Well, welcome everybody, and thank you so much for joining us for South32's 2023 Annual General Meeting. My name is Karen Wood, and it's my pleasure to chair the meeting today. Before asking Len Collard to come forward to offer a welcome to country, I'd like to acknowledge the traditional owners of the land on which we meet, the Whadjuk people of the Noongar Nation. And pay my respects to the elders, past and present, of the lands on which you are located today, and the lands on which South32 conducts its business around the world. In the spirit of reconciliation and respect, now more important than ever, we will continue to support initiatives that strengthen the unique cultural and spiritual relationships that indigenous and tribal people have to the land, waters, and seas, and their rich contribution to society.
To ensure their legacy continues and extends for future generations. Please now make Len welcome, as he conducts a welcome to country on behalf of the Whadjuk people. Len?
Ah, Kaya!
It's always great to catch up with people on our ancestral homelands. It's great to see the board all here, and I just want to say welcome to Noongar Boodja [Foreign language] and we know that all roads lead to Birit—all the roads lead to Perth. A bit Roman-ish in that conversation. And when my daughter Ingrid rang me this morning and said, "Dad, you need to get off the couch. It's like a game of footy. You're on the field today." We've got a late injury, and she can't be here, so Ingrid sends her apologies to one and all. And so I've been drawn into the fantastic opportunity to be here with you and give us a bit of a blessing and a yarn.
Now, it's been made clear to me by the Chairperson Woods, says, "Len, I know those Aboriginal Dreamtime stories go on, and on, and on, but we've got a lot of members coming today, and we've got some important business to cover." And I've heeded what the boss has said, and so I'm gonna do the short version of a welcome. And, one of the things you noticed when I spoke at the beginning, we speak in the language of our ancestors on our homelands, and that, in a sense, is a part of the old diplomacy, and it's also a part of the modern diplomacy, and it's a part of the future. We were always told as children to learn our language. Always speak to them in our language.
This is our homelands. So as an international corporation, I'm sure when you travel to different sites around the globe, I imagine that the people that will possibly speak to you in English as a manner of good, goodwill, or maybe they'll speak in Spanish or Portuguese or whatever they speak to you in. And so we follow that diplomacy in the Noongar lands we speak in our language. Of course, we know Noongar is a global thinking people. We know that many people come from across the world, so we pick English to speak to you. I'd like to speak to you in maybe in French or maybe Portuguese or Bahasa in Indonesia, which I probably could do a little bit, but I'll probably make a fool of myself, so I'll just stick with speaking Australian to you.
The final thing I say is good luck with the board today. I'll be, I'll be looking forward to seeing the outcomes, about who's who on the new board, whether you maintain your representatives or you come up with some new ones. And I'm sure there's lots of anxious heartbeats going on about that matter to happen shortly. But keep in mind, as I promised, I'll keep it short, and I'll be looking forward to catching up with South32 in some possible way. I'll talk to Shane about a few bits and pieces earlier on. So hopefully I'll get to talk to you more, maybe not this year, but maybe in 2024, and we can actually live up to the moniker, Brighter Futures, Together.
So on that note, I'm going to just finish off with a tune on the didgeridoo, and the idea behind that is to bring the good spirit or what we call the Kwop Wirrin, to our engagement today. Now, play fair, be determined in what you want, but please, don't pull the knives out, and let's not have no blood on our hands. Unless we need it. No, I was only joking. So I'll finish off the didge, and I'm going to move out of the meeting, and I'll leave you good people to do the really important business to sort out where to from here for South32.
Thank you, Len. We really do appreciate you getting off the bench this morning. Kaya to Ingrid, and we hope that her family injury situation rectifies itself quickly. So ladies and gentlemen, I'm joining you today from Perth, along with our Chief Executive Officer, Graham Kerr, and Company Secretary, Claire Tolcon. Also joining me on the stage from my far right are Non-Executive Directors, Frank Cooper, Xiaoling Liu, and Carlos Mesquita. And on my far left, Futhi Mtoba, Jane Nelson, Wayne Osborn, and Keith Rumble. We also have with us today, either in person or remotely, members of South32's Lead Team. The board, together with some of the members of the Lead Team who are here, look forward to meeting with shareholders after these proceedings.
In attendance also today, we have Graham Hogg, representing the company's auditor, KPMG, and Christopher Dedrick from Computershare Investor Services, who's been appointed Returning Officer for the meeting and scrutineer for the vote on Resolutions 2A to 6. I'm happy to confirm that a quorum is present and now formally declare the meeting open. I'll now ask Claire to run through a few procedural matters. Claire?
Thank you, Karen, and good afternoon, everybody. This year, we are conducting a hybrid meeting using Computershare's meeting platform, enabling shareholders, proxyholders, and guests to attend. Through this platform, all virtual attendees are able to watch a live webcast of the meeting, while shareholders and proxyholders are also able to ask questions and vote. For those shareholders joining us in person, please take note of the emergency exits. In the event of an emergency, instructions will be issued over the emergency warning and intercommunication system. In the event the alarm activates, the following warning tones will be sounded: The stage one sound is a beeping sound. Please remain seated and follow any warden instructions. The stage two sound is a whooping sound. We ask you to remain calm and evacuate the building via the nearest emergency exit.
Fire wardens can be identified by red hats, and they will advise when it's safe to return to the building. For those shareholders joining us online, please stay connected, and we'll message you through the meeting platform as soon as possible. Questions received in advance of the meeting will be read out by our moderator, Belinda Truman. For those attending in person, microphones are available in the aisles. If you wish to ask a question, please raise your hand and introduce yourself to one of our microphone attendants, who will introduce you to the meeting. For those attending online, you may begin submitting questions now by clicking on the Q&A icon. Alternatively, if you wish to ask a question verbally, please dial the appropriate telephone number to be connected to the audio question line.
Continue to listen to the meeting, and at the appropriate time, the Chair will ask the moderator to invite you to ask your question. If we receive multiple questions on the same topic, we may group them together when we answer. As stated in the notice of meeting, voting will be conducted by way of a poll on all resolutions, and the Chair will open voting shortly. For those attending in person, physical voting cards will be used. For those attending online, if you're eligible to vote, press the Vote icon once voting opens. To cast your vote, simply select one of the options. You can cast your vote and change your vote on each resolution at any time before the Chair declares the voting closed. If you have difficulties with the platform, please refer to the online meeting guide, which is available under the Documents icon.
In the unlikely event that we experience any major technical difficulties, we'll provide you with updates through our website and stock exchanges. I'll now hand you back to the Chair.
Thanks, Claire. I now declare voting open on all resolutions, so you may complete your voting form or submit your votes online at any time. Some of you may recall that at last year's meeting, one of our shareholders asked that we display the proxy position on each item of business before a call for questions on that item. While I understand that this is still not general practice, we have decided to trial it this year after some consultation with shareholders. But if any shareholder would like to talk about how we do this going forward, then please don't hesitate to let us know after the meeting. It's always a pleasure to be here in Perth for the South32 AGM. Whether you're joining in person or online from another location, we genuinely appreciate your participation, so thank you.
We've 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. Cristovão Alberto Tonela and Mr. Alfredo Francisco Domingos João were fatally injured while undertaking maintenance work at Mozal Aluminium in Mozambique in November. On behalf of the board, I express my sincere and deepest sympathies to their families, their 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've already commenced our journey to fundamentally shift our safety performance and deliver the cultural transformation required for sustained improvement, recognizing that this will take time and needs to result in that sustained improvement. The tragic loss of our colleagues at Mozal Aluminium has demonstrated why this work is of the utmost importance and strengthened our resolve to eliminate fatalities and serious injuries from our business. And I want to assure you that I, as the Chair of South32, your board members, 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 a strong production growth throughout the year in Aluminium and Base Metals. 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 amortization of $2.5 billion. This was achieved despite lower commodity prices, industry-wide inflationary pressures, and a backdrop of the volatile economic and geopolitical tensions we're all so familiar with. During the financial year 2023, we returned $1.2 billion to shareholders, including a fully franked, ordinary, and special dividend, and via our on-market share buyback.
Reflecting our disciplined approach to capital management, your board has resolved to further expand our capital management program to $2.4 billion, leaving $133 million to be returned by the first of 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 organizational culture, one of respect for our people that supports a positive employee experience and a 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 ASX 300 companies by 2030. I'm pleased to say that during the year, we achieved that target, with representation of women on the Lead Team increasing to 50% from 37.5% in the prior year. Just as we recognize 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 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 honored to have them join us. During the year, we farewelled Mr. Guy Lansdown, who resigned from the board to concentrate on his philanthropic activities in Mexico, and I would like to take this opportunity to thank Guy for his valuable contribution during his tenure as we expanded our presence into the Americas. I said earlier that we have many reasons to be optimistic about 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've identified and executed opportunities to sustainably reshape our business, and this transformation process remains a fundamental part of our strategy. The changes we've made to date, and the investments we're continuing to make in the 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 minimizing 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're 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're 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's our Scope 1 and 2 emissions, by 2035 from our FY 2021 baseline. In September of last year, we published our first Climate Change Action Plan, which included a Scope 3 goal. This was the subject, you might recall, of a non-binding advisory resolution at our annual general meeting, and we received strong shareholder support for our plan, with over 89% of votes cast in favor of that resolution.
