Exxaro
Resources
Limited
Integrated
Report
2022
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Contents
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2
3
Driving transition through leadership
Driving value creation through transition
About our integrated report
Understanding our business
5
Chairperson’s statement
7
10
12
About Exxaro
Sustainable growth and impact
Our operating context
Drivers of value creation
18
Our business model
Our material matters
Our business risks and opportunities
22
26
36
Navigating this report
We use icons to show:
Read more online at www.exxaro.com under the investors tab
Read more in this report
Material themes that guide
our integrated reporting
The capitals we use
and affect
Adapting to a changing
context
Responsible environmental
stewardship
Natural
Human
Building sustainable
communities
Social and
relationship
Helping our people thrive
Manufactured
Executing our strategy
Intellectual
Creating value through stakeholder engagement
Driving business resilience
Financial
Transitioning the business for growth
42
CEO’s report
44
47
48
50
Our strategy: positioning Exxaro for sustainable
growth and impact
Performance against our strategy and future focus
2022 strategic key performance indicators
Key strategic trade-offs
Governance for value creation
52
Our leadership
55
73
Summarised governance report
Combined assurance for effective governance
Our performance
75
Finance director’s overview
86
88
92
101
Operational performance
Business resilience
Our people
Social licence to operate: earning our legitimacy
103 Our environment: stewardship and compliance
112
Responding to TCFD reporting requirements
113 Our Mineral Resources and Mineral Reserves
116 Glossary
118 Administration
Principled governance
Reporting suite
We are committed to transparent reporting and publish an annual
reporting suite detailing our performance:
Environmental, social and governance
(ESG) report
Consolidated Mineral Resources and
Mineral Reserves (CMRR) report
Group and company annual financial
statements
Summarised annual financial statements
and notice of annual general meeting (AGM)
These reports and other supplementary reports are available
online and should be read together for a complete understanding
of our business and performance.
Connect with us
We encourage and welcome feedback on our reporting suite from
our stakeholders. Please send any comments or suggestions to:
Malusi Buthelezi
Manager: Integrated reporting and ESG
Tel: +27 12 307 3174
Mobile: +27 83 460 3723
Email: Malusi.Buthelezi@exxaro.com
www.exxaro.com
Follow us on Facebook, Twitter, Instagram,
LinkedIn and YouTube
Driving transition through
leadership
Welcome to our 2022 integrated report, themed driving transition through leadership.
The report unpacks the transformation of our business through a just transition to a
sustainable future.
The theme supports the impact pillar of our strategy, encapsulates
progress against our key performance indicators (KPIs) stated
in 2021 and shows leaders are delivering our objective to empower
people to create impact.
When I took the helm as chief executive officer (CEO) in 2022,
it was clear to me that, to achieve our strategic objectives and
mindful of ESG imperatives, I needed to encourage everyone
to “get on the bus”, so that together we achieve our goals for
a sustainable future.
We are heading in the right direction. Our strategy remains
on track despite headwinds from economic market challenges.
The capital allocation model has maintained its fitness to support
the strategy, and our remuneration structure was implemented
from January, to achieve better alignment among management,
employees and shareholder interests, rewarding our people
for being responsive to the needs of society and the environment.
I invite our stakeholders to join us on this journey and keep
us on track.
Realising value creation through integrated
thinking and sustainability
Exxaro Resources Limited (Exxaro, the company or the group)
is a South African diversified resources company with an
existing coal and renewable energy business and acquisitive
growth prospects in minerals and renewable energy solutions.
In line with Exxaro’s purpose of powering better lives in
Africa and beyond, our ambition is to provide resources
(energy, commodities, capital and people) critical to ensuring
a low-carbon world.
We understand that we cannot grow sustainably without
creating a positive impact in the environment and communities
we serve. We are committed to responsibly maximising the
value of our coal assets by reducing stranded assets, and
playing an active role in creating a future that realises our
vision: resources powering a clean world.
Our success lies in the strength of our culture and values, which
strengthen our resilience and ensure we deliver stakeholder
value, guided by our Sustainable Growth and Impact strategy.
Integrated thinking
Our belief in sustainable value creation is inspired by the careful
consideration of the relationship between the resources we use
and affect, and potential trade-offs inherent in strategic decision
making. We integrate the six capitals into our business model and
strategy, and continuously strive to positively contribute to, and
negate any adverse impact on, these capitals.
Our approach to integrated thinking is translated into the value
creation message, content and structure of this report.
Dr Nombasa Tsengwa
Our sustainability framework
Exxaro voluntarily endorses the United Nations (UN) 17
Sustainable Development Goals (SDGs). We also participate
in the National Business Initiative (NBI) in South Africa to
align the 17 SDGs with the country’s National Development Plan
and implement leading practices to uphold the most material
SDGs so that our business leaves a lasting positive impact.
The SDGs that Exxaro impacts are highlighted in colour.
16
PEACE, JUSTICE
AND STRONG
INSTITUTIONS
15
LIFE
ON LAND
14
LIFE
BELOW WATER
13
CLIMATE
ACTION
12
RESONSIBLE
CONSUMPTION
AND PRODUCTION
11
SUSTAINABLE CITIES
AND COMMUNITIES
17
PARTNERSHIPS
FOR THE GOALS
1
NO
POVERTY
ZERO
HUNGER2
10
REDUCED
INEQUALITIES
9
INDUSTRY,INNOVATION
AND INFRASTUCTURE
8
DECENT WORK AND
ECONOMIC GROWTH
GOOD HEALTH
AND WELL-BEING
3
4
QUALITY
EDUCATION
5
GENDER
EQUALITY
6
CLEAN WATER
AND SANITATION
7
AFFORDABLE AND
CLEAN ENERGY
Exxaro Resources Limited
Integrated report 2022 | 1
Driving value creation through transition
Our purpose informs and motivates our decisions and actions. Stakeholder value creation
is central to our purpose and vision to achieve direct and positive impact on society.
Our value creation is driven by our
Purpose
Powering better lives
in Africa and beyond
Vision
Resources powering
a clean world
Values
• Empowered
to grow and
contribute
• Teamwork
• Committed to
excellence
• Honest
responsibility
Sustainable Growth and Impact strategy
(page 44)
Strategic objectives
1. Transition at speed and scale
2. Make our minerals and energy businesses thrive
3. Empower people to create impact
4. Be carbon neutral by 2050
5. Become a catalyst for economic growth and
environmental stewardship
Strategic outcomes
1. Business level and growth
2. Decarbonisation
3. Health and safety
4. Environmental stewardship
5. Diversity, equity and
inclusion
6. Social impact
It is influenced by factors in the operating environment
Our operating context
(page 12)
Forces in our macro-economic
context, markets and other
social and environmental
trends could present
opportunities or risks to our
business model and thus affect
our ability to create value.
+
Risks and
Stakeholders’ needs
opportunities (page 26)
Material risks and related
opportunities are key factors
that must be managed to
ensure our continued success.
We further assess our climate
risks according to the Task
Force on Climate-related
Financial Disclosures (TCFD)
recommendations.
and concerns (page 36)
Our stakeholder
relationships and active
engagement form a key
process in understanding
and delivering value and
impact.
+
=
Material matters
(page 22)
These elements all
inform the themes
that we consider
material to our value
creation.
It is achieved through our business activities (page 18)
These activities and strategy are key to creating value as we pursue a just transition to a new operating model while balancing
our financial performance.
Mining responsibly
Generating renewable energy and
delivering related products and services
Strategising for future relevance
and a just transition
Delivering sustainable impact and
responsible practices
Resulting in an impact across . . .
The six capitals
We are mindful of our impact on each
capital we use and affect to conduct
our business activities and aim to
enhance these where possible.
To deliver value to our
stakeholders
We strive to create mutual value for
and with our stakeholders. They are an
integral part of our business because
they can impact Exxaro or are impacted
by our business.
Business model (page 18)
Stakeholder engagement
(page 36)
Value distributed to stakeholders
Ensuring broader impact
We aim to drive a positive impact on
the SDGs that we have identified as
being areas where we can make a
difference. Exxaro aims to fulfil our
ESG commitments, including the
TCFD principles.
TCFD index (refer to the
databook) and responding to
TCFD reporting requirements
(page 112)
Payments to government:
taxation contribution
R7 250 million
(2021: R2 930 million)
Cost of financing
R982 million
(2021: R1 020 million)
Community investment and
volunteerism
R181 million
(2021: R61 million)
Employees’ tax
R1 607 million
(2021: R1 390 million)
GreenShare employee
scheme
R121 million
(2021 : R164 million)
Cash dividend paid
R6 686 million
(2021: R9 557 million)
Salaries, wages and benefits
R4 310 million
(2021: R4 084 million)
Dividend paid to
non-controlling interest
R2 275 million
(2021: R3 131 million)
2 | Exxaro Resources Limited
Integrated report 2022
About our integrated report
Exxaro’s integrated report for the year ended 31 December 2022 is a value creation story for our
stakeholders, particularly our shareholders and other providers of financial capital.
Scope and boundary
The report contains material information about our strategic
decisions and operational performance for the period
1 January 2022 to 31 December 2022 (the 2022 financial year).
It covers the financial and non-financial information of our
wholly owned and joint arrangements in South Africa, Europe
and Australia. The reporting boundary incorporates material
information about Cennergi Proprietary Limited (Cennergi). We
consolidated material information related to Cennergi’s safety
incidents into the Exxaro group’s results. Unless otherwise
stated, we no longer include information on Exxaro Coal Central
Proprietary Limited (ECC) operations since its disposal in
September 2021.
We include limited information on operations where we do not
have management control but hold an important equity interest,
namely Black Mountain, Richards Bay Coal Terminal Proprietary
Limited (RBCT) and Sishen Iron Ore Company Proprietary Limited
(SIOC), a subsidiary of Kumba Iron Ore Limited, or joint control,
being Mafube Coal Mining Proprietary Limited (joint venture) and
Moranbah South coal project (joint operation).
The 2022 integrated report summarises the most material
information of the ESG and CMRR reports. Further detail on
our financial performance is available in our annual financial
statements, and historical performance in previous reports.
Reporting boundary
(risks, opportunities and outcomes)
Sustainable Growth and Impact
strategy (page 44)
Business model (page 18)
Operational performance
(page 86)
Material matters (page 22)
Business risks and opportunities
(page 26)
Governance (page 51)
Financial reporting entity
(control and significant influence)
• Subsidiaries
• Joint arrangements
• Investments
Stakeholders
(page 36)
• Government and
regulators
• Employees and labour
unions
• Communities
• Investors
• Suppliers
• Customers
• Civil society
• Others
We report our progress in creating and preserving value, and
preventing the erosion thereof, in the short, medium and long
term. The report contains the most material information about
our value creation transparently and understandably.
Materiality
We distinguish the information to include in this report through
a double materiality determination process, which identifies
the matters that impact our ability to create value (financial
materiality), and our impact on the environment, communities and
society (impact materiality). We group these material matters into
themes that link to the resources we use and affect.
Material matters (page 22)
Frameworks and guidelines
The content of the report is guided by:
• Our materiality determination process
• The Companies Act of South Africa, 2008 (Act 71 of 2008),
as amended (Companies Act)
• The Integrated Reporting Framework
• International Financial Reporting Standards (IFRS)
• The JSE Limited (JSE) Listings Requirements
• Department of Trade, Industry and Competition (dtic) broad-
based black economic empowerment (B-BBEE) codes of good
practice
• Broad-based Socio-economic Empowerment Charter for the
Mining and Minerals Industry 2018 (Mining Charter III)
• The United Nations Global Compact (UNGC)
• Global Reporting Initiative standards (elements of the ESG
report are cross-referenced for a broader perspective)
• The King IV Report on Corporate Governance™ for South Africa,
2016 (King IV)1
• The South African Code for the Reporting of Exploration
Results, Mineral Resources and Mineral Reserves, 2016 edition
(SAMREC Code)
• TCFD recommendations
• The Sustainability Accounting Standards Board (SASB)
Assurance
KPMG provided independent reasonable assurance over
key sustainability information in this report. The key
performance data assured by KPMG is detailed in
combined assurance for effective governance (page 73).
Board responsibility
The board of directors (board) acknowledges its responsibility
for ensuring the integrity of our reporting suite, including this
integrated report, which was prepared in accordance with the
Integrated Reporting Framework. The board believes the report
addresses all Exxaro’s material matters and presents a balanced
view of our strategy, business model and Exxaro’s ability to
create and preserve value over the short, medium and long term,
as defined by the six capitals. The report remains the ultimate
responsibility of the board, is prepared under the supervision
of senior management and is subject to rigorous internal and
external assurance reviews.
Mvuleni Geoffrey Qhena
Independent chairperson
Dr Nombasa Tsengwa
CEO
Riaan Koppeschaar
Finance director
Dr Geraldine Fraser-Moleketi
Lead independent non-
executive director
Karin Ireton
Independent non-executive
director
Ben Magara
Independent non-executive
director
Isaac Malevu
Non-executive director
Likhapha Mbatha
Non-executive director
Zwelibanzi Mntambo
Non-executive director
Mandlesilo Msimang
Non-executive director
Billy Mawasha
Independent non-executive
director
Nondumiso Medupe
Independent non-executive
director
Isaac Mophatlane
Independent non-executive
director
Vuyisa Nkonyeni
Independent non-executive
director
Peet Snyders
Independent non-executive
director
Chanda Nxumalo
Independent non-executive
director
Dr Phumla Mnganga
Independent non-executive director
1 Copyright and trademarks are owned by the Institute of Directors South Africa.
NPC and all of its rights are reserved.
14 April 2023
Exxaro Resources Limited
Integrated report 2022 | 3
Understanding
our business
We are preparing Exxaro to
achieve our vision of resources
powering a clean world — with
our Sustainable Growth and
Impact strategy considering our
purpose, prospects and social
obligations within an evolving
operating context.
Chairperson’s statement
About Exxaro
Sustainable growth and impact
5
7
10
12 Our operating context
4 | Exxaro Resources Limited
Integrated report 2022
Chairperson’s statement
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Mvuleni Geoffrey
Qhena
Chairperson
“
Through the persistent
tough macro-economic
background that included
global inflationary
challenges and ongoing
logistical constraints,
Exxaro continued to
deliver excellent results,
displaying our agility to
navigate the obstacles
we faced.
“
In 2022, we reported a record 78% increase in EBITDA* to R19 002 million and a 28% increase in headline
earnings per share (HEPS) at R60.16. This resilient performance was mainly due to the exceptional
performance of our coal, driven by high-quality product mix, and increases in export and domestic sales
prices. These results reflect that our early value coal strategy is once again delivering results, and
the importance of our continuing efforts to deliver on our commitments to stakeholders through the
Sustainable Growth and Impact strategy.
Reflecting on Exxaro’s strategic progress
Our strategy of transforming Exxaro into a diversified company that thrives in a low-carbon future requires responsibly extracting
maximum value from existing coal assets while transitioning from a coal base to a minerals and renewable energy business. The strategy
further recognises the important role Exxaro must play in the just energy transition, which considers South Africa’s growth and
development needs. While balancing these needs can be challenging, we believe that this transition offers opportunities for our
organisation to embrace the context and evolve with it.
The board reviewed and recommitted to the strategy, and oversaw several drivers that strengthen, enable and enhance its successful
implementation. These included:
• Approving a revised capital allocation model to assist the business in balancing acceptable value distribution to shareholders with
long-term investments
• Approving the new Social Impact and diversity, equity and inclusion strategies and human rights policy, which outline Exxaro’s
commitment to sustainable growth and impact that benefits communities and broader society, and Exxaro’s commitment to protecting
human rights throughout our value chain
• Setting and monitoring performance and culture expectations for the group through the remuneration-linked short-term incentive (STI)
scheme, with the inclusion of new targets for water security and efficiency and energy efficiency to strengthen our greenhouse gas
(GHG) mitigation and business resilience efforts
• The appointment of Leon Groenewald as managing director of the renewable energy business in March 2023, further demonstrating our
commitment to succession planning
• Overseeing the establishment of the executive ESG steering committee which is mandated to coordinate the integration of the ESG risks
and opportunities and ensure outcomes-based measurements and assurance
* Net operating profit before interest, tax, depreciation, amortisation, impairment charges or impairment reversals and net losses or gains on the disposal of assets and investments
(including transaction differences recycled to profit or loss).
Exxaro Resources Limited
Integrated report 2022 | 5
Chairperson’s statement continued
In line with our diversification commitments, Exxaro developed a
pipeline of renewable and new minerals projects for consideration
and performed due diligence on several of these. However, we
have not been able to conclude the projects at this stage due to,
among other factors, deferring value expectation on those assets.
The development of the Lephalale self-generated solar plant is
progressing well with the necessary regulatory approvals being
obtained. This further displays our commitment to responsibly
transitioning into a low-carbon business.
Our strategy: positioning Exxaro for sustainable growth
and impact (page 44)
Embracing good governance
The board is the custodian of the group’s strategy and governance
and we believe that robust governance practices provide the
foundation for value creation.
Critical to the successful execution of any strategy is the team
that leads its delivery. This includes having the right skills,
structure and rigour at board level to support decision making.
The board is committed to striving for the appropriate size,
balance of power, independence, diversity, skills, knowledge and
experience to enable it to discharge its governance role and
responsibilities objectively and effectively. In line with this
commitment, the board adopted a policy that includes a broader
definition of board diversity and inclusion, with revised targets, as
well as a nomination and appointment policy. The changes made
to the board in 2021 and 2022 aimed to strengthen our skills and
diversity.
Dr Nombasa Tsengwa has succeeded Mxolisi Mgojo who retired on
31 July 2022. Since taking the helm, Nombasa has skilfully steered
the ship, delivering on our strategic promise to stakeholders. We
once more thank Mxolisi, who received a Business Leader of the
Year award in 2022, for his invaluable contribution to Exxaro.
Nondumiso Medupe was appointed as an independent non-
executive director on 3 January 2023. Nondumiso brings a wealth
of experience in governance, accounting, risk management and
sustainability.
We will bid farewell to three longstanding board members. Ras
Myburgh retired by rotation this year, and Vuyisa Nkonyeni and
Isaac Mophatlane will retire by rotation at the AGM. On behalf of
the board, I would like to thank Ras, Vuyisa and Isaac for their
valuable and outstanding contributions to Exxaro over the years.
Prioritising engagements with our stakeholders
In line with King IV, Exxaro embraces a stakeholder-inclusive
approach to governance. As part of this process, the board
actively balances the needs, interests and expectations of our
stakeholders with the organisation’s best interest over time. In
2022, several key engagements took place to enhance our
relationships through meaningful dialogue.
After two years of COVID-19 restrictions, Exxaro held a three-day
governance roadshow with shareholders in September 2022. The
roadshow provided a platform for shareholders to meet our
leadership and for Exxaro to share insights and progress on issues
such as delivering on our strategy, our revised capital allocation
model, our shareholder structure and returns, remuneration and
our ESG performance, among others. This engagement also
allowed us to receive shareholder feedback, which informs our
decision making.
We held a stakeholder day at Grootegeluk, with the board, social,
ethics and responsibility committee (SERC) and management in
attendance, to share our progress and performance, and receive
the community’s feedback on Exxaro’s social performance and
impact. Engagements were scheduled over three days with
enterprise and supplier development (ESD) and socio-economic
development stakeholders in Limpopo and Mpumalanga.
Participants included national, district and local government,
community leaders, union representatives, ESD programme
implementation partners and social and labour plan (SLP), ESD
and mega-project beneficiaries.
These engagements highlight the board’s belief that effective
stakeholder engagement leads to improved relationships founded
on respect and trust, and better informed decision making.
Closing
We expect that the operating environment will remain challenging,
with global macro-economic drivers likely to shape the operating
context once again. However, I am confident that the work
undertaken to date has positioned the business to respond swiftly
and with agility.
Safety is one of Exxaro’s key priorities. Management continues to
lead in this regard and this is also reflected in their performance
contracts. Sadly, and after over a five-year fatality-free period, we
lost Mathews Moanalo at the Belfast mine. We pass our deepest
condolences to his family, friends and colleagues. Exxaro will
continue to strive to achieve and maintain our zero-fatality
approach in our activities.
My deepest gratitude to my colleagues on the board, the
management team, under the leadership of Nombasa and our
employees across the business. As we look ahead to 2023, it is
thanks to your continued commitment and dedication that we are
delivering on our purpose — to power better lives in Africa and
beyond.
Mvuleni Geoffrey Qhena
Chairperson
14 April 2023
6 | Exxaro Resources Limited
Integrated report 2022
About Exxaro
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Our business’s sustainability and impact depend on our contribution to accelerating
economic growth, practicing environmental stewardship and driving positive change.
Our diversified asset portfolio comprises interests primarily in thermal coal (where we are among the top five South African coal
producers), a growing renewable energy solutions business and equity-accounted investments in ferrous (iron ore) and zinc among
other base metals. We will contribute to a more sustainable future by expanding our business portfolio to include manganese, bauxite
and copper. Our business interests in Europe comprise a marketing and logistics office in Switzerland. A joint operation with Anglo
Coal Grosvenor Proprietary Limited, the Moranbah South project, is conducted in Australia.
We are aiming to be carbon neutral by 2050, and are committed to being an active participant in the just transition to a low-carbon
economy. The renewable energy solutions business and our scope 1 and 2 emissions reduction efforts are critical activities in this
regard. Reduction of scope 3 emissions is a longer-term goal influenced by the country’s energy mix.
Assets
Coal production
R85.1 billion
at 31 December 2022
(2021: R75.7 billion)
43.1Mt
(2021: 42.3Mt), excluding
buy-ins
Renewable
energy
generation
671GWh
(2021: 724GWh)
Five coal mines##
Two windfarms
Ownership structure
Market
capitalisation
R75.9 billion
(2021: R53.4 billion)
Constituent of the
JSE Top 40 Index
Responsible
business
30.81%
black-empowered
Among the top 30
in the FTSE/JSE
Socially Responsible
Investment Index
EYESIZWE*
RF
30.81%
EXXARO
BEE SPV
52.2%
EXXARO
14.9%
IDC
22.9%
EXXARO
ESOP SPV
5.0%
EXXARO
COMMUNITY
NPC#
5.0%
* Eyesizwe (RF) Proprietary Limited (Eyesizwe), a special purpose vehicle (SPV)
private company, incorporated under South Africa’s laws, holds the black economic
empowerment (BEE) shares.
# Exxaro Matla Setshabeng NPC.
## Including one joint venture, Mafube.
Our core operation is thermal, semi-soft coking and
metallurgical coal mining, supplying Eskom, other
domestic markets and offshore markets.
Our coal mining business is structured under four
legal entities, all managed and operated by Exxaro,
supplemented by a 50% JV with Thungela Resources
Limited in Mafube and a 12.04% legal equity interest
in RBCT.
Our renewable energy business, Cennergi, consists
of 229MW of wind generation assets in the Eastern
Cape that contribute to the national energy supply.
Coal
100%
Cennergi
>90%
SIOC
20.62%
SIOC is a leading supplier of high-quality iron ore
to the global steel industry and a subsidiary of
Kumba Iron Ore.
Black Mountain
26%
Black Mountain operates two underground mines
and a processing plant in the Northern Cape that
produces zinc and other minerals.
We continue evaluating our options to dispose of
our shareholding in Black Mountain.
Exxaro Resources Limited
Integrated report 2022 | 7
About Exxaro continued
Our assets
Minerals business
Our minerals business comprises coal operations and our equity investments in iron ore and zinc. We have deep roots in mining
with a track record of operational excellence and delivering value. Our coal asset base is a key differentiator and critical part of how
we create value for our stakeholders. Only mineral assets with Measured and Indicated Resources are listed in this report. Inferred
Resources are reported in the supplementary
CMRR report.
Operations
Project
• Largest high-quality Coal Reserves remaining in the country,
providing a platform for early value returns
• Largest supplier of energy coal to Eskom and ArcelorMittal
South Africa Limited
• Produced 43.1Mt of thermal and metallurgical coal
(2021: 42.3Mt), up 1.9% in 2022 – the majority of power station
coal is supplied to Eskom
• Grootegeluk is one of the largest integrated mining and
beneficiation operations globally, running the largest coal
beneficiation complex, and the only producing mine in the
coal-rich Waterberg, adjacent to Eskom’s Matimba and Medupi
power stations
• As at 31 December 2022, 15% of R1.7 billion capital expenditure
was spent on greenfield and brownfield expansion projects
(2021: 34%, R2.5 million)
Limpopo
Mpumalanga
1 Grootegeluk complex
Location: West of Lephalale
Market: Domestic and export
Product: Thermal and metallurgical coal
Coal Resources (inclusive):
• Measured: 3 039Mt
• Indicated: 967Mt
Coal Reserves:
• Proved: 2 034Mt
• Probable: 550Mt
Mining method: Open-cut
Run of mine (RoM): 56.52Mt
Life of mine (LoM): 19+ years*
Mpumalanga
2 Thabametsi
Location: West of Lephalale
Market: Domestic
Product: Thermal coal
Coal Resources (inclusive):
• Measured: 270Mt
• Indicated: 749Mt
Coal Reserves (inclusive):
• Probable: 130Mt
Mining method: Open-cut
RoM: Project
LoM: 24 years
3 Belfast
Location: South of Belfast
Market: Export (alternative domestic)
Product: Thermal coal
Coal Resources (inclusive):
• Measured: 101.6Mt
• Indicated: 8.0Mt
Coal Reserves:
• Proved: 35.8Mt
• Probable: 1.4Mt
Mining method: Open-cut
RoM: 2.65Mt
LoM: 11 years
4 Leeuwpan
Location: South-east of Delmas
Market: Domestic and export
Product: Thermal coal
Coal Resources (inclusive):
• Measured: 65.8Mt
Coal Reserves:
• Proved: 36.1Mt
• Probable: 3.3Mt
Mining method: Open-cut
RoM: 3.71Mt
LoM: 7 years
5 Matla
Location: West of Kriel
Market: Domestic (Eskom)
Product: Thermal coal
Coal Resources (inclusive):
• Measured: 657Mt
• Indicated: 91Mt
Coal Reserves:
• Proved: 130Mt
• Probable: 38Mt
Mining method: Underground
RoM: 6.16Mt
LoM: 2+ years*
6 Mafube joint venture (50%)
Location: East of Middelburg
Market: Domestic and export
Product: Thermal coal
Coal Resources (inclusive):
• Measured: 125.0Mt
• Indicated: 16.3Mt
Coal Reserves:
• Proved: 80.6Mt
• Probable: 40.8Mt
Mining method: Open-cut
RoM: 5.44Mt
LoM: 21+ years*
7
Moranbah South project (50%)
Location: Queensland, Australia
Undertaking prefeasibility study to inform decision
for development prospects.
8 | Exxaro Resources Limited
Integrated report 2022
* Adequate Reserves well beyond expiry of mining right.
GautengNORTH WESTNORTHERN CAPEWESTERN CAPEEASTERN CAPEFREE STATEKWAZULU-NATALLimpopoMpumalangaBelfast3Grootegeluk14Mafube6Matla52ThabametsiLeeuwpan Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Renewable energy business
Our energy business comprises interests in renewable energy through our wholly owned subsidiary, Cennergi.
Cennergi is a southern African-based independent power
producer (IPP) that focuses on developing, owning and
operating renewable assets. Cennergi has two established
wind projects (the Tsitsikamma community and Amakhala
Emoyeni windfarms).
The renewable energy business is also developing the 68MW
Lephalale solar project in a ring-fenced SPV that will supply
renewable energy to Grootegeluk, reducing the carbon
footprint and electricity costs of this mining operation. The
energy business has also concluded a joint development
agreement with Enertrag, an established German IPP, to
develop projects in Mpumalanga for the mining industry.
Eastern Cape
8 Tsitsikamma community windfarm
9 Amakhala Emoyeni windfarm
Location: Near Tsitsikamma
Capacity: 95MW
Number of turbines: 31 x 3.1MW
Performance: Generation output in line with P50 targets since 2016
Customer: Eskom
Power purchase agreement: 20 years
Commercial operation: 2016
Shareholding: Cennergi (75%), RE Times (16%) and the Tsitsikamma
Development Trust (9%)
Location: Near Bedford and Cookhouse
Capacity: 134MW
Number of turbines: 56 x 2.4MW
Performance: Consistent performance since 2016, albeit at lower
than planned P50 generation numbers
Customer: Eskom
Power purchase agreement: 20 years
Commercial operation: 2016
Shareholding: Cennergi (95%), Cookhouse Community Trust (2.5%)
and the Bedford Community Trust (2.5%)
Limpopo
10 Lephalale solar project
Product: Solar energy
Capacity: 68MW
Customer: Exxaro Coal Proprietary Limited (Grootegeluk)
Power purchase agreement: 25 years
Commercial operation: 2025
Shareholding: 100% Cennergi Holdings Proprietary Limited
Financial close: 31 March 2023
Estimated commercial operation: 2025
Exxaro Resources Limited
Integrated report 2022 | 9
GautengNorthWestNorthern CapeWestern CapeEastern CapeFree StateKwaZulu-NatalLimpopoMpumalanga8Tsitsikamma 9Amakhala Emoyeni10 Lephalale Sustainable growth and impact
Our Sustainable Growth and Impact strategy is anchored on measurable and multi-stakeholder value creation. The strategy aims
to transform Exxaro in a systematic and integrated manner into a diversified company that will transition from a coal base to a
minerals and renewable energy business that will thrive in a low-carbon future.
Forces shaping our strategy
Understanding the narrowing opportunity and the growing exogenous risk as the world accelerates to a net zero carbon economy
We need to balance South Africa’s socio-economic development, which relies on coal generated power, with supporting the transition
to a low-carbon economy. These are major changes that will raise future challenges and increase external risks for those who do not
adapt. They will also present significant opportunities for those who can evolve.
Climate change
Just transition
Climate change increases competition for scarce
resources like water and biodiversity between
communities. Factors such as rising heat increase the
risk of health and safety incidents at our operations.
The transition to a low-carbon economy has significant
socio-economic implications for our business and the
communities in which we operate.
Energy transition
Stewardship
The growth in disruptive technology in the energy
sector could displace our business in the medium
to long term.
We believe we do not own coal assets but we are
stewards of responsibly maximising their value. We
have a responsibility to use these coal assets to build a
sustainable business for our investors, employees and
communities, and a sustainable future for the planet.
These forces have increased in prominence over the past year. Significantly, the global energy crisis, exacerbated by the Russia-
Ukraine conflict, increased global action for decarbonisation, and investor funding targeted to ESG equity funds. These trends support
the positioning and direction of our strategy.
Transitioning to a resilient, diversified resources company
Minerals business
Energy business
Coal
Minerals
Renewable energy
Early value coal to maximise our high-
quality assets
• Continue to contribute to energy
security in South Africa and beyond
• Decarbonising will further strengthen
our existing competitive advantage
and extend the horizon of our coal
business
• Diversify into minerals to support a
low-carbon future
• Diversify earnings and contribute to
Exxaro’s growth
• Clearly defined investment criteria
that ensure we invest in the right
opportunities within geographies
where we can execute
• Balance sheet and capabilities provide
a competitive advantage
Build a leading global renewable energy
solutions business by 2030
• Own one of South Africa’s leading
managers of renewable assets
• Strategy underpinned by three
interdependent pillars: utility
generation, distributed generation
and services
• Long-term cash flow stability
}
10 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
As we start implementing our strategy, we are refining and consolidating the drivers of our strategic direction,
how we measure our future success and reflect on our past strategic performance. The board fully supports our
strategy and we have clearly identified our future path to achieve our vision. We believe our sustainable growth
can only be achieved if our communities and broader society benefit from our sustainable impact efforts. In 2022,
we developed our Social Impact strategy to support the achievement of this goal.
Our response
The transition imperative
To responsibly enter a carbon-constrained future given
our base as a carbon-intensive coal asset, our approach
involves:
Energy transition
• Coal and renewable energy businesses play a key
role in energy security
• Responsibly optimise the coal business
• Repositioning the business to capture transition
opportunities
Just transition
• Prioritising workers, communities and value chain
partners as we transition our business in a just manner
Sustainable impact is at the core of our
purpose and future
• Commitment to invest in and support the resilience of society in
the just transition
• Remain a responsible custodian of the assets entrusted to us,
as evidenced in our ESG performance
• Balancing acceptable value distribution to shareholders with
investment for the long term for all stakeholders
• Operate our businesses with social and environmental
stewardship
This informs our Sustainable Growth and Impact strategy
Sustainable
• Be carbon neutral by 2050
• Maximise value from coal through early value and
market to resource strategy
• Reduce climate-related risks
• Deliver positive impact through our Social Impact
strategy
Growth
• Diversify into resilient future-facing minerals and
renewable energy, ensuring a significant EBITDA
contribution in these areas by 2030
• Grow renewable energy business to 1.6GW (net)
by 2030
• Ensure disciplined capital allocation to maximise
value, supported by a robust investment process
Impact
• Deliver social, economic and environmental
benefits
• Contribute to sustainable livelihoods
• Strengthen contribution to a just energy transition
• Go beyond compliance to achieve sustainable
impact
Strategic objectives
Transition at speed and scale
Make our minerals and energy businesses
thrive
Empower people to create impact
Be carbon neutral by 2050
Become a catalyst for economic growth and
environmental stewardship
Refer to our strategy (page 44) for detail on
our strategy, strategic development process and
performance against our objectives.
Exxaro Resources Limited
Integrated report 2022 | 11
Our operating context
Exxaro’s macro-economic operating context and commodity markets include global and
domestic factors that affect our ability to create value for our stakeholders over time.
Global and domestic economic conditions
ESG
Geopolitics
Foreign currency market
Inflation and interest rates
Cyber threats
1
2
3
4
5
6
Commodity markets
Coal markets
Coal logistics
Iron ore market
7
7.1
7.2
7.3
Our broader operating context: trends influencing our business
1 Global and domestic economic conditions
The Russia-Ukraine conflict and renewed COVID-19 lockdowns in China are among the series of economic shocks that disrupted supply
chains, fuelled inflation, increased energy costs and slowed global economic growth. After a strong finish to 2021 at 6.1%, global economic
expansion lost momentum in 2022, with a slower growth rate of 3.0%.
Financial market conditions deteriorated during the second half of 2022, and the global economic outlook for 2023 has weakened to
fall short of potential growth levels. The end of 2022 experienced the weakest growth and the global economy remained at its highest
vulnerability in early 2023, when any major economic shock could have tipped the world economy into recession.
South Africa’s real GDP surpassed its 2019 level in the first
quarter of 2022, signalling complete recovery from the COVID-19-
induced recession of 2020. Subdued growth in 2022 reflected the
lingering effects of unrest in July 2021, extensive flooding in April
2022, slowing global growth and inadequate electricity supply.
Speedy and judicious implementation of energy reforms could
raise private investment to benefit economic activity.
Global gross domestic product (GDP): 3.0% (2021: 6.1%)
Real GDP growth rate (%)
2022
3
2
3.6
3
6.7
2.0
(2.20)
(35.4)
2021
6.1
6
5.4
8.5
9.1
4.9
4.8
3.4
World
US
Eurozone
China
India
South Africa
Russia
Ukraine
2023
forecast
2.1
0.7
0.50
5.2
5.1
0.6
(1.32)
8.0
Source: S&P Global, February 2023.
Cause
• Russia-Ukraine conflict
• Renewed COVID-19 lockdowns in China
• Slower global economic growth
• Unrest in July 2021 and extensive
flooding in April 2022 in South Africa
• Inadequate electricity supply in South
Africa
Implications for Exxaro
• South Africa’s energy mix and demand
• Higher inflation on operations
• Higher interest rates
Our strategic response
• Cost management
• Customer engagement
• Supplier engagement: cost
• Logistics: ensure passage of coal to ports
12 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
2 ESG
ESG is an integral part of our Sustainable Growth and Impact strategy. To this end, the executive committee established an ESG steering
committee to coordinate the integration of the ESG risks and opportunities and ensure outcomes-based measurements and assurance.
These include decarbonisation and social impact.
Global responses to climate change are driving economic reforms, commitments and regulations to steer decarbonisation efforts. The
2022 UN Climate Change Conference (COP27) finalised the details of a work programme to urgently scale up mitigation, ambition and
implementation in this critical decade. During this conference, issues impacting developing countries and businesses operating in these
countries were highlighted and included:
• The submission of ambitious nationally determined contributions (NDCs) by countries: South Africa submitted ambitious NDC
targets for 2025 and 2030. It is envisaged that these targets will impact Exxaro and other businesses through stringent climate change
policies, carbon prices and carbon budgets
• Low-carbon technologies such as hydrogen and carbon capture storage are associated with high costs and not commercially available
• Energy storage: Challenges associated with storing renewable energy will impact decarbonisation efforts of businesses like Exxaro,
which are targeting 100% consumption of renewable energy and reduction of scope 2 emissions
• Carbon pricing: The EU’s Carbon Border Adjustment Mechanism and its potential impact on developing countries and businesses
operating in these countries. There might be future financial implications for Exxaro associated with carbon-intensive products for
export to the EU
Social impact is an outcome our Sustainable Growth and Impact strategy and addresses material social and compliance matters that
concern stakeholders.
Implications for Exxaro
• It is imperative for us to demonstrate
our ESG commitments as this impacts
shareholders’ assessments of our
company and our social licence to
operate
Our strategic response
• Established an ESG steering committee
• Separate annual ESG report
• Invest in and expand a diversified
minerals and renewable energy business
• Energy efficiency and scope 1 emission
• Stringent climate policy and carbon
reduction
Cause
• ESG is a priority for all stakeholders
• Integration of ESG into corporate
strategies, decision making and
stakeholder reporting
• Countries pledged to scale up carbon
mitigation, ambition and implementation
• South Africa aims to access significantly
higher levels of climate finance during
the implementation of NDCs
• An increasingly distressed socio-political
prices
• Increase decarbonisation efforts
• Global energy demand and transition
• Social impact should result in a
and strained economic operating
environment characterised by inequality,
unemployment and poverty
harmonious co-existence between
Exxaro and local communities, creating
a thriving environment
• Renewable energy installation (scope 2
emission reduction)
• The Social Impact strategy aims for a
market-driven, multidimensional and
scaled approach to improve the lives
of communities. It aims to shift from
inequality, unemployment and poverty to
empowered communities with skills and
capabilities
• Upskilling will enable employment and
entrepreneurial opportunities, which
creates economic wellbeing, social
progress and dignified livelihoods
Creating value through stakeholder
engagement (page 36)
Our environment (page 103)
Social licence to operate (page 101)
3 Geopolitics
Global geopolitical tensions continued to impact supply-demand dynamics for key Exxaro commodities. The Russia-Ukraine conflict and
subsequent sanctions, and continuing US-China and China-Australia tensions were evident during 2022. The European Union’s ban on coal
imports from Russia and the restart of thermal power plants significantly impacted supply-demand balance, trade flows and seaborne
thermal coal pricing.
Cause
• Russia-Ukraine conflict
• China import restrictions on Australian
Implications for Exxaro
• Opportunities in the European thermal
Our strategic response
• Market strategy adapts to changing
coal market
global flows
coal
• Higher but volatile seaborne thermal
• Global supply chain disruptions
coal prices
• Market to resource optimisation
• Increased collaboration with stakeholders
• Availability and/or higher costs of
material input
Exxaro Resources Limited
Integrated report 2022 | 13
Our operating context continued
4 Foreign currency market
Economic turmoil usually brings about two key dynamics of the US dollar:
• The US dollar’s continued role as the dominant global reserve currency and the corresponding role played by the Federal Reserve as the
world’s central bank
• The view that US dollar assets, especially US treasury bills and bonds, are regarded as safe havens
This was no different during 2022. As central banks significantly increased interest rates with recessionary risks on the horizon, the US
dollar’s exchange value soared in response to rising US dollar bond yields and investor flight to safety. This added to inflation and financial
stress in developing and emerging countries.
In South Africa, the rand weakened by 10.7% during 2022 on the back of the strong US dollar, declining commodity prices (with the
exception of the energy complex), flight to safety and recessionary risks. The US$/R exchange rate is expected to remain volatile in 2023,
mainly dependent on whether the surge in inflation is brought under control by the major central banks and recessionary risks.
Cause
• US dollar strength
• Recessionary risk sentiment
• Increasing interest rates to curb inflation
Implications for Exxaro
• Forex volatility, weaker exchange rate
favourable to local exports
Our strategic response
• Rand-based pricing for input products
• Limited hedging
• Local sourcing
5 Inflation and interest rates
Persistent high inflation led to the world’s major central banks tightening their monetary policies. In 2022 we saw high interest rate
increases and a resolve to restrain actual and expected inflation. Policy trade-offs are challenging as inflation extends beyond food
and energy, with risks that over-tightening could tip the global economy into a severe recession and under-tightening could further
entrench inflation.
In 2022, South Africa’s headline inflation averaged 6.9%, and is expected to remain above the mid-point of the South African Reserve
Bank’s inflation target range of 3% to 6% during 2023. The repurchase rate increased by a cumulative 300 basis points during 2022.
Further normalisation into 2023 may be needed to raise rates to levels consistent with a stable and lower inflation rate.
Cause
• Persistent high inflation
• Interest rate increases
• Monetary policy trade-offs
Implications for Exxaro
• Cost and revenue escalations
• Borrowing cost increases
Our strategic response
• Inflation-linked escalations
• Reduce debt levels
• Cost management
6 Cyber threats
Exxaro’s Digital@Exxaro programme is a key catalyst in driving modernisation and digital transformation.
Cause
• Digital and technological innovation
enables improved productivity, safety
and environmental management in the
mining industry
Implications for Exxaro
• The programme has enabled data-driven
decision making and drives end-to-end
integration and optimisation of our value
chain to remain competitive
Our strategic response
• The Exxaro digitalisation and innovation
journey is a strategic initiative driven by
the CEO
• Our award-winning Digital@Exxaro
programme is transforming our company
culture to ensure we are more open and
agile when we engage with internal and
external stakeholders
Driving innovation and information
management (page 90)
14 | Exxaro Resources Limited
Integrated report 2022
Our markets
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
During 2022, global markets were affected by the impact of the Russia-Ukraine conflict, renewed
COVID-19 infections and lockdowns in China, mixed and volatile commodity prices, continued supply
chain disruptions, inflationary and interest rate pressures and global recessionary risks.
7 Commodity markets
Exxaro’s commodity markets recorded mixed and volatile performances in 2022. The energy complex markets remained relatively tight
compared to industrial mineral markets. Key drivers included the Russia-Ukraine conflict, resurgent COVID-19 infections and lockdowns in
China, supply chain disruptions and recessionary risks.
API4 coal export price averaged US$270.87/t
(2021: US$124.12/t)
Commodity prices (US$/t)
Commodity
Thermal coal
(RB1)
Thermal coal
(RB3)
Iron ore fines
Lump premium
2023 forecast
150
120
110
11
2022
270.87
206.05
120.03
13.92
2021
124.12
95.59
159.89
22.58
Source: Various commodity market intelligence reports, September 2022 and February 2023.
