Thanks for standing by. Welcome to the South32 2023 full year financial results investor and analyst call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key, followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Graham Kerr, CEO. Please go ahead. Thank you, and good morning, everyone, and thanks for joining us today. On the call with me is our Chief Financial Officer, Sandy Sibenaler, and our Chief Operating Officers, Jason Economidis and Noel Pillay. I'll give a short summary of our results before handing back to the operator for questions. Before I go into detail about our results, I'd like to talk about safety. Nothing is more important than the health, safety, and well-being of our people. Tragically, two of our colleagues, Tineo and Alfredo, lost their lives in a fatal incident at Mozal Aluminium in November. Our deepest sympathies remain with their families and colleagues. In response to the incident, we continued our work to fundamentally shift our safety performance and implement our multi-year safety improvement program. We are working to enhance our safety culture through the use of our safety guarantee, an internal approach where each of us stop and ask ourselves where we can guarantee our own safety and that of our colleagues before undertaking each task. Turning now to FY 2023 results. Our team delivered strong production growth in aluminum, base metals, and manganese during the year, and achieved annual production records at three of our operations. These strong results were underpinned by our recent portfolio improvements in copper and low-carbon aluminum, commodities that are critical in a low-carbon future. This growth, coupled with our ongoing focus on cost efficiencies, has resulted in one of our largest underlying financial results to date, with underlying EBITDA of $2.53 billion, despite a challenging backdrop of declining commodity prices and industry-wide inflationary pressures. A record $1.2 billion was returned to shareholders during the year. Today, we have announced a fully franked ordinary dividend of $0.032 per share in respect of the June 2023 half year. Looking ahead, low-carbon aluminium production is expected to increase by 12% in FY 2024, and Sierra Gorda is executing projects to increase future copper production. Our Hermosa project in Arizona presents a significant opportunity to sustainably produce commodities critical for a low-carbon future for decades to come. At the Taylor zinc-lead-silver deposit, we are on track to make a final investment decision towards the end of this calendar year. Separately, we confirmed the opportunity to produce battery-grade manganese at Hermosa's Clark deposit and have signed multiple MOUs to potential customers for future potential supply into North American markets. We continue to unlock value from Hermosa's high prospective land package, recently returning our best copper results to date at the Peak Copper Prospect. We are also continuing investing in greenfields exploration options to discover our next generation of base metals mines. During the year, we consolidated our position in Argentina's high-prospective San Juan region, exercising our earn-in right to acquire a 50.1% interest in the Chita Valley copper prospect and acquiring a strategic interest in Aldebaran Resources. In closing, the outlook is positive as we continue to execute our strategy. We are well positioned to capitalize on the transition to a low-carbon world. Thank you. I'll now hand back to the operator for questions. Thank you. If you wish to ask a question, please press star, then one on your telephone keypad. If you wish to cancel your request, please press star two. If you're on a speakerphone, pick up your handset to ask a question. Your first question comes from Sylvain Brunet with BNP. Please go ahead. Good morning, Graham. Morning, team. My first question is on the net debt and, more precisely, on the moving parts in your working capital. Just if you could remind us what were the one-off effects and what we should expect in the next half. My second line of questions is on manganese. First, maybe to get a little bit more color around the comment you made about rail bottlenecks in Australia. And second, if you could give us your best estimate of the marginal costs in South Africa manganese for the market there, competitors at the moment, under current conditions, please. Thank you. Okay. So just the first one, Sylvain, I think it was debt and working capital, correct? The first bit broke up a little bit. Yeah. Yep. Okay. Because that was just the price to the market. Yeah. Sandy, you want to talk to those? Yeah, absolutely. So our free cash flow was affected by a number of one-off items and timing. So we did have an inventory build of $126 million over the course of the year, and it's predominantly related to the Brazil Aluminium restart, along with some temporary impacts at Mozal. We also had one-off portfolio impacts, including the Sierra Gorda pre-completion taxes and the royalty sales taxes, accounting for $147 million. And, the CMSA life extension payment, the Mozal final acquisition payment, and the Aldebaran acquisition payment, cumulatively just under $100 million on these portfolio items. We further had the lagged effect from prior period record profitability on cash tax payments. And