Latest news with #R12-billion
Daily Maverick
13-05-2025
- Business
- Daily Maverick
Exxaro's R11.67bn manganese pivot: green transition, black capital or boardroom realignment?
Exxaro Resources' acquisition of Ntsimbintle and OM Holdings' manganese assets is more than a strategic minerals grab; it's a post-coal pivot, a consolidation of black industrial capital and, potentially, a power move following months of executive turbulence. Behind the R11.67-billion headline lies a test case for South Africa's just transition, governance in mining and who controls the future of critical mineral wealth. Ex-post-facto acquisition, or new way forward? Exxaro, once a proudly coal-driven juggernaut, is now betting nearly R12-billion on a mineral pivot. But the timing of its boldest diversification step in a decade raises deeper questions – less about manganese itself, and more about who is really driving the strategy. Just five months ago, Exxaro CEO Dr Nombasa Tsengwa was suspended amid whistle-blower complaints and reported boardroom tension. Her leadership had prioritised transition minerals, copper acquisitions and energy diversification. Now, under newly appointed CEO Ben Magara, the miner has acquired the very assets Tsengwa had reportedly explored – including a controlling interest in Tshipi Borwa. Was this deal long in the making? Almost certainly. But its execution, shortly after a contested leadership change, suggests more than just strategic continuity. It may also reflect a shift in governance, internal alignment and institutional confidence in the next phase of Exxaro's identity. R11.67 billion in minerals – and rising Exxaro has entered into binding agreements to acquire a portfolio of manganese assets from Ntsimbintle Holdings and OM Holdings. These include: 1% effective interest in Tshipi Borwa; 51% of Mokala Manganese; 9% of Hotazel Manganese Mines (Wessels and Mamatwan); 100% of Ntsimbintle Marketing and Trading; and 99% of Jupiter Mines (ASX-listed). The initial price tag is R11.67-billion, but the deal includes a 'locked box' structure – and if Mokala's minority shareholder Blue Falcon exercises its tag-along rights, the total may increase to R14.64-billion. Exxaro has stated that the deal is funded from internal resources, with no anticipated impact on its dividend policy or net cash position. Why manganese? Why now? Manganese is often overshadowed by cobalt, nickel and lithium in energy transition narratives – but its role in both steel production and emerging battery technologies is critical. High-purity manganese is increasingly used in lithium-ion battery cathodes, particularly in markets such as China and India. South Africa holds an estimated 70% of global manganese reserves and about 37% of global production. The Kalahari Manganese Field (KMF), where these mines are located, is one of the richest global manganese belts. With long-life mines and operational offtake agreements in Asia, the deal aligns with Exxaro's stated strategic aim to reposition as a diversified minerals and energy solutions business. This pivot began under Tsengwa's leadership, with moves into renewables (such as the Lephalale Solar Project) and copper (through prior due diligence on assets in Botswana). The manganese deal may be the crown jewel of that vision – even if finalised under a different leadership banner. Black capital makes a rare play Beyond its commercial value, the transaction marks a notable moment in South Africa's mineral economy. It is a transfer of strategic mineral assets from one black-controlled enterprise to another – a rarity in a sector still defined by historic capital imbalances. Ntsimbintle Holdings, led by Saki Macozoma, is one of the country's most successful black-owned mining ventures. Its 74% interest in Ntsimbintle Mining – which owns 50.1% of Tshipi – forms the heart of the transaction. OM Holdings holds the remaining 26%, also being sold to Exxaro. Macozoma described the transaction as 'a landmark for BBBEE' and expressed confidence that Exxaro would be a capable custodian of the assets in a press release marking the proposed purchase. This is not merely an exit, but what Ntsimbintle has called a 'portfolio simplification and reinvestment opportunity' – enabling it to focus on new growth areas while maintaining long-term community benefit structures. Plug-and-play into Asia The manganese operations come with pre-existing offtake agreements into China and India, mirroring Exxaro's existing coal customer base. The integration is likely to be operationally smooth – Exxaro's existing logistics and bulk commodity trading capacity are already geared towards these corridors. Still, manganese is not without volatility. Prices have swung significantly in the past two years, driven by Chinese steel demand and evolving EV battery chemistries. Execution will require careful risk management. A contested Kalahari Strategically, the KMF mines place Exxaro in a mineral corridor long dominated by global majors and niche players. The region also comes with complex stakeholder dynamics – from environmental scrutiny to local beneficiation expectations. This acquisition positions Exxaro as a full-spectrum mining house, with assets in coal, manganese, renewables and energy infrastructure – but also amplifies its exposure to political and regulatory sensitivities. Regulatory approvals remain The transaction remains conditional on: Competition Commission approval; DMRE sign-off under the Mineral and Petroleum Resources Development Act; and Environmental and beneficiation approvals, particularly if brownfield expansions are envisaged. The 'locked box' structure means any financial leakage prior to closing – such as dividends, losses or capital shifts – could result in upward adjustments to the purchase price. While Exxaro's executive has projected stability under new CEO Ben Magara, the lingering absence of clarity around Tsengwa's departure – including conflicting narratives over internal whistle-blowers, governance disputes and legal claims – remains part of the story's