Exxaro report selector 2019

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Exxaro Resources Limited
Integrated report 2019

Currently viewing: Positioning the business for growth / Stakeholder management

Stakeholder management

In support of Exxaro’s purpose of powering better lives in Africa and beyond, we continue to work towards improving the quality of our relationships with stakeholders and building long-term, stable and mutually trusting relationships that will create shared value for all our stakeholders.

We have adopted a stakeholder maturity model to assess our progress and improvement in relationship building with our stakeholders (see ESG report stakeholder review). Our management objective is to improve our stakeholder engagement maturity level from ad hoc and procedural to integrated and relational levels over the next two to three years. This requires context and simplicity.

Exxaro’s approach to stakeholder management

The board has approved the key account management (KAM) approach to stakeholder management for Exxaro. The approach is aimed at improving stakeholder engagement across the organisation so that it is proactive and responsive to risks and opportunities. In this way, we will be better able to strengthen stakeholder relationships in an increasingly dynamic and uncertain operating environment. It is a purposedriven process that supports Exxaro’s stakeholder excellence objectives, our organisational purpose and our culture themes of “ownership” (results orientated, efficient and effective) and “open and connected” (collaborative, connected to the ecosystem).

For more information on the KAM approach, see stakeholder review of the ESG report.

Stakeholder and risk identification

Our approach to stakeholder risk management begins with the identification of key external stakeholders, risks, issues and opportunities. A process of stakeholder mapping and analysis is conducted regularly across our operations to identify new stakeholders and emerging issues, and to determine the extent to which they affect or are affected by the activities, outputs and/or the outcomes of the organisation and thus their materiality to the organisation.

During quarterly risk reviews at the business units, the material issues identification process and annual functional reviews at head office, stakeholder-related risks are evaluated in line with Exxaro’s enterprise risk management framework. The inputs inform the development of either an issues management-focused engagement plan or a risk managementfocused plan. In 2019, Exxaro implemented a stakeholder management system to monitor the effectiveness of engagement activities across the business.

Engagement highlights of 2019

Community engagements

A highlight in 2019 was a reduction in the number of production stoppages related to community protests at our operations, from 22 in 2018 to 4.5 in 2019. We attribute this to greater responsiveness to stakeholder needs, and the number of engagements with key local, provincial and national stakeholders as well as the activities of independent social facilitators now appointed at all operations. The proactive identification and communication of local procurement opportunities for communities also contributed to the reduction.

The role of the social facilitators is to mediate and enable alignment between the mine and communities on recruitment, training and preferential procurement. The positive impact of the social facilitators is particularly evident at Grootegeluk and Matla mining operations. At Grootegeluk, the partnership resulted in 17 engagements in the second quarter alone with municipal and local forums linked to major political parties. Matla has not experienced any community protests that have caused major disruptions at other mines in the eMalahleni municipality.


Local government engagement

In June, the new general manager at Grootegeluk, Ronald Mafoko, was introduced to the Lephalale Local Municipality Council as well as the Ga-Seleka and Shongoane traditional leaders. He was welcomed warmly and assured of their support. Grootegeluk is also working to re-establish a stakeholder engagement forum to continue the dialogue process and feedback to the community on social initiatives.

While the number of production stoppages related to community unrest has reduced, protests continue and are responded to at all business units, largely focused on procurement and employment opportunities.

Government engagements

The atmosphere of the local political landscape was tense in the second quarter due to national general elections on 8 May 2019. Government engagements in the first half of the year therefore focused on political party stakeholders for insight into policy thinking. Exxaro donated R20 million to political parties in 2019 using the parliamentary proportional method.

In 2019, Exxaro expanded its engagement to political parties to target reputation building opportunities and collaboration with government through initiatives such as:

  • Secured a partnership with Brand South Africa as custodians of promoting the role of business in South Africa, disseminating positive narratives about the company’s nation building initiatives
  • Worked with the Department of Minerals and Energy to align the country’s messaging and participated in government activities on the margins of the Mining Indaba
  • Met with the Minister of Employment and Labour, Thembelani Nxesi, to position our labour strategy. The minister also officiated at the launch of Exxaro’s new head office, the conneXXion, earlier in 2019
  • On 26 November 2019, our Grootegeluk mine hosted the Waterberg launch of the model aimed at prioritising delivery of high-impact regional development.

The president launched a new district development model in three pilot municipalities between October and November.

Our overall objective of government engagement is to seek alignment on national priorities and develop opportunities of collaboration for social and economic development in South Africa. Accordingly, we are exploring a municipal capacity building programme in collaboration with the NBI and MISA to improve the capability of municipalities in delivering social services and establishing partnerships with businesses and civil society for the implementation of high-impact projects.

