In 2019, at the South African Investment Conference, Exxaro committed to investing R20 billion towards the country’s efforts to economic recovery. They could not have possibly anticipated what was to unfold globally as COVID-19 brought the world to its knees. This injection would make a major difference to South Africa’s economy as a result.
Through their contribution, Exxaro became one of the shining examples that supported President Ramaphosa’s investment goals. Just ahead of the 2022 SAIC, Exxarro opened its open-pit Grootgeluk mine as a showcase to the media and stakeholders, in Lephalale, Limpopo.
The mine uses a conventional truck and shovel operation, employing 3 200 people to help in the production of 26 metric tonnes (mt) per annum, final coal products. This mine has an estimated minable coal reserve of 3 261metric tonnes and a total measured coal resource of 4 719 metric tonnes. Some 22mt of annual production is power station coal, which is transported directly to Eskom’s Matimba and Medupi power stations, on a 7-kilometer conveyor belt in terms of the existing supply contract.
Speaking on the 2019 investment commitment Mr. Mzila Mthenjane – Executive Head: Stakeholder Affairs shared that; “We were also being challenged by the capital market, our own shareholders, to say R20 billion at the time was half of our market cap, which presented a huge investment risk. We were also investing at a time when there was actually no investment in terms of the mining industry, so the industry was recovering from earlier days of what the markets call exuberance… and being in a position to rather distribute cash to shareholders rather than investing. We are seeing the consequences of that, which is one of the contributing factors to supply constraints. It does not just supply chain constraints; it’s the fact that there haven’t been investments. So, I think for us, it’s been an encouragement to continue with our strategy of investing rather than withhold or postpone the investment”.
The 2019 commitments included the eight mega investment projects that Exxaro undertook which are;
- A R5.3 billion investment into the Grootegeluk Mine Complex expansion.
- An extension of life project for the Matla Mine, worth R3.5 billion, which is still ongoing.
- The Belfast new mine development worth R3.3 billion.
- The life of mine extension project of the Mafube mine, in a joint venture worth at least R1.9 billion.
- The Grootegeluk Rapid Load Out Station project, to the tune of at least R1.3 billion.
- A R600 million investment in the Grootegeluk ‘Discard In Pit’ Project Backfill;
- The Leeuwpan LifeX Project, and
- A R340 million investment into the Exxaro Coal Centeral Seam 4, which has extended the life of the mine by at least 15 years.
A ninth project, which would have built the 630megawattThabametsi Power Station, was cancelled after the project’s environmental approval was officially overturned by the High Court.
During the two-day media tour, Exxaro executives also shared a picturesque image of the highly applauded business, sharing insights on their contributions to the digital economy within the mine, the protection of employees and communities against the COVID-19 pandemic through the setup of the COVID-19 lab, the opportunities presented by the European demand for coal due to the Ukraine/Russia war and other opportunities for coal mining in South Africa and internationally.
Exxaro further shared that its growth prospects include amongst others, a long-term plan to support transition to a low-carbon economy in a commercially appropriate manner; organic coal production growth to supply coal production to domestic clients such as Eskom and export markets; and a stable revenue model from the renewable energy investment. Exxaro also has a record of 5 years fatality-free mine.
