Good morning. I'm Franscelene Moodley, the Head of Investor Relations at Anglo American Platinum, and thank you for joining us today at our 2023 interim results. If I can guide you to our cautionary statement. If you could read this in full in your own time, I'd appreciate it. We will have time at the end of the session for a Q&A. Good morning. I'm Franscelene Moodley, the Head of Investor Relations at Anglo American Platinum, and thank you for joining us today at our 2023 interim results. If I can guide you to our cautionary statement. If you could read this in full in your own time, I'd appreciate it. We will have time at the end of the session for a Q&A. I'll now hand over to Natascha, our CEO, and Craig Miller, our Finance Director, to take you through the presentation. Thank you.
It's our opportunity to sing for our supper, I guess. Good morning, welcome to the presentation of our 2023 interim results. Thank you for taking the time to join us here today, both in person and also virtually. I would like to acknowledge my colleagues in the room, all of our guests, specifically, also, members of our board: our Chairman, Norman Mbazima, and some of our board members who joined us, Themba Mkhwanazi, Suresh Kana, John Vice, that's here today. I haven't seen Thabi Leoka. I think we expected her, and Roger Dixon. I'm sure they will join us a little bit later. Let's start with a summary of the first half's performance and also the operating context of the first half. We are firstly, pleased to also...
Members of our board, our chairman, Norman Mbazima, and some of our board members who joined us, Themba Mkhwanazi, Suresh Kana, John Vice, that's here today. I haven't seen Thabi Leoka. I think we expected her, and Roger Dixon. I'm sure they will join us a little bit later. Now, let's start with a summary of the first half's performance and also the operating context of the first half. We are firstly pleased to report zero fatalities at own operations and our joint ventures, as well as a record low total recordable case frequency rate of 1.58, reflecting a 34% improvement year-on-year. Our metal-in-concentrate production was 1.85 million PGM oz, and our own refined production was 1.7 million PGM oz for the half.
Our EBITDA was ZAR 13 billion of 1.58, reflecting a 34% improvement year- on- year. Our metal-in-concentrate production was 1.85 million PGM oz, and our own refined production was 1.7 million PGM oz for the half. Our EBITDA was ZAR 13 billion, and we achieved an EBITDA mining margin of 42%. In this half, our operating environment continued to present several challenges. We have seen continued global market volatility, concerns around the reopening of China's economy, interest rate uncertainties, and an increase in cost environment relating to inflationary and foreign exchange movements.
We continue to see a decline in the South African and Zimbabwean economies, amplifying many socioeconomic challenges. Unfortunately, many of these issues are caused by crime and corruption, which impact not only our operations, but society at large. However, we do remain resilient and have navigated well through many of these challenges that are within our control, minimizing the impact on our operations, employees, and host communities. One example of this work is our management of the energy crisis. Despite increased load curtailment, we have been successful in limiting the impact on ounces lost while progressing our large-scale renewable generation projects and further reducing our consumption to accelerate our energy independence. Our strategy and our culture work together to achieve our purpose of reimagining mining to improve people's lives.
Our strategy guides our choices, and our culture enables every colleague who walks through our gates on a daily basis to be fully authorized and psychologically safe to do their best work every day. There's a diversified use of our metals, which include industrial, automotive, technology, battery storage, food preservation, investments, and jewelry. In addition to that, we see many other emerging users, including the development of the green hydrogen technology, which is PGM-intensive and something we are very excited about.
I would like to take a moment to reflect on the delivery of our four strategic priorities. ESG is about collaborating with our host communities and our countries in which we operate to create better future. We continue to be industry pioneers, ensuring an healthy environment, thriving communities, and being a trusted corporate leader. We are set up to be a business that goes beyond resilience, with the aim to thrive through the ever-increasing rate of change we experience today. This strategic priority forms the basis of safe, stable, and capable operations, which will see us firmly placed in the first half of the cost curve for the long term. Our world-class portfolio of assets form part of an integrated value chain, and we will continue to leverage these to deliver value to all of our stakeholders.
We do this by looking after our resources and driving innovation, making our jobs and our organization better. Our market development work is fundamental to ensure our products have a sustainable and positive impact on the world. We are leveraging capabilities through these activities and capture value from adjacent value chains. Simply put, our purpose and what we do matters. We have been shaping the value creation pathway of our world-class mining assets, and have a deep understanding of the potential of every asset, as well as the inherent optionality that exists. This value is leveraged through our uniquely positioned we do matters.
This value is leveraged through our uniquely positioned, integrated downstream process. We believe that we have the best PGM assets in our portfolio, creating optionality expected of a world-class business. These options are de-developed and continuously assessed against our capital allocation framework, so that we make the right decisions at the right time. Now, just as a reminder of some of these options that we have, our work on future of Mogalakwena will optimize value creation over the long, long term for this very long-term asset. It is an absolute phenomenal resource, and its polymetallic ore body will make the right decisions at the right time. Now, just as a reminder of some of these options that we have, our work on future of Mogalakwena will optimize value creation over the long, long term for this very long-term asset.
It is an absolute phenomenal resource, and its polymetallic ore body will benefit from metal demand from the energy transition. Amandelbult's prill split has unique characteristics that provides the operation with a significant strategic advantage. It is supportive of the critical mineral requirements for the hydrogen economy and will continue to play a role in ICE vehicles. In line with our strategic priority to maximize value from our core portfolio of assets, we are using existing infrastructure at Mototolo to extend mining into the
Unki represents one of the largest PGM deposits outside South Africa. We continue to optimize the business for long-term value generation. We are the world's leading primary producer of PGMs, mining, refining, and market to beyond 30 years. Unki represents one of the largest PGM deposits outside South Africa. We continue to optimize the business for long-term value generation. We are the world's leading primary producer of PGMs, mining, refining, and marketing our products for more than 90 years, with an excellent understanding of the industry and our customers' needs. Appropriate to the quality and life of our assets, we have a first-in-class logistics platform and global distribution network, efficiently supplying PGMs across the world from a diverse and optimized supply base. This is normally Craig's slide, but I'm gonna talk to this today.
It's all about our disciplined capital allocation. This framework has demonstrated our ability to retain a strong balance sheet that can be maintained throughout the cycles. Through the next couple of days, you're gonna hear about this again and again. Our investments are value-driven, ensuring that our assets will operate in the first half of the cost curve. We have been, and will continue to prioritize the right sustaining capital investment to ensure safe, stable, and capable operations for the long life of our assets. We are committed to our base dividend of 40% of headline earnings. Also, through the next couple of days, you're gonna hear about this again and again. Our investments are value-driven.... ensuring that our assets will operate in the first half of the cost curve.
We have been and will continue to prioritize the right sustaining capital investment to ensure safe, stable, and capable operations for the long life of our assets. We are committed to our base dividend of 40% of headline earnings, and we continue to deliver on this and assess our business and its optionality against this framework. This has enabled us to declare an average dividend of 75% of headline earnings over the past five years. We are one of just a few South African resource companies who have matched our returns to shareholders against the invested cash flows over the last two decades. We observe and assess the market fundamentals, therefore, they are well understood and guide our investments. We study various long-term market outlook scenarios and are focused on making the right decisions to ensure we remain agile and resilient long into the future.
Now, let's review our ESG performance for this half. As commented, I'm actually really grateful that we have not recorded any fatalities in the last 18 months at our own managed operations. We continue to see a drop in incidents, recording our lowest injury frequency rate to date. We are continuously researching and implementing new ways to improve and re-energize our ambitions towards zero harm. Fatalities in the last 18 months at our own managed operations. We continue to see a drop in incidents, recording our lowest injury frequency rate to date. We are continuously researching and implementing new ways to improve and re-energize our ambitions towards zero harm. These progressive step change are not by chance. We drive purposeful, focused interventions and continuously reviewing our approach as technology evolves, incorporating learnings and adopting best practice. I would like to reflect on milestones that our operations have achieved.
Three of our operations have recorded more than 11 years fatality-free, whilst our Amandelbult has shown significant safety improvement as a result of our back to basics safety approach and the successes of modernization of the mine. Our business relies on partnerships and collaboration with various public sector entities to operate effectively. This enables us to provide our employees and host communities with basic infrastructure needs. To minimize disruption on our operations and host communities, we have been partnering with government and business on solutions to secure energy, water, road, and rail infrastructure, addressing fraud. Our business relies on partnerships and collaboration with various public sector entities to operate effectively. This enables us to provide our employees and host communities with basic infrastructure needs.
