Ladies and gentlemen, thank you for standing by, and welcome to the Glencore Preliminary Results 2020 Webcast and Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session at any point during the presentation. I must advise you that this conference is being recorded today, 17th February 2020. I would now like to hand the conference over to your speaker today, Mr.
Martin Dewey, Head of Investor Relations. Please go ahead, sir.
Good morning. Thank you for joining us for our 2020 financial results. Today on the call, we'll have Ivan Glazenberg, CEO Stephen Kalman, CFO and joining from Australia, we'll have Gary Nagle, our CEO designate. Without any further ado, I'll hand it over to Ivan.
Okay. Thanks, Martin. Good morning. Turning to the slides in the first slide, Slide 4, we talk about the investment proposition of Glencore. And as you're aware with our commodities, we enable the Transition to a low carbon economy and our business model has been responsive to take this into account.
We are leading producer, marketer and recycler of these transition commodities and we'll talk about those actual commodities later on. We sector leading in our climate strategy and as we announced in December, we're targeting a 40% reduction in our total CO2 emissions By 2,035 and by 2,050, net zero ambition for scope 1, 23 to emphasize including Scope 3 emissions. We believe we are responsible stewardship of the declining coal business over time. And as the industry decarbonizes, we'll be running these assets whilst we deplete them towards the end of their life in 2,050. But we'll talk about that in more detail later.
We believe we got the right business model. The transition to a low carbon future is overall positive For Glencore in view of our commodity mix and we've got the right commodities for this decarbonization transition which is taking place. A high portfolio of these commodities, they're good high margin commodities, large scale mining And long life assets and we'll talk about the life of these assets, which Steve will give details later on in respect of these low carbon commodities. The business is extremely highly cash generative today. And if you have a look at it, we do look at the EBITDA based on the Spot prices, January prices, in fact, you'll see we talk about $16,000,000,000 of EBITDA was roundabout $7,200,000,000 of free cash.
And if you had to use today's spot prices that is more like $17,000,000,000 EBITDA and close to $8,000,000,000 of free cash. So the business model and the strategy and the asset mix creates a sustainable growing returns in this Transition to the low carbon energy. So if you look at the 2 20 scorecard, if we have a look at the next slide, Slide 5, It's been a healthy cash generation of the business even with the difficult environment with COVID-nineteen Existing and affecting some of our assets during the first half of the year, we generated EBITDA of $11,600,000,000 which is flat similar to 2019 and the marketing and industrial metals offset the weaker coal price that existed during the year. Net income pre significant items was $2,500,000,000 which is plus 2% on 2019 and the equity free cash flow was extremely strong in view of this environment, dollars 4,300,000,000 free cash flow And that's up 65% from the previous year. And on the back of that free cash flow, we will We'll be paying out a dividend of $0.12 which is roundabout $1,600,000,000 and that's in view of our existing dividend policy and Steve will talk about that later on, how that is calculated and how that will be paid out during this year and the potential to increase it when we review it in the half year at the half year results.
The industrial assets, as I said, were resilient even under the difficult environment during First half of the year and industrial assets generated $7,800,000,000 of EBITDA, which is slightly lower than the previous year. And this is mainly due to the strong metals performance of commodity prices during the year, outweighed by the weak Coal prices as we all know that existed during 2020. The metals business generated $7,300,000,000 and the energy $1,000,000,000 which is 73% lower and as I said, mainly due to the lower coal prices. The cost margin performance was strong and as you'll see we've decreased our costs or production across the range of our assets and our copper assets Today produced copper at $0.94 during 2020, sorry, which is $0.15 lower than the year before, Zinc minus $0.07 post gold and silver credits, which is $0.35 lower than the year before And nickel, dollars 3.76 which is $0.22 lower than the year before and coal we producing at $45 a ton during 2020, and even with those low coal prices still generating a margin of $11 As expected, the marketing performance was extremely strong during last year and we generated $3,300,000,000 of EBIT, which is up $1,000,000,000 of the previous year, 41% up and that's been a strong performance from our major Commodity trading units, energy generated $1,800,000,000 of EBIT, which is $437,000,000 higher than the year before And metals $1,700,000 which is $578,000,000 higher than the year before and that was supported by market conditions And the difference in 2019 when we had the challenges on the cobalt, which we spoke about previously.
The agricultural division Well and Vatera where we equity account the 49% ownership which we have in Vatera, equity accounted $211,000,000 there, $58,000,000 the year before, so that is a good strong performance from our agricultural business. The company has an extremely strong balance sheet now. The net It has been reduced to $15,800,000,000 and that is successfully repositioned within the $10,000,000,000 to $16,000,000,000 target range, which we set for the company And we're targeting to get down towards the middle of that range and hopefully lower by the end of 2021. We have available committed liquidity of $10,300,000,000 and we have the bonds maturing maximum $3,000,000,000 every year. As I said earlier, the spot illustrative cash flow at today's spot prices would be right about $17,000,000,000 close to $8,000,000,000 free cash.
So the company is looking extremely strong going into this year. And as I said, hopefully by the end of the year, we should generate that type of cash. Turning towards the sustainable performance of the company. Unfortunately, we had 8 fatalities during the year. Pete and his team is still working extremely strong on that, noting that we do employ 145,000 employees and contractors through our business, But we're definitely aiming to be fatality free throughout our business, but you'll see the total recorded injury frequency rates is decreasing, lost time In injury, frequency rates is also decreasing.
So this is an area where Pete and his team are focusing on to ensure we become fatality free in this company. If you look at our scope 1 and 2 CO2 emissions, we talk about 24,300,000 tonnes. And if you look at our Scope 3 CO2 emissions, 264,000,000 tonnes, but we'll talk about that later what Glencore is doing in this area to ensure we are reducing both our scope 1, 2 and 3 emissions. So with that, I hand over to Steve to talk about the financial performance for the year.
Thank you, Ivan. So we commence on page 8 in terms of financial scorecard. We'll get to most of these main headline numbers later on in the presentation as well. Don't intend to dwell Annie, but just in terms of just from a statutory perspective, if you're trying to sort of tie it up, we obviously took some impairments in H1. It was taken primarily there.
There was a strong profit performance in H2 given the headline numbers. But net income, pretty significant items Up year on year by 2%. All the other debt and cash flow metrics we'll look at in the coming slides. If we go to page 9, Just looking at the industrial part of the business, as Ivan mentioned, there was a 13% decline from $9,000,000,000 to $7,800,000,000 June, the year very much a tale of 2 halves in terms of industrial business with significant tailwinds for this business going forward into 2021 as well. Metals and Minerals side was actually up by 31%.
Particularly, there was a pleasing turnaround at the African copper business, essentially Katanga, With a successful ramp up higher metal prices also in H2 contributing to the 2.5 times performance half on half H1 H2 and very healthy mining margins in that business at 36%. The energy business was the drag on earnings industrial side During 2020, reflecting both oil and to a lesser I mean coal prices to a lesser extent the oil prices, we did respond to market dynamics By reducing supply out of all three of our jurisdictions in Australia, Colombia as well as South Africa seeking to rebalance markets, we did see some recovery in prices As reflected in the spot cash flow analysis, which I'll go through later on, it wasn't quick enough to materially change 2020's trajectory. So we finished the year at $1,000,000,000 but already annualizing now just the coal business itself at $85 Newcastle or so is now slightly above $2,500,000,000 as well. I think the table on the bottom right is quite telling, showing The overall $7,800,000,000 industrial EBITDA for the year is made up $2,600,000,000 in H1 $5,200,000,000 So you can see that recovery in H2 2 on prices and volume, some of it COVID related particularly in the metal side.
