The global economic environment can have a positive or negative impact on the demand for the ferrochrome and chrome ore produced by the Venture. When it is doing well, demand increases and prices tend to follow suit. The volatility of the ZAR:USD exchange rate also affects our profitability. In the current financial year, for example, the weakening of the rand against the US dollar again improved our profitability. All our stakeholders are affected by our ability to be profitable and sustainable. Global instability, including the ongoing conflict between Russia and Ukraine, as well as in the Middle East, may contribute to market uncertainty.

Loss of sales is highly likely if increased costs make our product prices uncompetitive. A further possible impact is the loss of production because of electricity shortages. Should the Venture be unable to secure electricity supply for new projects, it would be unable to grow its operations. This issue could impact shareholders, Merafe management and employees as well as Venture management, Venture employees, communities and customers.

The Venture's continued development and application of energy-efficient technology have historically allowed it to sustain its relevance in the ferrochrome industry. The Venture regularly engages with Eskom and is represented on the Energy Intensive User Group. While the conclusion of the Negotiated Pricing Agreements (NPA) with Eskom brought about price certainty for electricity at the Venture's smelters, the tariff remained much higher than our key competitors. Engagements with various stakeholders are in progress and are aimed at finding avenues to make electricity tariffs more competitive for South African smelting businesses. The Venture's strategy to explore and exploit viable alternative sources of energy continues.

The deterioration of South African infrastructure and associated services (railways and harbours) impacts the reliability of delivery of the Venture's products. It also impacts the transportation of raw materials to our operations.

The Venture uses different ports for product delivery. Road haulers are also used to complement other transportation modes.

The Venture will continue to engage proactively with key stakeholders to attempt to find solutions to critical logistics issues, which have worsened over the years.

Climate change can impact business continuity, profitability, health and safety and environmental aspects. The Venture's operations give rise to a significant quantity of indirect and direct GHG emissions and are also exposed to the potential impacts of climate change resulting from GHGs.

The Venture continually engages with legislators, researchers and industry bodies to track and evaluate the situation and develop an improved awareness of and preparation for the risks associated with climate change. The Venture continues to take steps to reduce its carbon footprint. These include the development of energy-efficient technology and research into the use of alternative sources of energy.

Water is an important input in our operations. All stakeholders are impacted by this issue.

With regard to water, we ensure that we have adequate supply and storage facilities. We have access to different water schemes. We re-use a large proportion of water and we have access to underground water. In 2017, as part of its water conservation and water demand management strategy, the Venture implemented compressive model base water balance at all our sites. All of the mines and water reticulation are comprehensively mapped and assimilated into the model to ensure all water streams are covered. The models also have a predictive function, which simulates any process changes to assess the impact on the whole water reticulation system.

Dissatisfied communities embarking on action to remove the Venture's social licence to operate would create an unsustainable working environment and cause significant reputational damage. Communities, investors, the Department of Mineral Resources (DMRE), employees and local municipalities would all be affected.

Community social issues are addressed regularly with goodwill, commitment and leadership. By addressing social issues, the South African mining industry can achieve a more sustainable environment for itself and the communities in which it operates.

Diversification into other commodities would provide us with a buffer against the cyclical nature of ferrochrome, which can and has negatively impacted our profitability in certain years. This issue could impact our shareholders, management and employees.

In August 2014, the Board announced its strategy to focus mainly on ferrochrome and chrome in the medium-term and this was the main focus from 2015 to date. The Board, by participating in the Venture, ensures that the competitive advantages enjoyed by the Venture mitigates this exposure to one commodity. The Venture has since exploited the opportunity to produce PGMs as a consequence of these being associated minerals in the production of chrome ore. The Company, however, will also consider acquisitions outside of ferrochrome on an opportunistic basis.

By not having a majority stake in the Venture, decisions that are taken in the best interest of the Venture may, on the other hand negatively impact Merafe.

Contractual provisions and partnering with a world-class operator and global ferrochrome leader are all helpful in bolstering our overall sustainability. We continually strive to ensure the interests of both partners in the Venture are aligned and to maintain strong relationships based on mutual respect between both management teams.

These credentials are important to maintain a competitive advantage. Any future acquisitions in the mining industry will require empowerment to be ensured.

In 2015 Glencore BV acquired the shares of Royal Bafokeng Holdings Limited. The "once empowered, always empowered" principle allows the Company to benefit from continued recognition of black ownership. The empowerment credentials of Merafe and the Venture however continue to be a focus.

Maintaining a safe and healthy environment is one of the cornerstones of our success. Employee morale is affected by how we manage this issue. Significant reputational damage is also a key factor. This issue could impact employees, contractors and their families, DMRE, Mine Health and Safety Inspectorate, trade unions and investors.

The Venture invests in safety training and efforts to transform its safety culture into one where every employee takes responsibility for their safety and that of their fellow employees.

Loss of production impacts profitability. We also need to consider increased costs and the possible damage to property. The safety of the Venture's employees is also at risk; intimidation of employees by strikers and a breakdown in the relationship with Venture employees are all important factors affecting not only Venture employees but their families, communities, the DMRE and shareholders.

Communication, mutual understanding and respect are fostered daily with employees to enhance the working relationship. We also invest time and effort in establishing an understanding with the trade unions. The Venture also abides by the collective agreements in place and negotiates with the unions with the aim of reaching an agreement on annual wage increases.

Ferrochrome sales to China are impacted by the export of un-beneficiated chrome ore from South Africa, which is facilitating the growth of a ferrochrome industry in China. Profitability would be negatively impacted as would shareholders, Merafe management, Merafe employees, Venture partners, Venture employees and communities, as well as government stakeholders, e.g. South African Revenue Service (SARS).

The Venture further believes that market forces over the medium term will reduce this risk. In October 2020, cabinet announced the introduction of a chrome ore export tax. However, details are still awaited regarding implementation by government. Should market dictates force the Venture to pivot away from smelting, we believe that our significant and quality reserves and resources, and our efficient operations and experienced management team should position us well to be a competitive miner.

Chinese ferrochrome production has been increasing over time. This has been facilitated, inter alia, by China's investment in energy-efficient plants and its cheaper cost of electricity. China's ferrochrome production growth coupled with volatile chrome prices and rising production costs, are threatening the long-term sustainability of South African ferrochrome smelting.

The Venture continues to manage costs within its control. Additionally, the Venture has been actively collaborating with various governmental and other stakeholders to identify viable and impactful interventions that can effectively mitigate this risk.