![]() #### CLIMATE CHANGE REPORT 2023 ![]() #### www.thungela.com ![]() 01 #### Introduction 1 Our South African operations 2 Our Australian operation 3 Our strategy 4 Chairman’s statement 6 Chief executive officer’s statement 7 Our year at a glance 9 02 #### Governance 10 03 #### Risk management 14 04 #### Our strategic response #### to climate change21 05 #### Metrics and targets 27 06 #### Appendices 33 Reporting criteria 33 Performance tables 36 TCFD Index 37 Glossary 38 Additional information 40 ## Contents #### About this report This report provides our stakeholders with an open and transparent account of our approach to climate change and is aligned with the recommendations of the Task Force on Climate- Related Financial Disclosures (TCFD). It has been informed by the International Sustainability Standards Board’s (ISSB ® ) S2 Climate-Related Disclosures. The report provides our stakeholders with transparent disclosure of Thungela’s comprehensive approach to manage and mitigate the impacts of climate change. The Thungela Integrated Annual Report and the Thungela Environmental, Social and Governance Report include additional information about the Group’s management, operations, financial performance and approach to sustainable development. #### Report scope In this document we incorporate our whollyowned operations and the joint ventures where we have management control. We also include information about operations where we do not have management control but hold a significant interest. This includes Mafube Coal Mining Proprietary Limited (Mafube), a 50% joint venture with Exxaro Mpumalanga Coal Proprietary Limited. We have accounted for 50% of Mafube’s greenhouse gas (GHG) emissions and energy consumption in line with the GHG Protocol, and 100% for all other indicators. We exclude environmental, social and governance (ESG) data from other activities in which we have a shareholding but do not have operational control, such as the Richards Bay Coal Terminal, the Phola Coal Processing Plant, Pamish and Rietvlei Mining Company Proprietary Limited, but these are included in scope 3, category 15: investments. Ensham mine is excluded from this year’s reporting, to allow for assessment and alignment and integration of key performance indicators, baselines, reporting criteria, risks and governance. This is aligned with the approach taken across all ESG indicators. #### Directors’ responsibility The Thungela Board of Directors acknowledges its responsibility for this report and delegated its social and ethics committee to oversee the integrity of its compilation. The board has collectively reviewed this report and confirms that it both addresses Thungela’s material climate-related issues and provides a balanced and appropriate representation of the Group’s climate change performance. Annual Financial Statements 2023 Integrated Annual Report 2023 #### impact DEMONSTRATING ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT 2023 #### Thungela’s 2023 reporting suite This report forms part of our overall suite of reporting documents for the year ended 31December 2023, and should be read in conjunction with the Thungela Integrated Annual Report, the Thungela Annual Financial Statements and the Thungela Environment, Social and Governance Report. THUNGELA CLIMATE CHANGE REPORT 2023 1 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 1 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY INTRODUCTION ![]() Mt – million tonnes LOM – life of mine ### Our South African operations Our seven mining operations are among the highest quality thermal coal mines in South Africa by calorific value. GREENSIDE COLLIERY Market:export and domestic Coal Resources ●  Measured: 8.5Mt ●  Indicated: 4.0Mt Coal Reserves ●  Proved: 15.0Mt ●  Probable: 2.1Mt Mining method: underground – bord and pillar LOM:5 years ZIBULO COLLIERY Market: export and domestic Coal Resources ●  Measured: 376.4Mt ●  Indicated: 55.5Mt Coal Reserves ●  P r o v e d : 27.1M t ●  Probable: 24.3Mtt Mining method: underground – bord and pillar and opencast LOM:8 years MPUMALANGA Middelburg eMalahleni MAFUBE COLLIERY 1 Market: export Coal Resources ●  Measured: 26.6Mt ●  Indicated: 1.4Mt Coal Reserves ●  Proved: 82.6Mt ●  Probable: 32.1Mt Mining method: opencast LOM:20 years 1 Resources and Reserves are shown at 100%. GOEDEHOOP COLLIERY Market: export and domestic Coal Resources ●  Measured: 243.8Mt ●  Indicated: 5.8Mt Coal Reserves ●  Proved: 6.4Mt ●  Probable: 0.2Mt Mining method: underground – bordand pillar LOM:2 years RIETVLEI COLLIERY Market: domestic Coal Resources ●  Measured: 5.0Mt ●  Indicated: 0.8Mt Coal Reserves ●  Proved: 20.9Mt ●  Probable: 2.5Mt Mining method: opencast LOM:8 years MPUMALANGA PROVINCE Coal Reserves ●  Proved: 26.4Mt ●  Probable: 2.1Mt Mining method: opencast LOM:6 years KHWEZELA COLLIERY Market: export and domestic Coal Resources ●  Measured: 39.5Mt ●  Indicated: 9.5Mt Coal Reserves ●  Proved: 7.4Mt ●  Probable: – Mining method: opencast LOM:2 years ISIBONELO COLLIERY Market: domestic Coal Resources ●  Measured: 16.4Mt ●  Indicated: — THUNGELA CLIMATE CHANGE REPORT 2023 2 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 2 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY INTRODUCTION ![]() ● QUEENSLAND Rail line (339km) Port of Gladstone Brisbane Bowen Basin ### Our Australian operation ENSHAM MINE Market:export Coal Resources 1 ●  Measured: 66.4Mt ●  Indicated: 969.8Mt Coal Reserves 1 ●  Proved: 32.0Mt ●  Probable: 34.6Mt Mining method: underground LOM:16 years 1 Reserves and Resources are shown at 100% Mt – million tonnes LOM – life of mine THUNGELA CLIMATE CHANGE REPORT 2023 3 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 3 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY INTRODUCTION ![]() Our five strategic pillars will enable us to deliver on our purpose to responsibly create value together for ashared future. Safety Drive Maximise Create Optimise our ESG aspirations the full potential of our existing assets future diversification options capital allocation Safety is our first value. We do not waiver in our commitment in operating a business that is free of fatalities and injuries. ESG remains at the heart of our strategy and informs our approach to our existing business, how we plan future projects and how we evaluate potential acquisitions. We maintain a broad ESG perspective recognising thesocio-economic implications in and around our business while managing a transition to a low-carbon future. We are continuously improving the competitive positioning and cash generation of the assets we own and operate today – through productivity initiatives and execution of approved capital projects on time and within budget. We are developing a future pathway for our business by pursuing geographic diversification and leveraging our core skills. We also consider and pursue the divestment or winding down of high-cost tonnes or stranded resources. Ongoing implementation of an efficient capital allocation strategy, based on our approved investment evaluation criteria to ensure that any ‘buy versus build’ options compete with additional shareholder returns in the form of additional dividends and sharebuybacks. OUR INVESTMENT EVALUATION CRITERIA Our investment evaluation criteria have been designed to optimally balance responsible stewardship with the need to upgrade our portfolio and create shareholder value. They are critical to all ‘buy versus build’ decisions, ensuring that investments compete with additional shareholder returns. We continue to evaluate all merger and acquisition opportunities against these criteria. Environmental Social Governance ● Consider the impact on global carbon output ● No net loss of biodiversity ● Support existing regional communities and supplier base ● Improved transparency and accountability Responsible stewardship Cost/margin curve Payback Capital intensity ● Target lower half of global seaborne cost curve ● Target short payback period ● Competitive capital expenditure (capex) per tonne when compared to alternative options Upgrade our asset portfolio Net present value (NPV)/capex Internal rate of return (IRR) Closure costs ● NPV ● Capital efficiency ● IRR higher than our nominal weighted average cost of capital (WACC) ● Cash flows to fund closure cost provisions beyond current life of mine (LOM) Maximise shareholder value ### Our strategy THUNGELA CLIMATE CHANGE REPORT 2023 4 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 4 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY INTRODUCTION ![]() STRATEGIC FOCUS AREAS We continue to make significant progress on the execution of our strategic focus areas. Safety Initiatives Outcomes Relentless drive to operate a fatality free business ● One fatality Drive our ESG aspirations Initiatives Outcomes Implement optimised rehabilitation and closure plans ● On-going optimisation of rehabilitation activities, planning and associated costs Operate with a credible pathway to net-zero by 2050 ● 30% reduction in scope 1 and 2 emissions by 2030 from a 2021 baseline. On-track to meet target, having achieved 11% emission reduction by the end of 2023. ● Delivering carbon intensity reduction initiatives across the business, including own-use solar photovoltaic installations at Zibulo and Elders ● Identifying emissions offsetting opportunities that support our strategy Continue to create shared value ● R312 million total contribution to employee and community trusts based on 2023 financial performance Maximise the full potential of our existing assets Initiatives Outcomes Deliver productivity improvements ● Several underground productivity initiatives successfully implemented Enable an optimised cost structure ● Cost containment initiatives implemented during 2023 with a focus on targeting cost reduction across the business Optimise use of rail and port infrastructure to enhance marketing optionality ● Established the Ensham coal sales book ● Enhanced train loading options through improved siding availability and use of third-party sidings Develop and deliver production replacement and life extension projects ● The Elders project in execution, on schedule and within budget ● Zibulo North shaft life extension project approved by the board in early 2023 and development on schedule Create future diversification options Initiatives Outcomes Divestment of stranded resources and high-cost tonnes ● Progress on divestment of remnant resources and plant infrastructure at Umlalazi Geographic diversification ● Completion of the Ensham acquisition in September 2023 ● Ongoing evaluation of additional organic and inorganic opportunities in line with our investment evaluation criteria Diversification where we have demonstrated our ‘right to win’ ● Ongoing evaluation of various options Optimise capital allocation Initiatives Outcomes Maintain liquidity buffer throughout the commodity cycle ● Liquidity buffer in line with business needs Evaluate internal projects and acquisition options which deliver superior returns over time ● Several acquisition opportunities were evaluated during 2023, with the successful completion of the Ensham acquisition Seek shareholder approval for a potential share buyback programme ● Announcement of share buybacks up to R500 million THUNGELA CLIMATE CHANGE REPORT 2023 5 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 5 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY INTRODUCTION ![]() ### Chairman’s statement Last year, Thungela published its scenario- based approach to net zero and its commitment to achieve a 30% reduction in scope 1 and 2 emissions by 2030 from the 2021 baseline in its inaugural Climate Change Report. The pathways to net zero, informed by climate scenarios and energy security in South Africa, provide a useful decision- making framework for the board. Given the importance of climate change action and the commitment by Thungela to contributing to the goals of the Paris Agreement (Article 2), the board is responsible for overseeing Thungela’s climate change strategy. Progress on the implementation of the strategy is reported to the board on a quarterly basis. These updates, together with six-monthly updates on key climate-related publications such asthe Intergovernmental Panel on Climate Change’s 2023 report and the World Energy Outlook published by the International Energy Agency, areconsidered when making strategic decisions. We believe that the global response to climate change should pursue dual objectives: limiting temperatures in line with the goals of the Paris Agreement, and supporting the United Nations Sustainable Development Goals (UN SDGs), driving inclusive and sustainable economic growth, and universal access to clean, affordable energy. The integrated approach that Thungela takes when it comes to ESG matters is consistent with this. There is a balance to be achieved between the need for a transition to a low-carbon economy and the moral imperative we have to empower the communities where we operate to enable the economic diversification required for their transition away from coal, the lifeblood of the region. While the world continues to use coal, it is crucial that the producers of this fossil fuel do so responsibly. Thungela, driven by its purpose to responsibly create value together for a shared future, is well positioned to remain a preferred producer of high-quality coal. In 2023, I engaged with stakeholders on climate change issues. We welcome the interest we have received and the constructive discussions that we have had with large institutional investors. I believe that these engagements are critical to long-term value creation. I am proud to be able to refer to Thungela as a responsible miner of coal and I am encouraged by the progress we are making towards our climate commitments. Sango Ntsaluba Chairman 24 April 2024 I am proud to be able to refer to Thungela as a responsible miner of coal and I am encouraged by the progress we are making towards our climate commitments. SANGO NTSALUBA THUNGELA CLIMATE CHANGE REPORT 2023 6 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 6 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY INTRODUCTION ![]() ### Chief executive officer’s statement We also believe that there is no silver bullet to achieving the goals ofthe Paris Agreement and that coal still has a significant role to play in the low carbon transition. We are supportive of the COP28 call for a “just, orderly and equitable” transition with accelerated efforts towards the phase-down of unabated coal power. Renewables alone will not solve our global energy challenges due to its low average load factors and intermittent output. In addition to the sheer volume of raw materials and critical minerals needed to manufacture solar and wind capacity, currently, coal generates over 60% of the electricity used for global solar photovoltaics (PV) manufacturing. Coal also plays an essential role in supporting renewable energy sources by ensuring grid stability and continuous power supply, which is vital for preventing power outages particularly given the intermittent nature of renewable energy. The growth of solar PV in recent years has been impressive. It accounted for 12% of global generation in 2022 and is set to rise to 30% by 2030. This puts power system flexibility at the centre of electricity security, with grids fast becoming a bottleneck to clean energy transition. Urgent and large-scale investment in electricity grids is required, with 80 million kilometres of grid infrastructure needing to be replaced or added by 2040. Without this, the prolonged use of fossil fuels will be required. Global coal investment in 2023 surpassed 2022’s levels. In most parts of the world, the majority of investment went towards maintaining existing operations and brownfield developments, while energy security concerns and power shortages in India and China have led to the development of new mines and the expansion of existing operations. Electricity generation from coal also reached an all-time