Our environmental stewardship

How we deliver value through our natural capital

We understand that mining can result in long-lasting environmental impacts if unmanaged. Our strategy continues to guide our approach in managing our environmental impact — protecting the natural resources on which we rely. We manage the impact of our activities on the environment and society by incorporating performance principles into our ESG management systems, environmental policies and practices. We comply with local legislation, management standards, and current and future-based best practice.

Exxaro's wheel of excellence ensures our approach to environmental stewardship is consistent across the group. It effectively integrates new assets to align our BUs in implementation, compliance, monitoring and reporting processes. It also guides BUs in acquiring necessary competencies.

Performance snapshot

Climate change adaptation and resilience

From governance to strategy, risk management and capital allocation, among others, climate change and its impact on our business and stakeholders are central to our thinking and actions. Our ability to create sustained value now and into the future drives our response to the climate change agenda.

Our employees, contractors, customers, suppliers and communities play a critical role in our ability to address climate change issues. Exxaro's collaborative, inclusive and partnership approach to climate change enables us to continue on our journey of being carbon neutral in a just manner.

Aligned with TCFD recommendations, Exxaro's Climate Change Response strategy and decarbonisation plan guide our approach to mitigating the impact of and addressing climate change while prioritising adaptation and building resilience.

To achieve this, we are:

Our performance

Prioritising adaptation and resilience

Our awareness, training and education initiatives not only deepen our knowledge as an organisation, but also stimulate behaviour change in pursuit of climate change adaptation and resilience at our operations and in communities.

Key initiatives implemented this year included:

• Exxaro climate change masterclasses: Exxaro has been facilitating climate change masterclasses for the past two years as part of employee awareness, education and behaviour change. Classes are held throughout the year
• The decarbonisation campaign and the climate change course: The first phase of the campaign encouraged employees to participate in a 10-week personal decarbonisation challenge and complete the innovative climate change course. Weekly challenges on LetsConnect encourage and reward planet-saving behaviours. The second phase is planned for 2024 and will focus on decarbonisation projects being implemented at BUs
• Employee carbon footprint calculator app pilot: The app is a gamified platform that tracks, calculates and quantifies an employee's emissions profile
• Community awareness and education: For the past two years, Exxaro has run these campaigns to create awareness and educate community members about climate change issues. Topics include the negative impact of pollutants on the environment and their health. Campaigns align with the goals of our Social Impact strategy, and going forward will include an increased focus on embedding knowledge and assisting communities with access to renewable energy

Carbon intensity decreased by 20% due to energy efficiency measures at our operations. Ongoing operational efficiency programmes implemented include working with our engineering teams and a service provider to identify potential group-wide projects to implement at our operations with significantly high energy usage. We are systematically reducing the emissions of our Grootegeluk vehicle fleet by addressing logistics constraints using analytics tools and implementing optimisation solutions that include:

• Mine digitalisation
• Dispatch and fleet allocation optimisation
• Truck payload management
• Shovel and truck cycle variability management
• Road condition and construction opportunities
• Out-of-cycle waste reduction

We continue efforts of promoting renewable energy as a cost-effective technology through the anaerobic biodigester programme, which was launched with SANEDI and UNISA in 2019.

Our operational efficiency drive aims to address challenges experienced in delayed internal reporting.

Air quality management

Addressing the deterioration of air quality remains one of our top priorities, as pollution has significant negative environmental and social impacts. Our risk‑based approach ensures that we continue striving for air pollution reduction for our people and planet.

Pollutants such as dust and particulate matter (PM) emanate from opencast mining activities that unavoidably generate dust, posing health and safety risks and negatively impacting the environment.

To address this, we aim to progressively reduce air quality emissions (dust fallout, PM₁₀ and PM_2.5) within our operating boundary. Our approach ensures compliance with environmental legislation and regulatory requirements, and incorporates:

Our performance

We apply the non-residential limit for compliance assessment because our operations are located in industrial areas. In areas where host communities are located close to our operations, we apply the residential limit compliance assessment. During the year, Exxaro intensified all efforts to prevent and mitigate dust fallout.

The multi-pollutant monitor installed at Grootegeluk is in trial phase. The monitor will measure SO2, PM and NOx, all of which are pollutants that can impact health and the environment. Calibration activities on the monitor during 2023 ensured credibility, good quality results and proper placement to minimise breakdowns and provide security.

For the past two years, we have run communication campaigns on air pollution and GHG emissions in our communities to raise awareness about the environmental impacts associated with mining activities. Quarterly feedback sessions ensure campaigns remain relevant and help us determine how we can assist communities in reducing the impact of mining activities.

