Exxaro Resources limited

Environmental, social and governance report 2021

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OVERVIEW

OVERVIEW

OVERVIEW

Introduction About this report About Exxaro Evolution of a 21st century company Our ESG perspective Measuring our performance Strategic key performance indicators Stakeholder management

TRANSITIONING TO SUSTAINABLE GROWTH AND IMPACT

In this strategy-focused chapter, we outline how our business leadership has transitioned as well as our strategy. As we commence the implementation of the strategy, we outline the drivers for our strategic direction, how we will measure our success into the future as well as reflecting on our past strategic performance.

We're building on an existing successful platform leveraging our skills and differentiation with a long-term vision to develop a sustainable, growth-orientated, value-driven company, a leading international renewable solutions provider by the end of the decade.
ENVIRONMENT

ENVIRONMENT

ENVIRONMENT

Environment Air quality Climate change resilience Energy management Water security management Waste management Biodiversity Environmental liabilities and rehabilitation

TRANSITIONING TO SUSTAINABLE GROWTH AND IMPACT

In this strategy-focused chapter, we outline how our business leadership has transitioned as well as our strategy. As we commence the implementation of the strategy, we outline the drivers for our strategic direction, how we will measure our success into the future as well as reflecting on our past strategic performance.

We're building on an existing successful platform leveraging our skills and differentiation with a long-term vision to develop a sustainable, growth-orientated, value-driven company, a leading international renewable solutions provider by the end of the decade.
SOCIAL

SOCIAL

SOCIAL

Social People Communities Human rights

TRANSITIONING TO SUSTAINABLE GROWTH AND IMPACT

In this strategy-focused chapter, we outline how our business leadership has transitioned as well as our strategy. As we commence the implementation of the strategy, we outline the drivers for our strategic direction, how we will measure our success into the future as well as reflecting on our past strategic performance.

We're building on an existing successful platform leveraging our skills and differentiation with a long-term vision to develop a sustainable, growth-orientated, value-driven company, a leading international renewable solutions provider by the end of the decade.
GOVERNANCE

GOVERNANCE

GOVERNANCE

Governance Ethical culture Performance and value creation Adequate and effective control Trust, good reputation and legitimacy Board of directors Our executive team Remuneration and nomination committee report

TRANSITIONING TO SUSTAINABLE GROWTH AND IMPACT

In this strategy-focused chapter, we outline how our business leadership has transitioned as well as our strategy. As we commence the implementation of the strategy, we outline the drivers for our strategic direction, how we will measure our success into the future as well as reflecting on our past strategic performance.

Remuneration committee report Nomination committee report Risk and business resilience committee report Social, ethics and responsibility committee report Audit committee report Investment committee report King IV application register Remuneration report

We're building on an existing successful platform leveraging our skills and differentiation with a long-term vision to develop a sustainable, growth-orientated, value-driven company, a leading international renewable solutions provider by the end of the decade.
ADDITIONAL INFORMATION

ADDITIONAL INFORMATION

SOCIAL

GRI index SASB index Task Force for Climate-Related Financial Disclosures (TCFD) Assurance report Appendix A: Criteria Glossary Administration

TRANSITIONING TO SUSTAINABLE GROWTH AND IMPACT

In this strategy-focused chapter, we outline how our business leadership has transitioned as well as our strategy. As we commence the implementation of the strategy, we outline the drivers for our strategic direction, how we will measure our success into the future as well as reflecting on our past strategic performance.

We're building on an existing successful platform leveraging our skills and differentiation with a long-term vision to develop a sustainable, growth-orientated, value-driven company, a leading international renewable solutions provider by the end of the decade.
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About Exxaro

Exxaro has two decades of experience in mining, energy and ESG.

We have a diversified asset portfolio comprising interests primarily in coal, a growing renewable energy solutions business and equity-accounted investments in ferrous (iron ore) and zinc. We have plans to invest and diversify into manganese, bauxite and copper.

ASSETS:

R75.7 billion

at 31 December 2021

(2020: R78.6 billion)

Five

Coal mines:

Two

Windfarms

30.81%

Black-empowered

COAL PRODUCTION:

42.5Mt

in 2021

(2020: 47.4Mt), including buy-ins of 0.2Mt (2020: 0.3Mt), reflecting contributions from our expanded flagship Grootegeluk mine

Constituent of the JSE Top 40 Index

RENEWABLE ENERGY GENERATION:

724GWh

MARKET CAPITALISATION:

R53.4 billion/

US$3.4 billion

in 2021

(2020: R50 billion/US$3.4 billion)

Among the top 30 in the FTSE/JSE Socially Responsible Investment Index

We are among the top five coal producers in South Africa. Hence, we understand the importance and ambition of being carbon neutral and achieving net zero carbon by 2050, and strive to be an active participant in the just transition to a low-carbon economy. We have started incorporating renewable energy solutions into our business portfolio, as evidenced by our 100% ownership of Cennergi since 1 April 2020. Exxaro is also proud to embrace the principles of the Task Force on Climate-related Financial Disclosures (TCFD).

