ArcelorMittal South Africa Limited (ACL) Earnings Call Transcript & Summary

[Audio Gap] presented either by proxy or letter of representation. Further, in terms of the Companies Act 2008, it is required that at least 25% of the shares in issue be represented. I wish to confirm that the required quorum of shareholders is indeed present or represented, and I accordingly declare the meeting properly constituted. Shareholders are also reminded that as per company policy, the Annual General Meeting is reserved for shareholders only. The notice convening the meeting has been in the hands of shareholders for the prescribed period, and I propose that it be taken as read. Are there any objections to this procedure? If I can also verify with the operators of our platform, whether they see any hands up, may not be visible to me. There doesn't appear to be any hands raised or any objections expressed. I would like to then proceed in terms of introducing to the meeting, the business for the day. And before we proceed with the main business of the meeting, I would like to use this opportunity then to just share some remarks and address shareholders as well as share some thoughts regarding key issues and highlights relevant to the business of ArcelorMittal in this year that ended 31 December, 2021. Firstly, I think that in conveying my message to shareholders, I wish to just confirm, as we have done in some of the shareholder engagements we managed to have before this AGM, that if one looks back to 5 February, 2013, today marks the end of term of office for 2 of us as directors for Ms. Nomavuso Mnxasana, who joined slightly later than me, I think, by a few months. But for me, having started on the 5th of February, 2013, at this AGM, I can now confirm that it's been 9 years. And firstly, I would like to thank the group leaders in ArcelorMittal, the Group Chair, the Group CEO; and also the representatives of ArcelorMittal Group that's with us on the Board. Raman and Brad, that it's really been a great privilege to be a chair of this very important company in our economy. And in itself, ArcelorMittal Group, a very important company in the global outlook of steel production. And so we are delighted that as we present these remarks to shareholders, we are also joined through seamless transition that we managed to facilitate as a Board by 2 directors that we will be putting forward before shareholders one as a successor to Ms. Mnxasana in terms of a newly appointed director, Mr. Abe Thebyane with regards to the responsibilities that she's been fulfilling as Chair of the Human Resources and Remuneration Committee, part of the HR -- the combined HR at [ Nom Co ]. That we did appoint earlier in the 2021 financial year, Ms. Dawn Earp, who would also be putting for voting by shareholders for the first time, who would also then be taking over the parts of the responsibilities that Ms. Mnxasana had been fulfilling as Chair of the Audit and Risk Committee. We also then would want to welcome Professor Bonang Mohale, who I have the privilege to hand over to as the designated Chair of the ArcelorMittal Board, commencing this AGM. And so one can't help but just cite a few extracts from the letter that we sent to shareholders and refer you to the statement that I referred to by Joel Barker, who defines a leader as someone you choose to follow to a place that you wouldn't go by yourself. And most importantly, emphasizes that, the role of leaders is to secure and recognize the future of the enterprises that they are entrusted to lead. And so as ArcelorMittal South Africa is, so that is what has guided us throughout these 9 years. We've been constantly looking at how we recognize the changing landscape of the steel industry in order to ensure that we secure the long-term sustainability of ArcelorMittal South Africa. On this path towards securing the long-term sustainability of ArcelorMittal South Africa we've had to navigate a few challenges, some of them became historical milestones. Firstly, we had in the history of South Africa had to deal with the challenge that we began to see 2014-'15 of the influx of Chinese imports -- steel imports into South Africa. And that called on us as the Board, as the Executive Team at the time to commence engaging government around the challenges of that this would present to the primary steel sector in South Africa. We, through that, secured the hot rolled coil and the construction steel sector protections that we received from the support by government. We also then proceeded to engage with the Competition Commission at the time around challenges that we faced as an entity that related to allegations of uncompetitive conduct. And through that engagement achieved an amicable agreement with the Competition Commission and the government, which have since been settled successfully. We also then had to deal with the matter of South Africa's requirements for any large enterprise such as ArcelorMittal with regards to the requirement of license to trade as presented by the requirements of the Broad-Based BEE Act. And so in 2016, we then entered into a Broad-Based BEE transaction, which brought on board Likamva Resources, which acquired 17% of our shares in AMSA. This then also was topped up with the addition of a number of community-based trusts, which also contributed further to enhancing the Broad-Based BEE credentials of AMSA, the ArcelorMittal Community Trust, the Isabelo Trust and also the consortium broadly of Amandla we Nsimbi. We also faced operational challenges along the way as we were navigating this journey of securing the long-term sustainability of AMSA. We were met early on in 2014 by an incident in front of a park where we lost a blast furnace. Later we also saw a historic event in the history of steelmaking, because in steelmaking the reline of a major steel plant occurs once in a while. It's at a one in several decades, incident. And so we saw the reline of the Newcastle and 5 blast furnace in 2014. The key thing of note is that throughout these turbulent times, mindful holders will be mindful that during this period, we were bleeding a lot of cash, reporting lots of losses. But I must say we take a real pride and pay respect to our group -- ArcelorMittal Group -- for never letting go during these difficult times. They stood by this asset. And if had it not been for their support, I think we would have been talking a different story in terms of the long-term viability of ArcelorMittal South Africa. We wish to, as the broad pay a single attribute to the Executive Team as led by Kobus Verster. We saw an acceleration and also a leadership that brought into fruition many years of a journey of trying to achieve cost competitiveness for ArcelorMittal South Africa. Various leaders before Kobus put building blocks that eventually fell into place when our CEO took office. And through his stellar leadership, we today stand to as a Board as well as an Executive Team to report to shareholders that in 2021, we recorded our strongest EBITDA since 2008 as well as a headline profit of ZAR 6.8 billion, contrasting sharply to the previous year's loss of ZAR 2 billion and the many other losses that we've incurred in several years prior. This was not an easy journey. It occurred in a very tough trading environment presented by the historic COVID-19 pandemic. The pandemic itself is a once in 100-year event, that's how generally markets referred to it. Given that the last of this was in the 1917-1918, so in 2021, '22 -- '20, '21, '22 to have to deal with this prolonged pandemic and still succeed in achieving our one organization operating model. And now we are solidly on a path of a value plan program that will continue to ensure that this sustainability for ArcelorMittal is not a once or fad or a once-off fashionable trend, but were successive Boards and successive Executive Teams will find strong building blocks upon which to build a long-lasting legacy for ArcelorMittal in South Africa. And so during this 9-year period, we also celebrated in 2016, the 10th anniversary of ArcelorMittal Group, since the creation of the group. And as I step down, I wish to say to Brad and the rest of the Board that I will be watching on the sides in 4 years' time when ArcelorMittal celebrates its 20th anniversary. And I'm quite confident that looking at the strength of AMSA and the growing strength of the group, especially with the group now having kicked off a new platform of leadership on greening of steel and ensuring that we all will be able to piggyback on that platform, to ensure that as we all look towards a carbon zero effect on our production and our supply chain that ArcelorMittal South Africa will also be counted amongst those that have lived -- stepped on to the plateau of preserving our environment for posterity. And so with that, I wish to say Prof. Mohale, as you assume office, may you hopefully have as wonderful term of office as I have been enjoyed. And I can assure you that you're joining a team of committed men and women who really want to see South Africa continue to be counted among many key steel manufacturers in the globe. And most importantly, as our own country continues on this new trajectory of rebuilding and recovery for the economy. We've also enjoyed good support from the Office of the President, including his economic advisory team as they embarked on this investment journey, with investment South Africa to secure ZAR 1 trillion into this economy in the first 5 years of office of the incumbent President. We hope that the modest foundation we built serves as a platform from which we can springboard lasting success. With that, ladies and gentlemen, that concludes the Chairman's address. And so at this point, for the sake of good order, I'm now going to request that we proceed with the next order of business. And just remind us, firstly, that for the sake of good order, we are using a virtual platform for this meeting. We will allow questions on the reports we presented after voting on the resolutions, but having taken place. But also that questions relating to the specific resolutions may be asked after the resolutions have been proposed and therefore, voting would take place on that basis. The integrated Annual Report that incorporates the reports of the directors, the audit and risk committee reports, transformation, social and ethics committee report as well as the financial statements, including the Chair's report of the year that ended on 31st December 21, have also been in your hands for some time. The report fully covers the activities of the company for the period under review and have nothing to add in terms of the information contained therein. I wish to now invite that members of the Board that I shall call upon table also on a high-level basis and a highlights basis, the relevant reports that we've cited in this agenda. And the first of those is the audit and risk committee, and I wish to refer shareholders to the report of the audit and risk committee as included on Page 7 of the 2021 Annual Financial Statements as well as Page 48 of the 2021 Integrated Annual Report, which reports we shall take as read. And in addition, allow me to invite Ms. Nomavuso Mnxasana, who has been serving as Chair of this committee in this financial year to also share some highlights from that report. Madam Nomavuso Mnxasana.

