Integrated report 2020
Exxaro report selector 2020
Exxaro Resources Limited
Integrated report 2020
REPORT SELECTOR
We recognise that climate change is one of the biggest threats facing humanity today. As a responsible corporate citizen, we are determined to transition our business and make our portfolio resilient in the 1.5˚C world. We aim to be carbon-neutral by 2050 and partner with our suppliers and customers to reduce emissions associated with the use of our products.
Our transition to a low-carbon and resilient portfolio is intentional and anchored on the just transition principle which seeks to balance our business financial performance, South Africa’s economic development needs, ecosystem protection and societal adaptive capacity in the face of the changing climate. Our business has been in transition as early as 2010 with the establishment of Cennergi, a 50/50 joint venture with Tata Power. Today, Cennergi is wholly owned by Exxaro and operates two windfarms in the Eastern Cape that feeds 239 megawatts of renewable energy into the national grid. In 2019 the board of directors approved the adoption of the TCFD recommendations as a strategic framework for guiding our Climate Change Response strategy. We have published our Climate Change Response Strategy and assessment on how aligned we are with the TCFD recommendation (for more information see our CCRS report available online)
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Manufactured
Social and relationship
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Human
Intellectual
To us climate change is not just a business risk issue, it also provides opportunities to sustainably diversify and transform our portfolio to low-carbon technologies. We understand that the use of coal in the South African economy will continue in the foreseeable future. As a major supplier of coal to Eskom has long understood the need to balance the country’s socio-economic development, which relies on coal-generated power to support the transition towards a lowcarbon economy in response to the negative impacts of climate change. This transition, which will change life as we know it today, is impacting energy and capital markets, business models, value chains and the overall context for conducting business. The transition to a low-carbon world is growing external risk for those who do not adapt at speed and presents considerable opportunities for those who are agile in their response. We are committed to responsibly balancing these competing needs and delivering on our purpose both now and into the future.
The transition to a low-carbon economy aligned to the Paris Agreement objectives of 1.5°C to 2°C world will be challenging, but not impossible. As we shift our business from an extractive to a regenerative portfolio there are inherent risks to the livelihoods of many, particularly in communities that are adjacent to our coal operations. The just transition framework will mitigate these risks by providing a range of social interventions and the opportunities presented by the expanded renewable energy programme will secure jobs and the livelihoods of broader society when economies are shifting to sustainable production.
Coal will remain a valuable source of energy in the foreseeable future. Our early value coal strategy has adapted and responded to support our overarching Sustainable Growth and Impact strategy by optimising our coal reserves, minimising stranded high-value reserves and moving operations lower in the cost curve, such that we land coal competitively across all markets. The performance of our coal business this past financial year has demonstrated the benefits of this early value strategy, while continuing to meet the requirements of our long-term supply contracts and delivering value for our stakeholders.
Our new Sustainable Growth and Impact strategy integrates business sustainability, growth and impact because we understand that these elements of our business and operating environment are deeply connected. We cannot grow sustainably without deliberately creating a positive impact on the environment and communities we serve.
Going forward, our business portfolio will shift to more climate resilient businesses, with a focus on renewable energy and a continued review of minerals contributing to a low-carbon world. This shift will establish the base for our new multi-core business. This multi-core business will be built on the platform of skills and technology that is driving our coal business. Our Climate Change Response strategy supports our overarching Sustainable Growth and Impact strategy specifically through two of the five objectives:
We aim to support these objectives by creating partnerships driving climate action and raising employee awareness on climate change mitigation and adaptation
The diversification of our portfolio into renewable energy by acquiring 100% of Cennergi, will support our carbon-neutrality strategy. We will continue to invest in the development of low-carbon energy sources to enable access to clean, affordable and reliable sources of energy.
We measure compliance to environmental authorisations on two levels: approved, and compliance to conditions.
Our analysis shows that our approved environmental authorisations are within acceptable levels (100%).
We implemented a new integrated monitoring and compliance system to help us improve the score achieved in 2018. A compliance score of 96% in environmental authorisation conditions was achieved throughout our operations. As part of this process, detailed checklists per site are being drafted to drive improved compliance to conditions.
Delays and appeals against integrated water use licences granted by the Department of Water and Sanitation have become a risk for new projects and part of their critical paths. To mitigate the long lead times in securing the necessary permits and licences, we engage early with the respective regulators, and proactively with every interested and affected stakeholder group.
Total carbon dioxide, equivalent CO2e emissions in 2020 were 70 255 kilotonnes (kt) compared to 72 029kt in 2019. The decrease of 2.5% reflects the impact of our energy intensity reduction projects. Our short-term carbon intensity target is -5% on the prior-year level across the group, which is ambitious as some projects take time before their impact is evident, particularly from a carbon intensity perspective. We performed below the target with a carbon intensity of 4.9t CO2 emission per total tonnes mined compared to 5.4kt in 2019. The decline is due to energy efficiency projects and a decrease in rehabilitation activities in our operations.
Diesel and electricity remain the biggest components of our GHG footprint. We are currently addressing energy security, economic productivity and environmental impacts in our drive to become carbon-neutral and thrive in a low-carbon economy.
Exxaro performed well on both the CDP climate change and water disclosures in 2020, indicating leadership and the group’s commitment to climate change mitigation and adaptation, as well as addressing and managing water risks.
South Africa is a water-scarce country and we recognise that water-reduction initiatives are crucial to sustainable operations, particularly under prevailing drought conditions. Our group water strategy was approved in 2017. It is informed by our risk assessments and identifies five strategic focus areas of excellence:Group water intensity deteriorated by 39% due to the ramp up of our Belfast operation and changes to in-pit conditions at Grootegeluk that influence our recycling efforts.
We refined our water intensity targets in 2020 and developed a new five-year target in line with industry norms and site-specific conditions. We lowered our previous aggregated target of 200L/t to 180L/t. This target is well below the coal industry average of 380L/t. It supports our strategy to reduce water intake in line with the Department of Water and Sanitation’s drive to increase water conservation and reclamation.
Our two wind facilities have Operational Environmental Management programmes (OEMPs) in place and maintain the ESMS in accordance with the requirements of the ISO 14001:2015, ISO 45001:2018, the Equator Principles, the IFC Performance Standards, the World Bank EHS Guidelines and the IFC ESMS Implementation Handbook. In addition, the two facilities have water use licences and other operational licences. Based on the Social Action prepared by Lenders, and the OEMPr, the following environmental monitoring programmes have been identified to be relevant for the operational phase of the two wind farms and are being implemented at both sites:
