Valterra Platinum Limited (VAL) Earnings Call Transcript & Summary

Good morning, and thank you for joining Anglo American Platinum's 2020 Annual Results Presentation and Strategy Update. Presenting today, we will have Natascha Viljoen, the CEO of Anglo American Platinum; and Craig Miller, our Finance Director, who will together go through the 2020 performance of the company. If you would like to ask any questions throughout the presentation, you can submit questions and comments through the virtual platform. And for those on the conference call, there will be an opportunity to ask questions at the end. Moving to the cautionary statements. I would just like to draw your attention to the statement, and we will appreciate if you could read this in full in your own time. And with that, I'd like to hand you over to our CEO, Natascha.

Good morning, everyone on the call and -- on the webcast and on the conference call who has joined us here this morning. Before we start, I would like to take a moment on behalf of everyone at Anglo American Platinum to pay our respects to the victims of COVID-19. We would also like to pay tribute to our colleagues we lost in work-related incidents. I'm deeply saddened by the loss of our colleague, Lindile Manzingi, in a fall of ground incident at our Amandelbult mine, and by the loss of the 3 colleagues at our joint operations, João Silindane at Kroondal; and Johannes Mahlalela and Dennis Mdaka at Modikwa. We once again extend our deepest condolences to their families, friends and colleagues. I would like to start with an overview of 2020. We achieved record financials in 2020 despite facing significant headwinds, with our performance demonstrating that we can deliver. Firstly, the elimination of fatalities and zero harm remain embedded in our values. And we were reminded that it is a journey that requires undiluted leadership every day when we sadly and unacceptably had a work-related fatality at our Amandelbult mine after 700 days of being fatal-free. We remain committed to this journey. We feel proud and privileged to have been in the position to support our employees and host communities during the COVID-19 pandemic. And we will continue to look after their well-being and play our role in supporting the rollout of the vaccines to employees and communities. As expected, PGM production was impacted by COVID-19, but we had a strong recovery in the second half with production up 1% year-on-year, showing we have embedded COVID-19 protocols in our new normal. Refined production was impacted by COVID-19 and the temporary closure of the ACP. We are pleased that we were able to safely manage the ACP operations and complete a successful rebuild of Phase A ahead of schedule. Phase A continues to operate well and even above expectations. The fundamentals for the PGM market remain robust and the PGM dollar basket price increased 51%, with rhodium increasing an incredible 190%. The strong price environment underpinned our record financial performance with an EBITDA of ZAR 42 billion, increasing by 59%. Moving on to a review of ESG and how we run a responsible business. The company's core value of safety starts with a primary focus to eliminate fatalities. Despite the challenges of shutting down and restarting operations, we had an improvement in our total recordable case injury frequency rate, improving 4% to 2.4 per 1 million hours worked. The rate was further reduced to 1.77 in December due to the implementation of greater risk management, an increase in management time at the operations, and safety stoppages to strengthen our elimination of fatalities at work. We will continue to pioneer and implement new technology, digitization and modernize our operations to further improve our safety performance and work towards our goal of zero harm. COVID-19 has highlighted the serious need in our communities, which required a collective response effort. We have invested ZAR 500 million in initiatives to support our local communities and protect the livelihoods of our employees. Our efforts include: providing monthly food parcels and vouchers to help 160,000 community members; ensuring water supply to communities benefiting over 100,000 people, and this is over and above our normal water supply to host communities. We've provided equipment to 77 local clinics and hospitals and supported victims of gender-based violence. In addition to this, we continue to support all our employees. We paid ZAR 1.6 billion in salaries during the lockdown and continue to pay those who are still not able to come back to work to ensure we continue to continue to protect both lives and livelihoods. Our responses have enabled us to work in new ways with our stakeholders, and we invest in partnerships and solutions that will continue to benefit our communities long after the pandemic has ended. In other areas, we continue our broader management of chronic disease. As part of our safety strategy, we focus on the health and well-being of our employees by providing medication to people infected with tuberculosis. There has been a significant reduction in TB-related deaths, from 27 in 2015 to 1 in 2020. We've also managed to reduce our TB incidence rate by 43%, to 187 per 100,000 people, which is well below the South African national average of 615. Despite thus surpassing the UNAIDS 2020 commitments of 90:90:90 in 2019, we had a slight reduction across all the measures in 2020. 94% of our employees know their status, 92 of those infected are on anti-retroviral treatment, and 84 have viral load suppression. During lockdown, we made additional efforts to ensure all employees had access to their medication before the national lockdown. We made home deliveries and ran communication campaigns to remind people to take their medication. We will continue to focus on meeting the UNAIDS targets, with the next goals currently under review. We had no material environmental incidents at our operations since 2013. And we've made significant progress in reducing our waste to landfill, improving 92% since the 2013 baseline, with most of our waste either being reused, recycled or recovered. We have 5 remaining work streams -- waste streams that need solutions to get to us to the ultimate ambition of zero waste to landfill. These remaining waste streams equated to only 118 tonnes in 2020, less than 1% of the waste we sent to landfill in 2013, our baseline year. In response to the global challenge of climate change, our activities are focused on radically reducing our energy consumption through future smart mining methods and technology adoption as well as switching to low-carbon energy sources and increasing renewables in our energy mix. Aligned with this approach, we have set 2030 targets to improve energy efficiency and reduce absolute greenhouse gas emissions by 30% against a 2016 baseline. We aim to achieve carbon neutrality by 2040. We have so far achieved an 8% reduction in greenhouse gas emissions, driven primarily by the results of energy efficiency improvements and energy reduction opportunities at our operations since 2016. We have also steadily decreased our energy intensity by 7% since 2016. In 2020, 29% of our water use was from potable sources. This consumption is down from 38% in 2016, with the reduction achieved from focused water management practices and increasing our use of water from treated municipal effluent sources. Technology will play an important role to reduce this further. With the support of the South African and Zimbabwean governments and with the industry collaboration, mining was one of the first industries that was allowed to restart operations under strict health protocols. This enabled us to continue our meaningful contribution to society, to focus on creating sustainable operations for the long term, aligned with our purpose, which is to reimagine mining to improve people's lives. Despite the impact of COVID-19, we increased our economic contributions compared to 2019. This included doubling our taxes to government to ZAR 10.4 billion. Our community share scheme, Alchemy, successfully settled the notional vendor financing, resulting in 1.4 million Anglo American shares transferring to local community development trusts around our operations in South Africa. We've continued over ZAR 800 million on -- to spend over ZAR 800 million on social and labor plans, corporate social investment projects and dividends to both the automatic and Alchemy community share schemes as well as investments to protect the health of communities during COVID-19. We continue to focus on growing local procurement, amounting to ZAR 21 billion in 2020. This included ZAR 3.8 billion spent directly in doorstep communities. We've spent ZAR 10.9 billion on salaries and benefits to employees, and we have paid ZAR 13.8 billion in dividends to shareholders in 2020. Looking now to a review of our operations. Total PGM production for 2020 decreased by 14% to 3.8 million ounces due to the national lockdowns as well as the closure of the Tumela upper section and some surface operations at Amandelbult as they reach the end of their life. Operating conditions were difficult. And the management teams did very well to manage these challenges, embed COVID-19 protocols to keep our employees safe. In spite of these additional protocols, we had a strong recovery in the second half with own mines production up 1% against the second half of 2019. And by the end of 2020, we had all our operations at 100% of normal production capacity. Our mining margins remained strong at 55% for own mine operations. Refined PGM production of 2.7 million ounces was impacted by both the temporary closures of the ACP as well as the impacts from COVID-19. This led to an increase in work-in-progress inventory of around 1 million PGM ounces, which is expected to be released by the end of 2020. Across our operations, we saw a strong recovery in the second half production as national lockdowns were limited to the first half of the year and COVID-19 protocols became the new way of working. Production recovery at Unki and Mototolo were particularly strong, outperforming second half 2019 production levels whilst managing COVID-19 protocols. Mogalakwena was the least impacted by the national lockdown restrictions and is one of the first operations granted the right to continue operating surface operations. However, community unrest in the final quarter impacted production as employees were unable to get to work. Amandelbult, who had the largest challenge due to its size and number of employees, was more affected. And the mine managed to return to normal production capacity by the end of the third quarter. Normalizing for infrastructure closures, Amandelbult was only 6% down in the second half, providing a strong recovery in performance despite the headwinds. In spite of the lower volumes of production, we continued to see strong EBITDA margins across all our operations. Across our own mine operations, we also saw an increase in our mining EBITDA margin from 44% in the first half to 62% in the second half of the year. These very strong financial results were primarily due to the increased basket price and supported by a ZAR 1.8 billion in cost savings, which more than offset the impact of CPI and mining inflation. Refined PGM production of 2.7 million ounces was impacted by the ACP repairs and COVID-19. As you can see in the chart, compared to 2019, we lost 712,000 PGM ounces due to COVID-19, which meant we had lower input material to refine. In addition, the temporary closure of ACP resulted in a buildup in work-in-progress inventory of around 1 million ounces. This is not lost production and will be released by the end of 2022. Sales volumes from production of 2.9 million PGM ounces were impacted by lower refined production, but supplemented by the sale of refined inventory stock. We also saw a significant increase in trading as additional metal was sourced from third parties to mitigate the supply disruptions to our customers. The ACP A is running well following its almost full rebuild. Our improved monitoring and controls are showing us stability, and the plant is improving. We have high availability rates for the plant. And due to the stockpiles of furnace matter ahead of the ACP, we have a constant right of feed, which will insist in releasing the working capital build. In addition, the chart shows our quarterly refined production performance since the end of 2018. Assuming the midpoint of our refined production guidance for 2021 of between 4.6 million and 5 million PGM ounces, and including tolled refined material, we can show that our historic refining performance will allow us to refine our metal in concentrate production as well as draw down the work-in-progress inventory. This provides us with the required confidence that we will manage successfully through the period while Phase B is being rebuilt. These rebuilds form part of our normal annual or biannual maintenance schedules. I will now hand over to Craig to take us through the financials and market update.

