Good morning, ladies and gentlemen. Welcome to Exxaro's Full Year Results for the Year Ended 31 December 2025. Thank you for joining us today. Thank you for joining us both here in person and online. I would like to welcome our board members who are here with us, as well as our executive leadership team. My name is Anda Mwanda, Manager, Investor Relations here at Exxaro, and today, I have the privilege of facilitating this session. At Exxaro, safety is our number one priority. Before we convene this meeting, I would like to take you through our safety briefing. Please note that we have not planned an emergency drill for today. If the alarm is activated, please remain calm and wait for the Exxaro floor marshals. They are in the room, and they are wearing red reflective vests.
They will escort you to the assembly point that is outside in front of the building. We'll remain at the assembly point until instructions are issued to re-enter the building. Please note that visitors are advised to always be accompanied by their host. If you begin to feel unwell, please let your host know, and they will escort you to our medical facilities on-site today. Our first-aid facilities are outside the auditorium. You turn right and the first passage to the left. Please note that texting while walking is not permitted at Exxaro. Therefore, we'd like you to please keep your phones on silent for this session.
Now we can move to the next slide. Please take note of our disclaimer. Today's presentation will cover key highlights, operational performance, financial performance, and finally, we will take you through our outlook. Unless otherwise stated, results are presented today year-over-year. We're comparing year-over-year from 31 December to 31 December 2024. Today's speakers are our Chief Executive Officer, Ben Magara, and our Finance Director, Riaan Koppeschaar. Please note that as they come in, we have allocated time at the end of the session for questions and answers.
With that, Ben, over to you.
Thank you very much, Anda. We call him Kopis. A very good morning to everyone. Thank you for joining us today, both here in person and some are also online. Let me really extend a warm welcome to the board members and to my Chairman, Geoff Qhena. Thank you very much for joining us today. I've got some, my old alumni folks. They were a little bit tired and sitting on the sofas outside, earlier on. We can see how much Exxaro sweat them with the video you saw there. Dr. Con and [Saleh], you are present today. Most welcome. Please raise your hands for all the new ones who don't know you. Thank you. Thank you. Thank you.
Really, I would love you to enjoy today, everybody who stand up, enjoy the pictures that you are going to see on the screens. They really are meant to depict all the various activities that we did in some of the execution projects we executed last year, and some of them are still in execution right now. As you go through, those pictures were deliberately put in this presentation, not just to make the presentation beautiful, but to showcase the hard work and the acceleration of delivery that happened with Exxaro last year. This is my first Exxaro annual results presentation as chief executive. We stabilized the business following a challenging start to the year. We had a very low coal pricing environment as well.
I'm pleased that the executives and I, and every employee of Exxaro, put shoulder to wheel, and we hit the ground running. My wife didn't want me to say this, but we got our mojo. Within a week of joining Exxaro, Riaan Koppeschaar and the executive team and I visited all our coal operations, and thereafter we also went to the closed collieries, to our renewable energy facilities everywhere. We met the majority of our fellow employees, and the dividend paid. As Exco, we showed up, we showed respect to our employees, we engaged, and we listened. Our people said, in their words, "Uzobona." These results are a testimony of what they said to us when we met them, and they said, "Uzobona." We also visited all our national labor organizations at their own offices. We were at Rissik Street, downtown, to see NUM.
We went to Soltec to see Solidarity. Our regulators, we met all of them, and also met you, our investors. Unfortunately, when you've got white hair, you can't hide. Thanks, Sipho, for joining us. Thank you very much. It's wonderful to have you here. We will deliver the video because I think it makes a great story for where Exxaro has come from. We reinforced what our chairman, Geoff Qhena, was telling you in those tough times, that Exxaro remained steadfast, it remained focused on its priorities, and that the strategy was intact. Thanks, Geoff. You almost became an executive, really delivering these kind of things, and consequently, we delivered the best industry-leading safety performance ever. We announced and delivered manganese, so we call it manganese is in the house. We doubled our renewable energy capacity.
We refinanced our bank facilities at even better rate, better terms. We restructured and created a strong management team, making it really fit for purpose. Our leadership bench is now representative of our country's demographics with competent young and old executives. A blend of energy, of foresight, experience, expertise. It's diverse and inclusive. If you are Mongezi, you are retiring this year. We executed on ethics and culture. Ethics and culture we reset, and the results were reflected in a follow-up culture pulse survey outcome to just prove whether we are moving forward, and I'm very pleased with the results we got. Our network partners also came to the party with much improved performance, both from Transnet and Eskom. We say, "Siyabonga," and long may it continue. We are glad to see that the crisis management issues have basically been resolved.
Now we can look ahead to long-term opportunities and partnerships with our partners. Ladies and gentlemen, it's been a lot of work. It's been extremely and very much fulfilling. We are doing the best work of our lives at Exxaro, safely and together. Thank you. As we celebrate Exxaro's listing 20 years ago, my executive and I are confident of Exxaro's next growth path, and we are on it. Evidence will be shown today as we go through. With that backdrop, I would now want to go through the highlight, the key highlights and the operational results, and then hand over to Koppeschaar, who can share with us the financial results before I come back to talk about the outlook and how we see the world today.
Starting with safety, as I said earlier on, the best and industry-leading safe performance ever, and I would like to state that I stand for safety. At Exxaro, we speak with one voice when we talk about safety. In 2025, we closed the year with 40 consecutive months, 40 months consecutively without a fatality. We should not be measuring businesses with fatalities, but we know where we come from, and we want everybody to go home safely every day. We should expect it of ourselves, and we should expect it of our own people, and we should help them achieve that. Our group lost time injury frequency rate improved by 33% to 0.04 per 200,000 worker hours worked.
If you look at that graph on the right-hand side, you will see that over the past 20 years since listing, we have reduced our lost time injury frequency rate tenfold from 0.42 to 0.04. Even more encouraging, some of our mining operations like Grootegeluk and Belfast completed a full year without a lost time injury. This is a clear result of discipline and commitment at every level with every single employee choosing, as I said earlier on, to work safely every day. At Exxaro, we believe zero harm is achievable. My fellow employees, we have to remain vigilant. Exxaro delivered robust performance numbers, and I'll go through those numbers right away. At Cennergi, we increased our wind farm plant availability by 2% to 98%.
