Exxaro is a company of the 21st century and therefore understands that diversity, empowerment and development at every level can only be achieved through effective, transparent and accountable leadership.

Exxaro’s leadership recognises that good corporate governance practices are essential in maintaining high standards of integrity, professionalism and ethical behaviour. Exxaro’s directors are fully committed to embedding the principles of transparency and accountability in our various business operations, ensuring we create value for all stakeholders.

In making good governance a hallmark of our group, the directors are guided by established tenets in creating longterm value for all:

• Adherence to sound principles of direction and management
• Implementation of best practices in corporate management
• Understanding, including a review of national and international developments to gain a better appreciation of corporate govrnance systems and mechanisms
• Clarification of issues pertaining to the board of directors and management
• Recognition of shareholder/stakeholder rights and responsibilities.

Best-practice corporate governance structures ensure a dynamic cycle of improvement where every individual is guided by a common set of values as we expand our quality portfolio of assets. At Exxaro, our values guide the way this organisation is managed and controlled. These values appear on the first flap.

In compliance with the mining charter, Exxaro is one of the largest black-owned and managed resources companies listed on the JSE, comfortably exceeding charter requirements with a 53% black economic empowerment (BEE) shareholding.

Compliance with King II

The Exxaro board, committees and management believe compliance is key in maintaining the group supports the provisions and principles of corporate govrnance as defined by the King II report and the Listings Requirements of the JSE, and complied in all material respects with the Code of Corporate Practices and Conduct in King II and the requirements of the JSE during the review period.

To ensure excellent corporate govrnance practices are entrenched in the group, all our operations are obliged to subscribe to the spirit and principles of King II. While the Exxaro board takes overall responsibility for compliance with King II, directors of subsidiaries are required to continually monitor compliance with these principles within their legal leadership recognises that good corporate entities.

Ethics

In line with Exxaro’s compliance with the by the group risk manager and company secretary, and ethical behavior is encouraged throughout the group by communicating regularly with employees, using a number of different communication channels.

During the year, all business units were assessed for risks related to corruption and fraud. Training in anti-corruption policies and procedures is integrated into the group induction programme for new employees and during annual competence update training for existing staff.

Formal disciplinary measures are in place to deal with any identified incidents of corruption and fraud. In addition to Exxaro’s a reporting hotline (whistle-blowing) is in place through which all stakeholders can report suspected corruption, conflicts of interest, contraventions of group values or other reportable irregularities, with guaranteed anonymity. Details of the reporting mechanisms: Hotline: 0800 20 35 79 Hotmail: Exxaro@tip-offs.com.

Alleged irregularities reported on the hotline are fully investigated. Some resulted in criminal prosecution.

Exxaro regularly participates in industry initiatives focused on developing equitable public policies for the mining sector. However, the group does not directly or indirectly support political parties or, individual politicians through financial or in-kind contributions.

Board of directors

Functions

The The board is the focal point of govrnance system, with ultimate accountability and responsibility for the The board charter details the purpose and composition of the board, responsibilities of board members, requirements for board meetings and remuneration of directors. The charter was reviewed during the year to assess compliance with the current regulatory framework and international best practices.

During the review period, the Exxaro board completed a self-assessment of its performance. We intend to establish formal board evaluation procedures in future.

The primary responsibility of the board is to determine the company’s direction. It is also responsible for identifying key risk areas and performance indicators, monitoring performance against agreed objectives, advising on financial matters and reviewing the performance of executive management against defined objectives and industry standards.

Composition

The board is an appropriate mix of skills, experience, demographic diversity and personalities to ensure effective leadership and sound govrnance.

As a truly South African company we support and actively drive transformation in everything we do, and we are proud that the majority of our board members are historically disadvantaged South Africans.

The board currently comprises 12 directors:

• Four independent executive directors
• Two executive directors
• Six non-executive directors.

In categorising the capacity of each director as executive, executive or independent, Exxaro is guided by the guidelines of King II.

Independence

There is a clear distinction in Exxaro between the roles of chairman and chief executive officer (CEO) to ensure no one has unfettered powers of decision-making. Identifying suitable candidates for the role of independent chairman has taken longer than anticipated. During the year our acting chairman, Dr Len Konar, ensured continuity in the independent executive director, responsible for the effective functioning of the board in his acting capacity.

The CEO is in charge of the company as a whole and directly responsible to the board. Among other things, he is responsible for ensuring the company achieves its strategic and financial objectives, and for monitoring its day-to-day operational requirements.

Appointments and succession planning

Within its powers, the entire board selects and appoints directors, including the CEO and executive directors, on the recommendations of the transformation, human resources, remuneration and nomination committee (TREMCO).

