Socio-economic development

Socio-economic development projects refer to the application of funds, goods and labour to provide sustainable services for the local community, which can be owned, managed and maintained by that community. Unlike a donation, Exxaro’s role in these projects extends beyond providing funds. This includes active involvement in applying funds, as well as a project management role. A “local” community is defined as one in the immediate area of Exxaro’s operations.

During the year, a strategic review of Exxaro’s socio-economic development strategy highlighted the following key risks:

• Delayed approval to close any mine because of non-compliance with social and labour plans
• Reputational risk (ineffective stakeholder engagement)
• Loss of investment opportunities
• Adversarial relationship with neighbours.

Accordingly, we have developed a timeline to Exxaro’s desirable state that includes:

• Sustainable communities as a result of social and labour plans and other investment
• Our stakeholders become our ambassadors
• Measurable improvement in quality of life and poverty eradication
• Clear strategic objectives for investment
• Successful mine closure where Exxaro exits.

Our social development initiatives are determined by the Exxaro Chairman’s Fund and Exxaro Foundation Trust. Under the overarching framework of Exxaro’s sustainable development strategy and policies, trustees are mandated to ensure resources are allocated to projects and donations that both meet the objectives of the trusts and are inherently sustainable.

Focus areas

All Exxaro’s sustainable development activities, including social development projects and donations, are focused on areas deemed relevant and strategic to South Africa’s socio-economic development. These focus areas are reviewed from time to time with attention currently on:

• Formal education
• Skills development and capacity building
• Enterprise development
• Health and welfare
• Environment
• Infrastructure (related to socio-economic projects)
• Agriculture
• Tourism
• Sport and recreation.

To ensure we achieve our strategy, we believe it is important to create public-private partnerships (PPPs) on all our projects.

Although not all our social and labour plans have been approved by the Department of Mineral Resources, those already in place are mainly implemented according to set targets. These plans focus on communities close to our operations, the source of some 70% of our workforce, to ensure they benefit from the mine’s presence in multiple ways.

Exxaro’s policy is to actively recruit labour from local communities wherever possible, and training initiatives focus on developing the skills of community members to fulfil the group’s requirements.

In 2009, Exxaro contributed over R31,4 million to socio-economic development projects, corporate projects and other initiatives. At 1,8% of 2008 net profit after tax and 3,29% of a normalised net profit after tax for 2009, this compares well to the compliance target of 1% in the codes of good practice for the minerals industry.

Socio-economic focus areas
Project implementation

Socio-economic development projects in the group’s social and labour plans focus on enterprise development, infrastructure development and poverty alleviation as requested by the Department of Mineral Resources. Each project is being implemented over a five-year period. After projects are approved by the trustees, the business units begin implementing each project according to milestones determined by the social and labour plans.

Over the next four years, the number of jobs to be created according to social and labour plan projects that started in 2008 will exceed 670. Indirectly, these projects will benefit over 11 400 people.

Click here to view some of our recent case studies.