Glencore Plc Unsp/Adr

Good morning and welcome. Thank you for joining us for the presentation of our 2022 financial results. Joined here today by Gary Nagel, CEO, Stephen Kalman, CFO, and Peter Freyberg, our Head of Assets. I'll hand it over to Gary.

Thanks, Martin. Good morning. Welcome to those here in person and all those online. Welcome. Thanks for joining us for our 2022 results presentation. So taking a look at our scorecard for the year, our financial scorecard as a start, it's been a record year for Glencore. Our adjusted EBITDA for the year is a little over $34 billion, broken down between our industrial assets and our marketing business. On the industrial side, an adjusted EBITDA of $27.3 billion. And on the EBIT side, a record again for our marketing business, a $6.4 billion EBIT result for the year. Really phenomenal year on the marketing side, double the top end of our range. equity-free cash flow of $24 billion, and we finished the year with virtually zero net debt. All of this resulting in us being able to pay generous turns back to our shareholders. We followed our well-publicized and well-established capital returns policy. Steve will take you through it in more detail. There's a slide on it in the pack as well as in the appendix. But we're returning $7.1 billion to our shareholders this year. $1.5 billion in the form of a bar back and the remainder as a cash dividend to shareholders. On the industrial side, as I said, we generated $27.3 billion of adjusted EBITDA. A large portion of that, and again, the breakdown is later in the pack, is a result of higher coal prices and the fact that we were able to bring in now the full Serehon operation for the full 2022, where previously we were only one-third shareholders of that operation. On the slightly negative side, we have seen some headwinds in terms of cost inflation, but that is across the industry. That is seen across the board, whether it be in energy costs, whether it be processing costs, whether it be labor costs. We have seen those across the board, and all of those are reflected in our outlook period as well. Margins for metals slightly down off 2021 numbers, but coal obviously a higher EBITDA margin and reflected in our terrific results of the coal business in 2022. On the marketing side, as we said, a record year, $6.4 billion EBIT. We've seen huge dislocations, huge arbitrage opportunities, huge volatility in particularly the energy markets. And as a result, we've been able to service our customers, provide our customers with the energy security they need, the minerals they require to be able to navigate a very volatile world, and has resulted in a very good marketing result for our business. On the ESG side, we've made a lot of progress on the climate side. Peter and his team are working extensively on our marginal abatement cost curve. We've expanded the inventory significantly. A number of projects, a significant number of projects in fact, which are NPV positive at very low assumed carbon prices. He continues to engineer these projects and will be implementing them sequentially across our business as we continue to move in that direction. On our climate change strategy, as you know, we have a sector-leading strategy. We will reduce our Scope 1, 2, and 3 emissions. And important is to say Scope 3 emissions because many others in the industry are unable to make commitments around Scope 3. But of our 2019 base year, as you know, we'll be down 15% by 2026. And importantly, at least 50% down by 2035. Our business includes a portfolio of critical minerals, and these will be critical in the transition to a green economy. And as we run down that coal business, we will continue to invest in our critical minerals and provide the minerals and metals needed for the decarbonisation of the world's energy grid. We also have a CCS plant in Australia, as you know, CTSCO. That project is advancing, and as the IEA has said in many of its reports, the world needs all technology to be able to meet our ambition of net zero by 2050, of which CCS is one of them. So we're very happy to advise that that project continues to move. It's a pilot project. CCS plant at the Milner and Power Station, and the EIS is now open for comment, and we'll continue to invest in that project. The other area that we focus on a lot in our business is recycling and the circularity of our minerals. We've invested capital in it during 2022, and we'll continue to invest in 2023. It's profitable for our business, but not only is it profitable, it's the responsible thing to do. The world requires circularity. It requires recycling. not only because the world needs those metals and there isn't enough metals in the world from primary sources, but it is the responsible thing to do as we decarbonize and as the world requires these materials. On the social side, we've unfortunately lost four of our colleagues this year. And this is something that we take incredibly serious. It is the single most important driver of our company. Peter and his team work relentlessly to ensure that we keep our people safe and that we target zero harm in this company. We haven't achieved that objective, but it is the number one objective that we have in this company, and we will not rest until our people are all safe. We have our SafeWork program that Peter has revitalized. It is something that is dynamic. It's not something that you implement and you say, you tick a few boxes and say this program is in place. It's dynamic. It's worked on. It's amended. It's changed because we learn every day and we see every day and things come up every day that are different. And it's a dynamic program which we are seeing huge amounts of improvements across the business and we'll continue to work on that to keep our people safe. On the governance side, we are committed to be a responsible and ethical operator, wherever it is that we operate. During 2022, we settled investigations with the US, UK, and Brazilian authorities, and we continue to work on the investigations with the Swiss and the Dutch authorities. During the year also, we had extensive shareholder engagement around our climate strategy. We had a vote, or AGM vote, on our progress report, and we had overwhelming support in favor of our climate strategy that we've published. So with that, I'll turn it over to Steve to take you through the financials.