We're very grateful for this strong vote of confidence in our approach, and I just want to thank all those shareholders and others who invested time in meeting with us in the lead up to the finalization 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 the 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 that plan, including updating the 1.5-degree scenario to stress test the potential impacts of climate change on our business. We also progressed our decarbonization initiatives with a focus on operations which account for the majority of our greenhouse gas emissions.
That's 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'll continue to provide annual updates on our progress against the 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 that they are safe for all. It's 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'll 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 recognize the importance of minimizing our impact on ecosystems and aim to achieve no net loss for all new projects and major expansions. It's our responsibility to minimize 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 bio regions. Our remaining operations are scheduled to complete a biodiversity risk and opportunity screening assessment in FY 2024. 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 bio regions. 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 is a key focus for South32, and we actively support improvements in tailings management through the International Council on Mining and Metals, and through industry conferences and research projects.
Your board is pleased with the progress that has been made in FY 2023, while acknowledging that we must continue our critical work to improve our safety performance. In the year ahead, we'll 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'd 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. It's now a pleasure to hand you over to Graham.
Thank you, Karen. I also acknowledge the traditional owners of the land in which you meet, the Whadjuk people of the Noongar Nation, and pay my respects to the elders, past and present. As a significant employer and investor in Australia, we recognize 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 Islanders 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 them 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 Indigenous stakeholders in the areas where we operate and seek their input on matters relating to them. Thank you for joining us here today. As we look back on our year, in which our teams across the world performed strongly in a challenging economic climate, and we continue 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, Tonella 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 to everyone who has been affected by the deaths of Tonella 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. This 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 work with our work to deliver a step change in our safety performance in the year ahead. Everyone has a 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 recognize 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% representation of women across our representation of black people, and in FY 2023, we achieved 86.9% across our South Africa workforce, exceeding our target of 85%. We also achieved 55.3% of black people in management roles in South Africa, and we'll 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 be done 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 organization and delivering on the measurable objectives that we have set. With the ongoing uncertainty around China's stimulus and the impact of anti-inflationary policies on the developed world, the macroeconomic climate remained volatile throughout the year. Despite these challenges, our teams have delivered strong production growth during the year as we continue 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%, Base Metals by 17%, and Manganese by 4%. 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 $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% in FY 2024, as Brazil Aluminium continues to ramp up and increase volumes at Mozal Aluminium.
Sierra Gorda is expected to increase its future copper production as a result of the plant debottlenecking project, and it has advanced studies for the fourth grinding line expansion, which could lift copper throughput by 15%-20%. 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. In May, it was confirmed as the first mining project in the U.S. to be added to the FAST-41 permitting process, underlying its importance to provide critical local minerals. Hermosa 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 electrical vehicle supply chain, and we have signed multiple non-binding, non-exclusive MOUs with potential customers for potential supply into the North American markets. We are also seeing some exciting exploration across Hermosa's regional land package, with recent drilling at 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 metal 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 earning right to acquire a 51 point... Sorry, 50.1% 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 we 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 on-site boiler from coal to natural gas, and that work is now complete. Work on the conversion of the second boiler is expected to commence in FY 2024. The use of natural gas at Worsley Alumina remains an interim step as we pursue long-term energy transition solutions focused on electrification and renewable energy.... We commenced detailed design and execution planning for commercial scale trial of ventilation air methane mitigator of VAMMIT technology at Illawarra Metallurgical Coal. This technology has the potential to deliver significant advancements in emissions reductions technology at underground coal mines.
At Sierra Gorda, we transitioned to an agreement for cost-efficient, 100% 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 decarbonization 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 understanding with Eskom to explore the potential to enter into a pilot agreement to purchase energy attributes associated with 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 ZAR 9.9 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 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, leadership, economic participation, good health and social well-being, and natural resource resilience.
We are proud to invest $27.7 million into our local communities during the year. In FY 2023, we also spent more than $1 billion on local suppliers across our operations, an increase of $111 million compared to the previous year. We paid more than $920 million in corporate income tax and $312 million in royalties, which helped fund essential infrastructure and services within the communities in which we operate. As we progress into FY 2024, 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 capitalize 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 a 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 Karen.
Thanks, Graham. It's now time to move to the formal items of business. Each resolution and the explanatory notes are outlined in the notice of meeting, dated 11th September 2023. As well as consideration of the financial statements, the business before us today includes six ordinary resolutions and one special resolution. As you will have seen from the notice of meeting, other than in respect of resolutions in which they have a personal interest, the directors recommend shareholders vote in favor of all resolutions. I intend to vote all undirected proxies that I hold as Chair in the same manner. We'll work through each resolution in order, and I'll provide you with a summary of the proxies received as we read out each item of business. I'll also invite questions on each resolution.
The first item of business is to receive the financial report, directors' report, and auditors' report, as set out in the company's annual report for the year ended 30 June 2023. There is no requirement to approve these reports, and we're simply tabling them for discussion. As I mentioned earlier, we have Graham Hogg from KPMG with us, and Graham is available to answer questions relating to the audit. Are there any questions or comments on the financial report, the directors' report?
- Perspective, the results were disappointing. You've pointed to a very good EBITDA result, but that was then overshadowed by the write-down in Hermosa, the $1.3 billion impairment. And I've got a number of questions about that, if I may.
Of course.
The first, through you, to the auditor.
I'd like to ask the auditor what impairment indicator was identified in 2023 for Taylor? And what changed in 2022, 2023, to his assessment or to the firm's assessment of the of that key auditor area of asset valuation in relation to Hermosa, and whether with the benefit of hindsight, that impairment trigger was in fact pulled in the previous year or prior year. And whether he's happy with the company's explanation of the cause of it being COVID, dewatering, and cost inflation.
Thanks, John. I'm going to hand you to Graham, as you requested, to answer that question. But can I just say first, thank you for being here, and thank you for the ongoing engagement we have with your association. Graham?
Thank you, Karen, and thank you, John. As a reminder, management prepares the financial report in accordance with Australian Accounting Standards and also in accordance with the Corporations Act. The board approves the financial report, and we, as independent auditors, conduct an independent audit on the financial report. Asset valuation is noted as a key audit matter in our audit opinion, as you would have seen, Mr. Campbell. Our audit procedures include performing an assessment of the reasonableness of management's assessment of the impairment indicators. Where impairment indicators do exist, we assess the reasonableness of the underlying assumptions used to determine the ultimate impairment. At each reporting period, we assess if there are impairment indicators indeed, across the full suite of South32 assets. Hermosa has been tested for impairment indicators since each period since acquisition.
The project is accounted for under IFRS, IFRS 6, which is Exploration and Evaluation of Mineral Resources. By its very nature, the company is continuing to expend funding to determine the economic viability of the project as a whole. In June 2023, it was determined that information from in-process advanced study work was now sufficient, such that an assessment could be made as to whether the capitalized expenditure could be recovered in full. As noted in our key audit matters and in note 13 to the financial statements, an impairment of this capitalized exploration and evaluation expenditure occurred as a result of this new information that was now available.
Okay.
Thanks, Graham.
Thank you, thank you, Graham. The follow-up question to that, Chair, is to you, if I may, to ask if you’ve asserted that the reason for the write down is these three factors of delays with COVID, the costs of dewatering and the cost inflation that’s taking place. But I put it to you that isn’t as much that you paid much too much for it to start with?
Thanks, John, for your question. Look, it won't surprise you to know we've spent a lot of time talking about Hermosa. In the lead up to acquiring the asset, the work that's gone on at the moment in terms of the pre-feasibility and now the feasibility study, and of course, in relation to the impairment. And we've asked ourselves whether we are comfortable with the acquisition, and the answer to that question is very strongly yes. You are right, there were three components that led to that impairment. Delays that, of course, everybody experienced as a result of COVID, the cost increases as a result of inflation, particularly in the United States, that we continue to see and remain concerned about, and some dewatering expenses that we had to incur. We don't feel unhappy about that purchase.
You know, as I said in my address, and indeed as Graham said, we're very confident about this asset. We think the asset is a very important part of our portfolio as we move towards more of those commodities required in a low-carbon world, and we feel very positive about it going forward. But, I mean, maybe, Graham, you might want to just comment about how you're seeing the work to date. I know John directed the question to me, but you might just have a few thoughts about that.
Yeah. Thanks, Karen, and thanks, John. Look, the way I think about the acquisition, and to Karen's point, I still think it being an acquisition underpins the future of the company. The impairment relates to the first stage of Taylor. The first stage of Taylor actually is, you know, requiring all the capital to build the roads, the infrastructure of the dewatering that the subsequent work on Taylor will support, but also Clark and Peak. And to put this in context, when we actually bought Taylor, when we bought Hermosa, it's about an hour and 10 minutes south of Tucson in a place called the Patagonia Mountains. It is a resource-rich area that's built off the back of historic old, shallow mines. So we bought it for three pieces of value when we actually made the acquisition.
One was around Taylor itself, the second piece was around what's called Clark, and Clark is a manganese oxide project that will basically feed into the battery EV market in North America. And the third piece is exploration potential. So Karen touched on the things that we have been disappointed in. Look, COVID hurt us by about two years, where we couldn't do any field work. There is certainly more water there than we expected, and that water is gonna take us an additional two years to move, and it's cost us an additional $365 million in capital to move that. The good news is, we've finished just the most important wells around the shaft at the moment, and the water treatment plant is actually up and running. What's the upside to the acquisition?
