In support of Exxaro’s purpose of powering better lives for all in Africa and beyond, we continue to work towards improving the quality of our relationships with stakeholders. We strive to do so by building longterm, stable and trusting relationships that facilitate business activities and create shared value for all our stakeholders.

SUMMARY OF KEY STAKEHOLDER RELATIONSHIPS

GOVERNMENT (REGULATORS)

Quality of the relationship: 2/3
Basis of rating: External assessment

• We conduct a reputation survey every two to three years (the last survey was conducted in 2018)
• A pilot relationship quality assessment is underway, aiming to quantify the quality of key relationships in the DMRE as well as provincial governments of Limpopo and Mpumalanga. The results will be available in the first half of 2021

Hot topics

•  Exxaro’s response to COVID-19 and economic recovery
• Just (energy) transition and Exxaro’s strategic outlook
• Social impact issues, including the economic and financial inclusion of women in South Africa’s economy, Exxaro’s contribution to the end of gender discrimination and GBV, Exxaro’s community benefit scheme, local community concerns, Exxaro’s land and agriculture projects in Limpopo, Mpumalanga and the Eastern Cape, and the best practice use of communal land

EMPLOYEES

Quality of the relationship: 2/3
Basis of rating: External assessment

• We conduct a reputation survey every two to three years. The last survey was in 2018
• Baseline employee engagement survey conducted in 2020

Hot topics

•  COVID-19 and preventing the spread of the virus
• Fullco agreements (continuous operation with limited to no interruptions (public holidays bought out in a collective agreement))
• Divestment from the ECC and Leeuwpan operations
• Diversity and Inclusion

For more information about how we are responding, please refer to the people section in Our people.

LABOUR UNIONS

Quality of the relationship: 2/3
Basis of rating: External assessment

Hot topics

• Wage negotiations
•  COVID-19 and employee wellbeing
• Recognition thresholds

For more information about how we are responding, please refer to the people section in Our people.

COMMUNITIES

Why we engage

Exxaro operates in eight local municipalities of South Africa and two provinces (Mpumalanga and Limpopo) with closed mines in another three municipalities, including two in KwaZulu-Natal. Stakeholder-related risks and issues among this group of stakeholders relate primarily to Exxaro’s material issues of social unrest and maintaining our social licence to operate.

Through our ongoing engagements, we strive to ensure there is no community unrest that can lead to production delays and stoppages, a proactive resolution of issues and challenges before they escalate to community unrest, improved visibility of Exxaro’s success stories, local job opportunities and community development initiatives, and shared value and benefit from local mining activity.

Quality of the relationship: 2/3
Basis of rating: Internal assessment informed by various external surveys

• We conduct a reputation survey every two to three years (the last survey was conducted in 2018)
• Perception assessment conducted by social facilitators at Belfast and Matla

Hot topics

• Employment and procurement opportunities at Exxaro as well as skills development that enables access to employment or procurement opportunities at Exxaro
• Challenges facing communities including prevailing health conditions, low literacy and low skills levels in the community are a barrier to community members accessing employment and procurement opportunities, which continues to drive community protests
• Challenges regarding engaging communities including inconsistent community representation, unproductive engagement and participation in community forums, violent community engagement events, community demands led by individual agendas and community representatives unwilling to adhere to sound governance processes
•  The COVID-19 pandemic has grave implications for our communities, compounding unemployment and poverty. When lockdown regulations eased, community groups demanded to engage with BUs on prioritisation of skills development, employment and business opportunities. Cooperation with Exxaro contractors is being pursued to ensure local consideration in skills development, employment and subcontracting government engagements are also addressing challenges to the prevention of the spread of the virus. Exxaro’s areas of intervention included water-related infrastructure through our SLPs as well as provision of accessories to schoolchildren and food parcels to needy communities. Community development and engagement are guided by the implementation of the SLPs, focusing on expediting water and health-related infrastructure
• Local taxi associations are key stakeholders in Exxaro’s BUs as we rely on them to transport employees and contractors. However, there are challenges associated with local taxi associations; they expect and demand opportunities at exorbitant rates, which affects employees’ ability to travel to and from work
• Local governments frequently shy away from accountability for mandated responsibilities, leading to instances where activities and/or outcomes are expected and/or demanded from Exxaro. This misalignment of expectations is exacerbated by service delivery gaps and internal factional conflicts in local governments
• Prevailing misalignment and tension between local government structures, community members and representation, exacerbated by service delivery challenges, introduced complexity in the local stakeholder landscape and challenged Exxaro’s ability to implement SLP initiatives
• Climate change and sustainability: there are significant environmental impacts of mining activity on communities

For more information about how we are responding, please refer to the social licence to operate and environment sections of this report in Social licence to operate: enabling our legitimacy and Our environment: stewardship and compliance.

