Integrated Report 2021
Exxaro Resources limited
Environmental, social and governance report 2021
We recognise that South Africa faces many challenges, including unemployment, poor access to basic services such as electricity, water, health, sanitation and education, exacerbated by the effects of COVID-19. As a business, we can help our host communities overcome these challenges because our success depends on their success.
We uphold our licence to operate by honouring our socio-economic development commitments to our communities and the DMRE, and going beyond compliance to power better lives.
From how we mine to what we mine, we steward our natural assets and social capital to uplift our communities.
As we move towards carbon neutrality by 2050, we continue ensuring that our transition contributes to the socio-economic wellbeing of the communities in which we operate. We continue empowering local suppliers and emerging small businesses to grow beyond the life of our operations. We also consider the social impact on employees and communities who depend on the coal economy and respond by preparing affected people through appropriate skills and social support structures.
Our integrated approach to infrastructure development, education, healthcare and ESD aims to advance and strengthen communities. We understand that our success is measured in the short term by delivery of initiatives and, in the long term by the legacy we leave for our communities. Our guiding principles are sustainability, stakeholder inclusiveness and collaboration.
We approach our community and socio-economic development activities through three broad focus areas, underpinned by our objectives, as outlined in our Sustainable Growth and Impact strategy:
We have repositioned ourselves as a diversified organisation with renewable energy solutions and mineral resource capabilities, critical and relevant to a low-carbon world. This positioning is encapsulated in our Sustainable Growth and Impact strategy, a strategic and tactical response to threats to our coal business arising from the dangerous effects of climate change.
The impact of the strategy focuses on the just transition principle, which seeks to balance businesses' financial performance and South Africa's economic needs, ecosystem protection and society's adaptive capacity in the face of climate change.
Key to this sustainable impact is empowering our communities to transition to a low-carbon world with us. The transition has significant socio-economic implications for us and them.
The impact pillar of the strategy defines how we will deliver impact to our ecosystem by integrating sustainability and impact initiatives (SLP, ESD, Impact Catalyst and others) before, during and after the life of our operations. This will initiate and build community projects and businesses into investable impact programmes, which can lead to sustainable, scalable economic impact and prosperity, independent of our continued operations.
Refer to the 2021 integrated report for details on our Sustainable Growth and Impact strategy.
Tshikondeni community members celebrate the hand-over of a new crèche
Our Impact at Scale concept has driven our approach to community development since its introduction in 2020. It seeks to establish inclusive, collaborative cross-sectoral platforms, initiatives and partnerships to achieve systemic socio-economic impact through public-private partnerships at regional level. These activities complement our SLP, CSI and ESD initiatives. Our Impact at Scale approach is guided by Exxaro's Sustainable Growth and Impact strategy and focuses on:
Programmes and partners
Aligned with the DMRE's medium-term strategic framework and government's District Development Model
Although Exxaro's approach has always been on collaborative partnerships, we made a concerted effort to entrench these partnerships this year. This was evident in our partnerships with the DoH, COGTA, the Municipal Infrastructure Support Agent (project management unit of the COGTA.), NBI, Minerals Council, the Impact Catalyst and various district municipalities where we operate. These relationships culminated in resource optimisation and capacitation, fostering sustainability and impact.
We also aim to engage with communities to understand their strengths and needs to co-create solutions that lead to shared value.
We fund our socio-economic development initiatives through the Exxaro Chairman's Fund (ECF), the Exxaro Foundation (EF), the Exxaro People Development Initiative NPC (EPDI) and Matla Setshabeng Development NPC, collectively referred to as our social impact investment vehicles.
Exxaro, Anglo American, World Vision South Africa, the CSIR, Zutari (formerly Aurecon) and the Limpopo government continue collaborating on the Impact Catalyst platform for large-scale socioeconomic development initiatives. A three-year funding cycle began in 2020 and Exxaro has committed R10 million over this period.
We continue to support the following initiatives:
To support government's district development model, Exxaro and NBI have partnered with COGTA to build municipal capacity.
The resulting technical assistant mentorship development programme engages municipality retirees with technical expertise to mentor municipal workers. In 2021, 10 mentors were assigned to 16 mentees across the Waterberg district. The programme addresses technical and leadership skills gaps needed for service delivery and local economic development. It aims to empower local municipalities by building capacity for effective delivery of basic services by the local government. The long-term vision is to attract additional investment and stimulate economic growth.
We committed R3 million to the programme in 2021. This phase will be completed in March 2022, with plans for further investment.
