Exxaro report selector 2019

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Exxaro Resources Limited
Integrated report 2019

Currently viewing: Positioning the business for growth within the context of climate change / Understanding our key strategic trade-off considerations

Understanding our key strategic trade-off considerations

Unpacking the social and environmental trade-offs of coal and its future in South Africa’s energy mix

Coal as a fuel source carries significant costs for environmental systems. In truth, the increasing frequency and scale of climate change-related events has brought to the forefront the critical need to transition to a low-carbon economy. However, structural economic transitions have, historically, had the greatest negative impact on the most vulnerable in society.

Our purpose is to power better lives in Africa and beyond. To achieve this aim, careful consideration must be given to the critical trade-offs of the immediate, and affordable energy needs of the economy along with the growing and urgent need to reduce carbon emissions to sustain our environmental systems.

Within this context, the South African Integrated Resource Plan foresees a significant reduction of coal-based electricity generation (currently at 77%) to close to 59% by 2030. However, it is anticipated that Matimba, Medupi (and Kusile operated by Serriti) will continue to operate beyond this period for an additional 15 to 20 years. Going forward, however, it is anticipated that new capacity will be led by solar and wind power.

In line with this outlook, we are seeking to meet immediate and longer-term energy needs through our adaptive coal strategy while exploring possibilities in renewable energy to support this transition, taking into consideration social and climate risk. Minimising the potential social risks during this transition remains critical, such as increasing unemployment and poverty that could arise from transitioning our coal-based economy to a lower carbon economy. Consequently, development of a Just Energy Transition strategy is an imperative alongside the urgency to switch our energy systems.

Digitalisation – Forging new career paths

The Exxaro digitalisation and innovation journey is a strategic initiative driven by the CEO. Key improvements achieved through this initiative include an integrated perspective of the value chain, leading to better decision making from visualised information through better dashboards.

We recognise that our continued pursuit of digital innovation will accelerate the rate at which historical jobs in our industry become obsolete. To address this trade-off, internal smart workforce initiatives were introduced to assist employees in acquiring the relevant knowledge and skills for the new world of work and the impact of digitalisation on the future of work.

Smart workforce programmes include training in digitalisation and innovation, Microsoft 365, design thinking, data science and data mining, culture and leadership behaviours aligned with Exxaro’s workforce of the future journey, creating a bias for action and, more critically, job-specific reskilling at operating units and our corporate office. The programmes were rolled out in 2018 and are revised continuously in line with business requirements.