Okay. Good morning, good afternoon, and good evening to everyone on the call. You have myself here in London. Well, in fact, Cobham, actually. Tony O'Neill in London. Paul Galloway, I think somewhere in Asia. And Stephen Pearce out of Perth in Western Australia. So Tony and I are on our 10th coffee and Stephen, I think he's on about his third G and T. Pleased to have you here with us. The order of play today is that I'll take you through an update on our second half performance. That'll be first up. Stephen will then run you through some of the forward-looking numbers. To close, I'll run you through the projects, exploration positions, and also give a sense of where things are heading from here, both in terms of the operations and the projects as well.
Next slide, please. Again, on the. Yeah, and now I can't see if that slide's changed. I'm just checking to make sure the system's working. Are we on the second slide, guys? Okay, just making sure we've got the system working. No, I've got sound credit. Okay, the second slide is the cautionary statement. Assume that you've all read that or will read that in your own time. I'm on slide three, talking to our We Care program, and that is our holistic and coordinated that we put in place to respond to the pandemic, which is focused on protecting both lives and livelihoods for employees, extended families in our host communities.
In many ways, the pandemic has proven more challenging this year than last, particularly in those countries where vaccination rollouts have been slower. Our work this year has been focused on keeping employees and community members safe and encouraging vaccination at the earliest possible opportunity. There we go. We're on the right slide. I'm assuming you can read the slide, so I won't read off the slide. We've also been doing a lot of work on mental health, also addressing gender-based violence and doing a lot of work in our local communities with our employees and with local communities to make sure that we're connecting, addressing the real issues that they're feeling and making sure that we're supporting wherever we can.
That might be food parcels, it might be providing help of a different kind, making sure that people are looking after each other and doing everything we can with community leaders to be part of broader solutions in those communities. The feedback we've had from that work has been really good. I think it's going to be important to continue those programs. Clearly, COVID is with us for a little bit longer, or will be with us for a bit longer. The work we do in the communities is really important. For us, we've made sure that everything we've set up and the work we do next year, that is for 2022, will include a continuing focus on that work.
People will also be aware of our position on vaccines and trying to make sure that we're doing things the right way. We're doing that in a very collaborative way, engaged with all of our employees in terms of the way we do the transition, and making sure that we do that in a constructive way. Next slide, please. To start the more structured part of our conversations, I'll start with safety and safety first specifically. While we're all pleased with the progress we've made over the last few years, and it does reflect the great work of the team on the Elimination of Fatalities Task Force and the work of the operations in implementing those programs, it is still sad to report that we've had one fatality in the year.
Carlos Gonzalo Rodríguez tragically lost his life in a vehicle incident at the Quellaveco project in Peru. For me, the only blemish for us on the project has been the loss of Carlos, and we had one previous incident. For me, that's been disappointing, but at the same time, the other aspects have been very well done. I know for Tom and the team, it has been a real disappointment. We've done a lot of work with the community and the family, making sure they've been looked after. With all of that, we'll continue working to improve. Tom and the guys have done a wonderful job in the community on COVID and the other elements.
On our general or our broader injury frequency rates, we've bottomed out a little bit in the last 12 months. In fact, the last quarter we started to improve again. I think so much the preoccupation with COVID some of the detail and the planning has suffered, and the changes we've had to implement have impacted I think some of that performance, both from an attention point of view and just the different way you've had to do things. We are coming out of that, soon to be improving, but there's a real focus on making sure we drive that trend back in the right direction. On other parts of the business, I think you guys have done a great job. Health cases continue to reduce, and that's really encouraging.
Taking people out of harm's way is the real focus there. You can see the progress we've made over the last few years. Environment, for those that can remember the 13 statistics we had in 2013, 34 reportable incidents. We've had one year to date, and that was an intermittent leak in the Base Metals Refinery in Platinum. Natasha and the guys are on top of that, looking at what we've learned and how we can improve some of our inspection processes. You've got the data tracking, but sometimes these leaks are small, that you've got to make sure your physical inspections are being done the right way, and that's being tightened up as well. Next slide, please. Okay. In terms of, yeah, good.
In terms of driving towards a sustainable future, the conversation around portfolio has been very important. I don't want to spend too much time on this slide. You've seen it a few times now, but just to remind you about why we think our transition sets us up for a sustainable future, and that our product will help enable the transition to a low carbon economy. The most important message, the world needs the metals and minerals we produce, and certainly we think the work we've done in the portfolio over the last probably eight or nine years has set us up for a very different future, I think, to most mining companies, and certainly those companies that are somewhat captive to a single or one or two operating assets or commodities.
We're certainly a much broader and allowed ourselves to step into a broader range of opportunities, and I think that's a real differentiating item for us for both now and the longer term. Of course, met coal is currently an important high-quality input to steel making. Today, very important, but it's likely what I call a transition product into the 2030s, as green steel technologies are implemented at scale. Again, we think that transition occurs probably mid-2030s. Our resources are timed to deplete just short of 2040. I think there's a good match there, but we'll continue to work and make sure we improve the business, and we will continue to improve the portfolio as we develop and grow into those future facing commodities. Next slide, please.
On climate change and the global energy transition, our pathway to carbon neutrality and our Scope 3 ambitions are now out there. At the end of October, we showed our detailed pathway to meeting our target on operational carbon neutrality. That's Scope 1 and 2 by 2040, and we announced our ambition to reduce our Scope 3 emissions by 50% by 2040. The carbon neutrality pathway is detailed and includes milestones around renewable energy. Our FutureSmart Mining technologies that are the key to reducing energy use and increasing efficiency, again, have been out there for a number of years. Certainly we've made significant gains in tackling the challenge of methane emissions in our met coal operations. It's probably the single most challenging technical issue, but we expect to have that solved by 2030.
Tony and the guys with the met coal team are working on that with other partners, and I expect that to be solved. We believe the pathway that we've set out is pretty clear. On Scope 3, we're confident we can deliver the ambition, and if the steel industry is able to decarbonize in line with a 1.5-degree Paris-aligned trajectory, we believe we could reduce our Scope 3 emissions by as much as 80% by 2040. We're going to encourage that pace of change as much as we can, and that is the push into green steel, high quality iron ore, high quality met coal, and then with the transition, the iron ore and the high quality iron ore becomes even more important.
Again, we think we're advantaged by that push both in the medium and longer term. From our baseline today to 2030, we expect our Scope 3 emissions to rise marginally, driven by a combination of the growth in our portfolio, which is positive, and the pace at which we will outstrip the rate of decarbonization of our value chains, and that's specifically steel. It's important to point out that even with our 35% growth in production by 2030, our Scope 3 increase is only a fraction of that growth, and that indicates that the growth is coming into lower carbon intensity areas of the business. That's a real positive.
Again, as we drive through the 2030s, that will continue to drop as we continue to drive the business forward and grow, we believe, with the new projects, and Woodsmith's a good example of that. That really does change the look and feel of the company into the 2030s. Again, an amazing set of opportunities with assets such as Woodsmith, Quellaveco, Collahuasi all underpinning the future of the business. It's a very different looking Anglo American today than it was even five years ago. From 20 to 30, I expect a steep reduction in Scope 3 emissions. We'll obviously follow those pathways. The growing impact of the investments we've made through the 2020s will also have that payoff in the 2030s.
Again, I think we're positioning very strongly and where many are still trying to work out how they might get to their targets, we've got pathway, pathways to our targets on Scope 1, 2, and 3, and many of those pathways are now being developed into detailed execution plans. I think that really does put us ahead of most. On the piece that is more in our control and the Scope 3, and that's shipping, we're confident we can meet our ambition to achieve carbon neutrality across our controlled ocean freight activities by 2040, with an interim 30% reduction in emissions by 2030. There's still a debate in the organization whether you can take some credits for third-party programs and movement of materials.
At the moment, they're not in the numbers, but certainly from our point of view, there are opportunities for us to improve and we'll think about how to report and make those numbers more transparent in the next cycle of reporting. We've had a COP 26 since our last sustainability presentation, and we think that what we put forward before the event seemed to land well. We thought it was appropriate, and if anything, played into the key themes that we saw coming out of COP 26. Our assessment of COP 26, we think it was constructive. Really, the real transformation that we saw was a change in the conversation from the why and the what to the how.
We believe the how is really the critical conversation that we'll see over the balance of this decade. To be honest, I think we've got a five-year start on most in terms of those conversations. What you'll see from the group is a continuing dive into more detail as we flesh out those programs and plans. I'll talk about the truck, the hydrogen truck a little bit later, but seeing the key parts of that being delivered in South Africa in the last few weeks, it really is an exciting time to be in the industry and to be part of how the industry is going to help green society on a broader basis.
