Okay. Thank you very much and welcome everyone. I probably should give a little bit of a health warning at the start of the presentation. We are trying a new approach and a new technology. And so if there are any stuff ups, It's my fault.
It's not Paul's and it's not the operators. So we'll see how we go. The theme for our presentation is keeping our feet on the ground. And while I'm a believer in the strong fundamentals for demand in our industry and likely constrained supply in many of our products. The last thing I want to see in our team, is anyone lifting their heads and forgetting about our focus on our continuing business transformation journey.
So to be clear, we believe we have a portfolio of assets and opportunities that play favorably into the big global themes around climate change, circular economy and the growing importance of material sciences in finding new and exciting uses for our metals and minerals. We've been strategic in our outlook and positioning for a number of years. And today's world continues to confirm. We are mostly, more than ever, positioned to improve and grow our business, both in the the short, medium and the longer term. I've now moved to the cautionary statement.
You should read carefully, preferably in your own time. On Slide 3, Our order of play is consistent with our established routines. I'll touch on performance and highlight a few key points. Stephen or Mr. Balance We'll then run you through the numbers to provide detailed insights and to reinforce our focus on capital and our investment disciplines.
And to close, I will take you through how we are transforming the business and positioning for today and the future. So again, next slide, please, to number 4. On safety, health and environment, for us, the improvement journey continues. 1st, on safety. Over the last 5 years, we've recorded a 40% reduction in total injuries and an 82% reduction in fatal incidents.
For us, despite a couple of serious incidents early in the year, It was our best ever safety performance as we continue our journey towards 0. And as we say, no year is a good year if you've lost someone in your operations. And so we still have to get there, but we're getting very close. And from our point of view, everything's going in to get us there. Secondly, on health cases, those issues are made up of less obvious or immediate hazards or risks in the business.
We're also heading in the right direction and again, significant improvement since 2013, about 95% reduction. So we're very proud of that performance. And on the environment, our improved planning and operating disciplines continue to support incident reductions across the group. And as people know, making sure we don't get that call in the middle of the night requires constant focus, appropriate technical design, operating disciplines and an open and effective governance process to ensure we're doing the right things the right way all the time. And for us, we still haven't got to a point where we've eliminated all of our incidents and our early issues last year point to that.
But I do want people to understand we're working very hard to eliminate all of those things from the business. And from our point of view, we've made significant progress, but we're certainly not yet where we want to be. I've now moved to Page 5. And on our broader ESG context, we continue to make good progress on our critical targets. Our energy efficiency improvements have also supported our greenhouse gas savings.
And as you can see, we have met both improvement targets for 2020. Working off our 2016 baseline, and that's represented by the horizontal green bars that we have on those charts. Our next step is an absolute reduction of 30% on both by 2,030. On our social way compliance and social wave being our social standards and practices package per our broader operating model approach to business. You can see we are approaching full compliance across the group.
Now as you know, these things evolve and develop over time. And so we have now designed the 3rd generation social weight package that will be used as a new and higher bar for community and social engagement. And we would say, we still got a long way to go. We haven't yet got our community relations where we want them to be. But again, just to let you know, we are working very hard in all of our the communities and across all of our sites on this particular aspect of the business.
The new package goes beyond industry benchmarks and has been imaginatively called Social Way 3.0. So a new industry standard with a title that only an engineer could love. Next slide. On COVID-nineteen, Despite the encouraging vaccine progress in many countries, it is clear the pandemic and its challenges for most are not going away quickly. At our responsible holistic approach, including supporting our communities continues.
And this broader community approach is an approach we share with many of our industry colleagues, particularly in jurisdictions where government support is less equipped to deal with these types of issues. And we have been taking these initiatives further. As we have understood, when people in communities are under stress, Domestic and gender based violence issues can grow. So we're working with our community leaders and governments to make sure we're dealing with all of the direct and indirect impacts of COVID. The lives and livelihoods of our employees, their families and the communities are the priority, and we've managed a strong operational recovery at the same time.
We've been strengthening and reinforcing protocols to help deal with 2nd waves affecting our operations as well. Our focus on people returning to work post Christmas has been very important and we've seen some impacts, but they're being managed effectively. And in anticipation of that post Christmas surge, we put in extra levels of testing to identify and mitigate risks. Based on our latest data. We expect most of the site impacts will be negligible as we move into March.
On demand for products, despite lockdowns and limitations, our order books are generally pretty full. And on diamonds, the demand bounce has been quite solid. So the early signs have been encouraging, but we do have some residual risks that will probably remain in some jurisdiction, probably to the mid year, but it's not significant. It's being managed. And from our point of view, I'd have to say the teams have done a great job in managing all the dimensions of the COVID-nineteen issue.
On results, and encouraging finishing finish after a tough start to the year. Despite all the issues and drama through the first half, we finished the year running at around 95% of full production capacity. But even more importantly, and despite lower volumes, Our unit costs and our capital spends were held in tight control. Along with the improving prices, we saw our second half EBITDA recovered to 6 €500,000,000 our highest for a 6 month period since 2011. This recovery and the disciplines that have gone with the learning from the Q1 disruptions and put us in a good position going into 2021.
On earnings per share, dollars 2.53 for the year or $1.81 or $1.81 in the second half. The full year return on capital employed at 17% was impacted by our higher capital base, with spending on Quellaveco and the Sirius acquisition impacting the denominator for the calculation. We will show pre- and post new project spend when we report these numbers going forward. However, the half the second half ROCE number was a pleasing 24%. So that's a good number.
Hopefully, we're all now on Slide 8 and looking at our 4 key business segments. De Beers has been has seen sales picking up through the Q4 and continuing into 2021, with Site 1 in January delivering our highest site sales for 3 years. The team will continue to manage production levels to demand and have kept costs very well managed through the process with a 10% unit cost improvement year on year despite 18% lower volumes. Given our broader restructuring, we expect to see more unit cost improvements through 2021. Bristol and the guys have done some really hard yards through the year, and we will continue to work through 2021.
In copper and nickel, We've delivered consistent performance in copper. We've navigated the twin challenges of water constraints in COVID with production leading target levels despite the challenges. The effective implementation of social distancing in Chile and Brazil has been a model for all of our operations, with work the water and securing alternative sources in Chilling being a real winner for the year. And Arun Puna and the guys have done great work there, Ruben and the crew in full support. On PGMs, a pleasing mining performance and processing production back to 100% levels by year end.
At the same time, the reinstalled A Unit at the ACP has been running very well since late November after a very careful and well managed commissioning process by Natasha and the team. So we are looking forward to a better year of both mined and refined production. The end with current strong spot prices, we're very well placed to deliver some strong margins and cash generation. In bulks. Minas Rio has continued to improve, another record performance in a year when we were down for 1 month for the planned pipeline inspection makes it a really credible performance.
At Kumba, despite lower production, largely as a result of COVID, Unit costs were 6% lower at $31 a tonne, and it was a similar story in our South African thermal coal operations. In met coal, the spat between Australia and China still remains an issue, although the pricing gap is starting to close as the market adjusts now for deliveries to new customers or adjust to new deliveries for new customers. In addition, we've had our operating challenges. Most recent, the current longwall panel at Moranbah has been moving through some tough ground since last Saturday night, and we recorded a high carbon monoxide gas reading in the waste areas. Now carbon monoxide is a result of light in the heating in the Gulf area.
So as per our protocols, we withdrew the workforce and we were we commenced monitoring the gas from Migos since that time. And by the end of the shift, the levels that actually returned to normal. Now we think that might have been the result of the Gulf fall, but we're taking extra precautions. We're pumping nitrogen in to make sure that we don't have any further gas levels, and we'd expect to return to operations in the next 2 to 3 weeks. We are working with the inspector in Queensland again to make sure we've got all the angles covered.
