Kestrel Coal Resources - Decarbonisation Strategy

Decarbonisation Strategy

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.

This document has been prepared by Kestrel

in

The information contained in this document is

and does not purport to be

The document does not contain an offer, solicitation, invitation to apply, recommendation or advice to buy, sell or hold any securities of Kestrel.

This document may contain forward looking statements, including statements about plans, strategies and objectives of management; and anticipated productive lives of projects, mine 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 risk.

Throughout this Decarbonisation Strategy, metallurgical and coking coal are used to broadly describe the Projects key products of low ash coking coal with a smaller volume of high ash coking coal.

CEO’s Message

Supplying metallurgical coal to steelmakers around the world, Kestrel Coal Resources recognises the urgency and importance of collective climate change action. This decarbonisation strategy documents our intent, ambition and progress in contributing to emissions reduction as we develop the Kestrel West Mine Extension (the Project).

Kestrel published our first Decarbonisation Strategy in 2024. In this we set out emissions reduction planned activities to 2030. With mining in the Project area expected to commence in 2033, this strategy documents our planned decarbonisation activities from 2033 to 2050.

We are building on our existing commitment to target substantive and innovative emissions reduction projects. We expect that the Project will continue to operate the first of its kind and scale technology in Australia to deliver the emissions reductions required to meet

the declining emissions baselines. This will require collaboration with Government, Regulators, our staff and technology providers to undertake flameless oxidisation of methane in our ventilation air and to reduce the emissions from coal mine waste gas drainage. The overlapping ambition between safety initiatives and environmental improvement is a challenge to be worked through carefully and deliberately.

I am confident that Kestrel will rise to this challenge as we continue to sustainably supply the forecasted needs of international steelmakers.

At the very heart of Kestrel is the aim to create a Legacy Worth Leaving The Kestrel West Mine Extension Decarbonisation Strategy is how we ensure we continue to deliver on this for the entire lifespan of the Kestrel Mine.

Phil Nobes Chief Executive Officer

Climate Change Position

Kestrel recognises the challenges that climate change presents to human and natural systems. Climate Change presents a mitigation challenge to reduce emissions, an adaptation challenge to plan for the effects of climate change and a transitional risk for the metallurgical coal industry.

Our approach to Climate Change is informed by and is consistent with Australia’s Climate Change Act 2022, Queensland’s Clean Economy Jobs Act 2024 and the International emissions reduction targets set by the Paris Agreement.

Where our customers are based around the world

01 Kestrel Coal Resources

1.1 Who is Kestrel?

Kestrel Coal Resources Pty Ltd is the proponent for the Kestrel West Mine Extension (the Project). Kestrel operates the Kestrel Coal Mine 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 surrounding areas, with a small team working from Brisbane for finance, sales and marketing, planning and corporate leadership.

Kestrel's mining operations are located within the Bowen Basin. The Bowen Basin is internationally renowned as one of the world's most significant sources of high-quality metallurgical coal. As a key export commodity, Bowen Basin coking coal's low impurity levels and superior coke making characteristics make it sought after worldwide for steelmakers.

Kestrel extracts metallurgical coal from the German Creek coal seam, via the underground longwall mining method. The mining process delivers Run-ofMine (ROM) coal onto a 7km overland conveyor directly to the Coal Handling and Preparation Plant (CHPP) for washing. Then to our dedicated train loadout for delivery to our international customers via Gladstone Port.

1.2 Kestrel South

The Kestrel Mine currently includes two distinct areas, Kestrel North and Kestrel South. Kestrel North was the original mine development (100-300 series, now decommissioned) and is the location of the CHPP facility. Kestrel South is the current mining area (400 and 500 series).

1.3 Kestrel West Mine Extension

The Kestrel West Mine Extension (the Project) proposes to increase the life of the existing underground operations by extending the current underground longwall mine into an area identified as Kestrel West. The Project will utilise the existing surface infrastructure minimising the impact of the Project. Approval of the Project will allow Kestrel Mine to:

¿ Maintain annual production rates of up to 12Mtpa ROM coal with an average of 7.25Mtpa of primarily metallurgical coal product for export markets.

¿ Continue to provide substantial employment opportunities within the Central Highlands region until circa 2050.

1.4 Sustainably Supplying Steelmakers

There are two main types of coal; thermal coal which is used in power generation; and metallurgical coal used as a reductant in the integrated steel making process.

