Exxaro Resources Progress report on the Mining Charterpmg-assets.s3-website-eu-west-1.amazonaws.com/docs/111109exxaro_0.pdfwith reference to progress being made on the Mining Charter

Exxaro Resources

Progress report on

the Mining Charter

9 November 2011

To provide feedback to the

Portfolio Committee on Mineral Resources

with reference to progress being made on the

Mining Charter and Exxaro’s strategy on

youth development

Objective

2

Agenda

Executive summary

Progress on elements of the Mining Charter Scorecar d

Enterprise development strategy for youth (job crea tion)

Conclusion

Reporting OwnershipHousing and

living conditions

Procurement and enterprise development

Employmentequity

Human resource development

Community development

Sustainable development and growth

BeneficiationMIN

ING

CH

AR

TE

R

3

ElementStatus 2014

Status 2010

Employmentequity5

Reporting1


6

Ownership2

Community development7

Housing and living conditions

3


8


4

Beneficiation9

ElementStatus 2014

Status 2010

Executive summary

4

On track At riskIn progress

LEG

EN

D

Back

5

Progress on

elements of the

Mining Charter

Scorecard

Reporting

6

Target1

ExxaroIndustrySubmittedAnnually Submitted

Progress on the Mining Charter is reported on annually

to the DMR and in Exxaro’s integrated annual report

Back

Eyesizwe

Background

Ownership

7

Target2

ExxaroIndustry55%15% 28%

2010

OwnershipTarget

2ExxaroIndustry55%15% 28%

2010

Wim de Klerk

SiphoNkosi

ZwelibanziMntambo

NoluthandoLangeni

Len KonarUfikileKhumalo

Rain Zihlangu

Jeff van Rooyen

JurieGeldenhuys

Chris Griffith

NkunkuSowazi

Rick Mohring

Board of Directors

67% of the Exxaro Board

are HDSA representatives

Coal Sands SishenIron Ore

Base Metals and Industrial Minerals

BEE ownership

Ownership

9

Target2


2010

Source : Exxaro Annual Report 2010

BEE Benefit

Ownership

10

Target2


2010

Source : Exxaro Annual Report 2010

Dividends paid over 4.5

year period - R2.86B

15%

55%

2010

% HDSA

Target Actual

BEE entrepreneurs (52.10%) + Employees (2.97%) = Percentage HDSA ownership (55.07%)

9 324

3 205

64 071

7 5082 408

39 505

24.2%

33.1%

62.2%

0

10000

20000

30000

40000

50000

60000

70000

Turnover AttributableIncome

Market Cap(ZARm)

Jun-11 Jun-10 % change

South African market capitalisation of company :R64 billion

Note :The recently announced proposed transaction w ith Tronox will not impact Exxara’s ownership

R34.9 billion in HDSA’s hands

Exxaro is a new generation company which is HDSA own ed, controlled and managed

OwnershipMarket capitalisation in hands of HDSA

11Back

Target2


2010

Target 2014 26%

Negotiation category employees

Employees receive a housing or living-out allowance either as an allowance or part of inclusive package


= 9750 EmployeesHousing Strategy

Home Ownership=

Rent, company housing and self-provided accommodation83%

Family quarters /flats

Home owners (bought company property)

Houses rented from company

Self-provided accommodation

5.05%

10.5% 52.88% 19.73%Note : Nutritious meals certified by dieticians at operations with hostels

