Kestrel Coal Resources - Sustainability Report 2022

SUSTAINABILITY REPORT 2022

Acknowledgement and Recognition of Country

Kestrel Coal Resources acknowledges and pays respect to the Western Kangoulu people, as the registered native title claimants for the land, on which we operate. We pay our respects to Elders past, present and emerging.

We proudly work in collaboration with the Western Kangoulu people under a voluntary Cultural Heritage Investigations and Management Agreement to achieve effective management that actively maintains, protects, and preserves heritage. Working together, our shared goal is to create meaningful, sustainable opportunities for Indigenous peoples through employment and business development.

Table of Contents

IMPORTANT NOTICES AND DISCLAIMER

This document has been prepared by Kestrel Coal Resources (ABN 98 624 245 325) (Kestrel) for informational purposes only. Kestrel has prepared this document based on information available to it at the time of preparation. The information contained in this document is general in nature & does not purport to be complete. The document does not contain an offer, solicitation, invitation to apply, recommendation or advice to buy, sell or hold any securities of Kestrel. This report has been prepared in accordance with the International Council on Mining and Metals (ICMM) Mining Principles. Metrics describing health, safety, environment, people and community related performance in a joint venture operation, from 1 January 2022 – 31 December 2022. This document may contain forward looking statements, including statements about plans, strategies and objectives of management; and anticipated productive lives of projects, mines and facilities; and climate change, other environmental and energy transition scenarios (which are potential scenarios and not forecasts). These forward looking statements are not guarantees, or predictions of future performance.

Certain information contained in this document is based on information prepared by third parties. Kestrel has not prepared and is not responsible for this third party material and accordingly Kestrel does not make any representation or warranty that this third party material is accurate, complete or up to date. Kestrel accepts no obligation to correct or update this third party material and all persons relying on this information do so at their own risk.

From the CEO

Shane Hansen CEO Kestrel Coal Resources

I am pleased to present our Sustainability Report for 2022, outlining how we create and sustain long-term value in a rapidly changing world, across the critical areas of Environmental, Social and Governance (ESG). As a business, Kestrel Coal Resources (Kestrel) is committed to keeping ESG best-practice at the core of all we do because we know this is essential for a sustainable future and critical to growing value for all our stakeholders. Our initiatives and approach have focused on establishing and maintaining meaningful, mutually beneficial and sustainable longterm relationships.

In a year where we celebrated the 30-year anniversary of the mine, Kestrel was also the proud recipient of the 2022 Australian Mine of the Year and the Outstanding Mine Performance award at the Australian Mining

Prospect Awards. This outstanding achievement and peer recognition is testament to the dedication of our team, a culture of respect, trust and positive communications throughout the business.

We are proud to have made substantive advances in our sustainability strategy in recent years, which has complimented our strong operating and financial performance. Significant focus has occurred on the key areas of ESG responsibilities including ongoing pursuit of innovative solutions to make our operations more sustainable, environmentally considered and energy efficient.

We recognise sustainability is critical to building and maintaining resilience as we continue to progress on our ESG journey. In 2022, we delivered our first ESG Strategy which was endorsed by our Board, putting ESG at the heart of our business. Our ESG Strategy mirrors our business approach of balancing growth with sustainability and takes into account the impact our decisions have on our stakeholders, community and the environment.

We are dedicated to creating a vision for a better tomorrow and empowering people to do and be their best. When we get this right, we have less injuries, less downtime, a better culture — enabling a high level of production through excellence in safety performance. Ultimately, for us it’s about making the right way, the easy way.

This year also saw the continuation of the highly successful ‘Kestrel Lifestyle Challenge’ to encourage employees and contractors to adopt positive exercise habits and expert advice promoting sustainable and nutritional meal choices. The success of this program was highlighted as the Winner of the Health Program Award at the 2022 Queensland Mining Industry Health and Safety

Conference. The program has brought people together under a common goal - “improving your health, improves your lifestyle”.

We continue to invest heavily in the next generation of Kestrel employees, whether they be apprentices, graduates, trainees or experienced industry veterans. In 2022 we delivered UNLEASHED, Kestrel’s very own leadership program. With 220 employees participating in the program over the year, UNLEASHED adopts the philosophy that leadership is not defined by a job title, it is a privilege. Program participants have benefited from noticeable uplifts across various personal and professional competencies including a 33% uplift in their ability to develop and execute innovative improvement ideas within a team environment, a 24% uplift in confidence to effectively coach others and a 22% uplift in participants ability to put plans in place to improve team engagement and performance. Given the outstanding results so far, UNLEASHED will be rolled out for new people to our business, and the program will continue to evolve.

Respect, understanding and sincerity are at the heart of our ongoing relationship with the Western Kangoulu people, the registered native title claimants for the land on which we operate. In partnership with the Western Kangoulu peoples and their representatives, we developed and delivered the CONNECT program to give all members of our workforce a detailed understanding of our cultural heritage responsibilities. 2022 also marked the deployment of our schools based cultural heritage workshops and installation of display cabinets at site offices to showcase items of significance in a location that’s easily accessible to our workers and visitors.

I trust you will find this latest update of our sustainability journey of interest.

CEO | 2022 SUMMARY | WHO IS KESTREL | OUR SUSTAINABILITY APPROACH

CORPORATE GOVERNANCE

2022 Summary

5.67Mt

Saleable Production

305 Number of local & regional suppliers

$237M

$ spent on local & regional suppliers

$122k Direct community support 67% Local workforce –full time workers

10% Gender Diversity

$650k Cultural Heritage Investment

270ha Area surveyed for cultural heritage

0.24t CO 2-e/t Coal Product

116l Raw water usage per tonne of coal product

571ha

Rehabilitated land certified 17.6 TRIFR (1,000,000 working hours)

Who is Kestrel?

Kestrel Coal operates in Queensland’s Bowen Basin region and is located 40km north of the vibrant town of Emerald. The majority of our workforce live in Emerald and local surrounding areas, with a small team working from Brisbane for finance, sales and marketing, planning and corporate leadership.

Kestrel extracts metallurgical coal from the German Creek coking coal seam, via the underground longwall mining method. The mining processes delivers Run-ofMine (ROM) coal onto a 7km overland conveyor directly to the Coal Handling and Preparation Plant (CHPP) for washing, and then to our dedicated train loadout for delivery to our international customers via Gladstone Port. We produce 8-10MT/yr of ROM coal with 70-80% yield. The coking coal produced at Kestrel is of high quality and is valued for its properties in steel production.

We have a diverse customer base, across North Asia, India, South East Asia and Europe. Our customers value the quality of our product and enter into secure term contracts to ensure continuity of supply.

Our Sustainability Approach

Sustainably Supplying Steelmakers

Kestrel is a leading global supplier of high quality metallurgical coal to the steel industry. Our product is highly sought after for its low impurity levels and unique coking properties. Our continuing focus is to provide this critical product to the steel industry in the most sustainable manner possible.

Kestrel’s sustainability approach is built upon our core values, and further refined by our corporate policies. Our approach expands upon our CEO-led goal of ensuring Kestrel provides a Legacy Worth Leaving, both now and in the future.

In 2022 Kestrel developed our ESG Strategy following a comprehensive process that included employee interviews, industry benchmarking, review of current and emerging ESG issues and listening to the local community.

