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 socio-economic development strategy, including our approach to education, and enterprise and supplier development, is aligned with our vision to have a positive impact on society. We also consider the long-term perspectives of government strategies such as the 2030 National Development Plan, as well as integrated development plans of the local municipalities where we operate.
Exxaro remains committed to investing in initiatives that build sustainable communities. We do this through collaboration and partnerships, proactive engagements, cultivating a deeper understanding of societal needs, as well as better application of best practices in corporate citizenship. To ensure measurable benefits, our social return on investment methodology evaluates the impact of the initiatives implemented in the communities surrounding our operations.
We focus on the following socio-economic development areas to enhance value creation and self-empowerment for our communities:
Our Exxaro people development initiative governs and oversees education and skills development programmes that benefit our employees and communities in the areas around our operations. We developed this initiative to align with the national education strategy, outlined in the National Development Plan, which states that early childhood development (ECD) is critical to ensure that children reach their full potential.
In 2019, Exxaro spent a total of R28.23 million on education initiatives, including sponsorship of university research chairs, academic programmes and infrastructure development for basic education.
We collaborated with Seriti and Eskom to rebuild Bonginhlanhla Primary School in Thubelihle, eMalahleni. Seriti began the first phase of building construction in 2018 and completed it in 2019. Exxaro spent R7.4 million on the second phase, which included the construction, a block of three classrooms, a laboratory, a library and a computer centre. The project produced a social return on investment of 5.1.
In Tshikondeni, we spent R1.2 million on equipping three ECD centres with learner and teacher support material. Exxaro built the ECDs in 2018 for the benefit of 151 children.
Exxaro also supported seven schools with academic programmes at a cost of R3 million for 882 grade 11 and grade 12 learners who achieved an average 75% matric pass rate.
Prevailing socio-economic conditions and challenges expose disadvantaged communities to the risk of food shortages, inadequate access to energy, potable water and proper sanitation, making them particularly vulnerable to illness. By collaborating with other businesses, specialists and government, Exxaro leverages its business capabilities, applying appropriate technologies, to address the challenges faced by these communities.
Exxaro contributed R5.03 million towards the establishment of new healthcare units at Baragwanath and Tygerberg hospitals. We also supported people living with acquired brain injuries.
As prioritised in the integrated development plans of local municipalities to improve living conditions and social inclusion, Exxaro is committed to providing access to opportunities, and promoting individual and community involvement, through infrastructure development. To this end, local enterprises are contracted, and local people are employed and trained.
In 2019, Exxaro completed the upgrading of three residential roads from gravel to tar in Siyathuthuka (Belfast) for the Emakhazeni Local Municipality at a cost of R5.6 million in 2019, and created 118 jobs during the project.
Our Grootegeluk mine began the refurbishment of a water pipeline in 2019 to ease the pressure on ageing water infrastructure due to rapid growth in the surrounding area. Bulk potable water was supplied to the Marapong residential area by Eskom's Matimba power station, in terms of an agreement between the Lephalale municipality and Eskom, until the agreement lapsed. Water is currently supplied in terms of an extended year-to-year agreement between the parties. The supply pipeline infrastructure, servicing businesses and the community in and around Marapong, is inadequate.
Exxaro will implement the first phase of the project, which includes the refurbishment and conversion of the existing Department of Water and Sanitation-owned 10km pipeline from the Zeeland water-treatment works to the Matimba raw water distribution chambers and potable water pipeline. The total budget for this project is R58 million and Exxaro spent R2.52 million in 2019.
At Exxaro, we embrace and prioritise enterprise and supplier development as we strive to be a positive force for social change and economic empowerment. Through enterprise and supplier development, we aim to lead economic transformation by supporting black-owned, black women-owned and black youth-owned small businesses that will create jobs in our host communities, transform the supply chain and support Exxaro's growth aspirations.