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. At present, metallurgical coal is the primary means to produce steel for our global economy. Steel is an important commodity in the energy transition, with approximately 250 tonnes of metallurgical coal required to build a single offshore wind turbine (generator, blades, tower and foundation). Our continuing focus is to provide this essential product to the steel industry in the most sustainable manner possible.

02 The Project’s Emissions Profile

BUSINESS AS USUAL

As part of the Project’s Environmental Impact Statement (EIS) Process, Kestrel prepared our projected emissions assessment on a “Business as Usual” (BAU) basis. This considered both the average financial year annual emissions and the total Project emissions. The information presented in this section of the Strategy is replicated from Chapter 11 of the EIS and all required assumptions and methodologies are documented in this Chapter.

2.1 Scope 1 Emissions – Business as Usual

Consistent with Kestrel’s historical emissions profile, the material scope 1 emissions sources for the Project are expected to be:

¿ Ventilation air emissions

¿ Post mining emissions

¿ Coal mine waste gas (CMWG) emissions

As a designated large facility Kestrel is covered by the Safeguard Mechanism. Based on the current Safeguard Liability rules, Kestrel’s potential safeguard liability on a BAU basis is estimated as a total of 2.95 MtCO2-e over the life of the Project.

Under the business as usual requirements, Kestrel is required to purchase an equivalent of 2.95 Million eligible offset credits which are currently allowed as either of Australian Carbon Credit Units (ACCUs) or Safeguard Mechanism Credits (SMCs).

2.2 Scope 2 Emissions – Business as Usual

The BAU scope 2 emissions were projected using a Project power demand forecast and the Department of Climate Change, Energy, the Environment and Water’s projections of the QLD grid factor extrapolated across the period for the Project.

TABLE 2 PROJECT SCOPE 2 EMISSIONS FORECAST - BUSINESS AS USUAL

2.3 Scope 3 Emissions – Business as Usual

Scope 3 emissions are defined consistently with the Corporate Value Chain (Scope 3) Accounting and Reporting Standard as, “All indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions.”

Kestrel prepared its first scope 3 emissions inventory for the FY22/23 year, setting out in the basis of preparation the data collection processes, emissions factor source and identified areas for improvement in future inventories. This was continued in FY23/24.

The infographic opposite summarises the emissions scopes considered to be part of Kestrel’s Value Chain. Kestrel’s full assessment of all scope 3 emissions categories and their applicability to the mine is set out in Chapter 11 Greenhouse Gases of the EIS.

TABLE 3 PROJECT SCOPE 3 EMISSIONS FORECAST - BUSINESS AS USUAL

FIGURE 1: INFOGRAPHIC OF KESTREL'S ASSESSED SCOPE 3 EMISSIONS SOURCES

SCOPE 3 EMISSIONS

SCOPE 1 EMISSIONS

03 Climate Scenario Analysis and Strategic Planning

There are two major categories of potential climate change impact on the Project:

1. The physical risks of climate change

2. The impact of climate policy on the demand of metallurgical coal.

To inform the climate change risk assessment, both of these potential climate change impacts were considered for the Kestrel West Mine Extension.

3.1. Climate Scenarios Analysed for the Physical Risks of Climate Change

To best assess the physical impacts of climate change on the Project, the work of the Intergovernmental Panel on Climate Change’s (“IPCC”) Sixth Assessment Report was considered and contextualised for the Project (IPCC, 2021).

To reflect the range of projected climate change scenarios, Kestrel has assessed the physical impacts on the Project using scenario Shared Socio-economic Pathways (SSP) 1-2.6 and scenario SSP 3-7.0. These were selected for the following reasons:

¿ SSP1-2.6 represents a pathway consistent with the ambition set for emissions reduction in Australia’s Climate Change Act 2022 which is to limit warming to 1.5°C by 2050.

¿ SSP 3-7.0 represents a medium to high climate change impact with limited mitigation and as such represents a projected middle to upper end of climate change impacts to the site.

¿ These scenarios have been modelled at a QLD granular level with data available in Queensland Future Climate dashboards (Queensland Government, 2025).

As mining for the Project is projected to be completed by 2050, the periods modelled by the IPCC for assessing the physical impacts of climate change are 2030 and 2050.

It is important to understand that climate change impacts are not universally consistent across the globe. The projections undertaken for the IPCC used a number of different modelling software to arrive at their projected impacts. These all take into account historical weather data to project the potential impact of increased greenhouse gas emissions across the complex weather systems around the globe. This predicts regional impacts of the same climate warming event.