However, we received less favorable wind conditions, resulting in energy generation being down 3% year-on-year. Our coal operations, coal production is up 1%, and sales were also up 1%. Coal export sales up 2% to 7.1 million tons, supported by the improving logistics performance. I'll touch on this a little bit more later about where the real improvement came from and where the opportunities still lie. Overall, we increased our revenue by 3% to ZAR 41.8 billion, despite the export coal prices being 14%-15% lower. It was a tough and challenging low export pricing environment. Despite all that, our EBITDA declined marginally by 2% to ZAR 10.2 billion. We were disciplined in our approach to cost management, and this is where Riaan Koppeschaar comes in even more because he kept stressing around cost, the importance of cost management.
We're able to also keep our absolute cash costs, particularly in coal, essentially flat year-on-year. Our net cash rose by 8% to ZAR 17.6 billion. Our balance sheet strength underpins the ability to invest and return capital to our shareholders, resulting in our headline earnings per share of 8% to ZAR 32.47 per share, supported by these stronger contributions we are seeing as well from our equity investments. Ladies and gentlemen, as I indicated, manganese is in the house.
Therefore, the group will no longer maintain the previously targeted cash buffer that we're keeping at ZAR 12 billion-ZAR 15 billion. In that regard, the board has revised our dividend policy. Our dividend cover ratio has been revised and improved from a range of 2.5x-3.5x to 1.5x-2.5x as a range based on our adjusted group earnings. For those who prefer calling it payout ratio, if you see 1.5x, you say one divide by 1.5x, you get 67%. If you get the 2.5x, 1 divide by 2.5, you get 40%. Our payout on group earnings will range between 40% and 60% of our earnings, 67% of our earnings.
We will continue to pay 100% pass-through of the dividend we get from SIOC. In line with this revised policy, we are pleased to announce with the chairman present that the board has declared a final dividend of ZAR 10 per share. Together with the interim declaration of ZAR 8.43 , it brings our total dividend for 2025 to ZAR 18.43 per share. In total, this equates to ZAR 6.3 billion to our shareholders' hands, which we promised, and I'm glad we have delivered. The revised dividend policy reflects our disciplined capital management approach, reinforcing our commitment to superior and consistent shareholder returns, while we also preserve the balance sheet strength, while we still deliver below the surface on our social investment projects.
We're also conscious of the commodity cycles and therefore we have monitored our future capital requirements and reflected on this, and believe it is fair at this juncture to revise and improve our dividend cover ratio. Alongside this robust business performance, we accelerated the prudent delivery of our strategy, strengthening and diversifying our portfolio for long-term sustainability. Post-year-end, you would have learned we've completed our first manganese transaction, positioning Exxaro as a globally significant manganese producer. I'll say more about this a bit later, but in renewable energy, we commissioned the 68 MW of the Lephalale solar plant feeding into Grootegeluk. We now have our first green electrons into Exxaro. Musa is shaking his head.
We announced the acquisition of 138 MW of the Gouda Wind Farm and 75 MW of the Sishen solar plant and the associated operations and maintenance company with those two assets. These transactions have progressed well with Competition Tribunal and Reserve Bank approvals already secured. We expect to close this transaction within the first half of this year. In partnership with ENGIE, Cennergi was selected as a preferred bidder under the REIPPPP Bid Window 7 on the 240 MW of Corona S olar plant in the Free State. Financial close on the Corona will bring Cennergi's growth capacity in operation and under construction to just under 900 MW in 2027.
As part of our portfolio rationalization and optimization, we also completed the responsible divestment of the entire shareholding of Exxaro FerroAlloys, enabling our operational continuity through meaningful management and employee participation in the future of that business. Let me speak a bit about a key part of Exxaro's unique value proposition. We are committed to meaningful socioeconomic impact, and we talk about impact beyond the surface. During the year 2025, Exxaro created about ZAR 19 billion worth of value to all our stakeholders, including employees, shareholders, I've spoken about earlier already, but the employees got the biggest chunk at ZAR 7.4 billion, for the sweat and for the efforts, and in regard to what we are able to deliver today. Of course, the government and financiers as well. We are continuing to build an inclusive culture. 91% of our employees come from historically disadvantaged backgrounds.
Women represent 35% of our people, and 47% in management roles. We were again certified as a top employer. We invested almost ZAR 400 million in learning and development to strengthen the technical capability and the deep leadership that we require, and we are building our talent in order to make sure the next 20 years continues to deliver what we have been delivering. We want our people to do the best work of their lives at Exxaro safely and together. We invested ZAR 1.7 billion in social impact initiatives, focused on preferential procurement, education, infrastructure, supplier development, and enterprise development. The creation of a sustainable secondary economies through our mineral succession program. Today, our early childhood development program supports almost 3,000 children, strengthening foundational learning across our host communities.
On that note, let me just give you a brief set of the context at which we produced these results. Globally, GDP was broadly resilient despite all the trade and the policy uncertainties across most economies. In South Africa, through our Operation Vulindlela project, we are witnessing a shift in progress through collaboration where business and government are working together to fast-track structural reforms, unlock economic growth, reduce costs, and improve South Africa's competitiveness. We are encouraged by the improvements both in energy availability, and there are early signs of progress also in logistics, particularly in the second half. However, the strong rand continues to put pressure on export pricing, but also on inflationary pressures. On commodities, the thermal coal market reflected a much weaker seaborne demand.
Persistently, the oversupply from China and the growth in production in India reduced our coal pricing environment with API4 around $90 per ton. It went as low as $80 a ton in October. All this on average reduced our pricing by 14% compared to the prior year. Again, against this backdrop, we are focused and we remain focused on operational delivery, protecting margins through effective cost management and operational efficiencies. Our teams, particularly in the market to resource, provided clear agility as the market started shifting between different regions. We continue to practice capital discipline. Let me explain briefly about logistics. We surely acknowledge the remarkable progress made by logistics and rail by Transnet.
