Earnings Call: H1 2021

Aug 12, 2021

Thank you. Good morning, ladies and gentlemen, and thank you very much for welcoming us to your private residence or it may be some of you may be in My name is Mzilam Tenjane and I Head of Investor Relations at IXARO. And I'm joined by the management team. We're led by our CEO, Mr. Mkoli Simekoto our CEO Designate and Head of Minerals Business, Doctor. Nombasa Tsengwa as well as our CFO, Rian Kop We're here to present to you our results for the 6 months of 2021, a result that we are really proud of Given the challenges that we have experienced in this 1st 6 months, but as with every opportunity also comes With every challenge comes an opportunity. I will not be talking much. And perhaps let me also remind you that I have had to take my mask off so that you can hear me. And we have been practicing our social distancing and all the required protocols to ensure that we limit and make sure that the curve does not continue to steepen. This being a virtual event, I think some of the normal Precautions that I would share with you such as bathrooms and things like that are obviously not necessary. So With the time then available to us, I will hand over to Mgolisi to provide us with the results overview. He will then hand over to Nombasa, who will then share with us the operational results. And then, Rian will then give the financial performance on the back of that operational performance and then Golesi will come back again and close off the session with the outlook. So without further ado, Golisi, can I hand over to you? Thank you very much, Nzila. And good morning, ladies and gentlemen, And a special welcome to all the Board members who are in attendance on this virtual call. It is a pleasure for me to be here as we present our interim financial results for the 6 months ended June 2021. 2021 thus far has been A dynamic operating environment with seemingly contradictory signals. As you can see in this slide, it highlights Some of the major features of our macro context. The quicker than anticipated global economic recovery from COVID has contributed to the best overall seaborne coal prices in 3 years, with consequential large discounts to index prices of lower quality coals. Climate change has become the focal point not only of our business, but society and global engagement. The risks associated with the energy transition are compounding and not pounding and not moderating, but continue to present opportunities in the course of this transition. The world is under pressure to transition faster, and that presents new opportunities. This dynamic environment affirms our approach of maximizing the value of our coal assets Through the early value coal strategy, thus minimizing stranded coal assets while building a low carbon resilient business. This is also underpinned by our synergy investment, which will further support our decarbonization strategy, and further details of this will be provided at our Capital Markets Day in September. Maximizing the value of our coal business and the portfolio optimization drive, supported by the SIOC investment, provides for current and near term returns from Exaro. Nombasa and Kopis will elaborate further in this regard. On the next few slides, I will spend some time on COVID-nineteen and provide an economic and market overview as well as we are delivering on our strategic priorities. COVID-nineteen was a major feature during the reporting period. We felt the impact of the 3rd wave, however, with a relatively limited impact on operational performance. We continued our interventions Through ongoing testing and awareness campaigns and implementing our health and wellness programs, which enabled us to maintain a 96% recovery rate. Our vaccination program, supported by the respective MECs for health in Limpopo and Bumalanga, underpinned the auspices of the National Department of Health, have started at both our registered sites and will pick up Momentum as more vaccinations become available. The visible role played by our leadership in promoting the vaccination campaign has been critical to our progress on vaccinations to date and also addressing vaccine hesitancy. This pandemic has also had a devastating impact on SMEs. In response, it was an imperative for us to Also ensure the sustainability of these businesses through our ESD program through restructuring of loan facilities and providing additional liquidity. And now turning To the economy and markets. The global economic activity reached an important milestone in the Q2 of 2021, surpassing the pre pandemic real GDP peak attained in the Q4 of 2019. After a 3.5% contraction in 2020, global real GDP is projected to increase by 5.8% in 2021, its strongest advance since 1973. Increased commodity prices, poorly functioning supply chains and some labor supply challenges, increased global inflationary pressures during the period under review. On Exxaro's commodity exposure, Iron oil prices continued trading at record levels, driven by strong Chinese steel production, also supported by the rest of the world's robust conditions. Additionally, Brazil iron ore exports remained soft, keeping the global iron ore market very tight and resulting in spot prices hitting all time highs. During the first half of twenty twenty one, India experienced a severe second COVID wave, which has substantially impacted the economy amidst provincial lockdowns, this resulting in constrained production and subsequently reduced thermal coal demand. Amidst various supply issues, the API 4 has reached $114 per tonne by end of June 2021. In addition, with the continued poor transnet Freight rail performance in South Africa. The index price was well supported at the time. The increased momentum of COVID-nineteen vaccinations in our key market economies should positively impact on the demand for thermal coal. The shift in energy transition policy will continue to intensify towards a global move For carbon neutrality, our net 0 by 2,050 in the run up to COP26, which is scheduled for November 2021. Volatility is going to remain with us for the foreseeable future. The robust and quicker than expected economic recovery is facing various headwinds. Overall, There are reasons for optimism in the short term, but we are also faced with poor visibility over the medium term. The steps we have taken to streamline our portfolio in response to Climate change will stand us in good stead for this world of complexity. I believe that the steps we are taking are helping us build dynamic resilience. Given this macro context, the strategic and active steps we have taken and planning for will ensure that our business remains agile and well positioned to continue creating value for all our stakeholders. Further to the communication of our strategic priorities in March, I am pleased with the steady progress so far. With regards to the optimizing our coal portfolio, We have fulfilled all CPs for the sale of ECC and are making good progress with the lupan sale. We remain committed to responsibly maximizing the value of our coal assets whilst we rebalanced the business portfolio for the long term. In addition to maximization of value for the coal business, As a reminder, the strategy to transition to a low carbon business portfolio includes building a renewable energy business that will protect the value of the coal business through self generation whilst building market position opportunities for distributed energy. It also includes using our mining capabilities to move beyond coal and into low carbon minerals and develop a comprehensive impact investment approach to ensure the socioeconomic resilience of our host communities during this transition. Critical to achieving this strategy is our capital allocation framework, which remains relevant for today's market conditions and disciplined future investments. We will not invest further for growth in the thermal coal, But rather harvest value from the recent CapEx program and continue to fulfill our customer needs. Cash distribution will be balanced between rewards to shareholders from current operations and long term value creation. Rian will share with you our capital allocation framework when he presents the financial performance. And so the highlights from the first half on the back of these strategic priorities are: We have maintained our leading ESG rating in the FTSE Russell ESG Index, and we remain amongst the top 100 emerging market performers According to Moody's ESG Solutions ranking, safety and 0 harm remain critical performance indicators for our business and are amongst the key indicators in these index ratings. We are very pleased with the record safety performance in terms of both our lost time injury frequency rate of 0.074 years fatality