Our socio-economic development initiatives are funded by the Exxaro Chairman's Fund (ECF), the Exxaro Foundation (EF) and the Exxaro People Development Initiative (EPDI).
The ECF and the EF govern our CSI initiatives, and SLP projects, while the EPDI oversees education and skills development initiatives across Exxaro's footprint. Our ESD committee is responsible for creating wealth, dignified employment and sustainable enterprises for our host communities.
Exxaro's integrated approach to infrastructure development, education, healthcare and ESD aims to advance and strengthen communities. We understand that our success is both short term in terms of delivery of initiatives and long term as determined by the legacy we leave for our communities. Our guiding principles are sustainability, stakeholder inclusiveness and collaboration.
The socio-economic development expenditure included SLPs, ESD, CSI and COVID-19 relief, totalling R198.64 million
"Impact at scale" drives our approach to community development. We introduced this approach in 2020 and will continue to reinforce it into the future.
Our community development initiatives are successful but not far-reaching as they are constrained by localised impact and lack of local government capacity. The socio-economic and environmental challenges are exacerbated by rising unemployment (aggravated by COVID-19) and poverty. Exxaro and government cannot resolve these challenges on their own.
Our impact at scale approach recognises the opportunity to reference legislative requirements such as the Mining Charter III and the dtic's B-BBEE codes as the foundation for our work with government. We also see an opportunity to lead better and bigger development initiatives that will arrest and reverse the scourge on our communities.
Our impact at scale approach includes:
Anticipating the long-term impact of COVID-19 on our "impact at scale" programmes, Exxaro has developed a post-lockdown response plan that will also mitigate any future unexpected events.
Our impact at scale approach is aligned with the DMRE's medium-term strategic framework (2019 to 2024). This framework confirms the role and contribution needed from the mining and minerals industry for far-reaching transformational development.
The framework has seven key objectives illustrated below.
Our impact at scale approach, guided by our Sustainable Growth and Impact strategy, also references the framework's identification and execution of community development initiatives. See our integrated report for more information.
Further impetus for our impact at scale approach is government's district development model - a new integrated planning model for cooperative governance, supporting district-based municipal service delivery, to transform rural and urban landscapes with complementary local economic development.
The pilot project in Lusikisiki (OR Tambo District Municipality) includes rural spatial development. The Durban pilot (eThekwini Metropolitan Municipality) includes urban spatial development. Exxaro is particularly interested in the Lephalale pilot, launched in the Waterberg District on 26 November 2020, which includes mining spatial development. Exxaro will partner with government to achieve the envisaged short and long-term community development objectives, through the municipal capacity-building programme described later.
The Waterberg is known for platinum production and increasing coal mining to meet growing demand for electricity. Lephalale is also an agricultural hub with game and livestock farming, as well as irrigated agriculture contributing to local economic development.
Exxaro, Anglo American, World Vision South Africa, the CSIR, Zutari (formerly Aurecon) and the Limpopo provincial government are collaborating on the Impact Catalyst platform for large-scale socio-economic development initiatives. Public-private partnership initiatives leverage collaboration across all sectors for impact beyond the scope of individual participants and locations, and in this instance, beyond mining.
The partners have contributed over R55 million in funding and human resources since 2019. Several initiatives are at different stages of implementation:
Exxaro has partnered with the NBI and COGTA to support host municipalities in a municipal capacity-building programme. The programme addresses technical skills gaps needed for service delivery and local economic development. It aims to empower local municipalities by building capacity for effective delivery of basic services by local government. The long-term vision is to attract additional investment and stimulate growth.
The NBI is a voluntary coalition of South African and multinational companies working towards sustainable growth and development for a sustainable future through responsible business action. As a member of the coalition, Exxaro shares mutually beneficial national high-impact solutions.
The technical assistance, mentorship and development programme of the NBI trains permanent senior local municipality employees. It is an outcome of the Business Unity South Africa job summit of October 2018. Reporting to the presidency through the National Economic Development and Labour Council, COGTA is represented in this programme to ensure alignment with the district development mode.
The programme aims to ensure sustainability and stability of municipalities with focus on expertise, processes, systems and management. Engagements with the Waterberg District Municipality began in the last quarter of 2020 to identify infrastructure projects and areas in need of support. Retirees with technical expertise will mentor municipality employees as individuals and groups in 2021.