Thank you, Natascha, and good morning, everyone. We're today reporting a record set of financial results. Despite the challenges posed by the ACP and the COVID-19 pandemic, revenue of ZAR 138 billion is up 38%, underpinned by strong PGM prices. Record EBITDA of ZAR 42 billion is up 39%, and headline earnings of ZAR 30.3 billion or ZAR 115.54 per share are up 63% from 2019. Cost-saving initiatives offsetting the impact of COVID-19 delivered ZAR 1.8 billion. And return on capital increased to 72%. The company's balance sheet remains strong with net cash of ZAR 19 billion. On the back of these strong results and in line with our disciplined capital allocation framework, we're able to declare a second half dividend of ZAR 9.4 billion or ZAR 35.35 per share, which equates to 40% payout of headline earnings. This brings the total dividend declared for the year to ZAR 12 billion, or ZAR 45.58 per share. Revenue increased by 38% year-on-year. PGM basket price increased by 71% to ZAR 33,300 per PGM ounce, contributing ZAR 28 billion to revenue. Rhodium prices increased by 190% and platinum rose -- sorry, palladium rose 45%. As a consequence of the ACP shutdowns, own production sales volumes declined by 38%. However, PGM trading volumes increased by 235% to just below 1.2 million ounces, mitigating the supply disruption to customers. Underlying unit cost increased by 15% to ZAR 11,739 per PGM ounce, below our June 2020 market guidance. Unit costs were impacted by the 14% decline in mine production as a result of the COVID-19 pandemic. However, cost savings across the business resulted in a ZAR 101.8 billion saving or ZAR 1,077 per PGM ounce, more than offsetting the impact of inflation. Continuing to pay salaries and wages to those employees not able to come to work during the COVID-19 lockdowns resulted in an additional ZAR 607 per PGM ounce. We're reporting a new EBITDA high of ZAR 42 billion, a 39% increase from 2019. The higher PGM basket price and the weaker South African rand, net of inflation, contributed ZAR 29 billion. The temporary closure of the ACP units in the first half of the year and the closure of the B unit in November resulted in lost EBITDA of ZAR 12.8 billion. The COVID-19 impact was ZAR 3.4 billion, made up of ZAR 1.3 million as a result of lower production from mining operations; ZAR 1.6 billion paid in labor cost to those employees not able to work because of the lockdowns; and ZAR 500 million was incurred in responding to the COVID-19 pandemic. The mining EBITDA margin increased by 10 percentage points to 55%, while the group EBITDA margin increased from 32% to 43%. And as I mentioned, return on capital increased to 72%. Trade working capital at the end of 2020 was ZAR 10.6 billion, compared to ZAR 3.1 billion at the end of 2019. The net increase was mainly attributable to the buildup of approximately 1 million PGM ounces in work-in-progress inventory ahead of the ACP. The value of this inventory is ZAR 36 billion, an increase of ZAR 22 billion from the prior period. As Natascha said, the release of this inventory is expected to take up to 24 months. However, the increase was partially offset by the ZAR 9.2 billion increase in the customer prepayment as a result of the higher PGM prices. Sustained business capital expenditure was ZAR 5 billion, focused on capital maintenance, purchasing equipment, the smelter rebuilds and the SO2 abatement project at the Polokwane smelter. The cost of the ACP A repairs was approximately ZAR 500 million, and we received ZAR 350 million from insurers in January. The rebuild of the B unit is expected to cost between ZAR 550 million and ZAR 600 million. ZAR 1.2 billion was spent on progressing our breakthrough projects, including the bulk ore sorter and coarse particle rejection projects at Mogalakwena, progressing the Amandelbult modernization program, and the copper debottlenecking project at the base metals refinery. So looking ahead, in line with our enhanced focus on asset reliability and a continuous maintenance cycle as well as replacing heavy mining equipment which is due to come to the end of its life, stay-in-business capital expenditure is anticipated to be between ZAR 7 billion and ZAR 7.5 billion in 2021. In 2022 and 2023, stay-in-business capital expenditure is anticipated to be between ZAR 7.8 billion and ZAR 8.3 billion. Capitalized waste stripping in 2020 was ZAR 2.5 billion, and this is expected to be between ZAR 2.8 billion and ZAR 3.1 billion in 2021. Despite the operational challenges, the company ended the year in a net cash position of ZAR 18.7 billion, up ZAR 1.4 billion on 2019. Liquidity headroom, excluding the customer prepayment, is ZAR 22 billion, comprising of undrawn committed facilities of ZAR 21 billion and cash of ZAR 1 billion. As a result of the strong balance sheet, the company has been able to declare a second half dividend of ZAR 9.4 billion or ZAR 35.35 per share. This brings the total 2020 dividend to ZAR 12.1 billion, equating to a 40% payout of full year headline earnings. Underpinning our strategy, we have a disciplined and value-focused approach to capital allocation with a clear prioritization on maximizing cash generation, which was ZAR 24.5 billion last year. ZAR 7.8 billion was spent on sustaining capital, maintaining the integrity of our asset base and in continuing our base dividend payout of 40% of headline earnings as dividend. Discretionary capital was allocated towards growth investments as we met our stringent value criteria. ZAR 1.5 billion was spent on breakthrough projects in 2020. I'll now take you through a review of the PGM markets. The 2020 was another strong year for PGM prices. As you can see in the chart, the achieved dollar basket price increased by 51% to just over $2,000 per PGM ounce. The South African rand weakened 11% against the U.S. dollar, resulting in a 71% increase in the rand basket price. Rhodium was the strongest performing metal, hitting an all-time high towards the end of last year. Looking at the demand side. Demand was impacted by a change in consumer behavior, driven by where people work, how they prefer to travel, their expendable income and alternatives to international travel. It's further been impacted by tightening environmental legislation. And lastly, the perception of wealth storage has impacted investment demand. The automotive sector accounts for 2/3 of PGM demand. The chart shows a sharp contraction in the first half of the year due to the COVID-19 pandemic. Light vehicle -- sorry, light vehicle sales were down 14% year-on-year, but this was almost entirely due to the 28% decline in the first 6 months, while in the second half an impressive recovery led by China meant sales were just 1% lower than the comparative period. PGM automotive demand was also helped by a 5% increase in average PGM loadings per vehicle, as tighter emission standards in China and Europe continued to require more metal. Two other large PGM demand segments, industrial uses and jewelry, were also affected by the COVID-19 pandemic, but to different extents. The share diversity of the PGM industrial use meant it tracked the wide industrial sector, which was more robust than retail and services sector. Platinum jewelry demand was significantly impacted, initially at least, as COVID-19 restrictions saw retail impacted badly and many weddings postponed. Jewelry, however, has also had a strong second half recovery, suggesting potential demand remains strong. 2021 should be a better year, especially for the bridal sector. Investment was also strong for platinum in 2020. Both exchange-traded funds and traditional bars and coins enjoyed robust demand. Many platinum investors appear attracted by the improving future fundamentals, such as the potential demand from hydrogen applications. On the other hand, palladium ETF selling continues, with holdings reaching its lowest level since 2008 as a tight market and high prices incentivize liquidation. 2020 was also a breakthrough year for the hydrogen economy. Governments increasingly see hydrogen as a crucial part of their net 0 carbon ambitions. 9 countries plus the European Union announced hydrogen strategies last year. And South Africa has also confirmed its hydrogen strategy. Corporates are also becoming increasingly involved. The Hydrogen Council has now 109 members, up from 59 in 2019, again showing that hydrogen is becoming a real commercial opportunity. It's not just targets and talking, installations of PEM electrolyzers, which have platinum and iridium catalysts and are a preferred way to make green hydrogen, have sold. The fact that the PGM demand and supply were both hit by COVID-19 meant overall balances weren't affected as much as might have been expected. Platinum and rhodium ended the year in larger deficits than in 2019, while palladium was a smaller but still a large deficit. In 2021, we expect a deficit on a 3E basis. Palladium will be in another sizable deficit, while rhodium will be in a smaller deficit than what we saw in 2020. We forecast platinum to be a small surplus, but this could change depending on factors such as a strong year of investment and the degree of substitution for palladium in gasoline catalytic converters. Thank you. I'll hand you back to Natascha.

