Earnings Transcript for NGLOY - Q4 Fiscal Year 2019

Stuart Chambers: Okay. Good morning, ladies and gentlemen. It's my pleasure as the Chairman of Anglo American to welcome you to our 2019 full year results presentation. I want to cover two things in brief before I hand over to Mark and Stephen, who will take us through the presentation. And firstly, as an enterprise, we have a very clear purpose, which is to reengineer mining to improve people's lives, improve people's lives, all people, our employees and contractors who work in our organizations, but also all of our other stakeholders, and including, of course, the billions of people who live on this planet and who go about their daily lives, consuming directly and indirectly a lot of the products that we make available. Now there are a lot of things that we need to concentrate on to improve in order to live that purpose. But there is one screamingly obvious one, of course, and that is our target of zero harm for the employees and contractors who work for us day in, day out. And as you're going to hear from Mark shortly, very unfortunately, last year, four of our employees, stroke contractors lost their lives going about their work in our managed operations. And Mark will give you some more detail beyond that. That's tough, right? Now that is the best-ever performance, but that is scant comfort for the families of those four. And I think that what's really important is to understand that improve people's lives when you ended four is a constant vigil. Now what comfort can we take? We can take comfort from the fact that, again, last year, year-on-year, we improved the important underlying safety measures of performance that we have on a kind of historic basis. So, that's good news. And secondly, the work streams, all of the work streams of The Elimination of Fatalities Taskforce that was kicked off in earnest about 18 months ago, properly in earnest to redouble our efforts have all progressed really, really well. So we're happy we're doing the right things, we're happy we're on the path, but we have got a long way to go. And please be assured that the Board of the company, of Anglo American, are very serious about this. The second and last subject I wanted to cover was since July, when I presented last time we've had two more Board changes. And I just want you to join me in welcoming our two new nonexecutive directors to the Board, both from South Africa, Hixonia Nyasulu, who joined in November of last year; and Nonkululeko Nyembezi, who joined last month. So welcome to them. Other than that, the Board is as it was. Let me now hand over to Mark and Stephen, and initially, Mark, to take us through last year.

Mark Cutifani: Thanks very much, Stuart. Ladies and gentlemen, you probably don't know, but the Chairman is a Manchester United supporter. I'm a Chelsea supporter, so we haven't spoken much during the course of this week. Ladies and gentlemen, what I'd like to do is just point you to -- you each have one of these on your chairs, which is what to do in the case of an emergency. There are no drills scheduled for this morning, so you shouldn't one hope need. But in the event we do, can you make sure you've got that in your hand and follow the processes that have been outlined, very important. Thank you. Again, just for me to acknowledge colleagues, Stuart, thank you for the opening. Colleagues, please take the opportunity to talk to people. I know some of you already have this morning. Most importantly, we have Chris Griffith with us today. Chris is flying in from South Africa rather night. As you are aware, Chris informed all of us of his intention to step down. And what I would like to say and acknowledge Chris for the wonderful contribution he's made to Anglo American over the last 30 years. And if I could make a special observation consistent with the Chairman's observation. For the first time in our history in the PGMs business, zero fatality in our operations. And for those that understand, we are still a deep underground miner, it's a remarkable achievement. And from me, Chris, congratulations. We also have announced this morning, or Anglo Platinum has announced this morning the appointment of Natascha Viljoen to replace Chris. Natascha is with us this morning. So welcome, Natascha. Big boots to fill, but we've known Natascha for about almost six years now at Anglo, and she's made a tremendous contribution in her time in the group and looking forward to the contribution that she will make in terms of the future of the business. I believe Themba Mkhwanazi is going to be here, but I haven't seen him yet, but just to let you know that he should be here. And we also have Tom McCulley. Tom, can you put your hand up? Tom is the leader on the Quellaveco project. He gave the briefing to the Board this week, and certainly, from our perspective, thrilled with the progress that's being made. And again, if you've got a minute, but I'm sure Tom would love to tell you about his project. He certainly gave the Board and the executive a great summary of where we're up to and very pleasing where it's up to as we stand today. To yourselves, thank you for joining us. It's been another important year for Anglo American. It's been a solid year in terms of results as we continue to build on the foundations that we've created over the last few years. We do see continuing upside and obviously the focus in how do we continue to maintain the rate, if you like, or the momentum that we've created. The P101 and our other operations improvement work is very important to us. We are not yet best of the best. We have improved our competitive position significantly, but there's a lot more we can do, and we remain focused on doing that work. And consistent with that is our improvement in safety, and those two pieces go hand-in-hand. Our broader technical changes that we introduced in the business has certainly had a big impact, and there's more we can do. And our marketing innovation work is something that doesn't get a lot of airplay that has been significant. And certainly, as you see, a number of our major competitors starting to restructure their marketing business and almost duplicating what we've put in place, it certainly says a lot, but Peter and the team, in terms of the work they've done. I will talk about FutureSmart a little bit later in my presentation. But again, a lot of people talking about technical innovation and getting the engine room working. And certainly, I think we're hearing a lot of terms that we've been using for a number of years now being thrown around in different parts of the industry. And our portfolio enhancement project, we remain committed to disciplined capital, a balanced approach to investments in the business to ensure that we continue to improve margins and returns. And from our point of view, we think that is the key to ensuring that we retain a consistent improvement in our performance over the longer haul. Good news and the bad news, diamond, tough; PGMs, great year. The beauty of being a diversified miner is quality of the assets that we're able to maintain and develop in the portfolio and the exposure we have to different markets. And again, that strength comes through in what has been a tough year in a couple of commodities, thermal coal, diamonds, but in PGMs, iron ore across the board. I think we saw a 2% improvement in price over the course of the year, but a 9% improvement in performance, which is pointing to both the quality of the portfolio or the diversity of the portfolio and the quality of the assets. And then finally, our offer for Sirius is in place. Under takeover rules, I won't be able to say more than I've already said. I will make a few comments. But again, I will be consistent, and we'll be happy to take questions. But as you would expect, we are somewhat constrained in what we can say. And I think people are probably a little bit disappointed in terms of the questions they've asked and what I've said in response to those questions. Nothing new here in terms of our conversations. But I think I should make the point that, for us, it's not inconsistent with our strategy. In fact, we think it's absolutely consistent, which is about focus on quality, focus on driving margins and returns over the long term and having a key effect with potentially another great asset to follow that in terms of development works well with all of the things that we've been talking to over the last five or six years. Stephen, can I have the clicker? Yes, sorry. So just to roll through on the agenda. I've gone past through dinner already. Just quickly, I'll do the transformation journey. Stephen will pick up the financials and talk to the numbers, the important bit. I'll talk to the growth and our approach going forward and then how we see ourselves positioned for the future. And I hope continue to help people understand how we see ourselves differentiating in the industry in which we work. Again, on the results margins, effectiveness when we talk about the business, we talk about measuring performance in three streams. Firstly, effectiveness. As a team, our job, our success is ultimately measured on the cash flow that we deliver from the business, and it's all about cash flow. We do talk to free cash flow, and we talk to sustainable free cash flow, which is cash flow before growth projects. So from our point of view, making sure we've got the balance but it's about generating cash flow, and that's our effectiveness measure, and we continue to improve the underlying business. Measuring the efficiency of those cash flows is our capital return measure, which is return on capital employed, and there are different capital return measures and each of you use [CRM]. But for us, it's about making sure we're focused on working every dollar as hard as But for us, it's about making sure we're focused on working every dollar as hard as we can, and our threshold return is 15%. Now you'll see this year that we've delivered 19%, which is above the threshold. But we look at those 2 numbers together to understand how well we're doing as a business because at the end of the day, if you're not delivering 15%, then you're starting to get close to value destruction, which, at the end of the day, means you don't and you're not creating a sustainable business. And then finally, sustainability has a number of mentions that we talk to, starting from safety, environment, developing people, social performance right the way through to maintaining a conservative balance sheet. And for us, looking at those pillars is as much about the first 2 numbers is making sure that we can deliver those results sustainably. And when we talk about capital allocation, it's about making sure we've got those 3 elements all heading in the same direction. In simple terms, we focus about -- we focus on getting those 3 dimensions right, and that's certainly where we've been from where we started in terms of the transformation journey. So to start with some key elements of that sustainability conversation, as Stuart pointed out, we've lost 4 colleagues in the year. And despite it being the best-ever safety performance that we've delivered, now you're as a good year if you've lost a colleague. The Elimination of Fatalities' work is absolutely key to the improvements and, ultimately, delivering on that promise of zero harm, but it also touches all other elements of the business. Health in our industry, quite frankly, has been an even more difficult issue and a bigger killer, the natural safety incidents over the long term. And I'm proud to say, and if you look back at around 2007, we lost over 600 colleagues to HIV stroke age-related illnesses. For the first time in the last 30-odd years, the number last year was 0. And that's a remarkable achievement, and it speaks to the lead that Anglo American took in South Africa and on a global basis in working with its employees and helping people understand what we could do to make a difference, including the first company, first major company that actually provided antiretroviral drugs to employees and their families. And for us, that achievement is as significant as anything we've done, and it speaks to who we are as a company and very much that purpose conversation that Stuart was talking to. It's one thing to talk about a purpose. It's another thing to live it, and we're certainly focused on living it. On environment, we continue to improve. I think the environmental performance reflects the focus on planning, understanding risk and making sure we control those risks. We've still got a lot of work to do within the operations, but in many ways, it's a metaphor for the focus the operating model brings and the focus on planning and making sure we're executing the work effectively. In terms of transformation, yes, we are a fundamentally transformed business. If you look at where we've come from, most of the story, we have focused on the portfolio. Half the assets, we've still grown production by 12% over that period. The thing that's driven that is the technical changes that we've introduced in the assets that we've kept and the underlying efficiency improvements. So, the average production from the assets we've retained is 30% higher from where we were back in 2012, '13. As a consequence, our operating cost in real terms have dropped 45% or 29% in nominal terms. And from our perspective, the real challenge going forward is to keep the lead on costs so that we deliver flat or better costs over time. And if we can continue to do that effectively, then we certainly believe margins and returns will continue to grow. And you will see in forecasting forward, where we talk about growing our margins from 40% to 45%, to 45% to 50%, the difference in those two numbers is that current prices, we can grow to 45% to 50% [Technical difficulty] with the focus on operating improvement, improvement in efficiencies through the productivity, doubling of productivity, we've continued to improve our competitive position, which reflects the transformation and the quicker improvement [Technical difficulty] based on revenue. So we try and get the weighted mix right, and we do that when we measure against our competitors and the data is externally sourced. So we think it's objective. And today or last year, based on the space on the first half, we're at 36 percentile. We still haven't got the final year numbers in. But based on what we've seen, we will probably improve a little bit more, but others may also move. So we'll wait and see where the numbers led. But we still remain from what we can see on the frontage of our competitive position. And with the diversity of the portfolio, I think we add another dimension that others don't have in terms of thinking about returns and positioning going forward. Consistent with that, we've also done a lot of work on the marketing side. So despite the commodity price, and that red squiggly line is our basket price over time, has actually dropped 5% in gross terms. So our growth in margins from 30% to 40% reflects the cost improvements that we've delivered and with better prices realized for many of our products. We've actually still grown our margins. And again, that's the test of resilience, we call it, in terms of your competitive position and what we can do with margins, and there's still more we can do. So with that, I'll hand across to Stephen.