TFR delivered a strong performance in the second half, ending at about 57 million tons of coal moved through the coal line, up from 52 million tons the prior year. Performance improvements were most evident in Mpumalanga region. While we welcome these improvements, this is way below Richards Bay's 91 million ton capacity, and the Waterberg line continues to operate below capacity. Exxaro has had to be agile in its approach, utilizing alternative channels to evacuate our coal from GG to the export market. With the foundation already laid, we are confident that we'll be able to make tangible progress in the Waterberg. Exxaro responded to the request for information published by the Department of Transport in 2025 for the private sector participation in coal and in the Chrome Corridor.
We also expressed our willingness and readiness to participate in the RFP, which we expect to be released soon. The long term of our export, we have a great optionality at GG, and this is key for us to continue to collaborate with Transnet, because it unlocks value for all our stakeholders. Now, going into operational performance. Total coal production volumes, 1% up to 39.9 million. Mainly as a result of improved production at Matla and Mafube. At GG Grootegeluk, production will decrease by 2%, more in line with demand from Eskom. Unit four came back on Medupi in July, and we're pleased right now that all the 12 units, six at Medupi and six at Matimba, are running as we speak. We know there's less demand in the country for power. For Eskom power.
The benefit for Exxaro with those two power stations is that those are the two lowest cost power stations in the country. To reduce costs, those two power stations have to keep running. As long as Dan and his team continue to do the maintenance they are doing, we can reliably expect those two power stations to continue, and they'll be more competitive in terms of power costs than anyone else in the country. Stable operations in Mpumalanga continue to underpin the strength and balance sheet of our core portfolio. Belfast maintained its nameplate capacity. They produced 3.5 million tons. The work and focus on Leeuwpan, which we announced last year on the turnaround strategy, continues. The progress is ahead of schedule. The Section 189 is completed, and there were no forced retrenchments.
The majority of our employees were all redeployed to vacancies elsewhere in the wider group. We are now looking forward to Caroline and her team to deliver in 2026. Mafube production increased by 12%, mainly due to improved business transformation initiatives they've got in place. Matla, the ramp-up of Matla's new shaft has progressed way ahead of schedule, delivering early coal production, resulting in a 14% increase in production. That's the highest production increase of one mine in the whole of Exxaro. Our president, Mangaliso, president of SACMA, he's here today. Thank you very much.
Thanks to you and your team. The coal sales up as well, 1% up. I've spoken already about Medupi and Matimba, and our expectation going forward. This was all offset by Matla's early coal production. Other domestic coal sales increased by 28%. Yes, 28%. This is really because the agility of our marketing teams was able to tell that there are better local margins than the margins we were getting from our export price, low export pricing environment. Metallurgical coal sales were down 43%, unfortunately, heavily impacted by the low demand from the local steel industry.
Turning to our export performance, despite the softer demand from India, again, I keep talking about how our the agility of our marketing teams, and Saki sits in the corner, even in the boardrooms. They successfully placed coal in all the other regions so that we could improve on our exports. We saw improved sales into Japan, where Exxaro's premium low sulfur, high energy coal market is well established and appreciated. Exxaro has an established brand with reliable quality and performance across our priority markets.
RB1 made up 81%, up from 74% in 2024 to 2025 in the export sales mix for 2025. We achieved an overall price realization of $86 per ton, which is 96% price realization. Enough on the coal, guys. I think the Cennergi guys would want to hear a bit more from their activities. Cennergi operating assets yielded stable and high EBITDA margins year-on-year, with average plant availability up 2% to 98%. This is all due to improved maintenance on the plant. Cennergi's operating wind assets generated 699 GW impacted by weaker wind conditions, particularly in the second half.
The commissioning of the LSP in Lephalale commenced in December, marking a significant milestone, like I said earlier, onto our coal mines, delivering 4 GWh of green electrons to GG. It is envisaged that the reduction in Scope 2 emissions will be about 17%, and we'll also see a reduction in our costs of electricity by about ZAR 100 million per annum. Ladies and gentlemen, it has been a robust year of delivery.
On that note, I need to hand over to Riaan to share the financial results. Thank you.
Thank you. Thank you, Ben. Good morning, ladies and gentlemen. It's good to share the financial results again with you. Just for comparability across the periods, the figures in this section are based on IFRS results, adjusted for headline earnings items. There's also a detailed reconciliation in the additional slides. Starting with the group results, the first two graphs at the top illustrate the performance of our own managed operations. You can see revenue increased by 3%, demonstrating the stability of our revenue despite a decline in export prices. As Ben pointed out, EBITDA declined only by 2%, reflecting a resilience in a challenging operating environment. The chart on the right shows income from our equity accounted investments.
This line increased notably, driven primarily by Sishen Iron Ore Company contributing ZAR 606 million more year-on-year. Black Mountain also delivered a strong performance, increasing by ZAR 425 million. Additional detail on the equity investments is provided in the supplementary slides. Despite operating in dynamic and challenging conditions, we generated cash of ZAR 10 billion ending financial year 2025, in a net cash position of ZAR 10.7 billion, consisting of ZAR 6.9 billion debt in the energy business and ZAR 17.6 billion net cash for the rest of the Exxaro Group. I will touch on the cash position in more detail later in the presentation. The weighted average number of shares in issue decreased from 242 million to 238 million following the repurchase and cancellation of shares under the share repurchase program.
Overall, this operational and investment performance translated into headline earnings of ZAR 32.47 per share, up 8%. Let's take a closer look at the EBITDA analysis, starting firstly with the price impact. Export prices realized in 2025 were $14 per ton lower or 14% decline in line with the lower API4 benchmark price. This was partially offset by a 1% improvement in our price realization relative to API from 95% to 96%. We also experienced stronger pricing in the domestic market that supported revenue. On volumes, we saw two distinct halves. The first half of the year, severe rainfall caused significant road and rail disruptions.
However, in the second half of the year, Transnet performance improved, enabling a 9% increase in our export volumes through RBCT, and this resulted in a 2% increase in total export volumes at 7.1 million tons. There was lower offtake from Eskom and AMSA, as Ben mentioned, but this was mitigated by higher domestic sales from Belfast and Leeuwpan helping to cushion the export shortfall. Across the mining industry, inflation continued to elevate the cost base. As explained earlier, if you look at electricity increased year-on-year by 12.7%, labor cost on average 7% and other cost tracked the PPI at 1.5%. Diesel was the only exception, providing relief with a 7% decrease, helping to offset the broader inflationary impacts.