Since December 2020, notable highlights include:
In December 2017, Exxaro concluded the replacement BEE transaction, ensuring a broad-based ownership level of 30% in Exxaro, which replaced the previous BEE ownership structure that had expired and vested in November 2016. The community benefit scheme, officially registered as an NPC called Matla Setshabeng Development NPC, and ESOP are part of the overall black shareholding of 30%, each holding 5% of the Exxaro interest.
Given the prior empowerment structure of more than 50% broadbased black shareholding, the replacement structure is exempt from compliance with the requirements of Mining Charter III. Exxaro concluded these transactions as an objective for proactive economic empowerment of employees and communities through benefits from its growth strategy and dividend earnings.
Matla Setshabeng NPC began operating in 2021 and has supported the Chris Hani Baragwanath haematology unit, DoH in Mpumalanga in the vaccination roll-out strategy initiatives and the Centre of Development Enterprise that supports the development of country policies.
Waterberg District Municipality and NBI representatives with mentors supporting Exxaro's municipal capacity building programme
Exxaro's approach to socio-economic development focuses on sectors aligned to the SDGs and is considered strategic within South Africa's socio-economic development. They include:
The SERC is ultimately accountable for and oversees community support and development. Our community development department is responsible for developing and implementing the community development strategy across our operations.
Our social investment activities continued to gather momentum in 2021 after lockdown disruptions in 2020 with primary focus on ESD education and community infrastructure projects. Some projects were stopped by community members who expressed concerns about the preferential procurement process. We also experienced delays in the approval of the Belfast, Matla and Leeuwpan SLPs. The DMRE has since approved the Belfast and Leeuwpan SLPs and has given guidance on the Matla SLP, which will be concluded and submitted for approval in the first half of 2022.
| Provided R127.7 million to 15 ESD beneficiaries | Stakeholder engagement day with local government and host community structures |
Spent R113.72 million on communities excluding ESD | ||||
Spent R21.39 million on educational support |
Created 205 jobs on infrastructure projects, which included building an ESD hub, social services, water and schools' infrastructure |
Socio-economic development expenditure, including SLPs, ESD, CSI (including COVID-19 relief), totalled R241.42 million (2020: R198.64 million) | ||||
| Community expenditure | 2021 | 2020 | |
| SLPs | R56.44 million | 23.38% | R27.5 million or 14% |
| CSI including COVID-19 relief | R57.28 million | 23.73% | R79.8 million or 40% |
| ESD financial contribution | R127.7 million | 52.9% | R55.4 million or 28% |
| Total | R241.42 million | R198.64 million |
excluding ESD financial support
Our ESD committee is responsible for creating wealth, dignified employment and sustainable enterprises for our host communities.
Exxaro's ESD initiatives are a key component of our socio-economic development response and critical to achieve our strategic objectives. The initiatives provide financial and nonfinancial support to small businesses with preference given to businesses in areas where we operate.
We provided R127.7 million in funding to 15 beneficiaries in 2021 (R53.3 million to seven enterprise development and R74.4 million to eight supplier development beneficiaries).
We also prioritised non-financial support through a Contractor Development Programme with the Gordon Institute of Business Science (GIBS) and a Financial Excellence Programme with the South African Institute of Chartered Accountants Enterprise Development (SAICA ED).
Spend: R127.7 million
Beneficiaries:
Status: 243 jobs were retained in the short term. Further monitoring and evaluation in 2022 will indicate business growth in terms of employment, revenue, asset growth, etc.
Tysys Capital Group is a National Credit Regulator licence holder and manages our ESD loan fund to support SMMEs in our communities. Total loans approved since its inception in 2018 amount to R396.4 million with R212.8 million in outstanding or future-dated repayments.
Loan repayments and cash on hand is invested in money market investments by Tysys Fund Managers. R7.1 million has been realised in 2021 in returns and the investments consistently outperform the Stefi Call Benchmark. The returns for December 2021, for example, were 4.45% against a Stefi Call Benchmark of 3.81%.
The fund has recovered R156.8 million in loan repayments since its inception, which is committed to financing additional demands from the surrounding and host communities. The loan fund and Exxaro are committed to going beyond compliance in supporting SMMEs.
Our non-financial support programmes complement the financing component of the ESD programme. Two programmes were developed and implemented based on a needs assessment study that identified the challenges that entrepreneurs encounter in growing and sustaining their small enterprises. The GIBS contractor development programme, for example, has significantly improved the business management capabilities in the beneficiaries. The beneficiaries have developed and presented business development plans, which highlight short and medium-term interventions needed to scale up their businesses.
Through the SAICA ED finance excellence programme, beneficiaries have benefited from financial coaching and book keeping services. This enables the beneficiaries to have a better view of their business' finance position. More focus is put in the development of similar programmes in 2022.
