Good afternoon, everyone. Thank you for joining us today in person as well as online. I know I said good afternoon, but also good morning to the Americas. Many of you would know me already, but my name is Theto Maake, Head of Investor Relations at Anglo American Platinum. We do have a lot to cover today, so I am glad that you could join us. Before we start, as you know, safety underpins everything that we do. In a similar spirit, I have been informed that there is no planned fire drill for the day. If there is an alarm, may I request that we exit the building in a calm and orderly manner, using both the doors on my left and right? There will be fire marshals who will actually take us through to our assembly point.
With that said, there is actually a cautionary statement behind me as well. Just checking the team. Cautionary statement. Thank you so much. There is a cautionary statement. As much as I'm tempted to read it word for word, I would rather recommend that you read it in your own time. Thanks. Next, I think just going into the next slide, [Tim]. Thanks. The agenda for today is quite a packed one. We will start with our Chairman being Norman Mbazima, who will take us through our key messages. Secondly, he will hand over to our CEO being Craig Miller and his executives. The intention there is just to come in and speak to who we are and who we are going to be. They will unpack our strategy, the market dynamics in which we operate under, as well as our integrated value chain.
All of this will actually be summarized through Sayurie, just taking us through the financial position that shows the action plans and decisive plans that we have taken has actually ensured that we can actually derive value for all our stakeholders. At the end of each section, we will actually be catering for 20 minutes breaks in between. There will be Q&As at the end, which is closer to the end of the day. I think what is important, we also have media in the room, but there has been some room that is set aside for media. I am going to request that you do not necessarily ask questions in this session as though because there will be a closed section at the end. When that is happening, the rest of us, I am sure you are all looking forward to it.
The rest of us will be having much-needed refreshments while some of our executives are just having media interviews. There is a lot to unpack. I might have said a mouthful, but with that said, I'm going to request that our Chairman comes on stage for an opening remark. Thank you.
I'm looking around to see if I recognize anybody, and I recognize the members of the board in front of me. Good afternoon, everyone. Welcome, and thank you for your interest in our company and for attending our Capital Markets Day. I wanted to speak to you today not about the business model, the strategy, or the future performance of the company, though I would love to do that, and I can do it at length, but not today. No. I will let our CEO, Craig Miller, and his executive team do all of that. Instead, I wanted to tell you a little bit about how we think and work as the board. First, even before that, let's take stock. We are here today because the company is demerging from Anglo American.
This is an exciting time for all our staff and our stakeholders, and I hope for you as current and future shareholders. The transition from having a majority shareholder to being a standalone company listed on two stock exchanges will, of course, impact the board. We have accordingly made some changes to the board. The three Anglo American nominees to the board, Themba Mkhwanazi, Nolitha Fakude, and Matt Daley, have stepped down. They have all served with distinction over the years and helped guide the company with great wisdom and skill. It has been a great pleasure working with them, so I'd like to take a moment to thank them for their invaluable contribution to the success of the company. As we prepare to move forward as an independent company, I want to welcome Dorian Emmett, Fagmeedah Petersen- Cook, and Hennie Faul to the board.
They are joining significantly adds to our board strength and its oversight capacity and further enhances an already vastly experienced and diverse group of directors. While the demerger means there are some changes within our organization, it is important to note that a company will be listed for over 30 years, operating to the highest standards. This will not change for us going forward. The board's governance structures are very well established. I have great confidence that the executive management team, with the guidance of the board, will deliver on our strategy, and we will continue being a leader in the global PGM mining sphere. Collectively, this board has tremendous knowledge and experience in all elements of mining leadership and technical operations.
Members of this board have experience in the assets of this company, the PGM industry, mining in general in a variety of commodities, and sustainability, finance, commerce, risk, and governance. As we embark on our journey as a fully independent company, good governance, diligent and knowledgeable oversight, and a constant considered interrogation of company strategy and performance will be the hallmark of this board. We look forward to continuing to represent the interests of the company and its shareholders. Although our name and corporate identity may be changing, there are certain parts of our DNA that will remain. We are a leading PGM producer, responsibly and safely extracting precious metals and associated byproducts from our exceptional mineral resource endowment. I want to repeat that: exceptional mineral resource endowment.
The significant value that has benefited all our stakeholders over the last five years is testament to our commitment to our shareholders, to our employees, to host communities, to governments, and to our customers. I'm particularly proud of the fact that our employees and our communities are also shareholders in our company. All this will remain deeply ingrained in our character. As you can see from this slide, we continue to make excellent progress on the demerger, and we remain on track to complete the process by early June.
There are a few important upcoming dates, including the release of our prospectus for the London listing during the week of 8th of April, the required shareholder vote at the shareholder meeting that will take place at the time of the Anglo American plc AGM on 30th of April, where its shareholders will be asked to approve the demerger and a dividend in specie to its shareholders, comprising Anglo American Platinum shares. Our own AGM on 8th of May, where our new name, Valterra Platinum Limited, and consequent amendments to our memorandum of incorporation will be voted upon, will follow. We expect to start trading on the JSE under our new name in late May, with the demerger and secondary listing on the LSE to follow in early June.
I want to thank you again for joining us here today, and I hope that all the information we will shortly be sharing will give you great insight into the company and its exciting prospects. Let me now hand over to our CEO, Craig Miller. You may recall that Craig was appointed to this position by this board a couple of years ago. An inspired appointment, you will agree. This board has fully supported the changes that Craig has made to his management team. Craig will tell you more, much, much more about the company. Thank you very much.
On the surface, we may not realize it, but every day, in so many ways, our lives are touched and enhanced by the efforts of mining, specifically the mining and processing of six of the platinum group metals, focusing on five being platinum, palladium, rhodium, iridium, and ruthenium. These sometimes seemingly invisible, endlessly shape-shifting, and planet-friendly metals are found in a myriad of everyday products that improve our lives significantly in a variety of extraordinary ways. Because of their purity, high melting points, unique catalytic properties, and corrosion resistance, PGMs are critical minerals found in our computer hard drives, monitors, and cell phones. They are used in catalytic converters and vehicle exhausts to reduce emissions and hydrogen fuel cells to power cars, trucks, buses, and buildings. They are trusted in medical devices like pacemakers, stents, and hearing aids, and even relied on for anti-cancer treatments.
Platinum, in particular, with its beautiful luster, exceptional strength, and resistance to tarnishing, has captured the attention and imagination of jewelers the world over because of its rare, unique, and highly sought-after attributes. With Southern Africa's top four PGM producers accounting for about 60% of the world's PGM supply, we are positioned as the world's leading refiner of primary-produced PGMs, and our resources extend well beyond another 80 years. Delivering PGM products of outstanding quality to our customers and maintaining a competitive cost base, we are able to generate cash through the cycle. Spread across the three main areas of the mineral-rich Bushveld Igneous Complex, our mines and operations in South Africa's Limpopo Province include Mogalakwena, the world's largest open-pit PGMs mine and one of the most exciting assets in the PGMs industry, with enormous optionality for generations to come.
We also operate the underground Amandelbult Complex made up of Dishaba and Tumela mines and Mototolo mine, which includes the Der Brochen Life Extension Project. Also in Limpopo, we are joint venture partners in operating the Modikwa mine. Finally, to the north in Zimbabwe, we own Unki Mine, one of the most efficient mechanized underground operations globally. Inspired to achieve our goal of zero harm in mining and to beat and set global best practice standards, we work to extract every possible ounce of PGMs from the ore body in a safe, efficient, and environmentally responsible way, reducing energy and water usage and cutting waste. Making use of advanced minerals processing technologies, the ore we mine is crushed and milled at our concentrators. We then utilize a froth flotation process at the concentrator to separate base metals and PGMs from other minerals.
As a further extraction of full value of the minerals we mine at our Amandelbult Complex, in partnership with our host communities, we house a chrome recovery plant, which takes the slurry from the concentrator plant and extracts chromite. We also operate two further chrome plants at Mototolo and Modikwa. Once this concentrating process is complete, smelting of the metal-rich concentrate takes place at our three primary smelters situated near Polokwane, Rustenburg, and Unki Mine. Studies are underway to repurpose our Mortimer smelter as a slurry cleaning facility to maximize value through our processing value chain. Our smelters run at up to 1,600 degrees Celsius, and utilizing large electric furnaces, the concentrate is then smelted to produce a furnace mat. At our converter plant in Rustenburg, the furnace mat is further processed in an oxidizing furnace, which produces the converter mat.
The converter plant has an integrated acid plant, which produces sulfuric acid for own and industrial uses. This converter mat, rich in base and precious metals, is then processed at our refineries. Once the converter mat has been milled, it is passed through wet magnetic separators, where the magnetic PGM fraction is separated from the non-magnetic metal fraction. The non-magnetic nickel-copper mat is processed through a hydrometallurgical process at our base metals refinery. The BMR is the largest producer of nickel cathode in South Africa. Through the use of mechanized and automated tank houses, through innovation and modern technology, BMR produces a high-quality electro-one nickel, as well as copper cathode, cobalt sulfate used in mining and agriculture, as well as sodium sulfate, which is crucial in the detergents market.
At the same time the base metals are being refined, the final PGM concentrate from the magnetic separation plant is processed at our precious metals refinery, one of the most technologically advanced plants of its kind in the world. By combining various solvent extraction, distillation, and ion exchange processes, platinum, palladium, and rhodium, along with other PGMs and gold, are produced from the final concentrate. It's through this integrated value chain that we are able to produce high-quality metals for our customers and create sustainable value for our stakeholders, including employees, unions, suppliers, host communities, governments, and shareholders.
Thank you, Norman, and good afternoon, everyone, and welcome to our Capital Markets Day. Building on what you've just heard from Norman, I'd like to first briefly outline what you're going to hear from us today. We're going to touch on our operating context and how we're creating lasting value for our stakeholders. You'll hear how safety and the well-being of every single one of our colleagues at Anglo American Platinum is our first priority, and there is our unrelenting commitment to achieving zero harm. As we've embarked upon the demerger process, we've worked to strengthen the capabilities within our company. This has resulted in a smaller, more focused, and appropriately experienced committee who you'll hear from and get to meet during the day.
we will also showcase our leading industry resource and how we plan to continue to contribute value from this through the consistent delivery of our operational excellence initiatives and our disciplined approach to capital allocation. Finally, we will articulate how we are confident in the outlook for the PGMs, as well as positioning ourselves to generate solid returns into the future. As you would have seen in the video, in terms of our geographic footprint, the portfolio of assets that we had, that we have, is world-leading. We are the leader of producing—we are the leading producer of PGMs and strategically focused on extracting the value out of our tier-one assets in Southern Africa. As a standalone company, we remain the leading precious metal miner with one of the largest endowments.
Among our peers, we are the undisputed leader in the PGMs industry, leading in attributable mineral resources, inclusive of mineral reserves. We have a strong track record of generating earnings, on average, far exceeding those of our peers. Looking at the broader market context, the market fundamentals of supply and demand suggest upside to the current PGM basket price. In terms of existing demand, this is stronger than we had previously forecast because the demand for pure BEVs is not growing as fast as expected, which means that the demand for PGMs in catalysts is more robust. In other areas of demand, including a wide range of industrial applications, this will continue to grow in line with GDP. As we look further out, we also see the prospect of new demand segments to support the energy transition and the technologies addressing climate change.
We reinforce our outlook that the demand for our metals is strong and it's sustainable. At the same time, we continue to see primary supply decline on the back of lower investments in existing and new assets across the sector, while secondary supply, which comes from the recycling market, continues to underdeliver against forecasts. We therefore believe that there will continue to be deficits in the balance between the PGM supply and demand, particularly in platinum and rhodium, which gives us the positive outlook for PGM prices. As we go forward, we do have a differentiated value proposition. Firstly, as I've said, we have an outstanding asset base, being clear around the role of each asset within the portfolio and the investments that we continue to make to grow as well as sustain our asset integrity, supporting the continued delivery of steady production.
In addition, our global marketing organization delivers the right solutions for our customers and helps us maximize the value potential from every single ounce that we produce. Secondly, we've got the capabilities and the discipline to make the most out of that asset base. The primary objective is to make sure that all our managed operations remain in the most competitive part of the cost curve. This sets us up for through the cycle of profitability, realizing superior EBITDA margins. Thirdly, we bring our assets and our capabilities together with a strong balance sheet, with a clear capital allocation framework, and a real discipline in how we execute. That should translate into a consistent and leading shareholder returns and great prospects for all of our stakeholders. Underpinning all of this is our personal commitment to zero harm, as well as integrating sustainability into absolutely everything we do.
As I've touched on, we have the leading PGM portfolio, which Willie and Agit will unpack for you a little bit later. In short, we have mine plans that give us a clear pathway to multiple decades of production. I'm grateful we don't have the reserve replacement challenges of many of our precious metal peers and instead can focus on optimizing the full potential from our outstanding endowment. We also have a great balance. We have enough breadth in the portfolio to give us the diversification and a wide range of options to enhance value. We also have sufficient scale to drive functional excellence, and we have enough focus that we can really push hard on our operational excellence. I hope today we'll be able to showcase that we're more than just a mining company. Instead, we have real strength through our leading position across the value chain.
There are important elements of margin and sustainable value that we generate through our well-invested processing infrastructure and by getting the right products to our customers in the most efficient way. Our marketing business gives us a real connection to our customers and also helps us to shape the demand for PGMs in a deliberate way. While our assets are a critical foundation for value, we also need the capabilities to deliver on the full potential from them. In order to deliver that potential, we are absolutely focused on operational excellence. We have the team, we have the systems, and the plans in place to position each one of our assets in the first half of the cost curve.
In an industry that is unlikely to see significant sources of new supply and where the low-hanging fruits on costs have already been taken out, this gives us the assurance of delivering cash through the cycle. We have put in place a new organization structure, which is set up to make the most of our status as an independent company through efficient governance, clear accountability, and a new level of agility. All of this sits behind our commitment to continue to deliver on our action plan, which involves a further ZAR 4 billion of cost reductions in 2025, helping us to achieve our target and getting our all-in sustaining costs across the assets below $950 per 3E ounce.
I believe we've got a great team in place to deliver on those plans, and we've now embedded sustainability across the business to make sure that we work in lockstep with our stakeholders, including our primary commitment to achieving zero harm and therefore making all of this a reality. The key to this is Mogalakwena, which Willie will take you through in detail, and further optimizations from our existing downstream processing assets, which Agit will explain to you. It is important because we want to connect the assets and the capabilities to shareholder returns, and that requires us to have a disciplined capital allocation. We have multiple options for growth, and we're committed to focusing on value, not volume, and making sure that shareholders continue to participate in the returns through the cycle.
Our primary focus is on maximizing the amount of capital we have to allocate, but then being disciplined about how that allocation translates into sustainable value creation. We will be focused on a strong balance sheet, a consistent dividend policy, and discipline about how capital beyond that gets distributed, whether it is the potential for enhancing performance from our key assets or delivering on incremental returns to shareholders. We will talk to you today about what some of those options are for enhancing our assets. As we go through the process, we will keep you informed as they evolve. Here you can see our strategic priorities, which are the foundation of what we do. I will now go into a little bit more detail in terms of each of those pillars. Turning to safety. Safety is personal. The drive towards zero harm remains our top priority.
