Good morning. Welcome to our first half results for 2019. Thank you for joining us here today and by webcast. This morning, we have our CEO, Ivan Glasenberg, our CFO, Steven Kalmin, and our Head of Industrial Assets, Peter Freyberg. I'll hand over to Ivan to commence the presentation.
Thanks, Martin. Good morning. To give you a summary of the results for the first half, as you can see, EBITDA is $5.6 billion, which is down 32% from the previous half last year. Would be $5.9 billion, pre the $350 million, which we mentioned during the production results in respect of the cobalt loss on the mark-to-market on the non-cash part of that. Cash generated by operating activities before working capital changes is $5.4 billion, which is down 21% from the previous half, previous first half of last year, and net CapEx cash flow is $2.2 billion. The ramp-up development assets, which we all know about and talk about, which is Katanga, Copper Africa, and Koniambo, has weighed on our earnings, and that created a negative EBITDA of $0.4 billion during the first half of the year.
These assets offer significant upside when we hit steady state of production levels, and as you know, with ramp-up assets, you always have these problems, and we continue to have these problems in both Katanga and Koniambo. That's why we have Peter Freyberg here today, and he will take you through the process and where we are getting on those two very important assets to the group, which will be major producing assets, both nickel, cobalt, and copper, which will generate for the future battery car industry. We have a strong cost position for our key commodities, and if you look at it, the first half cost performance on these key commodities, if you just look at copper alone, excluding the African copper, our production cost of $0.72 per pound. As you know, that is extremely low compared to our competitors, et cetera.
We're really at the low end of the cost curve on those assets, and those are long-term copper assets. Looking at zinc, you can see our costs are low, $0.03, including a gold credit. Excluding a gold credit, $0.40 per pound. Nickel, excluding Koniambo, once again, one of our ramp-up assets, $0.29 per pound, and thermal coal, our average cost across the board of $46, which leaves healthy margins with the coal prices during the first half of $32 margin. Marketing, as we always say, a diversified part of our earning activity. It's a constant earner. We always said even in difficult times, it's between $2.2 billion-$3.2 billion. As you'll see in the first half of the year there, it's $1 billion. It's down 35% on the previous first half.
If you exclude the cobalt, and we explained the situation of the cobalt, where we transferred the cobalt from the mine into the trading operation, and we took it at the market price at the time, and thereafter, we got a mark-to-market. If we exclude that, we would only be down 13% on the marketing during the first half. The balance sheet, in extremely strong shape, and as you know, we have tried to operate with a much more conservative balance sheet, and all our debt facilities have been renewed in March, April, and bond maturities continue to be capped at $3 billion maturing every in each year and not more than that in any particular year. The net debt of $16.3 billion, that's at the upper end of our target, which we mentioned.
We would like it at around about $16 billion, but that is after the $1.1 billion of leasing liabilities, which were recognized as reported debt during the first half of 2019 in terms of the new leasing standard accounting policies, where you got to capitalize the leases and you put the debt on your balance sheet. That was previously treated as operating leases, but Steve will talk in more detail about that later. Planning. We're planning to reduce a healthy 1.24 net debt to EBITDA ratio towards the one range, which we've always said we'd like to keep it within the one range, and we'll get it there, we believe, within the next six months-12 months, and that's where we'd like to keep it in the current uncertain economic environment which we exist today.
Looking forward, full-year marketing adjusted EBIT is tracking towards the middle of our range, $2.2 billion-$3.2 billion. We should be within halfway of that range. That's the guidance which we believe we'll get. That's excluding the $350 million cobalt loss, which we spoke about earlier. Full cost industrial production is weighted towards the second half of the year, and we will be increasing production in both copper, zinc, nickel, coal, and oil, and that should increase the production in the second half of the year. Peter will talk about where we're sitting there on the ramp-up assets to ensure we get those larger increases during the second half. Extensive operational and cost improvement initiatives are underway. We think we're getting there in most of these assets. Once again, we'll get more detail of that later. Safety. Year- to- date, it has not been good.
We've had 11 fatalities and eight incidents. That's not a good level. Most of these are at the focus difficult assets, but a lot of work has been put on that to improve it. We've restructured our HSEC and human resource teams, and we're reviewing the group approach to safety. That's another point that Peter will give further detail, how we are addressing these issues, and what we're doing to ensure that we get zero fatalities at our operations around the world. Integration of sustainability is a strategic priority of the firm. We act on this commitment through transparency, reporting our performance and progress.
Over the first half of 2019, we have released and published our human rights report, a new water report, payments to governments in 2018, declaring all the amounts, taxes we're paying to the various governments, and including part of our trading activities with government organizations. Our sustainability report, modern slavery statement report, those are more detailed reports which we're releasing within the company, and continue to do more of that going forward. With that, I think Steve will talk about the financial performance of the company and in more detail how we performed. Thanks.
Thanks, Ivan. Thank you all here this morning, and for those that may be listening in on the call as well and through the webcast. Just on page six, a few of the headline financial relevant details as well. I'll get into more detail on some of them going forward. Unfortunately, we don't have iron ore, so hence you see this picture as opposed to some other industrial mining companies that will be showing year-on-year improvements as we go through. I'll show the various variances down the track. As Ivan said, 5,659 reflecting the 350 cobalt down 28%. The commodity low prices for our basket of commodities was the main drag during this particular period, particularly coal and cobalt. Obviously, we've made some moves in terms of cobalt with the announcement of Mutanda also.
I'm sure there'll be questions on that later on. Peter will talk about that in trying to arrest the lower price environment and the oversupplies we've seen in that particular market. Marketing, Ivan has spoken about that as well. I think a pretty solid performance outside of cobalt, which has been well flagged during the last six to nine months as well. I'll talk about that on the marketing slide. I think the middle right-hand side is quite relevant. I'll put that up. Something you may not normally see, cash generated before working capital changes as a better, cleaner proxy for the cash flow generation in this particular year or this particular period, which, A, irons out the non-cash elements of the cobalt and the like. You can see that only down 21% compared to maybe 30% down in EBITDA.
It also normalizes or avoids the mismatch in our tax payments in this particular period during H1 2019, which would affect the funds from operation number of that 3.54. We did have some catch-up taxes that we had to pay in respect of 2018 earnings, particularly Australia, a little bit in DRC as well. You'll see that on page 30 of our financial statements where we had a tax liability, $1.1 billion at the end of last year. It's down to about $500 million. The overall funds from operation reflecting both interest and tax should normalize going forward as that lag effect of tax now works its way through the system.
The 5.4, despite all those commodity prices and despite everything that we've come through and some volume weighted more to the H2, a 20-odd percent reduction in that, has driven a pretty good cash flow generation performance. We'll look at the net debt movement as we work our way through the system as well. CapEx, there's a slide on that later on, but that's tracking well within our annual guidance of around $5 billion, with $2.2 billion at the half-year . Net debt, as Ivan said, obviously impacted by $1.1 billion of the lease standards. That's a standard that's been brewing for a while around effectively converting all lease-type obligations, including for us.
It's not just about certain within the industrial, there may be a handful of trucks and a few other pieces of infrastructure that may be in there, but it's also affecting some of our chartering commitments, shipping leases, and these things which may present themselves. $1.1 billion for our businesses of our scale and diversity is a relatively small number I would have thought against what people may have thought would have presented itself there. $4.7 billion of distributions this year and continuation of the base distribution plus the buyback of $2 billion. Where did things present themselves within both the industrial and then we'll get to the marketing component? This is the largest component. We're just the warm-up for the keynote speaker later on, Peter Freyberg, who'll be talking later on through the business.
A big part of Glencore's overall portfolio clearly resides within his mandate. He will go into and stress the work that's happening and obviously confidence in the pathway towards going from negative cash flow around Copper Africa, Koniambo, towards quite material positive cash flow on that during the next 24 months. The base business outside of that, I think if we look at some of the numbers on the extreme right in terms of EBITDA margins there, they've held in and they're very strong cash flow margins reflecting the competitive cost bases that we have within those particular businesses. Copper ex-Africa, 52% margin unchanged from where it was previous year, obviously dragged down overall with Copper Africa itself. Zinc held in pretty flat as well, including byproducts that we have within that business. Nickel as well, that is somewhat volume weighted.
We'll see a big tick up in the nickel business as we go the full year, so those EBITDA margins would be expected to increase, and coal has held in at about 40% as well. Of course, commodity prices, I'll show the bridge on the next page, has been the major variance period on period. Maintained strong cost performance and margins within our base business. Clearly Copper Africa, it's not just about prices, it's also huge cost pressures that we've faced, particularly in this particular period. Some should be temporary around regional pricing structures, around reagents, consumables, acid price and the like. I'll talk about that later on as well. That also reflects the current margin pressures and sort of economic situation of Mutanda. It's not just about pricing and tax and the like, it's also acid prices and consumables in the region as well.
Coal, we've been able to hold pretty flat for the year at around $2.1 billion, a little bit lower on pricing, but offset by additional volume contributions from some of the acquisitions we've done in the last couple of years. If we do look at that, just the industrial bridge, the biggest bar by far will be the price at $2.2 billion, half- and- half. We've shown some of the price reductions, obviously cobalt at nearly 60% period on period, zinc's out there as well. Coal in its various guises, mostly thermal coal, across both the Atlantic as well as the Pacific. What's missing as well is lead was also down 20%, affecting the zinc business. Quite a lot of production in lead as well and increasing our position there. What made up that 2.2? About 0.5 was coal. On the pricing impact, 1.8 was then metals.
Of that Copper Africa itself was 0.8., of which 0.6, $600 million was cobalt. By far the largest impact there. Zinc lead was about 0.4, half of that in Australia. nickel 0.2, including some cobalt. Other was the rest of copper and some chrome as well. Hopefully some of those commodities will see some improvements going forward. Cost was largely a nothing period on period. Obviously some ups and downs, but largely offset each other. FX provided some relief in Australia. South Africa and Canada are some of the bigger examples of that. That is providing additional tailwind as we speak at the moment, and I'll go through a bit of a mark-to-market at the end. We cut the books off at the end of July for our 12.8 current spot. If we mark today, it's not very different from that.
