Q&A: Exxaro - JSE MAGAZINE

Q&A: Exxaro

Mzila Mthenjane, Exxaro’s executive head of stakeholder affairs, on the company’s CSI strategies, environmental challenges and the future of coal in SA

Q&A: Exxaro

Q: How does Exxaro view corporate social responsibility?
A: Exxaro acknowledges that we operate within a greater context of society, and we cannot separate business from community. We find ourselves in the community and we are part of community and therefore corporate citizenship is our responsibility.

Q: How does the company’s CSI strategy align to national and provincial development plans?
A: Exxaro’s strategy is aligned to the NDP and other development frameworks, such as the municipal integrated development plans and Sustainable Development Goals. Our aim is to contribute to increased employment and reduction of poverty through developing new mining projects and our socio-economic development programme.

Exxaro’s CSI strategy has an objective to create productive employment, wealth and empower communities. When drafting the CSI strategy, we consult with the integrated development plans of each municipality where we operate. Our focus areas are aligned with the Exxaro purpose of ‘powering better lives, in Africa and beyond’, by responsibly investing in commodities that will promote sustainable life on the continent.

Further, we recognise other key assets in our possession that we could leverage to better lives, such as rehabilitated land and retreated water. We are developing very innovative thinking related to water and use of land for agriculture and renewable energy production. The combination of these innovations in energy, water and food will contribute to a better life for all, which ultimately is what we all desire. Exxaro also focuses on education, infrastructure (such as roads), water, energy, health and the environment. A common thread among these areas of investment is enterprise development. A great example of this at work is the Lephalale Development Forum, along with the Grootegeluk Medupi Expansion Project. Both were established with a number of stakeholders, inclusive of local government, during the construction of the Medupi power station in the Waterberg.

The expansion of our coal mining and beneficiation efforts in the area required addressing the needs of local communities for housing, education, infrastructure, health and welfare services, sport and recreation facilities. In so doing, we were able to create 24 new jobs just from the construction of eco-friendly houses, of which 101 people indirectly benefited. 50% of all contractors came from the local community, and a further 40-plus were trained and mentored in-house on road construction and brick-making. Exxaro believes that partnership and collaboration with broad sets of stakeholders is vital to meet the goals of the NDP.

Q: How does Exxaro work with NGOs and civil society to ensure its operations have minimal impact on near-mine communities?
A: We have lagged in this area and look forward to opportunities to engage with civil society groups for better impact and improved insight in our engagements with near-mine communities. We have embarked on a collaborative platform with other mining companies, provincial government and civil society groups for a collective impact model for regional development. We hope to communicate this milestone development some time during 2018.

Q: What is Exxaro’s relationship with relevant trade unions, and how does such co-operation ensure CSI significance and positive results?
A: We have developed relationships with unions at both national and regional (mine site) levels. The strength of these relationships is a work in progress. However, we are pleased with our engagement during 2017 in relation to wage negotiations. We resolved issues without any major incidents or extended impact on work and employees from strikes. Ongoing engagement at mine site takes place through Future Forums, where there is a representation of trade unions and Exxaro management, and the tracking and monitoring of social and labour plans take place to ensure effective implementation.

Q: How does Exxaro measure and monitor its CSI programmes in terms of ensuring relevancy and delivery of socio-economic plans?
A: To ensure Exxaro creates social value with the community projects, the social return on investment (SROI) methodology was adopted. SROI is a framework for measuring and accounting for value created based on the perspective of each stakeholder that experiences or contributes to the change. SROI tells the story of how change is being created by measuring social, environmental and economic outcomes – and valuing these in monetary terms, enabling the outcomes to be expressed as a ratio of benefits to costs for each project in rand terms.

Looking ahead, we will be prioritising enterprise and supplier development, infrastructure and education initiatives to complement our innovations in energy, food and water as described above – a shift in quality of nutrition, economic activity and health.

Q: What are the specific environmental challenges Exxaro faces, and how does it address these?​
A: Maintaining our water stewardship and biodiversity are key challenges. Firstly, prevention of water pollution, both surface and ground water, is critical to ensure we continue to have access to water for our business activities, and that there is continued provision of clean water to other stakeholders through local infrastructure.

