TIDMS32
RNS Number : 3935R
South32 Limited
26 October 2023
26 October 2023
South32 Limited
(Incorporated in Australia under the Corporations Act 2001
(Cth))
(ACN 093 732 597)
ASX / LSE / JSE Share Code: S32; ADR: SOUHY
ISIN: AU000000S320
south32.net
SOUTH32 LIMITED
2023 ANNUAL GENERAL MEETING
26 OCTOBER 2023
CHAIR AND CEO ADDRESSES
South32 Limited (ASX / LSE / JSE: S32; ADR: SOUHY) (South32) ,
in accordance with ASX Listing Rule 3.13.3, today releases the
addresses to shareholders to be given by the Chair and the Chief
Executive Officer at South32's hybrid Annual General Meeting.
A webcast of the event will be available to view live via the
following link ( https://meetnow.global/S32AGM2023 ). A recording
of the session will be made available on the South32 website
following its completion.
About us
South32 is a globally diversified mining and metals company. Our
purpose is to make a difference by developing natural resources,
improving people's lives now and for generations to come. We are
trusted by our owners and partners to realise the potential of
their resources. We produce commodities including bauxite, alumina,
aluminium, copper, silver, lead, zinc, nickel, metallurgical coal
and manganese from our operations in Australia, Southern Africa and
South America. With a focus on growing our base metals exposure, we
also have two development options in North America and several
partnerships with junior explorers around the world .
Investor Relations
------------------------------- -----------------------------
Ben Baker
T +61 8 9324 9363
M +61 403 763 086
E Ben.Baker@south32.net
Media Relations
------------------------------- -----------------------------
Jamie Macdonald Miles Godfrey
T +61 8 9324 9000 T +61 8 9324 9000
M +61 408 925 140 M +61 415 325 906
E Jamie.Macdonald@south32.net E Miles.Godfrey@south32.net
Further information on South32 can be found at www.south32.net
.
Approved for release to the market by Graham Kerr, Chief
Executive Officer
JSE Sponsor: The Standard Bank of South Africa Limited
26 October 2023
SOUTH32 LIMITED
2023 Annual General Meeting
26 October 2023
Addresses by Karen Wood, Chair and
Graham Kerr, Chief Executive Officer
The Chair acknowledged the Whadjuk people of the Noongar nation,
introduced the Non-Executive Directors and noted the attendance of
the auditor, and the returning officer for the meeting and
scrutineer of the vote.
The Company Secretary discussed the meeting procedures including
the management of questions and voting.
Karen Wood, Chair
It is a pleasure always to be here in Perth for the South32
Annual General Meeting. Whether you are joining us in person or
online from another location we greatly appreciate your
participation.
We have made substantial progress in the past financial year and
we have many reasons to be optimistic about the future. However, I
want to acknowledge that despite our continuing strong focus on
safety improvement across the Group, our safety performance is
still not where we need it to be.
During the last financial year, we were profoundly shocked and
saddened by the loss of two colleagues. Mr Cristovao Alberto Tonela
and Mr Alfredo Francisco Domingos Joao were fatally injured while
undertaking maintenance work at Mozal Aluminium in November. On
behalf of the Board, I express my sincere and deepest sympathies to
their families, friends and their colleagues. This incident was
devastating for everyone at South32 and has challenged each of us
to ask ourselves every day whether our decisions and actions
guarantee our own safety and that of our colleagues.
We have already commenced our journey to fundamentally shift our
safety performance and deliver the cultural transformation required
for sustained improvement, recognising that this will take time and
needs to result in sustained improvement. The tragic loss of our
colleagues at Mozal Aluminium has demonstrated why this work is of
utmost importance and strengthened our resolve to eliminate
fatalities and serious injuries from our business.
I want to assure you that I, as the South32 Chair, your Board,
Graham and the Lead Team, and everyone at South32 is focused on
improving our safety performance. We will never be truly successful
until each and every person that comes to work at South32 goes home
to their loved ones safe and well each day.
Graham will shortly provide a more detailed summary of our
financial and operating results. However, I'm pleased to say that
we delivered strong production growth in aluminium and base metals
during the year. We set annual production records at three of our
operations and delivered one of our largest underlying profit
results to date, with Underlying earnings before interest, tax,
depreciation, and amortisation of US$2.5billion. This was achieved
despite lower commodity prices, industry-wide inflationary
pressures and a backdrop of volatile economic conditions and
geopolitical tensions.
