Iluka Resources

Materiality assessment process

The Group adopted a materiality assessment process to identify climate-related risks and opportunities that could reasonably impact its strategy, business model and prospects, building on previous work undertaken under TCFD.

Identifying relevant risks and opportunities:

1. Map impacts and dependencies across the value chain by engaging with key internal stakeholders, including internal subject matter experts, benchmarking risks and opportunities against those externally published by industry peers, using climate-related scenario analysis. Iluka reviewed its physical risks and opportunities in 2025 through externally-facilitated risk assessments across Iluka's sites and projects in Execution phase, considering improved data resolution at sub-regional (asset) level.
2. Identifying potentially relevant risks and opportunities by assessing whether they could impact the business model or strategy. Transition risks and opportunities were assessed at an enterprise level.
3. Determining the risks and opportunities that have the potential to affect cash flows, financing access or the cost of capital across short-, medium- and long-term horizons. Iluka aligned time horizons considered with the Group's corporate planning process: short-term (now to 2030), medium-term (2030-2040) and long-term (2040 to 2050). The same time horizons were utilised for resilience assessments. The assessment considered a range of qualitative and quantitative factors including the nature, magnitude and likelihood of impacts assessed with input from management and internal subject matter experts.

Identifying material information: 4. Identify potentially material information about risks and opportunities by applying AASB S2 and the application guidance contained in the published standard. 5. Determine material information by assessing whether the information identified could influence decisions of the primary users of the financial information and this report. For transition risks and opportunities, Iluka leveraged previous risk and opportunity assessments undertaken in prior years pursuant to TCFD and considered them against those published by industry peers and TCFD guidance and literature. Where some level of quantification could be achieved (e.g. safeguard compliance costs and energy costs), the range of quantified outcomes against the scenarios informed the Group's view on materiality. For transition risk related to decarbonisation technology and transition opportunities identified, they are inherently material as they directly align to the current net zero ambition, predicated on it being commercially and technically feasible and/or aligned to overall strategic direction with respect to critical minerals. Physical risks assessed were grouped into their climate-related hazard categories and assessed on a qualitative basis by internal stakeholders. Materiality assessment was informed by the categories that had the highest number of physical risks rated as high risk or above, pursuant to Iluka's risk criteria (minor, moderate, high, very high and major) and enterprise risk management framework. 6. Consolidate relevant risks and opportunities into a table for validation by Iluka's Executive and for the Board's approval as part of Iluka's Key Risk Register.

Climate-related risks and opportunities identified

Key: Transition (T), Physical (P), Risk (R), Opportunity (O)

Short-term (2025-2030), medium-term (2030-2040) and long-term (2040-2050).

The values disclosed in Iluka's climate-related risk and opportunity assessment represent the number of sites impacted by the risk or aligned with the opportunity out of all Iluka's sites (five in total – Cataby, Jacinth-Ambrosia, Balranald, Eneabba and Narngulu).

Value chain concentration of each identified risk/opportunity:

Iluka considered the potential impact of climate-related risks and opportunities across its value chain, including in relation to existing customer markets, operations at its current mining and processing locations (including suppliers of critical infrastructure such as roads, port facilities and transport logistics between its operating and mining sites), and on projects that are currently in execution (i.e. the Eneabba refinery and Balranald mine).

For physical risks, the assessment boundary included inland road logistics and domestic port facilities for transport of heavy mineral concentrate from mining operations to processing facilities and outbound ports from which finished goods inventory is shipped.

While Iluka has strategic initiatives, including a Climate Change Work Program, that seek to address and manage the risks and opportunities, it does not have a climate-related transition plan and does not have specific emissions reductions targets.