The loss of three of our colleagues at Amandelbult's Dishaba Mine in workplace-related fatalities last year was tragic, and we're working hard to prevent any repeats, as well as implementing the remedial actions from these incidents across our business. We truly believe that zero harm is achievable, as is demonstrated by those of our operations who continue to be fatality-free, with both Mototolo and Unki operating for more than 13 years fatality-free, while Mogalakwena has operated for more than 12 years fatality-free. Our injury frequency rates continue to decline, with year-on-year improvements, and we're focused not on our own employees, but those of our contractors too. There is no room for complacency, and our commitment to safety is paramount. We believe that our focus on safety and the advancement in health and the well-being of all of our employees will result in zero harm becoming a reality.
To touch on our new operating model, excellence in leadership, it does come from our newly reconstituted executive committee and the leadership teams that we have put in place, where we're already starting to see the tangible benefits from the optimization and the project execution workstreams. In the demerger process, we took the opportunity to strengthen our technical capabilities within the company, and we're also nearing the completion of the build-out of the various functional teams to replace those activities which were previously performed by Anglo, with many of the individuals having transferred across to Anglo Platinum. Following these efforts and the restructuring, I'm confident that our new structure is fit for purpose and that the ways of working with greater accountability, clarity of expectations, and agility will secure our future success. Let me also just touch on labor relations.
There is an underappreciation of the stability of labor relations in South Africa's mining industry, possibly because of the volatile history. It is really important that you understand that the labor relations dynamics have evolved. The last three rounds of labor negotiations in the PGM industry have concluded without any significant disruptions, the most recent of which was the hallmark five-year agreement, which lasts until 2027. Virginia, with the support of the Exco and the management teams at our operations, is working consistently hard to ensure that the labor relations remain stable and continue to improve. Prioritizing employee well-being is more than just about safety.
It's about cultivating an environment with inclusion and diversity, taking care of the communities that our employees live in, and proactively managing health, both mental and physical health, as well as deploying the necessary skills and expertise that are required for us to succeed. Let me explain what we mean when we talk about operational excellence. While our assets are obviously the critical foundation of value, being deliberate about how we maximize that value from them is equally important. We do this through our relentless focus on excellence, the prioritization of work, and taking decisive action to ensure that our targets are met. The focus on improving productivity, increasing utilizations and recoveries, and only focusing on value-adding work are the key drivers in shifting our assets all down the all-in sustaining cost curve. All four of our assets are now operating in the bottom half of the cost curve.
Going forward, we have set clear targets and developed plans to further optimize our cost position across the assets, as well as at the corporate center, which Sayurie will unpack for you. This does begin with our additional ZAR 4 billion of cost reductions in 2025, which I mentioned. This is after we beat the ZAR 10 billion target that we set ourselves last year, exceeding that by ZAR 2 billion. I have already flagged our target is to get our all-in sustaining costs across our business to below $950 per 3E ounce. In terms of investing in our portfolio, we want to make the most of what we think are some of the best orebodies in the PGM industry. Our disciplined capital allocation approach ensures that we deliver maximum value from the portfolio, recognizing the role that each asset plays. What do we mean by that?
At Mogalakwena, that's a key source of growth ounces, which we believe the market will need based on our forecasts of market deficits in the 3E metals in the future. Willie will talk you through the optimization opportunities from the open pit as well as the underground project, which will further grow by adding lower-cost ounces without major investments required in either our concentrating or in our downstream processing business. At Mototolo, we're progressing the Der Brochen development, which will contribute to replacement ounces for the near-depleted Lebowa shaft at significantly lower costs. The full economic benefit of the chrome that we produce from Mototolo will also now accrue to us, which is absolutely crucial in the current chrome price environment. These two factors, combined with the operational excellence initiatives that we continue to drive, should shift Mototolo further down the cost curve.
Many of you may ask why Amandelbult remains a core asset. Let me be clear. Amandelbult is a strong contributor of margins to our portfolio, and its unique prill split, the ratio between the different PGMs and the byproducts, generates the highest revenue per 3E ounce in the sector and the fourth highest all-in sustaining cost margin at current PGM prices. Its extensive reserves, particularly at Dishaba, mean that Amandelbult has one of the longest lives among the western limb producers, allowing it to benefit from rising prices that are likely to follow when there is the closure of the shorter life shafts in the region.
With the necessary experts amongst our own employees, organized labor, and the regulator, as well as others in the industry, we can work relentlessly to improve the safety performance at Amandelbult and ensure that the operational excellence improvements translate into tangible results. Our Unki Mine in Zimbabwe is a safe, reliable, and consistent performer and will continue to contribute to cash flows in the company going forward. In terms of driving demand for our metals, our investment into growing the existing sources of demand and developing new ones is an imperative for us, as it aligns to the requirement for us to invest given the scale of the investment, the scale of the endowment that we have, but we will be disciplined in terms of how we allocate capital into market development. Let me explain a little bit around our approach to marketing and market development.
Firstly, our marketing team is not a cost center. Last year alone, the team generated about ZAR 0.5 billion from our trading activities. One of the reasons that we can do this, despite the liquid nature of some of the metals, is that our team's superior insights into market trends, given our customer connectivity. Secondly, having the longest life assets in the industry, it is crucial that we support long-term demand so that we can continue delivering leading shareholder returns long after our peers have either shut down or substantially curtailed their volumes. Our capital allocation discipline, therefore, extends into our market development activities and will invest in the future use cases because the opportunity for demand growth is both achievable and as is compelling. You could also quite easily say that our commitment to sustainability creates the demand for our product.
It provides our license to operate in the communities and the jurisdictions where we operate, and it makes us better, more resilient, and even more efficient operators. This is why sustainability is at the center of our strategy. It anchors our efforts to protect and to create value for all stakeholders, focusing on climate and energy challenges, building our relationships with our local communities, and maintaining ethical value chains. Yvonne will provide some practical details of how we integrate sustainability into our mining operations, and then Agit will explain in detail our mass pull reduction strategy and how that translates into ESG benefits as well. As I mentioned, we've reviewed and restructured our executive committee to streamline the roles and enhance it to the strategic alignment of the company. The changes have secured a simpler, fit-for-purpose structure with clear accountability.
This will enhance our operational efficiency, improve the ways of working, and delivering on one of our strategic pillars, which is to strengthen our technical capabilities. The structure emphasizes our local presence here in Southern Africa and the necessary proximity to our customers in the Northern Hemisphere. The changes include the removal of the Chief Operating Officer role and the appointment of Willie Theron as Executive Head of Mining Operations. Willie rejoins us with a track record of strong delivery in terms of its projects and mining expertise, and therefore, we're looking forward to his continued contribution in really shaping Anglo American Platinum. Sayurie Naidoo is our CFO, having been with Anglo American Platinum for over eight years. Agit Singh is responsible for our processing operations with a clear focus on operational excellence and improvements.
Yvonne Mfolo runs our corporate affairs and sustainability functions, while Virginia Tobecca takes care of people and organization. Martin Poggiolini is responsible for corporate development, while Hilton Ingram looks after marketing and market development. You will soon be hearing from all of them, and of course, you will have the opportunity to meet them during the course of the afternoon. In conclusion, before I hand over to Hilton and Martin to take you through the market dynamics, we firmly believe that with our strategy and the delivery thereof, we will unearth value for a better world. Thank you.
Thanks very much, Craig, and hello, everyone. Martin and I are going to discuss the PGM market dynamics as we see it. Before we do that, in case you were not aware, we mine and refine 13 products.
In addition to the five platinum group metals, we also produce cobalt, including gold, nickel, copper, UG2 chrome concentrate, three sulfates, and one rare earth metal. Of course, the PGMs, as they are commonly known, are at the heart of our business, accounting for 85%-95% of revenue over the last five years. Platinum is the largest by volume, but due to changing prices in the last five years, there have been instances where palladium in 2019, rhodium in 2021, and platinum in 2024 have been the biggest contributors to our revenue. Today, I'm going to focus on the PGMs. However, it's worth noting that our co-product revenue has been growing in recent years, and when we look at the demand prospects for those metals, we see that gold is at a record high with a bullish outlook in uncertain times.
Nickel's prospects are improving following recent developments that have shown that Indonesia is indeed price-sensitive, and continuing increases for the demand for stainless steel and therefore chrome, and healthy demand for copper driven by the drive for electrification. These all help provide resilience against PGM price volatility and the commodity price cycle. Let's take a look now at the PGMs in more detail. Let's break down the market demand for PGMs. Investments made up around 3% of demand last year. About 5% of PGM demand came from jewelry, though this accounts for around one-sixth of platinum demand, with smaller amounts of other PGMs. Just over a quarter goes to various industrial uses, with that sector making up a large proportion of platinum demand and the bulk of ruthenium and iridium. This is expected to grow over time with potential from the hydrogen economy.
However, by far the largest use at present of PGMs, accounting for 66% by value and more than 80% of the demand for palladium and rhodium, is the automotive sector, where they're used in emissions control catalytic converters, oxygen sensors, and spark plugs. I'm fortunate enough to be invited to the supplier conferences for the world's top three automakers. There is one thing that they and their suppliers all agree on. This is a time of unprecedented change in the automotive industry. Today, I'm unashamedly going to give you reasons why the mood music around PGMs has changed and why we should be optimistic. Let's start with what I call the PGM automotive demand equation. Automotive demand is a function of the number of vehicles produced, the share of those vehicles that are catalyzed, and the PGM loadings per vehicle across both light-duty and heavy-duty vehicles.
We have a positive outlook for automotive demand. Trends show that global auto demand volumes could beat consensus forecasts. Market demand still overwhelmingly favors ICE vehicles, with China's BEV success unlikely to be replicated elsewhere. Finally, stricter emission standards, improved testing are likely to lead to increased loadings. I'll address these each in turn on the coming slides. Let's start with how many new cars will be bought and sold in a year. Historically, growth in global GDP has gone together with rising car sales volumes. As you can see, the chart includes a rather conservative line, which indicates what would happen if the trend continued to hold into the future. However, consensus forecasts imply an inflection point has been reached and that that age-old relationship will no longer hold. Now, sudden divergence from long-term trends do happen, but rarely. We're entitled to be skeptical.
We have asked the forecasters about the change. Is it because of mobility as a service? No, came the response. We are through the hype cycle on mobility as a service, and several providers have gone bankrupt, and only the successful few remain. Is it self-driving vehicles? Nope, they said. These are still too far off to be affecting the forecast. What is changing? They attribute it to our changing relationship with cars due to urbanization, public transport, and affordability. That view assumes people buy cars purely for the utility of going from A to B. I'm not sure we do. If you've grown up poor, you know that cars represent more than just transport. They represent freedom and status. Our world is much bigger with a car. You have the freedom to go where you want, when you want it. It's also a potent status symbol.
Drive through the suburbs of Johannesburg today, and you'll see cars in the driveway that are worth more than the homes they are parked in front of. The role of freedom and status holds true in America, to the cities of Europe, to the informal settlements of Africa and India. I find it hard to believe that people are not going to opt for freedom of status as soon as they can afford it. That leaves affordability, right? Here I say, where there is demand, China will find a cost-effective way of filling it. While import duties are keeping their BEVs out of the U.S. and Europe, they are beginning to export plug-in hybrids to both countries. 80% of China's vehicle exports in 2024 were ICE vehicles.
If that relationship between GDP and vehicle demand continues to hold, we'll see 10 million more cars sold in 2030 than currently forecast. That's 1 million ounces more PGM demand, even allowing that a few of them will be BEVs. This brings us to the next factor in the equation, the share of catalyzed vehicles. It's important to note that for all the publicity, market demand still overwhelmingly favors ICE vehicles, with BEVs only having a small share of total car sales. In the established markets of the U.S.A., western Europe, Japan, and so on, BEVs had just a 10% market share last year, barely higher than in 2023. In emerging markets outside China, it's just 3%. At some point out in China, it was a quarter of new car sales and growing. They implied that this is the path that other markets will soon take.
In truth, it seems plausible that China's rapid BEV adoption might be an outlier. As China is different, it has limited historical experience with ICE vehicle ownership and less affinity with ICE vehicles. Its state has the capacity to make huge ahead-of-time investments in grid and charging infrastructure. It has high levels of urbanization and comprehensive and cheap high-speed rail networks. However, even in China, with all of those advantages, pure electric vehicles aren't for everyone. Range anxiety is real. Just look at how plug-in hybrids and extended range vehicles, which both need PGM catalysts, gained market share in recent years as customers looked for longer range and manufacturers' cheaper costs. Given a choice, customers want the freedom to refuel or recharge. It's no wonder, then, that global BEV penetration forecasts, while still rising, have been revised lower.
If we compare consensus forecasts now to a year ago, the share expected to be BEV by 2030 has come down from 40% to just 33%. That equates to an additional 1 million ounces of PGM demand forecast as of 2030. Now, numerous headwinds to BEV growth have been seen, such as the slow rollouts of charging infrastructure, high purchase and insurance costs, uncertain resale values, and more recently, political issues such as tariffs and subsidy cuts. Given this, are BEV forecasts possibly still optimistic? We've plotted a straight line through the existing data points and extrapolated that forward to 2030, and it implies a market share of 25%. That accounts for a further 1 million ounces improvement in PGM demand. Of course, we're not dismissive of the prospects for BEVs. We just believe that catalyzed vehicles will have a greater market share for longer.
Right, let's get on to the last factor in the equation. How much PGMs is on those cars that still have catalytic converters, known more commonly as loadings? We've long known that PGM loadings are a tug-of-war between the automaker's desire for technology-driven cost savings versus the need to meet steadily more strict emissions regulations. Just as important over the last decade or so has been the accuracy of testing, with realistic test cycles and real-world emissions testing. In the U.S., in the last few years, we've seen steadily rising loadings as emissions standards have been tightened. In Europe, they rose when Euro 6D was introduced and have remained at relatively high levels since. In China, after a substantial increase when China 6 was introduced, loadings have fallen in recent years.
Now, there are mixed effects in there, as a greater proportion of vehicles have been exported to lower-loaded countries and differences in China's cold start requirements. The thrifting process might have gone too far. On the right-hand side is an excerpt from a recently published consultation document by China's Ministry of Ecology and Environment proposing amendments to China 6 emission standards. Notably, the Chinese authorities acknowledge deficiencies in the standard and how it has been tested. Interestingly, the expression "defeat device" is prominent, clearly signaling an intention to address any weakness. In the weeks since the publication, we've seen some 70 testing sessions fined for not adhering to those standards. In China, a business responds quickly to changes in legislation and enforcement.
If Chinese loadings rose by just half a gram per domestically sold light vehicle, a small part of the gap with Europe, that would be an additional 300,000 ounces of PGM demand per year. There are clear reasons across the equation to be more optimistic than consensus in automotive demand. What are the other demand uses? PGMs do not just go into automotive applications. Indeed, two in every five ounces find other homes. Industrial demand is a broad church. It has a collection of hundreds of other uses taking account of the diversified qualities of PGMs to drive modern life as we know it. Key uses include process catalysts to make a wide variety of chemicals, to hard drives that underpin the internet and AI, to manufacturing fiberglass for wind turbines and copper foil for lithium batteries.
The prospects for PGM demand in existing applications are good, with key drivers being continued growth, rising middle class, capital expenditure, and technological shifts. The most exciting developments will surely be in new applications. We see large potential in the hydrogen economy, sustainable aviation, e-fuels, carbon-neutral feedstocks, and AI and cloud computing. While most PGM industrial uses are naturally price-insensitive, new opportunities are likely to come from economics-led PGM innovation. There are 9 million ounces of gold that go into industrial applications in a year. If we can substitute PGMs into 11% of those, that's an additional 1 million ounces of PGM demand. In a world where climate change and energy efficiencies are the defining challenges of our time, there will always be a need for the ingredients that enable reactions to take place at lower temperatures, lower pressures, and lower costs.
