Climate change report

Repowering Pacific Aluminium Operations

• Completed commercial and technical due diligence of submissions for supply of renewable electricity to Gladstone aluminium assets.
• Executed first renewable energy contract required for our Boyne smelter.

Alumina processing

• Developed a decarbonisation energy strategy for Yarwun and Queensland Alumina (QAL) refineries.
• Approved the Yarwun Hydrogen Calcination Pilot Demonstration Program.
• Progressed an electric boiler feasibility study for Vaudreuil.
• Progressed a double digestion pre-feasibility study at QAL, and commissioned a pilot plant.
• Progressed studies on electric steam generation technologies, electric calcination and thermal energy storage systems for refineries.

Aluminium anodes

ELYSIS™ progressed its research and development program with the ongoing aim of steadily improving cell performance. Learnings from the past 2 years will now be incorporated into the development of the larger-scale cells (450kA).

Renewable energy

• Constructed a 5MW solar plant pilot project at Kennecott Copper.
• Approved a 12.4MW solar system and a 2.1MWh battery storage system via long-term Power Purchase Agreements (PPAs) for Amrun, with construction starting in 2024 subject to regulatory approvals.
• Continued discussions on the proposed coastal Pilbara solar photovoltaic (PV) and progressed studies for further solar and wind developments.
• Signed a memorandum of understanding (MOU) with the Yindjibarndi Energy Corporation (YEC) to explore opportunities to collaborate on renewable energy projects in the Pilbara region. The initial focus is on rapidly exploring the potential development of a solar power generation facility for the supply of energy to Rio Tinto.
• Voltalia began construction of Phase 1, 130MW solar farm for Richards Bay Minerals (via PPA).
• Commenced construction of 16MW Phase 2 Wind project at QIT Madagascar Minerals.

Minerals processing

• Commissioned the BlueSmelting™ demonstration plant at Rio Tinto Iron and Titanium (RTIT) Quebec Operations and produced first tonne of pre-reduced ore.
• Completed an industrial trial of biocarbon at Sorel-Tracy¹.
• Progressed development of a biocarbon supply chain to provide a substitute for anthracite for the smelter operations.
• Implemented testing projects for electrification to reduce pelletising emissions at IOC.

Diesel transition

• Transitioned heavy machinery at US Borax operation to 100% renewable diesel, and secured contract to supply Kennecott Copper with renewable diesel from 2024.
• Assessed application of trolley-assist haulage technology for our existing haul fleet.
• Collaborated with original equipment manufacturers (OEMs) to prepare for battery electric haul truck pilots in the Pilbara.
• Completed a 6-month test program of a Scania 20 tonne battery electric truck in the Pilbara.
• Continued our involvement in CharIN and the ICMM's Initiative for Cleaner Safer Vehicles (ICSV) to solve challenges related to interoperability and large electric truck dynamic charging.

Nature-based solutions

• Completed five feasibility studies and commenced four feasibility studies in Guinea and South Africa.
• Implemented pilot projects in Fort Dauphin, in southeastern Madagascar, and completed restoration and REDD+² feasibility studies.

¹ Biocarbon trials are implemented using a step-by-step approach with the objectives of preserving the quality of the finished product as well as guaranteeing the performance of operations. All these parameters are taken into account in the gradual introduction of biocarbon into the smelters.

² REDD+: reducing emissions from deforestation and forest degradation, plus the role of conservation, sustainable management of forests and enhancement of forest carbon stocks.

Repowering Pacific Aluminium Operations

• Execute further renewable energy contracts required for our Boyne Smelter.
• Launch a Request for Proposal, in partnership with other shareholders, for renewable energy projects for Tomago.
• Seek renewable energy and storage capacity for Tranche 1 of electrification at the Gladstone alumina refineries.

Alumina processing

• Progress QAL double digestion feasibility study.
• Commence construction of the hydrogen calcination demonstration project.
• Progress electric steam and thermal energy studies for refineries.
• Deliver biofuel studies for Gladstone refineries as potential low-carbon fuel feedstock for steam generation.

Aluminium anodes

Research and development to focus on growing carbon-free aluminium smelting from the ELYSIS™ prototype cells that will enable the joint venture to take the next step towards an industrial demonstration level project.

Renewable energy

• Aggrekko will commence solar panel installation on the Amrun solar project, subject to regulatory approvals.
• Finalise the first tranche of renewable PPA commercial negotiations (up to 200MW) for our US renewable energy portfolio.
• Commission the Diavik Diamond Mine solar plant.
• Seek final investment decision on the Pilbara coastal solar PV.
• Commission the 5MW solar plant and start construction of Phase 2, 25MW solar plant at Kennecott Copper.
• Execute RBM Phase 2 PPA (approximately 200MW).

Minerals processing

• Ongoing validation of smelter gas and hydrogen use at the BlueSmelting™ plant.
• Production and testing of material from the BlueSmelting™ plant at the smelters.
• Progress with the installation of an electric boiler at the Iron Ore Company of Canada (IOC).
• Progress research and development analysis for biofuel and coke alternatives for pelletisation.
• Progress with the industrial ramp-up of biocarbon.
• Secure access to biocarbon sources.

Diesel transition

• Transition Kennecott Copper to renewable diesel.
• Commence battery electric haul truck trials in the Pilbara.
• Develop a deployment plan for partial electrification options.
• Consider options to develop an Australian biofuel supply chain.

