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Socio-economic development

Sustainability is defined as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". Sustainable development encompasses a balance between three pillars, namely economy, environment and society. The requirements of each must be considered and integrated into all activities to achieve sustainability.

Accordingly, socio-economic development is a group-wide commitment and an integral part of Exxaro's accountability to stakeholders. At senior executive level, we liaise with national and provincial government departments to ensure our initiatives align with national priorities. Our business units liaise with their municipal counterparts in implementing these strategic plans and feedback is given to senior management to ensure that stated objectives are met.

Our focus areas

Formal education
Skills development
Enterprise development, including small-scale mining
Health and welfare
Environment
Infrastructure
Agriculture
Tourism
Sports and recreation.

In Exxaro, socio-economic development is both a key responsibility towards our host communities, and a strategically sound business imperative. We believe the most sustainable results in creating economically, socially and environmentally viable local communities come from a three-way partnership between government, business and the communities themselves.

Acknowledging that community development is not our core competence, we have developed a systematic approach that defines real needs at community and government levels, and then harnesses the appropriate skills to ensure success:

Develop a stakeholder engagement and management plan (AA1000SES).
Understand key government objectives for growth and development.
Study growth and development strategy of provincial government.
Participate in local economic development structures and forums to formulate a joint approach.
Focus on capacity building and knowledge transfer.

Our approach is matched by clear delivery principles and standards on projects which must:

Meet real needs
Be sustainable
Be aligned to government initiatives at local, district, provincial and national levels
See partnerships as far as possible

— participation in existing local authority structures in each focus area
— co-funders for large projects

Make measurable impact
Obtain stakeholder input in selection and prioritisation.

Exxaro Resources

South African Mining Preferential Procurement Forum
When the mining charter was released, little was said about procurement although four elements were reflected as requirements:

Determine current levels of spend with historically disadvantaged South Africans (HDSAs)
Actively encourage existing suppliers to transform
Indicate commitment to progression of procurement from HDSA companies
Assist HDSA companies to develop.

Ready to comply, mining companies soon recognised the need to clarify definitions and adopt a unified approach to make reporting more meaningful. A process that sounds simple was immeasurably complicated by the different interpretations applied by individual companies to items as diverse as discretionary spending to classifying spare parts. This was the genesis of the SA Mining Preferential Procurement Forum of which Exxaro was a founding member and which includes most of the major and minor mining houses.

The forum's community involvement goes beyond including members on the panel. Provincial forums share opportunities in other provinces, provide links to empowerment partners and a network for interacting with mine procurement officers.

The forum has made considerable progress in just four years, but still faces significant challenges including its own transformation from a narrow mining-based approach to a national database for accredited suppliers. Kenneth Kgomo, Exxaro's manager of commercial equity developments, was elected chairman of the forum for 2006, and tasked with restructuring to reflect its empowerment status and preference for doing business with empowered companies, as well as clarifying legislative terminology with government.

Supplier development
Exxaro's supplier development programme has helped small companies tender to supply goods and services to large groups. It has trained suppliers in ways to run effective businesses. Just as importantly, it has been the catalyst for the transformation of much larger, established businesses in its operational areas.

In 2004, some 150 entrepreneurs were trained in the Northern Cape, Gauteng, Limpopo province and North West. In 2005, 26 suppliers were trained in the Lephalale district (Grootegeluk mine's area of operation). The majority of these companies are small enterprises. Through workshops, meetings, lectures, seminars, conferences and information sessions, topics ranged from starting a business, marketing, tendering and business administration to dealing with failure.

Exxaro's supplier development programme has shown excellent incremental growth since its establishment, with preferential procurement spending rising from R128 million in 2002 to R1.97 billion in 2007.