we had a relatively modest distribution from Sierra Gorda, as cash flows have been directed to the debottlenecking project there... We do have a positive outlook for cash generation, looking into FY 2024, with an uplift in production, unit costs holding across the majority of our operations, and with the aluminum value chain, raw material prices moderating, we do expect to see support for our margins. Thanks, Sandy. So maybe for the next piece, look, Australia Manganese at the moment, in terms of life, has about 11 years on the resource and about 4.7 in the reserve. Of the reserve life, which is out to FY 2028, there's about three and a bit years on the current areas, and the Eastern Leases South projects adds approximately one and a half years. In the resource, we include about another half to one year for the Eastern Leases North, and then there's about 2 years for the southern areas for the work that we've done so far. There is still a large piece of southern leases that remain, if you like, not available for exploration. As potentially, as we get closer to the end of the mine life, that's something we'll continue to engage with the ALC on, particularly as, you know, so the Aboriginal Land Corporation, as they obviously get quite a strong check out of us at the moment. Look, if you talk about what does it look like in terms of break-even costs in South Africa for trucking, you know, you're probably—we always talk about in terms of the CIF 44%, you're probably looking at the spot price, you know, around $4.40 at the moment. At today's spot price, that's what the break-even would be, but it fluctuates generally between that $4-$5 a ton. The market itself, obviously a bit flat at the moment. Gabon was out in the first quarter, yet you still saw price declines. You know, there's not obviously a strong pull for alloy at the moment coming through from the steel industry, so that's something we'll continue to watch. We do have, obviously, potential to do more work at Wessels in terms of expandability, but that, to some degree, is constrained by how Transnet performs and how they develop in the next piece of their plan, if you like. Does that answer both of those questions? Yeah. Thanks, Graham. Maybe a follow-up on coking coal. Sorry, this is where I meant the rail logistic bottleneck you mentioned in Australia, if you could give us a little bit more color there, please. Our rail bottlenecks in rail for- Coking coal. Yeah, I mean, that's yeah, for coking coal, that's more an issue in Queensland than obviously is where we operate down Illawarra. You know, we've actually got some challenges we've spoken about today in Longwall 19A, which is resulting in a bigger offset than we expected around the swamp feature called 15A, which sort of adds a bit more time to the planned outage on that space. The met coal market in itself, you're right, has been tight in Queensland, if you like, over a period of time, but you've seen a lot of that rebound in the last quarter. In the last quarter, we saw about 7 million tons sort of come back in, which is about 19% increase quarter-on-quarter. The challenge, obviously, in Queensland is obviously you've always got the risk of, you know, the balance of what happens on the supply side through weather, industrial action, rail, et cetera. I think the positive that we see in met coal is obviously coming out later in the fourth quarter of this calendar year, typically coming out of monsoon season, where there's a little bit more stronger demand. Okay. Thank you. The next question comes from Myles Allsop with UBS. Please go ahead. Great. Thanks for making this call. It's very helpful. Just clarify on the net debt, first of all, to be a solid investment-grade credit rating, what sort of net debt threshold should we expect? You know, where does the ceiling kind of sit for... This is the first question. Sure, so I'll take that one. Look, we don't have a fixed number for that in terms of our investment-grade credit rating, but we do like to think about our net debt position ranging around the +$500 million to -$1 billion. In terms of the net cash to net debt range, that really informs our risk appetite around that, rather than necessarily a hard metric, where we consider a number of them that meet the criteria for credit rating agencies. Okay, so if net debt continues to creep up closer to that $1 billion level, should we assume that the first shoe to drop will be the buyback, and then it will be around CapEx? Or how should we think around the priorities of cash flow if, you know, net debt creeps up or if it creeps up? So I think the priorities, Miles, remain unchanged. So for us, it's always gonna be around the safe and reliable operation of our plant, the investment-grade, investment-grade credit rating. Then it's gonna be basically around the payout ratio. Then any excess cash, obviously, we look to basically return to our shareholders, or to put it to work, depending on what the most attractive returns are. From our perspective, you know, look, last year, obviously, particularly Alumar, Illawarra and Cannington had a negative impact on cash flow because of their performance, but we still feel we've got enough leaders in the portfolio and other things to continue to sort of drive that fight for capital. You know, what we