Anglo American plc (AAL) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to this call today. I hope you're all safe and well wherever you are. Thanks. Today, we'll follow our usual flow but this time with a new face. So I'd like to introduce John Heasley, who started with us this time last week, taking over from Stephen. And technically, today's day for John, although for John, I'm sure it feels a little bit like day 80 already. Anyway, I'm going to talk the steps that we are taking to enhance margins and cash generation across the whole of the business, and that drives significant cost reductions for us and then make our business a lot more resilient. And John is going to then take us through some of the guidance numbers I'll come back and cover the longer-term outlook and our outstanding growth opportunities that we have across the portfolio and in the right products for the major demand trends that we've spoken about before. Now as always, I'm going to start with safety. Our commitment here to ensuring that our workforce returns home safely every day is unwavering, and it will remain our #1 priority. We've made significant progress here in improving our injury rates this year. But in 2 incidents, we still sadly had 3 fatalities and we know that there's still a lot more to do. Safety and operational performance, as you've heard me say before, go hand in hand. As we refocus on getting the basics right, adhering to our operating model and driving accountability of our leaders to spend more time in the field to deliver that operational stability, I do expect that these levers should support continued improvement of our safety performance. Across all of our operations, we considered our workforce to be a single team and that is regardless of whether they are employees or contractors. Everyone is accountable for working safely, in line with our performance standards, and that is without exception. Now we do indeed have a high-quality portfolio that combines a fantastic suite of assets with our deep bench of capabilities and our leading positions in certain products. All of this is underpinned by a robust capital allocation model and a pipeline of organic growth options. The long-term outlook for our products has arguably never ever looked better. A lot has changed in the last 18 months, though, and different circumstances require different approaches. We are alive to these near-term challenges, and we are responding accordingly. We've experienced a period of high and prolonged inflationary pressure that continues to impact costs across the whole of the industry, and we are taking measures to ensure that the business is set up to be resilient over the longer term and as we work through some of these temporary operational headwinds, too. Diamonds and PGMs are a lot closer to the end consumer than the earlier cycle products. And therefore, as we know more directly, and immediately impacted by changes in discretionary spending patterns. This is true in a slowdown. And as history has shown us before, it will equally be true in the case of an upturn. We are working towards positioning our assets squarely in the first half of their respective cost curves, and at the same time, continue to look through the cycles and focus on these longer-term demand themes. Just turning to the '23 operating performance. So this year, we expect to land broadly within our existing guidance range. And our focus has been on operational delivery, and we did indeed achieve a stronger second half as we had planned. In copper, we are delighted that Quellaveco has now ramped up to full capacity. Unit costs share are just a little higher than we expected as we land towards the lower end of our planned production range. But having successfully delivered this project and then been able to ramp it up as a new asset in a new country and transition to the operational phase as smoothly as we were able to do, I think, is absolutely a testament to the capabilities that we have in this organization. At the copper assets in Chile and Nickel, ore grades were as expected, lower and our world-class Collahuasi operation had another very, very good year. Although our sales volume is running a little bit behind our production, mainly because of weather impact, sea swells, et cetera, et cetera. Performance in the PGM business has been solid, both from the mines and from the operating -- process operating assets. The team here has expertly, I believe, navigated load curtailment with minimal impact. And from what we can see, Eskom seems to have had a better performance in the second half of this year, although I'm afraid we will have to continue to carefully monitor the outlook and the performance of Eskom into the first half of 2024. De Beers operationally has had a very, very solid year. But as I've spoken about before, we faced significant pressure in the downstream in the second half. Consumer spending on luxury goods has eased in the current macro environment, and China has been a lot slower to recover post COVID than we had expected it to. With the most recent sites of $80 million and $130 million, respectively, De Beers has been loss-making in the second half of this year. We are now forecasting our expected sales volumes to be around 25 million carats for the year, but we continue to believe that the fundamentals for diamonds are strong and we are positioning ourselves to supply into that inevitable demand bounce back. In iron ore, Minas-Rio has been our star performer this year, a stonking performance by the team there. On track for the top end of guidance and we've seen some performance records that they've achieved along the way, too. Kumba similarly has been performing exceptionally well at the operating level. But unfortunately, the logistics just haven't been there. As a consequence of this, in the last few weeks, we've been lowering volumes to manage the online stockpile that has been developing over the last year and a bit. And as a result, managing therefore, the costs too. We will now deliver to the lower end of our production range, but it will be for the purpose of managing about 2 million tonnes out of the stockpile into the port. At Steelmaking Coal, our focus has continued to be on safe and stable operations. However, consistency and predictability there have proven elusive in quite challenging ground conditions, particularly at Moranbah. We will land somewhere at around about the 16 million tonne mark for this year, and that, of course, has had an impact on our unit costs. We are now expecting these costs to come in at around $115 per tonne for the year. Of course, the price is north of $300 a tonne. We are still generating some very good margins here despite the excessive Queensland royalties. And finally, at Woodsmith, we have made significant progress this year, and we are delighted to have hosted you to a visit a few months ago. We will be within touching distance of that 27 kilometers on the tunnel and we did achieve the world record for the longest tunnel on a single tunnel boring machine. So well done to Tom and the team there. Sinking activities in the deep shafts continue to progress well, 680 meters of depth on the service shaft now, and 385 meters on the production shaft. We preemptively took some action in the first half of this year to reduce our business support costs by $0.5 billion by the mid of 2024. That work is on track and pretty well advanced. We are improving our organizational effectiveness through a simpler, a leaner, more streamlined organization that has fewer layers and clearer accountabilities. We are also taking measures to increase business resilience across the whole board. Within each of our businesses, we are pulling the necessary levers to enhance our financial performance both near and medium term and at the same time, protecting value over the longer term. That will translate into significant OpEx reductions for us of a further $0.5 billion in 2024. And our final lever is in the capital that we deploy. We have now reduced CapEx by $1.8 billion over the guidance period. Let me give you a little bit more color on what we're doing in each of these businesses. So firstly, copper. As you hopefully know, we have a truly world-class portfolio in copper, including Collahuasi, and it has very, very significant growth potential embedded within it. Los Bronces, though, I think, is a perfect example of the challenges that the whole of the mining industry is facing. Los Bronces itself is 156 years old, and as a result of that, is facing quite a lot of cost pressure from debt and grades with a reserve life of 34 years and plenty of resources to extend that, it is still an incredible ore body. It still accounts for more than 2% of the world's known copper resources. However, the ore at the current mining area is very hard. It impacts throughput and cost, and it will be at least another 2 years before we can open up other areas of the mine, so that we can blend this ore with a higher-grade softer ores and maintain historic production levels. The mine development has also been delayed in the last few years due to COVID-related and permitting issues. Now while we work through these challenges in the pit, we've decided to place the older of the 2 processing plants on care and maintenance in order to reduce our operating costs and our CapEx, which will help drive value for a whole of the business. As a result of our actions, unit costs will be 15% lower, and we will continue to invest, however, in critical projects, which will enable a swift reopening of the plant at the right time in the right pricing environment. Los Bronces remains an incredible ore body, and it is important to recognize the merits of having a permitted operation in an established copper jurisdiction. And to that end, we will continue to progress the studies of our Los Bronces underground project. At Quellaveco, we have adjusted the mine plan based on the latest geotechnical assessments of a known fault. Safety always comes first. And the consequence of this rephasing is that 75,000 tonnes of copper has been displaced into 2027. Now the new mine plant actually anticipates slightly higher overall volumes than we had previously forecast over the next 5 years, reflecting further optimization of the mining sequence. Given the current copper market outlook, of course, we may well also achieve some higher real term prices for these deferred volumes. Now as you know, we are well positioned in high-grade iron ore, producing premium quality products. However, Transnet's Logistics performance is currently limiting our ability to rail our mine volumes at Kumba, and we are now unfortunately stock bound. Had that been delivered to port, we would have made significantly more EBITDA this year. That unsold ore is also a significant blow of course, to the South African fiscus. Now while the government absolutely recognizes the severity of the situation, and I am convinced is continuing to make strides to get it resolved and sorted out, it is our view that this is going to take some time for conditions to improve and a longer-term solution to be implemented. And as a result, we are going to focus on ensuring that we have a balanced value chain through the reconfiguration of this business, including a revised mine plan and structural cost reductions to protect our margins. Minas-Rio has delivered operationally very well this year, as I said. We are now focusing on operational stability and optimization to maximize cash flows there. In 2025, we are dovetailing some additional maintenance work into the pipeline inspection process. Now moving on to steelmaking coal. As always and as I said right at the beginning of this presentation, safety has to come first for us. The Gas, Depth and Strata issues represent very big complex geotechnical challenges for us there. While our mining experience has resulted in improvements in procedures and risk management, we are still some way off where we had hoped to be at this stage of the reopening of these mines. Our priority needs to be delivering safe and stable production, and we are now focused on reconfiguring our cost structure in the near and the medium term to match our productive output. Operational improvements, debottlenecking and automation all represent opportunities to raise this capacity of these assets towards 20 million tonnes and we are working now hard on ensuring that we can implement some of these things. We have also made a significant improvement in our Australian operations in our Scope 1 and Scope 2 emissions, of which, of course, methane is the largest component. So far, we are capturing around 60% of the methane and our confidence in addressing the balance has significantly progressed over the last year. We also now have managed to secure 100% renewable energy for these operations, all starting in January of 2025. PGMs have been acutely in focus for us with a sharp below trajectory in prices over the last year. Although these did come from unsustainably high levels from the previous year and the year before. The basket price is now firmly into the cost curve with sector returns at the lowest point seen in this industry in the last 30 years. It remains to be seen how long these prices persist and its effect on a number of producers. We are ensuring that our own operations are resilient and that we secure Mogalakwena's highly attractive value proposition for the longer term. The team is working hard to identify and implement further cost reduction initiatives to sustainably deliver an all-in sustaining cost at a touch over $1,000 per PGM mounts. There are also a number of purchase of concentrate agreements that are coming to the end of their contract life and these changes are also now reflected in our revised production numbers. We are focused on enhancing returns through lower CapEx and near-term asset optimization work. And as a result, we will not be progressing work on the option for the third concentrate at Mogalakwena nor will we be progressing work for the time being on the expansion opportunities at both Amandelbult and Mototolo. At Mogalakwena, we have an exceptional ore body and as well in our operations in Southern Africa, we have the largest of the PGM processing capacity. Now that gives us significant optionality and flexibility for the future. As we work on the underground opportunity, we have one of the largest drilling campaigns in Africa underway and results so far have exceeded our expectations here, giving us confidence in the long-term development of that resource at the right time. Our value-over-volume approach will enhance the competitiveness of our world-class PGM assets under a range of price scenarios. Our business is positioned in the first half of the margin curve, which means that we do have significant flexibility within this portfolio. Current prices seem to reflect the aggressive consensus view of the rapidity of decline of the internal combustion engine. Recently, we've seen a rolling back and the dilution of many of the measures favoring Rapid BEV adoption. Hearing a lot more commentary on the difficulty of hitting BEV targets and more awareness of the need for internal combustion engines to play a role for longer. Now this plays into our very long-held belief that hybrid vehicles will play an absolutely critical transition step to clean the transport systems. And hybrids, as we know, require similar levels of PGMs to the internal combustion engine. Furthermore, we are also seeing how current market challenges are affecting the supply side. Projects that were previously being discussed are now being shelved, deferred or delayed because they're uneconomic at current prices. And longer term, we are seeing hydrogen accelerate just a little bit faster than many of us were forecasting with support -- which supports, I think, the outlook for platinum and Iridium in particular. And finally, with significant activity in the market development space, we do remain confident that these young metals with their unique properties will find metallurgical and catalytic uses in clean technology as well as a host of other industrial applications. Moving on to diamonds. At De Beers, we're taking a slightly different growth approach here as the business has performed extremely well operationally. What has gone against us is the market, particularly in the second half of this year. Demand and prices for diamonds have fallen as global GDP growth has fallen, but all cycles end, and we believe that the current weakness is temporary. Indeed, we are working closely with our partners to ensure that we can supply into that demand increase when it comes. Already, there are some signs that the market might be beginning to turn. Nonetheless, we are focused on streamlining De Beers, reducing the annual overhead by $100 million in a sustainable manner. We have also reduced our CapEx for next year with our investment focus on the highest value opportunities that we see in Southern Africa from the existing assets as well as on the exploration front. We will focus our efforts on the ramp-up of Venetia underground in South Africa, and we are planning to move forward with the first phase of Jwaneng underground in Botswana. The long-term fundamentals are strong and we have access to the world's best diamond assets. Now these include our renewed mining licenses in Botswana where we are progressing as planned towards a full agreement with the government early next year. We are also renewing our efforts in the Downstream. The return of the iconic A diamond is forever campaign has proven highly successful, and you can see some of the ads on the slide. We are committed to further strengthening demand for natural diamonds and the launch of our origin story will differentiate our natural traceable diamond offering, and highlight how the journey of our diamonds makes an extraordinary contribution to the produced countries. Woodsmith is the next multibillion-dollar greenfield project in our pipeline. I still believe this is a textbook example of a high-quality Tier 1 asset in a low risk jurisdiction. It is large scale, it is expandable, long life, and it has structural advantages that will position it in the lowest quartile of the cost curve, and it has the potential to generate very significant cash flows for many, many decades. You want these sorts of assets in any portfolio. For that reason, we are focused on setting it up right from the outset. It will be a truly modern and sustainable mine with a minimal impact to the surface. It will hardly be able to tell that it is there. POLY4 plays perfectly into those global demand teams I spoke about earlier. Food security for 10 billion people and delivering that sustainably remains one of the key challenges for the ags industry today. POLY4 is the crop nutrition solution that this industry needs. It can increase your crop yields by 3% to 5%, and it will have a significantly lower carbon footprint than conventional products because it is a natural product without the new requirement for downstream chemical processing. And that also means it is, therefore, use suitable for organic use. The nutrients themselves are, of course, not new, but the way they present in this product is new. And POLY4 can deliver absolutely significant additional benefits to the farmer well beyond the pure nutrient value. There is an enormous potential here in POLY4 even if we just capture a small slice of that significant upside. And with that, John, I'll hand over to you to take us through the guidance for the next few years, please?

