Good morning. Welcome to our 2019 preliminary results. Today we have Ivan Glasenberg, our CEO, and Steven Kalmin, our CFO with us today. Thank you for joining us. Ivan, I'd like to invite you up. Thank you.
Thank you. Morning. Thank you for coming for our 2019 results. Looking at the highlights for 2019, healthy cash generation during the year. As you'll see, our 2019 adjusted EBITDA is $11.6 billion. That's down 26% from the previous year. The major part of that is due to the lower commodity prices during the year. As you note, copper was down about 8%, zinc down 13%, nickel slightly up 6%, cobalt was the big one, down 57%. If you take the Newcastle Coal, down around about 27%. However, we still generated a large amount of cash and operating cash from our assets and trading gave us right about $10.3 billion. That's down 22% from the previous year.
Shareholders return, we returned to shareholders right about $5 billion and as you'll note, $2.7 billion was by the way of dividends, cash distributions there, and $2.3 billion on buybacks during the year, $0.3 billion was from the 2018 program. Net CapEx was around about $5 billion. As you can see, we still had solid margin and cost performance on our key commodities, even though you had these reduction of commodity prices. If you have a look at the EBITDA of the mining, the margins at the operations still relatively high, even with the drop of these commodity prices, as I say. If you exclude the ramp-up assets, we still have EBITDA margins at the mining assets of around 37%, and as opposed to 41% during 2018.
We clearly kept our costs under control and allowed us still to make those high margins even though we had the drop in the commodity prices. Coal EBITDA, the margin is 36%, as opposed to 46% previous year, but the cost was still contained. As you'll see in coal, we contained the cost still at $45 a ton, which allowed us to make a $26 margin. The full-year cost performance in our key commodities displays that we have top quality tier one assets. If you have a look at our copper excluding Africa, which will come in and the benefits of Africa will start coming in this year. I think Africa eventually, subject to the cobalt prices, will even hopefully bring the costs lower on the overall copper prices. You'll see we still have $0.81 a pound copper production, which is extremely low.
Tier 1 assets, it clearly displays. Zinc, $0.13. Nickel, $2.77 excluding Koniambo. We'll see Koniambo continues to perform better and hopefully that will start contributing to margins going forward. Thermal coal, as I said earlier, we're still maintaining tight cost around about $45, which allows us to make a $26 margin on our coal assets. Back to marketing. As we've always said, marketing is extremely resilient, no matter what the commodity prices are doing and even with the falling commodity prices. We still performed well in the marketing sector, as you see $2.4 billion, which is 2% down on the previous year, but a very strong second half in the metal performance and robust oil results throughout the year. Even you are all well aware of the cobalt loss we took during the first half, so the $2.4 billion includes the cobalt loss during the first half.
Very resilient performance across the marketing sector. As I say, especially in the second half of the year, the metals marketing increased over the year in the second half. Talk about the balance sheet. Strong balance sheet. We still have available committed liquidity of around about $10.1 billion. We have bond maturities capped around $3 billion per year. Net debt, $17.6 billion, that includes the $1.25 billion added on because of IFRS 16 accounting rules, which force it to put related lease liabilities onto the balance sheet. 2020, the idea is to reduce the net debt to EBITDA down to 1 time. Also to bring the debt around about $214-$15 billion, which Steve has always said that's where he'd like it within that range. Therefore, we'll move it around. That's where we'd like to be, even with 1 times net debt to EBITDA.
Even with higher EBITDA going forward, we would still like to keep the debt around about that level. We've recommended dividend this year of $0.20, which is around about $2.6 billion, which will be payable in two equal installments over the year. Talking about sustainability performance, fatalities is still an issue for the company. As you will note, fatalities has increased during the year. Large result of some of our focus assets which we're still working heavily on and Peter's here today and he spoke about it in our investor presentation in December, the work being done in that area. Spent a lot of time at two of the problematic assets and we're doing a full restructuring over there in Kazzinc and in Mopani.
Hopefully we will start reducing that and become fatality free, which is our aim going forward. A lot of work is being spent in that area, and Peter and his team is employing a lot of people in that area to ensure we start improving considerably there. This is our commitment of Glencore to transition to a low carbon economy. As you are aware, in 2019, a large amount of our capital expenditure is towards energy transition materials and basically that is copper, cobalt and nickel. If you have a look where our CapEx has been spent during 2019, it's been in those areas. It is the ramp-up of Mopani. It is the Katanga asset where we produce a large amount of our cobalt and copper.
Katanga, this year we said we'll produce 270,000 tons of copper. It will produce around about 30,000 tons-32,000 tons of cobalt. We're starting to transition most of our capital expenditure into that area of the low carbon economy. Nickel in Canada, which is used in the battery production, we'll talk about that later. We're increasing our production of nickel at Sudbury and capital is being spent there. What is happening in the other areas of our business? Coal, the Scope 3 emissions. What is Scope 3 emissions? We all know Scope 3 emissions is the emissions in the production of steel, in the production of power, in the use of fossil fuels in different forms of energy whilst you are burning at the CO2 emissions during the production of those commodities when you are utilizing those fossil fuels.
What is happening, we looking at our coal reserve base and where our coal production is going, it is depleting over the years. We are utilizing, digging the material out of the ground, and it's depleting, especially in Colombia and South Africa, we have depleting reserves. What we say here, our projection is by the year 2035, our coal production will reduce by around about 30%, and therefore our Scope 3 emissions, where this coal is being burnt in those power stations, is reducing. What are we doing? We are not selling our coal assets to get the Scope 3 off our books. Scope 3, because if you sell the assets and you sell it and you get rid of it or you spin it out, et cetera, Scope 3 emissions will still be occurring.
What we are doing, we are in fact depleting our reserve and therefore Glencore is having less Scope 3 emissions from the production of its commodity and especially coal as we move into other forms of a better low carbon economy, as I say, with the production of copper, nickel and cobalt. That's where we're going as Glencore to reduce our Scope 3 emissions, automatically reducing as we deplete our reserves going forward. If you look at cobalt, and as I said, an important part of the future to enable the mobility of electric vehicles, we are a major producer of cobalt in the world today. We produce around about 32,000 tons of cobalt. The market is around about 110,000 tons.
Going forward, as we expand further with Katanga, hopefully bringing Mutanda back up in about two years or three years, depending upon how the market looks and how we transition to the sulfide copper, we'll be a major producer of cobalt in the world. As you are aware, with the transition to the electric vehicles and two million electric vehicles being produced in the world this year and growing further, we believe around about the year 2030, we'll need another 75,000 tons of cobalt. A very important commodity. What we have done with cobalt and what we're trying to display in this slide is we have tied up under long-term contracts because of the demand for cobalt in the battery-making process for electric vehicles. We tied up a lot of long-term supply contracts.