Participants of an agripreneur Exxaro ESD training programme
The 12-month programme in partnership with GIBS is underway. The programme aims to formalise understanding and knowledge of industry context and operations among suppliers in the Exxaro value chain. It aims to develop management competencies of existing suppliers to meet the needs of Exxaro's current and future businesses, and enhance the capabilities of Exxaro's suppliers to grow their businesses and ensure their long-term sustainability.
The programme targeted 90 contractors in three cohorts with 10 online blocks. Due to the overwhelming demand, the programme has onboarded 97 beneficiaries. The first cohort has completed the 10 online blocks, and is scheduled to graduate from the programme in the first quarter of 2022. The combined revenue of the 97 enterprises amounts to approximately R170 million.
Our financial excellence programme, in partnership with SAICA ED, is a 12-month programme ending in May 2022. This programme consists of financial coaching interventions, accounting and backoffice support and currently supports 29 beneficiaries.
These are businesses that were characterised by an absence of financial management systems. These programme beneficiaries are improving in this area, with the goal of them embedding financial management systems by the end of the programme.
The ESD programme performance is based on an organisation's NPAT, with an expectation that 3% of the NPAT should go towards ESD support. One of the challenges experienced by the ESD programme is a result of the fixed perspective by the B-BBEE regulator, ie the dtic on measuring programme performance.
The dtic does not take into account that NPAT estimates fluctuate during a particular year, which has an impact on ESD programme performance. Exxaro's latest forecasted NPAT is significantly higher than the original NPAT, in terms of which the R127.7 million was determined. An organisation therefore has to make a trade off between compliance (spending the money to ensure compliance at all costs) and ethics (appropriately funding deserving businesses on merit).
With less than three months between the period the latest NPAT forecast was finalised and the financial year, it was not possible to spend the additional amount (150% increase) required for full recognition. The dtic was engaged with the aim of finding a way to lessen the impact of the revised NPAT forecast. An option that was proposed was for Exxaro to commit to spend the difference between the original and latest NPAT forecasts in 2022, and rather be evaluated on the original 2021 forecast.
The dtic was not amenable to this proposal, and agreed that funding commitments that are signed off before 31 December 2021 can count towards the spend recognition, although payment will be done in 2022. This perspective of measuring ESD performance poses a risk as the overall B-BBEE performance of the organisation might be affected. Going forward, the NPAT forecast will be closely monitored and early adjustments made on ESD spend, when necessary.
Aligned to our ESD strategy, we have set up ESD incubator hubs in each SLP area as drivers of impact. Each hub facilitates three-year incubator programmes for SMMEs.
In 2021, we finalised incubator programmes in Kriel, Emalahleni (20 beneficiaries), Belfast (20 beneficiaries) and Victor Khanye (11 beneficiaries). The Belfast hub was handed over to the Emakhazeni municipality on 26 May 2021.
Sector: Mining services
Location: Middelburg, Mpumalanga
Ownership:
Employment levels: 360
Beneficiary of: Zero interest loan of R11 million.
When Exxaro awarded Ritluka its launchpad contract for underground mining, underground road maintenance and support services in 2019, the company received an interest-free loan of R11 million from the Exxaro ESD programme to acquire equipment and machinery.
The funding has strengthened the company's balance sheet and enabled Ritluka to bid for contracts with other mining houses.
The company has grown from 29 employees in 2019 and now employs more than 360 full-time employees, headed by a management team with over 50 years' combined experience. The company has also been able to grow its annual revenue to exceed the R50 million mark, which graduates it to a generic entity under the B-BBEE codes of good practice.
Sector: Mining rehabilitation and revegetation services
Location: Delmas, Mpumalanga
Ownership:
Employment levels: 6 employees
Beneficiary of:
Ankone Consulting is a women-owned business that was founded in 2016 by Thembile Nzuza to provide mine rehabilitation, closure and revegetation services. The company has grown from being a small business after securing its first major contract with Exxaro to manage alien invasive species at the Leeuwpan coal mine in Delmas.
Exxaro's ESD department provided the company with development finance of R2.9 million (R2.3 million as a grant and R0.6 million as an interest-free loan) to acquire a hydro seeder, tractor, "bakkie" and safety equipment. The company is also part of the financial excellence programme with SAICA ED.
Maredi Tower and Infrastructure, trading as Thabure Towerco, manufactures cellphone tower infrastructure that is leased to leading mobile network operators. The company was assisted with funding totalling R8.2 million in the form of an interest-free loan. The funding was used to manufacture and install cellphone towers in remote areas in Limpopo.
By expanding network coverage and internet connectivity to remote and underdeveloped areas of the country, the company is helping resolve key infrastructure limitations that prohibit access to education, economic activity and basic services for most South Africans.
