Good morning. Welcome to our 2019 preliminary results. Today, we have Ivan Glazenberg, our CEO and Steve Kalman, our CFO, with us today.
The highlights for 2019, healthy cash generation during the year. And as you'll see, 20 19 adjusted EBITDA was $11,600,000,000 that's down 26% from the previous year. And the major part of that is due to the lower commodity prices during the year. And as you note, copper was down about 8%, zinc down 13%, nickel slightly up 6%, cobalt was a big one down 57% and if you take the Newcastle coal down roundabout27%. However, we still generated a large amount of cash and operating cash from our assets and trading gave us sorry, gave us right about $10,300,000,000 that's down 22% from the previous year.
Shareholders return, we returned to shareholders around about $5,000,000,000 And as you'll note, dollars 2,700,000,000 was by the way of dividends, cash distributions there and $2,300,000,000 on buybacks during the year, dollars 300,000,000 was from the 2018 program. Net CapEx was roundabout $5,000,000,000 and 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. And if you ever 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. So 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. So 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. And as you'll see in coal, we contained the cost still at $45 a tonne, which allowed us to make a $26 margin. So the full year cost performance in our key commodities displays that we have top quality Tier 1 assets. And if you ever look at our copper excluding Africa, which will come in and the benefits of Africa will start coming in this year. And I think Africa eventually subject to the cobalt prices will even hopefully bring the costs lower on the overall copper prices.
But you'll see we still have $0.81 upon copper production, which is extremely low Tier 1 assets, it clearly displays zinc, dollars 0.13 nickel, dollars 2.77 excluding Kaniyama and we'll see Kaniyama 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 costs 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 $2,400,000,000 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. And even you are all well aware of the cobalt loss we took during the first half. So the $2,400,000,000 includes the cobalt loss during the first half.
So very resilient performance across the marketing sector. And 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 $10,100,000,000 and we have bond maturities capped about around $3,000,000,000 per year. Net debt $17,600,000,000 and that includes the $1,250,000,000 added on because of IFRS 16 accounting rules, which force to put related lease liabilities onto the balance sheet.
2020, we got the idea is to reduce the net debt to EBITDA down to one time, also to bring the debt around about $214,000,000,000 to $15,000,000,000 which Steve has always said that's where he'd like it within that range. And therefore, we'll move it around. That's where we'd like to be even with 1 times net debt to EBITDA. So even with higher EBITDA going forward, we would still like to keep the debt around about that level. We've recommended dividend issue of $0.20 which is roundabout2.6 billion dollars which will be payable in 2 equal installments over the year.
Talking about sustainability performance, fatalities is still an issue for the company. And as you will note, fatalities has increased during the year, a large result of some of our focus assets, which we're still working heavily on. And Peter is 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 2 of the problematic assets and we're doing a full restructuring over there in Kazink and in Mapani. And hopefully we will start reducing that and become fatality free which is our aim going forward. So a lot of work has been 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.
Okay. This is our commitment of Glencore to transition to a low carbon economy. And 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. And if you ever look where our CapEx has been spent during 2019, it's been in those areas. It is the ramp up of Mapani.
It is the Katanga asset where we produce a large amount of our cobalt and copper. Katanga, this year we said will produce 270,000 tonnes of copper. But it will produce roundabout 30000, 32000 tonnes of cobalt. So 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 being spent there.
So 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 and 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. And 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.
So what we say here, our projection is by the year 2,035, our coal production will reduce by around about 30% and therefore our scope 3 emissions, waste coal is being burnt in those power stations is reducing. So 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, etcetera, 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.
So that's where we're going as Glencore to reduce our Scope 3 emissions, automatically reducing as we deplete our reserves going forward. If we 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 tonnes of cobalt. The market is around about 110,000 tonnes. And going forward, as we expand further with Katanga, hopefully bringing, Mutanda back up in about 2 years or 3 years, depending upon how the market looks and how we transition to the low to the sulfide copper will be a major producer of transition to the electric vehicles and 2,000,000 electric vehicles being produced in the world this year and growing further, We believe roundabout the year 2030, we'll need another 75,000 tonnes of cobalt, so very important commodity.
But 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've tied up a lot of long term supply contracts. And because of us at cobalt being independently audited each year by the cobalt refinery supply chain due diligence standard and this is standard defined by Responsibility Mining Initiative. The battery makers around the world like to have iCobalt, which is non artisanal cobalt. It is produced when a large industrial operation and therefore is artisanal free cobalt. So we've signed these contracts.