Thank you, Duncan, and good morning, everyone. It's great to be here, and I look forward to meeting many of you personally over the coming months. My decision to join Anglo American was predicated on a number of things. Firstly, my deep rooted personally belief in the criticality of the mining industry to the world's development and energy transition. Secondly, a great culture with a focus on doing the right thing for the long term. And thirdly, a fantastic set of assets, global leading positions in diamonds and PGMs and high-quality iron ore and phenomenal copper assets with great growth potential. Now as Duncan said, while it's only day 8 of the job, I'm pleased to say that my experience thus far has been hugely confirmatory. It's also been timely given that I've had the opportunity to participate in detailed budget review meetings with each of our businesses. And I've been especially encouraged by the unwavering desire of my Board and executive colleagues to do all that we can to maximize performance and returns from our existing assets to fund our future growth options. And I'm sure, as you can appreciate, as a Scottish Finance Director, that is music to my years. Moving on to the numbers. Duncan has stepped you through the operational performance for 2023. That translates into expected production up about 3% on last year, with unit costs up around 5%, reflecting higher CPI as well as the impact of lower grades, harder ores and deeper pits. You will see in the appendices some more detail by business if required. On CapEx, we expect to come in under our full year guidance at around $5.8 billion, following general tightening of spend across the board. Our effective tax rate at around 39% is slightly higher than the range previously indicated and reflects the impact of profit mix, higher contributions from South America and lower contributions from Southern Africa, particularly De Beers. I would like to remind everyone that a lot of other producers, particularly in Australia, for example, pay more of that economic rent and royalties that's set in operating costs rather than the tax line. And on an all-in basis, we aren't too dissimilar from those peers. Working capital has continued to build through the second half of the year, and this will be a particular focus of mine. Inventories are higher than we would like, especially in De Beers and Kumba, given market demand and transportation issues, respectively. That said, the key driver of the circa $1.5 billion anticipated increase in working capital this year as payables. With the lion's share being in PGMs, given the impact of lower prices on the valuation of the bulk payables and the customer prepayment. Finally, and of course, subject to Board discussion and approval in the new year, we would expect the dividend payout to be in line with our well-established policy at 40%. Looking now at the production for the next 3 years. You've heard from Duncan that we are very focused on maximizing the margins and cash generation from our operations. Against this backdrop, we've taken some difficult but necessary decisions to reconfigure some of the operations in order to capture more value from recovery. This translates into production being lower next year, most significantly in copper with the older and smaller Los Bronces plant moving into care and maintenance and the rephasing a clear vehicle due to the known fault. Our volume guidance is down 7% over the next 2 years before rising 4% in 2026. These reconfigurations enable significant cost reductions and will ultimately support higher margins and returns. Those cost reductions from our reconfigurations are evident on this next slide. Early action to improve resilience and margins is expected to deliver a 2% reduction in unit costs next year and broadly maintain those over the following 2 years. With CPI across our geographies at around 5%, you can see the favorable impact of our actions as significant. In copper, PGMs and iron ore, we are delivering significant year-on-year cost reductions and should see a resultant move to improve our position on the cost curves. We are rigorously implementing these measures to ensure they are comprehensively embedded into our operational footprint, allowing us to sustain this performance. And De Beer is the transition of Venetia to underground operations adversely impacts the unit cost of our managed operations. While we are proposing to change the ramp-up in light of prevailing market conditions and to optimize capital spend, we expect unit costs to return to current levels from 2026 as volumes pick up. The Steelmaking Coal business is more levered to fixed cost given the nature of longwall mining. And more generally, we're seeing Queensland slip down the rankings of competitiveness as a mining jurisdiction due to the additional royalty regimes implemented last year. While we have managed to broadly offset the key inflationary pressures, we are still working very hard to find opportunities to lower that cost base. If we can deliver any upside in our production, that represents our greatest margin lever for this business. Finally for me, our cost discipline also extends to CapEx. We've identified opportunities to reduce CapEx by $1.8 billion from now to 2026. That's $0.2 billion in 2023, $0.8 million in 2024 and a further $0.4 billion in 2025. 2026 CapEx gains is now set at $5.3 billion, which is $0.4 billion than our previous budget. These figures now include Woodsmith as we guided earlier in the year to spend around $1 billion per annum. Safety and asset integrity spend is untouched in these updated numbers. Those are sacrosanct. The savings reflect the refocus of investment. 2 such examples are to pursue only the underground Mogalakwena and PGMs and the technical review of the UHDMS project at Kumba. We will pull similar levers across the balance of the portfolio as required. Until we reach the FNTP decision on Woodsmith expected in early 2025, current governance processes will continue with ongoing spend remains subject to annual Board approval. As we have said, we will consider potential partnership opportunities for this business at the right time with the right partners and, of course, for value. In summary, we've updated our numbers with a focus on reducing costs, enhancing margins and driving cash generation. I'm confident that these are the right decisions for both the near and long term. Thank you, and I will now hand back to Duncan.