Thank you, Mr. Chairman. Ladies and gentlemen, Good morning. Allow me to highlight the following. This committee sat 7 times this year and we evaluated the annual financial statements of the group and of the company for the year ended 31st December, 2021. Based on the information provided to the committee, it considers that these financial statements comply in all the [ usual ] respects. As part of our duties, we also reviewed the independence and effectiveness of the external auditor, Deloitte & Touche. Deloitte & Touche, we have recommended last year at the AGM for reappointment as the auditor of the company until this AGM. And as we all know, Deloitte & Touche has been with us since 2005. And because now there is a rule that there must be rotation of auditors every 10 years. We have then embarked on a search for a new audit firm, which we are going to propose, amongst other resolutions to appoint Ernst & Young for the next year. So we also look at the IT audit letters as external auditors, which included the impairment of property, plant and equipment, environmental limitation, provision and asset retirement obligation as well as internal financial controls. And the committee also ensures that the significant risks facing the company are adequately addressed and monitored the relationship between the external assurance providers in the company. We also reviewed the expertise and experience of the Chief Financial Officer and the finance function. As the Board, we approved the appointment of the Interim Chief Financial Officer, Ms. Suretha van Wyk and we are satisfied that she has the appropriate expertise and experience to carry out her duties, since our Chief Financial Officer resigned during the year. And Ms. Suretha van Wyk has been with the company for a number of years. She has been working in that department of finance function, supporting the CFO. So we are confident that she has the expertise and experience. We also reviewed the expertise and experience of the company secretary, which is FluidRock, company secretary and we are comfortable that they have appropriate competence and experience to serve as company secretary of the company. With this -- just our responsibilities in terms of the JSE Listing requirements, which continues to prepare -- the company continues to prepare group accounts that comply with IFRS and the statutory requirements of the Companies Act as well as the JSE Listing. These responsibilities exercised within an acceptable timeframe. We also reviewed the statements on ethical standards for the company and considered how they are promoted and enforced. Thank you, Chair. I'll now hand over to the Chairman.