There's been some metal price reductions, but equally today you've got the Rand close to 15. Big benefits to our chrome and the coal businesses down there. You got the Aussie dollar dip below 67 or so overnight. The oil prices, which is a big consumer in diesel going into our various businesses. We've segregated for you just the cost volume impact of Copper Africa and [Koniambo]. That's not the price impact, which was a - $400. A lot of factors are feeding into that, and Peter can cover those in more detail later on. On Katanga, which feeds in there, we've had almost no cobalt sales. We're still working through the uranium issue. We are producing, but we're not selling the cobalt. It will eventually be sold. That will manifest itself within that particular variance.
The reagent costs, through acid lime and the likes, and I'll talk with how extreme some of those movements have been. Extra maintenance also carried out at Mopani, particularly through the smelter. The first period of the DRC mining tax has also come through. It effectively was effective around the 1st of July, 30 June last year. We didn't have any of that in the first half of 2018. All that's come through the first half of 2019, so a big increase there. Of course, at Mutanda, we've had some lower copper volumes come through. How does that look in a slightly different way of industrial contribution, cost developments, and volume developments? We provide it on page 42. Later on, you'll see some of the detailed bridges between some of our guidance expected contribution in EBITDA for the first half compared to actual.
I would say we were across broadly in line on zinc. Nickel a little bit behind on mostly on cost to do with by-product credits. Coal, we would've been a beat on some costs to do with currency as much as anything else. Copper would've been the miss around costs in particular, where Africa in particular has been a large drag, as you can see through the bottom right. Hopefully that drag has peaked around sort of maximum cash flow consumption within those businesses and we'll look to restore those to increasingly to break even through paying for themselves and ultimately being a significant cash generate as we go through. In the $1.3 billion copper point, $1.6 billion was ex- Africa, 0.3 negative on Africa. The unit cost, whether you look unit cost ex Africa or including Africa, the low cobalt prices was clearly a major fact.
To give you some sense of cost pressure within that business, which would've affected both Mutanda and Katanga. Acid prices were up 31% period on period, and we consumed a lot there and that was one of the catalysts for obviously building our own acid plant there, which we should have up and running through the first half of next year. Once we've got the acid plant up and running, the pricing will drop to 1/3 of current prices. That's the sensitivity that we have. There's a 35% increase in acid prices. Lime prices are up 75%. These are some key price consumables within those particular business. Also through the genesis of the power upgrades of the Inga and the transmission lines, you still got a period where we're having to have a mix of some imported power into our business as well, which is twice as expensive.
Within the next few months, we should be able to function within DRC 100% on domestic power situation. You've got double power prices on about 1/3 of our power had to be imported at Katanga during the period as well. Within zinc as well, you'll see partial timing differences during the periods on some buildup in inventories. We had 59,000 tonnes lower sales against production within the zinc business as well, which we should catch up some of that as we go through. Within the marketing, Ivan obviously touched on this. Very strong performance on the energy side. Oil was the standout over there during the first six months, a very strong performance year-on-year. Coal, actually weaker year-on-year, somewhat offset by a particularly weak Atlantic basin around competition with gas, carbon taxes and the like, which weakened both demand and the general structure of that particular market.
All these things should turn around, obviously, at some point. 2018, I would categorize as quite a tough benchmark or relatively high watermark, both within the metals and in aggregate at 1.5. Annualize that, you're very much at the top end of our range as well. Even last year, as much as we were 1.5 at the beginning of the year, we closed more around 2.5. I think for a full year tracking against last year and tracking comfortably within our range as well. What's somewhat lost in all this, which is just worth giving a little insight into that other color at the bottom, is our Agri business, which really is a share of net income now. Which was peanuts for the year, around $20 million.
There's a share of net income after interest, after taxes, after some big amortizations on some revaluations of that business was done based on sale. The underlying business was actually at EBITDA levels, up 6% period on period. Quite a strong performance at the Glencore Agri business. Meeting budgets within that business, which is pleasing after quite a tough 18-month or so period within that business. That does herald the prospects of starting. We haven't paid dividends out of that business since we set up the Glencore Agri JV a couple of years ago. The prospects of dividends coming through into the future and obviously increasingly material nature has improved and we should start being able to access that subject to whatever their own development and growth objectives may be.
That's something I'm sure none of you have got in any of your models necessarily as we go through. That would feed itself through into cash flow, FFO and the likes as we work through. Don't forget about Glencore Agri. It's still bubbling in the background. It has actually performed quite well during the first six months of this year. CapEx, very little to say on this other than as you were. Full year guidance still unchanged at the $5 billion and the $4.8 billion or so average over the next three years. Bottom left is just some of the projects being worked on in the respective businesses. In six months' time, we'll come back and just update on what the production profile then looks like over the next two to three years as well. Tracking, obviously, just 2.3.
If currencies stay where they are, as I said, that provides a bit of a tailwind, not just at the OpEx line, but also CapEx, because a lot of CapEx today is really capitalized OpEx around anything you spend money that has an enduring benefit beyond 12 months. A lot of underground development across the business, all the stripping and the overburn removal just gets capitalized as part of these numbers as well. A lot of that spend is in Aussie dollars, it's in pesos, it's in Peruvian, it's in Rand, it's in these currencies. We haven't reflected that yet. In a real mark-to-market, if you sort of say we're going to show later on them at $12.8 billion, mark-to-market, maybe we're $12.6 billion, $12.5 billion at the moment, but CapEx as well. Taxes and interest would be lower.
It doesn't change the net cash flow a lot. Balance sheet, a few numbers over there. $16.3 billion net debt around the top end of our range as well, influenced quite a bit by the new leasing standard 1.1. Page nine of the financials provides the full bridge between the periods from the cash flow generation, the CapEx, working capital, buybacks and some non-cash movements, leasing effectively non-cash. The assumption of some debt in a couple of the acquisitions we did as well. The Astron Energy Refinery down in Cape Town took on about $200 million or $300 million of debt as well. As Ivan mentioned, our long-term range is still the maximum 2x through the cycle within the 10-16. We'd committed or noted about six months ago to try and hover or be closer to 1x .
That still remains the nearer- term objective, looking to get there in the next six months-12 months. It's not an absolute die-in-a-ditch target. We'd just like the 1.24 to be heading south as opposed to north as we manage the business going forward as well. Liquidity is very strong, freshened up all facilities, so a good position there. Capital allocation slide is unchanged. Just a few points to note there would be the non-core targeted asset disposal still remains something we are working on, progressing a range of options with a goal to deliver, as I said, still at least $1 billion of long-term asset monetizations within the next six months-12 months. Just post-June, we've done a couple hundred, 150-200 of smaller things that have aggregated. Many things, there was a close of a small Brazilian iron ore mine, Ferrous Resources, which Vale brought.
We had 3.5%, 4% of that. That generated $30 million, $40 million the other day. There's some vessels, some shipping that we've accumulated over the years. We're monetizing some of those. There's potentially a couple hundred million there. We're halfway through that process as well. Some U.S. infrastructure still on the West Coast of U.S. is something that we're looking to progress. We're looking at potentially getting out of the upstream business in Chad. There was some noise on that. Process on the go there. Just long-term loan monetizations is also something I would put into that. We have some longer prepayment structures that have been at levels higher than we think that they make sense to be in a long-term fashion. I think there's going to be some reductions there, all of which could look to meet the $1 billion target and reduce debt accordingly.
If we now get into the building blocks for a spot or a 2019 type number, we're on page 15. Let's skip quickly to page 16. I think it's quite important, which is the volume and some of the weighting from H1 towards H2. We've shown actual production guidance 2019 for our respective commodities. We're going to see a pickup in copper ex-Africa of 75,000 tonnes. We were 475 tonnes first half you can see. That means mathematically 550 tonnes in the second half. Where's that coming from? Kolwezi will bring about another 20,000 extra tonnes period on period. A combination of grades and timing of maintenance and the likes in North Queensland, which is where we had severe flooding impacts across our Mount Isa operations, where effectively you had six to eight weeks of no product moving towards the refinery.
That can pick up 30,000 tonnes and then some other bits and pieces. Zinc, you've got quite a big increase H2 on H1 as well. To meet the 1,195, you're going to have to do 659. An extra 100,000 tonnes or so. Kazzinc will bring about 20,000 tonnes. Again, that was to do with timing of treatment of third-party material and some safety stoppages that we allude to Isa again, which is Lady Loretta as well as George Fisher will bring another 30,000 tonnes. Some of it's just ramp up of Lady Loretta. It's also to do with the North Queensland flooding and the entire system being down. McArthur River as well, generally due to seasonality and weather tends to have a better second half as well over the first half. Nickel will also pick up a lot, 73 H2 over 55.
Hopefully delivering those tonnes in a better nickel price environment, which is one thing that has responded quite well. It's not just Koniambo as Peter will talk to later on. That's less than half of that. You've got INO Canada, again, maintenance shuts and Murrin itself through a maintenance shut that was shut during most of April, will bring another 4,000 tonnes or so. Nickel's the biggest, at least in percentage terms and in absolute terms, it's looking to go from $100 million or so in the first half towards $700 million or $800 million EBITDA contribution. Coal will bring an extra 9 million tonnes second half. Colombia, Australia, South Africa all contributing bits, some of it M&A, some of it timing. Oil is quite a big step up due to Chad results of drilling program that we have down there.
All of that does explain quite a bit as we go back to page 15. Where are we in a full-year sense? Maybe right to left coal, 3.9 full-year. That's a slightly lower second half reflecting macros coal prices the like 2.1 first half, we do getting better volume. It does reflect the lot of fixed pricing that we already have within that business. Some updates, whether it was yesterday or last week that we did this as of last week. The coal team is pretty confident that's still in where they project that business roughly to finish for the full year as well on the coal side.
