Anglo American plc

So good morning, everyone, and welcome to Anglo-Americans 2024 results presentations. Just a few words from me before I hand over to Duncan and John and starting, perhaps unsurprisingly, with safety. Our very first value in our company is safety, and that cannot and must not ever change. We will not and cannot rest until we have created a safe workplace for everyone. We constantly work to improve our performance in this area. However, I'm very sorry to say that we had three workplace fatalities in 2024, which is, of course, not only tragic, it's also completely unacceptable. and it would be inappropriate of me not to mention that right up front. And Duncan is going to talk more about that during his presentation. Now, as many of you know, in 2024 and early 2025, we have seen substantial change at this company. We've made significant progress since we accelerated our strategic execution in the first half of last year. And the management team has delivered on all fronts and with some pace, not only in improving the operational and cost performance of the underlying business, but also, of course, in the simplification of the portfolio. And you've seen some of those changes coming through level eight. Now, the board has no doubt that that what we are seeing is a stronger and a more valuable Anglo-American emerge from this. But it is a journey, of course, and we have further to go. Now, briefly on board changes. There was none in 2024. But Anne Wade joined our board at the beginning of this year and attended her first board on Tuesday and has also joined the audit and the sustainability committees. Anne spent most of her executive career in the asset management industry. And a lot of that at Capital Group, which coincidentally and incidentally is now one of our largest shareholders, but they're not linked. And she has formerly served on the board also of Wholesome and John Leng Group. We very much look forward to Anne's contribution to our board going forward. That's it from me. Nothing further to say. Let me hand over to our chief executive, Duncan Womblad. Duncan. Thank you.

Thank you, Stuart, and good morning, everybody. It's good to see you. It's been a pretty busy year, so we've got a lot to get through today. 2024 saw us transform our performance with a very strong delivery on all fronts, I think, as we set ourselves up to implement our sequence of exceptional options on copper, iron ore and crop nutrients growth. The three key strategic pillars of operational excellence, portfolio simplification and growth have been our focus during the course of this year and we have made material progress here on each one of these over the last year. Driving operational excellence and bringing our assets to best in class is, of course, going to be a continuous and an ongoing journey. But we are seeing positive results from resetting of our mine plans a year and a half ago and the organisational design that we have now got focused on supporting work much closer to where the work is actually done. Now, despite our basket price falling by 10%, our actions to take out unprofitable production and excess costs has kept our EBITDA margins stable at 30%, with full-year EBITDA of $8.5 billion. Our focus on this operational leverage in the business and our simplified portfolio will mean higher margins going forwards. We realised cost savings in 2024 of a billion dollars and have used the portfolio simplification as an opportunity to rethink cost structures from the ground up. I'm very pleased with the progress that we've made on this transition. We've executed swiftly and for value with a steelmaking coal sale that we agreed for up to $4.8 billion and more announcements made during the course of this week, and I'll talk to some more of those later on in this presentation. Our focus will now increasingly be turning towards value accretive growth in the three pillars of the business, copper, iron ore and crop nutrients. And our set of strategic enablers, sustainability and technical competencies, our culture, our reputation and our customer solutions are all integral to delivering the full value potential of this portfolio. I'm going to unpack through this presentation some of these things, but I would just like to add an overarching comment that our focus remains on value creation, not simply more tons. And I feel confident that we now have a level of strategic ability and agility to create more value for all of our shareholders. Now, before we move into the results in some detail, there is, as I said, quite a lot happening in Anglo-American, and I'm happy to share some of the highlights of this and what we've announced in the last few weeks. So having achieved a strong finish to 2024 and met our production guidance across all of our businesses, this was led by solid performance in both copper and our iron ore businesses. We announced today that we will partner with our neighbours at Koudelka to develop a single mine plan for the combined Los Bronces and Indina resources, which will create at least $5 billion of pre-tax value between the two of us with no significant incremental capital expenditure. We have agreed the sale of our nickel business for up to $500 million, which performed very well during the course of last year, despite the very challenging nickel markets. In 2024, we achieved cost savings of $1 billion. Now, that equates to $1.3 billion on a run rate basis, which is ahead of schedule, and we are on track to deliver the full $1.8 billion on a run rate basis by the end of 2025. We also managed to keep net debt flat despite lower prices for our commodities by focusing