Anglo American plc (AAL) Earnings Call Transcript & Summary

Happy Halloween, everyone. Welcome, and good to see so much interest, and thank you for joining us this afternoon, our second sustainability performance presentation of the year. This continues to be our twice yearly update, affording us the opportunity to discuss how we're progressing on performance and to deep dive into those areas that we have not yet covered or wish to bring to your attention. For those who don't know me, I'm Anik Michaud, and I'm Group Director, Corporate Relations and Sustainable impact. Next slide, please. Our cautionary statement. I shall let you read this slide very carefully on your own time. Next slide, please. The order of play today. I will start by covering the safety share, and then we'll moderate the Q&A. After talking about some of our key sustainability metrics and progress, Duncan will update you on our response to climate change. And given the increased importance of the nature-based agenda, Tony will then take you through some of the work we are progressing in the area of biodiversity. And finally, I'm pleased to have our Executive Head of PGM Marketing, Hilton Ingram here, and he will bring us a customer perspective on our responsible mining work. If there's a message you take away from our work is that sustainability is not only a key part of our strategy and decision-making, but it is integrated and being embedded through the whole of the value chain. And fear not, of course, our Finance Director, Stephen is also here with us and is ready and happy to respond to your questions on the value and business case of doing all of this and so much more. So for the safety share. Safety is always top of mind as we strive towards zero harm for every one of our employees and contractors every single minute, of every single hour, of every single day. Nothing and I really mean nothing can ever come before safety. I wanted to talk a bit about how we and others in the industry share learnings from incidents so that everyone is aware of particular issues quickly and we can take action to help, prevent, repeat and therefore, save lives. One such example was a fatal incident where a technician was working to repair the hydraulic power back of the boarding steps of a haul truck. These trucks are massive. The tires are 13 feet in diameter, and the trucks weigh 200 tons, and this is when they're empty. Crews get on and off these trucks many times a day and in all weather condition. Retractable boarding steps like the ones in the photo are offered by the OEMs and by third-party producers to reduce the risk of people falling from the vertical ladders that were traditionally fit. This design is used on trucks at several of our mines as well as by many other mining companies around the world. The hydraulic power pack for the stairs is mounted into the floor of the first landing of the truck. And in order to observe the pumps and pipes in the pack, you need to look down from -- into the floor area. While doing the maintenance, we believe the technician has positioned himself on the steps outside the handrail area and somehow activated the hydraulic system, which tragically crushed him with fatal consequences. Immediately following the accident, we deployed trauma counselors and senior leadership to the mine to support the site team and of course, our employee assistance program was fully implemented. Based on initial information about the incident, we issued an internal alert and an immediate call to action to all of our mines. This instructed them to immediately review procedures and risks around powered ancillaries such as these steps. An investigation by the regulator is ongoing, and we are and will, of course, continue to fully support with information and access. An initial briefing was also shared with the ICMM as part of our commitment to safety of the broader industry, and this is also why I wanted to share this with you today. Awareness and learning from incidents are really important to save lives, many lives across the industry every year. Safety is not and should never be a source of competitive advantage. And with that, I will now hand across to Duncan.

