African Rainbow Minerals : 2023 Climate Change and Water Report (5.24 MB)

OUR 2023 SUITE OF REPORTS

IAR 2023 integrated annual report

A holistic assessment of ARM's ability to create sustainable value, with relevant extracts from the annual financial statements, the environmental, social and governance (ESG) report and Mineral Resources and Mineral Reserves report.

AFS 2023 annual financial statements

The audited annual financial statements have been prepared according to International Financial Reporting Standards (IFRS).

ESG 2023 ESG report

A detailed review of our performance on key environmental, social and governance matters. The ESG report includes the full remuneration report and should be read in conjunction with the GRI Index.

CCW 2023 climate change and water report

A detailed review of our performance on our key climate change and water matters, in line with the Task Force on Climate-related Financial Disclosures (TCFD).

Information available on our website www.arm.co.za

Information available elsewhere in our reports

KING 2023 King IVTM* application register

A summary of how ARM implements the principles and practices in King IV to achieve the governance outcomes envisaged.

MRMR 2023 Mineral Resources and Mineral Reserves report

In line with JSE Listings Requirements, ARM prepares Mineral Resources and Mineral Reserves statements for all its mining operations as per SAMREC guidelines and definitions (2016).

AGM 2023 notice to shareholders

• Notice of annual general meeting
• Form of proxy
• Commitment to good governance
• Board of directors
• Report of the audit and risk committee
• Report of the social and ethics committee chairman
• Summarised remuneration report
• Summarised directors' report
• Summarised consolidated financial statements.

TM Copyright and trademarks are owned by the Institute of Directors in South Africa NPC and all its rights are reserved.

All monetary values in this report are in South African rand unless otherwise stated. Rounding may result in computational discrepancies on management and operational review tabulations.

PageContentsheader continued

for the year ended 30 June

Overview

Governance

Climate change

Water

ARM's reporting against the United Nations Global Compact, sustainability data tables, the United Nations Sustainable Development Goals (SDGs) and GRI index are available on www.arm.co.za

OVERVIEW GOVERNANCE CLIMATE CHANGE WATER

African Rainbow Minerals (ARM) is a leading South African diversified mining and minerals company with operations in South Africa and Malaysia. ARM mines and beneficiates iron ore, manganese ore, chrome ore, platinum group metals (PGMs), nickel and coal. It also produces manganese alloys and has a strategic investment in gold through Harmony Gold Mining Company Limited (Harmony Gold).

CLIMATE CHANGE AND WATER REPORT 2023

1

Overview

As its core framework, this report uses the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the position statements of the International Council on Mining and Metals (ICMM) on water stewardship and climate change.

OVERVIEW GOVERNANCE CLIMATE CHANGE WATER

CLIMATE CHANGE AND WATER REPORT 2023

About this report

This report details our climate-change and water-management strategies, risk- management processes, and targets and performance measurements between 1 July 2022 and 30 June 2023 (F2023).

OVERVIEW GOVERNANCE CLIMATE CHANGE

It should be read with our F2023 integrated and ESG reports, available on our website at www.arm.co.za.

It covers operations that we either directly control or jointly manage, including those that form part of our ARM Ferrous and ARM Platinum divisions. During this financial year, we included Bokoni Platinum Mine (acquired in September 2022)

in various programmes related

to climate change and water. In this report we include Bokoni Mine in our greenhouse gas (GHG) targets, and in the integration of climate change into our enterprise risk management (ERM) processes. Performance data for Bokoni Mine will be detailed in the F2024 report.

Like our ESG report, this report does not address the operations, joint ventures or investments that we do not manage directly - such as ARM Coal, the Sakura ferroalloys smelter and Harmony Gold - or projects that are in exploration, development

or feasibility phases. These investments are part of our scope 3 GHG emissions inventory and included in our assessment and management of indirect climate and water-related risks and opportunities. All information is provided on a 100% basis throughout.

In our climate-change and water- management strategies and

reporting, we draw on various frameworks, guidelines, good- practice measures, and regulatory compliance requirements. We also seek to continually meet the reporting expectations of our varied and evolving stakeholder base.

