South African Coal Miner Plans New Climate Change Strategy

(Bloomberg) -- South Africa’s Exxaro Resources Ltd. said it’s working on a new strategy for its business founded on coal mining amid investor and public concerns about the impact of climate change.

The company said it’s planning “structural changes,” including clean-power initiatives, to make the business sustainable in the long term. In the meantime, Exxaro will extract “as much value as quickly as possible” from the assets it holds, especially thermal coal, Chief Executive Officer Mxolisi Mgojo said on Thursday.

South African businesses are responding to climate change as environmental groups sue the government for not cracking down on pollution from coal-fired power plants operated by Eskom Holdings SOC Ltd. and refineries owned by Sasol Ltd. South Africa introduced a carbon tax this year that will boost costs for the nation’s biggest polluters.

“The cost of insuring your mines is getting more expensive because of your carbon issues,” Mgojo said in an interview in Johannesburg.

The new carbon tax could ultimately reduce output and investment, according to mining lobby Minerals Council South Africa.

Exxaro will look at opportunities for Cennergi (Pty) Ltd., its clean-power joint venture with Tata Power.

Still, over the next few years, demand from the state-owned power utility will remain strong, according to Nombasa Tsengwa, executive head of coal at Exxaro. “Eskom is in need of coal and we’re in discussions with them,” she said.

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Dylan Griffiths, Lynn Thomasson

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