But at this update. I think it is we have seen these things before and it usually takes a week or 2 to get through them. So watching and care but I think the guys have done a good job in handling it and certainly satisfied that all the issues have been covered. On Grosvenor, The key issue for us is the timing of the restart and the commissioning of the new longwall. We expect to restart sometime in the second half of the year, but we don't want to preempt the inquiry or its findings.
And so we will be both patient and cautious in our approach. And so if I can go to the next slide, please. Okay. Consistent with growing cash flow and returns, you should be on Slide 9. Consistent with growing cash flow and returns for Anglo American, the improvement journey does continue.
While we've reported a 43% margin for the year, Our 47% margin in the second half was the eye catcher. Our 2020 3 target is greater than 45% using long term prices. And with Queveco and our other projects and the incremental projects we have in the pipeline. We'd expect to hit those numbers. The long term improvement approach has been driven by portfolio restructuring, our technical reconfiguration through Tony in his team and in his work with the operating leaders of the assets that stayed within the portfolio and the introduction of our industrial operating disciplines brought by the Anglo the rating model, and that is unique for the industry.
The total change package supported a 45% rule improvement in our operating costs or around 30% in nominal terms. And that's despite running 50% less assets. And that is We've actually grown production by around 12%. That's in 2019 numbers. Obviously, we've come back in 2020.
But again, we'll be back on that profile this year and beyond. And as I've said before, the improvement journey has no end in terms of what we see. In our Phase II work, we'll continue to drive up the benchmark performance curves on our capital assets, while building incremental and new capacity that has a lower cost structure further supporting our margin growth. So it's not just about growth, it's about quality growth in terms of the portfolio. Now if we go to Slide 10 and looking forward, we have carefully sequenced the execution of our the portfolio of incremental and new projects, which drives significant margin accretive production growth over the next 5 years and beyond.
From a strategic perspective, this growth is also continuing our portfolio repositioning towards future enabling commodities. And so our 20% growth by 2023, and that's compared to 2018, is more like 30% if we compare it to last year's production, and that is well underway. And the 25% by 2025 builds off our technology footprint and is as much about quality, as I said, as it is about top line growth. In our sequencing and with our sequencing, we are not trying to do too many things at the same time. That's being considered quite carefully in the way we've phased our projects.
Now Stephen will step you through some of this later, but the 2 main new constituents in our stage growth process Quellaveco and Woodsmith. Now on Quellaveco, we're tracking the original schedule despite COVID. So whilst we picked up 6 months in the pre COVID execution work. We've given most of that back to COVID. And whilst we are still dealing with some cases on-site.
We're at about 90% manning levels and we've got the work focusing on the critical task items. So we do that we're still doing very well on the ship. Tom and the guys have done a great job. We have also we have now also approved the installation of coarse particle recovery in the plant following very successful test work. So that will enhance overall production recovery, and we'll continue to improve the economics of the program as we try and bring our commissioning process forward in terms of additional production, which we can see we can do as a consequence of the latest drilling.
The other thing that we've done is we're in the process of committing to fully renewable energy power, a fully the renewable energy power contract, which will also improve our carbon emission credentials as part of the development of the project. At Will Smith, progress is solid. The tunnel has now been driven to almost 13 kilometers of its 37 kilometer target. Our detailed technical review is nearing completion and confirms the quality of the overall project design and the development approach within the parameters we had set. Ahead of our scheduled mid-twenty 21 update to the market, which will present final capital and schedule estimates, We are refining 2 aspects of the project that we had allowed for in our investment case.
We will likely bring forward the investment in additional ventilation to increase early production flexibility, and we are working through the detailed scheduling of the 2 shaft installations. Based on our work and involvement so far, we're very happy with the asset and its market potential. And importantly, it sits in the Q1 of the cost curve and is therefore capable of some really attractive returns. And from our point of view, these are really important points to focus on. I will again stress the point that it's not a potash mine, it's polyhalide, 4 nutrients, low carbon footprint.
We don't have to do all that downstream through processing, and we can put product on a boat cheaper than literally anyone and deliver it to almost any market in the world. This is a very different project to the ones you've been hearing about. And from our point of view, we think it's great potential. Certainly very pleased with what we've got based on everything we've seen so far. So if I go to the next slide.
Finally, and most importantly, on our business improvement focus, as I've said before, the first steps were in the operating model setting a stable base, from which we use our P101 program, which is about getting all of our capital assets up to top the industry performance, not in top quarter. We're talking top. P101 means best of the best to drive improving performance levels. To date, The team has delivered around $2,000,000,000 in raw numbers in the improvement, which is in terms of annual EBITDA on the business improvement side through efficiencies and operational delivery. The more difficult issue is we've given some of that back to the instability that we have in some parts of the process and the ACP failure in platinum is an example of that instability.
So the opportunity to get that opportunity to get that additional $1,000,000,000 back to the bottom line is around stability and consistency in the operation. That's a real at the drop 30%, as I said, out of that cost. We're getting that stability, get to the next and that's the works in progress through Taylioni's team and the operating layers across the business. So we're making the approach, but we're not where we need to be. So with that, Let me hand it over to Sue.
Thanks very much, Mark. And those of you who may know, I like about the numbers second with the themes that I want to make you through, and I'll be surprised that those themes remain same as last year and in fact before. And it's all about the operations cash flow, and we'll work hard to recapture that in 2020. At the 2, return to shareholders at 40% payout ratio dividend and 3, a strong balance sheet and invest in the future. That balance really sets us up for a strong and sustainable future.
So if you're on Slide 13, let's turn to the 2020 numbers. EBITDA, good recovery, dollars 6,400,000,000 in the second half, a record since 'eleven. Looking at the full year, strong results underpin the result, the system and that then flows through to consistent dividends. Net debt at 0.6 times EBITDA benefited from good prices, a bit more to come in terms of that story with the unwind of the working capital build that we had this year. Half 2 free cash flow, dollars 3,300,000,000 the SMA without the help of the working capital.
So
if we turn to Slide 14, looking across the different BUs, at the end of the quarter. A piece of Ricardo and Diamonds in the second half, strong mining margins at 54%, which talks to the underlying quality and resilience of the assets, at the JPY 650,000,000 in revenue from SiteOne in 2021, so an encouraging recovery so far, helped by decent selling season through Thanksgiving, Christmas, New Year and lower rough and polished inventory. At the end
of the quarter.
We have good performance on unit cost of $1.13 per pound. We had some additional non cash movements in provisions in the year, but again, margins. PGMs, good recovery in the second half, basket price on spots around or above 3,000 BGM an ounce. Remember that 60% of it previously known as minor metals, obviously having a day in the sun, Even with the ACP disruption, last year, we generated, I think, dollars 2,000,000,000 of revenue from palladium and $2,000,000,000 from rhodium at the end of the year. In Tubalts, US Rio has been standout performer, gaining good stability, at the driving the sales in the year at 24,000,000 tonnes of high iron content product.
At the EUR 1,900,000,000 EBITDA in the 62% margin. At Kumba, the margin was 55% at the Clearly, some prices, but those higher quality products from both Minnis at the and Kumba, we believe really the demand themes in the steel industry. Clearly, a target for met coal at the and improved prices hopefully persist into 2021. So overall, a good set of numbers, particularly pleasing with the recovery through the second half. And just before I leave this slide, I would encourage you to play the full spreadsheet that I think is the first one in the appendix.
At the on forward prices across the year. But I would note if you want to task moving situation, if you put in at spots even from a couple of weeks ago. You could well end up with a number. At the Overall, we're at relatively consistent levels even with volatility from price, COVID and operational disruptions. Importantly, as Matt mentioned, we are seeing underlying customer volume improvements primarily this period for Copa and Minas Rio, We are very focused on turning around operating challenges at PMs and met coal going forward so that you do see that proven struck to the bottom line.