As its core framework, this report uses the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and the position statements of the International Council on Mining and Metals (ICMM) on water stewardship and climate change. The climate- change and water-disclosure expectations have been evolving significantly in recent years. Accordingly, in F2023, we reviewed climate change and water-related frameworks and standards to inform the drafting of this report. Relevant frameworks and standards considered include:

• CDP (formerly the Carbon Disclosure Project)
• FTSE-RussellESG Index Series and the FTSE-Russell TPI Climate Transition Index Series
• GRI sector standard project for mining
• ICMM membership requirements and principles and related- performance expectations, including the ICMM Water Reporting Good Practice Guide, 2nd edition

• IFRS S2 Climate-related Disclosures, particularly volume 10 (Metals & Mining, page 71-78)
  of the industry-based guidelines
• JSE Guidance for Climate Disclosure
• Transition Pathway Initiative (TPI)
• Minerals Council of South Africa (MCSA) position on climate change
• World Economic Forum's (WEF) stakeholder capitalism metrics
• The United Nation's Sustainable Development Goals
• Engagements with non- governmental organisations (NGO), non-profit organisations and other stakeholders
• Regulatory reporting requirements
• Other evolving reporting expectations.

Through this report, we justify and explain how and where we have used a comparative basis

of reporting with previous years. We also cross reference content to relevant TCFD recommendations.

For illustrative purposes, the values in the report graphs are rounded to two decimal places. For exact percentages of year-on-year changes, please refer to the numbers detailed in the text.

WATER

CLIMATE CHANGE AND WATER REPORT

Environmental monitoring at Khumani Mine

2023

Social and ethics committee chairman's statement on the climate change and water report

The committee oversees the management of ESG risks identified through the enterprise risk management (ERM) process, which considers internal and external stakeholders as well

as governance processes.

F2023 focus

During the year, in relation to climate change and water, the committee:

Monitored tailings storage facilities (TSF) at our managed operations and progressed in conformance to the Global Industry Standard on Tailings Management (GISTM)

OVERVIEW GOVERNANCE CLIMATE CHANGE

ARM welcomes the increased focus on environmental and social responsibility

by shareholders, funders, customers, civil society and other stakeholders

Member

Dr RV Simelane (chairman)

JA Chissano

AK Maditsi

DC Noko

JC Steenkamp

Appointed

February 2007

August 2019

June 2012

August 2019

April 2018

Monitored ongoing initiatives to reduce carbon emissions and further improve our corporate water and climate-change reporting process. This included refining operation-specific decarbonisation pathways, setting short and medium-term company and operational GHG emission- reduction targets, and assessing performance against operation-specific water targets

WATER

as a sign that the importance of sustainability is becoming more widely accepted. ARM's motto of 'We do it better' includes an unwavering commitment to ethical and responsible practices.

Dr Rejoice Simelane Chairman of the social and ethics committee

Composition

The committee's terms of reference provide for a minimum of three members, with a majority

of independent non-executive directors. The committee currently comprises five independent non- executive directors who bring extensive experience in mining operations, human resources, sustainable development and stakeholder engagement.

Invitees to meetings include the chief executive officer, finance director, executive: investor relations and new business development, divisional chief executives, executive: risk, executive: sustainable development, group executive: human resources, group executive: legal and executive: compliance.

The committee met four times in F2023.

Assurance

In line with its terms of reference, the committee had oversight

of ARM's appointment of a new independent external sustainability assurance provider for the 2023 ESG report and reported to ARM's audit and risk committee that the appointment was made.

Execution of responsibilities

Based on its activities, we believe the social and ethics committee has executed its duties and responsibilities during the financial year in line with the Companies Regulations promulgated under the Companies Act and its terms of reference.

Working together to entrench good ESG practice

Sustainability is embedded in ARM's strategy and a principle deeply integrated into our operational ethos. We recognise that the company's long-term success and ability to create value are inherently tied to how responsibly and ethically we act.

