Exxaro
Resources
Limited
Integrated report
for the year ended
31 December 2023
Building momentum and resilience for sustainable growth and
impact
Navigating this report
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Contents
1
2
4
6
About this report
Delivering sustainable value creation
Snapshot of our long-term value creation
8
10
14
Chairperson’s statement
Who we are
Our operating context
Our business
20
24
28
39
45
47
50
56
61
81
83
90
92
96
106
109
120
121
Our business model
Our material matters
Our risks and opportunities
Engaging our stakeholders
CEO’s report
Our strategy
Performance against our strategy
and outlook
Our leadership
Summarised governance report
Combined assurance for effective
governance
Finance director’s overview
Operational performance
Business resilience
Building momentum with people
Social impact
Our environmental stewardship
Responding to TCFD reporting
requirements
Our Mineral Resources and
Mineral Reserves
How we create
value
Strategically
positioning the
business for
growth
Building
resilience
through
governance
Our
performance
Our Mineral
Resources and
Mineral
Reserves
124 Glossary
125 Administration
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
Building sustainable
communities
Natural
Human
Social and relationship
Helping our people thrive
Manufactured
Executing our strategy
Intellectual
Driving business resilience
Financial
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: Governance and reporting
Tel: +27 12 307 3174
Mobile: +27 83 460 3723
Email: Malusi.Buthelezi@exxaro.com
www.exxaro.com
Follow us on Facebook, X,
Instagram, LinkedIn and YouTube
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Building momentum and resilience for
sustainable growth and impact
Welcome to our 2023 integrated report,
which explains how we are building
momentum and increasing our resilience
in a turbulent macro-economic climate in
line with our ambition to achieve
sustainable growth and impact.
Dr Nombasa Tsengwa
Chief executive officer (CEO)
The previous year laid bare the intricate tapestry of challenges that define our
times – from geopolitical upheaval to the tenuous responses of global markets
to surging inflation and shifting energy paradigms.
As the clarion call for a sustainable future grows louder, we recognise our dual imperative: to bolster energy security by ensuring a reliable
coal supply and to navigate our strategic transition towards cleaner energy. This commitment is crucial, not just for maintaining the reliability
of our nation’s energy supply but as a cornerstone for supporting South Africa’s economic growth and prosperity.
We aim to grow from the exceptional business we have developed over the past 18 years, continuously building momentum and resilience for
sustainable growth and impact. Our rich history is the foundation for our progress, moving from a past focused solely on mining to embracing
the energy landscape of the future with an approach that emphasises energy security, endorses resources for a cleaner world and supports a
just transition to a carbon-neutral future by 2050.
To support this forward-looking approach, we meticulously evaluated our Sustainable Growth and Impact strategy during the year regarding
its progress, timing and scenario planning. This included endorsing a unified ESG framework, developing an ESG policy and enhancing our
strategic approach to sustainability. The creation of a strategic performance management dashboard further amplifies the visibility of
strategy execution.
Our energy initiatives and the strategic selection of minerals for diversification reflect our proactive approach to the global energy transition
and our contribution to a carbon-neutral future. The lessons learned over the past two years in evaluating potential opportunities in critical
minerals and energy have refined our approach, ensuring expansion efforts are well considered and aligned with our core sustainability and
value creation principles. These experiences have reinforced our commitment to resilience – withstanding market pressures and preparing to
capitalise on opportunities with agility and foresight.
We have also made significant progress in our Climate Change Response strategy by creating a comprehensive decarbonisation roadmap
with an ambitious goal of achieving carbon neutrality. This roadmap, in its mature phase, outlines the actions that will guide the group
towards a sustainable transition, anticipating more stringent environmental regulations. Our Lephalale solar project (LSP) is a tangible
representation of our commitments and is poised to deliver a 27% reduction in scope 2 emissions on completion. This project complements
our core coal business and reflects our comprehensive approach to energy provision.
We stand ready to apply our learnings in a way that propels us forward. We are poised to engage with the future of
energy with the same dedication and focus that has seen us through the past years. This is the essence of our
story – a tale of resilience, learning and a steadfast commitment to making a sustainable impact. It is a narrative
we carry into the future as we continue to shape an enduring legacy in powering possibility.
Exxaro Resources Limited Integrated report 2023
1
About this report
Exxaro’s integrated report for the year ended 31 December 2023 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 2023 to 31 December 2023 (the 2023 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
the Cennergi group of companies (Cennergi). We consolidated
material information about Cennergi Proprietary Limited’s safety
incidents into the group’s results.
We include limited information on operations where we:
• Do not have management control but hold an important
equity interest, namely Black Mountain Proprietary Limited
(Black Mountain), Richards Bay Coal Terminal Proprietary
Limited (RBCT) and Sishen Iron Ore Company Proprietary
Limited (SIOC), or
• Have joint control, namely Mafube Coal Proprietary Limited joint
venture and Moranbah South project (joint operation)
Reporting boundary
(risks, opportunities and outcomes)
Strategy (page 47)
Business model (page 20)
Operational performance
(page 90)
Material matters (page 24)
Risks and opportunities
(page 28)
Governance (page 55)
Financial reporting entity
(control and significant influence)
Stakeholders
(page 39)
• Government and
regulators
• Employees and
labour unions
• Communities
• Investors
• Suppliers
• Customers
• Civil society
• Others
• Subsidiaries
• Joint arrangements
• Investments
Materiality
We distinguish the information to include in our reporting suite through a double materiality determination process, which identifies
the matters that impact our ability to create enterprise value (financial materiality) and our impact on the environment, communities
and society (impact materiality).
We group these material matters (page 24) into themes that link to the resources we use and affect.
Only matters that could substantively affect our ability to create value in the short (one to five years), medium (six to 10 years) or
long term (>11 years) are reported on in our integrated report. We understand, however, that sustainability issues can shift between
impact and financial materiality. We therefore conduct an annual materiality determination process to assess this movement.
Impact
materiality
All sustainability matters affected
by or that affect Exxaro
Our reporting suite
Audience
All sustainability matters that
reflect our significant impacts on
the environment and people.
A sub-set of sustainability-related
risks and opportunities that could
substantively affect our ability to
create value in the short, medium
or long term.
Monetary amounts in the financial
statements reflecting the effects on
enterprise value that have already
taken place at the reporting date, or
are included in future cash flow
projections.
D
y
n
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m
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e
r
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l
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ESG
report
Integrated
report
All stakeholders seeking
to understand the
entity’s significant
sustainability impacts
Investors, lenders and
creditors seeking to
assess enterprise value
Group and company
annual financial
statements
Summarised annual
financial statements
and notice of AGM
CMRR report
Primarily investors
and capital markets
y
t
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D
Financial
materiality
2
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Integrated thinking
Our belief in sustainable value creation is inspired by carefully
considering the relationship between the resources we use and
affect and potential trade-offs 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 this report's
value creation message, content and structure. This is supported
by the information outlined in our ESG report, detailing our
performance against our ESG commitments.
As part of embedding ESG into the business, we voluntarily endorse
the United Nations (UN) 17 Sustainable Development Goals (SDGs).
We also participate in the National Business Initiative 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 materially impacts are highlighted in colour.
Frameworks and guidelines
Our reporting suite is guided by and applies the following:
IR ESG AFS CMRR
x
x
x
x
x
x
x
x
x
x
Materiality determination process
Integrated Reporting Framework
Companies Act of South Africa, 2008 (Act
71 of 2008), as amended (Companies Act)
International Financial Reporting
Standards (IFRS®) Accounting
Standards*
JSE Limited (JSE) Listings Requirements
and Debt Listings Requirements
Department of Trade, Industry and
Competition (dtic) Broad-based Black
Economic Empowerment (B-BBEE) Codes
of Good Practice
The effective parts of the Broad-based
Socio-economic Empowerment Charter
for the Mining and Minerals Industry 2018
(Mining Charter III)
King IV Report on Corporate
Governance™ for South Africa, 2016
(King IV)**
South African Code for the Reporting of
Exploration Results, Mineral Resources
and Mineral Reserves, 2016 edition
Global Reporting Initiative standards
(elements of the ESG report are cross-
referenced for a broader perspective)
United Nations Global Compact (UNGC)
Sustainability Accounting Standards
Board
Task Force on Climate-Related Financial
Disclosures (TCFD) recommendations***
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
* As issued by the International Accounting Standards Board.
** Copyright and trademarks are owned by the Institute of Directors South Africa and all of
its rights are reserved.
*** This now falls under the custodianship of the IFRS Foundation.
Assurance
KPMG provided independent reasonable assurance over key sustainability information in the ESG report. The assurance report is
available on page 190 of the ESG report.
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 of 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
Geraldine Fraser-Moleketi
Lead independent non-executive director
Karin Ireton
Independent non-executive director
Billy Mawasha
Independent non-executive director
Nosipho Molope
Independent non-executive director
Isaac Malevu
Non-executive director
Mandlesilo Msimang
Non-executive director
10 April 2024
Nondumiso Medupe
Independent non-executive director
Chanda Nxumalo
Independent non-executive director
Likhapha Mbatha
Non-executive director
Ben Magara
Independent non-executive director
Dr Phumla Mnganga
Independent non-executive director
Peet Snyders
Independent non-executive director
Zwelibanzi Mntambo
Non-executive director
Exxaro Resources Limited Integrated report 2023
3
Delivering sustainable value creation
In line with our 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.
Long-term forces shaping our way forward…
We must balance South Africa’s socio-economic development, which relies on coal-generated power, with supporting the transition to a low-
carbon economy. These major changes 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
Climate change increases competition between communities for scarce resources like water
and biodiversity. Rising heat increases the risk of health and safety incidents at our operations.
Energy transition
The growth in disruptive technology in the energy sector could displace our business in the
medium to long term.
Just transition
Stewardship
The transition to a low-carbon economy has significant socio-economic implications for our
business and the communities in which we operate.
We believe we do not own coal assets but are stewards who responsibly maximise their value.
We have a responsibility to use these coal assets to build a sustainable business for our
investors, employees, and communities, as well as a sustainable future for the planet.
…unfolding within our context
Our operating
context (page 14)
Forces in our macro-
economic context, markets
and other short to
medium-term social and
environmental trends
could present
opportunities or risks to
our business model and
thus affect our ability to
create value.
Risks and
opportunities (page
28)
Material risks and related
opportunities are key factors
that must be managed to
ensure our continued
success. We further assess
climate risks according to
the recommendations of
the TCFD.
+
+
Stakeholders’
needs and concerns
(page 39)
Our stakeholder
relationships and active
engagements are crucial in
understanding and
delivering value and
impact.
=
Material matters
(page 24)
These elements inform the
themes we consider
material to our value
creation and influence our
strategic direction.
We are navigating the tension between a rapid energy transition and a just, equitable shift that
benefits all stakeholders through our responsive strategy…
… that positions Exxaro for sustainable growth and impact.
4
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Delivering value through purpose…
Our purpose is the reason we exist. It guides our long-term decision making and daily actions. To achieve our purpose, we must deliver on
three core areas of value. These are the linchpins of our relevance and sustainability as a business. Value for Exxaro is therefore inextricably
tied to our ability to achieve these aims:
Energy
security
Resources
powering
a clean
world
Just
transition
Supplied 42.5Mt of coal product, powering households and industries in Africa and beyond
Increased capital investment in Grootegeluk and Belfast by 57%, in line with our early value strategy
727GWh of wind energy, powering approximately 21 900 average South African households per year in
line with our decarbonisation goals
Cennergi provides 229MW of wind energy to Eskom and aims for a 1.6GW capacity of internal and external
offtake by 2030 as part of our renewable energy expansion
Financial close of the LSP reinforces our commitment to sustainable energy investments. This will reduce
scope 2 emissions by 27% on completion in 2025
For each stakeholder group, we also aim to create and preserve relevant value:
Engaging our stakeholders (page 39)
Building resilience through governance (page 55)
Our performance (page 82)
Government and regulators – driving sustainable development
We create value for the governments and regulators in the regions where we operate through transparent operations that
contribute to economic growth and energy access, and collaborate on projects echoing national and regional energy strategies
and sustainability objectives.
Employees – powering possibility
We empower our employees with opportunities for career growth, equitable compensation, and a safe work environment. We are
also committed to delivering resources to power a clean world, resonating with our people’s aspirations for a sustainable future.
Communities – nurturing resilience and socio-economic growth
By integrating community needs into our operational strategy, we aim to foster sustainable growth and a resilient socio-
economic structure that supports community prosperity and our business's sustainability. Our initiatives are tailored to support
a just transition to a sustainable future, creating employment and reskilling opportunities for communities living in and around
our operations.
Customers – energising progress
We deliver value through our early value strategy and our market to resource strategy to meet our customers’ needs while
contributing towards energy security in South Africa and beyond. We also seek to supply minerals and energy that enable the
energy transition, nurturing trust-based, innovative partnerships that support our collective vision for sustainable development.
Investors – investing in tomorrow
We are bolstering the energy sector while strategically decarbonising to augment our coal business's competitive edge and
longevity. Our diversification into key minerals and energy underpins a sustainable development vision. This strategic direction
strengthens trust and delivers long-term value to investors through responsible growth and investment in the future.
Suppliers – strengthening supply chain sustainability
In our approach to supplier engagement, we focus on local procurement, which supports community businesses and aligns with
our sustainability goals by reducing logistical impacts. This not only strengthens local economies but also fosters deeper
community ties. Concurrently, we are dedicated to enhancing our supply chain's robustness and reliability, which we achieve by
investing in our suppliers' capabilities and advocating for best practices. Additionally, our suppliers are integral to our
decarbonisation journey. We educate them on climate change, carbon pricing, and adaptation strategies, deepening their
understanding and encouraging active participation in climate resilience and mitigation efforts.
Environment – sustaining environment
We minimise our environmental impact through responsible mining practices, investment in renewable energy initiatives, and a
deep commitment to biodiversity and the natural world.
Exxaro Resources Limited Integrated report 2023
5
Snapshot of our long-term value creation
For the past five years, Exxaro has demonstrated our commitment to creating
and preserving value for our stakeholders. By practising environmental and
social stewardship, supported by good governance structures, we ensure the
sustainability of our business and create value over time.
Since 2019...
45 168ML of
water
recycled
19% and 12%
reduction in
absolute
scope 1 and 2
emissions
Contributing
R5 million
towards rhino
conservation
every year
since 2020
Total alien
vegetation
cleared
2 872ha
Total economic
value created for
stakeholders
R7.43 billion
610 jobs created
through SLP
projects
Total spent on skills
development
R1.39 billion
Total spent on
CSI
R429 million
R63 million
invested in
climate
change
research and
development
Contributed
over
R900 million
in ESD funding
since 2018
Board gender
diversity increased
by 56%
Board racial
diversity increased
from 71% to 81%
Consistently
recognised in the
Bloomberg GEI
since 2014
1 335 employees
trained in implicit
and unconscious
bias since 2020
Maintained an
average score
above 4/5 for
governance
in the FTSE
Russell Index
6
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Our business
Exxaro is positioning itself to
navigate a rapidly evolving
landscape, with environmental
sustainability and social equity
as key drivers. Led by our
purpose, we will not only adapt
but thrive, transforming our
operations to provide
resources that contribute to a
cleaner, more equitable world.
8 Chairperson’s statement
10 Who we are
14 Our operating context
Exxaro Resources Limited Integrated report 2023
7
Chairperson’s statement
In the face of myriad challenges, our strategic initiatives
and the collective resilience of our people and operations
enabled us to not only withstand but also navigate
volatility with confidence and purpose, recording the
second highest ever EBITDA of R13.4 billion, thus laying
a solid foundation for continued growth and impact.
Mvuleni Geoffrey Qhena
Chairperson
For Exxaro, the volatile macro-economic climate impacted
commodity markets and trade, making strategic flexibility
essential. The group navigated these global upheavals while
contending with South Africa's internal challenges, including the
ongoing constraints of inadequate infrastructure and logistics
supply.
Building on legacy, embracing the future
As Exxaro moves forward, we find ourselves at a pivotal juncture,
urged by the global mandate for environmental stewardship and
climate action. Exxaro has made strides in our climate strategy,
developing a comprehensive decarbonisation roadmap with the
ambitious endpoint of carbon neutrality by 2050. In its mature
phase, this roadmap outlines actions to guide the group’s
sustainable transition in anticipation of more stringent
environmental regulations, reaffirming Exxaro’s leadership in
sustainable practices.
The board rigorously evaluated Exxaro’s Sustainable Growth and
Impact strategy’s progress, timing, and scenario planning against
our strategic scorecard framework. This included endorsing a
unified ESG framework and enhancing our strategic approach to
sustainability. We also evolved our strategic performance
management dashboard, improving the visibility of strategy
execution and enriching governance discussions within Exxaro’s
tiered governance structure.
Adapting to an evolving landscape, our annual board governance
roadshow delved into the potential impact of global sanctions
and financial threats, including grey listing and interest rate
fluctuations. The discussions led to a thorough analysis of these
risks and their implications for Exxaro, which remains under
active board and committee review.
Exxaro’s resilient operations are rooted in innovation and strong
technical expertise, reinforcing safe production, robust financial
performance and an effective approach to our strategic capital
allocation. To support this, the board has been leveraging our
Digital@Exxaro strategy, deep mining and energy expertise,
strong balance sheet, stable earnings, high-quality products and
a strong record of delivering sustainable impact.
8
Exxaro Resources Limited Integrated report 2023
Fostering robust governance and leadership
continuity
The board continues to demonstrate its commitment to
governance excellence as the bedrock for sustained value
creation. Leadership quality is paramount for strategic success,
necessitating the right blend of skills, diversity and oversight at
the board level. Our board consistently focuses on achieving the
right size, balance, independence and diversity to effectively fulfil
its governance mandate.
Demonstrating our dedication to these principles, Andiswa Ndoni
transitioned from group company secretary to the chief strategic
resilience and governance officer. Her expertise will continue to
benefit the group in this pivotal role. Michelle Nana will succeed
her as group company secretary from 1 May 2024. With a
background spanning over 30 years in company secretarial roles
across various geographies, and as a law graduate and esteemed
member of relevant professional bodies, Michelle is well
positioned to uphold the governance standards that underpin our
operations.
We are also pleased to announce Nosipho Molope’s appointment
as an independent non-executive director and a member of the
audit committee effective from 3 January 2024. Nosipho, a
distinguished chartered accountant, brings extensive experience
from her service on numerous boards, enhancing our governance
with her proficiency in audit, risk and ethical oversight.
While we embrace these new appointments, we also bid farewell
to Likhapha Mbatha who retires by rotation at the 2024 AGM.
Likhapha retires as a member of the social, ethics and
remuneration committee and has made a lasting impact on
Exxaro. The board extends its gratitude for her exceptional
service.
These changes reflect Exxaro’s ongoing commitment to strategic
board renewal and succession planning, ensuring the group
remains at the forefront of governance excellence and prepared
to navigate future challenges with resilience and integrity.
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Chairperson’s statement continued
Engaging to deliver lasting positive outcomes
The board firmly believes in the power of stakeholder
engagement to forge lasting, positive outcomes. True to the
ethos of King IV, our stakeholder-inclusive approach underpins
our governance philosophy.
We recognise that understanding and balancing our
stakeholders' diverse needs, interests and expectations against
the organisation's long-term interests is pivotal for sustained
success.
Engagements with crucial stakeholders like Transnet and Eskom
underscore our proactive approach in finding solutions to assist
in managing the material risks and operational challenges we are
facing. The board’s logistics committee, now institutionalised as a
permanent fixture of our governance, is pivotal in managing all
logistics risks faced by the company. It will continue to focus on
long-term international market access and immediate logistic
solutions.
Community engagements remain critical. By building
relationships grounded in understanding community needs,
Exxaro fosters collaboration and pre-emptively addresses
community concerns. The group also emphasises shared value
creation through local employment, procurement, and supplier
and community development initiatives, seeking to deliver value
beyond specific operational lifespans. This is illustrated through
our community investments, which totalled R1.9 billion this year,
a 17% increase since 2022.
In November 2023, class action litigation was launched against
South African coal mining companies, including ourselves,
relating to mineworkers who contracted coal mine dust lung
disease, as well as dependants of those mineworkers who died
and whose deaths were likely attributable to coal mine dust
disease. We are taking this action very seriously, since the health
and safety obligations of our employees are paramount. We are
investigating all the facts pertaining to the class action and will
respond appropriately. The group proactively researches and
reinforces health and safety measures, including cutting-edge
occupational hygiene and medical surveillance programmes, to
prevent occupational health diseases.
Feedback from our governance roadshow has been affirming.
Investors have recognised our engagement efforts and
suggested further improvements in our climate lobbying
disclosures. We value this feedback as it enhances our reporting
processes and ensures alignment with stakeholder expectations.
The board remains convinced that effective stakeholder
engagement is a cornerstone of robust governance. It fosters
relationships founded on respect and trust, leading to better
informed and more effective decision making.
Looking ahead
We are acutely aware of the ongoing global fluctuations and
persistent local challenges that loom large.
We continue to monitor socio-economic and political events,
such as the upcoming 2024 elections, both in South Africa and
the other countries we operate in.
Our response is one of vigilance and proactive stakeholder
engagement, working collaboratively to foster a climate of
stability and growth. Likewise, the safety of Exxaro’s people is a
top priority, and our leadership, company culture, and
performance contracts reflect this.
Looking to the future, Exxaro’s determination is unyielding – not
only to adapt to an ever-evolving landscape but also to be the
architect of change.
Our commitment to diversification remains. Although we have
not concluded a mineral transaction as yet, the board is satisfied
with management’s efforts in this regard and is comfortable that
a value creating asset will be added to the company’s portfolio.
Our intention is to ensure that we are strategically concentrating
on critical areas such as minerals and energy to leverage the
expanding opportunities within the green economy. Our
comprehensive approach ensures that all efforts are harmonised
with our goal of building a diversified enterprise primed for
resilience and growth within a transforming energy sector.
In closing, I want to thank my fellow board members, the
executive team under the leadership of Dr Nombasa Tsengwa,
and all Exxaro employees for their dedication and hard work.
We thank all our stakeholders for your continued trust and
support. As we move forward, we do so with a clear vision and a
strong sense of purpose, ready to embrace the opportunities and
tackle the challenges that lie ahead.
Mvuleni Geoffrey Qhena
Chairperson
10 April 2024
Exxaro Resources Limited Integrated report 2023
9
Who we are
Exxaro is a South African diversified resources company with existing coal
mining operations and growth prospects in energy transition minerals, energy
business and private rail infrastructure.
We are building Exxaro into a sustainable and impactful business that catalyses
economic growth, principled governance, environmental stewardship and
positive change.
Purpose
Vision
In line with Exxaro’s purpose
of powering better lives in
Africa and beyond, our
ambition is to provide
resources (people, minerals,
energy and capital) critical to
ensuring the energy
transition and low-carbon
future.
We understand that we cannot
grow sustainably without
creating a positive impact on
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.
Values
Our success lies in the strength
of our culture and values, which
strengthen our resilience and
ensure we deliver stakeholder
value. Our values are:
• Empowered to grow and
contribute
• Teamwork
• Committed to excellence
• Honest responsibility
Sustainable Growth and Impact strategy
The Sustainable Growth and Impact strategy is an integrated, multi-stakeholder approach to positioning the
business for a resilient and sustainable future.
10
Exxaro Resources Limited Integrated report 2023
Exxaro Resources Limited Integrated report 2023
11
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Business overview
Assets
R92.9 billion
at 31 December 2023
Coal product
42.5Mt
(including buy-ins)
Renewable energy
727GWh
(2022: R85.1 billion)
(2022: 43.1Mt)
(2022: 671GWh)
Five coal mines*
Two windfarms and a
solar project under
construction
Market capitalisation
R71.4 billion
(2022: R75.9 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
Ownership structure
BEE SPV
52.2%
Exxaro
14.9%
IDC****
22.9%
Exxaro
ESOP SPV
5.0%
Exxaro
community
NPC***
5.0%
Eyesizwe**
RF
30.81%
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% joint venture
with Thungela Resources Limited in
Mafube and a 12.04% legal equity
interest in RBCT.
Our energy business, comprises
229MW of operational wind
generation assets that contribute to
the national energy supply and the
68MW solar project under
construction.
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.
Including one joint venture, Mafube.
*
** 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 Aga Setshaba NPC (formerly Matla Setshabeng NPC).
**** Industrial Development Corporation of South Africa.
For detailed information on our group structure, refer to the 2023 annual financial statements.
Exxaro Resources Limited Integrated report 2023
11
Who we are continued
Our assets
Our diversified asset portfolio comprises interests primarily in thermal coal (where we are among the top
three South African coal producers), a growing energy solutions business and equity-accounted
investments in ferrous (iron ore) and zinc, among other base metals.
Expanding our business portfolio to include manganese, bauxite, copper, energy and broader energy transition minerals enables our
contribution to a more sustainable future and shareholder value enhancement. 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 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.
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
Snapshot
• Largest high-quality Coal Reserves remaining in the country, providing a platform for early
value returns
• One of the largest suppliers of coal to Eskom and ArcelorMittal South Africa Limited
• 42.5Mt of thermal and metallurgical coal product (2022: 43.1Mt), down 1.4% in 2023 – 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 2023, we invested R2.4 billion in sustaining our coal business (2022:
R1.6 billion)
Energy business
In line with our goals to decarbonise and diversify, Exxaro’s energy business comprises interests in
energy through our wholly owned subsidiary, Cennergi. This business supports Exxaro’s ambition of
generating 1.6GW of power by 2030 and includes supporting our current coal and future minerals
operations through self-generation and providing energy to external customers in mining and select
markets.
Cennergi is a southern African-based independent power producer that focuses on
developing, constructing and operating energy assets. Cennergi has two operational wind
assets (the Tsitsikamma community and Amakhala Emoyeni windfarms).
Once operational, the LSP will supply solar energy to Grootegeluk, reducing the
operation’s carbon footprint and electricity costs. A pipeline of opportunities continues to
be developed by the energy business for Exxaro and external offtake.
Snapshot
• Cennergi’s operating wind assets generated 727GWh of electricity (2022: 671GWh) – an 8%
increase due to improved wind conditions, despite the 15GWh generation loss at one of the
wind facilities due to an Eskom distribution line fault that occurred earlier in the year
• The LSP at Grootegeluk reached financial close on 29 June 2023 under a 25-year power
purchase agreement with Exxaro Coal Proprietary Limited. Construction commenced in
2023 and commercial operation is expected in early 2025. Refer to the case study on page
43 (ESG report) for details
• Cennergi’s operating wind asset project financing of R4 348 million (2022: R4 554 million)
will mature and be fully settled by the end of 2031. Cennergi’s solar asset project financing
will mature and be fully settled by the end of 2042
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Grootegeluk complex
Thabametsi
Location
Market
Product
Coal Resources
(inclusive)
Coal Reserves
West of Lephalale
Domestic and export
Thermal and metallurgical coal
• Measured: 2 978Mt
Indicated: 967Mt
•
• Proved: 1 971Mt
• Probable: 550Mt
Mining method
Run of mine (RoM)
Open-cut
56.05Mt
Life of mine (LoM)
18+ years*
West of Lephalale
Domestic
Thermal coal
• Measured: 270Mt
Indicated: 749Mt
•
• Probable: 130Mt
Open-cut
0Mt
23 years
Belfast
South of Belfast
Export (alternative domestic)
Thermal coal
• Measured: 98.4Mt
Indicated: 8.0Mt
•
• Proved: 33.2Mt
• Probable: 1.4Mt
Open-cut
3.16Mt
10 years
Location
Market
Product
Coal Resources
(inclusive)
Coal Reserves
Mining method
RoM
LoM
Leeuwpan
South-east of Delmas
Domestic and export
Thermal coal
• Measured: 63.4Mt
• Proved: 30.5Mt
• Probable: 3.3Mt
Open-cut
4.82Mt
6 years
Matla
West of Kriel
Domestic (Eskom)
Thermal coal
• Measured: 634Mt
•
Indicated: 92Mt
• Proved: 126Mt
• Probable: 31Mt
Underground
6.01Mt
1+ years*
Mafube joint venture (50%)
East of Middelburg
Domestic and export
Thermal coal
• Measured: 141.0Mt
•
Indicated: 2.2Mt
• Proved: 82.6Mt
• Probable: 32.0Mt
Open-cut
4.79Mt
20 years
* Adequate Reserves well beyond expiry of mining right.
Moranbah South project (50%)
Phase: Undertaking prefeasibility study to inform decision for development prospects.
Location: Queensland, Australia
Market: Export
Product: Coking coal
Coal Resources:
• Measured: 484.6Mt
Indicated: 226.0Mt
•
Location
Product
Capacity
Equipment
Performance
Customer
Commercial
operation
Power purchase
agreement
Shareholding
Tsitsikamma
community
Near Tsitsikamma
Wind energy
95MW
31 x 3.1MW turbines
Amakhala Emoyeni
Near Bedford and Cookhouse
Wind energy
134MW
56 x 2.4MW turbines
LSP
Lephalale
Solar energy
68MW
Adjusted P50 in the long term
Adjusted P50 in the long term
Eskom
2016
20 years
Eskom
2016
20 years
Reached financial close June 2023
Exxaro Coal Proprietary Limited
(Grootegeluk)
2025
25 years
Cennergi (75%), RE Times (16%) and the
Tsitsikamma Development Trust (9%)
Cennergi (95%), Cookhouse Community Trust
(2.5%) and the Bedford Community Trust (2.5%)
Cennergi (100%)
12
Exxaro Resources Limited Integrated report 2023
Exxaro Resources Limited Integrated report 2023
13
Our operating context
Exxaro’s operating context is determined by the external drivers that influence
our ability to create value. We review and assess global and local macro-
economic factors and commodity market trends, as they highlight
opportunities, inform our material matters and influence our strategic
direction and performance.
Our macro-economic context
Global and domestic economic conditions
ESG
Geopolitics
Foreign currency market
Inflation and interest rates
Cyber threats, digital and innovation
1
2
3
4
5
6
Our markets
Commodity markets
Coal markets
Coal logistics
Iron ore market
Our macro-economic context: trends influencing our business
Global and domestic economic conditions
7
7.1
7.2
7.3
In early 2023, global economic performance exceeded expectations, mainly led by the post-pandemic recovery. Despite the continued
challenges of elevated inflation, sharply higher global interest rates, some turbulence in the banking sector and geopolitical conflicts, the
global economy has managed to avert a recession.
World real gross domestic product (GDP) growth increased from an annual rate of 1.8% quarter on quarter in the fourth quarter of 2022 to
2.4% in the first quarter of 2023. Aside from an appreciation to 2.9% in the second quarter, the moderate economic growth pace recorded in
the first three quarters continued for the rest of 2023. Strong momentum in the US, with increased economic activity in Japan, India and
Brazil provided the necessary support to the world economy. After a 3.1% increase in 2022, world real GDP moderated to expand by 2.7%
in 2023.
Global GDP: 2.7% (2022: 3.1%)
Real GDP growth rate (%)
World
US
Eurozone
China
India
South Africa
2024
forecast
2.6
2.4
0.50
4.7
6.5
1.1
2023
2.7
2.5
0.6
5.2
6.9
0.6
2022
3.1
1.9
3.5
2.95
7.3
1.9
Source: S&P Global, February 2024, Exxaro analysis March 2024.
Despite unprecedented rolling loadshedding, South Africa’s real
GDP grew by 0.9% year on year in the first six months of 2023. This
modest upside reflected higher investment in machinery and other
equipment and a better-than-anticipated response to
loadshedding. However, GDP decreased by 0.2% in the third
quarter of 2023, followed by an expansion of 0.1% in the fourth
quarter. For the year as a whole, the economy expanded by 0.6%,
down significantly from 1.9% in 2022. The ongoing constraints of
inadequate electricity and logistics supply (and, the continuous
trend of broader infrastructure failure) have limited the local
economy’s future productive potential.
Cause
• Post-COVID-19 economic
recovery
• Elevated inflation rates
• Sharply higher global
interest rates
• Intensified rolling
loadshedding in South
Africa
Implications for Exxaro
• Any changes in South
Africa’s energy mix to
impact demand conditions
• Higher inflation on
operations
• Higher interest rates
Outlook
• Slower global economic
growth in 2024. Besides
the structural challenges,
the resilience of the South
African economy is
expected to persist
Our strategic response
• Cost management
• Customer engagement
• Supplier engagement: cost
• Logistics: ensure passage
of coal to ports
14
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
ESG
ESG is a fundamental component of our Sustainable Growth and Impact strategy. This is a business and social imperative driven by our
strategy and in line with global drivers, such as urgent climate action; increased risk of liability for greenwashing; resource depletion (natural
and finite resources); greater focus on ESG due diligence; sustainable supply chains and social equity and inclusion; increasing ESG
regulatory requirements; converging ESG reporting standards; significant shift towards digitalisation and leveraging artificial intelligence (AI)
to reveal ESG insights; growing stakeholder ESG expectations; international focus on ESG reporting transparency and comparability; and
pressures of economic inequality and unemployment.
Social impact is an outcome of our Sustainable Growth and Impact strategy and addresses material social and compliance matters from a
business imperative perspective.
Cause
• ESG is a priority for all
stakeholders
Implications for Exxaro
• Embrace ESG commitments as a business
imperative
• An increasingly distressed
• Integration of ESG into corporate strategies,
socio-economic and political
operating environment
characterised by inequality,
unemployment and poverty
decision making, and stakeholder reporting will
require a coordinated effort, but will result in
enhanced alignment, impact and efficiencies
• Social impact should result in a harmonious co-
existence between Exxaro and local communities,
creating a thriving environment
Outlook
• Expectations for enhanced ESG prioritisation
and performance will continue to increase,
driven by increased regulation and activism
• The 2023 United Nations Climate Change
Conference or Conference of the Parties
(COP28) outcomes on ESG are being
considered, with prioritisation of key aspects
such as transitioning away from fossil fuels,
decarbonisation technologies, water security,
carbon pricing, biodiversity management,
nature-based solutions, ocean-based mitigation
action and ensuring community resilience
Our strategic response
• Prioritise safety protocols, training and technology adoption
• Complete our draft decarbonisation roadmap to enable carbon neutrality by 2050, which reflects our short, medium and long-term
targets
• Address capital allocation aspects associated with the implementation of the draft decarbonisation roadmap
• Invest in and expand a diversified minerals and energy business
• Ensuring low-carbon transition mineral operations are sourced responsibly and implementation of traceability systems and adhering
to international standards
• Implement circular economy principles and investing in resource efficiency initiatives; adaptation measures in our operations and
host communities to increase adaptive capacity and resilience; and nature-based solutions for carbon offsetting
• Produce a separate annual ESG report aligned with standards to meet stakeholder information needs
• Develop an ESG policy that will drive our approach to integrating and embedding ESG across the group
• Ensure compliance in ESG matters
• Accurate reporting of ESG efforts and adhering to global ESG reporting standards to bolster investor confidence
• Forming strategic partnerships to address South Africa and Exxaro’s scope 3 emissions with stakeholders such as the memorandum
of understanding with the Council for Geoscience on carbon capture, utilisation and storage
Engaging our stakeholders (page 39)
Our environmental stewardship (page 109)
Social impact (page 106)
Geopolitics
Global geopolitical tensions in 2023 continued to impact supply-demand pricing dynamics for key Exxaro commodities. The implications of
the Russia-Ukraine conflict and subsequent sanctions, the continuing US-China and China-Australia tensions, and the Israel-Hamas war were
evident. The European Union’s ban on coal imports from Russia and the easing of Chinese import restrictions on Australian coal significantly
impacted supply-demand balance, trade flows and seaborne thermal coal pricing.
Cause
• Impact of Russia-Ukraine
conflict
• Easing of China import
restrictions on Australian
coal
• Israel-Hamas war
Implications for Exxaro
• Opportunities in the
European and Japanese
thermal coal markets
• Lower but volatile
seaborne thermal coal
prices
Outlook
• Geopolitical tension and
strategic competition to
inform framework for
relationships between
countries, multilateral
forums, global challenges,
flows of trade and
investment
Our strategic response
• Market strategy adapts to
changing global flows
• Market to resource
optimisation
• Increased collaboration
with stakeholders
Exxaro Resources Limited Integrated report 2023
15
Our operating context continued
Foreign currency market
US dollar strength was more resilient in 2023. The persistent underlying price pressures prolonged the tight and restrictive global financial
conditions, added financial stresses to developing and emerging countries, and prompted concerns of a wider economic slowdown and
recession. The US dollar’s position as the dominant global reserve currency and the fact that US dollar assets are regarded as safe havens,
benefited the currency in these global uncertain economic and financial conditions.