At the half past year with a bit of health in PG and payment, it's forced to bring net debt down to the half by 2,000,000,000 the very well set stage of delivery. Just to remind, dollars 5,600,000,000 of debt. At the net debt includes $1,000,000,000 of trips in Mitsubishi due to the accounting trend in Kaveco, dollars 1,600,000,000 from inventory build that's all through the year, largely in PGMs and diamonds and particularly in PGMs where we used to see that unwind over the next quarter. At the scorecard each period. Again, that's about my favorite word, balance, reposition the portfolio when required and return cash to shareholders.
Some mentioned good cash across the period, dollars 2,700,000,000 after funding sustaining capital with $3,300,000,000 in the second half. As per we use that to support the payout ratio based dividend with a total of $1,200,000,000 declared for 2020. We allocated $1,400,000,000 in terms of growth CapEx, at $700,000,000 in terms of the acquisition of Sirius Minerals. And the final piece of the puzzle, dollars 200,000,000 the remainder of that 1,000,000,000 share buyback scheme that we initiated in July 2019 and completed early in 2020. So if we could turn to Slide 18 and just over the next couple of slides, I want to spend a little bit of time just focusing on CapEx.
I know there's a few questions out there to understand the timing, particularly in how that relates to the volumes. And so I'll focus and talk through in detail both in terms of sustaining at the end of the year. And hopefully, a better understanding of some of our priorities. Just to be clear, there's no change to previous guidance on CapEx that we provided back in December. So let's have a first look at sustaining CapEx on this slide.
You can see that there's a long term sustaining CapEx level around that $3,000,000,000 as our portfolio evolves and life expend is on top of that and that will be a little bit variable. We are seeing slightly elevated levels of Lifec's CapEx over the next couple of years around that 7 to $900,000,000 per year, and that's as we complete the development of projects that you know around Venetia Underground, Aquila and Kolomela. Longer term average, more around that region of €500,000,000 per year. The underlying sustaining CapEx is also a touch higher in the next couple of years. The main driver has been the deferral of spend from 2020 and as we reprogram those work streams over the next a year or 2.
We've also included the desalination plant at Kollawasi. It's probably a combination of sustaining and growth that supports both current water requirements and wider expansion of Calawasi, which I'll come on to in a moment. And so it's probably a combination of growth enabling and sustaining. Needless to say, there's some growth embedded in those numbers simply linked to the growth in the portfolio on a copper unit equivalent basis as we deliver that growth. So let's now look at growth FX on Slide 19.
So in terms of growth CapEx, again, I'll walk you through a couple of slides just to provide a bit more clarity on what we're setting up here, particularly in terms of that growth CapEx and how that links to delivering the growth volumes over time. Again, just to emphasize, no change to the guidance that we provided back in December. So if we exclude Woodspiff just for the moment, growth CapEx per year around $1,500,000,000 to $2,000,000,000 over the next 3 years. And with that, we see our copper equivalent production increasing by around 20% by 2023 of that 2018 base. It's disciplined, it's margin accretive and predominantly focused around forward facing or future enabling portfolio.
It's technology friendly and links directly to the decarbonization agenda that we have in many cases. The CapEx that's forecast on this slide out to 2023 also provides some of the earlier spend on some of the volume growth beyond 2023 on projects that we do anticipate approving in that interim period. For example, Kollawase Phase 1, the Mogalakwaite and the energy plant debottlenecking.
We can
go to Slide 20, please. So let's look at some of those the projects in detail. Each case, attractive IRRs. And as Mark mentioned, they are well sequenced across time so that we manage the spend and the balance sheet appropriately. Calabeco, as Mark mentioned, progressing well.
Our share remaining around that 1,500,000,000 over the next 18 months or so. In 2023, we expect to see copper production of 300,000 to 350,000 tonnes. That adds, in its own right, around 10% to our overall copper equivalent volume at spots from about 2 weeks ago. Obviously, it's fast moving beast from about 2 weeks ago. That would give us EBITDA of around $1,000,000,000 in 2022 and more than $2,000,000,000 in 2023 on a 100% basis.
At the Another project, the Marine Namibia new vessel, the AMP 3, again, on time for delivery. It's a fast returning brownfield project, at around 500,000 carats at a very high value per carat on a 100% basis. And for us, it adds about 1% in copper equivalent volumes for our 50% share. Term Kollawasi, it's clearly a world class long life asset, and we're looking at of the efficiency and incremental growth of time in a number of phases. Phase 1, we would see is adding an additional ore mill and related infrastructure.
At CapEx while still being refined around NOK 6,000,000,000. Phase 1 increased throughput by around 20%, moving from about 160,000 to 200,000 tons per day. This equates to about at 200,000 tonnes per day. This equates to about 50,000 tonnes per annum of additional copper for our share, And that's about a copper equivalent production growth
at the
group level. We'll also progressively look at the technology initiatives such as bulk wall sorting to further optimize the operation, but that's more likely to be in the Phase 2 expansion. Those studies are underway. That would most likely be a full fourth line expansion, increasing throughput to around 300,000 tonnes per day, and that would add about 100,000 tonnes of copper equivalent production our share. Obviously, we would require new permits, and it's a little early to provide capital limits on that just at this stage.
At the Kleiner, a long life asset. We've almost already doubled production over the last 8 years without spending major capital. The focus has been on embedding the operating model and production efficiencies. And while we'll continue to drive efficiencies, the next stage will require some debottlenecking, and it's likely that we will add some additional concentrated capacity, which will add around at 300,000 to 600,000 PGM ounces of production. While still being refined, it's expected to cost between around $800,000,000 to $1,400,000,000 And again, we'll take a technology led focus and the studies that are underway through 2021.
So if I could then turn to Slide 21. So if we look beyond 2023, you would have seen earlier this week, we approved the Cision UHDMS project. It adds iron units to existing production if you assume that we're well constrained by increasing iron grade and quality of product. And importantly, physician adds 3 at least 3 to 4 years of my life. In terms of wood, as Mark mentioned, a Q1 cost curve asset with strong margins, We've committed to spend around NOK 500,000,000 this year and will provide further guidance in July.
At the It would add around 5% to our copper equivalent production when it's fully ramped up to that 10,000,000 tonne production level. At Moranbah, Grosvenor, again, a brownfield debottlenecking plant debottlenecking of the wash plant. Our immediate focus though does remain bringing Grosvenor safely back in H2, but when completed would add around 3% at copper equivalent growth in around 2024. And finally, on the technology projects, there's a number of fast the payback relatively small individual investments, and there's quite a bit more detail provided in the appendix. At programs such as the bulk haul sorting or the coarse particle rotation projects, cost competitive, modernize the operations, at the set us up on a more sustainable basis, for example, the hydrogen haul trucks and really underpin that journey as we go forward.
At the So if we could describe the 2, just to pull those themes together across the 3 pillars as we've spoken about on our journey through to 2022. The 3 pillars: 1, sustaining CapEx provides a continuing base for delivering on that efficient at the to that in a productive and sustainable way. And then the growth projects, as I just discussed, build on and transition the portfolio. So our $3,000,000,000 to $4,000,000,000 improvement target to 2022 remains very much on target. So let's just quickly look at each of those pillars.
Firstly, on the operating model in P101 and some examples. So the business on the ground is getting more efficient as we've often at Minas Rio approaching 26,000,000 tons by 2022. P101 systematically targeting opportunities across the value chain. At some examples. Again, 15% increase in truck utilization at Arapa, increased haul truck payloads at Los Bronces, an 8% throughput increase at the Minas Rio beneficiation plant and world class shovel performance across multiple operations.