This approach led to the identification of Kestrel’s material ESG topics and the alignment of them with our four key ESG Strategy themes, being:

„ Ethical Business Practice

„ Valuing Our People

„ Connected Communities

„ Responsible Environment Stewardship

Kestrel’s ESG Strategy is visualised below, with our currently identified material topics.

Kestrel’s 2022 Sustainability Report highlights our journey of continual improvement to incorporate our ESG Strategy into business decisions across all levels of the operation, and to reflect this through our policies, procedures and daily actions towards a more sustainable future.

In 2023, Kestrel will develop an implementation plan for the ESG Strategy to ensure we assess, review and progress in the matters that are material to us, as we move towards our goals and continue to increase our ESG maturity.

This report has been set out along ESG reporting lines, and broadly aligns to the ICMM – Mining with Principles Sustainability framework.

Our Material Topics

1. WORKPLACE HEALTH, SAFETY AND WELLBEING

Ethical Business Practice

Conduct business with honesty and integrity supported by the highest standards of governance

Material Topic #8, #9

Valuing Our People

Ensure our people can fulfil their potential in a safe, healthy and rewarding environment

Material Topic #1, #3

A LEGACY WORTH LEAVING

Connected Communities

Collaborate with our stakeholders to build enduring relationships and long-term successful outcomes

Material Topic #4, #5

Responsible Environment Stewardship

Continuously find ways to improve production efficiency, sustainably manage our natural resources and take strong action on climate change

Material Topic #2, #6, #7

2. CLIMATE CHANGE RESILIENCE

3. ATTRACTING, DEVELOPING AND RETAINING OUR PEOPLE

4. CULTURAL HERITAGE AND INDIGENOUS DEVELOPMENT

5. DEVELOPMENT OF LOCAL AND REGIONAL ECONOMIES

6. WATER STEWARDSHIP

7. WASTE STORAGE FACILITIES

8. INNOVATION AND TECHNOLOGY

9. ETHICS AND BUSINESS CONDUCT

Ten (10) principles common across the global mining community as an industry benchmark & sustainability framework. The ICMM 10 Mining Principles are built to incorporate UN Sustainable Development Goals (SDG’s), Paris Agreement climate targets & responsible production as good practice.

Corporate Governance

Corporate Structure

Kestrel Coal Resources is a private Australian company that is owned by EMR Capital (52%) and PT Adaro Energy (48%). EMR Capital is a specialist resources private equity manager, while PT Adaro Energy is an integrated coal mining and energy company, with businesses spanning over eight pillars in the coal, energy, utilities and supporting infrastructure sectors. Kestrel Coal Resources is the 80% owner and manager of the Kestrel Coal Joint Venture, the remaining 20% being owned by Mitsui.

Sustainability Governance

2022 Outcomes

As required annually under the Commonwealth Modern Slavery Act 2018, Kestrel completed its second Modern Slavery Statement in 2022 for the 2021 calendar year reporting period. The next statement is due in June 2023 for the 2022 reporting period.

In 2022, Kestrel’s ESG Strategy was developed and approved by the Board, with implementation to commence in 2023. Development of our ESG Strategy was underpinned by the proactive approach that has already been taken to adopting, implementing, and reporting on Kestrel’s ESG practices and outcomes. To guide the development of our ESG Strategy, a comprehensive process was undertaken including:

„ Interviews with senior staff across site and corporate roles

„ Benchmarking ESG performance of our industry peers

„ Review of current and emerging issues facing the resources industry

„ Listening to our neighbours, our customers, and the local community

„ Completing a desktop assessment to define our material topics

Kestrel Coal Resources operates under the guidance of a Board of Directors (the Board) which consists of ten (10) Directors with equal representation across Adaro and EMR Capital. An Operating Sub-Committee (OpCo) acts as an advisory group to the Board and meets monthly to review business performance, provide guidance to management on key business activities and provides regular updates to the Board.

The Board undertakes regular governance reviews including compliance tracking and reporting, Whistleblower registry, audit outcomes along with approval of major strategic / investment decisions and corporate targets.

Our Chief Executive Officer (CEO) reports to the Board and is responsible for delivering the sustainable performance of our business. Kestrel’s

sustainability direction is determined by the CEO, approved by the Board, and documented through our ESG Strategy, Sustainability Report, Values, Code of Conduct, and Sustainability and Climate Change Policy.

Kestrel is committed to providing a workplace which fosters mutual respect, honesty and working relationships. Everyone has the right to a fair and inclusive working environment of which they are proud to be a part of. Kestrel’s Code of Conduct outlines the standard of behaviour expected by all persons working for, or on behalf of Kestrel, around:

„ Anti-bribery and Corruption

„ Human Rights and Modern Slavery

„ Data Privacy

„ Theft and Fraud

„ Discrimination, Bullying and Harassment.

This approach led to the identification of nine material ESG topics which were grouped and aligned with our four key ESG Strategy themes.

The Year Ahead

In 2023, Kestrel propose to:

„ Review and update the Modern Slavery Statement.

„ Develop a 5-year implementation plan and progressively rollout the ESG Strategy.

„ Conduct an independent third party audit of our Safety and Health Management System.

WE ARE RESPECTFUL

We act with honesty, integrity & aim to be the team member everyone wants to work with.

WE ARE AGILE

We approach our work through a different lens. We do it safely & get the results few others can.

WE ARE COMMITTED

Whether it’s safety, hitting our targets, caring for our people, community or environment, we’re committed to doing it right.

WE ARE ONE

We are a diverse group with varied skills working together as one team.

Human Rights

Kestrel follows all human rights legislative requirements and fosters a culture that respects, protects and promotes human rights to ensure equality and fairness across Kestrel’s business. Two of our Values, ‘We Are Respectful’ and ‘We Are One’, relate to how the Kestrel team work together, and how we interact with others.

Kestrel’s on-boarding process for new employees requires each individual to sign on to the Values, as well as a range of policies and procedures that outline specific details to live up to our Values, including:

„ Code of Conduct

„ Remuneration – showing Kestrel’s fair and open process for remuneration

„ Indigenous Peoples and Heritage

„ Fair work information sheet for relevant external contacts

„ Leave provisions

„ Modern Slavery position

Information Integrity

Kestrel is subject to public ownership materiality requirements and standards through our joint venture partners, even though Kestrel is a private company. Kestrel maintains a media and information release policy across our business.

Information presented within this report is supplied from various departments and individuals throughout the organisation. Requests for contribution are sent out to all areas of responsibility, and information is collated by the Sustainability team for inclusion within the report, with an ongoing review process to maintain accuracy. Information specifically relating to National Pollutant Inventory (NPI) and greenhouse gas (GHG) emissions required under the National Greenhouse and Energy Report Act 2007 (NGER Act), are assurance checked via third party or internal processes.

Risk Management

Kestrel understands risk management is a key part of operating a successful business. We are committed to proactive and effective risk management within all aspects and levels of the business. Our approach is consistent in how we undertake risk management processes for safety, environmental, social, business operations or climaterelated risks. The consistent approach seeks to provide business resilience and the sustainable protection of things we value including our people, community, customers, other stakeholders and the environment.

Material risks across the business are assessed, managed and mitigated via the application of appropriate policies and practices. These material risks are regularly reviewed to evaluate the progress and suitability of mitigation actions and updated as required.

Within the area of climate change, Kestrel have identified six key areas of risk to be managed:

„ Natural environment: temperatures, rainfall (water supply & intensity of events), flooding, fires, changing flora/fauna, rising sea level.

