Whitehaven Coal Limited (WHC) Earnings Call Transcript & Summary

Welcome, everybody. Thanks very much for your attendance this morning. Welcome to Whitehaven Coal Limited's 2022 Annual General Meeting. My name is Mark Vaile. I'm the Chairman of the Whitehaven Board of Directors, and I will chair today's meeting. But before we go any further, I'd like to begin by welcoming New South Wales elder and board member of the Metropolitan Local Aboriginal Land Council, Aunty Ann Weldon, who will perform a Welcome to Country. Ann, please?

Good morning, everyone. Thanks, Mark. Thanks, Board. You've got a nice reception at the front there. The fellows that want to sing to us. They're singing in here. Well, I got drums and everything. That's a good sign. Anyway, they really have to have their opinion. Well, today, I stand before you on the land of the mighty Eora Nation. And I need to make you aware, first and foremost, that I am a Wiradjuri Koori Balang. And Wiradjuri, of course, is a mighty proud but large nation of average people and my ancestral blood country starts at the foot of the Blue Mountains, and it goes all the way up to Nyngan and around near high end. So it's a large area. Wiradjuri means three rivers' people. So the 3 main rivers is the Murrumbidgee; the Galiyarr, which has been renamed Lachlan; and the Wambool, which has been renamed Macquarie, and I think the traditional names sound better than Lachlan and Macquarie, but it is what it is. I was born in the segregated section of Cowra District Hospital, and I grew up in Erambie Aboriginal Reserve, which is just out of Cowra , 2-mile out of Cowra under the control of a mission manager and the police. But my ancestral bloodline connects all along the lands and the waters of the Galiyarr and the Murrumbidgee river. And one of the most, I mean, major achievements in my life is I am a mother, a grandmother of 11 incredible grandchildren and the grandmother of the handsomest little baby boy in the whole wide world. I am a Metropolitan Local Aboriginal Land Council member, and I've been a member of our Land Council for more than -- and going to meetings for more than 38 years. And then in this particular part of Eora country, Metropolitan Local Aboriginal Land Council is a cultural authority and custodian of culture, water and heritage. And this morning, I bring you a message of respect and caring, and it is important to acknowledge this country's rich, first and original story. So I'd like to pay my respects to all elders past, present of all aboriginal and non-aboriginal people here today and express my gratitude for the sacrifices that have been made by elders to create a better quality of life for all people in our country. And for me, it is indeed a humble privilege to provide a Welcome to Country. For me, it's a profound honor and a luxury of time, the time given by you and time given by many warriors that started the traditions for everyone. And our welcome isn't just words, it's a reflection of where we are, not this modern-day structure, but the continuous link of life, lesson, purpose and nurturing supplies. And the boundaries of traditional owners is not defined by the hand and a pen, but through the natural landscape of our incredible Mother Earth. The Eora Nation country spans from the Hawkes River to the north and the Pen to the west and the Georges River to the South. So on behalf of Metropolitan Local Aboriginal Land Council and with their permission of our members, I welcome everyone to the land of the Gadigal people and the Eora Nation. And I acknowledge the Gadigal people whose spirits and ancestors will always remain within their land, our Mother Earth. And whenever you travel or no matter where you live across this incredible country of ours, you are entering the land of a nation, a tribe or a clan, which have existed and belong to these lands that stretches far beyond 65,000 years. As first nations of this land, we are the most diverse, unique and sustainable people on the planet. We are the oldest living culture of the world, and it is important to acknowledge this country's rich, first and original history. So let me pay homage to the many warriors that created pathways for all of us, the ones recognized and the ones that we have never heard of. And our journey and milestones will only be realized if we can see -- if we can feel and if we can be a positive difference put into real action. And we must commit to making our world, our society inclusive breaking through barriers, not creating them. All of us together can bring about positive changes to multiple generations, starting with the healing of past generations and by declaring what should not have taken place to our present-day generations, giving them hope, where our creators have shown a way to creating a better future for the next generations for everyone in our country. But sadly, the lessons have been learned at our expense and that our devastation should and must be acknowledged. And to listen, to learn and come together, to heal and prevent that to from ever happening again. So as you connect land and share today and tomorrow and beyond, don't leave regretting what should have been done but create the legacy on what must be done, where our future is as only as good as our history, and we need to reflect upon the footsteps that we are all leaving and to know where we are heading, shaping a world that we can be proud of. And the truth needs to be told, but it must be heard if we are to walk together. I certainly look to further my vision through the realization of endeavors to protect our diverse culture, to protect and respect our land, our language, our motion and our spiritual wellbeing, our ceremonial ways of prior and through my journey, educate and nurture children, my grandchildren, my great grandchildren, my nieces and nephews and all children, and you can order upon my people's spirit as we continue on our journey. But we believe our ancestor spirits walk beside us, guiding us and light our way. And we ask that you walk beside us. Please do not walk ahead of us. And allow my people, aboriginal people, to reach our destiny. And I would like to sincerely thank your organization, Whitehaven Coal, for inviting me to come and conduct the Welcome to Country. I also acknowledge the fact that your company is actually located on the lands of the mighty Gomeroi people. Well, let me tell you, aboriginal and Gomeroi were at war. We were at war. We want it, of course, because those men from Gomeroi was coming down stealing all of the beautiful aboriginal women there. Yes. So it's certainly interesting and where we've come. I just hope that within your company that you certainly continue to -- I believe you've got young Bobby Sutherland. I watch Bobby grow into the young man that he is, and he is both mine due. I just told you about the Gomeroi fellas coming and stealing aboriginal women. His mother was aboriginal. His father was Gomeroi. Yes. So thank you for allowing me to come here I certainly wish you well. And can I just say that within your company I don't know what you give back, but there are a lot of worthy aboriginal organizations, but more importantly, programs and charities that you could certainly support in particular, not just in like Gomeroi country, it would be really beneficial. I don't know if you have scholarship schemes and the like. That's what certainly say positive. Your company does what it does. And what I say is that what you take out, you certainly give back and you protect to preserve what is there. So once again, welcome to the land of the Eora Nation and Gadigal people. Always was, always will be aboriginal land. Thank you very, very much.

Thanks very much, Aunty Ann, for that very warm welcome and a quick journey through history, and it's something that we all need to acknowledge and learn as much as we can. I'm from up on the Mid North Coast in Birpai country. So I sort of know about a lot up there. But -- and we know a lot about the Camilleri and the Gomeroi. And I'm sure that the many programs that we do help in supporting the Local Aboriginal Community in Gunnedah, Paul will allude to in his address today. But Bob Sutherland is one of our key employees, and we've got many, many others working for us as well. Thank you very much for your warm welcome. Thanks, Aunty Ann. Ladies and gentlemen, there is a quorum present, and I formally declare the meeting open. The notice of meeting has been distributed and will be taken as read. If I could just go through some introductions. Sitting at the table with me from your left, first of all, Tim Burt, Company Secretary; Paul Flynn, Managing Director and CEO. John Conde AO, Deputy Chairman of the Board and Chairman of the Remuneration Committee; Dr. Julie Beeby, Chairman of the Health, Safety and Environment and Community Committee; Fiona Robertson, Chairman of the Audit, Risk Management Committee; Board member Lindsay Ward; Kevin Ball, CFO right on the end there. Our other Board member at Ray Sage, who is domiciled in Singapore. He was unable to be here in person today, however, is online joining the meeting via -- joining the meeting electronically. I think we've got Mitch Fitzgerald, Partner of Ernst & Young, Whitehaven's auditor, is also here today to answer any questions on the audit of the company's accounts. And before we commence the formal part of today's meeting, I'd like to remind everyone here to be respectful of all shareholders who've taken the time to attend today. We welcome questions and comments, but anyone who is offensive or disruptive will be requested to leave the meeting so that all shareholders can get what they need to get out of today's meeting. All attendees are asked to refrain from using photographic or recording equipment. Once the meeting is concluded, there will be an opportunity for members of the media to put any questions they have to either myself or the CEO. This year, we are again using an electronic voting system, and all resolutions will be determined by poll. If you are eligible to vote, you can scan the QR code on your attendance card with your mobile device at any time after I open voting. This will take you to an online voting page. To cast your vote, simply select one of the options. There is no need to hit submit or the enter button as the vote is automatically recorded, and you'll receive a vote confirmation notification on your screen. So I now declare voting on Resolutions 1 to 5 open. So please submit your vote at any time while the voting is open, and I'll give everybody a warning later on in the meeting when we're about to close the voting. [Voting]