You've seen them being announced with Umicore, with GDR, 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, and 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 3 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 with and 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, corona virus sort of discounting on some of those, but coal is holding up pretty well, gold, PGM and cobalt, in fact, is also up about 15% or so as well. So 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 heard the continuation of lower commodity prices, which has affected the full year results, primarily in copper and in cobalt. The industrial business was at £9,000,000,000 down 32%. Marketing had a pleasing second half to the year, finishing £2,400,000,000 As Ivan mentioned, that was clearly covering some of the headwinds, particularly in cobalt for the first half.
We announced a €350,000,000 noncash NRV inventory adjustment, if you like. Some of that would have reversed back. So on a full year basis, the cobalt absorbed noncash losses would have been in the 200 in that year. But the 2.4 reflects the net amount of all that. And clearly, second half was performance was annualizing towards the top half of our range.
In terms of the cash generation, I think the 10,300,000,000 the cash generated pre working capital is a more indicative headline cash proxy because it sort of accounts for both the cobalt noncash 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. So 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 noncash at the time. The actual funds from operations, dollars 7,900,000,000 that absorbs, that's after interest and tax.
And 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. And you'll see that Page 27 of the annual report just in the balance sheet, the income tax payable itself dropped from £1,100,000,000 to £3.50,000,000 of income tax accrual at the end of the year. So there was £755,000,000 reduction there as well as some prepayments in some jurisdictions that we expect some refunds as well. So there's close to £1,000,000,000 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.
So pro form a really was closer to €9,000,000,000 in terms of funds from operations, and you'll see the likes of some of that analysis and footnotes that we give throughout the financial statements. Net debt, £17,600,000,000 I'll talk about that, the pathway also towards £14,000,000,000 to £15,000,000,000 as we look towards 2019. The leases was noncash adoption of IFRS 16 was a major impact in why we're there and not close to 16. There was £1,300,000,000 of the lease impact, £900,000,000 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, suddenly comes on the balance sheet and 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 £600,000,000 They're going to recycle very quickly. The average profile or amortization maturity was way less than 2 years on that particular thrust. So I'll talk about it later on, 17.6%, as Ivan mentioned, looking towards 'fourteen, 'fifteen 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. So 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 £4,000,000,000 of that difference. And that was across, clearly, cobalt, 57% that's turned the corner now at least.
Matunda certainly helped the rebalancing of that market as well. Coal itself has found some footings in certain markets as well. We potentially Europe still but picked up in the South African and in Asian sense. Met coal has also picked up a little bit, and we'll show the spot cash flow generation also. But 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 £300,000,000 in the price variance as well. We've announced people have just well chronicled the pressure, the margin, the power prices, everything that's down there and the industry is trying to sort of respond.
And 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. And 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, £4,300,000,000 That was €2,000,000,000 in coal alone across the various mixes of coal and €2,300,000,000 was on the metal side, of which our overall copper reporting line was £1,500,000,000 of that cobalt 900,000,000 and copper 600,000,000 alone. So cobalt clearly had a big impact, both in pricing. And to some extent, which will catch up over the next year or 2, 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 tonnes of production and about 4,500, 5000 tonnes of sales. There's a buildup of drying capacity lack. They've got to catch up in the processing.
So anyone with a calculator can work out clearly they're sitting with at least 12, 13,000 tonnes of cobalt contained down and within KCC as well. That also affects the timing, will also contribute to lowering of costs and cash flow generation. Port, our spot prices, our scenarios, do not assume there's that sell down. We just 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 2 coal acquisitions, can still contribute continue to generate good margins and strong cash flow generation both at HBO and Hell Creek. They were required pathway through 2018, so there was a slight volume impact, about €400,000,000 And then there was some negative impacts, a little bit onyambe 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 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. So it's sort of as you were if you look at the currency benefits, Argentina, 1 30,000,000 South Africa, 1 50,000,000 as well. Those affect some of the inflation as well as some power prices. There was a small noncash or it was an effect also during that particular year where the previous year we have to look at when we acquired extra for 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.
And there was a not sort of the prior year was slightly positively affected by a reversal of some of that provision. There wasn't the same effect this year. So 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 noncash as that worked its way through the system.
At African copper, that variance of 4.56, that's not the price, that's just the volume cost variance. That was exactly the same variance at the half year. So you've seen a stabilization in that business performance, both from the cost as well as the production. I think it was about 4.20, 4.30 at the half year. And that's a function of, of course, Mutanda relative to the previous year with not so much on the cobalt side before it went into care and maintenance, but there's low production volumes.
We spoke about rampant inflation and price pressure on the reagents and the consumables through the first half of the year, particularly acid and lime. And the first full effect this year of the mining code, which started effectively around the middle of 2018. So these were all impacts that ultimately, if you look at Africa Copper generally, it had a negative EBITDA 2019 of 3.50, strongly positive in 2018, both cobalt prices, volume, Wathunder, etcetera. On the spot scenario, as we look into 2020, there's about a £220,000,000 positive. So there's going to be a £500,000,000 or so positive variance as we go from 2019 into 2020 basis, the comfortably so we can deliver on that positive variance as we go forward.