Thank you, Mnxasana. If I can also, while we're still on this report, refer shareholders to the report of the transformation, social and ethics committee's included on Page 58 of the 2021 integrated Annual Report. A report that we shall take as read. And on that basis, I would like to call upon Ms. Noluthando Gosa, to also share some highlights from that report.

Thank you, Mr. Chairman. Good morning, shareholders, fellow directors and all participants. Mr. Chairman, as you indicated, I will also take the report as read. It's in the AGM pack, and I'll just go through the highlights. ArcelorMittal South Africa is committed to continuous growth in its contribution as a good corporate citizen, all for the benefit of all stakeholders. This continues to be important during the ongoing COVID-19 pandemic as well as the lockdowns as the impact on the business, employees, the communities, the suppliers and all stakeholders was actually quite significant. In terms of the composition of the Board, we have 8 directors, most of them independent directors with only one executive. And I will also take this opportunity to thank the outgoing Chair Mr. Makwana as well as Ms. Mnxasana, who were valuable members of this committee. We thank them for their contribution over the years. The qualification of the members of the committee are also in their report and they are all members with a valuable experience in this area. In terms of the meetings, we met as the committee is scheduled 3 times during the year. And in addition to that, we helped a B-BBEE workshop in October. The meeting was a joint sitting of both the transformation, social and ethics committee as well as the human resources, remuneration and nominations committee, which that committee have -- focuses more on the employment equity. Hence, we felt they need to do a joint session. In that workshop, we received presentations from some of the companies that we consider to be market leaders in the area of transformation, and we lent some valuable lessons from their experience. And the actions that we agreed upon out of that workshop are being implemented by management, and they will be monitored by the committee during the course of the year. On our responsibilities as the committee, we have statutory duties, one of which, of course, is to report to our shareholders like we are doing today, and also to assist the Board with monitoring and reporting on social, ethical transformation and sustainability issues. And this is not really limited to just monitoring transformation and bringing methods to the Board and coming to shareholders to update on what we are doing. There are also specific activities that are required of us, and one of them is to make sure that the company adheres to the United Nations Global Compact principles at the OECD recommendations regarding the combating of corruption and then the South African Employment Equity Act, which as a good corporate citizen we have to comply with, as well the B-BBEE Act. We also worked on overseeing the company's activities on the environmental, health as well as public safety area. We did this alongside a separate committee, which is the health and safety committee with slight overlapping responsibilities. We also look at consumer relationships. We look at the company's labor and employment activities, including the company's standing relative to the international labor organizations protocol on decent work and working conditions. While they commit to consider methods that are also dealt -- used by other committees, as mentioned the environmental and social methods, the committee also look -- it serves really as the social conscience of the company and ensures that good corporate citizenship, as mentioned, is upheld. And Chair, I will hand over to you. Thank you so much.

Thank you, Ms. Gosa. Without much ado, I now call upon our CEO, Mr. Kobus Verster to present the 2021 annual financial statements and directors' report and address the meeting with some highlights.

Thank you, Chair. Good morning, everyone. The 2021 annual financial statements were provided to shareholders, but we'll take them as read. I just want to highlight a few specifics. As you can see from the financial statements, last year was an exceptionally strong year for the company. The results were supported by a continued strong pricing environment, high sales volumes, supported by a robust price and cost effect. The result of that, we saw our revenue increase by 61%. That was on the back of a 13% increase in sales volumes after a substantial improvement in our production output supported by a 47% increase in price. These allow us to report the highest EBITDA and headline earnings since 2008. I think an important area to notice the improvement in the balance sheet, over the year we were generating a free cash flow of ZAR 2 billion, enabling us to reduce our net debt by ZAR 2.4 billion to ZAR 1.3 billion. I think it's important to notice, despite the reduction in net debt, we were able to reduce long overdue and significant payables to the tune of ZAR 2.7 billion. So on a net basis, almost improved the strength of the balance sheet by almost ZAR 5 billion. The Business Transformation Program, which we've kicked off about 3 years, 3.5 years ago, contributed a further ZAR 2.1 billion in improvements, bringing the total cumulative benefits to ZAR 5.6 billion. That programming this year will be converted to a multiyear value plan program, which is already effectively kicked off. I think largely important that we've started the decarbonization roadmap, something that we're all fairly excited about. And we will update stakeholders as we develop and articulate that plan in more detail. Thank you, Chair.

Thank you to our Group CEO, Mr. Kobus Verster. As previously indicated, we will allow for questions on the reports that have been presented after voting on the resolutions has taken place. Questions relating to the specific resolutions may be asked after the resolutions have been proposed and before voting takes place. I need to advise shareholders present that the Memorandum of Incorporation requires that voting on resolutions be put before meetings on the -- of the company shall be done by way of a show of hands, subject to Article 22.3. However, as provided for in Article 22.33 of the Memorandum of Incorporation, I wish to advise that voting on all items on the agenda will be conducted by means of a poll. Please note that only shareholders who are in possession of a valid proxy, which has been filed in accordance with the notice of the meeting or shareholders who are reflected on the share register or who are in possession of a written letter representation, are entitled to speak and vote at this meeting. Any person not so entitled may post questions after the conclusion of the formal meeting. It is necessary to appoint the scrutineer for the purposes of the poll. I propose to this meeting that [ Mr. Weinand Lo ] from Computershare be appointed as scrutineer to count the votes that will be cast on the poll. Are there any objections to this proposal? On my side, I don't see any hands. And if the scrutineers can help the host of the platform also, [ Mr. Weinand Lo ] can also check if there's any objections that I might be unaware of -- there's nothing…

No objections, Chair.