Today, the company has 55 full-time employees supported by part-time employees living in local communities, installing its costeffective internet solution for high-density communities. This enables the roll out of broadband networks in remote locations where the cost of installing underground fibre is prohibitive The company has been able to pay off its Exxaro ESD loan, and raise a credit facility with a major bank that will enable it to scale up operations.
Ms Welile Nhlabathi of Gigizela Trading Enterprise is a proud recipient of funding from Exxaro's ESD programme
Sector: Agriculture
Location: Various sites in Limpopo
Ownership:
Employment levels: 16 employees
Beneficiary of:
Servicios Empresaviales Holdings (SEH) is an aggregator that assists women-owned SMMEs in the textile and agriculture sectors to assail barriers to market access, funding, expertise, technology and infrastructure through collaborative efforts. The company supports 757 crop and grain farmers on 10 200ha of land in five provinces. The company works with entities such as the Spar Group and Tiger Brands.
In 2021, the Exxaro ESD programme provided SEH with funding of R5.7 million (grant funding of R1.1 million and an interestfree loan of R4.6 million) to acquire machinery and equipment for contract farming services to the farmers in the Tiger Brands programme. The acquisitions included a planter, maize and ground nut harvesters, a crop sprayer, a ground nut digger and other tools.
The initiative is aligned to Exxaro's objective of helping to diversify and sustain rural economies and its host communities. The funding bore immediate fruits, creating 16 new job opportunities for support employees and machine operators at SEH, but the real impact will be in enabling some of the subsistence farmers to commercialise their operations and capacitate them to provide high-quality, reliable supplies to Tiger Brands. It will also enable SHE to further scale-up the programme to support more farmers which will also provide additional opportunities for local entrepreneurs within the agri value chain.
Our operations have valid mining rights granted by the DMRE, which are at various stages of execution of their five-year SLPs.
In Limpopo, these are Grootegeluk, Thabametsi and Tshikondeni (in closure). In Mpumalanga, these are Matla, Belfast and Leeuwpan.
We delivered our approved SLP projects in 2021, spending R56 million, with improved efficiency compared to 2020
In 2021, we spent R113 million on our social investment projects, which included SLPs and CSI. These projects included school infrastructure and support programmes, delivering the ESD hub and programmes (excluding financial support) and water and sanitation infrastructure projects in Mpumalanga and Waterberg. We estimate that approximately 53 000 community members will benefit from services to be provided from these projects. During the implementation, 205 jobs were created.
Highlights of the five-year SLPs include:
| GaNala sports field (sports infrastructure) Total spend: R2.3 million Beneficiaries: Kriel Community Jobs created during construction: five contractors and 30 local jobs Status: Completed |
Exxaro's Matla Coal renovated a local soccer and rugby field to foster social cohesion and create income-generating opportunities during matches. Security was enhanced by the construction of a new concrete palisade fence. Five local contractors were appointed to undertake the renovations, thus maximising local contractor development on the project. This project was completed and handed over to the Emalahleni municipality in December 2020. |
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Kriel/GaNala ESD incubator hub (non-financial business support) Total spend to date: R12.2 million Beneficiaries: Incubation programme: 43 (26 enterprise development and 17 supplier development) Jobs created: 15 (10 during construction and six operational) Status: Infrastructure completed, programme still in progress |
To address unemployment and support local development, Matla Coal established an enterprise development centre in Kriel. An unused bakery building was renovated, upgraded and resourced with office automation, furniture and internet access. Two programmes are presented at the centre through an entry level enterprise development programme and a more advanced supplier development programme. Both programmes offer formal business acumen training, personalised mentoring and business support. |
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Thubelihle sanitation project Total spend: R5.7 million Beneficiaries: 272 households Jobs created: 41 Status: Completed |
The Thubelihle Ext. 5 sewer reticulation project was aimed at providing sewer infrastructure for the community. There were 633 stands in the Thubelihle community, and only 30% had access to sewer infrastructure. Exxaro and the municipality identified 272 households in the community that were connected to the current sewer infrastructure system through this project, increasing good health through improved sanitation standards in the community. |
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Emzinoni water valve project Total spend: R2.4 million Beneficiaries: 7 834 Jobs created: 20 Status: Completed |
This project is a substitution to the Bethal Water Reservoir project by the Govan Mbeki municipality in 2019. The Emzinoni upliftment and exposure of water valves project was identified and implemented to provide sustained water pressure levels to the community, alleviating the municipal water management infrastructure that had reached the end of its lifecycle. |
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Arnot/Mafube Primary School Total spend: R4.9 million Beneficiaries: 210 learners, 6 teachers Jobs created: 53 Status: Completed |
In the education sector, Exxaro completed six classrooms at Arnot (Mafube) Primary School in Steve Tshwete municipality. To respond to the population increase, following the construction of 83 houses over its previous SLP cycles, the classrooms were completed in December 2020 and handed over to the Department of Education in the first quarter of 2021. |
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Marapong water reticulation project, phase 1, Lephalale Total spend: R38.1 million Beneficiaries: 42 000 Job created: 45 Status: Completed |
The refurbishment of the Marapong bulk water pipeline from Zeeland to Matimba has brought reliable water supply to the Marapong community. Through its collaboration with the Lephalale municipality, Exxaro completed the pipeline refurbishment in November 2021, and will be providing project management services for the design of phase 2, which will be rolled out by the municipality. |
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Beneficiaries: ~53 000
Spend: R56 million
The following infrastructure was delivered through the SLPs in 2021:
The associated hub building in Kriel, Mpumalanga, valued at R4.8 million was completed and handed over to the Emalahleni Municipality in early 2021. To foster resilient local entrepreneurs, Exxaro has run an ESD incubation programme in Kriel which is anticipated to conclude in the second quarter of 2022.