Certainly, we think it plays into the themes that we've been talking about for our company and the mining industry and playing its role in society. I think there's an opportunity for us to pre-present ourselves in a very different way. Next slide, please. Focusing on our four key business segments. At De Beers, consumer demand for polished product continues to recover, driving a strong pull for our product. Our sight sales have been strong, averaging better than $500 million per site so far this year. Very solid year. Longer-term fundamentals for diamonds remain strong. Our restructuring work is ongoing and will help us capture even more value in the future as reduce the time from mine to finger. I love that term from Bruce and the guys.
With our marketing thrust, we'll be increasing our own jewelry offerings and do more to capture the full value of the De Beers brand. We really do see that as being critical. We've seen a 23% increase in prices since November last year. If you remember, I made the statement that we'd expect to see 30% increase over two years. We're running well ahead of that schedule, and it really does reflect the supply issues in the industry and the opportunities that we see and the good work Bruce and the guys have done in getting ourselves out there. Very enthusiastic in what De Beers can and should do in the next few years. On the copper business, the team is considered to deliver consistent operating and cost performance through 2021.
The near-term water management issues we put in place are delivering results with production up at Los Bronces despite the lower grades. Continuing work is focused on the longer-term solutions to reduce our water footprint, and we know this is an area where we face increasing challenges, which I'll come to in a bit, later on. We have experienced some recovery issues in the last few weeks at Los Bronces. Tony, the team, Ruben, they're all working on those issues. I think it's more a transitory issue, but it does need to be addressed. Some of those pressures will see us delivering through the year at the bottom end of the 650- to 660-kiloton guidance range for this year.
The cost impacts that you're seeing next year were generally forecast in terms of grades, but water's obviously making a difference as well. I'll, again, pick that up a little bit later. On PGMs, a solid mining performance despite the COVID protocols and the underground operations. Natasha and the team have really done a good job in the ACP. It runs well. We should finish the maintenance work on the B unit by the end of the year. We've reduced our work in progress from 1.9 million oz at the end of 2020 to 1.3 million oz, which we consider to be a more normal working level of inventory. The consistency that Natasha's achieving has really been impressive considering the early 2020 event.
We're almost 18 months away from that, and the team's done a great job. Considering the recovery and performance has been done through COVID has been remarkable. You will have seen that Platts announced the approval for Mototolo Der Brochen project will extend the mine life to over 30 years at a capital cost of $300 million. It's a low cost, high quality operation, fully mechanized, so very excited with that commitment. Again, it continues that transformation. In bulks, we generated record iron ore margins during the first half of the year, reflecting the quality of our product and our success in reducing costs over the medium term. Even with prices coming off in the second half, we continue to see good realized prices due to the premiums that our products attract.
That's a reflection of both some adjustments to mining strategies that have worked really well and the good work of our marketing team. The teams are working really well across the business, and you can see that in the numbers. Operationally, there was some unplanned maintenance at Minas-Rio, partly a function of working around some COVID issues as well. They certainly picked up during the second half or the last quarter has been picking up, so much happier now with the operation settling and doing a good job. At Kumba, the team managed to impact the impact of the rain earlier in the year, and that was really the dominant feature in the first quarter. We continue to work closely with Transnet on the rail de-bottlenecks.
The work in the last quarter and the performance from Kumba has been quite solid in the last quarter. Very pleased, and they've again done a good job on the COVID side. In met coal, I'll give more details in a later section, but to note that Moranbah is making steady progress in the current longwall. It's been a pretty tough one actually, with geological conditions being tough. Grosvenor is ready to restart pending regulatory approval. Our promise to have the operation ready has been fulfilled. Now we are in the dialogue with the regulators in terms of a restart. Again, Seamus French and the team done really good work in bringing that back together.
Some of the stuff they've done at Grosvenor is remarkable, and I really do think it sets a new benchmark in terms of what a modern, new era FutureSmart mine really does start to look like. I think it's a very exciting time for us in terms of the business. With that, I'll hand over to Stephen.
Thanks very much, Mark. If we can go straight to my first detail slide. Thank you. To start from me, a familiar message, and it's all about that strategic balance in terms of priorities that we've set up in recent years. We've returned over $10 billion to shareholders since 2017, and we offer near-term attractive high-margin growth focused on future-enabling products. We remain confident in our long-term target of a 45%-50% EBITDA margin through the cycle. Importantly, ensuring that we're delivering this in a sustainable manner that preserves both the integrity of our assets and contributing essential products that support the global transition. Next slide, please. Looking at our full year 2021 guidance numbers, CapEx is coming in lower than the range that we'd previously guided at about $5.2 billion.
It's been driven by some COVID delays and supply chain disruptions. We haven't been able to catch up as much of this as we'd hoped when we spoke to you at the first half results. Of that $5.2 billion, $3.4 billion is sustaining capital, including life extensions, and $1.8 billion is growth. I'll touch more on CapEx on the next slide. Just to highlight the amount of cash that's been returned during the second half of the year in total. At the Anglo American level, the dividends paid and buyback comes to just under $4 billion. The groups also paid out an additional $2.8 billion to our minorities during the year, and obviously that's mainly in Amplats and Kumba.
The combination of shareholder returns, higher tax payments, and lower commodity prices in the second half means that net debt will increase from the very low level that we saw at the half. We previously flagged at the half year that costs were up about 6% on an FX neutral basis, and this will be around 10% for the full year. As well as some cost inflation, there was the impact from production disruptions that we saw in met coal and Minas-Rio. If we were to strip those production impacts out, costs are up about 6% on an FX neutral basis. As Mark mentioned, all BUs remain on track with the 2021 unit cost guidance that we've provided at mid-year. A pretty pleasing performance on production overall, particularly in refined PGMs and diamonds. Just a few other guidance points.
Depreciation at $2.9 billion, just a touch lower than we originally expected. Our tax guidance now a touch higher for the year at 31%-33% for 2021. Just to note, we do expect that rate to increase going forward as a result of the profit mix moving towards higher tax rate jurisdictions, such as through our copper assets, but that's always dependent on actual prices. Also, just to remind you, and as always subject to board approval, but our dividend policy remains at a payout ratio of 40% of underlying earnings. Next slide, please. CapEx. CapEx is expected to come in at approximately $5.2 billion for the year. As I said, COVID has continued to have some impact on our ability to execute some of the non-critical works during the year.
We're slightly underspent compared to the previous guidance as we prioritized key maintenance work. We had expected to catch up a reasonable proportion in H2, but not all. We're carrying over about $800 million of spend into future years that will then schedule itself out in 2022 and 2023. But this is simply timing rather than cuts to spending. Looking forward, we've included the next three years of updated CapEx guidance, and for transparency, you can find the previous guidance in the appendix. At this stage, we've given you an initial estimate for next year for Woodsmith of around $0.7 billion, and that's consistent with the approach that we took last year. You will have seen our release this morning that sets out the changes we're making to upgrade the project configuration, and Mark will talk to this later.
The technical review, now largely completed, has confirmed certain further work that we plan to do to improve the project, and we expect to complete our design engineering, capital budget, and schedule at the end of 2022. We'll provide further update once that's done. Just to highlight that once again we've shown the Quellaveco desalination plant costs separately, just as we did last year. We'll be spending this across 2022 to 2024, which is just a subtly different profile than what we had previously. The current cost estimate has also been updated to reflect enhanced engineering estimates, which have been and general cost revisions to reflect the inflationary environment.
Just to note, we have classified the desal plant as sustaining CapEx, but it does support an element of future growth, and it's critical to supporting the operations in Chile, given the water availability pressures that we've been discussing. Our sustaining CapEx is up over the next few years as we spend on relatively significant discrete projects such as platinum processing and water and tailings in South America, but we do expect this to come back down to the long-term levels that we've previously guided. Next slide, please. Looking at cost and inflation, I know a popular topic across the industry, and consistent with the broader industry, we're seeing some general inflationary pressures at the moment. We see some impact on input costs and also some supply disruption, and that impacts both operating costs and CapEx.
A reminder as always though, that we see significant benefit on the revenue line from higher commodity prices and some relief as currencies also adjust. Also a reminder that through volume growth and the operational improvements such as P101 and technology on a per unit basis, so a unit cost basis, we aim to offset more than the impacts of inflation and that's where growth becomes really important. We expect inflationary pressures to remain in the near term, but hopefully they'll start to settle down towards the back end of next year. Off the back of that will clearly be record results for the full year, and our tax and social contributions for the second half will be significant and really importantly paid in the countries where we operate.
