ADMINISTRATION
Secretary and registered offi ce
MS Viljoen
Exxaro Resources Limited
Roger Dyason Road
Pretoria West
Pretoria
0183
PO Box 9229
Pretoria
0001
South Africa
Telephone +27 12 307 5000
Company registration number: 2000/011076/06
JSE share code: EXX
ISIN code: ZAE000084992
Auditors
Deloitte & Touche
Private Bag X6
Gallo Manor
2052
Commercial bankers
Absa Bank Limited
SHAREHOLDERS’ DIARY
FINANCIAL YEAR-END
ANNUAL GENERAL MEETING
REPORTS AND ACCOUNTS
Announcement of annual results
Annual report
Interim report for the half-year ending 30 June
DISTRIBUTION
Final dividend declaration
Payment
Interim dividend declaration
Payment
Corporate law advisers
CLS Consulting Services (Pty) Limited
United States ADR Depositary
The Bank of New York
101 Barclay Street
New York NY 10286
United States of America
Sponsor
Deutsche Securities (SA) (Pty) Limited
3 Exchange Square
87 Maude Street
Sandton
2196
Registrars
Computershare Investor Services (Pty) Limited
Ground Floor, 70 Marshall Street
Johannesburg
2001
PO Box 61051
Marshalltown
2107
31 December
April/May
February
March
August
February
March/April
August
September
The cover of this document is printed on Trucard Recycled 330gsm. It contains 50% postconsumer de-inked pulp, is FSC certifi ed and carries the NAPM
recycled mark. The body of this document is printed on Cartridge 120gsm. A minimum of 30% fi bre used in making this paper comes from well-managed forests
independently certifi ed according to the rules of the Forest Stewardship Council.
Carbon offset
The carbon footprint arising from the paper production, printing and distribution of this annual report will be determined and offset.
VISION: THROUGH OUR INNOVATION AND GROWTH, WE WILL BE A
POWERFUL SOURCE OF ENDLESS POSSIBILITIES.
MISSION: WE CREATE UNRIVALLED VALUE FOR ALL STAKEHOLDERS
OF OUR DIVERSIFIED RESOURCES BUSINESS THROUGH OUR
PROCESSES, THINKING AND PASSION.
VALUES: > EMPOWERED TO GROW AND CONTRIBUTE – DEVELOPING
AND DEPLOYING OUR KNOWLEDGE AND INGENUITY TO ACHIEVE OUR
VISION. WE FOCUS ON PEOPLE, CREATE FREEDOM TO INNOVATE AND
COLLABORATE, RESPECT INDIVIDUALITY, HAVE FUN AND RISE TO
CHALLENGES. > TEAMWORK – WE SUCCEED TOGETHER THROUGH
A CLIMATE OF RESPECT AND EQUALITY. > COMMITTED TO
EXCELLENCE – WE TAKE OWNERSHIP, PROVIDE VISIBLE LEADERSHIP
AND ENCOURAGE COLLABORATION, COMMITMENT AND CREATIVITY
FOR THE BENEFIT OF ALL. > HONEST RESPONSIBILITY – WE SPEAK
THE TRUTH AND ACCEPT ACCOUNTABILITY FOR OUR ACTIONS.
Annual report
FOR THE YEAR ENDED 31 DECEMBER 2009
E
X
X
A
R
O
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
9
THE EXXARO GROUP
CONTENTS
Group in brief
Strategic focus areas
Business objectives, highlights and
group structure
With assets of R23 billion, Exxaro is among the top
2 Key ratios
40 companies on the JSE Limited (JSE) by market
capitalisation, and one of the 30 best-performing
constituents of the JSE’s Socially Responsible
Investment index.
Exxaro is a diverse resources group with a portfolio
spanning coal, mineral sands, base metals and iron
3 Geographical locations
4 Group at a glance (operations)
6 Group review at a glance (fi nancials)
8 Summary of business operations
10 Chairman’s statement
14 Chief executive offi cer’s review
20 Financial review
32 Macro-economic and commodity review
38 Business operations review
ore and operations in South Africa, Australia, Namibia
49 Growth
and China. Exxaro has an unfolding pipeline of growth
projects that is arguably among the best in its
peer group.
The group’s reviewed strategic focus, record of
innovation and focus on sustainable development
underpin its promise to contribute to the economic
growth of South Africa.
ABOUT THIS REPORT
Guided by global best-practice standards and ongoing consultation with
51
Review of mineral resources and reserves
66 Executive committee
68 Directorate
Governance and Sustainability
72 Corporate governance
78 Shareholder information
79 Shareholders’ analysis
81 Risk management
84 Sustainable development
86 Approach to safety and sustainable
development
91 Safety and sustainable development
performance
113 Economic performance
115 Social performance
125 Society
126 Legislative compliance/mining charter
scorecard
131
Independent assurance statement to the
directors and management of Exxaro
Resources Limited
stakeholders, Exxaro publishes an integrated annual report detailing the
133 GRI indicator index
(cid:71)(cid:70)(cid:78)(cid:60)(cid:73)(cid:64)(cid:69)(cid:62)(cid:23)(cid:71)(cid:70)(cid:74)(cid:74)(cid:64)(cid:57)(cid:64)(cid:67)(cid:64)(cid:75)(cid:80)
www.exxaro.com
group’s economic, social and environmental performance. The full report is
also available on www.exxaro.com and on CD, where pertinent case studies are
included. Copies of this information are available on request (contact details
are on the inside back cover).
Supplementary fi nancial information
137 Group cash value added statements
138 Selected group fi nancial data translated
into US dollars
139 Defi nitions
Financial statements
141 Annual fi nancial statements
Administration
259 Notice of annual general meeting
263 Biographies of directors up for re-election
275 Form of proxy
BASTION GRAPHICS
www.exxaro.com
ADMINISTRATION
Secretary and registered offi ce
MS Viljoen
Exxaro Resources Limited
Roger Dyason Road
Pretoria West
Pretoria
0183
PO Box 9229
Pretoria
0001
South Africa
Telephone +27 12 307 5000
Company registration number: 2000/011076/06
JSE share code: EXX
ISIN code: ZAE000084992
Auditors
Deloitte & Touche
Private Bag X6
Gallo Manor
2052
Commercial bankers
Absa Bank Limited
SHAREHOLDERS’ DIARY
FINANCIAL YEAR-END
ANNUAL GENERAL MEETING
REPORTS AND ACCOUNTS
Announcement of annual results
Annual report
Interim report for the half-year ending 30 June
DISTRIBUTION
Final dividend declaration
Payment
Interim dividend declaration
Payment
Corporate law advisers
CLS Consulting Services (Pty) Limited
United States ADR Depositary
The Bank of New York
101 Barclay Street
New York NY 10286
United States of America
Sponsor
Deutsche Securities (SA) (Pty) Limited
3 Exchange Square
87 Maude Street
Sandton
2196
Registrars
Computershare Investor Services (Pty) Limited
Ground Floor, 70 Marshall Street
Johannesburg
2001
PO Box 61051
Marshalltown
2107
31 December
April/May
February
March
August
February
March/April
August
September
The cover of this document is printed on Trucard Recycled 330gsm. It contains 50% postconsumer de-inked pulp, is FSC certifi ed and carries the NAPM
recycled mark. The body of this document is printed on Cartridge 120gsm. A minimum of 30% fi bre used in making this paper comes from well-managed forests
independently certifi ed according to the rules of the Forest Stewardship Council.
Carbon offset
The carbon footprint arising from the paper production, printing and distribution of this annual report will be determined and offset.
VISION: THROUGH OUR INNOVATION AND GROWTH, WE WILL BE A
POWERFUL SOURCE OF ENDLESS POSSIBILITIES.
MISSION: WE CREATE UNRIVALLED VALUE FOR ALL STAKEHOLDERS
OF OUR DIVERSIFIED RESOURCES BUSINESS THROUGH OUR
PROCESSES, THINKING AND PASSION.
VALUES: > EMPOWERED TO GROW AND CONTRIBUTE – DEVELOPING
AND DEPLOYING OUR KNOWLEDGE AND INGENUITY TO ACHIEVE OUR
VISION. WE FOCUS ON PEOPLE, CREATE FREEDOM TO INNOVATE AND
COLLABORATE, RESPECT INDIVIDUALITY, HAVE FUN AND RISE TO
CHALLENGES. > TEAMWORK – WE SUCCEED TOGETHER THROUGH
A CLIMATE OF RESPECT AND EQUALITY. > COMMITTED TO
EXCELLENCE – WE TAKE OWNERSHIP, PROVIDE VISIBLE LEADERSHIP
AND ENCOURAGE COLLABORATION, COMMITMENT AND CREATIVITY
FOR THE BENEFIT OF ALL. > HONEST RESPONSIBILITY – WE SPEAK
THE TRUTH AND ACCEPT ACCOUNTABILITY FOR OUR ACTIONS.
Annual report
FOR THE YEAR ENDED 31 DECEMBER 2009
E
X
X
A
R
O
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
9
THE EXXARO GROUP
CONTENTS
Group in brief
Strategic focus areas
Business objectives, highlights and
group structure
With assets of R23 billion, Exxaro is among the top
2 Key ratios
40 companies on the JSE Limited (JSE) by market
capitalisation, and one of the 30 best-performing
constituents of the JSE’s Socially Responsible
Investment index.
Exxaro is a diverse resources group with a portfolio
spanning coal, mineral sands, base metals and iron
3 Geographical locations
4 Group at a glance (operations)
6 Group review at a glance (fi nancials)
8 Summary of business operations
10 Chairman’s statement
14 Chief executive offi cer’s review
20 Financial review
32 Macro-economic and commodity review
38 Business operations review
ore and operations in South Africa, Australia, Namibia
49 Growth
and China. Exxaro has an unfolding pipeline of growth
projects that is arguably among the best in its
peer group.
The group’s reviewed strategic focus, record of
innovation and focus on sustainable development
underpin its promise to contribute to the economic
growth of South Africa.
ABOUT THIS REPORT
Guided by global best-practice standards and ongoing consultation with
51
Review of mineral resources and reserves
66 Executive committee
68 Directorate
Governance and Sustainability
72 Corporate governance
78 Shareholder information
79 Shareholders’ analysis
81 Risk management
84 Sustainable development
86 Approach to safety and sustainable
development
91 Safety and sustainable development
performance
113 Economic performance
115 Social performance
125 Society
126 Legislative compliance/mining charter
scorecard
131
Independent assurance statement to the
directors and management of Exxaro
Resources Limited
stakeholders, Exxaro publishes an integrated annual report detailing the
133 GRI indicator index
(cid:71)(cid:70)(cid:78)(cid:60)(cid:73)(cid:64)(cid:69)(cid:62)(cid:23)(cid:71)(cid:70)(cid:74)(cid:74)(cid:64)(cid:57)(cid:64)(cid:67)(cid:64)(cid:75)(cid:80)
www.exxaro.com
group’s economic, social and environmental performance. The full report is
also available on www.exxaro.com and on CD, where pertinent case studies are
included. Copies of this information are available on request (contact details
are on the inside back cover).
Supplementary fi nancial information
137 Group cash value added statements
138 Selected group fi nancial data translated
into US dollars
139 Defi nitions
Financial statements
141 Annual fi nancial statements
Administration
259 Notice of annual general meeting
263 Biographies of directors up for re-election
275 Form of proxy
BASTION GRAPHICS
www.exxaro.com
STRATEGIC FOCUS AREAS
Exxaro has fi ve strategic focus areas:
Exxaro’s business strategy is guided by fi ve areas where the group believes it must perform well to claim competitive advantage and
provide an attractive investment case. We explain these focus areas below, together with our understanding of each and the relevant
performance examples. The CEO’s review (page 14) provides more detail in relevant areas and our business objectives set out targeted
fi nancial and non-fi nancial indicators.
What this means to Exxaro
> Low-cost producer
> Achieve performance targets
> Continuous review of performance
> Skilled, competent and value-driven workforce
>
Well-established safety and sustainable
development principles
>
Diversifi ed by commodity, products and
geography
> Annual real growth in net operating profi t
Capacity to increase and expand growth
>
aspirations
> Robust growth pipeline
> Healthy fi nancial status
> Responsible, safe operations
> Regulatory compliance
> Access to good-quality resources
> Protect intellectual property
> Positive stakeholder relations
> Representative and fair workplace
> Say what we do and do what we say
>
>
Develop, empower and retain skilled people
Be a preferred supplier to local and overseas
customers
> Employees live the vision and values
> Employee involvement
> Provide opportunities for development
Continuous improvement with related
>
recognition and reward
Focus on the development of Exxaro’s high
performance culture
>
1
Achieve
operational
excellence
2
Improve
Exxaro’s
portfolio
3
Ensure
Exxaro’s
sustainability
4
Protect and
build Exxaro’s
reputation
Examples of performance
> R750 million cost savings
> 45Mtpa total coal production
> 50% increase in steam coal exports
> Stable zinc performance despite challenges
> KZN Sands furnaces exceed 200kt
>
Integrated and transparent reporting
>
Expansion through focused growth in mega
carbon projects
> Divest from the zinc commodity
>
Stop development of Fairbreeze mineral sands
mine
Investigate ways to increase iron ore footprint
and renewable energy projects
>
> Debt/equity ratio of 29%
> R1 billion capex savings
>
R31,4 million contributed to socio-economic
development, corporate and other initiatives
> Good corporate governance
>
90% compliance on eight of nine mining
charter transformation requirements
> Reliable supplier to Eskom
>
Constituent of the JSE Socially Responsible
Investment index
Total dividend to Mpower employee
benefi ciaries – R39 million
5
Develop Exxaro’s
leadership and
people
>
>
>
>
BUSINESS OBJECTIVES
Exxaro’s business objectives are measurable indicators of performance.
At every level, and in different ways, our teams are accountable for these objectives.
Exxaro
Kumba
Resources
Target
2010
Target
Actual
2009
2009
Actual
2008
Actual
2007
Actual
20061
FINANCIAL TARGETS1
> Return on equity (ROE) (%)
> Return on capital employed (ROCE)
(%)
> EBITDA interest cover (times)
NON-FINANCIAL TARGETS
> Safety
– fatalities
– lost-time injury frequency rate
(per 200 000 hours)
> Safety, health and environmental
certifi cation (number) 2010
> Employment equity
– management (%)
– women (%)
> HIV/Aids voluntary testing and
counselling (%)
(long-term target 95%)
> Human resources development
(% spend of payroll)
> Mining learnerships
> Procurement from HDSA
companies (%)
> Community development
(% of NPAT2)
> Energy effi ciency and carbon
emissions reduction
– 2012 (%)
> HDSA ownership (%)
2014
25
28
>4
0
8
15
7
3
30
36
14
5
15
23
10
5
0
0,17
0,21
0,33
0,39
0,36
17
40
12
47
1
(10)
26
17
40
12
50
6,0
700
45
1
(10)
26
13
48
13,8
58
5,0
691
45
1,8
9
42
13
64
5,2
678
39
9
36
12
30
6,5
408
35
52
56
56
6
0,42
10
35
11
41
5,1
341
37
1 Financial targets set against a peer group of companies while actual ratios are based on statutory fi nancial results
that have not been restated for comparative purposes. Key ratios are shown on page 2. No fi nancial ratios are
reported for 2006 as Exxaro was only created in November 2006. Financial targets for 2010 being fi nalised
2 NPAT = Net profi t after tax
OUR GROUP STRUCTURE (as at 31 December 2009)
15%
Industrial
Development
Corporation
55%
9,5%
Eyesizwe▲
Eyabantu▲
9,5%
Tiso▲
Anglo American
plc*
9,73%
BEE
Holdco
52,26%
Exxaro
MPOWER#
2,98%
HIGHLIGHTS
Financial and
>
operational resilience
in a global recession
that has affected
demand and prices for
commodities
>
>
>
Revenue of R15 billion
Coal production and
sales exceed 45Mt – a
target set in November
2006
Achieved targeted
savings of
R750 million and
reduced capital
expenditure by over
R1 billion
>
200 cents per share
dividend declared
LOWLIGHTS
Three fatalities
>
recorded in single
incident
>
Net operating profi t
affected by R1,4 billion
impairment at KZN
Sands
>
Currency strength
impacted on earnings
11%
Basadi Ba
Kopane▲
Minorities
(free fl oat)
35,03%
20%
SISHEN
IRON ORE
COMPANY
As at 31 December 2009
* Held through Anglo
South Africa Capital
(Pty) Ltd.
▲ These are special
purpose vehicles for
shareholders in our
black-owned holding
company.
# Employee share
ownership programme.
Best Company To Work For survey by Deloitte –
Exxaro among top 10 in large-company category
Corporate Research Foundation – Exxaro in 6th
place in survey of our human resource processes
Corporate Research Foundation – 7th in SA’s
Leading Managers initiative
100%
100%
100%
COAL
SANDS
BASE METALS & INDUSTRIAL MINERALS
STRATEGIC FOCUS AREAS
Exxaro has fi ve strategic focus areas:
Exxaro’s business strategy is guided by fi ve areas where the group believes it must perform well to claim competitive advantage and
provide an attractive investment case. We explain these focus areas below, together with our understanding of each and the relevant
performance examples. The CEO’s review (page 14) provides more detail in relevant areas and our business objectives set out targeted
fi nancial and non-fi nancial indicators.
What this means to Exxaro
> Low-cost producer
> Achieve performance targets
> Continuous review of performance
> Skilled, competent and value-driven workforce
>
Well-established safety and sustainable
development principles
>
Diversifi ed by commodity, products and
geography
> Annual real growth in net operating profi t
Capacity to increase and expand growth
>
aspirations
> Robust growth pipeline
> Healthy fi nancial status
> Responsible, safe operations
> Regulatory compliance
> Access to good-quality resources
> Protect intellectual property
> Positive stakeholder relations
> Representative and fair workplace
> Say what we do and do what we say
>
>
Develop, empower and retain skilled people
Be a preferred supplier to local and overseas
customers
> Employees live the vision and values
> Employee involvement
> Provide opportunities for development
Continuous improvement with related
>
recognition and reward
Focus on the development of Exxaro’s high
performance culture
>
1
Achieve
operational
excellence
2
Improve
Exxaro’s
portfolio
3
Ensure
Exxaro’s
sustainability
4
Protect and
build Exxaro’s
reputation
Examples of performance
> R750 million cost savings
> 45Mtpa total coal production
> 50% increase in steam coal exports
> Stable zinc performance despite challenges
> KZN Sands furnaces exceed 200kt
>
Integrated and transparent reporting
>
Expansion through focused growth in mega
carbon projects
> Divest from the zinc commodity
>
Stop development of Fairbreeze mineral sands
mine
Investigate ways to increase iron ore footprint
and renewable energy projects
>
> Debt/equity ratio of 29%
> R1 billion capex savings
>
R31,4 million contributed to socio-economic
development, corporate and other initiatives
> Good corporate governance
>
90% compliance on eight of nine mining
charter transformation requirements
> Reliable supplier to Eskom
>
Constituent of the JSE Socially Responsible
Investment index
Total dividend to Mpower employee
benefi ciaries – R39 million
5
Develop Exxaro’s
leadership and
people
>
>
>
>
BUSINESS OBJECTIVES
Exxaro’s business objectives are measurable indicators of performance.
At every level, and in different ways, our teams are accountable for these objectives.
Exxaro
Kumba
Resources
Target
2010
Target
Actual
2009
2009
Actual
2008
Actual
2007
Actual
20061
FINANCIAL TARGETS1
> Return on equity (ROE) (%)
> Return on capital employed (ROCE)
(%)
> EBITDA interest cover (times)
NON-FINANCIAL TARGETS
> Safety
– fatalities
– lost-time injury frequency rate
(per 200 000 hours)
> Safety, health and environmental
certifi cation (number) 2010
> Employment equity
– management (%)
– women (%)
> HIV/Aids voluntary testing and
counselling (%)
(long-term target 95%)
> Human resources development
(% spend of payroll)
> Mining learnerships
> Procurement from HDSA
companies (%)
> Community development
(% of NPAT2)
> Energy effi ciency and carbon
emissions reduction
– 2012 (%)
> HDSA ownership (%)
2014
25
28
>4
0
8
15
7
3
30
36
14
5
15
23
10
5
0
0,17
0,21
0,33
0,39
0,36
17
40
12
47
1
(10)
26
17
40
12
50
6,0
700
45
1
(10)
26
13
48
13,8
58
5,0
691
45
1,8
9
42
13
64
5,2
678
39
9
36
12
30
6,5
408
35
52
56
56
6
0,42
10
35
11
41
5,1
341
37
1 Financial targets set against a peer group of companies while actual ratios are based on statutory fi nancial results
that have not been restated for comparative purposes. Key ratios are shown on page 2. No fi nancial ratios are
reported for 2006 as Exxaro was only created in November 2006. Financial targets for 2010 being fi nalised
2 NPAT = Net profi t after tax
OUR GROUP STRUCTURE (as at 31 December 2009)
15%
Industrial
Development
Corporation
55%
9,5%
Eyesizwe▲
Eyabantu▲
9,5%
Tiso▲
Anglo American
plc*
9,73%
BEE
Holdco
52,26%
Exxaro
MPOWER#
2,98%
HIGHLIGHTS
Financial and
>
operational resilience
in a global recession
that has affected
demand and prices for
commodities
>
>
>
Revenue of R15 billion
Coal production and
sales exceed 45Mt – a
target set in November
2006
Achieved targeted
savings of
R750 million and
reduced capital
expenditure by over
R1 billion
>
200 cents per share
dividend declared
LOWLIGHTS
Three fatalities
>
recorded in single
incident
>
Net operating profi t
affected by R1,4 billion
impairment at KZN
Sands
>
Currency strength
impacted on earnings
11%
Basadi Ba
Kopane▲
Minorities
(free fl oat)
35,03%
20%
SISHEN
IRON ORE
COMPANY
As at 31 December 2009
* Held through Anglo
South Africa Capital
(Pty) Ltd.
▲ These are special
purpose vehicles for
shareholders in our
black-owned holding
company.
# Employee share
ownership programme.
Best Company To Work For survey by Deloitte –
Exxaro among top 10 in large-company category
Corporate Research Foundation – Exxaro in 6th
place in survey of our human resource processes
Corporate Research Foundation – 7th in SA’s
Leading Managers initiative
100%
100%
100%
COAL
SANDS
BASE METALS & INDUSTRIAL MINERALS
Group
in brief
Exxaro Annual Report 2009 I 1
KEY RATIOS
RATIOS
Profi tability and asset management1
Return on net assets (%)
Return on ordinary shareholders’ equity
– Attributable earnings (%)
– Headline earnings (%)
Return on invested capital (%)
Return on capital employed (%)
Operating margin (%)2
Solvency and liquidity
Net fi nancing cost cover (times) – EBIT3
Net fi nancing cost cover (times) – EBITDA
Current ratio (times)
Net debt to equity (%)
Net debt to earnings before interest, tax, depreciation and amortisation (times)
Number of years to repay interest-bearing debt
1 A number of key ratios in 2009 have been adversely affected by the R1 435 million impairment at the KZN Sands operation.
2 Margin is 12% if the KZN Sands impairment is excluded.
3 Ratio is four times if the KZN Sands impairment is excluded.
WE CREATE VALUE FOR ALL STAKEHOLDERS
At 31 December
2009
Unaudited
Rm
2008
Unaudited
Rm
17
8
19
12
15
2
1
7
2
29
1,3
6
36
30
32
28
36
18
10
14
2
18
0,7
1
(cid:58)(cid:88)(cid:106)(cid:95)(cid:23)(cid:91)(cid:96)(cid:106)(cid:89)(cid:108)(cid:105)(cid:106)(cid:92)(cid:91)(cid:23)(cid:88)(cid:100)(cid:102)(cid:101)(cid:94)(cid:23)
(cid:106)(cid:107)(cid:88)(cid:98)(cid:92)(cid:95)(cid:102)(cid:99)(cid:91)(cid:92)(cid:105)(cid:106)(cid:23)(cid:41)(cid:39)(cid:39)(cid:48)
18%
58%
9%
15%
(cid:58)(cid:88)(cid:106)(cid:95)(cid:23)(cid:91)(cid:96)(cid:106)(cid:89)(cid:108)(cid:105)(cid:106)(cid:92)(cid:91)(cid:23)(cid:88)(cid:100)(cid:102)(cid:101)(cid:94)(cid:23)
(cid:106)(cid:107)(cid:88)(cid:98)(cid:92)(cid:95)(cid:102)(cid:99)(cid:91)(cid:92)(cid:105)(cid:106)(cid:23)(cid:41)(cid:39)(cid:39)(cid:47)
21%
62%
7%
10%
■(cid:23)(cid:23)(cid:73)(cid:92)(cid:100)(cid:108)(cid:101)(cid:92)(cid:105)(cid:88)(cid:107)(cid:92)(cid:23)(cid:92)(cid:100)(cid:103)(cid:99)(cid:102)(cid:112)(cid:92)(cid:92)(cid:106)(cid:23)(cid:93)(cid:102)(cid:105)(cid:23)(cid:106)(cid:92)(cid:105)(cid:109)(cid:96)(cid:90)(cid:92)(cid:106)(cid:23)
■(cid:23)(cid:23)(cid:71)(cid:105)(cid:102)(cid:109)(cid:96)(cid:91)(cid:92)(cid:23)(cid:99)(cid:92)(cid:101)(cid:91)(cid:92)(cid:105)(cid:106)(cid:23)(cid:110)(cid:96)(cid:107)(cid:95)(cid:23)(cid:88)(cid:23)(cid:105)(cid:92)(cid:107)(cid:108)(cid:105)(cid:101)(cid:23)(cid:102)(cid:101)(cid:23)(cid:89)(cid:102)(cid:105)(cid:105)(cid:102)(cid:110)(cid:96)(cid:101)(cid:94)(cid:106)(cid:23)
■(cid:23)(cid:23)(cid:71)(cid:88)(cid:112)(cid:23)(cid:91)(cid:96)(cid:105)(cid:92)(cid:90)(cid:107)(cid:23)(cid:107)(cid:88)(cid:111)(cid:92)(cid:106)(cid:23)(cid:107)(cid:102)(cid:23)(cid:107)(cid:95)(cid:92)(cid:23)(cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:23)(cid:23)
■(cid:23)(cid:23)(cid:71)(cid:105)(cid:102)(cid:109)(cid:96)(cid:91)(cid:92)(cid:23)(cid:106)(cid:95)(cid:88)(cid:105)(cid:92)(cid:95)(cid:102)(cid:99)(cid:91)(cid:92)(cid:105)(cid:106)(cid:23)(cid:110)(cid:96)(cid:107)(cid:95)(cid:23)(cid:90)(cid:88)(cid:106)(cid:95)(cid:23)(cid:91)(cid:96)(cid:109)(cid:96)(cid:91)(cid:92)(cid:101)(cid:91)(cid:106)
2 I Exxaro Annual Report 2009
GEOGRAPHICAL LOCATIONS
Amsterdam
Zug
CHINA
18
Beijing
NAMIBIA
19
South Africa
10
1
24
2 3
23
24
South Africa
15
9
14
AUSTRALIA
Perth
16
17
12
Brisbane
MPUMALANGA
22
20
21
GAUTENG
Middelburg
13
Witbank
7
11
5
8
6
4
Detailed maps on page 52, 64 and 65
Coal
1 Grootegeluk (GG)
2 GG expansion for Medupi power station
3 Char Plant phase 2
4 Leeuwpan
5 Arnot
6 Matla
7 North Block Complex
8 New Clydesdale
9 Tshikondeni
10 Mmamabula Central (Botswana gas project)
1 1 Inyanda
12 Moranbah South
13 Mafube*
* Joint ventures and investments not operationally controlled.
Mineral sands
14 KZN Sands
15 Namakwa Sands
16 Australia Sands
17 Kwinana expansion
Base metals and industrial minerals
18 Chifeng Zinc Refi nery*
19 Rosh Pinah
20 Zincor
21 Glen Douglas
22 FerroAlloys
23 Black Mountain*
24 Sishen Iron Ore Company*
(Sishen and Thabazimbi mines)
■ Operations
● Growth projects
▲ Representative offi ces
Exxaro Annual Report 2009 I 3
GROUP AT A GLANCE
BUSINESSES
Coal
Mineral
sands
Base metals
and industrial
minerals
INVESTMENTS
Iron ore
2009
CONTRIBUTION TO GROUP
REVENUE
Eight managed coal mines produced 45,2Mtpa of power
65% R9 731 million
station, steam and coking coal. All power station coal
produced was supplied to the national power utility,
Eskom, and municipal power stations. Grootegeluk is
23%
one of the most effi cient mining operations in the world,
and operates the world’s largest coal benefi ciation
complex. There is a robust pipeline of greenfi eld and other
expansion projects under way that will culminate in Exxaro
becoming one of the largest coal producers in South
Africa. Exxaro also produces char and related products
for the rapidly growing ferroalloys industry.
65%
Exxaro’s South African mineral sands operations include
KZN Sands and the Western Cape operations of Namakwa
Sands. In Australia, our interests are housed in Australia
Sands whose principal asset is 50% of the Tiwest joint
venture with Tronox Inc. Exxaro is one of the world’s
largest suppliers of titanium dioxide feedstock and zircon.
Collectively, the group’s mineral sands operations produced
245kt of slag, 185kt of zircon, 109kt of synthetic rutile and
53kt of pigment in 2009.
23% R3 508 million
23%
77%
11% R1 582 million*
11%
89%
* Excludes revenue from industrial
minerals and other businesses
The Rosh Pinah zinc/lead mine in southern Namibia and
Zincor electrolytic refi nery in Gauteng are one of the few
integrated zinc mining and refi nery operations worldwide.
Exxaro has an effective 22% interest in the Chifeng
zinc refi nery in China. In 2009, Rosh Pinah and Zincor
produced 94kt of zinc concentrate and 87kt of zinc metal
respectively. A dedicated plant in Pretoria manufactures
high-quality, gas-atomised ferrosilicon while Glen Douglas
provides a range of products for the steel, construction
and agricultural sectors.
Exxaro holds 20% of Sishen Iron Ore Company (Pty) Limited.
The company operates the Sishen and Thabazimbi mines,
producing some 41,9Mtpa of lumpy and fi ne iron ore in 2009.
A total of 38,2Mtpa ore was sold of which 90% was exported.
Sishen is one of the largest single open-pit mines in the world,
known for its high grade and consistent product quality.
4 I Exxaro Annual Report 2009
OPERATIONS
REGIONAL
LOCATION
OWNERSHIP 1
PRODUCTS
Grootegeluk mine
Limpopo
Division of Exxaro Coal (Pty) Limited
Leeuwpan mine
Mpumalanga
Division of Exxaro Coal (Pty) Limited
Tshikondeni mine
Limpopo
Division of Exxaro Coal (Pty) Limited
Power station coal (Eskom)
Semi-soft coking coal
Steam coal
Power station coal (Eskom)
Steam coal
Coking coal (ArcelorMittal)
Mafube coal 2
Mpumalanga
Division of Exxaro Coal (Pty) Limited
Steam coal
Mafube JV3
Mpumalanga
Inyanda mine
Mpumalanga
Joint venture of Exxaro Coal Mpumalanga
(Pty) Limited (50%)
Division of Exxaro Coal (Pty) Limited
Power station coal (Eskom)
Steam coal
Steam coal
Exxaro reductants
Limpopo
Division of Exxaro Coal (Pty) Limited
Arnot mine
Mpumalanga
Matla mine
Mpumalanga
New Clydesdale
mine
North Block
Complex
Mpumalanga
Mpumalanga
Division of Exxaro Coal Mpumalanga
(Pty) Limited
Division of Exxaro Coal Mpumalanga
(Pty) Limited
Division of Exxaro Coal Mpumalanga
(Pty) Limited
Division of Exxaro Coal Mpumalanga
(Pty) Limited
KZN Sands
KwaZulu-Natal
Subsidiaries of Exxaro Resources Limited
and a division of Exxaro TSA Sands (Pty)
Limited and Exxaro Sands (Pty) Limited
Steam coal
Char
Power station coal (Eskom)
Power station coal (Eskom)
11 260
Steam coal
Power station coal (Eskom)
Steam coal
795
2 545
572
Zircon
Rutile
Pig iron
Chloride slag
Sulphate slag
Namakwa Sands
Western Cape
Division of Exxaro TSA Sands (Pty) Limited Zircon
Rutile
Pig iron
Chloride slag
Sulphate slag
Australia Sands3
Australia
Subsidiary of Exxaro Resources Limited
which owns 50% in the Tiwest joint
venture
Zircon
Rutile
Synthetic rutile
Leucoxene
Pigment
Zincor refi nery
Gauteng
Division of Exxaro Base Metals (Pty) Limited Zinc metal
Rosh Pinah mine
Namibia
Subsidiary of Exxaro Base Metals (Namibia)
(Pty) Limited (50,04%)
Chifeng refi nery 3
China
Associate (22,00%)
Black Mountain 3
Mining (Pty) Limited
Northern Cape
Associate (26,00%)
Glen Douglas mine
Gauteng
Subsidiary of Exxaro Resources Limited
Sulphuric acid
Zinc concentrate
Lead concentrate
Zinc metal
Sulphuric acid
Zinc concentrate
Lead concentrate
Metallurgical dolomite
Aggregate
Lime
FerroAlloys
Gauteng
Subsidiary of Exxaro Resources Limited
Atomised ferrosilicon
Sishen mine
Northern Cape
Thabazimbi mine
Limpopo
Division of Sishen Iron Ore
Company (Pty) Limited
Division of Sishen Iron Ore
Company (Pty) Limited
Lump ore
Fine ore
Lump ore
Fine ore
SALES FOR 12 MONTHS
TO 31 DECEMBER 20091
000
TONNES
%
EXPORT
44
7
19
100
93
96
100
67
100
100
100
100
100
67
100
100
100
100
100
100
100
100
100
100
87
84
15 275
1 241
1 842
1 306
1 291
259
1 140
700
375
1 776
11
31
5 213
21
14
52
68
25
95
23
86
76
19
30
14
50
15
54
93
122
96
19
29
94
14
18
376
767
68
5
4 885
2 753
85
286
1 100% ownership unless otherwise indicated.
2 Exxaro’s 50% share of the Mafube expansion project.
3 Sales tonnage refl ects the group’s interest in the relevant subsidiary, joint venture or associate.
Exxaro Annual Report 2009 I 5
GROUP REVIEW AT A GLANCE
INCOME STATEMENTS
Revenue
Net operating profi t1
Net fi nancing cost
Investment and post-tax equity income
Tax
Non-controlling interest
Add back items for headline earnings
Headline earnings
Headline earnings per share (cents)
Dividends per share (cents)
Average realised exchange rate (R/US$)
STATEMENTS OF CASH FLOWS
Cash fl ows from operating activities
Cash fl ows from investing activities
Cash fl ows from fi nancing activities
Net (decrease)/increase in cash and cash equivalents
1 Includes a R1 435 million impairment of the carrying value of the KZN Sands assets.
12 months ended
31 December
2009
Audited
Rm
15 009
304
(415)
1 900
(766)
C O P Y T O
C O M E
1 491
2 514
729
200
8,39
(206)
(1 414)
874
(746)
2008
Audited
Rm
13 843
2 467
(241)
1 665
(510)
24
225
3 630
1 058
375
8,10
1 910
(3 756)
2 765
919
6 I Exxaro Annual Report 2009
STATEMENTS OF FINANCIAL POSITION
Assets
Non-current assets
Property, plant and equipment
Biological assets
Intangible asset
Investments in associates and joint ventures
Deferred tax
Financial assets
Current assets
Cash and cash equivalents
Inventories, trade and other receivables
Non-current assets classifi ed as held-for-sale
Total assets
Equity and liabilities
Capital and reserves
Equity attributable to owners of the parent
Non-controlling interest
Total equity
Non-current liabilities
Interest-bearing borrowings
Non-current provisions
Financial liabilities
Deferred tax
Current liabilities
Interest-bearing borrowings
Other
Non-current liabilities classifi ed as held-for-sale
Total equity and liabilities
Net debt
ANALYSIS PER SHARE
Number of shares in issue (million)
Weighted average number of shares in issue (million)1
Earnings per ordinary share
– Attributable earnings (cents)
– Headline earnings (cents)
Dividend per ordinary share (cents)
Dividend cover (times)
Net asset value per ordinary share (cents)
At 31 December
2009
Audited
Rm
2008
Audited
Rm
11 869
41
87
1 966
629
1 217
1 023
6 311
86
23 229
12 908
1
12 909
4 347
1 853
75
995
407
2 594
49
23 229
3 731
11 309
34
79
1 849
1 083
1 577
1 769
5 407
78
23 185
12 996
128
13 124
3 650
1 746
31
1 257
500
2 827
50
23 185
2 381
At 31 December
2009
Audited
Rm
2008
Audited
Rm
357
345
297
729
200
1,48
3 616
355
343
993
1 058
375
2,65
3 697
1 Shares issued to MPower are classifi ed as treasury shares and are excluded from the calculation of the weighted average number of shares.
Exxaro Annual Report 2009 I 7
SUMMARY OF BUSINESS OPERATIONS
12 months ended 31 December
2009
2008
2007
2006
2 560
2 233
327
36 700
14 581
1 188
13 230
4 865
115
2 721
5 574
1 387
1 801
984
561
841
2 962
2 499
463
34 246
14 510
956
13 030
3 702
156
1 892
4 111
1 485
1 421
814
391
2 496
2 133
363
34 599
14 268
921
13 613
3 985
331
1 481
4 665
1 585
1 504
1 107
469
2 020
1 752
268
36 562
15 324
1 247
11 273
5 213
2 822
683
6 638
1 207
1 259
822
691
1 843
816
38
45 258
44 834
41 319
41 760
368
36
20
108
15
104
24
244
116
26
73
97
20
229
34
19
50
16
95
18
315
130
27
103
6
135
24
367
34
17
90
20
150
26
300
115
24
91
11
126
27
319
50
25
75
10
134
36
272
128
28
83
8
112
23
000 tonnes produced
COAL
Coking coal
Grootegeluk
Tshikondeni
Power station coal (Eskom)
Grootegeluk
Leeuwpan
Matla1
Arnot1
New Clydesdale1
North Block Complex1
Mafube
Steam coal
Grootegeluk
Leeuwpan
New Clydesdale1
North Block Complex1
Inyanda
Mafube
Char
Total coal production
KZN SANDS
Ilmenite
Zircon
Rutile
Pig iron
Scrap pig iron
Chloride slag
Sulphate slag
NAMAKWA SANDS2
Ilmenite
Zircon
Rutile
Pig iron
Scrap pig iron
Chloride slag
Sulphate slag
8 I Exxaro Annual Report 2009
000 tonnes produced
AUSTRALIA SANDS3
Ilmenite
Zircon
Rutile
Synthetic rutile
Leucoxene
Pigment
BASE METALS
Rosh Pinah (zinc concentrate)
Black Mountain (zinc concentrate)4
Zincor (zinc metal)
Zincor (sulphuric acid)
Chifeng (zinc metal)5
Rosh Pinah (lead concentrate)
Black Mountain (lead concentrate)4
INDUSTRIAL MINERALS
Glen Douglas
Metallurgical dolomite
Aggregate
Lime
FerroAlloys
Atomised ferrosilicon
IRON ORE
Sishen6
Thabazimbi6
Total iron ore production
12 months ended 31 December
2009
2008
2007
2006
207
33
16
109
14
53
94
14
87
142
29
20
18
371
762
72
5
174
29
13
113
16
43
94
15
87
129
23
20
17
422
788
63
6
216
36
17
100
16
54
95
15
101
147
23
22
15
543
749
54
6
227
36
18
98
14
54
104
18
90
142
16
21
18
661
672
59
6
7 878
511
8 389
6 808
532
7 340
5 946
535
6 481
5 738
484
6 222
1 Physical information includes Eyesizwe Coal mines for 12 months in 2006 even though only acquired effective 1 November 2006.
2 Physical information includes Namakwa Sands for 12 months from 1 January 2006 even though only acquired effective 1 October 2008.
3 Physical information refl ects Exxaro Australia Sands’ 50% interest in the Tiwest joint venture.
4 Physical information refl ects Exxaro’s 26% interest in Black Mountain Mining (Pty) Limited from 1 January 2006 even though only acquired effective
1 November 2008.
5 Physical information represents the effective interest in Chifeng (Hongye) refi nery.
6 Physical information from 2006 refl ects Exxaro’s 20% interest in Sishen Iron Ore Company.
Exxaro Annual Report 2009 I 9
CHAIRMAN’S STATEMENT
DEENADAYALEN KONAR
‘We recognise that
to remain competitive
and sustainable, it is
vital that energy in
its broadest context
is dealt with as a
strategic imperative.
This spans every aspect
from potential energy
shortages and the
rising costs of energy to
climate change and its
related environmental
concerns.’
IN 2009, GOVERNMENTS AND COMPANIES AROUND THE WORLD
FACED THE WORST ECONOMIC RECESSION SINCE THE SECOND WORLD
WAR, WITH GDP GROWTH DROPPING SIX PERCENTAGE POINTS
FROM 2007 TO NEGATIVE 1,9%. THE NET EFFECT WAS A LOSS
OF CONFIDENCE, STRICTER CREDIT CRITERIA, DECLINING DEMAND,
REDUCED SPENDING AND INVESTMENT, DECLINING PROPERTY
PRICES AND SIGNIFICANT JOB LOSSES WORLDWIDE.
10 I Exxaro Annual Report 2009
Although experts initially thought the
with 2009 possibly ranking among the fi ve
As a member of the Chamber of
South African economy would weather
hottest years. As global understanding
Mines, Exxaro fully supports the work
the storm better than most, GDP growth
of climate change, its associated risks
the chamber is undertaking, both in
tumbled over fi ve percentage points. The
and opportunities continues to develop,
preparing for the charter review process
domestic situation was compounded by
investors are
increasingly demanding
and to achieve the policy objectives
steep increases in electricity tariffs and
more advanced corporate disclosure on
of government’s medium-term strategic
a rand that strengthened against the US
carbon performance.
framework.
dollar from 9,97 in the fi rst quarter to
7,50 in the fourth.
We recognise that to remain competitive
The work that has been done by the
and sustainable, it is vital that energy
chamber to date confi rms the intuitive
The global economic downturn initially
in its broadest context is dealt with as
understanding
that
competitiveness,
only had a minor impact on Exxaro and
a strategic imperative. This spans every
transformation and sustainability cannot
cost-savings initiatives early in the year
aspect from potential energy shortages
be independent goals. An industry that is
were suffi cient to brace us for the diffi cult
and the rising costs of energy to climate
not competitive in the global marketplace
times we anticipated. But a combination
change and its related environmental
– no matter how zealous the commitment
of external factors since September had
concerns. Our multi-faceted approach to
– will lack the essential capacity to reach
a signifi cant impact on Exxaro’s cash fl ow
energy is detailed on page 102.
transformation benchmarks. Nor will it be
and we had to re-evaluate the group’s
able to support the performance drivers
strategy by
reviewing all projects,
In February 2010, Exxaro’s energy
underpinning international principles of
commodities and businesses.
and carbon management programme
sustainability.
was formally approved and the group
Against this background, Exxaro’s results
recommitted to saving 10% on energy
Exxaro has met most of the key targets
for the year are commendable, with
effi ciency and carbon emissions by 2012.
set for 2009 in the existing mining
revenue rising 8% despite sharply lower
This pledge was communicated to each
charter (page 126). Targets in the codes
demand and prices
for
its
key
business unit, and the savings target
of good practice have been incorporated
commodities. The group-wide initiative
is being incorporated into the relevant
into our overall approach to sustainability
to reduce costs resulted in savings of
senior management performance criteria.
and the relevant business plans.
R750 million, while the thorough business
It will also be included in the annual
review – detailed by our chief executive
business planning process.
Sustainable development
offi cer – has positioned the group to
Exxaro takes its role as a leading and
better manage prevailing economic
Mining charter review and
concerned corporate citizen seriously
conditions and
resume
its growth
codes of good practice
and is fi rmly committed to advancing the
trajectory when markets improve.
The profi le of mining in South Africa’s
principles and practice of sustainable
Focus on energy and climate
particularly relevant in a year targeted
industrial and commercial domain was
development.
change
for a review of the mining charter.
Given the medium-term growth momen-
At the recent climate conference
in
The charter, a product of tripartite
tum in our business, we continue to make
Copenhagen, the UN weather agency
collaboration implemented in 2004, is
substantial investments. Also essential
noted that this decade is on track to be
the template by which mining industry
to our future growth and sustainability
the warmest since records began in 1850,
transformation is measured.
is our ability to address the social and
Exxaro Annual Report 2009 I 11
CHAIRMAN’S STATEMENT CONTINUED
EXXARO HAS A NUMBER OF INITIATIVES UNDER WAY TO
DEVELOP SKILLS, RAISE LITERACY LEVELS AMONG OUR OWN
PEOPLE AND THOSE FROM OUR COMMUNITIES AND BUILD A
POOL OF EXPERTISE THAT WILL TAKE SOUTH AFRICA INTO THE
FUTURE.
environmental
issues that affect the
stakeholders a full understanding of
A specifi c survey into the skills shortage in
health and prosperity of the communities
our initiatives.
in which we operate.
One of Exxaro’s core values is honest
global best practices. We have used
responsibility.
By
extension,
this
the guidelines of the Global Reporting
Exxaro has long measured itself against
Initiative (GRI) since 2004 and, in 2008,
declared our sustainability report as a
B+ level of application, in terms of GRI
standards. This was externally verifi ed,
as it is again in 2009 (page 131).
the mining industry estimated the shortfall
at 50 000, particularly well-qualifi ed,
competent and experienced artisans. The
industry trained about 1 800 artisans last
year, over one third of these in Exxaro
initiatives.
At present, mining is the only industry
exceeding its artisan training target, but
given the low pass rate, more than twice
as many artisans need to be trained
each year to close the 50 000 shortfall
Among other
international protocols
noted above.
to which Exxaro subscribes, we are a
signatory to the United Nations Global
In addition, the Mining Qualifi cations
Compact which binds member companies
Authority reports that nearly two thirds
and countries to a common universal
code of conduct (page 89).
Skills development
The economic climate of 2009 masked
the impact of skills shortages in South
Africa, given lower activity levels across
the board. However, recent reports have
of the local mining workforce are still
illiterate, despite adult basic education
and training (ABET) programmes being
introduced 20 years ago.
Exxaro has a number of initiatives under
way to develop skills, raise
literacy
levels among our own people and those
from our communities and build a pool
responsibility covers our role as a
corporate citizen, custodian of our
environmental resources and the ethical
code that guides our business practices.
At every level, and in every business,
Exxaro’s people are accountable for their
actions.
We are working towards entrenching
the Exxaro brand as one that includes a
strong sustainable development element.
Admittedly, this is an ambitious target,
given its multi-faceted dimensions, but
we have made signifi cant progress. We
believe that sustainable development
gives us our licence to operate and our
commitment is therefore both a business
and social imperative.
While the concept of sustainability is
estimated that the national artisan
of expertise that will take South Africa
interwoven throughout our business
shortage might require public and
into the future. In 2009, Exxaro had
operations, we present a separate
private-sector funding of R9 billion to
361 artisans and learners completing
section in this report to give interested
address.
various courses (page 117).
12 I Exxaro Annual Report 2009
Corporate governance
2009. Ms Noluthando Langeni was
Much has been achieved in the three
In 2010, the recommendations of the third
appointed to the board in her stead with
years since Exxaro was formed and the
King report on corporate governance in
effect from 23 February 2010.
board is confi dent that much more will
South Africa (King III) becomes effective.
be achieved in years to come. We will
King III requires very little change to the
I
thank
these directors
for
their
continue to benefi t from the strength of
way Exxaro conducts its business and
contribution to the board.
our operational capacity and investment
those areas where we do not comply will
for growth.
be addressed.
Having served as acting chairman since
2006, and as an
independent non-
I look forward to being part of Exxaro’s
Good governance is the foundation of
executive director for a number of years,
ongoing success, confi dent that we
an ethical approach to business. The
board continued its focus on promoting
the high standards of conduct we expect
I was elected as chairman of the board
will continue creating value for all
with effect from 23 February 2010.
stakeholders.
of our employees around the group,
Dividend
recognising that actions speak louder
than words.
One of the principal areas of non-
compliance with King II was addressed
shortly after year end when
I was
appointed
independent non-executive
chairman of the Exxaro group.
Also in the current year, the Companies
Act No 71 of 2008 is expected to come
into effect. Although this was signed into
law on 8 April 2009, the effective date
is now expected to be October 2010.
Again, Exxaro will address the few areas
The board of directors declared a fi nal
cash dividend of 100 cents per share,
taking the total dividend for 2009 to
200 cents per share.
Dr Len Konar
Chairman
Appreciation
Exxaro is home to some of the most
16 March 2010
formidable mining teams in the South
African
industry. Under the capable
leadership of Sipho Nkosi and his
executive management, the group has
proved its mettle in a most challenging
year. On behalf of the board, I thank
every one of the people in this group
required to comply with the new act.
for the passion and energy they bring
Directorate
to Exxaro’s continued growth and
development. I also thank my fellow
Mr Philip Baum resigned on 15 July 2009
directors for their ongoing support and
and Mr Chris Griffi th was appointed in
counsel, and
invaluable contribution
his stead. Ms Simangele Mngomezulu
in upholding the highest standards of
resigned with effect from 21 December
corporate governance.
Exxaro Annual Report 2009 I 13
CHIEF EXECUTIVE OFFICER’S REVIEW
SIPHO NKOSI
‘Currently our strategic
intent is to achieve
operational excellence
as a diversifi ed, and
low-cost, resources
business which
includes streamlining
management and cost
structures, maximising
cash fl ow and ensuring
availability of sustaining
and environmental
and environmental
capital.
capital.’
THE 12 MONTHS TO 31 DECEMBER 2009 – ONLY EXXARO’S THIRD
YEAR AS A LISTED, EMPOWERED RESOURCES GROUP – WILL LONG
BE REMEMBERED FOR THE SHEER SCALE OF THE GLOBAL ECONOMIC
MELTDOWN. FOR EXXARO, THE FIRST SIX MONTHS REFLECTED THE
EFFORT PUT INTO MANAGING THIS DOWNTURN AND ITS KNOCK-ON
EFFECT ON COMMODITY PRICES AND SUPPLY/DEMAND BALANCES,
WITH COMMENDABLE INCREASES IN REVENUE, NET OPERATING
PROFIT AND HEADLINE EARNINGS PER SHARE.
14 I Exxaro Annual Report 2009
In the second six months, some excellent
greenfi elds development to supply
KZN Sands operations during the
operating performances were offset by
independent power producers, the
next fi ve years while, in parallel,
external factors, principally the stronger
Mafutha coal-to-liquid joint venture
investigating feedstock alternatives
rand exchange rate and a sizeable
with Sasol, as well as the Moranbah
and the continuation of the business
increase in electricity tariffs.
South joint venture with Anglo Coal in
should market conditions improve
Strategy
>
We will strive to increase our coal
>
In the light of the southern African
Australia.
substantially.
As depicted on the inside front cover, our
export allocation and volumes to
strategic focus areas are to:
the metal markets, and develop
> Achieve operational excellence
downstream
products
such
as
>
Improve Exxaro’s portfolio
char and market coke in line with
> Ensure Exxaro’s sustainability
the government’s drive
to add
> Protect and build Exxaro’s reputation
value to natural resources through
>
Develop
Exxaro’s
people
and
benefi ciation.
leadership.
>
We believe the fundamentals of iron
ore are positive in the longer term,
Currently our strategic intent is to achieve
we have expertise and experience
operational excellence as a diversifi ed,
in mining bulk ore commodities, and
and low-cost, resources business which
therefore we are considering ways
includes streamlining management and
to
increase our footprint
in this
cost structures, maximising cash fl ow
commodity.
and ensuring availability of sustaining
>
A review of the existing business
and environmental capital.
portfolio and growth pipeline has led
to:
energy shortages, we have various
energy effi ciency
initiatives under
way (page 102). Also, while we have
a major focus on supplying the coal-
fi red power generation
industry,
as a responsible business we are
evaluating and developing a growth
pipeline of environmentally-friendly
renewable energy projects
in the
wind, solar and co-generation arenas.
Opportunities to supply independent
power producers are also being
examined. A funding strategy that
includes potential partners is being
developed to service the energy
growth pipeline.
A prioritised commodity strategy
is
–
A programme to reconfi gure the
geared to improve Exxaro’s portfolio.
group’s zinc assets and ultimately
This
is
in response to the current
divest
from
these
to enable
economic climate and the need to align
maximum value release for all
existing resources and cost structures
stakeholders. The
zinc assets
to best position the business to release
account for some 2% of the group’s
optimal value
for all stakeholders.
net assets and 10% of revenue. The
Accordingly, the following developments
current portfolio of zinc assets is
We believe these measures provide a
balance between our commodity and
project portfolios and our longer-term
growth aspirations. Our ongoing review
of the business with particular emphasis
on cost and balance sheet structures will
ensure we remain optimally positioned to
are taking place:
shown on page 4. We will not make
meet all stakeholder expectations.
>
An intensifi ed focus has been placed
further
investments
in the zinc
on our carbon-related project pipeline.
commodity.
While our growth projects are detailed
This encompasses the development
–
A decision not to proceed with
later, it is pertinent for me to comment
of mega mines in the Waterberg such
the planned development of the
on these here. Exxaro plans to spend
as the Grootegeluk mine brownfi elds
Fairbreeze mineral sands mine
about R28 billion between now and
expansion to supply Eskom’s new
in KwaZulu-Natal. Exxaro will
2018 on developments in the resource-
Medupi power station, the Thabametsi
accordingly plan for closure of the
rich Waterberg coal basin in Limpopo
Exxaro Annual Report 2009 I 15
CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
“EXXARO PLANS TO SPEND ABOUT R28 BILLION BETWEEN
NOW AND 2018 ON DEVELOPMENTS IN THE RESOURCE-RICH
WATERBERG COAL BASIN IN LIMPOPO ALONE, AS WE AIM TO
BECOME THE LARGEST COAL PRODUCER IN SOUTH AFRICA
(CURRENTLY FOURTH) IN THE NEXT FEW YEARS.”
16 I Exxaro Annual Report 2009
alone, as we aim to become the largest
2009 resulted in the deaths of three
>
The R9,5 billion expansion of
coal producer in South Africa (currently
contractors and injuries to 12 others. Our
Grootegeluk mine to supply Eskom’s
fourth) in the next few years. We have a
deepest condolences go to the families,
new Medupi power station, currently
unique advantage because Exxaro is the
friends and colleagues involved.
only company with a coal mine in the fi eld
– the massive and effi cient Grootegeluk
Incidents like these regrettably remind
open-pit mine. Additionally, our deposits
us that we still have much to achieve
are in a shallow area and therefore more
to reach our safety target of zero harm.
The overall safety performance for the
year was better than 2008, while the
average lost-time injury frequency rate
(LTIFR) per 200 000 man-hours worked
stream.
cost effective to mine. The Waterberg is
the undisputed future of the coal industry
and thus South Africa’s power supply,
and central to our growth strategy.
Exxaro’s planned projects in the Waterberg
between now and 2018 are detailed in the
Growth report on page 49.
The
commodity
portfolio
review
announced in December 2009 noted
our intention to explore opportunities
in the energy markets. Clean energy
initiatives encompassing co-generation,
carbon credit trading, and renewable
energy (wind and solar projects) are also
progressing well.
Safety
The fi rst two CEO Safety Summits took
place,
in February and October, and
will become bi-annual events to keep
employees focused on safety always, all
the way (page 91).
improved by 15% to 0,33, compared
to the target of 0,21 and 2008’s actual
performance of 0,39.
The year in review
During 2009, Exxaro achieved many
of its goals, honing its strategy for the
journey ahead, and putting systems in
place to guide operations into the future.
New sites began producing, employees
were recognised for their innovation and
commitment to the group, and each of
the operations contributed signifi cantly
to the communities in which they are
based.
During the year, we also concentrated on
employees’ total wellbeing. Apart from
the focus on heart health – South Africa’s
biggest cause of illness and death – we
trained over 200 HIV/Aids peer educators
and rolled out a new HIV/Aids initiative,
under construction. An estimated
2 000 contractor
jobs are being
created during the mine’s expansion
phase, with a further 7 000 jobs
involved in constructing the power
station. A signifi cant number of
permanent jobs will be created once
the mine and power station come on
>
Several operations achieved new
safety records, including Namakwa
Sands, Grootegeluk, Rosh Pinah,
Arnot, Zincor, and North Block
Complex. Arnot, New Clydesdale,
Matla and Namakwa Sands launched
safety awareness initiatives.
>
Thirteen business units are now
ISO 14001 and OHSAS 18001 certifi ed.
The remaining four business units
have programmes
in place to be
certifi ed by the end of 2010. Notably,
our AlloyStream pilot plant received
the highest score of all companies
in 27 countries participating in the
ISO 14001 audit in 2009.
>
A group-wide cost-reduction initiative
produced operational cost savings of
R750 million.
>
FerroAlloys has developed ultra-high
dense medium separation technology
that increases the density at which
benefi ciation plants can operate
(processing iron ore is challenging as
conventional benefi ciation plants can
only treat high-grade ore and large
quantities of iron ore are therefore
The safety of our employees has never
the ACT programme (page 95).
been more of a priority than it was in 2009,
with the group rallying stakeholders to
Highlights
focus on ways of achieving a zero-harm
>
Several new projects ramped up,
environment.
including the Diepspruit shaft at
rejected). If plants can process lower
New Clydesdale, and the char plant
density ore, it will allow iron ore mines
Tragically, an explosion in the maintenance
at Grootegeluk (page 40). Expansion
to exploit low-grade ore bodies such
contractors’ storage area near
the
of the Tiwest Kwinana plant is also
as waste dumps. The technology is
Zincor refi nery plant
in September
under way.
currently being tested in a pilot plant.
Exxaro Annual Report 2009 I 17
CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
>
Hot commissioning of the char plant at
>
In the third quarter, Exxaro received
draw on the group’s collective innovation
Grootegeluk began in June 2009 with
notice that Eskom was reviewing
and expertise in dealing with the issues
full production by December 2009 –
certain commercial terms contained
we face. Our people have an excellent
part of our long-term strategy to grow
in the Medupi coal supply and offtake
and long-standing track record of rising
with the ferrochrome industry.
agreement signed in September 2008,
above tough circumstances to make this
>
Exxaro’s Evergreen awards are the
including the coal price escalation
an even greater organisation.
platform for our people to make a
difference. Apart from recognising
ongoing personal development, we
encourage innovation in production
methods, creativity in safety systems
and structures, and the study of
the environment. This outstanding
performance from employees who
have remained loyal and passionate
about Exxaro and what we do,
even in the current diffi cult times,
underscores the progress we have
made since our inception just three
years ago. A new category has been
added to the Evergreen awards to
recognise achievements in addressing
the challenges of energy and climate
change.
>
Exxaro
launched
its fi rst housing
subsidy that assists employees at
certain levels to buy their fi rst home.
>
Exxaro again participated
in the
Deloitte Best company to work for
survey to benchmark the group to the
standards of an employer of choice.
Deloitte congratulated our group
for the signifi cant shift in year-on-
year results, with employees noting
the
improvement
in management
style, values and culture, HR policies
and procedures,
job satisfaction,
innovation, and change management.
Lowlights
The review period presented other
mechanism and coal delivery ramp-
up. Pending the outcome of the review
My sincerest thanks to Dr Len Konar for
process, Exxaro’s funding programme
his guidance and wise counsel as acting
was
temporarily
suspended
in
chairman. We look forward to his ongoing
December 2009 as was the placement
contribution as chairman.
of additional contracts associated
with the project. The review process is
Prospects
expected to be concluded in the fi rst
The rate of recovery from the global
quarter of 2010.
recession remains uncertain, despite a
>
Following the commodity portfolio
number of positive indicators.
review discussed earlier, Exxaro
withdrew from the Igoda coal export
Exxaro expects global demand
for
venture with Sasol Mining and
coal to increase, with demand for local
divested from the iron ore project in
power station coal expected to remain
Turkey as it did not meet the group’s
strong. Domestic demand for steam and
investment criteria.
metallurgical coal is, however, expected to
Operational overview
be fi rmer but remain subdued in 2010. Coal
exports may be affected by the availability
All operations delivered commendable
of rail and port allocation at RBCT.
production results combined with cost
savings and optimisation
initiatives.
For the mineral sands commodities,
Full details of operational activities
higher production and sales volumes
are provided on pages 38 to 48 in the
are anticipated at prices which, although
business operations review.
still under pressure, are showing signs of
Conversion of mining rights
recovery.
We continue to engage with relevant
The base metals business is expected to
stakeholders
to process registration
remain under pressure in 2010 as a global
of new-order mining rights granted, as
zinc oversupply may result in downward
well as the converted old-order mining
pressure on zinc prices in the second half
rights of the former Kumba Resources
of 2010, while local demand is expected
Limited. Approval of the conversion of
to remain stable.
the old-order mining rights of the former
Eyesizwe Coal (Pty) Limited submitted in
Based on current market expectations
operational and strategic challenges,
2008 is awaited.
including:
>
In September,
three contractors
Appreciation
for iron ore price increases effective from
1 April 2010, coupled with strong demand,
the equity accounted contribution from
died in a gas explosion at Zincor
Exxaro
is
fortunate
to have such
SIOC may have a positive impact on
(page 93).
exceptional people at every level who
Exxaro’s earnings.
18 I Exxaro Annual Report 2009
The introduction of royalty payments
from 1 March 2010 will have a negative
impact on the group’s operating results,
most notably for the coal business.
Overall, the group’s consolidated results
for 2010 will largely be driven by the
recovery in demand and prices for its
commodities, as well as by trading levels
of the local and Australian currencies.
The group will continue with its strong
focus on capital prioritisation and
working capital management, together
with rigorous cost control.
Exxaro has what it takes to continue
and grow as a key South African-based
resources group. By continuing to choose
our operations carefully, and managing
these effi ciently, we believe the future
holds abundant possibilities for Exxaro’s
shareholders, employees and other
stakeholders.
Sipho Nkosi
Chief executive offi cer
16 March 2010
Exxaro Annual Report 2009 I 19
FINANCIAL REVIEW
WIM DE KLERK
OVERVIEW
8% increase in revenue
to R15 billion
Profi t affected
by R1 435 million
impairment at KZN
Sands
Currency strength
impacted negatively on
earnings
Headline earnings of
729 cents per share
Final dividend of 100
cents per share; total
dividend of 200 cents per
share
Targeted savings
realised through
optimisation initiatives
and prioritising capital
expenditure
CALENDAR 2009 PROVED EXXARO’S RESILIENCE IN DIFFICULT
GLOBAL ECONOMIC CONDITIONS; SOLID RESULTS WERE
REPORTED DESPITE LOWER DEMAND AND SOFTER PRICES FOR
A NUMBER OF OUR PRODUCTS AMID A STRENGTHENING LOCAL
CURRENCY. THE GROUP’S BALANCE SHEET REMAINS HEALTHY,
INTERIM AND FINAL DIVIDENDS WERE DECLARED AND NET DEBT
LEVELS REMAIN RELATIVELY LOW AS A FOUNDATION TO SECURE
FUNDING FOR A SIGNIFICANT PART OF THE EXCITING GROWTH
PIPELINE, MOST NOTABLY IN THE COAL BUSINESS.
20 I Exxaro Annual Report 2009
Introduction
The group’s audited fi nancial results for the 12-month period ended 31 December 2009 include a proportionately consolidated
50% interest in Mafube Coal Mining (Pty) Limited (Mafube) from 1 June 2009 as well as a R1 435 million impairment (the impairment)
of the carrying value of the assets of KZN Sands after the decision not to proceed with the development of Fairbreeze mine. The results
are therefore not comparable with the corresponding period in 2008 which only includes the acquisition of Namakwa Sands and a
26% interest in Black Mountain Mining (Pty) Limited (Black Mountain) with effect from 1 October and 1 November 2008 respectively.
Fully comparable supplementary results have not been disclosed, however, analysis and comments in this report have been done by
excluding the impairment due to the signifi cant distortion it creates on inclusion.
Overview of group operating results
Table 1
R million
Revenue
Operating expenses
Net operating profi t before impairment
Net operating profi t margin (%)
12 months ended
31 December
2009
15 009
13 270
1 739
12
2008
13 843
11 376
2 467
18
Group revenue increased by 8% to R15 billion, with net operating profi t reducing by R728 million to R1 739 million before the
impairment.
Export sales were recorded at weaker average exchange rates than in 2008. However, realised currency losses were incurred as foreign
currency proceeds on export sales were repatriated at stronger exchange rate levels. Unrealised foreign currency losses were also
incurred on revaluing monetary items in foreign currency at 31 December 2009.
The coal business reported lower net operating profi t as an increase in revenue, mainly due to higher export and local power station
sales volumes, was more than offset by lower international coal prices and above-infl ation increases in the cost of electricity, rail tariffs
and labour costs, as well as realised and unrealised foreign currency losses.
All three units in the mineral sands business reported operating losses on the back of lower demand for their products at
generally softer prices. The two local operations, KZN Sands and Namakwa Sands, were also impacted by realised and unrealised foreign
currency losses while the Australia Sands operation was affected by the Australian dollar (AUD) persisting at strong levels against the
US dollar (USD).
Lower realised zinc prices and lower demand for products resulted in the base metals business recording a small net operating loss.
Exxaro Annual Report 2009 I 21
FINANCIAL REVIEW CONTINUED
Segmental results
Segmental results are shown in tables 2 and 3
Table 2
R million
Revenue
Coal
Tied operations1
Commercial operations
Mineral sands
KZN Sands
Namakwa Sands2
Australia Sands
Base metals
Rosh Pinah
Zincor
Inter-segmental
Other
Total
Table 3
Net operating profi t excluding the impairment (Rm)/margin (%)
Coal
Tied operations1
Commercial operations
Mineral sands
KZN Sands
Namakwa Sands2
Australia Sands
Base metals
Rosh Pinah
Zincor
Other
Other
Total net operating profi t
Non-cash costs
Earnings before interest, tax, depreciation,
amortisation and impairment (EBITDA)
12 months ended
31 December
2009
2008
9 731
2 681
7 050
3 508
705
1 334
1 469
1 582
566
1 413
(397)
188
9 040
2 492
6 548
2 776
974
491
1 311
1 829
436
1 733
(340)
198
15 009
13 843
12 months ended
31 December
2009
1 905
75
1 830
(124)
(12)
(110)
(2)
(8)
105
(47)
(66)
(34)
1 739
1 224
2 963
%
20
3
26
19
12
20
2008
2 654
83
2 571
104
31
155
(82)
(172)
(14)
(95)
(63)
(119)
2 467
976
3 443
%
29
3
39
4
3
32
18
25
1 Tied operations refer to mining operations that supply their entire production to either Eskom or ArcelorMittal SA Limited in terms of contractual arrangements
2 Revenue and net operating profi t included from the effective date of acquisition of 1 October 2008.
22 I Exxaro Annual Report 2009
Coal
Revenue increased by 8% to R9 731 million as higher export volumes, combined with increased domestic power station coal sales at
higher prices, were partially offset by lower domestic metallurgical and steam coal sales and lower export prices realised.
Despite higher revenue, net operating profi t decreased by 28% to R1 905 million, at an operating margin of 20%, as above-infl ation
increases in electricity, rail tariffs and labour increased the cost of sales. Costs were further impacted by realised and unrealised
exchange rate losses and an increase in exploration expenditure for the Moranbah South project in Australia.
The net operating profi t from the tied operations was slightly down year-on-year as the environmental rehabilitation provision was
reduced after extending the life-of-mine at Matla mine.
Mineral sands
KZN Sands
Despite the increased production, revenue reduced by R269 million to R705 million as lower sales volumes of zircon, pig iron and
chloride slag were recorded at softer prices.
The net operating loss of R12 million before the impairment was R43 million worse than the corresponding period as lower revenue
combined with realised and unrealised foreign currency losses were only partially offset by improvements in production effi ciencies and
cost savings.
Namakwa Sands
Net operating profi t for only three months in 2008 of R155 million was followed by a loss in the 2009 fi nancial year of R110 million. Softer
prices, albeit at a marginally weaker local currency, realised and unrealised exchange rate losses, and the R55 million derecognition of
the preheaters due to their deteriorated condition, all added to the weaker fi nancial results.
Australia Sands
Revenue increased 12% to R1 469 million while net operating results improved from a loss of R82 million in 2008 to a loss of R2 million
in 2009. This was achieved on the back of a much stronger production performance, higher pigment sales and higher average prices for
both mineral and pigment products at a realised rate of USD0,79 to the AUD compared with USD0,84 in 2008.
Base metals
Revenue for the 12 months to 31 December 2009 decreased by 14% mainly as a result of the lower average realised US dollar zinc price. The
average zinc price for 2009 of USD1 658 is 12% lower than in 2008 and was only partially offset by the slightly weaker local currency.
A turnaround from a net operating loss in 2008 of R172 million to a loss of R8 million was reported due to cost-saving initiatives
implemented as well as the upward revaluation of inventories at the Zincor refi nery at year end. The impact of above-infl ation increases
in electricity and maintenance expenses is, however, still being felt.
Other
Production volumes at the FerroAlloys plant were slightly higher while Glen Douglas production volumes were lower due to unplanned
plant stoppages. Sales volumes were lower at both Glen Douglas and FerroAlloys.
Revenue for 2009 decreased marginally compared to the previous year due to lower demand and selling prices.
Exxaro Annual Report 2009 I 23
FINANCIAL REVIEW CONTINUED
Consolidated
The following graph reconciles net operating profi t for 2008 to the R1 739 million reported for 2009:
Net operating profit: FY08 vs FY09 (unaudited)
4 000
3 500
3 000
2 500
m
R
2 000
1 500
1 000
500
0
2 467
(367)
228
(498)
(182)
355
(264)
1 739
FY
2008
Price
Volume
Exchange
Inflation
Cost
Namakwa
*Excluding impairment of R1 435 million at KZN Sands
FY
2009
1 905
(124)
(8)
(34)
(264)
(264)
1 739
12 months ended
31 December
2009
1 739
2
(415)
1 898
(766)
2 458
345
712
2008
2 467
2
(241)
1 663
(510)
24
3 405
343
993
Coal
2 654
(464)
Mineral Sands
Base Metals
Other
Total
104
(172)
(119)
61
36
2 467
(367)
369
(183)
46
(4)
228
(260)
(132)
(77)
(29)
(41)
(72)
(54)
(15)
(498)
(182)
(353)
362
213
133
355
Attributable earnings
Table 4
R million
Net operating profi t excluding the impairment
Income from investments
Net fi nancing cost
Equity-accounted income – net of tax
Taxation
Minority interest
Attributable earnings excluding the impairment
Weighted average number of shares
Attributable earnings (cents per share)
24 I Exxaro Annual Report 2009
Attributable earnings for the period, excluding the impairment, were R2 458 million (712 cents per share). This is signifi cantly lower
than the comparable 2008 attributable earnings of R3 405 million (993 cents per share) primarily due to lower operating results.
Attributable earnings include Exxaro’s 20% share of the after-tax profi ts of Sishen Iron Ore Company (Pty) Limited (SIOC) amounting to
R1 762 million, a contribution of R13 million from the effective 22% interest in the Chifeng zinc refi nery and an equity-accounted profi t
of R123 million from the 26% interest in Black Mountain.
The impairment of the carrying value of the assets at KZN Sands resulted in Exxaro recording a number of deferred tax asset write-
downs to refl ect the group’s assessment of the likelihood of having suffi cient future taxable income. In order to eliminate the distortion
caused by posting the required deferred tax write downs, attributable earnings should, for information purposes only, be determined
using a normalised effective tax rate of 28% as shown below.
R million
Net operating profi t excluding the impairment
Income from investments
Net fi nance cost
Equity-accounted income – net of tax
Taxation
Minority interest
Attributable earnings for information purposes
Weighted average number of shares
Attributable earnings (cents per share) for information purposes
Net fi nancing costs
An analysis of the composition of the net fi nancing cost was:
R million
Interest expense and loan costs
Finance lease
Interest income
Interest adjustment on non-current provisions
Total
12 months ended
31 December
2009
1 739
2
(415)
1 898
(371)
2 853
345
827
2008
2 467
2
(241)
1 663
(510)
24
3 405
343
993
12 months ended
31 December
2009
460
66
(145)
381
34
415
2008
283
63
(153)
193
48
241
The higher interest expense is due to higher debt levels after the acquisition of Namakwa Sands and a 26% interest in Black Mountain
in the last quarter of 2008 as well as payment for the 50% joint venture interest in Mafube in July 2009.
The interest adjustment on non-current provisions refers to unwinding of the discount rate for environmental rehabilitation provisions
accounted for at net present value.
Exxaro Annual Report 2009 I 25
FINANCIAL REVIEW CONTINUED
Income from equity-accounted investments — post tax
Table 5
R million
SIOC
Chifeng
Black Mountain
Total
12 months ended
31 December
2009
1 762
13
123
1 898
2008
1 856
(4)
(189)
1 663
The results of SIOC are fully reported by Kumba Iron Ore Limited in its fi nancial results to 31 December 2009.
Production at the Chifeng refi nery was in line with 2008. Equity-accounted income from this operation improved by R17 million to
R13 million mainly due to reduced production costs as well as lower 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.
Taxation
Due to the required deferred taxation asset write-downs subsequent to the impairment, the effective tax rate as disclosed is not
meaningful.
A reconciliation of the tax rate refl ects the following:
Percentage (%)
> Effective tax rate including the impairment
> Tax effect of:
– Share of associates and joint ventures
– Derecognition of deferred tax assets
– Exempt income and special tax allowances
– Assessed losses not provided for
– Capital losses
– Disallowable expenditure
– Other
> Corporate tax rate
42,8
29,6
(46,0)
4,3
(1,5)
(1,3)
(1,3)
1,4
28,0
Headline earnings
Headline earnings, which exclude the impact of the impairment of the carrying value of assets in KZN Sands, were R2 514 million
(729 cents per share), which is 31% lower than the R3 630 million (1 058 cents per share) in 2008.
26 I Exxaro Annual Report 2009
Headline earnings
Table 6
R million
Attributable earnings excluding the impairment
Net impairment of property, plant and equipment (PPE)
Share of associates’ impairments and adjustments
Gains or losses on disposal of PPE and subsidiaries
Taxation effect of adjustments
Headline earnings
Headline earnings per share
12 months ended
31 December
2009
2 458
(8)
88
(24)
2 514
729
2008
3 405
20
167
59
(21)
3 630
1 058
Dividends
Exxaro’s intention remains to progress to distributing 50% of attributable earnings to shareholders by means of interim and fi nal
dividend declarations. Dividend declarations in the medium term may, however, be lower to adequately provide for funding the current
growth pipeline of projects, comply with contractually agreed loan covenants, and maintain healthy key fi nancial metrics.
While Exxaro was affected by the global recession, the group continued with both its interim and fi nal dividend declarations in 2009.
Due cognisance was however taken of the uncertainty of the global economic recovery, Exxaro’s capital risk profi le as well as a prudent
focus on cash fl ow preservation.
Since the creation of Exxaro in November 2006, the following dividends have been declared:
Period ended
30 June 2007
31 December 2007
30 June 2008
31 December 2008
30 June 2009
31 December 2009
Dividend (cps)
R million
Incl STC1
Date declared Date paid/payable
R million
60
100
175
200
100
100
211
353
620
710
356
357
211
353
620
710
356
357
15 August 2007
10 September 2007
20 February 2008
17 March 2008
13 August 2008
22 September 2008
23 February 2009
30 March 2009
19 August 2009 28 September 2009
24 February 2010
19 April 2010
1 No STC is payable due to the utilisation of STC credits arising from the dividend receipts from SIOC.
Total dividends declared for the 2009 fi nancial year of R713 million equate to a dividend covered 3.5 times by attributable earnings and
are paid or payable to the shareholders as follows:
Gross dividend declared
BEE Holdco
Public
Anglo American
Exxaro empowerment scheme (Mpower)
Total
Rm
713
372
249
70
22
Final
Rm
Interim
Rm
357
186
125
35
11
356
186
124
35
11
Exxaro Annual Report 2009 I 27
FINANCIAL REVIEW CONTINUED
Cash fl ow
Table 7
R million
Net cash retained from operations
Net fi nancing cost, taxation and dividends
Cash used in investing activities
New capacity
Sustaining and environmental capital
Acquisition of investments and operations
Dividends received
Proceeds on sale of non-core assets and investments
Other
Cash (outfl ow)
Share issue
Other movements in net debt
(Increase) in net debt
12 months ended
31 December
2009
2 117
(2 323)
(990)
(992)
(1 090)
1 754
11
(107)
(1 620)
43
227
2008
3 574
(1 664)
(470)
(1 147)
(3 157)
1 044
29
(55)
(1 846)
31
(83)
(1 350)
(1 898)
Cash retained from operations was R2 117 million. This was primarily used to fund net fi nancing charges of R381 million, taxation payments
of R892 million, dividend payments of R1 050 million and capital expenditure of R1 982 million, of which R990 million was invested in
new capacity and R992 million applied to sustaining and environmental capital. After the receipt of R1 754 million in dividends, primarily
from SIOC, and the R1 082 million outfl ow to fi nalise the acquisition of the 50% interest in Mafube, the group had a net cash outfl ow of
R1 620 million for the fi nancial year.
Net debt of R2 381 million at 31 December 2008 accordingly increased to R3 731 million at a net debt to equity ratio of 29% at
31 December 2009.
Debt structure and fi nancial covenants
Compliance with the group’s fi nancial loan covenants with its external fi nanciers is shown below:
Table 8
Net debt to equity (%)
EBITDA interest cover (times)
HDSCR1
CHDSCR2
Ratio
Covenants
29
8
1,30
2,06
<125
>4
>1,3
>1,5
1 Historical debt service cover ratio (HDSCR) being cash earnings, less unfunded capital expenditure and taxation, plus dividends received (collectively
referred to as free cash fl ow), divided by mandatory capital and interest payments on fi nancing facilities.
2 Cumulative HDSCR being cash and cash equivalents at the beginning of the period, plus free cash fl ow, less dividends paid, divided by mandatory capital
and interest payments on fi nancing facilities. Dividend payments may not result in this being less than 1,5.
28 I Exxaro Annual Report 2009
Debt structure
The group’s debt structure at 31 December 2009 is:
Table 9
R million
Long term
Corporate
Australia Sands
Cash and cash equivalents
Net debt
Short-term standby facilities
Drawn
Available
Repayment profi le
4 754
4 144
610
(1 023)
3 731
736
555
181
1 300
2010
2011
2012
2013
After 2013
407
827
723
1 886
911
4 754
The fi nal dividend for payment in April 2010 will amount to a further cash outfl ow of R357 million offset by dividend infl ow from SIOC
of approximately R600 million.
Organisational structure
The acquisition of the 50% interest in the Mafube joint venture was completed with effect from 1 June 2009 followed by payment of
R1 082 million being made in July 2009.
Following the commodity portfolio review detailed by the chief executive offi cer, Exxaro plans to reconfi gure its zinc assets to ultimately
divest from them in an optimal manner. The portfolio of zinc assets includes the Zincor refi nery in Springs, Gauteng, a 50,04% interest
in the Rosh Pinah zinc and lead mine in Namibia, a 26% interest in Black Mountain which owns the Black Mountain zinc and lead mine
and the Gamsberg zinc project in the Northern Cape, and an effective 22% interest in the Chifeng zinc smelter in China.
The sale of Glen Douglas Dolomite (Pty) Limited remains imminent.
The fi nal evaluation of the iron ore project in Turkey concluded that it did not meet the group’s investment criteria and a decision was
made to divest from the project.
A total of 60% of Rosh Pinah’s projected zinc and lead concentrate sales are hedged to December 2011 at average forward prices ranging
from USD2 216 to USD2 061 for zinc and USD1 967 to USD1 713 for lead.
A detail of the hedging in place is as follows:
Table 10
Zinc
Lead
Year
2010
2011
2010
2011
Tonnes
hedged
Average
USD price
Average
ZAR price
26 400
26 700
53 100
5 172
5 500
10 672
2 216
2 061
2 139
1 713
1 967
1 840
19 944
19 976
19 960
15 690
19 065
17 378
Exxaro Annual Report 2009 I 29
FINANCIAL REVIEW CONTINUED
Capital expenditure
As announced on 1 December 2009, Exxaro reviewed its commodity portfolio and growth pipeline against the background of the
prevailing economic climate to align resources with a commodity strategy best positioned to release optimal value for all stakeholders.
Table 11 compares capital expenditure for the 12-month periods ended 31 December 2009 and 2008 together with an estimate for the
2010 fi nancial year.
Investment on expansion of the Grootegeluk mine at a revised capital cost of R9,5 billion over the next few years to supply Eskom’s
adjacent Medupi power station, and the AUD118 million Tiwest Kwinana pigment expansion project for an additional 40ktpa production,
has to date, and will continue to dominate cash outfl ows on capital expenditure in 2010 and beyond. Sustaining and environmental
capital in 2010 includes replacement of primary mining equipment at the coal operations.
Capital expenditure
Table 11
R million
Sustaining and environmental
Expansion
Coal1
Mineral sands
Base metals
Other
Total
Financial year
2010
Estimate
1 445
1 513
187
8
12 months ended
31 December
2009
992
492
486
12
2008
1 147
337
104
26
3
3 153
1 982
1 617
1 Includes capital expenditure on the Grootegeluk mine for Eskom’s Medupi power station in FY10 of R1 314 million, excluding capitalised interest.
Acknowledgements
I express my sincere appreciation to the previous fi nance director, Dirk van Staden, for the solid platform from which I was able to
operate and build, as well as to the very competent Exxaro fi nance teams for their continued commitment, dedication, and valuable
contributions.
Wim de Klerk
Finance director
16 March 2010
30 I Exxaro Annual Report 2009
0
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(cid:96)
(cid:105)
(cid:103)
(cid:92)
(cid:105)
(cid:88)
(cid:95)
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(cid:23)
Relative performance for the period 1 January 2009 to 31 December 2009
140
130
120
110
100
90
80
70
60
42%
27%
27%
02 January 2009
15 March 2009
27 May 2009
07 August 2009
19 October 2009
31 December 2009
Exxaro Resources Limited FTSE/JSE All Share Index FTSE/JSE Resources Index
(cid:74)(cid:95)(cid:88)(cid:105)(cid:92)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:23)(cid:103)(cid:92)(cid:105)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:101)(cid:90)(cid:92)(cid:23)(cid:93)(cid:102)(cid:105)(cid:23)(cid:107)(cid:95)(cid:92)(cid:23)(cid:103)(cid:92)(cid:105)(cid:96)(cid:102)(cid:91)(cid:23)(cid:40)(cid:23)(cid:65)(cid:88)(cid:101)(cid:108)(cid:88)(cid:105)(cid:112)(cid:23)(cid:41)(cid:39)(cid:39)(cid:48)(cid:23)(cid:107)(cid:102)(cid:23)(cid:42)(cid:40)(cid:23)(cid:59)(cid:92)(cid:90)(cid:92)(cid:100)(cid:89)(cid:92)(cid:105)(cid:23)(cid:41)(cid:39)(cid:39)(cid:48)
120
100
80
60
40
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(cid:39)(cid:41)(cid:23)(cid:65)(cid:88)(cid:101)(cid:108)(cid:88)(cid:105)(cid:112)(cid:23)(cid:41)(cid:39)(cid:39)(cid:48)
(cid:40)(cid:44)(cid:23)(cid:68)(cid:88)(cid:105)(cid:90)(cid:95)(cid:23)(cid:41)(cid:39)(cid:39)(cid:48)
(cid:41)(cid:46)(cid:23)(cid:68)(cid:88)(cid:112)(cid:23)(cid:41)(cid:39)(cid:39)(cid:48)
(cid:39)(cid:46)(cid:23)(cid:56)(cid:108)(cid:94)(cid:108)(cid:106)(cid:107)(cid:23)(cid:41)(cid:39)(cid:39)(cid:48)
(cid:40)(cid:48)(cid:23)(cid:70)(cid:90)(cid:107)(cid:102)(cid:89)(cid:92)(cid:105)(cid:23)(cid:41)(cid:39)(cid:39)(cid:48)
(cid:42)(cid:40)(cid:23)(cid:59)(cid:92)(cid:90)(cid:92)(cid:100)(cid:89)(cid:92)(cid:105)(cid:23)(cid:41)(cid:39)(cid:39)(cid:48)
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(cid:32)
(cid:73)
(cid:56)
(cid:81)
(cid:31)
(cid:23)
(cid:92)
(cid:90)
(cid:96)
(cid:105)
(cid:103)
(cid:92)
(cid:105)
(cid:88)
(cid:95)
(cid:74)
(cid:23)
3 000
2 500
2 000
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1 000
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120
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Exxaro Annual Report 2009 I 31
MACRO-ECONOMIC AND COMMODITY REVIEW
In 2009, the world found itself in the worst
During the fourth quarter of 2009, the
Commodity demand depended increasingly
economic recession since the Second
world economy started emerging from
on economic growth in China and, to a
World War, with GDP growth falling to a
the recession that had started in the same
lesser extent, other emerging economies
negative 1,9% after the 4,0% and 1,9%
period a year earlier. In this quarter the
in 2009. Expansion in China slowed only
expansion in 2007 and 2008 respectively.
year-on-year decline in economic activity
from 9,6% in 2008 to 8,7% in 2009,
The major factor in this decline was the
of advanced economies was only 0,7%,
mainly
from decreasing
international
sub-prime meltdown and associated credit
compared to 4,6% in the fi rst quarter. It
trade. In line with developed countries,
crunch which originated in the USA, but
is expected that positive growth will be
China also
injected massive stimulus
then spread to the rest of the world. This
recorded from the fi rst quarter of 2010,
into the economy in the form of fi scal,
resulted in a loss of confi dence, tight credit,
with most major developed economies
monetary and fi xed investment measures
declining demand, reduced spending and
participating in this turnaround. However,
to arrest the decline in economic activity.
investment, declining property prices and
recovery will be slow – economic growth of
These measures proved very effective,
signifi cant job losses worldwide.
about 2,0% is expected in this economic
with GDP growth accelerating from 6,2%
The impact of the recession was felt
fourth. GDP growth in 2010 is expected to
most acutely in the advanced economies
Although not impervious to conditions in
increase to an average of 10,1%.
grouping in 2010.
in the fi rst quarter of 2009 to 10,7% in the
of the world, despite unprecedented
advanced economies, emerging economies
fi scal and monetary stimulus measures
fared signifi cantly better in 2009. China
In the world as a whole economic growth
instituted by governments to ameliorate
and India did particularly well, with the
is forecast to recover to 3,2% in 2010,
the consequences of the credit crisis. USA
latter recording a GDP growth rate of
compared to a trend growth rate of 3,5%
GDP declined by 2,4% in 2009 and those
6,8% in 2009. The emerging economies as
to 4,0% in the period preceding the
of Western Europe and Japan by 4,0% and
a group achieved 1,2% GDP expansion in
recession.
5,1%, respectively. As a whole, economic
2009, compared to 5,8% in 2008 – growth
output in the advanced economies of the
in these countries is expected to improve
The key risks to the global economy in
world declined by 3,3% in 2009.
to 5,7% in 2010.
