Exxaro Resources, a leading South African coal producer, is on the brink of securing a deal to acquire manganese or copper assets, with a potential announcement expected later this year, according to a senior executive.
As the global transition from fossil fuels to cleaner energy technologies accelerates, Exxaro is actively seeking to diversify its portfolio by acquiring critical minerals such as copper and manganese.
These minerals are essential components in renewable energy systems and electric vehicle batteries, making them increasingly valuable in the global market.
Last year, Exxaro was among the bidders for Botswana’s Khoemacau copper mine but lost out to China’s MMG. Currently, the company is conducting due diligence on several potential acquisitions, according to Richard Lilleike, Exxaro’s Chief Growth Officer.
“We’ve intensified our level of engagement with potential targets, partners, and investors,” Lilleike said in an interview with Reuters, though he declined to provide specific details on the acquisitions being considered. “My hope is to announce a deal in 2024. We are actively working toward that timeline with several opportunities.”
The rising competition among global miners for copper assets has driven up valuations, prompting Exxaro to adjust its strategy.
The company is now focusing on partnerships and early-stage development projects as a more viable approach to securing these critical assets.
Exxaro, which primarily mines thermal coal used in power stations, has also invested significantly in renewable energy projects.
However, potential deals for manganese projects in South Africa are being complicated by complex shareholding structures and joint venture agreements, Lilleike noted.
South Africa is the world’s leading producer of manganese, a key steelmaking ingredient increasingly used in electric vehicle battery technologies.
Exxaro’s diversification efforts come at a challenging time for the company, which is facing declining earnings due to lower coal prices and insufficient rail capacity to transport coal to export ports.
For the first half of the year, Exxaro reported a 37% drop in headline earnings to 3.7 billion rand ($205 million). The company announced an interim dividend of 7.96 rand per share, down from 11.43 rand last year.