Cause
• Mixed price performance
• European energy insecurity
• Recessionary risks
• Supply constraints
Implications for Exxaro
• Volatile commodity markets
• Higher received prices for coal exports
Our strategic response
• Portfolio management
• Maximise coal exports
7.1 Coal markets
Thermal coal demand remained robust in 2022, largely driven by the higher coal demand from Europe. With the onset of the Russia-
Ukraine conflict in March 2022, thermal coal markets experienced significant disruption and volatility as Europe sought alternative high-
quality coal supply to reduce dependency on Russia. Low gas stocks, high gas pricing and uncertainty over energy security supported gas
to coal switching in Europe.
As the spot demand for high-quality coal increased, record high global thermal coal prices were reached in 2022. With the implementation
of the European embargo on Russian coal and the continued Chinese ban on Australian coal imports, global coal flows changed to respond
to the new market dynamics. Exports from South Africa into Europe increased and displaced Russian coal was exported to Indian and
Chinese markets.
Global thermal coal supply remained tight for most of the year with factors such as heavy rainfall, rail challenges and labour issues
impacting the major supply regions and providing pricing support.
Pricing declined from the highs in the second half of 2022, as the European market entered winter season well stocked on coal and gas
inventories and experienced milder than normal winter temperatures which in turn lowered heating requirements.
In South Africa, domestic demand remained robust throughout the year. The higher export price improved the attractiveness of
alternative export distribution channels allowing for volumes normally destined for the domestic market to be sold in the international
market. The resulting domestic supply tightness resulted in higher domestic prices.
Volatility and high prices were the key hallmarks of the 2022 global market for hard coking coal. Market tightness throughout the year
was due to supply-side challenges out of Russia and Australia. As 2023 progresses, market prices are expected to trend downward as
the results of stronger supply out of Australia, and modest demand, while the positive sentiment out of China is expected to be mostly
outweighed by weakness in Europe.
Cause
• Russia-Ukraine conflict
• European gas, carbon and coal price
Implications for Exxaro
• High API4 index price
• Market volatility
shocks
• Dynamic global trade flow
Our strategic response
• Early value coal strategy
• Market to resource optimisation
• Alternative routes to market
Exxaro Resources Limited
Integrated report 2022 | 15
Our operating context continued
7.2 Coal logistics
Transnet Freight Rail (TFR) railed 50.43Mt to RBCT from January to December 2022, compared to 58.12Mt for the same period in
2021. Rail was constrained throughout the year due to locomotive availability and security-related incidents, strike action and multiple
derailments. Given these challenges, TFR reduced the contractual and performance commitment from 81Mtpa to 60Mpta for the
2022/2023 period.
Exxaro’s export sales reduced from 7.6Mt in 2021 to 5.2Mt in 2022 due to lower railings to RBCT. To mitigate the impact of the lower rail
performance, Exxaro has successfully exported via alternative export ports and continues to strategically develop alternative routes
to market.
Cause
• Security-related downtime (cable theft,
vandalism and sabotage)
• Locomotive availability
Implications for Exxaro
• Reduced export volumes and increased
cost of alternative logistics channels
Our strategic response
• TFR engagement
• Develop alternative routes to market
7.3 Iron ore market
At the start of 2022, the iron ore price was stable, supported by strong Chinese steel production, despite the ongoing property weakness
and widespread re-established COVID-19 lockdowns in China. However, the market softened during April/May, after which sentiment
strengthened as new stimulus measures were announced by the Chinese government and lockdown restrictions eased. Weak demand
sentiment in China and Europe and global recession risks weighed on the iron ore market for the rest of the year.
We anticipate a relatively flat annual global steel production level for 2023. Higher iron ore supply and expected steady demand will likely
see seaborne prices testing cost curve support levels. Higher steel production from China presents a key market opportunity and lower-
than-expected seaborne supply poses a risk to the market.
Cause
• Volatile Chinese steel production
• Weak demand sentiment in China and
Europe
• Global recession risk
Implications for Exxaro
• Performance of SIOC investment
Our strategic response
• Exposure to higher-value iron ore lump
product
Coal rail transport at Grootegeluk mine
16 | Exxaro Resources Limited
Integrated report 2022
Drivers of
value creation
We are driven by our purpose
to power better lives in Africa
and beyond as we navigate
a just transition, considering
the needs of our stakeholders,
towards a clean world.
18 Our business model
22 Our material matters
26 Our business risks and opportunities
36 Creating value through stakeholder engagement
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Exxaro Resources Limited
Integrated report 2022 | 17
Our business model
Our business model depicts the capital inputs we need to conduct
our activities and deliver our products.
Natural capital
The natural resources we rely on
to run our business and create
our products
Human capital
The people who manage our
business and perform our
operational activities
Social and relationship capital
The relationships that provide
our social licence to operate
Manufactured capital
Intellectual capital
Financial capital
The physical mining, energy
and property assets that enable
us to deliver our products
The unique combination
of knowledge, experience,
innovation and systems that
differentiate Exxaro
The financial assets that enable
us to deliver on our strategy
• RoM: 74.48Mtpa (2021: 69.4Mtpa)
• Land managed: 62 603ha (active
and inactive mines)
• Water consumption: 10 419ML
(2021: 10 281ML)
• Employees: 6 745 (2021: 6 745)
• Contractors: 12 497 (2021: 12 068)
• Investment in skills development
and talent management: R331 million
(2021: R276 million)
• Diesel: 83 268kL (2021: 84 852kL)
• Electricity: 590 078MWh
(2021: 601 717MWh)
• Investment in employee
remuneration: R4.3 billion
(2021: R4.1 billion)
• Land rehabilitated: 2 000ha
• Culture: connect2NEXT
• Investment in SLP projects:
R13.38 million (2021: R56.44 million)
• Investment in ESD:
R291.2 million (2021: R127.7 million)
• Corporate social investment (CSI)
(including disaster relief funds):
R167.93 million (2021: R57.28 million)
• Stakeholder relationship growth
(2021: 1 933ha)
• Five mines (including one joint
• Continued investment in world-class
• Adjusted equity-accounted income:
venture), one ferro-silicon
manufacturing facility, one
digitalisation
R7.3 billion (2021: R9.8 billion)
• Business excellence integrated into
• Adjusted EBITDA: R19.0 billion
coal project and two windfarms
the business
(2021: R10.7 billion)
• Sustaining capital: R1.4 billion
• Leadership and management
• Cash dividend paid to external
(2021: R1.6 billion)
training: 264 people attended
shareholders: R6.7 billion
• Expansion capital: R0.3 billion
(2021: 322)
(2021: R9.6 billion)
(2021: R0.8 billion)
• Significant investment in updating
• Cash dividend paid to BEE Parties:
• Investment in property, plant
and aligning our strategy to our
R2.2 billion (2021: R3.1 billion)
and equipment: R1.7 billion
purpose and long-term goals
• Revenue: R46.4 billion
(2021: R2.5 billion)
• Continued investment in leading
(2021: R32.8 billion)
governance structures: changes
• Balance sheet strength
in board and engagement with
investors
• Natural resources, including the
• Attracting and retaining the right
Mineral Resources we rely on, are
finite and must be managed carefully
• Balancing the need for energy that
supports economic growth (primarily
coal fuelled) with the need to
transition to a low-carbon economy
employees with the necessary skills
for now and into the future remains
challenging in a competitive market
• Growing negative sentiment towards
companies in the fossil fuels sector
• Increasing expectations on
companies to solve societal issues
• Increased reputational risks due to
conduct of employees, contractors
and suppliers
• Manufactured capital remains costly
• As the world evolves at an
• In a low-growth environment,
with delays in project completions
unprecedented pace, technologically
financial capital remains costly and
hampering growth
and in terms of the operating context,
scarce
rapid innovation and ideation is more
important than ever and remains
challenging
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What we do
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align with our strategy
of strengthening our
resilience and ensuring
we deliver sustainable value
through a robust portfolio
in a low-carbon economy.
Our activities comprise:
Responsible mining
• Delivering resources to support the
country’s energy needs
Renewable energy operations
(own use and grid supply)
• Generating renewable energy projects
• Responsible environmental stewardship
and services
• Build a leading global renewable energy
solutions business by 2030
18 | Exxaro Resources Limited
Integrated report 2022
Strategising for future
relevance and a just transition
• SIOC (iron ore)
Diversified equity investments
Delivering sustainable impact
and responsible practices
• Developing a roadmap for a just
• Black Mountain (zinc)
• Driving diversity and inclusion
transition to a low-carbon economy
• Values-based leadership
• Effective governance
• Investments in community
development initiatives
• Stakeholder engagement and
communication
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Our business model depicts the capital inputs we need to conduct
our activities and deliver our products.
Natural capital
Human capital
The natural resources we rely on
to run our business and create
our products
The people who manage our
business and perform our
operational activities
Social and relationship capital
The relationships that provide
our social licence to operate
Manufactured capital
The physical mining, energy
and property assets that enable
us to deliver our products
Intellectual capital
The unique combination
of knowledge, experience,
innovation and systems that
differentiate Exxaro
Financial capital
The financial assets that enable
us to deliver on our strategy
• RoM: 74.48Mtpa (2021: 69.4Mtpa)
• Employees: 6 745 (2021: 6 745)
• Investment in SLP projects:
• Land managed: 62 603ha (active
• Contractors: 12 497 (2021: 12 068)
R13.38 million (2021: R56.44 million)
and inactive mines)
• Investment in skills development
• Investment in ESD:
• Water consumption: 10 419ML
and talent management: R331 million
R291.2 million (2021: R127.7 million)
(2021: 10 281ML)
(2021: R276 million)
• Diesel: 83 268kL (2021: 84 852kL)
• Investment in employee
• Electricity: 590 078MWh
(2021: 601 717MWh)
remuneration: R4.3 billion
(2021: R4.1 billion)
• Land rehabilitated: 2 000ha
• Culture: connect2NEXT
(2021: 1 933ha)
• Corporate social investment (CSI)
(including disaster relief funds):
R167.93 million (2021: R57.28 million)
• Stakeholder relationship growth
• Five mines (including one joint
venture), one ferro-silicon
manufacturing facility, one
coal project and two windfarms
• Sustaining capital: R1.4 billion
(2021: R1.6 billion)
• Expansion capital: R0.3 billion
(2021: R0.8 billion)
• Investment in property, plant
and equipment: R1.7 billion
(2021: R2.5 billion)
• Continued investment in world-class
• Adjusted equity-accounted income:
digitalisation
• Business excellence integrated into
the business
• Leadership and management
training: 264 people attended
(2021: 322)
• Significant investment in updating
and aligning our strategy to our
purpose and long-term goals
• Continued investment in leading
governance structures: changes
in board and engagement with
investors
R7.3 billion (2021: R9.8 billion)
• Adjusted EBITDA: R19.0 billion
(2021: R10.7 billion)
• Cash dividend paid to external
shareholders: R6.7 billion
(2021: R9.6 billion)
• Cash dividend paid to BEE Parties:
R2.2 billion (2021: R3.1 billion)
• Revenue: R46.4 billion
(2021: R32.8 billion)
• Balance sheet strength
• Natural resources, including the
• Attracting and retaining the right
• Growing negative sentiment towards
Mineral Resources we rely on, are
employees with the necessary skills
companies in the fossil fuels sector
finite and must be managed carefully
for now and into the future remains
• Increasing expectations on
• Balancing the need for energy that
challenging in a competitive market
companies to solve societal issues
supports economic growth (primarily
coal fuelled) with the need to
transition to a low-carbon economy
• Increased reputational risks due to
conduct of employees, contractors
and suppliers
• Manufactured capital remains costly
with delays in project completions
hampering growth
• As the world evolves at an
• In a low-growth environment,
unprecedented pace, technologically
and in terms of the operating context,
rapid innovation and ideation is more
important than ever and remains
challenging
financial capital remains costly and
scarce
Our purpose guides our activities, ensuring we continue providing critical resources that support
South Africa’s sustainable economic and social development in a way that will accelerate change and
ultimately safeguard the value we create for our stakeholders over time. We are committed to making
a deliberate positive impact through our physical outputs and the way we do business.
Responsible mining
• Delivering resources to support the
Renewable energy operations
(own use and grid supply)
country’s energy needs
• Generating renewable energy projects
• Responsible environmental stewardship
and services
• Build a leading global renewable energy
solutions business by 2030
Strategising for future
relevance and a just transition
• Developing a roadmap for a just
Diversified equity investments
• SIOC (iron ore)
• Black Mountain (zinc)
transition to a low-carbon economy
Delivering sustainable impact
and responsible practices
• Driving diversity and inclusion
• Values-based leadership
• Effective governance
• Investments in community
development initiatives
• Stakeholder engagement and
communication
Exxaro Resources Limited
Integrated report 2022 | 19
Our business model continued
Although we strive to create value through our business
activities and our Sustainable Growth and Impact strategy,
we have a negative impact on some capitals. We remain
committed to negating these negative impacts while
creating positive impacts beyond compliance by using our
recognised ESG, brand and culture.
Coal
43.1Mt product volumes
(2021: 42.5Mt)
Our business model
Our business model depicts the capital inputs we need to conduct
our activities and deliver our products.
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Natural capital
The natural resources we rely on
to run our business and create
our products
Human capital
The people who manage our
business and perform our
operational activities
Social and relationship capital
The relationships that provide
our social licence to operate
Manufactured capital
The physical mining, energy
and property assets that enable
us to deliver our products
Intellectual capital
The unique combination
of knowledge, experience,
innovation and systems that
differentiate Exxaro
Financial capital
The financial assets that enable
us to deliver on our strategy
• RoM: 74.48Mtpa (2021: 69.4Mtpa)
• Land managed for six mining
operations
• Water consumption: 10 419ML
(2021:10 281ML)
• Diesel: 83 268kL (2021: 84 852kL)
• Electricity: 590 078MWh (2021: 601
717MWh)
• Employees: 6 745 (2021: 6 745)
• Contractors: 12 497 (2021: 12 068)
• Investment in skills development
and talent management: R331 million
(2021: R276 million)
• Investment in employee
remuneration: R4.3 billion
(2022: R4.3 billion)
• Land rehabilitated: 2 000ha (2021:
• Culture: connect2NEXT
1 933ha)
• Investment in SLP projects:
R13.38 million (2021: R56.44 million)
• Investment in ESD:
R291.2 million (2021: R127.7 million)
• CSI (including disaster relief funds):
R167.93 million (2021: R57.28 million)
• Stakeholder relationship growth
• Five mines, including one
• Continued investment in world-class
digitalisation
• Core equity-accounted income:
R7.3 billion (2021: R9.8 billion)
joint venture, one Ferro-silicon
manufacturing facility, one coal
project and two windfarms
• Sustaining capital: R1.4 billion
(2021: R1.6 billion)
• Expansion capital: R0.3 billion
(2021: R0.8 billion)
• Investment in property, plant
and equipment: R1.7 billion
(2021: R2.5 billion)
• Business excellence integrated into
• Core EBITDA: R19.0 billion
the business
• Leadership and management
training: people attended
(2021: 322)
• Significant investment in updating
and aligning our strategy to our
purpose and long-term goals
• Continued investment in leading
governance structures: changes
in board and engagement with
investors
(2021: R10.7 billion)
• Cash dividend paid: R6.7 billion
(2021: R9.6 billion)
• Revenue: R46.4 billion
(2021: R32.8 billion)
• Balance sheet strength
• Natural resources, including the
• Attracting and retaining the right
Mineral Resources we rely on, are
finite and must be managed carefully
• Balancing the need for energy that
supports economic growth (primarily
coal fuelled) with the need to
transition to a low-carbon economy
employees with the necessary skills
for now and into the future remains
challenging in a competitive market
• Growing negative sentiment towards
companies in the fossil fuels sector
• Increasing expectations on
companies to solve societal issues
• Increased reputational risks due to
conduct of employees, contractors
and suppliers
• Manufactured capital remains costly
with delays in project completions
hampering growth
• As the world evolves at an
• In a low-growth environment,
unprecedented pace, technologically
and in terms of the operating context,
rapid innovation and ideation is more
important than ever and remains
challenging
financial capital remains costly and
scarce
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Our activities
What we do
Our business activities
align with our strategy
of strengthening our
resilience and ensuring
we deliver sustainable value
through a robust portfolio
in a low-carbon economy.
Our activities comprise:
Responsible mining
• Delivering resources to support the
country’s energy needs
Renewable energy operations
(own use and grid supply)
• Generating renewable energy projects
• Responsible environmental stewardship
and services
• Build a leading global renewable energy
solutions business by 2030
Our purpose guides our activities, ensuring we continue providing critical resources that support
South Africa’s sustainable economic and social development in a way that will accelerate change and
ultimately safeguard the value we create for our stakeholders over time. We are committed to making
a deliberate positive impact through our physical outputs and the way we do business.
Strategising for future
relevance and a just transition
• Developing a roadmap for a just
Diversified equity investments
• SIOC (iron ore)
• Black Mountain (zinc)
transition to a low-carbon economy
Delivering sustainable impact
and responsible practices
• Driving diversity and inclusion
• Values-based leadership
• Effective governance
• Investments in community
development initiatives
• Stakeholder engagement and
communication
18 | Exxaro Resources Limited
Integrated report 2022
Exxaro Resources Limited
Integrated report 2022 | 19
Renewable
energy
671GWh wind energy
(2021: 724GWh)
Our outcomes
Creating, preserving or eroding value: To ensure sustainability, our positive impacts must reach far and wide. We must be a catalyst
for meaningful change with our legacy measurable long after mining ceases.
Natural capital
– Despite a focused approach to
environmental stewardship, we have
an overall negative impact on the
environment and thus erode natural
capital. This is because we extract
natural resources as part of our
business activities and depend on these
natural resources.
• Mine responsibly
• Minimise our environmental impacts
• Actively participate in the just energy
transition to a low-carbon economy
• Reduce the risk of stranded assets
• Active land management
• Ensure biodiversity stewardship
• Increase the proportion of high-quality
coal in our product mix
• Continue improving our good cost
control and resource efficiency
Human capital
+ As part of ensuring we have the right
people to drive us forward, we invest
in, upskill and offer our employees
an attractive value proposition,
thereby increasing our overall human
capital. This investment extends to
potential future employees and the
communities who provide labour to
our operations.
= We preserve the value of our human
capital by being mindful of the health
and safety of our employees and
host communities, and striving to
achieve zero harm through collective
responsibility, commitment and risk
awareness.
Social and relationship capital
+ We deliver value to our host
communities through our impact
at scale initiatives, SLP commitments,
stakeholder engagements, attracting
participation from black-owned
suppliers and our commitment to the
UNGC principles.
= We are aware of the impact
mining operations have on host
communities, now and at the end of
a mine’s lifecycle. We aim to mitigate
this by ensuring a just transition of
our operations and our communities’
long-term sustainability.
• Remain committed to achieving zero
• Continuously seek ways to engage
harm
• Work with employees and contractors
to eradicate any safety incidents
• Continue to invest in employees
and maintain relationships of
mutual respect and benefit with our
stakeholders
• Maintain a robust ESG framework to
enable strategic decision making and
governance while considering our
long history and purpose to guide our
transition within the context of our
local and global realities
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^ Carbon intensity: 0.5% increase
(2021: 13% increase)
^ Water intensity: 0.5% increase
~ Environmental incidents: zero
(2021: 9% increase)
(2021: zero level 3)
~ Valid mining rights: 100% (2021: 100%)
^ Safety stoppage directives: seven
(2021: two)
^ Employee and contractor fatalities:
^ Lost-time injury frequency rate
one (2021: zero)
(LTIFR): 0.05 (2021: 0.08)
~ Occupational health incident frequency
rate (OHIFR): 0.16 (2021: 0.16)
^ Scarce skills retention: 4.4%
(2021: 3.7% (on target))
^ Community incidents*: 13 (2021: 14)
with one day shift lost at Matla
^ Top-quartile mining performer
in ESG governance structure
ESG analyst rating: 4.0 (2021: 3.7)
^ BEE level: 3 (2021: level 2)
* Incidents are protests that did not lead to production
stoppage.
Affected SDGs
20 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Our business model does not operate in
isolation. It impacts and is impacted by our:
• Risks and opportunities (page 26)
• Strategy and resource allocation (page 44)
• Performance (page 86)
• Stakeholders (page 36)
Impact on value: + Net increase in value = Net value preservation
Year-on-year change: ^ Positive increase
^ Negative increase
~ Unchanged
– Net value erosion
^ Positive decrease
^ Negative decrease
Iron ore (SIOC)
R4.9 billion adjusted
equity-accounted
income
(2021: R9 billion)
Waste
1 624t hazardous waste
(2021: 520t)
971ktCO2e emissions
(2021: 995ktCO2e)
This should be embodied in creating opportunities and economies that sustain communities and broader society for future generations.
Manufactured capital
+ Our investment in our portfolio of
quality assets to meet changing market
demands increases our manufactured
capital.
– However, these investments decrease
our financial capital and natural capital.
Intellectual capital
+ We continue increasing our
competencies across mining and
renewable energy. Our focus on
business resilience, investments
in innovation, digitalisation and
technology — for example, our
renewable energy risk and opportunity
domain analysis (RRODA) tool/
platform — increase intellectual
capital.
+ Our collective knowledge, skills
and resources positively impact
human, social and relationship,
and manufactured capital.
Financial capital
+ To ensure we positively impact
financial capital and create value
over time, we have a strong balance
sheet and cash-generative coal
business, a strategy that builds off
our core purpose and capabilities,
and a leadership team fully aligned
with the need to create a carbon-
resilient business. We deliver
financial value and empower people
to create impact and self-sustaining
economic activity.
= We invest and distribute our
financial resources to support our
strategy, increase efficiency, expand
operations and maximise value.
• Optimise our manufactured assets
• Fast track our decarbonisation and
investments to generate predictable
long-term cash flows and increase
portfolio diversification
• Maintain our competitive advantage
through innovation and digitalisation
• Build on an already successful business
as we mature, using our intellectual
capital and differentiation with a long-
term vision to develop a sustainable,
growth-orientated, value-driven
company
• Become a leading international
renewable solutions provider by the end
of the decade
^ Marginal timeline overruns in
~ Implementation cost for mega-projects
mega-projects
on target
^ Core system availability: 97.94%
(2021: 99.55%)
^ Secure scorecard: 76.35%
(2021: 63.45%)
• Continue focusing on initiatives
designed to lower costs, increase quality
and manage our risk profile to deliver
financial value
• Carefully consider how we allocate
capital to achieve our strategic goals
and invest in our current operations and
future growth plans
• Create value for our broader
stakeholders by continuously delivering
solid returns to shareholders and
ensuring we have the financial resources
to implement our growth plans and
social development objectives
^ EBITDA margin: 41% (2021: 33%)
^ Return on capital employed (ROCE):
45% (2021: 36%)
^ Adjusted HEPS: 6 016 cents per share
(2021: 4 683 cents per share)
^ Market capitalisation: R75.9 billion
(2021: R53.4 billion)
Exxaro Resources Limited
Integrated report 2022 | 21
Our material matters
Materiality considerations are a fundamental guide to our reporting. Our material
matters reflect the factors that impact our ability to deliver and sustain value for
ourselves, stakeholders and the natural environment.
Determining materiality
We annually assess our material matters. Since 2021, we have
followed a detailed double materiality determination process
to enable us to identify our impact materiality (our impact on
society, communities and the environment) and our financial
materiality (matters that impact our ability to generate revenue
and preserve shareholder value over time). This approach reflects
the combined guidance of the Integrated Reporting Framework
and GRI, and results in matters that are prioritised and grouped
into themes to inform our integrated and ESG report content.
Materiality determination process
• Assess the external context, including global, local and industry
risks, opportunities and trends
• Critically assess stakeholder reports
• Analyse external sources, including materiality mappers
• Review and benchmark our peers’ material matters
• Consider internal inputs, including risk registers, stakeholder
surveys and strategy
• Prioritisation of material matters by senior management and
executives
• Review and approval of matters by executives and those
charged with governance
• Output: Material matters for reporting purposes
2022 material matters
The 2022 review confirmed that all our previous matters remain
material and identified new matters for consideration under our
themes. The materiality matrix that follows reflects 35 material
matters grouped into seven themes, indicating their respective
impact and financial materiality. Recognising that materiality is
dynamic in nature, the process is conducted annually, allowing
us to regularly and timeously reflect on matters that may
evolve from being material from an impact perspective, to being
financially material.
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High
Impact on Exxaro’s ability to create value over time
Very high
Adapting to a changing context
Country risk*
Geopolitical context
Macro-environment
Supporting a just transition to a low-carbon economy**
Commodity price risk*
Responsible environment stewardship*
Water stewardship*
Impact of climate change*
Managing our pollution*
Closure planning and rehabilitation management*
Carbon emissions reduction*
Waste management*
Biodiversity management*
Building sustainable communities
Social licence to operate*
Social acceptance and community unrest*
Supporting a just transition to a low-carbon economy**
Impacts on local communities (positive and negative)*
Value sharing*
Job and business creation
Resettlement and land use*
Human rights
Helping our people thrive
Health, safety and wellness
Workforce: culture, capability, diversity, inclusion and innovation
Labour relations
Executing our strategy
Diversity into minerals
Build a leading renewable energy solutions business
Coal portfolio optimisation
Driving business resilience
Supply chain and logistical impediments*
Financial performance and resilience
Capital allocation
Cyber risk*
Innovation and digitalisation
Principled governance
Transparency, ethics and integrity
Embedding ESG in response to increased regulation and for
sustainability*
Legal, regulatory and compliance excellence
Risk management*
* New matter or theme. ** Dual matter (across two themes).
22 | Exxaro Resources Limited
Integrated report 2022
Our material themes
Adapting to a changing context
The operating context is changing rapidly. Social,
political and economic issues all impact our ability to
create value. We operate in a long-term asset class
with significant infrastructure investment. To remain
competitive, we must respond to the current context
and anticipate the future.
Material matters
• Country risk (failing infrastructure, institutions and
service delivery in South Africa)
• Geopolitical context
• Macro-environment
• Supporting a just transition to a low-carbon
economy
• Commodity price risk
Responsible environmental stewardship
We acknowledge the impact of mining in our
ecosystem. We must ensure we are responsible
stewards of natural resources upon which our
operations and communities rely to ensure a
sustainable future for our employees, communities
and the planet.
Material matters
• Water stewardship
• Impact of climate change
• Managing our pollution
• Closure planning and rehabilitation management
• Carbon emissions reduction
• Waste management
• Biodiversity management
Building sustainable communities
We operate in an environment of stakeholder
capitalism#. Our business activities impact our
stakeholders and they, in turn, respond to these
impacts.
Our social licence to operate depends on how we look
after our communities and the natural world around us,
and adherence to legislation.
In addition to the many programmes we have in place
to support our communities’ health and wellbeing,
we are also committed to a socially just transition,
sensitive to the potential impacts for Exxaro, our
communities, South Africa and the planet.
# Where organisations are oriented to serve the interests of all their
stakeholders.
Material matters
• Social licence to operate (including community
relations, collaboration and engagement)
• Social acceptance and community unrest
• Supporting a just transition to a low-carbon economy
• Impacts on local communities (positive and negative)
• Value sharing
• Job and business creation
• Resettlement and land use
• Human rights
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Related risks
• Key dependency on Eskom as a key
customer
• Inflationary pressures
• Water scarcity (medium to long
term)
• Country risk (political)
Strategic response
• Transition at speed and scale
• Make our minerals and energy
businesses thrive
• Be carbon neutral by 2050
• Become a catalyst for economic
growth and environmental
stewardship
Related capitals
Related SDGs
Our operating context (page 12)
and business resilience (page 88)
Related risks
• Key dependency on Eskom as a key
customer
• Inflationary pressures
• Water scarcity (medium to long
term)
Related capitals
• Country risk (geopolitical)
Related SDGs
Strategic response
• Transition at speed and scale
• Make our minerals and energy
businesses thrive
• Be carbon neutral by 2050
• Become a catalyst for economic
growth and environmental
stewardship
Related risks
• Unavailability of rail capacity
• Inflationary pressures
• Water scarcity (medium to long
term)
Strategic response
• Empower people to create impact
• Become a catalyst for economic
growth and environmental
stewardship
Our environment (page 103)
Related capitals
Related SDGs
Social licence to operate (page 101)
Exxaro Resources Limited
Integrated report 2022 | 23
Our material matters continued
Helping our people thrive
Exxaro’s employees are the enablers of our
performance. To deliver on our strategic goals,
we foster a culture that supports adaptability and
innovation, while leveraging the strength of diversity,
equity and inclusion.
We are committed to protecting our people’s
health, safety and wellness and building trusting
relationships.
Material matters
• Health, safety and wellness
• Workforce: culture, capability, diversity, inclusion
and innovation
• Labour relations
Executing our strategy
Climate change is not a refutable occurrence.
We are committed to the Paris Agreement and have
established a strategy and business objectives to
respond to both the short and long-term risks and
opportunities presented by climate change.
Material matters
• Coal portfolio optimisation
• Diversify into minerals
• Build a leading global renewable energy solutions
business
Related risks
• Not achieving growth objectives
• Fatal risk incidents
Strategic response
• Make our minerals and energy
businesses thrive
• Empower people to create impact
• Become a catalyst for economic
growth and environmental
stewardship
Related capitals
Related SDGs
Our people (page 92)
Related risks
• Unavailability of rail capacity
• Fatal risk incidents
• Not achieving growth objectives
• Inflationary pressures
• Country risk (geopolitical)
• Water scarcity (medium to long
term)
• Legal and regulatory non-
compliance
Strategic response
• Transition at speed and scale
• Make our minerals and energy
businesses thrive
• Empower people to create impact
• Be carbon neutral by 2050
• Become a catalyst for economic
growth and environmental
stewardship
Related capitals
Related SDGs
Our strategy (page 44)
Driving business resilience
Underpinning our strategic objectives is the drive
to enhance our business resilience through safe
production, delivering financial results, effective
capital allocation, compliance excellence, entrenching
innovation and capitalising on digitalisation.
Material matters
• Supply chain and logistical impediments
• Financial performance and resilience
• Capital allocation
• Cyber risk
• Innovation and digitalisation
Related risks
• Unavailability of rail capacity
• Key dependency on Eskom as a key
customer
• Cybersecurity attacks impacting
business
• Inflationary pressure
• Country risk (geopolitical)
Strategic response
• Make our minerals and energy
businesses thrive
• Become a catalyst for economic
growth and environmental
stewardship
Related capitals
Related SDGs
Business resilience (page 88)
24 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Principled governance
We conduct ourselves so as to strengthen our
business reputation as a good corporate citizen and
resilience in a changing environment.
Related risks
• Unavailability of rail capacity
• Dependency on Eskom as a key
Related capitals
Material matters
• Transparency, ethics and integrity
• Embedding ESG in response to increased regulation
and for sustainability
• Legal, regulatory and compliance excellence
• Risk management
customer
• Cybersecurity attacks impacting
business
• Inflationary pressure
• Country risk (geopolitical)
Strategic response
• Make our minerals and energy
businesses thrive
• Become a catalyst for economic
growth and environmental
stewardship
Related SDGs
Governance for value creation
(page 51)
Exxaro maintenance team at work
Exxaro Resources Limited
Integrated report 2022 | 25
Our business risks and opportunities
The mining industry has faced numerous challenges in the last three years. In an uncertain
and volatile environment, we rely on our mature risk management strategies to make agile
and effective decisions to mitigate risk exposure and leverage opportunities.
Our risk management approach and governance
In a volatile political and economic environment characterised by change and uncertainty, risk management is a critical success factor for
us to achieve strategic and business objectives to remain sustainable and protect shareholder value. Embedding risk management into our
daily activities and processes is key to making informed decisions and proactively planning for possible future unwanted events stemming
from internal and external sources.
Our enterprise risk management (ERM) process is a strategic initiative fully supported by the board and executive management. The ERM
framework provides a proactive, systematic and integrated approach to risk management. The principles outlined in the framework form
the foundation for our risk management philosophy, mission and vision. The ERM framework and process illustrated below are based
on principles published by the Committee of Sponsoring Organisations of the Treadway Commission, the ISO 31000 international guideline
on risk management and King IV. It also considered applicable codes of best practice such as ISO 9001, 14001 and 18001. The ERM
framework is regularly reviewed to ensure it remains relevant and effective.
Risk management process
Environment (internal and external)
1
Objective
setting
Set Exxaro
strategy and
objectives
2
Establish the
context
Understand
the event,
hazard and
environment
3
Risk
identification
Risk name and
description
4
Risk analysis
Unpack drivers
(root causes) and
impact
5
Risk evaluation
Determine
the inherent,
residual and
desired risk
score
6
Risk treatment
Implement
controls to
manage the risk
(corrective or
preventive)
7
Monitor and
review
Review and
monitor on a
frequent basis
Reporting of risks
We follow a cascade approach by identifying risk events at the organisation’s strategic, tactical and operational layers. Significant risks
from the strategic layer are filtered down to the tactical and operational layers and are supplemented by the identification of risks that
have an impact across the organisation. Significant risks originating at an operational layer will also be elevated to a strategic or tactical
layer if the residual risk and residual risk gap exceed certain thresholds. In this way, the process incorporates a top-down/bottom-up view
of risks within the organisation.
1 Strategic
Strategically promote partnership and set strategic direction
• Use risk management to test robustness and sustainability of strategy
• Commission risk-based audits
2 Tactical
Tactically embed strategy, manage service performance, issues and expectations
• Use risk management to ensure company and commodity strategy is achieved
• Monitor tactical and operational risks
• Monitor general controls
Operationally render and manage day-to-day service delivery and queries
• Day-to-day management of risks and monitoring key controls (operations and projects)
3 Operational
26 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Risk appetite and thresholds
Exxaro’s risk management philosophy identifies risk management as a strategic enabler rather than being compliance-driven. This ensures
that we think and act proactively at every layer to pursue the company’s strategic objectives.
The board and executive committee monitor KPIs quarterly to ensure all risks and key metrics are within Exxaro’s risk appetite. The risk
appetite framework is updated annually or when deemed necessary as part of the strategic planning process.
Strategy and strategic objectives linked to sustainability capitals
Sustainability capitals
Natural
capital
Human
capital
Social and
relationship
capital
Manufactured
capital
Intellectual
capital
Financial
capital
Set risk threshold
Modify risk thresholds
Performance against our strategy and future focus (page 47)
Opportunities
We use the ERM framework to identify and realise opportunities — for example, early value coal extraction to maximise value in the short
to medium term in view of the climate change risk. We believe that, for Exxaro to remain sustainable in the short term, it is important
to adapt the minerals business to change and identify and pursue possible opportunities that ultimately create value, such as reducing
stranded high-value Coal Reserve risk.
The opportunities we identified in 2022 informed our Sustainable Growth and Impact strategy.
Opportunity
The drive for future-facing minerals presents opportunities to invest in exploration
projects at various stages through our balanced portfolio approach towards capital
allocation and managing risk and returns
Private-public participation in local rail operations is an opportunity for value
unlock and vertical integration. We are currently investigating this opportunity
The multidimensional poverty index highlights the drivers of poverty and inequality
in our communities, allowing us to focus our social impact efforts towards
sustainable impact. We will focus on education, land use and local economic
development
The early value coal strategy and our ability to maximise resource to market
opportunities by leveraging the low cost and flexibility of our coal assets and
reserves
Strategic objective
Transition at speed and scale
Make our minerals and energy businesses thrive
Become a catalyst for economic growth and
environmental stewardship
Make our minerals and energy businesses thrive
Accelerated expansion into renewable energy will support our low-carbon
transition
Be carbon neutral by 2050
Make our minerals and energy businesses thrive
Impact investments provide an opportunity for Exxaro to leverage this financing
market to support our just transition ambitions and align with our Sustainable
Growth and Impact strategy
The hydrogen economy was identified as a strengthening signal through our
foresight process and market analysis conducted in 2021. Following this analysis, we
concluded that hydrogen provides tailwind opportunities for our energy business
and is not of significant interest to necessitate a horizon 2 shift at this stage
Nature-based solutions to mitigate the impacts of climate change were identified
as an opportunity, especially in lieu of the vast amount of viable land that Exxaro
has at our disposal. We intend to maximise this opportunity through our Sustainable
Growth and Impact strategy
Empower people to create impact
Make our minerals and energy businesses thrive
Be carbon neutral by 2050
Investing in self-generation facilities is an opportunity we are leveraging, which
aligns with our renewable energy growth strategy.
Make our minerals and energy businesses thrive
Be carbon neutral by 2050
Exxaro will develop a 68MW photovoltaic farm, near Grootegeluk, through its SPV,
Lephalale Solar Proprietary Limited. This is our first self-generation project to
expand and diversify within the renewable energy space, supporting low-carbon
emissions, and long-term savings on electricity usage at Grootegeluk
The global energy transition provides an opportunity to mine and supply the
minerals that support green technologies. Through a rigorous screening process,
Exxaro identified copper, manganese and bauxite as being most aligned to our
experience, capabilities and market forecast
Make our minerals and energy businesses thrive
Exxaro Resources Limited
Integrated report 2022 | 27
Our business risks and opportunities
continued
2022 risk trend
The trend report indicates changes in the residual risk score when comparing the 2022 and 2023 financial years. Our risk scores are derived
from the product of the likelihood and the impact of the unwanted event*. The top 10 risks are arranged from highest to lowest risk score.
The 2023 ranking represents the key possible unwanted events we anticipate having a potential impact on our ability to achieve our strategic
imperatives in 2023. These risks are reviewed on a quarterly basis and could change significantly depending on the internal and external root
causes that drive these risks to materialise. These risks are prioritised and treatment strategies have been designed and implemented. The
effectiveness of these treatments will be monitored on an ongoing basis to ensure the risks are managed down to acceptable risk levels.
2022 top risks
Ranking
2023 top
risks (forward-
looking)
Ranking
in top 10
trend
Comments
Unavailability of
rail capacity
Eskom systemic
risk
Community
unrest
Cybersecurity
threats
Health and safety
concerns
Cost
competitiveness
of products
Climate change
concerns
Loss of social
licence to operate
Unable to
secure sufficient
insurance cover
1
2
3
4
5
6
7
8
9
Unavailability of
rail capacity
Key dependency
on Eskom as a
key customer
Cybersecurity
attacks impacting
business
Fatal risk
incidents
Ø
Ø
Ù
Ù
Not achieving
growth objectives Ù
Inflationary
pressures
Country risk
(geopolitical)
Ø
Ù
TFR productivity remains a new challenge. Closing the gap initiatives
implemented to reduce impact of TFR performance on exports (other
optionalities and Free Carrier sales). High level engagements with TFR
continue with view to find solutions to current challenges and improve
train availability.
The utility continues to have operational challenges. Some of the
challenges experienced by Eskom require additional funding which will
place the utility under financial strain.
The risk of cyberattacks remains high. Following an incident in
October 2022 and the outstanding items on the cybersecurity score,
a comprehensive list of actions was compiled to lower the residual
risk. There are two categories of actions: (a) actions from the forensic
report received from the Microsoft Detection and Response Team and
(b) a list of actions identified internally with service providers.
Exxaro’s focus will be on our five strategic pillars:
• Incredible leadership
• Safety communication
• Risk management
• Safety training
• Consequence management
The primary growth lever for the organisation is inorganic growth
through acquisition. Possible contributing factors could also include:
• Core merger and acquisition capabilities
• Ability to structure and execute a deal
• Risk appetite associated with making deals
• Access to possible deals (beyond publicly listed)
• Competition for assets
• Speed at which we are able to process deals
Higher than inflation increases in the cost of consumables (eg oil
prices, logistical costs, etc) and lower production volumes result into
an increase in unit cost.
The current political environment, slow economic recovery,
deteriorating state infrastructure and other macro-economic factors
have an adverse effect on the country risk assessment.
Loss of licence to
operate
Ø Ongoing monitoring of compliance with specific focus
on licence to operate.
Legal and
regulatory non-
compliance
Ù
Ù
Changes to regulatory framework in mining and energy are constantly
monitored. Awareness and training on compliance matters are planned
for 2023. Ongoing monitoring of legal and regulatory compliance.
Additional augmentation of the Mokolo Crocodile Water Augmentation
Project (MCWAP) scheme through sourcing additional water from
Crocodile River system (MCWAP2) will strengthen the yield of the
overall system and alleviate the medium to long-term risk at our
Grootegeluk operation.
Our Mpumalanga operations are less vulnerable to water scarcity as
they have an overall positive water balance.
Exxaro will set an internal price of water in 2023 to further drive water
conservation awareness at our operations.
Country risk
(geopolitical)
10
Water scarcity
(medium to long
term)
* Risk = f (likelihood of risk occurring x Impact of the risk).
Ù Ranking in the top 10 is higher compared to previous year
Ø Ranking in the top 10 remained unchanged compared to previous year
Ú Ranking in the top 10 reduced compared to previous year
28 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Top 10 heat map
Exxaro’s top 10 risks are plotted inherently (before controls) and residually (after controls) on the heat maps below, followed
by an outline of our key identified risks, the main drivers, their potential impacts and mitigating treatments. We have considered
internal and external risks. Our mitigation strategies depend on the severity of impact and likelihood of occurrence.
Inherent risk
1
5
2
3 4
6
78
9
10
Residual risk
1
3
2
4
5
6
7
8
9
10
Almost certain 81% – 100%
Catastrophic 81 – 100
Almost certain 81% – 100%
Catastrophic 81 – 100
Almost certain 81% — 100%
Likely 61% – 80%
Likely 61% — 80%
Possible 36% – 60%
Likelihood
Unlikely 11% – 35%
Possible 36% — 60%
Unlikely 1 1 % — 35%
Likelihood
Rare 1% – 10%
Major 61 – 80
t
c
Minor 11 – 35
Moderate 36 – 60
a
I m p
Major 61 — 80
Moderate 36 — 60
I m p
t
Minor 1 1 — 35
a
Insignificant 1 – 10
c
Catastrophic 81 — 100
Almost certain 81% — 100%
Likely 61% – 80%
Likely 61% — 80%
Possible 36% – 60%
Likelihood
Unlikely 11% – 35%
Possible 36% — 60%
Unlikely 1 1 % — 35%
Likelihood
Rare 1% – 10%
Major 61 – 80
Moderate 36 – 60
Catastrophic 81 — 100
Major 61 — 80
c
Minor 11 – 35
I m p
a
t
Moderate 36 — 60
I m p
t
Minor 11 — 35
a
Insignificant 1 – 10
c
Rare 1% – 10%
Insignificant 1 – 10
Rare 1% – 10%
Insignificant 1 – 10
Managing our risks
Various risk treatment strategies are evaluated, including risk avoidance, reduction, sharing, acceptance or transferring. When selecting
risk treatment options, we consider the values and perceptions of stakeholders and the most appropriate ways to communicate them.
The decision to implement a treatment is based on risk tolerances, the effect the treatment will have on the impact and likelihood
ratings, and the results of the cost versus benefit evaluation. Once a risk treatment is implemented, Exxaro develops ongoing
mechanisms to monitor the implementation and effectiveness of the risk treatment.
