EXXARO NEEDS A GOOD NEWS STORY

Finweek English Edition - - INVESTMENT -

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.

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