Because of our cobalt being independently audited each year by the Cobalt Refinery Supply Chain Due Diligence Standard, this is a standard defined by our Responsible Minerals Initiative, the battery makers around the world like to have iCobalt, which is non-artisanal cobalt. It is produced in a large industrial operation and therefore is artisanal-free cobalt. We've signed these contracts. You've seen them being announced with Umicore, with TR, with SK Innovation and Samsung, and that is tying up a lot of our long-term cobalt supply to these major consumers of cobalt, which will be producing a large amount of the world's batteries for electric vehicles. That gives you a rundown of the structure of what we're doing going forward, and Steve will take you through the financials. Thank you.
Thanks, Ivan. Good morning to those in the room and those that may be listening in on the call. I think it's a reasonably clean, self-explanatory financial report. We were here just a couple of months ago updating on the longer term or the medium term, where we gave production cost and CapEx guidance for the next three years. I'll weave some of that also through the presentation, both in terms of the cash flow generations and spot prices today and some cost developments as well that we've obviously seen. Even on prices as we've gone through December to where we are today, it's pretty much as you were in terms of free cash flow generation because we've seen some reductions in some of the metals, coronavirus sort of discounting on some of those, but coal's holding up pretty well.
Gold, PGM. Cobalt, in fact, is also up about 15% or so as well. Just from an historical perspective, Ivan's highlighted some of these EBITDA 11.6. It was a pickup second half over first half. We were 5.6 in the first half. We've had the continuation of lower commodity prices, which has affected the full year results, primarily in copper and in cobalt. The industrial business was at $9 billion, down 32%. Marketing had a pleasing second half to the year, finishing $2.4. As Ivan mentioned, that was clearly covering some of the headwinds, particularly in cobalt for the first half, where we announced a $350 million non-cash NRV inventory adjustment, if you like. Some of that would have reversed backs on a full year basis. The cobalt absorbed non-cash losses would have been in the $200s in that year.
The $2.4 reflects the net amount of all that, and clearly second half performance was annualizing towards the top half of our range. In terms of the cash generation, I think the $10.3, the cash generated pre-working capital, is a more indicative headline cash proxy, because it sort of accounts for both the cobalt non-cash that occurred during the first half, and it's pre some tax mismatch or some lag effects that happens, which hits us at the funds from operation. The cash pre-working capital, which you can see was down 22%, that pretty much mirrors the EBITDA, which was down 26%. Slight improvement because of cobalt being non-cash at the time. The actual funds from operation $7.9 billion. That's after interest and tax.
Tax in particular is something that you should look at as something that was in cash terms relative to headline earnings in 2019 reflects a big catch-up in tax paid in 2019. Respective 2018, we were still working through some tax losses, particularly in Australia. You'll see that page 27 of the annual report, just in the balance sheet, the income tax payable itself dropped from $1.1 billion to $350 of income tax accrual at the end of the year. There was $755 million reduction there, as well as some prepayments in some jurisdictions that we expect some refunds as well.
There's close to $1 billion of tax that's been absorbed or paid within that funds from operation that doesn't relate to the headline EBITDA or cash during that year and is then effectively normalized and reflected in the spot free cash flow generation, which I'll talk about later. Pro forma really was closer to $9 billion in terms of funds from operations. You'll see the likes of some of that analysis and footnotes that we give throughout the financial statements. Net debt $17.6 billion. I'll talk about that, the pathway also towards $14 billion-$15 billion as we look towards 2019. The leases was non-cash adoption of IFRS 16 was a major impact in why we're there and not closer to $16 billion.
There was $1.3 billion of the lease impact, $900 million upon adoption, as well as some increases that's happened during the year in leasing, some of it in the marketing as well. Each time we charter a ship for more than 12 months today, a vessel, maybe 18 months or so, that suddenly comes on the balance sheet or a rental of some warehouse for storage of aluminum. If you do an 18-month deal, that comes on as leasing adjustments in these things. Those are going to recycle, particularly the marketing leases. There was $0.6 billion. They're going to recycle very quickly. The average profile or amortization maturity was way less than two years on that particular thrust. I'll talk about all that later on.
17.6, as Ivan mentioned, looking towards 14, 15 as our sort of next target or trigger or catalyst, at which point we would sort of reconsider that the balance sheet's in a much stronger position, reconsider capital management either in the form of additional dividends or potential buybacks at that particular point in time. If we get to the industrial, I think this is all well covered within the report and some of the details. Ivan still mentioned, notwithstanding the lower commodity prices, which we'll see in the bridge later on which accounted for by far the majority of the contraction in earnings from 2018 to 2019, about $4 billion of that difference. That was across the cobalt, 57% that's turned the corner now, at least. Mutanda certainly helped the rebalancing of that market as well. Coal itself has found some footings in certain markets as well.
Weak potentially Europe still, picked up in the South African and in Asian sense. Met coal's also picked up a little bit, and we'll show the spot cash flow generation also. Ivan also mentioned still the EBITDA margins, the buffer relative to still generating healthy margins within the business. On the right-hand side, you can still see pretty healthy margins notwithstanding. That reflects the low cost structure generally within our business, the high margin structure. Ferrochrome is a sort of a, generally a, I don't want to say a rounding error, but it's a smaller commodity in the business that's been under extreme pressure. We saw prices 14%, and that whole business accounted for $300 million in the price variance as well.
We've announced, people have as well chronicled the pressure, the margin, the power prices, everything that's down there, and the industry is trying to sort of respond. We've announced together with obviously various other companies down there are considering what the appropriate level of production is in these cost structures and how to turn that business around as well. Hopefully we will see some improvements going forward. On that particular bridge that I mentioned, so the big tower, the others are relatively small, is really the price contraction during the year as well, $4.3 billion. That was $2 billion in coal alone across the various mixes of coal, and $2.3 billion was on the metal side, of which our overall copper reporting line was $1.5 billion of that, cobalt $900 million, and copper $600 million alone. Cobalt clearly had a big impact, both in pricing.
To some extent, which we'll catch up over the next year or two, is the variance also between production and sales. It's been a slow period also in terms of, particularly from Katanga, if you like. They also released their results a few days ago. They announced 17,000 tons of production and about 4,500, 5,000 tons of sales. There's a buildup of drying capacity lack. They've got to catch up in the processing. Anyone with a calculator can work out clearly they're sitting with at least 12,000, 13,000 tons of cobalt contained down in within KCC as well. That also affects the timing, will also contribute to lowering of cost and cash flow generation forward. Our spot prices, our scenarios do not assume there's that sell down.