high in 2023, up 1% from the same period in 2022. While investment in new coal-fired generation capacity has slowed in recent years, it nonetheless continues in order to meet global power needs. China, India and Japan sent a clear message at COP28 that abated coal and a wide range of decarbonisation technologies will play a vital role in powering their economies, underwriting energy security and supporting emissions reduction. Established technologies such as carbon capture, utilisation and storage (CCUS), ammonia, and sustainable biomass have the potential to significantly reduce CO 2 emissions from fossil fuels without compromising the security, flexibility, and affordability of electricity supply. This is not a coal versus renewables debate. Choosing one fuel over the other is not feasible nor is it realistic. If we are to be successful in our transition to clean energy, and deliver an energy system that is affordable, reliable and sustainable, we need to use all fuels and all technologies available to us. We are acutely aware that action to address climate change has never been as critical as it is today. The extreme weather events and record temperatures of 2023 are testament to that. JULY NDLOVU THUNGELA CLIMATE CHANGE REPORT 2023 7 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 7 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY INTRODUCTION ![]() Unfortunately, 2023 saw the number of people without access to electricity increase for the first time in decades to approximately 760 million people. This increase was seen primarily in Africa where 80% of the population lives without access to electricity. This further highlights the need for a responsible energy transition, to minimise the impact on energy security and the most vulnerable people in society. Climate change is a material issue that can affect our business through regulations to reduce emissions, carbon pricing mechanisms, extreme weather events or chronic changes to the climate, access to capital and permitting risks. Importantly, it can also affect our employees, host communities and suppliers. The strategic, effective and appropriate management of these risks is critical, both to our business and to the lives of the people that depend on us. with the implementation of the 4 MW renewable energy project at Zibulo which is expected to be operating before the end of this year. Being a responsible miner is core to our strategic ambition and our goal is to leave a positive legacy for host communities long after the last tonne of coal has been mined. These objectives are not only ethically sound, but also strategically essential. The ability to leave a positive legacy is dependent on our ability to maximise the value from our existing assets and to invest in creating a competitive business in the future. July Ndlovu Chief executive officer 24 April 2024 This report, provides an overview of our approach to climate change matters with regards to governance, risks and opportunities and our responses to these, our scenario-based approach to our path to net zero, and our performance over the last year. We are in the process of aligning Ensham to our ESG reporting system and standards, and ESG information relating to Ensham will be included in the next annual reporting cycle. We are committed to reducing our scope 1 and 2 emissions by 30% by 2030 (relative to our 2021emissions baseline) in line with our path to net zero by 2050. I am pleased with the progress we have made against our commitments, with an 11% reduction in scope 1 and 2 emissions in 2023 from the baseline, energy and carbon intensity improvements that reflect the dedication of our sites to energy efficiency improvements and THUNGELA CLIMATE CHANGE REPORT 2023 8 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 8 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY INTRODUCTION ![]() SCOPE EMISSIONS Scope 2 emissions (kt CO 2 e) 433 2022: 440 Scope 3 emissions (kt CO 2 e) 32,033 2022: 37,071 Scope 1 emissions (kt CO 2 e) 295 2022: 308 Total scope 1 and 2 emissions (ktCO 2 e) 729 2022: 748 Carbon intensity (kg CO 2 e per total tonne moved) 3.56 2022: 4.02 Energy intensity (MJ per total tonne moved) 15.33 2022: 16.16 Total energy consumed (million GJ) 3.14 2022: 3.01 ### Our yearat a glance GJ – gigajoule Kt CO 2 e – kilotonne carbon dioxide equivalent We achieved a ‘B’ rating by the CDP in 2023 #### Key performance indicators THUNGELA CLIMATE CHANGE REPORT 2023 9 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 9 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY INTRODUCTION ![]() ### Governance #### High standards of corporate governance drive our commitment to ESG by #### emphasising transparency, accountability and ethical decision-making. Sustainability governance Given the coal industry’s global context, it is imperative that we adopt both a transparent and pioneering approach to ESG. In addition to addressing present concerns, the board must actively seek out and pursue innovative ideas that will sustain the future of the business, while simultaneously ensuring that it leaves a positive legacy for post mining landscapes. The board retains accountability for our ESG strategy, initiatives, progress and reporting. It is also tasked with evaluating our susceptibility, and assessing our management of significant environmental and social risks. It delegates responsibility for managing impacts on the economy, environment and people to the chief executive officer (CEO) and his executive committee. ESG governance at Thungela encompasses: • Setting clearly defined goals and objectives • Emphasis on risk management and internal controls • A thorough understanding of ESG structures, processes, risks and opportunities • Honest and transparent reporting of ESG performance • The utilisation of best practice standards to elevate sustainability efforts Please refer to page 130 of the Integrated Annual Report for the health, safety, environment and risk committee’s report. Sustainability governance encompasses not only being an effective board, but also continuously upskilling, training and interrogating new ideas and concepts and incorporating ESG into strategic decision-making. Our ESG governance approach ensures that particular focus is given to organisational structures, processes, related risks and opportunities and how these contribute to driving our ESG aspirations. This commitment extends to rigorous risk management, which is essential if we are to be a responsible custodian of our natural environment and a conscientious corporate citizen. Climate risk management is one of three priority pillars under the ‘E’ of our ESG approach. You can read more about our approach to ESG in the Environmental, Social and Governance Report. Our purpose aims to create value for all stakeholders, including shareholders, suppliers, employees and the communities that host our mining sites. This can only be achieved through sound corporate governance, which ensures that we act in the best interests of every stakeholder, disclose accurate and transparent details of all aspects of our performance, and take accountability for our actions. A more detailed account of corporate governance, including reports from the board and its various committees, can be found in the governance section of our Integrated Annual Report. #### Our approach Our approach to governance is informed by the principles outlined in the King IV™ Report on Corporate Governance for South Africa 2016 (King IV 1 ), the performance standards established by the International Finance Corporation, legislation and accepted industrynorms. The board takes ultimate responsibility for our business’s performance in all areas, including ESG. This extends not just to Thungela, but also to its subsidiary companies, associates, trusts andjoint ventures. Robust processes, policies and principles guide the board’s activities and lay the foundation for a strong ethical culture. They ensure the board’s adherence to statutory and industry requirements, providing direction and setting limitations on its decision-making. 1 Copyright and trademarks are owned by the Institute of Directors of Southern Africa NPC and all of its rights are reserved. THUNGELA CLIMATE CHANGE REPORT 2023 10 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 10 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY GOVERNANCE ![]() Board structure In a governance restructure to optimise board efficiency and effectiveness, we introduced a new investment committee. The remuneration and nomination committee was split into two separate committees: the remuneration and human resources committee and the nomination and governance committee. The social and ethics committee is now known as the social, ethics and transformation committee, while the risk and sustainability committee is referred to as the health, safety, environment and risk committee. AMONG THE BOARD’S ROLES AND RESPONSIBILITIES ARE: Focus on environmental management and transparent reporting on issues such as responsible water use, mine closure, climate change, and driving the pathway to net zero emissions Emphasising the implementation of, and compliance with, governance processes and procedures with a zero tolerance for fraud and corruption Ensuring the business operates safely Ensuring adequate succession planning at senior levels Reviewing operational performance and management Reviewing policies and processes that ensure the integrity of risk management and internal controls • Has expanded duties and required to report on, and oversee, the effectiveness and integrity of the Group’s accounting and financial reporting, external audit, internal audit, integrated reporting and combined assurance Audit committee • Oversees human resource development, talent management and skills retention • Reviews, for board and shareholder approval, the remuneration report and considers all remuneration-related matters, including salary increases and incentive awards Remuneration and human resources committee • Reviews and evaluates all investments and related financing, divestments, corporate restructuring and financing proposals, which exceed Group executive committee authority and require board approval • Monitors execution and tracks performance post implementation Investment committee • Nominates, elects and appoints board members • Responsible for board succession planning, board performance evaluations, the review and recommendation of sound governance principles and monitoring of regulatory compliance. Nomination and governance committee • Oversees transformation, employment equity and compliance with the 10 United Nations Global Compact (UNGC) Principles • Manages B-BBEE, ethics and responsible business practices, stakeholder relations and responsible corporate citizenship Social, ethics and transformation committee • Has overall oversight of group risk, IM as well as of sustainability with a focus on safety, health and environment • Determines the Group’s risk appetite and reviews legal matters Health, safety, environment, and risk committee BOARD THUNGELA CLIMATE CHANGE REPORT 2023 11 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 11 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY GOVERNANCE ![]() feedback on action items through in-depth discussions on ESG topics. More information on the board and its committees can be found in our integrated annual report. The biographies of all executive and non-executive directors can be viewed on our website at www.thungela.com/about-us/ who-we-are. The board holds regular strategic discussions on Thungela’s future. These discussions are prefaced with long-term strategic context and megatrends, including the impact of climate change and the global transition to a low- carbon future. For more details on governance, including the board and committee reports, please see the governance section of our Integrated Annual Report from page 92. Risk, sustainability and compliance The social, ethics and transformation committee and the HSE and risk committee are responsible for ESG, with special emphasis on the social and environmental aspects of our business. The former’s primary purpose is to ensure that we comply with the laws, codes and standards that apply in the running of a principled and socially responsible business, focusing on ethics, stakeholder relationships, corporate citizenship, inclusion and diversity, human rights and social transition associated with mine closure and the transition of the globe to a low carbon future. The latter oversees the identification, consideration and monitoring of HSE risks and impacts, including those associated with climate change, and ensures that the business has implemented effective policies, plans and practices for managing these. Leadership The board is led by independent non- executive director Sango Ntsaluba. As chairman, he is responsible for setting the tone for an ethical culture at board level, and for ensuring that the board fulfils its duties with integrity and in accordance with established corporate governance principles. He is also the board’s link to the company CEO, July Ndlovu, and his executive committee. The CEO is responsible for providing direction and leadership and has oversight of the implementation of our ESG strategy and the path to net zero. The executive committee is tasked with formulating our short, medium and long- term objectives, generating satisfactory levels of value creation and leading the implementation and execution of approved strategies, policies and our code of conduct. It is responsible for managing climate-related risks and opportunities, delivering on our strategic objectives, and providing progress reports to the relevant board committees. Reports encompass measures to control these risks, the implementation of opportunities, and proposed public disclosures. Site general managers are delegated the responsibility for managing day-to-day ESG performance, mitigating or avoiding possible impacts from our activities, and implementing projects to reduce our carbon emissions. Operational management teams provides regular reports on health, safety and environmental (HSE) matters to the executive committee during monthly and quarterly performance reviews. A monthly SHE steering committee addresses specific issues, governance matters, and operational • 2022 performance against carbon and energy intensity targets. • Update on development of scenario- based approach to the path to net zero. • Update on climate risks and TCFD reporting process. March 2023 • Board strategy session informed by a third- party presentation on macroeconomic factors, including geopolitical instability, the energy crisis, and the global transition to a low carbon future. June 2023 • Progress against carbon and energy intensity targets and energy efficiency project implementation. • Update on Zibulo and Elders 4 MW solar photovoltaic (PV) projects. August 2023 • Intergovernmental Panel an Climate Chance (IPCC) Climate Change 2023: Synthesis Report and Climate Action Tracker • International Energy Agency (IEA) World Energy Outlook 2023. • IEA 2023 special report: Credible pathways to 1.5 o C. • Carbon capture and storage (CCS) in South Africa. • Progress against carbon and energy intensity targets, energy efficiency and renewable energy project implementation. November 2023 • CCS progress update based on Global Carbon Capture and Storage Institute (GCCSI) Global Status of CCS 2023 Report and CCS projects under development in China by China Energy and China Huaneng Group. • Full year 2023 performance update on carbon and energy intensity targets and projects to be implemented in 2024. • Update on Zibulo and Elders 4 MW solar PV projects March 2024 • Special audit/social, ethics and transformation committee sitting on our approach to the compilation of the 2023 Environmental Social and Governance Report and Climate Change Report. April 2024 • Progress against carbon and energy intensity targets and energy efficiency