free. Good operational performance was overwhelmed by, firstly, a particularly poor TFR performance, resulting in a half on half decline on of 34% in our export volumes. The industry through the Mineral Council South Africa is engaged with TFR to resolve some of its challenges. Nombasa will discuss the impact of TFR when she presents the operational results. The strong commodity price performance has contributed handsomely to our financial performance. The increase in core EBITDA by 29% and helps by 67% is attributable to the performance of both coal and especially iron ore prices. Thus, given this financial performance, the Board has declared a historical interim Ordinary dividend of R20 0.77 dollars per share, up 2 23% on the interim dividend declared in the same period of 2020. I will now hand over to Nombasa to present the coal operational results. Thank you, MX. Despite The fact that poor TFR performance and the pandemic impact kept us on our toes during the reporting period. I am very happy to present a set of results on the operational side that demonstrates our resilience, our ability to withstand pressures and the challenges that we had to face in this past period. Now coming to the safety front. Our EltaFR increased by 40% to 0.07 in the first half, which is 13% lower than the set target of 0 point 8. Notwithstanding the industry regression in fatalities In the last year, I am pleased to report a record 53 months in Exxaro without a fatality as at the second of August this year. We congratulate all our teams at our operations For continuing to drive 0 demonstrating that Keter Okupepa is indeed the best choice. Now looking at COVID-nineteen and its impact as at the 31st July this year, a total of 5 10.78 confirmed cases were reported with a recovery rate of 96%. And you will agree with me that this is a very good recovery rate compared to the national rate of 90 We have 187 active cases in the group. Regrettably though, The group recorded 33 lives lost with 2 of these at Mafube. A total of 2,460 employees and contractors were vaccinated. And we are very happy to also inform you that our Rotakalec and Matla Health Centers were approved and registered as primary vaccine centers. Strict adherence to screening and testing protocols apply to all our employees and non employees who visit our sites, including our contractors across our business units. We were also very fortunate that we remained fully operation during very challenging times of this pandemic. Our appreciation goes to all our health workers and managers under the leadership of Doctor. Joseph Machila and Monezizetti, who really did a stunning job keeping us open in business. Going on to the volumes. As you can see from the bar graphs, Both production and sales were lower by 11% for this period, and the table shows a net decrease of 2,600,000 tonnes of product. And this is the result of a decrease at Grotta Khalek, as you can see, of 0.1000000 tonnes due to increased rainfall in January, compulsory COVID testing that we had to administer after the December break coupled with poor TFR performance. Belfast was down 0.3000000 tonnes Luopan, 7,000,000 tonnes and ECC, see 200,000 tons, also due to poor TFR performance. MATLAB was impacted by pit room limitations that we've been reporting over the years and COVID compulsory testing resulting in a decrease of 0,300,000 tonnes. While at Mafube, production was down by 200,000 tonnes impacted by TFR performance and COVID impacts. Now looking at sales. You can see the same net decrease of 2,600,000 tonnes, which is as a result of a 2,200,000 tonnes decrease in our export sales due to TFR challenges and decreased local domestic sales from Protegelec of 0.1000000 tonnes due to TFR performance and at Leopan by 200,000 tons due to decreased market demand. While at Matla, sales follow production, of course, and that's why we see that we had lower production there, offset by increased domestic sales at ECC of 300,000 tonnes due to export products sold in the domestic market. Now going on to the second half of 'twenty one, We focused that production and sales will be 11% higher mainly due to the ramp up of GG6 at Rothelek and Eskom sales increasing in line with contractual offtake. Let me just take a minute here and explain the question I think we will be getting in terms of what the impact of the August 8 explosion would look like in terms of our offtake. And just to remind you that this explosion, as we understand it, will result in 5 units being operational at Midupi. And as per normal and also As per contract, Eskom would approach us if there's going to be any impact or difference in their At this stage, we have not heard anything from Eskom in this regard, and we take it that we will be supplying Eskom accordingly. And as in normal practice, as we have observed, 5 units have been running at Medupi, And we have been able to supply the full uptake to ESCOM. So at this stage, we cannot advise anything different we are advised further by Eskom. Then looking at further what will increase this with the impact of the second half will be at Matla, where we expect increased production enabled by the ramp up at Mine 2, and this would obviously be as a result of the development of Mine 2. Then we will expect increased sales at Leopan, Isesi and Mafube enabled by the expected improvement in logistics availability. Previously, we have highlighted what we believe would be the amount of volumes that will be at risk as a result of the ongoing TF challenges of TFR challenges to an amount of 2,000,000 tonnes. And based on the current performance as we see it, our update estimation is a further 1,000,000 tonnes in addition to 2,000,000 tonnes, giving us a total of 3,000,000 tonnes of volume that will be at risk. We do, however, continue to engage CFR at all levels and monitoring the performance to update the market obviously later in the year as to whether we believe the 3,000,000 ton will be changing in any way. And as far as the markets, We can report good demand in the seaborne market and during a period where supply was disrupted on many fronts, leading to high prices less than a decade ago. Unfortunately, Exxaro could not fully participate and capitalize on very robust due to poor real performance. However, we've made quite good progress in our export sales to other African countries. India and Pakistan remain our 2 biggest destination even though sales to India were negatively impacted by lower demand for South African coal, and this is really due to the severe impact of their second wave of COVID-nineteen as well as the increased competition from the Australian exporters. The banning of Australian coal from China has resulted in China being our 3rd biggest export destination and is shown under other Asia. And China is expected to be a viable market for South Africa as long as the Australian coal is under ban. In terms of our increasing average product quality, which you can see on the bottom left and also price optimization initiatives. All of these resulted in an average realized price of 80% across all our export sales. As indicated on the bottom right, this is the highest we've seen in in 6 years, demonstrating our success in optimizing our asset portfolio, our product mix, pricing as well as our market positioning. Now moving on to cost efficiencies. We are very pleased that we're able to keep our rent per tonne cost increase at 4.2 percent, which is below mining inflation of 5.43. Despite The reduction in tonnes of 2,600,000 tonnes, increasing inflation, Ongoing high stripping ratios and additional COVID related impacts, which are unpredictable oftentimes. The highest impact was due to normal commodity related inflation, which amounted to R305,000,000, an equivalent of R17 per ton. The rest of the cost movements effectively offset each other, and Gopis will unpack all of the detail when he talks to his slide. In addition to the cost performance described above, we have indicated to you previously that we are targeting additional internal savings on production cost and sustaining CapEx. As indicated, production costs were below target but not sufficient enough to offset the full extent of the lower production tons. However, we continue to focus on specific cost initiatives. Having optimized our integrated centers, operational that we've been talking about over the last 2 years, we are now beginning to realize value in the form of Cost optimization and increased efficiencies. The next step in our digital journey is to mature our digital platform and analytics maturity, which will enable our decision making. And then over to my last slide, looking at our total capital spend For the 5 years 'twenty one to 'twenty five, it is expected to be 11% lower than previously