Valuable lessons have been learned through this process:

Supplier development programmes that combine central and divisional skills and resources are most effective
Emerging entrepreneurs benefit more from personal interaction combined with workshops and lectures
Multilingual facilitators make interactions more meaningful
Companies must accept that many of the entrepreneurs trained are not necessarily looking for opportunities in the mining industry. In addition, some are only looking for jobs
Access to funding continues to be a barrier, especially in rural areas
There are not enough opportunities for all entrepreneurs
Many expectations have been created with the promulgation of empowerment laws, and these must be carefully managed.

To generate direct benefit through supply opportunities and training on business-related issues to community members around the mine, Exxaro has engaged local municipalities in its operating areas in the process. Community members become involved in the programme through their local municipal office, organised forums and structures as well as through community leaders.

Projects – Coal

Grootegeluk

Biodiversity management at Grootegeluk
The first black rhino calf to be born at the Manketti Biosphere at Grootegeluk arrived in July 2005. This conservation project is a good example of Exxaro's commitment to responsible mining and the protection of biodiversity. The Grootegeluk mine lies within the transition zone of the Manketti Biosphere and is an intrinsic component of the long-term sustainability of both this zone and the biosphere as a whole.

Black rhino, an endangered species, is extremely difficult to breed successfully in captivity. Manketti is one of very few private conservation areas in South Africa that has black rhino and currently houses six black and 36 white rhinos. It is a 22 000-hectare social responsibility and conservation project formed in 1995 with the primary goal of conserving biodiversity. The biosphere is a self-contained habitat with very little management interference. One of its purposes is to breed endangered species and make them available for reintroduction to suitable habitats.

Furthering maths and science education in rural communities
Grootegeluk operates near the 110 000-strong town of Lephalale in Limpopo province. As one of only three major employers in an area with an unemployment rate of about 45%, Grootegeluk has concentrated on job creation and education, specifically maths and science.

There is high demand at Grootegeluk for school leavers who have passed maths and science, key subjects for further training in engineering and other disciplines at the mine. In line with the requirements of the mining charter, Grootegeluk also has targets for employing black graduates, and these are the school leavers it aims to train further. Faced with the challenge of creating local employment with a severely limited local pool of skills, the mine is working with the regional education department and other partners to build this pool of qualified matriculants every year.

Maths Olympiad
In 2004, Grootegeluk and the Department of Education launched a Maths Olympiad for grade 4 to 11 learners in 91 surrounding schools. Simplistically, the Olympiad is a process of prepared and supplied revision and support material culminating in tests to determine the standard of maths education.

This was the first project of its kind in the region, and the results offered valuable lessons for both Grootegeluk and the Department of Education. For the Maths Olympiad 2005, Grootegeluk's participation increased to include training teachers. Based on audits of the surrounding schools, Grootegeluk has supplied some with computer and laboratory equipment, and will also offer managerial training to headmasters.

Winter School
This Grootegeluk flagship project is run in partnership with the local Department of Education to improve the quality of teaching material available to schools, and to complement learning with practical and laboratory work to which learners wouldn't ordinarily have access.

Established in 1998, the project aimed to set up a joint resource and learning school that would be a shared asset for surrounding schools. As an initial contribution, Grootegeluk provided a building on one of its existing properties, and donated seed capital to set up the programme, now a teaching facility, known as the Bosveld Education Resource Centre, supplying material for maths, science and biology.

While the pass rate of schools in Limpopo province has been increasing steadily over several years (from 32% in 1997 to 70% in 2002), schools in the Palala district now achieve a pass rate of 80%. Although it is difficult to measure the results of the Bosveld Centre project directly, they appear to have played a role in these improved results.

Learning curve for crèche
A few years ago, Grootegeluk helped establish Iterileng Crèche in Marapong, near Lephalale, Limpopo province. Although the crèche filled an important need in the area, the building had slowly deteriorated as the level of poverty reduced support for the project from the local community.

After re-evaluating the need and the project's status, Grootegeluk initiated a comprehensive programme to completely revitalise the crèche. In line with Exxaro's collaborative approach, the support of the principal and parent committee was secured and they are all actively involved in the programme. Maintenance issues have been addressed and a training provider appointed for teacher training and support. Management systems were installed and new teaching aids and classroom furniture acquired. By the end of 2005, the crèche was again fully functional and self-sufficient.