do have got coming up near the end of the year is obviously the financial investment decision for Taylor, and that's something the board will have to decide when we get closer, where we put all our money, how much money we have. But it'll always be based on money we have in the bank, not prospective money. Okay. Maybe on the unit costs as well, I mean, I guess the new guidance for FY 2024 looks pretty punchy for Worsley and Illawarra stood out. You know, obviously, I've been looking at it quickly this morning, but, you know, those assets look increasingly marginal. I mean, as we look out into FY 2025 and beyond, is $290 the new norm for Worsley, or is the further kind of relief from raw material costs there. And with Illawarra at $140, and does that step down again in FY 2025? I think you talked about that before. And surely at this level, it's a pretty marginal asset, and just wondering how attached you are to Illawarra? Yeah. So look, let's maybe break that into components by first talking about Worsley. One of the big drivers in Worsley is obviously going to be, A, what your consumption of caustic is, i.e., the kilograms per ton, and the other one is gonna be price. For example, in FY 2023, you know, consumption was about 107 kilograms per ton. That falls to in 2024 to about 95. The caustic price, you know, is probably, if you look at FY 2023, the average caustic price in our part of the world is probably hovered around, including freight, around $659. You know, in FY 2024, we probably see that coming down. Actually, spot's considerably lower than that at the moment. Our cost numbers are built around $600 a ton of caustic, where it's probably trading closer at the moment to $330-$350. Spot is $330-$350? Around that mark is the way I'd be thinking about it. Okay. So there's significant downside risk to the Worsley unit cost guidance as we stand? I mean, the unit cost has more, if you like, for us to sort of come down in that space. So if you sort of did roughly the max of today's spot rate, if that applied for the whole year, you'd see our operating costs drop from probably about $290 to closer to the $270 a ton mark. I think it is important to also understand, Miles, that when we compare. You know, a lot of people are starting to compare our unit cost to what you see out of our competitors in the Southwest. They actually don't include freight and royalty in theirs. We do. To put it in perspective, the freight is roughly about $20 a ton. Okay, that's helpful. And Illawarra? Illawarra. So Illawarra, really, if you-- we talked about earlier 19A. So what we are definitely seeing at the moment is with 19A, that's the next longwall move that we had planned to occur in Dendrobium. That longwall move now was origi-- well, was originally scheduled to be about 32 days. When we've got the latest Subsidence Management Plan approval back, if you like, from the regulators, they're asking us to push the setback from what's called swamp 15A, from 61 meters to 121 meters, to minimize the risk of subsidence and hence impact on the actual swamp. As a result, that means that that outage for the longwall goes from 32 days to 103 days. So it does have a negative impact on bringing our production guidance down. Large business, which is largely fixed cost base. That's why you're seeing, if you like, in FY 2024 in particular, there is a little bit of an increase in the cost. That's predominantly being driven by that. What we do talk about, though, is we do the other work at Appin, is in terms of we're investing obviously in things like the shields, coal clearance, ventilation. And we have elevated capital for a couple of years. We do ultimately see the single longwall reducing complexity, reducing the delays that happen, longer panels, reduced development, and as a consequence there, we'd see the unit cost sort of coming much more down to a realistic level about what we'd expect to see. So at the moment, we've given a unit cost guidance, roughly about $140 a ton for FY 2024. As you get back to more normalized levels between 25 and probably 27-ish, 28 of about 5.5 million tons, you'd expect to see unit cost guidance more around the 110-115 kind of mark. Okay, that's helpful. Maybe just a last question as well on Alumar. It seems to be taking a lot, lot, lot longer to ramp up the smelter than originally planned. I know it's not kind of operated by yourself, but what's going wrong with Alumar and, you know, how's it in terms of kind of marginal, kind of cost, position, and, you know, is it... With hindsight, was it the right decision to restart the smelter, I guess, is the proper question? An exercise recently about was it a good or a bad decision to restart the smelter? Because to your point, it has been an under impressive performance in terms of the restart. The answer for that is yes, when we've done the review on that quite easily. If you recall, Alcoa, as the operator, started the actual smelter restart in June 2021, and, you know, it was actually put into care and maintenance in 2015. I guess a couple of key issues to date, in the early days, we were seeing a lot of issues around the alumina quality, the bath and compressor, and then we had a number of the pots were actually considerably worse than they had anticipated, which was causing significant early