We've given a full breakdown of next year unit costs by business unit in the appendix and please, I'd encourage you to speak to the investor relations team if you want to drill into any detail. Just a couple of quick points, and Mark will talk to this later, but we do expect there to be increases for copper Chile due to the expected grade declines and water availability issues. Remembering also it's a partial first year of operation for Quellaveco. This should be partly offset by improved unit costs for met coal and broadly flat costs for De Beers and iron ore. Overall, 2022 is only expected to see modest group increase. Next slide, please. We spoke to you at the half-year results. We noted that we've seen some delays to our cost and volume targets, and that's simply due to COVID.
We told you that we're pushing the target back a year to 2023. Since then, we've also increased that target as a result of that extra time, up by a further $0.5 billion. We expect to have made some further progress here by year-end, and you can see that on the left of this slide. We've always said that these would be loaded towards the end of the timeline. It is worth noting that these are weighted to 2023 in particular. Technology and innovation gains, importantly, go well beyond 2023. Our operating model and P101 initiatives have delivered some really pleasing results to date. Just to give you a few examples, in iron ore, Minas-Rio has again delivered strong improvement in throughput at the beneficiation plant.
In platinum, targeted improvement programs have delivered increased mine volumes from our Dishaba mine at Amandelbult, further de-bottlenecking at the Mototolo concentrator and strong ACP performance, all contributing to refined PGM production. There's similar examples in copper and De Beers. Across the operating model, P101 and the technical innovation space, by 2023, we now have higher confidence and expect to see some significant benefits on a growth basis as the vast majority of that growth value by 2023 is now embedded in the detailed business unit plans. However, we are facing some potential headwinds that may offset part of these benefits, such as grade declines, which means that the net improvements delivered may not show that full growth picture.
For example, increased recoveries and throughput driving an increase of about $1 billion in copper alone, but with the grade, a drop off next year that we've known about for a while and a couple of the water downsides will partially offset that in 2022. Or increased recoveries and volumes from improvement initiatives in platinum are being partly offset by lower processing performance and inventory lockup as we progress through some scheduled maintenance programs. Next slide, please. Turning to growth, our growth projects remain broadly on track, with more than 90% of our growth CapEx allocated to future enabling products. We are seeing some slight delays to some of the capital projects, whether that be from factors such as COVID or impact from things like the Moranbah growth and disrupted operations.
The timings above have just been slightly adjusted since the half-year results. However, the key message is that we still expect about 35% growth over the next 10 years. Importantly, in the near term, Quellaveco remains on track for next year despite all the challenges with COVID. That in itself delivers about a 10% uplift in our copper equivalent volumes. As we've discussed, we also have several smaller quick returning projects coming on stream in the next two to three years, including the diamond vessel in Namibia, delivering some of the highest value carats. The Sishen UHDMS technology project, delivering more of that premium iron ore product and debottlenecking at Minas-Rio and incremental expansions in copper at Collahuasi. A little further out at Mogalakwena, we're finalizing our review of the best configuration, size of expansion and technologies to integrate into that project.
We expect to decide on the way forward in half one next year. That project could then come on stream in the middle of the decade. In Met Coal, the near-term focus is obviously looking to safely restart and stabilize operations at the longwalls. We will then look at the low CapEx, high margin expansion option that we have there. On Woodsmith, as I said, more details to follow, but we're very much expecting this to play a key role in our growth over the next decade. With that, I'll hand back to Mark.
Yeah, one's gotta do it every time. Anyway, I'll try and give a bit of a scoot along, but thanks, Stuart. Try and make sure we've got enough time for Q and A. To start with, on innovation, our work continues. Although it's a little tougher in a world impacted by COVID. The main issue there is your access to sites being a bit restricted. Getting the people on the ground, Tony's people and supporting people, has been a little bit more difficult during the course of the last 18 months in particular, but that's improving. We've spoken about our innovation projects and the importance these projects will play from an operations improvement perspective.
It provides us with the ability to manage against some of these input cost pressures. We're committing to $500 million per year on these initiatives, and they will transform the way we mine and reduce the footprint we make. Again, they make a contribution on the cost side, which is very important in a world where we see inflation probably impacting us for a little while longer. At the same time, you've got to improve productivities and improve your efficiencies to make sure you stay ahead of that curve. We've all got to run a little bit faster, in my view, to stay ahead of where inflation's going.
Our projects are progressing, and certainly it's worth highlighting that we really see the benefits from these key programs probably hitting the bottom line in 2024, 2025, particularly once they can be combined. A few projects that connect a number of processes in an integrated way and the way we optimize the business are now on a holistic program through our FutureSmart program, which is quite unique and different in terms of the way we operate and optimize our business across the processes. That really brings the digital technologies into play. Tony and Arun and the team have really done some fantastic work that's not all that transparent at the moment, but the results that you'll see coming through will be material.
On bulk ore sorting, we have three operating sites and we're in optimization phases, each with a different set of value opportunities. Advanced process control, again, the work that Arun has done with the team and supporting the team has been really positive and we're seeing material improvements across the operations. At Arapa, for example, we've gone from two operations to one operation, producing the same material in the processing site. Those shifts are really material and will continue to help improve our underlying productivity and cost position. Coarse Particle Recovery has been approved at Quellaveco and will form part of the working model there.
Our Hydraulic Dry Stacking approach builds off the benefits of Coarse Particle Recovery and supports delivery of further water savings, and so the work at El Soldado has a much broader and longer term perspective. Our hydrogen truck and the major components have been delivered to Mogalakwena and currently being constructed as we speak. We saw those a few weeks back personally. That's really exciting. It'll be commissioned during Q1 next year, which is also very exciting. We've got a number of different players all arguing about who's gonna be the first one to drive the thing. I suspect the president of the country is right up there in the list as well. Next slide, please. On metallurgical coal, we've clearly had a couple of tough years.
Moranbah restarted at the beginning of June, and we are taking things quite carefully with the geotechnical challenges we've had on this particular block. It's what we call a seam roll that seems to dissipate and disappear in the next longwall. We'd expect the next wall to be much more of a kick along. For us, it'll take till the end of the year to finish the current longwall. We'll actually do the longwall relocation, and it'll be back and running at full capacity from February onwards. The Grosvenor work restarted underground in April, and the inquiry released its findings in May, with numerous learnings for both ourselves and the wider Queensland coal mining industry.
We've taken the opportunity now to reimagine literally how longwall mining should be done, brought in new technologies and really reset the bar in terms of the way the business should be set up. We're going through the regulators with what we've done, and this is really something quite different, remote control, surface operation, quite a different game plan, and again, a real industry benchmark-setting exercise, and so very excited with that work. From our point of view, the process of the regulators is going constructively. We expect to be ready to go with their approval at year-end or in early 2022. Again, all the things we needed to do have been done.
The team's delivered on plan, on schedule, and we're just working through the regulatory now to get the thumbs up to go. Again, really interesting, and I'm very positive on where to from here. The Moranbah and Grosvenor de-bottlenecking project has been pushed back to make sure that we get Moranbah up and Grosvenor settled in terms of the new configurations. We still expect to put the project to the board over the next couple of years, and it should be in operation for 2025. The project will increase plant capacity by 3.5 million tons, which will mean another 2.5 million tons of clean coal, high-quality clean coal, going into the markets.
It remains high margin, low risk, quick payback project, and from our point of view, it's still on the agenda and will kick in as soon as we're comfortable the two mining operations have settled. Aquila still on track to start up next year and replace volumes from Grasstree, which will reach the end of its mine life again. Since 2013, we've delivered on our projects, our major spends, and I'll talk about Quellaveco. Again, Aquila's another tick in the box in terms of doing that sort of work across the business. Again, we really have transformed the way we plan, develop and then execute our major projects, and Aquila's another good example. The met coal business should start seeing more positive and stable performance from next year.
The high quality met coal such as ours is really well valued in the market, and the prices that we've seen in the last year or so have really been something almost eye-watering in some respects. Whilst I don't think the Australia-China relationship's gonna get much better in the short term, one hopes that we get to a steadier, more constructive equilibrium, and I'd expect that to at least make some progress during the course of next year. It's not gonna change too quick, and therefore, for us, met coal will be a, I think, a material contributor over the next two or three years in particular. On copper, next slide please, sorry. On copper, we believe we're building something to be proud of in the business.
We are navigating a couple of the obstacles that we expected to navigate with lower grades at Los Bronces, but again in the forecast. In Quellaveco, we have a global scale, long life, low cost asset which will be up and running on time and on budget next year. I'll talk about that in a minute. There are some challenges in the Chilean assets, which I talked about in Los Bronces, water, tough for everybody. Again, the guys have done a fantastic job, still doing better than anticipated at Los Bronces. It has been very dry, and it has impacted on next year's forecast and obviously having an impact on costs as well.
