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Eskom’s biggest coal supplier buys Tata’s clean power stake

Exxaro Resources responds to the rising cost of carbon emissions with its new acquisition.

Exxaro Resources, the biggest coal supplier to South Africa’s state-owned power utility, bought Tata Power’s half of a clean energy joint venture as part of a strategy to make its business environmentally sustainable.

Exxaro will own Cennergi outright after the R1.55 billion ($105 million) deal is concluded, the company said Tuesday in a statement. Assets include two wind farms, which sell renewable power to the South African government in a program started in 2011.

The agreement demonstrates a strategy, by a business founded on coal mining, to make structural changes in response to public concern about the impact of climate change.

While Exxaro anticipates strong demand from power utility Eskom, the company is restructuring its business in response to the rising cost of carbon emissions.

“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 toward coal-based electricity generation,” Chief Executive Officer Mxolisi Mgojo said in the statement.

© 2019 Bloomberg L.P.

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