Nature-based solutions

• Finalise feasibility studies in Guinea and South Africa.
• Apply dual pilot-feasibility approach to our priority regions to finalise feasibility studies and ramp-up implementation pilots.
• Finalise and disclose information on voluntary commercial agreements.
• Provide detail on our carbon credit sourcing strategy, including our integrity criteria, due diligence process and volumes.

Steel value chain

• In 2022, we met our original target to engage with nearly all our direct iron ore customers. Since then, we have progressed to advanced discussions with 59% of them (by sales volume). In 2023, we made further progress on tangible prioritised projects with 25% of direct steel customers (by sales volume).
• Progressed design of Baowu Meishan microwave lump drying pilot plant.
• Completed feasibility study for BioIron^TM Continuous Pilot Plant (CPP) and secured a location.
• Completed concept studies with BlueScope^TM on ESF, and partnership with Baowu for small-scale pilot plant.

Aluminium value chain

• Defined potential areas of collaboration to help decarbonise alumina refining with customers, representing 47% of bauxite sales.

Shipping

• Achieved 37% lower emissions intensity.
• Introduced 5 liquified natural gas vessels into the fleet.
• Completed a 12-month biofuel trial.
• Completed feasibility study as part of West Australia-East Asia Iron Ore Green Corridor Consortium with Global Maritime Forum.
• Progressed key elements for low-carbon ammonia deployment as part of ITOCHU Ammonia JDA including safety and regulatory considerations, vessel design and risk management.

Procurement

• Completed a study to understand the sources of our procurement-related emissions. This enhanced our understanding of the sources and nature of our procurement-related emissions, including our highest emitting categories and suppliers, and potential abatement solutions.

Steel value chain

• Complete construction of the Baowu Meishan lump drying plant.
• Commence construction of the BioIron^TM CPP².
• Continue research on pelletisation of Pilbara ores.
• Progress laboratory testing and work program with BlueScope and BHP including further test works and pre-feasibility study for a Direct Reduction-Electric Smelting Furnace (DR-ESF) pilot plant.
• Plan for construction of a small-scale electric melter at a Baowu steel mill.
• Conduct feasibility study to evaluate a pilot scale-up for a fines-based reduction process.

Aluminium value chain

• Partner with 2 bauxite customers to advance research and development and process improvement projects in digestion and organics management.
• Develop technical options to reduce moisture content in bauxite.

Shipping

• Accelerate fuel efficiencies across the freight portfolio.
• Introduce 4 more LNG vessels.
• Pursue further biofuel or recycled fuel deployment.
• Improve emissions transparency using actual voyage data for over 95% of our cargo shipments for which we manage shipping.

Procurement

• Engage with our top 50 suppliers in high-emitting categories on decarbonisation.
• Introduce decarbonisation criteria to evaluate all new sourcing in high emissions categories.

² Subject to technical and funding approvals.

$425 million total decarbonisation spend

• $130 million capital expenditure (abatement projects and investments)
• $234 million operational expenditure
• $61 million RECs and offsets (intangible assets)

1.9Mt of abatement commitments made

• Renewable energy in Australia and Africa
• Renewable diesel at Boron and Kennecott
• Piloting low-carbon heat and using hydrogen in processing emissions

• We estimate our total spend on decarbonisation in 2024 will be approximately $750 million including capital expenditure and investments, operational expenditure, offsets and RECs.

• We published our review of industry associations in February 2023 and conducted an interim and year-end review of their advocacy. We engaged with 4 industry associations to discuss their climate advocacy.

• Formalise process to prioritise an energy transition that considers all issues.
• Assess projects in consultation with relevant stakeholders, including considering different partnership models and decarbonisation solutions that reflect the requirements of industry and local communities.

• Safety, environmental, social and governance matters remain as targets within the STIP. The 2023 STIP measures comprised the following: Impeccable environmental, social and governance (ESG) (20%), People and culture (10%), Excel in development (10%), and Social licence (10%).
• The carbon abatement target set for 2023 was 10Mt of CO₂e. A total of 29 projects progressed through a development stage during the year, leading to an above target performance of 12Mt CO₂e abatement expected by 2030.

• Climate change performance objectives are assigned an explicit performance weighting of 10% in the STIP in 2024. We will assess progress of moving carbon abatement projects through the various stages of development all the way to execution to meet our decarbonisation targets.
• Propose incorporating decarbonisation related performance measures into our LTIP as part of our 2024 Remuneration Policy.

• We have seen tangible examples of teams across the business undertaking decarbonization activities with a just transition at the forefront of the chosen approach. This has manifested through government engagement and host community partnerships, including the Diavik Diamond Mine closure investment, and contribution to energy hub development in both the Pilbara and Gladstone.

• Formalise the process to prioritise an energy transition that gives due consideration to ESG issues. Finalise alignment with the CA100+ net zero standard for a just transition.
• Ongoing assessment of projects in consultation with stakeholders, to consider different partnership models and decarbonisation solutions reflecting the requirements of industry and local communities.

• Integrated climate-related disclosures on governance, strategy, risk management, and metrics and targets into the 2023 Annual Report.
• Ensured climate-related financial disclosures comply with the Companies Act 2006 as amended by the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022.
• Aligned our reporting on the CAP with the CA100+ Net Zero Company Benchmark.
• Published our Scope 1, 2 and 3 Emissions Calculation Methodology report.

• Publish our progress on climate change annually in line with the recommendations of the TCFD and other requirements.