on cost control and prudent financial management. John's going to talk a bit more about that in his section. We've now clarified the pathway to complete the demerger of our PGM business by the end of June. And we've also taken the decision primarily to manage flow back to initially retain a stake of 19.9% in that business. Now, this helps the independent platinum teams start their new journey with appropriate leverage and also allows us to further reduce Anglo-Americans' leverage from the PGM demerger responsibly over time. Finally, we are already seeing the future Anglo-American emerge, which will have higher margins and higher returns. We remain on track to be substantively complete with the transformation by the end of this year, recognizing, of course, that the timing of De Beers' separation for value is somewhat dependent on early signs of a diamond market recovery. Our number one value and our first priority has to be safety, and nothing is more important than that to me. It is so important that we do ensure that people go home every day safely to their families and their friends. Safety and operating performance, I do believe, are inextricably linked. And as the stability of our operations has improved, so we have seen a step change in the reduction of our injury rates, resulting in a 28% improvement over the two-year window since 2022. So 2024 was our best-ever full-year performance as far as lost-time injury frequency rates are concerned. Together with the improvement in these injury rates, the severity of our high potential incidents continues to trend downwards, and I am confident that we are on the right track, but just not there yet. Despite this progress, it deeply saddens me to report the loss of three colleagues in two separate incidents at our managed operations during the year. We will continue to drive our values through the transformation in both our organisational and our operational capabilities. Our focus remains on more effective planning and our leaders spending more quality time in open conversations with their teams. We can see that this does help to drive open conversations and it does help to role model the behaviors that we want to instill in all of our people through a process that sets clear expectations, shows care and respect, and builds trust to empower personal safety ownership. Now, as you will have seen from our quarter four production result, we delivered on our 2024 production guidance across the board. 25 and 26 guidance is largely unchanged, and that reflects the stability that we're now achieving with the operating model and the right mine plans. We have added guidance for 27, which is again in line with our prior expectations and provides that strong platform for future growth. In 24, our copper assets delivered a solid operational performance. And in Chile, our decision to put the smaller and the more costly processing plant at Los Bronces on care and maintenance has absolutely helped that operation to generate a 23 percentage point improvement in EBITDA margin. At Kiveko, the stripping and pit development work is progressing well, and other phases being mined and opened up now will increase the flexibility of that pit in the medium to longer term. It is absolutely a remarkable asset, that, and it is one that produced its copper last year at 105 cents a pound and is expected to consistently produce over 300,000 tonnes per annum in the years to come. At our premium iron ore assets, Cuma delivered in line with the reconfigured business plan, which aligns, of course, its production to third-party logistics performance and has scaled back its cost base to achieve this without any compromise to its competitiveness. Minas Rio in Brazil achieved a record performance during the course of last year as all of its operations consistently delivered against their plan. A quick comment on the ultra-high dense media separation project, commonly called UHDMS, which is currently underway at Sishen. The tie-in of the modules of this project is going to have a 4 million ton impact to production in 2026. This will not, however, flow through to sales because we do have sufficient product in stock to take us through the tines and the commissioning period. So the UHDMS will treble production or certainly station's proportion of premium quality production, and it is a really value-accretive way of maximising value within the logistics constraints of that business. Now, in the businesses that we are exiting... In PGMs, there was a good performance considering the self-imposed safety stoppages at Amanda Bolt during the fourth quarter. The stability of our processing assets allowed for the release of built-up work-in-progress inventory, and we are now back to more normalised levels there. At De Beers, the rough diamond market trading conditions in 2024 remained extremely challenging. Persistently high midstream inventory levels and a prolonged period of depressed consumer demand in China resulted in rough diamond sales falling sharply in the second half of the year. Consequently, we reconfigured production and we removed 6 million carats in response to these conditions last year. And we will do the same with another 10 million carats in 2025. Now that said, there are encouraging signs that the acute negative conditions that we saw at the end of 2024 may lift, with better diamond jewellery sales seen in the US and India over year-end. But we do believe that it is appropriate to get ahead of these issues and therefore the proposed production cuts. In nickel, the strong operational performance and process stability demonstrated in 2024 resulted in a higher