Thanks, John. So turning now to the longer-term outlook. We have a highly differentiated investment proposition, underpinned by our high-quality portfolio very long mine lives and -- which is diversified across many critical minerals and metals that are essential for both ongoing global economic development and the transition to cleaner energy. This is supported by a strong marketing capability that maximizes the value of the products that we deliver to our customers. Our diversified portfolio works as a whole. Each of the businesses has a very clear role delivering a balance between cash generation and the funding and execution of our well sequenced set of growth options. With the current focus on copper and crop nutrients, that together are set up to strongly deliver enhanced value in the future. The attractive growth options that we have are naturally well sequenced over the next 10 years from a cash generation and a capital allocation perspective. As you all know, permitting time lines are a natural break on bringing on any new supply. The fifth ball mill at Collahuasi is now up and running with some debottlenecking options there to follow. Then permits are expected for the fourth line at Collahuasi in 2027. Once the studies have been completed, it will then follow peak spend at Woodsmith. That's Collahuasi. So permitting is then expected for Sakatti in 2029 with the underground expansion at Los Bronces, potentially delivering an annual production increment of 100,000 to 150,000 tonnes per annum. Sakatti is the greenfield option in Finland with a relatively low capital cost. It has a high grade, it is a polymetallic ore body. It contains copper, battery-grade nickel, platinum gold, and some cobalt. Whilst it is relatively small, it could deliver at least 100,000 tonnes of copper equivalent over a mine life that could extend over a couple of decades or so. And the byproducts here would, of course, give us a negative cash cost position. Our unique project execution capabilities should allow us to unlock the value of this particular ore body. Los Bronces underground could deliver over 10 million tonnes of copper equivalent over 100 years with copper head grades of around 1.5%. While studies ongoing, significant work has already progressed on optimizing the capital spend and we could deliver those volumes at, I believe, a very competitive capital intensity. At Quellaveco, we are progressing the studies of the expansion options that would help sustain production after we are through the initial high-grade period. We initially oversized elements of the plant in order to cater for this increase in throughput rates. And we are studying further expansion potential here, such as the possible third ball mill. Beyond the existing site, there is also additional regional potential that our discovery team are very interested in, including the adjacent moment area, which is around 10 kilometers away from the current mine. Now while we are taking firm action to respond to the near-term pressure, our commitment to responsible and sustainable mining is unwavering. We will continue to apply our value-focused approach to delivering on our sustainability ambitions. We have made good progress with the first wave of Envusa renewable energy projects in Southern Africa this year, and we will secure more than enough renewable energy for our own needs decoupling ourselves from the double-digit cost escalation in the electricity contracts that we have today and providing a greater grid stability to support broader economic development in the region. Envusa makes absolutely good business sense to us. It is strongly NPV positive, whilst also at the right, at the same time being the right solution for us. It is great for our decarbonization goals and it is great for South Africa. We seek out opportunities in challenges. These capabilities are a key enabler for our growth pathway from the delivery of Quellaveco through to the permitting milestones that we have achieved this year at both Los Bronces and Sakatti as well as the renewal of our long-standing partnership with the government of Botswana. Understanding our social license to operate remains at the heart of our approach. We have a clear track record of delivering on our promises. Communities and host governments can see that and they value that. We have been operating in our current jurisdictions for decades, learning, evolving and continuing to refine our approach. We aim to be the development partner that countries choose to work with. So to conclude, the outlook for metals and minerals has never looked stronger underpinned by the 3 mega demand trends that you've heard me speak about before. While much of the conversation today seems to be around and focused on decarbonization, let's forget that Poverty remains the #1 and most urgent daily challenge of much of the world's population. Uplifting global living standards amid a growing global population requires an unprecedented level of economic development. For example, giving everyone in the developing world, a living standard equivalent to just half that enjoyed in the developed world today would require us to mine an additional 70 billion tonnes of iron ore and an additional 1 billion tonnes of copper. Those numbers are quite extraordinary. To put that in context, that would represent approximately the same amount of iron ore that has been extracted over the entire course of human history and 1.3x the amount of copper that has ever been mined. And we must remember that we are discovering new applications for materials that we produce all of the time. Similarly, to feed the global population over the next 30 years, we'll require the use of more man-made fertilizers that have been consumed in total over the last 100 years. So our portfolio with its diversification of high-quality and long-life assets, I think, is very well positioned to deliver into these trends. We are taking deliberate, decisive and necessary performance interventions in this challenging and dynamic near-term environment to improve our resilience, capture value and ensure that we are set up to deliver for the long term. These measures, together with our technical capabilities and our approach to sustainability, position our assets to deliver significant and enduring value for decades to come. And with that, I am very happy to take questions. John and I are joined for this session with you -- with Ruben, Timber, [ El ] and Matt Daley. So Paul, if you'd like the master of ceremony, the question session, that would be great.