Craig certainly taught us new skills, that's for sure. Well, thank you, Craig. To close, I will turn to our 2021 guidance. We have embedded COVID-19 protocols at our operations and have set them up for a strong performance in 2021. PGM production is expected to be between 4.2 million and 4.6 million ounces, back to pre-COVID-19 levels. Refined PGM production guidance, which excludes tolling, is expected to increase to between 4.6 million and 5 million ounces as we refine production and release some of the buildup in work-in-progress inventory. Sales volumes remain in line with refined production, excluding traded ounces sold. Capital expenditure will increase to between ZAR 7 billion to ZAR 7.5 billion, as we focus on asset integrity and breakthrough technology capital to further improve our operational performance. Capitalized waste stripping is estimated to be between ZAR 2.8 billion and ZAR 3.1 billion. Unit cost guidance will be between ZAR 11,000 and ZAR 11,500 per PGM ounce for 2021, lower than 2020 due to improved volumes, productivity and cost improvements. To conclude, we continue to focus on our value of safety with the ultimate ambition of eliminating fatalities and achieving zero harm. We are proud of the support we have provided to communities and employees during the COVID-19 pandemic, and we'll use the insights to build even stronger relationships going forward. We continue to see robust demand for PGMs, in particular due to their unique qualities, which enable a green and decarbonized world, and we will continue our work to shape its use in support of this green future. We've embedded COVID-19 protocols and have confidence in the performance of the ACP A rebuild, setting the business up for strong recovery in 2021. Considering the impact of COVID-19, our mining operations had a good year. Despite the significant impact that the stoppages of the ACP had on refined production, I am convinced that the decisions we've taken to protect our employees and the integrity of our assets were the correct ones, and we have learned from every one of them. Accounting for all of this and with the support of high prices for our products, we have delivered record financial performance in a very challenging year. In collaboration with many stakeholders, driven by the care and respect for our employees and our communities and accountability to our suppliers of capital, our financial performance allowed us to make meaningful contribution to society and by dividends to our shareholders. And with that, I will hand you back to Emma for questions.

Thank you, Natascha. Thank you, Craig. We are going to take questions now. I have received some questions from the online webcast, and then we will go over to the conference call line. But as a starting question, I have one for you, Craig. This has come from Wade, who asks, could you please provide some color on the decision to not declare a special dividend? The group's financial position and PGM market outlook appear to be accommodating.

Thanks, Emma. Wade, yes, so certainly, I think we have a capital allocation framework which sets out how we go through the determination of where we direct our capital during the year. As a consequence of that, we clearly generated cash. We declared the base dividend of 40% as equating to just over ZAR 12 billion in dividends for the year. And then we look at our discretionary capital options. So -- but appreciating the balance sheet is strong, we have had a number of headwinds in 2020, principally being the ACP, which did have an impact on that. And as a result of that, we decided that we would like to see some more rands on the board with regard -- or ounces coming out of the ACP and processing before making any further dividend payment. But in line with our capital allocation framework, we will review -- and we do this at every reporting cycle, we will review how we and where we distribute that cash. And so my expectation is we'll go through a very similar process in June, and we'll certainly make the determination in terms of how we return cash to shareholders.

I have another question here, from Nkateko at Investec, for you, Natascha. Nkateko asks, what is the capacity of Amandelbult? Is the 550,000 ounce platinum production target still feasible with the infrastructure closures? Should we view this -- or how should we view this operation in the next 2 to 3 years?

Thank you for that question, Nkateko. The current capacity at Amandelbult is in the order of 700 -- 7 million ounces -- 7 million tonnes per year, my apologies. The infrastructure closures will obviously impact on those. And we are looking at ways of ensuring that we get to the right size for this operation to ensure its economic viability going forward.

Perfect. Craig, I've got another question you, also from Wade from Avior. What were the key constituents of cost savings of ZAR 1.8 billion? And are there any cost-saving targets for 2021?

So yes, so we're very, very pleased to have be delivered -- to have delivered the ZAR 1.8 billion in savings. And they come from various sources. Those savings, some of that is just because of -- as a consequence of the lower production, and therefore, savings on consumables. We have had some saving deferrals coming through as well, but they're across the entire piece. We've had lower contractor expenditure. So it was really a large focus around how do we respond to the lockdowns that we experienced in the second quarter of the year. In terms of going forward, we haven't articulated what the cost savings are, but the cost savings are built into our unit cost guidance which we've prepared, and we've suggested that's between ZAR 11,000 and ZAR 11,500 per PGM ounce.

Perfect. Adam, could I just quickly see if there are any questions on the conference call line, please?

[Operator Instructions]

Okay, I have plenty more questions on the webcast. So I'll continue. So again, Craig, another question for you from Nkateko at Investec. Could we please get an update on CapEx in -- sorry, aimed at improving the overall asset reliability of specifically the processing infrastructure? How much of this CapEx is in the ZAR 7 billion to ZAR 7.5 billion CapEx guidance for 2021?

And so Nkateko, in terms of the capital, so we are seeing a step-up in our capital maintenance program. And it's about approximately between ZAR 2 billion and ZAR 2.5 billion has been allocated to capital maintenance across the suite of assets for the next few years. And that is a step-up from we were spending approximately ZAR 1 billion to ZAR 1.5 billion, historically. So it is a step up, but it's just in recognition of our focus around asset integrity and maintaining the quality of our asset base.

Perfect. Natascha, I think I've got a question for you here from Adrian Hammond at Standard Bank. What's the risk of ACP having another incident before Phase B is repaired?

Thank you for that question, Adrian. I think it's a question on many people's minds. We have gone -- we have implemented significant new systems and control measures to make sure, firstly, that our operations of ACP A run stable, because if we consider the original challenge that we had, it was an operational challenge on ACP A. In addition to that, we have had many learnings on ACP B that we have implemented on ACP A. We are very conscious and deliberating how we operate that asset with the right level of competence in evaluating its performance on a daily basis. I think it's also just important to recognize that in history, we normally go through these rebuild cycles. So it's not the first time that we will be running one unit whilst another unit is being rebuilt. And we have done so successfully for many years. I think the fact that we had an incident loss year certainly impacted confidence levels. But I believe that we've done everything we should have to maintain the stability and the integrity of that asset.