Resolutions 6 and 7 are both contingent resolutions and will be dealt with later if necessary. If you require assistance with voting, please raise your hand. And I am holding open proxies in my capacity as Chairman, and it's my intention to vote all available proxies in favor of Resolutions 1 to 4 and against Resolutions 5 to 7. And we've got the housekeeping out of the way. I'll now turn to my Chairman's address, which was released to the ASX this morning. Just first of all, following on from Aunty Ann's very warm welcome earlier, I would like to add my acknowledgment of the traditional owners of the land on which we meet, the Gadigal people of the Eora Nation, and pay my respects to their elders past and present. And I also acknowledge as Auntie Ann did, the Gomeroi people and the Barada Barna people and their ancient and enduring connection to the lands and waterways on which our operating and development assets are located in the Gunnedah region. We are proud of the strong and constructive relationships we have formed with the traditional owner groups, and I'd like to reaffirm our commitment as a business to continuing our engagement in a way that's consistent with the track record we have now established over many years working together. Ladies and gentlemen, Whitehaven reported record earnings for FY '22 as demand for our products exceeded supply. Coal prices increased to new highs. The past year has highlighted that access to high-quality, high-CV coal for reliable energy supply remains essential. The products we sell into a global market cannot be easily substituted, which is reflected in the prices being achieved. Sanctions against Russian coal and gas as a result of the invasion of Ukraine have exacerbated global energy shortages. This predicament is also a function of the significant underinvestment in fossil fuels over many years. Decarbonization is necessary, but it must take place in a responsible and coordinated way. and we continue to maintain that this is a journey that will take decades, not years. As the world reprioritizes energy security at Whitehaven Coal, we are committed to maintaining supply and reliability for our customers and trading partners while supporting them to meet their emissions reduction aspirations. We produce the highest quality thermal coal in the seaborne market. Our thermal coal fuels high-efficiency, low-emissions electricity generation that is helping our customers in Asia generate electricity with lower emissions than older coal-fired power plants do. Towards the end of the financial year, our CEO, Paul Flynn, and I met with our largest customers in Japan, where more than 3,000 megawatts of new HELE electricity generation is planned to replace older coal-fired power plants. Our customers demand the highest quality coal to supply this new capacity and help them meet Japan's decarbonization goals in line with the Paris Agreement. We are proud of the role we play in this. As the world transitions to more intermittent renewable energy sources, traditional energy sources like coal are critical to providing reliable baseload energy, and it's important that the most energy-efficient and highest quality coals are available to do this. This will be energy intensive, and coal-powered electricity will be required to build necessary technologies and infrastructure to deliver on the world's emissions reduction aspirations. While maligned by some, there is now a growing acceptance that carbon capture usage and storage technologies will help ensure emissions reductions targets can be met while economies and populations continue to expand. Global investment in research and development in these technologies is growing rapidly, and momentum is building around the coal industry funded and government supported work of Low Emissions Technology Australia. Whitehaven plays an important role in supporting industry innovation, community development and economic growth more broadly. Our taxes and royalties to governments both state and federal totaled a record $1 billion in FY '22, helping to underpin Australia's economic prosperity, making a significant down payment on the stimulus that helped insulate our economy from the worst of the COVID pandemic. Looking ahead, demand for high-quality, high-CV thermal coal is set to remain strong with prices expected to be well supported for longer. In terms of metallurgical coal, despite current volatility, the longer-term demand and price environment is positive. We have a number of growth options to meet the strong continued demand, which Paul, our Managing Director, will comment in his address shortly. Overall, the outlook for Whitehaven is very positive. We are attracting and retaining good people to work with us. We have an engaged workforce, strong leadership and a developing cohort of emerging leaders. As detailed in our remuneration report in FY '22, we undertook a comprehensive review of our executive remuneration framework with retention of executive talent an important objective as well as alignment with shareholder value. I thank all of our people, particularly Paul Flynn and our stable and experienced team of executive leaders for the outstanding financial results in FY '22 and improvements across all areas of the business, including safety. It is encouraging to see a further reduction in the total recordable injury frequency rate to 5.4 in FY '22, and that Whitehaven's 5-year average of 5.8 is well below the New South Wales 5-year industry average of 12.9. We often talk about the inversely proportional relationship between safety and production. While we can never be complacent, it is pleasing to see this continuing to play out in our circumstance. I thank my fellow directors for their continued commitment and hard work and support. Sadly, for all of us, perhaps less so for him, my Deputy Chairman, John Conde, retires at the end of today's meeting after 15 years on the Board. As Deputy Chairman, John has been an indispensable counsel to me, and I will miss working with him immensely. And I thank you, John, very sincerely for your service, and I wish you all the very best in your retirement. Although you're not really retiring, you're just leaving our Board. I also thank our shareholders for their continued support and commitment to the company. It is extremely satisfying to see you being rewarded for your patience with a $0.40 fully franked final dividend being a step-up on the $0.08 unfranked interim dividend in FY '22. An additional $588 million has been returned to shareholders through our initial 10% share buyback scheme, which was completed just last week. We intend to continue to return capital to shareholders through franked dividends and buyback programs. We look forward to the year ahead and to being the #1 choice for our customers and delivering continued strong returns for shareholders. That concludes my comments, ladies and gentlemen. Thank you very much for your attention. I'll now hand over to Paul Flynn, our Managing Director, for his presentation. Thanks. Paul?