As Mark highlighted, we've seen about $2,000,000,000 increase in the underlying business run rates and $1,000,000,000 of that has dropped through to the bottom line to EBITDA so far, dollars 800,000,000 in the P101 category and about at JPY 200,000,000 in the technology area. Our focus now remains on delivering that stable and capable platform so we get more of those improvements to drop to that bottom line. On the technology and development front, digital technologies, for example, the predictive maintenance leading the way and have delivered that $200,000,000 to date. Some other examples, bulk haul sorting, at the testing and early rollout going well. The El Salvador pilot plant shows about a 10% reduction in energy and water intensity for that operation.
The full scale units are now being installed at Mogalakwena, Barra Alto and Los Bronces and expected to be fully operational within 12 months. At the bulk ore sorting also allows us to process more accurately by discarding some of the lower value ores before we put them through the plan. Also results in energy and water savings per unit processed as well. And ultimately, that can drive a 5% to 10% grade uplift, which flows through the production and the 3% to 4% unit cost improvement. With bulk ore sorting, we expect to The initial benefits to EBITDA of probably $100,000 to $200,000 per annum, a very strong run rate averaging post that.
Another example, of course, particle recovery, 1st full scale plant again now installed at El Soldado at Through separations and traded ore at a higher puddle size, that saves around 30% in energy and crushing and greater water recovery in terms of reuse from tailings up to a 50% benefit in water usage. Combination of those factors can drive a 5% to 10% production increase and up to a 5% reduction in unit costs. We believe that this technology is applicable across as many as 6 of the group's key assets, including Kayabeka, and we've announced the approval of that project today. Limited benefit by 2022 but will potentially drive EBITDA benefits it's rising over time to around $250,000,000 per year. Now I've already touched on the growth pillar, so I won't really go over that.
But again, just to confirm, We remain on track for that $3,000,000,000 to $4,000,000,000 target improvement by 2022 that we first committed to back in 2018. So just to conclude on Slide 23, our story remains consistent. It's all about balance. The returns continuing with the $6,100,000,000 in dividends and buybacks in 2017. The balance sheet remains strong.
Our commitment to discipline remains while we deliver this value added growth of around that 20% level through to 2023. That in turn drives our margins into our target range of 45% to 50%.
The Thanks, Stephen. And Now we'll look more broadly and forward across the business. I am now on Page the 25. So on diamonds, at an industry level, the fundamentals continue to improve. Our views on a positive recovery simply built on industry fundamentals and the associated buying behaviors of our customers.
1st, on demand. Demand has been steady and the outlook looks pretty encouraging. So given long term and most recent experience, we expect the demand to continue to follow global GDP and perhaps more importantly for a luxury good, the personal disposable income or PDI. Both GDP and PDI are expected to grow by around 3% per year over the next decade as the middle class is growing in size that their aspirations grow as we better target advertising and key customer segments. In China, currently the 2nd biggest diamond market after the U.
S, Chinese middle classes are expected to purchase around $1,000,000,000 worth of diamond jewelry over this same period. Globally, the demand profile is shifting towards female self purchasing, now making up almost 1 third of diamond jewelry purchases. And the continuing shift in focus on branding and provenance is something the business has led for many years. On supply, Looking forward in terms of natural diamond production, it's generally a group the industry is on a flat to declining production trajectory. There has been a lack of significant kimberlite discoveries most recently, and that's on a global basis.
In addition, to some 15% of existing supply by volume has been taken off stream or has reached the end of its mine life. The combination of growth in consumer demand for diamond jewelry and the flat to declining production points to good prospects for the diamond industry, both in the medium to longer term. Certainly, we expect the recovery to continue in 2021 of those fundamentals. On De Beers and our branding story, and this has really been the most significant part of Bruce and the team's work most recently. We're building off the De Beers brand and tailoring our offering to target segments.
That is a key to the driving price for only the best philosophy that we have in De Beers. Of our drive towards longer term margin improvement as built from our COVID response, with the accelerated business transformation necessitated by our the dark first half reality. Being a key player in driving the necessary modernization business with more efficient inventory management, increased online purchasing and growing consumer design for products with demonstrable ethical and sustainability credentials, including an enhanced depreciation of the natural word, really had been key considerations in the evolution of our change model. These are all messages that are resonating and assisting with the Anglo American and De Beers branding positions. The De Beers focus on continuing cost reduction reflects what all good businesses should be doing and shortening production to customer times, increasing our own jewelry business offerings and premium brands are all part of a strategic remaking of the business, all connected through digital technologies in mining, the processing, cutting, selling, tracing.
They're all part of the strategic makeover. Bruce, Antonio O'Neill, Intuitive Technology application at our joint at the hip. Consistent with our De Bea strategy, our light box strategy for lab grown products has also been an important part of our strategic approach to different market segments. The Veers is all about natural products to reflect and recognize every natural diamond is special, a one of a kind, a measure of a personal commitment on our very most or our most special personal relationships. On Lightbox, a fun fashion lab grown product with growing discounts now around 60% to 70% compared to the natural product and from our point of view, a good market to be in, but certainly not a market to the naturals.
And whilst that's not a simple 2 market piece, what we are seeing is the differentiation of those two segments in people's mind increases over time. And Bruce and the team are very sensitive to make sure the messaging is right in both contexts. Now to go to Slide 27. On PGNs, we have another sector with strong fundamentals and a great long term potential. Obviously, the news from Russia overnight probably increases the short term potential given palladium and nickel impacts.
PGM pricing is also being driven by strong fundamentals on a broader basis. The strength in demand with mix supplies resulted in a 50% increase in PGM basket price in 2020. And this strength in pricing has obviously continued into the New Year. On the demand side, ever increasing emission standards is crucial for the auto industry and means higher loadings of PGMs. We believe a 40% increase in loadings in 2029 is quite possible.
In particular, tighter emission standards in both Europe and China are driving demand for palladium and rhodium, both are currently in deficit. Palladium is expected by many to remain in deficit for at least 2 to 3 years, even after taking into account at 10% substitution to platinum. And in our case, that's not a bad thing. We're happy to see platinum pick up more market. At that.
Again, when we look at platinum, it's the all rounder TGM. A diverse range of other demand sources continue to emerge, food storage, glassmaking, 5 gs technology being some of the examples. The point here being that these are young metals with unique properties, the full application of which is still being understood. And we're not standing back waiting for others to recognize potential applications. Through the AP Ventures Fund, we are investing in the development of PGMs for new applications to unlock their full potential, which, for example, we think will be a key for a volatile hydrogen economy.
I don't know, the AP Ventures Fund has today raised $325,000,000 off our $100,000,000 seed funding. And so we're very excited about where we are and what the potential is in the industry. And on the supply side, there are very few near term medium very few near to medium term supply growth options across PGM production, 128 now. At the same time, currently mineable assets are depleted. And with PGM processing capacity at a premium, we're in a massive strategic position of more than 50% of the world ex Russia smelting, refining and associated base metals refining capacity.
And in the longer term, producers are unsure whether to expand production until they see more evidence the BEV and hydrogen developments. And certainly, from our perspective, hydrogen today is a real conversation and moving quicker by the day. And while we don't have to worry about the decisions on putting more capital into new downstream processing capacity. We've already got the lion's share. We can build out incremental mine opportunities while debottlenecking and squeezing better margins from a full value chain position, and it is unique in this industry.
The result. It is likely price will continue to do the heavy lifting in what is a constrained market. We have a great business with highly competitive and improving unit costs of around $700 an ounce, which supports a 70% mining margin across our basket of PGM products. The remarkable point to note, after a very tough year, we have still delivered a record financial performance, and we have no doubt and we have no depth in the business and with 70% mining margin as we stand today. So from our point of view, where the unique position in what is shaping up to be a long trigger to the portfolio.