All appointments are based on a formal and transparent process. Candidates are selected against criteria deemed appropriate for Exxaro, its industry and its transformation objectives.

The chairman is appointed for a term not exceeding one year and is nominated from the ranks of independent non-executive directors.

To ensure efficient staggering of director rotation, directors retire and may be nominated for re-election every three years. No director may hold office for more than three consecutive periods. The retirement age for executive directors is 70 years, effective at the annual general meeting after the date on which they turned 70.

Accountability

Exxaro’s the issues at hand. executive directors understand Exxaro’s expertise to the group.

We believe open communication with our directors is a priority in ensuring their accountability. Therefore all material information is disseminated to them between board meetings.

The company secretary is responsible for the duties set out in section 268G of the Companies Act. In terms of Exxaro policy, directors have free access to the company secretary and to independent professional advisers, whether in legal, technical or accounting areas, at the company’s expense.

Remuneration

TREMCO considers and submits recommendations to the board on fees to be paid to each executive director.activties. Appointed in 2001, Dr Konar is an Any changes to fees are recommended by the board and submitted to shareholders at the annual general meeting for approval prior to implementation and payment.

In line with generally accepted govrnance practices, independent executive directors do not have service contracts, are not members of the and are not given incentive awards.

Non-executive directors’ remuneration is summarised below:

Non-executive remuneration

Attendance

Board committees

The board has appointed three committees to assist in effectively discharging its responsibilities. All committees fulfil their responsibilities within clearly defined written terms of reference, which deal explicitly with their purpose and function, reporting procedures and written scope of authority.

These terms of reference were reviewed during the year and changes made where necessary to reflect our continuous drive to comply with regulatory changes and international best practices.

To ascertain their performance and effectiveness, committees are subject to regular evaluation by the board.

To ensure that board committees effectively discharge their responsibilities, the chairman of the board provides quarterly feedback to the board on their performance and achievement of their mandate.

Audit, risk and compliance committee

The committee consists of four members and the majority (including the chairman) are independent directors. Executive directors, the senior audit partner and head of the outsourced internal audit function also attend meetings and have unrestricted access to the chairman and committee members. executive directors may also attend by invitation. When required, suitably qualified people may be co-opted to render specialist services.

The committee meets at least four times a year.

The committee reviews the principles, policies and practices adopted in preparing the financial statements of company and its subsidiaries. It also ensures that interim and annual financial statements and any other formal announcements on the nancial performance comply with the Companies Act, the JSE Listings Requirements and International Financial Reporting Standards.

The committee reviews the work of the group’s external and internal auditors to ensure the adequacy and effectiveness of Exxaro’s financial, operating, compliance and risk management controls.

• Basic accounting assistance
• Payroll services
• Tax services
• Human resources services
• Information technology services
• Appraisal or valuation services
• Legislative and administrative decision-making and corporate govrnance
• Internal audit and risk management.

This policy was complied with in the year under review

Attendance

Safety, health and environment committee (SHE)

Composition and meeting procedures
The committee consists of five members with an independent chairman. The CEO and executive general manager: safety and sustainable development attend meetings as standing invitees.

Executive general managers of commodity businesses, human resources and technology management attend meetings by invitation. Suitably qualified people may be co-opted onto the committee when necessary to render specialist services.

The committee meets at least three times a year.

Role, purpose and principal functions
The purpose of the committee is to develop the framework, policies and guidelines for health, environmental and safety management and sustainable development group-wide.

The role of the committee is to:

• Oversee independent assurance of sustainability performance
• Oversee the development of policies and guidelines for its specific fields
• Review the policies and performance of the group on the progressive implementation of safety and sustainability policies
• Encourage independently managed subsidiaries, associates and significant investments to develop their own policies, consistent with those of the group
• Receive reports on substantive safety and sustainability risks and liabilities
• Monitor key indicators on accidents and incidents and, where appropriate, ensure this information is communicated to other companies managed by or associated with the company
• Consider for adoption substantive national and international regulatory and technical developments
• Facilitate participation, co-operation and consultation on related matters with government, national and international organisation's, supranational authorities, other companies and other relevant associations.

Attendance

TREMCO

Composition and meeting procedures
The committee consists of four members, chaired by an independent director. The CEO, financial director (FD), executive general manager: human resources, and compensation and benefits advisers may be invited to attend any meeting.

Suitably qualified people may be co-opted onto the committee to render the specialist services required to assist the committee in its deliberations on any particular matter.

The committee meets at least four times a year.

The purpose of the committee is to:

• Make recommendations on the composition of the board and board committees and ensure that the board consists of individuals equipped to fulfil the role of director of the company
• Guide, monitor, review and evaluate the progress on transformation, specifically employment equity, community involvement and preferential procurement
• Ensure the and schemes are related to achieving business objectives and delivering shareholder value
• Ensure compliance with statutory and best-practice requirements on labour and industrial relations management, and that appropriate human resources company’strategies, policies and practices are in place.

