REG - South32 Limited - 2022 AGM - Chair and CEO Addresses

South32Announcement

27/10/2022 07:30

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RNS Number : 3125E  South32 Limited  27 October 2022

 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

27 October 2022

 

 

 

SOUTH32 LIMITED

2022 ANNUAL GENERAL MEETING

27 OCTOBER 2022

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/S32AGM2022 (https://meetnow.global/S32AGM2022) ).
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
(file:///S%3A/Company%20Secretary/DISCLOSURE/EXCHANGE%20RELEASES%20FINAL/2022%2008%2025d%20FY%20RESULTS%20PRESENTATION/www.south32.net)
.

Approved for release to the market by Graham Kerr, Chief Executive Officer

JSE Sponsor: The Standard Bank of South Africa Limited

27 October 2022

 

SOUTH32 LIMITED

2022 Annual General Meeting

27 October 2022

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 to be back in Perth for this meeting.

 

I am conscious that we have people joining us online from around the country
and the world and I thank you for making the effort to participate.

 

While we achieved a lot during the last financial year, we cannot overlook the
fact that during this last year we lost one of our contractors who was working
at our Wessels Mine in South Africa. Mr Desmin Mienies was fatally injured in
November last year while performing electrical work on site.

 

On behalf of the Board, I express my deepest sympathies to Mr Mienies' family,
friends and colleagues.

 

The Board has reviewed the findings of the investigation following Mr Mienies'
death and been briefed on the steps taken to prevent a similar incident
occurring in the future.

 

Improving our safety performance is an ongoing focus for the Board, our Lead
Team and entire business.

 

Graham will speak to some of the work we have underway to achieve this
important goal.

 

To meet our commitment that each one of our colleagues goes home safe and well
at the end of every shift, we are also focused on supporting our people to
feel included and respected at work.

 

We strive to ensure that any work for South32 is undertaken in a way that is
consistent with our values and Code of Business Conduct.  As you would
expect, we have learned what we can from recent reports into workplace
misconduct and sexual harassment in our industry.

 

These learnings have guided us as we identify and respond to the risk factors
for harassment, just as we do for other safety risks.

 

At the heart of our work is a commitment to foster a culture where our people
feel safe to speak up when they are the victim of, or a witness to, an
incident of misconduct, whatever form it takes. The Board, working with the
Lead Team, sets the direction and tone for workplace culture.

 

We are working to embed inclusion and diversity into everything we do, through
the implementation of our Inclusion and Diversity Action Plan.

 

A critical part of our Action Plan has been the development of our new
internal inclusion and diversity standard, which sets minimum requirements for
all elements of people management.

 

From this financial year, our measurable objectives include actions targeted
at improving inclusion and diversity in our workplace, in addition to
measuring the representation of women and Black People in our workforce.

 

We are a signatory to the 40:40 Vision initiative led by the Health Employees
Superannuation Trust Australia to achieve gender balance in executive
leadership across all ASX300 companies by 2030. We have broadened our
objectives for this year to align our female representation targets at all
levels of the organisation to the 40:40 Vision by 2029.

 

Turning now to our operating and financial results.

 

We achieved strong realised prices for our commodities this year despite a
challenging global environment which included market volatility and the tragic
conflict in Ukraine.

 

Our operations performed well, delivering Underlying earnings before interest,
tax, depreciation and amortisation of 4.8 billion US dollars and free cash
flow of 2.6 billion US dollars.

 

The Group's statutory profit after tax was 2.7 billion US dollars.

 

We ended the financial year with a net cash balance of 538 million US dollars,
having returned 1.3 billion US dollars to our shareholders. This included
dividends totalling 1.2 billion US dollars and 128 million US dollars returned
to shareholders as part of our ongoing capital management program.

 

We further expanded our capital management program by 156 million to 2.3
billion US dollars, leaving 250 million US dollars to be returned by September
2023.

 

Our strong financial performance during Financial Year 2022 and disciplined
approach to capital allocation have supported investment in our business to
improve our portfolio by increasing our exposure to the commodities critical
to the transition to a low-carbon world.   This is a fundamental part of our
strategy to identify and pursue opportunities to sustainably reshape our
business for the future.