During FY23 we returned US$1.2 billion to shareholders,
including fully-franked ordinary and special dividends, and via our
on-market share buy-back. Reflecting our disciplined approach to
capital management, your Board has resolved to further expand our
capital management program to US$2.4 billion, leaving US$133
million to be returned by 1 March 2024.
Our people are fundamental to our success. Your Board and the
Lead Team are responsible for shaping our safe, values-based and
high-performance organisational culture. One of respect for our
people that supports a positive employee experience and productive
workplace. Our workplace culture and approach to inclusion and
diversity are critical differentiators that help improve our
ability to attract and retain the diverse talent we need to take
our business forward.
To underpin this work, each year we set measurable diversity and
inclusion objectives. Our gender targets are based on the 40:40
Vision, led by HESTA, while representation of Black People is based
on the South African Broad Based Black Economic Empowerment Codes.
The 40:40 vision aims to achieve gender balance in executive
leadership across all ASX300 companies by 2030.
And I'm pleased to say that during the year we achieved that
target, with representation of women on our Lead Team increasing to
50 per cent from 37.5 per cent a year prior.
Just as we recognise that diversity and inclusion strengthens
our workforce, we also believe that diversity is one of your
Board's strengths. Our Directors represent a broad cultural, ethnic
background and geographic mix. In May we were delighted to welcome
Mr Carlos Mesquita and Ms Jane Nelson as independent Non-Executive
Directors, both based in the Americas. Carlos and Jane have already
visited a number of our operations around the world and met with
our people and with some of the communities where we do our work.
Their appointments further enhance the Board's broad range of
skills and experience, particularly in major projects, operations
and sustainability and we are honoured to have them join us.
We farewelled Mr Guy Lansdown who resigned from the Board in May
to concentrate on his philanthropic activities in Mexico. I would
like to thank Guy for his valuable contribution during his tenure
as we expanded our presence in the Americas.
I said earlier that we have many reasons to be optimistic for
the future. In the eight years since our formation, South32's
portfolio has undergone a major transformation to become a truly
global, diversified producer of commodities critical to a
low-carbon world. We have identified and executed opportunities to
sustainably reshape our business and this transformation process
remains a fundamental part of our strategy. The changes we have
made to date - and the investments we are continuing to make in our
portfolio - are expected to support significant production
growth.
We continue to be excited by our Hermosa project in Arizona,
which presents a significant opportunity to sustainably produce
commodities critical for a low-carbon future and for decades to
come. During the year, the United States Government enacted the
Inflation Reduction Act, which aims to increase investment in clean
energy, offering tax incentives for domestic electric battery
vehicle production and supply chains.
The Hermosa project supports the anticipated growth in clean
energy, and is currently the only advanced project in the United
States that could supply two federally designated critical minerals
- zinc and manganese. Our ambition is for Hermosa to be our first
next generation mine with the potential to deliver improved safety
and productivity while minimising our environmental impact and
making a significant contribution to the local community.
During the year, we recorded a non-cash impairment expense in
relation to Hermosa's Taylor Deposit, as a result of delays
relating to COVID-19 and inflationary market conditions. Despite
the impairment, we continue to see substantial opportunity at
Hermosa. We are progressing Hermosa's Taylor and Clark Deposits
towards development, with a final investment decision on Taylor
expected in the March 2024 quarter.
Improving our portfolio, producing commodities that support the
transition to a low carbon future, is one way in which we are
responding to the opportunities and risks presented by climate
change. We support the goals of the Paris Agreement and have a
long-term goal to achieve net zero greenhouse gas emissions by
2050, inclusive of Scope 1, 2 and 3 emissions. We also have a
medium-term target to halve our operational greenhouse gas
emissions (that is Scope 1 and 2) by 2035 from our FY21
baseline.
In September 2022, we published our first Climate Change Action
Plan which included a new Scope 3 goal. This was the subject of a
non-binding advisory resolution at our Annual General Meeting last
year and we received strong shareholder support for our plan - with
89.6 per cent of votes cast in favour of the resolution.
We are grateful for this strong vote of confidence in our
approach, and I thank all those shareholders and others who
invested time in meeting with us in the lead up to the finalisation
of the Plan and then in taking time to review it. Our team has
engaged with some of the shareholders who voted against the plan to
understand areas they would like to see improved, and this feedback
is taken into consideration by your Board in determining our
approach to climate change going forward.
