Exxaro puts Congo Republic iron ore project funding on hold

Reuters

JOHANNESBURG (Reuters) - South African mining group Exxaro said on Thursday it will not allocate more funds for its iron ore project in the Republic of Congo until it finalises agreements on the usage of rail and port facilities when production starts.

Exxaro, which acquired the Mayoko project in 2012 as part of a takeover of Africa Iron, has already spent 2 billion rand on the project, part of a trend where South African mining companies are investing elsewhere in Africa.

The company has so far secured a mining licence and signed memorandum of understandings with the Republic of Congo's rail and port authorities. But there are no agreements yet on how the ore can be transported on the railway and how it will be handled at the port.

"No further funds have been allocated to this project until we receive all the definite agreements," finance director Wim de Klerk said during a presentation of Exxaro's annual results.

"Our board will then have the opportunity to evaluate the final agreements, the impact on the project and what it will do to our balance sheet going forward."

Exxaro is South Africa's second-largest coal producer with interests in iron ore and base metals.

The company has several expansion projects in the works and has been looking for more growth opportunities, including the South African coal assets of French oil company Total, which are up for sale.

"If Total is an opportunity, we will look at that and many other projects that are there," Chief Executive Sipho Nkosi said. He said the company was also looking for opportunities in Mozambique.

Exxaro reported a slight rise in full-year earnings on Thursday, helped by a strong performance in its coal business.

It said headline earnings for the year were 14.63 rand, up 4 percent. Headline EPS, the main profit gauge in South Africa, strip out certain one-time items.

The company declared a final dividend of 315 cents, bringing total the dividend to 550 cents, a rise of 10 percent.

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