 

During the year we acquired a 45 per cent stake in the Sierra Gorda copper
mine in Chile. We increased our shareholdings in Mozal Aluminium in Mozambique
and the Mineração Rio do Norte bauxite mine in Brazil. We participated in
the restart of the Alumar aluminium smelter, also in Brazil.

 

All are significant steps for our business.

 

The Board visited Sierra Gorda in June as we resumed our program of site
visits following a two-year pause due to COVID-19.

 

Graham and I also visited our Hermosa project where a pre-feasibility study
for the Taylor Deposit was completed during the year, demonstrating potential
for a sustainable, low-cost operation producing zinc, lead and silver.

 

We have commenced the feasibility study on Taylor, ahead of a final investment
decision, expected mid next year.

 

Graham and his team are also reviewing options to potentially accelerate the
development pathway for the Clark deposit at Hermosa, where there is potential
to produce battery-grade manganese for rapidly growing domestic markets in the
United States.

 

The Board also visited Worsley Alumina which, along with Hillside Aluminium,
Mozal Aluminium and Illawarra Metallurgical Coal is an important focus of our
efforts to achieve material reductions in operational greenhouse gas
emissions.

 

Delivering on our climate change commitments is fundamental to our purpose -
we cannot make a difference by using our natural resources to improve people's
lives now and for generations to come if we do not address the risks that
climate change presents.

 

As many of you will have seen we have now published our Climate Change Action
Plan as part of our Sustainable Development Report. This Plan will be put to
you today for your consideration.

 

The Plan brings together the work that has been underway since South32 was
formed in 2015 and sets out our approach, progress to date and the actions we
are taking to address the risks and opportunities that climate change
presents.

 

It describes how we are working in collaboration with our stakeholders to
prepare our business for the global energy transition, meet our climate change
commitments and achieve a just transition for our people, our business and our
communities.

 

Our approach to climate change is focused on four key areas, all of which are
integrated into our strategy and are overseen by the Board.

 

The first is reshaping our portfolio to the commodities that are critical in
the transition to a low-carbon world.

 

Second, is decarbonising our operations, with a focus on the four operations
within our portfolio which account for the majority of our emissions profile.

 

Third, is understanding and responding to the potential physical impacts of
climate change on our business to build operational resilience.

 

The inclusion of our approach to physical climate risk is a key differentiator
of our Plan.

 

And fourth, working with others to innovate and address shared challenges
across industry, and to decarbonise the value chain.

 

Recognising that we have a critical role to play in contributing to the
decarbonisation of the value chain, in partnership with our customers and
suppliers, the Plan includes a new goal of net zero Scope 3 greenhouse gas
emissions by 2050.

 

This follows our goal of achieving net zero operational emissions by 2050, and
our target to halve our operational emissions, that is Scope 1 and 2, by 2035.

 

Although we do not have direct operational control over activities in the
value chain, we are committed to proactively collaborating with our suppliers,
customers, industry peers and other value chain partners to make a meaningful
contribution to the actions and innovations required to reduce Scope 3
emissions.

 

The Plan also includes a new commitment that we will not develop or invest in
greenfield metallurgical coal projects.

 

At this stage we have not set a short-term emissions reduction target.

 

I want to assure you that this does not ignore the importance of short-term
actions to reduce emissions or indeed the interest our shareholders have in
measuring our progress.  Rather, it reflects the technical, commercial and
social complexities of some of our large emitting operations.

 

Your board will only set a short-term target when we are confident we can
commit to a meaningful reduction that we believe we can deliver within the
nominated time period.

 

This is not to say that we are not very focussed on short term emissions
reduction initiatives. Graham will go into some of the considerations, and our
progress in more detail shortly.

 

Your board regularly assesses progress against our climate change commitments
and as you know that progress is tied to remuneration at Lead Team level and
below. We report on this progress annually.

 

On the issue of biodiversity, we recognise the importance of protecting
ecosystems and have committed to no net loss for all new projects and major
expansions.

 

We understand that it is our responsibility to minimise the impacts of land
clearing and to rehabilitate land disturbed by our activities.

 

We are committed to supporting meaningful and sustainable initiatives that
address key threats and promote improved conservation outcomes within the
bioregions where we operate.

 

Just as we have progressed our work to improve our environmental performance,
the same is also true for our social performance.