Thanks very much, Anik, and welcome, everybody. Good to see you virtually, albeit, and thanks very much for joining us this afternoon. Now before I get into the detail of our sustainability performance, you may remember that back in July, I spoke about a $100 million 10-year loan agreement that we just contracted with the ISC. And this is linked indeed to the delivery of our sustainability goals and our integral and these are integral to our sustainable mining plan. And in this case, it was very focused around South Africa and supporting the partnership that we have with government over there to significantly increase the educational performance in host community schools, as well as creating 3 jobs off-site for every 1 job that we have on site and all of that by 2025. Since then, we've now introduced our first sustainability-linked bond, which includes performance targets that reduce greenhouse gas emissions and fresh water extraction as well as to enhance the support of job creation in host communities. And I think that this very much was a first of its type for the mining industry. So not necessarily the first sustainably-linked bond in the industry, but the first to include social performance goals as part of the criteria of the financial instruments. So I think, very important steps for us in the space and a clear indication that this is very important to us, and we're taking it seriously. Now I'm pretty sure that the audience to whom I'm speaking to today is very much aware of this growing awareness of the centrality of mining and its role in enabling the energy transition and the contribution that, of course, we can make to delivering a more sustainable future. That said, recognizing that many of the metals and the minerals that we produce are absolutely critical to the technologies that are going to be required to decarbonize the world's energy and transport systems. I think our commitment to being a part of the solution and the changes that the solutions require must begin at home in our own businesses. And this is by meeting our own emissions reduction in carbon neutrality goals in the first instance, while at the same time, we're very cognizant of the impact of that to our communities, both in terms of skills and jobs as well as to help catalyze new forms of economic activity in those regions. And that's why when we speak about the transition, which we know to be absolutely deterministically important to society at large. It is important to talk about it in terms of the just transition and what that means for all of those that are going to be impacted by it. So I want to assure you that we spend a lot of time thinking about that and how it's going to play out for all of our stakeholders and especially those that are very close to where the metals are actually mined. And so that's why we've decided to put in place our sustainability financing framework. I think that as I said, further demonstrates our commitment to sustainability in the round and meaningfully links certain of our funding requirements to the stretching sustainability objectives that we have set for the business. Moving on to the next slide, please. Just a quick recap of some of the messages that I made at the Half 1 results. So as Anik spoke about, safety is always and has to always be at the top of our mind as we strive for zero harm for every single one of our employees and contractors. And I'm deeply saddened to report that we had -- have experienced now a second fatality this year at our managed operations. And Anik has gone through that incident in quite some detail. Primarily because there's a lot that we can do to eliminate it, but there are a number of current risks in here that was important, that were very important to share with the industry at large. So not only did we do our own internal call to action as Anik mentioned. But we shared this with the manufacturer of the vehicle and with the ICMM membership at large because it's really important that these sorts of lessons, these sorts of learnings are distributed as widely and as broadly as we possibly can. So I've spoken in the past about our uptick in injury rates as we climbed out of the COVID disruptions after many years of continuous improvement. We absolutely do remain laser-focused in reversing that trend. And I'm quite pleased to say that certainly quarter-on-quarter since the beginning of the year, we have seen modest improvements in that trend. Not enough for us to be happy, but certainly some small changes that would indicate positive progress. We've continued to report 0 new cases of occupational health issues in 2022 as well as no levels or no Level 3 or above environmental incidents. So both of those, I think, reflect our continued work on environments, planning controls and our predictive monitoring programs. Moving on to the next slide, please. Thanks, operator. So looking briefly now at 3 of the key components of our sustainability performance. So from both the first 2 charts there on the left-hand side and the center, both energy and the greenhouse gas emissions perspective. Our efficiency improvements clearly are offset -- are offsetting the additional emissions that we see from increased production primarily from our steelmaking coal business as well as Quellaveco coming online. So it's the very good work there in terms of that -- those initiatives and more good work on the implementation of our Social Way 3.0 management system as well. So why coin the 3.0 well is because it's a progression on 2.0 and 1.0, and I think that, that's very important. And as I said before, I think this is a much higher bar than anything we've seen in the industry to date. And our 49% implementation, which you see on the right-hand chart there, of the foundational requirements of Social Way 3.0 from the end of 2021 now already represent a much higher level of overall performance than the 96% that we reported against Social Way 2.0 back in 2019. A little bit of a wage on the right-hand side indicates where we expect to land by the end of this year. So work in progress. I'm very happy with the direction of travel on that. On to the next slide. You're all going to be familiar now with the Anglo American purpose and the context for its strategy. But it is really worth reiterating how our innovative approach to sustainability is very much at the heart of our business strategy. Our sustainable mining plan is designed to deliver outcomes that are aligned with both our purpose of reimagining mining to improve people's lives and to deliver enduring value in its many different forms to a very wide range of stakeholders. So the 3 pillars of our sustainable mining plan, which we originally launched back in 2018 include goals that are aligned to 12 of the 17 United Nations Sustainable Development Goals, the ones that we felt that we could most positively impact. Now these goals are embedded into our business planning at a very granular level. So in the same way we think about operational objectives, planning a mine -- executing a mine. These goals are embedded into those sorts of decision-making and those sorts of planning processes. And I think that that's absolutely critical when you think about turning ambitions into real outcomes. And we ensure, I think, that the set of goals remains relevant to our stakeholders. And we do that through a very significant program of engagement and scanning of what we perceive to be the risks and ensure that we're still focusing on the right issue. So things change over time. I mean many of these goals that back some of them to 2016, in fact, and we want to be sure that we're getting them right and we're understanding how the world is evolving around us and we're sure that we continue to work on the things that are most important to not only ourselves, but our stakeholders, too. And we are broadly comfortable now that with the set of goals, as we've described them and as they stand, that they are good. But we will continue and have to continue to evolve these as needed over time. So moving on, just a quick word about climate change. I mean I absolutely am over the view, and we as an organization or of the view that climate change is now undeniably the defining challenge of our time. And as we have said repeatedly, we are committed to playing our part in working out solutions that help manage the impacts of climate change. And today, I wanted to update you on how we're doing in delivering against those commitments that we've made and in positioning our portfolio to deliver the future, enabling products that the world is going to need to be a cleaner, a greener and a more sustainable world. So on the next slide, this is a brief reminder of the journey to carbon neutrality within our own portfolio as we currently have it today and of the decarbonization commitments that we've already made. So for Scope 1 and Scope 2, we have a target of reducing our emissions by 30% against a 2016 baseline by 2030. And on our way then to achieving full carbon neutrality across the whole of the portfolio by 2040. So you'll be familiar now with that chart on the left-hand side, which gives you a very clear indication as to how we expect the emissions profile to evolve over that period of time. Those 2 distinct periods of time. We always said that over time, we would fill the detail in of achieving our reduction targets, and there have been a couple of developments since we updated you in April of this year. The first one I spoke about at length during our results presentation at the half, which is, of course, the launch of nuGen and the first motion of our Zero Emissions Haulage Solution. That work continues to progress and is going well. The new news is the creation of Envusa Energy, which is a joint venture company that we now have with EDF Renewables, and we will bring others on board with that as well. And we are setting that up to produce the renewable energy that we need to decarbonize our Southern African operations. And I'm going to speak a bit more about that