And as we move forward in 2021, we're now annualizing 13,000,000 on the industrial side, it was the end of January prices. So that's already comfortably ahead of the run rate in H2, which itself was a strong recovery period on period. If we look at page 10, just showing the waterfall on the industrial bridge from 8.9 to 7.8, The pricing variance was the main factor, but had been narrowing progressively during the year. If you look back to the H1 presentation Just on price variance, we were $2,100,000,000 period on period. So now it's down to 780,000,000,000.
So actually a positive period on period variance During H2, within that pricing variance, energy was down 1.6. Of that coal 1.4 and oil was 0.2 of that. Mentals was actually a positive $900,000,000 within the price. And you can see some of the percentage average The pressure space where we have exposure mostly is byproducts, but we also have the primary gold producer in Kazakhstan. You've seen prices up about 30 And on the pressure side, the PGM side, we also have byproduct exposure in nickel and the alloys business as well.
And you also have the pricing. We had a better second half, although the average was broadly similar in many of the base metals. The fact we had higher volumes in H2, we were more exposed to higher prices and you had some positive provisional price movements, Particularly in copper, so strong pricing performance within H2. The volume was all these variances have narrowed During the year, both volume and cost was higher at the first half, particularly both volume and cost impacts was felt in the coal business, Reflecting both voluntary and involuntary adjustments to market conditions and COVID related suspensions within coal and the averaging effect on the cost Efficiencies that that has as well. Within both those categories, the metal side of the business was actually positive offsetting The weaker performance from particularly the coal business, there was a bit of FX relief primarily on the South African rand period on period was $165,000,000 of that $243,000,000 But that's very much rearview going into 2021.
All those bars, at least from a net perspective, Expected to turn materially green on a price and volume perspective as we go forward. If we look at from page 11, some of the individual Scorecards for the various businesses as well starting with copper on page 11. Copper Industrial, dollars 4,500,000,000 of in 2020 representing 39 percent of group EBITDA. So starting to sort of leap in terms of overall mix Given current macros and the scale and strength of that particular business, pleasingly, its cost structure Back in August, I think we guided to 106 all in cost in the copper business that came in at 94 as a function of both efficiencies production Scale with also help from byproduct pricing in silver, gold, also zinc. There's some byproduct The Antamina operation within these results and Cobalt started showing some improvements towards the end of the year, particularly affecting Katanga.
That in particular has been the major increase in 2021. I think cobalt is up close to 50 Already year to date and we'll see that in some of the pricing benefits as well. So good performance on the copper side, particularly the The turnaround in the African copper business had a $1,000,000,000 turnaround 2019 to 2020 from a 0.3 negative in fact in 2019 to 0.7 With significant additional improvement expected in 2021. Later on, we'll look at the 2021 Illustrative Spot Scenario Guidance, we haven't changed any production guidance for 2021 And beyond from where we were at 4th December when we gave the update. What we have rolled forward or reflected in each of the businesses is a roll forward Of the cash costs within each business reflecting macro development from 4th December out to the end of January.
So that would reflect byproduct pricing, FX And fuel prices where you've seen obviously energy prices generally through crude and diesels also increased. So we were showing $0.87 a pound in copper for 21 guidance back in February and back in December and that's down to $0.80 a pound at the end of January With cobalt improvements in men's, since then that would have even moved down from men's. So $6,700,000,000 will show later on, Up to 42 percent of group EBITDA as well. Page 12, if we look at zinc side of the business that delivered a little over 2,000,000,000 EBITDA 2020 representing 18%. We also saw big cost improvements over the year on a post byproduct basis.
Through middle of last year, we were sort of $0.05 positive. We came in at minus $0.07 a pound. And again, that was a strong production performance in H2 And the increase in the byproduct credit that gets allocated across that business. So for this business, gold and silver in particular, Also significant lead producer, which comes in and quite a sizable negative H2 cost performance. For full year 2021, we're looking at negative 0 point 11 dollars a pound no change since December.
We We're seeing increased tonnage this year. We spoke about that also back in December. The main contributor being the commissioning expansion of the Jyrum complex in I think as we move forward as well. Just looking at nickel, came in at $600,000,000 EBITDA, page 13, 5% Of EBITDA, the key focus for this business is getting the ramp up of Kolyamba over the next few years, both to drive scale Around exposure to the nickel pricing, which is relatively strong at the moment and to also manage average costs as we go through the next period and deliver some expansion Within this business as well. Pricing, we've guided to 117,000 tons Production this year, no change since the 4th December.
That's seeing some year on year improvements, which we hope and expect out of Tony, Amber, as we move forward as well. On a spot basis, that business doing a little over $1,000,000,000 of EBITDA. As I said earlier on, this does have some of the exposure The high PGM prices, particularly out of Canada as well as cobalt prices out of Australia and Canada as well. Looking at coal on page 14, this was the lag on earnings contributions in 2014, but we're starting to The recovery in performance in this business as well EBITDA of $1,200,000,000 down to just 10% of Of group EBITDA costs and the likes came in as we would have expected. You can see through the table at The bottom of the top table just showing a Newcastle average pricing.
And you can see, if you like, that's where the damage was done through the periods 2019. Average 2019 was $78 down to a little over $60 and we're running about $85 at the moment, Generating 2021 illustrative of $2,500,000,000 as well. We have seen some tick up in cost In this business, we were guiding to about $47 in December. We're now a little over $50 and that's essentially the currency effect In Australia, but producing in Rand and the diesel intensity of this business as well with crude about $60 at the moment as well. You don't of course, get any byproduct relief within this business as well.
On an illustrative pro form a spot basis, coal moves up to about 15%, Thermal of that would be about 12%. We do have a met business, which would be about $500,000,000 of that $2,500,000,000 as well. Moving to page 15 and the marketing performance. This cushioned the overall performance of 2020 to deliver the stable year on year EBIT performance of the $11,600,000,000 we saw an extra $1,000,000,000 On marketing, up 2.4% to 3.3%, up 40%, and that's across the board, very healthy and strong performances. Metals and Minerals up 578, Somewhat flatted by the challenging cobalt market conditions, which we described and experienced in 2019, but net net, a very solid And consistent performance across all the metals and minerals units.
And then energy was 4.37 Benefiting from the, as we said, exceptional price movements, dislocations and carry trade and volatility within that business as well, particularly through H1, although H2 was also a very solid performance. And pleasing Libera, which The former Glencore AGRI in which we own 49% that had a very strong performance in equity pickup for us at a little over 200,000,000 That's at obviously the 49%. Grossing that all up to sort of 100%, you got a business at sort of around $1,000,000,000 worth of EBITDA. In terms of guidance, 2.2%, 3.2%, sticking to that range and we've plotted some of the data points from 2020 Going back all the way to 2,008, you can see quite consistent sort of around that range occasionally dips a bit below, a bit above, But it's a consistent range, validates the range itself and nice to have a data point now at sort of at the top end of that range as well, Which is you've got to go back to 2,008 as well in that particular. Top right, you can see some of the normally metals would be about Sort of twice the energy in a sort of average cycle cruising speed sort of period energy was sort of very much a Obviously, an exceptional performance.
If it's repeatable, we'll sort of wait and see. But that was very much Part of getting to the $3,300,000,000 as we did in 2020. We just guide to the balance sheet generally. What was a very important market for us as we approach the end of the year was to get the debt back within the 10, 16 range. That's been successfully done and We've done and repositioned at 15.8 or 15.2 ex marketing leases, which is the number that we primarily focus on for the purpose of that range.
