On behalf of Kumba's Board of Directors, and Executive Management, I'd like to extend a warm welcome to everyone joining us today. My name is Penny Himlok, Kumba's Head of Investor Relations, and I'm joined by Mpumi Zikalala, our CEO, and Bothwell Mazarura, our CFO. I'd like to remind participants joining us on the webcast and Chorus Call that they will be in listen-only mode until we open the line for questions at the end of the presentation. Please note the disclaimer, particularly in referencing our forward-looking statement. We will be watching the highlights results video, and thereafter I'd like to welcome Mpumi onto the stage. Thank you.
Thanks, Penny. Good morning, everyone, and thank you to the GSC for getting us to start with First Things First, which is around safety. To everyone, thank you for joining us. We'll start by going through a summary of our full year 2022 results, including our ESG and operational performance, before handing over to Bothwell to take you through the numbers in more detail, including the value that we've created over the past five years from our Tswelelopele strategy. I'll then talk about the strategy process as we have reached the end of our Tswelelopele journey and share our outlook for the year before wrapping up and opening up for questions.
As you know, and that's why I mentioned the safety aspect first, the safety, health, and well-being of our workforce is our highest priority. Therefore, before we go into our 2022 annual results, I share with great sadness that last week Monday, on the 13th of February, we had our first fatal accident in over 6.5 years. Tragically, Nico Molwagae, a drilling assistant who was employed by one of our service partners, was fatally injured at one of our mines at Kolomela mine. Our thoughts and prayers are with everyone, especially Nico's family, friends, and also our colleagues during this difficult time, and I ask you to please join me in a moment of silence as we think of Nico, his family, friends, and colleagues.
Thank you. We know that mining can be dangerous, but it shouldn't be. This is not our Kumba way. Our sacred covenant is that each and every one of our colleagues needs to go home to their loved ones safely each and every single day. We are committed to zero harm and doing everything we can to eliminate fatalities and fostering a safe operating environment. I'd now like to return to our 2022 results. Thank you for joining us in a moment of silence. Before I get to that, I would like to thank all our employees and service partners. We've delivered a solid set of results demonstrating that we can achieve together, and we have built good momentum to carry us into the year ahead. I'd like to acknowledge all our stakeholders, including our communities, customers, suppliers, and our government.
Let me now take you through the progress that we have made this year, starting with the macro operating context in 2022. 2022 has been marked by several external headwinds, and let me be the first to say that our Kumba team has done well to rise to these challenges. However, these had a significant impact on our business. The volatile iron ore markets and pricing environment, following the changes to COVID policy in China and weakening macroeconomic outlook, have made planning difficult. Increased energy prices following the war in Ukraine and global supply chain disruption added to input costs and place further pressure on planning ahead and working capital. We also experienced increasing disruption from erratic weather patterns and transnational logistics constraints, which has put real strain on our planning when it comes to both production and sales. We've lost the presentation. Thanks, Penny.
While we can't control external factors, I believe that there is scope to be more optimistic as we continue to focus on what is within our control. Our area of differentiation is the green transition, where both our work to cut our emissions as well as the quality of our product are set to help others manage their emissions. I will come back to this later in the presentation to talk more about our progress in this area. Moving on to the next slide. Starting with safety, which comes above everything else, our first fatality last week in over six and a half years has been devastating for all of us. We will be relentless in our efforts to achieve zero harm across all our operations.
Production of 37.7 million tons reflects challenging operational and logistics conditions. I'll go into more detail around this later. Our adjusted EBITDA of ZAR 37.3 billion and attributable free cash flow of ZAR 10.4 billion are the result of a combination of a much weaker pricing environment, lower sales volumes, and higher input costs due to macro impacts.
The EBITDA excludes an impairment on the value of Kolomela, which was announced in our trading statement on the 2nd of February. Bothwell will provide more details on this later. As ever, we are committed to creating enduring value. We are pleased to declare a final dividend of ZAR 5.2 billion, which brings Kumba's total shareholder dividends to ZAR 14.5 billion for this year. In addition, our empowerment partners will receive a total dividend of ZAR 4.7 billion for this year, or for last year. Moving on to our safety and sustainability performance. As you know, safety is non-negotiable. When high-potential incidents and lost-time injuries started increasing, we implemented a safety reset intervention focused on risk reduction as well as culture and behavioral change. We also continue to support our employees with health and wellness programs as well as providing support for mental health.
We have now had three consecutive years without occupational diseases and have seen a reduction in exposure to occupational hazards. We also made good progress with an increase in the average HIV viral suppression rate from 90%- 93% and a reduction in occupational tuberculosis cases. The overall non-occupational TB incident rate of 63 per 100,000 is well below our target for 2022 of 277 per 100,000. The focus in 2023 will include reducing noise, dust, and ergonomics exposure. On the next slide, we'll look at environmental sustainability, which is fundamental to our commitment to mine sustainably. A highlight for us is that in 2022, we marked over seven years of zero environmental incidents.
In terms of water, we are in a unique position of being a water-positive mine or of having water-positive mines, which means that we can supply water to the benefit of our local communities. Last year, we increased the supply by 8%, up to 18,000 ML. Million rand on our on-mine water infrastructure to reduce our freshwater consumption. Export as much as expected due to municipal infrastructure constraints. We continue to partner with local municipalities, Bloem Water, other Northern Cape miners, as well as government to improve the Vaal Gamagara water scheme. Given the Vaal Gamagara infrastructure constraints, we are revising our freshwater reduction and water recycling targets.
Our goal around this space remains to ensure the beneficial use of this valuable water resource for all through our collaboration, and this is the collaboration that I mentioned earlier. Reducing our carbon emissions remains a key focus for us. Our total emissions remain flat year-on-year, driven primarily by longer hold distances at our pits.
In the longer term, our ambition is to reduce our Scope 1 and 2 emissions by at least 30% by 2030 and to achieve carbon neutrality by 2040 from a Scope 1 and 2 perspective. I will provide more information on our journey a little bit later in the presentation. Operating sustainably includes facilitating value creation for all stakeholders, which brings me to our next slide. I will touch on a couple of highlights. Firstly, we contributed ZAR 8.9 billion in taxes and royalties to the fiscus and ZAR 19.2 billion in dividends to all our shareholders. These include our empowerment partners and our employees through our Envision employee share option scheme. Secondly, capital investment of over ZAR 10 billion further supports the sustainability of our business and the life of our assets. Thirdly, our local host communities in the Northern Cape benefited from ZAR 5.4 billion of procurement spend.
