Business resilience

Driving innovation and information management

Highlights

• Our established centres of excellence (CoEs) support our digitisation strategy
• The business applications CoE drives citizen development, which is empowering end-users to develop their own non-complex applications and workflows to improve task execution and productivity
• Data analytics is embedded in the way we do business with BUs using dashboards to enable decision making
• The intelligent automation CoE has automated 34 business processes since 2018, which has resulted in saving 90 000 hours over three years
• We use NAVEX One's conflict of interest solution and standardised policy management
• Our learning management solution embraces digital learning capabilities
• We deployed the Slope Stability Monitoring solution to monitor the movement and slopes of high walls. It also triggers evacuation in emergency situations
• We deployed a solution that designs blasting plans and monitors implementation
• Our electrical condition monitoring manages conditions of the substations
• We use Etap modelling of electrical networks for simulation of electrical networks
  • We deployed an Pix4D solution for drone surveying at Belfast and Grootegeluk for survey in the professionals in training (PIT) programme

Innovation is the ultimate white label word, the definition relying on the context in which it is used. Within Exxaro's context innovation is defined as the discovery, incubation, and implementation of cutting-edge solutions with the aim of adding value by refining efficiency, increasing effectiveness, and enhancing competitive advantage.

Due to the broad nature of innovation and its reliance on the context in which it is intended to be used, innovation is further categorised into four classifications namely, sustaining, incremental, radical and disruptive. Radical and disruptive types of innovation have been difficult to identify, source and implement while keeping focus on our core business. The innovation management team identified access to the broader innovation ecosystem as the best port of call to source these radical and disruptive innovation while not being inhibited by typical search engine constraints.

Exxaro's innovation management strategy is aimed at identifying areas where innovative solutions will support Exxaro's strategy. Innovation management's approach is underpinned by gaining access to an innovation ecosystem through partnerships with industry bodies, tech disruptors and innovators, it is anticipated to have a global reach of capabilities to assist in solving business challenges.

Exxaro's innovation strategy promotes collaboration with people and organisations outside the company. It promotes the belief that knowledge and creative initiatives from outside the company can contribute to achieving strategic goals.

In 2022, the innovation management team established the foundational elements required to project Exxaro's innovation journey to enable elements of the broader Exxaro strategy. This included external and internally focused efforts, the first of which was embedding within and aligning innovation to business optimisation and supply chain management processes. This was to enable key internal processes to support and embed innovation. This further supported the successful establishment of an ecosystem, resulting in a working relationship with a range of external innovation partners. A number of challenges were published to the innovation ecosystem focused on decarbonisation and improving operational efficiencies. The result of these challenges was exposure to innovative technologies that could not have been uncovered through traditional processes, one of which translated into approval to proceed with proofs of concept to test a solution at Mafube and Grootegeluk.

The achievements and traction of 2022 bode well for the 2023 roadmap and plan. With further development and extracting value from the implemented foundational elements completed in 2022, an additional focus area for 2023 looks to develop a systematic approach to innovation that will further embed innovation into the business planning and strategy process. This will enable the necessary strategy, processes, governance, resources and measurement to further enhance Exxaro's innovation journey.

With the ever-increasing cyber threat landscape, we have intensified our efforts to secure and safeguard our information and digital assets. There is continuous commitment and focus on enhancing our internal capabilities to identify, detect, respond and recover in the event of a cyberattack.

To improve our security posture and resilience, we are strengthening our controls to align with global best practices and deployed several systems to facilitate this. These include a data loss prevention tool to address privacy risks relating to sensitive information, continuous monitoring of our control environment by performing self-assessments and independent reviews to ensure the effectiveness of our mitigation actions and remediation of weaknesses. In so doing, we improved our cybersecurity score by 12.9% since the beginning of 2022.

Driving innovation

Exxaro takes great pride in our deep-rooted culture of innovation. We firmly believe that innovation is not limited to any particular department within the organisation, but rather, it is the responsibility of all employees to contribute to this effort. Our various departments, with their unique objectives and goals, are constantly innovating in different ways. For example, the business optimisation department focuses on efficiency, while the strategy and business transformation department concentrate on management innovation. Further, the projects and technology function is responsible for equipping our BUs with cutting-edge, forward-looking technologies, to ensure we keep on thriving as technology evolve within mining.

To ensure that all our functions have the necessary resources and capabilities to search for, identify, access, and accelerate these innovations, we have equipped our people with various innovation tools. These tools allow our employees to critically evaluate the need and implications of innovation, ensuring that purpose-driven innovation is at the heart of all our initiatives, and that value is continuously added to the triple bottom line.

One of the tools we have equipped our people with is access to an ecosystem approach to search for, identify, and access innovation. We recognise that innovation is amplified when knowledge and ideas are not isolated within our organisation. Therefore, we collaborate and partner with key stakeholders, such as government, research institutions, incubators, and accelerators. By taking a systems approach to solve large and systemic problems, we are able to leverage the strengths of these organisations and benefit from their expertise.

We place particular importance on collaborating with government stakeholders since they play a crucial role in driving energy innovation and implementing the incentives and regulations needed to stimulate investment in energy innovation, its deployment and uptake.

Delivering on our strategy and future focus

We will be futureproofing Exxaro and enabling a sustainable future for our business. We aim to fast track our decarbonisation and investments to generate predictable long-term cash flows and increase portfolio diversification. As the company matures, we will build on an already successful platform, leveraging our skills and differentiation with a long-term vision to develop a sustainable, growth-orientated, value-driven company, a leading international renewable solutions provider by the end of the decade.

Our capital allocation and project execution remains focused on leveraging the growth investments already made, supporting our early value coal strategy and sustaining our businesses by implementing our portfolio of stay-in-business capital projects. Our early value strategy means we are strategic about our capital allocation. We embarked on a capital expenditure journey in managing our sustaining capital, ensuring we sustain a robust coal portfolio with strong cash flow generation. We continue disposing of non-core assets. We continue on our capital excellence journey in investing in our coal business to remain resilient. We are targeting average capital of between R2 billion and R2.5 billion annually in real terms. As part of the early value strategy, the GG6 expansion was completed in 2022.

For our energy business, Exxaro is targeting an additional 1.6GW (net) capacity by 2030 with total capital deployment of approximately R28 billion. We estimate that one third will be our equity contributions and two thirds project financing. This could potentially provide approximately R3 billion in EBITDA in real terms. We are aiming to achieve equity returns on a portfolio basis of 15%.

We are focusing on opportunities in South Africa to start with, while monitoring opportunities in new markets for potential entry that meet our investment criteria, building strong foundations for the future and investing in renewable energy assets that enable us to transition to a low-carbon world.