To minimize disruption on our operations and host communities, we have been partnering with government and business on solutions to secure energy, water, road, and rail infrastructure, addressing fraud and corruption, and ensuring social stability in our operating environment. The National Energy Crisis Committee, or better known as NECOM, was established as a joint working platform between government, Eskom, and business to realize the expedited implementation of the Presidential Energy Action Plan. As a company, we have been supporting working groups within NECOM to achieve energy security and minimize load shedding and load curtailment. We have been partnering with government and business on water security to ensure that our host communities have the basic human rights of clean water supply and sanitation. We currently have 15 projects focused on water supply, refurbishment of water and sewage infrastructure.
As a company, we have been supporting working groups within NECOM to achieve energy security and minimize load shedding and load curtailment. Similarly, we have been partnering with government and business on water security to ensure that our host communities have the basic human rights of clean water supply and sanitation. We currently have 15 projects focused on water supply, refurbishment of water and sewage infrastructure, and importantly, water conservation. Our most notable water project is the Wilfontein Water Management Model Project. It is a public-private partnership between government and the mining industry, which will significantly improve water security in Limpopo. Construction will continue to 2030 to deliver the full program of 200 km of bulk raw water pipeline and associated infrastructure into the Far Eastern Limb. Now, let's look at operational performance for this half.
In December 2022, our medium-term outlook for private partnership between government and the mining industry, which will significantly improve water security in Limpopo. Construction will continue to 2030 to deliver the full program of 200 kilometers of bulk raw water pipeline and associated infrastructure into the Far Eastern Limb. Let's look at operational performance for this half. In December 2022, our medium-term outlook for 2023-2025 was adjusted to reflect new operating conditions, mainly at Mogalakwena and Amandelbult. The results of our improved Mogalakwena operational geological drilling had highlighted a short to medium-term reduction in higher grade ore volumes. 2023-2025 was adjusted to reflect new operating conditions, mainly at Mogalakwena and Amandelbult.
The results of our improved Mogalakwena operational geological drilling had highlighted a short to medium-term reduction in higher grade ore volumes, and lowered the weighted average grade at the mine. During the first half of 2023, we have increased the quality of our geological model through increasing our line of sight of drilling and reconciliation to actual performance. This is further supported by our resource drilling to expand the mineral resource into and conversion into mineral reserves. Our full-year grade is expected to be between 2.7 and 2.9 grams per tonne from here on into 2025, and therefore, Mogalakwena is expected to produce between 1 million and 1.1 million PGM oz per annum in each of these three years.
At Amandelbult, the Tumela upper infrastructure and the Schaapkraal open cast operations had come to the end of life of mine, resulting in lower mining volumes at Amandelbult. Due to the lower mining volumes, a decision was taken at the end of last 7.9 grams per tonne from here on into 2025, and therefore, Mogalakwena is expected to produce between 1 million and 1.1 million PGM oz per annum in each of these three years. At Amandelbult, the Tumela upper infrastructure and the Schaapkraal open cast operations had come to the end of life of mine, resulting in lower mining volumes at Amandelbult. Due to the lower mining volumes, a decision was taken at the end of last year to close the aging and high-cost Merensky concentrator.
At both Mogalakwena and Amandelbult, we also encountered short-term operational challenges in the half that has been resolved. In total, our PGM metal in concentrate production in the first half of 2023 decreased by 7% compared to the same period in 2022. We continue to see strong production performance from our Unki and Mototolo operations. Despite a very complex and challenging half, we have maintained a strong contribution to mining EBITDA from all our own managed operations and achieved an overall EBITDA margin of 42%. I want to do a little bit more of a deep dive into Mogalakwena and Amandelbult performance. At Mogalakwena, PGM ounces were mainly affected by the expected lower built-up grade, built-up head grade of about 10%.
There was further production impact due to a planned primary shovel shutdown and the unplanned shut of bio-oxidation plant in the first quarter. This was offset by into Mogalakwena and Amandelbult performance. At Mogalakwena, PGM ounces were mainly affected by the expected lower built-up grade, built-up head grade of about 10%. There was further production impact due to a planned primary shovel shutdown and the unplanned shut of bio-oxidation plant in the first quarter. This was offset by higher throughput and reliability at our North concentrator in the second quarter. Let's dive a little bit deeper into grade as well. I've mentioned that an updated and integrated resource and grade control model, informed by increased reserve circulation drilling and diamond drilling over the past three years, has provided us with an improved model for planning.
The update informed the three year guidance we provided at the end of 2022. We've built confidence in our new geological model, and the reconciliation of mined ore to our new model is well within acceptable ranges. It is important to note that the downgrade to guidance last year was not a function of concerns in the quality of the asset. It only pointed to the accuracy of our short to medium-term mine planning.
As we've heard out of some of our analyst feedback, we have not lost the ore body. It's still there. I'm hoping you are still there. Okay. If you look at our resource and reserve statement, you will see that we remain confident and our guidance remains. We continue to make good progress on the six work streams of the future of Mogalakwena. Our work to date has focused on furthering the detail on the pathway defined as part of our resource development plan. The pathway to value and the associated investment decisions have been defined through the following steps. If you look at our resource and reserve statement, you will see that we remain confident and our guidance remains. We continue to make good progress on the six work streams of the future of Mogalakwena.
Our work to date has focused on furthering the detail on the pathway defined as part of our resource development plan. The pathway to value and the associated investment decisions have been defined through the following steps: firstly, we are in the process of expanding mined volumes as the pit matures and deepens, to continue exposing higher grade areas of the ore body. We have committed ZAR 4 billion to our heavy mining equipment fleet in 2022 to support the future volume growth of the open pit operation. We have made significant progress with our heritage work and in resetting relationships, and continue to build a social compact with our host communities. In 2021, our heritage work identified a large number of graves at Motlotlo in areas identified for near-term waste dumping.
Our improved stakeholder relationship and diligence in following global best practice and growth of the open pit operation. We have made significant progress with our heritage work and in resetting relationships, and continue to build a social compact with our host communities. In 2021, our heritage work identified a large number of graves at Motlotlo in areas identified for near-term waste dumping. Our improved stakeholder relationship and diligence in following global best practice enabled us to relocate the majority of these graves in 2022 and the first half of this year, opening the required dumping space for the next 18 months. There's still a lot of work to do as mining is moving westwards towards the villages of Skiming and Leruleng. Over the next decade, these villages, consisting of about 1,100 households, will be impacted by mining activities such as blasting, dust, and noise.
We continue to study various ways to avoid or minimize the displacement impact, including underground mining, pit redesign, and improved blasting practices. Significant progress have been made with regards to the temporary relocation of the St. Rita's School, which will provide the necessary buffer to access ore and extend the life of the open pit. We are also making good progress with the first twin exploration decline at the Sandsloot underground. Phase B of the exploration decline will commence as a continuation of phase A in the last quarter of this year, which will allow for the underground drilling and upgrading of the resource classification, whilst progressing towards the first bulk ore sample. Provide the necessary buffer to assess ore, to access ore, and extend the life of the open pit. We are also making good progress with the first twin exploration decline at the Sandsloot underground.
Phase B of the exploration decline will commence as a continuation of phase A in the last quarter of this year, which will allow for the underground drilling and upgrading of the resource classification whilst progressing towards the first bulk ore sample. This enables us to progress our mining studies to establish the investable case for Sandsloot underground. The configuration of the current concentrators on mine has been optimized. Our study on the third concentrator continues to progress in line with our guidance for completion in the next 12 to 18 months. The coarse particle recovery plant has been commissioned, and the full circuit performance is now being evaluated against expectations. We are also investing capital in critical infrastructure that supports the current operation and future value pathways. This includes the Blinkwater 2 tailings facility, a pollution control dam, an upgrade of the Eskom bulk infrastructure, and internal road network.
While the technical and social aspects are being addressed, the impact of global mega trends on demand, supply, and prices of our metals remains front of mind as we progress the pathway to value and direct our disciplined capital allocation. We need to consider the full value to be unlocked, as certain work streams are integral to unlocking further value. Each step to deliver the future of Mogalakwena is currently at different levels of confidence and hold different levels of risk. Each requires separate capital investment decisions to be made at the right time and in line with our capital allocation of mind as we progress the pathway to value and direct our disciplined capital allocation. We need to consider the full value to be unlocked, as certain work streams are integral to unlocking further value.
Each step to deliver the future of Mogalakwena is currently at different levels of confidence and hold different levels of risk. Each requires separate capital investment decisions to be made at the right time and in line with our capital allocation framework to protect and strengthen our balance sheet. Let's look at Amandelbult. At Amandelbult, we have seen a marked improvement in safety, and this is a critical success factor for the future of Amandelbult. Our modernization program at the mine utilizes new technologies to continuously improve safety, mine productivity, and simplify operational logistics.
