EXXARO Resources has sold its stake in Australian metallurgical coal mine Moranbah South to Stanmore Resources, a Brisbane-based coal producer, for $105m (R1.68bn).
The South African diversified miner said in an announcement on Friday it had exercised its pre-emptive right over 50% of Moranbah South. This is in terms of a previous agreement with Anglo American in which Exxaro was a 50/50 JV partner in Moranbah South, a Queensland mine with a design capacity of 18 million tons a year.
In May, Anglo announced it had agreed to sell its steelmaking coal assets, which include Moranbah South, to privately held UK company Dhilmar Ltd for $3.86bn ($2.3bn in upfront cash). It was in the wake of this development that Exxaro exercised its rights over Moranbah South, and subsequently on-sold the property to Stanmore Resources.
For Stanmore, Moranbah South has infrastructural synergies with its neighbouring Eagle Downs mine, which it acquired from South32 recently.
Exxaro did not disclose the cost of exercising its rights.
Ben Magara, CEO of Exxaro, said today the sale of Moranbah South was in line with the group’s three-pronged focus on South African coal, renewable energy, and “future-facing metals”.
Last year, the company bought control of the Tshipi manganese mine in the Northern Cape province along with nearby assets. The transaction became unconditional in January. “As part of this strategy, we showed our investment in Moranbah South as non-core,” said Magara. Exxaro said it hoped to close the deal by the fourth quarter.
The logic for exiting Moranbah South is clear for Exxaro, given it would be the group’s only offshore asset with potential to distract management attention, notwithstanding resources that support a 30-year mine life.
Since joining the company’s executive team in April last year, Magara has focused the company’s growth aspirations on organic coal growth, greater access to export markets, and diversification. In addition to Tshipi, Exxaro is also seeking to add a 51% interest in Mokala to its manganese portfolio.
He has also referenced an interest in copper resource development. Commenting on Exxaro’s longer-term push into copper, Magara said at the firm’s interim results announcement in August, however, that he was sensitive to overpaying for a growth story.
“We are still looking for opportunities,” he said. “We had a team out in the Copperbelt (in Zambia) in the last week looking and kicking tyres. If we find it, good,” he added. “If we don’t, we focus on the growth potential of manganese.”
In 2023, Exxaro was outbid for Khoemacau Copper, a 130,000 tons a year copper project in Botswana, when China’s MMG bought it for $1.6bn.
As a result, Exxaro turned its sights on a copper exploration asset, said Exxaro’s new business executive Richard Lilleke in June. “Over the last year, we have increasingly focused on earlier-stage projects, where there is naturally increased risk … [but] … lower investment outlays,” he said. A budget of $10m to $30m is planned.
