South32 Ltd. · ASX:S32
South32 — BofA Securities Global Metals, Mining & Steel Conference 2023
42 slides from South32's conference presentation, May 16, 2023
Slide 1: Strategy and Business Update
16 May 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 STRATEGY AND BUSINESS UPDATE South32 Limited (ASX, LSE, JSE: S32; ADR: SOUHY) (South32) is pleased to provide the
Slide 2: Strategy and Business Update
STRATEGY AND BUSINESS UPDATE 16 May 2023
Slide 3: Important Notices
IMPORTANT NOTICES • This presentation should be read in conjunction with the “Financial Results and Outlook – half year ended 31 December 2022” announcement released on 16 February 2023, which is available on South32’s website (www.south32.net). • FORWARD-LOOKING STATEMENTS • This presentation conta
Slide 4: Overview
OVERVIEW 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 critical to a low-carbon future We have a pipeline of d
Slide 5: Our Strategy
OUR STRATEGY Our purpose is underpinned by a simple strategy UNLOCK OPTIMISE the full value of our business through our IDENTIFY our business by working people, innovation, and pursue opportunities safely, minimising our projects and technology to sustainably reshape our impact, consistently busines
Slide 6: Our Sustainability Approach
OUR SUSTAINABILITY APPROACH Our approach to sustainability focuses on five interconnected pillars Our FY23 focus areas • Implementing our Safety Improvement Program • Embedding our Inclusion and Diversity Standard • Implementing a global approach to indigenous and tribal peoples engagement and cultu
Slide 7: Protecting and Respecting Our People
PROTECTING AND RESPECTING OUR PEOPLE Providing a safe and inclusive workplace to unlock the full potential of our people Our belief that we all guarantee everyone at South32 goes home safe and well • Implementing our multi-year Safety Improvement Program to fundamentally shift our safety performance
Slide 8: Addressing Climate Change
ADDRESSING CLIMATE CHANGE Progressing initiatives to support our target4 to reduce operational GHG emissions 50% by 2035(a) and our goal4 of net zero GHG emissions by 2050 Reshaping our portfolio through the lens of our climate commitments Reshaping Decarbonising • Acquired 45% of the Sierra Gorda c
Slide 9: Our Portfolio
OUR PORTFOLIO We have an attractive commodity mix and a growth pipeline in commodities critical to a low-carbon future 15% growth in aluminium and Multiple options at our Hermosa project Deep pipeline of options in base metals volumes in FY23e6 in federally-designated critical minerals study and exp
Slide 10: Our Growth Pipeline
OUR GROWTH PIPELINE We have embedded options with the potential to deliver significant growth in commodities for a low-carbon future Feasibility Pre-feasibility Further exploration and study phase projects +7% Group copper equivalent growth Hermosa Sierra Gorda Hermosa Ambler Metals Cerro Matoso Her
Slide 11: Our Capital Management Framework
OUR CAPITAL MANAGEMENT FRAMEWORK Our capital management framework supports investments in our business and rewards shareholders as performance improves Capital management framework Capital allocation since FY16(a) (US$M) ROIC 2% 1% US$5.2B invested to optimise, unlock and identify value Competitio
Slide 12: Our Capital Expenditure Outlook
OUR CAPITAL EXPENDITURE OUTLOOK Prioritising safe and reliable operations and unlocking value through improvement and growth projects Capital expenditure guidance(a)(b) We expect to direct US$250M in FY23e at our Hermosa project, delivering critical path activity (US$M per annum) and study work for
Slide 13: Our Shareholder Returns
OUR SHAREHOLDER RETURNS We have returned US$2.3B to shareholders through our ongoing capital management program over the past six years Shareholder returns since FY16 (US$B) • Disciplined application of our capital management framework and strong balance sheet means shareholders benefit as our finan
Slide 14: Business Overview
BUSINESS OVERVIEW
