Good morning, everyone, and Welcome to Kumba's 2021 annual results. Thank you for joining us on the call. As many of you know, I'm Penny Himlok, Kumba's Head of Investor Relations, and I'm joined by our new CEO, Mpumi Zikalala, and our CFO, Bothwell Mazarura, who will present our annual results. Before we continue, please note the disclaimer and our forward-looking statements. At this stage, all participants other than our speakers are in listen-only mode until we open up the line for questions and answers at the end of the presentation. You're also welcome to send through your questions on the webcast. I will now hand you over to Mpumi.
Thanks, Penny. Good morning, everyone, and thank you for joining Bothwell and me as we take you through Kumba's 2021 results. It's a privilege to be here as CEO today, and I'm pleased to say that the team has made my day a bit easier by handing me a strong set of results that we'll take you through today. Before we get to that, I would like to spend a few minutes talking about my initial observations from my first weeks in the role and the priority key areas going forward. After that, I will do a brief overview of our 2021 performance before Bothwell goes through the numbers, and then I will wrap it up before we open the lines for questions. I've now been in the job for six weeks, and my first priority was to get out and spend time with our team across the operations.
In all my engagements, what has stood out for me has been the quality of our people. In those interactions, it's clear that we have a team that is fully committed, ready to challenge, and to be challenged to make this business the best we possibly can. I welcome that attitude because we live in a world with so much uncertainty, and we need to especially focus on all the factors that we can control. That is very much the priority, and I'm pleased that through Kumba's resource endowment and the Tswelelopele strategy, my first take is that we have a really good base to build on. It all starts with making sure that we approach everything with a shared set of values and a commitment to operate the business responsibly and sustainably. That's the right thing to do.
We are seeing more often that if you don't operate according to a higher set of values, you will either put your license to operate at risk or fail to sustainably grow your business. My discussions across the team have shown real engagement on this topic, and it's a priority for me that this remains core to our culture. I'm also pleased to see that Kumba has a good safety culture, demonstrated by a strong safety track record. One of the other distinctive features of Kumba is the quality of our product. This clearly resonates with our customer base, who are increasingly looking for support in meeting their own greenhouse gas emission targets. However, we cannot rely on pricing to secure a profitable business. We must take control of our own future, and therefore, operational excellence is critical.
We have done much already in this space, but I think there's more that we can do as we focus on getting the right product to the right customer at the right time. Therefore, overall for me, there are two priorities. Firstly, we must deliver on our purpose of reimagining mining to improve people's lives through living our values and making sure that our sustainable mining plan is a competitive advantage. Secondly, we must push hard to make Kumba the safest, most responsible, and sustainable business it can be, and it's a push that we start from a strong foundation as we focus on our priorities on building on our Tswelelopele strategy going forward. Let's now move on to the highlight of what has been a truly good year. I would like to remind you that all volumes apart from waste are reported in wet metric tons.
This year, Kumba delivered a strong performance as we continue to build momentum on a strong first half. Importantly, we've achieved more than five years of fatality-free production, and we are also pleased to report that this year also marks our sixth year of no significant environmental incidents. I would like to thank each and every one of our employees and contractors for these achievements. Together, we must avoid complacency and get to a position where such a performance is something that we expect rather than something that we celebrate. Production increased by 9% to 40.9 million tons, while total sales were flat at 40.3 million tons. This was despite weather and logistics challenges, which we will discuss in detail later on.
This operational resilience, combined with strong iron ore demand, saw us deliver a record EBITDA of ZAR 65 billion, representing a 41% increase year-on-year. Our balance sheet strength, combined with free cash flow generation of ZAR 30.5 billion, allowed us to declare a total dividend of ZAR 103.20 per share. This represents a 69% year-on-year increase. These successes combined enable us to create significant value for all our stakeholders. On to safety and sustainability, which are integral to our sustainable mining plan. Safety is our core value. In addition to our fatality-free record, we've achieved a 56% reduction in lost time injuries and a 51% reduction in total recordable incidents. Our elimination of fatalities program has been instrumental in improving safety performance. However, there is more work that we still need to do.
Even though the bulk of our leading measures have improved, we still suffered high potential incidents that we need to work on. Clearly, our risk reduction and safety culture initiatives will help us drive improvement. Turning to health, which is equally important to us. As we are all aware, working through the pandemic has certainly increased the complexity of managing health in the workplace, and therefore to have no new cases of occupational diseases for a second year is truly commendable. In terms of our WeCare COVID-19 program, I'm delighted to report that across our operations, more than 75% of our workforce have been fully vaccinated. Sadly, we have lost 29 of our colleagues to COVID-19 since the start of the pandemic, and our thoughts and prayers are with their families, friends, and colleagues.
To ensure that we take every opportunity to protect ourselves and our loved ones, we will continue to encourage everyone to vaccinate. In addition, voluntary HIV testing has improved. 91% of our staff are aware of their HIV status, compared to 88% in 2020. All those who have tested positive are on antiretroviral treatment with a 90% suppression rate. On the environmental front, we are reducing our freshwater consumption and continue to be a net provider of water. In total, we extracted 24 billion liters of fresh groundwater and supplied 70% or 17 billion liters of this valuable resource to the local municipality as part of the essential services we provide to local communities in our water-stressed region.
We utilize the remaining 7 billion liters of water in our operations, and we are committed to achieving our target of a 50% reduction by 2030, and we are on track to meet this target. Turning to the next slide. In creating a better future for all, decarbonizing our operations is an imperative. In terms of our Scope 1 and Scope 2 emissions, our energy usage is comprised of 80% diesel power and 20% electric power. However, electric power contributes up to 47% of our carbon emissions, and replacing this with renewable energy provides a massive opportunity. In 2021, our total emissions increased in line with higher levels of production following the COVID-19 interruptions in 2020. When compared to the normal production year of 2019, we have realized a net reduction in 2021.
As part of our pathway to decarbonization, we have the ambition to achieve zero Scope 2 emissions by 2030 and carbon neutrality by 2040. Kumba will participate in the broader Anglo American renewable energy strategy through the development of a solar PV plant in the Northern Cape. This strategy also includes other renewable technologies such as wind power to ensure 24/7 green energy by 2030. In addition, our sister company, Anglo American Platinum, is piloting a hydrogen-powered haul truck at Mogalakwena. We will evaluate these results as we continue to develop our Scope 1 emissions reduction strategy. In terms of Scope 3, iron ore has a critical role to play in the transition to a low carbon economy. We are partnering with our customers to achieve lower carbon emissions through our high-quality ore products, which will be further enhanced by the UHDMS technology.
