Creating value through stakeholder engagement

We engage proactively with our stakeholders to create shared value from facilitating business activities and demonstrate our purpose, to power better lives in Africa and beyond.

Our stakeholder environment was largely stable during 2021, which enabled us to produce the results we achieved and reported. The following highlights are elaborated on in this section:

Our employee engagements were consistent and remained heightened from the prior year given the prevailing context of COVID-19. Engagements with recognised labour unions were constructive.
We had no regulatory stoppages, particularly in relation to safety performance following the record breaking five-year fatality-free achievement and adhering to our 0.08 LTIFR target
We experienced some community unrest at some of our operations, but these did not result in production stoppages or incidents to people
We had several engagements with shareholders regarding the future of Exxaro in a low-carbon future, outlining our strategy, short to medium-term capital allocation outlook and expected results
From a customer perspective, Eskom, our largest customer, continued to take volumes
We had more engagements with TFR through the Minerals Council on the issue of rail availability for our export sales volumes

EXXARO'S STAKEHOLDER UNIVERSE

We utilise a holistic approach to stakeholder engagement, which recognises the interconnectedness of stakeholders in our operating environment. Our stakeholders have varying degrees of influence on executing our strategy and whilst we categorise stakeholders into four main clusters, as illustrated in the image above, we acknowledge that in reality stakeholders interact and the boundaries are constantly traversed, hence our key account management approach.

link For more information about engagements with our key stakeholders, our ESG report.

Exxaro's approach to stakeholder management

Our KAM approach to stakeholder management is based on the global best practice AccountAbility 1000 Stakeholder Engagement Standard. It is a responsive and proactive method for building stakeholder relationships and managing key business risks, better enabling us to achieve our strategic objectives.

A key tenet of the KAM approach is internal engagement among key relationship managers to share or exchange perspectives, facts and experiences of their stakeholder engagements, and provide insights on possible opportunities and risks to the business strategy that may arise from individual or a combination of stakeholder relationships.

Stakeholder relationship rating scale

0 No existing relationship or the relationship has challenges

1 Established relationship but can be improved

2 Good relationship with opportunity for improvement

3 Very strong relationship based on mutual trust and respect

The stable environment is reflected in relationship scores of 2/3 for all stakeholders. Relationships are perceived to be good but we believe there is always room for improvement.

GOVERNMENT Quality of relationship: 2/3

Why we engage - stakeholder needs and expectations			Outcomes and value delivered to stakeholders in 2021
We collaborate to find solutions for socio-economic challenges, participate in shaping policies at all levels of government and invest for South Africa's socio-economic development. Proactive engagement supports our efforts to drive business resilience and manage country risk Government requires us to engage and partner in socio-economic development regarding employment creation, community development, capacity building and, more recently, to support government's COVID-19 response strategies			We made contributions of R61 million through our SLP projects, particularly infrastructure, skills, local procurement and small, medium and micro-enterprises (SMMEs) development We made contributions of R15 million to the Solidarity Fund and practical support for the Department of Health's COVID-19 vaccination initiatives We committed R1.5 million over three years to government's anti-gender-based violence fund We made tax payments of R4.320 billion comprising PAYE of R1.390 billion and company tax contributions of R2.930 billion
Our response to stakeholder needs and expectations - important conversations during 2021			Engagement outlook for 2022
We consult and partner with local government in municipal Integrated Development Plans for the implementation of our SLP projects We explored and started capacity building opportunities in the Waterberg district municipality in partnership with the Department of Cooperative Governance and Traditional Affairs (COGTA) and NBI in the Technical Assistance, Mentorship and Development programme Exxaro participated in the Department of Mineral Resources and Energy's (DMRE) call to action for the coal industry's active voice in South Africa's response to climate change Over the past two years, we have engaged extensively with the health departments in Limpopo and Mpumalanga, supporting COVID-19 response strategies, including the vaccine and booster vaccine roll-out programme at mine level We are engaging with COGTA and the South African Local Government Association to find innovative responses to address service delivery challenges at local government level We engage regularly with the provincial leadership of Limpopo and Mpumalanga to discuss development priorities and provide feedback on Exxaro's socio-economic development initiatives We engaged with the Presidential Climate Change Commission regarding our just transition response strategy to positively manage the transition of communities who will be affected by the energy transition Exxaro commissioned a pilot assessment of the quality of our relationships with three key departmental stakeholders in government. Generally, the survey shows that Exxaro enjoys good to high levels of relational capital, which enables effective engagement and mutual value creation			We are planning the next five-year SLP programmes for Grootegeluk and Belfast, incorporating impact principles to include combined social, environmental and economic returns We will continue with the municipal capacity building programme for the Waterberg district, building on the success of the first phase of the programme and enhance the potential impact of the District Development Model, thus improving service delivery and attracting investment to the region We intend to increase engagements about our strategic response to climate change and the transition to a lower-carbon environment to foster an understanding of and collaboration on our Sustainable Growth and Impact strategy
Further reading
Refer to our outcomes in our business model for information on how we are creating or preserving value
See the stakeholder management section in the ESG report