This has been a journey and a positive one, and we will continue to focus on the delivery of the program to enhance the work environment and to improve operating conditions. Continued poor ground conditions at Dishaba, a requirement for higher rates of redevelopment, and short-term operational challenges at Tumela with underground rail maintenance stoppages impacted second quarter performance. The redevelopment requirements impacted development buffers at Dishaba. We have brought in additional labor skills mix to restore our mining buffers and provide flexibility to roll out the full benefits of cycle mining across the operations in a sustainable manner. Now let's walk through the Amandelbult complex and its future in a little bit more detail, and it will consist of three main areas. Firstly, the modernization of the existing mining areas that has started to deliver safety and efficiency improvements.
The start of the Middellaagte through the open pit operation. Ability to roll out the full benefits of cycle mining across the operations in a sustainable manner. Let's walk through the Amandelbult complex and its future in a little bit more detail. It will consist of three main areas. Firstly, the modernization of the existing mining areas that has started to deliver safety and efficiency improvements. The start of the Middellaagte through the open pit operation. Lastly, mining studies to shape the future of Middellaagte and Tumela 1 Sub Shaft. We are focusing on continuing the rollout of modernization cycle elements. We are staggering implementation to manage change and truly embed the modernized mining cycle. This has enabled us to start capture value through a safer and higher productivity mining cycle and lowering cost.
We are finalizing the permitting process and expect to start production at Middellaagte with an open cast mine at the end of this year. Production will ramp up to a maximum expected rate of between 110 and 180,000 tons per month. Furthermore, there are three studies currently underway. This has enabled us to start capture value through a safer and higher productivity mining cycle and lowering cost. We are finalizing the permitting process and expect to start production at Middellaagte with an open cast mine at the end of this year. Production will ramp up to a maximum expected rate of between 110 and 180,000 tons per month. Furthermore, there are three studies currently underway that will provide optionality for either life extension or growth of the complex.
The future of Amandelbult studies objectives are to define the optimal mining strategy, volume, and timing of various new mining areas and applied mining systems. That could be by optionality for either life extension or growth of the complex. The future of Amandelbult studies objectives are to define the optimal mining strategy, volume, and timing of various new mining areas and applied mining systems. That could be both modernized, conventional, mechanized mining, and/or hybrid opportunities within the portfolio. The journey we've been undertaking to trial a fully mechanized solution in Fifteen East has proven valuable to understand the successes and current limitations of mechanization for Amandelbult. These learnings form part of the studies as we map out our optimal pathway for the future of Amandelbult. Depicted here on this slide is just a comparison on size and technology of the extra-low-profile fleet that we are trialing.
With the fleet that we are trialing on mechanized solution in 15 East has proven valuable to understand the successes and current limitations of mechanization for Amandelbult. These learnings form part of the studies as we map out our optimal pathway for the future of Amandelbult. Depicted here on this slide is just a comparison on size and technology of the extra-low-profile fleet that we are trialing, with the fleet that we are trialing on your right-hand side, and the more conventional low-profile equipment on your left-hand side. The life and stability of our processing assets must match the life of our mining operations.
Now, this is recognized and form an integral part of our strategy and shapes our maintenance on your right-hand side, and the more conventional low-profile equipment, on your left-hand side. The life and stability of our processing assets must match the life of our mining operations. Now, this is recognized and form an integral part of our strategy and shapes our maintenance and capital allocation decision making. You will recall that at Polokwane smelter, our ramp up was completed at the end of January this year. We had also planned extended maintenance at our Waterval Smelter as part of our asset integrity work. The first half of the year is generally a higher maintenance period for our processing operations, where we see various parts of the processing value chain entering plant shuts. In addition, our processing operations have been impacted by load curtailment.
Despite that, we saw our own fine refined production at 1.7 million oz for the first half, with smelter utilization increasing steadily over the six months, and Polokwane running at more than 90% utilization in the second quarter. Overall, the utilization levels across maintenance period for our processing operations, where we see various parts of the processing value chain entering plant shuts. In addition, our processing operations have been impacted by load curtailment. Despite that, we saw our own fine refined production at 1.7 million oz for the first half, with smelter utilization increasing steadily over the six months, and Polokwane running at more than 90% utilization in the second quarter. Overall, the utilization levels across the smelters have risen to normalized levels, and our processing operations are running well.
Depicted here, on, again, your right-hand side, is a digital representation of the structures of Waterval Smelter. Our digital modeling enables us to better understand the risk in stress zones, high erosion exposure, localized heat sources, and general stresses and strains in structures. By proactively managing risk through appropriate monitoring and predictive maintenance, we are able to make the right long-term decisions for our assets, stability, and longevity. Now, despite being impacted by 42 days of digital representation of the structures of Waterval Smelter, our digital modeling enables us to better understand the risk in stress zones, high erosion exposure, localized heat sources, and general stresses and strains in structures. By proactively managing risk through appropriate monitoring and predictive maintenance, we are able to make the right long-term decisions for our assets, stability, and longevity.
Despite being impacted by 42 days of load curtailment in this half, thus far, our mining operations have not been impacted. We have had minimal lost ounces, and the deferred ounce impact was 66,400 PGM oz between all stocks and concentrate for the half. We have seen the curtailment impact increasing during the winter months. We are part of an intensive energy user group, which ensures that we have clear indications of what the state of the grid is. This allows us to make predictions around our own operations and plan accordingly. The models we've built allow us to match our operational response by overlaying maintenance days over curtailment days.
In the event of extended load curtailment, we have a clear business continuity plan in place to ensure that, if required, we can firstly bring our people to safety and our operations to a safe, controlled stop, ready for a restart. We also have near, medium, and long-term renewable self-generation solutions in place. I will now hand over to Craig to take us through the financial and market performance. Maintenance days over curtailment days. In the event of extended load curtailment, we have a clear business continuity plan in place to ensure that, if required, we can firstly bring our people to safety and our operations to a safe, controlled stop, ready for a restart. We also have near, medium, and long-term renewable self-generation solutions in place. I will now hand over to Craig to take us through the financial and market performance.
Thank you very much, Natascha. Good morning, everyone. I'll take you through the financial results for the first half of the year, considering the operating environment, which Natascha has just spoken about. The company generated revenue in the first half of about ZAR 65 billion and EBITDA of ZAR 13 billion, with a strong EBITDA mining margin of 42%. This was achieved despite a 29% decrease in the dollar PGM basket price. Our return on capital employed of 30% reflects our continued focus on efficient use of capital. The company's balance sheet is strong, with net cash of ZAR 24 billion, including the customer prepayment. In line with our disciplined capital allocation framework, the board declared an interim dividend of ZAR 3 billion, or ZAR 12 per share, which equates to 40% payout of headline earnings.
As we know, 2021 and 2022 were realized exceptionally high PGM prices. Prices allocation framework, the board declared an interim dividend of ZAR 3 billion, or ZAR 12 per share, which equates to 40% payout of headline earnings. As we know, 2021 and 2022 were realized exceptionally high PGM prices. Prices have now reduced, and consequently, we realized the ZAR 13 billion of EBITDA, which is similar to what we achieved in 2019. However, our EBITDA is down 69% on the first half of 2022. The 29% lower dollar PGM basket price was partially offset by a weaker rand, which had a combined impact of about ZAR 20 billion. This includes the impact of the lower valuation of concentrate inventory, which the impact of that was about ZAR 8 billion.
In addition, the anticipated lower sales volumes from our own operations contributed a ZAR 8 billion reduction, while higher mining and processing costs, due to the inflationary pressure, reduced EBITDA by a further ZAR 2 billion. EBITDA from our mining operations was ZAR 18 billion in the period. In terms of cash cost per PGM ounce, these entry, which the impact of that was about ZAR 8 billion. In addition, the anticipated lower sales volumes from our own operations contributed a ZAR 8 billion reduction, while higher mining and processing costs, due to the inflationary pressure, reduced EBITDA by a further ZAR 2 billion. EBITDA from our mining operations was ZAR 18 billion in the period. In terms of cash cost per PGM ounce, these increased to ZAR 18,076, up 13% on the second half of 2022.
The increase is predominantly due to the lower planned volumes and the impact of load curtailment, and the weaker rand. In the first half, we did experience above CPI increases in electricity and consumables, but we have seen escalation stabilizing, with prices of commodities such as diesel, explosives, and steel, reducing from the high levels that were recorded in the second half of last year. Taking into account the current economic and operating environment, we are implementing a sustainable cost reduction program to firmly position our assets in the lowest half of the cost curve. The focus areas in electricity and consumables, we have seen escalation stabilizing, with prices of commodities such as diesel, explosives, and steel, reducing from the high levels that were recorded in the second half of last year.
