Chief Executive Officer's
strategic review

Safety

For the year 2024, we recorded one fatality. Our condolences are extended to the family, friends and loved ones of the deceased. TRIFR improved by 1.47%, reaching 2.31 (2023: 2.34). The safety of our employees remains our top priority. We are committed to continuously improving our safety performance, focusing on the four key areas identified in our turnaround strategy: risk management, effective supervision, safety culture, and contractor management.

Health

We continue to monitor pandemics and other related diseases for any concerning trends that might impact our workforce, ensuring that necessary controls are implemented promptly.

Our commitment to creating a healthy work environment remains steadfast. We will review all health risk assessments and maintain our pre-, annual, and exit medical surveillance to monitor the occupational health of our workforce. Implementing our Health Standards and Health Hazards Exposure Limits is a core strategic focus, integrated with our baseline review to confirm exposures through quantitative data analysis.

Environmental, Social and Governance

ESG compliance is a fundamental pillar of our business operations. Our Health, Safety, Environmental, Community, and Human Rights Standards, introduced in 2021 and fully implemented in 2022, are now deeply integrated into our operations. We are reinforcing our commitment to being a responsible producer through second-line assurance, enhancing transparency and strengthening our compliance requirements.

As a member of the International Council on Mining and Metals (ICMM), we adhere to the mining principles, which include 10 sustainable development principles and eight position statements covering issues from biodiversity to water management. We recorded no major or catastrophic environmental incidents in 2024. We have completed the assessment of material water-stress risks and set local water targets, implementing actions to reduce impacts and improve performance against these targets. Additionally, we have embarked on a project to visualise our knowledge base using GIS solutions to support decision-making processes.

Our decarbonisation objectives align with those of the Glencore plc Group. Our portfolio profile provides the flexibility to reduce our carbon footprint. We aim to achieve a 50% reduction in our total CO₂ emissions by 2035 compared to our 2019 baseline. Strategic elements toward achieving this target include managing our operational footprint and leveraging opportunities to reduce our scope 3 emissions.

Financial review

Merafe's earnings slumped by 62% to R667 million. The key contributors to the decline in earnings were the full impairment of Boshoek smelter and lower ferrochrome volumes sold, coupled with weaker ferrochrome prices. Chrome ore prices and volumes were marginally higher and cushioned the impact of the ferrochrome decline. PGMs ounces sold more than double in 2024 due to the inclusion of the Eastern PGM recovery plant for the full year.

Operational review

Merafe's attributable ferrochrome production increased marginally from 300kt in 2023 to 301kt for the year ended 31 December 2024. Rustenburg smelter was idled for the full year, however volumes produced were not impacted as the other operations continued operating in the winter months.

Chrome ore produced at the mines declined by 4% compared to the prior year, mainly due to the Waterval East project coming to an end, coupled with a lower run of mine (ROM) at Eastern mine as a result of conveyor upgrades, breakdowns, safety stoppages and plant shutdowns.

Saleable PGM production increased from 6 588oz to 13 957oz as a result of the inclusion of the Eastern PGM plant and improved yields. The PGMX plant has been commissioned and is now producing concentrate.

The total unit cost of ferrochrome production increased by 2% year-on-year. The increase was driven by higher chrome ore market prices and fixed costs which were offset by lower reductant and plant cost. Fixed cost were impacted by an increase in the electricity demand fee.

The negotiated pricing agreements between the Venture and Eskom have been finalised and implemented effective 1 January 2024.

Logistics overview

Although we faced significant logistical challenges, we were able to meet the projected shipment volumes for 2024. Rail transport continued to experience difficulties, particularly with issues like cable theft, which led to a noticeable shift toward road transport for bulk commodities. This transition added pressure to South African port operations, impacting their efficiency. Later in the year, political unrest in Mozambique disrupted cargo movement along the Maputo corridor, affecting both road and rail deliveries to the port.