REGULATORS Quality of relationship: 2/3

Why we engage - stakeholder needs and expectations			Outcomes and value delivered to stakeholders in 2021
We engage to manage compliance with regulatory requirements, align with government initiatives and collaborate in shaping policies. Maintaining effective regulatory compliance ensures the success of our current and future businesses The JSE expects us to protect a broad range of stakeholder interests, particularly those of investors			Good compliance performance No regulatory stoppages Engagements with SARS led to new standard operating procedures, the appointment of a new service provider and ultimately a reduction in the number of disallowed diesel rebate claims from 20% to 2% Since the introduction of the internal section 54 standard, there has been a decline in the number of safety stoppages from seven in 2019 to three in 2020 and two in 2021 Outcome of DMRE call to action
Our response to stakeholder needs and expectations - important conversations during 2021			Engagement outlook for 2022
We have adopted new internal auditing processes and strategies as well as implemented management controls that improve our compliance and mitigate risks We engaged the dtic to lessen the impact of a significant increase in the revised NPAT forecast on our overall B-BBEE performance (used to determine ESD and socio-economic development contributions). The dtic agreed that funding commitments signed off before 31 December 2021 could count towards spend recognition, and payment will be made in the first quarter of 2022 We engaged with the DMRE to address authorisation delays for Leeuwpan and Matla mine SLPs We engaged with SARS to better understand issues around our diesel rebate submissions and the high number of disallowed claims. We work closely with our sponsors to ensure we fully comply with JSE Listing Requirements, make inputs into changes and engage proactively on areas of concern			We will continue: Proactive internal auditing for continuous compliance improvement Monitoring the process towards the finalisation of the Companies Amendment Bill Engaging with SARS to clarify uncertain draft regulations on diesel rebates Monitoring developments in the implementation of voluntary global standards for ESG reporting
Further reading
Tax report

Water quality monitoring at ECC in accordance with our licence to operate

EMPLOYEES Quality of relationship: 2/3

Why we engage – stakeholder needs and expectations			Outcomes and value delivered to stakeholders in 2021
We ensure that our employees' focus, profile and development efforts are aligned with our strategy and culture, empowering them with information to manage change and uncertainty, and identify opportunities for skills development as we embark on a busines transformation and transition Our employee engagement and culture survey in 2020 indicated that we must focus on improving diversity across the organisation and ensure fairness in promotion processes, including effective reward systems Engagement with employees contributes to strengthening business culture, distinguishing competitive advantage and promotes resilient business performance			We paid employment benefits to the value of R4.084 billion, including salaries, a housing scheme for qualifying employees, medical aid and a GreenShare, an employee share ownership plan (ESOP) payment of R164 million In line with Exxaro's integrated health and wellness strategy, which focused on diagnosis, management and prevention of diseases, the company's response to the pandemic prioritised avoiding, reducing and managing COVID-19 infections We achieved five years without a fatality (as at 3 March) and our LTIFR target of 0.08 We provided COVID-19 care such as constructing two on-site testing facilities, group-managed quarantine facilities and vaccination programmes As at 2 March 2022, 81.45% of employees and contractors have been vaccinated, with no loss of life recorded during the fourth wave
Our response to stakeholder needs and expectations - important conversations during 2021			Engagement outlook for 2022
In 2021, action plans for each business unit (BU) addressed the outcomes of the employee engagement and culture survey Our 2021 internal communication strategy addressed our evolving strategy, ESG priorities (climate change, social justice and diversity, equity and inclusion), the CEO transition, the new group STI scheme, our community and ESD initiatives and mental health and wellbeing during the pandemic Safety is one of the most important conversations we have with our employees. Senior management regularly engages at operations and the board, union and executive leadership annually engage on the issue at our Sustainability Summit			In 2022, we will follow up on the results of our employee engagement and culture survey
Further reading
Our people