Slide 15: Our Aluminium Value Chain Business
OUR ALUMINIUM VALUE CHAIN BUSINESS We have leading integrated positions in the aluminium value chain Bauxite and Alumina An integrated chain producing low-carbon • We are investing to further enhance our low-cost, integrated bauxite mines aluminium in Brazil and alumina refineries11 MOZAL ALUMINIUM
Slide 16: Our Base Metals Business
OUR BASE METALS BUSINESS Base and precious metals production across copper, nickel, zinc, lead and silver, and a portfolio of growth options Sierra Gorda copper AMBLER METALS JV (50%) • Capital efficient de-bottlenecking project on-track to be completed in FY24 Copper, Zinc, Lead & Silver • Fourth g
Slide 17: Sierra Gorda Copper
SIERRA GORDA COPPER The acquisition of Sierra Gorda has lifted Group margins and embedded options for further copper growth Sierra Gorda location Catabela pit remains Future drilling campaigns to test depth potential open at depth Spence mine Capital efficient On-track to increase plant throughput t
Slide 18: Cannington Zinc-Lead-Silver
CANNINGTON ZINC-LEAD-SILVER Transition to 100% truck haulage completed, bringing forward higher-grade material Summary Ore processed (Mdmt) 4 • Transition to a 100% truck haulage operation completed in Q2 FY23 3 2.75 2.62 2.40 2.40 3 2.20 • Decommissioning the underground infrastructure has reduced
Slide 19: Cerro Matoso Nickel
CERRO MATOSO NICKEL We have allocated capital at Cerro Matoso to unlock value and create options for potential supply into new nickel markets Cerro Matoso’s recent high-returning investments … and sets a strong platform to unlock further value have helped to re-position the operation ... following i
Slide 20: Our Steelmaking Raw Materials Business
OUR STEELMAKING RAW MATERIALS BUSINESS Supplying high quality manganese ore and coking coal products for domestic and export markets Manganese ore • Approved the Eastern Lease South life extension project(a), extending the life of GEMCO, one of the largest, lowest cost operations in the world15 • St
Slide 21: Australia Manganese
AUSTRALIA MANGANESE Progressing studies to extend the operation’s life into the next decade Australia Manganese mining areas and infrastructure • We have approved the Eastern Lease South life extension project, with first ore expected FY25 Port • Low capital (US$44M(b)), high-returning project (IRR
Slide 22: Growth and Exploration
GROWTH AND EXPLORATION
Slide 23: Our Future Growth Through Development & Discovery
OUR FUTURE GROWTH THROUGH DEVELOPMENT & DISCOVERY Our next phase of growth is expected to come We are investing to discover our next generation from our development options in North America of mines with over 25 exploration prospects ALASKA Ambler Metals (50%) NORTHERN AUSTRALIA - Arctic deposit - B
Slide 24: Hermosa Project
HERMOSA PROJECT Only advanced project in the US with the potential to produce two critical minerals, zinc and manganese, recently confirmed as the first mining project to be added to the FAST-41 process Taylor zinc-lead-silver Clark battery-grade manganese- Regional resource development option zinc-
Slide 25: Taylor Overview
TAYLOR OVERVIEW Potential to be a globally significant producer of base metals Taylor Highlights Taylor site map 138Mt zinc-lead-silver Exploration target ranging Mineral Resource(a), which from 10 to 95Mt(a) remains open at depth Dry-stack TSF WTP2 PFS outlined potential for a Designed as a low-imp
Slide 26: Clark Overview
CLARK OVERVIEW Ideally positioned to provide secure, localised supply of battery-grade manganese for the North American market Only advanced project in the PFS-S confirmed potential Confirmed flowsheet to produce US with a clear pathway to produce to produce ~60ktpa BGM, high-purity manganese sulpha
Slide 27: Our Exploration Portfolio in Alaska
OUR EXPLORATION PORTFOLIO IN ALASKA Attractive copper and polymetallic options in the prolific Ambler mining district Alaska regional map Ambler Metals JV (50%) Utqiagvik • 50% interest in the Ambler Metals joint venture, which hosts two known base metals deposits Deadhorse and numerous, early-stage