Thank you. We shall then move to the voting on the agenda items. We will now propose and display the resolutions one by one. If you have any questions pertaining to a particular resolution, please type your questions in the text box. We will respond to questions at the end of posing all the resolutions, and we will then afford shareholders an opportunity to submit their votes if not done so already. If we can then proceed with proposing the different solutions. Ordinary resolution number one, pertains to the appointment of auditors. You are requested to consider the appointment of the audit firm on recommendation of the audit and risk committee. Accordingly, I propose that the appointment of Ernst & Young (EY) as the independent registered auditor of the company be approved. If we can display the full resolution text. Ordinary resolution number 2.1, Is the reelection of directors. Firstly, we'll start with the proposal to reelect Ms. LC Cele as a director of the company. Ordinary resolution number 2.2, is the reelection of Ms. NP Gosa that we propose she be reelected as a director of the company. Assuming that directors have had an opportunity -- shareholders have had an opportunity to cast their ballots, I would like to now proceed to ordinary resolution number 3.1, which is the election of new directors, the first of these is we propose the appointment of Ms. Dawn Earp as a director of ArcelorMittal South Africa. We wish to proceed to ordinary resolution number 3.2. The election of Professor or Mr. Bonang Mohale, as a director of the company. We wish to table ordinary resolution number 3.3, which is a proposal for the appointment of Mr. Abe Thebyane or Abraham Thebyane as a director of the company. We then hope that directors have an opportunity to apply their minds to those, and we now proceed and request that shareholders consider the election of members of the audit and risk committee. The Board is satisfied that all the directors proposed for election are suitably skilled, experienced, independent nonexecutive directors who have appropriate experience and qualifications to fulfill their audit and risk committee obligations as set out in Section 94 of the Companies Act, as amended. All the following appointments are from the conclusion of this AGM until the conclusion of the next AGM of the company. Ordinary resolution number 4.1, is a proposal for the appointment of Ms. Dawn Earp as a member of the audit and risk committee. Ordinary solution number 4.2 is the proposal to appoint Ms. LC Cele as a member of the audit and risk committee. Ordinary solution number 4.3 is the proposal to appoint Mr. Neville Nicolau as a member of the audit and risk committee. We shall now give shareholders an opportunity to apply their minds to those ballots. We then wish to proceed to the nonbinding advisory resolutions. Nonbinding advisory resolution number 5.1 pertains to the endorsement of the remuneration policy. I confirm that should 25% or more of the votes cast to be against the 2 nonbinding resolutions, the company shall then undertake to engage with shareholders as to the reasons why and to appropriately address legitimate and reasonable objections that may be raised. I now propose that the company's remuneration policy as set out in the 2021 annual integrated report, be endorsed by way of a nonbinding and advisory vote. Proceeding to nonbinding resolution number 5.2, which is the implementation of the remuneration policy. I propose that the implementation report, which includes the remuneration disclosures in terms of the Companies Act, as amended, as set out in the 2021 annual integrated report, we endorsed by way of a nonbinding vote as an advisory vote. Having given shareholders some time to apply their minds to the ballots and the proxies, I wish to now proceed to special resolution number 1. Special resolution number 1 is the annual fees payable to the nonexecutive directors of the company. And I'm delighted that I don't have to recuse myself because of not an affected party. So I can safely say, as an independent non-affected party, because I will not be benefiting from this resolution proceeding forward. That shareholders apply their minds to 1.1, which is the proposal for the Chairman all-in annual fee, the directors annual retainer and attendance per Board meeting. 1.3 is the audit and risk committee chairperson's fee. 1.4 is the audit and risk committee members fees. 1.5 is the chair of the human resources and remco. 1.6 is the human resources and remco members. And taking into account that the human resources remco and nomco have been combined into one committee, the nominations committee chair is the chair of the Board. So the fee is included in that all-in annual fee. The transformation, social ethics committee chair, transformation, social ethics committee members, safety, health and environmental committee chair and 1.10 safety, health and environmental committee members and 1.11 any ad hoc or other committees that may be appointed by the Board, the chairperson. 1.12, any other ad hoc committee that may be appointed by the Board, the members thereof. 1.13 is nonexecutive directors that serve as trusts committee chairs and non-executive directors saving as share trust committee members. Those are the 14 items that form special resolution number 1, that we request that shareholders apply themselves to in terms of those fees. We then would assume shareholders have had enough time to do the necessary on their forms and proceed to special resolution number 2. Special resolution number 2 relates to financial assistance to related or inter-related company. I now propose by way of a separate special solution that authority be granted to the company for a period of 2 years from the date of which this resolution is passed, to generally provide any direct or indirect financial assistance in the manner contemplated in and subject to the provisions of Section 44 and 45 of the Companies Act as amended to a related or inter-related company or corporation or to a member of a related or inter-related corporation, pursuant to the authority hereby conferred upon the board for these purposes. The reason for this special resolution is that, from time to time, the company may be required to provide financial assistance to subsidiaries and other related companies within the group. The effect of this special resolution is that the company will be authorized to provide financial assistance to subsidiaries and other related parties within the group, subject to compliance with the relevant statutory requirements. We shall now afford shareholders an opportunity to apply themselves to that resolution. Ordinary resolution number 6, is the resolution relating to request for authority to implement resolutions that shall be passed at this AGM. I proposed by way of an ordinary resolution that any director or the company be authorized to do all such things, perform all acts and sign all such documentation as may be required to give effect to the ordinary and special resolutions adopted at this AGM. We hope, we've given shareholders time to then apply themselves to those ballots. So at this point, ladies and gentlemen, noting that order resolutions have been put to shareholders at this AGM for voting purposes, in the event that there's any questions from shareholders on these resolutions, we shall now invite those questions. This will also afford scrutineers time to count the votes while we are responding or engaging with questions.

