Mineral sands review

Exxaro’s base metals business encompasses a 50,04% interest in the Rosh Pinah zinc and lead mine in southern Namibia, the Zincor refinery in Gauteng, an effective 22% interest in the Chifeng zinc refinery in Inner Mongolia, China, and a 26% interest in Black Mountain Mining (Pty) Limited (Black Mountain).

Lead and zinc concentrate production at the Rosh Pinah mine was in line with 2008, with lead concentrate exports 14% lower than 2008.

Production of zinc metal at the Zincor refinery of 87kt was 338 tonnes more than in 2008, but adversely affected by downtime on the acid plant as well as the disruption caused by the explosion in September 2009. Domestic zinc metal sales were in line with 2008.

The average zinc price for 2009 of USD1 658 is 12% lower than in 2008 and only partially offset by the slightly weaker local currency.

Production at the Chifeng refinery (China) was in line with 2008. Equity-accounted income from this operation increased by R17 million to R13 millionbase metals after a R4 million loss in 2008, mainly due to reduced production costs and a reduction in the rates of environmental duties paid.

Exxaro’s 26% share in Black Mountain, acquired in the last quarter of 2008, contributed R123 million to equity income due mainly to increased sales volumes.

The prospects for zinc are referred to in the chief executive officer and are further elaborated on in the Commodity review.

Following the strategic decisions taken during the last quarter of 2009, the focus in the base metals commodity has been updated to:

• secure a viable long-term quality feedstock supply for Zincor
• quantify the upside life-of-mine potential at Rosh Pinah
• optimise the assets for divestment.

Activities in the financial year ahead will focus on approaching potential suitors in the second half.