In December 2017 Exxaro concluded the Replacement BEE Transaction, ensuring a broad-based ownership level of 30% in Exxaro, which replaced the previous BEE ownership structure that had expired and vested in November 2016. The community benefit scheme, officially registered as an NPC called Matla Setshabeng, and employee share ownership scheme are part of the overall black shareholding of 30%, each holding 5% of the Exxaro interest. Given the prior empowerment structure of more than 50% broad-based black shareholding, the replacement structure is exempt from compliance with the requirements of Mining Charter III - Exxaro concluded these transactions as an objective for proactive economic empowerment of employees and communities through benefits obtained from its growth strategy, viz dividend earnings.
The community benefit scheme will act independent of, but may partner with Exxaro and other social actors in delivering socio-economic benefits to the community, with the primary objectives to focus on anti-poverty initiatives; provision of healthcare services to poor and needy persons; and promotion and provision of education and training programmes.
Matla Setshabeng will cover primarily, all Exxaro operations in Mpumalanga, Limpopo and KwaZulu-Natal, including communities adjacent to closed operations previously owned by Exxaro. It will be operational at the district level to align with the district development model to achieve wide-reaching socio-economic development that can complement initiatives at a local level. Matla Setshabeng will be launched during 2021.
We began 2020 with plans to resolve challenges in the implementation of community development projects. Among these challenges were delays in project execution due to extended consultation, poor project planning, inadequate local municipal capacity and realising partnership models for our ESD programmes. We addressed some of the issues and pursued new opportunities. COVID-19 shifted our priorities so that our annual SLP project delivery schedules were disrupted in favour of an urgent response to the pandemic.
Despite these challenges and shortcomings, in collaboration with local municipalities, we began key municipal infrastructure projects at an estimated cost to completion of R73 million (R15 million in Belfast and R58 million in Lephalale). We also delivered community benefit projects at a total cost of R25.1 million to three local municipalities in the Nkangala district of Mpumalanga for education and ESD.
All Exxaro's business operations have valid mining rights granted by the DMRE, which are at various stages of execution of their five-year SLPs. In Limpopo, these are Grootegeluk, Thabametsi, and Tshikondeni (which is a mine in closure); and in Mpumalanga these are ECC, Matla, Belfast, Leeuwpan and Arnot.
|Investment in local economic development||Rm|
|ESD (non-financial support)||6.48|
Highlights of Exxaro's five-year SLPs are outlined below.
Infrastructure (water, roads and sports)
Rapid growth of Lephalale has put pressure on the municipality's ageing water infrastructure with resultant insufficient water supply to communities and businesses. COVID-19 has highlighted the urgency to address the critical relationship between water, health and hygiene. In 2018, Grootegeluk committed R58 million to establishing, upgrading and replacing bulk water pipelines.
Belfast committed R15 million to road rehabilitation in the Emakhazeni municipality after impactful rehabilitation of roads in Siyathuthuka at a cost of R6 million in 2019.
Matla renovated a local soccer and rugby field to foster social cohesion and create income-generating opportunities during matches. Security was enhanced with a concrete palisade fence.
Five local contractors were appointed to undertake the renovations, thus maximising local contractor development on the project.
This project was completed and handed over to the municipality in December 2020.
Exxaro contributed to school development initiatives in 2020 to uplift host communities with academic support and education infrastructure development.
Through an early childhood development (ECD) partnership with Komatsu, who provided R1.4 million for CSI programmes, ECD was identified as an area of need that would give great social returns, as proven through many studies, including the NDP. A needs assessment of ECD centres in Belfast, Mpumalanga and in Centurion, Gauteng was conducted. Exxaro donated R1.8 million towards addressing these needs. More than 1 000 children benefitted from this intervention.
Furthermore, Exxaro donated R500 000 towards the renovation of Magukubjane Senior Secondary School in Limpopo, due to storm damage in 2015.
In Steve Tshwete Municipality, Exxaro constructed six additional classrooms at Mafube Primary, to accommodate the growth of the Sekhululiwe township. The classrooms will be handed over to the Department of Education in 2021.
In 2020, Exxaro continued to support Grade 12 learners' academic camps, contributing towards improving the quality of education. Additionally support for university chairs was targeted at advancement of research contributing to sustainability and sustainable development.
Exxaro's ESD programme is a key component of our socio-economic development response and tenet of our Sustainable Growth and Impact strategy objectives going into the future. Total ESD funding in 2020 was R79.8 million, comprising R56.1 million in zero interest loans and R23.7 million in grant funding for EMEs and QSEs. Beyond the compliance requirements, the ESD programme also aims to diversify our supplier base and develop local enterprises for long-term social job creation and economic development.
