20 August 2010 – Exxaro Resources Ltd., a coal miner in South Africa, said plans to list its energy unit are at a “very advanced” stage as it seeks funds to pursue projects in renewable power and gas.
“Let’s create this company with other investors because there’s lots of them that are interested,” Sipho Nkosi, chief executive officer of the Pretoria-based company, said in an interview. Energy projects “guzzle” cash and it wouldn’t be “prudent” to keep them on Exxaro’s balance sheet, he said.
South Africa is investing 460 billion rand ($63.6 billion) in expanding power-generation capacity to avoid a repeat of blackouts in 2008 that caused mines and smelters to shut down. Eskom Holdings Ltd., the utility that provides 95 percent of the country’s electricity needs, has called for privatesector participation as it struggles to meet growing demand.
Exxaro expects a return on shareholders’ investment in the energy unit of as much as 10 percent in the first five years, Nkosi said. “The plans are very, very advanced; I’d say to you watch this space,” he said.
Exxaro, which supplies Eskom with thermal coal, now has its own power and gas projects and will this month complete an initial study into a solar plant in the north of South Africa. It also plans to install a second tower for a 40-megawatt wind farm on the west coast this year.
Exxaro declined as much as 3.2 percent to 113.95 rand in Johannesburg trading, and was at 114 rand as of 4:12 p.m. local time, valuing the company at 40.8 billion rand.
In coal, Exxaro’s biggest business, Nkosi is expanding production, while considering new iron ore ventures.
“We have identified a couple of projects now; they are in the process of being evaluated in South America, the continent of Africa and Australia,” Nkosi said. Exxaro has operations in South Africa, Namibia and China, according to its website.