project implementation. May 2023 BOARD DISCUSSIONS ON CLIMATE CHANGE THUNGELA CLIMATE CHANGE REPORT 2023 12 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 12 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY GOVERNANCE ![]() Incentivising change We are committed to delivering on our key priorities, which is reflected in the incentive structures. We hold our executive team accountable for aligning our business practices with our climate change ambitions. A total of 10% of the value of their long-term incentive plan (LTIP) awards relates directly to the reduction of operational GHG emissions and the implementation of our renewable energy commitment of 19 MW by the end of 2026. In addition, the bonus scheme outcomes for all employees is tied to the organisation’s performance, which includes reducing energy intensity. This is factored into our annual short-term incentive (STI) scheme. Transparency and disclosure It is only through accurate and transparent reporting that shareholders, potential investors, lenders, business partners, advocacy groups, communities and many other stakeholders can make an informed assessment of our business. The board reviewed and approved our interim and annual financial statements, notice of annual general meeting (AGM) and reporting suite, including the Group’s Integrated Annual Report, Environmental Social and Governance Report and Climate Change Report. In 2023, we were assessed by six global rating agencies. Apart from improving our scores across various metrics, we were classed ‘very high’ for ‘transparency’ and ‘data availability’. We also received a Brating from the CDP. We are pleased to release our second Climate Change Report which is aligned with the recommendations of the TCFD, with a TCFD-linked index on page 37 . This report is also informed by the ISSB’s S2 Climate-Related Disclosures. We will work to aligning with the ISSB’s S1 and S2 disclosures in the next reporting cycle. We recognise investors’ evolving interests and expectations on our views on climate change and have had a number of engagements on matters relating to ESG over the past year. We welcome these constructive engagements and believe that they are crucial to the creation of value in the long-term. Assurance IBIS ESG Consulting Africa Proprietary Limited (IBIS) was commissioned to conduct independent, third-party assurance on the information in our Environmental Social and Governance and Climate Change Reports for the financial year that ended 31December 2023. The full assurance statement can be found on page 135 of our Environmental Social and Governance Report. High assurance was performed on scope 1 and 2 and energy data and IBIS issued an unqualified opinion and concluded that the subject matters in scope were prepared in accordance with the defined reporting criteria and are free from material misstatement. THUNGELA CLIMATE CHANGE REPORT 2023 13 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 13 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY GOVERNANCE ![]() ### Risk management #### Effective risk management is essential for the safe, sustainable #### and responsible creation and protection of value. Operational and functional risk Project risk #### Integrated #### executive risks Figure out the context Understand the hazards Identify the unwanted events Analyse the risks What controls could be implemented? Treat the risks COMMUNICATE WITH YOUR TEAM #### Check that the controls are working A bottom-up and top-down review of all risk and control registers is undertaken to ensure that risks are properly considered throughout all levels of the organisation. The IRM framework gives guidance on the ownership, frequency and timing of reassessments, documentation output and facilitation and review responsibility for various business processes. By understanding, prioritising and managing our risks, we safeguard our people, assets, legal position, values, reputation and the environment. We are also better able to identify related opportunities that best serve the long-term interests of all our stakeholders. Our focus is on ensuring compliance with the JSE Limited’s Listing Requirements and the King IV, with particular emphasis on principle 11 which applies to integrated risk management (IRM). This principle emphasises the importance of governing risk in a manner that enables organisations to set and achieve their strategicobjectives while demonstrating their commitment tosustainable practices. Our approach to risk management Our IRM policy, framework and operational risk management (ORM) standard govern the way we manage risk and are applicable to all operations, business functions and projects. The IRM methodology is alignedwith the International Organization for Standardization (ISO) 31000standard. IRM is a formal process that exists to ensure that risks are methodically identified, assessed and effectively managed and that risk-related information flows throughout the organisation. Each operation or entity has a risk and control register that informs the compilation of a single executive risk summary report for the identification of principle risks that can be assessed against the established risk appetite. This report is updated and presented to the board for approval twice a year. THUNGELA CLIMATE CHANGE REPORT 2023 14 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 14 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY RISK MANAGEMENT ![]() Responsibility and accountability A key duty of the board and executive management team is risk management. The health, safety, environment and risk committee and the audit committee, are responsible for monitoring and assisting in the IRM process. They regularly evaluate the process and lines of defence tomake sure that risk is recognised, managed, mitigated and reported ina timely and appropriate manner. Risk management is integrated across the organisation and is embedded in critical processes to ensure that it supports both day-to-day activities and executive decision-making at an operational and corporate level. Assessing our climate change risks A full assessment of our climate change risks was conducted in 2022 by a third-party. The quantitative risk assessment process included the analysis of physical risks relating to relevant acute and chronic climate impacts and transition risks or opportunities relating to the transition to a lower-carbon global economy. The latter evaluated the impact of changes to policy and legal obligations, technological innovation, changing market demand and stakeholder expectations. The risk identification process included the review of our executive and operational risk registers and mapping of related risks to potential physical and transitional climate risks under three climate scenarios based on the Intergovernmental Panel on Climate Change’s (IPCC) Assessment Report (AR) 5 Representation Concentration Pathways (RCP) and AR6 Shared Socio-economic Pathways (SSP). Extensive engagement with internal subject matter experts and operational management teams was undertaken to validate the risks identified. The approach was designed to deliver robust, structured analysis which builds the foundation for enhanced climate disclosure and embedding climate risks in the business, in accordance with the TCFD’s objectives. To promote understanding and ensure that climate risks are fully integrated into our business at every level, we carried out roadshows focused on climate change and energy efficiency to all sites and functional disciplines in 2023. The presentation series aimed to upskill teams at the sites on what the potential physical risks might be and how to mitigate or adapt to these as well as to raise awareness across the business of our climate change commitments and pathway to net zero. Importantly, workshops were held with our social performance teams on the impacts of physical and transitional risks to our communities and how we can contribute to addressing these. Financial analysis The potential financial impact of climate-related physical and transition risks on Thungela was evaluated under various climate scenarios over the near (2030) and long (2050) term. A financial assessment gives us a better understanding of the relevant climate change risks and their implications so that appropriate mitigation actions and response strategies can be developed. The assessment will be used to guide internal decisions in relation to climate-related impacts. THUNGELA CLIMATE CHANGE REPORT 2023 15 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 15 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY RISK MANAGEMENT ![]() #### Climate change policy in South Africa South Africa has committed to net zero by 2050 and updated its mitigation targets which represent a significant progression from the first Nationally Determined Contribution (NDC). The country has committed to a fixed target for greenhouse gas emissions levels of 398-510 Mt CO 2 e by 2025, and 350-420 Mt CO 2 e by 2030, compared to 398-614 Mt CO 2 e between 2025 and 2030 as communicated in the firstNDC. Effective public policy is essential for providing the right framework of drivers and incentives to encourage coordinated, efficient and equitable response measures by all stakeholders. Thungela is committed to providing its expertise to assist the South African government and other stakeholders in developing such public policy and regulation. We work with industry and regulatory authorities to contribute to the development and implementation of these. Draft Climate Change Bill The Climate Change Bill (the Bill) was passed by the South African National Assembly on 24 October 2023. As of 16 February 2024, the Bill is with the National Council of Provinces Committee for review. The Bill proposes to assign carbon budgets to companies to ensure the country achieves it’s NDCs. The Bill also places a legal obligation on every organ of state to coordinate policies and programmes to ensure that climate change risks and vulnerabilities are acted upon. Carbon budget and pollution prevention plan Thungela has an approved carbon budget and pollution prevention plan for the period 2021 to 2025. Our 2022 pollution prevention plan progress report was approved by the Department of Forestry, Fisheries and Environment (DFFE) in 2023. The carbon budget and mitigation plan regulations will exist under the Climate Change Act. DFFE is expected to release draft carbon budget and mitigation plan regulations in 2024. Thungela continues to engage with the DFFE on the allocation of carbon budgets to the coal sector. A higher tax rate of R640 per tonne of CO 2 e on emissions exceeding allocated budgets was announced in the 2022 Budget by National Treasury. It has since been announced that this will come into effect on 1 January of the calendar year after the Bill is enacted and carbon budget regulations become law. Once this is implemented, the 5% carbon budget allowance will fall away. Government would like to increase the carbon offset allowance by 5% once the carbon budget allowance falls away to encourage further investment in green energy projects. Carbon tax Thungela has a carbon tax forecast model based on legislation and anticipated carbon prices which is incorporated into discounted cash flow models for projects. In 2023, we expensed R4 million (2022 : R4.1 million), based on the carbon tax rate of R159/tCO 2 e. Phase 1 of the carbon tax was extended to December 2025. In 2022, National Treasury proposed the gradual reduction of the carbon tax allowances for the second phase (January 2026 to 31 December 2030). In the 2024 national budget review, the Minister of Finance announced that a discussion paper on the second phase of the carbon tax will be published for public comment later in the year. On 5 January 2023, the 2022 Taxation Laws Amendment Bill was gazetted and includes amendments that seek to align South Africa’s carbon tax rate with global carbon prices. Annual carbon tax rates until 2030 (R/tCO 2 e) 2023 2024 2025 2026 2027 2028 2029 2030 R159 R190 R236 R308 R347 R385 R424 R462 The 2023 Taxation Laws Amendment Act, gazetted on 22 December 2023, allows eligible taxpayers to claim the 5% carbon budget allowance until 31 December 2024 if they participate in the voluntary carbon budget system. Effective from 1 January 2024, Schedule 1 of the Carbon Tax Act for fuel combustion emission factors and calorific values will be updated to align with DFFE Methodological Guidelines for Quantification of Greenhouse Gas Emissions. The carbon tax levy for the general fuel levy was 10c and 11c for petrol and diesel respectively for the 2023/2024 period. The carbon tax levy will increase to 11c for petrol and 14c for diesel effective from April 2024. #### Climate change policy in Australia The Australian government has committed to achieve net zero emissions by 2050 and a 43% reduction in emissions by 2030, from 2005 levels. Each Australian state has set their own interim emission targets, with Queensland committing to a 30% reduction by 2030. The Australian Climate Change Bill was passed into law in September 2022. Several domestic programmes have been launched through the Clean Energy Regulator, including Safeguard Mechanism, which requires Australia’s largest greenhouse gas emitters (emitting more than 100 kt CO 2 per annum) to keep their net emissions below a legislated limit, known as a baseline. These emissions limits will decline, predictably and gradually, on a trajectory consistent with achieving Australia’s emission reduction targets of 43% below 2005 levels by 2030 and net zero by 2050. Only scope 1 emissions count towards the facilities compliance. A full review of the climate-related policy affecting the Ensham Mine will be provided in the next climate change report. THUNGELA CLIMATE CHANGE REPORT 2023 16 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 16 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY RISK MANAGEMENT ![]() Our climate-related risks and #### opportunities The table below reflects our understanding of the most significant climate-related risks relevant to our business. We acknowledge that this list is not exhaustive and we will continue to enhance our understanding and response to these risks. RISK DESCRIPTION OUR MITIGATION MEASURES Physical (chronic) SEA LEVEL RISE The frequency of the current 1-in-100 year storm surge event at Richards Bay is projected to become more frequent across moderate (1-in-18 years) and high (1-in-11years) emissions scenarios by 2050. This may cause increased exposure to coastal inundation and potential damage to port facilities which may cause delays to product transportation or damage to port infrastructure. • Richards Bay Coal Terminal has emergency preparedness and response systems as well as meteorological monitoring and early warning systems in place INCREASED AVERAGE RAINFALL Total annual rainfall is projected to increase across all scenarios by 2050. This may cause operational disruptions due to flooding and inability to access mine workings, and increase operational costs associated with managing water. The risks to communities of increased rainfall may include discharge of mine-impacted water, increased occurrence of sinkholes or subsidence, disruptions to transportation due to road damage, which in turn may undermine food security. • Our water management strategy considers potential climate change-related risks. • We review our water balances annually and proactively manage water on site. We track and report site water withdrawals, consumption, discharges and reuse/ recycling, and water treatment in line with the International Council on Mining and Metals (ICMM) and the Minerals Council of Australia Water Accounting Framework. • Higher than normal precipitation and extreme rainfall events have been experienced in the Mpumalanga region over the last three years. This has prompted annual rainfall readiness reviews and the development of trigger action response plans. • We monitor and track