On the screen, it shows that there's 13 questions that have been asked, 6 have been reviewed. And so the first one says, good morning Chair, question from Leanne Govindsamy at the Centre for Environmental Rights. We note that there are a number of changes to the Board and would like to know whether any incoming Board members or subcommit members are explicitly responsible for oversight of AMSA climate risk and climate commitments while having the necessary and appropriate expertise to exercise such oversight? So the answer, Ms. Govindsamy is that we have not made changes to our SHE committee, which is the safety, health, environmental committee continues to be chaired by Mr. Neville Nicolau, who has all the requisite expertise to lead to that committee. And remembering also the work committee is a multi-stakeholder committee that includes worker representatives as well as members of the Board and also members of the Executive Team. The next question also from Ms. Leanne Govindsamy. We would like to know whether the audit and risk committee is responsible for addressing the climate-related financial and other risks, in particular, whether the committee and another subcommittee is responsible for reviewing and guiding major plans of action, risk management policies, business plans, budget, strategy, performance objectives, monitoring implementation, performance and so. So firstly, in terms of climate-related risks, as you would know, with methods such as carbon tax, this can have a balance sheet effect. So invariably, they will be -- they would be to go past the audit and risk committee in dealing with those ESG related risks. The FX that relates to what it means to be a good corporate citizen with regards to climate mitigation would then come through the social, ethics committee. The application of what we do in responding to being -- in terms of our zero-harm practices would go to the SHE committee. So perhaps I can pause there and see whether the chair of SHE Committee, the incoming chair of audit and risk and the chair share of transformation, social ethics have anything to add to my response.

I'm very happy with your response. Thank you.

Thank you very much, Dawn. Neville, any additions.

I have no additions Chairman.

Thank you very much. Noluthando any additions?

Nothing to add. Thank you.

Thank very much. The next question from [ Simson Makwana ] Good morning, Chair, why does AMSA have not called for stakeholder meetings of communities to deal with waste, water related, including [ repetition ] at west site. Dr. [ Makwana ] my understanding is that such meetings occur on an ongoing basis, and I'd like to invite the CEO as well as Mr. Mohamed Adam, who deal directly those methods to respond.

Chair, yes. Thank you. I think you're correct. Obviously, since 2020 with COVID, there was no meetings. But prior to that, there's often in frequent engagements. Unfortunately, sometimes very low attendance and participation in that. But as -- I think as we've discussed, the meetings or the engagement do take place. And in terms of the western side, I mean, there's actually no [indiscernible] communities to that specific area. Thank you, Chair.

Thank you very, CEO. I hope we've done with that. Dr. Makwana, the next question. We know that AMSA has published its first ESG report of 2030, 2050 commitments. And the question essentially firstly asked for the details thereof, asks for the details on what technical assistance will be received from Spain ArcelorMittal plant in Sestao requests information on what steps AMSA taking in terms of the risk of Eskom or power and explain the process of consultation that we've undertaken in terms of decarbonization roadmap. According to the integrated report, you regard noncompliance with environmental laws as a risk over the next 12 months. And then lastly, how old are AMSA's blast furnaces. So firstly, the Board's position in the integrated Annual Report and in briefings to shareholders is that in quarter 3 of 2022, the details of the roadmap will be published. And so it would be not possible in this meeting, AGM to share those details while we are still being prepared. But perhaps between the CEO and group on that basis, they may have a further voice over on some of the points on Spain, on Eskom on the blast furnaces and the environmental risks.

Thank you, Chair. I think in terms of our targets for 2030, 25% reduction and 2050 net neutral. It's largely in line with the group objectives. In terms of having access to specific plants, obviously, that's a given. We work with our global R&D department as well as the CTO department on an active and constant basis, assisting us in fine-tuning our decarbonization plan, learning from us and relearning from them. And that will continue and intensify as they also broaden their expertise base and knowledge base and technological breakthroughs. In terms of the Eskom risk, short term, very difficult to manage. Medium term, as part of the decarbonization actually, we will address some of the dependencies. You also have noted that we have announced 2, 100-megawatt one solar and wind project, which will reduce to an extent, our dependency, but also have a cost benefit. We -- and from an engagement perspective, I think we are -- we're committed to engagement as you are well aware with our past interactions. And I think in terms of embarking on this, as I said, a fairly exciting challenge of almost renewing the asset base of any steel companies we will continue to do that and appreciate your inputs into that. In terms of blast furnaces, blast furnace -- roughly -- one of -- the first blast furnace is 2028 thereafter 2032. So -- and but those are not cast in stone. Blast furnace can come down a bit earlier and sometimes, you can extend it a bit longer. And it will also depend on what's the development in terms of carbon capturing as well as some other commercial things, whether you will retire some of these assets at all or quicker. I think that's Chair dealing with most of or all of those questions.