So to Slide 29, talking about portfolio, our future enabling commodity mix alongside quality with diversity of positive differentiators in our industry. Consumer driven demand for diamonds, crop nutrients and PGMs and environmental themes and electrification driving demand for our copper, nickel and again, PGMs the contributes to the hydrogen economy are all big positive for Anglo American and our portfolio. And our iron ore and met coal assets are high quality, both physically and chemically, and therefore, desirable inputs for steel mills and in particular, the future green steel mills. And for those that understand with high iron ore values and low deleterious elements, The green technologies are far more efficient, the higher quality the iron ore feed. So we are uniquely positioned in that market as well for the longer term.
And for a green and for a generalist investor, our mix across these high demand growth sectors is not just for the next 5 years, but for the next 10 to 20 years. And so from our point of view, positioning the business through 2,040 is something we've been thinking about and doing for the last few years. So to Slide 30. Of our role in making the world a better place is the way we think about a number of the issues that we're working through and making sure they connect with the good performance. Our technology push led by Tony and in partnership with our business leaders is part of why we've been able to commit to making the business carbon neutral by 2,040.
A bit earlier than most, but we think that this is the right time line as it will continue to drive as well supporting our relentless push down all of our cost curves. Importantly, It's more than a target. We have plans to get there and we have plans to get 8 of our sites to carbon neutrality by 2,030. And as you know, we've contracted to be on 100% renewable power in Chile and Brazil by 2021 with solar and wind initiatives. And in Peru, we are already working through the same options for the Keyabeco business.
On our planned exit from South African thermal coal operations, I'm pleased to report we're making good progress with the preparation work on the demerger option certainly available to us probably during the course of this year. And if we do see a trade sale option emerge that we think has merits, we will still look at that. But certainly, on the demerger option, we're well advanced and in a good place to continue the process and announce something during the course of this year. And on Cerroon, we also intend to exit our onethree in Cerroon, certainly within 3 years. But obviously, we've got 2 partners that we have to work with to make sure that's the right way.
Now turning to Slide 11 and talking to carbon reduction and turning carbon reduction into a competitive advantage is something we recognized back in 2015. And again, Tony and the team working on the options with our corporate relations team. We've been thinking through technical issues, and that's been led by Tony, and how we set the business up to connect with our community. So you've heard about that decarbonization strategy and how it applies operations. We think 2,040 is a challenging target, but it is to deliver, but we have a plan to deliver.
And while We don't want to get caught up in the conversation around Scope 3 emissions and what we call the carbon reduction arms race. We believe the target that we have is appropriate and reflects the actions we're putting in place, which will also improve our competitive position. Now on Scope 3 emissions, we make a few simple observations. First, our scope through work has helped us understand more clearly the carbon intensity of our value chain. And the one thing that is clear is there are many different ways of calculating the numbers.
Now off the base that we've used, we understand that, For example, thermal coal represents around 25% of our carbon emissions. So obviously, an exit from thermal coal over the next 3 years would impact our reported Scope 3 numbers in that order. But we also point to our work on Scope 12 emissions, where the technical work will also impact adjacencies, how we connect with our communities. We also think there are credits both in supply chain terms of what we're doing at the community to further impact our Scope 3 emissions. In the steel industry, you've got met coal and iron ore.
And again, they represent the 2 other most significant areas in terms of our scope 3 emissions. For iron ore, it represents somewhere around 45% to 50% of our report at Scope 3 emissions and the industry tells us they'd expect to have green steel production making up about 50% of the world's the steel supply by 2,040 and you can apply those assumptions across to a Red Cross in terms of our iron ore business, remembering that the products We produce a favored in those new technologies because of the high quality, then you start to get a sense of what we can do at all. In met coal, it's a really important point to note that the demand that we don't have of significant alternatives that we can replace existing technologies in steel very quickly. So based on what we think the direction of travel and the timing it would take to do that conversions through the steel industry, that the timing would be far longer than the life of our medical assets. So what we're thinking through is how do we continue to make improvements in those businesses and make a meaningful contribution to our partners in the industry, but at the same time, continue to improve at our carbon position.
Now, we don't think it's right to just think about depleting assets. We don't think that's the right way that we should be working. We should all the if we can improve and we're working through that and we'll keep you posted on how that thinking is all coming together over the next 12 months. We've got our sustainability update in April. We'll again update at the age and continue to update throughout the next 12 months.
The one thing but I think it's important to note. The credibility we've built on how we're attacking the Scope 1 and Scope 2 issues is the stage we're dealing with Scope 3. And again, when we come with the final positions and targets, it will be thoughtful. It will be backed by a plan. It will be supported by the technology and how we believe we should the shape of the portfolio to the future.
And as you know, the work we're doing today is all about the future and certainly the positioning of our portfolio in the long 2. On Page 32, I did want to step back and reflect purpose again. It's founded on the delivery of sustainable returns to shareholders, employees and our business and society stakeholders. And so to reimagine mining to improve people's lives is not something we just say. It is what we believe we must to do as a business, both through the value we contribute to our host society, our host communities and society and also in the way we provide basic materials that then enable the world to be sustainable in all of its dimensions.
Our business, we keep our targets pretty simple. We target a better than 10% free cash flow on capital employed, and that's after making sure we're replacing depleting resources and resources as the prime measure of our effectiveness as business managers. To measure the efficiency or how we got that free cash flow. We measure rich capital employed in the range 15% to 20%, which is about measuring the efficiency of those cash flows. And then we have our 7 performance pillars that look at safety, health, environment, our competitive cost position in each of our target markets and as a business, how we set the balance sheet up to flexible as Steven has strived for you today.
And that's the focus of everyone within Anglo American and everybody has a responsibility to make sure every day we're moving closer to hitting those targets consistently and improving those numbers on a day to day basis. And then finally, on Page 33. Just to remind you about our investment proposition and it's pretty simple. We have the assets, we have the people and we have delivered industry leading returns since 2013, around 16% a year. And we have set the foundations to outperform through 2,030 and beyond.
And we've got the portfolio and we're in the right business just to continue to improve that performance. So with that, we'll pause for questions. Just to say, Stephen and Tony also here to answer the really hard questions. And so we'll hand across to the moderator. Thank you.
As your first question.
Paul, did you try and jump in there?
All good, Mark. I think the first question is on the line. Thank you.
And your first question Comes from the line of Jason Fairclough from Bank of America. Your line is open. Please ask your question.
Good morning, guys. Thanks for the presentation. Sort of some great message to deliver. So I I wanted to come back to a line of questioning from your business update in December, which is on technology. So Tony gets $1,000,000,000 to invest in these high return at fast payback projects.
I think you spent $200,000,000 so far. And I was just looking through your Slide 49, and I think Stephen mentioned this the course particle flotation retrofit, if we can call it that at Quellaveco. And he says 3% improvement in recoveries over the life of the mine. To me, that's huge. That's absolutely huge, right?
And if we're talking $250,000,000 EBITDA benefit per year, I guess the question is why aren't you pushing us out at other properties as fast as possible? Why can't you be more agile with these technology initiatives?
The end of
the call. Jason, I'll make one comment and hand across to Tony. Each body is different. And so the approach has to be different. So with that, I'll hand across to Tony and he'll give you the real technical story.
Tony?
Yes. Thanks, Mark. Hello, Jason. Good to hear you. Cayo Eco, we're really chasing the super gene upfront, And that's why we've really accelerated that.
Across the company, though, we've got enough sprints. And The technology, what we found with these sprints, we are able to move it much, much quicker. We've got other stuff we haven't talked about, for example, microwave technology that we're trialing or a trial. We've got the heap leaching at the Technology is really quite amazing. I think the rate limiting step for us at the moment It's basically getting approvals through the statutory side of things.
The guys in copper I've had days with the chain government people and they've been fantastic. We've just got to see that now manifest into, if you like, an accelerated approval process. That's the right limiting step at this point.
I think that's the important point to make, Jason.
Okay. Thanks, Mark. So just in terms of at some of the other properties. I mean, you're saying that you're putting it in place at Mogalakwena and then the potential rollout at Los Bronces, maybe even Coyowassie. Can we be talking about a 3% improvement in recovery at these other properties or it's not going to be quite as beneficial?