Altogether, we spent over ZAR 18 billion with BEE business suppliers, thereby making a significant contribution to the economic transformation of especially the Northern Cape region, where we employ 79% of our employees, including our contractors. I'll share some of the work that we are doing amongst our local host communities. Building a long-term partnership with our local communities is fully aligned to our purpose of reimagining mining to improve people's lives. In 2018, we set out a series of goals that are included in our sustainable mine plan. The first of these is the education initiative, namely the Anglo American South Africa Education Programme, which aspires to have 80% of participating schools in our host communities performing within the top 20% of state schools by 2030. We have made good progress. Now support 45 schools and 48 early childhood development centers.
Over 16,000 learners.
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Thanks. Apologies for that. Can I just check if you can still hear me? Okay, fantastic. In line with this, and clearly, this is an area that we are exceptionally proud of, and you'd understand why, over 16,000 learners were reached in phase 1 of the program, and a further 11,000 learners will be supported as we embark on Phase 2. I'm pleased to report that in 2022, almost 81 of our participating high schools performed above the national metric pass rate. A second objective is the health and well-being of our host communities, where we continue to strengthen community health systems. Our programs are very much aligned to the UN's SDG 3 targets, and we are focused on HIV and AIDS, gender-based violence, as well as substance abuse. Our third objective entails supporting five offsite jobs for every one onsite job that we have by 2030.
Since 2018, we have facilitated over 29,000 offsite jobs through various initiatives ranging from our inclusive procurement, enterprise development, and supplier development programs. We've done this together with the likes of Zimele and our SIOC Community Development Trust. We've also done this through other initiatives including education, our SLPs or social and labor plans, and other CSI projects. These are just some of the numerous initiatives that improve socioeconomic development in our host communities, something that we are very passionate about. I'll now move on to our operational performance. Challenging operational conditions prevailed in the first half of 2022, with improvements underpinned by our stability and capability programs. This resulted in higher total waste mine and improved feedstock availability. This supported a 12% increase in production in the second half.
In comparison, oil rail to Saldanha port by Transnet decreased as ongoing logistics constraints were amplified by the industrial action that took place in October last year. Low finished stock levels at the port of just around 800,000 tons impacted shipping throughput and sales decreased to 36.6 million tons. Having a stable value chain and healthy stock buffers are critical to our ability to deliver according to plan. Next, we'll take a closer look at Sishen and Kolomela's performance. At both operations, the focus has been on driving stability by building interprocess buffers, improving our HME availability and reliability, as well as improving our rain readiness plans. We are seeing good progress on these fronts, with Sishen being more mature and stable than Kolomela.
In the first half, Kolomela was impacted by high rainfall and the blasting misfire incident, we had lots of discussions around this, Kolomela's recovery in the second half saw waste mine increased by 39% and sailable production increased by 21%. The key focus has been the rebuilding of drilling and blasted floor stock levels following the first half disruptions that we experienced. Sishen's mining stability and production improved further in the second half. We have built healthy feedstock buffers, which positions us well for the year ahead. Moving on to logistics, where our focus is on collaborating with Transnet to improve the logistics system. Transnet's rail performance presented a significant challenge to our operations. Clearly, this needs to improve. Oil rail decreased by 9% to 35.9 million tons, representing just 80.5% of Kumba's contracted capacity compared to the 88% achieved in 2021.
In the fourth quarter, only 64% of Transnet's rail plan was achieved, this resulted in 3.5 million tons of lost sales and some ZAR 6.5 billion in lost revenue opportunity, with a knock-on effect on taxes and mineral royalties paid to government and ultimately the people of South Africa. Our near-term priority is the recovery and improvement of Transnet's logistics performance. We therefore welcome the joint program announced late last year between the Minerals Council South Africa and the Transnet board to create collaborative structures to stabilize and restore the operational performance of our rail lines and the port. Improving logistics efficiency is key, the completion clearly of outstanding maintenance will assist with further improvements to cycle time. We know that collaboration can be effective.
For example, we have successfully collaborated with Transnet and the Department of Agriculture on the locust spraying program, which has added benefit of not just what we see from a performance perspective in terms of our space, but also it helps the local farming community because they also struggle with the locust. We also welcome the white paper on the national rail policy, as we believe that private sector participation in the port and rail networks is critical. This will benefit all stakeholders, including government, emerging, and established miners, as well as the communities that depend on this space. I want to reiterate that we are committed to continued collaboration with Transnet and our industry peers to ensure the success and sustainability of the logistics network. We need to quickly improve the overall competitiveness and reliability of both our energy and logistics systems. These are key.
Moving on to the markets. Iron ore prices averaged $120 per ton last year, remaining above the psychological $100 per ton mark for the third consecutive year. The supply side has been supportive of stronger prices. After years of expansion, the supply from the Big Four iron ore miners peaked in 2019 due to Vale's Brumadinho tailings dam collapse and COVID-related disruptions since 2020. Outside of the Big Four, the supply from alternative sources of iron ore also decreased in 2022, largely as a result of the conflict in Ukraine and lower exports from India due to imposition of taxes. Iron ore demand has been less positive. China steel production has been contracting by about 2% per annum for the last two years, largely due to the zero COVID policy and weaker property markets.
Outside of China, inflationary pressure and weaker end-user demand eroded mill margins, forcing blast furnace closures in Europe. Going forward, the short-term outlook remains constructive at current price levels. China relaxed COVID restrictions late last year, and iron ore prices reacted positively to this news. Infrastructure investment is likely to remain buoyant this year, and mortgage rates are being lowered in various cities to revive their property markets. In Europe, we are picking up initial signs of recovery, with some steelmakers announcing blast furnace restarts. I will now hand over to Bothwell, who will take you through our numbers.
Thank you, Mpumi, and greetings to everyone. Mpumi has provided an overview of the market and our operational performance over the past year. Our financial results reflect this operating environment. Subdued iron ore markets and challenging logistics have impacted our top line, while the macro and operating environments have put pressure on our cost outcomes. However, improved operational performance in the second half and a weakening rand saw us achieving unit costs that were better than guidance. Iron ore markets, although down 27% from prior year, continue to reward quality. This has meant that our margins still support a solid financial performance despite all these headwinds. We've maintained capital discipline, ensuring that there's an appropriate balance between the liquidity on our balance sheet, investing for the future, and delivering excess returns to our shareholders. This remains our priority to ensure we continue to deliver value.