Thanks, Gary, and thanks for all those that have graced us with your presence here physically and those that are online here and around the world as well. Just to introduce the financial performance, by now we've got some slides that are very familiar. The look, the feel, the flow, the updates that we do from time to time by department, by industrial, by marketing. Also relative to the investor update that we did in December only a few weeks ago, there's been no change to any guidance around some of the key production and capex numbers over the next three years. And we have rolled forward the spot illustrative free cash flow, which we do three or four times a year. So with that, and hopefully with the delivery of numbers that are broad as expected, production results came out sort of a week or so ago. We should be able to move through relatively quickly. Some of the high-level numbers that Gary spoke to earlier on, they'll all be covered more in later on but clearly a fantastic financial performance for the group in 2022 aided primarily in the energy sector and being exposed both industrially and in marketing metals was more challenging both industrially and marketing that's where we see some upside going forward and we'll also show that in the spot illustrative number earnings up in the 18-19 pretty significant items there were a few impairments booked for those that like trawling through the 120-page financial release, you can see where those, some were in, they were all effectively in our metals business with some margin contraction via prices, TCs challenging, and just mine plan updates that we've done as well. And the equity-free cash flow, 24 billion, that's obviously a key number from which we can return cash to shareholders, we can invest in the business, and obviously managers around our net debt position as well. We'll get through all those slides later on. If we look at the industrial, starting with a few slides, as I said, very, very familiar. Generally, you can see the yellow charts bottom right. That's where the big increase was 21 to 22. So an overall 59% increase in industrial EBITDA up to 27.3 billion. The increase was 5.6 to 18.6, all in the energy segment, primarily coal. Of that 13 billion increased, 12.7 was in coal. We do have a small fledgling E&P business, which does generate cash. It does have exposure upstream, both in the liquid and the gas side. And that's been contributing and generating cash also for the business itself. But clearly materiality drowned out by the coal business. The acquisition of Ceron, effective 1 January 2022, had quite a profound impact. And incrementally, there was an uptick. I mean, just Ceron itself, in terms of our own earnings, 3.6 billion EBITDA for the year. compared to a 452 pickup in 2021. Had we still owned one third, it would have gone 452 to 1.2. So there was a 2.4 billion EBITDA presentation just in Cerro Juan by virtue of having owned the increased 66%, which we've had as well. We'll see on the next slide, there'll be a waterfall pricing was by far the largest variance. Then we'll work through some of the costs and volume variances as well. Within the metal side, again, bottom left, you can see in the gray area, we're actually down. 2.7 billion from 12 to 9.3. When we do show the spot illustrative numbers later on, we are looking to grow the industrial medicine, of course, subject to volume and prices as they stand, but we do see a tick up basis macros and production performance for 2023. It shows the strength of being diversified and across both activities, geography, processing, mining, metals and energy as well. Where we did see margin contraction across the metals business in 2000 and And 23, we did, that was the business most impacted with higher costs. We saw it across the board, frankly, all ultimately mostly macro commodity link through energy, diesel, Power prices were also processed. European power prices were, of course, a mess through most of the first six or nine months of last year. We've had a few volume impacts. We've specifically called out, I mean, the two biggest assets, at least year on year, and there's volume, there's cost, there's price variance at all, was at Katanga. It's been well talked about through the course of 2022. The outcome for the year was at 220,000 tonnes of copper compared to 264 in the previous year. And the net impact across cost volume price at Katanga was a drop of about a billion dollars in EBITDA between the two of that 2.7. The other reduction of any material nature was Mount Isa, which is across multiple assets, integrated business across both the mining of copper, zinc and smelting and production through to final product that it does as well. Isa itself was down about 0.5 billion. There was some non-cash impacts as well that does land up going through the EBITDA line. We did have to take some inventory fair value adjustments through the WIP, through the ultimate realization of those products as it goes through the system. So we'll see what impact that that had on costs as well. But production-wise at ISA, our zinc was 290 against 330 in the previous year. We've called that Lady Reta. It is a It's been a good cash contributor over the years, but like all good things, some mine in our business, there is an end date on that, and that's looking like 24 early 2025. And the copper business as well, it's sort of an ageing business across the copper as well, and we reported 71,000 compared to 92,000 the previous year. So those were two to call out on the mining side. Where was the action in terms of the industrial bridge? So from 17.1 out to 27.3. As we said, the biggest bar clearly is in price. You can see bottom left, some of the larger contributors was, at least on a benchmark term, Newcastle was up 163%. The other, coal and crude, were of course up as well. Copper, in fact, averaged down 6%. We'll see the impact later on. Zinc and nickel, on the contrary, were actually up average prices year on year. So the 12.2, 12.5 was positive energy, really all in the coal. part of the business as well. On the metal side, there was an impact negative of 0.3 across pricing. The big impacts we saw in the copper business was actually down 1.6 billion. We'll see individual slides later on as well. Average copper prices, provisional pricing had quite a material impact, and that's based on the sequencing of sales, the timing of the timing and frequency and curve of the reductions that we saw in copper prices, particularly we saw weaker Q2 and into early Q3. There was about a 400 million impact there on the copper business. Cobalt also, as a pricing variance, does come through the copper business given the byproduct across our African business as well. Started okay on the cobalt side. That's one of the weakest commodities clearly at the moment in terms of both supply and demand factors. Hopefully this year we can work through the lows of cobalt, find the bottom and be able to move forward in that particular market. It still is obviously a commodity that has some favorable demand outlook ultimately, but for now it's struggling with a surplus position. Within the volume side, we were net positive for the year, and that was primarily on the energy side, and again, primarily Serehon, having made the acquisition and acquired the extra two-thirds. Overall, like for like, our volumes in coal were actually down year on year, but we net net as a positive volume variance, and having generated good margins on what we added, and sacrificed less margins on what was ultimately missed in terms of some of the coal variants, some of the volumes, and particularly in South Africa, maybe volumetrically reasonably material, but not as impactful on the bottom line in terms of volume contribution. So energy was a positive 2.3. It's nice to see a positive volume variance. This is where the sector is is struggling. We'd hope to be able to turn that positive as well as we look for 2023. Metals, we saw some volume impacts. We've been through the copper-zinc impact. Zinc in particular, volume-wise, I've spoken about my eyes as well, but we've also adjusted the portfolio over the years. So that does manifest itself in some of the volume. if you think about our bolivian and peruvian operations which we've exited entirely from those consolidated controlled smaller businesses that we had production-wise we only produced 27 000 tons of zinc from those businesses in 23 against 111 in the previous period so that does work its way through the volume line those businesses whenever material profit contributors and it sort of works out in the balance between price and volume and cost and ernst henry as you're aware also from a volume cessation, we sold that 1st of January 2022. The cost variance negative, it's pleasing to see that because it's compensated by the price. So we've always won big blobs off to the price. And if we have to absorb some macro inflationary cost impact that are fueled by those exact commodity prices, which we saw as well. So it's certainly very positively correlated, not in terms of shape, but we'll get to keep most of the upside from producing at the high prices, then we'd have to absorb through the inflationary pressure that we have as well. On the cost, they were primarily commodity linked, as we put down in some of the commentary there, heavily impacted the coal business. We'll see some cost charts later on as well as massive consumers of diesel-fueled explosives and the likes around large earth-moving open pit operations, copper assets as well, diesel, big fleets that we have across the business as well. reagents across being both miner and processor. Zinc assets very exposed to energy and power in Europe. It was a major cost increase in 2022. Labor in Kazakhstan as well that moved quite early in the year in terms of adjusting their cost of living adjustments that they have as well. Many of those factors across the cost side of the business unfortunately have been moderating lately. And I say unfortunately because the price side of the bar is then also going to Give back some as we move forward and we'll look at the spot illustrative. A little bit of FX benefit as well with about 10% weakening that we saw across each of Aussie dollar, red and euro in 2000 and 23. So quickly as we go through some of the individual pages and again you'd be very familiar with these slides. Copper we did see a reduction 12%. Some of it was portfolio around Ernst & Henry. That was about 45,000 tonnes. Very little update from these slides compared to where we were at the December 2022 update. Katanga, in terms of our own long-term asset, was the one that's reduced production around the 220,000 compared to 260,000 plus in previous years. That has had a good Q4 production performance. We obviously saw that in our production report, annualising it sort of higher than that sort of 220 level that we're guiding, or 205 plus minus 15 that we're guiding bottom left in our production for this year. So fairly steady copper business production. This was an area that long-term has enormous portfolio growth optionality, both in a brownfield capacity, but ultimately in a greenfield capacity. Today's presentation is not gonna talk too much to the growth and the portfolio optionality. There are some slides that we've rehashed back in the back in the presentation as well. The pricing impact, as I mentioned, in terms of putting a 5.7 billion print on the copper business 22, against something that might have been higher, we have called that provisional pricing, was about 5%, it had a 5% impact than would otherwise have been the case on our Relos copper price. So coming at 364, had provisional pricing not been a factor last year, we would have been 19 cents a pound higher. I suspect you'll see this across the industry Generally printing, that equates to about $400 a tonne. We're across 900,000 tonnes of production last year. Sales is about 350 to 400 million impact, just in our copper business on provisional pricing impact. Costs have been ticking up and remain elevated, A, volumetrically to do with Katanga in terms of cost absorptions, but also now increasingly the impact of cobalt. that it's having across our costs with the enormous byproduct cushion that we normally get. We've seen it both in metal, but even more importantly on the hydroxide side, which is a commodity that's more impacted by surplus units at the moment. We've seen payabilities finish the year in the 50s compared to having average 84% through the first half. So that's led to a progression. You can see the 221 unit cost of 67 up to about 80. And we're at 91 cents at the moment of having rerun macros effective 1st of February 2023. Anti-investor day, we're about 92 cents. So as you were, there's been a slight moderation in costs generally, which would help around diesel and consumables and some of the reagents. As we roll forward into 23 on the right-hand side, you can see we're looking for around 5.9 billion. We've got all the details on slide 28. So we've got a higher price at 390 compared to the average of last year at 364 with the provisional pricing impact. Cost has ticked up a bit, primarily on account of cobalt, and we'll see a slight progression there. As we'll go through the year, we will need to, whether it's Q1, whether it's the first quarter production, whether it's the full year results, We will look to be dynamic around managing cobalt production and sales. So we want to see where the market is. We want to see what makes sense in terms of that market, how any sort of rebalancing and how quickly that necessarily occurs. We are a decent sized producer. We certainly don't have to be always continuously price takers. We can obviously have a bit more discipline in that market to the extent we choose to stockpile a bit in the cobalt side. Ultimately, there'll be cash realisation, but that would potentially impact the 91 cents if we're not selling all that cobalt during the year. That's still being worked upon. In zinc side, we've spoken about the reduction in production. We've seen some portfolio changes in that business, and I've called that ISA as well, ultimately focusing on our industrial mining assets orientated towards larger long-life assets in Kazakhstan and Australia. So it's going to be the Zinc business, it's going to be the MacArthur River, it's our processing business, and George Fisher itself, a long-life asset that we're looking to obviously improve performance and drive returns from that business over the long term. There were some non-cash charges within the Zinc business. It was worth calling that out. Some adjustments around stock valuations, some onerous contracts. Non cash adjustments that does find its way through method mechanically into the derivation of that sixty point three cents cost Without that it hasn't clearly cost the business in cash, but it does so mechanically work through in sixty cents There was around three hundred million. There was a bit of non cash adjustments around kasing business and also in portabesma When we moved to could tell some of those lines that would have otherwise have reduced us to thirty eight cents a pound pre those non cash impacts and And we're looking for 23 to bring the portfolio down to 28 cents, primarily moderating in energy prices. If you think about the European power price structure, gas, energy and the likes, this is where we see some of the benefits. Yes, you give away two somewhere here and maybe you pick back sort of 10, 20, 30 cents in the dollar as we go across the portfolio as well. There's also slightly better byproduct prices that we have. Zinc does, in our zinc business, we produce most of our gold and silver. At the margin, those have also improved in prices, both relative to last year and relative to our guidance that we had in December, which I think was $0.35. So now the portfolio is coming in at $0.28. So we finished $1.5 billion on a spot basis. This business moves to $1.7 billion. I suspect there may be a question on JIRAM later on. I will leave that for Peter to comment. But the same comment has come through that. We expect the continued ramp-up through 2023 with steady state buy. by Q4 this year. That does, for us, is quite a big game changer in terms of both cost and volumes and cash contribution across the zinc business and long life asset that we have there. Moving on to nickel itself, ticking up a bit in production. We've saw Connie Amber operating on two lines for most of the year. It's clearly not at any nameplate capacity, but at least a tick up in pleasing to see performance and better operating performance there. at around 25,000 tonnes. It's not sustainable at that level. It's an operation that ultimately would need to be in the 30,000s with a cost structure also that was more competitive. This is another one of those assets where you take two in the one hand and you give back a little bit. It is primarily coal-fired. So their energy costs and their costs generally exploded in 2010. and 22, which has led to some of those increases you can see in both ex-KNS and post-KNS unit pricing on the bottom right. This is the business that has some of the largest brownfield expansion transformational projects happening in Canada, both in the Raglan Territory as well as Honoping Depth. They'll be brand new, fresh projects. long-term more robust businesses once they're up and running from the sort of 2025 year and we'd look to see unit cost again starting to move south and improve across that business. Guidance for 23 is looking at current pricing around 1.5 billion with nickel and prices the way they are at the moment in that particular business. Coal, where most of the action was clearly in 2022 and continues to be, in terms of both impact prices, volatility, and leverage to prices, particularly in this business as well. Production-wise, we've spoken about the Sarahon ticker, but bad weather did have a large impact across all of our jurisdictions, leading to a like-for-like 9 million reduction in tonnes as well. very high costs across the board, energy fuel explosives. Also, this is the business most impacted by, at least in the mechanics of paying royalties across all of our jurisdictions. That does work its way straight through to our cost structure. We are very happy, I'd be very happy to be at 82 cents or $82 cash cost at the moment, 67 cents where we are at the moment, in part reflects low royalties basis, the curve that we've used as well. From a capex perspective, it goes without saying, but of course, now bringing in 100% of Cerrojón as opposed to 33, just mechanically, we will have those 113 million. And there's just the ongoing some inflation on the capex and just timing of fleet upgrades and replacements that we have on that business. Of course, the capex over time will sort of broadly follow the production decline in the portfolio generally, where Gary spoke to a three mine closures or our reports generally, we talk about three mines that do close in the next sort of year or two, and at least sort of 12 mines that will be closing before our 2035. You'll see the corresponding capex come off those businesses as we move forward. We've had to, we're trying to work out when do we cut and draw the numbers on the coal business and the spot illustrative. It is a moving feast. We'd cut it off, I think, Martin, as of end of Monday or through the course of Tuesday, and we used the Newcastle strip of 202 average. I think it's about that level at the moment. And the team down in Sydney can rerun their numbers on complicated spreadsheets. They look at all their times. They look at all their volumes. They look at all their portfolio variations, qualities between South Africa, Colombia. Of course, you've got met coal itself, which has been more stable across the business. That reduces the portfolio. We've got domestic contracts. We've got short. We've got long-term. And that's why we need to keep freshening up and guiding you guys as frequently as we can, because it's impossible to model the entire coal across pricing fixed curves and discounts that we do have as well. But as of now, basis a 202 Newcastle strip, we have a portfolio adjustment that's narrowed down to 51 with 152 realisation bottom right. So we're a margin of $84 a tonne, producing a 9.3 billion EBITDA estimate as we see it, basis today's macros for a 2,000 2023 results on coal, basis 110 million