To address water security and healthy sanitation, Exxaro completed three projects in 2021. In Mpumalanga, the completion and handover of the Thubelihle sewer pipeline resulted in safe sanitation via the individual connection of 272 households to the main sewer line. In Emzinoni, the completion of the water valves project ensured uninterrupted potable water pressure to the community. These two projects totalled R8.1 million.
The community of Marapong in the Waterberg district of Limpopo was positively impacted by the construction and refurbishment of the main water supply pipeline, completed at the end of 2021 at a cost of R38.6 million. Exxaro continues design and project management support to the second phase of the project being undertaken by the Lephalale local municipality in 2022.
In support of the Department of Education in Mpumalanga, two three-classroom blocks were completed at Arnot primary by two local contractors to the combined value of R4.9 million. The experience created increased skill which resulted in an increase in CIDB registration from level 2 to 5.
To positively impact the lives of the next generation of South Africans, Exxaro identified 11 early childhood development (ECD) centres, supporting them with resources for their operational needs, to the value of R1.4 million and benefiting 1 019 children.
Furthermore, Exxaro continued to support grade 12 academic camps in Lephalale. The camps benefited 300 grade 12 learners at a cost of R1 million. A career expo, held in collaboration with the Lephalale local municipality and the Department of Rural Development, Agriculture and Land Reform, was attended by 4 000 grade 11 learners and more than 70 learners completed psychometric aptitude assessments. Exxaro spent R600 000 on this event.
The grades 10, 11 and 12 mathematics and physical science learner support programme in two Emalahleni local municipality high schools and one high school in Msukaligwa local municipality, proved beneficial in 2021. A total of 407 learners attended the programme, at a cost of R2 615 200. Although there were many challenges encountered during the period, which included learners having lost learning time, due to rotational learning as a result of COVID-19 regulations and some classes being cancelled due to the riot action and unrest in the country, during July 2021, the learner results in the subjects of mathematics and physical science either remained the same or significantly improved. In one school, there was an improvement in the pass rate of mathematics from 65% in 2020 to 91% in 2021 and 77% to 97% in physical science in the same year. Similarly in another school, there was an improvement from 44% to 60% and 44% to 50% in mathematics and physical science respectively. In the third school, we saw a 1% year-on-year reduction in mathematics, where the school achieved 58% in 2021 and increased its physical science pass rate by 4%, to 71%. These results are encouraging, given the challenges faced by education in the reported year.
In 2020, we received positive feedback from our learner eye testing initiative and this resulted in continued support in 2021. In the reported year, we tested 7 042 learners from 10 primary schools across our areas of operations in 2021, of these 260 learners received prescription glasses.
Beneficiaries: ~300 000 and an additional 1.5 million in the long term
Spend: R57.28 million
In 2021, Exxaro supported university chairs, donating R9.5 million towards their research programmes. We have seen significant benefit in this investment, as the chairs are contributing to our evolving company strategy. This includes integrating climate science in our strategy, developing climate change training courses and employee awareness through master classes. The chairs have also started community outreach programmes, bringing climate awareness at community and municipal level; this programme will be intensified in 2022.
To mitigate the impact of COVID-19, Exxaro donated R1.37 million and R1 million each to Emakhazeni and Lephalale local municipalities, for the acquisition of water bowsers. Furthermore, we contributed R15 million towards the Solidarity Fund. COVID-19 lockdowns triggered a surge in GBV, and as a result Exxaro partnered with the Tears Foundation, which offers assistance to more than 290 000 women and children affected by GBV nationwide. The rest of the CSI funding went to Public Benefit Organisations nationally in areas of health, agriculture, welfare, and supporting organisations that promote governance.