The Jason, really to Mark's point, horses for courses, It's certainly in the design from a Harlequin at Los Bronzes. We'd actually, in the initial phase, just put it down at the Los Autodesk end. So we see a it's different dependent on each site basically.
Is it fair to say that in some cases, we might go for a little more volume versus recovery because that's a more effective outcome depending on the ore body capacity.
Yes, that's correct. I think the other parts on CBR, apart from the value, the we have In May this year, we will have a new tailings dam trial commissioned in El Soldado. So it's key for us not only for value, but basically moving away into engineered tailings dam. It's a key part of our strategy,
the Yes. Thank you.
Welcome.
And our next question comes from the line of at Gabriel from Morgan Stanley. Your line is open. Please ask your question.
Good morning, gentlemen. I have two questions from my side. That's the first one. So on current spot prices, you would almost be debt free by year end. Is your dividend policy up for debate internally?
And are you looking to make any changes to your payout to match of your peers in spite of your superior growth profile. That's the first question.
Well, I'll give the first one to Stephen. Stephen, your turn.
Listen, we're comfortable with the base payout given, let's call it, yesterday's realistic expectation of prices. At But that doesn't mean that we can't at any reporting period stop. And in fact, we do as part of that capital allocation cycle stop and consider any other forms of additional returns to shareholders. You saw back what's now 18 months ago, July 2019, I think it was, we announced the $1,000,000,000 buyback. So it's something that we do think about.
It's something that we actively discuss and something that we actively consider. If prices at the bottom of the base, remembering the beauty of the payout ratio is that, that also increases in terms of amount as profits increase. And so, yes, 40% a couple of 1,000,000,000 bigger than 40%, 1,000,000,000. So it sort of naturally adjusts in addition to considering additional returns. Thanks, Mark.
Yes. Thanks.
Thanks. And the The second question, Mark, is on the PGMs business. So you've touched on the issues that have been faced by your competitors in Russia. How do you think if these issues eventually turn out to be more frequent or structural, how is that impacting your thinking around PGMs? Do you have scope to accelerate some of the projects?
How do you think about the business holistically in that context? Thanks.
Well, firstly, we don't know how structural the challenges are. Obviously, the processing side is more readily fixable. The mining side, I don't have better information at this stage. You may have better information at this stage. But it does it's an issue for the industry because what we don't want to see PGMs race away too far in terms of pricing and encouraging alternatives.
But certainly, in terms of that location. The PTM suite are attractive for a whole range of reasons, rhodium, for example. So we're watching it carefully. Our ability to accelerate, we are already improving, increasing Amandelbult. To Mahaliqwena.
We've got incremental improvements planned. And those things have to be planned out carefully because we've got communities that we've got to make sure that we've got good relationships as we grow the business. And we've got other assets there that people are aware of that we're ticking over. So we've got the ability to accelerate and get bigger, but we still think it's a bit too early to call anything big. And from our point of view, probably best to debottleneck continue our debottlenecking and improving the processing operations and making sure we're getting the best bang for our buck from our internally sourced products by getting our cost down.
So we can build and improve, but we'll watch the market and look for a few more signs, but certainly very encouraging at the moment.
Thank you.
And your next question comes from the line of Jacob Gray from Goldman Sachs. Your line is open. Please the second half.
Yes, good morning, everyone.
Thanks for taking the question. My question is a fairly high level of general one is, We are seeing moves from some jurisdictions or countries potentially making mine development more challenging. And I was just wondering from a sort of business risk perspective, whether you see that applicable to any of your jurisdictions, whether that's something that It keeps you up at night and it's sort of a meaningful risk for analysts.
Check. It's something we always think about. We really pushed the sustainability agenda from 13, 14, really hard. We built the technical team under Tony and we built the corporate relations team underneath because we thought that were 2 critical areas for the future that you had to get right and you had to make sure that at you were connecting well with communities, regional governments and federal governments. And the living mine concept that at the time he's been talking to.
For those that know the Eden Project, you'll have a sense of what we've got in our heads. And a nice to work in social way and making sure those two pieces connect is a really strategic approach to making sure we're developing partnerships and we don't have this old paternalistic management approach to managing communities. I mean, you don't manage communities. You have to partner with communities, whether that's on heritage issues or whether that's on mine development or whether that's the work we do in the communities in developing jobs and our sustainability targets on being a catalyst for 5 jobs for every one job on-site. If you're doing those sorts of things, You're going to have lots of problems getting your projects away.
But I think look at Quellaveo as a good example. Peru has had the history of challenges. And I think so far, Thomas has done a fantastic job in connecting with the local communities. That's the sort of stuff we have to do to be successful. So it's a big issue.
It's a long term issue, and you really have to treat it as a strategic issue from our point of view.
Mark, if I might just add, at It can be underestimated a little bit, the ease of being on additional projects or supply because it does take time to work through, as you say, with the community or as Tony mentioned, permitting with authorities, and that could be a rate limiting factor on the supply side as we go forward.
No, no, I was just going to add it. Obviously, it's something with a potential new constitution in Chile Next year with some comments from Biden, I know that more relates to oil and gas, but it just feels like things are getting incrementally higher. And so I That's quite a general question, but it's just something I'm considering more broadly. Perhaps just one follow-up, if I may. Obviously, you mentioned At current spot, 'twenty one earnings look very good.
Obviously, your balance sheet is in good position. Some interesting some very interesting initiatives. I mean, what are the things that you are sort of most concerned about from a risk perspective, if at
all. Look, Somebody asked me the question about resource nationalism. I don't worry too much around resource nationalism in terms of relationships. We have got a diversified portfolio. That's a big advantage, geographically Diversified and we continue to improve our relationships in most of those jurisdictions, but we still got a lot to do.
We've still got to do a lot of work. What worries me for the industry is where we have incidents, whether it's a safety issue, whether it's an environmental issue, whether it's a heritage issue. These sorts of things tend to harden up regulators in dealing with the industry in an open and constructive way. So we've all got to do better, the Connect Better and help communities understand what we actually do in society. A lot of people don't realize that the mining industry drives 35% of Deutsche GDP through 10% on a measured basis, another percent through the services that we use to provide of the products we produce.
And then we drive industry's ability to be more competitive. And people don't understand that you need the copper and nickel and all of these things to decarbonize the world's economy. So we've got to get our message out there much better than we have. Our safe base work, for example, is about getting the 2,000,000,000 people that are really influential with NGOs and helping them understand what we're going to do and how we're trying to partner and we're changing the nature of global conversations around mining. We all have to do it or where the world is not going to be an easy place to live without mining.
And we have a commitment and a dedication to make sure we get the story out the right way.
The Great. Thanks, Mark.
Yes. Thanks, Jay.
And your next question comes from the line of Chris Guadaglia from Jefferies. Your line is open. Please ask your question.
Hi. Thanks for taking my question. So Mark, you've talked about an operational strategy, which is, I guess, about bringing online incremental volumes at low unit at the generating high returns long haul, which is obviously a smart way to run the business. If we're in a multiyear period, let's say, a very high commodity prices, Is it okay, 1st of all, to bring online capacity that might be much higher on the cost curve? And if so, where is there operational ability for any potentially capitalized on this period of very high prices.
Thanks.
So we remain really sensitive to bringing on high cost capacity or we wouldn't go out and buy new capacity at high cost because we think longer term, there's a that's a false economy. There will be volatility. We think we know our resources. We understand how to get the best of them. And we do things like the UHDS project at Kumba.
Kumba used to be really high cost, used the cost of $77 a ton breakeven cost into China. Today, it's in the 30s. So we halved our cost, and we've got the ability to bring on new technologies to get production. And those are the sort of smart things we can do. Tony, do you want to talk about some of the technology stuff that you're driving in terms of the volumes across the business, the money strategies in terms of those that question.