Nickel is the big jump, as I said, 0.7 up from $100 million, which is really a function of volume coming through in Canada and Australia and Koniambo being less bad hopefully in the second half than it was in the first half as well, and higher nickel prices, all of which is, in fact, even nickel price, you mark to mark that today, you can add another $100 million potentially onto that as well. Zinc will be pretty much as it was, 1.9 for the full year, 0.9 plus 1. Higher volumes coming out of zinc. Macros have taken that down clearly a bit, but also we produce a lot of gold and silver within that business, which has increased 10%-15%. Don't forget some of the precious byproducts that we have as well coming through. Copper goes from 1.3- 3.1, so 1.8.
Africa is broadly the same, 0.3, another 0.2 maybe in the second half. There'll be a step up from the rest, and that's to do with North Queensland, Kolwezi, and cost generally still looking good in the rest of the business as well. Putting all that together in a what is the cash flow generation, what might be the prospects and the equitizing and the debt movement and the shape of everything going forward. Adding all that together, marketing at the midpoint of the range, you've got $12.8 billion EBITDA at the spot. A slight recovery from the $6 billion or so pre-cobalt this year. CapEx still at $5.1 billion. Maybe there's a bit of buffer in there. We'll see how we go on the CapEx. That's cash tax and interest on a more normalized basis as well as we seek. $4.8 billion of cash flow.
We've given all the building blocks to that. I think the big bold thing, that's a good segue eventually into Peter's presentations, will be the free cash flow temporarily impacted in that 4.8 to do with African Copper, which itself, Mopani, Katanga, is running negative around $1.2 billion in this particular year. You got about 0.5 negative EBITDA and about 0.7 of CapEx as part of our $5 billion. You got 1.2 negative. With steady state production and plans accordingly, we should get to comfortably more than $1 billion of positive free cash flow out of around $1.6 billion of EBITDA of those two businesses two years down the track on not particularly heroic assumptions. We've used 6,500 forward copper and 15 realized cobalt to derive. There's a $2.25 billion cash flow turnaround story.
Clearly the first thing is just to stop the red, which will add $1 billion or so, then to deliver the positive cash flow. That's the big potential as we have going forward there. To give some bit more in-depth analysis behind that and hopefully the confidence that the plans can get there, I can hand over to Peter at this stage. Thank you, Peter.
Thank you, Steve. Thanks very much. Good morning to everybody. I'd just like to introduce myself. It's the first time in this forum with Ivan and Steve. Peter Freyberg, who heads up the industrial assets within Glencore. I think you're all very familiar with the commodities that we manage. My role is to manage the industrial assets that fall under those. The overarching strategy for the way that we run the business really remains the same in the sense that each commodity department, working together with their marketing and trading leads, establishes strategies for those businesses that are appropriate for the markets that they operate in, whether it's in terms of volumes or the types of products that they produce. My role within that is to make sure that within the industrial side, we have the right structures and strategies to deliver what we need to deliver.
Looking across the business, making sure that we have the right capabilities, and skills, and systems to make sure that we deliver what we say we're going to deliver in a reliable fashion. The intention certainly isn't with establishing this new role to build a large overhead in the business. The intention is to make sure that each of these commodity departments can do what they're designed to do and deliver what they have to. At this stage, I have a very small team working with me, principally today on HSEC. We've also got some people working on operational excellence projects and systems development, most of which at this time have actually been parachuted into assets where we need them. It is rather a small team, and the intention is to keep it that way for now.
Part of what you see there as well is the fact that we do have technology groups with Glencore Technology working underneath the copper department, and Expert Process Solutions, XPS, working under the nickel department. Although they fall underneath those specific commodities, they work across the business in terms of support. This year in particular, they've been of great value in terms of the way that I've used them in areas where we've needed them. Just talking about that and just quickly looking at what is happening in technology. There tends to be a focus on some of the challenge assets that we have, and we are going to spend most of this morning talking about the challenges and how we're addressing those. Glencore does have a technology capability in minerals and metals processing, and we've been doing it for a long time.
It's quite interesting to actually see that 2022- 20 26, ICMM members actually are using our technologies that we've developed, whether it's IsaMills or ISASMELT or processes that are developed by XPS. We are seeing and the philosophy and approach going forward will always be the right technology applied in the right applications for the right purpose. We do make sure that the underlying fundamentals of the business are right to support the technology applications that we do. We're seeing some of these processes rolled out to businesses today. I was at one of the assets in Kazzinc where we're seeing some of the work on atmospheric leaching with some of the more complex lead zinc ores there. Certainly in terms of support, we're seeing a lot of work in the challenge assets.
I spent most of the last seven months actually traveling around and trying to kick the tires and meet the team. The fact is that there are over 150 assets across Glencore. We are a highly diversified business, both in terms of commodities and geography. That presents some tremendous opportunities for us and is a big part of the value component of the business. I have managed to cover, I think, most of the South American copper and zinc assets. Not that long ago, I was up at the nickel assets late last year, having a look at what's happening in Canada. I have sampled the alloys assets in South Africa, looking both at Vanderbijlpark Smelter and the vanadium works that we're doing there. I've obviously spent a bit of time at Koniambo and Kazzinc.
Also in that time, I've probably had about five or six visits to both the Congo and Zambia, which is areas that we have a lot of work going on at the moment, as Steve and Ivan alluded to. What I have seen across the business is some excellence in terms of some of the assets and the way that they operate. We've got some world-class mining practices and safety practices and some of the best processing operations that you get anywhere. We have a very dedicated team across the business, a lot of driven people as well. Where we do have are some anomaly areas that do need addressing. Perhaps one of the things that I have seen is that there remains that strong correlation between safety performance and operating excellence.
Generally, where we have safety issues, we probably have operating issues as well, and that's certainly been the case in Africa. The focus assets at the moment and what I'd like to talk about today is what's happening in copper Africa and also the work that we're doing around Koniambo to improve performance there. Just starting off in Africa. Mopani, we had an absolutely horrible start to the year, and in the first few months, we actually had six fatalities at the Mopani operation.
Occurred in three incidences, and result in us actually suspending the operations and bringing in a team, a very large team, to try and help us understand what had gone wrong there. The fact is that Mopani, two years ago, had operated fairly well and had improved its safety very markedly, but in the recent history has lost control of that. We have got a team.
We've made tremendous progress, and I'll talk you through that a bit later. It wasn't just the underground and the safety. We also had a shutdown of the smelter. As you're aware, in June, we shut the smelter down, and we brought forward a rebricking of that smelter that was actually scheduled for next year. The second half of this year, essentially, is no metal production at Mopani, and we're looking to start that up and ramp that up towards the end of the year. What I can tell you is that we have made progress with the safety. We do understand how we want to operate the mine. We've got the right people doing the work right now, and we have a plan, and we will be able to take that forward and get to the production levels we've invested for and what it's supposed to do.
Katanga. Excuse me. Last year, Katanga was in ramp-up mode. It produced 150,000 tonnes of copper. We had indicated to the market earlier this year that we were targeting around 285,000 tonnes. As we ramped up, we've identified some bottlenecks, some maintenance backlogs, and we've readjusted that plan to the point where now we're expecting to get around 235,000 tonnes this year. Obviously, there are issues and there have been challenges with the cobalt qualities and the cobalt production. As early as February this year, we'd already identified solutions that didn't require the IX plant, so we started producing on-spec cobalt at perhaps a lower quantity than we would like. We are progressing those plans, and then ultimately, we'll build an IX plant there to make sure that we can deliver fully. Again, this is not a particularly large operation.
It's certainly being ramped up and has all of the normal ramp-up issues you would expect. The plans we have in place and the team we have in place will enable us to get it to the 300,000 tonnes per annum copper, 30,000 tonnes cobalt at a sub $1 with by-product credits cost of copper. Talking briefly about Mutanda, you would have seen the announcement this morning. I'll just take you through some of the issues there and how we see its future playing out. We are transitioning that to a care and maintenance phase later this year, and it'll be shut before the end of or at the end of the year. On Koniambo, we had a tough, a very tough, a very difficult first half. We produced under 11,000 tonnes of metal, and we were certainly targeting significantly more than that.
We fell short by 8,000 or 9,000 tonnes of what I would have liked to have seen come out of that operation. There are some things that we understand in terms of the fact that we ended up taking both furnaces down during that first half. We continued to have some power problems, but we are working through these, and we've got three initiatives running there at the moment that, again, make me reasonably confident that we can get that moving forward and that we can have a business there that delivers reliably what we invested for and what we designed it to do. Looking at focusing in now at Katanga and Mopani, Steve would have taken you through the numbers of where we are and where we possibly could be.
Certainly, the first half this year, with only 109,000 tonnes of copper and 6,000 tonnes of cobalt at Katanga, you end up with a very high unit cost driven by two things, obviously. One is the denominator in determining that, but also very high input costs. When you have these huge acid prices that we've seen and these increases in the acid prices, and we're importing acid, as we indicated, the IX plant will only be built next year. We're talking literally hundreds of thousands of dollars a day that we're paying for the acid that we could be saving once we run that ourselves. The 109,000 tonnes, we're targeting 235,000 tonnes. The chief bottleneck that we found this year was around the electrowinning plant. It's a very straightforward maintenance catch-up that we have to do there.
For us to start talking about 260,000 tonnes next year, going up to 290,000 tonnes the year after that, we don't see major bottlenecks between us, between now and then in terms of how we deliver that. I will take you through some of the work that we're doing across the different parts of the operation. We do see 300,000 tonnes being quite achievable, 30,000 tonnes of cobalt as a long-term steady life of mine. In fact, in the short term, we may exceed that tonnage because of the grades in the areas that we're mining.
There are certain costs out that are required, and you would have seen that in the notes to this page to get to the 165 [inaudible ]. We've been through very detailed processes to understand our business, and we have already identified very significant costs out that we can take through a diagnostic phase. Mopani.