We sell what we produce, but that is also a factor that would have held back reporting of cash and profits during the year as well. Volume, not much to speak of. It was the full year effect of the two coal acquisitions, can still continue to generate good margins and strong cash flow generation, both at Hunter Valley Operations and Hail Creek. They were acquired partway through 2018, so there was a slight volume impact, about $0.4 billion, and then there was some negative impacts, a little bit Koniambo, but also some timing differences again of some sales against production, which should provide at the point in time that we then go and sell down those inventories, it will obviously contribute some earnings going forward. There was a little bit in zinc, nickel, and in coal, where we actually had some slight inventory differences.
Cost impact was, you had some inflationary impacts. Clearly, in Argentina is extreme. South Africa, to a lesser extent. You've got the currency relief on the other side. It's sort of as you were, if you look at the currency benefits, Argentina 130, South Africa 150 as well. Those affect some of the inflation as well as some power prices. There was a small non-cash, or it was an effect also during that particular year, where the previous year, we have to look at when we acquired Xstrata all those years ago, there were some provisions raised at the time for some take or pay provisions relative to spot prices, which is just unwinding over a period of time. Each year, we need to look at our long-term profiles and see whether any of that provision needs to be increased or decreased.
The prior year was slightly positively affected by a reversal of some of that provision. There wasn't the same effect this year. It's a base period where there's a negative. There was no negative this year, but there was a small positive next year. That's why you have a negative variance. It was all non-cash as that worked its way through the system. At African Copper, that variance of $456, that's not the price, that's just the volume cost variances. That was exactly the same variance at the half year. You've seen a stabilization in that business performance, both from a cost as well as a production. I think it was about $420, $430 at the half year. That's a function of course, Mutanda relative to the previous year.
Not so much on the cobalt side before it went into care and maintenance, there is low production volumes. We spoke about ramp and inflation and price pressure on the reagents and the consumables through the first half of the year, particularly acid and lime. The first full effect this year of the mining code, which started effectively around the middle of 2018. These were all impacts that ultimately, if you look at Africa Copper generally, it had a negative EBITDA 2019 of $350 million, strongly positive in 2018, both cobalt prices, volume with Mutanda, et cetera. On the spot scenario, as we look into 2020, there is about a $220 million positive. There is going to be a $500 million or so positive variance as we go from 2019 into 2020 basis to current plans.
Hopefully, we've reset both operational cost and the likes comfortably so we can deliver on that positive variance as we go forward. A few more details on the industrial performance in the usual format that many of you will be familiar. Page 24 of the presentation. Don't intend to go through that, but that provides a lot more of the detailed building blocks as to how the EBITDA of this business arose relative to some of the building blocks and the guidance and some of the information that we'd provided over the years. It had come in reasonably close. Cost generally a little bit lower. Production in one or two departments a little bit weaker. Net-net, we would have exceeded the overall industrial performance of the sort of small model, if you like, that we do.
Would have beaten on the coal, copper side, and nickel may be a little bit weaker on the zinc side. Overall, as you can see, copper is improving as the African business stabilizes and the volume and cost benefits arise. That $3 billion was made up $3.3, as I said, ex-Africa, and negative $300 million for Africa to give a $300 million. Africa was negative $3 for the first half as well. It was effectively flat second half, and you've got improving performance there. The overall business was $3 billion for the full year and $1.3 billion for the first half. You're seeing that growth in that business. We expect that to continue as just on spot prices today, where copper's come off, cobalt's where it is. Our updated cost and volume guidance will be about $3.4 billion EBITDA around spot macros at the moment.
That business you can see as well, hopefully, we would have peaked at the $1.48 per pound price. That's including the African business. We've said by 2021, that should be getting across the whole business towards the $1 a pound. You can see on the bottom left, ex-Africa has been very stable. The big South American businesses, Australia, et cetera, down at the $0.81 a pound. It's been a significant drag through the last 12, 18 months. We spoke at length about that through the interim results last year in August. We gave some updates on plans, operational performance. Katanga itself delivered its targets for the second half, and has started reasonably well also for the 2020 as well. Relative to guidance as well.
Nickel and coal have come in slightly better, as you can see, in terms of cost guidance that we'd given through the second half of last year at the bottom. On the nickel business at $396, $398's flat, ex-Koniambo at $288-$277, not much in there as well. Thermal coal's been holding pretty well at the $45, $46 cost and the margin of 26%-27%. I think the sort of metrics, the building blocks that we've provided have shown themselves to be quite useful and we're looking to continually provide, and I'll show you the 2020 numbers as we work our way through the system as well. On the marketing slide, as we mentioned before, $2.4 billion. We needed to catch up clearly in the second half, and we have done that across all businesses. We're strong. Oil is clearly the standout.
You can see the strength of the diversification across product, geography, different markets, different backdrops, different economies, to still deliver the $2.4 this year, as I said, still having absorbed the cobalt non-cash adjustments, which cumulatively over the year, having taken the halftime score of $350 for the full year, it would have been in the $200s. Still significant. Clearly, a less material driver over the full year and something that is obviously less material to have made a bigger disclosure around for the full year as well. As I mentioned also on a call later on, something that's lost down in those bottom blue numbers as well, but not to necessarily forget, is there was quite a good performance in the Glencore Agri business during the course of 2019. Our share of their net income was $58 million compared to $21.
Off a low base, still a doubling up on that business. The underlying business was circa 10% or so up. There's high depreciation on everything else, which is why we land up with a share of net income. That business is doing pretty well, and we expect even a better 2020 on 2019. Don't forget that that exists. We own 50% of that business and reconfirm the guidance range as well. On CapEx as well, no change to the 3rd of December guidance for industrial from 2021, 2022 to five, five and four two. That is fully loaded with industrial leases and everything that we expect of how the debt evolution will go beyond 2020, 2021, 2022. We gave the movements, we provided some of the building blocks of what we're still expecting.
The expansionary on the bottom towards the right-hand side, open up as well, is effectively working. There hasn't been any new big sanctioning of any sort of major projects. There's still the multiple year projects as you'd expect in this business as well. There's the Katanga acid plant that gets commissioned through the first half of this year. That's working its way through the system. Zhairem, the big zinc replenishment and mine over within the Kazzinc business. That gets commissioned during the course of this year, hence the big expansion you'll see later on in zinc tons over the next couple of years. There's almost a parallel two mines operating before you do see some declines out there within the next two or three years. United, a brownfield coal approval down in Australia just to replace some declining tons elsewhere.
The big refreshment of the whole Canadian complex across both the Raglan, Onaping Depth, the whole Sudbury Basin to extend and preserve 20-plus years' worth of life there. Astron, an oil refinery it is. As we spoke last year in December, it was part of the commitments in buying that. There is an upgrade around turning that into ultimately a good business in terms of margin environments, but it still needs to adapt to clean fuels and debottleneck that particular business in terms of throughputs. That will consume some CapEx and then generate some reasonable cash going forward. The oil drilling programs are all in sustaining.
Attention, please. The fire alarm is about to be tested.
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Please take no action.