„ Social environment: changing stakeholders & shareholder expectations.

„ Changes in technology, energy sources and supply chains: steel makers, transport, materials.

„ Economic & institutional change: carbon net zero commitments, increasing requirements of governance, performance & reporting.

„ Finance & insurance landscape: increasing difficulty to access debt financing and insurance.

„ Rising litigation environment for coal miners in approval processes & climate change impacts to the future.

Kestrel continues to develop and evolve its overarching strategy to manage the potential and emerging impacts of the above climate related risks. We are actively engaged in addressing these climate change risks through implementation of our ESG strategy, minimisation of water use plus the focus on identifying and implementing options to reduce our carbon emissions. A robust strategy will deliver the foundations required to address the current key climate change risks and the ability to navigate future challenges as they arise.

Social

The Social dimension of our ESG approach refers to how we, as an organisation, manage relationships, create value and mitigate risks as we engage and collaborate with all our stakeholders. The social initiatives are primarily focused on creating positive outcomes for our employees, contractors, customers and the communities within which we operate.

At Kestrel we collaborate and engage with our stakeholders to provide clear, consistent and transparent communications, ensuring we are always acting with integrity and respect in fostering productive relationships. We bring this approach to life through our values.

Kestrel’s value of ‘We Are Committed’ embraces our commitment to care for our people, communities and environment; ‘We Are Respectful’ confirms we will act with honesty and integrity in all of our dealings with our stakeholders; and ‘We Are One’ incorporates our desire to work with our stakeholders’ establishing partnerships, that help us support each other to achieve mutually beneficial outcomes.

Health and Safety

Approach

Kestrel believes everybody deserves to return home safely every day. Kestrel is committed to providing a working environment where all our people, contractors and visitors are able to maintain sound physical and mental health. We will only reach our highest potential by instilling and supporting a safety mindset in everything we do and across our entire workforce.

Kestrel understands and promotes that attention to detail and engagement from all our people is required to achieve our health and safety commitments.

In 2022, Kestrel uploaded 111 formal risk assessments, 145 Job Hazard Analysis (JHAs) and 318 hazard identifications into

the Safety Health Management System (SHMS), and completed 15,817 Take 5’s. It is through individual ownership of our own and our workmate’s safety that Kestrel aims to minimise incidents and injuries on site.

While Kestrel maintains a high level of COVID and influenza general awareness, there are no specific COVID management controls currently enacted.

Mental Health

Kestrel is a proud supporter of the employee assistance program led by Gryphon Psychology. We encourage our workforce to access and use Gryphon’s services that include free and confidential counselling for work

Recordable Injuries – TRIFR, LTIFR and Industry Standard

and personal matters, free webinars, and a mobile device application for employees, contractors, and their families to ensure that they are accessible in any circumstances.

Tracking Safety Performance

Safety performance is measured, reported, and tracked through a range of key metrics that are standard across the mining industry. These are calculated as a factor of equivalent working hours of 100 people over a year (1,000,000 hours), so that they are also directly comparable across all mining operations. However, Kestrel never loses sight that each metric we report is in fact talking about one of our people.

INJURY STATS

2022 Outcomes

Kestrel’s reportable injuries and total recordable injury frequency rates (TRIFR) for the year continue to be below the Queensland Underground coal industry averages. The increase in injury frequency rates from 2021 was disappointing and a number of initiatives including work stoppages for safety resets, targeted hazard identification and rectification programs and supervisory coaching were implemented.

Hazard Identifications were a major focus throughout the year, with everyone throughout the workforce encouraged to take time out at key points through their work program to look for, record and remove any potential hazards.

Kestrel also implemented a regular work area checklist program that was completed by contract managers and Superintendents to encourage direct and meaningful interactions in the field with all employees and contractors. The checklist was developed to ensure a consistent approach across all work areas, highlighting what to look for and what to record, to ensure adherence to site standards.

In October, Kestrel completed the Broad-Brush Risk Assessment (BBRA) for the site, with a focus on reassessing all potential single/multiple fatality risks and confirming the Critical Risk management strategies were appropriate and implemented accordingly.

Initial indications from these programs have been positive, with a commitment

for constant improvement to ensure health and safety of the entire workforce remains at the forefront for all employees and contractors.

Completing ergonomic assessments using JAS (Joint Active Solutions) equipment also continued in 2022. This involved the Health and Safety Team (HST) utilising JAS equipment with operators in the field to identify opportunities to reduce the impacts of manual handling. This work will continue in 2023.

As committed in 2021, we actioned a vibration assessment program to establish baseline data. In 2022, 38 vibration assessments were conducted for whole body and/or hand-arm vibration to determine the risk profile for the site. Assessments have been conducted on both underground and surface mining equipment including loaders, drift-runners, graders, dozers, moxies, and forklifts, as well as vibrating hand tools including underground drills, rattle guns and grinders. This establishes the baseline, with the next stage of the project to implement improvements - such as upgraded seating in loaders - and taking follow up measurements to confirm any reduced vibrations. New low frequency antivibration gloves have also been purchased and made a stock item in the stores.

Training Needs Analysis’ (TNA’s) were developed for required roles in accordance with the Recognised Standard 22 requirements, with training programs being developed and implemented accordingly.

The Year Ahead

In 2023, Kestrel will remain focussed on our risk assessment approach and continual improvement in all health and safety controls.

JHA’s, Hazard Reports, Find it/ Fix it, and Take5’s will continue to ensure focus is directed to both our usual daily tasks and management of any new tasks that may be required.

Specifically for 2023, Kestrel is also proposing the following initiatives:

„ Continue using Joint Active Solutions (JAS) equipment and ergonomic reviews of standard tasks using leading edge technology.

„ Implement identified vibration reduction initiatives.

People and Culture

Approach

‘We Are Respectful’ highlights Kestrel’s aim to be the team everyone wants to work with through acting with honesty and integrity. ‘We are One’ recognises Kestrel’s diversity amongst the workforce with the varied skillsets amongst each individual contributing to the overall success of the Kestrel team. Our success is underpinned by attracting, retaining and developing people who have the right skills, appropriate experience, behaviours and values for our culture.

Breakdown of Employee Workforce

In 2022, our workforce consisted of 696 people in a combination of direct employees (458) and contractors (238). Indicative Indigenous employee rates, based on who has disclosed their ethnicity, is 2%. Female representation at Kestrel increased to 10% in 2022, up from 6% in 2020 and 7.4% in 2021. While the underground workforce is dominated by male employees, there is significantly more female representation in professional and management roles. Kestrel highly values the significant benefits added by a diverse employee base and continues to explore ways to further increase the diversity of our workforce. Kestrel supports events

such as International Women’s Day and Women in Mining.

Employee turnover for 2022 was 9.9%, slightly higher than 2021 at 8.6%. Additionally, unplanned leave increased from 2021 (3.1%) to 4.3% in 2022.

Talent Development

Building long-term, cross-functional working relationships for stronger connection and commitment is at the core of our Talent Development Program. Our program enables direct learning opportunities between both mentor and mentee. The program facilitates the sharing of corporate knowledge while supporting employees to progress within the company allowing them to reach their full potential. Kestrel also engage external mentors, as part of the formal mentioning process.