During 2023, the South African rand lost significant value against major global currencies. This is attributable to intensified loadshedding
with the perceived risk of a potential grid collapse, the country’s grey listing by the Financial Action Task Force, widening current account
and fiscal deficits, US dollar strength, global recessionary risk and widespread geopolitical tensions. The USD/ZAR exchange rate is
anticipated to be supported in 2024 by an expected improvement in both global economic sentiment and investor confidence.
Cause
• Restrictive global financial
Implications for Exxaro
• Forex volatility, weaker
conditions
• US dollar strength
• Recessionary risk
sentiment
exchange rate favourable
to coal exports
Outlook
• Positive global economic
sentiment expected to
support USD/ZAR exchange
rate
• The use of emerging markets’
currencies for bilateral trade
will increase
Our strategic response
• Rand-based pricing for
input products
• Limited hedging
• Local sourcing
Inflation and interest rates
Throughout 2023, global inflation continued its downward path, driven by tightening, cooling demand, supply chain resilience, declining
commodity prices and the reversal of many of the inflationary forces from the COVID-19 pandemic (lockdowns, supply disruptions,
extraordinary fiscal and monetary stimuli, and shifts in the composition of consumer spending).
In 2023, South Africa’s headline inflation averaged 6% and is expected to remain above the mid-point of the South African Reserve Bank’s
inflation target range of 3% to 6% during 2024. The repurchase rate increased by a cumulative 125 basis points during 2023, and together
with the 325 basis points increase recorded during 2022, policy interest rates remained restrictive and affected both global investment
sentiment and economic activity.
Cause
• Persistent high inflation
• Interest rate increases
• Monetary policy trade-offs
Implications for Exxaro
• Cost escalations
exacerbated by delayed
inflationary impacts on
input cost
• Revenue escalations
• Borrowing cost increases
Outlook
• Lower inflation and
interest rates to be
realised during 2024,
although regional
divergences expected to
remain
Our strategic response
• Inflation-linked
escalations
• Reduce debt levels
• Cost management
Cyber threats, digital and innovation
Our award-winning Digital@Exxaro strategy empowers Exxaro to leverage its skills, capabilities and digital infrastructure to add value to the
business and shareholders.
We will continue to leverage digital transformation to achieve operational excellence and, in support of our strategic objectives, to
differentiate ourselves and achieve sustainable growth and impact.
Exxaro is investigating opportunities brought about by the recent technological advancements, such as generative AI and exploring how such
technologies can add value to our business to reduce cost, improve productivity and enable ESG outcomes. We amplify the efficacy of our
ESG strategies by exploiting digital solutions, ensuring a comprehensive and forward-looking approach to ESG responsibilities. This synergy
between low-carbon technologies and digital innovation demonstrates our commitment to sustainability and technological advancement in
pursuit of robust ESG objectives.
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
Outlook
• Given the economic climate, it is
imperative for mining
organisations to innovate to
sustain a continued competitive
advantage. Recent advancements
in technology, such as generative
AI, bring new opportunities for
Exxaro and we will be continuously
evaluating these for applicability
Our strategic response
• We renewed our focus on
innovation across the
organisation, including
advancing our award-winning
Digital@Exxaro strategy in
areas of advanced analytics
and AI in support of our
Sustainable Growth and Impact
strategy
Business resilience (page 92)
16
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Our markets
During 2023, global commodity markets were affected by the inconsistent recovery from COVID-19 restrictions in China together with
supporting policy measures, global macro-economic headwinds, persistent inflationary and interest rate pressures and recessionary risks,
ongoing geopolitical tensions, China’s weak property market, and gas supply risks.
Commodity markets
Exxaro’s commodity markets recorded mixed and volatile performances in 2023. The year started with global economic optimism, however,
as it progressed, global investor sentiment changed and weighed negatively on global economic activity and commodity markets.
API4 coal export price averaged US$121.00/t (2022: US$270.87/t)
Commodity prices (US$/t)
Thermal coal (RB1)
Thermal coal (RB3)
Iron ore fines
Lump premium
Source: Various commodity market intelligence reports, January to December 2023.
2024 forecast
95
76
106
10
2023
121.00
100.72
119.54
9.64
2022
270.87
205.43
120.03
13.92
Implications for Exxaro
• Volatile and weaker
commodity markets
• Lower received prices for
coal exports
Outlook
• Commodity markets are
anticipated to rebalance
during 2024 to reflect
fundamental market
dynamics
Our strategic response
• Portfolio management
• Maximise coal exports
Cause
• Global macro-economic
headwinds
• Ongoing geopolitical
tension
• China’s weak property
market
• Gas supply risks
Coal markets
For most of 2023, seaborne thermal coal prices remained under pressure due to weak demand for high-calorific-value coal from Europe and
north-east Asia. Both thermal coal and gas prices declined significantly as Europe and Japan, Korea and Taiwan (JKT) remained well stocked
with both gas and thermal coal. Stronger renewables availability further reduced the role of gas and thermal coal in the European energy mix.
Towards the end of 2023, natural gas supply risks, the Israel-Hamas war and the uncertainty of the northern hemisphere winter were the key
drivers for the energy complex markets and pricing.
The switch from thermal coal to natural gas (coal-gas economics), including liquefied natural gas (LNG), particularly in Europe, where gas
prices were at times more competitive, led to a downward trend in thermal coal prices, with the Argus/McCloskey Coal Price Index (API4 )
price index declining to US$88.5 per tonne by July.
Changes in demand and trade flows were observed in the year. Lower coal prices resulted in a resurgence in Indian demand. China and India
were the primary demand drivers due to their economic growth potential and buoyant power demand. Changes in global trade included the
resumption of Australia’s supply into China from a previous trade ban, a drastic reduction in Russian supplies to Europe and Japan, and
Korea’s gradual weaning off from Russian coal dependency.
Australia and Indonesia, after overcoming earlier weather-related production challenges, increased their thermal coal output. However, this
coincided with a mild winter in Europe, which also contributed to a decline in seaborne coal prices globally.
Towards the end of the year, a resurgence in demand from China (driven by rising domestic prices) led to an increase in coal imports, as
Europe and the JKT region experienced a drop in coal consumption and imports.
The South African domestic market demand remained stable throughout the year across multiple products. The decline in export pricing
compressed margins and eroded profitability of alternative export channels. Operational challenges and equipment failures at Eskom’s
power stations impacted the offtake of power station coal in the Waterberg region.
Implications for
Exxaro
• Lower API4 index
price
• Market volatility
Cause
• European coal-gas economics
• Sufficient gas and coal stock levels in
Europe and JKT
• Warmer than usual winter
temperatures in northern
hemisphere
• Changes in global trade flow because
of geopolitical tensions such as the
ongoing Russia-Ukraine conflict
• Global energy transition
Outlook
• The easing of global
supply risks in both
the thermal coal and
natural gas (including
LNG) markets is
expected to filter
through to market
pricing
Our strategic response
• Early value strategy
• Market to resource
optimisation
• Exploring alternative
markets
• Focusing on market
adaptability
• Targeting high-demand
markets
Exxaro Resources Limited Integrated report 2023
17
Our operating context continued
Coal logistics
Rail operations continued to face numerous challenges, including limited availability of locomotives, security incidents and vandalism. As a
result, Transnet Freight Rail’s (TFR) performance to RBCT dropped from 50.43Mt in 2022 to 47.92Mt in 2023. Exxaro’s export evacuation
via rail and RBCT slightly increased from 4.65Mt in 2022 to 4.68Mt for 2023. Exxaro was successful in developing alternative routes to
market and continued to road truck coal and export via alternative export ports.
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
Outlook
• Our business operating
performance continues to
be impacted by the TFR
challenges. We remain
cautiously optimistic that
the continuous
collaborative approach
between critical
stakeholders will
eventually result in the
improvement of TFR’s
operational performance
Iron ore market
Despite the property sector weakness in China, the seaborne iron ore market was supported by the resilience of China’s steel output as the
much-anticipated steel capacity cuts remained modest. In addition, the property market policy easing, announced in August, is expected to
stimulate property demand and, in turn, stabilise the overall sentiment within the sector.
Continuous rising iron ore supply and exports remain the limiting factor for the iron ore prices. Major miners’ supply is increasing, and while
Chinese demand remains relatively flat, demand from the rest of the world is expected to recover in 2024. A stronger for longer pricing
environment is expected to prevail, supported by higher marginal cost levels.
Cause
• Weak property sector in
China necessitating
government stimulus
measures
• Resilience of China’s steel
output
• Supply and export
increases from major
miners
Implications for Exxaro
• Performance of SIOC
Outlook
• A balanced iron ore
investment
market expected for 2024
• Together with the easing
of the property market
policy and anticipated
modest steel capacity
cuts, a stronger for longer
pricing environment is
expected
Our strategic response
• Exposure to higher-value
iron ore lump product
18
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
How we
create value
Committed to powering
better lives in Africa and
beyond, we are transitioning
into a resilient, diversified
resources business while
decarbonising our portfolio.
Our goal is to forge a future
where the needs of the
present are met while
preserving the potential of
the future.
20 Our business model
24 Our material matters
28 Our risks and opportunities
39 Engaging our stakeholders
Exxaro Resources Limited Integrated report 2023
19
Our business model
Our business model depicts the capital inputs we need to conduct
our activities and deliver our products.
Our inputs
The resources and relationships we rely on
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
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
The relationships that provide our
social licence to operate
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
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.
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.
Responsible
mining
• Delivering
resources to
support the
country’s energy
needs
• Responsible
environmental
stewardship
• Delivering energy
projects and services
• Build a leading global
energy solutions
business by 2030
Energy
operations
(own use and
grid supply)
• Developing a
roadmap for a just
transition to a low-
carbon economy
Diversified
equity
investments
• SIOC (iron ore)
• Black Mountain
(zinc)
Strategising for
future relevance
and a just
transition
Delivering
sustainable impact
and responsible
practices
• Driving diversity and
inclusion
• Values-based leadership
• Effective governance
• Investments in community
development initiatives
• Stakeholder engagement
and communication
s
t
u
p
t
u
o
r
u
O
e
c
u
d
o
r
p
e
w
t
a
h
W
Coal
42.5Mt product volumes
(2022: 43.1Mt)
Renewable energy
727GWh wind energy
(2022: 671GWh)
Iron ore (SIOC)
R6.2 billion adjusted
equity-accounted income
(2022: R4.9 billion)
Waste
3 186t hazardous waste
(2022: 1 624t)
953ktCO2e emissions
(2022: 971ktCO2e)
Through our business model, we aim to achieve these overarching value outcomes
We will secure energy, power a clean world, and ensure a just transition through our business model. We are committed to providing
energy that fuels development, sustains our planet, and is fair to all involved.
Trade-offs to achieve strategic balance
The path to these outcomes involves careful navigation…
Energy
security
Resources
powering
a clean
world
A just
transition
We are building a foundation for a reliable energy supply to support economic growth and stability,
blending our heritage in coal with a bold venture into broader energy initiatives.
Our operations are pivoting towards sustainability, with acquisitive growth prospects in minerals and
further energy solutions. All ESG improvement opportunities form part of new capital project
requirements.
Understanding the socio-economic fabric we operate in, we are dedicated to a transition that
respects and uplifts our employees, communities, and stakeholders.
Balancing present energy demands with future needs
Our mission is to provide the energy essential for today's economic growth while stewarding environmental resources for
tomorrow. We acknowledge coal's immediate role in economic stability but are aware of its long-term environmental and
social costs. We therefore strategically invest in transitioning our business, accepting the short-term financial requirements as
a trade-off for future energy security. This transition promises regulatory alignment, and public goodwill, anchoring us firmly
within the global shift towards sustainable practices and attracting forward-thinking investors.
Profitability versus environmental stewardship
While our current operations, primarily powered by coal, underpin our financial strength, we are transitioning into a low-carbon
business, considering the just transition and sustainability. This shift, reflective of our dedication to the environment, not only
anticipates but actively embraces the long-term economic benefits of a low-carbon economy. It is a deliberate strategy to
mitigate risk, enhance market competitiveness, and secure a legacy honouring our environmental responsibilities. Our journey
towards sustainability is financially sound, aligning with investor interests in responsible energy practices while safeguarding
our planet for future generations.
Efficiency, equity and the just transition
In navigating today's challenging economic landscape, we pursue efficiency to achieve balanced long-term objectives. Our
efficiency gains are thoughtfully traded against immediate impacts to bolster business resilience, thereby ensuring sustained
reinvestment in our workforce and communities as we transition towards greener practices. Such shifts, though they may
present near-term challenges, are essential for the intertwined growth of our economy, environment and social fabric.
20
Exxaro Resources Limited Integrated report 2023
Exxaro Resources Limited Integrated report 2023
21
Our business model continued
Managing our capitals to achieve our ambitions
Our inputs (as at 31 December 2023)
• RoM: 74.83Mtpa (2022: 74.48Mtpa)
• Diesel consumption: 83 629kL (2022: 83
268kL)
• Electricity consumption: 590 931MWh
(2022: 590 078MWh)
• Water consumption: 7 430ML
(2022: 10 419ML)
• Land managed: 68 782ha (active and
inactive mines)
• Land rehabilitated: 2 132ha
(2022: 2 000ha)
Our outcomes
Despite our committed efforts to
environmental stewardship, the inherent
nature of our mining operations inevitably
leads to a decrease in natural capital. The
extraction of natural resources, essential to
our business activities, directly impacts the
environment despite our best practices and
mitigation strategies.
How we improve our outcomes
• 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
• Employees: 6 797 (2022: 6 745)
• Contractors: 13 868 (2022: 12 497)
• Investment in skills development and
talent management: R358 million
(2022: R331 million)
• Investment in employee remuneration:
R4.7 billion (2022: R4.3 billion)
• Culture: connect2NEXT
• Investment in social and labour plan
(SLP) projects (including ESD Hubs):
R14.96 million (2022: R13.38 million)
• Investment in enterprise and supplier
development (ESD): R111,3 million
(2022: R291.2 million)
• Corporate social investment (CSI)
(including disaster relief funds): R72.43
million (2022: R167.93 million)
• Stakeholder relationship growth
To ensure 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 seek to preserve the value of our
human capital by striving to achieve zero
harm. Although we have observed a
downturn in high-potential incidents (HPIs),
regrettably, we saw an increase in our lost-
time injury frequency rate (LTIFR). To
address this, we initiated enhanced safety
campaigns across all our operations.
We provide value to our host communities
through our impact-at-scale initiatives, SLP
commitments, active stakeholder
engagements, attracting participation from
black-owned suppliers and our commitment
to the UNGC principles.
We recognise the effects of our mining
activities on local communities, both during
operational periods and after a mine's
closure. We aim to mitigate this by ensuring a
just transition of our operations that supports
our communities’ long-term sustainability.
• Remain committed to achieving zero
• Continuously seek ways to engage and
harm
• Work with employees and contractors to
eradicate any safety incidents
• Continue to invest in employees
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
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Impact on value
Net increase in value
Net value preservation
Net value erosion
Year-on-year change
Positive increase
Negative increase
Unchanged
Positive decrease
Negative decrease
• Five mines (including one joint venture)
• One ferro-silicon manufacturing facility
• One coal project
• Two windfarms and one solar project in
construction
• Investment in property, plant and
equipment: R2.7 billion (2022: R1.7 billion)
• Continued investment in digital
transformation resulting in efficiencies in
our value chain
• Entrenched operational excellence
protecting our business from volatile
economic conditions
• Leadership and management training: 468
people attended (2022: 264)
• 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
• Adjusted equity-accounted income: R7 billion
(2022: R7.3 billion)
• Adjusted EBITDA: R13.4 billion
(2022: R19.0 billion)
• Cash dividend paid to external shareholders:
R5.5 billion (2022: R6.7 billion)
• Cash dividend paid to BEE parties: R1.8 billion
(2022: R2.2 billion)
• Revenue: R38.7 billion (2022: R46.4 billion)
• Balance sheet strength
Our investment in our portfolio of
quality assets to meet changing market
demands, particularly through an
expanded investment in green energy,
increases our manufactured capital. Minor
delays in our mega-projects were offset by
adherence to budget and the
commencement of crucial constructions,
signalling an effective management of our
manufactured capital.
Our early value strategy seeks to
mitigate the transition risk to our portfolio
of assets.
• Optimise our manufactured assets
• Fast track our decarbonisation and
investments to generate predictable long-
term cash flows and increase portfolio
diversification
We continue increasing our
competencies across mining and energy.
Our focus on business resilience,
investments in innovation, digital
transformation and technology increases
intellectual capital.
Our collective knowledge, skills and
resources positively impact human, social
and relationship, and manufactured
capital.
Improved core system availability
reflects increased intellectual capital.
Maintaining a robust balance sheet and a
thriving coal business, our strategic focus on
core strengths and a leadership dedicated to
carbon resilience ensures a positive impact on
financial capital, fostering financial value.
Long-term strategic investments
underscore our commitment to bolstering
strategy, enhancing efficiency, expanding
operations, and optimising value, ensuring a
resilient financial position despite year-on-
year variations in financial metrics.
• Leverage digital transformation to create
impact
• 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
• 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: 35% (2022: 41%)
Return on capital employed (ROCE):
35% (2022: 45%)
Adjusted HEPS:
4 681 cents per share (2022: 6 016 cents
per share)
Market capitalisation: R71.4 billion
(2022: R75.9 billion)
Our business model does not operate in
isolation. It impacts and is impacted by our:
• Risks and opportunities (page 28)
• Strategy and resource allocation
(page 47)
• Performance (page 82)
• Stakeholders (page 39)
Carbon intensity: 20% decrease
Employee and contractor fatalities:
Number of community members who
Marginal timeline overruns in mega-
Core system availability: 98.66%
(2022: 0.5% increase)
Water intensity: 30% decrease
(2022: 0.5% increase)
Environmental incidents: No level 3
incidents (2022: zero level 3)
Valid mining rights: 100% (2022: 100%)
Safety stoppage directives: four
section 54(a) stoppages (2022: seven)
None (2022: one)
LTIFR: 0.07 (2022: 0.05)
Occupational health incident
frequency rate (OHIFR): 0.15 (2022: 0.16)
Scarce skills retention: 4.5%
(2022: 4.4%)
benefited from our CSI: 41 867
(2022: 1.7 million)
Jobs created for SLPs: 29
(2022: 83)
Community incidents: Four (2022: 13)
Top-quartile mining performer
in ESG governance structure ESG analyst
rating: 3.9 (2022: 4.0)
BEE level: 2 (2022: level 3)
(2022: 97.94%)
projects
Implementation cost for mega-projects on
target
Construction of the LSP started
Implementation of three mine expansion
projects, securing an estimated ~85% of
Matla Coal Reserves
Coal Resources at Matla provided
additional pit room and the flexibility
for mining teams to alleviate implementation
delays
s
G
D
S
d
e
t
c
e
f
f
A
22
Exxaro Resources Limited Integrated report 2023
Exxaro Resources Limited Integrated report 2023
23
Our material matters
Materiality considerations serve as a crucial guide for our reporting practices. The matters
we deem material are those that significantly influence our ability to create and sustain
value, not only for our organisation but also for our 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). The process we follow includes:
External
assessment
• 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
Internal assessment
Consider internal inputs,
including risk registers,
stakeholder surveys and
strategy
Mapping
• Prioritisation of
material matters by
senior management and
executives
• Review and approval of
matters by executives and
those charged with
governance
• Final matters for reporting
purposes
Our approach reflects the combined guidance of the Integrated
Reporting Framework and Global Reporting Initiative, and results in
matters that are prioritised and grouped into themes to inform our
integrated and ESG report content. The detailed information
provided in this report focuses on issues that have a greater impact
on Exxaro's ability to create value over time. Matters that have a
higher impact on society, communities and the environment are
discussed in detail in our ESG report. The heat map below, along
with the material theme discussions, depicts the relative disclosure
levels across this report and our ESG report.
2023 material matters
The 2023 review identified 34 material matters, which were
grouped into seven overarching themes. 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.
Materiality matrix
24
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
A1
A2
A3
A4
A5
G1
G2
G3
G4
Adapting to a
changing context
Building sustainable
communities
Driving business
resilience
Helping our people
thrive
Country risk: Failing
infrastructure, institutions,
and service delivery in South
Africa
Supporting a just transition
to a low-carbon economy#
Commodity price risk
Macro-environment
Geopolitical context
C1
A2
C2
C3
C4
C5
C6
Social licence to operate
(including community
relations, collaboration and
engagement)
Supporting a just transition
to a low-carbon economy#
Ensuring human rights are
respected and upheld^
Social acceptance and
community unrest
Job and business creation
Value sharing
Resettlement and land use
B1
B2
B3
B4
B5
Financial performance and
resilience
Capital allocation
Supply chain and logistical
impediments
P1
P2
P3
Cyber risk
Innovation and digitalisation
Health, safety and wellness
Labour relations
Workforce: culture,
capability, diversity,
inclusion, attraction and
retention of key skills and
innovation^
Principled
governance
Responsible environmental
stewardship
Executing our
strategy
Transparency, ethics and integrity
Risk management
Embedding ESG in response to increased
regulation and for sustainability
Legal, regulatory and compliance
excellence
E1
E2
E3
E4
E5
E6
E7
Managing our pollution
Environmental incidents*
Carbon emissions reduction
Water stewardship
Waste management
Impact of climate change^
Closure planning and rehabilitation
management
E8
Biodiversity management
S1
S2
Diversify into critical minerals and
energy
Build a leading global energy solutions
business
S3
Coal portfolio optimisation
* New matter or theme.
# Dual matter (across two themes).
^ Matter renamed, expanded or refined.
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.
Related risks
• Unavailability of rail capacity
• Country risk (political)
• Customer concentration risk
Related capitals
Related SDGs
Material matters
• Country risk: Failing infrastructure,
institutions and service delivery in South
Africa
• Supporting a just transition to a low-
carbon economy
• Commodity price risk
• Macro-environment
• Geopolitical context
IR ESG
l l
l l
l l
l l
l l
l Detailed disclosure l Summarised disclosure
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
Our operating context (page 14)
and business resilience (page
92)
Exxaro Resources Limited Integrated report 2023
25
Our material matters continued
Building sustainable communities
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 our adherence to
legislation.
Related risks
• Adverse threat to licence to
operate
• Community unrest
Related capitals
Related SDGs
Strategic response
• Empower people to create
impact
• Become a catalyst for
economic growth and
environmental stewardship
Material matters
• Social licence to operate (including
community relations, collaboration and
engagement)
• Ensuring human rights are respected and
upheld
• Social acceptance and community unrest
• Job and business creation
• Value sharing
• Resettlement and land use
• Supporting a just transition to a low-carbon
economy
IR ESG
l l
l l
l l
l l
l l
l l
See
adapting to
a changing
context
l Detailed disclosure l Summarised disclosure
Social impact (page 106)
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
• Financial performance and resilience
IR ESG
l l
l l
• Capital allocation
• Supply chain and logistical impediments l l
l l
• Cyber risk
l l
• Innovation and digitalisation
Related risks
• Unavailability of rail capacity
• Cybersecurity attacks
impacting business
• Country risk (geopolitical)
• Customer concentration risk
Strategic response
• Make our minerals and
energy business thrive
• Become a catalyst for
economic growth and
environmental stewardship
Related capitals
Related SDGs
Building resilience through
governance (page 55), finance
director’s overview (page 83) and
business resilience (page 92)
l Detailed disclosure l Summarised disclosure
Helping our people thrive
Exxaro’s employees are the enablers of our
performance. To deliver on our strategic goals requires
a safe working environment and a culture that supports
adaptability and innovation, while leveraging the
strength of diversity, equity and inclusion (DEI).
Related risks
• Fatal risk incidents
• Inability to achieve growth
objectives
• Labour unrest
Related capitals
Related SDGs
Material matters
• Health, safety and wellness
• Workforce: culture, capability, diversity,
inclusion, attraction and retention of key
skills and innovation
• Labour relations
IR ESG
l l
l l
l l
Strategic response
• Make our minerals and energy
businesses thrive
• Empower people to create
impact
• Become a catalyst for economic
growth and environmental
stewardship
Building momentum with people
(page 96)
l Detailed disclosure l Summarised disclosure
26
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
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 the short and long-term risks and
opportunities presented by climate change.
Related capitals
Related risks
• Unavailability of rail capacity
• Fatal risk incidents
• Country risk (geopolitical)
• Inability to achieve growth
objectives
• Inadequate response to climate
change
Related SDGs
Material matters
• Diversify into critical minerals and
energy
• Build a leading global energy solutions
business
• Coal portfolio optimisation
IR ESG
l l
l l
l l
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
Our strategy (page 47)
l Detailed disclosure l Summarised disclosure
Principled governance
We conduct ourselves so as to strengthen our business
reputation as a good corporate citizen and bolster our
resilience in a changing environment.
Related risks
• Unavailability of rail capacity
• Cybersecurity attacks impacting
Related capitals
Related SDGs
business
• Customer concentration risk
• Country risk (geopolitical)
• Inadequate response to climate
change
Strategic response
• Make our minerals and energy
businesses thrive
• Become a catalyst for economic
growth and environmental
stewardship
Building resilience through
governance (page 55)
Material matters
• Transparency, ethics and integrity
• Risk management
• Embedding ESG in response to increased
regulation and for sustainability
• Legal, regulatory and compliance
excellence
IR ESG
l l
l l
l l
l l
l Detailed disclosure l Summarised disclosure
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.
Related risks
• Country risk (geopolitical)
• Customer concentration risk
• Inadequate response to climate
change
Related capitals
Related SDGs
Material matters
• Managing our pollution
• Carbon emissions reduction
• Environmental incidents
• Water stewardship
• Waste management
• Impact of climate change
• Closure planning and rehabilitation
management
• Biodiversity management
IR ESG
l l
l l
l l
l l
l l
l l
l l
l l
l Detailed disclosure l Summarised disclosure
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
Our environmental stewardship
(page 109)
Exxaro Resources Limited Integrated report 2023
27
Our risks and opportunities
In a dynamic operating 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 resilient and deliver sustainable
shareholder value.
Risk management process
Environment (internal and external)
Objective
setting
Set Exxaro
strategy and
objectives
Establish the
context
Understand
the event,
hazard and
environment
Risk
identification
Risk name and
description
Risk analysis
Unpack
drivers (root
causes) and
impact
Risk evaluation
Determine the
inherent,
residual and
desired risk
score
Risk treatment
Implement
controls to
manage the
risk (corrective
or preventive)
Monitor and
review
Monitor and
review on a
frequent basis
Reporting of risks
We follow a cascading approach by identifying risk events at the organisation’s strategic, tactical and operational layers.
In the past four years, the mining industry has faced logistics
constraints, fluctuating coal prices, global inflation and increasing
geopolitical tension, among other challenges. Over this time, the
global economy has also been impacted by a series of shocks,
including post-COVID-19 inflation and the effects of the Russia-
Ukraine and Israel-Hamas conflicts. 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 operating context (page 14)
Our risk management philosophy and approach
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. 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 our strategic objectives.
Exxaro’s enterprise risk management (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 Organizations of the
Treadway Commission, the ISO 31000 international guideline on
risk management and King IV. The framework also considers
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. The ERM framework was recently
reviewed by Deloitte to assess maturity of ERM and benchmark
against best practice. As a result of the exercise, improvement
recommendations were identified and a roadmap created to ensure
these are implemented.
Accountability and governance
Exxaro’s ERM process is a strategic initiative fully supported by the
board and executive management. The chief strategic resilience
and governance officer is responsible for enabling ERM across the
group, and reports to the board and the risk and business resilience
(RBR) committee. The RBR committee regularly reviews the ERM
framework to ensure alignment with current governance practices
and standards. The board and executive committee monitor key
performance indicators (KPIs) quarterly to ensure all risks are
within Exxaro’s risk appetite. 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.
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. In this way, the process
incorporates a top-down/bottom-up view of risks within the
organisation.
Strategically promote partnership and set strategic direction
• Use risk management to test robustness and sustainability of strategy
• Commission risk-based audits
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)
28
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Our risks and opportunities continued
Risk appetite and thresholds
Exxaro’s board and executive committee use risk appetite and tolerance levels to evaluate the level of risk the group is willing to endure in
the pursuit of the company’s strategy.
Risk appetite
Extent and type of risk we are willing to take in order to meet our strategic and capital
allocation objectives.
Risk tolerance
The maximum level of uncertainty/exposure we are prepared to accept.
The risk appetite framework is updated annually or when deemed necessary as part of the strategic planning process.
Strategy and strategic
objectives linked to the six
capitals
Set risk threshold
Modify risk threshold
Performance against our strategy and outlook (page 50)
Opportunities
We use the ERM framework to identify and realise opportunities – for example, global energy transition to maximise value in the medium to
long term in view of the achievement of growth objectives risk. We believe that, for Exxaro to remain sustainable in the future, it is important
to adapt the minerals business to identify and pursue possible opportunities that ultimately create value, such as diversifying away from coal
to future energy material and renewable infrastructure.
The following opportunities inform our Sustainable Growth and Impact strategy:
Opportunity
Strategic objective
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.
Transition at speed and scale
Private-public participation in local rail operations is an opportunity for value
unlock and vertical integration. We are currently investigating this opportunity.
Make our minerals and energy
businesses thrive
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 management
and small, medium and micro-enterprise (SMME) development.
Become a catalyst for economic growth
and environmental stewardship
The early value strategy and our ability to maximise market to resource
opportunities by leveraging the low cost and flexibility of our coal assets and reserves.
Make our minerals and energy
businesses thrive
Accelerated expansion into renewable energy will support our low-carbon
transition.
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.
Investing in self-generation facilities is an opportunity we are leveraging, which
aligns with our energy growth strategy.
Cennergi is constructing a 68MW photovoltaic farm, near Grootegeluk, through
our special purpose vehicle, Lephalale Solar (RF) Proprietary Limited. This is our
first self-generation project to expand and diversify within the energy space,
supporting low-carbon emissions and long-term savings on electricity usage at
Grootegeluk. We will also explore the opportunity for further self-generation.
The global energy transition provides an opportunity to mine and supply the
minerals that support green technologies. Through a rigorous screening process,
Exxaro identified future energy material and renewable infrastructure as being
most aligned to our experience, capabilities and market forecast.
Be carbon neutral by 2050
Make our minerals and energy
businesses thrive
Be carbon neutral by 2050
Make our minerals and energy
businesses thrive
Be carbon neutral by 2050
Make our minerals and energy
businesses thrive
Exxaro Resources Limited Integrated report 2023
29
Our risks and opportunities continued
2024 risk trend
The trend report indicates changes in the residual risk score when comparing the 2023 and 2024 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 2024 ranking represents the key possible unwanted events we anticipate having a potential impact on our ability to achieve our
strategic imperatives in 2024. 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.
2024
ranking
2024 top risks
(forward looking)
2023
ranking
2023 vs
2024 trend Comments
Unavailability of rail
capacity
1
Fatal risk incidents
4
Cybersecurity
attacks impacting
business
Country risk
(geopolitical)
Customer
concentration risk
Adverse threat to
licence to operate
Community unrest
Inability to achieve
growth objectives
Labour unrest
Inadequate response
to climate change
3
7
2
8
9
5
16
11
TFR productivity remains our most significant challenge, with a low run rate (below 50Mt for
the year) and increasing financial difficulties.
Initiatives by Operation Vulindlela, a joint initiative of the South African Presidency and National
Treasury, and the National Logistics Crisis Committee are identifying improvements for TFR,
including influencing structural and leadership changes.
Exxaro is implementing alternative solutions to close the gap on export performance created by
TFR. These include road trucking and exports via alternative ports.
This risk has increased due to a deterioration in safety indicators. Safety improvement plans are
being implemented with strong emphasis on the effectiveness of preventive controls. This is
supported by various other initiatives, including leadership visibility.
Exxaro remains vigilant to the high risk of cyberattacks and manages this risk through initiatives
that enhance our ability to detect, protect, respond and recover from cybersecurity threats.
These include:
• Implementing a robust cybersecurity awareness programme, establishing incident response
plans, conducting penetration testing and overseeing privileged identities
• Enhancing network security
• Enhancing disaster recovery capabilities
• Patching
The current political environment, slow economic recovery, deteriorating state infrastructure
and other macro-economic factors have an adverse effect on the country risk assessment.
General deterioration of infrastructure affects ability and cost of conducting business.
We continue to participate in industry-wide structures to contribute to solutions to address
industry and national challenges.
Risk continues to be monitored, taking the power utility’s operational challenges into account.
Challenges in achieving required spend on SLPs were identified, raising this risk and its potential
impacts. Resources are being allocated in technical, supply chain and project management areas
to address the gap.
Instability is expected before election outcomes and after the elections (forming of coalitions,
etc). The team has intensified proactive stakeholder engagement efforts to build relationships
with stakeholders by creating a conducive environment to ultimately reduce the number of
incidents encountered.
Increased pressure in delivering growth objectives to diversify Exxaro. The board approved
additional minerals to be explored. We continue to explore further opportunities to add to the
pipeline for consideration. The primary growth lever for the organisation is inorganic growth
through acquisition.
The risk of labour unrest has increased due to the upcoming wage negotiations and recent
unrest/hostage incidents at other mining companies.
Collaborate with value chain partners such as Eskom and the Council for Geosciences on carbon
capture and storage for the mitigation of scope 3 emissions.
* Risk = f (likelihood of risk occurring x impact of the risk).
Ranking in the top 10 is higher compared to the previous year
Ranking in the top 10 remained unchanged compared to the previous year
Ranking in the top 10 reduced compared to previous the year
New
30
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
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, their 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.
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
Risk trend
Management of risk (risk owner)
Residual risk increased compared to the previous year
Management support and oversight
Residual risk decreased compared to the previous year
Independent assurance (internal audit and other
assurance providers)
Residual risk remained unchanged compared to the
previous year
Independent assurance (external audit and regulators)
New
Governance structures (board and board sub-committees)
Exxaro Resources Limited Integrated report 2023
31
Our risks and opportunities continued
Unavailability of rail capacity (2023: 1)
Drivers
Impacts
• Cable theft and derailments
• TFR challenges that include availability of locomotives,
inadequate maintenance regime, and financial difficulties
• Operational stoppages
• Financial loss
• Inability to meet contractual agreements
• Shareholder dissatisfaction on lower returns
Treatments
Outlook
• Develop alternative routes to evacuate export-bound coal
• Continuous engagement with TFR to understand issues
and provide assistance
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 objective impacted
• Make our minerals and energy businesses thrive
Material theme
Capitals impacted
Line of defence
Risk ranking trend
Fatal risk incidents (2023: 4)
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
• Lack of safety and health involvement in the sourcing process
• Our business partners’ health and safety compliance are not aligned
• 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, incapacity or sick leave)
Outlook
Our employees’ safety remains a top priority. Although good safety
performance 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.
to Exxaro maturity
• Employee behaviour
Treatments
• Implement critical control management programme with strong
emphasis placed on the effectiveness of preventive controls
• Verify effectiveness of actions and learnings from incidents to
eliminate repeat incidents
• Management and verification of high-risk and non-routine tasks to
ensure control effectiveness
• Visible felt leadership where management is provided with the
opportunities to identify gaps and improvements in management
systems and behaviour while demonstrating their commitment to
safety
Strategic objective impacted
• Make our minerals and energy businesses thrive
Material theme
Capitals impacted
Line of defence
Risk ranking trend
32
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Cybersecurity attacks impacting business (2023: 3)
Drivers
Impacts
• Large number of devices connected (especially in operations) to
the corporate network that need to be managed (security
updates)
• Vulnerability due to lack of awareness – people exposing Exxaro
to cyberattacks
• Employees can work remotely as per our working guidelines
• Sophistication of cyber attacks
• Exxaro has not implemented technical controls to restrict or
monitor the use of removable media devices such as USBs
• Revenue loss and reputational damage
• Exposure of confidential information
• Business interruption
• Legal and regulatory impacts (Protection of Personal Information
Act, 2013 (Act 4 of 2013) (POPIA) implications)
Treatments
Outlook
The prevalence of cybersecurity attacks, specifically
ransomware attacks, is expected to increase. We will continue to
improve the robustness of the cybersecurity posture.
Exxaro continues to benchmark our cybersecurity profile to
enhance identification, detection, response and recovery efforts,
and our vulnerability identification and management efforts.