confidence for 2025 and 26, which has led to a modest increase in our production guidance there. We will provide more detail of the sale that we announced on Tuesday in just a few moments. And lastly, in steelmaking coal, we expect the sale to Peabody to close in or around the third quarter of this year, and we have already completed the billion-dollar sale of our minority interests in Jalambar. Now, as I said at the outset, I really am delighted with the progress on the portfolio simplification and the shareholder value that we are unlocking as a result. We've touched on the steelmaking coal sale, which will generate $4.8 billion of proceeds, and we got there quicker and at greater value than was generally anticipated. John will touch on the taxes and the transaction costs in what I believe was a really well-executed deal. I'm also very pleased with the sale of our nickel assets for up to $500 million, especially considering that these assets were under consideration for care and maintenance not that long ago. Credit there to the team who rapidly had to adjust their operational plans in the context of some really tough prevailing nickel market conditions. The transaction structure gives us upfront proceeds, but also allows us to retain some of the upside as and when nickel prices recover in the coming years. And we expect this transaction to be completed during the second half of this year. Our demerger of Anglo Platts is very much on track for the middle of this year, and I'm going to touch on that in a bit more detail on the next slide. Now, on De Beers, we are continuing to work towards a separation and exit as soon as makes sense to do so. It is worth remembering that this business has some of the best diamond assets and the best diamond mines and resources in the world. It has an iconic brand and is a global leader in the industry. We continue to believe that the headwinds from lab-grown diamonds are surmountable, and we see meaningful long-term value in this company. We are going to do what we can to protect the value in what is really challenging near-term market conditions. We have agreed a framework to move forward with the government of Botswana on our sales and mining license agreements, and this helps us to provide stability and confidence to the wider diamond sector. John will discuss later some of the measures that we are taking with the De Beers team in terms of managing into this near-term weakness. But let me be unequivocal. There is absolutely no change in our strategic rationale for the exiting of this business, and we are setting up De Beers to thrive as a standalone business. More specifically, now on the Anglo-Platinum demerger. Key milestones leading up to the demerger date include an Amplatz Capital Market Day, which is going to happen late in March, and then the publishing of their prospectus, along with our shareholder circular in early April. This is then followed by the required shareholder vote, which will happen at a shareholder meeting at the same time as our AGM at the end of April, following which the demerger will then occur in June. We are now finalising the key elements of the demerger arrangements, and there are two focus areas in order to ensure success for all of our stakeholders. Firstly, responsibly managing the flow back, and secondly, capital allocation. While the demerger gives Anglo-American shareholders the flexibility to make their own decisions about their investment in Anglo-American PLATS, we remain extremely positive about the case for PGMs and the AMPLATS investment case in particular. It is inevitable, however, that demergers, particularly in different primary listing jurisdictions, are going to result in some turnover in the shareholder register, and proactively selling down a proportion of our shareholding has indeed already helped manage that risk. At the same time, it also raised approximately $900 million of proceeds for Anglo-American. The proposed additional listing of Anglo-Platz on the London Stock Exchange is also designed to mitigate the impact of flowback to shareholders. And in addition to these steps, we decided, as I said earlier, to retain a 19.9% stake in the company following the demerger, which we believe is consistent with our intention to deliver the separation responsibly and optimally structure the capital in both of the businesses. Now, we intend to remove all board representation and deconsolidate our interest from the time of the demerger so that this does not interfere with a clean break. We are fully supportive of the Anglo-Plazas team in setting out their independent course following the demerger. Consistent with this, Amplats announced its final dividend for 2024 and an additional dividend, together totalling approximately $900 million ahead of the demerger, which allows them to deliver their strategic plan and be resilient without having to rely on improving prices. Now, this will result in an aggregate dividend of approximately $600 million to Anglo-American. Lastly, we intend to implement an Anglo-American share consolidation upon demerger, and this makes sure that the share price and the per share metrics of Anglo-American will be comparable before and after the demerger. This will impact the number of shares that each shareholder holds, but as it's done on a ratio basis or a pro-rata basis, the overall ownership percentage will not change. Let me now hand you over to John, who's going to take you through the numbers and the guidance, and then I'll come back and then walk you through what we're going to do with the company and the portfolio that we've got going forward. Thanks, John.