Last but not least, let's take a look at the jewelry markets. In China, falling luxury spend, its investment-led approach to jewelry buying, and rising gold prices have adversely impacted platinum jewelry sales. That has put pressure on global jewelry sales. However, this has marked an impressive increase at a 5% compound annual growth per annum since 2010 in jewelry demand in other key markets, such as the U.S.A. and increasingly India. There remain many challenges, but it's heartening to see 2024 seems to have been a turning point in this sector's fortunes. With gold now three times as expensive as platinum, the biggest gap since 1900, we see great opportunities here to regain market share from white gold, which ironically was invented as a cheaper alternative to platinum. If we can regain as little as 10% of white gold sales, that's an additional 1.5 million ounces of platinum demand.
We have reached the end of my section on demand, and hopefully you have taken four things away from your time with me, or my time with you anyway. There is upside to consensus vehicle sales forecasts. There are signs that catalyzed vehicles will retain a greater market share for longer. Enhanced testing in China presents upside in vehicle loadings. That the industrial and jewelry markets are healthy, with a number of upside prospects, including the price disparity with gold. With that, I will now hand you over to Martin, who will talk you through the supply side dynamics. Martin.
Thanks very much, Hilton. I know you've all been sitting for some time now, and rest assured after my section, we'll break, have a short break. Hilton flagged that I'm to talk to you about supply, and this is just as important in considering the PGM price dynamics in the future. Factors that present both challenges and opportunities in the years ahead. Firstly, supply is tightening, which presents both risks and upside, making it all the more important which mining assets you have in your portfolio. That's why we've positioned our assets to capture value across all market conditions, regardless of the macro environment. At the same time, for new supply to come online, prices must rise to levels that justify reinvestment. However, price alone is not enough. The position on the cost curve is equally critical.
To remain competitive and maximize returns, we must firmly be in the first half of the cost curve. This ensures that we can generate strong margins even in weak price environments while continuing to reinvest in our business. Our understanding of these markets, whether it's declining supply, the incentive for new production, and the cost curve position, allows us to think through our strategic priorities and allocate capital to navigate cycles effectively and drive long-term value creation. It is important to recognize the concentration of PGM resources and the impact that this has on supply dynamics. Just less than 80% of the world's PGM reserves are located in Southern Africa, cementing the region's role as a dominant supplier of these critical metals. This concentration, again, presents both opportunities and challenges. On the one hand, it reinforces South Africa's strategic importance in the global PGM market.
At around 30% of resources, this confirms Anglo American Platinum's value proposition as a reliable supplier to customers. On the other hand, it means that supply dynamics are shaped by regional factors, including regulatory shifts, infrastructure constraints, and geopolitical uncertainties. With our leading operational footprint and access to large, high-quality reserves, we are well positioned to leverage the advantages of this resource base while actively managing potential risks. As you heard from Craig, our focus remains on operational excellence, sustainability, and maintaining our cost competitiveness, ensuring that we capture long-term value in this evolving landscape. Historically, industry forecasts have overstated the growth of mined PGM supply. Many projections fail to fully account for the real complexities that limit supply growth, including economic constraints, sustainability requirements, and access to critical infrastructure.
As a result, supply expectations have often been overly optimistic, not fully reflecting challenges facing this industry and mining just in general. In response to the current PGM price environment, most producers, particularly in Southern and Northern North America, have again started to take action. Many have implemented cost-cutting measures, preserved cash, and more importantly, reduced capital expenditure, making it less likely that depleting mines will be replaced in the near term. The result is a structurally lower long-term supply market. While this should ultimately lead to higher prices that incentivize new investment, the long lead times required for project development mean that there will be no meaningful supply response in the medium term. Ultimately, a more balanced and realistic view of future supply is critical. By recognizing the real constraints on future supply, we can better understand the market dynamics and ensure the long-term sustainability of PGM production.
In recent years, the PGM industry has undergone fundamental shifts. Over the past decade, capital investment in new supply was minimal. Instead of expansion, we have seen a significant number of operations being placed on care and maintenance. This contrasts to the early 2000s, where the strategies were positions around anticipated growth in demand, which led to the development of 14 brand new mines to around 2011, many of which of those assets are not producing today. A number of these mines that are producing are now aging and will require capital investment to extend their lives. Rather than deploying cash earned to recapitalize mines during the cyclical record highs we saw in prices around 2018 through to 2022, we saw industry players invest in consolidation in the industry and even allocate capital outside of PGMs.
Unlike our competitors, Anglo American Platinum, we balanced our capital allocation between reinvestment in our business and distribution to shareholders. While previous high prices strengthened balance sheets and rewarded investors, they came at a cost, and that cost was a decline in new supply growth. Of the projects that were announced back in 2012, only two of those mines remain in production today, underscoring the challenges of bringing new supply online. At the same time, the closure of unprofitable mines and the lack of reinvestment in depleting assets mean that primary supply is expected to decline by as much as 16% by the end of the decade. Meanwhile, as you heard from Hilton, demand has and will remain more resilient than forecasts, increasing the likelihood of future supply constraints.
As we navigate this evolving landscape, we must strike the right balance between shareholder returns and capital investments, ensuring that we remain competitive today while securing production to meet market needs in the future. I want to touch just briefly on secondary supply. Recycled PGMs will continue to play an important role in meeting demand, but they remain a small contributor relative to other metals. For example, the last two years, open loop recycling accounted for less than 20% of global supply, which was primarily sourced from catalytic converters. However, this is well below the levels we have seen in base metals. For example, recycled copper makes up up to 32% of global supply in 2024.
Historically, industry forecasts have overestimated the rate and scale of recycled PGM supply, often failing to fully account for the constraints, including economics of the vehicle scrapping value chain, tightening sustainability regulations, and even just refining capacity. As shown on the right-hand side, research analysts have consistently overstated recycled PGM supply, reinforcing the need for a more realistic view of the rate of growth in recycling into the future. We all know that platinum, palladium, and rhodium are currently in deficit. Having taken into account the points that have been made by Hilton in our outlook for demand, the upside we see across all demand segments, together with the fact that we believe that the trend or supply will trend below market expectation, we expect that these deficits will continue into the medium term.
While the extent of the deficit of each metal may vary, we need to bear in mind the cross-substitution that exists between these metals. We remain extremely positive on the fundamentals for the industry. Let me turn right at this point to the next item that is just as extremely important when considering which companies will be able to deliver outperformance versus the industry, and that is the industry cost curve. The PGM cost curve of primary producers includes both all-in costs and sustaining capital per mine, and we present in the red line the revenue across the industry. This graph is based on external perspective by Metal Focus using published financial results. Most importantly, you'll see that our wholly owned mining operations sit within the first half of the cost curve.
This strategic cost positioning provides us an advantage during current weak prices and the ability to outperform versus peers when prices begin to improve. It is also important that we recognize that not all PGM production is equal. Different reef types drive different baskets of revenue, and the PGM composition specifically impacts overall profitability. This becomes apparent when you compare different assets across the industry, as can be seen by the jagged nature of the red line. For example, some reefs have a higher concentration of platinum and rhodium, which currently trades at a higher price compared to that of palladium. As a result, fluctuations in metal price impact cash flows and margins differently, with some operations benefiting more than others depending on market conditions. Understanding these variations in metal prices and baskets of revenue allows us to optimize our portfolio and ensure that we maximize value across our operations.
Going forward, our strategy remains focused on leveraging the diversity of our assets and maintaining operational flexibility, which will allow us to adapt to market cycles and drive sustained value. Lastly, before I conclude, let me say something on price. Given good fundamentals we have just outlined, you have to ask the question, why has price declined over the last couple of years? We believe that it is predominantly driven by market sentiment and short-term macroeconomic factors, and that only a small proportion of price decreases can be attributed to actual changes in PGM demand and supply specifics. We are confident that fundamentals ultimately determine long-term price. If we just look at rhodium's recent price rally, it is clear that supply tightness drives price.
No doubt, a key challenge facing PGM producers today is the growing imbalance between production costs and CapEx to sustain or develop new mines and the price we receive for our metals. The investment required to sustain current production levels, let alone develop new ones, demands a significantly higher price. To put this into perspective, in 2024, the industry's weighted average cost of all-in sustaining cost was around $1,117 per ounce. At the same time, spot prices were $1,164. With that equation, 40% of the industry is cash loss making. These narrow margins highlight weak cash flow generation, making it clear that returns at current prices are unsustainable. For long-term supply to be viable, prices will need to adjust. Looking at the bigger picture, we believe, just like any other commodity, including PGMs, the industry needs to earn a sufficient return for us to invest in capital.
However, both current and spot prices and consensus prices suggest an unsustainable, near-zero return on capital. Historically, capital employed for the industry has been on average between 10% and 20%. As can be seen on the bottom right-hand graph, the implied price level required to restore historical return on capital employed is significantly above the current spot prices of around $1,200, this despite the recent rally in rhodium. As such, we expect supply to remain constrained until we see meaningful price recovery. In summary, while demand drivers remain uncertain, there is reason to be optimistic as vehicle sales trend back to historical levels. Battery electric vehicle adoption progresses more slowly than previously expected. At the same time, primary and secondary supply will likely remain constrained as ongoing uncertainty and lack of investment inhibits growth.
In the near term, cost competitiveness will remain the key differentiator as producers navigate suppressed pricing while positioning for long-term recovery and value creation. With that, I thank you for your patience, and I'll be handing you back to Theto to talk through the breaks.
Thank you for that, Norman, Craig, Hilton, and Martin. I think I did tell you that my job today is super simple, one of them just being to announce when the breaks are. Even with that, Martin almost took my job, so I don't know what I'm actually left with. With that said, for the team that actually joined a bit later, I did allude to one, a couple of things. There will be actually the session today is being streamed, and we will provide details of that on our website in the next day or so.
Two, there will be Q&As at the end of the third session. For anyone with questions online, I think you can already start putting those across as well so that we can actually facilitate that at the end. Importantly, the media session as well, there will be that outside session coming through. All media questions will be handled outside of this forum. With that said, we are then going to go into a break now for 20 minutes for a bit of a leg stretch, bathroom break, teas and coffee, and so forth. If I may request that you are back here at 2:05 P.M. so that we can actually commence with the next session. Thank you so much.
[Oh, I've been tired of running, tired of looking over my shoulder lately. Tired of always trying to please you.
Oh, I gotta tell you, I'm going crazy. I don't want to live a lie. I just want to feel alive. I don't want to live a lie. Just want to do it my way. Don't want you to keep me from trying to fly. You always made a fool out of me. Couldn't even tell what was wrong or right. I don't want to live a lie. I just want to feel alive. I don't want to live a lie. Don't want to live a lie. Don't want to feel alive.]
Hi, everyone. May I request that we start making our way back to the room? Are you good? I don't have to say anything. Yes, that's all. What do you need it to do? This is not on the script. Okay, let me go and get it. He says it's good.
Right. Good afternoon and welcome back.
As you've seen earlier, our portfolio is truly world-class. The scale and geographic space gives us unmatched optionality, ensuring we can optimize our value chain throughput by blending over at various stages. Our mining operations are supported by integrated processing facilities, where ores concentrate on site before moving through smelting and refining, allowing us to capture full value from mine to market. With our dedicated marketing teams positioned in key global trading hubs, we maintain our direct access to major markets, ensuring we can serve our customer needs optimally. Our mining portfolio is diverse and positioned to drive sustained value. While Mogalakwena is the cornerstone of our operations, it benefits from a base metal-rich Platreef ore body with an even platinum-palladium prill split, delivering a balanced exposure to key metals in the PGM basket. The rich base metal content also provides significant smelting efficiencies across our processing network.
Our Mogalakwena is an anchor cash generator supported by a high-grade platinum and rhodium-heavy prill split that strengthens portfolio diversification. Additionally, the UG2 reef generates valuable chrome revenue, which has proved a natural revenue benefit in the current PGM environment. Mototolo and Modikwa JV, located on the eastern limb, bring both geographic and operational diversification, ensuring greater portfolio flexibility. Meanwhile, our mechanized Unki mine in Zimbabwe continues to deliver strong cash flow, underpinned by its base metal-rich, grey-dark ore body. All from Unki is smelted in-country before being integrated in our refining operations in South Africa, ensuring seamless processing efficiency. Looking at Mogalakwena, it is truly a world-class asset. It is also the largest contributor to our portfolio. It has a reserve life of more than 80 years, securing production for generations to come.
Just a note, in the last 30 years of open-pit mining at Mogalakwena, we only just touched 14% of the ore. And that's in comparison to the available reserves still left. It's a mine with an industry-leading PGM ounce production profile and has a mining rate covering a massive 372 sq km. For our British and American friends, that's around 143 sq mi. Beyond the open pit, Mogalakwena presents significant long-term growth optionality. Our exploration declines are advancing, allowing us the potential for underground mining while maintaining the flexibility to adapt to market conditions. This work ensures we can unlock additional value from higher-grade ore while retaining the ability to blend ore sources efficiently, further strengthening Mogalakwena's position as a low-cost, high-margin operation. With that, I invite you to enjoy the following video. As you've just seen, the underground opportunity at Mogalakwena extends well beyond the open pits.
While our current focus is on the Sandsloot as the highest-value starter opportunity, the long-term optionality remains significant across the broader ore body. As a point of reference, Ivanhoe's Platreef project begins at depths below what you've seen on screen, highlighting the scale of the resource and the potential that exists at Mogalakwena. Mogalakwena's declared reserve is significantly larger than some of its peers' declared resources. Why is that important? Because for a resource to be declared a reserve, an approved mine plan needs to be done, which is both capitalized and costed. The Sandsloot underground reef grade is also the highest of all the mechanized PGM assets in South Africa. When you look at operational excellence initiatives, it has truly strengthened Mogalakwena's all-in sustaining cost position, reinforcing its resilience across the price cycles.
This remains a key competitive advantage, ensuring that Mogalakwena continues to generate strong margins regardless of the macro PGM environment. The pit optimization work focused on adjusting the mine sequence to mine further north, which enables us to target lower strip ratios by mining less waste and reduce ore sterilizing while allowing early exposure of the high-grade and medium-grade ore. The ore routes were optimized to allow for improved hauling distances, significantly reducing hauling costs and cycle times and realizing savings of about 15% on a ramp per ton basis. We are also in the process of activating the northwest rock dump that will have a further 27% improvement on hauling and efficiencies and thus associated costs. Other key areas include refinement of best practice principles, focusing on quality over speed of drilling and charging practices associated with blasting, as well as strategic and tactical dewatering initiatives.
Our two on-site concentrators have a combined capacity of 14 million tons per annum, providing efficient and stable processing. We are comfortable with this remaining our throughput constraint as we prioritize value over volume, ensuring a disciplined and profitable production profile. What we are doing at Mogalakwena is a great example of our value over volume approach. We intend to mine volumes of 90-120 million tons per annum, achieving a lower associated stripping ratio of between 4.5 and 6.7 and a full-year blended grade of between 2.7 and 3 grams per ton. This maintains our guided Mogalakwena production range of approximately 1 million ounces, further driving lower all-in sustaining costs of between $900-$950 per 3E ounce, which further improves Mogalakwena's position on the cost curve. We are confident that this can be maintained for at least the next decade without major capital investment.
