Johannesburg - Listed diversified miner Exxaro Resources has unveiled details of a new black economic empowerment (BEE) scheme that will result in a new BEE entity owning 30 percent of the group.
When it was established in November 2006, BEE entity, Main Street 333 (MS333) became Exxaro’s controlling BEE shareholder. MS333 currently owns 50.19 percent of Exxaro. Former Exxaro chief executive Sipho Nkosi and current chief executive Mxolisi Mgojo are shareholders in MS333.
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Under the BEE deal, MS333 was obliged to hold more than 50 percent of its shares up to November 28 this year.
“A new special purpose vehicle, NewBEECo, will be incorporated for the purpose of being the new empowerment vehicle for Exxaro. It is the intention that NewBEECo will ultimately own 30 percent of the Exxaro shares,” Exxaro said.
Exxaro said that all the direct and indirect shareholders of MS333 would be invited to participate in the new BEE transaction by reinvesting their shares received from the unwinding process. It said the state-owned Industrial Development Corporation (IDC), which currently owns 15 percent of MS333 has agreed to invest in the new empowerment scheme.
According to Exxaro, the new BEE scheme would consist of a newly-formed special purpose vehicle to house both the IDC and the MS333 reinvestment. The special purpose vehicle will own 75.8 percent and the IDC will own 24.2 percent of the new BEE entity.
Exxaro committed to proceed with the scheme notwithstanding uncertainty around BEE in the mining sector. “Since inception, Exxaro has grown into one of the largest black-controlled companies in the South African mining sector. Exxaro is aware of the current uncertainty around the legislative requirements for BEE in the South African mining sector and specifically the uncertainty created by the current court process to determine the legal status of the “once empowered, always empowered” principle.
“However, the Independent Board Sub-Committee is of the opinion that Exxaro’s empowerment status is a significant part of its strategy and provides a competitive advantage. Remaining empowered is an essential part of Exxaro’s strategy to not only maintain sustainable relationships with critical stakeholders and ensure ongoing compliance with specific customer requirements, but also to further the imperative for transformation.”
Meanwhile, Exxaro finance director Riaan Koppeschaar said yesterday that thermal coal production from commercial mines was expected to increase 6 percent as a result of the inclusion of Exxaro Coal Central compared to four months in the 2015 financial year.
Exxaro said export sales volumes were expected to increase by 31 percent mainly because of the inclusion of Exxaro Coal Central and exports of Mafube power station coal which was previously sold to Eskom. He said sales to Eskom were expected to decrease by 8 percent largely as a result of lower offtake from Leeuwpan mine where the contract to supply Eskom was not extended, coupled with lower offtake from Grootegeluk.
BUSINESS REPORT