KUMBA IRON ORE LIMITED SUSTAINABILITY REPORT 2019 KUMBA IRON ORE LIMITED IRON KUMBA RE-IMAGINING SUSTAINABILITY REPORT 2019 SUSTAINABILITY MINING TO IMPROVE PEOPLE’S LIVES KUMBA’S 2015 HISTORY • Further 42% decline in iron ore prices – revised strategy from volume (increasing waste and production tonnes) to a value- based (cash-generating) strategy • Dividends suspended and restructuring of head office and support services at the mines • Slope failure at Thabazimbi, Board approves closure of the mine • Kumba achieved A-listing on the Global Climate Disclosure projects for water and climate change 2006 2016 • Sishen 21.4% residual mining • Unbundling of Kumba right awarded to SIOC Resources’ iron ore assets and • Agreement reached to transfer the re-listing of Kumba ownership of Thabazimbi to Resources as Exxaro Resources ArcelorMittal SA and a new Company Kumba • Restructuring of Sishen and Iron Ore, fully empowered with significant reconfiguration of 1931 BEE ownership of 26% • Iscor’s first mine established the Sishen pit at Thabazimbi in the Limpopo • Bottoming out of the iron ore province – mainly underground 2008 price • Maturity of Envision II, paid mining operations • Sishen JIG Plant (previously R75,000 per employee (after Sishen Expansion project) tax) in dividends, no capital formally opened in pay out due to decline in 1942 November 2008 Kumba share price • Open-pit operations • Construction started on commenced at Thabazimbi Kolomela 2017 1953 2011 • Kumba best performing share on the JSE • Sishen, our flagship operation, • Kolomela, first ore produced • Reinstate dividends established in the Northern five months ahead of schedule • Introduce three transformation Cape province and within budget horizons to enhance our • Maturity of the first phase of competitive position Envision (broad-based • Largely completed the relocation 1976 employee share ownership of the Dingleton community, with • The South African government scheme) with 6,209 employees only a small number of invested in the infrastructure to each receiving R576,045 community members refusing enable the export of iron ore (pre-tax) to leave from Sishen via the Sishen- • Kolomela achieved ISO 14001 Saldanha rail link and port Environmental Management and facility 2012 OHSAS 18001 Health and Safety • This opened up a new era of • Unprotected strike at Sishen in system certifications growth for the iron ore business the fourth quarter of 2012 1989 2013 2018 • Tswelelopele strategy with • Iscor is privatised • Finalisation of the new supply three horizons to achieve agreement with ArcelorMittal SA US$10/tonne margin • UHDMS pilot plant enhancement and extend the 2001 commissioned at Sishen in life of our assets beyond • Iscor unbundled into two fourth quarter of 2013 20 years separate companies, namely • Approval of the Dingleton Kumba Resources and Iscor relocation project • Transfer of Thabazimbi, including employees, assets and liabilities as well as the 2002 2014 mining rights to ArcelorMittal • Sishen achieved ISO 14001 • Kumba granted the mining right SA, effective 1 November 2018 Environmental Management and for the rail properties at Sishen • Kolomela mining right amended OHSAS 18001 Health and • 47% decline in iron ore prices to include Heuningkranz Safety system certifications during the year prospecting right INTRODUCTION APPROACH TO REPORTING APPROACH TO REPORTING Navigating our 2019 reports Introduction DIRECTORS’ Our integrated reporting suite comprises the following reports: KUMBA IRON ORE LIMITED KUMBA IRON ORE LIMITED INTEGRATED REPORT 2019 AUDITED ANNUAL FINANCIAL RESPONSIBILITY STATEMENTS 2019 KUMBA IRON ORE LIMITED KUMBA KUMBA IRON ORE LIMITED RE-IMAGINING RE-IMAGINING INTEGRATED REPORT 2019 REPORT INTEGRATED MINING TO MINING TO IMPROVE 2019 ANNUAL FINANCIAL STATEMENTS IMPROVE The Kumba Board, supported by PEOPLE’S LIVES PEOPLE’S LIVES the Audit Committee, has overall accountability for this report. It delegated the responsibility to oversee the reporting process to its Integrated Report (IR) Annual Financial Statements (AFS)* Social, Ethics and Transformation A succinct review of our strategy and business model, Detailed analysis of our financial results, with audited Committee, which was assisted by operating context, governance and operational financial statements, prepared in accordance with performance, targeted primarily at current and International Financial Reporting Standards (IFRS). a Steering Committee comprising prospective investors. executive managers and a KUMBA IRON ORE LIMITED KUMBA IRON ORE LIMITED SUSTAINABILITY REPORT 2019 ORE RESERVE (AND SALEABLE dedicated reporting team. The PRODUCT) AND MINERAL RESOURCE REPORT 2019 Board collectively reviewed the content of this report and confirms