Anglo American plc (AAL) Earnings Call Transcript & Summary

Okay. Good morning, everyone. Just before I turn to this morning's proceedings, let me acknowledge because it would be rather odd not to the other grave news we will work to this morning in Ukraine. And really, all I can say is the obvious, which is I hope. And I think most of us, if not all of us hope that the United Nations, all members of the United Nations, including Russia, return to some calmness and some restoration of the world order really because it's not a great direction. But that's going to play out one way or the another, meanwhile, I think we press on. So a warm welcome to all of those particularly nice to see physically and in person, many of you. So thank you. And of course, also a warm welcome to all those joining by phone and joining the webcast. You'll have seen our numbers a couple of hours ago, very strong financial numbers, strong for us, but also for others, of course, in our industry. And that's good for shareholders, obviously. But it's also very good for our stakeholders more broadly. When we do well, our host countries do well as do the communities surrounding our operations. And so it should be. So strong prices on many of our products, but also a really resilient operational performance. And I'd like to commend Mark, his team and all of our employees for delivering a record set of financial results. As you know, there's been significant improvement in the last 9 years. And if Mark doesn't mention it, I certainly will. Since he became Chief Executive of Anglo American. He is an outstanding leader and he hands the reins over to Duncan with the company going well. Of course, we see plenty of opportunity for Duncan for further operational improvement for the deployment of technologies, making us safer, more sustainable, more productive going into the future. And of course, delivering importantly also on our organic growth opportunities that we have. So no pressure, Duncan. We also had some further Board moves. Just in the last 12 months, we welcomed 3 new executive -- nonexecutive directors to our Board, Elisabeth Brinton, Hilary Maxson more recently, Ian Tyler. And in April, we say farewell to Byron Grote and Anne Stevens, 2 excellent contributors to our Board, both of whom have served 9 years. And finally, finally, be kind to Stephen today because it's his birthday. And I would like to publicly wish you a very happy birthday, Stephen. Stephen told me -- did he? I'm not sure, anyway, I'm sure he could think of a no finer way to celebrate his birthday than to talk to you about our results today. And without anything further, let me now hand over to Mark and Stephen.

Okay. Well, first, thanks very much, Stuart, for the introduction. I'd also like to say thanks to you and the Board. I was asked about leadership in the industry a few months back when I said the one thing about doing things at Anglo and making some tough calls I've never once had to look over my shoulder and worry about where the Board was, and so thank you to yourself and all the Board members, that support has been absolutely key in helping us the road we've traveled. And whilst we may not have got all of the decisions right, I think at the end, we've landed in the right places as we've adjusted based on learnings and feedback and trying to listen as much as we could. And the Board has been fantastic in that process. So thank you, and thank you to the Board. Again, I should make -- acknowledge all my colleagues. Stephen will introduce his CFO for a day in his introduction. So I won't preempt that, but I've decided to take on the tradition. We have Duncan Wanblad here as CEO for the day. And if he does a good job, there's a good chance you'll get there again. I can say, Duncan, welcome. So I'd like to say thank you for joining us in my first or last set of results. And from my point of view, it's been a great time. I'll say a few words at the end, Jason, just to fill things out before I take your first question. And hopefully, we'll be able to cover the issues pretty well. So if I could ask -- if we can go to the next slide, please. Thank you. Overall play will be consistent with how we've done things in the past. I'll touch on performance, highlight a few key points. Stephen will take you through the numbers and try and explain where the results came from and what to expect. And to close, I'll take you through how we're positioning the business for the future. And I've got the great pleasure in giving you an update on Quellaveco. We've even got a short film. So you've read the book, you'll see the movie today. Next slide, please. Starting up with people and in particular, our WeCare approach, I have described our holistic approach to looking after people through the pandemic. The one thing I would say is it is still with us. Good news is that in the last 3 months, touchwood, we've not lost a colleague, but it's been pretty devastating and 2021 was tougher than 2020 for us in terms of COVID. But again, we're seeing improvement. We're better than 95% production, but still a way to go to get to full production. And I expect that to be true through the course of the year. And I also think that the work that we've done in the communities and in particular, looking after people through our living with dignity program, particularly physical health and also mental health have been 2 key themes for us and themes where we've worked together with our local communities to try and make sure we looked after people. And the feedback we've had from our communities has been really positive. And in many ways, it's helped create a new relationship in those communities, particularly as people start to understand what we do our local communities and whether it's energy, whether it's water, whether it's making sure, food deliveries and it really has, I think, helped cement a much better relationship and helped us realize how we can better articulate and engage with people around the things that we do that most people take for granted. So again, I'd expect this to continue to improve, but we've got to be careful of variance. And certainly, we're watching things very carefully. Next slide, please. Consistent with the theme around people. For us, safety, health and environment continue -- will continue to be points of focus for us. We have come a long way, starting with safety. Whilst I'm pleased with the progress and the great work in particular in the last couple of years on the elimination of fatalities work. Sadly, we still lost a colleague, Carlos Gonzalo-Rodrigues tragically lost his life in a vehicle accident at Quellaveco. And for us, that tells us we've still got work to do. But in terms of where we've come from, we're proud of the good work that's being done. And from my perspective, I'm sad that I didn't finish with where we wanted to be, which is 0, but I'm sure Duncan and the team will get there and continue to improve the business on all fronts. Our injury frequency rate backtracked a little bit during the course of the year, particularly in the first half. So as we commissioned coming out of COVID and had to put a whole set of new procedures in place. We saw a bit of a backtrack on the frequency rate. The good news in the second half of the year, we improved 7% against the first half. So I think we're on the case, we're making sure people are focused on the planning issues, but we're keeping very close on those issues, and we've still got work to do. So I would hope that we reestablished that downward trend during the course of this year. And certainly, we've done much better in January and the last few months. So I'm hopeful that we're in the right place, but we still got to keep our focus on all the issues. Health cases, people being exposed to hazard dust, those sorts of things have all improved significantly as the chart show. And on the environment, the one issue that we did have, which is an intermittent league in the base metal refinery, that's been corrected. And again, we're looking for that 0 outcome on the environmental side as well. So we made good progress, but we can always do better, and we'll continue with that focus across the business. Next slide, please. In terms of the broader ESG performance, we continue to make good progress on our critical targets that underpin the sustainable mining plan. We are targeting an absolute reduction of 30% in both energy and greenhouse gases by 2030. And that's from the 2016 levels. The recovery from COVID has been patchy. And so we need to continue to improve our operating stability to see that flow through the other measures that are measured in terms of energy consumption. And as we get the stability back, I think there's a few more percentage points will come from just getting that stability. But given our carbon neutrality strategy, which we are also positive -- which will also positive -- positively impact energy intensity due to the electrification of our operations, we remain on track to meet our targets. So that's a good news. We've also made good progress on decarbonizing our operations with the commissioning of Quellaveco and with the changes we've made in our South American operations will be fully renewable energy input to the sites by year-end. So that's a big milestone for us. And that makes up about 70% of our energy consumption in those regions. So that's a big shift. And as you know, we're working with the South African government on a whole range of strategies to do the same sort of thing in South Africa, and that for us is an important part of the overall program. We're also upgrading our social engagement processes, Social Way. Most of the sites were at 90% to 95% of all of the social programs that we have in place. So we've then upgraded the Social Way, we call it Social Way 3.0. And so you'll see that the scores look pretty miserable on that scar, but we've made a significant change to what we're doing on site. So we're really upgrading that performance. And I would expect the teams over the next couple of years will make significant progress. And I've got no doubt within 2 or 3 years, there will be a Social Way 4.0. It's a journey, and we continue to make good progress. And again, a lot of that work manifest through we care. And certainly, the feedback from our local community has been very positive. But again, there's always more we can do. Next slide, please. In terms of the results, on controllables, production volumes were up 5% compared to last year. Again, COVID was probably more significant in terms of its daily impact across the operations. But then, of course, we had the met coal incident back in 2020 the Grosvenor issue. Moranbah has had a tough run this year in a very difficult longwall block with a different type of geotechnical environment as sort of a shale inclusion above the longwall, which has been pretty tough to negotiate, but they're now in the changeover. The good news is we're moving into the next block, which is -- we believe to be a much better block. Aquila has now been commissioned on time, on budget. And we're now cutting coal at Grosvenor as well. So I think we're -- we're setting up and hopefully, I leave Duncan with a better setup on the coal side. But again, we're going to have to take things carefully. The Grosvenor mine is a very new set of technologies that have been introduced. We're literally running the longwall from the surface and that's probably the most modern underground mine in Australia today, if not the world. And there's a lot of lessons being learned and a lot of lessons we'll take into our other operations. So again, it's -- it's another milestone event for us in the business. EBITDA, primarily driven by very strong prices and the work we've done over the years in terms of the portfolio. $7.22 EPS compared to our previous record. The biggest difference for us between the previous record, which I think was 2011 versus today, our costs are 19% lower in nominal terms or better than 40% lower in real terms. And so that's really the big shift that we've seen between the price -- between the results between those 2 record years. And so our mining margin of 56% and ROCE at 43%. We obviously target on ROCE through the cycle doing better than 15%. But we keep the discipline. And so when you really do get a bit of a kicker on the prices, you get a much better ROCE, but again we're not trying to land at 43%. It's really about the threshold through which you invest, and we're on track there and we're enjoying a very good number on the basis of the prices and where we are in the cycle. But again one thing we continue to look at is where do we think we are in the cycle with the way things look going forward, certainly with supply being very tight, it certainly looks encouraging putting aside the current issues in Europe. Next slide, please. In terms of operations and results, De Beers demand has been very strong. U.S. has recovered well. Site sales in '21 were strong, averaging nearly $500 a site, a solid growth our markets, particularly in the U.S. China has been pretty solid as well. First site this year at about $660 million is a good start to the year. We've seen a price increase of around 30% over the last 14 months. If you remember, back in November 2020, we were saying, look, we need, we think, to see around 30% increase for production to even hold. And so we've seen that and we said over 2 -- we expect that over 2 years, we've seen it in 14 months. And we think the fundamentals are still strong. Our marketing strategy has been going well. We're spending almost $200 million on marketing. That seems to be yielding results. We're also retooling the business. Our new ship has actually in its commissioning run, as we speak, 3 months early on budget. So again, another good project outcome. The best team have done a great job and certainly, I think De Beers is well-positioned in the market as they go forward. In base metals, copper business continued to deliver consistent operating and cost performance. It's been a tough year both from a COVID perspective and with water challenges. So the team has done really well. particularly at Los Bronces. The longer-term work will be around securing water, so we make sure that we've got enough to deliver and operate the site at capacity. Collahuasi, we saw a record production performance for the year and in particularly -- in particular, a pleasing cost performance of $0.61 a pound. Nickel, performance was stable. Production decreased slightly on the year really through a little bit of a grade drop and we weren't mining in all of the areas we would have liked to have been mining on. We're working through some licensing issues, but they seem to have been sold. So it will be a matter of in the next few months, just squaring the mine back up and making sure we delivering at the target grade. PGMs good mine performance for the year, reflecting strong recovery from COVID. The ACP unit continues to perform really well, probably 15% above the previous unit, much more stable. You'll see the rates come off a little bit because we've worked down our in-process inventories. But again, very good performance. And we've got the second unit ready as a standby spare and we've incorporated the new technologies in that unit as well. So I think we're in a good place and the taste team have really done well. In bulks, good iron ore performance, quality, a real focal point in the market. And so working on the quality side of both Kumba and Minas-Rio has really helped. And when you look at our breakeven cost positions, we're in a great place and partly benefiting from the higher quality and the netback on the breakeven price really helps us in our position. And when I show you the cost curves, there'll be no prizes guessing where Vale is at the moment, given the quality of their products, even though their production is down. that quality is very similar to where we are in terms of Minas-Rio. So we're both seeing that benefit compared obviously to the Pilbara. Met coal, again, I said a tough year. I think we've set met coal up to start improving during the course of this year. And so they've had a tough 2 years. We expect the next year or 2 to be certainly much better. But again, we'll take it carefully to make sure we keep people safe. Next slide. Thank you. So consistent with growing cash flow and returns, the improvement journey continues. And Stuart is absolutely right. We've created or we've established foundation for taking the business forward, both through our organization model and our operating model, which is a subset of the way we run the businesses and really takes an industrial approach to the way we set the business up and run the businesses. It is a foundation piece. It's something that, really, from our point of view, helps drive continuous improvement. And whilst the road on continuous improvement is never that smooth, the basics are in place, the people are in place. They understand what we're looking for. And I think the journey this year will be very important in terms of getting our stability and making sure that we create that platform for continuing improvement which is part of the growth story as well. In terms of margins, again, from 13 to 21%, it's both a story of improving cost position and prices. Our 45% to 50% margin is based on long-term prices. I think it's still a little too early to call what cycle we're in, in terms of commodity prices. But I think for transition metals, in particular, we're in a good place. And if prices are going to be a bit better than we're anticipating on the long term, then our margins are very good. And those margins are consistent with delivering that 15% or better ROCE return and those cash flow targets that we look forward to for the dividend and continue to invest in the future of the company. And that's -- and that -- those numbers are really important in terms of our driving our growth. And as Stephen said he'll talk about balance in his part of the presentation. I think he'll bring that point through very strongly. Finally, before I give a hand across to Stephen. I've got one last overhead. Since 2013, and just to explain the chart, some of you have seen this before. The light blue columns represent the average cost position we held we on our aggregated commodity base. So we're operating at the 49th percentile back in 2013. So that's against our competitors. We are now operating based on our latest numbers, which is substantially off the results that we've seen in, I think it was mid-'21. We're now operating up to 29%. Now we do have a credit from the quality of the product. So it's a breakeven price comparison, which for us is important because that drives your margins. Again, you can probably guess who peer 1 is, high-quality iron ore producer. And I'll let you figure out who peers 2, 3 and 4 are. But over that period, we're proud of what's been achieved on the cost side. So this is not about price. This is about the things that we've done in the business. And for us, it's probably the best place to stop and let Stephen unpack the numbers in more detail. Steve, over to you.

