Kestrel Coal Resources - Decarbonisation Strategy - 2025

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 Coal Resources (ABN 98 62 245 325) (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 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 Kestrel’s key products of low ash coking coal and smaller volumes 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 reductions. It is a complement to, and extension of, our climate change action plan embedded within our broader ESG Strategy.

This 2025 Strategy updates the 2024 Decarbonisation Strategy to reflect both the progress and the policy changes made in the intervening time. We have extended the period covered by this strategy to 2033, covering the expected mining of the current 500 series of panels. Our subsequent decarbonisation ambition is then covered by the Kestrel West Mine Extension Decarbonisation Strategy which I was proud to release earlier this year.

Having conducted the first year of reporting under the amended Safeguard Mechanism, Kestrel finds itself uniquely exposed to the baseline and credit carbon pricing regime. The agglomeration of open cut and underground mines into the same category under the Safeguard Mechanism as legislated, fundamentally disadvantages the productive and environmentally responsible footprint that Kestrel maintains.

This has focussed our resourcing on targeting substantive and innovative emissions reduction projects. We are investing in first of its kind and scale technology in Queensland to deliver emissions reductions. This will require collaboration with Government Regulators, our staff and technology providers to deliver reductions on the 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 steelmakers.

At the very heart of Kestrel is the aim to create a Legacy

Worth

Leaving. This Decarbonisation Strategy is how we ensure we continue to deliver on this.

Phil Nobes Chief Executive Officer

Climate Change Position

Kestrel recognises the challenges that climate change presents to human and natural systems.

Our approach to Climate Change is informed by and is consistent with Australia’s Climate Change Act 2022, the targets set by the Paris Agreement and the ICMM Climate Change Position Statement.

WHERE OUR CUSTOMERS ARE BASED AROUND THE WORLD

01 Kestrel Coal Resources

1.1 Who is Kestrel?

Kestrel Coal Resources Pty Ltd (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 which is internationally renowned as one of the world’s most significant sources of high-quality metallurgical coal. As a key export commodity, with low impurity levels and superior coke making characteristics, coking coal from the Bowen Basin is well sought after worldwide for steelmakers.

Kestrel extract metallurgical coal from the German Creek Coal seam, via the underground longwall mining method. This mining process delivers Run-ofMine (ROM) coal onto a 7km overland conveyor 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 (400500 series).

1.3 Kestrel West Mine Extension

The Kestrel West Mine Extension proposes to increase the life of the existing underground operations by extending the current underground longwall mine into an area identified as Kestrel West. As this extends the mine operation beyond the current expected approved life of 2033 to 2050 a separate Decarbonisation Strategy for Kestrel West has been prepared. These plans are complementary.

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 create steel for our global economies. 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 critical product to the steel industry in the most sustainable manner possible.

02 Our Emissions Profile

2.1 Scope 1 and 2 Emissions

We measure our Scope 1 and 2 emissions consistent with the requirements of the National Greenhouse and Energy Reporting Act 2007 (NGERs).

To ensure the emissions reductions projects are achieved, Kestrel has invested in our systems to ensure accurate measurement, calculation and reporting of greenhouse gas emissions. The Figure below shows the breakdown of our material emissions sources as reported under the National Greenhouse and Energy Reporting (NGER) Act for the period from 1 July 2023 to 30 June 2024. Kestrel reported total Scope 1 and 2 emissions of 1,384,014 tCO₂-e in this period.

Consistent with the requirements introduced by the amended Safeguard Mechanism, Kestrel undertook reasonable assurance of the Scope 1 Emissions for this period.

This Decarbonisation Strategy focuses on Kestrel’s material sources of Scope 1 and 2 emissions, that is:

¿ ventilation air emissions;

¿ pre and post mining gas drainage emissions;

¿ electricity consumption; and

¿ post mining emissions.

