RAL and Mining Giant Sign R100 Million Partnership
Roads Agency Limpopo (RAL) and Exxaro Resources, a JSE-listed black-empowered diversified mining company, have signed their second Memorandum of Agreement (MoA) since 2015 that effectively lines up the upgrade of a 9.56-kilometre D2001 road from gravel to tar in the Waterberg District Municipality of Limpopo Province in the next financial year.
The implementation of the new project will be carried out jointly by the two partners.
RAL and Exxaro are, because of the first partnership signed in 2015, currently working together on a R250million project for the upgrade of several roads in the Lephalale Local Municipality of Waterberg, that connects Ga-Seleka villages on the outskirts to the commercial centre of Lephalale.
Once the Northern and Southern links of the Ga-Seleka and Kitty road projects are complete, these roads will, impressively, link a total of thirteen rural villages.
RAL CEO Maselaganye Matji hailed the recently signed partnership as a vote of confidence in the way the Agency conducts business, while Exxaro’s Executive Head of Coal Operations Nombasa Tsengwa highlighted the combined oversight role both organisations have through their respective project managers and engineers as professional, and a hallmark of a successful partnership.
“Most (strategic) partnerships contributions are between 25% and 30%, however those who have had the experience of working with us have increased (those) contributions significantly in subsequent projects,” said Mr Matji.
In the breakdown of the current project under implementation, Exxaro has contributed R71.2m or 28.5% towards the construction cost while RAL is carrying the balance of R178.8m out of the total R250m.
The Strategic Partnership Approach with private sector companies, particularly in the mining and agricultural sectors, has been one of the key tenets of RAL’s successful turnaround strategy since the low point of 2011-2015.
The private sector contributions, now totalling R482 million, have helped to supplement the annual grant allocation of under R1 billion that RAL gets from Provincial Treasury to build roads.
Mr Matji said the success of this approach has gone a long way in alleviating road infrastructure backlog in the province, by co-funding the construction and rehabilitation of roads in economically strategic areas.
The future D2001 and the current project were jointly identified through the Integrated Development Plan (IDP) of the Lephalale Local Municipality, and provision for co-funding was subsequently included in Exxaro Grootegeluk’s Social and Labour Plan (SLP).
Dr Tsengwa said her firm decided to fund this project not only because it is a mandatory requirement but also because it is not currently provided for in RAL’s constrained budget.
“As a responsible citizen, Exxaro understands that the partnership between the public and private sectors is required to alleviate the backlog on infrastructure,” she said of Exxaro, which is also included in the Responsible Mining Index.
SLP is a mandatory requirement and ultimately a binding document required by the Department of Mineral Resources from mines on how they will benefit their employees and the communities they operate in from their massive profits.
Dr Tsengwa expressed Exxaro’s appreciation for the partnership with RAL saying they also, like RAL, want to ensure that the development of the area is advanced.
“The most exciting part for us is the ultimate goal of ensuring that the cost of doing business in Lephalale is reduced, and should not be stifled by issues of access,” she said
“Because we have experienced that challenge of being a pioneer, a miner and a business, in that area without other partners where we had to singlehandedly drive a lot of these initiatives. But having a partner like RAL can take us a long way.”
The Labour absorption process will also be biased towards local Small Medium and Micro Enterprises (SMMEs) and local labourers, who will benefit from onthe-job training and people development through provision of accredited training.
According to Exxaro, the company has to date spent R11.6m on labour complement, created 187 jobs onsite, prioritising the vulnerable groups; namely women, youth and people living with disabilities. The contractor on the Southern link road has already exceeded their contractual target of 60 jobs for the local community. And an amount of R36.6m has already been spent of SMME development and a further R337 000 was spent on training.
“Ga-Seleka projects are a good demonstration of how Exxaro Corporate Social Investment (CSI) strive to create a positive legacy and improve conditions of host communities by providing jobs, supporting local procurement, skills development, and ensuring sustainable social and economic benefits,” says the company.
RAL itself ringfence 30% of every project value to the employment of local SMMEs and 10% to the employment of local labourers in areas where it implements its construction projects.
Mutual benefits of the extension of the upgrade will predominantly assist with easy access to mining operations whilst also benefiting all other road users in the area by reducing travelling time and offering improved road safety for communities.
The conservative estimate for construction duration for this new road infrastructure project is ten months and it is scheduled for completion during the 2019/20 financial year.
“…THOSE WHO HAVE HAD THE EXPERIENCE OF WORKING WITH US HAVE INCREASED (THOSE) CONTRIBUTIONS SIGNIFICANTLY IN SUBSEQUENT PROJECTS”
Exxaro’s Executive Head of Coal Operations Nombasa Tsengwa and RAL’s Chief Executive Officer Maselaganye Matji during the MoA signing ceremony at Exxaro Headquarters in Pretoria at the end of April 2018
RAL and Exxaro’s first strategic partnerships project in Lephalale is due for completion by the end of November 2018. The extension of this upgrade will be completed during the 2019/20 financial year.