Thank you, Chairman. And welcome, everybody, to Whitehaven's Annual General Meeting for 2022. I also acknowledge the traditional owners of the land in which we meet today, the Gadigal people of the Eora Nation and the Gomeroi and Barada Barna Peoples who are partners in our growth as a business and also in our shared reconciliation journey. I pay my respects to their elders past and present. I'm pleased to be able to recap on Whitehaven's financial year results and also offer some reflections on the strong position the company is in. In our presentation, there is -- that's being released this morning, there is a disclosure slide that refers to the necessary disclaimers associated with forward-looking statements. FY '22 has been a very good year for Whitehaven. We've experienced exceptionally strong demand. We've reported record financial results. And we've maintained a disciplined capital approach during the course of the year, delivering ASX leading shareholder returns. And we continue to operate in a safe, efficient and sustainable way. As a reminder to you, Whitehaven exports all its coal into Asia for electricity generation, steelmaking, smelting and other industrial purposes. Our 3 important markets are Japan, Korea, Taiwan, which represent about 77% of FY '22 sales. In Japan, we keep the lights on for an average of 33 minutes of every 24 hours. In South Korea, we effectively keep the country operating for 23 minutes in a day. And in Taiwan, it's about 27 minutes of every day that Whitehaven provides electricity for. On a weighted average basis, that's about 30 minutes of electricity of every day provided by Whitehaven to some 200 million people across these very important markets. As the Chairman noted in his address, while sanctions against Russian coal and gas exacerbated global energy shortages, we were already seeing global shortages as a result of significant underinvestment in reliable forms of energy over the past decade or so. Thermal coal prices strengthened considerably in 2021. And following the unfortunate conflict in Ukraine, prices increased to new highs, particularly for high-quality thermal coal, and the global supply/demand imbalances are expected to continue with strong thermal coal prices. For metallurgical coal prices have dropped below thermal coal prices due to different market dynamics. The global economic slowdown has reduced steel demand in the near term and prices have softened. At Whitehaven, we've been able to switch some of our semi-soft coking coal to thermal markets to take advantage of the higher prices. Most semi-soft coals in the broader market that could have switched into the thermal market has already done so over the last couple of years. And as many will know, prime low-vol hard coking coal cannot be easily redeployed supply thermal coal demand. In addition to the strong demand for all fuel types, including the very competitive dynamics in the high CV thermal coal market that we play in, we've seen inflationary pressures impacting all input costs in FY '22. In addition to inflationary cost impacts have been in labor constraints due to full employment, minimal immigration and ongoing COVID-induced supply chain disruptions. These challenges will remain ongoing during FY '23. And finally, while severe weather events in December impacted Whitehaven, including cutting off Maules Creek's mine access for short periods, our operations were not impacted by the March floods as severely as the Hunter Valley producers, but logistics that being rail and port were adversely affected. The weather impacts in our operations and logistics and on the Australian coal industry more broadly have added to the tight market supply and further -- which is further supporting a high price environment. These market dynamics, together with strong operational performance, underpin Whitehaven's record financial results in FY '22. Our managed ROM coal production for the year totaled 20 million tonnes. And our managed coal sales, including purchased coal, were 18.8 million tonnes. 82% of the coal of the sales were thermal coal and 18% metallurgical coal. These numbers were encouraging in the year where we lost 2 weeks of production at Maules Creek, as I mentioned earlier, in the first half of the year as a result of flooding-related road closures, limiting access and ongoing COVID-related absenteeism and labor constraints more generally. In addition, we adopted a strategy of washing more coal to produce higher-quality blends to take advantage of the exceptionally high prices at the top end of the market. This meant costs were higher, but the superior margins achieved through our quality focused strategy helped us to secure an additional $1 billion in EBITDA for the year. Achieved coal prices of AUD 325 per tonne translated into $4.9 billion in revenue, a record EBITDA number of $3.1 billion and $2.6 billion in cash generated from operations and a net profit after tax of $2 billion. Because of these stellar results, we fully paid down our senior debt, and we paid a final dividend of $0.40 fully franked on the 16th of September. During the year, we returned $442 million of capital to shareholders in terms of up until 30 June. And we also paid an $0.08 dividend, as you know. And through that, the buyback program, the acquisition of 7% of the shares was part of the overall 10% program that we announced when we released the half year results for the year. As the Chairman has mentioned, we have completed our initial buyback program now last week. We are focused on maintaining a disciplined approach to capital allocation. Our path is clear. First, we'll use the capital or our cash to maintain and optimize the existing operations. Second, we will retain cash in the business to maintain strength in the balance sheet and fund optionality and flexibility. And third, we'll return capital to shareholders in the form of franked dividends and buybacks, as you've seen us do in FY '22. After those priorities with surplus cash, we can then consider investing for growth and what is the best use of the capital. Growth investments might include M&A, say, for instance, of minority stakes of our existing assets or acquisitions in the metallurgical coal sector and diversify operations out of the Gunnedah Basin is an example. Or it may include investing in Vickery or Winchester South as well as our development projects. but we'll only invest in these projects and opportunities if they deliver superior returns to shareholders. Our aim is to return at least 20% and up to 50% of NPAT to shareholders through dividends and buybacks. But if buying back additional shares continues to be more attractive than investing in growth, then our payout ratio may be higher if there is surplus cash. Share buybacks have been and are expected to remain an efficient and value-creating way to return capital to you, our shareholders, particularly if the share price is undervaluing the company, which we believe remains the case. While the share price has appreciated considerably over the past year, increasing from about $3 per share to about $10 in recent weeks, earnings have increased significantly. Looking at the history of Whitehaven's share price, there's been a strong correlation historically between the coal price, but that changed about 2 years ago. At that point, we started to see a disconnect between the price and also the coal price relationship, making Whitehaven shares exceptional value. While we do not expect the current coal prices to be the new normal, we do believe that there is -- has been a structural change that has occurred as a result of ongoing shortages and the changed market dynamics, which will deliver longer-term pricing higher than we've seen before. The coal market is not like any other. There has been little investment -- reinvestment in the industry to respond to supply shortages and very few companies in the position that Whitehaven is in, where we have new development opportunities that we can bring on in the future. For these reasons, we believe the stock, which is trading at a historically low EV to EBITDA multiple of less than 2x, continues to represent excellent value at these prices. In FY '22, we delivered total shareholder returns of 154% in that year, ranking Whitehaven as the #1 ASX listed stock from a total shareholder returns basis. In FY '23, so far, we've retained that #1 position. And if we look on a rolling basis over the past 12 months, the returns up until the 12 months ended 30 September shows TSR at 199%. While the strong demand and pricing environment is underpinning Whitehaven's results, results have been strengthened because of our focus, operating in a safe, efficient and sustainable way. Our safety performance improved in FY '22. We reported a total recordable injury frequency rate of 5.4 for employees and contractors. This result is 8% better than the prior year and 22% better over the last 5 years. Our people are highly engaged in our journey and our business more broadly. Employee engagement is an important focus of us, particularly given the challenges we faced during COVID and that we continue to face attracting and retaining good people in the industry and in regional locations. In many respects, employee engagement goes hand-in-hand with local community engagement, given the majority of our 2,500 workforce live and work in regional New South Wales. We're proud of the progress that we're making when it comes to employee and community engagement, diversity and participation. Importantly, 11.8% of our workforce identify as Aboriginal or Torres Strait Islanders. And 15.3% of employees are female, which is progressing well towards our target of 20% female representation by FY '26. There is more of these details tabled in our 2022 sustainability report, which I commend to you. The report covers environmental performance, which continues to improve. And once again, we've reported climate-related risks and opportunities having in regard to the voluntary framework recommended by the Financial Stability Board's Task Force on Climate-Related Financial Disclosures, known to many of you as TCFD. Our analysis continues to conclude that our operations will be resilient and return positive day to shareholders on the IEA's 2 enduring energy scenarios in its World Energy Outlook. Our Scope 1 and 2 emissions totaled around 1 million tonnes of CO2 in FY '22, which is slightly higher than FY '21, primarily related to fugitive emissions as a result of higher production volumes in Narrabri. We recognize that achieving net zero emissions by 2050, Australia needs appropriate legislation and regulatory mechanisms, and Whitehaven needs to contribute too by reducing its own emissions as well. We are actively engaged in responsibly aligning our activities to meet our share of the targeted national greenhouse gas emissions reductions, including the safeguard mechanism scheme, which is currently being revised with further detail from the federal government expected in the coming weeks and months. In FY '22, we are offsetting all of our scope 2 -- all of our scope 2 mine emissions by purchasing 100% carbon-neutral electricity across all of our sites, a product that is certified by the federal government under the Climate Active scheme. To further reduce the electricity consumed from the grid, we are undertaking a feasibility study for solar electricity generation at our Narrabri mine, which is currently the largest user of electricity in our portfolio. We're also investing in R&D options for reducing scope 1 emissions and including the difficult to abate fugitive emissions from our mining operations. An emerging technology in this space is a process owned by a company called Hydrobe Proprietary Limited in which Whitehaven is a significant investor. Hydrobe has a world patented process to run industrial emissions through microbial algae and bacteria to offer the potential to turn CO2 into salable products such as fertilizer, green hydrogen and syngas. We are considering the application of this technology at our mines and end users' products. We expect that carbon credits will need to be part of the solution to abate emissions, and we are developing an approach to ensure that we have access to reliable, government-endorsed ACCUs and international units -- credit units of high integrity. Options for carbon offsetting generation across our land holdings are being considered also including carbon farming. And we're also invested in technologies to develop carbon capture and storage technologies through our involvement in Low Emissions Technology Australia or LETA. And we have contributed in excess of $4 million to that organization over the last 5 years. Of course, we are directly helping our customers as well to reduce their emissions and achieve their decarbonization goals. Whitehaven's high CV thermal coal delivers lower CO2 emissions intensity than any other coal in the seaborne market, and this is due to its lower ash and higher calorific value properties of our coal. When Whitehaven's coal is used in a HELE power station, a high-efficiency, low-emission power station, the levels of emissions significantly decrease. For example, the plants that are fueling -- that we are fueling in Japan limit around 44% less CO2 emissions down Australia's subcritical coal-fired power plants in Victoria. Consistent with Japan's energy strategy plan to close subcritical power stations by 2030, replacement ultra-supercritical plants are coming online, representing new demand for Whitehaven. In fact, Japan has 5 new USC plants coming online between '22 and '24, and South Korea will commission 2 new units in 2023. Collectively, these lines will produce about 6,000 megawatts of electricity and capacity and will need to be fueled by high CV coal. In FY '22, 89% of our thermal coal was above 5,600 in calorific value and nearly 35% of the total volume was above 6,200 in calorific value. In the September quarter alone, 100% of our thermal coal was above 5850 calorific value. It therefore makes sense as the world decarbonizes, Whitehaven's energy content continues to be part of the energy mix and particularly in Asia where the newest, most technologically advanced coal-fired fleet, including the best technology, can extend the advantages of Whitehaven's high-quality coal. Turning to the future. Wood Mackenzie is forecasting global demand of thermal seaborne coal to largely remain static to 2030 and then to taper through to 2050. However, the market has bifurcated with advanced economies facing demand decline to 2050 as developing economies, mostly in Asia, our markets, which we are exposed, continue to demand -- to grow their demand. By 2030, Nearly 85% of the world's coal-fired generating capacity will be in emerging and developing economies according to Wood Mackenzie. And as you look at these forecasts, the amount of supply coming from existing mines falls well short of demand. We acknowledge the role we play, we will need to play and will need to play in the coming decades, including being one of the few coal producers in the world in a position to bring on new thermal coal production to meet this anticipated demand, such as our Vickery project. Looking to our portfolio of assets. Our underground operation at Narrabri has been granted an extension approval to 2044. Our large open-cut Maules Creek mine has more than 30 years of mine life. And it will come to -- and our Werris Creek mine will come to an end in 2024, and Tarrawonga has about 10 years left in its operations. The Vickery project is now fully approved and can produce up to 10 million tonnes of ROM production per annum and a very high-quality thermal coal. In order to fully assess the current economics of the project and determine the timing, we are revising earlier capital budgets, refining mine plans and finalizing operating licenses. We're also considering the opportunity to bring Vickery on in a staged approach, starting with a smaller capital approach, a smaller version, where we can mine Vickery coal and transport it to our Gunnedah CHPP plant for processing. A smaller scale initial investment will allow us to bring new volumes to market sooner, and we expect to be able to firm up our view around this project, this exciting project, in the middle of this financial year. Looking at metallurgical coal, we are seeing short-term softness as a result of economic slowdowns. This remains -- but this coal remains an essential ingredient in the steelmaking process and is structurally short in the long term. It's an essential component for the economic recovery and to service the obvious needs in Southeast Asia, in particular, and the subcontinent. Wood Mackenzie's growth is forecasting growth -- strong growth in the demand for seaborne metallurgic coal in Asia over the coming decades. Our Winchester South coal development in Queensland's Bowen Basin remains an attractive future option for Whitehaven. We expect it will take another year to achieve our state-based approval and then potentially another year further for the federal level approval. Progressing these projects is an important part of getting our projects shovel ready. In FY '23, we'll focus on further improving safety, our environmental performance and sustainability as well as maximizing the thermal coal volumes and managing costs and optimizing our margins. So far, we've delivered a September quarter, which reflects excellent operational performance in our Narrabri underground mine, which is tracking well ahead of plan. However, access from road flooding has impacted our operations to our open cut mines and hamper production, and we are hopeful the overall volume targets can be met and will remain focused on meeting our guidance for ROM coal production of 20 million to 22 million tonnes for the year and managed coal sales of a range of 17.5 million tonnes to 18.5 million. We're looking forward to delivering for you another strong year in FY '23, and I'd like to thank the team and our Board for their strong support during the course of this financial year. Thank you.

