NOMBASA TSENGWA: Why Exxaro supports the SA investment conference

In 2018 SA found itself in a challenging period, which saw the economy shrink by 2.6% in the first quarter of 2018 and a further 0.4% in the second quarter. Construction, agriculture and mining experienced the largest shrinkage. Mining activity fell by 1.7%. Many companies were hit by this economic downfall. Amid that challenging period Exxaro held steadfast to its intent to power possibility and purpose, and maintained its R20bn commitment to grow and expand its coal business.

Since then, we have seen how SA business and government have collaborated to ensure that our country’s economic fundamentals become resilient, and that we continue to show the world that SA is open for business despite the setback caused by the outbreak of Covid-19 two years ago. Despite these challenges, our government has continued to be rightly resolute in attracting investment to SA to realise the national goal of economic reconstruction and recovery of our economy.

Exxaro fully supports government’s drive to attract investments that will reignite the cycle of economic activity, employment and consumer demand that can grow the economy. Through our investment pledge at the fourth SA investment conference we aim to significantly contribute to our national goals of socioeconomic development, as they create sustainable jobs and the opportunity for skills development and training.

The conference is part of government’s drive to attract R1.2-trillion investment over five years. It draws investors, industry players and other stakeholders to help the country unlock its potential and create inclusive and sustainable economic growth. Started in 2018, the conference has already attracted R770bn in commitments across a wide range of economic sectors, including energy, infrastructure, telecommunications and pharmaceutical sectors.

This year’s conference continues to provide a platform for the government and business to collaborate and showcase SA’s investment qualities. It also affords the government the opportunity to update investors and stakeholders about the country’s economic reconstruction and recovery plan after the devastating impact of Covid-19, and to report back on the progress of previous commitments.

Indeed, with its diversified economy and world-class infrastructure, SA remains a key economic hub and a strategic partner to the rest of Africa in relation to access to the various markets and business opportunities, including tourism. Our country is tied to the region through partnerships such as the Southern African Development Community, the Southern African Customs Union and the African Continental Free Trade Area. Against this backdrop we as a company are fully aware that our prosperity as a country is linked to our continent; we cannot thrive alone.

A shared vision for SA and the region

As a company we are committed to joining forces with the government and other stakeholders to build on the current economic framework under the shared vision to achieve robust socioeconomic development for our people. We are always seeking to be a catalyst and force for national and regional development.

For this reason, in 2019 during the second investment conference, we pledged R20bn to President Cyril Ramaphosa, to continue to invest into the national economy. It was our way of playing our part in the rejuvenation of our country’s economy. This audacious commitment was geared towards the development of the thermal coal mining operations investments in Limpopo and Mpumalanga provinces. The investment was being injected into the industry over a three-year period.

Exxaro’s R20bn commitment represents more than 1% of the R1.2-trillion government aims to attract into the country. Our company’s project capital is split in half between developments at and around our flagship Grootegeluk mine in Limpopo and various projects across our mining operations in Mpumalanga.

To date, Exxaro has spent R17bn in building several brownfield and greenfield mining projects, including R3.3bn towards its Belfast Coal Mine — a first-of-its kind digital and connected mine in SA — and R5.3bn towards expanding thermal coal export volumes at the company’s flagship operation in the Waterberg region of Limpopo.

For the most part, Exxaro’s investment used local suppliers from our mining communities, with 98% of our capital spend being on SA suppliers. These investment projects have created about 10,000 direct and indirect employment opportunities. The balance of the expenditure is continuing in partnership with Eskom for the expansion of the Matla mine, which supplies Matla power station.

Towards a greener future

Exxaro has built an exceptional coal business that has delivered unrivalled value to all stakeholders. It is the cornerstone that has driven the value creation for our stakeholders through reliable supply of coal for electricity generation, continued employment of close to 20,000 people, and providing economic opportunities to SMMEs and other large suppliers. It will remain an integral part of both our newly adopted sustainable growth and impact strategy, and a driver of value going into the future.

With that as the primary focus, our reality as a business is that coal as an energy source carries a social and environmental burden on society. And with the global focus on climate change and our own aspiration to contribute positively and achieve carbon neutrality by 2050, this has emphasised the need to transition in a responsible manner into a low-carbon economy. Within this context we have long understood the need to balance the country’s socioeconomic development, which relies on coal-generated power, with the need to support the transition towards a low-carbon economy to reduce carbon emissions and the harmful effects of climate change.

Our historic vision to become a renewable energy pioneer in SA was evident as far back as 2009, culminating in our investment in Cennergi, which was then a 50-50 joint venture with Tata Power. Cennergi established itself in the local renewable energy sector in 2012 and commissioned two wind projects in the Eastern Cape in 2016: Amakhala Emoyeni wind farm near Bedford (134MW) and Tsitsikamma Community wind farm (95MW). These projects now contribute 229MW of renewable energy to the national grid.

The acquisition of Tata’s 50% interest in Cennergi resulted in Exxaro assuming 100% ownership of Cennergi effectively April 2020. Through Cennergi we not only serve an expanding renewable energy market, but also strive to build real value for our people, the environment, economy and our shareholders. To this end we entered into a memorandum of understanding with Eskom and Seriti in 2021 that will see us developing renewable energy projects to lower the carbon footprint at their operations. 

• Dr Tsengwa is Exxaro Resources CEO designate.