Stephen Pearce: Can I have the shooter? Thank you. Even as a Watford supporter, I'm pleased that many will play in Chelsea this week. Otherwise, I would have been the butt of the joke, I'm sure. Listen, good morning, and welcome to everyone. There's 3 key themes that I really want to talk you through this morning before I get stuck into the numbers. So it's about continuing delivery, and that's really built off the operating model and the productivity that Mark loves to talk to. It's about the increasing margin. So it's realizing the value from that productivity and dropping that to the bottom line. And then also, it's about the disciplined allocation of cash. So it's about the balance, getting the balance sheet right, allocating capital for the existing business, returns to shareholders, and then obviously, setting us up to deliver the next wave of disciplined growth. So turning to the numbers themselves. EBITDA, up 9%. What you see in the numbers, as Mark mentioned, is the benefit of owning quality assets and the diversification across the portfolio. So we had strong iron ore prices and PGM prices offsetting the weakness in the diamond midstream and coal prices; the 6% reduction in costs despite the headwinds that we've encountered, and I'll talk about those in a moment; and as Mark mentioned, again, some great work from the marketing team. EPS, up 8% to $2.75 a share. That drove the 40% payout ratio and a dividend of $1.09 per share. In addition, you'll be aware, we announced the $1 billion buyback at the half year, and we've progressed that through since then. So CapEx of $3.8 billion and up a little this year with the contribution to Quellaveco and obviously also progress in the Aquila met coal operations and the diamond vessel that we're building for Namibia. So with that, they're up a little bit as expected to $4.6 billion. So $10 billion of EBITDA, and we'll do a quick tour around the four business units. So diamonds, first of all, as Mark mentioned, the tough year, excess polished inventories in the midstream, some macro uncertainty and also some localized regional events. As a market leader to be responded, cut production and provided some relief in terms of pricing. Copper, a really solid plant performance, offsetting some of the water challenges at Los Bronces and then an excellent cost position overall, with C1 costs coming down to $1.26 across the year. In PGMs, as I said, EBITDA nearly doubled, significant increase in the basket price. Palladium and rhodium prices have continued in -- to improve into 2020. And that was -- as well, we had about 100,000 platinum ounces rollover from '18 to '19, given some of the load shedding that occurred late in the year. Now we did these calculations I think about midday yesterday, so you have to excuse me. They're probably significantly out of date by the time we speak this morning. So with spot prices, clearly, our margin continues to improve well in excess of 50%, given the basket price is now well in excess of $4,500 per -- an ounce. Just to give you a sense of the numbers here, that would translate to about $2 billion of platinum revenue, although I noticed that's up significantly overnight, a $4 billion of palladium revenue and about $3.5 billion of rhodium revenue. So you can see the extent those price moves are going to have in terms of cash flow should that continue. In terms of Bulks, we benefit from record production at Minas-Rio. At Minas-Rio, a really great performance again from the team, and Kumba recovered through the second half. Met coal, great margins there at 43% across the portfolio. Again, a number of moving parts, good iron ore prices, but softer coal, particularly [Serahan] reduced production given the weaker European markets. So let's have a look at what drives those numbers. So if we work from the left-hand side across to the right, so in terms of macro or external factors, broadly in line year-to-year. So currency, CPI and price broadly offset one another. We've also just pulled out for you there the impact of diamond's demand that had in terms of the underlying EBITDA. So that's the buildup in the midstream and the combination of lower index prices and the lower quality mix of diamonds, and therefore, the lower volumes that De Beers put into the marketplace. The last couple of slides, we have seen some early signs of recovery, but I would stress it's early. And obviously, the corona virus provides some uncertainty just as we go through the first half of this year. On the controllable side, a decent improvement, $600 million in all, largely driven by the Minas-Rio recovery versus the 2017 production. And we also had a $0.4 million of other cost and volume benefits, but they were offset to provide net $0.1 billion, given the water at Los Bronces for load shedding in PGMs and the loss of the domestic sales towards the end of the year in Kumba. Turning to the balance sheet. I can't just follow my page. Turning to the balance sheet. Again, I'm going to really reiterate some of the messages that we've been speaking really consistently about over the last couple of years. So it's about balance, it's about balance sheet strength and discipline so that we can consistently deliver period after period and also drive some of those value-adding growth opportunities overtime. Net debt was up as expected. Quellaveco stepped up, in total, $1.3 billion for the year. And also, we had the change in IFRS, in the finance standards accounting, which brought about $0.5 billion of leases onto the balance sheet. Just to point out as well that $4.6 billion does include about $300 million of Mitsubishi debt that we consolidate onto our balance sheet given the control. The two other balance sheet metrics are really important, the 0.5 net debt-to-EBITDA, very comfortable, well within our guidance, and net gearing at a very healthy 13%. Again, a real commitment to ongoing capital discipline so that we do provide that flexibility in the balance sheet should we need it. A key part of our thinking is clearly returns to shareholders. Dividend policy of 40% payout resulted in the dividends this year, $1.4 billion in total paid, an average yield of 5% across 2019. This was supplemented by a $1 billion buyback program that we announced at the half year. As of today, we're about $950 million roughly through that buyback program. And consistent with our disclosure, we'd expect to complete that by the end of March. Our 40% payout policy will continue through 2020 and '21. As per our normal considerations, if we were to generate excess cash, we will run that through our normal capital allocation considerations. Part of those considerations is that we would always assess whether we would return excess cash to shareholders through either a buyback or special dividend, and there's no change in that respect. So how did we go in terms of that capital allocation framework across the year? We generated sustainable free cash flow of $3.4 billion for the year. We have spoken about net debt, and, as I say, very pleased with where we are on the balance sheet. We started to allocate more capital to discretionary options because we have got the balance sheet to where we wanted to get it. So that was the $1 billion in terms of the buyback, at which, by December, we'd spent $900 million and then $1.1 billion in terms of gross spend. And I should be aware, the majority of that in terms of the Quellaveco project. So really, we think where we've got that again, balanced approach to how we're thinking about capital allocation and cash flow. Just to be clear too, you'll see on that bottom left-hand side, the Sirius would be part of our consideration in terms of how we allocate discretionary cash flow, so very clearly part of our thinking in terms of portfolio upgrade. So looking forward, in terms of CapEx, effectively, the same guidance that we gave you back in December. There's a step-up in CapEx for 2020 as we hit peak CapEx year for Quellaveco. The numbers there, do we exclude anything in terms of Sirius? Obviously, still subject to the ongoing offer. Sirius had indicated, and we are comfortable that with their proposed $0.3 billion over the next two years as part of their revised development schedule. Importantly, that would mean we're not really focused on heavy cash flow on two greenfield projects at the same time that would nicely sequence itself post Quellaveco spin. So also looking forward in terms of our $3 billion to $4 billion target. So we set that target just as a reminder from the start of '18 through to the end of '22. And as we've consistently said, some of that will be back-end weighted as we deliver particularly the tech dev and the projects. To date, we've delivered $0.5 billion. We're comfortable that our improvement run rate that we're seeing and our equipment performance is in excess of that. Some of that will come through over time as it gets released from working capital and flows through the system, and some of it in this second half, in particular, has been eaten up a little bit by some of those headwinds that I spoke about, water, load shedding, et cetera. But it's our job to make sure that we give that value visibility and getting all parts of our business to operate at those same run rates so that we see that value drop to the bottom line. For 2020, we've identified further improvements of $0.4 billion, no pressure, Natascha, but partly driven by improved performance in the smelting and refining at Kumba, sorry, at PGMs and a little bit of a turnaround in consistency of performance at Kumba. Remember, they had a few maintenance issues early last year. We have seen most of you would be aware, we had a roof collapse at Moranbah in January. Importantly, no one was hurt in that process, so the team did a great job. We were in the middle of a longwall move, and that will now take us about 8 weeks longer than what was originally planned. So we will lose around 2 million tonnes of production for Moranbah. However, we will try to make some of that up from Grosvenor, and obviously, we've got the balance of the year to really try to outperform to get that back. That results in about a $0.2 billion impact on EBITDA. And you will notice, if you've had a chance to look at the guidance, we've adjusted our guidance on met coal production for the year by about that sum. So looking at the three categories. Again, operating model P101, strong performance but partly offset. The tech dev, we continue to work on program, we're rolling out the initiative. The benefits will largely come through in '21 and '22. And again, just to give you a flavor of that, the ore sorting at El Soldado is in and running. I think it's the second half this year as the ore processing, sorry, the coarse particle flotation circuit will be in. And then we're also putting in the ore sorters at Mogalakwena and Barro Alto as we speak. So you should start to see some of those benefits flow through. Mark will touch on the growth projects in a moment, but all on time and on budget, and they obviously contribute to, I've said, towards the end of that '22 period. So just before I hand back to Mark, once again, fully committed to the balanced approach of running a strong balance sheet, flexibility through the cycle so that we can focus and create on long-term value for not only our shareholders but all of our stakeholders. We'll continue with attractive returns and balance as we think about those returns to shareholders as we try to look after both today's cash flow, so a disciplined value-adding approach. Mark mentioned the long-term EBITDA margin target, so I won't go into that again. But we do believe that we've got some upside still to flow through that as we deliver those underlying improvements in the business so that we get an increased sustainable margin, both at spot prices and that long-term consensus pricing. Mark, back to you.