• Ensure we have monitored security governance in place
• Stricter security practices and remediation of identified
weaknesses
• Conduct regular and ongoing security awareness
• Business continuity management plan and disaster recovery
testing
• Assess the current antivirus solution to improve the endpoint
protection capabilities, which detect threats such as malware/
ransomware on endpoints
• Harden the operating system security settings to not allow any
software programs to execute on endpoints, unless these
programs have been approved or whitelisted
• Access to USB ports will be blocked
• Implement a tool that monitors data movement
• Implement the use of privileged access management to manage
privileged identities such as system administrator accounts
• Implement an extended detection and response tool (XDR) to
monitor and block malware on endpoints
• Segregate the IT and OT networks
• Implement a backup and recovery solution to guarantee a clean
data backup and boost disaster recovery capabilities
Strategic objective impacted
• Make our minerals and energy businesses thrive
Material theme
Capitals impacted
Line of defence
Risk ranking trend
Exxaro Resources Limited Integrated report 2023
33
Our risks and opportunities continued
Country risk (2023: 7)
Drivers
Impacts
• Possibility of community unrest for political support
• Stakeholder dissatisfaction
• 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
Outlook
Social tensions and insecurity persist amid high levels of poverty,
income inequality and endemic unemployment (above 30%). With
the national elections in 2024, the local economy will likely continue
to face challenges like volatility from political uncertainty and
associated risks.
• Effect of local political environment
• Slow implementation of reforms and policy certainty
• Instability associated with national government elections
• Unstable/failing local government leading to poor service delivery
• South Africa’s low GDP forecast
• High levels of poverty and unemployment
• Low investor confidence
• Low corruption perception index scoring, indicating prevalence of
corruption
Treatments
• Align our purpose with governance and ethics
• Continuously monitor independent country risk assessment
report
• 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
• Participate in 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
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
Material theme
Capitals impacted
Line of defence
Risk ranking trend
34
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Customer concentration risk (2023: 2)
Drivers
Impacts
• Eskom power stations not operating at full capacity
• Eskom liquidity risk
• Commercial risk attached to long-term contracts
• Inadequate environmental financial provision at tied operations
• Environmental rehabilitation fund shortfall at Matla
• Realisation of approved funding for capital requirements (Matla
capital project programme)
• Low volume offtake from the power utility
• Loss of revenue
• Reputational damage
• Operational constraints
Treatments
Outlook
• Continuous stakeholder engagement
• Ongoing discussions on coal supply agreements
• Enforcement of coal supply agreements
Strategic objective impacted
• Make our minerals and energy businesses thrive
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.
Material theme
Capitals impacted
Line of defence
Risk ranking trend
Adverse threat to licence to operate (2023: 8)
Drivers
Impacts
• Delays in approval of licences and authorisations
• Unable to achieve SLP targets as approved (annual and five-year
projects)
• Unable to meet legislative targets, eg Mining Charter and B-BBEE
• High community expectations for social investments and
procurement opportunities
• BEE transaction unwinding
• Poor stakeholder communication about Exxaro achievements
• Suspension/cancellation of mining right or directive issued by
DMRE
• Reputational damage
• Financial loss
• Community unrest
• Production stoppages
Treatments
Outlook
• Fulfil regulatory requirements within reasonable cost/expenses
• Structured engagement with regulators
• Supervision on execution of projects (SLPs)
• Compliance performance management
We will continue to focus on delivering on our commitments in line
with 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
Material theme
Capitals impacted
Line of defence
Risk ranking trend
Exxaro Resources Limited Integrated report 2023
35
Our risks and opportunities continued
Community unrest (new)
Drivers
Impacts
• Delayed implementation of SLPs and transformation (local
• Potential harm to mine employees, contractors and community
economic development, human resource development, local
procurement, etc)
• Lack of participation of local community companies in the tender
process
• Influence of local community business forums on allocation of
opportunities
• High unemployment rate
• Loadshedding impacting SMMEs, resulting in job losses and fewer
opportunities for local employment
• Electioneering in the lead-up to and after the upcoming national
elections in May 2024
Treatments
members
• Disruptions to operations (prevent access to workplace)
• Reputational damage
• Financial loss
Outlook
• Monitor implementation of SLPs
• Ongoing engagement with Minerals Council and local and district
An increase in the number of incidents is expected due to the
upcoming national elections, which could impact our operations.
municipalities, among others
• Ongoing investment in communities aligned to Social Impact
strategy
• Strike emergency response plans
• Regular participation at community forums
Strategic objective impacted
• Make our minerals and energy businesses thrive
Material theme
Capitals impacted
Line of defence
Risk ranking trend
36
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Inability to achieve growth objectives (2023: 5)
Drivers
• Volatile economic and market conditions
• Regulatory/policy uncertainty in South Africa and other targeted destinations
• Competition for desired mineral assets increases valuation of opportunities
• The organisation’s ability to respond effectively to opportunities (internal skills and
processes)
• Shareholder pressure to return excess cash
• Capital allocation considerations and JSE transaction category criteria (execution risk)
Treatments
• Disclosure of target and performance against strategy and capital allocation
• Build critical skills and capacity to achieve strategy
• Assessment and execution of our opportunity pipeline
• Funds earmarked for growth strategy
• Consider and incorporate appropriate post-deal strategies
• Improve networking opportunities – insights on potential transactions and financing
• Regular communication on strategy, capital allocation and returns against targets –
investor engagements
• Board mandate to increase scope of minerals beyond manganese, bauxite and copper
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
Impacts
• Reputational damage
• Unable to transition from coal to other
minerals
• Undervalued/declining/volatile share price
and market value
Outlook
The primary growth lever for the organisation
is inorganic growth through acquisition. We
will continue to pursue opportunities for
growth through mergers and acquisitions.
Material theme
Capitals impacted
Line of defence
Risk ranking trend
Labour unrest (2023: 16)
Drivers
Impacts
• Wage negotiations
• Community activism
• Inter-union rivalry
• Labour unrest spilling over from other mining houses (sympathy strikes)
• Impact of potential local (branch) and regional union leadership changes
• Unstable macro-economic, socio-economic and political factors
• Operational stoppages
• Reputational damage
• Damage to assets
• Incidents and accidents
• Security risks
• Strained relationships with unions and employees
Treatments
Outlook
• Ensure strategic alignment with management and employees
• Regular union engagement
• Regular communication with various stakeholders
• Intelligence system on ground level
• Participate in the Minerals Council forum
• Ensure picketing guidelines and effective communication plans are in place
• Establish a strike emergency response plan and team
Strategic objective impacted
• Make our minerals and energy businesses thrive
The wage agreements are due for renewal in 2024.
Focus will be on the upcoming wage negotiations with
efforts focused on strengthening union relations.
Material theme
Capitals impacted
Line of defence
Risk ranking trend
Exxaro Resources Limited Integrated report 2023
37
Our risks and opportunities continued
Inadequate response to climate change (2023: 11)
Drivers
Impacts
• Ageing infrastructure and assets unable to withstand extreme
weather conditions
• Poor monitoring and reporting of climate change impacts. Lack of
forecasting capabilities of extreme weather events
• Lack of forecasting of extreme weather events
• International and local investor sentiment against fossil fuels
• Increased stakeholder activism (NGOs and communities)
• Increased stringent local and international legislation (eg carbon
tax, carbon budget and Climate Change Bill
• Competition between operations and communities for resources
such as water can emanate due to climate impacts particularly in
water stressed areas
• Increased cost of doing business
• Community protest
• Non-compliances associated with environmental emissions
• Energy security and supply
• Loss of production
• Natural disasters
• Equipment/infrastructure damage
• Possible fatalities and increased occupational incident rate
• Restriction in security of water
• Legal claims against heavy polluters
• Unable to secure insurance covers for operations
Treatments
Outlook
Collaborate with value chain partners such as Eskom and the Council
for Geosciences on carbon capture and storage for the mitigation of
scope 3 emissions. Exxaro operates in line with our carbon neutral
target.
• Develop Exxaro’s decarbonisation roadmap (2050)
• Develop market intelligence on carbon pricing
• Diversify the portfolio into other minerals
• Engage government on policy and other key role players
• Invest in renewable decarbonisation initiatives
• Reduce carbon intensity per ton of product to reduce carbon
emissions
• Reduce our water intensity per tonne of product produced
• Develop financial model to cost impact of carbon tax
• Costing of individual projects that will contribute towards
decarbonisation
Strategic objectives impacted
• Transition at speed and scale
• Become carbon neutral by 2050
• Become a catalyst for economic growth and environmental stewardship
Material theme
Capitals impacted
Line of defence
Risk ranking trend
38
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Engaging our stakeholders
Through our holistic stakeholder approach, Exxaro aims to build long-term,
stable, mutually beneficial relationships with stakeholders. Our engagements
enable us to better understand, manage and respond to material risks and
concerns, protect our licence to operate and create shared value.
Our approach to meaningful stakeholder engagement
We believe the value we create for our stakeholders is as important as the value we create for ourselves. Regular and ad hoc in-person
engagements, social impact assessments and surveys inform our understanding of our social impact, and stakeholders’ needs and interests.
In this section, we describe our stakeholder management through our ERM
framework lens.
Refer to the stakeholder-inclusive approach section of the ESG report for more information about our approach to
stakeholder engagement, details of our key stakeholder relationships, the nature and quality of our relationships with
strategic stakeholder groups and our responses to their concerns.
Stakeholder universe
We use our ERM process 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 key groupings – government, communities, business and value chain participants – and identify
relevant engagement strategies and objectives as required.
Government
• Governmental
departments
• Local governments
• Political parties
• Provincial government
• District municipalities
• Regulators
Business
• Non-governmental
organisations
• Media
• Professional industry
bodies
Value chain participation
• Unions
• Investors/shareholders
• Strategic suppliers
• Partner in delivery
• Sponsors
• Customers
• Employees
• Service providers
• Other mining
organisations
• Universities
• Financial community
• Non-profit organisations
Communities
• Local media
• Faith-based organisations
• Taxi association
• Farmers and landowners
• Other mining companies
• Local SMMEs
• Communities
• Local leadership
• Local schools
Assessing engagement effectiveness
Engagement effectiveness is assessed through assurance and audits of our procedures and changes in risk ratings. We also measure
perceptions of our engagement performance as part of a stakeholder survey.
Exxaro Resources Limited Integrated report 2023
39
Engaging our stakeholders continued
Material engagements in 2023
While we engage regularly with multiple stakeholders, this report focuses on engagements most material to value creation and
preservation.
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
2023 risk Unavailability of rail capacity
Engagement
purpose
Collaborate in finding solutions to improve logistics
Stakeholder Transnet
Further reading
Our risks and opportunities (page 28)
Stakeholder expectations and issues
Key engagements and outcomes
Quality of relationship:
• TFR performance
Material themes
• Supporting National Logistics Crisis Committee initiatives, which we
are optimistic will move performance in the right direction
• Engaging directly with Transnet through:
– Weekly meetings on operational and commercial matters (with TFR
Coal Line and TFR Commercial as Exxaro and as a member of the
Coal Exporting Parties group)
– Monthly meetings on issues not resolved at weekly meetings
– Quarterly and biannual coal industry meetings between senior
executives on performance matters and issues of strategic interest
Strategic objectives
• Make our minerals and energy businesses thrive
2023 risk Customer concentration risk
Quality of relationship:
Engagement
purpose
Eskom remains a key Exxaro customer. In 2023, Exxaro attributed 73% of sales to
Eskom. Long-term agreements with Eskom at Matimba and Medupi place the coal
business in a defensive position. We engage regularly in light of Eskom’s challenges.
Stakeholder Eskom
Further reading
Our risks and opportunities (page 28)
Stakeholder expectations and issues
Key engagements and outcomes
• Coal supply agreements
• Engaging to renegotiate the Matla cost plus agreement due to expire
Material themes
in mid-2024
• Conducting regular planning and operational alignment engagements
at Grootegeluk around Matimba and Medupi coal supply agreement
contracts
Strategic objectives
• Transition at speed and scale
• Make our minerals and energy businesses thrive
40
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
2023 risk Fatal risk incidents
Quality of relationship:
Engagement
purpose
Align employees’ focus with our health and safety strategy and culture for competitive
advantage and resilient business performance.
Stakeholder Employees
Further reading
Our risks and opportunities (page 28) and building momentum with people (page 96)
Stakeholder expectations and issues
Key engagements and outcomes
• Health and safety standards
• Communicating safety issue reminders daily at operational level and
Material themes
regular safety messages across various platforms
• Hosting our annual sustainability summit and focusing on eliminating
repeat incidents following last year’s LTIFR increase
• Facilitating ongoing safety training (including risk management,
safety for supervisors and legal liabilities), which perceptibly improved
the quality of mini hazard identification and risk assessments
• Hosting a compulsory weekly review meeting to discuss learnings
from internal or external safety incidents
Strategic objectives
• Make our minerals and energy businesses thrive
• Empower people to create impact
2023 risk Community unrest
Quality of relationship:
Engagement
purpose
We aim to build relationships and our understanding of community needs to enable
collaboration and successful delivery of socio-economic development projects.
Engagements enable us to proactively resolve issues or concerns raised by
communities and avoid protest action. In addition, we aim to communicate how we
create shared value through local employment and procurement, community
development initiatives, skills development and ESD.
Stakeholder Communities
Further reading
Our risks and opportunities (page 28) and social impact (page 106)
Stakeholder expectations and issues
Key engagements and outcomes
• Our communities expect Exxaro to employ, uplift and
empower locally to enable South Africa’s development
• We had four incidents in 2023 that resulted in three
hours of lost production at Leeuwpan (2022: 13). The
improvement can be attributed to our proactive and
intentional engagements with our stakeholders
Material themes
• Considering concerns raised at meetings between our board and host
communities in Mpumalanga during 2023, which included the ongoing
need for employment and local procurement, youth training and
development opportunities, engagement with traditional authorities
and collaboration in addressing crime
• Addressing community needs through our socio-economic
development, ESD and procurement initiatives and communicating via
our stakeholder engagement forums
Strategic objectives
• Become a catalyst for economic growth and environmental
stewardship
• Empower people to create impact
Exxaro Resources Limited Integrated report 2023
41
Engaging our stakeholders continued
2023 risk Adverse threat to licence to operate and country risk
Quality of relationship:
Engagement
purpose
Proactive engagement supports our efforts to drive business resilience and manage
risk. Exxaro plays a proactive role in finding solutions to socio-economic challenges and
contributes to shaping government policies by collaborating and partnering with
government.
Stakeholder Government
Further reading
Our risks and opportunities (page 28), our strategy (page 47)
Social (ESG report, page 67)
Stakeholder expectations and issues
Key engagements and outcomes
• 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 creation and community
upliftment*
• Socio-economic development*
• Municipal service delivery*
• Local procurement*
* Multi-stakeholder issues.
Material themes
Several partnerships and initiatives enable us to address government’s
expectations. These include:
• Consulting on SLP development and regularly collaborating on
projects
• Improving disclosure in our annual reporting suite
• Refining and consolidating our Sustainable Growth and Impact
strategy
• Implementing our Social Impact strategy
• Collaborating with the health departments in Limpopo and
Mpumalanga
• Reporting quarterly as required by our regulatory bodies
• Improving compliance and risk mitigation through internal auditing
processes, strategies and management controls
• Proactively engaging with the:
– Department of Water and Sanitation (DWS) and Department of
Forestry, Fisheries and the Environment on water issues at our
Durnacol and Hlobane mines in closure
– DMRE on the renewal of our Matla mining right
– DWS and DMRE on discard dumps
– DWS and Water Tribunal on Matla water use licence renewal
• Regularly reviewing and actioning complaints received at the mines
• Processing requests for information through the Promotion of Access
to Information Act, 2002 (Act 2 of 2002) (PAIA) and managing these
accordingly
Strategic objectives
• Become a catalyst for economic growth and environmental stewardship
42
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Engaging about our climate commitments
We engage with all our stakeholders on climate change concerns as we aim to understand regulatory
policy; empower employees, communities and value stream participants to manage climate change
impacts; contribute to thought leadership; and communicate our decarbonisation plan.
Exxaro is committed to conducting climate lobbying in a responsible and sustainable manner as stated in our Climate Change
Response strategy. Our goal is to also participate in stakeholder engagements on climate change in a manner that advances the
achievement of the Paris Agreement objectives. We value industry associations and the platform they present for knowledge sharing
and engagements on key issues such as climate policy, advocacy and the low-carbon transition.
We received a request from Just Share, Fossil Free South Africa and Aeon Investment Management ahead of our AGM in May 2023 to
report on the alignment of our climate lobbying and policy engagement activities, and those of our affiliated industry associations,
with the goals of the Paris Agreement. In response, we have engaged directly with Just Share to understand expectations, build trust
and establish an advisory partnership to determine the way forward.
During our governance roadshow in September, investors voiced their satisfaction with Exxaro’s engagement with Just Share and
suggested improving climate lobbying disclosure in our ESG and integrated reports.
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
Key engagements and outcomes
• Engaging on air quality management in priority areas
• Enhancing climate change adaptation and resilience for industry and government
• Working with government and other businesses to address South Africa’s
international climate change obligations
• Contributing to thought leadership on climate change issues
• Discussions with government on climate change management
• Engaging with businesses through Business Unity South Africa and Business
Leadership South Africa on issues affecting the country and securing energy supply
• Working with government, power utilities, industry and other stakeholders to ensure a
financially viable, technically healthy and well-managed energy supply sector for
South Africa
Material theme
Strategic objectives
• Transition at speed and scale
• Become carbon neutral by 2050
• Become a catalyst for economic growth and environmental stewardship
Further reading
Our risks and opportunities (page 28), responding to TCFD reporting requirements (page 120), building
momentum with people (page 96), social impact (page 106) and our environmental stewardship (page
109)
Transitioning into a low-carbon business (page 12), climate change adaptation and resilience (page 36)
and social (page 67) (ESG report)
Exxaro Resources Limited Integrated report 2023
43
Strategically
positioning the
business for
growth
We are acutely aware of the
delicate balance between a
rapid energy transition and a
fair, equitable shift that
benefits all stakeholders.
Through our Sustainable
Growth and Impact strategy,
we are positioning Exxaro for
sustainable growth and a
meaningful impact for all our
stakeholders.
45 CEO’s report
47 Our strategy
50 Performance against our strategy and
outlook
44
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
CEO’s report
Reflecting on our rich history of innovation and
resilience, this past year has further solidified
Exxaro’s dedication to sustainable growth and
impact amid the complex tapestry of global
economic challenges. I am pleased to present
the progress we have achieved, the obstacles
overcome, and the forward-looking vision
that guides our journey ahead.
Dr Nombasa Tsengwa
CEO
Delivering sustained value in a turbulent
context
Despite the anticipated downturn in China’s property sector, the
seaborne iron ore market found support as expected cuts in steel
capacity proved modest, and the easing of the property market
policy later in the year bolstered sector sentiment.
Thermal coal markets witnessed a resurgence in Indian demand,
spurred by economic growth and increased energy requirements.
This coincided with China’s heightened coal imports after the
Australian trade ban was lifted in 2020. Conversely, European
and northeast Asian demand softened, with ample coal and gas
stocks leading to price reductions.
Enabling sustainable growth and impact
through strategic foresight
While Exxaro's legacy is steeped in our country’s industrial
growth, we have a responsibility to transition to support a
sustainable future. Our tangible growth is reflected in the robust
expansion of our market capitalisation, escalating from
R20 billion at our inception in 2006 – when we set out to achieve
our purpose of powering better lives in Africa and beyond – to
R71 billion today. Today, we are transitioning from a history rich
in mining to engaging with the energy landscape of tomorrow,
drawing on the same commitment that steered us through past
challenges and successes.
Stronger renewables availability further curtailed Europe’s
dependency on gas and coal. Yet, as the year concluded, new
uncertainties from geopolitical conflicts and potential natural gas
supply issues contributed to volatile energy market dynamics.
Our strategy champions the outcomes of energy security,
endorses resources powering a clean world, and upholds an
energy transition that ensures the path to carbon neutrality by
2050 is both viable and responsible.
Domestically, challenges persisted with Transnet’s operational
issues, resulting in a multi-decade low in RBCT coal exports.
Additionally, Eskom’s operational hurdles curtailed coal offtake,
particularly from the Waterberg region. Although production saw
a 1.4% reduction, this outcome still stands as a testament to our
team’s capability, especially in navigating and mitigating the
impacts of the logistical constraints that have affected our
export sales.
Our operating context (page 14)
Wind energy generated from the Cennergi operations increased
by 8% compared to 2022 as wind conditions improved in 2023.
Although Tsitsikamma experienced an Eskom distribution line
fault in the first half of the year, resulting in 15GWh of lost
generation over a one-month period, an improvement in wind
performance was noted and the average plant availability of
97.3% was above the contracted 97%.
While group EBITDA decreased by 29% to R13.4 billion, this was
our second highest EBITDA following record thermal coal prices
in 2022. This was driven primarily by lower export prices and
lower sales volumes for domestic and export. We delivered
headline earnings of R46.81 per share, 22% lower than in 2022.
The coal business’s EBITDA margin decreased by 9% from 42%
to 33%, while Cennergi’s operational EBITDA margin remained
stable at 80%. We achieved an annualised ROCE of 35%.
This achievement is attributable to our high basket price
performance and efforts in efficient capital deployment and cost
management. These will be critical performance areas as we
embark on our growth journey ahead.
Aligned with our commitment to ensuring energy security –
meeting today’s needs while supporting a sustainable future for
all – our early value strategy focuses on optimising coal reserves
to minimise the risk of stranded high-value assets while
improving operational cost efficiency. In this regard, we
concluded a capital excellence programme to improve our capital
project delivery and enhance value during the year.
Our assets remained cost competitive and continue to deliver
operational EBITDA margins of 80%. The group’s augmented
capital investment in Grootegeluk and Belfast saw a 57%
increase over the previous year, which also speaks to the fact
that the strategy is working. Our early value strategy and market
to-resource optimisation enabled us to achieve the record
average price realisation of 97% against the API4 index – an
increase of 4% compared to 2022.
Business resilience (page 92)
The success of our coal business bolsters our financial resilience,
enhances our capital strategy, and positions the group to
capitalise on new opportunities and drive innovation for
sustainable profitability and growth.
Pursuing our ambition to deliver resources powering a clean
world, we seek to evolve from our coal-centric beginnings
towards future-focused minerals and energy resources.
This transition is epitomised by our wholly owned subsidiary
Cennergi, founded in 2009, delivering 229MW of clean energy to
Eskom.
Exxaro Resources Limited Integrated report 2023
45
CEO’s report continued
We aim to grow the business to become a leading energy
solutions provider with a 1.6GW generation capacity by 2030.
With the financial close of the LSP, Exxaro has further cemented
our investment in energy, exemplifying our dedication to
sustainable solutions.
Our venture into resilient, energy transition minerals is equally
strategic, building on a legacy that adapts to ever-changing
market dynamics. Our cash generation remains robust at R13.3
billion, enabling us to bolster our net cash position with R5.2
billion to R10.5 billion, putting us on a solid footing to execute our
growth strategy.
The insights garnered through meticulous evaluations of
potential opportunities in critical minerals and energy sectors
over the past years have honed our expansion strategy.
Continuous investment in market intelligence and capability
strengthening positions us to forge partnerships that are as
robust as they are insightful, ensuring judicious execution of the
most value-accretive deals.
It therefore gives me great pleasure to welcome our new chief
growth officer, Richard Lillieke. With his extensive banking and
investment management background, Richard has successfully
led numerous merger and acquisition transactions across the
continent. We are delighted to have him join our executive team
and excited about the leadership and expertise he will bring to
our minerals and energy growth strategy.
As we unlock value and invest in areas with significant growth
potential that align with our vision for sustainable impact, we
have commenced the divestiture of the FerroAlloys business,
which we identified as non-core to our future direction. With a
focus on enhancing black economic participation, the sale of
FerroAlloys is targeted to promote black ownership – a sale
process we anticipate concluding in the second half of 2024.
An energy transition remains central to our ethos. As we shift
towards a low-carbon business model, we must do so in a manner
that is equitable and inclusive for all stakeholders. Our
commitment to this transition is not only about reducing our
environmental footprint but also about ensuring that the shift
supports equitable socio-economic development, particularly in
the areas where we operate.
Exxaro is investing in a greener future and creating a foundation
for enduring social equity and economic vitality. To ensure that
no one is left behind as we transition, we offer access to social
development opportunities to all, in particular those in our host
communities.
We are pleased to report a 17% increase in community
investments, totalling R1.9 billion. Of this, 71% (R1.48 billion) was
directed towards supporting black SMMEs through local
procurement and ESD. Our ESD programme has been
empowering youth and women-led businesses since 2018,
benefiting communities across Limpopo, Mpumalanga and
KwaZulu-Natal. Our Social Impact strategy is aligned to the UN
SDGs and seeks to create a lasting positive impact on
communities and reduce poverty by combining multidimensional
approaches that address education, economic wellbeing and
access to land for economic activity.
Social impact (page 106)
Pleasingly, our environmental stewardship and social
responsibility initiatives have garnered recognition, as evidenced
by our second-place accolade in the 2023 ESG Investing Awards
for Social Responsibility, among our other many accolades.
46
Exxaro Resources Limited Integrated report 2023
Empowering our people to create impact
The wellbeing of our people is a fundamental priority that
underpins every facet of Exxaro’s operations. This financial
period, we recorded zero fatalities. Regrettably, we recorded
11 LTIs, resulting in a frequency rate of 0.07 against our target
of 0.05. Even though we have observed a downturn in HPIs,
indicating a movement towards our goal of an incident-free
workplace, there is no room for complacency.
The team initiated enhanced safety campaigns across all our
operations. We believe in creating a culture where safety and
accountability are paramount, and every team member actively
participates in safeguarding their wellbeing and that of their
colleagues. Looking back at the year, we are proud of the six
safety awards received at the COALSAFE Awards by the South
African Colliery Managers’ Association, reflecting our
commitment to operationalising zero harm at our operations and
beyond the mine gate.
Building momentum with people (page 96)
Our dedication to our people extends beyond safety. As the first
female CEO in Exxaro’s history, I am incredibly proud of our
progress in DEI and the transformational power of our succession
planning. The representation of black women in senior and
middle management has improved by over 75% in the past six
years. We are fostering an environment where DEI is woven into
the fabric of our corporate culture. This commitment has not
gone unnoticed; Exxaro was honoured as a Top Employer in
South Africa for the fourth time by the Top Employer’s Institute.
I am grateful for the recognition of the Gender Icon Award at the
2023 Standard Bank Top Women Awards and the Trailblazing
Women in Mining Award. At the Top Empowerment Awards, we
were also recognised in the DEI category, affirming our position
as leaders in creating a workplace where we all feel like we
belong. Additionally, being included in the 2023 Bloomberg
Gender-Equality Index is not just an honour but a benchmark
that drives us towards greater inclusivity and equality in our
industry.
These awards and accolades received are not just symbols of
honour but are testaments to the values we uphold and the
inclusive future we are building.
Charting the way forward
As we navigate the complexities of our industry and the broader
environmental and socio-economic challenges, our Sustainable
Growth and Impact strategy is more relevant than ever. We are
committed to transitioning Exxaro into a diversified minerals
business, focusing on manganese, bauxite, and copper, among
others, to build a sustainable and resilient future. Our energy
initiatives and the strategic selection of minerals for diversification
reflect our proactive approach to the global energy transition and
our contribution to a carbon-neutral future by 2050.
Our achievements and strategic direction are a testament to our
team’s dedication and hard work, the support of our
stakeholders, and the strength of our vision. As we look to the
future, we remain focused on driving operational excellence,
pursuing sustainable growth, and contributing positively to the
global energy transition.
I sincerely thank our investors, board members, partners, and
stakeholders for their unwavering support and commitment; and
especially the women and men who continue to contribute to the
business’s success. I would like to thank each and every one of
them for their dedication, resilience and loyalty. They know that
we are #cruising nicely!
Dr Nombasa Tsengwa
CEO
10 April 2024
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Our strategy
Our Sustainable Growth and Impact strategy is a comprehensive, stakeholder-inclusive plan,
laying the foundation for a resilient and sustainable future for our business to continue creating
and preserving value. We are determined to play an active role in creating a future that enables
our vision: resources powering a clean world.
Our approach transforms our business cautiously and effectively, developing into a diversified
company poised to thrive in and contribute to a low-carbon future. We commit to responsible
operations, prioritising material ESG areas, and adhering to compliance standards.
In 2023, we further refined and consolidated our strategy in response to the rapidly changing macro-economic environment, leveraging
short-term opportunities while remaining steadfast in achieving our long-term strategic objectives.
Our strategic objectives
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
Make our minerals and energy businesses thrive
Enhance focus on our core delivery areas, minerals and energy, by increasing our footprint in these areas, divesting of non-robust assets
and ensuring continued operational and digital excellence
Empower people to create impact
Ensure our people and partners have the capabilities, mindset, environment and passion to achieve our purpose
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
Become a catalyst for economic growth and environmental stewardship
Positively impact our ecosystem during and after our operations in minerals and 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
Exxaro Resources Limited Integrated report 2023
47
Our strategy continued
Our strategy unpacked
We intend to deliver our long-term
strategic objectives by aligning our
resources to the following priorities:
• Delivering value in existing coal
assets
• Growing our energy solutions
business
• Diversifying our portfolio to include
minerals that support a low-carbon
world
We leverage our strengths and
capabilities, which include:
• Experience in mining bulk
commodities
• Strength of our balance sheet
• Effective technical and commercial
due diligence
• Efficient business integration
• Expertise in energy
We will enable the execution of our
strategy over the next five years using:
• Clear targets
• A robust capital allocation model
• Rigorous performance tracking
• Accountability
• Cultivation of necessary skills and a
culture of execution
Capital allocation
Our ambition to be a diversified carbon-neutral minerals company with a significant energy business will be realised through effective capital
allocation. Our capital allocation model enables us to continue delivering shareholder value and create a sustainable, resilient and robust
enterprise that can withstand dynamic markets shifts, and 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 alignment
with our strategic intent.
To ensure we embed disciplined and data-driven capital allocation aligned to our enterprise ambition, we use the following criteria:
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 energy generation
• ESG and licence to operate
Timeframes
We will execute our strategy in phases, with clear outcomes for each focus area.
A mining business
with interests in coal,
iron ore, base metals
and energy
A coal-based mining
company diversifying
towards future-facing
minerals, with energy
capabilities
A diversified mining
company focused on
future-facing minerals,
with energy capabilities
A diverse carbon-
neutral minerals
company, with a
significant energy
business
• New income streams
introduced
• Minerals contributing
30% coal EBITDA
• Acquisitive and
organic growth
• Impactful business
• Minerals contributing
50% coal EBITDA
• Becoming a strong
business with diverse
income streams
• 1.6GW (net) renewable
energy
• Acquisitive and
organic growth
Accountability
We implement our strategy 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 business units (BUs): translate business plans into detailed execution plans
48
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Our energy business
To be a leading international energy solutions provider by 2030
Wind and solar energy
• A significant contributor of energy solutions (renewable assets and services)
• Servicing the public and private sectors in South African and other markets
• Focus on three energy areas:
– Distributed generation: Our growth in energy will be internally led by providing our existing operations with self-generation. We
have two large windfarms and micro-grids in operation, and the LSP under construction. 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 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
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
• Become a prominent player and contributor to energy
• Invest in energy with an acceptable risk profile targeting a portfolio
security in South Africa
return of 15% equity internal rate of return over time
• Strategic acquisition of skill and market entries to grow at scale
• Partnering to improve skills, credibility and growth
Competitive advantage
• Renewable pedigree and scale: We are a significant independent power producer in South Africa and have had exposure to the
energy industry 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 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 South Africa’s primary source of energy.
New minerals
Diversify into new mineral assets that are vital to a low-carbon
future, eg manganese, copper and bauxite, among others.
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.
How
• Ensure a robust coal asset portfolio, which includes
divestment 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 deployment, supported by our capital
excellence programme
• Minimise emissions at our existing operations
Why
• A business that thrives in a low-carbon future
• Diversify revenue for Exxaro’s growth
• Clearly defined investment supporting the right
opportunities
• Balance sheet and mining capabilities provide a competitive
advantage
How
• Exxaro has developed a minerals business approach that
enables a just transition to a low-carbon world while
leveraging our core competencies in bulk commodity mining
and logistics
• Robust screening criteria enable us to continuously review
and identify the minerals we should be focusing on for our
future growth
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. This allows efficient and effective evaluation of potential
growth opportunities
• Project execution excellence: Through expansion and greenfield successes, delivering digital innovation through our Digital@Exxaro
strategy 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.
Exxaro Resources Limited Integrated report 2023
49
Performance against our strategy and
outlook
We are gaining momentum as we transition to our new strategy. We have set
clear and ambitious objectives to progressively incorporate our Sustainable
Growth and Impact strategy into our operations.
To measure and manage our performance over time, we have identified specific KPIs that were selected by considering our past KPIs,
representing the various aspects of value creation we affect and our future objectives. The resulting indicators are refined and designed to
monitor our momentum towards our strategy while catalysing discussion and analysis within our organisation. Furthermore, they ensure we
address our previous ESG commitments and enable the achievement of these ambitious goals.
Our KPIs are grouped per capital and incorporated in the tables below in relation to how their continued availability, quality and affordability
impact specific strategic objectives.
Key
Description
Trend
Description
REM-S
Linked to remuneration (STI)
REM-L
Linked to remuneration (long-term incentive)
Deteriorated
Improved
Unchanged
Transition at speed and scale
Why it matters
Performance overview
The shift towards a low-carbon economy is imperative
due to the growing demands for climate change
mitigation. As a business, it is essential to approach
this transition with a balanced sense of urgency to stay
ahead of the curve while ensuring that the shift is
sustainable and generates a positive societal impact.
Material themes
SDGs impacted
• Reached financial close for the LSP, supplying 68MW to our Grootegeluk
mine via a 25-year power purchase agreement
• Continued development of energy solutions, especially in Mpumalanga, to
enable a just energy transition
• Actively reviewed, assessed and evaluated mineral opportunities aligned
with our strategy and, where applicable, meaningfully engaged in
investment processes
• Continued adhering to our robust capital allocation model
Continued availability, quality and affordability of capitals driving our strategy
Exxaro's strategy is firmly rooted in managing our capitals to support sustainability and growth. By optimising our coal assets and
advancing into other minerals and energy, we are securing financial capital and investing in our future capabilities. Our performance
indicators — EBITDA from new minerals, EBITDA contribution from Cennergi and installed energy generation capacity — are milestones
towards our 2026 and 2050 targets. These targets reflect our commitment to transitioning at speed and scale while securing the
availability of financial capital now and in the future to support sustainable value creation in a dynamic energy market.
Measuring related capital inputs
Performance indicator
EBITDA contribution from new minerals (%)REM-S
Target
Performance
2026
(short
term)
30
2030
(medium
term)
2023
2022
2021
Trend
50
0
0
N/A
Financial capital
Installed generation capacity (MW net)
780
1 600
229
229
229
Related trade-offs
Balancing the adverse environmental impact of coal with the need to support South Africa’s socio-economic
development
In our pursuit to transition to a low-carbon model rapidly and responsibly, we recognise the current socio-economic reliance on coal in
South Africa. While we accelerate our transition, we remain committed to supporting the nation's development, ensuring a responsible
shift that considers both the environmental impacts and the immediate energy needs of the society. This alignment is crucial as we
strive to create a positive social impact and lead by example in the just energy transition.
Looking
forward
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.
50
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Make our minerals and energy businesses thrive
Why it matters
Performance overview
Intensifying our focus on core delivery areas, specifically minerals
and energy, is crucial for future growth and sustainability. By
expanding our presence in these sectors, we can capitalise on the
burgeoning opportunities within the green economy.
Simultaneously, strategically divesting from assets not meeting
our robust criteria will streamline our portfolio and free up
resources to be reinvested into new minerals.
Material themes
SDGs impacted
• Concluded a capital excellence programme to improve our
capital project delivery and enhance value
• Continued efforts to create cost-effective logistics solutions
• Rolled out marketing initiatives that led to exceptional
performance on export price realisation
• Initiated a sales process for our FerroAlloys business
Continued availability, quality and affordability of capitals driving our strategy
The sustained success of our minerals and energy segments is deeply intertwined with the continuous availability of manufactured and
financial capital. By meeting our targets for coal exports, we exhibit our competence in managing our physical assets efficiently and
effectively. Financially, our strong EBITDA margin, ROCE and solvency ratio are testaments to our sound strategic decision making and
operational excellence.