The lesson for the mine was that capacity building, as with most sustainable development initiatives, is an essential element to ensure long-term success and that corporate support must remain in place until this increased capacity is well established.

Safe house opened
In remote rural areas, with serious unemployment and the rampant social problems that brings, the need for facilities usually found only in metropolitan areas becomes much starker. In 2005, Grootegeluk created a safe house in Lephalale to accommodate victims of abuse, most commonly domestic violence, while the Department of Welfare assists in creating a safer environment for them. It has operated at capacity almost since opening in February 2005, underscoring a real need in the community.

This “proudly Lephalale” project was implemented using upcoming black economic empowerment contractors, which also introduced the local labour force to the Exxaro tender process. Grootegeluk's sustainable development team managed the project and was actively involved with the materials list, skills training and quality assurance.

Tshikondeni

Tshikondeni winter school
Tshikondeni has been running an educational winter enrichment programme for the past nine years, which has helped many schools in Limpopo province, especially those with very low pass rates. Pass rates have now improved to 90-100% and learners are encouraged to register for mathematics and science to bridge any gap in these disciplines. With a better understanding of the importance of these subjects in the working world, interest and enrolments have risen sharply. Learners are informed about opportunities available through the Exxaro bridging school when they register for winter school classes.

The Department of Education is playing an important role in encouraging all learners to attend the winter school. With increased enrolments, additional winter school centres have been introduced.

Local development through tourism
Limpopo province province has great potential for tourism, particularly as a springboard to the world-famous Kruger National Park. Recognising the initiative shown by local youths who had completed their schooling but could not find jobs and wanted to create a community cultural village in the Bend Mutale region near the park, Tshikondeni mine enlisted the support of the Exxaro Foundation and the participation of local authorities in a project that supported local economic development and job creation.

With four traditional huts now constructed and fencing under way, the seven young entrepreneurs behind the cultural village will also receive training from the Department of Tourism on project management to give life to their dream of a marketable accommodation attraction on the north-eastern border of the Kruger National Park.

Makuya multipurpose centre
When Tshikondeni and the Limpopo province local development forum identified the need for a multi-purpose centre in the village of Hamakuya, the strength of their business plan secured R4 million in seed funding from Exxaro Foundation and the Vhembe District Municipality.

Launched by the premier of Limpopo province in February 2006, the centre serves the community in many ways: from providing offices for home affairs, social and labour departments to facilities for internet access and training in computer literacy. Future plans include establishing small infrastructures for SMME development. The centre demonstrates an effective public-private partnership between the mine and other stakeholders, reflected in good relationships and effective governance underpinned by sustainable development.

Tshikondeni – safety first
For one million shifts – or eight million hours – the teams at Tshikondeni focused on safety. That's two years and eight months of unrelenting concentration – by 1 100 people, most of whom work underground in this Limpopo province coal mine.

One million shifts without a fatality is “an outstanding achievement in a challenging operating environment”, as acknowledged by the chief inspector of mines for the Department of Minerals and Energy who presented the Millionaire floating trophy to the mine in June 2005. Tshikondeni also received the Safety Achievement Flag from the department as the winner of the coal mines division for most improved safety performance over three years.

These achievements clearly reflect the ability of the Tshikondeni team to manage their considerable underground challenges exceedingly well to ensure the mine is a safe place to work. It is also a good example of Exxaro's commitment to safety excellence which is a non-negotiable part of our business performance.

Other coal

Water management at Hlobane
In 2004, the Hlobane waterfall near Vryheid in KwaZulu-Natal began to flow again following Exxaro's restorative work to address decades of underground activity by a variety of mining companies. Over the years, rain that mingled with water run-off from Hlobane mountain became contaminated after seeping into massive mining-induced cracks and through three coal seams before decanting into nearby water catchments. As a result, the 40-metre Hlobane waterfall stopped flowing many years ago.