2022 Outcomes

Kestrel’s very own leadership program, UNLEASHED, was delivered in 2022. With 220 employees participating in the program throughout the year, UNLEASHED adopts the philosophy that leadership is not defined by a job title. Program participants have reported a 33% uplift in their ability to develop and execute innovative improvement

Kestrel Lifestyle Challenge

2022 saw the continuation of the highly successful Healthly Lifestyle Challenge. We understand that a high performing workforce is driven by a healthy lifestyle and balanced eating behaviours to promote overall wellbeing and prevent chronic illnesses. To ensure better health awareness amongst our workforce, the Kestrel Lifestyle Challenge was launched.

The Kestrel Lifestyle Challenge involves a 90-day challenge where employees and contractors of Kestrel are given the opportunity to participate in a range of activities that encourage healthy behaviour. The lifestyle challenge incorporates body composition analysis scans, weekly health and nutrition updates, exercises and a community that

support each other in forming healthy habits. As part of the program outline, all Kestrel employees and contractors (whether on the program or not), received weekly updates containing health and nutrition advice. Leaders worked with employees to overcome barriers identified to participating in the challenge, incorporating exercise routines into pre-shift meetings, providing a stationary bike in the control room and mentoring.

Kestrel’s Lifestyle Challenge saw an increase in participants in 2022 with 209 participants (underground, CHPP, professional staff onsite and in Brisbane), an increase of 53 participants from 2021. Three additional categories were added

ideas and a 24% uplift in confidence to effectively coach others. The success of UNLEASHED in 2022 will see the program continue to be rolled-out in 2023.

Kestrel’s COAR awards continued to grow as a way to recognise our people for their commitment, agility, respect and collaboration with colleagues and stakeholders. There were 222 COAR award nominations in 2022.

2022 also saw the Fair Work Commission approve the negotiated Enterprise Agreement which covers the majority of our employees.

The Year Ahead

In 2023, Kestrel propose to:

„ Continue to develop our people through purposeful career pathway planning.

„ Conduct a Highly Reliable Organisation diagnostic in partnership with the University of Queensland and develop an action plan.

in 2022, with more opportunity to win and suited more individual’s health goals (i.e. muscle gain). The addition of “healthy habits bingo” focused on creating healthy habits, where the winner was not determined based on metrics, but on participation which appealed to those who may not have physical goals. The challenge resulted in a total body fat loss of 344.6kg and a skeletal muscle mass gain of 64.2kg across the 209 participants, and an improved feeling of wellness across all participants.

The Kestrel Lifestyle Challenge continues to highlight Kestrel’s sense of community, and our people’s determination to be the best version of themselves.

UNLEASHED

In 2022, we continued to build upon the Kestrel experience with development programs, leadership growth opportunities and the evolution of the company culture. Our innovative and marque leadership development program UNLEASHED was delivered in 2022.

In 2022, there were 220 participants over mixed cohorts who were involved in the program. The program is undertaken through a mixed delivery mode, including 79 face-to-face sessions.

9 MODULES

ACCOUNTABILITIES

The Results

Following each session, participants were given a diagnostic of seventeen competencies to self-assess the impact the program was making on their leadership development.

The results have exceeded expectations. Our UNLEASHED program has seen an average uplift of 19% across diagnostic competencies.

Some standouts included:

„ a 33% uplift in leaders’ ability to develop and execute innovative improvement ideas within teams

„ a 24% uplift in feeling they can effectively coach others

„ a 22% uplift in being able to put plans in place to improve team engagement and performance

„ a 16% uplift in their ability to lead change

As a way to celebrate completion of the program, all participants were asked to nominate a peer, who they had observed to have made a positive change in their leadership style.

There were over 60 peer nominations, with 12 overall winners (who each received multiple nominations).

Work has now commenced on creating a consolidated UNLEASHED program for new starters to Kestrel.

&INFLUENCE

Kestrel COAR Awards

We wanted to embed our values within the Kestrel team, so that every person is performing at their best and lives and works with the values at their core.

Our COAR Awards recognise and reward success and work done well. We acknowledge members of the team who are going above and beyond their job expectations.

The program is designed for peers to acknowledge and support each other. It’s like… what would you give your work mate a hi-five for?!

The COAR awards have allowed us to take our values to the next level, ensuring they don’t just become ‘writing on the walls.’ At Kestrel, we are actioning our values, not just talking about them.

C ommitted

O ne

A gile

Respectful

Journey Map

Awareness

$20 put aside for community group donations

Nominations reviewed at the end of each quarter

See something great? Nominate

Recognition screen updated in the breezeways

Rewards

Winners awarded at pre-starts

After nominations have been vetted and reviewed a member of our senior leadership team will announce the winners at pre-start

Individual winners receive a BBQ prize pack

Team and crew nominations choose one of the following: Catered morning tea onsite

$500 voucher to a local venue

2022

Group

Stakeholder Engagement

Approach

Kestrel endeavours to regularly engage with our stakeholders to ensure clear, consistent and open communications. This helps us understand aspects of our operations that matter to them so we can minimise any impacts and generate positive outcomes.

Kestrel Stakeholders

Kestrel’s stakeholders are broadly defined as any party that may be impacted by or have an impact on, our operations.

2022 Outcomes

At Kestrel we are committed to supporting local and traditional owner companies. When we engage the market, we ensure that any local or indigenous companies with known capability are included in our tender process and our preference is to buy local.

In 2022 Kestrel hosted a 2-day meet and greet with Traditional owners and a

number of local vendors from Emerald. The aim of the sessions was to make sure our local vendors and traditional owners were aware of each other’s capabilities. The meetings were well received by all parties with engagements focussing on joint venture possibilities and labour placement services.

Kestrel continued its significant support of the local and regional economies by procuring stock, materials, services and equipment requirements from over 300 local and regional suppliers. Kestrel invested $128.4M into the Emerald and local business economy through buying local and a further $109.1M into the regional business economy (total $237.4M, an increase of $73.3M from 2021).

During 2022, the Kestrel mine celebrated 30 years of operations, both at home in Australia and with our customers overseas. As part of the celebrations we hosted a Family Open Day to showcase our operation to Kestrel’s family, friends

and community, including a guided tour of Kestrel North and Kestrel South. Kestrel proudly contributed $82k directly to the community through the Community Grants initiative.

Forest restoration projects in South Korea were the key focus of the POSCO GEM Matching Fund investment for 2022. GEM stands for ‘Go the Extra Mile,’ symbolising POSCO’s and Kestrel’s joint investments in ESG programs in Australia and South Korea. In 2023 the fund will go towards projects within Australia with Kestrel planning to improve native Bluegrass biodiversity in central Queensland, via rehabilitation of areas previously impacted by agricultural activities.

2023 will once again see Kestrel play host to our near neighbours for the annual Neighbours Day. This occasion provides us a fantastic opportunity to engage with our community particularly our immediately adjacent landowners.

The Year Ahead

In 2023 we will continue to build upon our strong foundations within the community and commit to:

„ Continue to engage and connect with our community and stakeholders via newsletters, social media, networking, and community events.

„ Ongoing support of local and regional economies by buying local, where possible.

„ Continue to support the community through the community grants initiative and ongoing sponsorships.

„ Continue our relationship with International Legends of League, specifically focused on remote indigenous communities.

„ Grow and nurture the relationships we have with local primary and secondary schools.

„ Broaden involvement at the Central Queensland University (CQU) Careers Expo.