Thanks, Paul, for that comprehensive presentation to shareholders of the year past and what we're looking forward to in FY '23 as we move forward beyond today. Okay. Ladies and gentlemen, we'll now move to the next stage of our meeting. As this is a shareholders' meeting. And the shareholders, their attorneys, proxies and authorized company representatives are entitled to ask questions, shareholders will be provided with a reasonable opportunity to ask questions on each resolution as we go to those resolutions as outlined earlier. To ask a question, just please raise your hand, and a microphone attendant will come around. Please introduce yourself when asking a question. If you have a question on a specific resolution that we're going to be dealing with later on in the meeting, I ask that question be considered when we're dealing with that particular item. Any general questions should be asked when we consider the financial report shortly. We welcome questions from shareholders, but it is important to give everyone an opportunity to participate. Please limit the number of questions, and please avoid using the time as an opportunity to make a statement or a speech. There will be plenty of opportunities for further engagement with both the Board and management immediately following the AGM. The meeting's first item of business is to consider the company's financial report and the reports of the directors and auditor for the year ended 30th of June 2022. The Corporation Act requires that these reports be laid before the meeting. However, there is no requirement for the shareholders to vote on these reports. So we table the financial reports that have been made available. And so at this point, the matter is now open for discussion. If anybody would like to raise any questions on the financial reports. A mic is coming to you, Julie.