Thanks, Mark. As Mark mentioned, I introduced this concept of CFO for the day when I started back in '17. And the concept there is that we plug one of the up and coming sort of finance professionals from across the globe and they get to participate in the weeks leading up to results announcements. So working with the [indiscernible] team, Investor Relations team. And obviously, they see the smooth reversals and they're coming together of the messages that we deliver. And so Dave Lambourn, who is in the audience today, is the CFO for the day for this period. But Dave, don't get too comfortable in the chair. Like Duncan, I'm going to be here for a little while yet. So listen, hopefully, one of the traits you'd like to see from a CFO is consistency. And so the 3 messages I want you to take away from today, the same that I've talked to in. So I started. First one is consistency of operations and cash flows. And I think we're in a pretty good space here. But we know we've still got a little bit more to do from some of the issues that we've had in 2021. But I think we're in a pretty good space. And as I say, we know what we need to deliver on. The second one is returns to shareholders. So our 40% base dividend is maintained, but we've also taken that opportunity to return excess cash, where that's risen back to shareholders. And we've got a strong balance sheet. So investing for the future. Again, CFO job's done when the CEO starts talking about balance as well. So pleased that it's taking hold. But that balance really does set us up strong and sustainable future as we go forward. So turning to the 2021 numbers. EBITDA, a strong recovery from the prior year, $20.6 billion, as we know, a record year, underpinned by strong prices that we are seeing some operational recovery. And hopefully, that should set us up for a good 2022. EPS significantly up at $7.22 compared to $2.53 in last year's result. And that not only drives that base dividend, but gives us that ability to make those additional returns. Net debt ended the year at $3.8 billion, so probably a little bit lower than what the market was expecting. And that benefit not only from the strong operational cash flows, but also that reduction in working capital of $1.1 billion. So free cash flow for the year at $9.6 billion, and that was after paying the high dividends and returns that we announced in the first half, higher dividends to noncontrolling interests and higher taxes across all of the countries that we operate in, and I'll come to that a little bit later. Next slide, please. So looking across the different business units, diamonds, as Mark mentioned, a good recovery particularly from the COVID impacts that we saw in the prior year. Demand for Polish product is strong, and we have tighter supply and that's resulted in that magic 30% number that Mark often speaks to in terms of the prices recovering from the low point that we had in 2020 through '21, we saw a 10% increase in the year nearly 25%, up from the low point by the end of last year, and then we've seen further increases early in '22 and unit costs were held broadly flat. So a great effort from the team. Base metals, robust operating performance despite the water challenges that we had across the copper operations. Unit costs saw some increase in the year, but Collahuasi, in particularly, the source of unit cost decreased despite that challenge. Margin in nickel, a healthy 45% and overall, really solid work from the team. PGMs you know, a strong refining performance in the year with the ACP up and running very strongly through the year. Prices remain quite healthy in the first half, came off a little bit in the second half. Obviously, we've seen that rebound in recent weeks. And that's despite high U.S. dollar unit costs in the business. Bulks in iron ore, 62% margin. Strong pricing and as Mark mentioned that higher quality product and premium really sought after by the market. Just a quick note from the CFO. Very pleasing to see $2.7 billion cash from Minas-Rio in the year. Just to -- if you could note that one down, that would be much appreciated. It was a challenging year for met coal, as we all know, but the team did a great job, 33% margins even with what the issues that they had to work through, again hopefully sets up for a strong 2022. Next slide, please. So looking quickly just at those drivers of EBITDA, again you can see the impact that prices had -- really pleasing to see that recovery in terms of COVID volumes coming through the result. That's particularly evident in diamonds as well as the operational recovery evident in PGMs and that increased cost and volume combined at $1.2 billion. But we know there's more work to do. As we have previously said, COVID has impacted our ability to crystallize all of those initiatives that we'd love to get implemented through the operations, but really confident we can drive those through to that target that we have through 2023. Next slide, please. So 2021 unit costs up 10% on an FX-neutral basis. Obviously, foreign exchange was probably the bigger impact at 6% across the producer currencies, so 16% up in total across the year. General CPI across the countries that we operate around 5%, and that's translated into about a $0.5 billion impact on our EBITDA this year. If you recall at the half year, we weren't really seeing inflation impact. So most of that flowed through in the second half. But this has been largely demand-led input inflation. So a lot of our input costs are coming from the same products that we actually produce. And so we do expect some of that to continue into '22, but we do note that, that's really quite widely happening across the industry. But we did include our estimates of how that would play out in the cost guidance that we gave you in December. But just a reminder, that's unit cost that we're discussing, obviously productivity, efficiency and technology can all play their part in driving absolute and relative unit cost performance and so on volume growth. And a reminder that we have around 18% volume growth by 2023, around 35% volume growth by 2030. So if we do see a sustained period of demand driven higher prices, I think we're well set up to be extremely competitive on a unit cost basis with obvious benefits flowing through into our revenue line. Next slide, please. So turning to the balance sheet. On CapEx, we came in broadly as forecasted for the year, higher than 2020. So we saw our ability to recover from some of the COVID impacts in that prior year. We weren't able to catch up quite as much as we would have liked. So we've got a little bit of carryover into the next year or 2. But pleasingly, that wasn't really in sustaining CapEx, it was largely in growth CapEx, and so that should roll out over the next year or 2. Next slide, please. Again, on the balance sheet. We started the year in a really good position from a net debt perspective. We're in great shape at the half year, and that enabled us to make those additional shareholder returns and that has continued for the year as a whole. We also saw that reduction in working capital of $1.1 billion, and that reflected in our sell-down of the PGM, a buildup that we had in the prior year, if you recall, and also diamonds, where they were able to reduce working capital into a very strong market. So across the year, net debt down by $1.7 billion and obviously, balance sheet in great shape to support our spends as we go forward. Next slide, please. So we do remain committed to our 40% dividend, and we really do believe that is appropriate for a company like ours with that balance of growth and returns to shareholders. With the impact of continued strong pricing, we were pleased to announce that additional $2 billion of return at the half year and a further $6 billion with these results bringing total returns in respect of the year to $6.2 billion, and that represents a total payout of 69% for the year. In addition, just a reminder, we did distribute the Thungela shares to shareholders in addition. And obviously, the price of that share has traveled very well across the year. I hope some of you still own some, I certainly do. But that reaffirms our commitment to that capital discipline and that balance that we often speak about. Next slide, please. As Mark said, this has been a record year for our shareholders, but also for all of our stakeholders that we interact with. I showed you for the first time at the half year, this slide and told you how proud I was of the contribution that we make in the countries in which we operate. We continue to make significant payments in the countries through the second half. And as a result, our activities have resulted in $7.1 billion of royalties and taxes collected and paid to the host governments in the year. That's up 89% from the prior year. Now not on this map clearly at the moment is Peru and Quellaveco, but as that ramps up, the contribution that we make to that economy will sort of transition from capital spend and the activity that, that drives into revenue-related activities and the taxes that, that will in turn, drive. But importantly, we pay our taxes where the profits arise, that is in our host communities and countries. And when prices rise, so do our tax payments and royalty contributions. So it's a win-win. It's a large number. It's often a little underestimated by host governments because they like you tend to revert to historic price forecast fairly quickly in their outlooks. But it does prove that tax systems work as they should, as prices increase, so do taxes paid. I know this is a really sensitive topic in a lot of the jurisdictions that we work. But we do have and continue to have very constructive engagement with those countries and with the various stakeholders. And I do believe that the contribution we make is widely recognized, but it is a difficult topic for the countries to get the right balance. Next slide, please. As you know, I'd like to recap our performance across the year against our capital allocation model. So cash generation for the year, $9.6 billion, after funding that sustaining capital. This continues to drive our 40% payout ratio-based dividend and that base dividend for the year was $3.6 billion. However, it's about balance, we offer as we invest both for the near term while returning excess cash to shareholders. We allocated $1.8 billion to growth capital in the year, an additional $2 billion in the first half and the $6 billion with these results, again, capital discipline. We also, by the year-end, had bought back $800 million of the $1 billion buyback that we announced at the half year and that was completed about 2 weeks ago. Next slide, please. At the half, and I mentioned earlier, we have seen some delays in terms of driving those cost and volume benefits through to the bottom line. And so at the half year, given the impacts COVID had, we moved that target period back 1 year to 2023. And then in December, given that we have a more extended period with Quellaveco and other initiatives flowing through, we increased that target by $0.5 billion to then be $3.5 billion to $4.5 billion. We've made some good progress in the year. You can see on this slide, but we have always said this would be largely back-ended to some of those target periods. And obviously, some of the technology and innovation will continue far beyond that 2023 period. For 2022, what do I expect to see or Quellaveco and the new vessel in Namibia will start to contribute volumes. So you'll see those flow into this bucket. I think bulk ore sorting will progressively start to contribute to the bottom line across a number of our operations as we continue to roll that out. And obviously, operational stability still provides, I think, a huge prize for us. Next slide, please. So to recap from me, a familiar message. It's all about balance. We have returned over $12 billion to shareholders in $17 billion and that's compared to the $18 billion that we've spent on capital in that same period. We offer near-term attractive high-margin growth on future enabling products. Balance sheet is in good shape. We've also added the chart on the bottom right-hand side, just to represent where our capital employed by geography. And again, you can see the balance, South America now representing 45%, Africa 33% and Australia, Canada and the U.K., the majority of the remaining 23%. And is that balance that ensures that we deliver in a sustainable manner and preserves the integrity of our assets that contributes the essential products that support that global transition. Thanks, Mark. Back to you.

