Exxaro to take full ownership of renewables company Cennergi

SOUTH AFRICA– Exxaro Resources a coal and heavy minerals mining company in South Africa, has concluded an agreement with Khopoli Investments, a subsidiary of Tata Power Company, to acquire Khopoli’s 50% shareholding in independent wind power producer Cennergi for R1.55-billion.

Exxaro which is also the largest supplier of coal to Eskom, has reached agreement to take a controlling stake in windpower producer Cennergi for R1.55bn.

Exxaro holds a 50% stake in Cennergi, which it established in a joint venture with India-based Tata power in 2012. After the deal, which is still subject to approval, Exxaro will hold 100% of the company which is in line with Exxaro’s ambitions of growing its presence in the energy sector.

Cennergi owns two wind farms in the Eastern Cape: the Amakhala Emoyeni Wind Farm near Cookhouse (134 Megawatts) and the Tsitsikamma Community Wind Farm (95 Megawatts). The installations were originally bid as part of Window 2 of the Department of Energy’s Renewable Energy Independent Power Producer Procurement Programme.

Cennergi had R4.9bn in debt as of December 2019 repayable over 15 years as of 2016. However, the debt would be excluded from Exxaro’s debt covenant ratios as it was limited recourse funding with no additional security from the company, it said.

Exxaro is seeking to diversify its interest away from coal, at a time when fossil-fuel based energy is facing disinvestment pressure from global asset managers.

In a statement, Exxaro said the deal is part of its ambition to grow its presence in the energy sector.

“As a South African-based company, Exxaro is pleased with this opportunity to consolidate its interest in this renewable energy asset at a time in South Africa where we need energy security as we respond to increasing negative sentiment towards coal-based electricity generation,” said Mxolisi Mgojo, CEO of Exxaro Resources.

“The collaboration between Exxaro and Tata Power over the past seven years to develop these projects to their current status has been commendable and outstanding success in South Africa’s implementation of its energy strategy.” He added.

Exxaro has also embarked on a strategy to accelerate organic and Greenfields development of its coal resources. Firstly, the aim is to capitalise on potential coal shortages as other districts globally find it increasingly difficult to commission new mines; secondly, is the threat that coal-fired power generation will be engineered out to a relatively minor role.

News Reporter

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