Taking into account the current economic and operating environment, we are implementing a sustainable cost reduction program to firmly position our assets in the lowest half of the cost curve. The focus areas are on both cost and operating efficiencies. These actions, together with the expected higher volumes from our mining assets in the second half of the year, gives us confidence to maintain our unit cost guidance at the upper end of the range of between ZAR 16,800 and ZAR 17,800 per PGM ounce. Net working capital increased by approximately ZAR 1 billion.
Metal inventory declined by ZAR 7 billion, mainly due to the ZAR 8 billion reduction as a result of the valuation of the purchase of concentrate inventory, due to the lower PGM prices, which were experienced in the first half of 2023, compared to what we experienced in the last six months of 2022. This was partially offset by higher work in progress inventory, due to the Polokwane smelter rebuild, which resulted in a lockup of concentrate stock, as well as the Eskom load curtailment impact of 66,000 oz , which Natascha's referred to. As previously guided, we expect the build-up and work in progress to be released during the course of this year and into 2024. The purchase of concentrate creditor and the customer prepayment also reduced due to the lower PGM prices, and this led to the net increase in working capital.
On smelter rebuild, which resulted in a lockup of concentrate stock, as well as the Eskom load curtailment impact of 66,000 oz, which Natascha's referred to. As previously guided, we expect the build-up and work in progress to be released during the course of this year and into 2024. The purchase of concentrate creditor and the customer prepayment also reduced due to the lower PGM prices, and this led to the net increase in working capital. Our year-to-date capital expenditure is ZAR 8.2 billion, and our full year guidance has been revised lower to around ZAR 22 billion. In terms of the categories of spend in the first half, we've continued to invest in asset integrity and maintenance, completing the slag cleaning furnace and the Polokwane smelter rebuild.
We also advanced the batching at Vaalk op and invested in our tailings storage facilities to achieve conformance to the Global Industry Standard on Tailings Management. We have and continue to review our CapEx, optimizing spend across the portfolio. In the second half of the year, we will receive some heavy mining equipment at Mogalakwena. We'll continue the maintenance programs to support safe, stable, and capable operations, as well as progressing the Mototolo-Der Brochen life extension project and the underground twin exploration decline at Mogalakwena. Turning to cash and returns to shareholders. During the period, the company generated solid cash from operations of about ZAR 17 billion. We paid taxes and royalties of ZAR 3 billion to the fiscus and invested ZAR 8 billion in CapEx.
Once again, in line with our disciplined capital allocation approach, the board has approved the interim dividend of ZAR 3 billion or ZAR 12 per share. If we now move over to the markets. The PGM basket price has fallen in 2023, however, it's still higher than it was pre-COVID. Most of the adjustment has come about due to the normalizing of the rhodium price, and across the three main PGMs, the basket is now well-balanced. The minor PGMs, iridium and ruthenium, continue to make sizable contributions.
Global light vehicle production, the metric most related to PGM demand, continues to recover from the pandemic shock. So far this year, output has been 13% higher than the same period last year, and while we expect the growth to slow, given higher interest rates, concerns over a recession now seem exaggerated, and a full year increase of between 6% and 7% is likely. Within this, although BEVs or light vehicle production, the metric most related to PGM demand, continues to recover from the pandemic shock. So far this year, output has been 13% higher than the same period last year, and while we expect the growth to slow, given higher interest rates, concerns over a recession now seem exaggerated, and a full year increase of between 6% and 7% is likely.
Within this, although BEVs continue to take market share, ICE vehicle production volumes are also expanding. Looking further ahead, industry forecasters expect continued growth in light vehicle production, but at a much slower pace than historically, relative to GDP, continue to take market share. ICE vehicle production volumes are also expanding. Looking further ahead, industry forecasters expect continued growth in light vehicle production, but at a much slower pace than historically, relative to GDP. While there are logical arguments as to why the world might become less car-reliant, strong growth in many emerging markets points the other way. If car production were to return to pre-COVID, to the pre-COVID trend, automotive PGM demand could surprise on the upside in the coming years. In 2023, we saw platinum price swing in line with the changing supply concerns, which saw a wave of investment and then disinvestment.
Fluctuations in the U.S. dollar have also been important. The underlying story, however, is positive. Automotive demand continues to rise as palladium substitution program that began a few years ago are realized. Industrial demand is also robust, and in line with our year-end forecast, we continue to see platinum in a deficit in the coming years, supporting its price. The palladium price has steadily weakened over the year. Concerns over Russian supply post the invasion of the Ukraine have eased, as Russian flows have recovered to pre-invasion levels.
With the automotive palladium purchasing subdued, speculators have bet heavily against palladium, taking the short position to a record high. If underlying automotive production remains strong, the short position raises the prospect of a short covering price rally. While we believe palladium is in deficit this year, we forecast a surplus in the next few years. Rhodium has been weak this year, with the price falling to a four year low. One reason for this has been the disposals by the fiberglass industry. A switch to richer platinum alloys has been ongoing for several years, but this has been masked by a rapid expansion of plant capacity. That seems to have stalled in 2021, meaning the ongoing switch has now led to a buildup of surplus rhodium stock. With the industry under some financial pressure, rhodium sales have followed.
It's uncertain when this will end, though various factors suggest that we're nearer the end of that process, rather than at the beginning. Underlying rhodium demand masked by a rapid expansion of plant capacity. That seems to have stalled in 2021, meaning the ongoing switch has now led to a buildup of surplus rhodium stock. With the industry under some financial pressure, rhodium sales have followed. It's uncertain when this will end, though various factors suggest that we're nearer the end of that process, rather than at the beginning. Underlying rhodium demand remains robust. A steady spread of real world emissions testing will continue to support rhodium in rhodium autocatalyst loadings in the coming years. As such, while the rhodium is in surplus due to stock disposals, it remains a really modest one.
I'd like to spend some time talking about hydrogen. I know we've spoken a lot about it over the years, and you're probably wondering why. After all, the sector is currently a very small proportion of total PGM demand. Put simply, it's because it matters. It matters for our planet, but it matters for the future of PGMs. We all know the potential for PGMs, from PEM electrolyzers to make green hydrogen and PEM fuel cells to convert hydrogen to electricity. As this slide illustrates, PGMs are used or have the potential to be wondering why. After all, the sector is currently a very small proportion of total PGM demand. Put simply, it's because it matters. It matters for our planet, but it matters for the future of PGMs.
We all know the potential for PGMs, from PEM electrolyzers to make green hydrogen and PEM fuel cells to convert hydrogen to electricity. As this slide illustrates, PGMs are used or have the potential to be used in a whole host of other hydrogen applications, from production and conversion through transportation and storage to end use. We're certainly seeing the momentum build in the hydrogen economy. There have been over 1,000 hydrogen project proposals announced globally for full or partial deployment by 2030. Direct investments of $320 billion have been made into hydrogen projects announced through to 2030, of which approximately 10% have passed the final investment decision stages. We, as Anglo Platinum, continue to invest in the development of a diverse range of existing and new opportunity areas for our metals.
Our opportunity areas tap into key global trends such as decarbonization of difficult-to-abate industries and mobility. For example, in Germany, our H2 Moves Berlin, which approximately 10% have passed the final investment decision stages. We, as Anglo Platinum, continue to invest in the development of a diverse range of existing and new opportunity areas for our metals. Our opportunity areas tap into key global trends such as decarbonization of difficult-to-abate industries and mobility. For example, in Germany, our H2 Moves Berlin, our fuel cell electric vehicle demonstration partnership with Toyota Germany and the Safe Driver Group, now has more than 100 Toyota Mirai deployed as taxis on the streets of the German capital.
Initiatives like these are helping the uptake of fuel cell electric vehicles by aligning end user demand with the supply of vehicles and infrastructure access, and by influencing new audiences via proactive marketing and education activities. I'll now hand you back to Natascha to take you through the strategic performance.
Thank you, Craig. Just a short bit to go. As a mining company, success lies in a comprehensive strategy that allows for agility to steer through the cyclical nature of the business, and a culture that enables our employees to execute on that strategy. Our targeted outcome is to ensure shared value to shareholders and our broader stakeholders, and we continue to track our delivery against our value creation as you can see on this slide. I truly believe that the decisions we've been making and will continue to make on that strategy. Our targeted outcome is to ensure shared value to shareholders and our broader stakeholders, and we continue to track our delivery against our value creation as you can see on this slide.