Mark Cutifani: I think you've got to hand it to Stephen. We had a pretty tough start to the soccer year this year with Watford not winning again. Last 10 games do. They've done a remarkable job. They've shot to second last in the premier lead. So for those other Watford supporters, Duncan, you commiserate. Disciplined growth. So where to next? The first point I'd like to make in the conversation around the growth, it's not simply about top line growth. When we talk growth, it's about growing value. And so there, for us, it's growing top line revenues and it's about growing margins in particular. And so for us, growth is about growing cash flow and growing returns. And I obviously touched something there. There we go. So for us, it's about sustainable free cash flow and returns, and that's really the key part of our focus. Well, that's really where the focus is for us as a group. In terms of projects, Quellaveco, doing well on time, on budget, very pleased with the progress we've seen. And again, I'd invite you to have a quick chat to Tom while he's here. Again, the complexities, and there are political complexities in all of the jurisdictions that the mining industry operate, but I think we've navigated those extremely well. And the local community relationships are exceptional. And for Peru, if you can get those relationships right, it's a key to being successful in the country. And so I think the team has done a good job, and we're very pleased with the progress so far. In terms of De Beers, with the new boat going -- is it a ship or a boat, Bruce? It's a ship. Stuart is going to kick me for even asking the question. Very happy with the progress, and the team has done a great job in working with the manufacturers, and I think they're doing very well in time. Just to remind you, the quality of the diamonds from the marine projects is very high. It's around $500 a carat. And so it really does add quality and margin again to the De Beers' work and a very important one for us. Aquila met coal, going very well, decline, a pretty straightforward operation, but an important one that picks up where Grasstree will finish off with its life. So very pleased with progress right across the board. And certainly, a two-path growth engine seems to be going very well, and we've got a number of things still to come through Moranbah-Grosvenor that Stephen's talked about. In terms of Sirius, I will stick closer to my script. It is a quality asset. We've talked about the polyhalite resource being a very different type of product, multinutrient, low chloride, low cost. It's a product that will travel. And certainly, the feedback we've had when we've done our due diligence work has been very positive. And in particular, the form that the product comes in is very important in terms of the value proposition. So we think it has good potential. Obviously, there's still a lot more work to do. And taking all those factors into account, we think the offer that we have is fair and reasonable, and it's taken all of those issues into proper account. The only other point I would make is we still have a way to go. There still is a vote from shareholders required, and all we ask is that shareholders take note of the Chairman's statement in the documentation regarding their recommendation in terms of the Anglo offer. And so from our perspective, it's a work in progress, still a long way to go. And again, we encourage those shareholders to look at the statement from the Chairman and the directors in terms of the Anglo proposition that is currently sitting before them. In terms of the future and how we think about the business, it is very much about quality assets. And again, our conversation around Sirius fits into that conversation as we do see there's a potential Tier 1 asset. And for us, we think that our focus in terms of what we've been doing with the portfolio, with the portfolio on a broader basis is consistent with those themes. We are continuing to shape the portfolio on the basis of a quality asset in markets that we think have potential strong pricing fundamentals and, from our perspective, something that we understand and we believe we can do well in. Our business model and the way we invest across the value chain is fundamentally different to our competitors. Our business model is a very different business model to a trading model or a logistics model. It is about understanding what we do from mine through to customer and consumer and making sure that we're investing in leverage points across the value chain. And that is a different approach. That approach has been absolutely clear as a bell, obviously, in De Beers. But our investment in platinum and the profile we've taken in the PGM industry is unique as well, and the work on venture capital in helping promote uses of platinum and other materials in terms of the hydrogen economy is how we differentiate ourselves in the way we think about our business and the models we're creating. In terms of FutureSmart mining, when we talk about carbon neutrality or we talk about the way the mining industry needs to look in 5, 10, 20 years, we've been in a strategic conversation for 6 years. FutureSmart mining is about changing the way mining is carried out so that we can ultimately get to carbon neutrality that we can ultimately reduce our footprint and connect ourselves to local community in a very different way compared to what we've done as an industry in the past. Our regional collaborative development model is unique. GemFair, working with our traditional miners and government to change the nature of mining is strategic, it's different. And we understand, in some cases, people struggle with some of the things we're doing. But as each day goes by, what we're doing makes more sense to those that talk ESG. It's not about talking, it's about walking. And we're proud to say that in the last 3 or 4 weeks with the publishing of the Responsibility Index, which is walk versus talk, we've come up as the top resources company. Now the challenge is to continue walking and leading the industry and the changes that we've talked to. And those approaches will lead us in terms of how we profile the business in terms of Scope 1, Scope 2, Scope 3 positions. But anything we talk to, any target we set will be based on the way we believe we should be transforming the business. It will have substance behind it. That's an important point. And for us, FutureSmart is the substance behind the conversation, and we've been there for 6 years. And putting all those pieces together, it's about people. We've built and developed, we think, an exceptional team across the business. We continue to evolve the business. And from our perspective, it's about people and about making sure we've got the right people in the right roles. And so we believe that, that will always be a work in progress, but it is again a defining position for us in the industry. On asset portfolio, again, Stephen, I think, said it well, a clip on diamonds and in PGMs, we are industry leaders. We take that leadership role seriously in terms of the way we talk to our industry, the way we talk to our products, the way we interface with both customers and consumers, and we understand the difference between the 2 and how we're developing our business for the longer term. Clearly, Bruce and his team are doing a lot of work in rethinking and reimagining the way diamond should be taken forward, and we're looking at every part of the value chain in terms of how it can make a more significant contribution in driving long-term value. Very important piece for us. And Chris has done the same in the PGM industry. Our high-quality bulks are unique in terms of quality. And for us, we've been positioning in that business the way we have for some years. We've taken Kumba's product from about 62%, 63% to 64.5% on the basis that we believe the market will reward quality, consistency and the relationship that we create in our markets and put that with our marketing work, again, a unique positioning in the industry. And with copper, nickel and other products we produce, again, a very much a future-facing portfolio, which we think is very much a differentiating factor in terms of the future and ultimately, we think future returns. Our investment proposition, again, is based on competitive assets, and you've seen our improvement in competitive position. We have built a differentiated set of capabilities. We've been thinking strategically from day 1 in terms of our transformation. How do we create a company that leads the industry and the way it thinks about how its services society and delivers the products the right way and in a way that are valued by society in terms of what we bring to the conversation? And those footprints and the work we're doing is consistent with that differentiated set of capabilities. A lot of people now are talking about focus on technical, focusing on operating capacities, we've been there for six years. And then finally, in terms of returns. When Stephen talks about balance, it is about discipline in capital allocation, investing in the right things and making sure the business is sustainable in every sense of the word. So whether it's a safety conversation or whether it's a growth conversation or whether it's a competitive cost position, it's all about building a sustainable business. And By that, we mean delivering sustainable returns and improving returns to our shareholders. So with that, Stephen and I would be thrilled to take your questions.