tons of production again, which is our latest guidance. We'll see the full figures later on across coal. Marketing business at 6.4 billion, a massive increase, of course, 2022. We're not alone in this market. I think if you'd see other independent or the oil companies or market participants clearly having to have managed risk well, been liquid having had execution capabilities it was a market structure that offered opportunity clearly through a lot of the disses dislocation dysfunction disequilibrium you throw all into the mix it was primarily an h1 story although some of it did take over into into H2. So we have that very big yellow bar at 5.2 towards anything we've done historically. Metals business 1.6 came off a bit, 0.9 from what was quite a good year in 2021 with the post-COVID, the reopening markets generally moving tighter and premiums higher, but we started to see a softening, China lockdowns and tighter monetary conditions generally. And again, as I said on the metals industrial, both on metals marketing as well, this is hopefully where we can see some positive progression as we go from 2022 to 2023. The two halves, I mean, the first half was $4 billion across across energy and metals with three billion energy, moderated to, it went from three billion to 2.2, still a very good second half. Metals was from one to .6, so it was a tougher H2 within the metals business as well. A quick call out to Viterra, which continues to perform very well. Numbers are somewhat, not hidden, but they sort of work out in the corporate and other, we pick up our 50% share of their net income. which for us was $494 million, and that was 50% of a net income of $1 billion of an EBITDA, 100% of $2.6 billion. So very strong performance. We provided a few details on page 29 later on to read in your own time. But business performing well successfully. They've just closed on the Gavilon acquisition towards Q4 last year. Integration's going well. Synergy's exceeding expectations, so that business is continuing to go from strength to strength as well. We get to some of the more interesting slides, but sort of what it all means from the balance sheet and working capital movements of which I'm sure there's keen interest. Available liquidity of $13 billion. That's very strong, very healthy levels. We could even push that higher. There's obviously no point at some point to just sort of a carry cost, but that's just sort of mechanically or through the cash generation, the rollover and refinance of facilities worth that $30 billion. As Gary said, we brought our net debt down from six to basically flat. And we'll look at the bridge on the next slide later on. RMI increased 2.6 billion from up to 27.4%. That's explained by some price movements and some volume movements across the RMA. On price-wise, the two most impactful for us in our businesses was in nickel. We've seen prices start and finish the year 43% higher. And whatever's in our general float and cycle across both metal and some of the other products that we trade across the nickel. There was a step up in RMI in the nickel business. Oil prices 10% higher, not necessarily carrying more volumes. It doesn't give them backwardated curves through most, but of course, just the sheer moving of oil and products at 10% more. And we have seen a lengthening of of working capital and trading cycle across inventory generally as people have had to navigate longer trade routes. Sort of all the previous Russian either exports, trans-shipment, if you think business of ours in Kazakhstan moving product in and out, it is taking longer to get metal concentrate from than it might otherwise have done in the past. And shipping routes have also changed. So that has at the margin added some volumes that we might ordinarily not have had in a more normal work environment as well. The non-RMI, I'll talk to that on the next page, and then 8.3 billion across other working capital. We've got some slides on that. I don't like the way it shows up in the financials as working capital. A lot of how it gets presented through the cash flow is really OPEX in nature, just the fact that previously we would have raised accruals or provisions when you ultimately settle them, they go through as a working capital reduction as opposed to just a normal sort of expense or some other operating cash flow that you might have. And these affect all our legal provisions, all our reductions in bonus accruals, some areas around rehab and all these things, they do land up coming through as a working capital adjustment. That is OPEX. That's not an asset of the business going forward. The classic working capital around receivables, payables, margining, that is an asset, that is an investment in the future, and we do generate returns. And I have tried to split out those two different categories as we move forward. A nice net debt to adjusted EBITDA is 0.00, which is... which is good there on the bottom right. So let's move into what's happened in in working capital and we have split it out between h1 and h2 i think that provides some useful insight and we've sort of got those categories in the gray and i'll work through them in turn are the more classic working capital that is cash it is an asset it's monetizable it's generating returns for the business all that on the left is is not necessarily in that category but if we start on the on the six billion net debt on the left hand side we've generated ffo which is your EBITDA less interest in tax and the likes as it works through. Net capex at 4.5, investments generated some cash for us, Ernst Henry and a few other bits and pieces. And then let's get it just quickly non-RMI. There was an increase of 2.5 billion as we report that non-RMI. The biggest component of that 1.2 billion, and this is for those more sort of technical in places of financials and accounting and the likes, We have an inter-segment adjustment that we have to make in our consolidated statements. When we report to you industrial and marketing, we treat them as third-party sales. So if our industrial is selling copper from Kalawasi to our Glencoe marketing, Kalawasi generates the income. We don't say that that needs ultimately to be sent to a uh to a third party so we'll obviously present the earnings over there from a financial perspective we will need to eliminate that profit because it hasn't ultimately been sold to that third party smelter whether they're in india and china or the like so we'll have this corporate adjustment we'll say industrials made x marketing is has made y but we'll have to report a sort of elimination between the segments until that final sale has actually happened there is a a negative adjustment that goes through earnings. And we report that, and there's some disclosure. That at the time would be a negative P&L, significant item that we report, and would be a negative cash flow movement as well, because we haven't actually, as Glencore, generated that cash in our system. This year we did run down those inventories within our marketing that previously came from industrial. So we actually had a positive sort of accounting adjustment that sort of was a rewrite back up the inventory, because the provision reduced, that goes into non-RMI. So there was 1.2 billion there, and I think Well, it's quite useful if we just go quickly to 25. I'm not going to produce it on the page, but if you have it in front of you, on page 25, we do provide the reconciliation exactly going from EBITDA of 34.1 billion to FFO 28.9. We've got marketing EBITDA, we've got industrial EBITDA, and then we have this positive of 1.2 billion corporate. So we've actually have generated that cash. during the business because we've now run down those inventories, but it's a timing difference between years in the marketing business when we ultimately sell and liquidate that inventory that was sourced from our own industrial business. So that part of 1.1 is within the non-RMI. We're not putting it into RMI to get a credit, nor should it. It's a sort of a corporate adjustment that happens within that part of the business. We did increase our non-RMI for the balance by circa 1 billion. Where has that happened? And some of that will recycle back in and we should generate the cash this year. We've called that ASTRON. There was a 0.3 billion increase in our inventory levels at ASTRON. As you know, we had the incident a few years ago and we've been rebuilding and refurbishing that refinery. The restart started towards H4 2000 in Q4 last year. And it's continuing, and now the finery is producing product towards sort of capacity levels that we have at the moment. For a period of time, you actually need to run double inventories. You have to rebuild your crude to be able to then ultimately process through the 100,000 barrels a day, but all the while you've got product that you've imported to satisfy your downstream business and your retail business. So we're actually carrying both. both product as well as crude within that particular refinery operation. The timing was awkward because it built up through towards the end of the year. Going forward, that business doesn't need the product. It brings in crude and that's its inventory and it processes whatever it needs for its downstream retail operation. Some of that will clearly come back, hopefully most of it during the course of 2023. And then in the African copper business and KaZinc, we are just holding more inventories generally around supply chain issues sort of complexities, Russian corridors, border logistics, business as well. We've just had to build up inventories generally to be able to operate in those businesses. Hopefully that's been overcooked somewhat and we can moderate and bring back some of that non-RMI also that's within that business. Then if we look towards our non-RMI working capital, 8.3 billion, which is the purple or red, the red box that we have over there. H1 movement was 6.9 million if we add up all the H1 components and H2 was 1.4 billion. If we focus just on the right-hand side, that's what I was referring to as the classic working capital. This is the normal conventional receivables payable, the margining calls. That increased 5 billion in H1, flat in H2. There was no movement across those three categories. So if we look at bottom right, if we start with our increase in our net margin requirements, that was 2.4 for the full year. Two billion increased in H1. I was, whether hoping or the probability existed that that may reduce. In fact, it went up 0.4 billion. Our margining was, initial margining was 2.2 billion, so that's the biggest component of that 2.4 billion. It was 2 billion in H1, it actually increased in H2. So there's been no let up in exchange requirements and exchanges. The brokers, they've continued to function with ultra conservative around their models, looking to avoid systemic risk, their stress test, avoid collapse, their VARs, their everything that they do. So in order to transact, there's been no let up, if anything. Things have even tightened up in some of these exchanges as they've closed out their reviews of what happened, the sort of investigations, the postmortems of some of the volatilities and panic that ensued through H1. I don't see that as particularly concerning, the fact initial margining is where it is. These are massive barriers to entry. They are there, they generate returns, the ability to transact, the ability to fund, the ability to manage those levels creates a degree of bid-offer spread and there's being a sort of a big company game frankly in order to transact in order to put on these sort of derivatives and is not by all means exclusive it's not the sole reason but it definitely contributes towards the the returns and the invested capital and the earnings that we're able to generate. To a large extent, smaller players either completely shut out of these markets or have capacity constraints that they need to come to bigger players like ourselves to say, help us function here. And part of that help us function is in the risk management, is in the liquidity, is in being able to manage their own risk by by leaning on ourselves as a reliable counterparty with us not taking any undue credit risk ourselves in that process. So that hasn't moderated. It has to at some point. I don't think it's healthy, frankly, from a consumer and an overall functioning market in terms of efficiency and ultimate cost to consumers and cost to businesses. If we then just move up in our classic receivables, payables, this is just normal sell a cargo, get paid 30 days later or buy. source aluminum, zinc, nickel, whatever the case may be and get those various terms We did call out in H1, we had a 1.5 bill. One of the main reasons was the mix of business and the loss of Russian supply to us, which was quite large across both metals and energy in the past. We were able to get higher than our average terms of trade across the Russian business as well. The fact that that has been removed, you saw that flow to working capital collapse at 1.5. The turnout for the year was 1.9, so that receivables payable did increase by 0.4. What we have called out specifically, again, timing difference around 22, 23, is a specific slow-moving exposure that we do have as well. That's something to a specific counterpart that's been enhanced and reinforced with classic trade finance instruments that we have. It's a basis upon which we do that business, and we are in the process of enforcing our our trade finance security, if you like, across that particular business, and we'd expect successful resolution of that exposure in 2023. And that's part of why it was a 0.4 increase, if you like, during that particular period. And then across our physical forward business, 0.7 was the net increase for you. This was an area where we did have some relief and some release in H2 in our mark to market physically across primarily the LNG book. This is our only business that really is longer term beyond 12 months. Low risk business from both the market and a counterpart, but if you're hedging two to three years of business, you are locking in some of the arbitrage and margins across be it US, Europe that may come in. We have import capacity, we have long term supply agreements, US and other origins. You will You know you're going to make a margin. You'll have to mark the market that physical and derivatives that we saw as we as we move through this. There is a timing, a cash timing mismatch potentially because you're not getting margin on your physical business. You do have to pay on your hedging. That did release across those three categories. Then we did see net net zero, which is good. And that money is on the balance sheet. It is cash. It is an asset. It will come back. It's working for us. It's generating good returns. and January's also started pretty well in the marketing business as well as we look in 23. On the left-hand side, you can see some of that awkward geographic working capital movements, as I said, particularly if you look at legal provision, we raised the provision $1.5 billion, as you know, last year. We settled $0.3 in H1, another $0.6 in H2. That $900 million comes through as a working capital movement as opposed to a significant expense or something. There's still $500 to go. We've proformed that as part of our shareholder distribution calculation we'll see on the next page. We do have deferred income categories, both where we've received some cash in respect of future physical deliveries. We've also got at the bottom left where we ourselves might have prepaid customers for future delivery. These are non-core byproducts, mostly gold and silver. from our industrial assets, where either shorter term we will, where the markets and the appetite is such that it's attractive to do, we'll get some prepaids from physical consumers that like their product, their cost of financing is attractive, and we'll take that money in. It also includes the old streams, you know, the Antamina and Antipakai streams that we did in the 2000 16, 17 period as well. So that came down 1.1 billion. The overall balance sheet aggregate around all these deferred income streams is about 2.3 billion. It came down 3.3 to 2.3. And then we have our various other provisions, which is our own advances that we've made. It's settlements of bonus accruals, it's rehabilitation costs, it's movements in VAT. All of that was another 1.3 through those various categories. We've increased our own prepays for product about 0.5 billion for the year as well. And that's for every now and again, you'll see an announcement Glencore with banks does a 500 million prepay to CSN for Einall. So as an example, that was a 500 million facility that was recently done. We put 10% in that as our own share. So there's 50 million. These things is a key part of the working capital cycle as well that we do. Sometimes goes up, sometimes goes down. If we then look at what does all that mean, on slide 17, shareholder top-up framework is very formulaic, at least around the base cash distribution, which comes to 5.1 billion, 40 cents a share, 1 billion for marketing. The fixed amount, 25% of industrial free cash flows. Again, I think slide 25 mechanically works through that calculation. Then we work out what's the quantum of any top-up. We start at 0.1. The base distribution, of course, needs to be provided for there. The remaining buyback of last year's announced $3 billion was $2 billion down towards the end of last year. We were still completing that January, February. There's another billion there that's almost done in the next week or so. The remaining legal provision of the 0.5. And what we needed to do, and we felt it was appropriate to do as well, just given the materiality, was the lag effect, particularly in Australia, around the income taxes in respect of 22 that are due 1st of June 2023. That's the big part of our coal business. We've seen those big earnings as well across that business. We have $1.8 billion to settle. We pay a lot of installments. The actual tax we're paying in Australia is multiples of that. Something like $3.5 to $4 billion is our US dollar, is our taxes that we're paying with Australian respect of $22. There's still $1.8 to go. It is debt-like in any sense of the word, and it's cash that we need to reserve, if you like, to settle that particular tax. So there's 1.8 less 400 million across the businesses where some taxes receivable with prepaid amounts and the like. So it nets out to 1.4. Mechanically, that leaves us 2 billion of top up. And we've allocated that towards 500 million cash on top of the base distribution, an additional 1.5 buyback. In aggregate, that's the 7.1 billion Gary spoke about, a 56 cents a share. We'll complete that buyback between now and obviously interim results and We'll see the cash generating during that period and we'll come back in six months time and we'll announce the top up that we would be doing at that particular point. Basis the cash flow that we generate over the next six months and we'll see what our top illustrative profits. No change on the capex. We were five or six weeks ago. We're still 5.6 billion. average per annum 23 to 25, same projects, same everything on the capex we're still holding, and we went through these slides back in December, so I will skip over. If we then look at the spot illustrator numbers for 23, our various progression costs, I think on the individual slides we've been through all of that. What does that all mean? We're at, as of now, we're at 22.6 billion of EBITDA running macros as of last 24 hours, generating 10.6 billion of free cash flow up across metals. So across copper, zinc, nickel, slightly up. Coal's the one that's at least against our December 22 update when we were at 28.7 as opposed to 22.6. Coal's gone 16.7 down to 93. We're all obviously looking to find the bottom there. But the business is obviously low cost. It's going to generate cash. It has over year in, year out. It's a competitive portfolio. It's delivering into the right market segments. But of course, it is a highly volatile construct that we have at the moment. So 10.6 billion annualized free cash flow. If we stay like that, half of that should come back during the next six months. So with that, I'll hand back to Gary. A lot of appendix slides for your own reading enjoyment. I'll hand back to Gary to close it out. Thank you.

