Ladies and gentlemen, thank you for standing by, and welcome to the Glencore Webcast and Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. I must advise you that this conference call is being recorded today, 28th May, 2020. I would now like to hand the call over to your speaker, Anthony Haywood, Chairman of Glencore, to start today's meeting.
Please go ahead, sir.
Ladies and gentlemen, good morning, and thank you for joining the call during these unprecedented times. I hope you and your families are safe and healthy. My name is Tony Hayward. I'm the Chairman of Glencore. Joining me on the call this morning is Ivan Glatzenberg, our CEO.
Due to government restrictions related to COVID-nineteen, regrettably, the AGM this year has to take the format of a closed meeting and shareholders will not be able to attend in person. Nevertheless, shareholder participation is crucial and we encourage shareholders to participate in the business of the AGM by voting by proxy. We recognize that an AGM is also an important event for shareholder engagement. It allows Ivan, myself and the Board of Glencore the opportunity to talk to and hear from some of our shareholders. We therefore decided to hold this call to provide shareholders with the opportunity to engage with the Chairman and CEO of the company.
After my introductory remarks, Ivan will update us on the performance of the group and our response to COVID-nineteen. We will then open the call to your questions. Since it is the first time we've held a call like this, I hope that the schedule of 90 minutes will allow sufficient time for all questions. At Glencore, our number one priority is to ensure the health and safety of our people and the communities that surround our operations. This has never been more important than today.
Over the last few months, we have been responding to the impacts of the pandemic, working closely with our expert medical advisers and taking into account advice from governments in our operating countries and global bodies such as the World Health Organization. We're conscious of the disruption uncertainty that this pandemic is having on our workforce, communities, operating regions, customers and suppliers. We operate only when we can keep our people safe and healthy, while safeguarding jobs and providing support to our local communities. In early April, we launched a $25,000,000 community support fund to complement the existing efforts by our local teams to provide the support their communities need during the pandemic. We have designed the fund to be flexible and responsive, and it is initially prioritizing systems to local health authorities and community organizations and their responses to the immediate impacts of the crisis.
Initiatives such as clean, access to clean water, hygiene products and medical equipment will be important in some regions. For example, our Komodo Copper Company operation in the Democratic Republic of Congo has donated almost $1,000,000 of medical supplies to the provincial government, whilst our oil business in London donated 100,000 medical masks to the National Health Service. In others, our efforts may focus on enabling students to continue learning while schools are closed. Our ability to act as a responsible operator is fundamental to enabling us to continue to source the commodities that advance everyday life. Your company's geographic diversity and the scale of our activities make a significant contribution to the national, regional and local economies in which we operate through the provision of employment and training, tax and royalty payments to governments, local procurement, social development and environmental stewardship.
In 2019, our tax and royalty payments contributed $7,700,000,000 to our host governments. And in addition, we spent $9,000,000 on public infrastructure projects such as water, sewage, power networks and roads. Around 3,500,000 people living near to our operations have benefited from our community investment activities. These include spending a further $90,000,000 in 2019 on projects such as environmental initiatives, health care facilities, education programs and enterprise development. While our operational and geographical diversity is a strength, we recognize that it can make it difficult to achieve a consistent performance across every asset.
We continue to experience challenges in certain areas, and we're focusing our efforts to improve our performance, for example, in safety. Our performance last year was simply unacceptable, with 17 people losing their lives at our operations. We put in place a number of initiatives to deliver a step change in safety performance, including major management changes at poorly performing assets and the establishment of a group wide fatality reduction program. The early results in these interventions are encouraging. During 2019 and into the early part of this year, we made progress in a number of areas that we consider material to our group's performance and future prospects.
This includes climate change, where we set out a projection for a 30% reduction in our Scope 3 emissions over the next 15 years. We're one of the first major extractive companies to do so. Further details can be found in our sustainable development report that we published earlier this month. The Board and I thank all of those working at Glencore for their efforts and commitment to the ongoing success of your company throughout the course of the last year, most particularly over the last 3 or 4 months. Let me now hand over to Ivan to give you an update on the business performance and how we're dealing with COVID-nineteen.
Ivan, over to you.
Thank you, Tony. Good morning. Yes, responding to COVID-nineteen has been a challenge for our company and for our people. It is an unprecedented challenge for all of us and as a responsible operator, our top priority is to protect the safety and health of our people and the communities that host our businesses. We've introduced a number of precautionary measures across our offices and industrial assets, and our goal is to operate only when we can keep our people safe and healthy.
Our teams are working closely with the governments, health agencies and other key organizations to provide effective local solutions. And to support these efforts, we have allocated $25,000,000 to help our local communities. Tony has given a few details how we have assisted at our various operations around the world. Responding to COVID-nineteen and the effect it's had on the global commodity markets has been very drastic. There's been a large amount of supply disruption and demand disruption.