We also have business interests in Europe (comprising a marketing and logistics office in Switzerland) and Australia (comprising a joint operation with Anglo Coal (Grosvenor Proprietary Limited) in the Moranbah South project).

*	Eyesizwe (RF) Proprietary Limited (Eyesizwe), a special purpose vehicle (SPV) private company, incorporated under South Africa’s laws, holds the BEE shares.
^#	Matla Setshabong NPC.

Our company is rooted in South Africa and respected by our peers for innovation, ethics and integrity.

MINERALS

Minerals

100%* ownership: Coal

Our core operation is thermal, semi-soft coking and metallurgical coal mining, supplying Eskom, other domestic markets and offshore markets

Our coal mining business (including Reductants) is structured under five legal entities, all managed and operated by Exxaro, supplemented by a joint venture for the Mafube operation and an equity interest in Richards Bay Coal Terminal Proprietary Limited (RBCT)

Base metals

26% equity interest: Black Mountain

Black Mountain operates two underground mines and a processing plant in the Northern Cape producing zinc and other minerals

We continue evaluating our options to dispose of our shareholding in Black Mountain following the suspension of the sale in December 2020

Ferrous

20.62% equity interest: SIOC

SIOC is a leading supplier of high-quality iron ore to the global steel industry and a subsidiary of Kumba Iron Ore

ENERGY

Renewable energy

Our renewable energy business consists of 239MW of wind generation assets in the Eastern Cape that contribute to national energy supply

100% ownership

Cennergi

Our renewable energy business

* Includes 50% joint control of Mafube.

OUR ASSET LOCATIONS

Our coal asset base is a key differentiator and critical part of how we create value for our stakeholders.

MINERALS BUSINESS

Our minerals business comprises coal operations and investments are iron ore and zinc. We have deep roots in mining with a track record of operational excellence and delivering value.

MINERAL ASSETS

Coal mining is our primary business, structured under five legal entities that we manage and operate. We also have a:

50% joint venture with Thungela Resources Limited in the Mafube operation
10.26% effective equity interest in RBCT
26% effective equity interest in Black Mountain
20.62% effective equity interest in SIOC

Largest high-quality Coal Reserves remaining in the country, providing a platform for early value returns
Largest supplier of energy coal to Eskom and ArcelorMittal South Africa Limited (AMSA)
Five managed coal operations (including 50% share of Mafube) produced 42.5Mt of thermal and metallurgical coal (2020: 47.4Mt), down 10% in 2021 – the majority of power station coal is supplied to Eskom
Grootegeluk is acknowledged as one of the largest integrated mining and beneficiation operations globally, running the world's largest coal beneficiation complex, and the only producing mine in the coal-rich Waterberg, adjacent to Eskom's Matimba and Medupi power stations – Grootegeluk's capacity is expanding by 7% (1.7Mtpa) with the double-stage beneficiation plant, Grootegeluk 6 (GG6) and new rapid load-out station to enhance the growth of our export sales volumes
As at 31 December 2021, 82% of the R17.5 billion capital expenditure was spent on greenfield and brownfield expansion and sustaining projects (2020: 74%)

Our energy business comprises interests in renewable energy through our wholly owned subsidiary, Cennergi.

Renewable energy assets

Cennergi is a southern African-based diversified independent power producer (IPP) that focuses on asset management and the development, ownership, operation as well as maintenance of its own renewable energy projects and some owned by other companies. Cennergi has two established wind projects in the Eastern Cape (the Tsitsikamma community windfarm (95MW) and Amakhala Emoyeni (134MW)), which reached commercial operation in 2016. The energy business is also planning the development of the 70MW Lephalale Solar Project in a ringfenced SPV that will supply renewable energy to our Grootegeluk complex, reducing our carbon footprint and electricity costs.

The two windfarms are SPV companies with no management or employees. Cennergi provides full business, project execution and operations management services under separate management service agreements. Cennergi is responsible for the windfarms' environmental and social management and implementation of SPV commitments, and ensures adherence to applicable environmental, social, legal, regulatory and corporate requirements.

Our investments in renewable energy will enable us to deliver on our strategy, detailed on Our strategy: Positioning Exxaro for enduring success

For details about our wind operations, refer to About Exxaro in the integrated report.