Perfect. I've got a question here from Sylvain at Exane BNP Paribas. I think, Craig, this is probably aimed for you. What is the latest on power availability and price in South Africa? Are there any constraints on operating hours? And how much of Amplats' power is sourced internally versus the grid?

Okay. So in terms of the cost and the escalations -- sorry, let me talk about availability. So clearly, we have been impacted by any load curtailment that Eskom introduced, but we are able to manage that in terms of how we deploy the energy then to our various assets. And typically, we will get a bit of notice and then we can make the necessary arrangement. So we're not in a position where we would have people necessarily underground. We would make sure that that's -- that we have all the electricity that's required there, and we would then reduce some of the electricity at some of our other operations. But we're able to manage that. But clearly, obviously, with the disruptions, it does have an impact on our business. In terms of the tariff escalation, so Eskom was awarded a 15% increase in electricity prices. That award came through last week. However, we have built into our unit cost guidance, we've built in a forecast increase of around that level. And so that is built into what we're anticipating spending for the year. And then in terms of where we are today, in terms of our own electricity generation versus the grid, at the moment, we take 100% of our electricity from the grid. However, as part of our Mogalakwena Solar PV plant and what we're looking to do there from the hydrogen truck, we're looking at developing our own solar plants that we would be able to then build that energy into the Mogalakwena operation, but that's something to come in the future years.

Perfect. I've a question for Natascha. Is Anglo American Platinum planning to mandate COVID vaccines for employees?

I think it's important to recognize, firstly, that at this stage, only governments can procure vaccines. I think in addition to that, we are fully committed to support government and industry to support the procurement and rollout of vaccines to our employees. And to that extent, we have been working closely with industry, with business, and collaborate, in support of government, to get vaccines to our employees and to the larger South African society as soon as possible.

I have a couple of questions that I think are likely to be aimed at Craig, from Shilan at UBS. There's 3 parts to this question. One, do your forecasted deficits include the sale of inventory? And what is your view on 2022 surpluses and deficits? The second part is please, can you give us more color on the Mogalakwena CapEx outlook? What needs to be replaced? I'm not sure about that part of the question, but is the expansion project still on the table? And this will be coming up in more detail in the strategy update. And three, you are lifting volumes materially year-on-year, but your unit cash cost guidance is flat. Can you give us some insight into the cost pressures you are facing?

Okay. So thanks very much for the questions. In terms of the deficit forecast for 2021 and then what we're looking forward to in 2022, yes, they do include the anticipated refined production from ourselves. And so that has been taken into account. I think as we look into the outlook for what 2022 looks like, as I said when we spoke, we see continuation of demand for PGMs in the water catalyst sector. And so we would be anticipating a 3E deficit as well in 2020 and 2022. So -- and that's just really driven by the fundamentals for the metals as well as the recovery that we see from ourselves and others in the South African industry following the impact of COVID. In terms of the Mogalakwena CapEx outlook, I think you're referring to the replacement of heavy mining equipment that we do see taking place in the -- in both in 2021, 2022 and to some extent, in 2023. We've got a series of pieces of equipment that have been coming to the end of their life. And we've extended their life through some of our P101 programs. We've been able to extend sort of truck operating hours by approximately 20%, 25%. So we've done that. But now we're going to phase of that replacement. And that's where you see that additional HME equipment spend coming through for the next few years. I think on the expansion, we'll cover that in the presentation very shortly. And then in terms of volume and your question around cost, certainly, we do see -- we have a program linked back to our P101, where we aim to achieve benchmark performance. As a result of that, we have greater efficiencies within the business. And that, therefore, enables us to moderate the increases in unit costs. Where we see cost pressures coming through, clearly the 15% increase in energy is one of those components. We do have wages which are forecast to increase by another 5.5% this year in terms of our wage agreement. So those are probably 2 of our largest drivers around cost pressures. But therefore, it's incumbent on us to work much harder in the business to be able to mitigate those cost increases and hence, the guidance that we've got in unit costs.

I have a question here for Natascha from Arnold. Is there any scope to toll treat some of the metal that's locked up? Is that any capacity in the industry to actually toll treat some of that buildup in work-in-progress inventory?

Arnold, thank you, and a very good question. We have reviewed a number of options to reduce our work in progress as fast as possible. And we are taking up some of those options that's available in the market. Though they -- I need to point out that they're very marginal, but certainly helpful. So that we have underway. I think the best way for us to reduce our work in progress is to ensure that we look after the stability of ACP A and run that operation as stable and reliable as possible. That would both be the most efficient and cost-effective way of reducing our work in progress.

Perfect. I've got another question. It might be for both of you, which is please comment on the sale of noncore assets such as Bokoni and Twickenham, and that's come from Patrick Mann at Bank of America.

Okay. So I'll take that, Patrick. In terms of Bokoni, we have a process that's underway for Bokoni. We've progressed that and parties are currently undertaking site visits and due diligence activities. And so we're -- there are a number of parties that are interested in that particular opportunity, and we're looking to hopefully conclude that sometime this year. In terms of Twickenham, that mine is obviously on care and maintenance. It is part of some of our options review in terms of how do we deal with that asset into the future with an expectation. We're busy updating our profiles for that. But I think as you'll see later on today, we've really focused around our core 4 operating assets as the key part of the portfolio.

Great. I've got a question for Natascha. This has come from Martin Creamer at Mining Weekly, who asks, new hydrometallurgy is being rolled out at a rival platinum mine in the Northwest. Is Anglo American Platinum aware of this development, the advantage of hydrometallurgy? Or is your company wedded to its pyrometallurgy system that uses 80% more electricity, has higher breakdown risk, destroys cobalt and has several other disadvantages?

Martin, thank you for that question. Yes, we are absolutely aware of this new technology. We have done extensive work to understand its application at our own operations, and we are keenly watching the development of that technology. In the meantime, with our own capital footprint, that is a very effective and efficient way to continue to -- and at the moment, still the most environmentally friendly way to treat and process our concentrate. We need to look after those assets, ensure that we continue our progress in working towards carbon neutrality, ensuring that we consider all of the ESG aspects around that processing. But certainly, Martin, we are not married to our own ideas. And we have a keen eye out on all new technologies that is in under development out there.

Craig, a question from Nkateko, asking how long will the repair of ACP Phase B take?

So ACP Phase B, as Natascha has said, is under rebuild at the moment, and we expect that it would be complete -- that those repairs will be completed in the second half of the year.

Got lots of questions coming up on rhodium here. So I've got a question that's come through from Dominic O'Kane at JPMorgan, who asked, what is your refined sales guidance for rhodium in 2021? And what is the split between the first and the second half? How much rhodium do you currently hold in inventory?

So Dominic, we don't provide the refined guidance split outs. So we give you the refined -- anticipated refined production on a PGM basis and then also for palladium and rhodium. I would suggest that you look at historically what we would have produced and you can interpret what that means for 2021.

I think I'll probably have this as the last question. And Natascha, this comes from Adrian Hammond, who says, given your change in fortunes, will you be contributing more to R&D with respect to hydrogen?

I think, Adrian, we will continue to invest money, as Craig mentioned earlier, guided by our disciplined capital allocation framework. We will, however, continue to support the development of our market, and we will say a little bit more about that in our strategy update a little bit later. And not using our own money, but to be effective in the money that we do spend leveraging other capability and development opportunities globally. But certainly, hydrogen is very interesting to us. It's interesting to the future of our product. We feel very bullish about it, and we'll tell you a little bit more about our plans in the strategy update.

Perfect. I think I will just very quickly just check that there are no questions coming from the conference call line.

No. We currently have no questions.