And particularly the current strong levels of cash flow, as Ivan said, dollars 7,200,000,000 on the $16,000,000,000 of free cash flow, it's probably ticked up close to 8,000,000,000 That clearly provides the fast track pathway towards our short and medium term targets around this year getting back below the mid range, so below 13 And towards the low end around the $10,000,000,000 in a sustainable fashion, which is where we want to do and clearly getting a net debt EBITDA Close to the one times, which would ensure that through the cycle and less than two times is never breached even through this cycle. As you can see in terms of net debt EBITDA, we peaked at 1.8 in June. Having started the year at 1.5, We're down to 1.37 at the end of December. And on a pro form a sense now, we'd be in fact below 1 already with net debt 15.8 and EBITDA at 16 plus, so we'd be below that level, which is a good position to be in. Net funding was broadly flat, In line with a pickup in the RMI, we're around $2,700,000,000 That was reflecting primarily the higher prices From period to period, start to the end of the year, copper up 26%, zinc up 20%, Alie up 11%.
There is some countercyclical still carry Trades on the books that will work their way through the system in the next sort of year or so, both in the oil side and on the metal side. So, You might ask if prices keep going, does your RMI sort of materially go above the $20,000,000,000 You will have Some positive factors on pricing. But as we go through a more pro cyclical period of Economy tightening markets backwardation curves, our units that we're actually carrying will also come down. So you'll see that positive impact as we go through on the RMI. On page 17, just on capital structure.
As I said, we're now looking to get below the middle of the range This year, that looks fairly straightforward on current metrics and business performance. And bottom right is just an update on where we did finish up for the year and effectively a sort of the actual From where we were at page 17, I think the slide of the H1 presentation where we said here is the pathway from 2019 credibly to below 16, what did it need to do in terms of both the cash flow generation at the time, which was still strong, and also the fact that there'd been a temporary Build up in working capital at the time, non RMI of around $3,000,000,000 finished the year at negative 1.5. So there was still an impact on a full year basis, but H2 delivered a part reversal of that 1,500,000,000 And ultimately ex marketing leases getting to $15,200,000,000 with equity free cash flow now above $7,000,000,000 as we've started 2021. And we've already locked in, I guess, a month and a half of that, which is Which is showing through the start of 2021 as well. Page 18, just on the Distribution analysis, the policy as you all know is $1,000,000,000 fixed out of the marketing reflecting the more sort of stable Highly cash conversion aspects of that business from EBITDA through to very little CapEx, lower effective tax rates in that business as well, Plus 25 percent of industrial free cash flows, setting the base distribution.
And then on top of that, of course, The company and the Board would consider additional top ups at any time frankly during the year, reflecting the state of its balance sheet, The cash flow is reflecting the outlook and the macro environment generally. We've plotted on the bottom right the marketing, Industrial and total equity free cash flows of the business as well from which to calculate that $1,600,000,000 corresponding to to the latter one point Corresponding back to $0.12 a share. So that's what's being proposed at the moment. But I would highlight that we will certainly as a minimum get the interim results in August, but frankly at any time if we felt it was appropriate to do some top ups and some capital Structure management that would always be an option for the group as we go through, but a very strong position and Balance sheet in check, net debt deleveraging targets, clearly a priority still as well, as well as paying healthy distributions as we go through. On Page 19, just an update on the CapEx where that finished up.
The outlook is no change from the December update from 4th December With $5,000,000,000 of CapEx industrial expected for 2021, reflecting a little bit of catch up in the Sustaining area, you can see up to $3,800,000,000 There were some project deferrals and COVID related impacts on some projects and generally A more cash preservation mode early in the year, but that was probably $200,000,000 of that movement. We do have a few fleet replacements The timing wise, this happened to be 2021 impactful, but they also there to derive strong operational efficiencies as well as high Internal rates of returns in NPV, particularly at Lomas Bias and Enter Bacardi, our South American hopper business, we have some meaningful fleet replacements that are quite lumpy when they do happen. They don't happen Very often and they're looking good in terms of what cost structures we expect in those businesses going forward. Other than that, nothing to speak of. 2021 guidance quickly just to put the building blocks.
We've got some of the production profile from 2021 On Page 21, nothing has changed from here to December. Copper just reflects the removal of Mopane tons From 2021 onwards, zinc goes through a high zinc phase through the Thank you, Jairam and Antamina zones. Cobalt, that's the progressive ramp up of Katanga. Nicholson, Kaniyama tons, ferrochrome back from Some of the mandatory suspensions in South Africa and coal a little bit up as well from some of the market related reductions That we're taking proactive measures in 2020, some COVID impact as well and that's also with Prodeko out also in the copper cobalt business. And none of these Numbers reflect any Matanda restart, which there was a point earlier on that says we're obviously working on firming up The appropriate plans, both technically and financially, and we'll be able to report back during the course of this year on the plans going forward there.
On 2021, you can just see the I mean, Page 22, you can see the cost structures, copper down to $0.80 And improving that position byproducts that generates EBITDA of 6.7 percent as zinc continues to decline as well with higher production and the byproduct Benefits that come with that business. That EBITDA is up to $2,800,000,000 nickel up to 1,000,000,000 As again, you have a little bit of expansion and some higher byproduct credits, EGMs and Cobalt as well. Coles still a first quartile cash margin position, but a tick up in costs, which would be consistent with anyone producing in Non U. S. Function at the moment, be it Australian dollars or any other currencies that's growing and that's running at $2,500,000,000 plus at the moment.
Just to finish up on page 23, there's the illustrative group EBITDA of $16,000,000,000 generating $7,200,000,000 of free cash flow. All the details for this you can find on page 36 later on, including the macro assumptions that we used on page 40 at the end of January on that. So strong tailwinds going into 2021. And with that, I'll hand back to Ivan.
Thanks, Keith. As you can see, if you look at the next slide, 25, how Glencore is uniquely positioned with the goal of the 2015 net 0 emissions, which we believe will shape our future. You have a look at the slide to lead the 1.5% pathway transition to net 0, The world has to utilize a lot less oil and there's the graph showing how much less oil equivalent, 1,000,000,000 tons of oil equivalent on oil, coal and gas As the world reduces consumption of these different commodities. However, what that will mean is an Increase in the amount of metals required for the different types of electricity generation, electric vehicles, etcetera. And by our assumptions and assumptions, if you look at it for copper, where the world is today consuming roundabout30,000,000 tonnes of copper, It's going to increase to around 60,000,000 tonnes per annum per year.
By the year 2,050, that's 2 times today's consumption. And to give you an idea, therefore, we'll have to produce an extra 1,000,000 tons of copper per annum going forward from 20 21 to 2,050. And if you look historically between 20 10, 2019, we only increased 500,000 So we really got to double that to meet the demand for copper going forward with this transition to the different forms of energy. If you have a look at nickel, similar applies to nickel, especially within respect of the battery, nickel, which is in the batteries for electric vehicle. Today, the world consumes right about 2,500,000 tons of nickel.
We'll have to go up to 9,200,000 tons by the year 2,050, 3.7 times the amount consumed today. And to give an example, we'll have to have nickel growth, production growth of around 225 1,000 tons as opposed to 2010 to 2019, we've only been growing at about 100,000 tons production increase per year. So we really got to double production every year going forward. Cobalt is a similar type story. Today, the world consumes around about 130,000 tonnes of cobalt per annum.
