Growing the South African economy

INVESTMENT

the South African economy

Driving inclusive and long-term growth for South Africa starts with participation and collaboration. All businesses – both listed and private companies as well as individuals who have the funds – should invest in our country, and work together with government to create employment opportunities. By Johan Meyer*

We cannot only generate revenue and issue dividends to shareholders without reinvesting, so that future generations can also reap the benefits. Businesses solely focused on profit without purpose are not developing the country or their communities. I fundamentally believe that the only way to improve our economic situation is if all companies dig deep and reinvest to grow the country – that way, we all win. But how do businesses go about investing in initiatives that matter and collaborating with the right partners to generate real value? Let us look at Exxaro’s investment commitment, successful implementation of projects, and strategic public-private partnerships (PPPs) as a proof point.

Investing in South Africa’s future with impactful projects

In 2019, we committed R20 billion to President Cyril Ramaphosa’s investment drive for the country at the South African Investment Conference (SAIC). This commitment is geared towards developing our coal mining operations and renewable energy investment in Limpopo, Mpumalanga and the Eastern Cape. These projects will generate the required cash flow not only to sustain and grow the business but also to unlock value for our stakeholders, including our host communities. Excluding the proposed Thabametsi independent power producer (IPP) project, which was cancelled due to a lack of IPP investment, our revised

Johan believes that participation and collaboration are critical in driving inclusive and long-term growth for South Africa

INVESTMENT

It’s crucial for businesses and individuals to invest in South Africa, especially with the challenges of Covid-19 and uncertain electricity supply

investment is around R17.5 billion. To date, we have spent R13 billion of this – about 75% of our committed value. R7.4 billion has gone towards projects that have been completed, including the Dorstfontein West Expansion, Leeuwpan Lifex Extension, Grootegeluk New Rapid Load Out Station, Mafube Life Extension and Belfast Implementation projects.

We have spent R13 billion on projects we are currently working on, which is in line with our original plan and cost flow provisions. Our Grootegeluk 6 project will be concluded next year and our Matla expansion (which is associated with Eskom) will be concluded at the end of 2023. The R4.5 billion project is on track and will result in the mine again producing 10 million tonnes of thermal coal per annum to support the power stations’ requirements.

Social impact is our focus across all of these projects, with thousands of direct and indirect employment opportunities being created and local black-owned, black-woman-owned and black-youth-owned businesses flourishing through enterprise and supplier development. All these initiatives drive our purpose of powering better lives for our people. And from a presidential perspective, we are creating hope for South Africa

by delivering growth projects that can sustain our country in the long run.

Urging more businesses to follow suit and invest

Exxaro’s commitment falls directly in line with the need for investments to support South Africa and to grow this beautiful country of ours. The more investments we have, the more projects we can execute and the more jobs we can create, moving South Africa forward.

For example, at the peak of our investment, we helped 7 000 contractors earn a living through implementing these projects. With more investments, these contractors and construction companies can stay afloat and give their communities hope for the future. As our CEO, Mxolisi Mgojo, reminds us, the small seeds we plant today eventually grow into strong, sheltering trees under which people can find shade and refuge. Over the life of our projects, we hope to generate value for generations to come.

It’s crucial for businesses and individuals to invest in South Africa, especially with the challenges of Covid-19 and uncertain electricity supply. We will need the right contractors to build these ‘trees’ that will eventually have a massive country-wide impact, providing much-needed jobs for all South Africans.

And for those who are reluctant to invest, we need to prioritise ethical leadership to form a foundation of trust. Citizens and businesses need to believe in and trust South Africa’s leadership so much so that they know the private sector and government can join hands to run the country ethically.

Joining forces for success

We all want to win this race for South Africa; however, just like a literal race, we cannot do it without the correct coach, training or talent. Forming PPPs is imperative to achieve our common goal of driving our country forward. As Exxaro, we cannot do it alone; as individual employees, we cannot do it alone; and as citizens, we can’t do it alone – we must work together.

We first need to form partnerships with government agencies; we then need partnerships with other private-sector companies so we can benefit from each other’s expertise. For example, Exxaro partnered with Tata Power when we first embarked on our renewable energy journey. We knew nothing about wind energy and consulted with them as specialists in the field, eventually buying out their share, and acquiring full ownership of renewable energy business Cennergi. Cennergi’s wind farms contribute renewable energy to the country – a prime example of how a well-defined partnership has created value for various stakeholders. The CEOs and business leaders of South Africa need to be bold enough to dream and then come together through PPPs to actually build these shared dreams. The link between aspirations and results is called execution – we cannot only talk about our dreams; we need to action them. Partnering with like-minded leaders and businesses is key to realising any dream.

Exxaro’s dream has always been to power better lives by building businesses that can support many families while successfully contributing to society and the economy. A R3.3 billion project like Belfast Mine, for example, has an annual projected income of R2 billion over the next 20 years, sustaining the community for decades to come.

However, committing to investments and PPPs and following through are two different things. Companies need to put their money where their mouths are and actually execute their plans. Consequence management is important, as it shows businesses what happens when they do not deliver on their promises and, more so, when they do it unethically.

Let us start sowing seeds now for our children and their children to benefit from. It is up to us to dream big, choose aligned partnerships, communicate with these partners, and execute those dreams. The future of South Africa depends on it.

*Johan Meyer is the executive head of projects and technology at Exxaro Resources.

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