AUGUST 2012 PAGe 1

Market News Strategy Group News SHEC Training People

AUGUST 2012

LIFE AFTER DURNACOLA mine closes … And

A community thrives

UNSUNG HEROESThe cycling fraternity meets our “x factor”

READY, GET SET, GO!GmeP delivers first coAl for meduPi

WE’RE DIGGING ITEmployees get their share, with Mpower 2012

AUGUST 2012 PAGe 3PAGe 2 AUGUST 2012

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of the following members

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Kim Hardy (editor)

(012) 307-4066

GMEP – Cecelia Stone

(014) 763-9758

Waterberg Region and Grootegeluk –

Thandeka Mchunu

083 567 2708

Reductants – Cora du Plooy

(014) 763-9343

Pretoria region – Samantha Bashman

(012) 307-3231

Mpumulanga Region, Inyanda, NCC,

Matla and Leeuwpan – Ankia Dednam

083 461 4835

Arnot and NBC – Lynne le Roux

072 795 3515

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“We call this ‘showbiz coal’ because of the celebrity spotlight it has been get-ting,” says Joe Meyer, GMEP general man-ager. “We crushed the first coal through the semi-mobile crusher and it was a delight to see how easily it ran through. The load-out system conveyors also performed very well. The commissioning of the assize and sampling system was delayed due to the fact that Eskom cannot take coal at this stage. Altogether it is a great installation and we cannot wait to deliver the first coal into the Eskom silo. Together with the GMEP team, I am extremely proud of what has already been and what will still be achieved through this project.”

Although the Medupi Power Station is 18 months from being ready to take GMEP’s newly delivered product, Eskom and Exxaro have agreed on a new revised coal ramp-up curve to align the coal offtake with delays on the Eskom power station project. The coal could be transported to the Matimba Power Station and other power stations in Mpumulanga until Medupi is ready for direct receipt via the conveyors. The first 800 000 tonnes of coal to Medupi unit six will go by conveyor during March and April 2013. In the meantime smaller amounts of coal will be used to test our load-out facilities until August 2012.

Project learningsGMEP has been a success beyond most expectations, but it hasn’t all been plain sailing. One of the early challenges, says Joe, was the lack of expertise in South Africa for a project of this kind. “It took an incredible effort to get the result we have on the table. It was a great result in the end, but the process was tough and our whole team learned a lot.”

GMEP has been a learning experience all round, he adds, and while the project would have benefited from a better mix of experienced team members, the in-house project management control philosophy was the right one, providing excellent

GMEP: The lowdown on lift off

neArly seven yeArs after starting the feasibility and five years after the detail design first started, Grootegeluk Medupi Expansion Project (GMEP) crushed its first coal on 22 June in the first semi-mobile tip and crusher. On time and within

budget, Exxaro is thrilled about the success of this venture.

given 387 units worth R75 000 regardless of race, remuneration package and years of service. New qualifying employees will receive a pro rata number of the units orig-inally determined, linked to the number of months for which they will participate in the scheme. In other words, someone who participates for a shorter period, for exam-ple, only 24 months, will receive fewer shares than someone who participates for the full five years.

“Mpower 2012 represents our continu-ous commitment to broad-based black economic empowerment, ensuring the upliftment of our employees and the ongo-ing growth of our company,” says Exxaro CEO, Sipho Nkosi. “The contribution of

all employees will be an important factor in the success of this group.”

Another element of Mpower 2012 is that in future, participants will receive a dividend payment linked to the number of units each participant holds.

If the previous Mpower scheme was anything to go by, then Mpower 2012 is certainly something to look forward to, as Exxaro edges closer to its goal of becoming a $20 billion company by 2020. Keep an eye on future editions of xxplore for news and regular updates on the value of the Mpower 2012 units. w

MpoWer 2012, which came into effect on 1 July, will run until end May 2017. The terms and conditions for participation in the new scheme are similar to the previous scheme. The main difference is that the vari-ous employer companies within the Exxaro group will contribute cash to the Trust to purchase shares and there will be no loan that the Trust must pay back to the employ-er companies. This means that Mpower 2012 participants can enjoy potential growth (and profit) from day one.

How will Mpower 2012 work?The Mpower shares are held in a trust. Every employee who accepts the offer to participate in Mpower 2012 by signing the written offer made to him or her, is now a beneficiary of this trust. The Trust is regu-lated by the Trust Deed, which stipulates the rules and regulations that the trustees must follow when managing the Trust. The recognised trade unions will nominate the majority of the trustees. Exxaro will also nominate a few. The majority of trustees must be historically disadvantaged South Africans.