A - Mark Cutifani: The reason I recognize the South African first is they won the World Cup, Jason. I knew you'd be -- it's not our game.

Ian Rossouw: Thanks, Mark. Remember, you brought it up, not me. Ian Rossouw from Barclays. Just two questions, if I may. Firstly, just on capital allocation. Stephen, you obviously gave us a nice sort of pie chart, and that is on a consolidated basis. But if you look at the ex South African net debt, that went up from about 8.5 -- I can think of another $400 million, $500 million up. So you're essentially buying back from debt. Could you give us an idea of the split just between how much you bought back in South Africa and in -- outside of South Africa? And obviously, you've said in the past, that does matter. I mean, with CapEx now rising, do you think it's -- there's room for more buybacks down the line? I mean, obviously, cash flow generation is very strong. A lot of that is in South Africa. So maybe just how you think about that? And then secondly, just on diamonds. You've obviously kept your guidance at 32 to 34. So that's roughly, let's say, 2 million to 3 million carats additional supply this year versus last year. You also have, let's say, $400 million or $500 million of inventory that you're looking to sell down this year. Do you think, given the environment with the coronavirus and Alrosa are looking to destock by 4 million, 5 million carats, it's appropriate to still maintain that? Or was it more you'll see how things go and adjust when appropriate?

