EXXARO Resources said on Thursday it had appointed the former Lonmin boss Ben Magara as its new CEO, effective April 1.
Magara, currently a non-executive director at Exxaro, succeeds interim CEO Riaan Koppeschaar, who will return to his former role as finance director. Magara takes over following major instability at Exxaro culminating in the acrimonious resignation of former CEO Nombasa Tsengwa in February.
Magara’s first action was to recommit Exxaro towards its diversification strategy, saying in a statement this morning he would use the group’s coal production “to expand our portfolio towards the critical low-carbon minerals essential for the future”.
“This is in line with our diversification strategy which I have been part of as Exxaro’s non-executive director and investment committee chairman,” he said.
“I believe this strategy will enable us to deliver enhanced value to all our stakeholders while balancing enduring profitability with environmental and social sustainability,” said Magara.
Since leaving Lonmin in 2019 following its sale to Sibanye-Stillwater, Magara founded Africa Mining & Metals Group, a private company focused on battery and precious metals. He also worked in the Democratic Republic of Congo advising in its copperbelt.
He will remain an independent non-executive director at Weir Plc, a FTSE100 company, but will step down from the board of shipping and ports logistics company Grindrod from April where potential conflicts lie with Exxaro’s heavy bulk minerals activities.
Exxaro chairman Geoffrey Qhena said that Magara’s “deep experience as an engineer, mine manager, corporate leader, and listed company CEO” would benefit Exxaro as it “accelerated” its transition into “a diversified minerals and renewable energy solutions business”.
The recommmitment to the diversification strategy, that Tsengwa said last year was in the direction of South African manganese assets, dashes hopes shareholders may have had for a special dividend distribution.
However, the group announced a R1.2bn buy-back programme representing the cash earned in the year under review. Riaan Koppeschaar, interim CEO said in an interview this morning the share buy-back was in terms of having met the firm’s cash buffer of R12bn to R15bn. A share buy-back was conducted in 2021/22.
Exxaro said previously it was setting aside up to R15bn for an acquisition. As of December 31, the group had net cash of R16.3bn (excluding net debt in its energy division), slightly up from R14.8bn at the same point in 2023.
Reporting its full year results for the 12 months ended December, Exxaro Resources said that at R7.3bn (R30.16/share) headline earnings were 36% lower, partly owing to a decline in export coal prices. However, earnings were boosted by a higher dividend from Kumba Iron Ore – up 10% to R3.7bn – despite lower iron ore prices.
Exxaro receives the Kumba dividend by dint of its 20% stake in the underlying operating company Sishen Iron Ore Company (SIOC).
Group Ebitda fell 22% to R10.4bn.
The outcome for shareholders was a final dividend declaration of R8.66/share. This took the total dividend to R16.62/share including the interim declaration of R7.96/share. Exxaro has a dividend policy of passing through its income from SIOC and 2.5 to 3.5x cover.
Exxaro also announced that Eyesizwe, its founding black-owned shareholder, had agreed to waive an option to liquidate some or all of its investments until 2027. This preserves Exxaro’s direct empowerment status at 30.81%.