A key element in reducing Scope 3 emissions also includes the utilization of natural gas-powered shipping vessels from 2023. Having a healthier environment ensures that we are creating a more sustainable future for our stakeholders, which brings us to the next slide. Kumba has created significant value for its stakeholders, which has increased substantially year-on-year. Over ZAR 21 billion in tax revenues and mineral royalties went to supporting government and our fellow South Africans. We increased our capital investment by 30% to ZAR 8 billion, and this not only benefits the life of our operations, but represents our commitment to investing in our country and local communities. While our strong financial performance has delivered real value, real shareholder value of ZAR 43.5 billion, with our empowerment partners receiving more than ZAR 10 billion in dividends. Safeguarding local livelihoods is extremely important.
We paid ZAR 5.6 billion in salaries and benefits, and 79% of our staff are employed from local communities in the Northern Cape. We also supported BEE suppliers with ZAR 10 billion of spend, of which ZAR 4 billion related to host community suppliers. One such initiative is the awarding of the ZAR 1.6 billion mining contract to a community-based joint venture to mine iron ore at our Kolomela mine. This joint venture supports Gamagara communities and women-owned businesses. These and similar opportunities will go a long way towards helping our communities thrive. We further contributed ZAR 258 million towards building thriving communities, including our COVID-19 support. Now turning to our value chain. Having a balanced value chain is critical to operational performance. Despite challenges, we saw an improvement across our value chain.
As you'll recall, waste mining was impacted by extreme rainfall at the start of the year. In addition, we had supply chain disruptions. However, waste mining recovered in the second half to end the year 2% higher. I will cover this in more detail on the next slide. We saw earlier that production increased by 9% to more than 40 million tons. This represents the impact of COVID-19 in 2020 and improved plant availability and reliability. Next, along the value chain, ore rails to port increased but still remains below production volumes. Importantly, export sales improved to over 40 million tons. Our strong production, combined with rail constraints, resulted in a higher stock level, mostly at our mines. By maintaining a deliberate balance across the value chain, we are able to operate flexibly using the overall or using the available logistics capacity.
These results demonstrate our operational resilience and ability to mitigate challenges successfully. Turning to the next slide, where we'll take a closer look at our operational efficiencies. Excessive rainfall in the first quarter and the subsequent impacts on mining conditions affected both our waste movement and operational efficiencies, particularly at Sishen. High saturation levels in the clay horizon meant that these impacts were felt well into the third quarter as we were challenged with lower equipment utilization. In the second half, we saw a 13% recovery at Sishen, demonstrating the effectiveness of our rain recovery plans. We've updated our rain recovery plans based on the learnings from last year, and we are certainly recovering much quicker after major events. Most of the fleet went through major overhauls in 2021.
We saw good improvements in the availability and reliability up to September, when like many of our peers in the industry, global supply chain disruptions impacted our HME spares availability. As a direct result, our fleet availability dropped. We have engaged our suppliers to resolve the situation, and we have started to see improvements. Given all these factors, the net impact was that the operating efficiencies on our primary fleet reduced by approximately two percentage points year-on-year to 49% for the shovels and 71% for the trucks. At Kolomela, we are pleased with the ramp-up in waste production at the Kapstevel South in line with the approved project. We continue to focus on improving operational efficiencies in the next two years, and we are still targeting a significant improvement in our truck and shovel fleet.
Our initiatives are centered on improving spares and equipment reliability, payload, cycle time, and the pit setup. In addition, we will be converting 8 of our drills at Sishen to autonomous in 2022, which will bring further improvement to our safety and productivity. Since we started our Tswelelopele journey, we have been focusing on improving our overall operational efficiencies and have seen some great improvements. We plan to continue focusing on this as part of our drive for operational excellence. Now, we'll take a look at how we are managing on the logistics front. Deep-water connectivity to logistics remains very high on our list of priorities. To address the rail infrastructure and equipment maintenance challenges, we've increased engagements with Transnet and our industry peers. Following these engagements, we have seen better equipment reliability and shipping throughput.
This contributed to export sales improving by 6% in the second half. In the short term, we still see further uplift from the improvement of the rail infrastructure, which will help lift speed restrictions. In addition, the three-year major equipment refurbishment program at Saldanha Port is expected to be completed this year. We are systematically shifting to larger Capesize vessels, which increases shipping capacity. Following these interventions, although the IOEC line is not yet back to pre-pandemic levels, we have seen some progress and believe there is still more room for improvement. In the medium term, we see a potential for performance uplift with the commissioning of the third tippler at Saldanha Port and shorter periods of shutdown maintenance. This brings me to the end of my operational review, and I will now hand over to Bothwell, who will take you through the numbers in more detail.
Thank you, Mpumi, and good morning to everyone on the call. It's always good to engage with you, although it's all still virtual. Hopefully, we'll be able to meet in person again soon. Kumba delivered a strong set of financial results achieved through the safe execution of our strategy, a strong production performance, and disciplined capital allocation. First up, I'll touch on some of our financial highlights. The strong iron ore price environment, together with our marketing team's ability to maximize premia, enabled a higher average realized FOB price of $161 per ton. This is a 42% increase year-on-year. When it comes to costs, our savings are closely linked to our operating efficiencies. As we've heard from Mpumi, our operational efficiencies decreased, meaning we did not realize the full cost savings that come with improving efficiencies.
Despite this, we achieved over ZAR 900 million of savings against a target of ZAR 1.1 billion for the full year. This compares to savings of ZAR 1.3 billion last year. However, you'll recall that last year's savings were supplemented by ZAR 618 million as a direct result of reduced activity following COVID-related disruptions. Our EBITDA margin rose to 63%, up from 57% this time last year. On the other hand, our break-even price rose to $56 per ton. Our focus on cost containment and maximizing market premia was more than offset by a stronger rand and higher freight rates.
Headline earnings per share increased by 46% to ZAR 103.65 per share, allowing the board to declare a total dividend of ZAR 103.20 per share. I'll break the dividend down a little bit later. On the next slide, we take a closer look at our marketing performance. Our product quality remains a strong differentiating factor. As the pressure of climate change grows, we have seen the flight to quality continue. Our iron ore content and lump-to-fines ratio remain ahead of our peers. As the decarbonization drive accelerates and more steel producers move to more efficient production methods, we will see an increase in demand for our product. Our realized price was more than 18% ahead of the nearest competitor and the average benchmark price of $136 per ton.
