Exxaro, SA’s biggest coal miner, says it is looking for manganese assets in its quest to diversify its business as copper had proven too expensive for the time being.
The group has explored various options as part of plans to establish a minerals business that will focus on “green metals”, including manganese, copper and bauxite that are used in cleaner-energy applications such as solar panels and electric vehicles.
Speaking to Business Day on the sidelines of a mining conference in Johannesburg, CEO Nombasa Tsengwa said Exxaro had been eyeing a copper asset just across the border from SA, but the deal failed because the price was too high.
“We realised that with everybody now chasing copper, these assets have become too expensive. We were under the impression that tier 2 assets would be affordable, but we have seen this is no longer the case, especially as a single player,” she said, adding that Exxaro’s priority now was manganese.
“Like copper, manganese is an important mineral in the energy transition. Battery-grade manganese is used [as a replacement for cobalt] to make lithium-ion batteries for electric vehicles, for example,” Tsengwa said.
“It is very clear to us that we must prioritise manganese. Manganese assets are affordable. With our balance sheet plus equity debt, manganese could make a better story for Exxaro.”
That did not mean Exxaro was walking away from exploring opportunities in copper, she said. “We will do more exploration, invest early and allow the process to grow as we find partners we can trust in this business.”
Tsengwa said the realisation in SA and abroad that coal was likely to remain a source of energy for longer than initially expected had allowed Exxaro more time to make decisions about possible acquisitions.
Eskom announced in May that its board had approved plans to delay the decommissioning of the Camden, Hendrina and Grootvlei power stations to 2030. Previous schedules provided for the Grootvlei and Camden power stations to be fully decommissioned by 2025 and Hendrina by 2026.
Despite the change in sentiment about coal, Exxaro was sticking with its decision not to invest in adding to its coal portfolio and adding more tonnes, Tsengwa said.
Miners of bulk commodities had been hit hard by the deterioration in services from Transnet Freight Rail — a challenge that they had not been well prepared for, Tsengwa said.
Exxaro’s coal business has been designed to run at an optimum production level of 50-million tonnes a year, including exports of between 8-million and 12-million tonnes.
However, the well-documented problems on the Transnet Freight Rail coal line resulted in its shipments of the commodity decreasing from 12-million tonnes in 2020 to 7.6-million tonnes in 2021 and 5.2-million tonnes in 2022.
Tsengwa said resolving the troubles at Transnet would take time and that export volumes through Richards Bay Coal Terminal, which dropped below 50-million tonnes last year — compared with 72-million tonnes in 2019 — were only likely to recover to more than 70-million tonnes a year within the next two or three years.
However, mining companies are hopeful that the focus on rail during phase 2 of the partnership between government and the private sector will lead to a faster recovery.
Transnet aims to improve its rail haulage performance to 170-million tonnes in the 2024/25 financial year, up from 152-million tonnes in the previous year and 149-million tonnes in 2022/23.
Under the second phase the partnership, that target was increased to 193-million tonnes.
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