Exxaro Resources will exit a mining venture with Vedanta Resources, which announced a $782 million investment in its new Gamsberg project in the Northern Cape, South Africa.
Exxaro was bound by an agreement to remain a 26% shareholder in London-based Vedanta’s Gamsberg zinc project in the country until at least 2016, Hilton Atkinson, a spokesperson for the company, said on Tuesday.
However, Atkinson said that Exxaro would seek to dispose of the stake later, reported Bloomberg.
The Gamsberg mine, at Aggeneys in the Northern Cape, will cost $630 million and produce 250 000 tonnes a year of zinc in concentrate.
Vedanta would build the mine in the Northern Cape in an investment that includes a $152 million refinery for the steel-making ingredient in neighbouring Namibia, Vedanta announced this month.
The company needs a venture partner such as Exxaro, which is controlled by black South Africans, to meet the conditions of its mining permit, a requirement meant to narrow economic disparities created by apartheid rule, according to reports.
“Exxaro divested from its zinc portfolio over the past two years,” Atkinson said, referring to the sale of the Rosh Pinah mine in Namibia and the closing of its Zincor refinery in South Africa. “Our ultimate strategy is still to exit from zinc” completely, he said.
Gamsberg represents a long-term aspiration for Vedanta Group in Southern Africa.
Group CEO Tom Albanese earlier this month said the output from the Gamsberg operation in the Northern Cape will make the Southern African region one of the most important suppliers of refined zinc globally.
“That will also result in these operations forming one of the cornerstones of our operations in Africa and will partially offset the loss of volume resulting from the end-of-life of mine at Lisheen, in Ireland,” stated Albanese.