On the next slide, I'll go into the main drivers of our price performance. Excuse me. Our strategy of developing markets outside China was supported by economic recovery in 2021 as vaccination programs gained traction and countries learned to live with COVID. These markets represented 57% of Kumba's sales, well up from 2020 when this share fell to 38%. With a global drive to increase productivity, we have seen healthy demand for our high-quality products, which contributed to the combined lump and iron premium of $22 per ton. Our marketing capability added another $3 a ton of product premium. This resulted in a total premium of $25 per ton. Now, let's move on to our EBITDA performance. Our EBITDA reflects a 27% increase in revenue in line with the higher average realized price we saw on the previous slide.
The price premium I referred to earlier boosted our profits by over ZAR 4 billion. We also benefited from ZAR 520 million from shipping operations. This was partially offset by a 10% stronger rand, inflationary cost pressures, and higher operating expenses compared to a COVID-impacted base from 2020. We'll take a closer look at costs on the next slide. There were four main drivers driving our unit cost performance for the year. Firstly, base mining inflation and above inflation escalations in key cost items like diesel and wages, as well as other supply chain-related increases, saw unit costs increase by 9%. Secondly, mining costs increased off a 2020 base, which benefited from one-off COVID-related savings. Mining inflation relating to longer distances and vertical lift also contributed to the mining cost increase.
We also saw higher maintenance spend at Sishen, as we focused on improving equipment reliability. The third factor centers around our operational performance and how it has impacted unit costs. As highlighted by Mpumi, waste stripping at Sishen was impacted by weather, resulting in reduced capitalization of stripping costs. This had a negative impact on unit costs. Lastly, and on a more positive note, these cost impacts were partially offset by higher plant production and cost savings achieved. This resulted in Sishen's unit cost improving from ZAR 448 per ton at the half- year to ZAR 432 per ton for the full year. Overall, however, Sishen's unit cost increased by 19%, while the increase at Kolomela was limited to 7%. Cost savings are therefore critical going forward as we seek to offset inflation, and I'll touch on this in the next slide.
Since the implementation of our Tswelelopele strategy in 2018, we have saved over ZAR 4 billion in costs. This is well ahead of our original target of ZAR 2.6 billion by 2022. Close to 60% of savings were attributed to operational improvements, with over 29% related to savings on overheads and the balance achieved through supply chain cost management. As mentioned on the first slide, we've saved over ZAR 900 million against the target of ZAR 1.1 billion in 2021. In 2022, we are targeting a further ZAR 1 billion in total cost savings, half of which is expected to come from operational improvements. The rest of the savings will be realized from our work on streamlining our overhead structures, as well as the continued focus on optimizing our supply chain.
Next, I'll provide an update on how we are delivering against our Tswelelopele targets. Our strategy has delivered significant value over the Tswelelopele period from 2018 to 2021. Cost- saving initiatives have allowed us to keep our unit cash costs relatively low, despite production volumes remaining constant. The increase in C1 cost in 2021 was largely driven by factors I spoke of previously, as well as a stronger rand, which added $4 per ton to our C1 costs relative to 2020. Over the same period, we've managed to achieve a significantly higher realized price, translating into a threefold increase in EBITDA per ton. On the right-hand side, our Tswelelopele strategy continues to focus on, firstly, achieving more than $2 per ton price premium over and above the lump and FE premium.
Over the past four years, aside from 2020, when markets were most impacted by COVID-19, the price premium has exceeded our target. Secondly, operational efficiency supports our cost- saving initiatives, and we are targeting P101 benchmark operational efficiency performance. Thirdly, we are continuing to focus on our cost savings journey, as I have described on the previous slide. Our objective in 2022 is to contain our C1 unit costs below $41 per ton. We are tracking well against the targets in terms of price premium, and we're prioritizing operational excellence going forward. This will contribute substantially towards cost efficiencies and mitigating inflationary pressure. Next, I'll move on to capital expenditure. In line with our sustainability focus, we have invested in our business as we position for the future. This has seen capital expenditure increase to ZAR 8 billion.
The 2021 spend relates to, firstly, ZAR 2.6 billion of expansion CapEx, which includes the Kapstevel South project, the UHDMS project, and P101 operational efficiency initiatives, as well as some technology projects. Secondly, ZAR 3.7 billion of staying business spend, mainly on capital spares and mining fleet to support our drive to improve equipment availability and reliability. The balance includes spend on plant and infrastructure upgrades to sustain our business, as well as other technology projects. Lastly, we spent ZAR 1.7 billion on deferred stripping, which reduced due to the lower stripping ratio at Sishen, partially offset by an increase at Kolomela due to the higher stripping areas that we were mining. In 2022, we expect CapEx of between ZAR 10.5 billion and ZAR 11.5 billion.
Of this, more than ZAR 5 billion relates to expansion CapEx on our projects, which I'll cover in the next slide. In the last two years, we approved the construction of Kapstevel South and our UHDMS project, totaling just under ZAR 11 billion. I'm pleased to say that both projects are on track as per the approved feasibility studies. Kapstevel South, our ZAR 7 billion investment at Kolomela, is 35% complete. We have stripped 23.6 million tons of waste since the project was approved in August 2020. We remain on track for the first ore in the second half of 2023. The construction of workshops and other support infrastructure is progressing well. At Sishen, the focus has been on project setup of the UHDMS plant and progressing the major engineering and procurement construction packages.
At the end of 2021, over 70% of the major works packages had been scoped, tendered, and awarded. Breaking ground is scheduled for the first half of 2022, and we are on track for commissioning in the second half of 2023, with handover in the first half of 2024. Both projects offer a healthy rate of return with good EBITDA margins. On the next slide, we talk about our balance sheet and capital allocation. Now, disciplined capital allocation is one of my priorities, and this slide demonstrates how we have applied our capital allocation framework. We started the period with ZAR 22.2 billion of net cash. We then generated ZAR 44.9 billion of cash flow after sustaining capital.
Our base dividend continues to target between 50%-75% of headline earnings, which translates to a base dividend of ZAR 36.7 billion at the top end of this target. The remaining capital was allocated to discretionary options totaling ZAR 13 billion. This included our expansion projects and additional returns to shareholders in the form of top-up dividends. Our final dividend of ZAR 30.50 per share amounts to ZAR 12.9 billion, which includes minorities. Which brings our pro forma net cash position to ZAR 4.6 billion at the end of 2021. Total dividends have increased by 69% over the comparative period, representing a payout ratio of 100% of headline earnings and giving us a dividend yield of 22%. I'm going to conclude by reflecting on the returns we have delivered since 2018.