Lines of defence
1 Management of risk (risk owner)
2 Management support and oversight
3 Independent assurance
Risk trend
Ù Residual risk increased compared to previous year
Ú Residual risk decreased compared to previous year
Ø Residual risk remained unchanged compared to previous year
« New
1. Unavailability of rail capacity (2022: 1)
Drivers
Impacts
• Cable theft and derailments
• Transnet’s locomotive availability
• Inadequate fleet maintenance due to lack of spares at TFR
• Financial viability of Transnet
• TFR skills shortage to maintain operations
• Operational stoppages
• Financial loss
• Unable to meet contractual agreements and
2022/23 budget
• Unable to grow and execute the value
extraction strategy
• Shareholder dissatisfaction on lower
returns
• Impairment of RBCT investments
Treatments
Outlook
• Marketing and logistics team exploring options to evacuate
export-bound coal
• Continuous engagement with TFR to understand issues
and provide assistance
• Engage Transnet Port Terminals for a possible contracting
to export via Richards Bay Transnet Port Terminals
• Implement a logistics solution (alternative options)
Operational and maintenance challenges are
expected to continue to have a significant
impact on Exxaro. Sustainable solutions to
current challenges will be explored through
proactive engagement with Transnet and
the industry.
Strategic KPIs
• Core operating margin
• Annualised ROCE
• Annual core HEPS and net debt to annualised EBITDA
Strategic objective impacted
Make our minerals and energy businesses
thrive
Material theme
Capitals impacted
Line of defence
1
Risk ranking trend
Ø
Exxaro Resources Limited
Integrated report 2022 | 29
Our business risks and opportunities
continued
2. Key dependency on Eskom as a key customer (2022: 2)
Drivers
Impacts
• Inadequate environmental financial provision at tied
• Cost of coal production becomes
operations
uncompetitive at Matla (lack of capital)
• Environmental rehabilitation fund shortfall at Matla
• Realisation of approved funding for capital requirements
(Matla capital project programme)
• Further delays in Eskom’s Medupi power station operating
at full capacity
• Eskom not honouring commercial rights and obligations as
per coal supply agreements (Eskom liquidity)
• Eskom liquidity risk
• Commercial risk attached to long-term contracts
• Loss of revenue
• Reputational damage
• Operational constraints
• National grid failure
• Eskom declares force majeure
Treatments
Outlook
• Enforce coal supply agreements and award arbitration in
terms of environmental funding
• Stakeholder engagement
• Ongoing discussions on coal supply agreements
Strategic KPIs
• Adjusted operating margin
• Annualised ROCE
• Annual adjusted HEPS and net debt to core EBITDA
Eskom’s financial challenges will remain
a concern in the short to medium term as
government continues to reform South
Africa’s electricity sector and Eskom
implements its turnaround strategy and
restructuring.
Strategic objective impacted
Make our minerals and energy businesses
thrive
3. Cybersecurity attacks impacting business (2022: 4)
Drivers
Impacts
• Large number of devices connected (especially in
• Production loss and ransom resulting in
operations) to the corporate network that requires to be
managed (security updates)
• Vulnerability due to lack of awareness. People exposing
Exxaro to cyberattacks
• Most employees working remotely
financial loss
• Loss of information
• Business interruption
• Legal and regulatory impacts (Protection of
Personal Information, 2013 (Act 4 of 2013)
(POPIA) implications)
Treatments
Outlook
• Ensure we have monitored security governance in place
• Data loss prevention strategy
• Stricter security practices
• Ensure regular and ongoing security awareness
• Monitor compliance with POPIA
• Business continuity management plan and disaster
recovery testing
Strategic KPIs
• Microsoft Secure Score
The prevalence of cybersecurity attacks,
specifically ransomware the most prevalent,
is expected to increase. We will continue to
improve the robustness of the cybersecurity
posture.
Exxaro continues to benchmark its
cybersecurity profile to enhance our
efforts on vulnerability identification and
management.
Strategic objective impacted
• Make our minerals and energy businesses
thrive
Material theme
Capital
impacted
Lines
of defence
1 and 2
Risk ranking
trend
Ø
Material theme
Capitals
impacted
Line
of defence
1, 2 and 3
Risk ranking
trend
Ù
30 | Exxaro Resources Limited
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Drivers of value creation
Transitioning the business for growth
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Our Mineral Resources and Mineral Reserves
4. Fatal risk incidents (2022: 5)
Drivers
Impacts
• Lack of fatal risk ownership and leadership support
• Under-classification of critical controls to manage fatal risk
• Inadequate resource allocation to implement and manage
critical control management programme
• Fatal health and safety incidents
• Operational stoppages
• High insurance premiums
• Loss of licence to operate
• Decrease in quality of life
• Section 54 by the Department of Mineral
Resources and Energy (DMRE)
• Loss of productivity (deaths, medical
incapacity or sick leave)
Treatments
Outlook
• Implementation of critical control management programme
with strong emphases placed on the effectiveness of
preventive controls
• Evaluate the effectiveness of the critical controls through
compulsory quarterly verifications
• Identification of the critical control performance trigger for
shutdown, critical control review or investigation
Our employees’ safety remains a top priority.
Although good safety performance (LTIFR)
has been demonstrated in the recent past,
we continue to implement our safety strategy
with a focus on safety improvement in our
quest for zero harm.
Strategic KPIs
• Fatalities
• LTIFR
• OHIFR
• Number of health and safety stoppage directives in terms
of section 54 of the Mine Health and Safety Act, 1996
(Act 29 of 1996)
Strategic objective impacted
Make our minerals and energy businesses
thrive
5. Not achieving growth strategy (new top 10)
Drivers
Impacts
Material theme
Capitals
impacted
Lines
of defence
1, 2 and 3
Risk ranking
trend
Ù
• Volatile economic and market conditions
• Perceived increased business risk
• Regulatory uncertainty in South Africa
• Speed at which we are able to process deals
• Competition for assets
• Access to possible deals
• No risk appetite associated with making deals
• Unavailability of skills
• Reputational damage
• Unable to transition from coal to other
Material themes
minerals
Treatments
Outlook
• Regular communication on strategy, capital allocation and
returns against targets
• Disclosure of target and performance against strategy and
capital allocation
• Build critical skills and capacity to achieve strategy
• Clarity of transition strategy to low-carbon future and
The primary growth lever for the organisation
is inorganic growth through acquisition. We
will continue to pursue opportunities for
growth through mergers and acquisitions.
expected returns
Strategic KPIs
• All
Strategic objective impacted
• Transition at speed and scale
• Make our minerals and energy businesses
thrive
• Empower people to create impact
• Be carbon neutral by 2050
• Become a catalyst for economic growth and
environmental stewardship
Capitals impacted
Lines
of defence
1, 2 and 3
Risk ranking
trend
Ù
Exxaro Resources Limited
Integrated report 2022 | 31
Our business risks and opportunities
continued
6. Inflationary pressures (2022: 6)
Drivers
Impacts
• Not achieving productivity indices (benchmark standards)
• Cost containment discipline not uniform
• Deteriorating mining conditions (decreasing yield
• Financial loss
• Margin squeeze
• Premature mine closure and allocation of
and increasing stripping ratio)
• Not meeting production volumes
• Exchange rate volatility
• Commodity price decline
• Inaccurate financial modelling
• Higher fixed costs (corporate office costs charged to
business units (BUs))
• South African geographical constraints
costs to other operations
• Reduced earnings will impact approval of
capital projects
Treatments
Outlook
• Embrace technology and innovation initiatives to improve
productivity performance
• Optimise operating model and avoid duplicated activities
• Create strategic partnership to leverage economies of scale
• Ensure balance between capital optimisation and
prioritisation
• Investigate and divest non-core and non-robust assets
• Review and monitor performance of suppliers and service
providers
• Increased awareness of cost management
• Focus on sustainable cost reduction programmes and
business improvement initiatives
• Planned reviews by coal operating company
• Rebalancing product chains for better use of infrastructure
Strategic KPIs
• Adjusted operating margin
• Annualised ROCE
• Annual adjusted HEPS and net debt to annualised EBITDA
Inflationary pressure is expected to continue
given challenges in the global economy
exacerbated by the Russia-Ukraine conflict.
We continue tracking and monitoring
production efficiency initiatives to manage
ongoing volatile conditions and cost pressures,
focusing on reducing consulting costs and
continued focus on production efficiencies.
Strategic objective impacted
Make our minerals and energy businesses
thrive
Material theme
Capitals impacted
Lines
of defence
1, 2 and 3
Risk ranking
trend
Ø
32 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
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Our performance
Our Mineral Resources and Mineral Reserves
7. Country risk (geopolitical) (2022: 10)
Drivers
Impacts
• Lack of investment and low employment creation
• Uncertainty about land ownership and security of tenure
• Limited local government capacity to deliver services
• Potential for nationalisation sentiment
• Continued poor economic performance will influence policy
and political outcomes
• Slow implementation of required reforms
• Corrupt practices (private and public sector)
• Rating agencies downgrade South Africa to junk status
• South Africa’s real GDP growth forecast to be 0.6% for
2023
• Limited fiscal capacity
• National party leadership elections every five years
• Nature of influence of opposition parties
• Political instability
• Policy uncertainty
• Possibility of community unrest for political
support
• Stakeholder dissatisfaction
• Potential regulatory penalties/oversight
• Increased compliance burden
• Potential increase in royalties/taxes
• Reduced investment opportunities (increase
in cost of capital)
• Increased cost of doing business (due to
increased compliance burden)
• Fewer opportunities for co-investment with
government in community development
• Breakdown in government relationships
with Exxaro
• Higher expectation from society and
government for more social investment
• Potential for junk status rating and/or
downgrade of Exxaro’s credit status due to
link to Eskom
• Pressure on revenue
Material theme
Treatments
Outlook
Capitals impacted
• Align our purpose with governance and ethics
• Continuously monitor independent country risk assessment
report
Socio-political risks, policy uncertainty and
sluggish South African economy are expected
to continue influencing this risk.
• Engage with shareholders on minerals business and capital
allocation for new strategy
• Establish and participate in collaborative regional
development platforms for community impact
• Develop renewables strategy that could result in new
investment and electricity security
• Long-term investment perspective for growth, development
and impact
• Municipal capacity building
• Ongoing engagement with Minerals Council and provincial
and local governments
• Strive for full compliance with relevant legislation for
business continuity
• Continued support of relevant business lobby groups
to engage business and government
• Increased and improved analysis of dynamic political
landscape and impacts on stakeholders
• Increased focus on provincial and local players and
intensified engagement across local stakeholder networks
to mitigate shocks “from above”
Strategic KPIs
• N/A
Line
of defence
1
Risk ranking
trend
Ù
Strategic objectives impacted
• Transition at speed and scale
• Make our minerals and energy businesses
thrive
• Empower people to create impact
• Be carbon neutral by 2050
• Become a catalyst for economic growth and
environmental stewardship
Exxaro Resources Limited
Integrated report 2022 | 33
Our business risks and opportunities
continued
8. Loss of licence to operate (2022: 8)
Drivers
Impacts
• Delays in approval of licences and authorisations
• Increased state interventions in the mining sector:
expectations to invest and transform
• Unable to achieve SLP targets as approved (annual and
five-year projects)
• Unable to meet legislative targets, eg Mining Charter and
• Directives issued by DMRE to remedy
• Reputational damage
• Penalties and fines
• Financial loss
• Community unrest
• Production stoppages
B-BBEE
• Lack of understanding of collaboration principles by other
Material themes
Capitals impacted
stakeholders
• Increased social activism
Treatments
• Adherence to commitments in the SLP as a minimum
• Implementation of human resource development
programme
• Pursue identified initiatives to progressively improve
Exxaro’s B-BBEE rating
• Compliance performance management
• Conduct SLP audits
Strategic KPIs
• B-BBEE level
• Mining Charter III KPIs
• Compliance KPIs (safety, health and environmental)
Outlook
We will continue focusing on delivery of
our commitments to our licence to operate.
Furthermore, the implementation of the Social
Impact strategy is expected to deliver greater
impact on the communities where we operate
Strategic objective impacted
Make our minerals and energy businesses
thrive
Lines
of defence
1, 2 and 3
Risk ranking
trend
Ø
9. Legal and regulatory non-compliance (2022: 12)
Drivers
• Inability to influence legislative changes
• Lack of awareness/knowledge around regulatory
requirement
• Culture of non-compliance in South Africa
• New laws and regulation enacted with high frequency in
South Africa and globally
• Uncertainty around energy legislation
Impacts
• Operational stoppage
• Reputational damage
• Stoppage directives
• Penalties and fines
• Potential civil and criminal liability
• Delays in licence approvals
Treatments
Outlook
• Conduct compliance awareness training on licence to
operate requirements
Changes to regulatory framework in mining
and energy are constantly monitored.
• Early alerts on prospective changes in legislation
• Compliance programme
• Legal industry engagement through the Minerals Council
about prospective changes
• Perform consequence management on deviations
• Internal and external compliance audits
Strategic KPIs
• Compliance KPIs
Ongoing awareness and training on legal and
regulatory requirements
Strategic objective impacted
Make our minerals and energy businesses
thrive
Material theme
Capitals impacted
Lines
of defence
1, 2 and 3
Risk ranking
trend
Ù
34 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
10. Water scarcity (medium to long term) (2022: 18)
Drivers
Impacts
• Drought exacerbated by climate change
• Limited water resources in South Africa
• Delays in the building of water infrastructure by
government
• Competing demands of agriculture, mining and general
• Operational stoppage
• Escalation of cost of water
• Legal and health impacts
• Opportunity loss of starting a new venture
• Net present value
population
• Traditional areas of operation have little water especially in
the Waterberg
• Mismatch of what is approved and what is required on the
water use licence (WUL)
Treatments
• Implement a water security and management strategy
• Board approved MCWAP2
• Recycling of water
• Water treatment plant ensuring water efficiency and
treatment
• Liaison with government via the Chamber of Mines
• Engaging in industry forums for catchment management
planning
• Establishment of public-private partnerships
Strategic KPIs
• Water intensity
Outlook
Additional augmentation of the MCWAP
scheme through sourcing additional water
from MCWAP2 will strengthen the yield of the
overall system and alleviate the medium to
long-term risk at our Grootegeluk operation.
Our Mpumalanga operations are less
vulnerable to water scarcity as they have an
overall positive water balance.
Exxaro will set an internal price of water in
2023 to further drive water conservation
awareness at our operations
Strategic objective impacted
• Make our mineral and energy business
thrive
• Become a catalyst for economic growth and
environmental stewardship
Material themes
Capitals impacted
Lines
of defence
1, 2 and 3
Risk ranking
trend
Ù
Matla pollution control dam
Exxaro Resources Limited
Integrated report 2022 | 35
Creating value through
stakeholder engagement
We protect and maintain our licence to operate by building long-term, stable,
mutually beneficial relationships, enabling us to create shared value with stakeholders.
Our engagements also serve as a key treatment in the response to and management
of organisational risks.
Our approach to meaningful stakeholder engagement
The value we create for our stakeholders is as important as the value we create for ourselves. We understand our social impact, as well
as stakeholder needs and interests, which we identify through regular and ad hoc in-person engagement as well as through social impact
assessments and a variety of surveys. This understanding enables us to respond appropriately during the course of business. We live our
purpose to strengthen and maintain our stakeholder relationships, facilitating shared, sustainable value creation and impact.
Refer to the ESG report for more information about our approach to stakeholder management (page 24) and engagement planning.
We have differentiated the layout of the stakeholder report between the ESG report and the Integrated Report. For this report, we
describe our stakeholder management through the lens of our enterprise risk framework — that is, where stakeholder management was
instrumental in responding to a key risk in 2022. However, in the ESG report, we have maintained a stakeholder lens to describe key
stakeholder relationships and the issues we addressed during our engagements.
Government
• Governmental departments
• Local governments
• Political parties
• Provincial government
• District municipalities
• Regulators
Stakeholder universe
We use our ERM process and regular BU and project workshops to identify our stakeholders and assess our impact on them, and their
impact on our business. We categorise our stakeholders into four main clusters of government, communities, business and value chain
Communities
participants and identify relevant engagement strategies and engagement objectives as required.
• Local media
• Faith-based organisations
• Taxi association
• Farmers and landowners
• Other mining companies
Stakeholder management (page 24) in the ESG report explains the nature and quality of our relationships with strategic stakeholder
• Local small, medium and
micro-enterprises (SMMEs)
• Communities
• Local leadership
• Local schools
groups discussed on the pages that follow.
Government
• Governmental departments
• Local governments
• Political parties
• Provincial government
• District municipalities
• Regulators
Business
• Non-governmental
organisations (NGOs)
• Media
• Professional industry bodies
• Other mining organisations
• Universities
• Financial community
• Non-profit organisations
Communities
• Local media
• Faith-based organisations
• Taxi association
• Farmers and landowners
• Other mining companies
• Local small, medium and
micro-enterprises (SMMEs)
• Communities
• Local leadership
• Local schools
Value chain participation
• Unions
• Investors
• Strategic suppliers
• Partner in delivery
• Sponsors
• Customers
• Employees
• Service providers
Business
Assessing engagement effectiveness
• Other mining organisations
• Non-governmental
• Universities
organisations (NGOs)
Engagement effectiveness is assessed through assurance and audits on our procedures and changes in risk ratings. We also measure
• Financial community
• Media
perceptions of our engagement performance as part of a stakeholder survey. We conducted our first reputation tracking survey in 2022
• Non-profit organisations
• Professional industry bodies
following a baseline study in 2018.
Value chain participation
• Unions
• Investors
• Strategic suppliers
• Partner in delivery
• Sponsors
• Customers
• Employees
• Service providers
36 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Material engagements in 2022
Exxaro has many stakeholders but for the purpose of this
report, we have focused on engagements most material to value
creation and preservation. The related stakeholders and the
detail of specific engagement are unpacked accordingly.
Quality of relationship
No existing relationship or the relationship has
challenges
Established relationship but can be improved
Good relationship with opportunity for
improvement
Very strong relationship based on mutual trust
and respect
2022 risk: Unavailability of rail capacity
Engagement purpose: Collaborate in finding solutions to improve logistics
Stakeholder: Transnet
Quality of relationship:
Further reading
Key engagements and outcomes
• Continued engagement through the Minerals Council South Africa
(Minerals Council) with TFR and the Department of Public Enterprises to
set up a collaborative forum between the mining industry and TFR. This is
envisaged to take off in 2023
Our business risks and opportunities (page 26)
Strategic objectives
• Make our minerals and energy businesses thrive
Stakeholder expectations and issues
• TFR performance: Cable theft and security, train and driver availability, locomotive spares and derailments, force majeure
Material themes
2022 risk: Key dependency on Eskom as a key customer
Engagement purpose: Eskom continues to be a key customer for Exxaro. In 2022, 75% of Exxaro’s sales was attributed
to Eskom. The long-term agreements with Eskom at Matimba and Medupi place the coal business in a defensive
position. We engage regularly in light of the challenges facing Eskom.
Stakeholder: Eskom
Quality of relationship:
Further reading
Our business risks and opportunities (page 26)
Key engagements and outcomes
• Matla: Engagements to renegotiate the Matla cost plus agreement, due
to expire mid-2023, are underway
• Grootegeluk:
– Medupi power station: Engagement on Exxaro’s support regarding
Eskom’s emissions abatement obligation
– Matimba and Medupi coal supply agreement contracts: Regular
planning and operational alignment engagements
Strategic objectives
• Transition at speed and scale
• Make our minerals and energy businesses thrive
Stakeholder expectations and issues
• Coal supply agreements
Material themes
Exxaro Resources Limited
Integrated report 2022 | 37
Creating value through stakeholder
engagement continued
2022 risk: Community unrest
Engagement purpose: We aim to build relationships and our understanding of community needs to enable
collaboration and the successful delivery of socio-economic development projects. Engagements enable us to
proactively resolve any issues or concerns raised before protest action occurs. We further aim to communicate
how we create shared value through local employment and procurement, community development initiatives, skills
development and ESD.
Stakeholder: Communities
Quality of relationship:
Further reading
Our business risks and opportunities (page 26)
and social licence to operate (page 101)
Communities (ESG report, page 78)
Key engagements and outcomes
• Continue engaging with communities and local municipalities through
existing platforms such as stakeholder engagement forums to address
local recruitment and procurement expectations. Regrettably we
continue to experience interference in our supply chain processes
• The board held a follow-up community stakeholder engagement day
in Limpopo
• We initiated engagements with key representatives of the Department
of Cooperative Government and Traditional Affairs with the objective
of strategic alignment on supporting socio-economic development in
traditional authority areas
• Our new Social Impact strategy was approved by the board in November
2022. This will enable us to identify and develop impact projects
• Continue our efforts to reflect South Africa’s diversity in the development
and outcomes of all our projects
Strategic objectives
• Become a catalyst for economic growth and environmental stewardship
• Empower people to create impact
Stakeholder expectations and issues
Our communities expect Exxaro to employ, uplift and empower locally, enabling South Africa’s development. Communities highlighted
infrastructure, service delivery, procurement and youth and skills development as key issues during the year.
Material themes
2022 risk: Fatal risk incidents
Engagement purpose: Align employees’ focus with our health and safety strategy and culture for competitive
advantage and resilient business performance.
Stakeholder: Employees
Quality of relationship:
Further reading
Our business risks and opportunities (page 26)
and our people (page 92)
Employee engagement (ESG report, page 68),
health and wellness (ESG report, page 64),
and safety (ESG report, page 62)
Stakeholder expectations and issues
• Health and safety standards.
Material themes
Key engagements and outcomes
• Continued implementation of the COVID-19 awareness and vaccination
programme with an average vaccination rate at our BUs of 90% against
the industry target of 80%
• Daily reminders on safety issues at operational level, annual BU safety
indabas and regular communication of safety messages across a variety
of platforms
• Annual leadership safety day and sustainability summit
• Ongoing safety and safety risk management training
• Our employee wellness programme (EWP) is communicated on multiple
internal platforms alongside daily inspirational SMS messages and weekly
mental health masterclasses
• Engaged with employees about Exxaro’s code of conduct
Strategic objectives
• Make our minerals and energy businesses thrive
• Empower people to create impact
38 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
2022 risk: Climate change concerns
Engagement purpose: Understand regulatory policy, empower employees, communities and value stream participants
to manage climate change impacts, contribute to thought leadership and communicate our decarbonisation plan.
Stakeholders
• Government and regulators
• Employees and unions
• Communities
• Investors
• Customers
• Suppliers
• Trade and research associations
Quality of relationship:
Further reading
Our business risks and opportunities (page 26)
TCFD (page 112)
Our people (page 92)
Social licence to operate (page 101)
Our environment (page 103)
Climate change resilience (ESG report, page 38)
and social (ESG report, page 59)
Stakeholder expectations and issues
• A just transition
• Climate change adaptation and mitigation
• Carbon pricing
• TCFD and decarbonisation plan
• Green procurement
• Biodiversity, waste and water
• Policy
Material themes
Key engagements and outcomes
Government and regulators
Engagements with leading national authorities on climate change and
carbon budgets included effective application of instruments designed
to meet South Africa’s international climate change obligations, particularly
the NDC. We engage with the Department of Forestry, Fisheries and the
Environment (DFFE) (lead department on climate change) and National
Treasury (lead department on the Carbon Tax Act). Discussions with
the Department of Energy included our renewable energy strategy and
potential future investments in renewable energy.
Employees and labour unions
Our energy management efforts and implementation of cleaner energy
sources at our operations drive carbon emissions reductions. Reducing
and offsetting our footprint in line with the NDCs is a priority.
Communities
We are engaging with communities on climate change mitigation,
adaptation and resilience with the aim of increasing the adaptive capacity
of host communities. We are also communicating our decarbonisation plan.
Investors
We have shared our strategic approach to climate change mitigation,
adaptation and business resilience as well as risks and opportunities,
carbon pricing, TCFD recommendations and broader ESG issues.
Customers
We engaged with downstream customers who impact our carbon footprint,
business strategy and ambition to be carbon neutral by 2050 about
our Sustainable Growth and Impact strategy, decarbonisation plan and
divestment from some coal operations. Engagement explored collaboration
in emissions reduction, aiming to reduce our scope 3 emissions and
customers’ scope 1 and 2 emissions.
Suppliers
Our green procurement strategy prioritises sustainable supplier
engagement with critical objectives including increasing the adoption
of environmentally friendly, natural resource-efficient equipment,
products and technology at Exxaro’s operations.
Trade and research associations
As a member of the Industry Task Team on Climate Change, we worked with government and other businesses to address South
Africa’s international climate change obligations, supporting the low-carbon transition, carbon price merits, collaboration and the
just transition.
Our NBI membership enables us to contribute to thought leadership on issues such as the just transition and the role of business
in ensuring the transition to a low-carbon economy, preparation for COP meetings and alignment with the SDGs.
Through the Minerals Council, we were involved in discussions with government on the implications of environmental policy, carbon
tax, and waste and water management in a changing climate.
We engaged with other businesses through Business Unity South Africa on macro-economic and high-level issues that affect the
country at national and international levels.
Exxaro was also among the Business Leadership South Africa members focused on securing energy supply.
As part of the Energy Intensive Users Group of South Africa, we worked with government, power utilities, industry and other
stakeholders to ensure a financially viable, technically healthy and well-managed energy supply sector for South Africa. We discussed
energy efficiency, energy strategy and policy implementation with government and other businesses through the Energy Efficiency
Leadership Network.
We also engage with various stakeholders such as government, NGOs, communities and industry, on air quality management
in priority areas through multi-stakeholder reference groups and implementation task teams for the Highveld and Waterberg-Bojanala
priority areas.
Strategic objectives
• Transitioning at speed and scale
• Make our minerals and energy businesses thrive
• Empower people to create impact
• Be carbon neutral by 2050
Exxaro Resources Limited
Integrated report 2022 | 39
Creating value through stakeholder
engagement continued
2022 risk: Loss of social licence to operate and country risk
Engagement purpose: Proactive engagement supports our efforts to drive business resilience and manage risk.
Collaborating and partnering with government is how Exxaro plays a role in finding solutions to socio-economic
challenges and contributes to shaping government policies.
Stakeholder: Government
Quality of relationship:
Further reading
Our business risks and opportunities (page 26)
Social (ESG report, page 59)
Stakeholder expectations and issues
• The role of big business in solving broader societal issues
• Responsible water management, minimising environmental impact
and overcoming climate change issues
• Life after mining, job development, community upliftment*
• TFR performance*
• COVID-19 response support*
• B-BBEE level — net profit after tax (NPAT) impact
• Socio-economic development*
• Municipal service delivery*
• Local procurement*
Material themes
* This is a multi-stakeholder issue.
Key engagements and outcomes
• Department of Public Enterprises — continued engagement through the Minerals Council regarding TFR
• Departments of Health in Limpopo and Mpumalanga to support COVID-19 response strategies, and vaccine and booster vaccine
roll-out programmes
• Engaged dtic regarding changes in NPAT and double treatment of dividend income. The challenges and proposed solutions were
well received by the dtic. The dtic confirmed that these are areas of concern they are aware of, but that changing the codes is a
lengthy process
• Engagement with the Department of Cooperative Government and Traditional Affairs, the Municipal Infrastructure Support Agency
and the South African Local Government Association to find innovative responses to address service delivery challenges at local
government level
• Regular engagement with the provincial leadership of Limpopo and Mpumalanga and their economic growth agencies to discuss
development priorities and provide feedback on Exxaro’s socio-economic development initiatives
• Engagement with the Presidential Climate Change Commission regarding our just transition response strategy
Strategic objectives
• Become a catalyst for economic growth and environmental stewardship
Case study: Reputation management top of mind
Perceptions of Exxaro’s reputation and business ambitions have improved significantly since 2018 among the majority of Exxaro’s key
stakeholders, according to the stakeholder reputation survey conducted in 2022.
The survey reached out to 1 487 participants (government, investors, media, civil society, customers, suppliers, organised labour,
communities and employees) online, by phone and in group sessions.
The survey was conducted against a global climate of generally declining trust in business to operate in the best interest of society.
However, among Exxaro’s stakeholders, trust in mining companies to operate in the best interest of society was up from 2018.
The overall results show significantly improved trust and reputation indicators for the company compared to the baseline survey
conducted in 2018.
Key findings
While all stakeholders agree that Exxaro delivers on its purpose, they also feel that there is an opportunity for us to increase the
intensity of feedback, especially to communities. It is interesting to also note that other than communities, all stakeholders believe
that we have a role to play in South Africa’s transition away from fossil fuels.
Expectations from Exxaro on the community front remain very high. While our community development efforts are acknowledged,
“more and better” is expected from the company given the increasing level of social and economic distress among our local
communities.
Reputation resilience
The survey outcome shows that, while our overall relationships with stakeholders (measured through stakeholder engagement
efficiency) are good, additional effort is required in relation to civil society and communities. In response, we have developed
strategies for each stakeholder group to guide future engagement that will address concerns and reinforce mutually beneficial areas.
40 | Exxaro Resources Limited
Integrated report 2022
Transitioning
the business
for growth
Our Sustainable Growth and Impact
strategy will deliver our long-term
strategic objectives, measured
and managed through KPIs for our
progress on the journey to become
carbon neutral by 2050.
42 CEO’s report
44
Our strategy: positioning Exxaro for sustainable
growth and impact
47 Performance against our strategy and future focus
78 2022 strategic KPI performance
50
Key strategic trade-offs
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Exxaro Resources Limited
Integrated report 2022 | 41
CEO’s report
“
Exxaro displayed
tremendous resilience in
navigating a tumultuous
operating environment
during the financial year,
characterised by economic
disruptions from the
Russia-Ukraine conflict
and resulting energy
crisis, market volatility,
domestic challenges, and
evolving geopolitics.
“
Since Exxaro’s creation in 2006, we have
weathered international and domestic disruptions,
among others, the global financial crisis, the
commodity downturn and more recently COVID-19,
while responding to the resonating global call to
action against climate change to reduce carbon
emissions in the face of South Africa’s energy
security challenges.
This is a time of many shifts – both externally and in our industry.
Geopolitical changes, the global energy transition, and the move
away from fossil fuels toward renewable energy will lead to varied
regional impacts that will disrupt social structures and local
communities. As such, we are conscious of the uncertainty among
our stakeholders as we embark on our business transformation
and transition to sustain Exxaro on the road to a low-carbon
future. We are equally conscious of our leadership role and
responsibility in society to carve a path to a positive legacy for
generations to come.
Exxaro’s value proposition
Our strategy is responsive to the changing operating environment.
Key strategic shifts include optimising our portfolio to maintain
our robust and resilient long-life coal assets, which are cost
competitive and continue to deliver operating margins above
20%. We unlocked significant value for shareholders by disposing
of non-core assets.
Our early value coal strategy was our foremost response to
climate change – to limit stranded high-value Coal Reserves and
increase the proportion of high-quality (high energy value) coal
products in our export mix. Combined with our market to resource
approach – to inform operational plans with market insights to
deliver coal products that meet customer specifications – this
strategy provides optionality and flexibility in terms of coal
blending to supply different markets during the prevailing
European energy crisis.
We have a robust capital allocation framework that supports our
business and future plans, through which we aim to maintain
our sustaining capital at an average R2.5 billion a year for the
42 | Exxaro Resources Limited
Integrated report 2022
Dr Nombasa Tsengwa
coal business. We foresee a consistent dividend policy of 2.5 to
3.5 times adjusted group earnings, translating to a pay-out ratio
of up to 40%. To facilitate our minerals and renewable energy
growth opportunities through mergers and acquisitions, we
are maintaining sufficient cash holdings and have sufficient
debt facilities, as shared elsewhere in this report. In addition,
macro-risks demand that we maintain an above normal level
of financial liquidity.
Investment in renewable energy and minerals
Cennergi will begin construction of the 68MW Lephalale
solar plant and enter into an offtake agreement with Grootegeluk
mine. Future merger and acquisition opportunities will further
grow the generation capacity from the 229MW base of wind
energy generated in the Eastern Cape. We aim to grow to 1.6GW of
generation capacity from wind, solar and battery storage by 2030.
This renewable energy investment will contribute significantly to
South Africa’s decarbonisation plans.
In the minerals portfolio, we have reviewed opportunities in our
targeted commodity interests, namely manganese, copper, and
bauxite. The commodity sector remains competitive with high
expectations for valuations, consequently, limiting access to
opportunities and delaying our pace of development. Therefore,
when pursuing acquisitions within these minerals, we balanced
the need to transition at speed with our investment criteria and
capital allocation requirements to balance risk and returns.
Our performance for the 2022 financial year
The past financial year was undoubtedly challenging for Exxaro,
but it also presented opportunities and demanded agility and
proactive response. Overall, the results of a record safety
performance and EBITDA were commendable. The tenacity and
excellent safety performance of our people, coupled with higher
coal prices, combined to deliver this value to our stakeholders.
Unwavering in our commitment to safety
Safety remains a top priority for me and the Exxaro family
at large. Encouragingly, our LTIFR performance continues to
improve. We achieved a rate of 0.05 ahead of our 0.06 target,
which is an industry-leading performance.
Sadly, following a five-year record without fatalities, it was a
lowlight when we lost Mathews Moanalo in an accident involving
mobile mine machinery at Belfast on 15 August 2022. It was
a stark reminder that consistent vigilance is critical in mining
environments, given prevailing energy levels. We extend our
sincere condolences to Mathews’s family, friends and colleagues
who can find comfort in Exxaro’s support as we come to terms
with this tragedy.
Our safety performance, combined with other sustainability
factors, such as community development, biodiversity
management, our decarbonisation plan and overall good
corporate governance, contributed to an improved FTSE Russell
ESG Index performance rating from 3.8 to 4.0 out of 5.0. We have
identified further opportunities, such human rights practice and
policy disclosure, to improve this scorecard performance and
demonstrate the reduction in risk to our investment proposition.
Delivering against logistics constraints
The most significant hurdle to overcome was ongoing logistics
constraints, which limited our export volumes at a time of
record coal prices (reaching US$271.63/tonne for RB1 and
US$205.43/tonne for RB3 thermal coal), arising from the
Russia-Ukraine conflict and consequent European energy crisis.
After a record 12Mt of exports in 2020, we are disappointed that
we could not achieve our export sales capacity of between 15Mt
and 16Mt following our expansion of the rapid load-out station,
Grootegeluk 6 (GG6) project and Belfast mine development.
We delivered maximum sales tonnage of 42.1Mt into a favourable
domestic and seaborne price market. While this outcome
contributed to the record revenue of R46.4 billion and EBITDA
of R19.0 billion, the financial opportunity lost is unfortunate.
Reflecting on this performance over the past five years, revenue
and EBITDA growth was 82% and 161%, respectively, the latter
demonstrating consistent cost management and despite a
worsening logistics performance. We are working closely with
TFR, government and the Minerals Council to remove logistics
constraints in the short term, including security of the coal line
and performance efficiencies.
Our continued focus on cost management has ensured that we
remain below mining inflation, despite the aggressive inflationary
increases observed during the year. Cost competitiveness is an
essential lever for our business’s sustainability. We achieved a coal
cost performance increase of 12.7% versus mining inflation of 13.8%.
Driving operational and production performance
Our people exerted energy and displayed tenacity to ensure
maximum export volumes under difficult conditions. We achieved
a 1% increase in overall production and sales volumes. We
improved our coal product mix through higher RB1 grade export
volumes to achieve the highest coal price level, despite worsening
rail logistics constraints. We successfully maintained our coal
supply to Eskom for electricity generation at Medupi, Matimba
and Matla power stations and responded to various other coal
product markets.
Cennergi delivered renewable energy in line with planned
design output. However, poor wind conditions in 2022 resulted in
a 7% decline in energy generated of 671GWh compared to 2021.
Delivering against our strategy and outlook
The Sustainable Growth and Impact strategy remains on track to
deliver on our strategic objectives. Our progress during the year
and outlook is as follows:
• Transition at speed and scale: the commodity market
for acquisition opportunities remains competitive but not
impossible. We have developed a pipeline of potential target
opportunities and remain prudent in our approach to ensure we
do the right deal at the right price. In the meantime, the coal
business remains robust, given the resource and reserve quality.
While we foresee thermal coal prices softening, through our
early value coal strategy and delivering high-quality volumes as
a proportion of our total exports, we will be able to achieve the
highest price levels. We firmly believe that this dual strategy of
managed coal operations and growing future-facing businesses
is the most optimal pathway for the energy transition, enabling
us to journey along with our employees, communities and all
our stakeholders
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
• Make our minerals and energy businesses thrive: cost
management is critical to maintain the competitiveness of
our operations and protect margins, especially during a high-
inflationary environment. We achieved a below-inflation cost
increase for the coal business, a level of performance we will
continue to aim for; ongoing stakeholder relations management
ensures that we create harmony between operations and
community stakeholders for business continuity; our regular
engagement with shareholders ensures that our investment
thesis remains top of mind; and the rail performance will remain
a challenge. However, formally established structures between
industry, Transnet and government will expectantly show
positive developments in the first half of 2023
• Empower people to create impact: as a critical enabler of our
vision, we strengthened and reinforced our human resources
development and skills programmes following the COVID-19
disruption. We are bolstering our skillsets in renewable energy
in anticipation of the growth. In relation to our communities,
we achieved record financial support of R291.2 million to local
SMMEs through our ESD programme and, combined with
supply chain efforts, achieved a record R1 097 million in local
procurement – an increase of 11.5% that exceeded our annual
10% target. Our SMME development programme has created
over 2 000 employment opportunities since inception in 2017/18
• Be carbon neutral by 2050: we remain on track, despite
short-term volatility and our disposal of Leeuwpan being
withdrawn until further notice, towards a 43% reduction in
scope 1 and 2 carbon emissions by 2026. Decarbonisation of our
business is an essential tenant of our business model
• Becoming a catalyst for economic growth and environmental
stewardship: our Lephalale solar plant project reached
financial close in April 2023 and construction will commence
in the first half of the year. Further to our SMME development
programme, our Social Impact strategy aims to deliver
significant investment in education, land use management and
related skills, as well as ongoing local economic development.
This strategy was approved by the board in November 2021.
Execution plans will be shared with the board for approval in
the second quarter of 2023
Appreciation
Reflecting on my journey, I am deeply grateful for the support
received and the lessons learned along the way. It has been a
journey of growth, self-discovery and several changes in my
professional life. The journey also prepared me for the period we
find ourselves in today. I firmly believe that, on the journey ahead,
there is a better place to be tomorrow than where we are today.
I would like to thank our investors and funders for their continued
support. To my board, thank you for your counsel and insights.
To our stakeholders, including among others, our government
partners, organised labour, regulators and community members,
I extend my gratitude for your support in building the Exxaro of
tomorrow. Not least of all, to our employees, you provided an
opportunity for me to engage with you on our “get on the bus”
roadshows, which was one of the highlights of my year.
Thank you all for your commitment and dedication as we work
together to build for a tomorrow we can be proud of.
Dr Nombasa Tsengwa
CEO
14 April 2023
Exxaro Resources Limited
Integrated report 2022 | 43
Our strategy: positioning Exxaro for
sustainable growth and impact
We aim to create and preserve value by delivering sustainable growth and impact.
Sustainable growth means we are transforming our business at prudent scale, evolving
into a diversified company that will thrive and contribute to a low-carbon future.
Sustainable impact means we aim to do this responsibly by addressing our broader
impact and material ESG and compliance matters. The Sustainable Growth and Impact
strategy is an integrated, multi-stakeholder approach to positioning the business for a
resilient and sustainable future.
We are determined to play an active role in creating a future that enables our vision: resources powering a clean world, as we transform
the business. During 2022, we further refined and consolidated our strategy in response to the rapidly changing macro-economic
environment. As part of this, we revised our capital allocation model to guide decision making in line with our enterprise ambition,
Our north star is to harness, harvest and harmonise resources powering a cleaner world.
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n
aly
t
w
al
t
s
h
t
c ellence
x
E S G e
0
n
l
5
a
o
r
0
b
t
2
r
u
a
e
y
c
n
b
e
B
Resources
powering a
clean world
Empower
people to
create impact
Strategic enab l e r s
Leadersh i p
Minerals
Supporting a low-carbon world
A globally significant minerals
business with established operations
complemented by acquisitive
and organic growth options across
commodities
Synergy
Impact
Energy
Powering a low-carbon world
A growing renewable energy
solutions business with sizeable
gross generation capacity
Our
targets
EBITDA
Minerals
contributing
50% of coal
Portfolio
Diverse
income
streams
ROCE ~ 20%
Impact
Future facing
minerals
ESG excellence
Renewable energy
Our strategic objectives
1. Transition at speed and scale: Transition our business with measured urgency given the growing need for the low-carbon
transition. We will do this while creating positive social impact. We will leverage our innovation, organisational intelligence
and learning culture to navigate this transition
2. Make our minerals and energy businesses thrive: Enhance focus on our core delivery areas, minerals and renewable energy,
by increasing our footprint in these areas, divesting of non-robust assets and ensuring continued operational and digital
excellence
3. Empower people to create impact: Ensure our people and partners have the capabilities, mindset, environment and passion
to achieve our purpose
4. Be carbon neutral by 2050: Reduce our carbon footprint and become carbon neutral by 2050. We will achieve this through
our focused portfolio decarbonisation and social impact initiatives
5. Become a catalyst for economic growth and environmental stewardship: Positively impact our ecosystem during and
after our operations in minerals and renewable energy, building community projects and businesses into investable impact
programmes, which can lead to sustainable, scalable economic upliftment and prosperity, independent of our continued
operations in these environments.
44 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
The details of our strategy
We intend to deliver our long-term strategic objectives by aligning our resources to the following areas:
• Delivering value in existing coal assets
• Growing our renewable energy solutions business
• Providing minerals that support a low-carbon world
We are leveraging the following strengths and capabilities:
• Mining and bulk commodity
• Balance sheet strength
• Technical and commercial due diligence
• Business integration
• Newly acquired expertise in renewable energy
Over the next five years, we will use the following to enable the
execution of our strategy:
• Clear targets
• A robust capital allocation model
• Monitoring performance through KPIs
• Accountability
• Skills and executing culture
Capital allocation
Our ambition to be a diversified carbon-neutral minerals company with a significant renewable energy business can be realised through
effective capital allocation. Our revised capital allocation model will enable us to continue delivering shareholder value and create a
sustainable, resilient and robust enterprise that can withstand dynamic markets shifts. We revised our approach to capital allocation
to grow our minerals and energy businesses while fully understanding their associated risks and rewards. The model ensures strategic
decision making between competing business investment interests and ensures alignment with our strategic intent.
We introduced additional criteria to ensure we embed disciplined and data-driven capital allocation aligned with our enterprise ambition.
Our capital allocation criteria include:
1. Strategic fit: metrics that evaluate financial and market performance, capability alignment, ESG performance and diversification of
product, geography and customers
2. Pacing: prioritising timing of investment decisions and considering factors such as time to earnings, organisational readiness and
stakeholder considerations to ensure timeous value realisation
Our capital excellence programme demonstrates our vigilance to optimising how we use our financial resources to create sustainable
value. Robust capital allocation is informed by our enterprise KPIs:
• Growth in minerals earnings
• Decarbonisation of portfolio
• ROCE
• Growth in renewable energy generation
• ESG and licence to operate
Timeframes
Our strategy will be delivered in phases with clear outcomes for each focus area.
