Our strategy
Our Sustainable Growth and Impact strategy is a comprehensive, stakeholder-inclusive plan,
laying the foundation for a resilient and sustainable future for our business to continue creating
and preserving value. We are determined to play an active role in creating a future that enables
our vision: resources powering a clean world.
Our approach transforms our business cautiously and effectively, developing into a diversified
company poised to thrive in and contribute to a low‑carbon future. We commit to responsible
operations, prioritising material ESG areas, and adhering to compliance standards.
In 2023, we further refined and consolidated our strategy in response to the rapidly changing macro-economic environment, leveraging
short-term opportunities while remaining steadfast in achieving our long-term strategic objectives.
Our strategic objectives
Transition at speed and scale
Transition our business with measured urgency given the growing need for the low-carbon transition. We will do this while creating
positive social impact. We will leverage our innovation, organisational intelligence and learning culture to navigate this transition
Make our minerals and energy businesses thrive
Enhance focus on our core delivery areas, minerals and energy, by increasing our footprint in these areas, divesting of non-robust assets
and ensuring continued operational and digital excellence
Empower people to create impact
Ensure our people and partners have the capabilities, mindset, environment and passion to achieve our purpose
Be carbon neutral by 2050
Reduce our carbon footprint and become carbon neutral by 2050. We will achieve this through our focused portfolio decarbonisation
and social impact initiatives
Become a catalyst for economic growth and environmental stewardship
Positively impact our ecosystem during and after our operations in minerals and energy, building community projects and businesses
into investable impact programmes, which can lead to sustainable, scalable economic upliftment and prosperity, independent of our
continued operations in these environments
Our strategy unpacked
We intend to deliver our long-term
strategic objectives by aligning our
resources to the following priorities:
- Delivering value in existing coal
assets
- Growing our energy solutions
business
- Diversifying our portfolio to include
minerals that support a low-carbon
world
We leverage our strengths and
capabilities, which include:
- Experience in mining bulk
commodities
- Strength of our balance sheet
- Effective technical and commercial
due diligenced
- Efficient business integration
- Expertise in energy
We will enable the execution of our
strategy over the next five years using:
- Clear targets
- A robust capital allocation model
- Rigorous performance tracking
- Accountability
- Cultivation of necessary skills and a
culture of execution
Capital allocation
Our ambition to be a diversified carbon-neutral minerals company with a significant energy business will be realised through effective capital
allocation. Our capital allocation model enables us to continue delivering shareholder value and create a sustainable, resilient and robust
enterprise that can withstand dynamic markets shifts, and grow our minerals and energy businesses while fully understanding their
associated risks and rewards. The model ensures strategic decision making between competing business investment interests and alignment
with our strategic intent.
To ensure we embed disciplined and data-driven capital allocation aligned to our enterprise ambition, we use the following criteria:
- Strategic fit: metrics that evaluate financial and market performance, capability alignment, ESG performance and diversification of
product, geography and customers
- Pacing: prioritising timing of investment decisions and considering factors such as time to earnings, organisational readiness and
stakeholder considerations to ensure timeous value realisation
Our capital excellence programme demonstrates our vigilance to optimising how we use our financial resources to create sustainable value.
Robust capital allocation is informed by our enterprise KPIs:
- Growth in minerals earnings
- Decarbonisation of portfolio
- ROCE
- Growth in energy generation
- ESG and licence to operate
Timeframes
We will execute our strategy in phases, with clear outcomes for each focus area.