Beyond inflation, several cost factors also influenced EBITDA. Our operational cost as part of our cost drive decreased by ZAR 625 million, mainly due to lower overburden removal at Leeuwpan at Belfast. You'll recall we were telling you over the past two years, we are looking at the pit and the overburden, and then also cost savings from the Leeuwpan turnaround strategy of ZAR 224 million. Inventory movements contributed a positive ZAR 424 million, mainly due to net realizable value adjustments in 2024, and employee cost increased due to higher production than sales volumes in 2025. Employee costs increased by ZAR 295 million, primarily due to the filling of vacant roles and also salary increases.
Rehabilitation liability adjustments were ZAR 226 million more favorable, supported by lower closure cost adjustments and a revised long-term inflation assumption consistent with the lower government policy on inflation. This was partially offset by lower discount rates that we used for our provisions. There were also a few life of mine adjustments. The stronger rand negatively impacted revenue by ZAR 288 million, with an additional ZAR 430 million in realized and unrealized foreign exchange losses on debtors and cash balances. General costs include ZAR 178 million in costs associated with the manganese transaction. This was partially offset by ZAR 77 million higher EBITDA from FerroAlloys prior to the disposal at the end of October 2025. As can be seen from the table on the top right, our Waterberg operations remain resilient.
You can actually see EBITDA increasing year-on-year, while optimization initiatives in the Mpumalanga region continue. International coal pricing dynamics are impacting broader industry profitability, especially in the Mpumalanga region, where coal reserves are becoming increasingly more complex to mine. We continue to have a very disciplined approach to cost management, and you can see total production cost increased by 0.4% year-on-year to ZAR 20.5 billion, underscoring our continued focus on cost control. It is important to note on the figure on the left that production tons used in the calculation of our cost per ton excludes Matla and Mafube operations. The 4% increase in the cash costs was mainly driven by lower offtake from Eskom at the Grootegeluk operation.
On the cost front, key successes include improved efficiencies across the value chain at all our operations. Also, the Leeuwpan turnaround strategy, resulting in a reset of the cost structure at the mine. We also have a continued business improvement focus across all the operations. We're also optimizing logistics costs all the time by directing exports through the lowest cost and most profitable export channels. Looking at the specific cost component movements reflected in the bottom right graph. Employee cost increased our cost by ZAR 15 a ton, mainly due to the filling of vacancies across the group and also the salary increases that we grant annually. General expenses were mainly impacted by a once-off credit in 2024 that did not occur again in 2025. Energy cost, as I pointed out, increased in line with the inflationary increase of 12.7%.
As a result of our improvement initiatives for the group, it only resulted in an increase of 11%. Maintenance was executed in line with the normal life cycle plans, resulting in an increase of ZAR 3 a ton. Improved contractor performance reduced our cost by ZAR 12 a ton based on lower overburden removal as well as operational efficiencies. The reduced overburden removal, lower fuel prices, and improved efficiency also resulted in a decrease of fuel cost and blasting material of ZAR 3 a ton and ZAR 2 a ton respectively. Rehabilitation costs decreased by ZAR 7 a ton as I previously explained. Export logistic costs increased by ZAR 3 a ton due to normal inflation with the remainder attributable to local sales where the corresponding income is reflected in revenue.
Our continued cost optimization continues to deliver results and will remain a key element in driving operational efficiencies, ensuring resources are utilized effectively and that performance aligns with our strategic objectives. Let me now turn to our cash generation and capital allocation strategy. Our framework remains disciplined and consistent as we continue to target a net debt to EBITDA ratio below 1.5x excluding our project financing arrangements. This ensures balance sheet strength while providing flexibility to execute our strategic priorities. In 2025, we generated ZAR 11.1 billion in net cash, and this comprised ZAR 7.8 billion from our own, owner-controlled operations and ZAR 3.3 billion in dividends we received from SIOC. In line with our framework, we allocated the capital across the business to support operations, growth, and shareholder returns.
ZAR 2.3 billion was invested in sustaining our operations and support functions, ensuring asset reliability and operational continuity. ZAR 5.9 billion was returned to shareholders through dividends, including ZAR 3.3 billion passed through from SIOC and ZAR 2.6 billion from our own managed operations. We invested ZAR 2.8 billion in expansion capital primarily for the ongoing work at the Lephalale Solar Project and the Karreebosch wind farm, which reached financial close in the first quarter of last year. ZAR 1.22 billion was also allocated to share buybacks under the share repurchase program.
Other allocations totaled ZAR 1.2 billion and include ZAR 403 million relating to lease term extensions across the group, ZAR 360 million in deposits that we placed with insurance providers, and ZAR 261 million relating to the translation of foreign currency bank accounts. ZAR 180 million was also incurred in development costs associated with the Karreebosch project. As a result of these allocations, our closing net cash position at the end of December was ZAR 17.6 billion, excluding the energy project financing net debt of ZAR 6.9 billion. Looking at sustaining capital, let me first start off with the coal business. Our capital performance remained disciplined and aligned to the long-term sustainability of the business.
Total CapEx remained well within guidance, with spend aligned to the capital execution plan, avoiding both over and underinvestment. We remain confident in our capital discipline and are committed to deliver the right investments at the right time in line with our strategic priorities. Further guidance on 2026 will be provided by Ben in the outlook section. Looking at energy, for Lephalale Solar, the cumulative investments since 2023 totals ZAR 1.6 billion as at the end of December. During 2025, we also invested ZAR 2.7 billion in the Karreebosch Wind Farm, of which ZAR 2.4 billion relates to expansion capital following the project reaching financial close in the first quarter. On average, our energy projects typically follow a 75% project finance and 25% equity funding model.
The project financing is utilized from the onset of the project with the equity injections, back-ended towards the latter stage of the project. All project financing has limited recourse to Exxaro's balance sheet and is hedged through interest rate swaps. As mentioned by Ben earlier, under our revised dividend policy, we have reduced our cover ratio from the previous 2.5x-3.5x range to 1.5x to up to 2.5x of adjusted group earnings as depicted on the right-hand side of this slide. Also pleased to announce, as Ben pointed out, the board has resolved to pay a final dividend of ZAR 10 per share, and this results in an overall group cover ratio of 1.8x .