Thanks, Duncan. If you'd like to ask a question, you can see the details on the screen. I'd like to hand over to the operator, [ Elly ], to take the first question, please.

[Operator Instructions] We have our first question from Jason Fairclough from Bank of America.

Some very interesting points. Look, a bit of a big picture question for you. So Duncan, you inherited a company running a series of Tier 1 assets. Today, it feels like we have pressure in at least 4 major businesses, right? So in PGMs, in Diamonds, at Kumba and at some of the copper assets. And then on top of that, you're going to be burning about $1 billion a year at Woodsmith for the foreseeable future. And today, you're actually taking quite aggressive steps to conserve cash. So how do you think about this? Is there actually an opportunity here to focus the portfolio, perhaps to shed some of the assets that don't have a position in Anglo American longer term? I guess some people would say that diversification is the enemy of simplicity. But just interested in how you're thinking about the portfolio, please?

Thanks, Jason. Look, I mean, you picked up a couple of interesting points there in terms of elements of the business that are exposed to a cycle, very unusual that we have the sort of confluence of a number of effects like PGMs, diamonds and the transport issues in South Africa related to Kumba, all happening at the same time in a portfolio of this nature. But this is what's happened and what you are seeing is us take the appropriate level of response to this thing. Certainly, from a whole portfolio position, what we're doing -- I mean, a couple of points that I want to reiterate there. First of all, every asset in the portfolio has a role. Some are cash-generating assets and some we then invest that cash in a value balanced way in accordance with our capital allocation model, including returns to shareholders in developing other assets over the business. And I think that's how you have to think about the portfolio. Cycles will be cycles. They will come and go. And we expect that with the quality and the type of assets that we've got in the portfolio, through the long run, there are extraordinary returns that get developed out of this. Now of course, part of what we have to do in response to the current economic climate and some of the issues that we've got temporarily and uniquely in this particular portfolio. we have to be sure that we are conserving cash, and we are allocating that cash even more rigorously. That's what we said that we would do, and this is what you're seeing us do. In the context of Woodsmith, this becomes part of the portfolio that will replace this portfolio over time. So what we will get in Woodsmith is 1 of the world's preeminent ore bodies with a great level of flexibility in the right commodity set to serve the right customer base that sits at the bottom of the cost curve, spinning off large volumes of cash for multiple decades. Now that doesn't just happen. So it has to be built up over time, and therefore, this allocation is very careful and very thoughtful. In the context of your question about, is this time to review elements of the portfolio? Well, I think all of the time is the right time to review elements of the portfolio. As I said earlier, every asset in the portfolio has a role to play. And it is important that, that role is effectively played through the life cycle of those assets and through the holistic cycles of the macro economy that affect the business over time. So we do review every single asset and its role in the portfolio on a regular basis. So not just now, but even at the tops of cycles, it is our job to continue to ensure that we have the right mix and suite of assets within the portfolio. So it's ongoing.