later on in this presentation. For Scope 3, we do have an ambition to reduce our Scope 3 emissions by 50% by 2040, and that is from a baseline that we measured in 2020. I'm not going to be spending a lot more time on Scope 3 today. But we are working very hard in terms of turning that ambition of 50% into actual pathways. And I'm hoping that in 1 of 2 of the next sessions that we have with you, we'll be able to share some of those pathways more fundamentally. Now this month, we signed a memorandum of understanding with a long standing customer, ThyssenKrupp Steel. And that was to collaborate on the developing of new pathways for the decarbonization of steelmaking. So steelmaking being one of the most -- the hardest to abate industries. We have a couple of products that, as you know, go into steel making very high-quality products. But we are also looking for ways to completely decarbonize steel, and we're looking to do that in collaboration with our downstream partners that are like-minded in the way that we think about things. And these collaborations effect, generally focus on joint research to accelerate not only the development of high-quality feedstock follow carbon steel but also to build on similar partnerships that we formed with other long-standing steel customers like Salzgitter and Nippon Steel. So another area that we'll be able to talk about soon is enhancing our existing approach to assessing and mitigating the risks associated with climate change and the resilience that such an approach will bring to the existing portfolio, our future portfolio and will not only be important for our own operations, but also key points in our value chains and especially for our host communities. So moving on to the next slide, please. And before I get into quite a lot of detail, I just wanted to step back and look at the question of ambition. So like many, many other companies, we are being asked quite regularly now whether our emissions reduction targets are ambitious enough. And as many have put it to me say, are you aligned with Paris. Now this is a more difficult question to answer than I think it might seem because as far as we can tell, there's no agreed way yet to assess whether the targets are aligned to Pathways constraining global temperature increase to only 1.5 degrees C and not even a single consensus definition of what this ore alignment to Paris actually means. So firstly, the context here. So we set our current Scope 1 and Scope 2 emissions of an absolute 30% reduction by 2030, and as I said a little earlier, of our 2016 base back in 2018. So at that stage, I think the target was absolutely sector-leading, very ambitious. And we also knew that our emissions would rise in the years immediately after 2016. So that was due to production growth, outpacing the rate at which we were able to affect emissions reductions in the short run. And that really means that our reduction from the peak emissions that we measured in 2019 down to 2030 is actually 45%. So that is very ambitious, I would say. And with that context and to assess our level of ambition, we then undertook an even further detailed internal review, and then after we've done that, we went external and said, "Can we be sure that we understand that this is the right work? It is heading us in the right direction." And we took a third-party verification from the Carbon Trust. So this review compared the emissions reduction that we were targeting between 2020 and 2030 to the many 1.5 degree C pathways that have been defined by the UN's intergovernmental panel on climate change. And the combination of our internal analysis and the independent GAAP assessment I think now gives the group confidence that our Scope 1 and Scope 2 trajectory are aligned with a well below 2-degree scenario and broadly are in the range of a 1.5 degree C world. So beyond 2030, our Scope 1 and Scope 2 emissions target of carbon neutrality by 2040 is absolutely now well within the range of Paris alliance scenarios that are out there today. Next slide, please. So this is just a bit of a reminder on the big picture of our decarbonization initiatives. And broadly, these, for us, on Scope 1 and Scope 2 level, absolutely break out into the supply of energy for our operations and the use of diesel within our operations. So just dealing with the first point first. So purchased electricity is clearly one of the biggest issues that we need to deal with. And we already have contracts in place across our South America operations meaning that half of the group's electricity supply is now already coming from the renewable sources. The solution for Southern Africa is actually quite different, right? I mean the fact is that renewable capacity just doesn't exist in Southern Africa. It's not a matter of clever contracting. It's not a matter of swapping contracts with one energy provider for another energy provider and working out what the value equation in that is. This is actually about creating a capacity that doesn't exist. And to do that, the fact that I mentioned earlier, the creation of Envusa Energy, which is our next step towards a renewable energy ecosystem. And I think you have to think about this in the context of ecosystems when you're thinking this broadly across the whole of Southern Africa, where we aim now to end up producing energy, clean energy at the rate of 3 to 5 gigawatts. So that's pretty big, which will both enhance the stability of the grid in South Africa and at very least, if not add capacity to that grid, replace it with -- replace some of the energy on that grid with more sustainable sources of energy. And we expect that this investment is going to be funded by a number of equity partners and debt financing, which would be typical, I think, for high-quality infrastructure projects at this time. The first wave of these projects is to deliver 600 megawatts, and they are almost shovel ready. We would expect that construction will begin on those very early next year. So this is actually taking the strategy and turning it into an implementation plan, first 600 megawatts start construction next year. It's not a process. I've said it before, and I continue to say, it's certainly not a process that we can do all on our own. It really does need effective collaboration and partnership across the businesses and with government to drive the scale and magnitude of change. And our work in South Africa, I think, certainly does demonstrate this. We are working to support South Africa's NDC climate goals. And specifically, these goals state the need for public-private partnerships. 18 months ago, the public policy space was very, very different in South Africa. And our ability to actually build the type of renewable capacity that we're looking at was absolutely impossible. But through the constructive and deliberate engagement that we've had with various stakeholders, but specifically with the Government of South Africa, I think we can now see the way that the landscape has changed, and it enables us to create these solutions, not just to solve our own carbon emissions conundrum, but along with other changes in the stakeholder expectations has now taken us to a very, very different place and allows us to have these partnerships where actually we can create more change that solve not only ours, but some of our other stakeholders, particularly our communities issues as well. Finally, on diesel. So the second component of what it takes to decarbonize internally. So on diesel emissions, you've heard from us quite a few times about the work on developing a hydrogen power truck. We announced a few months ago this nonbinding agreement to bring together nuGen with first mode. So first mode was our technology and engineering technology partner on nuGen. And we brought ourselves together in a new combined business. The idea here is to accelerate the development and the commercialization of this technology. And that includes potentially applications beyond the scope of mining. So when we develop this drivetrain, it became eminently clear to us that this didn't just need to be in big trucks. There was entirely a world on rail, for example, where this could play. And so why not create an entity that would bring all of these interested parties together, allow them to co-invest, drive scale more rapidly and then ultimately support a much greater decarbonization objective that we're pretty sure is going to benefit from the potential of this clean technology. So it also means that we don't just need to do this on our balance sheet. So Stephen is absolutely thrilled about that. And the idea that we can get to scale much more quickly in a much more leveraged way is what we're aiming at here. So if we assume that we progress as we envisage to do at this point in time, we would expect to replace our global fleet, which is currently around about 400 trucks starting towards the end of this decade over the following decade. So that's a really rapid expansion of the technology or a technological solution that just 3 years ago didn't exist at all. So on to my next slide, please, before I hand over to Tony. This is just a quick snapshot view of the shape of the portfolio as it stands today. And as I pointed out before, I really do believe that the vast majority of our portfolio is now what we would call future -- consisting of future-enabling products. And those are the metals and the minerals that are needed to enable the future that we're all aiming for a society. So our portfolio now exposes us to the major long-term demand themes, primarily cleaner, greener, more sustainable world through a growing global population that clearly need homes, transport, food and a decent quality of life. And all of our products in this portfolio play a role in that world and in a transition to that world. And with that in mind, I'm going to hand over now to Tony, who's going to take us through some of the thinking that we're developing and are working on in terms of biodiversity. So Tony, with that, over to you.

