Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Exxaro Resources Ltd., one of South Africa’s biggest coal producers, wants to become a major player in the country’s manganese mining industry.
After losing out on a copper mine in Botswana last year, chief executive officer Nombasa Tsengwa is prioritizing manganese in the company’s latest bid to diversify its business. South Africa is the world’s largest exporter of mid- to high-grade manganese ores, which are mainly used in steelmaking.
While Exxaro doesn’t currently own manganese mines, it’s told other players that it’s interested in acquiring projects, according to the CEO. South32 Ltd., Anglo American Plc and African Rainbow Minerals Ltd. are among the shareholders in manganese mining joint ventures, which are found primarily in Northern Cape province.
“We believe that the manganese industry requires a South African champion,” Tsengwa said. Exxaro is aiming to buy “a very good asset or two,” as well as undertake exploration, she said.
The steel industry accounts for 93% of manganese demand and will remain the dominant consumer of the metal, according to Tanisha Schultz, a Cape Town-based senior research analyst at Project Blue, which provides market intelligence on critical minerals. Batteries – including those used in electric vehicles – will triple their share of consumption to more than 7% by 2040, she said.
Exxaro, founded in 2006 on coal, zinc and titanium assets split from a unit of Anglo American, has previously diversified into clean power projects, including wind farms.
Like many other mining companies, Exxaro is also keen to add copper to its portfolio in anticipation of spiking demand driven by EVs, artificial intelligence and renewable energy. The firm reached a shortlist to acquire the Khoemacau copper mine in Botswana, before China’s MMG Ltd. came out on top last November, agreeing to pay $1.9 billion.
Exxaro remains interested in operating copper mines, “but with partners,” Tsengwa said. “They’re not affordable on their own.”
The firm would also like to develop a copper exploration program, according to the CEO, who highlighted Botswana, the Democratic Republic of Congo and Zambia.
Exxaro remains one of the top suppliers of coal to South Africa’s state-owned power utility Eskom Holdings SOC Ltd.
The company sold almost 41 million tons of coal last year, of which about 13% was exported. It could ship up to 10 million tons a year to overseas markets, but that’s hampered by the poor performance of state-owned rail and freight operator Transnet SOC Ltd, Tsengwa said.
(By William Clowes)
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