Introduction

Our approach to climate change

Gem Diamonds remains dedicated to responsible, safe, and sustainable mining. As part of this commitment, the Board adopted the Task Force on Climate-related Financial Disclosures (TCFD) framework in 2021, supported by a three-year adoption roadmap to guide implementation.

To ensure a robust approach to implementing the TCFD recommendations, the Group engaged independent experts across key areas, including insurance, decarbonisation, energy, risk management, corporate reporting and materiality assessment. In alignment with the TCFD recommendations, the Group conducted several external and internal studies during the three-year implementation period. These included climate change scenario analysis, physical and transition risk assessments, carbon footprint reduction opportunities, a carbon pricing model, and energy and water footprint assessments.

The three-year TCFD adoption roadmap was successfully completed in 2023, with regular progress updates provided to stakeholders. Further details on our TCFD adoption roadmap and associated studies can be found on our website, www.gemdiamonds.com, as well as in our Sustainability and Climate Change Reports from 2021 and 2022, available here. In 2023 refer to page 51 to 61 of the Annual Report and Accounts 2023.

In 2023, the Group committed to a 30% reduction of its Scope 1 and 2 emissions by 2030, using 2021 as a baseline. This commitment followed the Board’s adoption of our decarbonisation strategy, which sets out our ambitions to reduce energy consumption, improve our energy-use efficiency and transition to appropriate renewable energy sources.

This Climate Change Report outlines the Group’s alignment with the TCFD recommendations and disclosures as they relate to our 2024 operations. We encourage stakeholders to review this report alongside the Sustainability Report 2024 for a comprehensive understanding of our climate strategy.

Governance

How we govern climate-related risks and opportunities

Board

The Group has adopted a comprehensive governance framework to oversee climate-related risks and opportunities, integrating both bottom-up and top-down approaches. The Board, supported by its Committees, holds ultimate responsibility for climate governance, ensuring that our decarbonisation strategy is implemented in alignment with the Group’s best interests. It sets the risk appetite, strategic objectives, and accountability framework for managing climate-related risks and opportunities.

The Sustainability and Audit Committees receive regular updates on climate change matters, including risk exposure, progress against decarbonisation targets, and overall performance. The Audit Committee oversees climate-related strategy and governance, while the Sustainability Committee reports on operational performance, targets and metrics. Insights from climate-related data and performance reports informed the 2024 reviews of the Group’s strategy, risk management framework and annual budgets.

Management

The Group COO holds overall executive accountability for sustainability, including climate-related issues, decarbonisation, and energy management. Acting on the most material risks and opportunities identified through management forums, the COO drives business model transitions that enhance energy efficiency, reduce costs, and support decarbonisation. The Group CFO is responsible for integrating climate-related considerations into annual budgets, business plans, financial disclosures and risk management.

Climate-related risks and opportunities are embedded across key internal functions, including enterprise risk management, financial planning, reporting, insurance, project management, internal audit, and operations. This integration strengthens the Group’s approach to climate change, energy management, and decarbonisation. Management provides regular reports to the Gem Diamonds and Letšeng Boards and their respective Audit and Sustainability Committees, on the identification and response to climate-related risks and opportunities.

A more detailed view of our Governance approach can be found on page 52 of our Annual Report and Accounts 2023.

Strategy

The impacts of climate-related risks and opportunities on our businesses, strategy and financial planning

Our Group strategy to sustainably maximise stakeholder value is inseparable from our commitment to responsible stewardship of natural resources. Climate action and decarbonisation are central to our drive for operational efficiency and cost reduction. By implementing targeted initiatives to reduce energy consumption and improve efficiency, we expect to achieve further reductions in our carbon footprint while also realising cost savings. The Group focuses on three strategic priorities that guide how we create value for stakeholders. The first is maximising value from our operations, ensuring efficiency and optimisation across all aspects of our business. The second is operating responsibly while maintaining our social licence, reinforcing our commitment to environmental and community stewardship. The third is preparing for the future, integrating sustainability into long-term planning to enhance resilience and competitiveness.

2024 Climate-related considerations and strategy integration
Operational efficiency initiatives drive cost reductions, minimise resource wastage, and safeguard the long-term availability of critical resources for all stakeholders. These efforts enhance sustainability while strengthening the Group’s resilience and value creation.		Strengthening our resilience to the physical impacts of climate change, while supporting our PACs in enhancing their readiness and adaptability, reinforces Gem Diamonds’ commitment to responsible operations. These efforts help safeguard our social licence to operate, ensuring sustainable engagement with our environment and stakeholders.		The Group has established structures for the identification and implementation of climate-related opportunities and existing business continuity and disaster management plans include considerations for natural weather events, which we have successfully managed at our operations for many years.