With the lower grades and the lower coverage of demand, we have taken those forecasts into 2022 to make sure we give ourselves enough time to correct. Quellaveco will make a positive contribution to the overall copper business at $1.25 for the year. Don't forget, it's still in commissioning phase, but it will make a contribution to improving our cost, which is great. The overall average cost for copper will be $1.40 next year. I'd expect it to then continue to improve as the things at Los Bronces are settled.
We get Quellaveco to full capacity, and then ultimately, we start moving the incremental projects, Collahuasi and other possibilities going forward, so that the copper business ends up being a great long-term, low-cost proposition and certainly a very important part of our portfolio. We would then add Sakatti in Finland, where we're going through all the approval processes now and again, it would be another exciting addition to the portfolio. We're in a great position in copper, albeit a couple of things to deal with, but that's the nature of mining, and certainly the guys will get through those and continue the great trajectory that we've established in Quellaveco will help us with that momentum. With that, I'm on the next slide. Thank you. Talking about Quellaveco.
The key message on Quellaveco is that I'm really pleased to say that the project remains on track and within budget, and the team there are doing a brilliant job despite the impacts of COVID. Remember, we lost six months to COVID, and that had probably a half a billion dollar overall impact. Because we were six months ahead and tracking at least half a billion dollars below the budget in terms of project execution. We've been able to hold basically the timeframe and the budget, and that's a tremendous endorsement for Tom and the team. That will be an important part of the point I make on Woodsmith.
Again, in Quellaveco, I think the guys have done a great job. For those that weren't aware of it, we didn't talk about this at the start of the project. Quellaveco is actually by measures of volume of concrete at about almost 600,000 m³ plus earth moving, the largest ever mining project developed in South America. We believe if it's not the largest in the world, it's right up there with the largest in the world. For the team to be where it is today, given the scope and scale of the project, biggest we've seen ever in South America, and to be on track and on budget and commissioning major items. The freshwater dam is done. It's a net positive freshwater provided to the communities.
The flotation cells, SAG, ball mill shells, and motors are in place. Start of tailings dam, ore conveyor, canal, primary crusher starting to commission this month. Pre-strip began April 2021. First ore delivered October 2021. Beating all of the key milestones with some up-and-coming milestones. First mill line, crushers, conveyors, associated infrastructure all ready for commissioning in Q1. First production mid-2022 despite COVID, a remarkable achievement. From my point of view, I'm happy to be standing down in April 2019 knowing that we will have delivered on the commitment we made to the board to one, retool the whole business.
Two, retool our efforts in understanding how to deliver projects, which are the real value drivers for any mining business, and that we're handing the business across, that is a transformed business, and into a very capable leader's hands in terms of Duncan. We've also got contracts for 100% of the operational electricity to come from renewable sources, which results in a 70% reduction in CO2 emissions. For us, a really exciting period. Next slide, please. In terms of looking forward, the CapEx we're spending should be in the $5.3 billion-$5.5 billion range. Production guidance has been increased for 2022, 2023, and we've now provided you with 2024 guidance as well.
If you compare to what we were expecting at full notice to proceed, we're up considerably, almost 400,000 tons over the first five years, excluding the impact of COVID, and at a lower expected unit cost as well. We also expect a 12-month ramp up versus the previous 17 months schedule. The guys have done a great job. Unit costs expect to be $1.25 next year, $0.23 less than a dollar, and to be about $0.95 a pound average over the first five years. All of those beating our targets. Grade over the next few years will have an incremental positive impact, around 1% compared to 0.6 average over the reserve life. That's the good news.
You've also got data that these over the average reserve life in the appendix, so you can put that full picture together. Looking a bit further ahead, about five kilometers away, we've got the Mamut prospect. There are a number of short to medium-term expansion options that are being evaluated already, and we will be well-supported by the current resources and reserves that we have around the project. I'd expect to see this being an incremental improvement journey for the group and really sets the business up for the long term. Lastly, I also think we should mention the Peruvian political environment. Clearly, it's something we're very close to. We've established a good relationship with the president, the ministers in the cabinet, albeit there has been some change. We are keeping the relationships in the right place.
Our local relationships are very strong. People in Peru talk about the key of Quellaveco model, which recognizes what we've done on the social side, improvements to water supply, and a whole range of things. I think we really have established a partnership arrangement. While we're on the call, I'd like to thank the 10,000 workers and the 6,500 McEwen workers that have made such a fantastic contribution to the project. We're very pleased and proud to be a partner with Peru in this wonderful project. Next, Woodsmith and looking at the future and how we apply the lessons of the past to the next level of development in the group. As you know, we've been conducting a detailed technical review of the Woodsmith polyhalite project since mid-2020, following the acquisition and a lot of good work.
The guys will finish the review on time. The focus of the review was to ensure that the technical and commercial integrity of the full scope of the initial design provided us with a good base to work and look at how we wanna shape the business going forward. That review, largely done, has achieved those objectives and has provided us with the basis of really defining what we believe the project should be. It's very different to where Sirius had the project. Would be our first comment. Now, that's not to say the concepts and the approaches were wrong. What we're saying is, with our work, we see a different scope and a different approach as we take the business forward, and as a consequence, that will take a little bit longer to define in the detail.
That's why we're saying we'll be doing, pushing the estimate and doing the detailed estimates to the end of 2022 on the basis of the work we've done. They are doing the engineering work, and there's still quite a bit of work to be done. Particular attention, and I said this right from the start at the acquisition time, the sinking of the two main shafts would be the key area of focus. I think we said at the time that we've incorporated a very different time frame to the Sirius team in our financial acquisition model. The guys are working on that at the moment. We've just started the shaft excavations using what we call the sinking units, the SBR units.
We've actually got a couple of people that have used these units before working with us, and we wanna put a few months under our belt before we start putting final schedules together. We'll do that as part of the work next year. By the time we get to the end of the year, we'll have some good experience and I think a pretty good handle on the scheduling side of the business. I think that's very important in defining the final cost and the ramp-up program that matches to the marketing side. We've said from the outset that we wanted to make improvements. We wanted to make sure it was an Anglo American project, and that we deliver on our commitments once we commit to the acceleration of the project.
As I said, the detail will take a little bit longer. It has taken us a bit of time to unpack what we call the lump sum turnkey projects. There wasn't as much detail in those projects as we'd anticipated, so we've had to take a bit of time to unpack, clean those up, and get the detail done, and that's the work in progress through into early next year. That's the important part of that work. Again, from our side, the resource looks good. The concept was right. The scope of the key area is generally right. It's really in the detail and making sure that we get the detail to a standard that we're comfortable with, that when we press the button, we deliver.
We deliver the product, we deliver the quality, and we deliver to the market, and we make sure the two are connected. On the positive side as well, we've got a price where when we bought in, the polyhalite price was about $125 a ton. Today, it's trading at $225 a ton. Value and use opportunities have increased because of the way we see this material impacting certain markets. We're very excited in terms of the full package, and we think we've got a high-quality, exciting project with scale and quality, 50-year life, Q1 operating cost position, strong margins. We think great returns still very likely in terms of the project and the scope.
Again, a bit more detail to make sure it gets up to or is an Anglo American designed and executed project, which is really what we've established as a new benchmark with Quellaveco. Yes, we've been delivering a whole range of projects over the last few years. Again, this is another one where you've gotta make sure you take the time, get it right, and deliver. Very excited. We think it's great news from our point of view. In terms of scale, we're increasing the scale over time. From our point of view, we think the project is positioned to be very successful. It's a matter of getting the detail right. We've also announced Tom McCulley now moving from Quellaveco at the end of the year to Woodsmith.
Tom's track record at Quellaveco has been outstanding. We've been building a team to do the execution work, so I guess in a very simple way, it's a demonstration of our commitment to the forward look, and we're also putting a team that has got a great track record in delivering projects. I'd also like to acknowledge Chris Fraser contribution on the project. His vision for what could be, I think a little more than 12 years ago, has really created something very, very different, and we think very exciting. Chris will come into the corporate center and work with us on some projects around business development and looking at how we continue our work as a material solutions company. Again, I think an exciting opportunity for Chris.
He will continue to provide feedback and support as we go forward at Woodsmith. Again, we're now moving into a different phase, and Tom and the guys will take the project forward. Next slide, please. I think you know, with Quellaveco coming on, Woodsmith in the pipeline, Sakatti and other projects to follow, we're in a good place. We've got a quality portfolio complemented by a high-value growth opportunities. We still expect to move forward with projects at Murrumbidgee Road, and as I said, Collahuasi. Natasha's actually done a good job outlining the work to be done on Collahuasi earlier today. Collahuasi going through the work now. We're moving forward with the saline plant, the desalination plant rather.