The traditional core factors

of production, particularly in the mining industry, expand to recognise the importance of ESG factors such as the environment, human capital and our relationships with our host communities and broader society. Our activities help to realise the value in the country's mineral reserves

to catalyse growth and development. In the process, we are committed to operating sustainably, ethically and with full regard for the interests of our stakeholders and mindful

of our responsibility to manage and

mitigate potential negative impacts arising from

our activities and operations. ESG targets are included in the remuneration packages of relevant executives to align management and stakeholder interests.

We are proud to be a member of the ICMM and share its commitment to mining with principles. ARM has implemented the ICMM's sustainable development framework and, since F2019, our operations (except for Bokoni Mine which was acquired in September

2022) and the corporate office have completed self-assessments against the ICMM's

38 performance expectations. ARM determined that the operations prioritised for validation will follow

the ESG Report assurance process, with the undertaking that all operations will be subject to the external performance- expectations validation process over a three-year cycle. In F2023, self-assessments of performance expectations for Modikwa and Khumani mine were validated as part of the external assurance over ESG data.

CLIMATE CHANGE AND WATER REPORT 2023

Social and ethics committee chairman's statement on the climate change and water report continued

OVERVIEW

Responsible stewardship of natural resources

Protecting and preserving our natural resources is integrated into our business strategy. It is becoming increasingly clear that climate risks

to decarbonise are more ambitious than before, and that our evolving strategy is in line with our long-term commitment and will ensure future targets are achieved.

costs, constrain growth, disrupt our supply chains and place our communities under strain. We have made significant advances in measuring water impacts and water reporting over the last four

We have made significant advances in measuring water impacts and water reporting over the last four years. We now comply with updates to the ICMM's Water Accounting Framework (WAF).

GOVERNANCE CLIMATE

are escalating rapidly, underscoring the urgency of changing the way we work and consume natural resources.

We recognise the critical global challenges that climate change presents and the effects these may have on our business, our stakeholders and the world. We are committed to participating in the global response to reduce carbon emissions and to mitigating the physical impacts caused by climate change.

We announced our long-term GHG emission-reduction target at the start of F2022, which aims to achieve net-zero GHG emissions (scope

1 and 2) mining by 2050. This year we focused on refining our operation- specific decarbonisation pathways, and setting short and medium-term scope 1 and 2 emission-reduction targets. We are working to identify contextually appropriate and just mitigation options for each operation.

Over the last year, ARM's absolute scope 1 and 2 emissions decreased by 4% and electricity consumption decreased by 4%. The current level of scope 1 and 2 emissions (1.8 million tonnes of carbon dioxide equivalent; tCO2e) represents a 14% decrease compared to our F2018 baseline and a 28% decrease on the previous baseline in F2014. Although we fell short of meeting our short- term (F2023) target (achieving

a 3.5% rather than 4% reduction

in scope 1 and 2 emissions), we are confident that our current initiatives

In F2024, we will explore and set appropriate scope 3 targets in line with the ICMM 2021 climate change position statement, with guidelines due to be released by the ICMM in F2024. We will also contribute to advancing partnerships that enable credible target setting and emission reductions across

our value chains.

Over the past three years, we have deepened our understanding of the resilience of our business to climate transition and physical risks. South Africa's heavy reliance on electricity from coal-fired power stations and serious constraints on the national power grid limit our ability to reduce our carbon footprint through business-as-usual methods.

In April 2023, ARM platinum division concluded a 20-year power purchase agreement (PPA) to wheel 100MW of solar photovoltaic (PV) power to its platinum operations, which is expected to save circa

4 800 000tCO2e over 20 years. ARM ferrous division is investigating a possible energy blend for our Northern Cape operations, including the combination of solar, battery storage, wind and gas. Additional medium-term emission reduction plans include possible collaborations and further optimising energy efficiencies at our operations.

Globally, water systems are under threat from rising consumption, pollution, weak governance and climate change. ARM is exposed to greater water-related risks that could affect production, increase

years. We now comply with updates to the ICMM's Water Accounting Framework (WAF). From this report, we are following the guidelines of the ICMM's recently revised water reporting good practice guide.

