Social licence to operate

The objectives of our social licence to operate are to comply with regulations, and to seek to implement best practice engagement that supports the sustainable development of our stakeholders.

Maintaining our social licence to operate entails not only complying with the regulations imposed on mining companies by government, primarily the Department of Mineral Resources and Energy in South Africa, in the interests of host communities, but going beyond compliance and seeking to implement best practice engagement that supports the sustainable development of our stakeholders.

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 social licence to operate.

Response to community challenges

In our mining communities, our operations are the primary economic activity (other than Eskom) where there is limited economic diversification that is independent of mining. Given the current poor performance of our economy, we are unable to respond fully to community demands for employment and procurement opportunities that would develop small enterprises. However, our efforts and results during the year point towards the right direction and promising prospects for the future.

Investment per focus area	Rm
Social infrastructure	11.89
Education (including school infrastructure)	28.23
Enterprise and supplier development (including agriculture)	15.94
Governance	0.17
Sport	0.81
Health and welfare	5.03
Total	62.07

We believe that Exxaro is a tenant in our host communities. A successful relationship with communities is key to our business success and growth. In addition to our SLPs, we invest in areas such as environmental conservation and health and welfare through our CSI programmes.

Over the past four years, Exxaro has contributed R226 million towards socio-economic development initiatives around our mining communities: 46% on education, 24% on social infrastructure and 13% on enterprise and supplier development, creating over 1 700 jobs. In addition we disbursed R170 million to 30 enterprise and supplier development beneficiaries in 2019.

Our aim is to create economic diversification to limit dependency on the mine while building resilient and self-sufficient communities in the long term by implementing local development initiatives to improve social infrastructure and education as well as promoting employment and local procurement.

In 2019 Exxaro experienced 4.5 days of production stoppages due to community unrest compared to 22 in 2018.

Our SLPs focus on agriculture, education, enterprise and supplier development, infrastructure and skills development in the two provinces, Limpopo and Mpumalanga, where we operate in 2019:

• Grootegeluk, Leeuwpan, Matla and ECC presented academic enrichment programmes at a total cost of R6.2 million
• We equipped early childhood development centres in Tshikondeni
• ECC completed the Kriel community hall
• The Belfast skills development project trained 54 surface machine operators
• Road upgrades in Siyathuthuka near Belfast empowered local contractors and created 118 jobs.

For more information, please see above with details of our social licence to operate.

Compliance and licensing

As part of the project life cycle planning process, Exxaro ensures that all requisite rights, licences and authorisations are in place prior to construction and commissioning.

The only exceptions occur after a stakeholder appeal.

Exxaro aims to have every mining right valid and to comply with all conditions for each licence and right granted. We define the validity of a mining right by having its three pillars in place: the mine works plan, environmental authorisations and SLPs.

We define the enforceability of our mining rights by sections 93 and 47 directives issued, as well as any section 102 to amend a mine works plan, environment authorisation or SLP. In addition, compliance includes submitting reports to the Department of Minerals and Energy describing future mining activities.

Exxaro complies to the best of its abilities with all authorisations and licensing requirements for its current operations and projects. The authorisations typically include:

• Integrated water use licence
• Waste management licences
• Atmospheric emission licences
• Environmental impact assessments
• Records of decisions
• Environmental authorisation

Each of these has specific conditions to which mining operations have to adhere at all times.

Key highlights:

• Reduced number of disruptions at operations
• YD^x ( see ESG report Communities)
• SLP local economic development
• Community benefits due to capex expansion programme
• Continued success of enterprise and supplier development programme

Key challenge: Delay in SLP implementation

Opportunity: Municipal capacity building