Measuring related capital inputs
Performance indicator
Manufactured capital Coal product (Mt)
EBITDA margin (managed
operations) (%)REM-S
Financial capital
ROCE (%)REM-L
Target
Performance
2026
(short term)
2030
(medium
term)
2023
2022
2021
Trend
45
29
20
50
42.5
43.1
42.5
29
20
35
35
41
45
33
36
Solvency ratio (times)
2 to 3
2 to 3
3.5
3.3
3.0
Related trade-offs
Balancing capital allocation with our growth areas
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 with our portfolio ambition.
Our strategic objectives and their metrics (which include stringent financial return metrics for each growth area) will continue to guide
capital allocation so that we objectively assess strategic trade-offs related to capital allocation.
Looking
forward
We aim to optimise value creation from our coal business while diversifying into a resilient new minerals
business and growing our energy business to achieve our goal to become carbon neutral by 2050.
Exxaro Resources Limited Integrated report 2023
51
Performance against our strategy and outlook continued
Empower people to create impact
Why it matters
Performance overview
The true strength of our organisation lies in the collective
capabilities and dedication of our people and partners. By
empowering them with the necessary skills and fostering a
culture of innovation and accountability, we position ourselves to
make significant strides towards our goals. This empowerment is
about reaching organisational objectives and amplifying our
collective contribution to society and the economy, ensuring our
work resonates with purpose and leads to lasting positive change.
Material themes
SDGs impacted
• Embarked on an organisational effectiveness initiative to
improve the overall effectiveness across the business,
enhancing the impact of our people
• Launched a comprehensive DEI strategy to increase the
participation of women, youth and people living with disabilities
Continued availability, quality and affordability of capitals driving our strategy
We understand that our people are essential to our ongoing ability to innovate, operate efficiently, and respond to the dynamic needs of
the market and society. By investing in our human capital, we are investing in a sustainable future and fostering an environment where
our organisation and employees can thrive and generate enduring value. Our dedication extends to nurturing social and relationship
capital, critical to our licence to operate, reflected, in part, by our B-BBEE contribution level. Achieving targets like zero fatalities, low
LTIFR and OHIFR rates underscores our commitment to wellbeing and development. These efforts ensure we maintain a skilled,
motivated workforce and robust community relations, essential for driving sustainable value creation aligned with our strategic mission.
Measuring related capital inputs
Human capital
Performance indicator
FatalitiesREM-S
LTIFRREM-S
OHIFR
Social and relationship
capital
B-BBEE contribution level
Target
Performance
2026
(short term)
2030
(medium
term)
2023
2022
2021
Trend
0
0.02
0.06
1
0
0
1
0
0.01
0.07
0.05
0.08
0.02
0.15
0.16
0.16
1
2
3
2
Related trade-offs
Balancing operational focus and the need for diversification
As a business 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 crucial 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.
Looking
forward
We will continuously develop our people, processes and platforms to ensure we build on our learning
culture, enhance our organisational effectiveness and achieve our strategic objectives.
52
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Be carbon neutral by 2050
Why it matters
Performance overview
Achieving carbon neutrality by 2050 is a critical target that
reflects our commitment to environmental stewardship and
sustainable development. By actively reducing our carbon
footprint, we are contributing to the global effort to mitigate the
impacts of climate change. This ambitious goal will be realised
through the strategic decarbonisation of our portfolio and by
integrating social impact initiatives that promote environmental
responsibility. The drive towards carbon neutrality prepares us for
a future of stricter environmental regulations and positions us as
a leader in sustainable practices. Our dedication to this cause
demonstrates to stakeholders, including customers, investors,
and employees, that our operations align with broader societal
values of preservation and responsibility towards our planet.
Material themes
SDGs impacted
• Development of our decarbonisation roadmap is at an
advanced stage
• Financial close reached, and sod turning ceremony held for our
68MW solar self-generation project to supply Grootegeluk,
while more projects are under development
• Signed a memorandum of understanding with the Council for
Geoscience to partner on research and development related to
carbon capture, utilisation and storage – technology critical for
decarbonisation
Continued availability, quality and affordability of capitals driving our strategy
Our strategic reliance on natural capital underpins our ability to provide critical resources for a low-carbon world. However, the volatility
of climate patterns threatens the quality, affordability and accessibility of the resources we rely on and could jeopardise our operational
continuity and the communities we serve. Recognising this, our commitment to carbon neutrality by 2050 is underpinned by KPIs
tracking carbon intensity across scopes 1 and 2 and reducing our energy intensity. These indicators do not just measure but actively
guide our efforts towards portfolio decarbonisation and underscore our determination to diminish our carbon footprint.
Measuring related capital inputs
Performance indicator
Absolute emissions
(ktCO2e)
Natural capital
Target
Performance
2026
(medium term)
2050
(long term)
2023
2022
2021
Trend
40% reduction in scope 1
and 2 emissions
(579ktCO2e)
Carbon
neutrality
953 (2%
reduction)
971
994
Energy intensity (GJ/kt)REM-S
30
30
28
30
29
Related trade-offs
Balancing our growth ambitions with our carbon-neutral targets while appreciating that absolute carbon (total
emissions) might increase with acquisitions
As we aim for carbon neutrality by 2050, our growth strategy includes acquisitions that may temporarily raise our carbon footprint.
However, each potential acquisition is assessed in relation to our broader decarbonisation goals. This approach is central to our strategy,
ensuring that growth does not compromise our commitment to becoming carbon neutral.
Key measures related to carbon intensity and emissions are included in our strategic performance metrics and will be a crucial tool for
evaluating and balancing trade-offs pertaining 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 provide us with further clarity on potential shortfalls and opportunities.
Looking
forward
Our key focus in the short term will be to reduce our scope 1, 2 and 3 emissions and carbon tax liability
through additional energy efficiency projects, implementation of nature-based solutions, energy and other
initiatives. We will also leverage and operationalise strategic partnerships to achieve our decarbonisation
objectives.
Exxaro Resources Limited Integrated report 2023
53
Performance against our strategy and outlook continued
Become a catalyst for economic growth and environmental stewardship
Why it matters
Performance overview
Our role in fostering economic growth and championing
environmental conservation is pivotal. We can generate a
positive ripple effect beyond our operational lifespan through our
involvement in the minerals and energy sectors. By initiating and
nurturing community projects and businesses, we serve as a
driving force for long-term, self-sustaining development that
benefits local economies and ecosystems alike. These impact
programmes are designed to deliver immediate benefits and lay
the groundwork for ongoing prosperity that does not solely rely
on our presence. This approach underscores our vision of leaving
a legacy of empowerment and ecological balance, ensuring that
the progress and wellbeing of communities endure alongside
environmental integrity.
Material themes
SDGs impacted
• Prioritised energy and water efficiency projects
• With an overall FTSE Russel ESG score of 3.9, Exxaro continues
the trend of leading our global industry peers over the past five
years. This score is underpinned by our exceptional
environmental initiatives and stronger governance/disclosure
initiatives relative to our global peers
• Exxaro’s B-BBEE performance remains exceptional, with an
overall score of 95.52, with 5.51 surplus points attributable to
increases across all five categories
• Increased efforts in our minerals succession programme to
focus on capacitating and/or training farmers and enabling
market access; targeting black emerging farmers with
appropriate strategic partnerships for skills transfer
• Since 2018, Exxaro has supported 118 SMMEs, with a financial/
operational sustainability rate of over 99% compared to
national levels of approximately 10%
• Kicked off an early childhood development (ECD)/school
readiness programme focusing on training teachers and
resourcing ECD centres
Continued availability, quality and affordability of capitals driving our strategy
Our strategy for catalysing economic growth and upholding environmental stewardship revolves around the prudent utilisation of our
natural capital and fortifying our social and relationship capital. Through the reduction of environmental incidents, ensuring
responsible water usage and engaging with external feedback, we are not only preserving natural resources but also ensuring their
ongoing availability and quality. At the same time, we are dedicated to catalysing economic growth by enhancing agricultural
productivity and scaling up support for SMMEs, which invigorates local economies and fosters community resilience. Our ECD
programme underpins our investment in early education, vital for nurturing the next generation. These integrated actions underscore
our commitment to maintaining robust social ties, investing in the workforce of the future and driving sustainable development, all of
which secure our social licence to operate and contribute to long-term value creation.
Measuring related capital inputs
Target
Performance
Performance indicator
2026
(short
term)
2030
(medium
term)
2023
2022
2021
Trend
Crop yield to market (tonnes)
13 000
15 000
10 011
5 600
5 651
Social and
relationship
capital
Financially sustainable
SMMEs supported
ECD school readiness (%)
207
90%
295
90%
118
n/a*
105
n/a*
79
n/a*
Reportable environmental
incidents (levels 2 and 3)
0 level 2s
0 level 3s
0 level 2s
0 level 3s
1 level 2s
0 level 3s
0 level 2s
0 level 3s
6 level 2s
0 level 3s
Natural capital
Water intensity (kL/tonne
RoM)REM-S
FTSE Russel RatingREM-L
0.180
0.180
0.105
0.150
0.149
4
4
3.9
4
3.7
* The ECD programme was launched in 2023, so there is no data for 2021 to 2023.
Related trade-offs
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 will result in lower margins unless stringent
cost optimisation is undertaken.
In navigating these challenges, we must maintain our focus on short-term resilience while investing in long-term strategic research
and development. This delicate balance supports our aim to catalyse economic growth and environmental stewardship, steering
towards sustainable and scalable impact programmes that will last beyond our operations. Our portfolio approach towards resource
allocation guides us as we manage this tension.
Looking
forward
We aim to integrate and embed ESG further within Exxaro and progress our industry-leading ESG performance towards
delivering sustainable impact at scale. Skills development remains an important aspect to improve our B-BBEE
performance. ECD in our communities will be a new focus area to ensure improved school readiness of young children.
54
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Building
resilience
through
governance
Good governance is essential
to our ability to create value.
By prioritising transparency,
accountability and integrity,
we develop strategies that
generate and preserve value
while safeguarding from value
erosion. This proactive stance
aims to ensure that every
decision is a step towards
reinforcing stakeholder trust
and powering a more
sustainable future.
56 Our leadership
61 Summarised governance report
81 Combined assurance for effective
governance
Exxaro Resources Limited Integrated report 2023
55
Our leadership
The board provides effective ethical leadership and strategic direction while
balancing the company’s interests as a responsible corporate citizen with
stakeholders’ legitimate needs and expectations, within a framework of
principled governance. For the year in review, we are proud to present the
following board members:
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Chairperson
Member
Board
Nomination committee
Audit committee
RBR committee
Audit committee
RBR committee
Investment committee
Remuneration committee
Investment committee
Remuneration committee
Logistics committee
SERC
Logistics committee
Social, ethics and responsibility
committee (SERC)
Nomination committee
1. Mvuleni Geoffrey
Qhena (58)
Board chairperson and independent
non-executive director
2. Dr Nombasa
Tsengwa (59)
CEO and executive committee
chairperson
3. Riaan Koppeschaar
(53)
Finance director
Executive director since July 2016
4. Geraldine Fraser-
Moleketi (63)
Lead independent non-executive
director
5. Karin Ireton (68)
Independent non-executive
director
Director since 7 February 2022
Director since 19 April 2021 and
board chairperson since 27 May
2021
Executive director since 16 March
2021
Director since 18 May 2018
11. Chanda Nxumalo
(40)
Independent non-executive
director
Director since 1 February 2021
12. Peet Snyders (63)
Independent non-executive
director
Director since 1 July 2016
13. Isaac Malevu (50)
Non-executive director
Director since 22 June 2021
14. Likhapha Mbatha
(69)
Non-executive director
15. Mandlesilo
Msimang (47)
Non-executive director
Director since 6 March 2018
Director since 15 March 2021
6. Ben Magara (56)
Independent non-executive
director
7. Billy Mawasha (45)
Independent non-executive
director
Director since 7 February 2022
Director since 7 February 2022
8. Nondumiso
Medupe (53)
Independent non-executive
director
9. Dr Phumla
Mnganga (55)
Independent non-executive
director
10. Nosipho Molope
(59)
Independent non-executive
director
Director since 3 January 2023
Director since 7 February 2022
Appointed 3 January 2024
16. Zwelibanzi
Mntambo (66)
Non-executive director
Director since 28 November 2006
Board nominees for the upcoming 23rd AGM
In accordance with the company’s memorandum of incorporation (MoI), one-third of the non-executive
directors are subject to retirement by rotation and re-election by shareholders annually. Eligible directors
may offer themselves for re-election.
Furthermore, in accordance with our MoI, Likhapha Mbatha, who has reached the director retirement age, will
retire by rotation at the 23rd AGM to be held on 23 May 2024.
As per our board charter and director nomination and appointment policy, the nomination committee has
reviewed the composition, gender and racial balance of the board and evaluated the independence (where
applicable), performance and contribution of the directors listed below, as well as their individual knowledge,
skills and experience. The board will propose to shareholders the following directors for election and re-
election at the upcoming AGM:
Re-election
Mvuleni Geoffrey
Qhena
Independent non-executive director and chairperson
of the board
Mandlesilo
Msimang
Non-executive director
Election
Nosipho Molope
Independent non-executive director
Appointed
19 April 2021
15 March 2021
Appointed
3 January 2024
The ESG report includes details on the board’s composition, diversity and experience (page 134).
56
Exxaro Resources Limited Integrated report 2023
Exxaro Resources Limited Integrated report 2023
57
Our leadership continued
Independence (%)
Racial diversity (%)
l Independent l Non-executive directors l Executive directors
l African l Coloured l White
Gender diversity (%)
Racial diversity year on year (%)
l Women l Men
Gender diversity year on year (%)
l African l White
Age diversity: Number of directors (16)
l 2021 l 2022 l 2023
Average age per year
Non-executive director tenure
58
Exxaro Resources Limited Integrated report 2023
396147535644FemaleMale5954555620202021202220237882812218192021202220230475030 to 39 years40 to 49 years50 to 5960 to 69 years70 years and older552110 to 2 years3 to 4 years5 to 6 years7 to 9 years>9 years622513564475619 Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Our executive team
We have conviction in Exxaro’s Sustainable Growth and Impact strategy.
We are on the right path and focus is critical.
The ESG report includes details on our executive committee (page 139).
Dr Nombasa Tsengwa (59)
CEO
Executive director
Energy
Executive committee
Riaan Koppeschaar (53)
Finance director
Kgabi Masia (48)
Chief coal operations officer
Leon Groenewald (57)
Managing director: energy
Mongezi Veti (60)
Chief sustainable impact
officer
Johan Meyer (55)
Chief technology officer
Andiswa Ndoni (56)
Group company secretary
(ex officio)
Chief strategic resilience and
governance officer
Joseph Rock (54)
Chief people and
performance officer
Richard Lilleike (51)
Chief growth officer
Exxaro Resources Limited Integrated report 2023
59
Our leadership continued
Executive age diversity (an average age of 55)
Executive gender diversity (%)
Executive race diversity (%)
l Female l Male
Executive tenure at Exxaro
l African l White
60
Exxaro Resources Limited Integrated report 2023
56442278017130 to 39 years40 to 49 years50 to 59 years60 to 63 years4320 to 10 years11 to 20 years21 to 30 years Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Summarised governance report
The Exxaro board applies good corporate governance to ensure an ethical
culture, safeguard human rights, and support sustainable growth while
transitioning to a low-carbon world.
Exxaro’s board is the focal point and custodian of good corporate governance for the group. The board assumes ultimate accountability and
responsibility for the group’s performance and affairs. In so doing, it effectively represents and promotes the group’s legitimate interests. As
a responsible corporate citizen, Exxaro considers its material stakeholders’ legitimate interests and expectations to ensure it contributes
positively to society and the environment.
Exxaro’s corporate governance is underpinned by 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 through its own ethical and effective leadership.
King IV promotes good governance, transparency in leadership and decision making, and a focus on sustainability. Sustainable development
is an ethical and economic imperative. It entails economic and social growth to meet present needs without compromising the ability to fulfil
the needs of future generations. Sustainable development is a fitting response to organisations being an integral part of society, their status
as corporate citizens and meeting stakeholders’ needs, interests and expectations. Exxaro expresses its commitment to sustainable
development through its Sustainable Growth and Impact strategy.
In line with King IV’s recommendation to apply and explain how Exxaro practices good governance, we include our detailed King IV
application register in the databook, which sets out each principle with an explanation of steps taken, policies and processes. Our
corporate governance reporting is similarly structured under the four desired King IV governance outcomes of:
Ethical
culture
Performance and
value creation
Adequate and
effective control
Trust, good
reputation
and legitimacy
Material themes in focus
The following material themes received focused attention in 2023:
Adapting to a changing context
Responsible environmental stewardship
Building sustainable communities
Helping our people thrive
Executing our strategy
Driving business resilience
Principled governance
Exxaro Resources Limited Integrated report 2023
61
Board key matters in focus
Transitioning strategic direction
As sustained value creation is founded on good governance and
responsiveness to significant social and environmental challenges,
we continuously monitor and assess our strategy and formally
present to the board for approval at least once a year.
The board considered progress, timing and scenario considerations
related to the execution of the Sustainable Growth and Impact
strategy. The board also approved the consolidated ESG framework
as a lens through which to view the Sustainable Growth and
Impact strategy.
As part of the strategy development and review process, we
conduct a risk and opportunity assessment, including emerging
risks and material sustainability issues. Our top five risks for 2023
and the key events we anticipate may impact on our ability to
achieve our strategic imperatives for 2024:
2023 top risks
2024 key events
Unavailability of rail capacity
Unavailability of rail capacity
Key dependency on Eskom as a
key customer
Not achieving growth
objectives
Cybersecurity attack impacting
business
Fatal risk incidents
Fatal risk incidents
Cybersecurity attack impacting
business
Not achieving growth
objectives
Country risk
Coal mine dust class action
On 23 November 2023, coal mine dust class action litigation was
launched against Exxaro. The action relates to mineworkers who
contracted coal mine dust lung disease in the form of
pneumoconiosis caused by exposure to coal mine dust at various
Exxaro mines, as well as dependants of those mineworkers who
have died and whose deaths were probably attributable to coal
mine dust disease.
Exxaro takes its health and safety obligations seriously and is
investigating the facts pertaining to the class action. Our
management team continuously works on addressing risks and
ensuring preventive measures are properly implemented to
address the potential of any novice occupational health diseases
at Exxaro.
Managing rail risk
In response to Exxaro’s top risks for the past two years and the
possible impact on our sustainable growth, the board established a
non-remunerative ad hoc board logistics committee early in 2023
to monitor and report to the board on:
• The development of long-term solutions for logistics access to
international markets
• The identification of medium-term solutions and alternatives and
related matters
Based on the longer-term nature of logistical challenges within the
industry and, on recommendation from the nomination committee,
the board approved this committee as a standing board committee.
Members
Categorisation
Zwelibanzi Mntambo
Ben Magara
Committee chairperson, non-executive
director
Independent non-executive director
Dr Phumla Mnganga
Independent non-executive director
Mvuleni Geoffrey Qhena Independent non-executive director
Peet Snyders
Independent non-executive director
Climate change response
We believe our greatest opportunity is to help steer South Africa
towards a sustainable future by focusing on low-carbon minerals
and energy with the goal to be carbon neutral by 2050. The board
goes beyond compliance and responds to climate change through
its commitment to mitigating the impact of climate change with a
robust Sustainable Growth and Impact strategy.
The board oversees climate-related impacts, risks and
opportunities. These are mainly included in the SERC and RBR
committee terms of reference and annual work plans.
Climate change adaptation and resilience (page 111)
Climate Change Response strategy report (investor tab
under integrated reports 2020)
ESG governance
Exxaro works to integrate and embed ESG into the organisation
beyond mere compliance using a tiered governance structure and
lens through which to view the Sustainable Growth and Impact
strategy. The board sets the ultimate direction for sustainability
considerations, including committee and individual responsibilities
for overseeing 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 therefore sets our strategy and sustainable growth
performance targets which include ESG matters, while our
executive team manages and monitors ESG risk and impact,
supported by management and various management committees.
Our management ESG steering committee supports the executive
team in ensuring the integration of decarbonisation and other
critical ESG factors.
In addition to Exxaro’s ESG commitments and climate change
position statement, the ESG steering committee is responsible for
developing and reviewing an ESG framework policy for approval by
the board. Other policies supporting our ESG focus are referenced
throughout this report. In addition to policies and to highlight the
importance of ESG in everything we do, all reports submitted to our
board, its committees and executive committee require
management to reflect on strategy and financial implications and
provide directors with a risk analysis of major risks applicable to the
matter and its ESG implications.
For more on our tiered ESG governance structure reflecting
management roles and responsibilities, see our ESG report
(pages 117 to 119) for the distribution of ESG matters among
our board committees.
62
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Governance roadshow 2023
We held an annual governance roadshow for our domestic equity
shareholders from 4 to 6 September 2023. A series of nine-hour-
long meetings was held with shareholders. Key issues included our
strategy and capital allocation; our response to the proposed
resolution on climate change lobbying; and clarification of
remuneration structures and practices. The board is committed
to keeping shareholders informed on our progress in
addressing these.
Board diversity and independence
In terms of our directors’ nomination and appointment policy and
King IV, we annually review the structure, size and composition
(including the skills, knowledge and experience) of the board and
board committees. The following directors were appointed:
Independent non-executive directors
Appointed
Nondumiso Medupe
Nosipho Molope
3 January 2023
3 January 2024
Changes to the board:
• Vuyisa Nkonyeni and Isaac Mophatlane, both independent non-
executive directors, retired at the 2023 AGM. Vuyisa retired as
chairperson of the audit committee and member of the
investment committee. Isaac retired as chairperson of the
investment committee and member of the audit committee and
SERC. The board extended its gratitude for their valuable
contributions
• Nondumiso Medupe’s appointment as independent non-
executive director and audit committee member (effective
3 January 2023) was approved by shareholders at the
2023 AGM
• Nosipho Molope was appointed as an independent non-executive
director to the company and member of the audit committee and
SERC effective 3 January 2024. Nosipho’s appointment will be
submitted for shareholder approval at the 2024 AGM
• Likhapha Mbatha, who has reached the director retirement age,
will retire by rotation at the 23rd AGM to be held on
23 May 2024
Board composition, diversity and experience (ESG report,
page 134)
Innovation@Exxaro
Underpinning Exxaro’s strategic objectives is our drive to enhance
our business resilience through safe production, delivering financial
results, effective capital allocation, compliance excellence,
entrenching innovation and capitalising on digitalisation. Innovation
and digitalisation are part of Exxaro’s culture in driving business
resilience and helping our people thrive.
The following digital enablers are highlighted:
• Through our Digital@Exxaro strategy, we enabled value-driven
intelligent integration of our value chain to deliver near real-time
optimisation of our operations and implemented several
initiatives
• To foster innovation and meet the varying needs of end-users,
we adopted a systems approach and identified priority areas to
develop a range of optimised energy solutions and drive energy
innovation
• Exxaro applies a cloud-based digital sourcing solution that allows
suppliers to access the solution to receive and respond to
tenders, requests for quotes or purchase orders; create and
submit invoices and timesheets; and generally receive contracts
for electronic signature
• Annual declaration of conflicts of interest are done by directors
and employees electronically, which has been expanded to
include consultants and contractors
• We execute our purpose of powering better lives through our
learning management platforms, which include MyNexxt and a
community development platform, Powering Knowledge
We continue increasing our competencies across mining and
energy. Through our growing competence in innovation, we have
built multiple products and capabilities across our business that
position us to meet our energy business targets.
Driving innovation and information management (page 95)
Adapting to a changing context
We assessed the increased probability of sanctions against South
Africa and the impact on the financial stability of the country,
exacerbated by existing risks such as grey listing and higher
interest rates, among others. This matter received focused
attention during our second annual board governance session, with
the theme of “adapting to a changing context: South Africa macro-
security and grey listing”. These risks are continuously monitored
after being analysed to determine their impact on Exxaro and were
presented to the RBR committee and the board.
Focused governance sessions
The board conducts two annual, fixed, governance-related
intervention sessions, 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.
Board governance session themes for 2023
April
October
Responsible environmental stewardship: Directors’ ESG oversight role
Adapting to a changing context: South Africa macro-security and grey listing
Exxaro Resources Limited Integrated report 2023
63
Board key matters in focus continued
Governance in action
The below outlines the board’s quarterly progress in addressing our material themes to achieve our governance outcomes:
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Material themes
• First quarterly meeting
• 2022 financial results
presentation
• Second quarterly meeting
• Annual strategy sessions with
executive and management
• First governance session
focusing on responsible
environmental stewardship
• Visit to Cennergi windfarms
• 2023 sustainability summit
• Finance director’s pre-close
briefing
• Hybrid AGM held
• Stakeholder engagement days
• Third quarterly meeting
• 2023 interim financial results
presentation
• Second annual governance
session focusing on adapting to
a changing context
• Annual governance roadshow
• Fourth quarterly meeting
Safety moment and reporting
Safety moment and reporting
• Safety moment and reporting
• Safety indabas at all coal
• Safety moment and reporting
• Safety indabas at our two
operations and mines in closure
Cennergi windfarms
Annual conflict of interest
declaration and assessment by
directors, prescribed officers,
employees and contractors
Obtained AGM shareholder
approval through the non-binding
advisory vote on the remuneration
policy and its implementation
Approved the terms of reference
for the logistics committee
• Conducted annual board
assessments
• Approved the group year-end
financial results and IFRS
announcement
• Considered the going concern
assessment and approved the
solvency and liquidity assessment
for distribution to shareholders
Considered an energy blackout
crisis management plan and
guidelines in the unlikely event of a
total grid collapse, which includes
procedures for emergency
evacuation
• Considered the going concern
assessment and approved the
solvency and liquidity
assessment for distribution to
shareholders
• Approved the group interim
financial results, IFRS
announcement and interim
dividend declaration
• Revised board committee
membership, terms of
reference and charter
Approved the:
• Consolidated annual group
budget
• Treasury risk management and
hedging policy
• Revised insider dealing policy
• Policy for engagement of
external auditors to perform
assurance and other services
Approved the integrated suite of
documents for publication, including
the King IV report and JSE
compliance certificate
Requested that the unwind of the
2017 replacement transformation
transaction be included as a
standing agenda item
Approved the revised business rules
policy
Approved a revised workplace
harassment policy
Approved the:
•
• Strategic performance
Integrated ESG framework
management dashboard
• Amendment of the group
governance framework
Noted:
• An increase in B-BBEE
compliance to level 2
• Progress on roll out of DEI
strategy
• Employment Equity Amendment
Act, 2022 (Act 4 of 2022) and
approach to alignment
Approved the transaction
agreements in respect of the LSP at
Grootegeluk Coal Mine as cost
saving and scope 2 emission
reduction between two wholly owned
subsidiaries
• Approved the Sustainable
Growth and Impact strategy,
detailing implementing minerals
succession planning, education
and supplier development as
initial focus areas
• Considered progress and
approved strategic flexing of
boundary conditions and
investment criteria
Noted changes to the Companies Act Noted the change to the JSE
Listings Requirements on auditor
accreditation model
Appointed chief growth officer,
Richard Lilleike
Appointed:
•
Independent non-executive
director, Nosipho Molope
• New managing director of energy,
Leon Groenewald
Noted progress on the integration
of the group social impact
structures
• Considered the coal mine dust
class action litigation launched
against Exxaro
• Noted an environmental
incident, and a comprehensive
mitigation plan is being
executed
Approved the integrated report
material matters following a
double materiality test
Noted continued focus by the RBR
committee on information
technology (IT) security, risk and
governance
Noted:
•
Implementation of the mineral
succession strategy on Exxaro-
owned properties
• Results of 2023 culture and
engagement survey, part of
Exxaro’s DEI journey
• Approved the revised supply
chain management
sustainability policy
• Noted the wage gap statement
of intent, approved by the
remuneration committee
• Noted progress on various
acquisition and investment
opportunities
• Placed the COP27 roundtable
discussions on loss and damage
on the agenda for the next
governance session in 2024
Noted:
• Progress on various acquisition
and investment opportunities
• Progress in finalising an ESG
framework policy and related
stakeholder engagements
Approved an updated POPIA
policy and PAIA manual
Considered the proposed changes
to the Companies Act
Appointed:
• Chief strategic resilience and
governance officer, Andiswa
Ndoni
• Chief people and performance
officer, Joseph Rock
Approved the organisational
effectiveness programme and
structure
64
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
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.
Governance of ethics
Our board is committed to effective ethical leadership and
establishing an ethical culture. Flowing from this commitment, the
board adopted a number of codes, policies and practices outlining
the group’s ethics and values to which employees and suppliers are
required to adhere.
To support the board, the SERC is responsible for overseeing the
group’s ethical performance, and it therefore oversees ethics
management. Membership of the SERC was reviewed in 2023, with
new members – including the CEO and finance director – appointed
at the 2023 AGM.
A management ethics committee exists to ensure that high ethical
standards are maintained in Exxaro’s business conduct. The
committee is responsible for evaluating all instances of fraud,
extortion, bribery, corruption, possible conflicts of interest,
violations of the code of ethics or any other ethics-related matters.
It also oversees the continuous anti-fraud and anti-bribery
initiatives associated with a robust programme in terms of both
local and international laws and regulations.
Guided by our ethics strategy and management plan, the ethics
officer is responsible for embedding an ethical culture and ensuring
that integrity is maintained within the group.
................................................................................….......
Code of ethics
The following fundamental values are expressed in the code of
ethics:
Empowered to grow and contribute
Teamwork
Committed to excellence
Honest responsibility
Monitoring ethical culture
The board monitors the group’s ethical culture through its
reporting structures, including two board committees (SERC and
audit committee), the management ethics committee, the internal
audit function, head internal audit and our ethics officer.
A culture and engagement survey launched in January 2023 was
designed to measure employees’ perceptions and engagement
against the following categories:
• Exxaro’s Leadership Way principles
• DEI
• Exxaro’s culture themes
Independent consultants were appointed to manage the survey
roll-out and results consolidation. While none of the dimensions
scored below the critical weakness cut-off point, the following
areas of concern were identified:
• Disability and inclusion
• Employee engagement
• Career development, training and advancement
Positive findings of the survey included employees’ pride in working
at Exxaro, DEI, strong buy-in on Exxaro’s values and vision, and
gender issues. On request from the SERC, management will
develop an action plan based on the survey, which will be done in
2024.
................................................................................….......
Global ethics benchmark
As part of ethics management, Exxaro conducted a benchmark on
business ethics trends globally. Exxaro is trending positively
against the five major global trends listed in the Ethics &
Compliance Initiative’s Global Business Ethics Survey® 2023
report, with only one finding (fear of retaliation/psychological
safety) featuring in the Exxaro culture and engagement survey of
2023. This was reported to the SERC with the recommendations
outlined in the survey report. These will be incorporated to enhance
our ethics management programme for 2024.
................................................................................….......
Ethics awareness
To embed an ethical culture, we adopted the theme “Mining with
Morals”, which focused on:
• Clarifying ethical standards
• Promoting ethical decision making
• Raising awareness and understanding of consequences
• Encouraging reporting without fear
• Building a culture of integrity
In our internal group-wide communication, we reminded employees
to be guided by business ethics and the Exxaro family code of
conduct. Exxaro expressed our commitment to fighting fraud,
corruption, theft and unethical behaviour and acting without fear or
favour. By purposefully building ethical guidelines within
our business, we are keeping our employees' and stakeholders’
best interests in mind while maintaining a positive influence on
those we impact through our processes.
Exxaro Resources Limited Integrated report 2023
65
Ethical culture continued
Organisation for Economic Co-operation and
Development’s recommendations on 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 management ethics
committee composition; a process for tabling forensic reports;
monitoring BU investigations; and updating escalation protocols.
All the recommendations were 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.
................................................................................….......
Fraud and ethics hotline
We encourage employees and stakeholders to report
suspected fraud or corruption to Exxaro’s fraud and ethics
hotline (contact us tab).
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
protect the interests of the disclosing parties as far as reasonably
possible.
................................................................................….......
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.
Directors, prescribed officers and employees (and their related
parties) are obliged to actively avoid any conflict with Exxaro’s best
interest.
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.
We implemented and reviewed an electronic platform to facilitate
reporting, workflow approvals and an auditable communication trail
for disclosures by directors and employees, including a gifts and
benefits register, director trade clearances and policy management.
Conflicts of interest policy and register (reflecting material
disclosures in line with the JSE Debt Listings Requirements)
(our business tab under governance)
Supplier ethics
• We developed the supplier code of conduct to assist employees
in selecting suppliers who operate in a manner consistent with
our values and relevant standards. The code aims to
communicate our mandatory selection standards to prospective
suppliers and promotes a commitment to ethical conduct among
our suppliers
66
Exxaro Resources Limited Integrated report 2023
• As part of the supply chain pre-qualification process, suppliers
must disclose details of shareholders, directors and other
associates who are current or former 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
Supply chain sustainability (ESG report, page 105)
................................................................................….......
Anti-bribery and anti-corruption
The board has expressed a zero-tolerance stance towards bribery
and corruption and approved the group-wide anti-bribery and anti-
corruption policy. To support the board, the SERC is responsible for
overseeing the group’s ethical performance, which includes
detection and response to fraud and corruption. The RBR and audit
committees oversee risks, including controls and fraud risks.
................................................................................….......
Supplier conduct
To improve a broader operating environment and culture to combat
corruption, our standard operational and capital-related
expenditure terms and conditions with suppliers contain specific
provisions around sanctions, corrupt practices, fraud and
prohibited practices in respect of local and international legislation,
including the UN and European Union, which terms are considered
material to the relevant agreement.
Guided by the code of ethics and supplier code of conduct, we
evaluated our business relationships with various suppliers in light
of findings and recommendations contained in the state capture
report. The outcome of this evaluation was reported to the
management ethics committee, group executive committee and
SERC. Guidelines were developed as a framework to deal with
implicated companies doing business with Exxaro. The framework
will also be used in instances where suppliers and service providers
are mentioned adversely in the media or where it comes to Exxaro’s
attention that the company is under investigation or involved in any
dealings (actual or alleged) that could put Exxaro into disrepute.
................................................................................….......
Political contributions
Exxaro agrees that a clear policy on political funding provides for
certainty and consistency and reduces the suspicion that
companies are funding parties for their own interest. It is
acknowledged that the primary purpose of political donations is to
strengthen and consolidate democracy by ensuring that political
parties can function effectively within a multi-party democracy.
The group has a board-approved political donation policy in line
with national legislation, guiding all political donations and
contributions. The board requested that donations rather be
directed to the Independent Electoral Commission in support of
democratic stability. The update to the policy will be submitted to
the SERC for consideration and recommendation to the board for
final approval in 2024.
................................................................................….......
Monetary loss from unethical behaviour
The board is satisfied that the group has not suffered any monetary
loss as a result of legal proceedings (including fines) associated
with fraud, insider trading, anti-trust, anticompetitive behaviour,
market manipulation, malpractice or violations of other related
industry laws or regulations.
Respecting and upholding human rights (page 105)
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Performance and value creation
For more on our performance see:
Performance against our strategy and outlook (page 50)
Delivering measurable results and impact (ESG report,
page 19)
................................................................................….......
Performance targets to support our Climate
Change Response strategy
To strengthen greenhouse gas (GHG) mitigation and business
resilience efforts, we included targets on water security and
efficiency, and energy efficiency in the group’s short-term incentive
(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 recommendations.
................................................................................….......
Strategy-aligned internal reporting
Internal reporting to the board requires management 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 Exxaro enable
stakeholders to make informed assessments of our performance,
and short, medium and long-term prospects.
................................................................................….......
Good governance to achieve strategic objectives
See page 124 of our ESG report on how we apply good
corporate governance to support the achievement of our
strategic objectives and how the SDGs are supported
through specific steps taken in 2023.
Strategic direction
King IV articulates the board’s responsibilities of steering an
organisation strategically, in line with its core purpose and values,
by approving and monitoring an informed short, medium and long-
term strategy while considering sustainability-related impacts,
risks and opportunities.
As sustained value creation is founded on good governance and
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 presents the strategy to the board, iterative
workshops, following a bottom-up process, and board governance
sessions are held. During our annual strategy review process,
management also demonstrates how sustainability and ESG
objectives are integrated into the Sustainable Growth and Impact
strategy, including status and progress in our context. The board
therefore supports the King IV principles with regard to strategy
setting and follows an iterative process. As part of the strategy
process, a risk and opportunity assessment is conducted, which
includes emerging risks and an assessment of material
sustainability issues.
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, and a group governance
framework.
The board reviewed an integrated medium to long-term
decarbonisation roadmap to achieve carbon neutrality by 2050.