This includes the pass-through of the SIOC dividend and reflects a cover of 1.8x on Exxaro's adjusted group earnings. We also concluded our share repurchase program earlier in the year with a total of 7.4 million shares repurchased and canceled at a total value of ZAR 1.2 billion. With that, also, I just want to thank all the colleagues out there at the business units here at the connection for making the results possible. Also my team, finance, investor relations, communication, everybody involved. It was really a pleasure to make these a sterling set of results possible.
Will hand back to Ben. Thank you.
All right. Thanks, Riaan. In the picture there, ladies and gentlemen, and thanks, you will see a Karreebosch wind turbine foundation. That is 20 meters in diameter. It requires 600 cubic meters of concrete and 75 tons of steel to anchor that turbine. Before I share our guidance for 2026, I would like just to remind you of the uniqueness and competitiveness of the Exxaro portfolio, what excites us. Global energy markets and experts expect thermal coal. They forecast thermal coal in the future that it will continue as a key energy source providing baseload well beyond 2050. Against this backdrop, we have a strong coal base in Exxaro with significant export optionality. It is underpinned by high quality infrastructure investments made over many years ago, and we continue to provide sustaining capital.
We have a substantial resource base of more than 9 billion tons still to be mined and a strong pipeline of organic growth opportunities within our coal business. Our infrastructure is likely to last longer than our mining rights resources. We are looking at life extension opportunities in all our operations, maybe except at GG and Thabametsi, where we have got quite a sizable. In South Africa, Exxaro supplies 25%-30% of South Africa's energy, particularly through our Grootegeluk, which is also a high quality export coal asset. Generation costs at Matimba and Medupi, as I said earlier on, make these power stations the most competitive in the country.
In spite or despite if there's any energy drop, those power stations are likely to be the last, and they have to continue running because they provide the cheapest coal to the cheapest electricity to this country, and that's from Exxaro. This gives Exxaro a real advantage, especially because Grootegeluk is the world's largest coal beneficiation complex, the only coal mine operating today in the Waterberg. As I've mentioned earlier, while we appreciate the positive developments in Mpumalanga, the Waterberg TFR line remains severely constrained.
The rail reforms are a major catalyst for Exxaro and South Africa's long-term relevance to the global seaborne coal market. We have made our submissions and our intentions very clear to government that we are willing to participate through the established private sector participation programs and to drive investments, even our own money into the Waterberg, to unlock this potential for all our stakeholders. Lephalale in the Waterberg region is the fastest growing town and will be for a few decades. Rail remains the most cost-effective mode of evacuating our coal or the chrome in the same line, and also moving cargo into that same region. In addition, ladies and gentlemen, the energy solutions business is currently present in three provinces, and soon to be five provinces, if I listen to Leon carefully.
It provides Exxaro with stable and predictable earnings through the long-term power purchase agreements that we have, with consistently high operational margins and long duration cash flows. The Lephalale solar plant, as I said, is a behind-the-meter solution for Grootegeluk. We also acquired majority stake in Acciona's operational wind and solar assets, along with the operations and maintenance company. This not only strengthens Cennergi's operational base, but also enhances our operation and maintenance capability. We are pleased with the progress we have achieved. We look forward to closing the Acciona transaction in this half. The Karreebosch Wind Farm reached significant milestone recently. We successfully completed the first turbine steel lift, and the project is expected to start generating green electrons in 2027. The 240 MW Corona is a key development subject to financial close, as we said earlier on.
Reaching financial close on this Corona project will bring the capacity of Cennergi to under 900 MW, with diversified renewable energy sources across both solar and wind. Having successfully closed the manganese transaction, Exxaro is now globally a significant manganese producer. Tshipi Borwa makes the fourth largest mine in the world in manganese production. In the manganese field that we know is home to 70%-80% of the world's manganese. This Tshipi Borwa asset is world-class. It's long life. It's favorably positioned on the industry cost curve to withstand any downward pressure on pricing. These two assets with GG almost position Exxaro exceptionally around a defensive portfolio with excellent export optionality. We welcome all our colleagues from [Tshipi é Ntle] Mining who are here for joining the wider Exxaro group, and you're home to do the best work of your lives together safely.
This transaction brings together two big and successful BEE companies. A story that doesn't always get told, emphasizing that truly this is a great BEE success story. Manganese plays a critical role in steel production, and we are seeing increasing demand in the battery electric chemistries. Our integration approach since the transaction closed is deliberate and paced. The priority is continuity, operational stability for our employees, for the communities and all stakeholders. We have a long road and lots of tons. I think it's got reserves of about 85 million tons and resources to about 190 million tons. We have an established joint venture structure that operates the mine, which has served the mine well, and the collaboration with Jupiter is central to this model.
We are very grateful that Saki Macozoma, the Chairman of the Joint Venture Board, has accepted to have a transitional period for one year to ensure strategic continuity, stakeholder engagement and a smooth transition and handover period. We are also pleased that we have retained our community trust. They will continue to be represented at the board, establishing stronger relationships with our host communities in the manganese field. Exxaro, with three bulk commodities of manganese, coal and iron ore, makes Exxaro a key and significant private sector partner, both to Transnet and to Eskom, to drive our country's economic growth and job creation. As Exxaro, we take our role seriously as a champion partner for South Africa.
Ladies and gentlemen, I'm pleased to present to you Exxaro, a diversified natural resources champion with a strong coal base and a growing renewable energy business. Equity accounted investments in iron ore and base metals, and of course now with a globally significant exposure to manganese. 2026 marks 20 years since our JSE listing. A journey rooted in South Africa, shaped by Africa and increasingly connected to the world. 20 years of impact beyond the surface. In 2006, Exxaro was not just digging for minerals. We were digging for hope. From the outset, the purpose was very clear from our founders, powering possibilities and getting better lives in Africa and beyond.