I truly believe that the decisions we've been making and will continue to make daily as a management team and supported by our board, has set our business up to demonstrate resilience, agility, and adaptability through this continuous change that we face. We respond effectively to changing market conditions, commodity prices, and regulatory environments. We can respond and adjust our operating, operational practices and follow our capital allocation process to remain competitive, seize opportunities through these optionalities that we have at the right time. We have created a stable, sustainable foundation through the building blocks of the decisions we make.
There is a view that leadership success get measured, not during your tenure, but in the years after you leave. I believe we have taken decisions for this business that is aimed at securing the building blocks that protects the long-term sustainability build foundation through the building blocks of the decisions we make. There is a view that leadership success get measured, not during your tenure, but in the years after you leave.
I believe we have taken decisions for this business that is aimed at securing the building blocks that protects the long-term sustainability of our business. I have every faith that we will continue to deliver value to all of our stakeholders. This concludes our presentation. Thank you once again for joining us, both in person and online. I will hand back to Fran to facilitate questions and answers. Thank you, Fran.
Thank you, Natascha. We'll now start by taking Q&A from the floor. There are mics going up. Christopher Nicholson first.
Morning, Natascha. Morning, Craig. Morning, Amplats' team. It's Christopher Nicholson from RMB Morgan Stanley.
Thank you, Natascha. We'll now start by taking Q&A from the floor. There are mics going up. Christopher Nicholson first.
Morning, Natascha. Morning, Craig. Morning, Amplats' team. It's Christopher Nicholson from RMB Morgan Stanley. Can we talk about CapEx, please? I see that you've broadly left your CapEx guidance intact, not just for this year, for the next two years as well, but clearly, market prices have changed quite materially. I'm not sure if that's a view that either this dip in prices is temporary or a willingness to invest through the cycle, but maybe you could comment at what point you would start to reconsider. Can we talk about CapEx, please? I see that you've broadly left your CapEx guidance intact, not just for this year, for the next two years as well, but clearly, market prices have changed quite materially.
I'm not sure if that's a view that either this dip in prices is temporary or a willingness to invest through the cycle, but maybe you could comment at what point you would start to reconsider some of those CapEx plans. Maybe more specifically, when would you be prepared to gear up the balance sheet to continue that CapEx spending? I'll just ask a second question ‘cause it's linked to it. Within this framework, I think it's quite clear that maybe Amandelbult hasn't got the CapEx that it's needed over the last number of years, otherwise, volumes wouldn't have done what they've done. Will Amandelbult get the CapEx it needs going forward? Thank you.
Okay. Thanks, Chris. Hi, good morning. In terms of the CapEx, as I articulated, we continue to review the capital profile of the business. We have revised it down by about ZAR 1.5 billion.
Will Amandelbult get the CapEx it needs going forward? Thank you.
Okay. Thanks, Chris. Hi, good morning. In terms of the CapEx, as I articulated, we continue to review the capital profile of the business. We have revised it down by about ZAR 1 billion, ZAR 1.5 billion, and we'll continue to assess that, taking into account the situation that we're in. However, we've obviously learnt a number of expensive lessons over the years, and we'll continue to make the investments in ensuring that we've got the safe, stable, and capable operations. In terms of the second half, we broadly do see the delivery of HME equipment coming through at Mogalakwena. We do continue to see the investment that we need to make at Mototolo, in terms of its life extension.
We've got a series of rebuilds that go into 2024 and 2025, so we're starting to do some of that work in the smelters. We continue to evaluate it, and we'll do the right thing, safe, stable, and capable operations. In terms of the second half, we broadly do see the delivery of HME equipment coming through at Mogalakwena. We do continue to see the investment that we need to make at Mototolo in terms of its life extension. We've got a series of rebuilds that go into 2024 and 2025, so we're starting to do some of that work in the smelters. We continue to evaluate it, and we'll do the right thing from a business.
In terms of sort of broader in terms of where we're at, I mean, clearly the focus has to be, and is, getting the assets into the first half of the cost curve. That's where we will focus, in terms of what we need to do, going forward, in order to withstand, you know, the current operating environment. We will, as part of that disciplined capital allocation approach, retain a strong balance sheet. I could see ourselves, if we're needing to access debt in order to support some of the growth options into the future. Absolutely, in terms of stay-in business capital, we need to be able to generate that from our cash flows. That's where the focus will be.
In terms of Amandelbult, we've articulated some of the work that we have at Amandelbult. We continue to assess the options there in terms of what the appropriate structure and the timing of the various investments needs to be. That will be the sort of the ongoing focus, particularly going into the second half of the year. Both options into the future, but absolutely, in terms of stay-in business capital, we need to be able to generate that from our cash flows. That's where the focus will be. In terms of Amandelbult, we've articulated some of the work that we have at Amandelbult. We continue to assess the options there in terms of what the appropriate structure and the timing of the various investments needs to be.
That will be the sort of the ongoing focus, particularly going into the second half of the year.
Good morning. Nkateko Mathonsi from Investec Bank. Thank you so much for Natascha, for a detailed presentation on Mogalakwena. My question is relating to unit cost performance and the contribution of Mogalakwena, especially as a result of lower grades. If you can also comment in terms of the grades beyond 2025, beyond the 2.7-2.9 guidance in the next two years. My second question is on jewelry and the market development that is being focused at jewelry, and whether it has potential to actually underpin the basket price in the near term.
Do you want to start on cost? I'll take a little grade and jewelry.
Okay, yeah, certainly. I mean, I think we have seen an, we've obviously experienced an increase in cost at Mogalakwena. Those were anticipated, and I think we articulated some of that at the beginning of the year, particularly as the pit has deepened. You know, distances have increased. A lot of that associated increase in Mogalakwena cost is associated with, some of those planned operational.
Do you wanna start on cost? I'll take a little grade and jewelry.
Okay. Yeah, certainly. I mean, I think we have seen an, we've obviously experienced an increase in cost at Mogalakwena. Those were anticipated, and I think we articulated some of that at the beginning of the year, particularly as the pit has deepened, you know, distances have increased. A lot of that associated increase in Mogalakwena cost is associated with some of those planned operational challenges. We do see the second half getting a bit better. We had a number of pieces of equipment that were under maintenance in the first half, that was planned. Those have been returned to the pit, so you should start to see better efficiencies coming through in the second half, which will help ameliorate some of those cost increases we've seen.
In terms of just broader costs, I mean, I reiterate the point. I mean, we do have a process underway at the moment, which we've done, which we've started with the operations, really benchmarking the performance, benchmarking sort of consumables, benchmarking headcounts, benchmarking contractors, et cetera. We've got dedicated work streams underway in order to take costs out of the business. In addition to that, we've got work underway at the corporate center, which looks at not only the corporate office, but something's really benchmarking the performance, benchmarking sort of consumables, benchmarking headcounts, benchmarking contractors, et cetera. We've got dedicated work streams underway in order to take costs out of the business.
In addition to that, we've got work underway at the corporate center, which looks at not only the corporate office, but some of the functional areas, and would look around a restructuring there, where we would look to achieve better efficiencies and effectiveness of the current costs that we have in the business.
I think if I can add to some of what Craig said, we know that we're in a higher stripping, time period for Mogalakwena. The pit has matured, we have a number of pushbacks that we need to do. If we look at the inflationary pressures, specifically around diesel, things like cycle time actually really starts to make a significant impact. The work that Yvonne and her team has done to give us that additional dumping space, much closer to the operations, optimizing cycle times, and we've gone now, since from before we had that dumping space to now, we've halved basically our cycle times, and that, if you consider inflation on diesel, will have a significant impact on cost. That's the level of efficiency, measures that we are looking at.
Cheaper equipment in pit, better efficiency from a cycle time point of view. The team is going into the detail of looking at literally the minutes that count on change and the shift changeover, as an example. In all of these matters, the examples I'm giving is just to give you an indication that we are delving into the detail of minutes and kilometers to really optimize how we do work, because we know that we're in a higher stripping ratio period of time. I think it's important to note that this is a short-term period. We won't continue to see this high stripping ratios. We will get back to our normalized stripping ratios of about 7.5. Literally, the minutes that count on change and the shift changeover, as an example.
In all of these matters, the examples I'm giving is just to give you an indication that we are delving into the detail of minutes and kilometers to really optimize how we do work, because we know that we're in a higher stripping ratio period of time. I think it's important to note that this is a short-term period. We won't continue to see this high stripping ratios. We will get back to our normalized stripping ratios of about 7.5, but it will go up fairly high in the medium term. At the same time, we are obviously developing the underground options, and the other underground options targeted to be on an all-in sustaining cost point of view, the same as a normalized open-pit operation.