the magnitude and frequency of climatic events and we are working towards building a central repository for this data. • We undertake annual reviews and audits on the integrity of our mineral residue facilities and dams. • Areas that are at risk for subsidence or sinkholes are fenced off and declared ‘red areas’ and are inaccessible to communities and employees alike. • Sites have incorporated physical risks and response plans into their baseline risk registers. • We have developed an integrated emergency preparedness response plan that considers the potential effects of catastrophic events at sites, including those that may be associated with climate change, on doorstep communities. Physical risks Prioritised physical climate risks have been consolidated into chronic (increased average rainfall and sea level rise) and acute (storms and extreme weather events) risks, with flooding and landslides considered secondary impacts of these risk categories. The likelihood of these risks is low for operations that will reach the end of their lives before 2030 and will be higher for operations that will be in operation post-2030. The socio-economic context of host communities, discussed on page 89 of our Environmental Social and Governance Report increases their vulnerability to climate risks. THUNGELA CLIMATE CHANGE REPORT 2023 17 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 17 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY RISK MANAGEMENT ![]() RISK DESCRIPTION OUR MITIGATION MEASURES Physical (chronic) INCREASED DROUGHT Increase in the number of consecutive dry days may place additional pressure on the already water- stressed catchment. • We actively reduce freshwater consumption at our operations and have targets for the reduction of freshwater abstraction. • Water efficiency is maximised through the reuse and recycling of water in our coal processing plants using thickeners and filter presses. • The eMalahleni Water Recalamation Plant (EWRP) has the capacity to treat 50 megalitres (ML) per day of mine-impacted water and provides potable water to the local municipality with 6,851 ML supplied on 2023 (14% of the municipalities requirement). • Sites incorporated physical risks and response plans into their baseline risk registers. • We have included criteria that assess a corporate social investment (CSI) or social and labour plan (SLP) project’s ability to increase the resilience of the community to physical climate risks into our decision-making framework. • We currently have water management initiatives in place, which includes driving the optimisation of operation processes which leads to the reduction of water usage on site. This is supported by our investment model for new/alternative technology that optimises the use of water. Physical (acute) STORMS AND EXTREME WEATHER EVENTS Extreme rainfall intensity across all Thungela sites is projected to increase over multiple scenarios and time horizons. Storms and extreme weather such as high winds and severe lightening could cause flash flooding of mine sites and transportation networks, infrastructural damage and operational disruptions resulting from unsafe working conditions and inundation. • Every site has an emergency response plan, technical standards on managing inrush and extreme rainfall trigger action response plans which are reviewed periodically. • We have developed an integrated emergency preparedness response plan that considers the potential effects of catastrophic events at sites, including those that may be associated with climate change, on the communities around our operations. • We have extensive internal standards, systems and procedures to manage hazards on site, and are reviewing these to ensure that they include potential climate change-related risks. • Sites have incorporated physical risks and response plans into their baseline risk registers. • Social performance teams have incorporated projects into their SLP’s to improve the resilience of communities to physical risks. • We safeguard our assets and infrastructure through robust engineering design and construction standards, aligned with national design and construction standards, regulatory requirements and enhanced through Thungela’s internal standards, systems and procedures. THUNGELA CLIMATE CHANGE REPORT 2023 18 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 18 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY RISK MANAGEMENT ![]() RISK DESCRIPTION OUR MITIGATION MEASURES Policy and legal The introduction of new or more stringent carbon pricing mechanisms such as carbon tax, emissions caps or limits on emissions intensity, energy regulation, carbon trading and use of carbon offsets, both in our host countries and in export destinations may increase the cost of production and reduce margins. Changing regulation may also impact our ability to obtain, or delay, necessary project permitting approvals. There has been an increase in litigation in which climate change and its impacts are a contributing orkey consideration. In particular, a number of lawsuits (including class actions) have been brought against companies with fossil fuel operations invarious jurisdictions seeking damages related toclimate change. The Mpumalanga region is heavily dependent on coal mining for employment, both directly and indirectly. Increased carbon pricing and regulatory mechanisms as described above may impact our employees and communities through job losses and reduced total procurement spend. • We actively monitor changes in domestic and global policy relevant to carbon emissions. • We participate in and contribute constructively to the development of climate related policy in South Africa. We have a voluntary carbon budget, a pollution prevention plan and use a carbon tax forecast model based on existing legislation as well as projected carbon taxes associated with the NZE scenario in our modelling assumptions. • We engage with policy makers, either directly or via industry associations. • We have committed to net zero by 2050, and have developed a scenario-based approach to achieve this, which includes the substitution of part of our electricity requirements with renewable energy. • We seek to provide transparent disclosure on our climate change position and strategy. • We monitor legal developments and seek advice on these as necessary. • We continuously train and upskill our workforce using programmes that are recognised across the mining industry. • Our operations offer a range of mining and non-mining skills training programmes to unlock employment opportunities for young local people who do not have the financial means to further their education. These offer qualifications in, among many others, the operation of capital equipment, computer literacy, hospitality, and plumbing. Please refer to page 92 of the Environmental, Social and Governance report for more details. • We plan for closure using our mine closure toolbox which also takes into account social transition. • Employees and communities share in the value that we create through their participation in the Sisonke Employee Empowerment Scheme and the Nkulo Community Partnership Trust. We have contributed R156 million to each of these trusts related to 2023 performance, bringing total contributions since our listing to R1.5 billion. This will make a meaningful and lasting impact on the lives of those most important to enabling value creation – our employees and host communities. • We apply the theory of change to achieve our four socio-economic impact goals, two of which aim to reduce the reliance of communities on coal mining fortheirlivelihoods by improving access to income generating opportunities and incorporating a green economy lens into our enterprise and supplier development programme. • With several of our operations approaching their end of life, there are opportunities available through intentional planning and collaboration to repurpose rehabilitated areas to create sustainable businesses, where this will not contravene our obligations for site restoration, for the benefit of the communities surrounding our mines. Transition risks THUNGELA CLIMATE CHANGE REPORT 2023 19 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 19 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY RISK MANAGEMENT ![]() RISK DESCRIPTION OUR MITIGATION MEASURES Market drivers In response to ongoing decarbonisation of global energy supply, there may be a structural decline in global demand for thermal coal, which may in turn drive downward pressure on global coal prices. Over time, coal’s share of primary energy demand isexpected to decline. The global coal market is however dynamic andsubject to the changing geopolitical and energylandscape. • We have committed to net zero by 2050, and have developed a scenario-based approach to achieve this, which includes the substitution of part of 19 MW of our electricity requirements with renewable energy. Our scenario-based approach provides four distinct pathways informed by the climate scenarios. Given uncertainty over the future, these pathways provide us with a framework for agile decision-making. • Our strategy and investment evaluation criteria are designed to optimally balance responsible stewardship with the need to upgrade our portfolio and create shareholder value. Please refer to page 4 for our investment evaluation criteria. • Our buy versus build strategy using investment evaluation criteria to ensure that projects compete with additional shareholder returns. • We are positioning our portfolio on the lower half of the global seaborne cost curve to improve margins and reduce cash requirements during periods of lower prices. • A price-risk management steering committee is constituted specifically to monitor decisions and expenditure on swaps, financial instruments, and fixed price transactions. • Our focus on producing high-quality export coal with improved energy efficiency and lower pollutant content which is better suited to shifting customer needs. • Our largest waste stream is the mineral waste from our coal processing plants. We are currently actively re-mining three of our discard facilities,, which has the dual benefit of maximising the use of our coal resource, and reducing the environmental impacts and liabilities associated with the discard facilities. Reputation Availability of, and access to, financing and key services such as insurance may reduce and the cost of these services may increase if the number of parties prepared to partner with the coal industry reduces significantly. • We have implemented a self-insurance structure which will see the Group gradually reduce its reliance on the traditional insurance market. In 2023 we made a contribution of R0.2 billion to this structure. • In February 2023, we secured R3.2 billion in committed facilities with two South African banks with whom we have had a long-standing relationship. These facilities were arranged to further strengthen our balance sheet as we continue to migrate our capital structure in a manner that would enhance returns to shareholders over time. In addition, this seeks to provide sufficient liquidity to complete our capital projects and to navigate uncertainty across a number of external factors. Changing stakeholder expectations and lack of acceptance over the role of high-quality coal in supporting the transition to a lower carbon future may impact our industry’s, reputation and delay the environmental permit approval process. • We are committed to transparent disclosure through alignment with the recommendations of the TCFD and ISSB S2 and engage with our key stakeholders on climate change and broader ESG issues in a clear, meaningful and transparent manner. • Through our membership of the FutureCoal Alliance and the Coal Industry Advisory Board (CIAB) to the International Energy Agency (IEA), we advocate for a technology agnostic approach to a low carbon future, which includes coal-fired power emission abatement technologies such as high-efficiency, low-emission power plants and CCUS. • We are committed to fulfilling our purpose and being responsible miners. Our performance since we listed has demonstrated our commitment as reflected in our environmental, social and governance report and the favourable ESG ratings received in 2023. THUNGELA CLIMATE CHANGE REPORT 2023 20 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 20 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY RISK MANAGEMENT ![]() Using a scenario-based approach aligned with the physical and transition scenarios described previously, together with current business projections, including life extension projects, we have determined the interventions required to achieve our path tonetzero. Several operations are currently projected to close prior to 2030, namely Isibonelo, Goedehoop, Greenside and Khwezela. The Elders project, a production replacement project for Goedehoop Colliery, was approved by the board in 2022 and produced its first coal in February 2024. It is expected to operate for 12 years. The Zibulo North Shaft project, a life extension project for Zibulo’s current underground operations, was approved by the board in 2023. This project will extend the existing life of the mine from 2028 to beyond 2035. In addition to our operations, centralised services include our dedicated Highveld Hospital, shared services, the eMalahleni Water Reclamation Plant (EWRP), a rail loadout facility and central workshops. On 31 August 2023, we took ownership of a controlling shareholding in the Ensham Mine in Australia. We are in the process of aligning Ensham to our ESG reporting system and standards, and ESG information relating to Ensham will be included in the next annual reporting cycle. Our Lephalale coal-bed methane project is a significant gas resource in the Limpopo province of South Africa. Thungela is currently evaluating its development options and potential phasing in relation to South Africa’s energy crisis. A feasibility study commenced in 2023 and options being explored include use as a lower carbon energy source for power generation, diesel fuel substitution and liquefied natural gas. ### Our strategic response to climate change To meet our commitment to net zero by 2050, we have completed a full review of emission reduction opportunities and aim to reduce our scope 1 and 2 emissions by 30% by 2030 (relative to our 2021 emissions baseline). More details on our operations can be found on pages17to26 of our Integrated Annual Report. #### Scenario analysis What is scenario analysis and why do we use it? The events of the past three years have highlighted the market’s volatility in the face of pandemic-related and geopolitical disruption. These events have shown us that it is not the ability to foresee change and disruption that is important, but to be agile and adaptive when they occur. Scenarios are not forecasts or predictions and accurately foreseeing the future is challenging, even in the short term. Scenario analysis, however, helps us to identify key drivers of change, to inform decision- making, and evaluate business resilience against a set of divergent, plausible futures. It also highlights the potential risks and opportunities associated with these. #### Methodology A third-party performed scenario analysis using climate models to understand future potential climatic changes and identify adaptation requirements to build climate resilience. It also provided insight into what the future demand for our products may be to guide future decision-making. A physical and transitional climate risk assessment was performed across our operations, critical transport infrastructure, and export destinations based on the scenarios described on page 22. This quantitative assessment included an examination of relevant acute and chronic physical climate risks as well as market and regulatory risks, and changes in exposure under various climate scenarios. In addition, it determined high-level climate impacts and vulnerabilities on