Operational water withdrawals, excluding other managed water (water that is actively managed without intent to supply operational water demand) increased by 9% due largely to improved rainfall accounting and activities associated with the Merensky Project at

Two Rivers Mine. Following implementation of the new ICMM water reporting guidelines, total water withdrawals - including operational and other managed water - increased by 22% compared

to F2022, primarily due to the increases at Two Rivers Mine and the inclusion of water in the pit at Nkomati Mine. Our water-reuse efficiency, a key indicator in monitoring and managing consumption and losses, was at 78%.

Over the past two years, and aligned with the ICMM's Water Reporting Good Practice Guide, we have set operation-specific water targets for all operations except the newly- acquired Bokoni Mine (targets will be set in F2024). Our assessments this year show that the majority (81%) of these targets have been met

or are on track to be met.

Responsible tailings management is a priority for ARM, the mining industry and stakeholders.

In addition to the critical compliance requirements set in the guidelines of the Department of Mineral Resources and Energy (DMRE) and the South African National Standard on the management

of mine residue (SANS 10286), ARM is implementing a TSF management policy and standard that align with appropriate good- practice standards nationally and internationally, including the GISTM.

Reviews by Independent Tailings Review Boards for each TSF were performed in F2023 and conformance to the GISTM was self-assessed at Nkomati, Two Rivers, Modikwa and Khumani mines during the year, followed by GISTM conformance verification third party validation in July 2023.

In August 2023, we released the ARM Report on conformance to the GISTM (available on our website) to provide public disclosure and confirmation that ARM operations have implemented effective risk management processes and systems to ensure that TSFs are managed effectively and that any risk to people and the environment is identified and mitigated. Bokoni Mine is planning to conform to the GISTM by August 2024. The TSFs at Black Rock and Beeshoek mines are classified

as lower risk and these mines will conform by August 2025.

For further information regarding how we continue to integrate measurable greenhouse gas emission reduction

targets into executive remuneration, please see the remuneration report in the ESG report.

We believe this is the most effective and sustainable way of aligning executive and stakeholder interests, offers a simpler way to assess performance, and gives management a clearer understanding of what they can practically drive at the operations to achieve ARM group-level

GHG emission reduction targets.

Ethics and compliance

ARM's long-term success and reputation depend on our unwavering commitment to ethics and integrity. The code of conduct is built on our values and emphasises our dedication to the highest moral, ethical and legal compliance in dealing with our stakeholders. Directors and employees are required to maintain these standards to ensure the company's business is conducted honestly, fairly, legally, reasonably, in good faith and in the best interests of all stakeholders. The committee reviews reports of calls made to the independent anonymous whistleblower facility and the outcomes of resulting investigations.

We regard legal compliance as the minimum requirement and engage with regulators to ensure that licences and permit applications are approved and in place, so that

we continue to comply with the conditions of these authorisations.

Amendments to licences and permits is an ongoing process as operations expand and projects evolve, underpinned by internal and external compliance monitoring processes. Environmental incidents and

ARM's response are discussed ESG on page 71 of our ESG report.

The ARM group human rights policy, which was approved by the board in April 2023, formalises our commitment already set out in the code of conduct to conducting business in a manner that respects and gives utmost consideration

to the rights and dignity of all people, while centrally embracing the values and principles of ubuntu. It promotes respect for human rights and instils a culture of human rights between and among employees and the group's stakeholders.

Acknowledgements

I extend my sincere gratitude to my fellow committee members and the entire board for their support and contribution during the year. On behalf of the board, I thank management and employees for their diligence and ongoing commitment to operating responsibly, and our shareholders for their support and constructive engagements.

Dr RV Simelane Chairman of the social and ethics committee

CHANGE WATER

CLIMATE CHANGE AND WATER REPORT 2023

Our approach

OVERVIEW

We are committed to contributing to global efforts to reduce carbon emissions and mitigating the physical impacts of climate change. We are equally committed

to contributing

to a water-secure future that is socially and culturally equitable, environmentally sustainable, and economically beneficial.

To meet these commitments each year, we strive to better monitor and mitigate our environmental impacts, improve our understanding of and response to risks and opportunities, and comply with reporting and regulatory requirements.