If I look back, attributable free cash flow has grown from ZAR 7 billion in 2018 to ZAR 30.5 billion in 2021. Dividends have also increased significantly, and we've continued to create value for our shareholders. In the past four years, we have paid total dividends of ZAR 77.6 billion, including ZAR 15.9 billion in special dividends. Despite the cyclical nature of our business, the operational and macro challenges, and the market volatility over the past few years, we've provided consistent returns to shareholders. Since 2018, we have paid 95% of headline earnings to our shareholders. This underscores the operational resilience and financial strength of the business. We remain committed to maintaining a balance between investing to sustain and grow our business while returning excess cash to shareholders. Thank you. I will now hand you back to Mpumi.
Thank you, Bothwell. At the outset of our development journey in 2018, we were aiming to increase our ore reserves by 200 million tons by 2022. We have achieved this one year early by embedding P101, reducing waste through smart mine design, slope optimization, and the UHDMS technology. These have contributed to ore reserves increasing by 323 million tons, measured from the 2017 base and extending Sishen's life of mine to 2039. The UHDMS technology, in particular, is a real game- changer for us. As indicated by Bothwell, the UHDMS project will be fully commissioned in the first half of 2024, after which we plan to increase our percentage of premium products from 80%- 50% per annum as we support our customers in their decarbonization journey.
We have already seen that Kumba's products have a much higher average iron content than our competitors' products. This means that our customers utilizing our products in blast furnace steel making can realize a 2.5% carbon emission reduction for every 1% increase in iron grade. We are also able to lower our cutoff grade. As a result, we have successfully converted around 140 million tons of waste into approximately 50 million tons of sellable product. This improves our resource utilization and reduces our overall mine footprint. Looking further out, we are investigating opportunities to optimize the UHDMS technology at Sishen. At Kolomela, we continue with our work to extend the life of mine to 2040. Firstly, through the construction of the Kapstevel South project, which is more than 35% complete.
On the exploration front, we remain optimistic about the long-term potential of the Northern Cape and the development of Diepkloof-Driekop and Ploegfontein ore bodies, which we'll be working on for the next few years. We continue to explore high- potential targets in the Northern Cape and have invested more than ZAR 1.5 billion over the past 10 years on our prospecting right. This investment played a significant role in realizing the 323 million ton increase in reserves. Besides the obvious economic benefits of life extension, this creates enduring value for all our stakeholders, especially our employees and host communities, many of whom are either directly or indirectly dependent on the mine for their livelihoods. The extended life of mine makes our longer- term sustainability initiatives in terms of solar power and hydrogen fuel much more viable. Now, moving into guidance for 2022.
2022 has started well. We've seen China relax steel production restrictions and pushing back the timelines to achieve peak carbon emissions from the steel sector by five years to 2030. Both these developments raise expectations for a sustained recovery in steel production in China. In addition to an encouraging demand outlook in China, we are focused on developing markets outside China. Demand for our high- quality product will continue to grow as steel producers move to more efficient production systems. In terms of our value chain, we believe that there is still more room for improvement on the logistics front. In 2022, Transnet will complete its three-year period of major logistics maintenance. As a result, we are keeping a conservative outlook on rail performance. We intend to sustain and grow value for all our stakeholders by responsibly aligning production to evolving demand, while progressively improving the quality of our products.
This outlook is reflected in our production and sales guidance for 2022 of between 39 and 41 million tons to ensure that we maintain a balanced value chain. For 2023, we have kept the production guidance the same due to the tie-in of the UHDMS plant. In preparation for this, we are also maintaining a higher stock buffer at our mines this year. We expect to complete the final handover of the UHDMS plant in the first half of 2024, and in line with this, we have increased our production guidance to between 41 and 43 million tons for 2024.
Based on projected inflation and higher mining costs in 2022, Sishen's unit cost is anticipated to be between ZAR 490 and ZAR 520 per ton, and Kolomela's between ZAR 350 and ZAR 370 per ton. We intend to contain our C1 cost at $41 per ton based on an exchange rate of ZAR 16 to the US dollar. Our CapEx outlook is between ZAR 10.5 billion and ZAR 11.5 billion, as explained by Bothwell early on. Our capital allocation is balanced in terms of CapEx improvements for improvements and growth for the future, while making sure that our shareholders share in the value delivered. On the next slide, I'll conclude with Kumba's value proposition. Kumba is very well-positioned to deliver sustainable value.
Our Tswelelopele strategy has remained consistent and continues to serve us well. Through our high-margin assets, coupled with the ability of our committed and highly capable teams, we are continuing to leverage opportunities before us and are focused on further maximizing our performance and potential. We have had the benefit of strong prices. However, it's important that we grow value through operational excellence while improving cost efficiencies and achieving full- value for our premium product. Underlining all of this is our sustainable mine plan, which defines how we operate through the Anglo American Social Way, focusing on the three pillars aligned to ESG. Firstly, creating a healthy environment. Secondly, building thriving communities. Thirdly, fulfilling our role as a trusted corporate leader with high standards of corporate governance.
With these key elements in place, I see massive potential for Kumba to deliver safely and sustainably, sector-leading operational performance, financial returns, and social value in the years ahead. We are extremely humbled by the recognition we have received for our efforts in managing our business sustainably. This confirms that we are moving in the right direction, and we will continue driving for excellence. Finally, I would like to thank our employees and contractors for their hard work and commitment, our board for their leadership and guidance, and our partners and stakeholders for all their continued support. I will now hand over back to Penny, who will manage our question-and-answer session.
Thank you, Mpumi. We will now open the conference call for questions, and then we will move to the questions sent through on the webcast. Thank you. The first question from the lines comes from Shilan Modi of HSBC.
Morning, everyone. Thanks for the presentation today, and congrats on a strong set of numbers. A couple of questions from my side. Just based on the guidance that you're providing for Sishen unit cost, it looks like if you look at the midpoint, it looks at about, you know, 16% inflation year-on-year. Can you give us a breakdown of where you're seeing cost pressures coming through and what's your plans to manage that going forward? And then a bunch of questions on CapEx. So, you know, CapEx is guided to quite elevated levels for this year. It's been stepping up for the last few years. Can we expect CapEx to remain elevated for the next two to three years?
I ask this in light of the mine life extension plans that you have at Sishen and Kolomela, especially with the you know the three extra pits, the
Thanks so much.
