EXXARO NEEDS A GOOD NEWS STORY
The group said last month it could write off as much as R5.36bn in iron ore project costs in the Republic of Congo (RoC) after its plans were disrupted by lower-than-forecast grades from the venture, and difficulties extracting rail and port agreements with the RoC government.
An Exxaro shareholder, who asked to remain anonymous, was asked recently to give his view on what the group ought to be doing amid the iron ore disappointment. “Focus your energies on coal; become a coal pure-play,” he told Finweek he had said. IT SEEMS EXXARO HAS RESOLVED TO CAPITALISE ON ITS TRADITIONAL BUSINESS STRENGTH Two days after announcing the potential impairment in iron ore, Exxaro said it would spend R3.8bn building a coal mine near Belfast in Mpumalanga. It has also talked up the expansion potential at Thabametsi, a new coal project that could rival its Grootegeluk coal mine in the province.
Exxaro, a black- controlled company, was founded on the coal business following the unbundling of Kumba Resources, itself previously the mining division of State-owned steel entity, Iscor.
Rediscovering its roots is therefore proving an expensive exercise and, for now, a confounding one until more clarity can be provided on how Exxaro intends to extract value from the pricey piece of business.