2010 are viewed as further weakness
(cid:58)(cid:102)(cid:100)(cid:103)(cid:88)(cid:105)(cid:88)(cid:107)(cid:96)(cid:109)(cid:92)(cid:23)(cid:62)(cid:59)(cid:71)(cid:23)(cid:94)(cid:105)(cid:102)(cid:110)(cid:107)(cid:95)(cid:23)(cid:105)(cid:88)(cid:107)(cid:92)(cid:106)
(cid:32)
(cid:92)
(cid:94)
(cid:101)
(cid:88)
(cid:95)
(cid:90)
(cid:23)
(cid:28)
(cid:31)
(cid:23)
(cid:95)
(cid:107)
(cid:110)
(cid:102)
(cid:105)
(cid:94)
(cid:71)
(cid:59)
(cid:62)
(cid:23)
15
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(cid:40)(cid:48)(cid:48)(cid:40)
(cid:40)(cid:48)(cid:48)(cid:41)
(cid:40)(cid:48)(cid:48)(cid:42)
(cid:40)(cid:48)(cid:48)(cid:43)
(cid:40)(cid:48)(cid:48)(cid:44)
(cid:40)(cid:48)(cid:48)(cid:45)
(cid:40)(cid:48)(cid:48)(cid:46)
(cid:40)(cid:48)(cid:48)(cid:47)
(cid:40)(cid:48)(cid:48)(cid:48)
(cid:41)(cid:39)(cid:39)(cid:39)
(cid:41)(cid:39)(cid:39)(cid:40)
(cid:41)(cid:39)(cid:39)(cid:41)
(cid:41)(cid:39)(cid:39)(cid:42)
(cid:41)(cid:39)(cid:39)(cid:43)
(cid:41)(cid:39)(cid:39)(cid:44)
(cid:41)(cid:39)(cid:39)(cid:45)
(cid:41)(cid:39)(cid:39)(cid:46)
(cid:41)(cid:39)(cid:39)(cid:47)
(cid:41)(cid:39)(cid:39)(cid:48)
(cid:23)(cid:23)(cid:23)(cid:23)(cid:58)(cid:95)(cid:96)(cid:101)(cid:88)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:74)(cid:102)(cid:108)(cid:107)(cid:95)(cid:23)(cid:56)(cid:93)(cid:105)(cid:96)(cid:90)(cid:88)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:78)(cid:102)(cid:105)(cid:99)(cid:91)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:76)(cid:101)(cid:96)(cid:107)(cid:92)(cid:91)(cid:23)(cid:74)(cid:107)(cid:88)(cid:107)(cid:92)(cid:106)(cid:23)
(cid:74)(cid:102)(cid:108)(cid:105)(cid:90)(cid:92)(cid:49)(cid:23)(cid:62)(cid:99)(cid:102)(cid:89)(cid:88)(cid:99)(cid:23)(cid:64)(cid:101)(cid:106)(cid:96)(cid:94)(cid:95)(cid:107)
32 I Exxaro Annual Report 2009
in consumer demand due
to high
the rise in consumer prices going forward
continued to underpin commodity demand
unemployment, premature
tightening
will remain close to this benchmark.
and prices. However, strong growth
in
of fi scal and monetary policy, a sharp
Signifi cant increases in electricity prices
commodity imports into China has led to
rise in oil and other commodity prices,
will continue to put pressure on the
high levels of metal stocks in that country,
and further failures of large fi nancial
infl ation rate.
both offi cial and unoffi cial, and of a
speculative nature. If this overhang of stocks
institutions. At the same time, the impact
of stimulus measures will start waning.
A combination of some of these factors
could cause renewed negative global
growth, leading to a w-shaped growth
profi le. The
latter prospect
is viewed
as an uncomfortably high risk by many
analysts. The possibility that pervasively
low short-term interest rates could lead to
the development of more asset bubbles,
particularly in emerging economies, is
also viewed as a risk.
Although experts
initially thought the
South African economy would weather the
storm better than most, this expectation
proved illusory as GDP growth tumbled to
a negative 2% in 2009 from 3,7% a
year earlier, lagging the world economic
downturn by about three months. On
a quarterly basis, year-on-year growth
declined from negative 0,7% in the fi rst
quarter of 2009 to negative 2,2% in the
third, before the rate of decline eased
to some 1,4% in the fourth quarter. GDP
growth is expected to recover to 2,5%
in 2010, depending on, and in line with,
conditions in the rest of the world.
On average, the rand weakened against the
is not responsibly drawn down in 2010, it
US dollar in 2009 compared to 2008, from
could lead to rapid deterioration in commodity
R8,25 to R8,44/dollar. However, increasing
market fundamentals and prices.
risk appetite of investors, premised on a
healthy recovery of the world economy
Spot metal prices, which had seen
in 2010 and manifesting itself mainly in
signifi cant price declines in the second
strong portfolio infl ows, resulted in the
half of 2008, generally started improving
rand exchange rate strengthening against
in the fi rst or second quarter of 2009. The
the US dollar during 2009. This rate
monthly Economist Metals Price Index was
declined from 9,97 in the fi rst quarter to
89% higher in December compared to the
7,50 in the fourth. The rand is expected
low in February 2009. Contract commodity
to remain relatively strong compared to
prices, on the other hand, which had
the US dollar in 2010, which will have a
achieved record levels in 2008, all saw
detrimental impact on export earnings,
precipitous falls in the prices negotiated
although commodity prices seem to be
with their customers as settlements were
picking up. The latter are expected to be
generally reached early in the year.
volatile in 2010.
Projections of global steel production
Due
to declining economic activity,
indicate that crude output decreased by
infrastructure
bottlenecks
in
terms
107Mt, or about 8%, to 1 220Mt in 2009.
of electricity supplies and
transport
In contrast to the rest of the world,
and harbour capacities, as well as the
production increased in China by 13,5%
shortage of skilled and experienced
to 568Mt. In the rest of the world, output
human
resources, eased
temporarily
declined by 21% compared to 2008 to
in 2009.
Increasing economic activity
some 652Mt. China was responsible for
in 2010 will put renewed pressure on
about 47% of world raw steel production
these
infrastructure components. With
in 2009, much higher than the 2008 fi gure
regard to export logistics through the
of 38%. Steel output generally moved
Richards Bay Coal Terminal, rail capacity
sideways at low levels in the fi rst four
South Africa’s average annual consumer
remained a serious problem even during
months of 2009, but picked up steadily
price infl ation declined to 7,1% in 2009
the recession.
from 9,9% in 2008, allowing for monetary
relaxation by the Reserve Bank during this
Commodity review
over the rest of the year in both China and
the rest of the world. General expectations
are that in 2010 growth in steel demand in
period. Infl ation fell to the upper limit of
Robust materials-intensive economic growth
China will continue and recovery in the rest
the Reserve Bank’s target range of 3 — 6%
in China and other emerging economies,
of the world will accelerate as the global
in the fourth quarter. Expectations are that
especially in the second half of 2009,
economy recovers.
Exxaro Annual Report 2009 I 33
MACRO-ECONOMIC AND COMMODITY REVIEW CONTINUED
Low and stagnant steel production
in
Over the next fi ve months, the price
in steel production in China from May
the early part of 2009,
leading to a
remained in the low- to mid-$60/t range,
2009, resulting in strong levels of iron ore
negative outlook for coking coal market
after which it increased to an average of
import demand, led to an increase in the
fundamentals,
excess
capacity
and
$71/t in December on increased demand
spot price of fi ne iron ore in that country,
easing of supply bottlenecks, resulted in
after a very cold winter in the northern
from an average of $64/t in April to $105/t
signifi cant decreases in the level of contract
hemisphere, as well as a reoccurrence of
in December. Continuing expansion of
metallurgical coal prices negotiated between
logistical bottlenecks. The latter situation,
demand in China and recovery in demand in
consumers and producers. The contract
together with
indications of
increased
the rest of the world, together with the fact
price of hard coking coal declined by 57%
import demand from China and India, are
that the Australian and Brazilian currencies
to $129/t and that of semi-soft coking coal
positive factors for steam coal prices and
had appreciated by more than 20% against
by 65% to $85/t. Given the steady growth
could see these increase by some 20%
the US dollar, could see the iron ore price
in steel production in China and the rest of
in 2010.
settlement being upwards of 40% in 2010.
the world since contract prices were settled
in 2009, as well as the expectation that
Perceptions of an oversupplied iron ore
The 2009 average LME cash zinc price was
this would continue into 2010, the outlook
market, based on the decline in economic
$1 658/t, some 12% lower than the average
for contract prices in 2010 seems much
activity in late 2008 and early 2009, as well
for 2008. Driven by worsening market
improved. Benchmark prices, both for hard
as declining spot iron ore prices in China,
fundamentals, the zinc price fell to a low
and semi-soft coking coal, are expected to
led to a 35% decline in fi ne iron prices
of $1 060/t in February 2009. However, it
improve by more than 40%.
negotiated for 2009 and a 44% decrease
then increased steadily, reaching a high of
in that for lump ore. During the year, some
$2 570/t by the end of the year. This price
The average Richards Bay spot steam coal
iron ore producers began selling more iron
escalation was mostly due to commodity
price for 2009, at $64,41/t, was 47% lower
ore on the spot market, a trend that could,
investment fund activity premised on
than the average for 2008. The declining
in time, lead to a signifi cant change in the
a rapid recovery in the world economy
price trend of the second half of 2008
price-settling mechanism for the iron ore
in 2010, as well as strong demand from
continued until May 2009, with an average
market, including much greater use of
China. In addition, dollar weakness boosted
price of $57/t achieved in that month.
derivative instruments. Robust expansion
commodity prices.
(cid:69)(cid:102)(cid:100)(cid:96)(cid:101)(cid:88)(cid:99)(cid:23)(cid:95)(cid:96)(cid:106)(cid:107)(cid:102)(cid:105)(cid:96)(cid:90)(cid:88)(cid:99)(cid:23)(cid:90)(cid:102)(cid:101)(cid:107)(cid:105)(cid:88)(cid:90)(cid:107)(cid:23)(cid:96)(cid:105)(cid:102)(cid:101)(cid:23)(cid:102)(cid:105)(cid:92)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:106)
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250
200
150
100
50
0
(cid:40)(cid:48)(cid:48)(cid:39)
(cid:40)(cid:48)(cid:48)(cid:40)
(cid:40)(cid:48)(cid:48)(cid:41)
(cid:40)(cid:48)(cid:48)(cid:42)
(cid:40)(cid:48)(cid:48)(cid:43)
(cid:40)(cid:48)(cid:48)(cid:44)
(cid:40)(cid:48)(cid:48)(cid:45)
(cid:40)(cid:48)(cid:48)(cid:46)
(cid:40)(cid:48)(cid:48)(cid:47)
(cid:40)(cid:48)(cid:48)(cid:48)
(cid:41)(cid:39)(cid:39)(cid:39)
(cid:41)(cid:39)(cid:39)(cid:40)
(cid:41)(cid:39)(cid:39)(cid:41)
(cid:41)(cid:39)(cid:39)(cid:42)
(cid:41)(cid:39)(cid:39)(cid:43)
(cid:41)(cid:39)(cid:39)(cid:44)
(cid:41)(cid:39)(cid:39)(cid:45)
(cid:41)(cid:39)(cid:39)(cid:46)
(cid:41)(cid:39)(cid:39)(cid:47)
(cid:41)(cid:39)(cid:39)(cid:48)
(cid:23)(cid:23)(cid:23)(cid:23)(cid:56)(cid:108)(cid:106)(cid:107)(cid:105)(cid:88)(cid:99)(cid:96)(cid:88)(cid:36)(cid:65)(cid:88)(cid:103)(cid:88)(cid:101)(cid:23)(cid:99)(cid:108)(cid:100)(cid:103)(cid:23)(cid:102)(cid:105)(cid:92)(cid:23)(cid:90)(cid:102)(cid:101)(cid:107)(cid:105)(cid:88)(cid:90)(cid:107)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:56)(cid:108)(cid:106)(cid:107)(cid:105)(cid:88)(cid:99)(cid:96)(cid:88)(cid:36)(cid:65)(cid:88)(cid:103)(cid:88)(cid:101)(cid:23)(cid:93)(cid:96)(cid:101)(cid:92)(cid:23)(cid:102)(cid:105)(cid:92)(cid:23)(cid:90)(cid:102)(cid:101)(cid:107)(cid:105)(cid:88)(cid:90)(cid:107)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)
(cid:74)(cid:102)(cid:108)(cid:105)(cid:90)(cid:92)(cid:49)(cid:23)(cid:56)(cid:68)(cid:60)
34 I Exxaro Annual Report 2009
The increase in the zinc price came amid
declining from some $290/t in 2008 to
of 2009, but demand started improving
weak market fundamentals as refl ected
about $246/t in 2009. Contract TCs were
during the second half of the year. Despite
in a steady
increase
in LME stocks,
around $194,5/t at a zinc basis price of
the serious economic decline, prices for
rising from 255kt in January to 489kt in
$1 250/t. Spot TCs increased throughout
high-grade titanium dioxide feedstocks held
December, an increase of 92%. In addition,
the year but were well below realised
up reasonably well, in some instances due
estimates of unreported stocks built up
contract TCs due to the relatively tight
to the fact that contracts were concluded
in China ranged from 800kt to 1 000kt.
concentrate market. Expansion in mine
before the full
impact of decreasing
Besides this, Chinese authorities also
production due to rising prices, as well as
demand and destocking became apparent.
established an offi cial stockpile of 160kt of
the refi ned zinc stock overhang, could see
Although the feedstock market is still
zinc metal. In the second half of the year,
a concentrate market in surplus in 2010.
in surplus, the outlook for 2010 is more
increasing prices led to the start-up of
Realised contract TCs are expected to be
optimistic as the market tightens due to
some zinc mine and smelter capacity that
broadly similar to those of 2009.
increasing demand and an inevitable need
had been idled in 2008 and the fi rst half
for restocking. However, price increases, if
of 2009. This was particularly signifi cant
Recessionary conditions in the world had
any, are expected to be subdued.
in China. The weak market fundamentals
a severe impact on the titanium dioxide
of 2009 are illustrated further by a refi ned
pigment industry in 2009, with demand
The zircon industry also experienced a
zinc surplus of about 1,1Mt during the
expected to decline by about 9%. This
period of destocking in the fi rst half of
year, compared to the surplus of 280kt in
resulted in a signifi cantly oversupplied
2009, but in line with titanium dioxide
2008. Restocking in the rest of the world
market and the idling of several plants to
feedstocks, saw an upturn in demand in
as economies start to expand, as well as
manage inventories. This caused industry
the second half of the year, with offtake
continued strong demand from China, is
capacity utilisation to fall to below 80%.
from China being a major driver. Zircon
expected to lead to a decline in the market
As a result, prices moved sideways during
prices refl ected demand fundamentals
surplus in 2010 to about 500kt. However,
the year in Western markets, following
throughout the year, but started declining
some experts believe the high zinc price
the sharp decrease at the end of 2008.
again towards the end of 2009. The Murray
at the end of 2009 is not a true refl ection
In China, on the other hand, pigment
Basin Stage 2 and Jacinth Ambrosia
of market fundamentals and prices could
demand accelerated from April, leading to
projects
started production
towards
move sideways or even decline from these
cutbacks early in the year being reversed
the end of 2009, fi rmly establishing a
levels during 2010. Injudicious release of
and the industry producing at full capacity.
new zircon and rutile-producing mineral
large unoffi cial stockholdings, especially
Pigment imports into China showed a
province in Australia. The zircon market
in China, could see extremely volatile
similar picture.
is expected to recover in 2010, albeit with
market conditions and the price of zinc
modest price adjustments.
falling precipitously.
Changes
in
the pigment
industry’s
capacity utilisation had an
immediate
The US dollar strengthened signifi cantly
Due to the signifi cant cutbacks in mining
impact on the titanium dioxide feedstock
against the currencies of commodity-
production in late 2008 and early 2009
industry. As demand decelerated, the
exporting countries in the last quarter of
more than neutralising cutbacks in the
industry was forced to make cutbacks
2008 due to the sub-prime crisis in the
refi ning industry, the 2008 concentrate
and operational adjustments,
including
US and subsequent events precipitating
market surplus of some 200kt was whittled
the temporary closure of some titanium
a fl ight from risk and capital outfl ows
down to about 175kt. This, together with
dioxide slag-producing furnaces in South
from
commodity-producing
countries.
lower prices, led to the realised contract
Africa and Canada. Signifi cant destocking
These exchange rate levels were generally
treatment charges on concentrate (TCs)
of feedstocks occurred in the fi rst half
maintained in the fi rst quarter of 2009.
Exxaro Annual Report 2009 I 35
MACRO-ECONOMIC AND COMMODITY REVIEW CONTINUED
However, as perceptions grew that the
important. Capacity shortages in terms
which would affect growth in demand
world economy would recover relatively
of contractors, machinery, equipment
for bulk freight, will determine whether
quickly, the fl ight of capital from riskier
and mining professionals worldwide also
the expected shipping stock overhang is
markets reversed and the US dollar
abated. The signifi cant retrenchments in
actually realised. If it does, freight rates will
generally
started weakening against
the mining industry in the last quarter of
be put under pressure. China will remain a
the currencies of commodity-exporting
2008 and fi rst part of 2009 also stabilised
major driver in this market.
countries
from April 2009. Despite
later on.
this trend, these currencies weakened
According to the Metals Economics Group,
modestly against the US dollar on an
After falling to unsustainably low levels
estimated planned non-ferrous exploration
annual average basis. Expectations that
at the end of 2008, global bulk freight
spending for 2009 plummeted 42% to
the weakening of the dollar will continue
rates improved in 2009, with the Baltic
$7,7 billion, after rising for six consecutive
into 2010, on a view that the US Federal
Dry Index increasing in a cyclical pattern
years to a 19-year high of $13,2 billion in
Reserve will not start tightening monetary
by some 300% from January to December
2008. The global economic crisis and
conditions until late in the year, could see
2009. Commodity import demand from
declining prices for almost all mineral
receipts from commodity exports in local
China played a key role in the performance
commodities took their toll on the industry.
currencies decline. This will put pressure
of the freight indices in 2009. In addition,
This drop
is the
largest year-on-year
on producers to try and claw back these
delays in shipyard deliveries of bulk vessels
decline in global exploration budgets (in
losses in contract price negotiations.
and a high rate of scrapping early in 2009
both dollar and percentage terms) since the
resulted in the net change in the bulk
study of global exploration spending began
Mining costs generally declined in 2009
carrier fl eet being consistent with that of
in 1989. In time, this will result in capacity
due to pressure from lower prices and, in
2008, contrary to expectations of a huge
shortages when a sustained upturn in
annual average terms, weaker producer
increase in the fl eet. Subsequently, this has
demand
is experienced.
Investment
in
currencies. Lower energy prices, with the
led to the rolling over of expectations of a
exploration is expected to improve in 2010
average Brent crude oil price declining
signifi cant oversupply of ships into 2010.
as access to fi nancing, especially for junior
by 37% from 2008 to 2009, were also
The rate of economic recovery in the world,
explorers, improves.
(cid:69)(cid:102)(cid:100)(cid:96)(cid:101)(cid:88)(cid:99)(cid:23)(cid:95)(cid:96)(cid:106)(cid:107)(cid:102)(cid:105)(cid:96)(cid:90)(cid:88)(cid:99)(cid:23)(cid:90)(cid:102)(cid:88)(cid:99)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:106)
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300
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50
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(cid:40)(cid:48)(cid:48)(cid:39)
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(cid:40)(cid:48)(cid:48)(cid:42)
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(cid:41)(cid:39)(cid:39)(cid:41)
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(cid:41)(cid:39)(cid:39)(cid:44)
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(cid:41)(cid:39)(cid:39)(cid:46)
(cid:41)(cid:39)(cid:39)(cid:47)
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(cid:23)(cid:23)(cid:23)(cid:23)(cid:63)(cid:88)(cid:105)(cid:91)(cid:23)(cid:90)(cid:102)(cid:98)(cid:96)(cid:101)(cid:94)(cid:23)(cid:90)(cid:102)(cid:88)(cid:99)(cid:23)(cid:90)(cid:102)(cid:101)(cid:107)(cid:105)(cid:88)(cid:90)(cid:107)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:74)(cid:92)(cid:100)(cid:96)(cid:36)(cid:106)(cid:102)(cid:93)(cid:107)(cid:23)(cid:90)(cid:102)(cid:98)(cid:96)(cid:101)(cid:94)(cid:23)(cid:90)(cid:102)(cid:88)(cid:99)(cid:23)(cid:90)(cid:102)(cid:101)(cid:107)(cid:105)(cid:88)(cid:90)(cid:107)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:73)(cid:57)(cid:58)(cid:75)(cid:23)(cid:106)(cid:107)(cid:92)(cid:88)(cid:100)(cid:23)(cid:90)(cid:102)(cid:88)(cid:99)(cid:23)(cid:106)(cid:103)(cid:102)(cid:107)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)
(cid:74)(cid:102)(cid:108)(cid:105)(cid:90)(cid:92)(cid:49)(cid:23)(cid:56)(cid:68)(cid:60)(cid:50)(cid:23)(cid:60)(cid:101)(cid:92)(cid:105)(cid:94)(cid:112)(cid:23)(cid:71)(cid:108)(cid:89)(cid:99)(cid:96)(cid:106)(cid:95)(cid:96)(cid:101)(cid:94)
36 I Exxaro Annual Report 2009
(cid:69)(cid:102)(cid:100)(cid:96)(cid:101)(cid:88)(cid:99)(cid:23)(cid:95)(cid:96)(cid:106)(cid:107)(cid:102)(cid:105)(cid:96)(cid:90)(cid:88)(cid:99)(cid:23)(cid:113)(cid:96)(cid:101)(cid:90)(cid:23)(cid:88)(cid:101)(cid:91)(cid:23)(cid:99)(cid:92)(cid:88)(cid:91)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:106)
(cid:32)
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$
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3500
3000
2500
2000
1500
1000
500
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(cid:48)
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(cid:48)
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(cid:74)(cid:102)(cid:108)(cid:105)(cid:90)(cid:92)(cid:49)(cid:23)(cid:64)(cid:36)(cid:69)(cid:92)(cid:107)(cid:50)(cid:23)(cid:57)(cid:105)(cid:102)(cid:102)(cid:98)(cid:23)(cid:63)(cid:108)(cid:101)(cid:107)
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)
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(cid:23)
(cid:91)
(cid:101)
(cid:88)
(cid:23)
(cid:98)
(cid:90)
(cid:102)
(cid:107)
(cid:106)
(cid:91)
(cid:92)
(cid:92)
(cid:93)
(cid:23)
(cid:70)
(cid:75)
(cid:96)
(cid:41)
(cid:69)(cid:102)(cid:100)(cid:96)(cid:101)(cid:88)(cid:99)(cid:23)(cid:95)(cid:96)(cid:106)(cid:107)(cid:102)(cid:105)(cid:96)(cid:90)(cid:88)(cid:99)(cid:23)(cid:75)(cid:96)(cid:70)(cid:41)(cid:23)(cid:103)(cid:96)(cid:94)(cid:100)(cid:92)(cid:101)(cid:107)(cid:35)(cid:23)(cid:93)(cid:92)(cid:92)(cid:91)(cid:106)(cid:107)(cid:102)(cid:90)(cid:98)(cid:23)(cid:88)(cid:101)(cid:91)(cid:23)(cid:113)(cid:96)(cid:105)(cid:90)(cid:102)(cid:101)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:106)
1000
900
800
700
600
500
400
300
200
100
0
(cid:39)
(cid:48)
(cid:48)
(cid:40)
(cid:40)
(cid:48)
(cid:48)
(cid:40)
(cid:41)
(cid:48)
(cid:48)
(cid:40)
(cid:42)
(cid:48)
(cid:48)
(cid:40)
(cid:43)
(cid:48)
(cid:48)
(cid:40)
(cid:44)
(cid:48)
(cid:48)
(cid:40)
(cid:45)
(cid:48)
(cid:48)
(cid:40)
(cid:46)
(cid:48)
(cid:48)
(cid:40)
(cid:47)
(cid:48)
(cid:48)
(cid:40)
(cid:48)
(cid:48)
(cid:48)
(cid:40)
(cid:39)
(cid:39)
(cid:39)
(cid:41)
(cid:40)
(cid:39)
(cid:39)
(cid:41)
(cid:41)
(cid:39)
(cid:39)
(cid:41)
(cid:42)
(cid:39)
(cid:39)
(cid:41)
(cid:43)
(cid:39)
(cid:39)
(cid:41)
(cid:44)
(cid:39)
(cid:39)
(cid:41)
(cid:45)
(cid:39)
(cid:39)
(cid:41)
(cid:46)
(cid:39)
(cid:39)
(cid:41)
(cid:47)
(cid:39)
(cid:39)
(cid:41)
(cid:48)
(cid:39)
(cid:39)
(cid:41)
(cid:23)(cid:23)(cid:23)(cid:23)(cid:81)(cid:96)(cid:105)(cid:90)(cid:102)(cid:101)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:73)(cid:108)(cid:107)(cid:96)(cid:99)(cid:92)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:58)(cid:95)(cid:99)(cid:102)(cid:105)(cid:96)(cid:91)(cid:92)(cid:23)(cid:106)(cid:99)(cid:88)(cid:94)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:76)(cid:74)(cid:23)(cid:96)(cid:100)(cid:103)(cid:102)(cid:105)(cid:107)(cid:23)(cid:103)(cid:96)(cid:94)(cid:100)(cid:92)(cid:101)(cid:107)(cid:23)(cid:103)(cid:105)(cid:96)(cid:90)(cid:92)(cid:23)
(cid:74)(cid:102)(cid:108)(cid:105)(cid:90)(cid:92)(cid:49)(cid:23)(cid:75)(cid:81)(cid:68)(cid:64)
450
400
350
300
250
200
150
100
50
0
(cid:32)
(cid:92)
(cid:107)
(cid:88)
(cid:105)
(cid:107)
(cid:101)
(cid:92)
(cid:90)
(cid:101)
(cid:102)
(cid:90)
(cid:23)
(cid:107)
(cid:38)
$
(cid:74)
(cid:76)
(cid:31)
(cid:23)
(cid:92)
(cid:94)
(cid:105)
(cid:88)
(cid:95)
(cid:90)
(cid:23)
(cid:107)
(cid:101)
(cid:92)
(cid:100)
(cid:107)
(cid:88)
(cid:92)
(cid:105)
(cid:107)
(cid:23)
(cid:90)
(cid:101)
(cid:96)
(cid:113)
(cid:23)
(cid:91)
(cid:92)
(cid:106)
(cid:96)
(cid:99)
(cid:88)
(cid:92)
(cid:73)
)
t
/
$
(cid:74)
(cid:76)
(cid:31)
(cid:23)
(cid:92)
(cid:90)
(cid:96)
(cid:105)
(cid:103)
(cid:23)
(cid:107)
(cid:101)
(cid:92)
(cid:100)
(cid:94)
(cid:71)
(cid:96)
2500
2250
2000
1750
1500
1250
1000
750
500
250
0
Exxaro Annual Report 2009 I 37
BUSINESS OPERATIONS REVIEW
COAL
Revenue up 8%
Signifi cant increase in
coal exports
Inyanda at name-plate
capacity
2010 Capital expenditure estimate
33%
67%
■ Sustaining and environmental
(R760 million)
■ Expansion (R1 513 million)
THE REVIEW PERIOD WAS A CHALLENGING ONE IN MANY
RESPECTS COMPARED TO 2008. INTERNATIONAL COAL PRICES
DECREASED SIGNIFICANTLY WHILE DOMESTIC DEMAND FOR
METALLURGICAL AND STEAM COAL ALSO DECLINED.
38 I Exxaro Annual Report 2009
Operating results
Total
Revenue
Net operating profi t
Capital expenditure
Physical information
Production (000 tonnes)
Power station coal
– Tied operations1
– Commercial operations
Coking coal
– Tied operations1
– Commercial operations
Other coal
Char
Coal buy-ins
Total
Sales (000 tonnes)
Eskom coal
– Tied operations1
– Commercial mines
Other domestic coal
– Tied operations1
– Commercial mines
Coal export2
Char
Total
2009
Rm
9 731
1 905
924
2008
Rm
9 040
2 654
741
2009
2008
Variance
Y-O-Y %
36 562
16 486
20 076
2 020
268
1 752
6 638
38
759
46 017
36 299
16 473
19 826
4 587
259
4 328
4 715
31
36 700
18 095
18 605
2 560
327
2 233
5 574
733
45 567
36 255
18 054
18 201
5 481
352
5 129
3 276
45 632
45 012
(138)
(1 609)
1 471
(540)
(59)
(481)
1 064
38
26
450
44
(1 581)
1 625
(894)
(93)
(801)
1 439
31
620
(9)
8
(21)
(18)
(22)
19
4
1
(9)
9
(16)
(26)
(16)
44
1
1 Tied operations refer to mines that supply their entire production to either Eskom or ArcelorMittal SA Limited in terms of contractual agreements.
2 Includes steam coal exports from Exxaro’s 50% share of the Mafube expansion project.
Exxaro Annual Report 2009 I 39
BUSINESS OPERATIONS REVIEW CONTINUED
The review period was a challenging one
half of 2009, unfortunately later than
Steam coal production was 19% higher at
in many respects compared to 2008.
planned. We aim to achieve full production
6,638Mtpa mainly due to the inclusion of
International coal prices decreased
by the end of the second quarter in 2010.
production from Mafube of some 816kt
signifi cantly while domestic demand
after Exxaro acquired a 50% interest in
for metallurgical and steam coal also
Total coal production volumes were
the joint venture in June 2009. Higher
declined. Exxaro was fortunate enough
marginally higher than the previous year.
production at Inyanda and North Block
to partially offset softer demand and
prices by
increasing exports after
securing additional export access at
Richards Bay Coal Terminal (RBCT) from
other RBCT users.
Inyanda mine is producing at name-plate
capacity and the joint venture with Anglo
American on the Mafube operation was
concluded in June 2009, resulting in
additional production.
Power station coal production at Eskom
tied mines was 9% lower at 16,5Mtpa
mainly as a result of an
inrush of
water at Matla’s number 2 mine which
affected production for several months,
but has subsequently been rectifi ed.
This was partially offset by increased
production at Arnot mine after ramping
up the opencast mining operations to
full production.
Additional emphasis was placed on
value growth by downstream integration,
of which the Sintel char plant at
Grootegeluk is an example. The char plant
The
commercial mines
increased
production by 8% to over 20Mtpa to meet
increased demand from Eskom.
Coking coal production showed a marked
Complex (NBC) mines was offset by lower
production at Grootegeluk and Leeuwpan
mines due to
lower domestic steam
coal demand. Production at NCC’s new
Diepspruit shaft also ramped up slower
than anticipated.
Some 38kt of char was produced
by the four new retorts successfully
commissioned at Grootegeluk mine.
Ramp-up to full production is expected in
the second half of 2010.
Sales to Eskom were in line with the
previous year as increased sales volumes
from the commercial operations were
was commissioned in the second half of
decrease year on year, down 21% to
offset by lower sales volumes from the
2009. Although not currently running
2,0Mtpa, due
to diffi cult geological
tied operations mainly due to production
at capacity, quality and demand for the
conditions at Tshikondeni mine. Semi-
challenges at Matla mine.
product has exceeded our expectations.
soft coking coal production decreased
signifi cantly at Grootegeluk mine on
Domestic sales were
16%
lower at
The Diepspruit shaft at New Clydesdale
lower demand from the steel and related
4,6Mtpa due to lower demand during the
(NCC) was commissioned in the second
industries.
recessionary climate.
40 I Exxaro Annual Report 2009
In line with Exxaro Coal’s strategy, export
volumes
increased 44% year-on-year
to 4 715Mtpa after Exxaro secured an
additional export allocation at RBCT from
other RBCT users.
Exxaro Coal aims to create excep-
tional value by being an innovative,
integrated and synergistic coal and
reductants company, with a global
footprint, utilising and developing
excellence in people and value-adding,
Even though RBCT will have installed
superior processes and structures to
capacity of 91Mt per annum, forecasts
achieve the annual target of 75Mt of
indicate that Transnet Freight Rail (TFR)
coal and 750kt of reductants by 2015
will only have the capability to transport
by focusing on:
65Mt of coal in 2010. This will have a
negative impact on new entrants into
>
>
Operational excellence
Responsible
custodianship
of
RBCT via the Phase V development
safety, health and sustainable
scheduled
for commissioning during
development
April 2010 as these participants had
>
Continued optimisation of market
already in 2009 positioned themselves
position
to export through RBCT. Although RBCT
> Value growth of the business
>
Organisational excellence including
a high-performance culture.
had capacity of 72Mt per annum in 2009,
only 61,7Mt was exported compared with
approximately 63Mt in 2008 mainly due
to lower rail performance.
Prospects for the coal commodity busi-
ness are summarised in the chief executive
offi cer’s review (page 14) and detailed in
the commodity review (page 32). The
growth aspirations are included in the
report on page 49.
Exxaro Annual Report 2009 I 41
BUSINESS OPERATIONS REVIEW CONTINUED
MINERAL SANDS
Record slag tapped from
both furnaces at KZN
Sands
Lower demand at softer
prices
R1 435 million
impairment at KZN Sands
Good cost performance
from all three business
units
2010 Capital expenditure estimate
33%
67%
■ Sustaining and environmental
(R356 million)
■ Expansion (R187 million)
Operating results
Total
Revenue
Net operating (loss)/profi t1
Capital expenditure
1 Excludes the R1 435 million impairment at KZN Sands.
2009
Rm
3 508
(124)
826
2008
Rm
2 776
104
571
THE GLOBAL RECESSION IMPACTED ON DEMAND FOR ALL
PRODUCTS DURING THE YEAR. DEMAND IMPROVED IN THE
SECOND HALF OF THE YEAR BUT NOT TO THE FORECAST LEVELS
ALTHOUGH CHLORIDE SLAG, ZIRCON AND PIGMENT PRICES
INCREASED YEAR ON YEAR.
42 I Exxaro Annual Report 2009
Physical information
2009
2008
Variance
Y-O-Y %
(000 tonnes)
KZN Sands
Production
– Ilmenite
– Zircon
– Rutile
– Pig iron
– Scrap pig iron
– Slag tapped
– Chloride slag
– Sulphate slag
Sales
– Ilmenite
– Zircon
– Rutile
– Pig iron
– Scrap pig iron
– Chloride slag
– Sulphate slag
Namakwa Sands1
Production
– Ilmenite
– Zircon
– Rutile
– Pig iron
– Scrap pig iron
– Slag tapped
– Chloride slag
– Sulphate slag
Sales
– Zircon
– Rutile
– Pig iron
– Scrap pig iron
– Chloride slag
– Sulphate slag
Australia Sands2
Production
– Ilmenite
– Zircon
– Rutile
– Synthetic rutile
– Leucoxene
– Pigment
Sales
– Zircon
– Rutile
– Synthetic rutile
– Leucoxene
– Pigment
1 Namakwa Sands is included from 1 January 2008, for comparable purposes.
2 Exxaro Sands Australia’s 50% interest in its Tiwest joint venture is disclosed.
368
36
20
108
15
205
104
24
21
14
52
6
68
25
244
116
26
73
126
97
20
95
23
86
76
19
207
33
16
109
14
53
30
14
50
15
54
229
34
19
50
16
112
95
18
40
36
14
64
7
101
17
315
130
27
103
6
166
135
24
135
27
82
1
145
26
174
29
13
113
16
43
35
14
62
17
44
139
2
1
58
(1)
93
9
6
(15)
(12)
(1)
(33)
8
(71)
(14)
(1)
(30)
(6)
(40)
(38)
(4)
(40)
(4)
4
(1)
(69)
(7)
33
4
3
(4)
(2)
10
(5)
(12)
(2)
10
61
6
5
116
(6)
83
9
33
(42)
(19)
(14)
(33)
47
(23)
(11)
(4)
(29)
(24)
(28)
(17)
(30)
(15)
5
(48)
(27)
19
14
23
(4)
(13)
23
(14)
(19)
(12)
23
Exxaro Annual Report 2009 I 43
BUSINESS OPERATIONS REVIEW CONTINUED
The global recession impacted on demand
KZN Sands
Despite increased production, revenue
for all products during the year. Demand
KZN Sands had signifi cantly higher
reduced as lower sales volumes of zircon,
improved in the second half of the year
but not to the forecast levels although
chloride slag, zircon and pigment prices
increased year on year. In these trying
production volumes, with both furnaces
pig iron and chloride slag were recorded
operational compared to one furnace
at softer prices.
being down for 10 months in 2008 after
the water ingress incident in February
Namakwa Sands
operating circumstances, the three units
in this business recorded a good cost
2008.
The impact of the global recession on
operations resulted in postponing the
performance.
Unfortunately, current depressed market
fundamentals for the commodity led to the
decision to discontinue the development
of the Fairbreeze mine as replacement
for the Hillendale mine at KZN Sands.
Titanium slag tapped was 93kt higher at
furnace 1 start-up which was shut down
205kt as both furnaces tapped more than
for a reline at the end of March 2009. In
100kt of titanium slag. Low manganese
addition, production activities at the mine
pig iron and ilmenite production were
and separation plants were temporarily
respectively 58kt and 139kt higher than
halted in August to preserve cash fl ow
in 2008, in line with increased slag
and avoid building up stocks.
This decision in turn invariably resulted in
production. Zircon and rutile production
the impairment of the carrying value of
remained in line with 2008 despite the
Total annual sales of 299kt were down
the assets at KZN Sands to the value of
decrease in run-of-mine tonnes as a result
28% on the previous year’s record of
R1 435 million.
of higher grades mined.
416kt.
44 I Exxaro Annual Report 2009
Australia Sands
of USD0,79 to the AUD compared with
Improvement initiatives led to pigment
USD0,84 in 2008.
production returning to 2007
levels,
with 2009 production up 23% on 2008.
The prospects for the mineral sands
Zircon and rutile production increased
commodity business are referred to in the
as a result of higher grades and various
chief executive offi cer’s review (page 19)
improvement
projects.
Synthetic
and elaborated on in the Commodity
rutile production was slightly
lower
review (page 21). The growth aspirations
following maintenance-related problems
are included in the report on page 50.
predominantly experienced in the second
quarter of 2009.
Revenue increased while net operating
results improved. This was achieved on
the back of a much stronger production
performance, higher pigment sales and
higher average prices for both mineral
and pigment products at a realised rate
The objective of the mineral sands
business is to:
>
Maintain its position among leading
global suppliers of titanium dioxide
feedstock and zircon
> Downstream value addition
>
Increase its share in the world
chloride pigment market.
Exxaro Annual Report 2009 I 45
BUSINESS OPERATIONS REVIEW CONTINUED
BASE METALS
Higher production of zinc
metal despite downtime
on acid plant
Improved operating
results assisted by cost
savings
Lower average realised
LME zinc price
2010 Capital expenditure estimate
5%
95%
■ Sustaining and environmental
(R167 million)
■ Expansion (R8 million)
THE BUSINESS RECORDED STABLE PRODUCTION RESULTS
DESPITE PLANT DOWNTIME AND AN EXPLOSION IN SEPTEMBER
2009 AT THE ZINCOR REFINERY.
46 I Exxaro Annual Report 2009
Operating results
Total
Revenue
Net operating loss
Capital expenditure
Physical information
Production (000 tonnes)
Base metals
Zinc concentrate
– Rosh Pinah
– Black Mountain1
Zinc metal
– Zincor
– Chifeng2
Lead concentrate
– Rosh Pinah
– Black Mountain1
Zinc metal sales
– Domestic
– Export
Lead concentrate – Rosh Pinah
Export
2009
Rm
1 582
(8)
139
2008
Rm
1 829
(172)
228
2009
2008
Variance
Y-O-Y %
108
94
14
116
87
29
38
20
18
122
93
29
19
109
94
15
110
87
23
37
20
17
126
93
33
22
(1)
(1)
6
6
1
1
(4)
(4)
(3)
(1)
(7)
5
26
3
6
(3)
(12)
(14)
1 Exxaro’s 26% interest in Black Mountain has been disclosed from 1 January 2008, for comparable purposes.
2 Exxaro’s effective interest in the Chifeng refi nery is disclosed.
Exxaro Annual Report 2009 I 47
BUSINESS OPERATIONS REVIEW CONTINUED
Exxaro’s
base metals
business
increased by R17 million to R13 million
encompasses a 50,04% interest in the
after a R4 million loss in 2008, mainly
Rosh Pinah zinc and lead mine in southern
due to reduced production costs and a
Namibia, the Zincor refi nery in Gauteng,
reduction in the rates of environmental
an effective 22% interest in the Chifeng
duties paid.
zinc refi nery in Inner Mongolia, China,
and a 26% interest in Black Mountain
Exxaro’s 26% share in Black Mountain,
Mining (Pty) Limited (Black Mountain).
acquired in the last quarter of 2008,
Lead and zinc concentrate production
due mainly to increased sales volumes.
at the Rosh Pinah mine was in line with
2008, with lead concentrate exports 14%
The prospects for zinc are referred to in
contributed R123 million to equity income
lower than 2008.
the chief executive offi cer’s review on
page 19 and are further elaborated on in
Production of zinc metal at the Zincor
the Commodity review on page 21.
refi nery 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.
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
The average zinc price for 2009 of
feedstock supply for Zincor
USD1 658 is 12% lower than in 2008
>
quantify the upside
life-of-mine
and only partially offset by the slightly
potential at Rosh Pinah
weaker local currency.
Production at
the Chifeng refi nery
(China) was in line with 2008. Equity-
accounted income from this operation
>
optimise the assets for divestment.
Activities in the fi nancial year ahead
will focus on approaching potential
suitors in the second half.
48 I Exxaro Annual Report 2009
GROWTH
Capital expenditure and
project pipeline
As announced on 1 December 2009,
Exxaro
reviewed
its
commodity
portfolio and growth pipeline against
the background of
the prevailing
economic climate to align resources
with a
commodity
strategy best
positioned to release optimal value for
all stakeholders.
Following this review, Exxaro plans to
reconfi gure its zinc assets to ultimately
divest from them in an optimal manner.
The portfolio of zinc assets includes the
Zincor refi nery in Springs, Gauteng, a
50,04% interest in the Rosh Pinah zinc
and lead mine in Namibia, a 26% interest
in Black Mountain which owns the Black
Mountain zinc and lead mine and the
Gamsberg zinc project in the Northern
Cape, and an effective 22% interest in
the Chifeng zinc smelter in China.
Coal
Grootegeluk expansion for Medupi
Detail engineering on the expansion of
the Grootegeluk mine to supply Eskom’s
new Medupi power station with 14,6Mtpa
of power station coal for 40 years is
progressing to be able to supply fi rst coal
to Eskom in the second quarter of 2012.
terms contained
in the Medupi coal
supply and offtake agreement signed on
19 September 2008, including the coal
price escalation mechanism and the coal
delivery ramp-up. Pending the outcome
of the review process, Exxaro’s funding
programme was temporarily suspended in
December 2009 as was the placement of
additional contracts associated with the
project. The review process is expected to
be concluded in the fi rst quarter of 2010.
Due to the delays in project execution, the
capital cost associated with the project is
now expected to increase from R9 billion
to R9,5 billion.
Thabametsi project
Waterberg prospecting joint
venture (project Mafutha)
Exxaro entered into a prospecting joint
venture agreement with Sasol Mining for
the development of a new coal mine in
the Waterberg to supply Sasol’s potential
new 80 000 barrels-per-day
inland
coal-to-liquids facility. The project is in
pre-feasibility stage and a decision to
proceed to bankable feasibility study is
expected in 2010.
Waterberg infrastructure
development
An integrated infrastructure plan is being
implemented for the Waterberg coalfi elds
The Thabametsi project pre-feasibility
with relevant stakeholders. Focus areas
study to develop a potential greenfi elds
include the supply of raw water to the
mine adjacent to Grootegeluk mine is
area as well as rail, road and housing
scheduled for completion by end March
infrastructure.
2010. If approved, Thabametsi would
supply the market with power station
Sintel char project
and metallurgical coal. Implementation of
this project is however linked to Eskom’s
future developments in the Waterberg,
together with the establishment by the
Department of Energy of an appropriate
enabling environment to allow for new-
generation capacity in terms of Eskom’s
multi-site base-load independent power
producer (IPP) programme. The scope
of the bankable feasibility study will
only be fi nalised after the details of
After the successful commissioning of
the Sintel char plant at Grootegeluk mine
to produce reductants for the ferroalloy
industry, Exxaro is currently evaluating
the phase 2 expansion to produce a
further 140ktpa of char.
Moranbah South resource
Exploration of the hard coking coal
resource on
the Moranbah South
properties
in
the Bowen Basin of
Queensland, Australia, is progressing well
and results obtained are encouraging.
This coincides with the start-up of the
potential
new-generation
capacity
power station. Full production from 2015
have been determined, after which the
is anticipated.
required technical studies will begin. The
Exxaro received notice from Eskom in the
of 2009 and are due to be completed
venture with Anglo American, has the
third quarter of 2009 that Eskom was
during 2011. First coal production could
potential to produce premium-quality
seeking to review certain commercial
be expected by 2015.
hard coking coal.
environmental studies started at the end
Moranbah South, which is a 50% joint
Exxaro Annual Report 2009 I 49
GROWTH CONTINUED
Energy
The
commodity
fi ve years while, in parallel, investigating
portfolio
review
other feedstock alternatives and the
announced on
1 December 2009
continuation of the business should the
stated the group’s intention to explore
outlook for the mineral sands industry
opportunities in energy markets. Clean
improve substantially.
energy
initiatives encompassing co-
generation,
carbon
credit
trading,
Kwinana
and renewable energy (wind and solar
The implementation of the Tiwest Kwinana
projects), are progressing well.
Development of the fi rst fi ve-spot test
for the coal bed methane project in
Botswana, with the aim of testing for
economic gas fl ow, is progressing well.
Completion of the test work is planned
for April 2010, after which the site will
be operated until economic gas fl ow has
been attained.
Clean energy initiatives include:
>
Solar
–
Pre-feasibility study on a 200MW
plant at Lephalale.
>
Wind
–
Pre-feasibility study on a 100MW
wind farm on South Africa’s West
Coast.
Mineral sands
As a result of the decision not to continue
with the development of Fairbreeze
pigment expansion project to increase
production by 40ktpa
is progressing
according to plan, with commissioning
targeted for the second half of 2010.
Exxaro is funding 100% of the expansion
project, with capital expenditure now
projected at some AUD118 million.
Base metals
Base metals activities are focused on the
process of optimisation for divestment.
Exxaro anticipates that potential suitors
will be approached in the second half of
2010.
Ferrous
The fi nal evaluation of the iron ore
project in Turkey concluded that it did
not meet the group’s investment criteria
and a decision was made to divest from
the project.
mine, Exxaro will plan for the closure of
Exxaro is considering ways to expand its
the KZN Sands operations over the next
footprint in the iron ore commodity.
50 I Exxaro Annual Report 2009
REVIEW OF MINERAL RESOURCES AND RESERVES
The Mineral Resources and Ore Reserves
the exploration work done, the extent of
it appears. A list of Exxaro’s competent
underpinning Exxaro’s current operations
the geological potential, the mineability
persons is available from the company
and growth projects are summarised in
and associated risks/opportunities to
secretary on written request.
the tables on pages 53 to 64. Mineral
establish an eventual extraction outline
Resources are reported
inclusive of
(EEO). Mineral Resources and Ore
The processes and calculations associated
those Mineral Resources that have been
Reserves quoted fall within existing Exxaro
with the estimate have been audited by
converted to Ore Reserves and at 100%,
resources mine or prospecting rights.
internal competent persons and are audited
irrespective of the percentage attributable
Mining rights are of suffi cient duration
by external consultants when deemed
to Exxaro, except for Gamsberg and Black
(or convey a legal right to convert or
essential to establish transparency. In the
Mountain mines, because fi gures received
renew for suffi cient duration) to enable
case of mines or projects in which Exxaro
from Anglo Base Metals represent resources
all reserves to be mined in accordance
does not hold the controlling interest, the
exclusive of reserves. Signifi cant changes
with
current production
schedules.
fi gures have been compiled by competent
in resource or reserve fi gures are explained
Mineral Resources and Ore Reserves
by footnotes to each table. Resource
were estimated by competent persons on
estimations are based on resource models,
an operational basis and in accordance
which
incorporate all new validated
with the SAMREC Code (2007) for South
geological
information, updated geo-
African properties and the JORC Code
persons from the applicable companies
and have not been audited by Exxaro.
Resource and reserve estimation at Exxaro
mines or projects in Australia were done
by competent persons as defi ned by the
logical models and, if applicable, revised
(2004) for Australian properties. Ore
JORC Code (2004).
resource defi nitions and classifi cations.
Reserves in the context of this report
The resource models are compiled as a rule
have the same meaning as “Mineral
between June and August of the reporting
Reserves”, as defi ned by the SAMREC
year. Ore Reserves are estimated using the
Code 2007. All competent persons have
relevant modifying factors at the time of
suffi cient relevant experience
in the
reporting (mining, metallurgical, economic,
style of mineralisation, type of deposit,
marketing, legal, environmental, social and
mining method and activity for which they
governmental regulatory requirements).
have taken responsibility, to qualify as a
Mineral Resources in which Exxaro held
“competent person” as defi ned in these
the controlling interest were reviewed
codes at the time of reporting. These
in 2009 to comply with “reasonable and
competent persons have signed off their
realistic prospects for eventual economic
respective estimates in the original Mineral
The person
in Exxaro designated
to
take corporate responsibility for Mineral
Resources and reserves, HJ van der Berg,
the undersigned, has
reviewed and
endorsed the reported estimates.
extraction” (SAMREC Code 2007).
Resources and Ore Reserve statements
HJ van der Berg
Exxaro uses a systematic review process
to the inclusion of the information in this
Pr Sci Nat (400099/01)
that measures the level of maturity of
report in the form and context in which
Manager mineral assets
for the various operations and consent
MSc (Geology), BSc (hon)
Exxaro Annual Report 2009 I 51
REVIEW OF MINERAL RESOURCES AND RESERVES CONTINUED
Exxaro’s tenure over its mineral assets,
Exxaro mines. The progress will be
the area was considered, but the potential
as
listed
in the tables, was audited
evaluated again early in 2010 to review
is too low to warrant further interest. The
and
is confi rmed with the following
the status and ensure that decisions taken
study on the Ranobe mineral sands projects
consideration: the appeal against the
remain valid or are adapted to comply with
refusal of a prospecting right over several
the growth strategy.
farms included in the Leeuwpan Mineral
Resource was addressed when a new
Internationally
the
focus was
on
mining right, which covers these farms,
investigation of the Moranbah hard coking
was granted to Exxaro. The appeal against
coal deposit in Queensland, Australia, an
the refusal of a prospecting right, which
iron ore project with associated base metal
covers the Strehla Mineral Resource, has
potential in Turkey and heavy mineral
not yet been resolved.
sands in Madagascar. Drilling also continued
at the Rosh Pinah zinc mine in Namibia.
Exxaro received written confi rmation from
Exploration drilling at Moranbah, which
the Department of Mineral Resources
is a 50:50 joint venture with Anglo Coal
(DMR), dated 2 April 2009, which confi rms
Australia, was increased and a structural
that all the ex-Kumba mining licences have
study completed. The results were very
been converted to mining rights. Apart
positive and the project is moving into
from the Glen Douglas mine, which was
prefeasibility study phase. The viability
executed in September 2009, execution
of the iron ore project in Turkey was
of the other conversions still needs to
tested through small-scale experimental
be scheduled by the DMR. With regard
mining. Although the mining process was
to the conversion of the ex-Eyesizwe
successfully executed, results
indicated
mines, applied for in 2008, all additional
that the achievable production rate would
in Madagascar was fi nalised in 2009 and
the decision taken not to renew the option;
the rights have therefore been relinquished.
Drilling down to areas below the known
ore bodies in the Rosh Pinah mine and
exploration to the north of the mine in
conjunction with the Anglo American group
confi rmed the potential to fi nd additional
zinc ore. Prospecting will continue in 2010.
Exxaro recognises the importance and
value of its mineral assets as the base of its
present success and future sustainability.
The drive to manage, optimise and
grow the company’s mineral assets will
therefore remain a focus area in 2010.
Mineral asset risks and opportunities are
being identifi ed at each operation and
growth project, and managed to improve
utilisation and profi tability, while pursuing
safer working conditions and responsible
environmental practices. Simultaneously,
information requested by the DMR was
be too small for Exxaro to be interested.
the growth strategy will focus on adding
submitted and the evaluation process is
The investigation was therefore terminated.
quality new resources to Exxaro’s mineral
continuing. The delay in the conversion
Simultaneously, the base metal potential in
asset portfolio.
or execution of converted rights does not
put any of the mines at risk, because the
COAL MINES AND PROJECTS IN SOUTH AFRICA
old-order right remains in place until the
minister takes a decision on the application
for conversion and the conversion has
been executed. Three new mining rights,
which cover two small extensions to
the Hillendale Mineral Resource and an
extension to the Fairbreeze C resources,
were executed.
As a result of the economic climate and
good management practice all growth
projects, including exploration projects,
were evaluated and prioritised during the
year. Prospecting activities were focused
on the Waterberg coalfi eld and a number of
high-priority coal projects in Mpumalanga
province, especially those close to existing
52 I Exxaro Annual Report 2009
COAL
Coal Resources
The table below details the total inclusive Coal Resources estimated as at 31 December 2009.
Commodity
Coal
Operation1
Arnot mine6
Mpumalanga
(captive market)
(UG)
Matla mine
(captive market)
(UG)
Inyanda mine7
(OC)
Leeuwpan mine
(OC)
Mafube mine8
(OC)
NBC mine9
(North Block Complex)
(OC)
Belfast project
(prospecting)
(OC)
NCC mine
(New Clydesdale)
(UG, OC)
Coal
Limpopo
Grootegeluk mine10
(OC)
% attributable
to Exxaro2
Resource
category
100 Measured
Indicated
Inferred
TOTAL
100 Measured
Indicated
Inferred
TOTAL
100 Measured
Indicated
Inferred
TOTAL
100 Measured
Indicated
Inferred
TOTAL
50 Measured
Indicated
Inferred
TOTAL
100 Measured
Indicated
Inferred
TOTAL
100 Measured
Indicated
Inferred
TOTAL
100 Measured
Indicated
Inferred
TOTAL
100 Measured
Indicated
Inferred
TOTAL
Grootegeluk West project11
100 Measured
(prospecting)
(OC)
Indicated
Inferred
TOTAL
Waterberg North project
100 Measured
(prospecting)
(OC)
Indicated
Inferred
TOTAL
Tonnes
(million)3, 5
150,2
38,3
25,5
214,0
406,0
330,5
107,5
844,0
12,6
–
–
12,6
181,7
2,8
–
184,5
121,1
–
57,3
178,4
30,7
5,1
0,2
36,0
107,7
3,7
7,1
Grade4
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
–
–
Raw Coal4
Raw Coal4
Raw Coal4
–
Raw Coal4
Raw Coal4
–
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
Tonnes
(million)3, 5
Grade4
% change
176,8
8,5
6,5
191,8
256,5
483,0
71,3
810,8
15,5
–
–
15,5
186,6
2,8
–
189,4
122,5
–
54,3
176,8
32,4
20,2
0,0
52,6
107,7
3,7
7,1
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
–
–
Raw Coal
Raw Coal
Raw Coal
–
Raw Coal
Raw Coal
–
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
11,6
4,09
(18,7)
(2,6)
0,9
(31,7)
118,5
Raw Coal4
118,5
Raw Coal
0
13,9
42,2
–
56,1
2 610
1 290
787
4 687
–
1 021
3 617
4 638
–
–
2 176
2 176
Raw Coal4
Raw Coal4
–
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
–
Raw Coal4
Raw Coal4
Raw Coal4
–
–
Raw Coal4
Raw Coal4
16,8
40,3
–
57,1
4 117
1 347
96
5 559
17
5 357
590
5 963
–
–
2 176
2 176
Raw Coal
Raw Coal
–
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
Raw Coal
–
–
Raw Coal
Raw Coal
(1,8)
(15,7)
(22,2)
0
Exxaro Annual Report 2009 I 53
REVIEW OF MINERAL RESOURCES AND RESERVES CONTINUED
Commodity
Operation1
% attributable
to Exxaro2
Resource
category
Tonnes
(million)3, 5
Waterberg South project
100 Measured
(prospecting)
(OC)
Tshikondeni mine
(captive market)
(UG)
Indicated
Inferred
TOTAL
100 Measured
Indicated
Inferred
TOTAL
Coal
Australia
Moranbah South project12
50 Measured
(prospecting)
(UG)
Indicated
Inferred
TOTAL
Rounding-off of fi gures may cause computational discrepancies.
All changes more than 10% (signifi cant) are explained.
–
–
699
699
24,0
10,1
–
34,1
56,0
150,0
60,4
266,4
Grade4
–
–
Raw Coal4
Raw Coal4
Raw Coal4
Raw Coal4
–
Raw Coal
Raw Coal4
Raw Coal4
Raw Coal4
Tonnes
(million)3, 5
Grade4
% change
–
–
699
699
24,4
10,1
–
34,5
165,6
767,8
406,1
–
–
Raw Coal
Raw Coal
Raw Coal
Raw Coal
–
Raw Coal
Raw Coal
Raw Coal
Raw Coal
0
(1,0)
Raw Coal4
1 339,5
Raw Coal
NA
1 Mining method: OC – open-cut, UG – underground.
2 Figures are reported at 100% irrespective of percentage attributable to Exxaro and refer to 2009 only.
3 The tonnages are quoted in metric tonnes and million tonnes is abbreviated as Mt, Coal Resources are quoted on a Mineable Tonnage In-Situ (MTIS) and on a air-dried basis.
4 Coal qualities are reported in Table 1 and are quoted on a Mineable Tonnage In-Situ (MTIS) and on a air-dried basis.
5 Mineral Resources are quoted inclusive of Mineral Resources that have been modifi ed to Ore Reserves unless otherwise stated.
6 The increase is the result of a change in the cut-off specifi cation (2m to 1,8m minimum seam thickness), the update of the open cut Mooifontein model, the re-defi nition of the
resource boundary and a minor modifi cation in classifi cation methodology.
7 The reduction is the result of mining depletion (2,4Mt) and a revision of the geological model (0,5Mt).
8 Figures are received from Anglo Coal and were not audited by Exxaro, Coal Resources are quoted on a Mineable In-Situ (MTIS) basis and tonnes are in addition to those
resources which have been modifi ed to produce the reported Coal Reserves. The slight increase is the result of mining depletion (2,9Mt) being offset by additional drilling and
revised geological model.
9 The update of the geological model (specifi c the exclusion of “seam 2 upper-upper” from “seam 2” because of poor quality), the transfer of 8Mt to inventory because of the
exclusion of boreholes with suspect quality and/or collar information and mine depletion (3,5Mt) resulted in the signifi cant decrease.
10 The decrease is the result of production depletion (37Mt), revised resource classifi cation methodology (~835Mt), which includes the exclusion of geophysical logged open
holes for classifi cation purposes as well as the revision of the resource, based on eventual economic extraction, which resulted in the exclusion of benches 1b, 7a and zone 1.
The Coal Resource classifi cation methodology implemented in 2008 has been reviewed and applied with certain modifi cations in 2009. Measured resources are classifi ed by
a 500m drill grid spacing, but structurally complex areas require additional investigative drilling to increase the structural defi nition for inclusion into the measured category. The
exclusion of geophysical logged open holes in resource classifi cation this year will be reviewed in 2010 after current investigations have been concluded.
11 The project area is adjacent to Grootegeluk and forms part of the geological model of the mine. The decrease and movement between the categories are the result of the
exclusion of geophysical logged open holes in resource classifi cation and the movement of 903Mt to inventory based on eventual economic extraction.
12 Figures are received from Anglo Coal Australia and not audited by Exxaro. Resources outside the 2009 long wall layout and the north-west board and pillar area are excluded
from reporting this year and is part of the low potential resources.
54 I Exxaro Annual Report 2009
COAL RESOURCE QUALITIES
Table 1
Operation
Arnot mine
Matla mine
Inyanda mine
Leeuwpan mine
Mafube mine
NBC mine
Belfast project
NCC mine
Grootegeluk mine
Grootegeluk West project
Waterberg North project
Waterberg South project
Tshikondeni mine
Moranbah project
Seam/
layer/
formation
Total
Total
Total
TL2
BL2
Total
Total
Total
Total
Volksrust
Formation
Vryheid
Formation
Volksrust
Formation
Vryheid
Formation
Volksrust
Formation
Vryheid
Formation
Volksrust
Formation
Vryheid
Formation
Total
Total
Measured Resource
Indicated Resource
Inferred Resource
Tonnes
(Mt)1
CV
MJ/Kg
150,1
406,0
12,6
104,8
76,8
121,1
30,0
107,7
13,9
23,6
21,5
25,3
16,0
25,0
23,4
20,4
24,6
25,0
%
VM
23,9
23,0
24,0
17,0
19,0
23,5
21,2
23,4
26,5
%
Ash
21,1
25,0
20,4
42,0
22,0
27,9
28,3
18,9
20,3
%
S
1,0
1,0
1,9
0,9
1,0
0,8
0,9
1,1
1,2
Tonnes
(Mt)1
38,3
330,5
–
1,6
1,2
–
5,1
3,7
42,1
CV
MJ/Kg
23,9
20,7
–
11,3
25,7
–
20,0
24,2
23,2
%
VM
23,7
22,4
–
10,8
9,7
–
21,2
22,1
23,7
%
Ash
21,4
27,6
–
51,8
20,5
–
30,0
20,1
25,7
Tonnes
(Mt)1
25,5
107,5
CV
MJ/Kg
24,1
21,3
%
S
0,9
0,7
–
0,4
1,1
–
–
–
–
57,3
0,9
1,1
1,0
0,2
7,1
–
–
–
–
22,1
21,4
24,4
–
%
VM
23,7
22,5
–
–
–
21,6
21,4
21,6
–
%
Ash
20,8
25,9
–
–
–
30,4
25,1
20,0
–
%
S
0,9
0,7
–
–
–
0,8
0,8
1,3
–
1 962
12,7
19,7
54,4
1,1
990
14,2
19,7
53,9
1,1
621
13,4
20,0
53,6
0,9
648
23,2
22,2
27,6
2,1
300
23,3
22,3
28,6
2,2
166
23,2
21,5
28,5
2,0
840
13,8
19,4
55,9
0,9
2 960
12,5
19,6
56,4
0,9
181
22,9
22,3
29,5
2,3
656
21,5
21,8
32,1
2,2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
24,0
56,0
30,8
24,9
22,0
19,0
14,0
26,7
0,7
0,6
10,1
150,0
30,8
26,3
22,0
18,4
13,9
22,7
0,7
0,6
VM – volatile matter, S – sulphur, CV – calorifi c value.
Rounding-off of fi gures may cause computational discrepancies.
Coal qualities are quoted on a Mineable Tonnage In-Situ (MTIS) and on an air-dried basis.
1 The tonnages are quoted in metric tonnes and million tonnes is abbreviated as Mt.
2 TL – Top layer, BL – Bottom layer.
1 588
11,2
19,1
56,5
1,0
588
16,3
21,0
41,7
1,6
247
10,6
19,4
55,5
0,6
451
16,5
21,1
38,3
–
–
–
–
60,4
27,2
17,9
20,9
4,2
–
0,6
Exxaro Annual Report 2009 I 55
REVIEW OF MINERAL RESOURCES AND RESERVES CONTINUED
COAL
Coal Reserves
The table below details the total Coal Reserve estimated as at 31 December 2009.
2009
2008
Commodity
Operation1
%
attribu-
table to
Exxaro5
Reserve
category
ROM
(Mt)2,3
Arnot mine (UG)
Coal
Mpumalanga (captive market)
100
Matla mine6 (UG)
(captive market)
Inyanda
mine7 (OC)
100
Proved
Probable
TOTAL
Proved
Probable
TOTAL
Proved
Probable
TOTAL
72,6
10,2
82,8
201,1
132,1
333,2
11,6
0,4
12,0
Leeuwpan
mine (OC)
100
Proved
Probable
TOTAL
88,3
64,8
153,1
Mafube mine8 (OC)
50
NBC9 (OC)
(North Block
Complex)
Belfast project
(OC)
(prospecting)
NCC mine
(OC, UG)
(New Clydesdale)
Coal
Limpopo
Grootegeluk
mine10 (OC)
Tshikondeni
mine11 (UG)
(captive market)
100
100
100
100
100
Proved
Probable
TOTAL
Proved
Probable
TOTAL
Proved
Probable
TOTAL
Proved
Probable
TOTAL
35,6
67,3
102,9
26,9
4,1
31,0
91,9
3,0
94,9
11,7
–
11,7
Proved
Probable
TOTAL
2 140
666
2 806
Proved
Probable
TOTAL
3,98
–
3,98
Saleable product (Mt)2,4
Coking
coal
N/A
N/A
N/A
N/A
N/A
N/A
A-grade export steam coal
Thermal
coal
70,4
9,9
80,3
200,1
131,5
331,6
Metal-
lurgical
coal
N/A
N/A
N/A
N/A
N/A
N/A
8,2
0,3
8,5
Export
Thermal
4,2
–
4,2
Export
18,4
25,1
43,5
N/A
N/A
N/A
56,8
–
56,8
N/A
N/A
N/A
35,4
9,4
44,8
Thermal
8,2
21,2
29,4
24,5
3,7
28,2
29,9
–
29,9
7,6
–
7,6
Coking
coal
96,4
33,0
129,4
Thermal
coal
905,3
309,6
1 214,9
Metal-
lurgical
coal
9,5
23
32,5
Metal-
lurgical
coal
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Metal-
lurgical
coal
83,3
33,7
117,0
ROM
(Mt)2,3
86,1
1,2
87,3
110,3
264,2
374,5
13,9
–
13,9
88,0
57,4
145,4
40,6
66,8
107,4
24,2
19,6
43,8
91,9
3,0
94,9
12,5
–
12,5
2 756
552
3 308
Saleable product (Mt)2,4
Coking
coal
N/A
N/A
N/A
N/A
N/A
N/A
A-grade export steam coal
Thermal
coal
85,7
1,2
86,9
109,7
262,9
372,6
Metal-
lurgical
coal
N/A
N/A
N/A
N/A
N/A
N/A
8,7
–
8,7
A-grade export steam coal
48,4
34,3
82,7
Thermal
11,4
20,9
32,3
24,2
19,6
43,8
29,9
–
29,9
8,6
–
8,6
Export
22,0
24,7
46,7
N/A
N/A
N/A
56,8
–
56,8
N/A
N/A
N/A
Coking
coal
124,0
28,1
152,1
Thermal
coal
1 094,1
221,0
1 315,1
Metal-
lurgical
coal
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Metal-
lurgical
coal
105,3
14,9
120,2
2,11
–
2,11
N/A
N/A
N/A
N/A
N/A
N/A
4,41
–
4,41
2,40
–
2,40
N/A
N/A
N/A
N/A
N/A
N/A
Mine life
based on
reserve
(years)
%
change
(5,2)
(11,0)
17
33
(14,0)
5,1
5,3
21
(4,2)
20,4
(29,3)
0
(6,6)
(15,2)
(9,8)
8
40
7
55
7
Rounding-off of fi gures may cause computational discrepancies.
All changes more than 10% (signifi cant) are explained.
Reserves quoted are inclusive of reported Mineral Resources unless otherwise stated.
1 Mining method: OC – open-cut, UG – underground.
2 The tonnages are quoted in metric tonnes and million tonnes is abbreviated as Mt.
3 Coal Reserves are quoted on a run of mine (ROM) reserve tonnage basis which represents the tonnages delivered to the plant at an applicable moisture and quality.
4 Saleable reserve tonnage represents the product tonnes of coal available for sale on an applicable moisture basis. Qualities of saleable products are provided in Table 2.
5 Figures are reported at 100% irrespective of percentage attributable to Exxaro and refer to 2009 only.
6 The decrease is the result of mining depletion (11,27Mt), the exclusion 14Mt in seam 4 due to safety considerations and the exclusion of ~17Mt due to a change in
classifi cation methodology.
7 Decrease is the result of mining depletion (2,1Mt) and a revision of the geological model (0,5Mt).
8 Figures are received from Anglo Coal and were not audited by Exxaro.
9 Decrease is the result of the signifi cant reduction in the resource base (refer to Coal Resource table).
10 The decrease is the result of mining depletion and the change from indicated to inferred resources (~450Mt) within the LOMP that occurred with the implementation of the
revised classifi cation methodology.
11 Mining depletion (~0,6Mt) and revised block scheduling changes (0,86Mt) have depleted the reserve.
56 I Exxaro Annual Report 2009
COAL RESERVE QUALITIES
Table 2
Operation
Seam/
layer
THERMAL saleable
(proved + probable)
METALLURGICAL saleable
(proved + probable)
COKING saleable
(proved + probable)
Arnot mine
Matla mine
Inyanda mine
Leeuwpan mine
Mafube mine
Belfast project
NCC mine
Grootegeluk mine
Tshikondeni mine
Total
Total
Total
TL2
BL2
Total
Total
Total
Total
Volksrust
Formation
Vryheid
Formation
Total
Tonnes
(Mt)1
CV
MJ/Kg
%
VM
80,3
331,2
8,5
44,8
4,2
43,5
29,4
29,9
7,6
24,3
19,8
27,5
21,0
26,8
27,5
23,6
27,6
27,7
24,0
20,4
25,1
20,0
16,0
25,2
21,3
21,8
28,0
%
Ash
23,0
28,1
15,1
24,0
16,0
11,5
20,7
15,2
14,7
751
21,4
27,1
31,8
464
–
22,4
22,0
29,9
–
–
–
%
S
1,0
1,1
0,6
0,8
0,7
0,4
0,8
0,6
0,8
0,8
2,2
–
Tonnes
(Mt)1
CV
MJ/Kg
%
VM
%
Ash
%
S
Tonnes
(Mt)1
CV
MJ/Kg
%
VM
%
Ash
%
S
–
–
–
–
32,5
26,8
20,0
16,0
–
0,7
–
–
–
–
–
129
29,2
35,6
59,1
117
29,1
24,5
11,3
–
–
–
–
0,6
–
–
2,1
–
–
–
30,8
22,0
90,0
4,3
–
9,0
Saleable reserve tonnage represents the product tonnes of coal available for sale on an applicable moisture and air-dried quality basis.
VM – volatile matter, S – sulphur, CV – calorifi c value.
Rounding-off of fi gures may cause computational discrepancies.
1 Saleable product tonnages are quoted in metric tonnes and million tonnes is abbreviated as Mt.
2 TL – Top layer, BL – Bottom layer.
Exxaro Annual Report 2009 I 57
REVIEW OF MINERAL RESOURCES AND RESERVES CONTINUED
MINERAL SANDS
Mineral Resources
The table below details the total inclusive mineral sands resources estimated as at 31 December 2009.
Commodity
Operation1
2009
% attribu-
table to
Exxaro2
Resource
category
Tonnes
(million)3
Grade
% ilmenite
2008
Tonnes
(million)3
Grade
% ilmenite
Mineral sands
KwaZulu-Natal
Hillendale mine
+ Braeburn
+ Braeburn Extension4
(OC)
Fairbreeze
A+B+C+C Ext
(OC)
Fairbreeze D
(additional resource not
included in Fairbreeze LOM)
Block P
(OC)
Block P Extension project
(prospecting)
(OC)
Port Durnford project5
(prospecting)
(OC)
100
100
100
100
0
51
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
40,9
–
–
40,9
202,1
26,9
–
229,0
–
9,2
–
9,2
–
40,6
–
40,6
3,27
–
–
3,27
3,7
2,5
–
3,6
–
2,5
–
2,5
–
3,1
–
3,1
Rights have been relinquished
due to poor current
economical viability.
142,5
340,1
466,0
948,6
3,0
2,8
2,5
2,7
53,4
–
–
53,4
202,1
26,9
–
229,0
–
9,2
–
9,2
–
40,6
–
40,6
–
–
42,0
42,0
142,5
340,1
466,0
948,6
3,35
–
–
3,35
3,7
2,5
–
3,6
–
2,5
–
2,5
–
3,1
–
3,1
–
–
2,7
2,7
3,0
2,8
2,5
2,7
%
change
(23,5)
0
0
0
–
0
58 I Exxaro Annual Report 2009
Mineral sands resources continued
Commodity
Operation1
% attribu-
table to
Exxaro2
Mineral sands
Eastern Cape
Mineral sands
Limpopo
Eastern Cape project
(Nombanjana, Ngcizele,
Sandy Point old and recent) (OC)
Gravelotte sand and
pebbles
(OC)
Gravelotte rock
(OC)
Letsitele sand project
(prospecting)
(OC)
Letsitele rock project
(prospecting)
(OC)
Mineral sands
Western Cape
Namakwa Sands mine6
(OC)
Mineral sands
Madagascar
Mineral sands
Australia
Ranobé
– Upper sand unit
(OC)
Tiwest
– Cooljarloo mine
(OC)
Jurien project
(OC)
Dongara project
(prospecting)
(OC)
100
100
100
100
100
100
0
50
50
50
Resource
category
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
2009
Grade
% ilmenite
4,6
3,3
3,9
4,5
9,1
–
4,0
7,6
–
–
20,7
20,7
10,5
–
–
10,5
–
25,9
–
25,9
% ilmenite
3,0
2,5
1,5
2,7
Tonnes
(million)3
226,2
9,9
19,8
255,9
75,1
–
31,3
106,4
–
–
112,3
112,3
12,5
–
–
12,5
–
53,6
–
53,6
578,1
258,1
84,8
921,0
% zircon
0,7
0,7
0,3
0,6
Option has not been renewed due to
poor current economical viability.
95,0
234,1
10,0
339,1
–
25,6
–
25,6
91,4
–
–
91,4
% THM
2,9
2,3
2,4
2,5
–
6,0
6,0
4,5
–
–
4,5
2008
Grade
% ilmenite
4,5
–
–
4,5
9,1
–
4,0
7,6
–
–
20,7
20,7
10,5
–
–
10,5
–
25,9
–
25,9
% ilmenite
3,9
3,6
2,4
3,3
4,8
4,0
3,5
4,1
% THM
3,4
2,4
2,4
2,6
–
6,0
6,0
4,5
–
–
4,5
Tonnes
(million)3
232,9
–
–
232,9
75,1
–
31,3
106,4
–
–
112,3
112,3
12,5
–
–
12,5
–
53,6
–
53,6
181,3
393,2
262,9
837,4
208,8
320,4
181,3
710,5
62,5
281,8
10,0
354,3
–
25,6
–
25,6
91,4
–
–
91,4
%
change
9,8
0
0
0
0
10
–
(4,3)
0
0
% zircon
0,9
0,8
0,6
0,8
–
–
–
%THM – % total heavy minerals.
Mineral Resources are quoted inclusive of Mineral Resources that have been modifi ed to Ore Reserves unless otherwise stated.
Rounding-off of fi gures may cause computational discrepancies.
All changes more than 10% (signifi cant) are explained.
1 Mining method: OC – open-cut, UG – underground.
2 Figures are reported at 100% irrespective of percentage attributable to Exxaro and refer to 2009 only.
3 The tonnages are quoted in metric tonnes and million tonnes is abbreviated as Mt.
4 The decrease is the result of mining depletion (7,7Mt), redefi nition of the ore-body fl oor (~1Mt), loss of material due to backfi lling (~0,1Mt) and review and update of the
geological model (~3,7Mt). The total resource estimate includes 15,5Mt of material within the legal mine boundary buffer and ~2,8 Mt of material located beneath current
infrastructure.
5 Prefeasibility study has been fi nalised during the reporting year and the project was put on hold due to poor current economical viability.
6 The operation was reviewed by Exxaro during the reporting year as well as externally audited. The increase is primarily the result of the inclusion of the OFSW unit in the east
mine (~90Mt) and the update of the geological model with the new 2008/09 drilling information.
Exxaro Annual Report 2009 I 59
REVIEW OF MINERAL RESOURCES AND RESERVES CONTINUED
MINERAL SANDS
Ore Reserves
The table below details the total mineral sands reserves estimated as at 31 December 2009.
Commodity
Operation(1)
%
attribu-
table to
Exxaro2
Reserve
category
ROM
(Mt)3
2009
2008
Grade
Total heavy mineral (THM) composition
%
THM
%
ilmenite
%
zircon
%
rutile
%
leuco-
xene
ROM
(Mt)3
Grade
Total heavy mineral (THM) composition
%
THM
%
ilmenite
%
zircon
%
rutile
%
leuco-
xene
Mine life
based on
reserve
(years)
%
change
100
Proved
18,9
7,0
56,2
7,3
4,0
2,0
25,8
7,5
55,0
6,5
3,7
1,9
Mineral sands
KwaZulu-Natal
Hillendale mine4
(OC)
(including
Braeburn and
Braeburn
Extension)
Fairbreeze
A+B+C+C Ext5
(OC)
Probable
TOTAL
100
Proved
Mineral sands Gravelotte sand
100
Limpopo
(OC)
Mineral sands
Namakwa
Sands mine6
Western Cape (OC)
100
Proved
Australia
Tiwest
50
– Cooljarloo (OC)
– Jurien (OC)
50
– Dongara (OC)
50
(prospecting)
–
18,9
161,1
20,4
181,5
52,4
–
52,4
393,6
120,0
513,6
93,3
17,0
110,3
–
15,7
15,7
29,5
–
29,5
–
7,0
6,6
4,2
6,4
13,0
–
13,0
9,0
6,9
8,3
2,7
2,7
2,7
–
7,9
7,9
7,3
–
7,3
–
56,2
60,4
49,0
59,1
85,0
–
85
3,2
2,3
2,9
60,6
56,0
58,1
–
54,0
54,0
48,6
–
48,6
–
7,3
8,2
7,4
8,1
N/A
–
N/A
0,7
0,5
0,6
8,8
13,4
9,0
–
10,0
10,0
10
–
10,1
–
4,0
3,4
2,7
3,3
N/A
–
N/A
0,2
0,2
0,2
4,6
5,2
4,5
–
6,8
6,8
7,0
–
7,0
–
2,0
1,7
2,1
1,7
N/A
–
N/A
0,4
0,3
0,4
3,0
2,8
2,9
–
2,3
2,3
2,0
–
2,0
2,7
28,5
137,4
44,1
181,5
52,4
–
52,4
64,7
217,9
282,6
58,0
56,0
114,0
–
15,7
15,7
29,5
–
29,5
5,0
7,3
6,1
7,2
6,4
13,0
–
13,0
12,2
10,0
10,5
3,3
2,7
3,0
–
7,9
7,9
7,3
–
7,3
63,0
55,8
59,9
61,3
60,3
85,0
–
85
38,7
37,8
38,0
60,6
60,4
60,5
–
54,0
54,0
48,6
–
48,6
4,0
6,3
8,3
8,1
8,1
N/A
–
N/A
9,8
9,8
9,8
9,3
8,4
8,9
–
10,0
10,0
10
–
10,1
8,0
4,1
3,1
3,4
3,3
N/A
–
N/A
1,8
2,1
2,0
4,3
4,6
4,4
–
6,8
6,8
7,0
–
7,0
2,0
1,9
1,4
1,8
1,7
N/A
–
N/A
3,9
4,1
4,1
3,2
3,1
3,1
–
2,3
2,3
2,0
–
2,0
(33,6)
3
0
0
22
11
81,7
18
(3,2)
6
0
0
5,2
9,8
Probable
TOTAL
Proved
Probable
TOTAL
Probable
TOTAL
Proved
Probable
TOTAL
Proved
Probable
TOTAL
Proved
Probable
TOTAL
%THM – percent total heavy minerals.
Rounding-off of fi gures may cause computational discrepancies.
All changes more than 10% (signifi cant) are explained.
Reserves quoted are inclusive of reported Mineral Resources unless otherwise stated.
1 Mining method: OC – open-cut, UG – underground.
2 Figures are reported at 100% irrespective of percentage attributable to Exxaro and refer to 2009 only.
3 The tonnages are quoted in metric tonnes and million tonnes is abbreviated as Mt.
4 The decrease is the result of mining depletion (7,7Mt) and reduction in the resource base.
5 The measured resources previously reported as probable based on the pending status of the Fairbreeze C Ext. mine right application were reclassifi ed as proved reserves this year due to the granting
of the mine right during the reporting period.
6 The change is the result of a review of the reserve model and the signifi cant increase in the resource base.
60 I Exxaro Annual Report 2009
BASE METALS
Mineral Resources
The table below details the total inclusive base metal resources estimated as at 31 December 2009.
Commodity
Operation1
Base metals
Namibia
Rosh Pinah mine
(zinc and lead)
(UG)
2008
Grade
%Zn
8,7
6,6
4,8
7,2
Tonnes
(million)3
Mt
4,7
5,8
1,7
12,2
%
change
(4,5)
%Pb
2,2
1,8
0,8
1,8
%
attribu-
table to
Exxaro2
Resource
category
Tonnes
(million)3
50,04 Measured
Indicated
Inferred
TOTAL
Mt
4,2
5,8
1,7
11,6
2009
Grade
%Zn
8,5
6,7
4,8
7,1
%Pb
2,2
1,8
0,8
1,8
2009
%
attribu-
table to
Exxaro2
Resource
category
Tonnes
(million)3
Grade
Commodity
Base metals
Northern Cape
Operation1
Black Mountain Mining
– Deeps and Broken Hill4,5
26 Measured
(zinc, lead, copper and silver)
(UG)
– Swartberg4,6
(zinc, lead, copper and silver)
(UG)
Indicated
Inferred
TOTAL
26 Measured
Indicated
Inferred
TOTAL
Mt
7,2
5,8
7,3
20,3
–
17,3
24,5
41,8
Commodity
Operation1
%
attribu-
table to
Exxaro2
Resource
category
Tonnes
(million)3
– Gamsberg North4,7
26 Measured
(zinc)
(OC)
Indicated
Inferred
TOTAL
Mt
43,3
57,5
53,3
154,1
Zn%
Pb%
Cu%
Ag g/t
3,2
3,0
2,3
2,8
–
2,9
2,8
2,8
0,4
0,5
0,7
0,5
–
0,7
0,6
0,7
38,5
44,7
25,9
35,8
–
35,0
41,0
39,0
2,7
2,1
3,0
2,6
–
0,6
0,7
0,7
Grade
Zn%
7,1
6,5
5,4
6,3
2008
Grade
Zn%
Pb%
Cu%
Ag g/t
3,4
4,3
1,4
3,0
–
2,9
2,8
2,8
0,6
0,6
1,1
0,8
–
0,7
0,6
0,7
47,0
58,0
14,0
40,0
–
35,0
41,0
39,0
3,7
3,7
4,4
3,9
–
0,6
0,7
0,7
Grade
Zn%
–
–
4,1
4,1
%
change
206
0
% change
184
Tonnes
(million)3
Mt
1,6
2,6
2,4
6,6
–
17,3
24,5
41,8
Tonnes
(million)3
Mt
–
–
54,2
54,2
%Zn – percent zinc, %Cu – percent copper, %Pb – percent lead, Ag g/t – grams per tonne silver.
Mineral Resources are quoted inclusive of Mineral Resources that have been modifi ed to Ore Reserves unless otherwise stated.
Rounding-off of fi gures may cause computational discrepancies.
All changes more than 10% (signifi cant) are explained.
1 Mining method: OC - open-cut, UG - underground.
2 Figures are reported at 100% irrespective of percentage attributable to Exxaro.
3 The tonnages are quoted in metric tonnes and million tonnes is abbreviated as Mt.
4 Figures received from Anglo Base Metals and were not audited by Exxaro.
5 Resources quoted are in addition to reported Ore Reserves. Broken Hill and the Deeps Mineral Resources are combined for reporting purposes as both deposits are geologically
connected and make use of the same mining infrastructure. The decrease in Ore Reserves due to production has been partially offset through changed economic assumptions
and updated resource modelling based on new information. The defi nition of Mineral Resources for Broken Hill and the Deeps is based on the same 2009 economic and
fi nancial parameters as used for the defi nition of Ore Reserves.
6 Mine was placed on care and maintenance in 2007. No Ore Reserves, all remaining resources are declared.
7 Resources quoted are in addition to reported Ore Reserves. These Mineral Resources were formerly referred to as Gamsberg. However the recent discovery of the Gamsberg
East deposit has necessitated distinction between the two deposits; hence the renaming of Gamsberg to Gamsberg North. Towards the latter part of 2009, a new Gamsberg
Mineral Resource model has been produced based on an extensive drilling campaign carried out during 2008 and 2009. Mineral Resources are defi ned using geology and
a cut-off grade (3% Zn) within an economic pit shell. In view of the signifi cant changes (geological model, economic parameters and technological advancements) that have
taken place since the 2000 feasibility study was completed, Ore Reserves have been reallocated to Mineral Resources and will be restated once a new feasibility study has
been completed and approved. During 2009, some 11kt of material with an average grade of 8% Zn were mined via the exploration audit and processed at the Black Mountain
concentrator.
Exxaro Annual Report 2009 I 61
REVIEW OF MINERAL RESOURCES AND RESERVES CONTINUED
BASE METALS
Ore Reserves
The table below details the total base metal reserves estimated as at 31 December 2009.
2009
2008
Commodity
Operation1
%
attributable
to Exxaro2
Reserve
category
ROM
(Mt)3
Grade
Base
metals
Rosh Pinah
mine4 (UG)
(zinc and lead) Namibia
50,04
Proved
Probable
2,8
2,0
%Zn
10,3
7,9
%Pb
2,5
1,7
ROM
(Mt)3
Grade
Saleable product
Mine life
based on
reserve
(years)
%
change
Saleable product
Zinc
metal
(x 1,000t)
Lead
metal
(x 1,000t)
282
158
69
34
3,3
2,7
Zinc
metal
(x 1,000t)
Lead
metal
(x 1,000t)
327
203
80
49
%Zn
10,1
7,4
2009
2008
%
attribu-
table to
Exxaro2
Commodity
Opera-
tion1
Reserve
category
ROM
(Mt)3
Grade
%Zn
%Pb
Cu%
Ag g/t
Saleable product
Zinc
metal
(x 1,000t)
Lead
metal
(x 1,000t)
Copper
metal (x
1,000t)
Silver
metal
(x 1,000t)
ROM
(Mt)3
Grade
%Zn
%Pb
Cu%
Ag g/t
Saleable product
Zinc
metal
(x 1,000t)
Lead
metal
(x 1,000t)
Copper
metal (x
1,000t)
Silver
metal
(x 1,000t)
Mine life
based on
reserve
(years)
%
change
Base
metals
(zinc, lead,
copper and
silver)
Black
Mountain
mining
Deeps5
(UG)
26
Proved
Probable
4,9
2,8
3,5
2,0
3,6
2,6
0,4
0,4
43
50
171,2
176,6
18,5
206,8
57,4
74,7
11,6
142,6
3,0
5,9
3,7
2,9
3,2
2,9
0,5
0,4
40
42
109,4
93,2
13,4
116.8
170,1
168,2
21,9
244.5
Commodity
Operation1
Base metals
(zinc)
Gamsberg 6 (OC)
%
attributable
to Exxaro2
26
2009
2008
Reserve
category
ROM
(Mt)3
Proved
Probable
TOTAL
–
–
–
Grade
%Zn
–
–
–
Saleable
product
Zinc metal
(x 1,000t)
–
–
–
ROM
(Mt)3
34,2
110,3
144,5
Grade
%Zn
7,5
5,5
6,0
Saleable
product
Zinc metal
(x 1,000t)
2,6
6,1
8,7
%
change
–
%Zn – percent zinc, %Cu – percent copper, %Pb – percent lead, Ag g/t – grams per tonne silver.