3.2. Impacts of the Climate Scenarios for the Physical Risks of Climate Change on the Kestrel Mine

The Project continues the operations of Kestrel’s key operational asset, the Kestrel Mine. The mine is located off Lilyvale Road, 40 km north of Emerald, within the Central Highlands District Council Region. The potential impact of the IPCC 6th Assessment Report scenarios SSP 1-2.6 and SSP 3-7.0 were assessed for the Central Highlands District Council Region for all climate variables. These included both the average and the potential severe events relevant for the site, documented in Chapter 5 of the EIS.

The analysis of the climate scenarios found that the most significant predicted climate change impact for Kestrel Mine are increases in the temperature (mean, minimum, maximum), an increase in the heatwave peak temperature and extreme temperature indices. These will impact surface operations including gas drainage activities; mining rehabilitation; and coal handling, preparation and processing. For more detail on the forecast climate change impacts please see Chapter 5 of the Kestrel West EIS.

3.3. Climate Scenarios Analysed for Metallurgical Coal Demand

The Project will primarily produce metallurgical coal which is a primary input into the manufacture of steel. According to the International Energy Agency (2022), “The steel industry accounts for 6% of global energy demand and contributes almost 8% of total energy system CO2 emissions. It is the single‐largest user of coal in industry, accounting for 16% of global coal demand and more than 90% of coking coal demand.”

Steel can currently be made using three main technologies: blast furnace (~70% global production in 2022), a direct reduced iron or electric arc integrated steel facility including a blast furnace. Kestrel’s clients largely produce either coke oven coke and/ or steel using a blast furnace, where coke is used as an oxidant to reduce iron ore. The gases created in the processes (coke oven gas) are generally recycled for energy within the integrated iron and steel facility (International Energy Agency, 2022).

Generally, demand for steel is considered by the four end uses: construction (~50%), vehicles, machinery and consumer goods (International Energy Agency, 2022). The IEA noted the below in relation to the predicted demand for steel:

Demand for steel is expected to continue to rise in the years ahead, particularly in emerging market and developing economies. During the early stages of economic development, countries typically require large amounts of steel to build infrastructure. As the in‐use stock of steel accumulates in buildings, vehicles and so on, demand gradually shifts from the acquisition of new goods containing steel to the maintenance of the installed inventory of steel products, or in‐use stock.

Emerging market and developing economies are the primary driver of recent growth in industrial coal demand. As a country industrialises, its per capita consumption of steel, cement and other coal‐intensive goods increases. Few alternatives to coal are available today to produce steel, cement and other industrial products. In cases where there may be alternative means such as the use of natural gas, they tend to be more expensive than coal in most regions. Many emerging market and developing countries are far from reaching the saturation levels of the outputs such as steel and cement that have been observed in advanced economies, so their demand for coal is projected to continue to rise rapidly.

(International Energy Agency, 2022)

In its specialist report, “Coal in Net Zero Transitions”, the IEA considers two scenarios for the coal industry and climate change policy:

1. Announced Pledges Scenario (APS)

a. Assumes all net zero pledges announced by governments are met on time and in full (as at 2022).

2. The Net Zero Emissions (NZE) by 2050 Scenario

a. A path to achieve the goal of 1.5°C stabilisation in the rise in global average temperatures.

The projected impact on metallurgical coal demand is considered independently in each scenario.

3.3.1. Announced Pledge Scenario

The IEA Modelling demonstrated that coking coal demand declines over time to 2050. Specifically: In the APS Scenario: Australia fares better, but its exports nevertheless decline by about 20% to 2030: they fall further and faster after 2030 as significant reductions in coking coal demand from major importers start to add to the rapid decline in steam coal. Australia’s exports in 2050 are almost 65% lower than in 2021. (International Energy Agency, 2022)

Figure 2 demonstrates the forecast of total coal by region and then the split of coking versus export coal. Comparatively, coking coal will continue to be exported from Australia into 2050, albeit at much reduced rates to the current market.