Ambition targets
A mining business
with interests in iron
ore, base metals
and renewable
energy.
A coal-based
mining company
diversifying towards
future facing
minerals, with
renewable energy
capabilities.
A diversified mining
company focused
on future facing
minerals, with
renewable energy
capabilities.
A diverse carbon
neutral minerals
company, with a
significant renewable
energy business.
2022
2026
2030
2050
• New income streams
introduced
• Minerals contributing
30% coal EBITDA
• Acquisitive and organic
growth
• Impactful business
• Minerals contributing
50% coal EBITDA
• Becoming strong
business with diverse
income streams
• 1.6GW (net)
renewable energy
• Acquisitive and
organic growth
Accountability
Our strategy is implemented in three tiers of accountability:
• Tier 1 board: establish vision, mission and set direction of the business
• Tier 2 executive management: apply approved strategy into business plans
• Tier 3 executive BUs: translate business plans into detailed execution plans
Exxaro Resources Limited
Integrated report 2022 | 45
Our strategy: positioning Exxaro for
sustainable growth and impact continued
Our renewable energy business
To be a leading international renewable energy solutions provider by 2030
Renewable energy
• A significant contributor of renewable energy solutions (renewable assets and services)
• Servicing the public and private sectors in South African and other markets
• Focus on three renewable energy areas:
– Distributed generation: Our growth in renewables will be internally led by providing our existing operations with self-generation.
We have two large windfarms and micro-grids in operation, and the Lephalale solar project under development. We will then look to
providing generation for customers in mining and select markets
– Utility generation: We intend to provide utility generation in select markets. We will determine markets for focus through selection
criteria
– Services: We will build our energy services business by growing our existing renewable energy business and augmenting our
generation business. We will also offer asset management, energy management, digital services and virtual power
Why
• Transition Exxaro to a carbon-neutral future as a start
• Provide diversification and long-term sustainability to Exxaro’s
cash flow including providing cost-competitive energy solutions
• Become a prominent player in the energy security industry in
South Africa
How
• Leverage Exxaro’s advantage, which includes our internal energy
requirements, a healthy balance sheet, resource evaluation
skills, excellence in project management and optimisation, and
experience in the project lifecycle
• Invest in renewable energy with an acceptable risk profile
targeting a portfolio return of 15% equity internal rate of return
over a period of time
• Strategic acquisition of skill and market entries to grow at scale
• Partnering to improve skills, credibility and growth
Competitive advantage
• Renewable pedigree: We have a significant local IPP in South Africa and have had exposure to the renewables business since 2009
• Strong Exxaro brand: Includes a strong balance sheet to back this new strategic pillar
• Adjacency advantage: All our operations require decarbonisation. Operations are often located in clusters with other mining peers
also requiring solutions
• Partnerships: We have formed partnerships that enable growth and contribute key offtake opportunities
Our minerals business
To utilise Exxaro’s mining skills to supply minerals that power a clean world and provide our shareholders with superior returns while
driving decarbonisation ambitions
Coal
Our coal business continues to deliver value for Exxaro and is key
in providing the country’s primary energy source
New minerals
Diversify into new mineral assets (manganese, copper and bauxite)
that are vital to a low-carbon future
Why
We believe that the coal assets under our care do not belong to us.
Therefore, we have a responsibility to manage them appropriately.
To do this, we must ensure that, on our way to a low-carbon future,
we do not leave high-value assets sterilised and stranded.
Why
• Diversify revenue for Exxaro’s growth
• Clearly defined investment supporting the right opportunities
• Balance sheet and mining capabilities provide a competitive
advantage
How
• Ensure a robust coal asset portfolio, which includes divestment
How
• Exxaro has developed a minerals business approach that
from resources that do not suit our future portfolio
• Optimise our market to resource capability
• Digitalise our operations with a focus on value creation
• Optimise capital allocation supported by our capital excellence
programme
• Minimise emissions at our existing operations
enables a just transition to a low-carbon world while leveraging
our core competencies as a bulk miner
• Robust screening criteria enable us to continuously review and
identify the minerals we should be focusing on for our future
growth
• Our initial targeted minerals (manganese, copper and bauxite)
offer the best risk to reward ratios to:
– Deliver our bold EBITDA target
– Support our ambition to power a clean world
– Benefit from the decarbonisation tailwinds that will drive
world economies into the future
Competitive advantage
• Specialised skills: We have roots as a diversified miner with recognised specialised skills in mining. This includes open-pit and bulk
commodity experience, base metals, mineral sands and industrial minerals
• Project execution excellence: Through expansion successes, delivering digital innovation through our Digital@Exxaro programme and
continued operational excellence from our high-performing coal operations
• Recognised for our ESG performance, brand and culture
We unpack our progress against delivering on our strategy on the following pages.
46 | Exxaro Resources Limited
Integrated report 2022
Performance against
our strategy and future focus
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Building traction as we transition to our new strategy
We are in the process of transitioning into and embedding our Sustainable Growth and Impact strategy. We have clear objectives to
achieve this strategy and have provided an overview of our traction thus far in the table below. To best measure and manage our progress,
we have identified KPIs that we will measure our performance against over time. These have been carefully selected by considering
our previous KPIs (which reflected the capitals of value creation that we use and affect) and our future goals. The resultant indicators
are refined and targeted, designed to monitor momentum on strategy while catalysing management discussion and analysis within the
organisation. They also ensure all previous ESG commitments are covered in their achievement.
Performance overview
Looking forward
Material themes
SDGs impacted
• Partnered with Enertrag to
jointly develop renewable
energy solutions, especially in
Mpumalanga, to enable a just
energy transition
• Completed several minerals
due diligence studies and
decided against acquisitions
due to unfavourable return
characteristics
• Developed robust capital
allocation model
• Achieved record financial and
safety performance
Transition at
speed and scale
Make our
minerals
and energy
businesses
thrive
Empower
people to create
impact
• Implemented the group
incentive scheme aligning
individual and team goals to
group objectives
Be carbon
neutral by
2050
Become a
catalyst for
economic
growth and
environmental
stewardship
• Established ESG steering
committee with clear terms of
reference
• Self-generation renewable
energy projects are planned
for implementation at our
Grootegeluk and Belfast
operations in the short term
• Developed detailed Social
Impact strategy with clear
targets, actions and focus
areas
• Partnership with Endangered
Wildlife Trust to develop
a monitoring programme
to enhance our biodiversity
management processes
We aim to transition at speed
and scale but not at all costs.
Our investments in minerals
and energy will be governed by
our prudent capital allocation
framework and rigorous
investment criteria positioning
our portfolio within our desired
risk-adjusted return levels
Safety, cost optimisation and
business improvement remain
our priorities across our
minerals and energy businesses
Continuous development of our
people, processes and platforms
to ensure we build on our
learning culture and achieve our
strategic objectives
Our key focus in the short term
will be our detailed stakeholder-
centric decarbonisation
roadmap with clear objectives
and milestones, including on
scope 3 emissions
We aim to progress our industry
leading ESG performance
towards delivering sustainable
impact at scale
Exxaro Resources Limited
Integrated report 2022 | 47
2022 strategic key
performance indicators
For the past seven years (2015 to 2022), we have measured our strategic performance against the following dashboard of strategically
important KPIs. These KPIs align to our objectives as well as the capital sources of value we use or affect. These indicators are under
review but will continue to be measured as they support our ESG commitments and the successful execution of our new strategy.
For 2022, we continued to measure our performance against these while we transition to our Sustainable Growth and Impact strategy, and
appropriate metrics and strategic KPIs were being finalised.
Our KPIs are outlined in the strategic performance dashboard below.
KEY
Trend^
Deteriorated
Improved
ØUnchanged
New KPI this period
KPI threshold
Indicator
Out of
appetite
Worst
tolerable
Best
realistic
Target
Possible
waste or
opportunity
Natural capital
Strategy
Target
Actual 2022
Indicator
Actual
2021
Indicator
Trend
based on
indicator^
Reportable
environmental incidents
(levels 2 and 3)
Be carbon
neutral by
2050
Carbon intensity
(scope 1 tCO2e/total
kilotonnes mined
(kTTM))
Carbon intensity
(scope 2 tCO2e/kTTM)
Water intensity
(kL/tonne RoM)
Percentage
environmental liability
provision in place —
commercial and captive
operations
Be carbon
neutral by
2050
Be carbon
neutral by
2050
Improving
water
efficiency
Be carbon
neutral by
2050
0 level 2s
0 level 3s
0 level 2s
0 level 3s
Actual for
previous year
less 5%
Actual for
previous year
less 5%
0.5% reduction
0.8% increase
0.15 to 0.18
0.15
80% to 100%
Between 50%
and 80%
Physical rehabilitation
(actual versus budget)
Become a
catalyst for
economic
growth and
environmental
stewardship
0% deviation
from budget
Between 25%
and 50%
deviation from
budget
6 level 2s
0 level 3s
Actual for
previous year
less by more
than 5%
Current year
less than
previous year
0.149
72%
Ø
Ø
Human capital
Strategy
Target
Actual 2022
Indicator
Actual
2021
Indicator
Trend
based on
indicator^
Fatalities
LTIFR
OHIFR
Skills provision
(percentage of
appointment of
employees within)
Scarcity skills retention
(percentage turnover)
Empower
people to
create impact
Empower
people to
create impact
Empower
people to
create impact
Empower
people to
create impact
Empower
people to
create impact
0
1
0.06
0.05
0.18
0.16
0
0.08
0.16
60%
64%
62.17%
5%
4.4%
3.7%
^ The trend-based indicators are in accordance with Exxaro’s internal sustainability framework.
48 | Exxaro Resources Limited
Integrated report 2022
Ø
Ø
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Actual
2021
Level 2
8%
behind
schedule
19%
over
budget
Actual
2021
10.3%
3%
Actual
2021
24.4%
33.6%
Trend
based on
indicator^
Indicator
Ø
Ø
Trend
based on
indicator^
Indicator
Trend
based on
indicator^
Indicator
Ø
Ø
Ø
Social and
relationship
capital
B-BBEE contribution level
Black ownership
SLPs project delivery
(time variance)
SLPs project delivery
(cost variance)
Manufactured
capital
Capital project delivery
measure (time variance)
Capital project delivery
measure (cost variance)
30%
47.1%
47.1%
Strategy
Target Actual 2022
Indicator
Level 1
Level 3
Empower people to
create impact
Become a catalyst
for economic growth
and environmental
stewardship
Become a catalyst
for economic growth
and environmental
stewardship
Become a catalyst
for economic growth
and environmental
stewardship
0% behind
schedule
40% behind
schedule
0% over
budget
16% over
budget
Strategy
Target Actual 2022
Indicator
Make our minerals
and energy
businesses thrive
Make our minerals
and energy
businesses thrive
0% behind
schedule
0.4% over
schedule
0% over
budget
0% over
budget
Financial capital
Strategy
Target Actual 2022
Indicator
Adjusted operating margin
Adjusted ROCE
Net debt to EBITDA
(excluding Cennergi)
* Exxaro is in a net cash position.
Make our minerals
and energy
businesses thrive
Make our minerals
and energy
businesses thrive
Make our minerals
and energy
businesses thrive
20%
35.2%
20%
46.9%
1.5 times
*
*
Exxaro Resources Limited
Integrated report 2022 | 49
Key strategic trade-offs
Balancing our growth ambitions with our carbon-
neutral targets while appreciating that absolute
carbon (total emissions) might increase with
acquisitions
The intent to decarbonise is at the heart of our Sustainable
Growth and Impact strategy. Our acquisition targets will include
their own carbon emission and carbon intensity figures that we
will have to evaluate in our growth journey.
Key measures related to carbon intensity and emissions are
included in our strategic performance metrics and will be a key
tool for evaluating and balancing trade-offs related to growth.
A key role of our decarbonisation roadmap is to give us a better
understanding of future scenarios and projections for our
business. This will give us further clarity on potential shortfalls
and opportunities.
Related SDGs
Balancing operational focus and the need for
diversification
As a business that is transitioning towards a carbon neutral
portfolio by 2050, we recognise that portfolio diversification
is essential in balancing risk and reward across multiple time
horizons.
Our operating coal business remains a key source of capital to
support this transition and managing this business optimally while
motivating our workforce is essential in achieving our ambition.
We enable this through balanced performance scorecards at all
levels of the business, clear alignment of strategic goals, and
candid conversations led by our CEO and executive team.
Related SDGs
Balancing short-term business performance
against long-term ambition
Our scenario and risk modelling process highlights a potential
global recession scenario and the implications this will have
on our business in the short term. Reducing coal prices and
increasing inflation and energy costs result in lower margins
unless stringent cost optimisation is undertaken.
We have to balance the need for short-term business resilience
against resource allocation research and development that is
essential in achieving our long-term strategy.
Our portfolio approach towards resource allocation guides us as
we manage this tension.
Related SDGs
We understand that, to create sustained value for
our stakeholders, our strategy must recognise
and balance the inherent trade-offs we face.
In developing our strategy, we consider the
potential trade-offs our strategic decisions create
to ensure we fully comprehend these decisions as
well as work to maximise positive outcomes and
curb negative impacts.
We can link each of our trade-offs to the achievement of one or
more of our strategic objectives.
We know that achieving our objectives must be balanced
and we will not necessarily be able to maximise all objectives
concurrently. However, we have robust processes and decision-
making frameworks to make choices and trade-offs between these
objectives. Over time, each objective will be realised.
Balancing the adverse environmental impact
of coal with the need to support South Africa’s
socio-economic development
As a developing country, South Africa depends on reliable energy
to fuel its growth. However, coal has a noticeable impact on
environmental systems. As the frequency and scale of climate
change-related events continue to grow so has the imperative to
transition to a low-carbon economy. We support this imperative
but we are mindful that structural economic transitions take time.
Without adequate planning, transitions like these have historically
had negative impacts on the most vulnerable in society. Our
purpose is to power better lives in Africa and beyond. To achieve
this, we continue carefully considering the critical trade-offs of
the economy’s immediate and affordable energy needs along
with the growing and urgent need to reduce carbon emissions
to sustain our environmental systems. Our Sustainable Growth
and Impact strategy is designed to balance these seemingly
competitive needs, ensuring we participate in the just transition
to a low-carbon economy while delivering on our early value coal
strategy in a prudent and responsible manner.
Related SDGs
Balancing capital allocation with our growth areas
Given that we intend to become a multi-core business, our capital
allocation approach must support our short and long-term growth
ambitions. We will need to allocate finite capital to opportunities
in minerals and renewable energy that will enable our strategic
objectives.
Our approach to capital allocation is agile and an integral
component of our strategy creation and delivery. Our capital
allocation process is supported by governance that supports
disciplined and unbiased decision making aligned to our portfolio
ambition.
Our strategic objectives and their metrics (which include stringent
financial return metrics for each growth area) will continue to
provide the guide for capital allocation so that we objectively
assess strategic trade-offs related to capital allocation.
Related SDGs
50 | Exxaro Resources Limited
Integrated report 2022
Governance for
value creation
Our governance processes and
practices steer us in the right
direction with the pillars of
exemplary corporate citizenship —
transparency, accountability and
integrity — as our guides.
52 Our leadership
55 Summarised governance report
73 Combined assurance for effective governance
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Exxaro Resources Limited
Integrated report 2022 | 51
Our leadership
Board of directors
The board is responsible for setting the strategic direction, supervising the operational
activities of Exxaro and its performance while balancing the company’s interests as a
responsible corporate citizen with the legitimate needs and expectations of stakeholders.
For the year in review, we are proud to present the following board members:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1. Mvuleni Geoffrey
Qhena (57)
Board chairperson and
independent non-executive
director, nomination committee
chairperson and remuneration
committee member
2. Dr Geraldine Fraser-
Moleketi (62)
Lead independent non-
executive director, SERC
chairperson and remuneration
committee and nomination
committee member
Director since 19 April 2021
and board chairman from
27 May 2021
Director since 18 May 2018
3. Karin Ireton (67)
Independent non-executive
director and SERC member
Director since 7 February 2022
4. Ben Magara (55)
Independent non-executive
director and risk and business
resilience (RBR) committee
member
5. Billy Mawasha (44)
Independent non-executive
director, investment committee
member and audit committee
member
Director since 7 February 2022
Director since 7 February 2022
9. Vuyisa Nkonyeni (53)
10. Chanda Nxumalo
11. Peet Snyders (62)
12. Isaac Malevu (48)
13. Likhapha Mbatha
Independent non-executive
director, audit committee
chairperson and investment
committee member
Director since 3 June 2014
(39)
Independent non-executive
director, audit committee
member, RBR committee
member and investment
committee member
Director since 1 February 2021
Independent non-executive
director, RBR committee
chairperson, SERC member and
investment committee member
Non-executive director and
investment committee member
Director since 22 June 2021
Director since 1 July 2016
(68)
Non-executive director and
SERC member
Director since 6 March 2018
6. Nondumiso Medupe
(52)
7. Dr Phumla Mnganga
(54)
8. Isaac Mophatlane
(49)
Independent non-executive
director and audit committee
member
Appointed 3 January 2023
Independent non-executive
director, remuneration
committee chairperson and
nomination committee member
Independent non-executive
director, investment committee
chairperson, audit committee
member and SERC member
Director since 7 February 2022
Director since 22 May 2018
14. Zwelibanzi
Mntambo (65)
15. Mandlesilo Msimang
16. Dr Nombasa
17. Riaan Koppeschaar
(46)
Tsengwa (58)
(52)
Non-executive director,
Non-executive director,
CEO and executive committee
FD
remuneration committee and
investment committee member
chairperson
nomination committee member
and RBR committee member
Executive director since
July 2016
Executive director since
Director since 28 November
Director since 15 March 2021
16 March 2021
2006
Chairperson
Board
Audit committee
Investment committee
Nomination committee
RBR committee
Remuneration committee
SERC
Member
Independence
(%)
35
Gender
(%)
47
65
53
Independent
Other (includes non-executive
directors and executive directors)
Men Women
Audit committee
Investment committee
Director tenure
0 to 3 years
Nomination committee
4 to 6 years
4
RBR committee
Remuneration committee
SERC
7 to 9 years
>9 years
1
1
Age diversity (%): Number of directors (17)
9
30 to 39 years
1
40 to 49 years
50 to 59 years
60 to 69 years
70 years and older
0
4
5
7
52 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
1. Mvuleni Geoffrey
2. Dr Geraldine Fraser-
3. Karin Ireton (67)
4. Ben Magara (55)
5. Billy Mawasha (44)
Independent non-executive
director and SERC member
Independent non-executive
director and risk and business
resilience (RBR) committee
Independent non-executive
director, investment committee
member and audit committee
Director since 7 February 2022
member
member
Director since 7 February 2022
Director since 7 February 2022
Qhena (57)
Moleketi (62)
Board chairperson and
independent non-executive
Lead independent non-
executive director, SERC
director, nomination committee
chairperson and remuneration
chairperson and remuneration
committee and nomination
committee member
committee member
Director since 19 April 2021
and board chairman from
27 May 2021
Director since 18 May 2018
9. Vuyisa Nkonyeni (53)
Independent non-executive
director, audit committee
chairperson and investment
committee member
Director since 3 June 2014
10. Chanda Nxumalo
(39)
Independent non-executive
director, audit committee
member, RBR committee
member and investment
committee member
Director since 1 February 2021
11. Peet Snyders (62)
Independent non-executive
director, RBR committee
chairperson, SERC member and
investment committee member
Director since 1 July 2016
12. Isaac Malevu (48)
Non-executive director and
investment committee member
Director since 22 June 2021
13. Likhapha Mbatha
(68)
Non-executive director and
SERC member
Director since 6 March 2018
6. Nondumiso Medupe
7. Dr Phumla Mnganga
8. Isaac Mophatlane
(52)
(54)
(49)
Independent non-executive
director and audit committee
member
Appointed 3 January 2023
Independent non-executive
director, remuneration
committee chairperson and
Independent non-executive
director, investment committee
chairperson, audit committee
nomination committee member
member and SERC member
Director since 7 February 2022
Director since 22 May 2018
14. Zwelibanzi
Mntambo (65)
Non-executive director,
remuneration committee and
nomination committee member
15. Mandlesilo Msimang
(46)
Non-executive director,
investment committee member
and RBR committee member
Director since 28 November
2006
Director since 15 March 2021
16. Dr Nombasa
Tsengwa (58)
CEO and executive committee
chairperson
Executive director since
16 March 2021
17. Riaan Koppeschaar
(52)
FD
Executive director since
July 2016
Gender diversity year-on-year
(%)
Racial diversity year-on-year
(%)
5
7
1
6
3
5
80
70
60
50
40
30
20
10
0
7
4
9
3
5
2
90
80
70
60
50
40
30
20
10
0
7
6
3
3
8
7
2
8
2
2
8
1
Female
Male
2020
2021
2022
2020 2021 2022
Black White
Racial diversity
(%)
18
6
African Coloured White
76
Average age per year
60
58
56
54
52
59
55
54
2020
2021
2022
The ESG report includes details on the
board’s composition, diversity and
experience (page 110).
Exxaro Resources Limited
Integrated report 2022 | 53
Our executive team
Working tirelessly to deliver on Exxaro’s Sustainable Growth and Impact strategy,
our executive team includes:
Dr Nombasa Tsengwa (58)
Riaan Koppeschaar (52)
Hemuna Bhola (51)
Alex de Angelis (42)
CEO
Finance director
Acting executive head:
human resources
Executive head:
strategy and business
transformation
Leon Groenewald (56)
Kgabi Masia (47)
Johan Meyer (54)
Mzila Mthenjane (52)
Managing director:
energy
Appointed March 2023
Managing director:
minerals
Executive head:
projects and technology
Executive head:
stakeholder affairs
Executive age diversity
30 to 39 years
0
40 to 49 years
2
50 to 59 years
60 to 69 years
0
8
Executive race diversity
(%)
Executive gender diversity
(%)
40
0
10
30
50
70
African
Indian
Coloured
White
Female
Male
Mongezi Veti (59)
Andiswa Ndoni (55)
Executive head:
sustainability
Group company secretary
(ex officio)
The ESG report includes details on our executive committee
(page 116).
54 | Exxaro Resources Limited
Integrated report 2022
Summarised
governance report
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
The Exxaro board applies good corporate governance to ensure sustainable growth while
transitioning to a low-carbon world, an ethical culture and delivering on the promise of
human rights.
Exxaro’s board is the focal point and custodian of good corporate governance for the group. The board sets Exxaro’s short, medium and
long-term strategic direction through our
model and budget, setting and monitoring performance and culture expectations as well as a governance framework for the group, the
board enables sustainable value creation.
Sustainable Growth and Impact strategy (page 44). By approving a new capital allocation
At the core of Exxaro’s corporate governance are principles that guide the board in meeting its responsibilities to the company, the group
and its stakeholders. These principles enable the company to achieve the King IV governance outcomes and fulfil its purpose to power
better lives in Africa and beyond.
In addition, through good governance, our board is committed to contributing positively to achieving SDG 16, which
seeks to promote peaceful and inclusive societies for sustainable development, provide access for all, and build
effective, accountable and inclusive institutions.
Ethical culture
Performance and value
creation
Adequate and
effective control
Trust, good reputation
and legitimacy
The board therefore regards good corporate governance as
fundamentally important to create value and achieve the above
King IV governance outcomes in its own ethical and effective
In line with King IV’s recommendation to apply and
leadership.
explain how Exxaro practices good governance, we include our
detailed King IV application register in the ESG report (page 142).
This sets out each principle with an explanation of steps taken as
well as Exxaro’s policies and processes.
Material themes in focus
The following material themes received focused attention in 2022:
To this end, the board achieved the following outcomes:
• Identification of new directors to take over in future as
chairpersons of board committees as part of succession planning
• The board continued to address independence, gender diversity
as well as strategic skills, experience and competencies
(including sustainability, ESG, human resource governance,
energy and hard rock mining) in line with Exxaro’s strategy and
succession planning
The following directors were appointed:
Independent non-executive directors
Appointed
Adapting to a changing context
Responsible environmental stewardship
Building sustainable communities
Helping our people thrive
Executing our strategy
Driving business excellence
Principled governance
These material themes were addressed as described below.
CEO transition
The board welcomed Dr Nombasa Tsengwa as CEO of Exxaro
from 1 August 2022, and expressed confidence in her expertise
and leadership as Exxaro’s first female CEO, taking the company
further on its journey to achieving its Sustainable Growth and
Impact strategy. She succeeds Mxolisi Mgojo who retired on
31 July 2022. The board thanked Mxolisi, who received a Business
Leader of the Year award in 2022, for his invaluable contribution
and wished him well in his retirement.
Board diversity and independence
The board expressed commitment to contributing to diversity,
equity and inclusion in its composition, and to promote
independent character and judgement within the board.
1
2
3
4
5
Karin Ireton
Ben Magara
Billy Mawasha
Dr Phumla Mnganga
7 February 2022
Nondumiso Medupe
3 January 2023
Ras Myburgh, an independent non-executive director since
1 September 2016, indicated that he would not be available
for re-election at the AGM on 25 May 2022 and retired
by rotation. The board expressed sincere appreciation to Ras
for his dedication, commitment, and invaluable contribution
to Exxaro during his tenure as an independent non-executive
director and chairperson of the remuneration committee.
Nondumiso Medupe’s appointment as an independent
non-executive director and audit committee member (effective
3 January 2023). Vuyisa Nkonyeni and Isaac Mophatlane will
retire by rotation, as independent non-executive directors, with
effect from the date of the AGM, being 18 May 2023.
Board composition, diversity and experience (ESG report,
page 110)
Exxaro Resources Limited
Integrated report 2022 | 55
Summarised governance report continued
Governance roadshow 2022
Following two years of COVID-19 restrictions since the last
governance roadshow in 2019, and in an attempt to improve
ongoing engagement with shareholders, Exxaro held a three-day
governance roadshow with equity shareholders in September
2022.
The purpose was to:
• Introduce Exxaro’s new board leadership, represented by
the chairpersons of the board and remuneration committee,
accompanied by the group company secretary and executive
head: stakeholder affairs
• Provide insight on the shareholder structure and returns, ESG
performance, Sustainable Growth and Impact strategy, concrete
plans to drive decarbonisation, the updated capital allocation
model and response to society’s needs
• Provide feedback to shareholders on progress in addressing
concerns about executive remuneration and incentives raised
during the 2019 governance roadshow
• Confirm the board’s commitment to Exxaro’s Sustainable
Growth and Impact strategy, as communicated in September
2021, and listen to feedback about the strategy, capital
allocation and other governance-related issues
Shareholders’ views were considered and the board committed to
continuing the annual governance roadshow to keep shareholders
informed about progress in meeting the abovementioned
commitments.
Climate change response
We intentionally focus on positioning Exxaro for growth, anchored
on the just transition principle, which seeks to balance our
financial performance, South Africa’s economic development
needs, ecosystem protection and society’s adaptive capacity in the
face of climate change.
Exxaro believes that our greatest opportunity is to help steer
South Africa towards a sustainable future through undiluted focus
on low-carbon minerals and energy with the goal to be carbon
neutral by 2050. The board is committed, beyond compliance, to
mitigating the impact of climate change with a robust Sustainable
Growth and Impact strategy.
The board has oversight of climate-related impacts, risks and
opportunities. This is included in the SERC and RBR committee
terms of reference and annual work plans.
Actions that honoured this commitment in 2022 included:
• Exxaro continued implementing the National Energy Regulator
of South Africa-registered 68MW Lephalale solar project with
the first phase of this multi-technology solution, designed for
Grootegeluk’s demand profile, fast-tracked to reduce up to
one third of the BU’s scope 2 emissions and significantly save
electricity costs
• Review of Exxaro’s strategic objective (evident in total carbon
abated) to realise our goal to be carbon neutral by 2050
through scope 1 and 2 emission reductions with current
initiatives as well as other opportunities presented at COP27
and concrete plans to drive decarbonisation. The objective will
be indicated by the total amount of carbon abated
• Review of the minerals diversification strategy in a low carbon
future as growth in these future facing minerals become critical
• Exxaro to implement Taskforce on Nature-related Financial
Disclosures pilot in the 2023 financial year
• To strengthen our GHG mitigation and business resilience
efforts, water security, energy and water efficiency targets have
been included as part of the group incentive scheme in 2022
Climate Change Response strategy (2020 investor tab)
Governance oversight of climate change (ESG report,
page 13)
56 | Exxaro Resources Limited
Integrated report 2022
Strategic direction
As sustained value creation is founded on good governance
and on responsiveness to significant social and environmental
challenges, our strategy is continuously monitored and assessed,
and formally presented to the board for approval at least once a
year. Before executive leadership’s strategy presentation to the
board, iterative strategy workshops, following bottom-up process,
and board governance sessions afford integration of inputs
into the group strategy. The board therefore supports King IV
principles regarding strategy setting through an iterative process.
As part of the strategy process, a risk and opportunity assessment
is conducted, including emerging risks and assessment of material
sustainability issues.
Top five risks at the end of 2022:
1
2
3
4
5
Unavailability of current rail capacity
Eskom systemic risk
Community unrest
Cybersecurity threats
Health and safety concerns
Our business risks and opportunities (page 26) and
our strategy: positioning Exxaro for sustainable growth
and impact (page 44)
Diversity, equity and inclusion strategy
Exxaro’s diversity, equity and inclusion strategy (ESG report,
page 68) supports the achievement of our transformation
commitments through employment plans, Mining Charter III
targets and the B-BBEE scorecard that uphold our licence to
operate.
The board approved the strategy in July 2022 when diversity,
equity and inclusion principles, strategic priority areas and
success measures were identified. The concept of “equity” was
added as a key success factor for diversity, equity and inclusion
within Exxaro. The strategic objectives include gender identity
and equity, racial equity, disability competence, inclusive culture,
external inclusivity, leadership, and communication.
Our diversity, equity and inclusion principles include:
1
2
3
4
5
Promoting an environment of respect for all
Building an environment of trust
Establishing processes free from prejudices
Zero tolerance of discrimination and harassment
Promoting diversity, equity and inclusion
Exxaro’s gender equality charter (launched in 2021) was enhanced
with our anti-gender-based violence (GBV) footprint and
implemented in the first quarter of 2022.
Outcomes and value delivered (ESG report, page 24)
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Corporate calendar 2022
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Approved the group’s annual
financial statements and final
dividend declaration
Approved re-pacing of the
Sustainable Growth and Impact
strategy relating to minerals
and energy as well as capital
allocation
• Considered the going
concern assessment
Mandated management’s
COP27 participation
• Approved the assessment
of the group’s liquidity and
solvency in the context of
distribution to shareholders
and trading statement
Approved the group interim
financial results and interim
dividend declaration
Deliberated and approved
the group’s Social Impact
strategy (ESG report, page 78)
• Considered delegation
of authority policy and
framework amendments
• Reviewed board committee
terms of reference
Approved the consolidated
group annual budget
Information management deep
dive: information management
strategy, governance
processes, risk management,
applications and current
initiatives
Considered amended conflicts
of interest, gifts and benefits
policies
• Considered the going
concern assessment
• Approved the assessment
of the group’s liquidity and
solvency in the context of
distribution to shareholders
and trading statement
Considered and approved:
• Board committee
composition
• Rotation and independence
of directors
• Group company secretary
evaluation
• Prescribed officer
determination
• Approved the governance
report to be included in the
ESG and integrated reports
• Considered the JSE
compliance certificate
Executed return-to-work action
plans to minimise production
impact, focusing on cost
containment and productivity
Held the group’s third hybrid
AGM
Governance roadshow
Approved group delegation of
authority and human rights
policy
• Strategy sessions
• First governance session
Stakeholder days
Second governance session
Exxaro Resources Limited
Integrated report 2022 | 57
Summarised governance report continued
Governance that supports our sustainability drive
“We conduct our business activities in a way that creates success for Exxaro and society.
From how we mine to what we mine, we are stewarding our natural assets and social
capital to uplift our communities.” Dr Nombasa Tsengwa
The company recognises that it forms part of an interrelated community. As such, it may have positive and negative impacts on society
and the global SDGs. Exxaro believes that investing responsibly and strategically in commodities will help sustain life on the continent, and
is committed to being an environmentally responsible organisation, driving sustainability throughout our business while building on our
delivery track record.
The board sets the ultimate direction for sustainability considerations, including committee and individual responsibilities for oversight of
sustainability-related impacts, risks and opportunities by ensuring these are reflected in board and committee terms of reference, annual
work plans, and other relevant policies and processes.
The board’s oversight of sustainability is best illustrated by the distribution of ESG matters among the respective board committees
reporting to our board (as outlined below).
Board and board committee oversight of ESG matters (per committee terms of reference and captured in annual work plans):
Audit
Investment
Nomination
Remuneration
RBR
SERC
Environmental
Climate change
GHG emissions
Energy, water and waste
Pollution
Environmental compliance
Biodiversity and land use
Resource scarcity
Social
CSI
Training and education
Diversity and equal opportunity
Non-discrimination
Human rights
Health and safety
Privacy and security
Labour relations
Local community impact
Governance
Board diversity and structure
Board performance
Ethical culture
Executive pay
Anti-bribery and anti-corruption
Audit and assurance
Stakeholder engagement
Procurement practice
Risk management
Regulatory compliance
Internal policies
Information technology governance
Tax transparency
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
58 | Exxaro Resources Limited
Integrated report 2022
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Ethical culture
Statement of strategic ethical intent:
Exxaro aspires to build an ethical culture
based on Exxaro’s values. To do this,
Exxaro is committed to operating ethically
by living the Exxaro values with dignity,
transparency, consistency, fairness and
respect in all that we do.
Ethical commitment
Recognising that our public reputation is one of our most
important assets, the organisation is committed to achieving
the highest ethical standards. We recognise our obligations to
our stakeholders, particularly shareholders, clients, employees,
business partners, competitors, authorities, the environment and
the wider community. Maintaining the trust and confidence of
our stakeholders is the responsibility of every Exxaro employee.
As Exxaro is committed to doing the right thing, even when
no one is watching, our employees are expected to be able to
distinguish between right and wrong, and commit to what is right.
By emphasising our ethical commitment, we continue to grow as
a business.
Ethics management strategy
Building organisational ethics is a journey. Our board assumes
responsibility for ensuring that organisational ethics is managed
effectively and governs the group’s ethics to support the
establishment of an ethical culture. In line with this responsibility,
the board adopted a statement of strategic ethical intent as well
as an ethics management strategy. The strategy sets out various
strategic focus areas as well as interventions to be implemented
and overseen by the group executive committee and management
ethics committee. The following strategic focus areas have been
identified:
• Ethics awareness
• Ethics accountability and responsibility
• Ethics talk
• Senior management, management and employee commitment
to ethics
• Unfair people practices
Code of ethics
Our code of ethics confirms that the organisation’s ethical
principles promote values such as trust, acceptable behaviour
and fairness.
Exxaro values provide general guidelines for interactions with
each other and our stakeholders, and reflect what is important
to Exxaro and how we conduct ourselves.
The following fundamental values are expressed in the code
of ethics:
• Empowered to grow and contribute
• Teamwork
• Committed to excellence
• Honest responsibility
Our group policies and procedures, relating to specific issues,
processes and situations, support the code of ethics. The following
policies (with several reviewed in 2022), among others, support an
ethical culture:
• Code of ethics
• Anti-bribery and anti-corruption
• Conflicts of interest
• Exxaro’s supplier code of conduct
• Fraud prevention
• Fraud investigation process
• Fraud response
• Gifts and benefits from suppliers
• Recruitment and selection
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
• Whistleblowing
• Insider dealing
• Political donations
• Nepotism
• Diversity, equity and inclusion framework (including people with
disabilities policy and gender equity charter)
Monitoring ethical culture
The board monitors the group’s ethical culture through its
reporting structures, including two board committees (SERC and
audit committee), the ethics management committee, the internal
audit function, chief audit officer and newly appointed chief ethics
officer.
An independent risk assessment by The Ethics Institute in 2021
to measure the state of ethics at Exxaro, focusing on ethical
behaviour and ethical culture, recommended that an ethics
strategy and management plan be designed to enable Exxaro to
actively manage ethics and address identified concerns.
A detailed ethics strategy and management plan were designed
and approved by the board upon recommendation by the ethics
committee, executive committee and SERC.
The risk assessment also measured employees’ ethical behaviour
defined as the frequency with which employees observe unethical
behaviour on a day-to-day basis in Exxaro. Exxaro group ranked
91 out of 100, which is unethical conduct never observed or rarely
observed, and therefore considered low risk. Behavioural risks
encountered frequently by employees included bypassing rules
and unfair people practices. These risks are addressed in the
ethics strategy and management plan.
Ethics talk
Informed by the Companies Act, King IV and strategic focus areas
identified in the ethics management strategy, the group company
secretary started 2022 by distributing a governance newsletter,
focusing on ethical culture, to the board. The newsletter
highlighted:
• Ethics is not only compliance with policies, rules and regulations
but integrity in doing the right thing because one believes that
it is the right thing to do
• Ethical conduct is required of individual directors and the board
as a collective
Organisation for Economic Co-operation and
Development recommendations related to ethical
behaviour
ENSafrica conducted an ISO 37001 readiness assessment in 2018
and identified a gap in ensuring that new third-party exposures
are assessed as part of a due diligence process. Exxaro has since
introduced due diligence processes for suppliers, customers,
employees and business partners.
A comprehensive evaluation of the fraud hotline in 2020
identified areas needing improvement such as the composition of
the management ethics committee, a process for tabling forensic
reports, monitoring BU investigations and updating escalation
protocols. All the recommendations have been addressed and
reaudited to the satisfaction of the internal auditor. As part of this,
Exxaro is committed to an independent review of the hotline every
three years. The next audit is in 2024.
In addition, the ethics management training, and anti-bribery and
anti-corruption programmes were reviewed, and the executive
committee approved an updated anti-bribery and anti-corruption
programme.
Exxaro Resources Limited
Integrated report 2022 | 59
Ethical culture continued
Fraud and ethics hotline
We encourage employees and stakeholders to report suspected
fraud or corruption to Exxaro’s
(ESG report, page 128).
fraud and ethics hotline
The hotline is independently managed and reports to the SERC
and management’s ethics committee.
Due to the importance of retaining the integrity of the hotline,
it is necessary for Exxaro to, as far as reasonably possible, protect
the interests of the disclosing parties. As the hotline plays an
important role in combating fraudulent activities, Exxaro has
successfully defended a court application for the disclosure of an
anonymous complaint, which could have undermined the system’s
confidentiality.
Supplier ethics
•
The supplier code of conduct (supplier tab) was developed
to assist employees in selecting suppliers who operate in a
manner consistent with Exxaro’s values and relevant standards
• The code aims to communicate Exxaro’s mandatory selection
standards to prospective suppliers
• In addition, it promotes the company’s commitment to ethical
conduct among suppliers
• As part of the supply chain pre-qualification process, suppliers
must disclose details of shareholders, directors and other
associates who are current or former Exxaro employees in
compliance with the conflicts of interest policy
• Employees who evaluate requests for proposals or recommend
contract awards must declare that they have neither an interest
in nor a close relationship with the supplier that may be
construed as a conflict of interest
Board charter and code of conduct
Our board charter and code of conduct (board charter) regulates
the parameters in which the board operates and ensures the
application of good corporate governance principles in all dealings
in respect and on behalf of the company and the group. It sets
out the roles and responsibilities of the board, individual directors,
chairperson, CEO, lead independent non-executive director and
group company secretary.
The board charter requires board members to be individuals
of calibre, integrity and credibility with the necessary skills and
experience.
The nomination committee must ensure continuity of
directorships and undertake succession planning on behalf of the
board. This includes identification, mentorship and development
of future candidates.
The board charter was reviewed in 2022 to include consideration
by the board of the need for periodic independent assurance in
respect of areas such as:
• Infrastructure, information technology and systems
• Sound governance of the company including corporate
governance, risk management, ethics and internal controls
• Compliance with applicable laws and adopted, non-binding rules,
codes and standards in a way that supports the organisation
being ethical and a good corporate citizen
Focused governance sessions
The group company secretary hosts two annual, fixed,
governance-related intervention sessions for the board, to which
the executive leadership is also invited. These sessions are an
opportunity to provide directors with a deeper understanding of
corporate governance matters, including an opportunity to focus
on new regulations or amendments to the regulatory environment
within which Exxaro operates. These sessions are included in the
annual corporate calendar to ensure maximum attendance by
directors.
The themes of the two governance sessions in 2022 were:
• Regulatory framework I (the regulatory universe applicable
to directors and prescribed officers as well as proposed
amendments to energy regulation)
• Regulatory framework II (competition law and amendments
to the debt and equity listing requirements)
Avoiding conflicts of interest
In terms of the Companies Act and King IV, directors and
prescribed officers have specific duties regarding disclosure
of actual direct and indirect conflicts of personal financial
interests as well as the perception of a conflict, including that
of their related parties.
The group has a conflicts of interest policy, which was extensively
reviewed in 2022. Focus was on line managers and management
assessing declarations received from employees. Additional
clarifications and guiding principles were included following
questions from employees and learnings from previous years.
Conflicts of interest policy and register (reflecting material
disclosures in line with the JSE Debt Listings Requirements)
The policy continues to place an obligation on directors,
prescribed officers and employees (as well as their related
parties) to firstly avoid conflicts of interest. It also lists several
unacceptable conflicts that may not be approved when declared.
Annual general declarations of outside interests are required from
directors and prescribed officers in accordance with section 75(4)
of the Companies Act. In terms of the policy, annual declarations
are also required from all employees in the group.
In addition to the annual declarations:
• An item dealing with the declaration of interests at the
beginning of each meeting appears on every board, board
committee, executive and management committee agenda
• All meeting attendees are required to formally declare that
none of them, nor their related parties, have any personal
financial interest in any matter on the agenda
• The abovementioned declarations are recorded in meeting
minutes
• A director or prescribed officer must indicate personal financial
interest in a matter to be decided through written resolution
by informing the group company secretary
Implementation and review of an electronic platform to facilitate
reporting, workflow approvals and an auditable communication
trail for disclosures by directors and employees began in 2022
and is effective. This includes the gifts and benefits register,
director trade clearances and policy management.
60 | Exxaro Resources Limited
Integrated report 2022
Performance and value creation
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Strategic direction
King IV articulates the responsibilities of the board, which is to
steer an organisation strategically in line with its core purpose
and values by approving as well as monitoring an informed
short, medium and long-term strategy while considering
sustainability-related impacts, risk and opportunities.
The board sets Exxaro’s short, medium and long-term
strategic direction through our Sustainable Growth and
Impact strategy. It enables sustainable value creation through
approval of a new capital allocation model and budget, setting
and monitoring performance and culture expectations as well
as a governance framework for the group.
Business continuity and crisis management plans
The board adopted an emergency response plan in 2019, focusing
on capability interfaces for crisis management and business
continuity, to ensure integrated disaster or incident response and
recovery.