As Exxaro embarked on its organisational digital transition process in 2018/19, we established a programme YDX (Youth Exponential Development) within our local communities in Limpopo and Mpumalanga to empower 400 youth with digital skills as part of "taking our community along" the transition. The aim of the programme was to provide youth with digital skills that would enable them, at the least to be employable, but primarily to create their own digital enterprises. The participants were also provided with monthly stipends during the twelve month development programme.
Regrettably, between December 2019 and January 2020, media reports alleged that, whilst training was continuing, the service provider had failed to pay the stipends to the youth, naturally leading to disgruntlement with the programme from the participants. Consequently, the YDX programme was suspended and subsequently ceased following an internal audit of the service provider and the matter was reported to law enforcement and remains sub judice.
As an act of goodwill, Exxaro decided to donate to the youth an amount equal to the stipends that remained outstanding and would have otherwise been received if the programme was successfully implemented.
Key lessons learnt from the experience were through consistent and effective oversight of contract relationships, strict adherence to supply chain processes when contracting, and a clear philosophy with regard to relationships with beneficiaries when a third party is involved in delivering a service or benefit.
We are investigating other programmes to replace the YDX to empower youth with these digital skills which will be critical for the just transition.
Cennergi is committed to improving the wellbeing and living conditions of local communities within a 50km radius of its two windfarms.
As part of our economic development obligations, required by the DMRE, Cennergi is committed to investing 2.5% of our revenue in projects that support our host communities. We group our enterprise development and socio-economic development commitments in five categories: education and skills development, social welfare, healthcare, general administration, and enterprise development.
To ensure sustainable development and impactful investment in our communities, the AECFT and TWFT appointed Forethought Africa to review the current socio-economic and enterprise development strategy and economic development plans and develop a theory of change. Through the theory of change process, both trusts have committed to a community development approach with strong focus on high-impact strategic projects aligned with our communities' socio-economic development needs and long-term aspirations. Accordingly, 70% of the trusts' economic development budgets will be allocated to long-term strategic investments, 20% to quick-impact projects and 10% to a discretionary fund focusing on community welfare and social cohesion.
Stakeholder and community engagement is a critical pillar of Cennergi's social impact investment decision-making criteria. Our dedicated internal community liaison officers and local community trustees oversee formal and informal community engagement with local communities, mayors, government departments and community special groups such as local business forums and youth, among others.
Stakeholder engagement meetings were restricted in 2021 due to COVID-19. Nonetheless, we held several virtual meetings with local municipalities and provincial government representatives.
Cennergi aims to maintain CSI spending of approximately 1.5% of NPAT on socio-economic development and 2% of NPAT on supplier development while assisting local SMMEs in our preferential procurement programme.
The share of procurement sourced from B-BBEE suppliers, QSEs, EMEs and women-owned vendors is tracked against commitments and targeted percentages in the implemented agreement. Tsitsikamma community windfarm and Amakhala Emoyeni have committed to 60% total procurement from B-BBEE suppliers, 10% from QSEs and EMEs, and 5% and 2.5% respectively from womenowned vendors.
Cennergi met our preferential procurement targets for 2021 and did not incur any termination points or penalties.
In 2021, we assisted Khaman Security, a local 100% black-owned security company providing security services at Amakhala Emoyeni, with establishment of a security control room, accreditation, regulatory registration and business mentorship in partnership with SAICA ED.
We also appointed a local supplier, Mandsons Proprietary Limited, for collection and disposal of waste from the guard house at Tsitsikamma community windfarm from 1 October 2021. Cennergi purchased a 2 500L mobile trailer for Mandsons to remove sewage from the site and, eventually, other surrounding windfarms and communities.
The TWFT partnered with Early Inspiration to provide a skills training and capacitation programme, parent-support programme and suitably qualified ECD practitioners for six crèches in the area at a cost of R1.06 million.
2021 Tsitsikamma windfarm trust bursary recipients
In 2021, the TWFT partnered with Paul Sauer High School to accommodate 67 grade 12 learners at Qhayiyalethu High School, and provide after-school learning services, at a cost of R659 685. The school did not have grade 12 mathematics and Afrikaans teachers so the trust paid monthly stipends for two teachers.
The TWFT also supported the Koukamama local municipality and the local Department of Education with prefabricated classrooms to establish a new high school at a cost of R1.1 million.
The Wittekleibosch and Snyklip development trusts, which own four dairy farms in partnership with local dairy farmers, received funding from the TWFT for two young women, Nolonwabo Sharon Songongo and Odwa Budaza, to attend livestock training at Rothman Livestock Training Academy at a cost of R448 000. Both women are now employed in experiential work-based training at the dairies.
