Exxaro Resource limited Report Selector 2018

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Exxaro Resources Limited Integrated report 2018

Understanding our business

Positioning the business for growth

Performance

Mineral resources and reserves

Corporate Governance

Additional Information

Performance against strategy

In 2018, our strategic objectives continued to guide our actions. The constrained environment again called for tough decisions and a firm commitment to continue our focus on business resilience: our ability to withstand any economic and commodity market downturn.

In determining our focus areas, we distilled multiple issues across our operating context, concentrating on those with important implications for our business model to guide our strategic responses. We summarise our progress below.

  • Replacement and expansion of primary mining capacity
  • Improved maintenance of facilities to accommodate the increasing mining fleet
  • Implementation of semi-mobile in-pit crushing technology to reduce travelling distances, cycle times and cost (limits the number of units in the truck fleet compared to conventional pit-rim dumping)
  • Commissioned GG10 to enhance product flexibility, capitalise on pit liberation and enhance flexibility

Strategic priority of excellence   Priorities Key performance indicators Looking ahead Related risks
Marketing  
  • Market-to-resource optimisation
  • Extend presence in export value chain
  • Logistics approach for Transnet Freight Rail (TFR) and Richards Bay Coal Terminal (RBCT)
  • Product mix and RB1 growth (lower value but higher demand)
  • Diversity of our markets
  • Higher-value blended coal at RBCT
 Export volumes will improve as exposure to Eskom is reduced
1 Dependency on Eskom as a key customer
7 Price and currency volatility
8 Cost competitiveness of products
9 Infrastructure access (TFR, RBCT) and capacity

Portfolio  
  • Develop portfolio investment and divestment scenarios
  • Execute streamlined investment and divestment processes
  • Number of successful divestments and investments
  • Sale of interest in Tronox will progress
1 Dependency on Eskom as a key customer
4 Executing business-of-tomorrow strategy
7 Price and currency volatility

Operational    
  • Implementing 'XXX'1
  • Top 5 priorities in Start-up Way2
  • Implementing Lean53
  • Increase production by 3Mt3
  • Rand cost per tonne
  • Total product improvement
  • Labour cost per tonne
  
7 Price and currency volatility
8 Cost competitiveness of products

Capital management  
  • Achieve capital allocation targets
  • Align project portfolio with strategy
  • Reduce capital cycle lead time
  • Communicate effectively to markets
  • Measure and forecast in real-time
  • Return on capital employed
  • Mega project execution (time and cost variance)
  
6 Capital project execution

 
Innovation  
  • Real-time value chain visualisation across all our businesses
  • Integrated operation centres for all business units
  • Data analytics
  • Ensure ICT infrastructure is in place
  • 5% year-on-year performance improvement across all business units
 Reach the first quartile by 2023 on the coal cost curve
5 Competition and product substitution
7 Price and currency volatility
8 Cost competitiveness of products
People and organisational   Workforce of the future strategy Implementation of work of the future strategy
  • Reward and remuneration benchmarking
  • Inclusion and diversity strategy
  • Embedding the work of tomorrow strategy
 People specific:
  • Retention strategy
  • Talent retention
    Ensuring compliance with BBBEE and mining charter III Ensuring transformation in terms of:
  • Reporting
  • Human resources development
  • Employment equity
  • Housing and living conditions
  
  • Compliance and adherence to targets
  • Employee value proposition
    Employee engagement Embedding culture journey aligned with business strategy  
  • Talent retention
  • Reskilling and upskilling employees for the new world of work
Safety and sustainability  
  • Maintain licence to operate
  • Leverage latest technology in safety and health
  • Valid mining rights in place
  • LTIFR
  • OHIFR
 Continue to perform well on safety, aiming for zero harm across activities.Continue to strive for 100% compliance to all regulations and authorisations.
Continue to drive safety improvement plans to exceed LTIFR target of 0.11Health awareness campaigns will improve OHIFR 		2 Maintain social licence to operate
Stakeholder engagement   Reputation management
  • Market perception
  • Government
  • BEE status
  • Investors
  • ESG rating agencies
  • Communities
  • Stakeholder survey results
  • Government relations
  • Improving BEE status
  • Hold/Buy share status
  • FTSE, and other key scores
  • Minimise community unrest incidents
  • Improve community engagement and relationships
 Adopting an extrovert style of communication to 'tell the story' better.BEE status has improved to level 4 and is close to level 3 ESG ratings should steadily improve over the next cycle.Focused attention on job creation via ESD initiatives. 2 Maintain social licence to operate
3 Community unrest
1 Operational excellence initiatives per mine
2 Start-up Way: 1 Bias for action, 2 Performance management, 3 Ownership for operational excellence, 4 Line-function incentive system, 5 Span of control
3 A range of initiatives to extract more from what we have and maximise opportunities

 

 

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