Mark Cutifani: Yes, Stephen?

Stephen Pearce: So in terms of the buyback, first of all, then I'll throw to Mark on De Beers, so remembering a couple of things. So we pay 100% of the group dividend from South African cash. And also, we got permission to pay the full buyback from South African cash. And the way we implemented that buyback was consistent with a proportional representation of the register. So it was a proportional buyback in South Africa as well as it was out of London. So I suppose we kept that fairly constant. Remembering also that we have the majority of those South African dollars held in U.S. dollars in London. And so at year-end, we actually had very limited local currency in South Africa. You'll see that we don't see the detail in the notes. So I'd have to say we're fairly comfortable. And practically, it doesn't have a big impact in terms of how we manage the cash.

Ian Rossouw: Just to follow-up on that then. So I guess, even if the net debt outside of South Africa rises, if there's cash building up, there's potential for further capital returns over and above the [indiscernible].

Stephen Pearce: Yes, with the capital programs that we do have outside of South Africa are about to come online and generate significant cash flow. So Quellaveco production coming in early '22. Some of the other projects that we've got will generate significant cash flow in the near term. It just so happens in the last few months as well, we've had very, very strong PGM prices in the first half of the year, very strong iron ore prices. Again, you'll see when you see the detail, really great returns and cash flow out of Minas-Rio as well for the year.

Mark Cutifani: On diamonds, just to put it into context. China is about 15% global demand. There's no doubt there aren't as many people today walking around jewelry shops in China, and certainly, Hong Kong virtually done. So it is quite -- it will have an impact. But at the moment, we've seen a good U.S. selling season. Certainly, the sentiment seems to be much better in the first site. So all of those issues are going in the right direction. But at this stage, we don't see anything that suggests we should adjust our guidance on the basis that we starting to see a bit more activity in China. But I think we need to see for another couple of months before we would say anything more than that. But as I said, we're seeing, obviously, a negative in China, but we're seeing positives elsewhere. And the sentiment from the site all seem pretty good and still seems to be holding up pretty well. So no reason for us to adjust, certainly at this stage, probably another couple of months before we've got a better picture. Jason?

Jason Fairclough: Jason Fairclough, Bank of America. Two quick ones for me. First, just on the stub. So as strong as the performance of Anglo shares have been, you actually materially underperformed the performance of Amplats. And I'm just wondering whether you, as a management team, or for that matter, whether the Board feels like it should take steps to close up that gap to unlock that value, right? You understand?

Mark Cutifani: Yes, I understand the question. I appreciate your concern, though.

Jason Fairclough: The second question just on Quellaveco. You're talking about commissioning in 2022. And the aerial photographs looked quite impressive. So I'm just wondering how much you're sandbagging in there?

Mark Cutifani: Yes, I understand that question, too, Jason. All right. On Amplats, I think if you looked at both Amplats and Kumba, they've done extremely well. And I would argue that you've got the 2 best investment stories in South Africa by country mile, and people are investing in a great story. I would argue that the Anglo American global story is just as exciting, but we've probably got a much broader pool that we're playing in. And overtime, we've experienced those things tend to normalize out. So, I think it's the normal ebb and flow we see in terms of differences. Our job at Anglo is to keep growing the business in terms of margins and cash flow. And where we were trading maybe at a 40% discount a year or two ago, we're at about 19% discount. If we keep closing that gap and deliver a 30-odd percent return to shareholders, at some point people start switching their money on a broader basis. And our appeal to generalists, we think, is something that could quite materially change how people look at us. So we're focused on the big guide, the longer-term guide and the fact that we've got assets making a great contribution, it's a bigger story. Copper, the whole story is, in our view, the main gun. Quellaveco. Look, the guys are doing a good job. On paper, we're doing extremely well. But I've been around this industry for 43 years. I've run major projects. You can lose the gains very quickly. And so from our point of view, we'd like to see a little bit more time and finish off, we'd like to see the concrete finished in the mill, in particular, because we've still got, what, 60-odd thousand tonnes of concrete to place in the mill time. So, before I start flapping my gums and looking too excited, I'd like to see that done but we're making good progress. There is no doubt on the technical aspects, we're doing extremely well. But communities, we're interfacing with a lot of people. You want to make sure that you get a little further into the project before you start making extravagant claims in terms of where you are. I'll work my way across and back, George, if that's okay?

Liam Fitzpatrick: It's Liam Fitzpatrick from Deutsche Bank. Two questions. Firstly, on PGMs. Yes, the thinking changed which we, I guess, over the last 3 months, just in terms of project priorities. Are you looking to accelerate some of the growth options that you have, given the clear price signal that we're seeing? And certainly, on thermal coal, it looks like the business is in runoff. Are you still looking at divestments? And is that something that's realistic just given the state of the industry?

Stephen Pearce: Yes, sure. On PGM projects, we remain focused on investing in the right things. I'm always a bit cautious on getting too excited in the short term over prices because what goes up quick and come down twice as quick. I'm certainly one that would say the underlying demand fundamentals appear to be very strong. But at the same time, we would still expect to see some switching from palladium to platinum over time. Interesting to see the platinum price start to jump around a little bit as well. So we'll see what that actually means. But from our point of view, we're investing in the right things. We've made it very clear that we're pushing along with Mogalakwena. Not exactly sure what the final outcome at Mogalakwena will be, but for our point of view, that's a priority project. It stands on its own 2 feet, either at long-term pricing or current pricing. And we'll keep pushing that along pretty aggressively. We're also very clean on the Amandelbult modernization program as well and getting the chrome out at full capacity as well. So we've got a number of strings to our bow in South Africa. It's very exciting.

Liam Fitzpatrick: Thermal coal? The thermal coal...

Mark Cutifani: Thermal coal. Yes, look, as you know, we shrunk the footprint 60%. We're investing in sustaining capital as you would expect. We are, during the course of this year, working through the pathway we should take in terms of the transition. We'll give you a more detailed update in April when we do our sustainability report to the market, and there are a number of options on the table. So we'll work through those and give you a pretty clear pathway in April in terms of where we're going. But we are still in the transition. And I'd be highly surprised to be still in thermal coal within 5 years. So it will certainly be shorter than that.

Myles Allsop: Myles Allsop, UBS. A couple of questions. Just following up on the PGM sort of question. Do you think the basket price is above or a balloon at this point? And could you just give us a little bit more of a sense of the CapEx around the Mogalakwena kind of expansion? And then secondly, just thinking more broadly about CapEx and running at 4.5 to 5.5 the next few years. When thinking beyond that, with Sirius potentially coming into the pipeline with the Mogalakwena expansion coming to the pipeline, are we likely to stay around that sort of level out to the mid-2020s if you have your way and these projects move forward?