Whilst when we talk about open pit, people do get concerned around cost, we are considering all-in sustaining cost with stripping included in that entire cost. That is really the target of the underground operations. The underground operations, and I'll kind of feed into your question on grade. The underground operations, targeting the higher grade portion of the ore body, not having to strip out the entire ore body that can be between 40- 60 meters wide. You get concerned around cost. We are considering all-in sustaining cost, with stripping included in that entire cost. That is really the target of the underground operations. The underground operations, and I'll kind of feed into your question on grade.
The underground operations thing, targeting the higher grade portion of the ore body, not having to strip out the entire ore body that can become, be between 40-60 meters wide, really targeting that high-grade area. Where we are currently seeing between 2.7-2.9 grams per ton, we see that after 2025, that will go back to where we used to run, to about 3.4 grams per ton to normalize levels. The underground indication is really quite lucrative. We're seeing intersections that will indicate grades of way ahead of 4 grams per ton, up to as high as 6 grams per ton from underground, all indicating that continuously we see a continuation of the ore body....
We see really good intersections in terms of the quality of the ore body when we do go underground, and about 3.4 grams per ton to normalized levels. The underground indication is really quite lucrative. We're seeing intersections that will indicate grades of way ahead of 4 grams per ton, up to as high as 6 grams per ton from underground, all indicating that continuously we see a continuation of the ore body. We see really good intersections in terms of the quality of the ore body when we do go underground. That level and that drilling program well advanced and will continue to advance through the exploration declines.
Thank you. Leroy Mnguni from HSBC. My first question, You mentioned the modernization at Amandelbult is progressing very well. How do you measure your success, and how are you tracking relative to your benchmark, where you have rolled out the modernization? The Sandsloot declines at Mogalakwena. Based on your plans, how far are you from doing the bulk sampling? Lastly, I'm just curious how the recent load shedding that we've had or load curtailment, sorry, compares to the how are you tracking relative to your benchmark, where you have rolled out the modernization? The Sandsloot declines at Mogalakwena. Based on your plans, how far are you from doing the bulk sampling?
Then lastly, I'm just curious how the recent load shedding that we've had or load curtailment, sorry, compares to the load curtailment in those challenging sort of April and May months, and how that's impacting your business?
I'll start with the first two. Will you do the load shedding one?
Yeah.
Okay. Firstly, modernization. I think modernization is measured in two ways. Firstly.
-load curtailment in those challenging sort of April and May months, and how that's impacting your business.
I'll start with the first two. Will you do the load shedding one?
Yeah.
Okay. Firstly, modernization. I think modernization is measured in two ways. Firstly, safety. What the modernization design originally intended to do is to target the areas that's got fatal risk and replace that with improved technology. Areas like winch operations, fall of ground, rail bound equipment. We have made significant progress on the rollout of all of the aspects of modernization from a safety point of view, and I believe that that is a fundamental reason on why we've seen the improved safety performance out of Amandelbult. For a mine like Amandelbult to be nearly three years fatal free, and we're very grateful for that, we will never become bullish about that, I think is an extraordinary performance for that team, but I think it is underscored by that work.
The last bit that we're currently rolling out is we've gone from just rockstop nets to blast on mesh on the entire mine. We started at Setshaba. That is the most difficult underground ground conditions. That is tracking well, then we will move to Tumela. That's got a lower risk in that area. We see the benefit, and we also see our operators telling us that their understanding and their focus on safety, performance for that team. I think it is underscored by that work. The last bit that we're currently rolling out is we've gone from just rockstop nets to blast on mesh on the entire mine. We started at Setshaba. That is the most difficult underground ground conditions. That is tracking well, then we will move to Tumela. That's got a lower risk in that area.
We see the benefit, and we also see our operators telling us that their understanding and their focus on safety is enhanced because you just get to a place that you don't tolerate any risk factors anymore, because they are well-equipped to manage those risk. The second one is from an efficiency point of view. That specific portion of the modernization has got two aspects. The one is drilling, both face drilling and support drilling. The other aspect of it is cycle mining. In both the face drilling and support drilling, we're rolling out Epiroc drills. The face drilling is slow. We are seeing quite a bit of challenges with this technology because it's not as robust as our conventional drills. We do see the operators loving it, though, because they get their work done quicker.
There's health benefits. You've got less vibration. The equipment is not robust enough for the kind of operating environment. It's slow because we continue to develop our equipment handling, but also the actual design of the equipment. That's been slow in its delivery. The support drilling is going well. Again, that feeds into easier support drilling, making the environment safe. We do see the operators loving it, though, because they get their work done quicker. There's health benefits. You've got less vibration. The equipment is not robust enough for the kind of operating environment. It's slow because we continue to develop our equipment handling, but also the actual design of the equipment. That's been slow in its delivery.
The support drilling is going well, again, that feeds into easier support drilling, making the environment safe. Again, back to safety. From an efficiency point of view, cycle mining, cycle mining is about how we schedule our mining cycle. It is similar to how we think about mechanized mining, where every fleet, every unit of fleet has got more than one face or operating face. In the same way, we have teams that we've consolidated, so you have more than one operating face, making sure that every team has got efficiency and deliver efficiently every day. We've seen a 10% consistent improvement at Tumela, where it's rolled out well, that is how we think about mechanized mining, where every fleet, every unit of fleet, has got more than one face or operating face.
In the same way, we have teams that we've consolidated, so you have more than one operating face, making sure that every team has got efficiency and deliver efficiently every day. We've seen a 10% consistent improvement at Tumela, where it's rolled out well, and that's the kind of expectations we can see. At Dishaba, it's been less successful because as we develop faster, we need more develop, developing buffer ahead of us. Before, because of Dishaba's poor ground conditions, we've struggled to keep up with the level of development because we have to redevelopment. We develop, we lose panels due to ground condition, and we need to redevelop. That work will take us a little bit longer, but it's about that 10%. We've targeted about 10%-15% improvement, and we see that consistently coming through at Tumela now. Load shedding.
Okay, in terms of load shedding, yeah, Leroy, you're correct. April was pretty intense, and what we've seen over the last couple of weeks is probably about another 4,000 oz impact as a result of load shedding. That was up until last Friday, but it's substantially lower than what we experienced in April. I mean, I think just to go back to what we were forecasting, you'll recall at the beginning of the year, we estimated the impact of load shedding to be between 150,000 and 200,000 oz.
I think the stability, and the sort of energy supply that we had, both in May and into June, we've revised that forecast down to between 130,000 now and 150,000 oz. You recall at the beginning of the year, we estimated the impact of load shedding to be between 150,000 and 200,000 oz. I think the stability, and the sort of energy supply that we had, both in May and into June, we've revised that forecast down to between 130,000 now and 150,000 oz. I think we missed Nkateko's question on jewelry.
My apologies, Nkateko. Yep, I did. Do you want to take it while she's there?
Yes.
Sorry, Nkateko.
Sorry, did you have another follow-up?
My apologies.
The bulk sampling.
The timing of the bulk sampling, we are doing drilling already. The drilling that we're currently using, surface drilling. We'll start the underground drilling now that we've got phase A done. We'll start that bulk drilling towards the end of the year. That's already feeding into a pre-phase A. Then the bulk sample will be at the end of phase B, which is another 18 months. That doesn't stop the development of the work. It gives us all of the drilling work that we need for pre-feasibility already. Do you want to take?
Yes.
Nkateko's question?
Just in terms of jewelry, particularly platinum jewelry, we do see that not deteriorating much more in China this year. However, that is dependent on sort of what we see coming through from the economy. But you're certainly still seeing a relatively robust demand in some of the other sectors, particularly the European and the US market, but not necessarily much more deterioration in China. It just does depend on what happens from an economic, o r in China this year. However, that is dependent on sort of what we see coming through from the economy. But you're certainly still seeing a relatively robust demand in some of the other sectors, particularly the European and the US market, but not necessarily much more deterioration in China.
it just does depend on what happens from an economic perspective.
Good morning, Arnold van Graan . I do agree, I think the safety record that Amandelbult in particular is extraordinary. Some of your peers are talking about DMRE safety stoppages and self-induced safety stoppages. Have you suffered from any of those, and to what extent? Just a second question, I see there's a significant pickup in trading activity in trading metal, which you say is in line with your strategy. What exactly is the approach that you take when you trade metals, and what's the profitability of that activity? I think the safety record that Amandelbult in particular is extraordinary. Some of your peers are talking about DMRE safety stoppages and self-induced safety stoppages. Have you suffered from any of those? To what extent?
