Exxaro to diversify investment portfolio

[miningmx.com] — SOUTH African diversified miner
EXXARO RESOURCES LIMITED is keen to broaden its portfolio to include copper and iron ore, its chief CEO Sipho Nkosi said on Tuesday.

Sipho Nkosi said Exxaro sees more opportunities now to grow by adding new commodity businesses than it did during the financial crisis.

“Copper is one business that excites us, and we think it has got a good future. We are looking at various opportunities on the African continent and other areas,” he said.

“There are quite a lot of projects that we are evaluating in various parts of the continent,” Nkosi said, declining to give details because Exxaro was still in talks with governments on potential ventures.

Apart from copper, Exxaro plans to also invest in iron and to grow its energy business.

Exxaro, whose main business is in coal, expects coal prices to stay at around $85-90 a tonne in the short to medium term, supported by a healthy supply-demand balance.

But Nkosi said the strong rand would keep on hurting its profits, with each 10 cent move in the currency hitting its operating profit line by R30m-R40m.

The rand, which has strengthened more than 25 percent since the start of 2009 and is trading near a 2 and a half year high, has become the biggest challenge for South African exporters, who are paid mainly in US dollars for their exports but have to pay for their costs at home in rand.

Nkosi also said he was upbeat about improvements in Transnet’s rail line leading to the export terminal at Richards Bay, with record amounts of coal reaching the terminal in September.

South Africa is a major exporter of coal to power stations in Europe and Asia, but state-owned logistics group Transnet has been struggling to transport all the material destined for export due to bottlenecks on its line.

Nkosi said Transnet was likely to rail 70 million tonnes next year, up from an estimate of 65 million tonnes in 2010 but still far from meeting an expanded annual capacity at the export terminal of 91 million tonnes.

The CEO said Exxaro was likely to bid as part of a consortium to help build the Transkalahari railway line from Botswana to Namibia to be able in future to export more coal, given Transnet’s restrictions and its own limited export allocation at the Richards Bay Coal Terminal.