Okay. Perfect. I think we should call it to a close there, and I will respond to all of the additional questions that came through on the webcast, but thank you very much, everyone. [Break]

Good afternoon, everyone, and thank you for joining us for this presentation. We are thrilled to have this opportunity to update you on our strategy. This follows the delivery of our previous strategy, which sets a strong foundation for the next wave of value creation from Anglo American Platinum. I'm joining you today for a shared presentation by Craig Miller, our Finance Director; Yvonne Mfolo, Executive Head, Corporate Affairs; and Prakashim Moodliar, Executive Head Projects and Environments. Benny Oeyen, our Executive Head of Market Development will be joining us remotely for the question-and-answer session. Today, we look to share greater detail to provide clarity on our strategic priorities. I would like to draw your attention to the cautionary statement. We will appreciate if you could read this in full in your own time. We will cover the following topics today: a reminder of our purpose and the strategic priorities that directs us to this important purpose; the market outlook and drivers that underpin our strategy; we will provide further detail of how we look to create value; and finally, we will share what this will mean for the business in terms of value creation. We are grounded in our purpose, which is to reimagine mining to improve people's lives. We are transforming the very nature of mining for a safer, cleaner, smarter future. We are using more precise technologies, less energy and less water, and we are reducing our physical footprint for every ounce of PGMs and base metals we produce. This purpose guides us as we continue the delivery of our strategy to create a better future for society. The world needs our metals to enable a greener future. With the acceleration of decarbonization, we will see an increase in demand for our metals. We are building off our strong foundation with an industry-leading integrated portfolio of assets from mine to market, these diversity of mineral assets, and we will move all our assets into the first half of the cost curve. We are strengthening our discipline -- our distinctive capabilities from setting industry benchmarks for performance, leading technology deployment and unique approach to market development. We are ensuring we deliver safe, reliable and stable operations, creating a fully mechanized and modernized portfolio of mining assets and capturing value across our value chain. We are delivering shared value through our sustainability pillars of being a trusted corporate leader, co-creating thriving communities and enabling a healthy environment. We will maintain our balanced and value-focused capital allocation to deliver industry-leading returns, with a return on capital employed in excess of 25% through the cycle. To achieve our purpose and create value for all stakeholders, we will drive 4 strategic priorities. We will stimulate new markets and leverage new capabilities through our market development activities and capture value from adjacent value chains. We will embed anti-fragility across our business with the aim to increase our ability to thrive through major disruptions. We will maximize value from our core portfolio of mining and processing assets, deploying technology and innovation to drive efficiencies and growth with targeted investments that define the future of our world-class assets. And finally, we want to build on the pockets of excellence to become a leader in ESG in the mining sector, embedding ESG in the -- as a center of our strategy to become a trusted partner, leading in co-creating thriving communities and ensuring a healthy environment. Our people make it all happen. Therefore, the creation of a purpose-led, values-driven, high-performance culture will be the foundation of our strategic delivery. We have an experienced executive team taking the company forward to deliver on our exciting new strategy. This team has extensive mining industry experience globally and is structured to align with our key strategic priorities. Building on the strength of the executive management team and given our renewed focus on asset integrity, operational excellence and ESG, we have restructured the roles of a number of executive positions and have a new team -- and have new team members. As we seek to create thriving communities as a strategic imperative, we have introduced Yvonne Mfolo as Executive Head of Corporate Affairs. Appointed as the Executive Head of Health, Safety and Asset Reliability, we've appointed Riaan Blignaut. And lastly, Chris McCleave has joined the team in the role of Executive Heads, Technical and Operational Excellence. Moving into the market outlook. Our market -- I'm moving into the market outlook and our markets development initiatives. So we have an expansive portfolio of diversified end products, consisting of both platinum group metals and base metals. The world has seen -- has been relying on our metals, and they will become increasingly important over time due to their unique features. They have played a really critical role in emission reduction in the past and will continue to do so for the foreseeable future. In addition, our metals benefit from diversified demand sources, including industrial applications, jewelry and investment. Looking into the future, we are excited that our metals will play a critical role in the energy transition and electrification of mobility. For example, platinum and its alloys are uniquely suited for catalyzing the reaction within both hydrogen fuel cells and hydrogen electrolyzers. Looking at the base metals we produce, nickel and cobalt have widespread use in battery electric vehicles, and copper demand will be driven by the energy transition to renewables. And we are equally excited about the development work we are doing for PGM applications in battery and low in batteries and low loss computing. In the medium term, we continue to see robust PGM demand. Total vehicle production will continue to increase as economies expand. Most of these vehicles, including all types of hybrid electric vehicles, will still need PGM catalysts. The PGM loadings on these catalysts will increase due to more stringent emissions legislation globally. And even as battery electric vehicles take a greater share of sales, PGM demand in light-duty vehicles could be up to 20% higher in 2030 compared to 2019. In the future of mobility, we see battery electric vehicles and fuel cell electric vehicles as complementary applications. There's an increasing recognition of hydrogen's role in decarbonizing sectors that are otherwise difficult to abate, like heating and mobility. Fuel cells have a particular advantage for longer-range applications required faster refueling, for example, heavy-duty trucks, buses and trains. Hydrogen potentially offers one of the most -- of the largest upsides for platinum demand in the coming decades. So I'll spend a little bit of time on it on how it might impact our markets and what we are doing to help that. What is different now to the past is that there is a major directional shift with hydrogen applications. And we are seeing positive signs towards the critical success factors to make this market a reality. It is all in the story of the electron and the molecule. Hydrogen is primary and an opportunity to sell renewable energy in molecules. This solves a significant challenge of the continuous supply of renewable energy. The conversion of electrons to molecules and back to electrons, though, has cost and efficiency impacts. Policy changes and the inclusion of hydrogen in both government and private sectors decarbonization strategies will ensure that the resources are being made available for the development of the technologies. Through 2020 into 2021, we have seen strong momentum in hydrogen-related investments. In the last year alone, over 200 hydrogen products were announced worldwide. And government funding pledges for hydrogen economy more than tripled in 2021, reaching USD 70 billion, driven by a global shift into decarbonization. We expect that these investments will continue to reduce the cost of hydrogen and make certain mobility applications increasingly competitive. For example, the hydrogen council estimates that 60% of applications become competitive at a cost of between USD 4 to USD 6 per kilogram. This is well over the $2 per kilogram that Bloomberg New Energy Finance believes can be achieved by 2030, showing how soon hydrogen and fuel cells can become a commercial reality. This will mean, to mean the hydrogen economy has significant potential for PGMs. To put this into perspective, if just 50% of heavy-duty vehicles and 15% of light-duty vehicles were to shift to fuel cell power, this could translate into PGM demand of about 6 million ounces or 75% of global demand today. Electrolyzers will also use PGMs and provide the green hydrogen crucial for the success of fuel cells. These could contribute hundreds of thousands of ounces of additional demand a year by the mid 2030s. But we are not waiting for this demand to materialize on its own. Through our unique approach to market development, we shape future PGM demand through nurturing, scaling and sustaining a diverse set of new and existing demand segments. Our approach covers the full business life cycle from idea discovery to scale. At early stage, we assemble ecosystems by coordinating capital and talent around PGM centric ideas. For PGM businesses that are scaling up, we support them by providing growth capital deployed either directly or through AP Ventures. For relatively mature demand segments, we support by scaling and capturing the demand base. These activities are supported by 2 work streams shaping the business environment. The first is communication to create a positive and supportive narrative for the opportunities; and secondly, policy advocacy to create a positive playing field for the growth of opportunity areas. Now let's turn to a specific example of accelerating PGM demand, the hydrogen economy. We coordinated the development and deployment of our own and others capital to grow companies in the hydrogen sector. We created and spun out AP Ventures, which today has 15 high hydrogen usage companies in their portfolio. We are developing a fuel-cell-empowered 300 tonne haul truck for our own operations, which will enhance the application of the technology in heavy-duty applications. We are also encouraging the development of hydrogen freight corridors. These are projects that aggregate demand for fuel cell road trucks from end users. This happens along a specific route with the appropriate refueling infrastructure to service those users. We are engaging with policymakers, trade associations and local authorities to create supportive regulatory environments, especially in the major early hydrogen adopter markets of the U.S., China, the EU and the U.K., and are playing a role in shaping the South African hydrogen strategy. Finally, we promote the case for green hydrogen and fuel cells to business and public. As an example, we were one of the driving forces and founding members of the Hydrogen Council globally and the Hydrogen and Fuel Cell Association in China. Our market development approach is not only limited to hydrogen. There are multiple potential demand applications that offer a mix of short to long-term PGM demand. To highlight but a few, we've got low loss computing where new generation, PGM-enabled magnetic memories makes computation faster and lowers energy consumption. In the field of material science, Alloyed have created a digital and physical alloy platform to accelerate the development of new PGM alloys. Line batteries working in the area of battery and storage is another opportunity area. And our testing and R&D continue to show that palladium and potentially platinum can offer a unique formula, creating a PGM demand opportunity in battery electric vehicles, increasing energy density and cyclability. At this point, I want to invite Prakashim to join me to take us into the next section of our strategy presentation. Thank you, Prakashim.

