Exxaro to expand into nickel and copper

The diversified miner is planning to develop projects in coal, minerals sands, nickel and copper mining and to expand its interests in the iron ore business using both its own cash and money raised from the markets

GROOTEGELUK MINE, South Africa (Reuters) - 

South African diversified miner Exxaro Resources plans to expand into nickel and copper mining in Africa, its Chief Executive Sipho Nkosi said on Friday.

Nkosi said Exxaro would spend its own cash and raise additional capital from banks and seek equity partners to develop projects in coal, minerals sands, nickel and copper mining and to expand its interests in the iron ore business.

"We have taken a view that if there is some opportunity on copper and nickel, we will get involved in that. We have got to go outside South Africa for iron ore, copper and nickel ...it will be within the (Africa) continent," Nkosi said.

Nkosi said the company, which is developing major coal reserves in South Africa's Waterberg area in the Limpopo province, expected the Richards Bay Coal Terminal (RBCT) to double its port capacity within the next few years from an estimated 6.3 million tonnes at the end of 2009.

"Our plans are, probably in the next five-six years, to double that one," Nkosi told Reuters in an interview.

Nkosi said Exxaro, the main supplier of coal to South Africa's power utility Eskom , could spend up to 12 billion rand expanding the Grootegeluk mine to supply coal to Eskom's Medupi plant, which is under construction, by October 2010. .

Nkosi said Exxaro had started discussions to develop the Mafutha coal mine as a joint venture with South Africa's petrochemicals group Sasol, and around R12-13 billion could be spent on the project. .

EXPANSION WITHIN AFRICA

Nkosi said Exxaro also planned to explore possibilities of mining for coal in Botswana but the project would need to be supported by new rail infrastructure to transport coal.

Exxaro is in talks with Transnet Freight Rail (TFR), the freight arm of South Africa's logistics group Transnet Ltd

for a possible joint venture to expand rail capacity.

"Between ourselves and TFR, we are looking at various permutations," Nkosi said.

Nkosi said Eskom's proposed tariff rise for the next three years would adversely affect mining companies. .

"Companies are going to battle, because it weighs heavily on their cost. May be some partial privatisation of some (Eskom) units should be considered to raise funds for Eskom," Nkosi said.

Exxaro forecast it would supply Eskom with up to 38 million tonnes of coal this year, versus 36 million tonnes last year.

However, its ability to export coal will depend on the rail capacity to the RBCT. .

The port owners had said they would expand its capacity to 91 million tonnes by October, but logistics group Transnet has said it signed contracts with coal producers to rail only up to 70 million tonnes of coal to the port this year.

Exxaro has said it could use private haulers if Transnet is unable to bring all its coal to the port. .

© Thomson Reuters 2009 All rights reserved

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