So when we talked about Taylor originally, we talked about a 20-year mine life. At the moment, we're looking for stage one to be around 30-ish years, and the resource is still open laterally and at depth. If you think about, you know, on top of Taylor, we've got Clark, which is a manganese oxide deposit that potentially has a life of 60+ years. That isn't included in the impairment assessment at all yet, because it's not advanced as well. And we talk about the regional exploration package. We have a very large land position there, where we've got about roughly 15 highly prospective targets. The most recent one we've been drilling is the Peak deposit, where we've now put down roughly 17 holes.
We announced four of those as part of our June quarterly production report, and some of the hits on those holes were 139 m at 2.5% copper equivalent, predominantly copper. We also had about 60 m at about 3.8% copper equivalent. So we now have roughly four holes, if you like, that are about 100 m apart, running over 1% copper between thickness of probably 50-100 m, which would probably be one of the best copper holes or prospects that have sort of been seen globally this year. So we do believe that this, if you like, play in the basin, and the basin is Hermosa, Taylor's the first stage, will actually give us multigenerational options to build over many decades as we ride out the different price waves.
But what it does come with is some high infrastructure costs to actually set up the basin, which Taylor Stage One is incurring.
Fair enough.
Thanks, Graham.
Can I go on from there?
Please, John, yes.
The next question would be this feasibility study. Can we have an undertaking that it will be at last released when you produce your half-year report at the very latest?
Yeah. The board has not yet seen the result of the feasibility study. We will, before the end of the calendar year, and in our quarterly report that we released just earlier this week, it said that our intention was to release further information about that. I think, what did we say, Graham? By around-
Next quarter, next year.
Yeah.
Which is really a half-year result.
The half-year result. So, February-ish. Yeah.
I'm just a bit critical of the fact that we've been hearing the same story for a number of periods about feasibility studies one way or the other, and that they've never yet emerged.
What I can promise you is the team is going to do outstanding work and will bring it to us when that work is completed. And of course, we'll share it as soon as we can.
It's probably worth us touching on, John, the most recent delay has really been a positive, where we've been added to the FAST-41 process, so it's looking at the benefits of that, including potentially funding for some different components of the project from the U.S. government under the Strategic Minerals Act.
It's worth making a point about that, Graham, because maybe that's not well understood, but FAST-41 is Fixing America's Surface Transportation. I think it was an Obama government initiative, but it was amended in a later administration, to include mining companies, and South32 is the first, perhaps still the only, Graham, I don't know-
Right
- the only mining company to have that status. Now, that's tremendously important for us. It's also tremendously important for the United States as it really beefs up its focus on critical minerals.
Could I just ask on that? Because I'm a bit curious. Over the last couple of days, we've heard from Albanese in Washington that Australia is going to be given treatment you know to facilitate the export of critical minerals to the U.S. And your manganese deposits in Australia would be much better quality much better grade than the one that you've got at Clark. Are you not able to get the same benefit from mining the Australian ore than Clark?
I'll let Graham make a comment, but it's all about transportation.
So it's about transportation, location, and a little bit about impurities, John, because the more... Because you're really producing a high-grade product that goes into batteries, and the impurities cause instability in the batteries and fires.
Looking at a deposit, deposit location is important to understand the impurities. Proximity plays a role. The other advantage in the U.S., while Australia will have a good relationship with the U.S. on this, they don't necessarily have access to the same funding pools that we will at Clark. Typically, in projects like that, you've seen the U.S. government potentially provide a grant of up to a third of the capital to develop a project. I think the other thing with both GEMCO and our HMM business is they're also well-positioned to service other markets outside of North America. You know, Clark is really designated where the U.S. has probably been a laggard on EVs, but certainly the IRA Act, with some of the rebate credits, will drive some of the EV increases in the U.S., and that's where Clark's well positioned for that.
We'll look at HMM for potentially Europe, and we'll potentially look at, you know, GEMCO, even though it's got a shorter life at the moment, we'll look at the potential there around Southeast Asia.
Am I allowed one more on-
Please.
On Hermosa?
Yes. Go ahead.
You've described it in numerous places in the annual report as being a non-cash expense. I put it to you that that is misleading and wrong, that you spent the cash, you paid out $1.3 billion to acquire the project originally, and you then spent cash on the other costs of the other $1 billion worth of costs that have been incurred since up to 30th of June. And then when you write it off, it is cash that could have been retained and either spent on a more profitable project or hadn't been given to us as dividends, or as buybacks or whatever, but it would have been, there are alternatives to what that $1.3 million was spent on.
It was our cash before management and the board blew it.
So, what I'm saying to you is, why have you not asked Mr. Kerr to resign as a result of the decision that was obviously cost the shareholders a lot of money?
Yeah. We're gonna have to agree to disagree on the description. We've described it as non-cash, because that's exactly what it was. And we've also been through the reasons for this impairment, John. Again, just to repeat, the delays occasioned by COVID, the inflationary pressures, totally outside Graham and his management team's control, and some dewatering expenses that were not foreseeable at the time that we acquired the asset. So this isn't one of those circumstances where management has a responsibility for the unfortunate impairment that we've had. Now, nobody's happy about an impairment. We're all disappointed to have announced one of this magnitude. But I think the more important question is: Is there still value for our shareholders in the asset and in the project itself? And we feel very confident about that.
Okay, well, I've got one other question, and I'll sit down.
I said that last time.
John, just, just let me see if there's anyone else in the room who wants to ask a question. Sure, please come forward.
Anthony, Anthony Fels. Chair, I'd like to introduce Anthony Fels.
Hi, Mr. Fels.
Thank you. Thank you. I just want to ask a couple of questions. Firstly, in relation to the referendum on the Voice-
Sure
In the Constitution. How much did the company commit financially, and how much did the company commit through resources, staffing, or whatever?
Thanks for your question, Mr. Fels. We supported the Uluru dialogues, and our objective in financially supporting the dialogues was to make sure that we had access to people who would be able to help our employees, and contractors for that matter, better understand the issues ahead of the referendum. We donated $300,000 to the Uluru dialogues. I don't know, the answer to the second question as to whether we provided any in-kind support by people doing work. Graham, can you help with that?
So we took a very clear position that we weren't gonna tell our employees how to vote. As a company, we support Uluru's Statement of the Heart and the move towards reconciliation, but we didn't donate directly to the Yes campaign, like some other people did. What we did hold internally was a series of different educational workshops that our people attended, and some other people externally attended as part of trying to encourage people with an open mind. That's probably about the extent of what we actually did. We had, as you'd expect, we're an organization that operates in different parts of Australia. We had people who were strongly yes, we had people who were strongly no. I'm certainly a strong yes, but I'm also not gonna tell people how to vote in a referendum.
Thanks, Graham.
Yeah, I'll ask a couple other questions in relation to it, but just a yes or a no is all, is all I really need.
Okay.
But first of all, does the company... Is it easier for the company to deal with if the yes was successful and you had a national, a voice enshrined in the Constitution, you're dealing with a group of whoever is involved in the Voice for Canberra, is that easier for this company to deal with than dealing with local communities in the projects? And I'm only just talking about the Australian projects on the ground here. Yeah, just yes or no is fine.
Oh, I'd love to go yes or no, but I don't feel I can do justice to it. Look, we have the good fortune to work in local communities every day. And in some parts of Australia, you know, which is relevant to this question, where we've been doing this work, our people have been involved for decades, way before South32 came to life in 2015. And we have really strong relationships with traditional owners in those communities, and we will continue to do that. We did form the view, after a great deal of thought, that having a Voice to Parliament of the kind that was suggested in the referendum would enhance the opportunity for First Nations people to have a say in the outcomes and the policies that were designed to impact their lives and their livelihoods.
I think that's a totally uncontested position. I think there's a well-accepted recognition across both sides of this debate, that participating in decisions that impact people is going to lead to better outcomes. Now, the model for doing that is obviously one that's being contested. I'm sorry I haven't given you a yes or no.
I wasn't necessarily expecting one. The other thing I... And you can give me a yes or no, or you can explain it further, but do you and I guess the board, unless anyone wants to dissent to what your answer is, but do you believe that this process of having a referendum and supporting the Uluru Statement has set the Aboriginal cause forward or backwards over the last 12 months?
You know, fortunately, I'm Chair of South32 and not the Prime Minister, so I don't have to worry about how the decisions that were made around taking that to a vote and all of the analysis that's been done after that time. There'll obviously be a lot of soul-searching, and that's best done by the people who made those decisions. The fortunate thing for us is that we do have a strong presence on the ground. I mean, to give you an example, I said earlier about the work that's been going on for decades, and I'm thinking particularly about Groote Eylandt, where our GEMCO asset is, where we work with the Anindilyakwa Land Council every day in making sure that what we do is consistent with the aspirations of that community. We'll just keep doing that.
We'll do what our job is, which is to make sure that all of the communities where we operate are better off for our presence. What we do know is that there is significant disadvantage, again, an uncontested point, and one that we need to try and address through the resources we have available.