Reserves quoted are inclusive of reported Mineral Resources unless otherwise stated.
Rounding-off of fi gures may cause computational discrepancies.
All changes more than 10% (signifi cant) are explained.
1 Mining method: OC – open-cut, UG – underground.
2 Figures are reported at 100% irrespective of percentage attributable to Exxaro and refer to 2009 only.
3 The tonnages are quoted in metric tonnes and million tonnes is abbreviated as Mt.
4 The decrease is the result of mining depletion (~0,5Mt) and revised mine design based on updated economical assumptions (~0,7Mt).
5 Figures received from Anglo Base Metals and not audited by Exxaro. Reserves quoted are exclusive of Mineral Resources. The decrease in Ore Reserves due to production has
been partially offset through changed economic assumptions and updated resource modelling based on new information. The defi nition of Mineral Resources for Broken Hill and
the Deeps is based on the same 2009 economic and fi nancial parameters as used for the defi nition of Ore Reserves.
6 Figures received from Anglo Base Metals and not audited by Exxaro. A prefeasibility study is currently in progress and no Ore Reserves are therefore reported.
62 I Exxaro Annual Report 2009
INDUSTRIAL MINERALS
Mineral Resources
The table below details the total inclusive industrial mineral resources estimated as at 31 December 2009.
2009
2008
Commodity
Gauteng
Operation1
Glen Douglas mine
(metallurgical dolomite)
OC
Glen Douglas mine
(aggregate dolomite)
OC
%
attributable
to Exxaro2
Resource
category
Tonnes
(million)3
Grade
% SiO2
<2,5
–
<2,5
<2,5
Tonnes
(million)3
179,2
–
125,2
304,4
Grade
% SiO2
<2,5
–
<2,5
<2,5
178,5
–
125,2
303,7
34,2
Raw material
36,1
Raw material
–
193,7
227,9
–
Raw material
Raw material
–
193,7
229,8
–
Raw material
Raw material
%
change
(0,2)
(0,8)
100
100
Measured
Indicated
Inferred
TOTAL
Measured
Indicated
Inferred
TOTAL
Mineral Resources are quoted inclusive of Mineral Resources that have been modifi ed to Ore Reserves unless otherwise stated.
%Sio2 – percent silica.
Rounding-off of fi gures may cause computational discrepancies.
All changes more than 10% (signifi cant) are explained.
1 Mining method: OC – open-cut, UG – underground.
2 Figures are reported at 100% irrespective of percentage attributable to Exxaro.
3 The tonnages are quoted in metric tonnes and million tonnes is abbreviated as Mt.
Exxaro Annual Report 2009 I 63
REVIEW OF MINERAL RESOURCES AND RESERVES CONTINUED
INDUSTRIAL MINERALS
Ore Reserves
The table below details the total inclusive industrial mineral reserves estimated as at 31 December 2009.
Commodity
Operation1
Industrial minerals
Gauteng
Glen Douglas (OC)
Dolomite mine
Glen Douglas (OC)4
Dolomite mine
2009
2008
%
attribu-
table to
Exxaro2
100
100
Reserve
category
Proved
Probable
TOTAL
Proved
Probable
TOTAL
ROM (Mt)3
Grade
%
SiO2
<2,5
–
<2,5
42,1
–
42,1
8,6
–
8,6
Raw dolomite
–
Raw dolomite
Saleable
product
Metallurgical
dolomite
(Mt)
39,8
–
39,8
Aggregate
(Mt)
8,5
–
8,5
ROM (Mt)3
Grade
%
SiO2
<2,5
–
<2,5
Raw dolomite
–
Raw dolomite
42,8
–
42,8
10,5
–
10,5
Saleable
product
Metallurgical
dolomite
(Mt)
40,2
–
40,2
Aggregate
(Mt)
9,8
–
9,8
%
change
(1)
(18)
MINERAL SAND MINES AND PROJECTS IN KWAZULU-NATAL
64 I Exxaro Annual Report 2009
BASE METAL AND INDUSTRIAL MINERAL MINES IN SOUTHERN AFRICA
Exxaro Annual Report 2009 I 65
EXECUTIVE COMMITTEE
66 I Exxaro Annual Report 2009
Left: Sipho Nkosi (55)
Chief executive offi cer
BCom (hons)(econ), MBA (Univ Mass, USA), Diploma in Marketing Management,
Advanced management leadership programme (Oxon)
After six years at Ford Motor Company in South Africa as a market analyst, in 1986
Sipho moved to Anglo American Coal Corporation as a marketing coordinator. In
1992 he joined Southern Life Association as senior manager, strategic planning. In
1993 he was appointed marketing manager, new business development at Trans-
Natal Coal Corporation, which later became Ingwe Coal Corporation. In 1997 he
joined Asea Brown Boveri (South Africa) Limited as vice-president marketing,
becoming managing director of ABB Power Generation in 1998. As founder of
Eyesizwe Holdings, he served as chief executive offi cer. On 1 September 2007 he
was appointed chief executive offi cer of Exxaro.
Right: Wim de Klerk (46)
Finance director
BCom (hons), CA(SA), TEP (Darden), EMP (Harvard)
Wim has served on the executive management team of Iscor, responsible for
strategy and continuous improvement. From 2001, he was responsible for the
mineral sands commodity business and assumed responsibility for the base
metals businesses in 2008. He was appointed to his current position in March
2009.
Trevor Arran (42)
Executive general manager: sands and base metals
BSc (hons)(econ geo), Advanced management programme
(UP/GIBS), BEP, diploma project management
Trevor has a wide mining background, supplemented by fi nancial experience
gained in equity markets, investment banking and new business. He assumed
responsibility for his current portfolio in the fi rst half of 2009.
Left: Mxolisi Mgojo (49)
Executive general manager: coal
BSc (hons), MBA, Advanced management programme (Wharton)
Previously at Eyesizwe Coal, he was responsible for marketing. Before assuming
his current position, Mxolisi was responsible for the base metals and industrial
minerals commodity business.
Right: Retha Piater (55)
Executive general manager: human resources
BCom (hons), MBA, Advanced management programme (Insead)
Retha has 23 years of human resources experience across the various business
units and commodities, specifi cally in the area of remuneration.
Left: Dr Nombasa Tsengwa (45)
Executive general manager: safety and sustainable development
Senior secondary teacher’s diploma, BSc (hons), MSc, PhD (Biotechnology)(Univ
of Maryland, USA), Advanced management programme (Insead)
Prior to her appointment in 2003, Nombasa was the deputy director-general for
the Department of Environmental Affairs and Tourism, and served as a corporate
manager at the Council for Scientifi c and Industrial Research (CSIR). Subsequent
to year end, Nombasa assumed responsibility for the coal captive mines.
Right: Ernst Venter (53)
Executive general manager: business growth
BEng (hons), MBA, Advanced management programme (Insead)
Ernst has headed a number of portfolios including base metals, consulting
services, mining technology, coal benefi ciation, process development and plant
metallurgy. Prior to assuming his current position, he was responsible for the
coal commodity business.
Left: Marie Viljoen (63)
Company secretary
Marie has 23 years’ experience in the fi eld. She is responsible for the group’s
corporate governance and business administration to comply with statutory and
legal requirements.
Right: Dr Willem van Niekerk (50)
Executive general manager: corporate services
BSc (hons), MSc, PhD (met eng)(Univ of Pretoria), BCom (Unisa),
MBA (Henley), TEP (Darden)
Willem started his career as a metallurgist with Iscor in 1985, progressing
to general manager corporate technology by 2001. At Exxaro, he has headed
Zincor and Australia Sands, and is now responsible for technology, information
management, logistics and supply chain management.
> Dirk van Staden retired with effect from 28 February 2009. Wim de Klerk was appointed as fi nance director on 1 March 2009.
Exxaro Annual Report 2009 I 67
DIRECTORATE
68 I Exxaro Annual Report 2009
Left: Sipho Abednego Nkosi (55)
Chief executive offi cer
BCom (hons)(econ), MBA (Univ Mass, USA), Diploma in marketing management,
Advanced management leadership programme (Oxon)
See page 66
Right: Willem Abraham de Klerk (46)
Finance director
BCom (hons), CA(SA), TEP (Darden), EMP (Harvard)
See page 66
Left: Christopher Ivan Griffi th (45)
BEng (mining)(hons), professional engineer
Chris is chief executive offi cer of Kumba Iron Ore, chairman of Sishen Iron Ore
Company and a member of the Anglo American plc executive committee. Prior to
his appointment at Kumba in 2008, he headed joint ventures for Anglo Platinum.
Chris is a member of the South African Institute for Mining and Metallurgy and
the Association of Mine Managers.
Right: Jurie Johannes Geldenhuys (67)
Independent non-executive director
BSc (eng)(elec), BSc (eng)(min), MBA (Stanford), professional engineer
Jurie spent 35 years with the Anglovaal Group in technical and executive
capacities across numerous commodities, retiring as managing director of
Avgold Limited in 2000. He was president of the Chamber of Mines (1993 – 1994)
and served on several of its board committees. He also served on the Atomic
Energy Council and National Water Advisory Council. He is currently non-
executive chairman of Astral Food Limited and chairs its human resources and
remuneration committee.
Left: Ufi kile Khumalo (44)
Non-executive director
BSc (eng) (UCT), MAP (Wits), Senior executive development programme
(Harvard), Advanced management programme (Insead)
Ufi kile served with Sasol and Eskom as a senior engineer and Bevcan as
a manufacturing manager prior to joining the Independent Development
Corporation (IDC). He held several positions at the IDC, including head of
international fi nance; executive vice-president of industrial sectors and executive
vice president of projects. He provided strategic direction in the industrial
sectors on large projects, and was involved in evaluating investment proposals,
contributing to successfully implementing the IDC’s development mandate.
Right: Deenadayalen Konar (56)
Independent non-executive director, chairman
BCom, CA(SA), MAS, DCom
Immediately after completing his articles at Ernst & Young, Len became an academic
at the University of Durban-Westville. He then spent six years with the Independent
Development Trust as head of investments and internal audit, prior to becoming a
professional director of companies and consultant. He is past chairman and member
of the external audit committee of the International Monetary Fund. Len is currently
chairman of Steinhoff International and Mustek, and a board member of Illovo Sugar,
Makalani, Sappi and JD Group and co-chairman of the implementation oversight
panel of the World Bank in Washington.
Vincent Zwelibanzi Mntambo (52)
Non-executive director
BJuris, LLB (Univ of North West, LLM (Yale)
Zwelibanzi is executive chairman of ASG Business Solutions. He was previously a
senior lecturer at the University of Natal, executive director of IMSSA, director-
general of Gauteng Province and chairman of the Commission for Conciliation,
Mediation and Arbitration of South Africa. He is chairman of Metrobus (Pty) Ltd,
Mainstreet 333 (Pty) Ltd and a director of SA Tourism (Pty) Ltd and Aveng Ltd.
Left: Richard Peter Mohring (62)
Independent non-executive director
BSc (eng)(mining), MDP, PMD (Harvard); professional engineer
From 1972 to 1998, Rick held production, managerial and executive posts in the
gold and coal divisions of the Rand Mines and Billiton groups. From 1998 until
2000, he was chief executive offi cer of NewCoal, an empowerment initiative set
up by Anglo Coal and Ingwe Coal Corporation and the forerunner to Eyesizwe
Coal, the largest BEE coal company in South Africa. Rick served as deputy chief
executive offi cer of Eyesizwe Coal for three years. He retired in December 2003,
and set up a private consulting company, Mohring Mining Consulting.
Right: Nkululeko Leonard Sowazi (46)
Non-executive director
BA, MA (UCLA)
Nkululeko is founding executive chairman of the Tiso Group, a black-controlled
investment holding company with interests in natural resources, infrastructure
and industrial services. He was previously executive deputy chairman of JSE-listed
banking group, African Bank Investments Limited (ABIL) and managing director of the
Mortgage Indemnity Fund. He is chairman of Idwala Industrial Holdings, Home Loan
Guarantee Company, Financial Markets Trust, and serves on the boards of Aveng Ltd,
Alstom South Africa, Trident Steel, Emira Property Fund and African Explosives Ltd.
Left: Jeffrey van Rooyen (59)
Independent non-executive director
BCom, BCompt (hons), CA(SA),
Competitive readiness programme (Columbia, USA)
Director of various companies in the Uranus Group. Non-executive director
of MTN Group and Pick n Pay Stores. Trustee of the International Accounting
Standards Committee Foundation and member of the University of Pretoria’s
faculty of economic and management sciences oversight board. Jeff was a
partner in Deloitte and Touché, chairman of the Public Accountants and Auditors
Board, CEO of the Financial Services Board and advisor to the Minister of Public
Enterprises. He is a founder member and former president of the Association for
the Advancement of Black Accountants of South Africa.
Right: Dalikhaya Zihlangu (43)
Non-executive director
BSc (eng) (mining) (Wits), MDP (Unisa), MBA (Wits)
Dalikhaya is chief executive offi cer of Eyabantu Capital Consortium. Between
1989 and 1994, he was a stoper/developer and shift boss at Vaal Reefs Gold
Mining Company. From 1995 until 2002, he served as shift boss, mine overseer,
operations manager and mine manager at Impala Platinum Limited, and then as
chief executive offi cer of Alexkor Limited. He is a non-executive director of the
South African National Oil and Gas Company (PetroSA), chairman of its human
capital committee and a member of its business strategy committee.
> Dirk van Staden retired with effect from 28 February 2009. Wim de Klerk was appointed as fi nance director on 1 March 2009.
> Philip Baum resigned as a non-executive director with effect from 15 July 2009. Chris Griffi th was appointed as non-executive director on
16 July 2009
> Simangele Mngomezulu resigned as a non-executive director with effect from 21 December 2009.
Exxaro Annual Report 2009 I 69
WE UNDERSTAND THAT REACHING OUR LONG-TERM GOALS
REQUIRES SHORT-TERM ACTION.
70 I Exxaro Annual Report 2009
Governance
and
sustainability
Exxaro Annual Report 2009 I 71
CORPORATE GOVERNANCE
Highlights
>
Independent board, individual director
performance assessments and peer
evaluation of directors
>
Roll-out of a comprehensive induction
programme
for directors, which
included:
–
Statutory
and
regulatory
requirements
relating
to
the
governance and operations of the
company
–
The organisation’s operations and
business environment
>
Implementation of a new framework
for delegation of authority in support
of the board-approved policy and best-
practice principles
>
Implementation of reinforced pro-
cesses for confl ict of interest
>
Introduction of a bi-annual CEO Safety
Summit
>
Introduction of an ethical assessment
panel
compliance to the competition act
and implementation of a structured
compliance programme to ensure
competition law compliance
>
Independent King
II
compliance
accountable, not only to shareholders but
of the business or the
interests of
to all stakeholders.
shareholders and, if appropriate, obtains
independent expert advice.
Transparency and accountability have
never proven more
important
than
The board has a written charter that
during the global fi nancial crisis of the
governs
its powers,
functions and
last fi nancial year. Exxaro’s effective
responsibilities. There is a clear distinction
embedded governance processes have
in Exxaro between the roles of chairman
allowed it to critically evaluate and re-
and chief executive offi cer to ensure
evaluate capital projects to create value
unfettered powers of decision making.
for the benefi t of internal and external
stakeholders within existing fi nancial
The board selects and appoints the
constraints.
company secretary and recognises the
pivotal role to be played by the company
The review of capital projects is only
secretary in achieving good corporate
one of a number of governance processes
governance.
within
the
organisation.
Exxaro’s
governance
processes
are
guided
The board meets at least fi ve times a
by the:
>
Memorandum
and
articles
of
year.
association
> Board charter
>
>
Board committees’ terms of reference
Companies Act 61 of
As a truly South African company, we
support and actively drive transformation
in everything we do and therefore we
1973, as
are proud that the majority of our board
members are historically disadvantaged
>
Listings Requirements of the JSE
South Africans.
Limited
> King codes
> Global Reporting Initiative.
Our board consists of:
>
independent
Four
non-executive
directors,
unconnected
to
the
organisation
> Six non-executive directors
> Two executive directors.
assessment
>
Launching a high-level review of
The board
The board
is ultimately accountable
existing governance practices against
and responsible to shareholders for the
the compliance
requirements of
performance and affairs of Exxaro. The
>
Independent
assessment
of
amended
King III.
board therefore retains full and effective
In assessing the status of directors, the
control over Exxaro and gives strategic
principles of the Listings Requirements of
Sound corporate governance is implicit
direction to management. The board is
the JSE Limited were used.
in our values,
culture, processes,
also responsible for ensuring compliance
organisational structure and operations.
with all relevant laws, regulations and
The
board
collectively
provides
To ensure that the tone
is set for
codes.
accountability
and
transparency,
scrutinising, monitoring and strategic
functions,
and maintains
strict
corporate governance practices are
The board regularly evaluates economic,
confi dentiality of all information relating
driven from our board of directors through
political, social and legal issues, as well as
to the business of Exxaro. The board
to management and all employees.
any other relevant external matters that
is familiar with issues of concern to
This ensures management
remains
may infl uence or affect the development
shareholders.
72 I Exxaro Annual Report 2009
Attendance
Board 2009
D Konar (Chairman)
PM Baum
WA de Klerk
JJ Geldenhuys
CI Griffi th
U Khumalo
SEA Mngomezulu
VZ Mntambo
RP Mohring
SA Nkosi
NL Sowazi
J van Rooyen
DJ van Staden
D Zihlangu
P = present
X = apology
pre/post appointment
Appointed
20
27
to board
Feb
March
29
May
15
Jul
18
Aug
01
Oct
30
Nov Present Apology
1 Jun 01
17 Feb 04
1 Mar 09
1 Jun 01
16 Jul 09
28 Nov 06
13 Aug 08
28 Nov 06
28 Nov 06
18 Oct 01
28 Nov 06
13 Aug 08
1 Jun 01
28 Nov 06
P
X
P
X
P
X
P
P
P
X
P
P
P
P
P
P
P
P
P
P
P
X
P
X
P
X
P
P
P
X
P
P
P
X
P
P
P
X
P
P
P
P
P
P
P
X
P
P
P
P
P
P
X
P
P
P
P
P
P
P
P
P
P
P
X
P
P
P
X
X
P
P
P
P
P
P
P
X
P
P
P
P
P
P
7
1
6
7
3
4
5
6
7
6
3
6
1
6
0
3
0
0
0
3
2
1
0
1
4
1
0
1
Committees of the board
The committees assist in the execution of
board duties, powers and authorities. The
board delegates to each of the committees
the authority required to enable the
committees to fulfi l their respective
functions through formal board-approved
terms of reference.
Delegating authority to board committees
or management does not mitigate or
discharge the board and its directors of
their duties and responsibilities. This is
refl ected in the Exxaro delegations of
authority framework (the framework)
which is managed by the offi ce of the
company
secretary. The
framework
has been adopted by all wholly-owned
In the spirit of transparency and full
disclosure, each committee’s independent
chairman reports formally to the board
after each meeting on all matters within
their duties and responsibilities. This
includes recommendations on steps to be
taken.
Board committees and members are
authorised to obtain independent outside
professional advice when considered
necessary. The company secretary assists
the board committees and members in
obtaining any such professional advice.
Audit, risk and compliance
committee
The committee
for
is
appointing auditors and ensuring the
company’s fi nancial reporting is accurate
responsible
subsidiaries.
and complete.
The committee assists in:
>
Ensuring effective internal fi nancial
controls are in place
>
Overseeing
the
external
audit
function
>
Reviewing the integrity of risk control
systems and risk policies
>
Evaluating
the qualifi cation and
independence of the external auditor*
>
Evaluating the scope and effectiveness
of the external audit function*
>
Evaluating the competency level of
the fi nance director*
>
>
Appointment of the chief audit executive
Compliance with legal and regulatory
requirements.
* Evaluation performed and concluded at the
committee’s November 2009 meeting.
Exxaro Annual Report 2009 I 73
Appointed to
committee
20
Feb
29
May
18
Aug
30
Nov Present Apology
13 Aug 08
11 Feb 02
30 May 07
30 May 07
P
P
P
P
P
P
P
P
P
P
P
X
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
4
4
4
3
4
1
4
4
0
0
0
1
0
0
0
0
CORPORATE GOVERNANCE CONTINUED
The committee, in carrying out its duties,
Attendance
has due regard to the principles of
governance and code of best practice as
contained in the King reports.
Audit 2009
J van Rooyen
(Chairman)
D Konar
RP Mohring
NL Sowazi
WA de Klerk
DJ van Staden
SA Nkosi
R Strydom*
P = present
X = apology
invitees
* Chief Audit Executive
post retirement
The committee meets at least four times
a year.
Due to the heavily regulated environment
within which Exxaro operates, emphasis
has been placed on the need to implement
effective compliance processes in line
with the standards of the Compliance
Institute of South Africa.
The terms of reference of the audit, risk
and compliance committee describe the
committee’s oversight responsibility in
managing compliance risk.
The
following
compliance-related
memorandums were submitted to the
committee and the board for noting:
>
Directors’ liability in terms of safety
and environmental statutes
>
Directors’ liability in terms of the
Transformation, remuneration,
human resources and
nomination committee
The purpose of this committee is to:
>
Guide, monitor, review and evaluate
Exxaro’s progress on transformation,
the following responsibilities for the
nomination element are carried out:
>
recommendations
Providing
on
the composition of the board and
board committees and ensuring that
the board of directors consists of
individuals who are equipped to fulfi l
with
specifi c
reference
to
the
the role of directors of the company
three primary pillars – employment
>
Annual
revision
of
corporate
Competition Act 1 of 2009 (that seeks
equity, community involvement and
to amend the Competition Act 89 of
preferential procurement
1998)
>
Make recommendations on appoint-
>
Gap analysis on the draft King III
ments, remune ration policies and
governance
guidelines
and
related documents and providing
recommendations to the board as
deemed advisable
>
Providing comments and suggestions
on committee structures of
the
report and actions required by the
board and management ahead of King
III coming into effect
>
The impact of the proposed Companies
Act, Act no 71 of 2008.
Exxaro’s compliance policy describes
the process and
the
roles and
responsibilities of individuals responsible
practices for the company’s executive
directors, senior management and
board,
committee
operations,
other employees
member qualifi cations and member
>
Review compliance with all statutory
appointment
and
best-practice
requirements
for labour and industrial relations
management.
>
Establishing
and
maintaining
procedures for interested parties to
communicate with board members
>
Reviewing and recommending to the
board its annual training programme
for implementation of the compliance
Although this is a combined committee,
>
Maintaining procedures for reviewing
process.
a process is in place to ensure that
board members’ interests.
74 I Exxaro Annual Report 2009
Although the board chairman is not a member of the committee, a separate agenda is in operation for nomination committee
matters and the board chairman chairs this part of the meeting.
Attendance
TREMCO 2009
RP Mohring (Chairman)
PM Baum
JJ Geldenhuys
VZ Mntambo
WA de Klerk
D Konar
SA Nkosi
DJ van Staden
P = present
X = apology
invitees
pre/post appointment
Appointed to
committee
19
Feb
15
May
17
Aug
30
Oct
Present Apology
1 Mar 08
16 Mar 04
1 Jun 08
9 May 07
P
P
P
P
P
P
X
P
P
P
P
P
P
P
P
P
X
P
P
P
X
P
X
P
P
P
P
4
1
4
3
3
4
3
1
0
1
0
1
1
0
1
0
Safety and sustainable
development (S&SD)
committee
The name of this committee was changed
the audit, risk and compliance committee
>
Report to the board on developments,
on S&SD matters, related risks and their
trends and/or signifi cant legislation
management within Exxaro.
on S&SD matters relevant to Exxaro’s
operations, its assets and employees
from safety, health and environment
In executing this governance function,
>
Identify those issues and elements
committee
in 2009
to
refl ect
its
the committee will:
arising from national and international
obligations
to
the
environment,
>
Assess
the
effectiveness
of
protocols applicable to Exxaro’s S&SD
employees and
those
communities
management’s approach
towards,
>
Ensuring
the
company
reports
impacted by Exxaro’s operations
in
and activities in, managing S&SD-
annually
through an
integrated
support of sustainable development.
related risks
sustainability report on S&SD issues.
>
Review signifi cant S&SD
incidents,
The committee’s purpose is to provide
performance
indicators
and
The committee meets at least three
advice to the board and, as necessary, to
compliance
times a year.
Attendance
S&SD 2009
JJ Geldenhuys (Chairman)
RP Mohring
D Zihlangu
WA de Klerk
SA Nkosi
P = present
X = apology
A = absent without apology
invitees
pre/post appointment
Appointed to
committee
19
Feb
28
May
17
Aug
27
Nov Present Apology
11 Apr 02
1 Jun 08
18 Apr 07
P
P
A
P
P
P
P
P
P
P
P
P
P
P
P
P
P
4
4
3
1
4
0
0
0
0
0
Exxaro Annual Report 2009 I 75
CORPORATE GOVERNANCE CONTINUED
Management committees
Executive committee
The executive committee
(Exco)
is
constituted in terms of Exxaro’s articles
of association to assist the CEO
in
managing the group.
Exco assists the CEO to guide and control
the overall direction of the company and
acts as a medium of communication and
coordination between the business units,
corporate service departments and
subsidiary companies and the board.
Collectively and individually, the members
of the executive committee must:
>
Oversee the fi nancial, operational and
safety performance of Exxaro
>
Guide Exxaro in its relations with
shareholders and key stakeholders,
including
employees,
regulators,
politicians, environmental
interest
groups and the media
>
Develop group strategy for board
approval
>
Receive and consider regular reports
from businesses in Exxaro to monitor
and manage fi nancial performance
>
Ensure coordination between business
units as well as corporate service
departments
>
Continually review
the adequacy
of
reporting arrangements and
effectiveness of internal control and
risk management
>
Approve or recommend to the board
expenditure and other fi nancial
commitments as specifi ed
in the
framework for the delegation of
authority
>
Acts as a responsible corporate citizen
and follow an ethical culture.
The committee ensures
that new
opportunities fi t Exxaro’s portfolio and
determines strategic priorities. It oversees
strategic initiatives and investigations
into the viability of potential investment
projects throughout the group. The
committee discusses and challenges
as
Exxaro’s portfolio performance
well as
initiatives
and projects.
Initiatives aligned with
the current strategy are included in
proceedings of the investment review
committee.
to
terminate
the current
strategy or to proceed with initiatives
or projects that are not included in the
current strategy are subject to agreed
governance procedures.
Recommendations
in
intended strategic
initiatives
Investment review committee
is
investment review committee
The
constituted as a management committee
to assist the CEO with the management
process of the group.
for
committee oversees
approval
The
processes
investments, designed
to ensure that these are aligned to the
group’s agreed strategies and values,
identifi ed and evaluated,
risks are
investments are
to
produce the maximum shareholder value
within an acceptable risk framework and
appropriate risk management strategies
are pursued.
fully optimised
The main purpose of the committee is
to review investments in a structured,
formal and transparent manner to ensure
that:
>
Each project meets the strategic,
investment require-
technical and
ments of the company, which includes
the identifi cation and management of
all project-related risks
Critical decisions, project parameters
and
are
followed and addressed prior to
governance
processes
>
Each project enhances the portfolio
value of the company.
The offshore review committee fulfi ls a
similar governance function for Exxaro’s
offshore subsidiaries, with executive
management
Exxaro’s
interests at offshore structures.
representing
Offshore review committee
This committee assists the board to
fi nancially co-ordinate Exxaro’s portfolio
of offshore investments and interests.
The primary responsibilities of
committee include:
>
the
Financial control and governance of
Exxaro’s offshore
investments and
multi-disciplinary interests
Effi cient fi nancial structuring
Providing for the funding of offshore
investments and expenditure
Ensuring fi nancial reporting, auditing
and tax-related issues are properly
managed
Ensuring the company’s overseas
offi ces
staffed,
are
managed and utilised.
effectively
>
>
>
>
The offshore review committee meets
quarterly, or more frequently if required.
Sustainability
The Exxaro brand is built on a strong
vision — everything we do and deliver
today will allow others to realise their
vision tomorrow. At Exxaro, we look
beyond the current commodities and
operations and see the impact we have
on people and the planet.
Exxaro is committed to good corporate
citizenship which requires economic
performance while considering the long-
term impact of business operations on
stakeholders and the environment.
Sustainability is a cornerstone of the
Exxaro group and our approach
is
Portfolio review committee
The portfolio
review committee
is
>
constituted as a strategy management
committee to assist the CEO with
portfolio management.
committing funds
76 I Exxaro Annual Report 2009
and verbal presentations. Specifi cally,
there are a number of mechanisms for
stakeholders to interact with the board
and its sub-committees. These include
annual general meetings, representative
forums and
internal communications
across a range of platforms.
Marketing communication
In line with its corporate values, Exxaro
communicates
regularly and openly
with all stakeholders. At all times, our
laws,
communications adhere to the
standards and voluntary codes of
accepted marketing communication in
the areas where we operate. During the
year, no incidents of non-compliance
were recorded.
embedded in the fi rst of our corporate
values: empowered to grow and contribute.
Our aim is to encourage entrepreneurship
as far as possible to transform this value
into reality for as many stakeholders as
possible (page 122).
Black economic empowerment
codes of good practice
While we understand that companies
need to verify the BEE status of suppliers
in terms of the Codes of Good Practice,
its reporting to the
Exxaro confi nes
requirements set out
in the Mineral
and Petroleum Resources Development
Act and its associated mining charter
scorecard.
Our approach to transformation and
empowerment, however, fi ts well with
the requirements of the BBBEE codes
and scorecard. In structuring Exxaro, we
ensured that the:
>
Majority of voting rights are exercised
by HDSA shareholders without any
restrictions
Majority of profi ts accrue to black
people
Majority of the board comprises black
people
The
target
exceeds the mining charter target for
management.
employment
equity
>
>
>
>
>
>
Ensure fairness in dealing with the
interests of all employees, other
affected individuals and the company
Document the process for disclosure,
approval and review of activities that
may amount to actual, potential or
perceived confl icts of interest
Provide a mechanism for the objective
review of personal outside interests.
By implementing the above, the company
is in a position to:
>
interests, provided
Allow individuals, where appropriate,
to acquire and maintain personal
outside
that
these do not interfere with, or have
the potential to interfere with, their
duties to the company, or improperly
infl uence the judgements expected
of them when acting on behalf of the
company
Protect individuals from misplaced
charges of any confl ict of interest
by providing a mechanism for the
approval
objective
(including conditional approval) of
appropriate personal outside interests
held by individuals
Avoid any unjustifi ed perception of
bias or self-interest by individuals
acting
the
company has approved the holding
of personal outside interests by such
individuals.
situations where
review
and
in
>
>
Disclosure policy
The board has adopted a formal policy of
continual disclosure of interests to ensure
full and timely disclosure by directors.
interests policy
Confl ict of interests
Exxaro has a comprehensive confl ict
to
of
directors, management and employees
in regulating conditions that constitute
or could constitute a confl ict.
that applies
The primary objectives of this policy are
to:
>
Promote
business-related confl icts of interest
transparency and avoid
External communications
Briefi ng analysts,
investors and fund
managers is an important element of
maintaining investor relations. However,
we will only provide price-sensitive
information
that
information to the market.
disclosing
after
stakeholder
Broader
communication
plans have been implemented. The group
believes in clear, transparent, concise
and timely dissemination of relevant
information to all stakeholders. This is
achieved through a multitude of channels
and media, including written, electronic
Exxaro Annual Report 2009 I 77
SHAREHOLDER INFORMATION
Shareholder information
Market listings and other
information
The principal market for Exxaro is the
JSE Limited. As a constituent of the
All Share Top 40 Index (ALSI40 Index),
Exxaro shares trade through the STRATE
system.
on behalf of its US ADR shareholders.
Contact Computershare or BoNY for
further details.
Shareholder communication
General shareholder enquiries
Computershare
the registrar
is
for
Exxaro. All general enquiries and
correspondence concerning shareholders
Closing JSE share prices are published in
(other than shares held in ADR form)
most national and regional South African
should be directed to the registrar.
newspapers and are available during the
Computershare’s contact details are on
day on the Exxaro and other websites.
the inside back cover. Shareholders must
Share prices are also available on I-Net
notify Computershare promptly in writing
Bridge, Reuters and Bloomberg.
of any change of address.
Exxaro
has
an
over-the-counter
All enquiries concerning shares held in
sponsored American depositary receipt
ADR form should be directed to BoNY,
(ADR) facility with the Bank of New York
with contact details set out on the inside
(BoNY) under a deposit agreement. For
back cover.
additional information, please refer to
the BoNY website: www.adrbny.com.
Shareholders can obtain details about
ADR holders
ADR holders may instruct BoNY on how
their own shareholding on the internet.
Full details, including how to gain secure
access to this personalised enquiry facility,
shares represented by their ADRs should
are provided on the Computershare
be voted. Registered holders of ADRs will
website: www.computershare.com.
have annual and interim reports mailed to
them at their recorded address. Brokers
or fi nancial institutions that hold ADRs
for shareholder clients are responsible
Publication of fi nancial
statements
Shareholders wishing to view the annual
for forwarding shareholder information
report or interim report in electronic
to their clients and will be provided with
rather than paper form can access it on
copies of annual and interim reports for
the Exxaro website: www.exxaro.com.
this purpose.
Dividend determination
Dividends are determined
Major shareholders
As of 31 December 2009, the one entity
in South
known to Exxaro as owning more than
African rand (ZAR) and are declared
10% of its shares is Main Street 333
payable in the same currency by the
(Pty) Limited with 186 550 873 shares
group. ADR shareholders are paid in
representing 52,26% of the number of
US dollars by the group’s ADR bank,
shares in issue. This entity is commonly
BoNY. BoNY effects the conversion of
referred to as BEE Holdco (refer to
ZAR-determined dividends in US dollars
page 129).
78 I Exxaro Annual Report 2009
SHAREHOLDERS’ ANALYSIS
at 31 December 2009
Issued share capital:
356 940 200
Shareholder spread
1 – 1 000 shares
1 001 – 10 000 shares
10 001 – 100 000 shares
100 001 – 1 000 000 shares
1 000 001 shares and over
Category
Black economic empowerment
Corporate holdings
Unit trusts/mutual funds
Pension funds
Custodians
Investment trusts
Insurance companies
Exxaro Employee Empowerment
Private investors
Charity
Other funds/holdings
American depositary receipts
Other
(cid:57)(cid:92)(cid:101)(cid:92)(cid:93)(cid:96)(cid:90)(cid:96)(cid:88)(cid:99)(cid:23)(cid:106)(cid:95)(cid:88)(cid:105)(cid:92)(cid:95)(cid:102)(cid:99)(cid:91)(cid:92)(cid:105)(cid:106)
(cid:95)(cid:102)(cid:99)(cid:91)(cid:96)(cid:101)(cid:94)(cid:23)(cid:42)(cid:28)(cid:23)(cid:102)(cid:105)(cid:23)(cid:100)(cid:102)(cid:105)(cid:92)
2,98%
2,26%
9,73%
Number of
shareholders
% of
shareholders
Number
of shares
% of
issued capital
14 250
2 545
367
135
25
82,27
14,69
2,12
0,78
0,14
4 764 072
7 632 635
20 245 742
36 784 654
287 513 097
17 322
100,00
356 940 200
1,33
2,14
5,67
10,31
80,55
100,00
Number of
shareholders
% of
shareholders
Total
shareholding
% of
issued capital
1
380
2 542
431
37
35
64
1
0,01
2,19
186 549 411
36 775 160
14,67
31 904 602
2,49
0,21
0,20
0,37
0,01
31 212 720
23 592 018
14 721 727
11 679 164
10 618 974
13 440
77,59
7 881 247
76
313
1
1
0,44
1,81
0,01
0,00
960 678
806 810
236 227
1 462
52,26
10,30
8,94
8,74
6,61
4,12
3,27
2,98
2,21
0,27
0,23
0,07
0,00
17 322
100,00
356 940 200
100,00
(cid:62)(cid:92)(cid:102)(cid:94)(cid:105)(cid:88)(cid:103)(cid:95)(cid:96)(cid:90)(cid:23)(cid:106)(cid:103)(cid:99)(cid:96)(cid:107)(cid:23)(cid:102)(cid:93)
(cid:89)(cid:92)(cid:101)(cid:92)(cid:93)(cid:96)(cid:90)(cid:96)(cid:88)(cid:99)(cid:23)(cid:106)(cid:95)(cid:88)(cid:105)(cid:92)(cid:95)(cid:102)(cid:99)(cid:91)(cid:92)(cid:105)(cid:106)
4,85%
1,00%
0,56%
2,59%
52,26%
91,00%
■(cid:23)(cid:23)(cid:68)(cid:88)(cid:96)(cid:101)(cid:23)(cid:74)(cid:107)(cid:105)(cid:92)(cid:92)(cid:107)(cid:23)(cid:42)(cid:42)(cid:23)(cid:31)(cid:71)(cid:107)(cid:112)(cid:32)(cid:23)(cid:67)(cid:96)(cid:100)(cid:96)(cid:107)(cid:92)(cid:91)
■(cid:23)(cid:23)(cid:56)(cid:101)(cid:94)(cid:99)(cid:102)(cid:23)(cid:56)(cid:100)(cid:92)(cid:105)(cid:96)(cid:90)(cid:88)(cid:101)(cid:23)(cid:58)(cid:102)(cid:105)(cid:103)(cid:102)(cid:105)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)(cid:23)(cid:23)
■(cid:23)(cid:23)(cid:71)(cid:108)(cid:89)(cid:99)(cid:96)(cid:90)(cid:23)(cid:64)(cid:101)(cid:109)(cid:92)(cid:106)(cid:107)(cid:100)(cid:92)(cid:101)(cid:107)(cid:23)(cid:58)(cid:102)(cid:105)(cid:103)(cid:102)(cid:105)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)
■(cid:23)(cid:23)(cid:60)(cid:111)(cid:111)(cid:88)(cid:105)(cid:102)(cid:23)(cid:60)(cid:100)(cid:103)(cid:99)(cid:102)(cid:112)(cid:92)(cid:92)(cid:23)(cid:60)(cid:100)(cid:103)(cid:102)(cid:110)(cid:92)(cid:105)(cid:100)(cid:92)(cid:101)(cid:107)
■(cid:23)(cid:23)(cid:74)(cid:102)(cid:108)(cid:107)(cid:95)(cid:23)(cid:56)(cid:93)(cid:105)(cid:96)(cid:90)(cid:88)
■(cid:23)(cid:23)(cid:76)(cid:101)(cid:96)(cid:107)(cid:92)(cid:91)(cid:23)(cid:74)(cid:107)(cid:88)(cid:107)(cid:92)(cid:106)(cid:23)(cid:102)(cid:93)(cid:23)(cid:56)(cid:100)(cid:92)(cid:105)(cid:96)(cid:90)(cid:88)(cid:23)(cid:88)(cid:101)(cid:91)(cid:23)(cid:58)(cid:88)(cid:101)(cid:88)(cid:91)(cid:88)(cid:23)(cid:23)
■(cid:23)(cid:23)(cid:76)(cid:101)(cid:96)(cid:107)(cid:92)(cid:91)(cid:23)(cid:66)(cid:96)(cid:101)(cid:94)(cid:91)(cid:102)(cid:100)
■(cid:23)(cid:23)(cid:73)(cid:92)(cid:106)(cid:107)(cid:23)(cid:102)(cid:93)(cid:23)(cid:60)(cid:108)(cid:105)(cid:102)(cid:103)(cid:92)
■(cid:23)(cid:23)(cid:73)(cid:92)(cid:106)(cid:107)(cid:23)(cid:102)(cid:93)(cid:23)(cid:107)(cid:95)(cid:92)(cid:23)(cid:110)(cid:102)(cid:105)(cid:99)(cid:91)
Exxaro Annual Report 2009 I 79
SHAREHOLDERS’ ANALYSIS CONTINUED
Public/non-public shareholders
Public shareholders
Non-public shareholders
Directors and associates
Main Street 333 (Pty) Ltd*
Anglo American Corporation
Exxaro Employee Empowerment
Kumba Management Share Trust
*Directors’ holdings of 18 548 286 excluded
Benefi cial shareholders holding 3% or more
Main Street 333 (Pty) Limited
Anglo American Corporation
Public Investment Corporation
Exxaro Employee Empowerment
Geographic split of benefi cial shareholders
South Africa
United States of America and Canada
United Kingdom
Rest of Europe
Rest of the world
Directors
SA Nkosi
VZ Mntambo
D Zihlangu
NL Sowazi
WA de Klerk
D Konar
Number of
shareholders
% of
shareholders
Total
shareholding
% of
issued capital
17 310
11
7
1
1
1
1
99,93
118 980 067
0,06
0,04
0,01
0,01
0,01
0,01
237 960 133
18 548 286
168 002 587
34 730 282
10 618 974
1 783 716
33,33
66,67
5,20
47,07
9,73
2,98
0,50
Total
shareholding
% of
issued capital
186 550 873
34 730 282
8 061 047
10 618 974
52,26
9,73
2,26
2,98
Total
shareholding
% of
issued capital
324 815 582
91,00
9 244 751
3 569 402
17 311 599
1 998 865
2,59
1,00
4,85
0,56
356 940 200
100,00
Number
of shares
8 016 068
5 529 881
2 818 552
2 181 590
1 462
168
18 548 286
% of shares
2,25
1,55
0,79
0,61
0,00
0,00
5,20
Please note that indirect benefi cial holdings of Nkosi, Mntambo, Zihlangu and Sowazi
were held under Main Street 333 (Pty) Limited
80 I Exxaro Annual Report 2009
RISK MANAGEMENT
Risk philosophy
Effective risk management (ERM)
is
central to maintaining and improving a
competitive advantage while adapting
to changes in the business environment.
The underlying principle of ERM or
enterprise-wide risk management
is
that every entity exists to provide value
for
its shareholders. Exxaro’s ERM
adopts a holistic approach to managing
uncertainty, representing both risk and
opportunity. The aim is to establish the
acceptable level of risk in each area of
business, which should be as low as
reasonably practical, while taking full
advantage of the highest returns possible
to maximise shareholder wealth. In all risk
management activities, compliance with
the King III Code of Corporate Practice
and Conduct is a fundamental principle.
Risk appetite
The audit, risk and compliance committee
appetite and ensures it is aligned with
(corporate governance)
and other
group strategy. Exxaro’s risk appetite
compliance issues.
is a function of its ability to withstand
unexpected
losses and their
impact
on the group’s ability to continue as a
going concern. In addition, risk appetite
is determined by obtaining robust risk
information that enables management to
assess overall capital needs and enhance
capital allocation capability.
Risk culture
Risk owners
are
responsible
for
continuously monitoring
the ever-
changing risk profi le of the environment
in which they operate.
The internal environment encompasses
Risk identifi cation process
The
risk management process
is
continuous, with well-defi ned steps. Risks
from all sources are identifi ed and once
they pass a set materiality threshold, a
formal process begins in which causal
factors and consequences are identifi ed
and the correlation with other risks and
mitigating controls reviewed.
The top business risks, appropriately
categorised and based on impact and
likelihood of occurrence,
together
with mitigating control measures, are
the whole organisation and sets the basis
disclosed below
in descending order.
for how risk is viewed and addressed by
These top business risks have been
all responsible employees. It takes into
approved by the executive committee,
account the risk management philosophy,
the audit, risk and compliance committee
of the board approves Exxaro’s risk
risk appetite, integrity and ethical values
of the board, and the board itself.
High-level business risks
Risk
STRATEGIC
Impact
Probability
Control measures
Future of KZN Sands operation
High
High
Continuous review of viability should signifi cant
sustainable changes transpire in market
fundamentals of the commodity.
Retention of new mining rights and
High
High
Prioritisation of prospecting rights. Engaging
prospecting rights
with non-governmental organisation and relevant
authorities. Ensure compliance with all legal and
regulatory requirements.
Funding current operations and value-added
High
High
Ranking value-adding opportunities in an approved
growth within balance sheet and equity-
raising constraints
commodity strategy aligned growth process and
within an acceptable capital structure, underpinned
by cash fl ow generation and preservation, giving
credence to maintaining Exxaro’s empowerment
status.
Exxaro Annual Report 2009 I 81
RISK MANAGEMENT CONTINUED
High-level business risks
Risk
Impact
Probability
Control measures
STRATEGIC continued
Longer-term decline in commodity prices
High
Medium
Exploring alternatives to raise equity given the
affecting dividend payouts, and impacting
on stable BEE shareholder structure
group’s equity-raising restrictions.
Continuous business improvement. Optimised
use of operating assets. Maintain healthy balance
sheet through judicious consideration of growth
aspirations and global market conditions.
Medium-term reserve confi rmation for
High
Medium
Redefi ne and confi rm physical properties of ore
Namakwa Sands
reserve at Namakwa Sands; investigate redesign
and product blending opportunities.
Long-term, viable, quality zinc concentrate
High
Medium
Continued exploration activity at Rosh Pinah
supply to zinc refi nery in Springs
zinc mine and identifi cation of other viable zinc
concentrate supply sources.
Lengthy process of executing new mining
Medium
Medium
Ensure compliance with mining charter
rights
requirements. Continuous engagement with
Department of Mineral Resources.
Securing a strategic partner for Australia
Medium
Medium
Actively participate in securing a preferred
Sands operation
OPERATIONAL
technology partner in good fi nancial standing for
Australia Sands.
Anticipated signifi cant price increases for
High
High
Participation in industry forums that engage with
electricity combined with power supply
uncertainty, and the impact of interruptions
on safety, production and profi tability
Eskom and the National Energy Regulator of South
Africa (NERSA). Investigation into co-generation.
Implementation of power-saving initiatives and
examination of alternatives for conserving and using
electricity throughout operations. Commitment to
assist Eskom with additional coal supply to achieve
stability in power grid.
Above-infl ation increases in certain input
Medium
High
Strategic sourcing and long-term contracting with
and maintenance costs as well as availability
reliable suppliers. Continuous business improvement
concerns on certain materials
PROFITABILITY
initiatives and knowledge sharing.
Volatility in currencies combined with impact
High
High
Judicious hedging policy. Continuous business
of forecast macroeconomic parameters and
commodity prices on operating margins,
returns on investments, project cost
escalation in respect of growth aspirations,
and loan covenant compliance
improvement initiatives with rigorous tracking.
Optimised use of operating assets to leverage
benefi ts of higher throughput. Investigate
downstream integration opportunities and
diversifi cation of markets and product sector.
Rail and port infrastructure constraints
High
High
Collaborate with Transnet Freight Rail; upgrade
inhibiting coal exports and ability to transfer
zinc feedstock to zinc refi nery
loading facilities; engage with Richards Bay Coal
Terminal (RBCT) shareholders on additional export
allocation; engage to fully utilise Exxaro’s RBCT
allocation of 6,3Mtpa; evaluate viability of acquiring
own rolling stock.
82 I Exxaro Annual Report 2009
High-level business risks
Risk
Impact
Probability
Control measures
PROFITABILITY continued
Impact of the buoyant construction and
High
Medium
Maintain database on escalations of major
engineering market on the cost of capital
projects
commodity items based on industry trends and own
experience to ensure comprehensive provision for
escalation on project costing and timing of long-lead
items.
Prolonged depressed global economic
Medium
Low
Restructure to be profi table throughout the
downturn impacting on demand and prices
commodity cycle. Ensure a fi t-for-purpose support
services offering.
HUMAN RESOURCES
Attraction and retention of key skills
Medium
Medium
Implementation of effective retention strategy for key
impacting on current production and future
growth
disciplines. Remain an employer of choice due to:
– regularly benchmarked market-related
remuneration
– comprehensive training and development
– growth opportunities
Focus on innovative recruitment initiatives and
succession planning. Continuous rotation and
exposure of own talent in multidisciplinary project
teams
Strategy to comply with code of practice.
ENVIRONMENT
Risks posed by continuously changing
High
High
Continuous monitoring of work performed in line
environment legislation, including delays in
with rehabilitation strategy. Process hazard reviews
permit approvals
Pressure from authorities to guarantee
environmental liability shortfall.
SAFETY AND SUSTAINABLE
DEVELOPMENT
on emissions.
Continuous engagement with authorities. Ongoing
rehabilitation managed out of operational budgets
while Exxaro Environmental Rehabilitation Fund
provides for fi nal closure costs.
Poor safety record resulting in government,
Medium
Medium
Enhancing safety awareness and preventative
labour union and other stakeholder
intervention
programmes through a strong focus on hazard
identifi cation and visible felt leadership.
Focusing on outcomes of 2009 CEO Safety
Summits.
HIV/Aids pandemic
Medium
Medium
Improve voluntary counselling and testing enrolment
by creating a conducive environment for disclosure
and treatment participation.
Exxaro Annual Report 2009 I 83
SUSTAINABLE DEVELOPMENT
SIPHO NKOSI
RESPONSIBLE BUSINESS PRACTICES REMAIN A LONG-TERM
VALUE PROPOSITION FOR EXXARO: IT MAKES BUSINESS SENSE
TO INVEST IN CREATING A SUSTAINABLE ENVIRONMENT IN
WHICH TO OPERATE, BASED ON UNIVERSAL VALUES, ACCOUNT-
ABILITY AND TRANSPARENCY. IT’S SIMPLY ALSO THE RIGHT
THING TO DO.
In preparing this report, we drew on
stakeholder feedback, a review of current
standards and conventions
(including
Global Reporting Initiative (GRI), UN Global
Compact, Organisation
for Economic
Co-operation and Development (OECD)
guidelines on multinational enterprises,
International Labour Organisation (ILO)
conventions 69 and 176, as well as UN
declaration of human rights) in developing
material themes that will guide this and
future reports. These themes include:
> Implementation and maintenance of
ethical business practices and sound
systems of corporate governance
> Integration of sustainable development
considerations in corporate decision-
making processes
> Implementation of risk management
strategies based on credible data sets
> Adherence to fundamental human rights
and respect of cultures, customs and
values in dealings with stakeholders
> Contributing to the social, economic
and institutional development of our
communities
> Implementing effective, sustained and
transparent engagement
strategies
with all stakeholder groups, as well as
explicit responsiveness to stakeholder
concerns
> Demonstrating understanding of and
implementing responses to the business
case for sustainability.
Distilling these themes into those most
material to the South African resources
sector highlights the need for:
> Ongoing improvement of occupational
our sustainable development initiatives
emerged in the form of synergies across
commodity businesses, disciplines and
divisions. Perhaps the best example of this
is our carbon footprinting project which
prompted the vegetative study, which in
turn informed our water management
study and each site’s biodiversity action
plan.
We have also made solid progress in our
ability to report meaningful data off a
common information technology platform.
This has been most evident in the areas of
energy, air quality monitoring and socio-
economic development.
health and safety performance
Message from the
chief executive offi cer
I believe 2009 was a year that truly
tested the depth of mining companies’
commitments to sustainable development
— and at every level. Faced with myriad
challenges in protecting the economic
innovative
bottom
solutions to honour our commitments to
the social and environmental bottom lines
by making available funds work harder and
by ensuring that every initiative benefi ted
the maximum number of people.
line, we developed
In this respect, Exxaro proved its mettle.
The benefi t of integrating our safety,
health and environment division with
84 I Exxaro Annual Report 2009
> Ongoing improvement of environmental
The group’s performance on the key elements
environmental
accreditation
(ISO
performance, particularly water use,
of sustainable development — economic,
14001) – Matla, North Block Complex,
energy consumption and effi ciency, and
social and environmental — was again
Inyanda and AlloyStream. In particular,
waste and land management
mixed during 2009. On the positive side, we
AlloyStream scored so highly in the
> Transparency
in
engaging with
considerably improved our ranking in the
ISO 14001 audit that
in February
stakeholders on controversial topics
South African Carbon Disclosure Project,
2010 it received an award for best
or situations
reinforcing the progress made towards best
performance worldwide.
> Continued progress against require-
practice. We exceeded the group target for
ments of the mining charter
HIV/Aids voluntary counselling and testing,
This takes the total to 13 of 17
> Management of HR challenges, ie skills
and made good progress in our drive on
operations accredited to date. The fi nal
shortages and employment equity
water management.
four operations have been scheduled
> Use of integrated approaches to land
for accreditation in 2010.
use planning to contribute to conserving
Given the strategic importance of every
biodiversity
> Understanding
impacts of climate
effi ciency to conservation and generation
report was ranked among the leaders
aspect of energy — from consumption and
Our 2008 sustainable development
change on the company and its long-
— we have broadened the scope of our
in several industry surveys (page 88).
term sustainability
internal data management and external
While this is encouraging, it reinforces
> Demonstrating
an
understanding
reporting (page 125). Underscoring this
our resolve to report on sustainability
of product
stewardship
including
focus, a new category has been added
issues as well as we do on the fi nancial
responsible product design, use, re-use,
to Exxaro’s internal awards to recognise
aspects of our business, because
recycling and disposal of products
achievements in addressing the challenges
we believe our stakeholders deserve
> Ongoing,
integrated planning and
of energy and climate change. It has
no less.
provision for mine closure.
become a strategic imperative to address
the cost and impact of Exxaro’s energy
In our quest to be a truly responsible
Combining
these
themes with our
consumption — pricing, supply security and
business
in all
respects, Exxaro
vision of creating unrivalled value for
the impact of our consumption on climate
reports against the guidelines of
all stakeholders through our processes,
change all need to be considered, and we
the Global Reporting Initiative 2006
thinking and passion translates
into
want to recognise the contributions our
(GRI G3, at externally assured B+
measurable targets in the longer term:
> Sustainable returns to our shareholders
people make in addressing these. The
level), as a signatory of the United
fi rst Evergreen awards in this category
Nations’ (page 135) Global Compact,
— including our own people. The return
will recognise the
individual, projects
and a constituent of the JSE Socially
on equity target for 2009 was 25%,
and business units that have shown
Responsible Investment (SRI) Index.
actual performance was 8% (page 26)
> An injury-free work environment — the
target for 2009 was a lost-time injury
achievements in addressing energy and
climate change issues in their work.
Responsible
business
practices
remain a long-term value proposition
frequency rate of 0,21 against the actual
Areas where we missed our targets include
for Exxaro: it makes business sense
rate of 0,33 (page 93)
our disappointing safety performance,
to invest in creating a sustainable
> A healthy workforce — with an
albeit an improvement of 15% on 2008
environment in which to operate, based
appropriate balance between individual
LTIFR levels. We deeply regret the deaths
on universal values, accountability and
responsibility and healthy working
of three contractors at Zincor during
transparency. It’s simply also the right
conditions (page 93)
the year, and the loss of a colleague in a
thing to do.
> Responsible use of our natural resources
non-reportable incident, and extend our
(pages 95 to 112).
Performance
We understand that reaching our long-
term goals requires short-term action. Our
condolences to their families and friends.
Our renewed commitment to safety and
the incremental progress made during the
year is detailed on page 91.
Sipho Nkosi
material issues for 2009 are discussed
In 2009,
four operations obtained
Chief executive offi cer
on page 87 and cross-referenced to the
both
international heath and safety
relevant sections.
accreditation
(OHSAS
18001)
and
16 March 2010
Exxaro Annual Report 2009 I 85
APPROACH TO SAFETY AND SUSTAINABLE DEVELOPMENT
During the year, Exxaro’s approach to
sustainable development was crystallised
after a thorough review of the group’s
strategy, business drivers and structures.
This review highlighted that the group has,
in recent years, moved up the safety and
sustainability ladder from being:
> Reactive — focused on cost management,
simpler and
fewer standards, key
processes and systems informed by
compliance to legal requirements
> Risk-based approach — focused on
statutory and non-statutory compliance
> To beyond compliance — establishing
local industry leadership in safety and
sustainable development.
Our approach
principles:
> Visible felt
is based on specifi c
leadership with strong
commitment from group executives
> Safety and sustainable development as
an integral value of our business
> Resource optimisation
> Performance measured against set
targets
> Reporting and transparency
> A caring culture that transcends the
mine gate
Business case for integrated safety and sustainable development
Maintain elevated
brand/corporate
reputation
Maintain
international
management and
reporting standards
Employer of
choice
Self -
sustaining
communities
Gaining and
maintaining
licence to operate
and grow
Optimisation
and effi ciency of
resources
Investment
of choice
Approved
material S&SD
thrusts
Value
creation
Improved
standards of
living
Enhanced
resource
conservation
High S&SD
performance
culture
Maintain
stakeholder trust
Mining
charter
Enhanced
work/life
balance
Identify and
reduce S&SD risk
Improved
attraction/
retention of
workforce
●● Company value
●● Stakeholder value
> International sustainability standards
– Greenhouse gas management and
and reporting
> Stakeholder
focus
and
improved
– Clean Development Mechanism
disclosure
relations with stakeholders.
– Water management
– Waste management
> Effective stakeholder management
> Motivated workforce, committed to
> Living up to our promises
> Legal compliance as one of the steps
Various independent audits and ratings1
have confi rmed either this progress or
towards a sustainable business.
its outcomes. In line with our strategy,
Driven by an
integrated safety and
sustainable development (S&SD) business,
our target now moves to the fi nal rung of
this ladder — entrenching the Exxaro brand
as one that includes a strong sustainable
development element. This is a position of
industry leadership that encompasses:
> Integrating sustainability objectives in
the design, planning and operating of
our business to make S&SD an integral
part of strategy, business systems and
processes
sustainable development is an integral part
continuous improvement
of our value proposition to stakeholders.
> Investment of choice
However, we acknowledge that achieving
> Unqualifi ed external assurance reports
and maintaining industry leadership is a
> Safe and healthy operation.
journey of continuous improvement.
To entrench Exxaro as a
long-term
sustainable business, our focus is on
ensuring our group is recognised for:
> Good corporate governance
> Good environmental stewardship
> Cleaner production
– Mitigating climate change impacts
This strategic choice — entrenching
sustainable development as part of the
Exxaro brand — dictates both our mandate
and outcomes. Implementation is being
built on three reinforcing and
inter-
dependent sustainability pillars, shown on
the following page.
1 Department of Minerals and Energy Presidential audit 2007, Ernst & Young external assurance
(2008), ACCA sustainability reporting award (2007) and JSE SRI best-performer category (2008).
86 I Exxaro Annual Report 2009
Underpinned by the business case for
sustainable development and the triple
bottom-line drivers in each area, our
approach
is determined by a formal
charter that defi nes our goals and our
commitment to stakeholders.
The business case and charter are, in turn,
guided by the need to earn our legal, social
and market “licences to operate”, as shown
below. To achieve these licences, we focus
on identifying and reducing risk in fi ve
strategic sub-divisions — safety, health and
hygiene, socio-economic development,
environment and compliance — while
remaining cognisant of the inter-linked
nature of these divisions.
Simultaneously, we need to balance the
group’s economic interests and risks with
the social and environmental concerns
of our stakeholders. Accordingly, Exxaro
implements specifi c
interventions and
developmental projects guided by the
social needs of the community, interested
and affected parties, and by the national
priorities of society at large, including:
> Education,
training
and
skills
development
> Healthcare promotion, particularly HIV/
Aids programmes
> Job creation, SMME (small, medium and
micro enterprises) and other business
opportunity development
> Conservation of environment and
awareness programmes
> Infrastructure development.
This comprehensive process resulted
in short- and long-term focus areas for
Exxaro, which are continually assessed
against the group’s changing risk profi le.
These are detailed in their respective
sections and summarised below:
> Safety (page 91)
– CEO Safety Summit — top fi ve issues
– Contractor management
Pillars of sustainable development
SOCIAL
Socio-economic
development
Enterprise development
Employee wellness
Skills development
Social impact of operations on
neighbouring communities
Zero harm and zero tolerance
Human rights
Employee practices
ECONOMIC
Energy, greenhouse gases
and climate change (impact
management)
Preferential procurement
Benefi ciation
Economic instruments
(eg taxes, CDM)
JSE/SRI, GRI assurance
Carbon-disclosure project
Sustainability
ENVIRONMENTAL
Minimise impacts
(air, water, land and
biodiversity)
Waste minimisation and
recycling
Authorisations
Rehabilitation
Cleaner production
Liability management
Natural resources use
(eco-effi ciency)
> Health performance tracking (page 93)
– Sector targets
> Compliance (page 125)
– Assurance standard
– Corporate health and hygiene
– JSE/SRI standards
targets
– Statistics and reporting
– HIV/Aids strategy
> Environment (page 95)
– Corporate targets
– Resource optimisation
> Socio-economic development (page 121)
– Mining
charter/codes of good
practice for the minerals industry
– Social and labour plans
– Key
performance
indicators,
– Stakeholder engagement
statistics and reporting
Integrated safety and sustainable development approach guarantees our licences
to operate
Legal licence to operate
Social licence
to operate
Market licence to
operate
The national environmental
management act (green laws)
Biodiversity
manage-
ment policy
Integrated
pollution and waste
management policy
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All elements managed in an integrated manner
Exxaro Annual Report 2009 I 87
APPROACH TO SAFETY AND SUSTAINABLE DEVELOPMENT
CONTINUED
Stakeholder engagement
Engaging with our stakeholders
is
fundamental to creating value for all
our investors as well as building solid
relationships with
authorities
and
interested and affected parties. Good
progress has been made in effectively
and strategically aligning stakeholder
engagement across the group.
> Authorities — consultation at national,
independent validation of the efforts and
provincial, district and local level
achievements of our people even more
> Regulators — senior Exxaro members
highly. Awards received during the review
meet with offi cials
from
relevant
period included:
government departments
> Namakwa Sands achieved NOSCAR
> Industry bodies — Exxaro’s chief
status for the fourth consecutive year.
executive offi cer has just begun his
This is the National Occupational Safety
third term as president of the Chamber
Association’s (NOSA) highest award
of Mines, and the group actively
in safety, health and environment risk
participates in chamber issues
management — and most prized because
To
further
strengthen
stakeholder
> Investors — regular interaction between
it takes years to achieve and a minute to
engagement,
Exxaro
applies
the
management and investor community
lose
AA1000SES standard which
is based
on
the
processes
tabled
below,
and supported by a new
integrated
software system to manage stakeholder
engagement more effectively.
includes fi nancial results presentations,
> Namakwa Sands was also recognised by
roadshows, site visits and individual
NOSA for its successful implementation
meetings.
Investors have complete
and maintenance of SHEQ management
access
to group operations and
systems. Competing
against
126
management
companies worldwide, Namakwa Sands
> Media
—
regular
interaction
won the international mining award for
Exxaro
communicates
with
each
between management and media
mines using the integrated NOSA SHE
stakeholder group in a number of ways:
representatives
system — for the second consecutive
> Employees are
invited to provide
> Communities —
in addition to the
year. The company’s environmental
views and comments on any aspects
stakeholder
engagement
process,
and radiation manager received the
within the group through bi-monthly
business units’ management members
international environmental coordinator
newsletters, an
intranet,
regular
serve on municipal
forums
for
award for the second consecutive year,
employee surveys and feedback from
integrated development planning and
while the SHEQ manager at Namakwa’s
various forums
local economic development, and
smelter was named international SHE
> Customer perceptions are regularly
through external service
surveyed
actively participate in capacity-building
risk manager — mining. These awards
initiatives
are based on the 2009 NOSA grading
providers
> Interest groups — Exxaro is building
audit results
> Supplier interaction is ongoing through
external perception surveys, forums and
strong relationships with relevant non-
> In 2009 Exxaro moved up to 12th place
government bodies and interest groups.
in the Carbon Disclosure Project of
other initiatives
> Trade unions — regular consultation
with all recognised unions by the group’s
Awards
While being recognised by our peers and
South Africa. This is a commendable
achievement
and
a
signifi cant
improvement on
the group’s fi rst
employee relations management unit
industry bodies is encouraging, we value
submission in 2008
Progress on stakeholder engagement
Process
Progress in 2009
> Develop a database with all stakeholders
> In-house software programme for socio-
> Engage with stakeholders in developing a
economic development, which includes
proactive approach
> Determine material issues
> Respond on all issues
stakeholder management, has been rolled out
> Twelve of 13 business units have been trained
and are implementing this module
> Ensure completeness (ie ensure that materiality
> The system will be fully operational by end 2010
issues are appropriately addressed and that a
> Namakwa Sands will implement the new system
risk management plan is in place)
during 2010
88 I Exxaro Annual Report 2009
(page 102) and air quality management
(page 99).
> Chifeng Refi nery — Exxaro has an
in
effective 22% economic
interest
> Exxaro’s internal newsletter was named
best internal newsletter for the second
consecutive year by the South African
Publication Forum
> Exxaro’s 2008 annual report was
ranked among 16 considered excellent
in the prestigious annual Ernst & Young
Excellence in Sustainability Reporting
awards
> Exxaro was ranked seventh
in the
Publisher’s Choice Top 10 in SA’s Leading
Managers 2009/10, an annual survey
spearheaded by CRF South Africa to
strengthen business leadership in the
country, assist in sustaining stakeholder
confi dence in the economy and develop
the next generation of business leaders
> Exxaro again qualifi ed for the 2009 JSE
SRI index, and was ranked among the 30
best performers
> Zincor was recognised for its outstanding
social commitment to the community
by the Eastern Gauteng Chamber of
Commerce and Industry
> AlloyStream received top international
honours in the 2009 ISO 14001 audit
when it received the highest score of all
companies from 27 countries.
Report scope and boundary
Exxaro’s 2009 annual report
includes
the group’s sustainable development
performance. This integrates our economic,
social and environmental results for a
group-wide understanding, and sets out
the challenges and opportunities ahead.
The sustainable development report is
also available at www.exxaro.com.
The methodologies
for determining
specifi c indicators are described in the
Exxaro was formed in November 2006 by
merging the former Kumba Resources and
Eyesizwe operations. While this process
is largely complete, consolidation of the
Namakwa Sands business only started
towards the end of 2008. This has made
data comparability challenging in some
areas. Throughout
these processes,
however, Exxaro’s earlier adoption of
triple bottom-line reporting has remained
a cornerstone of our commitment to
sustainable development and of our
determination to entrench global safety
best
and
practices in all operations. Exxaro therefore
reports against the 2006 guidelines of the
Global Reporting Initiative (G3), and the
content of the 2009 report has again been
prepared in line with GRI intermediate
application level B+.
development
sustainable
As a signatory to the United Nations
Global Compact, Exxaro also reports
annually on progress in upholding the 10
universally accepted principles of human
rights, labour, the environment and anti-
corruption.
Sustainability performance in this report
spans the 12 months from 1 January to
31 December 2009. In addition to this
printed report and the web site, the full
report is also available on CD (contact
details on page 275).
This report excludes operations where we
do not have management control:
> Australia Sands — principal asset is
its 50% ownership in the Tiwest joint
text, eg injuries (page 93), carbon footprint
venture
an existing refi nery facility in Inner
Mongolia, China
> Mafube coal mine — joint venture in
Mpumalanga, South Africa.
In determining material issues to include in
this report, Exxaro uses the methodology
recommended by G3 which spans external
and internal factors:
> External
– Key sustainability issues raised by
stakeholders
– Sectoral
issues and
challenges
reported by peers and industry bodies
such as the Chamber of Mines
– Relevant legislation and voluntary
agreements (local and international)
of strategic signifi cance to the group
and its stakeholders
– High-profi le
sustainability
issues,
impacts or opportunities,
from
climate change to HIV/Aids
> Internal
– Exxaro’s values, policies, strategies,
processes and targets
– The interests and expectations of
stakeholders for whom our corporate
progress
is paramount,
including
employees,
shareholders
and
suppliers
– Key risks defi ned by corporate risk
methodologies
– Critical factors for Exxaro’s success,
including the synergy between our
operations and the universal aims of
sustainable development.
Exxaro Annual Report 2009 I 89
APPROACH TO SAFETY AND SUSTAINABLE DEVELOPMENT
CONTINUED
JSE Socially Responsible
Investment (SRI) index
compliance
Exxaro was again ranked among the 30
best performers on the JSE’s revised SRI
index in 2009. This index identifi es best
practice in corporate social responsibility
and corporate governance in a benchmark
index. Exxaro is classifi ed as having a
high environmental impact because it is
involved in mining and metals.
Solid progress is being made in areas
that do not yet fully comply with JSE
requirements,
providing
quantitative objectives and targets for
certain areas, and reporting on strategic
moves towards sustainability.
specifi cally
internal
Assurance – broad-based
verifi cation
record
Exxaro’s
(accuracy,
and monitor
completeness
of
management information and any data
gaps in the group.
the quality
and
consistency)
systems
In line with our commitment to the triple
bottom line, an integral part of reporting
to stakeholders is having the quality of
our disclosure
independently assured.
Each year, the safety and sustainable
indicators
development
and physical sites selected for external
assurance are assessed
to ensure
this process adds maximum value to
stakeholders. Ernst & Young’s report
appears on page 135.
performance
The outcome of this process identifi ed
a number of material issues pertinent to
business sustainability. These are disclosed
in the risk management section (page 81).
Issues that directly affect sustainable
development include:
> Safety — fatalities
> Retrenchments
> Legislated targets such as those in the
mining charter or for black economic
empowerment
> Health — HIV/Aids
> Climate change and energy use
> Environment — water use, biodiversity,
rehabilitation, waste and air quality
> SHE management systems, eg ISO 14001
> Diversity of our people
> Human rights
> Socio-economic development.
These issues are detailed and quantifi ed
in
the respective sections of
this
report.
Ongoing
feedback
from a range of
stakeholders helps us to contextualise
certain issues better for more informed
understanding by readers. Feedback is a
critical element of our reporting process
and the completed feedback form included
in this report should be directed to:
Hilton Atkinson
Manager: corporate communications
Email: Hilton.atkinson@exxaro.com
Telephone: +27 12 307 4843
Fax: +27 12 307 4760
Mobile: +27 83 609 1452
www.exxaro.com
90 I Exxaro Annual Report 2009
SAFETY AND SUSTAINABLE DEVELOPMENT PERFORMANCE
Our safety and sustainable development
governance model begins with meeting
legislative requirements as a minimum
standard. Sophisticated risk management
systems and processes are then modelled
around key risks for implementation at
operational level. A risk-based approach
informs the way resources are
also
allocated and used in the group to ensure
ongoing progress towards and beyond
legal compliance.
During the reporting period, no fi nes
or sanctions for non-compliance with
environmental laws and regulations were
imposed on any Exxaro operation.
ISO/OHSAS certifi cation
four operations obtained
In 2009,
international health and safety
both
and
(OHSAS
accreditation
environmental accreditation (ISO 14001) –
Matla, North Block Complex, Inyanda and
AlloyStream. This takes the total to 13 of
17 operations accredited to date. Another
four operations have been scheduled for
accreditation in 2010.
18001)
to
the
Notably, AlloyStream was certified for
the occupational health and safety
management system according to the
BS OHSAS 18001:2007 standard, for
environmental management systems
14001:2004
according
standard and recertified for the updated
quality management systems according
to the ISO 9001:2008 standard. In the
ISO 14001 audit, AlloyStream received
the highest score of all companies
from 27 countries
in the
2009 audit.
included
ISO
see www.exxaro.com/case_studies
ALLOYSTREAM IS WORLD CLASS
Notably, Namakwa Sands achieved OHSAS
18001:2004 certifi cation, and was the
fi rst operation in the Western Cape to
achieve OHSAS 18001:2007 certifi cation.
Namakwa Sands has also consistently
ISO 9001 and
retained
14001,
ISO
Safety
Highlights
> Exxaro ended the year with an LTIFR of
action taken where necessary. Only by
adopting a consistent zero-tolerance
approach to safety violations, with
0,33, a 15% improvement on the 0,39
consistent consequences, can Exxaro
recorded in 2008 but disappointingly
effectively protect
the
lives of
higher than the target of 0,21.
employees.
> Tshikondeni improved its safety per-
> Knowledge — training for life
formance in 2009, recording only seven
LTIs and 24 minor injuries. This is a
60% improvement in LTIFR and 27%
improvement in minor injuries on 2008.
see www.exxaro.com/case_studies
SMALL MINE, BIG HEART
Safety always, all the way
In October 2009, Exxaro held its second
CEO Safety Summit under the theme
Safety always, all the way to report back
on issues highlighted at the inaugural
summit in March when the group identifi ed
challenges that presented barriers to
sound safety practices. The summits
Exxaro will establish a standard safety
training programme across the group,
for all
job categories. Training will
become an ongoing sustainable process
to ensure every employee can identify
and respond to a dangerous situation.
> Identifying risks — formal process
Reinforcing the need to take two
minutes to conduct a mini-HIRA — a task
that could prevent injury or save a life
by becoming a conscious action, not
just a thoughtless habit. The mini-HIRA
standard will be revised and training
material developed
to ensure all
employees understand how to conduct
involved a range of stakeholders to
one.
identify key areas that will make a tangible
> Communication — daily
difference to safety performance, including
Talking about safety and having the
consequence
management,
safety
tools to keep safety at top-of-mind
training, culture (the Exxaro safety way
awareness are key to ensuring safety
of life), mini-HIRA (hazard identifi cation
practices become a way of life for group
and risk assessment) and communication.
employees.
Task teams are driving a broad spectrum
of action plans in these areas.
Exxaro has had the support of government,
the Chamber of Mines and its recognised
unions
in
implementing
its
safety
improvement plan, which includes:
> Leadership in making safety a way
of life
Exxaro’s leaders will set the example for
safe behaviour (visible felt leadership)
by being directly involved in safety
visits, and ensuring compliance to safe
work practices.
> Zero-tolerance approach
The 13 zero-tolerance safety rules
relate to:
> Being under the infl uence of drugs or
alcohol at the workplace
> Lifting heavy equipment
> Roof support in underground mines
> Confi ned spaces
> Working at heights
> Energy and machine isolation
> Vehicle safety and operating a vehicle,
equipment or machinery without
authorisation
> Explosives
Exxaro introduced the 13 zero-tolerance
safety rules that will become part of
> Working with electricity
> Gas explosion and gas areas
every employee’s conditions of service.
> Safety devices
Employees who violate or ignore these
> Permit work
ISO 17025 certifi cations.
rules will be investigated and disciplinary
> Site-specifi c rules.
Exxaro Annual Report 2009 I 91
SAFETY AND SUSTAINABLE DEVELOPMENT PERFORMANCE CONTINUED
Safety pledge
Signed by Exxaro stakeholders
in March 2009
We, at the Exxaro Resources group of
companies, and all our stakeholders,
in a relationship of mutual trust and
respect, will further evolve our safety
culture of zero harm in which we, while
consciously learning from our own
and others’ mistakes and caring for
each other, lead with safety excellence,
benchmarked against
industry best
practices.
Keeping our people safe
Our ultimate target remains zero injuries
and, therefore, zero fatalities. To reach this
goal, we have an incremental target of a
30% improvement in safety performance
each year. We aim to achieve this through
stringent application of management
protocols, programmes and systems.
Formal management-worker health and
safety committees are in place at all
operations, and meet regularly to ensure
we reach our targets.
The strategic review of our safety
practices highlighted key risks facing
limited hazard
our group, particularly
awareness, varied safety competency
and non-adherence to corporate safety
standards. Collectively, these may result in
the perception of Exxaro being an unsafe
business — a perception that carries
material risk to our sustainability.
Accordingly, we have developed a timeline
to Exxaro’s desirable state that includes:
> Zero fatalities
> Zero lost-time injuries
> Visible, felt leadership as a key driver of
safety excellence in Exxaro
> Zero repeat incidents.
Timeline to desirable state
2009
CEO Safety Summit outcomes:
1 Set up task teams to address
focus areas
2010 — 2011
Review priorities
2012 — 2015
Review priorities
1 Review safety improvement
plans (SIPs)
1 Annual CEO safety summit to
challenge safety performance
2 Develop safety communication
2 Set up and train peer review
2 Annual revision of SIPs
strategy
teams
3 Consistent disciplinary code
3 Conduct group-wide
3 Periodic peer reviews
applied equally across all levels
4 Revised HIRA standard to be
understood and applied by all
5 Revised visible felt leadership
standard consistently applied
across Exxaro
6 Safety improvement plans
as a result of fi rst summit
7 Standardised incident
investigation process
peer reviews to promote
implementation of SIPs
4 SIP progress reports every
quarter
5 CEO safety summit 2010
to discuss progress and
challenges
6 Continue benchmarking and
sourcing best practices
Although key risks differ by operation,
Exxaro has a policy in place that details the
the group’s major challenges are vehicle
group’s approach to identifying, preparing
incidents, energy and machinery isolation,
for and responding to emergency situations
and risk awareness and discipline at
affecting employees and surrounding
all levels. Skills shortages continue to
communities. This spans all known types
magnify these challenges and, accordingly,
of emergency including fi re, fl ood, bomb
ensuring the group has suffi cient trained
threats, etc. Emergency situations that
people remains a priority.
have occurred have been well handled,
demonstrating the comprehensiveness of
Improving safety performance extends to
both policy and training. A good example
contractors at all Exxaro operations as
is the
intervention to address risks
part of a formal programme:
associated with the outbreak of H1N1 — as a
> Contractors are managed as part of
result, the outbreak had no impact on any
Exxaro’s workforce
of Exxaro’s operations.
> Adherence to corporate contractor
management standards is enforced by
All lost-time injuries are investigated by the
each operation’s contractor manager
relevant business unit manager, while all
> Monthly inspections ensure compliance
fatalities are investigated by a committee
> Induction and medical examinations
with the appropriate skills, headed by an
are required by all contractors before
independent chairman. Each business
starting work
unit tracks its adherence to standards and
> Contractors participate in monthly SHE
legislation through a programme of self-
meetings at operations.
assessments and corporate audits.
92 I Exxaro Annual Report 2009
Exxaro set a target of zero fatalities,
and an LTIFR (lost-time injury frequency
rate per 200 000 hours worked) of 0,21
for 2009. Despite a steady reduction
in the LTIFR from 0,52 in 2005 to 0,36
in 2007, actual performance was 0,33
in 2009. This is a 15% improvement on
the LTIFR of 0,39 recorded in 2008. In
risk-specifi c terms, the leading cause of
injury was lifting and material handling.
The safety of our people is fundamental
to our business, and we will not rest until
we achieve our safety goals through
collective responsibility, commitment and
ongoing focus.
The fatality frequency rate per million man-
hours worked in 2009 was 0,07, compared
to 0,13 in 2008. Our target remains zero, as
no death is acceptable. Despite excellent
safety performances at several mines, we
regrettably lost three contractors during
the year in an explosion at a contractor’s
site at Zincor, and a colleague in a non-
reportable vehicle fatality at Arnot. This
case was thoroughly investigated, and
the lessons learned incorporated into our
safety programmes to create an injury-
free work environment.
Health and hygiene
Highlights
> Major HIV/Aids training, counselling
and testing drive at 11 business units –
with 83% of employees who attended
training sessions electing to be tested.
This represents 58% of the Exxaro
workforce, against the group target of
50%
> Of 6 684 employees tested (half had not
tested before), 12% were HIV positive
> 299 HIV-positive people are enrolled
on the company’s HIV management
programme
> 161 people are on ART (anti-retroviral
treatment)
> 224 peer educators were
(against group target of 200)
trained
> New holistic occupational TB standard
> New standard on managing hazardous
chemical substances.
Reducing employee exposure to health
risks remains a priority for Exxaro. Our
risks are typical of a mining group. Business
units identify, rank and quantify their
risks, and then implement programmes to
mitigate the impact. Workplace exposures
are linked to individuals and this forms
the basis of the medical surveillance
programme.
noise and dust, and this is refl ected in
the occupational disease profi le. Newly
diagnosed cases are submitted to the
compensation authorities for confi rmation
that they are work-related, and serve as an
early indicator of the possible occupational
disease burden. Accepted cases are
awarded compensation.
Our targets are to:
> Reduce NIHL (noise-induced hearing
loss) to less than 10% loss of hearing
(shift from baseline) per individual by
2013
> Reduce
compensation
costs
for
occupational diseases
> Reduce incidence of HIV
> Raise awareness of health and hygiene
The occupational health risks to which
most Exxaro employees are exposed are
programme.
Timeline to desirable state
2009
1 Status report on noise and
dust-control programmes
2 50% VCT
2010 — 2011
Review priorities
2012 — 2015
Review priorities
1 Track cases with >5% loss of
hearing (shift from baseline)
3 A total of 200 peer educators
2 Reduce percentage of
trained
4 Implement TB standard at
three business units
employees exposed to OEL
dust and fumes
3 70% VCT and 50% retention
on treatment programme
4 TB treatment provided at 50%
of business units
5 Occupational risk and
exposure profi ling standard
6 Baseline study of indirect costs
of HIV/Aids
7 Awareness campaign on noise,
dust and thermal
stress at all business units
1 No cases >10% NIHL
2 >80% VCT; >70% retention
on treatment programme
3 >85% TB cases complete
treatment
4 Reduce new HIV infections
by 5%
5 Reduce indirect costs due to
HIV/Aids by 5% from baseline
Key: OEL — occupational exposure limit; VCT — voluntary counselling and testing
Exxaro Annual Report 2009 I 93
SAFETY AND SUSTAINABLE DEVELOPMENT PERFORMANCE CONTINUED
Meeting mining sector targets
Dust and noise-reduction targets set by
the mining industry aim to reduce the
number of NIHL and silicosis cases. This
depends on:
> Minimising noise and dust exposure
to below occupational exposure levels
(OEL)
> Reducing the time spent by employees
in noisy and dusty areas
> Proper use of personal protective
equipment.
Initiatives to reduce noise include:
> Enclosing machines with open cabins
> Boxing work benches
> Installing silencers on auxiliary fans
> Training.
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and occupational TB. Efforts to reduce
was
issued for the group to ensure
uniform and comprehensive management
of employees with TB. The risks of TB
include:
> Spread of TB in the communities where
employees and contractors live
> Signifi cant risk of co-worker infection
(10 to 18 people are infected by one
active TB patient)
> The high prevalence rate of HIV (which
compromises individual immune systems)
is a known risk factor for developing TB,
therefore TB and HIV/Aids programmes
need to be reinforced
> Workplace exposure to mining dust is a
contributing factor to TB.
Initiatives to reduce dust include:
> Removal of coal crusher at one of our
sites
employees’ high noise exposure continue.
Given the dramatic increase in TB rates in
There is also increased susceptibility to
South Africa and in the mining industry
TB possibly fuelled by individuals with
in recent years (below), it is important to
> Extraction
fans at primary and
compromised
immune systems. There
manage TB and HIV holistically through
secondary crushers
have been no cases of silicosis.
better surveillance, diagnosis, treatment
and monitoring. At each business unit, TB
Tuberculosis
New cases of non-occupational TB
education initiatives reach employees at
least once a year. These include information
increased from 2008 (63) to 2009 (83 out
on symptoms and the importance of early
of 11 180 employees). A new TB standard
diagnosis for effective treatment. Adhering
Tuberculosis in the mining
industry
TB is a growing health problem globally
and in South Africa, as refl ected in the
80% increase in case notifi cation of
this disease in the local population
over the last fi ve years. This indicates
the rising burden of disease in the
community,
inability of the public
health system to fully control it, and
high incidence of HIV/Aids given that
over 60% of TB patients are also
HIV-positive. As such, a successful
HIV/Aids programme is critical to the
management and success of a TB
programme.
The high rate of occupational TB in
the mining industry is largely due to
exposure to airborne pollutants —
especially silica dust — as well as
(six months) can
poorly ventilated working and living
conditions. The relatively long treatment
to
period
interrupted treatment with a defaulter
rate of over 10%, which in turn can cause
multiple drug-resistant TB strains.
lead
TB is curable. It needs to be proactively
using wetting methods
managed
to reduce dust
levels, and wearing
respirators. In addition, infection control,
good diagnostic capacity, education on
the disease, a good health infrastructure
and resources are required. In the mining
industry, periodic medical surveillance
provides an opportunity for routine TB
screening.
> Use of water in stockpile areas
> Dust suppression on opencast surface
roads
> Increased ventilation in underground
sections
> Wet plants
> Training.
Occupational diseases
Reported cases are those newly diagnosed
and submitted to the compensation
authorities to confi rm that they are work
related and eligible for compensation. In
2009 Exxaro reported 90 occupational
diseases: this is an early indicator of the
possible occupational disease burden.
Tracking this data indicates potential cases
that could be compensated and provides
an opportunity to reinforce preventive
programmes.
In 2009, Exxaro had 20 occupational
disease cases accepted for compensation:
11 cases of NIHL, two cases of pneumo-
coniosis, one of occupational lung disease
and six of occupational TB.
There has been a general decrease in
occupational diseases, except for NIHL
94 I Exxaro Annual Report 2009
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end of 2009, 58% of our employees had
participated in voluntary counselling and
testing. This compares very favourably
with our target to get at least 50% of all
employees at each site to test for HIV.
A major awareness campaign during the
year helped group employees understand
the importance of their HIV status and
provided information to help them make
appropriate
lifestyle choices such as
joining a treatment programme or keeping
their status negative. Exxaro’s HIV/Aids
service offers employees support focused
on four key areas:
Prevention:
> Employees are trained and offered the
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(cid:45)(cid:39)
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(cid:41)(cid:39)
(cid:39)
(cid:99)
(cid:98)
(cid:108)
(cid:92)
(cid:94)
(cid:92)
(cid:107)
(cid:102)
(cid:102)
(cid:105)
(cid:62)
(cid:96)
(cid:101)
(cid:92)
(cid:91)
(cid:101)
(cid:102)
(cid:98)
(cid:95)
(cid:106)
(cid:75)
(cid:96)
(cid:99)
(cid:92)
(cid:101)
(cid:88)
(cid:89)
(cid:102)
(cid:63)
(cid:38)
(cid:99)
(cid:102)
(cid:90)
(cid:88)
(cid:101)
(cid:105)
(cid:108)
(cid:59)
(cid:58)
(cid:57)
(cid:69)
(cid:88)
(cid:91)
(cid:101)
(cid:88)
(cid:112)
(cid:101)
(cid:64)
(cid:106)
(cid:91)
(cid:101)
(cid:88)
(cid:74)
(cid:69)
(cid:81)
(cid:66)
(cid:23)
(cid:101)
(cid:88)
(cid:103)
(cid:110)
(cid:108)
(cid:92)
(cid:92)
(cid:67)
(cid:105)
(cid:102)
(cid:90)
(cid:101)
(cid:81)
(cid:96)
(cid:107)
(cid:102)
(cid:101)
(cid:105)
(cid:56)
(cid:23)
(cid:92)
(cid:90)
(cid:96)
(cid:93)
(cid:93)
(cid:102)
(cid:92)
(cid:107)
(cid:88)
(cid:105)
(cid:102)
(cid:103)
(cid:105)
(cid:102)
(cid:58)
(cid:99)
(cid:106)
(cid:88)
(cid:94)
(cid:108)
(cid:102)
(cid:59)
(cid:101)
(cid:92)
(cid:62)
(cid:23)
(cid:99)
to this new standard is expected to reduce
opportunity to test for HIV
the risk of developing, contracting and
> Peer educators are
trained and
spreading multiple- and extensively drug-
resistant TB in Exxaro.
supervised in conducting prevention
programmes and providing information
Hazardous chemical substances
A new hazardous chemicals standard was
issued to the group in 2009 in compliance
with legislative (Hazardous Substances Act
15 of 1973) and international requirements
(such as OHSAS 18001; ISO 14001; SANS
10232, 10234 and 10238). In terms of this
to colleagues
> Condoms are distributed.