Thank you very much, judging by the nod from our group director, I'm assuming there's nothing further to add. And so the next question says, good morning Chair, thanks for this opportunity. Robin Lenahan from the Centre for Environmental Rights. Within the context of the ArcelorMittal Group's emissions reductions, commitments, it would seem South Africa offers one of the least cost options for achieving these emission reductions. From a group perspective, if there were free and fair trade in iron, so you've skipped that now, Lenahan, you've moved your cursor, now I can't see the question. That's not the same question I was reading. Lenahan, please go back to the question I was reading.

Chair, we just putting that back up again. If you can continue with the next one, we'll put that back up for you again.

No, but don't please disrupt our meeting don't shift while we're in the middle of a question. We're in the middle of that question, please to pull it back.

Sure, sure.

Snap on the screen. Anyway, I don't know, Brad, if you got it the gist of it. It was about saying what is our outlook when we see our group emission reduction process relative to the South African environment. It was assumed that it offers a low costs perhaps opportunity of sorts. I do think that -- at a high level, it still takes us into the realm where we have said we're going to officially publish our roadmap in quarter 3 of 2022. So we generally reflect high level, but we're plead with our colleagues from the environmental organization to please just exercise a bit more patients until quarter 3 when we engage stakeholders on the details of our plans. But I don't know, Brad, if you want to offer any high-level remarks.

Mohamed, I can just read the question. I've got it before me Brad if you focus…

Yes, sir, that's fine. Thank you.

The question is good morning, Chair, thanks for this opportunity. Robin Lenahan from the Centre of for Environmental rights questions. Question. Within the context of the ArcelorMittal Global Group's emission reductions commitments, it would seem South Africa offers one of the least cost options for achieving these emission reductions. From a group perspective, if there were free and fair trade in iron between South Africa and the EU, it would make financially an economic sense to recreate new green iron/steel production plant in South Africa. As AMSA export opportunities of zero or low emissions steel to the EU or to other markets where South African located production could give South Africa a competitive advantage.

Okay. Yes, I think we're combining a couple of issues here, something about free and fair trade and then about the plans in South Africa. So the free and fair trade is a completely different issue, which I won't actually connect to this decision-making in South Africa to invest in climate-related improvements. I think Kobus gave a very robust answer. The group supports all of its units through technology transfer. And as Kobus mentioned, it's 2-way technology transfer. The individual units themselves, including South Africa, of course, have a lot of great ideas and great solutions that they're developing, and we ensure this technology transfer has done throughout the group so that everyone benefits. And then really, with that technology transfer and the best available ideas within our group, each of the units can produce a plan, which makes sense for their unit. And that's exactly what the South African team is doing, and they will come forward and explain that to shareholders, as mentioned by the Chairman. So I don't see that there's other restrictions or connections to the group other than this free and sharing of the best technology that exists within our group. And then, of course, the local plans will take advantage of that and do what makes sense given their asset structure, given the timing of assets requiring maintenance, which also puts Parana decision and other factors. So I would say the South African plan is going to be much clearer in the time frame that the Chairman acknowledged. So Chairman, that's all I have to say. I think Kobus answer was very thorough in this regard.

Thank you very much, Brad. So on that note from Mr. Brad Davey. There's a question from [ Zara Omar ] on the performance incentives. So firstly, as I indicated in my remarks, we've been single-mindedly focused on creating financial sustainability for the organization given the long-term period of losses that we've been incurring. As we're saying that we'll be publishing our long-term roadmap on ESG and sustainability in quarter 3. It follows good order that would then totally revamp our incentives to align them with that roadmap. But again, I don't want to say something today only to bind Prof. Mohale, and Abe Thebyane. And let's say -- but we didn't say this, it's the outgoing Chair that said this. So between the CEO, incoming Chairs of the Board and incoming Chair of [indiscernible], if there's anything further you wish to accentuate please come through.

Thank you, Makwana. It's Bonang. Just to reiterate that we are absolutely aligned because the handover process has been very seamless. This is probably my first meeting that I'm attending. So we will most certainly implement the commitments we have made [Foreign Language].

Officially, now [Foreign Language] Mohale. CEO, anything to add.

Yes. I think it's important to note that not only in South Africa, but group-wide, ESG is becoming part of the KPIs in terms of short and long-term incentives. So that will increasingly play a role in those 2 components of remuneration as from the current year already. So those things are pretty topical. And I think the importance that an attention it gets, obviously, it's becoming more important to measure executives and senior people on achieving those objectives. So I think we're all pretty much in line on the importance and how to incorporate that in a measurable form.

Thank you very much, CEO. I assume that Abe Thebyane you are covered by the new Chair and the CEO's comments. The proverbial thing of you're on mute. I think someone must publish a book on COVID-19, because you are on mute.

Yes, I was saying that's true for -- yes, it has all been covered. I have nothing further to add. Thank you.

Thank you very much. Ms. Govindsamy's question, I think we've answered earlier in terms of the expertise we've always had on climate and risk change and the Board remain unchanged and solid. And so the 3 new directors bring other skill sets because you've got to have a diverse Board. You cannot have a board that only specializes in ESG. If we can proceed to the next question, what steps has the AMSA has Board taken with regards to the items in the JSE climate change disclosure guidance, checklist. Mohamed can I ask you to come in and any member of the audit and risk committee can support your response?