The roadmap, which is at an advanced stage, outlines strategic
considerations and actions to increase our decarbonisation
performance.
................................................................................….......
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 various
business continuity governance documents and policies. This
process sought to align BUs with the board-approved business
continuity plan template, which aligns with ISO 22301:2019 and
British Standards Institution 11200:2014.
................................................................................….......
Performance evaluation
KPIs track the execution of our strategy for the board, board
committees, and group and energy executive committees. We use a
strategic performance dashboard that reports on the achievement
of these KPIs. The dashboard was reviewed in 2022 and its
reporting philosophy revised.
We developed a reimagined strategic performance dashboard to
oversee strategy execution and facilitate strategic conversations at
the right time within a tiered group governance structure. It aligns
prioritised KPIs with the Sustainable Growth and Impact strategy to
provide forward-looking insights, and support strategic discussions
and resource allocation.
Exxaro Resources Limited Integrated report 2023
67
Adequate and effective control
Governance framework
The framework provides an overview of our governance principles,
structures, policies and practices and the integration of the
minerals and energy strategies and budgets. It 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, and this is captured in the
delegation of authority framework.
The group governance framework was reviewed in 2023 to enable
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. The revision included new
board and management committees.
................................................................................….......
Board charter and code of conduct
The charter and code of conduct regulate the parameters in which
the board operates and ensure good corporate governance
principles are applied in all dealings in respect and on behalf of the
company and group. The charter sets out the roles and
responsibilities of the board, individual directors, chairperson, CEO,
lead independent non-executive director and group company
secretary.
The charter and nomination and appointment policy require 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 identifying,
mentoring and developing future candidates. The nomination
committee is also responsible for conducting independent
background checks on all proposed candidates prior to
recommending their appointment to the board.
The charter was reviewed in 2023 to align with new executive
designations and the nomination and logistics committees.
................................................................................….......
Board’s access to information
The board charter guides directors and executive 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 they believe that the information provided is
insufficient for informed decision making.
The board has unrestricted access to all company employees,
information, records, documents and property, and a process to
guide directors is provided should they require access. The board,
in carrying out its tasks, may obtain outside or other independent
professional advice it considers necessary to execute its duties.
The board charter sets out the required protocols for requests of
this nature.
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.
The board is satisfied that the delegations in place contribute to
role clarity and the effective exercise of authority and
responsibilities.
................................................................................….......
Board committees
Our corporate governance structure supports our ability to create
value in the short, medium and long term. Through this structure,
the board exercises effective control, and builds and protects the
organisation’s reputation and legitimacy. We consider good
corporate governance the responsibility of our board, executive
leadership, management and all our employees.
Board committees enhance efficiency by providing focused
expertise on specific areas, allowing the board to address a broader
range of issues. When used effectively, committees also enhance
the objectivity of the board’s judgement. As such, to facilitate the
execution of its functions, the board delegates activities to its
committees through formal terms of reference.
The board retains full and effective control of 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 response to the business risk resulting from unavailability of rail
capacity in executing the Exxaro strategy, the board established an
ad hoc board logistics committee early in 2023. The logistics
committee is responsible for monitoring and reporting to the board
on the development of long-term solutions for logistics access to
international markets, identification of medium-term solutions and
alternatives, and related matters. The board, based on the longer-
term nature of logistical challenges in the industry, and as
recommended by the nomination committee, approved the logistics
committee becoming a standing board committee.
The board committees’ terms of reference were reviewed in 2023,
including key focus areas and annual work plans.
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 paragraph 3.84(g) of the JSE Listings
Requirements.
68
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Subsidiary companies
The board, on behalf of the company, recognises the statutory and
fiduciary duties of subsidiary companies’ directors and particularly
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 a director’s duties in a subsidiary
company and the interests of the company, as holding company,
the director’s duties in the subsidiary company must prevail.
The group governance framework seeks to mitigate possible
tension between the holding company and its subsidiary boards.
The subsidiary directors must 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 all our subsidiary directors.
Ownership structure (page 11)
................................................................................….......
Group-wide control functions
The group control and oversight functions are responsible for
providing enterprise-wide oversight of operational management
and integrated reporting. The heads of these functions have direct
access to the board, audit committee and RBR committee, as
appropriate.
Our group control and oversight functions consist of:
• Corporate secretariat
• Risk management
• Compliance management
• Legal
• Strategy
• Internal audit and assurance
• Finance (as it relates to financial compliance)
The board is responsible for overseeing the effectiveness of the
oversight functions and ensuring an effective internal control
environment within the group.
................................................................................….......
Integrated ERM
Our ERM framework provides a process for effective risk
management. We follow a layered approach (top-down and bottom-
up) that considers all risks and impacts. The same terminology and
assessment mechanisms are used across the organisation. Our risk
catalogue includes a set of risk names, and an impact and likelihood
scale is used across different disciplines to ensure management
concentrates efforts and resources on material activities.
We link 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 for
audit findings to be closed out.
The risk management function, through the combined assurance
model, coordinates with the internal audit function to obtain
evidence on the effectiveness of treatment and control activities in
achieving the desired or planned risk treatment outcomes.
Assurance providers (internal audit, sustainability KPI audits,
external assurance providers, self-assessments and accreditation
reviews) monitor the effectiveness of significant risk treatments
and compliance with regulatory requirements, non-binding rules,
codes and standards, as well as policies and procedures.
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 group and company have a mature risk process that
ensures the risks that potentially impact Exxaro’s strategic
objectives are pursued by management to create shareholder
value.
In terms of our governance framework, risk management is an
independent control function across the group. The strategic risk
profile, highlighting the group’s material risks (including Cennergi’s
top risks) and emerging risks, is reported quarterly to the RBR
committee and board.
To test the robustness of our strategic risk profile, a study was
conducted in 2023 to compare the risk register to top risks
disclosed by mining industry peers. Our strategic risk profile was
found to be robust and reflects relevant risks that apply to our peers.
Our risks and opportunities (page 28)
................................................................................….......
Technology and information management
The board governs technology and information management in a
way that supports Exxaro in setting and achieving our strategic
objectives.
The board mandated the RBR committee, as part of its business
resilience focus, to oversee Exxaro’s ERM process, including key
risks facing the group and responses to address these risks,
including information management risks. The RBR committee is
mandated to oversee information management strategy
governance; integration of the improvement programme’s overall
direction, context and objective; and ensure alignment with the
enterprise business strategy, governance and risk management.
In addition to the RBR committee, the audit committee is
responsible for ensuring adequate information management
governance.
Governance plays a pivotal role in ensuring that our technological
infrastructure and processes align with organisational objectives
while also adhering to industry benchmarks. We strategically
aligned the information management governance framework with
recognised industry standards, including ISO 27001, COBIT 2019,
ITIL 4, ISO 31000 and ISO 27031, among others. This alignment
supports our commitment to best practice and ensures robust
oversight of our IT operations.
To further enhance decision making, oversight and strategic
direction, we instituted several management governance forums:
the project review committee, architectural review board,
investment review board, change advisory board, and information
management committee.
Our foundational policies support these structures by guiding
behaviour, expectations and operations. These include the
acceptable use of information and communications technology,
security, operations, project management, asset management and
the information and communications technology service continuity
policies. Together, this forms a cohesive governance structure that
promotes transparency, efficiency and innovation in our IT domain.
Exxaro Resources Limited Integrated report 2023
69
Adequate and effective control continued
Information management risk management
Information management risks and mitigation measures are
monitored continuously (including assessment of emerging risks)
and reported to the RBR committee quarterly.
These are our top information management risks over the past two
years:
2022
2023
Cybersecurity: data theft
Cybersecurity: data theft
Availability and quality of
data
Cyber threat: malware
IT disaster recovery
strategy, plan and
procedures
Cyber threat: disruption of
operations
There is also an emerging risk of impending enterprise resource
planning transformation due to end-maintenance support. We
monitor treatment plans for the risks to determine adequacy.
................................................................................….......
Information management disaster recovery
To ensure our disaster recovery programme is robust and resilient,
we strategically aligned it with the ISO 27031 guidelines by
embedding the plan-do-check-act cycle, a systematic series of
steps for continuous improvement of our disaster recovery
capabilities.
................................................................................….......
Beyond compliance
The group is committed to:
The board is responsible for ensuring that the group and our
employees comply with all applicable laws and regulations, and it
considers non-compliance with legal and regulatory requirements a
key risk. Accordingly, the board delegated the responsibility for
managing Exxaro’s compliance risks to the RBR committee.
The chief strategic resilience and governance officer is responsible
for providing a compliance and regulatory compass to the group by
promoting a culture of compliance.
Key compliance activities for 2023 included:
• Reviewing our regulatory compliance risk ratings and audit
review cycles
• Rolling out competition law training for the whole organisation
• Updating the POPIA policy and PAIA manual and providing
additional POPIA training
• Annual environmental authorisation and other licence audits at
our operations
Material compliance universe (ESG report, page 129)
................................................................................….......
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
Maintaining high standards of integrity, professionalism
and ethical behaviour in its relationships
Ensuring integrity of information used for decision making
by management, the board and its committees
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.
Our compliance philosophy is captured in a compliance policy
approved by the board, 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.
Management regularly revisits the group’s regulatory environment
to identify material legislation and categorises each using a risk-
based approach.
Supporting the integrity of external reports
Combined assurance forum
The combined assurance model was put in place through the
effective functioning of the combined assurance forum. The forum
coordinates assurance for our risk exposure, as identified and
ranked by the risk management function and aligned to King IV
recommended practices for assurance. The forum’s activities and
outcomes of assurance reports are presented quarterly to the audit
committee.
Five lines of assurance
Exxaro adopted the three lines of defence model for combined
assurance. The model aims to establish effective governance, risk
management and control practices within Exxaro.
However, with the continuous development of the concept of
combined assurance, we replaced the three lines of defence model
with the five lines of assurance. The five lines of assurance are
differentiated by the level of risk ownership and the independence
of assurance efforts or providers.
70
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Adequate and effective control continued
The five lines of assurance include:
• Line functions that own and manage risk and opportunity, such
as operational management
• Specialist functions that facilitate and oversee risk and
opportunity, such as compliance, risk, legal departments and
oversight structures
• Internal assurance providers, such as internal audit
• External assurance providers, such as independent external
• In 2021, the group adopted a framework for engaging auditors to
supply non-audit services. We confirmed that KPMG, in terms of
its policy, does not provide advisory and tax services to its audit
clients
• Our group governance framework confirms the internal audit
function as an independent control function across the group
• The internal audit charter informs the role and scope of work of
the internal audit function
auditors or other independent third-party providers
• The head of internal audit reports directly to our audit committee
• Regulators, such as the DMRE
and is administratively overseen by the CEO
................................................................................….......
Board statement
The board and audit committee are satisfied with the effectiveness
of controls for the year ended 31 December 2023. This conclusion
was reached 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.
Combined assurance for effective governance (page 81)
Combined assurance plan
The combined assurance plan focus areas are aligned to the group’s
top 10 strategic risks with inputs from assurance providers. The
plan considers the level of assurance from assurance providers in
providing the audit committee and board with confidence regarding
the effective functioning of the internal control environment.
Overdue and repeat findings
Exxaro uses an issue tracking management system to capture and
track the status of all internal audit and other assurance provider
findings. All overdue and repeat findings are reported at each audit
committee meeting.
Independence of audit and assurance functions
To ensure the independence of our audit and assurance functions,
the following measures are in place:
• We appointed KPMG as our independent external auditor, along
with its service delivery partner, AM PhakaMalele (approved by
shareholders at the AGM on 18 May 2023 by way of a separate
resolution of shareholders in terms of JSE Listings Requirements
paragraph 3.84(g))
• Under the management of Exxaro’s head of internal audit, PwC
and its service delivery partner, Ngubane & Co, have been
providing internal audit services since 1 July 2022
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Trust, good reputation and legitimacy
JSE compliance certificate
The board considered the JSE compliance certificate for the
reporting period, confirming the company’s compliance with the
JSE Listings Requirements, Debt Listings Requirements and every
disclosure requirement for continued listing on the JSE imposed in
2023. The certificate will be submitted to the JSE following board
consideration in early 2024.
................................................................................….......
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, board
committee reports, remuneration report and other online or printed
information that complies with legal requirements and meets the
legitimate and reasonable information needs of stakeholders.
................................................................................….......
No insider dealing
The company’s insider dealing policy was revised and updated in
2023. The policy complies with the JSE Listings Requirements,
Financial Markets Act and Companies Act and is aligned to the
company’s code of ethics. The policy applies to all directors,
prescribed officers, employees and consultants.
Before dealing in any Exxaro security, we require directors to
submit a pre-clearance form to the group company secretary for
consideration by the chairperson.
The insider dealing committee provides guidance and clarity to
employees and directors on insider trading or price-sensitive
information as well as prohibited or closed periods.
The group company secretary provides a group-wide
announcement of all closed and prohibited periods to assist
directors and employees in this regard. Directors and employees
have access to an electronic insider register, which reflects their
names as relevant. They receive an email informing them of their
addition to and removal from the register.
We provide ongoing online training on the MyNexxt platform to
directors, employees and consultants to ensure in-depth
understanding of the policy, regulatory environment and controls
in place.
We issue the necessary JSE Stock Exchange News Service
announcements when any director, prescribed officer, director of
major subsidiary, the group company secretary or company
secretary of a major subsidiary deals in any security.
Stock Exchange News Service announcements are available
on our website.
The board is satisfied with the controls in place to ensure
regulatory compliance.
Sponsors
The company‘s lead equity sponsor and debt sponsor, Absa Bank
Limited, and joint equity sponsor, Tamela Holdings Proprietary
Limited, perform the continuing obligations in connection with
Exxaro’s listing on the JSE. The board is satisfied that the sponsors
have executed their mandate with due care and diligence for 2023.
Outcomes and value delivered
Refer to stakeholder-inclusive approach (page 24) in our ESG
report for details.
................................................................................….......
Stakeholder inclusivity
Exxaro’s board has a stakeholder-inclusive approach that 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.
Stakeholder-inclusive approach (ESG report, page 24)
................................................................................….......
External communication
Stakeholder days
The SERC’s virtual stakeholder days during the year aimed to
communicate Exxaro’s social performance to stakeholders. These
events were also an opportunity for the SERC and board to engage
with diverse stakeholders and receive community and beneficiary
feedback on Exxaro’s social performance and impact.
A two-day stakeholder engagement event was hosted by the SERC
at Belfast, Mpumalanga, which included site visits to various Exxaro
social development projects and engagements with regional
government and municipal officials.
Other external communications
The following external communication (among others) took place
in 2023:
• Publication of the annual reporting suite (integrated report, ESG
report and climate change position statement)
• AGM notice (presentation of annual financial statements, SERC
report and various other resolutions for voting by shareholders)
• Stock Exchange News Service 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, identify possible challenges and
solutions for productivity and employment, and improve business
sustainability
• Exxaro 2023 sustainability summit
• COP28 (held in November/December 2023) where Exxaro was
given the opportunity to:
– Participate, engage and partner with different stakeholders
and play a positive role in providing solutions to manage
climate change
– Showcase our contribution to South Africa achieving its
Nationally Determined Contribution objectives and a just
transition
Exxaro’s contribution to COP28 (ESG report, page 33)
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How we
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Strategically positioning
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Building resilience
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Our
performance
Our Mineral Resources
and Mineral Reserves
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, to allow for reflection and reporting.
In addition to the SERC’s mandate, the RBR committee is
responsible for reviewing health and safety risks and focuses on
reported HPIs and lost-time injuries (LTIs).
Prioritising safety (page 98) and integrated health and
wellness (page 100)
Focus areas
Our focus areas supporting the outcome of trust, good reputation
and legitimacy in 2023 included:
• Executing the ethics strategy and management plan revision
• Executing and implementing the revised human rights policy and
starting a due diligence process
• The SERC and remuneration committee considered the results of
the 2023 culture and engagement survey as part of Exxaro’s DEI
journey
• The remuneration committee approved a wage gap statement of
intent. The statement is linked to Exxaro’s purpose and identified
wage gap principles and aligns with Exxaro’s revised
remuneration policy
• Completing the roll out of compulsory group-wide anti-bribery
and anti-corruption training on MyNexxt
• Rolling out additional group-wide POPIA training
Reputation and disclosure recognition
Delivering measurable results and impact (ESG report,
page 19)
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 include 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
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 the power to effect
investment and development. Exxaro is guided by the South African
Constitution, applicable legislation and external standards such as
the Minerals Council’s Human Rights Framework and the UNGC
principles on human rights, labour, environment and
anti-corruption.
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.
UNGC communication on progress (investors tab under
integrated reports 2021)
The board revisited, amended and approved Exxaro’s human rights
policy in 2022. Policy implementation and communication took
place and a due diligence assessment commenced towards the end
of 2023 to be completed and reported to the SERC in 2024.
Respecting and upholding human rights (ESG report,
page 108)
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Audit committee
Chairperson: Nondumiso Medupe
Members: Billy Mawasha and Chanda Nxumalo
Meetings: Six
Attendance: 93%
Changes: Vuyisa Nkonyeni (former committee chairperson) and Isaac Mophatlane (former member) retired by rotation at the
2023 AGM
Audit committee report (ESG report, page 143)
Composition as at 31 December 2023
Nondumiso Medupe
Chairperson
Billy Mawasha
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 the:
• 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
• Assessment of the adequacy of Exxaro’s insurance arrangements regarding the nature of our 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 board reviewed and approved the committee’s terms of reference, which align with legislation, regulations, King IV and the Institute of
Directors South Africa’s guidance for audit committees.
Key focus areas 2023/2024
Monitoring implementation of the strategy concerning the deployment of new post-modern enterprise resource planning solutions to
ensure acceptable cost, risk and alignment with the Exxaro strategy
Ensuring alignment of the combined assurance process, internal audit plan and external audit plan in terms of a risk-based approach
Reviewing Exxaro’s future strategy regarding insurance cover and self-insurance, taking into consideration global resistance to thermal
coal and insurance markets
Enhancing the committee composition and skills set
Monitoring and considering the impact of cybersecurity risks and use of AI in the finance and internal control environment
Managing talent challenges in the finance and internal audit functions in response to the global war for talent
Reviewing the transition from a predominantly outsourced model to a co-sourcing internal audit model, ensuring Exxaro’s transformation
objectives are 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 (paragraph 3.84(g) in particular) and King IV.
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How we
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Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Investment committee
Chairperson: Ben Magara
Meetings: Five
Members: Isaac Malevu, Billy Mawasha, Mandlesilo Msimang, Chanda Nxumalo and Peet Snyders
Attendance: 93%
Changes: Isaac Mophatlane (former committee chairperson) and Vuyisa Nkonyeni (former member) retired by rotation at the
2023 AGM. Ben Magara was appointed a member and committee chairperson
Investment committee report (ESG report, page 148)
Composition as at 31 December 2023
Ben Magara
Chairperson
Isaac Malevu
Billy Mawasha
Mandlesilo Msimang
Chanda Nxumalo
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 and post-investment reviews.
Importantly, the committee reviews the strategic fit, risk assessment and outcomes of financial, technical and legal due diligence for major
investments. It ensures adherence to all Exxaro’s governance processes and that we meet the approved hurdle rates, set from time to time,
before we commit any funds.
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.
Terms of reference
We reviewed the committee’s terms of reference in line with principle 8 of King IV, with minor amendments and rephrasing enhancements.
The board approved the revised terms of reference which align with legislation, regulations and King IV.
Conflict of interest
The committee’s mandate requires that disclosure of interest is in focus at the time of circulating information to the committee members and
before the commencement of any meeting. Any declaration or recusal by members is captured in the meeting minutes to ensure
transparency.
Key focus areas 2023/2024
Monitoring divestments and acquisitions
Reviewing and recommending for approval investment guidelines for minerals (energy review completed)
Monitoring the energy and minerals ESG KPIs and dashboard
Continuing to guide and recommend participation in proposed acquisitions that fit our long-term minerals and energy strategy
Confirmation
The committee, in carrying out its duties, has due regard to its terms of reference and the principles and recommended practices of King IV.
The committee is satisfied that it has conducted its affairs and discharged its responsibilities in accordance with its terms of reference.
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Logistics committee
Chairperson: Zwelibanzi Mntambo
Members: Ben Magara, Dr Phumla Mnganga, Mvuleni Geoffrey Qhena and Peet Snyders
Changes: None
Meetings: Four
Attendance: 90%
Logistics committee report (ESG report, page 150)
Composition as at 31 December 2023
Zwelibanzi Mntambo
Chairperson
Ben Magara
Dr Phumla
Mnganga
Mvuleni Geoffrey Qhena
Peet Snyders
Role and purpose
Early in 2023, the board established a non-remunerative ad hoc board committee to address the threat of rail capacity unavailability to
Exxaro’s strategy. The role of the logistics committee is to monitor and report on the development of long-term solutions for logistic access
to international markets, identification of medium-term solutions and alternatives and related matters.
In the second half of the year, on recommendation from the nomination committee, the board approved this committee as a standing
committee of the board.
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 mainly:
• Development of long-term solutions for logistics to access international markets for coal and minerals
• Identification of medium-term logistics solutions and alternatives to mitigate TFR issues to increase volumes
Terms of reference
The committee’s terms of reference were drafted and 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 2023/2024
Continuing with oversight of the development and review of the long-term logistics solutions to access international markets
Continuing to monitor the identification and review of medium-term logistics solutions to mitigate TFR risk and increase exports
Confirmation
The committee, in carrying out its duties, has due regard to its terms of reference and the principles and recommended practices of King IV.
The committee is satisfied that it has considered and discharged its responsibilities.
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the business for growth
Building resilience
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performance
Our Mineral Resources
and Mineral Reserves
Nomination committee
Chairperson: Mvuleni Geoffrey Qhena
Members: Geraldine Fraser-Moleketi, Dr Phumla Mnganga and Zwelibanzi Mntambo
Changes: None
Meetings: Four
Attendance: 100%
Nomination committee report (ESG report, page 152)
Composition as at 31 December 2023
Mvuleni Geoffrey Qhena
Chairperson
Geraldine
Fraser-Moleketi
Dr Phumla
Mnganga
Zwelibanzi
Mntambo
Role and purpose
In line with the JSE Listings Requirements, the committee is constituted as a committee of the board in terms of the Companies Act, the
company’s MoI and King IV. The committee is governed by its board-approved terms of reference which set out its role and responsibilities.
The main purpose of the committee includes to:
• Determine and evaluate the adequacy, efficiency and appropriateness of the group governance structure, practices and processes
• Ensure that the board’s composition and structure enable it to effectively fulfil the obligations of the board mandate
The committee’s areas of responsibility include:
• Reviewing the board composition and additional criteria
• Succession planning
• Performance evaluation
• Induction and training
• Oversight of corporate governance and statutory compliance
Terms of reference
The committee’s terms of reference were reviewed in 2023 to include a broader role as a governance committee. The amendments were
approved by the board. The terms of reference remain aligned with legislation, regulations and King IV.
Key focus areas 2023/2024
Developing the framework on future optimal board structure and size to support Exxaro’s strategy
Continue overseeing director induction and ongoing director development
Monitoring board and executive leadership succession planning
Considering 2023 board internal assessment outcomes and recommending matters for continuous improvement
Reporting on annual board governance roadshow outcomes and overseeing matters for implementation
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.
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Remuneration committee
Chairperson: Dr Phumla Mnganga
Meetings: Six
Members: Mvuleni Geoffrey Qhena, Geraldine Fraser-Moleketi and Zwelibanzi Mntambo
Attendance: 92%
Change: None
Remuneration committee report (ESG report, page 156)
Composition as at 31 December 2023
Dr Phumla Mnganga
Chairperson
Mvuleni Geoffrey
Qhena
Geraldine
Fraser-Moleketi
Zwelibanzi
Mntambo
Role and purpose
This committee’s role and responsibility is to ensure the group remunerates fairly, responsibly and transparently so as to promote the
achievement of strategic objectives and positive outcomes in the short, medium and long term. It also ensures the continuous development,
review and implementation of remuneration governance-related documents, including compliance with JSE Listings Requirements and
reporting obligations.
The committee is accountable to the board for executing its independent and objective oversight. The committee does not assume the
functions of management, which remain the responsibility of executives, prescribed officers and other members of senior management, nor
accountability for the functions performed by other board committees.
Where board committee focus areas overlap with this committee’s focus areas, committees collaborate to execute the board’s broader
effectiveness objective. For example, in support of the DEI 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 2023 and amendments were approved by the board. The terms of reference continue
to align with legislation, regulations, the company’s MoI, King IV and in accordance with the requirements of a JSE-listed company.
Key focus areas 2023/2024
Continuing our wage gap journey, tracking our pay ratios and monitoring appropriate interventions
Embedding the new STI and long-term incentive schemes in our Cennergi business
Monitoring compliance with the minimum shareholding requirement policy for all executives
Reviewing Exxaro’s long-term incentive plan rules and performance conditions
Reviewing our recognition policy and programme
Ongoing consideration and deliberation of shareholder feedback
Reviewing benefits and allowances
Confirmation
The committee is satisfied that its ongoing work aims to align remuneration with Exxaro’s values of fairness and equity. Exxaro will continue
striving towards remunerating employees in accordance with market-related salaries and equitable awards across the organisation.
The committee is 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.
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How we
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Strategically positioning
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Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Risk and business resilience committee
Chairperson: Peet Snyders
Meetings: Five
Members: Karin Ireton, Ben Magara, Nondumiso Medupe, Mandlesilo Msimang and Chanda Nxumalo
Attendance: 100%
Changes: Karin Ireton and Nondumiso Medupe were appointed members
RBR committee report (ESG report, page 159)
Composition as at 31 December 2023
Peet Snyders
Chairperson
Karin Ireton
Ben Magara
Nondumiso
Medupe
Mandlesilo
Msimang
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 implement an effective policy and plan for risk management that will enhance the group’s ability to achieve its
strategic objectives and to ensure that risk disclosure is comprehensive, timely and relevant. Risk management is the process effected by the
board, management and other personnel. It is applied in a strategy setting and across the enterprise and designed to identify potential
events that may affect the organisation, manage risks to within its risk appetite and provide reasonable assurance regarding the
achievement of the organisation’s objectives. Risk governance refers to the governance structures and mechanisms established within the
organisation where decisions are made and implemented regarding risks.
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 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 approved by the board. The terms of reference continue to be aligned with legislation,
regulations and King IV.
Key focus areas 2023/2024
Monitoring the class action served on Exxaro in November 2023 and its impacts on the group as a responsible corporate citizen, and
ensuring preventive measures regarding occupational diseases are properly implemented
Overseeing the implementation of the water management plan at all Exxaro mines, including closed mines, and any plans to mitigate these,
including an update to the ground water analysis model to include climate change impact on operations and water sources
Ensuring 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)
Reviewing Exxaro’s risk appetite
Reviewing Exxaro’s key compliance risks related to our licence to operate
Recommending appropriate predictive and proactive reporting and engagement with stakeholders (including the integrated report) based
on key risks
Overseeing the implementation of the revised governance of technology and information to ensure incorporation of technology and
information risks to enable strategy delivery and ensure business resilience
Reviewing business resilience key elements to ensure business strategy compliance
Confirmation
The committee, in carrying out its duties, has due regard to its terms of reference and the principles and recommended practices of King IV.
The committee is satisfied that it has considered and discharged its responsibilities.
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Social, ethics and responsibility committee
Chairperson: Geraldine Fraser-Moleketi
Members: Karin Ireton, Riaan Koppeschaar, Likhapha Mbatha, Dr Phumla Mnganga, Peet Snyders and
Dr Nombasa Tsengwa
Meetings: Four
Attendance: 97%
Changes: Isaac Mophatlane (former member) retired by rotation at the 2023 AGM. Dr Nombasa Tsengwa, Riaan Koppeschaar
and Dr Phumla Mnganga were appointed members
SERC report (ESG report, page 163)
Composition as at 31 December 2023
Geraldine Fraser-Moleketi
Chairperson
Karin Ireton
Riaan Koppeschaar
Likhapha Mbatha
Dr Phumla Mnganga
Peet Snyders
Dr Nombasa Tsengwa
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 public
interest and the global goal of sustainable development. The board has primarily entrusted the committee to oversee the company’s impact
on public interest and its ethical performance. It ensures compliance with Exxaro’s statutory duties and oversees that the core purpose and
values, strategy and conduct are aligned with the group’s responsible corporate citizenship.
The committee oversees the company’s ethics regarding business practices, its relationships with employees, other stakeholders and the
natural environment. It also assists the board by monitoring the group’s achievement of its shared sustainability goals and has oversight of
stakeholder management and ethics management.
As part of its responsibility mandate, the committee has oversight of how the company impacts planet, people and prosperity.
Terms of reference
The terms of reference were reviewed in 2023 and approved by the board. The terms of reference continue to be aligned with legislation,
regulations and King IV.
Key focus areas 2023/2024
Monitoring the coal mine dust class action litigation launched against Exxaro in November 2023 to ensure our conduct aligns with being a
responsible corporate citizen
Overseeing the development of the 2050 carbon neutrality roadmap to support Exxaro’s strategy to decarbonise and build resilience to the
impact of climate change
Reviewing the ongoing anti-bribery and anti-corruption programme implementation, ensuring an ethical culture and respect for human
rights, including the whistleblowing mechanisms for effectiveness
Overseeing the baseline study for the Taskforce on Nature-related Financial Disclosures framework that will assist with disclosing,
reporting and mitigating nature-related risks
Overseeing sustainability-related disclosures in line with IFRS sustainability disclosure standards
Overseeing the implementation of the proposed employment equity targets
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 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.
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business
How we
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Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Combined assurance for effective
governance
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 internal controls with comparable information for trend analysis where possible.
The board and audit committee assessed the effectiveness of controls for the year ended 31 December 2023 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
* Tier/level of assurance refers to independent external assurance.
Function assured
Assurance
provider
KPMG
KPMG
KPMG
Inlexso
Empowerdex
Ngubane
IMIU
PwC/ EY
PwC/EY
PwC/EY
Ngubane
Ngubane
Various
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
Outcome of assurance
As at 31 December 2023, there were 450 open findings, reflecting an increase of 56 open findings in the year. Of the 450 open findings,
283 (63%) 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 below:
Status of findings
Follow-up in progress
Ready for audit
Within timelines
Overdue
Total
Current period reporting
Internal audit
Other assurance
providers
Total for the
current period
62
65
70
10
207
0
218
25
0
243
62
283
95
10
450
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)
Level 2
(medium)
Level 3
(low)
Not rated
Total
1
0
1
6
0
6
3
0
3
0
0
0
10
0
10
Exxaro Resources Limited Integrated report 2023
81
Our
performance
Directed by our strategy and
guided by our values, we are
driven to meet our ambition of
providing resources critical to
ensuring a low-carbon world.
83 Finance director’s overview
90 Operational performance
92 Business resilience
96 Building momentum with people
106 Social impact
109 Our environmental stewardship
120 Responding to TCFD reporting
requirements
82
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Finance director’s overview
Despite logistical constraints, cost pressures and
lower coal pricing, our coal performance remains
strong in delivering value to stakeholders through
our early value strategy, coupled with our market
to resource optimisation initiatives. Our Cennergi
operations delivered a stable performance with
generation back to normal levels.
Riaan Koppeschaar
Finance director
Following our record performance in 2022 resulting from high commodity prices, the tougher conditions we experienced in 2023 resulted in
a 29% decrease in EBITDA to R13.4 billion. The contribution from our non-controlled operations showed a decrease in adjusted* equity-
accounted income by 4% to R7.0 billion. Adjusted equity-accounted income of SIOC increased by 26% to R6.2 billion, which was more than
offset by a weaker performance from Mafube (our 50% joint venture with Thungela). This translated into basic headline earnings per share of
R46.81 compared to R60.16 in 2022. We are pleased to have declared a final ordinary dividend to shareholders of R10.10 per share. The board
also declared a special dividend of R5.72 per share bringing the total dividend for the year to R27.25 per share.
Revenue of
R38.7 billion
down 17%
Cash generated by
operations of
R13.3 billion
down 29%
EBITDA** of
R13.4 billion
down 29%
Adjusted* equity-accounted
income of R7.0 billion
down 4%
Headline earnings of
R46.81 per share
down 22%
Final ordinary dividend
declared of R10.10 per
share down 11%
Special dividend declared
of R5.72 per share
Attributable earnings of
R46.66 per share
down 18%
* Adjusted for non-core items (headline earnings adjustments).
**EBITDA is calculated by adjusting net operating profit before tax with depreciation, amortisation, impairment charges or impairment reversals and net losses or gains on disposal of assets and
investments (including translation differences recycled to profit or loss).
Global economy and commodity prices
2023 was characterised by declining coal prices due to a decrease in high calorific value coal demand, driven by sufficient gas and coal
stocks in Europe, Japan, Korea and Taiwan. The reduction in coal demand was exacerbated by warmer than usual winter temperatures,
robust performance in renewable and nuclear energy generation, and significantly lower gas prices.
We also saw a resurgence in Indian demand compared to the 2022 financial year due to lower coal prices. There were visible changes in
global trade flows as Australia resumed supply into China from a previous trade ban, and Russian supplies to Europe and Japan reduced
drastically, with Korea adopting a gradual approach of weaning itself off Russian coal.
China and India’s economic growth and buoyant power demand were the main demand drivers for coal.
Domestically, operational challenges and equipment failures at Eskom’s power stations impacted the offtake of power station coal in the
Waterberg region. The operating environment for domestic coal end-users was challenging in the 2023 financial year due to loadshedding,
logistical challenges, slowing growth and inflationary pressures.
The benchmark API4 RBCT export price averaged US$121 per tonne (2022: US$271). The group realised an average export price of US$117
per tonne (2022: US$251). Despite this price decline, Exxaro was able to realise 97% of the average API4 index price based on our sales mix.
Export volumes decreased slightly to 5.1Mt (2022: 5.2Mt).
Exxaro Resources Limited Integrated report 2023
83
Finance director’s overview continued
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 2023 and 2022
are the same as the headline earnings adjustments.
The group performance highlights should be read in conjunction with the group (consolidated) annual financial statements as at the year
ended 31 December 2023.
Group revenue
Group revenue decreased by 17% to R38 698 million (2022: R46 369 million), mainly driven by significantly lower export sales prices due to
the steep decline in the API4 index price, partially offset by a weaker exchange rate and higher prices achieved on domestic sales at our coal
operations.
The revenue contribution from our energy operations was 16% higher than 2022. Energy generation from the Cennergi operating wind
assets was higher, driven by improved wind conditions compared to the prior year.
Group EBITDA
Group EBITDA decreased by 29% to R13 399 million (2022: R19 001 million). The main drivers for the decrease are provided in the
graph below.
Group EBITDA (Rm)
USD realised price
53%
API4 USD index price
realisation
93% vs. 97%
4%
Domestic price
benefit realised
R2.2bn
Export volumes
2%
due to logistics constraints
Domestic volumes
4%
from lower Eskom offtake offset
by higher local demand
Labour
Electricity
Diesel
PPI
6.8%
16.5%
(4.1%)
6.8%
Mafube buy-ins at
lower prices
R2.5bn
Operational cost
R1.2bn
Royalties
R795m
Employee cost
R172m
Rehabilitation
R101m
Weaker average
spot exchange
rate
R16.4 vs R18.4
12%
Fair value
adjustments
R820m
Insurance
R673m
The lower prices realised in 2023 were mainly driven by the lower benchmark API4 price resulting in an average realised price on our export
sales of US$117 per tonne, a 53% decrease compared to 2022. This was partially offset by a higher price realisation compared to the
benchmark API4 price of 4% due to our high-quality sales mix, as well as higher prices realised in the domestic market.
As a result of the ongoing logistical challenges, our export volumes decreased by 2%. To mitigate the poor rail performance, export coal was
transported to alternative export ports using road transport and some coal was sold in the domestic market. Domestically, operational
challenges and equipment failures at Eskom’s power stations impacted the offtake of power station coal in the Waterberg region.
84
Exxaro Resources Limited Integrated report 2023
19 002(8 768)(503)(1 007)2 377997241 47513 399FY22 Actual PriceVolumeInflationBuy-insOther costForexGeneral*FY23 Actual Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
We also experienced inflationary pressure with electricity costs increasing by 16.5%, labour costs increasing by 6.8% and the rest of our
costs increasing at PPI of 6.8%. There was some relief as our diesel costs decreased by 4%.
The cost of our buy-ins from our Mafube joint venture was lower, directly related to the lower API4 benchmark price in 2023 compared
to 2022.