BY REGION UNDER THE ANNOUNCED PLEDGE SCENARIO MODELLED BY THE IEA (INTERNATIONAL ENERGY

3: COAL EXPORTERS AND IMPORTER IN THE ANNOUNCED PLEDGES SCENARIO MODELLED BY THE IEA (INTERNATIONAL ENERGY AGENCY, 2022)

CC BY 4.0

3.3.2. Net Zero Emissions Scenario

The analysis considered the impacts on metallurgical coal under the more ambitious Net Zero Emissions (NZE) scenario noting the following:

In the NZE Scenario, coal trade declines to about half its current level by 2030 and in 2050 it is nearly 90% lower than in 2021. Most of the remaining coal trade is related to power plants and industries equipped with CCUS in the Asia Pacific region. Coking coal accounts for well over half of total coal imports in 2050 (up from 30% today).

In the NZE Scenario, the pace of innovative technology deployment is more than twice as fast as in the APS. This leads to a reduction in current emissions from iron and steel production of more than 20% by 2030 and more than 90% by 2050.

(International Energy Agency, 2022)

Effectively the modelling by the IEA for the NZE model shows a much weaker demand for the coking coal from the Kestrel West Extension. This has been modelled as a variable in the climate risk assessment available in Chapter 5 Climate in the EIS.

04 Decarbonisation Pathway

For each material emissions source for the Project the feasible options for emissions reduction are set out below, with carbon offsets considered as part of our holistic carbon management approach. These have been considered in line with the GHG abatement hierarchy outlined in Figure 5.

5 GREENHOUSE GAS ABATEMENT HIERARCHY

Each of our proposed emissions reduction measures will be characterised in the greenhouse gas abatement hierarchy.

4.1. Reducing Emissions from our Material Scope 1 Sources

4.1.1. Ventilation Air Emissions

The material source of ventilation air emissions represents a significant challenge for the coal mining industry worldwide. The emissions in this category represent the very low concentrations of methane and carbon dioxide which are contained in the high volume flowrates of ventilation air, circulated throughout the underground workings to ensure the safe operation of the mine. With concentrations of methane ranging from 0.2% through to 0.6% this methane is well below the lower explosive limit of methane and the concentration at which the gas would ignite to combust the methane to carbon dioxide.

Kestrel’s priority is to “reduce” methane available to become part of the ventilation air flow through a significant, targeted and comprehensive gas drainage program. By executing a thorough gas pre-drainage program, Kestrel can reduce the amount of methane able to flow into the ventilation air stream. As part of this drainage program, Kestrel pre-drains not only the extracted coal seam (German Creek Seam), but also the overlying Corvus coal seam. Drainage of this overlying seam prior to mining minimises the gas available to migrate post mining through the goaf to the ventilation system. Even with this extensive drainage program, our Ventilation Air Methane (VAM) is the single largest scope 1 emissions contributor.

As per Kestrel’s 2024 Decarbonisation Strategy, Kestrel is pursuing Regenerative Thermal Oxidation (RTO) technology to be running in the next three to four years. The success of this project remains caveated by the fact that the technology is untested in Queensland and Kestrel are committed to working with the relevant Regulators to ensure that progress is achieved only to the strictest of safety standards and controls. This is a “reduce” project on the greenhouse gas abatement hierarchy.

The ACCU Scheme Project methodology, Carbon Credits (Carbon Farming Initiative—Coal Mine Waste Gas) Methodology Determination 2015, sets out the requirements for estimating emissions abatement from RTO units. Applying this methodology with reasonable assumptions regarding the RTO, results in the emissions avoided calculation of scope 1 emissions of 164,122 tCO2-e/financial year or a total of 2.8 MT CO2-e across the life of the Project.

4.1.2. Pre and Post Mining Drainage Emissions

Drainage of CMWG occurs both in advance of, and post mining, to ensure the safe working conditions for coal mine workers. The type and extent of the gas drainage is coal seam dependent. At present Kestrel is pre and post draining via the following methods:

¿ Surface-in-Seam

¿ Underground-in-Seam

¿ Goaf Drainage

¿ Post Seal Drainage

Whilst the methane and carbon dioxide concentration of each gas source change both over time and across the coal seam, generally this gas contains concentrations of methane above 50%, meaning it can safely and easily be combusted.

The global warming potential of methane is 28 times that of carbon dioxide, that is, one tonne of methane released to the atmosphere is as impactful on global warming as 28 tonnes of carbon dioxide. Combusting methane through flares, accordingly, materially reduces the emissions from this gas source, an activity which Kestrel has been undertaking since 2018.

Kestrel’s emissions forecast includes assumptions for the percentage of gas flared versus vented over time. For this source of emissions, effectively the “business as usual” approach is the “with all measures approach” as the emissions reduction activities are assumed both in terms of reducing vented methane emissions, and in terms of reducing overall gas availability for the ventilation air methane.