And look, Duncan, when we were up in Yorkshire, I think over dinner, one of the investors asked you if there are any sacred cows, I think, was the phrase in the portfolio. Is everything for sale at the right price?

Yes. Well, look, I mean, the short answer to that is if you're managing a portfolio like we are, there are clearly no sacred cows in it because if every asset has its place and its time, we have to look at it through that lens all of the time. So no, there are no sacred cows.

Next questioni comes from Alain Gabriel from Morgan Stanley.

So you have reset for volume guidance today, you've doubled down on the cost-cutting program and the pull back on CapEx, but the market doesn't seem to think this is enough, judging by how the share prices have reacted today. First question, is there more or deeper restructuring that you can or are prepared to do across the various businesses to speed up the turnaround? One. And then 2 on Woodsmith following up on Jason's question. That's the single largest consumer of cash today and for the foreseeable future as well, is finding a strategic partner on the table to help share the capital burden. I think we've addressed this before, but in light of your new guidance, is there a new thinking around it?

Alain, Thanks. So second question first. John addressed that in his part of the presentation. So there's no new thinking on this thing. We continue at pace to find a partner at the right partner at the right price for this particular asset. And so no new news there. In terms of the levers that we've got to pull, we continue to focus on the things that we can control and we will continue to control them in an appropriate way in response to the conditions as we move forward.

Our next question comes from Tyler Broda from RBC.

Great. I've got 2 questions. One, I was wondering you can go a little bit more into Quellaveco in terms of sort of the guidance for next year, which looks, I think, a little bit soft versus expectations. Why did this come about? Could you just give us a bit more color there? I guess the second question is a question around, I guess, just the working capital, diamonds, PGMs, the Kumba buildup. How do you expect to see that evolve? Obviously, there'll be lower production. But can you give us a bit of steer on where you see the working capital over the next sort of 12, 24 months?

Sure, Tyler. Matt, I'm going to come to you in terms of the fault at Quellaveco and how we're navigating our way around that and the implications for it. But on working capital, I'll also ask Al just to talk about what we're doing with diamonds, but certainly at Kumba, the response there has been to slow the mine down and move the stockpile until such time as Transnet recovers. Tyler, as I've said before, there's been an enormous amount of work by both business and government and Transnet to get on with the recovery of that particular institution and the logistics infrastructure, and that work is progressing. It is unfortunately not going to represent a massive turnaround or recovery to the original capacity that, that line had in the next year or 2. Now that's quite a long time for a business to remain stock bound and very difficult for us not to effectively respond to that. And so that's what Mpumi and the team are doing. We have absolutely not lost faith in the fact that this will recover and it will come back, but being very realistic in terms of the progress that's been made over the last year or so, it is unlikely in our view that this recovery will be next year. And so therefore, we are just planning accordingly. There are no material or significant impact to the mine itself because as soon as we get the transport capacity, we will be able to ramp the operations back up. So with that in mind, we will be able to take care of the working capital or the excess working capital at Kumba over the next couple of years. In PGMs, really, already there is -- there's a little bit of slag as a result of the original Polokwane deferral about a year ago that we need to work through, but that's not really a big deal. The biggest impact to working capital as far as PGMs are concerned by the impact of Bakken [ toll ] agreements and the prepayment agreement that we had with one of our customers is just unwinding into a lower pricing environment at this particular point in time. So whilst John is completely focused, as are we on working capital management, this will be one of those. And then perhaps, Al, before we go to Matt, you could talk about diamond inventories and the cycle management, please.

Thank you, Duncan, certainly. So through the course of -- particularly the second half of this year, we've seen a downturn in demand for diamonds driven by predominantly macroeconomic factors. As Duncan said earlier, we know that cycles are, by definition, cyclical. And because of that, we kept production relatively steady through the second half of this year and that has led to a buildup of inventory because so many of our costs are fixed, that appears -- that feels to us to be the way things do and sets us up very well for the inevitable upturn during the course of the next year. We're growing in content in that upturn coming sooner rather than later. Having said that, if there is continued lower -- longer prices and demand on that, we have a series of levers that we can pull during the course of 2024, and we work with our producer countries and our partners in those countries to do so, including, of course, mining lower grade ore and making operational changes on that basis. So there are a series of levers we can pull, depending on the circumstances ahead. But as I said, we are in a good position if as we believe there is an upturn beginning during 2024. Thanks, Dunny.

Thank you, Al. Matt, do you want to just talk to the fault at Quellaveco, please?

Yes, certainly. Thanks, Duncan, and thanks, Tyler, for the question. So Quellaveco orebody continues to impress us as we've progressed the mining and learned more about this particular ore body. We've always known about this fault, and we continue to look at our pit designs to optimize extraction for both productivity and costs. And so what you will see is just a rephasing of the copper over the business plan period. And in fact, this redesign will slightly lower copper in 2024, actually delivers higher total copper and hence, value over the next 5 years. So mining progresses pretty much as planned, and we'll continue to optimize this pit well into the future.

Our next question comes from Liam Fitzpatrick from Deutsche Bank.

Sorry to go over some ground that's already been covered, but I just wanted to clarify kind of how you're thinking about things. So the first one is just on Woodsmith. So I think back in the trip, you said partnering or syndication was part of the longer-term strategy at the right time. Has there been a bit of a shift there because I think you suggested that there may be a process, so where is that now? Is there an active partnering process going on at the moment? And then in terms of that -- the previous question on the portfolio, I guess the share price performance today and this year is something that the market doesn't think there's enough action at the moment. Could we expect any further kind of details from you and the management team next year in terms of perhaps how you see the portfolio, whether that's in terms of the asset base or division?

Liam, I mean you are actually covering ground that I think we've already addressed. So I'll just say it again for clarification. So the syndication process is something that we will do, and it will be done at the right time and for value. I think that, that's really important given the assets of this nature. And then as far as any portfolio changes and so on, we will continue to do what we need to do to ensure that we have a high-quality portfolio of assets that delivers through the cycle and we will continue to respond in whatever way is necessary to respond to both short- and long-term circumstances.