The increase in operational costs was mainly due to once-off overburden removal at Leeuwpan, Belfast and Grootegeluk, enhanced
maintenance efforts in line with schedules and equipment hire, and higher production volumes at Leeuwpan and Belfast.
Royalties decreased in line with lower revenue.
Employee costs, including incentive payments, were lower in line with lower profitability and performance targets not being met.
The net decrease in rehabilitation cost is due to the impact of external surveys performed at our operations, combined with a favourable
movement in discount rates in 2023, partially offset by an increase in the water treatment cost at our mines in closure to curb the impact
of decanting.
The net positive foreign currency exchange variance is due to the impact of the weaker ZAR/USD exchange rate on revenue as well as
realised and unrealised foreign currency exchange differences on foreign trade receivables and cash balances.
Included under general expenses are fair value adjustment gains on foreign exchange contracts, environmental rehabilitation funds, and
funds held in our insurance portfolio.
Adjusted equity-accounted income
Adjusted equity-accounted income from associates and joint ventures decreased by 4% to R6 991 million (2022: R7 303 million).
Coal: Mafube
Coal: RBCT
Ferrous: SIOC
Other: Black Mountain
Other: LightApp
Total
Adjusted equity-accounted
income/(loss)
2023
Rm
510
(8)
6 157
332
6 991
2022
Rm
1 902
(9)
4 902
578
(70)
7 303
Dividends received
2023
Rm
1 525
2022
Rm
750
Change
%
103
3 386
5 153
(34)
Change
%
(73)
11
26
(43)
(4)
4 911
5 903
(17)
The 26% increase in adjusted equity-accounted income from SIOC to R6 157 million (2022: R4 902 million) was driven by higher iron ore
prices and sales volumes as well as cost optimisation initiatives. This was offset by a 73% decrease in Mafube’s adjusted equity-accounted
income, mainly due to lower export prices.
SIOC declared a final dividend to its shareholders in February 2024. Exxaro’s share of the dividend amounts to R2 107 million, which is 7%
higher than the interim dividend received. The dividend will be accounted for in the first half of 2024.
Group headline earnings
Group headline earnings decreased by 22% to R11 327 million (2022: R14 558 million), driven by the 29% decrease in group EBITDA and 4%
decrease in adjusted equity-accounted income.
The weighted average number of shares of 242 million remained unchanged, translating into headline earnings per share of 4 681 cents per
share (2022: 6 016 cents per share).
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 return cash to shareholders through the cycle while retaining a strong financial position.
During 2023, we had cash inflows of R16.1 billion (2022: R20.4 billion), comprising R10.7 billion from our operations net of tax paid (2022:
R14.7 billion) and dividend income received from our equity-accounted investments of R4.9 billion (2022: R5.9 billion) as well as net interest
received of R0.4 billion (2022: R0.3 billion net interest paid) on our cash and cash equivalents.
In terms of our capital allocation framework, we used this cash to:
• Sustain our operations with capital expenditure of R2.5 billion (2022: R1.4 billion)
• Expand our operations with further capital expenditure of R0.2 billion (2022: R0.3 billion)
• Pay dividends to external shareholders of R7.4 billion (2022: R8.9 billion)
Given our net cash position (excluding ring-fenced project financing) at 31 December 2023 and 31 December 2022, our net debt to EBITDA
cover ratio was well below our target of 1.5.
Exxaro remains in a strong liquidity position with a net cash balance of R10.5 billion as at 31 December 2023 (2022: R5.2 billion) and
undrawn borrowing facilities and maturities as set out below. If the energy net debt is excluded, the net cash position at 31 December 2023
was R14.8 billion (2022: R9.6 billion).
Exxaro Resources Limited Integrated report 2023
85
Finance director’s overview continued
Capital funding structure
Exxaro (excluding energy)
Facilities available
Drawn
Rm
Undrawn/
committed
Rm
Undrawn/
unissued
Rm
Maturity profile of debt
EXXARO
Term loan and revolving facility
3 400
3 250
Repayment period
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
ENERGY
Project financing
Interest-bearing borrowings
Interest capitalised
Lease liabilities
Capitalised transaction costs
Total interest-bearing debt
Net cash and cash equivalents
Net debt
Economic value distribution
643
4 043
64
389
(9)
4 487
1 202
3 285
(19 321)
(14 834)
4 833
4 833
5
62
(13)
4 887
(538)
4 349
4 000
Less than 6 months
6 – 12 months
1 – 2 years
2 – 3 years
3 – 4 years
4 – 5 years
>5 years
1 267
Repayment period
Less than 6 months
6 – 12 months
1 – 2 years
2 – 3 years
3 – 4 years
4 – 5 years
>5 years
4 487
954
248
507
2 574
80
97
27
4 887
144
148
349
450
557
683
2 556
2023
2022
l Salaries, wages and benefits l Employees‘ tax l Payments to government: taxation contribution l Cost of financing l Cash dividend paid
l Dividend paid to non-controlling interests l Community investments and volunteerism l GreenShare employee scheme
We distribute the value we generate to our stakeholders as follows:
• Employees receive salaries or wages, share-based payments as well as bonuses (where certain performance conditions are met)
• Employees’ tax deducted from the 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 are 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 corporate social investment 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.
86
Exxaro Resources Limited Integrated report 2023
4 7071 6525 0391 1005 5051 85590994 3101 6077 2509826 6862 275181121
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Portfolio optimisation
As part of the broader Exxaro strategic review, we continuously seek opportunities to unlock value to support our Sustainable Growth and
Impact strategy. As previously reported, Exxaro identified that the FerroAlloys business is no longer a strategic fit within our envisaged
minerals business portfolio and a sales process has commenced to dispose of our entire shareholding in Exxaro FerroAlloys Proprietary
Limited. Exxaro aims to enhance the economic participation of black-owned companies in the South African economy. In line with this intent,
we earmarked the FerroAlloys disposal process to target black ownership.
As we are still in the initial stages of the sales process, the investment did not meet all the criteria to be classified as a non-current asset
held-for-sale on 31 December 2023.
Financial KPIs
Despite the operational challenges experienced in 2023, 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. Exxaro complied with all the bank covenants for the year ended 31 December 2023.
Refer to note 12.1.4 of the group annual financial statements for the year ended 31 December 2023 for detailed disclosure on the
salient terms and conditions of interest bearing borrowings.
Coal sensitivity analysis
The following diagram indicates key sensitivities on the coal net operating profit:
Measure
Sensitivity
Net operating
profit impact
Environmental rehabilitation discount rate decrease
Environmental rehabilitation discount rate increase
Royalty cost
Production cost
Domestic sales volumes
Export price per tonne
Export sales volumes
Exchange rate
Labour
Railage
Fuel
Energy
1%
1%
1%
1%
1%
US$1
1%
10 cents
1%
1%
1%
1%
(169)
156
369
189
153
94
56
52
32
31
16
8
Key financial risk factors affecting our performance
Our strategic treasury function predominantly provides financial risk management services to the business, coordinates access to domestic
and international financial markets, and monitors and manages operational financial risks 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 risk.
In managing our capital, we focus on a sound net debt position, return on shareholders’ equity (or return on capital employed) and the level of
dividends to shareholders. Our policy is to cover annual net funding requirements through long-term loan facilities with maturities spread
over time. Neither Exxaro nor any of our 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 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.
Our activities expose us primarily to the financial risks of changes in environmental rehabilitation funds, portfolio investment and deposit
facilities quoted prices, foreign currency exchange rates and interest rates. We enter into a variety of derivative financial instruments to
manage our exposure to foreign currency risk and interest rate risks, including:
• Currency foreign exchange contracts, currency options and currency swap agreements to manage the exchange rate risk arising from the
export of coal and import of capital expenditure
• Interest rate swaps and interest rate forwards to manage interest rate risk on interest-bearing borrowings
Price risk management
Our exposure to equity price risk arises from investments held by and classified as “at fair value through other comprehensive income” or “at
fair value through profit or loss”. Our exposure to price risk in relation to quoted prices of environmental rehabilitation funds, portfolio
investments and deposit facilities 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.
Exxaro Resources Limited Integrated report 2023
87
Finance director’s overview continued
Foreign currency risk management
Certain transactions are denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The currency in which
transactions are entered into is denominated in US dollar, euro and Australian dollar. Exchange rate exposures are managed within approved
policy parameters using foreign exchange contracts, currency options and currency swap agreements.
We maintain a fully covered exchange rate position in respect of foreign balances (if any) and imported capital equipment, resulting in these
exposures being fully converted to rand. Trade-related import exposures are managed through using economic hedges arising from export
revenue and foreign exchange contracts. Trade-related export exposures are hedged using foreign exchange contracts and currency options
focusing on short-term receivables. Any open exposure to foreign currency risk on these balances is insignificant as the turnaround time is
generally less than 30 days. Foreign-denominated capital purchases funded by rand-denominated project financing arrangements are
hedged using foreign exchange contracts.
Monetary items are translated at the closing rate at the last day of the reporting period.
The foreign exchange contracts used to hedge foreign currency exposure mostly have a maturity of less than one year from the reporting
date. When necessary, foreign exchange contracts are rolled over at maturity.
Refer to note 16.3.3.2.2 of the group annual financial statements for the year ended 31 December 2023 for detailed disclosure.
Interest rate risk management
We are exposed to interest rate risk as we borrow and deposit funds at floating interest rates on the money market and extended bank
borrowings. Our main interest rate risk arises from long-term borrowings with floating rates, which expose us 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. We also use 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, we
look 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.
Loan facility and bonds
Refer to note 16.3.3.2.3.1 of the group annual financial statements for the year ended 31 December 2023 for detailed disclosure.
Energy project financing
The group is exposed to the risk of variability in future interest payments on project financing, attributable to fluctuations in three-month
Johannesburg Interbank Average Rate during operations phase, and one-month Johannesburg Interbank Average Rate during construction
phase. The designated hedged item is the group of expected 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.
Refer to note 16.3.3.2.3.2 of the group annual financial statements for the year ended 31 December 2023 for detailed disclosure.
Liquidity risk management
Liquidity risk is the risk that we will not be able to meet our financial obligations as they fall due. Our approach to managing liquidity is to
ensure, as far as possible, that we will always have sufficient liquidity to meet our liabilities when due, under normal and stressed conditions,
without incurring unacceptable losses or risking damage to our reputation.
The ultimate responsibility for liquidity risk management rests with the board, which has built an appropriate liquidity risk management
framework for managing Exxaro’s short, medium, and long-term funding and liquidity management requirements. We manage liquidity risk by
monitoring forecast cash flows in compliance with loan covenants and ensuring that adequate unutilised borrowing facilities are maintained.
Amount approved
Total borrowings
Unutilised borrowing capacity
Group
2023
Rm
65 309
(8 923)
56 386
2022
Rm
58 524
(9 093)
49 431
Exxaro’s capital base, the borrowing powers of the company and the group were set at 125% of shareholders’ funds for both the 2023 and
2022 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.
88
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Credit risk management
Credit risk relates to potential default by counterparties on cash and cash equivalents, loans, investments, trade receivables and other
receivables.
We limit our counterparty exposure arising from money market and derivative instruments by only dealing with well-established financial
institutions of high credit standing. Our exposure and the credit ratings of our counterparties are continuously monitored, and the aggregate
value of transactions concluded are spread among approved counterparties. Credit exposure is controlled by counterparty limits that are
reviewed and approved by the board annually.
Trade receivables consist of several customers with whom Exxaro has long-standing relationships. A high portion of term supply
arrangements exists with such customers, resulting in limited credit exposure (which exposure is limited by performing customer
creditworthiness or country risk assessment).
Exxaro strives to enter into sales contracts with customers, which stipulate the required payment terms. It is expected of each customer that
these payment terms are adhered to. Where trade receivable balances become past due, the normal recovery procedures are followed to
recover the debt, where applicable new payment terms may be arranged to ensure that the debt is fully recovered.
Exxaro has concentration risk due to our exposure to one major customer. This is, however, not considered significant as the customer
adheres to the stipulated payment terms. We establish an allowance for non-recoverability or impairment that represents our estimate of
expected credit losses in respect of trade receivables, other receivables, loans, cash and cash equivalents, and investments.
Refer to note 16.3.3.4.1 of the group annual financial statements for the year ended 31 December 2023 for detailed disclosure.
Outlook
Economic context
Global inflation is expected to continue its downward path, although towards the end of 2023, energy-related pressures temporarily stalled
this trajectory. As a result, policy interest rates are predicted to remain restrictive for longer, affecting both global investment sentiment and
economic activity.
Despite unprecedented rolling loadshedding, South Africa’s real GDP grew by 0.9% year on year in the first six months of 2023.The modest
upside reflected higher investment in machinery and other equipment and a better-than-expected response to loadshedding. However, GDP
decreased by 0.2% in the third quarter of 2023. The ongoing constraints of inadequate electricity and logistic challenges limit the local
economy’s future productive potential.
During 2023, the South African rand lost significant value against major global currencies. This is attributable to intensified loadshedding
with the perceived risk of a potential grid collapse, the country’s grey listing by the Financial Action Task Force, widening current-account
and fiscal deficits, US dollar strength, global recessionary risk, and widespread geopolitical tensions. We expect the USD/ZAR exchange rate
to improve in 2024 due to an expected improvement in both global economic sentiment and investor confidence.
Commodity markets and price
Despite the uncertainty of the severity of the northern hemisphere’s winter and potential risks around natural gas availability and prices,
continued strong Chinese thermal coal imports are expected to provide some support to seaborne thermal coal prices. However, the easing
of global supply risks in both the thermal coal and natural gas (including liquefied natural gas) markets are expected to filter through to
market pricing.
Continuous rising iron ore supply and exports remain the limiting factor for iron ore prices. Supply increases from major miners, a flat
Chinese demand, with the rest of the world demand recovering are expected in 2024. A stronger pricing environment is expected to prevail,
supported by higher marginal cost levels.
Operational performance
TFR railed 47.92Mt of coal to the Richards Bay Coal Terminal from January to December 2023. The export rail performance remains below
expectations due to the impact of security, vandalism, and locomotive shortages.
Riaan Koppeschaar
Finance director
10 April 2024
Exxaro Resources Limited Integrated report 2023
89
Operational performance
Exxaro’s manufactured capital is the physical mining, energy and
property assets that enable us to deliver our products. The quality of
our assets and how effectively we use them impact our overall value
creation and operational performance.
How we deliver value through our manufactured capital
We invest in our assets to maintain their enduring value, upkeep and performance, and optimise their use in delivering our products at
optimal qualities. Optimising our portfolio and effectively using our invested capital enables us to achieve excellent operational performance,
which in turn enables value creation and preservation across the other five capitals.
We deliver value through our:
• Operational excellence and digital transformation programmes that use data-driven insights for decision making to enable safety
performance, improve productivity and optimise cost
• Integrated operations centres enable timeous decision making, allowing our business to focus on controllable elements, consequently
limiting the impact of disruptions in the value chain. We continue enhancing this process through deployment of data science and
advanced analytics initiatives
• Market to resource optimisation strategy that informs operational plans with market insights to deliver coal products that meet customer
specifications
• Continuous portfolio reviews and appropriate sustaining capital investments, which ensure we prioritise our investments – enabling the
right investment that will contribute and add value to the portfolio
We build momentum and resilience in executing on our strategy and business model through
operational excellence and continued investment in our manufactured capital.
Material theme
Matter
Supporting our strategy
Our broader impact
Adapting to a
changing context
• Macro-environment
• Country risk
• Geopolitical context
• Commodity price risk
Executing our
strategy
• Diversity into critical
minerals and energy
• Coal portfolio optimisation
• 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
Performance snapshot
Exxaro’s
manufactured capital
Investments in our
manufactured capital
Improving our
outcomes
(business model,
page 20)
Five mines (including one joint venture), one coal project, one ferro-silicon manufacturing facility,
two windfarms and one solar project in construction
R2.5 billion
R0.2 billion
R2.7 billion
invested in sustaining capital
(2022: R1.4 billion)
invested in expansion capital
(2022: R0.3 billion)
invested in property, plant and
equipment (2022: R1.7 billion)
Optimising our portfolio
• Disposal of shareholding in Exxaro FerroAlloys Proprietary Limited
Accelerating our decarbonisation
• Financial close of the 68MW LSP on 29 June 2023
Exxaro’s operational performance areas encompass coal, energy, ferrous, portfolio optimisation and investments in minerals and energy.
Looking
ahead
Safety, portfolio optimisation, cost efficiency and continuous business improvement remain our
priorities across our coal and energy businesses.
90
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Our performance
Coal
Total product (Mt)
Total sales (Mt)
Export sales (Mt)
Cash cost per total tonnes handled (R/t)
Cash cost per production tonne (R/t)
International thermal coal pricing (API4) averaged US$121/t in
2023 (2022: US$271/t). Prices declined from 2023 levels due to
coal to gas switching in Europe. Europe and key markets in Asia
also remained well stocked during the year, keeping prices stable.
Production cost per tonne was mainly impacted by lower offtake,
resulting in increased total tonnes handled with the following
impact on costs:
• Volumes handled resulted in increased contractor activities,
equipment hire and enhanced maintenance costs
• Employee costs increased primarily due to normal labour
increases
• Energy costs rose, primarily due to a 16.5% increase in electricity
rates, offset by improved efficiencies
These costs were offset somewhat by the decrease in the
rehabilitation liability mainly due to an increase in discount rates.
Other operational costs were impacted by a net positive foreign
exchange variance due to a weaker ZAR/USD exchange rate on
revenue as well as realised and unrealised foreign exchange
differences on foreign debtors and cash balances. Royalties
decreased in line with lower revenue, while our insurance expense
also decreased due to the change in accounting treatment of new
insurance products. These decreases resulted in a premium
expense (classified as a financial asset) on the balance sheet.
Our net cash cost per tonne was above mining inflation, impacted
by increased cost as explained. However, our cost per total tonnes
handled was R1 lower, demonstrating our ability to cost-efficiently
move volumes.
In the face of a challenging macro-environment, our commitment
to cost containment remains. We therefore see ourselves returning
to normalised cost as we bolster our responsiveness to a new,
ongoing reality.
Energy
Cennergi’s operational EBITDA margin was
80% (2022: 80%), showing the consistency of
earnings underpinned by long-term offtake
agreements.
The two windfarms generated 727GWh in
2023 (2022: 671GWh), despite the
Tsitsikamma community windfarm suffering
15GWh of losses owing to an Eskom
distribution line fault. The increase in
generation resulted from improved wind
conditions. Our average equipment availability
was 97.3% in 2023, slightly above the
contracted levels of 97.0%.
Ferrous
SIOC
• Adjusted equity-accounted income of R6 157 million
(2022: R4 902 million) primarily driven by higher iron ore prices,
higher sales volumes and cost optimisation initiatives
• An interim dividend of R1 967 million was received from the
investment in SIOC in August 2023. SIOC declared a final
dividend to its shareholders in February 2024. Exxaro’s share of
the dividend amounts to R2 107 million, which is 7% higher than
the interim dividend received. The dividend will be accounted for
in the first half of 2024
Exxaro Resources Limited Integrated report 2023
91
42.50.643.1(0.6)42.520212022202342.8(0.7)42.1(1.6)40.52021202220237.6(2.4)5.2(0.1)5.120212022202381.410.391.70.990.8202120222023376.037.0413.069.0482.0202120222023 Business resilience
Exxaro’s intellectual capital is the unique combination of knowledge,
experience, innovation and systems that differentiate us. We leverage
these elements to respond to market challenges and position our
business for the future.
How we deliver value through our intellectual capital
Our operations must be able to overcome frequent challenges and adapt to change in global and local markets. We use our intellectual
capital and differentiation to transition our already successful business into a company that remains sustainable, growth-orientated and
values-driven into the future.
Exxaro is focused on driving and leveraging changes to patterns of production, consumption and ways of working to 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 deliver value through:
• Efficient project portfolio management and capital allocation
• Increasing our competencies across mining and energy
• Investing in innovation, digitalisation and technology
• Managing our relationships with stakeholders for reputational resilience
Purposefully using our intellectual capital enables us to build momentum
and resilience in executing on our strategy and business model.
Material theme
Matter
Supporting our strategy
Our broader impact
Adapting to a
changing context
Executing our
strategy
Driving business
resilience
• Supporting a just transition to a low-carbon
economy
• Build a leading global energy solutions
business
• Coal portfolio optimisation
• Supply chain and logistical impediments
• Cyber risk
• Innovation and digitalisation
• Capital allocation
• 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
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Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Performance snapshot
Exxaro’s
intellectual capital
Investments in our
intellectual capital
Improving our
outcomes (business
model, page 20)
The knowledge, experience, innovation and systems that enable business resilience
Developed:
• Carbon footprint calculator app
for employees
• Near miss reporting app to report
safety-compromising behaviours
• Visible felt leadership app
Installed FuelActive
technology on haul
trucks at
Grootegeluk and
Mafube
An appropriately
skilled, diversified
and independent
board
Engagement with
our stakeholders at
the governance
roadshow
• Leveraging digital transformation to create impact
– Our Digital@Exxaro strategy
– Fully integrated digitalisation into our talent management strategy
• 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 and values-
driven company
– Deepening our knowledge and stimulating behaviour change in pursuit of climate change
adaptation and resilience through awareness, training and education initiatives for our people and
host communities
– Integrated finance, tax, legal and company secretary structures for better coordination and to
enhance the financial efficiency of our impact efforts and integrated reporting
• Become a leading international renewable solutions provider by 2030
– Decarbonisation roadmap will be executed in a phased approach for sustainable impact
Exxaro’s business resilience encompasses capital allocation, energy investments, innovation and information management, and
reputational resilience (engaging our stakeholders, page 39).
We are future proofing 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.
Our capital allocation and project execution remain focused on leveraging the growth investments
already made, supporting our early value strategy and sustaining our businesses by implementing our
portfolio of sustaining capital projects. Our early value strategy means we are strategic about our capital
allocation.
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 energy assets that enable us to transition to a low-carbon world.
Exxaro is continuing on our transformation journey with a dedicated focus on enterprise-wide
transformation, innovation and digital, leveraging data by turning it into insights, aiding in decision-
making across the organisation and creating an agile environment. We continue to strive to attract and
appoint top tech talent to support our Digital@Exxaro strategy.
Decarbonising our mobile equipment fleet
FuelActive is an innovative fuel cleaning system that reduces harmful emissions, fuel consumption,
repair and maintenance downtime, and related costs – supporting our goal of systematically
decarbonising our fleet.
FuelActive uses a floating pickup to draw clean fuel from the top of the fuel tank, instead of the bottom where contaminants settle.
The system improves engine efficiency and reduces fuel consumption while maintaining the manufacturer’s intended emission
standards and performance throughout equipment life. A three-month trial of this technology at Mafube compared the performance
of our mining truck fleet against the manufacturer’s baseline data (collected over at least six months) – with and without the
FuelActive system. We collected and managed data on fuel economy and carbon dioxide emissions every month and presented it to
management and FuelActive (as average litres of diesel consumption per hour) at biweekly reviews.
Payback from our
investment within
263 days
Key benefits realised
CO2
reduction of
762 tonnes
Annual
fuel savings of
R6 million
Exxaro Resources Limited Integrated report 2023
93
Business resilience continued
Our performance
Capital allocation
Project
Classification (growth/sustaining) Product
Focus and performance
Capital
expenditure
Location: Mpumalanga
The infrastructure projects at Matla, to achieve a 10Mtpa production objective once fully ramped up, were approved.
Matla LoM
programme
Outlook
Sustaining
10Mtpa of thermal
coal
Developing infrastructure to support
LoM production
R5.2 billion
Construction of the Matla Mine 1 tunnel development was completed. We aim to complete the incline conveyor in the first half of 2024, the
overland conveyor in the first half of 2025 and the support complex and plant in the second half of 2025. Mining equipment manufacturing
was completed by the Matla Central Workshop. Mine 2 development was completed. We aim to complete Mine 3 development in the second
half of 2024. We expect to complete and conclude the programme in the first half of 2026.
We focus on sustaining a robust coal portfolio with strong cash flow generation through the capital excellence journey and always focusing
on the early value strategy. In this process, we continue to evaluate and optimise our portfolio and, where needed, dispose of non-core assets
and invest in our coal business to remain resilient. We are targeting average capital of between R2 billion and R2.5 billion annually in real
terms.
Coal
Coal sales by product tonnes (%)
l Domestic metallurgical l Other domestic l Exports l Eskom
2023
actual
2 432
2 217
201
14
2023
previous
guidance
2 514
2 314
180
20
2022
actual
1 605
1 348
252
5
2 432
2 514
1 605
% change
previous
guidance
3
4
(12)
30
3
Sustaining
Waterberg
Mpumalanga
Other
Total
Capital expenditure in our coal business increased by 12%
compared to 2022, driven by investment in sustaining our
operations, which is well aligned with our capital guidance.
The increase in sustaining capital is mainly due to higher spend at
Grootegeluk to support continuation of the business. Our capital
excellence journey is enabling improved project timing, execution
and savings.
Supply chain and logistics
While the South African logistics environment is challenging given
the rail performance to RBCT, we use our intellectual capital to
develop new innovative logistics solutions and corridors to ensure
we are on a more sustainable strategic path. We successfully
exported via alternative ports and continue to look at solutions that
will optimise our value chain from our mines to alternative posts,
including our road and rail flows.
Our operating context (page 14)
Investments in energy
Exxaro is targeting a total of 1.6GW (net) installed capacity by
2030 with an estimated total equity capital deployment
of approximately R13 billion based on high level assumptions, with
the remaining capital requirements being project financed. This
could potentially provide a forecast estimated EBITDA of
approximately R4.9 billion. We are aiming to achieve equity returns
on a portfolio basis of 15%.
The LSP reached financial close on 29 June 2023, and construction
started shortly thereafter. The project total investment cost is
R1.56 billion.
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Exxaro Resources Limited Integrated report 2023
2121373
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Driving innovation and information management
Exxaro’s innovation plays a pivotal role in driving our Sustainable
Growth and Impact strategy. The main focus is on optimising value
creation from our coal business using digital innovation, while
diversifying towards resilient minerals and growing our energy
business. Our innovation and technology journey is geared to
enable the business to be carbon neutral by 2050.
Innovation is a strategic enabler and key to realising our 2030 goals
Our approach to innovation is underpinned by our innovation management programme, which aims to take a systematic approach to
integrate innovation into our entire business value chain, ie operations, marketing and logistics intelligence, corporate innovation
and embracing disruptive innovation through data science and generative AI. The innovation programme is managed through
structured processes and governance, while building future in-house capabilities, and measures that enhance Exxaro’s strategic
objectives.
Business diversification
Exxaro’s commitment to technological and social innovation goes
beyond conventional mining practices. Implementing innovative
mining and processing technologies ensures that the transition
towards emerging minerals is financially viable and that Exxaro
remains on the lowest cost curve when new operations are
introduced. Beyond economic considerations, Exxaro recognises
the crucial role of innovation in creating positive social impact.
In a drive to achieve operational effectiveness, we emphasise the
importance of technology and innovation to enable our strategy
and achieve our goal to become carbon neutral by 2050. Over the
years through our innovation journey, Exxaro successfully deployed
technology-enabled integrated operating centres, visualised our
value chain, deployed predictive analytics and mineral resource
integration.
By leveraging technology, we ensure our operations go beyond
compliance, measuring and enhancing our social and environmental
impact. This includes deploying innovative digital solutions to
strengthen Exxaro’s contribution to a just energy transition and
aligning with global sustainability goals. One of these initiatives,
integrated operations centres, facilitates the seamless integration
of mineral resources and optimisation to enable effective, data-
driven decision making. Integrated operations centres optimise
resource utilisation and minimise environmental impacts, enabled
through continuous monitoring. The integration of advanced data
analytics and automation technologies supports us to achieve our
early value strategy and reduce climate-related risks, thus
reinforcing Exxaro’s commitment to sustainable practices.
Through developments in generative AI, Exxaro will continue to
look at opportunities to automate certain processes and deploy
technology to ensure we remain competitive.
Culture of innovation
We empower our people to create impact by cultivating an
innovation culture. This is integral to how we conduct business at
Exxaro, ensuring our sustained success in a constantly evolving
landscape. Exxaro has a deep-rooted culture of innovation – we
believe that innovation is not limited to any particular department,
but rather, it is everyone’s responsibility. This cultural foundation
signifies that innovation is not sporadic, but an integral part of our
values, mindset and practices, embedded in every aspect of how
Exxaro operates. Through this culture, our people are empowered
to create impact.
At Exxaro, we are passionate about creating a positive socio-economic impact in the communities where we operate. This passion
motivates Exxaro to integrate social innovation into our operations. Exxaro’s innovation and digital journey extends to social innovation,
by addressing community challenges through innovative, workable responses to environmental or social challenges. We aim not only to
be a modern mining company but also a socially innovative and responsible one. Empowering people through innovative initiatives
ensures that Exxaro's growth contributes to the overall development and wellbeing of the economies in which we operate.
Cybersecurity
In today’s digital age, cybersecurity has become an essential
component of business resilience. As we increasingly rely on
technology and data, the cyber threat landscape also increases –
the impact of which extends far beyond financial losses and affects
reputation and stakeholder trust.
To mitigate the inherent cyber risk, we implemented a
cybersecurity programme that focuses on preventing cyber
incidents through detection, response and recovery activities. Our
dedicated resources enhance our cybersecurity threat intelligence
and detection capabilities. We gather insights from emerging
threat patterns and malicious actors, and are committed to
strengthening our security controls.
We implement a robust cybersecurity incident response plan that
outlines the steps to be taken in the event of a security breach.
This is supported by a disaster recovery plan to ensure that we can
recover from major incidents. We also realise the importance of
educating our employees on inherent cyber threats and have
implemented a cybersecurity awareness programme to educate
them about cybersecurity best practices and potential threats,
including phishing awareness and social engineering.
We did not record any data breaches this year.
Exxaro Resources Limited Integrated report 2023
95
Building momentum with people
Exxaro’s human capital is the knowledge, skills, know-how, safety,
health and wellbeing of the people who manage our business and
perform operational activities. This includes our employees and
contractors. Our human capital is central to the success of our
business.
How we deliver value through our human capital
Investing in, upskilling and offering an attractive value proposition increases our human capital, while safeguarding our people’s safety,
health and wellbeing, preserves value and prevents its erosion. Our people and partners have the skills, capabilities, mindset and passion to
achieve our purpose.
We deliver value through our people strategy, which is a catalyst for the Sustainable Growth and Impact strategic objectives. The six pillars of
our people strategy are underpinned by our commitment to a people-fit organisation, developing capabilities and enabling human resources
through our purpose.
We also deliver value by:
• Progressing against our commitment to achieving zero harm by prioritising safety
• Building resilient employees and host communities through integrated health and wellness
• Maintaining our employee value proposition, fostering a diverse, inclusive and equitable workplace, and managing employees’ needs and
expectations
• Offering learning and skills development opportunities to ensure a healthy talent pipeline of core and critical skills for existing and
potential employees (including our host communities)
Empowering our people to create impact is critical in building momentum and resilience as
we progress against delivering on our strategy and business model.
Material theme
Matter
Supporting our strategy
Our broader impact
Helping our
people thrive
• Health, safety and wellness
• Workforce: culture, capability, diversity,
inclusion, attraction and retention of
key skills and innovation
• Make our minerals and energy
businesses thrive
• Empower people to create impact
• Become a catalyst for economic
• Labour relations
growth and environmental
stewardship
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Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Performance snapshot
Exxaro’s human
capital
20 665 employees (2022: 19 242)
6 797 (33%) permanent employees (2022: 6 745,
35%)
13 868 (67%) contractors* (2022: 12 497, 64.9%)
* Contractor total does not include Cennergi sub-contractors.
178 employees (2022: 103)
35 (20%) permanent employees (2022:
20%)
143 (80%) contractors (2022: 80%)
Investments in our
human capital
Improving our
outcomes (business
model, page 20)
• R358 million invested in training and development
• R4 707 million invested in employee remuneration
• R10.5 million invested in developing targeted employees in management programmes, leadership
roles, postgraduate studies and support functions
• Stop and Fix campaign launched to enhance employees’ safety
• DEI strategy launched and embedded in the business
• Awareness campaigns, initiatives and measures implemented to address health risks
• Remain committed to achieving zero harm
– Adopted leading practices on preventing fall of ground and trackless mobile machinery
incidents
– Participated in the CEO Zero Harm Forum hour of learning
– Introduced revised incident management standard to check and verify the effectiveness of
corrective actions and enable meaningful learnings
– ISO 45001 certification received at Matla, Leeuwpan and Grootegeluk
– Demonstrated our commitment to the five safety focus areas at the 2023 sustainability
summit
• Work with employees and contractors to eradicate any safety incidents
– Held awareness campaigns and initiatives to address health risks
– Implemented health and safety representative empowerment programmes
– Launched the Stop and Fix campaign and introduced going back to basics
– Near miss reporting app launched to report safety-compromising behaviours
– Visible felt leadership app launched to enhance leadership presence and engagement on the
field
• Continue to invest in employees
– Progressed the DEI strategy
– Streamlined the application process for internal employment opportunities
– Rolled out various leadership programmes among employees at different levels
– Awarded internships and bursaries to black people with disabilities and students of the
Edumap initiative
– Introduced the employee referral reward programme
Looking
ahead
Our future focus is on building a stronger, more inclusive workforce by filling critical vacancies,
empowering employees to excel through the performance achievement framework and advancing DEI at
Exxaro, with particular emphasis on the inclusion of people with disabilities. We will continue to protect
the safety, health and wellbeing of our employees by pursuing zero harm, reducing safety-related
incidents and preventing and managing health risks at our operations.
DETAILED DISCLOSURE
Read building momentum with people (ESG report, page 70) for details about our approach and performance.
Exxaro Resources Limited Integrated report 2023
97
Building momentum with people continued
Prioritising safety
The safety of our people is a moral imperative that underpins the sustainability and efficiency of our operations. We strive
to achieve our ultimate safety goal of zero harm by proactively managing safety risks through strict and consistent
implementation of Exxaro’s five safety focus areas.
Safety is critical to achieving the objectives of our Sustainable Growth and Impact strategy. Supported by the five key safety focus areas, our
safety strategy steers us in our approach to managing safety-related risks and preventing incidents.
Safety strategy key focus areas
Incredible leadership
Demonstrating our ongoing commitment to
our employees’ safety by hosting the leadership
safety day and sustainability summit, led by our
CEO
Communication
Providing regular communication on our safety
performance, which includes incidents, learnings
from incidents and actions to be taken to
mitigate emerging risks. Messages are shared on
virtual platforms across the group
Consequence management
Adhering to non-negotiable safety rules that
promote life-saving behaviours
Training
Capacitating employees and raising their
awareness
The sustainability summit allows the executive committee:
• An opportunity to engage with employees on health and safety issues and
deliver learnings from incidents
• A platform to reiterate our commitment to zero harm
• Events to recognise employees and contractors for safety excellence
The 2023 sustainability summit was hosted at Grootegeluk on 20 April 2023.
• Our Khetha Ukuphepha (isiZulu for “choose safety”) campaign, launched in
2019, encourages personal responsibility for safety
• We host annual safety indabas to drive the importance of safety
• We launched the Stop and Fix campaign in 2023 to encourage employees to
proactively address safety risks before they escalate
• We analyse incidents in terms of zero tolerance rules
• Consequence management aligns with our culture values and is applied fairly
across BUs
In 2023, this included:
• Safety management training for line supervisors
• Visible felt leadership champions training
• Safety representatives training
• On-the-job training for employees
Risk management
Embedding risk management into our daily
activities and processes to make informed
decisions and plan proactively
We identify, assess and implement effective controls to address risks and
opportunities with the aim of preventing and mitigating incidents and improving
our safety performance. We have a high-risk task verification process at our
BUs, led by site management, to verify the effectiveness of controls for high-
risk activities and non-routine work.
Cennergi’s windfarms comply with the Occupational Health and Safety Act (OHSA), 1993 (Act 85 of 1993) and the
LSP with the OHSA and MHSA. Cennergi’s head of operations reports safety incident investigation findings to the
windfarms and company boards. Site managers and health and safety representatives conduct investigations following
reports from contractors. LTIs and medical treatment cases are immediately reported to the group health and safety
department.
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Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Our performance
Exxaro
Cennergi
No fatalities
(2022: one)
No fatalities
(2022: none)
Four HPIs
(2022: five)
No HPIs
(2022: none)
11 LTIs
(2022: seven)
No LTIs
(2022: none)
0.07 LTIFR
(2022: 0.05)
Our LTIFR increased due to an increase in hand and finger injuries associated with lifting and material handling, as well as slip and fall
incidents that occurred at our BUs. We remain committed to reducing our LTIFR and will continue to intensify our daily efforts to achieve
zero harm.