Good to be seeing the Board in-person. I like to read the body language as well as hear the speeches and read them. My name is Julie Llewellyn Smith. I've been a small shareholder. Sometimes a little larger shareholder, but I don't hold many now. And I like to raise questions on behalf of the universe because I was trained as a socioeconomic researcher, and they shouldn't have put us girls at Hornsby Girls High into classes where we were taught to think for ourselves. But having done that, I think it's a benefit because I've listened to Auntie Ann this morning with great interest. I have been trying to educate myself as a human geographer as to what really happened, and I have to face the fact that some of my ancestors were over the Blue Mountains more than 4 decades before me and may be implicated in names, not Maules Creek, but other ones. And I started school in Cowra, and I was horrified in 2010 on the way to Greenville Bird observer camp to find out that I had never had any knowledge of it. So they're just some preliminaries, but I want to say that from listening to Auntie Ann, something jumped into my head that never occurred to me before. Whitehaven Coal. Coal is black. White and black have got to walk together, and you've got to find a way to do it. And the white is not superior. I had to learn that the hard way in my philosophy class. I'm not superior because I'm English speaking and white. [indiscernible] thank you for taking me back to that core that shocked me. Now I'm going to go to a couple of questions specifically towards the end of Paul's presentation. I would very much like to hear some more details about the solar feasibility study underway, since when timing-wise. And what -- is it a long study? Or when can we expect some preliminary results? And the other one, which I'll come to -- my color coding is often the way I organize things. Wood Mackenzie are doing some studies, and you're a major shareholder in it. So I think there's some conflict potential of interest. But once again, because of the Wood, and I'm getting some questions between Board members. So have I misunderstood that...

Keep going with the question, Julie.

Yes. So Wood Mackenzie, that same little different thing jumps into my head. Wood, not coal, Mackenzie, Scottish, they don't mine coal anymore. So would the Board consider approving an independent assessment of the Wood Mackenzie report to put to us shareholders? Because there's a lot of information and we need some guidance.

Thanks, Julie. I have -- it was a lengthy contribution. But you've been a long-term shareholder, and you always turn up at our AGMs, and so we did indulge. But I would remind shareholders to keep their questions short. I'm just going to make a quick comment on the first part of your question, which is in regard to the solar feasibility. We've actually conducted -- there's 2 components to this. One is very advanced in development, and it's a -- what we call a behind-the-meter solar farm, which will supply electricity straight into the Narrabri underground, and that's going to be built on site. And I'll -- Paul will comment in terms of the progress as far as that is concerned. The second element of the feasibility that was undertaken was the larger scale, our larger scale solar farm in terms of cannot be built is the topography right. And that came back as a positive, but there's no pipeline out there near Narrabri to get that electricity into the grid yet. And so there's a couple of elements to it. But behind the meter solar farm, which will replace electricity we are buying from retailers at the moment, is certainly well advanced. But I'll get the -- I'll get Paul to comment also on the WoodMac issue because to our knowledge we're not a shareholder in WoodMac. Paul?

Yes. Thank you, chair. Thank you, Julie. A little bit more color on the solar, if I might, Chairman. Having looked at a range of options. And as the Chairman has mentioned, we looked at an industrial scale facility, but there is not the transmission capacity in the network to be able to move electrons of industrial size solar farm into the system. And so that deficiency is well understood by the government. They have plans to improve that so that other developers such as ourselves can look at opportunities to bring renewable energy generation into our region, but it is very constrained in terms of that capacity to put the electrons into the system. So then we moved to look at something more bespoke to our own requirements, something smaller scale where we weren't dependent on the transmission capacity, and that's why the Chairman has mentioned the behind the meter. So on our land, servicing our own needs, displacing the consumption from the grid. That's about 35 megawatts is what we're looking at there. We have done the pre-feasibility study. So we're moving into the feasibility study, which includes the compatibility of solar power, which is a relatively diffuse energy source and aligning the conditions of power, the quality of power I should say, with the needs of our longwall operation. It's our largest consumer of electricity, but you need to have certain frequency and conditions of power to be able to make that functional. So we are studying that. I expect we'll have an answer for this and through a feasibility study within the next 12 months. We've identified the location. We're doing the necessary work to consider already an EIS associated with that. So it is looking quite interesting for us. So we're very encouraged by what we've seen to date for the smaller size we are captive to the government fixing the transmission network in our region in order to be able to do something a little larger. Hopefully, that's helpful. On WoodMac, we're not a shareholder of WoodMac. No. So we're completely independent of that. We do pay for the service, no doubt, and they're one of many services that we use. Not just WoodMac, there's others as well. So crew CRU, also well respected and widely used worldwide. We're very familiar with them because of the IEA uses them as well. AME and others, Commodity Insights. So we try and take a view from all these sources because there's always some risk associated with depending on one forecaster's view. But we're happy to bring a synthesis of those collective views, if you like, to shareholders if you'd like to see an amalgam of what their current view is. Perhaps, we can put that together and make that available to shareholders.

Thanks, Paul. Next question. Gentleman in the black jumper.

My name is Dr. Rod Anderson. I live on Gadigal Land. There are 2 small parts to my question, which really, I guess, about provision for certain financial liabilities. The first part is, does Whitehaven Coal have a plan to protect the future of your workforce and the economic viability of the communities in which you operate by creating transition plans for each of your mines?

Is that the full -- the entirety of your question?

I have the second part. Given the large surplus recently secured by Whitehaven Coal, what programs will you implement soon to support your own workforce through this transition and to support economic diversification in the New South Wales Northwest more broadly?

Thanks. Rod, was it?

Yes, Rod.

And I presume you're asking your question as a proxy holder today. Thank you. On behalf of Mr. Hamish Maxwell Stewart on his 237 votes. I'm going to get Paul to comment in a second. But initially, my general response is the best work thing that we can do in the interest of the economic viability and the future of our employees is continuing to operate the assets while the demand remains for the product that we produce in the international markets. And that goes for all employees, whether they be here or whether they be in the Gunnedah Basin. It also goes for the local economy in the Gunnedah Basin and more broadly across towards Tamworth. Paul, do you want to make a comment?

Yes. Thank you, Chairman. I'll just add that we are fortunate having long-life mines, and those mines are very interesting to our customers because they have invested in long-life assets that consume the product we have, and the matching of those power station lives is the most important thing that our customers are considering in terms of where they procure the coal from. As I mentioned earlier, we only fuel HELE power stations, the highest, most efficient power station technology. As I also mentioned there earlier, the youngest fleet of these coal-fired power stations is in Asia, in our backyard. And given that we are in an environment of heightened energy security concerns for physical supply, price is important, of course. But our customers are very, very concerned about physical security, not just for today because there's a shortage because of some turbulence in the world, which is very unfortunate; but longer term, because they've built assets that are going to be around for 30, 40 years, and they want to know, or they want the confidence that they have relationships with companies that have long life mines that can continue to service that requirement. As I mentioned, 30 minutes across 200 million people every day is a responsibility that we take very seriously.

Thanks, Paul. Sorry, there's other -- I'll come back to you. I'll let others ask questions first. Lady in the front here, down the front, I can see.

Tracy Carpenter. I'm holding a proxy from Winnie Foo. I wanted to refer to the Vickery coal mine and some confusion over the split between metallurgical and thermal coal. In the -- it was referred to in both Managing Director's speech and your own, Mr. Chairman. And I note that it's referenced as a metallurgical coal asset. But the approval documents in 2014 lists the coal split as 70% thermal and 30% metallurgical. But in more recent documentation, I've seen that the coal split is 40% thermal coal and 60% metallurgical. Can you please clarify what the split is expected to be? And what has caused the shift in those figures, please?

