ESG Report 2021
Exxaro Resources Limited
Integrated report 2021
Our natural capital comprises the resources we draw from our natural environment to run our business and create the products and services we deliver to our stakeholders. We are committed to managing these resources responsibly.
We understand that mining can result in long lasting environmental impacts if unmanaged. Our strategy is anchored on balancing our operational activities with the ability of the environment to regenerate itself.
We are committed to balancing our role as a critical supplier to South Africa's coal-based electricity sector with our deep commitment to sustainable mining and corporate responsibility. As such, we aim to be the most environmentally responsible coal mining company at the forefront of climate change and environmental sustainability as we transition our company to a low-carbon portfolio.
We manage our impact on natural capital by, among others:
Using environmental sustainability to guide our business strategies, we strengthen our organisational resilience while ensuring minimum impact on the environment.
| Material theme | Matter | Our strategic response | Our impact on the SDGs | ||||||
| Adapting to the changing context |
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| Building sustainable communities |
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Our environmental approach is guided by our Sustainable Growth and Impact strategy and our goal to proactively transition our business to a low-carbon portfolio. To achieve this, we have developed a focused environmental policy that is aligned with company goals and current best practice and standards. This is supported by our all-encompassing group management standards for air quality, water, energy, biodiversity, rehabilitation and mine closure, as well as environmental incident management and reporting. Each BU embeds these standards and maintains ISO 14001 certification for effective environmental management requirements. From 2022, achieving our goals will be further enhanced by linking environmental performance to employee STIs.
Our impact on natural capital relates to air quality, climate change, energy, water and waste management, biodiversity, and environmental liabilities, land management and rehabilitation.
For a detailed overview of our natural capital approach and performance, please see the environment chapter in our ESG report.
Managing air quality is a top priority from an operational, social and regulatory perspective. Opencast mining impacts local air quality through construction and vehicle activity on unpaved roads can impact air quality due to releasing pollutants, dust and other particulate matter.
In addition, our pollution prevention plans and regulatory compliance support Exxaro's goal to become carbon neutral by 2050, as they target a reduction in CO2 emissions linked to energy use.
Managing air quality ranges from our operational approach of prevention and mitigation to engaging with communities. These measures include:
In 2021, we continued to implement our air quality reduction initiatives, expanding our monitoring and improving our approach systematically. We installed particulate matter multi-monitors at Grootegeluk to deepen our understanding of the mine's impact on the surrounding environment. We consistently enhance our mitigation measures to reduce the significant impacts on the environment using dust suppression measures that comply with regulated limits.
We aim to maintain our current air quality monitoring network at all BUs and mines in closure to ensure compliance with emissions limits. We are continuously reviewing our air quality management systems at all of our operations align to changes in the mining conditions. In addition, we are continuously investigating alternative dust control measures (wind breakers and other technology for stockpiles) to reduce our dust fallout rate.
Our strategy to go beyond compliance for air quality, will be to actively monitor and measure a broader spectrum of emissions such as Methane, SOx and NOx. Currently methane emissions are reported as fugitive emissions and determined using an empirical estimated method. These efforts will ensure that we lead in our approach to air quality.
At Exxaro, we actively respond to the climate change agenda as stipulated by the IPCC scientific findings. The risks it presents, physical and transitional, will impact business sustainability if not actively understood and managed. Conversely, we seek to identify and capture the opportunities that a just energy transition will present.
To positively respond to the climate change agenda, we are pursuing a reduction in our carbon footprint with the goal of being carbon neutral by 2050 for scope 1 and 2 GHG emissions. Delivering on this requires many aspects of our business to transition. Our carbon emissions reductions strategy is driven by our efforts in energy management, where reducing our energy consumption and improving our energy efficiency remains a high priority.
Our approach to climate change is embedded in our Sustainable Growth and Impact strategy as Exxaro repositions our business for climate resilience and business sustainability. This is guided by our:
Furthermore, we measure and manage the risks related to climate change through our ERM processes, and measure and report against the Greenhouse Gas Protocol and the CDP climate change programme.
