South African executive and Exxaro Resources CEO Nombasa Tsengwa has stated that the group’s strategic diversification into green minerals has become more urgent recently due to geopolitical tensions, inflation, and high borrowing costs, which have slowed investments in core metals.
“The bottom line is that significant investments in green energy minerals like manganese and bauxite are needed to support the much-needed energy transition,” Tsengwa said during Exxaro’s earnings call on Thursday.
She added that failing to invest now in the expected increase in demand for these minerals will jeopardize the long-term energy transition of companies and governments around the world.
Exxaro’s move into green minerals under the leadership of Tsengwa, who became the group’s CEO in March 2021, comes as miners around the world look for sustainable options as part of a strategic transition and diversification into the low-carbon economy.
Exxaro has announced plans to acquire manganese, copper, and bauxite assets as part of its strategic shift away from coal. These minerals are critical in the transition to clean energy.
Tsengwa stated that the present copper, manganese, and bauxite pricing environments are favorable for acquisitions, and that the declining supply in China, the world’s largest producer of and market for bauxite, creates an opportunity for new investments to fill the output gap.
“The long-term fundamentals of these three selected commodities remain appealing, and we remain committed to pursuing acquisitions,” she said.
Exxaro reported a 26-percent increase in headline earnings, the primary profit measure in South Africa, at the end of the first half of 2022, driven by higher coal prices, which saw its revenue rise from R15.14 billion ($889.5 million) to R22.33 billion ($1.31 billion) during the half-year period.
The South African miner expects targeted non-coal assets to generate the equivalent of 30 percent of its 2021 coal earnings of R10.7 billion ($630 million) by 2026 in line with its strategic diversification plans.
