Exxaro Resources SAP ECC6

Programme

Achieving the near impossible

Presented by: Antionette Wagner and Marius van Jaarsveld

12 September 2012

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Introduction

Antionette Wagner

Executive lead

Deloitte

Marius van Jaarsveld

Partner

Deloitte

2

Agenda

Exxaro Resources Limited

Overview of the transformation programme

Highlights of the SAP ECC6 programme

Success factors

Lessons learnt

Questions and answers

Next steps

Selecting Deloitte

3

Exxaro Resources Limited

4

Exxaro Resources Limited

Anglo American plc

9.8%

Free float 37.54%

BEE Holdco 52.66%

Exxaro Resources Ltd 100%

Exxaro Coal

Limpopo

Leeuwpan mine

Tshikondeni mine

Mafube coal

Mafube joint venture (JV)2

Inyanda mine

Exxaro reductants

Arnot mine

Matla mine

New Clydesdale mine

North Block Complex

Exxaro Sands

Toliara Sands Option to

acquire 100%

Namakwa Sands 100%

KZN Sands 100%

Australia Sands 100%

Tiwest Joint Venture

50%

Other interests

Cennergi 50%

Sishen Iron Ore Company

20%

Tronox Limited 38.5%

Zincor

Rosh Pinah (Namibia) 50.04%

FerroAlloys

Chifeng (China)

22%

Black Mountain and Gamsberg Project

36%

Exxaro Base Metals and Industrial Minerals

Alloy-StreamTM

South African-based mining group, listed on the JSE Limited.

One of the best-performing constituents of the JSEs Socially Responsible

Investment (SRI) index.

At 31 December 2011, Exxaro had assets of R37 billion and a market capitalisation

of R60 billion (US$7 billion).

Diverse and world-class commodity portfolio in coal, mineral sands, base metals and

industrial minerals.

Exposure to iron ore through a 20% interest in Sishen Iron Ore Company (SIOC).

Second largest South African coal producer with capacity of 47 million tonnes per

annum.

Third largest global producer of mineral sands.

A significant participant in the coal and mineral sands markets.

The eight coal mines produce 46,8Mtpa of power station, steam and coking coal.

All power station coal produced is supplied to the national power utility, Eskom, and

municipal power stations.

Grootegeluk is one of the most efficient mining operations in the world, and operates

the worlds largest coal beneficiation complex.

5

Overview of the

transformation

programme

6

The need for transformation

Ensure Exxaros sustainability. Protect and build Exxaro s

reputation.

Develop Exxaros leadership and people.

Improve Exxaros portfolio.

Achieve operational excellence.

Expected financial return on capital within the core operations does not

support sustainable growth cash

requirements. Services and corporate functions

do not serve the business

optimally, resulting in below standard service delivery,

unacceptable service cost and

inappropriate control.

Goals Improve financial return for

investors.

Optimise the core structures. Hardwire core for improvement.

Establish greater role clarity.

Better service delivery. Reduced services costs.

Benefits Alignment in structures and

processes:

High level alignment in core structures.

Improved focus on planning and

optimisation. Aligned key business process.

Value creation:

Significant revenue potential. Focus on plant efficiencies,

product mix and market

optimisation. Cost reduction:

Significant reduction in costs.

To achieve its Mission and Vision and to live the Values and the

Brand Promise, Exxaro identified

the following focus areas:

To deliver this, Exxaro identified the following business challenges

Siyaya was then launched to address these challenges

7

The Siyaya transformation programme

we are on the move

A strategic business programme,

called Siyaya, was launched to

achieve these and other strategic

goals such as creating unrivalled

value in terms of return on capital

employed, and creating robust

businesses that share, optimise

cost structures, improve

throughput and optimise their

sales mix.

Perform corporate office functions appropriate to

chosen governance

model

Corporate

office

Services

Economy of

skill

Professional

services

Economy of

scale

Transactional

services

Regional and

site services

Growth

Business of

today

Cash engine

Operational excellence

Operations

Sands and base metals

Coal

8

It was recognised that technology would be a key enabler to achieve

this vision

September 2010 Investigation to to understand the key

business drivers and technology

requirements of Siyaya and determine the

most appropriate ERP Landscape

Strategy and Roadmap to enable this

vision.

1990s Exxaro was a pioneer in implementing

SAP in the middle and late 1990s and

had six existing SAP instances and one

Elypse system.

November 2010 Decision to replace SAP 4.7 systems with

a single consolidated SAP ECC6

system.

Exxaros Business Intelligence (BI) capability

was advanced, as this capability has historically

been necessary to create a single view of a

consolidated Exxaro across the multiple

underlying clients.

Technology challenges

Lack of consistency in

business process

execution, underpinned by

discrepancies in supporting

systems. Configuration

differences in the various SAP

clients reflect process

deviations and differences

between operations.

Technology barriers

existed, created by the

multiple SAP client

environment, preventing the

organisation from leveraging

cross business capability

e.g. the opportunity to manage

critical stock as a single

business entity.

Business process

ownership was lacking in

some areas, and the mandate

to govern the organisation in a

single consistent manner is

absent or lacking.

Master data discrepancies

remained a challenge

hindering standardization,

although some notable efforts

have been made, particularly

in Supply Chain.

9

Siyaya Foundation stage

A complex programme

The transformation programme was executed along five parallel streams with an aggressive timeline:

Enabling technology (including SAP ECC6).

Work force transition.

Services management.

Change communication and training.

Facilities and infrastructure.

February March July May June August September October November December January Apr

2011 2012

Staffing Staffing preparation

ERP blueprint socialisation Systems training Training process and systems Process

training

Facilities fit out and integrated solution Facilities ready Facilities long-term transition

Service management enablement Service management transition

Systems support Build system Test system UAT Cutover ERP blueprint

Consult Overall solution support

Data clean up and preparation Capture data in new systems

Change and communication support Change preparation /mobilisation

Stabilise Consult Staff and system readiness Train and deploy

6 May 3 October 1 January

10

SAP 5

SAP 4

SAP 3

SAP 2

SAP 1

Blue print Implementation Single SAP

ECC6 Instance

SAP consolidation into one ECC6 instance

Exxaro opted for a two p