A few more details on 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 these business arose relative to some of the building blocks and the guidance and some of the information that we provided over the years. It had come in reasonably close, some costs generally a little bit lower, production in 1 or 2 departments a little bit weaker, but net net, we would have exceeded the overall industrial performance of the sort of small model, if you like, that we do. We would have beaten on the coal copper side, and nickel maybe a little bit weaker on the zinc side. So overall, as you can see, copper is improving as the African business stabilizes and the volume and cost benefits arise.
That GBP 3,000,000,000 was made up GBP 3,300,000,000 as I said, ex Africa and negative GBP 300,000,000 for Africa to give it GBP 300,000,000 Africa was negative GBP 3,000,000 for the first half as well. So it was effectively flat second half, and you've got improving performance there. The overall business was £3,000,000,000 for the full year and £1,300,000,000 for the first half. So seeing that growth in that business, we expect that to continue as just on spot prices today where copper has come off, cobalt is where it is. Our updated cost and volume guidance will be about €3,400,000,000 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. And we've said by 2021, that should be getting across the whole business towards the $1 a pound. And can see on the bottom left, ex Africa has been very stable. The big South American businesses, Australia, etcetera, are 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 planned operational performance. Katanga itself delivered its targets for the second half, and it started reasonably well also for the 20 20 as well. Relative to guidance as well, so nickel and coal have come in slightly better as you can see in terms of cost guidance that we've given through the second half of last year at the bottom. On the nickel business, at 280 or 396,398,000 flat ex Konyama, 288,000 to 277,000,000 not much in there as well.
And thermal coal has been holding pretty well at the $45 $46 cost and the margin of $26 $27 So I think our 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, SEK 2,400,000,000, we needed to catch up clearly in second half, and we have done that across all businesses where 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 noncash adjustments, which cumulatively over the year, having taken the half time score of 350 for the full year, it would have been in the 200s.
So 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 the call later on, what's something that's lost down in those sort of 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. So our share of their net income was £58,000,000 compared to 21,000,000. So for a low base, we're doubling up on that business, but the underlying business was circa 10% or so up. And but there's high depreciation and high everything else, which is why we land up with a share of income.
But that business is doing pretty well, and we even a better 2020 on 2019. So don't forget that, that exists. We own 50% of that business and sort of reconfirm the guidance range as well. On CapEx as well, no change to the 3rd December guidance for industrial from 2021, 'twenty two, the 5.5, 5 and 4.2. That is fully loaded with industrial leases and everything that we expect of how their 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, up as well, is effectively working. It hasn't been any new big sanctioning of any sort of major projects. There's still a multiple year projects, as you'd expect, in this business as well.
There's the Catangar asset plant that gets commissioned through the first half of this year. That's working its way through the system. Jairam, the big zinc replenishment and mine over within the Kazink business. That gets commissioned during the course of this year, hence the big expansion you'll see later on in zinc tonnes during the next couple of years. There's almost a parallel 2 mines operating before you do see some declines out there within the next 2 or 3 years.
United, a brownfield coal approval down in Australia just to replace some declining tonnes elsewhere and the big refreshment of the whole Canadian complex across both Raglan, Onoping depths, the whole Sudbury Basin to extend and preserve 20 plus years' worth of life there. Astrone Oil Refinery, it is as we spoke last year in December, there is a 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.
Thank you, Citi. Okay, Martha's off to see you. I think we can continue. Looks like we're good to go. The middle graph, just wanted to 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 on Page 51 or so in note 2, the financials, where we do show the gross amount capitalized into the assets on both the marketing and the industrial. So 5.3 percent on the industrial, 4.38 percent on the marketing side. Of course, marketing is mostly leases at Shipping and Vessels. There's no other CapEx that necessarily goes into that business. Then 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 $582,000,000 There's a small amount of interest that gets capitalized. Obviously, that's noncash as well. There's the GBP 652,000,000 The net sale of the PPE and cash terms gives the GBP 4,000,000 That's it's a transition year in respect to the leasing. As I said, both on the bottom right, those 5.55%, 4.2% s in terms of 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, very strong liquidity position, £10,000,000,000 a very manageable maturity profile, no more than about £3,000,000,000 Still looking towards the longer term, £10,000,000,000,000,000 range. That's excluding marketing leases because clearly those has no part to play within an overall longer term sort of 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. So 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% to 15% or closer to 1x and the before we will consider. So there is a priority or a natural de clearing that's going to happen through the generation of free cash flow, £4,300,000,000 I'll then talk about that later on. £2,600,000,000 is the distribution that's been recommended.