Could I just ask an operational one as well, please? Just on De Beers. So at this point, there's no production cuts. How long do you wait before we could see something a bit more meaningful on the production side, just to react to what we -- the weakness we're seeing in the market?

We're not waiting. So we are working actively at the moment with our partners in the producer countries in order to identify the levers that we can take step-by-step during the course of the year. As I said, we need to be careful with this because a large number of our costs are fixed. So we need to avoid doing something that actually just disrupts mines, which then take a lot to recover from and doesn't actually create the cost savings that you really want to drive out of this. But no, we're not waiting. We're working actively with our partners at the moment, and to ensure that if things do stay low, then we're ready to react now.

Our next question comes from Richard Hatch from Berenberg.

I've got a couple of questions. The first one is just on Los Bronces. I mean it's a pretty big cut in volumes. Can you just help us a little bit out just in terms of what that second plant run rate is, what kind of price situation do you need to see that kind of that ramp-up again? And are you able just to sort of give us a bit more color on that Copper Chile volume cut? Is it entirely Bronces? Or is there other bits and bobs elsewhere? That's the first one, please.

Richard. Look, Bronces, the volume cut is of the one plant of the [ civil ] Los Bronces plant is around about 60,000 tonnes per day of capacity that comes out. It is fundamentally led by a couple of things. So first of all, the mine development has been held back. As we know, we're monophasic out there at the moment. It's going to take a couple of years to get Donoso open up. And during that period of time, the capital required for this plant, the operating cost on this plant are extraordinarily high. So the margins on every copper tonne that come out are very close to 0 or negative on that basis. So it doesn't make any sense for us to keep running that plant at current short-term pricing. So Ruben and the team are going to use this time to deal with one of the tailing dams that we are in the process of moving and manage the costs. So we will be able to start this plant back up in the right price environment, and certainly pretty quickly in a couple of years' time, if that transpired. So that is the major issue at Los Bronces and it's the right response, value over volume.

Cool. Understood. And I guess that probably means that in the CapEx numbers, there's a little bit less stripping in there if you're not having to push us hard?

That is correct.

Cool. And then just on coal. We've talked a bit about coal in the past as well, met coal price costs continue to sort of remain elevated. I get that there's a Queensland royalty change that's impacted the cost curve full stop. But on that met coal business down in Queensland is 20 million tonnes now the right long-term run rate to think about where it can be? And this business has previously operated at $60 a tonne, I guess, completely gets a different environment now. But what's a good long-term line in the sand to set a target for on costs for the coal business in Australia?

So Richard, look, I mean, I think the right sort of long-term run rate for this operations is in the order of sort of 24 million to 25 million tonnes per annum. And timber -- Dan and the team are now ensuring that their long-run cost base is appropriate to that type of productive output. It will take a couple of years to get from 17 million tonnes, which is where we're going to end around about this year to the 25 million tonnes. But in advance of that, we're making sure that we've got the right cost structure to support that sort of output.

Okay. And long-term costs?

So long-term inflation? Long-term exchange rates? It's -- we will control every element of this that we can.

Next question comes from Myles Allsop from UBS.

Yes. Just a couple of questions. First of all, just looking back, this is the second consecutive year where we've had some fairly material cutbacks to guidance. What can you say just to give us some confidence that this is the last of the bad news that when we get to December 2024, we're not going to have another round of sort of cuts to production guidance?

Myles, we've got -- so we've got some very good assets in the portfolio. They have many of them being impacted by some very unique set of circumstances coming out of the COVID years and then some specific logistics and infrastructural issues generally around the world, and that's been the biggest issue. We have adjusted, I think, dynamically to these circumstances and as things become clearer, we've used this great team of people and our planning process is to come up with something that we believe is a very meaningful and realistic outcome for the next couple of years in this business. So the -- I can absolutely assure you that the things that we are in control of that we need to be on control of are being well controlled by a team of extraordinary people and that once we come through, some of these cyclical impacts, particularly in diamonds and PGMs, we will be very, very well set.

Okay. And then maybe just on the cost savings. Obviously, that's the other some new news from today, this $1 billion that's coming through. And to what degree is that embedded in the unit cost guidance? Or as we look into 2025 unit cost, obviously, you're not guiding that at this point. Can we hope to see a further step down in unit across a number of the divisions?

John, do you want to take that?

Yes, no problem. Thanks, Myles. It's nice to talk to you. Yes, I mean the cost thing, as you said, the $500 million we talked about previously on the overhead work. So that continues and is well underpinned and well progressed. So that's coming through nicely. The new $500 million that we've announced today, that's more operationally focused, given the action that we've been talking through. So that is coming through in the unit cost and that underpins the 2% step-down in unit costs in 2024. And I think it's not to underestimate the scale of that, given that 2% net offsetting, as I said, CPI running at 4% or 5% plus mining inflation on top of that. So there is significant action there. Obviously, that would all come in immediately on 1 January, so they'll get a carry forward or some of that on an annualized basis into 2025. And as I said in my presentation, we expect to see that those unit costs will hold broadly at the sort of 2024 levels for a couple of years late after, which I think gives good confidence that we see a little bit more in the tank to continue to manage to offset that inflation that I just described.

Our next question comes from Chris LaFemina from Jefferies.

Thanks for the update. Just a question on the diamond market first. The weakness that you're seeing, which you're attributing to consumer weakness, it feels like a bit like 2008, 2009, but the global economy, obviously isn't as bad as it was then. So I'm wondering how much of this is a function of kind of the structural shift into synthetics? And could you comment on whether synthetic demand is down as much as natural diamond demand? Or is it just the real diamonds that are getting impacted more by the weaker consumer?

Sure. Al, do you want to take that first?