Let's take a closer look at the financial performance for the year. Despite a volatile market, we realized an average price of $113 per ton. This was 13% above the benchmark price, reflecting the demand for high-grade iron ore. C1 unit costs per ton were slightly up on the prior year due to some cost headwinds, which were partially offset by a weaker rand. We also continued to focus on cost savings, achieving ZAR 1.1 billion of savings against our target of ZAR 1 billion for the full year. Our break-even price increased from $56 to $68 per ton on the back of increasing unit cost and stay-in-business expenditure. This was coupled by a decrease in our product premiums. These increases were partially offset by a weaker rand and lower freight rates and royalties.
Our EBITDA margin, although down from last year, continues to be strong at 50%. In absolute terms, our EBITDA for the year was ZAR 37.3 billion. Mpumi referred to an impairment charge earlier. This charge is as a result of the valuation of Kolomela falling below the carrying value of its assets on the balance sheet. The valuation was negatively impacted by a change in Kolomela's production profile to reflect current logistics performance, as well as increasing cost inflation over the life of mine. I've previously talked about Kolomela's particular sensitivity to cost and production impacts given its relative size. The total impairment charge was ZAR 5.4 billion before tax. It's important to note, though, that this is a non-recurring, non-cash item, which does not impact our EBITDA or our headline earnings. Our headline earnings for the year were ZAR 56.19 per share.
This allowed the board to declare a total dividend of ZAR 45 per share for the year. If I turn on to our premium product. One of the primary differentiators that we have is the quality of our ore body. The FE quality and lump-to-fine ratio of our ore are significantly ahead of our peers. This positions us well in the market, especially with the increasing focus on decarbonization and green steel, where higher premium products play an increasingly important role. We achieved a price premium of $13 per ton, again well ahead of our peers. We have been consistently increasing our sales to markets outside of China, with the share now at 50%. This aligns with our target of between 50% and 55% of sales to these markets. This is where our products are valued more for their carbon reduction properties.
Let me take a look closer look at our EBITDA performance. This was largely driven by lower sales volumes due to the logistical constraints, as well as a lower realized FOB price. While we achieved ZAR 1.1 billion in cost savings, higher inflation and cost escalations resulted in an increase in operating expenditure, and this negatively impacted our profitability. This was partially offset by lower freight and royalty rates, as well as currency weakness as the rand depreciated against the dollar. We will take a closer look at cost on the next slide. Given the combined effects of geopolitical tensions and macroeconomic challenges, we saw an acceleration in base mining inflation, which impacted key input costs. This saw unit cost increasing by 13% and 15% at Sishen and Kolomela, respectively.
Both mines were also impacted by increasing hold distances and vertical lifts, and we continue to invest in maintenance to support equipment availability. As Sishen progressed towards operational stability, increased mining and production rates saw better dilution of unit costs as we built critical feedstock buffers, including C-grade material. Sishen also benefited from cost savings, which partially offset the impact of inflation and cost escalation. These factors combined helped to limit unit cost increases at Sishen to just 11%. This was not the case at Kolomela, however. Operational challenges experienced during the year meant that the cost dilution brought on by mining and production performance were not realized. Unit costs increased by 46%. The lower plant production was by far the most significant contributor to this increase. It is clear that cost discipline must remain a priority.
While we work to stabilize operations and this will go a long way towards containing costs, we need to do more. I will provide more color on what we are doing in this regard on the next slide. I spoke about the impact that increases in key input costs had on our overall cost performance. This slide shows how these increases impacted major cost categories in our value chain. Our cost optimization program is designed to limit the impact of these inflationary pressures. The biggest opportunity lies in containing cost increases in the first three of these cost buckets. Labor, contractors, and fuel make up 63% of our total costs. Although explosives have increased by 59%, this only affects about 4% of our total costs. We introduced several initiatives to optimize costs in 2022.
One of these was improving operational performance and also optimizing the mine plan, and this contributed significantly to our cost savings. We see further opportunities going forward, though. Contractor optimization and more efficient utilization of consumables such as fuel and tires present further cost-saving opportunities in 2023. We will also be reviewing our sourcing model to ensure that we buy and spend better. General consensus suggests that inflation and diesel price increases have peaked. As I mentioned earlier, we continue our work to optimize costs. However, headwinds in the form of geological inflation and challenging logistics continue to limit our ability to dilute costs. As a result, unit costs for Sishen are expected to increase to between ZAR 540 and ZAR 570 per dry metric ton, and for Kolomela to between ZAR 510 and ZAR 540 per dry metric ton. This is for the full year 2023.
C1 unit costs are anticipated to be around $44 per ton. If I turn to capital expenditure. Our capital expenditure program reflects strong capital discipline focused on sustaining and expanding our business to deliver long-term value. We invested $3.2 billion for the year in our expansion projects. This included ZAR 1.9 billion for our Kapstevel South project, which is about 60% complete. We spent a further ZAR 800 million on our UHDMS project. Now, this project is currently undergoing a technical review as we assess the additional complexities identified in execution. As we perform this review, the value of the UHDMS technology remains intact. UHDMS will allow us to lower the cut-off grade of our feed, increase product quality, reduce unit cost, and extend the life of mine of Sishen.
We are committed to finding the best engineering solution to ensure the successful implementation of the project. We will update the market again later in the year. The balance of expansion CapEx largely relates to operational efficiency initiatives and technology projects. SIB spend of ZAR 4.5 billion relates to HME maintenance and infrastructure upgrades. Lastly, deferred stripping CapEx increased due to higher stripping ratios at both mines. For the full year 2023, our guidance on CapEx is between ZAR 11 billion and ZAR 12 billion. This includes expansion CapEx to improve to complete the work at Kapstevel South, and we are expecting first ore on this project in the first half of 2024. It also includes SIB CapEx, which comprises mining equipment, plant and infrastructure replacement, and further upgrades. Further spend includes projects to improve safety, environmental, and sustainability, as well as equipment reliability.
Lastly, deferred stripping will reduce to just about ZAR 1 billion as we mine in lower strip areas in 2023. If I turn on to capital allocation. We continue to deliver sustainable returns supported by balanced capital allocation. Our dividend policy includes base dividend targeting between 50%-75% of headline earnings. Despite the strong headwinds, we generated cash of ZAR 20.8 billion after paying for sustaining capital. We spent about ZAR 4 billion on expansion capital and paid a total of ZAR 25 billion in dividends. We ended the year with ZAR 9.3 billion in the bank. On the back of this strong closing net cash position, we will be paying a final dividend of ZAR 6.9 billion, which includes ZAR 1.7 billion paid to our minority shareholders. This represents a final dividend of ZAR 16.30 per share to Kumba shareholders.