So the surplus cash flow generation above all, that's 1,700,000,000. That will be prioritized towards debt reduction, which should see us in the current price environment move to a little bit above £15,000,000,000 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 2 weeks, we saw big spikes in oil and crude. Oil and copper, both up 5%, 6% just in the month.
The year finished at about $66,000 $67 crude. We're obviously more down at $57,000 Copper was about $5,300. We've retraced those movements in December. And just in that month alone, we had $800,000,000 of margin calls go out in respect of our hedging facilities. Those have all come back since now through January.
Some of that obviously adjust the RMI. Some of it does result in a non RMI depending on what's been hedged across the book as well. So we have seen some partial reduction there, and there is a focus still on some noncorelongterm monetization, which I'll talk a little bit about that later on as well. So there's sort of the pathway towards 2015, 2016, 2014 to 2015. The pace of that and the trajectory and acceleration, everything else is going to be a function of macros, commodity prices.
So how soon do we get there? Is it 6, 9, 12 months? I mean pick your numbers, but it's going to be a positive trajectory on the way down. And 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 time frame around In terms of potential In terms of potential disposals or monetizations, Page 26, we just update some of our various stakes listed or otherwise and some potential noncore asset disposals. There's not yes, dollars 1,000,000,000 still internally a number that we can construct a relatively easy case for delivering on that.
But 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, is very healthy in some areas, maybe less healthy in others given things. So 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 Mototola PGM operation in South Africa about 12, 18 months ago. It was fifty-fifty with Anglo. We sold it to Anglo so they could have 100%, but we effectively retained most of the price upside through a 5 to 7 year period. So there was a deferred consideration, which was not linked to operation. They took operational risk, but we were there was some price deferral as part of that.
So there's a series of 5 or 6 years' worth of cash flows given the explosion in rhodium, palladium, platinum and the like. Our over the next few years, our nominal sort of forward curve cash flows in respect of that's in the sort of €400,000,000 to €500,000,000 range at the moment. So even in the near years, you would get €100,000,000 plus and then it would sort of tail off. So that's something we could look at, whether you hedge some of that, how do you accelerate it, how do you sort of monetize, how do you lock it in. That's something like that can clearly go towards even something like that that was almost off the screen is a reasonable contributor potentially to that.
And you still have some U. S. Infrastructure, long term roads, other precious exposures that potentially gets us down there. So watch that space. We'll sort of come there.
Just to finish up before we get on the $220,000,000 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 hand side. So we actually this is before noncash leases and a small amount of debt that was assumed in the Astrone acquisition as well. I think there was about £200,000,000 But funds from operations, £7,900,000,000 really £9,000,000,000 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 cash, I spoke the £5,000,000,000 the 5 point £1,000,000,000 of distributions positive and then you had some noncash 1,300,000,000 leasing, which was the major factor in getting to £17,600,000,000 where we were at that stage. Going forward, you can see some deleveraging, some cash flow potential, £5,000,000,000 of distributions, £5,300,000,000 last year. This year, we're committing to £2,600,000,000 at the moment.
Cash CapEx, similar levels and hopefully some positive on the acquisition front and still a strong business in terms of cash flow generation. So 2 20, if we just look at some of that guidance, maybe let's if we start on Page 18. So there's the production now, 2021, 'twenty two, exactly the same as what we gave 3rd December, no change. So we're still comfortable with those numbers there. So where do we see some movements, 'nineteen to 'twenty, which we spoke about, copper and cobalt down account of Wathanda, but a cost structure that's improving, cash flow business overall improving in the business.
Zinc actually has some strength in volumes, particularly Jaira and Los Antamina goes through a stronger zinc period. Both of those factors start between 'twenty one, 'twenty two declining because you got some parallel mines at Kazzink and Tamina also normalizes back then. You got 1 or 2 smaller assets in Canada and South America shut in 2022. Nickel, koliamba, you should see improvements during this year, another 4,000 tonnes 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. So what does that all mean back to the cash flow generation at the moment and the cost structures? So copper, you can see a declining profile in terms of cost structure, 1,000,000,000.82, that's the same as what we advised a couple of months ago. You should see GBP 3,400,000,000 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 drying capacity that exists down there. Zinc, slight reduction in cost guidance relative to where we are, a little bit byproduct, a little bit currency. Nickel, quite a sharp reduction in price, both in actual terms relative to 'nineteen but also against guidance that we gave back in December, which was $396,000,000 down to $351,000,000 The PGM byproduct 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 $100,000,000 into the nickel business as well. So they'll deliver another 700,000,000 and coal, £3,200,000,000 around spot price at the moment on 135,000,000 tonnes. We've seen costs come down $2 since December, dollars 47 down to $45 Currencies would play a big part.