guided during the June session of the EFD close. Expulsion capital is expected to be 5% higher within our tolerance range. We confirm that we will not invest any further growth capital in the thermal coal portfolio, as Mpolisi has mentioned, to focus on sustaining our diversified product portfolio, servicing our markets and executing our Elu value strategy. Going forward, the focus will be on generating returns from the capital invested over the last 5 years. On sustaining CapEx for the same period, it is 13% lower than what we previously guided mainly due to The removal of ECC amounting to about R717 million from the first half of twenty twenty two and onwards. And then Lue Pan, R409 million from the second half of next year and onwards. On sustaining CapEx, still very pleased to announce that our sustainable savings still remain at R1.3 billion. In closing, ladies and gents, you will agree that my core team and our support functions have delivered the best results any resilient team could have under very tough operating and unpredictable market conditions. And this performance demonstrate that Exxaro has a robust portfolio of assets, which has enabled us to respond competently to these difficult and unpredictable times. I now give over to Gopis. Thanks, Nombasa. Good morning, ladies and gentlemen. I'll be comparing the 6 month period ending 30 June to the 6 month period ending 31 December 2020. So just a reminder again, we will be discussing the core results. So the IFRS results are adjusted With the non core items consisting of headline earnings adjustments and other items deemed to be non core, During this period, there were no additional non core adjustments and the items included in headline earnings adjustment for The current period is a CHF 1,300,000,000 gain on the disposal of our shareholding in Tronox and the related gain On translation, difference of CHF 876,000,000 recycled through profit and loss. Further details are included in the backup slide. So on this first slide, you will see the high level overview of our core results and the difference between our own managed operations depicted at the top and the income from equity investments at the bottom. The revenue and EBITDA will be unpacked in the following slides. At the bottom, you will see the contribution from our non managed operations showing a significant increase with equity income increasing 63% to ZAR6.7 billion, mainly as a result of the exceptional performance from our investment in Cision Iron Ore Company. This translated into headline earnings per share of ZAR27.22, an improvement of 67%. If we look at the revenue waterfall graph, domestic prices realized on Eskom sales were higher, But in the domestic market was slightly offset by lower prices in the metallurgical and market coke space in line with international prices. On the exports, the higher benchmark API 4 price resulted in an average price per tonne achieved of CAD 78 which is 74% higher compared to the second half of last year. On the volume side, you can see there the financial impact that Nombasa alluded to. So I'm not going to discuss that further due to the TFR challenges we experienced. On the energy side, you will see that the revenue was about CHF 75 million lower. That is as a result of lower wind speeds during this 6 month period and also warranty inspections that were performed. On the exchange rate front, the rand dollar spot rate was 11% stronger and we achieved a rate of ZAR14.78. On Matla, you can see that the revenue increased ZAR 36,000,000 due to a higher recovery of CapEx from Eskom and partially offset by a lower recovery of production cost. If we look at EBITDA, the revenue variance was unpacked on the previous slide. On inflation, on an annualized basis, our labor inflation was only 1.4%. Diesel increased 11.2%, electricity costs 7.8% and the rest of the cost base at PPI of 3.4%. Employee cost was a bit higher as a result of the higher HSOP distributions, which also included the TRONOC special dividend and also safety bonuses. This was partially offset by lower training spent at the operations due to COVID. The higher rehabilitation adjustment is due to us discounting the liability at a lower discount rate in line with lower government bond yields. The operational cost, a bit lower due to the Lower production volumes, although additional maintenance was performed at Groote Harelock of GBP 185,000,000 and we also had Higher coal buy ins from Mafube and also at Tumela during the first half of this year at higher prices at an additional cost of ZAR147 1,000,000. The selling and distribution cost is in line with the lower export volumes. On the stock movement and buy ins, we had to hire 3rd party buy ins to fulfill our export commitments. This had a negative impact of BRL 194,000,000, but we also had stock increases at the BUs due to the PFR performance resulting in a positive variance of €281,000,000 The net ForEx variance is a combination of realized and unrealized ForEx differences on debtors and cash balances due to the fluctuation in the rand. The last one on this slide in the general bucket, the CHF 76,000,000 under energy. This was a once off adjustment that occurred last year due to accounting policy alignment with the Step Up acquisition of Synergy. If we then look at the split between revenue and EBITDA between Waterberg and Mpumalanga, we're very pleased to report an increase at the Waterberg in EBITDA as well as the commercial Mapumalanga mines. In the Waterberg, it was mainly driven by the higher revenue, offset to some extent by inflation of ZAR134 1,000,000 and rehab adjustments of a negative CHF 77,000,000 The positive CHF 634,000,000 Variance in Mpumalanga was due to lower selling and distribution cost of about CHF 400,000,000 Positive inventory adjustments due to production exceeding sales, which was a positive CHF 231,000,000 and lower mining cost in line with the lower production of a positive CHF 213,000,000 This was to some extent offset by inflation of €179,000,000 and rehab adjustments of €70,000,000 In the other bucket the coal segment, the movement there is mainly due to the ESOP distribution that I referred to. Also included, there was a SASL SARS diesel rebate write off of about CHF 30,000,000 and also a donation of CHF 15,000,000 to the Solidarity Fund. So all of this translated into a very healthy 30% EBITDA margin for the gold business. If we look at energy, so for the 6 month period, synergy generated 331 gigawatt hours of electricity, which is below our expectation due to lower wind conditions And lower plant availability, the plant availability was caused by the end of 5 year warranty inspections that we performed and also maintenance that we planned for in the lower wind season. The plant availability has since increased to normalized levels. And generally, generation is higher in the second half of the year. Also in the top right, you will see The generation that we normally target on an annual basis and you will see that it looks like we may be lagging it during the current year. So all of this translates into very good EBITDA margins on a normalized basis. Exceeds 80%. And it shows the consistency of earnings of these wind farms, which are underpinned by long term offtake agreements. Also the project finance debt, just a reminder again, They will be fully settled by 2,031 and has no recourse to the Exxaro balance sheet is hedged through interest rate swaps. And therefore, we also apply hedge accounting and there is no volatility on the income statement. So since the start of the wind farms in 2016, we've maintained availability factor of around 98% compared to the 97% that we've seen during the first half of this year. If we look at core attributable earnings, the net financing cost, you will see there the synergy portion of CHF 246,000,000 and we also capitalized interest of CHF 149,000,000 at our GG6 project. Looking at equity income, Mafube, our JV with Tungela, Equity profit of CHF98 1,000,000 as a result of higher export prices, partially offset by the stronger rand dollar and also lower sales volumes due to the TFR challenges. The increase in SAOK to CHF 6,300,000,000 mainly driven by higher iron ore prices as well as high price premium that they realized in the market. So Tronox that consists of our 26% interest in the South African operations only for 2 months of this year. So Tronox Plc exercised the flipping option for Tronox SA Shares, which became effective on the 24th February and that investment was therefore realized. Black Mountain, this investment, the sales process didn't go through in 2020. So we're now again including Black Mountain again. So the increase there is due to lower production cost and also lower financing cost. Also important to note at the end of last year, our share count was 358,700,000 shares. And with the share buyback program, we've now repurchased shares to the value of CHF900 CHF50 1,000,000 and it translates into just over CHF6,080,000 shares. So in this calculation for the Earnings per share, the share count has now been reduced from 251,000,000 to 250,000,000 shares. So So all of this then translated into core attributable earnings per share of BRL27. 