A mining business
with interests in coal,
iron ore, base metals
and energy
2022
A coal-based mining
company diversifying
towards future-facing
minerals, with energy
capabilities
2026
- New income streams
introduced
- Minerals contributing
30% coal EBITDA
- Acquisitive and
organic growth
A diversified mining
company focused on
future-facing minerals,
with energy capabilities
2030
- Minerals contributing
50% coal EBITDA
- Becoming a strong
business with diverse
income streams
- 1.6GW (net) renewable
energy
- Acquisitive and
organic growth
A diverse carbon-neutral
minerals
company, with a
significant energy
business
2050
Accountability
We implement our strategy in three tiers of accountability:
- Tier 1 board: establish vision, mission and set direction of the business
- Tier 2 executive management: apply approved strategy into business plans
- Tier 3 executive business units (BUs): translate business plans into detailed execution plans
Our energy business
To be a leading international energy solutions provider by 2030
Wind and solar energy
- A significant contributor of energy solutions (renewable assets and services)
- Servicing the public and private sectors in South African and other markets
- Focus on three energy areas:
- Distributed generation: Our growth in energy will be internally led by providing our existing operations with self-generation. We
have two large windfarms and micro-grids in operation, and the LSP under construction. We will then look to providing generation
for customers in mining and select markets
- Utility generation: We intend to provide utility generation in select markets. We will determine markets for focus through selection
criteria
- Services: We will build our energy services business by growing our existing energy business and augmenting our generation
business. We will also offer asset management, energy management, digital services and virtual power
Why
- Transition Exxaro to a carbon-neutral future as a start
- Provide diversification and long-term sustainability to
Exxaro’s cash flow, including providing cost-competitive
energy solutions
- Become a prominent player and contributor to energy
security in South Africa
How
- Leverage Exxaro’s advantage, which includes our internal energy
requirements, a healthy balance sheet, resource evaluation skills,
excellence in project management and optimisation, and experience
in the project lifecycle
- Invest in energy with an acceptable risk profile targeting a portfolio
return of 15% equity internal rate of return over time
- Strategic acquisition of skill and market entries to grow at scale
- Partnering to improve skills, credibility and growth
Competitive advantage
- Renewable pedigree and scale: We are a significant independent power producer in South Africa and have had exposure to the
energy industry since 2009
- Strong Exxaro brand: Includes a strong balance sheet to back this new strategic pillar
- Adjacency advantage: All our operations require decarbonisation. Operations are often located in clusters with other mining peers
also requiring solutions
- Partnerships: We have formed partnerships that enable growth and contribute key offtake opportunities
Our minerals business
To supply minerals that power a clean world and provide our shareholders with superior returns while driving decarbonisation ambitions
Coal
Our coal business continues to deliver value for Exxaro and is
key in providing South Africa’s primary source of energy.
Why
We believe that the coal assets under our care do not belong
to us. Therefore, we have a responsibility to manage them
appropriately.
To do this, we must ensure that, on our way to a low-carbon
future, we do not leave high-value assets sterilised and
stranded.
How
- Ensure a robust coal asset portfolio, which includes
divestment from resources that do not suit our future
portfolio
- Optimise our market to resource capability
- Digitalise our operations with a focus on value creation
- Optimise capital deployment, supported by our capital
excellence programme
- Minimise emissions at our existing operations
New minerals
Diversify into new mineral assets that are vital to a low-carbon
future, eg manganese, copper and bauxite, among others.
Why
- A business that thrives in a low-carbon future
- Diversify revenue for Exxaro’s growth
- Clearly defined investment supporting the right
opportunities
- Balance sheet and mining capabilities provide a competitive
advantage
How
- Exxaro has developed a minerals business approach that
enables a just transition to a low-carbon world while
leveraging our core competencies in bulk commodity mining
and logistics
- Robust screening criteria enable us to continuously review
and identify the minerals we should be focusing on for our
future growth
Competitive advantage
- Specialised skills: We have roots as a diversified miner with recognised specialised skills in mining. This includes open-pit and bulk
commodity experience, base metals, mineral sands and industrial minerals. This allows efficient and effective evaluation of potential
growth opportunities
- Project execution excellence: Through expansion and greenfield successes, delivering digital innovation through our Digital@Exxaro
strategy and continued operational excellence from our high-performing coal operations
- Recognised for our ESG performance, brand and culture
We unpack our progress against delivering on our strategy on the following pages.
Report Index
IR