Mopani, the unit cost is where it is simply because there are no tonnes there. Certainly for the year, it looks worse as we won't be producing in the second half and we're carrying all of those costs. We're in a phase where we are rebuilding the smelter, and we have the right work happening on the mine. We are positioning for a restart next year. There will be a small shutdown in the smelter next year to do some work that we couldn't bring forward to this year, but the smelter will be operating from the start of next year. We should be able, over a steady life of mine, and you can see that we've got two different levels for Mopani there. We believe that 140,000 tonnes is a doable proposition. We have the hoisting capacity.
We're building a new concentrator. The smelters obviously can easily accommodate that. In fact, we continue to smelt other people's concentrates as well. 140,000+ some additional tonnes if we optimize the underground the way that we would like to. That swings us long-term to a +$ 300 million EBITDA out of that operation at those prices that Steve was indicating, the $6,500 copper. That would put both those African assets at around $ 1.6 billion and obviously you've got to allow for some tax and capital. As we indicated this year, the cash position out of those two assets alone is in the order of -$ 1.2 billion. Well in excess of a $2 billion turnaround is what we're looking for there, and which is an achievable proposition.
Just looking at Katanga, w e implemented a review amongst other things when we started to see that we're struggling. Certainly part of my role, and coming into this position, was absolutely clear that we had some focus areas. Across the business, there's a crystal clear understanding that turning these two assets around, Katanga and Mopani, and then on top of that, making sure that Koniambo delivers, is probably the highest value thing that we can do in Glencore right now.
Katanga obviously also started to show the stresses and strains of the lower cobalt prices and wearing the increased taxation coming out of Mining Code 18. With the increase in the input costs, whether it was lime or acid, brought this business under particular pressure. Certainly as an operator, sometimes those things are good for having a good look at the operation to understand what we can do better.
The thing that pleased me is that we decided to address it by utilizing in-house expertise to a large extent. We brought in some of our mining specialists. I think a lot of you know that certainly the business that I used to be involved in previously in Glencore, moving dirt is something that we do in very large quantities. The coal business moves around 3 billion tonnes a year. Bringing in expertise to understand how we can mine and sequence and plan the mining operation better, we had people that were available, and we've done a very full and detailed diagnostic. I'll take you through some of the work and some of the findings that we had and what we have to do to take the mining forward. It's not a particularly big mine.
It's in difficult conditions in terms of the materials and the geotech and the high rainfall levels and the groundwater that we have to deal with. It's something that you can engineer your way through and manage your way through. Processing relied very heavily on Glencore Technology to come in and have a look at what was happening, and we actually see ourselves improving recoveries, getting the electrowinning plants working at an optimal position, and getting onto that 300,000 tonnes per annum trend. For both of those activities, mining and processing, asset management will be key. Again, we've brought people in that we have in-house to work through that with us and establish the right asset management strategies and make sure that we're doing the maintenance so that the systems and the equipment can operate reliably and deliver what we have to deliver.
One of the bigger levers that we've seen there is making sure that as a business, we've got the right team and organization in place, and we've done a lot of work. We did get some external help with that to help us do the diagnostic and go through every single department and every single activity and every single function to see how we can address that and make it fit for purpose. We do see material savings coming through that area. Also, we see some opportunities such as making sure that we're utilizing the national workforce to the best of capability.
We're at a stage now we're actually getting into the change management, certainly on the organizational side and going through the detailed plans prior to implementation or as we start to implement. The target remains to consistently deliver life of mine annual production of that 300,000 tonnes, together with the 30,000 tonnes of cobalt, hopefully well sub $1 a pound. Just talking about the mining, excuse me. If we break the business down into its fundamental components, it's a mine and together with some processing and some maintenance, and you've got to have the right team managing it. We have gone in, we have opened up the life of mine plan, looked at it in detail. They're quite high ratios at Katanga, making sure that you get the sequences right and the pushbacks right, and you move the waste material into the right areas is critical.
We are well advanced for that work. That, I think once we've got that in place, that's fine. To achieve that longer-term plan, we've got to get the pit working properly. You will know that historically we've had geotechnical problems, that drainage in the DRC and that type of geology is complex with high rates of inflow. With proper design of the drainage system, pit bottom layout, getting the drill and blast right, setting up the truck shuttle operations properly, making sure roads and ramps and these sound like pretty 101 stuff, they are. Making sure those things are done properly, that the team understands what the expectations are is what will get it there. Making sure that you have a pit management team that can deliver that. We are well advanced with this work. The designs are there, the understanding is there.
We've changed the drill and blast totally. We've moved diggers around from configurations where they shouldn't have been to where they should be. We've done a huge amount of work on the roads. The productivity goes up, the costs come down, and the reliability is there. On the processing side, there are key areas of focus. The acid plant, absolutely critical that we get that going as soon as possible. As a project, we have added additional resources to make sure that we understand all of the moving parts in that project and that we can deliver it as we're supposed to. That now we have a good understanding of the risks, and we're tracking that very, very accurately. Quarter two next year, it will be in ramp-up mode, and certainly by Q3, full operation. Restoring the electrowinning, the setback this year was that.
As the mine was developed, I think there was perhaps a lack of focus on some of the maintenance in electrowinning plant. We've taken basically parts of the electrowinning plant down, refurbishing them, getting them to the right standard and operating now. It's looking very, very good. I was there just two weeks ago again, and the work is on track. Cobalt, as you know, we identified a problem late last year with uranium in the product. Our immediate response was to look at putting an IX plant in, which is ultimately the long-term solution in terms of cleaning that up. By February, we'd already identified that we could rejig the plumbing in the process, and essentially brought some additional thickness in. We started adding phosphoric acid, and we were able to drop out the uranium within that process.
We are still adding some additional thickness that we have to bring that to full capacity. That'll actually see us producing proper, full recovery of cobalt by the end of the year on spec. The IX plant will be brought in to fully clean that up and make sure that we can do it on a 100% basis. At the moment, we tend to run on average in the low 90s being on spec. We do have the odd parcels that still aren't quite there. We will redesign that process, add the IX plant, and make sure that the product that we produce is exactly what the market wants. In terms of the asset management, again, pretty straightforward stuff.
We do this exceptionally well in many parts of the business, and it's making sure that we've got the right capabilities on site, and the right plans and strategies on site and that the work is followed in the manner that it needs to. We do see in various parts of our assets where we aren't performing the way that we should, and that obviously adds more to the costs, means that we aren't producing as reliably as we can. We have a straightforward plan that will sort that out in the future. We're also leaning on the OEM somewhat to make sure that they work closely with us and participate in that and ensure that we're not forgotten in the long chains that they have going into the DRC and that we have the right componentry, the right service levels from the OEMs.
There's nothing there that can't be solved on the maintenance side. That's, I believe, well in hand as well. On the organizational side, restructure and rightsizing within the business is something that we need to do. It's grown over the years. There are opportunities to address that. We're at the change management stage. We've done the diagnostics. We've identified what is in the universe of the possible there. We're now going through that change management process to make sure that we do the right things to the right parts of the organization to deliver what we have to. There has been work done around the governance side with SAP implementation. Today, we have a much better understanding of our numbers. Our procurement side has improved dramatically. We've got better control over the volumes and the cost of materials going into our business.
Now that we've sorted the SAP out, the reporting and the details that we can manage by are something that means that we can be efficient managers going forward. If you don't see the numbers, it's very hard to navigate. Partnering with key stakeholders. This is fundamental. If we're going to be successful there, we've got to get a few things right. Certainly at Katanga, we have a partner, and working very closely with them is fundamental to making the business a success. Also, we have some very significant community and other challenges and working with the government, both national and local, is key to solving some of those issues.
I think everybody in the room and everybody watching this webcast is aware that we had some very tragic events on the 27th of June with illegal miners in the operation, where there were two collapses and a number of people were killed. This is a problem that is across a lot of operations in the DRC. We're working very closely with the government to try and find long-term solutions towards this. At the same time, we are making sure that we control our site, that we've got perimeter controls in place, that we improve the security and working with the community itself in terms of improving what the situation is there. Long-term, we will have a site where we don't get these sorts of invasions that we've been experiencing over the last 12 months.
That in itself brings a new stability to the business and allows people to concentrate on actually taking the business forward other than dealing with some very, very difficult problems that we've had to deal with in terms of those invasions and the terrible things that can happen with them. To look at some detail, we don't normally share this level of detail with everybody that's on the outside of the business, but we have put together a very comprehensive plan for Katanga at this stage. As I said earlier on, it's not a particularly large business in terms of the mining. It's 45 million tonnes a year of waste, and we're feeding into the plant around 13 million- 12 million tonnes, putting a bit on stockpile. We are mining a little bit from the underground, and that will ramp up over time.
We're still thinking about how we rightsize that. If we can make the open pit more efficient, we can get more economic pushbacks and we probably won't have to chase the underground quite as hard. There are some benefits to operating the underground at the moment in terms of asset credits. We've done the detailed planning. We're running this option at the moment. We're very comfortable that we can get up to the 260,000 tonnes and 290,000 tonnes. The capacities are there throughout the system. We will see increase in copper grades. Interestingly enough, some of the low copper grade this year is because of the artisanal mining. We've lost copper and cobalt out of the mine because of those invasions that we've had. There is a natural increase over the next couple of years anyway. That gives you the detail of the plan.
We talk about a long-term 30,000 tonnes cobalt, as I indicated earlier on and foreshadowed was that we'll actually go through that average mark in the next couple of years, but then settle long-term around 2,500 tonnes. 30,000 tonnes a year or 2,500 tonnes per month. On the copper side, heading towards the 300,000 tonnes per annum. Mopani. We talked about the six fatalities. Three incidences. Very, very difficult situation. I've been to each of the sites, and obviously spent a lot of time with the team looking at what we can do to turn that around. As with the other incidents across Glencore, and I will be talking later on about safety in general. Absolutely unnecessary. None of those incidents should have happened.
As a fundamental, as an operator for 40 years, I'll tell you, it's a loss of control, and we can bring that back into control very quickly and sort that out. We did implement a program to identify the underlying causes and address those in an immediate fashion. We brought in the 23 persons that came from a wide range of places. It's quite interesting, when you go to Mopani, the Mopani team actually refers to their Copper Brothers, which are the guys that came in to help them. We're down to half a dozen or so people now that continue to work there. The mood there is quite different. Everybody's very positive. It was quite a challenge shutting a business for six weeks in operation.