Combined with our interim dividend, total dividends for the year amount to ZAR 14.5 billion and represent a payout ratio of 80%. This gives us a dividend yield of 9%. As we conclude our five-year Tswelelopele journey, we reflect on the value that we've created since 2018. Our margin enhancement strategy, which is underpinned by three value drivers of product quality, operational efficiency, and cost optimization, has helped us to partially offset the significant cost pressures experienced over the last few years. Our EBITDA margin increased to 50% as we focused on enhancing our price premium, which saw us realizing an average premium of $3 per ton during the five-year period. We achieved this while containing C1 unit costs at $40 per ton by delivering cost savings of ZAR 5.2 billion and focusing on improving operational efficiency.
We also set ourselves a target to extend the life of our assets to 2040. Through our three pillars of efficiency, technology, and exploration, we've brought an additional 323 million tons of reserves to Sishen's mine life, well ahead of our target of 200 million tons, and this has resulted in an eight-year life extension of Sishen to 2039. Over the past five years, our attributable free cash flow totaled ZAR 85.8 billion, and we distributed ZAR 92.1 billion in dividends to shareholders. Importantly, this includes dividends paid to our staff and to our communities. It reflects an average dividend payout ratio over the last five years of 92%. Going forward, we will continue to build on the gains we saw with our Tswelelopele strategy as we navigate a dynamic operating environment.
Our priorities still remain: enhancing our margin to maintain our competitive position, maintaining our financial discipline, and delivering sustainable returns to all our stakeholders. Thank you. I'll now hand back to Mpumi.
Thank you, Bothwell. Our Tswelelopele strategy has created value over the last five years and provides a solid foundation for the next phase of value delivery. We are currently refreshing our strategy, and this next phase is focused on addressing four interlinked megatrends having the most influence to our business. The first trend relates to changes in how steel is produced. This is driven by the second trend of increasing consumer and regulatory pressure to reduce GHG emissions, given the increasing impact of climate change around us.
The third trend is the future of work, with advances in technology such as artificial intelligence and big data analytics changing the type of work we do, as well as when and where we work. The last trend is society's expectation of big business. Besides the pressure to decarbonize, society is increasingly looking at big business for local economic development, education, job support, and plenty of other things. More importantly, we will have the continuity of our purpose, which will drive our strategy. As a reminder, our purpose is to reimagine mining to improve people's lives. Although we are still working on our strategy refresh, I can say with confidence that having been in the business for the past 12 months, there is much more to accomplish from a Kumba perspective.
The focus of our next phase of value delivery will be enabled by us realizing the full potential of our core, as well as ensuring that we are appropriately positioned for a sustainable future. A crucial aspect of this future is the green steel transition that is driving demand for our premium ore. Let us have a look at this in more detail on the following slide. Supply chain decarbonization commitments are growing rapidly. The graph on the left shows the increase in downstream Scope 3 sustainability commitments in the past year. As an example, compared to a year ago, 35% of airlines have now set Scope 3 emission reduction targets. In line with downstream end users, many steel makers have also set commitments to decarbonize. The number of steel mills with emission reduction targets increased exponentially in 2021 to about 25% of global steel production.
For the 2030 goal, different regions have set different timelines and magnitudes. Europe clearly leads with its top 5 mills targeting emission reductions of 58%. To achieve this, European steel makers are expected to pivot more towards the direct reduction route, which offers a larger CO2 emission reduction compared to the blast furnace route, especially when based on green renewable hydrogen. More than 20 DRI projects have been announced to date in Europe, which is likely to bring some 40 million-50 million tons of capacity in the region. Demand for high-quality ores will increase as it offers higher productivity and has lower energy requirements. As a rule of thumb, every 1% higher FE content reduces blast furnace steel making emissions by about 2%-3%, while using lump represents another 10% from an emission reduction perspective.
Long-term price focus for premium ores are therefore likely to remain above the historical average. Kumba's greater share of lump and high-quality FE positions us well for this green transition. Additionally, we need to ensure that we continue to progress on our own pathway to decarbonization. Moving to this, as I mentioned earlier, we have set a target of Scope 1 and 2 emission reduction of 30% by 2030. The first step will be the construction of a 68 MW solar plant at Sishen by 2025. We are also investigating a 10 MW solution for Kolomela. In the medium term, we are participating in the broader Anglo American renewable energy ecosystem project, which will provide renewable penetration of between 85%-95% through the wheeling of renewable solar and wind energy before 2030.
Under Scope 1, we have several projects under investigation. Clearly the key one is the one that you know of, driven by our sister company. This is around fueling our truck fleet utilizing hydrogen fuel cells. In terms of Scope 3 emission reduction, our UHDMS technology will enhance our high-quality iron ore and represents significant value creation for Kumba. More than this, the UHDMS will play an essential role in our own decarbonization pathway, as well as clearly enabling others. Bothwell covered this earlier. From a logistics perspective, the cover picture in this presentation, I hope you remember it, was the inclusion of our Ubuntu Harmony vessel, which was launched in January this year. She is the first of our planned fleet of 10 liquefied natural gas-powered vessels. These LNG-fueled ships are expected to deliver a 35% reduction in carbon emissions.
We are also assessing our supply chain to ensure that we lower our emissions. Importantly, we seek to achieve the transition by working closely with our steel customers, such as Salzgitter, Nippon Steel, and Thyssenkrupp, to collaborate on research to develop iron ore products that enable green steel. These partnerships are critical to us, contributing towards advancing green steel and ultimately the decarbonization of the steel industry. These initiatives are all part of our medium-term outlook, and I hope you are as excited about these as clearly we are internally within Kumba. Turning to our 2023 full-year guidance. Looking ahead, our clear priority is to deliver on our full-year 2023 guidance and unlock full potential of our ore while operating safely and responsibly.
We will continue to focus on maximizing margin across the value chain by capturing the benefit of our premium products and driving operational efficiencies and cost optimization across our operations. We are committed to finding the best engineering solution to ensure the successful implementation of the Sishen UHDMS project. As we've said, the technology is sound. It is about finding the best project execution plan. Bothwell covered this. The value of the UHDMS technology includes the ability to lower the cut-off grade, increase product quality, reduce unit costs, and clearly extend the life of our assets, particularly looking at Sishen. We will update the market again later in the years, Bothwell said, when we finalize the review work.