Thanks, Duncan. Good afternoon, everyone. It's great to be with you. First slide, please. As we all know, our plan and its ecosystems are at a tipping point due to the pressure of climate change, and the way humanity interfaces with the plan. Clearly, this includes nature and biodiversity, which are declining at an unprecedented and alarming rates with potential for significant impacts for humanity within the next 10 years. It's really becoming very present. Moving up to our purpose, must include a strong relationship with nature and biodiversity. [indiscernible] fundamental role to a namely 5 [indiscernible] ecosystems through healthy waterways, climate change impact, wildlife and habitats. This challenge of climate and environment impacts the communities and the stakeholders that we partner with, and it refocuses our responsibility to ensure that we understand the biodiversity in the areas that we operate, our impact on it and how we ensure that our overall play diversity impact is ultimately a net positive. We have a huge, huge opportunity in front of us to go beyond compliance to being able to operate and operate with purpose. Next slide, please. Approximately 65% of our sites operate in semi-arid areas. This [indiscernible] is very variable. It's very difficult to measure the biodiversity. Data historically is a radically once connected. And the data itself is quite hit and can be quite seasonal. And we're putting a lot of effort into ensuring that we -- our understanding, if you like, of the biomes in which we operate are much better understood. One of the biggest challenges is water and biodiversity has a role to play here, not only in the quality of the water but clearly, when you've got water in semi-arid areas, then it has a huge impact on the range of biodiversity that's up living healthy. Taking water then and looking more closely at some of the work that we've been doing in this biome in Chile and our sites in Comair. We've modeled and designed new rehabilitation land forms that promote increased water retention, reduce land and soil erosion from runoff, which in turn creates a cleaner and more reliable supply of water to both the ecosystem but also the communities. In Australia and [indiscernible] -- A key to biodiversity feature often missed to allow us to both improve the quality of this water, which in turn makes it more available to other users and from us more by diversity. We recognize that biodiversity exists at large and small scale and are excited particularly about this work that the microbes [indiscernible] in supporting both nature and water outcomes. In Peru, we've undertaken a wide catchment level of valuation, looking at both our [indiscernible] site and its broader region. So that we have a more detailed understanding of the functionality of the whole ecosystem. This level of assessment as part of our biodiversity management program has never been done to this detail before, and included a much improved definition of the important Waterdale's habitat within our operational footprint, its extent and its needs. So our management plan focuses on more water retention in this wetland, improving wetland function, which will overall increase biodiversity in this region and improves the overall management of the catchment. Next slide, please. Water is not the only connection with biodiversity. And obviously, there are others, including climate change and ecosystem functionality. Across our organization, we are already achieving positive biodiversity outcomes. It looks like we need to too many slides. So I'll just go back to the other one. There are a few selected examples from across the business. In Brazil, at our iron ore operations, not only have we created a significant voluntary offset area to protect key threat and regional habitats, but we've also created a new nursery that is cultivating important native species, rehabilitates relocated plants and integrates them into habitat improvement projects across the site and the neighboring landscape. To date, 169 species are in commendation and already reforested. And we are also targeting and protecting the restoration of important ironstone virus habitat. So a lot of the work that we're doing in Brazil is around threatened species. In Chile, we have partnered with local communities and governments to rebuilt, to develop important local seedbacks. We've increased our own and community-owned nursery capacity and integrated this into a replanting program on areas of land impacted prior to our operations on site. We have several important endemic vulnerable species in our banks that will support future rehabilitation efforts. And using eDNA in our Woodsmith Project, we've identified key species that we've returned to the site area as a result of our ongoing biodiversity management plans and establishment of a new wetland. Subsequent creation of more of this habitat has also increased by diversity insect populations, bats and birds. And for example, we've seen the return of the harvest mass, have previously thought to be extinct in the North Yorkshire [indiscernible] area. We have many more examples across the business and across the diverse landscapes in which we operate, and we continue to drive innovation and set up partnerships to increase our positive impact. Next slide, please. You can see that we recognize the trend of nature loss and helping to rebalance the system requires going beyond the business as usual or know that net loss approach. Consequently, as part of our sustainable mining plan, we've committed in 2018 to deliver net positive plans to all our business and to be actively manage them across their life and to have this in place by 2030, I think we're actually good progress in this area. We have laid out a pathway to demonstrating net biodiversity gains in the areas we operate, which started with the rollout and implementation of our biodiversity standard at the end of 2018. This defines how we measure, assess and manage biodiversity. It's critical that biodiversity impacts are incorporated into the design principles of the mines and fully integrated with mine plan, from the source through engineering right through the life cycle of a mine. And to digress, we just took all our key operators to Peru for a technical conference. And footprint of our business was key. It was what it was about. And we particularly took the operators out into the desert and said, what do you see and trying to get them to focus more on if you like on the areas of their business that are outside of their normal operations to understand the biodiversity and that that's part of their business as well. We're working to understand how we can possibly and proactively impact the biodiversity in the regions which we operate, particularly in the semi-arid areas that we've referred to earlier. By end of last year, we've completed detailed baseline assessments across 16 of our 24 operations. And defining and assessing significant biodiversity features, including key habitats, key species and important ecosystems. From this, we have developed biodiversity management programs for every site. These programs are multifaceted, able to find the key features, defined ecosystems that can be improved or restored or further protected, includes measurements of progress to ensure our actions are adding value. Plans are used to feed into both regional and national biodiversity programs. So we add value beyond our own site work. Although the verified baseline is 2018, we know that there have been impacts potentially on some of this land prior to this. And we are also trying to qualitatively assess this and ensure that we include, if you like, additional conservation actions that can further improve, if you like, the environment in these areas. We have an industry-leading eDNA program running at 16 sites, as I said earlier. And we're using this eDNA sampling in water, soil and down to the microbial area to help us assess and monitor the environment. I think the level of information that we've got has never been achieved certainly in our business before. What does this tell us? It tells us what is present and a level of detail not possible for that enables a species and habitat level approach to biodiversity management. The microbial element also enables to assess overall ecosystem health and recovery. This means that we can see again from our management approaches to carry more faster but also where the management program could be changed. We see tools like eDNA, drone surveillance and fine level ecosystem mapping being integral to dynamic and successful biodiversity management programs. These are in place across our sites and being updated to ensure progress and trajectory going forward. I think some of the challenges that we haven't quite got our head around, one is clearly urban spread and where that encroaches around our business and what that means around the whole biodiversity players that we're developing. Clearly, we need to get a better understanding that. I think the other challenge is actually education not only how our operators see the environment in the same way that they see safety, the same way that they say, carbon neutrality now. How do we get them to see biodiversity and have it as a normal part of their daily operations are clearly key. I think education in the universities with technical people needs to pick this up to a much higher level. Next slide, please. Finally, we cannot do this in isolation. That is why we've developed and continue to develop programs and projects with long-term credible partners. Those who see our work is leading in the space as well as networking with a broad range of groups in the biodiversity and nature section. We are leading the way in creating a new eBio Atlas to make more improved data available, to drive more protection and management decision making. We're also at the forefront of efforts to develop nature-based disclosures. We're the only mining company that is a member of the Task Force on Nature related Financial Disclosures or TNFD. And TNFDs working towards transparent disclosure on nature-related risk at a detailed level, considering impacts, measurements, dependencies of companies on nature and how these are being managed. It is also designed to support the development of globally adoptable frameworks for disclosure that promote biodiversity and nature integration into business decisions. So in summary, we continue our net positive impact path over site owned and delivered biodiversity management plans. So being driven by future smart mining and designed into our life of asset planning. They have to be every day business. At the same time, we continue to work with our global diversity partners to deliver and verify positive outcomes and bring the ethos of future's mining to our nature challenges. Most importantly, we don't see our work on biodiversity in nature singularly is eaten [indiscernible] our work on climate, water, carbon neutrality and thriving communities. We will keep you updated as we continue our journey. Now I'd now like to hand you over to Hilton Ingram. Thank you.

