Communities

Highlights

Handing over houses, crèches and a hall to the community of Tshikondeni in Limpopo with a total spend of R15 million

Completed Ga-Nala landfill project in Matla costing R972 000

Disbursements of R186 million to 24 ESD beneficiaries

SLP projects and donations of R84.8 million

Lowlights

21 community protests affecting our operations or projects, particularly in Mpumalanga

Construction of Rietkuil clinic delayed by Department of Health's lack of commitment to provide staff post-construction

Our socio-economic development (SED) strategy, including our education and enterprise and supplier development strategies, have been aligned with our vision. Through collaboration and partnerships, Exxaro will continue to invest in initiatives that build sustainable communities based on proactive engagement, developing a deeper understanding of societal needs and better application of best practices in corporate citizenship. To ensure measurable benefits, our social return on investment (SROI) methodology evaluates the impact of these initiatives in beneficiary communities.

Exxaro plays a significant role in South Africa as an employer, offering direct and indirect jobs, skills development as well as enterprise and supplier development opportunities.

Our priority SED areas aim to maximise value creation and self-empowerment for communities by:

• Supporting education, health and the natural environment
• Applicable infrastructure development
• Enterprise and supplier development.

Education

The Exxaro people development initiative is an internal framework that governs and tracks all education and skills initiatives for our employees and community development in areas where we operate. Since inception, we have invested an average 37% of our total community spend per annum on education.

Our education strategy is informed by the national department's strategy which recognises early childhood development (ECD) as fundamental to creating a solid foundation in the early years of learning. We have conducted a situational analysis on ECD at Grootegeluk and implementing the programme.

We renovated the Siyanqoba Care Centre, adjacent to the sponsored Leeuwpan Mine Crèche, at a cost of R1.1 million. The centre cares for 26 children and 12 local labourers were used for renovations.

We completed construction of three ECD community crèches in Tshikondeni, investing some R3 million for 242 beneficiaries per year. We are now equipping the centres with educational material.

We contributed to learner support programmes for 1 766 grade-12 learners at winter and spring camps, despite community strikes, in addition to resourcing and infrastructural development projects.

In 2018, 400 learners sat for examinations, with 124 learners obtaining university-entrance passes and earning 19 distinctions (2017: 277 learners, five distinctions).

Health, environment, agriculture, water and energy

Prevailing socio-economic challenges expose disadvantaged communities most to the risk of food shortages, access to energy, potable water and proper sanitation, making them particularly vulnerable to illness. Leveraging our business capabilities, we will respond effectively by collaborating with other businesses, specialists and government in applying appropriate technologies to improve access.

The Ga-Nala landfill site project near Matla was completed in 2018, with fencing erected and a weighbridge installed. This project has 12 beneficiaries and 26 jobs were created.

In line with our aim to leave self-sustaining communities in our areas of operations, we funded Kedithabitha, a 100% black women-owned farm between Abbotspoort and
Ga-Seleka villages in Lephalale. Our objective is to develop this small-scale farm into a fully fledged commercial farm, and to use this farm to link other local small farmers to bigger markets. As such, we identified another small-scale enterprise with potential for growth, Maphi and Mamaphathi farm, also in Ga-Seleka village. This farm will share the tractor and farming implements we donated to Kedithabitha. We have provided training, mentorship, equipment and farm implements to both farms. Kedithabitha farm is on track to realising its potential by establishing a customer base with large supermarkets. There are 144 beneficiaries and 36 jobs were created.

These projects are expected to generate an SROI of 2.4.

Enterprise and supplier development (ESD)

Exxaro's ESD strategy is intended to develop entrepreneurs and suppliers across the priority investment areas and any other opportunities. There are four pillars to the hybrid model underpinning the ESD strategy:

• Providing ESD grants and loans (ie ESD funding)
• Training and developing ESD beneficiaries (incubation)
• Equity investment fund management
• Crowd-sourcing business ideas.

In all our operations, ESD centres are being established to provide business training and support, hands-on mentoring and coaching. These centres are already operational at our Delmas and Belfast operations. Entrepreneurs are receiving business acumen training, personalised mentoring, business support and support to gain access to business funding.

A new business incubator is being established in Kriel near our Matla operations. Grootegeluk contributed R3.55 million over the last four years towards the operation of the Lephalale Enterprise Development Centre. There are 25 SMEs participating in the incubation process. A rural entrepreneurship development programme benefiting 80 people has been implemented at our operations in Belfast and Lephalale.

SROIs for these projects have been calculated at 2.5 to 3.0.

Infrastructure development

Infrastructure such as housing, community and cultural centres, and roads provide shelter and mobility, essential elements for a better community life.

We donated 56 houses, three crèches and a hall to three communities living near Tshikondeni mine in Limpopo. The 50m², three-bedroom houses were provided to beneficiaries identified by the municipality through the government housing initiative. The crèches are designed to accommodate 242 children per year. The community hall will be used for gatherings, funerals, school and church functions, as well as an emergency centre.