Just a second question, I see there's a significant pickup in trading activity, in trading metal, which you say is in line with your strategy. What exactly is the approach that you take when you trade metals, and what's the profitability of that activity?
Okay, let's start with safety. You'll do the trading one?
Sure.
We do have DMRE activity. We always do, and we always welcome it, because it's a new set of eyes. We do see section 54s, but not to the extent that it's impacted our performance. This one is a little bit bittersweet, the Tumela impact that we've seen at the beginning of the year, where we have had a stoppage of the entire Tumela mine due to rail maintenance. There's quite a bit of detail behind it that I won't necessarily bore you with, but I think fundamentally what was important there for me, is that our employees stopped the mine. I think that is fundamental to the safety drive that we have, that employees feel safe enough and deliberate enough about their safety, that they do take that action.
Whilst we should have never been there in terms of rail maintenance, the fact that our employees took that matter and say, "Well, no, we will first fix this." We fixed it, and we will make up that ounces in the second half. Not safety drive that we have, that employees feel safe enough and deliberate enough about their safety that they do take that action. Whilst we should have never been there in terms of rail maintenance, the fact that our employees took that matter and say, "Well, no, we will first fix this." We fixed it, and we will make up that ounces in the second half. But not DMRE activity continuously, but not impacting on our performance. Craig?
In terms of trading, Arnold, as you know, we've built up quite a bit of capability in the marketing team, not only selling our own, our own volumes, but then sort of, you know, helping that with the insights in terms of the strategy around those sales. As a consequence of that, you know, we've identified an opportunity to trade some of the metal. It's a really small component. I mean, the volume looks high, but actually, in terms of the activity, it's really, really small. In the marketing team, not only selling our own, our own volumes, but then sort of, you know, helping that with the insights in terms of the strategy around those sales.
As a consequence of that, you know, we've identified an opportunity to trade some of the metal. It's a really small component. I mean, the volume looks high, but actually, in terms of the activity, it's really small. I think the profit that we generated in the first half of the year was around about ZAR 400 million. Not nearly as significant as, you know, the activities that the marketing team deploy in terms of selling our own equity volumes.
Steve?
Hi, it's Steve Friedman from UBS. Maybe just a follow-up on Mogalakwena. You spoke earlier on about sort of a normalized unit cost position for the open pit. Just curious, if you can kind of give us a bit of a longer-term sort of outlook on stripping ratios, capitalized waste stripping, how you sort of see that playing out. Obviously, over the medium term, you're creating the flexibility, and we've seen that big pickup in sort of tons mined, and obviously the purchase of the additional HME equipment. Yeah, if you could just maybe give us a bit more color, because that would sort of, you know, give us a bit more. Maybe just a follow-up on Mogalakwena. You spoke earlier on about sort of a normalized unit cost position for the open pit.
Just curious if you can kind of give us a bit of a longer-term sort of outlook on stripping ratios, capitalized waste stripping, how you sort of see that playing out. Obviously, over the medium term, you're creating the flexibility, and we've seen that big pickup in sort of tons mined, and obviously the purchase of the additional HME equipment. Yeah, if you could just maybe give us a bit more color, because that would sort of, you know, give us a bit more of insight in terms of what you're expecting for underground as well, I suppose, and what a normalized unit cost is. Thanks.
Let me talk about the stripping ratio, and then you'll take pick up on cost. We currently, we've been running in stripping ratios of about 7.5. We've seen that pick up to nine. We'll see that going up further to about 11, and then come back to that 7.5-8 stripping ratio. That's why we'll see that the volume moved will go from, will increase to the same kind of ratios. Again, if we go back to what I've earlier touched on in terms of diesel cost effectiveness in cycle times, we used to move about 90 million tonnes per annum. That's gonna increase to about 130, 140 million tonnes per annum. Will increase to the same kind of ratios.
If we go back to what I've earlier touched on, in terms of diesel cost effectiveness in cycle times, we used to move about 90 million tons per annum. That's gonna increase to about 130 million, 140 million tons per annum. By the time you then look at diesel efficiency and cycle times, it really start to make a big impact.
In terms of the cost, Steve, this year, Well, our half one all-in sustaining cost was around about ZAR 1,250, sorry, dollars per PGM.
by the time you then look at diesel efficiency and cycle times, it really start to make a big impact.
In terms of the cost, Steve, this year, our half one all-in sustaining cost was around about $1,250 per PGM ounce. If you take out the additional increase in HME equipment, you probably take out around about $70. Our full year forecast, that would increase to taking out around about $90. Certainly the impact of that additional HME coming through. This would sort of start to normalize in 2025 and into 2026. I think we have guided higher waste stripping next year, it's starting to come off then in 2025 and into 2026.
As that normalizes, obviously, then you start to see the sort of the improvements of grade, which Natascha has spoken about. Yeah, so that's the current position. Clearly, obviously, that's all under review as part of the cost containment exercise that we have underway.
Last question on the floor to René.
Hi, Natascha and Craig. Thanks for the presentation. Just to clarify on Nkateko's question on, Mogalakwena underground grade, that 4-6 grams a ton, is that built-up head grade or is that in situ?
Built up.
Built up?
Yeah.
Okay. Just on energy sufficiency or power sufficiency, if I remember correctly, you need about 3.5 GW of power to run?
Last question on the floor to René.
Hi, Natascha and Craig. Thanks for the presentation. Just to clarify on Nkateko's question on Mogalakwena underground grade, that 4-6 grams of ton, is that built-up heat grade or is that in situ?
Built up.
Built up?
Yeah.
Just on energy sufficiency or power sufficiency, if I remember correctly, you need about 3.5 GW of power to run your whole operation. Excuse me. With the subsidized or the extra energy plants that you're building, what proportion of that could you supply yourselves?
René, you will remember we spoke about embedded supply that started off with Mogalakwena 100 MW there. We will continue to build. We're targeting another 125 at Amandelbult, about 35 at Mototolo, and we've got an Unki plant up and running, all targeted as well. In addition to that, in the meantime, due to the energy security, through the agreement we have with Envusa, you'll remember that we've got that 5 GW... René, you will remember we spoke about embedded supply that started off with Mogalakwena 100 MW there. We will continue to build. We're targeting another 125 at Amandelbult, about 35 at Mototolo, and we've got an Unki plant up and running, all targeted as well.
In addition to that, in the meantime, due to the energy security, through the agreement we have with Envusa, you'll remember that we've got that 5 MW target or an agreement with Envusa. We're targeting another 520 MW to give us that additional energy security in the short term. That's all targeted for the next 2-3 years to coming, and after that, of course, we are targeting, by the time we get to the full, 5 GW, that we will be fully on renewables by 2030.
Okay, fine. Thanks. Just the security situation on on your mines. I remember a little while ago, you had to evacuate one of your general managers because of threats to him and his family. How is that situation developing? Is that still a worry?
Security remains a big challenge for us. I think the fraud and corruption, social stability, as we touched on earlier, is a real concern for us. We're addressing this in a number of ways. For starters, we continue to drive really hard our own work with our communities to stabilize our relationships and build opportunities for local economic development. That is much slower and much smaller than societal expectation, though, but I think that's an important starting point. Through the partnerships that we've spoken about earlier today, whether it's through NECOM or the Olifants River Water Management Model, these are all areas that's obviously to our own benefit from a business point of view, but all of these create further infrastructure and job opportunities to local economic development in the areas that we operate. That's another factor.
That is much slower and much smaller than societal expectation, though. I think that's an important starting point. Through the partnerships that we've spoken about earlier today, whether it's through NECOM or the Olifants River Water Management Model, these are all areas that's obviously to our own benefit from a business point of view, but all of these create further infrastructure and job opportunities to, and local economic development in the areas that we operate. That's another factor. Part of the partnerships that we have is working with the police. We've got a pretty good working relationship with the police in the various areas and the NPA. There is quite a bit of resources that's going into those partnerships to secure that societal stability around our operations.
The last one is, of course, just really, the governance around our own processes, in making sure that we're really rigorous in how we flow through on our own processes, placing orders, keeping an eye on, procurement mafia. I should have added, just as part of, the police work. There is quite a bit of resources that's going into those partnerships to secure that, societal stability around our operations. The last one is, of course, just really, the governance around our own processes, in making sure that we're really rigorous in how we flow through on our own processes, placing orders, keeping an eye on, procurement mafia.
I should have added, just as part of the police work is not only to bring social stability into the communities, also addressing illegal mining, which in our case is very specific underground copper rather than. That kind of relationship with getting the right resources in place, following through on investigations, and take it all the way to prosecution is important. We address it on all of the different levels through governance processes and partnerships.
Thanks very much.