Okay, I'll ask one more question, and then only as he brings it. And then I just want to ask one question in relation to the Resolution 5, about the remuneration for Graham Kerr-
Sure.
in a positive way. But on, I just want to know, was there strong lobbying from any of your institutional shareholders or any other groups that were supporting the yes campaign for the company to get involved in that? And then I guess another question, but was it put to this...? I didn't attend last year's meeting. I can't remember if it was an open meeting like this or it was online, but what was broad shareholder support sought, like you do with environmental issues and carbon issues and things, in relation to supporting political issues such as the referendum?
Yeah. I don't remember any discussion at last year's AGM on this subject. Of course, it was before the Prime Minister announced that he was going to put it, and when he was going to put it. I don't think we had any discussion. We haven't had strong lobbying from anybody. We formed a view entirely on the basis of what we thought was in the best interests of South32. So, no. And, and interestingly, you know, I did a number of meetings with investors in the lead up to the AGM, which is something we do each year, and I think out of about 35 meetings, I had just one question from shareholders about this. Now, those meetings were before the referendum, so I, I would say that it was not a matter that was particularly on the minds of our, our investors.
Okay, thank you. And just in relation to the Resolution 5, regarding the CEO's-
Remuneration and incentives, well, one concern I have is he seems to pick the top of the market when he sells his shares, but it's not necessarily good for the company when you see the CEO disposing shares. Now, I understand he's got to pay tax and whatever else. He might have other reasons to do it, but is there other ways that the board can do this? And I'll see now, the remuneration package you're working. I think the shares are going to be priced at, well, fair, fair, significantly above what they are today, for example, because the market has gone the other direction.
But is there a better way to do it than, I mean, and I, I love incentivizing any staff, but the way we're doing it here, is there a way to either hold them in escrow for a while or some other way where, the CEO is not up for a big tax bill because of the value of his, his, his entitlements?
Yeah.
He's not having to, if he has to pay tax and needs to sell shares, it's just not a good look for the company, and the shareholders usually suffer a bit of a downtrend in the market if the CEO is selling shares.
Yeah. So as you know, if any of the key management personnel or directors, for that matter, sell any shares, it's reported to the stock exchange, and we always report the reason, and the reason has been to pay tax. I mean, that is quite a usual process and only fair, because if he didn't sell the shares to pay the tax, he'd have to find other remuneration to pay that tax. So he's paying the tax on the value of the shares that have been granted. And that's an Australian tax issue rather than an issue for executives themselves. If Graham was to sell any shares, he needs permission to do it under our securities dealing policy.
I have absolutely no concern at all about any transaction that he might have done since he joined South32 as Chief Executive back in 2015. I mean, I should just say, because, you know, sometimes these things are forgotten. He has only had one year where the long-term incentive have vest, has vested in the eight years since the formation of this company. This board holds a discretion over the granting of long-term incentives, so he might meet the performance hurdles, but we nevertheless hold a discretion as to whether we'll grant, and allow those shares to vest. Now, in one year, where the board felt that the value of the vested shares was just beyond expectations, we talked with Graham and in consultation with him, agreed to waive or forego the value of one significant tranche of those long-term incentives.
Now, that was worth over $4.5 million. That's not the act of someone who's not committed to this company and prepared to invest their livelihood and back the company in the way he has. So we have a great deal of confidence.
Yeah, more of a comment, but I mean, is there maybe you can offer him an interest-free loan to pay his tax or whatever it might be. I'm just saying-
Yeah.
As a shareholder, the shares generally go down after the CEO disposes shares for whatever reason. It's just not a good look.
Yeah.
I'd love him to hang on to his shares and
Which he's done.
Retire, yeah.
Yeah, which he's done. He has a very significant shareholding in the company, so he's certainly putting his investment behind those of other shareholders. Absolutely.
Okay. Thank you.
Thanks, Mr. Phills.
I'd like to introduce Mr. Anthony Paul.
I'm sorry, was it Mr. Pell?
Paul.
Mr. Paul.
Paul.
Yes, thank you. Well, from a point of view of a modest, simple shareholder, I have a very simple, perhaps a little silly question. And perhaps the answer to this is already in the very extensive reports, presentations that you had. But the question, and I would appreciate a very simple answer. The share price of South32 dropped about 25% from January to now. All right? So my question is, could you comment on this and give a simple answer why this happened? Thank you.
Thanks, Mr. Paul. I must be overly complicating my answers because several of you have asked for a simple answer, so I'll do my very best. We don't control the share price. What we control is executing our strategy, which is to orient our portfolio towards those commodities with a future in a low-carbon world. And I think the management team, under Graham's leadership, have done an exceptional job on doing that since the formation of the company back in 2015. We are not immune from the shocks that we're seeing around the world, the geopolitical tensions, but also the economic shocks that we're all now starting to see repeatedly. So there will be a consequence in share price, but again, it's not something that we control.
Your board is absolutely focused on doing our job to oversee the execution of the strategy. But Graham, I mean, you've been talking to investors following the full year result. Did you want to make a comment?
Yeah, probably two comments. I've one, is Karen's right, there is a large exposure to commodity prices. So about 50% of our book is probably exposed to the aluminium value chain, which demand has been weak in Europe and probably not particularly as strong as people hoped coming out of COVID. So that would be a component compared to prior years' pricing. And I think the other thing, if you're gonna be honest, we had a disappointing quarter around production in a couple of our assets, which probably didn't help at that time. The production sort of come back, but the aluminium prices continued to be low.
Thank you.
Thank you. Anything else from the floor? John, do you want to squeeze in a, your, your last question?
On Sierra Gorda. You've got a deep, open cut there, but no reserves on the schedule. You've only got resources. And in discussions with you, we understood that the reason was that you weren't getting full cooperation from your joint venture partner in getting the exploration done to prove up the resources and turn them into reserves. But it does seem to us pretty critical that when you're getting down to the bottom of a hole, that you know where to go next.
Thanks, John. I'm gonna get Graham to comment on... I'm not sure I was worried about cooperation from our partners, but go on.
So what it actually is, we acquired Sierra Gorda about 18 months ago. When you acquire an entity that's overseas, they don't have to report against the JORC Code. And general practice in doing a takeover or a deal, you have a couple of years to at least move to resource and then reserve. The measurement that is done in Australia is different, for example, than what it is in North America. Our partner there is a Polish company, have their own set of reporting requirements. It's not about the material not being there. We continue to see strong performance out of Sierra Gorda, and we spoke about the growth options. We did the resource this year. We will do the reserve next year, and it's not a case of them cooperating.
It's actually someone going through all the logs that have been drilled, piece, piece by piece, and doing your QA, QC requirement as under JORC. Usually, you have two to four years to do that after doing a foreign acquisition. We've done the resource already, and we'll look to do the reserve by next year's full year report.
Okay, thanks.
Thanks, John. Before I go on to other business, I'm conscious there have been some pre-submitted questions. Belinda, so could I just pass to you or to see if there are any questions on the phone?
Thank you, Chair. Before I move on to the pre-submitted questions, we've received one online question from Mr. Wiebusch in relation to the auditor's report. Further to Graham Hogg's auditor's report to an earlier question, there is no reference to Hermosa in KPMG's audit report in FY 2022. Why didn't KPMG identify Hermosa as a key audit matter in its FY 2022 report? Did KPMG raise the potential for an impairment write down with management in FY 2022?
Thanks, Belinda, and thanks, Mr. Wiebusch, for your question. Graham, would you like to comment?
Thank you, Karen. I understand the questions in relation to the FY 2022 audit report. You'll see in our KAM for FY 2022, we do actually refer to our asset valuation as a key audit matter. We don't specifically call out all of the assets of the company. We called out three assets of the company where they had had impairment indicators, and that was Brazil for a reversal. That was last year. Sorry, it was Brazil, that was Hillside for goodwill. We have no need to call out Hermosa in our audit opinion. We are looking at asset impairment as a whole and triggers. And in the FY 2022 year, there was no trigger for the Hermosa assets.
As I stated before, and as I stated in the FY 2023 report, the trigger is all around the availability of information, such that management can form a view, potential view on what the value of Hermosa is.
And I might just add to that if I can, but because this is obviously something the board looked at very closely. When we bought Hermosa, we were treating the three pieces, the Taylor development, the Clark development, and the additional land as a single package. It was only when we had sufficient information to make the decision that Taylor and Clark would be separately developed, that that impairment trigger took place. Thanks, Belinda.
Thank you, Chair. We've received another question from Mr. Wiebusch. The 2019 annual report states that South32 paid $1.4 billion for Hermosa. $1.3 billion was written off in FY 2023. This write-down represents over 10% of South32's equity. What changes has the board made to its due diligence process, given this material loss? How has, and will, this loss impact management remuneration?
Thanks, Belinda. I think we've largely answered this to John's question earlier, but the amount of money we paid for Hermosa was for those three components: Taylor, Clark, and the additional land package. When we determined the amount of the impairment for Taylor, we were not taking into account the value that we think will be delivered from Clark and the additional land. But Graham, do you want to add any comments to that?