On closing Hlobane mine some six years ago, Exxaro devised a solution to minimise mine-related water pollution. After rejecting easier options because of their environmental implications, Exxaro opted for a more complex solution: to plug the cracks with a flexible, durable and non-toxic seal, underlined with a mixture of available soil and bentonite clay (the bitumen film seal is non-toxic and bentonite is a naturally occurring substance). The seal was covered with rocks and soil and vegetated to prevent erosion, marking the first time this kind of project had been successfully carried out anywhere in the world and attracting interest from global water management experts. Uniquely, it is also part of an integrated water management system.

South African law requires the minimisation or prevention of water pollution prior to the issue of a mine- closure certificate. Exxaro went well beyond legal requirements in its restorative work at Hlobane mountain. To date, Exxaro has sealed one kilometre (or 1 200 hectares) of cracks – achieving its objective of keeping clean water clean for local communities by minimising the exposure of Hlobane mountain's water to pollutants. Ongoing monitoring will maintain that status and keep the waterfall flowing.

Social plan for Durnacol closure
As the chief employer in a remote rural area in KwaZulu-Natal province, Exxaro understood the importance of developing a far-reaching social plan to mitigate the impact of mine closure for Durnacol from 2001. The R24,4 million social plan encompassed jobs (a combination of redeployment, alternative employment and a R3 million training programme to develop skills), developing a self-sustainable town and a home-ownership programme.

To realise its goals, Exxaro has worked closely for almost 10 years with the Department of Minerals and Energy, the National Union of Mineworkers, the DNC Community Forum (a section 21 company focused on the interests of residents), the Mineworkers Development Agency and the Dannhauser Transitional Local Council. In September 2003, Durnacol was proclaimed a town, with attractive assets – from buildings and equipment to sports and medical facilities – donated by Exxaro. In the process, over 400 people are now homeowners, some assisted by the government's RDP fund, with the proceeds of sales of Exxaro-owned mine houses reinvested in community projects.

Exxaro also funded infrastructural upgrades required for a functioning town, from the electricity network, sewage plants and water treatment works to roads and storm-water drains.

Mine closures can have a devastating impact on communities, given that operations are often in remote areas with little or no other economic activity. Durnacol proves this does not have to be the case. Apart from the skills training that has enabled many people to start their own businesses, a cultural village is being planned, the business plan for a welding workshop has been approved and an agricultural project is under way on 200ha of land donated by Exxaro, in conjunction with the Department of Agriculture. Exxaro has finalised the appointment of a development company to provide an integrated development plan for consideration and approval by all stakeholders in Durnacol. Durnacol is today a vibrant community, energised about its future and capitalising on the many opportunities identified.

Eyesizwe Coal

As the primary Eyesizwe Coal operations – Arnot, Matla, North Block Complex and New Clydesdale collieries – are integrated into the Exxaro group, we will report more fully on these sustainability projects, many of which are well established and pivotal to community development in these rural areas.

Projects – Mineral sands

KZN Sands

Maths and science improvement project at high schools
KZN Sands implemented a programme in 1999 at eight rural high schools in its operational area to counter the lack of science laboratories in local schools. In association with Exxaro and the University of Johannesburg/Somerset Education, KZN Sands developed micro-science kits that can be easily transported to remote rural schools. With these kits, learners can execute any basic science experiment on the class desk. Manuals for guiding teachers and learners alike are included. Teacher workshops and training are part of the programme to ensure a better quality of education in these fields. Teacher skills are improved through workshops in partnership with the local education department.

In a separate initiative, a science academy has been established in partnership with a local private school to give high achievers a chance to excel. A total of 26 learners are part of the academy and are tutored by teachers from the private school. Learners' performance grades at their respective schools are monitored and improvements are recorded annually. Problem areas are identified through feedback sessions with teachers and the education department and follow-up sessions are arranged to address these areas.