LABOUR UNIONS Quality of relationship: 2/3

Why we engage – stakeholder needs and expectations			Outcomes and value delivered to stakeholders in 2021
We have a policy of freedom of association, and have entered into recognition agreements with several labour unions. Employees are free to be part of any union We strive for proactive issues resolution, relationship building and collaboration to maintain workplace harmony and professional working relationships with labour unions. This ultimately minimises the risk of labour unrest We value input in business operations and community engagement and therefore engage with unions at least twice a year about our performance and strategic outlook and more regularly during wage negotiations We respect unions' objectives to ensure fair labour practices, remuneration, benefits and better working conditions for their members			Well-established engagement and communication structures Union input on business growth strategies Training and development Regulatory compliance ensures unions are able to negotiate fairly and equitably with Exxaro on behalf of their members Recognition agreements are forever green
Our response to stakeholder needs and expectations – important conversations during 2021			Engagement outlook for 2022
All wage negotiation processes were concluded peacefully without industrial action, thus securing labour stability for the next three years			We will continue: Engaging with unions through structures created and contained in recognition agreements Delivering sub-committees' agendas emanating from wage agreements Engaging on union procedural agreements as necessary Monitoring other issues, including the Climate Change Response strategy

COMMUNITIES Quality of relationship: 2/3

Why we engage – stakeholder needs and expectations			Outcomes and value delivered to stakeholders in 2021
We engage through the delivery of our SLP projects, affirmative procurement and ESD programmes to address community challenges in infrastructure development (roads, water, health and education infrastructure), employment creation, skills development and small business development. These needs have deepened since the onset of the COVID-19 pandemic Our objective is to understand community needs and how we can respond better and overcome challenges in local employment, procurement opportunities and community development initiative Our engagements go beyond regulatory requirements and aim to maintain good relationships that provide for success for our current and future businesses and thriving communities			An evergreen NPC with section 18A status was implemented for the benefit of Exxaro communities in areas surrounding our operations in the Waterberg and Nkangala districts, and the Eastern Cape Infrastructure projects to the value of R52 million benefited 196 people through temporary construction jobs and 50 946 people through the provision of water, sanitation, sports facilities, etc Education projects and support programmes to the value of R29.39 million benefited 8 512 learners
Our response to stakeholder needs and expectations – important conversations during 2021			Engagement outlook for 2022
Exxaro employed 18 813 people during the year, consisting of permanent and contractor employees During the execution of our R17 billion coal capital expansion programme, we employed 6 901 people, with 7% being from local communities Our ESD programme enabled participation in our supply chain through procurement and enterprise development opportunities, supporting SMMEs in business development and creating local employment In our continuing support to the national economic recovery plan, all SMMEs have been placed on immediate early payment terms and are paid within 14 days of invoicing. We increased local procurement by 11.3% of total procurement spend on local SMMEs to R1.05 billion - exceeding the company's target of 10% and more than doubling the 4.5% achieved in 2020. Through this focus on local businesses, Exxaro empowered 241 local black-owned SMMEs In a virtual engagement with our board, led by our SERC over three days, community members in Mpumalanga and Limpopo expressed their concerns about the negative effects of the current economic climate, called for greater empowerment of, and employment and business opportunities, for youth and women, and called for the provision of land for both subsistence and commercial farming, among other local needs			We aim to increase engagement with communities and traditional authorities around the implementation of government's District Development Model We will continue addressing and responding to issues raised during board stakeholder engagement sessions We have commenced engagement with local government regarding the next five-year SLP projects at Grootegeluk and Belfast
Further reading
Social licence to operate: enabling our legitimacy and our environment: stewardship and compliance