Mark Cutifani: On the PGM prices, there is no doubt there's a shortage of palladium and rhodium. And what we're seeing is strong demand for both. And if I could use the description, an automobile CEO won't get fired for spending $50 per car extra on PGM, but they might get fired for not meeting their emission targets. So the demand is real. We've seen increases in consumption per car, particularly in China, as they've tightened the limits. So these are real demand trends. The question for us is more around, will there be some switching? Because don't forget, palladium is very important in terms of either heat source in the car, whereas platinum is more effective further down the process. So there's some technical questions. The real question is, how long will the technical people take and what can they do to maybe shift the use of platinum, palladium and rhodium around? Rhodium is used for a whole range of things. So the world is short rhodium clearly at the moment. And I'm not sure there's a lot more coming on in the near term. So it's in a pretty good position. Platinum, I still think will be a beneficiary, but it might take a little bit longer. In terms of Mogalakwena, to get it into two parts, you've got one third or a new concentrator, which would be certainly in the 1 billion to 1.5 billion type range, but you've also then got the technical type solutions where it might be all sorting and a whole range of incremental capital options that give you a far better return. So we've got a fair range of things that we're looking at. And from our perspective, I wouldn't like to call it here or there because this technical stuff is really coming along extremely well. We've got our first bulk shorter in El Soldado operating, doing very well. We're building at Mogalakwena as we speak. We're in...

Stephen Pearce: Barro Alto.

Mark Cutifani: Barro Alto in terms of nickel and we've got, obviously, plans to Los Bronces and Collahuasi. So I wouldn't back a single horse yet. And there's quite a range in the capital options. But again, the capital is not massively above those sorts of numbers in any case. It's quite manageable. It's quite containable and certainly, a real value-add from platinum, whichever way you look at it.

Stephen Pearce: Maybe I'll just add to the overall capital question and so, Chris, I'll just get you to nod at me. We're still doing the studies in terms of that Mogalakwena options, and it was really be -- towards the end of '21 that we'd be looking to bring that forward or maybe a little bit earlier through '21, that we'd complete those studies and perhaps link up with the work Tony is doing to be able to make some decisions. Again, just about capital discipline. We're not going to rush out, as Mark said, just because we have a high price today. We want to make the right long-term decisions in how we spend that capital. On the overall CapEx question, a couple of points to make. Obviously, as we deliver Quellaveco, Moranbah Grosvenor brownfield, the new ship in Namibia, we'll be generating additional cash flows from all of those businesses as well as additional cash flows from the underlying business, given the improvements that we're focused on. So the business will be, I think, in quite a different place in the next couple of years. Could we have a sequence then of other capital projects without preempting any decision, potentially so but obviously, each of those decisions will be made in their own right based on meeting metrics, based on a view of markets, not just for the now, but for the longer term. So how that plays out, we'll have to wait and see how markets develop. But potentially, we could have some internal options in front of us. I think, a nice position to be in, to at least have the options there. We'll make the decision about capital when it's the right time to make the decision on capital.

Mark Cutifani: That balance between a single large-scale project at any one time and the incremental projects is a really important way or really important issue that we think about in terms of managing the portfolio. When we go back to previous periods where all the resources were committed to a single project, that's not something that we'll -- well, not a mistake that we will make again. It's a clear learning from the history. And certainly, from our point of view, that point about balance is absolutely critical and really does define how we think differently on an ongoing basis. Yes?

Sylvain Brunet: Sylvian Brunet with Exane BNP Paribas. My first question is on power in South Africa. Are you looking at building more of your own power to hedge against the Eskom risk now that things have been approved? My second question is on marketing and alluding to your comment on the model before. Now you're doing more in this field, in base narrows in particular. Would you consider reporting the marketing contribution from the division separately? Lastly, an ESG question, on your 22% greenhouse gas reduction target by 2020, just wondering what was the number in 2019 that you've achieved already.

Mark Cutifani: Just on the internal options on power. Tony's here and I know he'd be absolutely thrilled to talk about those options a little bit later. But we've got 2 basically -- around 100-megawatt options we're looking at. One at Mogalakwena, which would be solar. We'd use excess solar capacity to generate hydrogen, and we'll be installing a hydrogen -- and it's a hybrid hydrogen battery truck by the end of the year. Tony, I think that's the plan in terms of the work you're doing with NG, it's the partnership with NG. That would be a precursor to a broader commitment on hydrogen options for our off-truck -- off-highway truck fleet. That's part of our whole carbon gas or decarbonization strategy. We're also looking at something in the Northern Cape. We've had discussions with the various ministers in South Africa, very supportive of those types of options. Their main point is that they are not keen to see people selling back into grid. So you do a self-consigned system, which works perfectly for what we want to do because we would use excess capacity to generate hydrogen so that we continue to de-carbonize on a much broader footprint. So that's absolutely critical. And that logic holds for any jurisdiction we're in. So, I think that's part of this pathway to in terms of improvement In terms of the 19 targets, I think we're about -- our target was 22% by -- yes -- So we're at about...

Stephen Pearce: Certainlt that will go out in the annual reports information, I think, in early March. So you'll see some of the actual reporting for those numbers.

Mark Cutifani: So we'll have the full breakdown. But the tag between the 2, but we're on track to hit our targets by that time.

Stephen Pearce: In terms of your question on marketing, good question. It's complex is the simple answer. It's something that we will think about. The priority largely has been around our own volumes in our own tons. But with that expertise, obviously, you start to double it out a little bit in terms of taking advantage of the market volumes and the skills that you develop. So that's something that is under consideration. As I say, it is complex, and we'll work through the detail over time.

Mark Cutifani: Yes. It is becoming a material contributor, there's no doubt. But if you go back to our original 2013 strategy, we were targeting a $400 million contribution, but that also included changing arrangements we had with key players against those original targets where we're up to about $750 million contribution. But some of those benefits would stay with the business because all we were doing is getting ourselves up to what we thought was competitive level. Additional benefits above and beyond that is exactly what Stephen's scratching at. We think we need a little bit more clarity, and that's what we're talking about. So against the original commitment, we are well ahead of those commitments, and we continue to improve and broaden the trading platform as well. Yes? I'll start heading back.

Dan Major: It's Dan Major from UBS. Two questions. Firstly, on diamonds, a follow-up from Ian. If you look at your sales and pricing strategy relative to Alrosa, you, I guess, maintained sales and took a bigger hit on pricing. Can you give us any indication of the value or the quality per carat of inventory that you hold now and how that's changed?

Mark Cutifani: No, that's not correct, actually. We did pull back volumes, particularly with what we could actually deliver. So we pulled back 15%, Bruce? Have to be at least there?

Bruce Cleaver: Yes, yes. Around that.

Mark Cutifani: So we made a significant change to what we had and what we could put out there, hence the mix. But also, we did something really important. The sales that we delivered through a good part of last year actually brought us back into balance in terms of the quality of the mix. So we did some really important inventory housekeeping as part of last year's recalibration strategy. So we're in a good position today. We've got a good mix in terms of products. And we're in good conversations with our site holders because we've done the things we did last year, but we pulled back ourselves about 15%. Bruce, is there anything I've missed in that point?

Bruce Cleaver: We are broadly balanced, Bruce, across our inventory holding across the spectrum of the diamond quality.