Look, I think it's really about value. And we look at the ore bodies at Nokton, rate per hour or dollars per hour, how do we push more through the whole system. So things like bulk ore sorting. And bulk ore sorting is now effectively handed over to the business units and for them to include it in their businesses. The microwave technology, the CPR are all about fundamentally shifting the rates at where possible, probably up 20%, 25%.
So we concentrate on that. We've got a really good strategic understanding of our ore bodies. I think it's important that we, to Mark's point, keep our discipline. And at You could in previous cycles, we've seen everyone blow their heads off. And I think if we can keep our discipline, push through these extra tons where you've got them, then I think it actually helps us reposition further again.
So we don't want to add too much volume to a market and take the steam out of it. What we're trying to do is be smart in the way we allocate our capital, get the best returns, hold our margins and at the same time, keep an eye on when things will turn the other way and not get caught. And I think that's a really important discipline to keep in the business. That's why from the outset, we're keeping our feet on the ground.
Sorry, just as a follow-up to that, if we're not talking about any significant changes to strategy, it looks like you'll be generating enormous amounts of free cash flow. Balance sheet is already This question was sort of asked earlier, but just kind of to follow-up on this in terms of capital allocation. Should we expect surplus cash flow to just be returned to shareholders. Is that going to be the model going forward? Or is it possible that you start to invest more aggressively in the business?
I mean, how do we think about that surplus
Well, let me take Stephen's word, balance. We think too many times in our industry, we forget about that word and it's a really important word. So We're investing in the right things, Teo Wekker. We saw a great opportunity in Sirius, and we're certainly very pleased with what we've seen so far. We've got a pipeline of opportunities that we seek and seeing.
We're not looking to jump all over the place. We're going to keep with that discipline. If we do see an opportunity out there, look at it, but we've got to think long and hard about where it fits longer term. We're not going to do short term stuff that doesn't make sense. So so we're going to keep the discipline, keep the strategy.
And as Stephen said and he talked to, he's making sure that capital discipline or allocation is right. And we're very happy to return money to shareholders on the basis that they seem to like it.
It's hard to answer that, Chris, from my perspective. When the CEO and the Technical Director are talking balance and discipline, my job is done.
And your next question comes from the line of Leon FitzPatrick from Deutsche Bank. Your line is open. Please ask your question.
Thank you.
Good morning, everyone. Two questions for me. Firstly, on De Beers. Before 2019, was generally averaging around $1,400,000,000 in EBITDA per annum. Given what you're seeing today in terms of demand recovery.
Is there any reason that you're seeing why De Beers doesn't reach or exceed that type of level in 2021? Then second question on the group structure. I know today everything looks very bullish and it's going well in terms of cash flows, etcetera. But A lot of us still view Anglo as a relatively complicated business. You've got 2 subsidiary listening to NSA.
There are large minority through the group, etcetera. So Do you as a management team believe these complications impact the group in terms of its rating? And is there any current thinking or plans on how you could simplify the group going forward, whether that's through divestments or consolidating minorities. And I'm thinking beyond the coal divestments that you've already mentioned. Thank you.
Yes. Two good questions. Firstly, on De Beers, Bruce and the team have the same cash flow, return and sustainability targets we have across the industry of the company and they compete for capital. And certainly, we expect with the new strategy, Bruce should be able to deliver beyond those numbers that we talked about, 1.4%. He certainly got a high target than that.
But at the same time, you've got to be careful in forecasting how quickly the business recovers is something we'll watch carefully through 2021, but I think the strategy is right. I think the focus and understanding and playing to our brand strategy, which is something that we've rebuilt after we've got the De Beers brand back in the stable. I think that was a really important strategic move. The success of Forevermark, the success of the work he's done in China. The work on Lighthawks and differentiating between the naturals, I think they're all things that will help to us get back to those numbers and better.
And certainly, that's where we're taking the business. And again, we're very excited by what Bruce is doing in the hard yards he's taking at the moment. So I'm very confident and certainly a big circle of what Bruce and the guys have done. In terms of complexity, one thing that we would certainly like is for some of those relationships to be a little bit easier. But at the same time, we're not about to go and do something the sake of just doing it and blowing value.
So we have all those types of issues on our radar, and there are certain things we'd like to employ. So there's no doubt about that, Making it an easier entity to analyze is very important to us. That's why Paul has put his business on a pay. And certainly we had great feedback helping demist it from making it a lot simpler. There's a lot more stuff we can do.
And let me say, it's all on our radar, but at the same time. We look to do those sorts of things for value and in time will be there.
Mark, if I could just add, obviously, the diamond market is coming back nicely at the moment, but we do remain, I suppose, cautiously optimistic through 2021. So I would love to be as got there in 'twenty one, but really getting back to that level is probably a multiyear journey. Hopefully, stability and profitability comes back to that market. But certainly, those targets are there over a number of years to meet and exceed those previous profit levels. I'm a big fan of simplicity in capital structures.
And yes, we are somewhat complex. We've halved a number of assets, as everyone knows, over the last sort of 5 to 7 years. I suppose we will continue to look for opportunities to simplify. But as Mark says, it's about discipline of value, at the And they are paramount in anything that we would consider.
Is it fair to say that any kind of simplifications from here. It's more about structure and minorities rather than shedding more assets.
The yes. Mark, you want to take a look?
Yes. Yes. But we like the portfolio we have. There's always of process of renewal and improvement. So that way, but we're pretty happy with what we've got generally.
We've always incrementally improve and growing in different areas. But there are certain things we understand we could do to simplify things, but some of those things occur naturally at the time. So we don't need to rush, but we certainly are focused on those types of opportunities and get there as quick as we can.
Your next question comes from the line of Sylvain Brunet from at the
end of the year.
Thank you. Good morning, gentlemen, and well done on the H2 performance. My first question is on working cap in diamonds. With a strong catch up that You guys could squeeze the later part of the year, the 5% price increase in January. It looks like conditions are Probably stronger than most of us expected.
Is there okay we could expect a further unwind of at inventory in the course of H1 already. That's my first question. My second one is on PGMs and really reflecting on your Slide 27 when you're showing an increase in lowings with the EU 7 and China 7 standards coming by 2025. If you could perhaps help us understand if Some PGM are going to be impacted more than others. Is it more of a volume, palladium story, which would explain the at the moment or would you say those standards would impact all the 3 of them in a symmetric way?
My last question is on emissions. When we look at source of emissions, and Mark, you hinted at that, fugitive methane emissions are pretty big team and big share of your scope 1 in medical. I know the call is slightly mainly about SAML, but If you want to stay ahead of the curve on this team is now a time to also consider medical as a little bit more problematic than is usually perceived. And You had some operational issues at Moranbah, you've seen China pushing back on imports. I'm just wondering whether it is still worth deploying technology, CapEx some time in a business which is facing so many headwinds.
Thanks.
Okay. So Steve, do you want to pick up the De Beers and then I'll at the PTM and some of the cover.
Yes. Thanks, Mark. So yes, we finished the last quarter last year reasonably Yes, with some good sites and therefore, good volume pull through. And as you say, that continued through Site 1 and hopefully through this Q1. So I would expect any of that excess diamond inventory to largely work its way out of De Beers through that Q1, and we're on track to do that at this stage.
So the focus for us on working capital then largely moves to the PGM buildup that we've had. We've done a lot of work and the team have done enormous amount of planning out over the next 12 plus months, but that will take us a little bit longer as we see it today, but we continue to look for opportunities to unwind that working capital as well. Thanks, Mark.
The stage, Steve. Look, on PGMs, it's a very good question. And as you know, there's also uranium now. It's in the mix as well. When you look at the hydrogen, where we produce, I think it's around 100,000 ounces of aridion, up here 3,000 now.