Oh, look, I think it would be, again, there's still upside on Taylor, Clark, and the broader land package to walk through. And as Graham sort of mentioned about reversals, you know, the way we measure impairment is based on a discounted cash flow, future cash flows. It doesn't necessarily put a great value around cash flow that occurs 20 years, 15 years out in the future. So I think there's that aspect as well that comes into play. Would we actually buy Hermosa again? Absolutely. I think if we had another one of those projects, I think it underpins the growth of South32 for probably 20, 30, 40 decades. And probably the greatest comparative would be the Cannington deposit, which was, you know, I was actually there when we built it under BHP. You know, it had a mine life that was probably about 10-12 years.
It's now been running for 26 years and got another 10 years left to go, and it's generated strong cash flows and growth in the resource over multiple decades. It was never included in the original evaluation decision. How you make money in the resource industry is to have resources that have optionality and can be developed over multiple decades, because we'll never pick the price.
Thanks, Graham. Belinda?
Thank you, Chair. I'll now move on to the pre-submitted questions. The first question is from Ms. Lee. I note there has been a significant increase in finance costs. While interest-bearing liabilities have decreased, the interest on borrowings increased from $31 million- $68 million, which cannot be explained by the increases in interest rates over that time.
Thanks, Belinda. This is referring to the increase of $37 million, which was attributed to $700 million of senior unsecured notes that we took out to support the Sierra Gorda acquisition. That's the copper acquisition in Chile. And in April of 2022, when we issued those notes, we only had to account, obviously, for two months or two and a half months of the interest in that financial year, whereas the financial year, FY 2023, we accounted for the full 12 months. So that accounts for the difference.
Thank you, Chair. Our next question is from Mr. Bryce. Many mining companies are seeking lithium deposit opportunities. Is South32 also on the search for lithium ore bodies?
We're always on the search for commodities, as I said earlier, with a future in a low-carbon world, and certainly lithium is one of those. But we need to search for opportunities that add value, are value accretive, and we just haven't seen a lithium opportunity that meets our investment criteria on that front. Now, if we found an early-stage opportunity, that we did feel added value to our shareholders as a way of getting into the lithium business, then we would do that, but we just haven't found that opportunity to date. I mean, I should say that Graham, with key members of his team, spent a lot of time, unsurprisingly, scouting the world for opportunities that fit not only our strategy at South32, but ultimately will deliver value to shareholders. But Graham, anything you want to comment on lithium?
Look, I'll just say, Karen, it clearly is an attractive commodity. For us, it's all about the price to get in, and at the moment, we probably see equity values are priced too high for us to create value for our shareholders. We seek to grow the value for our shareholders, not to grow the units we produce.
Thanks, Graham.
Belinda, anything else?
Thank you. Our next question is from Mr. and Mrs. Lurie. Why is the share price performance so bad? And if you have no idea how to improve it, should you all resign?
Thank you. We've obviously touched on this earlier in the meeting, and I said in my answer to that question that we certainly acknowledge the volatility of the share price over the last 12 months. Again, as I said, however, we have no control over that. We spoke about some of the issues impacting our business: commodity prices, the geopolitical tensions, the inflationary environment in which we're operating, and as Graham added, some of the production challenge that we had, particularly at Illawarra Metallurgical Coal. Our job remains to be absolutely focused on the execution of the strategy of South32, and we certainly hope that the share price will follow those endeavors.
Thanks, Belinda.
Thank you, Chair. Our next question is from Dr. and Mrs. Dwyer: Can we please forget about being social activists? We are wanting profits and dividends, not causes.
Thanks, Belinda. We've sort of touched on this a little bit, I think, in my explanation as to why South32 supported the Voice to Parliament with the amendment in the Australian Constitution. Look, our job is not to be social activists. As a board, our job is to make decisions that are in the best interests of our company, and I can assure you that in everything we do, that is our test. Will involvement in a particular issue be in the best interests of the company? I mean, we need to think about the sorts of things that we do get involved with. We've talked about the Voice earlier this morning, but I think all shareholders would recognize that where there are policy decisions that impact our business and on which we've formed a view, it's important that we make our voice heard on that.
I'm thinking about, for example, industrial relations reform or tax reform, or how to deal with climate change without compromising the secure supply of energy. They are all things about which there are different political views, but they're things that we have to form a view on because they impact our company and ultimately go to what is in the best interests of the company. That's how we approach every issue that comes across our table.
Thank you, Chair. The next question is from Mr. and Mrs. Billinghurst: Will you continue to act in the best interests of shareholders and not get involved in a range of peripheral issues that do not add value? If it is an issue that does not resonate above, then will it be put to shareholders?
I think that has largely been answered with my last answer and some of the earlier comments that I've made. You know, just to be clear, again, we are not social activists, and we don't spend our time on issues that are peripheral to making sure that we're acting in the best interests of South32. We have, in the past, put some issues to shareholders. We did that, of course, with the Climate Change Action Plan last year. Where that's appropriate going forward, we would certainly entertain that. But I guess, Mr. and Mrs. Billinghurst, the confidence I hope I can leave you with is that we don't spend our time on anything unless it is in the best interests of South32.
Thank you, Chair. The next question is from Mr. and Ms. Wells, and is also on the Voice to Parliament. Considering most Australians, and presumably South32 shareholders, staff, and/or customers, oppose the Voice referendum and the potential deleterious effects that it could have had on the social, economic, and governance wellbeing of the nation and company, what specific risk and/or cost-benefit analyses were undertaken prior to committing the company's reputation to supporting the referendum?
Thanks, Belinda, and thanks, Mr. and Mrs. Wells, for your question. It's obviously been a subject on a number of shareholders' minds today. So maybe if I can just reiterate, we made the decision to support the Voice because we formed a well-considered view that it was in the best interests of South32, that a mechanism was put in place to improve outcomes for the Indigenous people on whose lands we mine. Before we made that decision, we consulted with the traditional owners of those lands and got a point of view. I mean, as Graham said earlier, there are very different points of view, not only in the community, but of course, within South32, about the referendum that was put, and we completely respect everybody's point of view on this.
I think the one uncontested issue is that we do have grave disadvantage in the communities in which we are working every day, and finding ways to address that disadvantage and using whatever we can, whatever means at our disposal to do that, is critically important.
Thank you, Chair. The last pre-submitted question is from Mr. Schaefer: Do you take shareholders' health into account when carrying out director duties?
Thank you for the question. You know, we've talked a lot about health and safety today, and a look at our annual report and indeed, the sustainable development report, will also, I hope, give some confidence that health and safety is at the front and center of everything we do. We don't, of course, have control over health of our shareholders, but we hope that the sort of reporting that we do and the opportunity that shareholders have to talk to us about health and safety will give some confidence that we take it extremely seriously. Thanks, Belinda.
Thank you. We've received some more online questions. The first question is from Mr. Paisley: Are you aware how many pages comprise the Uluru Statement from the Heart? My understanding is it is 26. Have you read and understood all of them?
Yes, the Uluru Statement from the Heart is one page, but there are additional pages that reflect the discussions in Uluru. I have read them. I wasn't at Uluru. I don't know the nature of those discussions that led to that background material, but I know it's been a subject of some concern, and was obviously raised throughout the referendum campaign.
Thank you. We've received three questions from Mr. [Mincube], from ESG Insight, on behalf of various pension funds. The first question relates to safety. One fatality is a fatality too many. The company experienced two fatalities in the financial year. What were the failings of its safety strategy that resulted in these fatalities, and what measures have been enacted to prevent further loss of life going forward?
Look, thank you for that question, and again, it's something that we've touched on today, but just let me spend another minute on it, because it is so important. We had, as I said earlier, two fatalities at the Mozal smelter in Mozambique in November. Two men, mid-30s, mid-40s, lost their lives when we had a catastrophic collapse of a raising girder at that operation. As the questioner asked or noted, one fatality is too many, and we have had too many at South32. We've had fatalities. Until the Mozambican fatalities, we've had nine fatalities in South Africa. five of those people were contractors, four were employees. We have to confront the fact that this is simply not good enough.
We are not delivering on our commitment to making sure everybody who works with South32, whether they're an employee or a contractor, goes home safe and well at the end of every day. Until we get that right, we can't get anything right. This is a subject on which the board has spent a very considerable amount of time, both in the full board but also in the Sustainability Committee, chaired by Keith Rumble. Graham has, following the November fatalities, put in place a safety improvement program, and underpinning that program is this concept that he talked about in his address of the safety guarantee. That is a point of connection with every employee to guarantee their own safety and the safety of those with whom they work. He would describe that as fostering, throughout the organization, a chronic state of unease.
In other words, we can't take anything for granted. We have to have this state of unease about every aspect of work that we're doing. Now, this program involves training everybody throughout the organization. At our August meeting, the directors went through some of that training, so we have a very clear idea about how it operates. In August, some of us were up on Groote Eylandt with GEMCO, and we had the opportunity to talk to employees there who'd been leading that program, and it is all leader-led. In other words, it's being delivered by our own people, but with external expert advice. And we got a chance to talk to people who had been the recipients of that training.
The one thing I think every board member would want to assure you of is that throughout all of our discussions with Graham, his team, the operational leadership, everybody in the field with whom we've talked about this, is committed to better safety outcomes, and we have to deliver them.
Thank you. The next question from Mr. Mincube relates to the class action. A class action has been brought against the company, alongside others, concerning pneumoconiosis and lung diseases contracted by coal miners at the company's mines. Given lessons from the silicosis class action, what is the company's position, preparedness, and provisions for this lawsuit?