Thanks, Steve. As people know, Stephen has championed the conversation around balance. And I've had a few of my English colleagues point out that being Aussies, we are usually quite balanced. We've got a chip on both shoulders. And that's not quite the balance we were thinking about. But certainly, from our point of view, that message seems to be landing pretty well. One other interesting point before I kick in, Steve and I were just talking this morning, South Africa has announced a bit of a change to its corporate tax rate. And so I am looking forward to the conversation around the premium that we should get having our assets in South Africa. So I hope I get a couple of questions on that at the end of the day as well, given the debates that we're seeing around the world, in relation to corporate tax and COVID issues. So well done to the South African government. That's a really good message for investment in the jurisdiction. Okay. So in terms of a sustainable future and the things that we can do in terms of the portfolio, we have very much a future-orientated portfolio. We talk about met coal as a transition enabling product. We have high-quality met coal that's very important to at least minimizing carbon gas make before the transition to green steel and hydrogen. And so from our point of view, that's a very important part of the portfolio and it's a contributor to improvement. But again, we'd expect that transition to occur during the 2030s. And so from our point of view, it's still a very important part of the portfolio and one that makes a real contribution, particularly in today's world where high-quality met coal is very important in terms of where we are. We've also continued to build and shape the portfolio. And with the sale of Cerrejón, we've completed our repositioning out of thermal coal. And again, I think those changes have been well received in the market. In terms of -- next slide, please. In terms of climate change and the global energy transition, you've seen both of these pictures before on separate slide and really it's the key message, from our point of view, is we do have a pathway to operations carbon neutrality, and we are working and introducing new technologies, new energy sources, and we've got a strategy to get there. In terms of scope 3, we would see an increase in scope 3 emissions in the short term, reflecting our growth in production -- but all the while, we're improving our efficiencies. And as we continue on the portfolio side, so we would end up, we think, at about 50%. If the steel industry is able to accelerate and deliver on the 1.5% climate change objectives that would mean our scope 3 contribution through our customers would be down to -- or we would reduce by something like 80%. So I think we're in the right place. I think we're in the right conversations, and we're trying to understand how we can best influence those outcomes. And again, if I go back to iron ore, the high-quality iron ore, we've produced provides at least a 30% improvement in relative contribution to carbon gases for our customers. And so again, I think having the right products in that mix is very important as well. And that will be important post met coal into hydrogen, the energy consumed in converting to steel will be still a very important part of the conversation. Next slide. Thank you. And we have -- and we will start with a video on Quellaveco. So I'm calling for the video, light, camera, action. [Presentation]

