Exxaro powers up for future growth
Coal miner eyes energy, water and land
EXXARO sees its future as a company focused on opportunities in energy, water and land rather than coal mining, Exxaro Resources chief executive Mxolisi Mgojo says.
Exxaro is Eskom’s biggest coal supplier and for the next 30 years will be supplying the Thabametsi coal independent power producer, one of the two successful bidders in the Department of Energy’s first round of coal independent power producer project awards announced last week.
Exxaro has all mining rights and the authorisation to start work at Thabametsi coal mine. But Life After Coal Network, a coalition of environmental non-governmental organisations, said the Thabametsi and Khanyisa power plants were “unnecessary and destructive”.
“As well as contributing to climate change, the projects will pose an immediate threat to people’s health and to the local environment. “Earthlife Africa, represented by the Centre for Environmental Rights, has therefore instituted legal proceedings to set aside the environmental authorisation granted to Thabametsi.”
Apart from coal, Exxaro has interests in iron ore, mineral sands and renewable energy.
In the year to December coal contributed 98% of its revenue and 81% of its operating profit.
Mgojo, who was speaking at the Gordon Institute of Business Science forum last week, said Exxaro had held discussions in November with a broad group of internal and external stakeholders to consider the future of the company.
At that time Exxaro’s shares were about R40 from a high of more than R200 in 2012, its black empowerment transaction was under water and commodity prices were weak.
Discussions centred on whether Exxaro could exist beyond coal mining and whether it should remain largely South African or play a greater role beyond its borders. Coal would be needed by customers in SA for the next 20 years, but comprised a small portion of the new power that the government was commissioning, Mgojo said.
“Today, we have abundant coal and it is cheap but it will be displaced. It is just a question of when,” he said.
Mgojo said new-generation global companies such as Uber and Airbnb did not own assets.
Their strengths were service and relationships, innovation and use of new technologies, which enabled them to do more with fewer people.
Mining companies had large overheads. They controlled land, water and energy and have employment and environmental consequences for their surrounding communities as operators and after closure.
“Our purpose is not only to make returns for shareholders, but to have meaningful social impacts.
“We want to take land, water and energy to create new economies, in collaboration with communities,” Mgojo said.
He said Exxaro was working towards finding the right business models in these areas. Investors who questioned Exxaro’s commitment to coal should also be considering how technology would disrupt their futures and what they should be doing to survive. — BDLive