Here, if we look at the latest ESG report we've issued is certainly taking into account the global developments around corporate reporting, including reporting on climate disclosure. We've tried to link sustainable development goals. We've tried to map it against the TCFD requirements. So Chair, we're not there yet, but we've made a lot of progress in time -- in terms of meeting all of these reporting requirements. I think the CR is well aware, that there's a lot of developments globally about reporting. There's moves to consolidate reporting standards. And at the moment, there are various different standards of reporting, and that's why the JSE came out with the guidance. But with what we've done, I think we've already taken a stab about integrating the various reporting standards and trying to report in a coherent sensible way. So we have done that in the ESG report.

Thanks, Mohamed. The next question also repeats more or less the same theme. So I think we will not go through that again. So the question that follows on just that also from [ Zara ]. Can we proceed to the next one? Scroll down. Chair, as a follow-up to our question on suitably qualified directors will refer to the requirements of the TFD in relation to the required skills. Honestly, we've dealt with that. Next one, please. Question from [ Richard Heisman ]. Good morning, please, can you update us with the next debt position currently? And what is your strategy to allocate any excess cash? Can shareholders expect dividends or share buybacks with this excess cash generation, CEO, CFO?

Yes. I think in terms of cash generation, 2021 was one of the first strong years in terms of generating cash, preceded by many years of substantial losses and negative cash flow. So our immediate objective is to strengthen the balance sheet, which we are in process of doing. And I think we also have to be very clear that the investment requirements in terms of decarbonization and those things need to be quantified and fully understood. But I think medium, longer term, obviously, any company has the objective of having a sustainable, strong balance sheet and have an equitable distribution of future profitability. But for the moment, we still have to work on our balance sheet chair. Thank you.

Thank you very much. The next question by Robin Lenahan. Firstly, talks about AMSA being unable to compete in the European markets. Our strategy, as AMSA ArcelorMittal South Africa does not operate in the EU. We're an Africa steel operator. And then to the second question, if it is the support and subsidies, then what support would AMSA need to establish a green iron steel export plant in South Africa. I don't know if you want to reflect on that quickly Kobus, but I think the question misses our strategy a little bit.

But I think, yes, I think we are primarily focused on being cost competitive and firstly, servicing the domestic market. And to the extent that we've got additional capacity focused on Africa, and after East Africa. So those are our home markets where we have operated in the past, and we would prefer to operate because we think we've got a quality and regional competitive advantage. From competing with the EU in future in terms of green steel, I think it's still early days. In terms of our developments there, the South Africa and ourselves still need to understand how we hold green hydrogen is going to evolve, both from a cost perspective but also from a timing perspective. But given all of that, we do believe that our Saldanha steel assets are well placed to be converted to either green DRI or green steel. So for us, it's pretty much a focus area. And coming back to one of the earlier questions that the -- we are working with various parties and also with group to see how we can, in the future, convert that to a competitive green in supplier. The second question then become, do you supply yourself? Do you have enough capacity to supply others? Obviously, that would be a later decision.

Thank you, Kobus. I have a next question, can I ask you Suretha, give us a fresh voice? The question says, morning Chair in comparison to last year's performance, how is this year's performance. The questions from [ Ms. Violet Mathieu ]. Suretha?

Yes, Chair. Thank you. Chair, it's in line with what we presented that at our year-end results and the forecast. So we are quite satisfied, that's -- we are on track.

So [ Ms. Mathieu ] in my address, I spoke about the ZAR 6.38 billion headline earnings versus ZAR 2-point-odd-billion losses last year. The CEO spoke at length about the improved financial performance. May we refer you further to those 2 reports, if we may. Ms. Govindsamy reiterates the need to be consulted. Certainly, between now and quarter 3, there is ample time, Ms. Govindsamy to -- as you've done in the past, to recharge to Mohamed and our Head of Legal and Regulatory Affairs, who will then ensure that the time is created to afford stakeholders the requisite consultation. As we said, we will be going public in quarter 3. So there is ample time for that consultation to happen. The next question says, what are your plans -- or we know your plans to repurpose Saldanha Bay plant, but are concerned about the reliance gas as a transition for. Please explain why AMSA not able to leapfrog gas a transition for our feedstock. If you could scroll up a little bit [ Lenahan ], so I can see who's asking the question. The question is from Mr. Govindsamy. So if I can hand it over to Kobus to respond.

Actually, I think in terms of the natural gas developments in the Saldanha area, I mean, as there's no gas available. There's talks about natural gas, but there's also a lot of resistance around having an interim solution. So I think we will most probably leapfrog, and that's why we have discussions with third parties around the development of hydrogen and green hydrogen in that area. Thank you.

Thank you very much. Is there any further questions that we've not addressed?

Was the last one, Chair.

Thank you, [ Renaud ]. We wish to thank all our shareholders and key stakeholders who also hold shares for the several questions that they've raised. As we've showed you in the past, and I'm certain -- the new Chair would continue in this tradition of encouraging us as a Board, as an Executive Team to have constructive engagements with all our key stakeholders. The door of our Head of Legal and Regulatory Affairs, Mohamed Adam is open for you to reach out to him, inviting to request these engagements. And also in line with our stakeholder engagement strategy from an executive point of view, the Executive Team will also ensure that proactively they engage with key stakeholders, because globally, we take our corporate citizenship seriously. And we really know that we can only be all strong if we all are aligned in terms of the key -- I must underline the best key interests that are common to all of us, because we must appreciate that there needs to be an alignment around the best key interests that serve the best interest of the entity in its endeavor to grow sustainably. I'm going to request 2 things mainly from -- I'm going to request the scrutineers to display the outcome of the voting results thereafter before I close, Dr. Mohale, our new Chair, I'm going to hand over to you to say a word or 2. I'm not sure, Brad, as group representative, whether you may wish to say a word or 2 before I then perform my last duty of closing the AGM. [ Renaud ] can we see the outcome of the voting?