our operations, employees, communities and customers. The assessment covered two time horizons to inform near- term (2030) and long-term (2050) decision-making. THUNGELA CLIMATE CHANGE REPORT 2023 21 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 21 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY OUR CLIMATE CHANGE STRATEGY ![]() #### The scenarios Three types of physical risk climate scenarios capturing low, moderate and high emission futures were used for the analysis, applying the Intergovernmental Panel on Climate Change’s (IPCC) AR5 Representative Concentration Pathways (RCP) and AR6 Shared Socioeconomic Pathways (SSP) reports. These scenarios align with those used for the transition risk analysis which are based on the scenarios set out in the International Energy Agency’s (IEA) World Energy Outlook, 2022. The combination of these formed the basis for the development of our approach to net zero. 1 These transition scenarios are based on those set out in the IEA’s World Energy Outlook, 2022 of the International Energy Agency. Mtce: Million tons coal equivalent. #### PHYSICAL SCENARIO 1 RCP 8.5/SSP 5 ~3.2 o C – 5.4 o C RCP 4.5/SSP 2 ~2.5 o C – 2.7 o C RCP 2.6/SSP 1 ~1.7 o C – 1.8 o C Transition scenario 2 #### Stated Policies Scenario Announced Pledges Scenario Net Zero Scenario #### Key outcomes #### Physical risks #### dominate • Emissions are curbed based on existing policies and announced national commitments to reduce emissions, but fall short of meeting the Paris Agreement • Continued use of fossil fuels and energy-intensive activities • Effects of climate change require investments in adaptation measures to protect assets, infrastructure andcommunities #### Insufficientdecarbonisation • Slow implementation of policies duetopolitical, institutional and societal barriers • The transition to a low-carbon economyis disorderly, uncoordinated and delayed • Transition happens faster in certain regions and slower in others, leading to differences in regional policies and implications on the cost of doing business and global trade Transition risks and #### opportunities dominate • Globally coordinated effort to reduce emissions to net zero by 2050 • Accelerated transition to renewables and electrification, and aggressive regulations limiting the extraction and use of fossil fuels in all major economies #### Risks and opportunities • Flood and extreme precipitation • Extreme heat and wildfires • Sea level rise • Water stress • Carbon pricing policies • Energy policies • Litigation risks • Flood and extreme precipitation • Extreme heat and wildfires • Sea level rise • Water stress • Carbon pricing policies • Regulatory risk • Reputational risk and opportunity • Flood and extreme precipitation • Extreme heat and wildfires • Sea level rise • Water stress Projected coal demand • Continued fossil fuel investments • Slow decrease in demand for fossilfuels • Coal demand in 2030: 5,149 Mtce • Coal demand in 2050: 3,828 Mtce • Reduced fossil fuel investments • Modest decrease in demand for fossil fuels • Coal demand in 2030: 4,539 Mtce • Coal demand in 2050: 1,613 Mtce • No oil, natural gas and coalfields developed due to reduction in demand • Falls in fossil fuel prices due to lower demand • Coal demand in 2030: 3,024 Mtce • Coal demand in 2050: 539 Mtce Thungela position #### Extended fossilfuel marketSlow #### transition #### Accelerated #### decarbonisation THUNGELA CLIMATE CHANGE REPORT 2023 22 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 22 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY OUR CLIMATE CHANGE STRATEGY ![]() #### IEA projections for global thermal coal demand Regulatory decisions across the globe are likely to drive coal price and demand. The IEA World Energy Outlook’s 2022 scenarios describe what the future may hold for coal demand andelectricity generation. The rate at which demand will decline in future years, depends onthe stringency with which countries pursue climate targets. In the scenarios above, it is clear that while there is a decrease in the demand for coal, while less exaggerated in the STEPS and APS, the decrease takes place over an extended period and there will evidently be a market for coal for the next 10 to 15 years. The inclusion of the term phrase “phase down of unabated coalpower” in the COP 23 text is consistent with the terminology used in the IEA’s NZE where more than 80% of the coal use in2050 will be abated with carbon capture, utilisation and storage (CCUS). 0 1 000 2 000 3 000 4 000 5 000 Global coal demand and supply (Mtce) 2010 2 0 21 2030 2040 2050 STEPS APS NZE 2 954 1 177 407 THUNGELA CLIMATE CHANGE REPORT 2023 23 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 23 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY OUR CLIMATE CHANGE STRATEGY ![]() #### A scenario-based approach to net zero by 2050 We have adopted a scenario-based approach to chart our path to net zero, using the IEA World Energy Outlook 2022 scenarios. It is important to remember that scenarios are not forecasts or predictions and that accurately predicting the future is challenging, even in the short term. Scenario analysis assists us in identifying key drivers of change and enables us to inform decision-making and evaluate business resilience against a set of divergent but plausible futures. It also highlights the potential risks and opportunities associated withthese. To meet our 2050 net zero target, four distinct pathways are available, and are informed through climate scenarios. Given uncertainty over the future, these pathways provide us with a framework for decision- making based on triggers that may occur. Global trends and dynamics are reviewed annually to ascertain which plausible pathway we may be on so that we can be agile and adaptive in our decision-making. The route we take relies on two critical inflection points: the security of the energy system in South Africa and the pace of decarbonisation globally. The STEPS and APS both see coal demand declining more moderately than the net zero pathway and have been combined in our pathways as ‘slow transition’. The ‘accelerated decarbonisation’ pathways arealigned with the NZE. 2023-2024 2025 2030 2040 2050 Zibulo 4 MW solar Energy efficiency improvement projects Energy security reduced Energy security stabilised Carbon offset projects 15 MW renewable energy solution ‘behind the meter’ Carbon offset projects 15 MW renewable energy solution Offset Mergers and Acquisitions (M&A) or projects with renewable energy Partner with Independent Power Producers (IPP), use or invest in green energy No further coal expansion Evaluate commodity diversification options Partner with IPPs, use or invest in green energy Implement feasible energy storage solutions Offset M&A or projects with renewable energy tailored to LOM and community needs Wheel excess renewable energy from closing operations to other sites Energy storage solutions to offset remaining emissions Wheel excess green energy to local communities/industries Bank/sell carbon credits Solve remaining emissions from the EWRP Evaluate commodity diversification options Invest in energy storage solutions Accelerated decarbonisation Accelerated decarbonisation Need for energy outweighs change in legislation A Local need for energy balanced with need to decarbonise B High pressure, change in legislation C Reduced local demand for energy D Slow transition Slow transition THUNGELA CLIMATE CHANGE REPORT 2023 24 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 24 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY OUR CLIMATE CHANGE STRATEGY ![]() Resilience of our business model Our business focus is on producing high-quality export coal, which is increasingly preferred over lower grades. This is particularly true for customers in our export markets as they make the shift to improved efficiency power stations where lower pollutant content in coal is preferred. There has also been an encouraging increase in the CCUS pipeline, where the capture capacity of CCUS projects in development, in construction or operating has increased 48% since 2022 to over 350 million tons 2 . Our tier 1 assets operate in the lower half of the cost curve which, coupled with our commitment to responsible production of a high-quality product, contributes to our business’s resilience. Global trends in 2023 Global coal investment in 2023 surpassed 2022’s levels, driven by demand in China and India. Most of this investment went towards maintaining existing operations and brownfields developments, while in India and China, energy security concerns and power shortages have led to the development of new mines and the expansion of existing operations. Although investment in new coal-fired generation capacity has slowed in recent years, it continues nonetheless 1 . The IEA STEPS scenario sees the demand for all fossil fuels, including coal, peaking before 2030. Despite this, electricity generation from coal reached an all-time high in 2023, up 1% from the same period in 2022. Unfortunately, 2023 also saw the number of people without access to electricity increase for the first time in decades to approximately 760 million people. This was primarily seen in Africa where 80% of the population lives without access to electricity 1 . Investment in variable renewable energy (VRE) deployment has increased significantly, accounting for 12% of global generation in 2022 and set to rise to 30% by 2030. This puts power system flexibility at the centre of electricity security. There is growing recognition of the role of flexible, dispatchable, thermal energy such as abated coal in stabilising electricity systems where high loads of VRE exist. The clean energy transition must be orderly, just and equitable to minimise the impact on energy security and the most vulnerable people in society. #### The pathways give us the flexibility to adjust our #### approach to achieving our net zero target as #### the world evolves. 1 IEA (2023), World Energy Outlook 2023, IEA, Paris https:// www.iea.org/reports/world-energy-outlook-2023, Licence: CC BY 4.0 (report); CC BY NC SA 4.0 (Annex A) 2 Global CCS Institute, 2023. The Global Status of CCS 2023. Australia. THUNGELA CLIMATE CHANGE REPORT 2023 25 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 25 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY OUR CLIMATE CHANGE STRATEGY ![]() Key to the closure of any mine is social transition. The Mpumalanga region, and particularly the Highveld coalfields, is especially at risk as the region is heavily dependent on both coal mining and coal-fired power generation. Notwithstanding climate change, the coalfields and power stations have finite lives and a strategic approach to the transition in this area is critical. This transformation will involve coordinated action and decisions by private companies, government, communities and individuals. The process by which opportunities will be maximised and risks mitigated will be complex and involve multiple stakeholders. Our vision is to collaborate with host communities to establish regenerative landscapes that create sustainable livelihoods. We aim to leave a positive legacy through the integration of mine closure planning with the repurposing of rehabilitated land and the conservation of biodiversity for the benefit of communities and the environment. We take a holistic approach to mine closure by identifying the full spectrum of life-of-mine opportunities, risks and liabilities at the outset and planning with the end in mind. We are investigating a wide range of post-closure land use options, with a view to developing a responsible mine closure strategy and maximising our climate change opportunities. Some of these options include the leasing of land to independent power producers for renewable energy installations, agro-industrial projects and carbon farming. Stakeholder engagement and buy-in will be essential to create diversified economies that will persist in the long term. Mine closure projects and responsible social transition Our EWRP, commissioned in 2007 and expanded to a capacity of 50 ML per day in 2015, uses reverse osmosis technology to treat mine impacted water to potable quality. Reverse osmosis technology is energy intensive and a substantial portion of the emissions in 2050 on our path to net zero are the scope 2 emissions from this plant. The potable water is supplied to community members in the water-stressed eMalahleni Local Municipality. Passive water treatment or nature-based solutions (NBS) use natural processes, such as vegetation, soil, and microorganisms, to treat water. This approach often requires fewer energy inputs and produces lower carbon emissions compared to traditional treatment methods. They can be more cost- effective and enhance the resilience of water treatment systems to the impacts of climate change, such as increased flooding, droughts, and water quality fluctuations. Natural ecosystems like wetlands and forests provide buffering capacity against extreme weather events and help regulate water flow and quality. Many NBS involve restoring or preserving natural habitats, which supports biodiversity conservation. Years of research and development conducted in partnership with a variety of technology and academic partners has resulted in the implementation of both engineered and natural solutions to address water treatment post closure. These include phytoremediation, biological sulphide reduction, and the creation and restoration of wetland systems. You can read more about our nature based solutions in our Environmental, Social and Governance Report on page 52. Passive water treatment Central to our net zero pathway will be the incorporation of a minimum of 19 MW of renewable electricity by the end of 2026. Further details on our progress can be found on page 29. Renewable energy strategy Several operations are projected to close prior to 2030, namely Isibonelo, Goedehoop, Greenside and Khwezela. This will result in a reduction in greenhouse gas (GHG) emissions associated with those operations. While rehabilitation activities will continue to take place after closure, once those have been completed the energy consumption of those operations will be limited to that associated with ongoing maintenance and water treatment. Mine closures The implementation of energy efficiency projects across our business. Read more about this on page 29. Energy efficiency opportunities Reduction in scope 1 and 2 emissions of 30%by2030 The first milestone on our journey to net zero will be to reduce our scope 1 and 2 emissions by a minimum of 30% by 2030. This target will be achieved by: THUNGELA CLIMATE CHANGE REPORT 2023 26 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 26 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY OUR CLIMATE CHANGE STRATEGY ![]() Scope 1 and 2 emissions We are pleased to report an 11% reduction in 2023 from 2021’s baseline of 819 kilotonnes (kt) of CO 2 equivalent (ktCO 2 e) and a 2.5%reduction in total scope 1 and 2 emissions to 729 kt CO 2 e from 748kt CO 2 e in 2022. Our carbon intensity dropped by 11% from 4.02 kg CO 2 e per total tonne moved (TTM) in 2022 2 to 3.56 kg CO 2 e per TTM in 2023. Scope 1 emissions in 2023 decreased by 3.9% to 295 kt CO 2 e (2022:308 kt CO 2 e), with an 8.3% increase in GHG emissions fromfossil fuel combustion and a 11% decrease in fugitive emissions. Ourscope 2 emissions decreased by 1.5% to 433 kt CO 2 e (2022:440kt CO 2 e). Lower emissions are the result of lower production levels due to the further deterioration in Transnet Freight Rail’s (TFR) performance, the relatively lower tonnage contribution of our underground mines and energy efficiency projects which abated 11,561 t CO 2 e. #### Greenhouse gas emissions Thungela’s GHG emissions have been calculated according to the GHG Protocol Corporate Accounting and Reporting Standard (www.ghgprotocol.org) and the IPCC 2006 Guidelines. We use the operating control approach in reporting emissions and include the following in our footprint: Greenside, Goedehoop, Zibulo, Khwezela, Isibonelo, centralised services (Highveld Hospital, shared services, central workshops, RLT and the eMalahleni Water Reclamation Plant) and 50% of Mafube’s emissions. Details on the calculations, methodologies and emission factors for scope 1, 2 and 3 are described in the “Appendix: Reporting Criteria“. Scope 1: Direct GHG emissions from fossil fuel (diesel and petrol) combustion in mobile mining equipment (haul trucks, loaders, dozers, vehicles), diesel combustion in stationary equipment (generators), fugitive emissions from underground mines and other process emissions (sewage treatment and water neutralisation). Fugitive emissions Fugitive emissions in coal mining refer to a suite of gases associated with the formation of coal that are liberated during the coal mining process. Typical coal seam gas comprises methane (CH 4 ), carbon dioxide (CO 2 ), nitrogen and some trace gases such as ethane and butane. Generally, CH 4 and CO 2 comprises the bulk of the composition (approximately 90% CH 4 and 10% CO 2 ) with the other constituents being negligible. In underground mines, CH 4 is released from both the coal produced and brought to surface for processing, and from coal remaining underground in pillars, walls and on the floor and roof. This post-mining CH 4 is released overtime and is vented to the atmosphere viaupcast shafts. We currently use country specific Tier 2 emission factors for fugitive emissions. Given the age of the geology and shallow depth of South African coal seams, fugitive emissions from opencast mines are assumed to have vented already while emissions concentrations from underground mines are lower than those seen in other geographies. Scope 2: Emissions from electricity purchased from South Africa’s national power utility, Eskom. Scope 3: These emissions were evaluated for purchased goods and services, capital goods, fuel and energy related activities, upstream transportation and distribution, waste generated in operations, business travel, employee commuting, upstream leased assets, downstream transportation and distribution, use of sold products and investments. Our targets Our goal is to reduce our scope 1 and 2 emissions by 30% by 2030 and reach net zero by 2050 from a 2021 baseline. 