Energy efficiency

Energy efficiency is a critical component of our decarbonisation journey. Managing our consumption and pursuing alternative energy sources in a just and sustainable manner will ensure our long-term resilience, enabling further progress towards transitioning into a low-carbon business.

Our energy efficiency efforts are critical for us to achieve our goal of being carbon neutral by 2050. Exxaro's energy and carbon management programme outlines how we reduce our direct emissions and energy consumption. The programme is supported by:

Our performance

Our primary energy sources included 41% electricity (2022: 40.7%) and 59% diesel (2022: 59%). Total energy consumed increased by 0.15%

Total electricity and diesel intensity decreased in 2023 by 9% based on the increase in RoM tonnages and improvement in energy and productivity performance in the mining areas across BUs.

Based on the 8.64% increase in RoM tonnages, electrical energy intensity decreased by 7.72% and diesel energy intensity decreased by 10.04%.

According to our group STI scheme rules, Belfast, Leeuwpan, Matla and FerroAlloys met energy intensity targets, while Grootegeluk and the group did not. The group did not achieve its 2023 energy intensity STI target based on the 2023 GIS rules. However, comparing the group total consolidated energy intensity performance for 2022 with that of 2023 (in GJ/kilotonne) shows that there was an improvement in energy intensity performance year on year. The energy intensity performance for 2022 in GJ/kilotonne was 29.59 with the 2023 performance at 27.43, which represents a reasonable improvement in energy intensity performance year on year.

We experienced challenges in data acquisition (validity, frequency and resolution) in the second quarter of 2023, which impacted our ability to analyse, respond and correct declining energy performance at Grootegeluk. We are improving our data collection process to enable real-time behaviour management. We developed an analytical tool to link plant production throughput with electrical energy per plant module at Grootegeluk, enabling us to monitor and manage energy intensity performance through the plant. We also implemented advanced process control in the plant modules to further improve energy efficiency.

Based on the positive results from FuelActive units installed on three haul trucks at Mafube, a similar pilot was launched on five haul trucks at Grootegeluk. The intent is to gauge the improvement in fuel consumption (expected between 3% and 5%) on the haul trucks and reduce maintenance costs.

Grootegeluk will be replacing its heavy mobile haul truck fleet, with carbon emissions and sustainability prioritised in selecting the appropriate best-fit technology partner. We are engaging with our original equipment manufacturers on this process, ensuring roadmaps will incorporate decarbonisation, sustainability and transitioning from traditional diesel-fuelled haul trucks.

Water security

Our operations span across large geographical areas, with water facilities and mining areas connected to the water resources and atmosphere. The overall in and outflow of water within the mine boundary are closely coupled to local climatic conditions. To ensure we safeguard sustainable access to sufficient, acceptable quality water, we implement site-specific water management plans influenced by climate change variability, watershed risks and planning scenarios.

Water security management is a critical component of our overall operational and environmental management as we are sensitive to South Africa's water scarcity and the effects of climate change, particularly increased temperatures and rainfall variability. Without controlled efforts to maintain water security, we risk production stoppages, financial loss and non-compliance with water authorisations. The consequences could impact our licence to operate, increase competition for scarce resources, limit investment opportunities and damage our biodiversity efforts.

We manage water-related risks, minimise impacts and operate efficiently by:

• Reducing, reusing and recycling water in line with water conservation plans that support the National Water Resource Strategy
• Providing suitable barriers to our dirty water facilities that prevent groundwater contamination
• Committing to protecting and improving water quality by discharging treated water at our operations through reverse osmosis and/or sewage treatment plants
• Incorporating climate analytics (ENSO and SA Weather Services seasonal outlook) into our water management decision-making processes

Our tailings management system focuses on operation, monitoring and decommissioning of tailings dams. It uses comprehensive risk-based management and governance systems in line with internationally recognised good practice. Exxaro aims to align tailings management with the Global Industry Standard on Tailings Management.

Our performance

These improvements are mainly due to lower water abstraction from the Mokolo Dam at our Grootegeluk operation as we increased recycling of water from the pit. The newly constructed reverse osmosis plant at our Belfast operation also allowed much of the water abstracted from the pits to be returned to the catchment as an offset.

Our water intensity targets align with industry norms and site-specific conditions. The 180L/t RoM target is well below the coal industry average of 380L/t RoM. This supports our strategy to reduce water intake and support the DWS's objectives to increase water conservation and reclamation. Our water intensity improved by 30% due to factors mentioned above.

Our 38% water recycling ratio target (defined as the total water recycled divided by total water used including recycled water) is substantially higher than the coal industry average of 6%, as outlined in the national water use efficiency benchmarks of the DWS. In 2023, we exceeded our performance from 2022 by 18.6%.