Thanks, Steve. I mean, just one slide really to close it out where we are. I think Steve's taken you through the details of the financials. But really, where we are as a business, big picture, we have a sector-leading climate ambition, an ambition to be net zero by 2050 with a sector-leading ambition or targets on our scope one, two, and three emissions. our business is very unique within the industry uh we're not just a miner we're not just a trader we're not just a recycler we're all of them we market we produce we recycle we're across the chain we're in the energy side we're in the critical mineral side we're in the carbon side we're in the solution business for our customers and that's something that is very unique across our business and we do that in the context of helping the world transition in a decarbonized world responsibly and ethically across our business. We have a portfolio of critical minerals. As our coal business runs down, we continue to ramp up in various other critical minerals as the market needs it. Significant growth prospects in our copper business in particular, but also potential growth prospects in nickel as well as cobalt. And we'll bring on those material into the market as the world needs it to decarbonize and supply the minerals of tomorrow while we supply the energy needed of today. Our business model remains flexible. We can adjust as market conditions change, as world requirements change, and we proved that during the course of 2022. It was one of the most volatile and changing environments we've seen for a long time, and our business was incredibly flexible and incredibly adaptive to what was happening in the world. We will be responsible, we will be ethical where we operate, and it underpins the culture of Glencore. Our portfolio includes a large array of large scale, low cost, long life operations and we continue to invest in those as well as additional operations across our business. And as Steve pointed out, highly cash generative, illustrative spot numbers, EBITDA of $22.6 billion and free cash flow of $10.6 billion. So in a nutshell, A real terrific year for 2022, but the business set up for continual excellent returns across the business going forward. With that, we'll turn over to you for questions.