Attendance

The executive committee (Exco) is chaired by the CEO and consists of 10 members. It meets formally every six weeks and informally weekly.

Exco is mandated, empowered and held accountable for implementing the strategies, business plans and policies determined by the Exxaro board. It is also responsible for managing and monitoring the business affairs of the company in line with board-approved plans and budgets, prioritising the allocation of capital and other resources and establishing best management and operating practices.

Exxaro follows a structured process to ensure it invests in projects aligned with group strategy and which yield the required returns. In this process two forums are engaged: an initial assessment is completed by the strategic co-ordination forum and a comprehensive review is then undertaken by the investment review committee. The offshore review committee assists the board in financially co-ordinating of offshore investments and interests.

Management committees

The strategic co-ordination forum

The forum met every six weeks until the retirement of the chief operating officer on 31 August 2008. This forum will be replaced by the portfolio review committee, chaired by the CEO.

The mandate of this forum is to:

• Ensure alignment of strategy execution and new developments
• Determine strategic priorities and co-ordinate, support and monitor strategic initiatives throughout the group
• Allocate resources and accountabilities for investigations or studies.

Investment review committee

The committee meets monthly and its primary responsibility is to undertake comprehensive investment reviews and assess the technical feasibility and financial viability of proposed capital projects or investments priorportfolio to these requests being presented to the executive committee and Exxaro board for approval.

In fulfilling these objectives, the committee ensures that:

• Each project meets the strategic, technical and investment requirements defined by the board
• Critical decisions, project parameters and potential risks are adequately addressed and researched prior to recommending the commitment of funds
• Each project enhances the portfolio value of Exxaro.

Offshore review committee

The committee meets quarterly, or more frequently, if required. Its primary responsibilities include:

• Financial control and governance of investments and multi-disciplinary interests
• Efficient financial structuring
• Proving for offshore investment funding and expenditure
• Ensuring financial reporting, auditing and tax-related issues are properly managed
• Ensuring the company's overseas offices are effectively staffed, managed and used.

Intellectual property committee

Texaco acknowledges the importance of intellectual property antistrophe innovations are exploited and, if appropriate, patented and properly maintained. Copyright, trademark and possible infringement issues are also addressed. The committee also comprises the company secretary, representatives of the finance and technology departments, and representatives

Sustainability

Sustainability is a cornerstone of the Texaco group and our approach is embedded in the first of our corporate values: “empowered to grow and contribute”. Our aim is to encourage entrepreneurship as far as possible to transform this value into reality for as many stakeholders as possible (page 74).

Black economic empowerment codes of good practice

While we understand that companies need to verify the BEE status of suppliers in terms of the Codes of Good Practice, Texaco confines its reporting to the requirements set out in the Mineral and Petroleum Resources Development Act and its associated mining charter scorecard.

Our approach to transformation and empowerment, however, fits well with the requirements of the BBBEE codes and scorecard. In structuring the new group, we ensured that the:

• Majority of voting rights are exercised by HDSA's
• Majority of profits accrue to black people
• Majority of the board comprises black people.

Disclosure policy

The board has adopted a formal policy of continual disclosure of interests to ensure full and timely disclosure by directors.

Conflicts of interest

Exxaro has drawn up a comprehensive conflicts of interest policy that applies to all directors, management and employees in regulating conditions which could or do constitute a conflict.

The primary objectives of this policy are to:

• Provide guidance on the behavior expected in accordance with the company’s
• Promote transparency and avoid business-related conflicts of interest
• Ensure fairness in dealing with the interests of all overseas office employees, other affected individuals, and the company
• Document the process for disclosure, approval and review of activities that may amount to actual, potential or perceived conflict of interests
• Provide a mechanism for the objective review of personal outside interests.

External communications

Briefing analysts, investors and fund managers is an important element of maintaining investor legal relations. However, we will only provide “price-sensitive” information after disclosing that information to the market.

Broader stakeholder communication plans have been implemented. The group believes in clear, transparent, concise and timely dissemination of relevant information to all stakeholders. This is achieved through a multitude of channels and media, including written, electronic and verbal presentations. Specifically, there are a number of mechanisms for stakeholders to interact with the board and its sub-committees. These include annual general meetings, representative forums, internal communications across a range of platforms and more.

Marketing communication

In line with its corporate values, Exxaro communicates regularly and openly with all stakeholders. At all times, our communications adhere to the laws, standards and voluntary codes of accepted marketing communication in the areas where we operate. During the year, no incidents of non-compliance were recorded.