INVESTORS

Why we engage

Our investors are the owners of our business and have expectations regarding the value creation of their investment. Through clear communication of our strategy and distribution policies, we can align with their expectations and grow trust in our organisation, which strengthens our access to capital.

Quality of the relationship: 2/3
Basis of rating: Internal assessment informed by various external surveys

• The results of the annual investor/analyst perception survey conducted in May 2020 showed minor changes compared with the results of the 2019 survey and remained positive. There was a higher level of qualitative feedback in the third report, revealing insights and making constructive suggestions
• Overall, Exxaro management is still perceived as delivering well in its operational commitments. However, there was a decline in clarity of the overall acquisition/disposal strategy and the diversification strategy
• Disclosure perceptions increased slightly with the perception that Exxaro has the technical and leadership skills required to achieve its objectives, with capital allocation and our approach to it perceived positively

Hot topics

• The coal business’s performance, the shift to energy rationale, capital allocation and impact on the dividend policy as well as inquiries into the energy strategy. An emerging area of interest is shareholder climate change activism
•  The impact of COVID-19 on the business is still top of mind for investors who focused on management actions taken during the crisis to cope with and contain the virus — balance sheet, operations and employee and community safety and livelihoods were the main issues
• Exposure to Eskom and key relationship management versus the stated legal challenge in light of the force majeure. Additionally, the risk Eskom’s structural breakup comprises for the future as well as its recent/current unreliable electricity supply
• A persistent investor issue is the value unlock of “rump” (assets) and the company’s stated strategic asset focus versus selective diversification. The early value coal strategy and avoidance of sterilised or non-contributory assets in the Waterberg and Mpumalanga have played a key role in the perception of the investment case
• Exxaro’s renewable energy strategy and cornerstone investment of 100% ownership of Cennergi will remain top of mind for the foreseeable future

For more information about how we are responding, please refer to the Chairman’s statement, CEO’s report and Financial director’s overview respectively.

CUSTOMERS

Why we engage

We aim to foster customer understanding and strategic partnerships through continuous engagement and information sharing, and actively listening to our partners to foster mutually beneficial relationships. Engagements are aimed at understanding the environment, trends and market sentiment; exploring future relationships; and improving operational and financial performance.

Quality of the relationship: 2/3
Basis of rating: Internal assessment informed by various key data measured

• Effective and ongoing engagement with customers
• Effectively dealing with and resolving complaints from customers

Hot topics

• Reduced production volumes impacting supply to the market
• Inability to consistently provide product at the correct specification
•  Disruptions in demand as South Africa and the world are faced with the second/third waves
•  Credit risk/poor payment — some customers were adversely affected by the COVID-19 pandemic and requested more lenient payment terms in the short term

For more information about how we are responding, please refer to the operational review section in Operational performance.

SUPPLIERS

Why we engage

Our suppliers are a critical part of our value chain. Managing these relationships to create mutual benefit supports our operational, strategic and impact goals, and forms part of our risk management approach.

The supplier relationship management programme supports Exxaro’s strategies by leveraging value chain partner capabilities. Supply chain management achieves this through supplier collaboration initiatives intended to deliver cost savings, achieve sustainability mandates, ensure the security of supply and mitigate business risk exposure. The supplier relationship management approach positions Exxaro at an advantage to extract discretionary value and emerge as a “customer of choice” for selected strategic suppliers.

Quality of the relationship: 3/3
Basis of rating: Internal assessment informed by various external surveys

• We conduct a reputation assessment every two to three years (the last assessment was conducted in 2018)

Hot topics

Exxaro’s sourcing strategies set out to concurrently optimise for:

• Performance and supply risk
• Financial and fraud risk
• Supply chain sustainability

For more information on our ESD programme, please refer to Communities of our ESG report.