And by 2,050, we'll be consuming roundabout507,000 tonnes per annum, a large amount of that is the amount of cobalt which is Put in the batteries for the electric vehicles and the growth of electric vehicle going forward will demand a lot more cobalt. Give you an idea there also tells you that we'll have to produce an extra 13,000 tons of cobalt per annum to meet that target Between 2018, 2019 where there's been a lot of growth with more production in the DRC, we've only grown 7,000 tonnes per annum. So we really got to double that. Similar numbers talk about zinc where we 13,900,000 tons going to 28,800,000 and we will have to grow 500,000 tons per annum as opposed to roundabout 260,000 tonnes. So that clearly displays these are the metals which are required in the future for this energy transition and therefore the world mining industry is going to have to find ways to increase production.
If you turn to the next slide, it's clear if you look at the mantle of to meet this global demand For metals, we will have to increase supply, but you can see there isn't a large pipeline of new mines coming into the system. And if you have a look at the slide on the left, there's been limited investment and no new sources of discoveries. So the investment, if you look between 2,001, when you had the big demand for commodities from China and there's a lot more capital expenditure in the Mining sector, we had ramped up during 2,005, 2,007. It has come down considerably now 2017 2019 And therefore, there are not many shovel ready projects. And as you can imagine, we're going to need a lot of shovel ready projects to feed this demand that is coming into this part of the commodity sector.
So therefore, we get it's going to be more challenging. Hopefully some of the mines will extend their lives with the higher commodity prices. You will need higher commodity prices to therefore In the life of these mines, the new mines are in challenging locations, lacking infrastructure, having governments there where it's easy to operate in those That's getting harder, but these are the areas where we're going to have to go and that's where this the new mines will have to come in these more difficult regions. So it's going to be a lot harder. Also, we're going to have to get more technically advanced to therefore mine these lower grade materials and that's Glencore is a leading in that area because we got Glencore Technology, which works on this all the time and we got XPS, so we lead us in this areas where we can get more efficiencies and utilize the better technologies at these mines where there is lower grades And that's where the mining companies are going to have to get smarter in order to mine these low grades profitably in order to meet the supplies demand.
So it's clear To meet this demand that we believe is coming with this energy transition is going to be difficult and the mining industry is going to have to increase their production in various different forms and manners. But as indicated in this slide, it's going to be extremely difficult. We are a leading supplier in these Particular metals and if you look at our portfolio, as I said, spoke about earlier, we uniquely positioned. We're one of the world's largest Copper producers in the world producing 1,260,000 tons per annum. And if you have a look at our reserve life, It's very large.
We've got around about 23 years left on reserves, but if you include the resources, it's somewhat higher And some of our mines can continue growing producing 50, 60 years. If you look at cobalt, we're the world's largest cobalt producer today producing 27,000 tonnes per annum that will grow as you've seen with the slide that Steve has given you earlier, we grow up to 40,000 tonnes per annum. We have a massive reserve life of about 50 years and even larger resources there. And as you can see, we are large producer of that commodity. The world's only 125,000 tonnes.
We produced 27,000 tonnes and as I said, growing to 40. If you look at nickel, we produce 110,000 tons growing 225,000 tons. We have 26 year life on our reserve over there. We've got a bigger resource base, so we can continue looking to expand in that area. And the same goes for zinc and vanadium and these commodities that are very much required in this new energy transition.
So we're uniquely positioned with great assets in those areas, the lowest cost producing most of those commodities, As Steve indicated earlier, and if you look at copper, we were producing at $0.80 per pound. And as the byproduct credits Get higher hopefully that will even come lower in that area. So really one of the lowest cost producers of these leading metals which are required going forward. Turning to the next slide, just an idea what Glencore has, a strong pipeline of brownfield and greenfield options. As you are aware and I've always stated, I'm not excited about greenfield projects, but Glencore does have a lot of easy brownfield projects where we can increase production with expansions.
But as I said with Glencore, we'll always be extremely cautious. It's more about value over volume and we'll not be expanding just for the sake of Expansion will monitor to see demand, what is required in the world and then decide how we increase and when we increase. What you'll see and we Spoken about our depleting coal assets. You will have a look as we move more into these other commodities. We'll be growing our metals in those commodities Whilst we deplete our coal production down to the year 2,050, which I'll talk about in the next slide, as we support our decarbonization footprint going forward.
So that bodes well for the demand of the various commodities. If you have a look at the next slide where we talk about the transition of Decarbonization and our emissions footprint, as we said during our December presentation, we look at all three of our Scope 1, 2 and 3 emissions and we add that up. And as you can see in 2019, we had 376 1,000,000 tons of CO2 emissions at Scope 1, 2 and 3. And we said we will decrease that both with our Scope 1 and 2 as our assets deplete And we'll also on Scope 3, as we deplete our primary, we run down our coal reserves and therefore reach 40% Decrease of our CO2 emission, Scope 1, 23 by the year 2,035. So we're one of the few mining companies We have put a clear pathway how we get to 40% by the year 2,035 of our scope 1, 2, and 3 emissions.
And as you can see, a large part of that is our coal depletion. We've also said that we will achieve by 2,050, we have Ourselves the ambition of achieving net 0 CO2 emissions by 2,050. How do we get there? A large part, as you can See is our primary coal depletion and that is where we run down our coal reserves and we'll get to a minimal amount by the year 2,050. Colombia will basically be shut by then South Africa and depleted a large amount of our Australian higher quality coals over there.
We will also reduce our scope 1 and 2 by energy efficiency and fuel switching at our operations And the other mines besides our primary coal depletion will also get there with offsets and efficiencies, Primarily from carbon capture storage, we'll be doing a lot of work in that area and we believe the world will have progress in carbon capture storage, whereby we'll get the benefit of that and therefore the consumption of our commodities and the CO2 emissions with the consumption of those commodities will decrease considerably. So we've got a clear pathway how we get there, our medium term 40% by the year 2,035 and net 0 by the 2,050. If you have a look at the next slide, it shows what we try to emphasize there. Our approach is unique in our sector. Our competitors are not At the same Scope 3 reduction as we have said.
If you have a look, we all talk about Scope 12, but Slide there gives you an indication that scope 12 is very small in the total amount of our CO2 emissions from our products. Scope 1 and 2 in the case of Glencore only represents 8% of our total CO2 emissions. If you have a look at our peers, it's Also similar small amount scope 1 and 2 is insignificant in the amount of the CO2 emissions and a large part of the CO2 emissions come from scope 3 when the consumers are utilizing our products. So therefore, as I said before, by 2,035 and I gave an indication how we reduce Scope 1, 2 and 3 emissions, where we get down to 40% by the year 2,035. That gives you an idea how our peers are also doing that.
They mainly being Paris aligned by Scope 12 and no one is being getting Paris aligned in respect of Scope 3 And that gives you an idea how we are reducing in that area. If you move towards 2,050 and our total CO2 emission ambition To be minus 100% by the year 2,050. I explained earlier how we get there. And if you have a look at our peers, A lot of them are getting net 0, scope 12, but to get scope 3, none of them are getting to net 0. So we believe we're unique in the sector, in our sector whereby we are reducing and an ambition to be 0 CO2 emissions by the year Turning to the next slide, the last slide, Page 32, giving we were uniquely positioned for the future.