The RBR committee oversaw the process of updating the following
business continuity governance documents:
• Emergency response plan
• Crisis management policy
• Business continuity plan
• Information management disaster recovery plan to reflect
changes in the internal and external environment
Furthermore, this process sought to align BUs with the board-
approved business continuity plan template, which is aligned to
ISO 22301 and British Standards Institution 11200:2014.
Performance targets to support our Climate
Change Response strategy
To strengthen GHG mitigation and business resilience efforts,
we included targets on water security and efficiency as well
as energy efficiency in the group’s STI scheme in 2022.
The energy efficiency targets relate to diesel and electricity
consumption. Diesel accounts for over 95% of our scope 1
GHG emissions, while coal-based electricity is 100% of our scope
2 emissions.
Implementation of these two KPIs is a progression of our Climate
Change Response strategy, our goal to be carbon neutral by 2050
and further alignment with the TCFD.
Internal reporting
We introduced a new format for internal reporting to the
board in 2022. Management is required to detail the outcomes
of proposed recommendations to the board in respect of:
• Strategy implications
• Financial implications
• Risk and compliance analysis
• ESG implications
Transparency
The board is committed to clear and comprehensive financial
reporting and disclosure as well as constructive shareholder
engagement, including transparency of activities and
performance. The board therefore ensures that reports
issued by the company enable stakeholders to make informed
assessments of the group’s performance as well as its short,
medium and long-term prospects.
Assurance
Refer to combined assurance (page 73) for detail on
assurance over key sustainability information in this report.
Performance evaluation
KPIs track the execution of Exxaro’s strategy for the board,
board committees, group and energy executive committees.
Exxaro uses a strategic performance dashboard that supports
reporting on the achievement of these KPIs. The dashboard was
reviewed in 2022 and its reporting philosophy revised. To measure
execution of Exxaro’s refined Sustainable Growth and Impact
strategy, reporting will focus on exceptions (out of appetite or
worst tolerable) going forward to ensure execution and tracking of
performance towards achieving the strategy and desired portfolio.
Through a cascade principle, the group executive committee
drives and reports on the selected board KPIs. The status of
the strategic performance dashboard is reported at board
meetings throughout the year, focusing on reporting to the
board what matters.
Strategic performance dashboard (page 48)
Exxaro Resources Limited
Integrated report 2022 | 61
Adequate and effective control
Group governance framework
To further allow Exxaro’s core businesses to thrive in an
increasingly dynamic market and industry sector, and to continue
to support the execution of the approved strategy, group
governance was extensively reviewed in 2021. The board adopted
a framework that provides an overview of governance structures,
principles, policies and practices, which together enable the
company to meet statutory and regulatory requirements, and
direct stakeholder engagements.
The legally sound framework guides monitoring and oversight
of business affairs to achieve accountability, authority and
sound decision making as well as policies to support the group
in achieving the Sustainable Growth and Impact strategy. It is
an entrenched governance principle within Exxaro that group
wide policies require board approval. All group-wide policies are
therefore submitted to the board for final approval.
The framework sets out the following:
• Statutory and regulatory framework of corporate governance
• Various group governance structures and role players
• Guiding principles that underpin effective corporate governance
and describe the role of the board regarding reserved matters,
delegations, policies and frameworks that apply across
the group
• The roles of:
– Shareholders and stakeholders as well as shareholder
reserved matters
– The board, board committees and reserved matters
– Executive management and the executive committee
– Independent control functions and structures within
the group
– The holding company, subsidiaries and other entities
Delegation of authority
The delegation of authority policy and framework defines the
limits of authority designated to specific positions of responsibility
in the company and the group’s management structure. It also
defines commitments and transactions that may include capital
amounts approved by individuals on Exxaro’s behalf. The final
approval of commitments and transactions outlined in the policy
must always be made by parties with designated authority.
The policy and framework are regularly reviewed to ensure
aligned decision making within a changing business environment.
This also provides direction and clear delegation of power
to management. The framework is adopted by our subsidiary
company boards and implemented throughout the group as part
of the overall group governance framework.
In 2021, the energy business-specific delegation of authority
was subjected to a rigorous review process by the executive
and the board with various opportunities to provide input around
delegations and oversight requirements. A revised energy-
specific delegation of authority framework was approved by the
board and adopted by the subsidiary company. Following this,
a review of sub-processes was scheduled for 2022 as it is a critical
governance pillar to ensure an effective control environment and
is a key enabler for the achievement of group-wide objectives.
A comprehensive review of the group delegation of authority
framework was conducted in 2022. Major changes were made in
respect of legends used to ensure clarity, further enhancements
as well as changes to actual delegations. It is planned to provide
separate approval frameworks for the subsidiary entities in 2023.
The board is satisfied that the delegations in place contribute
to role clarity and the effective exercise of authority and
responsibilities.
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Board committees
Exxaro’s corporate governance structure supports its ability
to create value in the short, medium and long term. Through
this structure, the board exercises effective control, builds and
protects the organisation’s reputation and legitimacy. We consider
good corporate governance the responsibility of our board, as well
as our executive leadership, management and all our employees.
The board committees enable the board to deal with more
issues with greater efficiency by having focused expertise
considering specific areas on behalf of the board. If approached
appropriately, the involvement of a committee should ideally
also enhance the objectivity of the board’s judgement. Therefore,
to assist the board with the execution of its functions, the board
delegates activities to board committees through formal terms
of reference. It should be noted that the board retains full and
effective control of the business and company affairs, and
does not assume management’s functions, which remain the
responsibility of the executive directors, prescribed officers and
other senior management.
In 2020, board committees embarked on a significant
transformation journey, focusing on reimagining the operating
model, acquisitions and evolving the broader business strategy.
This was driven by a changing business environment and
regulatory developments. To this end, Exxaro revisited and
enhanced the respective terms of reference of its corporate
governance structures. In line with King IV, these included:
• Exxaro’s current operating environment and the impact
of its activities on public interest
• Effective collaboration through cross-membership between
committees
• Balanced distribution of power
The terms of reference of the respective committees were
reviewed in 2022, including key focus areas and annual work
plans being revisited.
The board confirms that it is satisfied that the board
committees executed their roles and responsibilities. In this
regard it is confirmed that the audit committee has executed
the responsibilities set out in 3.84(g) of the JSE Listings
Requirements.
Subsidiary companies
The board, on behalf of the company, recognises the statutory
and fiduciary duties of directors of subsidiary companies
and, in particular, their duty to act in the best interests of the
subsidiary company at all times whether or not the director is
nominated to the board of the subsidiary company (in its capacity
as holding company). In the case of a conflict between the duties
of a director in a subsidiary company and the interests of the
company, as holding company, the duties of the director in the
subsidiary company must prevail.
The framework seeks to mitigate possible tension between the
holding company and its subsidiary boards through the following
measures:
• The board assumes overall responsibility for organisation and
strategic coordination within the group, including its vision,
mission and strategic direction, and oversees the group’s
performance
• Control of a subsidiary is achieved by implementing various
measures including:
– Approving its memorandum of incorporation (MoI) and
any amendments. In this regard, Exxaro’s wholly owned
subsidiaries have a pre-approved standard MoI applied on
establishment and any amendment will be considered for
approval by the RBR committee
– Election of directors by the subsidiary shareholder (which
may be delegated by the board as representative of the
subsidiary shareholder in the delegation of authority policy
and framework)
– Establishment and clear communication of the group’s
general strategy and its adoption by the subsidiary companies
– Requiring a shareholder vote or consent rights for specific
matters as per the subsidiary MoI and the delegation of
authority policy and framework (such as amendment of the
MoI or election of directors)
– Adoption of policies for key matters informed by the
corporate governance principles and reflected in the
framework
– Adopting the delegation of authority policy and framework on
establishment and when it is updated by the board
– Financial control through capital allocation and budget
approval for the group
– Having regular monitoring meetings among representatives
of Exxaro and its subsidiaries (as part of the Exxaro business)
to follow up on implementation of directives and performance
through regular reporting into the board committees
– Setting a corporate-wide independent internal audit function
with a direct reporting line to the group audit committee as
well as appointment of the group external auditor
– Implementing group-wide risk and compliance management
practices and other independent control functions
– Establishing an efficient information management system to
monitor key strategic indicators
The subsidiary directors are bound to adhere to the framework
and adopted group policies. This does not absolve the directors of
subsidiary boards from exercising their fiduciary duties. If directors
breach their fiduciary duties, they may be held liable under
section 77 of the Companies Act. This responsibility is clearly
highlighted for subsidiary directors.
Group-wide control functions
The group control and oversight functions consist of the corporate
secretariat, risk management, compliance management, legal,
strategy, internal audit and assurance, and finance (as it relates
to financial compliance), which are responsible for providing
enterprise-wide oversight on operational management and
consolidated reporting. The heads of these functions have direct
access to the board, audit committee and the RBR committee
(as appropriate).
The internal audit function does not receive delegations through
the CEO but is delegated authority directly by the audit committee
to execute responsibilities in terms of the internal audit annual
plan. The chief audit officer reports administratively to the
finance director.
The board is ultimately responsible for overseeing the
effectiveness of the oversight functions and ensuring an effective
internal control environment within the group.
Ownership structure (page 7)
Board’s access to information
The board charter guides our directors and management on the
information requirements to be shared with the board while the
onus remains on each director to advise the chairperson and/
or CEO should he or she be of the opinion that the information
provided is insufficient to enable informed decision making.
In addition, the board has unrestricted access to all company
employees, information, records, documents and property, and
a process to guide directors is provided should such access be
required. The board, in carrying out its tasks, may also obtain
outside or other independent professional advice it considers
necessary to carry out its duties. The required protocols for
requests of this nature is set out in the board charter.
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Technology and information management
The board governs technology and information management in
a way that supports the organisation setting and achieving its
strategic objectives.
The board has mandated the RBR committee, as part of its
business resilience focus, to oversee Exxaro’s ERM process,
including key risks facing the company and group and responses
to address these risks, including information management
risks. In addition, the RBR committee has a specific mandate to
oversee governance of the information management strategy
as well as integration of overall direction, context and objective
for the improvement programme, and ensure alignment with the
enterprise business strategy, governance and risk management.
In addition, the audit committee is responsible to ensure adequate
information technology governance through delegation to the
information management steering committee.
Information management risks and mitigation measures are
monitored continuously, including assessment of emerging risks,
and reported to the RBR committee quarterly.
The top five information management risks identified at the end
of 2022:
1
2
3
4
5
Cybersecurity: data theft
Availability and quality of data
Information technology disaster recovery strategy, plan
and procedures
Cyber threat: malware
Cyber threat: disruption of operations
Cybersecurity remains the biggest identified and managed risk. EY
concluded a cybersecurity assessment in 2021, assessing the same
metrics as in 2018, and found a substantial improvement across all
metrics. Exxaro’s scores are much higher than the mining industry
peer group. Based on the assessment, a new cybersecurity
programme was defined to achieve further improvements. Exxaro’s
cybersecurity profile (Microsoft Compliance Score) rating at the
end of September 2022 was 75.73%, which meets the 70% target
for the year with stretch target of 80%.
Integrated ERM
Exxaro’s ERM framework provides a process for effective
management of all types of risks. We follow a layered approach
(top-down and bottom-up) considering all risks and impacts. The
same terminology and assessment mechanisms are used across
the organisation from finance to projects, safety and operational
risk management, etc. A set of risk names is in our risk catalogue,
and one impact and one likelihood scale is used across different
disciplines to ensure management concentrates efforts and
resources on material activities.
The company links all risks, assurance activities and material
issues to reduce assurance costs and derive greater value
from auditing controls. A tracking and monitoring system is
applied for transparency in audit findings to be closed out. The
risk management function, through the combined assurance
model, coordinates with internal audit to obtain evidence on the
effectiveness of treatment and control activities in achieving the
desired and planned risk treatment outcome. Assurance providers
(internal audit, sustainability KPI audits, external assurance
providers, self-assessments and accreditation reviews) monitor
effectiveness of significant risk treatments and compliance with
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Integrated report 2022 | 63
Adequate and effective control continued
regulatory requirements, non-binding rules, codes and standards
as well as policies and procedures.
• Ensuring compliance is continually monitored and reported by
management, and external and internal audit
The ERM framework and process are based on principles
published by the Committee of Sponsoring Organizations of the
Treadway Commission, the ISO 31000 international guideline on
risk management and King IV. It also considers applicable codes of
best practice such as ISO 9001, 14001 and 18001.
The ERM framework is reviewed regularly to ensure alignment
with current governance practice and standards. The board is
satisfied that the company and group have a mature risk process
that ensures risks potentially impacting its strategic objectives are
pursued by management to create shareholder value.
In terms of our group governance framework, risk management
is an independent control function across the group and our chief
risk officer is a standing invitee to RBR committee and group
executive committee meetings.
The strategic risks profile, highlighting the group’s material risks,
including Cennergi’s top risks, and emerging risks are reported
quarterly to the RBR committee and the board.
Our business risks and opportunities (page 26)
Beyond compliance
The group is committed to:
1
2
3
Maintaining high standards of integrity, professionalism
and ethical behaviour in its relationships
Compliance with the letter and spirit of the law and
regulations governing its conduct by ensuring the
organisation acts with due skill and diligence
Conducting its business in adherence to statutory,
supervisory and regulatory requirements
While Exxaro drives compliance with relevant regulatory
requirements in its jurisdictions, the law serves as a minimum
standard of conduct. Beyond complying with the law, Exxaro
promotes a compliance culture at all levels.
The group’s compliance philosophy is captured in a compliance
policy, which supports ethical and responsible corporate
citizenship, and seeks to create sustainable value for all
stakeholders by striving for operational efficiency, growth and
regulatory compliance with applicable laws.
The regulatory environment in which the group operates is
regularly revisited by management to identify material legislation
and to categorise each using a risk-based approach.
Key focus areas of the 2022 annual compliance plan included:
• Closing out of the POPIA implementation project with an
internal audit to ensure compliance
• Updating regulatory compliance content available to business
as well as the compliance calendar
Notwithstanding the regulatory jurisdiction of the business,
Exxaro has a compliance function that reports to the chief risk
officer. The group governance framework confirms the role of the
chief risk officer with respect to regulatory compliance in that
the person has oversight over group compliance management
to monitor regulatory compliance and ensure consolidated
compliance reporting.
Exxaro’s board is responsible for ensuring that the company and
its employees comply with all applicable laws and regulations, and
consider non-compliance with legal and regulatory requirements
a key risk. Accordingly, the board has delegated the responsibility
for managing Exxaro’s compliance risks to the RBR committee.
The board’s RBR committee is responsible for:
• Overseeing regulatory compliance risks, policies and
frameworks
• Monitoring compliance with agreed policies, national and
international protocols and procedures on non-financial aspects
in collaboration with the SERC
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Combined assurance model
Exxaro applies a combined assurance model to optimise assurance
by management, as well as internal and external service providers,
while fostering a strong ethical climate and mechanisms to
ensure compliance. Using our board-approved ERM approach,
management identifies key risks facing Exxaro and implements
the necessary internal controls with comparable information for
trend analysis where possible.
The audit committee is responsible for overseeing the use of a
combined assurance model to achieve the following objectives:
• Enabling an effective internal control environment
• Integrity of information used for internal decision making by
management, the board and its committees
• Supporting the integrity of external reports
The board and audit committee found the effectiveness of
controls for the year ended 31 December 2022 as satisfactory.
This was concluded principally through a process of management
self-assessment (including formal confirmation by executive
management), reports from internal audit, independent external
audit and other assurance providers.
Exxaro defines assurance broadly to cover all sources, including
external assurance, internal audit, management oversight
and regulatory inspections. The three lines of defence clearly
delineate the roles of internal stakeholders, ensuring common
procedural understanding when tackling risks.
Our combined assurance model includes and optimises all
assurance services and functions to collectively provide an
effective control environment and support integrity of information
used for internal decision making by management, the board and
its committees, and in our external reports including:
• Corporate governance disclosures in terms of King IV
• Financial statements and other external reports including our
integrated and ESG reports
The forum’s activities and outcomes of assurance reports are
presented quarterly to the audit committee.
Combined assurance report (page 73)
Overdue and repeat findings
A new issue tracking management system was installed and
configured with the business user launch and training in October
2022. This system will capture and track the status of all internal
audits and other assurance providers findings, and all overdue and
repeat findings will be reported at each audit committee meeting.
Independence of audit and assurance functions
To ensure independence of our audit and assurance functions,
the following measures have been put in place:
• Effective for the financial year ended 31 December 2022,
KPMG was appointed as Exxaro’s new independent external
auditor together with its delivery partner, AM PhakaMalele,
approved by shareholders at the AGM held on 25 May 2022
by way of a separate resolution of shareholders in terms of
the JSE Listings Requirements paragraph 3.84(g)
• Change in internal audit service provider: PwC and its service
delivery partner, Ngubane & Co, were appointed as Exxaro’s
internal audit service provider from 1 July 2022
• A framework for engagement of auditors to supply non-audit
services was adopted in 2021 and confirmed that KPMG, in
terms of its policy, is not allowed to perform non-audit services
• Internal audit function is confirmed by our group governance
framework as an independent control function across the group
• Internal audit charter (reviewed in 2022) informs the role and
scope of work of the internal audit function
• Chief audit officer of Exxaro and the internal audit function
report directly to our audit committee and is administratively
overseen by the finance director
Trust, good reputation and legitimacy
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Stakeholder inclusivity
Exxaro’s board has a stakeholder-inclusive approach that,
supported by its key account management approach to
stakeholder engagement, responds to principle 16 of King IV
regarding stakeholder inclusivity and responsiveness. It aims
to balance the needs, interests and expectations of material
stakeholders in the organisation’s best interest over time to
protect and build trust in the organisation and its reputation and
legitimacy in the eyes of our stakeholders.
As recommended by King IV, Exxaro’s disclosure regarding
stakeholder relationship management reflects our management
approach, key focus areas and stakeholder management activities.
Creating value through stakeholder engagement (page 36) and
stakeholder management (ESG report, page 24)
Internal communication
CEO’s roadshow
As part of her transition, our new CEO challenged employees to
#GetOnTheBus during roadshows at BUs and head office. The
CEO engaged with employees on opportunities presented by
Exxaro’s Sustainable Growth and Impact strategy and shared how
employees could actively participate in the growth and success of
Exxaro and our country.
External communication
Stakeholder days
The purpose of the stakeholder day virtual events was:
• To communicate Exxaro’s performance to stakeholders
• For SERC and the board to engage with a diverse set of
stakeholders by listening to community feedback and receiving
an account from beneficiaries on Exxaro’s social performance
and impact
The stakeholder engagements were scheduled over three
days with ESD and socio-economic development stakeholders
in Limpopo and socio-economic development stakeholders in
Mpumalanga. Participants included:
• National, district and local government
• Community leaders (including tribal authorities, community
structures, NGOs and strategic business partners)
• Union representatives
• ESD programme implementation partners
• SLP, ESD and mega-projects beneficiaries
Other external communications
The following external communication (among others) took place
in 2022:
•
Publication of the annual reporting suite (integrated report,
ESG report and climate change position statement)
• AGM (presentation of annual financial statements, report of the
SERC and various other resolutions for voting by shareholders)
SENS announcements
•
• Interim and annual financial results presentations by executive
management
• Results roadshows following the annual and interim results
presentations for interaction with investors
• SLP future forums that play an important role in engaging with
labour representative groups to promote ongoing discussions
about the future of mines, to identify possible challenges and
solutions for productivity and employment, and to improve
business sustainability
• Sustainability summit in Middelburg, Mpumalanga
Governance roadshow
•
• COP27 (in November 2022) at which Exxaro presented its
response to the climate change risk
Integrity in reporting
The board ensures the integrity of the company’s integrated
report and its alignment with best practice in integrated reporting,
including other reporting by the company.
The board also oversees the publication of our annual financial
statements, ESG report, and the reports of our audit committee,
SERC, RBR committee, investment committee, and remuneration
and nomination committees as well as the remuneration report
and other online or printed information that complies with
legal requirements and meets the legitimate and reasonable
information needs of stakeholders.
Anti-corruption
The board approves the group-wide anti-bribery and
anti-corruption policy. The SERC receives quarterly reports on
forensic investigation statistics and progress with initiatives
under the SERC-approved fraud prevention and anti-bribery
and corruption programme. For the oversight role of the SERC,
please consider the SERC report.
Responsible corporate citizenship
The board ensures the organisation’s strategy and conduct reflect
its purpose of powering better lives in Africa and beyond and to be
a responsible corporate citizen in giving effect to its purpose.
As the organisation is an integral part of society, the board
sets the strategic direction and ensures that the company’s
responsible corporate citizen efforts include compliance with the
Constitution of South Africa (including the Bill of Rights), the law,
leading international and national standards, and its own codes of
conduct and policies.
The board exercises independent judgement in overseeing
management and safeguarding the interests of all stakeholders,
including our shareholders. In fulfilling its stewardship role, the
board seeks to instil and foster a corporate environment founded
on integrity, and to provide management with sound guidance
in pursuit of long-term shareholder value, ensuring that the
company provides sustainable value to society as a whole.
Governance
It is the SERC’s role, as amended in 2021, to entrench responsible
corporate citizenship as part of the committee’s focused
activities. The role and responsibility of the board’s SERC includes
overseeing the impact of the consequences of the group’s
activities and outputs on its status as a responsible corporate
citizen in:
• Economy: economic transformation as well as fraud and
corruption prevention, detection and mitigation
• Society: public health and safety, consumer protection,
community development and protection of human rights
Commitments
Following an internal gap analysis in 2021, the board revisited,
amended and approved Exxaro’s human rights policy in 2022.
Fundamental to Exxaro’s purpose of powering better lives, is our
stance that all people have inherent fundamental human rights
regardless of their differences. As such, Exxaro is committed to
respecting and upholding human rights for all people in its sphere
of influence where the company has power to effect investment
and development. Exxaro is guided by the Constitution, applicable
legislation and external standards such as the Minerals Council’s
human rights framework, the UNGC principles on human rights,
labour, environment and anti-corruption.
Human rights (page 99)
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Integrated report 2022 | 65
Trust, good reputation and legitimacy continued
Exxaro remains committed to supporting the 10 principles of the
UNGC. The UNGC principles are embedded in our Sustainable
Growth and Impact strategy, values, operations and stakeholder
engagements in alignment with our endeavours to meet the
SDGs. We believe that Exxaro’s voluntary participation in the
UNGC advances the case for responsible business practices
and encourages our stakeholders to do the same. It holds us
accountable to a global standard as we strive to become a catalyst
for economic growth and environmental stewardship.
Bloomberg Gender-Equality Index recognised Exxaro in 2023 for
the fourth consecutive year for the company’s accomplishment
in a predominantly male dominated industry sector. The
Gender-Equality Index framework defines a set of metrics used
to determine a company’s progress towards equal representation
of gender through the various employment levels of the
organisation. Therefore, various global experts submit the
Bloomberg social survey to be evaluated on the achievement or
adoption of best-in-class statistics and policies.
UNGC communication on progress
Health and safety
The importance of safety in the workplace receives focused
attention at each board, board committee and executive
committee meeting. This is achieved through a standing safety
moment item on all agendas.
In addition to SERC’s mandate, the RBR committee is responsible
for reviewing health and safety risks and focuses on reported
high-potential incidents (HPIs) and lost-time injuries (LTIs).
Safety (ESG report, page 62) and health and wellness
(ESG report, page 64) outline our approach and performance.
Focus areas
Our focus areas in 2022 (going into 2023) included:
• Approved a new ethics strategy and management plan
• Developed and approved a revised human rights policy
• Compulsory group-wide anti-bribery and anti-corruption
training on MyNexxt to be completed in 2023
• Compulsory training of directors, prescribed officers, group
company secretary and directors of major subsidiaries on
insider dealing and training available on MyNexxt
Reputation
The Sunday Times Top 100 Companies Awards ranked Exxaro fifth
for the second year. The awards recognise JSE-listed companies’
contributions to the economy and social progress through
investments, initiatives, and job creation. The awards also applaud
these private-sector companies for achieving the highest returns
for their shareholders over the past five years.
Exxaro also won Capital Finance International’s 2021 award for
best sustainable mining leadership in South Africa in recognition
of our renewable energy efforts and investment. The award
acknowledges Exxaro’s work in realising a regenerative economic
model for its mining operations.
In addition, Exxaro received Top Employers Institute recognition
for its industry-leading people development practices. This
reflects our dedication to a better working world through excellent
human resources policies and people practices. This is the third
time Exxaro has received this honour since 2014.
Our strategic evolution (ESG report, page 4) lists our awards
over the years.
Transition Pathway Initiative
The Transition Pathway Initiative (TPI) is a global initiative led by
asset owners. It assesses individual companies’ positioning for the
transition to a low-carbon economy.
Exxaro’s TPI score of level 4 reflects our GHG emissions, risks and
opportunities related to the low-carbon transition.
Our TPI score was level 2 in 2016 and 2018. It improved to level 4
in 2019 and we have maintained this achievement since then.
TPI performance scores
Level 0: Unaware of climate change as a business issue
Level 1: Acknowledging climate change as a business issue
Level 2: Building capacity
Level 3: Integrating into operational decision making
Level 4: Strategic assessment
Delivering measurable results and impact (ESG report, page 10)
Disclosure recognition 2022
• EY Excellence in Integrated Reporting: Our 2021 integrated
report earned a historical fifth place among the Top 10 (the
highest achievement in our history)
• Global ESG Investing Awards: Exxaro’s 2021 ESG report earned
second place among the best sustainability reports in the world
• FTSE Russell ESG performance:
– Overall final ESG score of 3.8
– Our governance reporting score increased from 4.6 (2018 to
2021) to 4.7
• MSCI ESG rating: Exxaro sustained its “A” rating and improved
in the “E” (environment) category. The governance category,
measuring corporate governance and corporate behaviour,
where the company scored 6.9 out of 10, compared to the
industry standard rating of 3.9
Delivering measurable results and impact (ESG report, page 9)
66 | Exxaro Resources Limited
Integrated report 2022
Audit committee
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Chairperson: Vuyisa Nkonyeni
Members: Billy Mawasha, Isaac Mophatlane, Ras Myburgh
and Chanda Nxumalo
Meetings: Six
Attendance: 88.5%
Audit committee report (ESG report, page 120)
Composition during 2022
Vuyisa Nkonyeni
Chairperson
Billy Mawasha
Isaac Mophatlane
Ras Myburgh
(retired 25 May 2022)
Chanda Nxumalo
Role and purpose
The committee is an independent, statutory committee whose members are appointed annually by Exxaro’s shareholders in compliance
with section 94 of the Companies Act and the principles of good governance. In terms of the Companies Act, this committee has an
independent role with accountability to the board and shareholders of the company. The committee does not assume the functions of
management, which remain the responsibility of the executive directors, prescribed officers and other members of senior management,
nor does it assume accountability for the functions performed by other committees of the board. In addition to the Companies Act, the
committee’s duties are guided by the JSE Listings Requirements and King IV.
The committee is governed by its terms of reference that codify its role and responsibilities. To assist the board, the committee plays an
essential role in providing independent oversight of:
• Quality and integrity of the financial statements and related public announcements
• Integrity and content of the integrated reporting process
• Qualification and independence of the external auditor
• Scope and effectiveness of the external audit function
• Scope and effectiveness of the overall combined/integrated assurance process
• Effectiveness of internal controls and the internal audit function
• Assessing the adequacy of the company’s insurance arrangements with regard to the nature of its business and insurable risks
• Integrity and efficacy of the risk management process relating specifically to internal controls and financial reporting risks through
assurance over system controls and policies in place
Terms of reference
The terms of reference were reviewed and enhanced in accordance with the 2022 Institute of Directors South Africa guidance for audit
committees and approved by the board. The terms of reference continue to be aligned with legislation, regulations and King IV.
Key focus areas for 2022 and 2023
Review the strategy in relation to the deployment of new post-modern ERP Solutions to ensure acceptable cost,
risk and alignment with the Exxaro strategy
Ensure alignment of the combined assurance process, internal audit plan and external audit plan in terms of a
risk-based approach
Review Exxaro’s future strategy relations to insurance cover and self-insurance, taking into account global
resistance to thermal coal and insurance markets
Continued to oversee the project plan for financial and risk-based disclosures in terms of Exxaro’s aim to comply
with the TCFD
Approve the levels of materiality to be used for internal audit (including audit protocols and classification of
findings) and consider levels of materiality for the independent external auditor
Oversee transition plans for internal and external audit functions
Status
Ongoing
Achieved
Ongoing
Ongoing
Achieved
Achieved
Confirmation
The committee, in carrying out its duties, has due regard to its terms of reference, the Companies Act and the JSE Listings Requirements
as well as the principles and recommended practices of King IV. The committee is satisfied that it has considered and discharged its
responsibilities in accordance with its terms of reference and confirms that it fulfilled its mandate and responsibilities in terms of the
Companies Act, the JSE Listings Requirements and King IV.
Exxaro Resources Limited
Integrated report 2022 | 67
Investment committee
Chairperson: Isaac Mophatlane
Members: Billy Mawasha, Isaac Malevu, Mandlesilo Msimang,
Chanda Nxumalo, Vuyisa Nkonyeni and Peet Snyders
Meetings: Eight
Attendance: 85.5%
Investment committee report (ESG report, page 124)
Composition during 2022
Isaac Mophatlane
Chairperson
Billy Mawasha
Isaac Malevu
Mandlesilo Msimang
Chanda Nxumalo
Vuyisa Nkonyeni
Peet Snyders
Role and purpose
The committee has an independent role in terms of which it operates and makes recommendations to the board, monitors on behalf of the
board and reports to the board on material acquisition, merger/investment or disposal opportunities, and ongoing material transactions
and related matters in the scope of the approved energy and minerals sustainable growth strategy, including ongoing portfolio
management of these businesses, existing and post-investment reviews and management.
The committee’s role is to review the strategic fit and risk appetite, and financial, technical and legal due diligences for major investments.
It shall further ensure adherence to all Exxaro’s governance processes at all times and that the approved hurdle rates, set from time to
time, are met before any funds are committed. An investment opportunity will therefore first serve at the investment committee where a
detailed review shall be conducted in line with the investment criteria approved by the board. After the review, the investment opportunity
may be recommended by the committee to the board for final approval.
The committee’s role expanded in 2022 to include consideration of Exxaro’s capital allocation strategy.
Terms of reference
The committee’s terms of reference were reviewed and are aligned with legislation, regulations and King IV. The committee is satisfied
that it has conducted its affairs and discharged its responsibilities in accordance with its terms of reference.
Key focus areas for 2023
Divestments: The committee received updates on the proposed divestments in line with Exxaro’s strategy
Acquisitions: The committee considered potential acquisitions by the energy and minerals business in line with
Exxaro’s strategic objectives
Governance: The committee reviewed its terms of reference
Investment framework: To ensure it fulfils its role, the committee considered a framework that would serve as a
guideline for presentations of investment and acquisition opportunities
Status
Ongoing
Ongoing
Ongoing
Ongoing
Confirmation
The committee, in carrying out its duties, has due regard of its terms of reference and the principles and recommended practices of King IV.
68 | Exxaro Resources Limited
Integrated report 2022
Remuneration committee
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Chairperson: Dr Phumla Mnganga
Members: Mvuleni Geoffrey Qhena, Dr Geraldine Fraser-Moleketi,
Zwelibanzi Mntambo and Ras Myburgh
Meetings: Seven
Attendance: 90.3%
Remuneration committee report (ESG report, page 126)
Composition during 2022
Dr Phumla Mnganga
Chairperson
Mvuleni Geoffrey
Qhena
Dr Geraldine Fraser-
Moleketi
Zwelibanzi Mntambo
Ras Myburgh
(retired 25 May 2022)
Role and purpose
The committee’s terms of reference leverage the benefit of cross-membership for fulfilment of remuneration matters as well as board
governance and nomination matters.
The committee is accountable to the board for execution of its independent and objective oversight set out below.
Duties and responsibilities of the remuneration committee
• Remuneration governance
• Oversee development and regular review of the remuneration policy that articulates and gives effect to the board’s direction on fair,
responsible and transparent remuneration
• Oversee implementation and execution of the remuneration policy
• Exercise any power or discretion vested in the board under any remuneration scheme established for the benefit of employees of the group
• Review executive and senior management remuneration and performance measurement
• Oversee fees for non-executive members for services as directors, as approved by shareholders
• Provide mandates for non-bargaining and bargaining unit employees’ salary negotiations
• Governance of performance management
The committee does not assume the functions of management, which remain the responsibility of executive directors, prescribed officers and
other members of senior management. It also does not assume accountability for the functions performed by other committees of the board.
Where board committee focus areas dovetail or overlap with this committee’s oversight, there is seamless collaboration between committees
to execute the broader effectiveness objective of the board — for example, in support of the diversity and inclusion strategy execution, as it
applies to fair pay or application of mechanisms to achieve and exceed employment equity.
Terms of reference
The committee’s terms of reference were reviewed in 2022 and amendments were approved by the board. The terms of reference continue
to be aligned with legislation, regulations and King IV.
Key focus areas for 2023
Approval of Cennergi’s organisational structure and appointment of head distributed generation
Revised group remuneration policy and reward framework
Implemented incentives and scorecards: group STI, long-term incentive and production incentive schemes
Revised performance management processes aligned to strategic objectives
Board committee composition review and board and executive management succession planning including
appointment of managing director: minerals
Executive officer transition
Policy improvements: Employee leave conditions and parental leave policy
Non-executive director remuneration
Committee work plan and terms of reference review
Board continuing professional development
Status
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Confirmation
The committee is satisfied that its ongoing work aims to align remuneration with the organisation’s values of fairness and equity. The
company continues to strive towards remuneration of employees in accordance with market-related salaries and equitable awards across
the organisation.
The committee is also satisfied that employees are invested in achieving the company’s strategic goals through a remuneration philosophy
and policies that incentivise short-term and long-term performance awards with sufficient stretch built into targets.
Exxaro Resources Limited
Integrated report 2022 | 69
Nomination committee
Chairperson: Mvuleni Geoffrey Qhena
Members: Dr Geraldine Fraser-Moleketi, Dr Phumla Mnganga,
Zwelibanzi Mntambo and Ras Myburgh
Meetings: Seven
Attendance: 90.3%
Nomination committee report (ESG report, page 130)
Composition during 2022
Mvuleni Geoffrey
Qhena
Chairperson
Dr Geraldine Fraser-
Moleketi
Dr Phumla Mnganga
Zwelibanzi Mntambo
Ras Myburgh
(retired 25 May 2022)
Role and purpose
The committee’s terms of reference leverage the benefit of cross-membership for the fulfilment of remuneration matters as well as board
governance and nomination matters.
The committee is accountable to the board for the execution of its independent and objective oversight set out below.
Duties and responsibilities of the nomination committee
• Board and board committee structure, size and composition
• Monitoring the board’s performance against race and gender diversity representation targets
• Nomination and appointment of directors
• Induction and ongoing development of directors
• Board and board committee succession planning for key positions, including chairperson and committee chairpersons
• Review succession planning for executive directors, key group executives and subsidiaries, and ensure availability of the succession
plan for the CEO and finance director
• Board and board committee performance evaluation
The committee does not assume the functions of management, which remain the responsibility of executive directors, prescribed officers
and other members of senior management. It is also not accountable for the functions performed by other committees of the board.
Where board committee focus areas dovetail or overlap with this committee’s oversight, there is seamless collaboration between
committees to execute the broader effectiveness objective of the board — for example, in support of the diversity and inclusion strategy
execution as it applies to fair pay or the application of mechanisms to achieve and exceed transformation targets.
Terms of reference
The committee’s terms of reference were reviewed in 2022 and the amendments approved by the board. The terms of reference continue
to be aligned with legislation, regulations and King IV.
Key focus areas for 2023
Diversity and inclusion policy
Board composition
Induction and ongoing development of directors
Nomination and appointment of directors
Succession planning
Performance
Status
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Confirmation
The nomination committee, in carrying out its respective duties, duly regarded the principles and recommended practices of King IV.
The committee is satisfied that it has considered and discharged its responsibilities in accordance with its terms of reference.
70 | Exxaro Resources Limited
Integrated report 2022
Risk and business resilience committee
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Chairperson: Peet Snyders
Members: Ben Magara, Mandlesilo Msimang,
Ras Myburgh and Chanda Nxumalo
Meetings: Five
Attendance: 100%
Risk and business resilience committee report (ESG report, page 133)
Composition during 2022
Peet Snyders
Chairperson
Ben Magara
Mandlesilo Msimang
Ras Myburgh
(retired 25 May 2022)
Chanda Nxumalo
Role and purpose
The committee is a board committee in terms of section 72 of the Companies Act, the company’s MoI and King IV. The committee’s role is
as follows:
Risk management
The committee’s role is to oversee the implementation of an effective policy and plan for risk management that will enhance the group’s
ability to achieve its strategic objectives and that disclosure regarding risk is comprehensive, timely and relevant. Risk management is
the process effected by the board, management and other personnel, applied in strategy setting and across the enterprise, designed
to identify potential events that may affect the organisation and manage risks to be within its risk appetite, and ultimately to provide
reasonable assurance regarding achievement of the organisation’s objectives. Risk governance refers to the governance structures and
mechanisms established within the organisation in terms of which decisions regarding risk are taken and implemented. The committee
is responsible for reviewing the ERM process, including key risks facing Exxaro as well as responses in place to address these risks with
particular focus on:
• Strategic risks
• Financial risks (technical debate on managing financial risk will take place at audit committee meetings but financial risks are part of the
overall enterprise risk register over which this committee has oversight)
• Operational risks
• Regulatory compliance risks
Business resilience
Business resilience is the ability of an organisation to absorb and adapt in a changing environment to enable it to deliver its objectives,
survive and prosper. Risk, incident, crisis and business continuity management are among the four key elements of business resilience.
The role of the committee is to oversee the appropriateness of Exxaro’s crisis response plans and frameworks.
Terms of reference
The committee’s terms of reference were reviewed and enhanced in accordance with the 2022 Institute of Directors South Africa
guidance, and approved by the board. The terms of reference continue to be aligned with legislation, regulations and King IV.
Key focus areas for 2022/2023
Review relevance of current KPIs and completeness of current and emerging risks in line with approved strategy
Review risk governance efforts to ensure monitoring of key risks impacting strategic objectives (includes review
of completeness of current and emerging risks in line with strategy)
Ensure effective plans are in place based on the impact of business disruption (plans are up to date and no
significant incidents occurred that led to business disruption)
Review Exxaro’s risk appetite
Review Exxaro’s key compliance risks related to licence to operate
Based on the key risks, recommend appropriate predictive and proactive reporting as well as engagement with
key stakeholders (including integrated report)
Review governance of technology and information to ensure incorporation of technology and information risks
to enable strategy delivery and ensure business resilience
Review business resilience key elements to ensure business strategy compliance
Status
Ongoing
Ongoing
Ongoing
Achieved
Achieved
Achieved
Ongoing
Achieved
Confirmation
The committee is satisfied that it has discharged its responsibilities and fulfilled its mandate in accordance with its terms of reference, the
Companies Act and King IV.
Exxaro Resources Limited
Integrated report 2022 | 71
Social, ethics and responsibility committee
Chairperson: Dr Geraldine Fraser-Moleketi
Members: Karin Ireton, Likhapha Mbatha, Isaac Mophatlane
and Peet Snyders
Meetings: Six
Attendance: 93.3%
Social, ethics and responsibility committee report (ESG report, page 138)
Composition during 2022
Dr Geraldine
Fraser-Moleketi
Chairperson
Karin Ireton
Likhapha Mbatha
Isaac Mophatlane
Peet Snyders
Role and purpose
The committee mandate derives from the company’s commitment to proactively managing its economic, environmental and social impacts,
and the public interest, in addition to those laid down in section 72(4) of the Companies Act, read with Regulation 43, the MoI and King IV.
The company recognises that it forms part of an interrelated community and as such may have positive and negative impacts on the
public interest and the global goal of sustainable development. The committee oversees the company’s ethics with regard to business
practices, its relationships with its employees and other stakeholders and the natural environment. It assists the board by monitoring the
extent to which the group is achieving its shared value goals in a sustainable manner.
The board has primarily entrusted the committee with shared oversight of sustainability management without relinquishing overall
responsibility.
ESG oversight by board committees (page 58)
ESG matters shape and direct board discussions. This committee tracks the group’s performance in line with the strategic KPIs within
the committee’s oversight responsibility. These indicators inform matters within the committee’s mandate, which are brought to the
attention of the board for discussion when required. As reported, under the auspices of the committee we are steadily working towards
decarbonisation through our Sustainable Growth and Impact strategy. Our strategic objectives advocate for a Just Transition in a manner
that balances South Africa’s economic development needs, ecosystem protection and social adaptive capacity.
The committee thus performs an oversight role of the organisation’s actions and outputs (how the company conducts business,
specifically the application of its value system surrounding ethical standards and social responsibility).
Terms of reference
The committee’s terms of reference were extensively reviewed in 2021 to include responsible corporate citizenship in its role and
responsibilities. The terms of reference were reviewed in 2022 and the amendment approved by the board. The terms of reference
continue to be aligned with legislation, regulations and King IV.
Key focus areas 2023
Oversee implementation of the diversity, equity and inclusion strategy in support of the overarching Exxaro strategy
as a key business value driver
Scrutinise human capital strategies, human capital investment and oversight (strategic workforce issues) that impact
the group’s brand and reputation
Oversee implementation of the stakeholder engagement strategy and key account management of eight identified
stakeholder groupings
Review ongoing anti-bribery and anti-corruption programme implementation including rolling out of conflicts of
interest programme and ensuring an ethical culture
Ensure ESG is leveraged to build long-term competitive advantage, enhance resilience to sustainability risks and
attract socially conscious investors, talent and customers
Status
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Confirmation
The SERC is pleased to confirm that, in carrying out its duties, as prescribed, it has duly regarded King IV principles and recommended
practices, and has discharged its responsibilities in accordance with its terms of reference and the Companies Act. Beyond mere
compliance, the committee is also satisfied that it has fulfilled its non-statutory mandate and that there are no material instances of non-
compliance to disclose. If any material non-compliance existed, it was duly considered during the year in review.
72 | Exxaro Resources Limited
Integrated report 2022
Combined assurance for
effective governance
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
The board, supported by the audit committee, is ultimately responsible for Exxaro’s system of internal controls, which has been designed
to evaluate, manage and provide reasonable assurance against material misstatement and loss.
We apply a combined assurance model to optimise assurance by management, as well as internal and external providers, while fostering
a strong ethical climate and mechanisms to ensure compliance.
Using our board-approved ERM approach, management identifies key risks facing Exxaro and implements the necessary
controls (page 26) with comparable information for trend analysis where possible.
internal
The board and audit committee assessed the effectiveness of controls for the year ended 31 December 2022 as satisfactory, principally
through a process of management self-assessment (including formal confirmation by executive management), reports from internal audit,
independent external audit and other assurance providers.
Approach, governance and reporting
Exxaro defines assurance broadly to cover all sources, including external assurance, internal audit, management oversight and
regulatory inspections.