Thank you, Cindy. Okay, Mark is off this week. I think we can continue. Looks like we're good to go. The middle graph, this should be the only time that it was just around the IFRS, the leases, and just trying to show you how it works through the 120 pages as you go through. Where we do report, page 51 or so, Note two, the financials, where we do show the gross amount capitalized into the assets on both the marketing and the industrial. $5.3 on the industrial, $438 on the marketing side. Of course, marketing is just mostly leases and shipping and vessels. There's no other CapEx that necessarily goes into that business. From a net cash perspective, you then pull out the IFRS leases and the other, most of it is page 10. You can see the new leases were added was $582.
There's a small amount of interest that gets capitalized. Obviously, that's non-cash as well. There's the $652, the net sale of the PPE in cash terms gives the $4,966. It's a transition year in respect to the leasing. As I said, both on the bottom right, those 5.55, 4.2s, it's neutral in terms of balance sheet. Those are fully loaded CapEx irrespective. There's some small leasing that we still expect in the industrial side, 2020. There's a few commitments on some fleets, and then it tapers off effectively beyond that, and it should be very little on the industrial side. In terms of balance sheet, as Ivan said, very strong liquidity position, $10 billion. A very manageable maturity profile, no more than about $3 billion. Still looking towards the longer term, 10-16 range.
That's excluding marketing leases because clearly those has no part to play within an overall longer term capital structure in terms of true leverage. These are more really short-term operating type consuming expenses within our marketing business, whether it's vessels and transport, if you like. $17.6 was reported net debt, $0.6 marketing leases, we get down to $17. We have mentioned that we would like to move towards the $14-$15 or closer to one times before we would consider. There is a priority or a natural de-gearing that's going to happen through the generation of free cash flow, $4.3 billion. I'm going to talk about that later on. $2.6 billion is distribution that's been recommended.
The surplus cash flow generation above all that's 1.7, that'll be prioritized towards debt reduction, which should see us in the current price environment move to a little bit above $15 billion. That's pre any long-term monetizations disposals that we may have, and also some release of some margin calls. There was a big outflow, just towards the end of the year, 2019. The last two weeks, we saw big spikes in oil and crude, oil and copper, both up 5%, 6% just in the month. The year finished about $66, $67 crude. We're obviously more down at $57. Copper was about $5,300. We've retraced those movements in December and just in that month alone, we had $800 million of margin calls go out in respect of our hedging facilities. Those have all come back since now through January. Some of that obviously adjusts the RMI.
Some of it does result in a non-RMI, depending on what's been hedged across the book as well. We have seen some partial reduction there, and there is a focus still on some non-core long-term monetization, which I'll talk a little bit about that later on as well. There's sort of the pathway towards '15, '16, 14-15. The pace of that and the trajectory and acceleration, everything else is going to be a function of macros, commodity prices. How soon do we get there? Is it six, nine, 12 months? I mean, pick your numbers, but it's going to be a positive trajectory on the way down.
That's just clearly more headroom, more comfort, more conservatively structured, and it would be a level at which we would then gather around the table and debate as to whether we wish the timeframe around capital management, additional buybacks, and the likes would be back on the table at that particular point in time. In terms of potential disposals or monetizations, page 26, we just update some of our various stakes listed or otherwise, and some potential non-core asset disposals. Yes, $1 billion still internally a number that we can construct a relatively easy case for delivering on that. In terms of time and quantum, it's now going to be a function of us being able to come down. The market backdrop today, the environment is very healthy in some areas, maybe less healthy in others, given things.
Anything precious, PGM, infrastructure, low interest rate environment, we have clearly positive exposure to some of those. There's some non-core assets there. One to just highlight, which is probably lost generally over here. As many of you know, we sold 50% of the Mototolo PGM operation in South Africa about 12, 18 months ago. It was 50/50 with Anglo. We sold it to Anglo so they could have 100%, but we effectively retained most of the price upside through a five to seven-year period. There was a deferred consideration which was not linked to operation. They took operational risk, but there was some price deferral as part of that. There's a series of five or six years worth of cash flows given the explosion in rhodium, palladium, platinum and the like.
Over the next few years, our nominal forward curve cash flows in respect of that in the $400 million-$500 million range at the moment. Even in the near years, you would get $100 million+ and then it would tail off. That's something we could look at, whether you hedge some of that, how do you accelerate it, how do you monetize, how do you lock it in? Something like that can clearly go towards even something like that was almost off the screen is a reasonable contributor potentially to that. You still have some U.S. infrastructure, long-term loans, other precious exposures that potentially gets us down there. Watch that space. We'll sort of come there.
Just to finish up before we get on the 2020, this just shows the, in fact, the movements in net debt in terms of the typical operational cycle was in fact slightly positive on the right. Oh, boy. On the right-hand side. This is before non-cash leases and a small amount of debt that was assumed in the Astron acquisition as well. I think there was about $200 million. Funds from operations $7.9, really $9 billion pre the tax catch-up, which is almost a working capital type adjustment. I spoke about that earlier on. We were flat in terms of net acquisitions and disposals last year. Hopefully, we can see some positive movement there, which I spoke about earlier on.
The net cash CapEx, I spoke to the $5 billion, the $5.3 billion of distributions positive. You had some non-cash, $1.3 leasing, which was the major factor in getting to $17.6, where we were at that stage. Going forward, you can see some deleveraging, some cash flow potential, $5 billion of distributions, $5.3 last year. This year, we've committed to $2.6 at the moment. Cash CapEx, similar levels. Hopefully, some positive on the acquisition front and still a strong business in terms of cash flow generation. 2020, if we just look at some of that guidance, maybe if we start on page 18. There's the production, our 2021, 2022, exactly the same as what we gave 3rd of December, no change. We're still comfortable with those numbers there. Where do we see some movements? 2019 to 2020, which we spoke about.
Copper and cobalt down on account of Mutanda, a cost structure that's improving, cash flow business overall improving in the business. Zinc actually has some strengthening volumes, particularly Zhairem or Antamina goes through a stronger zinc period. Both of those factors start between 2021, 2022 declining because you've got some parallel mines at Kazzinc. Antamina also normalizes back then. You've got one or two smaller assets in Canada and South America shut in 2022. Nickel, Koniambo, should see improvements during this year, another 4,000 tons there. Ferrochrome this year around supply management, market conditions as to where we are this year. Coal, pretty flat. Oil does see some reasonable growth out of all the jurisdictions in Cameroon, Equatorial Guinea, and Chad as well. What does that all mean back to the cash flow generation at the moment and the cost structures?
Copper, you can see a declining profile in terms of cost structure, 120/82. That's the same as what we advised a couple of months ago. Should see $3.4 billion at current prices being generated within the copper business. That does not include additional cobalt sales that are there to be had, subject to market price and the likes and drawing capacity that exists down there. Zinc, a slight reduction in cost guidance relative to where we are, a little bit by-product, a little bit currency. Nickel, quite a sharp reduction in price, both in actual terms relative to 2019, but also against guidance that we gave back in December, which was $396 down to $351. The PGM by-product is a major factor.
