Board key matters in focus

Strategic direction, risk and performance

As sustained value creation requires responsiveness to significant social and environmental challenges, we annually assess our strategy and formally present it to the board for approval.

After a two-day strategy session, the board reaffirmed the Sustainable Growth and Impact strategy while monitoring its progress and execution. The inclusion of energy transition minerals into the growth pipeline was noted. The ESG framework remains the lens through which the Sustainable Growth and Impact strategy is viewed.

How ESG is integrated into our strategy

The strategy development and review process follows a risk and opportunity assessment, including emerging risks and material sustainability issues.

Our risks and opportunities

The top five risks for 2024 and key events we anticipate may impact our ability to achieve our strategic imperatives for 2025 include:

 

Geopolitical risk and competition risk are emerging risks that were identified for investigation by the executive risk committee to assess their potential impact on the strategy.

Our strategic performance management dashboard enables visibility of strategy execution and facilitates strategic conversations at the right time within a tiered group governance structure.

Our strategy

Coal mine dust class action

As reported previously, a coal mine dust class action litigation was launched against Exxaro on 23 November 2023. 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 has duly served and filed our answering affidavit. The Deputy Judge President assigned the dates for the certification hearing, which will take place from 25 November 2025 to 5 December 2025.

Exxaro takes our health and safety obligations seriously. Our management team continues to work on addressing risks and ensuring preventive measures are properly implemented to address the potential of any novice occupational health diseases at our operations.

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 few years and the possible impact on our sustainable growth, the board logistics committee was established early in 2023 to 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

The logistics committee is monitoring the reform taking place in South Africa, with government assuming more responsibility for rail reform, as evidenced by the gazetting of the Rail Network Statement at the end of 2024. It also considered a prefeasibility study focusing on alternative solutions to increase rail infrastructure capacity.

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 our robust Sustainable Growth and Impact strategy. In addition, a peer review of Exxaro's decarbonisation roadmap has commenced to ensure its credibility and subsequent implementation. Included in the review process is the climate transition action plan.

Our board ensures effective oversight of climate-related impacts, risks and opportunities through the SERC and RBR committee.

In October 2024, the board held a governance session where it considered climate interactions as well as water challenges and trends.

Climate change mitigation, adaptation and resilience

Climate Change Response strategy report

Adapting to a changing context

The first five months of 2024 started with several interesting local and global dynamics. The pace of change in the industry has elevated and could present opportunities for Exxaro to further entrench our Sustainable Growth and Impact strategy. The burning platform on our coal business has remained, with the world moving towards a low-carbon economy, and energy security remaining the key focus globally. Further, with almost 50% of the world going through elections during the year, the board considered the social issues and geopolitics that could have a significant impact on our industry and society.

The board's strategy session was themed "positioning Exxaro to win" and included the following expert-led topics:

• Commodities outlook – supply and demand dynamics, price forecasts, and trends on all commodities including energy transition minerals
• M&A landscape and insights – scenarios for the growth phase, providing a view on acquisitions in the last decade, and considering China and Middle East competition for assets
• Energy landscape– the global current energy landscape, market trends

Divestment of non-core assets and investments

FerroAlloys

Exxaro has made significant progress in disposing of our entire shareholding in Exxaro FerroAlloys Proprietary Limited, with the sale and purchase agreement expected to be concluded in the 2025 financial year.

Innovation

Innovation and digitalisation are integral to Exxaro's culture, driving business resilience and empowering our people to thrive. The board approved a refreshed innovation strategy, aligning with advancements in the digital and technological landscape.

With the evolution of AI, we aim to go beyond visualisation to prescriptive analytics through advanced solutions such as digital twins, further strengthening our data-driven decision-making capabilities. By leveraging data science and AI, we enhance automation based on pre-programmed actions while advancing our automation journey.

The integrated Mineral Resource Management lever, powered by AI, will enable us to drive Resource intelligence. Predictive maintenance will help the organisation evolve towards smart assets that not only anticipate potential failures but also recommend the most effective corrective actions improving efficiencies.

The refreshed iNNOVAXXION will be deployed safely and responsibly, supported by our robust governance and risk management structures and policies. This will unlock untapped value and support our Sustainable Growth and Impact objectives.

Technology-driven innovation and sustainability

Governance roadshow 2024

We held our annual governance roadshow for domestic equity shareholders from 30 September to 2 October 2024. A series of meetings was held with shareholders representing 69.43% of Exxaro's total domestic shareholding.

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 performance conditions in the Exxaro incentive scheme, remuneration-related ESG measures and the deferred bonus plan (DBP), which was a shareholder concern in previous years. Given the feedback received from shareholders in recent years, Exxaro undertook a detailed review of the incentive schemes.

The progress with Exxaro's vertical and horizontal wage gap was discussed along with the potential impact of the recently promulgated legislative disclosure requirements. The company is confident that work in this regard is well advanced and will consider commencing with disclosure pertaining to the wage gap.

Changes to the board and management

In terms of paragraph 3.59(b) of the JSE Listings Requirements shareholders were informed on 6 February 2025 of Dr Nombasa Tsengwa's resignation. The board thanked Dr Tsengwa for her years of service and wishes her all the best in her future endeavours.

Following an expedited and targeted selection process, the board appointed Ben Magara as the incoming CEO, effective 1 April 2025. Ben stepped down as an independent non-executive director and succeeds acting CEO, Riaan Koppeschaar, who continues his role as FD. Together with an experienced management team, the board is confident that the company will stabilise and be led by focusing on meeting customer demand and driving safe, disciplined and efficient production, while creating value for stakeholders.

Board diversity and independence

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

Board composition

Board ESG direction and oversight

The board sets the ultimate direction for sustainability considerations, including committee and individual responsibilities for overseeing sustainability-related impacts, risks and opportunities by ensuring these are reflected in board and committee terms of reference, annual work plans and other relevant policies and processes, which are reviewed annually.

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

	Audit	Investment	Logistics	Nomination	Remuneration	RBR	SERC
ENVIRONMENTAL
Climate change		x				x	x
GHG emissions						x	x
Decarbonisation						x	x
Energy, water and waste						x	x
Pollution						x	x
Environmental compliance						x	x
Biodiversity and land use						x	x
Resource scarcity		x				x	x
SOCIAL
CSI						x	x
Training and education							x
Diversity and equal opportunity					x	x	x
Non-discrimination					x	x	x
Human rights						x	x
Health and safety						x	x
Privacy and security	x					x	x
Labour relations					x	x	x
Local community impact		x				x	x
GOVERNANCE
Board diversity and structure				x			x
Board performance				x
Ethical culture	x			x			x
Executive pay					x
Anti-bribery and anti-corruption	x					x	x
Audit and assurance	x					x	x
Stakeholder engagement	x		x	x	x	x	x
Procurement practice	x		x			x	x
Risk management	x	x	x			x
Regulatory compliance	x			x	x	x	x
Internal policies	x	x		x	x	x	x
Information technology governance	x					x
Tax transparency	x					x	x

Building resilience by decarbonising today for a sustainable tomorrow

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 board approval.

Other policies supporting our ESG focus are referenced throughout this report. 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. This approach highlights the importance of ESG in everything we do.

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

Exxaro's ESG governance structure beyond compliance

Board oversight