Our combined assurance model includes and optimises all assurance services and functions to collectively provide an effective control
environment and support the integrity of information used for internal decision making by management, the board and its committees,
and in our external reports including:
• Corporate governance disclosures in terms of King IV
• Financial statements and other external reports, including our integrated report and ESG report
The forum’s activities and outcomes of assurance reports are presented quarterly to the audit committee.
Assurance review
For the year under review, the sources, level and focus area of assurance, commissioned and performed, are summarised below.
Focus area
External/statutory audit
Sustainable development/KPIs
Environmental liability provisioning
Mining rights and environmental legal compliance
B-BBEE dtic code compliance
Mining Charter III compliance
Insurance risk surveys
Major and mega capital projects
Mineral Resources and Mineral Reserves statement
Governance, risk and internal controls
Employee benefits
SLP projects
ISO and OHSAS certifications
Assurance
provider
KMPG
KPMG
KPMG
Inlexso
Empowerdex
Ngubane
IMIU
PWC/ EY
PWC/EY
PWC/EY
Ngubane
Ngubane
Various
Function assured
Tier/level of
assurance*
3
3
3
3
3
3
3
3
3
3
3
3
3
Corporate
Yes
Yes
Yes
Yes
Yes
Yes
Yes
BU
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
* Tier/level of assurance refers to independent external assurance.
Outcome of assurance 2022
As 31 December 2022 there were 394 open findings, reflecting an increase of 73 open findings in the year. Of the 394 open findings,
310 (79%) findings are classified as “Ready for Audit” (a three-month “waiting” period is applied before performing follow-up procedures
for the control to be fully embedded). The split by status of findings is depicted in the chart below.
Status of findings
Follow-up in progress
Ready for audit
Within timelines
Overdue
Total
Overdue findings have been classified by ratings assigned in the final audit report and split into sources below.
Source
Internal audit
Other assurance providers
Total
Level 1
(high)
0
2
2
Level 2
(medium)
18
9
27
Level 3
(low)
1
1
2
Not rated
0
0
0
Refer to Appendix A (page 167) in the ESG report for detailed disclosure.
Current period reporting
Internal
audit
Other
assurance
providers
Total for the
current period
30
107
14
19
170
7
203
2
12
224
37
310
16
31
394
Total
19
12
31
Exxaro Resources Limited
Integrated report 2022 | 73
Our
performance
Our values and culture are
driving us towards our goals for
society and the environment at
large: we are empowered to grow
and contribute within honest
and responsible teams who are
committed to excellence.
75 Finance director’s overview
86 Operational performance
88 Business resilience
92 Our people
101 Social licence to operate: earning our legitimacy
103 Our environment: stewardship and compliance
112 Responding to TCFD reporting requirements
74 | Exxaro Resources Limited
Integrated report 2022
Finance director’s overview
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Riaan Koppeschaar
Finance director
Revenue of
R46.4 billion
up 41%
Adjusted equity-accounted
income of
R7.3 billion
down 26%
Cash generated
by operations at
R18.9 billion
up 79%
EBITDA of
R19.0 billion
up 78%
Headline earnings of
R60.16 per share
up 28%
Total ordinary dividend
declared of
R27.29 per share
down 16%
“
The strong commodity price performance together with our
operational excellence efforts have contributed positively to our
financial performance. Despite the logistical constraints, our
managed operations were able to show strength and resilience
resulting in a 78% increase in EBITDA to R19.0 billion. The
contribution from our non-controlled operations showed a decrease
with adjusted equity-accounted income decreasing 26% to R7.3
billion, mainly due to the performance of SIOC. This translated into
basic HEPS rising to R60.16 compared to R46.83 in 2021. We are
pleased to have declared a final ordinary dividend to shareholders
of R11.36 per share, bringing the total dividend for the year to
R27.29 per share.
“
Exxaro Resources Limited
Integrated report 2022 | 75
Finance director’s overview continued
Global economy and commodity prices
After a strong finish to 2021, the global economic expansion lost momentum during 2022. The growth rate in 2021 of 5.8% decreased to
2.8% in 2022. As financial market conditions deteriorated during the second half of 2022, the global economy remained at its highest
vulnerability, with the risk of a global economic recession emerging.
During 2022, our supply into global thermal coal markets was influenced by the Indonesian government’s temporary ban on exports,
inclement weather conditions, rail challenges in South Africa and labour issues in Australia. In addition, the Russia-Ukraine conflict sent
global markets into turmoil as Europe’s energy insecurity surfaced, which, among others, favoured South African seaborne thermal coal
trade as international sanctions for Russian coal came into effect. For most of the year, the tight global gas market remained supportive
to thermal coal demand and prices.
Despite the property sector weakness and widespread renewed COVID-19 lockdowns in China, the iron ore market started off the
year relatively stable, supported by strong Chinese steel production. The iron ore market softened during April/May, with sentiment
strengthening towards the end of the first half of 2022 from new stimulus measures and due to the easing of lockdown restrictions by the
Chinese government. Weak demand sentiment in both China and Europe and global recession risks are expected to weigh on the iron ore
market for the remainder of the year.
Group performance highlights
For a better understanding of the comparability of results between the two reporting periods, we have adjusted our financial results for
non-recurring items (referred to as non-core adjustments) to derive our adjusted financial results. The non-core adjustments in both 2022
and 2021 are the same as the headline earnings adjustments, resulting in no differences in EBITDA and headline earnings, respectively.
Group performance* — double-digit growth challenging operating environment
Revenue (Rm)
EBITDA (Rm)
50 000
40 000
30 000
20 000
10 000
0
+82%
41%
9
6
3
6
4
1
9
4
5
2
6
2
7
5
2
1
7
7
2
3
4
2
9
8
2
2018
2019
2020
2021
2022
20 000
15 000
10 000
5 000
0
+161%
78%
2
0
0
9
1
1
7
6
0
1
1
8
2
7
2
3
8
5
1
9
2
7
2018
2019
2020
2021
2022
Equity income (Rm)
HEPS (cents)
7 000
6 000
5 000
4 000
3 000
2 000
1 000
0
+179%
28%
3
8
6
4
6
1
0
6
9
5
1
2
4
5
3
2
3
7
9
2
2018
2019
2020
2021
2022
10 000
8 000
6 000
4 000
2 000
0
+123%
-26%
3
4
8
9
3
0
3
7
5
5
4
6
0
5
7
4
1
7
2
3
2018
2019
2020
2021
2022
*Adjusted for non-core items.
76 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Group revenue
Group revenue increased 41% to R46 369 million (2021: R32 771 million), mainly due to the exceptional performance of the coal business
driven by higher export and domestic sales prices, despite the ongoing logistical challenges.
The revenue contribution from our energy business was 3% lower than 2021 due to persistent low wind conditions experienced during the
past 12 months both in South Africa and across Europe.
Group EBITDA
Group EBITDA increased by 78% to R19 002 million (2021: R10 671 million), mainly attributable to a 78% increase in coal EBITDA.
The main drivers for the 78% increase in group EBITDA are provided in the graph below.
Group EBITDA — record EBITDA despite cost pressures (Rm)
13 254
(466)
(2 161)
(4 111)
2 797
(721)
(261)
19 002
25 000
20 000
15 000
10 000
5 000
10 671
0
Actual
2021
Price
Volume
Inflation
Cost
Forex
General
ECC
Actual
2022
Export volumes
down 18%
due to logistics
constraints
(excl ECC)
Alternative
marketing
solutions
implemented
Labour: 7%
Electricity: 11%
Diesel: 60%
Producer price
index: 14.5%
Good cost
containment
Mafube buy-ins at
higher prices
R2.6 billion
Higher royalties
R786 million
Higher selling and
distribution cost
R786 million
Weaker average
spot exchange
rate
R16.4 vs R14.8
API4 USD index
price up
118%
USD realised
price up
161%
USD price
realisation
to API4 index
increased to 93%
from 77%
Disposal of ECC
on 3 September
2021
Fair value
adjustments
R315 million
Community
projects
R137 million
Expected credit
losses
R120 million
Insurance
premium
R80 million
We realised higher prices on our products in line with higher international coal prices. We are particularly proud of our price realisation of
93% compared to the API4 price index, which underscores the value of our early value coal strategy to render a high-quality product mix,
enabling us to respond to changing market conditions.
As a result of logistical constraints, our export volumes decreased by 18% (excluding ECC) but through our concerted efforts, we were able
to mitigate some of the losses through alternative logistical solutions including the use of alternative ports as well as trucking of coal.
2022 was characterised by double digit inflation growth in the mining sector but we were able to limit our cost increases to 12.7% for our
coal operations as we continue to realise the benefits from our digital and operational excellence programmes.
Inflationary pressure on costs was mainly driven by diesel tariff increases that were significantly higher than the producer price index
inflation rate.
Operational costs increased in line with higher production, and we bought in more coal from Mafube at higher prices.
Royalties increased in line with higher revenue as well as lower capital expenditure to offset against the revenue.
Selling and distribution costs increased due to the alternative logistical solutions we implemented.
The net positive forex variance is due to the impact of the weaker rand/US dollar exchange rate on realised and unrealised forex
differences on foreign debtors and cash balances.
Included under general expenses are negative fair value adjustments on forward exchange contracts (FECs) and the environmental
rehabilitation funds, higher spend on community projects, higher provision for expected credit losses as well as a higher insurance
premium paid.
ECC, which was disposed of on 3 September 2021, is stripped out for comparability purposes.
Exxaro Resources Limited
Integrated report 2022 | 77
Finance director’s overview continued
Adjusted equity-accounted income
Adjusted equity-accounted income from associates and joint ventures decreased by 26% to R7 303 million (2021: R9 843 million).
Adjusted equity-accounted income and dividends received
Coal: Mafube
Coal: Tumelo1
Coal: RBCT
Ferrous: SIOC
TiO2: Tronox SA2
Other: Black Mountain
Other: LightApp
Total
Adjusted equity-accounted
income/(loss)
2022
Rm
1 902
2021
Rm
375
29
(18)
9 035
54
352
16
9 843
Change
%
407
(100)
50
(46)
(100)
64
(538)
(26)
Dividends received
2022
Rm
750
2021
Rm
Change
%
100
5 153
9 991
(48)
5 903
9 991
(41)
(9)
4 902
578
(70)
7 303
1 Disposed on 3 September 2021 as part of ECC disposal transaction.
2 2021 equity-accounted income up to the date of disposal on 24 February 2021.
The significant increase (+407%) in adjusted equity-accounted income from Mafube, our 50% joint venture with Thungela, was driven
by higher export coal prices realised on higher sales volumes.
The 46% decrease in adjusted equity-accounted income from SIOC to R4 902 million (2021: R9 035 million) was primarily driven by lower
market prices and volumes, as well as higher operating expenses, which were partially offset by a weaker currency.
An interim dividend of R2 498 million was received from our investment in SIOC in August 2022 (second half 2021: R6 329 million). SIOC
declared a final dividend to its shareholders in February 2023. Exxaro’s share of the dividend amounts to R1 419 million, which is 43%
lower than the interim dividend received. The dividend will be accounted for in the first half of 2023.
The increase in the adjusted equity-accounted income of Black Mountain is mainly due to higher sales volumes at higher prices for zinc,
lead, copper and silver.
Group earnings
The strong contribution from our managed operations together with the contribution from our non-controlled operations resulted in
a 26% increase in headline earnings to R14 558 million (2021: R11 568 million).
There was a decrease in the weighted average number of shares to 242 million (2021: 247 million) due to the shares that were bought back
in 2021 as part of the share repurchase programme.
The increase in headline earnings, together with the lower weighted average number of shares translates to a record basic HEPS of 6 016
cents per share (2021: 4 683 cents per share), 28% higher than the prior year.
Capital management and shareholder returns
In terms of our capital allocation framework, free cash flow generated will be prioritised per the diagram below:
Cash inflow
Debt
service
Sustaining
capex
Dividends
Expansion
capex
Growth
Excess
cash
The diagram represents the order of our capital allocation framework. In applying our capital allocation framework, we aim for a gearing
ratio of below 1.5 times net debt (excluding ring-fenced project financing) to EBITDA. The capital allocation framework is in line with our
commitment to sustainably returning cash to shareholders through the cycle while retaining a strong financial position.
During 2022, we received cash of R20.6 billion (2021: R25 billion which included R5.8 billion proceeds from the disposal of our investment
in Tronox Holdings plc in 2021), comprising R14.7 billion from our operations (net of tax paid) (2021: R9.2 billion) and dividend income
received from our equity-accounted investments of R5.9 billion (2021: R10.0 billion).
In terms of our capital allocation framework, we then utilised this cash to mainly:
• Service our debt (net of interest received) of R0.3 billion (2021: R0.8 billion)
• Sustain our operations with capital expenditure of R1.4 billion (2021: R1.6 billion)
• Expand our operations with further capital expenditure of R0.3 billion (2021: R0.8 billion)
• Pay total dividends of R9.7 billion (2021: R13.7 billion)
• 2021 also included R1.5 billion for the implementation of the share repurchase programme
Given our net cash position (excluding ring-fenced project financing) at 31 December 2022 and 31 December 2021, our net debt
to EBITDA cover ratio was well below our target of 1.5 times.
78 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Exxaro remains in a strong liquidity position with a net cash balance of R5.2 billion as at 31 December 2022 (2021: net debt of
R3 718 million) and undrawn borrowing facilities and maturities as set out below. If the Cennergi net debt is excluded, the net cash
position at 31 December 2022 was R9.7 billion (2021: R764 million).
Capital funding structure — Exxaro excluding Cennergi
Facilities available
Undrawn/
committed
Rm
Undrawn/
unissued
Rm
Drawn
Rm
3 250
4 000
Term loan and revolving facility
Domestic Medium-Term Note
programme
Interest-bearing borrowings
Interest capitalised
Lease liabilities
Capitalised transaction costs
Total interest-bearing debt
Current
Non-current
Net cash and cash equivalents
Net cash
3 850
643
4 493
60
420
(14)
4 959
544
4 415
(14 612)
(9 653)
Capital funding structure — Cennergi
Maturity profile of debt
Repayment period
Less than 6 months
6 – 12 months
1 – 2 years
2 – 3 years
3 – 4 years
4 – 5 years
> 5 years
Facilities available
Drawn
Rm
Undrawn/
committed
Rm
410
4 551
4 551
3
58
4 612
(200)
4 412
Maturity profile of debt
Repayment period
Less than 6 months
6 – 12 months
1 – 2 years
2 – 3 years
3 – 4 years
4 – 5 years
> 5 years
Project financing
Interest-bearing borrowings
Interest capitalised
Lease liabilities
Total interest-bearing debt
Net cash and cash equivalents
Net debt
Value distribution (Rm)
181
2 275
121
6 686
2022
982
61
164
2021
3 131
4 310
1 607
7 250
9 557
Salaries, wages and benefits
Employees’ tax
Payments to government: taxation contribution
Cost of financing
Cash dividend paid
Dividend paid to non-controlling interest
Community investments and volunteerism
GreenShare employee scheme
4 084
1 390
2 930
1 020
The value generated by Exxaro is distributed to its various stakeholders as follows:
• Employees receive salaries or wages, share-based payments as well as bonuses (where certain performance conditions are met)
• Employees’ tax is deducted from employees’ remuneration and paid to the South African Revenue Service
• The governments of the countries where Exxaro has operations and investments receive various taxes and royalty payments
• Cost of financing is payments to providers of finance who receive a return through interest and other loan costs
• Shareholders receive a return on their investment through dividends and capital growth in the share price
• Communities surrounding the operations of Exxaro benefit through CSI initiatives
• In terms of Exxaro’s GreenShare employee scheme, employees received a further distribution of profits through dividends
All stakeholders benefit from continuous reinvestment into the group to ensure sustainability and expansion.
Exxaro Resources Limited
Integrated report 2022 | 79
4 959
301
243
1 139
508
2 564
80
124
4 612
95
116
273
349
449
555
2 775
Finance director’s overview continued
Summarised statement of financial position
At 31 December
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Inventories
Equity-accounted investments
Financial assets
Deferred tax
Other assets
Current assets
Inventories
Financial assets
Trade and other receivables
Cash and cash equivalents
Current tax receivables
Other assets
Total assets
Equity and liabilities
Capital and other components of equity
Share capital
Other components of equity
Retained earnings
Equity attributable to owners of the parent
Non-controlling interests
Total equity
Non-current liabilities
Interest-bearing borrowings
Lease liabilities
Other payables
Provisions
Retirement employee obligations
Financial liabilities
Deferred tax
Other liabilities
Current liabilities
Interest-bearing borrowings
Lease liabilities
Trade and other payables
Provisions
Financial liabilities
Overdraft
Current tax payables
Other liabilities
Total liabilities
Total equity and liabilities
2022
Rm
63 357
37 446
2 760
352
176
18 060
3 539
254
770
21 788
1 728
376
4 199
14 812
101
572
85 145
983
1 700
44 136
46 819
12 560
59 379
20 574
8 378
438
25
2 762
165
112
8 668
26
5 192
715
40
3 340
179
5
143
770
25 766
85 145
2021
Rm
63 298
38 351
2 927
401
145
17 322
3 237
369
546
12 419
1 606
311
2 701
7 042
24
735
75 717
983
1 560
37 007
39 550
10 548
50 098
20 841
9 255
470
53
2 201
159
406
8 271
26
4 778
1 000
34
2 230
101
1
418
994
25 619
75 717
Property, plant and equipment decreased by R905 million when compared to the corresponding period last year, which includes
R1 401 million spend on sustaining capex (stay-in-business capex) and R251 million on expansion capex, offset by depreciation charges
of R2 457 million. The net movement further included borrowing costs capitalised.
80 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
The graph below summarises key movements in the net debt balance for the year ended 31 December 2022.
Group results — net debt/(cash)
(Rm)
3 718
(18 863)
Cennergi
4 482
Rest of
Exxaro
(764)
4 121
x
a
T
1
2
0
2
r
e
b
m
e
c
e
D
1
3
d
e
t
a
r
e
n
e
g
h
s
a
C
332
t
s
o
c
g
n
i
c
n
a
n
i
f
t
e
N
1 652
(5 909)
9 665
785
(742)
i
d
a
p
s
d
n
e
d
v
D
i
i
x
e
p
a
C
i
d
e
v
e
c
e
r
r
e
h
t
O
s
d
n
e
d
v
D
i
i
e
w
z
i
s
e
y
E
(5 241)
Cennergi
4 412
Rest of
Exxaro
(9 653)
2
2
0
2
r
e
b
m
e
c
e
D
1
3
Portfolio optimisation
Exxaro initiated the Leeuwpan divestment process as part of its ongoing portfolio optimisation strategy to ensure the future resilience of
our coal business. Unfortunately, progress on the divestment stalled and the process was stopped in the third quarter of 2022 to ensure
stability at the mine. Exxaro will continue to review its coal assets and projects in line with its strategic goals.
Exxaro continues to evaluate its options to dispose of its 26% shareholding in Black Mountain.
Financial KPIs
The achievement of our financial KPIs is presented in the table below.
All internal KPIs are well within target, indicating a healthy balance sheet and strong cash flow generation. The impact of various coal
sensitivity measures as well as the key financial risk factors can be further used to stress test our current headroom.
The group has complied with all the below mentioned bank covenants for the year ended 31 December 2022 and the previous financial
year.
KPIs
Target
2021
2022
Internal KPIs
EBITDA interest cover*# (times)
Net debt/(cash): equity* (%)
Net debt: EBITDA*## (times)
Return on total capital employed (%)
Bank covenants**
Net debt/(cash): equity (%)
EBITDA interest cover# (times)
Net debt: EBITDA## (times)
* Excluding Cennergi consolidated results.
** Including dividends received from associates and contingent liabilities, except DMRE guarantees and excluding Cennergi consolidated results.
# Exxaro is in a net finance income position in 2022.
## Exxaro is in a net cash position.
>4
<40
<1.5
>20
<80
>4
<3
75
(2)
36
(1)
35
(17)
45
(16)
Exxaro Resources Limited
Integrated report 2022 | 81
Finance director’s overview continued
Cennergi
The project financing debt under Cennergi is subject to the following financial covenants which have been achieved for both 2022
and 2021:
Tsitsikamma SPV loan facility
• Historic debt service cover ratio1 for the calculation period ending on a calculation date is not less than 1.10:1
• Minimum annual forecast debt service cover ratio for the next calculation period is not less than 1.10:1
• Loan life cover ratio2 is not less than 1.15:1
• Project life cover ratio3 is not less than 1.25:1
1 The ratio of A to B where, A is the aggregate cash flow available for debt service (CFADS) less taxes and B is the aggregate of the finance costs,
in each case for the relevant calculation period.
2 The ratio of A to B where, A is the net present value of forecast CFADS from such calculation date to (and including) the final scheduled repayment date, discounted at the discount
rate (as produced by the financial model) and B is the aggregate of the facility outstanding on such calculation date.
3 The ratio of A to B where, A is the net present value of forecast CFADS from such calculation date to the end of the tenor of the PPA discounted at the discount rate and B is the
aggregate of facility outstanding as at such calculation date.
Amakhala SPV loan facilities
• Projected senior debt service cover ratio1 for the immediately following measurement period is not less than 1.10:1
• Historic senior debt service cover ratio1 for the immediately preceding measurement period is not less than 1.10:1
• Senior loan life cover ratio2, as at each measurement date, is not less than 1.15:1
• Senior project life cover ratio2, as at each measurement date, is not less than 1.30:1
• Projected total debt service cover ratio3 for the immediately following measurement period is not less than 1.05:1
• Historic total debt service cover ratio3 for the immediately preceding measurement period is not less than 1.05:1
• Total loan life cover ratio4, as at each measurement date, is not less than 1.10:1
• Total project life cover ratio4, as at each measurement date, is not less than 1.20:1
1 The ratio of CFADS to senior debt service for that period.
2 The ratio of the applicable total present value amount, as at that measurement date to the sum of (i) the senior facility outstanding and (ii) all the IFC facility outstanding, as
calculated and produced by the financial model, as part of the forecast for that measurement date.
3 The ratio of CFADS to total senior debt service for that period.
4 The ratio of the applicable total present value amount, as at that measurement date to total facility outstanding, as calculated and produced by the financial model, as part of the
forecast for that measurement date.
Coal sensitivity analysis
The following diagram indicates key sensitivities on the coal net operating profit.
Coal sensitivities — 2022
Measure
Royalty cost
Domestic sales volumes
Environmental rehabilitation discount rate
Production cost
Export sales volumes
Exchange rate
Export price per tonne
Labour
Railage
Fuel
Energy
Sensitivity
1%
1%
1%
1%
1%
10 cents
US$1
1%
1%
1%
1%
82 | Exxaro Resources Limited
Integrated report 2022
Impact on net operating profit (Rm)
(450)
(338)
450
338
(218)
(196)
194
196
(155)
155
(118)
118
(85)
85
(30)
30
(29)
29
(15)
15
(6)
6
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Key financial risk factors affecting our performance
The group’s corporate treasury function predominantly provides financial risk management services to the business, coordinates access
to domestic and international financial markets, and monitors and manages the financial risks relating to the operations of the group
through internal risk reports that analyse exposure by degree and magnitude of risks. These risks include market risk (including foreign
currency risk, interest rate risk and price risk), credit risk and liquidity.
In managing its capital, the group focuses on a sound net debt position, return on shareholders’ equity (or ROCE) and the level of
dividends to shareholders. The group’s policy is to cover its annual net funding requirements through long-term loan facilities with
maturities spread over time. Neither the company nor any of its subsidiaries are subject to externally imposed capital requirements.
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 profit or the value of its holdings of financial instruments.
The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimising
the return on risk.
The group’s activities expose it primarily to the financial risks of foreign currency exchange rates, commodity prices, interest rates and
changes in the environmental rehabilitation fund and portfolio investment quoted prices.
Price risk management
The group’s exposure to price risk in relation to quoted prices of the environmental rehabilitation funds and portfolio investments is not
considered a significant risk as the funds are invested with reputable financial institutions in accordance with a strict mandate to ensure
capital preservation and growth. The funds are held for strategic purposes rather than trading purposes.
Foreign currency risk
Certain transactions are denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The currency in which
transactions are entered into is mainly denominated in US dollar, euro and Australian dollar. 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 loan balances (if any) 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 currency options
with specific focus on short-term receivables.
Uncovered cash and cash equivalents amounted to US$32.89 million (2021: US$49.85 million).
Monetary items have been translated at the closing rate at the last day of the reporting period.
The FECs that are used to hedge foreign currency exposure mostly have a maturity of less than one year from the reporting date.
When necessary, FECs are rolled over at maturity.
US$
€
AU$
2022
Average
achieved
rate
16.63
Average
spot
rate
16.37
17.19
11.34
Closing
spot rate
16.98
Average spot
rate
14.78
18.10
11.49
17.47
11.11
2021
Average
achieved
rate
14.88
Closing
spot rate
15.94
18.04
11.55
Interest rate risk
The group is exposed to interest rate risk as it borrows and deposits funds at floating interest rates on the money market and extended
bank borrowings. The group’s main interest rate risk arises from long-term borrowings with floating rates, which expose the group to
cash flow interest rate risk. The risk is managed by undertaking controlled management of the interest structures of the investments and
borrowings, maintaining an appropriate mix between fixed and floating interest rate facilities in line with the interest rate expectations.
The group also uses interest rate swaps and interest rate forwards to manage the interest rate risk exposure.
When the contractual terms of the borrowings and covenants thereof require the use of hedging instruments to mitigate the risk of
fluctuations of the underlying interest rate risk cash flow exposure and the impact on profit or loss of specific projects being financed, the
group looks to apply hedge accounting where an effective hedge relationship is expected and to the extent that such exposure poses a
real risk to the achievement of the loan covenants.
The financial institutions chosen are subject to compliance with the relevant regulatory bodies.
Exxaro Resources Limited
Integrated report 2022 | 83
Finance director’s overview continued
Loan facility and bonds
The loan facility and bonds were entered into at floating interest rates.
The interest rate repricing profile for the loan facility and bonds is summarised below:
At 31 December 2022
Non-current interest-bearing borrowings: loan facility and bond
Current interest-bearing borrowings: loan facility and bond
Total interest-bearing borrowings: loan facility and bond
Total borrowings (%)
At 31 December 2021
Non-current interest-bearing borrowings: loan facility and bond
Current interest-bearing borrowings: loan facility and bond
Total interest-bearing borrowings: loan facility and bond
Total borrowings (%)
1 to 6 months
Rm
Total
borrowings
Rm
(4 034)
(505)
(4 539)
100
(4 704)
(851)
(5 555)
100
(4 034)
(505)
(4 539)
100
(4 704)
(851)
(5 555)
100
Project financing (Cennergi)
The group is exposed to the risk of variability in future interest payments on the project financing, attributable to fluctuations
in the three-month Johannesburg Interbank Average Rate. The designated hedged item is the group of forecast floating interest rate cash
flows arising from the project financing, up to the notional amount of each interest rate swap, over the term of the hedging relationship.
The notional amounts per interest rate swap match up to the designated exposure being hedged.
Where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging instrument and
the hedged item. This will effectively result in recognising interest expense at a fixed interest rate for the hedged project financing.
The exposure profile is summarised as follows:
At 31 December
Project financing nominal amount
— Linked to fixed rate
— Linked to floating rate
Project financing nominal amount linked to floating rate
Interest rate swap notional amount (swap floating rate to fixed rate)
Effective floating rate exposure on project financing1
1 Represents 40% exposure on the Tsitsikamma SPV project financing.
Percentage exposure
Group
2022
%
100
3
97
97
(81)
16
2021
%
100
3
97
97
(81)
16
2022
Rm
(4 554)
(141)
(4 413)
(4 413)
3 691
(722)
2021
Rm
(4 700)
(145)
(4 555)
(4 555)
3 808
(747)
Liquidity risk
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.
Borrowing capacity is determined by the board of directors, from time to time.
Amount approved
Total borrowings
Unutilised borrowing capacity
84 | Exxaro Resources Limited
Integrated report 2022
Group
2022
Rm
58 524
(9 093)
49 431
2021
Rm
49 438
(10 255)
39 183
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
The group’s capital base, the borrowing powers of the company and the group were set at 125% of shareholders’ funds for both the 2022
and 2021 financial years.
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.
Credit risk
Credit risk relates to potential default by counterparties on cash and cash equivalents, loans, investments, trade receivables and other
receivables.
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’s 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 audit committee annually.
Exxaro has concentration risk as a result of its exposure to one major customer. This is, however, not considered significant as the
customer adheres to the stipulated payment terms.
Exxaro establishes an allowance for non-recoverability or impairment that represents its estimate of expected credit losses in respect of
trade receivables, other receivables, loans, cash and cash equivalents and investments. The main components of these allowances are a
12-month expected credit loss component that results from possible default events within the 12 months after the reporting date and a
lifetime expected credit loss component that results from all possible default events over the expected life of a financial instrument.
Expected credit loss allowances increased by 76% to R183 million (2021: R104 million). The increase mainly relates to ESD loan recipients
struggling to keep up with payments. The ESD committee is renegotiating payment terms for some of these loans. ESD loans to the value
of R1.6 million have been written off at 31 December 2022.
The carrying amount of financial assets represents the maximum credit exposure. None of the financial assets were held as collateral for
any security provided.
Outlook
Economic context
The aggressive nature of the interest rate increases by central banks globally, on the back of stubbornly high inflation rates, has
moderated the global economic outlook for 2023 to fall short of the potential growth levels. The United Kingdom and broader Europe
specifically run the risk of a recession, and any new major economic shocks could tip the world economy into a global recession. However,
the relaxation of China’s strict COVID-19 and real estate sector policies are expected to support the Chinese and global economic activity.
South Africa’s subdued economic performance in 2022 reflected the lingering effects of the unrest in July 2021, the extensive flooding in
April 2022 and slowing global growth, alongside the structural constraint of inadequate electricity supply. Energy reforms are underway,
with tangible commitments expressed by potential investors. Speedy and judicious implementation could raise private investment, aiding
economic activity.
The rand/US dollar exchange rate is expected to remain volatile during the first half of 2023.
Commodity markets and price
The heightened European interest in South African thermal coal is expected to remain well into 2023, as Europe continues to find
solutions to be independent from Russian energy sources. South African thermal coal exports into high caloric value markets, such
as South Korea and Japan, present further opportunities for Exxaro. The expected global gas trade flows and market prices, post the
European winter months, are expected to remain supportive of seaborne thermal coal demand and prices. Stronger demand from the
Pacific is expected as South African coal continues to trade at a discount to Australian coal.
Supply tightness and higher prices in the seaborne thermal coal markets spilled over into the South African domestic market and are
expected to support domestic prices into 2023. The domestic market demand for both sized and unsized product is still strong, despite
declines in export pricing. Although pricing has held up compared to the export market, indications of pricing pressures are seen for
products destined for export. Consequently, domestic market participants are experiencing margin squeeze when trucking coal to
alternative ports, as export prices are declining.
For the iron ore market, increasing steel demand and the seasonal low iron ore supply from Australia and Brazil, due to rainy weather,
will support seaborne prices in the first quarter of 2023. In the latter part of the first half of 2023, further support is expected from the
positive market sentiment amid China’s economic revival.
Operational performance (page 86)
Given the ongoing challenges with rail performance, the business continues to respond with our market to resource optimisation strategy,
ensuring continued operations and diversified export flows by trucking coal to alternative loading stations and ports. We continue to
evaluate alternative logistical options to evacuate our export product.
Riaan Koppeschaar
Finance director
14 April 2023
Exxaro Resources Limited
Integrated report 2022 | 85
Operational performance
Our manufactured capital comprises the physical mining and energy assets
we require to deliver our products, primarily coal and energy. Our operational
performance is impacted by the quality of the assets we own and how effectively
we utilise these assets.
Exxaro’s manufactured capital consists of five mines, including
a joint venture; two coal projects; a ferro-silicon manufacturing
facility; and two windfarms. These assets are substantial in
size. It is critical to invest in them to ensure their enduring
value, upkeep and performance, and optimise their utilisation
in delivering our products at optimal qualities.
We strive to positively impact our operational performance
through:
• Appropriate stay in business capital investments
• Optimisation strategies
• Market to resource strategy
• Portfolio review
Material theme
Matter
Our strategic response
Our impact on the SDGs
Adapting to a changing
context
Executing our strategy
• Geopolitical context
• Macro-environment
• Supporting a just transition to
• Transition at speed and scale
• Make our minerals and energy
businesses thrive
a low-carbon economy
• Commodity price risk
• Coal portfolio optimisation
• Diversify into minerals
• Build a leading global renewable
energy solutions business
How we will achieve this
To achieve excellent operational performance, through executing our strategy in portfolio optimisation and effective utilisation of our
invested capital. We do this through operational excellence and digitalisation programmes, optimisation strategies, internal cost savings
and utilising data science for decision making.
Our operational performance areas comprise:
• Coal
• Energy
• Ferrous
• Portfolio optimisation
• Investments in minerals and renewable energy
Snapshot of our performance
Product volumes
43.1Mt
Sales volumes
42.1Mt
Export volumes
5.2Mt
Coal
Despite major rail constraints, our operational excellence and digitalisation programmes focus on safety, productivity improvements
and cost management that deliver value. Through our integrated operations centres and market to resource optimisation strategy, we
continue to enable timeous decision making, allowing our business to focus on controllable elements, thus limiting the impact of the
disruptions in the value chain. We are continuing with our drive to enhance this process through our data sciences and advanced analytics,
which is a large part of our digital programme going forward.
International thermal coal pricing reached record highs in 2022 with the API4 averaging US$270.87/t versus US$124.12/t in 2021.
Prices were supported by increased demand from Europe with the onset of the Russia-Ukraine conflict and the embargo that was placed
on Russian coal. Pricing was further supported by supply chain disruptions such as bad weather, mine incidents, labour issues and logistics
constraints. Shortage of liquefied natural gas and other gas also drove European coal prices higher based on gas-to-coal switching
where possible.
86 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Cost per tonne
Production cost per tonne was impacted by increased inflation resulting in higher fuel and blasting expenses. We further experienced
higher maintenance, which was offset by savings on contractor costs, resulting in a net saving in production costs.
Other operational costs were impacted by increased royalties, based on increased revenue and lower capital spend, distribution cost
providing for alternative logistical channels, general expenses and rehabilitation, offset by a positive impact on foreign currency movements,
resulting in a net increase in operational cost.
Our net cash cost per tonne remained below mining inflation.
Internal cost saving initiatives were focusing on improved efficiencies remain a major focus to address the inflation challenges.
To further remain competitive across various markets, our operational excellence and digital programmes continue to focus on specific
projects across the value chain, which are aimed at managing stock levels and productivity, thus reducing overall production costs.
42.5
0.6
43.1
Total coal product
(Mt)
50.0
47.4
(4.9)
40.0
30.0
20.0
10.0
Total coal sales
(Mt)
50.0
46.8
40.0
30.0
20.0
10.0
42.8
42.1
(4)
(0.7)
0
2020
2021
2022
0
2020
2021
2022
Coal export sales
(Mt)
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
12.2
7.6
(4.6)
5.2
(2.4)
2020
2021
2022
Energy
Cennergi
Cost per tonne
(R/t)
500
400
374
20
394
50
444
300
200
100
0
2020
2021
2022
Cennergi’s EBITDA margin was 80% (2021: 83%), showing the consistency of earnings underpinned by long-term offtake agreements.
The two windfarms’ performance generated 671GWh in 2022 (2021: 724GWh). The decrease in generation resulted from persistent
low wind conditions. In South Africa and regions such as Europe, windfarms have experienced below-normal wind conditions over
the past 12 months. Our average equipment availability of 97.9% was better than contracted levels of 97.0%.
Ferrous
SIOC
• Adjusted equity-accounted income of R4.902 billion (2021: R9.035 billion) primarily driven by lower market prices and volumes and
higher operating expenses which were partially offset by a weaker currency
• Dividends received of R5.153 billion to Exxaro in 2022 (2021: R9.991 billion)
Portfolio optimisation
Black Mountain
Exxaro continues to evaluate its options to dispose of its 26% shareholding in Black Mountain.
Leeuwpan
Exxaro initiated the Leeuwpan divestment process as part of its ongoing portfolio optimisation strategy to ensure the future resilience
of our coal business. Progress on the divestment stalled and the process was stopped in the third quarter of 2022 to ensure stability
at the mine. Exxaro will continue to review its coal assets and projects in line with its strategic objectives.
Exxaro Resources Limited
Integrated report 2022 | 87
Business resilience
Our intellectual capital comprises the unique combination of knowledge,
experience, innovation and systems that differentiate Exxaro. We leverage these
elements to respond to market challenges and position our business for the future.
Technology and innovation are evolving exponentially – driving
changes to patterns of production, consumption and ways of
working. Exxaro is focused on both driving and leveraging those
changes that can positively impact our business’s value and
sustainability. We apply our collective knowledge, skills and
resources to ensure our business is responsive while safeguarding
our people, assets and the business.
We strive to positively impact our intellectual capital through:
• Maintaining our competitive advantage through innovation and
digitalisation
• Using our intellectual capital and differentiation to transition
our already successful business into a company that remains
sustainable, growth orientated, values driven into the future
• Becoming a leading international renewable solutions provider
by 2030
Material theme
Matter
Our strategic response
Our impact on the SDGs
Adapting to a
changing context
Executing our strategy
Driving business
resilience
• Geopolitical context
• Country risk
• Supporting a just transition to a low-
carbon economy
• Portfolio optimisation (coal and
investment)
• Diversify into minerals
• Build a leading global renewable
energy solutions business
• Implementing high-impact socio-
economic development programmes
• Capital allocation
• Cyber risk
• Innovation and digitalisation
• Transition at speed and scale
• Make our minerals and
energy businesses thrive
• Become a catalyst for
economic growth and
environmental stewardship
• Proactive reputation
management
How we achieve this
Our operations must be able to overcome frequent challenges and adapt to change in global and local markets. We do this through
efficient project portfolio management and capital allocation, increasing our competencies across mining and renewable energy, and
investing in innovation, digitalisation and technology.
Business resilience comprises:
• Capital allocation
• Investments in renewable energy
• Driving innovation and information management
• Reputational resilience
•
Stakeholder relationship management (page 36)
Snapshot of our performance
Inputs
Outcomes
Capital allocation
Investments in
renewable energy
• GG6 completed
• Developed infrastructure projects for Matla
• Engagements with Eskom about funding in progress
• GG6 small coal plant handed over to Grootegeluk
operations
• Matla will be able to produce 10Mtpa of thermal coal
• Acquired full ownership of Cennergi in 2020
• Financial close for the first solar plant for supply
to the Grootegeluk mine expected in the second
quarter of 2023
To be a leading international renewable energy
solutions provider by 2030 to:
• Fulfil own generation needs
• Expand South African services and distributed
Driving innovation
and information
management
• Collaborating through open innovation
• Our RRODA platform/tool
• Cybersecurity awareness campaigns
generation footprint
• Potential to decarbonise current business
operations (scope 1 or 2 emissions)
• Core system availability: 97.94% (2021: 99.55%)
• Secure scorecard: 76.35% (2021: 63.45%)
Reputational
resilience
• Stakeholder reputation surveys
• Stakeholder reputation
• Stakeholder sentiment
88 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Capital allocation
Exxaro continues to focus on the portfolio of growth and sustaining capital projects by executing our early value strategy and our capital
excellence journey.
Salient features for 2022
Capital expenditure decreased
by 33% from 2021 to
R1 652 million
R1 401 million
applied to sustaining and environmental
capital (stay-in-business capital)
(2021: R1 635 million)
R251 million
invested in new capacity (expansion
capital) (2021: R836 million)
Classification
(growth/
sustaining)
Project
Location: Waterberg (Limpopo)
Product
Focus and
performance
Capital
expenditure
Outlook
We commissioned the GG6 expansion project’s new small coal plant, and all four modules are in production. We combined, converted,
improved and expanded the capacity of the existing GG2 plant into an efficient double-stage beneficiation plant, with all modules in
production. The forecast final cost at completion remains R5.3 billion.
GG6
expansion
Growth
1.7Mtpa of semi-
soft coking coal
R5.3 billion
Expanding the existing
Grootegeluk 2 plant to
enable production of
semi-soft coking coal
First production through the small
coal plant was achieved during the
first quarter of 2021. Construction
was concluded during the fourth
quarter of 2021. The project will close
by the first half of 2023.
Location: Mpumalanga
We implemented a programme of infrastructure projects to support Matla to achieve a 10Mtpa production objective once fully ramped up.
Exxaro continues to engage with Eskom to release the required funding to execute the full scope of the programme.
Matla LoM
programme
Sustaining
10Mtpa of thermal
coal
R3.8 billion
Developing
infrastructure
to support LoM
production
Construction of the box cut and silo
for Matla Mine 1 has been completed.
We aim to complete the tunnel
development and incline conveyor
in the second half of 2023. Equipment
manufacturing is progressing as
planned. We aim to complete Mine
2 and 3 development in the first
half of 2025. We expect to complete
and conclude the programme in the
second half of 2025.
Coal
Capital expenditure in our coal business decreased 33% lower
compared to 2021, driven by 72% lower spend on expansion
capital as we completed the construction of the GG6 plant.
Sustaining capital decreased by 12% due to less spend at
Grootegeluk and Belfast. We are starting to realise the benefit
of our Capital Excellence journey which is a combination
of project savings and improved timing on project execution.
Coal sales by product tonnes
(%)
2
11
12
75
Domestic metallurgical Other domestic
Sales of Eskom
Exports
2022
actual
2022
previous
guidance
2021
actual
% change
previous
guidance
1 374
1 117
252
5
231
231
1 430
1 158
256
16
257
257
1 564
1 285
261
18
840
709
131
1 605
1 687
2 404
(4)
(4)
(2)
(68)
(10)
(10)
(100)
(5)
Sustaining
Waterberg
Mpumalanga
Other
Expansion
Waterberg
Mpumalanga
Total
Investments in renewable energy
No investments in renewable energy were made for the year
under review. However, progress was made on developing the
Lephalale solar project during the year. The intent is to target
financial close by the first half of 2023, thereafter followed
by construction. The project will cost between R1.52 billion and
R1.58 billion to develop 68MW.
Exxaro Resources Limited
Integrated report 2022 | 89
Business resilience continued
Driving innovation and information management
Highlights
• Our established centres of excellence (CoEs) support our
digitisation strategy
• The business applications CoE drives citizen development,
which is empowering end-users to develop their own
non-complex applications and workflows to improve task
execution and productivity
• Data analytics is embedded in the way we do business
with BUs using dashboards to enable decision making
• The intelligent automation CoE has automated 34 business
processes since 2018, which has resulted in saving
90 000 hours over three years
• We use NAVEX One’s conflict of interest solution and
standardised policy management
• Our learning management solution embraces digital learning
capabilities
• We deployed the Slope Stability Monitoring solution to monitor
the movement and slopes of high walls. It also triggers
evacuation in emergency situations
• We deployed a solution that designs blasting plans and monitors
implementation
• Our electrical condition monitoring manages conditions of the
substations
• We use Etap modelling of electrical networks for simulation
of electrical networks
• We deployed an Pix4D solution for drone surveying at Belfast
and Grootegeluk for survey in the professionals in training (PIT)
programme
Innovation is the ultimate white label word, the definition
relying on the context in which it is used. Within Exxaro’s
context innovation is defined as the discovery, incubation, and
implementation of cutting-edge solutions with the aim of adding
value by refining efficiency, increasing effectiveness, and
enhancing competitive advantage.
