SDG 16 (peace, justice and strong institutions) seeks to promote peaceful and inclusive societies for sustainable development, to provide access for all, and build effective, accountable and inclusive institutions – from small companies to multinationals and governments. The Exxaro board is committed to contributing positively to achieving this goal, especially through good governance.
The board drives the Exxaro strategy and budget, sets performance and culture expectations as well as the governance framework, including its subsidiary and controlled companies, trusts and joint ventures. The board therefore continues to be the focal point and custodian of corporate governance for the group.
At the core of Exxaro's corporate governance are principles that guide the board in meeting its responsibilities to the company and its stakeholders, to enable the company to achieve the King IV governance outcomes and fulfil its purpose to power better lives in Africa and beyond. The board therefore regards good corporate governance as fundamentally important to create value and achieve the following governance outcomes in its own ethical and effective leadership:
Our board assumes ultimate accountability and responsibility for the company's performance and affairs. In so doing, it effectively represents and promotes its legitimate interests. As a responsible corporate citizen, it also considers its material stakeholders' legitimate interests and expectations to make a positive contribution to society at large.
The board annually identifies key focus areas, which may continue to receive attention in subsequent years, such as the following in the reporting period:
Our COVID-19 mitigation measures were informed by the group's health and wellness strategy, based on three pillars: diagnosis, management and prevention.
Following on our 2020 interventions, additional measures were put in place to deal with the pandemic, including:
The importance of health, safety and wellness is a focused item on the agendas of board, board committee and executive committee meetings to enable feedback on the organisation's endeavours in this regard, including COVID-19 responses.
The board was comfortable with the governance processes applied across the group and various measures put in place during the pandemic to ensure the business is more resilient and responsible to withstand challenges into the future.
For details on Exxaro's COVID-19 responses, refer to Our people.
We intentionally focus on positioning Exxaro for growth, anchored on the just transition principle, which seeks to balance our financial performance, South Africa's economic development needs, ecosystem protection and society's adaptive capacity in the face of climate change.
Exxaro believes that our greatest opportunity is to help steer South Africa towards a sustainable future through an undiluted focus on low-carbon minerals and energy with a goal to be carbon neutral by 2050 through consistently reducing our direct emissions. The board is committed, beyond compliance, to mitigating the impact of climate change.
Specific actions in 2021 to honour this commitment included:
For details on our Climate Change Response strategy, refer to our ESG perspective in the ESG report.
The reporting period was particularly important from a governance perspective with the board focusing on reviewing governance structures in the group, board committees' terms of reference as well as delegations of authority to create and preserve value for agile decision making in the minerals and energy businesses while maintaining decentralised decision making in the more mature coal business.
King IV recommended practices for group governance require the board to assume responsibility for governance across the group. The board exercises this responsibility by adopting a group governance framework that provides direction on how the relationship between the holding company and subsidiaries should be structured and managed.
The following outcomes were achieved in 2021 flowing from the board's key focus areas:
|Chanda Nxumalo||Independent non-executive director||Appointed
1 February 2021
|Mandlesilo Msimang||Non-executive director||Appointed
15 March 2021
|Geoffrey Qhena||Independent non-executive director||Appointed
19 April 2021
|Isaac Malevu||Non-executive director||Appointed
22 June 2021
|Karin Ireton||Independent non-executive director||Appointed
7 February 2022
|Bennetor Magara||Independent non-executive director||Appointed
7 February 2022
|Billy Mawasha||Independent non-executive director||Appointed
7 February 2022
|Phumla Mnganga||Independent non-executive director||Appointed
7 February 2022
For more information on the board's composition, diversity and experience, refer to the ESG report.
King IV prescribes that the board should appreciate that an organisation's core purpose, risks and opportunities, strategy, business model, performance and sustainable development are inseparable elements of the value creation process. The review of corporate responses, social justice movements and other material economic and business impacts, analyst reports on megatrends with a view to identifying material business environment developments and data points, is a continuous process.
An updated strategy process was adopted by the board to provide for a continuous cycle in ensuring an integrated strategy across Exxaro businesses, supporting Exxaro's purpose. As risk management is inherently linked to achievement of strategic objectives, an integrated risk management approach is applied in the strategy review process, including the identification of emerging risks.
For Exxaro, innovation is key to a successful, thriving business. Without actively driving innovation practices, businesses stagnate and ultimately fail.
The board recognises that it is imperative for Exxaro to continue innovating and strive for radical and disruptive solutions, not only to address challenges but to drive and support our strategic goals of carbon neutrality.
In addition to initiatives within the group and to promote board effectiveness, the following was put in place to support our board:
On 23 February 2021, Tronox Holdings plc exercised its "flip-in" call option over Exxaro's 26% shareholding in Tronox SA, for which Tronox Holdings plc delivered 7 246 035 newly issued Tronox ordinary shares to Exxaro on 24 February 2021. This resulted in the derecognition of the investment in Tronox SA and recognition of an additional investment in Tronox Holdings plc (refer to note 6.1.4 in the 2021 group and company annual financial statements).
On 1 March 2021, Exxaro concluded a public offering in the United States of the 21 975 315 Tronox Holdings plc ordinary shares. The shares were sold at a public offering price of US$18.25 per share which was reduced by underwriting discounts and commissions resulting in an achieved price per share of US$17.43. This resulted in the derecognition of the investment in Tronox and the achievement of Exxaro's strategy to monetise our investment in Tronox (refer to note 6.1.4 in the 2021 group and company annual financial statements).
On 8 April 2021, Exxaro signed a sales and purchase agreement with Overlooked Colliery Proprietary Limited disposing of the ECC* operation. All conditions precedent to the sales and purchase agreement were fulfilled and the transaction became effective on 3 September 2021 (refer to note 8.3 in the annual financial statements).
The disposal process for Leeuwpan continues with definitive legal agreement envisaged to be signed in the first half of 2022, and regulatory approvals obtained thereafter.
We continue to evaluate our options to dispose of its 26% shareholding in Black Mountain.
In line with King IV's recommendation to apply and explain how good governance is practised within Exxaro, our detailed King IV application register is included in the ESG report . This sets out each principle with an explanation of steps taken as well as policies and processes used by Exxaro.
In addition to this, our governance reporting is also structured under the four desired outcomes of King IV, namely: