Mxolisi Mgojo
Chief executive officer
While the first three months of 2020 passed smoothly with strong operational results, the emergence of COVID-19 disrupted life as we knew it. As a team, we quickly reset our compass and shifted our engagement platforms for positive outcomes.
The pandemic underscored fundamental underlying societal issues, including unemployment, inequality and constrained healthcare. Across the spectrum, business, government, social partners and other stakeholders rallied together to respond to COVID-19 to halt its spread, and support those in need. The challenges we all faced during the year were extensive, these moments of triumph and ubuntu are what resonate with me.
Exxaro saw this time of crisis as an opportunity to ensure our stakeholders, including government, our employees, suppliers and contractors and host communities, received the necessary support and commitment to help them overcome the pandemic's negative impacts. As the country continues to face numerous challenges, exacerbated by COVID-19, I believe we have no choice but to come together to create a better future for the next generation.
Our operations heeded the call with a sense of urgency. From a community perspective, approximately R1.95 million was spent on various COVID-19-related initiatives including an R20 million donation to the Solidarity Fund, R13.9 million towards small, medium and micro-enterprises (SMMEs) and R7 million for two testing facilities at Grootegeluk and Matla. We conducted skills development and ESD programmes via online platforms for host communities. Our investment in free community WiFi for Siyathuthuka in Belfast ensured social distancing without loss of communication. Our Belfast and Grootegeluk operations assisted the Emakhazeni and Lephalale municipalities respectively with short-term water supply to prevent the spread of COVID-19. We collaborated with mining contractors and non-governmental organisations to provide food parcels and PPE to vulnerable people and essential service providers at the cost of R1.8 million and R209 million on COVID-19 preventative measures. Exxaro also contributed R460 000 to the Minerals Council South Africa initiative to provide PPE to the Department of Health in Mpumalanga.
To keep our employees safe, and in line with our health and wellness strategy that focuses on the diagnosis, management and prevention of diseases, our response to the pandemic continues to focus on avoiding, reducing and managing COVID-19 cases. As at 1 March 2021, a total of 2 780 employees have been infected since the onset of the pandemic, with a recovery rate of 99%. Our deepest condolences to those who have lost their loved ones due to the virus. We remain committed to our fight to prevent further loss of life and continue to implement COVID-19 preventative measures in line with government regulations and recommendations.
Refer to our response to COVID-19 for more information on the initiatives we implemented to assist host communities.
Despite a depressed global coal market for most of 2020, we reported a 25% increase in core group EBITDA to R7 291 million (FY19: R5 832 million), and a 26% increase in core headline earnings per share (HEPs) at R29.73 (FY19: R23.54) for the financial year ended 31 December 2020. This is a notable achievement in the face of the COVID-19 pandemic, a distressed local economy and relatively low thermal coal pricing environment.
We navigated significant headwinds and new risks brought about by COVID-19 during the year, however, pleasingly all Exxaro operations returned to full capacity from the second half of the year, with Matla at 80% until the end of the third quarter. Overall coal production volumes (excluding buy-ins) increased by 4% to 47.4Mt, mainly attributable to higher production at Grootegeluk as well as the Belfast mine, which was fully ramped-up from March 2020. The increase was partly offset by lower production at Leeuwpan and ECC due to the COVID-19 lockdown. Sales improved by 5% to 46.8Mt as a result of a 34% increase in exports as well as higher domestic sales from Grootegeluk, offset somewhat, by lower domestic sales at Leeuwpan and ECC.
Our ability to create value for stakeholders is anchored around our safety performance. Amidst the backdrop of the pandemic, it is pleasing to be able to report on our record safety performance. A significant highlight for the year was the achievement of a record 48 months without a fatality as at 2 March 2021, and we continued to operate uninterruptedly with no section 54s. Our LTIFR for the year of 0.05 was 55% better than the set target, and represents a 58% year-on-year improvement in our LTIFR, which is a company record. I would like to commend all our teams for continuing to drive zero harm so effectively.
Exxaro grapples with two key concerns when facing strategic decision making: Exxaro's future, and how do we balance the competing needs of our stakeholders while ensuring we deliver on our purpose?
We have always been a predominantly fossil fuel business. However, we understand the crisis facing the planet due to climate change and are committed to being carbon-neutral by 2050 in terms of scope 1 and scope 2 greenhouse gas (GHG) emissions (as detailed in our ESG report in the environment section). At the same time, we must meet the needs of our stakeholders as we safely and responsibly extract maximum value from our assets.
In 2020, we reviewed our strategic intent and developed a new Sustainable Growth and Impact strategy (refer to our strategy: positioning Exxaro for sustainable growth and impact). This strategy considers the complexities and opportunities we face, ensuring we are responsible today as well as into the future. Further, the outcomes of our TCFD recommendations assessment will provide a structured framework for engagement with the financial community as we embark on our just transition journey in response to climate change.
Our strategy also recognises that, to ensure sustainability, our positive impacts must reach far and wide. Exxaro must be a catalyst for meaningful change, with our legacy measurable long after mining ceases. This should be embodied in creating opportunities and economies that sustain communities and broader society for generations to come.
As we embark on the next leg of our strategic journey, how we execute our plan will be a critical determinant of its success. That's why we are focused on ensuring we have the right human capital to drive us forward and that we, in turn, offer our employees a value proposition that both motivates and inspires them.
This past year highlighted the importance of ensuring our people are resilient in a changing working environment to protect both their lives and livelihoods. I was inspired by my colleagues as they adapted time and again to an ever-changing context.
We continue developing and entrenching a company culture of agility, accountability and adaptiveness.
Our continuous investment in our employees across the organisation helps keep our goals aligned and focus in mind. Since 2014, Exxaro has been recognised as one of South Africa's top employers by the globally focused Top Employers Institute. The merit in these awards lies in our commitment to our employees.
We embrace diversity and inclusivity as an enabler of our business strategy, rather than a compliance exercise. The diversity of perspectives, skills and experience in our teams will support our growth and help us identify the unique risks and opportunities we will face. I believe that people must truly be empowered to unlock their unique talents to drive our business forward and ensure we can maximise our positive impact on society.
We strive to actively break down barriers for women in the mining sector. We are also committed to ending GBV, which we foster through collaboration with our peers and the Minerals Council South Africa. Exxaro firmly believes that no person should face discrimination, abuse or hardship for any reason, including race, gender, age or sexual identity, among others.
As a business, Exxaro has long recognised the risks associated with climate change, as well as the opportunities it brings for future development. The work we have done to ensure our strategy is aligned to these risks and opportunities will position us well for the future, as we ensure we capitalise on the momentum to liberalise South Africa's energy sector. The combination of energy production and asset management will create an annuity income stream in the long term for the group. In the short term, the aim is to establish credentials as distributed energy solutions.
While the year has not been easy, I believe the results speak for themselves. I am deeply appreciative of Exxaro's people for their absolute dedication to their work. Thank you for your tireless efforts this year. To my fellow board members, thank you for your guidance and counsel as we faced complexities extending beyond our business.
Finally, to our stakeholders across the globe, thank you for your continued support.
I truly believe in Exxaro's purpose and, along with my executive committee colleagues, I am committed to ensuring we power better lives every day.
Mxolisi Mgojo
Chief executive officer
19 April 2021