A bit on cobalt, but out of Canada, we produce a lot of the rhodium, the palladium, and the platinum, which delivers a benefit relative to December of more than $100 million into the nickel business as well. They'll deliver another $0.7 billion. Coal, $3.2 billion around spot price at the moment on 135 million tons. We've seen costs come down $2 since December, 47 down to 45. Currencies would play a big part. Colombia, South Africa, Australia. Low oil prices a little bit as well. The margins of a $74 Newcastle, which is roughly where it is. Coking coals has increased a bit, $160. Europe, not Europe, South Africa, API4 is strong, API2 is clearly lagging, but across the portfolio, we're still well positioned there.
As it all adds up, you've got $12.2 billion of that EBITDA spot prices today generating $4.3 billion of cash flow. Still more than 1.5 times covering the base distribution where we are and the pace of getting some of the targets from the balance sheet and additional capital management is really going to be a function of some of the macros as we go forward. I suspect there'll be some questions on that later on. Hand back to Ivan.
Thanks, Steve. Okay, what are our 2020 priorities? The same slide we spoke about in December. The important issues the company is focusing on. As I said earlier, health and safety is an extremely important issue. Peter's spending a lot of time in that. As I say, reviewing all our assets. Especially the assets where we've had the fatalities, sending in a team to ensure we get zero fatalities throughout the group. A lot of work's being spent on that. Hopefully, this year we'll reduce it considerably. The ramp-up development assets, as we spoke about in December, we got our various ramp-up assets to ensure that they deliver and they perform on time and on budget. Katanga is a major one, the one in Africa, which is a large asset. As we said, last year, we ended up producing 230,000 tons.
This year, we aim to produce 270,000 tons of copper and around about 29,000 tons of cobalt. It looks like we are online, and we believe we will hit those numbers during this year. We've had a good start to the year at that asset. The Mopani smelter restart, it has just restarted. It's ramping up slowly and also performing well. Hopefully, we will have a successful commissioning there. The acid plant in Katanga, which should get into operation during the first half of this year, is also online on budget, so that should perform well. Once again, the last asset that we've got in the ramp-up phase is Koniambo in New Caledonia, and to ensure that we get operational stability over there.
That's the last of our ramp-up assets, and then hopefully all our assets will be performing well across the group, and we won't have any issues at the assets. Operating efficiency and capital discipline. As we've seen, we do have assets, which is in the lowest quartile, and they're performing well. Steve gave details how they're going to perform during 2020. Once again, to manage the free cash flow of the company in the correct manner. Strong balance sheet, commitment to our triple-B investment grade rating. As we said, and we emphasize to hit an EBITDA, net debt to EBITDA of one time and to keep the total net debt $14 billion-$15 billion. Depending upon the cash flow as this year, you saw with the current commodity prices, we'll have an EBITDA around about $12.2 billion, which should generate $4.6 billion of free cash flow.
As we said earlier, we'll utilize that for the dividend repayment to reduce the debt down to the $14 billion-$15 billion mark, depending where commodity prices are going to be, if there's excess, we can continue focusing on more buybacks. Once again, depending upon where the share price is sitting and how the commodity prices are flowing and whether that cash flow will allow us to continue doing that. Management, we spoke about this in December. During this year, we will transition to a new management team. We've transitioned most of the divisions to the new management team. This is the fourth generation, as I mentioned, during December, the fourth generation of management changes. It will continue taking place during this year, and we're working on that to ensure that we will have the new management in place as soon as possible.
Confidence, stability, and consistency through the operation, as I said earlier, to ensure the assets are performing well, balance sheet in good shape, return any excess cash to shareholders, and be very disciplined on any capital allocation and ensure we're not wasting capital on new assets or expanding assets merely for the sake of increasing volume into the market, which could affect the market and not getting the right return for our shareholders. We continue emphasizing to ensure that if there is excess cash in the company, it is deployed in the right manner and not just put in assets for the sake of growing the business. If we cannot get the right returns within the business, return cash to the shareholders. We'll continue on that program as we have done in the past to ensure we are handling the company in the correct manner.
I think that gives you a summary of the results for 2019 and how we see the company going forward. We're open to any questions. Jason. Jason? Martin? If you want to get away from that.
Sorry, Steve, I wasn't sure if you touched on or not, but just in terms of the write-downs, the $2.8 billion, could you just talk us a little bit through that? Is that a pricing thing or is there something else going on there? Just to be clear, is that pre or post-tax?
Those are post-tax numbers. If we run through the more material, which some of them are pricing impacts, some are other events. Colombian coal is about $1 billion of that, circa half across Cerrejón and half across Prodeco as well. That coal is predominantly going into Europe historically, pricing of API2. It's competing with low gas prices, particularly in Europe. The overall economics, notwithstanding energy mix and the likes, that's what's really dented some of the economics and the prospects of getting better value for that product as well. We have taken, and particularly longer life assets, pricing over a long period of time will have less impact. Shorter life assets will have a greater impact also in terms of NPV. These are not the long life assets like we have in Australia and some other operations as well.
You're talking seven years Prodeco and sort of 10-ish or so Colombia, if you look at the, obviously, resource base over there. We did take our longer term to API2 prices down. I think we give the details on the financials, exactly what those assumptions are. That just across the normal curves would have had that $1 billion or so impact there. That is price related on European competition in terms of prices. Chad oil, there was 500 or so. That was already in the June results as well. We have our operating assets on the west side through three or four different fields. They're producing, drilling continues, fairly straightforward also there. We also had some big exploration acreage more on the east side, which there is some expiries and continuous processes that need to go to negotiate, extend, and get those terms.
The expiration of many of those was during the course of 2019. There was months of discussions and potential negotiations around whether it makes sense to continue with those projects or on what basis you could continue. In the end, they expired with no agreements being reached with the local government. We had to take the full impairment on the whole exploration acreage as well on that side. There was $500 or so there. Mutanda also something that was done in the August numbers. There was $300 there, which was a function of them going into the announced care and maintenance and just what the effect that has on the cash flow profile where you've stalled on cash and then again, there wasn't any long-term price adjustments there. It was purely reflecting the pause in business there. Those were the main ones.
Thank you.
Lee?
Lee Fitzpatrick from Deutsche. Two questions on coal. Firstly, on Colombia, I think you're losing cash at spot prices. How long do you tolerate that before you consider
Production cuts or something similar. Secondly, just on the broader question of a potential spin-out, is that part of your medium-term thinking? If so, what would be the potential triggers to that? Thank you.