22. If we look at capital allocation, it's still our intention that our net debt EBITDA, excluding The synergy project financing should remain below 1.5 times. Our cash inflows during the half year, ZAR7 1,000,000,000, 3,300,000,000 from our own operations as well as dividends of 3,700,000,000, mainly from SCIO. Following the disposal of our shares in Tronox, we received DKK5.8 billion. In terms of our framework, we use this to pay financing costs, sustaining our coal operations and support functions with CapEx of CHF 686,000,000 and also expanding the coal business with further CapEx of CHF 488,000,000. We paid a dividend totaling CHF 6,400,000,000, which includes a CHF 1,900,000,000 special dividend from the proceeds of TRONOGS. So the share repurchase program, as I pointed out, up until the 30th June, We've repurchased just over ZAR 6,080,000 shares to the value of ZAR 960,000,000. So all of this resulted in a net debt position at the end of June of just over ZAR7 1,000,000,000 At the net debt equity ratio of 6% and the net EBITDA cover ratio excluding synergy of 0.4, well below our target of 1.5 times. So as Mokulisi pointed out, very pleasing that we were able to pay a final dividend of ZAR20 77. So as our coal CapEx expansion program is now nearing completion, We have in line with our policy applied a 2.5x cover ratio on adjusted group earnings and thereby balancing the shareholder distributions and our strategy for future investment in low carbon. And as a result of that, the board could pay this dividend of ZAR20 77. So with that, I'm going to hand back to Morcolisi. Thanks very much Also everybody that contributed to the result, the people at the operations, Support functions, also the finance people for all the effort and the long hours, really appreciate it. Thank you very much, copies and also Nombasa, for for presenting the sterling results operational results. And within this context, Our business outlook will focus on delivering on our strategic priorities. Firstly, completing all our sales of non core assets, Remaining being Liupan and also including Black Mountain Mining. Secondly, to continue to maximize the value of the coal business for the benefit of all our stakeholders and lastly, position the Exaro business for a low carbon future and ensuring that we take all our stakeholders along during this transition. From a country perspective, although the recent unrest and economic damage could have lasting effects On investor confidence and job creation. Initial estimates indicate that the full extent of the recovery and impact the progress in economic reforms, as evident in South African economy during the first half of twenty twenty one, have been delayed. All these fiscal socioeconomic imbalances, together with the COVID-nineteen 3rd wave impact, will have a knock on effect on the economic reconstruction and recovery path for South Africa into the second half of this year. The likelihood of Eskom playing in the renewable sector will accelerate the decarbonization of 3, and create a low carbon growth opportunities for the economy. As economies reopen after the widely spread COVID-nineteen Delta variant, Governments were forced to reintroduce more restrictions. However, social activities have resumed levels should not be seen as a long term trend for the future of coal. A correction can be expected as logistics challenges are addressed. The COP26 event in Glasgow is significant in relation to the 2015 COP15 and Paris agreements in terms of, amongst others, Financing of the energy transition and its impacts. We will be active participants at the event with a view of informing and shaping our Just Transition strategic direction towards a low carbon future. Local dynamics are clearly negative to both immediate operational stability and long term investment efficiency and attractiveness. The issue of COVID-nineteen, The recent social unrest, the Transnet need to be addressed separately and holistically and with urgency. Whilst interdependent, they do require and framing based on practical and time based actions, which must be agreed amongst all stakeholders and executed at Speed and scale, they do have a dire implications on SA Inc. Business and government have been engaging intensively to identify key themes To a short term recovery and long term economic performance, such as closing our country's inequality gaps, Restoring confidence in our economy and strengthening national security. In this regard, government and business have agreed on their key respective actions briefly described on this slide. From a government point of view, There is definitely a requirement to unblock red tape, address labor issues and some policy directives in the short term to support the growth agenda and enable rapid job creation. Leadership, including the President, must be visible and to be seen as being in the control and owning The broader national challenges. A more proactive communication that reinstates confidence in our economy and reverses some negative perceptions arising from the last few weeks must be undertaken with great vigor. From the business side, business will augment government efforts in the following key ways: by identifying areas of local support to vulnerable communities and executing accordingly. Mobilize and develop practical ideas for job creation, links to geographic areas where they are located: providing collective support to SNMEs, especially those operating within rural and township areas. Exxaro's support through our ISD program is worth noting here. 66 entities comprising 44% being 100% black owned and 26% women owned are supported by Exxaro and have grown total revenues by 160% Since inception of the program in 2018, it's ZAR1.2 billion, of which ZAR1.1 billion was derived from doing business with Exxaro. A total of 1102 additional jobs were created, including a growth in paid salaries of 185% over the 3 year period. The ESD program is one of the critical drivers of our objective of being a catalyst for economic growth and environmental stewardship as we embark on our transition to a low business portfolio. Business has committed to collaborating with government, and we will keep The momentum going and we should keep each other accountable in terms of our commitments. In conclusion, these results underpin our approach to deliberately managing risk and maximizing our investment proposition. Currently, we are predominantly a coal company that must reward shareholders and responsibly maximize the value of the coal assets bequeathed to us. With these assets. The results demonstrate our disciplined progress in streamlining our portfolio to deliver efficiency and protect shareholder value while adjusting for a future of lower risk and moderate returns. Recent events and the demonstration of the social instability in our domestic market is an urgent reminder that business must work with government if we want to protect the investment proposition for our country. It highlights the importance of an environmental, social and governance framework and a just transition in our management of decarbonization and energy transition. I do look forward to our Capital Markets Day On the 20th September, where we will take you through our strategy for managing in a world in transition, in which risk and volatility have become permanent features of our personal and economic realities. And so ladies and gentlemen, let me also take My management team and all our Exxaro community, because it is through your support and commitment That we continue year in and year out despite the difficult challenges, but having the resolve to ensure that we continue creating an even stronger Exxaro of tomorrow. I thank you all. And I want to thank You very much for your time this morning, ladies and gentlemen, and I just wish you that You keep safe and healthy. And when your time comes, When you can get vaccinated, I really urge all of you to do that. It is our collective responsibility to keep each other healthy. So I know there are some instances of hesitancy, But think also of your families and all the people around you. And with that, I now want to hand over to you, Mzila, for our question and answer sessions. Thank you all. Thank you very much, Mkholisi, and thanks to Nambasa and Rian as well for an excellent delivery. I have