„ Continue hosting the Kestrel annual Neighbour Day.

„ Commence the implementation of the POSCO GEM Matching Fund for improving native Bluegrass biodiversity.

Each of these stakeholders have varying interests in Kestrel’s operations.

Stakeholder Interests

Neighbours & nearby sites

Financial & operations partners

Traditional owner applications

Western Kangoulu

Industry & Interest Groups

Customers

Stakeholder Interests

„ Environmental and social impacts Regulator & State Government

„ Operational and financial performance

„ ESG performance

„ Cultural heritage

„ Opportunities for employment, education and procurement

„ Investment in local Indigenous community

People & community service groups of Central Highlands

„ Legislative compliance

„ Taxes and royalties

„ Local community investment

„ Local employment and procurement

Local government CHRC „ Rates

„ Local employment and procurement

„ Local community investment

„ Coal/ Mining Industry reputation Lease land as active cattle farm AACo

„ Coal quality

„ Production reliability ensuring supply requirements

„ Competitive price

„ Environmental impacts

SPOTLIGHT 30th Anniversary

2022 was a special year at Kestrel as we celebrated 30 years of mining operations and connection with the Emerald community.

Over two events; a fun-filled Gala at the Emerald Town Hall and a familyfriendly open day at site, we were able to thank our community, our neighbours, and our families for being part of our journey over the past 30 years.

As our CEO Shane Hansen said, “it has been a winding journey, with some ups and downs, but without your support and partnership, it would not have been possible to provide the opportunities to thousands of people who have called Gordonstone, Kestrel and Emerald home”.

At our 30th Anniversary Gala, our CEO reflected on past operations and shared our vision for the future…

“Our mine life will exceed many of our working lives and coal mining as we know it, will be very different in

the coming years as we commit to reduce our carbon footprint.

At present, there are no proven competitive substitutes for metallurgical coal in blast-furnace steelmaking and the ongoing urbanisation and industrialisation of emerging Asia will require steel. We will continue to investigate energy production methods and pursue available technologies to reduce our footprint and play our part in effective reduction of carbon emissions.

There are great opportunities for us at Kestrel to lead the way for the future of mining in Australia. To continuously find ways to strengthen operational efficiency, shore up safety and enhance productivity.

There is just something about who we are, and what we do, that has always made us uniquely Kestrel.

We believe that work is one part of the equation when it comes to a

fulfilling life, and it is our vision to ensure support and opportunity for everyone to be their best, both at work and at home.

Generations of mining families have come through our turnstiles and worked their hardest to create a better Kestrel for tomorrow.

We want to leave a lasting legacy –we want to contribute and become integrated with our community to ensure they thrive well after we are gone.

We are one of a kind, we always have been, and always will be. We are not afraid to stand out and do things a little differently – this is what makes us uniquely Kestrel”.

Indigenous Development

for the training package, while Everick Foundation in collaboration with WK, developed three lesson plans in line with the Grades 5 – 6 Queensland curriculum. Feedback from the school and students confirmed the presentation addressed the curriculum requirements, and was also interesting, educational and well received by the students.

Approach

Kestrel is committed to partnering with the Western Kangoulu people (WK) (as the registered native title claimants of the land on which we operate) and Indigenous peoples, to achieve meaningful, sustainable outcomes in heritage, land management and socioeconomic prosperity.

We take our responsibility to protect cultural heritage values and significant areas seriously. Beyond managing the cultural heritage values on the land, Kestrel is also working with the WK people to develop opportunities for Indigenous business and employment that align with our own business strategy.

Following the successful launch in 2021 of the Indigenous Development Program, WK have independently followed up opportunities with other business, government and community groups identified from the launch, while Kestrel has continued to work in partnership with WK to achieve real outcomes.

2022 Outcomes

Kestrel’s Procurement and Human Resources teams both met with WK representatives throughout 2022 in order to identify upcoming Kestrel opportunities that aligned with WK capabilities. These meetings helped

to identify direct employment and/or contract opportunities that were provided to WK. Importantly, this process established ongoing contact between both parties, so that details of future opportunities and WK’s growing capabilities, can be exchanged and appropriate opportunities progressed.

In 2021, Kestrel committed to increasing the capacity of WK people through provision of mine site induction and supervisor training programs. In 2022, eleven WK people employed by the WK business Lumburra Bimbi Pty Ltd were put through generic mining industry Standard 11 training programs, followed by Kestrel site specific induction training. A smaller number of WK people were also provided with generic G1, G8 and G9 training packages, and passed through Kestrel’s site-specific Supervisor Induction program. Successfully completing the generic courses are the basis for job opportunities anywhere within the Queensland mining industry, while the Kestrel specific courses mean that these people are ready to commence work at Kestrel at any time.

On 4th August 2022, on National Aboriginal and Torres Strait Islander Children’s Day, two representatives from WK presented a cultural heritage awareness session at the Emerald North Primary School. Kestrel provided funding

Kestrel, WK and the Everick Foundation entered into a collaborative project called the Regional Heritage Pilot Study. The broad objective of the project was to understand historic cultural landscapes using geological fingerprinting of artefacts, sources and places to Link their movements through the Landscape. Research partners included QUT (geological) and UQ (archaeological). The project aligned culture, geology and archaeology. The Pilot study was successful in identifying a range of connections across the landscape, however further studies were recommended to provide greater clarity. The additional stages of the work are being considered by the combined parties.

The Year Ahead

In 2023, Kestrel will:

„ Continue to expand opportunities for WK to participate in tender processes.

„ Continue to build WK capability through induction and training programs.

„ Ongoing utilisation of WK businesses for Heritage Management System (HMS) development, cultural awareness training, school cultural heritage presentations and training development – including a High School cultural heritage presentation program.

„ Work with WK to identify and assist with providing a base for WK business and development opportunities.

Kestrel is committed to excellence and continual improvement in environment and land performance, being a good neighbour by striving to minimise impacts for people and the planet. Kestrel recognises our responsibility in the shared values of land, water, habitats, ecosystems, people and the resources we interact with.

We operate in an ancient and shared landscape, and we respect heritage, connection to land, agriculture, biodiversity, livelihoods and environmental values in everything we do. We continuously strive to be responsible stewards of the resources entrusted to us, and ensure our operation will create a positive and sustainable legacy.

Land Stewardship Approach

As the owner of over 17,000 ha of land, Kestrel is strongly focussed on sustainable land stewardship. Achieving our ESG Strategy goal of a Legacy Worth Leaving, means we need to manage the land today to ensure we are not decreasing or limiting its future productivity.

We acknowledge that these opportunities are not only related to productive agricultural lands, but also extends to the ecological and biodiversity values that are maintained along waterways and in remnant vegetation, and to the heritage values and connection to country that have been established over centuries by the Traditional Owners.

As an underground mine, Kestrel has the benefit of not needing to clear vegetation or dig through the soil and overburden layers in order to access the coal seam. We have drifts to access the coal, and all development and mining works then occur underground. The only vegetation clearing that occurs is for surface infrastructure, which equates to approximately 4% of our land surface. This means the remaining land is accessible for commercial grazing purposes. We are mining below, while cattle graze above us.

