Edison | Mar 05, 2013 06:50AM ET
On 28 February, Coal of Africa (CZA.L) declared force majeure on its export sales following the derailment of 10 railcars at the Maputo rail corridor. As a result, all traffic between Komatipoort and Maputo was suspended for at least seven weeks. This blow comes just a few weeks after the company suffered flooding at the Vele mine. Both events will have a pronounced impact on the company’s financial performance in H213, unless it manages to adjust its production and redirect at least some of its export supplies to the domestic market.
While the force majeure notices were issued at all CoAL’s operations, we understand the rail suspension will only affect exports, while the domestic sales should continue as normal. In addition, the company may be able to redirect some of its export supplies to the local market, thereby somewhat mitigating the pronounced operational and financial impact. In Q213, c 50% of CoAL’s sales was exported. We will revise our forecasts following the release of H113 financials in March.
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