(R) Increased energy costs: Energy costs associated with grid-connected energy, diesel and natural gas are a key component of Iluka's overall cost structure. Policy decisions in Australia regarding both the roll-off of fossil fuel generation and ambitions for greater renewable energy penetration on the Wholesale Energy Market and National Electricity Market have resulted in less predictable and higher energy costs. Iluka's strategy for managing energy costs in 2025 focused on ensuring security of supply of coal for the SR kilns at North Capel concurrently with pursuing renewable energy opportunities. In the short-term, Iluka has retained sufficient quantities of coal to meet its operational requirements at North Capel. The Group's current priority is to develop a comprehensive energy strategy that includes evaluation of new/emerging renewable energy options and alternative power supply opportunities across the Iluka portfolio. This work will be undertaken internally and accordingly no further funding has been allocated at present for this risk. The Group will continue to identify opportunities to manage energy supply and cost escalation risk as part of its business-as-usual activities.

(R) Increased safeguard compliance costs: The trajectory of domestic policies on carbon pricing is uncertain from 2030 onwards, limiting the ability to measure impacts beyond the short-term reliably to inform strategic responses. The emissions from Iluka's SR kilns are hard to abate as required technologies are yet to prove to be commercially viable. Accordingly, in the short- to medium-terms, Iluka will continue to acquire Australian Carbon Credit Units (ACCU) to meet its safeguard compliance obligations. Iluka will continue to monitor progression of Australian Government climate-related policy and advocate its position, including monitoring eligibility for trade-exposed, baseline-adjusted status under Safeguard Mechanism. Purchases of ACCUs will be funded via working capital.

(R) Decarbonisation technology not commercially feasible: Commercial availability of alternative technologies (e.g. green hydrogen, biochar and tyre-derived fuels) is an option to adapt to rising safeguard compliance and energy costs. Iluka's ambition to be net zero by 2050 incorporates an assessment of commercial feasibility. Decision-making regarding Iluka's response to climate-related risks is informed by the use of a Marginal Abatement Cost Curve (MACC), plotting decarbonisation opportunities on the basis of cost to abate a tonne of CO2. Iluka is also integrating the Technical Readiness Level (TRL) and the Commercial Readiness Index (CRI) in the evaluation of decarbonisation projects – standard benchmarking tools adopted by the Australian Renewable Energy Agency (ARENA). Iluka progressed studies and assessments of various technologies as part of the 2025 Climate Change Work Program. In 2025, Iluka's strategy in response to this risk focused on: short-term potential substitutes for coal (tyre-derived fuels and biochar) in the SR kilns; long-term potential substitutes for coal (NewGenSR® technology); and emerging decarbonisation solutions, including electrification of existing fossil-fuel-reliant processes. Outcomes of existing studies indicate deployment of these alternative technologies is dependent on their commercial feasibility (scale and price). In the short-term, Iluka will continue to monitor the commercial viability of these alternatives; no further funding has been allocated for 2026.

(R) Increased severity and frequency of extreme rainfall events / (R) Increase in frequency of extreme temperature days: Iluka will continue to embed climate resilience considerations into its existing risk management systems, including engineering and design, asset integrity, water management, logistics and emergency management. This includes: designs of future developments informed by climate risk assessment; ongoing review and maintenance of surface water plans considering climate projection data; landform designs informed by climate projections; tailings management system aligned to ANCOLD guidelines and design considering climate projections; logistics management (port maximisation plans; mitigation plans with logistics providers); ongoing review and maintenance of site emergency management and asset management plans together with annual emergency management training; maintaining on-site back-up power generators and generator mitigation plans; managing levels of heavy mineral concentrate (HMC) at processing sites to enable continued supply; engagement with critical infrastructure providers to manage continuity of power supply; and continuous review of health and safety processes and procedures within Iluka's HSEC framework and system.

(O) Increased demand for rare earth oxides: Iluka considers the global transition toward electrification, including the growth of electric vehicles and renewable energy technologies, as a major structural driver of rare earths demand. This presents a significant opportunity for the Group, particularly through development of the Eneabba refinery and Iluka's mineral sands deposits containing monazite and xenotime rare earth assemblages. Iluka's short-term strategy for its rare earths business consists of: continuing construction and commissioning of the Eneabba refinery pursuant to the terms of its loan arrangement with Export Finance Australia; securing customer offtake contracts on sustainable pricing terms; investigating and executing third-party feed source opportunities for the Eneabba refinery; and continuing the feasibility study into rare earths metallisation.

