Dineo Matomela
Exxaro Resources would sell its mineral sands assets to Tronox in exchange for a 38.5 percent stake in a new venture, Wim de Klerk, the finance director at Exxaro, said yesterday.
The proposed transaction would create New Tronox as an Australian-registered holding company, expected to be listed on the New York Stock Exchange.
It would be an integrated mine-to-processing-to-pigment business with a significant asset base that was “expandable and low on the cost curve”, he said.
Exxaro chief executive Sipho Nkosi noted: “An integrated model has always been part of Exxaro’s mineral sands strategy.
“Exxaro will bring to this transaction its long-life mineral resources, mining and processing expertise, world-class direct-current furnace ilmenite smelting technology, strong minerals research development capabilities and proprietary slimes handling capacity.”
US-based Tronox, the fifth-largest producer of titanium dioxide pigment, would hold the rest of New Tronox, which would acquire Exxaro’s 50 percent interest in the Tiwest joint venture with Tronox in Western Australia and 74 percent of its wholly owned KZN Sands and Namakwa Sands operations. Exxaro will retain a 26 percent stake in the two local operations to comply with empowerment rules.
The partnership is a vote of confidence in South Africa after investor confidence in the country fell in August to its lowest level since the second quarter of 2010, according to Maxim-ETM’s investor confidence index.
Dennis Wanlass, the chief executive of Tronox, said: “We are pleased to expand our footprint into South Africa and have a great deal of confidence in the business environment created by the South African government.”
Exxaro shed 2.11 percent to R175.22 on the JSE yesterday.