As responsible land managers, we recognise the importance of establishing partnerships with other parties that hold an interest in what we are doing both on and below the land. Through transparency and regular engagement, we have established good relationships with the Traditional Owners of the land, our agricultural land managers, our neighbours and our local communities. By listening to the concerns and aspirations of these stakeholders, Kestrel aims to develop a post mining land use that will blend into the regional landscape and provide opportunities for economically sustainable land use long after our operations have ceased.

2022 Outcomes

Kestrel mine operates on land that has a long history of agricultural productivity, and this is largely maintained through our existing lease with Australian Agricultural Company (AACo), who operate the lease as a fully separate and productive cattle property. Small areas of land may temporarily be removed from production for minor subsidence repairs or surface infrastructure installations.

Kestrel in 2022 completed a range of studies over our mining tenements, including currently approved Mining Leases (MLs) and Mineral Development Licence (MDL) 182. A portion of MDL182 has been identified as a potential mine extension area and given the project name Kestrel West. The mine extension is proposed not to significantly increase production rates, but predominantly to extend the existing life of the mine. Studies for Kestrel West included:

„ Terrestrial ecology and Biodiversity

„ Surface water values and Creek Geomorphology

„ Groundwater, including modelling, Bore Census, water quality, aquifer connectivity and resource assessment

LAND STEWARDSHIP | CULTURAL HERITAGE LAND MANAGEMENT | INDIGENOUS HERITAGE AND CULTURAL AWARENESS PROGRAM WASTE AND REJECT MANAGEMENT | WATER STEWARDSHIP | CLIMATE CHANGE AND CARBON MANAGEMENT

„ Soils and Land Suitability

„ Commencement of air, noise, light and vibration assessments

„ Subsidence modelling

„ Detailed mine planning and mine engineering design works, including resource definition

Outcomes from these studies will be utilised in 2023 to commence the required Queensland and Commonwealth environmental approval processes.

Targeted surveys were also completed to confirm the extent and condition of the native Bluegrass communities, including the endangered Queensland King Bluegrass community (Dichanthium queenslandicum), which are known to occur onsite. The survey reports confirm native Bluegrass communities within the Study Area cover 1,107 ha and maintains significant values, including supporting the Endangered King bluegrass species and representing the Endangered Natural Grasslands of the Queensland Central Highlands and the northern Fitzroy Basin Threatened Ecological Community (TEC). In 2023 Kestrel will investigate opportunities to improve or extend existing native grassland communities within our mining tenements.

Kestrel’s Progressive Rehabilitation and Closure Plan (PRCP) was granted an extension by the Department of Environment and Science (DES) to allow for additional studies to be undertaken to develop the final landform and rehabilitation plan for the Co-Disposal Facility. The studies will provide detailed land cover design modelling, and include the necessary technical assessments of geotechnical and geochemical stability, to ensure the rehabilitated Co-disposal Facility at mine closure will address all regulator and community expectations, for a safe, stable, non-polluting and selfsustaining post mining land use. Kestrel’s PRCP is due for submission to DES in September 2023.

A Soil and Land Suitability Assessment (SLSA) was completed in 2022 for the Kestrel West Project area. The SLSA documents the nature and distribution of major soil types in the area. In addition, the SLSA assesses the land suitability for a range of potential land uses. Approximately 65% of the 7,710ha survey area is suitable for the highest levels of broadacre agricultural production.

Kestrel is one of the few mining operations in Queensland that have

achieved certified rehabilitation, with 571ha currently being certified. Given the history of rehabilitation at Kestrel over 30 years, we are confident of our rehabilitation methods. In 2022 we identified additional land we believe is ready to be certified as fully rehabilitated. Kestrel plans to formally commence this process with DES in 2023.

In 2022, Kestrel also sought approval for a Regional Interests Development Approval (RIDA) for a single panel addition to our current RIDA approval. Completion of the RIDA approval is due in 2023.

The Year Ahead

In 2023, Kestrel propose to:

„ Commence formal Queensland and Commonwealth environmental approval processes for the Kestrel West project area.

„ Complete final landform and rehabilitation planning for the Codisposal Facility.

„ Submit the Progressive Rehabilitation and Closure Plan (PRCP).

„ Commence the process to increase the area of certified rehabilitation with DES.

„ Continue to collaborate with our agricultural land stakeholders on vegetation management strategies, and optimisation of cattle grazing conditions.

„ Set the framework for a holistic land management strategy.

LAND STEWARDSHIP | CULTURAL HERITAGE LAND MANAGEMENT | INDIGENOUS HERITAGE AND CULTURAL AWARENESS PROGRAM WASTE AND REJECT MANAGEMENT | WATER STEWARDSHIP | CLIMATE CHANGE AND CARBON MANAGEMENT

Cultural Heritage Land Management

Approach

The protection of heritage values is everyone’s responsibility. This responsibility is conveyed to all employees and contractors during site inductions, with more specific training and risk assessments undertaken with relevant personnel interacting with cultural heritage areas. Kestrel’s Indigenous Peoples and Heritage Policy specifically requires that we “expect awareness, understanding and respect of Indigenous people rights, cultures, values and heritage to be embedded across our workforce and activities.”

Before undertaking any land disturbance at Kestrel, a Ground Disturbance Permit is required, that specifically identifies Cultural Heritage management requirements. This includes checking locations against mapped areas of Cultural Heritage significance, and undertaking surveys and clearance works as appropriate under the Cultural Heritage Investigation & Management Agreement (CHIMA) and in consultation with WK. With this approach, we have, and continue to undertake extensive cultural heritage surveys, and to build awareness through our workforce, protect significant areas with restricted access, strictly control our ground activities and clearly demarcate heritage areas.

Kestrel and WK’s agreed CHIMA outlines our commitment to heritage protection and how Kestrel and WK work together. Above all, we value our relationship with WK, and we work together to achieve our mutual aspirations.

While Indigenous Cultural Heritage land management is the predominant focus on site, Kestrel also recognises that understanding and protecting the heritage values since European settlement helps us to understand our local history.

2022 Outcomes

There was a total of 7 Cultural Heritage Survey events in 2022, conducted over 270ha and 191 ‘person’ days. These surveys identified 200 culturally significant artefacts, salvaging 164 of these and contributing $650,000 into cultural heritage investment. 2022 also saw the commencement of targeted cultural heritage investigations relating to Policeman’s Lagoon. Late in 2021, WK were successful in applying for a “Caring for Country Grant” through the DES Looking after Country Grant Program. The project was titled “The Cultural Landscape of Policeman’s Lagoon, Western Kangoulu Country”, with the purpose of the study to provide opportunities for WK people to manage their country through participation in and knowledge gained from archaeological investigation of ancestral camp sites at Policeman’s Lagoon. Kestrel supported WK in the application and also committed to funding any shortfall in the grant, and provide additional support through involvement of Everick Heritage Consultants, contracted to Kestrel. Outcomes of the study were provided to all parties late in 2022.

Raising awareness of WK’s cultural heritage both within Kestrel and further afield, is a shared goal. Therefore in partnership with WK, Kestrel undertook a project to ensure the WK people and cultural heritage values were clearly and immediately acknowledged at the North and South Kestrel Entrances, with the WK greeting of “Wadda Moolie”, the WK symbol and a range of culturally relevant artefacts and information arranged at both receptions.

To assist communicating these values further afield, Kestrel, the Everick Foundation and WK collaborated to develop a brochure that highlights a range of WK cultural artefacts and their uses.

In 2022, WK finalised development of a 3-stage Heritage and Indigenous Cultural Awareness training program, and Kestrel implemented this program

across the company. See Spotlight for full details on this training program.