We believe we've got the right strategy. We are achieving net 0, as I said, global emissions by the year 2,050. And we recognize our responsibility to support the achievement of the goals of the Paris Agreement by decarbonizing our own emissions footprint and as I said, All 3, including Scope 3. We will put a plan to our shareholders for an advisory vote at our AGM in April on this strategy. And therefore, we will take it to them for the vote.
So as I said, and as you can see through this presentation, we have the right business model going forward. We're responsible in a flexible business model that adapts for these new commodities that is required in this energy transition. We are a leading producer and marketer and recycler of transition commodities. We have a large amount of smelters around the world where we can recycle A large amount of these commodities, which is also helping for the energy transition. And as I said and Steve's pointed out, our quality Polae is well populated with large scale, low cost, long term, high margin assets.
So that's how the company looks for the future. We talk About coal and how we're going to be responsible stewardship of coal and our policies going forward and how these policies have been set up. So I think the best person who can talk about Future as he is the guy who is going to be running this company and positioning the company for the future and he can lay out his strategy, How we wish to handle the company going forward. So Gary, you're on the line. Your chance to tell the investors how you're taking this great company forward.
Thanks, Alwyn. Thanks very much, and good morning to everybody on the line. I mean, terrific set of results, as you can see, we presented today. And Just to put in a bit of context of where our climate change strategy that was announced on the 4th December last year at our Investor Day, I was deeply involved in the development of that climate change strategy and the business strategy around it. And I firmly believe it's the right strategy for our company.
Our plan is to, as you've seen, to decarbonize our total emissions footprints. That's For Scope 1, 2 and 3, which is unique in the industry. How we get there, as you've heard from Arvind, is a depletion of our coal business. And that really gets us to a ambition of net 0 by 2,050. It's the right pathway for Glencore.
It's the right pathway for the world. And that's the way we're heading. I mean, of course, we'll listen to shareholders. We want to hear what the shareholders have to say. They believe in our strategy.
So far, the feedback Very positive, but we want to hear more. If there's a demand to do something different by the shareholders, we'll listen to this and we'll focus What the shareholders want us to do. But I strongly believe in the approach outlined in this presentation. It's the way forward for our company. It sets us up for the future.
And I look forward to driving the strategy as we go forward.
Okay. Thanks, Gary. Well, I hope you consult with me as a shareholder when I'm sitting in the On the strategy and we will discuss this over time together with the other shareholders, but please make sure you keep paying me a good dividend. Okay, Steve.
Absolutely. I
think that captures everything for today. So I think, Martin, we're open to hand over to questions. Thank you. Thanks very much.
Ladies and gentlemen, we will now begin the question and Session. Please stand by where we compile the Q and A Thank you. And our first question comes from the line of Alain Gabriel from Morgan Please ask your question. Your line is open.
Yes. Good morning, gentlemen. Two questions from my side. Firstly, on the capital returns policy, you have hinted at the top up in the first half. Have your priorities changed?
And in other words, where would you spend the incremental dollar? Would it be towards reaching the lower end of your net debt guidance or increasing shareholder returns? That's my first
question. Steve?
I think this year we've said we want to get below the middle of the range. So that's That's a priority. But I think just the extent of the cash flows, it's sort of $7,000,000,000 and even on a monthly basis, It doesn't take much to certainly get through 13% and get towards 10% as well. But I mean, if we're carrying on with the sort of cash flow that we are obviously generating and the macro picture holds up As we expected to do, then I think the probability or likelihood of some top up come August, I would say, is Obviously, very high at the moment. So first priority, get below 13% and then see what sort of how to navigate still additional top ups And the medium term journey to get sort of 10.
I think they're not fully inconsistent. I think we can Find the right balance in August.
Okay. Thank you. And the second question is, you seem to be actively managing the sale assets Via the Mopane exit and then Prodico. Where is your focus next? Which assets are you targeting next exit?
I mean, there's smaller assets, we just look at them all as we move on. We've said we want to reduce the amount of tail assets, the one that takes Large amount of management time and doesn't contribute a lot to the profits. So we're just moving 1 by 1 through their process.
I think most of you know what that tail looks like. So, those are the areas that we're obviously focused on, those that don't necessarily add much In terms of materiality, exactly as Ivan said, they do have a huge footprint in terms of day to day management from Operational and safety and the likes as well in environment and the ones where maybe the price or the optionality long term is not Like the core part of the portfolio.
Thank you.
Thank you. And our next The first question comes from the line of Ian Rizzo from Barclays. Please ask your question. Your line is open.
Good morning, guys. Just to follow-up on Alain's Question on the tail assets. I mean, do you have a sort of a size of an asset base in mind? Or and maybe just In terms of timelines and I guess quantum of sort of proceeds, if you can provide a bit of color on that would be great. Thank you.
Yes. Look, we're working 1 by 1 through them. You'd only be a genius. Just look at those assets, the tail ones there, they don't generate much cash. We're getting a bit of interest from various parties.
And as we get that interest and some of them we go through a formal process and then we Wait for reverse inquiry and we're progressing well through that. How much cash generation? Steve, you can talk there.
Yes. I mean, I wouldn't I mean, these are not the ones that are going to inject multiple 1,000,000,000 of dollars. I mean, those are clearly the assets that we're happy to keep ourselves. I mean, Those are the core assets. I wouldn't I mean, we'd obviously want to sell for value and do things that make sense both in structure or Ongoing commercial ties, it can be a range of things that's part of the sale process.
But I wouldn't start necessarily penciling in Or sort of multi billions here nor carving out assets that make sense sort of for us to keep. You can see how quickly The sort of positive exposure is to sort of cycles and the good assets and the good commodities that you have at the moment, the last thing we want to be doing is 2, 3 years down the track is Kicking ourselves on a few of these things, but certainly some things that obviously make sense. And those are the things like Molpani, like you've seen Prodeko, there's a few things Maybe in the oil side, a few things in the zinc side. These are things we're looking at.
And they're very much in progress at the moment. There will be announcements over time. And as Steve said, they're not going to generate big amounts of cash that we're going to stand up about it, but they do make it easier to run the company. And as Steve says, for safety standards, etcetera, it's less work for Peter and his team And for assets that don't generate much, it just makes it a lot simpler. So that will happen pretty swiftly.
Thanks. Maybe just to follow-up on Prodeco. Do you obviously, you're rescinding the mining licenses there. Are you also giving the liabilities back to the government? Or Do
you still sit with the liabilities?
Gary, I think you can answer that.
Yes. We're not rescinding the licenses. We're handing it back under Colombian law, which The process called reversion. We will be up to date with all our obligations to the government when we hand it back. Those are That covers the full suite of responsibilities, any outstanding royalty payments, any backlog in environmental work that needs to be done, We will do that to make sure we are up to date with that.
Any work that we have to do in terms of rehabilitation compensation outside of the mine, Any of our social commitments with respect to our communities, all of those we will be keeping to and doing, And we'll be handing back the mine to the government in working phase. If the government decides to award the leases to somebody else, Okay. They can, but we will be handing it back and taking on all our responsibility and making sure we're up to date with all our liabilities.
Okay. Thanks, Gary.
Thank you. Our next question comes from the line of Liam Fitzpatrick from Deutsche Bank. Please ask your question. Your line is open.
Firstly, just on the DRC. You've mentioned you're looking again at Matanda, can you give us a potential time line there in terms of project approval and the construction period? And then linked to that on the mining tax code, has it now been effectively accepted by the industry? And if not, What are the next steps in the time line from here? And then lastly, a question for Gary, just on the business structure.