Our absolute carbon emissions (scope 1 and 2) decreased from 1 034 484tCO2e to 995 082tCO2e. However, our carbon intensity increased due to production challenges, discussed in our operational performance on page 114 . This translates to a 13% increase in carbon intensity despite energy efficiency projects at our operations. We expect an intensity reduction as we implement initiatives to support our STI scheme and our 2050 carbon-neutrality initiatives. Additionally, the grid emission factor increased from 1.06 to 1.08 affecting scope 2 and 3 emissions.
Carbon intensity increased by 13% to5.51ktCO2e/TTM kt (2020: 4.9ktCO 2 e/TTM kt)
Electricity intensity decreased by 10% to14.18MWh/kt(2020: 13MWh/kt)
Diesel intensity decreased by 2.05% to2 000L/kt(2020: 2 042L/kt)
Scope 1 and 2 emissions decreased by 4% to995ktCO2e(2020: 1 035ktCO2e)
Scope 3 emissions increased by 2.5% to70 931ktCO2e(2020: 69 220ktCO2e)
We have participated in the CDP climate change programme since 2008
We remain cognisant of the changing regulatory landscape and continue to monitor related developments that may impact our business. We will continue contributing to Exxaro's goals to build a climate-resilient organisation - by reducing emissions and extending our influence throughout our value chain. We will progress our efforts to raise awareness, internally and externally, about climate change and the just energy transition required to support South Africa's transition.
Improving energy efficiently is critical, particularly in South Africa, where electricity costs are increasing and primarily generated using fossil fuels. Exxaro is committed to being carbon neutral by 2050 for scope 1 and 2 GHG emissions. We recognise that energy management is the key driver of carbon emissions and therefore critical to the achievement of our decarbonisation goals.
Innovative and efficient energy management is critical on our path to carbon neutrality. As we prepare our business for the low-carbon economy, we must ensure that decarbonisation thinking is embedded throughout our operations with an ongoing commitment to reduce our energy consumption.
Our large-scale investments were previously centred on Grootegeluk, our largest coal mining operation, due to the scale of opportunities and the impact of these initiatives on energy intensity. In 2021, we shifted our focus to include all active operations to implement a cohesive energy management system to baseline energy intensity, set targets, and measure performance of the identified initiatives to reduce energy and carbon intensity in 2022 and beyond. We are driving behaviour change through embedding a culture of energy awareness, reduction and accountability by all employees. This involves ongoing communications, awareness training and engagement. We completed a detailed review of each key BU's energy efficiency opportunities and key focus areas for 2022. Furthermore, we have developed the Exxaro energy and carbon transition profiler dashboard to track fuel and electricity usage at group and BU levels.
These initiatives support the transition to a low-carbon economy and enable our operations to improve energy efficiency by striving to achieve low carbon footprints and optimise energy consumption.
Our energy absolute consumption improved due to energy efficiency projects. Intensity performance regressed due to a decrease of 10% in production tonnages in 2021.
Total energy consumed decreased by 16% in 2021 to5 411 267GJ(2020: 6 462 881GJ)
Electricity Consumption decreased by 0.67% to601 717MWh(2020: 605 770MWh) Intensity increased by 9% to14.18MWh/kt
Diesel Consumption decreased by 11.73% to 84 852kL (2020: 96 131kL) Intensity decreased by 2.06% to 2 000L/kt
Our 2022 objective is to align the measurement and management of our energy goals across all our BUs. We will confirm and finalise the 2022 targets for operations as well as clarify our five and 10-year goals, and track performance through the energy and carbon transition profiler tool as well as site productivity and energy management services.
In line with our renewable energy strategy, in 2023 we will begin construction of the Grootegeluk solar photovoltaic facility. The ~70MW facility will be developed with Cennergi and will provide clean, secure energy, significant cost savings and a reduction in our carbon footprint.