Local economic development in KwaZulu-Natal
Around 45% of people in KwaZulu-Natal province, now the country' s most populous province, are jobless. KZN Sands employs just 364 permanent employees and approximately 256 contractors – therefore it can only help indirectly to create more job opportunities. By creating indirect job opportunities through implementing sustainable small, medium and micro enterprises (SMMEs), KZN Sands demonstrates the value of its role as a responsible corporate citizen.

Various small businesses have been established with the assistance of KZN Sands. One of the most successful is the Dube Village project for women. In 2002, the company started with eight women who had no business knowledge. Since then, a successful, professional company has been built with a directorate of the original eight women and a profit base of R200 000 per annum. The main products include beadwork, sewing and catering. The company also has a 40% share of an enterprise producing safety and mine uniforms, which could lead to a contract with KZN Sands to provide work clothing in future. A factory has been established that permanently employs 30 people and Dube Village is employing another 20 women in beading production. In only four years, the remarkable success of this business is attracting new investments from other established companies.

Development through KZN Sands' gardening project
Soil and water conservation and correct planning methods in rural areas are lacking largely as many people have never been educated in this area. The KZN Sands garden programme operates at 12 primary schools in its area. The focus is to educate learners and teachers on soil and water conservation and instil improved agriculture techniques by developing vegetable garden programmes at these schools. The second phase of the project focuses on entrepreneurship, teaching product marketing and basic financial management. The money generated pays the school fees of underprivileged children, buys school clothes and provides fresh vegetables to HIV/Aids sufferers. The ultimate aim is that the knowledge will be taken home to educate parents and that community vegetable gardens will be implemented. To date, three successful community vegetable gardens have been established.

Poverty alleviation is one of the main drivers of the local development plan, and positive partnerships have been formed between KZN Sands and local government with this project. The district municipality is a partner in establishing nurseries at the same schools to encourage the entrepreneurship stage of the project. Ultimately, improved farming techniques will provide a positive legacy for local communities long after KZN Sands operations have ceased.

Bayethe Aids programme sponsored by KZN Sands
With nearly seven million HIV-positive South Africans at the end of 2005, including 3,3 million women and nearly 11 000 babies, HIV/Aids is a national pandemic in South Africa and the highest percentage of HIV-positive people (41%) live in KwaZulu-Natal province. The majority of those testing positive to the virus are between 15 and 35 years – the age of young adults studying and entering the business world.

In 2002, a partnership was formed between KZN Sands and King Goodwill Zwelithini to educate communities at grassroots level through cultural awareness. Selected community representatives were trained to educate the maidens (young girls) in the communities who, in the traditional cultural values of the Zulu, are subservient to men. Education includes knowledge about HIV/Aids, prevention, addressing cultural values and how to take care of their bodies.

In 2005, Exxaro funded the initiation of a second phase of the programme, training boys in communities on the dangers of unprotected sexual intercourse and how to prevent HIV/Aids. The king annually facilitates important cultural events which are attended by thousands of maidens and young boys from all over KwaZulu-Natal. These events provide the ideal platform to promote the programme and distribute education manuals. The king's address enhances the message of the education programme.

To date, 50 000 people have been educated and 20 000 education manuals distributed by 10 permanent HIV/Aids trainers. The KZN Sands workforce is informed about the training programme, providing a platform for employees to share knowledge on HIV/Aids with their families and communities. Volunteering programmes, where employees interact with communities in sharing knowledge, have also been implemented.

Although a solution to the HIV/Aids pandemic is not imminent, the Bayethe campaign is raising awareness and understanding of the disease in rural communities and is seen as a key element in the fight against Aids in KwaZulu-Natal province. The partnership with the king plays an important role in the image of KZN Sands as a good corporate citizen in rural communities and his authority gives credence to the programme and its aim.

KZN Sands safety project
During commissioning and ramp-up phase, KZN Sands had an exemplary safety record, reaching 3,2 million lost-time injury-free hours in December 2002 and 483 days worked without a lost-time injury.