Colombia, South Africa, Australia, low oil prices a little bit as well and the a 74 Newcastle, which is roughly where it is. Coke and coal has come off 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.
And then as it all adds up, you've got £12,200,000,000 of that EBITDA spot prices today, generating £4,300,000,000 pounds of cash flow, so still 1.5 more than 1.5 times covering the base distribution where we are in the pace of getting some of the targets from the balance sheet and additional capital management is really going to be a function of that of some of the macros as we go forward. I suspect there'll be some questions on that later on. So I'll hand back to
Ivan. Thanks, Steve. Okay. What are 2020 priorities? The same slide we spoke about in December, the important issues the company is focusing on.
And as I said earlier, health and safety is an extremely important issue and Peter is spending a lot of time in that. And as I say, reviewing all our assets and especially the assets where we've had the fatalities, sending in a team to ensure we get 0 fatalities throughout the group and a lot of work has been spent on that and 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 a budget And 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 tonnes. This year, we aim to produce 270,000 tonnes of copper and roundabout 29,000 tonnes of cobalt.
And it looks like we're on line and we believe we will get hit those numbers during this year and we've had a good start to the year at that asset. The Mapani smelter restarted has just restarted, it's ramping up slowly and also performing well. So hopefully, we will have a successful commissioning there. Asset 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.
And once again, the last asset that we've got in the ramp up phase is Coniambe in New Caledonia and to ensure that we get operational stability over there. And 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 and once again to manage the free cash flow of the company in the correct manner. Strong balance sheet, commitment to our BBB investment grade rating.
And as we said and we emphasized to hit an EBITDA net debt to EBITDA of one time and to keep the total net debt 14 to 15. Dollars Depending upon the cash flow as this year, you saw with the current commodity prices, we'll have an EBITDA around about $12,200,000,000 should generate $4,600,000,000 of free cash flow. And as we said earlier, we'll utilize that for the dividend repayment to reduce the debt down to the $14,000,000,000 $15,000,000,000 mark. And depending where commodity prices are going to be, if there's excess, we can continue focusing on more buybacks, but 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 a 4th generation, as I mentioned, during December, the 4th 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. So we continue emphasizing to ensure that there is 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, but if we cannot get the right returns within the business, return cash to the shareholders. So we'll continue on that program as we have done in the past to ensure we are handling the company in the correct manner. So I think that gives you a summary of the results for 2019 and how we see the company going forward. So we're open to any questions.
Sorry, Steve, I wasn't sure if you touched on it or not, but just in terms of the write downs, the $2,800,000,000 could you just talk us a little bit through that? Is that a pricing thing? Or is there something else going on there? And just to be clear, is that pre- or post tax?
Those are post tax numbers. So the main I mean, if we run through the more material, which some of them are pricing impacts, some are other events, Colombian coal is about £1,000,000,000 of that, circa half across Cerajon and half across Prodeco as well. That coal is predominantly going into Europe historically, pricing of API 2. It's competing with low gas prices, particularly in Europe. So 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.
So 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. So these are not the long life assets like we have in Australia and some other operations as well. So you're talking 7 years Bradeco and sort of 10 ish or so Colombia if you look at the, obviously, resource base over there. So we did take our longer term sort of API2 prices down.
I think we give the details in the financials exactly what those assumptions are, and that just across the normal curves would have had that $1,000,000,000 or so impact there. So 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 3 or 4 different fields.
They're producing drilling continues fairly straightforward also there. We also had some big exploration acreage more in 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 sort of negotiations around whether it makes sense to continue to with those projects or on what basis you could continue in the index fight with no agreements being reached with the local government. So we had to take the full impairment on the whole exploration acreage as well on that side.
So there was 500 or so there. And then, Motanda, also something that was done in the August numbers, there was 300 there, which was a function of them going into sort of the announced care and maintenance and just what the effect that has on the sort of cash flow profile where you've stalled on cash and then again long term there wasn't any long term price adjustments there. It was purely reflecting the sort of pause in business there. So those were the main ones.
Liam Fitzpatrick from Deutsche. Two questions on coal. Firstly, on Colombia. I think you're losing cash at spot prices. So how long do you tolerate that before you consider production cuts or something similar?
And then secondly, just on the broader question of a potential spin out, is that part of your medium term thinking? And if so, what would be the potential triggers to that? Thank you.
Yes. Look, Colombian coal, as you know in Glencore, if we are still losing cash at any assets, we're not going to keep mining if it is cash negative. You've seen what we've done in zinc, we've done it in coal, we've done it in our various operations. So we continue assessing Prodeka, the Largo and Calantoritas type operation. And 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 API 2, yes, then we've really got to make a strong decision and see what we do there, which we're assessing all the time.