KUMBA IRON ORE LIMITED RE-IMAGINING RE-IMAGINING SUSTAINABILITY REPORT 2019 SUSTAINABILITY MINING TO MINING TO IMPROVE IMPROVE that it believes this Sustainability PEOPLE’S LIVES PEOPLE’S LIVES Report 2019 addresses our material issues, and is a balanced and appropriate presentation of the sustainability performance of the group. The Kumba Board approved Sustainability Report (SR) Ore Reserve (and Saleable Product) and Mineral Resource Report (ORMR)* this report on 13 March 2020. Reviews our approach to managing our significant environmental, social and governance (ESG) issues and Reported in accordance with the South African addressing those sustainability issues of interest to a Code for the Reporting of Exploration Results, broad range of stakeholders. Mineral Resources and Mineral Reserves Buyelwa Sonjica (SAMREC Code – 2016 edition). Chairperson: Social, Ethics and * Published on 18 February 2020. Transformation Committee 1 Cover images 1. The small business hub in Kathu provides funding and training for aspiring SMMEs in the 2 area. Mxolisi Mashele, a Procurement Specialist at Sishen, with Boineelo Melato, a Social KUMBA IRON ORE LIMITED and Economic Development Intern at the hub. Online SUSTAINABILITY REPORT 2019 SUSTAINABILITY 3 2. Strata Control Officer, James Banda from Kolomela, at the Kapstevel pit selecting the scan area for the ground probe SSR-FX used for monitoring high wall stability. Each of these reports, with additional updated information, is available on our website: 3. Kolomela has donated two complete prefab classrooms to Postmasburg High School. 4 4. Happy Olyn, pictured at his plant nursery in Kathu, is the owner of Myidea services in the 5 Siyathemba village, which provides landscaping and cleaning services to Sishen. w ww.angloamericankumba.com 5. Community members living in the town of Jenn-Haven, approximately 50km from Kolomela, being taught bricklaying. They are laying bricks on a new road in their own town as part of More specific information can be found with skills development and training. The road was funded by Kolomela. our page reference throughout this report. Contents IFC Kumba’s history Our people Environmental impacts Appendices 33 Safety and health 77 Environmental management 104 Performance tables Introduction 49 Workforce culture and capability 82 Water 113 Climate change disclosures 1 Approach to reporting 86 Climate change 114 United Nations Sustainable 2 Performance highlights Building social capital 92 Mine closure, rehabilitation and Development Goals (SDGs) 2 About this report 59 Upholding high social standards biodiversity 116 B-BBEE scorecard 3 Our values 64 Making a positive social contribution 97 Air quality 117 Summary GRI Table 4 Creating and sharing value with 99 Mineral residue management 122 Independent assurance report our stakeholders 102 Non-mineral waste 125 Reporting criteria Our approach 126 Glossary of icons 5 Who we are 127 Glossary of terms and acronyms 7 Social, Ethics and Transformation 132 Administration Committee Chairperson review 10 Business model and integrated value chain 12 Chief Executive’s review 16 Measuring performance 18 Business and sustainability strategies 21 Governance and management approach 30 Stakeholder engagement Kumba Iron Ore Limited Sustainability Report 2019 1 INTRODUCTION PERFORMANCE HIGHLIGHTS AND ABOUT THIS REPORT PERFORMANCE HIGHLIGHTS Fatality-free 12 0.69 SINCE MAY 2016 HIGH POTENTIAL INCIDENTS LOST-TIME INJURY FREQUENCY RATE 2018: zero p 2018: 7 q 2018: 0.92 p NO LEVEL 3 TO 5 ENVIRONMENTAL HISTORICALLY DISADVANTAGED SOUTH INCIDENTS FOR FOUR CONSECUTIVE 25% AFRICANS HELD 71% OF MANAGEMENT YEARS WOMEN IN MANAGEMENT POSITIONS 2018: 1 p 2018: 24% p 2018: 68% p R170.9 million R13.9 billion R2.4 billion SPENT ON DIRECT SOCIAL INVESTMENT SPENT ON PROCUREMENT FROM SPENT ON SUPPLIERS IN HOST HDSA BUSINESSES COMMUNITIES 2018: R120.5 million p 2018: R11.8 billion p 2018: R1.4 billion p FTSE Russell confirms that Kumba has been independently assessed In 2020, Kumba Iron Ore Limited received a rating of A (on a scale of according to the FTSE4Good criteria, and has satisfied the requirements AAA-CCC/in the MSCI ESG rating assessment. to become a constituent of the FTSE4Good Index Series. Created by the global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance of companies demonstrating For more information visit: www.msci.com/esg-ratingsv strong environmental, social and governance (ESG) practices. ABOUT THIS REPORT PURPOSE AND SCOPE OF THIS REPORT Annual Financial Statements (AFS), and Ore Reserve (and Saleable This report seeks to provide our key stakeholders – namely our Product) and Mineral Resource (ORMR) report. The reporting shareholders, employees, local communities, non-governmental process