Stakeholder management

• Short-term outlook of investors
• Climate change activism with increasing pressure from ESG investors to exit thermal coal. In line with the Paris Agreement, many institutional investors are committing to reducing exposure to coal in their portfolios, which will result in significant constraints in access to capital for companies' operating coal assets going forward

• New entrant in the top 20 shareholder list is Arrowstreet Capital
• From a geographic perspective, the overall shareholding continues to be dominated by South Africa, remaining largely flat for the year at 77% with offshore at 23%

Our investors are the owners of our business and have expectations regarding the value creation of their investment in Exxaro. Through clear and transparent communication of our strategy, distribution policies and achievement of key milestones, we can align with their expectations and grow trust in our organisation to protect returns, prudently allocate capital within the business and ensure transparency regarding our future capital allocation plans - all of which strengthens our access to capital.

Exxaro is committed to ongoing transparent engagement with investors. Given the focus on climate change, we particularly emphasise targeting and engaging with ESG investors to communicate about our Sustainable Growth and Impact strategy, which aims to responsibly optimise our coal business, reposition our business to capture transition opportunities, and prioritise the just transition for workers and communities.

We engage with investors and shareholders by facilitating investor roadshows, including one-on-one and group meetings, hosting capital market days and financial results presentations as well as participation at investor conferences locally and abroad.

We measure the quality of our relationship through the annual investor perception survey.

• Due to the constantly evolving ESG and regulatory environment, investors are increasingly scrutinising listed companies' strategies for responsibly building sustainable businesses for all stakeholders involved and the planet at large. This has led to a greater demand for improved transparency and reporting around climate change goals from listed companies
• Global investors tightening their criteria around investing in fossil fuel producers to mitigate the impact of climate change will continue to constrain access to capital for coal-intensive companies

Exxaro's growth prospects remain top of mind with the need for clarity on the just transition and implementation of the Sustainable Growth and Impact strategy. In addition, poor performance of Transnet's rail service raises concerns about the negative impact on the coal business while domestic market demand for power station coal remains depressed as Eskom is fully stocked. Additional concerns include the impact of COVID-19, climate change activism amid calls for withdrawal from the thermal coal business, capital allocation and execution risk of the new minerals strategy, and cost escalation.

We want to "power a clean world" with a just transition to a carbon-neutral future. Our Sustainable Growth and Impact strategy aims to diversify our earnings by 2030 as an interim step to becoming carbon neutral by 2050 - by building a resilient, future-facing portfolio; increasing customer diversification and generating multiple revenue streams; and maintaining our own ESG performance to be a catalyst for sustainable economic and environmental development. This strategy is anchored on measurable and multi-stakeholder value creation with a strategic objective of promoting business resilience in the short term and portfolio robustness in the medium to long term. We are well positioned to continue delivering value through portfolio optimisation, ensuring sustainability of our business, operational excellence and capital allocation priorities.

• Key customer dependency
• Eskom systemic risk

We engage regularly via telephone, email and virtual meetings, whenever possible, and at different levels in respective customer organisations. The pandemic has encouraged more frequent interactions with our customers, ensuring that we remain relevant and connected. This has also ensured responsiveness to stakeholder concerns and resulted in Exxaro marketing and logistics addressing issues in a timely manner. This has built relationships and allowed sustainable business to continue in unprecedented times.

We measure the quality of our relationship through:

• An internal assessment informed by various key data measured
• Effective and ongoing engagement with customers
• Effectively dealing with and resolving complaints

• Inability to have face-to-face discussions especially when discussing poor rail performance and the impact on deliveries. However, we continued to engage on a regular basis
• Managing supply-demand logistical challenges that emerged from producers had high stockpiles in 2021 and an abundance of product in the domestic market. The domestic marketing team had to sell coal domestically and establish new customer relationships via mostly virtual customer engagement methods

Quality product, consistent and reliable supply of product and responsive service.

Exxaro has clearly articulated its strategy to the market. Our stakeholders want to be kept informed and we communicate regularly to meet their expectations.

• COVID-19 concerns
• Eskom systemic risk
• Community unrest
• Safety and health concerns
• Cost competitiveness of products
• Climate change concerns
• Country risk (political)
• Inability to achieve financial targets
• Low commodity price

• In Limpopo, Mpumalanga, KwaZulu-Natal and the Eastern Cape, we have 2 741 vendors
• Procurement spend is segmented based on financial, price, supply and fraud risk
• Supplier spend is segmented across operational expenditure, capital expenditure, logistics and social investment expenditure
• Over 60% of Exxaro's procurement spend was directed towards black-owned and black women-owned suppliers
• In 2021, some 11% of Exxaro's procurement spend was directed towards SMMEs from host communities

As part of our risk management approach, we manage relationships with suppliers, crucial participants in our value chain, to achieve mutually beneficial operational, strategic and impact goals. Our supplier relationship management programme supports Exxaro's strategies by leveraging value chain partner capabilities. Supply chain management achieves this through joint initiatives aimed at cost savings, sustainability, supply security and business risk exposure mitigation. Exxaro is thus at an advantage to extract discretionary value and emerge as a "customer of choice" among strategic suppliers.

• Direct, proactive engagement with strategic suppliers as part of our supplier relationship management programme supports Exxaro's strategies by leveraging value chain partner capabilities through collaboration intended to deliver cost savings, achieve the sustainability mandate, ensure security of supply and mitigate business risk exposure so that Exxaro is at an advantage to extract discretionary value and emerge as a "customer of choice"
• Engagement methods include ad hoc contract reviews to assess performance and negotiate price, our quarterly contractor forum platform to share information on developments in Exxaro as well as safety, health and environmental issues and a biannual Supplier Day to recognise top performers

We measure our performance through a reputation survey, various external surveys and a self-assessment. The last reputation assessment was conducted in 2018.

We will provide an update in the 2023 reporting cycle.

Our stakeholders include emerging and established suppliers. The main expectation from suppliers includes:

• Business opportunities within Exxaro
• To be paid in full and on time
• To collaborate with Exxaro in creating shared value

Exxaro's sourcing strategies set out to concurrently optimise for performance and supply risk, financial and fraud risk and supply chain sustainability. Supply chain management activities and engagements with suppliers are aimed at preventing or mitigating such risks. For example, agile strategic and group sourcing, contract negotiation and innovation discussions are aimed at managing performance and supply risk. We are constantly reviewing and updating our policies and procedures to respond to the proliferation of procurement scams and fraud attempts. Ongoing improvements to our procurement processes are aimed at risk management and increasing transactional speeds for our suppliers.

In delivering on our purpose of powering better lives in Africa and beyond, our supply chain activities are aimed at increasing the participation of black-owned suppliers and those from host communities, reducing the environmental impact of Exxaro's business and enhancing our reputation while upholding sound corporate governance. Exxaro is fully compliant with the preferential procurement requirements of the B-BBEE codes and mining charters.