Secondly, management of viable wetlands is important to our water stewardship programme and is supported by scientific research to understand the ecological status of affected wetlands, which then provides for development of sustainable solutions in response. Biodiversity has a potential impact given the scale of our operations and requirements to develop ancillary infrastructure. Where we encounter red data species and we can’t avoid mining the area, we undertake detailed relocation programmes to protect species as the first option.

Lastly, with regard to closure of mining operations at the end of their economic lives, we remain fully committed until we complete our approved rehabilitation plans and are issued with a closure certificate by the Department of Mineral Resources.

Q: Energy, water, pollution, air manage-ment issues often cross over into CSI. Is this the case with Exxaro? If so, how difficult is it to maintain operational efficiency and ensure compliance?
A: Exxaro has been part of the Carbon Disclosure Programme since 2008. Our experience in carbon emission accounting and disclosure has allowed us to put in place appropriate structures to deal with the difficulty of implementing climate change mitigation measures. Stakeholder engagement is very important to ensure success of the measures given the cross-boundary of the emissions. Thus we are members of technical organisations that consult with government on greenhouse gas policy issues, and we fund three university chairs in energy, climate change and global sustainability.

Our operational compliance activities are supported by strong technical research and industry best practice. We are also very focused on helping to develop alternative sources of energy, in line with the SA government’s Renewable Energy Independent Power Producer Procurement (REIPPP) programme. One such example is the 50:50 joint venture with the Bombay Stock Exchange-listed Tata Power. Cennergi was created through this partnership to motivate the generation of clean, zero-emission wind energy farms. After being named a preferred bidder in REIPPP in 2012, two wind farms in the Eastern Cape achieved commercial operation in 2016.

The 56-turbine, 134 MW Amakhala Emoyeni wind farm is located near Bedford. Together, the Cookhouse and Bedford Community Trusts own 5% of the equity of the business. Meanwhile, the 95 MW Tsitsikamma Community wind farm comprises 31 turbines as well as the associated plant infrastructure. It was established on Wittekleibosch – a farm owned by the Tsitsikamma Development Trust (TDT), which has a 9% shareholding. Wittekleibosch forms part of 19 farms purchased in 1994 by the Department of Land Affairs on behalf of the Mfengu tribe, which was forcibly removed from the area in 1977.

Among the socio-economic development projects delivered during the wind farm-construction period was the building of 12 new houses for families affected by the construction of the wind farm, the provision of transport for local schoolchildren and the renovation and refurbishment of a multipurpose centre for the TDT. A key objective of all the projects has been the employment of local labour and skills transfer. In this way, Cennergi directly benefits three local communities in SA through community ownership structures and socio-economic development projects.

Q: Could you outline some of your other CSI initiatives and results?
A: Exxaro contributes towards whole school development programmes (which involve teacher and principal development, maths and science programmes and camps for Grades 11 and 12) across all our business units. A sporting facility at Klarinet in Emalahleni was built to the value of R12.3 million. During construction, 60 jobs for local labourers were created. This sports facility will serve the community and nearby schools in Klarinet. In Kriel, an upgrade of the municipal landfill site is under way – this will ensure that the municipality can operate the site within permit conditions and extend its lifespan. A small recycling business will also be established.

Q: What is the future of coal in SA, its current value and looking ahead?
A: SA is currently a coal-driven economy. Given the country’s development challenges, and as proposed by the government, the transition to a low-carbon economy should take into account economic factors, poverty and sustainable development. The government’s Integrated Resource Plan for Electricity 2010–2030 forecasts that coal will continue to be a significant part of SA’s energy mix, with renewable energy making up to 42% of new electricity generation capacities in SA over the next 20 years.

The NDP outlines the necessity to accelerate the formation of independent power producers to alleviate the country’s baseload power generation challenges. As the largest supplier of coal to the national power utility, and in order to meet the country’s energy and development requirements, Exxaro will continue to supply its customers with coal for the foreseeable future. Recent reports also indicate the possibility of nuclear baseload generation.

By Kerry Dimmer
Image: Athiyah Cader Fataar; Repro: Karin Livni