EXXARO Resources on Tuesday announced an agreement to buy manganese assets in South Africa’s Northern Cape, principally from Ntsimbintle Holdings which owns 50.1% of the 3.4 million ton a year Tshipi Borwa mine.
If consummated, expected to be in early 2026, the transaction will bring the curtain down on Exxaro’s three-year search for asset diversification which has seen the company kick the tyres of copper and vanadium assets, among others.
Exxaro is primarily a coal producer with additional exposure in renewable energy. In its 2024 financial year, the company produced 39.4 million tons of thermal coal. Tshipi Borwa is South Africa’s largest manganese operation and the fourth largest worldwide.
The purchase consideration is put at R11.67bn in cash but it could be higher or lower depending on whether related parties exercise a combination of tag-along and pre-emptive rights. One of these related parties is the Samancor Joint Venture owned by South32 (60%) and Anglo American (40%).
The deal basics are that Exxaro is buying 74% of Ntsimbintle Mining, a subsidiary of Ntsimbintle Holdings in which entrepreneur Sakkie Macozoma’s Safika Holdings has a 39.7% stake. But the deal also includes 19.99% of Jupiter Mines, a company listed on the Australian Securities Exchange which is a 49.9% joint venture partner of Ntsimbintle in Tshipi Borwa.
Other acquisitions in the package are Ntsimbintle Marketing, ownership of which will give Exxaro control over the destination of Tshipi’s manganese, 51% of Mokala Manganese in which Glencore has a tag-along right, and 9% of Hotazel Manganese in which Samancor is the main beneficiary.
Depending on whether these pre-empts or tag-along rights are exercised, the purchase price for Exxaro could range from between R9bn and R14.64bn.
Partly driven by sky-rocketing coal prices between 2022 and 2023, a result of the energy security concerns following Russia’s invasion of Ukraine, Exxaro had cash-on-hand of December 31 of R19.7bn and net cash of R11.8bn.
In addition to building this cash, the company has continued to pay dividends which it said today would be unaffected by today’s transaction. Exxaro also had access to undrawn bank facilities to help finance the deal.
In addition to Ntsimbintle Holdings, the manganese assets are also being purchased from OMH (Mauritius) Corp., a subsidiary of ASX-listed OM Holdings, a geographically diversified ferroalloys company. All in all, Exxaro will own 60.1% of Tshipi Borwa.
Exxaro said it opted for manganese owing to the significant resource base in South Africa’s Northern Cape (representing about 70% to 80% of world resources and 34% of global mined production in 2024), while the company also had experience in the operation of large open pit mines.
It also said manganese was integral to the production of steel “and is an emerging key essential ingredient in the green economy”.
The annoncement represents a major boost for Ben Magara who took over as CEO of Exxaro in April. This was following a distracting period for the company in which former CEO Nombasa Tsengwa was suspended, eventually resigning in January.
Shares in Exxaro gained just over 2% in early Johannesburg trade. The company’s stock is 18% weaker on a 12-month basis, largely owing to a decline in coal prices.