already received a number of questions, but they really cluster around Three themes and the first one being around TFR. And so I will just read out Those questions related to TFR and when we've responded to all of them, then I'll go to Cole. And then the last theme being around energy and and specifically synergy performance. So on TFR, the question is around Our confidence in terms of the second half performance on TFR given the recent shutdown and some challenges in In KZN. And the other question on TFR is the extent to which I guess Exxaro as part of the coal industry is considering private investors participating alongside TFR to improve its performance as I think we've seen in the iron ore business. And then, I think those were the 2 Key questions around TFR. If there are any others, I will pick those up. Maybe if we can have a response on the TFR question. So Sarkiswanapu, who is our GM for Marketing and Logistics, will respond to those questions. I think on the TFR question with regard to our confidence for the second half, important that we understand that We're battling 2 challenges in the main year. The 1 is the operational challenge largely stemming from the Lack of availability on the locomotive fleet. And we've also had quite a few derailments in the 6 months period that's kind of uncommon at the level at which it occurred. So we are fairly confident that TFR will towards The Q4 start to win on the operational side specifically with regarding to the locomotives And we believe that towards the end of the year, we will hopefully see that being resolved. The bigger challenge and the bigger uncertainty probably remains with the security related issues. On the coal line, you will understand that the coal line Geographically stretched over a very long distance and it's quite difficult to police that beacon area. So TFR has employed our array of measures to curb the impact of the security related issues, which Largely is in the form of cable theft and vandalizing of rail and infrastructure equipment. So, TFR is really doing a lot of work in that area. And then we also know That industry and even through the Minerals Council of South Africa, there is a lot of engagement with TFR To say how can we collaborate, how can we solve this issue jointly into the future. We also know there is A lot of effort at national level to bring an end to this risk that the security issues pose to the industry and to the fiscus in the loss of revenue that we incur. So, yes, I think we're fairly confident for the second for the last quarter for this year And looking forward to a resolution of the security issues. Okay. Thanks, Sakhi. And then if we move over to the questions related to the performance of the Coal business, I think this first question is actually a compliment to the coal team in terms of the cost cutting because I will use a specific words here where Sandy Leh from Mtambo Wells says, how much cost savings are you looking to eke out In the second half, so I think you suggested that it does get difficult as you continue to succeed with cost cutting. And then a question around the markets that the growth the export growth in Africa has been quite substantial. Are you able to share which countries those are and how sustainable is that growth in Africa. And then related to those export markets, what you're seeing in terms of buying trends from Europe where at some point it was at 0 and it's now at marginally low levels. And then the other question On the core performance around the price that how sustainable is this 80% level of API price that you've been able to achieve. Maybe let me stop there. And maybe related to the 80% of the price achieved Is the if you look at the trend in the RB1 in your graph, looking forward, is that Potentially sustainable in terms of the RB1 component. Sakur, do you want to start? Good. Yes, if I can start with the markets on the question about Africa. So I think important to understand that Africa is actually a very small market in the seaborne thermal coal market. And The increase that you see in our sales there was success on specific tenders that we had in this period. So it is not necessarily a growth in demand from the market, but successes that our international team had On that front, on Europe, I must say for the bulk of the first half, the API2 price visavis the API4 price was actually very unattractive for South African exporters And not a lot of coal has gone to Europe in the early part of this half. It's actually a year towards the latter part of this half And then over the past month that you've seen API 2 really steaming ahead and we probably will see more South African coal Going into that destination due to the positive price differential between API 2 and and the Atlantic Basin generally is very tight. So we will see coal flow into that area. On the price side, I think important to understand that the price is very deliberate or the achievement of the 80% visavis the index is a very deliberate effort from the Exxaro side. As Nombasa has alluded to earlier, It really is a result of the optimization of our asset portfolio, but it also comes very strongly Through in the way that we look at our product portfolio both from a production and a sales mix perspective, where we have specific initiatives to improve on that. Also, our international team has done very well on pricing compared to the benchmarks that we use in the 6 month period. Going looking forward, we believe the Percentage of RB1 in the portfolio as we indicated on the slide is definitely sustainable and we see no reason why the achievement of higher level of actual price realized against the index is not sustainable. So we definitely expect to be sustainable. Nombasa, back to you on the cost one. Maybe before you walk away, there's one question on TFR Sakai on Whether we're seeking any alternatives to exiting our coal that I just forgot mentioned earlier? Yes. So on the challenge that TFR has posed to the business or the lack of export capacity as opposed to the business, We definitely are looking at all options to evacuate coal from our operations. Who I think has done a wonderful job in balancing the production with the demand from the market influenced by logistics, so that we do not sit with undue stock volumes. But we are looking at all options with regard to port, to rail and other exporters to make sure we try and get as much of our export product Still off our minds and into the market to our customers. Just for on the cost, I know I'm going to ask Melis to stand as well. But I think it's always important to recall what do we have advised in the past in terms of remaining within mining inflation and that's the confidence we have going into the second half. But I know he does it so much better than me. I think he must just unpack some of the initiatives that we're looking into in the second half. Mel? Yeah. Thanks, Mumbasa. And the question from Sandeli is correct. I mean, it does become more and more difficult to eke out savings As you get to a different threshold in your cost base, but there are a number of initiatives that are being driven and staying within mining inflation is we measure ourselves on, and that's the guidance we've given to the market, and we've managed to do that even with the 2,600,000 tonne reduction in the volumes coming down by 11% essentially. We saw that our costs only went up 4%. If you see on Kopi's slides 20 21, The derived EBITDA cost of sales has come down by CHF400 1,000,000. That's in absolute terms. That's after taking into account inflation increases, etcetera, etcetera. So that's how we measure ourselves. We're looking at exiting ECC at the end of August. That's one of our higher cost operations. And we're also looking at progressing the Liupan divestment. That's also a high cost operation in Mpumalanga and has been one of the operations that have been mostly affected by the TFR constraints because of its product mix and market demand limitations. We look at our fixed costs and we try and compress those as much as possible. We try and eliminate any variable costs associated with tonnes that we don't produce. So those are the things that we focus on, and we will be back in November to explain and early March To explain how did we perform now in the second half when we hope some of the logistical constraints are assisted and Our portfolio optimization in terms of being low on the cost curve has actually progressed as well. So it's just some indication of where we're going to be. Thank you, Melis. And I think just to add that the teams do take opportunity to save costs depending on what's happening. For example, our market to resource strategy, which really already is disrupted by the performance and the fact