At the start of the scheme on 1 July 2012, Mpower 2012 participants were each

l A near doubling in Grootegeluk production to

approximately 35Mtpa, of which 32Mtpa will be power

station coal and the balance coking and steam coal. l Further development of downstream beneficiation

projects.l The eventual construction of four semi-mobile tip

and crushers that will advance with the mine’s

expansion.l The incorporation of a dry screening process for

screening out the -4mm material. l The incorporation of very large diameter cyclones of

1 450mm. l The fact that the entire plant is managed from one

central point – the single control room referred to by

the GMEP team as “Louis’ Taj Mahal”.l The construction of a run of mine bunker and discard

bunker that support continuous production. l Support of the local manufacturing and construction

industry – to such an extent that more than 90%

of all equipment and all construction was done by

South African companies, with about 55% of the

labour force being sourced from the Lephalale

district. l Harmony between mega industry and the ecosystem

as a zero effluent operation – the result of a

constant effort to improve on and keep ahead of

environmental legislation. This was factored into the

project at the start.

the GmeP team

celebrated the

crushing of the

first coal at the

Grootegeluk medupi

expansion Project

on 22 June.

MPOWER 2012 IS HERE

followinG on from the success of the Mpower share scheme, which shared around R1 billion with employees in its final payout last year, Exxaro’s shareholders have unanimously approved the launch of the Mpower 2012 scheme.

oversight of the project and expertise for future projects.

“Our execution model, through which we free-issued equipment to our contrac-tors from our capital yard, also worked extremely well,” says Joe. “It put all the right knowledge management processes in place, in the right areas.

“Using specific project management experts in specific areas also contributed significantly to our success. At the same time, we were able to expose multi- diversity project teams and contractors to different aspects of the project, which proved very beneficial.

“However, if I were to do this project again, I’d take difficult design compo-nents through a more stringent process of upfront loading to make it easier for con-tractors to understand and execute certain aspects. I would also ensure that every day has at least 36 hours!”

Like any other development of this scale, success is in part thanks to unfailing support from all corners of the organisa-tion. “I would like to thank our board, Steercom, Exco and Exxaro’s senior man-agement for their support, as well as all other functional departments in the group, who helped us tremendously,” says Joe.

“A big thank you also to the project team and all our contractors for the way they worked together to achieve what we have today. We are still forecasting a good saving on the initial amount that the board approved – even though we have achieved significantly more than what was originally required.

“And finally, thanks for the healthy conflict, the caring and all the great laughs – this has truly been a ‘family affair’.” w

DiD yoU KnoW?The various employer

companies within the Exxaro

group pay for Mpower 2012

shares, and employees do not

have to pay this back.

THiS MeAnS THAT …

Participants can enjoy potential

growth (and therefore profit)

from day one.

“The contribution of all employees will be an important factor in the future success of this group.”

Sipho Nkosi, Exxaro CEO

PRojeCT HiGHLiGHTS

2011 IN REVIEW

What went up, what went down, what did we do better and how

did we do it?

It’s all captured in the 2011 Employee

Report, included in the centre of this edition

of xxplore – don’t miss it!

AUGUST 2012 PAGe 5PAGe 4 AUGUST 2012

Market News Strategy Group News SHEC PeopleMarket News Strategy Group News SHEC People

exxaro scooped two out of five awards at the recent CIPS Africa awards dinner in May, for the Best Process Improvement Project (Exxaro’s content management solution, which shared the award with Absa) and the Best Procurement Project (the top accolade at the awards, won by our diesel value team).

Pieter Venter, group manager of SCM, explains that Exxaro pipped many other major corporates to the post includ-ing the likes of Eskom, SARS, FNB, SAPPI, Shell, Transnet and Group 5. The panel of judges included representatives from Accenture, Barloworld Logistics, Sappi, PetroSA, Tiger Brands, National Treasury, NAMPAK and international CIPS members.

“This is something we can all be proud of and confirms once again that we are at the front line in terms of our approaches and methodologies,” says Pieter. “We have since received requests from other companies to review projects and approaches and to potentially become involved in the training and mentoring of supply chain students.”

Exxaro’s winning entries were:1. Best process improvement project: The successful implementation of an SCM content management solution at Exxaro has reduced the amount of pro-curement spend that is not codified from 38% (end 2007) to 20% by end 2011. It also helped to improve our compliance to adopted standards from 9,6% (end 2007) to 65% in 2011. We have also almost halved the number of master records for materials and services.