Bothwell, please take the first two. Thank you.
Thank you, Mpumi. Thanks, Shilan. Good morning. The cost guidance, yes, you're quite right. We are guiding for double-digit cost increase at Sishen. I think maybe if I just start with 2021, and you've seen that we have been challenged, especially with the operational disruptions we saw in the first half of the year. What that has meant is that it has stalled our progress in terms of our efficiency improvement drive. But it has also meant that from a waste perspective, we didn't move as much waste as we wanted to at Sishen in 2021. Now, this has had an impact on 2021 unit costs, but will also continue to have an impact going into 2022.
Firstly, on the physical side, we have to move much more waste at Sishen than we moved last year. There is an element of catch- up from a waste movement perspective, and that will obviously filter into our unit costs. As we move that much waste, that also comes with moving longer distances, and also higher vertical lifts in the pit. That will also increase the cost pressure. In terms of what we're doing about it, and again, in line with our Tswelelopele strategy, we remain committed to operational excellence, and our efficiency drive continues. We intend to get back on track towards P101 benchmark performance, and that will see an improvement in our unit costs.
As I said during the presentation, we're still targeting another ZAR 1 billion of cost savings as well. That will go a long way towards offsetting those inflationary pressures I spoke about. Unfortunately for next year, we are not seeing that fully offsetting the inflationary pressures and hence the double-digit increase. If I just think about beyond next year, we should see the unit cost start to stabilize back to single digit type increases, as we stabilize the waste profile, but also as the UHDMS starts to come into play, and that is cost positive, as you know, because we will be treating what we previously classified it as waste, so it'll have a positive impact on our unit costs. That you should see that impact coming through going forward.
Shilan, just on CapEx, and if you recall last year, 2021, our initial guidance, right at the beginning of the year, was also around about the ZAR 10 billion-ZAR 11 billion mark. We didn't spend as much as we had originally guided, so we spent about ZAR 8 billion. There's an element that has rolled over from 2021 into 2022. As you rightly say, the biggest elements of this are the two projects, the Kapstevel South and the UHDMS project. I said this in the presentation, we do see that spend continuing in 2022 into 2023 as both these projects then start to come into commission, and we will see them being fully executed by 2024.
We will see double-digit billions in terms of CapEx in 2022 as well as 2023 before the growth CapEx starts coming off. You asked about P101 CapEx. A lot of what we do on the P101 side is really setting us up for the future in terms of the business, in terms of the operational improvements, which we see filtering into the growth of the business. As we optimize our costs, we can start increasing some of the reserves that we recognize as the economics of the pit become better. We do see an element of our P101 spend contributing to growth as opposed to just sustaining the business.
Thanks, Bosso. Shilan, you also asked a question about what it is that we are looking at insofar as, I guess, our Scope 2 emissions are concerned. We will participate in the broader Anglo American renewable energy strategy. As part of this, the first leg that we are looking at is the development of a 60-80 MW plant in the Northern Cape. There's a lot of work that's going on in the space, and we are currently busy with the permitting space. You linked your question to specifically batteries and whether we'll be using batteries. Glenn, do you want to add something on that?
Yeah, I can. I mean, in terms of securing 24/7 renewable power, wind is obviously the cheapest. We're looking at a combination of solar and wind. Wind will be in the longer term, you know, as part of the Anglo American strategy, looking further out beyond 2024, what that looks like. Batteries at this stage are still very expensive. Wind is the preferred option. As part of an integrated, you know, ecosystem of renewables, we will consider, you know, battery if it is feasible. First part of this stage is solar, you know, followed by wind for us.
Thank you, Glenn.
Thank you.
The next question comes from Brian Morgan of RMB Morgan Stanley.
Hi, guys. Thanks very much. Thanks for the opportunity. Can I just follow on with the questions if we could just focus on Sishen's unit costs. If I look back at my numbers, we've seen a 74% increase in costs if I assume the midpoint of the 2022 guidance since 2018 at 15% CAGR. The period between 2013 and 2018, costs were very well managed. You know, there's that blow-out since that point. It feels, you know, I look at the numbers, it feels as though we've slipped into the same old trap where, you know, when margins are good, costs inflate.
Obviously, you know, you've had the one-on-one projects and the cost savings and all of those things, and we've seen very high levels of input cost inflation, particularly recently. Maybe to Mpumi, you know, if you've come in now, new to the role, et cetera, is this something that you're worried about? Do you think that there might be a bit of fat in the system which has crept in over the last three or four years, which needs to get stripped out?
Yeah, thanks. Thanks, Brian. I think that's a great question. I indicated that I've been in the role for just over six weeks, and the first thing is I've been really impressed by the quality of our people and what it is that we've been able to achieve from a Tswelelopele strategy perspective. What's been positive for me is that for us, it hasn't just been about talking about the strategy, but it has been around executing in line with the strategy. Key, as I indicated earlier, is that we have to focus on operational excellence, and I believe that we are starting from a good base as we focus on this.
If you look at last year, we clearly, from an operational efficiency perspective, struggled in the first quarter due to rain, and towards the latter part, we had the supply chain disruptions that impacted our availability and reliability, insofar as, I guess, our HME fleet was concerned. We've done a lot of good work in this space, and I'm impressed with what I've seen. The fact that clearly we still have rain, we'll continue having rain, but we are recovering far much quicker post that. We are also working with our customers or with our suppliers, sorry, with regards to ensuring that we've got the right space that we need to maintain our equipment. We'll continue focusing in this space, and we do see value as a team as we continue looking at this.
I think something else that we need to include, and Bosso touched on it a little bit, is the fact that when one looks at the UHDMS technology, once we commission that plant, we'll essentially be converting material that would typically have gone to waste into ore. I think it's a real game- changer for us because all of a sudden, declaring those tons as ore will actually yield value for us as a business. I guess your question is, am I concerned? I think the key is I'm actually impressed by the team and the foundation that's been laid, but believe that we have to continue focusing on operational excellence, and that's certainly a space that we will continue focusing on. Bosso, I don't know if you want to add anything on, specifically the cost element, now.
Yeah. Nothing more. Not a lot to add, Mpumi. I think, Brian, and you do. You go back a few years, and you focus on Sishen's unit costs. Yes, we have seen cost pressures over the last year. As I said, we will continue to see them in 2022. It's also important to just look back at how we have contained C1 unit costs. I think one of the slides that I talked about, which was slide 21, is a nice picture to have a look at and see how we have maintained C1 unit costs flat through the Tswelelopele strategy period. Yes, we have seen an increase in 2021.
