5 months ago

Opportunity Issue 104

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Opportunity magazine is a niche business-to-business publication that explores various investment opportunities within Southern Africa’s economic sectors. The publication is endorsed by the South African Chamber of Commerce and Industry (SACCI).

MINING _________________

MINING _________________ We plan to ensure that our revenue is primarily generated from lowcarbon business operations. ________________ As early as 2010, Exxaro began building this future by investing in two wind farms through renewable-energy producer Cennergi. As our investments in renewable energy increase over time, our revenue from them will grow too. The importance of transparency We have completed our alignment assessment to the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Going forward, we will be aligning our external climate-risk financial disclosures to the TCFD recommendations. This will provide transparency regarding our targets, strategies, climate-change risk management and opportunities to our stakeholders. Investors, asset managers and financial institutions are increasingly demanding that companies disclose their climate-related financial risks and opportunities. These disclosures allow more effective valuations of risk exposure and empower markets to reward sustainable and resilient business models. Reporting in line with the TCFD recommendations is the strongest signal to our shareholders that our business considers climate-related financial risks and opportunities as critical. As we transition to a low-carbon portfolio, we have engaged consistently with our shareholders and financial partners on our strategy to address the risks and opportunities of climate change that may affect our operational and financial sustainability. We have also participated in local and international climate-action networks, such as being a headline sponsor of the South African pavilion at the UN Conference of the Parties meetings. This partnership approach to climate change has allowed us to share our knowledge and seek new approaches to bolstering our portfolio resilience. Preparing for future scenarios Coal demand will continue to come under pressure both domestically and globally, which is why we have developed three climatechange scenarios using IPCC and Internal Energy Agency (IEA) data to guide our response strategy. These scenarios range from a “contained” situation where global temperatures rise by 1.5°C, to a “partly contained” 2°C scenario, to a “slipping out of control” global scenario (with a rise of 3°C or more) where the Paris Agreement objectives have not been achieved, but finance for low-carbon projects will be more readily available. What is important to consider, however, is that even if the 2°C objective is achieved, Southern Africa warms on average at Exxaro is the largest supplier of coal to Eskom and will not abruptly stop producing coal. Credit: Exxaro almost twice the global rate, which would result in an unthinkable domestic temperature rise of 4°C. A low-carbon transformation will be vital to mitigate the exposure risk, not only for our business but also for the broader national economy. Therefore, over the next decade, we plan to ensure that our revenue is primarily generated from low-carbon business operations. Looking forward Despite the challenges of today’s economic environment, Exxaro continues to reduce greenhouse gas emissions and will leverage opportunities that are presented by the transition to cleaner energy. Although mitigating climate change is critical to our company, we depend on good financial performance to support our investments in low-carbon innovations. With a portfolio in both high-quality coal and renewable energy assets, as well as our strong credit rating, prudent capital management, history of transparency with climate disclosure and active engagement with stakeholders, we have established ourselves as a trusted and responsible provider of energy in South Africa. Climate change may pose unprecedented risks, but if we are prepared to respond strategically and meet our responsibilities, it presents even greater opportunities – which we will engage with stakeholders to be on an ongoing basis. Riaan Koppeschaar, Financial Director at Exxaro Resources 24 |


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