Thank you, Tony. As Anik mentioned earlier, I'll be talking to you about responsible mining and giving you a customer's perspective on that. I'll outline to you how FutureSmart mining is enabling Anglo American to better meet our customers' prevalence needs for their supply chains. Next slide, please. Anglo American strategy centers around a portfolio of long-life, high-quality assets world-class people united by a common purpose and innovation for future smart mining, including our sustainable mining plan, offers us in marketing a great foundation to build value for our customers and for Anglo American. There are 3 pillars of product, partnership and problems. And the product, we've looked to maximize the value of our quality products through effective marketing, efficient value chains and sourcing complementary third-party products. Partnerships sees us understanding our customers' unique needs and tailoring solutions to meet them. And provenance is assuring our customers that our products have been mined and sourced to the world's most exacting standards. Next slide, please. You see when a customer chooses to buy from Anglo American, they're putting their reputation in our hands. And we believe that the way we safeguard our customers' reputations sets us apart from the competition. Our customers are increasingly being held accountable for the integrity and ESG credentials of their supply chains, thanks to increasing demands from consumers, shareholders and regulators. So how do customers get assurance on the sustainability credentials of their suppliers? Well, relying on regulation is no longer an option, owing to different standards and different levels of enforcement globally. Auditing individual suppliers is also not an option. Many of our customers have loads of suppliers and the burden on those suppliers would be untenable. So many of our customers are increasingly turning to sustainability certification programs. But those sustainability certification programs need to be credible and [indiscernible] food the support from customers, NGOs and unions. Otherwise, our customers would still be at risk from legal and reputational harm. Next slide, please. Anglo American has been engaging with responsible mining standards since 2005. It all started with De Beers and the Responsible Jewelry Council in response to conflict diamonds. But that raised the question for us, how do we tackle this challenge in our broader business? And so in 2008, we joined other mining companies, customers and NGOs working to create a universally acceptable responsible mining standard. That process led to the Initiative for Responsible Mining Assurance, publishing a comprehensive standard for socially and environmentally responsible mining, which is widely [indiscernible] by most as the most rigorous responsible mining standard, not least because of the multi stakeholder support that it has including customers, NGOs and trade unions. Now Anglo American has long held a leadership position in IRMA. But today, there are 65 mining companies engaging with it. Clear evidence that there is support for a rigorous standard with high levels of stakeholder trust. We've also continued to engage constructively with other schemes in partnership with industry peers and customers, like the ICMM's Mining Principles, Coppermark and towards sustainable mining. Next slide, please. In recognition of the growing importance of provenance to our customers, in 2018, Anglo American committed to assuring all its operations against a recognized responsible mining standard by 2025. We set up this commitment as one of our 9 stretch goals in our sustainable mining plan, and I'm pleased to say that we are well on track to meet that goal. Now De Beers will continue to implement its well-established Responsible Jewelry Council standard, which ensures responsible practices across the entire jewelry chain from mine to retail. For our industrial metals and minerals business, our approach focuses on IRMA. By adopting the most rigorous standard we can effectively and efficiently meet the requirements of membership standards like the ICMM and other certification schemes that our customers may offer, thereby reducing the cost and audit burden on our operations. I'm keen to stress though that we mined to Anglo American standards. And in most instances, our standards meet or exceed those of IRMA. For the balance, we are looking at where we can improve our standards or where IRMA, which is in its first iteration, can achieve its objectives in other ways. Our first site to be earnest IRMA audited was Unki, one of our smaller PGM operations based in Zimbabwe, and we are delighted to get an IRMA 75 rating there. After a break, imposed by the pandemic, we've had 6 of our sites audited last year. The final results of those audits are expected in the next few months. And while we don't expect to match Unki's very strong performance at every mine. We are hopeful of some positive outcomes. Now on the next slide, please. Our commitment to credible mining standards is further evidence of Anglo American living up to its purpose to reimagine mining to improve people's lives, but it also makes economic sense. Does it mean that we'll be able to add the mythical greenium to the bottom of an invoice? Well, I'd never say never, but I do think that's unlikely. However, we are increasingly finding that our most valuable customers are those whose values and aspirations align with our own. Those interested, not only in the tangible qualities and characteristics of the commodities we sell, but more importantly, in the values and the commitments of those that mine them. This slide shows the companies that are publicly committed to IRMA. Their support creates opportunities for us in Anglo American to capture a first mover advantage with these customers and other early adopters. It also enables us to build trust with valued customers and to leverage that trust for greater value. You see trusting customers are more open about opportunities to increase revenue, decrease cost and decrease risk, all opportunities that will enable us to add value to our customers and to Anglo American. The trust is not only important to our customers. It's also clearly important to our host governments who entrust us with their precious resources and to the communities around them who afford us the opportunity to mine those resources. Finally, sustainability certification programs provide you the investor the ability to benchmark responsible mining credentials to build trust and hopefully take the right decisions. So thank you. That's all for me. I'll now hand you back to Duncan.