that, that we impact on the production side, we have full stockpiles, We've got to stop production. We've got to slow your plan. So we do make sure that from stripping ratio point of view as well, We do align our stripping such that we don't overstrip when we are not going to need to take out the core. So those are opportunities. I think the team has been very smart in in Tembo, Sporting and then adjusting accordingly. Thank you very much for that feedback and response. And so if we move over then to questions on synergy, And some I will direct to Ryan because they relate to the debt. But the first one on the How Exxaro is responding to the 100 Megawatt threshold on embedded energy? Maybe for Roland To respond to that, I think from an operational, that's really the only question. The others, Rian can jump in there. So the question from Peregrine, David Fraser is, why would the interest charge be down 43% year on year when the debt level is actually 2% higher and also related to the debt is If I can find that question. But maybe just carry on Roland while I find the second part of that question. Okay. So the debt, I don't think it's down 40%. It's more or less the same. What you could be referring to was the first half of last year, We only acquired synergy in April. So finance charges was included for the first half of last year for 3 months, For the whole of last year for 9 months and now for 6 months. So it's probably to do with Timing on the acquisition because previously it was equity accounted. Okay. And then I found that other question on the synergy debt in terms of Whether we plan to settle the synergy debt and whether it will be fully settled or we'll refinance it? Look, those are options that we will consider as we go along. So currently, we the debt will be settled by as they mature on a yearly basis, we do repay some of the debt by 2,031. But to the extent that it makes commercial sense to refinance them or to extend the maturities, It is definitely something that we will look at. But at this stage, it's not something we're actively looking at. All right. Roland, do you want to take the question on the 100 Megawatt? Just to that Point on the debt. We did do an analysis, I think it was last year. Yes, last year on the refinancing options. And options and economically, it didn't make much sense for us, but it's something that we'll be looking at on a regular basis. It's obviously A key potential addition of value to the synergy asset. So it is something that we keep an eye On the 100 Megawatt question, I mean, there's Probably a detailed answer and a fairly simple answer. The simple answer is that it definitely helps our strategy in that it enables us to develop Renewable Energy Solutions potentially quicker with a threshold increase. And a slightly more detailed answer is that we're still awaiting the exact gazetting in terms of what that 100 megawatt threshold increase means for the renewable energy industry. But I think that the most important Point to take from it is that the original threshold was 1 megawatt. The initial suggestions from from government was that they were going to raise it to 10 megawatts. There was pressure to raise it to 50 megawatts. And when came, it was 100 Megawatts. So I think that just shows that government is really committed and interested in engaging the private sector to help provide some of the solutions that we're to the problems we're seeing in the electricity industry in South Africa. So it's a pretty good sign that legislation is moving in the right direction, and we expect to see more improvements in that regard. All right. Thank you very much. There is another question on synergy, but it's related to strategy. And, Janre, I'm not picking on you by mentioning your name, But it's a question we've had throughout the morning as well. And our response is that we will share additional strategy Information at our Capital Markets Day for which we have announced the date of the 20th September and further details will be provided. Your question was talking of really wanting to understand an order of magnitude CapEx to M and A spend on renewables projects and how it will compare to coal CapEx. So that's a question that I think will be answered Fairly detail at the Capital Markets on the 20th September, if you could please indulge us with your patience. And then I think the last question or last two questions. The first one being around our vaccination In terms of what's our current daily vaccination rate and how much do we think we do we have enough vaccines available And where we are in terms of supply of vaccines, if they're regular? Well, let me I don't know. I think what we can do is to highlight the fact that as it has been already been already publicized, I think even on television, the program that we are running in so far as really driving our efforts, Firstly, by ensuring that our health centers' facilities have been registered and the effort that we are driving with government to support not only the vaccination of our people, but also their families and extending to the communities. Thus far, we have no limitation on the ability to vaccinate the people. The capacity is there. I think what has been basically what we had been waiting for was the consistent arrival and the supply of vaccinations to the extent that the board had even, given, permission for us to stand about 50,000,000. 70,000,000. 70,000,000 in so far as acquiring these vaccines in advance so that we could actually claim that back through the program that they have, where the treasury has made an undertaking to finance the whole vaccination program of the country. So there is no lack of capital. There's no lack of capacity. I think by and large, what we are waiting for is to ensure that we can get the consistent apply of vaccinations. Now we do know that the government, with the work of our support from our business for South Africa, have been very much working on this to ensure that we can be getting more vaccinations or vaccines for the country. And by and large, what we do know is that now with J and J also being supported, and I think there's another one that has been recently approved. I think it's a Chinese one, if I'm not mistaken, that with those now coming on stream, We're going to be having more, vaccinations, being made available to the country. There was a slight disruption that took place in terms of what happened a few weeks ago, especially in some of the vaccination sites, especially in Gayser N, But all those vaccines were redirected to other provinces that were not affected. And so to the that even within ourselves, we are trying to ensure that by the end of this year, as of ZARO, We want to be in a position when, by and large, we would have vaccinated basically the full population, also given the 25 year olders plus going forward. And so our intent is that when we come back into the by the time we go for our holiday season, that it is we don't have to have the same challenges we had at the beginning of the New Year. Now we had to go and do mass testing, and that impacted initially the our production capability at the beginning of the year. So our strategy is to maximize our vaccination of our people and their families and the immediate surrounding communities as quickly as we can before the end of the year. Great. Thank you very much. And then there's a couple of other questions, individual. So and this one, Rian, to yourself. When we expect to complete the sale of non core assets? So The sale of ECC will be completed the end of this month. We on Liupan, we are hopeful that we will conclude the sale by December, but then there will still be conditions that will have to be met, the competition in Section 11. And And also probably by the end of the year, good progress on the Black Mountain Okay. And then there's a question related to coal again, specifically around the stockpile levels at Medupi at present. And if we have any concerns on offtake given the stockpile levels? Well, I can just say at this point in time that we look at and see the stockpiles of Meduobie over the fence. We don't often measure them necessarily. And we can always take an estimate. They've got enough stock on the Medupi side. And I can say anything between 13,000,000 to 17,000,000 tonnes at this point in time. That is now the strategic stockpile. On the livestock power side, they may be slightly lower than Matimba. And we often assist if they need to reclaim in any way. So no issues there that makes me worry about the Sadly, that they may not take stock. Okay. And then the next one is more of a plea Then a question, and it's one that I will certainly take further with Bonginkosi regarding our enterprise and supply development, where I think in his