Exxaro Resources Limited
Integrated report 2021

Outgoing and incoming CEOs' reports

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Outgoing CEO's report | Mxolisi Mgojo

Reflections on our year and our journey to position our business for sustainable growth

Mxolisi Mgojo: Outgoing CEO

Mxolisi Mgojo Outgoing CEO


When we returned to work in 2021, we continued to be positive despite the COVID-19 restrictions that remained in place as new variants of the virus extended the pandemic. The year was characterised by ongoing global uncertainty as the bisecting crisis of the pandemic and climate change weighed on the economy.

Locally, social unrest in South Africa flared up as pre-existing inequality and growing unemployment came to a head. The resulting destruction was significant, and came at a tremendous cost to the economy as businesses suffered rampant theft and destruction of property, damaging fragile business and consumer confidence. The intangible damage was equally significant, and included increased unemployment rates, intensified political instability and greater divisions socially, which will take a long time to remedy.

From this destruction, there were also moments that highlight how we will address the underlying causes and outcomes. Moments where ordinary citizens and law enforcement worked together to protect their communities. These acts show how, as a collective, we need to partner and proactively collaborate to acknowledge and address the risks of increased inequality, unemployment and poverty laid bare by the pandemic.

We were pleased to witness the effective roll out of the government's vaccination programme – a critical step in slowing the spread and lessening the impact of COVID-19. We endeavoured to assist our peers and government with the roll out and the critical economic recovery plan.


Despite the challenges faced, we remained focused on leveraging our growth investments, supporting our early value coal strategy and sustaining our businesses by implementing our portfolio of stay-in-business capital projects. As a result, we were able to pay a special dividend of approximately R1 950 million to shareholders in May 2021.

Capital expenditure in our coal business decreased by 22%, mainly due to timing in sustaining capital expenditure and some projects nearing completion, offset slightly by the roll-over of GG6 expansion spend from 2020 due to the pandemic. The construction of GG6 expansion project was completed in the last quarter of the year. Close out of the project is expected in the second half of 2022 with the final cost of completion remaining at R5.3 billion.

We monetised our Tronox investments in March 2021 and received R5 763 million from its disposal. We continue to evaluate our options to also dispose of our 26% shareholding in Black Mountain.

Our capital allocation programme remained prudent while we concluded our share repurchase programme of R1.5 billion in November 2021. The shares bought back between July and November will be cancelled and delisted by the JSE, resulting in issued share capital of 349.3 million shares at year end when the group had net cash of R0.8 billion (excluding Cennergi's net debt of R4.5 billion).

We continued to engage with Eskom for additional funding to complete the Matla Mine 1 relocation project, which began with construction in August 2020. We expect approval in the second quarter of 2022.

The prefeasibility study on determining the way forward for the Moranbah South hard coking coal project in Australia began in the third quarter of 2021 and is expected to be completed early in 2023.

Total coal production (excluding buy-ins) and sales volumes decreased by 10% and 9% respectively, mainly due to logistics constraints and the disposal of the ECC* operation earlier than anticipated. This was mitigated by diverting Belfast's export product to the domestic market and a nominal increase in Waterberg domestic sales.

TFR moved 58.12Mt to RBCT during the year compared to 70Mt during 2020. Grootegeluk dropped to four (2020: seven) trains per week. Mpumalanga export rail performance decreased to 15 (2020: 25) trains per week. This poor performance is due to locomotive unavailability, increased cable theft and vandalism of rail infrastructure. The coal industry intervened by appointing a security service provider to reduce cable theft and engaging in initiatives to improve overall operational performance.

In our energy business, the two windfarms ran below planned capacity due to lower than expected wind speeds. This, along with increased maintenance, and the end of five-year warranty inspections, affected electricity generation, which was a combined total of 724GWh for the year.


Zero harm remains our key business and sustainability objective, and the health and safety of our employees and communities remain a priority. We reached record performance of five consecutive years without a work-related fatality and an LTIFR of 0.08 as at 3 March 2022 in line with our target of 0.08.