Unemployment rates remain high in our areas of operations as the informal business sector is not fully developed. Job creation and poverty alleviation require an integrated approach. At Matla, Exxaro is committed to establishing and operating an enterprise development centre for the town of Kriel. We are also developing 15 small enterprises with mentoring and coaching in Kriel. To date, 22 small businesses and 10 suppliers participated in this programme and created 12 new jobs.
In Mhluzi, Mpumalanga, Exxaro built an industrial park to house businesses that operated in residential backyards and along township roads. Without negatively affecting the livelihoods of SMME owners, Steve Tshwete municipality (in terms of its integrated development plan) partnered with various stakeholders to establish this project. Exxaro's municipal capacitation efforts and planned collaborations with government agencies enabled construction of these enterprise development centres that continue to serve communities, sustain businesses and create further employment opportunities (even without our involvement).
Cennergi's enterprise development (ED) activities
The TWFT donated a centre pivot irrigation machine to the Wittekleibosch Development Trust to empower emerging black dairy farmers with the equipment they need to increase milk production and further employment opportunities in the community (at a project cost of R1.1 million). NNP Women Poultry, a 100% local woman-owned business to supply chicken eggs within and around the Tsitsikamma areas, Lihlumile Project – a newly established vegetable tunnel project located in Wittekleibos, Guava Juice Piggery Project and Jwayi Mbombela Carpentry, were among other ED actives that TCWF supported in 2020 with skills development programmes, tools, and equipment to the value of R2.8 million.
Meanwhile, the Amakhala Emoyeni Community Fund Trust supported Phurura Trading, Adelaide and Bedford laundry projects, three vegetation tunnel projects (Mallanskraal, Bedford and Cookhouse), Bavuyise Construction-Project, Rise and Shine Bakery Noganta's Construction, Mtika General Trading, and the EC Mobi Trail to the combined value of R3.6 million. To ensure the success and sustainability of local SMMEs, the Trust will partner with SAICA to run monthly coaching and mentorship workshops for six local business and is also planning to implement a Beginner Sewing Programme for 100% black-women owned Sophila Cookhouse Primary cooperative in 2021.
The graph below shows EMEs and QSEs supported in each of South Africa's provinces (75% are located in Mpumalanga and Limpopo where Exxaro has operations).
The ESD programme's total funding from its inception in 2018 to date is R438.1 million for 68 qualifying beneficiaries. Key demographics on the 68 beneficiaries is as follows:
Performance monitoring and evaluation of supported QSEs and EMEs is underway. A report is expected in the first half of 2021. Preliminary findings from a sample of 30 QSEs and EMEs who received funding of R251.6 million indicates:
Exxaro’s survey of the impact of COVID-19 on our ESD programme revealed that 55% reduced operations, 35% stopped operating and 10% were unchanged. A similar national survey by the Centre for Development and Enterprise in August 2020 indicated that 86% of businesses did not know where to access emergency funding, 87% could not run their businesses from home and 87% could not support themselves or their families during lockdown. Our ESD programme focused on mitigating the impact of COVID-19 with the following outcomes:
Our ESD programme also continued further development programmes in 2020:
Exxaro's ESD programme granted UMI Plant Hire a R10 million interest-free loan to purchase two articulated dump trucks from Bell Equipment in 2020. The balance of the R12 617 000 purchase was funded by Bell Equipment with aftersales support at a reduced rate. Owned by Mshoza Malaza, UMI Plant Hire supplies equipment to a contract miner at our Belfast operation. The funding saved UMI Plant Hire R150 000 in monthly leasing costs and strengthened its asset base.
When Jehovha Jaira Trading Enterprise (JJ Trading), a Lephalale-based mining services company owned by Shirley Mnisi, had to temporarily lay off 91 employees at the beginning of the COVID-19 lockdown, Exxaro's ESD programme intervened with a R1.3 million interest-free loan to save the jobs and ramp up operations. The company had already paid off a R10 million loan provided by Exxaro in 2018. One of the first beneficiaries of our ESD programme, funding was initially provided to refinance existing assets and purchase a 40-seater bus to transport employees. The company has grown from 175 employees to 254 since 2018.