questions also suggestions of how we can further improve on the ESD program. For instance, in terms of further facilitating the process at business unit level, And that is certainly an area that we continue to look at because that's where our communities are located. And then He's asking us to consider reviewing some of our conditions in terms of the ESD process and Bonginkosa will need to engage with you to understand which particular Conditions you're referring to? And also, I mean, the whole point of the ESD is to lower the barriers to access to finance. So I think the suggestions that have been made here by Bonginkosu will be taken into consideration. And my details are available on And then a question from F. Davids and this is an interesting one. If we've considered carbon capture usage and storage together with some of our customers like Eskom to offset our carbon heavy activities. And I can venture a response there, Mr. Davies, I think you'll appreciate that this is a technology which is I think globally still in development. And in terms of our overall decarbonization strategy, we're looking at both current and future technologies that will enable us to achieve our 2,050 target of being carbon neutral. In the short to medium term, we also looking at what we call nature based solutions, which from where we are today, we see could potentially serve as carbon sink. There are various ways of approaching addressing the issue of carbon heavy activities in terms of offsets. But carbon capture and storage and land usage is one technology that we are watching and we see how it's developing to assist us, not just ourselves, but I think it's one which will greatly advance the world's cause towards achieving some of the emissions targets we've said. I hope that answers your question. I don't know if there are any other questions from Chorus Call. Yes, sir. We have 3 participants on the line at the moment. Okay. This question comes from Patrick Mahn of Bank of America. Hi, Patrick. Hi, good day and thank you very much for the call. I have 2 kind of interlinked questions, both around the dividend policy. So there seems to be a bit of a subtle change in the dividend policy where the cover has gone from Kind of your core coal earnings to group attributable. Can you just explain what's changed and The thinking behind that, is it done sort of to increase the amount of cash available for reinvestment or how should we be thinking about the current policy versus the versus the previous policy? And then the second question, which is linked is just how do you think about Paying out dividends versus doing share buybacks, particularly when you look at kind of the discount to the luxury value For Cision, I mean, your dividend today is over 10% just on the interim dividend. How do you balance up doing these really high dividends versus buying back shares? Thank you. Okay. So firstly, on the dividend policy. So you'll recall, I think we already changed the policy last year. And previously, the policy only included the synergy operations. So we changed it now to Exxaro to the group. By implication, it now will also include the energy business synergy. So when we calculate the dividend to be paid, The earnings of synergy and energy will also be taken into account. And then secondly, The question around share buybacks versus dividends. I mean, at the end of the day, it is a question about What is your view on the intrinsic value of the share that you need to take a view on? So when we embarked on the share buyback in Earlier in the year, we obviously took a view what the intrinsic value is. And as long as the share price is below that intrinsic view, then we may consider buybacks To the extent that we don't think the share price is below the intrinsic value, then we will more towards Dividends. Okay. Thank you. And then sorry, just one follow-up question, If I may, I think somebody else did ask it, and I apologize if I missed the response. But there was some suggestion of private sector participation in Transnet. Can you just comment on whether that's something Exxaro would consider and what could the potential benefit be? Thanks. Hi. Look, there are a lot of engagements between Transnet and the industry. I mean, it's not just the coal business only. Even under the auspices of the Minerals Council, I know that they are also engaging iron ore and the chrome side the industry. And we are part of those engagements, and there's really nothing at this stage we can share that is tangible. Okay. Thank you very much. Thanks, Patrick. Next question, Chorus Call. The next question comes from Brian Morgan of RMB Morgan Stanley. Two questions, if I may. Just the first one is on the disposal of ECC and Leopane, You sold ECC now to Overlook, not a company we know. So how do you make sure when you're selling assets that the buyers are going to appropriately rehabilitate those assets. I believe in the case of ECC that you've taken the rehabilitation cash as part of the deal. So that probably makes the hurdles even higher for them to clear. Do you have an answer for that? Do you want to start or should I? So, yes. So, Brian, remember as part of the Section 11, The buyer of a mining asset must with the DMR either put cash or guarantees with the DMR taking into account the view on the rehabilitation at that point in time. So you won't get a Section 11 if the DMR is not happy that the buyer has earmarked sufficient cash for the rehab. So although in that instance, we're taking the cash, the buyer had to replace that cash with a guarantee with the DMR. So you're satisfied that ECC, even if we go into a bear market coal price scenario that ECC will be appropriately rehabilitated. Yes. Look, they have to do it by law. And I mean, obviously, there's no amount of money that is available for rehabilitation. Now to the extent over time that the liability grows, We can't now stand in for that. But as the liability stands today, there is either through the guarantees or the money that they may put in a new trust fund, sufficient money for rehabilitation. Okay. So then the next question then is, DG6 Phase 2 is Coming to fruition sometime soon, we've got quite big differentials in the markets between RB1, RB2 and RB3. You're guiding for 90% price realization relative to RB1 by 2023. If that was today, so TG-six was Phase 2 was in production today, and this was 2023, and the current market differentials were in place. What would the price realization be relative to RB Brian, thanks for the question. Saki here. Yes. I think we do not disclose that number, but I think you have enough information to calculate that number. We do disclose 1st 6 months period and up to, I think, 2023, what the product mix is envisaged to be going forward. And then if you have the API 4, which you can make your own calculations on plus discounts on the sub grades, You can actually calculate if that product mix play out, what the realization factor of API 4 will be. In general, I can say I think the 2023 is probably a pretty good estimation of that, But I think you can easily calculate that from the information we've provided. Could the GED 6 Phase 2 products could potentially be at a premium to RB1, right? Sorry, I've missed question, Brian, if you can just repeat, please? In my understanding, the Gg6 Phase II product could be priced at a premium to RD-one. Is Is that wrong? Yes. I think we it all depends how we play with that in the market Because what determines our realized price of course is the sales mix and it depends on how we utilize that product in our sales mix. But I think for your estimation of realized price, you can look at our product mix estimation and just discount the API 4 on the RB1 portion. And then I think we have the 3rd question. That is correct, sir? No, no. It was 2 from me. The next comes from Tim Clark of SPG Securities. Thanks very much. Can you hear me? Yes, we can, Tim. I thought you'd forgotten about us. Not today. Just there seems to be a subtlety in the presentation that With a decrease in coal investment, there is a desire to return more cash shareholders from the historic high investment levels in coal. And yet there isn't a change to the dividend policy, you still have 2.5 half times cover. And I'm just sort of trying to work out, should we think about you working towards a sort of net Cash net debt level that you're comfortable with and then returning more cash to shareholders than the 2.5 times Or should we think about you accumulating more cash for renewables or I'm just struggling to think of that capital allocation given the subtlety of those turns. That's my first question. My second question, you had a few questions on Medupi and the explosion. And if I run my numbers, you did 12.6 sales to