Johannesburg, South Africa — MININGREVIEW.COM — 03 December 2009 – Diversified resources group Exxaro Resources Limited (Exxaro) “’ the operator of South Africa’s only zinc refinery “’ has completed a review of its existing business, commodity portfolio and growth pipeline, and has decided to ultimately divest from its zinc assets.
In a statement issued here, the company said the review had been undertaken against the background of the current economic climate and the need to align existing resources and cost structures with a prioritised commodity strategy best positioned to release optimal value for all stakeholders.
Exxaro confirmed that it planned to reconfigure the group’s current portfolio of zinc assets which included the Zincor refinery in Springs; a 50.04% interest in the Rosh Pinah zinc and lead mine in Namibia; a 26% interest in Black Mountain Mining (Pty) Ltd which owns the Black Mountain zinc and lead mine and the Gamsberg zinc project in the Northern Cape; and an effective 22% interest in the Chifeng zinc smelter in China.
The statement added that, as a result of the impact of the current economic climate, commitments to large capital projects as well as the current medium-term outlook of the mineral sands industry, the group had decided not to proceed with the planned development of the Fairbreeze mineral sands mine in KwaZulu-Natal. It would accordingly plan for the closure of the KZN Sands operations during the next five years.
This decision not to develop the Fairbreeze mine would necessitate a review of the carrying value of the KZN Sands operation as at 31 December 2009 which would in all probability result in a significant impairment of the carrying value of the asset by up to R1 500 million.
“We have undertaken a thorough review and prioritisation of our capital expenditure and project pipeline to optimally position the group in the current economic climate,” said Exxaro chief executive officer Sipho Nkosi.
“The latest measures provide a balance between our commodity and project portfolios and our longer-term growth aspirations. Our ongoing review of the business with particular emphasis on cost and balance sheet structures will ensure that we remain optimally positioned to meet all stakeholder expectations,” he added.
Caption, Pic 1: Stripping of cathode zinc.