JOHANNESBURG (miningweekly.com) – Coal-miner Sasol on Monday expressed disappointment at losing its black economic empowerment (BEE) partnership with Exxaro.
The black-controlled JSE-listed Exxaro is South Africa's largest coal producer.
Sasol CFO Christine Ramon, in an item not bullet-pointed on the overhead screen, said: "We have had some disappointing news from our BEE partner Exxaro. That is with regard to our first mining empowerment deal concluded in 2006. Exxaro will no longer be participating in the Igoda joint venture, due to the economic climate and other financial commitments that Exxaro has."
Exxaro said its decision to withdraw from the Igoda coal-export venture with Sasol Mining had followed its capital expenditure prioritisation review, in the light of the global economic downturn.
The Igoda empowerment vehicle, which was created when Exxaro was still Eyesizwe Coal, was part of Sasol Mining's empowerment strategy.
"Importantly, mining remains in compliance with the Mining Charter and will meet the 2014 targets, as well," Ramon said.
Ironically, Exxaro and Sasol have entered into a prospecting joint venture to develop a new coal mine to supply Sasol's proposed coal-to-liquids Mafutha project in Limpopo province.
Sasol executive director Dr Bennie Mokaba said that the deal Sasol had completed with BEE partner Ixia Coal would take it further along the road to Mining Charter compliance.
Sasol CEO Pat Davies added that Sasol was already at 20% equity compliance with the Mining Charter as it stood, and would reach the target required by 2014, particularly with Sasol's other BEE transaction, the Inzalo deal.
Davies added: "There is a little bit of disparity between the Mining Charter and the Codes of Good Practice, but if that was sorted out by the officials, we would meet the 2014 target right now.
"We continue to remain focused on building operational capacity in the mining sector and we are working very closely with Ixia Coal in that regard," Ramon said.
"Exxaro has reduced its project pipeline and will focus on the successful implementation of committed and board-approved projects, an example being the expansion of the Grootegeluk mine to supply Eskom's Medupi power station," said Exxaro CEO Sipho Nkosi.
Sasol Mining MD Hermann Wenhold added: "While it is disappointing that the partnership with Igoda Coal is no longer viable for Exxaro, we understand the impact of the tough market conditions and recognise many companies are facing difficult decisions regarding their future investment options."
Sasol Mining forms part of Sasol's South African energy cluster, which, Ramon said, continued to be the primary contributer to group profitability and cash generation.
Mining increased profitability on the back of a weaker rand, which boosted the export sales of coal, despite lower volumes.
Sasol Mining's profit rose 14% to R1,6-billion and focus continued on building operational capacity in close liaison with BEE partner Ixia coal.
Synfuels operating profit of R25-billion was up 30% in the 12 months to June and upliftment in operating volumes was expected in the new financial year.