Our approach

We manage our environmental liabilities and rehabilitation in compliance with legislation and evolving responsible mining practices. Our holistic and integrated approach to land management, mine closure and concurrent rehabilitation* is unpacked on the next page.

In implementing this approach, we:

• Consider impacts on employees, communities, the environment, government and infrastructure
• Proactively manage environmental impacts to minimise residual liabilities (ie water quality and quantity, and topsoil health) that could affect Exxaro's financial performance
• Complete concurrent rehabilitation timeously
• Prevent water ingress into rehabilitated areas
• Calculate financial provisions in terms of GNR 1147 (financial provision for prospecting, exploration and mining operations). Our sustainability and finance departments, in conjunction with independent technical and financial specialists, conduct external assessments annually at all coal and energy operational sites, as well as our coal mines in closure
• Approve and update liabilities through internal governance processes

Identify impacts and rehabilitation areas	Add identified impacts Remove rehabilitated areas
Adjust tariffs and escalation	Current tariffs and producer price index escalation
Separation of immediate and LoM cost	Apply definition and optimisation option
Calculation and prioritisation of concurrent liability	Prioritise rehabilitation according to environmental risk assessment Calculate volumes to be moved during concurrent rehabilitation
Scheduling of concurrent rehabilitation	Schedule rehabilitation according to mine plan schedule
Budgeting	Five-year slices: first year per month and next four years per annum
Reporting	Quarterly physical movement against budget

We also aim to deliver on our closure and rehabilitation strategic objectives of:

• Embedding concurrent rehabilitation and mine closure in the management of operations at BUs
• Aligning with rehabilitation standards that ensure sustainable alternative post-mining land use (including vegetation that can be used for carbon sequestration)
• Clear and measurable concurrent and ongoing rehabilitation targets
• Building accountability into operational management KPIs
• Reducing financial environmental obligation

Our approach aligns with our Social Impact strategy objectives by integrating the following principles:

• Equip employees with portable skills to pursue alternative employment and participation in meaningful economic activity
• Develop and implement a communication plan for employees
• Employee training to implement and manage mine closure plans
• Address health and safety issues as well as employment opportunities for communities
• Socio-economic activities that must continue after mine closure
• Identify the needs and expectations of stakeholders and socio‑economic impacts
• Assist host communities to acquire skills for commercial activities and infrastructure use after mine closure
• Ensure opportunities are available to improve quality of life
• Align closure with community expectations to honour SLP commitments
• Develop and implement plans for engagement with communities, government and NGOs, among others
• Help mine owners and operators achieve liability-free closure within a reasonable timeframe
• Management's commitment to implementing the closure plan

*Mine rehabilitation is the restoration of the post-mined landscape to the intended post-mining land use.

Integrated stages of mining and mine closure planning

We strive to integrate land and liability management in daily mine planning to minimise final closure costs for each operation and optimise final land use after closure.

• Equip employees with portable skills, eg vegetable farming to pursue alternative employment and participate in gainful economic activity
• Develop and implement a communication plan for employees
• Employee training to implement and manage mine closure plans

• Include power lines, water pipes, buildings and dams
• Retained if it can be used to implement and support a sustainable final land use
• Incorporated into the final closure environmental management plan and donated to a relevant entity managing the implementation of these

• Includes any redundant but serviceable assets such as vehicles and furniture
• Retained if it can be used to support social impact programmes and transferred to a relevant entity managing their implementation

We annually review our mine closure and rehabilitation obligations and rehabilitation plans and closure objectives are amended after environmental management programme performance assessments. Cost estimates of activities in the concurrent and final closure rehabilitation programme are reviewed and adjusted. External auditors visit our sites, review documents and audit the environmental liability bi-annually. This highlights potential rehabilitation alternatives that could decrease the long-term closure liabilities of operations.

Exxaro's Environmental Rehabilitation Fund (EERF) and additional bank and insurance guarantees provide for new developments and cover shortfalls in financial provisions. The EERF's assets are managed in terms of asset and liability modelling aligned with risk, return and liability on each site. The objective is to maximise investment growth in the cost of liability provisions. An external specialist supports EERF trustees with technical skills required to profile and identify suitable structures for assessment by the trustees. Current implementation includes:

• Two income building blocks benchmarked to cash rates and investing in government treasury bills, banks and corporate paper
• Three growth building blocks targeting inflation-linked returns and investment in insurance and bank-guaranteed products
• Equity-driven portfolios without explicit investment guarantees but portfolio managers controlling capital risk by managing volatility

Programmes, such as the MSP, aim to address health and safety issues as well as employment opportunities for communities.

Each BU has five-year conceptual concurrent rehabilitation plans, schedules and associated budgets to:

• Set measurable targets
• Avoid backlogs and related impact on rehabilitation liabilities
• Enable managers to implement strategies without cash flow constraints
• Include concurrent rehabilitation in operational tracking

Our performance

Exxaro's rehabilitation successes since 2002