Dear shareholders,
I am pleased to present the RBR committee report for the year ended 31 December 2023. The committee focused on enhancing Exxaro's ability to achieve its strategy, its reputation as a good corporate citizen and its resilience in a changing environment.
Peet Snyders
RBR committee chairperson
In 2023, the committee consistently had four members, with a majority of independent non-executive directors.
The committee welcomed Karin Ireton and Nondumiso Medupe, both independent non-executive directors, as committee members following their appointment by the board on 14 March 2023.
The board is satisfied that the committee members have a suitably balanced blend of skills and experience to enable the committee to discharge its functions.
Standing invitees to committee meetings include the CEO, finance director, chief sustainability officer, chief technology officer and chief strategic resilience and governance officer. Other individuals, including members of management, external consultants and service providers, are invited to attend the committee's meetings from time to time in consultation with the committee chairperson.
Gender and racial diversity
The committee held four scheduled meetings – as determined by its terms of reference – and one special meeting in 2023. The 100% meeting attendance illustrates a high level of commitment from committee members. The table below provides an overview of meeting attendance in 2023.
| Members | Designation | Attendance at quarterly meetings |
Attendance at special meeting |
| Peet Snyders | Independent non-executive director and RBR committee chairperson | 4/4 | 1/1 |
| Ben Magara | Independent non-executive director | 4/4 | 1/1 |
| Mandlesilo Msimang | Non-executive director | 4/4 | 1/1 |
| Chanda Nxumalo | Independent non-executive director | 4/4 | 1/1 |
| Karin Ireton | Independent non-executive director | 3/3* | * |
| Nondumiso Medupe | Independent non-executive director | 3/3* | * |
| * | Karin Ireton and Nondumiso Medupe were appointed as members by the board on 14 March 2023. |
The committee is a board committee in terms of section 72 of the Companies Act, the company's MoI and King IV. The committee's role is outlined below.
The committee's role is to implement an effective policy and plan for risk management that will enhance the group's ability to achieve its strategic objectives and to ensure that risk disclosure is comprehensive, timely and relevant.
Risk management is the process effected by the board, management and other personnel. It is applied in a strategy setting and across the enterprise and designed to identify potential events that may affect the organisation, manage risks to within its risk appetite and provide reasonable assurance regarding the achievement of the organisation's objectives. Risk governance refers to the governance structures and mechanisms established within the organisation where decisions are made and implemented regarding risks.
The committee is responsible for reviewing the ERM process, including key risks facing Exxaro and the responses to address these risks with particular focus on:
Business resilience is the ability of an organisation to adapt to a changing environment to enable it to deliver its objectives, survive and prosper. Risk, incident, crisis and business continuity management are the four key elements of business resilience. The role of the committee is to oversee the appropriateness of Exxaro's crisis response plans and frameworks.
The committee's terms of reference were reviewed and approved by the board. The terms of reference continue to be aligned with legislation, regulations and King IV.
As there is no regulatory requirement to conduct an annual external independent performance assessment, while King IV recommends regular performance evaluations for all board committees, it is a governance practice at Exxaro to conduct such independent assessments every second year.
At the end of 2023, we conducted an internal evaluation of the committee's performance and effectiveness in accordance with King IV recommendations. The evaluation aimed to identify and record areas needing strengthening or refinement while considering internal and external dynamics and factors that may positively or negatively impact the committee's ability to enhance its performance and effectiveness in these areas. The assessment concluded that the committee functions effectively.
| Key highlights | Material themes |
| Noted that in line with our journey towards zero harm, Leeuwpan mine pleasingly achieved 33 fatality-free years on 31 March 2023, and Matla mine continued its excellent safety performance and achieved six fatality-free years on 2 March 2023 |  |
| Recommended an amended insider dealing policy to align with current market practice in respect of price-sensitive information thresholds and amended closed period definitions in line with the JSE Listings Requirements |  |
| Considered the integration of social vehicles, including the expanded mandate and amended MoI following Exxaro Matla Setshabeng Development NPC change to Exxaro Aga Setshaba NPC |  |
| Considered and recommended the revised supply chain sustainability policy, which included amendments to fronting and misrepresentation, be tabled for board approval and implementation | |
| Considered the guidelines for dealing with companies implicated in the State Capture Commission of Inquiry Report and managing the reputational risk associated with these companies. The guidelines were proposed by the ethics committee and approved by SERC | |
| Proactively engaged with shareholders at the annual board governance roadshow to outline Exxaro's long-term value creation, leveraging ESG for business resilience and sustainability, with the committee chairperson focusing on risks raised by shareholders and the Exxaro risk management strategy | |
To test the robustness of our strategic risk profile, the committee considered a risk comparison with our mining and metals peers and an updated strategic risk profile highlighting the group's material risks. The energy business's strategic risk profile was included.
From the analysis, the committee concluded that the Exxaro risk register has a majority of risks relevant to industry peers, except for those specific to the circumstances of a particular mining company. These risks may be relevant and will be considered at a tactical level to understand their potential impact on Exxaro.
These include digital and innovation, new business models and workforce.
The committee is satisfied that Exxaro's strategic risk profile is robust and reflects relevant risks that apply to its industry peers. The committee is also satisfied that the Exxaro strategic risk profile reflects the group's material risks, including emerging risks.
Business resilience (integrated report)
The committee considered amendments to various policies, including:
The committee also had a focused discussion on the ERM framework. A study was conducted in 2023 to compare the risk register to top risks disclosed by mining industry peers. Our strategic risk profile was found to be robust and reflects relevant risks that are applicable to our peers. The ERM framework will be reviewed to include the risk appetite statement.