Detection:
> Voluntary HIV testing.
Treatment:
> Employees who test positive for HIV
can enrol on a treatment programme
standard, each business unit has to develop
through their own medical aid, or
a site-specifi c procedure, database and
through Exxaro’s outsourced service
training programme to eliminate and reduce
provider.
the possibility of harm to Exxaro employees
and contractors by the end of 2010.
H1N1 (swine fl u)
There was minimal impact of H1N1 on
Exxaro, with only three cases reported
across the group and the
individuals
recovered fully. Exxaro will continue to
monitor and manage potential risks as the
fl u season approaches.
Care and support:
> A service provider call centre stays in
touch with people registered on the
programme
> Trained
peer
educators
provide
information
about HIV/Aids
to
colleagues
> Health professionals are available on
site to provide technical support to
peer educators.
Environmental management
Highlights
> Exxaro ranks among the leaders in
carbon disclosure standards in South
Africa
> Water effi ciency
investigation under
way
> Electricity usage baseline established
for all operations.
Exxaro’s core focus
is on conserving
natural resources and reducing the burden
of pollutants on the environment by:
> Complying with all applicable environ-
mental legislation — as a starting point.
Our aim is to exceed compliance
> Developing
innovative policies and
programmes for addressing environ-
mental impacts.
All South African operations have environ-
mental management programmes (EMPs)
as required under the Mineral and
Petroleum Resources Development Act
(MPRDA) and the National Environmental
Management Act (NEMA). North Block
Complex’s EMP expired and
is being
updated, while the EMP amendment to
Arnot’s Mooifontein is also under way. All
HIV/Aids
see www.exxaro.com/case_studies
EMPs are key indicators in ensuring that
The prevalence of HIV/Aids across Exxaro
MAKING A DIFFERENCE IN THE
Exxaro becomes a sustainable business.
is currently estimated at 12%. At the
HIV/AIDS PANDEMIC
Exxaro also adopts the precautionary
Exxaro Annual Report 2009 I 95
SAFETY AND SUSTAINABLE DEVELOPMENT PERFORMANCE CONTINUED
approach recommended by NEMA
in
evaluating the environmental impacts of
business opportunities.
by dedicating a resource to oversee the
environmental authorisation process.
To enhance
implementation of these
legal requirements and the sustainable
use of natural resources, standards
for air quality management, water
management, biodiversity management
and rehabilitation management have been
completed and will be implemented in
2010.
Key risks and management
activities
A strategic review of key environmental
risks from Exxaro’s mining activities during
the year highlighted:
> Air pollution, water pollution, water-
supply security and surface disturbance
> Cost of, and provision for, environmental
liabilities
The
in-house environmental specialist
unit has increased its scope of services
> Compliance to statutory and non-
statutory environmental requirements.
As such, we have developed a timeline to
Exxaro’s desirable state that includes:
> Sustainable ecological systems at all
Exxaro operations
> Stable rehabilitation fund with a gradual
decline in environmental liabilities as
these liabilities are addressed during
active operation
> Full environmental
to
sustainable development requirements
> No asset risk and reduction in land-
compliance
holding costs.
Timeline to desirable state
2009
2010 — 2011
1 Develop and implement air quality management
Review priorities
2012 — 2015
Review priorities
plans – Inyanda, KZN Sands and Zincor
2 EIA-EMP amendments (14)*
3 Eight site-closure reviews
4 Ferroland divestment (Gravelotte and Hlobane)
5 Approval of closure EMPR for Hlobane
6 Develop and implement integrated water-use
licence (Glen Douglas, Tshikondeni opencast and
Eerstelingsfontein project)*
7 Assurance preparedness – all fi ndings
8 Biodiversity action plans
1 Review performance on air-quality management
plans for Grootegeluk, New Clydesdale, Matla
2 Review performance on integrated water-use
licence for Namakwa Sands, Arnot, North Block
Complex, Glisa, Grootegeluk and selected
projects
3 EIA-EMP amendments
4 Ferroland divestment from Durnacol, Manketti
5 Biodiversity action plans – Arnot-Matla, North
Block Complex, Grootegeluk, KZN Sands,
Namakwa Sands, Rosh Pinah
6 Water business case investigation
7 Implementation of closure activities at Northfi elds
and KZN Sands according to plan
1 Exxaro-wide strategic environmental risk
assessment
2 Water business case implementation
3 Review implementation of closure activities at
mines in closure
4 Environmental liability management process
(EERF, Arnot-Matla)
* Most of these have at least a 12-month cycle
Key: EIA — environmental impact assessment; EMP — environmental management plan; EMPR — environmental management plan report; EERF — Exxaro
environmental rehabilitation fund
Water and waste management
To manage Exxaro’s waste water risks, the
following management actions were taken
during the review period:
> Integrated water and waste management
plans were developed, reviewed and
updated for Glen Douglas, Tshikondeni,
Leeuwpan and Grootegeluk water
treatment plant
> Water
balances were
developed,
revised and updated for Tshikondeni,
Grootegeluk, Leeuwpan, North Block
Complex Eerstelingsfontein project,
Glen Douglas, Matla and KZN Sands
central processing complex (CPC).
Integrated water management
Exxaro
is committed to best-practice
guidelines developed by the Department of
Water Affairs in 2008/9 and the following
measures, among others, are constantly
implemented at all business units:
> Dirty water areas are identifi ed and
demarcated
> Dirty water is captured from dedicated
areas and stored in suitable holding
facilities
> Concurrent rehabilitation efforts ensure
maximum clean water run-off
> Dirty water areas are kept to a
minimum
> Erosion protection on water conveyance
systems
> Re-use and reclamation of water in the
dirty-water system.
Water-use defi nitions have been stan-
dardised across business units via the
Exxaro water management standard. This
group-wide standard guides business units
in tracking compliance against legal and
reporting requirements for water.
96 I Exxaro Annual Report 2009
Water effi ciency projects at Exxaro
These projects have been integrated into the new Exxaro water-effi ciency project scheduled for completion in 2010.
Business unit
Description
Grootegeluk
Matla
Arnot
Leeuwpan
Inyanda
Tshikondeni
New Clydesdale
> In pit storage of stormwater run-off for plant utilisation (after pH neutralisation plant to avoid corrosion)
> Dewatering of the Basalt aquifer and re-use as process water
> The Basalt aquifer is fed mainly by seepage from the unlined pollution control dams, stockpile areas and slimes facility
> Water recovery from the slimes disposal facility is re-used as process water
> Excess water from underground is being considered for distribution to Eskom as process water
> No formal water reclamation used in plant plan in place
> Water recovery from the slimes disposal facility
> Storm water run-off recycled and re-used via the process water dams
> Water reclamation from the slimes facility is used as process water
> Stormwater run-off from the plant area is captured and returned to the plant for re-use
> Pit water from groundwater fl ow and run-off is pumped back to the dirty-water facilities for re-use
> Co-disposal facility with water reclamation which is re-used in the plant
> Stormwater run-off collected in lined pollution control dams at shaft areas and re-used as process water
> Slimes disposal with percolated water recovery for re-use in the plant area
> Stormwater run-off at the plant area is recycled back as process water
> Pit stormwater run-off is used for dust suppression
North Block Complex
> Excess water from pit and stormwater run-off is collected in pollution control dams for dust suppression
Zincor
Glen Douglas
KZN Sands
Namakwa Sands
> Rainwater collection from roofs is used to augment process water
> Borehole abstraction used to draw back pollution plume and augment process water
> Stormwater run-off into opencast areas used as process water in the plant area
> Reclamation of rainwater to augment water from Umgeni Water
> Seepage and run-off at CPC is collected and used as process water
> Seawater is used as process water
> Process water is recycled from the disposal facilities and re-used in the plant
Total water withdrawal by source
North Block
Complex
Tshikondeni
Glen Douglas
Rosh Pinah
Zincor
KZN Sands
Namakwa
Sands
Source
Municipal
Unwa Dam, boreholes
Municipal
NAM-Water
Municipal, boreholes,
rainwater harvest
Municipal
Olifants River (Western
Cape), seawater
Source
Arnot
Eskom
Glisa
Grootegeluk
Inyanda
Mokolo Dam,
boreholes, pit water
Mokolo Dam
boreholes
Olifants River
(Mpumalanga),
boreholes
Leeuwpan
Boreholes
Matla
Eskom
New Clydesdale
Olifants River
(Mpumalanga)
(cid:78)(cid:88)(cid:107)(cid:92)(cid:105)(cid:23)(cid:108)(cid:106)(cid:92)(cid:23)(cid:90)(cid:102)(cid:101)(cid:106)(cid:108)(cid:100)(cid:103)(cid:107)(cid:96)(cid:102)(cid:101)(cid:23)(cid:103)(cid:92)(cid:105)(cid:23)(cid:57)(cid:76)(cid:23)(cid:31)(cid:94)(cid:105)(cid:102)(cid:108)(cid:103)(cid:23)(cid:107)(cid:102)(cid:107)(cid:88)(cid:99)(cid:23)(cid:41)(cid:35)(cid:46)(cid:40)(cid:23)(cid:68)(cid:100)(cid:42)(cid:32)
(cid:43)(cid:28)
(cid:44)(cid:28)
(cid:43)(cid:28)
(cid:40)(cid:28)
(cid:46)(cid:28)
(cid:43)(cid:40)(cid:28)
(cid:41)(cid:28)
(cid:41)(cid:44)(cid:28)
(cid:42)(cid:28)
(cid:40)(cid:28)
(cid:45)(cid:28)
(cid:40)(cid:28)
■(cid:23)(cid:23)(cid:56)(cid:105)(cid:101)(cid:102)(cid:107)(cid:23)
■(cid:23)(cid:23)(cid:58)(cid:95)(cid:88)(cid:105)(cid:23)(cid:71)(cid:99)(cid:88)(cid:101)(cid:107)
■(cid:23)(cid:23)(cid:62)(cid:105)(cid:102)(cid:102)(cid:107)(cid:92)(cid:94)(cid:92)(cid:99)(cid:108)(cid:98)(cid:23)
■(cid:23)(cid:23)(cid:64)(cid:101)(cid:112)(cid:88)(cid:101)(cid:91)(cid:88)(cid:23)
■(cid:23)(cid:23)(cid:67)(cid:92)(cid:92)(cid:108)(cid:110)(cid:103)(cid:88)(cid:101)
■(cid:23)(cid:23)(cid:68)(cid:88)(cid:107)(cid:99)(cid:88)(cid:23)
■(cid:23)(cid:23)(cid:69)(cid:92)(cid:110)(cid:23)(cid:58)(cid:99)(cid:112)(cid:91)(cid:92)(cid:106)(cid:91)(cid:88)(cid:99)(cid:92)(cid:23)(cid:58)(cid:102)(cid:99)(cid:99)(cid:92)(cid:105)(cid:112)
■(cid:23)(cid:23)(cid:69)(cid:102)(cid:105)(cid:107)(cid:95)(cid:23)(cid:57)(cid:99)(cid:102)(cid:90)(cid:98)(cid:23)(cid:58)(cid:102)(cid:100)(cid:103)(cid:99)(cid:92)(cid:111)
■(cid:23)(cid:23)(cid:75)(cid:106)(cid:95)(cid:96)(cid:98)(cid:102)(cid:101)(cid:91)(cid:92)(cid:101)(cid:96)
■(cid:23)(cid:23)(cid:66)(cid:81)(cid:69)(cid:23)(cid:74)(cid:88)(cid:101)(cid:91)(cid:106)
■(cid:23)(cid:23)(cid:69)(cid:88)(cid:100)(cid:88)(cid:98)(cid:110)(cid:88)(cid:23)(cid:74)(cid:88)(cid:101)(cid:91)(cid:106)
■(cid:23)(cid:23)(cid:62)(cid:99)(cid:92)(cid:101)(cid:23)(cid:59)(cid:102)(cid:108)(cid:94)(cid:99)(cid:88)(cid:106)
■(cid:23)(cid:23)(cid:73)(cid:102)(cid:106)(cid:95)(cid:23)(cid:71)(cid:96)(cid:101)(cid:88)(cid:95)
■(cid:23)(cid:23)(cid:81)(cid:96)(cid:101)(cid:90)(cid:102)(cid:105)
Percentages have been rounded
Exxaro Annual Report 2009 I 97
SAFETY AND SUSTAINABLE DEVELOPMENT PERFORMANCE CONTINUED
> Avoiding
negative
environmental
> Financial resources allocated to water
impact or damage
management:
– Purchase of water
– Water management
– Water release/discharge
> Water-related fi nancial liabilities for
operational and closure phases.
Although this process is still in its infancy,
the outcome from the fi rst phase of data
analysis will assist in identifying gaps,
risks and assessing different business
units’ water-use patterns, available water
resources, and potential for developing
water reclamation schemes. Phase 1 will
be completed in July 2010.
see www.exxaro.com/case_studies
MAKING REHABILITATION WORK
FOR WATER CONSERVATION
Waste management
A group-wide policy on waste manage-
ment that will address material issues
related to waste streams, such as disposal
of hazardous as well as general waste
generated from Exxaro operations, has
been prioritised for 2010.
The business case for water
management
Exxaro has embarked on a three-phased
process to develop a strategic water
management plan
for all business
units, spanning water effi ciency, water
reclamation and water re-use initiatives.
In fi nding a solution that benefi ts our
group, government and communities
> Manage, minimise or eliminate post-
closure liability: proactive positioning
to make water available to other water
users
> Offset against anticipated waste
discharge changes
> Profi le of water being elevated
in
feasibility assessments as a sensitive
alike, the strategic drivers behind this
parameter.
project include:
> The limited water resources available
Phase 1 began in November 2009 and
in certain parts of South Africa to
support new or expanding mining and
was rolled forward to 2010. Data listed
below is being gathered as part of the
mineral projects
> High cost of inter-basin transfer of
water to support development projects
(R5-10/m3 and increasing)
> Compliance requirements — water-use
phase 1 investigation:
> Geographical
and
water-related
location of each operation
> Water effi ciency, both in terms of use
and development as a resource
> Water
infrastructure and
related
licensing requires re-use as per the
investment
Department of Water Affairs’ hierarchy
> Legal and regulatory requirements and
of water management on mining and
compliance for operational and closure
industrial facilities
phases
Developing a strategic water management plan
Phase 1
Phase 2
Phase 3
Company-wide assessment of
water supply, water management
and water liabilities to establish
the size of the water resource
that may be available to the
water business.
Water market and business
opportunities. Learning from
worldwide trends. This will
establish local and regional
demand for water by users
able to purchase the water.
Business case for Exxaro
entering the water market as a
viable enterprise development.
98 I Exxaro Annual Report 2009
Air quality management
Exxaro has implemented an air quality
In applying this framework, particularly
the emission inventory step, across our
management framework for quantifying
operations, it is evident that most of our
and determining the
impact of our
ambient pollution impacts associated with
ambient emissions, and managing non-
emissions are particulate matter or dust
compliance and continuous improvement
from mining activities. In addition, Exxaro
(below). This approach, which is aligned
also operates smelting operations in its
particulate matter (represented as PM10),
sulphur dioxide (SO2) and nitrogen oxide
(NOx).
Emissions from mining
operations
Dust-generating activities (ie blasting,
to the requirements of the 2007 national
mineral sands and base metals commodity
vehicle entrainment and wind erosion of
framework for air quality management
businesses. Emissions from these smelters
exposed operational areas) are challenges
in South Africa, provides a standardised
are regulated by a registration certifi cate
the group addresses daily
through
methodology across
the group
for
issued by the chief air pollution control
environmental management measures
quantifying emissions and determines
offi cer in the Department of Water and
such as dust-suppressant agents (eg Dust-
the appropriate action in mitigating their
Environmental Affairs (DWEA). Emissions
A-Side) on haul roads, applying water to
impact.
of concern from these smelters are
secondary unpaved operational roads
Air quality management framework
Business unit’s emission inventory
Point sources
(eg stacks)
Line sources
(roads)
Area sources
(discard dumps)
Volume sources
(fuel storage tanks)
and vegetating topsoil and overburden
material.
All our mining operations monitor daily
fallout dust rates and results are assessed
against the national standards (SANS) set
out in fi gure 1.
Air quality impact
assessment
If above government
emission
requirements
Result of emission
inventory
If below government
emission
requirements
Air quality dispersion
modelling
Development and implement
air quality management plan
s
t
u
p
n
I
Meteorological
data
Developing
monitoring
network
Developing
mitigation plan
Compliance reporting
(monthly and annual reports)
Yes
Pivot compliance:
reporting below
emissions limits
No for three consecutive
reporting periods
Inputs
Meteorological
data
Digital terrain
data
Emission
inventory
Figure 1: National standards (SANS)
Level
Target
Action residential
Action industrial
Alert threshold
Dust fallout rate
(mg/m2/day)
Permitted frequency
300
600
1 200
2 400
Three in any year, no sequential months
Three in any year, no sequential months
None. First exceedance requires remediation and compulsory report to
authorities
Figure 2: Results from Exxaro’s monitoring points
Operation
Coal
Mineral sands and base metals
Points monitored with
single-unit fallout
dust bucket
Average number of exceedances – 2009
60
36
600mg/m2/day
9
3
As % of total
13
8
Exxaro Annual Report 2009 I 99
SAFETY AND SUSTAINABLE DEVELOPMENT PERFORMANCE CONTINUED
Exxaro has implemented a management
key performance
indicator that tracks
compliance against the “action residential
limit”. Even though our operations are
classifi ed under
industrial targets, we
recognise that some operations are close
to densely populated areas. Tracking
compliance against the residential limit
provides a standardised management
approach that aims to move our operation
into the long-term target of 300mg/m2/day
(fi gure 2, page 99).
On average, the operations in the coal
commodity business exceeded the 600mg/
m2/day limit 13% of the time in 2009. Most
of these exceedances were recorded in the
winter and spring months. The mineral
sands and base metals commodity business
exceeded the limit 8% of the time.
Emissions from smelting
operations
All our
registration
certifi cates issued in terms of section 10
of the Atmospheric Pollution Prevention
Act, 1965 (Act 45 of 1965). These stipulate
smelters have
Figure 3: Performance of smelters
acceptable stack emissions for particulate
matter at KZN Sands smelters; particulate
matter, NOx and SO2 at Namakwa Sands;
and SO2 at the zinc smelter. The table below
shows the performance of our smelters
against permit conditions (fi gure 3).
Biodiversity management
is threatened by
Global biodiversity
human development — including mining.
Climate change is expected to exacerbate
this effect. As such, conservation is
becoming increasingly important. Exxaro-
owned and -managed land has signifi cant
biodiversity given the wide geographical
spread of the group’s operations.
As part of the process of developing
biodiversity management plans for each
business unit, a comprehensive study was
undertaken to determine vegetation types
on all land held by Exxaro and quantify
greenhouse gas reduction as a result of
vegetation.
1
values
carbon
tier
determined.
Agriculture, forestry and other land-use
practices were included to provide for
a more accurate and complete carbon
footprint, accounting for the various
business units and the group as a whole.
Based on aerial photographs and GIS
land use and vegetation maps, a carbon
vegetation type map for each operation
(mines and smelters) was compiled.
The carbon quantities captured within
the 32 types of vegetation in land under
operational control are estimated to be
around 30 million tonnes. The data on
vegetative carbon stocks within various
land use practices assists Exxaro’s
environmental practitioners in executing
their environmental and rehabilitation
activities. A summary of biodiversity
management is shown overleaf.
see www.exxaro.com/case_studies
MANKETTI’S FABULOUS FROGS
The boundaries and vegetative mapping
were completed in 2009 and preliminary
see www.exxaro.com/case_studies
NATURE’S BALANCE RESTORED
Business unit
No of points Pollutant
Permitted
emission rate
Namakwa Sands
KZN Sands
Zincor
2
2
2
15
2
PM
SO2
NOx
PM
SO2
30
500
700
50
24
Units
mg/m3 (24hr average)
mg/m3 (1hr average)
mg/m3 (1hr average)
mg/m3
mg/m3
Assessment
frequency
Bi-annually
Bi-annually
Bi-annually
Quarterly
Continuous
Exceedance
of permitted
emission rate
(2009)
0
0
0
5
1
Formal biodiversity management policy in place
In terms of a policy approved in September 2008, Exxaro’s
intention on biodiversity is to be a mining company that
leads by example in protecting, enhancing and conserving
South Africa’s biodiversity to ensure that the right
of future generations to a healthy, complete and rich
biodiversity is entrenched, and to ensure sustainability in
terms of biodiversity through biodiversity management
and/or offset areas that refl ect duty-to-care principles.
Group operations are mandated to ensure that biodiversity
conservation and the use of natural resources through
mining co-exist through proper planning, decision-making,
conservation and offsets.
The objectives of this policy are focused on the protection
and conservation of biodiversity-rich areas of undisturbed
areas, preventing or limiting destruction of Red Data faunal
and fl oral species and eradication and control of alien
invasive species by means of practical and cost-effective
management skills, programmes and action plans.
100 I Exxaro Annual Report 2009
Biodiversity management
Description
Inyanda
Tshikodeni
KZN Sands
Rosh Pinah
Zincor
Namakwa Sands
Coal
Sands and base metals
CPC
BSB
CPS
Smelter
KZN -
Hillendale
& Port
Durnford
Location/size of land owned,
leased, managed or adjacent
to protected areas of high
biodiversity value
Land adjacent to protected areas
√
√
X
√
Adjacent to Kruger
National Park, within
Gariep Centre of Plant
Endemism
Signifi cant impacts of activities,
product and services on
biodiversity in protected areas
and areas of high biodiversity
value outside protected areas
Size of land assessed (hectares)
Buildings (farm buildings, mine
buildings, etc)
Cultivation
Grassland/dune scrub
Mine tailings/pits/bare soil/airfi elds
Open water
Plantations/woodland
Grassland (natural)
Grassland secondary/
transformed grassland
Open bushveld
Riparian forest
Sand banks
Stream vegetation (bushveld)
Thicket and encroached bushveld
Transformed/degraded bushveld
Wetland grassland
Bushveld
Floodplain bushveld
Inland forest
Mopani bushveld
Mountain bushveld
Coastal forest
Sugar cane
Desert wash
Habitats protected/restored
Protected
Restored
1748
12
249
18
4
57
1 372
35
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
X
Red data species
relocated to offset
area under MTPBA
management
Strategies, actions and plans for
managing impacts on biodiversity
Exxaro biodiversity strategy (draft)
Management plan (EMPR)
√
√
Biodiversity action plans (BAP)
√
First BAP draft
under way
Relocation strategy
of Frithia humilis with
SANBI and MTPBA
√
Recorded Frithia
humilis — Relocated
in conjunction with
SANBI and MTPBA
IUCN red list and national
conservation lists species affected
by operations
Note: Figures have been rounded
66
1
25
2
3
0
16
0
5
0
0
0
0
0
0
8
0
0
0
0
0
0
5
0
X
X
√
√
√
BAP draft under
way
X
None recorded
to date
22 386
72
709
0
132
197
103
0
0
663
473
177
412
4 469
590
40
4 457
27
235
5 710
3 921
0
0
0
√
Kruger National Park
Adjacent to
protected area -
impacts of mining
limited due to under-
ground activities
√
√
√
Draft update of
certain sections
in 2010
√
Various species
recorded but not
currently affected by
underground mining
operations. Potential
that future opencast
operations may
impact on red data
listed species
5 419
181
342
526
391
0
25
0
157
0
0
0
23
0
0
4
0
0
0
0
0
679
3 091
0
X
X
√
√
Only
Hillendale —
Port Durnford
no mining
activities
√
BAP draft
under way
— Hillendale
only
√
Recorded
and currently
affected
(Hillendale
– habitat
transfor-
mation)
√
0
√
X
√
√
√
√
0
0
Area not assessed 2009
√
X
√
√
√
X
√
√
X
X
X
√
Recorded
and
affected
by mining
activity
√
Recorded
and
affected
by mining
activity
√
Recorded
and
affected
by mining
activity
√
Adjacent to
RAMSAR
Site
296
38
0
0
107
0
9
24
113
0
0
0
0
0
0
3
0
0
0
0
0
0
0
0
√
RAMSAR
site
√
Wetland
with red
data
species
√
√
√
BAP draft in
compi-
lation
√
Recorded
but not
currently
affected –
population
of Kniphofi a
typhoides
stable and
healthy
√
Adjacent to
Sperr Gebied/
Richtersveld
National Park/
endemic hotspot
area
1 251
23
0
0
121
0
0
0
0
0
0
616
0
0
0
0
0
0
0
0
455
0
0
35
√
X
√
√
X
√
Recorded
various IUCN
red data
plant species
– affected
during previous
exploration
activities. High
number of
endemic species
present and
recorded.
Exxaro Annual Report 2009 I 101
SAFETY AND SUSTAINABLE DEVELOPMENT PERFORMANCE CONTINUED
Mine rehabilitation
Exxaro’s mine rehabilitation policy and
management standard is based on a
legal and risk approach — a system of
chronological steps to optimise ongoing
rehabilitation from the feasibility stage
of any mining operation through all
operational phases and, ultimately, to
prepare for effi cient mine closure. This
framework informs physical processes
and fi nancial provisions,
including
rehabilitation performance indicators.
this data,
Business units are already reporting on
these indicators each quarter. By closely
monitoring
rehabilitation
backlogs are identifi ed before undue
fi nancial liabilities occur. The goal of the
environmental rehabilitation department
is
report against set ongoing
rehabilitation budgets per business unit,
in terms of volumes and fi nance.
to
were completed for four operations and
submitted to DMR. Others are scheduled
for 2010.
see www.exxaro.com/case_studies
MINE CLOSURE PLAN IN ACTION
Energy and climate change
The Exxaro brand is built on a strong
vision: everything we do and deliver
today will allow others to realise their
vision tomorrow. At Exxaro, we look
beyond the current commodities and
operations and see the impact we
have on people and the planet.
to
that
recognises
Exxaro
remain
competitive and sustainable, it is critical
that potential energy shortages; the
rising costs of energy; climate change
and its related environmental concerns
are dealt with as a strategic imperative.
Exxaro contributed R38 million in 2009
and had R422 million in its trust fund
at 31 December 2009 for mine closure
activities.
rehabilitation
provisions annually also informs potential
rehabilitation optimisation alternatives
that will decrease the closure liabilities
of mines in the long term.
Updating
During the year, closure-cost reviews
were completed at eight operations. Five
inactive sites have been included in this
review process. Performance assess-
ments against EMPR
(environmental
report) objectives
management plan
Exxaro’s carbon footprint represents
almost
total
1% of South Africa’s
emissions. This is depicted in fi gure 1 for
2006 to 2009, divided by the source of
the emissions.
Figure 2 shows the updated baseline for
2006, the fi rst year for which a detailed
carbon footprint was calculated. In line
with the international carbon reporting
protocol, the baseline
is updated to
show data (accuracy), the inclusion of
additional sources of greenhouse gas
or GHG emissions, and the inclusion of a
new business unit purchased after 2006.
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(cid:90)(cid:102)(cid:101)(cid:107)(cid:105)(cid:96)(cid:89)(cid:108)(cid:107)(cid:102)(cid:105)(cid:23)(cid:31)(cid:68)(cid:107)(cid:23)(cid:58)(cid:70)(cid:41)(cid:92)(cid:32)
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(cid:61)(cid:96)(cid:94)(cid:108)(cid:105)(cid:92)(cid:23)(cid:41)(cid:49)(cid:23)(cid:76)(cid:103)(cid:91)(cid:88)(cid:107)(cid:92)(cid:91)(cid:23)(cid:41)(cid:39)(cid:39)(cid:45)(cid:23)(cid:89)(cid:88)(cid:106)(cid:92)(cid:99)(cid:96)(cid:101)(cid:92)(cid:23)(cid:107)(cid:102)(cid:107)(cid:88)(cid:99)(cid:23)
(cid:93)(cid:102)(cid:102)(cid:107)(cid:103)(cid:105)(cid:96)(cid:101)(cid:107)(cid:23)(cid:89)(cid:112)(cid:23)(cid:90)(cid:102)(cid:101)(cid:107)(cid:105)(cid:96)(cid:89)(cid:108)(cid:107)(cid:102)(cid:105)(cid:23)(cid:31)(cid:68)(cid:107)(cid:23)(cid:58)(cid:70)(cid:41)(cid:92)(cid:32)
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(cid:88)
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(cid:23)
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(cid:107)
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(cid:96)
(cid:92)
(cid:107)
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(cid:92)
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(cid:96)
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South Africa’s approach
South Africa has developed long-term mitigation scenarios, the basis of which
was accepted by cabinet in July 2008 as a framework to manage the country’s
greenhouse gas emissions. The mitigation policy adopted by cabinet includes:
>
Increasing the price on carbon through an escalating CO2 tax, or an alternative
market mechanism
>
>
>
>
Setting targets for electricity generated from both renewable and nuclear
energy sources by the end of the next two decades
Laying the basis for a net zero-carbon electricity sector in the long term
Incentivising renewable energy through feed-in tariffs
Exploring and developing carbon capture and storage for coal-fi red power
stations, and not approving new coal-fi red power stations without carbon-
capture readiness.
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102 I Exxaro Annual Report 2009
Energy and climate challenges are broad;
solutions are enormously challenging, and
Exxaro recognises the need to address all
three imperatives, namely energy security,
economic productivity and environmental
impact.
The energy and carbon
management programme
Purpose: to be recognised as a
leader in energy management
by minimising energy intensity
while working towards becoming a
carbon-neutral business.
included initiatives around the regulatory
environment, energy effi ciency,
the
implementation of cleaner technologies
and reputational issues to thrive in a low-
carbon economy. In 2009, this map was
further refi ned and now includes a strong
supporting programme. The programme
Energy
security
> Secure supply
> Reliability
In recent years, Exxaro has consolidated
focuses on operational management
its approach to clean energy at group level.
and energy project development and
The formation of a strategic map in 2007
implementation.
Economic
productivity
> Growth in
demand
> Price
volatility
Risks
and
oppor-
tunities
Environmental
impact
> Climate
change
> Land and
water use
> Carbon
emissions
These
issues are
increasingly being
incorporated as part of Exxaro’s long-
term business strategy. A dual approach is
currently being implemented:
> Firstly,
energy
an
and
Exxaro’s green timeline
2010
> Exxaro is developing renewable energy projects, one solar and two wind
> Exxaro’s budget for the energy and carbon management programme is approximately
R9 million
> This programme is broadened to focus on climate change and associated risks
> Exxaro becomes involved in industry engagement on future policies
2009
> Exxaro pays a large amount for electricity (more than R600 million) and forecasts electricity
costs for 2011 to be some R1,3 billion
> Exco approves energy and carbon strategy framework
> Exxaro participates in SA Research Centre for Carbon Capture and Storage with local and
carbon
international partners
management programme has been
implemented,
dealing with
both
mitigation and adaptation issues
> Secondly, as noted by the CEO (page 15),
after careful consideration, Exxaro is
evaluating and developing a growth
pipeline of environmentally
friendly
energy projects. Some of these initiatives
are outlined in the growth section on
page 49.
These two programmes are linked by
Exxaro’s drive to become carbon neutral
and the need to thrive in a low-carbon
economy.
2008
2007
2006
> Exxaro score in CDP leadership index improves by 9 percentage points
> Special budget approved to enable comprehensive response to energy, carbon and climate
change management to enable and achieve the group’s vision
> South Africa realises the extent of its energy crisis
> Exxaro starts energy effi ciency forum with champions at each business unit
> Dedicated manager appointed to focus on energy projects and opportunities
> Exxaro placed fi fth in South Africa’s CDP leadership index chapter for the energy-intensive
sector
> Exxaro sponsors UNISA Chair in Business and Climate Change for three years
> Exxaro spends R460 million on electricity
> Exxaro forms clean energy forum
> Group reports on carbon emissions for the fi rst time (1,9 million tonnes of CO2e)
> Exxaro spends R358 million on electricity
> Electricity is highlighted as a major cost to the group
> At inception, Exxaro chooses green as a corporate colour as a symbol of sustainability and
growth
> Exxaro adopts the Energy Effi ciency Accord signed by Kumba Resources
Exxaro Annual Report 2009 I 103
SAFETY AND SUSTAINABLE DEVELOPMENT PERFORMANCE CONTINUED
We elaborate on the most advanced of
these focus areas below:
Focus area: energy effi ciency
improvement projects
During the year, the electricity baseline
was established for all business units in
preparation
for
Eskom’s
power
conservation programme
(PCP). The
consequences of PCP and recent electricity
price
increase forecasts have added
impetus to the group’s drive to achieve
energy-effi cient production.
Modelling the impact of electricity price
increases over the next three years is an
exercise absorbing much corporate time
across South Africa, especially given the
quantum of approved increases and the
impact on most companies’ bottom lines.
Exxaro has invested in this exercise, which
forms the business case for much of the
strategy.
Purpose: to co-ordinate the identi-
fi cation, assessment and imple-
mentation of projects to improve
energy effi ciency at current
operations.
Improvements in energy effi ciency are
needed to remain competitive while
dealing with climate change and its related
environmental concerns.
In particular, Exxaro commits to:
> Reducing costs by reducing energy
consumption from 2006 baseline by
10% by 2012
> Increasing energy effi ciency
> Promoting the use of sustainable and
renewable energy
> Promoting
the
use
of
clean
technologies.
The energy and carbon management strategy drives the programme
It deals with both operational management and energy project development and
implementation, and has six focus areas.
s
e
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a
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i
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Regulatory and stakeholder requirements
l
a
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i
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a
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e
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Energy and carbon
footprint data
Management and
monitoring processes
and systems
Energy consumption
management
Consumption
management platform
Energy trading
platform
A platform for
electricity trading
(PCP/RTC, cogen and
renewables)
Energy effi ciency
improvement
projects
Energy effi ciency
improvements and
current operations
Energy and
carbon effi ciency
specifi cations for
capital projects
Energy and carbon
effi cient capital project
implementation
Becoming carbon
neutral
Clean energy project
implementation
y
t
i
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u
t
r
o
p
p
o
d
n
a
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E
Reporting
Assurance
Regulatory and stakeholder requirements
Focus area: Energy and carbon
footprint data
Purpose: to enable the production of
consistently auditable and verifi able
energy and carbon footprint report
for Exxaro by:
> Implementing
effective
energy-
management processes and systems
> Developing effective organisational
roles and responsibilities.
A more effective reporting system for
energy data has been developed and
implemented at all business units. This will
become the basis of reporting on carbon
disclosure and carbon footprint statistics.
Phase 1, electricity and fuel data, will be
extended to include other energy sources
in future phases.
Focus area: Energy consumption
management
Purpose:
> To enable effi cient and timely control of
energy consumption at the operational,
commodity business and Exxaro level
> To optimise energy consumption at
current operations by applying sound
operational principles.
Updated metering equipment is being
installed at our business units to facilitate:
> Consumption management (including
managing Eskom’s power conservation
programme allocations)
> Tracking
and
verifying
electrical
effi ciency initiatives
> Verifi cation of electricity accounts.
A centralised view of business unit
consumption is a future requirement.
104 I Exxaro Annual Report 2009
Focus area: energy and carbon
management guidelines for
capital projects
Purpose: to develop guidelines:
> To govern the Exxaro process in the
asset life cycle for optimal energy use
> To ensure energy optimisation is aligned
with the project management process.
To reach our goal of leadership in energy
management, we are further developing
synergies between Exxaro Technology, the
project management offi ce and individual
business units, focusing on:
> Guidelines,
responsibility matrices,
the
procedures and checklists
project offi ce to establish and maintain
for
an energy focus during all phases of a
project life cycle, from concept phase,
through the feasibility process to detail
design and implementation
> Guidelines
to
ensure
project
specifi cations and quality assurance
plans have specifi c energy-related
content
> Maintaining energy benchmarks for all
operations
> Identifying and maintaining energy
comparison tables of major equipment
> Guidelines
to
ensure
energy
considerations are included in planning
and executing maintenance
> Guidelines to ensure all relevant training
is available so that staff are aware of
the risks and opportunities related to
energy
> Guidelines
to
ensure
business
related issues when evaluating projects,
PCP, carbon credits, tax incentives.
tested on a
These guidelines were
comprehensive evaluation of energy-
effi cient alternatives and renewable energy
types versus equivalent conventional
products. Results are now included in the
fi nancial model for further pre-feasibility
studies.
Focus area: becoming carbon
neutral
Purpose: to develop the roadmap to
becoming carbon neutral by:
> Determining carbon footprint —
determine baseline, restate and update
annually (footprint calculated since
2006 — ISO 14064)
> Reducing carbon footprint — becoming
more energy effi cient, buying renewable
electricity,
reducing
bio-diesel,
consumption, and using the carbon
market
> Offsetting remaining emissions —
carbon market transactions, social
responsibility investment
> Developing renewable energy projects,
eg solar and wind.
Exxaro is making progress with a feasibility
study on co-generation to produce some
15MW of electricity from waste energy
at our Namakwa Sands operation. This
project has a potential saving of almost
150 000 tonnes of CO2e per annum and
offers signifi cant fi nancial benefi ts via
improvement considers all energy-
carbon credits.
Further co-generation studies are under
way for projects at our own and other
organisations’ operations with a potential
150MW generation capacity, equating to a
potential 1,5Mt CO2e per annum.
The objective
is to minimise energy
waste, thus increasing energy effi ciency.
The carbon footprint of electricity from
these sources is virtually zero. Such co-
generation projects would also qualify
under the Clean Development Mechanism
project under the Kyoto protocol.
While the global economic slowdown
has delayed the implementation of co-
generation, Exxaro remains committed
to reducing
its carbon footprint by
implementing these projects as well as
renewable energy initiatives which are
subject to the roll-out of an enabling policy
environment.
The group
is also
committed
to
participating
in carbon capture and
storage developments through:
> Playing an active role in the establishment
of the South African Centre for Carbon
Capture and Storage (SA Centre for
CCS)
> Co-sponsoring
the
2009
CCS
Conference, organised by the SA Centre
for CCS at which world experts were the
leading speakers
> Preparing for its coal bed methane
project.
Exxaro Annual Report 2009 I 105
SAFETY AND SUSTAINABLE DEVELOPMENT PERFORMANCE CONTINUED
Vegetation of Namakwa Sands
site
Globally, soils are estimated to contain
approximately 1 500 gigatonnes of organic
carbon, more than the total carbon in
vegetation and the atmosphere.
Modifi ed agricultural practices with
increased biodiversity
is a recognised
method of carbon sequestration as soil
can act as an effective carbon sink,
offsetting as much as 20% of carbon
dioxide emissions annually.
In tandem with the CDP reporting process,
a vegetative study was conducted during
the year (page 100). The study revealed a
baseline for the impact of the Exxaro group
of 29Mt carbon (enhanced 32Mt carbon).
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(cid:92)
(cid:105)
(cid:102)
(cid:90)
(cid:74)
(cid:47)(cid:39)
(cid:46)(cid:39)
(cid:45)(cid:39)
(cid:44)(cid:39)
(cid:43)(cid:39)
(cid:42)(cid:39)
(cid:41)(cid:39)
(cid:40)(cid:39)
(cid:39)
(cid:45)(cid:43)
(cid:46)(cid:42)
(cid:41)(cid:39)(cid:39)(cid:47)
(cid:41)(cid:39)(cid:39)(cid:48)
(national electricity response
> NERT
team)
> Energy effi ciency accord through the
technical committee facilitated by the
National Business Institute (NBI)
> Industry
energy
policy-infl uence
workshops
> World Wildlife Fund (WWF) round table
event
> South African Chamber of Commerce and
Industry’s (SACCI) electricity dialogue
> National trade delegation to the UK in
March 2010.
Exxaro is also involved in the initiatives of:
> South African
Independent Power
Producers Association (SAIPPA)
Carbon disclosure project
reporting
Exxaro again participated in the Carbon
Given that 2,6Mt carbon enhancement
Disclosure Project (CDP). The CDP is the
equates
to
10Mt CO2e, a
ten-year
rehabilitation plan could potentially yield
1Mt CO2e per annum. Further investigation
and planning is under way.
Governance
The various working groups tasked with
leading proponent of climate change and
carbon disclosure, with a strong and growing
history of corporate disclosure through
its annual questionnaires and database
of corporate responses. In 2009 the CDP
represented more than 475
investors
with US$55 trillion of assets under
energy initiatives report to a steering
management; a total of 1 800 companies
committee headed by the executive general
participated worldwide, including 77% of
manager, business growth, who is also a
the FTSE Global 500. Companies listed
member of the executive committee.
on the JSE have participated for the last
> Coaltech 2020
> Fossil Fuel Foundation
> Peace Parks Foundation
> SA Centre for Carbon Capture and
local
international and
Storage with
partners
> Clinton Foundation.
see www.exxaro.com/case_studies
SUPPORTING
BIODIVERSITY
BEYOND EXXARO
Three years ago, Exxaro began sponsoring
the Chair in Business and Climate Change
at Unisa. The vision is to create a centre
three years; in 2009 68% of the top 100
of excellence in business and climate
Shortly after year end, the executive
companies
(by market capitalisation)
change research, education and advocacy.
committee confi rmed
its support for
on the JSE responded, compared with a
In practice. One of the early landmarks of
the energy and carbon management
global average response rate of 55%.
programme and recommitted to saving
this project was the publication of Climate
Change: A Guide for Corporates by Unisa
10% on energy effi ciency and carbon
As a stakeholder in the mining industry,
Press in 2009.
emissions by 2012. This pledge was
Exxaro actively participates in shaping
formalised and communicated to each
appropriate policies
in South Africa
The research includes a review of the impact
business unit, with energy savings targets
becoming a measurable indicator in senior
management performance
contracts,
through many channels, including:
> The Chamber of Mines
> NERSA (National Energy Regulator of
and part of the annual business planning
South Africa)
of the Copenhagen meeting, delineating
green economies, and quantifying the
opportunities for green jobs as well as
critically evaluating
the
relationship
process.
> EIUG (Energy Intensive Users Group)
between business and climate change.
106 I Exxaro Annual Report 2009
Risks and opportunities of
climate change
Exxaro is exposed to physical risks from
climate change. These include excessive
rain,
droughts,
disrupted
transport
infrastructure and increased vulnerability
of local communities and workforces.
An
independent physical climate-risk
assessment of Exxaro’s operations
in
southern Africa was carried out in early
2009.
Climate variables and their potential impacts
Variable
Derived variable
Potential impacts
Average temperature
> Increased evaporation impacts on
Day-time
temperature
mine water balance
> Increased cost of cooling and
chilling
> Dust control impacts – scrubbing,
sensitive equipment
Number of days per year exceeding
> Worker fatigue
30,2°C
Annual rainfall
> Load on chilling plants too high
> Water availability to mine
Seasonal timing of rainfall
> Need for increased dam storage
The report details preliminary work to
Rainfall
Average storm size
> Operational interruptions
> Erosion of roads and slimes dams
Frequency of traditional 100-year
> Mine fl ooding
storm
> Infrastructure damage
> Slimes dam breakage
True size of 100-year storm
> Mine design, plant protection and
Frequency of high wind speeds
> Structure design
drainage
Wind speed
Average wind speed
> Dust control impacts —
scrubbing, sensitive equipment
assess the risks climate change pose
to Exxaro’s operations. In doing so, a
standard risk approach was taken, ie risk
is a function of both the natural climate
hazard and vulnerability of the underlying
infrastructure, population and socio-
economic activities to these hazards.
Consequently, it sources information on
both hazards and vulnerability to assess
which combinations of these could pose
the greatest risks.
The next steps
in addressing these
challenges have been
initiated by
prioritising the impacts in conjunction
with
the group’s
risk manager. A
roadshow to all business units by the
second quarter of 2010 will highlight
these risks, raise awareness and start the
process of developing and implementing
appropriate action plans.
Exxaro Annual Report 2009 I 107
SAFETY AND SUSTAINABLE DEVELOPMENT PERFORMANCE CONTINUED
Environmental performance
To enhance environmental
term clean-up activities and a negative
The table opposite sets out reportable
incidents
impact on shareholder value (eg over
environmental
incidents across
the
management and
reporting, Exxaro
R500 000 in damage has defi nitely
has introduced a standardised incident
occurred)
management system in all business units
to ensure the effective management of
all incidents, leading to a safer and more
sustainable work environment. The system
provides an integrated platform to track
and manage incidents; identifi es the root
causes of incidents and ensures proper
incident
reporting and management.
Environmental incidents are categorised as
level 1, 2 and 3.
> Level 3 — Environmental incidents with
immediate and
irreversible on-site,
remote-area impacts, will involve long-
> Level 2 — Environmental
incidents
with reversible on-site and immediate
surrounding impacts, will involve more
than 48 hours in clean-up activities and
a negative impact on shareholder value
(eg R50 000—500 000 in damage has
defi nitely occurred)
> Level 1 — Environmental incidents with
reversible on-site impacts, will involve
immediate clean-up and a negative
impact on shareholder value (eg under
R50 000).
group. A total of 20 level 2 incidents were
reported during 2009. All level 2 incidents
were reported to the relevant regulatory
authorities. Corrective actions to remedy
the incidents and prevent them from
recurring were approved by authorities
prior to implementation. There were no
signifi cant (level 3) incidents reported
in 2009.
Case study — Carbon offset project
Exxaro undertook to offset the environmental impact of
4 Emission reductions must be permanent (making sure
this annual report and the internal group newsletter.
the emission reductions are not temporary)
Accordingly, the carbon footprint of the paper, printing
5 The offset project should result in community benefi ts.
and distribution was quantifi ed under the international
greenhouse gas reporting protocol
Exxaro’s annual report and newsletter emissions were
offset by installing a 300-litre solar geyser and additional
To ensure the integrity of an offset project, fi ve criteria as
monitoring and verifi cation equipment at a cost of over
set by the World Bank must be followed:
R40 000. In line with our commitment to socio-economic
1 The project must be additional (making sure the project is
development, we looked for an organisation, such as an old-
not claiming reductions that would already occur)
age home, hospice or children’s home, that could benefi t
2 It must result in real emission reductions (making sure
most from this initiative. Olievenhoutbosch is a low-cost
project activity is monitored and emission reductions
housing area close to Exxaro’s Pretoria head offi ce and
claimed are verifi ed)
Badimorogo is a home in the area offering full-time care
3 Emission reductions from the offset project must not
to eight elderly residents. The solar geyser will reduce the
be double-counted (making sure the same emission
home’s monthly running costs.
reductions are not sold to several buyers at the same
time)
108 I Exxaro Annual Report 2009
Environmental incidents – level 2
Business unit
Level
Description
Receiving environment
Inyanda
KZN Sands
Grootegeluk
KZN Sands
Namakwa Sands
KZN Sands
Grootegeluk
Inyanda
KZN Sands
KZN Sands
KZN Sands
Namakwa Sands
Namakwa Sands
KZN Sands
KZN Sands
KZN Sands
Namakwa Sands
KZN Sands
Inyanda
Inyanda
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
Overfl ow of contaminated water into a clean water area
Stacks exceeded APPA permit requirements
Pollution control dam not functioning well — spilling into clean areas
Excessive visual smoke and particulate matter in atmosphere
Contaminated water spillage into clean areas
Contaminated water overfl ow to a river due to blocked drainage trench
Pollution control dam overfl ow to clean areas
Soil pollution from coal spillage
Clogging of dewatering cyclones systems resulting in water pollution
Stacks exceeded APPA permit requirements
Overfl ow of contaminated water into surrounding community properties
Water and soil pollution caused by fl ooding of sewage treatment plant
Water from the mine damaged farm road on neighbouring farm
Stacks exceeded APPA permit requirements
Water
Air
Water
Air
Soil
Water
Water
Soil
Water
Air
Water/soil
Water/soil
Soil
Air
Leaching of run-of-mine pipeline — in situ material from the operation into a
Water/soil
neighbour’s property
Water from the mine damaged neighbouring property
Erosion of sensitive area due to high rainfall
Water/soil
Soil
Release of rainwater in controlled manner into a river to prevent dam wall failure Water
Coal and hydrocarbon spillage
Overfl ow of water from the dam to neighbouring properties
Soil
Water/soil
Environmental incidents – group
Business unit
2009
2008
2009
2008
2009
2008
Level 1
Level 2
Level 3
Coal
Arnot
Char Plant
Grootegeluk
Inyanda
Leeuwpan
Matla
New Clydesdale Colliery
North Block Complex
Tshikondeni
Mineral sands
KZN Sands
Namakwa Sands
Base metals and industrial minerals
Glen Douglas
Rosh Pinah
Zincor
495
75
23
135
37
28
51
72
26
48
339
79
260
527
47
0
141
Total
1 361
Level 1: Minor impact and/or non-compliance
Level 2: Intermediate impact and/or non-compliance
Level 3: Major impact and/or non-compliance
458
88
n/a
208
n/a
27
26
99
0
10
201
130
71
338
36
0
101
997
6
0
0
2
4
0
0
0
0
0
14
10
4
0
0
0
0
20
5
0
n/a
3
n/a
0
0
0
0
2
10
10
0
12
0
0
2
27
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
n/a
0
n/a
0
0
0
0
0
0
0
0
0
0
0
0
0
Exxaro Annual Report 2009 I 109
SAFETY AND SUSTAINABLE DEVELOPMENT PERFORMANCE CONTINUED
Consumption per business unit 1 January – 31 December 2009
Business unit
2009
2008
2009
2008
2009
2008
Electricity (GJ)
Diesel (GJ)
Sasol Gas (GJ)
Coal
Arnot
Char Plant
Grootegeluk
Inyanda
Leeuwpan
Matla
New Clydesdale Colliery
North Block Complex
Tshikondeni2
Mineral Sands
KZN Sands3
Namakwa Sands4
Glen Douglas
Rosh Pinah
Zincor
Total
1 835 131
1 789 423
2 199 610
2 258 568
201 082
197 946
341 106
496 510
9 266
n/a
5 272
n/a
904 342
895 540
727 756
714 827
22 997
n/a
134 678
n/a
76 144
78 656
427 349
555 532
463 723
468 587
64 618
68 061
37 566
35 406
158 273
85 873
5 184
4 993
307 630
300 515
114 828
108 295
32 929
37 252
0
0
0
0
0
0
0
0
0
0
0
0
n/a
0
n/a
0
0
0
0
0
4 214 567
2 051 525
481 817
173 422
307 040
319 020
2 298 182
1 464 023
71 067
79 854
307 040
319 020
1 916 384
587 502
410 750
93 567
44 809
131 483
61 296
54 351
161 225
146 383
61 169
61 579
1 491 559
1 517 962
31 137
27 666
7 747 291
5 636 776
2 835 029
2 575 586
307 040
319 038
0
0
0
0
0
0
18
0
0
18
Base metals and industrial minerals
1 697 593
1 795 828
153 602
143 596
1 Total energy fi gures comprise electricity, diesel, petrol and sasol gas; fi gures are based on invoices from suppliers.
2 2008 electricity consumption has been restated due to a calculation error.
3 Recommissioned furnace in 2009 ramping up to production.
4 Only four months’ data presented for 2008.
Eco-effi ciency
Coal
Mineral Sands
Base Metals and Industrial Minerals
Energy (GJ/t)
Water (m3/t)
Energy (GJ/t)
Water (m3/t)
Energy (GJ/t)
Water (m3/t)
2009
2008
0,11
0,31
5,09
0,09
0,27
4,65
13,24
27,00
1,29
1,90
1,28
2,11
110 I Exxaro Annual Report 2009
Petrol used (GJ)
Total energy use (GJ)1
Water (m3)
Saleable product
(Kt)
2009
2008
2009
2008
2009
2008
2009
2008
14 899
18 223
4 049 640
4 066 214
11 345 080
11 623 896
37 195
43 721
3 307
5 134
545 494
699 589
1 045 197
770 720
5 211
4 967
0
n/a
14 538
n/a
62 165
n/a
37
n/a
4 623
5 448
1 636 721
1 615 815
6 673 009
6 484 680
13 521
18 215
n/a
0
0
157 675
n/a
778 205
n/a
746
n/a
503 492
634 188
414 856
808 636
2 585
2 778
5 035
4 705
533 377
541 352
1 573 593
1 581 907
11 254
13 199
0
0
1 933
3 888
0
0
0
195 839
121 279
274 493
302 244
312 814
305 508
1 103
1 029 049
2 936
149 690
148 483
522 459
646 660
1 087
5 007 312
2 545 053
13 029 937
14 771 649
0
2 676 289
1 862 897
11 115 338
14 238 349
3 888
1 087
2 331 023
682 156
1 914 599
533 300
395
395
0
0
414
1 851 591
1 939 855
2 731 962
3 206 356
414
106 501
186 247
289 315
1 051 324
0
0
222 394
207 963
1 149 524
968 039
1 522 696
1 545 645
1 293 123
1 186 993
785
2788
268
984
659
325
1 440
1 228
121
91
1034
3187
341
547
438
110
1 519
1 312
115
91
19 183
19 724
10 908 543
8 551 122
27 106 979
29 601 901
39 619
45 787
Exxaro Annual Report 2009 I 111
SAFETY AND SUSTAINABLE DEVELOPMENT PERFORMANCE CONTINUED
Business unit
Coal
Arnot
Char
Grootegeluk
Inyanda
Leeuwpan
Matla
New Clydesdale Colliery
North Block Complex
Tshikondeni
Mineral Sands
KZN Sands
Namakwa Sands
Base Metals & Industrial Minerals
Glen Douglas
Rosh Pinah
Zincor
Total
* Electricity purchased 1/1 000
** Diesel purchases 0,0027096/1 000
CO2 from electricity
purchased (Kt)*
CO2 from diesel (Kt)**
2009
509,7
55,9
2,6
251,2
6,4
21,0
128,8
10,4
1,4
32,0
1 170,7
638,4
532,3
471,4
12,4
45,0
414,0
2 151,9
2008
517,1
57,2
n/a
259,0
n/a
22,7
135,4
10,2
1,3
31,3
592,7
422,9
169,7
518,8
38,0
42,3
438,5
1 628,5
2009
163,1
25,3
0,4
54,0
10,0
31,7
4,8
11,7
22,8
2,4
35,7
5,3
30,5
11,4
4,5
4,5
2,3
2008
167,2
36,8
n/a
52,9
n/a
41,1
5,0
6,4
22,3
2,8
12,8
5,9
6,9
10,6
4,0
4,6
2,0
210,2
190,7
112 I Exxaro Annual Report 2009
ECONOMIC PERFORMANCE
Economic value generated and distributed
Component
Comment
2009
Direct economic value generated
> Revenues
Economic value distributed
> Operating costs
Revenue as defi ned per the accounting policy on
page 174
R15 009 million (page 180)
Payments to suppliers, non-strategic
investments, royalties, and facilitation payments
R14 705 million (page 180)
> Employee wages and benefi ts
Total monetary outfl ows for employees (current
payments, not future commitments)
R3 253 million (see note 3 to AFS* on
page 180)
> Payments to providers of capital
All fi nancial payments made to the providers of
the organisation’s capital.
Interest expense and loan costs of
R460 million (note 5 to AFS* on page 183)
> Payments to government (by country) Gross taxes
> Community investments
Voluntary contributions and investment of funds
in the broader community (includes donations)
Note 7 and 25.3 to AFS* on page 184
and 203
R31,4 million contributed to socio-economic
development, corporate and other initiatives
(page 122)
Economic value retained (calculated
as economic value generated less
economic value distributed)
* AFS = annual fi nancial statements
Investments, equity release, etc
Value-added statement on page 137
Retirement and medical plans
All permanent employees must belong to
a defi ned-contribution retirement fund. By
defi nition, contributions are fully funded
with no employer funding liability, and all
recognised funds are registered in terms
of the Pension Funds Act. Retirement
funds are adequately funded as per the
actuarial valuations on 31 December 2008,
available from the funds. The actuarial
valuations as at 31 December 2009 are
being completed.
At 31 December 2009, the rand value of
all employer subsidies of retirement funds
was R197 million (2008: R166 million).
retirement
legislative amendments
Pending
that
aim to make membership of a national
basic
fund and medical
aid compulsory continue to present a
challenge to corporate South Africa. Draft
legislation was expected in mid-2009 and
the group will prepare an appropriate
action plan once this is published.
In terms of agreements with labour unions,
is voluntary
medical aid membership
for employees in the bargaining units at
Exxaro Resources, Exxaro Coal and Glen
Douglas Dolomite. At all other group
employers and for the management and
specialist category of employees, medical
aid is compulsory.
At 31 December 2009, Exxaro had 8 706
employees (78% of the workforce) who
belonged to medical aids with stipulated
representing
employer
R70 million (2008: R51 million).
subsidies,
Accredited medical aid funds have been
structured to exclude any employer liability
for post-retirement medical benefi ts
for either existing or past employees.
However,
there are post-retirement
medical liabilities for certain employees of
Matla, a division within the coal business,
as well as at Namakwa Sands.
Market presence
Approximately 83% of all employees’
remuneration
is based on collective
agreements with trade unions determining
minimum wages for each grade. Other
employees’ (management and specialist
is based on
category)
performance and market competitiveness.
remuneration
Less than 1% of the workforce is governed
issued by
by sectoral determinations
the Department of Labour for farm and
forestry workers. Those employed by the
company receive substantially more than
the minimum requirements stipulated
by the Basic Conditions of Employment
Act. In all cases, minimum conditions
of employment in Exxaro exceed the
requirements of the act.
Generally residents from local communities
are employed at business units, except
in areas where specifi c skills are not
available. About 70% of employees at the
various business units are recruited from
local communities.
Preferential procurement
practices
During the year, Exxaro reviewed and
implemented a policy that aligns the
business to the recently promulgated
Department of Mineral Resources (DMR)
codes of good practice and broad-based
socio-economic empowerment charter
for the South African mining industry.
This preferential procurement policy tasks
the group to use its purchasing power to
Exxaro Annual Report 2009 I 113
ECONOMIC PERFORMANCE CONTINUED
ensure that external suppliers are engaged
(cid:71)(cid:105)(cid:102)(cid:90)(cid:108)(cid:105)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:23)(cid:93)(cid:105)(cid:102)(cid:100)(cid:23)(cid:63)(cid:59)(cid:74)(cid:56)(cid:23)(cid:90)(cid:102)(cid:100)(cid:103)(cid:88)(cid:101)(cid:96)(cid:92)(cid:106)
and every effort is made to contract with
suppliers that have strong empowerment
credentials or are making a tangible effort
to transform their businesses to comply
with BEE legislation.
Our commitment
to procuring
from
historically disadvantaged South African
(HDSA) companies is refl ected in solid
progress since 2005 when the
level
of discretionary spending with these
(cid:28)
(cid:44)(cid:39)
(cid:43)(cid:39)
(cid:42)(cid:39)
(cid:41)(cid:39)
(cid:40)(cid:39)
(cid:39)
(cid:41)(cid:39)(cid:39)(cid:44) (cid:41)(cid:39)(cid:39)(cid:45) (cid:41)(cid:39)(cid:39)(cid:46) (cid:41)(cid:39)(cid:39)(cid:47) (cid:41)(cid:39)(cid:39)(cid:48)
(cid:41)(cid:39)(cid:40)(cid:39)
companies was 24%, compared to 39%
■(cid:23)(cid:23)(cid:71)(cid:92)(cid:105)(cid:93)(cid:102)(cid:105)(cid:100)(cid:88)(cid:101)(cid:90)(cid:92)(cid:23)(cid:23)(cid:23)(cid:23)■(cid:23)(cid:23)(cid:75)(cid:88)(cid:105)(cid:94)(cid:92)(cid:107)
(cid:71)(cid:105)(cid:92)(cid:93)(cid:92)(cid:105)(cid:92)(cid:101)(cid:107)(cid:96)(cid:88)(cid:99)(cid:23)(cid:103)(cid:105)(cid:102)(cid:90)(cid:108)(cid:105)(cid:92)(cid:100)(cid:92)(cid:101)(cid:107)(cid:23)(cid:107)(cid:88)(cid:105)(cid:94)(cid:92)(cid:107)(cid:106)
(cid:28)
(cid:45)(cid:39)
(cid:44)(cid:39)
(cid:43)(cid:39)
(cid:42)(cid:39)
(cid:41)(cid:39)
(cid:40)(cid:39)
(cid:39)
(cid:41)(cid:39)(cid:39)(cid:48)
(cid:41)(cid:39)(cid:40)(cid:39) (cid:41)(cid:39)11
(cid:41)(cid:39)(cid:40)(cid:41)
(cid:41)(cid:39)(cid:40)(cid:42)
(cid:41)(cid:39)(cid:40)(cid:43)
see www.exxaro.com/case_studies
ENTERPRISE DEVELOPMENT
THROUGH PREFERENTIAL
PROCUREMENT
in 2008. With the promulgation of the
DMR codes of good practice, our policy
review now incorporates BEE expenditure
targets specifi ed in terms of capital goods,
operational goods, services, black women
ownership and SMMEs. For the review
period, the target of 45% was marginally
exceeded (45,03%), representing R3 billion
spent with HDSA-owned companies. The
target for 2010 is 47%, rising incrementally
to 56% by 2014.
Exxaro’s major suppliers are encouraged to
transform and secure accreditation in line
with the codes of good practice, but with
an indication of their narrow-based status.
In line with Exxaro’s future expenditure,
companies likely to have increased and
longer-term business relationships with
the group are viewed as strategic partners
for transformation. These suppliers are
encouraged to form partnerships with
local SMMEs in areas of group operations.
Categorising expenditure as required by
the DMR codes of good practice remains
an industry-wide challenge. The targets
shown graphically are annual percentages
and reporting is in line with prevailing
mining legislation.
As a group, we continue to give preference
to companies that demonstrate HDSA
involvement, development and support
in ownership, management and skills
development.
114 I Exxaro Annual Report 2009
SOCIAL PERFORMANCE
Our people
Exxaro’s current staff complement was
11 180 at 31 December 2009. Supported
At Exxaro, we follow a total remuneration
In the bargaining units, there are 9 288
approach
that has guaranteed and
employees, with 1 892 employees in the
variable components. The group’s vision,
management and specialist category. All are
by the
leading practices developed
in
mission, business strategy and culture
full-time employees with only one person in
recent years, we concentrate on exceeding
drive this remuneration philosophy and
Gauteng being a part-time employee (in a
compliance targets in South Africa by
strategy as do governance structures
bargaining unit). In Gauteng, 16 employees
training and development to maximise
and external statutory regulations (SA
in the management and specialist category
individual potential, equality and safety in
Revenue Services, King III and IFRS II). The
the workplace, meeting our employment
components include guaranteed pay, short-
equity targets and improving standards
term incentives and long-term incentives
of living in our stakeholder communities.
such as share schemes and benefi ts. All
Collectively, our
initiatives are also
components are benchmarked against the
contributing to reducing the shortage of
external market to ensure Exxaro remains
skills in our industry.
competitive.
After nearly two years of planning, process
design, system development, testing
This approach was studied by an
international authority on remuneration
and training, the new integrated HR
who rated it in line with global best
management system went live in March.
practices, and with the top 40 companies
This gives the group a consolidated and
listed on the JSE.
standard process and systems landscape
that is integrated with Exxaro e-learning,
Wage agreements governing remuneration
medical surveillance and access control
are in place at all group employers, while
systems, ensuring end-to-end business
formal processes determine remuneration
process
integration. This advanced
for
non-unionised
employees.
Six-
environment
supersedes all
legacy
monthly market surveys ensure that total
systems and enhances Exxaro’s ability
remuneration is market related. At all
to monitor, control, enforce compliance
levels, minimum conditions of employment
(medical and induction expiries, overtime
exceed the requirements of South Africa’s
and leave liability), ensures accurate and
Basic Conditions of Employment Act.
timely business information, and effective
forecasting of people-related information
During the year, there were again no
(employees and contracting workforce).
reported incidents of discrimination in
This sophisticated system gives managers
the group.
are expatriates. Two are based in China, one
in Australia, one in The Netherlands, 11 in
Namibia and one in Switzerland. The regional
distribution is as follows:
Region
Gauteng
KwaZulu-Natal
Limpopo
Mpumalanga
Western Cape
Namibia
Total
Bargain-
ing unit
1 045
617
2 715
3 697
736
478
9 288
Manage-
ment and
specialist
category
645
183
450
266
248
100
1 887
Total
1 690
800
3 165
3 963
984
578
11 180
The challenge of fi nding suitable skills
to staff new projects is ongoing. Exxaro
has an active retention programme to
maintain scarce skills that accounts for
2 — 3% of total payroll.
Since collective agreements determine
specifi c guaranteed minimum salaries,
there is no discrimination between salaries
of men and women. In the management
and specialist category, all employees are
on performance contracts and individual
immediate access to a “single view” of
There are
two main categories of
salaries are based on performance and
all essential employee information, and
employees
in Exxaro: employees
in
not gender. The breakdown of male/female
enables employees to manage much of
bargaining units and the management and
employees per category and region is
their own routine HR information.
specialist category.
shown below.
Region
Gauteng
KwaZulu-Natal
Limpopo
Mpumalanga
Western Cape
Namibia
Total
Bargaining unit
Management and
specialist category
Male
823
534
2 450
3 252
642
442
8 143
Female
Male
Female
222
83
265
445
94
36
444
141
389
224
202
71
1 145
1 471
201
42
61
42
46
29
421
Total
1 690
800
3 165
3 963
984
578
11 180
Exxaro Annual Report 2009 I 115
SOCIAL PERFORMANCE CONTINUED
Employment equity
Exxaro’s employment equity reports for
refl ect the following level of representation
white females as per the mining charter
per occupational level by designated groups
defi nition) and split between permanent
the period 1 August 2008 to 31 July 2009,
(historically disadvantaged South Africans
and temporary employees:
as submitted to the Department of Labour,
or HDSAs — blacks, coloureds, Indians and
Male
Female
Foreign
nationals
Level
Top management
Senior management
Professional, specialists and middle management
Temporary employment service labour
Skilled technical, academically qualifi ed
and junior management
– general managers
– temporary employment service labour
– other
– temporary employment service labour
Semi-skilled staff
– temporary employment service labour
Unskilled staff
– temporary employment service labour
A
3
22
201
4
77
3
947
49
3 328
65
1 003
278
I
0
8
31
0
10
0
38
1
16
0
0
0
C
0
2
10
0
1
0
18
0
4
1
1
0
W
13
145
356
9
150
2
996
44
119
21
29
7
Total permanent employees
5 581
103
36 1 808
Total temporary employment service labour
399
1
1
83
Total staff complement
5 980
104
37 1 891
Bursars
Learners
Contract workers
Total non-permanent
Total employees
72
387
70
529
6 509
5
7
1
13
117
1
3
1
5
35
112
72
219
42 2 110
B – black
I – Indian
C – coloured
W – white
A
1
3
66
0
7
0
191
16
228
12
124
9
620
37
657
33
105
17
155
812
I
0
1
21
0
1
0
21
1
9
0
1
0
54
1
55
4
0
1
5
C
0
2
2
0
1
0
W
1
24
85
0
11
0
24
306
0
7
0
2
0
38
0
38
0
2
1
3
19
64
7
5
2
496
28
524
11
1
25
37
M
0
1
1
0
0
0
3
0
F
0
0
0
0
0
0
Total
18
208
773
13
258
5
0 2 544
0
130
74
0 3 849
0
6
0
85
0
85
0
0
0
0
0
106
0 1 171
0
296
0 8 821
0
550
0 9 371
0
0
0
0
161
617
188
966
60
41
561
85
0 10 337
116 I Exxaro Annual Report 2009
Literacy and numeracy
Exxaro continues to offer sponsored,
voluntary adult basic education and
(ABET) programmes at all
training
commodity businesses. Exxaro carries
the full cost of these programmes, some
R1,3 million in 2009.
The expenditure
lower than 2008
is
without a signifi cant decrease in the
number of employees trained, due to
the computerisation and optimisation of
facilities and more effective deployment
of facilitators.
Candidates are screened and counselled to
ensure they can make informed decisions,
and an incentive scheme is in place for
each level completed to encourage more
employees to become functionally literate
and numerate. More than 1 000 employees
have passed one or more ABET levels
since the inception of this programme.
In 2009, Exxaro again made good progress
towards the target of offering every one
the opportunity to become functionally
literate and to participate in ABET classes.
During the year, 311 employees completed
various ABET levels successfully, a 32%
increase on the prior year. Of these,
24 passed ABET level 4, 78 passed level
3, 57 level 2, 113 level 1 and 39 pre-ABET.
Equally, the number of non-employees
completing different ABET levels continues
(cid:56)(cid:57)(cid:60)(cid:75)(cid:23)(cid:99)(cid:92)(cid:109)(cid:92)(cid:99)(cid:106)(cid:23)(cid:90)(cid:102)(cid:100)(cid:103)(cid:99)(cid:92)(cid:107)(cid:92)(cid:91)
(cid:69)(cid:108)(cid:100)(cid:89)(cid:92)(cid:105)(cid:23)(cid:102)(cid:93)(cid:23)(cid:103)(cid:92)(cid:102)(cid:103)(cid:99)(cid:92)
(cid:42)(cid:44)(cid:39)
(cid:42)(cid:39)(cid:39)
(cid:41)(cid:44)(cid:39)
(cid:41)(cid:39)(cid:39)
(cid:40)(cid:44)(cid:39)
(cid:40)(cid:39)(cid:39)
(cid:44)(cid:39)
(cid:39)
(cid:106)
(cid:92)
(cid:92)
(cid:112)
(cid:102)
(cid:103)
(cid:100)
(cid:60)
(cid:99)
(cid:99)
(cid:106)
(cid:92)
(cid:92)
(cid:112)
(cid:102)
(cid:103)
(cid:100)
(cid:92)
(cid:36)
(cid:101)
(cid:102)
(cid:69)
(cid:106)
(cid:92)
(cid:92)
(cid:112)
(cid:102)
(cid:103)
(cid:100)
(cid:60)
(cid:99)
(cid:99)
(cid:106)
(cid:92)
(cid:92)
(cid:112)
(cid:102)
(cid:103)
(cid:100)
(cid:92)
(cid:36)
(cid:101)
(cid:102)
(cid:69)
(cid:106)
(cid:92)
(cid:92)
(cid:112)
(cid:102)
(cid:103)
(cid:100)
(cid:60)
(cid:99)
(cid:99)
(cid:106)
(cid:92)
(cid:92)
(cid:112)
(cid:102)
(cid:103)
(cid:100)
(cid:92)
(cid:36)
(cid:101)
(cid:102)
(cid:69)
(cid:41)(cid:39)(cid:39)(cid:46)(cid:23)
(cid:41)(cid:39)(cid:39)(cid:47)(cid:23)
(cid:41)(cid:39)(cid:39)(cid:48)(cid:23)
(cid:28)
(cid:47)(cid:39)
(cid:46)(cid:39)
(cid:45)(cid:39)
(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:23)(cid:69)(cid:72)(cid:61)(cid:23)(cid:99)(cid:92)(cid:109)(cid:92)(cid:99)(cid:23)(cid:40)(cid:49)(cid:23)(cid:45)(cid:45)(cid:28)(cid:23)(cid:96)(cid:101)(cid:23)(cid:41)(cid:39)(cid:39)(cid:46)(cid:35)(cid:23)(cid:45)(cid:47)(cid:28)(cid:23)(cid:96)(cid:101)(cid:23)(cid:41)(cid:39)(cid:39)(cid:47)(cid:35)(cid:23)(cid:45)(cid:47)(cid:28)(cid:23)(cid:96)(cid:101)(cid:23)(cid:41)(cid:39)(cid:39)(cid:48)(cid:23)(cid:23)(cid:23)
to rise, with 320 completing an ABET level
during the year. Across the group, 68%
of employees had NQF level 1 or above
qualifi cation in December 2009 (68% in
September 2008).
Exxaro has accredited ABET training
centres at Grootegeluk, Tshikondeni,
Matla and Arnot mines. The group’s
annual training reports and workplace
skills plans, submitted to and approved
by Mining Qualifi cations Authority (MQA),
contain sections on the number of ABET
candidates completing various levels and
planned for the years ahead.
The group has some 93% of employees
with at least NQF level 1.
Sands
Specifi c ABET successes in 2009 include:
> KZN
participating.
the ABET
started
programme in 2007 at its Hillendale
mine operation with 31 permanent
employees
Twenty-
four went on to ABET level 2 English
literacy and, in 2008, 13 ABET learners
from ECMP started English
literacy
level 1. In September, 23 permanent
literacy
employees received English
Training and education
At Exxaro, we believe in empowering all
staff with the knowledge and skills they
need to help us grow the company, but
also to develop personally. In 2009,
Exxaro employees have successfully
completed more than 8 200 different
training
courses,
specialist
and
development
programmes.
Exxaro’s
policy is to invest an appropriate amount
of total payroll each year on human
resource development. In 2009, this was
5% (excluding the 1% skills levy) or an
investment of R125,6 million.
Through Exxaro’s
human
resource
development policy, we aim to:
> Develop and sustain core competencies
and maximise human resources to meet
the group’s strategic objectives and
improve operational performance
> Create a learning culture by assisting
and facilitating the process in which
employees and their dependants take
responsibility for improving their own
educational and competency levels, to
the mutual benefi t of the individual and
level-2 certifi cates.
the organisation
Functionally literate and numerate
Yes/no
> Ensure integration and uniformity in all
learning and development processes by
All staff
leveraging technologies
What percentage of staff has been
given the opportunity to be functionally
literate and numerate?
Do you have classrooms for literacy
and numeracy training?
Do you have full-time employed staff
to conduct training?
Do you provide training during work
hours?
What incentives are there for
employees to participate in these
learning programmes
Yes
Yes
Yes
Learner
grant
Functionally literate and numerate
Total staff count
Number of employees below ABET
Level 3
Number of employees on ABET Level 3
Number of employees above ABET
Level 3
Number
of people
11 180
2 236
345
8 599
> Support and reinforce our values
through various learning and develop-
ment initiatives
> Ensure
learning and development
initiatives are career-focused and
aligned with business objectives
> Establish life-long learning as the major
thrust of learning and development.
In 2009, Exxaro continued its broader
focus on skills development. Where
our primary focus was traditionally
on engineering learnerships, our skills
development objective has broadened to
include other learnerships and especially
skills
programmes, while
steadily
increasing the number of engineering
learnerships.
Exxaro Annual Report 2009 I 117
SOCIAL PERFORMANCE CONTINUED
During
the
year,
e-learning was
Chamber of Mines’ education advisory
Employees in the bargaining unit are
implemented at Arnot, Matla, North Block
committee, the MQA sector skills planning
not part of Exxaro’s formal performance
Complex, New Clydesdale, Inyanda and
committee
and
standards-generating
management system; their development
Namakwa Sands, while existing systems
bodies of the MQA.
were upgraded at remaining Exxaro
business units.
Training to assist employees in managing
profi le, formal career plan and individual
career endings is part of the social and
preference. The performance management
is driven by
individual development
plans derived from an employee’s job
In 2009, on average, 519 engineering
labour plan for each mine, submitted
process is entrenched in the culture of
learners were registered and trained at
to and monitored by the Department of
Exxaro.
the Colliery Training Centre in Witbank
Mineral Resources as part of the process
and Grootegeluk’s Grovos training centre.
of renewing mining licences for each
Grovos has become a national trade test
mine. In these plans, Exxaro included a
centre, where members of the public can
fi ve-year engineering learnership plan
complete any trade test.
for 2007 to 2011.
To put this contribution into perspective,
In monitoring our artisan retention strategy,
Exxaro alone constitutes more than 25%
the ratio of learnerships in the pipeline to
of all engineering learnerships registered
the number of artisans employed in various
with the MQA. Exxaro’s training
in
trades is reported to Exxaro’s executive
engineering
learnerships will
lead to
committee each month.
full artisan status in trades such as
electrician, fi tter, plater, diesel mechanic
The
impact of skills retention and
and millwright. Artisans are considered
availability
on
current
production
scarce and critical skills in South Africa
and future growth is one we keenly
and all these trades appear on the
understand. To retain technical and
country’s scarce skills list.
engineering competence in the group,
aggressive retention and succession-
The number of other learnerships and
planning strategies are
in place for
skills programmes has also increased sig-
technical categories, among others. We
nifi cantly in recent years, peaking towards
also regularly benchmark remuneration,
the end of 2009. By then, there were
provide comprehensive
training and
33 people registered in mining learner-
identify growth opportunities at every
ships, 51 in plant learnerships/bursars and
level.
This
includes
continuously
88 in administrative/services learner ships.
rotating and exposing our own talent to
When
combined with
engineering
multidisciplinary project teams.
learnerships,
this brought
the
total
number of learners in learnerships/skills
All
non-bargaining
unit
employees
programmes to 691.
receive formal performance and career
development
reviews bi-annually. All
All new management and specialist
category employees
receive
formal
training on the performance management
process and system to reinforce the
concept
that
reward
is driven by
performance. Performance management
is also included in a web-based induction
programme.
All training and development is based
on a thorough needs analysis, taking
cognisance of business strategy, identifi ed
skills defi ciencies via the performance
management process, succession planning
requirements, employee career progress,
and the relevant employment equity plans.
Personal development emphasises the
joint responsibility of employees to man-
age their career growth. Accordingly,
Exxaro provides fi nancial assistance to
permanent employees with potential to
further their education through part-
time studies of certain
recognised,
approved courses and programmes.
Employees nominated by the company to
attend courses or programmes are fully
sponsored for tuition, examinations, travel,
accommodation costs and study leave.
Exxaro’s human resources development
management members are assessed
Specifi c
strategies
to ensure
the
professionals continue
to contribute
throughout the year as the basis for
accelerated
learning and development
signifi cantly to the national and sectoral
individual
succession
programmes
of black people, women and people with
transformation
process
through
and
talent management.
These
disabilities include:
membership and participation in bodies
assessments are also linked to reward and
> Fast-tracking employees with leadership
such as Business Unity South Africa,
remuneration.
and management potential
118 I Exxaro Annual Report 2009
> Accelerated development for
course at the University of Pretoria.
of losing key knowledge workers, and
R89 154 622
offered
employment
at
Exxaro,
hensive
succession-planning
process
occupation-based skills
> Adult basic education
> Life skills programmes
> Learnerships.
Skills development
Skills development spend
Description
Spent
Total leviable amount
(payroll)
Total training spend
Total training spend on
black people
Total training spend on
black women
Total training spend on
white women
Description
Black people
Black women
White women
Black disabled people
Black disabled women
R2 553 904 649
R125 659 658
R11 320 652
R9 211 650
Number of
learners on
programmes
312
45
1
2
1
Career development
Exxaro’s strategy is to ensure 80% of all
new appointments are made internally.
We therefore have an integrated process
that is aligned with both our strategy
and industry needs to provide a steady
fl ow of qualifi ed talent to tackle our
growth and expansion projects. In 2009,
there were some 252 trainees involved
in programmes
supporting
internal
advancement. The overarching objective
is to ensure that trainees entering the
group are empowered, challenged and
appropriately rewarded:
> Exxaro People Development
Initiative:
Candidates must be grade 12 students
brought new people up to speed more
from Exxaro mining communities who
rapidly.
want to study for a mining-related
degree or diploma. On completing their
studies, candidates may be considered
Leadership development
Exxaro has ongoing formal leadership
for an Exxaro bursary
> Bursary programme:
development
initiatives, mentorship
programmes and
succession-planning
Exxaro granted around 30 bursaries
workshops involving senior management
in 2009 to school leavers interested
and employees. Building and retaining
in mining-related disciplines
such
a pool of current and future leaders
as engineering, geology and mine
is a priority
for
the group and
surveying. Graduates are generally
appropriate initiatives include a compre-
depending on the current need in that
and enhancing
strategic
leadership
fi eld, mostly
through
the group’s
competencies.
formal
three-year
professionals-in-
training programme. There are currently
145 bursars studying at South African
Employee turnover
Between 1 January and 31 December 2009,
institutions at a cost of R10 million:
Exxaro recorded an average employee
more than two-thirds are historically
turnover rate of 4% (2008: 7%), primarily
disadvantaged South Africans and
because of death, resignation, dismissal
26% are women
> Professionals-in-training
and disability. The turnover rate by
employee group is show below:
programme:
The three-year programme bridges the
gap between academic theory and the
work environment. Each professional-
in-training has a mentor who supervises
exposure to the various commodities,
leadership and management training,
Terminations
January –
December 2009
Employment equity
– occupational
categories
% of
work-
force Number
and
formal
training
from profes-
sional bodies. In 2009, there were
Senior offi cials,
managers, legislators
81 professionals in training throughout
Professionals
Exxaro in a R30-million programme:
77% are from designated groups and
26% of those are women
Communities of practice
Exxaro has communities of practice for
effective development and sharing of
knowledge, best practices and lessons
across the group. The focus is primarily
Technicians/associated
professionals
Clerks and
administrative workers
Service and sales
workers
Craft and related trades
Plant and machine
operators
Labourers and
elementary occupations
6
6
4
2
0
6
2
3
39
30
41
29
0
92
99
34
The Exxaro Foundation
sponsors
on core competencies required
for
25 previously disadvantaged students
Exxaro’s sustainability. In practice, these
each year for a 12-month bridging
communities have
lowered the risk
Exxaro Annual Report 2009 I 119
SOCIAL PERFORMANCE CONTINUED
independent defi ned contribution funds.
The employer contribution to retirement
funds in the group ranges from 10% to 18%
of employee pensionable earnings, and is
expensed as it occurs. All retirement funds
are governed by the South African Pension
Funds Act (1956), with no members on
defi ned-benefi t plans.
In October 2009, employees participating
in Exxaro’s Mpower
(empowerment
participation scheme holding around
3% of Exxaro’s shares to broaden share
participation among workers) received
their fi fth dividend payment. Since
inception in November 2006, each of
the benefi ciaries of the Mpower scheme
(9 289 at 31 December 2009) received
over R3 900 in dividends. After group-wide
elections, the fi rst representative board of
trustees took offi ce in May 2009.
The group continues to focus on home
ownership. To comply with the mining
charter and our own business needs,
a new long-term housing strategy was
developed in 2008.
During the year, the group introduced a
fi ve-year subsidy for fi rst-time home-
buyers who are permanent employees.
This was particularly welcome given the
unprecedented scarcity of bank mortgage
fi nance in 2009. Linked to the bank
lending rate, the subsidy reduces each
year as bond repayments become more
affordable. To date, 194 employees have
benefi ted from this subsidy to make
home-ownership more affordable.
While Exxaro’s housing policy focuses on
Number of
employees
2009
2008
929
594
1 343
8 314
822
389
1 336
7 588
Home owners (bought
company property)
Hostels
Single quarters
Rental and other
Total
11 180
10 135
Exxaro provides meals at two operations
where the quality and nutritional value
are determined by a dietician. Qualifi ed
staff continually monitor adherence
to contractual obligations. Employees
have accessible mechanisms to engage
both management and suppliers on food
issues.
Employee wellness
External
service providers manage
employee assistance programmes for our
people and their dependants at all business
units. These have been particularly
successful in ensuring a fast and effi cient
response to employees suffering trauma
because of work-related and community-
based events.
Diversity and equal opportunity
When we created Exxaro — the largest
black-owned mining company
in the
country — we stated our intention of being
the best example of how South African
companies could and should be run. We
made a commitment to our people to
ensure their progress and to build up the
skills base we needed to fulfi l our vision.
Employment equity is just one of the ways
in which we are doing this.
home ownership, employees receive a
While employment equity is certainly
housing or living-out allowance to assist
a
legal
issue, with strict
targets
them in obtaining accommodation. Land
imposed by both the mining charter
has been made available for housing at
and the government’s black economic
Grootegeluk where some 800 units will
empowerment codes, for Exxaro it is also
be built over the next three years.
a moral imperative.
National
Labour relations
Almost 70% of Exxaro’s employees
are represented by affi liated unions,
of
predominantly
Mineworkers (NUM) (55%), and Solidarity
(9,8%). Other recognised unions are
Mineworkers Union of Namibia (MUN),
National Union of Metalworkers in South
Africa (NUMSA), and United Association of
South Africa (UASA).
Union
Negotiations for improved wages and
conditions of employment are conducted
in various in-house forums and through
the Chamber of Mines.
Exxaro has a disciplinary code that is
used when necessary. The code is based
on the principle of fairness as required by
labour law. Supervisors have the skill to
implement the code.
Employees in the bargaining unit receive
several
beyond minimum
legislative requirements (below).
benefi ts
Employee benefi ts
Through collective bargaining, full-time
employees receive a range of benefi ts —
many exceeding minimum stipulations —
including:
> Retirement fund membership subsidised
by the employer
> Medical aid membership subsidised by
the employer
> Housing allowance/company
accommodation
> Guaranteed annual holiday bonuses/13th
cheque for bargaining unit employees
> Travel allowances
> Annual
leave, sick
leave, family responsibility leave
leave, maternity
> On-target bonuses, share appreciation
rights schemes, standby and call outs,
etc as well as payment for overtime
worked.
Retirement and other benefi ts for all
permanent employees are provided by
120 I Exxaro Annual Report 2009
At the heart of our employment equity
charter targets. A committee representing
can be owned, managed and maintained
strategy lie detailed plans developed by
all the group’s business units is mandated
by that community. Unlike a donation,
each business unit in consultation with its
to implement these initiatives.
Exxaro’s role in these projects extends
employees and unions. These are updated
beyond providing funds. This includes
and progress reported to the board
Exxaro operations introduced 220 girls to
active involvement in applying funds,
quarterly and government annually.
the world of mining in 2009 as part of the
as well as a project management role.
By following these plans, each unit ensures
that recruitment and skills development
are conducted responsibly, promoting
Take a Girl Child to Work initiative.
A “local” community
is defi ned as
one in the immediate area of Exxaro’s
Human rights
As a responsible corporate citizen, Exxaro
operations.
transformation without affecting existing
largely complies with labour legislation in
During the year, a strategic review of
positions in the company. Each business
South Africa and with International Labour
Exxaro’s socio-economic development
unit has a formally assigned senior
Organisation guidelines. As a signatory to
strategy highlighted the following key
manager for employment equity, and
the United Nations Global Compact, the
an employment equity forum that
is
group encourages freedom of association
risks:
> Delayed approval to close any mine
responsible
for ensuring appropriate
and collective bargaining, ensures child
because of non-compliance with social
plans are developed, executed, monitored
labour is not tolerated and that forced or
and labour plans
and communicated to employees.
compulsory labour is not practised.
> Reputational risk (ineffective stake-
Pleasingly, and despite the ongoing
Induction programmes ensure employees
shortage of skills, Exxaro exceeded 2009
are educated about human rights. Policies
mining charter targets well ahead of time
on discrimination, harassment and racism
holder engagement)
> Loss of investment opportunities
> Adversarial relationship with neighbours.
in both the management and women in
are in place, as are structures to protect
Accordingly, we have developed a timeline
core mining categories. This refl ects the
employees’ human rights in the workplace.
constant focus on internal promotion,
All security personnel are fully trained
to Exxaro’s desirable state that includes:
> Sustainable communities as a result
individual development and skills retention
after appointment on human rights
of social and labour plans and other
in our aim to be a preferred employer.
aspects relevant
to each operation.
investment
The group’s performance against the
Refresher courses also cover human
> Our stakeholders become our
mining charter’s revised targets appears
rights issues.
ambassadors
on page 126.