Development and implementation of the Heritage Management System (HMS) was a commitment for 2022 that, while not fully achieved, did progress to a final agreed scope between Kestrel and WK. This work will progress across a number of stages, with Stage 1 to commence early in 2023. A pleasing result for 2022 saw no reportable incidents to cultural heritage areas.

A specific element of the HMS that has already commenced development by Kestrel is the proposed Scarred Tree Management Plan (STMP). An outline of the STMP was presented at the Cultural Heritage Coordinating Committee (CHCC) in November 2022 and was well received by the WK representatives. It is proposed that Kestrel will work with WK to ensure the STMP is developed in coordination with the HMS.

The Year Ahead

In 2023, Kestrel propose to:

„ Work with WK to undertake cultural heritage surveys over land areas required for drilling, seismic survey, infrastructure development and additional baseline works for Kestrel West.

„ Continue with the current program of providing generic and Kestrel specific inductions for WK personnel to increase capacity for future mine site projects.

„ Contract WK business to develop Stage 1 of the HMS, incorporating the current draft plan for STMP.

„ Undertake detailed monitoring and assessment works for Policeman’s Lagoon.

„ Implement the Scarred Tree Management Plan.

SPOTLIGHT Indigenous Heritage and Cultural Awareness Program

In 2022, Kestrel asked the WK people to help develop a range of cultural awareness training packages, that would be incorporated into Kestrel’s standard induction and then expanded into targeted training programs. The training programs were developed into three (3) streams.

AWARE

All workers entering the Kestrel site are shown a cultural awareness video that introduces the Western Kangoulu people as the Traditional Owners of Kestrel mine land, including a Welcome to Country by WK Elders. The video identifies Indigenous cultural heritage values that may be present within the Mining Leases, and every person’s duty of care around protecting Indigenous cultural heritage.

With the exception of Kestrel’s CEO introduction, all words and images throughout the video were developed and voiced by WK representatives. The video was rolled out across the mine site and Brisbane office in mid2022 and is now used in all ongoing induction programs.

CONNECT

Where people are working within the Mining Lease area and beyond the Administration, CHPP or Underground operations, both Kestrel and the WK felt there was an increased potential to encounter cultural heritage artefacts in the field, and therefore a higher level of cultural awareness was required.

People working in the field needed to CONNECT their increased

understanding of cultural heritage values with the impact their actions could have on them. In 2022, 55 people working at Kestrel were taken through the CONNECT program, a 3-hour training package led by experience WK representatives and including a field visit to show cultural artefacts as they may be found in-situ.

REPRESENT

Executive and senior management, contract managers, key superintendents and cultural heritage contacts have the highest level of responsibility at Kestrel to ensure that they are leading by example, particularly in relation to our values around We Are Respectful and We Are One. These people REPRESENT by showing respect to the Traditional Owners of the land, and awareness

of the cultural heritage values that remain in place over the land.

A REPRESENT session was held in late 2022 and was attended by 21 people, including Kestrel’s CEO and the majority of the executive and senior management teams. The session was run by senior WK representatives and attended by a number of WK Elders who provided stories and context behind many of the cultural heritage values at Kestrel. Run over more than 6 hours, the training included a field visit and a visual display of a wide range of cultural heritage artefacts. The level of communication and sharing of information was extremely open and honest, and everybody who attended the session confirmed their commitment to protect the cultural heritage values that remain over the Kestrel Mine.

Waste and Reject Management

Approach

Kestrel’s waste management strategy utilises the waste management hierarchy to guide and rank waste management decisions. The hierarchy gives top priority to waste prevention, followed by re-use, recycling, recovery and finally disposal. Kestrel’s strategy promotes waste avoidance, waste reduction and resource recovery before considering disposal to landfill.

Kestrel work with appropriately licenced waste contractors to ensure that all waste streams, including regulated waste, are handled, stored, transported, tracked, and disposed of in accordance with legal requirements, including our site Environmental Authority. Throughout Kestrel’s operating areas, recycling bins are provided to promote the recycling effort among the workforce making individuals accountable for Kestrel’s overall recycling effort.

Waste from coal is managed as a separate category of waste. Coal mined from underground operations is conveyed to the Coal Handling and Preparation Plant (CHPP) where is it washed to remove larger impurities (rejects) and finer material (fines). The rejects and fines have historically been mixed together and disposed of at the site’s Co-disposal Facility (CDF). Kestrel aims to design, construct, operate and decommission facilities using risk-based management practices to ensure no unacceptable impacts to environment.

2022 Outcomes

The total volume of waste generated in 2022 was 2,569 tonnes, down from 4,517 tonnes in 2021 and 6,763 tonnes in 2020. This reduction was largely a result of a reduction of liquid wastes.

Kestrel’s scrap steel clean up in 2021 continued into 2022 and will be an ongoing focus into the future. In 2022, Kestrel sent almost 1,500 tonnes of scrap metal to recyclers, comprising mostly of heavy gauge scrap. With the success of the scrap steel clean up in 2021, a similar campaign to remove redundant or abandoned items from all site laydown areas was undertaken. The campaign saw $375,000 of items and materials sold to businesses, contractors and employees for removal from site and recycled or re-purposed. Some of these items included old machinery, used centrifuge baskets, scrap pipes, used conveyor belt and surplus fencing materials. In addition, 68 tonnes of scrap belt was sent for recycling and 792 intermediate bulk containers (IBCs) sent collected for repurposing or recycling. Waste reviews are conducted quarterly with Kestrel and contractors reviewing contract conditions and performance to identify further waste reduction initiatives.

Kestrel’s commitment to recycling is further demonstrated through the implementation of the recycling of plastic bottles and cans in conjunction with Containers for Change. Cut open IBCs have been placed across site for the collection of recyclable containers. These are then transported to the Containers for Change depot in Emerald. All money generated through this recycling initiative is donated to local junior sporting clubs.

The Year Ahead

In 2023, Kestrel propose to:

„ Implement a battery recycling initiative.

„ By partnering with a safety gumboot supplier we will investigate a program of recycling the several tonnes of gumboots for PPE used by Kestrel annually.

„ Further assess waste reporting processes.

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Water Stewardship

Approach

Kestrel understands the importance of a clean and reliable water supply within the Fitzroy River Basin. Our water stewardship approach acknowledges the shared needs and demands on water resources and the significance of responsibly managing water and collaborating with other users in the catchment. As a scarce and variable resource, we must provide for strong and transparent water governance, effective and efficient management of water at our operations. Managing water across the mine site in line with the rainfall conditions at the time requires Kestrel to delicately balance water recovery, use and storage.

2022 Outcomes

Kestrel’s total site water reduced to 3,268.26ML in 2022 with reductions across raw water, supplementary bore and dewatering usages. In 2022, Kestrel did not require any water from supplementary bores and reduced our raw water usage by 220ML, with usage being supplemented by output (permeate) from the reverse osmosis (RO) plants. Optimisation issues associated with the

RO plants was identified as one of the factors attributing Kestrel’s 175ML raw water increase in 2021 from 2020. To improve the metering and recording of mine water movements, Kestrel began work to install additional hardware to gain a better understanding of raw water use onsite as well as underground water make. Additionally, the RO feedwater was completely changed to goaf water, as it is more closely matched to the RO design specification. This resulted in an increased uptime in 2022 due to switching feed water source that more closely matched the RO Plant’s design specifications, with throughput rates remaining the same.