Thank you, Natascha, and good afternoon, everyone. Moving to our strategic priorities. We will start with how we embed anti-fragility to increase the resilience of our operations and embed the strategy. And I think Natascha gave a key example of anti-fragility as we went through the load curtailment this morning. Anti-fragility underpins our strategy with 4 cornerstones. The aim is to increase our ability to thrive through major disruption to ensure the successful delivery of our strategy. We focus on 4 areas. We are committed to eliminating fatalities and creating a zero harm work environment. We continue to develop and deploy technology to exceed operational benchmark performance and improve sustainability. Assuring asset integrity and reliability is critical to enable safe, predictable and stable operations. Finally, we will unlock the potential of our people through upskilling, creating a purpose-led culture and providing a future-fit workplace. In the following slides, I will provide a brief overview of each of these. Creating a zero harm work environment is nonnegotiable, driven by our values. We know that all fatalities are preventable, and we continue to embed this mindset. We acknowledge that our work is not done, as this will always require significant leadership, focus and drive. While improving safety outcomes by modernizing Amandelbult, where we are deploying technologies such as fall of ground indicators, 2-tonne safety nets, LED lights and winch proximity detection. Through our operating model, we are reducing unplanned work, from which we expect significant decrease in safety incidents. We are committed to driving positive change for our people, motivated by our purpose. At the center of our approach to our people is a purpose-led, values-driven and high-performing culture. This feeds into 4 focus areas. Starting with the workplace, we are creating a modernized digital workplace driven by innovation. Secondly, we are simplifying the way we work by creating well-defined work, clear accountabilities and structures to unlock safe, operational delivery and innovation. To create a future-fit organization, we are rolling out our data literacy training to create a fit-for-future workforce. And collectively, our colleagues have completed 3,000 modules to date. Finally, we are very conscious of the impact of modernization and automation on job opportunities. In addition to working very closely with our organized labor and ensuring reskilling opportunities for our employees, I believe this is closely related to the work we are doing in our communities. Our focus on local economic development through collaborative regional development is reflected in our aim to support the creation of 5 job opportunities outside the mine gate for every job inside the gate by 2030. Yvonne will address this further in the ESG section. We are enhancing our asset reliability to create a platform for predictable, sustainable and safe operations, underpinned by process safety. Recognizing our assets are at different levels of maturity and risk, we have adopted a risk-based approach to asset management that is creating visibility on each asset's condition and risk status, prioritizing our work considering the risk to safety, strategic importance and financial impact, building assurance programs to prevent premature failure and to protect the asset over the full life cycle, taking into account the life of operation into consideration. This approach is enabled through our people and the use of appropriate technology, creating a proactive maintenance culture. We are redefining the future of mining through future smart mining. We are deploying a -- we are developing a response to a number of strategic challenges we are facing as a mining industry in the areas of water and energy security, decarbonization and the safety of our tailing facilities. We are reducing our energy and water and capital intensity across our mines. And for example, at Mogalakwena, our rollout of coarse particle rejection technology targets throughput increases of 5% and roughly 8% reduction in energy and a 15% reduction in new water intake. Our bulk ore sorter targets 5% to 8% improvement in metal content of feed to the concentrators. To achieve our goal of achieving waterless mining, our major stakeholder is filing hydraulic dry stacking at El Soldado, one of our system mines, and we will benefit from these learnings and bring it to one of our sites. We are transforming into a truly data-driven organization. For example, we are building digital twins to generate accurate best operational recipes for our complex processing plants. This application is well advanced at Mogalakwena. Finally, we are rolling out innovation to continue to ensure each of our colleagues return home safely from work every single day, with specific focus areas at Amandelbult to modernize conventional mining. I will now hand you back to Natascha. The wonders of the mask.

Thank you, Prakashim. Moving next to maximizing value from our call, I will focus on the selection of some of our key assets. The foundation for our strategy is a strong base of high-quality and diversified assets and capabilities from resource to market. We have the largest mineral resource of all precious metal producers globally. Our 4 own managed mining assets are competitively positioned on the primary cost curve and have delivered record financial returns in the last year. We have considerable diversity in our ore bodies, creating resilience through price cycles, whilst all our assets operate off a strong platinum and palladium base. Mogalakwena and Unki has higher base metal intensity, in particular, nickel, whilst Amandelbult and Mototolo have high rhodium intensity and chrome. Beyond our mining assets, we have the largest processing footprint of the integrated PGM producers, creating optionality with significant potential. Finally, we have distinctive capabilities across our value chain inside our business and have access to world-class capabilities within the broader Anglo American group. Mogalakwena is a world-class polymetallic ore body, a mine of immense resource and size and quality, holding a leading cost position. Its diversity of metals with a high concentration of base metals make it resilient to market shocks and will benefit from the global energy transition. The basket price from Mogalakwena over the last decade has been significantly higher than other Eastern Limb and Western Limb mines. We see further potential of this asset through our exploration activities, with drilling continuing to define the ore body beyond our current mining operations. We are progressing 6 key work streams to realize the full potential of our flagship asset. Operational efficiency or P101 is improving mining and concentrating performance to benchmark in the near-term and is foundational to our work at Mogalakwena. We are looking at how technology can be deployed, complementary to expanding the concentrator capacity and maximizing the utilization of downstream processing. We are optimizing the mine plan and mitigating the impact of the future mine footprint. We're also advancing the potential of underground mining. Paramount to achieving this is resetting relationships with our communities and building valued partnerships. Our P101 initiatives aim not only to meet, but exceed industry best-in-class performance, and we are ready -- we are already demonstrating results. We've designed detailed initiatives, set corresponding targets to set the cutting edge in operational performance. At Mogalakwena, this includes enhancing rope shovel and truck fleet performance and improving both throughput and recovery at our concentrators. We expect these improvements to result in around a 5% reduction in rand per tonne milled and up to 10% improvement in PGM production. Mogalakwena has been on a journey, growing from 0.5 million ounces to more than double that today. Going forward, we are evaluating options to further increase production by between 300,000 and 600,000 ounces through technology development and an optimal mine design. The described work stream will support the potential for a further increase in production. The execution of what is a large integrated project considers the different levels of maturity of the different work streams, the capital intensity and broader ESG implications. Initial indications are that the capital expenditure between ZAR 13 billion and ZAR 23 billion will be required depending on the option chosen. We expect an attractive internal rate of return of between 23% and 27%. This project remains subject to Board approval, which we anticipate will be towards the end of 2021. We will be deliberate and disciplined in the decisions we take for this asset, aligned with our extensive project evaluation and capital allocation framework. Looking now at Amandelbult and transitioning this asset to its modernized and mechanized future, Amandelbult is our second largest operation by production. Amandelbult has a strong foundation with a rich diversity of metals, delivering the highest return on capital employed in 2020. Today, Amandelbult is still mostly a conventional underground mine with the associated safety risk and is located on the fourth quartile of the primary producer cost curve. The mine will become modernized and mechanized to deliver a consistent production in a more cost-effective way. Modernization and mechanization will be fast tracked. Through 5 integrated work streams, like all our operations, it will capture value from enhanced operational efficiency through P101. For example, we expect a 3% improvement in recoveries by 2025 relative to 2019. The modernization journey of Amandelbult will see the asset transition from conventional mining to modern mining methods. This will be enabled by implementing the latest available technology and in-house development -- developed innovations like timber-less support fast drilling, proximity detection to safeguard winch operations, and a digital rollout across the mine. Creating a safer and more productive work environment, these initiatives will deliver meaningful benefits at Amandelbult. On safety, we have made steady progress in recent years with a 20% drop in total recordable case frequency injury rate from 2016 to 2020. We aim to continue this trajectory, eliminating fatalities and achieving zero harm. Conventional mining will be phased out by the end of 2022, a major milestone for us as there will be no conventional mining across our portfolio. Through the investment in mechanized life, life extension projects like 15 East project currently in execution by 2030, we expect over 30% of our volumes to come from mechanized operations. Productivity will almost double from 4 to 8 square meters per employee, leading to a circa 20% decrease in unit cost per tonne. Mototolo/Der Brochen is a mechanized mine with a long life and expansion options. Our efforts are focused on investing to develop Der Brochen to extend Mototolo's life of mine, maintaining production scale and protect local employment. Mototolo's starting point is a competitive cost position, with possible declining volumes in the years ahead. Our activities are across 4 work streams. We are debottlenecking the concentrate at Mototolo to increase throughput by circa 10%. We are developing the decline at Der Brochen to replace declining Mototolo production. Looking further ahead, we are pursuing the possibility of further expanding concentrator capacity from 240,000 to 320,000 tonnes per month. And finally, we have developed the first-line tailing storage facility at Mareesburg to ensure that groundwater is not contaminated and with the additional options for expansion. Productivity improvement and additional expansion potential at Der Brochen leads us to expect an investment that Der Brochen will improve overall productivity at the combined Mototolo/Der Brochen operation by around 20% and increase PGM production by about 25%. The total investment for the project will be ZAR 3.9 billion of CapEx over 5 years with an internal rate of return of between 20% to 30% at long-term annualized consensus prices. Our Unki mine is a large resource and competitively positioned on the cost curve. This operation is setting operational benchmarks and is a jewel in our portfolio. This year, we will complete the debottlenecking of the concentrator to increase throughput to 210 tonnes per month -- 210,000 tonnes per month. Looking ahead, we will drive further operational efficiencies to ensure this asset continues to set performance benchmarks. Unki also recently became our first mine to achieve IRMA 75 Certification. Beyond our mining assets, we have an extensive processing footprint and an integrated value chain. This unrivaled scale creates opportunities to capture additional value. Our processing network provides significant opportunity with 10 ore inputs, 7 key components in the process and more than 13 end products. We are making a shift in how we view our processing operations and aim to capture value from the multiple interlinked assets, leveraging data and advanced analytics. For example, optimizing material flows to capture additional value from co-product development, exploring the production of battery-grade nickel sulfide as an example, and minimizing energy and carbon intensity. While there's more work to be done to unlock the full potential of our processing assets, initial estimates indicate a potential uplift for 5% EBITDA. The effort is underpinned by commitment to asset integrity and reliability, with all our processing assets undergoing the risk-based assessment presented earlier by Prakashim. At this stage, I will now hand over to Yvonne to talk to us about ESG.

