Risk Impact Mitigation Climate Change More frequent extreme weather conditions, rising sea levels and potential civil disorder. Changing weather patterns and an increase in extreme weather events may impact our operational stability. It poses a risk to our physical assets, markets, supply chains and our people. IGO is committed to contributing to a low-carbon future and is progressing towards carbon neutrality. Detailed information regarding our response to climate-related risks and opportunities is set out in the Climate Change section of the FY22 Sustainability Report. In FY22, our reporting was once again aligned with the recommendations of the TCFD and consolidated our carbon neutral strategy. As part of operational management process and to ensure business continuity, we ensure appropriate mitigations and management plans are in place at each of our operations. These include effective design considerations and mitigation plans for supply route disruption, bushfire and emergency management. Culture, Diversity and Our People Not fostering a workplace culture which attracts, retains and motivates a talented and diverse workforce. If we are unable to maintain our culture, where our people are bold, passionate, fearless and fun, we may see lower levels of engagement and people not ‘going the extra mile’ as well as lower our retention in a challenging labour market. This may have a negative impact on our financial performance and in the longer term may place constraints on our growth ambitions. It could also impact the cost and scheduling of capital projects. Our people and our culture are our greatest assets and are key to our delivery of strategy. Having a diverse and inclusive culture, with a strong sense of purpose, defines IGO and we are deliberate about creating and fostering our culture. This is fundamental to attracting and retaining our people. We offer competitive financial benefits benchmarked against others in the industry and an attractive health and wellbeing program. Staff retention is further incentivised through a rewards and recognition program. Stakeholder Expectations on ESG Failure to meet the evolving expectations of our key stakeholders on ESG issues and management. A failure to meet stakeholder expectations could damage our reputation, jeopardise our licence to operate, and impact our financial returns and capital management, which is essential to delivering our purpose and strategy. Living our values and our purpose of Making a Difference is imperative in attracting and maintaining a talented workforce and growing our business. We actively engage with all our stakeholders on a regular basis to better understand and address their individual needs and desires. We work with Traditional Owners and host communities to develop meaningful relationships and regularly carry out social impact work programs. We have a culture of doing what is right and we are a leader in ESG practices and reporting across our peer group. Our numerous initiatives to manage and monitor ESG issues are discussed in more detail in the Company’s 2022 Sustainability Report which can be found on the Company’s website. Risk Impact Mitigation Global Economic Conditions A significant or sudden deterioration in economic conditions. A significant or sudden deterioration in economic conditions or geopolitical unrest can adversely impact demand for the products we produce and commodity prices. The Group’s operating revenues are sourced from the sale of nickel and copper concentrates from the Group’s operations that are priced by external markets and, as the Group is not a price maker with respect to the metals it sells, it is, and will remain, susceptible to adverse price movements. Dividends received from our investment in TLEA will be impacted by variable lithium prices, reflected in chemical and technical grade spodumene prices paid to the Greenbushes operation, and lithium hydroxide prices paid to the TLEA. We may also be exposed to fluctuations in the value of the Australian dollar against other currencies. The Group is exposed to exchange rate risk on sales denominated in United States dollars (USD) whilst its Australian dollar (AUD) functional currency is the currency of payment to the majority of its suppliers and employees. Interest rate movements affect both returns on funds on deposit as well as the cost of borrowings. Furthermore, AUD and USD interest rate differentials are intimately related to movements in the AUD/USD exchange rate. Operational costs and the price of sea freight, smelting and refining charges are market driven and may continue to be impacted by inflationary pressures. IGO has a strong balance sheet, which is not highly leveraged, and a strong cost management culture. IGO’s portfolio contains high margin assets operating in the lower tercile of the cost curve. The Group mitigates its exposure to commodity prices through a financial risk management policy in which a percentage of anticipated usage may be hedged. Through our nickel operations and investment in the TLEA, the Group also maintains a diversification of cash flow sources which insulates the effects of single commodity price fluctuation or deterioration. Future Supply and Demand Change in forecast supply and demand of commodities due to geopolitical and macro-economic forces; change in technology leading to disruption in future supply and demand. Technological developments and/or product substitution may impact revenue and cash flow, and result in an inability to deliver on our strategy. We engage extensively with end-users of our products to understand the environment in which we operate. Through our upstream mining and downstream processing assets, IGO is enabling future-facing technologies including the electrification of transport, energy storage and renewable energy generation. The technology required to make this shift requires the products that IGO produces. Market Evolution IGO’s shift to an integrated battery metals company utilises new technologies for the production of these future facing metals. Slower ramp-up and commissioning of operations could be expected given the application of new technologies which are different to existing, well established processing technologies in the mining industry. We ensure appropriate test work is undertaken during the study phase and engaging expert engineering consultants at all times. We leverage off our partners’ technologies and experience, and manage market expectations during ramp-up and commissioning. Not Realising the Value of Mineral Resources and Ore Reserves Failure to build and optimise our mineral resources and ore reserves. Failure to replace depleting resources and reserves could impact on shareholder returns, the benefits our stakeholders receive and the long‑term viability of the Company. We continue to enhance our understanding of our existing resources and reserves and identify opportunities to add further value through a committed exploration program and active M&A. Managing Our Supply Chain Disruption of our supply chain due to geopolitical or global economic shocks or the impact of COVID-19. Failure to source goods and services in an ethical way. Disruption to the supply of our critical goods and services (such as raw materials, energy, equipment and logistical services) could impact our operations and affect production output and/or increase operating costs. It could also impact the cost and scheduling of capital projects. Failure to source goods and services in an ethical way could damage our social licence to operate. We continuously monitor our inventory levels of critical operational inputs and maintain strong relationships with our key suppliers so that we understand potential disruption points and can anticipate supply issues before they occur and respond accordingly. We have processes in place to manage the risks of modern slavery in our business and supply chains. Further details are available in our annual Modern Slavery Statement which is published on our website. 52 —IGO ANNUAL REPORT 2022 IGO ANNUAL REPORT 2022— 53
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