Thanks, guys. For us, Quellaveco was more than just the mining project. It was, in our view, a pathway to credibility in terms of building major projects. And whilst we've hit all of our key target milestones and major capital projects over the last few years. It was -- and we understood it to be a very important message to the market about building in running a business. And so it has been a team effort. It's been everybody in the organization who was giving their best. But I should mention Tom McCulley and the team, they have done such a fantastic job and through COVID with all of the issues they had to do with we literally stopped the key activities or many of the key activities for more than 6 months. And so whilst we would have liked to have been commissioning in 6 months earlier, I'd have to say the effort that the guys put in and the work has been tremendous. And we had the Omicron variants in the last 3 months. It probably took another month office. But again, everybody is back there working and doing extremely well. So certainly, from our point of view, a great effort under what has been difficult circumstances, but I must also say that in Peru, we've had great support from the government, from the locals. And that point about the river and the fact that with what we've done, we're providing water to the agricultural sector in the community all year round versus previously only get it to 6 months means that we're really important to the broader agricultural and community infrastructure and commercial base. We think that's the basis of a really positive relationship in that community, and it's quite different in terms of our relationship with those local communities. And whilst that never guarantees, things are going to go as you would like them to go, it gives us a pretty good start. And I think we've done a lot of good work through communities and working with communities. So I think we're in a good place. And certainly, it has been a real team effort, whether it's the technical team, the corporate relations, sustainability, finance everybody's been involved and certainly from our point of view, so far, so good in another few months. And I think Duncan will have a good story to tell at the half year. Next slide, please. In terms of the business itself, again, looking forward, the production numbers have been upgraded. The costs are in good shape. From our point of view, a very short payback period. The economics have proved over time and we've got our timing right fortuitously. No one's ever quite sure if you're going to be there, but we look like we've tied it well in that context. And so from our point of view, we're in a good place and certainly, copper looks like it's a good place to be on a more general basis. It also helps us with our overall copper business and the dynamics within the copper business, bit of pressure, a bit of work to be done at Los Bronces. But again, we knew that the grades would track back over time. So our timing has worked pretty well in that regard as well. So from a business planning perspective, I think the guys have done a good job in base metals, and we still see opportunities to improve Los Bronces in that context as well. Next slide, please. Okay. In terms of the broader portfolio and the options we've got across the portfolio, again just reinforcing Aquila delivered on time, on budget in met coal. The new diamond ship, in fact, was delivered 3 months early and again on budget. It's currently up in commissioning process as we speak. We do expect to move forward with projects at Moranbah and Grosvenor. We've got scaleup options for a Phase 2 at Collahuasi, which we're studying at Mogalakwena, the pathway to further develop the asset has evolved. I think a really important point to make and what came out of conversations yesterday is I'm not sure people understand that the underground option that we've developed for Mogalakwena, a large scale, high production, they are not traditional South African development or underground development assets. So 50% higher grade, very low unit operating costs. Net cost is actually lower than the open pit. And so for us, the combination of the open pit and the underground is a nice mix and also provides you a better utilization of your processing capacity because of the higher grade. So that blend of options was a really smart way of getting the best returns and continue our strong cash flow and delivery of dividends through the same period. So Natasha and the team have done good work. They'll be finished with the final options at the end of the year. And based on current estimates, we'd expect to be commissioning a plant probably around 2026. So I don't think that message on the underground and the different type of underground operation that we're talking about was fully appreciated yesterday. But we've had the hindsight of 24 hours, which has helped just reinforce that point. And as I said, Natasha and the team have done a great job. Sakatti, certainly an important one for us in following Woodsmith. And then Woodsmith itself, again, the team is working on the detail. Tom has been on site for, I think, 4.5 weeks, Duncan, and doing really good work, pulling the team together and look at how we manage costs in the short term and make sure we get the engineering right, the detail right, so that when we take the next step in terms of execution, we've got a project that reflects what we think the potential is and that we execute against those time lines based on a schedule that we've got full confidence in. Next slide. So our growth story remains broadly consistent with what we've been saying over a number of periods. Obviously, COVID has made certain things a little bit more difficult. We've had to flex around that. More than 90% of our growth capital is allocated to future enabling products. While we're seeing some slight delays to some, again, per COVID, overall, the general thrust is consistent and from our point of view, very excited in terms of what we have. In the near term, Quellaveco should deliver that 10% uplift that Stephen talked about. We also think there are other project -- well, we also know the other projects will start making contributions in the next 2 to 3 years. And from our perspective, with the understanding we have of resources around Quellaveco, I'm sure in the next couple of years, we'll be talking about increments to that project as well, given the position we have and the capital base that we've established. Next slide please. So we believe the delivery of sustainable returns to shareholders is in the imperative that will define the long-term success of our business. For us, we are positioned to develop or to deliver as we've differentiated with a combination of technical, marketing and sustainability capabilities that have been developed in our view as competitive advantages in our rapidly changing external environment. Coupling these capabilities with our world-class assets, strong balance sheet and ongoing improvement journey, we think, puts us in a very strong position as we focus on positioning ourselves in the future. And for us, when we talk about our 10% free cash flow based on the analysis we've done and the work Duncan and his team has done about being competitive and understanding what it takes to be competitive through cycles, 10% free cash flow puts us in top quartile position. If you're at 15%, you're right at the top through the cycle, I'm talking. So that is what we measure ourselves against in terms of delivering outcomes through the cycle. In terms of efficiency, we measure the efficiency of our capital deployment through the return on capital employed metric. It's not the only capital metric that you can use, but it's one that we can connect to actions on the ground with our teams. And so certainly, that's an important point. And pushing that point has been really important. 43% this year is a reflection of the price environment. And from our point of view, we haven't really adjusted our long-term pricing assumptions, but that's something that will remain -- will remain very focused on to make sure we get right. And then the pillars of value, safety, environment, social performance, making sure we've got the people in the organization. And I think our succession planning has proven to be pretty successful with Duncan ready to take over for myself and the teams that we've built and the talent that we've got in the organization. We're pretty proud of where we are and what we've done, and there's always more work to be done. And then finally, Paul has allowed me 3 minutes to do a reflection after 9 years. So I'm not sure many how many seconds that is per year, Paul. But if I could say that this is my 18th set of results for Anglo American. It is my last set of results. For those of you with good memories, at my first outing, I made some high-level observations around people and what a well-run mining company should deliver in terms of bottom line and broader business outcomes. On people, I said that people are not our most important assets. The people are far more than assets that is people are the business. In the end, when you're talking to [indiscernible] react to what you say and in terms of motivation and trying to encourage people to give you the best they've got, that's about leadership and how we connect to people. In the end, the head frame, the gold in the ground, all the other stuff that we may have, we do have some goal, don't react to the way we behave as leaders. And once we get that point right, then it's all about people, you can do anything. I've always tried to live up and lead consistent with that principle. And so if we've been able to deliver anything that our shareholders and stakeholders value, it is down to and through our people. I also said the great mining companies don't hurt people while delivering better than 15% TSR through price cycles, 10 years being the minimum period over which to judge where the remaining company has done a good job. I haven't made it to the 10 years. It's time for me to go. And if you ask family, they said it was time for me to go about 5 years ago. And whilst we've reduced our fatal events by 93%, we're not yet at 0 for me, that's a tragedy. And it's a tragedy because the impact that has on the lives of our people. But at the same time, I'm extremely proud of where we've come from and what we've done. Back in 2007, when I first joined Anglo Gold, the Anglo Group had 70 fatal incidents. We've had one. We lost Carlos at Quellaveco, but the milestones that we've achieved in that journey have been remarkable and for me. He'll do it and the team will get there. And I think we've made great progress, but we're not quite there. And as I said, that's the one disappointment I have. On business and financial results, as mentioned as a return to shareholders, I can confirm Anglo American has delivered higher than an 18% average annual TSR since that comment back in 2013. Now I'd have to look at the price today. So I'm not sure if it's still 18.5% if I include Thungela [indiscernible]. So I think we're still okay on the 18% number. So after 9 years, we're ahead of that 10-year milestone I measure us against, while delivering the best returns for the mining majors over that same period, and I measure it from 2013. I am tempted to measure it from 2016, but that would be tricky. And of course, you know what we're like, we're ethical in all of the conversations we have. I also believe we're set up to potentially deliver on that same objective through 2030 with the growth. And yes, there's still a lot of work to go through 2040, but we've got the foundations and we've got the people. And for me and with the assets, there's no stopping the organization. We deliberately set out to talk a different language to most, and we have also walked a different road. In targeting the portfolio changes in the operations, our results engine room, we dealt with relatively low value assets at the time, and we worked on our major potential value contributors to deliver towards the latent potential we had identified at the time. In fact, the assets that we've held on to, each one of them, on average, is doing 30% better than it was 9 years ago. And if I look at the average production per asset in the portfolio, we've actually almost doubled the production per asset. So the ability to focus on those big value drivers has been significant and certainly, I think being key in our doubling of productivity and our 40% real cost reduction. We developed an industrial approach to planning and running the assets and we're still learning and still on that journey. Duncan's background, I think, really favors driving that support further and beyond where we've been able to get to. And so I'm excited to watch how he takes the business forward. And on the revenue side of the margin equation, we retooled our marketing and trading capabilities. And if you could remember the first presentation where we said we're leaking $400 million, in that result this year, the marketing team, we estimate, has made a positive $1.2 billion contribution. So that's a $1.6 billion contribution on the revenue side that Peter and the guys have delivered. And we think that's remarkable. And probably something people don't appreciate, and we see that in the margins that we're delivering across iron ore, met coal and through other parts of the business. Terms like operating model, P101 have now become part of the industry Lexicon, while future smart mining really captured the broader industry's imagination and to truck Tony out, as grumpy as you may be, in my world, he's got the dry sense of humor of the characters we have in the team. He's done a wonderful job. But again, he's also had great colleagues to work with, with Duncan and the strategy. Stephen's balance and the finance are all part of a team in the process. Sustainability is an overused word that means different things to different people. In our case, future smart includes how we are reducing our environmental footprint and enhancing our social footprint, while improving our competitive cost position. So Nick and the team have been able to help us articulate a story that people can connect with. And whilst we've still got a way to go, certainly in terms of how we articulate the story is something that's really important, particularly for our social stakeholders and in the broader community. For me, it's a mindset that must be embedded in your culture and in all decision-making and not something you worry about afterwards. And I think in terms of authenticity, people know whether you mean what you say when it comes to sustainability when it comes to safety, when it comes to environment, when it comes to the social issues. And while Stephen uses the word balance, there is no doubt we're doing much better in recognizing and thinking from a shareholder perspective on our capital allocation decisions. And while employees are the business, shareholders own the business. The reality is shareholders are not being institutions, there are hundreds of thousands of individuals holding us through their savings and pension funds, and they rely on us to deliver and secure their financial security, and we take that obligation seriously and our local communities and our broader stakeholder committee must feel the positive differences we make, lest they challenge our right to exist, now more than ever. Ultimately, we're here to serve society in its broader sense, both through the metals and minerals we produce that are so critical to modern life and the urgent need to decarbonize and improve the world in many other ways. The last 2 years in particular, have reminded us of how much a positive difference we can make, particularly for those closest to our operations. As we look forward, our commitments to create or support 5 jobs off-site for every job on site and for schools in our host communities does reflect an understanding of the future of work conversations. But more importantly, it understands the importance of local communities and making sure that we've got the relationships where they will support our existence and they will support us doing better, so that we serve society and we deliver returns to our shareholders. I think it's all set up in our purpose to reimagine mining to improve people's lives. It took us 18 months to agree on 7 words. It's not so much the words that matter. It is the process and the sense of commemoratory and commitment to doing something different that I think binds us as an organization. In an ever more complex and connected world, the foundation for Anglo American's next chapter are well set. And I can't think of any person better than Duncan Wanblad to pick up the baton and pursue the many opportunities that we see in front of us. Looking back, I've had no great privilege than leading Anglo American and our incredible people. Together, we've transformed Anglo American's competitive position. And we're working towards a very different future for mining. It's a safer, smarter and more sustainable future that delivers enduring value for all of our stakeholders. I'd like to thank the Board. You said that I'd get a bit teary. I'd like to thank the Board for their unwavering support, the executive team for their tenacity in friendship, and every one of our work colleagues for their sheer resilience and all our stakeholders for their spirit of engagement and commitment to partnerships. I would also like to thank our shareholders for their trust. In 2013, we were trading at a 40% discount to our major peers. While that gap has now been substantially closed based on public numbers, I still think we're the best value mining company in this space. And when you look at the foundations that we've created continued delivery and growth, I think we're in a great place. And finally, to the analyst and reporting community, thanks for the attention and the eternally wise and thoughtful observations and questions. While we may not have always agreed, it has been a wonderful ride and your thoughts and commentary have always been considered with due respect and appropriate regard. Guys, it really has been a great pleasure. It has been fun. And whilst we've had a few tough moments, I have appreciated the honesty of your input, the camaraderie and that recognition that as an industry. We really do make an important contribution. And the more that we can work together to make that obvious to society at large, then the better I think the world will be. And so thanks for playing your part. Thanks for being so supportive and thanks for the wonderful ride, cheers. Thank you. And I think we're open for questions. Stephen, I think you may take the first one. Jason?