Yeah. Look, Colombia Coal, as you know, in Glencore, if we are losing cash at any assets, we're not going to keep mining if it is cash negative. You've seen what we've done before in zinc. We've done it in coal. We've done it in our various operations. We continue assessing Prodeco, La Jagua, and Calenturitas-type operation. If they continue losing cash and we don't see a turnaround in the coal price, especially as we said into Europe, is where the issues occur on the API2, yeah, then we'd really got to make a strong decision and see what we do there, which we are assessing all the time.
Cerrejón still makes money.
Cerrejón makes money no matter. Cerrejón produces 30 million tonnes, so its cash costs are a bit lower. It also has contracts not only into Europe, where it gets the benefit of the higher pricing. We're carefully monitoring naturally what the LNG and the gas prices are doing in Europe and what effect that's having on the API2 pricing. That's going to continue reassessing Glencore. Yeah, there may have to be some hard decisions made there. Regarding the coal business, right now, the coal business continues. If there are issues and we're having issues of investors or bankers or people regarding our coal business, then we've got to assess what we do with it. Right now, it's performing well. As you saw there, the USD numbers are good, and it continues to remain within our operations. We spoke about-
It does decline.
It declines. We spoke about the Scope 3 emissions when the coal is burnt in different power stations around the world, like all Scope 3 around the world. It ours reduces automatically because our reserves are reducing, as Steve said. Colombia, by the year 2035, would have stopped producing both Cerrejón and Prodeco, and therefore we will be reducing our Scope 3 emissions projected around about 30% by 2035. South Africa also decreases as time goes on the reserve base there. Australia maintains itself. It is the higher quality, better quality coal, so you can continue staying at those levels, and we'll continue producing there.
Savan.
Good morning. Quick question maybe on marketing. Just wondering in the context of disruptions in China, whether you've had any issues with performance already or if it's too early to say. Also, in this context, if you could talk perhaps to the impact that disruptions in China are having on the domestic market, whether that's creating more opportunities for you to sell into China on call.
Yeah, the first question, a bit too early to say. As you know, the Chinese have just come back from their New Year. We're trying to assess what the effect is. We haven't had cancellation of shipments. We haven't had delays in opening of letters of credit across most of our commodities. Nothing really to give a clear answer yet. We're closely monitoring it. They've taken an extra week, two weeks, potentially, after the holiday period, and we'll see what effect that is having on the first quarter consumption. A bit too early to say. The second part of your question was about production in China.
Domestic.
Domestic production.
Well, yeah.
Well, on coal, you know that is the case. Coal production in China has decreased during the first few weeks of the year. Especially since the coronavirus situation. We think that is having a positive effect on the worldwide coal prices because of less production in China. As you know, China is one of the largest producers in the world today of coal.
Myles.
Yeah. Myles, for UBS. Maybe a few quick questions. First of all, on Katanga and the drying capacity, how much cobalt will you be able to sell this year? When does the drying capacity get up to fully invested and fully operational?
It should be through Q2.
Q2.
They gave also their release on last week or so where they sort of showed the full capacity reaching because they have two drying units. One sort of came back, still needing some work eventually. There was a bigger job done on two. Two is now up, now one sort of for a month or two is back up. They should be full drying capacity in Q2, which will allow for both drying of existing production and clearly catching up on some of the arrears as well. They can sell more than they produce this year. They will have both the capacity and logistics to be able to do that.
Okay. We're working on the assumption that you sell what you produce this year and you keep the 30,000 tons.
That's what we've effectively worked on in terms of the overall sort of cost guidance and EBITDA generation that we give in the copper business at sort of the $120. Katanga itself doesn't specifically give any guidance themselves at a granular level around their level. They just talk about production guidance of the 27,000 tons, ±2. Sales will be a function of-
At the market's peak.
of just getting up and running.
With the D.R.C. and the new mining code, whereabouts are the discussions? It seems that it is all gone very quiet. Are we into a period of acceptance now and you just have to live in this new, slightly higher tax regime, or is there potential for pushback then?
Look, right now, it's not a matter of acceptance. We continue talking to the government about the new mining code. We are paying the higher royalty today.
Okay.
Under obstruction, we're not agreeing to it. We are stating that it's not under acceptance. We still have the old mining code. It has a stability agreement in it. We're still backing by that. We continue discussions with the government around it, and we'll see how we progress. It's not an acceptance of the new mining code yet.
Do you feel the political backdrop now is a lot more stable than sort of 12, 18 months ago?
It seems okay. We've been dealing with the government on various issues, so we continue dealing with them. There is stability in the country. You don't see any major issues in the country, so it looks okay.
Another couple of very quick questions.
Sure.
Just with the capital management, should we assume that you can turn it on out of cycle? So if you get to your target net debt range tomorrow, we could see an announcement the day after, in theory, that we're going to have excess cash return to shareholders soon?
That's the way-
Yeah, we have announced buybacks outside of cycles in the past. That possibility, in theory, clearly it does exist.
We could do it any time, you got to focus on two things. Number one, okay, what the commodity price is, what we assume is going to stay going forward. Are we going to get the $12.2 or maybe get $15 billion EBITDA? How much cash generated net? Depends where the share price is sitting again.
It would be unusual to do it outside of the financial cycles, but it's theoretically possible.
Just on agri, you're saying how well it's doing. In the past, when you spun out stake, you talked about driving consolidation within that space. I mean, is that very much off the cards at the moment because of the focus on the balance sheet, or are those sort of opportunities still in the air and a real possibility?
The agri business, the balance sheet's okay within the agri business. You also know we have strong partners there. It's always been an idea to continue to try consolidate that industry and try grow that business. They continue to look at opportunities around the world.
You could do it without injecting any additional cash.
Subject to the type of deal that has to be done.
Yeah. Okay.
Thank you. Tony Robson, Global Mining Research. Energy products marketing did well in 2019. Could you go into a little few more details there? Would you roughly say the plit up between metals and energy for marketing similar in 2020, roughly as 2019? Thank you.
Well, I would say for 2020, maybe energy comes off a bit and minerals goes up a bit, because you won't have a repeat of the sort of cobalt, obviously, on the metal side, which was a major headwind in the first half, slightly less for the full year, but it was a negative that we'd expect positive this year. Just on that and on the energy side, yeah, oil did have a sort of a standout year. How repeatable that is obviously remains to be seen. You could have energy coming off a bit, mining a bit. It's very well broad and diversified across the businesses, but I would expect.
The diversity of the different commodities within Glencore and the trading business and having the oil, it moves around. You saw, as Steve says, last year, cobalt suffered, but the other commodities didn't perform too badly. Oil performed exceptionally well. Too early to say how it's going to do this year. The first month has been relatively good. All commodities kicked in nicely during the first month in the trading business, so we'll wait and see. As you can see, oil is pretty strong. Since we've been public, we've used that 2.2 to 3.2 range. As we've always said, the marketing business is extremely resilient no matter what the movement in the commodity price is.