Effective management of climate-related risks and opportunities is integral to delivering on these priorities and strengthening Group performance. We continuously review our science-based physical and transition risk exposure assessments to evaluate the materiality of potential financial and operational impacts. This ongoing review helps us to identify emerging climate-related risks and opportunities while reassessing existing ones, enabling us to proactively plan for mitigation, adaptation and financial resilience. In 2024 we embarked on a process to prepare for future mandatory reporting requirements, specifically the TNFD and IFRS S1 and S2 standards.

Climate-related physical and transition risks are incorporated into our risk management framework. Our resilience to physical climate-related risks across our operations is strong – operating in remote and extreme environments, we have established robust strategies to withstand physical climate risks, including snowstorms, extreme temperatures, excessive rainfall, flash floods and drought. In addition, we closely monitor and model transition risks – such as regulatory changes, carbon taxes and global fossil fuel trends – to ensure these factors are integrated into our short, medium and long-term strategic planning. We continuously evaluate the materiality of potential physical risks under different future scenarios, enhancing our understanding of future risks and opportunities. For more information on how we respond to and prepare for extreme weather events, refer to our Sustainability Report 2024.

For more information on our key climate-related risks and opportunities identified by the Group click here

Decarbonisation strategy

Gem Diamonds is committed to setting practical, enforceable, and achievable science-based decarbonisation targets. The Group has pledged to reduce Scope 1 and 2 emissions by 30% by 2030, using 2021 as the baseline. Our decarbonisation strategy is designed to balance environmental responsibility with the socio-economic realities of our host countries, prioritising the well-being of our workforce and surrounding communities. Recognising the need for a just transition away from fossil fuel reliance, we focus on decarbonisation initiatives that account for economic, social and climate considerations.

Our decarbonisation strategy is driven by two core principles: enhancing process and equipment efficiency to reduce energy consumption and associated carbon emissions, and transitioning from fossil fuel-based energy to lower-carbon and renewable alternatives. To support this, Gem Diamonds actively collaborates with independent energy and carbon experts to enhance energy efficiency and mitigate emissions from our Scope 1 and 2 activities. We have adopted a bottom-up approach to identifying decarbonisation risks and opportunities, ensuring that resource-use efficiency and carbon reduction initiatives are implemented effectively. Progress against these commitments is systematically tracked and reported, with key performance indicators and remuneration frameworks ensuring accountability and long-term success. In 2024, our Scope 1 and 2 carbon footprint comprised 35% direct Scope 1 emissions (2023: 48%) and 65% indirect Scope 2 emissions (2023: 52%). For more information on the decarbonisation initiatives implemented during 2024, refer to the Targets and metrics section here.

We have embedded energy efficiency, alternative energy solutions, and decarbonisation into our broader business strategy, prioritising them as critical workstreams. As of 2024, limited renewable or alternative electricity sources are available to Letšeng to replace the existing grid-supplied electricity. Continuous assessment and implementation of energy-reduction initiatives remain a priority, enabling us to progressively lower overall demand while integrating lower-carbon and renewable energy sources where feasible. By focusing on reducing our energy consumption first, we can optimise the efficiency and cost-effectiveness of renewable energy adoption and residual emissions offsetting.

Risk management

How we identify, assess and manage climate-related risks

Gem Diamonds has a robust risk management framework that integrates top-down governance with bottom-up risk identification, ensuring comprehensive oversight and accountability. Climate-related risks and opportunities are systematically identified, assessed, and managed across short and medium to long-term horizons to support proactive mitigation and informed decision-making.

We employ structured internal and external processes to assess climate-related risks, including energy and decarbonisation challenges. Quarterly risk workshops with department heads inform updates to the Group risk register and guide the development of targeted mitigation measures. These are reviewed by the Audit and Sustainability Committees before being presented to the Board for approval. Once approved, risk management plans are implemented at both Group and operational levels, with effectiveness monitored through quarterly technical reviews, management risk workshops, and risk review meetings.

The Board holds ultimate responsibility for climate-related risk management, ensuring robust oversight of strategic, financial and operational impacts. The Audit Committee monitors climate-related risks, strategy, and governance, regularly reviewing financial disclosures and regulatory developments. The Sustainability Committee oversees energy and decarbonisation risks and opportunities, tracking performance against carbon and water footprint targets while ensuring effective HSSE risk management.

To strengthen our risk management approach, we collaborate with experts in insurance, decarbonisation, energy, and climate change to identify emerging risks and opportunities. This engagement enhances our organisational readiness, ensuring we anticipate future challenges and implement effective mitigation strategies that safeguard business continuity. A detailed breakdown of our climate-related risk management can be found on on page 56 of our Annual Report and Accounts 2023.