Mark Cutifani: Bruce?

Stephen Pearce: Just speak to...

Bruce Cleaver: The guidance in the books are correct.

Mark Cutifani: Bruce?

Bruce Cleaver: Bear with me a second. I think he asked a good question. I think that the difference in average price 2019 over 2018 is largely [indiscernible]. So it's not all prices. So actually, we haven't started [indiscernible] prices. We've sold more low-value goods [indiscernible] in fact '19 [indiscernible] because it was all demand and got our stock back all back in balance [indiscernible] So remember that you [indiscernible] that's a fundamental mix of prices.

Daniel Major: So just to be clear, the value per carat you had mentioned probably increased?

Bruce Cleaver: It's more in balance than it was a year ago. Yes, so it's basically -- we sold more low-value goods than 2019, so [indiscernible].

Mark Cutifani: I think we have a comment over here. I'd...

Bruce Cleaver: The press release today had the wrong slide in -- and presenting with a problem in terms of how to [indiscernible] for 2020.

Mark Cutifani: I think we should check that.

Stephen Pearce: Well, we'll certainly check that there and come back to you.

Dan Major: My second question was on your Slide 35. You've got a little stamp on the Collahuasi asset expansion in 2021, but not one against Mogalakwena. Does that imply that you intend to proceed with that project ahead of Mogalakwena?

Mark Cutifani: I wouldn't read that into it. No, not at all.

Dan Major: And the second one in conjunction with your JV partners, what is the dialogue with the Chilean government around potential taxation changes? How concerned are you about the referendum on the constitution? And how that impacts your capital allocation towards Chile relative to other areas?

Mark Cutifani: Well, firstly, in terms of Chile, conversations around the industry have continued for some time. The constitutional conversations is something we're watching. What we have shifted in terms of our work in chile is we've improved our relationship with Codelco significantly with the deal done on the Andina Pillar. That's a big shift from where we were a few years back. And I think it also reflects a much better relationship with the government. In terms of the constitution, your guess is probably as good as ours in terms of what will come through. The one thing we do know for sure, they know how important mining is for the country. And I would be extremely surprised if they did anything that impacted foreign direct investment in terms of the industry. Stephen, the latest on the tax stuff?

Stephen Pearce: Yes. So I mean, we work through all the local sort of regional and country mining associations, et cetera, as you would expect us to do as well as having some direct discussions with authorities. A comment not just for Chile. Obviously, whenever someone -- taxes or imposes other cash flows impacts your thinking about those things. That's not meant to be a comment just about an even particular country, but naturally, there are things that you think about when you think about capital allocation and that applies anyway.

Mark Cutifani: Yes, the Collahuasi options are quite modest in terms of cost. Los Bronces underground is going through a three-year environmental process. So the constitutional issues will be very clear and visible to us before we make those commitments, so we'll see what they look like. But we don't have major decisions pending the resolution of the constitutional conversations. We'll be -- we're in the right time frame for those anyway. But we're watching it carefully. Yes? No, we got one here. Sorry. We'll go up here and then I'll come back next, yes?

Unidentified Analyst: Can you hear me? No?

Mark Cutifani: I can -- but I just might not...

Unidentified Analyst: [indiscernible] that's okay. Two questions. Cost of volume improvements targets on Page 17. How they conclude in the entirety [indiscernible] on Page 32 or do they [indiscernible] those numbers speak [indiscernible]. And second question. Los Bronces production is constrained [indiscernible] end of the year. What is the outlook for [indiscernible]. Can you talk about it now? Should we expect it to be an annual feature now? And what [indiscernible]…

Mark Cutifani: So there's a lot of work going on now in improving water takes. So Aaron and the guys have been building their water inventories and doing pretty well. The difference between -- and you'll see that the range from Los Bronces, so the range from copper is broader, reflecting probably a 40,000 tonnes difference. And so on the bottom end is assuming we are constrained by water, and the top end is if we get a great fall of rain and we're able to fully run the units, then we get a significant lift in our copper production. I think it's about 40,000-tonne proven?

Unidentified Company Representative: That's right.

Mark Cutifani: That's the range, and that's what it's reflecting. So the bottom end?

Unidentified Analyst: The range is 620 to 670. So it's sure to come down.

Mark Cutifani: And most of that's Los Bronces, reflecting the Los Bronces water options that are being developed. Good work being done, but we've kept those options in. So again, Aaron and the guys done good work, and we'll continue to build the inventory. I'd like to think by the end of the year, we'll be in a much better position generally in terms of being able to cope with these types of conditions because I think we're in our second year of 100-year -- so we had our second 100-year drought, so we'll have to see where that ends up.

Stephen Pearce: In terms of cost and volume, then. If I understand your question correctly then yes, we try to make sure that they're consistent between production guidance the cost disclosure and forecast for the year. Obviously, there's always moving parts even -- since we set those or even since yesterday, I think it's changed. So -- and we try to cope with that, move with that. And ultimately, our job is to deliver to the bottom line.

Mark Cutifani: Yes, a good example is the cost and volume issue is we've seen, average, Tony, last 2 years, a 15% improvement each year in our major shovel productivities. And some of that has come through, and some of that we're seeing building inventories between their end product because of the improvement. So we're doing better on waste and we're getting some real stockpile inventories in front of the mills. And we're clearly debottlenecking the mills. That's why we'll see such a rapid release of copper if we get a little bit more water. So we've seen it, but it's not fully coming out of the system. And that's Stephen's point about cost and volumes. Stephen?

Stephen Pearce: So Mark, I think, Paul, as I understand, we've got a couple of questions on the line. We might just quickly go to that. We'll try to just whiz through a few more questions just to quickly get through, so between us, we'll shorten up our answers. We'll try to speed through the room and get a few extra questions done but if we can -- at the back of the room, if we can go to the first question on the line.

Operator: Andrew Cosgrove from Bloomberg.

Andrew Cosgrove: Gentlemen, just one on corona virus. I was just curious if you could just speak to how it's impacting or perhaps not impacting? I realize China's only about 1/3 of total sales, but curious about the breakdown by business line? And then secondarily, on Minas-Rio. I realize the costs are stepping up in 2020. I know you called out a 1-month stoppage, but just curious if there's anything else driving that? And then maybe longer term, where you guys see costs settling out?

Mark Cutifani: On corona virus, the key impact in China, probably the iron ore market, less so for us. We have about 25% of our products go to China. So we think the main impact will be iron ore. We've seen a bit of an adjustment at Kumba. But beyond that, we're not anticipating any major changes. Obviously, I've already talked about diamonds. Beyond that, no major changes, and we think things are starting to move forward. Minas-Rio. What we do is we do an annual pig run, while we're making sure that the pipeline is in good shape. And so from our point of view, that's a normal part of the process, and that's already contained within the full year forecast. Fortuitously, that helps us in iron ore because we'll do that in April. So if there's going to be an impact in iron ore, the fact that we've got to plan of for that period actually gives us a little bit of wiggle room in terms of any impacts that we may see. But it's primarily iron ore. And so there are probably a few others that would be a bit more sensitive to that than us.

Stephen Pearce: Nothing else to add. Maybe go to the second question on the line?

Operator: Brian Morgan from Morgan Stanley.