Sergey.
Thank you. Sergey Donskoy, Societe Generale. Two questions from me. One on this comment that you made at the very beginning about reducing coal production by 30% by 2035 to meet Scope 3 emissions target. Far as I understand, about half of that will be met through depletion of resources in Colombia. The other part is obviously South Africa. The question here is this, to what extent this is your firm commitment, and to what extent it's a reflection of the weak price environment and whether you can kind of review this target going forward if the situation improves? That's my first question.
Yeah, it's not to do with the weak price environment. We're just depleting the reserve. The reserve base is so much, it comes to an end. Prodeco, Calenturitas, and La Jagua comes to the end of its life. Cerrejón comes to the end of its life. I think it's around about 2032 or something like that. It also gets to the end of the life, you've depleted the reserve. South Africa also depletes part of reserve. There's not much you can do about it. Those are the facts. We're going to projecting Scope 3 emissions reduction by 30% by the year 2035.
Sergey, Sorry, there's also the oil business that contributes currently.
Yeah.
That sort of also goes from where it is.
depletes down.
to almost being done by then. The coal profile is, don't assume just take 30% Colombia this and try and sort of back solve where it is. There's a whole.
In South Africa, in theory at least, you can invest in virgin resources, but basically.
Can invest in, sorry?
In resources, you can develop new mines and access new resources, basically, in principle.
On our existing reserve structure to maintain those levels is utilizing our existing reserves in the country. The question, you could buy more, et cetera, but we're also limited to 150 million ton cap. The ways we see it was what we got, what we wish to expand, what we wish to do, looking across our reserve base, et cetera, we will reduce Scope 3 emissions. Our projected number is 30% by 2035.
Thank you. My second question is on marketing division performance, especially metals and minerals. The second half number, speaking of EBITDA, was a very big improvement on the first half, but that was partly because the first half was affected by one-offs.
Yes.
If we add back those one-offs, the increase was about, I think, 8%, half and half. At current levels, EBITDA from metals and minerals remains in my numbers about 15%-20% below the average over the last three-four years. Is this a reflection of some structural issues, some headwinds in this particular division that may prevent it from achieving those high levels it's enjoyed before?
No, there's certainly nothing structural. It's had some very good years in the past which then become sort of above average performance. There's definitely been some of those years. There's nothing structural that's reset what we'd expect in a normal year or would prevent it from getting back up to those levels. Cobalt, as you said, was the major non-cash one-off in the first half, the $350. If I look across, given South Africa, Ferrochrome, that market was tough second half, so they would've been below average, but no reason. That's not structural. That gets back up and running at some point. Things like your chrome, manganese, vanadiums was below average, I would say, second half. That can have improvements going forward.
We've always said.
In terms of singling out.
Higher commodity prices, there's more margin in the business. There's more arbitrage opportunities. Markets are tighter. You're talking historically where we've been high. We've had higher commodity prices. It's been a bit tougher while we've had these lower commodity prices. As I've always said, the marketing business is pretty resilient, even with these lower prices. We've always said we perform better during higher prices, and we're more towards the 3.2 as opposed to 2.2 during higher commodity prices, where better arbitrage opportunities, markets are a bit tighter.
Okay. My last and very small question. Current pretty high price gap between South African and Australian coal. How do you rationalize it? It didn't exist historically.
Yeah, I think a lot of it because demand for South African coal is moving towards India, Bangladesh, Pakistan. And I don't know the exact figure off my head, but I think around about 75% of South Africa's coal is going to those three regions. So it's getting that advantage. The quality of coal that's required is South African, the lower type quality coal's going into some of those areas. So that's, I think, the reason why you got that. South Africa today on spot, I think is pricing at around about $88. Australia is pricing at about new cost, around about $76. It's because of the demand for that particular coal in India, Pakistan, Bangladesh, where South Africa's coal's relatively fast. You also remember.
Their supply is constrained.
Huh?
South Africa's supply is constrained.
Supply is also tight. What South Africa is exporting around about 73 million tons of coal today, I think around about that figure. There's no big growth. Supply is extremely tight. Eskom, okay, is taking a bit less than they used to in South Africa. You've got those certain mines going into Eskom, exports limited, depleting coal reserves once again at various mines in South Africa. Australia's, what, around closer towards the 200 million tons and going into other markets and not going into that particular market where South Africa's getting the advantage.
Tyler.
It's Tyler Broda from RBC. Two questions from me. The first one just on Mutanda. I guess the cobalt market remains quite oversupplied, you're seeing a lot of demand from potential buyers over time to come in. I guess my question would be just in terms of the sulfides project in Mutanda, when do we expect to see more from that and sort of what would be the timings around bringing that back online? Secondly, for Steve, we've seen a big drop in shipping rates over the last few weeks, I guess from both an IFRS lease perspective as well as just the marketing business in general. Could you just walk through how that could potentially affect the profitability? Thank you.
Okay. On the first one, Mutanda, as we said, we now got it on care and maintenance. We assessing the sulfide. Peter and his team's working on that. It's going to take a bit of time to assess when we could start it up, how profitable it would be. It also depends, the mining code also affects Mutanda, where we will be sitting on the mining code at the time we do start up and what effect that will have, whether we're sitting on the old code or the new code. Those are issues we got to look at. The sulfide, how we going to process it, et cetera. We're looking at various options there. That, I think, Percy, should take at least 18 months to two years before we really could decide whether we get that up and running again.
If there is an oversupply in the cobalt market, and we believe the world does not need it just yet, you're then talking 2022. We got to assess how the electric vehicle battery industry is performing and how much is required into the market at that time. I think we're talking today, I can't remember the exact number, around about 37,000 tons of cobalt utilized in that area. How does that grow? We got to monitor that closely, and then we'll decide. As you know, with Glencore, we're not going to put a product into a market that is already oversupplied. That would have a negative effect on the pricing. We'll assess that very carefully.
Shipping, these are very short-term contracts that we obviously have. That is just a new way of presenting them. We've always had Sort of time charters and leases that gets consumed generally within our own business and shipping our own products. It's not a material part of the business. There's no big length in shipping that you do worse because prices go up or if prices go up and freight rates. It's a small part of just securing the logistics that we need to be able to run the business. No material impact on the business.
Thank you.
Ephrem.
Two quick questions. First, on the portfolio mix adjustment, for coal, your assumption has come down from around $10 per ton at the December stage to around $5 per ton on 135 million tons, about $1 billion of incremental EBITDA. It's big. I understand it does not include the Japanese fiscal year assumptions because those contracts are still being negotiated. Given the spike in coal prices because of the coronavirus impact, do you think there is further upside to those portfolio mix adjustment numbers, if the Japanese fiscal year contracts turn out to be better? That's one. Secondly, on the ferroalloys business, which was a disappointment last year, vanadium and ferrochrome prices are both showing signs of life.
