By:Miningmx

EXXARO Resources on Tuesday announced an agreement to buy manganese assets in South Africa’s Northern Cape, principally from Ntsimbintle Holdings which owns 50.1% of the 3.4 million ton a year Tshipi Borwa mine.

If consummated, expected to be in early 2026, the transaction will bring the curtain down on Exxaro’s three-year search for asset diversification which has seen the company kick the tyres of copper and vanadium assets, among others.

Exxaro is primarily a coal producer with additional exposure in renewable energy. In its 2024 financial year, the company produced 39.4 million tons of thermal coal.

The purchase consideration is put at R11.67bn in cash but it could be higher or lower depending on whether related parties exercise a combination of tag-along and pre-emptive rights. One of these related parties is the Samancor Joint Venture owned by South32 (60%) and Anglo American (40%).

The deal basics are that Exxaro is buying 74% of Ntsimbintle Holdings, a company in which entrepreneur Sakkie Macozoma’s Safika Holdings has a 39.7% stake. But the deal also includes 19.99% of Jupiter Mines, a company listed on the Australian Securities Exchange which is a 49.9% joint venture partner of Ntsimbintle in Tshipi Borwa.

Other acquisitions in the package are Ntsimbintle Marketing, ownership of which will give Exxaro control over the destination of Tshipi’s manganese, 51% of Mokala Manganese in which Glencore has a tag-along right, and 9% of Hotazel Manganese in which Samancor is the main beneficiary.

Depending on whether these pre-empts or tag-along rights are exercised, the purchase price for Exxaro could range from between R9bn and R14.64bn.

Partly driven by sky-rocketing coal prices between 2022 and 2023, a result of the energy security concerns following Russia’s invasion of Ukraine, Exxaro built a cash pile of just in excess of R15bn, primarily for a deal.

In addition to Ntsimbintle Holdings, the manganese assets are also being purchased from OMH (Mauritius) Corp., a subsidiary of ASX-listed OM Holdings, a geographically diversified ferroalloys company.

Exxaro said it opted for manganese owing to the significant resource base in South Africa’s Northern Cape (representing about 80% of world resources), while the company also had experience in the operation of large open pit mines.

It also said manganese was integral to the production of steel “and is an emerging key essential ingredient in the green economy”.

The annoncement represents a major boost for Ben Magara who took over as CEO of Exxaro in April. This was following a distracting period for the company in which former CEO Nombasa Tsengwa was suspended, eventually resigning in January.