Thanks, Gary Miles.

Miles also at UBS. Maybe a couple of questions. First of all on coal. Could you give us a sense first around the operational issues you've been having in Australia, South Africa, Colombia? Obviously you expect them to recur with the guidance you provided back in December. And then maybe a little bit more around the market conditions. Where do you think we'll find a floor to the Newcastle price?

Miles, operational challenges. I mean, you're always going to have operational challenges in mines, and particularly the size of our operations and the geographic spread that we have. Australia last year was really about the weather, significant rain events, which we saw across both Queensland and New South Wales. In fact, Queensland have seen some rain events this year, but Very limited impact on our business. So, I mean, the biggest challenge we've had operationally in Australia was around weather. South Africa, as you know, South Africa is struggling with energy and with the transport network. The particular concern for us has been Transnet and the ability to rail our material down to Richards Bay. We have supplemented that with some tracking, but it doesn't make up for the shortfall and obviously is quite costly. So South Africa's biggest challenge generally has been the transport or the transport solution. In Colombia, really it's been a little bit of weather, but mainly sort of some community disruptions. But we continue to engage with our communities and our host municipalities and governments. to ensure that we have a smooth operation in Colombia. On the market, look, I mean, you know, everybody says, well, the coal price has plummeted. I mean, let's take a step back. It's $200 a tonne. You know, those who have been in the industry for a long time will remember coal at $18 a ton or $20 a ton. So, you know, okay, at that time costs went, you know, $65 or $70. I agree. But, you know, $200 a ton is a terrific number. Market has come off significantly from the highs of $440, $450 in Newcastle. I'm talking Newcastle numbers now. Obviously, Richards Bay is $140 and... and APR2130. But so where the market looks, well, we've seen a year where people were desperate for energy and we helped supply them and give them the comfort that they'd have their energy sources. So stocks did build up in Europe. We all know that Europe has had a reasonably mild winter and gas supply into Europe was higher than people expected and storage in fact higher than people expected because of the mild winter. We've seen increased utilization of nuclear power in France. We've seen increased utilization of renewables across the whole of Europe. So Europe does have some excess stockpiles and that's resulted in a little bit of downward pressure on European pricing. On the Pacific side, as I said, Australia now, no one's expecting this big reduction in production, let's say, because of the weather. So we've seen a more rebalancing of the market, and as particularly the real competing fuel for coal is LNG, as LNG prices have come down. And if you compare where LNG prices sit versus coal on a like-for-like value and use basis, it's about right. Now, does that say it stays at 200 or 195, whatever it is today? You know, that's not what we're here to say. What we're saying is it is competitive with LNG at current prices. And it is a real competitor. If something happens in the LNG market, there's another fire at Freeport or China does come back stronger than expected and starts sucking in more LNG. Remember, last year China was closed for a large portion of the year. and LNG prices spark, there's real potential. What happens to domestic production in China? What happens to domestic prices in Indonesia? So there's many moving parts on that. But we do look at this and say at $200 a ton, it's still a very strong price. And there's a lot of things that can happen in the world. This time last year, there was no war in the Ukraine. Nord Stream was still operating. So things can change in the world, and that's the joy of a bulk commodity business is that you can adjust and adapt. And as I say, we're a very flexible organization. If prices do come off, we can adjust our business to reflect that basis, what's happening in the market. If prices go up, we adjust differently. But generally right now, $200 a ton, not a bad number.

The second question is on working capital, Steve. How much should we expect to come back over the next six months?

You know, I don't mind if nothing comes back in the next six months because that will be indicative of probably better marketing returns. So if you think about the sort of return on equity, return on capital, cash flow generation, if that sticks there and every year relative to what an assumption might be, if things were sort of more normal and you can have a recurring hundreds of millions that's coming through in the marketing each year, then that would be a pretty attractive proposition for our own balance sheet and shareholders generally so it's going to it's going to unwind basis sort of the energy volatility margins margining calm returning as some of those uh particularly sort of initial margins and issues that it may be sort of if ever it's sort of normal counterparts returning within marketplace as well so the fact we are where we are that's helping helping the business I think you will have, obviously, the LNG side, that 0.7 that's still left. If prices are flat, that'll just settle in in the normal course. That'll monetize over sort of 12, 18 months. The margining's the harder one to call timing-wise because I just don't know when the exchanges sort of take their, sort of adjust their modeling because they have these crazy sort of VAR seven times standard deviations and they look at all the different counterparts and they, and sort of overnight you'll have to place a lot more. That does shut many, as I said, smaller players out of the market that plays to our strength. Barriers to entries are huge. So I don't mind if it's there and we can keep coming out here and posting good numbers on marketing and having a back and a tennis match about whether our marketing ranges sort of should be higher. These are sort of more constructive and fruitful discussions than if that was to come back. Some of the non-RMI, of course, some of that will come back. I'd rather position it for let's sort of deliver and wait and see and grab and be thankful for what might come back, but at what cost? So I would just run it flat and let's see how we go.

Morning. Liam Fitzpatrick from Deutsche Bank. Two questions. Firstly, on Viterra, the presentation has got a slide where it says the integration of Gavilon is almost complete. So can you give us an idea of some of the options you're looking at? And could we start to see some movement on those in the next year or two? And then maybe on the tennis match, Steve, on marketing, it does seem that. you know, with higher interest rates, volatility, et cetera, that capital requirements are up and earnings power is up. I mean, will there come a point maybe this year when you are going to revisit that midterm guidance? Because it seems way out of whack with what the business is currently doing.

On Viterra, Liam, look, Viterra is a terrific business and Gavilan is transformational for it. It's really made it truly global in terms of all the geographies it services and operates in. You know, Steve mentioned some of the numbers which are in the pack, you know, over $2.5 billion of EBITDA, $1 billion of net income. And all that, you know, and a dividend paid of 400 million, and that's in the period where they spent over a billion dollars buying Gavilan and a significant amount investing in the working capital of Gavilan as well. So the fact that they were even able to pay a dividend just is testament to the quality of that business. And it's a sustainable, strong business for the future, and particularly where we go with food supply being critical on everybody's agenda. So what do we do? What are we looking at that? I mean, we're in no rush to do something with that business. It's a great business. We can sit here and harvest the cash flows. I don't think as Glencore we necessarily get the true benefit of the value of that in our share price. If we do a sum of the parts and you guys will run your models. I mean, our internal model says we don't get the benefit of that. Perhaps it hasn't been that cash generative over the past few years, but that's because it's been investing in its own balance sheet. And it did only pay, let's call it a $400 million dividend on a $2.5 billion EBITDA. So the cash flow, which does go directly to shareholders, is not really being valued, we believe, by the market adequately for the true value of that business. But, you know, we certainly wouldn't do anything just for the sake of doing something. But if we have a proposition for that business which allows us to allow the market to get that see-through value of what we believe the market is, what we believe the business is worth, then we would look at that. And there's many things on the table. I mean, you know, there's always the backup option of an RPO. I mean, we're not progressing on anything around that, but we can do that if we don't believe... We don't believe we're getting the right value and the competitors in the market where one could value it against and see where they trade. We could do something with one of our competitors. That's an option as well. Of course, there's antitrust issues one has to consider, but we could do that. People have suggested we do what Vale are doing on their base metals and sell a small portion of it to set a marker out there for value. That is also possible. where we could sell 10 or 20% of it. All of these would be in conjunction with our Canadian partners who are key joint venture partners of ours and we wouldn't do anything without them. without a joint decision with them. And the last option is we could just keep the business, keep harvesting the cash flows, keep paying dividends, keep paying it back to our shareholders until eventually the market does recognise the consistency of those cash flows and the quality of the business and recognises it within our share price. So there's an array of options for us.