Our enterprise and supplier development strategy intends to develop entrepreneurs and suppliers across priority investment areas, underpinned by the following four pillars:
The value proposition of our enterprise and supplier development strategy articulates the programme beneficiaries, and prioritises implementation through our existing processes and procedures with the following solutions:
In 2019, 30 enterprises were granted loans and grant funding totalling R170.7 million. The following entrepreneurs were able to grow their businesses and create sustainable employment:
Our financial support also includes restructuring loan payment terms for beneficiaries who are not able to honour their obligations due to, among other challenges, industrial action, inclement weather and project scope changes.
The enterprise and supplier development centres in Delmas and Belfast began operating in 2019 while we continued to establish others, and provide non-financial support, including mentoring and coaching, to our communities. The enterprise and supplier development centre in Kriel, close to our Matla operations, is scheduled to open in March 2020 and another at Grootegeluk towards the end of 2020.
Over the past four years, Exxaro has spent over R20 million on SLP-related enterprise and supplier development initiatives (Delmas: R5.2 million, Belfast: R5.5 million, Grootegeluk R7.8 million and Matla R1.8 million). A total of 61 SMMEs are beneficiaries in the incubation process.
Our rural entrepreneurship development programme in Belfast and Lephalale has benefited 77 small enterprises (Belfast: 24 and Lephalale: 53) over the past two years.
During Global Entrepreneurship Week in November 2019, we sponsored the 67CEOs Foundation's local community SMME development programme on advancing market access in eMalahleni, Lephalale and Centurion. The 67CEOs Foundation hosts free entrepreneurship workshops for newly established businesses in partnership with CEOs and experienced entrepreneurs. In August 2019, the Ebonoko Foundation introduced female entrepreneurs in eMalahleni and Lephalale to opportunities presented by the fourth industrial revolution.
In the coming financial year, we plan to improve business development services for communities at the enterprise and supplier development centres.
|Investment per focus area
|Education (includes skills development)
|Enterprise and supplier development (including agriculture)
|Health and welfare
A R4.7 million interest-free loan from Exxaro’s enterprise and supplier development programme has enabled Siza Coal Services Proprietary Limited, trading as Siza Labs, to decrease borrowing costs and thus improve profitability.
Founded in 2003 by Alexander (Alex) Masondo, the company employs 215 people full-time in its ISO 17025-accredited testing laboratories, which specialise in the analysis of coal, minerals, ore, soil and water.
Two commercial laboratories are located at Kinross and Middelburg, Mpumalanga, and another 10 are on-site facilities at various mining operations.
Significant achievements over the years include establishment of the first world-class accredited water testing laboratory in Middelburg, as well as multi-testing laboratories in Botswana and Zimbabwe.
Siza Labs is also a recipient of an inaugural Exxaro Supplier Excellence Award.
Keagile Trading Enterprise cc, trading as Adonai Kitchen & Catering, has used R500 000 grant funding from Exxaro’s enterprise and supplier development programme for working capital, and to purchase a delivery vehicle and catering equipment.
Exxaro has also provided coaching and mentoring in management, safety and hygiene.
Established by Ruth Mothapo, the company operates a restaurant at Exxaro’s Grootegeluk mine in Lephalale, Limpopo, in terms of a three-year contract, and supplies other companies.
With 19 full-time employees, Adonai is now able to diversify its revenue streams to include the Onverwacht Business Centre in Lephalale. Ruth has also applied for certification by the Food & Beverages Manufacturing Sector Education and Training Authority to provide training in food management and catering as well as hazard analysis and critical control points.
With development funding of R1.5 million from Exxaro’s enterprise and supplier development programme, Flashing Lites Photography Proprietary Limited has purchased equipment to improve the company’s capacity and service quality.
Established in 2015 by Hleku Maluleke, a professional mechanical engineer, who developed a keen interest in photography as a university student, the company produces photography, corporate films, animation and live streaming, among other audiovisual services, for various organisations.
Inspired to grow, Hleku has formed an advisory council of five industry experts who meet regularly to help him review the company’s performance and chart a sustainable way forward. Flashing Lites plans to relaunch as a boutique brand communications agency in 2020.
Project team demobilisation workshops
As three projects near completion of construction and commissioning, team members are assisted by Exxaro with demobilisation workshops.
