Ranked as one of the top five coal miners in South Africa, diversified miner Exxaro Resources has sought to implement leading practices in enterprise and supplier development across the company’s core functional areas.
Exxaro currently supplies local and domestic markets with thermal, metallurgical and coking coal from its seven operations located in the Limpopo and Mpumalanga provinces. Notably, Exxaro’s opencast and openpit operations account for about 35-million tonnes of coal a year.
“Small enterprise challenges are vast and varied,” says Exxaro stakeholder affairs executive head Mzila Mthenjane, adding that the miner, therefore, partners with organisations that share similar objectives in terms of developing sustainable small enterprises.
The company provides financial and non-financial support for qualifying beneficiaries that either have a contract with Exxaro or have a subcontracting agreement with an Exxaro contractor.
Mthenjane points out that this focus enables the company to invest in its enterprise and supplier development initiative in the mining value chain with a focus on host communities.
Exxaro’s initiative has seen it included in the FTSE/JSE Responsible Investment Top 30 Index.
The Responsible Investment Top 30 index provides the market with an environmental, social and governance-based tradeable index on which financial products can be based.
Mthenjane explains that contractors, especially first-time contractors, do not have the assets required to execute the contract. They also do not have the credit history to lease equipment at affordable rates, thereby driving up costs and, ultimately, reducing profit margins.
Further challenges include delays in procuring the equipment, which consequently impacts on contract delivery. Further, plant breakdowns, especially where the equipment is out of warranty, can adversely affect contract performance.
Exxaro seeks to mitigate these challenges by partnering with original-equipment manufacturers (OEMs) to enable contractors to access the required equipment.
Mthenjane notes that the agreements with OEMs are premised on the understanding that it is in all the parties’ interest to develop emerging black contractors into scaled, sustainable enterprises.
“The ultimate beneficiary is the contractor,” he says.
In terms of Exxaro’s support, the contractor will have access to financial and non-financial support, while the OEM will offer advice on fleet selection, management and optimisation, as well as driver training and information on the latest technology.
Exxaro and the OEM can then provide blended funding for the equipment required as the contractor scales up and accesses new opportunities.
Improving the operations of the contractor businesses will also generate attention by creating an ecosystem of development support providers to enhance the operations of the contractors, notes Mthenjane.
This ecosystem will be supported by specialist service providers and retired mine engineers and foremen who will provide technical support for the contractors.
Exxaro and the OEMs have solutions that can reduce capital and operational costs and, to maximise benefits for the contractor, these have to be offered in a planned and coordinated manner that drive towards a common goal.
Mthenjane concludes that Exxaro’s goal is to provide support as a development process, as opposed to intermittent transactions that do not have an end-goal.