Water is a strategic natural resource for South Africa and our business. Our mines are in water-scarce areas and the country is experiencing the effects of climate change, particularly increased temperatures and rainfall variability. Furthermore, the International Council on Mining and Metals identified several risks related to mining operations due to chronic changes in precipitation extremes and droughts.
Therefore, it is our responsibility to effectively manage our water supply to safeguard various mine aspects to enable production, dust mitigation on the surrounding communities, effective pollution prevention.
We are committed to responsible and sustainable water use as enshrined in our water management policy. The policy focuses on efficient water reuse and recycling. Our mine and wastewater management policy and strategy follow an integrated water resource management hierarchy that includes:
The policy aligns with the requirements of the National Water Act, 1998 (Act 36 of 1998), supported by the integrated water resource management hierarchy issued by the Department of Water and Sanitation.
We implemented a comprehensive programme on responsible and sustainable water management at our BUs, focusing on water use and related risks. We manage these risks, minimise impacts and operate efficiently by:
Reducing, reusing and recycling water in line with water conservation plans that support the National Water Resource Strategy
Equitable distribution of water resources, considering business growth and sustainable consumption
Our commitment to protecting and improving water quality by discharging water treated in our BUs through our reverse-osmosis water treatment plant at Matla
We continued implementing and improving our water management efficiency, mitigation, maintenance and conservation measures during the year. Highlights include:
46% water recycled (2020: 45%)
10 890ML total water withdrawal ↓ (2020: 11 798ML)
10 281ML total water consumption → (2020: 10 924ML)
149L/t water intensity (2020: 137L/t) (target 2025: 180L/t) From
From 2022, we will measure and link the achievement of our water-related targets to our group-wide STI scheme as a driver of our Climate Change Response strategy and Sustainable Growth and Impact strategy. As part of our TCFD process, the financial and business resilience implications of water security will be effectively quantified. We will continue our efforts to improve our water efficiency through various infrastructure projects and enhancements.
Mining activities create various waste streams. The responsible and successful management of waste is critical to maintain our licence to operate, and an important part of how we minimise environmental degradation.
To address and manage this, we develop policies and procedures that align with leading practices, ensuring we leave a positive legacy for future generations.
We have a group environmental policy and waste management standard for hazardous and non-hazardous waste. Our waste management standard enforces a hierarchy that promotes prevention, minimisation, reuse, recycling and energy recovery while ensuring safe waste disposal in line with the National Environmental Management: Waste Act, 2008 (Act 59 of 2008) and supporting legislation.
Our environmental policy includes initiatives such as waste prevention, reuse, recycling, energy recovery and safe waste disposal to reduce environmental and health risks.
In 2021, our waste management team focused on implementing initiatives to better classify, manage and reduce our waste across our BUs as we embrace our cradle-to-grave approach and the ultimate goal of attaining zero waste operations (and implement cradle-to-cradle aspiration). Our waste streams were previously classified in 2013, and we intend to redo this assessment to better classify and manage our performance.
2 914t general waste recycled (2020: 2 914t)
520t hazardous waste sent to landfill – a 66% improvement on the previous year (2020: 1 511t)
Added COVID-19 medical waste (masks, gloves and screening waste) as a new stream of hazardous waste
Looking ahead, our focus remains on:
It is an economic and ethical imperative for the industry to prioritise biodiversity conservation for ourselves, the communities that depend on local resources and for the planet.
We are committed to ensuring the protection and conservation of biodiversity-rich ecosystems. We achieve this through our biodiversity programmes, including our alien invader eradication programme, pan research, wetland rehabilitation and offset, and biodiversity relocation initiatives. These programmes not only protect indigenous flora and fauna species but also ensure the expansion of such species to support ecosystems within and beyond the areas Exxaro operates in.
