Integrated report 2019
Exxaro Resources Limited
Integrated report 2019
We recognise that, as a responsible corporate citizen, we must contribute positively to the global goal of transitioning to a low-carbon economy while managing the immediate needs and requirements of all our stakeholders.
We seek to manage climate change risk through proactive mitigation initiatives including efforts to reduce GHG emissions and through adaptation efforts such as increasing our capacity to cope with changes in climate and the impacts on our business.
Measuring specific indicators across our business units enables us to prioritise our actions and resources to address the greatest impacts on our business and mitigate our negative impacts on climate change.
In determining our material matters over the past year, we grouped matters of significance raised during engagements with our stakeholders in this regard under the theme climate change.
Social and relationship
Natural
Financial
Manufactured
Globally, we are facing the dual-energy challenge of providing affordable and reliable energy to meet growing demand while managing the risks of climate change. The continuing dependence on fossil fuel-generated electricity and fuels for transportation means that greenhouse gases (GHGs) emissions will continue to increase, thereby making it difficult to curb global temperature increases. The Intergovernmental Panel on Climate Change's (IPCC) climate change assessment reports have presented irrefutable evidence that the earth's climate balance has been altered towards warming, with the most significant contributor being increased carbon dioxide (CO2) concentrations in the atmosphere since the fourth industrial revolution.
In light of this, reversing this trend and halting temperature increases to below 2°C will be challenging - but not impossible. The United Nations (UN) IPCC 1.5°C Special Report states that limiting warming to 1.5°C implies reaching net-zero CO2 emissions globally around 2050 and concurrent deep reductions in emissions of non-CO2 gases, mainly methane (CH4).
In this regard, the decarbonisation of energy generation is critical. Introducing renewables into the energy mix is therefore essential and we recognise that this would have significant implications for fossil fuels, especially coal use, globally. This must, however, be balanced with the need for affordable and reliable energy in Africa to ensure that the continent develops its industrial base to reduce poverty and unemployment significantly. We believe that renewable energy can support the electrification of Africa and we are strategically working towards this.
The Paris Agreement aims to limit warming to "well below 2°C above pre-industrial levels" and to pursue efforts to limit the temperature increase to 1.5°C. This is a significant milestone to ensure collective action for the mitigation of climate change impacts.
We support the South African government's efforts to transition to a low-carbon economy within the principle of Just Energy Transition, taking into account the contribution of coal in the socio-economic development of the country. The role of business is critical in adopting low-carbon technologies and driving innovation in product design to ensure that the objectives of the Paris Agreement are attained. Opportunities to expand the energy mix by incorporating renewables will increase access to reliable energy for the population, thereby contributing to the reduction of GHG emissions.
Around 77% of South Africa's primary energy needs are currently provided by coal. The Integrated Resource Plan (IRP) 2019 states that the share of coal in the South African energy mix will reduce to 59% by 2030. This will increase pressure to diversify our business portfolio with the low-carbon future in mind.
In 2019, our audited scope 1 and scope 2 emissions were 412 and 670 kilotonnes of CO2 (ktCO2) respectively. We will incorporate low-carbon fuel technologies and self-generated renewable energy in our operations to reduce our scope 1 and scope 2 emissions. This will support our aspirational target to be carbon neutral by 2050. We will engage our customers to support initiatives to reduce emissions from our product use, which will positively influence scope 3 indirect emissions.
We will continue to disclose our carbon emissions, climate change risks, opportunities and interventions through internationally recognised organisations such as the CDP (formerly known as the Carbon Disclosure Project). We aim to enhance our climate change disclosure landscape by adopting the Task Force on Climate-related Financial Disclosures' (TCFD) recommendations.
The diversification of our portfolio into renewable energy by acquiring 100% of Cennergi, an independent power producer, will support our carbon neutrality strategy. We will continue to invest in the development of low-carbon energy sources to ensure that the majority of the population has access to affordable and reliable sources of energy.
We measure compliance to environmental authorisations on two levels: approved, and compliance to conditions.
Our analysis shows that our approved environmental authorisations are within acceptable levels (100%).
We implemented a new integrated monitoring and compliance system to help us improve the score in 2018. A compliance score of 96% in environmental authorisation conditions was achieved throughout our operations. As part of this process, detailed checklists per site are being drafted to drive improved compliance to conditions.
Delays and appeals against integrated water use licences (IWULs) granted by the Department of Water and Sanitation have become a risk for new projects and part of their critical paths. To mitigate the long lead times in securing the necessary permits and licences, we engage early with the respective regulators, and proactively with every interested and affected stakeholder group.
Total carbon dioxide (CO2) emissions in 2019 were 72 029 kilotonnes (kt) compared to 73 795kt in 2018. The decrease of 2.4% reflects a decline in rehabilitation activities at some operations Our short-term carbon intensity target is -5% on the prior-year level across the group, which is ambitious as some projects take time before their impact is evident, particularly for carbon intensities. We performed below the target with a carbon intensity of 5.4t CO2e per total tonnes mined compared to 5.3kt in 2018. Much of this is due to the inclusion of additional operations such as Belfast and ECC.
Diesel and electricity remain the biggest components of our GHG footprint. We are currently addressing energy security, economic productivity and environmental impacts in our drive to become carbon neutral and thrive in a low-carbon economy.
Exxaro performed well on both CDP climate change and water disclosures in 2019, indicating leadership and the group's commitment to climate change mitigation and adaptation, as well as addressing and managing water risks.
South Africa is a water-scarce country and we recognise that water-reduction initiatives are crucial to sustainable operations, particularly under prevailing drought conditions. Our group water strategy was approved in 2017. It is informed by our risk assessments and identifies five strategic focus areas of excellence:
Group water intensity improved by 9% from 0.11kL/ton to 0.10kL/ton in 2019 mainly due to the sale of North Block Complex and the introduction of early run of mine (ROM) at Belfast.
As part of our commitment to water efficiency, and outlined in our strategy, we have finalised long-term, operation-specific water intensity targets for 2018 to 2022. The targets are based on the prior two years' consumption (baseline) and target water withdrawals from natural resources. To ensure targets are achievable, we conduct water efficiency assessments every six months to assess progress and identify opportunities.
Exxaro acknowledges the findings of the Intergovernmental Panel on Climate Change (IPCC). We agree that the negative impacts of climate change on our host communities, operations and society at large could be significant.