We house climate change and water together in this single report given that they are inextricably linked. For the sake of clarity, we describe our climate-change and water journeys separately, in this and subsequent sections. However, where relevant, we describe how the respective activities and analyses intersect.

Our climate-change journey to date

The need for an urgent global response to the threat of climate change is clear, across all areas of society and the economy. We are committed to being part of the solution.

Setting targets

We have taken many notable GHG target-setting steps since we first

tracked and reported on GHG emission-reduction initiatives to the CDP in 2010. In F2020, we revised our carbon emission-reduction target based on a bottom-up assessment of opportunities to reduce GHG emissions at our operations, and a top-down assessment that included benchmarking against peer company targets and stakeholder expectations.

In F2021, ARM committed to achieving net-zero GHG1 emissions (scope 1 and 2) from mining by 2050 (figure 1). To achieve this commitment, we undertook to develop operation-specific decarbonisation pathways and associated short-term and medium- term targets. We recognise that decarbonisation cannot happen at all costs, particularly in the context of a developing country, and are working to identify contextually- appropriate and just mitigation options for each operation.

We began developing these decarbonisation pathways in

F2022. This year, we have focused on improving our underlying data (projected GHG emissions) and conducting additional assessments of GHG mitigation potential. We have also prioritised three main mitigation options within our decarbonisation pathways: energy-efficiency measures, renewable energy and emission-reducing new energy vehicles.

We used these pathways to set short and medium-termscope 1 and 2 targets that include operation- specific plans (figure 3). As part of these initiatives, by F2026 we will make incremental improvements

to our energy efficiency, secure large-scale renewable energy solutions and battery storage, and pilot battery electric vehicles underground.

Some of our most advanced explorations have focused on different opportunities to invest in renewable energy technologies and to procure clean energy from renewable sources.

By F2030 we plan to have sustained energy savings, to scale up existing and additional renewable energy solutions and new energy vehicle solutions, including appropriate opencast technologies.

In F2024, we will also explore and set appropriate scope 3 targets in line with the ICMM 2021 climate change position statement, and contribute to advancing partnerships that enable credible target setting and emission reductions across our value chains.

To track our progress and performance, this year we continued to improve the functionality of our ESG data system. This included incorporating financial metrics, and exploring options for integrating wider ESG-relevant metrics and related management activities. We are in the latter stages of choosing a preferred data solution and intend to roll-out the data system in F2024.

We consider executive incentives as an important mechanism for ensuring our GHG targets are achieved. This year, we have explored a methodology to integrate short-termtargets into the climate- change component of the long-termincentive scheme. This method offers a simple process for assessing performance and provides management with a clear picture of what they can practically drive at the operations to achieve the ARM group-levelGHG targets.

Other emission-reduction activities underway include: internal carbon pricing; energy efficiency projects and capital allocation; and explorations into low-carbon technologies and products.

Performance

Our actual emissions have decreased over time due largely to Nkomati Mine moving to care and maintenance and Machadodorp Works stopping the metals recovery plant. However, for deeper insights into our performance, we consider a business-as-usual baseline that isolates the impacts associated with our emission-reduction initiatives.

Based on these assessments, our performance has varied over the years. Between F2013 and F2018, our emissions reduced steadily (figure 5 - carbon footprint scope 1 and 2). These reductions slowed in F2019 due to challenging market conditions, limited viable options and implementation of many "quick-win" initiatives. However, due to additional investments and improved measurement and reporting,

we registered significant additional emission savings in F2020, F2021 and F2023.

Despite these emission savings, we fell short (by 0.5%) of meeting our F2023 target. The target included a 4% absolute reduction of scope 1 and 2 emissions by F2023 against an F2018 business-as-usual baseline through emission-reduction initiatives implemented from F2019. To determine our performance relative to this target, we calculated the percentage of emission reductions that could be attributed to our emission-reduction initiatives, and found a 3.5% absolute reduction

of scope 1 and 2 emissions compared to the business-as-usual baseline.