Yeah, thank, thank you for the question. There's not a lot that I can say about that because, we're still working through the nature of the action itself with our legal team. But it is an action that's been brought against BHP, South32, Seriti Resources, and Anglo American for, dust issues in South African coal mines. We've owned those coal mines, between 2015, when South32 came across from BHP, and 2021. But it's very early days in terms of understanding the scope of that litigation and indeed, whatever our approach is going to be. But I, I would just add, again, as I've said before, safety and health is absolutely at the forefront of everything we do.
Thank you. The final question from Mr. Mincube relates to diversity. South32 missed its diversity chart targets, with black representation in management dropping to a low of 55%, well below its target of 60%. Please advise efforts to address this and timelines. Diversity at board level remains a challenge. What is being done to address this anomaly?
Thank you. Maybe I'll deal with the second piece of that first. I'm not sure that we do have a problem with diversity at our board. We have four of our eight non-executive directors are women, and, and you've heard a little today about the geographic areas and the skill set and experience represented by members of your board. So I think we do actually have an appropriately diverse board. Insofar as black people in management are concerned, you are right, it was 55%. That remains a focus for Graham and his team, led by Noel Pillay in South Africa. But Graham, you might want to comment on that.
Yeah, thanks, Karen. Look, it, we only have so many management positions actually in South Africa, and it doesn't take for the loss of a number of positions where people have moved company to have a big impact on that number. So certainly in a couple of our assets, we've lost a couple of our key black managers that we have developed over time. The challenge for us is to continue to actually build that capability within the business and progress it through our business. And that's certainly something that's in Noel's objectives over the next 12-18 months.
Thanks, Graham.
Thank you. We've received three questions from Mr. Mayne. At last year's annual general meeting, the Chair promised to examine the unfair barriers to entry slipped into the South32 constitution by the BHP directors at the time of the 2015 demerger, which makes it very difficult for external candidates to nominate for the board. What was the outcome of the review, and why haven't you proposed a constitutional amendment this year to regularize our approach with best market practice? Will you make the change next year rather than remaining an outlier?
Thanks, Mr. Mayne, for your question. And, yes, I recall the question at last year's meeting, and we did undertake to have a look at it, which we did. So we gave some thought to the section that you're referring to, which requires prospective directors to have the support of 100 other shareholders or five percent of issued capital. And we decided not to recommend any change to take forward. The truth is, we haven't had any representations from anybody over the eight years of our life wanting to stand for a seat on the board, but not able to get that support. So I can't see that this is a particularly burning issue for South32 shareholders.
We obviously will continue to watch this space, and if we got that type of interest and people felt that they were being prohibited from standing for our board, then, of course, we would look at it again.
Thank you. The next question from Mr. Mayne. The 2022-2023 annual report claims that we have approximately 260,000 shareholders. It would be useful to know how many of these shareholders participated by voting in today's resolutions. Do you have a rough estimate of the turnout? And why not formally disclose this by revealing the numbers of shareholders voting for and against in your AGM results announcement to the ASX? The ASX itself adopted this practice last week, and Tabcorp did it yesterday. So why not follow this lead? I asked for this from South32 last year and was rebuffed.
Thanks, Belinda. I'm going to ask Claire. Claire, do we know the number of shareholders?
Not off the top of my head, but we have the proxies that you would see in terms of the percentage that people vote on each resolution-
Right.
But not necessarily the number.
Okay.
And that's what we disclosed to the ASX.
Okay. Thanks, Claire.
Thank you, Chair. The last question from Mr. Mayne. Up until yesterday, South32 had spent $2.4 billion buying back 794 million of its own shares during the current buyback. That's an average price of $3.05 against the current price of $3.24. Even with the broader market near 12-month lows, so well done for adding value with a good value buyback. Many companies overpay in buybacks. What ground rules did you give the brokers in terms of buying prices to ensure we didn't do the same?
Thanks, Belinda. We do have a protocol, as you would expect. A share buyback is a key part of our capital management program, and we have used it. In fact, I think it's right to say, Graham, we've probably bought back about 11%?
Yes.
About-
Slightly more, but yeah-
Yeah
... about 15% of shares on issue.
Thank you. Since formation. So it has been value accretive for shareholders, and we're very pleased about that. But I can't talk about the content of that protocol that we have, safe to say that we monitor it very closely. Anything you want to add?
I would say in our last results presentation, there was a nice slide that actually shows we tend to buy more of our stock when the price is low and less when the price is high. But we also only buy back when we have excess cash with nowhere to allocate it. And if you think about us as an organization in terms of South32, roughly since inception, we've spent about 38% of the $15 billion, roughly, that we've generated back into sustaining our existing business and extending the life of GEMCO, HMM, Cannington, et cetera. We've also returned 38% of that value back to our shareholders, and the other balance, about 22%, we've used to actually grow the company through acquisitions and exploration. And with the board and management, what we're looking to do there is balance near-term returns, medium-term, and long-term.
Thanks, Graham. Belinda?
Thank you. We have two questions from Mr. and Mrs. Daley. First question, could you state which of your operations in Australia are subject to the safeguard mechanism imposed on CO2-emitting facilities which exceed 100,000 tons per annum?
All our operations will be subject to it.
Thank you. The next question is: There seem to be a lot of local anger at the Hermosa project with respect to water rights. Are these now resolved, and how is Hermosa progressing?
Thanks. Graham, you might want to comment.
Yeah, look, like everywhere we operate at Patagonia and the surrounding area, and the Nogales and Santa Cruz County, there's a variety of different views. I would say overall, we have a very strong supporter base there. And in fact, the last board visit, we had an interaction with a number of local community and businesses, was hugely supportive of the project. There are people who don't like mining full stop and are always gonna have some concerns, and we continue to work with them with an open dialogue. There's probably been two issues that have been asked by the communities. One, probably not as much around water, to be honest, but it has been asked by a couple of people because the water is not... While we're doing dewatering at Taylor at the moment, we're at-- no, no one's losing the water or using the water.
We're actually just putting the water in a slightly different aquifer. So it's actually not generated that much focus and intention. The other one is, as we develop the manganese, you know, prospect of Clark, how are we gonna handle manganese dust? Obviously, today, we're one of the world's largest manganese producers, so we've got a lot of experience in that space. That has caused a little bit of, angst in a small portion of the community, which we continue to engage them on, and that noise, to a large degree, after sharing some of the practices and protocols, is moderated as well.
Thanks, Graham. And as Graham indicated, we were there as a board in June, and we did have a terrific opportunity to speak with a number of community representatives. So, you know, as a board, notwithstanding some of the concerns Graham's alluded to, we do feel very supported in Arizona, but also in Santa Cruz County.
Thank you. We've got no further questions on this item.
Thank you. Anything else from the room? Okay, I will move to the next item of business, if I may. Resolutions 2A and 2B seek the approval for the re-election of Dr. Xiaoling Liu and myself as directors of the company. Xiaoling and I were both appointed and elected as directors in 2017, and re-elected again at the 2020 AGM. During the year, and in accordance with our usual practice, all directors participated in a review of the effectiveness of the board and of each individual board member, including, of course, Xiaoling and myself. Resolution 2A is for the re-election of Xiaoling. We have the summary of proxies received on display now. As mentioned, Xiaoling has been a non-executive director since November 2017.
Her contribution as a member of the Nomination and Governance Committee, the Risk and Audit Committee, and the Sustainability Committee is very highly regarded by her fellow directors. Her extensive experience in mining operations, execution of major capital projects, leadership and business strategy, financial acumen, risk management, and health and safety are enormously valuable to the board. Following a review of Xiaoling's performance, the board recommends that shareholders vote in favor of her re-election. Xiaoling, could I ask you now to address the meeting?
Thank you, Karen. Good afternoon, everyone. I'm seeking your support for re-election, so I can continue serving the interests of South32 shareholders. It has been an honor to serve South32's board since my appointment in 2017. I'm also a member of three of South32's board committees: Nomination and Governance, Risk and Audit, and Sustainability. I'm a metallurgical engineer with a 26-year career at the Rio Tinto Group until my retirement in 2014. My roles at Rio Tinto included General Manager and Managing Director positions in smelting operational management, Managing Director, Technical Services, where I led Rio Tinto's global technical service unit, and President and Chief Executive Officer of Rio Tinto Minerals, where I led the Borates business with integrated mining, processing, supply chain operation, and sales and marketing in the United States, Europe, and Asia.
From this experience, I bring to the board of South32 expertise in mining and processing operations, the execution of major capital projects. In addition to my technical knowledge, I possess global business experience and financial acumen, and have skills in technology and innovation, strategy, health, and safety. I have a strong understanding of the key environmental impacts, risks, and opportunities relevant to our business. I have served as a non-executive director at Newcrest Mining Limited and Iluka Resources Limited, and I'm currently a non-executive director of Incitec Pivot Limited. I have also served as Chancellor of Queensland University of Technology, a director of Melbourne Business School, Vice President of the Board of Australian Aluminium Council, and a board member of the California Chamber of Commerce.
It has been an honor to serve on the board of South32 over the past six years, and I hope to continue my contribution with your support today. Thank you.