2021 was chosen as a baseline as the year that Thungela listed as a standalone entity. Greenhouse gas emissions (kt CO 2 e) 2023 2022 2021 2020 Scope 1 295 308 362 369 Fossil fuels 121 112 137 15 5 Fugitive emissions 170 192 219 209 Process emissions 4 4 5 5 Scope 2 433 440 457 514 Total scope 1 and 2 emissions 729 74 8 819 883 Scope 3 32,033 37, 071 54,744 64,680 Scope 1 and 2 GHG intensity (kg CO 2 e/TTM) 2 3.56 4.02 4.56 4.60 Carbon emissions from electricity consumption are the biggest contributor to our footprint (59%) followed by fugitive emissions (23%) and emissions from fossil fuel combustion (17%). ### Metrics and targets295 #### Scope 1 GHG #### emissions (kt CO 2 e) 2022: 308 433 #### Scope 2 GHG #### emissions (kt CO 2 e) 2022: 440 32,033 #### Scope 3 GHG #### emissions (ktCO 2 e) 2022: 37,071 #### Our performance 2 The carbon intensity for 2022 has been restated from 4.18 based on changes to the total tonnes moved at Isibonelo, where key mining processes such as dozing and pre-stripping had erroneously been excluded from the calculation. THUNGELA CLIMATE CHANGE REPORT 2023 27 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 27 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY METRICS AND TARGETS ![]() Our scope 3 emissions decreased 14% to 32,033 kt CO 2 e from 37,071 kt CO 2 e in 2022 due to the reduction in sales volumes (use of product sold) which account for 93% of our scope 3 emissions. We advocate for a technology agnostic approach to a low carbon future, to address our scope 3 emissions, through our membership of the FutureCoal Alliance and the Coal Industry Advisory Board (CIAB) to the International Energy Agency (IEA). These organisations facilitate research into technologies that abate emissions from coal combustion such as high-efficiency, low-emission power plants, ammonia and biomass co-firing and CCUS. 1 A full review of our scope 3 emissions was undertaken in 2023 and emission factors were updated to the United Kingdom Department of Environment, Food and Rural Affairs (DEFRA) 2023 factors. The updated factors have resulted inanotable difference in the emissions from the previous year. 2 Upstream transportation and distribution includes trucking of stock between our operations to manage our stockpiles due to TFR under performance as well as rail transportation of product to Richard Bay Coal Terminal. Prior to 2023, emissions from rail transportation were included under category 9. 3 The 2022 values for category 4 and 9 have been restated from 163 kt CO 2 e and 124 kt CO 2 e respectively. The review of our scope 3 footprint revealed that the emissions from shipping had been excluded from category 9 in 2022 andthe value previously in this category pertained to rail transportation and was therefore included in category 4 after the update. 4 Total scope 3 emissions for 2022 have been restated from 35,947 kt CO 2 e due to the addition of shipping related emissions in Category 9. Scope 3 emissions In 2023, we undertook a full Scope 3 assessment on our 2023 data to better understand the emissions across our value chain and improve our scope 3 reporting. All 15 of the scope 3 categories were assessed for applicability to Thungela and where relevant have been included. Additional categories that have been included in 2023 are capital goods, business travel, employee commuting and upstream leased assets. In addition to improving our disclosure in terms of the categories disclosed, we reviewed the emission factors for each of the categories and have updated these where necessary. Scope 3 emissions (kt CO 2 e) Scope 3 category 2023 2022 2021 Category 1: Purchased goods and services 30 5 30 Category 2: Capital goods 12 Category 3: Fuel- and energy-related services 1 65 544 668 Category 4: Upstream transportation and distribution 2,3 238 287 Category 5: Waste generated in operations 1 1 5 6 Category 6: Business travel 0.94 Category 7: Employee commuting 19 Category 8: Upstream leased assets 0.48 Category 9: Downstream transportation and distribution 1,3 1,789 1,12 3 1,008 Category 10: Processing of sold products N/A Category 11: Use of sold products 29, 816 35,072 53,031 Category 12: End-of-life treatment of sold products N/A Category 13: Downstream leased assets N/A Category 14: Franchises N/A Category 15: Investments 62 35 Total scope 3 emissions 4 32,033 37, 071 54,744 THUNGELA CLIMATE CHANGE REPORT 2023 28 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 28 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY METRICS AND TARGETS ![]() #### Energy management The efficient use of energy and optimising our use of energy sources is an ongoing priority. Fossil fuels (mainly diesel) for loading and haulage account for 52% of our total energy consumption (and 17% of our total emissions), with electricity accounting for 48% (and 59% of our carbon footprint). The unit cost of both is expected to continue to increase. #### Our approach Driving energy efficiency and optimising energy sources Thungela’s standard and related guideline on energy and carbon emissions’ management sets out the requirements to drive energy and carbon savings across the business. In recent years, we have achieved significant energy intensity reductions through a range of efficiency and productivity improvement initiatives across our operations. Current energy-efficiency improvement projects focus on improving the efficiency of large energy users such as processing plants, ventilation systems at underground operations and load and haul equipment at opencast mines. Several opencast operations have reduced idle times on their haul fleet and dozers thereby reducing diesel consumption, with commensurate savings being realised. The sites have also improved road conditions and shortened hauling distances to reduce rolling resistance and diesel consumption. A strong focus on ventilation system optimisation in 2023 yielded significant energy savings. Initiatives included: ● The sealing of underground sections to reduce ventilation requirements. ● Ventilation fan speed reduction. ● Fan blade adjustments to reduce fan input power. ● Optimising section layouts to enable a reduction in the number of fans operating, without compromising ventilation. The above initiatives are supported by a robust project execution framework which includes management commitment, scheduled reviews with energy champions, performance reviews and forums to share and reapply learning within the business. Supplementing electricity with renewable supply Central to our net zero pathway will be the incorporation of a minimum of 19 MW of renewable electricity before the end of 2026. A 4 MW solar photovoltaic (PV) plant is currently under construction at Zibulo’s underground operation. The plant is expected to be commissioned in the fourth quarter of 2024. #### Looking ahead We will continue with the focused implementation of identified energy efficiency and carbon reduction opportunities, internal best practice and benchmarking to achieve our energy intensity reduction targets. These include reducing mining footprints in the underground operations to allow for further optimisation of the ventilation systems and reduction of conveyor lengths, optimising processing plant and conveyor operating times to avoid running at low volumes of coal, continued focus on idle time reduction and haul route optimisation. Energy consumption 2023 2022 2021 2020 2 019 Energy from electricity (million GJ) 1.50 1.50 1.57 1.78 1.91 Energy from fossil fuel use (million GJ) 1.64 1.51 1.85 2.09 1.95 Total energy used (million GJ) 3 .14 3.01 3.42 3.87 3.86 Energy intensity (MJ/TTM)\* 15.33 16.16 19.04 20 .16 19.40 Electricity consumption (MWh) 416,824 415, 732 494,626 434,916 415,490 Diesel consumption (kl) 45,263 41,800 57,838 51,285 41, 815 \* The energy intensity for 2022 has been restated based on changes to the total tonnes (TTM) moved at Isibonelo, where key mining processes such as dozing and pre-stripping had erroneously been excluded from the calculation. A further 4 MW solar PV plant will be installed at the Elders project, and is currently in the advanced feasibility stages. External permits, approvals and rezoning applications are being processed by the relevant government departments and endorsement from the National Energy Regulator of South Africa is in progress. The strategy for the remaining renewable energy requirement will be evaluated to determine the most efficient and effective model for sourcing this energy, with a view to it becoming available by the end of2026. Performance Total energy consumption (electricity and diesel) increased 4.3% to 3.14 million gigajoules (GJ), compared to 3.01 million GJ in 2022. This was due to an increase in total tonnes moved, particularly at our opencast operations which increased total diesel consumption. Our energy intensity improved by 5.1% year-on- year to 15.33 MJ/TTM because of a strong focus on energyefficiency projects, eliminating diesel theft, accelerated rehabilitation efforts at closing mines (2022: 16.16 MJ/TTM\*). The energy efficiency projects implemented yielded savings of 43,000 GJ, which was predominantly brought about through ventilation optimisation. R49 ### million invested in the #### Zibulo solar PVproject in 2023 THUNGELA CLIMATE CHANGE REPORT 2023 29 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 29 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY METRICS AND TARGETS ![]() #### Water Our mines are situated in a water-scarce region where water supply may be negatively impacted by increased demand, the further deterioration of local water infrastructure, and climate-driven conditions, including drought, rising temperatures and variable rainfall. These factors underscore our responsibility to both contribute positively to communities’ access to this precious resource, while at the same time protecting the integrity of critical ecosystems. This involves the proactive identification of our key water risks, their careful management, and Goedehoop and Isibonelo collieries and, to a lesser extent Mafube, rely on fresh water from external sources and had a reduction target of 20% by 2023, using 2015’s 1,015 ML as a baseline. The importation of water decreased by 52% to 369 ML from 767 ML in 2022. Freshwater abstraction in 2023 was 64% lower than the 2015 baseline, thus exceeding the2023 target. Greenside, Khwezela and Zibulo were working to reduce their consumption from the EWRP by 20% by the end of 2023 from a baseline of 1,997 ML in 2015. They have brought down their combined water-use by 10% from 1,312 ML (restated from 1,553 ML) in 2022, to 1,097ML in 2023. This represents a year-on-year reduction of 10% and a reduction of 45% from the 2015 baseline. To replace freshwater and EWRP abstraction targets, which ran until 2023, we have set a new reduction target of 2.5% annually, relative to the previous year. Reuse and recycling rates remained constant at 96% in 2023 in line with performance in 2022, exceeding our water efficiency target of 75% by a significant margin. Water treatment substantially mitigates of the risk of uncontrolled discharge, particularly during periods of high rainfall. Through treatment, we reduce recharge, better manage stormwater and create sufficient storage space in pollution control dams and underground compartments. An overall treatment rate of 69% was achieved in 2023 against a target of 40%. This is an improvement on the 57% realised in 2022. the development of collaborative solutions to regional water challenges. Please see page 49 of the Environmental, Social and Governance Report for our approach to managing water. Our targets and performance We take our stewardship of this natural resource seriously and have ambitious targets in place. #### Target: reduce freshwater #### abstraction by 20% by 2023 #### against a 2015 baseline 369 ML #### and a 64% reduction from baseline 2022: 767 ML #### Target: reduce potable water #### abstraction from the EWRP by 20% #### by 2023 against a 2015 baseline 1,097 ML #### 1,097 ML and a 45% reduction #### from baseline 2022: 1,312 ML #### Target: treat 40% of mine- #### impacted water 69% 2022: 57% #### Target: zero level #### 3 or greater water #### incidents 2 #### level 3 incidents 2022: 1 level 4 and 1 level 3 incident #### Target: maintain water reuse and #### recycling levels #### above 75% 96% 2022: 96% THUNGELA CLIMATE CHANGE REPORT 2023 30 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 30 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY METRICS AND TARGETS ![]() #### Memberships and associations SCS does not prescribe what abatement opportunities should be adopted by any nation or company and encourages collaboration across the value chain to advance a progressive, innovation and technology led coal industry. The coal value chain is a significant contributor to sectors such as power, steel, cement, aluminium, chemicals, and renewable infrastructure. SCS has a strong focus on abated coal innovation and technologies. Under SCS abated coal has a broader definition that encompasses a range of responsible practices, emissions controls, efficiency gains and advanced coal opportunities in the pre-combustion, combustion and beyond combustion phases. It supports the right to choose and establish a coal ecosystem which includes options of efficiency, process improvements, health and safety, emissions reduction including carbon abatement, waste management and recycling, land rehabilitation, technology advancement and innovation. FutureCoal recognises the objectives of the Paris Agreement and advocates for an inclusive all fuels and all technologies international policy framework to support the sovereign rights of all coal producing and consuming nations and those