(O) Increased deployment of renewable energy generation: As the global transition to net zero accelerates, increasing deployment of renewable energy technologies is expected to place downward pressure on long-term renewable energy costs. Iluka has entered into Power Purchase Agreements (PPAs) for all three of its mineral sands mining operations (Cataby, Jacinth-Ambrosia and Balranald). In 2025, Iluka completed renewable energy studies for North Capel and Eneabba; identified and assessed opportunities to improve pumping efficiency at Cataby and Jacinth-Ambrosia; and evaluated the InPipe HydroXS® system, a micro-hydropower technology designed to recover energy by converting pressure differentials within pressurised water pipelines into electricity. Future plans are currently focused on internal work to assess and identify the most suitable renewable energy solutions for Eneabba, guided by the outcomes of the options analysis undertaken in 2025. No further funding has been allocated to manage this risk at present.

Net zero ambition and Climate Change Work Program

Iluka has the ambition to be net zero by 2050 where technology is viable, available and commercially feasible. This ambition recognises that the commercial and technical viability of technology required to decarbonise its Scope 1 and 2 emissions is central to Iluka's climate resilience in the context of the global transition to net zero. Iluka does not have specific emissions reduction targets. In 2025, Iluka was guided by its Climate Change Work Program, the purpose of which was to identify and assess the feasibility of mitigation and abatement opportunities. This program does not constitute a formal transition plan. Work program priorities and outcomes are reviewed and approved by the SusCo on an annual basis, and progress on initiatives is updated to the SusCo on a bi-annual basis.

For 2025, the Climate Change Work Program targets were qualitative in nature. The ultimate purpose of the work program targets is to identify opportunities to mitigate Scope 1 GHG emissions from Iluka's North Capel operations, being the Group's most material source of Scope 1 emissions, followed by Scope 2 mitigation opportunities via assessing incremental energy efficiency opportunities at Cataby and Jacinth-Ambrosia and renewable energy evaluations. The targets apply for 2025 and there were no interim targets. Given the targets are exploratory in nature, they were not specifically aligned to international or jurisdictional agreements or commitments on climate change. No revisions were made to the targets during the year.

2025 Climate Change Work Program outcomes:

• Energy efficiency: Iluka reviewed several energy-efficiency proposals at Cataby and Jacinth-Ambrosia. Opportunities were identified, however current conditions mean most options are not yet commercially viable; Iluka will continue to monitor these opportunities.
• Renewable energy: Evaluations for North Capel and Eneabba were both completed; further work to refine suitable renewable energy options for Eneabba will be considered for future years.
• Alternative fuels: A preliminary trial using tyre-derived fuel confirmed material handling characteristics are suitable for further assessment; additional work will proceed when operational timing is appropriate. Initial biochar test work at North Capel showed potential for partial coal replacement in the SR process; further work is required to validate outcomes at scale. Given the paused status of North Capel's kiln operations, decarbonisation activities relating to alternative fuels will be progressed when operational readiness allows.
• Technology step-change: Independent reviews of the NewGenSR® development plan were completed and will guide future planning; no further development work is scheduled for 2026.

Current financial effects

(R) Increased energy costs: In 2025, Iluka incurred a total of $74 million in respect of coal, diesel, natural gas and electricity consumption. Iluka acquired coal in 2025 at total cost of $67 million to underpin processing requirements at North Capel for the short-term. Significant risk of material adjustment in 2026: expected to be materially aligned with 2025.

(R) Increased safeguard compliance costs: In 2025, Iluka purchased 30,376 ACCUs at total cost of $1.1 million and surrendered 18,431 units to offset excess emissions associated with its obligations under the Safeguard Mechanism for the period 1 July 2023 to 30 June 2024, with a total cost of $0.6 million recognised using a weighted average cost methodology. ACCUs surrendered were recognised as expenses to Iluka's income statement. Significant risk of material adjustment in 2026: Iluka has idled the operation of SR kiln 2 (SR2) for 2026, effective 1 December 2025, with the kiln restart timing dependent on market conditions; this will result in reduced emissions and hence lower carbon cost offset required under the Safeguard Mechanism. SR1 remains idled.