Many thanks, Xiaoling. Are there any questions or comments on this resolution? Anything in the room? Thank you, Belinda.
No questions online.
Thank you. Can I ask you then to enter your vote on Resolution 2A? Thank you. I'll now move to Resolution 2B, which is the re-election of myself as a director of the company. So with that, I'm gonna hand over to Wayne to handle this item. Thank you.
Thank you, Karen, and good afternoon, everyone. It's my pleasure to speak to Resolution 2B. To be or not to be, sorry. The re-election of Karen Wood. I couldn't resist. I'll be fined for that later. As a director of the company. We have the summary of the proxies received for this resolution on display now. In 2019, Karen Wood was elected unanimously by the board as its Chair, recognizing her wealth of industry knowledge, her deep understanding of the business, and her active engagement with internal and external stakeholders. Karen has served South32 with distinction, including her roles as Chair of our board and the Nominations and Governance Committee. Her leadership and experience have been invaluable as South32 continues to reshape our portfolio and welcomes new directors to our diverse board.
On behalf of my fellow directors, I can say that we feel privileged to have a person of Karen's caliber as Chair and Non-Executive Director. Following a review of Karen's performance, conducted by the board, the board recommends that shareholders vote in favor of the re-election of Ms. Karen Wood as director of the company. Karen, would you please speak to your nomination for re-election?
Thanks, Wayne. I'd be delighted to. Let me just say at the outset, what an honor it has been to serve as Chair of South32 since 2019, and indeed as a Non-Executive Director from 2017. I have the very good fortune to serve with a board of men and women who are highly skilled and dedicated to our company's performance. Like my board colleagues, I also have the very good fortune to work with Graham and his team, all of whom are committed to the company and to its purpose. Our board work is, I touched on this earlier, involves contributing to South32's strategy, overseeing the company's culture, and meeting our governance obligations. And that's achieved by the collective efforts of all those who share the stage with me today. And in this, of course, we are answerable to you, our shareholders.
My role as Chair includes helping to ensure that each of your directors bring their own independent thought to their work, and that the environment in which we operate is modeled on integrity, on transparency, on trust, and on respect. A little about my background. I've worked in the commodities sector for over 27 years, first in food commodities and then in the natural resources sector, which does give me an understanding of the key strategic risks and of course, the opportunities in a global business of our kind. It's also provided me with some experience in leadership, in regulatory and legal compliance, in health and safety, in social performance, and community and public policy. A little about my bio, which you will have seen in the annual report.
Prior to joining South32, I was employed by BHP in a number of global leadership roles, including governance, people, and public affairs. When I retired from BHP, I chaired the foundation of that company for some time before assuming the Chair here at South32. In addition to my work at South32, I serve as a non-executive director on the listed investments company, Djerriwarrh Investments Limited, and contribute to a number of not-for-profit organizations. So let me finish by just again saying thank you for the great honor of being able to Chair this company from 2019, and I look forward to continuing that role with your support. So thank you.
Thank you, Karen. Are there any questions or comments on this resolution? Yes.
Can I ask, do we just lob this outside, or do we have to get to the yellow line to make it a better box?
The purple box at the back, I think is the... Yep. No other questions in relation to this resolution. Belinda?
We've received no questions online. Thank you.
Okay. If there are no more questions, please enter your vote on Resolution 2B now. Thank you. I'll now hand the Chair back to Karen.
Thank you, Wayne. Resolution 3A is for the election of Mr. Carlos Mesquita as a director of the company. We have the summary of proxies, which you'll see on the screen. Carlos was appointed to the board on the first of May this year, and also at that time, joined the Nomination and Governance Committee and the Sustainability Committee. He's a qualified metallurgical engineer and has worked in mining and metals for more than 40 years, including 30 years with BHP. Carlos's extensive experience in major mining projects and operations in Base Metals and Aluminium in the Americas and Africa is a valuable addition to our board's skills as the company continues to advance its exploration and development options and takes steps to decarbonize its portfolio. As I said earlier, we're delighted to have Carlos join us.
The board recommends that shareholders vote in favor of the election of Carlos as a director of the company. Carlos, could I now ask you to address the meeting?
Thank you, Karen, and good afternoon, everyone. Since joining the South32 board in May 2023, I had the opportunity to complete a comprehensive induction to the board and to the company. I had visited a number of our operations, met senior leaders, some of them are here, and received briefings from management in the specific areas of the business and our strategy. I have also been appointed to two board committees, the Nomination and Governance and Sustainability Committees. Today, I'm seeking your support for my election as an independent, non-executive director. I'm a metallurgical engineer.
I'm sorry.
Yeah. Same as Charlie. And have worked in the global mining and metals industry for more than 40 years. During this time, I have worked with BHP Group for 30 years in the Base Metals and Aluminium businesses, including Asset President of Mozal in Mozal Aluminium in Mozambique, and Asset President of Escondida, the copper mine in Chile. I was also Vice President of major projects, where I led the Base Metals projects program, overseeing more than $10 billion in mining investments in countries like Chile, Australia, and Peru. More recently, in the first half of 2022, I was a consultant for South32, providing in-country support following our acquisition of the 45% interest in Sierra Gorda copper mine. I am based in Chile, but divide my time between Chile and Brazil.
I have extensive experience in leading mining and processing operations and major capital projects, including first-hand experience leading complex operations with responsibility for safety, volume, and costs. Thank you very much for your support.
Thank you, Carlos. Could I ask if there are any questions or comments on this resolution? Nothing in the room. Belinda?
No further questions online.
Thank you. Could I now then ask you to enter your vote for Resolution 3A? Thank you. I now move to Resolution 3B, which is for the election of Ms. Jane Nelson as a director of the company. We have, again, a summary of the proxies on the screen. Like Carlos, Jane was appointed to the board on the first of May this year and is also a member of the Nomination and Governance Committee and the Sustainability Committee. Jane's career comprises a portfolio of roles across academia, as well as international policy, business leadership groups, and not-for-profit organizations. She has expertise in sustainable development, including in human rights, cultural heritage, and indigenous issues, and a significant understanding of climate change and biodiversity risks.
Her strong focus on sustainable development enhances our board's broad range of skills and expertise, supporting the company's ongoing focus on producing commodities that are critical in a low-carbon world. Again, we're delighted Jane has chosen to join us. The board recommends that shareholders vote in favor of the election of Jane as a director of the company, and I now ask you, Jane, to address the meeting.
Thank you. Thank you, Karen, and good afternoon, everyone. Since joining the South32 board in May, like Carlos, I've had the opportunity to complete a comprehensive induction to the board and to our company. In addition to getting to know my fellow directors, I've had the opportunity to meet with many of our senior leaders, and I've visited a number of our operations and local communities. Together with Carlos, I have received briefings from management about our business, including those topics related to the nomination and governance and the sustainability committees of the board, of which I am a member. Today, I am seeking your support for my election as an independent, non-executive director. As Karen has said, my career to date includes roles across academia, as well as international public policy, business leadership groups, and not-for-profit organizations.
I have lived and worked in Africa, in Asia, in Europe, and in the United States, and my work has focused on promoting sustainable business practices and partnerships. Over the past 20 years, I have served as the Founding Director of the Corporate Responsibility Initiative at the School of Government at Harvard University. I've also served on ExxonMobil's External Sustainability Advisory Panel and on advisory councils for other multinational corporations and for the World Bank Group and the United Nations. I'm currently a non-executive director of Newmont Corporation, and I serve on the World Economic Forum's Global Future Council on Good Governance and on the forum's Climate Governance Community of Experts. My experience in sustainable development, especially as it relates to improving people's lives, respecting human rights and indigenous peoples, and addressing climate change and biodiversity, align with our company's purpose and our strategy.
I'm delighted to have been appointed to the South32 Board, and I hope to receive your support for my election today. Thank you.
Thanks, Jane. Do we have any questions on this resolution? Nothing in the room. Belinda, anything on the phone?
No further questions. Thank you.
Thank you. Well, then, could I ask you please to enter your vote on Resolution 3B? As I said earlier, we are delighted to have Carlos and Jane join our board. We're honored to have two people with such deep skill and experience join us at South32. And Jane and, and Carlos, your fellow directors look forward to working with you in the years to come. Charlene, congratulations on your re-election, and we look forward to continuing to work so closely with you, so. If I move now to item four, which is the adoption of the remuneration report for the year ended 30 June 2023, which you can find in the annual report. If anyone wants to look at it now, starting on page 78. We have the summary of the proxies received on display now.
As I think shareholders now understand, the Corporations Act requires listed companies to provide a remuneration report, and while your vote is advisory, your board does take your views into account when it's formulating remuneration policy and determining our approach. The board is committed to a remuneration framework that supports the implementation and achievement of our strategy and our business objectives. That framework consists of fixed pay, a short-term incentive, and a long-term incentive. We're satisfied that the framework has enabled us to reflect overall business performance and shareholder experience in the remuneration outcomes for executives. We believe that realized pay outcomes for Graham as Chief Executive since demerger are a testament to that alignment. In 2022, the Remuneration Committee, and subsequently the board, approved a 5% increase to Graham's fixed pay in recognition of his extensive experience and skill set.