Thanks, René. We'll now take questions on the call, please.
Thank you. We have a question from Adrian Hammond of SBG. Please go ahead.
Good day, Natascha and Craig. Firstly, Natascha, two questions for you. Congratulations, firstly, on your safety record thus far. Which brings me to the first question around Amandelbult. I do notice you target 100% modernization and mechanization by 2030.
If Amandelbult doesn't achieve this, do you see this mine exiting the portfolio, firstly? Secondly, could you give us the board's position on finding your successor, any update there? For Craig, thanks for the market overview on prices, and appreciate the issue on glass and rhodium. We are forecasting higher high sales year-on-year, and we've got lower supply. Any color why prices keep falling, particularly palladium, if you can add on that. What levers can you pull in the group, should prices fall further? Thanks.
Adrian, firstly, I think we are very aggressive in terms of looking at a mechanization strategy. I think it's really important to say that, because fundamentally, we have to say, well, is there a different way that we can do this? Saying that, however, I think it would be naive to think that we're just gonna get it right, and I think you are one of the people who continuously point out to us some of the challenges that we do have in terms of making real mechanization work underground at Amandelbult. That's why I think there's firstly, modernization is just gonna happen strategy. I think it's really important to say that, because fundamentally, we have to say, well, is there a different way that we can do this?
Saying that, however, I think it would be naive to think that we're just gonna get it right. I think you are one of the people who continuously point out to us some of the challenges that we do have in terms of making real mechanization work underground at Amandelbult. That's why I think there's firstly, modernization is, this is just gonna happen, and we've seen the benefit. The strategies and the development work that we are doing is to develop and see, well, can we make mechanization work? At 15 East Drop Down, we've now got the system, the entire mining system, operating with the kind of equipment that you've seen on that slide. I can't remember the slide number. But it's a track equipment. It's and we've seen the benefit.
The strategies and the development work that we are doing is to develop and see, well, can we make mechanization work? At 15 East Drop Down, we've now got the system, the entire mining system, operating with the kind of equipment that you've seen on that slide. I can't remember the slide number. It's a track equipment. It's much lower than your conventional mining, equipment, and it is remote control as well. That gives you a very different kind of equipment than what we're used to. That entire system, as I say, is up and running as a full mining unit, and we see that team hitting all of their milestones at the moment.
That gives you a very different kind of equipment than what we're used to. That entire system, as I say, is up and running as a full mining unit. We see that team hitting all of their milestones at the moment. We do accept that, there's quite a bit of work still need to be done because that needs to be sustained. All of the equipment, all of the maintenance, quite a bit of work still have to happen. When we talk about our studies, our studies are modernized conventional, which is that is the baseline. We are continuing to look at mechanized, but as an alternative, we're also studying hybrid options that could look something like. When we talk about our studies, our studies are modernized conventional, which is that is the baseline.
We are continuing to look at mechanized. As an alternative, we're also studying, hybrid options that could look something like, mechanized development and conventional stoping. In there's a number of different scenarios that we are evaluating. Important to note that whilst we're driving that before, for all the right reasons, we might end up somewhere in between, conventional and mechanized. As far as success is concerned, the process has been really robust. The process has run well, and it's near its end. An announcement is imminent.
Thank you.
Just in response to your questions around, you know, what do we see from a PGM price perspective, given sort of anticipated higher motor vehicle production. I think we indicated that ICE vehicle and PGM demand, as a result, could be 3%-4% higher. I think there's a couple of aspects in terms of why you don't necessarily see that translating into price just at the moment. In talking to the marketing team, I think OEMs are relatively well-stocked. Knowing, you know, some of the supply concerns that we've had in terms of the, you know, the Russian invasion of the Ukraine and the situation around Russian supply has, to some extent, sort of dissipated. Demand, as a result, could be 3%-4% higher.
I think there's a couple of aspects in terms of why you don't necessarily see that translating into price just at the moment. In talking to the marketing team, I think OEMs are relatively well-stocked. Knowing, you know, some of the supply concerns that we've had in terms of the, you know, the Russian invasion of the Ukraine and the situation around Russian supply has, to some extent, sort of dissipated. Then also, obviously, you know, in from a South African perspective, and still relatively, you know, reasonable production coming through, despite some of the operating challenges around Eskom load curtailment. Customers are continuing to take off take, as planned, but not necessarily rushing to take on board additional inventory.
I think that's one of the levers. In terms of just, I think, the other aspects, that's touched on that is you are seeing some of the response taking place in the platinum price as you've seen that substitution of palladium for platinum coming through. I think that's really supported the platinum price and it's the expectation that that should rally as you move into the deficits next year. In terms of our own levers, inventory, I think that's one of the levers.
In terms of just, I think, the other aspect, that's touched on that, is you are seeing some of the response taking place in the platinum price as you've seen that substitution of palladium for platinum coming through. I think that's really supported the platinum price and the expectation that should rally as you move into the deficits next year. In terms of our own levers, I think the key focus for us is really ensuring that the assets are at the bottom half of the cost curve. No immediate plans to take out additional supply at this stage. However, the focus is really around cost and operating efficiencies to ensure that we keep the business sustainable.
I think the key focus for us is really ensuring that the assets are at the bottom half of the cost curve. No immediate plans to take out additional supply at this stage. However, the focus is really around cost and operating efficiencies to ensure that we keep the business sustainable, and we're able to you know, withstand some of the challenges that we're currently experiencing just in terms of the downturn in prices. I think it's really important that we're set up and set the business up for the future, because I think as we've spoken about it, you know, the potential for additional demand from ICE vehicles is could very much materialize into the future.
Ensuring that we're able to leverage from those opportunities is critical.
That's clear. Thanks.
I think that's it from the line. We'll move on to Q&A. Just one question for you, Craig. It's a merged question because a couple analysts have asked around this. One is from Shai Shekar from Citi and Cameron Needham from Bank of America, around the cost reduction plans. I think that's it from the line. We'll move on to Q&A. Just one question for you, Craig. It's a merged question because a couple analysts have asked around this. One is from Shai Shekar from Citi and Cameron Needham from Bank of America, around the cost reduction plans. To what extent can you elaborate on that right now? To what extent are the changes made through bottom-up approaches versus pushing top-down?
Yeah. you know, I think we're continually evaluating our costs. you know, I think, you know, demonstrating Amandelbult last year, shut down very expensive Merensky operation. we'll continue to focus around that. However, the initiative that we have underway is very much associated with benchmarking our performance at the moment with what happened previously. We have identified a series of levers that we can drive in terms of operational operating efficiencies of our equipment, getting them back to where they need to be. That, you know, we have spoken about, you know, rope shovel at Mogalakwena, shut down very expensive Merensky operation. we'll continue to focus around that.
However, the initiative that we have underway is very much associated with benchmarking our performance at the moment, with what happened previously. We have identified a series of levers that we can drive in terms of operational, operating efficiencies of our equipment, getting them back to where they need to be. That, you know, we have spoken about, you know, rope shovel at Mogalakwena. It was under maintenance in the first half. It's come back into production in the second half, and our expectation then, with the associated haul trucks, et cetera, is that we reduce some of the waiting times and drive those efficiencies. That, therefore, allows us to be able to park some excess equipment and these ancillary equipment that we have on site.
We've also then had a look at, you know, some of the consumptions that we have at the concentrators, and really looking through those, and also trialing new chemicals. It was under maintenance in the first half. It's come back into production in the second half, our expectation then, with the associated haul trucks, et cetera, is that we reduce some of the waiting times and drive those efficiencies. That therefore allows us to be able to park some excess equipment and these ancillary equipment that we have on site. We've also then had a look at, you know, some of the consumptions that we have at the concentrators, and really looking through those, and also trialing new chemicals, reagents, et cetera, which are cheaper, but potentially give us the same recovery and through...
Output. Those are some of the initiatives that we have underway. It's not only, you know, bottom-up. The operations have identified key areas of focus for themselves. That's been augmented by the benchmarking analysis that we've done to help support that. There's also been, very clearly, some articulation in terms of what the value is of those savings that they need to be and how those are built in a way. It's not only, you know, bottom-up. The operations have identified key areas of focus for themselves. That's been augmented by the benchmarking analysis that we've done to help support that.
Then there's also been, very clearly, some articulation in terms of what the value is of those savings that they need to be and how those are built into the plan. It is multifaceted. Then in addition to that, as I said, we've got the review underway at the corporate and the functional areas. That's really focused around how do we sort of reduce costs, reduce initiatives, and really looking at our structures to be able to support that.
Perfect. That wraps up Q&A. Thank you everyone for joining, and we close.
Thank you.