After my visits and after having had a look around the mine, we decided that was absolutely necessary. The working conditions weren't something that we wanted to have continue, and we have addressed that. We've addressed it by changing out the leadership of that business. We've essentially taken out the top two levels and replaced them. The level below that, we have totally restructured, and we are still going through a restructuring process to make sure that on a shaft-by-shaft basis, we have the right people doing the right work. It's involved a lot of training, and taking all 16,000 employees through a process to make sure that people understood what we expected and making sure that they understood that we would be working with them to get the right results.
We're ramping up now and although the smelter is down, the mine is looking in a much better condition. If you go into the working places today, they're quite different to what they were, what I found there four months, five months ago. We've started to shut down some of the old infrastructure. We've in fact closed around seven shafts. There were announcement of two shafts because those are sort of the shaft complex working areas, central and north shaft. But we've actually closed down seven shafts, including some verticals, taken out a lot of underground conveying systems and simplifying the operations. The impact overall on employees is that we're reducing that number by about 2,000, but as we start to commission the new infrastructure, we expect productivities to continue to increase. And speaking of which, there's some great stuff there. There's some three new shaft complexes.
We've got the Synclinorium shaft, the Mufulira shaft, Mindola shaft. Both Synclinorium and Mufulira are hoisting, and are in ramp-up mode. They're excellent installations. They are the future of that business. There is the 2 million-tonnes per annum Mindola shaft. That should be finished sometime next year, and then we start ramping that up as well. The basic infrastructure is there. We've got a concentrator that we're building that'll be finished sometime first half next year. We can then take out the old Nkana concentrator and it'll be quite a different business to the one that was a couple, a few years ago. To make it make money, we've got to mine the right stuff, and we've got to do it in the right way. There's a very detailed review of the mine plan that's on the go. It's an incredible ore body.
It's very large, very extensive. What we're doing is making sure that we are mining the right ore at the right time in the right sequence, making sure our recovery of the ore body in those areas that we mine is maximized, eliminating the dilution that we're getting, reducing development ratios. Again, very much 101 stuff, but it takes perhaps a fresh set of eyes and the right tools to look at it to get us to where we need to go. It's quite a detailed piece of work that we're undertaking, and the immediate short-term gain we'll hopefully see in six months-12 months as we start to mine perhaps a bit smarter in terms of how we tackle the ore body. Actually having a bedded down, optimized life of mine plan probably take a bit longer, around 24 months.
Within that, we will see our head grades improve. We are hoisting often and putting into the plant well below 2%, and the ore body can do a lot better than that with improved mining methods and selectivity, and sequencing. A lot of the kick we should be getting out of improved head grade at Mopani. In terms of the plant, the acid plant and the smelter started giving us problems late in 2018, and certainly the beginning of this year, we were having a lot of outages. Some driven through the acid plant, we certainly saw it manifesting as accelerated brick wear in the ISASMELT , and we're also having problems in the matte settling furnace as well. We've had to shut those down, and have accelerated the rebricking work.
What we have done is we've brought in capability out of our North American smelting business, together with guys out of Glencore Technology to work with Mopani. We now have a very detailed project to take that forward, get it rebuilt. Beyond that, to work with a team when we recommission to make sure that we're operating in an optimal manner and that we get maximum campaign life out of each of the rebricks and that the acid plant does what it's supposed to do. There will be a small shutdown, as I mentioned earlier on, in the second half of next year, and that's just focused on some of the work that we've been unable to bring forward with this unplanned shutdown that we're currently experiencing.
In summary, for Mopani, the right mine plan underground, the right management processes and system, the right leadership, and running the smelter properly, feeding it with concentrate from our new concentrator, there's no reason why we shouldn't get to that $300 million EBITDA a year at all. No reason whatsoever. Mutanda. You've really heard about us phasing it out and that we're coming to the end of the oxide ores. There is some left at higher ratios, but it's not economic at the moment with cobalt prices and copper prices where they are, and with acid and input prices where they are at the moment. This is the right thing to transition this into a care and maintenance phase. We are working hard on the sulfide plant. The studies show us that there's tremendous potential there.
There's in the order of 100 million tonnes of open pitable sulfide reserves with decent copper grades, 1.7 high cobalt grades, over 0.5% of cobalt. We do see that as a strong option for the future. That doesn't mean that we stop looking around to see whether there are oxide ores within the area that we can develop and in some of the leases that we have as a potential alternative path or second path to continuing to have value out of the Mutanda business. Right now, with prices where they are and having a cobalt market that is clearly oversupplied, this is the right thing to do. We got to this stage after discussions with the government. There are obviously discussions with the site.
We are going to continue to employ the national force, the national employees, in the operation as we go through the care and maintenance phase. We will continue to run the acid plant because there is a market for that acid, and we will use the opportunity to upskill that workforce to make sure that when we do restart, we can do it maximizing the number of national employees. On Koniambo, I said earlier on that we had a very disappointing first half, and certainly was challenging for the team. We lost a lot of tonnes, a lot of metal through the same causes and the same issues that have been challenging us in the past. One of our larger losses, probably around 3,500 tonnes of metal was lost as a result of it, was because of issues we had in the power plants.
We've made real progress there. Where we had previously cracking boilers, where we didn't have proper ash handling capability within those boilers, where we've had expansion issues around expansion joints. We've done a lot of work there and a lot of repairs, and we've got those boilers to a condition where they are significantly more reliable than they have been in the past. We're now in a run in the second half where they are operating, and one of them has been operating very consistently now for a couple of months. The other one we've just ramped up as we've taken a furnace out of shutdown. Again, all the indications are that we can have steady state boiler power plant operations there. We've continued to have some losses through shutdowns within the plant itself, and they come in different areas.
We've had agglomerations in the fluidized bed reduction zone of the plant. We've had feed problems. We've had some problems around the hammer mill flash dryers. The team is very focused on engineering these out, so as we come across them, we identify solutions, and we make sure that we, as much as we can, that we don't get a repeat of those. We've probably lost easily 3,000 tonnes of metal in the first half against those sorts of issues, which we hopefully will see occurring on a less frequent basis. In terms of how we manage it, we have put three initiatives in place. The first one is a new level of technical oversight of Koniambo. We've put in what we call a ramp-up control group.
This is based on successful projects we've had elsewhere across Glencore, where we have a complex project, either because it's a very large CapEx project or it has large technical complexity. We bring in sets of experts, some internal and if necessary, some from the external world to work together with the team. Other than the fact they really do live on an island, they don't operate on an island, and that they have a bridge to people that can assist them and help them prioritize the work that they're doing. This is already showing, I think, benefits in identifying some of the things that we need to do to take that business forward.
Some of the issues we've had are probably self-inflicted, so we've undertaken a study on the maintenance side, and we've identified opportunities for improving the maintenance, so that when we plan the maintenance better, when we do it, we execute it better, and that the outcomes we have from the maintenance is what we're looking for, rather than that we have breakdown shortly thereafter or repeat repairs and those sorts of things. Then we've also brought in some people, some resources to help us look through the costs, because as much as we're going to ramp up the denominator and get the tonnes up, if we can take costs out of the numerator, that will help us get to the sub $5 a pound that we need. Those initiatives are being progressed. Steve did talk about a better second half.
We don't have any major shutdowns planned in the second half. It is now about reliable operations. I think we're reasonably well-positioned for it. This very complex piece of infrastructure will continue to give us some challenges. I think we've got the right processes in place now to manage it better. More on the planning, more on the predictability of what can come up next, better quality repairs when we have to do them. I think the power plants are in a lot better place than they were 12 months ago or even 24 months ago. They're coal-powered thermal generators. We should be able to get that right. Safety, I'm going to end on this before we go to Q&A. We've had 11 fatalities. Copper, we had the Mopani six fatalities that I talked about. We had one in the DRC.
We've had three across zinc and one in alloys, which was a fall of ground. What we've done and how we're addressing it is not overly complex but is essential in terms of the work and how we go forward. The first thing we did is we looked at the corporate structure and the work that was done corporate in terms of how they provide leadership, how they provide direction, how they provide advice, how they provide assurance. We have restructured and rejigged that team, and we're still bringing in some additional resources. It is a different style and different approach to what we've had. With increasing rate of fatalities, unless we do something different, we're not going to change the result. We've developed a very detailed plan, strategy, and plan for the business that addresses key areas and gaps that we've had and that we've identified.
We are in the process now of cascading that plan through all of the departments and down to each and every one of the assets. Within that plan, we've also identified the essentials of having safe outcomes. As Ivan indicated, these are areas where we're getting these terrible results. We have many areas where we're getting great results, and leveraging off those areas and identifying what they do well, and what works well, and what really positions a business for long-term zero-fatality outcomes, is what we've made that element list up of and that strategy and plan of. Having a strategy and plan and understanding the key elements is just the first step. If you look there, you can see that the two areas that stand out obviously are copper and zinc, where we have a lot of work to do.
Even within that, it's not just one site. We obviously had issues at DRC, and if we look back just beyond the first six months of this year, last year as well, similarly, it was copper and zinc. There's a full recognition that the structures and the staffing and the skills and the capabilities in those departments relating to the HSEC side has to change. We're in the process of working through that with those departments, bringing the right people in, putting the right systems in, and making sure that the right work is done in the right places to deliver the safe outcomes that we need. Within that, we have to address the accountability model as well. For the right accountability model, you do need some process that governs those operations.
It's making sure that those strategies, plans, and elements that we talk about as being key for that safe outcome are in place and people are held accountable for keeping them in place and making sure they are there. We're also doing some work around the assurance process. We have a very structured assurance process within the HSEC area. The expectation is that mature assets can manage that themselves, and there is a verification and oversight process that makes sure that's okay. The less mature assets and the focus assets, we are injecting an additional level of assurance that is tuned to helping us understand what works, what doesn't work, and whether the controls we're putting in place and whether management is being as effective as they should be to deliver what we need to deliver. We will get there. Thank you.