At the same time, we continue to assess underground optionality with exploration declines and feasibility studies progressing at the inactive Sandsloot pit. This is without causing any disruption to the current open pit operations located further to the north. Higher-grade underground ore presents an exciting opportunity, enabling us to balance the high-grade ore with the lower-grade ore and thus feed that through the two concentrators. This provides us with two key strategic advantages. Firstly, we unlock additional ounces by blending higher-grade underground ore with the lower-grade open pit ore without adding additional concentrator capacity. Secondly, it can lead to an additional 10% of ounces—apologies for that—10% of ounces additional on the Sandsloot as the Sandsloot underground ramps up and also can be as high as 50%, depending on our investment decision at that time.
Secondly, further lowering all-in sustaining costs and maintaining our H1 cost curve position with a benefit of 10%-20%. The exploration declines at Sandsloot have reached the reef intersection, making an important milestone in assessing Mogalakwena's underground potential. In addition, we are actively progressing exploration drilling work from the exploration decline excavations for improved understanding of the ore body informing the feasibility studies. As part of this process, we plan to mine a decent sample size of ore that's representative enough to inform a bulk sample that can be processed through our concentrators, allowing enough feed to process for a number of days continuously to be able to validate with a high level of confidence ore characteristics and associated recoveries. We are targeting a bulk sample of approximately 100,000 tons of underground ore.
When we get to this, we can get to the next step, which is trial mining. We envisage a long-haul open-stoping mining method similar in nature to other massive ore body type deposits in the world. Long-haul open-stoping is a highly selective and productive mining method. It involves drilling long holes into the ore body and then blasting to create stopes, which are large open spaces. The method is sufficient for varying ore thicknesses and dips. It allows for high extraction rates that can be adjusted to accommodate changes in ore body geometry. Additionally, it minimizes the need for manual labor within the stope, enhancing safety and productivity. However, this has not been done in the South African PGM mining region.
The trial mining is really a crucial step to ensure the validation of our input as well as our output parameters can be applied within our feasibility studies. It additionally allows us for sufficient time to train up required skills to be capable and competent and to create a baseline on how we move forward optimally within the underground options. Our feasibility study is expected to be completed in 2027 for the phase one, at which point we will make a decision on whether to ramp up mining operations from underground. Initially, this involves a load and haul-based operation at about 2 million tons per annum. Note that this level of production is less capital intensive as opposed to what will be required for a 4 million ton per annum operation. All of this will also lead to increased ounces with the all-in sustaining cost benefit.
The potential to scale up to a 4 million ton per annum is through the establishment of infrastructure that enables conveyor belt systems, which will inform a relatively higher capital requirement as compared to the trucking option. There is a lot of full potential, and this is what the number C on the slide shows, that in that time, we can even get up to a 5 million tons per annum. Both these decision points are subject to our capital allocation framework and associated investment decision hurdles. The long-term capital profile will ultimately be shaped by decisions we take over the next decade. Sayurie will unpack some further detail on how our capital outlook will look further on. Coming to Amandelbult, it is still the second largest operation and continues to be a key cash flow contributor.
The operation consists of two modernized vertical conventional mining shafts, namely Tumela and the Dishaba. It still has a significant resource life. While we have explored greater mechanization in the past, the reef dictates. The geology and the reef dictates. We see with that that conventional mining remains the most effective extraction method. Conventional mining is a labor-intensive mining method with a higher inherent risk exposure compared to mechanized or open pit mining. Safety thus remains a non-negotiable priority. Also, at this particular juncture, I just want to highlight that in late February, Amandelbult did experience, the whole area did experience more than 200 millimeters of rainfall in 48 hours, causing widespread flooding in the area. We activated our emergency preparedness and business continuity plans as some of our infrastructure, including Tumela L ower, flooded.
This ensured that our whole approach to this ensured that all employees were safely removed from underground without any injuries or incidents. The Dishaba mine and Tumela Upper are still back in production, with Tumela Lower currently being dewatered. A detailed technical assessment of the impact of the flooding and the remedial actions necessary and the pathway to restore safe production at Tumela Lower is currently underway. Amandelbult boasts a high-quality ore body. Not all ore bodies are the same. This is by delivering the highest ounce per square meter mined in our underground portfolio, well above other mining regions. In addition, its greater exposure to platinum and rhodium, compounded by the high chrome content on the UG2 reef, sets it apart in the sector in terms of revenue per ounce contribution. Amandelbult's unique prill split of platinum and rhodium presents a compelling upside.
Our past market cycles, this mix has driven strong earnings, with rhodium contributing significantly in 2021 and chrome currently providing support amidst softer PGM prices. Relative to peers, it has the longest life on the western limb. We are now beginning these life extension studies beyond the current mining profiles to ensure that Amandelbult can continue to be positioned to capture future price recovery and continue delivering strong cash flows well into the future. Under current life of mine plans, we anticipate a gradual decline in production from the existing Tumela operation. The life extension studies are in two key areas, namely the Tumela and the central complex. These studies will help us determine the optimal path forward to sustain production and to extend the mine's cash contribution.
Looking at Mototolo, the operation is a bord-and-pi llar mining method, and we've seen on the contribution that it's a significant denominator as well in the portfolio. Also important is that it has its mining the UG2 reef, and similar to Amandelbult, it has a high chrome content. If we can move up a bit. Just move up a bit. The Mototolo shafts, namely Borwa and Lebowa, are heading towards the end of their operational life. The Der Brochen project is basically the replacement project to commence the transition of the mining from the old Lebowa shaft across to the Der Brochen mine and later on also the Borwa shaft. The Der Brochen extension continues to make strong progress. Our teams are focused on ensuring smooth ramp-up, maintaining operational stability and efficiency throughout the transition.
We intentionally constrain the production profile to ensure that from Der Brochen to match concentrator capacity as we prioritize efficiency and margin over volume. In August 2024, we successfully began operating the chrome plant and selling 100% of its production at market-related prices. Chrome production from Mototolo was about 52,000 tons for 2024. You will now see the full year of that being impacted and both benefiting the all-in sustaining cost and revenue streams as well.
With that, I'll now hand you over to Agit, who will take you through our processing operations and opportunities we are unlocking in this part of the world. Thanks.
Thank you, Willie, and good afternoon, everyone. It is clear from what Willie has just presented that we really do have best-in-class mining assets. Now I'm going to talk you through how they are backed up by world-class processing assets.
First, I really want you to understand what we do in processing. We start with the ore that Willie and his team have mined, which contains only a few grams per ton of PGMs that is delivered to our concentrators. Through a series of crushing, milling, and flotation stages at our seven concentrators, we upgrade these metals into higher-grade product ready for smelting. Also, we have three chrome plants across our portfolio. Mass flow is a critical factor in this process. By optimizing it, we ensure maximum metal recovery, low energy consumption, and reduced waste, improving both efficiency and sustainability. At our five smelting operations and our converter plant, we produce a PGM-rich mat, which is then sent to our two refineries. Using advanced hydrometallurgical processes, we upgrade this metal to an ultra-pure 99.99% refined PGM product ready for global markets.
This process I just talked through is possible because we are a fully- integrated PGM producer with the largest processing facilities in Southern Africa. Our vertically integrated processing assets enable us to control every stage of production, which allows the highest standards of quality and product delivery to the market. Our full processing value chain from concentrators to refined metal gives us a significant competitive advantage. As an engineer, you won't be surprised to hear that the processing value chain really, really excites me. We're able to use the fundamentals of mineral processing in our concentrators to upgrade the feed by up to 30 times. Our smelting operations are the most unique in the world, operating at temperatures of approximately 1,600 degrees Celsius. Now, you won't find furnaces that can do this in most parts of the world.
Our base metal and precious metal refineries are chemistry sets on steroids, a dream come true for chemists and chemical engineers. Here we use chemical and physical properties of the base metals and PGMs to extract and refine to the highest metal purities in the industry. You may not realize it, but in our processing business, we have more than 400 critical steps, and we are optimizing each one of these. This is what gets us excited every single day. Our full processing value chain from concentrators to refined metal gives us this competitive advantage. We have all the pieces of the PGM value puzzle. On the next slide, I will go into a lot more detail around why these processing assets give us a strategic advantage in the industry. We process ores from various Southern African reefs due to our broad range of geographical locations.
This diversity allows us to continuously improve our knowledge of how to process varying ore types and optimize our process to get the most value from the ore we mine. This ore variability gives us the option to blend the different ore types to optimize smelter efficiency. At our Mogalakwena concentrator, we can process all the PGMs as well as the heavy base metal loading. For an engineer, this is really, really exciting. If you let me corner you over canapés later on, I will explain at length just how exciting this is. Our smelting assets allow us to extract metal with maximum efficiency while upholding excellent environmental standards. These smelting operations offer significant flexibility in terms of geographical diversification with a broad footprint serving multiple regions.
In particular, the converter plant enhances our process by providing significant base metal throughput, which is particularly advantageous when processing Plat reef ore and Great Dyke-type concentrates. Additionally, it can process solid mat feeds from third parties. Matte is a metal sulfide phase formed during the smelting process that contains large amounts of PGMs and base metals. Simply put, it is a ready-mix high PGM and base metal cocktail that we need to deconstruct at our refineries. Our smelting flow sheet is designed for benchmark metal recoveries, ensuring optimal performance. The installed smelting footprint we have developed would be highly capital-intensive for others to replicate, with an estimated value in the order of ZAR 70 billion-ZAR 90 billion. Put differently, we have already built and paid for smelters, so any competitor who wants to replace this capacity will need to deploy a lot of new capital.
Our refineries provide us with significant optionality to optimize, adapt, and meet changing market demand. Our advanced refining technologies ensure we meet the highest purity standards, which provides us with the flexibility to serve premium markets that demand superior quality. This flexibility, vertical integration, and quality outputs mean we can secure higher margins. We also have the largest base metal capacity in the industry, enabling us to efficiently process Platreef ore. We can process base metals and precious metals in parallel due to the slow cooling of the mat at our converter plant, which enables the upfront and bulk separation of PGMs from base metals at our magnetic concentrator plant. This parallel processing reduces pipelines and improves efficiencies. A PGM processing value chain is categorized by high capital intensity and replacement costs.
Because our processing value chain is well capitalized, it allows us further flexibility to optimize the balance between own production and third-party material. Setting up downstream smelting and refining would be a challenge for new entrants. However, we can structure and manage purchases to support our processing strategy. Currently, approximately 40% of our concentrate volumes are derived from third parties. This demonstrates the flexibility we have, allowing us to tailor our purchases of concentrate to drive value creation for the processing assets. We have created further optionality through our low mass pull strategy. This strategic shift allows us to cost-effectively repurpose the Mortimer smelter for slag cleaning duty, thus creating a valuable opportunity to unlock additional value. Our vertically integrated processing value chain, together with our leading processing footprint, delivers real value.
Okay, this slide is a really important part of processing that I want you to take away today. We operate and maintain the largest fleet of primary smelting furnaces for PGM concentrate. We also have the largest installed furnace capacity in the industry, totaling 183 megawatts. Really important, we have been processing Plat reef-type concentrate since the mid-1990s, the only company that is doing this, and our extensive experience and advanced technology in handling Platreef concentrate is a key differentiator from our competitors. We have done a huge amount of work to optimize our smelting operations, where we have high utilization of available capacity. This means that instead of running more furnaces, we are running fewer furnaces more efficiently. Our furnace operating philosophy, backed by a robust rebuild program, has given us absolute confidence in the strategy. I'll explain more about this later on.
When combined with concentrator improvements on mass pulls and reconfiguring smelting for further efficiencies and recovery improvements, we have significantly enhanced our operational capabilities. Our advanced refining technologies enable exceptional recovery rates as we turn concentrate into final state refined metals. We have ample capacity in our refining facilities, which is critical as the industry has very limited surplus base metal capacity, as you can see in the graph of nickel production in the industry from 2021 to 2024. With our significant base metal capacity, we are well positioned to process the high base metal ore types like Platreef from Mogalakwena. Now that we have covered our position as the largest PGM processing facility, I would like to highlight the strategic advantage our processing capacity gives us.
Okay, now I'm going to take you through what our processing division has unlocked for our business already and our future plans. Our processing value chain unlocks our own margins, delivering more than 17 percentage points of additional EBITDA margin. Crucially, the benefit we get from operating our own fully integrated process is that we generate much higher value by processing our own mine volumes compared to third-party concentrate. We will continue with our operational excellence program to drive further value at our concentrators. We have already achieved high margins. With the improving recovery, mass pull, and chrome heels, we intend to deliver a further 2-5 percentage point improvements in recoveries in the next three years. Our mass pull strategy aims to deliver an improvement of 0.5-2 percentage points.
This improvement equates to reducing our mass pulls by 35%-40% at Mogalakwena concentrator and 30%-35% at the Amandelbult. We also aim to deliver a further 6-8 percentage point improvements in chrome yields from our UG2 concentrators at the Amandelbult, Mototolo, and Modikwa. We announced in 2024 that we will become a low mass pull producer of Platreef ore. The next slide speaks to what exactly this means. Okay, so I'm going to try and make all of you experts in mass pull today. At the most basic level, this slide is telling us that with the new strategy, we are producing higher grades of PGMs with less volume of concentrate, with all the handling benefits that it entails. Before I tell you how this works, I would also like to provide some context on our journey.
Historically, the mass pull from our Platreef ore at Mogalakwena has been higher than that from UG2 ore due to their significantly different properties. Conventional techniques for mass pull reduction on UG2 ore types have proven ineffective on complex Platreef ores. We explored alternative technologies and ultimately settled on using Jameson cells. The Jameson Cell is a high-intensity froth flotation cell that allows us to more selectively recover our metals from Platreef ore bodies. There is a lot that sits behind this, so again, I am happy to pick this up during the break. To explain the mass pull strategy at Mogalakwena North Concentrator, let us assume that we feed 14 million tons per annum of grade at 2.7 grams per ton.
At a mass pull of 3.5%, we will produce 490,000 tons of concentrate and 950,000 ounces of PGMs at a concentrate grade of 60 grams per ton. At a lower mass pull of 2.7% for the same feed conditions, we will produce 378,000 tons of concentrate at a grade of 78 grams per ton while maintaining the PGM ounces at 950,000 ounces. It is important to note that the low mass pull strategy at Mogalakwena will not reduce PGM ounces produced. Rather, it allows us to achieve approximately 30% improvement in concentrate grade at Mogalakwena North Concentrator with an upgrade ratio of approximately 30 versus 22 with flotation tank cells. This translates to a 20% reduction in material handling and logistics, which roughly translates to a reduction of 5,000 trucks per annum.
The lower concentrate volume results in immediate power and water consumption reduction of 10-15% at our smelters. This has significant sustainability benefits, including a 10% reduction in our scope 2 CO2 emissions. We are producing the same ounces with higher concentrations, lower volumes, and therefore less material to smelt. I think you can agree that is significant. This will lead to huge downstream benefits for processing. To reach these targets, we installed and are currently commissioning Jameson Cell technology at Mogalakwena North Concentrator. After laboratory work, pilot plant testing, and a demonstration plant at Mogalakwena North Concentrator, we found that this technology improves selectivity and efficiency on Platreef ores. An added benefit is the low footprint of these high-intensity flotation cells. Only four Jameson Cells will be required to replace the 40 conventional tank cells at the current cleaner circuit at the North Concentrator.