Kestrel has also made significant progress on the development of a 30 MW CMWG fired power station in 2024/25 to achieve the greatest efficiency from this gas. Our current projections show that this power station will be operational from FY26/27 to FY34/35, running for just two years of the Project. In offsetting grid purchased power, the power station will also achieve the following key benefits:

¿ Reduction in scope 2 emissions

¿ Reduced reliance and capacity demand on the electricity grid

¿ Excess power delivered to the electricity grid

¿ Generation of ACCUs through the Registered ACCU Scheme

The Power Station project has been included in the “With all Measures” emissions reduction totals for the period from FY33/34 to FY34/35 both in terms of reducing scope 1 emissions and for the ACCUs generated from the project from the scope 2 emissions reductions. The Power Station project is both a reduction and a substitution project in terms of the greenhouse gas abatement hierarchy.

4.1.3. Post Mining Emissions

As an underground mine Kestrel is required to report fugitive emissions associated with the post mining emissions for the ROM coal. As there is only a single method to calculate this emissions source under the National Greenhouse and Energy Reporting Scheme, that applies a factor to the ROM coal, there is no opportunity for Kestrel to reduce the emissions from this source without a direct impact on production.

4.1.4. Diesel and all Other Emissions Sources

As per the assumptions outlined in Chapter 11 of the EIS, emissions associated with diesel combustion (whether for power or transport use) and all other scope 1 emissions sources total 2% of the estimated scope 1 emissions. At this level of emissions it is clearly not a material source for the Project, which is typical for an underground mine.

Consistent with our 2024 Decarbonisation Strategy, Kestrel will continue to explore low emissions diesel options which might include the following:

¿ Switching to either biodiesel or renewable diesel options for above ground use in the first instance

¿ Consider alternative engine technologies such as hydrogen and/or electric engine for above ground use in the first instance

} Note that substantive testing is required prior to the introduction of either of these options to an underground environment

¿ Energy efficiency options wherever available

4.1.5. Emissions for Land Use, Land Use Change and Forestry

Whilst not reported under either NGERs or the Safeguard Mechanism, the emissions associated with Land Use, Land Use Change and Forestry represent a potential opportunity for emissions reductions through an ACCU scheme project on Kestrel’s available land. Whilst this remains a live opportunity, actively being considered by Kestrel and potentially relevant for the Project, as Kestrel hasn’t yet registered any additional land sector projects under the ACCU Scheme, these were not accounted for in the “With all Measures” emissions reductions calculations.

4.1.6. Total Scope 1 Emissions With All Measures

TABLE 4 PROJECT SCOPE 1 EMISSIONS REDUCTION PROJECT EMISSIONS

*Calculated for the two years of the Project operation. The total avoided scope 1 emissions calculation applies the emissions reductions across the 17 years of the Project.

With all measures in place, when compared to the BAU case, the safeguard liability has been significantly reduced from 2,950,356 tCO2-e to 14,407 tCO2-e across the life of the Project.

4.2. Reducing Scope 2 Emissions

Scope 2 emissions are calculated by multiplying the forecast electricity demand of the Project by a Queensland State based factor. The options to reduce the total scope 2 emissions include: reducing the electricity consumed and/ or sourcing emissions from a lower emissions intensity generation source.

For this emissions source, Kestrel projected the emissions using the forecast QLD electricity grid emissions factor. This reduces to 0 tCO-e/MWh using a linear extrapolation of DCCEW’s forecasts by FY37/38. As with the emissions calculated for the pre and post coal mine waste gas, effectively Kestrel’s “Business as Usual” projections include the decarbonisation of the QLD grid and the best case emissions reduction for this source.

4.2.1. Renewable Energy

There are options for Kestrel to consider the installation of renewable energy generation for the Project. These might include wind, solar and/or pumped hydro electricity generation across the land holdings. As these will not generate additional emissions reduction, the decisions on these will progress as and when the economic assessments demonstrate these as viable options. This has been characterised as a “substitute” activity for the purposes of the greenhouse gas abatement hierarchy.

4.3. Reducing Scope 3 Emissions

4.3.1.

Purchased Goods and Services

Kestrel recognises that the current method of estimating emissions associated with this source could be improved both improving the carbon inventory literacy and engaging directly with our suppliers of goods and services. As part of the Project, Kestrel will continue to engage with our suppliers on carbon inventories.

