The black economic empowerment company said its withdrawal followed a review and prioritisation of its spending and project pipeline following the global economic downturn.

“Exxaro has reduced its project pipeline and will focus on the successful implementation of committed and board-approved projects, an example being the expansion of the Grootegeluk mine to supply Eskom’s Medupi power station,” Exxaro chief executive Sipho Nkosi said.

Igoda, an empowerment venture between Eyesizwe Coal (now Exxaro) and Sasol, was formed in 2006 and was part of Sasol Mining’s broad-based empowerment strategy.

“While it is disappointing that the partnership with Igoda Coal is no longer viable for Exxaro, we understand the impact of the tough market conditions and recognise many companies are facing difficult decisions regarding their future investment options,” Sasol managing director Hermann Wenhold said.

Exxaro is the fourth-largest South African coal producer with capacity of 45 million tonnes per annum.

Sasol Mining produces about 40Mt of saleable coal per year.