Exxaro Resources has concluded a 17-year coal supply agreement with Eskom for the Matla power station, a deal that replaces an original contract dating back to 1983 and secures a revenue stream for the diversified miner until November 2043. The agreement, effective from 1 April, commits Exxaro’s wholly owned subsidiary, Exxaro Coal Mpumalanga, to supply approximately 9.3 million tonnes of coal per annum from Matla Colliery to the power plant. The original supply agreement expired at the end of June 2023, leaving a gap that the new long-term contract now fills.
The deal is underpinned by the R5.2 billion Matla Life-of-Mine expansion project, which Exxaro is executing on behalf of Eskom. According to the company, the project is on track for completion in the first half of the 2026 financial year, a timeline that aligns with the contractual supply commitments. Exxaro also secured key regulatory approvals in 2025, including the renewal of its Mining Right and an Integrated Water-use Licence, both of which are necessary for compliant mining operations and long-term operational continuity.
The agreement comes at a time when Exxaro is navigating lower coal prices while maintaining shareholder returns. The company increased its annual dividend by 15% to R10 per share as a final payout, bringing total distributions to R18.43 per share, or R6.3 billion. This followed a 7% decline in full-year profit to R7.1 billion and a 2% easing of earnings before interest, tax, depreciation and amortisation to R10.2 billion. Coal output rose 1% to 39.9 million tonnes, with sales increasing by the same margin to 39.6 million tonnes.
READ – Exxaro Rewards Shareholders as it Pivots from Coal to Manganese and Renewables
Chief executive Ben Magara has positioned Exxaro’s next growth phase around a diversified portfolio that retains a strong coal base while expanding into manganese, renewable energy and selective exploration. The company recently completed the acquisition of manganese assets linked to the Tshipi Borwa mine in the Northern Cape, which Magara described as the fourth-largest manganese mine in the world, with a resource exceeding 180 million tonnes. He has framed manganese as an energy mineral central to the company’s growth appetite.
Despite the diversification push, Magara has maintained that coal will remain a significant contributor to the energy mix beyond 2050, citing its role in providing baseload power domestically and globally. He pointed to Exxaro’s position in the Waterberg, where the company controls 9 billion tonnes of coal and operates Grootegeluk, described as the world’s largest beneficiation complex. The company is also pursuing life-extension opportunities across its existing coal mines, identifying deposits beyond current boundaries that can be developed using existing infrastructure.
The Matla deal secures a long-term outlet for a substantial portion of Exxaro’s thermal coal production at a time when Eskom’s generation fleet remains heavily reliant on coal-fired power. The utility has been working to improve the reliability of its plants, with Matla being one of the larger stations in Mpumalanga. For Exxaro, the agreement provides predictable volume commitments that support the investment case for the Matla expansion project and the broader colliery operations.