Seron makes money no matter. Seron produces 30,000,000 tonnes. So it's cash costs are a bit lower. It also has contracts not only into Europe where it gets the benefit of the higher pricing. So we're carefully monitoring naturally what the LNG and the gas prices are doing in Europe and what effect that's having on the API 2 pricing.
So let's continue reassessing Glencore. And yes, 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 core business, then we've got to assess what we do with it. But right now, it's performing well.
As you saw, the EBITDA numbers are good and it continues to remain within our operations. And we spoke about And it does decline. It declines. We spoke about the Scope 3 transmissions when the coal is burnt in different power stations around the world, like all Scope 3 around the world. It reduces automatically because our reserves are reducing, as Steve said.
Colombia, by the year 2,035, we would have stopped producing both Seron and Prodeko and therefore we will be reducing our Scope 3 emissions projected around about 30% by 2,035. South Africa also decreases as time goes on the reserve base there. Australia maintains itself. It is the higher quality, better quality coals, so you can continue staying at those levels. And we'll continue producing there.
Quick question maybe on marketing. Just wondering in the context of disruptions in China, whether you have any issues with performance already or if it's too early to say? And also in this context, if you could talk perhaps to the impact that disruptions in China hiring on the domestic market, whether that's creating more opportunities for you to sell into China? Yes. The first question, a bit too early to say.
As you know, the Chinese have just come back from the New Year. So 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 credits across most of our commodities. So nothing really to give a clear answer yet.
We're closely monitoring it. They've taken an extra week, 2 weeks potentially after the holiday period and we'll see what effect that is having on the Q1 consumption. So a bit too early to say. The second part of your question was about production in China.
Domestic.
Domestic production. Well, on coal, you know that is the case. Coal production in China has decreased during the 1st few weeks during the 1st few weeks of the year and especially since the coronavirus situation. So we think that is having a positive effect on the worldwide coal prices because of less production in China. And as you know, China is one of the largest producers in the world today of coal.
Myles?
Myles will talk 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? And when does the drying capacity get up to fully invested and fully operational?
It should be through Q2. They gave also their release on last week or so where they sort of showed the full capacity reaching because they have 2 drying units. 1 sort of came back still needing some work eventually. Then there was a bigger job done on 2. 2 is now up now that now one sort of a month or 2 is back up.
But that 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, which will so they can sell more than they produce this year. They will have both the capacity and logistics to be able to do that.
Okay.
But we're working on the assumption that you sell what you produce this year and keep that
in mind? 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 1,000 tonnes plusminus2. Sales will be a function of just getting up and running.
With the DLC and the new mining code, whereabouts are the discussions? It seems that it's 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 a potential to push back there?
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. Under Obstructural, we're not agreeing to it. So 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. But we continue discussions with the government around it and we'll see how we progress. But it's not an acceptance of the new mining code yet.
Do
you feel the political backdrop now is a lot more stable than 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.
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 returned to shareholders in as to where you're going.
Yes. I mean, we have announced buybacks outside of cycles in the past. So that possibility, in theory clearly does exist.
Yes, we could do it any time, but you got to focus on 2 things. Number 1, okay, what the commodity price is, what we assume is going to stay going forward. Are we going to get the $212,000,000 or maybe get $15,000,000,000 EBITDA? How much cash generated net? And then 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.
And then just on AGRI, you're saying how well it's doing. And 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 agribusiness, the balance sheet is okay within the agribusiness. You also know we have strong partners there. So we will it's always been an idea to continue to try consolidate that industry and try grow that business. So they continue to look at opportunities around the world.
So you could do it without injecting any additional cash?
Subject to the type of deal that has to be done.
Tony Robson, Global Mining Research. Energy Products Marketing did well in 2019. Could you go into a little few more details there? And would you roughly see the split up between Metals and Energy for marketing similar in 2020 roughly as 2019? Well, I would say for 'twenty, 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. So that just on that. And on the energy side, I mean oil did have a sort of a standout year. How repeatable that is, obviously, remains to be seen that you could have energy coming off of it, mining it, but it's very well broad and diversified across the businesses. 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. And all performed exceptionally well. Too early to say how it's going to do this year. The 1st month has been relatively good.
All commodities kicked in nicely during the 1st month in the trading business. So we'll wait and see. But as you can see, we're always pretty strong since we've been public. We've used that 2.2% to 3.2% range. And as we've always said, the marketing business is extremely resilient no matter what the movement in the commodity prices.
Sergey Donsko, Societe. Two questions from me. 1 on this comment that you made at the very beginning about reducing coal production by 30% by 2,035 to meet Scope 3 emissions target. So as I understand, about half of that will be met through depletion of resources in Colombia. But the other part is obviously South Africa.
And the question here is this, to which extent this is your firm commitment and to which extent it's a reflection of the weak pricing environment and whether you can kind of review this target going forward if the situation improves? That's my first question.