2. Best procurement project: The diesel value team project has developed a methodology and approach to identify and extract additional value from the diesel used within Exxaro. Now in its planning and implementation phase, this project is expected to release as much as R43 million in value. To put this in perspective, Exxaro’s diesel consumption and spend during 2010 was approximately 74,5 million litres and R471,5 million respectively. w

THEY ARE THE STRONGEST LINkS

exxAro’s suPPly chAin Management (SCM) team has won two awards from the Chartered Institute of Purchasing and Supply (CIPS) Africa, which goes to show that the often-complex work of our supply chain and procurement teams is improving both our bottom line and our reputation as a well-run business.

Back (from left): Pieter venter (scm), sean mooney (scm), marlene Botha (scm).

front (from left): Johan Braak (consultant), hannes de Bruin (scm), Jayshree Brijball

(scm), mike hughes (corporate technology), Brenden Pillay (scm).

THey SCoReD – AnD won!Congratulations to the Corporate Centre winners of the Siyaya training

competition, who won vouchers ranging from R500 to R8 000 for

completing their training in as short a time as possible and passing with

at least 80%. The competition aimed to ensure that everyone was ready

to work within the new operating model that came into effect in January.

Prizes were awarded as lucky draws in four categories:

1. Lucky draw for employees who completed their training requirements

(less than five courses, 5-10, and more than 10).

2. Trainers (10 internal trainers were chosen based on rating and

motivation)

3. Sponsorship and leadership prizes (20 employees were chosen based on

rating and motivation)

4. Employees who were not required to complete any training, but who

supported and were directly affected by the change process.

CIPS is the world’s largest

procurement and supply profession

organisation with 66 000 members

in 150 countries. There were 15 300

members in Africa from 14 countries

who were eligible to submit entries

into this year’s competition.

Fast FaCt

More than 400 attendees descended on eMalahleni for the CEO Summit, including Exxaro board members, Exco, all levels of management, safety and union representatives, as well as representatives from the Department of Minerals and Resources, the Chamber of Mines and the Department of Health.

Since the inaugural event in 2009 and personally led by CEO Sipho Nkosi, this summit has become Exxaro’s main driver of improved safety performance. This is reflected in year-on-year improvements in the lost-time injury frequency rate (LTIFR) of 15%, 24% and 20% respec-tively, with Exxaro reaching its target of 0,21 in 2011.

Besides celebrating this achievement, the highlights of the summit included:l The presentation of the proposed

SHEREP empowerment programme – an all-new structure that aims to upskill safety, health and environment repre-sentatives. The programme was well received and is regarded as an industry best practice.

l Lively entertainment from comedi-ans Popeye and Spinach (of the TV programme Zone 14 on SABC 1). Their special brand of humour helped to share the SHEC message with attendees.

l A unique blend of music and industrial theatre from the “Drum Cafe” team.

Exxaro has now set its sights on the next ambitious target: an LTIFR of 0,15, which will require a further improvement of 28% from the previous target (0,21). w

SAFETY ALWAYS, ALL THE WAY TO EMALAHLENI

“Safety is everyone’s responsibility – and

all employees help to make Exxaro a safe

place to work.”Sipho Nkosi, Exxaro CEO

How will we achieve a 0,15 LTiFR? l The new SHEREP empowerment programme will help us to improve risk identification and awareness among

our employees, and in this way prevent LTI incidents from occurring.

l The Global Minerals Industry Risk Management Programme will standardise our risk management language.

Exxaro is currently one of only a few organisations in South Africa to implement this programme.

the town of eMalahleni (Witbank) was transformed in March when the team from NCC hosted Exxaro’s seventh CEO Summit in the city hall.

drumming in the shec message are the

team from the drum café.

Above: the ncc organising team who

hosted the ceo summit in the emalahleni

city hall.

right: mongezi veti, general manager for

shec.

Fatality-Free!exxaro reaches 12-month safety milestone

On 12 July Exxaro announced that

for the previous rolling 12 months,

not one employee was lost to a

mining or work-related accident.

The achievement spans all units in

the group, including the two mineral

sands business units that were

recently incorporated into Tronox

International.

“This is a huge achievement for

Exxaro. It’s the first time in our six

years of existence that we have

achieved this milestone,” says CEO

Sipho Nkosi.

“While we celebrate this

milestone, we should take extra

caution in ensuring that Exxaro

remains a safe company. We also

want to recognise our unions, the

Department of Mineral Resources,

the Chamber of Mines and other

stakeholders for their continuous

involvement, support and drive in

our safety initiatives.

“The safety of our people is

fundamental to the success of

our business and therefore this

achievement means so much to us.”