The leading causes of LTI and HPI incidents included:
• Poor risk awareness and assessment
• Inadequate hazard awareness and identification
• Non-adherence to procedures
• Unsatisfactory supervision, change management and task planning
We have revised our incident management process to enhance incident investigations, subsequent corrective actions and learnings, which
we believe will reduce our LTIs going forward. This also contributed to the decrease in HPIs compared to last year.
We had four section 54(a) (mining activity stopped) (2022: seven) stoppages.
No reportable health and safety incidents were submitted to the Department of Employment and Labour (2022: none).
In quarterly external compliance audits by Libryo, Tsitsikamma and Amakhala Emoyeni achieved average scores
of 95.6% (2022: 96.4%) and 96.8% (2022: 96%) respectively.
We implemented the following initiatives to demonstrate our commitment to achieving zero harm and preventing safety incidents following
the tragic fatality experienced at Belfast mine in 2022:
Campaigns
Apps
• Bouncing Back at Belfast launched to uplift employees’ morale and offer them counselling
• Stop and Fix campaign launched across BUs
• Near miss reporting app launched to report safety-compromising behaviours
• Visible felt leadership app launched to enhance leadership presence and engagement on the field
Back to basics
to basics in terms of operational safety
• Khetha Ukuphepha principle reinforced – every life counts
• Safety focus areas reinforced at the sustainability summit to eliminate repeat incidents and go back
Learning from
incidents
• Revised incident management standard introduced to check and verify the effectiveness of
corrective actions and enable meaningful learnings from internal operations and across the mining
industry
Celebrating our progress
Group
One year fatality-free
15 August 2023
Belfast
One year fatality-free
Grootegeluk
11 years fatality-free
Leeuwpan
33 years fatality-free
Matla
Six years fatality-free
Mines in closure
13 years fatality-free
FerroAlloys
26 years fatality-free
Cennergi
Seven years fatality-free
We were honoured to be recognised at the 2023 COALSAFE Awards, where we received several awards in the safety category for fatality-
free production shifts at various operations, an LTIFR of 0.00 at Leeuwpan and an outstanding award for most improved dust milestone at
Grootegeluk.
Looking
ahead
Maturing our safety culture through training and development will be a continued focus as we prioritise
zero harm and protect the sustainability of our business. Alongside this, we plan to:
• Reinvigorate the five safety focus areas and the Khetha Ukuphepha principle
• Eliminate repeat incidents
• Enhance supervisor safety capacitation
• Advance and digitise safety systems
Exxaro Resources Limited Integrated report 2023
99
Building momentum with people continued
Integrated health and wellness
We recognise that a physically and psychologically safe workplace is inextricably linked to successfully delivering on our
strategy. Integrated health and wellness builds resilient employees and host communities by enhancing quality of life,
boosting morale, improving productivity and ensuring safety.
Preventive, holistic and employee-driven health and wellness underpins our approach. Our integrated health and wellness strategy, which is
aligned with legislated basic conditions of employment, enables us to create an empowering environment for our employees. We offer an
employee wellness programme, which addresses employees’ financial, emotional, social, and mental, occupational, environmental, spiritual
and physical challenges, and their impacts. We also host complementary awareness campaigns, testing drives and initiatives.
Prevent
Diagnose
Manage
Preventive programmes (mandatory
awareness campaigns and healthy
lifestyle coaching) address a range of
employee health and wellness
challenges.
We improve medical surveillance by
extending clinical tests (heart disease
and risk-based cancer screening) and
DNA analysis from middle
management upward.
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 culture themes (ESG report, page 82)
Our performance
Employee
wellness
programme
8.9% utilisation
(2022: 12.68%)
6.4% Proactive Health
Solutions benchmark
Demographics
• Majority men (18 to 50 years old) in 2023
• 6 350 cases were managed, of which 716 were individual cases, 578 were group
trauma debriefing sessions and 5 056 were group information sessions
• Stress is the leading cause of mental health issues
• 251 employees have relationship-related challenges
• The majority of employees who utilised the employee wellness programme
services are between the ages of 30 and 39, making up 43%
Non-
occupational
diseases
93 new diabetes cases
(2022: 24)
334 hypertensive
employees and contractors
(2022: 92)
• 18 419 employees and contractors received HIV/Aids awareness training
(2022: 14 585)
• The number of people who attended awareness sessions increased, as our
workforce increased to 20 665 people. The prevalence of HIV/Aids cases
among permanent employees is 1.87%. The national prevalence rate is 14% (on
31 July 2022)
Occupational
diseases
Occupational diseases
remained at 23
(2022: 23)
No cases of silicosis
(2022: none)
Occupational diseases
• One occupational disease case (tuberculosis) (demonstrably work related) was
accepted by the Medical Bureau for Occupational Diseases for compensation
(2022: five)
• The OHIFR was 0.15 (below target of 0.18) (2022: 0.16)
l Noise-induced hearing loss l Pneumoconiosis l Silicosis l Chronic obstructive airway disease l Occupational tuberculosis l Occupational asthma
We measure our performance against mining industry targets set in 2014. 2023 was the last year we measured our performance against
these milestone measurements, as new milestones will be communicated in 2024.
100 Exxaro Resources Limited Integrated report 2023
25232346755211317911202120222023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Campaigns and initiatives
Cancer awareness campaigns and testing drives targeted at breast and testicular cancer
All BUs
Wrapping trees with pink cloth to show support for those suffering from breast cancer
Matla and
Grootegeluk
Providing mammograms and education on men and women’s health via the pink truck
Grootegeluk
Participating in the parkrun for breast cancer
Initiatives per operation
• Hosted a marathon to raise awareness of lifestyle diseases, with 2 600 people participating across the group
• Implemented a peer influencer programme where influencers spread awareness of noise-induced hearing loss,
tuberculosis and thermal stress
All BUs
• Launched onsite therapy
• Provided financial assistance to employees through our financial wellness service provider, Bayport. One of the
key highlights was the successful opening of secured accounts, divided between vehicle and home loans
• Held a cholera masterclass on how to prevent the spread of cholera and the precautionary measures to follow
to limit infections
• Held a masterclass on the importance of taking care of mental health
• Ongoing monitoring of lifestyle diseases at Matla wellness centre
• Initiated a biggest loser campaign on lifestyle management at Matla to encourage and promote an active
Matla
lifestyle
Grootegeluk
• Initiated a women’s health drive at Matla and implemented health programmes focused on women’s health
and family planning at Matla
• Implemented a thermal stress project at Grootegeluk to monitor thermal stress indices in real time and
alert employees when temperatures increase or decrease above or below regulatory standards
• Conducted a wellness outreach programme at Mogol park
• Held an HIV/Aids awareness campaign
• Implemented the Step It Up challenge on LetsConnect, which targeted lifestyle diseases by encouraging
employees and contractors to be more active. Smart watches were given to employees and contractors to
monitor their sleep patterns, number of daily steps and heart rate
Cennergi employees use the group’s employee health and wellness programme and attend sessions arranged for Exxaro
BUs. Cennergi held medical screening (including blood pressure, blood sugar and HIV screening) and financial wellness
interventions to improve the health and wellness of its operations team in 2023.
Looking
ahead
We will continue to actively manage health and wellness in the group with a specific focus on
implementing continuous heat stress monitoring, advancing the electronic occupational health and
hygiene management system and archive, and implementing health and wellness wearables at Belfast to
track real-time employee vitals. We also plan to acquire additional specialised human resources.
Exxaro Resources Limited Integrated report 2023
101
Building momentum with people continued
Engaged employees
We meaningfully engage with our employees to understand their material needs and concerns and maintain our employee
value proposition as an employer of choice. Engaged employees are more productive, which enhances safety at our
operations and supports the sustainability of our business.
Employee engagement is supported by the embedding of our values and culture, effective communication and a commitment to constant
improvement. Our employee relations strategy enables us to manage and respond to employees’ needs and expectations. DEI is central in
our approach.
Grounded in our purpose, values, vision, culture and strategic objectives, our DEI strategy:
• Empowers us to create an environment built on trust and respect, free from prejudice, harassment and discrimination
• Enables our employees to achieve our goals by recognising that our focus on DEI is a business imperative
• Fosters a conducive environment for employees to thrive by encouraging changes in attitude, behaviour and ways of working to address
systemic barriers
• Informs our implementation of appropriate internal processes, procedures and practices
Our new persons with disabilities policy supports the objectives of the DEI strategy in ensuring persons with disabilities have equal access to
employment, training, skills development opportunities and career pathing.
Cennergi’s employment equity committee guides and monitors transformation and skills development and oversees
implementation of the employment equity plan, which aligns with legislation and the Department of Employment and
Labour Codes of Good Practice.
Our performance
Strategic priorities
• Following board approval of a revised approach to our DEI strategy in 2022, we reviewed our policies and practices. This included
aligning campaigns (in partnership with stakeholder affairs and communications) with strategic objectives
• Advanced our employee relations capacity building processes and conducted a capacity building process with our shop stewards for
wage negotiations in 2024
• Provided wellness sessions to manage mental health, gender-based violence and stigmatisation
• Conducted a culture and engagement survey to track the efficacy and progress of culture integration
• Progressed the DEI strategy, with a strong drive around women in mining, inclusivity and workplace harassment
Employee turnover
• Average rate of 4.5% due to abscondment, death, incapacity,
dismissal, resignation and retirement (2022: 4.4%)
• 83.81% of employees in bargaining units (2022: 82.37%)
• 16.19% of employees in management and specialist category
(2022: 17.62%)
Employment equity
• Certified level 2 BEE contributor
• 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 DEI
strategy)
Housing
• 1 379 permanent employees received mortgage repayment
Trade union representation
• 5 376 employees (79%) (2022: 5 276) were represented by affiliated
subsidies for first-time home buyers since 2017
• 42 employees live in converted hostels (single-quarter
accommodation or family units)
• Housing allowance paid to 2 213 employees with a registered
bond (2022: 2 272)
• Living-out allowance paid to 3 271 employees renting
accommodation (2022: 3 594)
Workplace harassment
• Conducted workplace harassment training and interventions
in response to sexual harassment cases reported in 2022
• Zero sexual harassment cases reported this year
Share ownership
Each GreenShare beneficiary received a R10 209.92 cash payment
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 of South
Africa)
• Multiple three-year wage agreements signed in 2021 remained
effective. These agreements will expire in June 2024, and plans are
underway to hold wage negotiations with organised labour, with a view
to potentially signing another three-year wage deal
Eliminating discrimination and resolving grievances
• No alleged discrimination cases or grievances were filed (2022: zero)
Cennergi consistently meets job creation targets and did not incur
contract termination points or penalties from the DMRE in 2023
In advancing our DEI journey, we plan to launch a new DEI e-learning programme to provide a comprehensive
training opportunity for employees. We will also focus on achieving the objectives set out in our performance
achievement framework, namely:
• Supporting the performance achievement process and facilitating the integration of Exxaro’s culture and
leadership philosophy
• Empowering managers and their teams in the performance management process
• Creating an environment where all employees have a sense of belonging and bring their full selves to work
• Ensuring aligned business performance and providing clarity on individual and team
contribution, accountability and access to customised development
• Ensuring the performance management process is ethical, equitable, objective, fair, transparent, consistent
and credible
102 Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Talent management
We empower our employees by offering learning and skills development opportunities to ensure a healthy talent
pipeline of core and critical skills. Our community-based skills development programmes, which are aimed at
educating marginalised groups and youths, support our employment equity targets and ensure a feeder line of
trained and skilled candidates.
Attracting, developing and retaining skilled people strengthens our ability to deliver on strategic objectives, ensure business continuity and
preserve the value we create for our employees and communities. Talent management is a critical sustainability factor and part of our
employee value proposition.
We achieve this through:
• Our talent management strategy and delivering against its strategic objectives: This strategy outlines our approach to strategic
workforce and talent planning, leadership and capability development, compliance training and reporting, and talent pipeline development
activities
• Measuring and reporting our performance through KPIs: We annually identify and measure KPIs as part of the strategic dashboard for
talent management and people and performance. Talent management and review processes aim to identify and prepare suitable internal
candidates for positions while building a leadership pipeline to address skills shortages
• Monitoring the relevance of our training programme: Our people and performance and digital value chain teams keep informed of
technological advances in training to ensure our programmes are up to date (including Adapting to 4IR on MyNexxt, Power BI and
dashboards, and our data science programme language curriculum)
• Cross-platform education and training: We offer classroom-based training, e-learning platforms, simulators, virtual reality, webinars and
masterclasses – thereby broadening the scope of learning opportunities
Cennergi prioritises internal recruitment of high-potential employees to retain talent and grow management expertise.
Employees receive STIs based on individual and company performance. Cennergi invests 1% of its payroll in employee
training and development. Line managers conduct performance appraisals twice a year to determine training and
development needs.
Our performance
Zero talent management-
related grievances lodged in
2023 (2022: zero)
R193.5 million invested in job-
related skills development
(functional and technical
training) (2022: R198 million)
R7.6 million invested in
community development,
such as portable skills training
(2022: R8.2 million)
R126.6 million invested in
bursaries, training professionals,
internships, learnerships and
skills programmes
(2022: R101 million)
R22 million in support for
Youth Employment Service
(YES) partners to train and
develop youth from our host
communities (2022: R10 million)
126 employees (89% black
people and 58% black women)
in our 24-month mentoring
programme (2022: 40)
R0.95 million invested in adult
education and training (2022:
R1.57 million)
Appointed 16 external Paterson
D band (middle management)
and 43 internal candidates
(2022: 16 and 40)
Appointed three external black
candidates and nine internal
black candidates Paterson E
band (senior management)
candidates (2022: one and three
respectively)
People development training expenditure
Total training (Rm)
Total training (% of total payroll)
Training of black people (Rm)
Black people trained (% of total payroll)
2023
358
6.22
318
5.54
2022
331
6.0
275
5.0
2021
276
5.8
222
4.7
In accordance with its aim to further the objectives of diversity and inclusion in the energy sector, Cennergi recruited
eight new employees in 2023, of whom 75% were female (six African women) and 25% were male (two African men).
Exxaro Resources Limited Integrated report 2023 103
Building momentum with people continued
We track our performance against the strategic objectives of the talent management strategy:
Use digital
platforms
Enhance employee
experience
Build relevant
future skills and
competencies
Build a talent
pipeline
representative of
economically active
populations
Build a talent
pipeline for energy
and minerals
businesses
Establish healthy
strategic partner
relations
* South Africans at local universities.
• 1 033 employees registered for open-source online courses (LinkedIn, Udemy, Coursera,
Open Sesame and OTT University). Overall, 70% utilisation was achieved during 2023
• 91 309 compliance-related courses, ensuring safety, health and environmental compliance,
completed through MyNexxt
• 109 745 training interventions on the MyNexxt e-learning platform as part of our Digital@Exxaro
strategy and aligned with connect2NEXT and smart workforce initiatives (2022: 96 665)
• Achieved 63% utilisation on Powering Knowledge community SMME e-learning platform
• Offered multiple courses and learning interventions on ESG and risk, performance, IT and
cybersecurity, and management
Line managers are no longer required to approve employment applications made by their team
members, allowing employees to freely explore internal growth opportunities. This resulted in an
increase in internal applications, with 1 598 applications in the Paterson DL band and higher in 2023
compared to 760 in 2022. We also reintroduced a revamped employee referral reward programme,
which offers employees rewards for referring successfully appointed candidates.
• 306 employees attended various leadership programmes (2022: 83) and 162 enrolled
in management programmes (2022: 181)
• 30 employees enrolled in the University of Cape Town Graduate School of Business Women
in Leadership programme (2022: 21)
• We are in the process of developing a capability system tool to guide employees on capability and
capacity building to advance their careers with various learning and development opportunities
• Rolled out several leadership programmes to employees on various Paterson band levels and
provided university-accredited short courses in competencies to support new capabilities
• Refreshed our talent management strategy in 2023 to support capability development and
succession planning for management and specialist roles
• Implemented the employee referral programme to address challenges in recruiting qualified black
women
• 32.5% D band (2022: 30.8%) and 25.3% E band (2022: 35.4%)
• Improved spend on bursaries awarded to black people studying through Department of Higher
Education and Training accredited institutions to the planned target score on the B-BBEE strategic
dashboard. The subscore for this B-BBEE element improved to 0.44% (2022: 0.19%)
• Updated our recruitment policy to align with the DEI strategy and created a new people with
disabilities policy
• Female employees represent 31.2% of our workforce (2022: 29%)
• 61% female professionals in training graduates (2022: 50%)
• 61% black women full-time bursars in engineering and mining disciplines*
• 55% women in learnership and internship feeder schemes (2022: 56%)
• 11 black women sponsored at technical and vocational education and training colleges to improve
access to formal learnerships such as artisan training (2022: 31)
• 25 black South Africans (56% black women) with disabilities supported at local tertiary institutions
for full-time studies (2022: 20)
• 23 internships for black people with disabilities appointed in 2023 (12 of whom are black women)
• 85 professionals in training programme graduates in our talent pipeline (96% black South Africans)
(2022: 89) at a cost of R55 million (2022: R42.6 million)
• 54 full-time bursars in engineering and mining disciplines (2022: 52)*
• R1.1 million invested in bursaries to address engineering skills shortages (2022: R3.8 million)
• 10 matriculants supported in Edumap maths and science bridging programme (2022: 10)
• 12 full-time bursaries for tertiary studies awarded to Edumap students who are youth from Exxaro’s
communities (2022: none)
• Submitted annual workplace skills plans and training reports to the Mining Qualifications Authority;
Mining Charter compliance to the DMRE; and B-BBEE scores to the dtic including employee
information, spend, training and development programmes. We received R50.5 million of skills levy
tax paid back in grants
• Actioned two Yes4Youth initiatives to improve the employability of youths from our communities
Our focus is on enabling responsive, agile talent acquisition to fill critical vacancies and providing a
marketplace for internal employment opportunities, supported by an online platform. We are also
focusing on streamlining our internal policies to reduce the number of policies and improve policy
management and employee access.
Legacy artisan trade qualifications expired at the end of 2023. This will require involvement in newly
developed qualifications through the Quality Council for Trades and Occupations.
104 Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Respecting and upholding human rights
We believe that all people have inherent fundamental human rights regardless of their
differences. We are therefore committed to respecting and protecting the human rights of all
employees and stakeholders. We strive to be a responsible steward of natural assets and social
capital to uplift host communities.
Recognising that our operations could cause adverse human rights impacts, we have a human rights policy (updated in 2022) which outlines
our expectations of employees, suppliers, business partners and other parties directly linked to our operations, products and services. We
also perform regular due diligence reviews to identify, prevent, mitigate and account for our response to human rights impacts.
We address key human rights issues in the following areas:
• Governance and ethics
• Equal opportunities/non-discrimination and transformation
• Human rights in the workplace
• Security
• Freedom of association and the right to collective bargaining
• Safety and health in the work environment
• Environmental management and conservation
• Respect for all communities
Cennergi ensures human rights considerations are adequately managed and addressed through human resources policies and
a code of conduct and grievance procedure aligned with South African human rights legislation. Cennergi is also committed to
the IFC’s Performance Standard 2 on labour and working conditions, which requires companies to treat their workers fairly,
provide safe and healthy working conditions, avoid using child or forced labour and identify related risks in their primary
supply chain. Consistent with Exxaro, employees can report human rights violations to supervisors, line managers, the people
and performance department or anonymously through Exxaro’s fraud and ethics hotline.
Our performance
Exxaro is trending positively
against the five global trends listed
in the Ethics & Compliance
Initiative’s Global Business Ethics
Survey® 2023 report
196 employees participated in DEI
courses (such as workplace
harassment and diversity and
inclusion) during the year
There were no human rights
grievances lodged against
Exxaro in 2023
191 fraud and ethics allegations
were reported (164 to the fraud
and ethics hotline) managed by
internal audit (2022: 213)
23% resulted in disciplinary
inquiries
Out of the 22 disciplinary hearings
that were concluded, 19 ended with
findings of guilt, while one resulted
in a not-guilty verdict (2022: 41)
Two employees brought Exxaro
before the Council of Conciliation,
Mediation and Arbitration. In one
instance, the Commissioner decided
in favour of Exxaro, and in the other
instance, the matter was resolved
through a mutual agreement (2022:
none)
We conducted an evaluation of Exxaro’s business relationships with suppliers referenced in the state capture report and developed
guidelines on how to deal with suppliers mentioned adversely in the media.
We experienced delays in appointing a partner to conduct a due diligence review on our processes,
however, due diligence is now underway with completion anticipated in the second quarter of 2024. Our
focus will then be on addressing the gaps identified in the review and conducting training for employees.
We also plan to roll out the ablution facilities project in 2024, which is currently in the planning phase.
Exxaro Resources Limited Integrated report 2023 105
Social impact
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.
How we deliver value through our social and
relationship capital
We strive to leave a positive legacy in our communities by
implementing large-scale community development initiatives. We
deliver value and achieve tangible impact through the Social
Impact strategy, which focuses on land use management,
education and SMME development.
The strategy is a proactive response to mitigate the systemic
social challenges in our communities through a long-term
perspective. When viewed through the lens of the SDGs, this will
have a lasting positive impact on communities and reduce poverty
by combining multidimensional approaches that address
education, economic wellbeing and access to land for economic
activity. The strategy will also allow us to influence other areas of
wellbeing without additional investment.
The strategy enables us to deliver impact at scale through the
following key principles:
• A market-based approach that integrates social, environmental
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 value we deliver through the Social Impact strategy is
supported by:
• Social Impact strategy funding structures: These support the achievement of social impact by serving as conduits for community
donations and sponsorships
• Incorporating social impact principles in future planning: We plan future SLPs in accordance with social impact principles and impact
areas in consultation with communities and government when developing municipal integrated development plans. We also consider social
impact principles in future mining and energy operations. Through localised, in-sourced project management we develop intellectual
capital to leverage continuous improvement in SLP delivery
The investment we make in our communities demonstrates the importance we place
on our social responsibility. Guided by sustainability, stakeholder inclusiveness and
collaboration, we uplift and develop our host communities to build better futures.
106 Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Material theme
Matter
Supporting our strategy
Our broader impact
Building
sustainable
communities
• Social licence to operate (including
• Empower people to create
impact
• Become a catalyst for
economic growth and
environmental stewardship
community relations, collaboration and
engagement)
• Supporting a just transition to a low-carbon
economy
• Ensuring human rights are respected and
upheld
• Social acceptance and community unrest
• Job and business creation
• Value sharing
• Resettlement and land use
Performance snapshot
Exxaro’s
social and
relationship
capital
Investments in our
social and
relationship
capital
Improving our
outcomes
(business model,
page 20)
• The relationships that provide our social licence to operate
• The impact we have on our communities, stakeholders and society at large
R223.51 million invested by Exxaro and Cennergi in socio-economic and enterprise
development programmes (2022: R205.81 million)
• Completed the municipal capacity building programme
• Started phase 2 of the Phumulani agri-village food garden
• Contributed significant value to local communities through targeted procurement initiatives
• Trained farmers and connected them to markets as part of the minerals succession programme
• Continuously seek ways to engage and maintain relationships of mutual respect and benefit with
our stakeholders
– Partnership with Women in Mining Business, a national association that promotes female
participation in mining value chain opportunities
– Developed support structures for black contractors
– Attended the Lephalale Investment Summit
– Consultation with communities and government when developing municipal integrated
development plans
• 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
– Incorporated ESG-aligned strategic priorities into the supply chain sustainability policy
Looking
ahead
Our long-term commitments aim to enhance our shift towards greater social impact. To achieve this, we
have:
• Undertaken to develop baseline assessments for ECD in Lephalale and Mpumalanga. In Mpumalanga
the process will be concluded in the second quarter of 2024
• Invested in land use management. The minerals succession programme portfolio is defined and plans
developed for implementation
• Embedded the end-to-end supplier development framework
• Developed community stakeholder engagement plans
DETAILED DISCLOSURE
Read co-creating and preserving value with communities (ESG report, page 92) for details about our approach and performance.
Exxaro Resources Limited Integrated report 2023 107
Social impact continued
Co-creating and preserving value with communities
We manage and mitigate the positive and negative impacts of our activities on the environment and society by creating socio-economic development
in our communities as we pursue operational efficiency, growth and regulatory compliance.
We achieve tangible impact in our communities through the three pillars of the Social Impact strategy:
• Land use management (minerals succession programme)
– We ensure black emerging farmers have access to resources that guarantee the sustainability of their businesses. We provide holistic support
through mechanisation, inputs, access to markets, funding and skills development to enable emerging farmers to commercialise their businesses
• Education
– Our education initiatives aim to improve the quality of school education, and target ECD and whole school development
• SMME development
– We provide financial support, skills development and training to SMMEs to improve their service/product delivery and increase the
representation of local black-owned suppliers in our supply chain
ESD
Our ESD programme is a critical element of the Social Impact strategy and our purpose of powering better lives in Africa and beyond. ESD initiatives
provide financial and non-financial support to small businesses in areas where we operate, thereby promoting economic transformation and
establishing sustainable communities. The programme delivers sustained stakeholder value by securing our licence to operate while being financially
self-sustaining; reducing enterprise-wide supply chain risk; and supporting economic transformation by growing the number and size of black-owned
businesses.
Supply chain sustainability
Our supply chain sustainability activities integrate supply chain choices that support socio-economic development, preferential procurement, ethical
conduct and our climate change response. Sustainable procurement and supply chain processes are critical components of our social and
environmental responsibilities as we are sensitive to South Africa’s socio-economic challenges, and the effects of climate change on our supply chain.
Our performance
Socio-economic development and CSI
Exxaro
Cennergi
R86.91 million invested in social investment projects for socio-
economic development (SLPs and CSI) (2022: R181.31 million)
R25.3 million invested in socio-economic development initiatives,
including education, welfare, agriculture development and health
(2022: R24.5 million)
• 41 867 community members benefited from CSI projects
• 350 jobs created, positively impacting more than 4 500 people
(2022: 1.17 million)
• 29 jobs created for SLPs (2022: 83)
Implementation of our prevailing five-year SLPs experienced delays due to challenges with small enterprises and suppliers lacking relevant skills,
maturity and capabilities. The difficult economic environment also impacted the viability of these enterprises and suppliers, with some withdrawing
due to liquidation. We are managing these challenges through ESD interventions aimed at building capabilities. In addition, a developmental
approach through technical and administrative mentoring support has been given by the project teams to guide local contractors.
We will continue to drive delivery of the Social Impact strategy in terms of education, land use management and SMME development, as well as
create value through collaboration and partnerships. We also plan to advance the Impact Catalyst’s integrated waste management study and will be
moving the material recovery facility and waste advocacy proposals into implementation phase. We are seeking funding partners for the viable
feasibilities.
ESD
Retained 355 jobs (2022: 1 037)
Spent R111.3 million (2022: R2 912 million), positively impacting 14
qualifying small enterprises and exempt micro-enterprises, and one
youth-owned and nine women-owned businesses
ESD approvals since programme inception have combined grants and loans. Approvals have steadily increased since their drop in 2020, which was
caused by a poor pipeline of funding applications related to challenges from COVID-19 and a distressed economy. The ESD programme reached self-
sustainability at the end of 2022, meaning the loan fund was able to ensure compliance and support new beneficiaries through loan repayments,
instead of annual funding from Exxaro’s budget. The 2023 funding is from loan repayments and will ensure that Exxaro’s overall B-BBEE
performance target is achieved.
We are focused on streamlining our ESD process and building the capabilities of our small enterprises and suppliers. We plan to implement an end-
to-end supplier development framework in 2024 to improve the conversion from prospective to actual suppliers and support first-time contractors
to deliver on their contractual obligations. We are also rolling out a tender readiness programme in 2024 to improve the capabilities of small
enterprises in our host communities to respond to requests for quotations.
To augment our existing ESD funding, we intend to leverage additional funding through co-funding.
Supply chain sustainability
More than R1.3 billion of our procurement spend was directed to 263
local black-owned SMMEs (2022: R1.09 billion; 246)
Local contracts worth R1.9 billion were awarded to 31 suppliers
(2022: R525 million; 38)
We developed support structures for black contractors and simplified the onboarding process with a supplier portal.
Our future focus areas include:
• Providing more procurement opportunities to SMMEs from host communities through targeted expenditure and skills development
• Driving the adoption of green procurement initiatives
• Improving the systems and technologies to track our spend on green products, with the goal of increasing this spend
• Prioritising investing in understanding the causes and impacts of disruptions (climate and non-climate related) to our supply chain
108 Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Our environmental stewardship
Exxaro’s natural capital is the resources on which we rely to run our
business and create the products and services we deliver to our
stakeholders. Our natural capital impact encompasses climate change
adaptation and resilience, air quality, energy, water security, waste
management, biodiversity protection, and environmental liabilities, land
management and rehabilitation.
How we deliver value through our natural capital
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. We manage the impact of our activities on the
environment and society by incorporating performance principles into our ESG management systems, environmental policies and practices.
We comply with local legislation, management standards, and current and future-based best practice.
Exxaro’s wheel of excellence ensures our approach to environmental stewardship is consistent across the group. It effectively integrates new
assets to align our BUs in implementation, compliance, monitoring and
reporting processes. It also guides BUs in acquiring necessary
competencies.
We deliver value and prevent its erosion through:
• Environmental management programmes that comply with applicable
legislation, ensuring that all activities requiring licences are fully licensed
• Management standards that are integrated into our environmental
management activities
• Incident management and reporting through a standardised system –
ensuring our BUs manage incidents effectively and efficiently to minimise
negative impact. We immediately report incidents and mitigation
measures to relevant authorities
• NEMA’s precautionary principle against which we evaluate our
environmental impacts
• Our efforts to exceed minimum regulatory requirements and enable
consistent compliance – ensuring we respect and uphold human rights,
and maintain our environmental licence to operate
• Performance rewards through the group STI scheme, aligned with our
decarbonisation plan and Sustainable Growth and Impact strategy, to
motivate employees to uphold these standards
• Stakeholder engagement and collaboration to address and respond to
concerns, work together to achieve mutual benefits, and contribute to
environmental and socio-economic development initiatives, among
others
Responsibly managing and mitigating the negative impacts of our activities on the
environment is critical to enabling the success and long-term sustainability of our
business, and ensuring we create a sustainable future for our employees,
communities and the planet.
Exxaro Resources Limited Integrated report 2023 109
Material theme
Matter
Supporting our strategy
Our broader impact
Adapting to a
changing context
Responsible
environmental
stewardship
Executing our
strategy
Principled
governance
Performance snapshot
Exxaro’s
natural capital
Investments in
our natural
capital
Improving
our outcomes
(business model,
page 20)
• Supporting a just transition to a low-carbon
• Make our minerals and
energy businesses thrive
• Be carbon neutral by 2050
• Become a catalyst for
economic growth and
environmental stewardship
economy
• Managing our pollution
• Carbon emissions reduction
• Environmental incidents
• Water stewardship
• Waste management
• Impact of climate change
• Closure planning and rehabilitation
management
• Biodiversity management
• Build a leading global energy solutions
business
• Embedding ESG in response to increased
regulation and for sustainability
• Legal, regulatory and compliance excellence
• 74.83Mtpa RoM
• Land we manage and rehabilitate (active and inactive mines)
• Water we consume
• The diesel and electricity we use
• Supporting research and development in climate change
• Created awareness and provided training and education across all environmental topics for our employees,
contractors and communities
• Invested over R1.5 billion in the LSP to reduce scope 2 emissions, manage climate-related risks and leverage
opportunities
• Mine responsibly
– No fines or penalties recorded
– Improving disclosure through participating in the CDP forestation programme
– Collected one year’s consistent data on air pollutants at Grootegeluk – a key result of the multi-pollutant
ambient air quality monitor installed
– Adoption of water intensity targets
• Minimise our environmental impacts
– Improvement in energy intensity against the consolidated group GJ target
– Fuel cleaning system launched at Mafube
– Recalibrating the Grootegeluk water balance model to improve overall water management
– Mobile reverse osmosis plant commissioned at our Belfast operation
– Improving dirty and clean water separation, and preventing groundwater contamination with improved waste
management at operations
• Actively participate in the just energy transition to a low-carbon economy
– Land use management integrated into our Social Impact strategy
– Progressed against our decarbonisation journey and identified various decarbonisation projects and
opportunities for implementation in the short to medium term
• Active land management
– Started rehabilitation at Durnacol dump 7 and Tshikondeni dump
• Ensure biodiversity stewardship
– Adopted nature-based solutions that enable biodiversity protection and restoration, positively contribute to
our broader social impact, and include benefits such as carbon offsetting and credits
• Reduce the risk of stranded assets
– We focus on sustaining our business to maximise our returns in executing our early value strategy.
Investments are reviewed, optimised and scheduled in line with our capital excellence journey. We continue
to review and optimise our coal portfolio of assets
• Optimise our production and sales mix in line with our market to resource optimisation strategy
– Our robust and diverse product portfolio, resulting from the early value strategy and our market to resource
optimisation initiatives, enabled us to optimise our product mix, resulting in record price realisation of 97% in
2023
• Continue improving our good cost control and resource efficiency
– Our operational excellence programme enabled by data sciences and advanced analytics provides data-
driven insights to improve efficiencies and optimise costs, which is critical in protecting our business during
volatile economic conditions
To further improve our performance and sustainability, we are looking into strategic partnerships,
applying green technologies and sound environmental management tools.
DETAILED DISCLOSURE
Read the environment chapter (ESG report, page 32) for details about our approach and performance.
110 Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Climate change adaptation and resilience
From governance to strategy, risk management and capital allocation, among others, climate change and its impact on our
business and stakeholders are central to our thinking and actions. Our ability to create sustained value now and into the
future drives our response to the climate change agenda.
Our employees, contractors, customers, suppliers and communities play a critical role in our ability to address climate change issues.
Exxaro’s collaborative, inclusive and partnership approach to climate change enables us to continue on our journey of being carbon neutral in
a just manner.
Aligned with TCFD recommendations, Exxaro’s Climate Change Response strategy and decarbonisation plan guide our approach to
mitigating the impact of and addressing climate change while prioritising adaptation and building resilience.
To achieve this, we are:
Prioritising
adaptation and
resilience of our
operations and host
communities
Reducing our carbon
footprint
We consider the external climate-related risks we face; the systems, processes and projects we
implement; and awareness created through communication, education and training for stakeholders
across our value chain
Our decarbonisation plan outlines our journey to reduce our carbon footprint and ultimately become
carbon neutral by 2050. Supported by analytics tools that inform strategic decision making, we
include climate change metrics in scorecards, and climate change is embedded in our capital
allocation model
Supporting research and
development
We are investing extensively in developing knowledge of climate change, energy and sustainability.
We prioritise innovation, research and development, and collaboration on sustainability issues with
value chain stakeholders
Monitoring, measuring
and reporting data and
performance
Internally, we use monthly energy and carbon data reporting and the operating control accounting
approach; track carbon and energy reductions using the STI scheme at group and BU levels to inform
employee and executive reward performance; and continuously investigate data solutions for real-
time feedback, which we believe will allow us to respond quickly to emerging issues and
opportunities to reduce our emissions. Externally, we participate in the CDP climate, water and
forestation programmes
Read more about our response to climate change
Climate Change Response strategy
Climate change position statement
CDP
TCFD Index
Investor tab under integrated reports 2020 Sustainability tab
www.cdp.net
Databook
Transitioning into a low-carbon business
ESG report, page 12
Decarbonisation plan
ESG report, page 14
Climate change adaptation and resilience
ESG report, page 36
Responding to TCFD reporting requirements, page 120
Our performance
Prioritising adaptation and resilience
Planted 100 trees on rehabilitated land at Belfast
as part of adopted nature-based solutions and 100 trees
at Matla to create a wind break and mitigate the impact of
dust from the area
Introduced a pilot for a carbon footprint calculator
mobile app for employees
Established strategic partnerships with several
stakeholders to ensure we leverage all opportunities
presented in using nature-based solutions
Engaged with the South African National Biodiversity
Institute on guidance for the use of nature-based solutions to
offset emissions at our operations. We have invested in two
Spekboom pilot carbon offset projects
Our awareness, training and education initiatives not only deepen our knowledge as an organisation, but also stimulate behaviour change in
pursuit of climate change adaptation and resilience at our operations and in communities.