12

Target3

ExxaroIndustryOn targetBaseline Baseline

232 employees benefit from a home ownership subsidy

Sharing hostel accommodation

0.25%24 people at Tshikondeni

Accommodation in single quarters

11.6%1 person per room

R137 millionspent on housing allowances in 2010

Arnot Coal housing project

13

Target3


Family accommodation for employees

Flats converted from hostels for employees

• 797 housing units designed using green design principles

• Aligned to the DOE energy efficiency goals


Exxaro received the Nedbank Green

Mining Award in 2010

Successes Eco-friendly housing in Lephalale

Optimum building

orientation

Grey-water recycling

50-70% local labour

Evaporative cooling system

14

Target3


All future housing projects by Exxaro will follow this model

Lephalale eco-friendly housing

15Back

Target3



16

5%

30%

10%

43%

24%

25%

0% 10% 20% 30% 40% 50%

Procurement ofcapital goods

Procurement ofservices

Procurement ofconsumables

Actual Target

Pre

fere

ntia

l pro

cure

men

t fr

om B

EE

ent

ities

•Procurement from women enterprises = 3%

•Youth development strategy will address shortfall

•Focus on raising performance of services procurement

•2014 Target = 70%

Multinational suppliers contribution towards SED

• Systems and structures in place to receive contribution

• On track for 2014

Target 2014

50%

40%

Back

Target4


2010

20% 20%

30%

40%

15%

29%

37%42%

57%

n/a

50%

30%

55%

76%

46%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Topmanagement

Seniormanagement

Middlemanagement

Juniormanagement

Core andcritical skills

Exxaro has exceeded 2010 and most 2014 Employment E quity targets

Target 2014

Employment equity

17Back

Target5

ExxaroIndustry

201051%40% 41%

Target 2010 Industry Exxaro

Employment EquityWomen and People with disability

Women

Target5

ExxaroIndustry

201014.7%10% 13.4%

Disability

Target ExxaroIndustry

20101.4%2% n/a

10.0%

2.0%

13.4%14.7%

1.4%

Woman in Management People with Disability

Target Industry Exxaro

Total HRD expenditure (R0.12b)

Total annual payroll (R1.93b)

= 6.2%


19

Target6

ExxaroIndustry

20106.2%3% 4.6%

Artisan and learnershipsAn average of 430 engineering learners receive training each

month which makes up 5.4% of all learnerships in the mining

sector even though Exxaro employees only make up 2.5% of

the industry

For 2011, 76% of learner intake was black (HDSA)


20

Target6

ExxaroIndustry

20106.2%3% 4.6%

R23.7m

Over the last 5 years Exxaro has qualified

over 500 artisans and 108 engineers

83% of all employees are functionally literate

156 employees are currently in the ABET training

83%

ABET training

Every employee

has the opportunity

to participate in

ABET training at

company cost


21

Target6

ExxaroIndustry

20106.2%3% 4.6%

R5.3m

Industry average is 52%

Bursaries and bridging school

103 bursars are studying full time at universities at a cost of

R11 million per annum

66% of Bursars are HDSA’s

20% are Women

88 Professionals in Training are participating in Internships at a

cost of R40 million per annum

30 bursars in the bridging programme at a cost of

R2,2 million per annum

Total of 210 students to date


22

Target6

ExxaroIndustry

20106.2%3% 4.6%

Other training initiatives

Functional, Compliance and Individual Development


23Back

Target6

ExxaroIndustry

20106.2%3% 4.6%

R85.3m (since inception)

From Exxaro’s Social and

Labour Plans over 670 jobs

have been created which

translates into an indirect

benefit to 11 400 people

from local communities

Total Spent: R222.9 million

For the period 2007-

September 2011 the socio-

economic development

spend was R222.9

million

During 2010 R39 million was

invested in socio-economic

development which is 2.5% NPAT

(Net Profit after Tax)

Community development

24Back

Target7

ExxaroIndustry

NPAT2.5%1% n/aNPAT

Mid 2007 to September 2011 Community Development

0.33

0.46

0.33

0.25

0.15

2007 2008 2009 2010 2011

LTIFR

45

32

3

2007 2008 2009 2010 2011

Number of fatalities

LTIFR has dropped from 0.46 in 2008 to 0.15 in 2011

due to the implementation of our safety programmes.

• 70% of actions as per the targeted 2014 tripartite action

plan for Health and Safety have been implemented

• All our employees and contractors undergo medicals in

terms of occupational health

• The Voluntary Counseling and Testing (VCT) rate has

increased from 36% in 2008 to 75% in 2011

• R14.9 million has been invested in HIV/Aids

Programmes between 2008-2010

Health and Safety

The mining industry has identified fall of ground as a major

contributor towards fatalities. Exxaro Resources volunteered to

implement a pilot project at Arnot mine on early shift examination to

reduce FOG. In addition Arnot is implementing a netting project to

further manage the risk of FOG. These initiatives have proved very

positive and will be rolled out to all Exxaro underground mines.