Another local community member, Mzoxolo Mboyiya, employed at Oyster Bay windfarm, completed a basic technical training course, which led to a one-year employment contract in Japan.
The TWFT partnered with Nomfundo Mogapi, founder and CEO of the Centre for Mental Wellness and Leadership, in 2021 to provide leadership development training to AmaMfengu leaders who are key stakeholders of the Tsitsikamma Community Windfarm. He uses expertise in trauma to help people function effectively in wounded contexts.
The Tsitsikamma Development Trust is currently custodian of the AmaMfengu community's land. The leadership development programme will enable them to take charge of their business development.
Guided by the outcomes of the impact measurement in the revised SED/ED strategy, the TWFT continued to support NNP Women Poultry, and the Lihlumile and Guava vegetable farming projects, in 2021 with mentorship, machinery, tools and equipment at a cost of R2.8 million.
TWFT's ESD programmes support SMMEs by promoting entrepreneurship, creating employment, increasing economic activity in local communities, and empowering previously disadvantaged people.
Infrastructure development
Since the TWFT provided skills training, machinery, tools, equipment, land clearance, fencing, tunnels and solar-powered watersupply systems to the Lihlumile Project in 2019, the farm has grown to supply vegetables to crèches in Wittekleibos today.
The business harvested its first sweetcorn and soya beans in 2020, and planted 800 cabbages with a 75% yield, after the TWFT appointed an implementation agent, Jeffreys Bay-based Oliver Tree, to mentor the enterprise.
In 2021, the AECFT spent R13.7 million on socio-economic and enterprise development projects in our host communities.
The AECFT built six new houses for Klipfontein farmworkers, each equipped with a solar geyser, shower and stove, and renovated four farmworkers' houses at Alstonfield farm and one at Varkenskuil farm in 2021.
The AECFT provided funding for the drought-stricken Bedford Town and Country Residents Association to develop a water conservation and water demand management plan for the Adelaide and Bedford communities at a cost of R310 000.
In partnership with the municipality, the AECFT and the Bedford Community Fund Trust have also committed R5 million to resolving water challenges in the area. Planned projects include water abstraction redesign, repair and service of existing pump stations, refurbishment of the Bedford and Adelaide water treatment plants, storage and pressure management, a centrifugal solids separator, leak management and groundwater augmentation.
Lighting the community of Cookhouse
The AECFT spent R900 000 on the installation of 30 solar-powered streetlights with battery packs in the Cookhouse community to improve safety and security. The installation contractor appointed 14 local community members to help with the installation.
The AECFT supported Bedford Launder-Ighayiya neBhongolwetu, Lahome agriculture project, Rise and Shine Bakery, Mitsi Trading, Zimamele Mutua, Sophila Cookhouse Sewing Cooperative, Bedford waste recycling project, Malanskraal vegetable tunnel project and Mtika General Trading in 2021.
We partnered with SAICA ED to run monthly workshops, as part of an incubation programme for these SMMEs, including coaching, mentoring, accounting and compliance support.
The AECFT donated a 2 500L mobile septic tank trailer to Mtika General Trading, a Cookhouse-based sewage removal company, owned by Bhongolwethu Mema, in 2021 to expand the company's services.
Assisted by the AECFT since 2019, with the initial donation of a 1 000L septic tank, the company has secured contracts with several businesses in Cookhouse and has increased its workforce from six employees to 13.
In 2021, the AECFT appointed SAICA ED to provide accounting, mentorship and compliance support to Adelaide-based Rise and Shine Bakery, owned by Xolani Reuben Dyesha.
Since 2019, the AECFT helped grow the business with an initial donation of equipment, a generator and 2 000 crates. It has grown from four employees to 10, in 2021 supplying bread to 84 spaza shops in Bedford, Adelaide and Cookhouse.
The SAICA ED mentorship programme helps the business comply with basic business regulations.
Exxaro's goal to be carbon neutral by 2050 encompasses an approach to decarbonisation that goes further than our operations. Community projects need to incorporate elements of decarbonisation where appropriate and consider the possible impact of climate change over the long term.
This can be seen in our inactive sites where we have implemented rehabilitation activities. We have also developed a mineral succession programme for each site in collaboration with communities in the area where Exxaro is a catalyst in community development and environmental stewardship.
Further, rehabilitated land is leased to communities for farming production with coordinated assistance in soil and water management, and general landholding skills.
Our advocacy programmes at schools aim to entrench the sustainable use of resources and inculcate interest in sustainability initiatives among youth.