The microphone here? Are we just shouting out through the roof?

That's along with our results.

So look, a question on growth. But before I do the risk of being presumptive, thanks to you for engaging with the analyst community. It's been a pleasure, I think, for me and certainly for most of us here. You've been a breath of fresh air, honestly, so it's been great. Look, on growth, I mean, you brought the operational stability. Anglo is now styled as be growth-oriented big miner. But at some point, growth starts to work against itself. It gets harder because you get, right? And so I guess as you look forward, do you need to change the business to be bigger to allow yourself to sort of continue to deliver the growth? There's no jelly bean chart. There's no bubble chart in your presentation, but those seem to have made a reappearance of other mining companies. Do we need a jelly bean chart?

So no, I don't think we need a jellybean chart. I know Duncan in his role in strategy has done really good work. We started off describing ourselves a mining company back in 2013 and the first image digging holes in the ground. BMW were asking us about providence and guaranteeing that the products we provide for them, the raw materials come from the right places, ethical, human rights, all of those issues could have come back. So we started to talk about being a metals and minerals company because they use 18 metals and minerals in the cars. And so we started to define ourselves in the terms of how customers think about us. And then in the last 3 years, probably Duncan, we started to talk about being a minerals or a material solutions company. And so the adjacencies that we've been building in marketing, trading and other work is about building off the capital base that we have established and what we've learned in our markets and doing better in our markets. And hence, the focus on marketing in to be. So we think there's much more we can do to work off the position we have to create better returns. And we'll continue to look at other opportunities in a broader sense. So I think you've got to keep working every angle. You've got to look at all the opportunities. And I still think we're very early in that journey, Jason. So I don't know how far we can go. But I'm sure that Duncan and the team are going to take us towards somewhere different, and try and answer those questions in more than one dimension. And I think that's the key. Exploration, get your assets, do that -- work those assets well and then work all the adjacencies that you have available to you because when things get a bit rocky or a bit tough, those additional revenue streams that you have, which are probably more reliable through the cycle will make a big difference in terms of the value proposition for shareholders. So that's capturing the thinking that we've been discussing as a Board and as an executive team. And again, I think those conversations will continue on. In fact, the Board conversation we had the other day was probably the best one I've been involved in, in my time in the 9 years. And I think that's a reflection of the sort of never-ending quest to look at how we can improve returns, keep growing in an appropriate way. And it's the interest of the executive and the Board, and we're working together as a team. So I think that's really important.

Is it still just one big project at a time?

It is, for the moment, I think it's appropriate because I think big projects like Quellaveco absorb a lot more than simply just the project skills that you put into the project. You've got Tony and his team making sure the mining things are done correctly. You've got everybody involved. You've got a Nick and the team on the social management and development perspective. And Woodsmith requires the right detail and all of the dimensions to be right. So we'll take a little bit longer to get it right. But when they press the button, they'll get it right. And so I'm pretty confident, in fact, looking at what we have, we're very excited with what we have, but it needs more work to get it to where we want it to be. So yes, and how you tail those and flip into the next one, I think we're learning how to do that. The move from Tom to Woodsmith was very thoughtfully done. We'd already recruited for the commissioning process. And I think that's been done pretty well. So yes, but we'll have a lot of smaller projects on the way through that are very important to us and their technology work as well. So I think we've got both sides covered. What we're now looking for is some exploration hits. And I think that, that will help fill out the portfolio pretty well.