Yes. It's not to do with the weak price environment. We're just depleting the reserve. Reserve base is so much. It comes to an end.
Prodejo, Kalantoritas and Harbua comes to the end of its life. Serra Horn comes to the end of its life. I think it's run by 2,032 or something like that. It also gets to the end of the life, you've depleted the reserves. South Africa also depletes part of reserve.
So 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 2,035.
Sorry, there's also the oil business that contributes currently. And that sort of also goes from where it is
to
almost being done by then. So the coal profile is I mean, don't assume just take 30%, Colombia this and try and sort of backsold where it is. There's a whole
In South Africa, in theory at least, you can invest in virgin resources, but basically you can't In virgin, sorry. In new resources, you can't develop new mines and access new resources, obviously, in principle.
On our existing reserve structure to maintain those levels is utilizing our existing reserves in the country. Now the question, do you want to you could buy more, etcetera, but we also limited to 150,000,000 tonne cap. So the ways we see it was what we got, what we wish to expand, what we wish to do, looking across our reserve base, etcetera, we will reduce Scope 3 emissions. Our projected number is 30% by 2,035.
Thank you. And 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. If we add back those one offs, the increase was about, I think, 8%, half and half. And at current levels, EBITDA from minerals remains, in my numbers, about 15%, 20% below the average over the last 3, 4 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?
I mean, no, there's nothing there's certainly nothing structural. It's had some very good years in the past, which then become sort of high sort of above average performance. So there's definitely been some of those years, but there's nothing structural that's reset kind of what we'd expect in a normal year or would prevent it from getting back up to those levels. But Cobalt, as you said, was the major sort of non cash one off in the first half, the 3.50 pounds And but if I look across, I mean, the given sort of South Africa ferrochrome, that market was tough second half. So they would have been sort of below average, but no reason that's not structural.
That gets back up and running at some point. So things like your chromanganese vanadiums was below average, I would say, second half. So that can have improvements going forward in terms of singling out.
Higher commodity prices, there's more margin in the business, there are more arbitrage opportunities, markets are tighter. So you're talking historically where we've been high. We've had higher commodity prices. So it's been a bit tougher while we've had these lower commodity prices. But as I've always said, the marketing business is pretty resilient even with these lower prices.
But 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 price where better arbitrage opportunities markets are a bit tighter.
And my last very small question. Current pretty high gap price gap between South African and Australian coal, How do you rationalize it? It didn't exist historically.
Yes, 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 the advantage. The quality of coal that's required is South African, the lower type quality coals going into some of those areas. So that's, I think, the reason why you got there.
So South Africa today on spot, I think, is pricing at around about $88 Australia is pricing at about, NewCoast, around about $76 but it's because of the demand for that particular coal in India, Pakistan, Bangladesh, where South Africa's coal is relatively tight. That's quite constrained.
South Africa's supply is concerned.
And supply is also tight. What South Africa is exporting around about 73,000,000 tonnes of coal today, I think right about that figure and there's no big growth. So supply is extremely tight. Eskom, okay, is taking a bit less than they used to in South Africa, but you've got those certain mines going into Eskom, exports limited, depleting coal reserves once again at various mines in South Africa. And Australia is what's around closer towards the 200,000,000 tonnes and going into other markets and not going into that particular market where South Africa is getting that vantage.
It's Heather Brode from RBC. Two questions from me. The first one just on Matanda. I guess the cobalt market remains quite oversupplied, but you are 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 Matanda, when do we expect to see more from that and sort of what would be the timings around bringing that back online?
And then 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 kind of walk through how that could potentially affect the profitability? Thank you.
Okay. And the first one, Rotunda, as we said, we now got it on care and maintenance. We're assessing the sulfide. Peter and his team is 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 Matunda, where we will be sitting on the mining code at the time we do start up and whether that what effect that will have, whether we're sitting on the old code or the new code. So those are issues we got to look at, how the sulfide, how we're going to process it, etcetera. So we're looking at various options there. But and that I think, firstly, should take at least 18 months to 2 years before we really could decide whether we get that up and running again.
However, 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 I can't remember the exact number, around about 37,000 tonnes of cobalt utilized in that area. And how does that grow? We've got to monitor that close and then we'll decide. But 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.
So 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 in shipping our own products. So it's not a material part of the business. So you would there's no big length in shipping that you do worse because prices go up or if prices go up in freight rates that you would it's a small part of just securing the logistics that we need to be able to run the business, so no material impact on business.
