Workers own the mine

Mineral Resources Minister Gwede Mantashe, right, and the department’s director-general, Thabo Mokoena, at Exxaro Arnot Colliery. Pictures: Ndileka Lujabe
Mineral Resources Minister Gwede Mantashe, right, and the department’s director-general, Thabo Mokoena, at Exxaro Arnot Colliery. Pictures: Ndileka Lujabe

For the first time in the history of South Africa, former mine employees have become owners of a mine they used to work at.

Exxaro Resources, one of the largest black-owned mining companies in the country, has decided to hand over full ownership of Arnot coal mine, situated between Middelburg and Carolina in Mpumalanga, to its former employees and nearby communities.

The company acquired Arnot from Eyesizwe Coal following its creation in 2006. Arnot had a 40-year coal-supply agreement with Eskom for the nearby Arnot Power Station. The agreement lapsed on December 31 2015, leading to the closure of the mine and retrenchment of employees.

A 2016 prefeasibility study on the commercial viability of Arnot, however, found that there were still several areas that could be mined. No reserves have been declared because there is no supply agreement in place.

This is a ground-breaking and transaction in South African mining history

The mine’s mineral area is 15 021.21 hectares. Before its closure, the mine’s annual production in 2014 and 2015 was 1.44 million tons and 1.40 million tons, respectively. Arnot has a mining right that will lapse on December 6 2039.

Exxaro spokesperson Tsabeng Nthite said the mine had been transferred to Arnot OpCo, an entity owned by the former employees, communities and Wescoal Holdings.

“This is a ground-breaking and transaction in South African mining history,” said Nthite.

“The transaction embodies the spirit of empowerment and demonstrates Exxaro’s commitment to responsible corporate citizenship.”

She could not, however, say how many employees would benefit, nor could she provide the financial value of the mine.

Mineral Resources and Energy Minister Gwede Mantashe granted the cession of the mining rights of Arnot to Arnot OpCo about eight months ago.

Nthite said Exxaro transferred the mining rights, as well as movable and immovable assets, at no cost to Arnot OpCo. The former employees have been given 50% ownership through Innovators Resources, a trust and private entity. Innovators Resources partnered with Wescoal, which has vast experience in coal mining and is a supplier to domestic and export markets. Wescoal holds a 50% stake through Arnot HoldCo, which has shareholding in Arnot OpCo.

“It is anticipated that production will mostly be supplied to Eskom.

“Arnot mine can potentially deliver coal to the Arnot Power Station by conveyer belt, resulting in a cost-competitive advantage,” Nthite said.

Attempts to reach Arnot OpCo CEO Bontle Aphane were unsuccessful.

In the far eastern part of Mpumalanga, communities near Nkomati Anthracite Mine were given a 16.1% stake in the coal mine in 2018.

The mine is owned by Sentula Mining and the Mpumalanga Economic Growth Agency, a parastatal under the provincial department of finance, economic development and tourism. The deal came about after Sentula Mining secured a R151 million loan from the Industrial Development Corporation to expand its operations.

The agreement quelled tensions between the owners of the mine and the surrounding communities of KwaLugedlane, Matsamo and Mawewe near Komatipoort. Over the years, the communities have accused the mine’s management of overlooking locals when employing staff, degrading their farming land and blasting too close to their houses, causing the walls to crack.

Nkomati Anthracite Mine has been in operation since 2009.

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