INVESTORS Quality of relationship: 2/3

Why we engage – stakeholder needs and expectations			Outcomes and value delivered to stakeholders in 2021
Exxaro has been on a transformation process since 2015/16, guided by our objectives and key priorities, including portfolio optimisation, operational excellence (cost management), growth (strategy) and capital allocation (dividends versus future investment) We have refined our objectives in response to climate change, This led to the development of our Sustainable Growth and Impact strategy with embedded key ESG principles Investor interests in Exxaro's ESG performance has heightened, especially regarding the energy transition and its social impact (employees and communities) These strategic shifts require consistent engagement with shareholders to provide information and insights on our progress in implementing these objectives and priorities, governance processes in place for risk management and implications arising from challenges and achievements of executing our strategy We report our operational and financial performance twice a year. Each report is preceded by the FD's preclose letter to sell-side analysts (and financial media) to share expected operational performance which will impact financial results. This minimises unexpected developments to the financial results			We expect the revised export outlook to be lower and in line with export capacity, assuming that TFR will perform to this minimum level given interventions implemented to date We hosted a Capital Markets Day where we presented our Sustainable Growth and Impact strategy and expected targets to 2030 (EBITDA contribution of 45%, 30% and 25% from coal, energy and minerals respectively) - shareholder interests and enquiries on further details is encouraging We delivered a record dividend pay-out of R9.557 billion (the total dividend distribution for the year is R32.52/share) Exxaro received several acknowledgements of our ESG performance, including the Sunday Times Top 100 company (13th) and leading mining company in the FTSE Russell index
Our response to stakeholder needs and expectations - important conversations during 2021			Engagement outlook for 2022
We held more than 60 meetings with shareholders through investor conferences, solicited meetings, and non-deal roadshows following results presentations We have maintained our momentum on portfolio optimisation, completing the ECC disposal and remained on track with the sale of Leeuwpan by the second half of 2022 We remain intent on the sale of Black Mountain and await the results of the prefeasibility study to inform our decision regarding Moranbah South in Australia We continue to guide for our cost performance to be in line with mining inflation, which we achieved for the 2021 financial year The poor performance of TFR and resulting impact on our coal exports is of concern to investors. The resolution of the TFR issues will take time. Exxaro and the industry (through the MCSA) is engaging, among others, TFR, Transnet, Department of Public Enterprises and Office of the President We will not be investing further growth capital into the coal business - rather, we will be harvesting the completed R17 billion investment (and completing the Matla LoM projects), thus maximising the value of the coal business through the early value coal strategy to prevent stranded assets, and ensuring continued energy security from the Eskom coal (base load) power stations we supply; executing the Sustainable Growth and Impact strategy through acquisitive growth in minerals and renewable energy solutions; and developing just transition investment opportunities for the benefit of communities who will be affected by the energy transition We have further modified our executive remuneration policy and structures following investor engagements in 2019. A new STI structure is in place, effective 1 January 2022, aligned to the strategy, incorporating shared value/risk principles and material business sustainability targets to ensure long-term shareholder and stakeholder value creation			We aim to increase investor engagements through investor conferences, non-deal roadshows. Meetings will continue as Exxaro implements the Sustainable Growth and Impact strategy We are planning a governance roadshow, led by the board chairperson, during the second half of 2022 to share board priorities and engage on changes made to Exxaro's remuneration policy in response to investor concerns voiced during our last engagement
Further reading
Chairperson's statement, CEOs' reports and FD's overview

