Johannesburg — South African coal company Exxaro Resources said it will seek to extract value from the carbon-intensive fossil fuel while it still can, but for the future is focused on finding opportunities in greener energy.
South Africa – the continent’s biggest greenhouse gas emitter – gets the vast majority of its energy from coal-fired power stations run by state-owned power utility Eskom and Exxaro is a supplier to Eskom.
The government is seeking to address a need to maintain power supplies and avoid overly abrupt change, while addressing pressure to shift to lower carbon fuel because of demands to limit greenhouse gas emissions and reluctance by investors to put money into assets that could become stranded.
Exxaro, which exports coal as well as supplying it for domestic power generation, began seeking investment opportunities in water, food security and energy in 2017.
It said on Thursday, it was opting for an energy focus.
“There is still a lot of value in the coal assets. We want to extract that as early as possible so that we do not have stranded assets,” Chief Executive Officer Mxolisi Mgojo said, but for the future he said the company would focus on new energy opportunities.
“If we don’t take the climate change issue very seriously and see it as part of our responsibility to respond to it in a very effective and impactful way again, then God help us,” Mgojo said.
The company already has a joint venture with Tata Power Company Limited investment in the Cennergi wind project.
That has generated 45 million rand ($2.73 million) in income for its 2019 financial year and Exxaro has agreed to buy the remaining 50% share for 1.550 billion rand.
Exxaro reported a 13% rise in annual earnings as gains from its stake in Sishen Iron Ore offset lower earnings from coal.
Coal earnings were hit by factors including lower demand from Eskom in part because of a delayed power plant project, and as the seaborne market was oversupplied.
Mgojo said the company was seeking further opportunities in renewable energy and had a team that was drawing up a new growth strategy, but did not provide financial or other details.
The miner declared a final dividend of 566 cents per share compared with 555 cents per share a year earlier. ($1 = 16.3696 rand)
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