An interest-free loan of R10 million from Exxaro’s ESD programme enabled Sokoma Transport and Logistics to save R130 000 a month by settling leasing agreements in 2020. The company, owned by Themba Dabula, was able to purchase a grader and articulated dump truck. With a three-year road construction and maintenance contract at Mafube, Dabula must maintain a substantial asset base and a storage facility in Middelburg, Mpumalanga.
|Project team demobilisation workshops||As three projects near completion of construction and commissioning, Exxaro assists team members with demobilisation workshops.|
|Project internship programme||An on-the-job training programme began in 2019 to create opportunities for an initial intake of 14 interns.|
|Curriculum vitae database at Grootegeluk||To ensure transparency, Samketsi (an independent service provider) is developing a recruitment database of candidates in Lephalale for the Grootegeluk complex and any other local companies.|
|Organisational human factor benchmark||The Afriforte organisational human factor benchmark assessment extended to labour brokers and project teams in 2019 continues to measure working conditions in the interests of employee safety, health and wellbeing.|
|Local procurement: Leeuwpan relocation||Five construction packages enable local contractors to participate in the construction phase of the Leeuwpan relocation. All labour and materials must be procured locally with an established contractor supervising work, including on-the-job training.|
Exxaro collaborated with stakeholders to mitigate the impact of COVID-19 on our SLP projects. With relationships built on trust, we found innovative ways to continue working with communities, local authorities and other stakeholders.
Our investment in free community wifi for Siyathuthuka in Belfast was a necessity to ensure social distancing without loss of communication. We will replicate this project in other host communities.
When our BUs received numerous requests for assistance, we contributed R20 million to the national Solidarity Fund. Through the ECF, BUs also made discretionary donations. In addition, we collaborated with mining contractors and NGOs to provide food parcels and PPE to vulnerable people and essential service providers at a cost of R1.2 million.
Exxaro also contributed R460 000 to the Minerals Council initiative to provide PPE to the Department of Health in Mpumalanga.
We committed R2 million to address water supply challenges that hinder COVID-19 mitigation measures in the Emakhazeni and Lephalale municipalities. We will implement these short and long-term projects in collaboration with the MISA and the NBI.
We invested another R7 million in two COVID-19 testing laboratories to support public health departments in Lephalale (Limpopo) and Kriel (Mpumalanga).
Exxaro's supply chain sustainability strategy and policy govern procurement and supply chain management. We thus address the diverse expectations of customers, regulators and investors.
Our strategic objectives for this reporting period included:
Exxaro is fully compliant with the requirements of the B-BBEE codes for preferential procurement in the 2020 reporting period. The graph below details our performance in this regard.
|1||Procurement from entities with R10 million to R50 million annual turnover.|
|2||Procurement from entities with less than R10 million annual turnover.|
|3||Procurement from suppliers who are at least 51% black-owned.|
|4||Procurement from suppliers who are at least 30% black women-owned.|
|5||Procurement from suppliers who are at least 51% designated group owned (entities owned by black youth, black military veterans, black disabled people and black people living in rural areas).|
The Mining Charter III requires mining rights holders to meet prescribed targets in sourcing mining goods and services from targeted groups before 2023. Exxaro’s inclusive procurement programme focuses on sourcing mining services from black youth and black women-owned companies.
|1||Procurement from entities with more than 25% black ownership and at least level 4 in the B-BBEE scorecard|
|2||Procurement from entities with historically disadvantaged people as majority owners..|
|3||Procurement from entities with black women as majority owners.|
|4||Procurement from entities with black youth as majority owners.|
|1||Procurement from entities with more than 25% black ownership and at least level 4 in the B-BBEE scorecard.|
|2||Procurement from entities with historically disadvantaged people as majority owners.|
|3||Procurement from entities with black women and black youth as majority owners.|
Our supply chain strategy recognises the multiplier effect of Exxaro's procurement spend in host communities. Our localisation strategy sets out to leverage our procurement spend by targeting opportunities for black youth and black women-owned enterprises in these communities.
In 2020, we recorded the following milestones in our host communities:
In 2020, we adopted a new source-to-pay policy that guides our employees and contractors in maintaining ethical behaviour. It also ensures that we source goods and services from companies who uphold our supplier code of conduct.
We launched our supplier excellence programme in 2019 to acknowledge suppliers who demonstrate commitment to our standards. Our employees also participate in an anti-corruption and anti-bribery programme launched in 2018. It explains best practice and associated risks, particularly fraud, corruption, human rights, bribery and conflicts of interest. In addition, our green procurement programme ensures sourcing, use and disposal of goods and services in terms of globally accepted material stewardship standards. We plan to increase our investment in this programme.
Celebration at the Rietkuil resettlement hand-over ceremony