[miningmx.com] – Sipho Nkosi, CEO of Exxaro Resources, confirmed he will retire from the R36.6bn diversified miner from tomorrow (March 31) after seven years at the company.
Mxolisi Mgojo, who currently heads Exxaro’s coal business, has been appointed Nkosi’s successor, although he will first serve as CEO-designate for 11 months from May in an approach Exxaro described as a transitional period in order to “… ensure a phased hand-over of accountabilities and responsibilities”.
Mzila Mthenjane, head of strategy for Exxaro, said that Nkosi had also been appointed CEO of the company on a designate basis. “In that respect, what we’ve done with Mxolisi is no different to what we’ve done in the past,” he said.
Said Len Konar, chairman of the Exxaro: “The appointment of Mxolisi is the culmination of a thorough succession plan that was implemented over several years.
“The Exxaro board is pleased to welcome him as our CEO-designate and we look forward to the strategic management, business acumen and operational know-how that he will bring to bear in the roll-out of the Company strategy”.
Mgojo will be succeeded by Nombasa Tsengwa, currently GM of Exxaro’s coal assets in Mpumalanga province. He will take up his position from Mgojo, on May 1 “… until further notice,” said Exxaro.
Mgojo and Nkosi were founding members of Eyesizwe Coal, an empowerment firm that vended coal assets from Anglo American into Kumba Resources before it was unbundled into Exxaro and Kumba Iron Ore in 2007.
Nkosi’s retirement was not a complete surprise as the 10-year contract locking in the empowerment vehicle in which Nkosi, Mgojo and other investors hold a 54% controlling share in Exxaro – Dreamvision Investments – expires in 2016.
Dreamvision’s stake in Exxaro is currently worth R19.76bn, but it was intended to be more in terms of Nkosi’s stated ambition in 2012 to make Exxaro a $20bn company by 2020. Exxaro was worth $10bn at the time.
The last 18 months, however, have been difficult for Nkosi with the write-down for R5.8bn of the firm’s Mayoko iron ore project in the Republic of Congo and the decline in commodity prices in general and coal specifically.
The group’s response was to adopt a back-to-basics strategy which includes a R3.8bn coal mine project in Belfast, Mpumalanga province – a strategy with which Mgojo should be comfortable given his coal mining expertise.
Exxaro also said it would spend R16bn over the next five years increasing its supply of coal from the Waterberg in the Limpopo province to 35 million tonnes/year (mtpa).
In addition, Exxaro bid R4.9bn for Total Coal South Africa (TCSA), the 4mtpa coal export firm, although the transaction is yet to receive the approval of the South African government amid speculation that TCSA’s minority shareholder, Mmakau Mining, opposes it.
Miningmx speculated that Exxaro may actually prefer to see the TCSA deal lapse as the export thermal coal price has fallen further since the transaction was announced nine months ago – a development could result in a further write-down if the deal is consummated.