As I mentioned earlier, our premium quality products are a key differentiator and offer a significant benefit to our customers as they strive to comply with regulatory requirements to cut greenhouse gas emissions, and we will continue to capitalize on this. We have improved the stability and resilience of our operations, particularly at Sishen, and the turnaround of Kolomela is an important strategic focus area as we set ourselves up for the next phase of value delivery. Pleasingly, we have started to see the benefits of the rain readiness plan, the optimized mine plan, and the enhanced maintenance practices at both our operations. However, given the Transnet rail challenges faced in 2022, we have reset our production guidance to between 35 million and 37 million tons. Rail capacity is expected to improve as our collaboration with Transnet progresses.
We will also draw down on our high stock buildup at the mines to supplement sales at our guidance of 37 million-39 million tons. As Bothwell said, our guidance for unit costs is approximately $44 per ton, while capital expenditure is anticipated to be between ZAR 11 billion and ZAR 12 billion. Our balance sheet is resilient, and we are committed to disciplined capital management. More importantly, and bearing the recent tragic incident in mind, we are focused on keeping our safety covenant, and that is for all our colleagues to go home to their loved ones safely each and every single day. It is an important outcome that we can only achieve when we look at operating together as our holistic Kumba team relentlessly, and this requires each and every single person within our workforce, and I'm 100% certain that we've got this commitment.
Before we go to Q&A, let me conclude with our value proposition. We have a good set of fundamentals in place for value delivery. We have premium quality, high-value assets with life extension opportunities, which positions us well for future growth. This is supported by our proven operational resilience, a strong marketing team, and efficient and prudent capital allocation. We are committed to continued delivery to our stakeholders. We have clear ESG targets in our sustainable mine plan, and achieving these remains a key priority for us. Before we close and take your questions, I wish to just once again thank all our Kumba employees and contractors for all their hard work and commitment, our Kumba board for their council and leadership, as well as our partners and stakeholders for all their support. I will now hand back to Penny, who will manage our question- and- answer session. Thank you.
Thank you. Thank you, Mpumi. We'll now open up for questions, first in the room, followed by the conference call line, and then we'll move to questions on the webcast. Hi, Brian.
Hello there. There we go. Thanks very much for the presentation. Is it morning or afternoon? It's just morning still. Just a question on Transnet and specifically related to the take-or-pay. Could you just remind us of the volumes that Transnet has contracted to in terms of the take-or-pay contract, if you're planning to make a claim against that, number one? Number two, is it based on loss of profits? Is the calculation based on loss of profits? Number three, last year we saw Transnet call force majeure on the coal producers and cancel all those contracts. Is this something that you're concerned about in the event that things don't improve on the line?
Mpumi?
Bothwell will take the take-or-pay and the contract one, the contractual one.
Thanks. Thanks, Mpumi, and good morning, Brian. Yes, we do have a take-or-pay agreement with Transnet. Mpumi in the presentation mentioned that for the full year 2022, we only achieved about 80.5% of contracted tons. The contract itself has got a threshold below which or over which there are take-or-pay obligations. We would love for them to be based on profits lost, but unfortunately, they are not. There is a calculation mechanism in the contract itself. We do look at this post the year-end, obviously. There are a couple of extenuating circumstances, and there are some force majeure events which are adjusting, but it's a calculation that we are finalizing and currently talking to Transnet about.
Brian, we do this every year, in addition, you're talking about the force majeure that came from the strike, in addition, in instances where there's significant rain that causes some significant issues. If I look at it, the low-cost issue last year, there was also a force majeure issue. You are possibly not cited of all the other force majeure issues, as Bothwell said, at the end of the year, we sit and we review that, and we close that off with Transnet.
Good morning. I'm Nkateko from Investec Bank. I also want to follow up on Brian's question on Transnet, I appreciate the collaboration and the white paper, but I mean, execution is always a risk. I want to know from you, what do you think needs to happen to actually reduce that execution risk and reduce unnecessary delays? My second question, if you can comment on efficiencies. We saw at Sishen, the OEE has increased, but the shoveling trucks actually decreased year-on-year. If you can also comment on the operational improvements projects that have been budgeted for and give us examples of the areas that you actually are focusing on. My last question will be for Timo. Timo, what's your and I mean, it's related to lump premium, which has recovered but not to the levels that we have seen previously.
What is your outlook as far as the lump premium is concerned, especially considering that the steel margins remain very fragile? Thank you.
Yeah, thanks, Nkateko. I'll take those, and we'll ask Vijay to add to just one. On the Transnet side, you're 100% correct. All of us know that having plans without.
Welcome to Chorus Call. Please, hold on.
Yeah. All of us know that having plans without execution is meaningless. The key around our collaboration is around driving the execution of the plans. I'll start because we've segmented them into a couple of categories, and I'll start with some of the successes that we've seen because I think we need to recognize that as well. Firstly, last year around about this time, we were talking about derailments coming from the low-cost challenges. If you look at where we are right now through the collaboration with Transnet and the Department of Agriculture, we haven't actually had those derailments. Secondly, there's been other collaborations. Transnet needed to close off on some tamping work, and this is practically post the shut; you have to align and pressurize rail.
We collaborated around the execution of that work and will continue collaborating because these are now about, from an execution perspective, immediate things that need to be done today in order to ensure that we see improvements. A great example of this was the work that was actually done during COVID. Some of the best performance that we saw from a Transnet perspective was, funny enough, during COVID, where there was collaboration between Transnet and industry around Transnet getting back into operations, looking at vaccinations, testing, etc. That's why we believe that collaboration is key. That's the first part because it's looking at performance today, and that's where the collaboration between now the Minerals Council of SA, because it includes the other channels, and clearly the Transnet board, because this has been escalated, is key.
It is about not just having plans but looking at the execution of the plans and looking at how best we can assist similar to what we did during COVID. The second aspect is then looking at sustaining the performance, particularly from a maintenance perspective. You need to do upfront maintenance. Otherwise, it will bite you. Clearly, that's what the discussions are essentially looking at. We previously spoke about the independent technical review. That is critical. It's not going to move performance today, but it will ensure that we understand what needs to be done to sustain the performance going forward. That will essentially continue. I guess I can say that the key focus is around execution because we all understand, I mean, we see the impact.
I shared the numbers of what we saw from a 2022 performance relative to what we are not happy with in 2021. The good thing is that we are aligned on the aspect that essentially recognizes that we can only win together with Transnet. Transnet can't win if clearly there's no performance, and we can't win if there is no performance. There's great collaboration around that. We still, however, as I said, believe that concessioning the line, is something that needs to be looked at, and that's where the private sector participation comes in. We'll continue driving that, but let's start with first things first, the things that are driving performance today and the things that will sustain performance. Then on the second one, you're 100% correct.