Thank you, Duncan, and good morning, everyone. Over the last year, we've focused on delivering consistently strong financial results with special attention to cost efficiency and cash generation. I'm pleased to say that the business has responded well. There's a real energy across the group to deliver on commitments and tangible progress is evident in our 2024 results. Production was 7% lower than last year, but in line with our expectations. the year-on-year movement being largely due to the Grosvenor fire, and our own actions at De Beers and Los Bronces to focus on value over volume. Revenue was 12% lower, largely driven by a 10% reduction in basket price. Notwithstanding this $3.9 billion reduction in revenue, the EBITDA reduction was only 1.5%. This was due to our deliberate and significant action to reduce costs and is evident in our EBITDA margins which have been broadly maintained at 30% despite those lower volumes and prices. We saw a significant step up in cash conversion to 97% reflecting a laser focus on working capital where we realised a $1.8 billion inflow. with working capital and cash management becoming a common language right across the group. This strong operating cash flow allowed us to maintain net debt flat at $10.6 billion after dividends and growth capex. Our net debt to EBITDA now stands at 1.3 times, which remains within our target range of less than 1.5 times at the bottom of cycle. and with substantial proceeds from our portfolio simplification still to be received over the coming year. This all allowed the Board to recommend a final dividend of 22 cents and bring the total 2024 dividend to 64 cents per share, in line with our 40% payout policy. EBITDA at $8.5 billion was $1.5 billion lower than last year. And you can see here that this was driven by the lower basket price, mainly iron ore. The effects of CPI and lower volumes were offset by our cost-saving actions, which realised $1 billion in the year. Those $1 billion of cost savings have been delivered across each of our businesses and corporate centre, as shown here. The phasing of the cost savings in the year means that on a run rate basis in 2024, we've now delivered $1.3 billion, which is ahead of our targeted $1 billion run rate at this point. As I'll show in the next slide, this has not been easy given the impact on our people, but of course it was necessary. Our cost savings have been realised in three main areas. Operational headcount, operational efficiencies and corporate streamlining. Starting with operational headcount, we had a 19% reduction in Coomba and a 15% reduction in PGMs. These were challenging decisions to take and impacted many colleagues, families and communities. But of course it was done in a respectful and responsible manner in keeping with our values. Turning to operational efficiencies, our focus on costs and cash is driving a renewed energy for continuous improvement. There are many examples across the group, but I'll call out a couple of the more significant. Firstly, across our copper assets at Los Bronces, El Sodado and Chagres in Chile, we saw total operating costs decrease by 21%. This covered many areas, but included a data-driven review of our load haul activities at Los Bronces, allowing a 16% reduction in our haul truck fleet. Secondly, we realised a £0.2 billion reduction in PGMs from consumable costs. This included diesel, explosives, chemicals and tyres, following significant supplier negotiations. And finally, through our corporate streamlining, we rely 0.3 billion of cost savings in corporate overhead and corporate initiative costs. This included streamlining resource across many functions as we move work more close to our operations. Finally, on costs, I'm pleased to say that we're well on track to delivering our committed $1.8 billion of savings. Having already delivered a £1.3 billion run rate in 2024, we will deliver the remaining £500 million as the portfolio simplification continues over the course of 2025. This balance will be largely in the corporate centre, including further headcount reductions and initiative savings. While the full $1.8 billion run rate will be achieved by the end of this year, we expect realized savings in the year to be around $1.5 billion, an incremental $500 million compared to 2024. As a reminder, we're taking the opportunity as we reshape our portfolio to reset many of our corporate processes and ways of working. We will be a more nimble, streamlined business with more work taking place closer to our assets and communities. This will be more efficient and cost-effective, and I'm confident that in time this will allow us to realise even stronger financial outcomes. Rounding out on EBITDA, it's worth standing back to look at the relative contributions from our businesses. Copper and iron ore represented 76% of our EBITDA, with EBITDA margins of 50% and 40% respectively. These margins have been supported by the cost actions described earlier. which are further evidenced in the reduction in unit costs in both businesses. Those unit costs in copper were supported by putting the second lost bronzes plant on care and maintenance, as well as favourable foreign exchange, while iron ore benefited from significant cost savings at Coomba and the record