JOHANNESBURG (miningweekly.com) – Global investor sentiment towards South Africa improved significantly in 2024, Exxaro FD Riaan Koppeschaar reported on Tuesday, December 3.

In a pre-close message for the financial year ending December 31, Koppeschaar highlighted the expectation of further positive improvements in investment sentiment towards South Africa on the back of factors including energy and logistical advancement.

“It is anticipated that private investment in renewable energy, increased maintenance by Eskom, a smooth run without loadshedding, and transmission system developments, along with the continuation and acceleration in the implementation of the structural reforms in ports and rail, will result in further reducing energy and logistical constraints and positive improvements in investment sentiment towards South Africa,” the FD of the Johannesburg-listed diversified mining and renewable energy solutions company elaborated in a stock exchange news service announcement accessed by Mining Weekly.

Impressively, Exxaro’s contribution to South Africa’s social upliftment has been elevated considerably at this time of social strain.

Generously, and in the best interests of South Africa, social investments for the ten months to October 31 amounted to R2.4-billion, which is 26% higher than the R1.9-billion spent during the entire 12 months of 2023.

The local procurement spend on small, medium-sized and microenterprises (SMMEs) constituted 75% of that social investment.

Combined, these initiatives have supported 488 SMMEs through local procurement as well as enterprise and supplier development.

A net cash balance of R16-billion (excluding energy net debt) was on hand as at October 31 and the intention is to continue to retain cash of between R12-billion and R15-billion to fund growth.

Fittingly, Exxaro generates clean energy through its wholly owned wind energy company Cennergi, which is forecast to generate 729 GWh of electricity in this financial year (FY), which is up on 727 GWh generated in FY23 and higher than the guided 720 GWh.

Moreover, commercial operation of the 68 MW Lephalale solar project at the Grootegeluk coal mine is anticipated in the first half of 2025.

The project is a significant milestone for Exxaro in its contribution towards the enhanced energy security of Grootegeluk and Lephalale community, decarbonisation of its operations, energy cost savings, and South Africa’s energy transition pathway.

Emphasis has been placed on sourcing local talent for the construction of the renewable-energy facility, which will employ between 300 and 400 individuals at peak.

As a company whose vision is to invest in resources powering a clean world, the R1.56-billion investment will generate 176 GWh/y of clean energy and reduce emissions for 25 years from commissioning.

This project covers a 236-ha development envelope 25 km west of Lephalale in Limpopo. The site is 2 km from the Marapong community settlement and 4 km from Eskom’s Matimba power station, which Exxaro provides with coal.

Going into 2025, Exxaro describes global economic activity as remaining well positioned for a further gradual moderation of consumer price inflation, more accommodative financial conditions, and a continuation of the steady global real gross domestic product growth rates.

With respect to Exxaro's key commodities, the average benchmark API4 RBCT export price for FY24 is set to be $15/t down on the $120/t of FY23.

Weighing on 2024’s iron-ore market and pricing were subdued Chinese economic growth, persistent downturn in the Chinese property market, robust global iron-ore supply, and increasing China port inventories. Following a set of policy announcements by China, the impact on iron-ore and steel demand was not as supportive.

Expected 2024 coal production of 40 013 000 t will be down on the 42 464 000 t of 2023 and likely 2024 coal sales of 39 844 000 t will not match 2023’s higher 40 526 000 t.

Metallurgical sales are expected to increase by 3% compared with FY23, driven by increased demand by domestic end-users.

State rail enterprise Transnet transported 42.1-million tonnes to Richards Bay Coal Terminal from January to October 2024, equivalent to an annualised tempo of 50.51-million tonnes.

The performance from Grootegeluk averaged a low three trains a week compared to Mpumalanga’s export rail performance which averaged eight trains a week for the same period.

With the support of the coal industry, rail performance improved during the year from an annualised tempo of 47-million tonnes to 50.5-million tonnes.

Maintaining assets to enable effective production remains a core Exxaro focus, with prioritisation of investments in projects that have a high impact on business performance.

The Matla Mine 1 Relocation project commenced with construction in August 2020. Eskom has approved all required funding to implement the project. The expected completion date of the Matla life-of-mine project is the first half of 2026

CLIMATE CHANGE RESPONSE STRATEGY IMPLEMENTATION

The now-completed peer review of the draft decarbonisation roadmap and draft Climate Change Transition Action Plan was undertaken to ensure the credibility and application of relevant principles and international frameworks such as the Task Force on Climate-related Financial Disclosures recommendations.

“The review outcomes were positive,” Koppeschaar stated. With recommendations provided on the way forward and further technical information required for the refinement and finalisation, it is envisaged that the roadmap and Climate Change Transition Action Plan will be finalised during the first quarter of next year.

On the climate policy front, Exxaro is following developments on the implementation of the Climate Change Act, which was signed into law by President Cyril Ramaphosa in July, but is not yet operational. A Presidential proclamation to bring it into effect still needs to be issued.

Regarding carbon budget allocation, Exxaro is awaiting feedback from the Department of Forestry, Fisheries and the Environment on the way forward.

Potential National Treasury changes to the carbon tax structure are also being closely followed to ensure risk management and opportunity identification.