Thanks, Peter. Just to give the outlook and a bit of a summary where Peter took us and what we've done and Steve's results, looking at the fundamentals and the short-term fundamentals going forward on the commodity prices. The short-term fundamentals, as I said earlier, still remain positive, supportive. If you look at the inventories of our major commodities which we produce mainly, the stocks are at extremely low levels. If you take LME, you take SHFE, you take bonded warehouses et cetera, sum of off- LME material, you got copper at 13 days supply, you got nickel at 25 days supply, and you got zinc at six days consumption. These are really low levels that we've seen over the years, demand growth remains positive in most of these commodities.
As we've all seen, mine supply, even us, as Peter's just gone through, we got our ramp-up assets. Our competitors all have the similar problems with ramp-up assets. You've seen what's happened on a lot of these new mines. They're all underperforming. Even if you look at besides the inventories at extremely low levels, the other part is if you look at the deficits, if you look at, take copper, for example, if you take new supply that's coming in the market this year or next year, you take the tonnes that are coming out of the market or that came out of the market this year, you got deficits in most of these commodities in both copper, nickel, zinc, in 2019. Going forward, in some of the commodities, zinc, even next year, there's a deficit.
Copper, not a big deficit, but let's see, that's just actual production tonnages, but if you've got increase in demand 2%-3%, it will be hard to meet those tonnages. Demand for high-premium energy coal, the better quality coals which we produce remain strong even though in Europe, in the Atlantic Basin, it's not that strong, which we had with the low gas prices which affected the price of coal in Europe. In Asia, Southeast Asia, demand continues to increase. There's still new power stations being built in various countries in Asia. Demand for the product increases. Supply in some of those countries, if you talk Coal India, you talk China, it's not meeting what they anticipated. Therefore, they're starting to import a bit more. It looks like the import of coal into that part of the world will continue growing.
The long-term outlook, where we see the outlook and where it looks good for our commodities, we will talk about the electrification of mobility. If you look at the amount of electric vehicles that people are talking to be on the road by 2040, if you talk up to 620 million vehicles on the road, the amount of the commodities which we produce to produce the batteries which are required in those vehicles, the charging points which are required for copper, it bodes well for both copper and nickel and cobalt, which we have. As I said, I spoke about thermal coal. We still believe it is important for base load and with the demand growth in Asia, we believe with the better quality coals which we have, the outlook still remains pretty good for coal.
Looking at urbanization, where demand grows for most of the commodities, both for early cycle, late cycle commodities. You have urbanization and the rising living standards, 2.4 billion people increasing in the world in the population by 2050. The demand for commodities will continue and even for coal, with the demand for electricity, coal still being baseload, cheap electricity production is still gonna be required in those countries. It's clear, and we can see with the commodities, and therefore with the demand growing and whatever percent we agree it will grow, whatever percent growth we believe will continue in China, putting new supply in the market is getting more difficult. Social license to operate, we can see is extremely difficult. We're going to more difficult regions to produce these commodities. It's clear, with these commodities, it's volume. Volume affects the pricing.
We've seen when we had the disruption in iron ore. Look what happened to the price of iron ore with the disruption, when we took some zinc out of the market. If you're not putting new supply in the market with new mines, which as I say, is difficult or even existing mines reducing tonnes, et cetera, it has a major effect on pricing. That's what I'm trying to point out here. It's getting more and more difficult to put new mines into production. You're going into more difficult regions, so it's getting more difficult to add tonnes into the market. If demand keeps growing, it should bode well for the price of the commodities going forward. I don't want to talk much on this, just giving a summary really. Most of the stuff was we got a compelling mix of assets.
I believe commodity mix, we got the right commodities in this mobility for transition to battery vehicles, electric vehicles. We are a leading supplier of high energy coal. Our business is well-positioned. As you heard from Steve and Peter talking you through the operations, if you look at our operations, our cost of production and our forecast for the full year is extremely low. Copper at $0.80, zinc at $0.10, nickel at $2.88. We swing into better production in the second half of the year. Marketing tracking well towards between the mid-range of the $2.2-$ 3.2.
Ramping up of our developing assets, I think Peter gave you a pretty good outlook, how he's gonna get this right, the work that's been done, and we feel very comfortable and he's made us all feel comfortable what we're gonna do at Mopani, what we're gonna do at Katanga, and Koniambo ramping up nicely. I think we'll get those last three ramp-up assets which we got in our portfolio performing well. We also shouldn't lose sight, if you look at our existing assets, besides the three ramp-up assets which we focus on, we've missed production targets, et cetera, our existing assets are all performing extremely well. If you look at our copper throughout the book, performing well. If you look at our coal around the world, performing well. Zinc performing well, doing very well in Australia.
Our non-ramp-up assets are performing well, we're doing well in that area, I believe in a short space of time, Peter's given you the outlook, where the volumes will be. When the ramp-up assets are performing, we'll have a great range of assets, I know we've got a lot of assets around the world, 150 sites, but we're performing well at most of them. When these ramp-up assets get there, we'll be in a great position. Balance sheet is strong. Steve took you through the balance sheet. Where we're looking, we want to take our net debt to EBITDA down to a 1x , which is strong position. We believe we'll get there in the next six months-12 months. I believe the fundamentals are well for the company going forward. We've got the right commodity mix. Our assets will be performing well.
Strong balance sheet, things are looking hopefully well for the future. Thank you. Martin? You taking? Okay, let's go. Questions, yes, Jason. Martin, come take it. Okay.
Sorry. Jason Fairclough, Bank of America, Merrill Lynch. Just, Peter, thanks a lot for the great walkthrough on the path forward in the, particularly in Africa. Could we just talk a little bit about how we got here with the, particularly with the African business? I mean, is this, The word I've heard from you a couple times there, Peter, is control. Is it just we didn't have the right people, we didn't have the right plan? I mean, these, on the one hand, they're ramp-up assets. On the other hand, they've been there for a long time.
Yeah, Peter can talk. He's reviewed them all. All I can say, but you say they've been there for a long time, yeah, Mopani's an old asset. You know, it's been there a long time.
I mean, Katanga's an old asset as well.
Katanga-
Even at the time of the IPO, I visited Mutanda. I mean, these are not new assets.
Yeah, Mutanda, well, you visited Mutanda, and Mutanda ramped up pretty quick to 200,000 tonnes, and it got there pretty quickly, producing 30,000 tonnes of cobalt. Mutanda was a well-performing asset. Unfortunately, Mutanda didn't have enough oxides, and it performed well because Mutanda was giving us $1.3 billion EBITDA per year. We had a three years, four good, very good years at Mutanda. It did perform well, the actual plant. The idea was to go into the sulfides later on. The oxides depleted quicker than we thought they were going to deplete. We rather took the view, instead of moving into the sulfides immediately, we'd rather do a better study on the sulfides before we go there. The cobalt price isn't helping us today, why rush it? Let's be sure of where, when the mine can be economical and viable.
At current cobalt price, it's not that viable. We also had the tax put on us, the extra mining tax, which affected the profitability of that mine. We've taken the more prudent decision and said, "Okay, Mutanda, let's wait. Let's get the sulfide in line. Make sure we've got the sulfide plan correct." When we've got it correct, and the cobalt price is viable and subject to where the Mining Code will end up being, then we must make the decision to go forward. Mutanda, not that bad. Katanga, you know, we had to develop the whole ore leach, and we had to develop the whole ore leach program, which we did, ramped up pretty well. Got, you know, built on time, pretty much on budgets, not too bad.
There were issues at Katanga. Actually, the Mining Code affects us also because we're paying their higher taxes and royalties over there. Peter alluded to the maintenance, yes, dropped the ball a bit on maintenance, no doubt. That was the issue. Instead of producing the 285,000 tonnes that we indicated this year, we'll produce around about 235,000 tonnes Peter's talking about. A lot of that to do with the maintenance of the SX-EW plant. That's where we are. That's the reason. Mopani, as I say, is an old plant. They've sinking the three new shafts. They did the work on the three new shafts. That's pretty much on time. Little bit over budget, not too bad. The other delay is basically the problem we had at the smelter.
How much of this is the ramp-up of the projects versus not having the right people and controls in place versus the more general operating environment?
You want to answer that, Peter?
It's, Jason, it's a combination of those. Right now, we are putting in the structures, the processes to make sure that we can deliver long-term reliably so that we don't have the situation you had with the SX-EW where whilst they're focusing on delivering the whole ore leach plant, which they did a great job with, somebody doesn't take the eye off the ball in a different part. We've got the right systems across the business with the right people, we'll give you the right outcomes. As I said, these are not complex assets. I have spent most of the first six months trying to look forward with the business and getting the right people in place to give us what we need to. People really enjoy working there because they know we're heading in the right direction.
We are comfortable that we will take it where it needs to go.
You also got to remember, Jason, if you look at Katanga, you look at Mutanda, you look at Mopani, et cetera, not big cost overruns and not far off time production. Off Katanga, of course, on the 30,000 tonnes 40,000 tonnes where they didn't get it, as Peter says, with the maintenance. What is pretty impressive is the CapEx spend and the time to ramp up to get it where it is, not too bad. We got the full first line running at 150,000 tonnes very quickly at Katanga. The second line is ramping up very nicely. Unfortunately, we lost the 40,000 tonnes because of the maintenance.
Okay. Thank you.
CapEx, not too bad.
Sir, Myles Allsop UBS. A few quick questions. First of all, with the cash returns and this focus on getting net debt down below 1x , which I think is around $3 billion, are you going to continue the $2 billion buyback, complete that off in the second half, or is that going to be paused? Should we assume any disposal proceeds are now used to delever rather than to extend the buyback by $1 billion? Maybe secondly, on Jason's question, you guys don't really seem that patient, just generally. If Africa keeps burning $1 billion of cash, if it's one of those assets that just cannot be fixed, how long do you give it before you get more radical? I guess you're getting pretty radical anyway with Mutanda.