Is there a volume upside to be expected this year versus your guidance or is it just going to be price that's going to drive the upside if things get better?
Okay. The portfolio mix, we do build into that portfolio mix some assumption of that a certain percentage of our coal is going to get contracted under the JPU benchmark and what premium that we think is reasonable in the assumption. We'll, obviously, throughout the year, roll it into actuals rather than a guidance. Whether it's sort of historical premiums that we expect for X number of tons relative to a sort of a Newcastle Coal benchmark. I don't know the exact numbers, you normally I don't know what the premiums are. We build in a normal either we will beat that or we will not beat it. We will come in June or before and we'll either shrink or expand that portfolio adjustment based on that percentage of the tons.
It's not as material across the portfolio maybe as it once was. Obviously, at some point it just locks in your price. In terms of the size of those tons, it's not quite as material as it once was. Obviously, the strength in the API4, the South African, back to that question that was asked earlier on, that's also narrowed that gap because it's all pegged off a Newcastle. Historically, there would have been a discount. In fact, there's a premium in that. It's contributing positively. You've seen also pick up on the met side, which feeds into the portfolio. You've seen $10, sort of it was $150 or so through January. We've seen pickups to $160. It's early days in the coal world.
There can be sort of evolutions, but we do try and call it the way we see it at a particular point in time and provide that sort of guidance. It's sort of 3.2 and there's a lot of real estate between now and.
A lot of moving parts in the Japanese negotiations.
But it's-
We've got a few different time frames. You reset them.
The last couple of weeks has been positive, basically, on the coal side.
Let's see what the coronavirus, exactly what effect it has on the Chinese coal production. It's daily monitoring.
On the ferrochrome side, I would say, I wouldn't expect volume upside necessarily. Pricing wise, hopefully, given has been a little, as you said, pick up on the European side. If anything, we need to get through the Rustenburg process, we'd assumed obviously some tonnage coming out. The Rustenburg smelter is one of four or five complexes that we have down there. We announced, I think four to six weeks ago, a consultation period effectively around that it's been losing money and is the most expensive and has been the most impacted by inflation, high prices, and the like. It's not sustainable. It hasn't been producing, its capacity is 250,000, 300,000 or so. We had assumed an overall portfolio production-wise that included some Rustenburg tonnage. Let's see where that obviously proceeds.
The business, particularly that smelter and generally, needs to see high prices.
Sandeep.
Good morning. This is Sandeep from Morgan Stanley. I have a question on depreciation. It has increased to $7.1 billion, versus $6.3 billion last year. A delta of $700 million-$800 million. Is that a normal run rate that we should think for next few years? Secondly, on free cash flow, can you give a breakdown of what was free cash flow on marketing and what was for industrial? Because you used to have a slide in prior presentations. Thank you.
The depreciation, part of the leasing would have increased depreciation relative to the historical. As we've said, we've added that $1.3 billion of leases. These are fairly short-term profiles, there's sort of $300 million to $400 million in depreciation just on the leasing change relative to what standards applied in the previous years. It would be just the general commissioning of these various projects and these new expansions. There'd be more depreciation as in the oil side, on the drilling. There'd be just assessment of mine lives, new projects, Koniambo now depreciating that previously was all getting capitalized as that sort of production. Katanga now with the ramp up. As it sort of keeps expanding through its 150, 235, 270 this year, its depreciation unit of production, its base is quite correlated with that production.
You'd find at least 200 to 300 out of the African portfolio as well would be accounting for that. If you look at it asset-for-asset wise, you would see that it makes sense across the different expansions and where the maturity profile of those assets are. It should be, given production levels now, I would imagine it should be fairly stable at those sort of levels. Free cash flow from marketing, well, I mean, $2.4 billion EBIT. Tax across that business, we've always said sort of circa 10% is what the blend would be across the different jurisdictions. Primarily Switzerland's obviously the biggest by country mile there. That's circa 10%. U.S., Singapore, various other places tends a reasonable average across the marketing. It just comes down to the interest side, and we haven't got that specific number here.
I think we can look to reintroduce that in some of the disclosures going forward if it's useful information again, rather than a consolidated view. I know we did in the past.
Myles?
Just a couple of follow-up questions. First of all, on the M&A front, I mean, there is potentially a neighbor within the Hunter Valley up for sale at Mount Arthur, which here is super compelling in terms of industrial kind of synergies potentially, as well as marketing synergies and so on. I mean, how are you going to continue to be nimble, flexible, innovative, and see if there are ways to capture that without meaningfully increasing coal exposure, obviously improving the quality of the coal portfolio?
Of course, we'll always look to capitalize on opportunities, but we will have to live within the bands and the commitments we have. As you say, we could dispose of things. We've got various assets we could dispose or do something with. Something's got to be very compelling for us to look at it. There's got to be a lot of synergies, it's got to give us the right returns, et cetera. People are looking at potentially selling assets. We're not doing the same. As I say, we are just purely depleting, and we're reducing. We're not selling an asset to get rid of our Scope 3 emissions. If there's opportunities there, we'll look at it, but we'll still stay within our limits.
Is Mount Arthur, from a geographical perspective, as good as HVO in terms of?
We cannot comment on that. We cannot comment.
Maybe the second question, last question, just thinking about succession planning and can you remind us what you're looking for? Have you found any mini-mes in the Any clones in the ranks and timing and so on?
We've always said the board is looking at various individuals throughout the group. We've always said that it will be internal. There are a lot of internal members within the group who could take over. As I say, we've got to get first in place, as I said, the fourth generation in place, and then we'll move on the last leg.
Last piece.
That's the chairman, yeah.
We have a chairman, so that's chairman of the nom committee.
Yes.
Just to follow up on it's Jason Fairclough. To push you a little bit on this, I mean, why wouldn't you consider external? I guess beyond that, where are the guys?
Where? Which guys?
The new generation. You used to bring everybody along.
They're working. Working for the company and making us money to ensure they're in the running for the job.
Proving themselves.
Proving themselves. If they sit here, they're not doing much.
Very stable.
What were you saying about it? Why not external?
Why not external?
I think we've got such great internal candidates. They've been with us for many years. Names have been thrown around. Naturally, there's someone great out there who could run this company better than the internal guys. Of course, we'd have to look at that. Right now, we think there's such a good bench of internal guys who could take the position. I very much doubt if there's anyone better than them outside the company who can run this company better in the future. They've been in this company 20, 25 years, most of those individuals' names that have been thrown around. They know the company. They know the culture of the company. They know how this company operates, so I think they'll be great for the future of this company to ensure it continues its growth in the future.
If you've got any names, send them to the Nom Committee.
Appreciate it.
I think that's it. Thanks very much. That's the results for 2019. Thank you.