Exxaro Resources Limited Integrated report 2023
111
Our environmental stewardship continued
Key initiatives implemented this year included:
• Exxaro climate change masterclasses: Exxaro has been facilitating climate change masterclasses for the past two years as part of
employee awareness, education and behaviour change. Classes are held throughout the year
• The decarbonisation campaign and the climate change course: The first phase of the campaign encouraged employees to participate in a
10-week personal decarbonisation challenge and complete the innovative climate change course. Weekly challenges on LetsConnect
encourage and reward planet-saving behaviours. The second phase is planned for 2024 and will focus on decarbonisation projects being
implemented at BUs
• Employee carbon footprint calculator app pilot: The app is a gamified platform that tracks, calculates and quantifies an employee’s
emissions profile
• Community awareness and education: For the past two years, Exxaro has run these campaigns to create awareness and educate
community members about climate change issues. Topics include the negative impact of pollutants on the environment and their health.
Campaigns align with the goals of our Social Impact strategy, and going forward will include an increased focus on embedding knowledge
and assisting communities with access to renewable energy
20% decrease in carbon intensity
to 4.4tCO2e/kTTM (2022: 5.54tCO2e/kTTM)
Scope 1*: 1.4tCO2e/kTTM)
(2022: 1.90tCO2e/kTTM)
Scope 2*: 2.96tCO2e/
kTTM
(2022: 3.64tCO2e/kTTM)
The 68MW LSP at
Grootegeluk, designed to
reduce our emissions by
161ktCO2e, achieved financial
close on 29 June 2023 and
construction activities began
thereafter
R2 797 million
carbon tax liability paid for
production-related
emissions, ie fugitive
methane emissions
associated with the coal seam
8.5% decrease in scope 3** emissions
to 68 156ktCO2e (2022: 74 488ktCO2e)
Re-baselined our short-term decarbonisation plan
emissions to reflect 2022 as the new baseline year
Reducing
our carbon
footprint
*All of Exxaro’s BUs’ carbon emissions are taken into account for these two intensity calculations.
** Scope 3 emissions for domestic sales.
Carbon intensity decreased by 20% due to energy efficiency measures at our operations. Ongoing operational efficiency programmes
implemented include working with our engineering teams and a service provider to identify potential group-wide projects to implement at
our operations with significantly high energy usage. We are systematically reducing the emissions of our Grootegeluk vehicle fleet by
addressing logistics constraints using analytics tools and implementing optimisation solutions that include:
• Mine digitalisation
• Dispatch and fleet allocation optimisation
• Truck payload management
• Shovel and truck cycle variability management
• Road condition and construction opportunities
• Out-of-cycle waste reduction
We continue efforts of promoting renewable energy as a cost-effective technology through the anaerobic biodigester programme, which was
launched with SANEDI and UNISA in 2019.
Our operational efficiency drive aims to address challenges experienced in delayed internal reporting.
R63 million invested
to date to support
research and development
(2022: R8.9 million)
Supporting
research and
development
Monitoring,
measuring and
reporting data and
performance
CDP scores
Climate: B (management
category)
Water: B (management
category)
Exxaro participated in COP28 climate change deliberations and sponsored the South
African COP pavilion. Key developments that Exxaro benefited from include
decarbonisation technologies, fossil fuel sector, the Global Stocktake Report outcomes,
developments in carbon markets, quantifying scope 3 emissions, carbon markets and
trading, just transition developments, phasing out of fossil fuels, loss and damage fund,
global adaptation fund, green finance, increasing renewable energy capacity and climate
lobbying.
Our CDP scores indicate that we are taking coordinated action on climate and water
security issues. To improve our performance, we are strengthening our efforts to
demonstrate best practice in strategy and action as recognised by frameworks such as
the TCFD, Accountability Framework and others.
Our primary focus areas in 2024 include climate adaptation (at our operations and host communities), and 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, nature-based solutions and carbon offsets.
Our Climate Change Response strategy and position statement will be reviewed and updated in 2024 to
incorporate the latest developments in climate science and climate frameworks. We will also be setting green
procurement targets for our supply chain strategy.
Commercial operations of the LSP are expected to commence in the first quarter of 2025.
112
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Air quality management
Addressing the deterioration of air quality remains one of our top priorities, as pollution has significant negative
environmental and social impacts. Our risk-based approach ensures that we continue striving for air pollution reduction for
our people and planet.
Pollutants such as dust and particulate matter (PM) emanate from opencast mining activities that unavoidably generate dust, posing health
and safety risks and negatively impacting the environment.
To address this, we aim to progressively reduce air quality emissions (dust fallout, PM10 and PM2.5) within our operating boundary. Our
approach ensures compliance with environmental legislation and regulatory requirements, and incorporates:
Prioritising
adaptation and
resilience of our
operations and host
communities
We regularly assess our plans and mitigation measures to ensure they remain effective. We also
expand our monitoring network and systematically improve our approach to maintain our target of
100% monitoring at all operations, and to continuously increase the granularity of data. Our air
quality management plans enable the development and implementation of sustainable air pollution
reduction measures for current and future operations
To reduce the significant impacts on the environment and our host communities, these measures
include:
• Chemical and wet dust suppression on unpaved roads and open ground (with additives to 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)
• Planting trees as windbreaks as implemented at our Belfast operation
Our dust monitoring networks ensure effective air quality management and compliance with the
National Dust Control Regulations. These regulations allow two non-residential and residential
exceedances per operation in a year (not within sequential months)
Campaigns empower our communities to change their behaviour and mindsets – highlighting the
health impacts of using domestic fuels and assisting communities with access to renewable energy
Best practice
prevention and
mitigation measures
Monitoring, measuring
and reporting data
(including continuous
research and
development of new
dust suppression and
air pollution mitigation
technologies)
Awareness and
education campaigns
for various
stakeholders
Our performance
One non-residential dust fallout exceedance
(2022: none)
Two residential dust fallout exceedances (at Matla)
(2022: two at Matla)
We apply the non-residential limit for compliance assessment because our operations are located in industrial areas. In areas where host
communities are located close to our operations, we apply the residential limit compliance assessment. During the year, Exxaro intensified all
efforts to prevent and mitigate dust fallout.
The multi-pollutant monitor installed at Grootegeluk is in trial phase. The monitor will measure SO2, PM and NOx, all of which are pollutants
that can impact health and the environment. Calibration activities on the monitor during 2023 ensured credibility, good quality results and
proper placement to minimise breakdowns and provide security.
For the past two years, we have run communication campaigns on air pollution and GHG emissions in our communities to raise awareness
about the environmental impacts associated with mining activities. Quarterly feedback sessions ensure campaigns remain relevant and help
us determine how we can assist communities in reducing the impact of mining activities.
We aim to continue:
• Working with government and other stakeholders on air quality management
• Improving and reporting on our performance
• Addressing stakeholder expectations
We plan to report monitored data in 2024, which will provide valuable insights about the impact on
sensitive receptors and contribute to regional efforts of effectively monitoring and managing air quality
within the Waterberg-Bojanala priority area to reduce impacts on health and the environment. This is
critical for us to deliver on the strategic objectives of our Sustainable Growth and Impact strategy.
Exxaro Resources Limited Integrated report 2023
113
Energy efficiency
Energy efficiency is a critical component of our decarbonisation journey. Managing our consumption and pursuing
alternative energy sources in a just and sustainable manner will ensure our long-term resilience, enabling further progress
towards transitioning into a low-carbon business.
Our energy efficiency efforts are critical for us to achieve our goal of being carbon neutral by 2050. Exxaro’s energy and carbon management
programme outlines how we reduce our direct emissions and energy consumption. The programme is supported by:
Monitoring,
measuring and
reporting
performance using
targets and the
productivity and
energy management
services
Creating awareness
through education
and training to drive
energy-saving
behaviour
Our performance
Each operation has energy intensity targets linked to the group STI scheme. Targets are based on
the outcomes of current state and opportunity scoping reviews, which began at Grootegeluk in
2021. The outcomes of the reviews also informed interventions to reduce energy consumption
and GHG emissions to improve intensity (GJ per total tonnes handled).
Our people and performance, business improvement and information management teams drive
behaviour change among employees, who in turn support efforts to establish energy management
systems. Engineering teams champion energy-saving initiatives and motivate behaviour
transformation. We discuss performance in monthly forums at each BU.
Electrical energy intensity decreased to 3.11MWh/kt
(2022: 3.37MWh/kt)
Diesel energy intensity decreased to 4.39MWh/kt
(2022: 4.88MWh/kt)
Electricity consumption increased to 590 931MWh
(2022: 590 078MWh)
Diesel consumption increased to 83 629kl
(2022: 83 226kl)
Total energy consumed increased to 5 219 390GJ
(2022: 5 211 418GJ)
Our primary energy sources included 41% electricity (2022: 40.7%) and 59% diesel (2022: 59%). Total energy consumed increased by 0.15%
Total electricity and diesel intensity decreased in 2023 by 9% based on the increase in RoM tonnages and improvement in energy and
productivity performance in the mining areas across BUs.
Based on the 8.64% increase in RoM tonnages, electrical energy intensity decreased by 7.72% and diesel energy intensity decreased
by 10.04%.
According to our group STI scheme rules, Belfast, Leeuwpan, Matla and FerroAlloys met energy intensity targets, while Grootegeluk and the
group did not. The group did not achieve its 2023 energy intensity STI target based on the 2023 GIS rules. However, comparing the group
total consolidated energy intensity performance for 2022 with that of 2023 (in GJ/kilotonne) shows that there was an improvement in
energy intensity performance year on year. The energy intensity performance for 2022 in GJ/kilotonne was 29.59 with the 2023
performance at 27.43, which represents a reasonable improvement in energy intensity performance year on year.
We experienced challenges in data acquisition (validity, frequency and resolution) in the second quarter of 2023, which impacted our ability
to analyse, respond and correct declining energy performance at Grootegeluk. We are improving our data collection process to enable real-
time behaviour management. We developed an analytical tool to link plant production throughput with electrical energy per plant module at
Grootegeluk, enabling us to monitor and manage energy intensity performance through the plant. We also implemented advanced process
control in the plant modules to further improve energy efficiency.
Based on the positive results from FuelActive units installed on three haul trucks at Mafube, a similar pilot was launched on five haul trucks at
Grootegeluk. The intent is to gauge the improvement in fuel consumption (expected between 3% and 5%) on the haul trucks and reduce
maintenance costs.
Grootegeluk will be replacing its heavy mobile haul truck fleet, with carbon emissions and sustainability prioritised in selecting the
appropriate best-fit technology partner. We are engaging with our original equipment manufacturers on this process, ensuring roadmaps will
incorporate decarbonisation, sustainability and transitioning from traditional diesel-fuelled haul trucks.
Our primary focus in 2024 will be improving plant throughput performance and electrical energy
efficiency at all BUs.
114 Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Water security
Our operations span across large geographical areas, with water facilities and mining areas connected to the water
resources and atmosphere. The overall in and outflow of water within the mine boundary are closely coupled to local
climatic conditions. To ensure we safeguard sustainable access to sufficient, acceptable quality water, we implement site-
specific water management plans influenced by climate change variability, watershed risks and planning scenarios.
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. Without controlled efforts
to maintain water security, we risk production stoppages, financial loss and non-compliance with water authorisations. The consequences could
impact our licence to operate, increase competition for scarce resources, limit investment opportunities and damage our biodiversity efforts.
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
• Incorporating climate analytics (ENSO and SA Weather Services seasonal outlook) into our water management decision-making processes
Cennergi’s windfarms use licensed boreholes and rainwater. Employees and contractors drink bottled water at the
operations.
Our tailings management system focuses on operation, monitoring and decommissioning of tailings dams. It uses comprehensive risk-based
management and governance systems in line with internationally recognised good practice. Exxaro aims to align tailings management with
the Global Industry Standard on Tailings Management.
Our performance
Water recycled
improved to 56%
(2022: 47%)
Water consumption
improved to 7 430ML
(2022: 10 419ML)
Water withdrawal
improved to 8 744ML
(2022: 11 486ML)
Water intensity
improved to 105L/t RoM
(target: 180L/t RoM) (2022: 150L/t RoM)
These improvements are mainly due to lower water abstraction from the Mokolo Dam at our Grootegeluk operation as we increased recycling
of water from the pit. The newly constructed reverse osmosis plant at our Belfast operation also allowed much of the water abstracted from
the pits to be returned to the catchment as an offset.
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. This supports our strategy to reduce water intake and support the DWS’s objectives to increase water conservation
and reclamation. Our water intensity improved by 30% due to factors mentioned above.
Our 38% water recycling ratio target (defined as the total water recycled divided by total water used including recycled water) is
substantially higher than the coal industry average of 6%, as outlined in the national water use efficiency benchmarks of the DWS. In 2023,
we exceeded our performance from 2022 by 18.6%.
Projects implemented
Internal water
pricing
Belfast water
treatment
plant
Grootegeluk
Oliphantskop
Dam lining
Exxaro embraced the internal water pricing strategy as a planning tool by setting a shadow price, where a
price is used during discussions and evaluations of water-related business decisions. The shadow pricing is
based on the minimum cost of producing water from alternative sources such as reverse osmosis. This
shadow price is further adjusted by evaluating current and future water risks using the Aqueduct Water
Risk Atlas for the regions under consideration to identify the true cost of water for a location. The Aqueduct
Water Risk score is a combined score comprising physical, chemical and regulatory risks.
Belfast implemented a reverse osmosis water treatment plant to alleviate hydraulic load in the mine
reticulation system by removing excess water, treating it, and returning it to the watershed. Higher than
normal rainfall over the preceding three-year period placed the storage facilities under pressure as the mine
could not use all of this water on site.
The treatment plant allowed the site to reduce its water intensity by 80%. It also ensured that any risk of
storage facility spillage into the natural environment was negated.
The lining of the Oliphantskop Dam will enable enhanced water recycling at the beneficiation plants to
prevent process water losses to the pit, reducing electricity consumption due to pumping and water quality
deterioration in the pit.
We aim to further improve our water management plans to ensure climate resilience and safeguard our
natural resources for future generations.
Exxaro Resources Limited Integrated report 2023
115
Our environmental stewardship continued
Biodiversity protection
Safeguarding our natural ecosystems is an essential part of our business and rehabilitation initiatives. Through
conservation and sustainable practices, we strive to be responsible stewards of the environment – mitigating biodiversity
loss and building resilience against climate change.
Without responsible practices, mining activities contribute to biodiversity loss, which affects wildlife, economic activities and people who
depend on natural resources. This is compounded by climate change – a main driver of biodiversity loss. Our biodiversity management plans
guide our efforts in the protection and conservation of biodiversity-rich ecosystems within mining right areas, and incorporate:
Biodiversity
protection
initiatives
Monitoring,
measuring and
reporting data and
performance
The goals of our
Social Impact
strategy
Relocation and conservation programmes, invasive plant eradication, wetland and pan relocation and
research
Environmental and social impact assessments before we mine, biomonitoring and environmental
incident reporting
Contributing to livelihoods through job creation and learning opportunities
Recognising that we need to address climate change and biodiversity loss simultaneously, we adopt nature-based solutions that enable
biodiversity protection and restoration as part of our response to climate change.
Cennergi manages biodiversity at its facilities with an environmental management programme. This approach aligns with
the Equator Principles and the International Finance Corporation’s Performance Standard 6 guidelines on biodiversity
conservation and sustainable management of living natural resources. Cennergi’s biodiversity monitoring and mitigation
plan aims to achieve no net loss of biodiversity.
Since 2016, full-time local SMMEs have successfully managed Cennergi's invasive alien plant control programme.
116
Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Our performance
1 638ha cleared of
invader plants
(2022: 236ha)
Released rehabilitated birds of
prey into Exxaro’s conservation area at
Belfast in partnership with Dullstroom
Birds of Prey Centre
Monitored and managed
rehabilitated Belfast
wetland areas
Increased biodiversity at
pan creation sites through
ongoing proof-of-concept
study at Grootegeluk
We focused on monitoring our wetland rehabilitation areas this year, with rehabilitation of new areas planned for the 2024 financial year.
Initiatives per operation
Belfast
Matla
Grootegeluk
We monitored and managed rehabilitated wetland areas. Part of wetland rehabilitation management is to
eradicate alien invasive species plants. A local community contractor was appointed for invasive alien plant
eradication. Exxaro provided the contractor with training, equipment and start-up capital, and assisted the
contractor to register as a co-operative.
Belfast planted 100 Searsia Lancea trees on the mine rehabilitated surfaces for carbon sequestration, carbon
credit and/or carbon offset purposes.
An indigenous forest was established at Matla when 100 indigenous trees were planted at the new Mine 1 shaft
area. Other than having an impact on local biodiversity, the trees also serve as a wind break, improving the
visual impact of the shaft as well as improving the air quality in the area.
We plan to relocate any baboon spiders and other species of concern that will be impacted by the expansion of
the pit area in 2024 and 2025. The relevant permits for this will be obtained as part of the process.
The service provider will be appointed in the first half of 2024 and should commence with the invasive alien
plant eradication in the second half of 2024.
Tshikondeni
The local community conducted invasive alien species control through Exxaro’s partnership with the Impact
Catalyst. The community cleared 1 429.56ha.
Cennergi
No red data mortalities were recorded at Tsitsikamma (2022: none). No secretary bird (sagittarius
serpentarius) fatalities were recorded at Amakhala Emoyeni (2022: one).
Unfortunately, one Cape vulture fatality was recorded (2022: one), one immature martial eagle (polemaetus
bellicosus) and one blue crane (grus paradisea) fatality was recorded at Amakhala Emoyeni (2022: none).
The martial eagle is a regionally and globally endangered species and the blue crane is classified as “near
threatened” regionally and “vulnerable” globally. Both birds are priority species at Amakhala Emoyeni with a
fatality threshold of zero in terms of the adopted biodiversity monitoring and mitigation plan.
In collaboration with the Endangered Wildlife Trust and International Finance Corporation, Cennergi is
exploring an offset opportunity for Cape vultures through the Cape vulture safe zone project, and WildSkies is
investigating approaches to reduce cumulative impact on blue cranes.
A bat curtailment programme was implemented at Amakhala Emoyeni between October 2022 and May 2023.
The bat fatality threshold was not exceeded for the monitoring period and, as a result, the programme will not
need to curtail turbines during the October 2023 and May 2024 period. However, the need for curtailment will
be informed by the new bat fatality data from the fatality monitoring programme.
We will:
• Conduct a Taskforce on Nature-related Financial Disclosures baseline assessment in 2024 to identify our
nature-related risks and impacts with the goal of improving our management and reporting of these risks
• Amend biodiversity management standards, and align with the Taskforce on Nature-related Financial
Disclosures and biodiversity COP17 outcomes
• Plant the first 4ha of Spekboom in Lephalale in 2024 as part of our nature-based solutions in
addressing climate change
Exxaro Resources Limited Integrated report 2023
117
Our environmental stewardship continued
Mine closure and rehabilitation
Our integrated closure planning and concurrent rehabilitation will ensure we leave a sustainable post-mining legacy –
building momentum throughout our operations’ lifecycles as we work towards enhancing our positive impact and
mitigating our negative impact.
We manage our environmental liabilities and rehabilitation in compliance with legislation and evolving responsible mining practices. In
implementing our holistic and integrated approach to land management, mine closure and concurrent rehabilitation, we:
• Consider impacts on employees, communities, the environment, government and infrastructure
• Proactively manage environmental impacts to minimise residual liabilities (ie water quality and quantity, and topsoil health) that
could affect Exxaro’s financial performance
• Complete concurrent rehabilitation timeously
• Prevent water ingress into rehabilitated areas
• Calculate financial provisions in terms of GNR 1147 (financial provision for prospecting, exploration and mining operations). Our
sustainability and finance departments, in conjunction with independent technical and financial specialists, conduct external assessments
annually at all coal and energy operational sites, as well as our coal mines in closure
• Approve and update liabilities through internal governance processes
We strive to integrate land and liability management in daily mine planning to minimise final closure costs for each operation and optimise
final land use after closure.
Our performance
2 132ha land rehabilitated
(2022: 2 000ha)
11 028ha land disturbed
(2022: 9 624ha)
R9 327 million unscheduled
closure costs
(2022: R8 427 million)
Four operations in active closure
(2022: four)
R3 552 million operational
guarantees at year end
(2022: R3 606 million)
Growth of Exxaro and Matla rehabilitation
trust funds (combined)
R244 million
(2022: R19 million)
The increase of 1 404ha in land disturbed is due to the inclusion of Mine 1 development at Matla as well as additional areas mined at the
opencast operations at Grootegeluk, Leeuwpan and Belfast. The increase in our performance of land rehabilitated of 132ha is due to
increased rehabilitated land handed over to farmers at Matla to utilise. The backlog in rehabilitation at Leeuwpan will be addressed in 2024
with a dedicated five-year budget to clear the backlog volumes for backfilling pits.
Although the implementation date was set (19 February 2024), we await promulgation of draft financial provision regulations for mine
closure and rehabilitation (GN 792) issued on 27 August 2021. Discussions continue between the environmental policy committee of the
Minerals Council, on behalf of Exxaro and our mining peers, and the DMRE. The proposed regulations will repeal GNR 1147. All our BUs will be
continuously assessed according to GNR 1147. The implementation of GNR 1147 was postponed indefinitely by government. The delays in the
government's implementation of GNR 1147 creates legislative uncertainty in the financial provisions for environmental rehabilitation areas.
Exxaro’s rehabilitation successes since 2002
Hlobane: Sealing of cracks on the
mountain was completed, and the
Hlobane waterfall runs during every
rainfall event
Eerstelingfontein/Inyanda:
Concurrent rehabilitation completed
within one year after completion of
mining activities
Tshikondeni: All rehabilitation
completed within five years, with
maintenance on discard remaining
Matla: Crack sealing on subsidence
areas was completed within two years,
and local farmers were given access to
the area for crop production. The water
treatment plant has been operating
successfully since 2016
Belfast: Rehabilitation of the wetland
system adjacent to mine was
completed
Grootegeluk: Proof-of-concept study
in the mining right area was completed
and six seasonal pans were created
• Started rehabilitation at Durnacol
dump 7. Design and plans for
dumps 1, 2 and 3 are in progress
• Engaged with government on
Grootegeluk dumps 4 and 5 to
finalise rehabilitation redesigns
• Tshikondeni dump maintenance
continues
• Phase 2 of the Belfast wetland
rehabilitation system began this
year, and will improve wetlands
within the mining right area
Looking
ahead
We plan to do the following:
• Discard dump design and rehabilitation at Grootegeluk, Durnacol, Hlobane and Tshikondeni
• Rehabilitation projects at three inactive sites
• Concurrent rehabilitation at all operational mines
• Water treatment solutions at Durnacol and Hlobane closed mines
118 Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Waste management
Managing our waste streams responsibly is an important part of how we minimise environmental degradation. We achieve
this through prevention, minimisation, reuse and recycling while ensuring safe waste disposal as the last option.
We manage the impacts of our waste streams by aligning our policies and procedures with sustainability principles and leading practice. We
regularly review our policy and management standard to ensure relevance and alignment with legislation. Our waste management practices
incorporate:
• Our cradle-to-cradle approach, which minimises waste production, ensuring waste from one process is used in other processes to
encourage elimination or minimisation of waste
• Exxaro’s management standard for hazardous and non-hazardous waste
• Our waste management hierarchy to avoid, reduce, reuse and recycle, which prevents and avoids waste as much as reasonably practicable
• The proximity principle (treat and dispose of waste in reasonable proximity to the point of generation), duty of care (we are ethically
responsible for waste management) and the precautionary principle (we are proactive in mitigating environmental risks)
• Monitoring, measuring and reporting data and performance
• Awareness and training across BUs forms part of our induction for new employees
Examples of hazardous waste emanating from our operations
include used oil, contaminated soil, medical waste, used personal
protective equipment and sewage. General waste comprises:
• Recyclable domestic waste (plastics, polymers, cardboards,
metal cans and papers)
• Non-hazardous recyclable industrial waste (rubber products
such as waste tyres and conveyor belts, scrap metals and
industrial products)
• Inert, non-recyclable waste (rubble and demolition waste
separated at source) collected, recycled or taken to safe
disposal sites by specialist service providers
Our performance
Material waste at Cennergi’s facilities includes
general waste, oil rags and used oil. Cennergi
implements waste separation at source to
increase recycling, where possible, and minimise
waste sent to landfill.
2 703t general waste recycled
(2022: 2 768t)
3 186t hazardous waste sent to landfill
(2022: 1 624t)
General waste recycled decreased by 2% due to less volumes of high-density polyethylene recycled at Grootegeluk.
The total weight of hazardous waste generated at our managed coal operations and sent to landfills increased to 3 186t (2022: 1 624t).
The 54% increase in the amount of hazardous waste sent to landfill at Grootegeluk is due to the workshop wash bay silt being included as
hazardous waste as of April 2023.The decision was made based on a DWS finding indicating that the silt from the wash bays has the potential
to pollute due to its hydrocarbon content and can thus not be disposed as plant discard. Alternatives are being investigated and the outcome
of the waste classification will confirm the way forward.
The drive to improve housekeeping across the mine also added to this increase in waste being taken to the hazardous waste storage area for
disposal.
To address the increase, the mine will investigate and implement the delisting of the workshop wash bay silt in 2024 and 2025.
Initiatives per operation
Head office
Grootegeluk
Exxaro head office started a recycling drive by updating the bin labels at the planter, plaza, printer and cafe
station to promote better waste separation, which increases post-consumer recycling of strategic parts. This
recycling initiative will play a part in environmental awareness for head office employees.
The integrated waste management solution developed by Impact Catalyst includes alternatives linked to tyre
reclamation. The roll-out of the solution will be supported by the mine. In the interim, the mine will continue to
investigate various service providers that can assist with the reclamation of waste tyres.
Exxaro is also working on the following initiatives to further improve our waste management approach:
• Innovation and alternative treatment for integrated waste management
• Evaluating cost-effective options for recycling, reuse, emissions reduction and other end-of-life recovery options
• Opportunities for cost saving and optimisation
• Industrial symbiosis to stimulate green business effectively
We plan to use various waste reduction or avoidance technologies and opportunities at our BUs to ensure
waste is reduced.
Exxaro Resources Limited Integrated report 2023
119
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.
1
The board’s oversight of climate-related risks and opportunities
Further reading
Governance (ESG report, page 112)
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 sub-committees. The CEO and chairperson
oversee climate-related risks and opportunities.
Building resilience through governance
(page 55)
2 Management’s role in assessing and managing climate-related risks and opportunities
Ultimate responsibility from a management perspective rests with the CEO. She is supported by the
executive committee. A scenario analysis is applied to identify risks and opportunities by management
teams, as stated in our Climate Change Response strategy.
3
Climate-related risks and opportunities the organisation has identified over the short, medium
and long term
Climate-related transitional risks include emerging regulation, legal/litigation, carbon pricing, market and
reputational risks. Physical risks include extreme weather events, such as flooding and heat waves.
Opportunities include investments in low-carbon minerals, growing the energy business, business
resilience, energy self-generation, implementation of low-carbon technologies and strategic partnerships.
Transitioning into a low-carbon business
(ESG report, page 15)
Our strategy (page 47)
Transitioning into a low-carbon business
(ESG report, page 15)
Our risks and opportunities (page 28)
4 The impact of climate-related risks and opportunities on the organisation’s strategy and
financial planning
Transitioning into a low-carbon business
(ESG report, page 13)
Our Sustainable Growth and Impact strategy focuses on diversifying to low-carbon transition minerals
and growing our energy business. Prudent financial planning and capital allocation is applied to ensure
business resilience in a low-carbon world.
Our strategy (page 47)
5
The resilience of the organisation’s strategy, taking into consideration different climate-related
scenarios, including a 2ºC or lower scenario
We undertook a 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.
Climate Change Response strategy report
(investor tab under integrated reports 2020)
and climate change position statement
(sustainability tab)
Our strategy (page 47)
6
The organisation’s processes for identifying and assessing climate-related risks
We take a proactive approach to identifying climate-related risks. The ERM framework considers climate
risks and has an impact scale that is used to rate these risks.
7
The organisation’s process for managing climate-related risks
Climate-related risks are managed within our ERM framework. The RBR committee, on behalf of the
board, is responsible for regularly monitoring risks that will have an extreme impact on the group if they
materialise. Extreme risks, together with their controls, are considered critical in the ever-changing
environment in which we operate. These are continually monitored and reviewed in line with the risk
appetite framework and combined assurance approach.
Transitioning into a low-carbon business
(ESG report, page 15), Climate Change Response
strategy report (investor tab under integrated
reports 2020) and climate change position
statement (sustainability tab)
Our strategy (page 47)
Transitioning into a low-carbon business
(ESG report, page 15)
Our risks and opportunities (page 28)
8 How processes for identifying, assessing and managing climate-related risks are integrated into
the organisation’s overall risk management
Our risks and opportunities (page 28)
Climate-related risks are integrated into overall risk management and factor as one of the top 20 risks
facing the business.
9
The metrics used by the organisation to assess climate-related risks and opportunities in
line with its strategy and risk management
Climate risks and opportunities metrics are disclosed in the ESG report, ie carbon emissions, carbon
intensity, fossil fuel revenue versus clean technology revenue.
10 Disclose scope 1, scope 2, and, if appropriate, scope 3 GHG emissions, and the related risks
We report extensively on our scope 1, 2 and 3 emissions in our ESG and CDP reports.
11 The targets used by the organisation to manage climate-related risks and opportunities and
performance against targets
Environment (ESG report, page 32) and
remuneration report (ESG report, page 168)
GHG emissions (ESG report, page 42)
and CDP report (www.cdp.net)
Transitioning into a low-carbon business
(ESG report, page 14)
We have committed to reducing our emissions by 40% by 2026 and being carbon neutral for our scope 1
and 2 emissions by 2050. We also have a carbon intensity reduction target (5% reduction compared to
the previous year’s carbon intensity).
Our strategy (page 47)
120 Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Our Mineral
Resources and
Mineral Reserves
We are capitalising on our
existing asset base, which
underpins our transition
from coal mining towards
a future in minerals and
energy, equipping us to
flourish in a low-carbon
economy.
Exxaro Resources Limited Integrated report 2023
121
Exxaro Resource and Reserve reporting
strategy
Exxaro continuously strives to enhance the estimation and
reporting of our Resources and Reserves through:
Competence
Assurance
Accurate
estimation
Credibility
Accountability
Reconciliation
Governance
Trustworthy estimates
Professional execution
Responsible exploitation
Our Competent Persons are the
custodians of the mineral assets,
employing responsible and
innovative technical management
principles.
Mineral 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.
Our early value coal exploitation plans, supporting our Sustainable
Growth and Impact strategy, are implemented at all our operations.
Considerations
reflected in reporting
Our reporting is informed and
guided in accordance with:
Exxaro's
diversification
Global energy
transition
World
economy
ESG
122 Exxaro Resources Limited Integrated report 2023
Our
business
How we
create value
Strategically positioning
the business for growth
Building resilience
through governance
Our
performance
Our Mineral Resources
and Mineral Reserves
Notes on our operations and projects
Grootegeluk
• Positive outcomes of an external
estimation audit, illustrating the
credibility of the processes
underpinning our estimates
• Production of coking coal
increased but year-on-year RoM
decreased slightly
Mpumalanga
Leeuwpan
• An optimisation study is in
progress to attain a steady and
consistent RoM supply as the
OL pit nears depletion. The focus
will be primarily on the exploitation
of the remaining OI pit
Thabametsi
• The resource is located immediately adjacent to
our Grootegeluk operation, and we are
considering scenarios that will unlock maximum
value for the integrated Waterberg business
Matla
• The implementation of the three mine
expansion projects, securing an estimated ~85%
of Matla Coal Reserves, progressed well
• Coal Resources identified through innovative
MRM principals, previously situated outside the
LoM, provided additional pit room and the
necessary flexibility for the mining teams to
alleviate implementation delays
Belfast
• Market to resource flexibility was achieved
through establishing a domestic client base
• Challenges experienced early in the reporting year
were addressed, resulting in exceptional
production performance in Q3/4
• Grade control is a key enabler for mining flexibility
between the various pits at the operation
Australia
Mafube
• A 50% owned, highly successful joint venture mine
with our partner Thungela Resources
• Focused exploration drilling during the year to
increase geological confidence and progress on
environmental studies enhanced future planning
at the operation
Moranbah
• A 50%-owned, hard-coking coal joint venture development with Anglo American Steelmaking Coal in the Bowen Basin, Queensland, Australia
• The execution of a 33km2 3D seismic survey is currently in progress. On completion, most of the Resource will be covered by 3D seismic surveys and will, in
conjunction with focused drilling, contribute materially to the de-risking of the Coal Resource
Our coal estimates for the reporting year (Resource (Mt)) (Reserve (Mt))
Total attributable Coal Resources
Total attributable Coal Reserves
l Measured l Indicated l Inferred – Proved – Probable
9 400Mt
2 900Mt
l Matla l Leeuwpan l Mafube l Belfast l Grootegeluk l Thabametsi l Moranbah South project
Our total attributable Coal Resources decreased by ~1%, primarily due to mining. On-mine drilling increasing the level of confidence
resulted in material movements between the Coal Resource categories, as noticeably observed at our Mafube mine.
Our total attributable Coal Reserves decreased by ~3%, primarily due to mining depletion and revised LoM plans. A material decrease in Coal
Reserves only noted at our Leeuwpan mine (~14%) is due to new drill hole information received and layout losses that occurred during mine
plan execution.
Other than normal mining depletion, no material changes to the total attributable Coal Resource and Coal Reserve estimates are further
reported for any of our operations.
Notes:
a.
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 2023 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.
Rounding off of figures quoted may result in minor computational discrepancies, although it is not deemed significant.
b.
c.
Exxaro Resources Limited Integrated report 2023 123
4 5734 1723 8314 4384 3572 2112 5552 4221 9361 9303 9373 4673 3423 1563 1492 9172 0221 8972 2762 2027571 0951 0837437322019202020212022202381114441451218650
Glossary
AGM
API4
B-BBEE
Annual general meeting
Argus/McCloskey Coal Price Index
Broad-based black economic empowerment
Black Mountain
Black Mountain Mining Proprietary Limited
BU
Cennergi
CMRR
COP28
CSI
DEI
DMRE
dtic
DWS
EBITDA
ECD
ESD
ESOP
ERM
Exxaro
HEPS
HPI
IFRS
JKT
JSE
King IV
KPI
LoM
LSP
LTI
LTIFR
Business unit
Cennergi Proprietary Limited
Consolidated Mineral Resources and Mineral Reserves
2023 UN Climate Change Conference of the Parties
Corporate social investment
Diversity, equity and inclusion
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)
Early childhood development
Enterprise and supplier development
Employee share ownership plan
Enterprise risk management
Exxaro Resources Limited
Headline earnings per share
High-potential incident
International Financial Reporting Standards
Japan, Korea and Taiwan
JSE Limited
King IV Report on Corporate Governance for South Africa™, 2016
Key performance indicator
Life of mine
Lephalale solar project
Lost-time injury
Lost-time injury frequency rate
Mining Charter III
Broad-based Socio-economic Empowerment Charter for the Mining and Minerals Industry 2018
MoI
OHIFR
PAIA
POPIA
RBCT
RBR
ROCE
RoM
SDG
SERC
SIOC
SLP
SMME
STI
TCFD
TFR
UNGC
Memorandum of incorporation
Occupational health incident frequency rate
Promotion of Access to Information Act, 2002 (Act 2 of 2002)
Protection of Personal Information Act, 2013 (Act 4 of 2013)
Richards Bay Coal Terminal Proprietary Limited
Risk and business resilience
Return on capital employed
Run of mine
Sustainable Development Goal
Social, ethics and responsibility committee
Sishen Iron Ore Company Proprietary Limited
Social and labour plan
Small, medium and micro-enterprise
Short-term incentive
Task Force on Climate-Related Financial Disclosures
Transnet Freight Rail
United Nations Global Compact
124 Exxaro Resources Limited Integrated report 2023
Administration
Group company secretary and registered office
Andiswa Ndoni
Exxaro Resources Limited
The conneXXion
263B West Avenue
Die Hoewes Centurion
0157
(PO Box 9229, Pretoria 0001)
South Africa
Telephone: +27 12 307 5000
Lead equity sponsor and debt sponsor
Absa Bank Limited (acting through its corporate and investment
bank division)
Absa Sandton North
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
Independent external auditor
For the financial year ended 31 December 2023
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
Transfer secretaries
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.
www.exxaro.com
Exxaro Resources Limited Integrated report 2023 125