Now looking ahead as we conclude, our coal sustaining CapEx is guided to be between ZAR 4 billion- ZAR 4.5 billion. The increase is mainly driven by our truck and shovel replacement program at Grootegeluk Mine to sustain these production levels and to also benefit from any export optionality. We are seeing those export prices coming through, and we want to make sure that we can maximize on that. It also drives our operational efficiency, improves reliability, availability, sustainability, and reduce our total cost of ownership.
Coal production sales, we are guiding somewhere between 39.4 million -42.8 million tons as we continue to ramp up production at Matla. Export sales, we're expecting to be between 7.3 million -8 million tons on the back of this improved and continuing to improve rail and logistics performance. With the current prices, it also provides opportunities for our intermodal channels, different channels that we supply, we move our coal.
In parallel, the commissioning of the Lephalale solar plant together with the focus contribution from Gouda and Sishen, we are expecting to lift our energy generation guidance, which we are expecting to be at about 1,050 GWh -1,150 GWh . The Iran-U.S. conflict has introduced uncertainty into global energy markets, obviously through all the oil price volatility and the rising logistics costs. For South Africa, these higher oil prices could weaken our trade balance and put even more pressure on inflation and economic growth. From an operational perspective for Exxaro, coal exports are largely sold on an FOB basis. However, we could be more impacted by higher freight and insurance costs, which are incurred more by our customers and also incurred by the manganese as manganese is sold on CIF, and this could have some impact on margin pressure.
However, back to coal, the tighter LNG supply could actually support coal demand, and we're seeing these coal prices now possibly 10%, 15%-20% higher since the conflict started. It's not great given the humanitarian crisis that's ongoing, but the systemic impact of that is that coal demand in order to meet the energy requirements of the world is on the rise. Since 2006, Exxaro remains a consistent and high-yielding dividend payer. That record, coupled with our superior returns, reflects how disciplined we are with capital allocation, with our resilient performance, but also the long-term thinking and purposeful action. As I said, Exxaro is a real true testimony that inclusive and diverse companies are more sustainable.
Lastly, I have to share to my employees, to my fellow employees, I am truly proud of the results we have achieved. I really would like to sincerely acknowledge the commitment and hard work of each one of you. These achievements are a direct reflection of your dedication and your resilience, especially if you consider the low pricing environment we faced last year. It is through your efforts that Exxaro continues to deliver to all our stakeholders while positioning this business for long-term success. Together, we are strengthening Exxaro's position as a diversified natural resources champion in Africa and beyond. Let's keep doing the best work of our lives safely.
I was really getting worried you're not going to clap. But, thank you very much. Thank you. Of course, I must finish with our partners as well and our shareholders. Thank you for your support. Here is to Exxaro's new dawn. Thank you very much.
Thank you, Ben. Indeed, here's to Exxaro's new dawn. We would like to say goodbye to those of us that are joining us on LinkedIn. We had about 89 people joining us on LinkedIn this morning. Thank you so much for joining us. We're gonna go into our questions and answers. The way we're going to do it is that we're gonna start with questions here in the room. Please raise your hand. We've got roaming mics around. Kindly introduce yourself before you ask your question. I see we've got a hand there, Tim. Tim has got his hand up. Then Ben will take over and Riaan will take the questions for us.
Yes, Tim?
Thank you very much. It's Tim Clark from SBG Securities. Just first of all, congratulations on the safety result and the cost result. I think it's really pleasing to see such a good safety result over such a sustained and long period of time. Well done to everybody. I've got a few questions. Let's start off just with manganese. You've managed to get your foot in the door now. You've sort of crossed the line of having a look inside. I'd just be interested if there's a few initial thoughts on what opportunities you see and what opportunities lie. It's a contractor mine, whether there's something you can do on the contractor side and just what you're seeing in terms of opportunity on manganese in the short term.
My second question just speaks to the balance sheet, Riaan. It's wonderful that after the transaction you're not gonna keep the buffer and you're gonna be capital efficient, but a lot of South African coal producers and other miners keep a little bit of cash. You've got a very strong annuity stream, so I would imagine that you can very easily take a little bit of debt. But we don't know how to think about it. Perhaps if you could give us some way of thinking about the right level of balance sheet, post the transactions, obviously post Mokala, et cetera. That would be very helpful. Just my last question, just on BEE. We're moving fast towards a renewal, or the end of the BEE transaction next year.
I would imagine that you're starting to scope out and plan the way you would like to move forward with that, and if you could give us some initial guidance on what you're thinking about the replacement transaction would be helpful. Thank you.
Thank you.
Thanks very much, Tim. Appreciate the comments on safety and costs, and it's an area of our passion, and we're very pleased with what's going on there. On the Manganese side, where to from here? Our main priority right now is the integration program. I think we bring in complementary expertise from all the bulk mining capabilities and technical mining that we bring. We are very pleased that the joint venture structure allows us to bring those efficiencies and benefit everybody. That we have seen from the first board meeting we already had last week. There's been very good collaboration about what various parties can bring to the table.
I think as a way forward, our priority is right now to integrate and to assimilate and to learn from them and from our employees how the manganese trading works. We are sending our teams to just understand even more and acquainting ourselves into how we can find more benefits between coal and manganese. They're both bulk, but they tend to sell differently distinct from coal selling at FOB and manganese at CIF and the trading routes that we're expecting. I think a lot of work. We're still learning from them, but we're really interested in what we can contribute, and we can see already the collaboration that's going on. In terms of way forward, that's really the key.
Get the integration right, get the stakeholder engagement right, because we have a community there who are partly just in the community trust, partly shareholders, and we can see the benefits of continuing to work with them. The longevity and sustainability of that region depends on also providing the real impact beyond the mining. We're seeing some good work around that. The third issue is really around Mokala. We still have a way to finalize our negotiations with Glencore, and we are in advanced stages right now, so we expect that to now come to pass. Our long-stop date, as you know, is February 2027. That's the next one.
We also believe that given our strengths, when our logistics guys talk to us, they tell us that on this acquisition, Exxaro becomes almost the second or one of the top three biggest, gross ton kilometer customer to Transnet. The engagements with Transnet in logistics, how we can improve logistics in the Kalahari Manganese Field and the ports is key. There is a Manganese Producers Consortium that we are already involved in, and we are looking to see what opportunities exist to expand and also create efficiencies and reduce costs in that region. I think our priority is to integrate the current assets, finalize Mokala, get the logistics partnerships working to provide good cost and efficiencies, and whatever more later. I think that's our priority right now.
