Exxaro upbeat about its coal operations

1st February 2019

By: Kim Cloete

Creamer Media Correspondent


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CAPE TOWN – Empowered coal mining giant Exxaro Resources is confident about its prospects in the coal sector, despite tough conditions and rising cost pressures in South Africa.

Exxaro executive head of coal Nombasa Tsengwa on Thursday said the company produced 47-million tons of coal and was geared to grow this to 60-millions tons by 2023.

Exxaro is the largest supplier of coal to Eskom and South Africa’s fourth-largest exporter of thermal coal.  “We are strategically positioned for both domestic and export coal markets and have a strong balance sheet,” she told delegates at the Southern African Coal Conference, in Cape Town.

Currently, most of Exxaro’s coal is destined for the local market, but Tsengwa said she was keen to expand its exports.

“We believe in the future of coal. We think coal will still be in good demand until 2040 when there will be equalisation of renewables and coal.”

Tsengwa said 1 600 new coal-fired power plants are planned or under construction in 62 countries. “We think we are well positioned to satisfy those markets.”

She told Mining Weekly Online that the domestic market was limited.

“The domestic market can only take so much. It is already saturated. We see the export market becoming really critical and where we see the most growth from our side.”

Tsengwa said Exxaro was keen to diversify into markets such as Pakistan and Egypt, while Ethiopia was also a potential option.

“We have worked with cement companies who are investing in Africa and have supplied them with coal. We’ve had some experience in African markets, but can do better.”

Tsengwa said Exxaro, which is 30% black-owned, had a market capitalisation of R54-billion as at January 28.

“We’ve had good growth in volumes of about 16%. Buoyant prices have helped us.” She added that the company’s debt to equity ratio was low, on the back of strong cash flows in operations and it had a good and prudent capitalisation process.

Tsengwa said Exxaro’s mines were strategically positioned near power stations, particularly in Mpumalanga. 

The company is also pleased with the progress being made at its R3.3-billion Belfast coal project, which will see the first thermal coal being mined in the last quarter of this year. “We believe it is one of the last high-quality projects in Mpumalanga.”

Tsengwa expects the company’s flagship Grootegeluk mine, in Lephalale, to "remain with us for quite some time; for generations to come".

It is the largest coal mine in the southern hemisphere operated from a single footprint. The opencast mine is 4 km long and 120 m deep, and set on 1 200 ha, with nine plants in total.

But while registering growth, relationships with communities around the mine had been tough at times, conceded Tsengwa.

A broader challenge facing the industry was the mismatch in rail and port capacity, which limited participation in international markets.

Exxaro is, meanwhile, also adapting to technology in tune with the Fourth Industrial Revolution.

“We want to make sure we get real-time data from each part of the value chain, from where the coal is procured and mined, to the power plant.”

She said visualising the mining value chain had started to reap rewards as coal could be dispatched in a much more controlled way. This had improved production.

Tsengwa was pleased to see that the State capture enquiry was lifting the veil on corruption. Together with "clarity in the regulatory space" she said this could encourage investors. However, she called for more government incentives for exploration.



Edited by Creamer Media Reporter


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