I'll come to Paul in a second in responding to that. But just remember that most of our assets in the Gunnedah Basin produce -- are able to produce both semi-soft coking coal, metallurgical coal and thermal coal. It would be irresponsible of us as a company if we didn't pursue the highest and best value of the product on behalf of our shareholders and indeed the nation. I mean just remember that we export everything we produce. In FY '22, we paid $1 billion in taxes and royalties. That's helped bring that budget deficit down as we saw it last night, and so it can swing either way. Now it costs probably more because there's more washing involved to produce the metallurgical coal. But if the demand and the price is there for that, then it can swing that way. So those percentages can move. So I'll just -- Paul, the question was specifically about Vickery.

I understand. Sorry. Tracy, was it? Could you remind me where you got the 70-30 from?

From 2014.

From 2014. Okay. No, thank you.

Well, that was a small version. That was a 4.5 million tonne approval.

That's correct. So the smaller version that was approved in September '14 was not as extensive in footprint wise as the subsequent approval, which we've received for the larger version of the mine. We incorporated area, what was known as Vickery South, which the government had tendered out, which is adjacent. And by incorporating that into the overall footprint of the mine, the split between metallurgical and thermal change, 60-40 is the split of the aggregated project.

Thanks, Paul. Gentleman.

Gregory Walker. I'm a shareholder. Recently added Whitehaven shares to my portfolio, which has been a good timing. My question is that I understand our revolving credit facility matures next year. Have we been able to secure refinance for that loan? And just a comment on that, given many banks decarbonization strategies, do we have an alternative capital management plan in place should we not be able to access bank debt for our company's upcoming projects?

You are correct that the revolving facility, the current arrangement expires later on next year. We have been engaged in preliminary discussions with the current, probably if you like, of financial institutions that provide that revolving facility. And of course, some circumstances over the -- since we established that have changed. I think that we still have, and I'll come to Paul or Kevin. 2 of the Australian banks still a part of our funding syndicate, plus Japanese banks and I think maybe a Chinese bank. But the company is doing a lot of work in terms of reviewing what we need in that structure. We had made public announcements at some point. We may enter into a U.S. dollar bond to have that as part of the debt structure as well as the revolving structure that we have in place. But certainly, underlying all of that and given the results in FY '22, where we've deleveraged the balance sheet completely to the tune of about $900 million, the focus going forward is to run a little bit of a more conservative balance sheet, as Paul outlined in his presentation. But we're just about to embark upon the renewal, if you like, of the facilities, the banking facilities that you're referring to. I'll just get Paul. You want to make a comment? Or maybe Kevin after you.

Gregor, we're in good form in terms of those discussions with the syndicate. We don't need the whole $1 billion that we have today. I think that's pretty clear. As we mentioned earlier, and you've noted, we will run a more conservative balance sheet going forward. So we think it will be refinanced in orderly fashion, but we just don't need the whole $1 billion anymore. So we will reduce that, but we will be keeping more cash on the balance sheet as a result. And as the Chairman has mentioned, we are looking for opportunities, of course, always to diversify sources of capital. And the markets -- the bond markets themselves haven't been particularly stable, I think, as most bond market watchers would observe given the gyrations in property market, in particular in China, have caused a lot of disturbance in that market. We don't need to do anything any time soon, I might add, because we're in good financial shape. So we'll take our time and do it at a time of our choosing. But the refinancing, I have a little concern for that.

That, I assume, means that some of your lenders, too, you mentioned Mr. Chairman, you're in discussion for bond and supporting bond issues if you need it.

The bond would be in the U.S. market, not in the Australian market. It will be heavily Asian subscribed in terms of sources of funds because the Asian market is very important to us, and they understand the role that our business plays in the economies in Asia. So we would expect a large piece of that to come out at Asian financial markets, but it will be U.S.-based.

I'll just go to -- one more over here, then we'll come back over to the gentleman in the cap next.

I'm Theo Amarod. I'm a proxy shareholder for Marcus Poth and Karen Large. In their submission to the Independent Planning Commission's assessment of Narrabri's Stage 3, 5 university of New South Wales climate scientists looked at the remaining carbon budget for both 1.5 and 2 degrees of warming and concluded the following. There is no carbon budget left that can be spent by an extension of coal mining at Narrabri. If New South Wales wishes to achieve its goal of net zero emissions by 2050 or by 2030 as the science now requires, coal still in the ground must be left in the ground. Likewise, when former Chief Scientist of Australia Professor Penny Sackett reviewed your project, she concluded it represents a catastrophic risk and advised that New South Wales Independent Planning Commission not approve it. Can you explain why Whitehaven is going ahead as though they are incorrect?

There's a number of assertions in there that I'm going to firstly leave Paul to respond to because it's a detailed and lengthy question. Thank you very much there. Paul?

Thank you, Chair. Look, Narrabri Stage 3, obviously, approval just for everybody's context is a life extension of an existing mine. And obviously, during the rigorous processes that the state government goes through, including obviously the IPC's ultimate approval of the project. They go through extensive analysis of all submissions, and there are submissions from every quarter interested in these types of developments, which you would imagine. I think the conclusions overall speak for themselves in terms of the scrutiny from 4 climate change-related considerations, both at the state government level and also the IPC determined that the project should go ahead after considering all those important perspectives that are provided by submissions. So ours is not to second guess those, as I mentioned earlier. Our customers are obviously in a heightened state of concern about the continuity of supply of our high-quality coal, as I mentioned earlier. It is the lowest carbon intensity of any coal available in the seaborne trade, and we have a role to continue to provide that whilst our transition to a lower carbon future continues to occur.

Thanks, Paul. And gentlemen in the cap there.

Good morning. Thank you for your time. Mr. Chairman, last year, the Board said it would look at our company's resilience, some of the net zero by 2050 scenario. I note that it's not available in this year's financial report or sustainability yet again. Given that a large cohort of our investors now request this disclosure, why is it still not being provided? And does the Board ever intend to assess and disclose the risks and results in net 2050 scenario poses to investors' capital and the viability of our upcoming projects no matter how unlikely the Board may consider this scenario?

Well, take on Board your comments. What was your name?

Hugh, Hughborne.

Hugh, we were the first coal company in Australia to report under the TCFD. And we've continued to do so, and we've continued to put that information now to shareholders testing against the TCFD measures as well as through our sustainability report. We have 2 new circumstances that you referred to in Australia with the election of a new government. One is the commitment to net zero by 2050. And that, I just might remind shareholders is a commitment to a net zero, not an absolute zero, net zero emissions. The other is to achieve a 43% reduction by 2030. We've been engaged with the government as they're starting to put together the -- and implement that policy that they went to the election with in terms of how we work in with the government. Obviously, it's a government commitment, both the target of net zero by 2050 and the target of 43% reduction by 2030. They are commitments of our elected government in Australia, we will comply. And so to the extent that Paul has actually had input into the process, had meetings with senior government ministers since the election as far as what we are going to need to do and the things that we're asking from government with regard to not disadvantaging our business as against other international business with whom we compete. These are very, very important measures. But I'll just get Paul, if you want to add to that please. Paul actually met with Chris Balan to discuss these matters.