Maybe a little bit more on coal and realized pricing would be helpful.
Steve, the first part?
We would absolutely finish the existing $2 billion buyback. There's around $700 million or so ready to go. That'll be done during the course of 2019. The way I look at it, if we're starting now at, say, $16 billion or so net debt, lease accounting aside, let's assume that we're not going to change bands and stuff to reflect a pro forma of these things. We'll take that on the chin around the leasing. We're at $16 billion. Cash flow at spot, we said $2.4 billion. I think there's some tailwinds in terms of CapEx and some tax shields and various things, but that's an illustrative thing. Take half of that $2.4 billion. We got the second half of the distribution, the $0.10. That's next month, $1.3 billion, so that's the $0.20. The rest of the buyback is the $0.8.
That's $2 billion coming out of that $2.4 billion. That's without any disposals and any other working capital or other areas. That should allow us to finish the end of the year below 16 and start trending down. Then, as we say, the six months- 12 months, I'm then into first half next year, the capacity to do incremental buybacks would then play second fiddle to the heading south on that leverage in the short term. Again, then you're starting the year $2.4 billion again, you take the half. The base distribution, $1.3 billion. There I would put in backend some of the disposal proceeds, and I'm putting in $1 billion in there. That, yes, it would get prioritized then towards that debt reduction.
You're generating $3.4 billion first half next year, and then you're covering the first half of next year's distribution, assume the same $0.10 just for modeling purposes. You're able to bring your debt down two and a bit. In 12 months' time, you're then dropping just a little bit below the 14 and your ratio is one and some change, so 1.07. Obviously, there's a lot of variables that go into what the next 12 months can look like in terms of disposals and macros and working capital and timing of some other payments and these things. Absolutely finish out the existing buyback. The base distribution is well covered. Those would take priority. As I said, it's not the one is a do or die, have to meet that by a certain point.
I just want to trend towards the one and that's having hopefully peaked now at one and a quarter to start heading south and responding to markets and how all that works out.
Okay, the other part of your question. What is our patience in Africa, et cetera, has been progress. Well, as I said, we're getting 240,000 tonnes there, 35,000 tonnes this year. We should get 285,000 tonnes. You've heard Peter's presentation. He's pretty confident we're going to get the 285,000 tonnes. He doesn't foresee any issues there. It's just the maintenance of the SX-EW plant, which he feels comfortable on. You saw his graphs, which he showed you, where you would get up to 265,000 tonnes next year and then hit the 300 pretty soon thereafter. I think it's September where he starts annualizing at 300,000 tonnes. He feels comfortable on that. Peter, correct?
I think we've got the-
Somebody got to answer.
It's a mine, a concentrator, and a whole leach plant, and together with an acid plant. There's some parts that we have to commission. The acid plant has to get up and going. The cobalt side, we have got the fix for the uranium, and we're putting the thickness in to drop that out. We will do the IX overlay next year that makes sure that we can do that 100% of the time and get on-spec product. We've got the right people involved in the business. The plan is there and the team is there, and I don't see any reason. We've risk assessed it. We believe we should produce.
Okay. The third on coal, what is your question on coal?
In terms of realized pricing, are we going to see another step down in the second half? Just the nature of the contract structure out of-
The figure there, we put the figure in the forecast. I think the margins are-
Well, it would. Basis some macros over the last week or so based on our book as it currently rolls off and quarterly lock-ins and fixed prices, there would be $2.1 does step down. We're $2.1 the first half, $3.9. It's a $2.1-$1.8.
We get the margins have dropped, I think from 37% down to 27% or something in that period. We've dropped the margins down there. Now let's see what coal does in the second half. It actually does with the supply side. It looks interesting, the coal side right now.
Morning. Liam Fitzpatrick from Deutsche Bank. Two questions. Firstly, on the portfolio, probably one for all of you. You own a lot of assets. I think the figure quoted was 150 or over that. Do you think the business is just too complex at the moment? Is there scope to upscale the $1 billion divestment target that you have? Then secondly, linked to that, the ag business, it's deconsolidated. The former head recently left. Is it still a core business?
The first thing, look, we're always looking at the tail assets. Do they bring much to the business? Does it help the trading book? They're having the smelters, the refineries do help the trading business in a way, so you would like to keep them. We always look at the tail end of the assets and see what is potential to sell. Does it move the needle much for the company? You could dispose of them and the $1 billion could increase. That's something we look at all the time. If there's demand for them and someone really wants them, like Steve said, we're still doing some disposals on the oil side, some of the tankage, the storage facilities we'll look at doing. We're always reviewing that. Having 150 assets is a lot to manage.
If things don't move the needle, they're not important for the group, we will dispose of them. The second point, yeah, the ag business is important. We think, as Steve says, it's performing well this year. It's picked up this year. We got the partnership there. Chris left. We've got David Mattiske, who we were grooming along the way to take over from Chris. He had planned his departure well in advance. It was all well planned, and I think it's a business that still works well for Glencore and performing quite well this year. It is a business they would like to grow over time. We've always said it is a business that needs a bit more growth, so they will keep looking for opportunities.
We'll probably need to, just on the Glencore Agri, we'll need to hopefully spend a little bit more time in it, maybe not now, but at other times, just to bring more visibility about obviously how it's performing as it's coming through almost immaterial through the numbers, but it still is at the time of the divestment, it was obviously at a value at sort of $3.5 billion for 50% of the underlying infrastructure and the assets. It's very strong positions in obviously different regions. That business should be comfortably at 100%, sort of an $800 million annualized EBITDA, not much CapEx, not much sustaining like a mine or whatever it is. A lot of that should generate some pretty good cash flow. It should be quite infrastructure-led returns, though.
Ultimately, let's see how that market develops in terms of consolidation and multiples and these things, but there's a good value to unlock there down the track. Don't sort of, obviously make sure it's covered somewhere in the Glencore sort of some of the parts there at the moment, because I assume it's not at the moment.
It generates cash. It should be kicking out dividends, so hopefully should be pushing cash into Glencore.
Sergey.
Yes. Thank you, Sergey Donskoy, Société Générale. Couple of small questions on Katanga and a couple of small questions on Mutanda. On Mutanda, I understand that the mine is being put on care maintenance partly because the oxide ores are getting depleted, but it is also because of the adverse market conditions. Is it possible to give some guidance or idea what were the costs in the first half so we could understand under what conditions the mine could return to production? Second question also on Mutanda, this decision to suspend production at the mine, has it been discussed with the authorities in DRC and how was it received?
Yeah. The authorities, our team went down, had meetings with authorities, explained to them that we were taking this decision. It made sense. They were informed fully about it.
You don't expect any opposition on this front?
No, I don't expect it. They've come out with a statement. They're aware of it. They were advised of it, and they said they had no comment further. Regarding the costs, our costs this year will be about.
It's probably fairly breakeven-ish at sort of EBITDA. You've still got then the ongoing investments that need to go as you deliver on future projects. It would be post CapEx would be negative from a cash flow, and that was influenced obviously cobalt, more of a cobalt exposed operation at the 125 type scenarios. The input costs, as we mentioned on things like import, lime, and acid was incredibly dramatic on that business as well. It's a pause now to work on sulfides. It may come back under an entirely different sort of cost mindset structure as it goes forward.
It could have been for the CapEx to bring in the sulfides. You've got to build the concentrator. You've got to build different type, whether you build the Albion or roaster. We look at the various things. Peter and his team's working on that. Once we've got the full understanding of what it costs, the capital involved, and what numbers are required for both cobalt and copper to make it viable, then we'll bring it back.
All right. Thank you. On Katanga, also two small questions. Is it possible to give an idea what was the impact of this inflation in acid prices and in other materials on first half cash costs, kind of isolate this particular effect? Second thing, do I understand correctly that radioactivity is no longer an issue, so this ion exchange plant is simply now a backup option?
Yes.
I think the IX plant, we're obviously end up polishing. We also want to retreat some of the hydroxide that we've got there that's got uranium in it. I think it gives us a very robust process that ensures that we have the right quality product, but also can allow us to reprocess some of the hydroxide that's got uranium in it.
Also in scale, being able to treat when you're at 30,000, I don't think you'd need that plant to be able to treat it. In terms of acid plants, as compared to, w hen we're up in producing acid itself, we should be at about $185 a ton. We were paying just over $200 last year. We paid close to $600 during the first six months of this year. I think it's something like running an incremental cost of $20 million a month just on acid alone. You can times by six or 12 or whatever you want to do on that. That's just incremental. It's a huge cost component of the business.
Thank you.
Good morning. Sam Catalano from Credit Suisse. Two questions. Firstly, just on marketing, the marketing division. You've explained very well the issue with cobalt inventory. If we go back, there was the coal hedging a few years ago, an issue with cotton last year or the year before. You've talked in the past about the risk management structures in the marketing business, how can that change, I guess, to minimize these series of one-offs effectively, if you want to look at it that way?
The coal, we know what the hedge was. We explained it at the time. The cotton was an issue, we explained it, et cetera. This on the cobalt is a little bit different because you've got to remember, this is moving it from producing assets into the trading business per the agreements. Because the market was extremely weak, it's just from the one end to the other end, really. Came from our assets into the marketing, and that's what it was, and it came at a high price. Because the market was extremely weak, we couldn't move it out. You couldn't sell it. It had stayed at the asset, you would have just Sorry?
You can't hedge it either.
You can't hedge it because cobalt, that amount of tonnes, you can't hedge. You had to sit with it there at the price you had taken it from the asset at the time, and then you had to mark-to-market, and that's where we got the $350 million loss. Had it sat at the asset, then it would be at the lower cost on net realizable value, and cost was somewhat lower, so you wouldn't have had that type of price movement. That was just because of the market as it is. If the market was better, as soon as it comes into the trading book, it moved out and it would have moved out at the price of the day as similar to the price at which you bought it from.
That is just the way the contracts are set up in that part of the way we've got it set up.
It's not dealing with third parties, which is I guess what.