nations which genuinely seek to support them. It recognises that the coal industry must modernise and mobilise, to demonstrate the commodity’s versatility in providing long- term energy security, emissions abatement, and sustainable development in line with a number of the United Nations Sustainable Development Goals. Minerals Council of South Africa Thungela is a member of the Minerals of Council South Africa (MCSA), which is a mining industry employers’ organisation that supports and promotes the South African mining industry. The Minerals Council serves its members and promotes their interests by providing strategic support and advisory input. It represents 73 members, comprising of 90% of South Africa’s mineral production by value across a range of commodities. MCSA supports the goal of the Paris Agreement and together with its members are committed to participating in a responsible transition to a net zero by 2050, prioritising climate-resilient development and a people-centred pragmatic energy transition. MCSA has developed a Climate Change Framework for the mining industry to assist members as they fulfil these commitments. The climate change framework includes mitigation (reduction of scope 1, 2 and 3 GHG emissions), adaption (risk mapping, planning for increased variability and intensity in weather patterns and shifting portfolio to adapt to changing demand for minerals) and just energy transition (minimising impact on employees, community engagement and public awareness ensuring procedural justice is achieved andrefine mine closure planning to account for the impacts of theenergy transition). In 2023, MCSA played an active role in providing comments on the 2023 Draft Taxation Law Amendment Bill, Draft Climate Change Bill, Carbon Border Adjustment Mechanism (CBAM) and the Draft Climate Change Strategy for South Africa’s Water and Sanitation Sector, which included inputs from members. Active engagements between the DFFE, the MCSA and representative members took place in 2023 on the carbon budgets and mitigation plans in relation to the mining sector. As a member of MCSA, Thungela participated and supported the position taken by the association on these matters. In particular, we provided technical comments on the adjustments to the emission factors for fugitive emissions proposed by National Treasury in the Draft Taxation Law Amendment Bill. Business Unity South Africa We participate in the Business Unity South Africa (BUSA) environmental sub-committee and the BUSA climate change working group in our capacity as members of the MCSA. One of BUSA’s strategic objectives looks at the just transition towards low carbon, climate resilient and ecologically sustainable economies and societies. In 2023, BUSA engaged directly with DFFE and National Treasury on matters such as the carbon budget, mitigation plans, Climate Change Bill, Draft Taxation Law Amendment Bill and businesses input to COP 28. We provided technical comments on the adjustments to the emission factors for fugitive emissions proposed by National Treasury in the Draft Taxation Law Amendment Bill. Our climate change advocacy position We engage constructively with policymakers both directly and through industry associations to advocate for our position on matters relating to climate change and our business. We engage in public policy discussions, with a view to maintaining a balanced approach as we believe that effective policy is essential for providing the right framework of drivers and incentives to encourage coordinated, efficient and equitable response measures. There may be times when our views diverge from those of our trade association partners, in which instance we aim to ensure our views are noted and recorded. We support the Paris Agreement, and advocate for the accelerated deployment of all emission reduction technologies (per Article 10.2 agreement), including coal abatement technologies such as high-efficiency, low-emission coal-fired power plants and CCUS. We also encourage the development of low and lower-carbon sectors such as renewables and gas respectively, as well as the development of a conducive policy and regulatory environment to encourage climate action within the confines of our national circumstances. In all our climate advocacy activities, we are committed to compliance, transparency, and accountability. FutureCoal Global Alliance Thungela is a member of FutureCoal, previously the World Coal Association which rebranded to the FutureCoal Global Alliance in November 2023. FutureCoal represents a think tank of forward-focused coal participants across the coal value chain, driven to ensure that coal prospers sustainably from producer to end user. Representing industry leaders committed to building a sustainable pathway for the global coal value chain. This is established in their work programmes that cover a range of issues encompassing advanced coal technologies capable of mitigating the environmental impact of coal from the cradle to the grave, termed ‘Sustainable Coal Stewardship’ (SCS). THUNGELA CLIMATE CHANGE REPORT 2023 31 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 31 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY METRICS AND TARGETS ![]() Coal Industry Advisory Board The Coal Industry Advisory Board (CIAB) is an advisory board to the IEA made up of a group of high level executives from coal-related enterprises across the value chain. The 26 members including Thungela, are drawn from 13 countries and represent just under 80% of global coal production and consumption. The CIAB’s role is to advise the IEA of developments in the coal markets and coal technologies space, which informs its projections and advisory work with member governments. In 2023, two reports were produced by CIAB, namely “The hydrogen economy and the role of coal” and “The resilience of coal- based industries in the transition to net zero”. The next work programme topic for 2023/2024 will be “Maintaining a stable electricity grid in the energy transition”. Industry Task Team on Climate Change Thungela is a member of The Industry Task Team On Climate Change (ITTCC), which is a non-profit association that includes a number of large companies. The organisation is supportive of South Africa’s international commitments to meet our climate change goals and gradual transition to a lower carbon economy. The ITTCC has commissioned studies on carbon pricing, just transition, GHG pathways scenario development, post-2020 climate change mitigation system among others, to input into policy development. The organisation encourages knowledge sharing of best practice approaches adopted by the ITTCC companies. In 2023, topics of discussion included just energy transition, CDP, TCFD, the Climate Change Bill, Science-based targets and CBAM. National Business Initiative The National Business Initiative (NBI) is a voluntary coalition of South African and multinational companies working towards sustainable growth and development. The NBI has multiple projects and partnerships that are designed to help member companies understand the nature of the challenge, build their capacity to respond and ultimately to work collectively with government to develop solutions to climate change and emissions mitigation in South Africa. The NBI is a regional partner to We Mean Business and provides links with South African business and policy makers working on climate change and business. The NBI represents South African companies who have signed up to commitments by pledging their support for a low carbon future. Some of these commitments include; setting science-based reduction targets, renewable energy and carbon pricing. The NBI is also a local partner of the CDP which has successfully integrated climate change into mainstream business thinking. The organisation informs members on how to respond to growing environmental and economic risk and opportunities which arise from climate change, just transition, biodiversity loss and water security. Energy Intensive User Group The Energy Intensive Users Group (EIUG) addresses members interest by working with Eskom on the immediate and growing energy deficit in the country and what can practically be done to minimise the impact of this. The EIUG has a strong technical background and engages with government departments on the need for a cohesive approach to energy supply to ensure security of supply, stable pricing and a clear path forward on policy, within a just transition framework. The EIUG works in collaboration with the ITTCC and is fully committed to the transition toward a low carbon economy. The country must transition to a lower-carbon future; the EIUG aims to ensure that this is done in a manner and within a time-frame that protects and maintains the competitiveness of our economy. The group engages directly with government departments, Eskom and the National Energy Regulator of South Africa. Membership fees Thungela pays annual membership fees to some of the industry associations. The annual fees payable are calculated according to each association. Thungela also pays additional fees if required for projects conducted by the associations. Association 2023 Membership (Rand million) Comment FutureCoal 1.84 Revenue based membership fee and work programme contribution Coal Industry Advisory Board 0.32 (USD12,000 annual membership and USD5,000 contribution to the work programme to fund the research report done by the International Centre for Sustainable Carbon) Industry Task Team on Climate Change Nil The ITTCC is a sub-committee of the EIUG National Business Initiative 0.21 Minerals Council of South Africa 12 Production based membership fee Energy Intensive User Group 0.29 THUNGELA CLIMATE CHANGE REPORT 2023 32 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 32 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY METRICS AND TARGETS ![]() ### Reporting criteria KPI Definition Methodology Energy from fossil fuel use (million gigajoules (GJ)) Diesel and, to a lesser extent, petrol consumed by our mobile equipment, including haul trucks, loaders, dozers, light vehicles and stationary equipment such as generators. Fuel data is entered in by sites in litres or m 3 onto our safety, health and environment (SHE) management system where all calculations are automatically processed using the guidelines and factors below. Methodology Guidelines: GHG Protocol Corporate Accounting and Reporting Standard Calorific value source: 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2, Energy Density value source: Diesel-2006 HESS Material Safety and Data Sheet; Petrol- 2012 ENGEN Material Safety and Data Sheet. Scope 1 emissions (ktCO 2 e) Direct GHG emissions from under our management control and proportionate data where we have a significant interest but not management control (Mafube). Scope 1 emissions result from the following activities: • Stationary combustion in generators • Mobile combustion in mobile equipment and vehicles. • Fugitive emissions from the coal seams during and after the mining process that include CH 4 and CO 2 . • Industrial processes and product use – Includes the use of limestone for the neutralisation of acid mine drainage. • Wastewater treatment and discharge – Includes the emissions from anaerobic sewage treatment systems. Scope 1 emission related data is entered onto our SHE management system by each operation. The sites enter the activity data, such as quantity of fuels consumed, run-of-mine tons, limestone consumption and number of people using the sewage treatment facilities and the emissions are automatically calculated by the system. Our CO 2 e emissions from fossil fuel combustion include CO 2 , CH 4 and N 2 O. Methodology Guidelines: GHG Protocol Corporate Accounting and Reporting Standard; DFFE Methodological Guidelines for Quantification of Greenhouse Gas Emissions, Version No. MG-2022.1; 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 — Energy and Volume 5 — Wastewater Treatment and Discharge (Domestic wastewater treatment) Emission factor source: 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 — Energy, Volume 3 — Mineral Industry and Volume 5 — Wastewater Treatment and Discharge; DFFE Methodological Guidelines for Quantification of Greenhouse Gas Emissions, Version No. MG-2022.1 Global warming potential factor: 2001, IPCC Third Assessment Report (AR3) for 100 year time horizon. Scope 2 emissions (ktCO 2 e) Emissions from electricity purchased from South Africa’s national power utility, Eskom Purchased electricity values are captured in MWh on the SHE management system and emissions automatically calculated applying the GHG Protocol’s location-based approach. Methodology Guidelines: GHG Protocol Corporate Accounting and Reporting Standard (Scope 2 guidance) Emission factor source: 2022 Eskom Integrated Report Scope 3 emissions: Purchased goods and services (Category 1) Emissions from the extraction, production and transportation of goods and services purchased by Thungela. This includes products purchased such as explosives, limestone and hydrated lime and the services of contractors for the construction phases for Zibulo extension and Elders. The diesel and petrol consumption by the contractors on their operated equipment is taken into account. The spend based method was applied for the purchased products. The financial cost of purchased products was collected for 2023 and multiplied by the applicable emission factor. The fuel related activity data collected from the contractors was converted to an energy value and then multiplied by the emission factors for CO 2 , CH 4 , N 2 O and GWP factors. Methodology Guidelines: GHG Protocol Corporate Value Chain (Scope 3) Standard and Scope 3 Calculation Guidance and ICMM Scope 3 Emissions Accounting and Reporting Guidance Emission factor source: 2021, EPA , Supply Chain Greenhouse Gas Emission Factors v1.2 by NAICS-6; 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 – Energy GWP factor: 2001, IPCC Third Assessment Report (AR3) for 100 year time horizon # APPENDICES THUNGELA CLIMATE CHANGE REPORT 2023 33 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 33 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY APPENDICES ![]() KPI Definition Methodology Scope 3 emissions: Capital goods (Category2) Emissions from the extraction, production and transportation of capital goods purchased by Thungela. Capital goods include items such as haul trucks, vehicles, dozers and conveyors. The spend based method was applied for the purchased capital goods. Methodology Guidelines: GHG Protocol Corporate Value Chain (Scope 3) Standard and Scope 3 Calculation Guidance and ICMM Scope 3 Emissions Accounting and Reporting Guidance Emission factor source: 2021, EPA , Supply Chain Greenhouse Gas Emission Factors v1.2 by NAICS-6 Scope 3 emissions: Fuel and energy related activities (Category 3) Emissions from the extraction, production and transportation of fuels and energy purchased and acquired by Thungela. This includes diesel, petrol and transmission and distribution losses for electricity. The diesel and petrol values in litres was multiplied by the well-to-tank emission factors. Electricity purchased in MWh was multiplied by the transmission and distribution grid emission factor. Methodology Guidelines: GHG Protocol Corporate Value Chain (Scope 3) Standard and Scope 3 Calculation Guidance and ICMM Scope 3 Emissions Accounting and Reporting Guidance Emission factor source: 2023, United Kingdom Department for Environment, Food and Rural Affairs (DEFRA) emission factor; South Africa’s 2021 Grid Emission Factor Report, 2 February 2024 Scope 3 emissions: Upstream transportation and distribution (Category 4) Emissions from the transportation and distribution of coal between sites by truck as well as the railing of coal to Richards Bay Coal Terminal. Trip distances were determined and multiplied by load. This was then multiplied by the rail freight and road freight emission factors. Methodology Guidelines: GHG Protocol Corporate Value Chain (Scope 