When you look at our OEE numbers, and Vijay will ask you to add to this, clearly, the Sishen numbers were stronger than the Kolomela numbers, and that reflects what I spoke about around Sishen being more stable because it's been around the improvements that we've seen from a Sishen rain readiness plan and clearly what we've seen in terms of an improvement insofar as the HME reliability is concerned. We are not where we'd like to be. We believe that there's still more that can be done, irrespective of whether you're talking about shovels, where we've seen a greater improvement, or our trucks. Clearly, for our trucks, we're looking at both the massive trucks, the 960s, and the slightly smaller ones. They are still big in scale, the 860s. That's where our work primarily for Sishen is focused on.
With the stability at Sishen, I've got to say, I mean, if I look at some of the indicators that we're seeing, they're actually pretty solid. Some of the work, you asked about, I guess, clear things that will be driving just around our programs. If you look at Sishen, we've got a project this year that's looking at the crusher replacement, and it's not linked to a whole lot of things. It's simply because the crusher is old and it needs to be replaced, and it's part of the work that will be driving this year. We continue investing from a stay-in-business capital perspective. Kolomela, as you indicated, clearly, if you look at OEEs look at the actual performance as well. It's the availability and utilization, but also the performance rate.
The numbers are not as strong for Kolomela. That's largely linked to the challenges that we saw in the first half of the year. We know about them. It's the impact of rain. We know that beginning of last year, we had significantly more rain at Kolomela and certainly the blasting misfire incident. Kolomela actually closed strong. Before I hand over to Vijay, can you just talk about Kolomela in the fourth quarter? Thanks, sir. Vijay is our COO. Thanks.
Thanks, Mpumi. I think you have mostly talked about the things. I'll just add on a couple of elements. If you look at the whole HME reliability program, this is the last year of the major capital program that we had put in place to improve the reliability of our HME, and we'll be completing most of the work by quarter three. That is one. Secondly, in Sishen, first of all, let me talk about Sishen. What are the big things happening? Second is we completed 10 autonomous drilling rigs last year, and that is going to improve our inter-process buffer.
Sishen, this year, it would be very crucial is how do we balance the production capability right across because even when there's, say, load setting from Eskom, how do we balance our production processes and make use of that particular time to get the best possible business outcome, optimizing where do you reduce the load? As far as Kolomela is concerned, the priority is still creating the inter-process buffers, more so right at the beginning of the mining value chain, drilling and blasting. That's where we are stabilizing. The second would be the best effective utilization of the assets in terms of balancing out trucks and shovels, that would be assisted by the reliability program that we are doing as far as the trucks are concerned mostly.
The last thing is making sure that, again, if you have got strong buffers, then how do we align our production program to how Transnet is performing, and how do we allocate production in that particular space?
Vijay, just talk about how Kolomela closed for the year, DMS and DSO.
Kolomela, really, if you look at Kolomela, the guidance that we put in here, Kolomela, from a production process point of view, both the processing plant, in fact, our DMS processing plant, that's the UHDMS plant, actually had its best-ever production month in the month of December, which is much higher than the run rate required even to meet this year's production requirement. Even the DSO plant produced close to 1 million tons in the last month. That tells you that our production processes, specifically from the processing plant's point of view, we have got these buffers. These buffers can be better utilized as long as we have got inter-process buffers in front of the processing plants, and that allows us to handle any surprises that come either from Eskom or even from Transnet. That's how we manage it.
Thanks, Vijay.
Timo.
Thank you.
All right. There is a little bit of pressure on the lump premium. In the short term, it is sitting just over $0.10 per DMTU at the moment, around about $6-$7 per ton. There's a few reasons for that. The first one is that at the moment, metcoal prices are extremely high, around about $3.75 per ton or even higher. Typically, when that is the case, you see that there's a preference for pellets rather than lump. Secondly, we haven't lately seen sintering cuts to the same extent as we have in previous years. Typically, those sinter cuts would provide support for the lump premium, we haven't actually seen that this year.
The third reason is that both BHP and Rio have brought online new mines, South Flank and Gudai-Darri, and both of those mines have a higher percentage of lump in the overall portfolio, and therefore, the overall lump fine ratio for both BHP and for Rio has gone up, which means that there's simply more lump in the market. There's another reason. Lump is also a relatively high-grade product, and although the steel market sentiment in China is definitely much better now, steel mills remain cautious. When they are cautious, they are not in productivity mode, they're in cost mode. When they're in cost mode, they're not going to be buying high-grade products to the same extent. That's also putting a little bit of pressure on the lump premium.
I think at the moment, the steel mills in China use 11.2% of lump in the blast furnace burden when it can be as high as 14%-15% when there's more of a productivity mode in the market. There's a whole bunch of reasons why lump is at the moment under a little bit of pressure. Longer term, I'm not concerned about that. We do see a trend where the ratio of direct charge material being used in China in the blast furnaces is going up by about 1 percentage point a year, and that means that demand for lump is improving steadily over time. I think that's also driving the long-term outlook for the lump premium. Longer term, our view is that it should be about $0.20-$0.21 per DMTU, so double from what it is today.
What we showed on the slide earlier on is that there are others out there like Wood Mackenzie who have a more positive outlook on lump than we do. They are talking about $0.24 per DMTU. At the short term, in the short term, there is a bit of pressure. Longer term, all should be well. For this year, we expect a lump premium on average just below the $0.20 per DMTU mark.
Thank you, Timo. If there are no more questions from the room, we've got 15 minutes left. Okay, there's one question.
Thank you very much.
Thanks very much.
Hi, it's Thabang Thlaku from SBG Securities. Just a few questions from me. Number one, I don't know if I missed the trading update, but obviously, your headline earnings picture has come in below the bottom end of your guidance range that you gave us at 4Q 2022. Can I ask, what would you say were the key driving factors behind that miss? Secondly, I don't know if you guys mentioned it in the presentation, but I didn't see what your break-even cost for 2022 was. Moving on to the next question, Mpumi, I think you mentioned in your presentation about what the nominal cost was from Transnet, but I think I missed it.