Then injuries increased significantly, causing the 12-month rolling injury ratio to rise from zero in December 2002 to 1,19 in December 2004, the worst performance since inception despite a number of measures implemented by senior management to bring injuries under control.

At the end of 2004, KZN Sands management decided a new approach was necessary to establish the causes for the operation's poor safety performance, the so-called I Care breakthrough project. A team was assembled from operational and maintenance personnel to investigate causes using a three-phase approach: analysis, idea generation and implementation over a period of seven weeks.

Since the implementation of I Care, safety performance has improved from the low of 1,19 in December 2004 to 0,61 in October 2005, the company's best performance in two years. A top-down commitment to safety, the willingness to try new methods and the understanding that safety is a daily concern has paid off for KZN Sands, with lessons learned rolled out across the group.

Projects – Base Metals and Industrial Minerals

Zincor

Refuse removal at Vukuzenzele informal settlement
Vukuzenzele is an informal settlement close to Zincor (Springs, Gauteng province) where some of the refinery's employees live. As the settlement is not a proclaimed residential area and the local municipality does not provide refuse removal services, Zincor assists in removing refuse for this community to provide a cleaner, healthier environment.

Working smarter
Zincor has in the past used lime to neutralise spent magnesium electrolyte bleed (a solution containing acid) and to treat all effluent streams before they reach the tailings dam. Using lime as a neutralising agent, however, is extremely expensive due to the transport and slaking costs involved. Towards the end of 2003, Zincor management decided that the smelter would now use calcium carbonate for these processes. CSIR-developed technology indicates that, with simple operational adjustments, calcium carbonate is as effective as slaked lime and a two-phase project to switch from lime to calcium carbonate was initiated and completed in 2005.

This technology has resulted in significant cost savings and confirmed Zinco's position as one of the top global zinc companies in cost efficiency and technological advancements.

Springs Business Linkage Centre
As part of its commitment to developing business enterprises, Zincor supports the Springs Business Linkage Centre which focuses on:

Developing the capacity of business enterprises through training and related development initiatives
Establishing business linkages and developing opportunities with bigger business
Implementing systems to support business enterprises.

Grootvaly Blesbokspruit Conservation Trust
With mining and other industrial activities in the area and resultant pollution, wildlife in the Blesbokspruit sanctuary, near Springs (Gauteng) was threatened to the point of extinction. In support of sustainable development initiatives in the area, Zincor refinery and other stakeholders teamed up to restore the environment. Today, the Blesbokspruit sanctuary has international status as a RAMSAR site. Birdlife has been restored and a variety of bird species – some rare, others migratory – inhabit the site. Indigenous fauna and flora has also been restored. The Grootvaly Blesbokspruit Conservation Trust now boasts an educational centre to cater for local schools, youth groups, environmental bodies and members of the public. Jobs have been created and the centre is becoming a popular tourist attraction.

Zincor safety stacks up
In 2005, Zincor commissioned the first of four auto-stackers to increase the safety of employees and reduce costs. In the past, stacking zinc sheets after stripping them from the cathodes was done manually, which often led to hand and back injuries. This technological improvement has significantly reduced risk, increased productivity and reduced energy use.

Other initiatives

Peace Parks – Exxaro supports conservation initiatives for sustainable economic development, such as the Peace Parks Foundation. Exxaro has committed to donating R10 million over ten years to the transfrontier parks initiative.

Education and training – Exxaro supports several initiatives as part of its commitment to training and development, and alleviating the shortage of skills, including the Minerals Education Trust, its own bridging school, bursars programme and learnerships, National Institute for Higher Education and University of Stellenbosch Transformation Chair.

Business Trust Initiative – Exxaro is a member of the trust, which creates jobs, supports development and fights crime.

New African Mining Fund – Exxaro contributed R20 million to the fund which provides access to capital for junior mining entrepreneurs.

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