As there is significant uncertainty around how this may impact our calculation of emissions from this source, Kestrel has conservatively assumed no emissions reductions result from this increased engagement with our suppliers.

4.3.2. Fuel and Energy Related Activities

As per Section 4.1.4, Kestrel will continue to explore low emissions diesel options for the Project. Through both a combination of this selection and the improved engagement with Suppliers set out in Section 4.3.2, there may also be scope 3 emissions reductions achieved in the fuel and energy supply chain as a result of these activities.

4.3.3. Waste Generated in Activities

Whilst immaterial, this source of emissions can be further reduced through improved recycling practices and engagement with our suppliers as outlined in Section 4.3.1. Kestrel will review our waste management plan with our waste services suppliers to ensure that all opportunities for recycling are maximised as they become available. This has been characterised as a “reduce” activity for the purposes of the greenhouse gas abatement hierarchy as this will reduce the total emissions associated with landfilling waste. In the interest of conservatism in our estimated scope 3 emissions “With all Measures” no emissions reductions have been assigned to this category of emissions.

4.3.4. Business Travel

The business travel emissions for Kestrel are immaterial for both the scope 3 and emissions totals. As such emissions reduction projects for this emissions source has not been considered further.

4.3.5. Employee Commuting

The employee commuting emissions for Kestrel are immaterial for both the scope 3 and emissions totals. As Kestrel already offers an employee bus and as these emissions are immaterial even on a conversative assumption basis, emissions reduction projects for this emissions source has not been considered further.

4.3.6. Downstream Transport Rail

All product coal from the Project is railed by Pacific National to the Gladstone Port facility. In Pacific National’s ESG Report 2024 the climate change target of, “We have aligned our scope 1 emissions intensity target with the Safeguard Mechanism reform which reduces the legislated emissions limit (baseline) of a covered facility by 4.9% annually.”

Kestrel understands the ambition and challenge of these announced targets by Pacific National. We have applied this target annually out to 2050. This has been characterised as a “reduce” activity for the purposes of the greenhouse gas abatement hierarchy.

Shipping

In 2023 the International Maritime Organisation (IMO) agreed in Resolution MEPC.377 (80) the 2023 IMO Strategy on Reduction of GHG Emissions from Ships (International Martime Organisation, 2023). This includes the targets of:

¿ .2 carbon intensity of international shipping to decline } to reduce CO2 emissions per transport work, as an average across international shipping, by at least 40% by 2030, compared to 2008;

¿ .4 GHG emissions from international shipping to reach net zero

} to peak GHG emissions from international shipping as soon as possible and to reach net-zero GHG emissions by or around, i.e. close to, 2050, taking into account different national circumstances, whilst pursuing efforts towards phasing them out as called for in the Vision consistent with the long-term temperature goal set out in Article 2 of the Paris Agreement.

¿ Indicative checkpoints to reach net-zero GHG emissions from international shipping:

} .1 to reduce the total annual GHG emissions from international shipping by at least 20%, striving for 30%, by 2030, compared to 2008; and

} .2 to reduce the total annual GHG emissions from international shipping by at least 70%, striving for 80%, by 2040, compared to 2008.

Conservatively applying the targets where there are multiple options, Kestrel has assumed the following emissions reduction targets are met in our shipping emissions-intensity:

¿ 20% reduction by FY30/31

¿ 70% reduction by FY40/41

¿ 100% reduction by FY49/50

As the destination of the Project coal is unknown, Kestrel calculated the emissions on a tCO2-e/tonne Sold Coal basis using the scope 3 calculations for FY22/23 and FY23/24. Knowing that global emissions shipping intensity has increased from 2008, in lieu of a 2008 baseline, Kestrel applied the above emissions reductions to the FY22/23 intensity, linearly extrapolating between the reduction targets. This is a conservative approach given that the IMO emissions intensity reduction targets will require much deeper cuts to emissions. This has been characterised as a “reduce” activity for the purposes of the greenhouse gas abatement hierarchy.

4.3.7. Processing of Sold Products

Kestrel does not currently collect information on our metallurgical client’s coke oven facilities and in some cases will supply the metallurgical coal to an intermediary without visibility of the end user. Accordingly, Kestrel calculated the BAU emissions associated with the use of metallurgical coal in coke production conservatively, assuming that the coke production is conducted without coke oven gas by-product recovery.

