South32 Limited

Thank you for standing by and welcome to the South32 Half-Year Financial Results Outlook H1FY22 Investor and Analyst Call for the United Kingdom and South Africa. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Graham Kerr, CEO. Please go ahead.

Thank you. Good morning everyone and thanks for joining us today for our financial results conference call for the half year ended 31st December 2021. I'm joined today with our Chief Financial Officer Katie Tovich, our Chief Operating Officers Jason Economides and Noel Pillay. I will give a summary of our results before handing back to the operator for questions. The most important commitment we make at South32 is that everyone goes home safe and well. And during the half, we didn't achieve that. In November, we tragically lost one of our colleagues, Mr. Desmond Menez, a contractor with Electra Mining, who was fatally injured while working at our vessels mine at South Africa Manganese. My deepest sympathies are with Mr. Menez's family, friends, and colleagues, and we have provided them with our support. We undertook a detailed investigation to understand what happened, and we are sharing these learnings across our business. During the period, we initiated the safety system of work, achieve a step change in our safety performance. We will never be truly successful until we eliminate fatalities and significant incidents. Our teams around the world have worked incredibly hard to deliver a strong set of production results during the half and we have achieved some significant milestones with the reshaping of our portfolio for a low-carbon future. During the period, we achieved a record operating margin of 44% and a significant increase in our underlying earnings to US $1 billion, benefiting from a broad recovery in commodity prices and the divestment of lower returning businesses. We maintained our focus on operating performance, holding the increase in controllable costs to less than 3% of our total cost base, despite significant inflationary headwinds. We delivered record quarterly production of Brazil alumina and South African manganese, While at Worsley and Lumina, we continue to operate above nameplate capacity. At Cannington, we have revised production guidance 5% higher as we prepare to transition to 100% truck haulage in the June 2022 quarter, bringing higher grade material forward in the mine plan. We also achieved a 26% increase in payable nickel at Ceramitosa following the completion of the furnace refurbishment and the first haul from our higher grade Q&P project. Production guidance has been advised lower for Illawarra Metallurgical Coal and Australian Manganese, reflecting lower first half volumes and the impact of COVID-19 on those operations. During the half, we generated a substantial improvement in free cash flow and distributions for our manganese business to US$942 million, despite the temporary bill We also delivered a very strong return on invested capital of 25% and we finished December with net cash of US$975 million which increased to US$1.1 billion by the end of January. Our strong financial performance has translated to increased returns to shareholders with a record dividend of US$0.087 per share and a further US$110 million added to our capital management program with US$302 million now to be returned. We've made significant progress reshaping our portfolio with the divestments of South Africa Energy Coal, Temco and Metalloys, which is expected to sustainably lift the group's operating margin into the future. We're adding copper to our portfolio by acquiring a 45% stake in Cerro Gordo in Chile, and we completed a pre-feasibility study for the Taylor deposit at Hermosa in Arizona, demonstrating potential for a sustainable, low-cost operation. We're also increasing our exposure to green aluminium, increasing our shareholding in Moselle aluminium and participating in the restart of the Brazil aluminium smelter using renewable energy. We are well placed to continue our strong performance, remaining focused on delivering safe, stable production and realising value from the improvements we have made to our portfolio. Thank you and I will now hand back to the operator for questions.

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Sylvain Grenet with BNP Paribus Exane.