The Impact Catalyst

The Impact Catalyst was launched in Polokwane, Limpopo, on 29 October 2019 by the founding partners, including Exxaro, Anglo American, World Vision and the Council for Scientific and Industrial Research (CSIR), and attended by the province’s premier as well as other key stakeholders. It is aimed at increasing the impact of socio-economic development initiatives through collective action. Several other companies in finance, engineering and consulting as well as other sectors have expressed interest in the initiative. Exxaro has committed R10 million to the Impact Catalyst which has to date funded a feasibility study into establishing a local manufacturing capacity and a health project.

Investor engagements

A key feature of 2019 was the Capital Markets Day, which provided an opportunity to update investors on Exxaro’s coal strategy to 2023 in terms of capital investment, volume growth and anticipated coal market activity. In addition, investor engagement was intensified by the governance roadshow for insight into investor concerns about Exxaro’s remuneration philosophy and structure. Investors engaged through offshore and domestic conferences and raised concerns such as coal supply to Eskom, the outlook for seaborne prices, climate change risk and response, and capital allocation in relation to capex, use of cash from disposals and the dividend policy. Offshore investors were particularly concerned about the sovereign risk. Investor engagements will be more demanding in view of our strategy considerations. We are also exploring shareholder concerns and insights on the Just Energy Transition concept from a South African perspective as well as their perceived role in this process.

Civil society/NGOs

We engaged the Centre for Environmental Rights (CER) regarding a concern on water use licence compliance at our Leeuwpan mine, Mpumalanga.

We are working to resolve the concerns expressed.

Building our stakeholder relationships
Category   How we engage   Key topics and concerns   Our response  

Quality of relationships (based on internal assessments and/or external surveys)

  • CEO roadshows
  • Business unit mass meetings
  • Caucus system
  • LetsConnect mobi/USSD system
  • Business unit and group newsletters
  • Television screens
  • Email
  • Company portal
  • Improved communication
  • Transformation (throughout organisation)
  • Skills development
  • Community development
  • Business strategy
  • Ethics
  • Recruitment practices
  • Responsible environmental management
  • Job security
  • Exxaro strategy and outlook
  • We increased the number of communication channels with employees to include a mobile app, at no cost to employees, to receive information
  • Skills development spend ( Business model that creates value)
  • Employment equity implementation ( People)
  • Responsible environmental management ( see ESG report Environment)

Quality of relationships (based on internal assessments and/or external surveys)

  • Quarterly meetings
  • Union/management monthly meetings
  • Future forums
  • Employment equity forums
  • Skills development forums
  • Transfer of provident fund from Iscor to Exxaro
  • Recognition agreement
  • Line of sight (LOS)
  • Career pathing
  • Skills development
  • Individual development plan
  • Transferring employees to MineWorkers Provident Fund and Exxaro pension/provident fund ( see ESG report People)
  • Recognition agreement signed with NUM and UASA at ECM ( see ESG report People)
  • LOS (under discussion: the line of sight principle referring to an incentive that clearly indicates, over a short period of time, whether or not controllable operational targets are being achieved) ( see ESG report Remuneration report)

Quality of relationships (based on internal assessments and/or external surveys)

  • Government engagement plan implemented at corporate centre aiming to build provincial or national relationships necessary to support business unit activities
  • Regular engagements at provincial and local level as required to secure social licence to operate
  • Current skills and small, medium and micro enterprise (SMME) development initiatives
  • Role in climate change and renewables
  • Identifying areas for collaboration to address community needs
  • Projects in agriculture
  • Water projects
  • Job creation
  • Skills development ( see ESG report People)
  • Employment equity ( see ESG report People)
  • Climate change and responsible environmental management
    ( Climate change)

Quality of relationships (based on internal assessments and/or external surveys)

  • Formal quarterly mine stakeholder engagement forum meetings
  • Municipal local economic development forums
  • Collaboration structures such as Coal Leadership Forum in Mpumalanga
  • Ad hoc meetings with taxi associations, farmers and farming communities and various other community meetings
  • Better engagement and procurement opportunities
  • Continued investment in community development, job creation and youth development
  • A total of R62.1 million was invested in community development, infrastructure and education initiatives in 2019 ( see ESG report Communities).
  • Exxaro has partnered with Anglo American, the CSIR, World Vision and the Limpopo provincial government in the Impact Catalyst – a collaborative socio-economic development platform aimed at achieving more significant impact ( above).
  • The R40 million investment in the Youth Exponential Development (YDx) initiative, in line with the president’s youth empowerment scheme, was rolled out in 2019 ( see ESG report Communities).