Brian Morgan: Guys, there's a budget speech next week, Wednesday, in South Africa. Are you at all concerned about any particular or potential windfall taxes for mining, super profits taxes, extra royalties because of the PGM price basket?

Mark Cutifani: Look, one thing that we've seen from South Africa is a pretty responsible approach in terms of taxation and its fiscal regime. I don't think that's going to change much under the finance minister. We know the Finance Minister very well. However, given the circumstances, one has to be careful not to assume you know. So we'll wait and see like everyone else. But again, I'd make the point that the finance minister and South Africa generally has tended to be fiscally conservative. And certainly, we don't expect anything untoward. There may be adjustments. We'll wait and see.

Stephen Pearce: Nothing else to add. We might come back then to questions in the room. Tyler?

Tyler Broda: Tyler Broda from RBC. Just two questions for me. One, on El Soldado and the bulk ore sorting. I guess, could you just give a little bit more commentary around some of the deltas you're seeing perhaps? And then also sort of how that fit versus expectations? And then secondly, Stephen, with the PGM prices moving or palladium moving at $100 an hour, let's say. Obviously, things are fast moving. I don't think you'd be this kind of guy, but would there be a chance for off-cycle buybacks at all from Anglo American, if that was something that came forward?

Stephen Pearce: You just answered, I can get the rest.

Mark Cutifani: You answered the last question then I'll just pick up the front end.

Stephen Pearce: Listen, we normally just, whenever we're making our cash forecast, we're considering out some time. There will be pluses and minuses across the different commodities at different times. So I think you should expect us to consider the dividend decision at the half year.

Mark Cutifani: On the ore sorting, I'm going to look at Tony, make sure he's nodding or shaking his head when I say this. The range of upgrade that we've seen is up to 20% on grade. And we balanced that back, making sure that we've got the ore through the mill balanced. And what you're doing is making sure you tail is not such a quality that you're throwing away value. So maybe 10%, on average, Tony and Ruben, in that range, in terms of balancing the circuit?

Anthony O'Neill: I think you've got to consider El Soldado as a place we pull our technology through. I wouldn't get too hung about the actual numbers. And it's allowed us to fast-track the work at in platinum. The bulks order is already built in platinum and going through commissioning there. So yes, we're seeing the 20%. Ultimately, how much we can flex the mine determines what number you end up with.

Mark Cutifani: But you're going to pull more ore through it. It's a balance. But the nice thing is you've got flexibility, which means you can think about your capital very differently. That's the key.

Stephen Pearce: Question in the room again. We're going to go here. So we go, yes.

Richard Hatch: Richard Hatch from Berenberg. Question on De Beers. And you're negotiating with the Botswanan government with the agreement coming to an end this year, I believe, this or next year. And what do they want? What do you want? And what do you expect? And in reality, what kind of economic change could we see to De Beers? First one.

Mark Cutifani: They want a good partner, we want a good partner, so it's a marriage made in heaven. Look, all of these things require us to think laterally, and there's give-and-take in these conversations. And don't forget, the mines are getting deeper. And so the way we think about these things changes. Explaining that and making sure those issues are understood takes time. You have to be patient. And if you think the guy behind you looks a little stressed, he's not, he's very relaxed. And we've still got a way to go. But beyond that, we can't speak about what's in that. That would be unfair on the Botswanans. But it's constructive, but still with a way to go. Bruce, would you like to add anything to that?

Bruce Cleaver: The only thing I think I can say is you've been doing this on-and-off for 50 years [indiscernible] accommodation [indiscernible]…

Mark Cutifani: And I think it's fair to say we respect to each other in the process, and we're respectful of each other in the process as well. So we don't talk outside the conversations as well. So we do appreciate the question, but sorry.

Richard Hatch: And then, Stephen, just on the balance sheet. Working capital, and I suppose it all depends a bit on De Beers and how the market goes first half. But do you expect any kind of change? Or can you give us some guidance on working cap moves first half/second half?

Stephen Pearce: Not yet, no, because I think I need to see how things play out from a sort of supply-demand point of view. Listen, I wouldn't expect anything particularly untoward this year. I suppose it's my general impression. We'll always work to refine it. We'll always work to get the product out the door and the cash in the door. So nothing from that point of view would change. But outside of that, I'm not anticipating anything particularly half-to-half outside of normal natural sort of cycles. Maybe one last question in the room, and then we'll wrap it up.

Sandeep Peety: Sandeep Peety from Morgan Stanley. I have a couple of questions. Firstly, on the work capital. So cash inflow from operating payables has been close to 5% for fiscal year '18 and '19. And can you explain what is driving that? And what should we think for the next year? And secondly, on the inventory buildup. Should we expect that to be released in 2020? And my last question is on the expected loss. If the water station continues in Los Bronces and the issues that we have seen in Eskom continues, what is the expected loss for 2020?

Stephen Pearce: So a couple of comments here. I'm not sure I quite understood the first one. So I'd answer the second and third one first. So in terms of inventory build. So yes, we had a little bit of inventory build in De Beers, as I think we've flagged. I'd love to see that flow out but ultimately, it will depend a little bit on market conditions just as to the time that may take. We also had a little bit of inventory build or not as much inventory run off as we would have liked in platinum. So again, some of that run down. It's a different mix between the two. In De Beers, it's really held us finished goods ready to go. In platinum, it's held us largely as work-in-progress. So getting it through the last phases of the processing plant is really important in that part of the business. And so I'd love to see that perhaps come back towards normal levels again. On Los Bronces, I'm not sure I can add too much more to the guidance that we've given. We've given a production range, as Ruben said, of that 620 to 670. That's really around water. So depending on how that plays out over the year, we'll have a reasonably good start and we're trying to recover as much water as we can to maximize the volume. We're just going to have to keep you posted. I'm not sure I can understood the first part of your question about the 5%.

Sandeep Peety: The first part of the question was on operating payables. It's been a release of $500 million for fiscal year '19. And then for fiscal year '18, it was, again, $500 million, close to that number. So what is driving that? And should we expect that to continue.

Stephen Pearce: So some of those, let's call it, on the credit side of the balance sheet, will be -- depend a little bit on timing of projects and just where some of that project work is going. And you may recall, we also have a prepayment sitting within the PGM business, and it flexes a little bit with price sometimes. So that -- they're probably the two things that have been moving, particularly in increasing PGM price environment. But we can certainly catch up on detail if you're looking for anything more than that.

Mark Cutifani: With your inventory numbers, just be careful. As we continue to improve the physical processes, Stephen's point about clearing inventories is absolutely right. But you'll create new inventories as you drive the production of the front end up. So we'll clear it and keep improving. But as we continue to improve, to get to that $3 billion to $4 billion run rate, there will be some hang ups in various parts of the process -- natural part of the improvement process. But we'll keep you posted on where those build ups are occurring so you know how it's flowing through. But as Stephen said, we've got a clear -- we can see how to clear what we've got, but we're going to keep improving. So there's going to be more there that we're going to have to clear through. So we'll keep you posted.

Stephen Pearce: Mark, we've got to wrap up. I think Paul is looking at me sternly.

Mark Cutifani: Guys, thank you very much for the time.