Thanks, Hilton. I appreciate that. Look, in summary, I guess, so we're on the last slide now. It's clear that the world that we're living in is changing at quite a rate. And not the least within that world, so our society's expectations of businesses across many industries, not just the mining industry. And I think that, certainly, what you heard from Hilton and Tony would suggest that as an organization, we're very alive to the fact that these things are changing, and we want to be very adept and adroit at being able to change positively and constructively in line with these needs of society. Otherwise, how is it that we can improve people's lives. So this is very much fundamental to the strategy and the direction of this business. I mean we do think that given where we are today, we're well positioned to deliver into this. We've set the business up to be resilient. It is disciplined. It is opportunistic where it can be. But overarchingly, it is a responsible business. I do believe that we have the people and the assets and the capabilities. And those capabilities that we don't have, as you heard from Tony, today, we're developing pretty rapidly to deliver the sustainable returns. Right now, it is clear that our feet need to be firmly on the ground as we steady ourselves for what is likely to be a pretty tough macroeconomic outlook in the near term. And I want us to be absolutely ready to come out on the other side of this period even stronger than we are today and to deliver the metals and the minerals of the world, so urgently needs in the cleanest and the most socially responsible way possible. And with that, Anik, I think I hand back to you so that you can moderate the Q&A session.

Thanks, Duncan. Operator, we are now ready to take calls.