Are you able to give us some sort of numbers in terms of either higher costs or lost revenues as a result of Transnet underperformance and perhaps also Eskom if there is a material impact? My two last questions, I promise, are around sort of operations. How is your water readiness strategy performing year-to-date? Just as a follow-up on Transnet, with everything that's been said and the execution risks mentioned by Ngateko earlier on, does Kumba have any other options outside of Transnet? We've seen some of the manganese producers send ore via tracking into Namibia and really try and find alternatives outside of Transnet. Is there something like that for Kumba? Thanks.
Yeah, thanks, Thabang. Bothwell, do you want to take the first?
Yeah, sure. Thanks.
Thanks.
Three, actually. Yeah.
Thanks, Thabang. Yes, we did come in just below guidance from a headline earnings per share perspective. At the time when we issued the trading statement, as we say in that trading statement, we were still finalizing the numbers and final audit. The biggest change was on the impairment charge because we hadn't finalized it then. We focused on making sure that we are still within on the total earnings measure of earnings per share, and that's why we didn't issue a further trading statement after that. Break-even cost, $68 per ton. We did mention it, or I mentioned it in the presentation. As I said, an increase from about $56 per ton in 2021, largely driven by higher costs, higher stay-in-business expenditure, lower premiums compared to the high-price environment in 2021, but offset by exchange rate weakness and then lower freight rates and lower royalties as well.
From a Transnet impact perspective, what we have in the slide deck is Q4 impact, which is where we felt the most impact. That's when we had the strike. We had the delayed shut, and we had a slower ramp-up from coming out of that shut, and we lost about 3.5 million tons in that space. That, on a top-line basis, is about ZAR 6.5 billion worth of revenue lost just in Q4 alone. We did have. That graph on Transnet shows you that even throughout the year, they were not performing to contracted capacity. If you add the rest of the year, then you're looking at over ZAR 10 billion worth of impact on our revenue line. The Eskom impact was not as in fact, it wasn't material at all.
I think, as Vijay was saying, the way we manage our buffers and flexibility is to ensure that whenever we are asked to curtail a load from an Eskom perspective, we manage it in terms of the two plants, and we do have sprint capacity or catch-up capacity in the plant as well. Eskom impact has not been material on the 2022 result.
Yeah. Let me add to that, Thabang, clearly, with the increased risk from Eskom, that's something that we're watching closely. It's not just the impact to our business, but it's also the potential impact of Eskom to Transnet because that would clearly come back to us. Those discussions are taking place as well. On our rain readiness plan, I have to say our teams have done exceptionally well. Sishen most probably has one of the best rain readiness plans that most of us have seen, certainly within the Anglo American group. Even from a Sishen hasn't been impacted. I mean, it's been marginal. Clearly, we'll still continue getting rain. We do operate in areas that do get more rain around about this time of the year, fantastic rain readiness plan. Even from a Kolomela perspective, because clearly, Kolomela copied what Sishen had done.
We're not as mature at Kolomela, we certainly copied what Sishen had done. The impact is certainly not similar to what we saw last year. Certainly, both operations have done a lot with regards to the rain readiness plan. We spoke about it last time. It's about trying to divert water away from the pit as much as possible, looking at how our teams construct the roads, making sure that we've got the sump in place at the time when we need to have them in place. They did a fantastic job, essentially, around this, and ensuring that we try as much as possible from a mine plan perspective not to mine in areas that have high levels of clay during this time because clearly, we know that our kit would get stuck in those areas. Certainly, seeing the results of that plan.
Your last question is around options outside of Transnet. Clearly, that's something that we continue thinking about. I have to say that if you think about our line, I mean, we're very far from the Saldanha port. That's part of the key reason why, even as we think about other options, it remains absolutely critical that we work in collaboration with Transnet. The infrastructure is already in place, and the capacity, in terms of the installed capacity, the key is to unlock that capacity. If you look at both rail and the port and what it is that they can do because those contractual volumes that we refer to, you can actually add what it is that others do, and clearly, the impact is felt in a similar way. That capacity is there.
We believe that, particularly and Brian, you asked I think it was actually no, sorry, it wasn't Ngateko who asked the question earlier. We believe that the things that need to be looked at from a Transnet perspective are certainly sitting within control. It's not the China rail issues around locos, which is what the coal players are looking at. It's things that sit within control, and the bulk of it is around maintenance and other related matters. That's why we continue driving that collaboration.
Okay. Thabang, if we've addressed, we'll also give you an opportunity later, if that's okay. Could we please go to the Chorus Call questions?
Of course. The first question we have is from Shilan Modi from HSBC. Please go ahead.
Afternoon, everyone. Thanks for taking my questions. Just a follow-up on one of the previous questions. Are the locomotives on the iron ore line for Transnet, are they diesel or electric? I'm just trying to understand the load-shedding impact. If there's a persistent issue with Transnet, if this doesn't get resolved in the next, say, year or two, what is the likelihood of your assets being restructured? If you can't operate at full capacity, there is a negative impact to operating costs and, therefore, margins and profitability. At what point do you decide on whether to restructure the operations? And by that, I mean potentially downsize.
Then if you can give us some color on I know we spoke about this earlier, but if you can give us some color on the issues around the private participation on the rail and any timelines, even if it's your gut feel around timelines that you think that this can come to fruition. I know you have been working with Transnet over the last couple of years to help them improve their performance even before the pandemic. How has that changed in the last, say, 12 months versus before that? I know, Mpumi, it's a bit of a difficult question for you. Maybe I don't know if someone else would want to contribute to that as well. Yeah, thanks. I might come back with another one post this.
Yeah. Thanks, Shilan. On the first one, I guess there's two elements to that. I guess on the one side, you're asking if there would be an impact if Transnet were to be load-shedded. The answer is yes. We've seen an element of that from a port perspective. Clearly, we are, together with Transnet, engaging with Eskom around that because that's the load-shedding element. Others have asked us around whether our locos will be moved to the coal line. Certainly, as part of the recovery committee, we are all in there. It's the coal producers, chrome producers, manganese producers, and ourselves. That's not the intent that Transnet is essentially looking at. They are looking at unlocking the challenges that they have more generally from a local perspective. On the second one, what happens if the issue is not resolved within the two years?
Shilan, I guess the first thing that I'll say is that, if you recall, we actually reduced our guidance from previous levels quite significantly. That was with the understanding that we needed to think about the challenges that exist at Transnet and what practically needs to be done to overcome those challenges. Then we clearly also said that we need to work together with Transnet around resolving those challenges. That's something that we've always been consistent around. That's why I spoke about what happened in 2020 because we do believe that collaboration that's focused on execution will actually get us to where we would like to get to. The reason why we reduced our guidance and funny enough, other people are asking us if there's opportunities when one looks at guidance because we previously spoke about over 42 million tons per annum.