We anticipate that the Jameson Cells will be fully operational by the end of H1 2025. The benefits of the mass pull strategy have enabled us to increase our smelting optionality and capacity, optimize our capital allocation, reduce smelting costs, and improve stability and sustainability. This enables us to place Mortimer on care maintenance in 2024 and will allow us to convert it to a slag cleaning duty. The reason this is so important is that the conversion means that we can process our surface stockpiles of converter slag, which are currently not generating cash. Slag is a byproduct formed during the process of smelting and can contain appreciable amounts of PGMs and base metals. We plan to start processing converter slag from 2027 onwards.
This process will produce approximately 150,000 additional PGM ounces and around 20,000 tons of nickel and copper, generating additional revenue for the business, which is not currently in our production guidance. For those of you who have been following this business for some time, I'm sure you'll be pleased to know we have been putting a lot of time, energy, and disciplined capital into smelting operations. What this means is that we have a robust and intentional rebuild plan that allows us to mitigate any unplanned stoppages of our smelters. Secondly, we have put a lot of focus and attention into our operating philosophy of our furnaces, focusing on stable feed and stable power, further instilling confidence in the improved utilization of our furnaces. Additionally, we have implemented rigorous monitoring and controls, which inform our structured furnace rebuild program and drive operational excellence.
This is the reason why we have very high confidence in operating fewer furnaces at higher utilization. The benefits of these programs are evident, as we have had no unplanned failures on our primary furnaces since 2017 and on the converter plant since 2020. We are confident that with the investments made and the controls in place, we will continue to avoid unplanned failures resulting in significant cost savings. Furthermore, our investment in our asset plants at Waterval and Polokwane smelters allowed us to maintain SO2 emissions below the minimum emission standards targets. As a result of placing Mortimer on care maintenance, we have saved approximately ZAR 400 million in 2024. Looking ahead, we anticipate saving around ZAR 1 billion in 2025. I think you'll agree that this is a lot of cash. Our smelters are very well positioned in the industry.
For instance, our flagship primary furnace at Polokwane operates at 68 megawatts, which is double the power input of the next biggest furnace in the industry. The levels of automation and control, along with our approach to process safety, are unparalleled in the industry. I know we have talked today about being an industry leader, but this is reality for us, and this is yet another example of why we feel confident about making such claims. Examples of our advanced practices include remote operation for tapping of the furnace and the use of machine vision tools for safety around our furnace. Again, if you want to know more about tap hole management, happy to discuss this during the break. I have covered a lot of quite technical content today and made you experts in mass pull, I hope.
I really hope that having heard from Willie and me, that you now have a much better appreciation of the extent and quality of our assets, how much work we have done to optimize each element of the integrated portfolio, and are already seeing great results with more to come. Importantly, how our full integration is a real differentiator in the industry. I will now hand you over to Yvonne, who will pick up on the sustainability thread.
Thank you. Tough act to follow. I'll give it my best. Thank you, Agit, and good afternoon, everyone. Sustainability is central to our business model. We embed sustainability into everything we do because this is how we create and protect value while ensuring we uphold our responsibilities to society and the environment. This, in turn, enhances our competitive advantage.
Put differently, when all your stakeholders from communities you work in to your regulators and your host countries to your commercial ecosystem all see how you sustain value for them, you get more support, and that helps the business in achieving its strategic objectives. How do we do this? Sustainability is integrated in everything we do. Our sustainability strategy is anchored around three focus areas, which are climate and energy, local communities, and ethical value chains. Each plays a fundamental role in securing our long-term success. Mining, as we know, is energy intensive and platinum even more. As we transition towards a lower carbon economy, securing cost-effective and resilient energy sources is critical. Our climate and energy and decarbonization initiatives focus on security of electricity supply, which is the first.
By investing in renewable energy and enhancing security of supply, we will also position ourselves as a preferred supplier in a carbon-conscious global market. We are partnering with a specialized green energy provider, Envusa, to enhance our renewable and secure energy generation capacity. Agit has already highlighted what Process is doing on this front. We are decarbonizing our operations by targeting a 30% reduction in scope 1 and 2 emissions by 2030, with a clear path to carbon neutrality by 2040. Current examples include our Polokwane smelter emissions improvement program to meet national [MIS] standards. Agit touched on that. We are also actively managing water-related risks. Climate change is intensifying our water scarcity, so we are proactively implementing water stewardship strategies to mitigate this impact within our operations and our host communities. Our second key commitment is to community development that goes beyond just meeting regulatory requirements.
We must ensure that our present translates into long-term socioeconomic benefits for the people whose support we need in order to thrive. To strengthen economic and social resilience in our local communities, we focus on the following pillars. Firstly, improving livelihoods. We prioritize job creation within and beyond our mining operations, supporting local SMEs and ensuring economic diversification in our host communities. Secondly, we catalyze partnerships. We collaborate with NGOs, government agencies, and our business community to magnify our positive impact, ensuring that our initiatives drive systemic change. Thirdly, we must deliver on our promises. Our ability to execute social-economic development projects effectively is key to strengthening trust and fostering lasting community development and support. The third element of our sustainability strategy is supporting ethical value chains by driving responsible sourcing and transparency. Customers and investors increasingly demand ethical sourcing and transparent value chains.
This is not just a matter of compliance. It is a strategic imperative. It makes us stand out as a premium operator and supplier. We are strengthening our ethical value chain by meeting global ethical standards. We are actively pursuing IRMA, the Initiative for Responsible Mining Assurance Certification, which will reinforce our position as an industry leader in responsible mining. All our mining operations are IRMA-certified, with both Unki and Mototolo certified at 75%, while Mogalakwena and Amandelbult are at 50%. We intend to either maintain or improve these ratings. Accreditation is the final piece of the puzzle. We are in an accredited London Platinum and Palladium Market and London Bullion Market Association good delivery refiner and source metal in line with their standards. Our LBMA accreditation also enables us to get cross-recognition with the London Metals Exchange. Mogalakwena's, I needed to catch a break.
Mogalakwena's development pathway supports our sustainability commitments. Let's see how this plays out by looking at the future of Mogalakwena. The development of the Mogalakwena underground will deliver economic and operational advantages and clear sustainability benefits. By moving underground, we can significantly reduce our impact on surrounding host communities, cutting down on noise, dust, and vibrations associated with open-pit operations, which will enable us to harmoniously coexist. From a processing perspective, underground mining offers greater ore body selectivity, allowing us to blend higher-grade underground ore with open-pit feed. This has tangible efficiency benefits, including optimizing concentrator feeds, leading to higher yields and improved recoveries, lower energy intensity, which enhances our overall sustainability profile, and reduced tailings volumes with our underground backfill strategy, further limiting surface tailings. In addition, by supplementing open-pit with underground production, we can reduce waste stripping intensity, improving overall operational efficiency.
As Craig mentioned earlier, underground mechanized mining requires specialist skill sets. We are proactively developing a talent strategy to ensure we have the right expertise in place when the time comes while creating decent jobs for our local communities. I hope this makes it clear that by embedding ethics and sustainability into our business model, we will both enhance our competitive positioning and strengthen long-term relationships with the stakeholders whose support we need. Through our focus on decarbonization, community resilience, and ethical business practices, we are future-proofing our business, strengthening our brand, securing markets, and our long-term profitability. With that, I will now hand over to Hilton to wrap up this session before we go to the break.
Thank you, Yvonne. Hi, it's me again. We're nearing the home straight, and I'll talk you through how we as a marketing team add value to Anglo American Platinum. We market 13 products. Of those, only two go to market via intermediaries: selenium, a rare earth, and sulfuric acid. The rest we take to market ourselves. We've sold the majority of our products via one-, three-, and five-year contracts, but it's important to understand the markets in which we operate. Platinum, palladium, and gold have liquid over-the-counter markets in London and futures markets in New York. By contrast, rhodium, iridium, and ruthenium are opaque, thinly traded willing buyer, willing seller markets. Our nickel cathode is LME deliverable, while the chemical makeup of our copper means it's a Class 2 product. Both of these trade on the liquid, physical, and futures LME exchange.
By contrast, UG2 chrome concentrate trades in a thinly traded physical market. From a logistics perspective, the precious metals are moved by passenger airline belly freight, while the nickel and copper are moved by container freight. Chrome is shipped via truck or rail to port and via a bulk ship to customers largely in Asia. Mining companies have traditionally chosen to define the battery limits of their business as find, mine, process, and deliver. This has left a gap between the services they were historically prepared to offer and customers' needs. Into that gap have stepped intermediaries, offering our customers the services they need while leveraging the imperfections of the market and using their market insights to generate additional value. As marketing, we aim to add value beyond the inherent value of our products.
I know the slide behind me is an exercise in 50 shades of blue, but that central gray sphere is inherent value, and then we as marketing look to layer on additional value over and above that. Now, the inherent value belongs to Agit and to Valee, and we define it and we derive it from benchmarks where they exist or best possible proxies, including trader quotes. To that, we then add an equity premium or the value we derive through negotiations with our customers in exchange for guaranteed supply, value and use benefits, logistics, and other services. We can then add additional value to that through our trading team, which work within defined risk and working capital limits. The trading desk allows us to derive additional value from bid-offer spreads, time spreads, geographical arbitrage, quality arbitrage, and by taking proprietary positions.
Our trading capability then enables us to come back and add further value to our equity through being able to include fixed prices and price optionality into our agreements. It also enables us to better manage our own supply risks. Our intention is to compete with intermediaries for a fair share of the downstream value pool by providing solutions that meet or exceed our customers' needs. We're looking to grow that value pool through adding additional innovative solutions and capturing a brand value premium. As the illustration shows, it's about growing the cake. We've added more than $600 million over the last six years to the cake, thanks to the great effort of our teams, to higher prices and increased market volatility. Our value proposition to customers rests on three territories, of which tailored solutions is one.
The other two are being a trusted partner and our willingness to work together with our customers to shape our world. Let's have a look at trusted partner. When customers work with us, they can rely on us to find value for both of us, deliver what we promise, and operate to the highest industry standards ethically and sustainably. The picture on the right-hand side is taken at the 2023 VW Supplier Conference. I'm standing there with Dirk, VW's Chief Purchasing Officer. Out of 40,000 suppliers, VW issued two sustainability awards, and one of them went to Anglo American Platinum for our work championing and implementing the Initiative for Responsible Mining Assurance Standards. As Yvonne highlighted, we're an independently accredited responsible miner and source metal within recognized market standards.
These standards, together with the efforts of our refining and marketing team, mean that we can be trusted partners to our customers, ensuring that their reputation is safe in our hands. Now on to our third territory, shaping our world. We're optimally positioned to help customers address some of the world's most defining challenges, including reducing global greenhouse gas emissions and, at the same time, to shape the future dynamics of our metals. We do this through four main levers: advocacy, where we advocate for ICE emission standards, improved PGM procurement practices, the hydrogen economy, and hydrogen in mobility. We look to nurture new PGM applications and new PGM businesses through funding research and development, taking stakes in startup businesses, and being an early adopter of technology that uses PGMs.
We actively invest in hydrogen and other PGM venture capital funds, and we look to collaborate with partners across the value chains, both horizontally and vertically, to drive demand for our products. To believe in PGM market development, you need to believe that a South African company can have an impact on a global scale. Here is a great example of what we can do. In 2022, we were one of the founding members, together with Toyota and Hyundai, of the International Hydrogen Fuel Cell Association in China. Today, IHFCA, as it is fondly known, has more than 100 members, and it provides us with a means to engage with the Chinese authority and bring together like-minded people from across the world to tackle the challenges faced by the industry. IHFCA is only one such example.
We're also founding members of the Hydrogen Council, Hydrogen Europe, and the African Hydrogen Partnership. What the hydrogen economy needs to succeed is ecosystems that work, and there's no better way to deliver those ecosystems than by getting like-minded people and supportive governments in a room working through the challenges. As our friends at Mastercard would say, the benefits of this are priceless. What's the benefit of shaping our world? In mobility, nearly 6 million ounces of platinum demand could be created if 10% of new light-duty vehicles were fuel-cell electric vehicles. An additional 900,000 ounces of palladium demand could be created if 10% of new vehicle sales used PGM-enriched lithium-sulfur batteries, similar to those that are currently being developed by one of our nurturing businesses, Li-ion battery.
In the industrial space, we have a number of applications we are looking at, from PGM's potential role in enhancing processing power in data centers, particularly important as the impact of AI continues to grow through the production of carbon and through the production of carbon-neutral feedstocks, such as sustainable aviation fuel. Collectively, we believe these could generate more than 2 million ounces of incremental demand. That does not include the 1 million ounces of additional demand from the partial substitution with gold in industrial applications that I mentioned earlier. Finally, in jewelry, as I've alluded to earlier, if 10% of white gold jewelry is converted to platinum, for instance, utilizing our new alloy, Inoveo Platinum, we believe an additional 1.5 million ounces of platinum demand could be created.
All of this underlines the importance of proactive market development in creating resilience in the end markets of our metals and securing Anglo American Platinum's future into the long term. Thank you. We're going to have a short break now, and then when we come back, we'll hear from our CFO, Sayurie Naidoo, and those people that want to catch up with Agit on mass pull and tapping holes is over there.
Enjoy.
Mogalakwena is a tier-one asset that's got so much potential to either upscale [shoot and upscale the technology that we have in the industry to an] effective mine with the current resources that we have, from equipment through to people that we can utilize to the best of our ability.
Looking at the pit itself, there are so many opportunities within the full value chain, from where we design the mine with the footprint that we have to our availability throughout the value chain up to rehabilitation and everything in between.
Welcome to Sandsloot Underground, our exploration project. Currently standing within the Sandsloot pit. The pit was decommissioned and stopped in 2011. Subsequently, the whole open pit mining environment moved to the north. In 2018-2019, through a resource development program, we identified that there is real value to be created within the context of Mogalakwena by utilizing a blending strategy whereby we incorporate an underground mining environment which would blend the higher-grade underground ore with the open pit. From underground, we plan to get about 4 to 6 grams per ton for every ton that we mine.
In some places, the ore or the grade is going higher than that; it goes to between 7 and 10 grams per ton. What makes this a world-class asset and the reason why we're standing here today is that it's a very competent hanging wall contact where the majority of the grade is sitting, very loaded on the contact, and then it disseminates into the footwall, which lends itself perfectly to the mining method that we've applied. Our preferred mining method is a long-haul open stoping, whereby we will utilize the dip and the competent hanging wall to our advantage.
Time to get your PPE on. Check that your headlamp is working. Let's go underground with one of our teams so you can see how it's done. You'll get a real sense of how the operations are progressing. We utilize a drill- and -blast mining method.
Sandvik automated drilled rigs do the majority of the work using technology and best practice principles. We've also implemented an in-cycle shotcreting system, which is fiber-reinforced, along with the bolting, again improving the safety and infrastructure of our mine. Once drilling is completed, charging can begin, which will be blasted later. Following the blast, the stope is cleaned using a load-haul dump truck. Across our entire business, we are committed to visible felt leadership, continuously improving safety and the way work is done. Creating a space where every voice matters and everyone feels valued, supported, and is encouraged to speak up.
For the initial phases, we plan to start at about 1.5-2 million tons per annum.
In the longer-term phase, we plan to establish a conveyor belt decline that runs from the footwall side of Sandsloot all the way to the north and tying back up to the north concentrator. That is envisaged to handle and ramp up the production capacity from the 1.5 to 2 million tons, ramping that up between 3.5-4 million tons per annum. The drill hole spacing for our resource confidence is 35 by 35 meters. This gives us real knowledge of where the high pockets of value sit, which blocks do we attack first, which do we potentially leave for a later stage. Now, this is one of the benefits of a long-haul open stoping mining system where you've got selectivity. Sustainability is part of our business, and we've really worked intensively around water efficiencies. We obviously are mining in an environment that is water scarce.