Do you think the business is too complicated? Glencore has got 2 to 3 times more assets than major peers. So in this ESG focused world, do you think simpler is better? And are you overall happy with the organizational structure as it stands today?
Okay. I'll talk about Mutanda. As I said, Peter and his team are working on it. They're still working through the process. There's no exact timeline.
I think hopefully Peter will give us an answer soon when he's ready to pull the button on that, but we're still doing the work on it. So I cannot give you an exact time on that. The new mining code in the DRC, no, we have not accepted it. We are still in discussions with the government and we'll continue to have discussions with the government and we have not accepted the change of the old code to the new code. Gary, hand over to you on the structure, if you think it's too hard a job or not?
Certainly don't think it's too hard a job. It is a hard job, but not too hard a job. I wouldn't take it if I thought so. The asset the company is clearly Quite complicated, but we have a terrific team of management at all levels managing the business. And sometimes some of the complexity is what gives us our advantage.
We're able to operate in jurisdictions where many people don't. We're able to Marketing business, which is resilient through the cycle, that complexity brings with the returns for us and managed by A terrific set of management. Obviously, we've heard from Steve and Arvind, there is a drive to reduce some of the tail assets, which you know what And that will, by its very nature, take out some of the complications and simplify the business generally. But overall, the organization structure is good. It is robust.
And there's no major changes that I believe are necessary.
Thank you, Gary.
Thank you. Our next question comes from the line of Stephen Brunet from Exane. Please ask your question. Your line is open.
Good morning, gentlemen, and congratulations on cost performance. Just had one question on Nickel and Konyamba. If you could just walk us The steps toward a ramp up to nameplates, what's left to do On the technology side and so on. And as we talk in New Caledonia and in the context of a fairly tight All market for nickel, are you considering any potential export of ore straight from New Caledonia, so DSO?
Okay. Peter is here. I can hand it over to Peter, so he can give an exact update what's going on Kone Amber. Peter?
All right. Thanks, Ivan. Just quickly looking back at last year, which was a disappointing year, with only just under 17,000 tonnes, Really driven to a large extent by COVID. And we obviously have to shut down the furnaces Roughly on an annual basis and COVID caught us in the middle of one of the shutdowns. And it had to be extended for several months because we couldn't get resources Because of travel restrictions, that meant that we operate the other furnace longer than we would normally.
And we're now moving from a 1 essentially a 1 furnace operation that we had last year, And we'll be stepping back to the 2 furnace operation by April this year. The key is that over the last 18 months, We've had some management changes and brought in some additional skills onto the island. We've Looked at all of the bottlenecks and we're reengineering all of the issues that we think will hold us up. And we're expecting a Surely high output this year and stepping up over the next 3 years towards the high 30s and early 40,000 tonnes per annum.
Okay. Nickel ore. Nickel ore export, nickel ore, we're not doing this.
There's no plan
for that.
Okay. Thank you.
Thank you. And our next question comes from the line from Myles Aloft from UBS. Please ask your question. Your line is open.
Hi. I think it's Myles Hulte with UBS. Just maybe a few questions. First of all, on the coal markets, obviously, we're seeing this very Strong rally on the back of the cold winter in China. Do you think coal prices can hold at this level?
Or do you think as we move Into the spring, we'll see prices rebase back down to $50 $60 How are you The market and can you take advantage by lifting volumes from some of the Mossbald or assets in Australia was the first question.
Okay. Yes, the co market, it dropped during March as you're well aware with COVID, a lot of industrial consumption, Especially in India, got affected, Malaysia, different areas. So therefore demand decreased even in China. So that's how we dropped 250. As you're aware, it's not just the cold winter industrialization has picked up in India and in different areas And the world sort of got back to a better position and that pushed up demand.
Naturally, the cold winter has helped, but you also got to remember, There is no new supply of seaborne coal in the market, okay. Indonesia picked up a bit, slightly not that much in Russia. You saw us in Colombia, Colombia decreased, you had problems at Cerrohon and you had Prodeko shut, you also had us cut back in Australia. We'll bring back some of those Australian tons which we cut back, but nothing of major amount, but we are decreasing in other areas. So, yes, I think it should stay strong.
And it's a matter of as the world industrial Industry picks up again. There are new coal fired stations being built around in Asia and demand continues there even though Europe's a lot less. But as Europe demand is only seaborne coal about 35,000,000 tonnes. But the main thing if you look at supply, Supplies reducing all over the world on the seaborne side and no new tons coming into the market.
So we should expect a higher price. And one thing with your responsible ownership strategy of coal, when you look at The total emissions reduction in 2020 versus 2019, you've cut emissions by over 20%. Almost That 2,035 target is starting to look quite conservative. Obviously, there is a cyclical element to it. But Do you are you going to set out any interim targets to over the next sort of 5 years of time frame as opposed to looking out over a 15 year time frame to Add credibility and convince people it's not greenwashing.
No, you can see it's not greenwashing. We don't To give a scorecard year by year, we said we're aiming to get the 40% by 2,035. We are on that trajectory. And as you can see, we've reduced quite a bit already. So we'll just continue going on that trajectory.
You can see it's not greenwashing, it's actual Depletion of production of the actual tons and that continues to go. We're not talking about massive carbon credits or other type greenwashing stories. This is real, as I said, it's not wishy washy that we've heard some of our competitors talk about. This is real depletion of production And reducing our Scope 3 CO2 emissions with less production coming out from our coal mines.
One very last question on Glencore AGRI. Obviously, good performance. What's the kind of strategy with AGRI going forward? Is it Yes, core part of the business. You obviously rebranded it back to Viterra, which created some questions as to where it sits medium term.
But How extension of our agri as part of the portfolio?
I think it's still an important part of our portfolio and I don't see any reason why it shouldn't. It trades, it has the same The rest of Glencore on the trading side, they also own a vast array of assets. And we've always said, we've got Very strong partners in the business, the 2 Canadian pension funds and that's a business we'd like to see going forward. So I'm sure Gary and the team and Dave Matista running the business will want to grow it. And I don't believe, as you can see, is contributing Well to the company and we'll start paying out dividends.
So I think it's something that should grow and they're always looking for View opportunities to grow that business.
Thank you. And our next question comes from the line of Jason Faircock from Bank of America. Please ask your question. Your line is open.
Good morning, everybody. Thanks for the call today. Just a couple of questions. The first one is for Ivan or maybe for Gary. It looks like BHP is Looking at selling some thermal coal assets, could Glencore be a buyer of those assets?
So or more generally, is the purchase of coal assets Consistent with your emissions framework. So that would be the first question. Second question, just on your bubble chart on Slide 28, so the brownfield projects. Do Do you have any thoughts on the aggregate amount of capital that could be put to work here and the potential returns that we'll be looking at? So is this $5,000,000,000 or $10,000,000,000 of total CapEx that could go into these projects?
Sorry, Jason. I mean, Gary, you can I can comment a bit, but I don't think we have intention of buying BHP's coal assets? As I said, We're depleting our coal assets, so nothing really to do on that front. On the other side, you said if you look at Gary, I don't know if you want to add anything else on call, but I think that covers it.
No, that covers it. I mean, we're not going to comment on individual transactions.
Okay. On the other thing, if you look at Slide 28, now that just gives you an idea, you know color why you Look at each asset there and you can see some would or brownfield easy expansions, not massive CapEx. Others would be large CapEx. As you say, the $3,000,000,000 $4,000,000,000 type greenfield operations, as I said, I'm not excited to do those, but it's going to be The new management to decide, but hopefully they'll follow my policy and avoid greenfields for as long as possible. But some of these brine fields, you know, color was as well known, you can expand that, the exact amount of billions, I don't know, Pete and his team always look at that.