CUSTOMERS Quality of relationship: 2/3

Why we engage – stakeholder needs and expectations			Outcomes and value delivered to stakeholders in 2021
Our domestic and offshore customers have enabled the performance of the business during 2021 Eskom remains our largest customer, taking 71% of our sales (66% in 2020). AMSA remains critical to our metallurgical coal sales. These are translated to high-value thermal coal sales when the opportunity arises Export sales were 37% down due to poor rail performance We maintain expectations on quality products (coal and ferro-silicon), consistent and reliable supply of product, and responsive service (renewable energy supply)			Safe production Reliable and continuous supply of coal to all customers in terms of quantity/volumes, quality and affordability
Our response to stakeholder needs and expectations – important conversations during 2021			Engagement outlook for 2022
As we started communicating our Sustainable Growth and Impact strategy to stakeholders – customers in particular have sought clarity on what gradual divestment means for the coal business Key conversations included logistics and its challenges in the domestic market and exports Our rail logistics partner, TFR, is experiencing numerous challenges, resulting in poor rail performance, which continue to negatively impact our ability to move coal to customers and ports. These issues include security-related challenges (cable theft, sabotage, vandalism and community interruptions) as well as challenges related to the availability and reliability of locomotives. The latter is a function of challenges to procure critical spare parts for locomotives. The industry, Minerals Council and Exxaro are engaging extensively at ministerial level with Transnet and TFR to understand these challenges and offer support			As restrictions ease and where possible, we hope to have more in-person engagements with our customers to maintain the current relations and establish new relationships, To have closer collaborations with rail and road transporters, and port owners for more capacity in 2022
Further reading
Operational performance

Coal loading at our Leeuwpan coal mine siding

SUPPLIERS Quality of relationship: 2/3

Why we engage – stakeholder needs and expectations			Outcomes and value delivered to stakeholders in 2021
Our supplier relationship management programme supports Exxaro's strategies by leveraging value chain partner capabilities Supply chain management achieves this through joint initiatives aimed at business sustainability through cost savings, supplier diversity and transformation (black ownership and participation), supply security and business risk exposure mitigation Exxaro is thus at an advantage to extract discretionary value and emerge as a "customer of choice" among strategic suppliers Suppliers look to Exxaro for business opportunities, timeous and full payment and collaboration for shared value (risk and opportunity management)			We were able to place all black-owned SMMEs on immediate payment terms Achieving R1.05 billion procurement or over 11% of our procurement spend with local SMMEs We are constantly looking at ways to improve our systems and processes to improve the ease of doing business with Exxaro We are investing money in creating infrastructure and policies to make easier for emerging suppliers to work with Exxaro
Our response to stakeholder needs and expectations - important conversations during 2021			Engagement outlook for 2022
Exxaro's sourcing strategies set out to concurrently optimise for performance and supply risk, financial and fraud risk and supply chain sustainability through agile strategic and group sourcing, contract negotiation and innovation discussions We constantly review and update our policies and procedures to respond to the proliferation of procurement scams and fraud attempts Ongoing improvements to our procurement processes are aimed at risk management and increasing transactional speeds for our suppliers In delivering on our purpose, our supply chain activities are aimed at increasing the participation of black-owned suppliers and those from host communities, reducing the environmental impact of our business and enhancing our reputation while upholding sound corporate governance Exxaro is fully compliant with the preferential procurement requirements of the B-BBEE codes and mining charters We remain committed to working with our supply chain partners to ensure our annual input costs remain below inflation In 2021, we tested the readiness of our strategic suppliers for climate change and we are now working with our top 10 up and downstream suppliers to reduce our scope 3 emissions We are engaging suppliers to encourage transformation and promote industrialisation and local economic development			We want to work with our supply chain partners to build climate change resilience within our supply chain We continue collaborating with suppliers to achieve cost savings and reduce fraud We continue increasing beneficial participation of black youth-owned and women-owned SMMEs. This is increasingly critical given the negative social impact of youth unemployment in our host communities
Further reading
ESD programme ( of our ESG report)