Thank you. I think Riaan can touch on the o n the balance sheet, but possibly you could also touch on the BEE unwind program.
Okay. The cash, the ZAR 17.6 billion, ZAR 10.6 billion was already paid as part of the first phase of the Mokala or the Ntsimbintle acquisition. The balance of the cash, we still reserve some of that cash for Mokala. We still need to pay the other acquisition, Gouda acquisition, that's ZAR 1.8 billion. The equity contributions of the Karreebosch wind farm and Cerro Corona, if it closes, still has to go in. If you deduct all of that, basically the cash balance is fully depleted. What we always said is, obviously the growth ambition doesn't stop here. We've also got a new corporate facility of ZAR 13 billion that we can tap going forward.
What we always said is we don't want to have gearing in the company that goes beyond 1.5x EBITDA. If you look at EBITDA that we reported today, that's ZAR 15 billion of debt. Obviously to get to those levels, you'll have to do something big. We also, I think from a board perspective, are conservative. You know, will always look at these gearing levels and the cash levels on the balance sheet prudently.
Especially, I think, you know, even now before the crisis, you know, we were closely monitoring the commodity price and the exchange rate because that is putting a big drain on your export business, especially in the Mpumalanga region, where I pointed out that Mpumalanga is becoming more and more difficult to mine due to the coal reserves. Those mines are higher up on the cost curve, so they're very sensitive to commodity, the coal pricing, and the exchange rate. So at least now there is a bit more opportunity on the export side to look at it. But that's more or less how we look at the balance sheet.
On the BEE transactions, obviously the sustainability BEE is very important for Exxaro. We're fully aligned with our BEE partners, so discussions behind the scenes since we announced the extension two years ago has been continuing. It's not that we haven't been doing work behind the scenes. Obviously the one item that we're waiting for is the new Minerals Bill. We don't know exactly what the new Minerals Bill will bring, you know, whether there could be more community, more ESOP requirements. Before we can finally decide on a way forward, we must have clarity on all of those issues. Thank you.
Exactly. Thanks, Riaan. Most of the team, I think, the fair acknowledgement for Exxaro, which it benefits us, is these are shareholders who created this company. Therefore, their longevity depends on our longevity, their longevity depends on all of us together. Finding what really works for all of us is critical, but the Minerals Bill is key. Really, we are, this is as much their company, and we look forward to making sure we find and come back to the market when we have resolved. It's something that's keeping us quite busy because we think it's important to provide clarity.
On the cash generation that Riaan spoke about, I think the defensive nature of this portfolio is really exceptional. As long as. Obviously, you don't know where the electricity prices are going. We don't know where the consumption is. The base load in South Africa is possibly showing us that the lowest cost power station producers are going to continue to run for a while because of the need for base load. That defensive nature of Exxaro really gets the juices flowing around cash generation to continue.
We are conscious of the conflicts, we're conscious of inflationary pressures, and the board has looked at all that and all the future growth capital that we require and the sustaining capital we need as well in profiling and finding this capital allocation framework that we have come up with an improved dividend. Which I think our shareholders, I can tell you, as you know, have been clamoring, saying, "Are you still going to maintain the ZAR 12 billion-ZAR 15 billion cash buffer?" We do not need as much anymore. We understand we are a cyclical business, defensive as it may be.
Thank you. Ben. We've got a question.
Thanks very much. It's Brian Morgan here, RMB Morgan Stanley. Congrats on 20 years. That's a very good achievement.
Thank you.
Just a question. You spoke about potential PSPs, and you spoke about the Waterberg line. I'd like to just get inside your head, get a feel for what your vision is. Sort of what would you like to see unfolding on the Waterberg? The 2.5 million tons of exports out of GG in this last year, looking for 2.6 million -2.9 million in 2026. What's the maximum the mine could do, you know, what to inform sort of-- The upper bound of what you're liking.
Absolutely. Thanks, Brian. I think there are two sides of that story. We have GG with great export optionality. We could possibly double what we are doing right now at GG alone. If our view of the market and the logistics was to improve, we also have a very high quality Thabametsi project next to GG. You can access that through the high wall of GG and go in and start producing export. The potential is massive. I think if we predict what this partnership and private sector participation with Transnet might bring for us and the chrome players along the route of that line, because it comes through Rustenburg and back into Ogies and Witbank.
The maximum I know Exxaro, and I've got three candidates here to defend my fact, the maximum Exxaro has ever done with a well improved, Transnet was about 12 million tons of export. There's no reason we can't get there, knowing the optionality we have in the Waterberg.
Thank you, Ben. Are there any further questions in the room? Please remember to raise your hand, and we'll send the mic to you. If there are no further questions, we are then gonna move over to the webcast online. Operator, do we have any calls online or any questions online?
Thank you, sir. At this stage, we have no questions on the telephone lines.
Okay, thank you. From the text messages, we have a message. We have a question from Chilizi Rabada from IDC. The question is: GG seems to be seeing the least benefit of the rail improvements. What's the plan around the alternative routes, particularly with expected fuel increases, given the geopolitical backdrop? Also, maybe a general outlook on diesel, the diesel costs and some geopolitical issues related to that.
Right.
It's the opportunity.
Oh, thank you very much for those questions. I think GG got the least benefit from the improvements this past year, but then Mpumalanga got the maximum benefit to Richards Bay. When we talk about GG not having the biggest benefits about its access to the high-margin route or the highest margin route, which is the Richards Bay route. We have lots of optionality with our intermodal channels of moving coal from GG, particularly one also to Richards Bay, but mostly to Maputo. At current prices, that's quite attractive. We do not move the coal up to Maputo. We move it to our sidings around Mpumalanga. We are able to actually utilize that. The biggest benefit for GG and for Exxaro is the blending of our products between GG and the product we produce in Mpumalanga.
