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Message from the chief executive officer

I believe 2009 was a year that truly tested the depth of mining companies’ commitments to sustainable development — and at every level. Faced with myriad challenges in protecting the economic bottom line, we developed innovative solutions to honour our commitments to the social and environmental bottom lines by making available funds work harder and by ensuring that every initiative benefited the maximum number of people.

In this respect, Exxaro proved its mettle. The benefit of integrating our safety, health and environment division with our sustainable development initiatives emerged in the form of synergies across commodity businesses, disciplines and divisions. Perhaps the best example of this is our carbon footprinting project which prompted the vegetative study, which in turn informed our water management study and each site’s biodiversity action plan.

We have also made solid progress in our ability to report meaningful data off a common information technology platform. This has been most evident in the areas of energy, air quality monitoring and socioeconomic development.

We drew on stakeholder feedback, a review of current standards and conventions (including Global Reporting Initiative (GRI), UN Global Compact, Organisation for Economic Co-operation and Development (OECD) guidelines on multinational enterprises, International Labour Organisation (ILO) conventions 69 and 176, as well as UN declaration of human rights) in developing material themes that will guide future reports. These themes include:
  • Implementation and maintenance of ethical business practices and sound systems of corporate governance
  • Integration of sustainable development considerations in corporate decision-making processes
  • Implementation of risk management strategies based on credible data sets
  • Adherence to fundamental human rights and respect of cultures, customs and values in dealings with stakeholders
  • Contributing to the social, economic and institutional development of our communities
  • Implementing effective, sustained and transparent engagement strategies with all stakeholder groups, as well as explicit responsiveness to stakeholder concerns
  • Demonstrating understanding of and implementing responses to the business case for sustainability.
Distilling these themes into those most material to the South African resources sector highlights the need for:
  • Ongoing improvement of occupational health and safety performance
  • Ongoing improvement of environmental performance, particularly water use, energy consumption and efficiency, and waste and land management
  • Transparency in engaging with stakeholders on controversial topics or situations
  • Continued progress against requirements of the mining charter
  • Management of HR challenges, ie skills shortages and employment equity
  • Use of integrated approaches to land use planning to contribute to conserving biodiversity
  • Understanding impacts of climate change on the company and its long-term sustainability
  • Demonstrating an understanding of product stewardship including responsible product design, use, re-use, recycling and disposal of products
  • Ongoing, integrated planning and provision for mine closure.
Combining these themes with our vision of creating unrivalled value for all stakeholders through our processes, thinking and passion translates into measurable targets in the longer term:
  • Sustainable returns to our shareholders — including our own people. The return on equity target for 2009 was 25%, actual performance was 8%
  • An injury-free work environment — the target for 2009 was a lost-time injury frequency rate of 0,21 against the actual rate of 0,33
  • A healthy workforce — with an appropriate balance between individual responsibility and healthy working conditions
  • Responsible use of our natural resources.

Performance

We understand that reaching our long-term goals requires short-term action.

The group’s performance on the key elements of sustainable development — economic, social and environmental — was again mixed during 2009. On the positive side, we considerably improved our ranking in the South African Carbon Disclosure Project, reinforcing the progress made towards best practice. We exceeded the group target for HIV/Aids voluntary counselling and testing, and made good progress in our drive on water management.

Given the strategic importance of every aspect of energy — from consumption and efficiency to conservation and generation — we have broadened the scope of our internal data management and external reporting. Underscoring this focus, a new category has been added to Exxaro’s internal awards to recognise achievements in addressing the challenges of energy and climate change. It has become a strategic imperative to address the cost and impact of Exxaro’s energy consumption — pricing, supply security and the impact of our consumption on climate change all need to be considered, and we want to recognise the contributions our people make in addressing these. The first Evergreen awards in this category will recognise the individual, projects and business units that have shown achievements in addressing energy and climate change issues in their work.

Areas where we missed our targets include our disappointing safety performance, albeit an improvement of 15% on 2008 LTIFR levels. We deeply regret the deaths of three contractors at Zincor during the year, and the loss of a colleague in a non-reportable incident, and extend our condolences to their families and friends.

In 2009, four operations obtained both international heath and safety accreditation (OHSAS 18001) and environmental accreditation (ISO 14001) – Matla, North Block Complex, Inyanda and AlloyStream. In particular, AlloyStream scored so highly in the ISO 14001 audit that in February 2010 it received an award for best performance worldwide.

This takes the total to 13 of 17 operations accredited to date. The final four operations have been scheduled for accreditation in 2010.

Our 2008 sustainable development report was ranked among the leaders in several industry surveys. While this is encouraging, it reinforces our resolve to report on sustainability issues as well as we do on the financial aspects of our business, because we believe our stakeholders deserve no less.

In our quest to be a truly responsible business in all respects, Exxaro reports against the guidelines of the Global Reporting Initiative 2006 (GRI G3, at externally assured B+ level), as a signatory of the United Nations’ Global Compact, and a constituent of the JSE Socially Responsible Investment (SRI) Index.

Responsible business practices remain a long-term value proposition for Exxaro: it makes business sense to invest in creating a sustainable environment in which to operate, based on universal values, accountability and transparency. It’s simply also the right thing to do.

Sipho Nkosi
Chief executive officer

16 March 2010



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