We continue to respond to the COVID-19 pandemic through our health and wellness strategy, which prioritises avoiding, reducing and managing infections. The group recorded 5 140 (2020: 2 780) confirmed cases and a recovery rate of 99%. We registered our Grootegeluk complex and Matla occupational health centres as accredited vaccination sites. As at 16 March 2022, Exxaro had vaccinated 12 671 employees and contractors aged 18 and above, reaching 84.60% and exceeding our 80% target.

On a broader scale, Exxaro worked with the Minerals Council to increase resilience, reduce poverty and enable prosperity, and partnered with Dis-Chem and provincial health departments to vaccinate employees, contractors and their next of kin. We also partnered with World Vision South Africa to continue distributing hygiene and food packs across the country.

Prioritising decarbonisation

Our decarbonisation project office began an assessment to baseline our value chain emission profile and determine immediate solutions we can implement. To ensure we embed climate change outcomes, risks and performance in the organisation, we included water and energy intensity performance in our revised short-term incentive (STI) scheme. This will ensure we implement strategic projects to mitigate water security risk and transition our energy use to cleaner fuels.

Investing in our communities

The primary focus of our social investment and engagement activities was re-establishing relationships after lockdown, funding ESD projects, and implementing community infrastructure projects. We provided total ESD funding of R127.7 million to 15 SMMEs, supported 97 beneficiaries in the Gordon Institute of Business Science contractor development programme and 29 beneficiaries in the South African Institute of Chartered Accountants Enterprise Development (SAICA ED) financial excellence programme.

In 2021, we spent R113 million on our social investment projects, which included SLPs. These projects included school infrastructure and support programmes, delivering the ESD hub and programmes, (excluding funding) and water and sanitation infrastructure projects in Mpumalanga and Waterberg. We estimate that approximately 2 000 000 community members will benefit from services to be provided from these projects. During the implementation, 205 jobs were created.

Three virtual stakeholder days in September 2021 enabled our board members to directly listen to beneficiaries for a balanced reflection on our performance. We were pleased to maintain harmonious engagements with our communities leading up to local government elections.

Securing our future

To transition our business with urgency for a low-carbon future, we divested from ECC*, continued to review the future of the Thabametsi mining right, and applied for an environmental licence for the Belfast expansion project.

The Leeuwpan disposal process continues with definitive legal agreements expected to be signed in the first half of 2022 and regulatory approvals thereafter.


Through my involvement with Business Leadership South Africa and Business Unity South Africa, I am acutely aware of crucial conversations on climate change issues and the need to transition to a greener economy without excluding the people who depend on fossil fuels for their livelihoods.

Exxaro has long grappled with the unique challenges South Africa, and indeed many countries in the developing world, face. Balancing the country's economic growth plans and energy requirements with the difficult reality of climate change.

In response, we engaged extensively with leading experts and affected stakeholders, and reassessed our portfolio and direction. Our ambition is to play a pivotal role in the transition to the cleaner low-carbon economy.

Our history and purpose through our robust ESG framework are at the heart of our governance and decision making, and will guide our transition within the context of our local and global realities.

We are deliberately building our capabilities in renewable energy, starting with our investment in Cennergi. By scaling our renewable energy business, we can build on our position as a key anchor of energy security in South Africa and a significant contributor to renewable energy solutions in other markets.

To this end, in 2021, Exxaro, Eskom and Seriti recorded their intent to pursue the development of renewable energy solutions for the cost-plus mines supplying coal to Eskom. Exxaro, acting under the auspices of Cennergi, and Seriti, under its subsidiary Seriti Green, will investigate and propose suitable renewable energy solutions and projects at their respective mines and related Eskom sites in consultation with Eskom.


I am proud of the people who are part of the team building Exxaro. The results we have collectively achieved in the past years are a testament to the calibre of our team who work tirelessly to deliver on our strategy.

I am confident that the successes of the past will be taken to even greater heights in the competent and capable hands of my successor, Nombasa Tsengwa, who is supported by the dedicated people of Exxaro.

I'd like to thank our valued stakeholders for their continued support. I believe that the work we have undertaken, together with our clear vision and strategic plans, will enable us to continue to serve our stakeholders and deliver on our purpose to power better lives in Africa and beyond.