Two quick questions. First, on the portfolio mix adjustment for coal, your assumption has come down from around $10 per tonne at the December stage to around dollars per tonne on 135,000,000 tonnes, about 1,000,000,000 of incremental EBITDA. So 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 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
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 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 then, obviously, throughout the year, we'll then roll it into actuals rather than a guidance. So whether it's sort of historical premiums that we expect for X number of tonnes relative to a sort of a new cash flow benchmark, I don't know the exact numbers, but you normally sort of I don't know what the premiums are, but we build in a normal and then either we will beat that or we will not beat it. And then we will come in June or before and we'll either shrink or expand that portfolio adjustment based on that percentage of the tonnes.
There's not it's not as material across the portfolio maybe as it once was. Obviously, at some point, it just locks in your price. But in terms of the size of those tonnes, it's not quite as material as it once was. Obviously, the strength in the API for the South African, back to that question that was asked earlier on, that's also narrowed that gap because it's all pegged off Newcastle. Historically, there would have been a discount.
In fact, there's a premium in that, so it's contributing positively. And you've seen also pickup on the Met side, which feeds into the portfolio. You've seen $10 sort of it was $1.50 or so through January. We've seen pickups to 160. So 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 there in the Japanese negotiations. We've got a few different time frames
to set them. The last couple of weeks has been positive on the coal side. And let's
see what the coronavirus exactly, what effect it has on the Chinese coal production. So it's daily monitoring.
On the ferrochrome side, I would say, I mean, I wouldn't expect volume upside necessarily pricing wise, hopefully, given it has been a little as you said pick up on the European side. If anything, we need to get through the Rustenburg process because we'd assumed obviously some tonnage coming out. Now the Rustenburg smelter is one of 4 or 5 complexes that we have down there. We announced, think, 4 to 6 weeks ago a consultation period effectively around that because it's been losing money and is the most expensive and has been the most impacted by inflation, high prices and then the like. It's not sustainable.
It hasn't been producing, but its capacity is 250, 300,000 or so. So and we had assumed an overall portfolio production wise that included some Rustenburg tonnage. So let's see where that obviously proceeds. But the business, particularly that smelter, in generally needs to see high prices.
Good morning. This is Sandeep from Morgan Stanley. I have a question on depreciation. It has increased to £7,100,000,000 versus £6,300,000,000 last year, delta of £700,000,000 to £800,000,000. Euros So is that a normal run rate that we should think for next few years?
And then 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.
Yes. The depreciation, so part of the leasing would have increased depreciation relative to the historical. As we've said, we've added that $1,300,000,000 of leases. These are fairly short term profiles. So there's sort of $300,000,000 to $400,000,000 in depreciation just on the leasing change relative to what was what standards applied in the previous years.
And then it would be just the general commissioning of these various projects and these new expansions, so there'd be more depreciation as in the oil side and the drilling. There'd be just assessment of mine lives, new projects, Conyamba 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. So you'd find at least 200 to 300 out of the African portfolio as well would be accounting for that. So 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. But it should be given production levels now, I would imagine it should be fairly stable at those levels.
Free cash flow from marketing, well, I mean, CHF2.4 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 is obviously the biggest by a country mile there. That's circa 10%. U. S, Singapore, various other places, tends a reasonable average across the marketing. So it just comes down to the interest side, and we haven't got that specific number here.
But I think we might have 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.
A couple of follow-up questions. First of all, on the M and A front, I mean, there is potentially a neighbor within the Hunter Valley up for sale. Mt. ArcelorMucia 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.
We'll always look to increase the to capitalize on opportunities, but we will have to live within the bands and the commitments we have. So as you say, we could dispose of things. We've got various assets we could dispose or do something with. But something's got to be very compelling for us to look at it. It's got to be a lot of synergies, it's got to give us the right returns, etcetera.
So people are looking at potentially selling assets. We're not doing the same. As I say, we're just purely depleting and we're reducing. We're not selling an asset to get rid of our Scope 3 emissions. But 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 can't comment on that.
And then maybe the second question, last question, just thinking about succession planning and 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 we'll be internal.
There are
a lot of internal members within the group who could take over. But as I say, we've got to get 1st in place, as I said, the 4th generation in place, and then we'll move on the last leg. I was the Chairman, yes.
You are the Chairman, so it's the Chairman of the Non Committee? Yes.
Just to follow-up on this, Jason Fairclough. The to push you a little bit on this, I mean, why wouldn't you consider external? And I guess beyond that,
where are the guys? Because
you the new generation used to bring everybody along. They're working,
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. So what were you saying about it? So 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. And 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. But right now, we think there's such a good bench of internal guys who could take the position.
It's definitely, 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 have been thrown around. They know the company. They know the culture of the company.
They know how this company operates. So they think they'll be great for the future of this company to ensure it continues its growth in the future. But if you got any names, send them to the Nom Committee. I think that's it. Thanks very much.
And that's the results for 'nineteen. Thank you.