Due to the broad nature of innovation and its reliance on
the context in which it is intended to be used, innovation is
further categorised into four classifications namely, sustaining,
incremental, radical and disruptive. Radical and disruptive types
of innovation have been difficult to identify, source and implement
while keeping focus on our core business. The innovation
management team identified access to the broader innovation
ecosystem as the best port of call to source these radical and
disruptive innovation while not being inhibited by typical search
engine constraints.
Exxaro’s innovation management strategy is aimed at identifying
areas where innovative solutions will support Exxaro’s strategy.
Innovation management’s approach is underpinned by gaining
access to an innovation ecosystem through partnerships with
industry bodies, tech disruptors and innovators, it is anticipated
to have a global reach of capabilities to assist in solving business
challenges.
Exxaro’s innovation strategy promotes collaboration with people
and organisations outside the company. It promotes the belief
that knowledge and creative initiatives from outside the company
can contribute to achieving strategic goals.
In 2022, the innovation management team established the
foundational elements required to project Exxaro’s innovation
journey to enable elements of the broader Exxaro strategy. This
included external and internally focused efforts, the first of
which was embedding within and aligning innovation to business
optimisation and supply chain management processes. This
was to enable key internal processes to support and embed
innovation. This further supported the successful establishment
of an ecosystem, resulting in a working relationship with
a range of external innovation partners. A number of challenges
were published to the innovation ecosystem focused on
decarbonisation and improving operational efficiencies. The result
of these challenges was exposure to innovative technologies that
could not have been uncovered through traditional processes,
one of which translated into approval to proceed with proofs of
concept to test a solution at Mafube and Grootegeluk.
The achievements and traction of 2022 bode well for the 2023
roadmap and plan. With further development and extracting value
from the implemented foundational elements completed in 2022,
an additional focus area for 2023 looks to develop a systematic
approach to innovation that will further embed innovation into
the business planning and strategy process. This will enable
the necessary strategy, processes, governance, resources and
measurement to further enhance Exxaro’s innovation journey.
Cybersecurity
With the ever-increasing cyber threat landscape, we have
intensified our efforts to secure and safeguard our information
and digital assets. There is continuous commitment and focus
on enhancing our internal capabilities to identify, detect, respond
and recover in the event of a cyberattack.
To improve our security posture and resilience, we are
strengthening our controls to align with global best practices
and deployed several systems to facilitate this. These include
a data loss prevention tool to address privacy risks relating
to sensitive information, continuous monitoring of our control
environment by performing self-assessments and independent
reviews to ensure the effectiveness of our mitigation actions
and remediation of weaknesses. In so doing, we improved our
cybersecurity score by 12.9% since the beginning of 2022.
Driving innovation
Exxaro takes great pride in our deep-rooted culture of innovation.
We firmly believe that innovation is not limited to any particular
department within the organisation, but rather, it is the
responsibility of all employees to contribute to this effort. Our
various departments, with their unique objectives and goals,
are constantly innovating in different ways. For example, the
business optimisation department focuses on efficiency, while the
strategy and business transformation department concentrate
on management innovation. Further, the projects and technology
function is responsible for equipping our BUs with cutting-edge,
forward-looking technologies, to ensure we keep on thriving as
technology evolve within mining.
To ensure that all our functions have the necessary resources and
capabilities to search for, identify, access, and accelerate these
innovations, we have equipped our people with various innovation
90 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
tools. These tools allow our employees to critically evaluate the
need and implications of innovation, ensuring that purpose-driven
innovation is at the heart of all our initiatives, and that value is
continuously added to the triple bottom line.
One of the tools we have equipped our people with is access
to an ecosystem approach to search for, identify, and access
innovation. We recognise that innovation is amplified when
knowledge and ideas are not isolated within our organisation.
Therefore, we collaborate and partner with key stakeholders,
such as government, research institutions, incubators, and
accelerators. By taking a systems approach to solve large and
systemic problems, we are able to leverage the strengths of these
organisations and benefit from their expertise.
We place particular importance on collaborating with government
stakeholders since they play a crucial role in driving energy
innovation and implementing the incentives and regulations
needed to stimulate investment in energy innovation, its
deployment and uptake.
Delivering on our strategy and future focus
We will be futureproofing Exxaro and enabling a sustainable
future for our business. We aim to fast track our decarbonisation
and investments to generate predictable long-term cash flows and
increase portfolio diversification. As the company matures, we will
build on an already successful platform, leveraging our skills and
differentiation with a long-term vision to develop a sustainable,
growth-orientated, value-driven company, a leading international
renewable solutions provider by the end of the decade.
Our capital allocation and project execution remains focused
on leveraging the growth investments already made, supporting
our early value coal strategy and sustaining our businesses
by implementing our portfolio of stay-in-business capital projects.
Our early value strategy means we are strategic about our capital
allocation. We embarked on a capital expenditure journey in
managing our sustaining capital, ensuring we sustain a robust coal
portfolio with strong cash flow generation. We continue disposing
of non-core assets. We continue on our capital excellence journey
in investing in our coal business to remain resilient. We are
targeting average capital of between R2 billion and R2.5 billion
annually in real terms. As part of the early value strategy, the
GG6 expansion was completed in 2022.
For our energy business, Exxaro is targeting an additional
1.6GW (net) capacity by 2030 with total capital deployment
of approximately R28 billion. We estimate that one third will be
our equity contributions and two thirds project financing. This
could potentially provide approximately R3 billion in EBITDA in
real terms. We are aiming to achieve equity returns on a portfolio
basis of 15%.
We are focusing on opportunities in South Africa to start with,
while monitoring opportunities in new markets for potential entry
that meet our investment criteria, building strong foundations for
the future and investing in renewable energy assets that enable
us to transition to a low-carbon world.
Case study: Protecting our business through digital transformation
In the information era, data is the “new gold”. Our Digital@
Exxaro programme is therefore geared to enable us to
leverage the big data generated within and around us, and
create value. Our dream is to be a data-driven organisation.
Leveraging our integrated operations centres and data
platforms, we are deploying advanced data analytics and
machine learning to solve current problems and futureproof
our business. One such use case is the implementation
of the machine learning model to proactively monitor
and manage our haul road conditions in our pits.
The quality of the roads is one of the challenges that
contribute to the overall value chain performance.
If not well managed, bad road conditions lead to truck
downtimes and reduced production throughput. The ability
to proactively monitor the road conditions and prevent
the deterioration before it impacts the hauling operation
tempos, cycle times and truck reliability, is critical.
We are implementing a machine learning solution that
leverages big data from our truck sensors like vibrations,
truck speed, geolocation to predict the haul road
conditions. This solution will enable the operations team
to identify the deteriorating road conditions in real-time
and repair the roads resulting in improved hauling
performance. The successful implementation of this
solution will not only improve throughput but will also
reduce truck suspension failures.
Exxaro Resources Limited
Integrated report 2022 | 91
Our people
Our human capital is central to the success of our business.
Our human capital impact comprises:
• Attracting and retaining the right employees with the skills
we need now and in the future within a competitive market
• Investing in, upskilling and offering existing and potential
employees (including our host communities) an attractive
employee value proposition to ensure we have the right people
• Employees striving to achieve zero harm through collective
responsibility, commitment and risk awareness as we are
mindful of the health and safety of our employees and host
communities
We strive to positively impact our human capital through:
• Our commitment to achieving zero harm
• Working with employees and contractors to avoid safety incidents
• Continuously investing in our employees’ growth and development
• Respecting the human rights of our workforce and other people
who may be affected by our operations (do no harm)
• Investing in community development through our SLPs and
ESD programmes
Material theme
Matter
Our strategic response
Our impact on the SDGs
• Health, safety and wellness
• Workforce: culture, capability,
diversity, inclusion and innovation
• Labour relations
• Make our minerals and energy businesses
thrive
• Empower people to create impact
• Become a catalyst for economic growth
and environmental stewardship
Helping our
people thrive
People strategy
People at the heart
Enable human resources through digital
We differentiate ourselves by continuously
evolving, creating impact through new ways
of work and pursuing new opportunities
Develop capabilities and grow talent
We evolve by demonstrating excellence,
sharpening skills, pushing limits and realising
our true potential
Seamless employee experience
We collaborate with our employees to create
compelling human-centred experiences
throughout the employee lifecycle
We leverage internal and external partnerships
to continuously optimise our human resources
services to better serve our people
Lead with trust, adaptability and an outward
mindset through the Exxaro Leadership Way
We empower our employees to truly
live our values and foster a culture
of trust without fear
Future-fit organisation
We look at current and future trends, and
continuously pivot our organisation with speed
to remain relevant and take our people along on the
journey, considering:
• Diversity, equity
and inclusion
• Operational
• Performance
achievement
model
Catalyst for the five Sustainable Growth and Impact strategic objectives
• Culture and values
• Partnerships
People (page 60) in our 2022 ESG report details our human capital approach and performance.
How we will achieve this
Our people and partners have the skills, capabilities, mindset and passion to achieve our purpose. Empowered to create impact, we build
our resilience as a company on each other’s strengths.
The SERC oversees people’s health, safety, engagement and development. Our executive head: human resources, supported by various
management departments, is responsible for developing and implementing employee-related strategies.
Delegation of authority framework (page 62)
Snapshot of our workforce
19 242 people employed
(2021: 18 813)
35% full-time employees
(2021: 35.84%)
64.9% contractors
(2021: 64.13%)
Cennergi: 21 full-time employees
Operation and maintenance contractors employ:
• Amakhala Emoyeni windfarm: 44
• Tsitsikamma community windfarm: 38
Cennergi Holdings: eight full-time employees, and in the
process of recruiting a further 10 permanent employees.
Our future focus is on building internal capabilities and reskilling the workforce to support transitioning the organisation into new
commodities. Addressing pay equity is also a continued focus. Diversity, equity and inclusion will continue to be a top focus area over the next
two years, while leadership accountability and communication will be the key enablers to unlock the diversity, equity and inclusion strategy.
92 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
The five safety pillars
Safety
Our unwavering focus on zero harm has enabled us to achieve our record
LTIFR performance of 0.05. We focus on identifying and managing
inherent processes, external risks with a hierarchy of controls, and
stakeholder involvement on our journey. We believe that we can achieve
zero harm through continuous improvement and proactive measures.
Safety is crucial to achieving our strategic objectives for our
business to thrive. In our aim to manage safety-related risks
and prevent repeat incidents, we are guided by our safety
strategy supported by the five pillars.
Incredible leadership
To demonstrate sustainable commitment to our employees’ safety, our CEO leads an annual leadership safety day and the
sustainability summit. The 2022 sustainability summit was hosted by Belfast Coal on 7 April 2022. The leadership safety day
affords the executive committee:
• An opportunity to engage with employees on health and safety issues
• A platform to demonstrate our commitment to our zero harm vision
• Events to congratulate employees and contractors for safety excellence
Communication
We continuously communicate our safety
performance which covers incidents
and learnings from incidents as well as
actions to be taken to address emerging
risks. Messages are broadcast on virtual
platforms across the group:
• Our Khetha Ukuphepha (isiZulu for
“choose safety”) campaign encourages
personal responsibility for safety
• BUs host annual safety indabas to drive
the critical importance of safety
Consequence management
• We set simple non-negotiable safety
rules to promote life-saving behaviours
• Incidents are analysed in terms of zero
tolerance rules
• Consequence management
on safety-related contraventions
is applied fairly across BUs in line
with our cultural values
Training
We provide comprehensive training
to address safety risks. In 2022, these
included:
• The course for managers in risk
management programme
• Safety management training for line
supervisors
• Visible felt leadership champions
training
• Safety representatives training
• On-the-job training for our employees
Risk management
The course for managers in risk management programme trains leaders and employees on a structured approach with guidelines
and strategies to establish and maintain a multidimensional risk management framework. We aim to embed the course’s principles
in our daily risk management processes and improve our understanding of safety risk assessment processes.
Since implementation in 2009, we review our safety strategy annually to ensure focus areas are appropriate. We also review our
safety targets every year, based on prior performance, and apply stringent management protocols, programmes and systems.
We launched the Khetha Ukuphepha campaign in 2019 with the main objective to reinforce our zero harm vision and reiterate our
philosophy that every life counts.
Safety (page 62) in our 2022 ESG report details our approach and performance.
Snapshot of our performance
Our 2022 safety targets
How we performed
Zero fatalities
Zero HPIs
LTIFR of 0.06
Zero LTIs
Zero DMRE notices
• Five-year fatality-free milestone achieved in March 2022
– Grootegeluk: 10 years fatality-free milestone in October
2022
– Leeuwpan: 32 years fatality-free milestone in March 2022
• One fatality at Belfast in August 2022
Five HPIs (2021: one)
Below target: 0.05 (2021: 0.08)
Seven LTIs (2021: 12)
Cennergi
• No fatalities at both
windfarms for six consecutive
years
• No reportable LTIs (2021:
zero)
• Seven section 54s (mining activity stopped) (2021: two)
• No section 55s (mining in affected area stopped) (2021: two)
• No reportable health and
safety incidents (2021: two)
Zero safety-related grievances
No safety-related grievances (2021: zero)
More than 50% of serious incidents recorded in 2022 were repeats, which prompted a call to action from the CEO. The leading causes
of incidents included:
• Poor risk awareness and assessment
• Inadequate hazard awareness and identification
• Non-adherence to procedures
• Unsatisfactory supervision, change management and task planning
In collaboration with our stakeholders, we are addressing the increase in the number of HPIs by revising our incident management process
to enhance the quality of our incident investigations and enable meaningful learning from incidents and appropriate mitigation across
the group. We will continue to aim for zero fatalities and the reduction of all other work-related incidents by:
• Eliminating repeat incidents
• Implementing stringent risk management processes across the group
Exxaro Resources Limited
Integrated report 2022 | 93
Our people continued
Health and wellness
We improve quality of life, morale, productivity and safety of
our employees and communities through a health and wellness
strategy that extends beyond compliance with regulations to the
sustainability of our industry.
Our integrated health and wellness strategy incorporates legislated
basic conditions of employment. It is a preventive, employee-
driven, holistic approach that identifies occupational and non-
occupational health risks and their causes. It presents solutions
to mitigate these risks and their impacts on the business within
an empowering environment.
Health and wellness (page 64) in our 2022 ESG report details our approach and performance.
Integrated health and wellness strategy
Prevent
Preventive programmes (mandatory awareness campaigns and healthy lifestyle coaching) cover
eight dimensions of employee health and wellness.
Diagnose
We improve medical surveillance by extending clinical tests (heart disease and risk-based cancer
screening) and DNA analysis from middle management upward.
Manage
We improve healthcare management by ensuring all employees with occupational and non-
occupational health risks are included in a disease management programme.
Our integrated health and wellness strategy is supported by our cultural pillars (ESG report, page 70)
Prevention initiatives
Employee wellness programme (EWP)
1. Financial
2. Emotional
3. Social
4. Thinking
5. Occupational
6. Environmental
7. Spiritual
8. Physical
Since the onset of the COVID-19
pandemic, our EWP has addressed
the impact of financial, and other
personal and professional challenges,
on employees.
Bayport Financial Services provides
debt restructuring, financial
rehabilitation and financial
management training to employees
experiencing financial hardship
(worsened by the impact of COVID-19).
Managed by our human resources and sustainability departments,
our external counselling service has addressed psychosocial,
legal, financial, emotional, family, work-related and substance
abuse issues since January 2021.
94 | Exxaro Resources Limited
Integrated report 2022
Awareness:
• We advertise the EWP on LetsConnect, LCD screens
at our operations, screensavers and the intranet
• Mental health masterclasses on Microsoft Teams every
second Friday educate employees and present practical
self-diagnosis and coping techniques
• Daily inspirational messages via SMS provide
EWP contact details
#You’reNotAlone:
Voice notes and videos share employees’ struggles
with mental health and the relief offered by counsellors
or therapists
Certificate of fitness:
The EWP is part of induction and physical fitness tests
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Snapshot of our performance
We focused on implementing our health and wellness strategy while encouraging employees to receive booster COVID-19 and
flu vaccinations. We achieved a 90% COVID-19 vaccination rate against the industry target of 80%. We also progressed in addressing
mental health issues brought to our attention during the pandemic.
Non-occupational diseases
• 54.9% reduction in reportable occupational health incidents (2019 to 2022)
• Occupational tuberculosis (TB) cases increased (including infected employees who worked 200 shifts a year)
Dust fallout (ESG report, page 37)
•
• 7 791 COVID-19 cases (2021: 6 816)
• 23 occupational diseases (reduced by COVID-19 mitigation measures) (2021: 25)
• 24 new diabetes cases (2021: 39)
• 92 hypertensive employees and contractors (2021: 290)
Although we did not record health and wellness-related grievances (2021: zero), tuberculosis (TB) case reporting presented challenges.
Our TB rate increased as infected employees who worked 200 shifts a year are considered occupational TB cases, particularly in Lephalale
where government is addressing the high TB incidence rate and dust fallout exceeds the threshold. Through the Impact Catalyst we
identified health facilities in communities where Exxaro operates that need support to make health services accessible and Right-to-Care
was engaged to implement the programme.
Occupational diseases
180
150
120
90
60
30
0
65
42
4
8
11
51
35
2
1
2
11
32
27
3
1
1
2018
2019
2020
1
13
2
5
4
25
2021
174
97
2
11
64
2021
Mining industry
23
2022
17
6
Noise-induced hearing loss Pneumoconiosis Silicosis Chronic obstructive airways disease Occupational TB Occupational asthma
In line with the outcomes of our 2022 sustainability summit, which highlighted mental health concerns, we are developing a mental
health policy to be introduced in 2023. The policy will address the leading causes of mental health issues. It will also empower
supervisors to facilitate resources at BUs instead of calling on external service providers.
Our hearing conservation committee, chaired by mine general managers, is also investigating customised hearing protection and engineered
interventions to address identified causes of noise-induced hearing loss. This will facilitate compensation by Rand Mutual Assurance.
Utilisation:
12.68%
(2021: 15.82%)
Mining industry:
9.32%
(2021: 7.67%)
Life Employee Health Solutions
benchmark: 10.74%
(2021: 9.47%)
Demographics:
Majority men
(14 to 50 years old) as in 2021
Services accessed:
Face-to-face counselling
preferred
Counselling mainly in English
Mental health*
Our approach to mental health
is informed by World Health
Organization principles and
the impacts of COVID-19 at
each BU (disruptions to regular
working routines, fear of loved
ones contracting the virus and
uncertainty about the future).
Mental health was the top
category presented to the EWP.
* January 2020 to July 2022 by Life Employee Health Solutions.
793
cases managed
Stress
is the leading cause
of mental health
issues
1 in 3
employees has
mental health-
related challenges
and
54% female
46% male
37%
are 25 to
34 years old
Exxaro Resources Limited
Integrated report 2022 | 95
Our people continued
Employee engagement
We maintain our employee value proposition, as an employer of choice,
through meaningful engagement with the people we attract and retain
for the sustainability of our business.
Our established engagement structures encourage communication,
and keep employees adequately informed about key organisational
changes, health, wellness, safety, and operational and financial
performance. We also use insights from employee engagement
initiatives to enhance our processes and workplaces.
Our values and culture are a foundation for behaviours,
mindset and philosophy that gives our employees a sense
of belonging in the workplace. We continue to embed our
values and culture through various initiatives to ensure
continued alignment with our organisational purpose and
strategic objectives.
Diversity, equity and inclusion are central in our approach to meaningful engagement with our employees.
Diversity, equity and inclusion strategy
The strategy, aligned with our Sustainable Growth and Impact strategy, is informed by our purpose, values, vision, culture and strategic
objectives. It is a journey that began before 2019, and our approach continues to evolve to increase the speed and scale of our impact.
Employee engagement (page 68) in our 2022 ESG report details our approach and performance.
Snapshot of our performance
The board approved a revised approach to our diversity, equity and inclusion strategy (ESG report, page 68) in 2022. In delivering
on this revised approach, we reviewed our policies and practices, as outlined in our 2022 ESG report. Our approach to maintaining a
representative workforce, with respect for the needs of our host communities, is defined in this strategy.
Strategic priorities
• Revised diversity, equity and inclusion approach
– Benchmarking performance measured against foundation (drive the strategy), internal (attract and retain
people), external (listen and serve society) and bridging (align and connect)
• Reviewed policies and practices
– Workplace harassment policy aligned with codes of good practice
– Implemented new STI scheme
– Introduced parental leave policy
– Approved disability policy
– Employee relations strategy review based on fairness and addressing COVID-19 impacts
– Wellness sessions managed mental health, COVID-19, GBV and stigmatisation (supported by employee
assistance programme)
– Continued skills workshops and training for employee relations managers and line managers
– Broadening employee relations capacity building processes to understand recognition agreements
• Aligned stakeholder communication campaigns with strategic objectives on electronic and hybrid platforms
(mobile phones and LetsConnect intranet)
Trade union
representation
• 5 276 employees (78.2%) (2021: 5 180) represented by affiliated trade unions recognised by Exxaro (National
Union of Mineworkers, Solidarity, Association of Mineworkers and Construction Union, Food and Allied Workers
Union and National Union of Metalworkers South Africa)
• Three-year wage agreement signed in 2021 remained effective
Share ownership
• Each GreenShare beneficiary received a R12 400.64 cash payment
Workplace
harassment
• Several harassment and sexual harassment cases reported, which were dealt with firmly by management
• All sexual harassment cases reported and investigated resulted in perpetrators being found guilty and dismissed.
This included senior managers who failed to act when victims reported allegations of sexual harassment
• Launched a GBV campaign this year to encourage employees to report all forms of harassment to the available
reporting structures
Employment equity
• Achieved employment equity targets over the past five years (aligned with Mining Charter III)
• Addressing women in senior management targets with new employment equity plans for the next five years
(aligned with diversity, equity and inclusion strategy)
• Certified level 3 BEE contributor
Employee turnover
• Average rate of 4.4% due to abscondment, death, medical incapacity, dismissal, resignation and retirement
Eliminating
discrimination and
resolving grievances
Housing
(2021: 3.7%)
• 82.37% of employees in bargaining units (2021: 81.93%)
• 17.62% in management and specialist category (2021: 18.03%)
• No alleged discrimination cases or grievances were filed (2021: zero)
• 1 384 permanent employees received mortgage repayment subsidy for first-time home buyers since 2017
• 97 employees live in converted hostels (single-quarter accommodation or family units)
• Housing allowance paid to 2 272 employees with a registered bond (2021: 1 436)
• Living-out allowance to 3 594 employees renting accommodation (2021: 3 329)
Cennergi
• Consistently met job creation targets
• No contract termination points or penalties from DMRE
• The Cennergi Holdings structure was approved during 2022, including its diversity and inclusion plan
We plan to complete another baseline culture and engagement survey to track the efficacy and progress of culture integration.
This will also highlight areas needing improvement while we continuously improve our employment experience as we live our values
with leadership support.
96 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Managing our talent
To deliver on strategic objectives and ensure business
continuity, we need to attract, develop and retain skilled
people whose fulfilling careers enable them to contribute
to socio-economic development.
We encourage continuous professional development so that
we have the right skills, at the right time, in the right place.
Talent management is a critical sustainability indicator. We annually
identify and measure KPIs as part of the strategic dashboard for talent
management and human resources. The talent management and
review processes, combined with succession planning, aim to identify
and prepare suitable internal candidates for positions while building
a leadership pipeline to address skills shortages.
Our talent management strategy
Talent management evolves with our strategy to support capability development, new ways of working, and succession planning
for management and specialist roles, supported by our diversity, equity and inclusion and Social Impact strategies.
Strategic workforce planning
• Market data informs talent sourcing and development to align our evolving capability framework
with our strategic direction (minerals and energy businesses)
• Stakeholder engagement determines workforce requirements, and learning and development
interventions to build competencies that deliver on our business strategy
• Our digitalised environment enables efficient talent management
Talent planning
• Development with focus on our employment equity candidates
• Proactively addresses talent and critical skills shortage and changes when employees
are promoted, rotated, resign or retire
• 30.8% D band (2021: 26.3%) and 35.4% E band (2021: 30.8%) clusters prepare black employees
to occupy higher level positions immediately or for medium-term occupation
Leadership and capability
development
• Leadership programmes were updated in 2022 to include latest capability developments
in support of our strategic direction
• Various leadership programmes (leading, leadership in the connection economy, essential
leadership, leadership workshops and launchpad) are aligned with the Exxaro Leadership
Way Capability development and preparation for the changing world of work include topics
on diversity, equity and inclusion, change management, the fifth industrial revolution and
sustainability
• We continue expanding initiatives to facilitate continuous learning for compliance and personal
development to maintain our competitive advantage
• Our new capability and capacity building framework continues to be developed to reflect changes
to business strategy requirements and priorities towards developing employees holistically with
greater emphasis on on-the-job training and coaching
• 83 employees attended various leadership programmes (2021: 121) and 181 enrolled
in management programmes (2021: 201)
• 21 employees enrolled in the University of Cape Town Graduate School of Business Women
in Leadership programme
Create a learning culture
• Creating a culture of self-learning is important to empower our employees to prepare for
future roles
• E-learning and classroom-based training offer:
— Leadership and management development
— Soft skills training
— Occupational programmes and technical training by academic institutions, service providers
and our Grootegeluk and Matla training centres (accredited by the Quality Council for Trades
and Occupations)
• Ongoing employee development guided by internal processes such as performance achievement,
career and succession planning, culture and leadership initiatives, and SLP commitments
— Individual development plans ensure a healthy pipeline of core and critical skills
• 592 employees registered for open-source online courses (LinkedIn, Udemy, Coursera,
Open Sesame and OTT University)
• There were 96 665 training interventions on the MyNexxt e-learning platform (2021: 80 303)
as part of our Digital@Exxaro strategy. Courses included:
— Anti-bribery and anti-corruption: 3 560
— Implicit and unconscious bias: 822
— Adapt to 4IR: 769
— Exxaro Leadership Way: 235
— Cybersecurity: 2 318
— Microsoft Office: 503
— Confidentiality courses: 707
Skills development and training Annual submission of workplace skills plans and training reports to the Mining Qualifications
Authority, Mining Charter compliance to the DMRE and B-BBEE scores to the dtic includes employee
information, spend, training and development programmes
Compliance training
Ensuring safety, health and environmental compliance, 83 104 induction compliance interventions
were completed through MyNexxt
Exxaro Resources Limited
Integrated report 2022 | 97
Our people continued
Our talent management strategy continued
Talent pipeline and feeder
schemes
• Comply with employment equity targets and address shortages in critical skills
— Address engineering (mechanical, electrical and mining) and geology skills shortages
with bursaries (second and third-year full-time students in host communities) and our PIT
programme
• Learnerships and feeder schemes training and developing youth with formal qualifications
(artisans, miners, trackless mobile machinery and plant operation, and administration)
• Employment opportunities for local youth through formal programmes that ensure a feeder line
of trained and skilled candidates
— Internships establish a feeder scheme for C band positions (graduates receive work experience
within a structured training programme that improves employability)
• Adult education and training help employees reach national qualification framework level 1
(grade 9) with functional literacy for health and safety communication, further development,
and access to higher level jobs
• Our three-year PIT programme blends academic theory with hands-on workplace experience
to prepare employees for current and future business needs (each graduate has a technical
coach who supervises exposure to various operations as well as technical, leadership and
management training for three years before we guide trainees who meet accreditation
requirements to become professional engineers)
Talent acquisition
• Our talent acquisition team encourages sharing of job advertisements on platforms such
as LinkedIn to reach a wide audience of suitable candidates
• Most candidates are sourced internally, which indicates that our internal pipeline is healthy
• The majority of positions are filled by black female employees to improve our employment equity
profile in senior roles
Our talent management strategy includes strategic workforce planning, talent planning, leadership and capability development,
compliance training and reporting, and talent pipeline development activities.
Managing our talent (page 74) in our 2022 ESG report details our approach and performance.
Snapshot of our performance
No talent management-related grievances were lodged in 2022 (2021: zero).
Developing our
talent
• We spent R331 million or 6.0% of our payroll (2021: R276 million or 5.8%) on training and development, including:
– Job-related skills development (functional and technical training): R198 million (2021: R157 million)
– Bursaries, training professionals, internships, learnerships and skills programmes: R101 million
(2021: R104 million)
– Developing targeted employees in management programmes, leadership roles, postgraduate studies and
support functions: R7.4 million (2021: R5 million)
– Community development such as portable skills training: R10.5 million
– Support for Youth Employment Service partners training and developing youth from our host communities:
Supporting
historically
disadvantaged
people
R12.6 million
• Women
– Female employees represent 29% of our workforce (2021: 26%)
– 50% female PIT graduates (2021: 41%)
– 63% black women full-time bursars in engineering and mining disciplines*
– 56% women in learnership and internship feeder schemes (2021: 51%)
– 31 black women sponsored at technical and vocational education and training colleges to improve access to
formal learnerships such as artisan training (2021: 23)
• Training professionals
– PIT programme graduates in our talent pipeline: 89 (89% black South Africans) (2021: 85) at a cost
of R42.6 million (2021: R45.4 million)
– Full-time bursars in engineering and mining disciplines*: 52 (2021: 28)
– Invested in bursaries to address engineering skills shortages: R3.8 million (2021: R2.4 million)
– Matriculants supported in Edumap maths and science bridging programme: 10 (2021: 10)
• People with disabilities
– Black South Africans with disabilities supported at local tertiary institutions: 20 (55% black women) (2021: 10)
– Bursars and interns supported: 40 (2021: 19)
• Adult education and training
– Invested R1.57 million (2021: R1.02 million)
– Four employees (2021: three)
— 52 community members (2021: 89)
* South Africans at local universities.
Developing
talent bench
strength
• Employees in 24-month mentoring programme: 40 (77% black people and 32% black women) (2021: 32)
• Employees who attended mentee training: 35 (12 trained as mentors)
• Candidates in fast-tracking programme: 52 (95% black people and 69% black women) (2021: 64)
98 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Talent
acquisition
Appropriate
learning
interventions
• Paterson D band (middle management) candidates appointed:
– External: 16 (100% black people and 69% black women) (2021: 25)
– Internal: 40 (80% black people and 38% black women) (2021: 48)
• Paterson E band (senior management) candidates appointed:
– External black: One (100% black women) (2021: two)
– Internal black: Three (2021: three)
• Enrolled employees in formal studies to improve capabilities (traditional programmes and others supporting
renewable energy, digitalisation and the new world of work)
– Postgraduate1: Nine (six black people and four black women)
– Undergraduate1: 17 (16 black people and five black women)
– New skills short courses2: 44 (33 black people and 20 black women)
1 South African universities.
2 South African and international universities.
Cennergi has commenced with recruitment of key skills and will aim to further the objectives of diversity and
inclusion in the renewable energy sector.
Cennergi Holdings is recruiting for skills and will look both internally and externally.
We will address our out-of-appetite B-BBEE score for spend on bursaries awarded to black people with initiatives that will reach more
students who have not already received funding from the National Student Financial Aid Scheme.
In addition, we will focus on finding solutions to recruit qualified black women, particularly in our Lephalale labour-sending area where
there is a shortage of suitable candidates with engineering qualifications.
Our planned interventions will develop relevant core and functional capabilities for current and future businesses.
Human rights
Human rights are basic freedoms based on dignity, fairness,
equality and respect.
Exxaro strives to be a responsible steward of natural assets and
social capital to uplift host communities. Acknowledging that
our operations could negatively impact human rights, we have
developed a policy and are committed to implementing processes
that align with South African legislation and corporate governance
guidelines.
Our renewed policy provides guidelines to ensure that we adhere
to human rights principles. It is aligned with our purpose because
we believe that all people have inherent fundamental human
rights regardless of their differences. As such, we are committed
to investing in and developing areas within our sphere of influence
for the benefit of our stakeholders.
Human rights (page 89) in our 2022 ESG report details our approach and performance.
Snapshot of our performance
We redeveloped our human rights policy, which outlines our expectations of employees, suppliers, business partners and other parties
directly linked to our operations, products and services.
No human rights-related grievances were lodged against Exxaro in 2022 (2021: zero).
Governance and ethics
• Of the 64 (2021: 54) corruption cases reported against employees, 55 resulted in further action such as
disciplinary inquiries, cases registered with South African Police Service and arrests
• Completed disciplinary investigations returned a guilty verdict and resulted in 41 (2021: nine) dismissal
cases. None of the cases involving dismissal went to the Commission for Conciliation, Mediation and
Arbitration (2021: one)
Fraud and ethics hotline (ESG report, page 97)
Equal opportunities/
non-discrimination and
transformation
• Aligned with South African Constitution and other legislation, National Gender Policy Framework
and UN Convention on the Elimination of all Forms of Discrimination against Women
Diversity, equity and inclusion strategy (ESG report, page 68)
Exxaro Resources Limited
Integrated report 2022 | 99
Our people continued
Human rights in the
workplace
• Never use, cause, demand or impose forced or compulsory labour on any person
• No child labour (no employees under legal minimum age of 18)
• Support legitimate workplace apprenticeships, internships and similar programmes complying with
applicable laws and regulations
• Safeguard employees’ physical and mental health with reasonable working hours, leave and holidays
• Fair discipline in accordance with transparent disciplinary and grievance mechanisms
Employee engagement (ESG report, page 68)
Freedom of association
and the right to
collective bargaining
• Respect employees’ rights to join or form labour unions without fear of reprisal, intimidation
or harassment
• Committed to establishing constructive dialogue with freely chosen representatives of legally
recognised unions
• Support collective bargaining principle
• Engage in good faith with union representatives
Employee engagement (ESG report, page 68)
Health and safety in the
work environment
Respect for all
communities
• Stringent management protocols, programmes and systems maintain zero harm
Safety (ESG report, page 62) and health and wellness (ESG report, page 64)
• Respect cultural values of host communities (specifically self-sufficiency, sustainability, health, safety
and natural environment)
• Uphold communities’ fundamental rights to access quality water, affordable electricity, and protection
from noise, air pollution and hazardous materials
• Guided by the International Finance Corporation’s Performance Standard 5 and comply with DMRE’s
mine community resettlement guidelines (effective 30 March 2022)
Communities (ESG report, page 78)
Security
• Guided by Regulation of Gatherings Act, 1993 (Act 205 of 1993), stakeholder management and human
rights policies, and security strategy, aligned with Voluntary Principles on Security and Human Rights
during protest action affecting operations
• Ensure continuous training of employees in human rights principles
Environmental
management and
conservation
• Social impact framework addresses mine closure through mineral succession planning programme
• Closure planning and mine rehabilitation protect environment, society and community upliftment
• Committed to responsible mining, climate change mitigation and adaptation beyond compliance
Climate Change Response strategy (2020 investor tab)
• Human resources policies manage and address human rights considerations
• Guided by code of conduct and grievance procedure aligned with South African human rights legislation
• Committed to the International Finance Corporation’s Performance Standard 2 on labour and working conditions
– Treat workers fairly
– Safe and healthy working conditions
– No child or forced labour
– Identify related risks in primary supply chain
We will continue to embed human rights practices within our business and business conduct and further align these to our renewed
policy. We acknowledge that our mining activities could cause conflict with communities and other interested and affected groups
and are in the process of appointing a partner to conduct due diligence on our processes and address gaps. We also aim to train
our employees in human rights.
100 | Exxaro Resources Limited
Integrated report 2022
Social licence to operate:
earning our legitimacy
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Our social and relationship capital refers to mutually beneficial relationships that
provide our social licence to operate. To ensure we have a holistic, positive and lasting
impact on our people, communities and society at large, we conduct our business
activities in a way that promotes development and success for us and our stakeholders.
Our social and relationship capital impact comprises large-scale,
high-quality initiatives that provide for meaningful socio-economic
upliftment opportunities:
• Education and skills development
• Land use and management
• Local economic development
We strive to positively impact our social and relationship capital
through:
• Our Social Impact strategy addressing challenges in our host
communities
• Investment in socio-economic development
• Going beyond compliance to protect our licence to operate
Material theme
Matters
Our strategic response
Our impact on the SDGs
Building
sustainable
communities
• Social licence to operate
• Social acceptance and community
unrest
• Empower people to create impact
• Be a catalyst for economic growth
and environmental stewardship
• Supporting a just transition to a low-
carbon economy
• Job and business creation
• Impacts on local communities
(positive and negative)
• Value sharing
• Human rights
“We know that there is a better place to be tomorrow than where we are today.”
Dr Nombasa Tsengwa
Communities (page 78) in our 2022 ESG report details our social and relationship capital approach and performance.
How we achieve this
Our Social Impact strategy (ESG report, page 78), embedded in the objectives of our Sustainable Growth and Impact strategy, is a
multidimensional and scaled approach to empowering our host communities. We work to empower them with skills and capabilities to find
employment, and entrepreneurial opportunities to create their own economic wellbeing, social progress and dignified livelihoods. However,
the potential for negative community sentiment to escalate could negatively impact our ability to succeed with our growth strategies.
Our Social Impact strategy is a shift from a market-driven approach to a multidimensional approach to inputs and expected outcomes. We
will continue to address compliance requirements with increased focus and on a larger scale, complemented by discretionary expenditure
and collaboration.
Six funding structures serve as conduits for community donations and sponsorships, namely the Exxaro Chairman’s Fund and
Foundation, Matla Setshabeng NPC, Amakhala Emoyeni Community Fund Trust, Tsitsikamma Community Windfarm Trust, Tsitsikamma
Development Trust and ESD programme. Our Social Impact strategy enables us to deliver impact at scale through the following key
principles:
A market-based approach
that integrates social,
environment and economic
outcomes
Long-term planning,
aligned to the life
of operations and
incorporating post-mining
livelihoods
Design for larger projects
that will enable multiplier
effects
Optimising existing
resources and capabilities
and recognising the power
of partnerships
The board approved the Social Impact strategy in November 2022. The SERC, through its statutory provisions, has oversight of community
engagement and development. This committee will oversee the implementation of the Social Impact strategy. The executive head:
stakeholder affairs, has been delegated with the role and responsibility for integration and execution.
Exxaro Resources Limited
Integrated report 2022 | 101
Social licence to operate:
earning our legitimacy continued
Snapshot of our performance
Invested in social investment projects
for local economic development
(SLPs and CSI)
R181.31 million
(2021: R113.72 million)
Jobs created
583
(2021: 205)
Number of community members
benefited
1.26 million
(2021: 53 000)
A combined total investment
contributed by Exxaro and Cennergi
in socio-economic and enterprise
development programmes:
R205 million
SLP projects
• Spend: R13.38 million (2021: R56.44 million)
• Our spend was impacted by delays experienced in the implementation of SLP projects
• Submitted proposals for Thabametsi (2020 to 2024), Matla (2020 to 2025), Grootegeluk (2023 to 2027)
and Tshikondeni (in closure) (2023 to 2027) SLPs
• DMRE approved the Matla (2020 to 2025) SLP
CSI (including
disaster relief)
• R167.93 million (2021: R57.28 million) (Matla Setshabeng NPC was established in 2021 and was fully operational
in 2022, hence the high difference in CSI spend)
• 1.17 million beneficiaries (including GBV campaigns and university chair) (2021: 300 000)
• R80.9 million invested in community education to benefit 41 000 learners
ESD
contribution
• Spend: R291.2 million (2021: R127.7 million)
• Beneficiaries:
— Qualifying small enterprises (QSEs) and exempt micro-enterprises (EMEs): 30 (2021: 15)
— Youth-owned: 16 (2021: four)
— Women-owned: nine (2021: seven)
• Jobs retained: 1 037 (2021: 243)
The ESD programme achieved record disbursements and played a role in the achievement of the procurement targets
described below. Driven by a higher group NPAT, the programme had to spend a much higher amount within the year
to ensure compliance with the dtic B-BBEE codes. Given the high coal prices, the forecast NPAT was much higher than
budgeted at the beginning of the year. All efforts were invested to achieve the higher target, however, there were
fundamental constraints that prevented us from achieving our ESD compliance goal. Firstly, resource constraints
to spend more money and secondly, increasing the volume of ESD funding applications does not improve the number
of qualifying applicants. While we reached an annual increase and record disbursement of R291 million, we expect
to achieve 9.75 points (65%) out of 15 compared to the target of 13.5 (90%) once the B-BBEE verification for 2022
has been finalised.
Supply chain
sustainability
• Preferential procurement: Fully compliant with B-BBEE codes: overall score of 26.9 (2021: 28.3) against 24.2 target
• Green procurement programme: Spent R133 million (0.8% of total procurement budget)
• Mining Charter III scorecard: Scored 40 (2021: 40) points against 37.2 (2021: 31.5) target
• Local procurement: Spent R1 097 million (2021: R1.05 billion) with 246 (local black-owned SMMEs (2021: 241)
• Ethical procurement: E-procurement software, supplier onboarding process and checks to reduce fraud risk,
maintain cost efficiency and avoid conflicts of interest
Our affirmative procurement initiatives at operating mines remain above target. We spent R1.1 billion, (circa 11.4%)
of discretionary procurement compared to a target of 10%, on local SMMEs, thus injecting significant value into
the local communities. However, the challenge remains large and we will continue to pursue higher levels of this
investment through targeted expenditure and skills development to increase both the volume of expenditure and
value per expenditure.
Cennergi’s share of procurement sourced from B-BBEE suppliers, QSEs, EMEs and women-owned vendors
is tracked against commitments and targeted percentages in the implemented agreement.
Tsitsikamma community windfarm and Amakhala Emoyeni are committed to 60% total procurement from
B-BBEE suppliers, 10% from QSEs and EMEs, and 5% and 2.5% respectively from women-owned vendors.
While the Social Impact strategy will fit into the “S” element of ESG, the implementation approach will incorporate elements from “E” and
“G” to ensure sustainability, especially in relation to just transition considerations. We were deliberate in selecting to focus on education
(ECD and adopting local schools), land use and management (mineral succession planning, ie finding alternative economic uses of the land
beyond mining) and continuation of local economic development through local procurement and ESD initiatives. When viewed through the
lens of the SDGs, this approach will have a sustaining positive impact on communities and reduce poverty by combining multidimensional
approaches (education, economic wellbeing, school health and education infrastructure) and influence other areas of wellbeing without
additional investment (the multiplier effect). We are planning to have approval of (partial, while researching other) execution plans by mid-
year 2023.
102 | Exxaro Resources Limited
Integrated report 2022
Our environment:
stewardship and compliance
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Our natural capital is the resources we draw from our natural environment to run
our business and create the products and services we deliver to our stakeholders.
We understand that mining can result in long-lasting environmental impacts
if unmanaged. Our strategy continues to guide our approach in managing our
environmental impact; protecting the natural resources on which we rely.
