ESG Report 2021
Exxaro Resources Limited
Integrated report 2021
Our manufactured capital comprises the physical mining and energy assets we require to deliver our products, primarily coal and energy. Our operational performance is impacted by the quality of the assets we own and how effectively we utilise these assets.
Exxaro's manufactured capital consists of four mines, two coal project and two windfarms. These assets are substantial in size. It is critical to invest in their upkeep and performance, and optimise their utilisation in delivering our products. It is also important to invest in these assets as they will deliver our strategic goals.
We strive to positively impact the operational performance through:
Material theme
Adapting to the changing context
Executing our strategy
Matter
Our strategic response
Our impact on the SDGs
To achieve excellent operational performance, we need to be strategic on our portfolio of assets and optimise the use of our manufactured capital. We do this through operational excellence and digitalisation programmes, optimisation strategies, internal cost savings and utilising data science for decision making.
Our operational performance areas comprise:
Despite changes in the coal portfolio, with some operations diminishing reserves, rail constraints and COVID-19, our operational excellence and digitalisation programmes focus on safety, productivity improvements and cost management that deliver value. Through our integrated operations centres and M2R optimisation strategy, we continue to enable timeous decision making, allowing our business to focus on the controllable elements, thus limiting the impact of the disruptions in the value chain. We are continuing with our drive to enhance this process through our data sciences and advanced analytics, which is a large part of our digital programme going forward.
The API4 price for coal exported from Richards Bay was strong in 2021, averaging US$124/t versus US$65/t in 2020. Thermal coal prices reached record highs in October 2021 with the API4 price peaking at US$247/t. Prices were driven by an international seaborne market that experienced supply chain disruptions such as bad weather and mine incidents. Shortage of LNG and gas also drove coal prices in Europe higher as gas-to-coal switching took place.
Material handling at our Grootegeluk BU
Cost per tonne was impacted by lower operational cost linked to lower production volumes, positive foreign exchange realised as well as decreased distribution cost from decreased exports. This was partially offset by inflation, increased employee cost as well as an increase in rehabilitation cost linked to updated rates and increased royalty on increased revenue.
In addition, to respond to the challenging conditions mentioned before, specific internal cost saving initiatives were deployed to address the challenges. These initiatives were implemented successfully and assisted to partially offset the impact of the lower volumes.
To further remain competitive across various markets, our operational excellence and digital programmes continue to focus on specific projects across the value chain, which are aimed at managing stock levels and productivity, thus reducing overall production costs.
Total coal product (Mt)
Total coal sales (Mt)
Coal exports sales (Mt)
Cost per tonne (R/t)
Energy core EBITDA was R914 million (2020: R648 million for the nine months since acquisition). Apart from three months' additional results, as Cennergi is now consolidated for the full period, the EBITDA has increased mainly as a result of CPI contractual increases.
The two windfarms performance generated 724GWh in 2021, marginally lower than 2020 (727GWh in the full 12-month view) due to lower than expected wind speeds, which impacted energy generation.
Exxaro concluded its strategy to monetise its investment in Tronox Holdings plc on 1 March 2021. As part of this divestment Tronox SA shares have been disposed of.
Exxaro continues to evaluate its options to dispose of its 26% shareholding in Black Mountain.
We undertook a strategic decision to dispose of our ECC* and Leeuwpan operations, having identified these assets as non-core to the future objectives of Exxaro. The resultant sale of ECC* to Overlooked Colliery was concluded in September 2021. On Leeuwpan, the disposal process is well underway and good progress has been made.
* Divestment concluded in September 2021.
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