For further details on how Gem Diamonds identifies, evaluates, and manages risks including climate-related risks refer to the Risk management section on page 21 of our Annual Report and Accounts 2024.

Short-term processes include annual business and financial planning, performance reporting, short-term capital allocation and contract negotiations.

Climate related risks

Increase in occurrence of moderate precipitation
Enhanced emissions reporting obligations
Enhanced ESG obligations

Potential financial impact

Increased operating costs
Increased capital investment

Climate-related opportunities

Increased resource efficiencies and reducing our reliance on fossil fuels
Enhanced water use strategies
Waste reduction and recycling initiatives/li>

Potential financial impact

Reduced operating costs
Increased capital investment

Medium to long-term processes include strategy development, social and environmental management plans, rehabilitation planning, capital management plans, financing and capital investments and operational planning, including contract negotiations and future-focused projects.

Climate related risks

Increase in occurrence and severity of precipitation
Rising mean temperature
Strong winds
Increased frequency and duration of droughts
Failure of electricity providers to move to a low-carbon economy
Substitution of technology with lower-emission alternatives
Social risks due to resource constraints, particularly in developing countries
Evolving regulatory context regarding carbon tax
Increased costs of carbon-intensive products (such as diesel)
Reputational risk

Potential financial impact

Increased capital investment
Increased operating cost
Reduced revenue from decreased production capacity
Increased insurance premium or insurance unavailability
Research, development and implementation costs of new technology
Inappropriate investment decisions

Climate-related opportunities

Identify opportunities to transition to renewable energy sources
Position Gem Diamonds as an ethical and responsible producer of low-carbon-footprint diamonds
Use of new technologies
Reputational benefits

Potential financial impact

Reduced exposure to carbon and fossil fuel pricing
Increased capital availability
Decreased operating costs
Increased capital investment

Unpacking our climate change scenario analysis

Understanding climate-related risks and opportunities allows us to align our business strategy with stakeholder demands of the industry, enhance sustainability efforts throughout the organisation, create resilience to climate change-related impacts and maximise value for all stakeholders.

Putting a price on
carbon

Internal carbon pricing is a globally recognised tool to guide decision-making when assessing climate change impacts, risks and opportunities, by forecasting a future world under various climate-change scenarios.

Targets and metrics

The targets and metrics used to assess and manage relevant climate-related risks and opportunities

The Group continuously monitors key metrics to assess climate-related risks and opportunities, ensuring a data-driven approach to sustainability. Semi-annual carbon and water footprint assessments provide shorter-term insights into progress against set goals, enabling a proactive response to immediate risks and opportunities. This monitoring allows for swift action on climate and energy-related matters, including consumption rates, carbon emission trends, and efficiency improvements. As part of regular operations, the Group measures and tracks various environmental factors, including carbon and water footprints, freshwater dam levels, precipitation patterns, energy consumption trends, environmental expenditure, and land use and rehabilitation activities. These insights support informed decision-making and the effective management of resources to enhance long-term sustainability. For more information on our carbon emissions, including Scope 1, 2 and 3 emissions and other climate-related metrics, refer to our Sustainability Report 2024.

Our carbon, energy and water footprints

Our total 2024 carbon footprint for the Group was 104 762 tCO₂e, 5% lower than 2023 (110 198 tCO₂e). This includes direct carbon emissions (Scope 1), energy indirect carbon emissions (Scope 2) and material Scope 3 emissions. Since 2021, the Group has achieved a 32% reduction in total carbon emissions and a 27% reduction in Scope 1 and 2 carbon emissions in line with our decarbonisation target of a 30% Scope 1 and 2 carbon emissions reduction by 2030. Key drivers of this progress include optimising our waste mining profile, initiatives implemented to enhance energy efficiency, and reducing overall energy consumption.

In 2024, Scope 1 emissions accounted for 32% of the Group’s total carbon footprint, a decrease from 43% in 2023 and 41% in 2021, while Scope 2 emissions increased to 59% compared to 45% in 2023 and 44% in 2021. This shift in the Group’s 2024 emissions profile was primarily driven by the improved reliability of the South African electricity grid and a significant reduction in waste tonnes mined. Load shedding decreased from 335 days in 2023 to 83 days in 2024, significantly reducing the reliance on diesel-powered generators and resulting in a 59% reduction in generator-related carbon emissions year on year.

