Operating outlook

Anticipated global trends and challenges across short, medium and long-term time horizons inform Exxaro’s strategic vision.

Short to medium-term outlook in our markets

In the short term, commodity markets are poised to receive support, albeit limited, from the global monetary policy easing cycle currently underway, through several interlinked mechanisms such as currency markets and improving investor appetite for risk assets. Easing cycles also signal a central bank’s intention to support economic growth, which improves demand expectations for industrial commodities. However, uncertainties persist due to the implementation of proposed policies under the US administration. In addition, in the period since the close of the financial year and issuing this report, geopolitical tensions have again surfaced as a significant challenge.

Over the medium term, evolving geopolitical and geoeconomic conditions will likely continue to influence market trends. These include demand for critical energy transition metals, China’s slowing economy and its continued dominance in key production and processing stages. These conditions are driving nations to prioritise domestic or allied resource security, which plays a pivotal role in shaping market trends.

Medium to long-term outlook

Climate change

The World Economic Forum flags extreme weather events, biodiversity loss and ecosystem collapse as significant global risks over the next decade. Extreme weather events are anticipated to increase in severity, necessitating improved monitoring, reporting and evaluation systems, stronger regulation and increased funding. While the 30th United Nations Conference of the Parties (COP30) highlighted a lag in global climate action and ambition, the outcomes of the conference will help inform global responses to climate change mitigation. These included an expectation to increase climate adaptation finance threefold by 2035, new initiatives to support countries in achieving their Nationally Determined Contributions, the creation of an impactful transition mechanism, an agreed set of indicators for the Global Goal on Adaptation and an initiative to keep the question of phasing out fossil fuels top of mind.

Energy transition

The energy transition is driving significant changes in energy systems and markets. The global use of primary materials will increase significantly in the coming decades, according to the Organisation for Economic Co-operation and Development. Concurrently, the International Energy Agency projects that several energy transition metals will experience supply deficits in the market as demand climbs, resulting in higher prices. However, most of these metals are also subject to high market volatility, especially given the high market concentration of mining and production sources. At the same time, increased mining activity must consider and address the environmental impacts of resource extraction to avoid amplifying the negative effects of climate change.

Impactful transition

The shift to cleaner energy is reshaping the mining industry. As demand for fossil fuels declines and, while the appetite for green energy grows, industry players must adapt and reposition to be sustainable. Furthermore, the low-carbon transition carries considerable socio‑economic implications, influencing employment and economic stability in mining communities. The transition to renewable energy must consider social impacts to ensure an inclusive future.

Stewardship

Over the medium to long term, the importance of responsible resource management and sustainability is projected to increase. We are mindful of our social and environmental impacts, as well as the high standard of governance required for us to be financially sustainable. Investors, communities and other key stakeholders expect greater transparency, with government policy and regulation shifting in response. Changing workforce dynamics mean that we need to advance and retain the best talent in the market, as developments in mining technology will augment traditional mining jobs and require new skills. As urban populations grow, commodity and energy demand will rise along with an increase in extreme weather events, requiring mines to be mindful of their environmental impacts, including upstream and downstream emissions.