As I said in the presentation, $4 per ton of that is purely FX because of a much stronger rand in 2021. Yes, it's a concern, and we are working on it from an operational excellence perspective, as Mpumi says, but also from a pure cost savings as I've alluded to in the presentation. This is getting the utmost of focus. When you look back, I think it is important to put it into context. That slide, I feel, just gives it the right context in terms of what we've achieved on the cost side.
Okay. Thanks very much.
The next question comes from Ian Rossouw of Barclays.
Thank you. Just a few from my side. A question on your. I guess you've highlighted some of the logistical constraints and, I guess, opportunities for that to improve with, I guess, the major maintenance completing. I was just sort of curious on your confidence in rail and port performance both improving over coming years. Obviously, you've guided to an increased mining production in 2024, and looking at your updated mine plan, it looks like that will increase further in 2025 and 2026. Maybe just sort of over the medium term, talk about, I guess, apart from these maintenance sort of improvements and efficiency improvements, are there plans to sort of for incremental expansions in some of the capacity on the logistics side? The second question, just on your updated resource statement.
I noticed the Kolomela strip life mine strip ratio increased quite a bit. Just curious what's driving that. The third question, just on something Anglo American Platinum mentioned in their results yesterday. They talk about a trust deficit with the engagement with their communities, and they're working hard to regain that. I'm just sort of curious about your relationship with communities, and also part of that, just I mean how is the Dingleton relocation going? I think you mentioned that's almost complete. Maybe just on that as well, if there's any other future community relocation plans required within the mine plan. Thanks.
Thanks, Ian. I think those are good questions. I'll start with the first one, and Timo will add to it. I mentioned that Transnet will this year be completing their last annual shutdown, and this is something that they've been working on for the past three years. We clearly see this as a positive, because we do believe that one has got to look at maintenance in a proactive manner. Post this, I think if you consider the fact that, you know, when you take circa 2-3 trains out, you remove about, you know, 2-3 million tons of capacity. If you consider the fact that clearly the longer annual shutdowns will no longer be there, we should see more time, or time when we'll essentially be running great.
The other couple of things are we've certainly been working with Transnet, and I can certainly say what's been positive for me is the openness with which Transnet has been engaging with us. You know, my team and I have essentially been to see them. If I look at it, I think there's commitment, firstly, from a Transnet perspective, for them to work with not just us as Kumba Iron Ore, but the mining industry as a whole, and we've seen that through the various engagements that have been put in place. The fact that for us, as Kumba Iron Ore, clearly the other thing that we are looking at is Transnet finalizing some of the work that they are doing from a rail perspective, and that will help us as it will eliminate some of the speed restrictions that we've seen.
There's quite a bit of work that needs to be done in that front. What's good for us is that the engagements are taking place. The plans that Transnet says they will execute are being executed, and we will continue collaborating with them in the future. Clearly, we do see a potential for an uplift in performance. Timo, do you want to add on that one first?
Yeah. Thanks, Mpumi. I mean, not much I can add to that. You've been very complete. You know, a couple of points. Exactly as you say, this year, 2022, will be the last of three major maintenance periods, part of the asset midlife refurbishment program. Forward beyond here, those maintenance periods should be shorter. That will obviously be a benefit, and we should start seeing the impact of that maintenance and midlife refurbishment and could translate into more slots on the railway line, for example, the lifting of speed restrictions and so on. That generate that additional capacity.
A comment I have to make is that, you know, if you go back in the past, we have been operating at high levels in the past, so that would suggest that we can return to that in future as well, particularly when the maintenance is gonna be completed. Then third comment maybe on the port, we're working with Transnet on a whole range of initiatives to lift capacity, larger vessels, more direct loading, reduce tether reclaimer movements, a different layout of stockpiles, and so on. And all of those should also have an effect and lift the capacity. You know, we're quite confident that can improve from where we are now and that we should be seeing that in the medium term.
Thanks. Before you jump on to the next question, maybe just for Timo, well, how much more do you think Transnet can lift that 10.7 million tons per quarter capacity on the port side. Then maybe the same on the rail, which is, I think on your presentation, 11.2.
Well, I mean, in first instance, I'll be quite happy if we get back to contractual capacity, right? We have a little bit of a mismatch at the moment between our rail and our port capacity, and that's obviously as a result of the closure of Saldanha Steel. You know, on the port side, you know, our full contractual capacity is just over 42 million tons. Simply take a quarter of that's more or less where you should be. What we need to do is see that sustainably delivered. You know, not a hit and miss, but sustainably quarter after quarter, that level of performance. That would be a big plus.
Thanks, Timo. Ian, we'll move on to the next one. You asked a question about our resource statement from a Kolomela perspective. Glenn?
Thanks for the question, Ian. Ian, you are right. The Kolomela stripping ratio has gone up. It's mainly linked to Kapstevel South. Kapstevel South was approved in August 2020, but we've done some additional geological work in that area and actually realized a 20 million ton gain in that area, so we've brought that into the pit this year. Obviously it's at a higher strip ratio than the life of mine strip ratio, so therefore the strip ratio went up. But it does add value, and it is economically. Obviously, that's why we brought it in.
Also what we're starting to do, Ian, if you think about, you know, Kumba as a stripping portfolio, you know, with the UHDMS project coming in at Sishen, we've dropped the Sishen life of mine strip ratio from 3.9 to 3.3. Obviously, Kolomela's gone up, you know, to 4.5 in the life of mine. If you look at the portfolio, and that's how we're trying to balance, you know, the stripping on the mines and production on the mines. You know, net, Kumba's stripping portfolio has gone down from 3.8, which was last year, to 3.5. So we optimize within that portfolio. Yes, Kolomela did go up, but it's as a result of, you know, adding additional ore to the reserve statement.
Okay. Thank you.
Thanks, Glenn. Then moving to your last two, I'll start with the first one, and Pranill will add to the last one. You mentioned that Anglo American Platinum spoke about the trust deficit around communities. Overall, all of us as an industry focus on building the relationships that we have with our communities. If I focus specifically on our business, I think there's a couple of things that we've done really well there. If you look at our results, we spoke about the fact that from a local procurement expenditure perspective, we actually have spent ZAR 4.1 billion with local suppliers. That's quite high.