25

Target8

ExxaroIndustryOn targetBaseline n/a

All closure plans have

been submitted and we

are focusing on

sustainable closure of

operations

We are focusing on ensuring that all

our rehabilitation plans are up to

date with the rehabilitation process

Aspire to be compliant with all permit

requirements, particularly water use licenses

16 water use licenses have been approved

4 remaining operations are awaiting approval

Exxaro has an Energy and Carbon Management Programme to manage

and reduce our CO2 emissions as well as a Water Management

Programme to reduce water usage and pollution

Fully compliant in terms of

Environmental Management

Plans

Environment


26

Target8


2nd place for sustainabilityfor 2010

Global Change and Sustainability R12.6 million

Biodiversity and BusinessR3.5 million

Business and Climate Change R7.5 million

Environment

Exxaro sponsors three tertiary chairs as part of its research , tuition and advocacy initiatives in sustainability

Association of Certified Chartered Accountants


27

Target8


1st placeSappi award for best sustainability reporting

Chartered Secretaries/JSE annual report awards

Merit award in Top 40 category

6th placeErnst & Young excellence in corporate reporting

has achieved the 2014 target of 100% South African based sampling

Further R&D is commissioned through the

departments of CSIR, Council for Geoscience,

SAMMRI, Mintek and other South African

based organisations

has a research and development division

South African based research support


28Back

Target8


Exxaro has integrated beneficiation as part of its c ore business strategy in addressing business growth and industry transfor mation

Beneficiation

Resulting in :

• Increased job creation

• Increased taxation

Partnership with SAMMRI

• Conduct medium to

long-term research in beneficiation

• Develop value-adding technologies

and broaden the skills base in South

Africa

Exxaro Reductants Mineral Sands

140 000 tonnes of Char per annum

Triple production by 2015

Feasibility studies to produce 450 000

tonnes of market coke per annum

Downstream beneficiation opportunities for titanium slag and zircon

Local production facility has been

established for new titanium metal production

technologies 29

Thermal : Char = 1 : 5

Target9

ExxaroIndustry

Partnership

Beneficiation successes

Original ProductVolume

(tonnes ‘000)

Price (Rand per

tonne)Beneficiated product

Volume (tonnes

‘000)

Price (Rand

per tonne)

Existing operationsCoal – small nutsIlminite

205820

5001 106

CharTIO2 SlagLow manganese pig iron

128400280

2 3473 2343 559

Projects under constructionSemi soft coking coalCoal – small nuts 752

350995650

Market cokeChar

326222

3 7893 672

Future potentialTIO2 Slag 121 3 234 TIO2 Pigment 110 20 999

Target9

ExxaroIndustry

Partnership

30Back

31

Proposed strategy

on job creation and

youth development

Education

Ensure well

functioning

schools

Professional

career

guidance

Skills

development

Technical skills

centres

Tertiary

EducationBridging

programmes

Bursaries

Business Incubator

Business Skills

Development

Mentorship and

Coaching

Business

Hubs

Procurement

alignment

Enterprise development strategy for youth (job creation)

32

The

business

hub will…

… resulting

in 100 new

jobs

… incubate 20 new

enterprises per

annum…


33

20122013

20142015

5001300

2300

3800

Cumulative planned job creation

Proposed implementation planYear No of

hubsEnterprises(20per Hub)

Jobs to be created

2012 5 100 500

2013 8 160 800

2014 10 200 1000

2015 15 300 1500

Total 38 760 3800

It is envisaged that by 2015, 38 business hubs will be established thereby creating 760

enterprises. At a ratio of 5 jobs per enterprise this translates into the creation of 3 800 jobs


34

Grootegeluk Medupi Expansion Project

has contributed more

than R190.2 million to

infrastructure development

(roads, water, capacity building)

through the Lephalale

Development Forum

35

Back

The total project value of

GMEP is R9,5 billion4200 people received skills

training and 11 470 job created

during the construction phase

490 permanent jobs will be

created for the GMEP operation

42% of total spend has been to

local business (120 companies)

Conclusion

36

Exxaro is committed to the transformation

objectives of government

Whilst progress has been made, we are aware of

the challenges we face and look forward to

focusing on them in the short to medium term

Back

Thank you

Documents

Exxaro Resources Progress report on the Mining Charterpmg-assets.s3-website-eu-west-1.amazonaws.com/docs/111109exxaro_0.pdfwith reference to progress being made on the Mining Charter