Exxaro reviews the regulatory landscape for legislative changes that impact the company and ensures that processes are updated to ensure compliance, including the regulatory compliance universe.
Regulatory compliance training continued in 2023 and focused on competition law compliance and POPIA.
Exxaro started a process to benchmark our compliance management framework to enhance compliance risk management. This will enable Exxaro to develop a compliance roadmap, which will be presented to the committee in the second quarter of 2024.
The committee was briefed on the water management regulations applicable to all mines, as well as projects to address the mitigation of potential impacts and necessary infrastructure that was constructed and is being maintained. The ground surface water analysis model will be updated to reflect climate change impacts on operations and water sources for the long-term benefit of the community and environment.
The committee receives reports on and monitors the rehabilitation of mine areas, including dumps, as well as regulatory compliance status and any action plan with due dates in respect thereof.
The status of all renewal applications regarding our mining rights, WULs and environmental authorisations are reported to this committee. Additionally, the status of concurrent rehabilitation and environmental liability was reported to the committee.
The committee is satisfied with the measures in place to address compliance risks impacting Exxaro's licence to operate.
Exxaro continued to apply predictive and proactive reporting in our analysis and reporting.
The Coal Resources and Reserves were estimated on an operational or project basis and in line with the SAMREC (2016) and SANS (10320):2020 edition Codes for the South African assets and the JORC Code(2012) for the Australian coal property. The Exxaro annual estimation and reporting process is managed through Exxaro geosciences, LoM policies and associated reporting and estimation procedures, which are reviewed annually and updated if required. The committee reviews and recommends the Resource and Reserve statement annually.
The RBR committee chairperson participated in the annual board governance roadshow held in September 2023. Shareholders raised a number of risks for board consideration, which included the choice of assets and the class action suit. The committee noted the risks presented by shareholders, and the strategies used to manage these risks will be monitored by the committee.
Management reports in depth to the committee on information management governance, information management demand, operations infrastructure and applications, data analytics and intelligent process automation, information management risks and audits, disaster recovery programme status and our enterprise resource planning transformation journey.
The committee ensured that Exxaro's disaster recovery programme meets the highest standards of robustness and resilience by aligning it with ISO 27031 guidelines. Over the past three years, our disaster recovery measures have matured and underwent rigorous testing which confirms that they are mature and effective.
The committee also reviewed the cybersecurity incident response plan and recommended it for approval.
Business resilience (integrated report)
Exxaro, guided by the code of ethics and supplier code of conduct, evaluated its business relationships with various suppliers in light of findings and recommendations in the state capture report. The evaluation's outcome was reported to the management ethics committee, group executive committee and the SERC.
A framework of guidelines was developed for dealing with implicated companies currently doing business with Exxaro for approval by the group executive committee. Exxaro will also use the framework in instances where suppliers and service providers are mentioned adversely in the media or where it is made aware that the company is under investigation or involved in any actual or alleged dealings that could put Exxaro into disrepute. Should a supplier whose services are critical to Exxaro be charged, Exxaro would issue a holding statement and continue with the existing contract, but not enter into any new contract.
The committee receives reports on the total crime incidents across the group, including any recoveries.
Exxaro's safety improvement initiatives monitored by and reported to the committee included to following:
| The sustainability summit held on 20 April 2023 aimed to bring together internal and external leaders to engage on various areas of the sustainability portfolio. The summit seeks to bring together BU colleagues to review and recommit towards achieving Exxaro's strategic sustainability objectives. | Following the fatality in August 2022, the coal operations and BU leadership teams increased their presence in the field through focused and visible leadership. A check and verification process to assess effective implementation of key lessons at other sites commenced in the first quarter of 2023. |
| As part of an initiative to empower health and safety representatives to be key safety, health and environmental drivers in their lines of work, the mines ran several training programmes for our health and safety representatives, including coaching and mentoring. | As part of the safety incident interventions, Matla mine hosted its quarterly safety indaba/stand-down on 5 June 2023 and relaunched the Stop and Fix campaign. |
| Leadership interventions included executive committee members communicating risk awareness messages to the broader workforce on the identified safety risks as part of the Khetha Ukuphepha campaign. | Any HPI places Exxaro's strategic goal of zero fatalities at risk which also impacts the achievement of zero harm. All HPIs are investigated and solutions are shared across the group for implementation and to test their effectiveness in eliminating repeat incidents. All this is reported to the RBR committee. |
Key focus areas 2023/2024
| Monitoring the class action served on Exxaro in November 2023 and its impacts on the group as a responsible corporate citizen and ensuring preventive measures regarding occupational diseases are properly implemented |
| Overseeing the implementation of the water management plan at all Exxaro mines, including closed mines, and any plans to mitigate these, including an update to the ground water analysis model to include climate change impact on operations and water sources |
| Ensuring effective plans are in place based on the impact of business disruption (plans are up to date and no significant incidents occurred that led to business disruption) |
| Reviewing Exxaro's risk appetite |
| Reviewing Exxaro's key compliance risks related to licence to operate |
| Recommending appropriate predictive and proactive reporting and engagement with stakeholders (including the integrated report) based on key risks |
| Overseeing the implementation of the revised governance of technology and information to ensure incorporation of technology and information risks to enable strategy delivery and ensure business resilience |
| Reviewing business resilience key elements to ensure business strategy compliance |
The committee is satisfied that it has discharged its responsibilities and fulfilled its mandate in accordance with its terms of reference, the Companies Act and King IV.
On behalf of the RBR committee
Peet Snyders
RBR committee chairperson
10 April 2024
Report Index
IR