Thank you, Natascha, and good afternoon, everyone. Our ambition is to become a leader in ESG in the mining sector. As part of our updated strategic direction, we want to ensure that ESG is not a standalone, but rather at the center of the strategy. To date, our efforts across the ESG space have been recognized locally and globally by multiple organizations, and you can see some of this on the screen. However, our real success will be measured by our stakeholders, and our ambition is to be the preferred investor for responsible investors, a business treasured by host communities, a responsible supplier to our customers, and finally, operating with minimal impact on the environment. As part of this ambition to be a leader in the mining industry on ESG, we will embody the 3 pillars of our sustainable mining plan. Firstly, developing trust as a corporate leader, providing ethical value chains and improved accountabilities to the communities we work with. Secondly, we will enable thriving communities by improving their health, quality of education and access to employment opportunities. Beyond these clear targets, we want to reshape our approach to communities, working with them to co-create sustainable livelihoods through a shared vision. Finally, maintaining a healthy environment by creating waterless, carbon-neutral mines and delivering positive biodiversity outcomes. To shed more light on how we will enable thriving communities across our 4 pillars, let me paint our vision of what this could look like in the future. On stakeholder engagement and participation, we will have established the stakeholder accountability forum by July 2022. Towards our efforts to create value for our stakeholders, we will improve health outcomes, facilitating the supply of drinkable water to all our communities. Through the Mapela water project, we have provided access to water to 70,000 people in the area. We will support schools in our host communities, ensuring all are in the top 20 of state schools in their province. We will support the creation of employment opportunities, for example, through our Zimele enterprise development project, which aims to support the creation of 2,000 jobs by 2022. To protect value for our stakeholders, we will protect water resources for our host communities by radically reducing our own usage, for example, through deploying hydraulic dry stacking and coarse particle recovery as we are currently doing at Mogalakwena. Our mines will be carbon-neutral through renewable energy production and renew -- reduced energy intensity by 2040. We are also investigating opportunities for our communities to play a larger role in our solar PV project through equity shareholding, skills development and provision of some jobs. Finally, we will put in place a long-term land access and recyclement plan and address legacy issues. Moving to our next priority. We will deliver carbon-neutral production by 2040 and a 30% reduction in carbon emissions by 2030 relative to the 2016 baseline. We have made significant progress moving towards decarbonizing our value chain already, identifying opportunities across our value chain to decrease energy intensity with an 8% emission reduction already achieved from energy efficiency initiatives. Clean power through renewable energy generation to scale renewable adoption across our value chain. Our initial project is a 75-megawatt solar plant at Mogalakwena, which is already at request for proposal stage. Finally, we aim to lead the global mining industry in fuel cell truck adoption. We will start with Mogalakwena, where we aim to have a 40-truck rollout commencing in 2024. We currently have a proof-of-concept underway and expect first motion in the second half of 2021. I will provide more details on the next slide. Carbon reduction delivers value through multiple mechanisms. Our initial estimates show that there is that -- show that these moves will deliver economic value with at least a net neutral NPV by decreasing exposure to risk electricity tariffs and carbon taxes. Beyond the economic value, this will also enable us to improve energy security and increase long-term security for our products as customers and export markets push for lower-carbon content. We are leading decarbonization efforts through our deployment of fuel cell trucks at Mogalakwena, a truly innovative and industry-leading project. This is an integrated solution for our mine. The truck are energized through excess renewable energy production converted to hydrogen. These fuel cell trucks are 0 carbon yet will be embedded on our existing truck design, ensuring no compromises on performance. Thank you. I will now hand over to Craig to shed more light on what our strategic moves will deliver in terms of value creation.

Thank you, Yvonne, and good afternoon, everyone. Our strategy has been quantified to define the value we'll deliver for all stakeholders. I'll now take you through some of the highlights of what we aim to achieve over the next 10 years. Starting with production. We'll maintain our production scale. We expect overall operational improvements and expansions to result in steadily increasing production over the next 10 years. Today, our attributable PGM production is approximately 3 million ounces, and we expect to expand this to 3.6 million ounces over the next 10 years, this despite the expected winding down of our Kroondal operation during this period. The expansion will be achieved through deliberate capital investment in a manner that improves our mining margin and our competitive positioning. The strategy will follow our capital allocation framework. This disciplined approach to extreme -- sorry, this disciplined approach is extremely important to us and instills our commitment to embedding anti-fragility. The approach allocates free cash flow, first, to sustaining capital to maintain the asset integrity. Following that, a dividend and then discretionary capital options, provided that they meet the strict investment criteria. Thereafter, in the event of excess cash, this will be returned to shareholders. So we expect our strategy to require increased capital expenditure over the next 3 years, as guided to you earlier in the presentation where I set out what the SIB looks like for the next 3. These investments will initially focus on ensuring the reliability and other stay-in-business commitments as well as our already approved discretionary capital. In the longer term, we see additional optionality for further discretionary CapEx. Our commitment to the base dividend payout rate of 40% of headline earnings remains intact. We're also working to ensure our ESG priorities receive the right level of resourcing and focus in our capital allocation framework. [Audio Gap] our trend of delivering exceptional operational and financial outcomes for all our stakeholders. Firstly, we'll achieve an important milestone by 2022 that all our assets will either be mechanized or modernized. Through our operational improvements and innovation plays, another important objective is ensuring that all our assets are in the lower half of the primary producer cost curve by 2025. This is an important outcome which will allow us to remain immune to deep market downsides. Ultimately, we'll continue to deliver strong returns by maintaining our scale of production, along with improved -- with an improved cost position. Our EBITDA margins are expected to remain stable between 30% and 40% based on long-term consensus prices, while a strong through-the-cycle ROCE of about 25% will be achieved. As part of our commitment to delivering shared value, we'll ensure as a priority that we co-create thriving communities. For example, in 2020, we supported the creation of 1,400 jobs outside the mine gates, and we'll look to support the creation of 5 jobs off-site for everyone on-site by 2030. Accompanying this will also drive sustainability of our operations. For example, we look to reduce -- we look to -- we expect a 30% reduction in CO2 emissions by 2030. Thank you. I'll now hand you back to Natascha to conclude.