Jason?

Oh, sorry. Just on the marketing question. I mean, what I've said, and I'll continue to say it, Liam, and maybe I sound like a broken record and it's... and at some point things have moved on around the business, given the data points we keep posting around this business, is that it would still be good to see this business tested in a normal environment again, of which we haven't had one for as long as... I don't know what a normal environment is, but we've been through such... from sort of covert into lockdowns into sort of China on again off again through the energy crisis that we saw last year. So these are all generally constructive environments from a commodity merchant and volatility and premiums and the likes as well. So If you go back and I had that same sort of chart, yes, you've seen this lumpy last two or three years. There is a longer cycle sort of prior to that where we were in that two to three, two. I think high working capital, higher interest rates, these are all things which we'd always hinted would see us at the top. I mean, the question historically is when are you going to be in the top half of the range? That was the number one question. Not is your range wrong. Now it's sort of saying I think we are. All things being equal, you've got working capital, you've got interest rates where they are. And in fact, for the spot illustrative, I didn't use the midpoint. We used actually $3 billion, not $2.7. Because those conditions say that even in a normal environment, we'd be top half of range today, whatever normal is. So I'm going to keep sort of just being a broken telephone on this stuff. And hopefully the marketing business, given strength and barriers to entry, these are things that have structurally, I think, changed in terms of the market. Maybe we're losing... credibility in that range, but that's okay. I'd rather lose credibility there than raise it and then find that we'd sort of pushed it out too early.

It's Jason Faircloth, Bank of America. A couple maybe related questions. First one's on growth. So if I look at your volumes generally the last couple of years, they've been going down. What we're seeing elsewhere in the industry is people are sort of switching back into growth mode. You guys have alluded to some of the organic growth opportunities. Just wondering how you think about inorganic growth potential. And then second question, if I could, would be maybe related. Any comments on the big deliveries of aluminium into warehouses in Asia?

On the M&A, Jason, I mean, this company has always been, a lot of this company has been built on the back of M&A and it's part of our DNA and it's something that we're always open to do and on the lookout for. However, we don't do M&A for the sake of M&A. We've got a very strict capital allocation framework. We know the types of returns we want, the types of geographies we want, the types of commodities we want. And it's unlikely that you would see us to be sort of the highest bidder in some sort of public process, whatever it may be. Our M&A opportunities come largely through our marketing business, the relationships that we have, the value we add to our customers who often then, you know, sort of we take equity interest in, where we perhaps have existing infrastructure nearby that we can then join venture or do something with a nearby operation on an equity side, which makes sense. So, you know, inorganic growth has always been on the agenda for this company, but we're not going to do it at all costs and, you know, sort of pay over the top for transactions, which makes sense. They have to meet our capital allocation framework. Ali, I mean, that's just normal deliveries of Russian metal into an enemy warehouse. There's nothing really more to say. I mean, Russian metal is not sanctioned. We have an existing contract, which we, you know, that's a contract that existed before the war. And we said we would keep to and we have to legally. And Russian metal is being used around the world. And it's nothing, there's nothing abnormal about delivering Russian metal into an enemy warehouse. Can you just remind us, when does that contract end? It's a volume, it's not only a term, it's a volume contract, so we do expect some time, probably towards the second half of next year.

Thank you.

Alain.

Thanks. This is Alan Gabriel at Morgan Stanley. Just asking the inverse of Jason's question on inorganic growth. You do have quite a bit of assets that are locked into your diverse portfolio that you might or you have talked about exploiting, such as either selling a stake or outright sale. Can you give us an update of where we stand on these transactions, if you can think about bringing any minority shareholders into any of these assets to just unlock value in a world where there's a genuine scarcity of these assets?

Are you talking about the growth assets that we have?

Not growth assets, assets like Alpachon or Alumbera.

I mean, Alpachon is a terrific deposit. I mean, the more we look at it, the more we like it. It's bigger, it's better than we thought it would be. It's a great asset. And that will be developed at some stage. I mean, but we're not going to rush into developing it for a number of reasons. One, at $9,000 copper, we're not developing it. We'll develop it when the world really needs that copper, and we've been quite clear about that. Number two, it's a greenfield operation, so that will be last cab off the rank. We're not going to develop that where we've got significant brownfield operations and expansions that we can develop first. Lower capital, lower risk, no need to rush that in. Ultimately, when we do bring Alpachon on, Alpachon will have to come into the world. The world needs that copper, and Alpachon will have to come on. How we do that is still to be determined. Could we do what some of the others have done, like Anglo did at Craveco, and bring in a partner to de-risk and bring in some capital? Sure, that's on the table. We would consider those options. Thank you.

Sivan?

Sylvain Brunet with BNP Paribas. Just staying maybe with El Pachon, I think since you mentioned the feasibility at the CMD, there's been a bunch of events in Latin America, in Indonesia, in Russia even, suggesting the vulnerability of supply for copper. Is there a case where you could consider bringing forward or accelerating the preparatory work you're doing, and do you have the resources to do that internally to bring El Pachon sooner?

We are doing work. It's not that we're sitting on our hands. There's a lot of work being done around all our projects, in fact, not just El Pachon, but all our other projects. We're doing drilling. We're doing permitting. We're doing consultations. We're doing land acquisitions. We're doing environmental studies. Those continue all the time. So our ability to bring on the assets is not always necessarily dictated by those sorts of things. It's dictated also by the market. Now, I do understand that an asset like Alpachon, you don't just decide to bring it on and you have copper the next day. It does take some time. But we want to be comfortable and confident that the market conditions there are right for us to bring those production on. You look at the copper market today. You've got a couple new assets coming into the market. You've got Kamoa ramping up. You've got QB2 ramping up. You've got Coyoveco ramping up. So there is copper coming into the market over the next two, three years, additional copper. So, you know, for us to say we categorically will go ahead with that project now to bring in the copper, yes, it only comes in in the next two, three years. You know, that's a call that we're not ready to make yet because we're not comfortable enough on the tightness of the copper market. We do believe in the long-term future of the copper market. And you look at any of these estimates and where copper... demand will go, and the key will be timing that and getting it exactly right. But while we're timing it, we are doing a lot of work on those projects, so when we are ready to pull the trigger, we will. Now, before we do that, as I said to Jason, we're going to bring on some of the quicker, short-dated stuff that can come on earlier, some of the brownfield as we see strength in the market, and as our extra tons into the market don't result in prices coming down again. We will feed into the strength rather than oversupply markets.

Thanks, Gary. Maybe another one for you on the recycling. Could you give us a sense of how much capex this represents in the company today and how much is happening on the ground already in your development?

It's immaterial capex. You know, sort of we spend a bit here, you sometimes make an announcement, 40 million here, 50 million there. I mean, this year was a 2022, we put the $200 million into last cycle. I mean, that is a convertible. So it's You know, it's capex in a sense, but, you know, there is a repayment of that through the repayment of the convertible, or we take equity and do something with that. So it's not big, but it's key in terms of building the network, building the distribution channels, building the R&D. So it's not going to be big and it's virtually self-funded. In fact, it is self-funding because we're spending less capital generally on a general basis than EBITDA that that business produces. So it's sort of virtually a stand-alone that whatever EBITDA produces, not even whatever, It spends on capital less than the EBITDA it produces and then continues to grow the EBITDA line. So it's a terrific business with huge growth potential and limited risk given our existing infrastructure of smelters and processing facilities around the world. So the return on capital becomes significant.

Great. Maybe just one last one for me, which was on coal capex, which was increasing quite materially. If you could unpack that, which portion was the Sierra Leone consolidation, and what was inflation, and what was extra investment there?

