This audio is brought to you by Wearcheck, your condition monitoring specialist.

Group wind power generation last year increased by 8% and the Lephalale solar power project is on its way to being operational in the first quarter of next year, Exxaro CE Dr Nombasa Tsengwa highlighted during the company's presentation of double-dividend 2023 results.

The increased wind performance resulted in 727 GWh of high-margin of green electricity being generated into the market at a high earnings before interest tax depreciation and amortisation (Ebitda) margin - and, were it not for a fault that occurred on the distribution network of State-owned power utility Eskom, there would have been 15 GWh more.

The 2023 Ebitda margin or the energy business was 80% for the second consecutive year, emphasising the stability of the renewable energy business.

Additional good news on the climate change mitigation front is that the 68 MW Lephalale solar power project under construction is poised to provide Exxaro's Grootegeluk coal mine with 176 GWh/y of green energy in the first quarter of 2025 - earlier than the operational date reported by Mining Weekly in a previous report.

Regarding wind energy, Exxaro FD Riaan Koppeschaar pointed out that the project financing of R4.3-billion for the Cennergi wind farms - which will be fully settled in 2031 and which have no recourse to the Exxaro balance sheet - are hedged through interest rate swops at an effective interest rate of 12.8%.

Koppeschaar also noted that hedge accounting is also applied to the Lephalale solar project, which ensures limited volatility on the profit-and-loss account.

The empowered coal, energy, and ferrous-linked company declared a final dividend of R10.10 a share, which is roughly R3.4-billion, and drew loud applause when it announced a special dividend of R5.72 a share, which is about R2-billion as well. Exxaro's shareholder distribution has totalled more than R45-billion over five years.

Exxaro reported its second highest Ebitda performance of R13.4-billion for the financial year ended December 31, despite lower coal export prices and reduced domestic and export sales volumes of coal. Coal revenue decreased 18% to R37-million and coal Ebitda decreased by 36%.

"We remain committed to our sustainable growth and impact strategy as we transition towards becoming a more diversified business," Tsengwa said. (Also watch attached Creamer Media video.)

One of Exxaro's strategic priorities is to grow its energy business and become carbon neutral by 2050, while integrating environmental social governance (ESG).

"We continue to benchmark above our peers on global ESG best practice," Tsengwa revealed.

The R1.6-billion Lephalale solar photovoltaic power plant will provide Exxaro with a 27% reduction in Scope 2 emissions, carbon intensity has been reduced by 20% and a memorandum of understanding has been signed with the Council of Geosciences to explore carbon capture usage and storage to mitigate difficult-to-abate carbon emissions.

'WONDERFUL MARKET'

During the media briefing, Exxaro Energy MD Leon Groenewald provided additional insight into the renewables business in response to Mining Weekly's questions.

Regarding the Lephalale solar power, he said: "Our aim is to be operational in the first quarter of next year and it will help us, firstly for us as a business, to make some decent money, but also saving some 27% of Scope 2 emissions, and then making a healthy dent in the Eskom monthly account.

"We think the renewables market is quite healthy currently, both for organic and inorganic opportunities, and we are pursuing both," he said, amid the current request for information (RFI) environment.

"We're building a pipeline to participate in the RFIs that are being issued and we are in the market and awaiting feedback on some of these processes, so we're quite bullish.

"On the merger and acquisition front, we're active in most of data rooms, and the moment you're in a data room, the confidentiali...