In Arnot, phase 1 of the Mhluzi industrial park project has been completed. This is a multi-stakeholder partnership between Exxaro Arnot Coal, Anglo Goedehoop Colliery, Glencore, Corobrik and Steve Tshwete local municipality to build industrial workshops for informal local businesses. Anglo Goedehoop Colliery has completed phase 1 of three workshops already built, and Exxaro will construct four workshops in Phase 2. The partners have committed R21 million to the project.

Investment per focus area – total: R45.9 million

Communities

In 2018, Exxaro operations experienced about 21 community disruptions (total R18 million loss) that negatively affected production at operations, particularly in Mpumalanga. The community demands included local employment, skills development and procurement opportunities.

Exxaro entered into partnership with South African Digital Content Organisation (SADICO) to implement a youth development programme, which we named Youth Exponential Development (YDx) to train and develop 400 youth in digital technology and fourth industrial revolution concepts; and organising them into technology cooperatives, for incubation for a 12-month period.

Significant progress has been made on the Tshikondeni legacy project. The crucial milestone achieved in 2018 is the finalisation of the deed of donation, transferring the mine village and related infrastructure to the Makuya Tshikondeni Development Foundation (MTDF) NPC, the non-profit company established through which the Tshikondeni legacy project objectives will be achieved. Along with this milestone the Exxaro ESD committee approved additional funding to support the establishment of an eco-village as the core business activity of the MTDF. This funding will supplement the infrastructure development budget from AMSA, agreed as part of the mine closure.

Responding to community challenges

We are on track to achieve a level 4 BBBEE status after implementing our enterprise and supplier development strategy which was our area of weakness on the DTI codes scorecard. Benefits for recipients of financial support (from Gauteng, Limpopo and Mpumalanga) include an increase in their asset base, refinancing assets at more affordable rates to ease cash flow, and an improvement in business operations. We expect these businesses to increase their turnover and employ more people in the medium term.

Our social and labour plans (SLPs) are five-year community investment programmes with annual initiatives for co-investing with local government and other social partners. In 2018, we focused on agriculture, education, enterprise and supplier development (ESD), infrastructure and skills development in the two provinces, Limpopo and Mpumalanga, where we operate:

• We presented academic enrichment programmes at four of our operations, viz Grootegeluk, Leeuwpan, Belfast and ECC at a total cost of R6.2 million
• As part of our post-mine closure investment in Tshikondeni, we handed over 56 homes (affecting 56 families and 448 community members)
• Early childhood development centres and a community hall to the Tshikondeni communities in Limpopo with a total spend of R15 million
• Completed Ga-Nala landfill project in Matla to facilitate local waste management by the local municipality
• In Limpopo, we have almost completed a 36km regional road at a cost of R71.2 million in partnership with Roads Agency Limpopo to connect multiple villages in the area.

Employee and community empowerment scheme

The mining charter was published in the second half of 2018 and the mining charter guidelines made available in the last quarter of 2018. The establishment of the new employee and community empowerment schemes will take place during 2019. All required governance processes, consultations and stakeholder engagements will be followed for the approval of the scheme before it will be implemented. This includes complying with the charter and meeting the aspirations of our stakeholders including shareholders, employees and communities adjacent to our operations.

	Case study - from finance to farming (ESD) Extracted from Trialogue Business in Society Handbook 2018 Thulani Dube recently benefited from an Exxaro enterprise development grant that will help him scale and automate his poultry business. Located in Delmas, Dube is a highly adaptive entrepreneur who left a career in finance for a new path in farming. After the commodity downturn in 2016, Exxaro was forced to offer voluntary retrenchment to some of its workers and Dube was among those affected. Rather than face the discouraging shortage of jobs and an indefinite term of unemployment, he used his severance package to buy some land and set up a chicken broiler operation. While many emerging farmers feel poultry is a tough market, crowded out by cheap imports and weighed down by high input costs and health regulations, Dube saw only opportunity for growth. Inspired by his namesake and family totem, Dube, which means 'zebra', named his business Zebra Force General Investments (ZFGI). ZFGI Monumental Chickens – so named because of the impressive size his chickens reach at harvest – is the first entity created out of the holding company. While he has no technical training in farming, he embraced the challenge by studying farming through online resources, and completed an MBA at Stellenbosch University to solidify his business acumen. From Exxaro's perspective, the quality of the candidate, his strong leadership skills, financial literacy and an operational business made for a compelling loan application. ZFGI Monumental Chickens received an R8.9 million grant for capital expenditure and infrastructure improvements that will enable the business to triple its existing annual turnover of R4 million – provided offtake agreements can be secured. Modifications to six existing chicken houses will automate clean drinking water, heating and feeding for the chicks until they reach their full size, and enable Dube to more hygienically and efficiently expand the number of birds. The investment will also provide solar fencing to secure the perimeter, and construct employee housing for 20 staff members. "I see many farmers collapsing under the weight of input costs, so if we can reduce our cost burden of electricity by using renewable energy and eventually produce our own chicken feed, we are likely to be more profitable," explains Dube. He plans to build a new abattoir facility that further reduce outsourcing costs and is essentially creating a circular economy by selling the chicken manure to fresh produce farmers. In return for a grant that is being strategically applied to expand the business, Exxaro is helping to build a commercial-scale agribusiness that employs 20 people directly and benefits up to 100 people across the value chain.