Energy management

We realise that efficient energy use is critical, particularly in South Africa where coal-based electricity supply is constrained and cost outpaces inflation. As such, we are committed to energy management that reduces GHG emissions to achieve our decarbonisation goals. We consider our value chain and support suppliers on our inclusive, sustainable and productive decarbonisation journey.

We manage our energy consumption with a view to be carbon neutral by 2050.

Our approach

To be carbon neutral, innovative and efficient energy management is crucial. As we prepare our business for the low-carbon economy, we must ensure that decarbonisation thinking is integrated into our operations with dedication to reducing direct (scope 1 and 2) GHG emissions across our BUs and value chain. To support these goals, we use the ISO 50001 energy management system.

ISO 50001 energy management system

Our group-wide energy and carbon management programme supports our goals:

• Innovative and efficient energy management is critical on our path to become carbon neutral
• Preparing for a low-carbon economy by embedding decarbonisation thinking in operations with commitment to reducing scope 1 and 2 emissions across BUs and our value chain

Our energy and carbon management programme aims to improve diesel and electricity efficiency to reduce energy consumption. Our technology and engineering department reduces diesel consumption at our operations with fuel additives and payload management.

We uphold our licence to operate through:

• Energy management (energy efficiency plans and reports, and intensity targets)
• Our Climate Change Response strategy (responsible resource consumption and CO₂ emissions reports)

BUs have energy and GHG reduction targets to reduce overall energy consumption and intensity.

The productivity and energy management services (PEMS) dashboard supports projects and performance monitoring to address operational inefficiencies and help each site achieve targets.

Accountability and responsibility

BU managers are responsible for achieving energy management objectives, supported by the group engineering manager and executive head: projects and technology.

How we performed

Our primary energy sources were 40.7% electricity (2021: 40%) and 59% diesel (2021: 59%). Total energy consumed decreased by 5.25% in 2022 to 5 211 418GJ (2021: 5 500 339GJ). Electricity and diesel intensity in total decreased in 2022. We submitted a 12L tax claim for one of the completed diesel energy intensity reduction projects executed at Grootegeluk.
Based on the decrease of 2.4% in RoM tonnages, electrical energy intensity increased by 3.9% to 3.37MWh/kt (2021: 3.24MWh/kt) and diesel energy intensity decreased by 7.0% to 4.88MWh/kt (2021: 5.25MWh//kt).

Electricity and diesel consumption	2022	Year-on-year change (%)	2021	Year-on-year change (%)	2020
Electricity (MWh)	590 078	1.38	582 066	-0.67	628 834
RoM (kt)	175 176	-2.38	179 451	-9.74	212 741
Electrical energy intensity (MWh/kt)	3.37	4.01	3.24	9.08	2.95
Diesel (kl)	83 226	-9.4	91 838	-11.70	96 143
RoM (kt)	175 176	-2.38	179 451	-9.75	212 741
Diesel energy intensity (MWh/kt)	4.88	-7.05	5.25	2.17	4.64

Refer to the (databook) for more detail on our electricity, diesel, RoM and intensities.

Targets set

Each BU has energy intensity targets linked to the STI scheme. The targets were based on the outcomes of current state and opportunity scoping reviews, which began at Grootegeluk in 2021. By year end, targets were in place at all operations.

The KPIs are diesel energy intensity, calculated by the ratio of total diesel energy consumed to total RoM from the plant and waste, and electrical energy intensity as a ratio of total electrical energy consumed to total RoM not processed through the plant.

The outcomes of the reviews also informed interventions that will reduce energy consumption and GHG emissions to improve intensity (GJ per total tonnes handled) at each site. Intensity performance is tracked monthly relative to the calculated energy intensity baseline. This baseline was calculated using the energy consumption and production data from the most recent preceding year that represented each mine's steady-state operation.

We resolved challenges in collecting data during the reviews with project assumptions vetted and approved by each BU. We are improving this data collection process to enable real-time behaviour management.

Energy-saving behaviour positively impacts the business and our wider operating environment. As such, our human resources, business improvement and information management teams drive behaviour change among employees by nurturing a culture of emissions reduction and accountability through communication, awareness training and engagement. Employees support efforts to establish energy management systems with engineering teams championing initiatives. Energy management champions motivate behaviour transformation and we discuss performance in monthly forums at each BU. The enabling tools, implemented by ECS (an independent measurement and verification service) and Exxaro, are described below.

PEMS	PEMS is a digitalisation solution enabling BUs to track operational efficiencies and inefficiencies. It is designed to improve energy consumption and production against an adjusted baseline at a daily/weekly/monthly resolution. PEMS is expected to achieve a 5% reduction in fuel consumption and carbon savings at each site projected over the next five-year period from 2021. This is key to achieving energy and GHG project targets.
Energy and carbon transition profiler (SmartEPS)	SmartEPS is a web-hosted application which enables users to understand the impact of interventions with an energy and GHG profile to 2050. This solution is at user-acceptance testing phase with each BU.
Measurement, verification and identified opportunities with tax rebate	ECS quantifies the impact of energy savings and submits the data to the South African Revenue Service (SARS) for a section 12L tax rebate. One project at Grootegeluk was submitted to SARS in December 2022. The combined energy savings of this project is 2 667 221kWh with an estimated net incentive rebate value (at 28% marginal tax rate) of R709 481. ECS will further quantify the impact of priority projects at Grootegeluk, our Mpumalanga operations and FerroAlloys in 2023 .
Solution user adoption and engagement	ECS conducts strategic weekly/bi-weekly/monthly/quarterly performance reviews at Grootegeluk, Matla, Belfast, Leeuwpan and FerroAlloys) to assess project status, and implementation of PEMS and SmartEPS. These sessions also address shorter interval control measures to ensure each site achieves monthly STI targets.