But that is an easy expansion. Loma's The extension is also pretty easy. We've spoken about Muthunda, the copper cobalt restart. We're looking at that. But yes, most of the brownfields are not massive projects.
Greenfields, yes, all those big projects and we're going to think twice about that.
Okay. Thank you, Ivan. Can I just come back to the first question? I just want to make sure that I understand the answer. So you're saying that You will not be buying any coal assets as part of your ongoing strategy around coal and the rundown?
Look, we can't talk about particular transactions, But we are running down our assets. That's our intention. I mean, I don't know what else is coming there. We can't talk about any particular transaction. We'll wait and see.
Jason, nothing that one does would jeopardize those medium and long term goals. So I mean, it's not going to be a straight line journey. I mean, Even within our sort of existing portfolio, there's going to be periods of declines. It might go up a little bit. There's an extension here.
It goes down. But that line and the end goal It's absolutely sort of locked in the exact path and trajectory with sort of which you take will be sort of determined With obviously emissions, economics, social responsibility, all those sort of things in mind. But that's not going to be compromised in any way, shape,
Yes. How you get that linear line and how that line is going down within different mines will be different. Some mines may be expand, other mines may be depleting, other reserves may be developed, other reserves depleting. So we've got a lot of mines. I don't know.
Swap on that?
Swap as we may swap, as you say, if something comes available, we may look at it and get rid of something else. So we will Work within our portfolio of coal assets, following that trajectory, the 40% and the 0% by 2,050. Following that trajectory, we will get there working with various assets within our group plus could look at other people's assets and doing swap type arrangements.
Our next question comes from the line of Sergey Donskoi from Societe Generale.
Yes. Hi, everyone. Thank you very much. First question is actually maybe a follow-up to Jason's. Could you remind us please, what would be the volume of coal output by 2,035 consistent With the same reduction of your scope 3 emissions by 40% in tonnage?
I don't know the exact number. You're not going
to be fine. I mean, take out 2019 and chop 40% of that. That's a pretty good
Close enough. You can see if you look at that Page 29, it shows you most of it is primary coal depletion. The rest is small.
And that's the minimum. It doesn't mean you won't See that, that's also there's a bit of oil in the mix, which also disappears over that sort of profile, but that would be a pretty good base assumption.
Understood. Thank you. Now a second question. On your copper revenue, I think that well, it seems that the average realized Price was pretty strong, especially in the second half of the year on my numbers by as much as maybe 9% versus Average support. The question is, was it because of inventory release or was it the effect of provisional pricing or timing of shipments or something else?
Provisional pricing would be the biggest component. Timing of shipments would be the second in that. So obviously, you saw that Increase accelerate towards Q4. There was more sales. We were stronger in production also Q4.
So you get the benefit of obviously high price Robin, let me add that PP was important in November December.
Would it be possible to quantify the effect of Provisional pricing or is it something that can be worked out from the numbers?
I think without provisional pricing, you would have Being close to an average realization, but you do have the timing of I mean, if you look at our quarterly production, it was obviously stronger H2 2 on H1, particularly an operation like an Antamina was down for about 6 or so weeks. You saw a continued ramp up at So just timing of production would have been the smaller components, PP would have been the majority.
I see. And lastly, the Dalyn Obruchevskaya Zinc project in Kazakhstan, what is the expected capacity and when do you think The mine will become production accretive.
Peter? Well, as you know, we're running those operations at the moment Through the Ritter concentrator and as those ramp up, we're replacing tonnage there. So there are decisions going forward as Whether or not we expand concentrated capacity. But as they come in at the moment, I would say the same level that we are at the moment.
I see. Thank you. And when this CapEx is going to be spent?
The mines start running down in 3 or 4 years' time, so the expenditure will be over the next few years.
Okay. And that's in our numbers, so again, in those CapEx guidance. That's part of those assumptions.
Thank you very much.
Thank you. Our next question comes from the line of Chris Laffino from Jefferies. Please ask your question. Your line is open.
Hey guys, thanks for taking my question. Just two questions actually, one on the outlook for your key markets and secondly on Strategy or capital allocation. So first on the outlook, you make a pretty compelling case about major supply constraints, the structural demand drivers due to decarbonization, markets are tight already. Looks like commodity markets are only going to get tighter, which means prices I would assume go materially higher. So the first question on the outlook is how would you compare the outlook today To the early 2000s, like the beginning of the China super cycle?
That's the first question.
Yes. Look, the China super cycle came and that At the time people did have potential projects or reserves they could develop. They weren't ready for the boom and that's why we got the boom because it took them time to develop But by the time 2008, 2009 came, they had developed them. So that is the difference. The demand was there.
The demand was very strong, But the supply was also there, just a little bit delayed. You remember that time you couldn't even get a Caterpillar equipment, you couldn't get ties. So you're a bit delayed, but It was the mines and potential mines to increase and new mines to open up. The difference today now how is demand outlook? Okay, a lot As I said earlier during the presentation, depends on what's going to happen on infrastructure development in the United States.
China, we know is strong, 50% of the world's commodities are consumed in China as you're aware and demand is strong there and looks like it will remain robust. How the rest of the world develops and when does the fiscal spending occur in the U. S. And infrastructure spending, if that does kick in, then demand is very strong. And as you can see, besides the actual infrastructure spending, the new generation of commodities that are going to be required for the new energy mix And these are these commodities which are spoken about.
Demand will, I believe, also be strong there and the outlook does look good. The difference this time to 2,002 and as I clearly set out in the one slide, I think it's Slide 26, We're not ready for it. And even though they weren't ready for it in 2002, the projects were there. Today, I don't believe we have those projects and it's going to get more difficult. So I think the supply response this time is going to be harder than before in a lot of these more difficult commodities, especially if you talk cobalt, copper, Those are the main two ones where the world is going to struggle.
Nickel, yes, they can pick up supply because NPI in Indonesia can continue growing and The ore and the reserves are there. It's more difficult in copper, it's more difficult in cobalt, zinc, there aren't major big projects that are also occurring. So that can be difficult. And coal, it looks good on the supply side because no one's going to finance new projects and there are no new projects with the negativity around coal. And therefore, new supply seaborne coal is going to be more difficult even though demand is picking up because there are new coal fire station I know a lot of others are closed, but even if coal demand stays flat, supply, seaborne coal is going to be difficult.
Thanks for that. So basically, you're currently within your net debt target range. You're doing $8,000,000,000 of mark to market free cash flow. The outlook for commodities appears to be pretty compelling. You're going to generate lots of cash in the years ahead.
I guess the question then is why would paying net debt down Further be a priority. I mean, it seems like if anything, a big buyback or even acquisitions would be a pretty Compelling strategic use of capital at this point in the cycle. I mean, your shares are obviously materially lower than where they were when you IPO ed, but the outlook is probably better now than it was then. And again, the balance sheet being at less than one times net debt to EBITDA, it seems like you're in a pretty good position now to go out and actually put capital to work to actually create longer term value by Making investments now, just what's the overall philosophy around that?
Okay. Steve can talk about the debt, why was bring the debt closer towards the lower end of the range towards the $10,000,000,000 I think I can answer part of that question, but I'll leave him to answer. I think we've been through enough cycles to have the balance sheet in a lot stable place and €10,000,000,000 net debt is a nice place To have it there. But if you are the other idea that you say go buy things, there's not much to buy and I don't see anything Dubai right now, but I'm sure Gary and the team will be opportunistic and if opportunities come and are there, they will look at it. But right now, I don't see anything that they can go There are some brownfield expansions.