[Operator Instructions] And your first question today comes from the line of Myles Allsop from UBS.

Great. Really interesting presentation as always. I suppose wondering just thinking about this year and the performance of Anglo, there have been a whole host of operating issues, whether it's in met coal and iron ore, PGMs, copper. Could maybe it's worth contextualizing kind of what's behind them? I think it's probably quite common to a lot of companies. But I guess you've made all this progress from an ESG perspective, but it's not -- it doesn't feel like this year, it's being visible in the operating performance being as reliable as it was sort of 18 months ago. That was the first question.

Yes, Myles. So look, I pointed this out at the half year, and the story really hasn't changed significantly since then. It's an extraordinary year for all sorts of reasons. Many of them related to the topic that we're discussing today, climate change and the impact of that having on the business. There is no doubt in my mind. And we plan quite thoughtfully around cycles. Of course, it rains every year in every country. And therefore, why can't we predict exactly what the rainfall is going to do. And so when we go through our planning processes, and we're in the middle of doing that now for next year, I can absolutely tell you, we have a look at the current data. We say, right, that's what it's likely to be. We think this is a relevant data set, and we're going to plan for that. And we might get this wrong in a country, but by and large, we get it more right than wrong. The beginning of this year, in every country that we operated in, we had excessive rainfall that took quite a lot longer to deal with in terms of our capabilities to deal with it in the instant not in the medium term, but in the instant. And then on the other side of that coin, as you know, we had really excessive levels of drought that affected the operations in Chile, which, by and large, we managed to plan for, but actually, we're more extreme than we expected them to be. So that remains true. The second element is this issue of the impact of coming out of COVID. So for 2 years, we operated the business in a way that would be inconsistent with the operating model that we have. And that was deliberately so in terms of managing access to site, managing the social distancing between employees and contractors, managing the way we operated and had to work during what was a terribly disruptive period for everybody not just for us. And I think that the consequences of some of that aligned with some of the climate issues play through into the business. Your ability to execute planned work is a function of your ability to resource the work that you plan. And for 2 years, we just didn't have -- I mean there were some operations that had 50% of the people on site at the work phase as a result of dealing with conditions associated with the pandemic. So primarily, there are a couple of overhang issues that exist within the business that we're working through. So I said to you that Quarter 2 was going to be better than Quarter 1, it was. Quarter 3 was going to be better than Quarter 2, it was. And so we expect that trend to continue.

Great. So next year is going to be a fantastic year, hopefully. And maybe...

Next year would be better than that.

Yes. The other kind of question is around legacy assets and how you're dealing with these. You had that tailings slide of all De Beers mine in South Africa. But how does that fit in with your broader approach to ESG, obviously, is very focused on current assets, but clearly, there's sort of a legacy challenge that impacts reputation as well.

You're talking about the office on [indiscernible], Myles?

Yes. That's right.

Yes. Look, I think we definitely have a responsibility to ensure that when we divest assets that those assets are responsibly divested. So -- so I mean, I don't think it's true that we can hang on to or be accountable for every single asset that we divest if we take them -- we take the right process, and ensure that the people that are -- that it's going to operate those assets in the way that we would expect them to be operated. And I think that De Beers absolutely did that with Yahoo [indiscernible]. More than that, I don't think there is anything that we could do. That's different from legacy assets that we hold, but don't operate anymore there. We have a direct responsibility to deal with those assets in a way that we would as if they were operating assets.

And the question comes from the line of Sylvain Brunet from BNP Paribas.

My first question is on your GAG reduction target in pathway. You've given us the ambitious target to 2030. Wondering if you had some sense in, it could be a range. It doesn't have to be an exact figure, but where you'd like the company to be at the midpoint of that, say, 2025? That's my first question. My second question is on water and obviously, the bottleneck in Latin America, and I'm thinking more so about Chile and U.K. Combining the mining industry will manage to avoid new regulation in this area and are you engaging with the Chilean government on this? And what are the solutions that you're putting in place to avoid this? And my last question, if I may, on the S on ESG, which, as we know, is a lot about perception. How do you ensure that you stay on top of what communities really want often they get asked extensively before a project gets started and at the time of approval? But how do you ensure that these trusts and this understanding of each other remains for -- at its best throughout the life of the mine.

Thanks, Sylvain. The first...

Sorry, do you want to take the first 2 and I can take the third one?