At the moment, we're really operating about 54% of the water that we use actually has been reused in the circulation. When it comes to emissions, we're actually operating in a range between 0.1-0.18 tons of carbon dioxide emissions equivalent. Really a lot of great work in that space, making sure that we intensify the energy usage, we become very efficient in water, and we also take into account the carbon emissions. We can have the best ore body in the world. We can have all of the equipment, but without the people, we won't go anywhere. We see this as an opportunity to create more employment and to grow collaboratively with our communities as we embark on skills transfer, upskilling our workforce, and creating the future for this business.
We've just achieved IRMA 50, a big milestone in Mogalakwena, something that really took multifunctional collaboration in the team. As we know, IRMA is a global standard through which we verify our processes around how we become a responsible miner. It has actually demonstrated that Mogalakwena sits at the core, ensuring that we become a responsible PGM producer. The results speak for themselves. From inception, what we've planned, we've delivered on. We are putting papers into practice. There's an area where you can actually see mining being reimagined to improve people's lives. Mogalakwena is sitting in this unique situation that provides us with opportunities that, should the market demand and we should upscale, we are scalable and we can do that. We definitely have the right equipment already to be able to do that.
Definitely coupled with the people, we would be able to do that. This project is all about creating real impact, real value through safely implementing best practice principles while we learn more about this world-class asset that we have been blessed with at Mogalakwena.
Hello. Hi. May I request that we start coming back to the room?
Welcome back, everyone, and good afternoon. Fortunately, we are now on the home stretch, and I get to cover the part you are all looking forward to: returns. As we have Anglo American Platinum benefits from a balanced revenue stream across various metals. This diversification has been crucial in stabilizing our revenue at above ZAR 100 billion per annum, despite fluctuations in individual metal prices.
We have proven to be agile in response to lower PGM prices through our decisive action plan by reducing our operating costs by ZAR 7 billion and SIB Capital by ZAR 5 billion last year. Cumulatively, through our actions, we delivered ZAR 12 billion in savings, which exceeded our 2024 targets by ZAR 2 billion. We have identified further cost-saving opportunities on which I will elaborate in the coming slides. Our balance sheet remains resilient with a debt ceiling of one times net debt to EBITDA through the cycle. We believe that the quality of our assets, the recent shift down the cost curve, and our continued capital discipline will allow us to keep paying a superior base dividend of 40% of headline earnings while still investing in the efficiency and sustainability of our operations.
Our commitment to consistent shareholder returns is evident in our track record over the years. As followers of the PGM mining industry, you will know that this is unmatched in our sector. Our cost-savings initiatives enabled us to right-size and reset our cost base and deliver an all-in sustaining cost of below $1,000 per 3E ounce in 2024. In addition to the ZAR 7 billion in cost savings achieved last year, we are targeting a further ZAR 4 billion in 2025. The chart on the right provides a breakdown of these additional savings, the majority of which are related to the annualized benefits of the cost savings achieved in 2024. Be assured that we will continue to look for opportunities to further drive down costs beyond 2025 to mitigate the impact of inflation.
Some of these drivers include continued operational excellence, such as the Mogalakwena pit optimization, processing efficiencies, and the energy savings through renewable projects. Our target is for a further ZAR 1 billion-ZAR 2 billion of operational cost savings after 2025. On the chart on the right, we have provided a breakdown of all the demerger-related costs. I must emphasize that these are one-off costs totaling ZAR 1.6 billion-ZAR 1.9 billion, the majority of which will be incurred in 2025, with the final portion in 2026. These costs include separation activities, advisory costs, and our corporate identity transformation. Furthermore, we will settle intercompany costs incurred to date of around ZAR 4 billion related to services provided by Anglo American, of which 70% has already been accrued by end 2024. Our optimization benefits arising from the demerger range between ZAR 1 billion and ZAR 1.5 billion per annum.
This will be achieved through a more streamlined corporate structure, reduced intercompany recharges, and delivering efficiency improvements. However, as a partial offset, there are some dyssynergies that arise from procurement, contracts, and systems which were previously under the Anglo American umbrella, and these amount to around ZAR 0.5 billion per annum. We will, of course, identify further opportunities to offset these dyssynergies. Our unchanged total CapEx guidance reflects a stable sustaining capital profile, but an increase in discretionary capital over the next three years, which is driven largely by carefully considered value-accretive future projects that have been tested against our rigorous capital framework. The timing of the spending could, of course, be reconsidered if a weaker PGM price environment materializes versus what we anticipate in 2026 and 2027.
These future projects include the Mogalakwena Underground project, which is in pre-feasibility with twin decline, early development, stage gating to feasibility in the second half of 2025. The estimated capital is around ZAR 2 billion-ZAR 3 billion per annum for the next three years. The Tumela One Subshaft project, also in pre-feasibility, will allow us to continue to deliver high-margin ounces at Amandelbult. The repurposing of Mortimer Smelter to a slag cleaning furnace, which has low execution risk and a fast payback. The key message here is that we remain disciplined in terms of capital allocation, and the future projects that we are investing in are value-accretive with compelling returns. Our stay-in-business capital spend has been primarily focused on ensuring asset integrity, which remains a priority for us. We have allocated significant resources to maintaining and improving the structural integrity of our assets.
SIB CapEx has come down materially as we have successfully restored the sustainability, stability, and flexibility at our operations. Part of the reduction is attributable to a concerted effort to optimize our CapEx spend, reprioritize projects, and leverage efficiencies. Looking ahead, our stay-in-business CapEx of approximately ZAR 6 billion-ZAR 7.5 billion per annum will continue to prioritize asset integrity and reliability. In 2024, we targeted an all-in sustaining cost of below $1,050 per 3E ounce and achieved $986 per 3E ounce. All our managed assets were cash flow generative in 2024, with strong all-in sustaining cost margins as a result of our disciplined approach to cost management and capital allocation. Importantly, Amandelbult generated a healthy all-in sustaining cost margin of 20% in 2024. Its compelling margins make it an anchor asset in our portfolio.
With the further cost reductions being targeted, we expect all our assets to remain cash generative at spot prices, and we are guiding an all-in sustaining cost target of $970-$1,000 per 3E ounce for 2025, subject to the impact of the Amandelbult f looding incident. We expect to remain at around $950 per 3E ounce in real terms over the medium term. At this point, I could probably stop talking here as the slide speaks for itself. It is important to consider our PGM operations' all-in sustaining cost, where we have demonstrated our position in the bottom half of the cost curve, but also the context of the revenue basket. Based on all-in sustaining cost margins, you will note that Amandelbult s hifts up the margin curve because its attractive prill split generates the highest revenue per 3E ounce in the industry.
Similarly, at Mototolo, even before the benefits we are expecting from the inclusion of chrome and operational efficiencies at Der Brochen ramps up, we have one of the highest all-in sustaining cost margins in the portfolio. For Mogalakwena, despite its higher capital intensity typically associated with open pit mines, it sits in a favorable position with further improvements to come as the identified operational efficiencies start to show in the costs. As a prelude to the next slide, this chart illustrates the portfolio's strong cash generating ability at spot prices before we talk about what we want to do with the cash. The principles of our disciplined capital allocation framework remain unchanged. These are sustainable cash generation through the cycle supported by the delivery of our operational excellence program, prioritization of sustaining capital to deliver safe and stable production, commitment to a base dividend payout of 40% of headline earnings.
Any excess capital can then be further deployed into discretionary options, either in the form of additional shareholder returns or investment in the capital projects with appropriate expected returns. The demerger provides us with a unique opportunity to construct a new and tailored capital structure optimized for life as a leading independent PGM producer. In assessing the optimal construction of our independent balance sheet and the appropriate levels of leverage through the cycle, we have factored in our world-class resource endowment, continued investment into our operations and assets, and our project pipeline opportunity, our cost-competitive asset base, where all four of our assets are in the bottom half of the cost curve, and maintaining a strong and flexible balance sheet through the cycle.
Consequently, we declared a ZAR 16.5 billion cash dividend, after which the company retains a ZAR 1.1 billion net cash position, including the customer prepayment on a pro forma basis. Our aim is to maintain net debt to EBITDA at below one times through the cycle. This is in line with PGM industry peers and provides adequate flexibility to withstand price volatility and allows us to execute and deliver on our strategy. We currently have committed debt facilities of ZAR 34 billion, of which ZAR 10 billion is from South African lenders and ZAR 24 billion from Anglo American. These facilities will be replaced at demerger with around ZAR 28-30 billion, consisting of revolving credit facilities provided by local and international lenders, as well as a debt capital markets bridge facility.
Lastly, we have a well-earned reputation in the market for delivering shareholder returns, having consistently paid a base dividend over the last eight years and often returning a special dividend on top of that, a claim none of our PGM peers can make. Our dividend policy at 40% of headline earnings remains one of the most generous payout ratios amongst our precious metals mining peers, and shareholder returns will continue to remain a priority in our capital allocation framework. Thank you, and I will now hand you over to Craig to close for us.
Thank you, Sayurie. I think it's fair to say that we've covered an enormous amount of territory today, and I hope you'll leave today's session with a better understanding of the unique properties and the qualities of our business, which truly make us a leading integrated PGM producers with a resource endowment that supports our growth optionality. We've demonstrated how our world-class integrated value proposition positions us to not only mine, refine, and market our metals, capturing more value for ourselves. I am confident that we have the capability within our company to continue to deliver on a resilient performance, and I know that we'll meet the challenge to deliver the most from our organization. Before finalizing our presentation today, there are some key fundamentals which I want you just to please remember. Firstly, we're relentless and unconditional in our focus on safety.
We remain committed to ensure that every single person that enters our operations returns home to their families and friends every day. Second, we have an experienced executive team with a strong track record of delivery to lead our simplified and our strengthened organization. Third, we have a leading mineral resource endowment, which offers pathways to grow our value. Fourth, we remain absolutely confident in the outlook for PGMs and have a positive outlook on the markets. Fifth, we are well positioned to generate EBITDA margins regardless of where we are in the price cycle. Lastly, we remain disciplined in allocating capital to ensure sustainable shareholder value delivery. Underpinning those messages is our clear focus around sustainability and incorporating that into everything that we do. I genuinely am super excited about the future which lies ahead of us. Thank you very much for joining us.
I'll now hand you over, of course, to Theto, who will facilitate a question and answer session, and you can really ask all the difficult questions to the executive team who are going to join me up on the stage. Thanks very much.
Thank you, Craig. I think to all, thank you for all the speakers of the day, starting with Norman all the way to Craig closing the session. I believe they were able to unpack who we really are, right, an independent leader in the market of PGM industry. The next session, and thank you to everyone here. I see you've actually stayed for the entire afternoon, so we are quite grateful that you were able to spend the afternoon with us. Now on to the one area I enjoy the most, to the dread of my executives, which just puts them on the hot seat, right? Typically for every session that we have, I'm supposed to come and close the session.
If you see Craig thanking you and say, "Let's close," it just means that not only did I go over time, it just means that he started saying, "Cut, cut," and I did not. He will come in and say, "Thank you, everybody." I hope it does not happen today. Similar to how we do it for all the other events, we will first start in the room, and as usual, I will request that you mention your name and which company you represent. Given the sheer numbers today, I am going to request that up to two or three questions per person so that we can cover as many questions as possible. Once done, I am also just checking for the guys online to say you can start posting your questions so that I can reach them out at the end.
There will be roving mics going around, so just remember name, company, and your questions. I see there is already a couple of questions coming through.
Thanks a lot for the presentation, fols .
Hey, Jason.
Yep. It's Jason Fairclough, Bank of America. I'm actually just going to ask one question because there are a lot of people in the room. If we look at your growth projects today, and particularly, I guess I'm thinking about the uncommitted ones, would these projects attract capital at spot PGM prices, or do we need to take a bit more of a bullish view on prices?
Yeah, Jason, I think, look, the key areas for us in terms of growth, as we've outlined, are at Mogalakwena and particularly Sandsloot. That is, as we've articulated, it's still very much in the pre-feasibility stage and feasibility stage. I just think, you know, reiterating, you know, what we've said, being able to bring those ounces to the concentrator at Mogalakwena and not having to invest in any further downstream processing capacity certainly makes it really, really attractive. You know, and importantly, ensuring that we operate in the lower half of the cost curve should be able to sustain that investment. As Sayurie has said, in terms of our discipline around capital and what you can expect from us, for a project to proceed, it will need to meet the various returns.
Those returns, you know, not only include what the payback is, what the IRR is, but more importantly as well, where it positions us on the cost curve in order to sustain that. Once we have completed the studies and we are in a position to be able to push the button, come 2027, we will do an evaluation in terms of where we are at. That is clearly where we are from an initial growth perspective. The commitments that we have got under, sorry, if I can just confirm just on Mototolo, I mean, that is really replacement answers for Lobowa. We have committed to that project, and that does still generate returns even at the current price environment as well. I do not know, Willie, if there is anything else.
No, that's good.
All right. Could I just push you? Do those projects work at spot prices?
I think, Jason, as I've said, I mean, we're still in the study phase for the Mogalakwena Sandsloot . That is working out what does the cost look like, what do the CapEx profiles look like. We believe that given the value that we see from those projects, they will create value for shareholders. We need to complete those studies, and that's where we're investing the money and the time to be able to do that studying correctly. Once we're in that position, we'll make a decision in 2027 around whether we progress that and really ramp up the production profile, which we shared on the slide earlier today.
Okay, thank you very much.
Hi, afternoon all. It's Chris Nicholson from RMB Morgan Stanley. If I can just continue that theme, specifically around the Mogalakwena underground and talking about that in terms of its growth optionality, two questions. On the CapEx, it looks like you've spent about ZAR 1.5 billion on the CapEx so far in the underground just last two years, and you've penciled in, it looks like, another ZAR 8.5 billion over the next two years. That gets you to feasibility. What does that actually get you from the mine? I mean, is this just partial, or can we expect it to double? From there, the second question is, obviously, in the open pits you are up against some community constraints, the strip pressure is increasing.
Is there a scenario or is there a possibility that actually this underground becomes replacement answers in the end? Thank you.
Thanks, Chris. Willie, do you want to give a view in terms of just the?
If you look at the first 2.2 million ounces, that's essentially what we talk about. It's the lift one of the feasibility project. It's the 2.2 million, which is a trucking option. That relates to, if you isolate that in the old profile, that would yield in the region of about 400,000 ounces. You have to also note that that will offset in open cost ounces. Overall, there will be between 10% upwards over the million ounce for the complex in terms of production. When we talk about the next step, which is the 4 million, that will require a lot of infrastructure to support conveyor belt systems, and that can take you to a 4 million ton. That's additional capital that would have to be considered at that particular point in time.
You get the 10% up to about the 50% even additional growth in ounces from that portfolio, but then you'll get the benefit 10-20% on all-in sustaining cost. That all depends on what is the capital outlay for that particular decision point and whether it still makes our hurdle rates. I think in terms of when you look at the open cost, I think we were very deliberate in saying that for the next decade, you know, the 1 million ounces can be done without even having an underground mine and without having to look at communities. Also, with us moving towards the northern side, it's even beyond that in terms of the strip ratios. You can put it out even beyond 2035, 2040 before that starts playing some sort of role.