 

This year we evolved our approach to partnering with our communities to more
clearly define how we can contribute societal value through our broader social
contribution, including economic development, planning, respecting human
rights and our approach to cultural heritage.

 

Many of our operations and projects intersect areas of cultural significance
and we understand we have a critical role to play in preserving cultural
heritage.

 

During the year, we completed cultural heritage reviews for our operations in
the Americas and southern Africa, following a similar review of our Australian
operations in 2021.

 

The reviews inform the ongoing development of our approach to engagement with
Indigenous, traditional and tribal peoples.

 

As a significant employer and investor in Australia, we recognise the positive
impact we can have on reconciliation.

 

Our Innovate Reconciliation Action Plan has been developed to create a
foundation for improvement in areas such as Indigenous employment, Indigenous
procurement, cultural awareness, and maintaining strong relationships with
Aboriginal and Torres Strait Islander Peoples in the communities where we
operate.

 

We continue to review progress on our Innovate Reconciliation Action Plan to
identify opportunities for improvement.

 

We support the Uluru Statement from the Heart as the pathway towards
reconciliation put forward by Australia's First Nations people to enshrine the
voice of First Nations into the Australian constitution.

 

Because of the work we do and the impact it has on communities around
Australia, we believe it is important that we use our voice to support this
act of reconciliation, which can only foster deeper understanding and more
constructive relationships between Aboriginal and Torres Strait Islander
Peoples and non-Indigenous Australians.

 

We support the opportunity for all Australians to participate in this act of
reconciliation.

 

Over the past seven years, South32 has undergone a major transformation to
become a global, diversified producer of the commodities critical to a
low-carbon future.

 

This transformational work would not have been possible without the strength
of our underlying operating performance, which enabled us to capitalise on
record conditions for many of our commodities. 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.

 

I will now hand over to Graham.

 

Graham Kerr, Chief Executive Officer

Thank you, Karen.

 

Good afternoon everyone and thank you for joining us at today's meeting.

 

Before I begin, I too 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, present and emerging.

 

It's great to be able to return, in part, to face-to-face engagement to look
back on what has been a transformational time for our business.

 

A time where we accelerated our portfolio transformation.

 

And delivered record earnings, cash flow and shareholder returns.

 

However, the most important commitment we make at South32 is that everyone
goes home safe and well at the end of every shift and, as Karen mentioned, we
did not achieve that this year.

 

I am deeply saddened by the loss of our colleague, Mr Desmin Mienies, a
contractor who was fatally injured while undertaking electrical work at our
Wessels Mine at South Africa Manganese in November 2021.

 

On behalf of the Lead Team, I would like to express our deepest sympathies to
Mr Mienies' family, friends and colleagues.

 

Since 2020 we have disclosed contractor fatalities that occur during
activities associated with our operations, but that take place in locations
where we do not have control.

 

Sadly, earlier this month Mr Ephraim Tsietsi Moreki lost his life in a road
incident in South Africa. It is deeply upsetting that someone has lost their
life while undertaking work for our business and hasn't returned home to their
loved ones.

 

My sympathies are with his family, friends and colleagues. We will work with
the contracting company to understand what more can be done to reduce the risk
of a similar incident occurring again.

 

We know we must continue to improve our safety performance and a significant
amount of work is underway to achieve this.

 

In the first half of Financial Year 2022, we partnered with a leading safety
consultant to review our safety performance and identify areas for
improvement.

 

This formed the foundation of our Safety Improvement Program - a three-year
global program of work designed to achieve a step-change in our safety
performance.

 

To better support our contractors, we have developed and rolled out our
contractor management standard which defines performance requirements for
managing our contractors.

 

Keeping our people safe is fundamental to achieving our purpose and we will
maintain a relentless focus on this work.

 

Just as we strive to create workplaces that are physically safe, we must also
create a psychologically safe environment for our people.

 

Karen spoke about our commitment to foster a culture where people feel safe to
speak up, and we are working to create that culture in order to support our
people if they are experiencing any form of disrespectful behaviour,
harassment or bullying.

 

All forms of workplace misconduct present a threat to the physical and
psychological health and safety of our people.

 

Over the past year we continued to undertake a significant amount of work, so
our people feel safe, included and respected at work.