Sakatti would also fit into the portfolio in the future, and we're currently progressing the pre-feasibility work and the studies there as well. Next slide, please. Last and certainly not least, want to talk a bit about exploration. I'm hoping that we'll see a continuing stream of exciting results during the next year or two. I think John Heasley and the crew under Tony O'Neill have really done some great work in positioning in the right places. Our exploration effort is consistently funded through the cycle, has been since 2015. And certainly we think we're positioned to help us bring into the inventory, the projects inventory, to help us support the business through the 2030s. We think transformative discoveries represent the foundation of value creation for Anglo American, industry and society.
They also provide the potential to materially improve the size and quality of the business while diversifying the company's portfolio and commodity mix. I think that's another differentiator for us. We've got strong positions in Australia through Africa, South America, North America, and very exciting prospects and ground positions. That's something that you'll hear more about over the next 12-18 months. Finally, next slide, please. To remind you of our investment proposition as a group, with Steve and Tony and I here we can talk about the portfolio, differentiated capabilities, sustainability, sustainable returns.
A very different proposition we think in the mining industry and one that we're very proud of, and I'm sure the team will take forward over the next 10 years and continue to improve returns to shareholders and provide a very different experience for all of our stakeholders across the industry. With that, happy to take questions.
Thank you. Before we begin with the first question, Paul Galloway would like to say a few words.
I think we're almost there. Thank you. Please look at the bottom of the screen for the dial-in. A friendly reminder, please try and keep your questions to reasonably concise. No three or four parters, please. We'll do our best to get through as many as we can before 12:45 P.M. Dulce, can I hand over to you to introduce the first caller, please?
Thank you, Paul. Your first question comes from the line of Alain Gabriel from Morgan Stanley. Your line is open. Please ask your question.
Yes. Hi, everyone. Two questions from my side. I'll start with the first one. Mark, the delay in giving the update at Woodsmith and the management changes there could be interpreted by many skeptics that there's something that's not going well in that project. Waiting for another 12 months or so for some better visibility on spending ramp-up appears quite a long time. What has changed over the last three months to have you change this timeline? And what are the elements of that project that are keeping you up at night from this point onwards? That's my first question.
Okay. Thanks, Alain. Firstly, nothing's keeping me up at night. I've been around the industry for a long time, and in my view, I'm actually more excited about Woodsmith than I'm worried. I think the acquisition, and what we've seen in the review confirms the potential that we saw in the acquisition. Geology, resource, great. The overall strategy and execution approach, good. We flagged very clearly that the timing of the shafts and the timeframe around the shafts was a key issue for us. We also wanted to make sure that the production ramp-up matched the marketing. The marketing information that we've had has been very positive. I'm really pleased with the feedback.
In fact, if you look at the pricing of product, and we think the value and use on the product, that's been a real winner. The guys are trying to work out what price do we use, but it's certainly gonna be well north of the prices we used in the acquisition. They're working that through, Alain. That's a really important point, and a very positive one. All of those things are a good shape. Now, what was a little tougher than we anticipated, the turnkey lump sum contracts assumed the level of detail in engineering of the contractors, which down to the right level of detail. Now if you're a Sirius where the funding is more difficult, that's the right type of contracting strategy to go.
From our point of view, it leaves a lot, or it leaves you in the hands of your contractors. We've really pulled apart every one of those contracts, gone through the detail, and in that, our view, there wasn't enough detail to be confident that the execution strategy would be delivered, both in terms of quality, timing, and cost, actually. We're redoing some of that work and doing the detail that we think is necessary for this to be an Anglo project. That's the first point, and that's really important. That includes with the SBRs, you know, configuring them for U.K. conditions needed more time than was originally scheduled. Again, we'd forecast both issues in our acquisition model, they weren't a surprise, but there was more work to be done than we anticipated.
Again, in mining, these are the things you do see from time to time. I'm not worried by that 'cause we know exactly what we have to do and the guys have done a really good job on that work. Setting the timeframes up looking forward, we've also said the mining methods. We wanna go all continuous miners, so it's a much more productive and efficient mining approach. That's a very important and I think a positive change. As a consequence, we'll bring ventilation shaft forward to make sure we've got more air so that we can be more productive and reduce our operating costs. Again, another positive enhancement. We also are looking at ramping up to a higher level of production and producing a higher quality, more consistent product over the longer term.
That requires a different approach in making sure the processing side is matched to that. Making sure that the production is matched to the markets and how they develop. We've done all the work you expect us to do, and to be as frank and as clear as I can, this is not the project that had been previously presented to the market before Anglo took over. This is now morphing into an Anglo project, which if you go back in time at Quellaveco, when I first looked at Quellaveco back in 13 and 14, was an interesting prospect that had lots of potential. It took us two or three years to get that really defined in terms of what we wanted it to be.
Today, what you're seeing delivered is very different to what we looked at back in 2013/2014. The same discipline approach has been applied to Woodsmith. When we come out with the detail at the end of next year, you're gonna see a project that looks very different to the one that was originally proposed by Sirius. Different scope, different approach. Concepts are still the same, but this is now being transformed into an Anglo project. It's gonna take a little more time, a little more detail, but we're very excited, and I think this is a great follow on to Quellaveco. We're excited, we're positive, and from my point of view, I don't sweat it. I don't lie awake at night worrying about it.
I lay awake at night being excited about what we think the potential will be when we come to the market and explain what the project is. We expect to be going to the board in early 2023, post that review. The $700 million we've committed this year is also a demonstration of our ongoing commitment on the critical path items. Obviously in putting Tom and the team in place, that's also a statement about intent as well.
Thank you, Mark. That's very clear. My second question is around for Amplats. The cut in refined output has been more meaningful than what consensus was expecting or versus what you have guided previously. Has anything changed in how you're planning things at Amplats? Are there any factors that you did not expect previously that we need to consider going forward? Is there a particular reason why the lost volumes due to maintenance are not really caught up in subsequent years? Thank you.
Yeah, look, I think the way to think about Amplats is the previous thinking was big is better, volume. What Natasha is really focused on is value over volume. The development strategy for Mogalakwena, the underground development's high grade and the grades are quite remarkable. In some areas there, you've got grades that are equivalent to Norilsk in Russia. We have got that through open cut and through highly mechanized decline development. I think it's an exciting time for Mogalakwena as well. Tony and Natasha have worked together very closely on developing the strategy. It'll be about quality, it'll be about value, it'll be about margins, and the volumes will follow as they progressively work their way up the ramp curve.
I think it's the right way to deliver things. For us, it's about margins, values, returns, and returns to shareholders. I think that approach is the right way. We're not too worried about the volumes, but we are worried about cash flow, margins, cash flows and returns.
Thank you. Very clear.
Thank you. As your next question comes from the line of Jason Fairclough from Bank of America. Your line is open. Please ask your question.
Yep. Good morning. Good afternoon, guys. Thanks a lot for the presentation. You know I'm a bit of a sucker for Tony's technology projects. I'm just looking at slide 16. Can you talk to us a little bit about the CapEx associated with these initiatives near term? What sort of production EBITDA uplift should we expect? And ultimately, is this in near term production guidance? And then second part, very specifically, have you taken into account use of any of these technologies at Quellaveco?
Okay. I'm just going back. I'm just finding my slide 16. Okay. Got it. Thanks, Jason. Well, firstly, Jason, from our perspective, and I'll say a few things then I'll pass across to Tony. The work that has been done across the group has really been about changing the whole flow sheet. The work, as you know, occurs in packages, and is really about transforming the whole business. These elements are all in different places and phases, but it's very exciting. The budget of $300 million-$500 million generally incorporates these projects being phased over the next three to five years, and they help deliver the returns and improvements. They're all within that context.
Now, the only exceptions to those would be probably some of the bulk ore sorting work where it's a real shift. If I let Tony talk to that and working off the $300 million-$500 million a year, he can give you a sense if something might adjust left or right. Tony, can you take us through that approach incrementally and anything else you wanna add?
Thanks, Mark. Jason, good to hear from you. Firstly, I think the way I'd look at it is you've got roughly $2 billion, a little bit more coming out of essentially P101. If you look over the next three or so years, I think that the technology starts to come through and we expect another uplift, you know, basically coming out of the technology. If we look at Quellaveco, we've included Coarse Particle Recovery at the back end that will be done when the main project is broadly finished. The project itself is our first digital mine, so you've got the whole thing is digitally controlled with digital twins. We've got automated haulage in there. It's basically a reflection of all the appropriate new technologies that we've got.
I would say just in general, where we are now with our whole innovation program, we've not run out of ideas. I think there's another generation of ideas coming through. I would think that apart from hydrogen H2 trucks and carbon neutrality type projects, the next area that you'll see some really significant work coming through is around heap leaching.