This was the second increase awarded to Graham since he became Chief Executive, and aligned to increases for the broader South32 workforce. Our business scorecard guides short-term incentives for our executives. Last year, we delivered strong production growth in Aluminum, Base Metals, and Manganese. We also continued to reshape our portfolio through activities, including the work on the Taylor and Clark deposits at our Hermosa project, which we've talked so much about today. As I said earlier, our safety performance for the year was marred by the tragic deaths of two colleagues in Mozambique. Several safety performance measures included in our business scorecard were met, while others did not meet targets, including reducing our total recordable injury frequency and our potential material health exposures. We did deliver excellent results in our community measure and met several water performance targets.
Overall, our performance has been recognized in our business scorecard outcome for the 2023 financial year at 83.8% out of a possible 150%. As I say, these measures were undermined by the two fatalities, and for this reason, the business modifier was again used by the Remuneration Committee and the board. The modifier adjusts the overall business scorecard outcome for factors that are not specifically contemplated in the scorecard, including significant safety events. For the 2023 financial year, the board exercised its discretion to apply a negative modifier to reduce short-term incentive outcomes by 25% for the Chief Executive and by between 5% and 20% for other members of management personnel. In determining the modifier, we also took into account the non-cash impairment for the 2023 financial year at our Hermosa project.
The board continues to recognize Graham's strong leadership in delivering South32's purpose and values, and believes an individual outcome of 100%, combined with the business modifier, was an appropriate outcome for the year. As a result, Graham received a short-term incentive outcome of 62.9% of target or 42% of the maximum available under the plan. As you know, the long-term incentive is the component of executive pay most closely linked with the shareholder experience. It rewards executives for delivering shareholder returns that exceed peer benchmarks. Although our total shareholder return for the four-year performance period was 41%, so strong, this fell short of the threshold level required for vesting. As a result, all of the FY 2020 LTI awards lapsed, the fourth consecutive year that the long-term incentive has lapsed.
No major changes are proposed to our remuneration framework for the 2024 financial year. However, we are strengthening the link between safety and reward through an increased weighting in the short-term incentive business scorecard. We're also narrowing the strategic delivery component of the scorecard to focus on the delivery of our key Hermosa project while maintaining focus on financial measures. In the 2024 financial year, Graham will receive a 4.5% increase to his fixed pay to ensure it remains competitive. Other members of management will receive increases of between 4.5% and 6%, which align to the indices for the broader South32 workforce in the relevant countries in which they operate. Let me pause now and ask if there are any questions or comments on this resolution. John?
More of a comment, I suppose, really. We appreciate that management should be judged on underlying results in relation to financial awards. The hurdle should be set based on what can be managed by management, rather than what happens in the commodity prices in the world. We understand that, but we think that there should be a threshold financial hurdle related to an increase in net profit as per the accounts, to take into account things like impairments. And for that reason, we're voting against the remuneration report this year and the short-term element of the, well, you have one resolution for the awards to Mr. Kerr. So, we're voting against that because of the short-term element rather than the long-term element. That's the comment.
Thanks, John. Look, we appreciate your comment, and we appreciate there are different views about this. We do feel that we have the right remuneration structure for the organization. You know, we are balancing, making sure that we have the right level of incentives and pay for our people, along with making sure that that is aligned to the interests of our shareholders. And it's not an easy area for anybody, but after a great deal of deliberation and thought, we think that we do have the right structure. But I do appreciate your comment and the time you've taken to have a look at these issues. So thank you. I don't think we have any other questions in the room. So, Belinda, do you have anything?
Thank you, Chair. We have a question from Ms. Ekereke. Why award an increase to the executive director when the individual is already adequately remunerated?
Thanks, Belinda, and thanks, Ms. Ekereke, for your question. I think I actually touched on that in responding to John's comment. I mean, what Wayne is leading through his chairmanship of the Remuneration Committee is to get that balance right between pay outcomes that incentivize our management, but also outcomes that reflect the overall business performance and in alignment with the shareholder experience. You know, as I said earlier, Graham had a 5% pay increase last year. It was the second only since the formation of South32. We've approved 4.5% for this coming year. We think those changes are modest. They are certainly in line with the pay increases across the broader South32 workforce. So we do feel very confident that, as I said earlier, we have the right structure.
I spoke earlier about Graham's long-term incentives, and how he has had one of those vest over the eight years since the formation of South32. We don't for a moment think that our Chief Executive is overpaid.
Thank you. One final question from Mr. Wiebusch. There is no reference in the FY 2023 remuneration report to the $1.3 billion write-down. The Chair did not provide a response to this question when I asked it earlier. How has and will the $1.3 billion write-down impact management remuneration?
Thanks, Mr. Wiebusch, for your question. There actually is a reference in the remuneration report because it was one of the factors we took into consideration when we settled on the business modifier, the negative business modifier of 25%. There were two components to that. One was the fatalities, on which we've spoken today. The second was the Hermosa impairment. It's not unusual for us to take other things into account in the modifier. In fact, in FY 2020, when we applied a 30% modifier, we had one fatality that year, sadly, but we also wanted to reflect the incredibly uncertain environment in which we were all operating as a result of COVID. So in an effort to try and align the experience between Graham's outcome and the shareholder experience, we applied a 30% modifier.
So, I just want to assure you that that was one matter that we considered very closely and did take it into account.
Thank you, Chair. No further questions at this time.
Thank you. Could I ask you then to enter your vote on Resolution 4? There are voting restrictions for this resolution, and they're set out in the notice of meeting. Thank you. The purpose of Resolution 5 is to seek shareholder approval for the proposed grant of rights to our Chief Executive. Again, the summary of proxies received is on display. While we intend to source shares that will be allocated to Graham, if this award vests from the market, the board is seeking shareholder approval in the interests of transparency and governance to preserve flexibility to issue shares if that is considered more appropriate at the time of vesting. The rights relate to Graham's long-term incentive for the 2024 financial year and the deferred equity component of his short-term incentive award for the 2023 financial year.
The performance measures for the long-term incentive award remain unchanged. 80% will continue to be assessed using relative total shareholder return over a four-year performance period. Two strategic measures, one on climate change and one on the portfolio, will each continue to account for 10% of the award. Performance on strategic measures will be assessed by the board at the end of the four-year performance period in June 2027. Further information on the manner in which performance is assessed is set out in the notice of meeting and, of course, in the remuneration report. Do we have any questions on this item of business? Nothing in the room, Belinda?
We have one question from Mr. Mayne. Could the CEO summarize his past long-term incentive grants as to whether they have vested or lapsed? Also, has he ever sold any ordinary shares in the company or bought any on-market without relying on an incentive scheme to build his equity position in the company?
Thanks, Mr. Mayne, for your question, which I know is directed to Graham, and I will ask Graham to address it. But just to reiterate my earlier comment, only one year has the long-term incentive vested for Graham since the formation of South32. And as I mentioned earlier, the board did exercise its discretion in relation to that earlier long-term incentive to reduce the value of it by that very significant amount, that $4.7 million. But Graham.
Thanks, Karen. In terms of my own dealings, obviously, when we were created as a company with the demerger from BHP, a lot of my equity, all my equity from BHP transferred across to South32, so I'm certainly very long in South32 shareholding, and happy to have that. Since the time of the demerger, the only sales have been basically to cover tax.
Thanks, Graham.
No further questions. Thank you.
Thanks, Belinda. Could I now ask you to enter your vote for Resolution 5? Again, there are some voting restrictions for this resolution, and they're set out in the notice of meeting. So let me move now to Resolution 6. The purpose of this resolution is to seek shareholder approval for the renewal of the proportional takeover provisions contained in Rule 6 of the company's constitution. We have, again, the summary of the proxies received on display. The proposed provisions are identical to the existing provisions in our constitution, which came into effect when the company's constitution was adopted in March 2015 and were last renewed by shareholders in 2020. They're intended to allow shareholders to vote on any takeover bids received by the company that are only for a proportion of the company's shares.
Passing this resolution means that a majority of shareholders will be required to support such a bid. The board considers that the potential advantages of these provisions for shareholders outweigh the potential disadvantages, both of which are outlined in the notice of meeting. This is a special resolution and therefore requires approval of 75% or more of the votes cast. Could I ask if there are any questions on this resolution? Nothing in the room. Belinda?
No questions on this item.
Thank you. So could I ask you now to enter your vote on Resolution 6? Thank you. That brings us to the end of the items of business. But before I close the meeting, are there any other questions that shareholders would like to ask? Belinda, anything from you?
No further questions. Thank you.
Thank you. Well, if you haven't already done so, could you complete your voting cards and place them in one of the purple boxes that are being passed around? And of course, if you're online, enter your votes now, online. The poll will close in 10 minutes, so you have a little bit of time to complete that voting. And of course, in accordance with our usual practice, the results of the poll will be released to the stock exchanges and published on the company's website as soon as possible. All that remains for me to do is to say thank you for attending the South32 AGM. We do appreciate the effort that's made to join us, and I want to thank shareholders and guests for being both here in Perth and joining us online.
For those of you who are here in Perth, we hope that we'll have an opportunity to have some refreshments with you out in the foyer. We look forward to continuing our dialogue and your continued support for the year ahead. Subject only to the finalization of the poll, I now declare this meeting closed. Thank you and good afternoon.