[miningmx.com] — EXXARO Resources plans to move into iron ore next year to further diversify its portfolio and has big ambitions for growth at its coal and energy units, a senior official said on Friday.
Ernst Venter, the company’s manager for growth, said Exxaro was targeting the rest of Africa and Australia for either buying an existing producer or partnering in an early-stage project.
“We are narrowing in on our targets. We hope that not later than June 2011 there will be a movement on that,” Venter told Reuters.
“The preference would be to buy up an existing producer or to get into an area where there is a lot of bulk-up potential,” he said, declining to give further details.
Exxaro’s main business has been coal, and the company plans to raise its coal exports from just over 6 million tonnes per year to 10 to 26 million tonnes over the next decade, to help feed fast-growing demand from Asian power producers.
But the expansion depends on the availability of rail links between the coal-rich Waterberg region and ports for export.
Exxaro is part of a consortium interested in developing a 1,500km railway line to transport coal from Botswana to a port in Namibia. It may also assist with the expansion of a railway line leading to the Richards Bay coal export terminal.
The miner is also supplying coal to Eskom’s power plants. Its planned Grootegeluk mine expansion is due to supply 14.6 million tonnes of coal per year to Eskom’s new 4,800MW Medupi plant from May 2012.
In addition, the company is considering a new greenfields mine, which could supply 6 to 16 million tonnes of coal to new power plants operated by independent power producers.
ENERGY AMBITIONS
Meanwhile, Exxaro has invested heavily in clean energy projects to reduce its reliance on electricity supplied by Eskom, which is already struggling to meet increasing demand and supply cost competitive electricity to others.
The company has submitted 700MW worth of clean energy projects for qualification under the renewable energy feed-in-tariff programme offered by the government, Venter said.
“Four years from now, we will be paying more than R1 per kilowatt hour, and if you compare that with what we can supply from a wind farm, a solar farm and a cogeneration project, it becomes viable and there is a business case to do that,” he said.
The project pipeline includes two wind projects, expected to come on stream in 2013 to 2014, and various cogeneration plants feeding power to industrial users.
The company is also studying the potential to produce 80MW to 100MW from a coal-bed methane venture in Botswana, which could happen as soon as 2013 and boost power supply in that country.
“What we are seeing in 10 years is Exxaro producing 75 to 90 million tonnes of coal, 1.5 million tonnes per annum of reductants, generating about 1,500MW of electricity and producing around 10 million tonnes of iron ore,” Venter said.
He said the projects would be financed both from Exxaro’s balance sheet and through external financing.