As the 2.2 million tons comes in from the ramp up from Sandsloot, you can minimize the strip ratio and you can have a blend of between open pit and underground, which ultimately changes the whole scenario, whether you would ever have to replace communities. As we look at the open pit and we optimize the tactical plan to the open pit, there does not necessarily seem to be a need to replace communities for a long time, a very long time, beyond the current 20-25 years.
Thanks, Willie. I think maybe just to add to that point, it does not. Having said that, we do know that historically we have an impact on communities with just operating in the environment. I think Yvonne's slide was very instrumental in that regard.
We do feel that part of our social license to operate aspects is to look at all those things encompass, in any case, what we do to be a responsible operator in that area.
See Adrian and then Ben.
Good day. Good day, it's Adrian Hammond, SBG Securities. I have a question for Willie, Craig, and Hilton. Vinnie, firstly, you're a mining guy, but we've also had a lot of discussion today about processing. Certainly, you've demonstrated today that you're fully integrated and you've got lots of flexibility and redundancy around processing. Perhaps something you need to showcase a bit more. As a mining guy, where do you think then the bottlenecks are for the group as a whole? I will ask the other questions to let them think about it. Craig, you promised some more detail on the flowback. Of that 48% de-merge, how much do you think is at risk to impacting the share price? Do you have a lockup agreement yet in place for the remaining 19.9%? For Hilton, you put up a slide there demonstrating some loopholes in Chinese legislation.
What is the date of that publication, please? Because I remember seeing something similar quite some time ago. You also mentioned substitution of gold for platinum. Can you give us some examples, and is it actually practical? It could be quite substantial given the price differential. Also, those Chinese exports of vehicles, are the countries that are importing those vehicles, are they actually testing those loadings? Thanks.
I think Adrian, being Adrian, I asked three questions each. He went three people with multiple questions, but I'm sure we can pick up many of those. Yep.
Okay, go ahead, Willie.
Okay, Adrian, I think what's important is to look at each asset on an individual basis. I think looking at Mogalakwena, the concentrator capacity at Mogalakwena, sorry, at Amandelbult, let's start with that, Amandelbult. The concentrator capacity at Amandelbult is far more than the current underground ore that gets delivered to the concentrators. It is clear that the first bottleneck is Amandelbult is not a, it's an old lady, so to speak. It does not have anymore the capacity to get to the levels that it historically were in terms of tons. What we have seen with the mine plans, and Craig has alluded to those mine plans, is how you must think about Amandelbult, it's a 4 million ton operation. Okay, call it 4 to about 4.3 million ton operation.
What our effort would be there is to see how to get the best buildup head grade from that 4-4.3 million tons out. It is really to understand there are two concentrators there, a U1 and a U2 concentrator, and to see is there other projects that we can do with a second concentrator, i.e., tailings treatment or whatever the case might be. Ultimately, you want to get down to one concentrator and the underground all for one concentrator. There, the bottleneck is the mining; the concentrator capacity is higher than the mining effort there. Looking at Mogalakwena. Mogalakwena has the 14 million ton concentrator capacity, and there the discussion is about ounces because we can blend a higher grade underground ore to a lower grade open pit also to speak.
Without doing that even, the open pit at about 100-120 million tons, the open pit is adequate to give enough high grade, medium grade, and low grade material to sustain a million ounce profile, above a million ounce profile, and that can be done for at least the next decade. In terms of bottlenecks, as I tried to explain with the operational excellence in the slides, it is to really eliminate those issues that have a direct impact on your all-in sustaining costs going south. I think with all the work and the work still to be done there that we're busy with, we are trying to tick them off one bit at a time.
I think also in future aspects that we would be looking at too is how to further optimize what happens with the tailings layout, how we further optimize what we can put on the rock dumps and so forth. The Mototolo story is a replacement, and that replacement is really at this stage the limitation while we do not currently necessarily fill the concentrator plant to the fullest over a specific point in time. It is just how we try and balance to still get Der Brochen area opened up and then the crews moving across from the other two shafts. There is more to get them from the one area to move and transition across into the other. That is small mining problems, not big mining problems, so to speak. In essence, there we can fill the concentrator.
Mareesburg is in itself a competitive advantage because to get these days a tailings facility capitalized with all the regulatory environments and all the things that of late has happened again in the world is tough. If you have a tailings facility, you actually have a competitive advantage, and Mareesburg is a new one. For me, really the main key assets, Mogalakwena, Amandelbult, Mototolo, it's really about execution delivery and making sure we sustain the all-in sustaining cost down the cost curve as what we have explained around the work. Unki remains still, Unki, it still delivers. It's a wonderful workforce, and obviously at some particular point in time, we will have to look at those assets. Again, it's our capital allocation framework that will be the determining factor there. In terms of Mototolo, it is a non-managed operation.
It has a structure in it, and we will be working. It's one of those things that we will be working on and see what will be, how it will look forward. Do we still maintain the layout where we have Modikwa operating on its own and it has parkness, or is there control or a shifting of control in the future? That is where we are at with those assets. Okay, I think.
Now you go, Hilton, and I'll capture a flowback on the way once you've finished.
Sorry.
No, you go.
I forgot about it.
That's okay.
To your point, Adrian, I do not have the exact date off the top of my head, but it was late January, early February. I will get you the exact date. In the last couple of days, they have tightened the heavy duty restrictions as well. They are proposing implementing some pretty drastic sort of real-world testing on the heavy duty stuff. Clearly an indication, or we interpret it as an indication, they have identified they have got a problem and they are looking to solve it. The solution to that problem is going to be likely increased loadings. In terms of the palladium gold situation, the vast majority of gold in industrial applications goes into electronics, either in platings or in connectors. The perspective is, palladium is not equivalent, but it is not far off interchangeable. We are going to be working with Deep Science Ventures and others.
We've got an investment in Alloyed that allows us to run these tests rather quickly and see how much of that we can practically bring to fruition ourselves. There's also in China they make PVC from coal. To do so, they use a rather nasty gold mercury catalyst. We think there's scope there for us to replace that with a palladium catalyst. We are doing work in that area as well. You asked a third question. I was so busy thinking about the second one that I missed it. It's clear that the Chinese loadings have been coming down, as you point out, but they've also been exporting a lot of cars and perhaps to jurisdictions that do not necessarily follow Euro 5 or Euro 6. Is that a threat, I guess, particularly the hybrids? Yes, those loadings have come down.
We refer to it as a mixed effect, right? Because the loadings will be a mix of the countries you're exporting to. Now, with people self-sanctioning Russia, Russia couldn't get catalysts, so basically scrapped them, scrapped the requirement, right? You could virtually send cars with no catalytic loadings to Russia. You have those mixed effects. Generally, you have to have, and I'm going to fall over the pronunciation of the word, the car homologated in the countries that you are supplying those vehicles to. They will address standards. The element is you can pass your standards, and it's about for how long do you pass those standards. That's the real-world testing stuff. There'll be a bit of that as China exports, but cost-effective vehicles, and ICE vehicles is an upside for us, right? Lead to more sales, we hope.
Adrian, just in response to the question around the flowback. I think clearly Anglo has sold down its particular stakes leading up to the end of the year. Obviously, the retention of the 20% is all part of the mitigation of the anticipated flowback. Not really much of an update from what we said back in February, other than certainly the likes of today, the outlook that we have for the PGM sector and the quality of the assets will certainly help, we believe, in terms of addressing some of the challenges. Now is a great time in terms of buying Anglo Platinum. Through the demerger, that is your opportunity because we see the upside in the business. In terms of specifically as it relates to the lockups, as we said, those will just be normal sort of normal commiserate transactions.
Those details will be provided in more detail, I think, come April when the various announcements are released.
I see Ben. It was Ben first, and then we'll come through.
Thank you. Ben Davis from RBC Capital Markets. A couple of questions. First one on the Mortimer smelter conversion. Could you give us a bit of an indication of what the cost of those ounces will be, how much of it is dependent on stockpiles versus, say, current arisings? Is this something we should have in our model going forward at fortnight? And then secondly, just in terms of that aggregate 2-5% increase in recoveries you're targeting, how much is that coming from Mortimer and also just from the other operations? Any buckets that you could separate that into would be great. Yeah.
Yeah, so the material that we're treating at Mortimer is already above surface stockpiles. It's already been through the smelting process, and it's a byproduct stream, right? There's no additional cost associated with it apart from processing it and deriving the revenue. Those are the guidance that I gave around 150,000 ounces PGMs and 20,000 base metal tons that we have in that surface stockpile. The conversion is a very simple conversion, but there's some technical details around the feeding system that we're working out. The furnace itself remains a six-in-line and pretty much in line with the guidance that we've given before. Capital cost will be for the rebuild, some asset integrity work that we need to do, the conveying system, and then on the abatement side, we've got some work to do around that.
I think the guidance that Sayurie gave, she'll speak about it just now in terms of the capital input required for that.
Maybe just to add in terms of the stock that we've currently got that on our balance sheet, and it's about ZAR 5 billion that we'll process post 2027. And that's not in our refined production guidance.
Thank you.
It'll take sort of a number of years to.
Yeah. From 2027 is when we'll start processing it. It'll take between four and five years for us to process all of that material. The conversion will be done. It'll be using a 50% concentrate and 50% of the slag in the makeup of the feed that we'll be putting into the furnace.
I think Ben's other question was just your improvements in recoveries.
Which recoveries are you referring to?
There was a slide. Your 2024 versus your target, you've got 2-5% increase.
The concentrate recoveries.
Yeah.
Yeah. We have got 2-5% improvement recoveries, which work out to be about 50,000-55,000 ounces of PGMs per year. That is based on the work that we have done at Amandelbult, Mototolo, which already are deriving some of those benefits. The recoveries are certainly stepped up there. The big one is around the work we are doing at Mogalakwena and the commissioning of the Jameson Cells that will help us with the mass pull, but also with protecting the recovery. We are quite positive about the impact that will have on our recoveries in there. On average, about 50,000-55,000 ounces PGMs that we will be recovering additional.
I think Nkateko, then René, then Arnold.
Good afternoon, Nkateko Mathonsi, Investec Bank. My first question is probably for Willie and it is on safety. For as long as I've done this job, the whole industry has been talking about zero harm. I want to know from you if it is really achievable from a conventional mine. We've seen the mechanized operations actually maintain zero harm in terms of fatalities, but not necessarily the deep-level conventional mines. It would relate mainly to Amandelbult. Your view around that. The second question is probably for Yvonne and Virginia. I mean, today you've presented about supply possibly declining by 16% by 2030. That is five years from now. That could have very devastating impact on the economies of the communities where the PGM miners actually operate. I just want to know, how do you prepare for that?
Because right now we've seen quite a bit of stability. You've spoken about the five-year wage agreement. The past few years we've seen very good stability, but if really supply is going to decline that substantially, it could have a knock-on impact on the operating environment for everyone. You've talked about how Amandelbult has got the longest life in the western l imb. If the environment changes, it may not actually help. The last question, I have a lot of questions, but I will limit it to three, Theto. The last question is for Hilton. If you can talk about secondary supply recycling in North America, I'm of the impression that is the biggest recycling market. In this environment where we could potentially see tariffs on Canada and Mexico, how should we think about that? What is the potential impact on recycling? Thank you.
Yeah, so.
Safety first.
Yeah, always. I think a few years ago, that question was at various answers. If you take, we have moved on. There are so many mines, conventional mines, that have given 6 million fatality-free shifts, 8 million fatality-free shifts, 10 million fatality-free shifts in our industry in South Africa. There is no question that fatality-free mining and zero harm is possible. Where we are standing today, there are enough examples out there to not even second-guess it. There are a few things that we still need to work on as an industry. In terms of our company also, it is our utmost priority and it has been laid out. We work with people. We have to engineer as much as we can. We have to gear it out and make it as simple and as non-negotiable as possible for them to be able to do that.
That is where we continue to drive our effort. Definitely from where I'm sitting, there's enough examples out there to make me truly believe there's no reason, no question why it can't be done. We've done it at even on Amandelbult, went for two years without having fatality. It can be done. There's individual sections that has gone many, many, many years without fatality. There's no reason why we can't have zero harm and zero fatalities in our operation, including conventional mining. That's where I'm standing on it.
Yeah, I can come in on the community bit.
Virginia will talk to you about skills and how we think about skills.
Our sustainability strategy from a community perspective emphasizes resilience of communities. We can only achieve resilience if the communities are not really dependent on us. You would have seen that we're talking about when we create jobs or livelihoods, it's within and outside of our mines. We talk diversification as well. That's exactly for that reason that apart from the cyclicality of our industry, there's also an issue of closure where you would have seen that when mines close, then people, workers, communities were dependent on the mine and they're not able to survive or sustain themselves, and you leave ghost towns behind. What we are doing with this diversification is to ensure that the community is not just reliant on us.
Yes, we provide jobs, but most of the jobs that we provide, and you would have seen this year we've done about 2.5 offsite jobs against one each job within the mine. That is our strategy. More external jobs, more non-mining jobs, looking at other industries like tourism, agriculture to make sure that should anything not go well, go the opposite direction, communities are still able to sustain themselves. We look at provincial economic strategies and look at what's relevant in those areas. We work with partners. We've got a lot of initiatives that we have with Mr. Price, with Foschini to get our communities working within the clothing manufacturing industry, getting skills in those areas as well to make sure that they can sustain themselves beyond the life of mine. That is what's in our livelihood and sustainability strategy.
Thanks From the workforce perspective, what we do from a skills development perspective is that we partner with schools. In fact, we support specific schools around the communities where we operate, where the students come through into our technical skills programs. The reason why we do that is that because we develop for technical skills, it also helps that in the event of a decline, our employees are able to be self-sufficient in terms of having technical skills where they can set themselves up or they can still be able to do work outside the formal employment. The second thing that we do is we look at the strategic workforce planning because we know that with the life of mine, what we will need, the workforce that we will need, the skills that we will need in four or five years' time, up to 10 years' time.
We need to get much better in terms of allowing people to move on as they age. As you may be aware, some of our workforce, especially on operator level, have been in the mining industry for a long time. As they age and move on, we would be able to manage the workforce from that perspective. It is quite important that, especially within the South African environment, we focus on allowing people and helping them with skills to be able to survive beyond the life of mine.
Okay, over to me. On the recycling bit, there are no planned tariffs on South Africa that we're aware of. There's been a lot of noise, but there's no planned tariffs. If you look, we're three years into the Ukraine war, and Nornickel has not been sanctioned over that period, right? It is unlikely that the U.S. is going to impose tariffs on PGMs as it's not in their interests. In terms of the economic incentive and in terms of recycling, I think there is sufficient economic incentive to recycle today, and it would be unaffected. Over and above the economic incentive, there's the low carbon incentive, right? That is why we've got aspirations to reduce our carbon footprint by 30% by 2030 and to be carbon neutral by 2040. We've consistently seen, as Martin pointed out, recycling forecast expectations not being met, right?
I've been the victim of this because every time I say to the boss, they're going to rise, he doesn't believe me. There is an upside that goes with an improvement in recycling in the U.S., right? Those new cars today in the U.S. are 5-10 grams PGMs in terms of catalysts, and 90% of them are PGM, 90% of them are ICE vehicles. The element with the forecasters is they don't connect the two, right? If a vehicle leaves the parking lot, another vehicle's got to come in. There is upside potential there even if it does increase.
I think we'll go to René, Arnold, thereafter, we'll take two more questions from the room, and then I'll move online.