Not a lot further to add, Chairman, on that. I think you've covered off the detail of this. I think it's an evolving sort of circumstance. Obviously, our obligation, as the Chairman says, is to comply with the laws of the land. And with the 43% reduction by 2030, we'll play our part. And the responsible thing for us to do for shareholders to make sure that we're active participants in the consultation process is the safeguard mechanism revisions are bedded down, and so we are active in that in that arena. We have made submissions already on this. Mr. Balan was kind enough to visit our Newcastle office and meet many of our executives and shared morning tea with our staff, and so we're quite encouraged by the cooperative stance that this new government has taken.

Just have it here in the black cap.

Shareholder. Chairman, we're hearing a lot about energy...

It's a very important point, and it's one that goes a little bit to the broader context of the discussion here in some of the facts that Theo raised earlier. And as Paul outlined in his presentation, the strength of demand in our major markets in North Asia continues. It was strengthening just on the supply/demand equation before the Russian invasion of Ukraine. And of course, following that demand strengthened even further where those sovereign countries elevated energy security in term -- in a policy sense within those countries. And so during the course of this year, we've had the occasion to meet with a lot of our customers at least twice, if not more. And what we're finding is that, firstly, a much higher level of commitment to energy security. And if you just look at the Japanese market, they have a published stated policy of how they're going to achieve their target of 46% reduction by 2030. And it actually -- and that's a publicly -- public statement by the ministry in Japan with the mix of their energy sources to achieve that goal by 2030. And that includes in the fossil fuel sector, 20% is gas, 19% to 20% is coal, 36% to 38% is renewables, 20% to 22% is nuclear. And so what we're finding in our space, what our customers are saying, they're looking for longer-term commitments I mean, historically, our contracts might be 6 months, 12 months, 3 years max. A lot of our customers are looking for a longer-term commitment than that even at these prices because of their focus on energy security. If we can just go back to a couple of the sort of, I suppose, assertions in some of the questions. If you close Australia down, if you closed our operations down and the product that we produce that Paul highlighted very, very clearly in his slide deck, as far as the quality of the product that we sell to our customers, if you remove that from the market, those customers are then going to have to source far inferior quality product from places like Indonesia or even China, and they will just burn that and they will just -- the emissions will be much, much worse. There was a slide in Paul's slide deck that showed you that the ultra-critical power stations that many of our customers are still building and switching on initially have a 40% reduction in emissions compared to the power stations we have in Australia. You need to get out of your mind the fact that what's going on in Japan and Korea and Taiwan and Southeast Asia is what's happening in the Hunter Valley here to Troy Valley in Victoria. It's not. It's totally different. These power stations have 40% lower emissions than any of those power stations in Australia, and they haven't bolted on carbon capture usage or storage yet. And when we're in Japan 2 weeks ago, there was a lot of conversation about what's going to happen when that happens. And so we need to understand that. And so our product is not burned in Australia. Our product is burned in markets where they have a long-term strategy as for the balances their commitments under the climate change goals in Paris and in Glasgow and the subsequent meetings with their energy requirements into the future. And it's a very, very well-structured plan. And our company is part of that because we have the high-quality product that they need. There was pushed up back there.

Yes. Angus Robertson, shareholder. Look, I commend you on your recent comments, Chairman. I truly believe, actually, this company has a noble purpose, and it is because you have the cleanest seaborne coal in the world, as you just said, 40% cleaner coal than that from China, South Africa and Indonesia, which is the sort of places where it would be sourced from otherwise. And the irony of this whole discussion is that climate emissions are a global problem, and we should actually be opening more mines like Whitehaven has here in Australia and closing them down in places like China. And China, as some of the people in the room will be aware, has just announced they're going to produce 300 million more tonnes of its dirty coal. So I'd like to commend you on the purpose of the company and what it achieves on a global scale for actually reducing carbon emissions, and thank you very much. I'd also like to commend you for your annual report, and I thought it read very well and provided a lot of information to people, and thank you very much for that, too. My question really is, and I think the discussion here today is showing there's a degree of ignorance and distortion of facts, is Whitehaven able to contribute -- I have got it, is Whitehaven able to -- my question is, there's been quite a distortion and lack of knowledge in the Australian populace about what really goes on. And I just wonder if there's an opportunity for Whitehaven coal and other coal producers to get together to really start to try and educate the Australian [ partners ] on some of these facts because the argument has just got so strong with these distorted claims of the science is in and so on, and it's accepted by much of the populace as fact. And therefore, you get the sort of questions you've had at the meeting today. Is there an opportunity to the coal producer to get together to fund some real information on these issues and show how important the Australian coal industry is to reducing carbon emissions on a global scale, to show how important the coal industry is to the economy here in terms of funding the health and education that we all take and welfare that we all take for granted? And in terms of the regional towns like the gentleman was mentioning here, I mean, having consulted for a regional town which had its mine closed and said, look, we're desperately concerned because we're going -- so back in the '90s, we were going from an average wage of the miners of $90,000 to an average wage of the tourists and the tourism people -- in tourism, retail and hospitality of $20,000, and we're worried that people won't be able to pay their rates. And we won't be able to supply the water that we do because they weren't -- we aren't able to charge the rates that we currently charge. So in somewhere like Gunnedah, I know this is terribly important, as I can't give you the current figures, I suspect, and I'd be delighted if you could tell me, I suspect that an average retail job is around $30,000 or $40,000 for hospitality. And yet for mining, it will be well over $100,000. So I come back to the question about education and some of those comments I made, perhaps you might like to respond to.

Sure. Look, thanks. It's a very valid point because there needs to be a balance of information out there available for people to assess. And I mean, as an individual company, I mean, we and particularly the management team do our best. Our CEO is involved and engaged in many industry organizations that are trying to just disseminate factual information as best we can. But we continue to do that because it is the reality. And we need to understand not just what's going on in this space in Australia because we get a daily feed of that, but what's going on across the world. And as far as we're concerned, it is all -- it's very, very important work that we do as a company on behalf of our shareholders to engage and understand in those markets what is going on. I mean whenever Paul and I go to Japan to visit, we don't just talk to customers, we go and talk to the government, because the government in Japan sets the policy. And the Prime Minister of Japan was here last weekend and signed with our Prime Minister -- I don't know what they call them, well, they weren't treaty level documents, but they were probably MOUs. And one was on security, security. The other one was on energy security, because it is absolutely critical to a net energy importer like Japan to know they'll be comfortable in the knowledge that they have got those products coming to maintain and to operate their country. They are just about stocked out as far as renewables are concerned. And so -- and it's also very important for us, representing the interest of our shareholders that we understand that -- what they are doing to mitigate the Scope 3 emissions. And we're responsible for Scope 1 and Scope 2 here in Australia, where we sell our product to. We need to understand how they're doing it. I mean years ago, I once made the statement that we are assisting our customers achieve their Paris commitments, and it still remains a fact. Is there anything you wanted to add, Paul?

Other than to just say, I guess, the point that you make about the education and the dissemination of better quality information. I'll take that very much onboard. As a company, we do a lot, and we're always encouraging through those associations with other producers to do more. Each company has its own appetite for that type of work, I must say. But we think it's very important to represent our shareholders well in this discussion, and we're active participants in all those forms to encourage other players in the sector also to play a similar role. So there's more work to be done, I agree 100% with the sentiment you're raising there with your point. Very well made. And we'll continue to push hard for this.

Thanks, Paul. Maybe just here in front. Been trying for a while.