(R) Decarbonisation technology not commercially feasible: In 2025, Iluka incurred $0.2 million as part of its Climate Change Work Program on progressing the feasibility studies for NewGenSR® as a long-term solution to displace the use of coal (FY24: $1.3 million). Significant risk of material adjustment in 2026: expected to be materially aligned with 2025.

(R) Increased severity and frequency of extreme rainfall events / extreme temperature days: No material financial effects occurred from extreme rainfall/storm events and/or from extreme temperature days in 2025. Iluka also had no related insurance claims. Significant risk of material adjustment in 2026: expected to be materially aligned with 2025.

(O) Increased demand for rare earth oxides: Capital expenditure on the Eneabba refinery committed and/or spent to date in this business unit is $1,134 million, with $443 million spent during 2025. Significant risk of material adjustment in 2026: the refinery is scheduled to be commissioned in 2027; the expected materiality in 2026 is expected to be materially aligned with 2025.

(O) Increased deployment of renewable energy generation: At the end of 2025, Iluka had two operational solar farms in place: one at Jacinth-Ambrosia and the other at Cataby (commissioned in Q1 2025). Both solar farms operate under a PPA with third parties, with Iluka paying an agreed monthly charge. Total fees incurred for both PPAs in 2025 were $6 million. In 2025, Cataby and Jacinth-Ambrosia solar farms contributed 29% and 12% of the respective operation's energy requirements. Significant risk of material adjustment in 2026: expected to be materially aligned with 2025.

Anticipated financial effects

(R) Increased energy costs: Applying the high transition risk price scenario assumptions, energy costs represent 24% of operating expenditure on annual average over the short-term (at an estimated average annual cost increase of approximately $34 million from corporate plan cash flow assumptions), decreasing to 17% average (approximately $15 million increase) in the medium-term and 12% in the long-term (with no average net increase to corporate plan cash flow assumptions). Resilience assessment outcomes will be dependent on future decisions relating to asset mix and profile.

(R) Increased safeguard compliance costs: In the short-term, safeguard compliance costs on average increase to represent 0.8% of operating expenditure per year, resulting in an increase to annual average cost of approximately $3 million from corporate plan cash flow assumptions. This increases to 3.6% of operating expenditure in the medium-term with an increase to annual average cost of $12 million. No long-term effects were considered based on the current operating life of Iluka's North Capel facility assumed in current cash flow assumptions.

(R) Decarbonisation technology not commercially feasible: The MACC analysis reveals that even with higher carbon price assumptions derived from the NGFS Net Zero scenario, most technologies investigated to date are marginal or commercially unviable as they do not yet show a net saving. Due to the inherent uncertainty in commercial viability, no anticipated investment is currently included in Iluka's corporate plan for investment in decarbonisation technologies including NewGenSR®.

(O) Increased demand for rare earth oxides: The climate-related impact on demand assumptions for rare earth oxides (REOs) cannot be separately identified and the potential impact on future revenue cannot yet be determined; however, demand for REOs and associated revenue is likely to increase under both low and high transition risk scenarios.

(O) Increased deployment of renewable energy generation: Iluka's cash flows for the short- and medium-terms anticipate a renewable energy mix based on committed renewable energy projects (Cataby, Jacinth-Ambrosia and Balranald) and reflect the terms of its PPAs. It does not include renewable energy for projects under evaluation (Eneabba).

(R) Physical risks: Given the limited financial impacts from physical climate risk events to date, there is a high degree of measurement uncertainty associated with the long-term potential anticipated financial effects from these events. Iluka will continue to reassess the Group's exposure to these events on an annual basis.

