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Exxaro is spending R18.5 billion over the next five years to increase capacity to feed growing export markets in Africa and Asia, while diversifying its revenue from a near-stagnant home market.
The peak in spending will be reached in the 2018 financial year, when R5.6 billion will be spent, the bulk of it on the company’s Waterberg coal mines in Limpopo. About R4.5 billion will be used in 2017, up on the R2.9 billion the company is planning to spend this year.
The projects include the R3 billion Belfast coal mine in Mpumalanga, which is likely to achieve first output in the fourth quarter of 2019.
The mine is expected to produce 2.7 million tons a year. In Limpopo, there are also the Grootegeluk 6 and 10 coal projects, which between them will add 3.45 million tons at a cost of R4.35 billion between now and 2019.
Exxaro is investing R2.8 billion at the Thabametsi coal project in Limpopo, which is expected to produce 3.9 million tons a year from 2020.
CEO Mxolisi Mgojo said the company was looking for new markets in Pakistan, the Philippines, Vietnam, Malaysia and Egypt. Exxaro was still growing its Indian base, where there was still a lot of opportunity.
The company’s coal exports jumped 78% to 4 million tons in the first half of the year, while total sales gained 9% to 22 million tons.
Eskom remained Exxaro’s biggest customer, taking 9 million tons of its coal a year, Mgojo said.
Mgojo said Exxaro expected to announce a new BEE agreement with its Main Street 333 black investors before the end of the year.
The deal was likely to be below 50% of the overall company because it would depend on how much the BEE shareholders reinvest and would also be affected by the proposed changes to the Mining Charter.
Negotiations between the department of mineral resources and the Chamber of Mines over the Mining Charter were at a sensitive stage, Mgojo said, without supplying details. He said an announcement might be made within a month.
