Exxaro spending R5.2bn on coal mine expansion, R4.7bn on wind farm project

This audio is brought to you by Astec Industries, a Global Leader in manufacturing equipment for infrastructure, including asphalt production, construction, and material processing, driving innovation and sustainability. Johannesburg Stock Exchange-listed Exxaro Resources will be spending R5.2 billion on a life-of-mine expansion project at its Matla colliery and R4.7-billion on the development of the 140 MW Karreebosch wind energy project. Matla will basically provide a new mine and the wind farm's supply of clean energy to Northam Platinum will come with Scope 3 emission credits as Exxaro executes on its decarbonisation roadmap. Being an Exxaro coal customer, Northam will support the reduction of Exxaro's Scope 3 emissions obligations through the Karreebosch wind energy project arrangement. Despite persistent global and domestic headwinds, new Exxaro CEO Ben Magara reported a good set of dividend-yielding interim results that saw net cash rise 27% to R12.4-billion. Magara made the point that this level of cash buffer wouldnot be retained once the purchase of Ntsimbintle Holdings and OMH manganese assets is brought to completion, which is expected to take placed in the first quarter of next year. Of the R3-billion dividend funding, R1.7-billion was a pass through from the Sishen Iron Ore Company dividend and R1.3-billion from Exxaro's own managed operations. Half-year domestic and export coal sales were 1% higher on production of 19.4-million tonnes. The operating wind assets of Exxaro's energy solutions company Cennergi generated 337 GWh of electricity in the six months to June 30, amid the signing of a power purchase agreement for platinum group metals mining company Northam Platinum to receive clean power from the Karreebosch wind farm, a project that will uplift the gross clean power capacity to Cennergi 437 MW. Combined with Exxaro's Lephalale Solar Project, the two projects will more than double Cennergi's capacity by the first half of 2027. The half-year revenue of Cennergi rose 3.5% to R675-million on stable generation and increased annual tariff escalations, which uplifted the operational earnings of the wind energy business to R537-million - "and this drive is not just about money, but it's also about reducing emissions", said Magara. Expansion capital of R1.1-billionwas spent on the Lephalale Solar Project and the Karreebosch wind farm in he half year, FD Riaan Koppeschaar reported. Exxaro is configuring its assets to support its decarbonisation journey, with a particular focus on technologies such as fleet optimisation to reduce Scope 1 emissions. A key milestone in this commitment is the commissioning of the self-generation Lephalale Solar Project initiative at the Grootegeluk coal mine, which will deliver a 25% reduction in Scope 2 emissions and a 17% reduction in total Scope 1 and Scope 2 emissions. Addressing Scope 3 value-chain emissions remain a priority, and through strategic partnerships and meaningful stakeholder engagement such as the signing of a memorandum of understanding with Eskom in April, Exxaro expressed confidence of making progress in reducing these emissions. MORE DOMESTIC COAL OFFTAKE EXPECTED Exxaro is expecting more of its coal to be bought by Eskom, especially in view the fourth unit of the Medupi power station that it supplies, has been returned to service. "We we're very pleased when they announced a few weeks ago that unit four is back," said Magara during the presentation of half-year results covered by Mining Weekly. Each unit consumes somewhere around 2.2-million tons to 2.3-million tons of coal. "When a unit's down for a year, that's 2.2-million to 2.3-million tons out of your production and that impacts unit costs," said Magara, adding that all six Medupi units now seem to be running. As a result, Exxaro is guiding total 2025 production of around 38.9-million tons to 42.8-million tons, and total coal sales of 38.3-million tons and 42.4-million tons, with export sales ranging poss...