Exxaro targets manganese deals in South Africa

Nombasa Tsengwa

EXXARO Resources has targeted a deal in South Africa’s manganese industry, according to a report on Friday by Bloomberg News.

“We believe that the manganese industry requires a South African champion,” Nombasa Tsengwa, CEO of Exxaro told the newswire. Exxaro is aiming to buy “a very good asset or two,” as well as undertake exploration, she said.

Bloomberg didn’t provide further details of Exxaro’s possible acquisition but pointed out that South32, Anglo American and African Rainbow Minerals are among the shareholders in manganese mining joint ventures, which are found primarily in Northern Cape province.

Tsengwa said in August the firm has hoping to conclude a transaction that would diversify its product by the end of the year. “We are actively doing due diligences across a number of commodities in a number of jurisdictions and making good progress,” she said at the firm’s interim results presentation.

“We have a lot of bilateral discussions on the go which don’t follow defined timelines. These things tend to drag out on occasion,” she said.

Exxaro said in 2021 that it wanted to diversify into manganese, copper and bauxite but has not progressed the strategy. It was shortlisted for the Khoemacau copper mine in Botswana, before China’s MMG came out on top last November, agreeing to pay $1.9bn, said Bloomberg News.

In the meantime, the company has built up a net cash pile of about R12bn for a deal. It declared a special dividend for its 2023 financial year but it’s unlikely to repeat that when it unveils its 2024 numbers next year, Nedbank Securities analyst Arnold van Graan said in a recent note.

The firm would also like to develop a copper exploration programme in Botswana, the Democratic Republic of Congo and Zambia, said Bloomberg citing Tsengwa.

Exxaro remains one of the top suppliers of coal to South Africa’s state-owned power utility Eskom. The company sold almost 41 million tons (Mt) of coal last year, of which about 13% was exported. It could ship up to 10Mt a year to overseas markets, but that’s hampered by the poor performance of state-owned rail and freight operator Transnet, Tsengwa said.