volumes delivered at Minas Rio. Of course, the beers was breakeven in the year, and I'll come back shortly to describe the actions that were taking there. looking briefly at other items affecting earnings in the year. The underlying effective tax rate was 41%, up on 2023, primarily driven by the mix of profits and associated country tax rates. Also, the overall lower profit at the group level meant that there was a proportionally higher impact of those countries which are loss-making from a tax perspective, including the UK economy. On the special items reported outside of underlying earnings, the most significant impact was the $2.9 billion impairment at De Beers. This reflects our latest views on market outlooks given the weaker than expected 2024. The key changes since last year being a slower recovery in China and a larger impact from lab-grown diamond penetration. In essence, while there is no change to our belief in long-term prospects, we see more of a U-shaped recovery from here. Staying with De Beers, I'll now give a little bit more context to current trading conditions and how we're managing the business in that environment. Rough diamond trading conditions continue to be challenging. The ongoing economic challenges in China, which are impacting many luxury sectors, have led to a more than 40% cumulative reduction in consumer demand for diamonds over the last two years. And with China previously being the second largest and fastest growing market for diamonds, this has had a significant impact on both polished and rough diamond demand. As a result, Chinese retailers have been selling excess polished inventory back into the midstream. And this has added even further to an already high level of midstream inventories. The obvious impact of this has been a significant decline in rough diamond demand as midstream inventories have looked to normalise. You can see this on the chart where midstream inventories increased through the first half of the year before starting to reduce through the second half. This was evident in the rough diamond revenue profile for De Beers in 2024 where first half revenues were $2 billion compared to $800 million in the second half. And this lab-grown diamonds also continue to have an impact on natural diamond demand, primarily in the US, although we do expect that to lessen as prices for lab-grown diamonds continue to decline, further bifurcating the natural and lab-grown diamond markets. Of course, while these market conditions are frustrating, we have not stood still as a business. We've had an intense focus on the cash performance and proactively cut 6 million carats of production in 2024, managing to slightly reduce our inventory after a couple of years of significant increases. And in addition, we reduced overheads by around $100 million. As we move into 2025, conditions remain challenging, with our first site continuing at similar levels to the back end of 2024, with sales of $130 million. There are, however, some positive signs at the retail end, with credit card data showing jewellery purchases in the US increased 8% in December. And this will help to reduce those midstream inventories. In the meantime, we're taking all necessary actions to mitigate the financial impact of current market conditions, including further production cuts, capex reductions and cost savings. We also continue to focus on preparing the beers for separation. The conclusion of the sales agreement negotiations with the government of Botswana was an important step in this regard, securing our long-term access to the world's best diamond resources. Moving on now to our cash performance in 2024. Our sustaining attributable free cash flow at $1.7 billion was $1.6 billion higher than last year, despite that lower EBITDA. This was driven by a strong working capital performance where we saw a $1.8 billion inflow compared to a $1.2 billion outflow last year. The inflow was driven by receivables and inventory, partly due, of course, to lower volumes and prices, but also a structured and disciplined focus on a number of key areas. Firstly, payment terms for both sales and purchases. Secondly, prompt collections. Thirdly, proactive finished goods inventory management across PGMs, De Beers and Coomber. And finally, close management of consumables inventory across all businesses. While we won't be able to deliver 97% cash conversion every year, I have been pleased with how the business has responded to the challenge. And we are embedding a deep appreciation of the criticality of working capital management right across the group. Our sustainable attributable free cash flow largely funded our growth capex and dividend for the year. Growth capex primarily comprised of Woodsmith at $0.8 billion and $100 million at Kolowasi for the first stage of the de-bottlenecking plant. Half a billion of other cash flows include the $0.9 billion received from the two platinum book builds in the year, partly offset by movements in lease liabilities, foreign exchange and fair value movements. Net debt to EBITDA at 1.3 times is within our target range of less than 1.5 times at the bottom of cycle. And going forward, we will see further strengthening as we receive cash proceeds from our portfolio transformation. Now