  | |
| |
 |
|
| ||
Exxaro sets out 2012 coal strategy Posted: Thu, 02 Nov 2006 [miningmx.com] -- EXXARO Resources, the creation of which was today approved by shareholders, set out plans to produce 70 million tons/year of coal in six years making it South Africa's largest coal producer. And once it reaches the 70 million tons/year milestone in 2012, Exxaro has additional plans to grow beyond that, its directors said. It currently produces about 42 million tons/year. Exxaro will also produce zinc and titanium, but its primary offering is coal, something that has been missing from the JSE since coal heavyweights Anglo Coal, Ingwe and Duiker were delisted by their parent mining groups. Exxaro CEO Con Fauconnier, and Exxaro CEO-elect Sipho Nkosi, told Miningmx they had been planning the creation of this business since they first met in 1999. At that time, Fauconnier was running the mining arm of Iscor while Nkosi was MD of little-known Eyesizwe Mining. Eyesizwe was an empowerment hopeful pitching to buy the NewCoal assets, an assortment of underground and open cast coal operations, from Anglo Coal. Said Fauconnier: "I told Sipho if he could get hold of New Coal, then we could build the largest coal business this country has ever seen." Nkosi succeeded and has now, in one analyst’s assessment, effectively traded those coal assets back to Anglo American, which controlled Kumba, and has upgraded them through gaining control of Exxaro. Exxaro’s growth will be come from its dominant position on the Waterberg coal field in Limpopo Province. Exxaro also has links to energy giant Sasol because Eyesizwe, which controls Exxaro, is Sasol Mining’s major empowerment partner. The Waterberg contains South Africa’s largest remaining coal resource and is expected to become the country’s most important coal mining region within 10 to 20 years. In that time the Witbank and Middelburg coal fields, which have been the mainstay of the industry to date, will wind down. Exxaro owns the only operating colliery in the Waterberg, the multi-product Grootegeluk mine, which currently produces 18.8 million tons/year. Of this output, 14 million tons is sold to Eskom’s Matimba power station. Eyesizwe picked up some six billion tons of coal resource in the Waterberg as part of the NewCoal assets and that coal is located within kilometres of Kumba’s existing coal resources. The Exxaro listing documentation puts the present combined production of Eyesizwe/Kumba at 42.6 million tons/year of which 34.9 million tons is sold to Eskom, 1.9 million tons is exported and 5.5 million tons goes to the South African domestic market. The documentation lists a string of projects that will take Exxaro to a production level of 70 million tons/year. But there’s far more to come after that depending on further business the group can get from Eskom and Sasol. One of the major items in the planned growth to 2012 is the 7.3 million tons/year of coal that Exxaro will supply to the first phase of Eskom’s Project Alpha. Project Alpha involves the construction of an additional three generating sets at the Matimba power station. Eskom CEO, Thulani Gcabashe, said in May that Project Alpha would proceed, but Eskom and Exxaro are still negotiating the terms of the coal supply agreement. As a result, Fauconnier could not confirm that Exxaro has the contract. A further three generating sets at Alpha will slot in after 2012 and Exxaro must be viewed as the most likely coal supplier for those as well. In addition, Eskom is also currently negotiating a power purchase agreement with Canadian company CIC Energy. It is developing a $5bn power station on the Mmamabula coal field in Botswana, about 80km from Matimba. Mmambula is the westward extension of the Waterberg coal field. The planning documents indicate the transmission infrastructure for the Mmamabula and Alpha power stations will be integrated and will also provide spare capacity to handle the transmission of power from a possible third power station that could be built in this region. Another important growth factor to 2012 is Exxaro’s 35% stake in the Igoda joint venture with Sasol which Eyesiwe brings to the party.Free news alerts: click here to subscribe
| ||||