Our environmentally and socially responsible response to climate change
supports South Africa’s just transition programmes, and reflects our
commitment to sustainability and our goal to be carbon neutral by 2050.
We balance this with our role as a critical supplier to South Africa’s coal-based
electricity sector.
Our natural capital impact encompasses air quality, climate change resilience,
energy, water security, waste management, biodiversity, and environmental
liabilities, land management and rehabilitation.
We manage our impact by:
• Incorporating environmental performance principles
in our ESG management systems, environmental
policies and practices
• Complying with local legislation, management
standards, and current and future-based best
practice
• Going beyond compliance as demonstrated by our
participation in voluntary benchmarks such as the
global CDP climate and water disclosure projects
Material theme
Matter
Our strategic response
Our impact on the SDGs
• Make our minerals and energy
businesses thrive
• Be carbon neutral by 2050
• Become a catalyst for
economic growth and
environmental stewardship
Adapting to a
changing context
Responsible
environmental
stewardship
Principled
governance
• Supporting a just transition
to a low-carbon economy
• Water stewardship
• Impact of climate change
• Managing our pollution
• Closure planning and rehabilitation
management
• Carbon emissions reduction
• Waste management
• Biodiversity management
• Embedding ESG in response
to increased regulation and
for sustainability
Exxaro’s livestock grazing
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Integrated report 2022 | 103
Our environment: stewardship and
compliance continued
How we achieve this
Our environmental management programmes comply with applicable legislation, ensuring that all activities requiring licences are fully
licensed, and our Sustainable Growth and Impact strategy guides the evolution of our environmental policy as we transition to a climate
change-resilient portfolio. Management standards for air quality, water, energy, mine closure and rehabilitation as well as environmental
incident management and reporting support our BUs in this transition, and embed climate change mitigation and adaptation. These
standards are integrated into our environmental management activities, which are also ISO 14001-certified. Our STI scheme, aligned with
our decarbonisation plan and Sustainable Growth and Impact strategy, motivates employees to uphold these standards.
The RBR committee oversees our environmental management and impact on behalf of the board. The executive head: sustainability is
responsible for implementing environmental strategies for the group, assisted by sustainability and BU managers. The SERC ensures we
align with just transition principles while the ESG steering committee’s role is to support Exxaro’s ongoing commitment to environmental,
health and safety, corporate social responsibility, corporate governance, sustainability, and other relevant public policy matters.
Wheel of excellence
Our environmental commitments fall under the following areas, each supported by specific strategies and policies:
Environmental liabilities and rehabilitation (page 111)
Our mine plans consider land management, closure and
concurrent rehabilitation with financial provision to
ensure we honour our commitments.
• Approved environmental management programme with
closure objectives
Integrated concurrent and closure plan
• Mine closure and concurrent rehabilitation procedures
•
• Environmental risk amendments
• Rehabilitation monitoring and KPI reporting
• Closure project management
Air quality (page 105)
We manage and mitigate the negative impacts of air pollution, including
dust and particulate matter, emanating from our mining activities.
• Approved air quality authorisation (atmospheric emission licence)
• Management procedure and plans
• Assessment, monitoring and reporting
• Emissions inventories
Biodiversity (page 110)
Our low-impact, high-value approach supports
ecosystem health to protect indigenous flora
and fauna at our operations.
• Approved environmental
impact assessment
authorisations
• Management procedure
Impact assessments
•
• Management plans
• Ecological offset impact
procedure (includes
terrestrial and aquatic/
wetland ecosystems)
• Monitoring and reporting
• Ecology efficiency reports
• Land management
strategy
• Land management
procedure
• Operational land
management plan
• Land disposal strategy
Our
environmental
commitments fall
under the following areas,
each supported by
specific strategies
and policies
Climate change resilience (page 105)
We are building our climate resilience by enhancing the
adaptive capacity of Exxaro and communities and
capitalising on strategic opportunities presented
by the transition to a lower-carbon economy.
• Carbon measurements, data and reporting
• Carbon emissions reduction projects
• Becoming carbon neutral by 2050
• Climate change adaptation and mitigation
• Green supply chain
• Climate considerations for capital projects
Waste management (page 109)
Our cradle-to-cradle approach
minimises waste production through
recycling and reuse within a circular
economy.
• Approved waste management licence
• Waste stream assessment
• Prevention, reuse, recycling and energy
recovery
• Management procedure (including
classification)
• Handling, transportation and disposal
procedure
• Monitoring and reporting
Water security management (page 108)
Our water security plan is based on
efficient water consumption, reuse and
recycling to protect natural resources.
• WUL
• Management standards and procedures
• Risk assessment
• Water-saving targets and performance reporting
• Monitoring and reporting
• Technological water treatment options
•
Integrated water management plans
• Audits
Energy management (page 107)
Our energy and carbon management
programme drives efficiencies that
support a just transition to a low-carbon
economy.
• Measurement, data and reporting
• Energy intensity improvement projects
• Becoming carbon neutral by 2050
• Climate change adaptation and mitigation
• Green supply chain
• Energy and carbon management guidelines
for capital projects
The environment chapter (page 33) in our 2022 ESG report details our natural capital approach and performance.
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Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Exxaro’s air quality management approach aims to reduce our
impact through:
• Proactive risk-based planning and risk management
• Monitoring, measuring and reporting
• Implementing mitigation measures such as dust suppression
• Adhering to all applicable legislative requirements
Air quality
Air quality management is a top priority for operational
sustainability, community safety and regulatory compliance.
Pollutants such as dust and particulate matter (PM), including
PM10 and PM2.5, emanate from opencast mining activities such as
drilling, blasting, crushing, screening, transportation, materials
handling, windswept storage piles and exposed areas.
These activities unavoidably generate dust, and therefore pose
health and safety risks. We are responsible to our employees and
host communities to minimise and avoid this impact on air quality
and the environment.
Snapshot of our performance
• Dust suppression measures intensified to address fugitive emissions, particularly in winter, due to the high wind speeds which
result in an increase in fugitive dust emissions
• Substantial resources allocated to manage waste dumps at Grootegeluk to reduce air pollution
• Dust monitoring networks reviewed to ensure effective air quality management and compliance to the allowable number
of exceedances for the residential and non-residential limits per year (two non-sequential exceedances)
• Dust emissions tracked from sources other than our operations (such as agriculture, other mines, power generation and open areas)
• Additional ambient air quality monitors installed at our operations
• Reviewed Leeuwpan’s air quality management system to avoid source monitoring and ensure a comprehensive and representative
monitoring network
• Invested in an advanced digital solution for real-time emissions monitoring
We consistently enhance our mitigation measures to reduce the significant impacts on the environment and our host communities.
These measures include:
• Chemical and wet dust suppression on unpaved roads (with additives that improve effectiveness)
• Limited drop heights during offloading activities
• Vehicle speed control with proximity detection systems and speed limiters
• Vegetation on topsoil stockpiles and overburden material
• Blast design optimisation (considering wind conditions)
To further mitigate dust fallout, in addition to traditional dust suppression methods, we plant trees as windbreaks at Belfast.
None of our BUs exceeded the number of allowable exceedances (two per year and non-sequential) for residential and non-residential
dust limits. This is an indication that our fugitive dust mitigation measures are effective. We will continue monitoring and prioritising
the mitigation of dust emissions.
We aim to intensify mitigation efforts through chemical suppression of dust on primary haul roads to increase dust suppression
efficiencies in the third quarter of 2023. This is critical given that unpaved haul roads are significant contributors to fugitive dust in
our operations.
Climate change resilience
Climate adaptation, resilience and transition refer to our capacity
to adjust to current and anticipated climate change-related risks,
and capitalise on strategic opportunities presented by a low-carbon
and resource-constrained economy.
Two of Exxaro’s strategic objectives — to transition at speed and
scale and to be carbon neutral by 2050 — outline our goals and
commitment to fundamentally change our business to positively
respond to the climate change agenda.
Our Climate Change Response strategy, TCFD recommendations,
decarbonisation plan (under development for the medium and
long-term targets) and linked STI scheme across the business support
the achievement of these objectives. The principles and mechanisms
to respond to climate change are integrated throughout our business
and are central to our thinking and actions.
We mitigate climate change and its impacts through:
• Reducing our carbon footprint, guided by our Climate Change
Response strategy and decarbonisation plan. In the short
term, our operational energy efficiency projects, renewable
energy self-generation and potential divestment, will result
in emissions reduction of 40% by 2026 for scope 1 and 2.
We are developing the medium and long-term elements of
our decarbonisation plan, including the capital alignment
implications
• Measuring, monitoring and reporting data and performance
• Incentivising performance through the STI scheme
• Prioritising adaptation and resilience of our operations and
host communities
• Creating awareness during regular stakeholder engagements
• Supporting research and development
Read more about our response to climate change
Climate Change
Response strategy
(2020 investor tab)
Climate change
position statement
(sustainability tab)
Transitioning into
a low-carbon business
(ESG report, page 11)
TCFD Index
(refer to the
databook)
Decarbonisation plan
(ESG report, page 13)
CDP
(www.cdp.net)
Responding to TCFD reporting requirements (page 112)
Exxaro Resources Limited
Integrated report 2022 | 105
Our environment: stewardship and
compliance continued
Snapshot of our performance
Carbon intensity increased by 0.5% to
5.54tCO2e/kTTM
(2021: 5.51tCO2e/kTTM)
Scope 3 emissions increased by 5% to
74 488ktCO2e
(2021: 70 931ktCO2e)
Scope 1 and scope 2
emissions decreased
by 2.5% to 971ktCO2e
(2021: 995ktCO2e)
CDP score: B
(higher than the coal mining
sector C average)
R8.9 million invested in
research and development
(2021: R9.5 million)
Carbon intensity increased due to the ramp-up of operations at GG6, discussed in our operational performance (page 86). We expect
an intensity reduction as we implement initiatives to support our STI scheme and our goal to be carbon neutral by 2050. Additionally, the
grid emission factor increased from 1.06 to 1.08 affecting scope 2 and 3 emissions.
Exxaro has several operational efficiency programmes that aim to reduce scope 1 and 2 (direct) emissions by 62ktCO2e by the end of
2026. These programmes focus on reducing diesel and electricity consumption. The solar PV project at Grootegeluk is designed to
reduce emissions by 175ktCO2e upon commissioning and is envisaged to be implemented within the next two years. We also partner and
collaborate with our value chain partners on reducing emissions associated with their operational activities and the value chain, share
information on the impact and importance of climate change resilience for business and host communities. This is because scope 3
emissions are the main contributors to our profile. However, the impact of these initiatives cannot be quantified as savings in tCO2e.
As our decarbonisation journey moved into implementation, we included climate change metrics in scorecards across the business
and finalised our capital allocation model (page 45), supported by analytics tools that informed strategic decision-making. These tools
enabled incremental steps towards emissions reductions against significant logistics constraints for our vehicle fleet at Grootegeluk. We
addressed these constraints by implementing optimisation solutions that rectified higher carbon intensity per tonne of product mined due
to sub-optimal equipment use.
Our 2021 to 2025 pollution prevention plan, as required by the National Pollution Prevention Plan Regulations, includes GHG emissions
reduction projects that aim to reduce diesel and electricity consumption and carbon emissions at our operations.
We are investing extensively in developing knowledge of climate change, renewable energy and sustainability. We prioritise innovation,
research and development, and collaboration on sustainability issues with value chain stakeholders.
We remain cognisant of the changing regulatory landscape and continue to monitor related developments that may impact our
business. We will continue contributing to Exxaro’s goals to build a climate-resilient organisation — by reducing emissions, increasing
the adaptive capacity of our operations and host communities and extending our influence throughout our value chain. We will progress
our efforts to raise awareness, internally and externally, about climate change and the just energy transition to support South Africa’s
low-carbon transition.
Our primary focus areas in 2023 include climate adaptation (at our operations and host communities), using climate-related data
to predict the impacts of extreme weather events on our operations, communities and social impact programmes. In addition, we will
intensify energy efficiency and mitigation efforts at BUs. We are evaluating various opportunities to reduce emissions, including biofuels,
compressed natural gas, electric vehicles, carbon and methane capture and storage, solar farms, green hydrogen and emissions offsets.
106 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Energy management
We realise that efficient energy use is critical, particularly
in South Africa where coal-based electricity supply is
constrained and cost outpaces inflation. As such, we are
committed to energy management that reduces GHG emissions
to achieve our decarbonisation goals.
To be carbon neutral, innovative and efficient energy management
is crucial. As we prepare our business for the low-carbon economy,
we must ensure that decarbonisation thinking is integrated into
our operations with dedication to reducing direct (scope 1 and 2)
GHG emissions across our BUs and value chain.
We consider our value chain and support suppliers on our
inclusive, sustainable and productive decarbonisation journey.
To support these goals, we implement the ISO 50001 energy
management system.
Snapshot of our performance
Total energy consumed decreased by
Electrical energy intensity increased
5.25% to
5 211 418GJ
(2021: 5 500 339GJ)
by 3.9% to
3.37MWh/kt
(2021: 3.24MWh/kt)
Diesel energy intensity decreased
by 7.0% to
4.88MWh/kt
Electricity consumption increased
Diesel consumption decreased by
by 1.4% to
590 078MWh
(2021: 582 066MWh)
10.3% to
83 226kL
(2021: 91 838kL)
Our primary energy sources were 40.7% electricity (2021: 40%) and 59% diesel (2021: 59%). Electricity and diesel intensity
in total decreased in 2022. We submitted a 12L tax claim for one of the completed diesel energy intensity reduction projects
executed at Grootegeluk.
Based on the decrease of 2.4% in RoM tonnages, electrical energy intensity increased by 3.9% and diesel energy intensity decreased
by 7.0%.
Each BU has energy intensity targets linked to the STI scheme. The targets were based on the outcomes of current state and opportunity
scoping reviews, which began at Grootegeluk in 2021. By year end, targets were in place at all operations.
The outcomes of the reviews also informed interventions that will reduce energy consumption and GHG emissions to improve intensity
(GJ per total tonnes handled) at each site. Intensity performance is tracked monthly relative to the calculated energy intensity baseline.
This baseline was calculated using the energy consumption and production data from the most recent preceding year that represented
each mine’s steady-state operation.
Energy-saving behaviour impacts the business and our wider operating environment. As such, our human resources, business
improvement and information management teams drive behaviour change among employees by nurturing a culture of emissions
reduction and accountability through communication, awareness training and engagement. Employees support efforts to establish
energy management systems with engineering teams championing initiatives. Energy management champions motivate behaviour
transformation and we discuss performance in monthly forums at each BU.
From 2023, we will focus on adopting proven technologies to reduce electrical energy intensity. To this end, we will implement impactful
initiatives in our Grootegeluk and Mpumalanga process plant areas.
We will also begin decarbonising our mobile equipment fleet by working with original equipment manufacturers to align on their
technology road maps, and trial and implement their technologies at pace and economical scale over the next five years.
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Our environment: stewardship and
compliance continued
Water security management
Water security is our capacity to safeguard sustainable access
to sufficient, acceptable quality water. By proactively identifying
risks and planning solutions, we sustain communities, protect
the environment from water-related pollution and disasters, and
stabilise crucial ecosystems.
Water security management is a critical component of our overall
operational and environmental management as we are sensitive
to South Africa’s water scarcity and the effects of climate change,
particularly increased temperatures and rainfall variability.
We manage water-related risks, minimise impacts and operate
efficiently by:
• Reducing, reusing and recycling water in line with water
conservation plans that support the National Water Resource
Strategy
• Providing suitable barriers to our dirty water facilities that
prevent groundwater contamination
• Committing to protecting and improving water quality by
discharging treated water at our operations through reverse
osmosis and/or sewage treatment plants
Snapshot of our performance
47% water recycled
(2021: 46%)
10 419ML total water
consumption
(2021: 10 281ML)
11 486ML total
water withdrawal
(2021: 10 890ML)
150L/t RoM
water intensity
(2021: 149L/t RoM)
(target 2025: 180L/t RoM)
We exceeded our overall water recycling target of 38% (defined as the total water recycled divided by total water used including
recycled water).
Total water consumption (water withdrawals less water discharged) increased by 0.6% (normalised) and water intensity increased by 0.5%
due to increased consumption at our Matla operation with the new box cut construction.
Our water intensity targets align with industry norms and site-specific conditions. The 180L/t RoM target is well below the coal industry
average of 380L/t RoM.
Belfast’s WUL was submitted to the Department of Water and Sanitation (DWS) for review and was granted in the fourth quarter of 2022.
The renewal application for Matla’s WUL was declined by DWS. However, an appeal was lodged with the Water Tribunal ensuring that the
WUL is valid until a decision has been made. In the interim, Exxaro is engaging with DWS to find an acceptable resolution.
Our water management efficiency, mitigation, maintenance and conservation measures included:
• Financial approval of Grootegeluk’s Oliphantskop dam refurbishment project to be implemented in 2023/2024 (enhancing water
recycling at the beneficiation plants to prevent process water losses to the pit, and reducing electricity consumption due to pumping
and water quality deterioration in the pit)
• Recalibrating Belfast water balance while investigating a potential water treatment plant to reduce hydraulic load caused by heavy rains
over the past three years
• Completion of the new Matla Mine 1 pollution control dam linked to the Matla reverse osmosis plant
• Improved operation and maintenance of sewage treatment plants at Matla shafts 2 and 3
• Improving dirty and clean water separation, and preventing groundwater contamination with improved waste management
at operations
High rainfall had a negative impact on mining conditions although this mitigated the short-term risk of water shortages.
While we continue our efforts to improve water efficiency through various infrastructure projects and enhancements, we will set
an internal water price in 2023 to fully understand the actual cost of water versus the current cost to adequately address scarcity and
quality concerns.
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Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Waste management
Mining activities create various waste streams. We are
transforming our business into a circular mining economy so that
the waste we produce is recycled and reused with sustainable
benefits for host communities that depend on Exxaro for their
livelihoods.
By recycling and reusing the waste we produce, we uphold our
licence to operate with a cradle-to-cradle approach that minimises
waste production. Cradle-to-cradle waste management is a closed
cycle: waste from one process is used in other processes to
encourage elimination or minimisation of waste.
Exxaro’s evolving environment policy and management standard
for hazardous and non-hazardous waste govern our approach.
We ensure prevention, minimisation, reuse, recycling, energy
recovery and safe waste disposal in compliance with the National
Environmental Management: Waste Act, 2008 (Act 59 of 2008)
and supporting legislation.
Our management procedures include waste classification and
efficiency reporting, as required by waste management licences,
informed by sustainability KPIs aligned with ESG indices to drive
continuous improvement.
Snapshot of our performance
2 768t general waste recycled
(2021: 3 018t)
1 624t hazardous waste sent to landfill — a 68%
improvement on the previous year (2021: 520t)
Head office
Renewed contracts for recycling and general waste disposal at head office
Grootegeluk
Matla
Leeuwpan
Belfast
Completed the fire protection system installation in the
temporary waste tyre storage area and stacked tyres
as per the approved layout at Grootegeluk
Began appointing a new service provider (currently
TL Ideas, an ESD beneficiary) to manage our waste
recycling station at Matla
• Renewed our hazardous waste handling contracts
at Grootegeluk and Matla
• Placed medical waste, including waste generated
from COVID-19 preventive measures (masks, gloves
and screening) at the Matla and Grootegeluk clinics,
in specific containers
Took ownership of the optimised sewage treatment plant at Leeuwpan
Appointed Phambili Services, an ESD beneficiary, to manage general and hazardous waste
General waste recycled decreased by 9% due to less ferrous and non-ferrous scrap produced at Grootegeluk.
The total weight of hazardous waste generated at our managed coal operations and sent to landfills in 2022 increased by 68% due
to clean-up operations in May, June and August at Grootegeluk. This resulted in a 30% increase in the amount of hazardous waste
taken away and disposed of in a registered landfill.
In its grievance register, Exxaro did not report any waste grievances, fines or penalties and did not receive any environmental fines
and penalties related to non-compliance on waste management during the financial year.
Cennergi’s operation and maintenance contractors are responsible for waste management at both wind energy
facilities. Cennergi implements waste separation at source to increase recycling, where possible, and minimise
waste sent to landfill. Cennergi did not report any waste grievance, fines and penalties during the year.
We will optimise our 2023 reporting to set targets that will enable us to divert 80% to 85% of recyclable waste from landfill sites
by 2025. We plan to use alternative waste reduction or avoidance technologies and opportunities to procure equipment that supports
our commitment to the circular economy concept.
At Grootegeluk, we will continue the successful waste tyre reclamation project with a new service provider, establish partnerships with
other NGOs and seek access to additional project funding.
As advised by FTSE Russell, we will include additional KPIs in our reporting.
Our new waste management policy will be approved and published in 2023. The policy outlines waste reporting, management and
mitigation. Detailed procedures and KPIs will ensure we honour our commitments. The dashboard that tracks waste volumes generated,
recycled and sent to registered landfills will include KPIs such as total costs of environmental fines and penalties, as recommended by
FTSE Russell. This will enable us to improve our disclosure.
Assessments across our operations determined the scope of work needed to achieve these targets. Data collected on recyclable materials
from the waste stream assessments will optimise our 2023 reporting.
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Our environment: stewardship and
compliance continued
Biodiversity
Conservation is a priority for Exxaro to avoid biodiversity
loss for the sake of wildlife, economic activities
and people who depend on the natural resources
impacted by our mining activities. We therefore assess
our potential impacts before we mine, and conduct
biomonitoring and environmental incident reporting.
Communities benefit from employment created by
contractors who will eventually hand over invasive plant
control contracts to local community members.
We strive to be a low-impact, bio-regenerative
organisation for current and future generations.
Our holistic approach to biodiversity management combines:
• Cost-effective solutions
• Environmental responsibility
• Conservation of biodiversity-rich areas within mining rights
• Management of International Union for Conservation of Nature Red List
species
• Control of invasive plants (categories 1a, 2 and 3)
• Integration of biodiversity into social impact studies
• Collaboration with key stakeholders to achieve our biodiversity goals
(Mpumalanga Tourism and Parks Agency, DFFE, Limpopo Economic
Development, Environment and Tourism, DWS, Eastern Cape Parks and
Tourism Agency, and Mpumalanga Department of Agriculture, Rural
Development, Land and Environmental Affairs)
Snapshot of our performance
We experienced minor challenges such as restricted access to privately owned land within our mining right area for the removal
of invasive alien plants and delays in permit approval by authorities for species relocation from the mining area into conservation land
at Belfast. We therefore cleared 58% less invasive alien vegetation compared to the previous year.
Relocation and conservation programmes
Waterberg (Limpopo)
Mpumalanga
Grootegeluk and Belfast: Baboon
spider and succulent relocation
Grootegeluk: Conservation in
Manketti Game Reserve
Matla and Belfast: African grass owl and bat
protection
Our team works closely with
authorities in relocating baboon
spiders and protected succulent
species as our mining footprint
expands.
The 22 000ha Manketti Game Reserve
continues to optimise land use and
the sustainability of Grootegeluk.
Exxaro has partnered with the Endangered Wildlife
Trust to develop a monitoring programme that could
enhance our existing processes. Within the Belfast
conservation area, we also assist the Birds of Prey
NGO with the safe and controlled release of grass owls
and bats.
Eastern Cape
Amakhala Emoyeni: Cape vulture management
Cennergi supports the Endangered Wildlife Trust’s
Eastern Cape vulture safe zone research. This
programme aims to reduce Cape vulture fatalities at
operating and proposed wind energy facilities. It also
stabilises the local population by addressing threats
in the safe zone. It is the first habitat safe for vultures
within wind energy facilities and the surrounding
landscape.
Cennergi: Bird and bat fatality curtailment
Cennergi employs local carcass search companies to monitor bird and bat
fatalities in accordance with the South African bird and wind energy facilities
guidelines. At Amakhala Emoyeni, a bat fatality curtailment programme will be
implemented between October 2022 and May 2023 to reduce fatalities. The
avifauna specialists prepare the semi-annual bird and bat monitoring reports
submitted to lenders, BirdLife Africa, Endangered Wildlife Trust, the DFFE and
other relevant authorities.
No red data mortalities were recorded at Tsitsikamma in 2022. Unfortunately,
one secretary bird fatality was recorded at Amakhala Emoyeni.
110 | Exxaro Resources Limited
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Alien plant eradication
236ha land cleared of invader plants
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Across our sites, we progressed in avoiding:
• Biodiversity decline
• Indigenous animals being prevented from feeding or nesting in the area due to fauna changes
• Extinction of indigenous species due to genetic pool loss (pine, wattle and hakea trees prevent fynbos species growth)
• Greater risk of catastrophic events (fire and flooding) due to ecological imbalance
• Lower productivity of rangeland due to selective grazing
• Soil erosion and dam and river siltation due to invasive alien species consuming more water than indigenous flora
• Sandy and nitrogen-poor natural soil
Invasive alien plant control continues at BUs and will start at Grootegeluk in 2023. The tender process to appoint a service provider
began in the third quarter of 2022.
Since 2016, full-time local SMMEs have successfully managed Cennergi’s alien plant control programme.
Pan research
Following an assessment of pans at Belfast by the Council for Scientific and Industrial Research in 2019, and subsequent monitoring
by Exxaro since 2020 to avoid deprivation, an external reviewer conducts monthly and quarterly evaluations. We are evaluating
recommendations from our completed pan research project to determine the next steps.
Wetland rehabilitation
• We completed rehabilitation of the wetland system adjacent to Belfast in 2020
• The proof-of-concept study in the LoM footprint area at Grootegeluk was completed in 2021. Six seasonal pans were created using donor
material from pans that will be lost to mining. The five-year programme to monitor the project’s success started in January 2022
We did not record any biodiversity-related grievances in 2022.
Exxaro intends to introduce detailed regional biodiversity management plans, based on our impact assessments in 2022. Plans will ensure
compliance, and inform targets and KPIs being developed for each BU.
Environmental liabilities and rehabilitation
Understanding that responsible mining practices
continuously evolve, we have a holistic and integrated
approach to mine closure, taking into account
environmental protection, social wellbeing and financial
performance.
Mine rehabilitation is the restoration of the post-mined
landscape to the intended post-mining land use. We
see environmental rehabilitation as an opportunity to
uplift our employees and communities with sustainable
alternative land use.
We manage our environmental liabilities and rehabilitation in compliance with
legislation and evolving responsible mining practices. Our licence to operate
depends on a holistic and integrated approach to land management, mine
closure and concurrent rehabilitation.
Our approach therefore considers impacts on employees, communities,
the environment, government and infrastructure. Further, our proactive
management of environmental impacts minimises residual liabilities (water
quality and quantity, and topsoil health), that could affect Exxaro’s financial
performance by completing concurrent rehabilitation timeously and to
prevent water ingress into rehabilitated areas.
Snapshot of our performance
2 000ha land rehabilitated
(2021: 1 933ha)
9 624ha land disturbed
(2021: 9 280ha)
R8 428 million
total closure costs
(2021: R7 581 million)
Operations in active closure in 2022: Tshikondeni, Durnacol, Hlobane and Strathrae (2021: four)
Available land for emerging farmers and communities
• Mpumalanga
– Strathrae: 5 447ha (seven farmers on 4 495ha of land used for crop and cattle farming)
– Sheepmore: 740ha (two farmers on 740ha of land used for cattle farming)
• KwaZulu-Natal
– Durnacol: 190ha (110ha leased to one female farmer for cultivation)
• Limpopo
— Lephalale: 296ha (112ha leased to three entities for intensive vegetable farming)
We are working towards transferring 90% of post-mining land to emerging farmers in local communities by 2026.
We will align our mine closure and rehabilitation approach with the Sustainable Growth and Impact strategy in 2023.
Our strategic objectives include:
• Embedding concurrent rehabilitation and mine closure in the management of operations at BUs
• Aligning with rehabilitation standards that ensure sustainable alternative post-mining land use (including vegetation that can be used
for carbon sequestration)
• Clear and measurable concurrent and ongoing rehabilitation targets
• Building accountability into operational management KPIs
• Reducing financial environmental liability
Exxaro Resources Limited
Integrated report 2022 | 111
Responding to TCFD
reporting requirements
This is Exxaro’s third year of reporting in line with the TCFD recommendations. This reflects
Exxaro’s internalised and proactive approach to climate change and our ESG commitments.
The table below provides an overview of our responses and links to relevant coverage in this report, our ESG report and other
supporting documents available online. We published a separate Climate Change Response strategy and our climate change position
statement in 2020. These provide additional detail on some areas of our response to climate change.
Requirement
Progress
Further reading
1
Describe the board’s oversight
of climate-related risks and
opportunities.
Describe management’s role
in assessing and managing
climate-related risks and
opportunities.
Describe the climate-related risks
and opportunities the organisation
has identified over the short,
medium and long term.
Climate change is an integral consideration and
as such is embedded in our governance processes.
The board takes ultimate responsibility and is
supported by its subcommittees. The CEO and
chairperson oversee climate-related risks and
opportunities.
Ultimate responsibility from a management
perspective rests with the CEO. She is supported
by the executive committee. Climate change is a key
consideration and our response to it is embedded
in our Sustainable Growth and Impact strategy.
Climate-related risks and opportunities are embedded
in our risk management processes.
Describe the impact of
climate-related risks and
opportunities on the organisation’s,
strategy, and financial planning.
Climate change risks and opportunities are embedded
into all strategic, operational and financial matters.
Our strategy details how climate change is driving
our journey to resilience.
Describe the resilience of the
organisation’s strategy, taking
into consideration different
climate-related scenarios,
including a 2ºC or lower scenario.
We undertook scenario analysis to understand
our business resilience from a physical and transition
risk perspective. Our strategy is designed to ensure
our resilience to different climate scenarios, including
2ºC or lower.
Our strategy details how we are responding to
risks and opportunities associated with the low
carbon transition. Furthermore, our Climate Change
Response strategy report and climate change position
statement include information on this analysis.
We take a proactive approach to identifying
climate-related risks.
6
Describe the organisation’s
processes for identifying and
assessing climate-related risks.
7
Describe the organisation’s process
for managing climate-related risks.
Climate-related risks are managed within
our ERM framework.
Describe how processes for
identifying, assessing, and
managing climate-related risks are
integrated into the organisation’s
overall risk management.
Climate-related risks are integrated into overall risk
management and factor as one of the top 20 risks
facing the business.
2
3
4
5
8
9
Governance (ESG report, page 92)
Governance for value creation (page 51)
Transitioning into a low-carbon business
(ESG report, page 11)
Our strategy (page 44)
Transitioning into a low-carbon business
(ESG report, page 11)
Business risks and opportunities (page 26)
Transitioning into a low-carbon business
(ESG report, page 11)
Our strategy (page 44)
Climate Change Response strategy report
(2020 investor tab) and climate change
position statement (sustainability tab)
Our strategy (page 44)
Transitioning into a low-carbon business
(ESG report, page 11), Climate Change
Response strategy report (2020 investor
tab) and climate change position
statement (sustainability tab)
Our strategy (page 44)
Transitioning into a low-carbon business
(ESG report, page 11)
Business risks and opportunities (page 26)
Business risks and opportunities (page 26)
Disclose the metrics used by the
organisation to assess climate-
related risks and opportunities
in line with its strategy and risk
management.
Climate risk metrics are disclosed in the ESG report
for emissions, energy, water, land use and waste.
The remuneration report discloses how climate-
related issues are incorporated into our remuneration
practices.
Environment (ESG report, page 33) and
remuneration report (ESG report, page
145)
10 Disclose scope 1, scope 2, and,
if appropriate, scope 3 GHG
emissions, and the related risks.
11
Describe the targets used
by the organisation to
manage climate-related risks
and opportunities and performance
against targets.
We report extensively on our scope 1, 2 and 3
emissions in our ESG and CDP reports.
We have committed to being carbon neutral
for our scope 1 and 2 emissions by 2050.
112 | Exxaro Resources Limited
Integrated report 2022
GHG emissions (ESG report, page 41)
and CDP report (www.cdp.net)
Transitioning into a low-carbon business
(ESG report, page 11)
Our strategy (page 44)
Our Mineral
Resources and
Mineral
Reserves
We are unlocking value from our
existing asset base to sustain
our journey from coal mining to
minerals and renewable energy
solutions that will enable us to
thrive in a low-carbon environment.
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Exxaro Resources Limited
Integrated report 2022 | 113
Our Mineral Resources and
Mineral Reserves
Our Resources and Reserves
Exxaro continuously strives to enhance the level of estimation
and reporting of our Mineral Resources and Mineral Reserves.
Our estimation and reporting strategy focuses on sustaining our
mineral asset base by employing a responsible and innovative
technical management team. The value extracted from the
mineral assets is continuously reviewed with mine planning,
considering evolving knowledge of the mineral asset’s geological
complexities and its opportunities.
Our projects, operations and expansion initiatives are built on
trusted and assured Resources and Reserves, creating a platform
for the LoM from which annual business plans are derived. The
Resource managers of each operation are the custodians of the
LoM and ensure professional execution of the business plans,
stimulating profitability and return on investment while guarding
against irresponsible exploitation.
How we report
Our Resource and Reserve statements, explanations on how we
report (governance, assurance, competence and estimation) and
comprehensive descriptions of our coal operations are aligned
with section 12.13 of the JSE Listings Requirements and captured
in our
CMRR report, a supplement to this report.
Our Coal Resources and Coal Reserves were estimated on
an operational or project basis, and in line with the SAMREC
Code for African coal properties and the Australasian Code for
Reporting of Exploration Results, Mineral Resources and Mineral
Reserves, 2012 edition (JORC Code) for the Australian coal
property. The Exxaro annual estimation and reporting process is
managed through the Exxaro geosciences as well as LoM policies
and associated Coal Resource and Coal Reserve reporting and
estimation procedures.
Operations we report on
Exxaro reports Resource and Reserve estimates directly under
management’s control and for entities in which we hold a minority
interest.
Competence
Exxaro’s Coal Resources and Coal Reserves have been estimated
or supervised by the Competent Persons supported by technical
specialists and guided by corporate-appointed lead Resource and
Reserve Competent Persons.
The Competent Persons are full-time employees at their
applicable operations and their names, affiliation and relevant
experience are provided in the CMRR report.
Assurance
Assurance is implemented in terms of a three-tier system. Tier 1
assurance is conducted in parallel with our estimation processes
by internal/peer technical specialists to ensure estimates with
integrity. Tier 2 assurance consists of internal reviews conducted
on operations or projects, when deemed necessary, to ensure
compliance. Tier 3 reviews are comprehensive external Resource
and Reserve estimation reviews conducted on a three-year
operational cycle.
Grootegeluk mining area
114 | Exxaro Resources Limited
Integrated report 2022
Understanding our business
Drivers of value creation
Transitioning the business for growth
Governance for value creation
Our performance
Our Mineral Resources and Mineral Reserves
Our coal estimates for the reporting year
Exxaro’s attributable Coal Resources and Coal Reserves
s
e
n
n
o
t
n
o
i
l
l
i
m
e
c
r
u
o
s
e
R
16 000
14 000
12 000
10 000
8 000
6 000
4 000
2 000
0
3 030
6 970
2 227
763
4 720
2018
2 917
3 937
2 21 1
757
4 573
2019
2 022
3 467
2 555
1 095
4 172
2020
3 342
2 422
1 897
1 083
3 831
2021
2 276
3 156
1 936
743
4 438
2022
3 500
3 000
2 500
2 000
1 500
1 000
500
0
s
e
n
n
o
t
n
o
i
l
l
i
m
e
v
r
e
s
e
R
Measured Indicated Inferred Proved Probable
Notes:
• Resource estimations are based on the latest available geological models, which incorporate new validated geological information and, if applicable, revised seam, Resource
definitions and Resource classifications. For the 2022 reporting cycle, reported estimates are derived from actual mining up to the end of October, incorporating the planned
estimates for November and December.
• Resource and Reserve estimates in our statements are quoted in full, irrespective of Exxaro’s shareholding. Our attributable tonnage is clearly presented in the image above and,
when used in our report, always clearly defined as such.
• Rounding off of figures quoted may result in minor computational discrepancies although it is not deemed significant.
Coal Resources
-1%
Coal Reserves
+1%
Our total attributable Coal Resources decreased by 1%, primarily
due to mining which was offset by new exploration information
acquired at our various operations. On-mine drilling increased the
level of geological confidence resulting in material movements
from the Inferred to Indicated and to the higher confidence
Measured category.
Material movement in Coal Resources
Two operations reported material changes in Coal Resources.
A ~23% increase in total Coal Resources at Mafube mine is the
result of new exploration information and the movement of
the Rooipan area from Inventory to Coal Resources based
on environmental approvals received to drill within this area.
A 15% decrease in Coal Resources at Leeuwpan mine is due
to mining and disposals as a result of re-interpretation and
subsequent reclassification of coal material outside LoM plan
during the geological modelling process.
Our total attributable Coal Reserves increased by 1%, primarily
as a result of revised LoM plans.
Material movement in Coal Reserves
The significant increase (~144%) in the total Coal Reserves,
at Mafube mine, is the result of an updated LoM plan including the
Rooipan area after consideration of the successful submission of
the integrated WUL application. The Coal Reserves within Rooipan
are reported as Probable Reserves pending the approval of the
integrated WUL.
Other than normal LoM depletion, no material changes to the
total attributable Coal Resource and Coal Reserve estimates are
reported for any operations.
Exxaro Resources Limited
Integrated report 2022 | 115
Glossary
Adjusted
earnings
AGM
API4
Group earnings adjusted for non-recurring items (referred to as non-core adjustments)
Annual general meeting
Argus/McCloskey Coal Price Index
B-BBEE
Broad-based black economic empowerment
Black Mountain
Black Mountain Mining Proprietary Limited
BU
Business unit
Cennergi
Cennergi Proprietary Limited
CEO
CMRR
COP27
CSI
DFFE
DMRE
dtic
DWS
EBITDA
ECC
EME
ESD
ESG
ESOP
ERM
EWP
Exxaro
FECs
GBV
GDP
GG6
GHG
HEPS
HPI
IDC
IFRS
IPP
JSE
King IV
KPI
Chief executive officer
Consolidated Mineral Resources and Mineral Reserves
2022 UN Climate Change Conference of the Parties
Corporate social investment
Department of Forestry, Fisheries and the Environment
Department of Mineral Resources and Energy
Department of Trade, Industry and Competition
Department of Water and Sanitation
Net operating profit before interest, tax, depreciation, amortisation, impairment charges or impairment reversals
and net losses or gains on the disposal of assets and investments (including transaction differences recycled
to profit or loss)
Exxaro Coal Central Proprietary Limited (divestment concluded in September 2021)
Exempt micro-enterprises
Enterprise and supplier development
Environmental, social and governance
Employee share ownership plan
Enterprise risk management
Employee wellness programme
Exxaro Resources Limited
Forward exchange contracts
Gender-based violence
Gross domestic product
Grootegeluk 6
Greenhouse gas
Headline earnings per share
High-potential incident
Industrial Development Corporation
International Financial Reporting Standards
Independent power producer
JSE Limited
King IV Report on Corporate Governance for South Africa, 2016
Key performance indicator
116 | Exxaro Resources Limited
Integrated report 2022
LoM
LTI
LTIFR
MCWAP
MCWAP2
Life of mine
Lost-time injury
Lost-time injury frequency rate
Mokolo Crocodile Water Augmentation Project
Mokolo Crocodile Water Augmentation Project Crocodile River system
Mining Charter III Broad-based Socio-economic Empowerment Charter for the Mining and Minerals Industry 2018
MoI
NBI
NDC
NGO
NPAT
OHIFR
PIT
POPIA
QSE
RBCT
RBR
ROCE
RoM
Memorandum of incorporation
National Business Initiative
Nationally determined contribution
Non-governmental organisation
Net profit after tax
Occupational health incident frequency rate
Professionals in training
Protection of Personal Information, 2013 (Act 4 of 2013)
Qualifying small enterprise
Richards Bay Coal Terminal Proprietary Limited
Risk and business resilience
Return on capital employed
Run of mine
RRODA
Renewable energy risk and opportunity domain analysis
SAMREC Code
The South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves,
2016 edition
SDG
SERC
SIOC
SLP
SMME
SPV
STI
TCFD
TFR
Sustainable Development Goal
Social, ethics and responsibility committee
Sishen Iron Ore Company Proprietary Limited
Social and labour plan
Small, medium and micro-enterprise
Special purpose vehicle
Short-term incentive
Task Force on Climate-Related Financial Disclosures
Transnet Freight Rail
Tronox SA
Tronox KZN Sands Proprietary Limited and Tronox Mineral Sands Proprietary Limited
UNGC
WUL
United Nations Global Compact
Water use licence
Exxaro Resources Limited
Integrated report 2022 | 117
Administration
Group company secretary and registered office
Independent external auditor
Andiswa Ndoni
Exxaro Resources Limited
The conneXXion
263B West Avenue
Die Hoewes Centurion
0163
(PO Box 9229, Pretoria 0001)
South Africa
Telephone: +27 12 307 5000
Lead equity sponsor and debt sponsor
Absa Bank Limited (corporate and investment bank division)
15 Alice Lane
Sandton
2196
Telephone: +27 11 895 6000
Joint equity sponsor
Tamela Holdings Proprietary Limited
Ground Floor
Golden Oak House
Ballyoaks Office Park
35 Ballyclare Drive
Bryanston
2021
Telephone: +27 11 783 5027/4907
Company registration number
2000/011076/06
JSE share code: EXX
ISIN code: ZAE000084992 ADR code: EXXAY
Bond code: EXX005
ISIN number: ZAG000160334
For the financial year ended 31 December 2022
KPMG Inc
85 Empire Road
Parktown
2193
Private Bag 9
Parkview
2123
Telephone: +27 11 647 7111
Commercial banker
Absa Bank Limited
Corporate law adviser
Inlexso Proprietary Limited
Building 3 Summit Place
221 Garsfontein Road
Menlyn
Pretoria
0181
Telephone: +27 12 942 5555
Registrars
JSE Investor Services Proprietary Limited
One Exchange Square
Gwen Lane
Sandown
Sandton
2196
PO Box 4844
Johannesburg
2000
Telephone: 086 154 6572 or 011 713 0800
Disclaimer
Opinions expressed herein are, by nature, subjective to known and unknown risks and uncertainties. Changing information
or circumstances may cause the actual results, plans and objectives of Exxaro Resources Limited (the company) to differ materially from
those expressed or implied in the forward-looking statements. Financial forecasts and data given herein are estimates based on the
reports prepared by experts who, in turn, relied on management estimates. Undue reliance should not be placed on such opinions,
forecasts or data. No representation is made as to the completeness or correctness of the opinions, forecasts or data contained herein.
Neither the company, nor any of its affiliates, advisers or representatives accept any responsibility for any loss arising from the use
of any opinion expressed or forecast or data herein. Forward-looking statements apply only as of the date on which they are made, and
the company does not undertake any obligation to publicly update or revise any of its opinions or forward-looking statements, whether
to reflect new data or future events or circumstances. Any forward-looking information has not been audited, reviewed or otherwise
reported on by the external auditors.
118 | Exxaro Resources Limited
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