Kestrel moved into an area of the mine known as the 500 series in 2024. This area of the mine is significantly higher in coal mine methane than the previous worked areas. In preparation for this, Kestrel commenced coal mine waste gas drainage in 2018 to ensure that the gas in these areas is reduced to ensure both the safety of our workers and the responsible management of the high gas zones. We will be mining in this high gas area for the next five to seven years and will see higher emissions in our mine ventilation and the gas drainage activities without additional emissions abatement measures as a result of this.

FIGURE 2: INFOGRAPHIC OF KESTREL'S ASSESSED SCOPE 3 EMISSIONS SOURCES

SCOPE 3 EMISSIONS

SCOPE

2.2 Scope 3 Emissions

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 our publicly available basis of preparation, the data collection processes, emissions factor source(s) and identified areas for improvement in future inventories. We have calculated our Scope 3 emissions inventory in FY23/24 consistent with the defined boundary in Figure 2 (refer to figure 2 on page 10).

Kestrel reported total Scope 3 emissions of 7,477,761 tCO₂-e in the period from 1 July 2023 to 30 June 2024, broken down by the sources set out in Figure 3.

2.3 Period Considered

Kestrel’s internal planning horizons are used for the periods considered in this decarbonisation strategy. That is, “Short Term” for the next year, “Medium Term” for the next two to five years and “Long Term” as greater than five years up to the end of the approved mine life of 2033.

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 Kestrel, 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 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.

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.

3.3. Climate Scenarios Analysed for Metallurgical Coal Demand

Kestrel produces 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.

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 across the life of the Kestrel Mine. This has been considered as a risk for Kestrel.

04 Decarbonisation Pathway

For each material emissions source for Kestrel Mine the feasible options for emissions reduction are set out below, with carbon offsets considered as part of our wholistic carbon management approach.

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 emissions 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 0.2-0.6% methane it is well under both 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 minimise methane available to become part of the ventilation air flow through significant,

targeted and comprehensive gas drainage program. By executing a thorough gas pre-drainage program, we can reduce the amount of methane able to flow into the ventilation air stream. As part of this comprehensive 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 emissions are the largest source of emissions.

In 2024 Kestrel commenced working on a project for Regenerative Thermal Oxidation (RTO) technology to reduce

the Ventilation Air Methane (VAM). We were fortunate to be selected for grant funding under the Commonwealth’s Powering the Region Fund in 2024.

To date, Kestrel have commissioned the front end engineering design contractor to progress the options for the safe destruction of the methane in the ventilation air emissions. This 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 as we move through the Project phases.

RTO FEASIBILITY

Finalise Front and Detailed Engineering Design

Kestrel's Final Investment Decision

RTO CONSTRUCTION

With all relevant approvals, construction and commissioning of the VAM RTO

RTO OPERATION

Destruction of methane emissions from the Ventilation Air

4.1.2. Pre and Post Mining Gas Drainage Emissions

Drainage of coal mine waste gas 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 the following types of gas:

¿ Surface-in-Seam

¿ Underground-in-Seam

¿ Goaf Drainage

¿ Post Seal Drainage

Whilst the methane and carbon dioxide concentration of each gas source does change both over time and per well, generally this gas contains concentrations of methane well above 65%, meaning it can safely and easily be combusted.

The global warming potential on 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.

In the short term, ensuring that all collected pre and post drainage gas is flared, either through the newly commissioned blower plant and/or through movable well skids is the aim for Kestrel.

In the medium to long term, Kestrel is proposing to collect pre and post

drainage gas and install up to 30 MW of power generation capacity to achieve the greatest efficiency possible from this gas. 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

The Power Station project has obtained all regulatory approvals and is expected to commence construction in 2026.

SHORT TERM

CMWG FLARED

Signifantly reduce the CMWG Vented

MEDIUM TERM

POWER STATION CONSTRUCTION

With all relevant approvals construction and commissioning of power station

LONG TERM

POWER STATION OPERATION

Power generation and CMWG Destruction

ENERGY EFFICIENCY OPPORTUNITIES

Consider energy efficiency improvement projects

4.1.3. Post Mining Emissions

As a gassy underground mine Kestrel is required to report fugitive emissions associated with the post mining emissions for the Run-of-Mine (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. Electricity Consumption

Scope 2 emissions are calculated by multiplying the consumed electricity 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.