During the year we made progress against key elements of the
Plan, including updating our 1.5degC scenario to stress-test the
potential impacts of climate change on our business. We also
progressed our decarbonisation initiatives with a focus on
operations which account for the majority of our greenhouse gas
emissions -Hillside Aluminium, Illawarra Metallurgical Coal,
Worsley Alumina and Mozal Aluminium. Graham will talk to some of
these initiatives in a little more detail.
Your Board oversees climate change as a strategic risk and a
material governance issue, and we will continue to provide annual
updates on our progress against our Climate Change Action Plan in
our Sustainable Development Report.
Much has been said in recent weeks about the support offered by
some Australian companies to the referendum campaign to enshrine a
First Nations Voice to Parliament in the Australian Constitution.
Today's meeting gives me an opportunity to talk about why South32
supported a Voice to Parliament.
In 2020, we announced our support for the Uluru Statement from
the Heart as the pathway towards reconciliation put forward by
Australia's First Nations Peoples. This pathway included a Voice to
Parliament as the form of recognition that was sought following the
Uluru Statement.
As shareholders know, we mine on indigenous lands and formed our
view to support the proposed change to the Constitution after
consulting with Traditional Owners of those lands. It is in our
company's best interests that the communities that support our
operations are thriving; that community members have improved
health and education outcomes, for example, and are safe for
all.
It is our view, that hearing from First Nations Peoples on
decisions that impact them - including how monies are spent - will
lead to better outcomes. Our support therefore is entirely
consistent with our duty to act in the best interests of our
company. We will continue the work we do each day, including
through our Reconciliation Action Plan to support initiatives that
address the disadvantage faced by First Nations People both in
Australia and around the world.
In relation to biodiversity, we recognise the importance of
minimising our impact on ecosystems and aim to achieve no net loss
for all new projects and major expansions. It is our responsibility
to minimise the impacts to the environment and to rehabilitate land
disturbed by our activities.
At South32, we participate in working groups and other forums,
including the Taskforce on Nature-related Financial Disclosures, to
help develop and implement global standards and initiatives to meet
emerging expectations in relation to biodiversity disclosure.
During financial year 2023, we participated in a pilot study and
provided feedback on the learnings and existing barriers to
implementing the TNFD Framework in the Australian context. We also
updated our biodiversity risk and opportunity screening assessment
at GEMCO, Illawarra Metallurgical Coal, Worsley Alumina and the
Hermosa project considering both direct operational aspects as well
as pressures on the surrounding bioregions.
Our remaining operations are scheduled to complete a
biodiversity risk and opportunity screening assessment in FY24. We
plan to use the outcomes of that process to update our operational
and project risk profiles and identify opportunities to collaborate
and promote improved land and biodiversity outcomes within the
bioregions.
During the year, we also updated our approach to tailings
management, in alignment with the Global Industry Standard on
Tailings Management requirements. Meeting the requirements of the
Standard on Tailings Management is a key focus for South32 and we
actively support improvements in tailings management through the
International Council on Mining and Metals, industry conferences
and research projects.
Your Board is pleased with the progress that has been made in
FY23 while acknowledging that we must continue our critical work to
improve our safety performance. In the year ahead we will continue
to work hard to transform our portfolio to meet the global demand
for the commodities critical to a low-carbon future. On behalf of
the Board, I would like to thank our shareholders for their ongoing
support and reiterate our thanks to our people for their hard work
and commitment throughout the year.
I will now hand over to Graham.
Graham Kerr, Chief Executive Officer
Thank you Karen.
I also acknowledge the Traditional Owners of the land in which
we meet, the Whadjuk people of the Noongar Nation and pay my
respects to their elders - past and present.
As a significant employer and investor in Australia, we
recognise the positive impact we can have on reconciliation. As
Karen said, we have supported the Uluru Statement from the Heart, a
key component of which is the development of an Aboriginal and
Torres Strait Islander Voice to Parliament, since 2020. We saw The
Voice as a way to move reconciliation forward and improve outcomes
for Indigenous Australians and viewed it as a request from
Indigenous Australians to non-Indigenous Australians to advise on
matters impacting them. Following the referendum, we are providing
support and information to our people and our communities. We
remain committed to reconciliation and will continue to work with
all our Indigenous stakeholders in the areas where we operate and
seek their input on matters relating to them.
Thank you all for joining us here today.
As we look back on a year in which our teams across the world
performed strongly in a challenging economic climate and we
continued to make inroads in our pivot towards commodities critical
to a low-carbon future. I certainly share Karen's optimism about
the future of our business.