Women in mining initiatives
Attracting women to work in the group’s
Socio-economic development
Socio-economic development projects
refer to the application of funds, goods
> Measurable improvement in quality of
life and poverty eradication
> Clear strategic objectives for investment
> Successful mine closure where Exxaro
core business remains a focus area,
and
labour
to provide sustainable
exits.
despite Exxaro already exceeding mining
services for the local community, which
Timeline to desirable state
2009
2010 — 2011
2012 — 2015
1. Measurable SED indicators in place
2. Clear SED governance in place
Review priorities
1. SIA conducted at all business units
2. Investment objectives developed
and aligned
3. Measurable outcomes of stakeholder
engagement
Review priorities
1. SLPs implemented and aligned to Dept
of Mineral Resources requirements
2. Strategy/plan developed for SLPs
3. SLPs for all business units approved
4. SED adheres to JSE/SRI, GRI indicators
and ICMM principles
5. Investment ensures real and sustained
economic growth
Key: SED – socio-economic development; SIA – social impact assessment; SLP – social and labour plan.
Exxaro Annual Report 2009 I 121
SOCIAL PERFORMANCE CONTINUED
Our social development initiatives are
they benefi t from the mine’s presence in
on enterprise development, infrastructure
determined by the Exxaro Chairman’s
multiple ways.
Fund and Exxaro Foundation Trust. Under
development and poverty alleviation
as requested by the Department of
the overarching framework of Exxaro’s
Exxaro’s policy is to actively recruit labour
Mineral Resources. Each project
is
sustainable
development
strategy
from local communities wherever possible,
being
implemented over a fi ve-year
and policies, trustees are mandated
and training initiatives focus on developing
period. After projects are approved by
to ensure resources are allocated to
the skills of community members to fulfi l
the trustees, the business units begin
projects and donations that both meet
the group’s requirements.
the objectives of the trusts and are
implementing each project according to
milestones determined by the social and
inherently sustainable.
In 2009, Exxaro
contributed over
labour plans.
R31,4 million to socio-economic develop-
Focus areas
All Exxaro’s sustainable development
activities, including social development
projects and donations, are focused on
areas deemed relevant and strategic
ment projects, corporate projects and
Over the next four years, the number of
other initiatives. At 1,8% of 2008 net
jobs to be created according to social and
profi t after tax and 3,29% of a normalised
labour plan projects that started in 2008
net profi t after tax for 2009, this compares
will exceed 670. Indirectly, these projects
well to the compliance target of 1% in the
will benefi t over 11 400 people.
to
South
Africa’s
socio-economic
codes of good practice for the minerals
development. These focus areas are
industry.
reviewed from time to time with attention
currently on:
> Formal education
> Skills
development
building
and
capacity
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(cid:58)(cid:95)(cid:88)(cid:96)(cid:105)(cid:100)(cid:88)(cid:101)(cid:203)(cid:106)(cid:23)(cid:61)(cid:108)(cid:101)(cid:91)(cid:23)(cid:88)(cid:101)(cid:91)(cid:23)(cid:60)(cid:111)(cid:111)(cid:88)(cid:105)(cid:102)(cid:23)
(cid:61)(cid:102)(cid:108)(cid:101)(cid:91)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)
(cid:31)(cid:73)(cid:42)(cid:40)(cid:35)(cid:43)(cid:100)(cid:32)
31%
16%
> Enterprise development
> Health and welfare
> Environment
> Infrastructure
(related
economic projects)
> Agriculture
> Tourism
> Sport and recreation.
to
socio-
2%
3%
25%
23%
To ensure we achieve our strategy, we
believe it is important to create public-
private partnerships (PPPs) on all our
projects.
Although not all our social and labour plans
have been approved by the Department of
Mineral Resources, those already in place
are mainly implemented according to set
targets. These plans focus on communities
close to our operations, the source of
■(cid:23)(cid:23)(cid:60)(cid:91)(cid:108)(cid:90)(cid:88)(cid:107)(cid:96)(cid:102)(cid:101)
■(cid:23)(cid:23)(cid:74)(cid:98)(cid:96)(cid:99)(cid:99)(cid:106)(cid:23)(cid:91)(cid:92)(cid:109)(cid:92)(cid:99)(cid:102)(cid:103)(cid:100)(cid:92)(cid:101)(cid:107)(cid:23)(cid:88)(cid:101)(cid:91)(cid:23)
(cid:90)(cid:88)(cid:103)(cid:88)(cid:90)(cid:96)(cid:107)(cid:112)(cid:23)(cid:89)(cid:108)(cid:96)(cid:99)(cid:91)(cid:96)(cid:101)(cid:94)(cid:23)(cid:23)
■(cid:23)(cid:23)(cid:60)(cid:101)(cid:107)(cid:92)(cid:105)(cid:103)(cid:105)(cid:96)(cid:106)(cid:92)(cid:23)(cid:91)(cid:92)(cid:109)(cid:92)(cid:99)(cid:102)(cid:103)(cid:100)(cid:92)(cid:101)(cid:107)
■(cid:23)(cid:23)(cid:63)(cid:92)(cid:88)(cid:99)(cid:107)(cid:95)(cid:23)(cid:88)(cid:101)(cid:91)(cid:23)(cid:110)(cid:92)(cid:99)(cid:93)(cid:88)(cid:105)(cid:92)
■(cid:23)(cid:23)(cid:60)(cid:101)(cid:109)(cid:96)(cid:105)(cid:102)(cid:101)(cid:100)(cid:92)(cid:101)(cid:107)(cid:88)(cid:99)(cid:23)(cid:106)(cid:107)(cid:92)(cid:110)(cid:88)(cid:105)(cid:91)(cid:106)(cid:95)(cid:96)(cid:103)
■(cid:23)(cid:23)(cid:64)(cid:101)(cid:93)(cid:105)(cid:88)(cid:106)(cid:107)(cid:105)(cid:108)(cid:90)(cid:107)(cid:108)(cid:105)(cid:88)(cid:99)(cid:23)(cid:91)(cid:92)(cid:109)(cid:92)(cid:99)(cid:102)(cid:103)(cid:100)(cid:92)(cid:101)(cid:107)
Socio-economic focus areas
Project implementation
Socio-economic development projects in
some 70% of our workforce, to ensure
the group’s social and labour plans focus
see www.exxaro.com/case_studies
PLANNING FOR EXPANSION
see www.exxaro.com/case_studies
HOUSING PROJECT IN
MARAPONG
see www.exxaro.com/case_studies
KZN SANDS CHANGES LIVES
see www.exxaro.com/case_studies
ZIKULISE SME DEVELOPMENT
AND SKILLS CENTRE
see www.exxaro.com/case_studies
INCUBATOR HATCHES
see www.exxaro.com/case_studies
CLEAN START AT NAMAKWA
SANDS
see www.exxaro.com/case_studies
THREE STEPS TO BETTER
SCHOOLING
see www.exxaro.com/case_studies
SPINNING FOR CHARITY
122 I Exxaro Annual Report 2009
Selection of projects and donations: 2009
Mine
Project/donation
Benefi ciaries
Tshikondeni
Alternative energy (zinc-air fuel cells) project in Guyuni
Three direct jobs, 990 indirect project benefi ciaries
Sanari Entrepreneurial Centre established in Sanari, near
the mine. Exxaro partnered with National Development
Agency and Department of Labour to develop a business
and training centre for this community.
Musunda Citrus Farm – the Musunda community near
Tshikondeni Mine has been given a sustainable alternative
to its high rates of poverty and unemployment – a
20-hectare farming project supported by the operation
that will see the village benefi t from tomato, mango and
orange farming. The community has already harvested its
fi rst crop of tomatoes.
Makuya farmers’ cooperative – Exxaro is partnering with
Department of Agriculture, Forestry and Fisheries.
32 direct jobs, 81 indirect project benefi ciaries
13 direct jobs, 120 indirect project benefi ciaries
25 direct jobs, 400 indirect project benefi ciaries
Corporate
commitment
Exxaro assists the University of Pretoria’s community
project for the maintenance engineering department.
n/a
Grootegeluk
KZN Sands
Each year, a sizeable investment is made in technical and
civil skills development in the Lephalale area with the help
of several local training institutions. Skills offered include
welder/planter, ABET, maintenance operator and civil
skills.
Support to Abbotspoort drop-in-centre near Grootegeluk
Mine to care for the growing number of orphans in the
area.
Eco-friendly housing, roadbuilding and enterprise
development project (see case study – Housing project in
Marapong).
SME development and support centre (in partnership with
the European Union, Absa and uThungulu District
Municipality) was constructed last year and is now fully
operational. The centre offers community members the
opportunity to learn skills such as art and decoration,
furniture-making, sewing and beading, etc (see case study
– Zikulise SME development).
In Ezingeni, a hydroponics tunnel project was started to
produce tomatoes for local retailers. The project was
recently expanded to four tunnels in partnership with BHP
Billiton, and an upmarket packing and cooling facility built.
Vusani agricultural integrated farming where local youth
have been trained to operate a successful piggery
producing pigs for the local market, and a well-developed
nursery.
1 710 learners over a fi ve-year period. In 2009,
121 learners enrolled for ABET courses, and 102 for
civil skills
18 direct jobs, 65 orphans
24 direct jobs, 5 home owners, 101 indirect project
benefi ciaries
224 direct jobs, 1 120 indirect project benefi ciaries
Seven direct jobs, 35 indirect project benefi ciaries
Nine direct jobs and 45 indirect benefi ciaries
Namakwa
Sands
Koekenaap water-pumping facilities to pump fresh water
from the existing reservoir to households.
827 benefi ciaries
Exxaro Annual Report 2009 I 123
SOCIAL PERFORMANCE CONTINUED
Mine
Project/donation
Benefi ciaries
Namakwa
Pholla Park project – providing electricity to informal
400 households, benefi ting approximately 1 600 people
Sands
households. Main infrastructure completed. As informal
households are moved to a designated area, these will be
connected to electricity infrastructure. To date, over
100 houses have been connected.
West Coast College – skills development project.
These facilities benefi t almost 200 students per annum
Following the establishment of a computer laboratory in
currently, with a potential increase to 300. Nine community
2007, training facilities for electrical and fi tting learnerships
bursaries were allocated in 2009
were enhanced in 2008 and 2009. The welding workshop
was upgraded in 2009. A formal community bursary trust
was established with the fi rst bursaries awarded in 2009.
Lutzville West – a freshwater dam was built to provide the
4 280 people living in the Lutzville West community
community with water-storage facilities. With all
preparatory work completed, construction began in 2010.
Hydroponics farming – project to develop skills and create
Estimated 20 permanent jobs for unemployed members of
jobs. The site has been identifi ed and water rights
local communities and up to 40 seasonal jobs
secured. The project will begin in 2010.
Rosh Pinah
Due to the large infl ux of people to the area, the need was
23 teachers, 650 learners
identifi ed to expand the existing primary school which
already accommodates 600 learners. New teachers were
employed and a campaign to provide a better standard
education started. The improved school will make Rosh
Pinah town a better place to raise children and Rosh
Pinah Zinc Corporation an ideal employer.
Zincor
In Vukuzenzele, an informal settlement near the Zincor
All inhabitants of Vukuzenzele
plant in Springs, a refuse project educates residents about
a healthy environment, hygiene and welfare. Refuse is
collected monthly. Given its success to date, Ekhurhuleni
Metropolitan Municipality will take over the project in the
near future.
Arnot
A hydroponics garden was started near Arnot Mine which
25 jobs in year 1, 95 direct jobs over fi ve years,
will expand into a commercial farm over fi ve years.
332 indirect project benefi ciaries
New
A hydroponics garden was started where local community
65 direct jobs, 227 indirect project benefi ciaries
Clydesdale
members and mine employees can receive training in
agricultural skills.
North Block
A Saturday school for matriculants was established.
328 learners
Complex
A coal-yard project has been started near Siyathuthuka
40 temporary jobs (erect infrastructure),
township to meet demand for coal (98% of community
10 permanent jobs
members use coal stoves to heat their houses).
Support to Emakhazeni Municipality to electrify
Two direct jobs created
30 houses.
Upgraded Khayalami High School laboratory and library,
One job created
and supplied library with books.
Additional educator employed for Belfast Academy to
One direct job created
assist the school with the shortage of educators.
124 I Exxaro Annual Report 2009
SOCIETY
Monitoring and evaluation
currently
We
are
implementing
a
monitoring and evaluation system to
Benefi ciation technology
department
In November 2009, Exxaro
Compliance
While Exxaro exceeds legislative standards
launched
in several areas, we recognise that ongoing
measure progress and identify challenges.
its fi rst downstream coal benefi ciation
This system is aligned with Exxaro’s internal
venture when the char plant alongside
socio-economic development technology
Grootegeluk mine was offi cially opened.
platform. Scheduled to be fully operational
The char plant is Exxaro Reductants’ fi rst
by mid-2009, implementation was delayed
business unit, supplying a key ingredient to
by prevailing economic conditions. However,
the fast-growing ferroalloys manufacturing
it will be fully operational by March 2010
industry. It is also the fi rst step in the
with 12 of 13 business units already trained
group’s strategy of supplying a full range
in its use.
of reductants to South Africa’s metals
industry by using its coal reserves in the
Waterberg to their full potential.
The char plant has created 1 500 direct and
indirect jobs for people from the Lephalale
community — and access to an improved
way of life.
compliance is an essential element of our
statutory licence to operate. Accordingly,
we have established a dedicated unit to
monitor and maintain our compliance levels
and reduce the signifi cant risks of non-
compliance. Part of this unit’s responsibility
is meeting the timeline towards Exxaro’s
desirable future state that includes:
> Full compliance
legislation
to
(no
liabilities)
> ISO/OHSAS certifi cation for all business
units
> Diminishing compensation for environ-
mental impacts
> Standard for reporting on JSE SRI/UN
Global Compact/GRI implemented.
Timeline to desirable state
2009
2010 – 2011
2012 – 2015
1
2
3
4
Legal registers for all business units
updated in terms of amended laws
Reporting standard to comply with JSE
SRI /GRI B+/UN Global Compact/
external assurance
SHE integrated audits and reports
80% of business units using common
information management system
Review priorities for the year
Review priorities for the year
1
2
3
4
5
Review management standards against
amended legislation
Improve best-practice guide based on
2009 assurance report
1
2
3
Risk model for effective resourcing
Audits and maintenance of systems
Electronic compliance registers (based
on GRI A+)
Business processes aligned to GRI A+
4
Compliance audit (ongoing)
Integrated audits (including social and
labour plans)
Single information management system
for reporting
Exxaro Annual Report 2009 I 125
LEGISLATIVE COMPLIANCE/
MINING CHARTER SCORECARD
In 2009, the Department of Mineral Resources promulgated codes of good practice for the
mining industry. Simultaneously, industry progress against targets in the existing mining
charter has been reviewed, and the accompanying scorecard refi ned where necessary.
The table below refl ects progress to date and new targets.
In the past fi ve years, Exxaro has made steady progress to exceed many of the charter’s targets, most notably those for transformation
at management level, women in mining and building the pool of industry skills.
2010 mining charter scorecard
Met
Progress 2009
Human resources development
Functional literacy and numeracy
for employees
Target 2005:
> Skills development expenditure 100%
> Learning programmes 100%
> Functional literacy and numeracy 100%
Yes
Are there career paths for HDSA
employees
Not applicable
Yes
Exxaro’s policy is to invest an appropriate
amount of total payroll each year on human
resources development. In 2009, this was
6% (excluding 1% skills levy) or an
investment of R114 million. Fully company
sponsored, voluntary ABET programmes
running at all mines. Good progress made
in 2009 towards our target of offering
everybody the opportunity to become
functionally literate and to participate in
ABET classes. In 2009:
> 311 employees and 320 non-employees
enrolled on various ABET levels
> Financial incentive scheme for all
identifi ed ABET learners implemented
> Skills development expenditure 6%
> Learning programmes 97% as per
employment equity report
> Functional literacy and numeracy rate of
group: 78%
HRD policy in place dealing with
accelerated development. Formal
succession planning and individual
development plans rigorously used for all
management and professional categories.
HDSA employees receive special career
planning consideration and mentor support
Are empowerment groups being
mentored
Not applicable
Yes
Formal plans in place
Employment equity
Has the company published its
employment equity plan and
achievements
Is there a plan to achieve a set
target for HDSA participation in
management
Targets by 2009
> Top management 40%
> Senior management 40%
> Middle management 40%
> Junior management 40%
> Women in mining 10%
Yes
Yes
Employees have been consulted and plans
are available for reference at each business
unit
Exxaro is legally required to comply
with the management target of 40% as
set in the Mining Charter. Targets and
goals have been set and discussed with
employee representatives. Management
representation at 31 December 2009
was 48%.
126 I Exxaro Annual Report 2009
2010 mining charter scorecard
Met
Progress 2009
Is this plan being implemented
Not applicable
Has a talent pool been identifi ed
Not applicable
Is there a plan to achieve a set
target for women participation in
management
Migrant labour
Is the company not discriminating
against migrant labourers
Not applicable
Mine community and rural
development
Did the company participate in the
formation of integrated
development plans
Not applicable
Are these plans for local mining
community and major labour-
sending areas
Not applicable
What has been the process of
consultation with local community
Not applicable
Yes
Yes
Yes
Yes
Yes
Yes
Yes
How much has been spent on
integration development
Compliance target 1% of net profi t after tax
Yes
Plans are implemented and progress
monitored regularly
Exxaro has a succession plan system in
place to fast-track women and women in
mining.
> Actual women participation in
management 13,77%
Exxaro complies with government and
industry policies of non-discrimination
against foreign labourers
All interventions being implemented by
Exxaro are part of the integrated
development plans of involved authorities,
required legislation of the Department of
Mineral Resources and indicated
community needs
All interventions are undertaken in the
communities near our mines or as indicated
by local government
To identify real needs of involved
communities, the integrated development
plans of local and district government are
being used as social impact assessments
to identify socio-economic needs in the
community
Socio-economic development investment
in 2009:
Total investment of R31 444 178. Measured
against Exxaro’s 2008 net profi t after tax
(excluding equity contributions), this
represents 1,8%, well above the
compliance target.
The split per focus area at operation level
is: education 17%, skills development and
capacity building 25%, enterprise
development 23%, health and welfare 3%,
environmental stewardship 1% and
infrastructural development 31%.
Exxaro also implements projects at
corporate level, split among focus areas:
health and welfare 17%, environment 13%,
enterprise development 2%, skills
development 57% and education 11%
Exxaro Annual Report 2009 I 127
LEGISLATIVE COMPLIANCE/
MINING CHARTER SCORECARD CONTINUED
2010 mining charter scorecard
Met
Progress 2009
Compliance target 2014:
100% conversion of hostels to single
accommodation apartments/housing units
Housing and living conditions
Has the company provided
housing for miners
Is the company improving the
standards of housing
Are hostels being upgraded
Are hostels converted to family
units
Has the company offered the
option of home ownership to
miners
Is there a plan in place to improve
housing and living conditions
Does the company currently have
measures in place to improve
nutrition provided to miners
Are there plans in place to further
improve nutrition in future
Not applicable
Not applicable
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
The housing policy for the Exxaro group in
South Africa is focused on home
ownership. An additional subsidy policy to
assist fi rst-time home owners at business
units has been implemented.
Bargaining unit employees receive either a
housing allowance or living-out allowance
for accommodation. At some subsidiaries,
bargaining unit employees receive an
all-inclusive package (housing allowance
consolidated in salary). These allowances
are determined through collective
bargaining. Management and specialist
category employees receive an all-inclusive
package.
The split of accommodation is:
> 594 employees live in hostels. Hostels
are being converted into single quarters
or family housing or closed down
> 1 343 employees reside in single quarters
> 420 employees live in family housing
> 1 002 employees rent company houses
> 7 821 employees provide their own
accommodation
Plans are being developed to convert
hostels at Tshikondeni and Arnot to
single accommodation.
Exxaro provides meals at two operations
where the quality and nutritional value are
determined by a dietician. Qualifi ed staff
continually monitor adherence to
contractual obligations. Employees have
accessible mechanisms to engage both
management and suppliers on food issues.
Nutritional plans are continually updated
128 I Exxaro Annual Report 2009
2010 mining charter scorecard
Met
Progress 2009
Procurement
Are HDSAs given preferred
supplier status
Compliance
0-5
Years
> Local suppliers (goods)
20%
> Local suppliers (services) 50%
> Local suppliers
(consumables)
> Local SMMEs
> BEE suppliers:
15%
10%
50% black-owned
15%
30% black women owned 15%
6-10
30%
70%
30%
20%
20%
20%
Has the current level of
procurement from HDSA
companies been identifi ed in
terms of capital goods,
consumables and services
Is there commitment to progress
procurement from HDSAs of
capital goods, consumables and
services
Ownership and joint ventures
Is there HDSA participation in
terms of ownership equity
Has the company managed to
have attributable units of
production of 15% over fi ve years
Has the company managed to
have attributable units of
production of 26% over 10 years
Demonstrable HDSA fi duciary participation
at board level:
> 40% target on executive committee
Ownership scorecard
> Target 26% by 2014
Yes
Yes
Yes
Yes
Yes
Yes
In 2009, Exxaro reviewed and implemented
a policy aligned to the recently promulgated
Department of Mineral Resources codes of
good practice and broad-based socio
economic empowerment charter for the
South African mining industry. The group’s
preferential procurement policy tasks the
business to use its purchasing power to
ensure that external suppliers are engaged
and every effort made to contract with
suppliers that have strong BEE credentials
or are making a tangible effort to transform
their businesses to be BEE compliant.
The target for 2009 was set at 45%
procurement from HDSA companies and
marginally exceeded at 45,03%. With the
promulgation of the DMR codes, our policy
now incorporates BEE spend targets
specifi ed in terms of capital goods,
operational goods, services, black women
ownership and SMMEs. Our performance
tracking system has been aligned to the
policy.
Through its preferential procurement policy,
Exxaro has affi rmed its commitment to
accelerating procurement from HDSAs by
requiring every business to contribute
towards achieving specifi c percentage
spend targets on capital goods, services
and consumables.
After the Kumba empowerment
transaction, a new company was formed
and listed on the JSE as Exxaro Resources
Limited. In terms of the empowerment
transaction, Exxaro’s only major
shareholder is Main Street 333 (Pty)
Limited, commonly referred to as BEE
Holdco. This BEE entity holds 53% of the
shares in Exxaro. The entities that in turn
hold shares in BEE Holdco are Eyesizwe
SPV (54,1%); Eyabantu SPV (9,7%); Tiso
SPV (9,7%); Women’s Group SPV (11,2%)
and IDC (15,3%). A structure for
shareholder development is in place.
Exxaro Annual Report 2009 I 129
LEGISLATIVE COMPLIANCE/
MINING CHARTER SCORECARD CONTINUED
2010 mining charter scorecard
Met
Progress 2009
Benefi ciation
Has the current level of
benefi ciation been identifi ed
Compliance target 42% annual production
from refi ne stage
Yes
Has the baseline level of
benefi ciation been identifi ed
Is there an indication how the
baseline can be grown to qualify
for an offset
Reporting
Is the company reporting progress
on its commitment annually in its
annual report
Yes
Not applicable
Yes
The mineral sands business is investigating
downstream benefi ciation opportunities for
titania slag and zircon. A number of new
production technologies were investigated
with the aim of establishing a local titanium
metal-production facility. Investigations and
studies are ongoing
In coal, the market coke project is another
example of downstream benefi ciation.
Exxaro is investigating the feasibility of
producing market coke as a reductant to
the chrome industry. Certain technology
evaluation accompanies this initiative
130 I Exxaro Annual Report 2009
INDEPENDENT ASSURANCE STATEMENT TO THE DIRECTORS
AND MANAGEMENT OF EXXARO RESOURCES LIMITED
Scope of our engagement
The Sustainability Section (the Report)
of Exxaro Resources Limited’s (Exxaro)
2009 Annual Report for the period ending
31 December 2009, has been prepared
by the Directors and management of
Exxaro
(Management). Management
is responsible for the collection and
presentation of information within the
Report and for maintaining adequate
records and internal controls that are
designed to support the sustainability
reporting process. There are currently no
prescribed requirements relating to the
preparation, publication and verifi cation
of sustainability reports.
Our responsibility, in accordance with
Management’s request, was to carry out
a reasonable assurance engagement
over two key performance
indicators
and a
limited assurance engagement
over twelve key performance indicators;
the self-declared GRI G3 B+ application
level; assertions
in terms of mining
charter requirements; legal compliance
of operations in terms of environmental
management programme reports (EMPRs);
and the Report’s adherence to the
AccountAbility’s 1000 Principle Standards
(AA1000PS) 2008 principles of materiality,
responsiveness and inclusivity.
Our responsibility
in performing our
assurance activities is to the Management
of Exxaro only and in accordance with the
terms of reference for this engagement
as agreed with them. We do not accept
or assume any responsibility for any
other purpose or to any other person or
organisation. Any reliance any such third
party may place on the Report is entirely
at its own risk.
Our assurance engagement was planned
and performed in accordance with the
International Federation of Accountants’
(IFAC) International Standard on Assurance
Engagements (ISAE) 3000, Assurance
Engagements Other Than Audits or
Reviews of Historical Financial Information.
The Report has been evaluated using
the following criteria: the principles of
Materiality, Responsiveness and Inclusivity
as set out in AA1000PS; as well as against
the application of the Global Reporting
Initiative G3 Sustainability Reporting
Guidelines (the Guidelines).
Work performed
In order to form our conclusions we
undertook the steps outlined below:
> Interviewed a selection of Exxaro’s
management
for
functional and divisional area as well
as sustainable development
issues
to understand the current status of
sustainable development activities and
progress made during the reporting
period.
responsible
> Performed a high-level benchmarking
exercise of the material issues and
areas of performance covered in the
sustainable development reports of
Exxaro’s peers.
> Reviewed a selection of external
media reports to determine the level
of inclusion and discussion of material
topics in the Report.
> Reviewed selected documents relating
to aspects of Exxaro’s performance
linked to sustainable development, to
test the coverage of topics within the
Report.
> Reviewed the Report to check whether
material topics and performance issues,
identifi ed during the performance of
our engagement, had been adequately
disclosed.
> Tested the processes used to record,
collect, consolidate and report the
fourteen key performance indicators
listed below, by testing the indicators
at Group level and at selected business
units, as well as random samples of
data related to these key performance
indicators.
> Reasonable assurance – audited
two performance
following
the
indicators
— Fatalities indicator
— Socio-economic
(SED) project spend
development
> Limited assurance – reviewed the
following twelve key performance
indicators
— Health and safety data (Lost Time
Injuries (LTI); LTI Frequency Rate
(LTIFR); Noise Induced Hearing Loss
(NIHL); Occupational Tuberculosis
(TB); and Pneumoconiosis)
— Environmental data (Electricity;
Diesel Hazardous waste disposed
of; Indirect CO2 emissions (limited
to electricity and diesel use); Level
2 and 3 incidents; Water use; and
Land Disturbed vs. rehabilitated)
> Mining Charter commitments
> Legal compliance of operations in
terms of Environmental Management
Programme Reports (EMPRs)
> Reviewed whether Exxaro’s reporting
has applied the GRI G3 Guidelines to
a level described on page 133.
> We have sought to answer the
in order for
following questions,
us to evaluate the Report against
the
of materiality,
responsiveness and inclusivity as
set out in AA1000PS specifi cally as
follows:
> Materiality:
principles
— Has Exxaro provided a balanced
representation of material issues
concerning
sustainability
performance?
its
— Has Exxaro included sustainability
performance
from
all material entities in its defi ned
boundary for
its reporting of
identifi ed material issues?
information
— Are there any material aspects
that are not addressed in the
Report?
> Responsiveness:
Exxaro
to
material issues in a balanced and
comprehensive manner
in the
Report?
> Inclusivity:
responded
— Has
— How has Exxaro identifi ed and
engaged with stakeholders?
— How
has
stakeholder
Exxaro managed
participation
its
process?
— How has Exxaro responded to
stakeholder concerns?
Level of assurance
Our evidence gathering procedures have
been designed to obtain limited assurance
(as set out in ISAE 3000) on which to
base our conclusions for twelve key
performance indicators; the self-declared
GRI G3 B+ application level; assertions in
terms of mining charter requirements;
legal compliance of operations in terms of
environmental management programme
the Report’s
reports
adherence to the AA1000 PS. The
procedures conducted do not provide
all the evidence that would be required
in a reasonable assurance engagement
and, accordingly, we do not express
a reasonable assurance opinion. Our
(EMPRs); and
Exxaro Annual Report 2009 I 131
INDEPENDENT ASSURANCE STATEMENT TO THE DIRECTORS
AND MANAGEMENT OF EXXARO RESOURCES LIMITED CONTINUED
procedures relating to the two key
performance indicators for which we
provided reasonable assurance indicated
within the work performed discussion
have, however, provided
suffi cient
evidence for us to provide a ‘reasonable
level’ of assurance. While we considered
the effectiveness of Management’s
internal controls when determining the
nature and extent of our procedures,
our review was not designed to provide
assurance on internal controls.
was
conducted
Limitations of our scope
> The review of the key performance
indicators
at
Grootegeluk (Coal, Limpopo); Matla
(Coal, Mpumalanga; and Namakwa
Sands (Mineral sands; Western Cape),
while additional data points which
contributed signifi cantly to the key
performance indicators were selected
among the remaining sites
> We have not reviewed and consequently
do not provide any assurance on
historical data, except if assured in
our prior year assurance engagement
(2008).
> When
considering
responsiveness
under AA1000PS we did not attend any
stakeholder engagement activities.
> We provide no assurance over the
web content relating to sustainability
information.
Our conclusions
Subject to our limitations of scope noted
above and on the basis of our procedures
for this assurance engagement, we
provide the following conclusions:
Materiality
Indicators:
Based on the work performed:
> The indicators Fatalities and SED spend
reported by Management are fairly
stated in all material aspects, based on
the collation of information reported
at the various locations and on internal
reporting mechanisms; and
> Nothing has come to our attention that
causes us to believe that there are any
errors that would materially affect the
following indicators - (LTI, LTIFR, NIHL,
Occupational TB, Pneumoconiosis,
132 I Exxaro Annual Report 2009
incidents and
Electricity, Diesel, Hazardous waste,
indirect CO2 emissions, Water use,
level 2 and 3
land
disturbed vs. rehabilitated) reported
by Management. Nothing has come
to our attention that causes us to
believe that data pertaining to these
key indicators has not been properly
collated from information reported at
the various locations and in line with
the internal reporting mechanisms.
The report:
Based on our work performed, nothing
has come to our attention that causes us
to believe that:
> Any material aspects concerning
Exxaro’s sustainability performance
have been excluded from the Report.
> Any material
issues have been
excluded
from, or misstatements
made, in relation to information on
which Exxaro has made judgements in
respect to the content of the Report.
> The information or explanations on
statements or assertions on Exxaro’s
sustainability activities presented in
the Report that we have reviewed, has
been misstated.
Responsiveness
Based on our work performed, nothing
has come to our attention that causes us
to believe that any issues of stakeholder
interest were not included in the Report’s
scope and content.
Inclusivity
Based on our work performed, nothing
has come to our attention that causes us
to believe that any material issues were
excluded or misstated in relation to the
content of the Report.
Mining Charter Commitments
Based on our work performed, nothing
has come to our attention that causes us
to believe that Management’s assertions
relating to Mining Charter commitments
are not fairly stated.
Legal compliance of operations
in terms of EMPRs
Based on our work performed, nothing
has come to our attention that causes
to believe
us
that Management’s
assertions relating to legal compliance
of operations in terms of EMPRs are not
fairly stated.
GRI
Based on our work performed, including
consideration of the Report, and elements
of the annual report, nothing has come
to our attention that causes us to believe
that Management’s assertion that their
sustainability
the
requirements of the B+ application level
of the Guidelines is not fairly stated.
reporting meets
Selected observations
We note that:
> Exxaro
formalised
its
and
has
sustainability
communicated
strategy, and
in process of
is
implementing across all Business
Units which is refl ected in improved
recording, monitoring and management
of sustainability
indicators at the
Business Unit level.
> Controls should be improved at Group
level, however, to improve processes
to collate data provided by site for
reporting purposes
> Effective
internal
communication
strategies and initiatives have been
instrumental
the
embedment of sustainability within the
corporate culture.
facilitating
in
in
Our Independence and
Assurance Team
The fi rm and all professional personnel
involved
this engagement are
independent of Exxaro and our team
have not performed any work for Exxaro
that may confl ict with our ability to
express
independent assurance over
this Report. Our team is drawn from
our Climate Change and Sustainability
Services Department and has
the
required competencies and experience
for this engagement.
Ernst & Young Inc
17 March 2010
GRI INDICATOR INDEX
Index to Global Reporting Initiative G3 indicators
GRI
Topic
Economic
EC1
EC2
EC3
EC4
EC5
EC6
EC7
EC8
EC9
EN1
EN2
EN3
EN4
EN5
EN6
EN7
EN8
EN9
Economic value generated and distributed
Financial implications, risks and opportunities due to climate change
Coverage of defi ned benefi t plan obligations
Signifi cant fi nancial assistance from government
Standard entry-level wage compared to local minimum wage
Policy, practices, and spending on local suppliers
Procedures for local hiring, proportion of senior management hired from local community
Development and impact of infrastructure investments and services for public benefi t
Signifi cant indirect economic impacts
Environmental
Materials
Materials used by weight or volume, % products from secondary materials
Percentage recycled input materials
Energy
Direct consumption by primary energy source
Indirect consumption by primary source
Energy saved from conservation and effi ciency improvements
Reductions from energy-effi cient or renewable energy-based products and services
Initiatives to reduce indirect energy consumption, reductions achieved
Water
Total water withdrawal by source
Sources signifi cantly affected by withdrawal
EN10
Percentage and volume recycled and reused
Biodiversity
EN11
Location/size land owned/leased/managed/adjacent to protected areas, areas of high biodiversity value
EN12
Signifi cant impacts of activities.
EN13 Habitats protected or restored
EN14
Strategies, actions and plans for managing impacts on biodiversity
EN15
IUCN Red List species and national conservation list species in areas affected by operations
Page
113
107
113, 120
zero
120
113, 114
122
n/a
122
110, 111
n/m
110
n/a
102 – 107
102 – 107
102 – 107
97
n/m
97
101
101
101, 102
100 – 102
101
Key: n/m — not measured
n/r — not reported
n/a — not applicable
Exxaro Annual Report 2009 I 133
GRI INDICATOR INDEX
GRI
Topic
Emissions, effl uents, and waste
EN16
Total direct and indirect greenhouse gas emissions
EN17 Other relevant indirect greenhouse gas emissions
EN18
Initiatives to reduce greenhouse gas emissions, reductions achieved
EN19
Emissions of ozone-depleting substances
EN20 NOx, SOx, and other signifi cant air emissions by type and weight
EN21
Total water discharge by quality and destination
EN22
Total weight of waste by type and disposal method
EN23
Total number and volume of signifi cant spills
EN24 Waste transported under terms of Basel Convention (Annex I, II, III, VIII)
EN25
Identity, size, protected status, and biodiversity value of water bodies and related habitats signifi cantly affected
by discharges of water and runoff
Products and services
EN26
Initiatives to mitigate environmental impacts of products, extent of mitigation
EN27
Percentage of products sold and packaging materials reclaimed by category
Compliance
EN28
Signifi cant fi nes, sanctions for non-compliance with environmental laws and regulations
Transport
EN29
Signifi cant impacts of transporting products, and members of workforce
EN30
Total environmental protection expenditures and investments by type
Social performance: labour practices and decent work
LA1
LA2
LA3
LA4
LA5
LA6
LA7
LA8
Employment
Workforce by employment type, employment contract, and region
Number and rate of employee turnover by age group, gender, and region
Benefi ts for full-time employees not provided to temporary/part-time employees
Labour/management relations
Percentage employees covered by collective bargaining agreements
Minimum notice period on signifi cant changes, including specifi ed in collective agreements
Occupational health and safety
Percentage workforce represented in formal joint health and safety committees
Rates of injury, occupational diseases, work-related fatalities
Education, training, counselling, prevention, and risk-control programmes to assist workforce members, their
families or community members with serious diseases
LA9
Health and safety topics covered in formal agreements with trade unions
Training and education
LA10
Average hours of training per year per employee by employee category
LA11
Programmes for skills management and lifelong learning that support continued employability
LA12
Percentage of employees receiving regular performance and career development reviews
Page
102, 112
n/a
n/r
n/a
99 – 100
n/r
n/r
109
n/r
n/r
95 – 112
n/a
zero 91
n/r
n/r
115
119
120
115, 120
120
92
93, 94
93 – 95
115, 120
n/r
117 – 118
118
Key: n/m — not measured
n/r — not reported
n/a — not applicable
134 I Exxaro Annual Report 2009
GRI INDICATOR INDEX
GRI
Topic
Diversity and equal opportunity
LA13
Composition of governance bodies and breakdown of employees per category: gender, age group, minority
group membership, and other indicators of diversity
LA14
Ratio of basic salary of men to women by employee category
Social performance: human rights
Investment and procurement practices
HR1
HR2
HR3
Percentage and number of signifi cant investment agreements with human rights clauses or screening
Percentage signifi cant suppliers and contractors screened on human rights and actions taken
Total hours and percentage employee training on aspects of human rights relevant to operations
Non-discrimination
HR4
Total number of incidents of discrimination and actions taken
Freedom of association and collective bargaining
HR5
HR6
HR7
Operations where right to freedom of association and collective bargaining is at signifi cant risk, actions taken to
support rights
Operations with signifi cant risk for incidents of child labour, measures to eliminate
Operations with signifi cant risk of forced or compulsory labour, measures to eliminate
Security practices
HR8
Percentage security personnel trained in policies/procedures on human rights relevant to operations
Indigenous rights
HR9
Number of violations involving rights of indigenous people and actions taken
Social performance: society
Community
Page
116
115
n/r
n/r
121
115
n/m
n/m
n/m
121
n/r
SO1
Programmes/practices to manage impacts on communities, including entering, operating, and exiting
122 – 124
Signifi cant incidents affecting communities, grievance mechanisms to resolve, outcomes
Programmes that address artisanal and small-scale mining
Resettlement policies and activities:
– Number households resettled
– Practices on resettlement/compensation, alignment with World Bank directive
Operations with closure plans. Policy, stakeholder engagement processes, frequency of review, fi nancial
provisions for closure
Process for identifying local communities’ land and customary rights, including indigenous peoples, grievance
mechanisms to resolve disputes
Approach to identifying, preparing for and responding to emergency situations affecting employees,
communities, environment
Corruption
SO2
SO3
SO4
Percentage and number of business units analysed for risks related to corruption
Percentage of employees trained in anti-corruption policies and procedures
Actions taken in response to incidents of corruption
n/r
n/a
n/r
102
n/r
92
n/r
n/r
89
Key: n/m — not measured
n/r — not reported
n/a — not applicable
Exxaro Annual Report 2009 I 135
GRI INDICATOR INDEX CONTINUED
GRI
Topic
Public policy
SO5
SO6
Public policy positions and participation in public policy development and lobbying
Total value of fi nancial and in-kind contributions to political parties, politicians, and related institutions
Anti-competitive behaviour
SO7
Legal actions for anti-competitive behaviour, anti-trust and monopoly practices, outcomes
Compliance
SO8
Signifi cant fi nes, sanctions for non-compliance with laws and regulations
Social performance: product responsibility
Customer health and safety
PR1
PR2
PR3
PR4
PR5
PR6
PR7
Life cycle stages in which impacts of products and services are assessed for improvement, percentage of
signifi cant products and services categories subject to such procedures
Number non-compliances with regulations and voluntary codes on health and safety impacts of products and
services during life cycle, by types of outcomes
Products and service labelling
Type of information required, percentage of signifi cant products concerned
Incidents of non-compliance with regulations and voluntary codes on labelling
Practices related to customer satisfaction
Marketing communications
Programmes for adherence to laws, standards, and voluntary codes
Incidents of non-compliance
Customer privacy
PR8
Substantiated complaints on breaches of customer privacy and losses of customer data
Compliance
PR9
Signifi cant fi nes for non-compliance concerning provision and use of products and services.
Page
n/r
zero
zero, 72
zero
n/r
n/a
n/a
n/a
n/a
77
zero, 77
n/a
n/a
Key: n/m — not measured
n/r — not reported
n/a — not applicable
136 I Exxaro Annual Report 2009
GROUP CASH VALUE ADDED STATEMENTS
for the year ended 31 December 2009 (unaudited)
The value added statement shows the wealth the group has created through mining, benefi ciation, trading and investing operations. The
statement below summarises the total cash wealth created and how it was disbursed among the group’s stakeholders, leaving a retained
amount which was reinvested in the group for the replacement of assets and further development of operations.
31 December
2009
Rm
Wealth
created
%
31 December
2008
Rm
Wealth
created
%
Cash generated
Cash derived from sales and services
Income from investments and interest received
Paid to suppliers for materials and services
Cash value added
Cash utilised to:
Remunerate employees for services
Pay direct taxes to the state
Provide lenders with a return on borrowings
Provide shareholders with cash dividends
Cash disbursed among stakeholders
Cash retained in the group to maintain
and develop operations
Notes to the group value added statement
1. Taxation contribution
Direct taxes (as above)
Value added taxes levied on purchases of goods
and services
Gross contributions
2. Additional amounts collected by the group on
behalf of government
Value added tax and other duties charged on turnover
Employees’ tax deducted from remuneration paid
Unemployment Insurance Fund
Withholding tax
3. Levies paid to government
Rates and taxes paid to local authorities
Royalties paid to government
Workers’ Compensation Fund
Unemployment Insurance Fund
Skills Development Levy
(cid:58)(cid:88)(cid:106)(cid:95)(cid:23)(cid:91)(cid:96)(cid:106)(cid:89)(cid:108)(cid:105)(cid:106)(cid:92)(cid:91)(cid:23)(cid:88)(cid:100)(cid:102)(cid:101)(cid:94)(cid:23)
(cid:106)(cid:107)(cid:88)(cid:98)(cid:92)(cid:95)(cid:102)(cid:99)(cid:91)(cid:92)(cid:105)(cid:106)(cid:23)(cid:41)(cid:39)(cid:39)(cid:48)
18%
58%
9%
15%
100
44
7
5
15
71
29
14 812
1 754
(10 802)
5 764
3 502
892
526
1 050
5 970
(206)
892
1 915
2 807
1 976
652
32
2 660
35
80
6
32
30
183
100
61
15
9
18
103
(4)
12 789
1 044
(7 235)
6 598
2 871
487
346
984
4 688
1 910
487
1 541
2 028
1 861
613
21
16
2 511
22
71
4
21
19
137
(cid:58)(cid:88)(cid:106)(cid:95)(cid:23)(cid:91)(cid:96)(cid:106)(cid:89)(cid:108)(cid:105)(cid:106)(cid:92)(cid:91)(cid:23)(cid:88)(cid:100)(cid:102)(cid:101)(cid:94)(cid:23)
(cid:106)(cid:107)(cid:88)(cid:98)(cid:92)(cid:95)(cid:102)(cid:99)(cid:91)(cid:92)(cid:105)(cid:106)(cid:23)(cid:41)(cid:39)(cid:39)(cid:47)
21%
62%
7%
10%
■(cid:23)(cid:23)(cid:73)(cid:92)(cid:100)(cid:108)(cid:101)(cid:92)(cid:105)(cid:88)(cid:107)(cid:92)(cid:23)(cid:92)(cid:100)(cid:103)(cid:99)(cid:102)(cid:112)(cid:92)(cid:92)(cid:106)(cid:23)(cid:93)(cid:102)(cid:105)(cid:23)(cid:106)(cid:92)(cid:105)(cid:109)(cid:96)(cid:90)(cid:92)(cid:106)(cid:23)
■(cid:23)(cid:23)(cid:71)(cid:105)(cid:102)(cid:109)(cid:96)(cid:91)(cid:92)(cid:23)(cid:99)(cid:92)(cid:101)(cid:91)(cid:92)(cid:105)(cid:106)(cid:23)(cid:110)(cid:96)(cid:107)(cid:95)(cid:23)(cid:88)(cid:23)(cid:105)(cid:92)(cid:107)(cid:108)(cid:105)(cid:101)(cid:23)(cid:102)(cid:101)(cid:23)(cid:89)(cid:102)(cid:105)(cid:105)(cid:102)(cid:110)(cid:96)(cid:101)(cid:94)(cid:106)(cid:23)
■(cid:23)(cid:23)(cid:71)(cid:88)(cid:112)(cid:23)(cid:91)(cid:96)(cid:105)(cid:92)(cid:90)(cid:107)(cid:23)(cid:107)(cid:88)(cid:111)(cid:92)(cid:106)(cid:23)(cid:107)(cid:102)(cid:23)(cid:107)(cid:95)(cid:92)(cid:23)(cid:106)(cid:107)(cid:88)(cid:107)(cid:92)(cid:23)(cid:23)
■(cid:23)(cid:23)(cid:71)(cid:105)(cid:102)(cid:109)(cid:96)(cid:91)(cid:92)(cid:23)(cid:106)(cid:95)(cid:88)(cid:105)(cid:92)(cid:95)(cid:102)(cid:99)(cid:91)(cid:92)(cid:105)(cid:106)(cid:23)(cid:110)(cid:96)(cid:107)(cid:95)(cid:23)(cid:90)(cid:88)(cid:106)(cid:95)(cid:23)(cid:91)(cid:96)(cid:109)(cid:96)(cid:91)(cid:92)(cid:101)(cid:91)(cid:106)
Exxaro Annual Report 2009 I 137
SELECTED GROUP FINANCIAL DATA TRANSLATED
INTO US DOLLARS
for the year ended 31 December 2009 (unaudited)
The group statutory 2009 fi nancial statements have been expressed in US dollars for information purposes.
The average US dollar/rand of US$1:R8,35 (2008: US$1:R8,25) has been used to translate the income and statement of cash fl ows,
while the statement of fi nancial position has been translated at the closing rate on the last day of the reporting period US$1:R7,3973
(2008: US$1:R9,3560).
INCOME STATEMENTS
Revenue
Operating expenses
NET OPERATING PROFIT
Net fi nancing costs
Income from equity accounted investments
PROFIT BEFORE TAX
Income tax expense
PROFIT FOR THE YEAR
Profi t attributable to:
Owners of the parent
Non-controlling interests
ATTRIBUTABLE EARNINGS PER SHARE (CENTS)
HEADLINE EARNINGS
HEADLINE EARNINGS PER SHARE (CENTS)
STATEMENTS OF FINANCIAL POSITION at 31 December 2009
ASSETS
Non-current assets
Property, plant and equipment
Biological assets
Intangible assets
Investments in associates and joint ventures
Deferred tax
Financial assets
Current assets
Cash and cash equivalents
Other
Non-current assets classifi ed as held for sale
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Non-controlling interests
Non-current liabilities
Interest-bearing borrowings
Deferred tax, provisions and fi nancial liabilities
Current liabilities
Interest-bearing borrowings
Other
Non-current liabilities classifi ed as held for sale
TOTAL EQUITY AND LIABILITIES
NET DEBT (refer defi nitions on page 139)
STATEMENTS OF CASH FLOWS for the year ended 31 December 2009
Cash fl ows from operating activities
Cash fl ows from investing activities
Cash fl ows from fi nancing activities
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
138 I Exxaro Annual Report 2009
2009
USD
million
1 797
(1 761)
36
(50)
228
214
(92)
122
122
122
36
301
87
1 605
6
12
266
85
164
138
853
12
3 141
1 745
588
395
55
351
7
3 141
504
(25)
(169)
105
(89)
2008
USD
million
1 678
(1 379)
299
(29)
202
472
(62)
410
413
(3)
410
120
440
128
1 209
4
8
198
116
169
189
577
8
2 478
1 389
14
390
324
53
303
5
2 478
254
232
(455)
335
112
DEFINITIONS
ATTRIBUTABLE CASH FLOW PER ORDINARY SHARE
Cash fl ow from operating activities after adjusting for participation
of non-controlling interests therein divided by the weighted average
number of ordinary shares in issue during the year.
CAPITAL EMPLOYED
Total equity plus net debt minus non-current fi nancial asset.
CASH AND CASH EQUIVALENTS
Comprises cash on hand and current accounts in bank, net of
bank overdrafts, together with any highly liquid investments readily
convertible to known amounts of cash and not subject to signifi cant
risk of changes in value.
CURRENT RATIO
Current assets divided by current liabilities.
DIVIDEND COVER
Attributable earnings per ordinary share divided by dividends per
ordinary share.
DIVIDEND YIELD
Dividends per ordinary share divided by the closing share price on
the JSE Limited.
EARNINGS PER ORDINARY SHARE
– ATTRIBUTABLE EARNINGS BASIS
Earnings attributable to owners of the parent divided by the
weighted average number of ordinary shares in issue during the
year.
– HEADLINE EARNINGS BASIS
Earnings attributable to owners of the parent adjusted for profi ts
and losses on items of a capital nature recognising the tax and
non-controlling interests impacts on these adjustments, divided
by the weighted average number of ordinary shares in issue
during the year.
FINANCING COST COVER
– EBIT – net operating profi t (before interest and tax) divided by
net fi nancing cost
NET EQUITY PER ORDINARY SHARE
Equity attributable to owners of the parent divided by the number
of ordinary shares in issue at the year end.
NUMBER OF YEARS TO REPAY INTEREST-BEARING DEBT
Interest-bearing debt divided by cash fl ow from operating activities
before dividends paid.
OPERATING MARGIN
Net operating profi t as a percentage of revenue.
OPERATING PROFIT PER EMPLOYEE
Net operating profi t divided by the average number of employees
during the year.
RETURN ON CAPITAL EMPLOYED
Net operating profi t plus income from non-equity-accounted
investments plus income from investments in associates as a
percentage of average capital employed.
RETURN ON ORDINARY SHAREHOLDERS’ EQUITY
– ATTRIBUTABLE EARNINGS
Attributable earnings attributable to owners of the parent as
a percentage of average equity attributable to owners of the
parent.
– HEADLINE EARNINGS
Headline earnings attributable to owners of the parent as a
percentage of average equity attributable to owners of the
parent.
RETURN ON INVESTED CAPITAL
Net operating profi t plus income from non-equity-accounted
investments plus income from investments in associates as a
percentage of the average invested capital.
RETURN ON NET ASSETS
Net operating profi t plus income from non-equity-accounted
investments plus income from investments in associates as a
percentage of the average net assets.
– EBITDA – net operating profi t (before interest, tax, depreciation,
amortisation, impairment charges and net defi cit/surplus on sale
of investments and assets) divided by net fi nancing cost.
REVENUE PER EMPLOYEE
Revenue divided by the average number of employees during the
year.
HEADLINE EARNINGS YIELD
Headline earnings per ordinary share divided by the closing share
price on the JSE Limited.
TOTAL ASSET TURNOVER
Revenue divided by average total assets.
INVESTED CAPITAL
Total equity, interest-bearing debt, non-current provisions and net
deferred tax less cash and cash equivalents.
NET ASSETS
Total assets less current and non-current liabilities less non-
controlling interests which equates to equity of owners of the
parent.
NET DEBT TO EQUITY RATIO
Interest-bearing debt less cash and cash equivalents as percentage
of total equity.
WEIGHTED AVERAGE NUMBER OF SHARES IN ISSUE
The number of shares in issue at the beginning of the year,
increased by shares issued during the year, weighted on a time
basis for the period in which they have participated in the income
of the group. In the case of shares issued pursuant to a share
capitalisation award in lieu of dividends, the participation of such
shares is deemed to be from the date of issue.
Exxaro Annual Report 2009 I 139
EXXARO REVIEWED ITS PORTFOLIO AND GROWTH PIPELINE
AGAINST THE BACKGROUND OF THE PREVAILING ECONOMIC
CLIMATE TO ALIGN RESOURCES WITH A COMMODITY STRATEGY
BEST POSITIONED TO RELEASE OPTIMAL VALUE FOR ALL
STAKEHOLDERS.
140 I Exxaro Annual Report 2009
Group annual financial statements
for the year ended 31 December 2009
Financials
CONTENTS
Financial statements
142 Directors’ responsibility for fi nancial
reporting
142 Certifi cate by company secretary
143 Independent auditors’ report
144 Report of the directors
147 Directors’ remuneration
160 Income statements and statements of
comprehensive income
161 Statements of fi nancial position
162 Statements of cash fl ows
163 Group statement of changes in equity
164 Company statement of changes in equity
165 Notes to annual fi nancial statements
Annexures
252 1 Non-current interest-bearing
borrowings
254 2 Investment in associates, joint
ventures and other investments
256 3 Investment in subsidiaries
Administration
259 Notice of annual general meeting
263 Biographies of directors up for election
275 Form of proxy
ibc Administration
ibc Shareholders’ diary
Exxaro Annual Report 2009 I 141
DIRECTORS’ RESPONSIBILITY FOR FINANCIAL REPORTING
TO THE MEMBERS OF EXXARO RESOURCES LIMITED
The directors are of the opinion, based on the information and
The directors of the company are responsible for maintaining
explanations given by management and the internal auditors, and
adequate accounting records, the preparation of the annual
on comments made by the external auditors on the results of their
fi nancial statements of the company and the group and to develop
audit conducted for the purpose of expressing their opinion on the
and maintain a sound system of internal control to safeguard
annual fi nancial statements, that the internal accounting controls
shareholders’ investments and the group’s assets. In presenting the
are adequate, such that the fi nancial records may be relied on for
accompanying annual fi nancial statements, International Financial
preparing the fi nancial statements and maintaining accountability
Reporting Standards have been followed, applicable accounting
for assets and liabilities.
policies have been used and prudent judgements and estimates
have been made.
The directors have reviewed the group’s fi nancial budgets with its
underlying business plans for the period to 31 December 2010.
In order for the directors to discharge their responsibilities,
In the light of the current fi nancial position and existing borrowing
management has developed and continues to maintain a system
facilities, they consider it appropriate that the annual fi nancial
of internal control aimed at reducing the risk of error or loss in a
statements be prepared on the going-concern basis.
cost-effective manner. Such systems can provide reasonable but
not absolute assurance against material misstatement or loss.
Against this background, the directors of the company accept
The directors, primarily through the audit, risk and compliance
responsibility for the annual fi nancial statements, which were
committee which consists only of non-executive directors, meet
approved by the board of directors on 24 February 2010 and are
periodically with the external and internal auditors, as well as
signed on its behalf by:
executive management to evaluate matters concerning accounting
policies, internal control, auditing, fi nancial reporting and risk
management. The group’s internal auditors independently evaluate
the internal controls and co-ordinate their audit coverage with the
external auditors. The external auditors are responsible for reporting
SA Nkosi
on the fi nancial statements. The external and internal auditors have
Chief executive offi cer
WA de Klerk
Finance director
unrestricted access to all records, property and personnel as well
as to the audit, risk and compliance committee. The directors are
The external auditors have audited the annual fi nancial statements
not aware of any material breakdown in the functioning of these
of the company and group and their unmodifi ed report appears on
controls and systems during the year under review.
page 143.
CERTIFICATE BY COMPANY
SECRETARY
In terms of the Companies Act, 61 of 1973 of South Africa, as
amended, I, MS Viljoen, in my capacity as company secretary, con-
fi rm that for the year ended 31 December 2009, the company has
lodged with the Registrar of Companies all such returns as are
required of a public company in terms of this Act and that all such
returns are true, correct and up to date.
MS Viljoen
Company secretary
24 February 2010
142 I Exxaro Annual Report 2009
INDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF
EXXARO RESOURCES LIMITED
We have audited the annual fi nancial statements and group
circumstances, but not for the purpose of expressing an opinion
annual fi nancial statements of Exxaro Resources Limited, which
on the effectiveness of the entity’s internal control. An audit also
comprise the directors’ report, the statement of fi nancial position
includes evaluating the appropriateness of accounting principles
and the consolidated statement of fi nancial position as at
used and the reasonableness of accounting estimates made by
31 December 2009, the income statement and the consolidated
the directors, as well as evaluating the overall fi nancial statement
income statement, the statement of comprehensive income and the
presentation.
consolidated statement of comprehensive income, the statement
of changes in equity and the consolidated statement of changes
We believe that the audit evidence we have obtained is suffi cient
in equity and the statement of cash fl ows and the consolidated
and appropriate to provide a basis for our audit opinion.
statement of cash fl ows for the year then ended, a summary of
signifi cant accounting policies and other explanatory notes, as set
OPINION
out on pages 144 to 258.
In our opinion, the fi nancial statements present fairly, in all material
respects, the fi nancial position of the company and of the group as
DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL
at 31 December 2009, and of their fi nancial performance and their
STATEMENTS
cash fl ows for the year then ended in accordance with International
The company’s directors are responsible for the preparation and
Financial Reporting Standards, and in the manner required by the
fair presentation of these fi nancial statements in accordance with
Companies Act of South Africa.
International Financial Reporting Standards, and in the manner
required by the Companies Act of South Africa. This responsibility
includes: designing, implementing and maintaining internal control
relevant to the preparation and fair presentation of fi nancial
statements that are free from material misstatement, whether due
Deloitte & Touche
to fraud or error; selecting and applying appropriate accounting
Registered auditors
policies; and making accounting estimates that are reasonable in
Per BW Smith
the circumstances.
Partner
AUDITORS’ RESPONSIBILITY
Our responsibility is to express an opinion on these fi nancial
24 February 2010
statements based on our audit. We conducted our audit in
Buildings 1 and 2, Deloitte Place
accordance with International Standards on Auditing. Those
The Woodlands Offi ce Park
standards require that we comply with ethical requirements and
Woodlands Drive, Sandton
plan and perform the audit to obtain reasonable assurance whether
the fi nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence
Operating Offi cer), GM Pinnock (Audit), DL Kennedy (Tax Legal
about the amounts and disclosures in the fi nancial statements. The
and Risk Advisory), L Geeringh (Consulting), L Bam (Corporate
procedures selected depend on the auditor’s judgement, including
Finance), CR Beukman (Finance), TJ Brown (Clients and Markets),
the assessment of the risks of material misstatement of the fi nancial
NT Mtoba (Chairman of the Board), CR Qually (Deputy Chairman
National Executive: GG Gelink (Chief Executive), AE Swiegers (Chief
statements, whether due to fraud or error. In making those risk
of the Board)
assessments, the auditor considers internal control relevant to the
entity’s preparation and fair presentation of the fi nancial statements
in order to design audit procedures that are appropriate in the
A full list of partners and directors is available on request.
Exxaro Annual Report 2009 I 143
REPORT OF THE DIRECTORS
The directors have pleasure in presenting the annual fi nancial
The board of directors is ultimately responsible to monitor debt
statements of Exxaro Resources Limited (Exxaro) and the group
levels, return on capital as well as compliance with contractually
for the year ended 31 December 2009.
agreed loan covenants. For the year under review the following key
NATURE OF BUSINESS
Exxaro, incorporated in South Africa, is a mining group of
companies focusing on extracting and processing a range of
minerals and metals including coal, mineral sands, base metals
and selected industrial minerals. Exxaro also holds a 20% interest
in Sishen Iron Ore Company (Pty) Limited which extracts and
processes iron ore.
CORPORATE GOVERNANCE
The board endorses the Code of Corporate Practice and Conduct
as set out in the King III Report on Corporate Governance and has
satisfi ed itself that Exxaro has complied throughout the period in all
material aspects with the King III Code. A detailed report appears
on page 72.
REGISTRATION DETAILS
Exxaro is a listed company on the JSE Limited. The company
registration number is 2000/011076/06. The registered offi ce
is Roger Dyason Road, Pretoria West, Republic of South Africa,
0183.
ACTIVITIES AND FINANCIAL RESULTS
Detailed reports on the activities and performance of the group and
the various divisions of the group are contained in the reports on
pages 4 and 5 and pages 8 and 9 and in the business operations
review on pages 38 to 48. These reports are unaudited.
CAPITAL MANAGEMENT
As a diversifi ed mining company Exxaro is exposed to the cyclical
price movements associated with its suite of commodities. The
group’s policy is therefore to ensure that it maintains a robust
capital structure with strong fi nancial metrics underpinned by
adequate borrowing facilities to withstand a signifi cant downturn
in commodity cycles. Growth opportunities, debt levels and
dividend distributions to shareholders are considered against this
backdrop.
metrics were achieved:
Net debt/equity ratio (%)
Net fi nancing cost cover – EBITDA
(times)
Return on capital employed (%) (refer
defi nitions on page 139)
2009
29
7
15
2008
18
14
36
The capital base consists of total shareholders’ equity as disclosed,
as well as interest-bearing borrowings. As a new generation
empowerment company with a 55% BEE shareholding, Exxaro is
constrained from issuing equity, and its memorandum and articles
accordingly incorporate various provisions limiting the issue of new
shares or alterations of its share capital that could result in a loss of
its empowerment status.
The group aims to cover its annual net funding requirements
through longer-term loan facilities with maturities spread evenly
over time.
Although the intention is to progress to distributing 50% of
attributable earnings to shareholders, adequate provision is
made for future commitments and working capital requirements
in determining the level of interim and fi nal dividends to
shareholders.
The group may from time to time purchase its own shares in the
open market. These share purchases are primarily intended to
settle the group’s various employee share incentive schemes. The
group does not, however, have a defi ned share buy-back plan.
During the year under review the group complied with all its
contractually agreed loan covenants.
There were no changes in the group’s approach to capital
management during the year, however, the impact on demand
and prices for Exxaro’s commodities brought about by the global
fi nancial crisis, has reinforced the need for cash fl ow preservation
and judicious capital management.
144 I Exxaro Annual Report 2009
Neither the company nor any of its subsidiaries are subject to
DIVIDEND PAYMENTS
externally imposed regulatory capital requirements.
Dividend number 13
PROPERTY, PLANT AND EQUIPMENT
Interim dividend number 13 of 100 cents per share was
declared in South African currency in respect of the period
Capital expenditure for the period amounted to R1 982 million
ended 30 June 2009. The dividend was paid on Monday,
(2008: R1 617 million).
SHAREHOLDERS’ RESOLUTIONS
28 September 2009 to shareholders recorded in the books of the
company at the close of business on Friday, 25 September 2009.
To comply with the requirements of Strate, the last day to trade
At the eighth annual general meeting of shareholders, held on
cum dividend was Thursday, 17 September 2009. The shares
8 May 2009, the following resolutions were passed:
commenced trading ex dividend on Friday, 18 September 2009
• renewal of the authority that the unissued shares be placed
and the record date was Friday, 25 September 2009.
under the control of the directors
• general authority to issue shares for cash
Dividend number 14
• special resolution to authorise directors to repurchase company
Final dividend number 14 of 100 cents per share was declared
shares.
in South African currency in respect of the period ended
31 December 2009. The dividend payment date is Monday,
Exxaro and its subsidiaries have passed no other special or ordinary
19 April 2010 to shareholders recorded in the books of the
shareholders’ resolutions of material interest or of substantive
company at the close of business on Friday, 16 April 2010. To
nature.
SHARE CAPITAL
comply with the requirements of Strate, the last day to trade cum
dividend is Friday, 9 April 2010. The shares will commence trading
ex dividend on Monday, 12 April 2010 and the record date is Friday,
The total number of shares in issue increased during the year to
16 April 2010.
356 940 200. The increase can be summarised as follows:
Date of
issue
Number of
shares
355 036 600
Opening balance
Issued in terms of the Kumba
Management Share Option
Scheme due to options
exercised at prices ranging
from R61,40 to R104,50
Closing balance
7 January
2009 to
29 December
2009
1 903 600
356 940 200
Capital (Pty) Limited.
SUBSEQUENT EVENTS
INVESTMENTS AND SUBSIDIARIES
The fi nancial information in respect of investments and interests in
subsidiaries of the company is disclosed in annexures 2 and 3 to
the fi nancial statements.
During July 2009 the group invested R1 082 million in Mafube
Coal Mining (Pty) Limited, its joint venture with Anglo South Africa
SHAREHOLDERS
An analysis of shareholders and shareholdings appears on page 79
of the annual report.
The directors are not aware of any matter or circumstance that has
arisen since the end of the fi nancial period not dealt with in this
report or in the group fi nancial statements that would signifi cantly
affect the operations or the results of the group.
DIRECTORATE AND SHAREHOLDINGS
The names of the directors in offi ce at the date of this report are
set out on page 152.
Exxaro Annual Report 2009 I 145
REPORT OF THE DIRECTORS CONTINUED
The following non-executive directors resigned during 2009:
AUDIT COMMITTEE
• 15 July 2009 – Mr PM Baum
The audit committee has reviewed the scope as well as the
• 21 December 2009 – Ms SEA Mngomezulu.
independence and objectivity of the external auditors. The
Mr CI Griffi th was appointed as a non-executive director to the
as defi ned by the Companies Act and the committee has approved
committee has satisfi ed itself that the external auditor is independent
board on 16 July 2009.
the audit fees for the period. The audit committee has nominated
Deloitte & Touche as external auditor for the 2010 fi nancial year,
Ms N Langeni was appointed as a non-executive director to the
and BW Smith as the designated partner, for approval at the annual
board on 23 February 2010.
general meeting. Refer to the section on corporate governance on
page 74 for further details on the composition, role, purpose and
The acting chairman, Dr D Konar, was elected as chairman of the
principal functions of the audit committee.
board with effect from 23 February 2010.
INDEPENDENT AUDITORS
On 28 February 2009, Mr DJ van Staden retired as fi nance
The auditors of the company, Deloitte & Touche, and BW Smith as
director and Mr WA de Klerk was appointed as fi nance director on
the designated partner, will continue in offi ce in accordance with
1 March 2009.
section 270(2) of the Companies Act, 1973, of South Africa.
In terms of article 15.2 of the articles of association, the following
ACCOUNTING POLICIES
directors appointed to the board with effect from 16 July 2009 and
The accounting policies are consistent with those applied
23 February 2010, respectively, will retire and, being eligible, offer
in
the annual fi nancial statements
for
the year ended
themselves for re-election:
• Mr CI Griffi th
• Ms N Langeni
31 December 2008.
IFRS 8 Operating Segments and the amendments to IAS 1
Presentation of Financial Statements, issued in September 2008,
The directors below are required to retire by rotation in terms of
were early adopted during 2008.
article 16.1 of the articles of association, and being eligible, offer
themselves for re-election at the forthcoming annual general
meeting:
• Mr JJ Geldenhuys
• Mr U Khumalo
• Mr RP Mohring
COMPANY SECRETARY
The company secretary is MS Viljoen. The company secretary’s
registered address is:
Roger Dyason Road
Pretoria West
0183
South Africa
PO Box 9229
Pretoria
0001
South Africa
146 I Exxaro Annual Report 2009
DIRECTORS’ REMUNERATION
This report on remuneration and related matters covers issues
DIRECTORS’ SERVICE CONTRACTS
which are the concern of the board as a whole, in addition to
All executive directors’ normal contracts are subject to six calendar
those which were dealt with by the transformation, human
months’ notice. Non-executive directors are not bound by service
resources, remuneration and nomination committee (TREMCO).
contracts.
REMUNERATION POLICY
There are no restraints of trade associated with the contracts of
TREMCO has a clearly defi ned mandate from the board aimed at:
executive directors.
• ensuring that the company’s chairman, directors and senior
executives are fairly rewarded for their individual contributions to
The service contract of Mr DJ van Staden terminated on
the company’s overall performance; and
28 February 2009.
• ensuring that the company’s remuneration strategies and
packages, including the incentive schemes, are related to
performance, are suitably competitive and give due regard to the
interests of the shareholders and the fi nancial and commercial
health of the company.
Exxaro Annual Report 2009 I 147
DIRECTORS’ REMUNERATION CONTINUED
SUMMARY OF REMUNERATION for the year ended 31 December 2009
Executive directors
SA Nkosi
WA de Klerk3
DJ van Staden4
Less: gains on share scheme
Add: share-based payment expense
Total remuneration paid by Exxaro
Non-executive directors
PM Baum5,6
JJ Geldenhuys
CI Griffi th5,7
U Khumalo
Dr D Konar (chairman)
VZ Mntambo
RP Mohring
SEA Mngomezulu8
NL Sowazi
J van Rooyen
D Zihlangu
Basic
salary
R
Fees for
services
R
Performance
bonuses1
R
4 051 228
2 232 764
489 511
6 773 503
2 373 637
1 708 603
308 427
4 390 667
123 720
379 440
76 850
184 440
570 000
247 440
469 440
184 440
240 737
274 440
247 440
2 998 387
1 All incentive schemes are performance related and were approved by the board. The three-tier short-term incentive scheme applies to all employees
throughout the group.
2 Includes travel allowances.
3 Appointed on 1 March 2009.
4 Retired on 28 February 2009.
5 Fees paid to the respective employer and not the individual.
6 Resigned on 15 July 2009.
7 Appointed on 16 July 2009.
8 Resigned on 21 December 2009.
Retirement amounts paid or received by executive directors are paid or received under defi ned contribution retirement funds.
148 I Exxaro Annual Report 2009
Benefi ts
and
allowances2
R
Retirement
fund
contributions
R
Gains on
management
share option
scheme
R
1 644 031
368 187
217 551
51 117
636 855
1 644 031
135 713
215 838
426 980
778 531
35 241
19 693
11 696
66 630
Other
R
4 728
2 843
529
8 100
Total
R
6 933 493
6 021 630
1 276 564
14 231 687
(1 644 031)
3 288 279
15 875 935
123 720
414 681
76 850
184 440
570 000
247 440
489 133
184 440
240 737
274 440
259 136
3 065 017
Exxaro Annual Report 2009 I 149
DIRECTORS’ REMUNERATION CONTINUED
SUMMARY OF REMUNERATION for the year ended 31 December 2008
Executive directors
SA Nkosi
MJ Kilbride4
DJ van Staden
Less: gains on share scheme
Add: share-based payment expense
Total remuneration paid by Exxaro
Non-executive directors
PM Baum5
JJ Geldenhuys
U Khumalo
Dr D Konar (chairman)
VZ Mntambo
RP Mohring
PKV Ncetezo6
NMC Nyembezi-Heita7
NL Sowazi
D Zihlangu
J van Rooyen8
SEA Mngomezulu8
Basic
salary
R
Fees for
services
R
Performance
bonuses1
R
Benefi ts
and
allowances2
R
Retirement
fund
contributions
R
3 940 689
1 921 492
2 986 122
8 848 303
1 868 425
3 556 731
5 772 393
11 197 549
141 925
359 779
284 288
785 992
324 773
199 583
301 816
826 172
181 570
267 083
146 427
540 686
206 990
307 146
68 997
38 125
193 284
206 990
64 545
55 642
23 427
21 357
7 314
8 735
1 All incentive schemes are performance related and were approved by the board. The three-tier short-term incentive scheme applies to all employees
2 277 485
60 833
throughout the group.
2 Includes travel allowances.
3 Includes interest accrued on gains held in trust until vested.
4 Retired on 31 August 2008.
5 Fees paid to the respective employer and not the individual.
6 Retired on 30 April 2008.
7 Retired on 29 February 2008.
8 Appointed on 13 August 2008.
Retirement amounts paid or received by executive directors are paid or received under defi ned contribution retirement funds.
150 I Exxaro Annual Report 2009
Medical fund
contributions
R
Gains on
management
share option
scheme3
R
Compensation
on retirement
from executive
offi ce
R
13 248
11 776
13 248
38 272
263 715
5 414 223
2 229 942
3 128 218
2 493 657
8 542 441
Other
R
4 375
2 138
3 263
9 776
Total
R
6 293 435
11 729 437
14 719 290
32 742 162
(2 493 657)
1 856 744
32 105 249
181 570
290 510
146 427
540 686
206 990
328 503
76 311
38 125
193 284
215 725
64 545
55 642
2 338 318
Exxaro Annual Report 2009 I 151
DIRECTORS’ REMUNERATION CONTINUED
Directors’ benefi cial interest in Exxaro shares at 31 December 2009
Director
SA Nkosi
WA de Klerk
JJ Geldenhuys
CI Griffi th
U Khumalo
Dr D Konar (chairman)
VZ Mntambo
RP Mohring
NL Sowazi
J van Rooyen
D Zihlangu
Directors’ non-benefi cial interest in Exxaro shares at 31 December 2009
Director
SA Nkosi
WA de Klerk
JJ Geldenhuys
CI Griffi th
U Khumalo
Dr D Konar (chairman)
VZ Mntambo
RP Mohring
NL Sowazi
J van Rooyen
D Zihlangu
Direct
Indirect
8 016 068
1 462
168
5 529 881
2 181 590
2 818 552
54 950
152 I Exxaro Annual Report 2009
Directors’ benefi cial interest in Exxaro shares at 31 December 2008
Director
SA Nkosi
DJ van Staden
PM Baum
JJ Geldenhuys
U Khumalo
Dr D Konar
SEA Mngomezulu
VZ Mntambo
RP Mohring
NL Sowazi
J van Rooyen
D Zihlangu
Direct
Indirect
8 016 068
565
168
5 529 881
2 181 590
2 818 552
There has been no change to the interest of directors in share capital since the year-end.
On 31 December 2009 Mr SA Nkosi held 2,3% (2008: 2,3%) and Mr MZ Mntambo held 1,6% (2008: 1,6%) directly or indirectly in the share
capital of the company.
No director held any non-benefi cial interest in Exxaro shares at 31 December 2008.
Exxaro Annual Report 2009 I 153
DIRECTORS’ REMUNERATION CONTINUED
DIRECTORS’ SHARE OPTIONS AND RESTRICTED SHARE AWARDS
The following options and rights in shares in the company were outstanding in favour of directors of the company under the
company’s share option schemes:
Management share option scheme for the year ended December 2009
Executive director
WA de Klerk
Options
held at
31 December
2009
Exercise
price
R
Exercisable
period
Proceeds if
exercisable at
31 December
2009
R
3 230
29 130
8 750
13,62
12,90
19,62
16/03/2011
16/03/2011
22/04/2012
337 535
3 044 085
914 375
Total
41 110
4 295 995
1 Based on a share price of R104,50 which prevailed on 31 December 2009.
Management share option scheme for the year ended December 2008
Executive director
DJ van Staden
Total
Options
held at
31 December
2008
12 440
12 440
Exercise
price
R
Exercisable
period
12,90
16/03/2011
Proceeds if
exercisable at
31 December
2008
R
894 436
894 436
1 Based on a share price of R71,90 which prevailed on 31 December 2008.
Management cash-settled options for the year ended December 2008
The cash-settled options represent phantom option awards made to executive directors and a number of senior managers as
compensation for not being eligible to receive share option grants due to their involvement in the empowerment transaction.
The phantom option awards also have a grant price, vesting periods and lapse periods as other share option awards but are
classifi ed as cash-settled since shares will not be issued when exercised.
Options
held at
31 December
2009
Exercise
price
R
Exercisable
period
Proceeds if
exercisable at
31 December
2009
R
Executive director
DJ van Staden
1 Based on a share price of R71,90 which prevailed on 31 December 2008.
154 I Exxaro Annual Report 2009
Options
exercised
during the year
Exercise
price
R
Sale
price/market
price
R
Pre-tax
gain
R
Date
exercised
Pre-tax gain if
exercisable at
31 December
20091
R
293 542
2 668 308
742 700
2 140
4 000
2 840
1 710
9 790
11,48
11,48
10,76
10,76
10,76
3 704 550
20 480
92,11
91,20
91,51
91,30
91,00
172 548
318 880
229 330
137 723
785 550
1 644 031
26/10/2009
26/10/2009
26/10/2009
26/10/2009
26/10/2009
Options
exercised
during the year
Exercise
price
R
Sale
price/market
price
R
Pre-tax
gain
R
Date
exercised
Pre-tax gain if
exercisable at
31 December
20081
R
733 960
733 960
Pre-tax gain if
exercisable at
31 December
20091
R
Options
exercised
during the year
Exercise
price
R
Sale
price/market
price
R
Pre-tax
gain
R
Date
exercised
17 550
19,62
136,00
2 042 469
13/06/2008
Exxaro Annual Report 2009 I 155
DIRECTORS’ REMUNERATION CONTINUED
Management share appreciation right scheme for the year ended December 2009
Executive director
SA Nkosi
WA de Klerk
Rights
held at
31 December
2009
Exercise
price
R
Exercisable
period
38 680
41 780
67 430
147 890
19 330
16 410
37 760
73 500
60,60
112,35
67,07
60,60
112,35
67,07
01/03/2014
01/04/2015
01/04/2016
01/03/2014
01/04/2015
01/04/2016
1 Based on a share price of R104,50 which prevailed on 31 December 2009.
It is assumed that directors will not exercise rights which are out of the money.
Management share appreciation right scheme for the year ended December 2008
Executive director
SA Nkosi
Rights
held at
31 December
2009
38 680
41 780
80 460
Exercise
price
R
Exercisable
period
60,60
112,35
01/03/2014
01/04/2015
1 Based on a share price of R71,90 which prevailed on 31 December 2008.
It is assumed that directors will not exercise rights which are out of the money.
Management share scheme – long-term incentive plan for the year ended December 2009
Executive director
SA Nkosi
WA de Klerk
Rights
held at
31 December
2009
Exercise
price
R
Exercisable
period
38 682
41 782
67 438
147 902
19 334
16 418
37 764
73 516
01/03/2010
01/04/2011
01/04/2012
01/03/2010
01/04/2011
01/04/2012
Proceeds if
exercisable at
31 December
2009
R
4 042 060
7 046 435
11 088 495
2 019 985
3 945 920
5 965 905
Proceeds if
exercisable at
31 December
2009
R
2 781 092
2 781 092
Proceeds if
exercisable at
31 December
2009
R
4 042 269
4 366 219
7 047 271
15 455 759
2 020 403
1 715 681
3 946 338
7 682 422
1 Based on a share price of R104,50 which prevailed on 31 December 2009.
156 I Exxaro Annual Report 2009
Pre-tax gain if
exercisable at
31 December
20091
R
Options
exercised
during the year
Exercise
price
R
Sale
price/market
price
R
Pre-tax
gain
R
Date
exercised
1 698 052
2 523 905
4 221 957
848 587
1 413 357
2 261 944
Pre-tax gain if
exercisable at
31 December
20091
R
437 084
437 084
Pre-tax gain if
exercisable at
31 December
20091
R
4 042 269
4 366 219
7 047 271
15 455 759
2 020 403
1 715 681
3 946 338
7 682 422
Options
exercised
during the year
Exercise
price
R
Sale
price/market
price
R
Pre-tax
gain
R
Date
exercised
Options
exercised
during the year
Exercise
price
R
Sale
price/market
price
R
Pre-tax
gain
R
Date
exercised
Exxaro Annual Report 2009 I 157
DIRECTORS’ REMUNERATION CONTINUED
Management share scheme – long-term incentive plan for the year ended December 2008
Executive director
SA Nkosi
Rights
held at
31 December
2009
38 682
41 782
80 464
Exercise
price
R
Exercisable
period
01/03/2010
01/04/2011
Proceeds if
exercisable at
31 December
2009
R
2 781 236
3 004 126
5 785 362
1 Based on a share price of R71,90 which prevailed on 31 December 2008.
Management share scheme – deferred bonus plan for the year ended December 2009
Rights
held at
31 December
2009
Exercise
price
R
Exercisable
period
Proceeds if
exercisable at
31 December
2009
R
Executive director
SA Nkosi
WA de Klerk
361
718
2 573
213
2 315
6 620
466
13 266
212
542
1 398
182
1 644
3 000
326
7 304
86,45
111,88
111,88
89,61
68,63
65,58
91,08
86,45
111,88
111,88
89,61
68,63
65,58
91,08
01/10/2010
01/04/2011
01/04/2011
01/10/2011
01/04/2012
04/05/2012
01/10/2012
01/10/2010
01/04/2011
01/04/2011
01/10/2011
01/04/2012
04/05/2012
01/10/2012
1 Based on a share price of R104,50 which prevailed on 31 December 2009.
It is assumed that directors will not exercise rights which are out of the money.
Management share scheme – deferred bonus plan for the year ended December 2008
Executive director
SA Nkosi
Rights
held at
31 December
2009
361
718
2 573
213
3 865
Exercise
price
R
86,45
111,88
111,88
89,61
Exercisable
period
01/10/2010
04/01/2011
01/04/2011
01/10/2011
1 Based on a share price of R71,90 which prevailed on 31 December 2008.
It is assumed that directors will not exercise rights which are out of the money.
158 I Exxaro Annual Report 2009
37 725
22 259
241 918
691 790
48 697
1 042 389
22 154
19 019
171 798
313 500
34 067
560 538
Proceeds if
exercisable at
31 December
2009
R
Options
exercised
during the year
Exercise
price
R
Sale
price/market
price
R
Pre-tax
gain
R
Date
exercised
Pre-tax gain if
exercisable at
31 December
20091
R
2 781 236
3 004 126
5 785 362
Pre-tax gain if
exercisable at
31 December
20091
R
Options
exercised
during the year
Exercise
price
R
Sale
price/market
price
R
Pre-tax
gain
R
Date
exercised
6 515
3 172
83 044
257 633
6 252
356 616
3 826
2 710
58 974
116 752
4 374
186 636
Pre-tax gain if
exercisable at
31 December
20091
R
Options
exercised
during the year
Exercise
price
R
Sale
price/market
price
R
Pre-tax
gain
R
Date
exercised
Exxaro Annual Report 2009 I 159
INCOME STATEMENTS AND STATEMENTS
OF COMPREHENSIVE INCOME
for the year ended 31 December 2009
Revenue
Operating (expenses)/income
NET OPERATING PROFIT/(LOSS)
Interest income
Interest expense
Income from investments
Income from equity-accounted investments
PROFIT BEFORE TAX
Income tax expense
PROFIT FOR THE YEAR
Profi t attributable to:
Owners of the parent
Non-controlling interests
GROUP
COMPANY
Notes
2
3
5
5
6
14
7
2009
Rm
15 009
(14 705)
304
145
(560)
2
1 898
1 789
(766)
1 023
1 023
1 023
2008
Rm
13 843
(11 376)
2 467
153
(394)
2
1 663
3 891
(510)
3 381
3 405
(24)
3 381
2009
Rm
1 009
(4 320)
(3 311)
51
(390)
6 731
3 081
(2)
3 079
2008
Rm
915
758
1 673
50
(169)
1 319
2 873
7
2 880
3 079
2 880
3 079
2 880
STATEMENTS OF COMPREHENSIVE INCOME
PROFIT FOR THE YEAR
OTHER COMPREHENSIVE INCOME:
Exchange differences on translating foreign operations
Cash fl ow hedges
Share of comprehensive income of associates
Share-based payment movement
Income tax relating to components of other comprehensive
income
Net (loss)/gain recognised in other comprehensive income for
the year, net of tax
26
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
ATTRIBUTABLE EARNINGS PER SHARE (CENTS)
8
– basic
– diluted
1 023
3 381
3 079
2 880
(35)
(474)
8
118
142
(241)
782
919
(137)
782
297
286
193
520
187
92
(115)
877
4 258
4 117
141
4 258
993
943
3
83
9
95
3 174
(3)
66
63
2 943
3 174
2 943
3 174
2 943
160 I Exxaro Annual Report 2009
STATEMENTS OF FINANCIAL POSITION
for the year ended 31 December 2009
GROUP
COMPANY
Notes
2009
Rm
2008
Rm
2009
Rm
ASSETS
Non-current assets
Property, plant and equipment
Biological assets
Intangible assets
Investments in associates and joint ventures
Investments in subsidiaries
Deferred tax
Financial assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Current tax receivable
Cash and cash equivalents
Total current assets
Non-current assets classifi ed as held for sale
TOTAL ASSETS
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium
Other components of equity
Retained earnings
Equity attributable to owners of the parent
Non-controlling interests
Total equity
Non-current liabilities
Interest-bearing borrowings
Non-current provisions
Financial liabilities
Deferred tax
Total non-current liabilities
Current liabilities
Trade and other payables
Interest-bearing borrowings
Current tax payable
Current provisions
Total current liabilities
Non-current liabilities classifi ed as held for sale
TOTAL EQUITY AND LIABILITIES
NET DEBT
11
12
13
14
15
23
16
17
18
19
20
21
22
27
23
24
21
22
19
11 869
11 309
41
87
34
79
1 966
1 849
629
1 217
15 809
3 133
3 121
57
1 023
7 334
86
1 083
1 577
15 931
2 481
2 924
2
1 769
7 176
78
23 229
23 185
2 141
2 046
8 721
12 908
1
12 909
4 347
1 853
75
995
7 270
2 510
407
57
27
3 001
49
23 229
3 731
2 098
2 190
8 708
12 996
128
13 124
3 650
1 746
31
1 257
6 684
2 366
500
440
21
3 327
50
23 185
2 381
2008
Rm
176
6 157
104
41
6 478
5 073
478
5 551
13
12 042
2 276
946
5 025
8 247
240
10
6 668
87
11
7 016
7 090
14
343
7 447
18
14 481
2 318
1 041
7 038
10 397
10 397
8 247
3 335
28
2 708
24
31
3 363
2 763
359
362
817
205
10
721
1 032
14 481
3 354
12 042
2 435
Exxaro Annual Report 2009 I 161
STATEMENT OF CASH FLOWS
for the year ended 31 December 2009
GROUP
COMPANY
Notes
2009
Rm
2008
Rm
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated by/(utilised in) operations
Net fi nancing costs
Tax paid
Dividends paid
CASH FLOWS FROM INVESTING ACTIVITIES
Investments to maintain operations
Investments to expand operations
Investment in intangible assets
Proceeds from disposal of property, plant and equipment
Investment in other non-current assets
Acquisition of joint ventures and associates
Acquisition of subsidiaries and other business operations
Income from equity-accounted investments
Income from investments
Foreign currency translations
25.1
25.2
25.3
25.4
25.5
25.6
25.7
25.8
25.9
25.10
2 117
(381)
(892)
(1 050)
(206)
(992)
(990)
(19)
11
(1 090)
1 752
2
(88)
(1 414)
3 574
(193)
(487)
(984)
1 910
(1 147)
(470)
29
(179)
(221)
(2 757)
1 042
2
(55)
(3 756)
NET CASH OUTFLOW
(1 620)
(1 846)
2009
Rm
(788)
(337)
(1 066)
(2 191)
(88)
(19)
2008
Rm
(140)
(117)
18
(973)
(1 212)
(61)
(2)
(795)
(50)
2 131
1
1 230
(961)
1 319
1
1 207
(5)
CASH FLOWS FROM FINANCING ACTIVITIES
Non-current interest-bearing borrowings raised
Net movement of other non-current interest-bearing
borrowings
Non-current interest-bearing borrowings repaid
Current interest-bearing borrowings (repaid)/raised
Proceeds from issuance of share capital
Increase in loans from non-controlling interests
NET (DECREASE)/INCREASE IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at beginning of year
CASH AND CASH EQUIVALENTS AT END OF YEAR
CALCULATION OF MOVEMENT IN NET DEBT:
Net cash outfl ow as above
Add:
– shares issued
– loans from non-controlling interests
– non-cash fl ow movements in net debt applicable
to currency translation differences of transactions
denominated in foreign currency
– non-cash fl ow movements in net debt applicable to
currency translation differences of net debt items
of foreign entities
– hedging of share-base payment exposure
1 572
2 725
1 301
2 463
(674)
157
42
(2 113)
(355)
150
32
826
177
(135)
478
343
172
306
478
(658)
(93)
43
10
874
(746)
1 769
1 023
(418)
426
31
1
2 765
919
850
1 769
(1 620)
(1 846)
43
10
31
1
340
(352)
25.10
(123)
282
(14)
INCREASE IN NET DEBT
(1 350)
(1 898)
162 I Exxaro Annual Report 2009
GROUP STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2009
Other components of equity
Foreign
currency
trans-
lations
Rm
Financial
instru-
ments
re-
valuation
Rm
Equity-
settled
reserve
Rm
Retained
income
Rm
Attribu-
table to
owners
of the
parent
Rm
Non-
con-
trolling
interests
Rm
Total
equity
Rm
Share
capital
Rm
Share
premium
Rm
4
2 063
527
437
7
138
968
113
6 235
9 804
19
9 823
3 429
4 117
141
4 258
31
31
2
1
1
31
2
1
(957)
(957)
(7)
(27)
(7)
(984)
4
2 094
964
(162)
43
145
1 081
8 708
12 996
128
13 124
(142)
160
1 063
(137)
919
43
782
43
(1 050)
(1 050)
(1 050)
10
10
4
2 137
802
3
1 241
8 721
12 908
1
12 909
OPENING BALANCE
AT 1 JANUARY 2008
Total comprehensive income
Issue of share capital
Non-controlling interests additional
contributions
Liquidation dividend from subsidiary
Net profi t on dilution of interest
in a subsidiary
Dividends paid
BALANCE AT
31 DECEMBER 2008
Total comprehensive income
Issue of share capital1
Non-controlling interests
additional contributions
Dividends paid2
BALANCE AT
31 DECEMBER 2009
Dividend paid per share (cents) in
respect of the 2008 fi nancial year
Dividend paid per share (cents) in
respect of the 2009 interim period
Final dividend payable per share
(cents) in respect of 2009 fi nancial
year
375
100
100
1 Issued to the Kumba Resources Management Share Trust due to options exercised.
2 The STC on these dividends amount to Rnil after taking into account STC credits (2008: Rnil).
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the fi nancial statements of
foreign entities that are not integral to the operations of the group.