For the Project, Kestrel is committing to selling 50% of metallurgical coal to clients with coke oven gas by-product recovery. Kestrel will implement the information gathering systems required to measure this in the intervening years. This has been characterised as a “reduce” activity for the purposes of the greenhouse gas abatement hierarchy.

4.3.8. Use of Sold Products

Kestrel does not currently collect information on our thermal coal client’s facilities and in some cases will supply the thermal coal to an intermediary without visibility of the end user. Accordingly, Kestrel calculated the BAU emissions associated with the use of thermal coal conservatively, using the method 1 approach as outlined in the IPCC relevant calculation.

Kestrel will implement the information gathering systems required to measure this in the intervening years. As there is significant uncertainty around how this may impact our calculation of emissions from this source, Kestrel has conservatively assumed no emissions reductions result from this increased engagement with our customers.

4.3.9. Total Scope 3 Emissions With All Measures

4.4. Carbon Offset Strategy

Under the Safeguard Mechanism Kestrel is required to acquire and surrender either ACCUs or SMCs in the event of an “excess emissions situation” in each financial year.

To meet this legal obligation, Kestrel will be purchasing carbon offsets to meet its carbon liability. Kestrel will rely on the Clean Energy Regulator’s well established and reviewed processes for verifying the generation of the ACCUs. This has been characterised as an “offset” activity for the purposes of the greenhouse gas abatement hierarchy.

4.4.1. Purchasing offsets from Queensland

Kestrel is currently working with ACCU trading partners to source supply of ACCUs from within the Central Highlands region for our safeguard compliance in the short term (ie FY23/24 to FY24/25). Kestrel are committed to working with landholders in the region to support robust and additional carbon offset projects.

For the Project with all scope 1 emissions reduction measures, under Kestrel’s safeguard mechanism liability estimates, offsets are not required until FY33/34. At this stage Kestrel does not have a position on where these might be sourced from. Where Kestrel intends to source these from outside of Queensland, we would at that stage prepare the report required in the Guideline: Greenhouse Gas Emissions (ESR/2024/6819).

4.5. Summary of all Decarbonisation Initiatives

All emissions reduction projects are summarised in the below Kestrel West Mine Extension specific update of the greenhouse gas abatement hierarchy.

¿ Gas drainage program

¿ Vegetation clearing very limited as an underground mine

¿ Ventiliation Air Methane RTO Project

¿ Flaring coal mine waste gas methane from the gas drainage program

¿ Explore energy efficiency opportunities

¿ Working with suppliers to document their products and services specific emissions intensity, including a review of the waste management plan.

¿ Support Pacific National and the IMO in achieving their published emissions reduction targets

¿ 50% of metallurgical coal sold to clients with coke oven gas by-product recovery

Evaluate opportunities for renewable energy electricity supply

Carbon Offsets as required under the Safeguard Mechanism

FIGURE 7.1 – KESTREL WEST EMISSIONS PROFILE (SCOPES 1,2 AND 3) BUSINESS AS USUAL

FIGURE 7.2 – KESTREL WEST EMISSIONS PROFILE (SCOPES 1,2 AND 3) WITH ALL MEASURES

n Scope One Emissions n Scope Two Emissions n Scope Three Emissions n Scope One Emissions n Scope Two Emissions n Scope Three Emissions

FIGURE 8.1 – KESTREL WEST EMISSIONS PROFILE (SCOPES 1 AND 2) BUSINESS AS USUAL

FIGURE 8.2 – KESTREL WEST EMISSIONS PROFILE (SCOPES 1 AND 2) WITH ALL MEASURES

800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0

05 Climate Change Targets

5.1. Kestrel’s Climate Change Targets

Recognising that only the scope 1 emissions are directly within Kestrel’s operational control, Kestrel’s targets are based solely on scope 1 emissions.

Kestrel coal is committed to achieving net zero scope 1 emissions by 2050. Kestrel may choose to set interim targets based on our current operations and for the Project in the future.

5.2. Contribution to Queensland’s Target

5.2.1. Alignment with the Queensland Targets

The Queensland Clean Economy Jobs Act 2024 enshrined the below emissions reduction targets for Queensland in Law:

¿ by 30 June 2030, net greenhouse gas emissions in Queensland are reduced to an amount that is at least 30% below the net greenhouse gas emissions in Queensland for 2005;

¿ by 30 June 2035, net greenhouse gas emissions in Queensland are reduced to an amount that is at least 75% below the net greenhouse gas emissions in Queensland for 2005;

¿ by 30 June 2050, net greenhouse gas emissions in Queensland are reduced to zero (the 2050 net zero emissions target).