We anticipated not meeting this target, given a reduction of only

1.8% up to F2022 (figure 9). The near-doubling of emission reductions in F2023 is linked to implementing some of the new decarbonisation measures (page 63), as well as improved measurement and GHG reporting at Cato Ridge Works (which helped to identify emission- reduction opportunities). These reductions were achieved despite emission increases caused by changing operating conditions (such as higher stripping ratios,

or mining deeper and farther), expansion projects (Merensky project at Two Rivers Mine), as well as demand and product transport- related instability at our iron ore mines in the Northern Cape.

Our current work to develop decarbonisation pathways and set operation-specific targets represents a more ambitious decarbonisation strategy that includes a larger suite of more effective mitigation options. This strategy is in line with our long-term commitment, and characterised by clearer plans and associated resources and systems. Following this strategy will ensure future targets are achieved.

Managing risks

Over the last 12 months, and building on the climate-scenario analysis first done in F2021, we have made notable progress in explicitly incorporating climate change into our ERM processes. We have started engaging with the businesses to highlight the need to explore operation-specific impacts from projected physical climate changes. Extreme weather events (eg heavy rainfall, drought, flooding) have already affected most of ARM's mining sites (see table 2) and, by assessing different climate futures,

we are gaining a stronger understanding of the physical climate risks to which some of our operations and suppliers will be exposed. Our work involves exploring appropriate response measures, and developing systems to ensure more structured, ongoing assessments of climate risks, through corporate webinars, operation training webinars, and operation-specific workshops.

Reporting

One of our primary focus areas involves improving our accounting and reporting processes. This year, we continued to improve emissions accounting at Cato Ridge Works, where process emissions represent 44% of ARM's scope 1 emissions and 10% of its scope 1 and 2 emissions on an operational control basis. We have also worked to:

• More accurately estimate the carbon content of dust and slag from production
• Add carbon contents from fine ore sources (Gloria and Nchwaning)
• Subtract carbon captured in metal recovery plant product
• Add metal recovery plant production to calculate emissions intensity
• Use tapped (hot) metal tonnes to calculate emissions intensity (ie removing the impact of losses on the mass balance calculation).

Operations and investments outside our operational control are again included under the scope 3 emissions category. This includes emissions associated with coal investments (based on percentage equity in Goedgevonden (GGV), Participative Coal Business (PCB) and ARM Coal, Harmony and Sakura).

GOVERNANCE CLIMATE CHANGE WATER

CLIMATE CHANGE AND WATER REPORT 2023

Our approach continued

OVERVIEW

We have also continued to improve the accuracy and completeness of our scope 3 GHG inventory. This year, our scope 3 GHG emissions were externally assured for the first time. We continue to engage in ICMM working groups and, in F2024 we will set appropriate scope 3 targets in line with the ICMM 2021

our extension-phase carbon budget which covers calendar years 2020 to 2024. The DFFE used its product- level carbon-intensity benchmark to provide a draft carbon budget for our smelters. We have had a series of engagements with the DFFE about this draft budget, but it has yet to be finalised. We have not yet received a

resilience to climate change. During our climate-scenario analysis process, we identified transformation initiatives (specifically enterprise and supplier development, LED, social and labour plan, CSI and community trusts) as having the potential to contribute to improved resilience of vulnerable host communities to

Figure 1: Our climate-change journey

TARGETS TOWARDS NET-ZERO

Actual reduction: 3.5%

GOVERNANCE CLIMATE CHANGE

climate change position statement. In addition, we contribute to advancing partnerships that enable credible target setting and emission reductions across our value chains.

We continue to comply with South African carbon budget requirements. In previous years, we complied with phase 1 of the carbon budget (voluntary, non-legislated phase), and the Department of Forestry, Fisheries and the Environment's (DFFE) extension phase, and were working to align to the legislated phase 2 of the carbon budget. In F2023, we received confirmation of

carbon budget for our mines, and mandatory carbon budgets are likely to come into effect only once the climate change bill has been promulgated. Until then, we will continue to comply with existing requirements, prepare for future budgets, engage with the DFFE and interrogate its budget-allocation methods.