They can look at that. I'm sure that capital Could potentially be deployed, but as you know Glencore is very cautious on that and we don't want to be the one who adds new tonnages into the market that Pushes down prices. We'd rather as you say, let's generate the cash, let's get this $8,000,000,000 free cash and hopefully it gets grows more As commodity prices go higher and then just kick out dividends to shareholders. Steve's got a note there whether we do buybacks or not, I think rather leave that With the commodity price and the way commodity prices change, we'll leave that to shareholders and kick out tariffs, but I think I'll leave it to you to comment on that, Steve.
Yes. I mean, Chris, we were sitting here 12 months ago, before kind of the world sort of fell apart for sort of 3 to 6 months. So I mean, these things can turn around Pretty quickly positive. They can turn around pretty quickly negative. And we've seen I mean most companies including ourselves have the scars of having Too much debt in the sector without precipitous.
You can go from an EBITDA of 16 or 17 to 8, 9 or 10. We were in that same position 12 months ago, we were here. I mean, we were talking about a dividend last year that we paused for sort of 2020. So we didn't want to be in that position again. I don't think anyone enjoyed that Necessarily what's the right number.
We think 10 is the number. If you've got better ideas, sort of feel free to contribute in, but we feel that's sort of a good number around sort of where we are at the moment. A little bit of debt is fine. It's perfectly good. In fact, it's probably helpful.
And then sort of put this balance sheet Beyond any sort of doubt, there are some people probably sitting on this call that at 16 would not be comfortable investing and at 10 would jump in with sort of 2 feet and 2 arms. So we think that that's the right thing. The business obviously generates the cash. I haven't said, obviously not averse So, other forms of investment provided they reach their return, but it's a competitive environment out there for good assets. So I don't think anything is going to come cheap.
Maybe equities is a bit cheaper, but that's not our business is buying equity. That's your job out there. But going out and buying assets in copper or nickel or whatever the case may be, maybe coal is the one area, but you've just sort of heard our discussions Obviously in that. So I think it's the right sort of balance in terms of the balance sheets and debt levels and capital allocation.
Thank you for that.
Thank you. Our next question comes from the line of Dominic O'Kane from JPMorgan. Please ask your question. Your line is open.
Good morning, guys. Just a few quick questions. On cobalt, you've given us your production guidance. I wonder if you could give us your sales guidance for 2021. Will it closely mirror the production?
Or should we be expecting a greater volume of cobalt sales This year. 2nd question, just I mean, whether a question for Ivan or Gary. Just If you could maybe just give us some insights on how you're thinking about country risk with respect to future projects. Does your experience in Zambia and some of the other frontier jurisdictions lead you to pursue a slightly more conservative attitude to country risk exposure longer term? And then final question just on marketing.
It's relatively early in the year, but Is there any insight you can give us into how current market dynamics are shaping your expectation for commodity trading through 2021?
Okay. And the cobalt, I think production and sales should be similar. Gary can talk about other jurisdictions, what he feels about it. On the marketing, it's only been 2 months. And as Steve said earlier, I think you mentioned earlier on the call, the marketing looks good.
Is the market well set up? Yes, I think it's not bad. Will oil be to where we get the volatility and the That we had in 2020, we'll wait and see it's early in the year, but so far the marketing has performed well. Gary, you want to comment on other jurisdictions?
Yes, sure. Look, I mean, we're a company with experience operating in, Let's call it more difficult jurisdictions. But as Ivan pointed out earlier in the presentation, the world is going to need a lot of commodities, In the commodities we're in and they're in they're no longer in the Tier 1 first class jurisdictions. They're in the slightly tougher ones. So if the world needs it, we that's where not only us, but everybody's going to have to go.
So of course, we're not going to be Cowboys and going to jurisdictions that we don't believe our assets are safe will go into jurisdictions where there's Good regulatory environment, whether it's a good judicial environment where we can operate effectively and efficiently, bring our safety systems and our way Working efficiently. But if you want to be in the resources And you want to develop and we need and grow in the commodities that we're in, Then unfortunately, we can't one can't stay in these 1st world jurisdictions because that's not where the growth in supply from these commodities is going to come from. So we'll be careful how we operate and choose carefully which jurisdictions, but we We certainly will need to be in those sorts of countries.
And I think the rest of the mining industry is going to have to look to those jurisdictions. They have no option if the world is going to meet the Supply, the demand which we believe is going to occur and the supply in the easy countries is getting more difficult and the material is not And we're running out of material there. You've seen, look at our competitors, they are starting to go into these more difficult regions, exploration projects, etcetera, Teaming up with the smaller operators going into these areas. So I think we have no alternative and that's going to happen if the world's going to have to get these commodities for the future.
Thank you. Our next question comes from the line of Mile Alsop from UBS. Please ask your question. Your line is open.
Just a couple of quick follow-up questions. First of all, on Prodeco, are you retaining ownership of the port? Is it Feasible for Prodeko to restart under new ownership? Do they have a route to market? And then secondly, on working capital, we had the $3,000,000,000 build in the first half on the back of net payables Lifting half of that's reversed.
Should we expect the other half to reverse during the course of 2021? So we should be looking at a Kind of flat or even slightly lower sort of net working capital balance sort of in 2021?
Gary, you can take the Bruderco.
Yes. On the port, yes, we are retaining ownership of the port in Colombia. Any new buyer of or operator of Calantritas and La Jagua will have access through that port. It's a public port for public use. There are access arrangements in place.
It's a regulated tariff, so they will have access to market.
Steve? Yes, Miles, on working capital, obviously, net outflow 1.5 for the year, part reversal of second half. I would I think going forward, I would tend to sort of be more on the conservative side, assume that that's Not necessarily going to further sort of unwind it. We just manage it around the new levels of working capital in terms of payables and receivables And sort of days, clearly, we're compared to where it was sort of last year, it is more sustainable. It's more sort of conservative in terms of Sort of terms of trade and it may well I certainly wouldn't assume any further sort of release or unwind.
I think It's not a bad thing that it happened in terms of overall sort of balance sheet levels and alike. It's delivered the 15.8% when we sort of go forward and It will correlate with commodity prices and some other sort of opportunities or volumes that happen and we'll obviously comment on that as and when it happens, but I wouldn't assume a further unwind.
Okay. Thank you.
And our final question comes from the line of Please ask your question. Your line is open.
Hi, guys. Maybe just to follow-up on Jason's question on the sort of Coal assets. Would you I mean, in terms of your comment around asset swapping, would you Be willing to increase your exposure on the Atlantic Coal market or is your idea of swapping more focused on Pacific in
I don't know with prices in the Atlantic, I don't think we'd be too excited. Not much The market is not looking great in the Atlantic. But Gary, do you want to add something there?
There's not really much in Atlantic to swap full year. I mean, if I bring our supplies into Asia, there's not much left there.
Well, he's trying to get to Colombia, I'm sure, Ferrant. Ferrant. That's where it's going, Gary.
I think the first question you got to do is go ask Anglo and BHP what they're going to do.
And as Steve says, the managed decline.
Okay. All right. I'll leave it there. Thanks, guys.
Thank you.
Thank you. Okay. I think that's everything. Thank you very much. Thanks for the call.
Ladies and gentlemen, that does conclude your conference for today.