Iluka assessed its climate resilience by considering its climate-related risks and opportunities in a range of potential future scenarios. The scenarios were chosen based on the requirement under Australian law to use a low and high emissions scenario. Iluka considered the potential impact of climate-related risks and opportunities across its business, including operations at its mining and processing locations (including associated critical infrastructure such as roads, port facilities and transport logistics between its operating and mining sites) and on projects that are currently in execution (i.e. the Eneabba refinery and Balranald).

Scenario assumptions

The scenario analysis considers both climate-related transition and physical risks across four scenarios, applied to test resilience in the short-term (now to 2030), medium-term (2030 to 2040), and long-term (2040 to 2050).

Transition risk scenarios – Network for Greening the Financial System (NGFS):

• NGFS Net Zero (high transition risk scenario, 1.5°C): Warming stabilises around 1.5°C, with a small overshoot, as coordinated global action achieves net zero emissions by 2050; governments implement immediate and smooth policy tightening, including carbon pricing and clean-energy standards; carbon prices increase sharply and early, reaching high levels by 2030; clean energy and low-carbon technologies scale rapidly; energy prices transition downward in the long-term, though short-term prices may rise temporarily; carbon removals expand to medium–high levels. Aligned with the objectives of the Paris Agreement and with containing warming to 1.5°C above pre-industrial levels by 2100.
• NGFS Current Policies (low transition risk scenario, 2.9°C): Warming climbs to around 3.0°C as no new policies are introduced beyond those already enacted; no additional climate action occurs; carbon prices remain low or stagnant; technology adoption is slow and market-driven; energy prices remain volatile and trend upward; carbon removals remain at low levels.

In addition to these scenarios, Iluka has also leveraged its internal shadow carbon price assumptions to model impacts to its safeguard compliance costs in the short- and medium-terms.

Physical risk scenarios – IPCC:

• SSP1-1.9 (low physical risk scenario, 1.4°C): Very low emissions, reaching net zero around 2050; strong and immediate global action limits warming to 1.5°C; projected best estimate in global surface temperature by 2081-2100 of 1.4°C (very likely range 1.0 to 1.8°C); little increase in frequency and severity of extreme weather events.
• SSP5-8.5 (high physical risk scenario, 4.4°C): Very high emissions, continuing to increase and roughly doubling by 2050, assuming rapid economic growth driven by fossil fuels and minimal climate mitigation; projected best estimate of 4.4°C (very likely range 3.3 to 5.7°C); severe and compounding increase in frequency and severity of extreme weather events.

Climate hazard factors considered included increase in annual mean temperature, increase in annual potential evapotranspiration, increase in maximum one-day rainfall for a 100-year Average Recurrence Interval (ARI) event, and annual severe, extreme or catastrophic fire danger days per year, with extreme temperature days per year >35°C and >40°C respectively. Analysis of potential divergence beyond 2050 and out to 2100 has not formed part of Iluka's analysis, as this is well beyond Iluka's current corporate plan.

Resilience assessment outcomes

There is significant uncertainty around how transition risks informed by the NGFS scenarios will manifest at a domestic level, particularly how assumptions may translate into domestic policy settings for carbon transition and energy mix, making it challenging to predict impacts on Iluka's assets and operations.

For increased energy costs, Iluka stress-tested the potential range of energy prices under both scenarios against corporate plan energy cost assumptions by overlaying a price index derived from the NGFS scenarios; the increase is more pronounced under the high transition risk scenario, while more gradual (but less predictable) under the low transition risk scenario.

For safeguard compliance costs, overlaying the current short- to medium-term strategy of purchasing ACCUs, the economics of the SR kilns at North Capel are comparatively worse in both short- and medium-term under the high transition risk scenario, negatively impacting operating costs, assuming costs cannot be passed to customers and alternative technology options do not become commercially available at scale.

For decarbonisation technology, under the NGFS Net Zero scenario with a higher carbon price, decarbonisation projects become relatively more financially attractive earlier compared to carbon intensive technologies than in the low transition risk scenario; however MACC analysis shows most technologies investigated remain marginal or commercially unviable, requiring scalability to become viable.

