Coal giant Exxaro to halt investment in new thermal coal

South African coal mining giant Exxaro says it will halt investment in new thermal coal assets. The company exports coal as well as supply state utility Eskom’s power plants with coal for domestic power generation. The company is embarking on a trajectory to become carbon neutral by 2050, CEO Mxolisi Mgojo told delegates during the virtual Mining Indaba on Tuesday. Mgogo says the company will continue to supply thermal coal to Eskom’s Medupi and Matimba power stations in line with existing supply contracts.

We are not investing more in thermal coal

Exxaro CEO Mxolisi Mgojo

Mgojo expressed concern over the placement of future coal assets into new hands citing that not everyone will “treat the environment and other ESG aspects responsibly”.

“As we come to the end of life of our other coal reserves, we will not be building any new ones,” Mgojo said during an environmental, social and governance- (ESG-) focused panel discussion

Exxaro investing in renewables

Exxaro last year acquired the remaining 50pc shareholding of its renewable energy independent power producer Cennergi that it co-owned with indian firm Tata. The 100% acquisition of Cennergi by Exxaro signals the company’s intention to diversify into sustainable energy. The mining giant says the acquisition was aligned to its response to “increasing negative sentiment towards coal-based electricity generation”.

“We understand that we are a fossil fuel company and we are migrating to a whole new Sustainable Development Goal where we intend to drive the renewable part of the future, [while simultaneously] managing the balance between the current environment and the communities we operate in,” Mxolisi Mgojo commented.

Exxaro produced 44.9mn t of thermal coal in 2020. As part of its response to climate change, the firm aims to reduce its coal resources by 22pc and has committed to being carbon neutral by 2050.

South Africa is the 14th biggest greenhouse gas emitter in the world. The country gets most of its power from coal-fired power stations run by Eskom, but plans to move towards a more diversified mix of generation sources.