Carbon emissions	Unit	2024	2023	2021	Performance against 2021 baseline (%)
Scope 1 (direct)	tCO₂e	33 656	46 964	62 672	(46)
Scope 2 (indirect)	tCO₂e	61 610	49 975	67 473	(9)
Total Scope 1 and 2	tCO₂e	95 266	96 939	130 145	(27)
Scope 3 (indirect)	tCO₂e	9 496	13 259	23 718	(60)
Total Scope 1, 2 and 3	tCO₂e	104 762	110 198	153 863	(32)
Total tonnes mined (ore and waste)	tonnes	10 472 830	14 260 661	24 395 986	(57)
Ore tonnes treated	tonnes	5 018 739	5 024 665	6 172 428	(19)
Carats recovered	carats	105 012	109 656	115 336	(9)

Mining optimisation initiatives first introduced in 2021 such as shorter hauling distances, steeper slopes, and reduced mineral waste mining were further advanced in 2024. Revisiting these strategies to identify and implement additional efficiencies has contributed to an overall 46% reduction in mobile diesel consumption (the diesel consumed by our mining fleet and support equipment) since 2021. The reduced mobile diesel consumption resulted in an overall 41% reduction in our diesel-related Scope 1 carbon emissions, notwithstanding a 32% increase in stationary combustion related carbon emissions primarily due to increased hours of load shedding when compared to 2021. We remain committed to minimising our environmental impact while enhancing operational resilience through continuous improvement and strategic adaptation.

Letšeng carbon emissions related to diesel consumption (tCO₂e)	2024	2021	Performance against 2021 baseline (%)
Diesel: Mobile combustion	28 324	52 410	(46)
Diesel: Stationary combustion	4 735	3 587	32
Total emissions related to diesel consumption	33 059	55 997	(41)

The Group monitors intensity indicators to assess and appropriately respond to carbon emission changes. Although our emissions intensity for tonnes mined (ore and waste) increased from 2021 to 2024, this was directly related to the significant reduction in waste tonnes mined. However, our intensity indicators for carats recovered and ore tonnes treated showed a 20% and 10% improvement, respectively, from 2021 to 2024.

Carbon intensity indicators	2024	2021	Performance against 2021 baseline (%)
Intensity indicator: Scope 1 and 2 (tCO2e)/Tonnes mined (ore and waste)	0.009	0.005	80
Intensity indicator: Scope 1 and 2 (tCO2e)/Tonnes ore treated	0.019	0.021	(10)
Intensity indicator: Scope 1 and 2 (tCO2e)/Carats recovered	0.907	1.128	(20)

The Group will continue to measure and report on our carbon footprint performance as we work towards our goal of reducing our footprint by 30% by 2030, using 2021 as a base.

Group-wide energy consumption (for Scope 1 and 2 activities) in 2024 was 174.4 million kWh (2023: 233.4 million kWh). 99% of Scope 1 and 2 energy consumption in 2024 is attributable to Letšeng, where our principal energy sources are grid electricity and diesel-powered generators. In 2024, the Group refined its energy footprint calculations to incorporate factors such as generator efficiency, energy losses, and theoretical energy potential. These enhancements provided a more accurate representation of energy consumption across operations. By updating the energy footprint model with these considerations, the Group recorded a reduction in reported Scope 1 energy consumption. To ensure consistency and comparability, we also applied these revised assumptions retrospectively to data from 2021 onwards.

Energy consumption	Unit	2024	2023	2021	Performance against 2021 baseline (%)
Scope 1	kWh	113 408 056	182 417 242	227 683 163	(50)
Scope 2	kWh	61 000 690	50 994 991	68 637 800	(11)
Total Scope 1 and 2	kWh	174 408 746	233 412 233	296 320 963	(41)
Total tonnes mined (ore and waste)	tonnes	10 472 830	14 260 661	24 395 986	(57)
Ore tonnes treated	tonnes	5 018 739	5 024 665	6 172 428	(19)
Carats recovered	carats	105 012	109 656	115 336	(9)
Intensity indicator: Scope 1 and 2 (kWh)/Tonnes mined (ore and waste)	ratio	16.7	16.4	12.1	38
Intensity indicator: Scope 1 and 2 (kWh)/Tonnes ore treated	ratio	34.8	46.5	48.0	(28)
Intensity indicator: Scope 1 and 2 (kWh)/Carats recovered	ratio	1 660.8	2 128.6	2 569.2	(35)

Since 2021, the Group’s Scope 1 and 2 energy consumption has decreased by 41%, resulting in an improvement of energy-use efficiencies for ore tonnes treated and carats recovered, as set out in the table above. This illustrates an improvement in energy consumption across all activities, from mining and processing activities to site services. The increase in energy intensity for tonnes mined was primarily driven by the significant reduction in waste tonnes mined in 2024, as the actual energy consumption for both Scope 1 and 2 decreased by 59.0 million kWh compared to 2023 and by 121.9 million kWh from 2021 to 2024.