subtext. Communities, beneficiation and the just transition A key beneficiary of Ntsimbintle's structure is the John Taolo Gaetsewe Development Trust, which holds 14.47% of the company. Community-based entities, local women-led firms and Northern Cape entrepreneurs are also among its shareholders. Exxaro has pledged to honour commitments around community development, job creation, infrastructure delivery and skills transfer. This aligns with South Africa's broader 'just energy transition' goals – but success will depend on visible outcomes. Expectations are high. In a region often sceptical of extractive promises, execution will matter more than headlines. Among the clear winners are Exxaro – which now gains scale, diversification and a firm foothold in the transition mineral space – and Ntsimbintle Holdings and Safika, which exit on their own terms while unlocking capital for future strategic certain is the rationale behind OM Holdings' quiet withdrawal from South African manganese – no formal explanation has been provided. And then there is Dr Nombasa Tsengwa, whose early efforts to steer Exxaro towards diversification may yet define the company's trajectory, even if she is no longer at the helm to see it through. The real prize Exxaro's manganese acquisition is not just a portfolio expansion. It is a narrative pivot, where ownership, governance and transformation converge. What remains to be seen is whether this deal becomes a flagship for BBBEE industrial strategy, or a case study in how internal politics shape external outcomes. The manganese is real and the power shift may be just as material. DM
Daily Maverick
22-04-2025
- Business
- Daily Maverick
Loaded for Bear: It's a fiscal sin that Treasury has no sin tax on cannabis products
A cannabis sin tax could conceivably remove or reduce the perceived need to raise VAT by 0.5 percentage points. In the 2022/23 fiscal year, Canada's federal government collected more revenue from the sale of legal cannabis products than it did from beer and wine – a first since the legalisation of recreational pot for retail sales in 2018. As a Canadian, trust me, that is saying something. To wit, federal excise duties on cannabis products that year amounted to CA$894.6-million (R12-billion), slightly exceeding the CA$887.7-million raised from beer and wine sales. And that does not include the revenue that flowed to provincial governments from pot, beer and wine. In the same fiscal year in South Africa, National Treasury reaped R45.1-billion from alcohol taxes. Cannabis was – and remains – the missing link on the sin tax front in South Africa, and Treasury is missing out. 'Cannabis products are not yet part of excisable products, meaning they are not liable to health taxes (i.e. so-called sin taxes),' Treasury's media unit told me via email in response to my queries on the matter. 'The legislative framework for cannabis is still broadly limited to medicinal use or 'private use' and has not yet attained commercial status for possible application of excise duties.' As I recently noted in this column, pot policy in South Africa remains shrouded in a purple haze of uncertainty. This was thrown into sharp relief last month when Health Minister Aaron Motsoaledi banned the sale of edible cannabis products and then did an abrupt U-turn. But the majority of pot products being sold openly in shops across the country – edible or smokeable – are technically illegal in the first place, which explains why they are not yet classified as 'excisable'. As a consumer of such products, I can attest to the fact that the shops that sell cannabis-infused goodies appear, for the most part, to be paying VAT, as you get a receipt and card machines are used. It's not a 'cash only, wink wink, nudge nudge' kind of business. Such transactions all go through banks, so South Africa's banking sector is also complicit in the illicit sale of cannabis. This genie was freed from the bong by the landmark Constitutional Court decision in 2018 that in effect legalised the recreational use of cannabis. In May 2024, the Cannabis for Private Purposes Act gave the green light for adults to consume, cultivate and possess cannabis for private use. So, the rough foundations are in place for Treasury – which clearly needs every rand it can lay its hands on – to impose health or sin taxes on cannabis products. How much could it raise? That's hard to say. But conceivably, it could remove or reduce the perceived need to raise VAT by 0.5 percentage points. I have not seen an official estimate on the number of bud shops in South Africa, but they have sprouted all over the place. While such outlets are still outnumbered by bottle stores, it is clearly a business sector in a growth phase and is generating revenue from sales that could be subjected to health taxes. I mean, it's just a no-brainer. That the ANC is unable to pluck this low-hanging fruit is testimony to its general inability to craft coherent policy. It has so many competing interests – not to mention cadres coveting a piece of the pie for themselves – that many of the 'policies' that emerge resemble a stoner's epiphany. So, we have ridiculous situations such as the health minister doing an about-turn on the sale of a product that was being sold illegally for the most part and that should be subject to a health tax but is not because the legislative framework has not been extended to a vibrant commercial sector. In a nutshell If cannabis was subjected to a sin tax, the government could ease the tax burden elsewhere such as on VAT. The owners of such shops and their customers are – trust me on this – clearly not complaining. Imagine if you ran a bottle store and your booze was suddenly exempt from six taxes. You would have a liquidity boost of note. But it is astonishing that this cash-strapped government has not worked this out yet. And, at least some cannabis consumers would not mind paying a bit more for their dagga if it meant they did not have to pay an extra 0.5 percentage points for almost everything else they purchased. DM