Yeah, I think, I mean, we had on slide 13, I think it was. So we increased it by about sort of 300 or so. 113 was just mechanically an extra two-thirds of Sarahan that we now own during the course of the year. There was, more than any of our other business, you have... CapEx is often capitalized OpEx. So all the deferred strip that you do as well, this is workforces, this is diesel, this is moving sections and opening up voids and expanding sort of new areas. So accounting technically in the sort of old days you would have just thrown all that stuff into OpEx. Whereas now mechanically you sort of said is there a section of work which might be hundreds of workers and and 150 sort of items of kit that are opening up a new area within a Serehon or opening up a new area in some of the bigger sort of Australian operations, which would be then capitalised and then depreciated over the period. So deferred stripping is actually the biggest component of our coal capex, given the size and earth moving operation that we do have. That was subject to the same inflationary impacts of explosives because you just it's all that's going into that pot and then you're saying 12 months I'm going to capitalize this two three four five hundred million so deferred strip and it's both in terms of the actual activity that was done and the inflationary impacts of that work would have would have accounted for together with some fleet replacements and the likes as well that hits in that one particular year now there's always questions the coal decline you're going to see that capex clearly progress towards zero ultimately as we as we bring down and meet our targets in 26, 35 and the likes, it's not going to be a complete straight line. You will see certainly sort of a line with a diminishing percent factor over that particular time. Within certain years, it's going to be subject to timing of fleet replacements, generally sort of seven years you can have on some choices sometimes between whether you're buying or leasing. Generally we buy, but sometimes there's tax or other incentives to even lease it. That also affects that number. You will have your inflationary. We have seen some moderations and the timing of some asset disclosures. So 22, a little bit anomalous. It'll trend towards zero over time. Ian?

Morning, Ian Rousseau from Barclays. Just following up on two questions. Firstly, it's on Steve on the working capital, just pushing you on that. I mean, with the collapse in some of the commodity prices you've seen, I mean, understandably, the volatility would not see some of those working capital inflows come through, but just traditional work receivables, payables, would you expect some benefit in working capital to come through from that? And if you can put a number on that.

Well, you certainly would through, I mean, again, through those categories. And this is where it's, I don't want to go out, I mean, I was hopeful and expecting in terms of some of the initiatives that were happening vis-a-vis exchanges and some of the discussions that were happening, that back in August when we had this $2 billion even in initial margining, I said I could see a pathway towards a 40% reduction in that. which would have been 800 million of a potential release that didn't ultimately transpire. So I'm not going to now sort of give a timetable. At some point, inevitably, there will be some contraction in the margining side of the business, which is the biggest component of all the stuff. I don't know exactly where that point is going to do. As long as it is out there, that for me is not something that I feel is not working for the business, as I said, in terms of the competitive barriers to entry and the like. So I think it's actually helpful in terms of the relative competitiveness and the strength of some of the bigger players that they have. We would look to obviously settle and close out on that slower moving exposure. I did mention that as well. That's in the receivables payables. That should bring back. You saw 1.5 billion in the first half. It's gone to 1.9. That certainly should come back, a portion of that. I don't see the Russian supply coming back anytime soon. So those sort of structures in terms of trade that we have, I think there's a stickier element there. And all of that physical forward, that 0.7. should all come back. That could even turn negative. I mean, this can create some float sometimes. This is not always one way, either exposure or sensitivity or correlation. You could have some of these. I mean, if we were locking in future margins around locking in an import arbitrage between U.S. Europe, at least on LNG, if you had a situation where, because it's unmargined on physical and paper, I mean, if prices go down from that, we actually generate working capital. It's a bit sort of fake working capital you've generated because it's got to recycle back in. But you'll have a mark-to-market liability on the physical side, and you would have generated cash on our margining. So it can actually go the other way around, depending on prices in the business.

Thanks. And then just a follow-up on Viterra. Could you give a sense what you see the potential synergies would be for this Gavilon integration and then what the Gavilon contribution would have been pro forma if it was contributing EBITDA for the whole year? And just on your comments around value unlock, what would be a potential timeline you have in your mind? Seems like not near term, but what do you have in mind for that?

There's no particular timeline. I mean, David is running a great business and he's done a terrific deal on Gavilon. So there's no timeline. I mean, it is, you know, sort of for us as management, we frustrated with the fact that we don't believe we're getting the full credit for such a good business. And, you know, sort of, so there's no particular timeline. If the right opportunity comes up tomorrow, we'll pursue it. If it doesn't, then we'll sit on it and harvest the cash and let David continue to grow that business as he's been growing it. Why is Gavilan such a good business? I mean, if you looked at Vatera pre-Gavilan, it was dominant in all the big geographies around the world in terms of origination and distribution and storage of agri-products, except the North America, well, not North America, the United States market. Very big in Canada, pretty big in South America, Australia, and Eastern Europe, and even Russia and Ukraine. But there was a clear gap in the portfolio, which was the United States market. And the Gavilan assets are premier assets. These were chased. They were wanted by other of our competitors. And it effectively is the last piece in the puzzle and completes that to make it a truly world-class operation. Proforma-wise, I mean, I don't have the numbers off the top of my head, and I'm not sure, Steve, if we give those or not. But, I mean, it is a significant contributor to the business.

And there's just one on the coal marketing side. There were some stories in the news about the Japanese looking at starting to source lower quality coal and coal from South Africa and other sources. Do you have any thoughts on that?

Yeah, well, I mean, when Newcastle was up in the 400s and South African coal was in the early 200s, it's clear that there's a disconnect in terms of pricing. So you've seen now South Africa's 140, Newcastle is 200, so you've got a $60 differential. There's less incentive to do that. But one of the reasons you saw Newcastle come down so quickly from 400 to 200 was those... who could, and not everyone can, because many of the Japanese utilities, their boilers are built specifically for Newcastle coal, and they have to take it. Also, in some countries, you've got trace element restrictions, in particular places like China and Korea, where you can't always take South African coal, it depends which operation it is, or which utility it is. So it's not as simple that a utility can sit there and say, okay, the arbitrage is $200 or the differential is $200 and the freight differential is $20, so it's an easy $180. They can't do that because of technical restrictions. But those who can, yes, they did. And that's one of the reasons why you've seen this closing. Thank you.

Danielle. Danielle.

Thank you. I'm Danielle Chigamira from Credit Suisse. A question around critical minerals. So in terms of the strict definition, according to EU and the US, it's a list of pretty esoteric minerals that Glencore doesn't have huge exposure to. So when you talk about increasing your exposure to critical minerals, are you expecting that list to be expanded or are you going to go and build a rare earths mine?

No, we're not going to build a rare earth mine and we're not going to buy a rare earth mine. Rare earth is not a product that we would invest in. It may be critical, it is critical, but we focus more on the bulk side. We don't see where we can add any value on rare earths. I understand at first it's small volumes. There's not much in terms of blending. It's easy to move around the world because of small volumes. Our business involves areas where we can blend dirty concentrates with clean concentrates, high CV coal with low CV coal, buy in concentrate and use it in our smelters. So those are the types of things where we can add value in terms of critical minerals, and we don't see an area where we can add value on rare earths. Sure.

A question around the outlook for cobalt hydroxide. So what are your views in terms of the drivers of the significant weakness that we've seen? What are you expecting in terms of an outlook? And you mentioned the decline in pay abilities. What are you baking into the cost guidance in terms of pay abilities?

Steve can talk on the guidance. I'll just talk generally on the market. I mean, the market is weak now. We've seen it in terms of hydroxide pricing and the payables, and it's not unexpected. You've had China closed for effectively a year, if not longer. Now, if you look at the cobalt market, it's not all an electric vehicle story. You've got about one-third electric vehicles, one-third into consumer products, and one-third into sort of speciality areas. Now, electric vehicles have been pretty good. You know, what was last year, about 10 million electric vehicles, going up to 13, 13 and a half electric vehicles this year. Not all of them use cobalt. It depends on the chemistry they use. But electric vehicles, we've got no issue with it. Where we saw real weakness on the demand side is on consumer goods, cell phones, iPads, electric toothbrushes, whatever you want to call it, those little bits of cobalt that go into there. The Chinese stopped buying. Many of the world stopped buying. That was particularly weak. So we've seen weak demand. Now, we believe now with China reopening, we will see that coming back. You know, pent-up savings in China is very high. So we do think demand will come back. With that said, there is an excess or an overhang of inventory within the market. We see Tencare, for example, has big stockpiles, and once they are able to export, if they solve their issues with the DRC government, there's that cobalt to come out. We've just recently ramped up some production at Mutanda. You know, Kisanfu is producing. The Indonesians are producing as a byproduct of their nickel production. So there's supply. Now, where will the... So short-term, cobalt doesn't look that great, to be perfectly honest. It doesn't look that great. And we can always, you know, look at various supply responses as we've done previously, and we're not shy to do that, is to pull back production because we don't believe the market needs that material. It's something that we are considering and can consider. But longer term, the investment thesis for cobalt still looks very, very good. Electric vehicles, if it's 13.5 million vehicles this year, you've all got your own models what electric vehicle penetration will be, but if you're about 2030, 2035, you're up at 50, 60, 70 million electric vehicles, and a lot of those will have cobalts. just the general economic growth of the world and the need for cobalt in all other parts of the industry, whether it be consumer goods or speciality, looks very strong. And the supply side is, as funny as it says now because we oversupplied, the supply side is totally constrained because most of your cobalt sits in the DLC and most of it is in both DLC and around the world, it's a byproduct. So it's not that you can just go open up a cobalt mine. And the DLC is challenging, and it's not that you can go and have major competition out of Canada or Australia. Yes, they do produce a little bit as byproducts, but not enough to supply that growing demand. So longer term, cobalt, we still believe, is a very strong commodity. We just need to work through this dynamic within the market now of coming off weak demand and strong supply.