Hello, Mr. Chairman. My name is Eva, and I'm 19 years old. I'm speaking as a proxy. I was one of the litigants who took the former Environment Minister, Sussan Ley, to court, arguing that she had a duty of care not to approve your Vickery expansion project. My question is to the Board. Do you believe that you have the duty of care to the young people of Australia and the future generations to stay within 1.5 degrees of warming by stopping coal expansion and starting a just transition for your workers?

Is there more to the question? Or that's the question?

That's the question.

That's the question? Yes, we have a duty of care to not just our shareholders, but all people in Australia in terms of the balance of responsibility as being a responsible, publicly-listed company that's undertaking operations and activities that are legally endorsed and approved by governments across Australia in the interest of the economy of Australia, in the interest of the local economy, in the interest of young people in the Gunnedah Basin and what work. And more specifically, to your point, as I can -- I reiterate again, the alternatives to what we're doing are much worse for the people that you represent than what we are doing. I don't know whether Paul wants to add to that. Next question, please. Gentleman down here. Down the front, sorry.

Thank you, Peter Sainsbury. My wife and I hold shares. So Mr. Vaile, Mr. Flynn, congratulations, a huge year for the company. Can I just ask for a bit more information about something you said, Mr. Flynn, and appeared up in one of your slides. Last year, the Board advised the large financial and human capital requirements for upcoming projects, was such that the company could only handle one developing project at a time. But given we've seen these record profits, is the Board reconsidering this strategy? And just to ask you to expand on what you were saying earlier. So what's your thinking? And what do we need to do to be able to pursue multiple projects at one time?

Thank you for the question, Peter. It's a constant juggling exercise, I have to say, that one. Our view is still that one project at a time is the right way to go. Now which one goes first of those development projects is an open discussion for the Board considering the approval status of it, and obviously, the return profile that each of those 2 different projects represent. The challenge for us, and I'm sure this is no new statement to everybody in this room, our biggest challenge is labor and being able to resource up the very important human capital, to be able to build 2 projects at once, say, for instance, is obviously not something that we can undertake alone. All the service providers that we speak to are suffering the same dynamics that we have in terms of scarcity of those variable skills. And it's everything from trades people through to engineers and so on, and that's before we even talk about the raw materials required in order to be able to conduct an exercise of that scale. We're a little cautious. We see the market's in good form. We see financially, we're in good shape. We are very conscious of making sure we return capital to shareholders who have been long-standing and very supportive. So there's a balance there of all those. The outlook looks very good. So we do feel that we're in a unique position to bring on capacity. And harking back to the Chairman's comments about our recent trips to see customers, I mean they are very, very concerned about where the extra capacity is going to come from. So they're very encouraging of us considering what to do with our important projects. Winchester South is obviously not approved yet. So that's obviously further down the pipeline -- Winchester South, yes, sorry, our Queensland coking coal deposit in the Bowen Basin, whereas Vickery is now fully approved. And as I mentioned in my presentation, we are considering a capital-light version to bring that on so that we can accelerate the development of it. And again, this is all driven by customers' anxiety about physical supply, so we are looking at that very closely. But one of the most important pieces of that puzzle that's difficult at the moment is actually assembling a workforce, not just to operate it, but of course to build the project in the first instance. So we're pushing hard on that. I think if we had some other answers on labor scarcity, I'd love to hear that. I know the government is working on this and very mindful of it, and we're recruiting offshore as well and providing new incentives to bring people to our region, such as housing. You may have seen also, we soaked up the housing capacity in our region given that we've quadrupled our size in the last 10 years. So we need to stimulate other activities there that enable more people to come to our region to assist us in our journey.

Thanks, Paul. There's a gentleman at the back.

John [ Lewis ], shareholder. I'm sure this goes to a point you made about paying approximately $1 billion in royalties and taxes of FY '22. So I'm sure as you guys all know, the Queensland government recently changed their royalties scheme and basically increased the royalties they charge on the coal that's exported out. Do you see New South Wales going down the same path? And if so, how will it affect the company?

One of the things we actually put in the middle of the year when the Queensland government announced that increase in the royalty regime in Queensland -- we were actually in Japan and sort of, as everybody saw here, hit the headlines here to the extent that the Japanese ambassador went into the National Media making comment about it. That's the view they took of it. So we have sought as much comfort as we can get from the New South Wales government that it's not going to follow suit, but that only lasts until March next year because there's a state election in March next year, and they may get reelected, there may be a new government. So as far as we can, yes, we've saw undertakings that the royalty regime is not going to change in New South Wales. Obviously, as Paul just alluded to in the previous answer, we do own an asset that is a subject to approval processes in Queensland. And so we've been involved with the Resources Council in Queensland who are lobbying the Queensland government to remove the extra levy they put on once -- I think it's once they brought the budget back into balance. I mean it was announced as a budget rectification measure, if you like. But we know that once these things get baked into the base, it's hard to take them out. But there are a couple of things that we've been doing. But certainly, as far as New South Wales is concerned, the indications from the current state government that they're not going to make any changes here. But that's something that the industry will need to pursue with both political parties leading up to the election in March of next year. Yes. So the gentleman right next to you, if you want to hand him the microphone. I know there's people that have already asked questions who've got their hands up. I'm going to go through people that haven't asked any questions first.

My name is Nick. I'm appearing today as a proxy for a shareholder. So my question is about the Narrabri Stage 3 project. So as the Board would be aware, the Bushfire survivors for climate action are currently taking -- challenging the approval of that project in the London Environmental Court on the grounds that the approval was unreasonable, irrational and illogical and not in the public interest. So -- and of course, those grounds include the impact of Stage 3 on global heating and, in fact, heating here in New South Wales. So the project is seeking to mine thermal coal to 2044, and your documents submitted to the IPC indicated that Scope 1 emissions would continue out to 2064. Annual Scope 1 emissions compared to current operations are projected to roughly triple, mostly as a result of methane venting. And your documents identified that it's very difficult to abate those emissions. And I think Whitehaven Coal, the Department of Planning and the Independent Planning Commission all agreed that abatement of less than 1% is the current plan for those substantial Scope 1 emissions. So really my question -- or sorry, and finally, if the -- if you look at the Scope 1 emissions data reported to the clean energy regulator in Canberra, what you notice is that when Stage 3 becomes operational, if it is built, it will become the highest-emitting thermal coal mine in the entire country of Australia in terms of Scope 1 emissions. So there is no coal mine currently operating in Australia, thermal coal mine with higher emissions than the 1.36 million tonnes that your project is projected to emit. So I guess, coming to the question, the Australian government just signed the global methane pledge. Chris Bowen is cracking down on Scope 1 emissions, as you've said or referred to a few times with the safeguard mechanism conversations. So really, my question is, given that situation, is the Board reconsidering whether this is a good project and whether it's responsible for it to go ahead? And I guess the second part of it is, does the Board consider that if you're an Australian government looking to bring down Scope 1 emissions and there's a merit order of thermal coal mines in Australia, and as you've said, we're responsible for the Scope 1 and 2 emissions, so if you're looking to manage your Scope 1 emissions problem and you've got a mine that's the highest emitter in Australia, is there a risk that, that mine will be closed first simply because that makes good policy sense in a global, national and state quest to get to net zero?

Thanks, Nick. There's a lot of commentary on that as well as the question. I think the answer to the first part of your question is no. I'm going to let Paul answer the second part.