I'd like to begin by talking about safety. As Karen said, we
were devastated by the loss of two of our colleagues, Tonela and
Alfredo, who were fatally injured in an incident while undertaking
maintenance work on a raising girder at Mozal Aluminium in November
last year.
The incident had a profound impact on me personally and impacted
everyone across our business. Put simply, we must do better when it
comes to safety and we owe it to everyone who has been affected by
the deaths of Tonela and Alfredo to learn from this tragic
event.
Following the incident, we implemented additional controls,
including exclusion zones and controlled access to all other
raising girders at Mozal Aluminium and Hillside Aluminium.
Learnings were shared across our business, and immediate actions
were taken where required. We also commenced work with the original
equipment manufacturer of the raising girder to identify further
safety improvements which could be made, including replacing
critical components in all girders.
During the year, we continued our work to fundamentally shift
our safety performance, including the implementation of our
multi-year Safety Improvement Program. The program aims to shift
mindsets through leadership, empower our people, reduce risks with
effective controls, and improve systems and metrics.
Our approach to safety includes our 'Lead Safely Every Day'
program which supports our leaders to engage their teams on our
'safety guarantee'. Our 'safety guarantee' is our internal approach
where each of us stop and ask ourselves whether we can guarantee
our own safety and that of our colleagues before undertaking each
task. It is designed to create a sense of 'chronic unease' around
safety, so we can enhance our safety culture. We will continue with
our work to deliver a step-change in our safety performance in the
year ahead. Everyone has the right to go home safe and well at the
end of every shift.
In addition to the work we are doing to improve physical safety,
we recognise the vital importance of creating, and maintaining,
workplaces that are psychologically safe. We're working to build an
inclusive and diverse workforce that is representative of the
countries and communities where we operate. A culture where
everyone's unique differences are valued and celebrated and where
our people are empowered and supported to speak up if they feel
unsafe in any way.
For the first time in our history, in 2023 we exceeded 20 per
cent representation of women across our total workforce. In South
Africa, we are working to improve in our representation of Black
People, and in FY23 we achieved 86.9 per cent across our South
Africa workforce, exceeding our target of 85 per cent. We also
achieved 55.3 per cent of Black People in management roles in South
Africa and will continue to work to improve on this measurable
objective, noting we did not reach our target this year. We know
there is more work to do to create a workforce that is more
inclusive, diverse and representative of the communities where we
operate. But I'm confident we have built the right foundations to
continue to shift the dial in the future. As our CEO, I'm committed
to championing an inclusive culture across the organisation and
delivering on the measurable objectives that we have set.
With the ongoing uncertainty around China stimulus and the
impact of anti-inflationary policies on the developed world, the
macroeconomic environment remained volatile throughout the year.
Despite these challenges, our teams have delivered strong
production growth during the year and we continued to position
ourselves well to respond to the demands of the global energy
transition.
We achieved annual production records at three of our operations
- Hillside Aluminium, Australia Manganese and South Africa
Manganese. Aluminium production increased by 14 per cent, base
metals by 17 per cent and manganese by 4 per cent. These strong
results were underpinned by our recent portfolio improvements in
copper and low-carbon aluminium. This growth, coupled with our
focus on cost efficiencies, has resulted in one of our largest
underlying financial results to date, with underlying EBITDA of
$2.53 billion..
Our balance sheet remains strong, and we finished the year with
net debt of US$483 million, as we made record returns to
shareholders and invested to increase our future production of
commodities critical to a low-carbon world.
Looking ahead, our portfolio improvements are expected to
deliver further growth in commodities critical for a low-carbon
future. We expect to increase our low-carbon aluminium production
by 12 per cent in FY24 as Brazil Aluminium continues to ramp up,
and we increase volumes at Mozal Aluminium. Sierra Gorda is
expected to increase its future copper production, as a result of
the plant de-bottlenecking project and it has advanced studies for
the fourth grinding line expansion, which could lift copper
throughput by 15-20 per cent.
During the year, we made significant progress on our Hermosa
project in Arizona. As Karen mentioned, Hermosa is the only
advanced project in the United States that could supply two
federally designated critical minerals, zinc and manganese -
essential minerals for a clean energy future and in May, it was
confirmed as the first mining project in the US to be added to the
FAST-41 permitting process, underlining its potential to provide
localised supply of critical minerals.
Hermosa's zinc-lead-silver Taylor deposit has demonstrated
significant potential as an attractive, long-life base metals
development option. We expect to complete the Taylor feasibility
study in the December 2023 quarter, and announce a final investment
decision in the March 2024 quarter.