It's not a third party that we bought cobalt from someone who was sitting on a long position. It's just movement from one of our own assets into the trading book, et cetera.
Okay. The second question is just back on-
Of course, of Mutanda eventually, as that accelerates and rebalancing of that market, it should allow us to bring down that position as well.
We think we should go site.
Yeah. With regards to that, why wait till the end of the year to shut down Mutanda? Is that a sort of regulator authority thing? Why not shut it down today?
Yeah.
I think it's a logical transition. We looked at what was economic there. We've got to actually transition to that. We've got people that it affects. We're looking at that, the acid supply, the input costs. As Steve indicated, we are running just slightly better than breakeven at that business, and it's a logical stopping point.
Grant.
Hi, it's Grant Sporre from Macquarie. Sorry, can I ask two questions? The first one is just asking the sort of the cost question slightly differently. Just for Mutanda, once it's shut down, what's the sort of ongoing fixed cost going forward? Perhaps if you can just give us a broader sense of fixed versus variable cost at African Copper. Lastly, just on the coal strategy, Ivan, are you still sticking to your 150 million ton cap?
Coal, okay, I'll answer that then pass on to Peter. Coal is on the $150 million cap. That's what we've said we would stick by, and we're sticking by that. Which at the end of the day is good for the coal market. No one is building new coal mines. You see no new coal mines being built or being financed besides Coal India growing and new mines in China. The rest of the world, nothing there. Peter?
There are some costs, obviously, to keeping it on care and maintenance. We are going to try and offset some of those by running the acid plant. It's not really a material level. Plus there's going to be advantages for the future project through the upskilling and the training that we're going to do on that workforce. I think, in terms of holding the asset and social responsibility and having the right conversation with stakeholders, including the government, we are going to incur some costs, but they're not that high.
Sorry, just a quick follow-up. Just on the acid plants in the DRC. Just can you remind us how those are fed? Are they local sulfur deposits that you feed them? Or how-
Sulfur.
Sulfur.
The ratio in terms of the sort of logistics of number of truck movements is sort of moves from, it's sort of half or something.
Yeah.
Even logistics is actually a very challenging, I mean, even the acid supply, how many trucks need to offload each day?
Hundreds.
Hundreds. It's a huge logistics exercise to do.
Good morning. Sylvain Brunet with Exane BNP Paribas. First question on cobalt and maybe your sense of how advanced your customers are on their destock. I'm thinking of the OEMs of this world. Second question to Steve, maybe on debt. If you see still some room to bring some working capital down, whether that would be on the industrial or marketing side. My last question may be to Ivan. As the management team is changing, are you also taking this opportunity to have a fresh look at KPIs across the organization as priorities are changing a little bit in the organization and outside?
Yeah, of course, with the management team changing, we're always assessing how we value the performance of our people and how we're setting KPIs. That's an ongoing process which we continue to do in the group to monitor it in a better way and more professional manner. That's an ongoing process. Yes, we're doing that. The other part of your question on cobalt, I think, where do we see cobalt based on having us remove these tonnes? Is that your question?
No, Partly, yes, what is your assessment of the level of destock or how advanced customers are in their destocking?
I'm not sure exactly where they are on their destocking phase, but it looks where these tonnages are at the market, we believe that should start getting the market fairly well-balanced. It should have a positive effect on the price of cobalt. The market with these tonnes taken out, 30,000 tonnes or whatever, really should put the market back in balance and maybe slight deficit.
Encouragingly, our actual sales volume during the six months was actually stronger than we were expecting as well. That's why even our 10,300 tonnes in terms of exposure, it was pleasingly that it didn't go up in that environment. We were producing, we had some offtake commitments, and we were able to keep it at that same level. Sales was much stronger this period even than the six months in the previous six months. I think that's encouraging in terms of demand and needs and general stock levels as itself.
We also think the electric vehicle production in China during the second half during last quarter should start picking up, and that should make people to start restocking more cobalt because of the requirement of the batteries. You also have the European car manufacturers during the second half start coming out with some of their electric vehicles, more towards the latter end of the year, and that should therefore make more inventory, people starting to purchase more cobalt.
Working capital, inventory, I think there's probably scope to bring that down, through the RMI, even the non-RMI part. Obviously, just having held more cobalt than we would have normally held in terms of levels, we certainly see capacity to bring that down. That will inject some cash back in the business as well. I wouldn't on receivables, payables, call it as you were. There's always scope to do it. I think we're in a comfortable position more broadly there, both RMI and non-RMI inventory. I think there is scope to bring that down within the business and would naturally come down anyway in a lower price environment, as we've seen through the different cycles in 2008, 2009, 2015, 2016.
Yeah.
Thanks. Just two quick ones. Ben Davis from Liberum. Firstly, just what's the current situation with the illegal artisanal miners at Katanga? What sort of long-term practical solutions are being cooked up? Secondly, I might have missed it, but what's actually caused this massive rise in acid prices? Was it supply, demand on that side of thing?
Yeah. It's supply, demand, of course. New production in the DRC increased-
Well, not helped with the smelters going down in Zambia was a big factor, including ours.
Yeah. Didn't help with Mopani going down.
Others.
with Vedanta going down, which was producing acid. Both of them went down. Therefore, you lost the acid there. You've also had more demand of acid in the DRC, new mines coming up. More Chinese production where they needed acid, that's where it just tightened the supply. Regarding the second part, Peter?
On the artisanals, it wasn't just Katanga that had the issue. It was across the province, with an inward migration, I'd say, of thousands of people that were starting to mine illegally on sorts of leases such as ours. The government took a view on this. There is a presence of military. Obviously, that's not the best way to start addressing it, and we believe that there are long-term social solutions that need to be worked on to try and address that. We talk on a very regular basis with government at all levels and obviously emphasize issues such as human rights and voluntary principles and make sure that there's a mutual understanding of what the risks are and how to manage those. Their presence has resulted in a massive decrease in the activity.
We are working very closely with the governor and the government there to look at longer term solutions in terms of how we can invest socially, what the government can do to try and address this. At the same time, we are addressing perimeter control around our business to enable us to have better security and control the sort of influx that we've had in the past. These are very complicated lease boundaries that we have, together with entities such as Gécamines in there, and we are working together with them and others to sort that out. We are going to control the site, but at the same time, work very actively in the communities to try and find some offsetting development, some training, some enterprise development and the like to depressurize that. The community, the unions, and the government actually all being very supportive.
Myles, just a couple of follow-up questions. How is your relationship with the new government in the DRC? Do you think Tshisekedi is going to be prepared to consider changes to the Mining Code for existing operators? On the free cash flow of Agri, you say normalized EBITDA, your share is at $800 million. What sort of dividend could we assume in a normal world for the Agri JV going forward? Maybe on coal as well.
Makes you bullish. Do we have to wait till gas prices recover before we can get bullish coal? What could drive the recovery sooner?
Okay. Let's start with the first part of the question. With the government, how do we think we're doing on the Mining Code? The new government's in power, the new president's in power. He still hasn't appointed the cabinet. We're still waiting for the new appointment of the mining minister, and then we can have further discussions. The Mining Code, we have said clearly we don't accept the new code. We will challenge it. We're just waiting for the new government to be in place and then to have further discussions on it. We've had initial discussions with the president about it and where we sit and our feelings about the new Mining Code, and as you can see, the effect it has on our operations. It had a big effect on Mutanda. It has an effect on Katanga with the new code.
It is still being disputed, this part about, the second part, dividends that you, cash will get from the Ag.
I mean, from $800 EBITDA, you would derive free cash flows sort of circa $400 for that sort of business?
For sure.
No, that would be 100%. We'd obviously be 50% proportion in that. I mean, if it was a full payout and things were delivering at that level. Obviously, during various years, it's been at over $1 billion in 2014 and stuff. It probably troughed around sort of six-ish or something during the more difficult period the last couple of years. That business has invested in various sort of strategic ports and expansions in Brazil and various other bits and pieces that's also consumed some capital within the Glencore Agri in the last 12 months, 18 months. I'd say we're just steady and off payout ratios and a very comfortable debt position is where they're at. The business was set up initially with a reasonably conservative structure, and we haven't taken any dividends out over the last three years.
Anything that's been generated has either been invested or retained within the business.
Yeah, coal, I mean, bullish. Let's see. Look, Europe imports around about 100 million tonnes of coal. Where it got affected in Europe, with the low gas price, did have an effect on the overall coal market, but it's not a big part of the coal business today. Most of the coal goes into Asia. What have we seen in Asia? You've seen very strong demand in India, stronger than people expected. I think India is going to import around about 180 million tonnes. China imports are still very strong. New countries which are importing more, Bangladesh, Pakistan, Vietnam is becoming a big importer. Even Japan's increasing slightly. Demand is increasing up in a lot of these countries today, and you don't have new supply coming into the market. China, of course, is increasing coal.
India, where they do need more coal locally, Coal India is not increasing to the expectations. You've seen what Coal India's recent results came out. They're not reaching the levels they wish to. That's creating the market look a bit better. The lower prices naturally will force the Americans out of the market. The Americans, I think, are exporting around about 45 million tonnes. That will go down to 30 million tonnes. That's going to reduce the amount of coal coming out of there. Russia's struggling to increase big at these levels because the coal price is not that favorable for them at these levels. The increase in Russia, I don't think is as big as people anticipated. The supply is not there, and demand is growing, as I say, in Asia, not in Europe, of course. It's looking a bit better.
Could we get the turnaround before the end of the year, or is this a 2020, 2021?
I wish I could predict that precisely. It looks like it's getting tighter on the supply. As I said, when the Americans move the tonnes out and they reduce 15 million tonnes, Russia is not increasing its export as people expected. Demand is there. It can turn. Now, I don't know exactly where the worldwide inventories are sitting at these various power stations around the world. Of course, it's going to be how much inventory is sitting around and when people want to restock, and that's why it's hard to call exactly when you're going to get the turnaround. If you look at the demand supply figures, it looks like there's a deficit coming on the seaborne market. Good. Are you done, Martin?
Thanks very much. Thank you.