3) Standard and Scope 3 Calculation Guidance, ICMM Scope 3 Emissions Accounting and Reporting Guidance Emission factor source: 2023, United Kingdom DEFRA emission factor. Scope 3 emissions: Waste generated in operations (Category 5) Emissions emanating from the disposal or treatment of Thungela’s non- hazardous waste that goes to legal landfill. Paper, plastic and scrap metal are also sent to third parties for recycling. The total non-hazardous waste in tonnes is multiplied by the emission factor for commercial and industrial waste. The recycled waste is multiplied by the closed loop emission factors for paper, plastic and scrap metal. Methodology Guidelines: GHG Protocol Corporate Value Chain (Scope 3) Standard and Scope 3 Calculation Guidance and ICMM Scope 3 Emissions Accounting and Reporting Guidance Emission factor source: 2023, United Kingdom DEFRA emission factor. Scope 3 emissions: Business travel (Category6) Transportation by road or air and accommodation of employees in hotels for business-related activities. A single service provider is responsible for arranging all business travel and accommodation related activities. They have developed a dashboard which captures Thungela’s travel emissions using the DEFRA emission factors. Methodology Guidelines: GHG Protocol Corporate Value Chain (Scope 3) Standard and Scope 3 Calculation Guidance and ICMM Scope 3 Emissions Accounting and Reporting Guidance. Emission factor source: 2023, United Kingdom DEFRA emission factor. Scope 3 emissions: Employee commuting (Category 7) Employee commuting between their homes and place of work by minibus taxi and personal vehicles. The total distance for the year by minibus and cars was consolidated and multiplied by the emission factor for the different modes of transport. Methodology Guidelines: GHG Protocol Corporate Value Chain (Scope 3) Standard and Scope 3 Calculation Guidance and ICMM Scope 3 Emissions Accounting and Reporting Guidance. Emission factor source: 2023, United Kingdom DEFRA emission factor. THUNGELA CLIMATE CHANGE REPORT 2023 34 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 34 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY APPENDICES ![]() KPI Definition Methodology Scope 3 emissions: Upstream leased assets (Category 8) Thungela leases the Rosebank head office building and emissions are not included in Scope 1 or 2. The diesel and electricity consumption values are collected from the property manager and the emissions calculated using the guidance of the GHG Protocol. Methodology Guidelines: GHG Protocol Corporate Accounting and Reporting Standard; Emission factor source: 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 – Energy; 2022 Eskom Integrated Report GWP factor: 2001, IPCC Third Assessment Report (AR3) for 100 year time horizon. Scope 3 emissions: Downstream transportation and distribution (Category 9) Includes transportation- and distribution-related emissions resulting from the shipping of products sold. Coal is cold free-on-board, which means that the customer pays for the shipping. Thungela exports coal from the Richards Bay Coal Terminal. Shipping distances from Richards Bay Coal Terminal to destination ports are determined. The distance and load per trip was multiplied (tonne.km) and then multiplied by the cargo ship emission factor. Methodology Guidelines: GHG Protocol Corporate Value Chain (Scope 3) Standard and Scope 3 Calculation Guidance, ICMM Scope 3 Emissions Accounting and Reporting Guidance Emission factor source: 2023, United Kingdom DEFRA emission factor. Scope 3 emissions: Use of sold products (Category 11) Includes emissions from the use of Thungela’s product (thermal coal) by customers. The coal that is sold locally and internationally is captured in tonnes. We assume that 100% of coal sold is incinerated by customers. Coal values are converted to an energy value (GJ) using the calorific value of sub- bituminous coal which are then multiplied by the relevant emission factors to estimate CO 2 , CH 4 , N 2 O and converted to CO 2 e using the GWP factors. Methodology Guidelines: GHG Protocol Corporate Accounting and Reporting Standard; 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 — Energy Emission factor source: 006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2, Energy. Sub-bituminous Coal. GWP factor: 2001, IPCC Third Assessment Report (AR3) for 100 year time horizon. Scope 3 emissions: Investments (Category15) Thungela has accounted for scope 1 and 2 emissions from sites where we have a shareholding but do not have operational control, including Richards Bay Coal Terminal, Phola, Nasonti and Rietvlei. Diesel, petrol and electricity activity data is captured by the relevant site and provided to Thungela to calculate the emissions using the guidance and emission factors below. The scope 1 and 2 emissions are apportioned according to Thungela’s percentage ownership. Methodology Guidelines: GHG Protocol Corporate Accounting and Reporting Standard; Calorific value source: 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 —Energy Emission factor source: 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Volume 2 — Energy ; 2022 Eskom Integrated Report GWP factor: 2001, IPCC 3rd Assessment Report (AR3) for 100 year time horizon. THUNGELA CLIMATE CHANGE REPORT 2023 35 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 35 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY APPENDICES ![]() #### GHG emissions (kt CO 2 e) 2023 2022 2021 2020 Scope 1 295 308 362 369 Fossil fuels 121 112 137 15 5 Fugitive emissions 170 192 219 209 Process emissions 4 4 4.77 5 Scope 2 433 440 457 514 Total scope 1 and 2 emissions 729 74 8 819 883 Scope 3 1 32,033 37, 071 54,744 64,680 Scope 1 and 2 GHG intensity (kg CO 2 e/TTM) 2 3.56 4.02 4.56 4.60 #### Energy consumption 2023 2022 2021 2020 Energy from electricity (million GJ) 1.50 1.50 1.57 1.78 Energy from fossil fuel use (million GJ) 1.64 1. 51 1.85 2.09 Solar energy (million GJ) 0.00022 0 .1 0.38 0.36 Total energy used (million GJ) 3 .14 3.01 3.42 3.87 Energy intensity (MJ/TTM) 3 15.332 16.164 19.04 20 .16 Electricity consumption (MWh) 416,824 415,732 494,626 434,916 Diesel consumption (kl) 45,263 41,800 57,838 51,285 #### Water 2023 2022 2021 2020 Water withdrawals by source (1,000 m 3 ) Freshwater withdrawal 369 767 865 785 Potable water withdrawal from EWRP 4 1,097 1, 312 1 , 711 1 , 711 Total withdrawal 2 7,115 34,472 28,444 25,861 Surface water 5 19,530 25,788 19,384 16,929 Ground water 5 5,862 6,413 6,050 5,537 Third-party 1,753 2,271 3,067 3,432 Water treated (%) 69 57 57 66 Water efficiency (reuse/recycle) (%) 96 96 95 58 Water discharges (1,000 m 3 ) Total water discharged 25,842 19,869 21,835 20,347 Treated water discharged from EWRP 6 9,764 5,995 7,408 5,757 Total consumption 9,575 12,567 11 , 9 9 4 13 , 075 ### Performance tables 1. Total scope 3 emissions for 2022 have been restated from 35,947 kt CO 2 e due to the addition of shipping related emissions in category 9. 2. The carbon intensity metrics for 2022 have been restated based on changes to the total tonnes moved at Isibonelo, where key mining processes such as dozing and pre-stripping had erroneously been excluded from the calculation. 3. The energy intensity metrics for 2022 have been restated based on changes to the total tonnes moved at Isibonelo, where key mining processes such as dozing and pre-stripping had erroneously been excluded from the calculation. 4. 2020-2022 potable water values for Zibulo colliery corrected, previously overstated due to incorrect inclusion of non- potable flow to store. 5. In the 2022 environmental, social and governance report surface water and ground water values were reversed due to a mapping error in the report production process. This has been corrected. 6. Capturing error corrected on 2020-2022 treated water discharged from EWRP – previous numbers included EWRP consumption and discharge THUNGELA CLIMATE CHANGE REPORT 2023 36 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 36 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY APPENDICES ![]() ### TCFD Index TCFD recommendation Page GOVERNANCE Disclose the organisation’s governance on climate-related risks and opportunities a) Describe the board’s oversight of climate-related risks and opportunities Climate Change Report (CCR): 10-12 Integrated Annual Report (IAR): 92-134 b) Describe management’s role in assessing and managing climate-related risks and opportunities CCR: 12 IAR: 95, 130-131 STRATEGY Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s business, strategy and financial planning where such information is material a) Describe the climate-related risks and opportunities the organisation has identified over the short, medium and long term CCR: 17-20 b) Describe the impact of climate-related risks and opportunities on the organisation’s business, strategy and financial planning CCR: 17-20 c) Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario CCR: 21-26 RISK MANAGEMENT Disclose how the organisation identifies, assesses and manages climate-related risks a) Describe the organisation’s processes for identifying and assessing climate-related risks CCR: 15 b) Describe the organisation’s processes for managing climate-related risks CCR: 14-15 c) Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organisation’s overall risk management process CCR: 14-15 METRICS AND TARGETS Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process CCR: 27-32 b) Disclose scope 1, scope 2 and, if appropriate, scope 3 GHG emission and the related risks CCR: 27-28 c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets CCR: 27-28 THUNGELA CLIMATE CHANGE REPORT 2023 37 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 37 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY APPENDICES ![]() ### Glossary TERM USED Definition APC Advanced process control APS Announced pledges scenario BUSA Business Unity South Africa CBAM Carbon Border Adjustment Mechanism CCUS Carbon capture, utilisation and storage CDP Carbon Disclosure Mechanism CEO Chief executive officer CIAB Coal Industry Advisory Board (to the International Energy Agency) CO 2 Carbon dioxide CO 2 e Carbon dioxide equivalent CSI Corporate social investment Decarbonisation Reducing the carbon emissions associated with electricity, industrial activities, and transportation DEFRA United Kingdom Department of Environment, Food and Rural Affairs DFFE Department of Forestry, Fisheries and the Environment EIUG Energy Intensive Users Group Ensham Mine An unincorporated joint venture between Sungela and Bowen ESG Environmental, social and governance EWRP eMalahleni Water Reclamation Plant GHG Greenhouse gas GHG Protocol Standards and guidance for corporate accounting and reporting on emissions, which help governments and business leaders to understand, quantify, and manage emissions. The GHG Protocol separates emissions into different scopes depending on source. It is available at: https://ghgprotocol.org/sites/default/files/ standards/ghg-protocol- revised.pdf TERM USED Definition Group Thungela and its subsidiaries, joint arrangements and associates Fugitive emissions Emissions that are not produced intentionally and are not physically controlled. ICMM International Council on Mining and Metals IEA International Energy Agency IPCC Intergovernmental Panel on Climate Change IPP Independent power producer IRM Integrated risk management ITTCC Industry Task Team on Climate Change JSE Johannesburg Stock Exchange Limited KPI Key performance indicator kt A measure representing 1,000 tonnes LOM Life of mine LTIP Long-term incentive plan Mafube Mafube Coal Mining Proprietary Limited MCSA Minerals Council of South Africa Mineral Resource A concentration or occurrence of material of intrinsic economic interest in or on the earth’s crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into inferred, indicated and measured categories ML Megalitre M&A Mergers and acquisitions Mt Million tonnes Mtce Million tonnes coal equivalent THUNGELA CLIMATE CHANGE REPORT 2023 38 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 38 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY APPENDICES ![]() TERM USED Definition MTCO 2 e Million tonnes carbon dioxide equivalent Mtpa Million tonnes per annum NBI National Business Initiative NBS Nature-based solutions Net zero Net zero emissions is reached when anthropogenic emissions of greenhouse gases to the atmosphere are balanced by anthropogenic removals over a specified period NZE Net zero scenario ORM Operational risk management Paris Agreement An agreement adopted on 12 December 2015 at the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC), dealing with emissions mitigation, adaptation, and finance, which came into force 4 November 2016 (UN Doc FCCC/CP/2015/10/Add.1). ROM Run of mine, representing the product extracted from mining operations before it is processed into saleable product SCS Sustainable Coal Stewardship SLP Social and Labour Plan STEPS Stated policies scenario STI Short-term incentive t Metric tonnes 1,000 kg TCFD Task Force on Climate-related Financial Disclosures Thungela Thungela Resources Limited The Bill The Climate Change Bill TFR Transnet Freight Rail TTM Total tonnes moved UN SDGs United Nations Sustainable Development Goals USD United States Dollar VRE Variable renewable energy ZAR South African Rand THUNGELA CLIMATE CHANGE REPORT 2023 39 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY 39 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY APPENDICES ![]() ### Additional information #### Thungela Resources Limited 25 Bath Avenue PO Box 1521 Rosebank Saxonwold Johannesburg Johannesburg 219 6 2132 South Africa South Africa Tel: +27 11 638 9300 This report is available at: www.thungela.com #### COMMENT OR QUERIES #### RELATED TO THIS REPORT Nikki Fisher Email: nikki.fisher@thungela.com #### INVESTOR RELATIONS Hugo Nunes Email: hugo.nunes@thungela.com Shreshini Singh Email: shreshini.singh@thungela.com #### MEDIA CONTACTS Hulisani Rasivhaga Email: hulisani.rasivhaga@thungela.com #### Forward-looking statements disclaimer and third-party information This document includes forward-looking statements. Allstatements included in this document (other than statements of historical facts) are, or may be deemed to be, forward-looking statements, including, without limitation, those regarding Thungela’s financial position, business, acquisition and divestment strategy, dividend policy, plans and objectives of management for future operations (including development plans and objectives relating to Thungela’s products, production forecasts and resource and reserve positions). Bytheir nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Thungela, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Thungela therefore cautions that forward- looking statements are not guarantees of futureperformance. Any forward-looking statement made in this document or elsewhere is applicable only at the date on which such forward-looking statement is made. New factors that could cause Thungela’s business not to develop as expected may emerge from time to time and it is not possible to predict all of them. Further, the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statement are not known. Thungela has no duty to, and does not intend to, update or revise the forward-looking statements contained in this document after the date of this document, except as may be required by law. Any forward-looking statements included in this document have not been reviewed or reported on by the Group’s independent external auditor. The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the market abuse regulation (EU) No.596/2014 as amended by the market abuse (amendment) (UK MAR) regulations 2019. Upon the publication of this announcement, this inside information is now considered to be in the public domain. THUNGELA CLIMATE CHANGE REPORT 2023 40 GOVERNANCEINTRODUCTION RISK MANAGEMENT METRICS AND TARGETS APPENDICESOUR CLIMATE CHANGE STRATEGY ![]() #### www.thungela.com