Thank you, Craig. In closing, delivering our strategy will create value for all our stakeholders and move us closer to achieving our purpose. We believe that the world needs our metals to enable a greener future. We are building off our strong foundation with an industry-leading asset portfolio and have leading capabilities in all elements of our value chain. With our track record of delivery, we will have safe, stable production from a fully modernized and mechanized portfolio, maximizing value across the integrated value chain, delivered shared value through our sustainability pillars of being a trusted corporate leader, co-creating thriving communities and enabling a healthy environment. We will further cement our leadership position with all our assets at the bottom half of the cost curve and deliver industry-leading, through-the-cycle returns on capital by being deliberate and disciplined in the decisions we make. We are excited about the future potential of our products, and our world-class assets will enable us to deliver value for our people, our communities and our shareholders. Thank you for your time today. Thank you again for your patience with the interrupted presentation. I will now hand over to Emma to facilitate the question-and-answer session.

Okay. Thank you, everybody. Could I please ask Bethany, could we go to the line and see if we've got some questions on the conference call, please?

Absolutely. We have got some questions coming through. [Operator Instructions] We have our first question from Adrian Hammond from SBG Securities.

Natascha, thanks for the insights. I'm very curious to hear a bit more about your outlook for hydrogen demand, PGM demand. You certainly paint a very bullish picture given that you're ramping up some 20% over the next 10 years. So you certainly have conviction on demand. So I just want to unpack your 6 million ounces growth you see coming for fuel cells. What are your underlying assumptions in that outlook in terms of factoring adoption of fuel cells versus battery electric? And what sort of total car sales do you have in that number? I'm also curious to understand really what the CapEx will cost for your CO2 emission-reduction plans, particularly the 75-megawatt plants you have planned for Mogalakwena. And just curious to understand how do these sorts of plants, how the economics stack against Eskom on an NPV basis. I'm sure you've done a calculation.

Thanks, Adrian, and I'm going to pull the team in to help me answer some of these questions. I'll ask Prakashim to come in with the capital in a little bit more detail on the 75-megawatt solar plant at Mogalakwena. But let me start off with the assumptions around this. I think it's important to recognize that we -- the certainty of how the drivetrain is going to develop is still pretty low. I think it is important, and that's why we went into the typical applications on our Slide 11 of our slide pack. So what are the attributes of that will benefit battery versus hydrogen. And the assumptions that we've made is in the kind of attributes that allows with high energy density, faster recharging times to allow for bigger heavy-duty application. If you look at distribution of hydrogen in your typical hydrogen corridors, it will allow -- it allows for a very focused and a good application from a heavy-duty application. If you compare that to battery vehicles, we do have a view that there's a space for both drivetrains in the electrification of the drivetrain going forward, with batteries more specifically designed for shorter kind of distance. So that is the baseline. I think you would have seen the development of the views on the hydrogen economy changing very quickly in the near term -- well, in the recent past. And that's why what we have done is to look, well, what are the kind of success factors that we will have to achieve to make the hydrogen economy a reality? And that will drill down into the cost of hydrogen, both produced and at the fuel station. And we believe with the development that we've seen on driving down the cost, that this is a total possibility. From that point of view, we have made some assumptions. We have made assumptions of an uncertain future. And we've put that in this slide in Slide 13. So what are the assumptions? And with those assumptions saying, well, if it's 15% of vehicles of heavy -- of medium to large passenger vehicles or 5% of small, this will be the kind of consumption based on the current knowledge of thrifted loadings on hydrogen fuel cells. So this is an uncertain future that we are having a view on why -- how it could unfold. I think it is a -- we are bullish because of all the signs that we see around us from both governments and private sector. It is a future that we have to consider, thinking about how we develop the future of our mines. And that is the kind of framework that we're thinking of taking it forward. Prakashim, do you want to take the question on...

I don't expect anyone to have the answer. I was mostly just curious to know. I'm just saying I don't think anyone has the answer yet specifically, but is there any policy that underpins your assumptions? Policies from governments?

I think I'm probably going to ask -- I'm going to shift to Benny. I'm not sure if we can quickly shift to Benny. As I see, he's -- either the answer is yes. And can we shift to Benny, he's online, he's not with us in the room, to take that question? Please, Benny.

Good day, everybody. Yes, if I -- so specifically...

Can we just take -- can everybody hear Benny? Okay. Thanks. Sorry, Benny.

Yes. So specifically, your question was, what are the underlying assumptions here, right? And so the underlying assumptions for market where we did the what ifs is about 100 million vehicles, right, light vehicles, so for which then a certain percentage, smaller certain percentage is larger. That's one. And the second is, what do we see from governments? Well, we see really a lot from governments. And the trailblazer in this is actually China, to maybe not to the surprise of many. The Chinese government has very clear targets specified in their 5-year plans. We're just switching from the 13th to the 14th 5-year plans, which cover '21 to '25 now. And there is a very specific target in NEVs, in the new energy vehicles. These are hybrids, battery electric vehicles and fuel cell vehicles. And they're calculated that you have to achieve a certain percentage of your sales, which is growing every year in '21 and '22, and '23, et cetera, which are NEVs. But they are not counted as one vehicle is just one unit. One vehicle is with credits -- gets a credit score. And so for example, a fuel cell electric vehicle counts for 2.5 cars, a battery electric vehicle for 1.5, and a hybrid accounts for 1 NEV. So you see very clearly that there is a vision of the Chinese government to push fuel cell electric vehicles because they have certain advantages over battery electric vehicles, especially in the heavy-duty sector, right, where basically we see there was no alternative for long-distance, heavy-duty trucks to diesel. So that's going to be either diesel or either fuel cells. And in passenger cars, we always board rate as being in competition with BEVs, but we don't think so, we think they're really complementary. So as Natascha said, in the small car segment, it will be very BEV focused. In the larger cars and everything that's long distance and [ heavy growth ] will be fuel cell. So you see that quite a lot in China, I would say. There is a clear plan, also national plan for hydrogen refueling stations because that is, in the chicken and egg, that's the egg. You now see it in the EU as well with a new green deal, where they're targeting hydrogen refueling stations along freight corridors. And in South Africa and in the U.K., we see the first steps towards such initiatives as well.

Interesting. Thanks.

Prakashim?

I think we stated that our carbon reduction is at a net neutral NPV. And by that, we mean that we're busy working to the business cases, but we think that we are confident that there's accretive value across multiple sources. I think the source of the electrical tariff, where we're seeing a 2x on average inflation increase over last 10 years, we're seeing in the decreased exposure of carbon tax and we're not sure what legislation will go to move towards more developed market. That will increase the tax quite significantly and improved energy security. I think the energy security coming from the instances of supply disruptions and production disruption from it. So I think taking those factors in, we're quite confident that we could get to a net neutral NPV. On the 75-megawatt and the RFP that's out, we're also looking at allowing for an independent power producer system which allow us to then expand more rapidly across it. We're seeing from the tenders received, approximate cost of between $70 million to $90 million and an electric tariff of about [ USD 0.005 to about point U.S. cents ] per kilowatt hour. That's what we're presently seeing. We will conclude by probably end of April having a firm idea on how we move forward.

Perfect. Bethany, I think there are a couple of -- thanks, Adrian. Is there another question on the line?

Yes. We have a few questions on the conference call line. And the next one is going to Patrick Mann from Bank of America.

Thank you very much for the presentation. I wanted to ask a question, see if we can get some more information on Slide 44. So this is the growth from the 3 million ounces today to 3.6 million ounces in 2030. Can you maybe give us a bit of a breakup, how do you see the different assets contributing to this? And then I'm also just quite interested that there's net growth coming from the JV portion considering Kroondal's winding down, right? So should we expect that Modikwa has potential to increase massively from here? Just trying to wrap my head around what the production base looks like in 2030.