Sure. Thanks, Duncan. I think this is a question, which as you can imagine, preoccupies a lot of our waking thoughts. We see 3 main causes for the downturn in diamond demand over the course of the last year. The first is obviously, macroeconomic when global growth rates fall as they've fallen, guidance are often disproportionately hit by that, the converse, of course, when growth rates go up, so the first is that macroeconomics. The second is China and the lag that we see in the Chinese market responding and when Chinese consumers are going out on the moon, they're buying investments rather than diamonds in the same quantity. The third aspect that we're seeing is that engagements and therefore, the purchase engagement brings in the United States are down. And that's because 2, 3 years ago, when the people who wouldn't be getting engaged today should have been meeting for the first time, we had the COVID lockdowns. So we're seeing that lag there. So those 3 main effects. GDP, Chinese demand lagging and staying low. And thirdly, this after -- the macro piece as well on GDP. Now you asked about lab-grown diamonds and the encroachment that lab-grown diamonds are making. This is really, really interesting. So what we're seeing is 3 things. So lab grown supply continuing to rise out of India and China. We're seeing lab grown sales in terms of the amount, the numbers of diamonds going up in the United States. Not really outside the United States. This is mainly a U.S. issue, but we are seeing lab-grown diamond prices plummet. So they are down 90% over the last 2 years. And that's why you're seeing lab-grown diamond manufacturers going -- heading towards bankruptcy at the moment. So greater volume and much lower prices. What does that actually mean for us? This is actually, as we predicted. It's just happening a bit faster. And what we're seeing is this bifurcation, this total splitting of natural versus lab-grown. So it's painful in the short term, undoubtedly because it means a lot of lab growing volume going in, but it's true in the long term in that now the prices for lab-grown are less than 10% at a wholesale level of those prices are natural. There is less and less confusion between the products, and we believe that we're moving towards a time where we're going to see very, very differentiated markets for those 2 products.

You're not concerned about lab-grown diamond taking significant market share from natural stones and high-end jewelry, and is that even happening? Or is it more lower end jewelry where synthetics are getting the market share? I'm just -- I guess my concern here is that the cyclical -- the U.S. economy is not terrible. And you're seeing the rough diamond market there very, very weak. So just wondering how much of a real recovery we can see even if the U.S. economy stays resilient? Or do people just buy more of the synthetics?

So I think there's a couple of things going on. It's a really, really good question. There are a couple of things going on. Firstly, the natural diamond demand in the United States is not that bad at the moment. And we saw relatively good performance during the Thanksgiving and the Black Friday and the Cyber Monday period. So we can't complain about that. What we are seeing is I think a push that's happened through the last 2 to 3 years where lab-grown diamonds did encroach on areas such as engagement rings, but with the rapid fall now in lab-grown diamond prices, as I say, down 90% in the last 2 years, we are seeing lab-grown diamond moving towards being more of a -- action item fashion jewelry rather than the jewelry that marks the most meaningful movements in people's lifetimes, which is, of course, what we focus on in De Beers. Now when you are at that period where, if you like, the forest fire is burning most brightly and we're seeing large amounts of supply coming in, I think it's very important that we look actually at the profitability of that business and the prices of the lab-grown diamonds, and that's why we're so confident in the bifurcation of the market going forward. And in our view, natural diamonds remain, well, they have been for hundreds of years, symbols of the most important moments in people's lives and lab-grown diamonds do what crystal, Swarovski crystal, cubic zirconia has been and that is -- they remain a fantastically fun bit of fashion jewelry.

And Chris, just to reiterate. In terms of the quality of the assets that we have, in the portfolio. The -- from a diamond's perspective, these are second to none, and there have been very, very few -- none actually, new diamond discoveries in the last 15 years or so, and some of the older diamond assets are shutting down and closing down too. So all of that, everything that Al said, particularly in terms of what we're seeing as a natural break in the lab-grown markets to the natural markets and what's ultimately becoming a scarcity of supply of natural diamonds, I think stands this business in very good stead.

Our next question comes from Ian Rossouw from Barclays.

Just a couple of questions. Firstly, on the PGM business in the release of the pamphlet release, you mentioned that it's roughly keeping current production from owned operations flat, but you talk about a review underway to identify further opportunities. I mean, is this an opportunity to more meaningful cut some of these higher cost deep underground shop? Maybe just sort of curious what that could entail and what the business could look like in, let's say, 5 years' time? And then secondly, just on some of the core growth options you mentioned, Duncan. How should we think about the timing of these with regards to Los Bronces underground, Collahuasi expansions? I guess, you showed on that chart. But how do these investments of these sort of dovetail with each other? Or will there be some overlap in the second half of this decade?

Yes, Ian. Sure. So on the PGMs front, Timber and Craig, are absolutely having a look through all of the operating performance of all of these assets. Value over volume will be the driving mantra in all of this. But of course, we are absolutely optimistic on PGMs. And certainly, the quality of the assets that we have in the portfolio are, again, very, very good. And therefore, we believe should be right place to be able to present into this demand that we will see coming for all the reasons that I spoke about earlier. I mean if you plot the industry returns over the last 30 years, we are absolutely at the lowest of the lows in that period of time, and that can't be right in terms of this industry generally and our assets in particular. So Timber and Craig will continue with the review of the general performance of this business. We are, as I said earlier, absolutely focused on being sure that we are the best at what we can be the best of and what we are in control of. So let them get done with that review, and we'll see what comes out of that. As far as the copper growth options are concerned, I did take you through more or less the timing and the sequencing that we expect for these assets or for these projects in the future. So the first one rarely is going to be Collahuasi after Woodsmith. So right now, we are in, as I said, the fifth ball mill is up and running. We've got a few opportunities around debottlenecking there within the current permits. But then we will need to get the permits for the fourth line. And our expectation is that we would be able to acquire these permits in around '27. So the time that we get the permit would be actually after we've got through the peak spend of CapEx at Woodsmith. So we'd be on into the execution of the project of the fourth line at Collahuasi, '28, '29, '30, so coming into production in the early '30s. And we expect them to be able to get a permit. So we've got the first permit for Sakatti and that is the finish permit now going through the European Union process in 2029. So therefore, real construction probably 2030, 2031, and that's more or less at the tail end of the Collahuasi construction. And then Los Bronces underground is probably out beyond that. So we're busy doing the pre-feasibility study be for that now. And then we have, by and large, the environmental permits, and it's a number of other permits that we would need to go through for that. But my expectation is that the majority of that spend would occur naturally just after Sakatti is completed.

Maybe just to push you on the PGM restructuring. If you say that you'll look at value over volume, does that mean that sort of 2.1 to 2.3 from owned mines, I mean how much meaningfully can that fall?

I don't know. I mean -- so look, as when we're through this review, every ounce needs to have its own margin on it and not only in the short run, but in the long run, too. So obviously, we're not going to make the hard cutting to the bone irrational decisions in terms of the short run when we've got a view on what the long-term demand for these assets are going to be -- these products are going to be. But if we cannot see sustainable value on every ounce, then we will take those ounces out.

Next question comes from [ Matt Ream ] from Goldman Sachs.

I think you've covered on to the [ basis ]. So I'll have a couple on your copper growth. Just to start with Collahuasi. I've got a follow-on on Quellaveco. Just on the brownfield growth, the -- you suggested previously an uplift of around 20,000 to 50,000 tonnes of the debottlenecking initiatives and you seem to have landed on about [ 25,000 ]. And then the fourth line expansion seems to increase from around [ 100 to 150 ] from the early [ 20, 30s. ] So just keen to know what the scope change has been between those 2 options? And is bioleaching still part of the thinking?

