Exxaro embarks on major manganese acquisition as new CEO refocuses strategy
Under the new deal, Exxaro will take over a portfolio of manganese assets owned by the Saki Macozoma-fronted Ntsimbintle Holdings, as well as those held by OM Holdings.
Image: Supplied
Tawanda Karombo
Eskom coal supplier Exxaro Resources is diversifying its portfolio, sinking R11.6 billion into the acquisition of manganese assets in the Northern Cape in a deal expected to be closed early next year.
Exxaro recently appointed Ben Magara as CEO, taking over from Nombasa Tsengwa after a protracted fall-out with the former top executive.
Insiders on Tuesday said the company's stalled diversification was among points of disagreement between the company's board and Ndengwa. Magara's appointment appears to have refocused the company on its diversification into manganese.
Under the new deal, Exxaro will take over a portfolio of manganese assets owned by the Saki Macozoma-fronted Ntsimbintle Holdings, as well as those held by OM Holdings.
'This acquisition provides Exxaro with a strong entry point into the manganese sector,' said Magara.
He explained that manganese had become an essential component in steelmaking and had an additional growing market in the battery and renewable technology supply chains.
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'The acquisition will see us deploy our operational and commercial expertise in bulk commodities, logistics, and deep knowledge of the South African mining landscape including the regulatory environment, to unlock sustained growth and stakeholder value in the Kalahari Manganese Field,' he added.
In cementing the transaction, Exxaro has already entered into binding agreements to acquire shares and claims in the manganese assets held by Ntsimbintle Holdings and OM Holdings.
The targeted assets consist of a 74% of Ntsimbintle Mining, a 19.99% stake in Jupiter, 100% of Ntsimbintle Marketing and Trading as well as 51% of Mokala. Additionally, Exxaro has snapped up a 9% interest in Hotazel Manganese Mines.
According to Macozoma, chairman of Safika and Ntsimbintle Holdings, the landmark transaction 'is significant to the South African mining' sector.
'We are pleased that these assets will remain in South African hands as Exxaro is an excellent custodian that shares Safika and Ntsimbintle's strong values of safety, sustainability and a social license to operate whilst providing certainty to our valued employees and host communities,' said Macozoma.
He added that the sale of the manganese assets to Exxaro was consistent with Safika and Ntsimbintle's 'long-term plan to continue to simplify and strengthen our portfolio' so as to generate shareholder value.'
Exxaro expects that the transaction will close by the end of March next year. The transaction is also still subject to regulatory approvals.
Executives at Exxaro said during a media briefing on Tuesday that the assets under the transaction 'are well capitalized' with no immediate need for new capital, except stay in business capital.
'We will be looking to optimise what's on the ground for the benefit of all the joint venture partners, and that's work that we will have to start on completion of this transaction and we look forward to that and use our expertise not only in the operation itself,' said an executive from the company.
'I think we know that there's logistics that we could look to see how we optimize all that and our markets are predominantly the same except China.'
Analysts said the acquisition positioned Exxaro 'to capitalize on the rising global demand for manganese, a critical component in steel manufacturing and emerging battery' technologies.
Exxaro's revenues for the full year to December firmed up by 5% to R40.7bn, although group earnings before interest, tax, depreciation and amortisation (Ebitda) decreased by 22% to R10.4bn.
This meant that headline earnings per share for the period of R30.16 per share fell by 36%.
Nonetheless, Exxaro declared a final cash dividend of 866 cents per share,and also resolved to embark on a R1.2bn share repurchase programme.
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