that the portfolio transformation work is well progressed, I've set out on this slide our latest view on the net proceeds from the three agreed transactions. Firstly, on steelmaking coal, most of the non-contingent proceeds of £3.8 billion are expected to be received. Of this, around $1 billion has already been received in respect of the Jelenba transaction. For this non-contingent element, the transaction costs and taxes are expected to be about $200 million. On the remaining $1 billion of contingent proceeds, which is dependent on prices and the Grosvenor restart, we anticipate another up to $200 million of tax. On nickel, $350 million of non-contingent proceeds are anticipated to be received in 2025 with negligible costs and taxes. And in 2025, the net effect of the dividend declared by Anglo-American Platinum, the cash to be demerged, and settlement of intercompany charges payable by Anglo-American Platinum, based on the numbers at the 31st of December, would largely be net debt neutral. And obviously the actual net debt movement will be dependent on the actual balances at the time of the demerger. We expect taxes to be around £400 million in 2025. And as stated in our press release on Monday, we will initially retain a 19.9% shareholding at the point of demerger to limit flowback. This worked very well in the previous demergers of both Mondi and Tungela. We will reduce this stake responsibly over time, but at current share prices this would realise around £1.7 billion of proceeds with no further material taxes expected to be paid. One final point to note on cash, in 2024 and early 2025, we agreed to buy in on a number of our pension plans in the UK, essentially passing the liabilities to an insurance company. There is likely to be a cash surplus of around $200 million to $300 million across those schemes as they are wound up, and that cash will come back to the group over the coming years. So, as you can see, we really are setting the business up with a sound financial footing. The sound financial footing will be married with a much stronger operating business in our future state. This slide sets out our 2024 results on a pro forma basis post-transformation. It reiterates the messages that we conveyed when we announced our accelerated strategy last May. Our new business will have higher margins, higher cash conversion and higher return on capital. Turning now to guidance and looking first at our copper businesses. Unit costs will be maintained in line with 2024, with the impact of lower volumes at Kolowase and the full year impact of the lost bronzes plant being in care and maintenance being offset by the full year benefit of the cost savings that I discussed earlier. In iron ore, we expect a 3% increase on the 2024 unit cost to around $36 per wet metric tonne. And with Coomber's unit cost being flat on 2024, while Minas Rio is impacted by the lower volumes as a result of the pipeline inspection that's taking place this year. I've included unit cost guidance for other businesses in the appendix to the presentation. Group underlying effective tax rate guidance for the entire portfolio in 2025 is expected to be between 40% and 43%. And for the simplified portfolio, we currently expect a long-term underlying effective tax rate of between 38% and 42%. And our group depreciation guidance is unchanged from 2024 at $3 to $3.2 billion. As previously guided, we also expect to incur restructuring costs of around $400 million for delivering the incremental cost savings, with most of this to be incurred in 2025. You can see here CapEx guidance for the next three years on both a total group and simplified portfolio basis. You will note that the simplified business sees sustaining capex at around $2 billion per annum, while growth capex is focused on copper and iron ore, with Woodsmith limited to $300 million of capex in 2025, with expected opex also in Woodsmith of $100 million in 2025 and 2026. The main growth projects include Kolowase and Kaweko de-bottlenecking and the UHDMS project at Coomba. We've also provided some early estimates of our potential growth spending in 2026 and 2027 for our 1 million tonnes copper target. However, we would note that this includes unapproved projects, which could be subject to change based on timing and permitting, and in particular, as we develop the plans around the Los Bronces and Tina joint mine plan, which could defer a portion of this capital spend. I'll finish now with a quick recap on the key points. Despite a 10% lower basket price, we maintained EBITDA margins with a laser focus on costs and efficiency. Cost savings are being delivered ahead of schedule, with £1 billion realised in 2024 and with a run rate of £1.3 billion entering 2025, we're on track to achieve our $1.8 billion of committed run rate savings this year. We delivered 97% cash conversion and maintained net debt flat at $10.6 billion. Our agreed transactions will realise significant cash proceeds in 2025 to further strengthen our financial position. And our simplified portfolio will not only have a strong financial position, but will see enduring, resilient performance with higher margins, higher cash conversion and higher return on capital. Thank you very much, and I'll now hand back to Duncan.