Enhancing community resilience

We continue to investigate ways in which we can leverage our local economic development (LED) and corporate social investment (CSI) spending to enhance community

adapt to climate change. This year, we furthered a process to identify where existing initiatives contribute to this objective and can be scaled up, and where positive resilience outcomes can be driven by new transformation initiatives. Going forward, and to embed "climate resilience first" thinking across the organisation, we intend to co- develop a strategy that encompasses climate and development activities, and to develop practical tools that can support implementation of this strategy.

Targets:

• are underpinned by operation-specific targets
• are linked to incentives at executive and operational levels
• are tracked, refined and reported on using an ESG data system

WATER

ACTIONS

Environmental monitoring at Khumani Mine

Set long-term

GHG target

ARM aspires to achieve

net-zero GHG mining

(scope 1 and 2)

by 2050

Initiated process

to develop

operation-specific

decarbonisation

pathways

Updated executive

incentives and linked them to our GHG target

CLIMATE CHANGE AND WATER REPORT 2023

Our approach continued

OUR PRODUCTS ARE CONTRIBUTING TO A LOW-CARBON FUTURE

In F2017 and F2018, we completed site-specific risk assessments

at Beeshoek, Black Rock, Khumani, Nkomati, Modikwa and Two Rivers mines as part of a water- performance and reporting gap analysis and compliance project. In F2019, we used the WWF water

operational and corporate risk registers. We partner with local and regional government structures, where appropriate, to mitigate water risks outside of our mine boundaries.

Water stewardship and community resilience

through our LED and CSI spend programmes. These actions have the additional benefit of improving community relations and strengthening our social licence

to operate.

Reporting

OVERVIEW GOVERNANCE CLIMATE CHANGE

• Higher-qualityores optimise production and generate lower emissions
• Our high-quality lumpy iron lowers transport emissions
• Our high-grade manganese requires less energy to process.

• Hydrogen fuel cells use platinum to generate energy from hydrogen and oxygen; water is the only emission
• Our platinum can be used to create hydrogen fuel-cell electric vehicles, which offer a zero-emissions alternative to the internal combustion engine.

• Lithium-ionenergy storage supports the growth of renewable energy and electromobility
• Our nickel and manganese are used in these batteries.

risk filter* to support the identification and assessment of water-related risks at the operations. Water risks were discussed again as part

of climate and water workshops

in F2022. This year, we used detailed projections to understand the impact of climate change on the resilience of our business, which included considering different water-related futures (eg projected average annual

Investors and other stakeholders are increasingly calling for greater insight on catchment-level water balances, including projected demand and supply, as well

as water-quality elements. ARM's commitment to water stewardship drives our engagements with various stakeholders to find solutions appropriate to all water users' needs and to ensure the sustainability

External water-reporting requirements have evolved. Substantial work has been undertaken by the owners of various reporting initiatives to align reporting platforms and metrics. Given this evolution, the ICMM updated its Water Reporting Good Practice Guide, which includes guidance for more holistic and aggregated reporting. As an ICMM member,

WATER

Our water journey to date

Water is essential to all mining and metals operations. Without access to water, ARM cannot function.

We are increasingly exposed to water-related risks that could affect production, increase costs, constrain growth, disrupt our supply chains, and place our communities and employees under strain.

Our proactive and holistic water- management strategy facilitates how we sustainably manage our water resources. It is built around identifying and mitigating water- related risks, exploring opportunities, and engaging with partners

to achieve collective action. We focus on water balances, a hierarchy

of water uses, and minimising withdrawal of clean, potable

or municipal water. Our goal is to recycle 100% of water - excluding losses due to evaporation, seepage and entrainment - and to have

no uncontrolled discharges. This year we had one high impact (level 4) and no major impact (level 5) water- discharge incidents (page 99).

Setting targets

As an ICMM member, and in line with our water stewardship policy (page 76), we use water targets to better manage our withdrawals, consumption, outputs and reuse efficiency. Our initial target was set at the ARM-level in F2018, and included a 10% reduction of potable water withdrawals (surface and municipal sources) by F2020, relative to a baseline (set at F2011 levels; figure 2). Over the ensuing years, we increased the ambition of this target, in F2020 aiming for 15% less than the baseline by F2021, and

in F2021 aiming for 17% less than the baseline by F2022. In both instances, we met the targets and exceeded our ambition. However, without covering the multidimensional risks specific to each operational context (even mines in the same catchment areas face different water challenges), our operations did not find the targets useful for measuring and driving their water performance.