Quality of relationships (based on internal assessments and/or external surveys)

Investor perception survey results considered in this assessment

  • Annual and interim results presentations
  • Non-deal roadshows
  • Local and international investor roadshow meetings and webcast/teleconferences around finance director biannual
    pre-close statements
  • Hosted second Capital Markets Day event at new, digitally connected Belfast mine in Mpumalanga
  • Survey on Just (Energy) Transition
  • Feedback from annual investor perception survey:
  • The overall responding sample has improved significantly with more positive perceptions of Exxaro in almost all the categories such as strategy and capital allocation.
  • Investors continue to show appreciation for access to executive management and the regular and consistent contact given to them by Exxaro.
  • As a measure, good access to executive management scored the highest positive average in the entire report.
  • Climate change and transition plans.
  • In response to the information needs highlighted by analysts in the reputation survey, Exxaro has, firstly, improved communication of strategy, including capital allocation from process, and secondly, responded to key concerns about strategy and the future direction of the company.

Quality of relationships (based on internal assessments and/or external surveys)

  • Largely transactional engagements around commercial relationship
  • Exxaro hosted first ever Supplier Recognition Awards in 2019
  • Local procurement
  • Enterprise and supplier development
  • Supply chain processes, payment, partnerships and feedback
  • Our local procurement strategy is regulated by the supply chain sustainability policy, integrating local SMMEs into our supply chain through direct and indirect procurement channels. Direct procurement is enabled by set-asides, preferential tender evaluation criteria, and preferential contracting terms.
  • In 2019, contracts worth at least R380 million were awarded to black-owned SMMEs in Exxaro’s host communities. Indirect procurement is the preferred method of integrating SMMEs in major capital projects. Our sustainability policy encourages contractors to subcontract a share of the contract value to local SMMEs while adhering to Exxaro’s corporate governance and sustainability standards.
  • Exxaro has implemented a comprehensive enterprise and supplier development (ESD) strategy aimed at supporting economic transformation. Around R170 million was disbursed to 30 beneficiaries in 2019. Our digitalisation journey aims to create an efficient market for buyers and sellers to engage effectively. To improve our turnaround times and feedback, we are implementing a new system and digital portal for suppliers to track tenders and invoices, and improve efficiency. In principle, Exxaro supports proposals for collaboration and co-creation of our long-term procurement strategy and undertakes to investigate means to achieve this goal. We are also developing a stakeholder engagement plan to improve communication and interaction with suppliers ( see ESG report Communities).

Quality of relationships (based on internal assessments and/or external surveys)

  • Exxaro invited 60 key customers to our inaugural customer day and provided an overview of the business and our operations, as well as a visit to our Grootegeluk mine in Limpopo. The guest list included Eskom, ArcelorMittal and a variety of smaller customers and traders from around the country.
  • Availability of additional volumes
  • Impact of the Exxaro export strategy into the local market.
  • Requests for supply to new markets
  • Coal prices
  • The quality of our coal seams determines Exxaro’s products, markets and marketing strategy. Around 63% of our volumes are delivered to Eskom and 25% is exported. The remaining volumes are placed in the domestic market. In the past year, there has been a reduction in volumes supplied from Leeuwpan due to production challenges. However, Exxaro is committed to maintaining a local presence.
  • Several production issues at Grootegeluk resulted in variability in product quality for our domestic customers. The issues have been addressed by the operational teams.

Quality of relationships (based on internal assessments and/or external surveys)


  • Planning meetings, correspondence and communication activities
  • Media relations, improved access to senior management (especially CEO) and information about community development initiatives
  • A communication strategy has been developed, targeting our stakeholders through social media, print and broadcast channels. Most of the messages are aimed at sharing Exxaro’s involvement in education, small business and infrastructure development, agriculture and health. We continuously seek opportunities to profile the organisation among various stakeholders such as that offered by the South Africa Investment Conference.

Quality of relationships (based on internal assessments and/or external surveys)

  • Correspondence
  • Impact of Mpumalanga mining operations
  • Exxaro Just (Energy) Transition consideration
  • Exxaro responded in writing to the CER outlining our approach to environmental management, our understanding as to the role of the regulator, independent auditors and licence holder, and committed to addressing specific concerns noted in relation to our Leeuwpan mine.
  Strong relationship that enables mutual value creation
  Good relationship with room for improvement to enable mutual value creation
  Current state of relationship has adverse effects on value creation
  No relationship – adversely impacting value creation