Project internship programme
An on-the-job training programme started in 2019 to create opportunities for an initial intake of 14 interns.
CV database at Grootegeluk supports contractor recruitment process
To ensure transparency, Samketsi (an independent service provider) is developing a recruitment database of candidates in Lephalale for the Grootegeluk complex and any other local companies.
Organisational human factor benchmark
The Afriforte organisational human factor benchmark assessment was extended to labour brokers and project teams in 2019. It measures people's working conditions in the interests of employee safety, health and wellbeing.
Local procurement: Leeuwpan relocation action plan
Five construction packages were created so that local contractors could participate in the construction phase. All labour and materials have to be procured locally with an established contractor supervising work, including on-the-job training.
We believe that equipping the youth of our country with the skills they need to understand and use rapidly evolving technologies is critical. To this end, in partnership with the South African Digital Content Organisation, we are involved in the Youth Exponential Development (YDx) programme, which invites people aged 18 to 35, with interests in computers and technology, as well as a desire to start businesses, to learn about the fourth industrial revolution and digitalisation.
Exxaro has set aside R40 million to upskill 400 youth in our communities by exposing them to technology and innovation.
The applicants are drawn from eMalahleni, Victor Khanye, Emakhazeni, Steve Tshwete and Govan Mbeki in Mpumalanga, and Lephalale and Tshikondeni in Limpopo.
The programme has created co-operatives, that are taking advantage of networking and business opportunities.
“Our community projects address current socio-economic challenges and offer a solution beyond life of mine so that our communities become independent and sustainable,” says Tebogo Leepile, Exxaro’s community development manager.
Exxaro's supply chain sustainability strategy sets out to leverage procurement spend and thus meet our broad range of stakeholder expectations. The strategy commits Exxaro to ethically procure goods and services from historically disadvantaged SMME suppliers within our host communities.
Our ethical procurement programme also ensures that we source goods and services from companies that uphold our supplier code of conduct. We launched our supplier excellence programme in 2019 to acknowledge suppliers who demonstrate commitment in this regard.
Our employees also participate in an anti-corruption and anti-bribery programme, launched in November 2018, to understand best practice and associated risks, particularly fraud and corruption, bribery and conflicts of interest.
In addition, our green procurement programme ensures that sourcing, use and disposal of our goods and services adheres to world-class material stewardship standards. We plan to increase our investment in this programme.
Our preferential procurement spend complies with the provisions of the B-BBEE codes (refer to graph below).
B-BBEE preferential procurement performance in 2019
All of our business units are on track to be fully compliant with the revised Mining Charter by 2023 with particular focus on exempt micro-enterprises (EMEs), qualifying small enterprises (QSEs) and designated group-owned entities
Preferential procurement points achieved on the B-BBEE scorecard
Mining Charter III compliance: Goods procurement
All business units have met B-BBEE procurement targets for 2019 although attention is needed at Grootegeluk to meet 2023 targets.
Historically disadvantaged individual (HDI) procurement of goods is on track to meet 2023 targets except at Belfast where it will have to be prioritised as the mine scales up.
Women-owned (WO) and youth-owned (YO) procurement requires attention at Grootegeluk and ECC to meet 2023 targets.
MCIII – goods procurement performance
MCIII – services procurement performance
Mining Charter III compliance: Services procurement
B-BBEE procurement of services exceeds compliance targets across the business although HDI procurement of services requires attention at Grootegeluk and ECC. Attention to WO procurement of services is required at all business units, particularly Leeuwpan and ECC, to meet the 2023 target. YO services procurement is below target at all business units.
It is critically important that we respond appropriately to challenges experienced by our host communities in order to uphold our social licence to operate and thus meaningfully address the concerns of people who reside in areas adjacent to our operations. Our goal is to have a positive impact on their lives and to leave a lasting legacy.
In 2019, Exxaro experienced 4.5 days of production stoppages due to community unrest compared to 22 in 2018.
During 2019, Exxaro continued to experience community protests at all business units. Incidents included protests at Grootegeluk by the Lephalale (Ellisras) local taxi association and former employees of Group Five with damage to the medical and induction centre in Marapong. At ECC, several protests occurred around the provision of opportunities to employees, farm workers who felt that they were not adequately represented by community forums, demands for business opportunities and complaints from neighbouring communities on the negative impacts of mining operations.