Matt. Yes, so I'll ask Ruben just to talk to the ball mall output. I still think that, that's somewhere between 20,000 and 50,000 tonnes on our share basis. So I think it's just fundamentally a function of where we are in the ore body at any one particular point in time. The fourth line is pretty much in the same sort of dimension as we had previously said, both in terms of quantum and timing. So I don't think there's any change there. And as far as bioleaching is concerned, that remains potentially one of the options, but you need a high -- relatively high and sustainable price environment to make that work because we will have to do a little bit of capital to put the appropriate leach pads and plants in place to do that. So that is under consideration, but it isn't a high priority in the short run. Ruben, do you just want to clarify on the ball mill production please?

That's right, Duncan. It's around that. So 15,000 to 20,000 tonnes additional to -- as our share. We're [indiscernible] very well this month. So I think we could expect that coming in next year. And of course, there is a little bit of grade as well that we need to compensate. So I think this ball mill, we will cover that. But you're right. And then we have this option, as I mentioned, debottlenecking options and can be -- lithium can be more flotation cells. So we are in a process to discuss that with our partners. And then the fourth line, that's the big expansion, as you mentioned, is later on. But you're right. So the numbers are right. So no change in scope. Matt to be honest, it's just an adjustment of the profile, the road map for each phase of the growth.

Okay. Just come back on 2 parts. I guess, just near term with the plants and operations fully ramped up. How is your press [ royalty ] has been relative to your expectations? And are you comfortable in the immediate term that you won't be water constraints given the drought in the region? And then just a follow-on, more longer term. Duncan, you've highlighted on the fact you have scoped that mill up to 150,000 tonnes a day. But you permitted to around 130,000, if I recall. So just in terms of both infrastructure and permitting, what's sort of required here to push [ capacity ] to 150,000 tonnes?

Okay. Ruben, I'll ask you to just clarify the water situation. We had some really good precipitation during the course of this year. So I think stocks are pretty good going on into next year. And then of course, we've got new water scheme, which will come in from 2025 onwards. So I think we're going to be okay from a water perspective, but Ruben can clarify that. In terms of the constraints at Quellaveco. We're currently doing 127,500 tonnes a day. That is our permit constraint. That permit was fundamentally constrained by water availability. We were pretty certain that given our outline of this operation and the way we would be able to operate it, we would be able to demonstrate a water efficiency higher than what we were able to get permitted. And with that in mind, we should be able to then apply through the normal amendment processes for an increment in that permit to what we believe is the appropriate size for that shape and geometry of ore body, which would tolerate around about 150,000 tonnes per day. So we would need for that to happen as to be able to have a few years and a few seasons of collected and demonstrated water management performance data and then use that as part of the baseline information that would go into the permitting process and then that gives us the ability to bring that expansion. The intention would be in another couple of years, another year or 2 to be able to start that process. As I said before, we had in the original design of the project in anticipation of this keyed in the potential tie-ins for that volumetric expansion. So it should be a relatively low capital intensity expansion when we get to it. So Ruben, do you want to just clarify the water?

Yes, sure. So as you know, Chile has been [indiscernible] out with water restrictions and as one -- as part of the long-term solution, we have this integrated water solution project that we call that is progressing very well. 33% completed as we speak. So by end of '25, we should be up and running. It's a long-term contract with our partner. So that's going well. And short term, as you know, we need to have trucks, water trucks are supplying water to the plant. But as we speak now, because of the good rainy season in Chile this year, we are not running those trucks at the moment. But of course, at some point next year, depending on the need, we should run a little bit of -- to have a little bit of water trucks on the road. But because we closed one plant, maybe this is something that cannot happen. So we should have probably 34% or less cost in water, which is a big deal for process, as you know. We should remove out of the business of [ 70 million ] per year in water next year. So I think it's one decision in order to shut the plant given the contacts that Duncan explained and then, of course, the water solution is well balanced now to deal with the situation.

That's helpful. Sorry, my question was actually more geared towards potential in Peru with Quellaveco, just to confirm your water stocks are fine at Quellaveco.

Yes. I think they are -- yes, Ruben, do you want to confirm?

No, yes, absolutely. No, it's so far. So no issue in terms of water for Quellaveco. We have availability.

Our next question comes from Alexander Pearce from BMO Capital Markets.

Duncan, I was just wondering if you could drill down into the lower near-term guidance of Minas-Rio a little bit more, please, particularly in 2024, which is a little bit surprising. Maybe given that strong performance, you flagged in '23. And then longer term, the question is really, is there still a chance that we could see that 25 million to 27 million tonnes per annum run rate in your guidance again, always the new long-term lower?

Alex, thanks for that. So look, 2 things going on at Minas-Rio. None of them unknown to us. The first is that we -- as a result of that water leak several years ago have to run a pig through the water line every 4 or 5 years. And so what we're doing is just planning for that production drop as a result of the time that it takes us to pig this line, and check the dimensions of the wall thickness of the pipeline into the plan. The second thing is that the ore body transitions over a very long time to a much harder rock, the hardy turbo rides as they called. And as we run through that transition, there are just various phases of a mix proportion between the hard rock and the soft ore that we're in now, the impact of which is to slow processing rates down. There was a lot of thinking at the time that was done at the time that we thought that it might be possible to get to 27-odd million tonnes per annum that we would be able to deploy some technology that would help us with this throughput and processing rate. That's probably a little bit more a ways off than we had originally planned for it to be. So the mine is currently operating or currently has the potential to get to 26 million tonnes, which is the original design capacity of Minas-Rio. I'm absolutely certain that Ruben, Matt, [indiscernible] and the team will tweak it a little bit above that. But for the foreseeable future, and for those reasons, that's the outlook.

For all the questions, look, of course, if you've got any -- just before I hand back to Duncan, if you've got any further questions, then please give myself and the IR team a call. I'll be happy to try and talk you through those. Richard, I think we owe you a follow-up. But Duncan, if I may, just pass back to you to close, please.

Thank you, Paul, and thanks, everybody, for your time this morning. Just a reiteration is that this is an extremely high-quality portfolio with some great people operating these assets. So we are definitely close to, I hope, and the bottom of cycle, certainly for PGMs and diamonds. A couple of the very specific issues associated with Transnet and Los Bronces are well in hand, and we're getting on top of all of these things. I can assure you, we are absolutely focused on delivering, and we will continue to be agile in our response to current macroeconomic circumstances. And with that, again, thank you for your time, and hope you have a good break if there's a break coming your way. Take care.