We'll put it up now, Chair. Just apologies, there is one late question. I don't know if I want to deal with that before that?

We understand the community consultation was not possible before COVID. These have been lifted, blah, blah, blah. Please confirm whether we are planning to consult the community's detailed plan. I've just spoken to that, Madam Govindsamy. Let's please engage Mr. Mohamed Adam and the door is open to have those engagements. And I've said this already, we want to engage proactively. So if you're not ready, [ Renaud ] with the results in the interest of time, can I ask Dr. Mohale to say with or to our shareholders of AGM.

Thank you, Makwana. Thank you so very much. I'm absolutely touched, profoundly humbled and deeply or not indeed to be working in the firm foundation that you have so solidly laid. You, the Board and the rest of the Executive Team just commit to work diligently to build upon this firm foundation together with the rest of the Board and the executives. [Foreign Language]. Thank you.

Thank you very much to our newly elected appointed Chair of the Board for ArcelorMittal South Africa. The outcome of the resolutions up to resolution 3, you can see, they were all passed with averages of 98%, 99%. Ordinary resolutions were all passed up to ordinary resolution number 4.3, with that same average 99%. Please keep your cursor stable [ Renaud ]. From ordinary resolutions we go to the nonbinding resolution passed by 97%. The special resolutions from 1.1 to 1 point -- scroll down a bit -- to 1.14, I think, that's the resolutions relating to Board fees, passed at an average of 99%. Special resolution number 2, 99%. And ordinary resolution number 6, 100%. Then lastly, the advisory remuneration resolutions, you've scrolled too fast. I didn't see that [ Renaud ]. The resolutions is about 5…

Correct, Chair, 5.1, 5.2.

Also passed with 91%, 97%. So which means the Board, the company and its shareholders are aligned in terms of the remuneration policy and the remuneration implementation report. And we will, as I think both myself and Dr. Mohale have confirmed, we will take into account the advice that we are rightly receiving from our stakeholders that we should -- when we commit moving forward, as we finalize the green steel roadmap, the ESG road map that will be published in quarter 3 to ensure that we bake into the incentive schemes, full alignment to ensure that we also take into account the need to work towards greening our steel operations. A number of these challenges were not feasible for us when we were making losses. But now that we've started a new chapter of being financially sustainable within our modest means of affordability, within our own framework given that I think shareholders and stakeholders must remember, we operate in South Africa, not in the EU. And therefore, we can only move in tandem with what our own South African and East African market governance and SADC African governments allow us to do in terms of whatever existing, enabling frameworks and subsidies. That's our field of play, and that's our regulatory framework within which we are able to compete. And so with that, as I sign out, I wish to thank all of you, our various shareholders and stakeholders Dr. [ Makwana ] Madam Govindsamy and other colleagues from the Environmental Community, please continue to support ArcelorMittal South Africa. As I've said in previous AGMs, let us not behave like those who were aboard the Titanic. When they thought their side of the ship was dry and not leaking, they pointed on the other side and said your side of the ship is leaking. So let's move from the premise, especially that you are addressing as shareholders voting into 3 shares and a number of shares, let's all be in the same boat of being shareholders and key stakeholders that own a share of ArcelorMittal South Africa, that want to see it succeed. And therefore, there's no side of the Board of the management that is leaking. If this boat leaks, all of us are going to sink. And so on that note, it was a special privilege for the last 8.5 years now into 9 years to be part of this family. And so Brad, as I hand over to you, please convey my gratitude to all our colleagues at group, Mittal Sr., our Chair; and Mr. Aditya Mittal, our Group CEO, that we really cherish the journey that we've traveled together. Thank you very much. Over to you, Brad.

Yes. Thank you, Chairman and Makwana. I will pass along your comments to the senior leadership of ArcelorMittal. Just a couple of comments at the end. First, I'd like to thank everyone of the management team led by CEO, Mr. Verster. And I think it was an exceptionally strong year. And we've been through a number of very, very tough years, the last few years. I think the well-placed decisions that have occurred in those years, how to manage through the difficult market conditions and the lean times set us up to be in much better shape to take advantage of the market last year. And then, of course, they've built upon that coming into this year. And they're building upon that with solid strategic plans, which we will communicate more of. So I just want to thank the whole management team first. Second, that doesn't come without a lot of guidance from the Board of Directors. And I think the Board of Directors have done a fantastic job, guiding the team through these challenging times. And in particular, your leadership Chairman, it has been an amazing 8.5 years almost 9 years. I think you've seen everything the steel industry has to go through. And I think your counsel, your guidance your steady hand in terms of helping to direct this company through all these times has been extremely appreciated by the ArcelorMittal Group, and it should be extremely appreciated by all of the shareholders of the company. So I'd just like to thank you for your distinguished service and your great contributions to guiding this company through these challenging times into much better market conditions today and with a very positive outlook. So thank you.

Thank you very much. Mr. Brad Davey. Thank you very much, colleagues. It is now my privilege to declare the formal business of our AGM concluded, and wish everybody all of the best on the journey and road ahead. Thank you very much.