Cennergi, the wholly owned renewable-energy arm of coal mining company Exxaro and South Africa’s second-largest renewable-energy company, is being deployed to decarbonise the JSE-listed company’s own coal mines.
In addition, Exxaro, through Cennergi, is in discussion with other mining companies to bring them green energy from a mining know-how position and help them on their way to significant decarbonisation.
“We’ve been playing in this decarbonising space as a business from as early as 2009 because the net benefit of decarbonisation that comes about by introducing renewables is the part that really sets us into the next phase of our own decarbonisation strategy,” Exxaro CEO Mxolisi Mgojo explained in a Zoom interview with Engineering News & Mining Weekly.
Exxaro created renewable-energy company Cennergi in 2012 and built two wind farms with a combined capacity of 229 MW in the Eastern Cape in 2016.
In 2019, it acquired 100% of Cennergi, which is taking steps to generate 93 MW of renewable energy for Exxaro’s Grootegeluk, Belfast and Matla coal mines.
The net benefit for Grootegeluk alone is going to be a 70 MW renewable-energy solution, developed by Cennergi on an arm’s-length-based contract.
Grootegeluk will be the offtaker, with Cennergi helping the large Exxaro coal mine to secure electricity security at lower cost on a reduced carbon footprint.
“That renewable-energy solution, on its own, is going to reduce Grootegeluk’s carbon emissions by 35% – just one project. That is the extent with which we are using our energy business to decarbonise our own business,” Mgojo enthused.
Exxaro is offering the same decarbonisation solution to the many other mining companies that are setting out to bring renewable energy into their businesses without the weight of high capital investment but instead signing long-term power purchase agreements.
“We’re talking to those type of mining companies because we understand mining, and we will then be utilising that as an opportunity to further support the decarbonisation of the mining industry, as well as the decarbonation of our country, through the reduction of carbon emissions,” he added.
Exxaro’s decarbonisation strategy is premised on the imperative of global citizens to combat climate change as well as the threat that fossil fuels face as a source of energy going into the future.
In dealing with the energy transition, which is essential in the fight against climate change, the socioeconomic impacts of that transition on communities has to be justly managed.
“It’s about making sure that, in that transition, people are not left behind and that the poor and marginalised don’t become worse off but are also beneficiaries.
“We’re not asking ourselves how long the coal runway is. We’re saying that we cannot determine how long the runway for coal is. But what we can do is we can extract as much value as possible today from our coal assets when we are in this transition and use some of the proceeds not only to give back to the shareholders, but also to ensure that we can start looking at other areas of growth in renewables and other minerals of the future,” Mgojo said.
Exxaro CEO-designate and Minerals MD Dr Nombasa Tsengwa stated during Exxaro’s virtual Capital Markets Day late last month that the company named manganese, bauxite and copper as the minerals that formed part of its decarbonisation strategy.
Tsengwa stated that by investing in operating manganese, bauxite and copper assets, the new minerals business could represent 50% of expected coal earnings before interest, taxes, depreciation and amortisation (Ebitda) within ten years. This expected Ebitda percentage would exclude renewable energy and ferrous metals earnings.
The mission of the minerals business in manganese, bauxite and copper would be “to utilise Exxaro’s mining skills to supply minerals that power a cleaner world . . . and provide our shareholders with superior returns whilst driving decarbonisation ambitions”.
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