 

We also engaged directly with our people through our annual 'Your Voice'
survey, to better understand their day-to-day lived experience and perceptions
of our culture.

 

We know there is always more to do and we are working to understand and
respond to the risk factors for harassment, just as we do for other safety
risks. More recently, our work has also been informed by broader industry
learnings following the publication of key reports on this critical issue.

 

Global events such as the Russian invasion of Ukraine and the prolonged
impacts of COVID-19 have contributed to a volatile economic environment and
inflationary pressures throughout the year.

 

Against this backdrop, we delivered record earnings and cashflow in FY22.

 

We could not have achieved these results without the efforts of teams around
the world, and I want to thank our people for their contribution to our
success.

 

Our stable operating performance and portfolio improvements enabled us to
capitalise on the tailwinds of commodity prices.

 

Despite adverse impacts from weather and labour availability challenges
brought on by COVID-19, our operations delivered largely to revised plans.

 

Some production highlights during the year included achieving record
production at Worsley Alumina.

 

Hillside Aluminium and Mozal Aluminium continuing to test their maximum
technical capacity.

 

Exceeding production guidance at Cannington as we transitioned to a new mine
configuration, bringing forward higher-grade material.

 

And the team at Cerro Matoso achieving a 22 per cent increase in nickel
production.

 

We finished the year with a strong balance sheet, with net cash of 538 million
US dollars, after funding 1.5 billion US dollars of portfolio improvements
during the year, leaving us well placed to navigate further uncertainty in the
short term.

 

Our strong financial position and disciplined approach to capital management
enabled us to pay a record 648 million US dollar fully franked final ordinary
dividend in respect of FY22.

 

And a 139 million US dollars fully franked special dividend, taking total
dividends to a record 25.7 US cents per share for the year.

 

Our total shareholder returns of 1.3 billion US dollars in respect of FY22,
including our ongoing on-market share buy-back, was also a record.

 

We expect to see external volatility and uncertainty continue into 2023 with
ongoing geopolitical conflicts and supply chain disruptions, leading to
inflationary pressure across our industry.

 

We will continue to focus on cost management and expect to see the benefit of
production growth in the next financial year which we anticipate will help to
mitigate industry-wide cost inflation.

 

In what is our seventh year as a business, the South32 of 2022 looks very
different to the South32 at the time we were established in 2015.

 

Over the past seven years we have transformed our portfolio to focus on
increasing our exposure to the commodities critical to a low-carbon future,
and that transformation continued in FY22.

 

We acquired immediate exposure to copper, through our 45 per cent stake in
Chile's Sierra Gorda copper mine.

 

We grew our exposure to low-carbon aluminium through our increased
shareholding in the

hydro-powered Mozal Aluminium smelter in Mozambique.

 

And participated in the restart of the 100 per cent renewable powered Brazil
Aluminium smelter.

 

Through these investments, we expect to double our share of low-carbon
aluminium production capacity.

 

In August, we announced that we would not proceed with an investment in the
Dendrobium Next Domain project at Illawarra Metallurgical Coal in Australia.

 

The decision followed consideration of recently completed study work and
extensive analysis of alternatives considered for the complex.

 

Through this work, we determined that the expected returns from the up-front
capital expenditure did not justify an investment relative to the alternatives
considered for the complex, and so we decided not to proceed with the project.

 

We will now focus on continuing to optimise Dendrobium and the broader
Illawarra Metallurgical Coal complex to extend the mine life within approved
domains.

 

This decision increases our capacity to direct capital towards other
opportunities, including our world class development options in North America
that have the potential to underpin a significant growth profile to produce
commodities critical to a low-carbon future.

 

During the year, we continued to progress work at Hermosa, our development
option in Arizona.

 

We reached an important milestone on Hermosa's zinc-lead-silver Taylor
Deposit, with the completion of the pre-feasibility study and have now
commenced the feasibility study.

 

The final investment decision for Taylor is planned for mid-calendar year
2023.

 

At Hermosa's Clark deposit, a scoping study confirmed its potential for an
integrated underground mining operation producing battery-grade manganese.

 

The US Government announced that it would invoke the Defense Production Act,
supporting the production of critical metals including manganese.

 

Following this decision, we are looking at potential options to potentially
accelerate the development pathway for the Clark Deposit.