And just there was a point on what we used within our cost. We used for some byproducts, we cut it all off basis, 1st of February macros, which works through the entire sort of cost. So we were around $12 realised on sort of hydroxide, which is sort of circa 20 on metal and then in the 50s or so towards, yeah.

Okay, time for a couple more.

Ephraim? To Daniel's point earlier, there's an increasing trend towards localization of supply chains, US IRA requiring 80% metal locally by 2030, et cetera. Does that play into the strengths of Glencore, or is it a weakness for you? You're seen as the ultimate player in globalization, right? You get the metal from halfway across the world in supply at the cheapest rate. Is localization a long-term threat to your business, or does it kind of create opportunities? And linked to that, to kind of benefit from the localization? Are you looking at sort of moonshot projects like British Volt? Is that the way to go? Or is it more buying a stake in Wally's 2.5 billion sale, you know, to kind of increase your local exposure?

So the IRA is net positive for us. We like that. I mean, what does it do? It stimulates demand for electric vehicles. It stimulates demand for a decarbonization projects of which we supply the minerals and metals. Now, the IRA can say and do whatever it wants. You're not going to all of a sudden find cobalt mines in the United States. It's in the DRC. There's nothing they can do about that. And electric vehicles and Elon Musk and GM and Ford, they all need the cobalt. So what the IRA does is it encourages people or encourages companies to produce electric vehicles and encourages people to buy electric vehicles as incentives and the likes. But you can't buy a long range electric vehicle that doesn't have cobalt in it. And there's very little US cobalt, so it has to come. Now, maybe what we do is we take our cobalt from the US and we maybe process it in the United States. or in Canada or in Mexico or somewhere like that where you can get the benefit or some of those IRA benefits because it may not be sourced there but it may be processed either in the United States or a country that the United States has a free trade agreement with. So there's certainly a lot of benefits for that. And remember, when you've got these onshoring or nearsourcing or whatever you want to call it, those create disconnects in a market. as well. So, you know, when markets don't operate totally efficiently because you've got these kind of barriers or incentives or changes, that's where we do really well because we can optimize our position around that given our global strength around the world. So we see that as net positive.

Your second question was, sorry? I mean, in terms of how do you get exposure to that local one, I mean, like, I was taking an example of British Volt. British Volt, we're not buying.

Don't worry about British Volt. I mean, You know, British Vault, our exposure to British Vault was immaterial. But because it was a UK flagship thing, it seemed to get a lot of press. And, you know, it's unfortunate that the business... I think if you look at what we did with British Vault, it's like what we do everything in our... Not everything, but some of the areas in our recycling, in our business. So it was a bit like venture capital for us. Not that we're setting up any venture capital funds, so don't get ahead of yourselves, but a bit like we put a little bit of money there, we put a little bit of money here, there and everywhere. Now... Seven, eight, nine out of ten are working. We're doing very well on a lot of our others, whether it be Freya, whether it be Managem, whether it be LastCycle. This one didn't work. It's unfortunate. We want to see gigafactories built. We want to see them grow because that will help decarbonisation and it also helps our business. And we believe the UK is a good place. You know, it's had a long history of... of auto manufacture. There's a lot of knowledge base here, and they've got great infrastructure in terms of the land area and where the internet connector comes in. So we do hope something does happen with that, and we would be encouraging for our business, encouraging because we'll be able to supply materials to the Gigafactory there, and we think it's good for the UK. But, I mean, British Volt is small.

The question was a bit more philosophical in terms of are you going for this VC approach of, you know, moonshot, or is it more like steady state, you know,

proven projects like, for example, Vale's stake. We won't be buying a stake in Vale's project either. That's for sure. It's not available to us. Eduardo wants to sell it to, you know, sort of non-mining companies, and that's up to him. You know, there's a little bit of... I wouldn't say British Vault was moonshot. I mean, this was a real prospect, a real project. A gigafactory is not moonshot. This is not new, some sort of left field stuff. There's gigafactories all around the world. The fact that it failed in the UK in this particular project was for different reasons. But for us to advance some money to a gigafactory or a project for a gigafactory is not moonshot. It may not even be venture capital in the truest sense of the word because this is proved, tried, tested. The demand is there. We know it's needed and it's going to happen. Excuse me. So it's more investment in relationships, supply chains, because it just promotes the development of these kind of projects, which is good for our business. So it's less moonshot and more sort of consistent with how we want and how we see the market developing and helping the market develop.

Okay, last question. Tyler?

Hi, Tyler Broda from RBC. Gary, you've had your feet under the desk now for a year. You've got record results. You've got a balance sheet with no net debt, basically. How do you feel fundamentally about the structure of Glencore, the shape of the company, I guess? Where do you see sort of over the next sort of three to five years where you want to sort of evolve this company, if at all? And then the second question was for Peter. You've had your feet under the desk for a slightly longer period of time. Just out of curiosity, the industry's been going through a really hard time the last couple of years. From your point of view, what's different now from an operational perspective than where we were, say, 10, 15 years ago? And are those challenges surmountable? Thank you.

Closer to two years for me, but we're not counting. COVID, sorry.

Still record results.

Still record results. Two years in a row. um look i mean the business is great and the business that ivan handed over was great so you know we need to we obviously need to be on the front foot evolving as the world changes but we're not sitting here thinking that the the company was weak or the company had gaps or the company had issues or something it was a terrific company that i took over from ivan at the time um Huh? Yeah, you know, left Sarah on for us. So he's, you know, so in that sense, the company was in great position. Now, what have we done since then? We've continued to evolve and continue to invest in our recycle business, which we believe is critical. and will be really complimentary to this business. But as I said, you're not going to go see billions of dollars of capital invested in that. These are incremental 10s, 15s, 20s, maybe 100 million in a year or whatever it may be, which really grows their business. It's huge flow through our marketing and sets the business up for something very big in the future because Your real exponential growth in recycling is only going to come, you know, 8, 9, 10, 15 years from now when all these 13 million electric vehicles today start going through the recycling, you know, when that is. I mean, there's still recycling material today, whether it be e-waste or battery scrap and all those sorts of things. So that's an area that we're focusing on. We're also obviously, you know, sort of continued focus. It was there with Arvin and continue with me as well. There's on safety and to show we continue to be safe operators. We continue to grow our business. We want to do M&A, but in the right areas and very cautiously or strictly around our capital allocation framework. We continue to grow our marketing business and supply our customers with the products they need. We've grown that marketing business in the sense we've now encompassed things like a carbon business, which we've spoken about previously, And that carbon business is an ability, is a revenue generator for us, a P&L generator for us, but a service provider to our customers where we can provide them carbon-free products or carbon-free freight or whatever it may be. So we've invested in that part of the business. The energy business has grown. We've started to trade at the margin some lithium. Now, don't get ahead of yourselves. We're not going ahead and buying big lithium mines and starting getting into lithium in a big way. That's not happening, especially at $80,000 lithium. We're not doing that. But Because of our recycling business, we naturally have a lithium position. So why would we not look and trade around that where our customers are talking to us about it, where we supply them cobalt, we supply them nickel, we supply them copper, and they say, can you supply lithium? And we have a source of lithium. And our skills around... sourcing material and blending material and moving material, why not apply that to lithium? So it'll be in a small way, a little bit of small amounts of working capital applied to that, but it's an ability to grow. So we continue to grow the business off the base that we had.

Thanks, Tyler. What's changed over the last few years or five or six years? I think the confidence, our view in terms of commodity demand growth going forward has strengthened as it has across the industry. And that really opens up a lot of interesting opportunities for us in terms of how we look at our resource base and our future growth options. Still in line with what Gary was saying earlier on, we need the right signals to develop some of these, but we're certainly looking at our business in a different way in terms of how those growth options might be brought along. At the same time, we're having to contend with challenges in a number of the geographies that we operate, whether it is Peru or Kazakhstan or Chile, where we have seen some social issues coming to the fore over the last couple of years post-COVID and to do with inflation and other social issues that have erupted in some of those countries. So that leads us to a place where we'd like to grow our business. We're seeing some challenges. And really, at the end of the day, if we can perform, and there is increased focus on this by all of our stakeholders, if we can perform in the areas of how we interact with our communities, ESG, safety, that does put us in a good position in terms of how we grow our business going forward. So all of these sort of key drivers are dynamic, and it's a matter of keeping up with them.

Thanks, Peter. I'll just hand back to Gary to finish off.

No, I mean, a great year for the company. We've still got a lot of work to do around certain areas, particularly safety, but a good year for the company. Commodity market's a little bit weaker going into this year than we thought, but there are a lot of good signs in the economy that we see and potential growth opportunities for us. hopefully another good year up ahead. So thanks for all your support and any sort of questions or feedback afterwards, we're always available to you guys. Thanks very much.