Gem Diamonds recognises that climate change is reshaping global freshwater availability, with shifting precipitation patterns affecting the timing and volume of water recharge. The impact of unmitigated industrial activity on water quality further threatens an already vulnerable global water system. As a responsible mining company, we have embedded water stewardship into our business strategy to safeguard this critical resource.

Our approach is guided by nature-based solutions that balance ecosystem health with human well-being while ensuring a sustainable water supply for our operations. By integrating responsible water management into our decision-making processes, we contribute to long-term water security for both our operations and surrounding communities.

For more details on our commitment to water stewardship, refer to our Sustainability Report 2024 and our detailed water stewardship case study.

In 2024, Letšeng reviewed and updated its water balance model to more accurately assess and present its water withdrawal, evaporation, seepage, recycling and consumption across the operation. To ensure consistency and comparability, we also applied these updates retrospectively to data from 2021 onwards. As climate change continues to drive more dynamic weather patterns, our approach to water management will evolve in line with our growing understanding of its impacts. Since 2021, the Group has achieved a 53% reduction in net water usage and a 78% decrease in water withdrawal and capture, reflecting our commitment to responsible water stewardship. While our operations are not water-intensive, ore processing remains the primary activity requiring water input. To enhance efficiency and minimise water loss, we have implemented multiple water efficiency and water loss prevention initiatives since 2021, leading to a 44% improvement in net water use per tonne of ore treated. The increase in water usage per tonne of ore and waste mined in 2024 of 0.32 (compared to 0.21 in 2023) is primarily due to the reduced waste volumes mined. These efforts underscore our commitment to sustainable water resource management while ensuring operational resilience in the face of changing climate conditions.

Water consumption	Unit	2024	2023	2021	Performance against 2021 baseline (%)
Net water usage	million m³	3.4	3.0	7.3	(53)
Water withdrawal and capture	million m³	0.5	0.8	2.3	(78)
Water recycled	million m³	5.0	5.6	8.6	(42)
Water loss through evaporation, entrainment, and seepage	million m³	1.9	2.6	2.4	(21)
Total tonnes mined (ore and waste)	tonnes	10 472 830	14 260 661	24 395 986	(57)
Ore tonnes treated	tonnes	5 018 739	5 024 665	6 172 428	(19)
Net water use (m³)/Tonnes mined (ore and waste)	ratio	0.32	0.21	0.30	7
Net water use (m³)/Tonnes ore treated	ratio	0.68	0.60	1.18	(44)
Recycled water (m³)/Tonnes mined (ore and waste)	ratio	0.48	0.39	0.35	37
Recycled water (m³)/Tonnes ore treated	ratio	1.00	1.11	1.39	(29)

Find out more

Annual Report and Accounts 2023

We implemented several initiatives to reduce the impact of significant cost increases, to drive efficiencies and effectively manage operating costs in a highly volatile and uncertain economic environment.

Sustainability Report 2023

We are held in high regard across Lesotho for the community work we do. We will continue to foster this respect and constantly refine our contributions by listening closely to the people who need our assistance, enabling us to find practical solutions for the greatest possible benefit.

Our approach to Climate Change 2022

We have committed to a decarbonisation target of a 30% reduction in scope 1 and 2 emissions by 2030, against a 2021 base.

Introduction

Governance

Strategy

Short term: 1 to 3 years

Climate-related risks

Potential financial impact

Climate-related opportunities

Potential financial impact

Medium term: 3 to 5 years; long term: 5 to 10 years

Climate-related risks

Potential financial impact

Climate-related opportunities

Potential financial impact

Potential financial impact

Potential financial impact

Potential financial impact

Potential financial impact

Targets and metrics

Find out more

Annual Report and Accounts 2023

Sustainability Report 2023

Our approach to Climate Change 2022

•	Increase in occurrence of moderate precipitation
•	Enhanced emissions reporting obligations
•	Enhanced ESG obligations

•	Increased operating costs
•	Increased capital investment

•	Reduced operating costs
•	Increased capital investment

•	Increase in occurrence and severity of precipitation
•	Rising mean temperature
•	Strong winds
•	Increased frequency and duration of droughts
•	Failure of electricity providers to move to a low-carbon economy
•	Substitution of technology with lower-emission alternatives
•	Social risks due to resource constraints, particularly in developing countries
•	Evolving regulatory context regarding carbon tax
•	Increased costs of carbon-intensive products (such as diesel)
•	Reputational risk