As outlined in the pre and post mining drainage emissions section, Kestrel is progressing plans to produce power from our generated coal mine waste gas, and as such reduce the emissions intensity of the generation source. This leaves reducing the total electricity consumption onsite as the final emissions reduction activity for this source. Kestrel will internally review options to increase electrical efficiency across our operations and proceed with projects that demonstrate cost and emissions savings as per the Kestrel internal approval metrics.

POWER STATION CONSTRUCTION

With all relevant approvals, construction and commissioning of power station

POWER STATION OPERATING

Power generation and CMWG destruction

4.1.5.

4.1.6. Forecast Emissions

Considering the individual decarbonisation projects nominated for Kestrel’s material sources, the short, medium and long term impact on the Scope 1 and 2 emissions for Kestrel are set out in the figures below.

These forecasts are based on the Medium Term Plan developed in August 2025 using the Kestrel developed emissions forecast model.

4.2. Carbon Offset Project Opportunity

As a large landholder in the Lilyvale region, Kestrel are actively considering the ACCU Scheme project opportunities available within our landholdings.

IDENTIFY

Identify and register any approved opportunities under the ACCU Scheme

IMPLEMENT

ACCU Scheme Projects

4.3. Carbon Offset Strategy

As required under the amended Safeguard Mechanism, Kestrel acquired and surrendered ACCUs in FY23/24. Kestrel expects to continue to have a safeguard liability in the short term, whilst working through project approvals for each of the ventilation air methane abatement projects and the CMWG power station. Kestrel will continue to surrender carbon offsets consistent with the requirements of the Safeguard Mechanism.

IMPLEMENT

Evaluate opportunities to expand ACCU Scheme Projects

IDENTIFY

Implement Carbon Offset Strategy as required to meet Safeguard Mechanism Liabilities

IMPLEMENT

Implement Carbon Offset Strategy as required to meet Safeguard Mechanism Liabilities

IMPLEMENT

Implement Carbon Offset Strategy as required to meet Safeguard Mechanism Liabilities

4.4. Summary of all Decarbonisation Initiatives

SHORT TERM

ALL TARGETS

Consider Energy Efficiency Improvement Projects

Significantly reduce the CMWG vented

Finalise Front and Detailed Engineering Design for the VAM RTO

Identify opportunities for reduction in diesel consumed

Identify and register any approved opportunities under the ACCU Scheme

Implement Carbon Offset Strategy as required to meet Safeguard Mechanism Liabilities

MEDIUM TERM

ALL TARGETS

With all relevant approvals, construction and commissioning of the VAM RTO

With all relevant approvals, construction and commissioning of Power Station

Undertake diesel consumption reduction activities

Undertake any approved ACCU Scheme Projects

Implement Carbon Offset Strategy as required to meet Safeguard Mechanism Liabilities

LONG TERM

ALL TARGETS

Destruction of methane emissions from Ventilation Air

Power Generation and CMWG destruction

Review for opportunity to extend/enhance diesel consumption reduction program

Evaluate opportunities to expand ACCU Scheme Projects

Implement Carbon Offset Strategy as required to meet Safeguard Mechanism Liabilities

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.

Bibliography

¿ Australian Government Department of the Environment and Energy. (n.d.). What are the RCPs Infographic. Retrieved from https://coastadapt.com.au/ sites/default/files/infographics/15-117-NCCARFINFOGRAPHICS-01UPLOADED-WEB%2827Feb%29.pdf

¿ Australian Government, Australian Climate Service. (2023). https://www.acs.gov.au/pages/national-climate-risk-assessment. Retrieved from https://www.acs.gov.au/pages/national-climate-risk-assessment

¿ Queensland Government. (2024, 2 7). Queensland Future Climate: Understanding the data. Retrieved from https://longpaddock.qld.gov.au/qldfuture-climate/understand-data/