Projects implemented

Biodiversity protection

Safeguarding our natural ecosystems is an essential part of our business and rehabilitation initiatives. Through conservation and sustainable practices, we strive to be responsible stewards of the environment – mitigating biodiversity loss and building resilience against climate change.

Without responsible practices, mining activities contribute to biodiversity loss, which affects wildlife, economic activities and people who depend on natural resources. This is compounded by climate change – a main driver of biodiversity loss. Our biodiversity management plans guide our efforts in the protection and conservation of biodiversity-rich ecosystems within mining right areas, and incorporate:

Recognising that we need to address climate change and biodiversity loss simultaneously, we adopt nature-based solutions that enable biodiversity protection and restoration as part of our response to climate change.

Our performance

We focused on monitoring our wetland rehabilitation areas this year, with rehabilitation of new areas planned for the 2024 financial year.

Mine closure and rehabilitation

Our integrated closure planning and concurrent rehabilitation will ensure we leave a sustainable post-mining legacy – building momentum throughout our operations' lifecycles as we work towards enhancing our positive impact and mitigating our negative impact.

We manage our environmental liabilities and rehabilitation in compliance with legislation and evolving responsible mining practices. In implementing our holistic and integrated approach to land management, mine closure and concurrent rehabilitation, 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

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.

Our performance

The increase of 1 404ha in land disturbed is due to the inclusion of Mine 1 development at Matla as well as additional areas mined at the opencast operations at Grootegeluk, Leeuwpan and Belfast. The increase in our performance of land rehabilitated of 132ha is due to increased rehabilitated land handed over to farmers at Matla to utilise. The backlog in rehabilitation at Leeuwpan will be addressed in 2024 with a dedicated five-year budget to clear the backlog volumes for backfilling pits.

Although the implementation date was set (19 February 2024), we await promulgation of draft financial provision regulations for mine closure and rehabilitation (GN 792) issued on 27 August 2021. Discussions continue between the environmental policy committee of the Minerals Council, on behalf of Exxaro and our mining peers, and the DMRE. The proposed regulations will repeal GNR 1147. All our BUs will be continuously assessed according to GNR 1147. The implementation of GNR 1147 was postponed indefinitely by government. The delays in the government's implementation of GNR 1147 creates legislative uncertainty in the financial provisions for environmental rehabilitation areas.

Exxaro's rehabilitation successes since 2002

Waste management

Managing our waste streams responsibly is an important part of how we minimise environmental degradation. We achieve this through prevention, minimisation, reuse and recycling while ensuring safe waste disposal as the last option.

We manage the impacts of our waste streams by aligning our policies and procedures with sustainability principles and leading practice. We regularly review our policy and management standard to ensure relevance and alignment with legislation. Our waste management practices incorporate:

• Our cradle-to-cradle approach, which minimises waste production, ensuring waste from one process is used in other processes to encourage elimination or minimisation of waste
• Exxaro's management standard for hazardous and non-hazardous waste
• Our waste management hierarchy to avoid, reduce, reuse and recycle, which prevents and avoids waste as much as reasonably practicable
• The proximity principle (treat and dispose of waste in reasonable proximity to the point of generation), duty of care (we are ethically responsible for waste management) and the precautionary principle (we are proactive in mitigating environmental risks)
• Monitoring, measuring and reporting data and performance
• Awareness and training across BUs forms part of our induction for new employees

Our performance

General waste recycled decreased by 2% due to less volumes of high-density polyethylene recycled at Grootegeluk.

The total weight of hazardous waste generated at our managed coal operations and sent to landfills increased to 3 186t (2022: 1 624t). The 54% increase in the amount of hazardous waste sent to landfill at Grootegeluk is due to the workshop wash bay silt being included as hazardous waste as of April 2023.The decision was made based on a DWS finding indicating that the silt from the wash bays has the potential to pollute due to its hydrocarbon content and can thus not be disposed as plant discard. Alternatives are being investigated and the outcome of the waste classification will confirm the way forward.

The drive to improve housekeeping across the mine also added to this increase in waste being taken to the hazardous waste storage area for disposal.

To address the increase, the mine will investigate and implement the delisting of the workshop wash bay silt in 2024 and 2025.

Exxaro is also working on the following initiatives to further improve our waste management approach:

• Innovation and alternative treatment for integrated waste management
• Evaluating cost-effective options for recycling, reuse, emissions reduction and other end-of-life recovery options
• Opportunities for cost saving and optimisation
• Industrial symbiosis to stimulate green business effectively