Slide 28: Our Exploration Portfolio in Argentina
OUR EXPLORATION PORTFOLIO IN ARGENTINA The San Juan province of Argentina hosts several copper deposits along a highly prospective mineral belt San Juan province, Argentina Leonor Regalito We have invested in greenfield exploration partnerships in the San Juan province since N Los Helados José Maria
Slide 29: Summary
SUMMARY
Slide 30: Summary
SUMMARY We produce commodities critical to a low-carbon future Our recent investments have delivered strong growth in copper and low-carbon aluminium We are progressing options to further increase our leverage to attractive long-term markets Our consistent execution is underpinned by our disciplined
Slide 31: Markets Outlook
MARKETS OUTLOOK
Slide 32: Aluminium Market
ALUMINIUM MARKET With China’s smelting capacity expected to Healthy demand growth (~3% p.a.) driven Long-term price to be supported by be capped at 45Mt, the rest of the world is by transport and packaging sectors, higher inducement cost projects outside required to invest in new smelting and clean
Slide 33: Alumina Market
ALUMINA MARKET Changing market dynamics and growing Chinese dependence on Inducement cost projects expected to be built outside of China imported bauxite (+31% to 54% in the last decade) due to declining bauxite self-sufficiency and environmental policy China alumina by regional source Alumina price
Slide 34: Copper Market
COPPER MARKET Copper demand outlook is well supported by the proliferation Projected demand and supply gap by 2040e equivalent of renewables and rising electric vehicle penetration to requiring an additional ~1Mt of copper production each year Copper total demand Regional mine production capability
Slide 35: Zinc Market
ZINC MARKET Rapid renewables deployment could see China’s supply is constrained Projected demand and supply gap zinc demand double over the next two by rising environmental by FY31 equivalent to requiring more decades, as zinc coatings are critical in regulations and falling grades than 10 new Taylo
Slide 36: Manganese Market
MANGANESE MARKET Chinese energy costs have supported Price movement in the short-term We continue to expect the long term price a preference for high-grade ores remains driven by pace of recovery in to be set by marginal South African supply and a widening premium Chinese demand and supply dynamics
Slide 37: Battery-Grade Manganese Market
BATTERY-GRADE MANGANESE MARKET Committed government policies We expect manganese-rich battery Manganese-rich cathodes provide are expected to underpin a near chemistries to capture ~30% of the substantial cost, performance and six-fold increase in North American EV market by 2030, and >50% by 2040 s
Slide 38: Hard Coking Coal Market
HARD COKING COAL MARKET Demand for premium HCC(a) will continue Shortage of premium HCC expected Permitting challenges are to increase until the commercial adoption to provide further price support for constraining new mine supply of a viable steelmaking substitute high grade product Seaborne HCC pr
Slide 39: Supplementary Information
SUPPLEMENTARY INFORMATION
Slide 40: Annexure – Australia Manganese Mineral Resource and Ore Reserve Update
ANNEXURE – AUSTRALIA MANGANESE MINERAL RESOURCE AND ORE RESERVE UPDATE As at 30 April 2023 As at 30 June 2022 South32 Measured Mineral Resources Indicated Mineral Resources Inferred Mineral Resources Total Mineral Resources Total Mineral Resources Material Type(1) interest Mt % Mn % Yield Mt % Mn %
Slide 41: Footnotes
FOOTNOTES 1. In January 2023, South32 Limited received an ESG Risk Rating of 25.3 and was assessed by Morningstar Sustainalytics to be at Medium risk of experiencing material financial impacts from ESG factors. In no event shall this presentation be construed as investment advice or expert opinion a
Slide 42: South32
SOUTH32
South32 — BofA Securities Global Metals, Mining & Steel Conference 2023 on 6ix