Board key matters in focus

Transitioning strategic direction

As sustained value creation is founded on good governance and responsiveness to significant social and environmental challenges, we continuously monitor and assess our strategy and formally present to the board for approval at least once a year.

The board considered progress, timing and scenario considerations related to the execution of the Sustainable Growth and Impact strategy. The board also approved the consolidated ESG framework as a lens through which to view the Sustainable Growth and Impact strategy.

As part of the strategy development and review process, we conduct a risk and opportunity assessment, including emerging risks and material sustainability issues.

Our risks and opportunities (integrated report)

Our top five risks for 2023 and the key events we anticipate may impact on our ability to achieve our strategic imperatives for 2024:

We developed a reimagined strategic performance management dashboard to enable visibility of strategy execution and facilitate strategic conversations at the right time within a tiered group governance structure.

Our strategy (integrated report)

Coal mine dust class action

On 23 November 2023, coal mine dust class action litigation was launched against Exxaro. The action relates to mineworkers who contracted coal mine dust lung disease in the form of pneumoconiosis caused by exposure to coal mine dust at various Exxaro mines, as well as dependants of those mineworkers who have died and whose deaths were probably attributable to coal mine dust disease.

Exxaro takes its health and safety obligations seriously and is investigating the facts pertaining to the class action. Our management team continuously works on addressing risks and ensuring preventive measures are properly implemented to address the potential of any novice occupational health diseases at Exxaro.

Preventive measures include:

• Occupational hygiene programmes
• Implementation of leading practices developed through the Mining Industry Occupational Safety and Health Dust Learning Hub
• Medical surveillance programmes
• Policies and standard operating procedures to define controls to prevent and mitigate exposure to health hazards in the workplace

Managing rail risk

In response to Exxaro's top risks for the past two years and the possible impact on our sustainable growth, the board established a non-remunerative ad hoc board logistics committee early in 2023 to monitor and report to the board on:

• The development of long-term solutions for logistics access to international markets
• The identification of medium-term solutions and alternatives and related matters

Based on the longer-term nature of logistical challenges within the industry and, on recommendation from the nomination committee, the board approved this committee as a standing board committee.

The following directors were appointed as members:

Climate change response

We believe our greatest opportunity is to help steer South Africa towards a sustainable future by focusing on low-carbon minerals and energy with the goal to be carbon neutral by 2050. The board goes beyond compliance and responds to climate change through its commitment to mitigating the impact of climate change with a robust Sustainable Growth and Impact strategy.

The board oversees climate-related impacts, risks and opportunities. These are mainly included in the SERC and RBR committee terms of reference and annual work plans.

An in-depth analysis of the Intergovernmental Panel on Climate Change's Sixth Assessment Report was provided to the board and executive in 2021, which is available to all newly appointed directors and executives. This analysis included an up-to-date physical understanding of the climate system and climate change, presented by Prof F Engelbrecht of Wits. Any updates to the Intergovernmental Panel on Climate Change's Assessment Report will be presented to the board and executive management.

Climate Change Response strategy report (investor tab under integrated reports 2020)

Governance roadshow 2023

We held an annual governance roadshow for our domestic equity shareholders from 4 to 6 September 2023. A series of nine-hour- long meetings was held with shareholders representing 65.47% of Exxaro's issued capital as at the end of June 2023 and a total domestic shareholding of 77.68%.

The roadshow's purpose is to create positive engagement with our investor community and outline Exxaro's positioning on long-term value creation, leveraging ESG for business resilience and sustainability. The key objectives were to:

• Provide shareholders with a response to concerns or questions raised in previous engagements
• Provide an opportunity for in-person engagement with board members
• Confirm the board's trust in Exxaro's governance practices and support for management
• Obtain insights into how shareholders perceive Exxaro's strategy, capital allocation, remuneration and other management practices

Key issues included our strategy and capital allocation; our response to the proposed resolution on climate change lobbying; and clarification of remuneration structures and practices. The board is committed to keeping shareholders informed on our progress in addressing these.

Board diversity and independence

In terms of our directors' nomination and appointment policy and King IV, we annually review the structure, size and composition (including the skills, knowledge and experience) of the board and board committees. The following directors were appointed:

Innovation@Exxaro

Underpinning Exxaro's strategic objectives is our drive to enhance our business resilience through safe production, delivering financial results, effective capital allocation, compliance excellence, entrenching innovation and capitalising on digitalisation. Innovation and digitalisation are part of Exxaro's culture in driving business resilience and helping our people thrive.

The following digital enablers are highlighted:

• Through our Digital@Exxaro strategy we enabled value-driven intelligent integration of our value chain to deliver near real- time optimisation of our operations and implemented several initiatives
• We adopted a systems approach to develop optimised energy solutions and drive energy innovation by identifying priority areas for innovation that fosters the development of a range of energy options to meet the varying needs of end-users and foster innovation
• Exxaro applies a cloud-based digital sourcing solution, that allows suppliers to access the solution to receive and respond to tenders, requests for quotes or purchase orders; create and submit invoices and timesheets; and generally receive contracts for electronic signature
• Annual declaration of conflicts of interest are done by directors and employees electronically, which has been expanded to include consultants and contractors
• Through our learning management platforms, we execute our purpose of powering better lives, which include our employee learning platform, MyNexxt, and a separate community development platform, Powering Knowledge

We continue increasing our competencies across mining and energy. Through our growing competence in innovation, we have built multiple products and capabilities across our business that position us to meet our energy business targets.

Driving innovation and information management (integrated report)

Adapting to a changing context

We assessed the increased probability of sanctions against South Africa and the impact on the financial stability of the country, exacerbated by existing risks such as grey listing and higher interest rates, among others.

This matter received focused attention during our second annual board governance session, with the theme of "Adapting to a changing context: South Africa macro-security and grey listing". The risks were analysed to determine their impact on Exxaro and presented to the RBR committee and the board. These risks continue to be monitored.

Divestment of non-core assets and investments

FerroAlloys

As part of the broader Exxaro strategic review, we continuously seek opportunities to unlock value to support our Sustainable Growth and Impact strategy. We identified the FerroAlloys operation as no longer being a strategic fit within our envisaged minerals business portfolio. We do, however, believe that there is still significant value to be unlocked. The sales process to dispose of our entire shareholding in FerroAlloys has started. Exxaro aims to enhance the economic participation of black-owned companies in the South African economy. In line with this intent, Exxaro has earmarked the FerroAlloys disposal process to target black ownership.

Black Mountain

We continue to evaluate our options to dispose of our 26% shareholding in Black Mountain.

The board is comfortable that all ESG matters are distributed among the relevant board committees, as set out in the illustration below:

The board therefore sets our strategy and sustainable growth performance targets which include ESG matters, while our executive team manages and monitors ESG risk and impact, supported by management and various management committees.

Our management ESG steering committee supports the executive team in ensuring the integration of decarbonisation and other critical ESG factors. In addition to Exxaro's ESG commitments and climate change position statement, the ESG steering committee is responsible for developing and reviewing an ESG framework policy for approval by the board. Other policies supporting our ESG focus are referenced throughout this report. In addition to policies and to highlight the importance of ESG in everything we do, all reports submitted to our board, its committees and executive committee require management to reflect on strategy and financial implications and provide directors with a risk analysis of major risks applicable to the matter and its ESG implications.

Our tiered ESG governance structure reflecting management roles and responsibilities is illustrated below.