Ntsimbintle Holdings, led by businessman Saki Macozoma, will distribute the proceeds from the R11bn sale of its manganese business to shareholders, having decided against pursuing acquisitions to grow the business. The decision will boost its largest shareholder’s community development programmes.
The business was sold to Exxaro.
“We are going to declare dividends because we believe empowerment is about creating value, and that value must be in the hands of owners, who must then decide what they want to do with it,” Macozoma said.
He noted that one of the largest investors in Ntsimbintle was a trust that does development work in the Northern Cape and owns 15% of the company. The trust would receive a substantial amount of money. “They need to do their programmes, but they will also have to take a view on how they invest the rest of the money,” he said.
Macozoma’s Ntsimbintle Holdings controls 74% of Ntsimbintle Mining, with Singapore-based OM Holdings owning the remaining 26%. Ntsimbintle Mining owns the Tshipi Borwa Mine, which produces 3.4-million tonnes of manganese a year and has a track record of dividend payments.
Ntsimbintle started in the early 2000s when Macozoma began applying for manganese mining rights. He said he identified a gap in the market at a time when there was little interest in manganese.
“We believed it was going to be a dynamic industry because of the growth of China,” he said.
Manganese, used in steel production, was in high demand from China, which was growing at 15% and investing in infrastructure, including new cities, bridges and skyscrapers.
Macozoma said the group aligned itself with government policy at that time, which sought to prevent minerals from being “sterilised” by monopolies. “If that happens, then you have a missed opportunity,” he said.
Strategic timing
“I think the government was right because even when we came on stream, the people who took advantage of China’s growth were the Australians selling iron ore and manganese. We had [those resources] too, but we were not scaled up to take advantage of the opportunity. We eventually were, once we came into production.”
He said exiting the sector at this point was about timing. “If we miss the opportunity to sell to Exxaro — which has the cash, the rationale and the willingness to pay the price we want — then we don’t believe there will be another buyer in the next 10 to 20 years that could take this company to the next step.”
Cash-flush Exxaro had been sitting on a R15bn cash pile after coal prices surged following the Russia-Ukraine war, which disrupted supply as a result of sanctions on Russia.
The acquisition aligns with the company’s ambitions to diversify from coal, and came as shareholders called for dividends amid the cash pile.
What’s better than coal in this market is manganese, because manganese is one of the critical minerals for the decarbonisation of the world.
— Saki Macozoma
Macozoma said manganese, as a critical mineral, was a “no-brainer” for companies seeking to diversify their assets.
“What is better than coal in this market is manganese, because manganese is one of the critical minerals for the decarbonisation of the world. It is used in batteries, for instance, for cars,” he said.
The deal is also a win for Exxaro and its shareholders, he said. “They are getting a clean company that is producing, profitable and dividend declaring, making it easier for them to [justify] to their shareholders... It is value accretive for Exxaro, just as it was for us.”
Macozoma said Ntsimbintle Mining had built South Africa’s largest manganese exporter, developing the logistics to take the product to the coast and to markets, alongside a marketing arm in Singapore.
He said Ntsimbintle Mining’s strategy was not to grow beyond where it was, as doing so would have required finding cash — either to buy one of the major mining companies or to merge with others.
“That will always be on the table. The fact is that there was nothing on the horizon that we felt [would] increase the value and unlock value for shareholders,” he said.
Value creation
Building the company was not about scale, but value creation, which was one of the challenges of empowerment, he said.
“People are asset rich and cash poor. You can be worth this much today and the markets go down. Monetisation has always been part of our rationale, and we need to be able to monetise at the right price, given the unique set of assets we have built over the last 25 years.”
In its early years, the group sold a 49% stake to Pallinghurst Resources, which became Jupiter Mines and listed in Australia.
Macozoma was involved in the setting up of BEE policies when he served in parliament and on the ANC’s national executive committee. His company Safika Holdings was among the early BEE investors.
“The way to look at empowerment is to enable black people to accumulate capital, and that capital should not be trapped in a structure simply because the owners are black,” he said. “Our view has always been we don’t want to be trapped in institutions or companies where we are unable to do the right thing at the right time.”
Business Times
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