Thank you, Mark and I echo Jason's comments. With your reflections in mind for the last 9 years and given what you know about the company today, what do you think is the one most important challenge that Duncan faces in the first 12 months of this tenure? Is it more thinking about the group structure? Is it portfolio mix? Is it Woodsmith? Or is it more on the regulatory front in Chile and Peru on the taxation side?

The debate or the discussion we're having -- and I think this is where there are many -- Duncan bring so many different qualities to the role. He can handle all of the things you just said. I think the external environment is becoming more complex by the day. And so how we understand, engage, make a difference and be seen to be part of the solution, whatever that solution may be in different jurisdictions is really important. So what we've done in South Africa. The deregulation of the financial controls, I don't think people still understand fully how important that has been for us to be able to move the cash and invest and the fact that South Africa is now reducing its corporate tax rate tells you south Africa is out of the business. Those sorts of engagement, I think, are really important and a front and center. I think the other one on the other side, because all of the others matter is in the last couple of years, we've really driven hard on breakthrough improvement, but we lost a bit of our stability. And so myself, Tony, Duncan, Stephen and the team are talking about how do we get that stability back in control to build for the next push up the curve. So I think they are 2 ends of the scale and all of that stuff in between. I think they're the 2 key parts because that also help our safety and getting to 0 is that stability and control. Does that?

Yes. And I have a second question for Stephen on the numbers. What are the different moving parts that we need to consider for your first half free cash flows in terms of the catch-up cash tax payments, any working capital movements? And in that context, how should we think about the capital returns as we head into the first half of the year?

Yes, good questions. We don't have any major catch-up on the tax front. For those countries where we have December year-ends, we make large installments based on the estimated result in December, literally just before year-end for those countries with June year ends. Like Australia, we make contributions just before June. So the rules of the game these days are you've got to get it as accurate as possible within the year, and you've got to be up to date as across the year-end. So we don't really have too much cash tax catch-up in this first half. We paid some big -- certainly big checks in December. We have had -- not speaking out of terms and reactions from some tax offices as to you sure you've got this right because they were really quite substantial checks. So nothing major there. Working capital, if you cast your mind back probably 12 months ago, we were actually talking about the working capital increases that we had and the need to get that consistency, the ACP back up and running some buildups, say, in diamonds just because of market interruption. So -- and those things have worked themselves out through this year. So we're probably sitting at around, I'd say, normal levels. We've got a couple of smelter rebuilds coming in platinum over the next sort of 12 or 24 months. We go from open pit to underground at Venetia. So there'll be a couple of little moving parts, but in and around where we should sit. I've forgotten your last point.

The capital returns.

Capital returns, 40% both in and you should put that in a spreadsheet.

Maybe just the first one, Mark you mentioned about the super cycle, and I guess we have [Technical Difficulty] with high prices, inflation and are we seeing taxation starting to pick up and particularly in Chile, maybe just your thoughts on that. And maybe specifically on the [Technical Difficulty] already mentioned in the presentation, maybe just how that [Technical Difficulty] growth pipeline and [Technical Difficulty] order on projects? And the second question just for Stephen. Now with we're very close to Quellaveco ramping up, and I guess that should bring your sort of baseline EBITDA and cash flow generation up. How do you think about capital allocation? I mean does that lift the ceiling for CapEx and the ability to spend more on growth?

So I'll do super cycle and give Steve a -- look, we're very careful not to put a stake in the ground so we're in a super cycle. I'm always a bit worried. I'm still not convinced all boats are rising at the moment. I think energy transition and metals, where material sciences are developing very quickly and the use of metals in developing new energy sources and other new technologies will be very important. But it will be somewhat boutique in nature and substitution will probably increase across metal suites as well, for example, cobalt and batteries and you're already seeing a whole new suite of things being in reaction to high prices. So that's something we think about very carefully and Duncan's team have been working on option A, B, C in terms of understanding where to put our money. We think copper is in a great place. So we like being in copper, and we'll continue to build our exposure. And consistent with that, Los Bronces are still going through the environmental approvals. We won't make any decisions there until we understand what the tax regime will be. But certainly, from our point of view, I wouldn't suggest that we wouldn't invest but we better -- we will be clear on what the rules will be in making those investments. So that's something we're watching very carefully. Taxation. Yes, we've seen this movie play out a few times before. Chile has been -- I think it's more complex in Chile with the constitutional issues. They're currently -- full tax load is about 44%. And if you look at globally, it's somewhere between 39% and 49%. The way we read the conversations in Chile is we'd expect them to try and land inside that envelope, which maybe much a bit, but I don't think too much. But at the same time, I think we've got to see those conversation plan. We've been a very active participant in those conversations and in particular, explaining how our investments in hydrogen make a difference both in Chile and on a global basis. And for us to continue to make investment, you have to be continuing to make money. And by the way, you can mine copper in other jurisdictions. And so things like a reduction in taxation by the South Africans in my view, is a statement of intent. They're trying to attract investment. And with these returns, I think the countries should be trying to attract investment because when companies have got the ability to invest and they see a stable economic environment, that's where they'll invest. That's what history tells us. And so getting that message through in a constructive and appropriate way is always the challenge. But I think that's what we've got to do as an industry, and we've got to do it a lot better than we have done in the past. So I do think in Peru and Chile, the conversations will land in reasonable places, but we're going to have to engage and make sure we don't leave that conversation to chance. I think there were the main points on the taxation and the super cycle, Steve?

Capital. So yes, you're right. Obviously, we do get a step-up in that base earnings as Quellaveco comes on, the number we use is a 10% copper equivalent growth at the group level in terms of that step-up, which is quite significant and meaningful for us. I suppose we haven't known it's coming for a while, and so that does feed into the 1 to 1.5x sort of net debt-to-EBITDA target that we have. But it also does feed into that 40% payout ratio that we have as we've looked ahead, tried to anticipate what's coming and then provide that consistency. So the way I'd express it without giving away too much about Duncan's sweets taste, he probably likes kit-kats more than jelly beans. It's that straight line growth that just -- that sort of sets out before us. But I think we've also been pretty consistent with what's coming. And we own them already and they're nicely sort of sequenced in terms of timing, in terms of that capital allocation. And so I think we've got a pretty good path ahead of us as we think that through. So I don't see us changing our plans. You never say never. Obviously, different opportunities will come at different times. Discovery hopefully comes through as Mark says. And yes, you do scan the external world, but we've got a pretty good path ahead of us and I see us staying fairly committed to that. And as Mark mentioned, that combination of greenfield, brownfield, again, I think just sets us up really nicely in the way we think about that capital allocation and journey.

There was another point that I should have picked up or just to make sure -- yes, yes. And just thinking about what Stephen said, one thing I said earlier to a question this morning, it used to take 7 years to find and get a mine into development. Now it takes 15 years on average and in many cases, 20 years. So my concern and our concern as a group is the ability to get projects out there. And when you're in a commodity cycle or where we are today, and it could be a lot longer, then the reticent to allow development or not get a first slice of the pie actually constrains new developments. So I think there's -- we're in that territory of -- it will be difficult to get many projects away. And then it becomes a self-fulfilling prophecy. So that's what we're watching very carefully, and we're trying to work out where we are. In our case, the organic profile we have is really important, and it's a differentiator. We don't need to go out and buy something that's high risk or high cost relative to where we think the value can be created. We've got the ability to be prudent and take a bit of time. And so we think that's an advantage we have in today's market with our growth. But at the same time, I think we've got to remain open to what the possibilities would be. And that's as far as I should say, because the new CEO will define a position in the future. But I think where we are is in a good place and we're in a good place to be prudent and appropriate in terms of where we place our bets. And as Stephen said, I think we've shown that we can be balanced and that 1 project per time is a good discipline to hold as well. So I'll finish then I'll come right across.

Congratulations Mark. My question is on PGMs. I just wonder further in terms of the underground mining, Mogalakwena, is that just easier to do because of the wider [Technical Difficulty]. And then secondly, just on PGMs in general how can you push Mogalakwena before you start doing smelting and refining side? And are there any technologies you're looking at? Or how are you just looking at the potential growth?

