EXXARO Resources announced on Monday the sale of its ferrosilicon assets for R250m which it said was in line with its strategy to focus on coal and manganese.
Built in 1997 with a capacity of up to 12,000 tons a year of ferrosilicon, Exxaro’s FerroAlloys has been acquired by a consortium led by EverSeed (formerly Umbono), a Johannesburg-based natural resources investor.
“The acquisition of FerroAlloys is squarely aligned with EverSeed’s long-term strategy to build and operate essential industrial businesses,” said Kerwin Rana, CEO of EverSeed. It will control 60% of the consortium with the balance of shares in FerroAlloys to be owned by management (30%) and employees via a share ownership plan.
Finalised on October 31, the deal is financed through purchaser’s equity, debt, as well as some vendor finance as is typical of empowerment transactions in South Africa. Ferrosilicon is used to strengthen steel in the steelmaking process.
Ben Magara, CEO of Exxaro said the sale progressed his plans to streamline the organisation as well helped focus on “acquisitive growth ambitions in energy transition metals”.
In May, Exxaro unveiled the R11.6bn acquisition of 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.
The announcement was a major boost for Magara who took over as CEO of Exxaro in April following a distracting period for the company. The deal is only expected to be consummated next year but already there is speculation that Magara will target the consolidation of manganese in the province.
Commenting in March on the firm’s diversification plans, Exxaro’s head of new business, Richard Lilleike, said the strategy was “a case of unlocking that first deal which we feel could be a catalyst to something bigger”. About 70%-80% of the world’s total unmined manganese, a mineral primarily used in steel production, occurs there — enough to last at least 80 years.
Exxaro also said it had cooled its interest in building a presence in copper production. “Copper mines are too expensive, especially for coal miners and for investors in coal,” Magara told Bloomberg News last month.
“We have shifted our criteria and are now looking at advanced exploration projects that we can take up the value curve,” he told the newswire.