We are the only player with the capability to blend coal from GG and to create a higher premium. That's why you see that we improved our RB1 mix in exports from 74%-81%, because we benefit from having a mine from GG. The key thing is we want GG to improve. We are fully engaged with Transnet and the Department of Transport. As you'll be aware, there were 11 train operating companies that were awarded the opportunity to go further in the tender process with the Department of Transport. We are partnering with some of those in order to unlock the operating part of logistics, but we need the rail capacity to increase as well. We are well and intimately involved in that expansion discussion.
In the RFQ we have submitted our RFI. Really all that work is ongoing. We think it's better for Transnet now that they don't have as much crisis to focus on these long-term opportunities, and that's what we are driving as we speak. On the diesel, I will possibly give a bit to Riaan to comment on that, then maybe I can come with a wider view on what we're seeing with this conflict.
Obviously on the diesel side, that's something that we watching very closely. Luckily we've got a long-term offtake agreement with one of the majors in South Africa. We collaborate with them very closely on diesel. They also with the DMRE, you know, are looking at the diesel imports. If you look in South Africa, I think we import about 75%, and then 25% is through the local refineries. What we have at our mines, we do have strategic stocks. We on a daily basis monitor the strategic stocks. Even some of the mines, we still get daily deliveries of diesel to the depots.
At this point in time, our fuel suppliers are indicating to us that they don't foresee any crisis, but it's obviously something we need to monitor. Going forward, obviously the price may have an impact. We got a question this morning, what is the relationship between a diesel price increase and a coal price increase? There's a sensitivity on page--
35.
35 of the slides. For every $1 increase in the export price, that equates to ZAR 127 million on EBITDA. For every 1% increase in the fuel price, it's ZAR 16 million negative impact on EBITDA on the pro forma 2025 numbers.
Ben, anything you want to add?
Back to the general outlook. I think the Middle East conflict, as we said, really presents a material risk to global energy security and freight rates. Any prolonged or broader regional destabilization disrupts energy movement and shipping. The longer it goes, I think the more challenges we would have in all that. We are in a space where we have kicked in, like Riaan said, on fuel, on tires, and any materials we import. We have kicked in our business continuity management programs in order to monitor both with our suppliers and ourselves what we need to be doing in order to mitigate the risks posed by this conflict.
Thank you Ben. We have a quick question, one more question from Shashi Shekhar from Citi. On Tshipi Borwa, what is your expectation of cash costs and sustaining capital for financial year 2026.
Good point, Shashi, because I think, Tim, we didn't quite answer you when you talked about contract mining and what your plans are, with manganese. I think that could cover a bit of what Shashi's also asking. We were very clear when we did the due diligence that the business as it stands can continue to operate as it is for a while. We know the opportunities of capital replacement, removing contractor and putting owner-managed businesses and owner-managed mining is something that we know and are good at. I think over time, we have to keep assessing the capital profile of our contractor and see whether it fits our bill.
At this point, we were very clear when we did the acquisition that we do not want the manganese asset to drain what we normally call the second check after acquisition, which is normally the capital requirements. Do not expect to go in and spend more CapEx for that. I think the model of contract mining as it is today is still operational. We'll continue to assess and where we see opportunities of efficiency improvements in total cost of ownership at any replacement program and timing, we will act accordingly. I think that's really the crunch.
In terms of costs, I think so far we've highlighted that Tshipi Borwa is one of the lowest cost producers, and it's something we hope and are working to continue to improve, but bring our capabilities from coal and bulk mining to see whether we can improve for the benefit of all stakeholders.
Thank you, Ben. Are there any further questions in the room? Bonginkosi.
Thank you very much. Just a general question. I'm not gonna complain about dividends, so just a general question. I mean, there's a lot that's been written with regards to illegal mining, illegal. Are they mafias? Not. I nearly said illegal mafias. Mafias and all sorts of things that are now sort of disrupting the industry, particularly the coal business, and in fact, it's the others as well. How is Exxaro responding to that one? If that one is impacting and affecting you. Or the other one is, are you affected by it? That's the first question. Or if you are affected, how are you dealing with that one? That brings me to the other issue, and that is the issue of trucks that we have.
I mean, I stopped driving on the N2 because of the trucks. How are you seeing that phenomenon evolving over a period of time? Thanks.
Thank you. Thank you, Bonginkosi.
Thank you very much. We really appreciate you acknowledging the dividends. Thank you. Thank you very much. The ethics issue in society, in our fabric of society is evident in many shows that we all watch today. We're going through a very real aha moment about acting on unethical behavior. We are seeing that in society, and it's not different everywhere, even in the private sector. We have acted very decisively about what we stand for as Exxaro. What's key when issues like this happen is whether it happens or not is not the real message. It's what you do when you find it. We have said at Exxaro, we stand for safety, we stand for ethical behavior.
Where we find anyone not acting in those two areas, they are not doing it in my name as Chief Executive of Exxaro, and they are not doing it in anyone's name in Exxaro. We have worked very hard in that area to make sure that we review even our all our policies, that our people are very clear. The one thing that I'm very proud we did was we ran an ethics, Suppliers Ethics Day. We also ran our own leadership ethics and culture reset program for transformation. All these are really meant to help all of us realize the importance of ethical behavior in the longevity of a business. I think it's something that we're seeing in society, and it's something that we're very clear at Exxaro, that we act wherever we find it, and we have lots of evidence around that effort.
On the truck side and the illegal mining and all the activities, I think the biggest challenge for us, especially in the coal sector, is that the barriers to entry have lowered a lot. Anyone with a small license at current coal prices possibly makes money. The key is, do you have all the right licenses and approvals to make sure you can do it responsibly like Exxaro? That is where the challenges sometimes come in. We're seeing all that happening. The trucks are on the road. As long as Transnet can continue to improve as it is, if it improves again another 9%-10% this year, it will move the numbers from 62 million to about 65 million tons a year. Already that takes more trucks out of the road onto rail, and that has to be the long-term solution. Thank you.
Thank you, Ben. Can I please ask the operator if there are any further questions online?
Thank you, sir. Confirmed we have no questions on the telephone lines.
Thank you. Ladies and gentlemen, thank you so much for joining us today. We've come to the end of our session. Thank you, and have a good day further.
Thank you.