Biodiversity loss has also been identified as a significant risk of climate change. We have therefore started implementing several projects to ensure that our mines coexist in harmony with the environment and communities. In collaboration with community cooperatives, these projects include alien invader eradication projects, wetland rehabilitation projects and biodiversity relocation programmes. Our involvement in the Mokolo Crocodile River water augmentation scheme ensures water security in Lephalale.
We work with local municipalities in water security and waste management projects. We donated land to Lephalale to start a landfill site, which could be an energy-generating facility in the near future. We will also aim to provide access to market for waste distributors, ensuring that sustainable environmental practices contribute to sustainable livelihoods.
Over the past decade, we have sponsored three chairs at Wits, the University of Pretoria and Unisa to support environmental and climate change research. We also proudly support municipalities through a municipal capacity building programme. The university chairs provide training in climate change, management of energy, water and land, and access to postgraduate researchers for previously disadvantaged students.
Refer to our environment section on page 38 for more information.
Our host communities require more procurement, employment and training opportunities to overcome unemployment, poverty and inequalities. Exxaro provides relief through collaborations, public-private partnerships and other continuously improving interventions to address these complex issues. Our social compact approach endeavours to engender equitable participation by communities, promoting shared value.
Other challenges presented to Exxaro, such as respect for graves and family relocation, are addressed on a case-by-case basis.
We manage our procurement and supply chain processes in terms of our supply chain sustainability strategy and policy to satisfy the diverse expectations of customers, regulators and investors.
Our strategic objectives include:
To uphold our licence to operate, we track our performance against Mining Charter III targets. We also ensure our policies align with the regulations and enforce compliance.
Preferential procurement performance
Exxaro is fully compliant with the requirements of the B-BBEE codes for preferential procurement in the 2021 reporting period (as outlined in the graph below).
We achieved an overall performance of 28.3 against a target of 24.2 on the B-BBEE scorecard element for preferential procurement.
| 1 | Procurement from entities with R10 million to R50 million annual turnover. |
| 2 | Procurement from entities with less than R10 million annual turnover. |
| 3 | Procurement from suppliers who are at least 51% black-owned. |
| 4 | Procurement from suppliers who are at least 30% blackwomen-owned. |
| 5 | Procurement from suppliers who are at least 51% designated group owned (entities owned by black youth, black military veterans, black disabled people and black people living in rural areas). |
Mequse Trading employees celebrate Exxaro's ESD support
As mining rights holders, we must meet prescribed targets by 2023 when we source mining goods and services from targeted groups. Our inclusive procurement programme focuses on sourcing mining services from black youth and black women-owned companies.
We exceeded the 2021 Exxaro target of 31.5 points and scored 40 points on the Mining Charter III scorecard.
| 1 | Procurement from entities with more than 25% black ownership and at least level 4 in the B-BBEE scorecard. |
| 2 | Procurement from entities with historically disadvantaged people as majority owners. |
| 3 | Procurement from entities with black women as majority owners. |
| 4 | Procurement from entities with black youth as majority owners. |
| 1 | Procurement from entities with historically disadvantaged people as majority owners. |
| 2 | Procurement from entities with black women as majority owners. |
| 3 | Procurement from entities with black youth as majority owners. |
Exxaro is committed to increasing beneficial participation of black youth-owned SMMEs. This is increasingly critical given the negative social impact of youth unemployment in our host communities. Our supply chain sustainability policy is being reviewed to ensure this.
Over R1 billion of our procurement spend is directed at local black-owned SMMEs. We spent over R1.05 billion with over 241 local black-owned SMMEs in 2021.
We also reached the following milestones in our host communities:
We are committed to improving our QSE and EME preferential procurement performance going forward.
Following the adoption of the source-to-pay policy adopted in 2020, in 2021 we completed the implementation of our new digital source-to-pay platform. The policy and platform ensure that we source goods and services from companies that uphold our supplier code of conduct, and guides our employees and contractors in maintaining ethical behaviour.
In 2021, we adopted new generation e-procurement software (Coupa and Innoxico) to reduce the risk of fraud and to maintain cost efficiency.
We continue to drive ethical and sustainable procurement through the following programmes:
Our future focus areas include supporting rand per tonne cost reduction, integrating ESG into our source-to-pay process, supporting our board in managing conflicts of interest, socialising our supply chain management policies and reskilling our BU. We aim to improve our QSE and EME preferential procurement.
While we have always aimed to power better lives, we intend to do this on a larger and more integrated scale, leveraging partnerships to become a catalyst for economic growth and environmental stewardship, and thus achieve our strategic objectives.
As a catalyst, Exxaro intends to be an agent in starting or accelerating the creation of impact projects rather than controlling the entire process as we do in many other areas of our business.
We will do this by:
Report Index