Mxolisi Mgojo

Outgoing CEO

4 April 2022

* Divestment concluded in September 2021.

Reflecting on Mxolisi's tenure at Exxaro

Prior to 2016
  • 2006: Head of base metals and industrial minerals
  • 2008: Executive head of coal
  • Key strategic initiatives:
    • Unlocking value in the Waterberg
    • Reducing Eskom exposure
    • TFR and RBCT approach
  • CEO designate
  • Holistic coal strategy based on pillars of excellence:
    • Coal of today fuelling the Exxaro of tomorrow strategy
    • Optimising the portfolio based on scenario robustness and profit maximisation
  • Executed strategic initiatives for long-term value realisation:
  • Identified an opportunity to implement digitalisation and innovation to unlock value
  • Introduced M2R optimisation
  • Strategy to be in the lowest cost curve:
  • Defined the roadmap to achieve our 2026 objectives
  • Implemented The Startup Way and LEAN5 culture to accelerate value realisation
  • Capital optimisation
2019 Early value strategy (Wings) to responsibly bring forward long-term operating cash flows to support an accelerated just transition and defend against climate change-induced market risk:
  • Optimised LoM plans that protect shareholder value, promote growth and reduce overall environmental impacts
  • Value realisation from our digitalisation and innovation programme
  • Defence strategy against climate change (early value)
2020 to 2021
  • Development and approval of Exxaro's Sustainable Growth and Impact strategy
  • Strategic priorities:
    • Continue with our portfolio optimisation
    • Responsible value maximisation of our remaining coal asset portfolio
    • Deliberate and responsible management of risks and opportunities in the low-carbon transition
    • Prioritise acceptable value distribution with long-term investments
    • Acquire the remaining 50% stake in Cennergi from Tata Power

We thank Mxolisi for his strength of leadership and unwavering dedication to Exxaro over the past 15 years.

Exxaro CEO Mxolisi Mgojo during the 2020 results presentation

Exxaro CEO Mxolisi Mgojo during the 2020 results presentation

Incoming Ceo's Report TabIncoming Ceo's Report

Incoming CEO's report | Dr Nombasa Tsengwa

It is an exciting time to be at Exxaro. As I prepare to take the helm from Mxolisi Mgojo, I believe our plans to create a low-carbon future place us on a pathway that will positively impact our stakeholders and society at large.

Dr Nombasa Tsengwa: Incoming CEO

Dr Nombasa Tsengwa Incoming CEO

Our Sustainable Growth and Impact strategy is anchored on measurable and multi-stakeholder value creation. At the core of this strategy is our proactive diversification from carbon-based commodities, reducing our own carbon footprint and developing alternative economic opportunities that will support the livelihoods of communities depending on our coal operations.

The development of our strategy has been measured and informed by research, insight and a foresight process. Informed by this, we are building on our existing successful platform, leveraging our skills and differentiation with a long-term vision to establish a sustainable, growth-orientated, value-driven company – a leading international renewable solutions provider by the end of the decade that includes mineral targets as well.

Details on the performance of our Sustainable Growth and Impact strategy and future focus are here.

Going forward, to achieve our vision of having a resilient portfolio with diversified and robust growth opportunities, we leveraged our energy business to decarbonise and reduce our emissions by positioning the business for a low-carbon future.

We anticipate challenges along the way, which largely depend on the world's recovery from the protracted COVID-19 pandemic. These include fluctuating currencies, monetary policies, market demand and commodity pricing. These factors influence the inflation rate and our suppliers' capacity to deliver on their commitments. To remain competitive, we need to wholeheartedly embrace innovation to improve the efficiency of our operations to ensure we meaningfully address global energy demand while delivering shared value with positive socio-economic impact.

I am deeply grateful to Mxolisi for his guidance in this transition and appreciative of our executive committee for their support.

After 18 years at Exxaro, I know the power of this team. Looking ahead, I believe the implementation of our Sustainable Growth and Impact strategy will unlock value for our organisation, our stakeholders and the country at large – and I look forward to sharing our progress with you, our valued stakeholders.

Dr Nombasa Tsengwa

Incoming CEO

4 April 2022

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