Thanks. Just two questions from me. You said you'd run this company on a net debt to EBITDA ratio of less than one. With Anglo sucking all the cash out that you've had, do you think you'll ever run this company on net cash to EBITDA in the future sometime? The second question is to Hilton. Chatting earlier, you mentioned that you thought that the stocks in rhodium and ruthenium were down to zero. What's your feeling about the stocks in palladium and platinum now in months or in years demand?
Sayurie, do you want to talk about balance sheet here?
Yes, sure. In terms of our balance sheet, as I said, we have ZAR 1.1 billion of net cash at the end of 2024. At current spot prices, we expect that all our assets will generate cash for 2025, and we will remain in the net cash position. That does include our customer prepayment. Hilton is very hard at work to try to renegotiate that customer prepayment so that it will be extended. I think importantly, we have reset all our assets from a cost perspective so that they do have quite generous margins. If prices have to increase, I think we will be able to be in a very good cash position going forward. Yes, I think I firmly believe that we will be able to run this business as a net cash business eventually.
Okay. Thanks for the question. The general way that people do these above-ground stock calculations is to add up as many years of supply-demand balances as you can find. We have had Metal Focus do work for us on it, and their palladium and rhodium stocks are at 14-year lows. Yep. If I add up the supply-demand balances going back to 2010, I get to a negative 6 million ounces in palladium, and rhodium I come out at minus 150,000. Back in 2020, WPIC did a great piece of work where they looked at it excluding ETF investments. They said that that was there for a reason and tightly held. They came to a number of 2.4 million ounces back in 2020. If you add the surpluses and deficits to them, that is down at 2.1 million ounces. That is 30% of demand today, right?
There are two factors that are at play here. There are inventories, and there is how tightly those inventories are held, right? You have seen recent spikes in the rhodium price that point to, well, there might be metal around when everything is going well. As soon as there is a prospect of demand upside or people perceive there to be a supply disruption, suddenly those stocks are not as liquid as everybody thought. You saw that in the price response. You saw when we came out and said, well, we are only doing this because it is our normal way of doing business, that that price then came down, right? It is indications in rhodium at least that inventories may not be as high as everybody thought. The rhodium is always the canary in the coal mine. Let us watch the space.
Arnold?
Okay, good afternoon. It's Arnold Van Graan from Nedbank. Question for Chris. Chris, you've clearly demonstrated the significant upside potential from these assets. As a standalone company, you now have the ability to unlock that. My question is, where does that value unlock come from? Is it from having more operational autonomy, or does it come from having more capital allocation autonomy? Is it how you run these operations and manage them going forward, or is it about your ability to allocate capital that you probably wouldn't have been able to do otherwise?
Yeah, thanks for the question, Arnold. I think it's both, to be perfectly honest. Yeah, I think the opportunity for us to be very decisive around how we operate the assets with that clear drive around the operational excellence. I think Willie and Agit have explained a lot of that today. The opportunity for us as that standalone entity is to certainly drive that because that's how we see where our assets operate on the cost curve. That's how we see where we generate capital. Ultimately, we can utilize that capital and put it back into the assets, particularly if we think through the opportunities which Mogalakwena presents itself. As a standalone entity, it's both. We're really focused around the operational excellence and our ability to be able to generate returns. Either that's in the form of going back into the assets.
If we were still part of the Anglo American group, yes, we would have competed for capital with other commodities. Our competition is now very much internal. It is back to the quality of the assets that we have. If we cannot generate the returns and it does not make sense, we will return that back to shareholders. Focusing around that discipline remains front and center of who we are going to be as a standalone business going forward.
Quick one for Sayurie. On the ZAR 4 billion intercompany balance with Anglo American, is that on cost or is it an intercompany loan settlement? Is it cash flow that will actually leave the company?
Yeah, so that relates to the services that we currently procure from Anglo American. In terms of our service level agreements, it is global shared services, technical services, IM, etc. That will be the outflow of cash in 2025. As I said, we have already accrued for ZAR 3 billion of that by 2024.
Thank you.
Just checking, I see there's a question from Ravi there.
Yeah, sort of three very quick questions, and it's going to be simple answers. Firstly, there was no discussion of M&A at all in the presentation. Should we take it that for the foreseeable future, it'll all be focused on internal rather than external growth, especially if prices come down, some of your competitors get in trouble, wouldn't that be an opportunity to invest countercyclically given the very rosy outlook that the marketing team has presented on PGM prices? Secondly, related to that, again, the last spinoff from Anglo-Thungela had effectively built up a war chest of about ZAR 5 billion-ZAR 6 billion and generally sits on it, especially for opportunities and cushion when commodity prices come down. I appreciate the one-times net debt to EBITDA is a very conservative balance sheet.
If PGM prices go to $800 an ounce one fine morning and stays there for two years, you'll get to that one-times net debt to EBITDA pretty quickly within one or two years. Wouldn't it be more sensible given uncertainties to kind of build a net cash balance target rather than a net debt to EBITDA target from a financing point of view and give assurance to shareholders? Third and final one, just on the processing, you still have significant excess refining capacity. Yes, there are some projects that will lift your mine production, but there's also a good chance that a lot of them could become just replacements. Is there any plan to kind of buy discrete assets or long-term kind of supply agreements which are not POC but more kind of offtakes and kind of fill up that refining capacity? Thank you.
Yeah, okay, I will go with the first question. So, Sayurie, do you want to do number two and then Agit and Martin maybe talk about the opportunities around third parties? The first answer is actually quite easy. No, we are not looking at doing any M&A. Let me unpack that a little bit more. I mean, I think what we presented today, just the quality and the scale of the resource base that we have within our portfolio, at Mogalakwena, Amandelbult, Mototolo, there is very little reason for us to go out and buy other PGM assets which are potentially undercapitalized that we have spent a good part of the last decade trying to offload because we would not deploy capital to those assets.
Therefore, I think our real opportunity for us is deploying the capital we have back into our existing assets and really leveraging the value that we can create from those. No, our focus is very much with the assets that we have and really realizing the value potential that comes from it.
In terms of our leverage, as I said, that is really a ceiling. So the top end in terms of where we will go and where we're comfortable. In terms of, as I said, we're still in a net cash position, and that includes the customer prepayment. Excluding the customer prepayment, we're still at about 0.5 times net debt to EBITDA. I think just in terms of if we see prices at a sustained lower level than we are currently, I think there are levers that we can pull. As I've highlighted in my CapEx slide, there are discretionary capital options that we could possibly pull back on. Furthermore, there's discretionary spend, OpEx, that we could probably reduce as well.
I think we can also be comfortable that if our ounces are loss-making, we will also take some hard action in terms of not putting loss-making ounces into the market. I think in terms of the leverage ratio, we are quite comfortable at the one-times net debt to EBITDA.
Do you want to go first?
Yeah, go for it. The question around processing and refining capacity. Firstly, Mogalakwena is an amazing asset that's very rich in base metals. With the work that's been planned by Willie and the mining team, there's definitely more material coming through. On the slide that I showed, our EBITDA margins are 17 percentage points higher on processing our own materials. First of all, we want to make sure we have the capacity, and we'll use our capacity for our own materials. That additional PGM, as for base metal ounces, tons that are coming through will be utilized and will be accommodated in our base metal refining capacity. When it comes to third-party concentrates and contracts around that, Martin will speak about that just now, I'm sure. For us, it is about value. It's got to add value to our business.
You've seen today that I presented the strategic advantage of the processing assets. There's a lot of effort that's gone into from an investment point of view. There's very different thinking that's gone into it from how we process, how we run it. We believe, I believe that we've positioned ourselves in a very unique position in the market. Okay? We're not going to give away our processing capacity. Okay? We are open to the business, but it's got to be for the right value that we add. If the value is there to be obtained and achieved, then yes, we will look at taking it on. It's not a volumes decision. It's a value decision. Martin, is there anything you want to add to that?
No, you said most of it. I think there's two parts to think about. There's some of the historical contracts. Logically, there are some that are more economic than others, right? The less economic ones were structured under different arrangements at the time. We'll look to either export or renegotiate those in time. If we think more to your question that you've asked, what about new entrants, I guess? It's hard for me to sort of get my head around why we would not be investing on our own assets and essentially just allowing a new entrant to process at our facilities when we just would, if we're in that market that incentivizes that production. We've just spoken about the full potential that we could have at Mogalakwena.
Absent us being paid a return on the capital invested in that business, now Agit , I think pointed to how much replacement would cost. I think the simple answer is, no, that's not of interest to us. Anyone who wants to process at us needs to actually understand there's economics in processing that needs to be fulfilled.
Have we fully answered? I didn't see any other hands in the room. Andrew, can you go on?
Just a quick one. I noticed in the last results that the turnover in trading was materially higher than usual. A lot of activity. Correct me if I'm wrong on that point. Does this speak to, are we going to see this as the new norm in terms of just how much is traded? The reason I'm asking this is, over the last six-month period, you guys effectively brought 600,000 ounces to the market. This was quite readily absorbed if we think about it. You were above normalized inventory levels. At your results, you indicated that you now are at normal. In other words, you're not sitting on inventory, which can easily be liquidated. To Hilton's point, in rhodium, what you see as inventory sometimes isn't there when you need the material. We have had the situation at Amandelbult.
It's not fully recovered. Your guidance is unchanged, but it's at the low end of that guidance. What I'm trying to get at is, from where we stand today, unless there's a step down in demand, it actually feels as if they might, prices would have to react if there was a demand for material because there simply isn't that inventory at the producers to meet those contractual obligations.
I'm not sure who wants to answer the question.
Thanks, Andrew. Hilton, do you want to talk about some of the trading and then just sort of what we're seeing in the market at the moment?
Yeah. Look, we've got defined limits, right? We've got defined limits in terms of working capital, and we've got defined limits in what we can put at risk, what we call value at risk, right? What you've seen over the period is, go back three or four years, everybody wanted solutions in rhodium, and the value at risk on an ounce of rhodium was $1,000 an ounce, right? Our limits are unchanged, but today, your value at risk on an ounce of PGMs ranges between $30-$60 an ounce. That's given us the ability to do more within those confined limits. It's not something we started yesterday, right? This has been a 10-year journey to get to where we are today.
To put what we're doing into perspective, the London Bullion Market publishes a number every year, and they reckon there's north of 800 million ounces of PGMs traded in a year. That gives you some context to what we're doing inside of the broader market.
In terms of just tightn.ess of supply and therefore the robustness of demand, Hilton?
Yeah, yeah. You have obviously read the papers. There were a few things that played out in the rhodium market in the last few weeks. U.S. and China car sales were higher than expected. That notice from the Ministry of Environment in China came out pointing towards tightening of legislation. You saw the fiberglass prices go up. When fiberglass prices go up, you want to have the best possible bushings you can have in place because it is all about cycle times. With those three things, you saw an increase in the demand prospects for rhodium. The interesting bit is people think that when Willie has a challenge that refined ounces magically disappear, right? There are months pipeline between Willie and me. Those things we can see coming from a long way off. Munderbult shortfalls were not part of the driver of that.
What the driver was, was South Africa has a shutdown for Christmas break. That Christmas break works through the South African market into refined supply around about now. Those upticks in positive outlook for rhodium, together with seasonal low supply in South Africa, met in the middle. One trader was surprised by the fact that we were on both sides of the market. You have seen, as a result of that, an uptick in the price of rhodium, leading to the fact that there is not terribly much rhodium around. I have talked you through our perspectives on above-ground stocks too, which indicate that it is not around. The challenge palladium has is the short positioning in palladium. If the physical market sentiment turns, that will turn very quickly. The palladium price as a result of that short positioning will move fast.
I think, Andrew, just to your point around what we were able to do last year as a result of the stability that we saw in downstream processing, yeah, we were able to refine and sell more than what we produced from the mines. It just assures me that we do not have another mine in some cupboard that we can actually bring to the market. Therefore, going forward and in line with our guidance, you'll see that our MNC production broadly mirrors the refined production. From our perspective, we are back in balance in terms of inventory levels. Therefore, it speaks to, once again, sort of our outlook in the market that it is tight, that the deficits are there, and that there should be some form of price change into the future.
Thank you. I think that brings us to the end of questions in the room. I am looking, no Liro, you can't ask your questions today. We currently have four total questions on screen. Amazingly, they are all to Agit. I am actually going to leave it to you because remember he said by the time when he's done, he's made everyone experts in mass pull. Every question on screen is about mass pull. I am leaving it to the room as well as online to say, is it experts or something else? The first question is from Andrew from Wellington. So hs question is, the Jameson cells, when were they commissioned? Similarly, was it four? Are they all planned to be commissioned by H1 2025?
The Jameson Cells are being commissioned, and they are replacing the existing cleaner circuit at Mogalakw ena North Concentraor. There are four Jameson Cells that are being commissioned as we speak. That is the number. They will be commissioned by the end of H1 2025.
Okay, perfect. The next question is from Richard, Agit, also to you. The material from slag cleaning, is ZA R 5 billion value the market value or lower of cost and net realizable value?
I'm going to pass that to Sayurie.
I think that's for the content of the room. Yeah, it is at net realizable value, which is obviously for when it will be processed post 2027, and it'll be discounted. The ZAR 5 billion is a net realizable value.
The next one from Shashi from Citi. Has the cost benefit of mass pull strategy incorporated in 2025 cost guidance? And ZAR 1 billion and ZAR 2 billion potential savings post 2025?
Yeah. The operating cost benefits by Mortimer being on care and maintenance is actually built into our OpEx. Our capital rationalization work that we did last year that will obviously impact Mortimer with regards to rebuilds is built into our 2025 guidance as well. Yeah.
Okay, perfect. The last question for the day is from Abhishek from PIC. Hi, Agit. What impact does the lower mass pull at Mogalakwena have on recoveries of nickel and copper in the ore? Fully acknowledge that there is not impact on PGM ounce recoveries. Also, is there any impact on concentrating cost? One, impact on mass pull n base metals. Two, is there any impact on concentrating cost?
Yeah. I'm trying to debunk this myth in the industry right now. The mass pull g rade, mass pull recovery curve is not as steep as we think it is. It's actually more around the grind. The Jameson cells are very particular to the Mogalakwena North Concentrator or the ore because of highly altered material that it has as part of the makeup. The Jameson Cells help us significantly around it not competing for PGM and base metal flotation as well. The short answer to this is no. It doesn't have any negative impact on the base metals like we have on the positive side of PGM recovery as well. In terms of costs, I've demonstrated some of the cost benefits that we get in the entire processing value chain. We remove 5,000 trucks from the system that comes at quite a good cost saving.
We save 10%-15% on the energy costs at the smelting operations. We save 10%-15% around water. We also have huge amounts of benefits around our power consumption at the smelting operation. Yes, there are huge, huge benefits around the mass pull work that we're doing at Mogalakwena that will impact positively down the value chain and at the concentrator as well.
Okay, is that it? Ladies and gentlemen, I believe with those answers, it actually brings us to the end of the formal proceedings of our Capital Markets Day. Thank you once again to all the speakers, as well as Norman, who is still sitting out there. We are believing that you will continue to support us in our partnership as we venture into this new era as an independent PGM producer going forward. With that said, reiterating what I said earlier on, one, the session was streamed. The actual recording will be available in the next day or so. Presentation is already on our website, and we look forward to any other questions that you may have. With that said, our executives, Sayurie, Craig, and Yvonne, will go and sit with the media for 30 minutes or so.
The rest of us can actually continue with much-needed refreshments until 6:00, 6:30. Thank you once again.