Financial instruments revaluation reserve
The fi nancial instruments revaluation reserve comprises the effective portion of the cumulative net change in the fair value of cash fl ow
hedging instruments where the hedged transaction has not yet occurred.
Equity-settled reserve
The equity-settled reserve represents the fair value of services received and settled by equity instruments granted.
Exxaro Annual Report 2009 I 163
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2009
Other components of equity
Foreign
currency
trans-
lations
Rm
(3)
(3)
3
Share
capital
Rm
Share
premium
Rm
4
2 240
32
4
2 272
42
4
2 314
Equity-
settled
reserve
Rm
Retained
income
Rm
Total
equity
Rm
883
3 118
6 245
66
2 880
2 943
(973)
(973)
32
949
5 025
8 247
92
3 079
3 174
(1 066)
(1 066)
42
1 041
7 038
10 397
375
100
100
OPENING BALANCE
AT 1 JANUARY 2008
Total comprehensive income
Cash dividends paid
Issue of share capital
BALANCE AT 31 DECEMBER 2008
Total comprehensive income
Cash dividends paid1
Issue of share capital2
BALANCE AT 31 DECEMBER 2009
Dividend paid per share (cents) in respect
of the 2008 fi nancial year
Dividend paid per share (cents) in respect
of the 2009 interim period
Final dividend payable per share (cents) in respect
of 2009 fi nancial year
1 The STC on these dividends amount to Rnil after taking into account STC credits (2008: Rnil).
2 Issued to the Kumba Resources Management Share Trust due to options exercised.
164 I Exxaro Annual Report 2009
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
for the year ended 31 December 2009
1. ACCOUNTING POLICIES
Principal accounting policies
The principal accounting policies of the group and the
On 22 May 2008, the International Accounting Standards
Board issued its latest standard, titled Improvements to
Financial Reporting Standards 2008. The standard included
disclosures made in the annual fi nancial statements comply
35 amendments to various standards. These standards have
with International Financial Reporting Standards effective for
been applied, where relevant, to the fi nancial statements for
the group’s fi nancial year.
the period ended 31 December 2009:
The fi nancial statements are prepared on the historical cost
for annual periods beginning on or after 1 January 2009
basis, except for the revaluation to fair value of fi nancial
• Amended IAS 19 Employee Benefi ts, effective for annual
instruments and biological assets. Where comparative
periods beginning on or after 1 January 2009
fi nancial information is reported, the accounting policies have
• Amended IAS 20 Accounting for Government Grants and
been applied consistently for all periods.
Disclosure of Government Assistance, effective for annual
• Amended IAS 16 Property, Plant and Equipment, effective
periods beginning on or after 1 January 2009
Adoption of new and revised standards and
• Amended IAS 27 Consolidated and Separate Financial
interpretations
Statements, effective for annual periods beginning on or
The following standards and interpretations have been
after 1 January 2009
applied, where relevant, to the fi nancial statements for the
• Amended IAS 28 Investments in Associates, effective for
period ended 31 December 2009:
annual periods beginning on or after 1 January 2009
• Amended IFRS 2 Share-based Payments, effective for
• Amended IAS 29 Financial Reporting in Hyperinfl ationary
annual periods beginning on or after 1 January 2009
Economies, effective for annual periods beginning on or
• IFRS 7 Financial Instruments: Disclosures, effective for
after 1 January 2009
periods beginning on or after 1 January 2009
• Amended IAS 31 Interests in Joint Ventures, effective for
• Amended IAS 1 Presentation of Financial Statements,
annual periods beginning on or after 1 January 2009
effective for annual periods beginning on or after 1 January
• Amended IAS 32 Financial Instruments: Presentation,
2009, amendments relating to disclosure of puttable
effective
for annual periods beginning on or after
instruments and obligations arising on liquidation
1 January 2009
• Amended IAS 18 Revenue, effective for annual periods
• Amended IAS 36 Impairment of Assets, effective for annual
beginning on or after 1 January 2009
periods beginning on or after 1 January 2009
• Revised IAS 23 Borrowing Costs, effective for annual
• Amended IAS 38 Intangible Assets, effective for annual
periods beginning on or after 1 January 2009
periods beginning on or after 1 January 2009
• IFRIC 13 Customer Loyalty Programmes, effective for
• Amended IAS 39 Financial Instruments: Recognition and
annual periods beginning on or after 1 July 2008
Measurement, effective from 1 January 2009
• IFRIC 15 Agreements
for the Construction of Real
• Amended IAS 40 Investment Property, effective for annual
Estate, effective for annual periods beginning on or after
periods beginning on or after 1 January 2009
1 January 2009
• Amended IAS 41 Agriculture, effective for annual periods
• IFRIC 16 Hedges of Net Investment in a Foreign Operation,
beginning on or after 1 January 2009.
effective
for annual periods beginning on or after
1 October 2008
These amendments did not have a signifi cant impact on the
• Circular 3/2009 Headline Earnings, effective for reports
measurement or disclosure and presentation of items included
issued on or after 31 August 2009.
in the fi nancial statements.
The adoption of the amendments to IFRS 7 resulted in
The following standards were early adopted during 2008 and
additional disclosures regarding fair value measurements and
have been applied, where relevant, to the fi nancial statements
liquidity risks. Adoption of the other new or revised standards
for the years ended 31 December 2008 and 31 December
did not have a signifi cant impact on the measurement or
2009:
disclosure and presentation of items included in the fi nancial
• IFRS 8 Operating Segments, effective for annual periods
statements.
beginning on or after 1 January 2009.
Exxaro Annual Report 2009 I 165
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
1. ACCOUNTING POLICIES (continued)
• Amended IAS 36 Impairment of Assets, effective for annual
Adoption of new and revised standards and
interpretations (continued)
• Revised IAS 1 Presentation of Financial Statements,
effective
for annual periods beginning on or after
1 January 2009, revision requiring a statement of
comprehensive income.
The implementation of IFRS 8 led to differences in the basis
of segmentation compared to previous periods. As a result,
new operating segments were identifi ed. IAS 1 and IFRS 8
are disclosure standards and have no other impact on the
measurement or recognition of items included in the fi nancial
statements and accordingly the adoption thereof has had no
effect on the profi t or equity for 2008 or 2009.
At the date of authorisation of these fi nancial statements, the
following standards and interpretations were in issue but not
yet effective:
• Amended IFRS 1 First-time Adoption of International
Financial Reporting, effective for annual periods beginning
on or after 1 July 2009
• Amended IFRS 2 Share-based Payments resulting from
April 2009 Annual improvements to IFRS, effective for
annual periods beginning on or after 1 July 2009
• Amended IFRS 2 Share-based Payments, effective for
annual periods beginning on or after 1 January 2010
• Revised IFRS 3 Business Combinations, effective for annual
periods beginning on or after 1 July 2009
• Amended IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations, effective for annual periods
beginning on or after 1 July 2009
• Amended IFRS 8 Operating Segments, effective for annual
periods beginning on or after 1 January 2010
• IFRS 9 Financial
instruments – Classifi cation and
Measurement, effective for annual periods beginning on or
after 1 January 2013
• Amended IAS 1 Presentation of Financial Statements,
for annual periods beginning on or after
effective
1 January 2010
• Amended IAS 7 Statement of Cash Flows, effective for
annual periods beginning on or after 1 January 2010
• Amended IAS 17 Leases, effective for annual periods
beginning on or after 1 January 2010
• Amended IAS 24 Related Party Disclosures, effective for
annual periods beginning on or after 1 January 2011
• Revised IAS 27 Consolidated and Separate Financial
Statements, effective for annual periods beginning on or
after 1 July 2009
• Revised IAS 28 Investments in Associates, effective for
annual periods beginning on or after 1 July 2009
• Revised IAS 31 Interests in Joint Ventures, effective for
annual periods beginning on or after 1 July 2009
• Amended IAS 32 Financial Instruments: Presentation,
for annual periods beginning on or after
effective
1 February 2010
166 I Exxaro Annual Report 2009
periods beginning on or after 1 January 2010
• Amended IAS 38 Intangible Assets, effective for annual
periods beginning on or after 1 January 2010
• Amended IAS 39 Financial Instruments: Recognition and
Measurement, effective from 1 July 2009
• Amended IAS 39 Financial Instruments: Recognition and
Measurement, effective for annual periods ending on or
after 30 June 2009
• Amended IAS 39 Financial Instruments: Recognition and
Measurement amendments resulting from 1 April 2009
Annual Improvements to IFRS, effective for annual periods
beginning on or after 1 January 2010
• Amended IFRIC 9 Reassessment of Embedded Derivatives,
for annual periods beginning on or after
effective
1 July 2009
• IFRIC 14 IAS 19 The limit on a Defi ned Benefi t Asset, Minimum
Funding Requirements and their Interaction, effective for
annual periods beginning on or after 1 January 2011
• IFRIC 17 Distributions of Non-cash Assets to Owners,
for annual periods beginning on or after
effective
1 July 2009
• IFRIC 18 Transfers of Assets from Customers, effective
from 1 July 2009.
• IFRIC 19 Extinguishing
Liabilities with
Equity Instruments, effective for annual periods on or after
1 January 2011.
Financial
The adoption of IFRS 3, together with IAS 27, IAS 28 and
IAS 31 will have a signifi cant impact on the accounting and
disclosure of business combinations and the accounting
for the carrying value of investments on partial disposals of
investments for transactions effected on or after the effective
date. The adoption of the amended IFRS 2 will result in
different treatment of share-based payment transactions
in the accounts of the group’s subsidiaries, but will have no
impact on the group’s treatment of share-based payments.
The directors believe that none of the other new or revised
standards and interpretations will have an effect other than
enhanced disclosure.
Basis of consolidation
The group annual fi nancial statements present
the
consolidated fi nancial position and changes therein, operating
results and cash fl ow information of the company and
its subsidiaries. Subsidiaries are those entities in which the
group has an interest of more than half of the voting rights or
the power to exercise control so as to obtain benefi ts from
their activities.
The results of subsidiaries are included for the duration of
the period in which the group exercises control over the
subsidiary. All intercompany transactions and resultant
profi ts or losses between group companies are eliminated
on consolidation.
1. ACCOUNTING POLICIES (continued)
Where necessary, accounting policies for subsidiaries are
changed to ensure consistency with the policies adopted
by the group. If it is not practical to change the policies, the
appropriate adjustments are made on consolidation to ensure
consistency within the group.
The results of special purpose entities that, in substance, are
controlled by the group, are consolidated.
The company carries its investments in subsidiaries at cost
less accumulated impairment losses.
Goodwill
Goodwill is refl ected at cost less accumulated impairment
losses, if any. It represents the excess of the cost of a business
combination over the fair value of the group’s share of the
identifi able net assets and contingent liabilities of that entity at
the date of acquisition. Goodwill is assessed for impairment
on an annual basis.
The gain or loss on disposal of an entity includes the balance
of goodwill relating to the entity.
Negative goodwill arising on a business combination
represents the excess of the fair value of the net identifi able
assets and contingent liabilities of the entity acquired over the
cost of acquisition, and is recognised immediately in profi t or
loss.
Investments in associates and joint ventures
The company carries its investments in associates and joint
ventures at cost less accumulated impairment losses.
An associate is an entity over which the group has the ability to
exercise signifi cant infl uence, but which it does not control.
A joint venture is an entity jointly controlled by the group
and one or more other venturers in terms of a contractual
arrangement requiring unanimous consent for strategic
fi nancial and operating decisions. It may involve a corporation,
partnership or other entity in which the group has an interest.
Investments in associates are accounted for in the group
fi nancial statements using the equity method for the duration
of the period in which the group has the ability to exercise
signifi cant infl uence. Equity-accounted income represents the
group’s proportionate share of profi ts of these entities and the
share of tax thereon. The retained earnings of an associate,
net of any dividends, are classifi ed as distributable reserves.
Where the group’s share of losses of an associate exceeds
the carrying amount of the associate, the investment in the
associate is carried at nil value. Additional losses are only
recognised to the extent that the group has incurred further
funding obligations or provided guarantees or sureties in
respect of the associate.
Investments in joint ventures are accounted for in the group
fi nancial statements using the proportionate consolidation
method.
Where necessary, the results of associates and joint ventures
are restated to ensure consistency with group policies.
Unrealised profi ts and losses are eliminated.
The group’s interest in associates and joint ventures is
carried in the statement of fi nancial position at an amount
that refl ects its share of the net assets and the unimpaired
portion of goodwill on acquisition. Goodwill on the acquisition
of associates and joint ventures is treated in accordance with
the group’s accounting policy for goodwill.
Property, plant and equipment
Land and extensions under construction are stated at cost
and are not depreciated. Buildings, including certain non-
mining residential buildings and all other items of property,
plant and equipment are refl ected at cost less accumulated
depreciation and accumulated impairment losses.
Depreciation is charged on a systematic basis over the
estimated useful lives of the assets after taking into account
the estimated residual value of the assets. Useful life is either
the period of time over which the asset is expected to be used
or the number of production or similar units expected to be
obtained from the use of the asset.
Moulds and refractory furnace relines are depreciated based
on the usage thereof.
Items of property, plant and equipment are capitalised in
components where components have a different useful life to
the main item of property, plant and equipment to which the
component can be logically assigned.
The estimated useful lives of assets and their residual values
are re-assessed periodically with any changes in such
accounting estimates being adjusted in the fi nancial year of
re-assessment and applied prospectively.
Exxaro Annual Report 2009 I 167
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
1. ACCOUNTING POLICIES (continued)
Property, plant and equipment (continued)
The estimated useful lives of items of property, plant and equipment are:
2009
Coal
Mineral sands
Buildings and infrastructure (including residential buildings)
Mineral properties
Fixed plant and equipment
Mobile equipment, built-in process computers, underground
mining equipment and reconditionable spares
Loose tools and computer equipment
Development costs
Refractory relines
Site preparation, mining development and exploration
2 – 25 years
2 – 25 years
2 – 25 years
13 000 – 40 000 hours
or 1 – 14 years
1 – 5 years
8 – 20 years
n/a
0 – 25 years
3 – 40 years
3 – 29 years
1 – 30 years
3 – 25 years
3 – 15 years
10 – 20 years
4 – 6 years
3 – 29 years
Base metals
Industrial minerals
Other
Buildings and infrastructure (including residential buildings)
Mineral properties
Fixed plant and equipment
Mobile equipment, built-in process computers, underground
mining equipment and reconditionable spares
Loose tools and computer equipment
Development costs
Refractory relines
Site preparation, mining development and exploration
2 years – indefi nite
n/a
2 – 50 years
2 – 15 years
2 – 8 years
n/a
n/a
7 – 25 years
10 – 25 years
n/a
5 – 25 years
5 – 15 years
5 years
n/a
n/a
20 years
20 – 25 years
n/a
5 – 10 years
2 – 5 years
3 – 5 years
n/a
n/a
6 years
2008
Coal
Mineral sands
Buildings and infrastructure (including residential buildings)
Mineral properties
Fixed plant and equipment
Mobile equipment, built-in process computers, underground
mining equipment and reconditionable spares
Loose tools and computer equipment
Development costs
Refractory relines
Site preparation, mining development and exploration
2 – 25 years
2 – 25 years
2 – 25 years
16 000 – 40 000 hours
or 2 – 16 years
2 – 10 years
8 – 20 years
n/a
2 – 25 years
3 – 40 years
3 – 29 years
2,5 – 29 years
2,5 – 20 years
2,5 – 10 years
4 – 10 years
4 – 6 years
3 – 29 years
Base metals
Industrial minerals
Other
Buildings and infrastructure (including residential buildings)
Mineral properties
Fixed plant and equipment
Mobile equipment, built-in process computers, underground
mining equipment and reconditionable spares
Loose tools and computer equipment
Development costs
Refractory relines
Site preparation, mining development and exploration
2 years – indefi nite
n/a
2 – 50 years
2 – 15 years
2 – 8 years
n/a
n/a
7 – 25 years
10 – 25 years
n/a
5 – 25 years
5 – 15 years
5 years
n/a
n/a
20 years
20 – 25 years
n/a
5 – 10 years
5 years
3 – 5 years
n/a
n/a
6 years
168 I Exxaro Annual Report 2009
1. ACCOUNTING POLICIES (continued)
For a sale and leaseback transaction that results in a fi nance
Maintenance and repairs which neither materially add to the
lease, any excess of sales proceeds over the carrying amount
value of assets nor appreciably prolong their useful lives are
is deferred and recognised on the straight-line basis over the
taken to profi t or loss.
period of the lease.
Direct attributable expenses relating to mining and other
Leases of assets to the group under which all the risks and
major capital projects, site preparations and exploration are
benefi ts of ownership are effectively retained by the lessor,
capitalised until the asset is brought to a working condition
are classifi ed as operating leases. Payments made under
for its intended use. These costs include dismantling and site
operating leases are charged against income on the straight-
restoration costs to the extent that these are recognised as a
line basis over the period of the lease.
provision.
Financing costs directly associated with the construction
evaluated for recognition, classifi cation as a fi nance or
or acquisition of qualifying assets are capitalised at interest
operating lease, measured and accounted for accordingly.
Arrangements that contain the right to use an asset are
rates relating to loans specifi cally raised for that purpose, or at
the average borrowing rate where the general pool of group
Biological assets
borrowings was utilised. Capitalisation of borrowing costs
Biological assets are measured on initial recognition and at
ceases when the asset is substantially complete.
each fi nancial year-end at their fair value less estimated point-
Directly attributable costs associated with the acquisition,
profi t or loss for the period in which it arises. Plantations
development and installation of certain software are capitalised.
are measured at their fair value less estimated point-of-sale
Such assets are depreciated using the amortisation methods
costs. The fair value of the plantations is determined by an
and periods applicable to computer equipment.
independent appraiser, based on the Faustman Formula as
of-sale costs and any change in value is included in the net
Gains and losses on the disposal of property, plant and
fair value less estimated point-of-sale costs, fair value being
equipment are taken to profi t or loss.
determined by the age and size of the animals and the market
applied within the forestry industry. Livestock is measured at
Leased assets
price. Market price is determined on the basis that the animal
is sold to be slaughtered. Livestock held for sale is classifi ed
Leases involving plant and equipment whereby the lessor
as consumable biological assets (inventories). Game is
provides fi nance to the group with the asset as security and
measured at fair value less estimated point-of-sale costs,
where the group assumes substantially all the benefi ts and
fair value being determined as the market price. Market price
risks of ownership, are classifi ed as fi nance leases. Assets
is determined with reference to the most recent live auction
acquired in terms of fi nance leases are capitalised at the
selling prices. Game held for sale is classifi ed as consumable
lower of fair value and the present value of the minimum lease
biological assets (inventories).
payments at inception of the lease and depreciated over the
useful life of the asset. The capital element of future obligations
Intangible assets
under the leases is included as a liability in the statement of
An intangible asset is recognised at cost if it is probable
fi nancial position. Each lease payment is allocated between
that future economic benefi ts will fl ow to the enterprise and
the liability and fi nance charges so as to achieve a constant
the cost can be reliably measured. Amortisation is charged
rate on the fi nance balance outstanding. The interest element
on a systematic basis over the estimated useful lives of the
of the fi nance charge is charged against income over the
intangible assets.
lease period using the effective interest rate method.
Exxaro Annual Report 2009 I 169
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
1. ACCOUNTING POLICIES (continued)
the carrying amount of the cash-generating unit exceeds its
Intangible assets (continued)
recoverable amount.
Subsequent expenditure on capitalised intangible assets is
capitalised only if it increases the future benefi ts embodied in
A previously recognised impairment loss is reversed if there
the specifi c asset to which it relates.
has been a change in the estimates used to determine the
Intangible assets with fi nite useful lives are amortised on
the carrying amount that would have been determined (net
the straight-line basis over their estimated useful lives. The
of depreciation) had no impairment loss been recognised in
amortisation methods and estimated remaining useful lives
prior years. For goodwill a recognised impairment loss is not
are reviewed at least annually.
reversed.
recoverable amount, however not to an amount higher than
The estimated maximum useful lives of intangible assets in
Financial instruments
respect of patents, licences and franchises are 25 years. The
Recognition
carrying amounts are reviewed at each fi nancial year-end to
A fi nancial instrument is recognised when the group becomes
determine whether there is any indication of impairment.
a party to a contract which entitles it to receive contractually
Research, development and exploration costs
fi nancial assets that require delivery within the timeframe
Research, development and exploration costs are charged
established by regulation or market convention (regular-way
against income until they result in projects that are evaluated
purchases) are recognised at trade date, which is the date on
as being technically or commercially feasible, the group
which the group commits to acquire the asset.
agreed cash fl ows on the instrument. All acquisitions of
has suffi cient resources to complete development and can
demonstrate how the asset will generate future economic
Derecognition
benefi ts, in which event these costs are capitalised and
The group derecognises a fi nancial asset when the contractual
amortised on the straight-line basis over the estimated useful
rights to the cash fl ows from the asset expire, or when it
life of the project or asset. The carrying amounts are reviewed
transfers the rights to receive the contractual cash fl ows on
at each fi nancial year-end to determine whether there is any
the fi nancial asset in a transaction in which substantially all
indication of impairment.
Impairment of assets
the risks and rewards of ownership of the fi nancial assets are
transferred. Any interest in fi nancial assets transferred that is
created or retained by the group is recognised as a separate
The carrying amounts of assets are reviewed at each fi nancial
asset or liability.
year-end to determine whether there is any indication of
impairment. If any such indication exists, the recoverable
The group may enter into transactions whereby it transfers
amount is estimated as the higher of the net selling price and
assets recognised on its statement of fi nancial position, but
the value in use.
retains either all risks and rewards of the transferred assets or
a portion of them. If all, or substantially all, risks and rewards
In assessing value in use, the expected future cash fl ows are
are retained, then the transferred assets are not derecognised
discounted to their present value using a pre-tax discount rate
from the statement of fi nancial position.
that refl ects current market assessments of the time value of
money and the risks specifi c to the asset. An impairment loss
The rights and obligations retained in the transfer of fi nancial
is recognised whenever the carrying amount exceeds the
instruments are recognised separately as assets and liabilities
recoverable amount.
as appropriate. In transfers where control over the asset is
retained, the group continues to recognise the asset to the
For an asset that does not generate cash infl ows largely
extent of its continuing involvement, determined by the extent
independent of those from other assets, the recoverable
to which it is exposed to changes in the value of the transferred
amount is determined for the cash-generating unit to which
asset.
the asset belongs. An impairment loss is recognised whenever
170 I Exxaro Annual Report 2009
1. ACCOUNTING POLICIES (continued)
sale fi nancial assets are classifi ed as such because they
Financial instruments (continued)
Non-derivative fi nancial instruments
do not fall within the classifi cation of loans and receivables,
held to maturity investments or fi nancial assets at fair value
Non-derivative fi nancial instruments comprise investments in
through profi t or loss. Gains or losses on available-for-sale
equity and debt instruments, trade and other payables, cash
fi nancial assets are recognised directly in equity, except for
and cash equivalents, loans and borrowings and trade and
impairment losses and foreign exchange gains and losses on
other receivables.
monetary items. When the fi nancial asset is derecognised,
the cumulative gain or loss previously recognised in equity is
Non-derivative fi nancial instruments are recognised initially
recognised in profi t or loss.
at fair value plus, in the case where fi nancial instruments are
not fair valued through profi t or loss, any directly attributable
Financial instruments not at fair value through profi t or loss,
transaction costs. Subsequent to initial recognition, non-
and not available-for-sale
derivative fi nancial instruments are measured as described
• Receivables
below.
Long-term receivables and trade and other receivables
are measured at amortised cost using the effective interest
Cash and cash equivalents comprise cash balances and call
method. Effective interest rate method is a method of
deposits. Bank overdrafts that are repayable on demand form
calculating the amortised cost of a fi nancial asset or liability
an integral part of the group’s cash management system and
(or group of fi nancial assets or fi nancial liabilities) and
are included as a component of cash and cash equivalents
allocating the interest income or interest expense over the
for purposes of the cash fl ow statements. Cash and cash
relevant period. Amortised cost is the amount at which the
equivalents are measured at amortised cost.
long-term receivables and trade and other receivables are
measured at initial recognition, minus principal repayments,
Financial instruments at fair value through profi t or loss
plus or minus the cumulative amortisation using the effective
The group has designated fi nancial assets and liabilities at fair
interest rate method of any difference between the initial
value through profi t or loss when either:
amount recognised and the maturity amount, minus any
• the assets or liabilities are managed, evaluated and reported
reduction for impairment or uncollectibility.
internally on a fair value basis;
• Loans and borrowings
• the designation eliminates or signifi cantly reduces an
Loans and borrowings are measured at amortised cost
accounting mismatch which would otherwise arise; or
using the effective interest rate method.
• the assets or liabilities contain an embedded derivative that
• Payables
signifi cantly modifi es the cash fl ows that would otherwise
Trade and other payables are reported at amortised cost,
be required under the contract and has to be separately
namely original debt less principal repayments and any
disclosed and fair-valued through profi t or loss.
amortisation using the effective interest rate method.
• Investment in equity instruments
All of the group’s fi nancial instruments designated as at fair
The fair value of investments is based on quoted bid
value through profi t or loss were designated as such as
prices for listed securities or valuations derived from
it is believed that the designation signifi cantly reduces an
discounted cash fl ow models for unlisted securities. Equity
accounting mismatch which would otherwise arise.
instruments for which fair values cannot be measured
Subsequent
to
initial
recognition, fi nancial
instruments
equity instruments classifi ed as available-for-sale are sold
designated or classifi ed as at fair value through profi t or loss
or impaired, the accumulated fair value adjustments are
are measured at fair value with changes in fair value recognised
included in the profi t or loss statement as gains and losses
in profi t or loss.
from investment securities.
reliably are recognised at cost less impairment. When
Available-for-sale fi nancial assets
The group has designated certain assets as available-for-
sale fi nancial assets. In other circumstances available-for-
Exxaro Annual Report 2009 I 171
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
1. ACCOUNTING POLICIES (continued)
Cash fl ow hedges
Financial instruments (continued)
When a derivative is designated as a hedge of the variability
Financial instruments not at fair value through profi t or loss,
in cash fl ows attributable to a particular risk associated with
and not available-for-sale (continued)
• Held to maturity investments
a recognised asset or liability or a highly probable forecast
transaction that could affect profi t or loss, the effective portion
Investments with a fi xed maturity that management has
of changes in the fair value of the derivative is recognised
the intent and ability to hold to maturity are classifi ed as
directly in equity. The amount recognised in equity is removed
held to maturity. These investments are included in non-
and included in profi t or loss in the same period as the hedged
current assets, except for maturities within 12 months from
item’s cash fl ows affect profi t or loss under the same income
the fi nancial year-end date, which are classifi ed as current
statement line item as the hedged item. Any ineffective portion
assets.
of changes in the fair value of the derivative is recognised
immediately in profi t or loss.
Held to maturity investments are carried at amortised cost
using the effective interest rate method.
If the derivative expires or is sold, terminated, or exercised, or
Derivative fi nancial instruments
no longer meets the criteria for cash fl ow hedge accounting,
or the designation is revoked, then hedge accounting is
The group holds derivative fi nancial instruments to hedge
discontinued and the amount recognised in equity remains
its foreign currency, interest rate and price risk exposures.
in equity until the forecast transaction affects profi t or loss. If
Embedded derivatives are separated from the host contract
the forecast transaction is no longer expected to occur, then
and accounted for separately if the economic characteristics
hedge accounting is discontinued and the balance in equity is
and risks of the host contract and the embedded derivative
recognised immediately in profi t or loss.
are not closely related, a separate instrument with the same
terms as the embedded derivative would meet the defi nition
Economic hedges
of a derivative, and the combined instrument is not measured
Hedge accounting is not applied to derivative instruments
at fair value through profi t or loss.
that economically hedge monetary assets and liabilities
denominated in foreign currencies. Changes in the fair value
Derivative instruments are recognised initially at fair value;
of such derivatives are recognised in profi t or loss as part of
attributable transaction costs are recognised in profi t or loss
foreign currency gains and losses.
when incurred. Subsequent to initial recognition, derivative
instruments are measured at fair value, and changes in fair
Net investments in foreign operation hedges
value accounted for as described below.
When a derivative, or a non-derivative fi nancial liability, is
Fair value hedges
designated as a hedge of a net investment in a foreign
operation instrument, the effective portion of changes in the
When a derivative is designated as a hedge of the change in
fair value of the hedging instrument is recognised directly
fair value of a recognised asset or liability or a fi rm commitment,
in equity, in the foreign currency translation reserve. Any
changes in the fair value of the derivative are recognised
ineffective portion of changes in the fair value of the derivative
immediately in profi t or loss together with changes in the fair
instrument is recognised immediately in profi t or loss. The
value of the hedged item that are attributable to the hedged
amount recognised in equity is removed and included in profi t
risk.
or loss on disposal of the foreign operation.
If the derivative expires or is sold, terminated, or exercised, or
Separable embedded derivatives
no longer meets the criteria for fair value hedge accounting, or
Changes in the fair value of separable embedded derivatives
the designation is revoked, hedge accounting is discontinued.
are recognised immediately in profi t or loss.
Any adjustment up to that point, to a hedged item for which
the effective interest rate method was used, is amortised to
profi t or loss as part of the recalculated effective interest rate
of the item over its remaining life.
172 I Exxaro Annual Report 2009
1. ACCOUNTING POLICIES (continued)
Determining fair values
Financial instruments (continued)
Impairment of fi nancial assets
The determination of fair values of fi nancial assets and
fi nancial liabilities is based on quoted market prices or
A fi nancial asset is assessed at each reporting date to
dealer price quotations for fi nancial instruments traded in
determine whether there is any objective evidence that it is
active markets. For all other fi nancial instruments fair value is
impaired. A fi nancial asset is considered to be impaired if
determined by using generally accepted valuation techniques.
objective evidence indicates that one or more events have
Valuation techniques include net present value techniques,
had a negative effect on the estimated future cash fl ows of
the discounted cash fl ow method, comparison to similar
that asset. An impairment allowance is raised when there is
instruments for which market observable prices exist, and
an indication of impairment and a write-off is only effected
valuation models. The group uses widely recognised valuation
when the debtor is deemed to be fully impaired and not
models for determining the fair value of common and more
recoverable.
simple fi nancial instruments like interest rate and currency
swaps. For these fi nancial instruments, inputs into models are
An impairment loss in respect of a fi nancial asset measured
available on the market.
at amortised cost is calculated as the difference between its
carrying amount, and the present value of the estimated future
The fair value of long and medium-term borrowings is
cash fl ows discounted at the original effective interest rate.
calculated using quoted market prices, or where such prices
An impairment loss in respect of an available-for-sale fi nancial
are not available, discounted cash fl ow analysis using the
asset is calculated by reference to its fair value.
applicable yield curve for the duration of the borrowing is
used. The fair value of fi nancial assets and fi nancial liabilities
Individually signifi cant fi nancial assets are tested for impairment
with standard terms and conditions and traded on active liquid
on an individual basis. The remaining fi nancial assets are
markets, is determined with reference to quoted market prices.
assessed collectively in groups that share similar credit risk
The fair value of other fi nancial assets and fi nancial liabilities
characteristics.
(excluding derivative instruments) is determined in accordance
with generally accepted pricing models based on discounted
All impairment losses are recognised in profi t or loss. Any
cash fl ow analysis using prices from widely available current
cumulative loss in respect of an available-for-sale fi nancial
market transactions. The fair value of derivative instruments
asset recognised previously in equity is transferred to profi t or
is calculated using quoted prices. Where such prices are not
loss.
available, use is made of discounted cash fl ow analyses for
the duration of the instruments for non-optional derivatives,
An impairment loss is reversed if the reversal can be related
and option pricing models for optional derivatives.
objectively to an event occurring after the impairment loss was
recognised. For fi nancial assets measured at amortised cost
Financial guarantee contracts
and available-for-sale fi nancial assets that are debt securities,
Financial guarantees are contracts that require the group to
the reversal is recognised in profi t or loss. For available-for-
make specifi ed payments to reimburse the holder for a loss
sale fi nancial assets that are equity securities, the reversal is
it incurs because a specifi ed debtor fails to make payment
recognised directly in equity.
when due in accordance with the terms of a debt instrument.
Offset
Financial guarantee liabilities are initially recognised at their fair
Financial assets and liabilities are set off and the net amount
value, and the initial fair value is amortised over the life of the
presented in the statement of fi nancial position when, and
fi nancial guarantee.
only when, the group has a legal right to set off the amounts
and intends either to settle on a net basis or to realise the
The guarantee liability is subsequently carried at the higher of
asset and settle the liability simultaneously.
this amortised amount and the present value of any expected
payment if a payment under the guarantee has become
probable. Financial guarantees are included within other
liabilities.
Exxaro Annual Report 2009 I 173
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
1. ACCOUNTING POLICIES (continued)
Financial instruments (continued)
Net fi nance costs
date. Gains or losses arising on translation are credited to or
charged against income.
Finance income comprises interest income on funds invested
Foreign entities
including available-for-sale fi nancial assets and hedging
The fi nancial statements of foreign entities are translated into
instruments that are recognised in profi t or loss. Interest
South African rand as follows:
income is recognised as it accrues in profi t or loss, using the
• assets and liabilities at rates of exchange ruling at the
effective interest rate method.
reporting date
• income, expenditure and cash fl ow items at weighted
Finance expenses comprise interest expense on borrowings
average rates
and agreements for the use of assets classifi ed as fi nance
• goodwill and fair value adjustments arising on acquisition at
leases in terms of IFRIC 4, unwinding of the discount on
rates of exchange ruling at the reporting date.
provisions, and dividends on preference shares classifi ed as
liabilities. All borrowing costs are recognised in profi t or loss
All resulting exchange differences are refl ected as part of
using the effective interest rate method.
shareholders’ equity. On disposal, such translation differences
are recognised in the income statement as part of the
Foreign currency gains and losses are reported on a net
cumulative gain or loss on disposal.
basis.
Fees and commission
Foreign currency hedges are dealt with in the fi nancial
Foreign currency hedges
Fees and commission income and expenses that are integral
instruments accounting policy.
to the effective interest rate on a fi nancial asset or fi nancial
liability are included in the measurement of the effective
Exchange rate used
interest rate.
The average US dollar to South African rand conversion rate,
where applicable, of US$1: R8,35 (2008: US$1: R8,25) has
Other fees and commission expenses relate mainly to
been used to translate the income and statements of cash
transaction and service fees and are expensed as the services
fl ows while the statement of fi nancial position has been
are received.
Inventories
translated at the closing rate at the last day of the reporting
period US$1: R7,40 (2008: US$1: R9,36).
Inventories are valued at the lower of cost, determined on
Revenue recognition
the moving average basis, and net realisable value. The
Revenue, which excludes value added tax, represents the
cost of fi nished goods and work-in-progress comprises
gross value of goods invoiced.
raw materials, direct labour, other direct costs and fi xed
production overheads, but excludes interest charges. Fixed
Export revenues are recorded according to the relevant
production overheads are allocated on the basis of normal
sales terms, when the risks and rewards of ownership are
capacity. Write-downs to net realisable value and inventory
transferred.
losses are expensed in the period in which the write-downs or
losses occur.
Foreign currencies
Transactions and balances
Revenue from the sale of goods is recognised when signifi cant
risks and rewards of ownership of the goods are transferred to
the buyer.
Transactions denominated in foreign currencies are translated
Revenue arising from services and royalties is recognised on
at the rate of exchange ruling at the transaction date.
the accrual basis in accordance with the substance of the
relevant agreements.
Monetary items denominated in foreign currencies are
translated at the rate of exchange ruling at the reporting
174 I Exxaro Annual Report 2009
1. ACCOUNTING POLICIES (continued)
Annual contributions are made to the group’s Environmental
Interest and dividend income
Rehabilitation Fund, created in accordance with statutory
Interest is recognised on the time proportion basis, taking
requirements, to provide for the funding of the estimated cost
account of the principal outstanding and the effective rate
of pollution control and rehabilitation during, and at the end
over the period to maturity, when it is determined that such
of the life of mines. The Exxaro Environmental Rehabilitation
income will accrue to the group.
Fund is consolidated.
Dividends are recognised when the right to receive payment is
Expenditure on plant and equipment for pollution control is
established.
Income tax expense
capitalised and depreciated over the useful lives of the assets
whilst the cost of ongoing current programmes to prevent and
control pollution and to rehabilitate the environment is charged
Income tax expense represents the sum of the tax currently
against profi t or loss as incurred.
payable and deferred tax.
Deferred tax
The tax currently payable is based on taxable profi t for the
Deferred tax is provided using the balance sheet liability
year. Taxable profi t differs from profi t as reported in the income
method on all temporary differences between the carrying
statement because it excludes items of income or expense
amounts for fi nancial reporting purposes and the amounts
that are taxable or deductible in other years in determination
used for tax purposes.
of taxable profi t (temporary differences), and it further excludes
items that are never taxable or deductible (non-temporary
A deferred tax asset is recognised to the extent that it is
differences). The group’s liability for tax is calculated using tax
probable that future taxable profi ts will be available against
rates that have been enacted or substantively enacted by the
which the associated unused tax losses and deductible
reporting date.
Provisions
temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at
Provisions are recognised when the group has a present
each reporting date and reduced to the extent that it is no
legal or constructive obligation as a result of past events, for
longer probable that suffi cient taxable profi ts will be available
which it is probable that an outfl ow of economic benefi ts will
to allow all or part of the asset to be recovered.
be required to settle the obligation, and a reliable estimate
can be made of the amount of the obligation. Where the
Deferred tax is calculated using taxation rates that have been
effect of discounting to present value is material, provisions
enacted at the reporting date. The effect on deferred tax of
are adjusted to refl ect the time value of money, and where
any changes in taxation rates is charged or credited to the
appropriate, the risk specifi c to the liability.
income statement, except to the extent that it relates to items
previously charged or credited directly to equity.
Decommissioning and environmental rehabilitation
Provision
is made
for environmental rehabilitation and
Deferred tax assets and liabilities are offset when there is a
decommissioning costs where either a legal or constructive
legally enforceable right to set off current tax assets against
obligation is recognised as a result of past events. Estimates
current tax liabilities and when they relate to income taxes
are based upon costs that are regularly reviewed and adjusted
levied by the same taxation authority and the group intends,
as appropriate for new circumstances.
and has the ability, to settle its current tax assets and liabilities
on a net basis.
Where a provision is made for dismantling and site restoration
costs, an asset of similar initial value is raised and amortised
in accordance with the group’s accounting policy for property,
plant and equipment.
Exxaro Annual Report 2009 I 175
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
1. ACCOUNTING POLICIES (continued)
Short and long-term benefi ts
Employee benefi ts
Post-employment benefi ts
Retirement
The cost of all short-term employee benefi ts, such as
salaries, bonuses, housing allowances, medical and other
contributions, is recognised during the period in which the
The group provides defi ned contribution retirement funds
employee renders the related service.
for the benefi t of employees, the assets of which are held
in separate funds. These funds are funded by contributions
The vesting portion of long-term benefi ts is recognised and
from employees and the group, taking account of the
provided for at fi nancial year-end, based on current total cost
recommendations of independent actuaries. The group’s
to company.
contribution to the defi ned contribution fund is charged to the
income statement in the year to which it relates.
Termination benefi ts
The group does not provide guarantees in respect of returns
employment is terminated before the normal retirement date
in the defi ned contribution funds.
or whenever an employee accepts voluntary redundancy in
Termination benefi ts are payable whenever an employee’s
exchange for these benefi ts.
Provision for severance benefi ts is made in accordance
with the Namibian law for the Namibian operations. As the
The group recognises termination benefi ts when it has
severance benefi ts are only payable on retirement or the
demonstrated
its commitment
to either
terminate
the
involuntary termination of service from the side of the employer,
employment of current employees according to a detailed
this is accounted for as a post-retirement service. The plan is a
formal plan without possibility of withdrawal or to provide
defi ned benefi t obligation. The cost of providing these benefi ts
termination benefi ts as a result of an offer made to encourage
is determined based on the projected unit credit method and
voluntary redundancy. If the benefi ts fall due more than
actuarial valuations are performed at every reporting date.
12 months after the reporting date, they are discounted to
The defi ned benefi t obligation presented in the statement of
present value.
fi nancial position represents the sum of the present value of
the obligation less the fair value of plan assets plus/minus any
Equity compensation benefi ts
balance of unrecognised actuarial gains or losses, minus any
Senior management, including executive directors, have been
balance of unrecognised past service costs.
granted share options and share appreciation rights (SARs).
The share appreciation rights are subject to achievement
Unrecognised actuarial gains or losses are recognised in
of performance-related criteria before vesting. Grants are
profi t or loss based on the corridor method. In other words,
based on existing ordinary shares and can be purchased or
an excess of the balance of unrecognised gains or losses over
the purchase can be deferred. The option or purchase price
10% of the greater of the present value of the obligation or fair
equals the market price on the date preceding the date of the
value of the plan assets is recognised in profi t or loss over the
grant.
expected remaining working lives of participating employees.
Past service cost is recognised immediately to the extent that
either be:
the benefi ts are vested and recognised over the remaining
• purchased and, if vesting according to the rules of the
period until vesting for benefi ts that are unvested.
scheme, recorded in share capital and share premium at
When the options or SARs vest and are exercised, they can
the amount of the option price; or
Medical
• payment can be deferred resulting in no increase in share
A post-retirement medical contribution obligation exists for a
capital or share premium until paid for and vesting according
selective number of in-service and retired employees of the
to the rules of the scheme.
accredited medical aid funds. This benefi t is no longer offered
to employees. The actuarially determined liability is raised as a
non-current provision.
176 I Exxaro Annual Report 2009
1. ACCOUNTING POLICIES (continued)
Employee benefi ts (continued)
Post-employment benefi ts (continued)
Equity compensation benefi ts (continued)
committed to the sale, which should be expected to qualify for
recognition as a completed sale within one year from the date
of classifi cation.
The fair value of the options or SARs granted to senior
Segment reporting
management,
including executive directors, have been
Exxaro is a mining group of companies focusing on extracting
determined at grant date using a suitable option pricing model
and processing a range of minerals and metals including coal,
and are expensed over the vesting period of the options or
mineral sands, base metals, and selected industrial minerals.
SARs with a corresponding increase in equity.
Exxaro also holds a 20% interest in Sishen Iron Ore Company
(Pty) Limited which extracts and processes iron ore.
For cash-settled share-based payments, a liability equal to the
portion of the goods or services received is recognised at the
Segments are based on the group’s different products and
current fair value determined at each fi nancial year-end.
operations as well as the physical location of these operations
Dividend
and associated products. The group’s reportable segments
are tied coal operations, commercial coal operations, KZN
Dividends paid are recognised by the company when the
Sands, Namakwa Sands, Australia Sands, Rosh Pinah,
shareholder’s right to receive payment is established.
Zincor, other base metals and other. The basis of segment
reporting is representative of the internal structure used for
These dividends are recorded and disclosed as dividends
management reporting.
paid in the statement of changes in equity.
Cash and cash equivalents
Dividends proposed or declared subsequent to the year-end
For the purpose of the cash fl ow statement, cash and cash
are not recognised at the fi nancial year-end, but are disclosed
equivalents comprise cash on hand, deposits held on call,
in the notes to the fi nancial statements.
and investments in money market instruments, net of bank
Secondary tax on companies
overdrafts, all of which are available for use by the group
unless otherwise stated. The carrying amount of these assets
Tax costs incurred on dividends are included in the taxation
approximates their fair value.
line in the income statement in the year in which the related
dividends are declared.
Judgements made by management
Discounted operations and non-current assets
estimates (as mentioned below) have been made by
held for sale
management in the process of applying the group’s
Discontinued operations are signifi cant, distinguishable
accounting policies that have the most signifi cant effect on
components of an enterprise
that have been sold,
the amounts recognised in the fi nancial statements:
abandoned or are the subject of formal plans for disposal or
• the identifi cation of special purpose entities controlled by
The following judgements, apart from those involving
discontinuance.
the group which must be consolidated (refer note 28);
• in applying IFRS 5 Non-current Assets Held for Sale
The profi t or loss on the sale or abandonment of a discontinued
and Discontinued Operations, management
has
operation is determined from the formalised discontinuance
made judgements as to which non-current assets and
date.
discontinued operations fall within the scope of the
standard and had to be reclassifi ed and measured in terms
If the carrying amount of a non-current asset or disposal
of IFRS 5;
group will be recovered principally through a sale transaction
• in applying IFRS 2 Share-based Payments, management
rather than through continuing use, such an asset is classifi ed
has made certain judgements in respect of the fair value
as a non-current asset held for sale and measured at the
option pricing models to be used in determining the various
lower of the carrying amount and fair value less cost to sell.
share-based arrangements
in respect of employees,
This condition is regarded as met only when the sale is highly
as well as the variable elements used in these models
probable and the asset (or disposal group) is available for
(refer note 30).
immediate sale in its present condition. Management must be
Exxaro Annual Report 2009 I 177
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
1. ACCOUNTING POLICIES (continued)
estimate, the discount rate used and the expected date of
Judgements made by management (continued)
closure of mining activities in determining the present value
• in applying IFRIC 4 Determining whether an Arrangement
of environmental and decommissioning provisions. Estimates
contains a Lease, and
IAS 17 Leases, contractual
are based upon costs that are regularly reviewed, by internal
agreements were assessed to determine whether they
and external experts, and adjusted as appropriate for new
convey the right to use an asset and their classifi cation as
circumstances. Refer note 22.
either an operating or a fi nance lease
• in applying IFRS 8, the identifi cation of reportable operating
Post-retirement obligations
segments of the group
For defi ned benefi t schemes, management is required to
• in applying IAS 19 Employee Benefi ts, the identifi cation
make annual estimates and assumptions about future returns
as to the nature of benefi ts provided by each scheme and
on classes of schemes assets, future remuneration changes,
thereby determine the classifi cation of each scheme.
employee attrition rates, administration costs, changes in
Key assumptions made by management in applying
expected remaining periods of service of employees. In making
accounting policies
these estimates and assumptions, management considers
The following key assumptions concerning the future, and
advice provided by external advisers, such as actuaries. Refer
benefi ts, infl ation rates, exchange rates, life expectancy and
other key sources of estimation uncertainty at the fi nancial
note 22.
year-end, may have a signifi cant risk of causing a material
adjustment to the carrying amounts of assets and liabilities
Other provisions
within the next fi nancial year if the assumption or estimation
For other provisions, estimates are made of legal or constructive
changes signifi cantly:
Going concern
obligations resulting in the raising of provisions, and the
expected date of probable outfl ow of economic benefi ts to
assess whether the provision should be discounted. Refer
Management considers key fi nancial metrics and loan
note 22.
covenant compliance in its approved medium-term budgets,
together with its existing term facilities, to conclude that the
Impairments and impairment reversals
going-concern assumption used in the compiling of its annual
Impairment tests are performed when there is an indication of
fi nancial statements, is relevant.
impairment of assets or a reversal of previous impairments of
Share-based payments
assets.
For share-based payments estimates are made in determining
Management therefore has implemented certain impairment
the fair value of equity instruments granted. The assumptions
indicators and these
include movements
in exchange
are used in the Black-Scholes methodology and the Monte
rates, commodity prices and the economic environment its
Carlo valuation methodology and includes assumptions
businesses operate in.
regarding future dividend yield, risk-free rate, expected
employee attrition rate, expected share volatility and expected
Estimates are made in determining the recoverable amount
option life. Refer note 30.
of assets which includes the estimation of cash fl ows and
discount rates used.
Environmental and decommissioning provision
Provision is made for environmental and decommissioning
In estimating the cash fl ows, management bases cash fl ow
costs where either a legal or constructive obligation is
projections on reasonable and supportable assumptions
recognised as a result of past events. Estimates are made
that represent management’s best estimate of the range of
in determining the present obligation of environmental and
economic conditions that will exist over the remaining useful
decommissioning provisions, which
include
the actual
life of the assets, based on publicly available information.
178 I Exxaro Annual Report 2009
1. ACCOUNTING POLICIES (continued)
Mineral resources
Key assumptions made by management in applying
Management makes estimates of mineral resources and
accounting policies (continued)
ore reserves in accordance with the SAMREC Code (2000)
Impairments and impairment reversals (continued)
for South African properties and the JORC Code (2004) for
The discount rates used are pre-tax rates that refl ect the
Australian properties. Such estimates relate to the category for
current market assessment of the time value of money and
the resource (measured, indicated or inferred), the quantum
the risks specifi c to the assets for which the future cash fl ow
and the grade.
estimates have not been adjusted.
Contingent liabilities
Black economic empowerment (BEE) credentials
The difference between the fair value of equity instruments
Management considers the existence of possible obligations
issued as part of an empowerment transaction, and the
which may arise from legal action as well as the possible non-
identifi able consideration received for such issue, represents
compliance of the requirements of completion guarantees
a BEE credential expense that does not meet the recognition
and other guarantees provided. The estimation of the amount
criteria of an intangible asset and is expensed through the
disclosed is based on the expected possible outfl ow of
income statement.
economic benefi ts should there be a present obligation. Refer
note 31.
Deferred tax assets
Deferred tax assets are recognised based on the probability
that suffi cient future taxable income will be available to reduce
the asset carried.
This requires management to make assumptions on a
subsidiary by subsidiary level of future taxable income in
determining the deferred tax asset to be raised. Refer note 23.
Useful life and residual values
The depreciable amount of assets is allocated on a systematic
basis over their useful lives. In determining the depreciable
amount management makes certain assumptions in respect of
the residual value of assets based on the expected estimated
amount that the entity would currently obtain from disposal
of the asset, after deducting the estimated cost of disposal.
If an asset is expected to be abandoned the residual value is
estimated at zero.
In determining the useful lives of assets management
considers the expected usage of assets, expected physical
wear and tear, legal or similar limits of assets such as mineral
rights as well as obsolescence.
Exxaro Annual Report 2009 I 179
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
GROUP
COMPANY
Notes
2009
Rm
2008
Rm
2009
Rm
2008
Rm
15 009
13 843
15 009
13 843
1 009
1 009
915
915
2. REVENUE
Sale of goods
Services
3. OPERATING EXPENSES
Cost by type
– Raw materials and consumables
– Staff costs
– salaries and wages
– share-based payments
– termination benefi ts
– pension and medical costs
– Income from sale of investment
– General charges
– Share-based payment: BEE credential expense
– Railage and transport
– Repairs and maintenance
– Impairment charges and reversals of non-current
3 538
3 497
3 253
91
4
245
2 837
1 008
1 585
2 644
84
12
215
(7)
2 137
2
677
1 434
20
2
481
894
4
(612)
(100)
(8)
35
508
37
34
389
1
5
3 273
6
25
9
(1)
(1)
assets
4
1 435
– Impairment charges, reversals and write-offs of trade
and other receivables1
– Energy
– Depreciation of property, plant and equipment
– Amortisation of intangible assets
– Movement in inventories
– Own work capitalised
– Sublease rentals received
11
13
217
761
1 123
13
(1 295)
(97)
(13)
Cost by function
– Costs of goods sold/services rendered
– Selling and distribution costs
– Sublease rentals received
– Impairment charges and reversals of non-current
assets
– Impairment charges, reversals and write-offs of trade
and other receivables1
– Income from sale of investment
14 705
11 376
4 320
12 199
867
(13)
10 744
625
(8)
4
1 435
217
20
2
(7)
1 048
(1)
3 273
14 705
11 376
4 320
52
427
42
11
35
(1 726)
376
1
8
(1)
(2)
4
15
(758)
971
(1)
(2)
(1 726)
(758)
1 Consequent to the impairment of the KZN Sands businesses, intergroup loans receivable by the company (included in trade and other receivables) were
impaired to an amount of R3 273 million.
180 I Exxaro Annual Report 2009
GROUP
COMPANY
Notes
2009
Rm
2008
Rm
2009
Rm
2008
Rm
3. OPERATING EXPENSES (continued)
Cost by function (continued)
The above costs are stated after including:
Auditors’ remuneration
– audit fees
– other services
Consultancy fees
Contingent rentals paid
Contingent rentals received
Currency exchange differences
– net realised losses/(profi ts) on currency exchange
differences
– net unrealised losses/(profi ts) on currency exchange
differences
Depreciation and amortisation
– buildings
– mineral properties
– residential buildings
– buildings and infrastructure
– machinery, plant and equipment
– leased assets under fi nance lease
– site preparation, mining development, exploration
and rehabilitation
– amortisation of intangible assets
Directors’ emoluments (refer to the report of the
directors, page 144)
– executive directors
– remuneration received by directors of the company
– bonuses and cash incentives
– compensation on retirement from executive offi ce
– non-executive directors
– remuneration received by directors of the company
Exploration expenditure
Fair value (gains)/losses on fi nancial assets at fair value
through profi t or loss:
– designated upon initial recognition
– held for trading
– ineffectiveness arising from cash fl ow hedges
losses/(gains)
Fair value (gains)/losses on fi nancial liabilities at fair value
through profi t or loss:
– designated upon initial recognition
– held for trading
11
11
11
11
11
11
11
13
16
1
166
12
(37)
576
45
1
180
6
125
767
9
35
13
15
3
149
10
(27)
(476)
(39)
3
165
5
99
584
10
28
4
115
50
(19)
(465)
60
(7)
26
11
130
(54)
55
(7)
5
1
78
8
8
5
1
74
1
(6)
25
15
12
11
9
2
(1)
9
11
4
3
(1)
(465)
3
Exxaro Annual Report 2009 I 181
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
Notes
4
22
3. OPERATING EXPENSES (continued)
Gains on held to maturity investments disclosed at
amortised cost
Impairment charges and reversals of non-current assets
Inventories write-down to net realisable value
Inventories previously written down reversed
Movement in provisions
Net losses on disposal or scrapping of
property, plant and equipment
Net profi t on disposal of investment
Operating lease rentals expenses
– property
– equipment
Operating sublease rentals received
– property
Reconditionable spares usage
Research and development costs
Share-based payment: BEE credentials
Impairment charges, reversals and write-offs of trade
and other receivables1
GROUP
2009
Rm
1 435
2
23
84
15
71
(13)
4
7
217
2008
Rm
(40)
20
128
(136)
236
65
(7)
46
61
(8)
1
5
2
2
COMPANY
2009
Rm
2008
Rm
(40)
(1)
4
4
5
(1 726)
41
14
2
(2)
7
14
(1)
3
3 273
1 Consequent to the impairment of the KZN Sands businesses, intergroup loans receivable by the company (included in trade and other receivables) were
impaired to an amount of R3 273 million.
Note:
Pensions
Retirement amounts paid or receivable are paid or received under defi ned contribution retirement funds.
Operating lease arrangements – contingent rent received
The group has entered into various operating lease arrangements, of which some will include contingent rent received. The major
arrangements’ basis to determine contingent rent received is the useful life of property, plant and equipment.
Operating lease arrangements – contingent rent paid
The basis to determine contingent rent paid is the difference between fi xed escalations as specifi ed in the contracts and Producer Price
Index (PPI) escalations.
182 I Exxaro Annual Report 2009
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
4.
IMPAIRMENT CHARGES NON-CURRENT ASSETS
Included in operating expenses are the following
impairment losses:
Impairment on property, plant and equipment1
Total impairment charges
Reversal of impairment of property, plant and equipment
Total impairment reversals
1 435
1 435
Total impairments and reversals before tax
1 435
21
21
(1)
(1)
20
(1)
(1)
(1)
1 The decision not to develop the Fairbreeze Mineral Sands mine had a negative effect on the carrying value of the KZN Sands operation at 31 December
2009. The two Sands businesses in KZN are viewed as a single economic unit as the operations are interdependent and neither can operate economically
without the other. The recoverable amount of the assets has been determined by the calculation of its value in use for which a discount rate of 8,4% was
used compared to 7,4% used for the similar calculation performed on 31 December 2008. The impairment amounts to R1 435 million.
The carrying value of expenditure capitalised during the development phase on the Market Coke and Belfast projects was impaired in 2008 based on the
uncertainty of the recoverable amount.
GROUP
COMPANY
5. NET FINANCING COSTS
Interest expense and loan costs
Finance leases – interest
Interest income
Net interest expense
Interest adjustment on non-current provisions (refer note 22)
Borrowing costs capitalised during the year amounted to
R6 million (2008: Rnil)
Included in interest expense are the following:
Interest expense on fi nancial liabilities measured
at amortised cost
Interest expense on bank overdrafts
Interest expense on fi nancial liabilities designated
at fair value through profi t or loss
Included in interest income are the following:
Interest income on unimpaired loans and receivables
Interest income on unimpaired available-for-sale
fi nancial assets
Interest income on cash and cash equivalents
Interest income on fi nancial assets designated
at fair value through profi t or loss
Net fee costs on fi nancial liabilities not at fair value
through profi t or loss
2009
Rm
460
66
(145)
381
34
415
450
9
1
(38)
(13)
(75)
(19)
5
2008
Rm
283
63
(153)
193
48
241
250
4
(37)
(69)
(47)
11
2009
Rm
388
(51)
337
2
339
386
2
2008
Rm
167
(50)
117
2
119
163
4
(1)
(50)
(49)
(1)
5
8
Exxaro Annual Report 2009 I 183
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
4 616
371
4 987
144
138
282
1 744
1 037
6 731
1 319
(24)
(24)
4
22
26
(9)
(1)
3
(7)
2
(7)
2
2
462
(51)
411
343
1
344
36
14
50
(46)
7
(39)
766
2
2
757
757
(95)
(12)
(107)
8
8
(97)
(68)
(165)
1
16
510
6.
INCOME FROM INVESTMENTS
Subsidiaries
Unlisted shares
– dividends
– net interest received
Associates
– dividends
Other
Listed shares
– dividends
Total
7.
INCOME TAX EXPENSE
Charge to income
South African normal tax
– Current – current year
– prior year
– Deferred – current year
– prior year
– rate adjustment
Foreign normal tax
– Current – current year
– prior year
– Deferred – current year
– prior year
Secondary Tax on Companies
Non-residents withholding tax
Total
184 I Exxaro Annual Report 2009
GROUP
COMPANY
2009
%
2008
%
2009
%
2008
%
42,8
13,1
0,1
(0,2)
7.
INCOME TAX EXPENSE (continued)
Reconciliation of tax rates
Tax as a percentage of profi t before tax
Tax effect of
– assessed losses not provided
– capital (losses)/profi ts
– disallowable expenditure
– reclassifi cation of previously disallowable expenditure
– exempt income
– special tax allowances
– share of associates and joint ventures
– tax rate differences
– rate change on deferred tax balance
– Secondary Tax on Companies (STC)
– withholding tax
– Controlled Foreign Company profi ts (CFC)
– foreign exchange differences
– prior year adjustment
– derecognition of deferred tax asset
– write-down of subsidiaries’ loans
(1,5)
(1,3)
(1,3)
2,2
2,1
29,6
0,5
(0,8)
1,7
(46,0)
(0,3)
0,2
(0,7)
1,1
1,0
11,9
0,4
0,3
(0,1)
(0,4)
(0,1)
(0,1)
1,7
Standard tax rate
28,0
28,0
Effective tax rate for operations, excluding income from
equity-accounted investments, impairment charge and
share of tax thereon
57,8
22,7
(0,2)
57,8
17,2
(0,4)
11,4
(29,7)
28,0
28,0
Exxaro Annual Report 2009 I 185
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
8. EARNINGS PER SHARE
Basic headline earnings per share is calculated by
dividing the headline earnings by the weighted average
number of ordinary shares in issue during the year.
Headline earnings (R million) (refer note 10)
Weighted average number of ordinary shares
in issue (million)
Headline earnings per share (cents)
For the diluted headline earnings per share the weighted
average number of ordinary shares is adjusted to
assume conversion of not yet released purchased shares
and options under the Management Share Scheme, net
of shares held by the Scheme for releasing purposes.
Diluted headline earnings per share is calculated by
dividing headline earnings by the adjusted weighted
average number of shares in issue.
Weighted average number of ordinary shares in issue
(million) as calculated above
Adjusted for options and net purchased shares in terms
of the Management Share Scheme (million)
Weighted average number for diluted headline earnings
per share (million)
Diluted headline earnings per share (cents)
Basic attributable earnings per share is calculated by
dividing the net profi t attributable to owners of the parent
by the weighted average number of ordinary shares in
issue during the year.
Profi t for the year attributable to owners
of the parent (R million)
Weighted average number of ordinary shares
in issue (million)
Basic earnings per share (cents)
For the diluted attributable earnings per share the
weighted average number of ordinary shares is adjusted
as above.
2 514
3 630
345
729
343
1 058
345
13
358
702
343
18
361
1 006
1 023
3 405
345
297
343
993
Diluted earnings per share (cents)
286
943
For the current year, shares under option had an effect
on the adjusted weighted average number of shares in
issue as the average option price attached to the option
shares was lower than the average market price.
9. DIVIDEND
Dividends paid during the year:
Cash dividends
Paid to minorities
STC on these dividends amounts to nil (2008: nil)
after taking into account STC credits.
186 I Exxaro Annual Report 2009
1 050
1 050
957
27
984
1 066
973
1 066
973
10. RECONCILIATION OF GROUP HEADLINE EARNINGS
Profit for the year attributable to owners of the parent
Adjusted for:
– IAS 16 Impairment of Property, Plant and Equipment
– IAS 16 Gains or Losses on Disposal of Property,
Plant and Equipment
– IAS 28 Share of Associates’ IAS 16 – Gains or losses
on Disposal of Property, Plant and Equipment
HEADLINE EARNINGS
1 435
88
(8)
1 515
(24)
2
(22)
For the year ended 31 December 2009
Gross
Rm
Tax
Rm
Non-
controlling
interest
Rm
Net
Rm
1 023
1 435
62
(6)
(2)
(2)
2 514
Profit for the year attributable to owners of the parent
Adjusted for:
– IAS 16 Impairment of Property, Plant and Equipment
– IAS 16 Gains or Losses on Disposal of Property,
Plant and Equipment
– IAS 16 Reversal of Impairment of Property, Plant and Equipment
– IAS 27 Gains on Disposal of Subsidiary
– IAS 28 Share of Associates’ IAS 16 – Gains or Losses
on Disposal of Property, Plant and Equipment
– IAS 28 Share of Associates’ IAS 39 – Recycling of
Remeasurements from Equity to the Income Statement,
including a hedge of net investment in a foreign entity but
excluding cash flow hedges
– IAS 36 Impairment Reversal of Investment
HEADLINE EARNINGS
GROUP HEADLINE EARNINGS PER SHARE FOR
THE YEAR ENDED 31 DECEMBER
HEADLINE EARNINGS PER SHARE (refer note 8)
– basic
– diluted
For the year ended 31 December 2008
Gross
Rm
Tax
Rm
Non-
controlling
interest
Rm
21
66
(1)
(7)
2
4
161
246
(20)
(1)
(21)
2009
cents
729
702
Net
Rm
3 405
21
46
(1)
(7)
1
4
161
3 630
2008
cents
1 058
1 006
Exxaro Annual Report 2009 I 187
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
Site
preparation,
mining
develop-
ment,
exploration
and rehabili-
tation
Rm
Extensions
under
con-
struction
Rm
776
87
17
1 887
339
(2)
Total
Rm
17 625
1 982
39
1 228
(36)
(230)
2
7
(606)
(3)
86
(4)
1 591
20 723
5 487
1 123
72
(97)
45
(4)
6 626
38
829
1 435
(36)
2 228
(36)
2
1 589
11 869
11
81
972
355
35
5
395
63
79
142
435
11. PROPERTY, PLANT AND EQUIPMENT
Land and
buildings
Rm
Mineral
proper-
ties
Rm
Resi-
dential
land and
buildings
Rm
Buildings
and infra-
structure
Rm
Machinery,
plant and
equipment
Rm
184
106
2 262
349
87
1
(78)
562
1
1
18
9
282
2 640
575
180
5
5
147
27
2
7
(4)
1
2 309
403
10 060
1 020
7
81
(4)
(1)
7
167
15
704
(186)
(5)
51
150
180
2 969
11 809
42
6
727
125
5
(3)
5
(3)
856
227
445
3 787
776
44
(94)
30
(1)
4 542
495
911
672
1 406
20
765
48
6
6
542
1 869
132
1 441
5 861
GROUP
2009
Gross carrying amount
At beginning of year
Additions
Changes in
decommissioning assets
Increase in joint venture
Disposals of items of
property, plant and
equipment
Net reclassification to
non-current assets classified
as held for sale
Exchange differences
on translation
Other movements
At end of year
Accumulated depreciation
At beginning of year
Depreciation charges
Increase in joint venture
Accumulated depreciation
on disposals of items
of property, plant and
equipment
Exchange differences
on translation
Other movements
At end of year
Impairment of assets
At beginning of year
Impairment charges
(refer note 4)
Disposals of items of
property, plant and
equipment
At end of year
Net carrying amount
at end of year
188 I Exxaro Annual Report 2009
11. PROPERTY, PLANT AND EQUIPMENT (continued)
Land and
buildings
Rm
Mineral
proper-
ties
Rm
Resi-
dential
land and
buildings
Rm
Buildings
and infra-
structure
Rm
Machinery,
plant and
equipment
Rm
Site
preparation,
mining
develop-
ment,
exploration
and
rehabili-
tation
Rm
Extensions
under
con-
struction
Rm
Total
Rm
665
39
1 131
852
13 898
1 617
GROUP
2008
Gross carrying amount
At beginning of year
Additions
Changes in
decommissioning assets
Acquisition of subsidiary and
other business operations
Disposals of items of
property, plant and
equipment
Net reclassification from
non-current assets
classified as held for sale
Exchange differences on
translation
Other movements
At end of year
Accumulated depreciation
At beginning of year
Depreciation charges
Accumulated depreciation on
disposals of items of property,
plant and equipment
Net reclassification from
non-current assets
classified as held for sale
Exchange differences on
translation
Other movements
At end of year
Impairment of assets
At beginning of year
Impairment reversals
Impairment charges
At end of year
Net carrying amount
at end of year
169
12
2 200
101
19
28
(1)
(1)
1
147
37
5
(1)
(1)
2
42
19
1
(1)
2
(17)
184
12
3
(14)
1
30
31
2 262
381
165
10
19
575
6
6
1 746
152
8
7 886
543
60
280
1 703
(7)
(383)
(2)
(18)
21
127
(78)
154
175
2 309
10 060
644
99
3 464
594
(1)
31
44
776
316
28
(9)
(291)
(2)
(9)
12
(10)
727
227
(55)
79
(4)
3 787
496
(1)
227
495
(1)
13
1
355
63
63
36
241
(4)
(2)
2
(369)
104
2 272
(397)
(101)
240
(8)
1 887
17 625
4 854
894
(303)
(66)
114
(6)
5 487
809
(1)
21
829
17
21
38
183
1 681
105
1 355
5 778
358
1 849
11 309
The net carrying amount of machinery, plant and equipment includes:
Assets held under finance leases (refer note 21)
– cost
– accumulated depreciation
For details of property, plant and equipment pledged as security refer to annexure 1.
A register of land and buildings is available for inspection at the registered office of the company.
2009
Rm
2008
Rm
197
69
128
196
60
136
Exxaro Annual Report 2009 I 189
104
66
(83)
87
Total
Rm
229
88
(4)
1
314
53
25
(4)
74
87
240
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
11. PROPERTY, PLANT AND EQUIPMENT (continued)
Land and
buildings
Rm
Mineral
proper-
ties
Rm
Resi-
dential
land and
buildings
Rm
Buildings
and infra-
structure
Rm
Machinery,
plant and
equipment
Rm
Site
preparation,
mining
develop-
ment,
exploration
and rehabili-
tation
Rm
Extensions
under
con-
struction
Rm
COMPANY
2009
Gross carrying amount
At beginning of year
Additions
Disposals of items of
property, plant and
equipment
Other movements
At end of year
Accumulated depreciation
At beginning of year
Depreciation charges
Accumulated depreciation
on disposals of items
of property, plant and
equipment
At end of year
Net carrying amount
at end of year
11
1
12
5
5
7
114
22
(4)
83
215
48
25
(4)
69
146
190 I Exxaro Annual Report 2009
11. PROPERTY, PLANT AND EQUIPMENT (continued)
Land and
buildings
Rm
Mineral
proper-
ties
Rm
Resi-
dential
land and
buildings
Rm
Buildings
and infra-
structure
Rm
Machinery,
plant and
equipment
Rm
COMPANY
2008
Gross carrying amount
At beginning of year
Additions
Disposals of items of
property, plant and
equipment
Other movements
At end of year
Accumulated depreciation
At beginning of year
Depreciation charges
Accumulated depreciation
on disposals of items
of property, plant and
equipment
At end of year
Impairment of assets
At beginning of year
Impairment reversals
At end of year
Net carrying amount
at end of year
11
11
5
5
6
82
2
(7)
37
114
34
15
(1)
48
1
(1)
66
Site
preparation,
mining
develop-
ment,
exploration
and
rehabili-
tation
Rm
Extensions
under
con-
struction
Rm
80
61
(37)
104
Total
Rm
173
63
(7)
229
39
15
(1)
53
1
(1)
104
176
Exxaro Annual Report 2009 I 191
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
12. BIOLOGICAL ASSETS
GROUP
2009
Carrying amount
At beginning of year
(Losses)/gains attributable to physical and price changes
Net reclassification to inventory
At end of year
Fair value of biological assets can be split as follows:
– mature
– immature
The plantation was valued by Mr JM Potgieter,
an independent appraiser, on 20 November 2009.
2008
Carrying amount
At beginning of year
Gains attributable to physical and price changes
Disposals
Net reclassification from inventory
At end of year
Fair value of biological assets can be split as follows:
– mature
– immature
Plantation
Rm
Livestock
Rm
Game
Rm
Total
Rm
8
(1)
7
4
3
7
6
3
(1)
8
6
2
8
6
3
(2)
7
7
7
6
(1)
1
6
6
6
20
9
(2)
27
27
27
18
3
(2)
1
20
20
20
34
11
(4)
41
38
3
41
30
6
(4)
2
34
32
2
34
Plantations consist of wattle and bluegum trees.
Livestock consists of cattle and horses.
Game consists of rhino, buffalo, warthog, giraffe, ostrich and a large variety of antelope.
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
121
19
3
143
42
13
1
56
87
108
4
9
121
32
4
4
2
42
79
19
19
9
9
10
13.
INTANGIBLE ASSETS
Patents, licences and franchises
Gross carrying amount
At beginning of year
Additions
Transfers from other assets
Exchange differences
At end of year
Accumulated amortisation
At beginning of year
Amortisation charge
Transfers from other assets
Exchange differences
At end of year
Net carrying amount at end of year
192 I Exxaro Annual Report 2009
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
14.
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
Associated unlisted companies
1 965
1 848
Joint ventures (Unlisted)
– incorporated
Total
1
1
1 966
1
1
1 849
Refer to annexure 2 for market and directors’ valuations of investments.
ASSOCIATE COMPANIES
JOINT VENTURES
Investments
Rm
Loans1
Rm
Total
Rm
Investments
Rm
Loans
Rm
Total
Rm
2009
GROUP
At beginning of year
Net share of results
Per income statement
Elimination of intergroup profits
Dividends paid
Exchange difference adjustments
Share of reserve movements
At end of year (refer annexure 2)
1 816
1 776
1 776
(1 752)
(38)
8
1 810
32
123
122
1
155
1 848
1 899
1 898
1
(1 752)
(38)
8
1 965
1
1
1
1
ASSOCIATE COMPANIES
JOINT VENTURES
Investments
Rm
Loans
Rm
Total
Rm
Investments
Rm
Loans
Rm
Total
Rm
757
2
1 850
(1 042)
62
187
1 816
219
(187)
32
757
221
1 663
(1 042)
62
187
1 848
2008
GROUP
At beginning of year
Additional interests acquired
Transfer (to)/from other assets
Net share of results
Dividends paid
Exchange difference adjustments
Share of reserve movements
At end of year (refer annexure 2)
Aggregate post-acquisition reserves:
– associate companies
– joint ventures
Total
1
1
1
1
2009
Rm
1 466
2 982
4 448
2008
Rm
1 515
2 525
4 040
1 These loans are interest free and have no fixed repayment terms. These loans have been subordinated to other debt until such time that the associate’s
assets exceed its liabilities.
Exxaro Annual Report 2009 I 193
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
15.
INVESTMENTS IN SUBSIDIARIES
Shares at cost less impairment losses
Indebtedness
– by subsidiaries
– to subsidiaries
Total (refer annexure 3)
Less: current portion included in trade and other receivables
Less: current portion included in trade and other payables
Non-current portion
16. FINANCIAL ASSETS
Environmental Rehabilitation Trust asset
Long-term receivables
Derivatives
Investments (refer annexure 2)
For details refer to note 27 on financial instruments.
17.
INVENTORIES
Finished products
Work-in-progress
Raw materials
Plant spares and stores
Merchandise
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
3 322
3 290
10 358
(105)
10 253
(7 012)
105
3 346
6 668
11
11
7 895
(626)
7 269
(5 028)
626
2 867
6 157
10
31
41
422
420
375
1 217
1 404
659
527
537
6
3 133
342
488
360
387
1 577
1 022
467
465
522
5
2 481
Included above are inventories relating to Exxaro Sands (Pty) Limited, Rosh Pinah Zinc Corporation (Pty) Limited and Exxaro Base Metals
(Pty) Limited which might be sold or utilised in production over more than 12 months. Included in merchandise are biological assets
held for sale classified as inventories.
Inventory sold in which delivery is delayed at the buyer’s request, but the buyer takes title amounting to Rnil (2008: Rnil).
Included in inventories is Rnil (2008: R86 million) pledged as security for liabilities.
194 I Exxaro Annual Report 2009
18. TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Indebtness by subsidiaries (refer note 15)
Indebtness by subsidiaries
Specific allowances for impairment
Derivative instruments (refer note 27.1)
Specific allowances for impairment
Collective allowances for impairment
Trade receivables are stated after the following
allowances for impairment:
Specific allowances for impairment
At beginning of year
Impairment loss recognised
Impairment loss reversals
Other reconciling items
At end of year
Of which relates to:
Trade receivables
Other receivables
Subsidiaries
Collective allowances for impairment
At beginning of year
Impairment loss recognised
Other reconciling items
At end of year
Of which relates to:
Trade receivables
19. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
Assets
Property, plant and equipment
Financial assets
Inventories
Trade and other receivables
Tax receivable
Liabilities
Non-current provisions
Deferred tax liabilities
Trade and other payables
Total at end of year
GROUP
COMPANY
2009
Rm
2 620
673
51
(221)
(2)
3 121
(9)
(220)
3
5
(221)
(217)
(4)
(221)
(2)
(2)
(2)
(2)
38
17
8
18
5
86
(28)
(9)
(12)
(49)
37
2008
Rm
2 183
496
256
(9)
(2)
2 924
(4)
(5)
4
(4)
(9)
(8)
(1)
(9)
(3)
(1)
2
(2)
(2)
(2)
36
15
8
14
5
78
(27)
(7)
(16)
(50)
28
2009
Rm
2008
Rm
45
7 012
10 285
(3 273)
34
(1)
33
5 028
5 028
13
(1)
7 090
5 073
(1)
(3 273)
(3 274)
(1)
(3 273)
(3 274)
(3)
2
(1)
(1)
(1)
18
18
13
13
18
13
Included above are the assets and liabilities of a subsidiary, Glen Douglas Dolomite (Pty) Limited, classified as held for sale (disposal group)
and other assets and liabilities classified as held for sale.
Management is committed to the sale of the disposal group and the assets and liabilities which will be disposed of within the next 12 months.
The disposal group is included in the other segment results and the other assets and liabilities are included in the commercial coal
operations segment.
Exxaro Annual Report 2009 I 195
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
20. SHARE CAPITAL
Share capital at par value
Authorised
500 000 000 ordinary shares of R0,01 each
Issued
356 940 200 (2008: 355 036 600) ordinary shares of R0,01 each
Share premium
Shares held by Kumba Resources Management Share Trust
and the Exxaro Employee Empowerment Participation Scheme
Trust (MPower)
Total
The Kumba Resources Management Share Trust and the
MPower have been consolidated.
Refer to statement of changes in equity (pages 162 and 163)
for details of movements.
Reconciliation of authorised shares not issued (million)
Number of authorised unissued ordinary shares at
beginning of year
Number of shares repurchased during the year
Number of shares issued during the year
Number of unissued authorised shares at end of year
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
5
5
5
5
4
2 314
(177)
2 141
4
2 272
(178)
2 098
4
2 314
4
2 272
2 318
2 276
145
(2)
143
147
(2)
145
145
(2)
143
147
(2)
145
The following resolutions pertain to the unissued ordinary shares under the control of the directors until the forthcoming annual general
meeting:
1. Subject to the provisions of the Companies Act, 61 of 1973, as amended (the Act), and the requirements of the JSE Limited (JSE), the directors be and
are hereby authorised to allot and issue at their discretion such number of the remaining authorised but unissued ordinary shares of one cent each in the
capital of the company as may be required to be allotted and issued pursuant to the Share Incentive Scheme (the scheme).
2. Directors are authorised to issue the unissued ordinary shares of one cent each in the capital of the company (after setting aside so many shares as may
be required to be allotted and issued by the company pursuant to the scheme for cash, without restrictions to any public shareholder, as defined by the
JSE Listings Requirements, as and when suitable opportunities arise, subject to the following conditions:
• this authority shall not extend beyond the next annual general meeting or 15 months from the date of this annual general meeting, whichever date is
earlier;
• a press announcement giving full details, including the impact on net asset value and earnings per share, be published at the time of any issue
representing, on a cumulative basis within one year, five percent or more of the number of shares in issue prior to the issue/s;
• the shares be issued to public shareholders as defined by the JSE and not to related parties;
• any issue in the aggregate in any one year shall not exceed 15% of the number of shares of the company’s issued ordinary share capital; and
• in determining the price at which an issue of shares be made in terms of this authority, the maximum discount permitted will be ten percent of the
weighted average traded price of the shares over the 30 days prior to the date that the price of the issue is determined or agreed to by the directors.
In the event that shares have not traded in the said 30 day period a ruling will be obtained from the committee of the JSE.
3. Directors are authorised to acquire from time to time shares issued by the company, provided:
• that the repurchase is effected through the order book operated by the JSE trading system and is done without any prior understanding or arrangement
between the company and the counterparty;
• that this authority shall not extend beyond 15 months from the date of this resolution or the date of the next annual general meeting, whichever is the
earlier date;
• that an announcement containing full details of such repurchases is published as soon as the company has repurchased shares constituting, on
a cumulative basis, three percent of the number of shares in issue prior to the repurchases and for each three percent, on a cumulative basis,
thereafter;
• that the repurchase of shares shall not, in the aggregate, in any one financial year, exceed 20% of the company’s issued share capital at the time this
authority is given;
• that at any one time, the company may only appoint one agent to effect any repurchase;
• that the repurchase of shares will not take place during a prohibited period and will not affect compliance with the shareholders’ spread requirements
as laid down by the JSE; and
• that shares issued by the company may not be acquired at a price greater than 10% above the weighted average traded price of the company’s shares
for the five business days immediately preceding the date of repurchase.
The above authorities are valid until the next annual general meeting.
196 I Exxaro Annual Report 2009
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
362
617
617
1 701
200
200
3 697
(362)
3 335
205
278
369
669
1 392
2 913
(205)
2 708
21.
INTEREST-BEARING BORROWINGS
Non-current borrowings
Summary of loans by financial year of redemption
2009
2010
2011
2012
2013
2014
2015 onwards
Total non-current borrowings (refer annexure 1)
Current portion included in current liabilities
Total
Details of interest rates payable on borrowings are
shown in annexure 1.
Included in the above interest-bearing borrowings are
obligations relating to finance leases (refer note 11). Details are:
Minimum lease payments:
– less than one year
– more than one year and less than five years
– more than five years
Total
Less: Future finance charges
Present value of lease liabilities
Representing lease liabilities:
– current
– non-current (more than one year and less than five years)
– non-current (more than five years)
Total
407
827
723
1 886
304
607
4 754
(407)
4 347
63
256
3 302
3 621
3 361
260
5
13
242
260
500
328
419
794
1 611
85
413
4 150
(500)
3 650
59
255
3 367
3 681
3 428
253
5
17
231
253
Exxaro entered into numerous operating and finance lease arrangements. All major lease arrangements are renewable if there is mutual
agreement between the parties to the arrangements with some contracts specifying extension periods. Arrangements containing
escalation clauses are usually based on CPI or PPI indexes. None of the lease arrangements contain restrictive clauses that are unusual
to the particular type of lease.
There were no defaults or breaches in terms of interest-bearing borrowings during both reporting periods.
At 31 December 2008 Rosh Pinah Corporation (Pty) Limited (Rosh Pinah), a subsidiary in which Exxaro holds 50,0264%, was, however,
in breach of certain provisions of a facilities agreement entered into with a number of financial institutions. The breach was waived by
the financial institutions conditional upon Rosh Pinah settling the funding obtained by no later than 31 March 2009. The funding was
subsequently settled in March 2009. The liability was included in the current portion of non-current borrowings for 2008.
Exxaro Annual Report 2009 I 197
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
22. PROVISIONS
Environ-
mental
rehabili-
tation
Rm
Decom-
missioning
Rm
Restruc-
turing
Rm
Post-
retirement
medical
obligation
Rm
Post-
retirement
defined
benefit
obligation
Rm
Cash-
settled
share-
based
payment
Rm
GROUP
2009
At beginning of year
Charge to operating
expenses
Additional provision
Unused amounts reversed
Interest adjustment
(refer note 5)
Provisions capitalised
to property, plant and
equipment
Increase in joint venture
Utilised during year
Exchange differences
Reclassification to non-
current assets held for sale
At end of year
Current portion included
in current liabilities
Total non-current provisions
2008
At beginning of year
Charge to operating
expenses
Additional provision
Unused amounts reversed
Interest adjustment
(refer note 5)
Provisions capitalised
to property, plant and
equipment
Acquisition of subsidiary and
other business operations
Utilised during year
Exchange differences
Reclassification to non-
current assets held for sale
At end of year
Current portion included
in current liabilities
Total non-current provisions
1 274
395
27
68
12
12
16
30
(12)
4
(1)
1 323
(21)
1 302
1 020
222
222
35
27
(10)
5
(25)
1 274
(15)
1 259
(3)
2
(5)
8
39
3
442
442
263
2
2
8
104
13
7
(2)
395
395
7
7
2
77
77
36
9
10
(1)
1
22
68
68
8
(5)
30
(6)
24
31
4
(8)
27
(6)
21
3
3
3
3
3
4
4
(2)
5
5
6
3
6
(3)
(6)
3
3
Total
Rm
1 767
23
28
(5)
34
39
30
(19)
7
(1)
1 880
(27)
1 853
1 356
236
240
(4)
48
104
62
(24)
12
(27)
1 767
(21)
1 746
198 I Exxaro Annual Report 2009
22. PROVISIONS (continued)
Environ-
mental
rehabili-
tation
Rm
Decom-
missioning
Rm
Restruc-
turing
Rm
Post-
retirement
medical
obligation
Rm
Post-
retirement
defined
benefit
obligation
Rm
Cash-
settled
share-
based
payment
Rm
COMPANY
2009
At beginning of year
Charge to operating
expenses
Additional provisions
Interest adjustment (refer
note 5)
Utilised during year
Total non-current provisions
2008
At beginning of year
Charge to operating
expenses
Additional provisions
Unused amounts reversed
Interest adjustment (refer
note 5)
Utilised during year
Total non-current provisions
21
2
23
19
2
21
3
4
4
(2)
5
5
4
7
(3)
(6)
3
Total
Rm
24
4
4
2
(2)
28
24
4
7
(3)
2
(6)
24
Environmental rehabilitation
Provision is made for environmental rehabilitation costs where either a legal or constructive obligation is recognised as a result of past
events. Estimates are based upon costs that are regularly reviewed and adjusted as appropriate for new circumstances.
Decommissioning
The decommissioning provision relates to decommissioning of property, plant and equipment where either a legal or constructive obligation
is recognised as a result of past events. Estimates are based upon costs that are regularly reviewed and adjusted as appropriate for new
circumstances.
Funding of environmental and decommissioning rehabilitation
Contributions towards the cost of the mine closure are also made to the Exxaro Environmental Rehabilitation Fund and the balance of the
fund amounted to R429 million (2008: R349 million) at year-end.
Of this amount R422 million (2008: R342 million) is included in financial assets and R7 million (2008: R7 million) in trade and other
receivables of the group. Cash flows will take place when the mines are rehabilitated.
Exxaro Annual Report 2009 I 199
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
22. PROVISIONS (continued)
Restructuring
The liability includes accruals for plant and facility closures, including the dismantling costs thereof, and employee termination costs, in
terms of the announced restructuring plans for the Hlobane and Durnacol mines.
Provision is made on a piecemeal basis only for those restructuring obligations supported by a formally approved plan.
The restructuring for Durnacol mine will be completed within the next seven years and for Hlobane mine in the next 16 years.
Post-retirement medical obligation
After the merger with Eyesizwe (Pty) Limited in November 2006 and the successful creation of Exxaro, it was discovered that a post-
employment healthcare benefit had been provided to a group of continuation and in-service members on the Witbank Coal Medical Aid
Scheme and the BHP Billiton SA Medical Scheme. This benefit, which is no longer offered, applied to selective employees previously
employed by Eyesizwe or Ingwe Coal and comprises a subsidy of contributions.