Just to push, sorry, and I'm not sure if it's for Tony or for Mark. Your production guidance, does it include the debottlenecking from the technology?
The answer is. I think Stephen spoke to this, Jason, that our programs are all included in the business unit budgets. There's been a real take-up. All the technology that we think is production ready is included.
Okay. Thank you very much.
Tony, the only thing I'd add to that, Tony, is obviously the benefit from a lot of this technology in particular flows well beyond 2023. Obviously we haven't given guidance past that point, but we are expecting those benefits to continue to ramp past that timeframe.
Okay. Cheers, Stephen. Appreciate the color. Thank you.
Jason, for summary, the $300 million-$500 million a year is the capital cost that you were scratching at. Tony's then covered the EBITDA benefits that flow through from the improvements. The one to two billion plus the one that comes in the forward-looking stuff. Stephen has just tried to make sure that you see that we've got it in the numbers to 2023, 2024, but there's a continuing and improving benefit that goes beyond that. Tony is saying there are new things that will back that up as we go forward as well. Is that clear?
It's $500 million CapEx for an extra $1 billion a year of EBITDA. Sounds like a good investment.
We think so.
Thank you.
Thank you. As your next question comes from the line of Liam Fitzpatrick from Deutsche Bank. Your line is open. Please ask your question.
Hi. Good afternoon, everyone. Two questions. Firstly, on the cost side, looking at copper and PGM, the cost guidance for 2022 is higher than at least I expected. How much of that, if we forget about grades, et cetera, should unwind, if we're looking into 2023 for those two divisions? And then secondly, just back to Woodsmith. I know you're not gonna give us any kind of numbers on it, but you have compared it with Quellaveco, where you did partner to de-risk it. Given that, from what you're saying, you know, it sounds like scope is changing, CapEx higher, probably volume's higher. And given this is a new market for Anglos, would you consider a minority stake sale for this project further down the line? Thank you.
Okay. I'll have a crack at both, Liam, but I will give Stephen the last word on costs as well. Firstly, I think your point's right. From our perspective, the grade issue is always a structural cost at Los Bronces. You're right, put that aside. I think the other challenges unwind progressively over the next two years for Los Bronces as we improve the recovery work, the P101 and technology programs kick in. It's a combination of water addressed, the P101 improvements and the technology work that improves the position. You've got the water availability and more consistent operations going forward. That's the Chile conversation. Quellaveco will keep improving and there'll be incremental opportunities there.
Over a couple of years period, I think we get ourselves in good shape. Then you're starting to kick into the Collahuasi contribution. I think that's very important. Secondly, on Woodsmith again, scope, making sure we've got that right, making sure we've got the detail right is really important to execute with consistency. We keep the option open on looking at a partner. I guess the way to think about that is in looking at a partner, we'd be looking for someone, if we decide to go down that route, if we decide that could add value. In our particular case, we don't see the balance sheet issue as being a concern. It's whether we believe we can bring a partner in that can actually add value in the process.
The project phase of Woodsmith, where Tom and his team are really the key players, is probably around a four-year period. We understand what that looks like. That option remains open. The question is, will we have added enough value in the eyes of a potential shareholder? I still think we've got a couple of years, and I'm only saying that in that you've got the next 12 months of doing the detail, but the real value will really start to hit people, I think, in 2023. That would be the timeframe to start looking seriously at a partner. They'd have to add value, would be my view. Now, with that, I'll hand over to Stephen.
Remember that you will have a new CEO in 2023 and Duncan's been absolutely key in developing the strategy. I don't think there'll be a big shift in the strategy, but how he sees that value in 2023, 2024, Stephen and Tony will be obviously part of those conversations. That would be my perspective on it. Steve, both the cost and Woodsmith perspective, please.
Yeah, thanks, Mark. You covered some of the main points on copper. It's really just a function of the math in 2022. If you look at Quellaveco, you know, I'll pick a point, 150,000 tons at $1.25 versus 350,000 tons at $0.95 the year after. It's really just that commissioning and ramp-up phase across the portfolio. It actually hangs together quite nicely. I think Mark covered the Los Bronces points, so nothing to add there. On PGMs, yeah, there's a subtle increase, 2021 to 2022. Natasha and Craig doing an enormous amount of work on both cost efficiencies, but particularly stability. I think that's the point, just to pick up on one of Alain's questions earlier.
That's really been the thing that's been quite pleasing through the ACP since it came back up, is that stability and consistency of operation has helped drive some of that inventory run out this year and the great refining numbers. We're just in the cycle through 2023, 2024 of some of the programmatic rebuilds in some of the parts of the operations, particularly in some of the smelters. Some of these things are like once in a 12-year or once in a 15-year rebuild. We just happen to be in a couple of those cycles, just as you would ideally like to release some of the inventory. It'll just take that little bit longer. Nothing to be concerned about. We look at maximizing value and options and alternatives there.
It's just the way some of the timing and the numbers drop. Nothing to be too concerned. A lot of focus. Mark, nothing too much to add on the Woodsmith front. I think you answered that.
Okay.
All right.
Thanks.
Thank you.
Thanks, Liam.
Thank you. Your next question comes from the line of Ian Rossouw from Barclays. Your line is open. Please ask your question.
Thanks. I just wanted to follow up on Woodsmith, just around your comments previously. Tony, I think you were saying that you were expecting the overall CapEx budget to be in the same ballpark as previous estimates. I mean, obviously now with the scope change, which to me is analogous to much higher CapEx increases. Mark, I guess you've previously talked about bringing the ventilation shaft into or earlier into the plan. I guess I didn't realize that didn't previously was included in the CapEx plan. Maybe just give a sense of, I mean, are we looking at significant increase in CapEx? And I mean, is that just now phased over a longer period? If you can give some indication on that.
Maybe just, I guess you were saying on previous sort of detailed engineering. I mean, by the time you will be done with this review, I guess you would have spent close to $2 billion on the project. Are you comfortable continuing with the spending on the critical path now? I guess what you currently see as the sort of returns of the project going forward.
Okay. Thanks, Ian. Let me frame the points you've made, and then I'll hand across to Tony. Firstly, the focus on the critical path items, like the tunnel and the shafts, we think is the right thing because we believe the project's a very good project. The work we've done so far, I think, has confirmed that belief in the project. We're very happy. By the way, product has gone from $125 a ton to $225. That doesn't mean we're gonna shift our pricing to $225, but it does give us a lot of confidence that we've probably picked a good place to be. That's the first point.
Second point, it doesn't necessarily mean there's a massive increase in capital. I think you gotta just pull that one back. The capital estimates that Sirius provided were estimates to the pierce point of the ore body. We had said right from the get-go that we had different numbers to Sirius, higher numbers than Sirius, and that the likelihood would be that the time frames would push back because the detail needed to be done and that we thought they were probably quite aggressive on the timing of the shafts. Those things have all proven to be correct, and so we're happy that we looked at those things the right way in the acquisition and in the model.
In looking at the ore body, in looking at the market, we think there is scope to drive towards the bigger project earlier than was originally envisaged. Which means the capital spend over time takes us to a bigger scope and a bigger project, and more of the granulated feed. Because the original Sirius scope only had 7 million tons of granulated material, and then they had ungranulated. We think you're better off going all granulated because the feedback from the market has been really positive on that form of the product. And it also plays into a higher price. We think the marketing strategy has to be taken proper account of. We think it's a very different look. We'll give you the CapEx schedule for the longer term, not just up to the pierce point.
That actually shows you what's needed to take us to the full project scope. We think it's a good story. We think it really does look like a long-term Anglo American project, but it has to be done the right way, and the detail needs to be done the right way. Tony, how, what do you wanna sort of chip at in that conversation?
Look, I think we had a lot of learnings, particularly out of Minas-Rio. If we had our time again at Minas-Rio, the key piece of infrastructure that we would have put more flexibility into would have been the pipeline. In looking at Woodsmith, when you look at resources that are so long-lived and got such quality, how do we ensure that we've got flexibility and optionality longer term? That's really where the work is focusing. Then how do we put the level of design? Then with Quellaveco, the reason that it's been so successful is that when we really kicked off Quellaveco, we had about 70% engineering done.
If you combine those two elements, that's really what we're focusing on at Woodsmith. We've also had the ability to watch other projects using same technologies, and what are the learnings from them that we've been able to put into our own project at a really early phase. I think it's, you know, the level of engineering, planning, scheduling, and project control is what you'd expect from a company from us, or like us. The tunnel to date has gone very well. It's in about 17 km and, you know, that's in good shape. We expect to start cutting in seriousness from January next year in the service shaft. Production shaft, the machine's already positioned in the shaft.