Separately, Hermosa's Clark deposit is ideally positioned to
supply battery-grade manganese to the North American electric
vehicle supply chain and we have signed multiple non-binding,
non-exclusive MOUs with potential customers for future potential
supply into North American markets. We are also seeing some
exciting exploration across Hermosa's regional land package, with
recent drilling at the Peake prospect delivering our best copper
exploration results to date.
In July this year, we recorded a non-cash impairment in relation
to Hermosa's Taylor Deposit. This was driven by delays related to
COVID-19, dewatering requirements to allow access to the ore body,
and inflationary pressures for key inputs such as steel, cement,
and electrical components.
We continue to see substantial opportunity to unlock additional
value across Taylor, Clark and our highly prospective regional
exploration package at Hermosa - and that optionality is not
included in the impairment assessment.
We are continuing to invest to discover our next generation of
base metals mines and we have more than 25 exploration programs
underway in targeted regions including Alaska, Argentina and
Australia.
During the year, we consolidated our position in Argentina's
highly prospective San Juan region, exercising our earn-in right to
acquire a 50.1 per cent interest in the Chita Valley copper
prospect and we acquired a strategic interest in Aldebaran
Resources, owner of the Altar copper project, also in the San Juan
region.
Turning now to climate change. As Karen mentioned, we published
our first Climate Change Action Plan in September last year, and
were pleased to see our shareholders strongly supported the Plan at
last year's AGM. Our work to deliver on our climate change
commitments continued during the year.
At Worsley Alumina, we commenced the conversion of the first
onsite boiler from coal to natural gas, and that work is now
complete. Work on conversion of the second boiler is expected to
commence in FY24. The use of natural gas at Worsley Alumina remains
an interim step, as we pursue longer-term energy transition
solutions focused on electrification and renewable energy.
We commenced detailed design and execution planning for a
commercial scale trial of ventilation air methane mitigator, or
VAMMIT, technology at Illawarra Metallurgical Coal. This technology
has potential to deliver significant advancements in emissions
reduction technology at underground coal mines.
At Sierra Gorda, we transitioned to an agreement for cost
efficient 100 per cent renewable electricity supply and at Hillside
Aluminium, we deployed the AP3XLE energy efficiency technology
which we expect will deliver a reduction in greenhouse gas
emissions in the near term.
Hillside Aluminium's longer-term decarbonisation is tied to the
transition to a lower-carbon energy source and there's no doubt
this represents a challenge, particularly when it comes to
developing large-scale renewable and low-carbon energy sources in
South Africa. We will continue to investigate a range of potential
solutions, including acquiring energy attributes, to reduce
Hillside's emissions intensity in the near term and we have signed
a non-binding Memorandum of Understanding with Eskom to explore the
potential to enter into a pilot agreement to purchase energy
attributes associated with the electricity generated at Eskom's
Koeberg Nuclear Power Station. Hillside Aluminium plays an
important role in South Africa, directly and indirectly supporting
more than 31,000 jobs and directly contributing ZAR9.9 billion to
South Africa's GDP.
As part of our transition away from carbon intensive energy, we
remain mindful of the need to help support a fair and just
transition for the smelter's workforce, local communities and the
broader South African economy. I'm sure you've heard me say it
before - I fundamentally believe that when mining is done right, it
can make a big difference in people's lives.
With more than 9,000 employees and a presence in six continents,
we are proud to create opportunities for our people and the
communities where we operate so they can benefit from the
development of natural resources. Our social investment program
focuses on education and leadership, economic participation, good
health and social wellbeing, and natural resource resilience, and
we were proud to invest US$27.7 million into our local communities
during the year.
In FY23 we also spent more than US$1 billion on local suppliers
across our operations - an increase of US$111 million compared to
the previous year, and we paid more than US$920 million in
corporate income tax and US$312 million in royalties, which help
fund essential infrastructure and services within the communities
in which we operate.
As we progress into FY24, the outlook for our business is
positive. I'd like to thank our teams around the world for their
hard work and contribution during the year. We are well positioned
to capitalise on the transition to a low-carbon world, with our
portfolio geared towards meeting demand for commodities that will
play a key role in the global energy transition and strong
potential for further growth and value from our pipeline of
high-quality development options and exploration partnerships.
Thank you for joining us today and for your ongoing support.
I'll now hand back to our Chair.
The Chair then conducted the formal items of business.
Approved for release to the market by Graham Kerr, Chief
Executive Officer
JSE Sponsor: The Standard Bank of South Africa Limited
26 October 2023
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