What that includes is not just going and finding people that are ready to deliver a service to us as a business, but it does mean that we work from an enterprise and a supplier development perspective around developing local suppliers. We actually have a model that we call the Tswelelopele model that is aimed at assisting our local suppliers in terms of their growth. We see this as something that adds value to our communities. I also mentioned that 79% of our employees come from our local communities, and clearly, that adds a lot of value. There's other things that we do, you know, things such as the provision of 17 billion liters of water to our local municipality.
The key for us is around ensuring ongoing engagements with our communities as we seek to understand their challenges and us working very closely with them in terms of assisting with those. What's also impressive is the fact that when one looks at our region, we also engage with other local players. You may recall that we announced the Impact Catalyst program, where we are now bringing together other players and working together to assist with improving the lives of our communities. It is a space that we continuously work on. I don't think it's a space that one ever stays, you know, I've done it, but I can certainly say that there's a lot of work that's taking place, and that when I look at the relationship, I would actually say it's very constructive.
You know, we liaise with various players within our community, and we will continue doing this. Pranill, please see if you want to add to that, and please talk specifically about Dingleton.
Yeah, thanks, Mpumi Zikalala. I think you covered that well. Just on Dingleton, as we mentioned, a key highlight for us in 2021 was reaching agreements and completing the relocation of Dingleton's last homeowners. The way we've done this is in line with our Social Way 3 standards, but also making sure that we aligned with international benchmarks like the IFC standards. In total, 517 out of 517 property owners, business owners, and homeowners were successfully relocated.
Currently and ongoing, our priority will be on livelihood restoration for the Siyathemba community, and we have a post-resettlement working group working with us, and we engage with them on a continuous basis to ensure that we hear each other and we continue with our ongoing support as Siyathemba being part of our host community.
Thanks, Pranill. Ian, you also added the part, are we planning on relocating other communities? Not at the moment, you know. If that were to ever happen in the future, we'd certainly do exactly what we did with Siyathemba, but there are no plans for us to do that at the moment. Thank you.
Thanks.
Thank you. The next question comes from Thabang Thlaku of SBG Securities.
Hi, good afternoon, everyone. I have a few questions on Transnet and operations and the balance sheet. I'll kick off with Transnet, Boomie. Can you just give us a little bit more color on this longer annual shut? I think you mentioned the fact that they've been doing that over the last three years. How long is that cycle? How many years do we have to wait until they do a sort of similar maintenance?
Thanks, Thabang. I'll take that first one. Timo may add. Transnet embarked on the annual shuts, the slightly longer shutdown, and I have to be specific first. These were planned. We do want planned maintenance because that's clearly proactive maintenance. They are doing the last one this year in September, October, and that is the end for this particular phase. Going forward, I'm sure like any other business, they'll review their maintenance plans. They have not given any indications of the need to do shuts similar to this, because clearly they would have caught up with their backlog maintenance. We actually, I have to say, support the phase that they've gone through. Anybody who, I guess, runs assets would see the need to ensure that you catch up on backlog. Timo, do you want to add to that?
Yeah. All I'll say is that from next year, we should be seeing a maintenance period of, you know, somewhere around 7-10 days at most. Yeah. Much shorter than what we're seeing this year or the past couple years.
Okay. Thank you. Moving on to my next question, Jane, I think it's for you. You know, Boomie mentioned the fact that you guys had converted about 140 million tons of waste. I'm assuming that's run-of-mine waste into 50 million tons of production. With regards to that, when I look at your increases in reserves at Sishen, that 54%, I'm assuming that's the average grade and not the cut-off grade. If I am correct in my assumption, what is the current cut-off grade in your reserves?
Yeah, thanks. Thanks, Thabang. You're right. The 140 million tons of reserve, that's the low-grade portion or what we traditionally call C grade. That's between 40% and 48% iron content. We've converted that now to reserves, and if you take the yield, that converts to about 50 million tons of saleable product. That's the 140 to 50. And then in terms of the current cut-off grade, the current cut-off grades around 48, but that's because we're, that's the cut-off grade of the jig plant. Now with the UHDMS coming in, that cut-off grade now will become 40%.
Does that mean that when UHDMS is fully operational in FY 2024, we should see you guys increase those reserves a lot more than we were seeing this year?
No. We've converted all of the, you know, low grade that we would be feeding this, the UHDMS plant this year. That change has happened this year. There is further optimization work we're doing, Thabang. In terms of the low grade we were targeting, that's all converted this year.
Okay. Are there any discussions around potentially moving forward the point at which you start exploring and looking at the stockpiled reserves or resources? Sorry.
No, no. Good question.
Go on.
Good question, Thabang. Look, we do have stockpiles on surface. But you know, in terms of mining, because we've got that 140 million tons in the pits, we've got to mine that anyway to get to our other ore. So that'll be first prize in terms of putting that through the plant. So we will look at those stockpiles on surface, you know, as part of the life of mine extension. But we have more than enough, you know, to see us through to, you know, the mid-2030s and, you know, closer to 2040 in terms of the current run of mine coming out of the pits. But there is opportunity there on those stockpiles, but much later in life. We've got enough in the pit at the moment.
Okay. It remains the same. My last question is for Bosso. You know, something that you highlighted, I think earlier, your restricted cash has gone up to ZAR 2.9 billion from just over ZAR 800 million or close to ZAR 900 million last year. Are you able to give us a bit more color on how we think about that and if we'd be able to sort of estimate that number going forward based on, I don't know, iron ore prices or sales volumes?
Yeah. Was that the end of the question, Thabang? You sounded like you wanted to continue.
Yeah.
Okay. All right. Look, as we say in the note to the financial statements, that restricted cash represents money that we have to put up with the banks to cover the variation margin in some of the price risk management activities we do in our marketing entities. Now, what drives that really is the period in which what we call the quotational period, but also volatility of iron ore markets. Last year in particular, we saw extreme volatility, first of all, in the first half of the year going up, and then in the second half of the year, going down.
If you look at the high and low points, peaked well over $200 per ton from an iron ore price perspective, and then bottomed around about $90 per ton. It's that wide volatility that has created the need to put up more variation margin in terms of what we put up, and that's why there's been such an increase. To model it, Thabang, would be very difficult. It's like modeling the iron ore price and how that behaves at any given point in time.
What we have done, though, in terms of just to make sure we manage that gap, is that we have put up new facilities, and you will see it in our financial statements that we have put up specific facilities in those marketing entities to be able to cover those variation margin gaps, so reducing the need to put up actual cash as we do this. You should see that providing relief in the balance sheet going forward.