A key development during the recent period was establishing the National Logistics Crisis Committee (NLCC), led by President Ramaphosa. The NLCC's workstreams, which include representatives from key ministries like the Department of Transport, are focused on stabilising various sectors of the supply chain and logistics. Significant progress has been made, particularly with the Rail Network Statement and the third-party access initiative for rail, which is expected to be rolled out soon.

Electricity supply

The supply and cost of electricity continues to be a risk for our operations, however for most of 2024, there was uninterrupted power supply, which is positive.

Electricity tariffs increased by 12.65% in April 2024. NERSA granted Eskom a tariff increase of 12.74% effective 1 April 2025. The Venture concluded Negotiated Pricing Agreements with Eskom, which became effective in January 2024. The effect of these agreements provides price predictability and does cushion from double digit increases.

Market review

Global stainless steel supply grew by 4.8%¹ year-on-year in 2024, driven by increased melt rates across all regions. Production in China expanded by 6.4%¹ year-on-year, surpassing 40 million tonnes¹ and accounting for over 60%¹ of global output. Production in Europe and the United States, while showing some growth, remained significantly below historical levels.

The strong growth in stainless steel production led to an increase in demand for chrome units, particularly in China. However, this rise in demand was offset by supply growth, with Chinese ferrochrome production increasing by 25%¹ year-on-year. The expansion of low-cost alloy production capacity in China significantly compressed global smelter margins. Consequently, the ferrochrome oversupply resulted in a sharp decline in ferrochrome prices during H2 2024, which in turn led to a decrease in chrome ore prices.

¹CRU Data.

Renewable energy projects

As part of the Venture's strategy to ensure stable and consistent supply at optimal cost of electricity to the operations, both offsite and onsite projects are being pursued.

Offsite: The Venture has reached a significant milestone in its quest to achieve a 50% reduction in emissions by 2035 compared to the 2019 baseline. Financial close was reached for the Sonvanger Solar plant, a 100MW facility located near Theunissen in the Free State province.

Strategic review

Our strategy remains unchanged and we continue to focus on ferrochrome and chrome ore production and maximising cash flows from the Venture. We continue to evaluate growth opportunities together with our Venture partner.

Business review

On 3 February 2025, shareholders were advised that the Company had, through the Venture, initiated a business review process in respect of its ferrochrome smelting business and is assessing potential measures to address the ongoing market challenges.

The business review followed sustained pressure from the prolonged economic downturn in the global ferrochrome market, which is not expected to ease in the near to medium term. Should the Venture not be able to identify viable solutions to sustain profitability, it may have to consider suspension of certain furnaces in May 2025.

The Venture is actively working with regulatory authorities to mitigate any continued adverse impacts and will continue to explore all viable alternatives in partnership with organised labour. Additionally, the Venture has engaged with its suppliers to identify cost-saving measures to help improve the current situation.

Update regarding the chrome ore operations

The Venture has entered into a mutually beneficial enhancement to its historical agreement with Lonmin plc, as well as a new chrome management agreement with, inter alia, Sibanye‑Stillwater Limited – refer to the SENS published on 19 February 2025.

It is anticipated that the new agreement will result in increased feed and improved recoveries, thereby optimising production yields and reducing operational costs across all relevant chrome recovery plants.

Outlook

The outlook for FY2025 anticipates market volatility due to geopolitical tensions, protectionist policies, ongoing regional wars and potential slowdowns in Chinese industrial production. While declining global interest rates might help, inflationary concerns and currency volatility remain risks.

Demand for stainless steel is expected to remain strong, driven by infrastructure development and manufacturing in Asia. South Africa's role as a major chrome ore supplier provides an advantage, but increased Chinese ferrochrome production capacity poses a challenge, putting pressure on pricing. The Company plans to review smelting operations, leverage technology for optimisation and cost reduction, and focus on environmental sustainability (including a new solar plant) and ESG principles to navigate these challenges.

We are dedicated to creating shared value for our stakeholders.

ZANELE MATLALA
Chief Executive Officer

7 March 2025

Global stainless steel production (Mt)

Global stainless steel production (%)

Global stainless steel production (%)

Global ferrochrome production (Mt)

Global ferrochrome demand (%)

Global ferrochrome demand (%)