Exxaro takes a holistic approach to biodiversity. Our efforts are aligned with the legislative environmental framework governed mainly by the National Environmental Management Biodiversity Act, 2004 (Act 10 of 2004). Our renewable energy business manages biodiversity around its facilities through an operational environmental management programme, and aligns its approach with the Equator Principles and the IFC's Performance Standard 6 guidelines on biodiversity conservation and sustainable management of living natural resources. We are committed to:
Our programmes include:
As part of Exxaro's efforts to consolidate our biodiversity programmes, we will reassess our impacts in 2022 to identify specific targets and related KPIs to measure our performance.
To ensure compliance and continued conservation of areas around our operations, biomonitoring, the implementation of alien invasive control plans and biodiversity management plans will continue and be enhanced at all BUs in the next financial year.
We are committed to rehabilitation beyond compliance. We believe it is our moral responsibility to conduct concurrent rehabilitation in a changing regulatory, economic and operating landscape. We see environmental rehabilitation as an opportunity to uplift our communities, leaving a positive legacy of alternative sustainable land use.
We approach mine closure from a holistic and integrated perspective, understanding that responsible mining practices continually evolve, as we strive to deliver a lasting positive legacy while balancing environmental protection and social wellbeing with financial performance.
Due to the complex nature of environmental liabilities and rehabilitation, Exxaro adheres to several legislative frameworks that guide our management and approach.
All assessments were conducted according to relevant regulations. We review mine closure and rehabilitation financial provisions annually. We use cutting-edge systems and tools to manage environmental liabilities and rehabilitation. This year, we introduced a business analytics service to track expenses against budgeted figures. The application provides interactive visualisations and business intelligence capabilities, enabling timeous mitigation measures to fast-track concurrent rehabilitation.
Rehabilitation plans and closure objectives are amended after environmental management programme performance assessments. Cost estimates of activities in the concurrent and final closure rehabilitation programme are reviewed and adjusted. External auditors visit our sites, review documents and audit the provisions twice a year.
Cennergi reviews its financial provisions for facility closure and rehabilitation annually with a review by an external consultant conducted every third year. Cennergi considers amendments to rehabilitation plans and closure objectives, based on periodic environmental management programme performance assessments. The cost estimates of activities in the concurrent and final closure rehabilitation programme are reviewed and adjusted where necessary.
Each BU has five-year conceptual concurrent rehabilitation plans, schedules and associated budgets to set measurable targets, avoid backlogs and related liabilities, enable managers to implement strategies without cash flow constraints and include concurrent rehabilitation in operational tracking.
9 280ha land rehabilitated (2020: 1 981ha)
1 933ha land disturbed (2020: 1 981ha)
R7 581 million total closure costs (2020: R9 536 million)
Exxaro's Environmental Rehabilitation Fund (EERF) and additional bank guarantees provide for new developments and cover shortfalls in financial provisions. The EERF's assets are managed in terms of asset and liability modelling aligned with risk, return and liability on each site. The objective is to maximise investment growth in the cost of liability provisions.
Operational closure, concurrent rehabilitation and land management activities directly connect employees, communities, the environment, government and infrastructure, and are part of Exxaro's operating philosophy and moral responsibility. Our land management goals include transferring 90% of post-mining land to emerging farmers in local communities by 2026. We continued to create strategic partnerships with farmers to advance agri-economies in support of government's land redistribution policies.
We actively plan our operations with closure in mind, ensuring adequate financial resources are available to meet our rehabilitation commitments. Four operations were in active closure in 2021, namely Tshikondeni, Durnacol, Hlobane and Strathrae (2020: five). We also strive to integrate land and liability management in daily mine planning. This minimises final closure costs for each operation and optimises final land use after closure. All operations report concurrent rehabilitation KPIs every month on Exxaro's Middle Eye platform.
The social aspects of mine closure are integrated into our approach. These include broader society, employees and communities.
Looking ahead, we aim to continue:
Protecting South Africa's indigenous flora and fauna within our mining rights areas forms part of our biodiversity focus
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