Yes. So Tony and the team with Natasha are working on bulk ore sorting course particle flotation and nice technology to be on the processing side. And that's about improving cost structures. And our strip ratio was about 4.8:1. The strip ratio to about 2035 is about 6.3. And so she's got a lot of time to get that right in the configuration we have, she can do with the communities over that time. The reason we like the underground option is you can take that to up to 5 million tonnes, highly mechanized. It's a big roof, so exactly right. You can mechanize and do that productively and actually produce at a lower cost per tonne of ore delivered to the mill and you got 50% more grade. And so your revenue per tonne process goes up as well at the concentrator level, and you're getting your balance right downstream. Now the other thing that we've got going for us in the Anglo [indiscernible] business, is we do have different types of concentrates, some can be sold as concentrate with very little value loss. So we've got quite a bit of flexibility in our mix to manage our capital over time, downstream based on what we can do with various concentrates. Now the Mogalakwena concentrate, a little more complex. Amandelbults are really clean, nice concentrate that could almost go to most smelters across the globe. So we've got the flexibility to make the right calls and we're patient. And we'll work these options through as Natasha has done, and she'll come with the proposal at the end of the year, would be my view. And that 26, I think, is pretty solid. But I read someone saying, have we seen the best of it. I don't think we've seen the best of our PGM business. That's my view. Because I think the underground -- highly mechanized underground operation is another stream to the bow that really does give us some breadth and options in our business.

It's Dominic, JPMorgan. At the risk of being repetitive, question on jurisdictional risk. So is it a risk that the industry needs to just absorb and suck it up or at senior level. Can we still implement risk mitigation measures. So taxability agreements, are they redundant? Or do they still have the -- are they still...

Yes, I think we've got to do more as leaders. And I think a demonstration of what you can do over time. So we've got to be patient. We've got to be consistent, and we've got to show we're delivering value, not simply to shareholders, but to all of our stakeholders and governments then take notice. The support we've had at Quellaveco has been remarkable. We've got a 15-year stability agreement. That's very important to us. But at the end of the day, you're always listening to governments, you must always listen to their issues and work out how you can support them in what they're trying to do. And Chile is going through a constitutional review. Of course, we're going to be constructive and try and do our bit and try and be part of the solution. But at the same time, we would hope that governments respect the agreements that we have in place. And that ultimately defines where the countries are successful in mining is the stability of their policy and their settings and try and help them understand that, but we also have to understand their issues and be part of the solution. So as leaders, we've got to do more. I think we've tried to follow that approach. It served us very well in the jurisdictions we've been in. We're in Peru today, they talk about the Quellaveco model. We'll be at the President's Investment Conference in South Africa, and we'll be looking to be part of the solution. Our proposals on energy configuration that works for Anglo American, but it also works for South Africa. So looking for those win-win. That's the nature of our work, and that's our accountability. And so we'll be right in the middle of those conversations because we believe it's the right thing to do.

At that level, do you bake in a high cost of capital now because of these risks or [Technical Difficulty] 15%?

Stephen's the minister in charge of risk and return balance, but we also sort of trim it to it. So the answer is yes. And we also look at jurisdictions to what we call business risk periods. And let me be as simple as I can. If we see high political risk in the jurisdiction, then forget the return is we want the bulk of our cash back in 3 or 4 years' time because it changes the risk profile. And I think McDavis once said it quite well. If you can get the bulk or half of his capital back in 2 or 3 years, then he looks at the risk quite differently on a go-forward basis. I think he nailed that assessment of risk by jurisdiction, the right way. It's very practical, how quickly -- the term of the government is 3 to 5 years, then your risk period in a highly political environment has to be connected to that, and we have the traditional financial and business development, so we come at it from a number of ways. And the Board is very good in challenging us in terms of thinking about how much you're prepared to put into that country. Maybe you go smaller and you accept there will be some inefficiencies. And then what you do is you use the funds, you create to build the size of business and the efficiencies you want over time. They're the sort of things and the assessments we have in Anglo American.

And is that market, it's also one of those tanker moments in my view of mining finance is even when money is cheap and things are going well, you don't forget about political risk. And there is that danger sometime through the cycle. And so you've got to have that discipline of strategy over time because things change in your investment horizons. And so yes, we'll adjust our discount rates as things feed through in that. But we've never forgotten the learnings of past cycles in that assessment. And I think you have to -- when you're allocating long-term capital and syndication, not wanting to pick on any particular country, but we syndicated partly for those reasons because we felt it was the right thing to do given the scale of investment for our balance sheet for a greenfield project for a new country. And so again, I think we've got a little bit of a track record of keeping those things absolutely at the top of mind.

So that kind of. Yes.

Two questions, Mark. One on Woodsmith and then one on Diamond. So on Woodsmith, because of the delays, the market is obviously treating that there could be an overrun here. So in December, you said we shouldn't interpret that as a major CapEx overrun. And you also said it should be a fairly linear level of CapEx, I guess are you still comfortable with those comments.

Yes. So the one thing I would say is the project we're building is not the serious project. It's a different project scale. We've changed the mining method. We think that -- the full continuous mining suite needs to be -- will be a longer term, more efficient configuration that requires a bit more ventilation. And so the scope and scale will be different, and it will be built as an Anglo project with a long-term view, and that will be matched to market development, which we think is really positive. And I think the prices are up 70% from when we bought. So there'll be ins and outs. But the team has to get the detail right, and we did that with Quellaveco, and that's really put us in a good position. So we did the same with the project. So it's going to look different. How different? That's what the detail will show us, but it will be a different conversation. In all likely it will take a bit longer, and it will cost more, but it will be a long-term value-creating project for Anglo American that is really markets look strong. The overall logic was good. And so tunnels, shaft, all that fits, it's how do you execute the right way and time it to go with the market development to get the best return for the shareholders. That's what we're working for.

And one more on tough one on diamonds just given the importance of Russia to that market even before potential sanctions -- have you already -- or are you already picking up on any kind of shift away from Russian material towards your material?

We've heard nothing as yet. And we'll have to have a good look at sanctions and what that may mean. But at this stage, we've not heard anything other than people wondering, one, what will happen; and two, what sanctions might look like? And three, what might that mean? So we don't know. We are looking at that and watching that very closely over the next 3 or 4 days to see if there's anything else we can see other than a product that is very rare and it's becoming more rare by the day before we got to today, whether that means supply is impacted in some way, shape or form. We don't know. And we'd be guessing in this stage. So we're watching and looking at that very case. But we haven't seen anything as yet to tell us which way it will go. So there's nothing new or nothing special that we've got in that conversation.

And so obviously, one of the first targets for the tenant was the 15% and that's been clearly well surpassed. But given the improvements that you've seen in productivity and the cost position of marketing, do you think you would be above that 15% at bottom of the cycle prices?

So our original target was to be at 15% through the cycle and what that reflected a view on long-term prices and delivering projects in the mining industry, as shareholders are investing in us to build mines and make a good return. And so that for me was the breakeven number, was 15%. If prices are higher, we'll do a little bit better. But then we have to think about the new investments and how do we make sure that -- because we can grow, we've got more assets, we can do more. And so we'll continue to use that 15% as hurdle rate or we've got to do better than that through the cycle. So it just means that our assumptions and what we do is built on those new price assumptions looking forward. So 15% remains the hurdle, and it's better presented as a hurdle rate. The 15% to 20% reflects that we're just doing better than we thought we would. But that 15% is the hurdle for our capital decisions. Steve, do you want to add?

Beautifully, Mark, so nothing to add. Stuart asked me the same question, Danielle.

So we've had practice of answering this with the Board a few times.

The second one was just actually on the electricity products. Can you remind us how much electricity do you consume in South Africa? And obviously, we know about the potential for renewable investment from Mogalakwena. But given you're targeting to get to the mostly renewables by 2030, how much more investment direct or otherwise, do you need to invest into renewables in South Africa?