Yes. Thank you, Anik. That sounds great. So, on the first, terms of we'd like to see on our progress. I think that, that is, by and large, described in that slide that I pointed out earlier that left-hand side of that page. That is a trajectory. It is a pathway within our existing assets that show where we hope to be from a neutrality point of view. Now of course, there are many things that that's dependent on the rate at which we are able to develop technology, the rate at which governments change some of the regulatory environments, et cetera, et cetera. But so far, that is the direction of travel. And so our interim milestones are internally at least measured of that pathway. As far as water and water risk goes particularly in Chile, this is a really big issue. And I think continued reliance in any way, shape or form on continental water in the region is going to be problematic. And therefore, Tony and his team actually have been working very hard with Ruben to come up with sort of more sustainable long-range water solutions that strategically do not rely on having to swap groundwater sources around in times of emergency. And we have done this. I mean we are very close to a complete solution, which would involve both the use of gray water and desalinated water and that in time, would see us completely eradicate our dependence on Continental waters as it's called in Chile. So we are basically within months of starting the execution on that. Just one last point on that is that I do think industry, it behooves industry a lot to work more closely with one another in more effective partnerships. The number of desalination plants that are going up in South America, particularly in Chile are extraordinary. And of course, it always does get complicated in the context of who's going first, what projects are dependent on what water, but to be able to consolidate around combining big infrastructure projects like that. I think is probably the next step of sustainability at a macro level that we as an industry will need to work on.

Okay. Thanks, Duncan. And maybe to answer the S and what our community -- how do we know what our communities want. Well, first of all, our approach is very -- is not line-centric but engagement centric. Engagement, engagement, engagement is the name of the game. And from our processes point of view. If you look at one of the targets in the trusted corporate leader part of our S&P, we have local accountability forms. And that allows us or makes -- it ensures that we are co-creating with the community, that we don't take a paternalistic approach in thinking that we understand what they want better than they do. So it is very much about engagement. And also, we also have our, as Duncan was mentioning in our performance slide, we also have our Social Way 3 that we're in the process of implementing. And through some of those processes, we have some ways of actually understanding some of the causes of the issues that we have, for example, through our grievance process. So it's very much a mindset process and systems responds to that. Operator?

And your next question comes from the line of Ian Rossouw from Barclays.

Just to follow up on Sylvain's question about the Chile water situation. Duncan, can you mention, I guess, sort of you continuously trying to improve the sort of water performance of the operation. I guess you've said that in the past. And you've, I guess, done some deals to give some -- or have more water available. If we have the same drought next year as we had this year, I mean, do you have other sort of measures you can sort of -- sources you can add to North Bronces to -- in terms of the performance to improve production? Or can we -- I guess, when can we actually expect to see a bit more sort of self-sufficiency on some of the options you're looking at? That's the first question. And then just on Quellaveco, there's been some sort of news reports over the last sort of month about sort of water license issues, I guess, community or local or regional mayors that's known for anti-mining historically. And sort of questioning some of the water licenses. Obviously, the water licenses at Quellaveco has been issued, and you have the permits, but just wanted to get a sense of what exactly is going on seems to be agricultural ministry looking at a review of those licenses. So I just want to get your insights on that. And then lastly, just on the hydrogen truck in -- at the Mogalakwena mine. Just keen to year how that's progressing? Has the truck actually been sort of holding ore around ore waste and whether you've been able to ramp up the electrolyzer and sort of producing hydrogen for that truck on site?

Duncan, how would you like to allocate these topics? Actually, water a Quellaveco and hydrogen truck.

I'll take on the Quellaveco and if Stephen can just help me with some of the timing on the Quellaveco on the Chile story when I get there and then Tony, if you'll take the Mark's question related to hydrogen, please. So Ian, thanks for the question. So as you know, we spent quite a lot of time trying to swap these groundwater sources around for more sort of sustainable long-term kind of sources over the last few years. And of course, we've done a lot of work with our neighbor at Andina to be sure that we're optimizing excess water, water shortages between the 2 operations, dealing -- helping to deal with some of the environmental issues that they may have in terms of the water and water quality and so on. So that's all been very constructive, but as we've pointed out, clearly, not enough to cope with the extreme weather conditions as they happen from time to time. The integrated water solution that I mentioned when answering Sylvain's question was really around the implementation of a desalination plant. So that will take some time to get in place. That desalination plant is a relatively big desalination plant. But actually, ultimately, what we will do [indiscernible] water out with double the water that becomes available from a gray water plant facility. So probably a couple of years. And Stephen, you might be able to confirm exactly the time line on that. I can't remember that off the top of my head now. Just in terms of next year, if we had a similar sort of drop to excess. So one, we're not predicting that this year [indiscernible] enough in terms of next year. And also our water stocks going into next year are significantly healthier than they were coming into this year. So I did mention at the half that we've had some precipitation. Much of the water there is a function of the snow melting and there was some good snow this year. So our current water stocks in terms of our conventional sources are looking to be more robust for next year than they were at the beginning of this year. Stephen, do you have those dates?

Yes. Thanks, Duncan. So as you say, good snowfall and water catchment this year. We'll continue with the interim arrangements in terms of supplementary sources, tracking in water, neighboring water supplies, et cetera, for the next couple of years. The Las Ponta solution will be implemented in a couple of stages. So the first few stages will be some of the gray water sourcing and pipelines into site. And then the sort of second stage would be some of the [indiscernible] plant, which will provide clean water, as you suggest. So it's another 2 to 3 years by the time those phases are fully implemented.