We think that if the right level of work gets executed, we should be able to get back to those, call it, kind of numbers. To be fair, when one looks at the recent performance indicators, that's what caused us to reduce the guidance number because clearly, in 2021, we spoke about the fact that performance was at circa 88%, and we were consent. If you look at last year, clearly, performance was at 80.5%. With the reduction in performance, the key was restating our guidance and then working together with Transnet to turn things around. That's something that is absolutely within our top priorities because clearly, it's a space that needs to be unlocked. From a PSP perspective, it's an interesting one. I have been around for 12 months now, and you spoke about progress over the last 12 months.
I think there's two things. I indicated that first things first is to unlock the value by virtue of us seeing that performance has reduced and turning that around. Unlocking that will not just only benefit ourselves, but it will benefit others as well, so both emerging and established miners. That is where we are focusing. At the same time, we still believe that concessions are the right way to go. We've looked at external benchmarks. I can't talk about a timeline because clearly, there is something that we are engaging with both government and Transnet around. All that I'll say is that looking at external benchmarks, that tells us that concessioning the line or private sector participation and there's different ways, by the way, of doing this would unlock a lot of value. We'll continue driving that work. Thanks.
Thanks, Shilan. I'm not sure if there are any other questions on the line. If not, we would like to go to the webcast. We are getting to the end of our time.
We have one more question from Richard Hatch from Berenberg.
Okay. Thank you. I'll take that question.
Thanks very much, and thanks for your time. Look, I'm just kind of curious as to Kolomela costs into the medium term and hearing what you're saying about operational improvement, the way you'd like to try and get Kolomela costs to on a ramp-a-ton basis. Then just on the UHDMS, it seems like you're facing some more challenges there. We spoke about it previously. As I look at your medium-term production guidance, at what point would you like to bring that online and fully ramp it up? Can you just give us a reminder on that, please? Thanks.
Thanks, Richard. Just in terms of Kolomela and its costs, I think, as I said in the presentation, we did see significant cost impacts at Kolomela and largely stemming out of the operational challenges that they had. I also spoke about, given its relative size, how sensitive it is to production performance. We saw about a ZAR 80 per ton impact simply because of the reduction in plant production when compared to last year. That's how we ended with the cost outcomes at Kolomela. Pumi spoke about how they ended the year relatively well, especially in Q4. We do expect an uptick in production next year, which is what we have guided. That will go a long way in diluting some of that cost inflation at Kolomela. We will see about a 7% increase in unit costs at Kolomela.
We've guided between ZAR 510 and ZAR 540. As our outlook, especially in the outer years from a production perspective, increases, then we should see those costs remaining relatively stable. I guess, as Vijay also said, the production outcomes are linked to what logistics can give us from a capacity perspective, but I think also linked to what Shilan asked around what do we do with the cost base in a constrained logistics environment. I think we are constantly looking at it. We don't wait for a particular point to react from a cost-based perspective given what logistics is doing. We are constantly looking at that. One of the points I made in the presentation was around looking at our sourcing model and looking at the contractors that we use and how we deploy them.
That remains one of the levers we have as a business. If the logistics channel continues to be constrained or deteriorates, then that's what we will be looking at from a cost-based perspective in terms of making those changes to make sure that we don't continue with a big overhead but with reduced production.
Thanks, both. Thanks, Bothwell. Then to just close off on the second one. Richard, what we shared around the UHDMS is similar to what we said last time. We are clearly working within a brownfields environment, so working within an existing plant. That poses additional complexities just from a safety perspective and the engineering execution perspective. That's why we spoke about reviewing the project. The technology is sound. It's about finding the best project execution plan that will ensure that we'll still achieve what we seek to achieve and will come back once we finalized the work. We've got a strong team that's looking at the work.
I mean, it's good to say that even the engineering design company that we are working with, they've also brought us the best skills, individuals that have international experience because the complexity is just around working within brownfields or a redfields environment. Once you finalize the work, we'll come back and provide an answer. Thanks.
Thank you, Richard. Thank you, Mpumi. If I can just turn to one or two questions on the webcast, many of them are related to Transnet, which I think we have addressed. The one question is a safety question which we've not had. The question is from John Dreyer from Visio Fund Management. Your safety seems to be deteriorating a bit from the high LTI in five years and now fatality. What do you think has caused this, and how do you plan to improve this going forward?
Yeah. Thank you, especially for touching on safety because for us, safety, as I said, is not even the highest priority. It is a value. If you look at our values, we've got six values. The first value is around safety. Ensuring that we live up to our safety covenant of getting our people back to their loved ones unharmed is something that we take seriously. As I said, we are devastated by the fatality that we had on the 13th of February. We are currently busy with the investigation process together with our service partners. If I look at our 2022 performance, we saw an increase in our high-potential incidents. They increased from 10 to 12. Clearly, we investigated all of those and made sure that we put measures in place to prevent repeats.
From a lost-time injury perspective, the bulk of them were incidents linked to slip, trips, and fall. They were also linked to some of our engineering teams working with machinery. To be fair, I mean, we take this very seriously. If a person gets their finger pinched, it is a lost-time injury for us because clearly, they've been hit within our workplace. Yet again, we took a step back and evaluated what was essentially causing it. There were quite a few things that we essentially looked at. For our younger, slightly less experienced workforce, it was about ensuring that we have a look at how we fast-track the aspect of them getting more experience and a couple of other things. That's how we've essentially set ourselves up for this year. Thanks for the question.
We take it seriously, and safety is a value for us.
Thanks, Mpumi. The last question, it's also from John Dre, and this would be potentially for Timo. You mentioned that Europe announced 40 million-50 million tons of DRI capacity. Roughly, when do you expect this to come online?
It's going to take a while. The first projects are going to come online probably late 2025. Steelmakers are what they're trying to do is replace blast furnaces when they need a major reline with DRI capacity at that point. The timeline is different for the different steelmakers, but the first projects should be coming on late 2025. Gradually, over time, we'll see more of that.
Thank you, Timo. We've now reached the end of the session. I am aware that we have a number of questions that haven't been addressed in the session, and I will revert back to each question that has been sent through in the webcast after our roundtable. With that, I'd like to thank you very much for attending and joining us today. Thank you very much for your continued support. I'd like to just mention to the analysts attending the analyst roundtable, we will be having this upstairs in the Euro Room from 12:45 P.M. Thank you.
Thank you.