So we represent somewhere between 2% and 3% of South Africa's energy consumption in our operations. Our proposal which is concept going into pre-fees, which is wind farms, West Coast, East Coast, solar arrays, Northern Cape. And then we've got our own inside defense options is the proposal we've put to the government in terms of us wanting to get to our 0 footprint. But having all of those things outside our fence line run through the Eskom system. And so how those projects are developed will then determine what financing we may or may not have to find. Now from our point of view, there is probably some optionality on whether we invest and what return we get on the price of power that we'll consider. But at the same time, what the government has said is, gee, that's great. That works for us. It helps build our footprint, deliver on our outcomes. And we've got lots of players who want to invest in that capacity. So infrastructure funds and say you know what, we can't find projects to invest in. We can't fulfill our mandates. These are the sorts of things we'd like to do. So at the moment, we can go from 0 capital to get there to full. We won't do the full. So it's a matter of what's the best return for Anglo-American shareholders in that context. The other thing is the new technology where we've got the underground water, where we use the water as a battery effectively got a solar plant, which is what we have at Mogalakwena. You fully run that plant during the day, you pump water on the excess using the excess energy and then let the water run back underground at night. And so it's effectively a battery and the efficiency of that is almost equivalent to a lithium battery, believe it or not. So it's a fantastic bit of technology work. And it's something that's not new in South Africa in terms of a concept. So those pieces is how we, I think, make a difference to countries in thinking about our role in the country, what works for us, what works for the country. That's when I think countries start to appreciate the contribution we make.

Sorry, I a lot more detail on the financials and things right, but we're working hard on them. It's moving fast and it's really coming together quite well. You just going to need to be a little bit patient and I think just a little bit longer. And then hopefully, we can scope out the detail for you, give you a little bit more clarity.

Yes. And you connect the renewables to hydrogen production, and then we use the hydrogen to replace the diesel in our trucks. And the diesel in our trucks across the globe is about 20% of our carbon gas mix. So it is a fully formed logic.

It's a conceptual for the [Technical Difficulty] but the -- obviously, what we're seeing is, I think within mining and cement producers [Technical Difficulty] 700 megawatt of their own renewable production as an inside the fence. So I'm not wanting to cost exposures on to Eskom. But what -- how do you think about that balance of risk in terms of wanting to work with Eskom, who doesn't have the best track record versus having that security?

And I was involved in one of the energy task force back 10, 12 years ago. And the system is running at about 65% availability. It should be up near 75% plus. And so what we've talked to the team about is can we help in any way, shape or form. Would our industrial operating model, those sorts of things be of use is very open. At the end of the day, he's already working down that track. What we think we can do is maybe help connect some points -- and as the industry maybe help with industry connecting with Eskom to be part of the solution. And certainly, our proposal in terms of energy generation, they're very, very enthusiastic on. So we're just looking to see how we can help. But there's always this thing, you don't presume that you know the answers. What we've put to wonder is, how can we help. And there are a range of things we have. Help us understand how to help you. And I think that's where we're starting. And in fact, Duncan and I were in South Africa last week, having those types of content. The fact they're open to that endpoint, I think, is a really good sign.

So please go next, and then we'll take one call from grant on the telephone and Sylvain and Richard Hatch will take your questions in the roundtable if we maybe running out of time. So 2 more questions.

I've just got a few follow-ups just on Woodsmith you're saying the scale could be larger. So it's already supersized by series. Is it going to be super super size or is it?

No, no, no. So for those that -- and some of the subtleties are a bit different, but it was originally 7 million granulated and 3 not granulated. So we'd be looking at a fully granulated product mix. So I wouldn't call it -- I don't want to be called super sized, I don't let that to be the headline. So that would really be leaving bank and legacy. No, it's sized for what we think the market will be. But we've got to match the development to the market development. And so there's no point spending capital too early if the market still needs time. So that's what the guys are working on this. We've got Alex out in the marketplace, Peter and Alex and the team, and we've got Tom on the project, but Tom is watching both. So I think the guys will pull all that stuff together in the next 12 months. But we're very excited in terms of the potential, but there's still a lot more work to be done. And remember, we went around the Quellaveco optimization a couple of times. And we're probably in the second cycle of that at the moment with Woodsmith, but it really does look quite exciting. And when you look at low carbon footprint, and the fact that the product can be used on crops and they're still classes organic, really differentiated in the world of fertilizers. The people are only just starting to wake up to why we went there.

So second one was just on [Technical Difficulty] spend. Should we still assume that you can deliver the 2% reduction, keeping your CapEx to decarbonization within the sustaining CapEx or is a lot of your competitors now differentiating decarbonization spend and sustaining CapEx? How should we think for yourselves because you've got the most ambitious targets in front?

So we have got that $300 million to $500 million per annum on sort of technology. So some of that will get picked up in there. And as I've said on technology, some of the decarbonization spend just becomes part of your normal spend, sort of actually replacing trucks in normal cycles and those things. So if we get harder and harder, I think, to split out apart from a couple of specific projects. We are still working on some of that detail, and I think we will have some choices as to how that flexes. So again, you're probably going to have to bear with us a little bit. Some of these are big, long-dated projects. But I think a lot of them won't necessarily be on our balance sheet directly.

So you got majority in sustaining technology still?

For a bit, yes. I think so.

I think the other point is we're also pushing hard, Steve, on each investment having its own return. It's not simply about decarbonizing. We think renewables with the technologies we're developing will improve their cost position over time as well. Because if you look in South Africa, stabilizing the grid, getting consistent production, helping the team on the other side with the renewable mix actually improves the reliability from our perspective and the unit cost plus with our internal grid, the Mogalakwena solar array improves their cost structure. So for us, their investments in improving our returns, and that's how we think about it. And that's the challenge we put to everybody in our business.

Alex, so I'm going to wait for you in the roundtable, if I may. Operator, can we go to grant on the...

Your phone question now comes from Cantor from Bloomberg.

Just two brief ones. The first one is, Mark, you talked in your presentation that you hadn't really changed your long-term price assumptions. And given the sort of inflation which may or may not be quite sticky, and perhaps the inclusion of a carbon price. Can you just maybe describe the conversations you're having around that in terms of your perhaps changing them in the future. And my second question is you talked about -- you're hoping for some exploration success. Can you sort of narrow down as to where you're hoping for that success to come through? And if not, specific region? Is it greenfield? Or is it more in and around mines or brownfield exploration?

So I'll start with the exploration question. And I told Duncan and I was going to say, I expect the discovery in the next 2 years. And if we don't deliver one, then that's Duncan fault. But I'll take full credit for the next 2 years. But more seriously, I think the team has done a great job. We've got good positions in Brazil, in Peru and in other parts of South America. Clearly, Chile is still an important jurisdiction for us. We're doing work in Australia around the Mount Isa region, again, a really interesting ground. We're in Namibia on rare earth, and we're also working through a number of countries in Africa, Zambia included looking at going back into Angola for a few different things. So I think the guys have done a fantastic job positioning the portfolio. But in the exploration, nothing's guaranteed. I think they've got great ground positions. And for me, as a shareholder, as a very interested shareholder in the next 2 years, I've got my fingers crossed. But I think they've done some fantastic work. But to be fair, the Duncan and the team, you can't really preempt these things until you're pretty sure you've got something. We're still following up on the Brazil stuff. It's still very exciting. But I think they've done a great job in positioning. Now in the next 2 or 3 years, we hope to see something. But again, I'm certainly not going to leave Duncan with a legacy in this conversation. Second point...

Long-term price assumptions and carbon pricing. At least, we do refine our long-term price assumptions, but it's a refined rather than a dramatic change. What may change more is your glide path to those long-term assumptions depending on where markets sit. I'll have to crack Duncan at purest economic theory would say that a lot of carbon price on the inputs for us should be passed through to the outputs being revenue lines. Now my challenge back to the economics team internally is well, are you sure about that? And how is that going to feed through. So it's -- again, it's something we're watching carefully. Obviously, how carbon prices play out in different economies, both in developed world and developing worlds, I think everyone is still watching because there is quite a differential, I think, still at the moment, but probably with one general direction, so it's something we're watching, listening, trying to incorporate into our assumptions and base cases and certainly into our capital allocation decisions, how those things may play out now.

Yes. There's an argument on metals intensity as middle is -- middle class develops and grows, which we think is pretty strong. And you then balance that against how long it takes to develop a new project. One would say and suggest that there's upward pressure and Stephen's, I think, very articulately covered the carbon side, there are a range of issues that will put pressure on the prices. So we run scenarios both ways, just to make sure we understand if it is continuing to go up, we know how to react with the resources we have, and that's really important. It's understanding the potential of your resources and where you can go to respond and get the best returns for shareholders depending on prices, both negative because there's always a chance things can go the other way. So we know which way to go when prices go in particular direction. That's really important. Okay. So ladies and gentlemen, thank you very much for being so engaged and listening to our story. We very much appreciate it. I have been terribly lucky to present these sets of results. And poor Duncan has got to follow a record performance, but I'm sure he and the team will do a fantastic job supported by the board. It's been an absolute pleasure, and I hope you all have a great day.