As part of the business combination with Namakwa Sands on 1 October 2008 a post-retirement medical obligation was acquired. The
post-retirement liability is of a defined benefit nature, and consists of an implicit promise to pay a portion of members’ post-retirement
medical aid contributions. This liability is also generated in respect of dependants who are offered continued membership of the medical
aid upon the death of the primary member, either pre- or post-retirement. This benefit, which is no longer offered, applied to employees
employed prior to 2001 by Namakwa Sands.
The obligation represents a present value amount, which is actuarially valued on an annual basis. Any surplus or deficit arising from the
valuation is recognised in the income statement. The provision is expected to be utilised over the expected lives of the participants of
the scheme.
Post-retirement defined benefit obligation
Provision for severance benefits is made in accordance with the Namibian law for the Namibian operations. As the severance benefits
are only payable on retirement or the involuntary termination of service from the side of the employer, this is accounted for as a post-
retirement service. The plan is a defined benefit obligation. The cost of providing these benefits is determined based on the projected unit
credit method and actuarial valuations are performed at every reporting date. The defined benefit obligation presented in the statement
of financial position represents the sum of the present value of the obligation less the fair value of plan assets plus/minus any balance of
unrecognised actuarial gains or losses, minus any balance of unrecognised past service costs.
The provision is expected to be utilised over the expected lives of the participants of the scheme.
Cash-settled share-based payment
Exxaro offered a cash-settled payment, based on the company’s share price performance, to certain individuals who were under an
embargo and not entitled to accept share scheme offers, due to their involvement in the empowerment transaction.
The payments will be made over the next five years depending on the share price performance of the company and the contracts of the
individuals.
23. DEFERRED TAX
The movement on the deferred tax account is as follows:
At beginning of year
Currency revaluation of opening balance
Increase in joint venture
Items charged directly to other components of equity
– current
Transferred to non-current assets held for sale
Income statement charge – current (refer note 7)
– prior
– rate change
At end of year
GROUP
COMPANY
2009
Rm
174
5
26
(142)
(2)
297
8
366
2008
Rm
345
(7)
115
(7)
(192)
(68)
(12)
174
2009
Rm
2008
Rm
(104)
(97)
(9)
4
22
(87)
(9)
(1)
3
(104)
200 I Exxaro Annual Report 2009
23. DEFERRED TAX (continued)
Comprising:
Deferred tax liabilities
– property, plant and equipment
– bad debt reassessment
– foreign tax losses carried forward
– inventories
– leave pay accrual
– financial instruments
– provisions
– Exxaro Environmental Rehabilitation asset
– decommissioning provision
– share-based payments
– hedge premium
– restoration provision
– prepayments
– unrealised profits
– assessed losses
Deferred tax assets
– provisions
– property, plant and equipment
– Exxaro Environmental Rehabilitation asset
– decommissioning provision
– income received in advance
– financial instruments
– share-based payments
– hedge premium
– unrealised foreign exchange profit/(loss)
– restoration provision
– inventories
– bad debt reassessment
– lease liability
– leave pay accrual
– prepayments
– tax losses carried forward
– derecognition of deferred tax assets
– foreign tax losses carried forward
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
1 113
(46)
6
(31)
(6)
86
(6)
(6)
2
(95)
7
(25)
(4)
995
(88)
137
22
(9)
(126)
(17)
(1)
98
(109)
(3)
(1)
(72)
(13)
14
(1 017)
822
(266)
(629)
366
1 154
(1)
(20)
(2)
(30)
201
(40)
81
(5)
2
(1)
(77)
5
(7)
(3)
1 257
(1)
399
15
(10)
(3)
(99)
4
(4)
(102)
(157)
(1)
(70)
(28)
6
(870)
(162)
(1 083)
174
(2)
4
(13)
(1)
(6)
(5)
(64)
(87)
(87)
(1)
2
4
3
(3)
(6)
(8)
(95)
(104)
(104)
Calculated tax losses
– Tax losses available for setting off against future South African
taxable income
3 646
3 118
229
339
– Tax losses available for setting off against future foreign taxable
income
950
650
The total deferred tax assets raised with regard to assessed losses amount to R465 million (2008: R1 055 million), and are mainly
attributable to the Exxaro sands businesses.
The total deferred tax assets not raised amount to R877 million (2008: R100 million).
Exxaro Annual Report 2009 I 201
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
24. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Leave pay accrual
Indebtness to subsidiaries (refer note 15)
Derivative instruments (refer note 27.1)
25. NOTES TO THE CASH FLOW STATEMENT
25.1 CASH GENERATED BY/(UTILISED IN) OPERATIONS
Net operating profit/(loss)
Adjusted for non-cash movements
– liquidation dividend
– depreciation and amortisation
– impairment charges and reversals
– impairment charges and reversal of trade and other
receivables
– provisions
– exploration cost
– foreign exchange revaluations and fair value adjustments
– reconditionable spares usage
– net loss on disposal or scrapping of property,
plant and equipment
– net profit on disposal of investments
– share-based payment expenses
Working capital movements
– increase in inventories
– increase in trade and other receivables
– increase/(decrease) in trade and other payables
– utilisation of provisions (refer note 22)
Cash generated by/(utilised in) operations
25.2 NET FINANCING COSTS
Net financing costs
Financing costs not involving cash flow (refer note 22)
GROUP
COMPANY
2009
Rm
932
1 307
226
45
2 510
2008
Rm
935
1 150
218
63
2 366
2009
Rm
24
176
20
105
34
359
2008
Rm
17
130
31
626
13
817
304
2 467
(3 311)
1 673
1 136
1 435
217
23
2
4
84
83
3 288
(643)
(612)
103
(19)
2 117
(415)
34
(381)
1
898
20
236
40
(10)
1
65
(7)
81
3 792
(513)
(471)
790
(24)
3 574
(241)
48
(193)
34
3 273
3
7
30
36
(365)
(457)
(2)
(788)
(339)
2
(337)
15
(1)
4
(6)
5
(1 726)
37
1
(691)
556
(6)
(140)
(119)
2
(117)
202 I Exxaro Annual Report 2009
GROUP
COMPANY
2008
Rm
(137)
(782)
(1)
433
(487)
(957)
(27)
(984)
(1 119)
(28)
(1 147)
(470)
(470)
(179)
(179)
2009
Rm
2008
Rm
(10)
24
(14)
8
10
18
(1 066)
(973)
(1 066)
(973)
(88)
(88)
(795)
(795)
(61)
(61)
(2)
(2)
(49)
(1)
(50)
25. NOTES TO THE CASH FLOW STATEMENT (continued)
25.3 NORMAL TAXATION PAID
Amounts (unpaid)/receivable at beginning of year
Amounts charged to the income statements
Arising on translation of foreign entities
Amounts unpaid/(receivable) at end of year
25.4 DIVIDENDS PAID
Amounts unpaid at beginning of year
Dividends declared and paid
Dividends declared and paid by subsidiaries to minorities
Amounts unpaid at end of year
25.5
INVESTMENTS TO MAINTAIN OPERATIONS
Replacement of property, plant and equipment
Reconditional spares
25.6
INVESTMENTS TO EXPAND OPERATIONS
Expansion and new technology
25.7
INVESTMENT IN OTHER NON-CURRENT ASSETS
Increase in associates, joint ventures
and other investments
Increase in investments in subsidiaries
(Increase)/decrease in non-current financial assets
Increase in investment in joint venture
During July 2009, the group invested R1 082 million
in Mafube Coal Mining (Pty) Limited, its joint venture
with Anglo South Africa Capital (Pty) Limited, which
is included in the coal segment results.
The increase consists of the following:
Property, plant and equipment
Non-current financial assets
Inventories
Trade and other debtors
Deferred tax
Provisions
Trade and other payables
2009
Rm
(433)
(461)
2
(892)
(1 050)
(1 050)
(960)
(32)
(992)
(990)
(990)
(1 082)
(8)
(1 090)
1 156
3
36
49
(26)
(30)
(106)
1 082
Exxaro Annual Report 2009 I 203
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
25. NOTES TO THE CASH FLOW STATEMENT (continued)
25.8
INCOME FROM EQUITY-ACCOUNTED INVESTMENTS
Income from equity-accounted investments as per income
statement
Dividends received from equity-accounted investments
Non-cash flow income from equity-accounted investments
25.9
INCOME FROM INVESTMENTS
Income from investments as per income statement
Non-cash flow dividends in specie received from
subsidiary
25.10 FOREIGN CURRENCY TRANSLATION RESERVE
At beginning of year
Closing balance
Movement
Unrealised (losses)/profits in relation to foreign transactions
Revaluation of non-current loans
Less: Arising on translation of foreign entities:
– inventories
– trade and other receivables
– financial assets
– trade and other payables
– utilisation of provision
– taxation paid
– property, plant and equipment acquired
– intangible assets
– investments acquired
– non-current loans
– minority loans
– share capital
1 898
1 752
(1 898)
1 752
1 663
1 042
(1 663)
1 042
2
2
964
802
(162)
(48)
(172)
(294)
(20)
(30)
(8)
(5)
(1)
43
2
(30)
(123)
1
(123)
(88)
2
2
527
964
437
84
(199)
377
51
71
(5)
(10)
(12)
10
124
6
72
282
(212)
(55)
25.11 TRANSLATION OF FOREIGN CASH AND CASH
EQUIVALENTS
Translation differences on cash and cash equivalents
67
32
6 731
1 319
(4 600)
2 131
1 319
(3)
3
(3)
4
3
3
1
(3)
(3)
1
(3)
1
(4)
1
204 I Exxaro Annual Report 2009
26. OTHER COMPREHENSIVE INCOME
2009
2008
GROUP
Exchange differences on translating
foreign operations
Currency translation differences
– Less: Reclassification adjustments
for exchange differences realised on
liquidation of subsidiaries
Share of other comprehensive income
of associates
Share-based payments movements
Financial instruments fair value movements
recognised in equity on cash flow hedges:
(Losses)/gains arising during the year
COMPANY
Currency translation differences
Share-based payments movement
Before-tax
amount
Rm
Net-of-tax
amount
Rm
Tax
Rm
Before-tax
amount
Rm
(35)
(35)
(62)
(62)
(97)
(97)
8
118
(474)
(474)
(383)
3
83
86
15
189
189
142
9
9
8
133
(285)
(285)
(241)
3
92
95
193
215
22
187
92
520
520
992
(3)
66
63
Tax
Rm
57
57
(172)
(172)
(115)
Net-of-tax
amount
Rm
250
272
22
187
92
348
348
877
(3)
66
63
Exxaro Annual Report 2009 I 205
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS
27.1 CARRYING AMOUNTS AND FAIR VALUE AMOUNTS OF FINANCIAL INSTRUMENTS
The tables below set out the group’s and company’s classification of each class of financial assets and liabilities,
as well as their fair values.
At fair value through
profit or loss
Held for
trading
Rm
Designated
Rm
429
422
7
429
17
446
153
153
28
28
181
51
51
51
75
75
45
45
120
GROUP
2009
ASSETS
Non-current assets
Property, plant and equipment
Biological assets
Intangible assets
Investments in associates and joint ventures
Deferred tax
Financial assets, consisting of:
– Exxaro Environmental Rehabilitation Trust asset
– Richards Bay Coal Terminal (RBCT)
– Ndzalama game reserve
– Long-term receivables
Total non-current assets
Current assets
Inventories
Trade and other receivables
Tax receivable
Derivative financial instruments
Cash and cash equivalents
Total current assets
Non-current assets classified as held for sale
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Non-distributable reserves
Retained earnings/(loss)
Equity attributable to equity holders of the parent
Minority interest
Total equity
Non-current liabilities
Interest-bearing borrowings
Non-current provisions
Derivative financial instruments
Deferred tax
Total financial non-current liabilities
Current liabilities
Trade and other payables
Derivative financial instruments
Interest-bearing borrowings
Tax
Current provisions
Total current liabilities
Non-current liabilities classified as held for sale
Total liabilities
206 I Exxaro Annual Report 2009
Held-to-
maturity
investments
at amortised
cost
Rm
Loans and
receivables
at amortised
cost
Rm
Available-for-
sale financial
assets at
fair value
Rm
Financial
liabilities
at amortised
cost
Rm
Non-financial
assets and
liabilities
at cost
Rm
Total
carrying
amount
Rm
Fair value
of financial
instruments
Rm
Maximum
exposure of
the carrying
amount to
credit risk
Rm
420
420
420
2 649
1 023
3 673
23
4 116
368
368
368
368
11 869
41
87
1 966
629
14 592
3 133
421
57
3 611
47
18 249
2 141
2 046
8 721
12 908
1
12 909
211
1 853
995
3 059
92
49
57
27
225
37
16 231
11 869
41
87
1 966
629
1 217
422
368
7
420
15 809
3 133
3 070
57
51
1 023
7 334
86
23 229
2 141
2 046
8 721
12 908
1
12 909
4 347
1 853
75
995
7 270
2 465
45
407
57
27
3 001
49
23 229
1 217
422
368
7
420
2 649
57
51
1 023
1 217
422
368
7
420
2 649
57
51
1 023
40
40
4 136
75
2 373
45
330
57
12
3 983
3 983
2 373
330
2 703
12
6 698
Exxaro Annual Report 2009 I 207
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.1 CARRYING AMOUNTS AND FAIR VALUE AMOUNTS OF FINANCIAL INSTRUMENTS (continued)
GROUP
2008
ASSETS
Non-current assets
Property, plant and equipment
Biological assets
Intangible assets
Investments in associates and joint ventures
Deferred tax
Financial assets, consisting of:
– Exxaro Environmental Rehabilitation Trust asset
– Richards Bay Coal Terminal (RBCT)
– Igoda
– Mafube
– Ndzalama game reserve
– Derivatives
– Long-term receivables
Total non-current assets
Current assets
Inventories
Trade and other receivables
Tax receivable
Derivative financial instruments
Cash and cash equivalents
Total current assets
Non-current assets classified as held for sale
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Non-distributable reserves
Retained earnings
Equity attributable to equity holders of the parent
Minority interest
Total equity
Non-current liabilities
Interest-bearing borrowings
Non-current provisions
Derivative financial instruments
Deferred tax
Total financial non-current liabilities
Current liabilities
Trade and other payables
Derivative financial instruments
Interest-bearing borrowings
Tax
Current provisions
Total current liabilities
Non-current liabilities classified as held for sale
Total liabilities
At fair value through
profit or loss
Held for
trading
Rm
Designated
Rm
360
360
360
256
256
616
31
31
63
63
94
348
342
6
348
15
363
127
127
123
123
250
As disclosed in the table above, financial liabilities with a carrying amount and fair value of R181 million (2008: R250 million)
have been designated at fair value through profit or loss.
The carrying amount of the financial liabilities designated at fair value through profit or loss at 31 December 2009 was the
same as the contractual amount at maturity date for the year ended 31 December 2009 (2008: R2 million lower than the
contractual amount ) for the group.
208 I Exxaro Annual Report 2009
Held-to-
maturity
investments
at amortised
cost
Rm
Loans and
receivables
at amortised
cost
Rm
Available-for-
sale financial
assets at
fair value
Rm
Financial
liabilities
at amortised
cost
Rm
Non-financial
assets and
liabilities
at cost
Rm
Total
carrying
amount
Rm
Fair value
of financial
instruments
Rm
Maximum
exposure of
the carrying
amount to
credit risk
Rm
488
488
488
2 668
2
1 769
4 439
19
4 946
381
351
25
5
381
381
11 309
34
79
1 849
1 083
14 354
2 481
2 481
44
16 879
2 098
2 190
8 708
12 996
128
13 124
249
1 746
1 257
3 252
4
21
25
50
16 451
11 309
34
79
1 849
1 083
1 577
342
351
25
5
6
360
488
15 931
2 481
2 668
2
256
1 769
7 176
78
23 185
2 098
2 190
8 708
12 996
128
13 124
3 650
1 746
31
1 257
6 684
2 303
63
500
440
21
3 327
50
23 185
3 274
3 274
2 303
373
440
3 116
6 390
1 577
342
351
25
5
6
360
488
2 688
2
256
1 769
1 577
342
351
25
5
6
360
488
2 688
2
256
1 769
34
34
2 303
63
532
440
Exxaro Annual Report 2009 I 209
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.1 CARRYING AMOUNTS AND FAIR VALUE AMOUNTS OF FINANCIAL INSTRUMENTS (continued)
At fair value through
profit or loss
Held for
trading
Rm
Designated
Rm
11
11
11
11
34
34
34
34
34
34
COMPANY
2009
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments in associates and joint ventures
Investments in subsidiaries
Deferred tax
Financial assets, consisting of:
– Exxaro Environmental Rehabilitation Trust asset
– Derivatives
Total non-current assets
Current assets
Trade and other receivables
Derivative financial instruments
Tax receivable
Cash and cash equivalents
Total current assets
Non-current assets classified as held for sale
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Non-distributable reserves
Retained earnings/(loss)
Equity attributable to equity holders of the parent
Total equity
Non-current liabilities
Interest-bearing borrowings
Derivatives
Non-current provisions
Total financial non-current liabilities
Current liabilities
Trade and other payables
Derivative financial instruments
Interest-bearing borrowings
Total current liabilities
Total equity and liabilities
210 I Exxaro Annual Report 2009
Held-to-
maturity
investments
at amortised
cost
Rm
Loans and
receivables
at amortised
cost
Rm
Available-for-
sale financial
assets at
fair value
Rm
Financial
liabilities
at amortised
cost
Rm
Non-financial
assets and
liabilities
at cost
Rm
Total
carrying
amount
Rm
Fair value
of financial
instruments
Rm
Maximum
exposure of
the carrying
amount to
credit risk
Rm
3 346
3 346
7 056
343
7 399
10 745
3 346
3 346
11
11
11
7 056
34
14
343
11
11
11
7 056
34
14
343
240
10
3 322
87
240
10
6 668
87
11
11
3 658
7 016
7 056
34
14
343
7 447
18
14 481
2 318
1 041
7 038
10 397
10 397
14
18
3 676
2 318
1 041
7 038
10 396
10 396
28
28
24
24
10 448
3 335
3 335
301
362
663
3 998
3 335
3 335
28
3 363
325
34
362
721
14 481
325
34
362
Exxaro Annual Report 2009 I 211
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.1 CARRYING AMOUNTS AND FAIR VALUE AMOUNTS OF FINANCIAL INSTRUMENTS (continued)
COMPANY
2008
ASSETS
Non-current assets
Property, plant and equipment
Intercompany loans debits
Investments in subsidiaries
Deferred tax
Financial assets, consisting of:
– Exxaro Environmental Rehabilitation Trust asset
– Derivatives
Total non-current assets
Current assets
Trade and other receivables
Tax receivable
Derivative financial instruments
Cash and cash equivalents
Total current assets
Non-current assets classified as held for sale
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Other components of equity
Retained earnings
Total equity
Non-current liabilities
Interest-bearing borrowings
Derivative financial instruments
Non-current provisions
Total financial non-current liabilities
Current liabilities
Trade and other payables
Interest-bearing borrowings
Current tax payable
Derivative instruments
Total current liabilities
Total liabilities
At fair value through
profit or loss
Held for
trading
Rm
Designated
Rm
10
10
10
10
31
31
31
13
13
44
31
31
13
13
44
As disclosed in the table above, there were no financial liabilities designated at fair value through profit or loss as at
31 December 2009 for the company.
212 I Exxaro Annual Report 2009
Held-to-
maturity
investments
at amortised
cost
Rm
Loans and
receivables
at amortised
cost
Rm
Available-for-
sale financial
assets at
fair value
Rm
Financial
liabilities
at amortised
cost
Rm
Non-financial
assets and
liabilities
at cost
Rm
Total
carrying
amount
Rm
Fair value
of financial
instruments
Rm
Maximum
exposure of
the carrying
amount to
credit risk
Rm
2 867
2 867
5 060
478
5 538
13
8 418
176
3 290
104
3 570
3 570
2 276
946
5 025
8 247
24
24
8 271
176
6 157
104
41
10
31
6 478
2 867
2 867
41
10
31
41
10
31
5 060
5 060
5 060
13
478
13
13
478
13
2 708
31
804
205
10
13
478
5 551
13
12 042
2 276
946
5 025
8 247
2 708
31
24
2 763
804
205
10
13
1 032
12 042
2 708
2 708
804
205
10
1 019
3 727
Exxaro Annual Report 2009 I 213
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.1 CARRYING AMOUNTS AND FAIR VALUE AMOUNTS OF FINANCIAL INSTRUMENTS (continued)
The Exxaro Environmental Rehabilitation Trust Fund (EERF) was created and complies with the requirements of both the minerals
and petroleum resources activities.
The EERF receives, holds and invests funds contributed by the Exxaro group of companies for the rehabilitation or management
of negative environmental impacts associated with mining and exploration activities. The EERF receives, holds and invests funds
contributed by the Exxaro mining operations, which contributions are aimed at providing for sufficient funds at date of estimated
closure of mining activities to address the rehabilitation and environmental impacts.
The trustees of the fund are appointed by Exxaro and consist of sufficiently qualified Exxaro employees capable of fulfilling their
fiduciary duties.
The funds are invested by Exxaro’s in-house treasury department with reputable financial institutions in accordance with a strict
mandate to ensure capital preservation and real growth.
Funds accumulated for a specific mine or exploration project can only be utilised for the rehabilitation and environmental impacts
of that specific mine or project.
If a mine or exploration project withdraws from the fund for whatever valid reason, the funds accumulated for such mine or
exploration project are transferred to a similar fund approved by the Commissioner of South African Revenue Services. The
fund can not be closed down without the permission of the Commissioner of the South African Revenue Services. R67 million
(2008: R143 million) of the investments designated at fair value through profit or loss and the EERF are equity investments listed
on the JSE Limited.
Included in the long-term receivables is an amount of R420 million (2008: R481 million) recoverable from Eskom in respect of the
rehabilitation and environmental expenditure of the Matla and Arnot mines at the end-of-life of these mines. The corresponding
anticipated liability is disclosed as part of non-current provisions (refer note 22).
A 2% increase in the JSE industry average at reporting date would have increased equity by Rnil (2008: R1,1 million) after tax;
an equal change in the opposite direction would have decreased equity by Rnil (2008: R1,1 million). The impact on profit or loss
would have been an increase or decrease of Rnil (2008: R1 million) after tax. The analysis has been performed on the same basis
for 2008.
There were no allowances for impairments on long-term receivables or investments in equity instruments at cost during the period
under review.
214 I Exxaro Annual Report 2009
27. FINANCIAL INSTRUMENTS (continued)
27.1 CARRYING AMOUNTS AND FAIR VALUE AMOUNTS OF FINANCIAL INSTRUMENTS (continued)
FAIR VALUES
Fair value hierarchy level
Financial assets and liabilities at fair value have been categorised in the following hierarchy structure:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2 – Inputs other than quoted prices included in Level 1 that are either directly or indirectly observable for the asset/liability.
Level 3 – Inputs for the asset/liability that are not based on observable market data (unobservable inputs).
Fair value
Rm
Level 1
Rm
Level 2
Rm
Level 3
Rm
Description
GROUP
2009
Financial assets held for trading at fair value through profit
or loss
– Current derivatives
Financial assets designated as at fair value through
profit or loss
– Exxaro Environmental Rehabilitation Trust
– Ndzalama game reserve
Available-for-sale financial assets
– Richards Bay Coal Terminal
Financial liabilities held for trading at fair value through
profit or loss
– Non-current derivatives
– Current derivatives
Financial liabilities designated as at fair value through
profit or loss
– Non-current interest-bearing borrowings
– Current interest-bearing borrowings
422
422
51
51
429
422
7
368
368
120
75
45
181
153
28
51
51
120
75
45
181
153
28
351
7
7
368
368
375
Total
1 148
422
Reconciliation of Level 3 hierarchy
Opening balance
Movement during the year
Total gains or losses for the period recognised
in profit or loss
Purchases
Sales
Transfers out of Level 3
Closing balance
Ndzalama
game
reserve
Rm
Richards Bay
Coal
Terminal
Rm
6
1
7
351
50
(33)
368
Igoda
Rm
25
Mafube
Rm
5
(25)
(5)
Exxaro Annual Report 2009 I 215
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.1 CARRYING AMOUNTS AND FAIR VALUE AMOUNTS OF FINANCIAL INSTRUMENTS (continued)
FAIR VALUES
Description
COMPANY
2009
Financial assets held for trading at fair value through profit
or loss
– Current derivatives
Financial assets designated as at fair value through profit
or loss
– Exxaro Environmental Rehabilitation Trust
Fair value
Rm
Level 1
Rm
Level 2
Rm
Level 3
Rm
34
34
11
11
34
34
At 31 December 2009 the carrying amounts of cash and cash equivalents, trade and other receivables and trade and other
payables approximate their fair values due to the short-term maturities of these assets and liabilities.
Of the financial assets and liabilities as at 31 December 2009 and 2008, the interest-bearing borrowings had their fair values
determined based on published price quotation in active market. The borrowings’ net present value (NPV) is calculated using the
nominal annual compounding annually (NACA) rate.
No financial assets and liabilities had their fair value determined using valuation techniques during the year ended 31 December
2009 or 2008.
For the financial year ended 31 December 2009, the investment in Richards Bay Coal Terminal (RBCT) had no active market
available. RBCT is the largest single export coal terminal in the world and is situated in Richards Bay. It is a 24-hour shipment/
export operation. Exxaro acquired 8 662 shares (1,20% stake) in RBCT through the merger of the former Eyesizwe (Pty) Limited
and Kumba Resources Limited which was valued at R2 million on 1 November 2006. Additional 10 000 shares were acquired
in RBCT on 30 June 2008 for R213 million. These shares were purchased at a price of US$30 million. The 10 000 ordinary
shares entitle Exxaro to a 1,39% shareholding in RBCT. The 10 000 shares also entitle Exxaro to 1Mt of export allocation. All
the shareholders in RBCT acquire equity instruments in order to obtain the right to export coal. The South Dunes Coal Terminal
(SDCT) also holds an investment in RBCT, of which Exxaro Coal (a 100% subsidiary of Exxaro Resources Limited) holds 33% in
SDCT, with the effective value of R186 million at 31 December 2009 (2008: R136 million). All this, coupled with minor wharfage
expenses, results in the overall investment in RBCT with a carrying value of R401 million (2008: R351 million). The fair value could
not be measured reliably because RBCT shares do not form part of an active market as there are no other shares available in
South Africa. Willing buyers and sellers can not be found at any time (restricted to a select few) of the same nature (homogenous)
and prices are not available to the public. Although one could attach a certain set of market influences that significantly affect the
value of such shares, the volatility of eg freight rates would cause the valuation to vary significantly.
The fair value of the financial instruments at initial recognition was determined to be the transaction price. Upon initial recognition
no differences existed as a result of the fair value upon initial recognition differing to the value of the financial instrument determined
using a valuation technique.
Subsequent to initial recognition, as the fair value of the investment in RBCT could not be measured reliably, the investment has
been carried at cost. The carrying value of the investment in RBCT is R401 million (2008: R351 million).
It is not anticipated that the RBCT investments will be disposed of in the near future as the group has no intent to dispose of it.
27.2 RECLASSIFICATION OF FINANCIAL ASSETS
No reclassification of financial assets occurred during the period.
216 I Exxaro Annual Report 2009
27. FINANCIAL INSTRUMENTS (continued)
27.3 STATEMENT OF CHANGES IN EQUITY
Included in the statement of “other comprehensive income non-owner related movements” are the following pre-tax adjustments
relating to financial instruments:
Effective portion of change in fair value of cash flow hedge
Amount removed from equity and included in initial
carrying amount or cost of non-financial asset
The above amounts are all included in the hedging reserve.
27.4 RISK MANAGEMENT
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
(256)
2008
Rm
256
(256)
256
27.4.1
Financial risk management
The group’s corporate treasury function (other than Exxaro Australia Sands (Pty) Limited which operates on a decentralised
basis but within the approved group policies), provides financial risk management services to the business, co-ordinates
access to domestic and international financial markets, and monitors risks. These risks include market risk (including
foreign currency risk, interest rate risk and price risk), credit risk and liquidity risk. The group’s objectives, policies and
processes for measuring and managing these risks are detailed below. The group’s management of capital is detailed
in the report of the directors.
The group seeks to minimise the effects of these risks by using derivative financial instruments to hedge these risk exposures.
The use of derivative financial instruments is governed by the group’s policies approved by the board of directors, which
provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-
derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is
reviewed by the internal auditors on a continuous basis and results are reported to the board audit committee.
The group does not enter into or trade financial instruments, including derivative financial instruments, for speculative
purposes. The group enters into financial instruments to manage and reduce the possible adverse impact on earnings and
cash flows of changes in interest rates, foreign currency exchange rates and commodity prices. Compliance with policies
and exposure limits is reviewed by the internal auditors annually, with the results being reported to the audit committee.
27.4.2 Market risk management
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, commodity prices
and equity prices, will affect the group’s income or the value of its holdings of financial instruments.
The objective of market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising the return on risk.
The group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (see
27.4.2.1 below), commodity prices (see 27.4.2.2 below) and interest rates (see 27.4.2.3 below). The group enters into a
variety of derivative financial instruments to manage its exposure to interest rate, foreign currency risks and commodity
price risks, including:
– Forward foreign exchange contracts (FECs) and currency options to hedge the exchange rate risk arising on the
export of coal, base metal and mineral sands products as well as imported capital expenditure
– Forward interest rate contracts to manage interest rate risk
– Interest rate swaps to manage the risk of rising interest rates
– Forward exchange contracts to hedge the commodity prices arising on the export of zinc and lead.
27.4.2.1
Foreign currency risk management
The group undertakes transactions denominated in foreign currencies, hence exposures to exchange rate
fluctuations arise.
The currency in which transactions are entered into is mainly denominated in US dollars (USD), euros, and
Australian dollars (AUD). Exchange rate exposures are managed within approved policy parameters utilising
FECs, currency options and currency swap agreements.
The group maintains a fully covered exchange rate position in respect of foreign currency borrowings
and imported capital equipment resulting in these exposures being fully converted to rand. Trade-related
import exposures are managed through the use of economic hedges arising from export revenue as well
as through FECs. Trade-related export exposures are hedged using FECs and options with specific focus
on short-term receivables.
Exxaro Annual Report 2009 I 217
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.2 Market risk management (continued)
27.4.2.1
Foreign currency risk management (continued)
Uncovered foreign debtors at 31 December 2009 amount to US$142 million (2008: US$65 million), whereas
uncovered cash and cash equivalents amount to R40 million (2008: R53 million). All capital imports were
fully hedged. There were no imports (other than capital imports) which were not fully hedged during both
2009 and 2008. Monetary items have been translated at the closing rate at the last day of the reporting
period US$1: R7,40 (2008: US$1: R9,36).
The FECs which are used to hedge foreign currency exposure mostly have a maturity of less than one year
from the reporting date. When necessary, FECs are rolled over at maturity.
Pre-tax unrealised exchange gains amounting to Rnil (2008: R9 million), arising from the revaluation of Exxaro
Australia Sands Pty Limited foreign currency loans for which an economic hedge exists through specific future
export sales revenue, were recognised in equity as hedge accounting was applied.
The following significant exchange rates applied for both group and company during the year:
2009
United States dollar
Euro
Australian dollar
2008
United States dollar
Euro
Canadian dollar
Australian dollar
Average
spot
rate
Average
achieved
rate
Closing
spot
rate
8,39
11,63
6,60
8,25
12,04
7,71
6,93
7,48
10,90
6,77
8,10
11,90
7,98
7,07
7,40
10,64
6,64
9,36
13,18
7,67
6,48
Foreign currency
Material FECs and currency options, which relate to specific balance sheet items, that do not form part
of a hedging relationship or for which hedge accounting was not applied at 31 December 2009 and
31 December 2008, are summarised as follows:
Market-
related
value
Rm
Foreign
amount
million
Contract
value
Rm
Recog-
nised
fair value
profits/
(losses)
Rm
164
22
175
11
47
5
53
6
GROUP
2009
Exports
United States dollar – FECs
2008
Exports
United States dollar – FECs
218 I Exxaro Annual Report 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.2 Market risk management (continued)
27.4.2.1
Foreign currency risk management (continued)
Cash flow hedges – foreign currency risk
The group has entered into certain forward exchange contracts, which relate to specific foreign commitments
not yet due and export earnings for which the proceeds are not yet receivable. Details of the contracts at
31 December 2009 and 31 December 2008 are as follows:
GROUP
2009
Imports
United States dollar – FECs
Euro – FECs
Less than three months
Six months
Total
Less than three months
Three months
Total
Exports
United States dollar – FECs
Less than three months
United States dollar – Note holders loan
One year
> three years
Total
Market-
related
value
Rm
Foreign
currency
million
Contract
value
Rm
Recog-
nised
fair value
in equity
Rm
12
2
14
11
2
13
133
12
432
577
3
3
1
1
18
2
58
78
10
3
13
10
2
12
135
12
432
579
1
1
1
1
(2)
(2)
Note: In respect of a US$60 million (2008: US$60 million) loan liability of Exxaro Australia Sands Pty Limited, an economic
hedge exists between US$ revenue and US$ borrowings. Accordingly, future sales proceeds to be applied to the repayment
of US$ borrowings are recorded at the historical exchange rate effective at the date of loan draw-down.
Exxaro Annual Report 2009 I 219
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.2 Market risk management (continued)
27.4.2.1
Foreign currency risk management (continued)
Cash flow hedges – foreign currency risk (continued)
With respect to the above-mentioned cash flow hedges, the future expected cash flows are represented
below:
Expected future cash flows
– United States dollar – FECs
– Euro – FECs
– United States dollar – Note holders loan
Expected gain/(loss) in profit or loss (at maturity)
– United States dollar – FECs
– Euro – FECs
– United States dollar – Note holders loan
GROUP
2008
Imports
United States dollar – FECs
Euro – FECs
Less than three months
Three months
Total
Less than three months
Total
Exports
United States dollar – Note holders loan
Less than three months
Three months
Six months
United States dollar – Note holders loan
> three years
Attributable to tax
Total
2010
Rm
135
12
(2)
1
2011
Rm
>2011
Rm
Total
Rm
12
432
135
12
444
(2)
1
Market-
related
value
Rm
Foreign
currency
million
Contract
value
Rm
Recog-
nised
fair value
in equity
Rm
3
1
4
18
18
75
56
37
561
730
3
1
4
19
19
57
44
41
552
694
1
1
8
6
4
60
78
(1)
(1)
(18)
(12)
4
(9)
3
(32)
Note: In respect of a US$60 million (2008: US$60 million) loan liability of Exxaro Australia Sands Pty Limited, an economic
hedge exists between US$ revenue and US$ borrowings. Accordingly, future sales proceeds to be applied to the repayment
of US$ borrowings are recorded at the historical exchange rate effective at the date of loan draw-down.
220 I Exxaro Annual Report 2009
27. FINANCIAL INSTRUMENTS (continued)
27.5 RISK MANAGEMENT (continued)
27.4.2 Market risk management (continued)
27.4.2.1
Foreign currency risk management (continued)
Cash flow hedges – foreign currency risk (continued)
With respect to the above-mentioned cash flow hedges, the future expected cash flows are represented
below:
Expected future cash flows
– United States dollar – FECs
– Euro – FECs
– United States dollar – Note holders
loan
Expected gain/(loss) in profit or loss
(at maturity)
– United States dollar – FECs
– Euro – FECs
– Canadian dollar – FECs
– United States dollar – Note holders loan
2009
Rm
> 2009
Rm
Total
Rm
141
19
561
561
2009
Rm
141
19
(27)
(1)
(9)
Market-
related
value
Rm
Foreign
currency
million
Contract
value
Rm
(27)
(1)
(9)
Recog-
nised
fair value
in equity
Rm
COMPANY
2009
Imports
Euro – FECs
Less than three months
Total
1
1
1
1
With respect to the above-mentioned cash flow hedges, the future expected cash flows are represented
below:
Expected future cash flows
– United States dollar – FECs
– Euro – FECs
2009
Rm
2010
Rm
2011
Rm
Total
Rm
1
1
Exxaro Annual Report 2009 I 221
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.2 Market risk management (continued)
27.4.2.1
Foreign currency risk management (continued)
Cash flow hedges – foreign currency risk (continued)
Market-
related
value
Rm
Foreign
currency
million
Contract
value
Rm
Recog-
nised
fair value
in equity
Rm
COMPANY
2008
Imports
United States dollar – FECs
Less than three months
Total
1
1
0,1
0,1
1
1
With respect to the above-mentioned cash flow hedges, the future expected cash flows are represented
below:
Expected future cash flows
– United States dollar – FECs
2009
Rm
2010
Rm
2008
Rm
1
Total
Rm
1
Foreign currency sensitivity
The following table includes outstanding foreign currency-denominated monetary items and adjusts
their translation at the period end for a 10% increase in foreign currency rates and details the group and
company sensitivity thereto. Foreign currency-denominated monetary items such as cash balances, trade
receivables, trade payables and loans have been included in the analysis. A positive number represents a
gain while a negative number represents a loss.
For exports (US$), an increase in the exchange rate of the rand (ZAR) against the dollar (US$) (eg FEC taken
out on exports at R6,10:US$1, with actual rate coming out at R6,50:US$1) represents a weakening of the
rand against the US$, which results in a loss incurred of R0,40.
The opposite applies for a decrease in the exchange rate.
GROUP
United States dollar
Euro
COMPANY
United States dollar
PROFIT OR LOSS
EQUITY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
167
248
(28)
(4)
17
115
For imports (euro), an increase in the exchange rate of the rand (ZAR) against the euro (eg FEC taken out on
exports at R10,00:€1, with actual rate coming out at R11,0:€1) represents a weakening of the rand against
the euro, which results in a gain incurred of R1,00.
The opposite applies for a decrease in the exchange rate.
A 10% decrease in the rand against each foreign exchange rate would have an equal but opposite effect
on the above, on the basis that all other variables remain constant.
222 I Exxaro Annual Report 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.2 Market risk management (continued)
27.4.2.2
Commodity risk management
The group entered into commodity derivatives to hedge certain of its export product exposures, in terms
of lead and zinc prices.
Cash flow price hedges for coal at year-end are insignificant due to limited hedged exports and fixed price
agreements.
As of 31 December 2009 the net fair value of commodity derivatives reflected a R87 million loss
(2008: R583 million). The potential loss in fair value for such commodity hedging derivatives from a
hypothetical adverse 10% move against Exxaro’s position in commodity prices would be approximately
R13 million (2008: R21 million).
Prices for future purchases and sales of goods and services are generally established on normal commercial
terms through agents or directly with suppliers and customers. Price hedging is undertaken on a limited
scale for future zinc sales at Rosh Pinah Zinc Corporation (Pty) Limited and Exxaro Base Metals (Pty)
Limited to secure operating margins and reduce cash flow volatility. Price hedging is also undertaken for
future lead sales at Rosh Pinah.
The potential profit or loss in accounting for changes in fair value for such commodity hedging derivatives,
assuming an adverse 10% move in commodity prices, is demonstrated below. This analysis assumes that
all other variables remain constant. The analysis is performed on the same basis for 2008.
There is no impact on the profit or loss for both 2009 and 2008.
Lead
Zinc
PROFIT OR LOSS
EQUITY
2009
Rm
2008
Rm
2009
Rm
(2)
(11)
2008
Rm
(3)
(18)
A 10% positive move against the above commodity prices at 31 December would have had the equal but
opposite effect on the above derivatives to the amounts shown above, on the basis that all other variables
remain constant.
Cash flow hedges – commodity risk
The forward hedged position at balance sheet date is shown below:
2009
Recognised transactions
Lead
Price
Currency
Zinc
Price
Currency
Attributable to:
– tax
– minority shareholders
Market-
related
value
Rm
Tons
Foreign
currency
million
Contract
value
Rm
Recog-
nised
fair value
in equity
Rm
10 675
53 100
138
158
1 237
1 070
20
20
114
85
186
186
1 056
1 185
2 603
239
2 613
(48)
28
(181)
115
(18)
(9)
(113)
Exxaro Annual Report 2009 I 223
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.2 Market risk management (continued)
27.4.2.2
Commodity risk management
Cash flow hedges – commodity risk (continued)
With respect to the above-mentioned hedges, the future expected cash flows are represented below:
Expected future cash outflows
Lead
Zinc
2008
Recognised transactions
Lead
Price
Currency
Zinc
Price
Currency
Attributable to:
– tax
– minority shareholders
2010
Rm
162
917
2011
Rm
Total
Rm
210
931
372
1 848
Market-
related
value
Rm
Tons
Foreign
currency
million
Contract
value
Rm
Recog-
nised
fair value
in equity
Rm
18 825
81 750
161
314
939
1 337
30
30
173
130
276
276
1 356
1 166
2 751
363
3 074
115
(38)
416
(171)
(134)
(99)
90
With respect to the above-mentioned hedges, the future expected cash flows are represented below:
Expected future cash outflows
Lead
Zinc
Expected gain/(loss) in profit
or loss (at maturity)
Lead
Zinc
2009
Rm
2010
Rm
2011
Rm
2012
Rm
Total
Rm
138
736
20
181
151
847
16
174
214
867
39
138
49
71
552
2 521
7
9
82
501
224 I Exxaro Annual Report 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.2 Market risk management (continued)
27.4.2.3
Interest rate risk management
The group is exposed to interest rate risk as it borrows and deposits funds at both fixed and floating
interest rates on the money market. The risk is managed by maintaining an appropriate mix between fixed
and floating rate borrowings taking into account future interest rate expectations. The risk is also managed
by entering into interest rate swaps. The financial institutions chosen are subject to compliance with the
relevant regulatory bodies. A proportion of term through borrowings entered into at floating interest rates in
anticipation of a decrease in the interest rate cycle.
The interest rate repricing profile is summarised below:
1 – 6
months
Rm
7 – 12
months
Rm
Beyond
1 year
Rm
Total
borrowings
Rm
At 31 December 2009
Term borrowings (under the IFRS 7 scope)
% of total borrowings
At 31 December 2008
Term borrowings (under the IFRS 7 scope)
% of total borrowings
3 790
100
3 336
86
704
4 494
100
561
14
3 897
100
The group makes use of interest rate derivatives to hedge specific exposures in the interest rate repricing
profile of existing borrowings.
The value of borrowings hedged by interest rate derivatives, the instruments used and the respective rates
applicable to these contracts are as follows:
Borrow-
ings
hedged
Rm
Floating
interest
payable
%
Floating
interest
receivable
%
Fixed
interest
payable
%
Fixed
interest
receivable
Recog-
nised
fair value
gain/(loss)
Rm
At 31 December 2009
Local
Interest rate derivatives
beyond one year:
– Interest rate swaps
At 31 December 2008
Local
Interest rate derivatives
beyond one year:
– Interest rate swaps
675
3m Jibar
11,1
(13)
675
3m Jibar
11,1
2
The following table reflects the potential impact on earnings, given a movement in interest rates of 50 basis
points:
Increase of 50 basis
points in interest rate
Decrease of 50 basis
points in interest rate
2009
Rm
2008
Rm
2009
Rm
2008
Rm
Profit/(loss)
(18)
(16)
18
16
Exxaro Annual Report 2009 I 225
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.3
Liquidity risk management
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its
liabilities when due, under normal and stressed conditions, without incurring unacceptable losses or risking damage to
the group’s reputation.
The ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate
liquidity risk management framework for the management of the group’s short, medium and long-term funding and
liquidity management requirements.
The group manages liquidity risk by monitoring forecast cash flows in compliance with loan covenants and ensuring
that adequate unutilised borrowing facilities are maintained. The group aims to cover at least its net debt requirements
through long-term borrowing facilities.
Financial guarantee liabilities are initially recognised at their fair value, and the initial fair value is amortised over the life
of the financial guarantee. The guarantee liability is subsequently carried at the higher of this amortised amount and the
present value of any expected payment if a payment under the guarantee has become probable.
Financial guarantees are included within other liabilities.
Borrowing capacity is determined by the directors in terms of the articles of association, from time to time:
Amount approved
Total borrowings
Unutilised borrowing capacity
GROUP
2009
Rm
16 136
4 754
11 382
2008
Rm
16 245
4 150
12 095
The group’s capital base, the borrowing powers of the company and the group were set at 125% of shareholders’ funds
for both the 2009 and 2008 financial years.
Standard payment terms for the majority of trade payables is the end of the month following the month in which the
goods are received or services are performed.
A number of trade payables do however have shorter contracted payment periods.
To avoid incurring interest on late payments, financial risk management policies and procedures are entrenched to
ensure the timeous matching of orders placed with goods received notes or services acceptances and invoices.
226 I Exxaro Annual Report 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.3
Liquidity risk management (continued)
Maturity profile of financial instruments
The following table details the group’s contractual maturities of financial liabilities:
Maturity
Carrying
amount
Rm
Con-
tractual
cash flows
Rm
0 – 12
months
Rm
1 – 2
years
Rm
2 – 5
years
Rm
More
than
5 years
Rm
GROUP
2009
Financial assets
Exxaro Environmental Rehabilitation
Trust asset
Richards Bay Coal Terminal (RBCT)
Ndzalama game reserve
Derivatives
Long-term receivables
Trade and other receivables
Cash and cash equivalents
Percentage profile (%)
Financial liabilities
Interest-bearing borrowings
Trade and other payables
Derivatives
Percentage profile (%)
Derivative financial liabilities
(included in the above)
Foreign exchange forward contracts
used for hedging
– Sell (rand inflow)
Other forward exchange contracts
– Buy (rand outflow)
439
368
7
51
420
2 673
1 023
4 980
100
4 494
2 385
120
6 999
100
175
24
320
235
420
975
20
439
368
7
51
420
2 673
1 023
4 980
100
4 494
2 385
120
6 999
100
51
2 673
1 023
3 746
75
407
2 385
45
2 832
40
11
33
108
99
7
44
1
214
4
742
3 345
75
817
12
3 350
48
Exxaro Annual Report 2009 I 227
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.3
Liquidity risk management (continued)
Maturity
Carrying
amount
Rm
Con-
tractual
cash flows
Rm
0 – 12
months
Rm
1 – 2
years
Rm
2 – 5
years
Rm
More
than
5 years
Rm
342
351
25
5
6
488
2 668
2
616
1 769
34
6 306
100
3 897
2 303
94
440
6 734
100
342
351
25
5
6
488
2 668
2
616
1 769
34
6 306
100
3 897
2 303
94
440
6 734
100
4
4
25
53
98
1
281
228
25
5
6
487
2 668
2
220
1 769
34
4 697
75
495
2 303
63
440
3 301
49
363
33
392
6
185
3
1 032
16
323
2 812
267
75
(44)
398
6
2 768
41
267
4
GROUP
2008
Financial assets
Exxaro Environmental Rehabilitation
Trust asset
Richards Bay Coal Terminal (RBCT)
Igoda
Mafube
Ndzalama game reserve
Long-term receivables
Trade and other receivables
Tax receivable
Derivatives
Cash and cash equivalents
Non-current assets held for sale
Percentage profile (%)
Financial liabilities
Interest-bearing borrowings
Trade and other payables
Derivatives
Current tax payable
Percentage profile (%)
Derivative financial liabilities (included in the above)
Foreign exchange forward contracts used for hedging
– Sell
Other forward exchange contracts
– Buy
23
53
228 I Exxaro Annual Report 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.3
Liquidity risk management (continued)
Maturity
Carrying
amount
Rm
Con-
tractual
cash flows
Rm
0 – 12
months
Rm
1 – 2
years
Rm
2 – 5
years
Rm
More
than
5 years
Rm
Company
2009
Financial assets
Exxaro Environmental Rehabilitation
Trust asset
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Percentage profile (%)
Financial liabilities
Interest-bearing borrowings
Trade and other payables
Derivatives
Percentage profile (%)
Derivative financial liabilities
(included in the above)
Foreign exchange forward contracts
used for hedging
– Buy
11
10 402
34
343
10 791
100
3 697
301
32
4 030
100
1
11
10 402
34
343
10 791
100
3 697
301
32
4 030
100
10 402
34
343
10 779
99,9
362
301
32
695
17
11
11
0,1
619
2 716
619
16
2 716
67
Exxaro Annual Report 2009 I 229
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.3
Liquidity risk management (continued)
Maturity
Carrying
amount
Rm
Con-
tractual
cash flows
Rm
0 – 12
months
1 – 2
years
Rm
2 – 5
years
Rm
More
than
5 years
Rm
Company
2008
Financial assets
Exxaro Environmental Rehabilitation
Trust asset
Trade and other receivables
Derivatives
Cash and cash equivalents
Non-current assets held for sale
Percentage profile (%)
Financial liabilities
Interest-bearing borrowings
Trade and other payables
Derivatives
Taxation
Percentage profile (%)
Derivative financial liabilities
(included in the above)
Foreign exchange forward contracts
used for hedging
– Buy
10
7 927
44
478
13
8 472
100
2 913
804
44
10
3 771
100
1
10
7 927
44
478
13
8 472
100
2 913
804
44
10
3 771
100
7 927
13
478
13
8 431
99
205
804
13
10
1 032
27
10
31
41
1
278
2 430
31
309
8
2 430
65
27.4.4
Credit risk management
Credit risk relates to potential default by counterparties on cash and cash equivalents, investments, trade receivables
and hedged positions.
The group limits its counterparty exposure arising from money market and derivative instruments by only dealing
with well-established financial institutions of high credit standing. The group exposure and the credit ratings of its
counterparties are continuously monitored and the aggregate value of transactions concluded are spread among
approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the
board annually.
Trade receivables consist of a number of customers with whom Exxaro has long-standing relationships. A high portion
of term supply arrangements exists with such clients resulting in limited credit exposure which exposure, where dictated
by customer creditworthiness or country risk assessment, is further mitigated through a combination of confirmed
letters of credit and credit risk insurance.
Exxaro establishes an allowance for non-recoverability or impairment that represents its estimate of incurred losses in
respect of trade and other receivables and investments. The main components of this allowance are a specific loss
component that relates to individually significant exposures, and a collective loss component established for groups of
similar assets in respect of losses that have historical data of payment statistics for similar financial assets.
230 I Exxaro Annual Report 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.4
Credit risk management (continued)
At the reporting date, the amount of change in the fair value of financial liabilities designated at fair value through profit
or loss, attributable to credit risk is as follows:
Cumulative
Current financial year
GROUP
COMPANY
2009
Rm
2008
Rm
(2)
(8)
2009
Rm
2008
Rm
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. None of the financial instruments
below was held as collateral for any security provided.
The maximum exposure to credit risk at both reporting dates was equal to the carrying value of financial assets for both
group and company.
Detail of the trade receivables credit risk exposure:
GROUP
COMPANY
2009
%
2008
%
2009
%
2008
%
By industry
Manufacturing (including structural metal and steel)
Public utilities
Other
By geographical area
South Africa
Asia
Europe
USA
Other
25
32
43
100
41
9
21
15
14
100
53
23
24
100
47
15
22
14
2
100
The group does not have any significant credit risk exposure to any single counterparty or any group of counterparties
having similar characteristics.
Exxaro Annual Report 2009 I 231
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.4
Credit risk management (continued)
Exposure to credit risk (continued)
Financial guarantees are contracts that require the group to make specified payments to reimburse the holder for a
loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt
instrument.
Guarantee provided by banks to secure financing
The carrying amount of the financial assets at
reporting date was:
Neither past due nor impaired
– trade and other receivables
– other financial assets
– intercompany loan debits
– derivative financial instruments
– tax receivable
– non-current assets held for sale
– cash and cash equivalents
Past due
– trade and other receivables
Total financial assets
Impaired
– trade and other receivables
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
4 978
2 671
1 217
51
17
1 023
1
1
6 257
2 619
1 217
616
2
34
1 769
49
49
10 791
10 402
12
34
343
8 472
32
10
7 895
44
13
478
4 980
6 306
10 791
8 472
233
16
3 289
16
Financial assets including impaired receivables
5 213
6 322
14 080
8 488
The group strives to enter into sales contracts with clients which stipulate the required payment terms. It is expected
of each customer that these payment terms are adhered to. Where trade receivables balances become past due, the
normal recovery procedures are followed to recover the debt, where applicable new payment terms may be arranged to
ensure that the debt is fully recovered. Therefore the credit quality of the above assets deemed to be neither past due
nor impaired is considered to be within industry norms.
There were no financial assets with renegotiated terms during the 2009 or 2008 reporting periods.
Trade and other receivables age analysis
Past due but not impaired
One – 30 days overdue
31 – 60 days overdue
61 – 90 days overdue
>90 days overdue
Total carrying amount of financial instruments
past due but not impaired
Past due and impaired
>90 days overdue
Total carrying amount of financial instruments
past due and impaired
Total carrying amount of financial instruments
past due or impaired
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
1
1
2
233
235
28
15
4
7
54
(5)
(5)
3 289
49
3 289
16
16
232 I Exxaro Annual Report 2009
27. FINANCIAL INSTRUMENTS (continued)
27.4 RISK MANAGEMENT (continued)
27.4.4
Credit risk management (continued)
Before the financial instruments can be impaired, they are evaluated for the possibility of any recovery as well as the
length of time at which the debt has been long outstanding.
No collateral was held by the Exxaro group as security and other enhancement over the financial assets during the years
ended 31 December 2009 or 2008.
Loans and receivables designated at fair value through profit or loss.
The group had no loans and receivables designated as at fair value through profit or loss during the period.
Collateral
The group may require collateral in respect of the credit risk on derivative transactions with a third party. The amount of
credit risk is the positive fair value of the contract.
Collateral may be in the form of cash or in the form of a lien over a debtor’s assets, entitling the group to make a claim
for current and future liabilities.
The group is also exposed to a situation where a third party may require collateral with respect to the transaction with
that third party.
The carrying value of financial assets that may be repledged or resold by counterparties is as follows:
Non-current other financial assets
Trade and other receivables
Cash and cash equivalents
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
41
45
86
2008
Rm
360
272
102
734
These transactions are conducted under terms that are usual and customary to standard lending and borrowing
activities.
No financial assets were repledged during the year under review for collateral purposes.
Guarantees
The group did not during the period obtain financial or non-financial assets by taking possession of collateral it holds as
security or calling on guarantees.
There were no guarantees provided by banks to secure financing during the financial years ended 31 December 2009
or 2008.
For all other guarantees, refer to note 31 on contingent liabilities.
27.4.5 Other price risks
The group is exposed to equity price risks arising from equity investments. Equity investments are held for strategic
rather than trading purposes. The group does not actively trade these investments.
Exxaro Annual Report 2009 I 233
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
28. RELATED PARTY TRANSACTIONS
During the year the company and its subsidiaries, in the ordinary course of business, entered into various sale and purchase transactions
with associates and joint ventures. These transactions occurred under terms that are not more or less favourable than those arranged
with third parties.
Associates and joint ventures
Details of investments in associates and joint ventures are disclosed in note 14 and annexure 2 while income is disclosed in note 14. There
were no finance costs or expenses in respect of bad debts or doubtful debts incurred with regard to the joint ventures or the associates
during the financial years ended 31 December 2009 or 2008.
2009
Joint
ventures
Rm
Associates
Rm
2008
Joint
ventures
Rm
Associates
Rm
Items of income and expense incurred during
the year are as follows:
– group sales of goods
– group purchases of goods and services
The outstanding balances at year-end are as follows:
– included in trade and other receivables (refer note 18)
– included in trade and other payables (refer note 24)
– included in cash and cash equivalents (refer annexure 2)
– included in financial assets (refer note 16 and annexure 2)
48
164
1
28
10
311
38
79
223
162
3
5
1
22
217
135
During both years under review, there was no provision raised for doubtful debts related to the outstanding balances above.
Subsidiaries
Details of income from, and investments in subsidiaries are disclosed in notes 6 and 15 respectively, as well as in annexure 3.
Corporate service fee from subsidiaries
The following corporate service fees were received by Exxaro Resources Limited for essential services rendered:
Exxaro Coal (Pty) Limited
Exxaro Base Metals (Pty) Limited
Exxaro Sands (Pty) Limited
2009
Rm
189
38
36
263
Special purpose entities
The group has an interest in the following special purpose entities which are consolidated unless otherwise indicated:
Entity
Nature of business
Exxaro Environmental Rehabilitation Fund
Exxaro Employee Empowerment Participation Scheme Trust
Exxaro Foundation
Exxaro Chairman’s Fund
Exxaro People Development Initiative
Kumba Resources Management Share Trust
Trust fund for mine closure
Employee share incentive trust
Local social economic development1
Local social economic development1
Local social economic development – bridging classes1
Management share incentive trust
1 Non-profit organisations.
65
34
2
9
2008
Rm
145
46
40
231
234 I Exxaro Annual Report 2009
28. RELATED PARTY TRANSACTIONS (continued)
Directors
Details relating to directors’ emoluments and shareholdings (including options) in the company are disclosed in the report of the
directors.
Senior employees
Details relating to option and share transactions are disclosed in note 30.
Key management personnel
For Exxaro Resources Limited other than the executive and non-executive directors, no other key management personnel were identified.
Refer to page 148 and 149 for details on directors’ remuneration.
For the group, for 2009 and 2008, the executive committee has been identified as being key management personnel.
Short-term employee benefits
Termination benefits
Share-based payments – related expense
Total compensation paid to key management personnel
2009
Rm
34
7
41
2008
Rm
47
9
7
63
Shareholders
The principal shareholders of the company at 31 December 2009 are detailed in the “Analysis of Shareholders” schedule on page 79 and 80
of the annual report.
Contingent liabilities
Details are disclosed in note 31.
Exxaro Annual Report 2009 I 235
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
29. OPERATING SEGMENTS
Information regarding the group’s reportable segments is presented below.
Analysis of the group’s profit or losses and assets and liabilities by reportable segment:
Segment profit or loss
Segment revenue
Total revenue
Intersegmental
External
Segment net operating profit/(loss)
Interest income (external)
Interest expense
Interest adjustment on non-current provisions (refer note 22)
Depreciation and amortisation
of intangible assets
Impairment charge and reversals
Income tax expense/(income)
Net surplus on disposal of investment
Other non-cash flow items not disclosed above
Cash inflow from operations
Cash generated by operations
Income/(loss) from equity-
accounted investments
Capital expenditure
Segment assets and liabilities
Deferred tax assets
Assets (external excluding
deferred tax)
Investments in associates
(equity accounted)
Total assets
Liabilities (external)
Deferred tax liabilities
Current tax payable
Total liabilities
Additions in non-current assets1
Coal
Tied
operations
Commercial
operations
2009
Rm
2008
Rm
2009
Rm
2008
Rm
2 681 2 492 7 050 6 548
75
2
2 681 2 492 7 050 6 548
83 1 830 2 571
67
30
31
35
61
54
467
370
(60)
42
(38)
42
1
(42)
33
478
21
705
22
139
177
185
111
71
237 2 482 3 033
199 1 943 2 780
924
740
22
2
623 1 491 8 566 5 836
623 1 491 8 588 5 838
795 1 606 1 486
816
899
60
763
133
20
5
409
22
950 2 525 2 658
881
2 006
740
1 Excluding financial instruments, deferred tax, post-employment benefit assets, intercompany loans, investments in subsidiaries.
The group relies on two of its major customers for its revenue from the tied coal operations, commercial coal operations, Zincor and
the other reportable segments.
These two external customers account for at least 10% or more individually of the group’s revenue (15% and 31% (2008: 20% and 28%)).
The total amount of revenue from these two customers was R2 249 million and R4 643 million respectively (2008: R2 626 million and
R3 800 million respectively).
236 I Exxaro Annual Report 2009
KZN
Sands
Mineral sands
Namakwa
Sands
Australia
Sands
Rosh
Pinah
Base metals
Zincor
Other base
metals
Other
Total
2009
Rm
2008
Rm
2009
Rm
2008
Rm
2009
Rm
2008
Rm
2009
Rm
2008
Rm
2009
Rm
2008
Rm
2009
Rm
2008
Rm
2009
Rm
2008
Rm
2009
Rm
2008
Rm
705
974 1 334
491 1 469 1 311
974 1 334
(110)
3
31
5
62
1
170
(3)
147
491 1 469 1 311
(2)
(82)
155
4
18
21
48
66
10
10
161
168
5
32
566
(397)
169
105
5
7
12
55
436
(340)
96
(14)
13
16
(2)
42
1 016
397
1 413
(47)
1
1
18
53
1 393
340
1 733
(95)
2
(66)
(63)
7
15
42
(1)
1
705
(1 447)
3
50
(7)
171
1 435
358
29
(71)
21
(180)
22
(4)
(9)
(75)
(7)
29
188
(311)
(113)
88
30
66
103
(87)
23
210
121
23
182
260
131
218
86
43
203
188
(2)
26
85
5
11
(35)
94
41
319
87
259
182
126
557
187
69
93
69
133
(65)
(70)
136
1
188
198 15 009 13 843
188
(34)
60
389
4
39
37
40
45
52
198 15 009 13 843
304
2 467
(119)
145
153
56
526
346
167
34
48
3
1 136
898
32
(1)
(24)
1 435
766
96
6
38
413
3 288
2 117
20
510
(7)
414
3 792
3 574
5
(7)
3
(67)
(84)
(193)
1 762
93
1 856
79
1 898
1 982
1 663
1 617
179
502
58
(12)
(82)
211
83
63
38
20
331
297
629
1 083
1 943 3 252 3 415 3 571 3 453 2 924
473
1 097
1 110
1 002
65
67
986
1 013 20 634 20 253
2 122 3 754 3 473 3 559 3 371 3 135
448 1 229 1 025
109
496
426
299
473
183
64
426
87
496
259
299
182 2 789
448 1 229 1 134
557
187
247
69
1 097
316
284
(4)
596
97
1 193
563
1 065
505
16
579
69
505
133
292
395
41
(39)
4
6
1
202
289
1
(44)
(21)
(64)
252
1 674
2 991
4 105
11
12
4 128
119
1 966
1 849
1 647
2 957 23 229 23 185
9 268
8 364
3 292
995
1 257
12
57
440
34
3 338 10 320 10 061
3 090
4 782
325
Exxaro Annual Report 2009 I 237
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
29. OPERATING SEGMENTS (continued)
Information about geographical areas
Sourced from country of domicile
– South Africa
Sourced from foreign countries
– Rest of Africa
– Europe
– Asia
– Australia
– other
Total segment
External revenue
Carrying amount of
non-current assets1
2009
Rm
2008
Rm
2009
Rm
2008
Rm
9 279
8 758
12 580
12 424
4
3 445
886
31
1 364
15 009
19
2 823
959
33
1 251
13 843
335
55
1 079
206
74
645
14 049
13 349
1 Excluding financial instruments, deferred tax, post-employment benefit assets, intercompany loans, investments in subsidiaries.
No asymmetrical (irregular) allocations to reportable segments occurred during the periods under review. There were no material changes
in total assets disclosed from the last annual financial statements.
Total segment revenue, which excludes value added tax, represents the gross value of goods invoiced. Export revenue is recorded
according to the relevant sales terms, when the risks and rewards of ownership are transferred. The group uses the basis of significant
marketing regions to allocate external revenues to the individual countries.
Total segment revenue further includes operating revenues directly and reasonably allocable to the segments. Segment revenue includes
sales made between segments.
These sales are made on a commercial basis.
Segment net operating profit equals segment revenue less segment expenses and includes impairment charges – reversals and negative
goodwill.
Segment expenses represent direct or reasonably allocable operating expenses on a segment basis.
Segment assets and liabilities include directly and reasonably allocable assets and liabilities. This information is not regularly provided to
the chief decision maker.
There were no differences in the way segment assets and liabilities are measured for reportable segments or group purposes.
There were no differences in the way segment profit or loss is measured in comparison to the previous annual period or between the
reportable segments’ profits or losses and the group’s profit or loss.
30. EMPLOYEE BENEFITS
Retirement funds
Independent funds provide retirement and other benefits for all permanent employees, retired employees, and their dependants. At the
end of the financial year, the main defined contribution retirement funds to which Exxaro was a participating employer, were as follows:
– Exxaro Selector Pension Fund and Exxaro Selector Provident Fund
– Iscor Employees Umbrella Provident Fund
– Mine Workers Provident Fund
– Namakwa Sands Employees Provident Fund
– Sentinel Mining Industry Retirement Fund.
In compliance with the Pension Fund Act after the unbundling of Kumba Iron Ore Limited, Sishen Iron Ore Company employees were
transferred to the newly created Kumba Iron Ore Selector Pension and Provident Fund after all regulatory approvals had been obtained.
Members pay a contribution of 7%, with the employer’s contribution of 10% to the above funds, being expensed as incurred.
All funds registered in the Republic of South Africa are governed by the South African Pension Funds Act of 1956 (the Act).
238 I Exxaro Annual Report 2009
30. EMPLOYEE BENEFITS (continued)
Retirement funds (continued)
Defined contribution funds
Membership of each fund at 31 December 2009 and 31 December 2008 and employer contributions to each fund were as follows:
GROUP
Exxaro Selector Funds
Iscor Employees Umbrella Provident Fund
Mine Workers Provident Fund
Namakwa Sands Employees Provident Fund
Sentinel Mining Industry Retirement Fund
Other funds
COMPANY
Exxaro Selector Funds
Iscor Employees Umbrella Provident Fund
Sentinel Mining Industry Retirement Fund
Working
members1
Working
members1
Employer
contributions
Employer
contributions
2009
Number
2008
Number
2009
Rm
2008
Rm
2 516
3 625
893
1 906
1 177
421
10 538
702
131
38
871
2 470
3 587
870
1 900
830
478
10 135
668
144
30
842
66
37
12
15
31
8
169
25
1
2
28
62
34
2
15
22
12
147
23
1
2
26
1 Working members who are contributing members to an accredited retirement fund.
Due to the nature of these funds the accrued liabilities by definition equate to the total assets under control of these funds.
Defined benefit funds
Exxaro previously disclosed its interest as a participating employer in the closed defined benefit funds namely the Mittal Steel South Africa
Pension Funds and Iscor Retirement Fund. Such interest was disclosed while final confirmation was awaited on either the approval by
the Registrar of Pension Funds of the scheme for the apportionment of an existing surplus, or the permission to not submit a surplus
apportionment scheme in terms of section 15B of the Act. Both such final confirmations were received in 2007.
The group has a defined benefit obligation for the provision of severance benefits to employees of the Namibian operations in accordance
with Namibian law. As the severance benefits are only payable on retirement or the involuntary termination of services from the side of the
employer, this is accounted for as a post-retirement service. This plan is a defined benefit obligation. No other post-retirement benefits
are provided to these employees.
The most recent actuarial valuations of the present value of the defined benefit obligation were carried out at 31 December 2009 by
Alexander Forbes. The present value of the defined obligation, and the related current service cost and past service cost, were measured
using the projected unit credit method.
The principal assumptions used for the purposes of the actuarial valuations were as follows:
Discount rate
Inflation rate
Salary increase rate
Amounts recognised in profit or loss in respect of the defined benefit plan were as follows:
Current service cost
The expense for the year is included in the employee benefits expense in the income statement.
2010
%
9,50
5,75
7,25
2009
%
7,50
4,00
5,50
2009
Rm
1
Exxaro Annual Report 2009 I 239
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
30. EMPLOYEE BENEFITS (continued)
Retirement funds (continued)
Defined benefit funds (continued)
Reconciliation of the opening and closing
balances of the present value of the defined
obligation:
Balance sheet amounts at beginning of year
Plus current service cost
Plus actuarial gains or less actuarial losses
Refer note 22 for detail on liability.
Determination of estimated post-retirement expense for the next financial year:
Current service cost
Interest cost
Expense
2009
Rm
3
7
10
2010
Rm
1
1
2
Medical funds
The group and company contribute to defined benefit medical aid schemes for the benefit of permanent employees and their dependants
who choose to belong to one of a number of employer accredited schemes. The contributions charged against income amounted to
R75 million (2008: R70 million). Exxaro has a post-retirement medical obligation to a limited number of in-service and retired employees
belonging to two medical schemes for which an actuarially determined liability has been raised. Eyesizwe’s contribution to the post-
retirement medical aid obligation for the year ended 31 December 2009 amounted to R1,4 million (2008: R1,5 million).
As part of the business combination with Namakwa Sands on 1 October 2008 a post-retirement medical obligation was acquired. The
post-retirement liability is of a defined benefit nature, and consists of an implicit promise to pay a portion of members’ post-retirement
medical aid contributions. This liability is also generated in respect of dependants who are offered continued membership of the medical
aid on the death of the primary member, either pre- or post-retirement. This benefit, which is no longer offered, applied to employees
employed prior to 2001 by Namakwa Sands. Contributions, if any, will be offset against the liability. No contributions were made for the
two months ended 31 December 2008.
Equity compensation benefits
The shareholders of Kumba Resources Limited (Kumba Resources) approved on 2 November 2006 an empowerment transaction
which in essence entailed the unbundling of Kumba’s iron ore business. Kumba Iron Ore Limited (Kumba Iron Ore) which listed on
20 November 2006, owned 74% of Sishen Iron Ore Company (Pty) Limited (Sishen Iron Ore) in December 2006. Kumba Resources was
renamed Exxaro Resources Limited (Exxaro) on 27 November 2006.
As Sishen Iron Ore was a wholly owned subsidiary of Kumba Resources before the unbundling of Kumba Iron Ore, senior employees and
directors of Sishen Iron Ore were eligible to participate in the Kumba Resources management share incentive plans.
In order to place, as far as possible, all participants in the Kumba Resources Management Share Option Scheme in the position they
would have been in if they were shareholders of Kumba Resources at the time of the implementation of the empowerment transaction,
the schemes continued in Exxaro and in Kumba Iron Ore, subject to certain amendments that were made to the Kumba Resources
Management Share Option Plan.
Kumba Resources operated the Kumba Management Deferred Purchase Share Scheme and the Kumba Management Share Option
Scheme for senior employees and executive directors of Kumba Resources.
The Kumba Management Deferred Purchase Share Scheme consisted of a combination of an option scheme, a purchase scheme and
a deferred purchase scheme and governed to maturity the share scheme rights and obligations of employees which were in existence at
the time of transfer of the employees from Iscor to Kumba Resources on unbundling of Kumba Resources effective July 2001.
Participants of the Exxaro and Kumba Iron Ore Management Deferred Purchase schemes who have been granted deferred purchase
shares received an Exxaro share and a Kumba Iron Ore share for every deferred purchase share held under the original purchase
agreement.
240 I Exxaro Annual Report 2009
30. EMPLOYEE BENEFITS (continued)
Equity compensation benefits (continued)
The Kumba Management Share Option Scheme consists of the granting of options in respect of ordinary Kumba Resources shares, at
market value, to eligible participants.
Shares and/or options held in terms of Kumba Management Deferred Purchase Share Scheme are released in five equal tranches
commencing on the second anniversary of an offer date and expire on the ninth anniversary of an offer date.
Options granted in terms of the Kumba Management Share Option Scheme can be exercised over five years commencing on the first
anniversary of the offer date. If the options are accepted by participants, the vesting periods, unless decided otherwise by the directors,
are as follows:
– 10% after first anniversary of offer date;
– additional 20% after second anniversary of offer date;
– additional 20% after third anniversary of offer date;
– additional 25% after fourth anniversary of offer date;
– additional 25% after fifth anniversary of offer date.
The options not exercised lapse by the seventh anniversary of the offer date.
Participants of the Exxaro and Kumba Iron Ore Management Share Option schemes exchanged each of their Kumba Resources options
for an Exxaro option and a Kumba Iron Ore option. The strike price of each Kumba Resources option was apportioned between the
Exxaro option and the Kumba Iron Ore option with reference to the volume weighted average price (VWAP) at which Exxaro and Kumba
Iron Ore traded for the first 22 days post the implementation of the empowerment transaction. The VWAP was calculated as 32,81% for
Exxaro and 67,19% for Kumba Iron Ore.
The Exxaro employees’ options in the Kumba Management Share Option schemes are released on the dates that the original options
would have vested.
Their options relating to Kumba Iron Ore are released on the earlier of:
– the date that the original options would have vested or
– 24 months from the date of unbundling (20 November 2008).
The Kumba Iron Ore options held by Exxaro employees lapse 42 months after the date of unbundling (20 May 2010).
The same periods apply to Kumba Iron Ore employees’ options in Exxaro.
According to the rules of the Long-Term Incentive Plan (LTIP) executive directors and senior employees of Exxaro and its subsidiaries are
awarded rights to a number of ordinary Exxaro shares. The vesting of the LTIP awards are conditional upon the achievement of group
performance levels (established by the transformation, remuneration, human resources and nominations committee of the board) over a
performance period of three years.
The extent to which the performance conditions are met governs the number of shares that vest. The performance conditions set for the
initial grant were as follows:
– the total shareholder return (TSR) condition: the Exxaro TSR will be compared to the TSR of a peer group over the three-year performance
period, averaged over a six-month period. The peer group comprises at least 16 members
– the return on capital employed (ROCE) condition: the ROCE measure is a return on capital employed measure with a number of adjustments.
Targets are set by the committee based on existing ROCE performance in the base year of an LTIP and planned ROCE performance in
the final year of the LTIP performance period.
Kumba Resources, at its election, would have settled the conditional awards by issuing new shares or by instructing any third party to
acquire and deliver the shares to the participants. Kumba Resources however, elected to collapse the scheme before the implementation
of the empowerment transaction, since it would have been difficult to firstly measure the performance post the unbundling and also to
take into account that employees of both Exxaro and Kumba Iron Ore needed to be compensated for accrued/vested benefits up to the
date of the unbundling.
The extent to which the conditions were satisfied up to the date of the unbundling, determined the number of shares deemed to vest for
each participant.
The cash settlement amount payable to each participant was determined by multiplying the number of shares deemed to vest in each
participant by the 30-day VWAP of Kumba Resources shares as at the last practicable date prior to the posting of the transaction
documentation to Kumba Resources shareholders.
According to the Deferred Bonus Plan (DBP) rules, executive directors and senior employees of Kumba Resources and its subsidiaries
had the opportunity to acquire shares (pledged shares) on the open market with 50% of the after tax component of their annual bonus.
After the pledged shares have been acquired, the shares are held by an escrow agent for the absolute benefit of the participant for a
pledge period of three years.
Exxaro Annual Report 2009 I 241
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
30. EMPLOYEE BENEFITS (continued)
Equity compensation benefits (continued)
A participant may at its election dispose of and withdraw the pledged shares from escrow at any stage. However, if the pledged shares
are withdrawn from escrow, before the expiry of the pledge period, the participant forfeits the matching award.
The participant will qualify for a matching award at the end of the pledge period on condition that the participant is still employed and
the pledged shares are still in escrow. The matching award entitles a participant to a number of shares equal in value to the pledged
shares. Upon vesting, the pledged shares and the matching award are transferred and released to the participant and rank pari passu in
all respects with the existing issued shares of Exxaro.
The company may settle the matching award by issuing new shares or alternatively, instruct any third party to acquire and deliver the
shares to the participant. The scheme was also collapsed before the implementation of the empowerment transaction. Participants
received 6 012 matching shares in total.
After the collapse of Kumba Resources’ LTIP and DBP schemes, Exxaro Resources awarded and will in future award rights in accordance
with the rules of the new schemes.
As a result of restrictions related to the empowerment transaction of Kumba Resources, certain executives and senior managers who
participated in the Kumba Resources Management Share Option Scheme were not able to receive certain grants of options which would
normally have been made in the ordinary course of operations. The human resources and remuneration committee of Kumba Resources
consequently awarded “phantom options” to the affected participants within the following framework:
• awards of “phantom options” were made, with the grant price, vesting dates, and lapse periods set to be the same as those of the
options awardable;
• on exercise, the participants are paid (in cash) the difference between the market price (volume weighted average price on the day
preceding exercise) and the grant price;
• all other rules and arrangements in respect of the amended Kumba Resources Management Share Option Scheme were replicated for
the Kumba Resources Phantom Share Option Scheme;
• the Kumba Resources Phantom Share Option Scheme was replicated for Kumba Iron Ore;
• Exxaro and Kumba Iron Ore entered into an agreement that facilitates the settlement of obligations towards participants of the Phantom
Option Schemes.
Accounting costs for Exxaro and Kumba Iron Ore Phantom Option Schemes require recognition under IFRS 2 Share-based Payment
using the treatment for cash-settled share-based payments. This treatment is more volatile than that of the conventional (equity-settled)
scheme and the liability will require marking to market at each reporting period. Under the above scheme 43 150 shares are outstanding
at 31 December 2009 (2008: 73 690).
Exxaro made the first annual grant in the Share Appreciation Rights Scheme (SARS) to participants in 2007, as well as new appointments.
Under the rules of the scheme, participants obtain the right to receive a number of Exxaro shares to the value of the difference between
the exercise price and the grant (or offer) price.
The performance period’s first review is on 1 March 2010 when the rights will vest if Exxaro’s headline earnings per share (HEPS)
increased by a minimum of Consumer Price Index (CPI) plus six percent in the three years. In 2011 and 2012 the minimum increase in
HEPS to achieve is CPI plus eight percent and CPI plus 10 percent respectively.
The committee has the discretion to determine the settlement method, being shares or cash.
Exxaro also created an Employee Empowerment Participation Scheme (MPower) whereby employees in junior levels are given the
opportunity to share in the growth of the company. Employees are awarded share units which entitle them to dividends of Exxaro in
the five-year period ending November 2011. By the end of the five-year period or capital appreciation period, the units that employee
beneficiaries hold in the Trust, will be sold. The capital distribution is the profit that is made on the share units after it is sold and the
outstanding loan (used to buy the shares) to Exxaro is settled.
242 I Exxaro Annual Report 2009
30. EMPLOYEE BENEFITS (continued)
Equity compensation benefits (continued)
No further awards will be made in terms of the old (Kumba) share incentive plans. The awards already granted and still outstanding are
being phased out. Only SARS, LTIPs, DBP and MPower schemes remain.
Exxaro will be limited to issuing a maximum of 30 million shares, which amounts to approximately 10% of the number of issued shares
as at the date of the general meeting where approval was given. Notwithstanding the foregoing, Exxaro may on instruction of the Exxaro
board and the transformation, remuneration, human resources and nomination committee, and as a fallback provision only, pay an Exxaro
employee participating in the share incentive plans an equivalent amount in cash in lieu of any Exxaro shares. The maximum number of
Exxaro shares to which any one eligible participant is entitled in total in respect of all schemes albeit by the way of an allotment and issue
of Exxaro shares and/or the grant of options shall not exceed one percent of the shares then in issue in the share capital of Exxaro.
As at 31 December 2009, the maximum number of shares approved and allocated by shareholders for the purposes of the
schemes, 30 million (2008: 30 million) represent 8,4% (2008: 8,5%) of the issued shares. Of the total of 30 million shares, 19,9 million
(2008: 21,1 million) shares are available in the share scheme for future offers to participants, while 10,1 million (2008: 8,9 million) shares
(2,8% of the issued shares) are allocated as options, LTIP, DBP, deferred purchase shares, or SARS to participants.
Details are as follows:
Number of shares approved by shareholders
Options, LTIP, DBP, deferred purchase instruments and SARS held by
Exxaro employees/participants
Options and Deferred purchase instruments held by Kumba Iron Ore employees/participants
2009
Million
30,0
(9,8)
(0,3)
19,9
2008
Million
30,0
(7,6)
(1,3)
21,1
At 31 December 2009 the company’s loan from the Kumba Resources Management Share Trust amounted to R39 539 138
(2008: R51 199 278). The loan is interest free and has no fixed repayment terms. This amount is reflected as an intercompany current
loan in the company’s accounts and eliminated at group level.
The market value of the shares available for utilisation at the end of the year amounted to R2 078 809 095 (2008: R1 358 122 343).
Details of the schemes and plans are:
Outstanding at beginning of year
Exercised
Lapsed/cancelled2
Outstanding at end of year
Options1
Exxaro employees
Kumba Iron Ore employees
December
2009
’000
December
2008
’000
December
2009
’000
December
2008
’000
3 554
(1 067)
(192)
2 295
5 070
(1 464)
(52)
3 554
1 272
(928)
344
1 869
(560)
(37)
1 272
1 No further grants are made under these schemes and plans that are being phased out have been replaced by the new share incentive schemes.
2 Exercise price range for lapsed/cancelled options: R12,16 – R47,73 (2008: R7,52 – R40,18).
Exxaro Annual Report 2009 I 243
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
30. EMPLOYEE BENEFITS (continued)
Outstanding at beginning of year
Exercised
Lapsed/cancelled
Outstanding at end of year
Outstanding at beginning of year
Issued
Exercised
Lapsed/cancelled
Outstanding at end of year
Exxaro employees
Kumba Iron Ore employees
Deferred Purchase1
December
2009
’000
December
2008
’000
December
2009
’000
December
2008
’000
4 200
(4 000)
200
5 200
(1 000)
4 200
400
400
400
400
Deferred Bonus Plan
Long-Term Incentive Plan2
December
2009
’000
December
2008
’000
December
2009
’000
December
2008
’000
18
55
(1)
(5)
67
2
16
18
906
772
(21)
(107)
1,550
481
462
(3)
(34)
906
1 No further grants are made under these schemes and plans that are being phased out have been replaced by the new share incentive schemes.
2 There is no amount payable by participants on vesting. They will be awarded rights to ordinary shares in the company.
Outstanding at beginning of year
Issued
Exercised
Lapsed/cancelled
Outstanding at end of year
Details of issues during the period are as follows:
Expiry date
Exercise price (share price range) (R)
Total proceeds if options are exercised at reporting
period/deferred purchase shares at reporting date
paid (R million)
Expiry date
Exercise price per share (share price range) (R)
Total proceeds if rights are immediately exercised/
deferred purchase shares immediately paid (R million)
Phantom scheme
SARS
December
2009
’000
December
2008
’000
December
2009
’000
December
2008
’000
74
(31)
43
98
(24)
74
3 097
3 194
(8)
(432)
5 851
1 422
1 820
(5)
(140)
3 097
Long-Term Incentive Plan
Deferred Bonus Plan
December
2009
December
2008
December
2009
December
2008
2012/2013
69,06 – 85,00
2011/2012
102,14 – 112,35
2012/2013
65,58 – 91,08
2011/2012
89,61 – 111,88
53,4
51,8
4,0
SARS
2,0
December
2009
December
2008
2016
62,83 – 112,35
2014/2015
98,38 – 155,69
222
200
244 I Exxaro Annual Report 2009
30. EMPLOYEE BENEFITS (continued)
Details of options/deferred purchase shares exercised during the year are as follows:
Exercise price per share (share price range) (R)
– Exxaro employees in Exxaro (post-unbundling)
– Exxaro employees In Kumba Iron Ore
Options
Long-Term Incentive Plan
December
2009
December
2008
December
2009
December
2008
91,40 – 104,50
48,00 – 160,85
76,50 – 77,30
60,6
(post unbundling)
140,00 – 306,17
107,00 – 376,00
– Kumba Iron Ore employees in Exxaro
(post unbundling)
Total proceeds if shares are issued (R million)
63,16 – 78,00
541,6
3,86 – 47,73
424,8
0,2
0,2
Deferred Bonus Plan
Deferred purchase
December
2009
December
2008
December
2009
December
2008
Exercise price per share (share price range) (R)
Total proceeds if shares are issued (R million)
77,32
86,45
65,75 – 66,50
0,3
65,00
0,1
Phantom scheme1
SARS
December
2009
December
2008
December
2009
December
2008
Exercise price per share (share price range) (R)
Total proceeds if shares are issued (R million)
76,00 – 91,28
136,00 – 136,09
67,83 – 92,00
0,2
60,60
0,32
1 The phantom option awards are classified as cash settled since no shares will be issued when exercised.
Terms of the options and deferred purchase shares outstanding at 31 December 2009 are as follows:
Share options held by Exxaro employees in Exxaro
Options
Long-Term Incentive Plan
Exercise
price
R
Out-
standing
’000
Exercise
price
R
Out-
standing
’000
Expiry date
2010
2011
2012
2013
7,32 – 11,59
19,90 – 19,62
13,72 – 32,84
33,47– 47,73
71 60,60 – 102,14
437 69,06 – 112,35
717 63,45 – 67,07
1 070
2 295
64,8
424
415
711
1 550
94,8
Deferred Bonus Plan
Deferred purchase
Expiry date
Exercise
price
R
Out-
standing
’000
2010
86,45
2011 89,60 – 111,88
65,58 – 91,08
2012
2
14
51
67
5,2
Exercise
price
R
18,36
Out-
standing
200
200
TOTAL
Total proceeds if shares are issued (R million)
TOTAL
Total proceeds if shares are issued (R million)
Exxaro Annual Report 2009 I 245
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
30. EMPLOYEE BENEFITS (continued)
Share options held by Exxaro employees in Exxaro (continued)
SARS
Exercise
price
R
Out-
standing
’000
Phantom scheme
Exercise
price
R
Out-
standing
’000
Expiry date
2010
2012
2014 59,42 – 104,99
2015 62,83 – 155,69
2016 63,45 – 92,51
TOTAL
Total proceeds if shares are issued (R million)
Share options held by Exxaro employees in Kumba Iron Ore:
TOTAL
Total proceeds if shares are issued (R million)
Share options held by Kumba Iron Ore employees in Exxaro:
Expiry date
2010
TOTAL
Total proceeds if shares are issued (R million)
Options
Exercise
price
R
6,91 – 47,73
Expiry date
2010
Out-
standing
000
344
344
9
19,62
19,62
1 179
1 723
2 949
5 851
10
33
43
Options
Exercise
price
R
15,38 – 97,74
Out-
standing
’000
1 018
1 018
49,9
Deferred purchase
Exercise
price
R
21,06
Out-
standing
000
400
400
The exercise prices of the options held by Exxaro employees in Exxaro and Kumba Iron Ore respectively at 31 December 2008 and
31 December 2009, have been recalculated with reference to the VWAP split of 32,81% for Exxaro and 67,19% for Kumba Iron Ore.
The last date for exercising these options is 20 May 2010.
