Things are turning around. Cennergi becomes the property of Exxaro Resources, a South African mining company specialising in coal production. Exxaro Resources, which already held 50% of its joint venture, Cennergi, a company specialising in renewable energy production, has purchased the remaining 50% of the shares. This acquisition was announced on Tuesday, September 17, 2019 by Exxaro’s management. The other half of the shares were held by a subsidiary of the Indian company Tata Power. By investing $105 million, Exxaro Resources is now the sole owner of Cennergi. This also gives the company full power over the Tsitsikamma (95 MW) and Aamakhala Emoyeni (134 MW) wind farms. Cennergi had won tenders for the operation of these parks in 2012. With this share buyback, Exxaro Resources is strengthening its capabilities to better meet Eskom’s expectations.
In addition, the investment allows Exxaro to better adjust to the recently enacted carbon tax law. Companies in South Africa now have to pay $8.34 per tonne of carbon emitted. The law came into force on June 1, 2019. According to Exxaro’s Executive Director, Mxolisi Mgojo (cited by miningmx.com), the acquisition of these assets allows the company to “consolidate its interests in renewable energy, at a time when the nation needs energy security in South Africa, in response to negative sentiment towards coal-fired power generation”.
The possibility of a gradual phase-out of coal had already been considered by the Institute for Energy Economics and Financial Analysis (IEEFA) for another reason. In a recently published report, the Institute announced that “South African coal exporters are likely to seek other markets as growth opportunities in major export destinations dry up”. A new day could dawn in South Africa, which in 2017 was the seventh-largest coal producer in the world. To be continued…
Luchelle Feukeng