 

Turning now to climate change.

 

We understand the need for action on climate change and our Climate Change
Action Plan outlines how we are responding by addressing our biggest
challenges.

 

As Karen mentioned, decarbonising our operations is fundamental to the
delivery of our Plan, which outlines our operational decarbonisation pathway
to support delivery of our medium-term target and long-term goal…

 

Our operational decarbonisation pathway consists of three steps - efficiency
initiatives in the near term, transition to lower-carbon energy in the
medium-term, and technology solutions in the longer-term.

 

Within that broad framework, our approach takes into account the unique
characteristics and challenges for decarbonisation of each facility in our
portfolio, with a firm focus on those operations that make up the majority of
our footprint.

 

At Hillside Aluminium, we are focused on transitioning the energy source from
coal-based power supplied via the South African electricity grid to secure,
reliable and affordable low-carbon energy in the medium-term.

 

The existing power agreement for Hillside Aluminium expires in 2031 and the
transition to a low-carbon energy source will be technologically and
commercially complex due to the smelter's constant high energy demand.

 

We will work with Eskom, government, and commercial partners to develop and
implement an energy solution at the scale required for a large aluminium
smelter.

 

At Worsley Alumina we are also studying options to transition the operation's
energy source, but there are technical complexities to be addressed.

 

Large-scale deployment of renewable energy such as solar and wind, which do
not generate steam directly, would require a change to Worsley Alumina's
process and energy infrastructure, and substantial expansion and modification
of the energy grid would be required to deliver renewable power at the
necessary scale for industrial users in the region.

 

Therefore, we expect to decarbonise Worsley Alumina in two stages.

 

We are working towards a conversion of the onsite boilers to natural gas which
would reduce operational emissions in the medium term.

 

Longer term, we are seeking new technologies to support increased
electrification and renewable energy for the refinery, which would require
broader investment in shared energy infrastructure in the region.

 

Given the complexities in decarbonising energy sources for Hillside Aluminium
and Worsley Alumina, we have not set a short-term emissions reduction target.

 

We will continue to evaluate our options but we will only set a short-term
target when we are confident on our pathway to meet such a target.

 

In the interim, we remain committed to prioritising efforts to reduce
emissions across our operations in the near term - from energy efficiency
programs, to the maturation and execution of energy switching and technology
solutions, and low-carbon design principles that have the potential to
materially reduce the greenhouse gas emissions footprint of our operations in
line with our medium-term target.

 

Delivering on our climate change commitments is fundamental to our purpose.

 

We will continue to regularly review our approach and we remain committed to
transparently reporting on our progress.

 

I look forward to the feedback on our approach.

 

I'd like to touch on the importance of our stakeholders, particularly the
communities where we operate.

 

We are committed to supporting and building meaningful relationships in our
communities, and we actively engage with stakeholders to understand their
interests and aspirations and identify opportunities to work together to
create shared value.

 

In FY22, we were proud to invest 31.1 million US dollars in community
initiatives, an increase of 40 per cent from FY21.

 

Our direct community investment was across our four key focus areas -
education and leadership, economic participation, good health and social
wellbeing, and natural resource resilience.

 

In South Africa, we support the growth of the business environment through ESD
- Enterprise Supplier Development.

 

We collaborate and work with small, medium, and micro enterprises on ESD,
which supports South Africa's transition towards fair economic distribution
and the alleviation of poverty.

 

Through this collaboration, we aim to do business with an ever-increasing
percentage of Black-owned suppliers.

 

In FY22, we increased our target for ESD spend from 4.73 million to 10.71
million US dollars.

 

By working with suppliers and local communities, we exceeded this with FY22
ESD spend of $17.5 million US dollars.

 

Finally, I'd like to again take the opportunity to thank our teams around the
world, who have worked hard to deliver results, in what is a challenging
global environment. Their contribution towards our success cannot be
overstated.

 

Looking ahead, we are well positioned for FY23, given our growing production
profile and strong balance sheet.

 

And we are well placed to capitalise on the increasing demand for the
commodities needed as the world transitions to a low-carbon future…

 

We will continue to position South32 for an exciting future over the next 12
months and beyond...

 

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.

 

JSE Sponsor: The Standard Bank of South Africa Limited

27 October 2022

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