Terms of the options and deferred purchase shares outstanding at 31 December 2008 are as follows:
Share options held by Exxaro employees in Exxaro:
Long-Term Incentive Plan
Out-
standing
000
465
441
Exercise
Out-
price
standing
000
R
287 60,60 – 102,14
150
112,35
737
1 080
1 300
3 554
90
906
78
Options
Exercise
price
R
Expiry date
9,60 – 20,34
2009
2010
7,52 – 19,62
2011 11,09 – 16,62
2012 13,72 – 32,84
2013 33,47 – 47,73
TOTAL
Total proceeds if shares are issued (R million)
246 I Exxaro Annual Report 2009
30. EMPLOYEE BENEFITS (continued)
Share options held by Exxaro employees in Exxaro (continued)
Deferred Bonus Plan
TOTAL
Total proceeds if shares are issued (R million)
Exercise
price
R
Expiry date
2010
86,45
2011 86,60 – 111,88
SARS
Exercise
price
R
Expiry date
2012
2014 58,33 – 104,99
112,35
2015
TOTAL
Total proceeds if shares are issued (R million)
Share options held by Exxaro employees in Kumba Iron Ore:
TOTAL
Total proceeds if shares are issued (R million)
Expiry date
2009
2010
Options
Exercise
price
R
40,62 - 16,11
6,91 - 47,73
12,90 - 13,62
19,62
Expiry date
2009
2010
2011
2012
Out-
standing
’000
148
1 118
4
2
1 272
33,1
TOTAL
Total proceeds if shares are issued (R million)
Deferred purchase
Exercise
price
R
6,97 – 9,17
18,36
Out-
standing
’000
4 000
4 000
Phantom scheme
Out-
standing
’000
Exercise
price
R
59,80 – 100,10
Out-
standing
’000
74
Out-
standing
’000
2
16
18
2,0
1 338
1 759
3 097
276,2
74
Options
Exercise
price
R
Out-
standing
’000
22,04 – 41,66
14,98 – 97,74
217
2 819
3 036
157,5
Deferred purchase
Exercise
price
R
Out-
standing
’000
21,06
400
400
Exxaro Annual Report 2009 I 247
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
30. EMPLOYEE BENEFITS (continued)
Details of options vested but not sold during the year are as follows:
Exxaro employees in Exxaro (post-unbundling)
Number of shares
Exercise price (share price range) (R)
Exxaro employees in Kumba Iron Ore (post-unbundling)
Number of shares
Exercise price (share price range) (R)
Kumba Iron Ore employees in Exxaro (post-unbundling)
Number of shares
Exercise price (share price range) (R)
Options
December
2009
December
2008
1 346 500
7,34 – 47,73
1 488 390
3,84 – 47,43
1 018 210
15,38 – 97,74
3 036 340
7,80 – 97,74
343 890
6,91 – 47,73
1 271 090
6,91 – 47,73
Long-Term
Incentive
Plan
’000
Options
’000
Deferred
Bonus Plan
’000
Deferred
purchase
’000
Exxaro shares/options only
Number of shares vesting
at beginning of year
– Exxaro employees in Exxaro
– Kumba Iron Ore employees
in Exxaro
Net change during the year
Number of shares vesting
at end of year
– Exxaro employees in Exxaro
– Kumba Iron Ore employees in
Exxaro
906
906
644
1 550
1 550
18
18
49
67
67
4 826
3 554
1 272
(2 187)
2 639
2 295
344
Directors’ interests in shares
For details refer to the report of the directors.
SARS
’000
3 097
3 097
4
4
(4)
2 754
5 851
5 851
Total
’000
8 851
7 579
1 272
1 256
10 107
9 763
344
Fair value of equity-settled share-based payment transactions with employees
The group applies IFRS 2 to grants of shares, share options or other equity instruments that are granted.
In determining the fair value of services received as consideration for equity instruments, measurement is referenced to the fair value of
the equity instruments granted.
The group applied the transitional provisions of IFRS 2 and applied the principles to grants that were granted after 7 November 2002.
Kumba Resources listed on 26 November 2001 and the volatility of its share price since then has been used to determine the
calculations.
The changes to the schemes brought about by the empowerment transaction were treated as a modification. The services received were
measured at the grant date fair value of the original equity instruments granted. Any incremental increase in the fair value of the equity
instruments granted is recognised over the revised vesting period.
The fair value of the options issued under the Management Share Option Scheme was determined immediately before and after the
modification using the Black-Scholes option pricing model.
The weighted average incremental fair value granted per option at the original strike price as a result of the modification amounted to
R12,55 while the incremental fair value for a repriced option amounted to R14,93.
248 I Exxaro Annual Report 2009
30. EMPLOYEE BENEFITS (continued)
Fair value of equity-settled share-based payment transactions with employees (continued)
The Black-Scholes methodology is used to calculate the
fair value of options granted to employees.
The inputs to the model are as follows:
Share price (R)
Weighted average exercise price range – original strike price (R)
Weighted average exercise price range – repriced strike price (R)
Annualised expected volatility (%)
Option life (years) (weighted average)
Dividend yield (%)
Risk-free interest rate (%) (weighted average)
Expected employee attrition (%)
2009
2008
Exxaro
Kumba
Iron Ore
Exxaro
Kumba
Iron Ore
49,00
34,76
13,12
37,90
3,11
4
8,26
10,0
110,00
71,18
26,86
37,90
3,08
4
8,26
10,0
49,00
34,76
13,12
37,90
3,11
4
8,26
9,26
110,00
71,18
26,86
37,90
3,08
4
8,26
9,26
The Black-Scholes methodology is used to calculate the fair value of Share Appreciation Rights (SARs) granted to employees.
The inputs to the model as at 31 December 2009 are as follows:
Share price (R)
Weighted average exercise price range
Annualised expected volatility (%)
Option life (years) (weighted average)
Dividend yield (%)
Risk-free interest rate (%) (weighted average)
Expected employee attrition (%)
The inputs to the model as at 31 December 2008 were as follows:
Share price (R)
Weighted average exercise price range
Annualised expected volatility (%)
Option life (years) (weighted average)
Dividend yield (%)
Risk-free interest rate (%) (weighted average)
Expected employee attrition (%)
SARs
vesting in
3 years
74,20
67,70
44,20
5,00
8,52
8,58
10,0
86,25
85,00
40,4
5,0
9,20
8,89
10,0
SARs
vesting in
4 years
74,20
67,70
43,19
5,50
8,68
8,65
10,0
86,25
85,00
40,4
5,50
9,59
8,94
10,0
SARs
vesting in
5 years
74,20
67,70
42,19
6,00
8,96
8,72
10,0
86,25
85,00
40,4
6,00
9,48
8,94
10,0
The Monte Carlo valuation methodology is used to calculate the fair value of Long-Term Incentive Plan, Deferred Bonus Plan and MPower
grants to employees.
The inputs to the LTIP model are as follows:
Date of grant
Share price at grant date (R)
Risk-free rate (%)
Dividend yield (%)
Expected volatility (%)
Time to vesting
Expected employee attrition (%)
04/01/2009
74,20
7,85
6,39
N/A
04/01/2008
110,35
8,88
2,81
N/A
28/2/2007
61,24
7,70
4,08
36,80
Three years
from date
of grant
10,29
Three years
from date
of grant
10,29
Three years
from date
of grant
10,29
Exxaro Annual Report 2009 I 249
NOTES TO THE ANNUAL FINANCIAL STATEMENTS CONTINUED
for the year ended 31 December 2009
30. EMPLOYEE BENEFITS (continued)
Fair value of equity-settled share-based payment transactions with employees (continued)
The inputs to the DBP model are as follows:
Date of grant
Share price at grant date (R)
Risk-free rate (%)
Dividend yield (%)
Expected volatility (%)
Time to vesting
Expected employee attrition (%)
The inputs to the MPower model are as follows:
Date of grant
Share price at grant date (R)
Risk-free rate (%)
Dividend yield (%)
Expected volatility (%)
Vest date
Vesting probability (%)
The inputs to the phantom scheme model are as follows:
Date of grant
Share price at grant date (R)
Risk-free rate (%)
Dividend yield (%)
Expected volatility (%)
Time to vesting
Expected employee attrition (%)
04/01/2009
77,06
7,49
6,66
N/A
Three years
from date
of grant
15,00
04/01/2008
111,88
8,88
2,77
N/A
Three years
from date
of grant
15,00
28/2/2007
61,24
7,70
4,08
36,80
Three years
from date
of grant
15,00
04/01/2009
71,00
8,20
3,00
37,00
28/11/2011
100
04/01/2008
71,00
8,20
3,00
37,00
28/11/2011
100
31/1/2007
71,00
8,20
3,00
37,00
28/11/2011
100
71,90 56,00 – 100,10
22/4/2005 –
1/12/2005
22/4/2005 –
1/12/2005
91,40
8,47 – 8,58
6,54 – 6,75
4,91 – 5,36 11,32 – 12,96
48,50
Mainly over
five years in
tranches
50,08 – 55,98
Mainly over
five years in
tranches
22/4/2005 –
1/12/2005
8,54 – 8,70
4,12
34,25
Mainly over
five years in
tranches
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
31. CONTINGENT ASSETS AND LIABILITIES
Contingent assets
An outstanding insurance claim for the Furnace 2 incident
at Exxaro TSA Sands (Pty) Limited for which it is probable that
settlement will be received in the first half of 2010.
Surrender fee on prospect rights, exploration rights and mining
rights.
Contingent liabilities
Contingent liabilities at balance sheet date, not otherwise
provided for in these annual financial statements, arising from:
– guarantees in the normal course of business from which it is
anticipated that no material liabilities will arise
– other1
99
59
562
155
135
57
523
64
48
1
3
1 Includes the group’s share of contingent liabilities of associates and joint ventures of R61 million (2008: R57 million).
The increase in 2008 and 2009 is mainly attributable to guarantees to the Department of Minerals and Energy in respect of
environmental liabilities on immediate closure of mining operations.
These contingent liabilities have no tax impact.
The timing and occurrence of any possible outflows are uncertain.
250 I Exxaro Annual Report 2009
32. COMMITMENTS
GROUP
COMPANY
Capital commitments at balance sheet date
Capital expenditure contracted for plant and equipment
Capital expenditure authorised for plant and equipment
but not contracted
The above includes the group’s share of capital
commitments of associates and joint ventures
Capital expenditure will be financed from available
cash resources, funds generated from operations and
available borrowing capacity
Capital expenditure contracted relating to captive mines
Tshikondeni, Arnot and Matla, which will be financed by
ArcelorMittal SA Limited and Eskom respectively
2009
Rm
97
78
2008
Rm
78
48
2009
Rm
2008
Rm
3 550
889
1 420
2 711
565
456
18
70
A trust known as New Africa Mining Fund (the Fund) was established during 2003 to make portfolio investments in junior mining projects
within South Africa and elsewhere on the continent of Africa. Exxaro, as an investor participant to the Fund, has committed to contribute
R20 million towards the Fund. The Fund manager can draw down this balance or any portion as and when required, by serving a
10-day notice to Exxaro. The commitment period commenced on 1 March 2003 and expired on 28 February 2009. Thereafter up until
28 February 2013 no new investments in new funds may be undertaken by the fund, however, Exxaro may still be required to invest funds
into established investments limited to the initial R20 million commitment.
GROUP
COMPANY
2009
Rm
2008
Rm
2009
Rm
2008
Rm
Operating lease commitments
The future minimum lease payments under non-cancellable
operating leases are as follows:
– less than one year
– more than one year and less than five years
– more than five years
Total
Operating sublease receivable
Non-cancellable operating lease rentals are receivable as
follows:
– less than one year
– more than one year and less than five years
Total
44
42
6
92
1
3
4
34
35
8
77
8
7
15
9
7
16
Exxaro Annual Report 2009 I 251
ANNEXURE 1
NON-CURRENT INTEREST-BEARING BORROWINGS
LOCAL
Unsecured loans
Secured loans
Final
repay-
ment
date
Rate of interest
per year (payable
half-yearly)
Rate of interest
per year (payable
half-yearly)
2009
2008
GROUP
COMPANY
Fixed
%
Floating
%
Fixed
%
Floating
%
2009
Rm
2008
Rm
2009
Rm
2008
Rm
2009
2009
2009
2011
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2015
2016
2011
2011
2012
2013
2025
2026
2031
2032
10,540
8,510
8,510
8,510
8,610
8,510
8,610
8,510
8,610
8,510
8,610
8,510
7,610
9,120
12,130
17,490
11,420
13,540
8,330
10,710
22,200
32,930
12,130
17,490
11,420
13,540
8,330
10,710
22,200
32,930
1,780
14,980
12,570
14,140
13,480
13,480
13,480
13,580
13,480
13,580
13,480
13,580
14,350
1
2
3
4
5
6
7
8
9
109
167
300
5
150
415
675
675
125
125
224
224
143
3,337
2
2
1
10
24
13
84
115
251
6
150
415
540
675
100
125
180
224
48
60
180
1,000
181
3,884
2
1
1
8
24
12
86
126
260
300
150
415
675
675
125
125
224
224
150
415
540
675
100
125
180
224
48
60
180
1,000
3,697
2,913
252 I Exxaro Annual Report 2009
Final
repay-
ment
date
Rate of interest
per year (payable
half-yearly)
Rate of interest
per year (payable
half-yearly)
2009
2008
GROUP
COMPANY
Fixed
%
Floating
%
Fixed
%
Floating
%
2009
Rm
2008
Rm
2009
Rm
2008
Rm
2016
6,640
5,620
6,640
2010
7,850
7,850
610
610
10
11
561
561
1
4,754
4,150
3,697
2,913
FOREIGN
Unsecured loans (US$)
FOREIGN
Secured loan (AUD)
Total non-current
interest-bearing
borrowings (refer note 21)
1 The interest is based on US PPI and settled in rands based on the US$/ZAR exchange rate. The PPI NACS on 31 December 2008 was 1,78%.
Finance leases recognised due to IFRIC 4 Determining Whether an Agreement Contains a Lease
2 Finance lease agreement between Exxaro Sands (Pty) Limited and Mhlathuze Water in respect of a plant with a book value of R1 million (2008: R2 million).
3
Finance lease agreement between FerroAlloys (Pty) Limited and African Qxygen Limited (Afrox) in respect of machinery and equipment with a book value of
Rnil (2008: Rnil).
4 Finance lease agreement between Exxaro Sands (Pty) Limited and Eskom in respect of buildings with a book value of R1 million (2008: R1 million).
5 Finance lease agreement between Exxaro TSA Sands (Pty) Limited and Air Products in respect of a plant with a book value of R4 million (2008: R6 million).
6
Finance lease agreement between Exxaro TSA Sands (Pty) Limited and Mhlathuze Water in respect of a plant with a book value of R20 million
(2008: R21 million).
7 Finance lease agreement between Exxaro TSA Sands (Pty) Limited and Eskom in respect of buildings with a book value of R13 million (2008: R14 million).
8
Finance lease agreement between Exxaro Sands (Pty) Limited and Kusasa Bulk Terminals (Phase 1) in respect of a plant with a book value of R43 million
(2008: R45 million).
Finance lease agreement between Exxaro Sands (Pty) Limited and Kusasa Bulk Terminals (Phase 2) in respect of a plant with a book value of R47 million
(2008: R49 million).
9
10 US$60 million senior notes (fixed interest rate) issued by Ticor Finance (A.C.T.) Pty Limited, an entity controlled by Exxaro Australia Sands (Pty) Limited,
and a syndicated loan facility of US$45 million (variable interest rate), of which US$21 million was drawn on 31 December 2009 (US$nil 31 December 2008).
11 Finance lease agreement in respect of computer equipment with a book value of Rnil (2008: R1 million).
Exxaro Annual Report 2009 I 253
ANNEXURE 2
INVESTMENT IN ASSOCIATES, JOINT VENTURES AND OTHER INVESTMENTS
Nature
of
busi-
ness1
Country
of incor-
poration2
Number
of shares
held
Percent-
age
holding
Group
carrying
amount
Company
carrying
amount
Year-end
other than
31 De-
cember
2009
%
2008
%
2009
Rm
2008
Rm
2009
Rm
2008
Rm
ASSOCIATED COMPANIES
Unlisted
Black Mountain Mining
(Pty) Limited
Chifeng Kumba Hongye Zinc
Corporation Limited
Chifeng NFC Kumba Hongye
Zinc Corporation Limited
Sishen Iron Ore Company
(Pty) Limited
Total associated companies
(refer note 14)
JOINT VENTURES
Incorporated
Unlisted
Mafube Coal Mining
(Pty) Limited
RoshSkor Township
(Pty) Limited
South Dunes Coal Terminal Co
(Pty) Limited
Thakweneng Mineral
Resources (Pty) Limited
Rosh Pinah Health Care
(Pty) Limited
Unincorporated
Moranbah Coal Project
Tiwest
INVESTMENT COMPANIES
Unlisted
Richards Bay Coal Terminal3
Other
Total other investments
(refer note 16)
TOTAL INVESTMENTS
The investments are valued
at balance sheet date. Listed
shares are valued at market
value and unlisted shares at
directors’ value.
Unlisted investments
in associates
– directors’ valuation
Unlisted other investments
– directors’ valuation
A
RSA
260
26,00
26,00
A & M
CH 58 520 000
38,00
38,00
A & M
CH 42 500 000
25,00
25,00
155
102
35
32
132
37
A
RSA 240 000 000
20,00
20,00
1 673
1 647
1 965
1 848
50
50,00
50
50,00
50,00
30 June
RSA
NAM
RSA
RSA
A
C
A
E
C
A
A
1 333
33,33
33,33
1
50,00
50,00
NAM
31,00
31,00
31,00
50,00
50,00
50,00
50,00
1
1
1
1
368
7
351
36
375
387
2 341
2 236
14 165
13 162
408
387
Where the above entities’ financial year-ends are not coterminous with that of the company, financial information has been obtained from
published information or management accounts as appropriate.
¹ A – Mining, C – Service, E – Exploration, M – Manufacturing.
² RSA – Republic of South Africa, CH – People’s Republic of China, NAM – Namibia, AUS – Australia.
3 Included in the directors’ valuation of 2009 is an amount of R33 million in respect of RBCT, which is classified as part of other debtors.
254 I Exxaro Annual Report 2009
The group’s effective share of balance sheet, income statement and cash flow items in respect of associated companies and joint ventures
is as follows:
INCOME STATEMENTS
Revenue
Operating expenses
NET OPERATING PROFIT
Net financing (costs)/income
PROFIT BEFORE TAXATION
Taxation
PROFIT FOR THE YEAR
Profit for the year attributable to ordinary shareholders
BALANCE SHEETS
Non-current assets
Current assets
TOTAL ASSETS
Equity and liabilities
EQUITY ATTRIBUTABLE TO THE EQUITY HOLDERS
OF THE PARENT
Non-current liabilities
Interest-bearing borrowings
Non-current provisions
Deferred taxation and other
Current liabilities
Interest-bearing borrowings
Other
Associated companies
Joint ventures
2009
Rm
2008
Rm
2009
Rm
2008
Rm
5 419
(2 686)
2 733
(49)
2 684
(785)
1 899
1 899
2 714
1 302
4 016
4 803
(2 290)
2 513
(64)
2 449
(806)
1 643
1 643
1 967
1 847
3 814
1 484
(1 500)
1 319
(1 392)
(16)
(5)
(21)
(21)
(21)
(73)
(21)
(94)
(94)
(94)
3 591
1 506
5 097
1 981
1 156
3 137
1 759
1 614
2 913
2 533
990
126
521
112
508
555
143
412
670
420
TOTAL EQUITY AND LIABILITIES
4 016
3 814
CASH FLOW STATEMENTS
Net cash flows from operating activities
Net cash flows from investing activities
Net cash flows from financing activities
Foreign currency translations
NET INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS
159
(835)
(2)
29
(649)
836
(359)
96
4
577
165
249
64
28
1 678
5 097
216
(567)
275
(76)
128
207
16
15
238
3 137
81
(248)
7
38
(122)
Exxaro Annual Report 2009 I 255
ANNEXURE 3
INVESTMENTS IN SUBSIDIARIES1
Country
of incor-
poration2
Nature of
business3
DIRECT INVESTMENTS
AlloyStream (Pty) Limited
AlloyStream Holdings (Pty) Limited
Clipeus Investment Holdings (Pty) Limited
Colonna Properties (Pty) Limited
Cullinan Refractories Limited
Exxaro Base Metals and Industrial Minerals Holdings (Pty)
Limited
Exxaro Base Metals (Pty) Limited
Exxaro Chairman’s Fund
Exxaro Coal (Pty) Limited
Exxaro Coal Botswana Holding (Pty) Limited4
Exxaro Employee Empowerment Participation Scheme Trust
Exxaro Environmental Rehabilitation Fund
Exxaro FerroAlloys (Pty) Limited
Exxaro Foundation
Exxaro Holdings (Pty) Limited
Exxaro Holdings Sands (Pty) Limited
Exxaro Insurance Company Limited
Exxaro On-Site (Pty) Limited
Exxaro People Development Initiative
Exxaro Properties (Groenkloof) (Pty) Limited
Exxaro TSA Sands (Pty) Limited
Exxaro Sands (Pty) Limited
Ferroland Grondtrust (Pty) Limited
Glen Douglas Dolomite (Pty) Limited5
Kumba Base Metals Namibia (Pty) Limited6
Kumba Resources Management Share Trust
Merrill Lynch Insurance PCC Limited
Rocsi Holdings (Pty) Limited
Skyprops 112 (Pty) Limited
INDIRECT INVESTMENTS
Coastal Coal (Pty) Limited
Exxaro Australia Pty Limited
Exxaro Australia Sands Pty Limited
Exxaro Base Metals (Namibia) (Pty) Limited
Exxaro Base Metals China Limited
Exxaro Base Metals International BV
Exxaro Coal Botswana (Pty) Limited (75%)
Exxaro Coal Mpumalanga (Pty) Limited
Exxaro Coke (Pty) Limited
RSA
RSA
RSA
RSA
RSA
RSA
RSA
RSA
RSA
Bot
RSA
RSA
RSA
RSA
RSA
RSA
RSA
RSA
RSA
RSA
RSA
RSA
RSA
RSA
NAM
RSA
ILE
RSA
RSA
RSA
AUS
AUS
NAM
HK
NE
Bot
RSA
RSA
256 I Exxaro Annual Report 2009
Issued
capital
unlisted
ordinary
shares
R
1
1
1
200
1 000
Interest of company
Investment in shares
Indebtedness
2009
R
2008
R
2009
Rm
2008
Rm
1
746 163
1
2 518 966
1 000
1
746 163
1
2 518 966
1 000
1
5 500 000
1
247 712 500
1
247 712 500
1
200
1 000
32 742 723
1 000
4 787
M
H
H
B
A
H
M
T
A
H
T
T
M
T
H
H
I
C
E
B
M
A
D
A
C
T
I
H
H
1
1
1
566 827
40 000
50
1
459 517 297
1 869 951 859
5 000 000
1
459 517 297
1 869 951 859
5 000 000
1
510
200
2
10 000
1
510
6 003 355
2
1
510
6 003 355
2
1
647 044 943
100
653 722 945
44 389 208
653 722 945
44 389 208
5 000
A
A
11
C 2 038 299 354
100
H
1 354
H
119 209
P
200
P
100 000
A
1
M
16
2
375
(22)
28
11
2
413
760
(10)
11
3 651
250
10
5 693
818
4
(40)
308
20
(42)
(1)
3
262
(2)
(51)
90
20
(51)
(1)
3
69
616
(490)
Country
of incor-
poration2
Nature of
business3
Issued
capital
unlisted
ordinary
shares
Interest of company
Investment in shares
Indebtedness
R
2009
R
2008
R
2009
Rm
2008
Rm
INDIRECT INVESTMENTS
Exxaro Finance Ireland
Exxaro Holdings (Australia) Pty Limited
Exxaro International BV
Exxaro International Coal Trading BV
Exxaro International Trading BV
Exxaro Investments (Australia) Pty Limited
Exxaro Maden Arama ve Madencilik Ltd Sti
Exxaro Madencilik Sanayi Ve Ticaret Anonim Sirketi (76%)
Exxaro Mineral Sands BV
Exxaro Reductants (Pty) Limited
Exxaro Sands Holdings BV
Ferrowest (Pty) Limited (95%)
Inyanda Coal (Pty) Limited
Magnetic Minerals Pty Limited6
Omacor Sac
Oreco Leasing Limited
Pigment Holdings Pty Limited
Rosh Pinah Mine Holdings (Pty) Limited
Rosh Pinah Zinc Corporation (Pty) Limited (50,0264%)
Senbar Holdings Pty Limited
Synthetic Rutile Holdings Pty Limited
The Vryheid (Natal) Railway Coal and
Iron Company Limited
Ticor (Overseas) Holdings Pty Limited6
Ticor Chemical Company Pty Limited
Ticor Energy Pty Limited6
Ticor Finance (ACT) Pty Limited
Ticor Resources Pty Limited
Ticor Titanium Australia Pty Limited6
Tific Pty Limited
TiO2 Corporation NL
Yalgoo Minerals Pty Limited
IRL
AUS
NE
NE
NE
AUS
TUR
TUR
NE
RSA
NE
RSA
RSA
AUS
PERU
MAU
AUS
NAM
NAM
AUS
AUS
RSA
AUS
AUS
AUS
AUS
AUS
AUS
AUS
AUS
AUS
F
H
H
C
C
H
P
P
P
M
H
B
A
A
G
F
C
H
A
C
C
A
H
G
F
F
H
H
H
H
A
893 656 391
5
662 037
172 866
172 866
5
32 512
6 436 530
134 973
1
169 999
136 500 000
1 000
31 740 964
10
1
10
1 000
2 280
10
10
3 675
10
10
10
10
8 111 062
10
10
85 101 240
48 216 010
1
1
4
25
(21)
TOTAL INVESTMENT IN SUBSIDIARIES (refer note 15)
3 322 307 534
3 289 564 811
10 253
7 269
1 At 100% holding except where otherwise indicated.
2 RSA – Republic of South Africa, AUS – Australia, NAM - Namibia, HK – Hong Kong, BVI – British Virgin Islands, ILE – Ilse of Man, IRL – Ireland, MAU – Mauritius,
NE – Netherlands, BER – Bermuda, Bot – Botswana, TUR – Turkey.
3 A – Mining, B – Property, C – Service, D – Land management, E – Section 21 company, F – Finance, G – Dormant, H – Holdings, I – Insurance, M – Manufacturing,
P – Exploration, T – Trust.
4 A wholly owned subsidiary of Exxaro Coal (Pty) Limited in 2008 – transferred to Exxaro Resources Limited in 2009.
5 Reclassified during 2008 as non-current asset classified as held for sale.
6 Deregistered during 2009.
Exxaro Annual Report 2009 I 257
ANNEXURE 3 CONTINUED
INVESTMENTS IN SUBSIDIARIES
TERMS AND CONDITIONS OF INDEBTNESS TO AND FROM SUBSIDIARIES
LOCAL
Unsecured loans
Final
repay-
ment
date
2009
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2013
2015
2016
Rate of interest
per year (payable
half-yearly)
Rate of interest
per year (payable
half-yearly)
2009
2008
Fixed
%
Floating
%
Fixed
%
Floating
%
8,510
8,510
8,510
8,610
8,510
8,610
8,510
8,610
8,510
8,610
8,610
7,610
9,120
12,570
13,480
13,480
13,480
13,580
13,480
13,580
13,480
13,580
14,350
Total unsecured
non-current loans
Interest bearing current loans payable/(receivable)1
Current portion of non-current loans
Non interest bearing current loans
Current loans
Total
1 Interest charged at average overnight money market rates.
2009
Rm
150
342
405
675
100
100
134
224
36
60
120
1 000
3 346
509
330
6 068
6 907
10 253
2008
Rm
300
150
415
540
675
100
125
181
224
157
2 867
(3 100)
247
7 256
4 402
7 269
258 I Exxaro Annual Report 2009
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the ninth annual general meeting of members of Exxaro will be held at the Exxaro Corporate Centre, Roger Dyason
Road, Pretoria West, Gauteng, South Africa, at 10:30 on Friday, 21 May 2010.
The following business will be transacted and resolutions proposed, with or without modifi cation:
1.
ORDINARY RESOLUTION NUMBER 1
Approval of fi nancial statements
To receive and adopt the annual fi nancial statements of the group for the period ended 31 December 2009, including the directors’
report and the report of the auditors thereon.
2.
3.
4.
5.
ORDINARY RESOLUTION NUMBER 2
Re-appointment of independent auditors
To ratify the re-appointment of Deloitte & Touche as auditors of the company and to appoint BW Smith as the designated audit partner
for the ensuing year.
ORDINARY RESOLUTION NUMBER 3
Auditors’ fees
To authorise the directors to determine the auditors’ remuneration for the period ended 31 December 2009.
ORDINARY RESOLUTION NUMBER 4
Re-election of directors
In terms of article 15.2 of the articles of association of the company, Mr CI Griffi th, appointed to the board with effect from
16 July 2009 and Ms N Langeni, appointed to the board with effect from 23 February 2010, will retire and, being eligible, offer themselves for
re-election.
Abbreviated curricula vitae in respect of Mr CI Griffi th and Ms N Langeni are set out on page 263 of the annual report.
ORDINARY RESOLUTION NUMBER 5
Re-election of directors
To re-elect the following directors who retire by rotation in terms of article 16.1 of the articles of association of the company, and who
are eligible for re-election:
5.1 JJ Geldenhuys
5.2 U Khumalo
5.3 RP Mohring
An abbreviated curriculum vitae in respect of each director offering himself for re-election is set out on page 263 of this report.
6.
ORDINARY RESOLUTION NUMBER 6
Remuneration of non-executive directors
To approve the proposed remuneration for the period 1 January 2010 to 31 December 2010:
Chairman
Director
Audit committee chairman
Audit committee member
Board committee chairman
Board committee member
Current
Proposed
R399 600
R433 600
R184 440
R200 120
R170 400
R184 880
R90 000
R97 650
R132 000
R143 220
R63 000
R68 340
Exxaro Annual Report 2009 I 259
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
7.
8.
8.1
8.2
8.3
8.4
8.5
ORDINARY RESOLUTION NUMBER 7
Renewal of the authority that unissued shares be placed under the control of the directors
“Resolved that, subject to the provisions of article 3.2 of the articles of association of the company, the provisions of the Companies
Act, 61 of 1973, as amended, and the Listings Requirements of the JSE, the directors are hereby authorised to allot and issue at
their discretion until the next annual general meeting of the company authorised but unissued shares for such purposes as they may
determine, after setting aside so many shares as may be required, subject to article 3.2 of the articles of association of the company, to
be allotted and issued by the company pursuant to the company’s approved employee share incentive schemes.”
ORDINARY RESOLUTION NUMBER 8
General authority to issue shares for cash
“Resolved that, subject to article 3.2 of the articles of association of the company, the provisions of the Companies Act, 61 of 1973,
as amended, and the Listings Requirements of the JSE, the directors are hereby authorised, by way of a general authority, to allot and
issue ordinary shares for cash on the following basis, after setting aside so many shares as may be required, subject to article 3.2 of the
articles of association of the company, to be allotted and issued by the company pursuant to the schemes, to any public shareholder,
as defi ned by the Listings Requirements of the JSE, as and when suitable opportunities arise, subject to the following conditions:
this authority shall not extend beyond the next annual general meeting or 15 months from the date of this annual general meeting,
whichever date is earlier;
a press announcement giving full details, including the impact on net asset value and earnings per share, be published at the time of
any issue representing, on a cumulative basis within one year, 5% or more of the number of shares in issue prior to the issue/s;
the shares be issued to public shareholders as defi ned by the JSE and not to related parties;
any issue in the aggregate in any one year shall not exceed 15% of the number of shares of the company’s issued ordinary share capital; and
in determining the price at which an issue of shares be made in terms of this authority, the maximum discount permitted will be 10%
of the weighted average traded price of the shares over the 30 days prior to the date that the price of the issue is agreed between the
issuer and the party subscribing for the securities. In the event that shares have not traded in the said 30-day period, a ruling will be
obtained from the committee of the JSE.”
The approval of a 75% majority of the votes cast by shareholders present or represented by proxy at the meeting is required for ordinary
resolution number 8 to become effective.
9.
ORDINARY RESOLUTION NUMBER 9
“Resolved that, in accordance with the amendments to Schedule 14 of the JSE Listings Requirements, the amendments be made to:
• the Deferred Bonus Plan 2006
• the Long-term Incentive Plan 2006
• Share Appreciation Right Scheme 2006
established and approved by shareholders of the company in 2006 (“the 2006 Incentive Plans”) in order to give effect to the amendments
summarised in the Appendices attached to the Notice of Annual General Meeting be and are hereby approved.”
In terms of the JSE Listings Requirements:
• the approval of a 75% majority of votes of all shareholders, present or represented by proxy, is required to approve the ordinary
resolution to approve the amended 2006 Incentive Plans; and
• equity securities held by a share trust or scheme will not have their votes at a general meeting or an annual general meeting taken
into account for the purposes of resolutions proposed in terms of the JSE Listings Requirements.
The amended 2006 Incentive Plans will be available for inspection at the offi ces of the company at Roger Dyason Road, Pretoria West,
during normal offi ce hours on business day from Tuesday, 20 April 2010 until Thursday, 20 May 2010.
260 I Exxaro Annual Report 2009
10. ORDINARY RESOLUTION NUMBER 10
“Resolved that subject to the adoption of ordinary resolution number 9 and in terms of sections 221 and 222 of the Companies Act No.
61 of 1973 (as amended), the allotment and issue of shares by the board, as a specifi c authority, pursuant to the provisions of the 2006
Incentive Plans, of such allowable maximum number of ordinary shares as provided thereunder and subject to the terms and conditions
of the 2006 Incentive Plans, be and is hereby approved.”
11. SPECIAL RESOLUTION NUMBER 1
Authority to repurchase shares
“Resolved that by way of a general authority, the company or any subsidiary of the company may, subject to the Companies Act,
61 of 1973, as amended, (“the Act”), article 36 of the articles of association of the company or articles of association of a subsidiary
respectively and the Listings Requirements of the JSE, from time to time purchase shares issued by itself or shares in its holding
company, as and when deemed appropriate.”
Pursuant to the above, the following additional information, required in terms of the Listings Requirements of the JSE, is submitted.
It is recorded that the general repurchase will be subject to the following limitations:
11.1
that the repurchase is effected through the order book operated by the JSE trading system and is done without any prior understanding
or arrangement between the company and the counterparty;
that this authority shall not extend beyond 15 months from the date of this resolution or the date of the next annual general meeting,
whichever is the earlier date;
that an announcement containing full details of such repurchases is published as soon as the company has repurchased shares
constituting, on a cumulative basis, 3% of the number of shares in issue prior to the repurchases and for each 3%, on a cumulative
basis, thereafter;
that the repurchase of shares shall not, in the aggregate, in any one fi nancial year, exceed 20% of the company’s issued share capital
at the time this authority is given;
that at any one time, the company may only appoint one agent to effect any repurchase;
that the repurchase of shares will not take place during a prohibited period (unless it forms part of a pre-announced repurchase
programme which meets the requirements of the JSE) and will not affect compliance with the shareholders’ spread requirements as laid
down by the JSE;
shares issued by the company may not be acquired at a price greater than 10% above the weighted average traded price of the
company’s shares for the fi ve business days immediately preceding the date of repurchase.”
11.2
11.3
11.4
11.5
11.6
11.7
The reason for this special resolution number 1 is, and the effect thereof will be to grant, in terms of the provisions of the Act and
the Listings Requirements of the JSE, and subject to the terms and conditions embodied in the articles of the company or any
subsidiary and the said special resolution, a general authority to the directors to approve the repurchase by the company of its own
shares.
At present, the directors have no specifi c intention with regard to the utilisation of this authority, which will only be used if the circumstances
are appropriate.
A general repurchase of the company’s shares shall not be effected before the JSE has received written confi rmation from the company’s
sponsor to the effect that the directors have considered the solvency and liquidity of the company as required in terms of Section 85(4)
of the Act.
12.
To transact such other business as may be transacted at an annual general meeting.
Exxaro Annual Report 2009 I 261
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
DISCLOSURES REQUIRED IN TERMS OF THE LISTINGS REQUIREMENTS OF THE JSE
The following information is provided in accordance with paragraph 11.26 of the Listings Requirements of the JSE and relates to special
resolution number 1.
WORKING CAPITAL STATEMENT
The directors of the company agree that they will not undertake any repurchase unless:
• the company and the group will be able, in the ordinary course of business, to pay its debts;
• the assets of the company and the group have been consolidated, fairly valued in accordance with International Financial Reporting
Standards, in excess of its consolidated liabilities;
• the share capital and reserves of the company and the group will be adequate for ordinary business purposes; and
• the working capital resources of the company and the group will be adequate for ordinary business purposes.
LITIGATION STATEMENT
Other than disclosed or accounted for in these annual fi nancial statements, the directors of the company, whose names are given on page 68
and 69 of these annual fi nancial statements, are not aware of any legal or arbitration proceedings, pending or threatened against the group,
which may have or have had a material effect on the group’s fi nancial position in the 12 months preceding the date of this notice of annual
general meeting.
DIRECTORS’ RESPONSIBILITY STATEMENT
The directors, whose names are given on page 68 and 69 of these fi nancial statements, collectively and individually accept full responsibility
for the accuracy of the information given in this special resolution, and certify that to the best of their knowledge and belief there are no facts
that have been omitted which would make any statements false or misleading and that all reasonable enquiries to ascertain such facts have
been made.
MATERIAL CHANGES
Other than the facts and developments reported on in these annual fi nancial statements, there have been no material changes in the affairs,
fi nancial or trading position of the group since the signature date of this annual report and the posting date thereof.
The following further disclosures required in terms of the Listings Requirements of the JSE are set out in accordance with the reference pages
in these annual fi nancial statements of which this notice forms part:
• Directors and management – refer to pages 66 to 69 of this report;
• Major shareholders of the company – refer to page 80 of this report;
• Directors’ interest in the company’s shares – refer page 80 of this report;
• Share capital of the company – refer page 79 of this report.
In terms of Schedule 14 of the Listings Requirements of the JSE, equity securities held by a share trust or a scheme will not have their
votes at a general meeting or annual general meeting taken into account for the purposes of resolutions proposed in terms of the Listings
Requirements.
By order of the board
MS Viljoen
Company Secretary
Pretoria
16 March 2010
262 I Exxaro Annual Report 2009
SHORT BIOGRAPHIES OF EXXARO DIRECTORS SEEKING RE-ELECTION
Name: JJ Geldenhuys – Jurie (67)
Designation: Non-executive director and chairman of the safety and sustainable development committee
Academic qualifi cations: BSc (eng)(elec), BSc (eng)(min); MBA (Stanford), professional engineer
Experience: From 1965 to 1980, Jurie held production and managerial posts on the gold, platinum and copper zinc mines of the then
Anglovaal Group. From 1981 till retirement he served in technical and executive capacities involving gold, base metals, coal, ferrous metals
and industrial minerals. He retired as managing director of Avgold Limited in 2000 and continued serving the group in a consulting capacity
till 2002. Previously served on the boards of Anglovaal Limited, Avmin Limited, Freegold Consolidated Mines Limited, Hartebeestfontein Gold
Mining Company Limited, Lorraine Gold Mines Limited, Eastern Transvaal Gold Mines Limited, Iscor Limited and Sallies Limited. Served as the
Chamber of Mines president (1993 – 1994) and on the Chamber’s executive council, gold producers’ committee and various other chamber-
related board committees. Has also served on the Atomic Energy Council and the National Water Advisory Council. Currently non-executive
director and chairman of Astral Food Limited (chairman of the human resources and remuneration committee).
Name: CI Griffi th – Chris (45)
Academic qualifi cations: BEng (mining)(hons), professional engineer
Experience: Chris is chief executive offi cer of Kumba Iron Ore, chairman of Sishen Iron Ore Company and a member of the Anglo American
plc executive committee. Prior to his appointment at Kumba in 2008, he headed joint ventures for Anglo Platinum. Chris is a member of the
South African Institute for Mining and Metallurgy and the Association of Mine Managers.
Name: U Khumalo – Ufi kile (44)
Designation: Non-executive director
Academic qualifi cations: BSc (eng) (UCT), MAP (Wits), Senior executive development programme (Harvard), Advanced management
programme (Insead)
Experience: Ufi kile served with Sasol and Eskom as a senior engineer and Bevcan as a manufacturing manager prior to joining the IDC. He
held several positions during 1999 – 2005, including head, international fi nance; executive vice-president industrial sectors and executive vice-
president; projects. He provided strategic direction in the industrial sectors on large projects. He was also involved in evaluating investment
proposals thus contributing to successfully implementing the IDC’s development mandate.
Name: N Langeni – Noluthando (66)
Designation: Non-executive director
Academic qualifi cations: BA (Cur), Diploma in Nursing Education
Experience: Noluthando is the group chief executive offi cer of Bambizandla Holdings. She was also appointed as director to the boards of the
National African Women’s Alliance (NAWA), Basadi ba Kopane Investments (Pty) Ltd, the South African Women in Mining Investment Holdings
(SAWIMIH) and Protea Hotel Group. She was previously the CEO of NAWA and a lecturer at the College of Nursing in Natal.
Name: RP Mohring – Rick (62)
Designation: Non-executive director and chairman of TREMCO
Academic qualifi cations: BSc (eng)(mining), MDP, PMD (Harvard); professional engineer
Experience: From 1972 to 1998, Rick held production, managerial and executive posts in the gold and coal divisions of the Rand Mines and
Billiton groups. From 1998 to 2000, he was chief executive offi cer of NewCoal, a black empowerment initiative set up by Anglo Coal and Ingwe Coal
Corporation to identify a suitable BEE group to purchase certain assets belonging to the vendors and establish a new BEE coal company. Eyesizwe
Coal, the largest BEE coal company in South Africa, was formed in November 2000 through this process. From 2000 until 2003, Rick was deputy chief
executive offi cer of Eyesizwe Coal, responsible for the operational control of mines producing 25Mtpa of coal, new business development, technical
services and health and safety. After 37 years in the mining industry, Rick retired from Eyesizwe Coal in December 2003, and set up a private consulting
company, Mohring Mining Consulting.
Exxaro Annual Report 2009 I 263
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
EXPLANATORY NOTES TO RESOLUTIONS FOR CONSIDERATION AT THE ANNUAL GENERAL MEETING
ORDINARY BUSINESS
Resolution 1: Approval of fi nancial statements
The directors must present to shareholders at the annual general meeting the annual fi nancial statements incorporating the directors’ report
and the report of the auditors, for the period ended 31 December 2009. These are contained in the annual report.
Resolution 2: Re-appointment of independent auditors
The reason for proposing ordinary resolution number 2 is to confi rm the re-appointment of Deloitte & Touche as external auditors of the
company and to appoint BW Smith as the designated audit partner. Deloitte & Touche were appointed as the company’s statutory auditors
since 16 February 2004.
Resolution 3: Auditors’ fees
It is usual for this matter to be left to the directors, as they will be conversant with the amount of work that was involved in the audit. The
chairman will therefore move a resolution to this effect authorising the directors to attend to this matter.
Resolution 4 and 5: Re-election of directors
Under the articles of association, one third of the directors are required to retire at each annual general meeting and may offer themselves for
re-election. In addition, any person appointed to fi ll a casual vacancy on the board of directors, or as an addition thereto, is similarly required
to retire and is eligible for re-election at the next annual general meeting. Biographical details of the directors, who are offering themselves for
re-election, appear on page 263.
Resolution 6: Remuneration of non-executive directors
The company in general meeting as per the articles of association shall from time to time determine the remuneration of non-executive
directors, subject to shareholders’ approval.
Resolution 7 and 8: Directors’ control of unissued ordinary shares
The existing authorities relating to resolutions 7 and 8 are due to expire at the forthcoming annual general meeting. The directors consider
it advantageous to renew these authorities to enable the company to take advantage of business opportunities, which might arise in the
future.
Resolution 9
The current 2006 Incentive Plans are not fully compliant with the JSE Listings Requirements. The reason for and effect of resolution 9 is
to address the non-compliance further to the amendments to Schedule 14 of the JSE Listings Requirements and to be in line with current
corporate governance best practice.
Resolution 10
The reason for and effect of this ordinary resolution is that it will allow the board to issue new shares to meet the obligations under the 2006
Incentive Plans, up to the allowable maximum provided for in ordinary resolution number 9. Approval is necessary to implement the 2006
Incentive Plans effectively.
SPECIAL BUSINESS
Special Resolution 1: General authority to permit the repurchase of shares
The reason for the special resolution is to grant the directors of the company a general authority for the acquisition of the company’s shares
by the company, or a subsidiary of the company.
The effect of the special resolution, once registered, will be to permit the company or any of its subsidiaries to repurchase such securities
subject to the limitations applicable. This authority will only be used if circumstances are appropriate.
264 I Exxaro Annual Report 2009
APPENDIX 1
AMENDMENTS TO THE RULES OF THE EXXARO LONG TERM INCENTIVE PLAN 2006
The rules of the Long Term Incentive Plan 2006 (“LTIP”) be and are hereby amended as follows:
1.
Name of Plan
Change the name of the Plan from “Newco Company Long Term Incentive Plan 2006” to “Exxaro Resources Limited Long Term
Incentive Plan 2006”.
2.
Clause 2.1.1
Amend the defi nition of “the Act” by adding the words “or as replaced in its entirety;”.
3.
Clause 2.1.8
Amend the defi nition of “the Company” by replacing the existing wording with “Exxaro Resources Limited (Registration number
2000/011076/06);”
4.
Clause 2.1.13
Amend the defi nition of “Employee” by deleting the words “including a Director (executive and non-executive) of the Group;”
5.
Clause 2.1.21
Amend the defi nition of “Participant” by deleting the words “but excludes non-executives who are members of the Committee”
6.
Clause 2.1.25
Amend the defi nition of “Plan” by replacing the words “Newco Company” with “Exxaro Resources Limited”
7.
Clause 2.6
Add a new clause 2.6 which reads as follows:
“2.6
Where required, the meaning of any expression not specifi cally included in the defi nition clause shall be interpreted based on
the meaning of such expression as applied in the human resources policies and procedures of the Company.”
8.
Clause 3
Replace clause 3 in its entirety by the following new clause 3:
“3.
THE PLAN
The Exxaro Resources Limited Long Term Incentive Plan 2006 is hereby constituted. The Plan shall be administered for the
purpose and in the manner as set out herein.”
9.
Clause 5.1
Replace clause 5.1 in its entirety by the following new clause 5.1:
“5.1
Shares available for the Plan
Subject to the provisions of clause 9, the aggregate number of Shares which may be allocated under the Plan when added to
the total number of unexercised SARs allocated previously under this Plan and any Shares allocated to employees under any
other managerial share scheme operated by the Company, shall not exceed 30 000 000 (thirty million) and this number may
not be exceeded without shareholders’ approval as envisaged in clause 16.2. Notwithstanding the afore going, Shares which
are not subsequently issued to a Participant for whatever reason, will revert back to the Plan.”
10. Clause 5.2
Delete clause 5.2 in its entirety.
Exxaro Annual Report 2009 I 265
APPENDIX 1 CONTINUED
11. Clause 5.3
Amend the numbering of clause 5.3 to read 5.2 and replace clause 5.3.1 in its entirety by the following new clause 5.2.1:
“5.2
Individual limit
5.2.1
The maximum number of Shares allocated to all unvested awards granted to any Participant, in respect of this Plan and any
other managerial scheme operated by the Company, shall not exceed the limit determined from time to time by the directors,
which number of shares shall not exceed 600 000 (six hundred thousand).
Amend the numbering of clause 5.3.2 to read 5.2.2.
Amend the numbering of clause 5.3.2 to read 5.2.3
12. New Clause 5.3
Add a new clause 5.3:
“5.3
Adjustments to number of shares and limits
5.3.1
The Committee must adjust the maximum number of Shares which may be allocated under the Plan as per clause 5.1 above
on a proportionate basis to take account of a sub-division or consolidation of shares; and
5.3.2
the Committee may, without the prior approval of shareholders in a general meeting, adjust the maximum number of Shares
allocated to all unvested awards granted to any Participant as per clause 5.2.1 above on a proportionate basis to take account
of any capitalisation issue, special dividend, rights issue or reduction of capital;
provided that the Auditors shall confi rm in writing to the JSE, at the time that such adjustment is fi nalised, that any adjustment
has been properly calculated on a reasonable and equitable basis. Such adjustment should give a Participant the same
proportion of the Company’s share capital as that to which he would have been entitled prior to the adjustment.
5.3.3
The issue of shares as consideration for an acquisition, the issue of shares for cash and the issue of shares or a vendor
consideration placing will not be regarded as a circumstance requiring adjustment in terms of clauses 5.3.1 and 5.3.2 above.
5.3.4
Any adjustment made in accordance with 5.3.1 and/or 5.3.2 above will be reported in the Company’s annual fi nancial
statements for the period during which the adjustment is made.
13. Clause 6.1
•
•
•
•
Change the heading of clause 6.1 to read as follows:
“Time when SARs may be granted and basis of Grant”
Include a clause number 6.1.1 in respect of the existing paragraph under clause 6.1.
Add the following wording to the end of clause 6.1.1:
“The Grant made as contemplated herein will be dated as at the date of the decision of the Committee to make the Grant and
no back-dating of Grants will be allowed under any circumstances.”
Amend the wording of clause 6.1 by adding the following paragraph at the end of the existing clause as clause 6.1.2:
“6.1.2
A Grant as contemplated above will be made annually on the basis of:
6.1.2.1
the Participant’s grade and annual income;
6.1.2.2
the Performance Condition as approved by the Committee having been satisfi ed; and
6.1.2.3 market related benchmarks.”
14. Clause 9
Replace clause 9 in its entirety by the following new clause 9:
“The main intention of the Plan is to settle the benefi ts by delivering Shares to the Participant. The Company may, on the instruction of
the Committee and the Directors, settle the SARs by issuing new shares, subject to the provisions of clause 5. Alternatively the
Participating Company will, on instruction of the Committee and the Directors, procure the funds for the purchase of the Shares in the
market and will instruct any third party to acquire and deliver the Shares to Employees employed by such Participating Company. Any
Shares so acquired through the market will not be taken into account when calculating the number of shares utilised by the Plan as
envisaged in clause 5.1 above.
Notwithstanding the foregoing, the Participating Company may, on instruction of the Directors and the Committee, and as a fallback
provision only, pay any Participant an equivalent amount in cash in lieu of any Shares.”
266 I Exxaro Annual Report 2009
15. Clause 10.1
Amend the wording of clause 10.1 by:
•
•
Deleting the heading “General” and replace with “Resignation and dismissal”
Deleting wording of clause 10.1 in order for clause 10.1 to read as follows:
“If a Participant’s employment with any Participating Company terminates for any lawful reason other than as set out in clause
10.2 before the Vesting Date, he will cease to be entitled to any rights associated with the Grant.”
16. Clause 10.2
Amend the heading of clause 10.2 by deleting the words “or any other circumstances which the Committee may consider appropriate”
and include the word “or” before “death . . .”.
Amend the wording of clause 10.2 by deleting the words “or any other circumstances which the Committee may consider appropriate”
and include the word “or” before “death . . .”.
17. Clause 11
Add a new clause 11.4:
“11.4
If the Company is placed in liquidation for purposes other than reorganisation, the Grant shall ipso facto lapse from date of
liquidation.”
18. Clause 14
Amend the wording of clause 14.1 by adding the following wording:
“14.1
It is specifi cally recorded that the provisions of paragraphs 3.63 to 3.74 of the JSE Listings Requirements will apply mutatis
mutandis to any dealings by the Company or the Plan involving Shares relating to the Plan.”
Add a new clause 14.11:
“14.11
Shares will only be issued or purchased as contemplated in clause 9 above once a Participant has been formally identifi ed.”
19. Clause 16.2
Replace clause 16.2 in its entirety by the following new clause 16.2:
“16.2 Subject to the provisions of clause 16.3 below, the provisions relating to:
16.2.1
the category of persons to whom or for the benefi t of whom securities may be purchased or issued under the Plan (the
Participants);
16.2.2
the maximum number of shares as contemplated in clause 5.1 above;
16.2.3
the maximum number of shares as contemplated in clause 5.2 above;
16.2.4
the amount, if any payable on application or acceptance of the Grant;
16.2.5
the basis for determining the price, if any and regardless of the form it takes, payable by Participants and the period after or
during which such payment must be made;
16.2.6
the voting, dividend, transfer and other rights, including those arising on a liquidation of the Company, attaching to the
Shares;
16.2.7
the basis upon which the Grants are made;
16.2.8
the treatment of Grants (Vested and Unvested) in instances of mergers, takeovers or corporate actions;
16.2.9
the rights of Participants who leave the employment of the Company or Participating Company whether by termination,
resignation, retirement or death insofar as their early departure from the Plan is concerned; and
16.2.10 the provisions of this clause 16.2,
may not be amended without approval by ordinary resolution of shareholders of the Company, holding not less than 75% of all
the voting rights cast at the general meeting where the approval is sought by shareholders present or represented by proxy at
the general meeting.”
20. Clause 16.5
Amend the wording of clause 16.5 by adding the words “Subject to clause 16.2, the Committee…” at the beginning of the clause.
Exxaro Annual Report 2009 I 267
APPENDIX 2
AMENDMENTS TO THE RULES OF THE EXXARO SHARE APPRECIATION RIGHT SCHEME 2006
The rules of the Share Appreciation Right Scheme 2006 (“SARS”) be and are hereby amended as follows:
1.
Name of Scheme
Change the name of the Plan from “Newco Company Share Appreciation Right Scheme 2006” to “Exxaro Resources Limited Share
Appreciation Right Scheme 2006”.
2.
Clause 2.1.1
Amend the defi nition of “the Act” by adding the words “or as replaced in its entirety;”.
3.
Clause 2.1.8
Amend the defi nition of “the Company” by replacing the existing wording with “Exxaro Resources Limited (Registration number
2000/011076/06);”
4.
Clause 2.1.12
Amend the defi nition of “Employee” by deleting the words “including a Director (executive and non-executive) of the Group;”
5.
Clause 2.1.23
Amend the defi nition of “Participant” by deleting the words “but excludes non-executives who are members of the Committee”
6.
Clause 2.1.32
Amend the defi nition of “the Scheme” by replacing the existing wording with “the Exxaro Resources Limited Share Appreciation Right
Scheme 2006 constituted by this document, as amended from time to time;”
7.
Clause 2.6
Add a new clause 2.6 which reads as follows:
“2.6
Where required, the meaning of any expression not specifi cally included in the defi nition clause shall be interpreted based on
the meaning of such expression as applied in the human resources policies and procedures of the Company.”
8.
Clause 3
Replace clause 3 in its entirety by the following new clause 3:
“3.
THE SCHEME
The Exxaro Resources Limited Share Appreciation Right Scheme 2006 is hereby constituted. The Scheme shall be administered
for the purpose and in the manner as set out herein.”
9.
Clause 5.1
Replace clause 5.1 in its entirety by the following new clause 5.1:
“5.1
Shares available for the Scheme
Subject to the provisions of clause 9, the aggregate number of Shares which may be allocated under the Scheme when added
to the total number of unexercised SARs allocated previously under this Scheme and any Shares allocated to employees under
any other managerial share scheme operated by the Company, shall not exceed 30 000 000 (thirty million) and this number
may not be exceeded without shareholders’ approval as envisaged in clause 16.2. Notwithstanding the afore going, Shares
which are not subsequently issued to a Participant for whatever reason, will revert back to the Scheme.”
10. Clause 5.2
Delete clause 5.2 in its entirety.
268 I Exxaro Annual Report 2009
11. Clause 5.3
Amend the numbering of clause 5.3 to read 5.2 and replace clause 5.3.1 in its entirety by the following new clause 5.2.1:
“5.2
Individual limit
5.2.1
The maximum number of Shares allocated to all unvested awards granted to any Participant, in respect of this Scheme and
any other managerial scheme operated by the Company, shall not exceed the limit determined from time to time by the
directors, which number of shares shall not exceed 600 000 (six hundred thousand).
Amend the numbering of clause 5.3.2 to read 5.2.2.
Amend the numbering of clause 5.3.3 to read 5.2.3
12. New Clause 5.3
Add a new clause 5.3:
“5.3
Adjustments to number of shares and limits
5.3.1
The Committee must adjust the maximum number of Shares which may be allocated under the Scheme as per clause 5.1
above on a proportionate basis to take account of a sub-division or consolidation of shares; and
5.3.2
the Committee may, without the prior approval of shareholders in a general meeting, adjust the maximum number of Shares
allocated to all unvested awards granted to any Participant as per clause 5.2.1 above on a proportionate basis to take account
of any capitalisation issue, special dividend, rights issue or reduction of capital;
provided that the Auditors shall confi rm in writing to the JSE, at the time that such adjustment is fi nalised, that any
adjustment has been properly calculated on a reasonable and equitable basis. Such adjustment should give a
Participant the same proportion of the Company’s share capital as that to which he would have been entitled prior
to the adjustment.
5.3.3
The issue of shares as consideration for an acquisition, the issue of shares for cash and the issue of shares or a vendor
consideration placing will not be regarded as a circumstance requiring adjustment in terms of clauses 5.3.1 and 5.3.2 above.
5.3.4
Any adjustment made in accordance with 5.3.1 and/or 5.3.2 above will be reported in the Company’s annual fi nancial
statements for the period during which the adjustment is made.”
13. Clause 6.1
•
•
•
•
Change the heading of clause 6.1 to read as follows:
“Time when SARs may be granted and basis of Grant”
Include a clause number 6.1.1 in respect of the existing paragraph under clause 6.1.
Add the following wording to the end of clause 6.1.1:
“The Grant made as contemplated herein will be dated as at the date of the decision of the Committee to make the Grant and
no back-dating of Grants will be allowed under any circumstances.”
Amend the wording of clause 6.1 by adding the following paragraph at the end of the existing clause as clause 6.1.2:
“6.1.2
A Grant as contemplated above will be made annually on the basis of:
6.1.2.1
the Participant’s grade and annual income;
6.1.2.2
the Performance Condition as approved by the Committee having been satisfi ed; and
6.1.2.3 market related benchmarks.”
14. Clause 7
Amend clause 7 by deleting clauses 7.4 to 7.9.
Exxaro Annual Report 2009 I 269
APPENDIX 2 CONTINUED
15. Clause 9
Replace clause 9 in its entirety by the following new clause 9:
“The main intention of the Scheme is to settle the benefi ts by delivering Shares to the Participant. The Company may, on the instruction
of the Committee and the Directors, settle the SARs by issuing new shares, subject to the provisions of clause 5. Alternatively the
Participating Company will, on instruction of the Committee and the Directors, procure the funds for the purchase of the Shares in the
market and will instruct any third party to acquire and deliver the Shares to Employees employed by such Participating Company. Any
Shares so acquired through the market will not be taken into account when calculating the number of shares utilised by the Scheme as
envisaged in clause 5.1 above.
Notwithstanding the foregoing, the Participating Company may, on instruction of the Directors and the Committee, and as a fallback
provision only, pay any Participant an equivalent amount in cash in lieu of any Shares.”
16. Clause 10.1
Amend the wording of clause 10.1 by:
•
•
Deleting the heading “General” and replace with “Resignation and dismissal”
Deleting wording of clause 10.1 in order for clause 10.1 to read as follows:
“If a Participant’s employment with any Participating Company terminates for any lawful reason other than as set out in clause
10.2, all unexercised (Vested and Unvested) SARs will lapse on such cessation.”
17. Clause 10.2
Amend the heading of clause 10.2 by deleting the words “or any other circumstances which the Committee may consider appropriate”
and include the word “or” before “death . . .”.
Amend the wording of clause 10.2 by deleting the words “or any other circumstances which the Committee may consider appropriate”
and include the word “or” before “death . . .”.
18. Clause 11
Add a new clause 11.4:
“11.4
If the Company is placed in liquidation for purposes other than reorganisation, the Grant shall ipso facto lapse from date of
liquidation.”
19. Clause 14
Amend clause 14.1 by adding the following wording:
“It is specifi cally recorded that the provisions of paragraphs 3.63 to 3.74 of the JSE Listings Requirements will apply mutatis mutandis
to any dealings by the Company or the Scheme involving Shares relating to the Scheme.”
Add a new clause 14.11:
“14.11 Shares will only be issued or purchased as contemplated in clause 9 above once a Participant has been formally identifi ed.”
20. Clause 16.2
Replace clause 16.2 in its entirety by the following new clause 16.2:
“16.2 Subject to the provisions of clause 16.3 below, the provisions relating to:
16.2.1
the category of persons to whom or for the benefi t of whom securities may be purchased or issued under the Scheme (the
Participants);
16.2.2
the maximum number of shares as contemplated in clause 5.1 above;
16.2.3
the maximum number of shares as contemplated in clause 5.2 above;
16.2.4
the amount, if any payable on application or acceptance of the SAR;
16.2.5
the basis for determining the price, if any and regardless of the form it takes, payable by Participants and the period after or
during which such payment must be made;
270 I Exxaro Annual Report 2009
16.2.6
the voting, dividend, transfer and other rights, including those arising on a liquidation of the Company, attaching to the
Shares;
16.2.7
the basis upon which the Grants are made;
16.2.8
the treatment of Grants (Vested and Unvested) in instances of mergers, takeovers or corporate actions;
16.2.9
the rights of Participants who leave the employment of the Company or Participating Company whether by termination,
resignation, retirement or death insofar as their early departure from the Scheme is concerned; and
16.2.10
the provisions of this clause 16.2,
may not be amended without approval by ordinary resolution of shareholders of the Company, holding not less than 75% of all
the voting rights cast at the general meeting where the approval is sought by shareholders present or represented by proxy at
the general meeting.”
21. Clause 16.5
Amend the wording of clause 16.5 by adding the words “Subject to the provisions of clause 16.2, the Committee…” at the beginning
of the clause.
22. Clause 16.6
Correct the number of this clause to read “16.6”.
Exxaro Annual Report 2009 I 271
APPENDIX 3
AMENDMENTS TO THE RULES OF THE EXXARO RESOURCES DEFERRED BONUS PLAN
The rules of the Exxaro Resources Deferred Bonus Plan (“the DBP”) be and are hereby amended as follows:
1.
Name of Plan
Change the name of the Plan from “Newco Company Deferred Bonus Plan 2006” to “Exxaro Resources Limited Deferred Bonus Plan
2006”.
2.
3.
4.
5.
6
7.
8.
9.
Clause 2.1.1
Amend the defi nition of “the Act” by adding the words “or as replaced in its entirety;”.
Clause 2.1.8
Amend the defi nition of “the Company” by replacing the existing wording with “Exxaro Resources Limited (Registration number
2000/011076/06);”
Clause 2.1.12
Amend the defi nition of “Employee” by deleting the words “including a Director (executive and non-executive) of the Group;”
Clause 2.1.21 (new)
Insert a new clause 2.1.21 to read as follows:
“2.1.21 “Matching Shares” the Shares forming part of the Matching Award;”
Clause 2.1.22
Amend the defi nition of “Participant” by deleting the words “but excludes non-executives who are members of the Committee”
Clause 2.1.24
Amend the defi nition of “Plan” by replacing the existing wording with “the Exxaro Resources Limited Deferred Bonus Plan 2006
constituted by this document, as amended from time to time;”
Clause 2.1.25
Amend the defi nition of “Pledge Period” by deleting the words “Letter of Grant” and replacing these with the words “Offer to
Participate”
Clause 2.6
Add a new clause 2.6 which reads as follows:
“2.6
Where required, the meaning of any expression not specifi cally included in the defi nition clause shall be interpreted based on
the meaning of such expression as applied in the human resources policies and procedures of the Company.”
10. Clause 3
Replace clause 3 in its entirety by the following new clause 3:
“3.
THE PLAN
The Exxaro Resources Limited Deferred Bonus Plan 2006 is hereby constituted. The Plan shall be administered for the purpose
and in the manner as set out herein.”
11. Clause 4.3
Insert the following at the end of clause 4.3: “Such selection will be made based on the Employee’s seniority and performance.”
12. Clause 5.1
Replace clause 5.1 in its entirety by the following new clause 5.1:
“5.1
Shares available for the Plan
Subject to the provisions of clause 10, the maximum number of Matching Shares which may be allocated under the Plan when
added to the total number of unvested Matching Awards allocated previously under this Plan and any Shares allocated to
employees under any other managerial share scheme operated by the Company, shall not exceed 30 000 000 (thirty million)
and this number may not be exceeded without shareholders’ approval as envisaged in clause 17.2. Notwithstanding the afore
going, Matching Shares which are not subsequently issued to a Participant for whatever reason, will revert back to the
Scheme.”
13. Clause 5.2
Delete clause 5.2 in its entirety.
272 I Exxaro Annual Report 2009
14. Clause 5.3.
– Amend the numbering of clause 5.3 to read 5.2 and replace clause 5.3.1 in its entirety by the following new clause 5.2.1:
“5.2
5.2.1
Individual limit
The maximum number of shares allocated to all Unvested awards granted to any Participant, in respect of this Plan and any
other managerial scheme operated by the Company, shall not exceed the limit determined from time to time by the directors,
which number of shares shall not exceed 600 000 (six hundred thousand).
– Amend the numbering of clause 5.3.2 to read 5.2.2
– Amend the wording of clause 5.2.2 by deleting the word “Grant” at the end of the paragraph and replacing this with the word
“Offer”.
– Amend the numbering of clause 5.3.3 to read 5.2.3
15. New Clause 5.3
Add a new clause 5.3:
“5.3
5.3.1
Adjustments to number of shares and limits
The Committee must adjust the maximum number of Matching Shares which may be allocated under the Plan as per clause
5.1 above on a proportionate basis to take account of a sub-division or consolidation of shares; and
the Committee may, without the prior approval of shareholders in a general meeting, adjust the maximum number of shares
allocated to all Unvested awards granted to any Participant as per clause 5.2.1 above on a proportionate basis to take account
of any capitalisation issue, special dividend, rights issue or reduction of capital;
provided that the Auditors shall confi rm in writing to the JSE, at the time that such adjustment is fi nalised, that any adjustment
has been properly calculated on a reasonable and equitable basis. Such adjustment should give a Participant the same
proportion of the Company’s share capital as that to which he would have been entitled prior to the adjustment.
The issue of shares as consideration for an acquisition, the issue of shares for cash and the issue of shares or a vendor
consideration placing will not be regarded as a circumstance requiring adjustment in terms of clauses 5.3.1 and 5.3.2 above.
Any adjustment made in accordance with 5.3.1 and/or 5.3.2 above will be reported in the Company’s annual fi nancial
statements for the period during which the adjustment is made.
5.3.2
5.3.3
5.3.4
16. Clause 6.1.1
Amend the wording of clause 6.1.1 by adding the following sentence at the end of the clause:
“The Offer made as contemplated herein will be dated as at the date of the decision of the Committee to make the Offer and no back-
dating of Offers will be allowed under any circumstances.”
17. Clause 6.2.1.1
Amend the wording of clause 6.2.1.1 by adding the following at the end of the existing clause:
“. . . Pledged Shares, which amount shall be calculated based on the Participant’s grade.”
18. Clause 6.2.4
Delete the wording of clause 6.2.4 in its entirety and replace with the following new clause 6.2.4:
“6.2.4
An Offer to Participate accepted by an Employee will take effect from the Date of Offer. An Offer to Participate which is not
accepted by an Employee within the period referred to in clause 6.2.2.2, will lapse and will be deemed never to have been
offered. No consideration is payable on the lapse of the Offer.”
19. Clause 7.5
Amend the wording of clause 7.5 by adding the words “Subject to clause 7.6 below.” at the beginning of the clause.
20. Clause 7.6 (new)
Insert a new clause 7.6 to read as follows:
“ 7.6
Notwithstanding the above the Participant shall have no voting rights in respect of the Pledged Shares until such time as the
Pledged Shares are either released or withdrawn, whatever the case may be, from the escrow.”
21. Clause 9.7
Delete clause 9.7 with the heading “Special Circumstances” in its entirety.
22. Clause 10
Replace clause 10 in its entirety by the following new clause 10:
“The Company may, on the instruction of the Committee and the Directors, settle the Matching Award by issuing new shares, subject
Exxaro Annual Report 2009 I 273
APPENDIX 3 CONTINUED
to the provisions of clause 5. Alternatively the Participating Company will, on instruction of the Committee and the Directors, procure
the funds for the purchase of the Shares in the market and will instruct any third party to acquire and deliver the Shares to Employees
employed by such Participating Company. Any Shares so acquired through the market will not be taken into account when calculating
the number of shares utilised by the Plan as envisaged in clause 5.1 above.”
23. Clause 11.1
Amend the wording of clause 11.1 by:
•
•
•
•
Deleting the heading “General” and replace with “Resignation and dismissal”
Deleting the reference to “10.2” and replace with “11.2”
Deleting the words “unless the Committee decides otherwise.”
Adding the following to the end of clause 11.1:
– “Pledged Shares shall be released to the Participant as soon as reasonably possible.”
24. Clause 11.2
Amend the heading of clause 11.2 by deleting the words “or any other circumstances which the Committee may deem appropriate”
and by adding the word “or” before the word “death”;
Amend the wording of clause 11.2 by:
•
deleting the words “or any other circumstances which the Committee may deem appropriate” and by adding the word “or”
before the word “death”; and
inserting the words “the Committee may”
•
25. Clause 12
Add a new clause 12.4:
“12.4
If the Company is placed in liquidation for purposes other than reorganisation, the Matching Award shall ipso facto lapse from
date of liquidation.”
26. Clause 15
Amend the wording of clause 15.1 by adding the following wording:
“15.1
It is specifi cally recorded that the provisions of paragraphs 3.63 to 3.74 of the JSE Listings Requirements will apply mutatis
mutandis to any dealings by the Company or the Plan involving Shares relating to the Plan.”
Add a new clause 15.11:
“15.11
Shares will only be issued or purchased as contemplated in clause 10 above once a Participant has been formally identifi ed.”
27. Clause 17.2
Replace clause 17.2 in its entirety by the following new clause 17.2:
“17.2 Subject to the provisions of clause 17.3 below, the provisions relating to:
17.2.1
the category of persons to whom or for the benefi t of whom securities may be purchased or issued under the Plan (the
Participants);
17.2.2
the maximum number of shares as contemplated in clause 5.1 above;
17.2.3
the maximum number of shares as contemplated in clause 5.2 above;
17.2.4
the voting, dividend, transfer and other rights, including those arising on a liquidation of the Company, attaching to the shares
and to any Matching Awards;
17.2.5
the basis upon which the Matching Awards are made;
17.2.6
the treatment of Matching Awards (vested and unvested) in instances of mergers, takeovers or corporate actions;
17.2.7
the rights Participants who leave the employment of the Company or Participating Company whether by termination, resignation,
retirement or death insofar as their early departure from the Plan is concerned; and
17.2.8
the provisions of this clause 17.2,
may not be amended without approval by ordinary resolution of shareholders of the Company, holding not less than 75% of all
the voting rights cast at the general meeting where the approval is sought by shareholders present or represented by proxy at
the general meeting.”
28. Clause 17.5
Amend the wording of clause 17.5 by adding the words “Subject to clause 17.2, the Committee . . .” at the beginning of the clause.
274 I Exxaro Annual Report 2009
FORM OF PROXY
EXXARO RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2000/011076/06)
JSE share code: EXX
ISIN code: ZAE000084992
ADR Code: EXXAY
(“Exxaro” or “the company”)
(cid:71)(cid:70)(cid:78)(cid:60)(cid:73)(cid:64)(cid:69)(cid:62)(cid:23)(cid:71)(cid:70)(cid:74)(cid:74)(cid:64)(cid:57)(cid:64)(cid:67)(cid:64)(cid:75)(cid:80)
TO BE COMPLETED BY CERTIFICATED SHAREHOLDERS AND DEMATERIALISED SHAREHOLDERS WITH “OWN NAME”
REGISTRATION ONLY
For completion by registered members of Exxaro unable to attend the annual general meeting of the company to be held at 10:30 on
Friday, 21 May 2010, at the Exxaro Corporate Centre, Roger Dyason Road, Pretoria West, Gauteng, South Africa or at any adjournment
thereof,
I/We
of (address)
being the holder/s of
1.
shares in the company, do hereby appoint:
or, failing him/her
2.
or, failing him/her
the chairman of the annual general meeting, as my/our proxy to attend, speak and, on a poll, vote on my/our behalf at the annual general
meeting of members to be held at 10:30 on Friday, 21 May 2010 at the Exxaro Corporate Centre, Roger Dyason Road, Pretoria West,
Gauteng, South Africa or at any adjournment thereof, and to vote or abstain from voting as follows on the ordinary and special resolutions
to be proposed at such meeting:
For
Against
Abstain
Ordinary business
1. Resolution to adopt the 2009 audited group fi nancial statements
2. Resolution to re-appoint Deloitte & Touche as auditors and to appoint
BW Smith as the designated audit partner
3. Resolution to authorise the directors to determine auditors’ remuneration
4. Resolution to re-elect director required to retire in terms of article 15.2 of the articles of
association
4.1 CI Griffi th
4.2 N Langeni
5. Resolution to re-elect directors required to retire by rotation in terms of article 16.1 of the
articles of association
5.1 JJ Geldenhuys
5.2 U Khumalo
5.3 RP Mohring
6. Resolution to approve non-executive directors’ remuneration for the period 1 January 2010 to
31 December 2010
7. Resolution to authorise directors to allot and issue unissued ordinary shares
8. Resolution to authorise directors to allot and issue ordinary shares for cash in terms of a
general authority
9. Resolution to approve amendments to the 2006 Incentive Plans
10. Resolution to authorise directors to issue and allot shares in terms of the 2006 Incentive Plans
Special business
1. Special resolution to authorise directors to repurchase company shares
Please indicate with an “X” in the appropriate spaces provided above how you wish your vote to be cast. If no indication is given, the proxy
may vote or abstain as he/she sees fi t.
Signed at
day of
2010
this
Signature
Assisted by me, where applicable (name (“Exxaro” or “the company”)
and signature)
Please read the notes on the reverse side hereof.
Exxaro Annual Report 2009 I 275
NOTES TO THE FORM OF PROXY
1.
1.1
1.2
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
A form of proxy is only to be completed by those ordinary shareholders who are:
holding ordinary shares in certifi cated form; or
recorded on sub-register electronic form in ‘own name’.
If you have already dematerialised your ordinary shares through a Central Securities Depository Participant (CSDP) or broker and
wish to attend the annual general meeting, you must request your CSDP or broker to provide you with a Letter of Representation
or you must instruct your CSDP or broker to vote by proxy on your behalf in terms of the agreement entered into between yourself
and your CSDP or broker.
A member may insert the name of a proxy or the names of two alternative proxies of the member’s choice in the space. The person
whose name stands fi rst on the form of proxy and who is present at the annual general meeting of shareholders will be entitled to
act to the exclusion of those whose names follow.
On a show of hands a member of the company present in person or by proxy shall have one (1) vote irrespective of the number
of shares he/she holds or represents, provided that a proxy shall, irrespective of the number of members he/she represents, have
only one (1) vote. On a poll a member who is present in person or represented by proxy shall be entitled to that proportion of the
total votes in the company, which the aggregate amount of the nominal value of the shares held by him/her bears to the aggregate
amount of the nominal value of all the shares issued by the company.
A member’s instructions to the proxy must be indicated by the insertion of the relevant numbers of votes exercisable by the member
in the appropriate box provided. Failure to comply with the above will be deemed to authorise the proxy to vote or to abstain from
voting at the annual general meeting as he/she deems fi t in respect of all the member’s votes exercisable thereat. A member or the
proxy is not obliged to use all the votes exercisable by the member or by the proxy, but the total of the votes cast and in respect of
which abstention is recorded may not exceed the total of the votes exercisable by the member or by the proxy.
Forms of proxy must be lodged at, or posted to Computershare Investor Services (Pty) Limited, to be received not later than
48 hours before the time fi xed for the meeting (excluding Saturdays, Sundays and public holidays).
For shareholders on the South African register:
Computershare Investor Services (Pty) Ltd
Ground Floor
70 Marshall Street
Johannesburg
2001
PO Box 61051
Marshalltown
2107
www.computershare.com
Tel: +27 11 370 5000
Over-the-counter American depositary receipt (ADR) holders:
Exxaro has an ADR facility with The Bank of New York (BoNY) under a deposit agreement. ADR holders may instruct BoNY as to
how the shares represented by their ADRs should be voted.
American Depositary Receipt Facility (ADR)
Bank of New York
101 Barclay Street
New York, NY 10286
www.adrbny.com
shareowners@bankofny.com
Tel: +(00-1) 888 815 5133
The completion and lodging of this form of proxy will not preclude the relevant member from attending the annual general meeting
and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof.
Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity or other legal
capacity must be attached to this form of proxy, unless previously recorded by the transfer secretaries or waived by the chairman
of the annual general meeting.
Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.
Notwithstanding the aforegoing, the chairman of the annual general meeting may waive any formalities that would otherwise be a
prerequisite for a valid proxy.
If any shares are jointly held, all joint members must sign this form of proxy. If more than one of those members is present at the
annual general meeting either in person or by proxy, the person whose name fi rst appears in the register shall be entitled to vote.
276 I Exxaro Annual Report 2009
ADMINISTRATION
Secretary and registered offi ce
MS Viljoen
Exxaro Resources Limited
Roger Dyason Road
Pretoria West
Pretoria
0183
PO Box 9229
Pretoria
0001
South Africa
Telephone +27 12 307 5000
Company registration number: 2000/011076/06
JSE share code: EXX
ISIN code: ZAE000084992
Auditors
Deloitte & Touche
Private Bag X6
Gallo Manor
2052
Commercial bankers
Absa Bank Limited
SHAREHOLDERS’ DIARY
FINANCIAL YEAR-END
ANNUAL GENERAL MEETING
REPORTS AND ACCOUNTS
Announcement of annual results
Annual report
Interim report for the half-year ending 30 June
DISTRIBUTION
Final dividend declaration
Payment
Interim dividend declaration
Payment
Corporate law advisers
CLS Consulting Services (Pty) Limited
United States ADR Depositary
The Bank of New York
101 Barclay Street
New York NY 10286
United States of America
Sponsor
Deutsche Securities (SA) (Pty) Limited
3 Exchange Square
87 Maude Street
Sandton
2196
Registrars
Computershare Investor Services (Pty) Limited
Ground Floor, 70 Marshall Street
Johannesburg
2001
PO Box 61051
Marshalltown
2107
31 December
April/May
February
March
August
February
March/April
August
September
The cover of this document is printed on Trucard Recycled 330gsm. It contains 50% postconsumer de-inked pulp, is FSC certifi ed and carries the NAPM
recycled mark. The body of this document is printed on Cartridge 120gsm. A minimum of 30% fi bre used in making this paper comes from well-managed forests
independently certifi ed according to the rules of the Forest Stewardship Council.
Carbon offset
The carbon footprint arising from the paper production, printing and distribution of this annual report will be determined and offset.
VISION: THROUGH OUR INNOVATION AND GROWTH, WE WILL BE A
POWERFUL SOURCE OF ENDLESS POSSIBILITIES.
MISSION: WE CREATE UNRIVALLED VALUE FOR ALL STAKEHOLDERS
OF OUR DIVERSIFIED RESOURCES BUSINESS THROUGH OUR
PROCESSES, THINKING AND PASSION.
VALUES: > EMPOWERED TO GROW AND CONTRIBUTE – DEVELOPING
AND DEPLOYING OUR KNOWLEDGE AND INGENUITY TO ACHIEVE OUR
VISION. WE FOCUS ON PEOPLE, CREATE FREEDOM TO INNOVATE AND
COLLABORATE, RESPECT INDIVIDUALITY, HAVE FUN AND RISE TO
CHALLENGES. > TEAMWORK – WE SUCCEED TOGETHER THROUGH
A CLIMATE OF RESPECT AND EQUALITY. > COMMITTED TO
EXCELLENCE – WE TAKE OWNERSHIP, PROVIDE VISIBLE LEADERSHIP
AND ENCOURAGE COLLABORATION, COMMITMENT AND CREATIVITY
FOR THE BENEFIT OF ALL. > HONEST RESPONSIBILITY – WE SPEAK
THE TRUTH AND ACCEPT ACCOUNTABILITY FOR OUR ACTIONS.
Annual report
FOR THE YEAR ENDED 31 DECEMBER 2009
E
X
X
A
R
O
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
9
THE EXXARO GROUP
CONTENTS
Group in brief
Strategic focus areas
Business objectives, highlights and
group structure
With assets of R23 billion, Exxaro is among the top
2 Key ratios
40 companies on the JSE Limited (JSE) by market
capitalisation, and one of the 30 best-performing
constituents of the JSE’s Socially Responsible
Investment index.
Exxaro is a diverse resources group with a portfolio
spanning coal, mineral sands, base metals and iron
3 Geographical locations
4 Group at a glance (operations)
6 Group review at a glance (fi nancials)
8 Summary of business operations
10 Chairman’s statement
14 Chief executive offi cer’s review
20 Financial review
32 Macro-economic and commodity review
38 Business operations review
ore and operations in South Africa, Australia, Namibia
49 Growth
and China. Exxaro has an unfolding pipeline of growth
projects that is arguably among the best in its
peer group.
The group’s reviewed strategic focus, record of
innovation and focus on sustainable development
underpin its promise to contribute to the economic
growth of South Africa.
ABOUT THIS REPORT
Guided by global best-practice standards and ongoing consultation with
51
Review of mineral resources and reserves
66 Executive committee
68 Directorate
Governance and Sustainability
72 Corporate governance
78 Shareholder information
79 Shareholders’ analysis
81 Risk management
84 Sustainable development
86 Approach to safety and sustainable
development
91 Safety and sustainable development
performance
113 Economic performance
115 Social performance
125 Society
126 Legislative compliance/mining charter
scorecard
131
Independent assurance statement to the
directors and management of Exxaro
Resources Limited
stakeholders, Exxaro publishes an integrated annual report detailing the
133 GRI indicator index
(cid:71)(cid:70)(cid:78)(cid:60)(cid:73)(cid:64)(cid:69)(cid:62)(cid:23)(cid:71)(cid:70)(cid:74)(cid:74)(cid:64)(cid:57)(cid:64)(cid:67)(cid:64)(cid:75)(cid:80)
www.exxaro.com
group’s economic, social and environmental performance. The full report is
also available on www.exxaro.com and on CD, where pertinent case studies are
included. Copies of this information are available on request (contact details
are on the inside back cover).
Supplementary fi nancial information
137 Group cash value added statements
138 Selected group fi nancial data translated
into US dollars
139 Defi nitions
Financial statements
141 Annual fi nancial statements
Administration
259 Notice of annual general meeting
263 Biographies of directors up for re-election
275 Form of proxy
BASTION GRAPHICS
www.exxaro.com
ADMINISTRATION
Secretary and registered offi ce
MS Viljoen
Exxaro Resources Limited
Roger Dyason Road
Pretoria West
Pretoria
0183
PO Box 9229
Pretoria
0001
South Africa
Telephone +27 12 307 5000
Company registration number: 2000/011076/06
JSE share code: EXX
ISIN code: ZAE000084992
Auditors
Deloitte & Touche
Private Bag X6
Gallo Manor
2052
Commercial bankers
Absa Bank Limited
SHAREHOLDERS’ DIARY
FINANCIAL YEAR-END
ANNUAL GENERAL MEETING
REPORTS AND ACCOUNTS
Announcement of annual results
Annual report
Interim report for the half-year ending 30 June
DISTRIBUTION
Final dividend declaration
Payment
Interim dividend declaration
Payment
Corporate law advisers
CLS Consulting Services (Pty) Limited
United States ADR Depositary
The Bank of New York
101 Barclay Street
New York NY 10286
United States of America
Sponsor
Deutsche Securities (SA) (Pty) Limited
3 Exchange Square
87 Maude Street
Sandton
2196
Registrars
Computershare Investor Services (Pty) Limited
Ground Floor, 70 Marshall Street
Johannesburg
2001
PO Box 61051
Marshalltown
2107
31 December
April/May
February
March
August
February
March/April
August
September
The cover of this document is printed on Trucard Recycled 330gsm. It contains 50% postconsumer de-inked pulp, is FSC certifi ed and carries the NAPM
recycled mark. The body of this document is printed on Cartridge 120gsm. A minimum of 30% fi bre used in making this paper comes from well-managed forests
independently certifi ed according to the rules of the Forest Stewardship Council.
Carbon offset
The carbon footprint arising from the paper production, printing and distribution of this annual report will be determined and offset.
VISION: THROUGH OUR INNOVATION AND GROWTH, WE WILL BE A
POWERFUL SOURCE OF ENDLESS POSSIBILITIES.
MISSION: WE CREATE UNRIVALLED VALUE FOR ALL STAKEHOLDERS
OF OUR DIVERSIFIED RESOURCES BUSINESS THROUGH OUR
PROCESSES, THINKING AND PASSION.
VALUES: > EMPOWERED TO GROW AND CONTRIBUTE – DEVELOPING
AND DEPLOYING OUR KNOWLEDGE AND INGENUITY TO ACHIEVE OUR
VISION. WE FOCUS ON PEOPLE, CREATE FREEDOM TO INNOVATE AND
COLLABORATE, RESPECT INDIVIDUALITY, HAVE FUN AND RISE TO
CHALLENGES. > TEAMWORK – WE SUCCEED TOGETHER THROUGH
A CLIMATE OF RESPECT AND EQUALITY. > COMMITTED TO
EXCELLENCE – WE TAKE OWNERSHIP, PROVIDE VISIBLE LEADERSHIP
AND ENCOURAGE COLLABORATION, COMMITMENT AND CREATIVITY
FOR THE BENEFIT OF ALL. > HONEST RESPONSIBILITY – WE SPEAK
THE TRUTH AND ACCEPT ACCOUNTABILITY FOR OUR ACTIONS.
Annual report
FOR THE YEAR ENDED 31 DECEMBER 2009
E
X
X
A
R
O
A
N
N
U
A
L
R
E
P
O
R
T
2
0
0
9
THE EXXARO GROUP
CONTENTS
Group in brief
Strategic focus areas
Business objectives, highlights and
group structure
With assets of R23 billion, Exxaro is among the top
2 Key ratios
40 companies on the JSE Limited (JSE) by market
capitalisation, and one of the 30 best-performing
constituents of the JSE’s Socially Responsible
Investment index.
Exxaro is a diverse resources group with a portfolio
spanning coal, mineral sands, base metals and iron
3 Geographical locations
4 Group at a glance (operations)
6 Group review at a glance (fi nancials)
8 Summary of business operations
10 Chairman’s statement
14 Chief executive offi cer’s review
20 Financial review
32 Macro-economic and commodity review
38 Business operations review
ore and operations in South Africa, Australia, Namibia
49 Growth
and China. Exxaro has an unfolding pipeline of growth
projects that is arguably among the best in its
peer group.
The group’s reviewed strategic focus, record of
innovation and focus on sustainable development
underpin its promise to contribute to the economic
growth of South Africa.
ABOUT THIS REPORT
Guided by global best-practice standards and ongoing consultation with
51
Review of mineral resources and reserves
66 Executive committee
68 Directorate
Governance and Sustainability
72 Corporate governance
78 Shareholder information
79 Shareholders’ analysis
81 Risk management
84 Sustainable development
86 Approach to safety and sustainable
development
91 Safety and sustainable development
performance
113 Economic performance
115 Social performance
125 Society
126 Legislative compliance/mining charter
scorecard
131
Independent assurance statement to the
directors and management of Exxaro
Resources Limited
stakeholders, Exxaro publishes an integrated annual report detailing the
133 GRI indicator index
(cid:71)(cid:70)(cid:78)(cid:60)(cid:73)(cid:64)(cid:69)(cid:62)(cid:23)(cid:71)(cid:70)(cid:74)(cid:74)(cid:64)(cid:57)(cid:64)(cid:67)(cid:64)(cid:75)(cid:80)
www.exxaro.com
group’s economic, social and environmental performance. The full report is
also available on www.exxaro.com and on CD, where pertinent case studies are
included. Copies of this information are available on request (contact details
are on the inside back cover).
Supplementary fi nancial information
137 Group cash value added statements
138 Selected group fi nancial data translated
into US dollars
139 Defi nitions
Financial statements
141 Annual fi nancial statements
Administration
259 Notice of annual general meeting
263 Biographies of directors up for re-election
275 Form of proxy
BASTION GRAPHICS
www.exxaro.com