failures. That issue was sort of worked on. Where are we today as we look at the ramp up? The ramp up, probably the big constraint at the moment is around crane availability. They've got one operating at around 70%. It probably needs to be about 90%. At 70%, you see an impact on anode changeouts, metal tapping, and the pot restart program. Now, in saying that, again, we're very clear, longer term, we absolutely see the value generation from this. You know, line one was completed in August 2022. Line two is about 65% ramped up, and we got to the completion actually in March 2023. And we started the ramp up in line three in November, which is currently about 55%. So overall, we have about 500 pots out of 710 in operation. ... Okay. I'll hang back. I'll come back for another question, but thanks. To be very clear, it's a disappointing performance on the restart. We, you know, that's something that we've obviously given feedback to Alcoa on. Yeah. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. The next question comes from Alexander Pearce with BMO. Please go ahead. Great. Thank you. Hi, Graham. Maybe could you provide an update on the power situation in South Africa and maybe just a little bit more color on some of the alternative power options? Obviously, you flagged you're looking at before. Thanks. Yeah, look, absolutely. I mean, we've got a current power block that's in place to 2031. When you look at where we are today, you know, that is predominantly allocated in terms of thermal coal being the primary source feed. What we have started to do is have some engagements with Eskom around, and we've got an MOU, a non-binding MOU in place to look at the use, potentially for a couple of years, of some nuclear source power. And that really is to test what that would look like, but also to make sure we have market access. As you see Europe, and particularly car manufacturers, push to that, if you like, lower carbon aluminum. In the meantime, we've been doing a lot of work over the last couple of years to technically prove that renewables via wind, via solar, can deliver the power that we actually need. But those studies also show that that market needs time to develop in South Africa and to be built out. So the concept would be that nuclear, in its early days, a lot of work to go, that nuclear could fill some of that gap to the renewables or available level at an affordable level. To be very clear, we've got to 2035, which is when we're committed to halving our operational emissions from our climate change targets. For us, it's more about the short term, how you get significant access to the European market. Thank you. Next question comes from Ian Rossouw with Barclays. Please go ahead. Hi, Ian, you there? Hi, sorry. Hi, Graham. Just to follow up on one of the questions in the previous call about longer term costs in alumina, Worsley versus in Brazil. You, you mentioned obviously about the bauxite sort of cost differentials and also caustic soda costs. How long should we expect these to start to converge? I think you've mentioned the number of $10 a ton. I wasn't sure if that was how far out that was in terms of expectations. Yeah, so I'd probably think that $10 a ton convergence around that mark, you'd start to see in FY 2024. Again, one of the big differentials there, for example, caustic price, the US Gulf, you know, that sort of in FY 2023 was about $722 a ton, and the consumption at Alumar was about 94. Next year, as you move into a better part of the mine plan, that consumption per kilogram, a ton, goes from 94 down to 78. And the spot price at the moment for caustic in, you know, the Gulf is now probably about $465. When we cut the budget numbers and the guidance here, is about $665. The other thing you're naturally getting over time at Brazil Alumar, on the refinery side, is we've got a debottlenecking project in place that continues to creep up volumes to FY 25. Okay, thanks. And just if you do the same exercise for Brazil, in applying spots, what would that cost be versus the guidance of, was it $382? Off the top of my head, I haven't got it in front of us, but my guess is you, you've probably got a bigger differential than what we've actually... Well, you've probably got a similar kind of differential, somewhere around $10-$15 a ton, if I just did the math quickly. But that's me doing it really quickly in my head, Ian. Okay. All right, thanks. I'll follow up post the call. Thank you. Thank you. There are no further questions at this time. I'll now hand it back to Graham for closing remarks. Look, thanks, everyone. Appreciate you taking the time today. A couple of closing points is, one, look, you know, our outlook continues to be positive. Our strategy is continued to actually help us evolve our portfolio to get more exposure to those base metals, compared to when we started the organization. You know, this year is an exciting year for us. We have a number of projects that will sort of go to our board for approval, around Taylor being one, and obviously some of the projects to help grow our copper position at Sierra Gorda. And on top of that, we have a number, if you like, development opportunities in the business around exploration and the broader portfolio. But look, thanks everyone today for your questions and support, and have a safe day.