For rare earth oxides, demand outlook is driven by climate change policy and influence on global energy mix, geopolitics, and technology developments; the range of outcomes cannot be isolated to any one factor, but demand and associated revenue is likely to increase under both low and high transition risk scenarios; Iluka's rare earths business remains resilient and will be an important asset to support the global transition to sources of clean energy.

For renewable energy, both scenarios present increased opportunities, accelerated in the short-term under the high transition risk scenario and delayed to medium- to long-terms under the low transition risk scenario, driven by a combination of policy and commercial scalability.

For physical risks, it is important to frame the resilience assessment within the current expected operational life of Iluka's operations and projects. Under Iluka's current corporate plan, only Eneabba and Wimmera (in definitive feasibility phase) are expected to be operational in the long-term (2040 to 2050); Cataby and Jacinth-Ambrosia are expected to cease operations in the short- to medium-terms; Balranald, Narngulu and North Capel may cease operations in the medium-term. There is potential for climate-related physical risks to impact during the closure phase of an asset prior to relinquishment, and climate risk factors are reviewed as part of closure risk assessments. Iluka has not considered the potential impact of physical risks on the corporate offices given the expected immateriality of climate physical risks to the corporate office relative to Iluka's operations.

In a low physical risk scenario, the majority of Iluka's current operations are not expected to be materially impacted beyond what is currently being experienced. The outcomes indicate a potential increase in risk exposure in the long-term under the high physical risk scenario; however, given the limited financial impacts from these physical climate risk events to date, there is a high degree of measurement uncertainty associated with the long-term potential anticipated financial effects. Iluka will continue to reassess the Group's exposure to these events annually.

Water-related hazards (increased severity and frequency of extreme rainfall and storm events) show effects managed under existing measures/minor across short-medium-long term under the low physical risk scenario, moving to a potential increasing risk exposure in the long-term under the high physical risk scenario. Temperature-related hazards (increase in frequency of extreme temperature days) show effects managed under existing measures in the short-medium term under the low scenario, and a potential increasing risk exposure in the long-term under the high scenario.

Notwithstanding the uncertainties, the scenario analysis and associated risk assessment outcomes indicate that Iluka's mining and processing operations are well positioned to adapt to changing physical risks. This confidence is underpinned by a climate risk-driven approach embedded in key technical areas of the business. For example, in 2025, water management risk-related activities included ongoing review and maintenance of Iluka's ground and surface water management responses at its mining sites. Climate change assessments and climate variable factors have also been considered in the designs for the Eneabba refinery and are part of assessments that will occur for planned developments such as Wimmera. Iluka will continue to evolve its practices taking into account changing technical requirements and guided by internal and external technical experts.

Measurement uncertainty affecting resilience assessment

Forward-looking disclosures on transition risks rely on assumptions on: (i) safeguard facility compliance costs, subject to regulatory and policy settings uncertain beyond 2030; and (ii) assumptions about future energy mix, prices and demand subject to a high degree of inherent uncertainty. While scenario analysis has been undertaken by downscaling trends from global scenarios for carbon pricing and energy prices applied to Iluka's corporate plan assumptions, there is a high degree of uncertainty as to the interplay of these assumptions with domestic regulation and government energy transition plans; the scenarios considered do not represent forecast assumptions.

Physical risk assessments rely on external climate models and internal assumptions about asset vulnerability. Iluka engaged an external service provider to generate site specific climate hazard projections derived from multiple credible Australian climate information sources. These inputs involve significant levels of measurement uncertainty due to variability in climate projections and assumptions about adaptation measures. Resilience assessment for physical risks has been undertaken using historically observed climate-related physical risk events to assess anticipated financial effects in the future; however these effects have not been subject to further quantification beyond this. The assessment sought to identify potential areas of exposure from material climate-related hazards (e.g. critical infrastructure disruption from extreme weather events) and understand potential effects as understood by Iluka operations personnel and internal subject matter experts, to inform a consequence assessment against Iluka's risk criteria (minor to major).