Once we have a bit of experience next year, you know, we will, I think the cutting rates and the shaft sink rates are the determinant of the project duration. At this point, we're not quite sure what that will look like. We're confident that we've got all the right work basically being done. Mark, I'll hand back to you.
Thanks, Tony. Ian, if I then just do a simple summary of where we are. We've been there for 18 months, and that's a relatively short timeframe, I guess, compared to many others that have made acquisitions or decided to work in this industry. We have remained committed to the critical path items on the project because we saw what we think is a world-class development and certainly everything we've seen so far confirms that. We've made sure we understood the market and the potential scope that services that market and gives us the best return. That's been done. Now we're doing the detail so that the execution of the project lives up to the standard we expect as a business. It is a different scope. It is a larger scale project.
It is an Anglo American type project. You know, what you've seen previously was a starting point for a conversation. When we made the acquisition, I made that pretty clear. It's a starting point. Guys have done a good job. It is gonna take longer. We will spend the money differently. We're pulling the detail apart. We're now putting that detail, about to start putting all the detail back together again, we'll be ready by the end of next year. In hitting a board presentation mid 2023, we'll have done all of that work within a three-year period, and we'll be driving forward beyond that.
Given where other big players in the industry have been on these sorts of things, I think that puts us a long way ahead of most in terms of getting it in the right place and in the right framework.
All right, thank you. Just one follow-up on the nickel guidance. There was quite a big reduction in 2023. I recall previously you had some plans there to change the product sort of quality to improve. I think it's also bulk ore sorting. Has that now changed, the plan?
I think you'll find some of the technical work, the kiln optimization has been pushed back a bit. The application of bulk ore sorting is where we want a real kicker on grade, and that might take just a little bit longer. Tony, do you want to add anything to that?
Bulk ore sorting, you know, we're assuming an 8% kick in grade. That's in, you know, when the capacity's there, well that's what we're assuming. We see some further potential around sizing and potentially screening. That's not included at this point.
We're looking to try and do a bit better than that, Ian, but a little bit more work to be done.
Okay. All right. Thank you, guys.
Thank you. Your next question comes from the line of Tyler Broda from RBC. Your line's open. Please ask your question.
Hey, thanks. Thanks very much for the call. Just a question on the emissions, Scope 1 and 2 emissions there and the move towards the carbon neutrality. I guess, you know, got a pretty consistent downslope through the 2020s, through 2030. Just wondering sort of what sort of levels of CapEx are required for this. I assume that's already in the sustaining for at least the guided period. I'm just wondering, is there any scope to accelerate this? Or sort of how are you thinking about that path to 30% down by 2030 at this stage? Thanks.
Okay. Thanks, Tyler. Firstly, Scope 1 and Scope 2, we're targeting 30%. That includes energy efficiencies. If we can get to 50%, and this is not a target, this is a conversation around our thinking, we'll get there. We're trying to get there to that 50% because that then aligns with the Paris Agreement. We're not quite in a position to commit to that. That's what the guys are working on. Tony and the guys have been well ahead of the curve and some good work. The methane work in Queensland will be critical in that. That'd be the first point. We are already at 36% renewable.
The only significant cost we've borne in getting there was a $200 million cost on one of the old contracts that we had to flip. We then had operating cost reductions that have already paid that back in the timeframes up to now. We'll be 56% by 2023. The investments required, which includes the whole configuration change in South Africa, which was partly about the South African grid with Eskom and about things we will do inside the fence.
The investments required to get to those positions and achieve our objectives is either in the sustaining capital of around $3 billion a year, the technology budget in the $300 million-$500 million a year under Tony's leadership, or it's part of the growth projects that we flagged as Mogalakwena and the other expansions that we're doing in the business. Now, the second part of that, which then drives us towards 2040 or the third part I should say, which is the replacement of diesel with hydrogen technologies, is then framed again as part of those budgets in the period 2024 through 2034. They're all covered in those areas. Now, there'll be some different things we do at different times, but they're all covered within those budgets.
Tony, do you wanna give more shape, and explain, for example, how you fund the hydrogen fleet? Stephen, if you wanna add something on the cost beyond that. Tony and then Stephen.
Look, I'll actually let Stephen talk to the funding because I might give him a heart attack. But
Thanks, mate.
Look, with, the-
Want me to go-
Technically-
You want me to kick off or? Sorry, you go.
Look, technically, there is, you know, we have all the plans that we can meet the targets that we're talking about. The issue really is timing, and that's really driven by Stephen. So I'll leave it with Stephen.
Thanks, mate. Tyler, not a lot to add from, was it six weeks ago, I think, when we had the Sustainability Day. Particularly around the hydrogen fuel trucks and the South Africa renewable, you know, we're working really closely with the teams. Those plans or the concepts are now feeding into more detailed plans, timing, execution strategies. You know, whether some of those things will be multi-user, single user, will all depend how they're funded. You're gonna need to just bear with us a little bit. None of the key themes and messages that hopefully we got across in the Sustainability Day have really changed. Mark's correct in the way he expressed the capital numbers in the $300 million-$500 million over the sort of the 2022-2023 period.
That's all in that guidance. Obviously, as we refine the plans and particularly the execution strategies, in the next year or two, we will give clarity as to how that sits and how that plays. You know, do we buy stuff across the fence? Do we build it ourselves and put it on balance sheet? There's some of that just to be refined in the next year or two.
Yeah. Thanks, everyone.
Tyler, does that answer your question? Does that cover that?
Yeah, no, it definitely does. Thanks. Thanks very much.
Okay. Thank you.
Thank you. Your next question comes from the line of Sylvain Brunet from Exane BNP Paribas. Your line is open. Please ask your question.
Thank you. Good afternoon, gentlemen. Two questions for me. Now we are hopefully past the worst on the pandemic period, and that, you know, challenges on the production for the industry, for yourself, are quite visible. I mean, the inelastic nature of the supply response in mining is now obvious to everyone. We can see capital intensity rising. Have you updated your long-term price assumptions? Any changes you've made or areas where you think there are gonna be of some more updates, we could see some upticks there? Be my first question.
Sorry, can I just make sure I got that right? Are you saying or are you asking us if we think commodity prices will kick up, or input costs will kick up, or both?
Just wanted to get a sense of whether you've changed any of your long-term price assumptions, market type?
Well, first, I'll give a view, and then Stephen will give his view, because he's probably a bit more conservative than me. First, in De Beers and diamonds, we think the risk is to the upside in that the world is running out of diamonds. There haven't been any major discoveries. We said 30% in two years, and we've seen 23% in just over a year. We're putting more money into marketing. We're really changing the way we're marketing, segmenting products. I think the upside or the risk is to the upside in diamonds. Again, we've got to be careful because we are competing with other products in the luxury market, and so it's not simply about supply of diamonds.
It's also about the markets you're in. The pressure will be to the upside 'cause there are less diamonds around. First point. Copper very strong. I think we haven't adjusted our numbers on the basis that in the end, the copper price will be what it will be, and we certainly don't wanna have any comfort or relax operationally on the basis that prices will help us out. We've been pretty tough. We're still around $3, but quite honestly, I think it could be quite stronger because again, supply is going to be hard pressed to match demand. I think the risk is to the upside, but we've not adjusted our numbers yet.
We would prefer to plan more conservatively and keep driving our costs and know how to flex a bit up on the upside. Nickel, again, probably pressure to the upside. We don't think Indonesia will come on as quick and as hard as some people think. HPAL developments are very finicky. They are ore body specific. They are technology specific. They will be challenging. The environmental impact in Indonesia of the Chinese developments will need to be watched very carefully, and so that will be a bit more challenging than people think. I think iron ore, quality iron ore, we think will do very well. We think the curve will change shape where quality will become more important, so we think we're well positioned there. I think they're the key issues.
I mean, I won't go through all the commodities, but I think the risk is to the upside because I think supply will be tough. Getting approvals done is gonna be tough. I think generally the risk is to the upside. As a company, we're working really hard to keep people focused on their costs. Tony and the team are really driving hard on the technology developments. If we can keep delivering and pushing those through, the $ half a billion that Stephen added and the extra $1 billion or $2 billion that Tony was talking about become real differentiators, we think in the three-to-five-year timeframe. Steve, do you wanna add your own perspective?
Thanks, Mark, and never disagree with anything you say. Listen, we are watching the supply and demand situation closely, but I think there's an important difference between a short and medium-term forecast and a capital allocation decision. That's where we really stick to the longer term views that Mark spoke to. I'd actually share Mark's view in terms of the short and medium-term forecast. I think it's behind your question, the supply and demand dynamics are pretty tight at the minute. Yeah, we may tweak our long-term assumptions around the edges, but nothing that significant. Certainly nothing feeding into any changes in the way we're thinking about capital allocation. That's really pinned to that longer-term capital investment cycle and discipline that we've often spoken about.