So all of these things are becoming quite interesting as we as the the vehicle emissions are being dealt with, and we're getting the hydrogen economy and demand, ultimate demand source is really important. Whether the PGMs will be impacted on a symmetrical way will depend on price. I think platinum will still be increasing its substitution across on palladium, albeit that will take a bit of time. Rhodium at 20,000 to 25,000 worries me a little on the demand side. But because of its ability to clean NOx emissions at low temperatures, it remains a favored technology.
But on those sort of numbers, I think the pressure will be to pull it back. So at around 10000 to 12000. I don't think this is due for a road in, but 25,000 is a bit high. So depending on the price you're assuming, Yes, I think there will be some asymmetry, which will probably favor platinum demand as we go forward. And the other will sort of adjust based on the relative prices between the 3.
So Your guess is as good as mine as to how that will play out, but that's how we see it at the moment. On met coal, You're right in saying methane emissions that we're focusing on. Tony, do you want to talk about Pierre's work and how we're thinking about broadly the emissions, but in particular, the handling of the methane work and the research work we're doing.
At Thanks, Mark. We are working on van, bent air and methane. We currently burn A percentage of that, but we are looking at technological approaches to actually lift our rate of, I guess, the construction to a much higher level. The early days are promising, but it's a little bit too early at this point to call exactly how that will pan out. I
think since yes, thanks, Tony. I think 2016, just to add the second part of that question about whether we should continue to invest in Metco. Look, From our point of view, all the businesses compete for capital. They've got some great assets on the ground. So we'll nurture those assets to make sure we get ourselves back up to full rate.
The business has generated, I think, about $5,500,000,000 free cash flow since 2016. So Seamus and Tim have done a great job. We'll get it back up there and probably take us the best part of this year with the Grosvenor ReTech and Moranbah settling down, but it is a great business. It is worth the effort. Certainly, the returns are there.
We've got a great probably the leading team, I think, in Australia in the coal industry, certainly by numbers. So yes, we're still there. We're going to stick with it. We're going to stick with the team. They've done a good job.
It has great earnings potential and we've posted a pretty good set of results without much from coal. So, Seamus will come back and the team will come roaring back in the next year.
And your next question comes from the line of Ian Rosso from Barclays. Your line is open. Please ask your question.
Hi, good morning. Mark, you mentioned a comment about the community relations and you're not where you want to be. Could you provide a bit more color on this? And I guess, what do you need to do to fix that? And then maybe just related to that, Your PGM assets, I guess, with the disposal of Bocconi, you've gained credit from most of the assets you've sold now, But your key assets now are 100% owned.
Is there plans to, I guess, involve some of the communities in some of these at the sort of asset sharing in the asset equity stake. And then just a second question on Therahen. It seems like the process is being a little bit longer than what you alluded to in terms of the exit there versus what you said in December. I was just curious what's causing that day. And I guess now that you've given an intention to exit Just wanted to get a sense of what your obligations are within the JV
at the main point. We don't believe as an industry, this is a Zanglo, we don't believe as up to the communities and that we all need belief. And I'm not pointing the finger anywhere. I'm saying we've all got a lot of work to do. For those that have tracked our faith based engagements and some of our other community engagement with the curious conversations stuff that we've the sponsor South Africa.
It's all about the expected people's values, their beliefs, and we should connect with the way that since South Africa. We're on a journey. We're on a journey with our communities. In some cases, our relocation is pretty well. We've just relocating sure that we're raising the capability to of living or managing where we go.
I don't think we've met terribly well. So we're doing all of those things and the commitment to the social way 3.0 is all about taking that up another level. And so what I'm saying is I'm making an observation the situation. And I don't think they get a totally good deal from governments or regional as well and or that an commitment to cash 5 jobs for each job that we have on-site is about doing more in those communities and as well as recognizes the digital technologies are coming towards us. So We're trying to get ahead of those curves and trying to make sure we improve all operations.
I'm assuming we have one operation. I'm saying we've got to do it right across in Australia, whether it's on Mogalakwena, whether it's around Sissen or whether it's around of a unique package across our industry, but it needs more.
Elsie, could you just speak to the next question very quickly. We've got another 7 questions queued. I'm afraid we've got time for 3. So the other 4,
And that's from the line of Mao Tseil from UBS. Your line is open. Please ask your question.
Great. Thank you. Just going to PGM and rhodium and palladium. What we've seen, I guess, over the long term, some acceleration in battery The sort of generation of EVs do you think becomes an issue
Well, I was going to say, I think hydrogen We'll certainly be a beneficiary on the large scale or the largest scale the transportation industry, and I think that's good news from our point of view, particularly with platinum. But I think in terms of palladium, we see palladium and gravel, palladium, we see the demand next the 2 or 3 years where the industry will be bought. But we think it starts to flatten the platinum becomes the output. So as well. I've got other unit abrasion and other physical characteristics that support its broader use.
But certainly, we think in around a 2 to 3 year period, palladium starts to drop away in price compared to platinum. But of the palladium is quite a beneficiary, particularly for the hydrogen industry. And then my view is that there will also be reconsideration of palladium and a whole range of other areas, a lot going on in battery technologies as well. So I don't think the game's played out yet. I don't think people fully appreciate where the demand
And your last question comes from the line of Dominic O'Kane from JPMorgan. Your line is open. Please ask your question.
Good morning, Mark. So my question relates specifically to South Africa. And I guess in the context of your slides with Slide 32 with the targets for free cash flow and return on capital employed. How does yesterday's sort of relaxation the currency controls, which is clearly what you've been talking about for years, changed your attitude to investing in South Africa. Clearly, you have some of the some great expansion options, great deposits in South Africa long term.
How should we think about your appetite for greater investment in South Africa in the long term? And equally, to your comment on the minorities, does the removal of those exchange controls make it more value accretive to start to increasing the minority stakes there, what are the upstreaming of dividends from South Africa?
Look, I've worked in South Africa or with South Africa since 2007. And the single most important issue in terms of investment in the country has been exchange control. With that announcement and with what we've done in the last 12 months. I think that's the single most important strategic issue for us as a group, that it makes South Africa one hell of an attractive investment. Even with its challenges for the mining industry, you've got a maturing leadership regime, the financial team understands the importance of attracting foreign direct investment, and this is a the critical step.
For us, absolutely key. And for those that talk about 2 balance sheets, forget that conversation. There's only one balance sheet in Anglo American today. And I think the move is quite significant. I think it's strategic.
And whilst all countries have got their issues, South Africa has made another important step in making itself an attractive destination for FDI. And it's going to be important in terms of their growth in the future, and they know it. So I think it's a big step, really important to us and very pleased to see it. Steve, do you want to add anything to that?
Hard to add too much, Mark, except that we've always had great the working relationship both with the Reserve Bank and with the National Treasury. You've seen what we've done progressively over time in terms of additional flows and returns to shareholders out of South Africa. But as you say, I think a great step for the economy going forward and their ability to attract capital in, and we're no different as we consider that decision, as you say. At you want to have a season and consistent set of fiscal regimes as you can, as you consider different projects. So I think it's a terrific step forward for the country, And we happen to benefit from that as well.
Thanks, Steve. Guys, one thing I missed, I didn't answer the Sarajon question to you earlier. I should just make the point that we'll wait for Gary Nagle to get his feet under the table and work out where he wants to go. But hopefully, we'll be able to resolve something in the next 12 months with the 2 partners on Sarah Hunt, but we have to wait and see.
Mark and gents, thank you very much for that, Walter. Thank you very much for running the show. At the for your time and your patience this morning. It was a slightly longer presentation than previous. There were some key messages that we wanted to try and share with you.
As ever, if there is anything that Investor Relations and my colleagues can do, then you know where we are. Please contact us. We'll be delighted to try and help. And for the sell side analysts that are joining us on the roundtable,