The local political landscape was particularly unstable in the second quarter of the year due to the national general elections on 8 May 2019. Government engagements in the first half of the year therefore focused on political party stakeholders to gain insight into policy thinking.
A highlight in 2019 was the 80% reduction in the number of production stoppages related to community protests at our operations. We attribute this to improved responsiveness to stakeholder needs and the number of engagements by our business unit and head office stakeholder affairs teams with key local, provincial and national stakeholders, as well as the activities of the social facilitators appointed at all operations, and our local procurement strategy. The social facilitator's role is to facilitate engagements and alignment between the mine, contractors and communities on recruitment, training and preferential procurement. The positive impact of social facilitators is particularly evident at Grootegeluk and Matla. At Grootegeluk, the partnership resulted in 17 engagements with municipal and local forums linked to the major political parties in the second quarter, which enabled the recruitment process around the finalisation of the Grootegeluk plant 6 (GG6) expansion project, following termination of the Group Five contract, to proceed with minimal disruption. Matla did not experience any community protests that were seen as major disruptions at other mines in the eMalahleni municipality.
In April, an alignment meeting between the acting municipal manager, Grootegeluk stakeholder affairs manager and Exxaro's manager: community development resulted in the establishment of a working group to address key concerns. In June, the new general manager at Grootegeluk was welcomed by the Lephalale Local Municipality Council, and Ga-Seleka and Shongoane traditional leaders, who pledged their support. Grootegeluk is committed to re-establishing a stakeholder engagement forum to continue the dialogue and feedback on social initiatives.
Exxaro also met with the Municipal Infrastructure Support Agency (MISA) to understand how Exxaro could leverage MISA to fast track and widen our impact. As a way forward, it was agreed that MISA and Exxaro would further explore a pilot project to capacitate a municipality so that it could self-manage water rehabilitation. MISA is strategically positioned to assist Exxaro in unlocking opportunities at local level.
In June, the first of Matla's biannual stakeholder engagement forum meetings was conducted to provide an update on business plans, SLP project progress, challenges and sustainability issues impacting on the future of Matla.
At ECC, scheduled community engagements include stakeholder forum meetings and engagements with the eMalahleni, Steve Tshwete and Govan Mbeki municipalities about SLP projects and role clarification.
Belfast has established a monthly stakeholder engagement forum consisting of all community structures, each represented by two members, which must share information with community members outside the forum. Belfast has also engaged with surrounding farming communities on issues ranging from employment and procurement opportunities to dust suppression and skills development. A transitional engagement and crisis prevention plan has been developed to ensure a smooth transition from project to operations.
Exxaro has also secured a partnership with Brand South Africa, as custodians of promoting a positive narrative about South Africa within the country and the rest of the world, to disseminate information about our nation-building initiatives.
After implementing our enterprise and supplier development strategy, identified as areas of weakness in terms of the Department of Trade and Industry codes of good practice scorecard, we achieved level 2 B-BBEE contributor status.
Benefits for recipients of financial support (from Gauteng, Limpopo, North West Province, KwaZulu-Natal 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 SLPs are five-year community investment programmes with annual initiatives for co-investing with local government and other social partners. In 2019, we focused on agriculture, education, enterprise and supplier development, infrastructure and skills development in the two provinces, Limpopo and Mpumalanga, where we operate, and achieved the following:
In 2019, we appointed a service provider to assist with designing an operational model for a community trust. A framework has been designed to ensure an effective and efficient transaction process in terms of the governance structure for the implementation of identified projects and their financing.
As part of Exxaro's replacement BEE transaction, in 2019, the new employee ownership plan and community benefit scheme were concluded for implementation in 2020.
A 5% shareholding in Eyesizwe RF will be transferred to each of the schemes through a combination of free and vendor-funded shares.
The employee share ownership plan is similar to the interim scheme and beneficiaries will benefit from dividend payments for the duration of employment.