South32 Limited

Thank you and good morning everyone and thanks for joining us today. I'm joined today by our Chief Financial Officer Katie Tovich and our Chief Operating Officer Jason Economides. I'll give you a summary of our results before handing back to the operator for questions. And just as a reminder, the presentation is available on our website. The most important commitment we make at South32 is that everyone goes home safe and well. This year we did not achieve that. We are deeply saddened by the loss of our colleagues, Mr Desim Menez, a contractor who was fatally injured while undertaking electrical work at our vessels mine at South Africa Manganese in November. Our deepest sympathies are with Mr Menez's family, friends and colleagues. We provided them with our support following this tragic incident and undertook a detailed investigation to understand what happened. The learnings were shared across our business and we held stop-for-safety conversations to discuss, and learn from them to prevent a similar incident occurring at any of our operations again. Moving to our results. During the first half of FY22, we undertook a review of our safety performance and identified areas for improvement. This formed the foundation of our Safety Improvement Program, a three-year global program of work designed to achieve a step change in our safety performance. When it comes to our operations this year, we delivered stable operating performance, despite a challenging external environment which included managing the ongoing impacts of COVID-19, labour availability and extreme weather events. We achieved record production of Worsley alumina and at Hillside Aluminium and Moselle Aluminium continued to test their maximum technical capacity. At Ceramitosa, we achieved a 22% increase in nickel production. And at Cannington, we exceeded our already increased production guidance as you transition to a new operating configuration. We delivered record earnings in cash flow as our stable operating performance, the implementation of logistic solutions and recent portfolio improvements enabled us to capitalise on significant price tailwinds. We generated a record underlying EBITDA of $4.8 billion and record underlying earnings Free cash flow increased by more than 200% to $2.6 billion and we finished the period with net cash to $538 million after funding $1.5 billion of investments to improve our portfolio during the year. As we continue to transform our portfolio, our capital management framework remains unchanged. A strong balance sheet is at the core of our strategy and our framework is designed to reward shareholders as our financial performance improves. Reflecting our strong financial position and disciplined approach to capital management, the Board has resolved to pay a record 648 million US dollar fully franked ordinary dividend in respect of FY22, and 139 million US dollar fully franked special dividend, taking total dividends to a record 25.7 US cents per share for the year. Our total shareholder returns of $1.3 billion in respect of FY22, including our ongoing on-market share buyback, was also a record. And today, we have further expanded our capital management program by $156 million to $2.3 billion, leaving $250 million to be returned by September 2023. During the year, we accelerated our portfolio transformation increasing our exposures to the metals critical to a low-carbon future. We acquired a 45% interest in the Cerro Gordo copper mine in Chile. We also acquired an additional 16.6% shareholding in Moselle aluminium, which benefits from access to hydro power. And we achieved first production from the restart of the Brazil aluminium smelter using 100% renewable energy. These investments in our aluminium value chain have increased our low-carbon aluminium production capacity by 100%. Our attractive commodity mix also includes a growth pipeline across development assets and exploration properties in lead metals. Looking ahead, we are well positioned heading into FY23, given our growing production profile and strong balance sheet, and we are well placed to capitalise on the increasing demand for base metals as the world transitions to a low-carbon future. Thank you. And I'll now hand back to the operator for questions.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Matt Green from Credit Suisse. Please go ahead.

Hi, good morning, Graham and Katie. Can I just start off with asking a question on the cost base of the African smelters? I note on slide 46 that raw material inputs across both smelters are around 52% of your cost base. But then in the release, it's saying about 77% for hillside and 74% for Moselle are power and raw materials. So do I interpret that as based on the FY22 cost that about 25% and 22% of your cost base is related to power? at Hillside and Moselle, respectively. Is that a fair observation? And if not, perhaps can you just provide some comments on how much of your absolute cost base is currently power-related, and how often is this price reset to reflect what we're observing in the PPI space? Thanks.