Okay. Just a follow-up question, Bothwell. I mean, your dividend is also one that's a bit tricky to forecast, 'cause even though we know the policy, there tends to be a top-up. Would you say a 90%-95% payout ratio is a reasonable assumption?
No. 50%-75% payout ratio.
Okay.
This is the policy. Any excess calculated thereafter gets you to your ultimate payout. That remains unchanged.
Thanks, Bosso.
Thank you.
Thanks, guys.
Thank you. At this stage, we have no further questions on the line, so I will now hand over for questions from the webcast. Thank you. There's just a few questions. They're sort of in five categories. The first being quite straightforward for Glenn. Richard Hatch has just asked to remind him of the targets for the efficiencies on shovels and trucks.
Yeah. Richard, on the shovels, we're targeting 80% of the benchmark. That's the target for shovels. You know, our dominant constraint is trucks. We are truck- constrained, so we're still targeting, at this stage, 100% on those.
Thanks, Glenn. The next question we have is from Mark Du Toit, and I would say that's for Vijay. Mark's asked, what are the drivers or what's giving us confidence to guide towards the 41-43 million tons for 2024 in terms of production?
Thanks, Mark. There are a couple of factors. First of all, as we discussed, our P101 program around improving our operating efficiencies. That's one of the key contributors. On top of that, in 2024 we'll see completion and we're starting to realize the full benefits of the UHDMS project. I think Mpumi touched upon this and Timo touched upon this. Transnet also completing their three-year program, and next year there will be a ramp up. We see steady ramp up even in the Transnet capacity. As we do all the time, we look into the entire value chain. Based on balance of our capacity right across the value chain, we are pretty confident that that would be the number.
Thanks, Vijay. We have a question or three questions actually for Timo. The one being, what is our expected realized price once UHDMS comes in terms of the kind of quality premium we can expect? The second one is, what is our view on lump premium? Lastly, the third one would be on the potential impact on Kumba from the Ukraine-Russia tension, and also on the FE price. Okay.
Okay, thanks very much. Look, the UHDMS will give us a larger share of premium products that should allow us to sell more of our products on a higher- grade index, channel more towards the most efficient steel makers that are willing to pay a premium. It should all benefit the premium that we're able to earn on top of the full lump premium and on top of the FE premium. We're targeting $2 with UHDMS. We should be able to achieve that, if not slightly better than that. On the lump premium, you know, we've been saying for some time that we expect the longer- term lump premium to be around about $0.20-$0.21, up from where it used to be, $0.15. We continue to believe that that is the case.
On lump specifically, there's two important developments. One is that on the supply side, there is more lump coming out of the Pilbara, both from Rio Tinto and from BHP, with their new mines, Gudai-Darri and South Flank. On the demand side, there is greater demand for direct charge products as China is lifting its share of lump and pellets in the blast furnace towards the levels that we're seeing in the traditional markets, Europe, Japan and Korea. We've been seeing an increase in direct charge products by about 1% every year. It's now in China, sitting at 29%. In those traditional markets, it's sitting at 36%. So that uplift that we expect to see over the next couple of years should be very positive for demand for lump.
There will be a bit more supply coming out of the Pilbara, particularly. In the short term, we're quite bullish on lump. We have strong lump premium at the moment, even though the met coal price is very high, as a result of supply constraints in Australia. As those constraints are lifted, the met coal price should be coming down, and that should actually be further supportive of the lump premium. In the short term, we expect a strong lump premium, much stronger than the $0.21 long term. Your question on the potential impact on Kumba from the tension that we're seeing in the Ukraine. Look, there are a couple of important iron ore producers in the Ukraine and in Russia.
You know, their exports could be impacted, obviously by the developments and sanctions that might follow. We obviously hope that it won't come to that, but you know, the likes of Ferrexpo, Metinvest, Metalloinvest have significant exports, particularly targeting Europe. You know, if it should come to that, and if steel mills in Europe find themselves short of pellets, then it's good for them to know that a good quality lump ore can be a very good substitute for a pellet. You know, Kumba is able to deliver premium lump to those markets and can support if needed.
Thanks a lot, Timo. We are running a little bit behind time. Just very quickly, there are two questions for Bosso. One is in terms of cost guidance and the other in terms of CapEx. If I can just bring together the questions on cost guidance, it's really simply in terms of what are the assumptions that are leading to the cost guidance for 2022. The other question on cost is just what are our measures that we're putting in place to achieve our savings target of ZAR 1 billion for 2022.
Thank you. Thanks, Penny. I'm not sure who the questions were from, but thanks. Thanks, Dominic and Nelson. Look, as I said, in terms of our 2022 cost guidance, the biggest driver is on the physicals, in terms of the waste that we're moving. We're moving upwards of 60 million tons more waste than we moved last year. You'll see that in our waste guidance, as well, and that's a big driver for us. As I said, we're seeing significantly longer distances and higher vertical lifts. That is really driving. In terms of your base inflation, your CPI is well contained at more or less between 4.5% and 5%.
Mining inflation runs about 2 or 3 percentage points ahead of that in terms of the other inputs. As I said, the biggest driver is on the physical side. On the cost-saving side, as I said, we're targeting ZAR 1 billion in cost. 50% of that is driven by our operational improvements. Just getting back on track on those efficiencies that Glenn spoke about will make us realize about ZAR half a billion rand in terms of cost savings. The rest of them come from our overhead optimization exercise. We've gone through an exercise to look at our overhead structures, and we've rationalized those, and we will start to see the benefits coming through in 2022 fully.
The work on the supply chain continues. We continue to optimize the prices we pay for our inputs, and we continue to optimize our use of contractors on our properties. That work will continue, and that's how the ZAR 1 billion of savings stack up.
Okay. The question on CapEx has largely been covered. I'll just touch briefly on it. In fact, we have questions from Richard, Tiego, and Emmanuel asking about whether ZAR 10 billion-ZAR 11 billion is fair for 2022 and if inflation is pushing that up. That's the first question. The second one is what our medium-term guidance is for 2023 and 2024, and then the outlook for capitalized strip, which we have covered.
Yep. I think we've covered a lot of that. Double digits in 2022, and it will continue at that level through to the next year as we complete UHDMS and Kapstevel South, and we should see it settle again below ZAR 10 billion. That's by and large where we are.
Thank you, everyone. Thank you, Judith, and thanks to everyone for joining us today, for your continued interest in Kumba. If you have any other questions, you're welcome to reach out to me. My contact details are on the website and in the results booklet. Stay safe, everyone, and goodbye.