Kestrel’s raw water usage continued to decline in 2022 compared to same period in 2021 and 2020. A total of 657ML of raw water was used in 2022 at a rate of 116L per tonne of coal product. The 2022 result achieved a reduction of 45ML raw water used compared to 2020 (702ML) and 220ML less raw water usage to 2021 (877ML), equivalent to 25% reduction for the previous year.

The volume of water released in 2021 was minimal, but highlighted an

2022 Water Source Breakdown

opportunity to improve our release procedures. Kestrel worked with the regulator to agree on improved water release conditions, and in 2022 we streamlined our operational processes to allow the optimal volume of water to be released back into the environment, as and when natural flow conditions allow. Returning water of suitable quality back into the river system helps to maintain natural river flow, and prevent an excess of water being stored onsite.

During the 12-month period controlled water releases were utilised under optimal release conditions resulting in a total of 1,202ML of water released back into the natural environment. Throughout 2022 our monitoring and reporting standards were maintained in accordance with the requirements set out by the regulator, the Department of Environment and Science.

In 2022, Kestrel also commenced dredging the Rejects Return Water Dam. These works to reinstate the design storage capacity will continue into 2023.

The Year Ahead

In 2023, Kestrel propose to:

„ Continue investigating improvements to metering and recording of mine water movements.

3,268ML Total site water

8.9ML/D Average daily extraction

„ Assess optimisation of current reverse osmosis plant against new or additional infrastructure.

„ Finish de-silting the Rejects Return Water Dam and complete bathymetry survey to identify volume de-silted.

„ Pursuing options to further reduce raw water intake from Selma Weir.

„ Continue to optimise performance of the dry tailings disposal process.

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Climate Change and Carbon Management

Approach

Kestrel recognises the challenges that climate change presents across human and natural systems. We are committed to supporting Australia’s carbon emission reduction targets, that align with the Paris Agreement, to limit the increase in global average temperatures to 2°C and transition to carbon neutrality by 2050.

We are in active dialogue with our customers to gain greater understanding of their own future ESG needs. This ensures Kestrel performs a valuable role in their ESG requirements by adapting to the changing landscape accordingly.

Kestrel reports under the National Greenhouse and Energy Reporting Scheme (NGERS) and Safeguard Mechanism legislation and has a good understanding of our current emissions. Through this understanding we recognise that climate change and the resulting need for carbon footprint reduction is one of our critical corporate risks. Climate Change Resilience is also identified as one of Kestrel’s 9 Material Topics in our ESG Strategy.

As an underground coal mine, the highest proportion of our carbon emissions (88%) are generated directly from the coal resource, while only 12% of emissions are attributable to diesel and electricity usage. This means that even major reductions in diesel or electricity consumption will have only a minor impact on our total carbon footprint.

Any major reduction in carbon footprint at Kestrel will need to occur through initiatives in reducing, re-using or mitigating our coal related gas emissions. Coal related gas at Kestrel includes:

1. Pre-drainage gas extraction: to reduce gas content in the seam ahead of mining, minimising risk of gas outburst or ignition. All predrainage gas is flared to convert methane to CO 2

2. Post-drainage gas extraction: to remove gas from overlying seams during longwall retreat. As much post-drainage gas as possible is flared to convert methane to CO 2

3. Vented-air methane (VAM): is gas extraction at very low concentrations from the mine working environment via the primary ventilation systems. VAM is our largest footprint as it is vented as methane and there is no viable technology currently available in Queensland to convert these low concentrations of methane to CO 2

Flaring methane and converting it to CO 2 significantly reduces carbon emissions as methane is 28 times more potent a greenhouse gas than CO 2. Kestrel has been undertaking pre-drainage and postdrainage flaring for some years, and is already achieving these reductions. At Kestrel, there is also an unavoidable factor of geology affecting the composition of our carbon footprint.

We are currently mining at depths of up to 450m below the surface as longwall operations proceed through the 400 panels and into the 500 panels. As the coal seam deepens, the total amount of gas increases and the composition of coal seam gas changes to a higher concentration of methane relative to CO 2. As a result of the unavoidable deepening of the coal seam, Kestrel’s carbon footprint will remain high for the next 5-7 years, before significantly reducing as mining progresses back into shallower sections of the coal seam where there is less gas and lower methane content.

To mitigate increasing gas levels as the mine progresses deeper, Kestrel commenced its first Underground In Seam (UIS) pre-drainage activities of the overlying Corvus coal seam to remove, capture and flare as much methane as possible to prevent it being lost directly to the environment in the ventilation air system. In addition, Kestrel has increased the intensity of gas drainage from previously mined areas to reduce inflow into existing mining areas.

Kestrel is focused on assessing opportunities to reduce our coal mine waste gas emissions. Our specific focus is to identify technology to allow conversion of VAM to CO 2, or to a usable methane concentration, that would provide the biggest single reduction in our carbon emissions.

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While no obvious solution for VAM is currently available, Kestrel acknowledges it is our responsibility to work with national and international carbon reduction leaders, our local, state and commonwealth governments and our communities, to manage these emissions and realise a low-carbon economy for the well-being of future generations.

2022 Outcomes

In 2022, Kestrel explored a diverse range of innovative technology options to reduce our carbon footprint across all emission sources to act against climate change.

A high-level concept definition study was undertaken by an internationally recognised environmental engineering company for a range of coal mine waste gas carbon mitigation options. The purpose of this study was to assist Kestrel determine where to focus our more specific carbon reduction projects. The study assessed a range of criteria and assigned a stop-light ranking on each of eight (8) assessed options. These options are summarised in the table (below).

While the high-level concept study was underway, Kestrel continued to progress a number of other emission reduction options including:

„ A 3.2MW Absorption Chiller feasibility assessment at one of

our coal mine waste gas drainage vents (VSA3).

„ Commenced discussions to partner with a Carbon Farming initiative across some or all of Kestrel’s agricultural land to generate Australian Carbon Credit Units (ACCUs).

„ Commenced assessing options with two separate providers around waste gas power supply stations (sizing between 5MW – 30MW).

„ Initiated discussions around the opportunity for a large renewable installation on Kestrel land – solar and wind.

„ Commenced discussions with Australian and international research and development organisations around VAM gas management options (either methane destruction, or methane concentration to useable limits).

By the end of 2022, Kestrel had determined to progress to feasibility stage the option for a coal mine waste gas power station, commencing with a trial 5MW facility, and progressing up to 25-30MW if the initial project is successful.

Further assessment of the Carbon Farming and VAM management initiatives will continue into 2023.

The Year Ahead

In 2023, Kestrel propose to:

„ Finalise feasibility, seek approvals and commence installation of an initial 5MW coal mine waste gas power station, with potential to upgrade to 25-30MW in future.

„ As a high priority, continue to actively seek opportunities and develop partnerships with relevant research and development organisations, to reduce VAM carbon emissions.

„ Evaluate opportunity to replace grid powered ventilaton and cooling systems with gas generation systems utilising coal mine waste gas.

„ Confirm opportunity for Carbon Farming, and develop implementation plan if viable.

„ Develop a Decarbonisation Plan as part of our ESG Strategy, that provides a Life of Mine vision and options implementation plan, for ongoing decarbonisation to meet both legislation and expectation.