So, as a next step on our target journey, we focused on setting context-based water targets for

operations with material water-related risks. Starting in F2021, and in line with ICMM guidance, we have worked with operations and technical teams to develop process-oriented targets that include commitments for stakeholder engagement, and that detail collective action to address community access to water.

By F2022, we had set context-based water targets for 75% of our operations, and this year, through operation-specific workshops,

we evaluated the progress made towards these targets figure 13; page 96. The majority (81%) of these targets have been met or are on track to be met. This year, we also set targets for the two operations excluded from the F2022 target- setting process (Cato Ridge Works and Machadodorp Works). Targets for the newly-acquired Bokoni Mine will be set in F2024.

Managing risks

Another of our key activities focuses on water-related risks and opportunities, which we consider at company and asset levels.

rainfall, peak rainfall intensity, evapotranspiration, droughts) for each operation. Details of emerging or ongoing risks and/or opportunities, and our capacity

to manage these, are discussed at our quarterly management risk and compliance committee meeting, and our social and ethics committee meetings. Meeting outputs and decisions feed directly into the strategy development process.

We are also increasingly looking beyond our operational borders

to manage risks. Beginning in F2022, and continuing this year, we are leveraging the preliminary results

of our climate-scenario analysis

to reassess water-related risks in our supply chain. We are also using

a catchment-level approach

to manage some of the significant catchment-level water risks that some of our operations face. These include poor existing infrastructure, lack of funding and capacity

to deliver new infrastructure, and the impacts of climate change on water supply. We regard water availability, consumption and pollution as key risks and include these in both our

of water resources. These stakeholders include: the Department of Water and Sanitation (DWS); local communities; authorities at local, provincial and national levels; water forums; irrigation boards; catchment management agencies (CMA); farmers and other industry users.

Engaging with communities helps us understand and mitigate their concerns, identify how we can contribute to community water security, and increase transparency of our operations. Along with our joint-venture partners, and through our operations, we invest in local water infrastructure to improve community access to sufficient potable water and increase community resilience. The ARM Rural Upliftment Trusts also fund water-provision projects, including sinking and equipping boreholes for schools and communities around South Africa.

Following our climate-scenario analysis, we are investigating opportunities to enhance community resilience to water-related impacts

we responded to this by sensitising our operations to the changes and to prepare for reporting in line with the updated guidance. This report includes the revised format prescribed in the guidance, as well as the previous format (to facilitate year-on-year comparisons). Going forward, we will only include the revised format.

For improved accounting and clarity, we now distinguish between operational water withdrawals (water that enters the operational water system used to meet operational water demand; page 77) and the withdrawal of other managed water (water that is actively managed without intent to supply the operational water demand).

We continue to report on aggregated water metrics for all sites, and

we have started to collect and report on changes in operational water storage.

We have also ensured compliance with updates to the ICMM's WAF released in 2021.

CLIMATE CHANGE AND WATER

• WWF's water risk filter (https://waterriskfilter.panda.org/) is an online tool that helps companies and investors assess and respond to water-related risks facing their operations and investments across the globe. The tool rates operational and basin risk on a scale of 1 to 5 and considers physical, regulatory and reputational water risks. Aggregated risk scores for catchment stress are computed by applying industry-specific weightings. Operational risks scores are calculated based on operation-specific responses to the WWF water risk filter questionnaire

REPORT 2023

Our approach continued

Figure 2: Our water journey

F2023

Began to incorporate climate change into our ERM processes, and began working with the business to explore the operation-specific impacts associated with projected physical climate changes.

* Further detail can be found in the ESG report on pages 36 to 41.

ESG

REPORTING

Through all our efforts we report on water using the ICMM water accounting framework guidelines. Up until F2022, our reporting was based on the 2019 guidelines, but in F2023 we began reporting data according to the revised guidelines.