5.2.2.

Scope 1 Emissions

Kestrel Coal Resources acquired 80% interest in the Kestrel Mine in 2018 and as such does not have a 2005 baseline for which to model Queensland’s targets. We are also committed to achieving net zero by 2050 and as such are aligned to this target.

For the 30 June 2035 target, Kestrel has considered both the forecast business as usual and with all measures emissions forecasts in Table 10 as a portion of the residual emissions and the abatement target to be achieved. Kestrel’s VAM Abatement project is expected to produce material reductions in our scope 1 emissions as reflected in this table.

Kestrel's contribution to Queensland’s

5.2.3. Scope 1, 2 and 3 Emissions

To determine Kestrel’s contribution to Queensland’s emissions targets inclusive of scope 2 and 3, ie, those emissions outside of Kestrel’s operational control, Kestrel has first considered which of these categories are incurred in Queensland. The assessment and rationale for this is set out below.

TABLE 11: THE PROJECT'S SCOPE 2 AND 3 EMISSIONS SOURCES ASSESSED AS OCCURRING IN QUEENSLAND.

Emissions Source

Electricity Yes Yes

1. Purchased goods

3. Fuel- and energy-related activities (not included in scope 1 or scope 2)

5. Waste generated in operations

6. Business travel

7. Employee commuting

9. Downstream transport - rail

9. Downstream transport - shipping

10. Processing of sold products

11. Use of sold products

A portion of expenditure occurs in Queensland.

A portion of the transport and distribution occurs in Queensland.

Yes, include 50% of this source of emissions as a conservative estimate.

Yes, include 100% of this source of emissions as a conservative estimate.

Solely occurs in Queensland Yes

Largely occurs in Queensland

Yes, include 100% of this source of emissions as a conservative estimate.

Solely occurs in Queensland Yes

Solely occurs in Queensland Yes

Does not occur in Queensland No

Does not occur in Queensland No

Does not occur in Queensland No

Using the above assessment and the forecast emissions in FY35, Kestrel’s scope 1, 2 and 3 contribution to Queensland’s emissions targets is in Table 12 below. We note that as the Queensland target is based on scope 1 emissions, and no estimate of Queensland’s scope 2 and 3 cumulative emissions has been made, this comparison will over-estimate Kestrel’s contribution to emissions in Queensland

TABLE 12: THE PROJECT'S SCOPE 1,2 AND 3 CONTRIBUTION TO QUEENSLAND'S EMISSIONS BUDGET (MT CO2-e)

scope 1,2 and 3 emissions in Queensland

5.3. Contribution to Australia’s Target

The Climate Change Act 2022 enshrined the below emissions reduction targets for Australia in Law:

¿ reducing Australia’s net greenhouse gas emissions to 43% below 2005 levels by 2030: } implemented as a point target; and } implemented as an emissions budget covering the period 2021 2030;

¿ reducing Australia’s net greenhouse gas emissions to zero by 2050.

As the Project does not commence before 2030 only the net zero emissions target was considered. Kestrel is committed to net zero emissions by 2050.

5.4. Contribution to the Paris Agreement

In the Nationally Determined Contributions under the Paris Agreement Synthesis Report by the secretariat released on 28 October 2024 by the UNFCCC summarises the requirements to limit warning to 1.5°C as:

¿ With no or limited overshoot over the course of the century:

} GHG emissions are reduced by 43 (34–60) per cent by 2030 relative to the 2019 level.

} GHG emissions have to be reduced by 60 (49–77) per cent by 2035 relative to the 2019 level.

} Net zero CO2 emissions by 2050 (99 per cent CO2 emission reduction relative to the 2019 level)

(United Nations Framework Convention on Climate Change, 2024)

Kestrel has plotted our forecast scope 1 emissions with all potential measures for the Project against a linear extrapolation of the targets in Figure 3. Although our projected scope 1 emissions with all measures does not decline linearly, we are forecast to meet net zero emissions by 2050 consistent with the recommended targets.

n No Emissions Abatement achieved

n With the Power Station

n With the Power Station and VAM n UNFCCC World Target Recommendations

06 Review of this Document

This document has been prepared as part of the Environmental Impact Statement for the Project. Kestrel has a public Decarbonisation Strategy for its existing operations and intends to review the opportunities for, progress against and continual improvement opportunities for the Project as part of our normal review processes for this Strategy.

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