Eskom from Choraqalek in the first half and if I annualize that it's 25.2 2. And my numbers, Medupia and Matimba should take 14.3 each, so 28.6. So My sense is that Eskom is not taking as much coal for a fully ramped up Medupia and Matimba anyway. And so you're actually missing up on missing off missing out on some of the potential ramp And I wonder if you could perhaps comment on that. And then my last question, I don't think it would ever be a result if I didn't ask you this question. But If I look at your central cost of €450,000,000 and then €145,000,000 in coal, and I acknowledge that there was a solidarity fund in 1 or 2 bits and pieces there. So even if we deduct a little bit from that, you're getting to like an annual fixed cost central cost of ZAR1 1,000,000,000. And if I put a multiple on that, it becomes a very meaningful part of your valuation. And I just wondered if you could talk to that a little bit because it just Every time I look at it, it feels a bit eye wateringly, hides. Okay. So perhaps what I'll do is I'll talk on the capital allocation. So at the moment, I think the easiest is to assume that we will accumulate cash as we develop the energy strategy. But what we always said is there's no intention to at this stage change the dividend policy, but it could be in future as with TRONOGS that Either if you don't make investments or you don't find investments with the correct returns that you then do special dividends to shareholders. So that will probably be the approach. And then on the corporate cost side, as we pointed out, we are currently busy with exercise to look at that. There are also once off items in there That fluctuates over time, for instance, your share based payments and all of that. But it is obviously a number that we are also looking into and there is a drive in the organization to see how we can reduce that number. Thanks, Fian. And then to me, your question around Medupi, if I can maybe repeat it Ronald Mafoko, who is the GM for Groote Glucken will respond to the question was around the fact that It seems like Medupi is not taking up to the level of its contracts being about 14,000,000 tonnes and we may be losing out. In 'twenty nine or 'twenty five. And then perhaps a comment on that, Ronald. Yes. Thanks, Tim, for getting to the crux of that. It is true that What we're missing out on here is an opportunity on that upside between the €5,200,000,000 and €28,000,000 odd that you referred to. You will remember last year, we came out And we were very vocal about our strategy in the meantime whilst Midupi is not at their full capacity yet. And we said that we will be focusing on our high value strategy. And We're very fortunate in that we have got the installed capacity and the flexibility within our plant complex to be able to divert production to high value and move the energy from what would have gone to the power station stream into our export stream and take advantage of the opportunity as it exists. And it also plays in our favor that we've got the prices at this stage. Saki, do you want to add? Yes. Just have a look at 37. There's a reference for you, Tim, to Slide 37, which looks at the coal sales volumes. Namaste, will you comment on that? No, no, let me just see first. So it gets up to 25,000,000. I mean, what I'm thinking about is, I When you took us up to Kuroda Kalog and you showed us the mine, you also gave us some charts with of optionality on it for higher levels of domestic or export production if Eskom's uptake is lower. And I suppose what I'm trying to get towards is, we be assuming a higher domestic sales number even if yes? Just another, just a principle, Tim. Paul team. Remember, the GG6 Phase II project was also in line with the 2 big objectives for us had been to make sure that it enabled us to add some tons from a power station coal point of view to top up from 25% to 29% to midubi. But what we've said was In the event that Eskom is not taking the extra 4,000,000 tons, it gives us optionality to produce more of the high value coal from 1.7, is it 2.7. So it gives us a benefit of 1,000,000 more tons of high value coal that we can actually export. And I'm not so sure if we talk necessarily domestic, but what I know is that if you at 25, You actually gain 1,000,000 tonnes of high value. And at obviously €29,000,000 you are back at €1,700,000,000 So that's really what we need to keep in mind. Okay. Thanks, Natya. Sorry, when I said domestic, I was meaning more sort of some Yes. Classigality to move. Yes. Not necessarily. Yes. Yes. Okay. Thank you very much. Good. All right. Thanks, Tim. Any other questions from Chorus Call? Seems to be one more. Yes, correct, sir. The next question comes from Tovang Thakou Just a couple of questions from me. Obviously, Sichuan or Kumba doing so well has really helped your dividend. And I just wanted to find out if over the short to medium term That flip up still makes sense considering how it's really helping you guys from a returning cash to shareholders point of view. And then my second question, Saket, we've been talking about this quality transition over a few years. So Part A, is that transition still on target or have there been delays to that quality or portfolio mix And secondly, would I be correct in assuming that, that portfolio mix that you've got in the slide actually sense in a market where API4 prices are higher, because you're always talking about changing the product mix to sort of suit The seaborne market. And then my last question is to Donbasa. I don't know if you're going to But would you be willing to give us like a split of EBITDA of the Puma Langa operation? Yes. That's it from my side. That's why you know the answer already, I'm sure. Okay. Okay. So perhaps what I can quickly on the okay, on the EBITDA split, I think once the disposals are finished, then it's very Going to be very easy to do the numbers because then Leupen and We'll be out of the mix. And then I think there was a question on the flip up. So as we said last time, at the moment, it's not anything we're in discussions or considering. So this it's currently not on the cards, the flip you. Okay. And then there was a question around the product mix and the transition we've seen to higher quality and whether it makes sense at current high prices. Thanks, Tabang. I think the transition to a higher quality export mix is definitely a sustainable one and that journey is very well on track and a very deliberate So I think that's something we feel quite confident in. Then on your question of whether the product mix will make more sense in price environment, not such an easy one to upfront say Because we were actually off a view that as prices were going up, you will see the accounts to the API 4 widened materially and therefore, you will actually see A big plus on your high quality. Whilst what we've seen this time around, even in spite of the Australian competition, is the discounts did not widen as much as we would have thought at an API IV of 150 dollars per tonne and more. I think the most important message about our export mix is not necessarily in what price environment makes it the most sense, But in the strength that it gives us to for whatever the situation in the market is, we can play to that market Because that's the strength of our portfolio, we can really tailor to get the most out of that portfolio given what the price do and where the discounts on the subgrades are. So yes, I just think from my side, it gives one a lot of confidence of what you can do in future with this. Thanks, Saki. Thanks. Any other questions from Chorus Call? All right. Thank you. Any further questions from the lines? Thank you very much. And I do not have any other questions from the webcast. And so with that, ladies and gentlemen, it brings us to the end of our presentation. And thank you very much for an engaging session and your questions and continued interest. Perhaps I can repeat that we have committed to our Capital Markets Day, where we will give further details on our strategy on the 20th September and we will time it such that it also accommodates our offshore investors in the East and West of the globe. And hopefully, we will get your interest in that session as well. What remains for me is to thank everyone who's made this event possible. There are too many To mention that it's always teamwork. Firstly, amongst my colleagues on Exco to my right, the CEO, CIO Designator and Financial Director and their respective teams, my own team on the Investor Relations, Stakeholder affairs as well as just about everyone in Exxaro who's really played a part in terms of the delivery of the results, bring it all together to this event today. So thank you to Exxaro and thanks to you the audience for your