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R1bn payout for Exxaro staff

Union official says it shows “we don’t need nationalisation to share wealth”.

JOHANNESBURG – 2012 is set to start on a good note for Exxaro Resources staff who will be paid approximately R135 000 (pre-tax) next month if they have been in the company’s service for the last five years.

This is over and above the R81.5m or R9 210 per beneficiary that has been paid out in dividends.

Exxaro, a black owned diversified miner, set up its employee share scheme (mPower) in 2006 when Kumba Resources was unbundled to form Exxaro and Kumba Iron Ore.

Exxaro still holds a 20% stake in Kumba Iron Ore’s subsidiary Sishen Iron Ore Company that recently announced payouts of over R500 000 to members of its own share scheme.

The 9 694 beneficiaries of the Exxaro share scheme are 90% black and comprise of all staff up to lower management levels. Middle and senior management participate in a separate share incentive scheme.

Mining companies traditionally set up employee share schemes to assist in complying with the 26% BEE ownership requirement of the Mineral and Petroleum Resources Development Act (MPRDA).

However, Exxaro’s employee share scheme, which holds approximately 3% of the group, was not mandatory. The miner was already 53% black owned and controlled on formation in 2006.

The BEE stake in Exxaro at the end of last year amounted to 52.1% and was made up as follows: Eyesizwe (28.7%), IDC (7.8%), Eyabantu (4.95%), Tiso (4.95%) and Basadi Ba Kopane (5.7%).

Sipho Nkosi, CEO of Exxaro Resources said this payout has “come about because employees worked very hard and pushed the company to where it is today”. The share price has almost trebled from its listing price of R58.50 to its current level just shy of R170.

In response to a question of why the scheme was implemented when it was not necessary to do so Nkosi said it had listened to the criticisms of companies not sharing the cake with its employees.

“We listen to the comments that there are fat cats at the top making money” Nkosi said.

In reference to poverty alleviation Nkosi said he hoped that the payout would improve living standards and called on staff to use the money to educate their children.

The recipients of the cash only scheme typically receive total cost to company salaries of between R8 500 and R38 000 on average per month said Exxaro’s executive general manager of Human resources, Retha Piater.

Louis Pretorius, spokesperson for Solidarity said “What makes this different is that contrary to Kumba, Exxaro did not need to have an mPower plan so this shows the company’s caring for its employees.”

Frans Stehring, a spokesperson for union UASA said “we don’t need nationalisation to share wealth. If all companies had schemes like Exxaro then we wouldn’t need to discuss nationalisation.”

Nkosi said “this scheme started before nationalisation. Let’s be honest, we do get pressure from the unions and workers. The whole nationalisation debate is easy to push when we don’t do what we are doing. People need to see tangible benefits that impact their own personal enclaves.”

The company confirmed that employees impacted by the restructuring of the company and closure of Zincor would also participate in the pay out.

Nkosi said it is too early to talk specifics on a new plan to replace mPower but that it is currently in talks with labour organisations and expects to roll out a new scheme next year after shareholders vote on it in May.


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