Okay.
Great. Thank you very much.
Sorry, I should add one that I didn't, and it was an obvious one. If you look at crop nutrients, the fact that we've got an organic product, low carbon intensity, and the value in use issues are becoming to the fore or coming to the fore in agriculture. We think the crop nutrients position is quite a special position on the revenue side as well. I would say that we're materially, or we are changing our view to the upside on the pricing side in crop nutrients. That's one that it still needs some work, and we still need to think about carbon and soil consistency and health and how that gets priced.
I think that's one of the real positives that the guys will be working and talking to in 12 months' time around the project, 12 or a little over 12 months' time. That's something we're trying to make sure we get right. As Tony said, getting the infrastructure right, getting the optionality right in the ore body, we're doing a lot of thinking because we see a lot of opportunities in the marketing that probably weren't clearly surfaced, so we're very excited on that front as well.
Mark, can I just come in very quickly before we go to the next question, please? We've got three more questions coming from Dominic, Richard, and Carsten. We've got about seven minutes, so just to keep us on track, please.
Thank you. Your next question comes from the line of Dominic O'Kane from J.P. Morgan. Your line is open. Please ask your question.
Hi, guys. Just quick question on copper, the Chilean copper guidance. Could you maybe just give us an indication of what contingencies you've got in the numbers for 2023, 2024 around water? Following on from that, are we into a situation, given the water scarcity issues, where we should start thinking about a desalination plant for Los Bronces long term?
I would say the water opportunity is probably 30-40,000 tons. If you get a whack of water, I think there's real upside. I think the downside is reasonably low because I think the guys have been quite conservative in the way they've forecast the numbers forward. If you said five or 10, I'd be comfortable in that range. I'll ask Tony O'Neill from a physical point of view if he's in the same ballpark, and also for his comment on the Los Bronces approach to water. After Tony O'Neill, Stephen Pearce, if you wanted to add anything.
I think your comment about water at the tonnage mark is about right. I'm hopeful there's actually some upside that we can deliver that we won't put in yet around recovery. We have been looking at water solutions to give us a, you know, a long-term fix now for 18 months. Hopefully, over the next 12 months, we can daylight some of that.
Steve?
The team have done a terrific job looking at all sorts of alternatives, in particular water efficiency, which sort of Tony's touching on as well in terms of recycling, et cetera. Some of the technology plays into that space. You know, ultimately, we're gonna have to come up with a long-term solution. Yeah, will desalination be a part of that possibly. But I think in combination, it'll be a little bit different to what we're doing at Collahuasi would be my suspicion at this stage.
Yeah. I think looking at Los Bronces underground, the water requirements as part of that will be part of that project assessment. The guys have done a good job on the third-party sources. They're a little more expensive, so they're better economic options. Whatever we do with water above and beyond what we've already got would be on a cost-justified basis. It would be a project enhancement. I think you've got the downside in the forecasts. I think we can probably do a bit better. To be fair, we need to give that a little bit more time before we start to put those numbers back in and improve the numbers. Is that okay, Dominic?
All good. Thank you.
Thank you. Your next question comes to the line of Richard Hatch from Berenberg. Your line is open. Please ask your question.
Yeah. Thanks very much. Questions on costs. Can you just give us a bit more clarity on what's going on with nickel costs? They're up 25% year on year versus a 5% production decrease. And also just in Kumba, you know, kind of costs have kind of moved from those sort of low 30s to kind of those high 30s, early 40s, what, dollars per ton, in an environment where the rand's kind of rather sort of weakened a bit. Appreciate you've got inflation coming at you. But can you just give us a little bit of steer on what's going on with those nickel costs and your thoughts on Kumba costs long term?
Then just lastly, just on Grosvenor, just to be clear, the Q3 production report talked to you about restarting longwall operations at the end of 2021. I just sort of picked up on your comment there that it might take a little bit longer as you just really kind of go at this thing to do it in the best way possible. Should we just assume a slightly slower ramp up for Grosvenor? Thanks.
Let me be clear on Grosvenor. We're ready to go. The issue is the time taken to get approval from the government. We're hoping to have that by year-end. Our forecast going forward, we think takes into account those moving parts. Stephen, if I'm right, and Tony, we haven't included much production in the first quarter from Grosvenor. I think our forecast going forward is pretty good and takes into account the regulatory risk. We're ready to go. Just to be clear, all of that stuff I said about good work being done is done. We had the presentation with the board two days ago. The guys did a fantastic job. I think blew everyone's socks off in terms of what they've done.
I think we're in good shape, but we do have to wait till the regulatory approval. Hopefully that'll be by year-end. Steve, do you wanna pick up the cost points?
Yeah, thanks, Mark. On Kumba, you know, I think everyone would realize South Africa is a slightly higher inflationary environment, but it's a combination of energy, labor, and volumes. You will note we've just tweaked the Kumba guidance down a little bit, and that's just working with Transnet and how we can maximize the volume flows there. On nickel, one of the main cost drivers is they use coal as part of their process. Tony might wanna touch on that. Obviously we're assuming a more elevated coke and coal input price for them. While it's a cost for them, obviously it's a revenue for the Met Coal business. Overall it's more than a positive. That'd be the main points I'd make. Thanks, Mark.
Mm-hmm.
The coal's used in the furnace, so it's part of the smelting process. The only other thing I'd add on Grosvenor is, we will not overproduce. We're going to stick to the ramp-up plan to make sure that we bring everybody along with us on the process.
Yeah.
Thank you.
Thanks, Stephen.
Thank you. Your next question comes from the line of Myles Allsop from UBS. Your line is open. Please ask your question.
Great. Thank you. Really a question for Stephen on cash returns. I mean, I think the comments in the presentation suggested a fairly high likelihood we're back at a 40% payout. Just wanna make sure that's the right way of thinking, given obviously net debt has stepped up materially in the second half. Also just looking forward as well, obviously CapEx is going up by over $1 billion in 2022, and probably close to $1 billion in 2023, depending on what you spend at Woodsmith on top of the $1 billion increase in 2022. It wouldn't take a huge amount, you know, in terms of lower commodity prices, whether it's copper or PGMs, to see the business moving to, you know, cash negative.
You know, how much flexibility do you have around that CapEx plan as we look out, you know, say 3.5 sustaining CapEx and so on, if we do move into a kind of weaker commodity price environment? Thank you.
Do you want me to kick that off, Mark?
I'd make one point there, Steve. The Woodsmith spend rate that you're scratching at, or the Woodsmith point on our forecast, remember, Woodsmith spend rate is reasonably consistent. It's not significant. It's around the shaft. Even with an accelerated approval, it's not that big a kicker on the spend. It's not a Quellaveco concentrated program. It's actually more of a spread over time thing. I don't think people have got it in their heads yet how Woodsmith plays out over time. We'll do a better job with that once the engineering, the detail's done. It's actually a slower build up over time, and you get revenue back, so it's quite different. I'm actually very relaxed on that side. Steve?
Yeah, just a couple of comments across a broad range of topics Miles probably in that question. Listen, I would encourage you to use the 40% assumption at the moment. When you do get to look at the net debt number at year-end, just a couple of points to note. Obviously at that point it would include something like $1.5 billion of the Mitsubishi share of the CapEx spend and some of how that works as per usual is included in the appendix. There will probably be at least $0.5 billion of finance leases in there. Just to help you interpret that number when you get it.
You know, part of what we wanna try to set up here is investing through the cycle, and that's been a big part of the discipline and the balance that we've tried to make. Obviously, as we grow the business, even in a slightly lower price environment with the Quellaveco coming on stream and the other volumes and efficiency improvements, you'd expect to see those things to flow through to the bottom line. You know, we stick to the view of, you know, the one major project at a time. You always have flexibility around the smaller projects as to when you kick them off, et cetera.
We are in just a slightly elevated capital intensity just for the next year or two, but we do expect that to come back and, you know, at different times mining businesses go through those little bits of cycles. We just happen to be in one at this point as we've sort of flagged for a while now. Pretty comfortable overall with where we sit. It's something obviously we always keep an eye on. You always have levers to pull if you need to, but we are trying to set up something that invests very much through the cycle. Thanks, Myles.
Okay, thanks.
Can I come in, guys? Dulce, I'll take over if I may. Thank you very much. Look, we haven't managed to get to two questions. Apologies, we'll come back to you directly on those. We are a little over our 12:45 close. I'd just like to say thank you very much to everybody for your time, your interest and your questions. If there is any follow-up, please let Juliet, Michelle or myself know. If not, we wish you all a safe and healthy merry Christmas. Thank you very much indeed.
Thanks, guys.
Take care.