And the commodity markets have responded quickly to the sharp reduction in demand with pricing for many of the commodities falling into the upper end of their respective cost curves. And as you will note, the full impact of the demand shock has been extremely significant and there's also been, as I say, the supply disruption. And as you'll see on the numbers which we presented on the slide, there's been a reduction in the different commodities. If you look at copper, there's been a 4% supply disruption zinc, a 6% supply disruption nickel, 5% thermal coal, 6%, met coal, 6%, 5% manganese ore, 11% chrome ore and chrome alloys. However, there's been low inventories going into the COVID and this is a result of the trade war that existed before we went into the COVID and we believe inventories were run down in important parts of the world such as China and therefore it has assisted and has not affected the commodity prices and people are having to restock and they're starting to restock in the inventories around the world and especially in China.
If you look at Glencore's assets, we operate more than 180 sites and offices in over 35 countries. The majority of our industrial assets continue to operate relatively normally, accounting for the various precautionary measures which we have taken at these operations. And as you will see, it has not had a major effect on our production at our various operations around the world. This slide gives you the details of what our previous guidance of production on our various tonnages have been. And we've recently updated them and it shows how the disruption because of COVID has affected some of these assets.
Going through the slide here, you'll see copper excluding African copper has reduced very little and a large amount of the reduction has been at African copper where we have dropped from 325,000 metric tons and our current guidance is 280,000 metric tons and most of that is due to the care and maintenance discussions we're having around Mapani. If you look at cobalt, not a large disruption over there. Zinc, a slight disruption. Most of that is the delay on the Zara new mine, which we're developing in Kazakhstan, and we've delayed the startup of that mine from 2020 into 2021. Nickel, small disruption, ferrochrome, larger disruption and that's mainly because of the smelters, which we have shut down in South Africa.
And while we are going through that process and discussions when they start up, we will have a reduction on the ferrochrome production there. Coal, we reduced around 135,000,000 tons down to 132,000,000 tons and most of that is in Colombia where we have had to shut down the operations due to the COVID initiatives over there. And we are still assessing with Prodeko, which is under care and maintenance at the moment, how we review that mine going forward. However, we have if you look at the next slide, we have moved quickly to position the business for the changed macroeconomic environment. Our liquidity has been reinforced.
And as you have seen, our refinancing and extension of our revolving credit facility on the same commercial terms as last year has been put in place. We've deferred the distribution decision on our dividend to quarter 3, 2020. Industrial CapEx has been cut. We originally had a planned CapEx of $5,500,000,000 We reduced it by $1,000,000,000 to $1,500,000,000 from asset curtailments and associated savings there, various deferrals and low equivalent U. S.
Dollar costs has helped us to reduce the capital spending. Mine costs for key commodities have been reduced. This is mainly because of strong focus on cost controls, lower energy costs, you can imagine with lower diesel prices, favorable foreign exchange rates and higher precious metal byproducts, which has underpinned some of the reductions of the prices you see on the right. If you have a look at our copper costs, we believe we are one of the lowest cost copper producer in the world today. And excluding Africa, we produce copper at average $0.83 a ton, including the African copper assets at $1.05 Zinc, if you take the gold credits, we have reduced the cost from $0.23 per pound down to $0.14 per pound.
Nickel, dollars 2.40 excluding Koneamba. And as you will see, our thermal coal costs production have reduced down to $42 per ton across the board. So we believe we are well positioned to navigate the current challenges. We have a flexible business model that adapts quickly to the changing conditions, the unique combination of industrial assets and marketing, a diversified portfolio of low cost commodities that will underpin the energy and mobility transition and high quality thermal coal that provides access to affordable and reliable energy and always as we state always that the marketing business is very resilient even to commodity prices moving up and down. We have a resilient and flexible balance sheet and we committed to strong BBBBA rating, disciplined approach to value over volume.
And as you will note in the company, when we realize that commodities are not required in the world, we do not wish to oversupply the market that does not require them. And that's why we have reacted with some of these production at our various operations to take into account the demand destruction across the world and therefore not feeding excess commodities into a market that does not require them. We have experienced management team focused on maximizing value creation and we continue to do that within the group. So with that, I hand back to you, Tony.
Thank you, Ivan. I'd now like to hand over the call to the operator who will manage the question and answer process for shareholders. In the interest of time and to allow as many shareholders to participate as possible, I'm going to ask you to limit questions to 1 per shareholder. Operator, over to you please. Thank you.
Thank you. We have our first question coming from the line of Jennifer Anderson. Please go ahead.
Thank you. Good morning. I thank you both, Tony and Ivan and the other board members for your leadership this last year and especially during COVID. My question is sustainability related. I'm noting climate related litigation continues to be a rapidly developing area, and I'm noting the numbers of young people involved.
For instance, a recent claim here in Australia involves, I read, 25 young people aged 13 to 30, challenging a coal project as threatening their human rights. In another claim I read, a 24 year old is suing his pension funds for not adequately assessing the impact of climate change on the fund's investments. These particular claims are not against Glencore, but they show climate litigation involving young people. And my question is about them as a stakeholder group. I'm interested to know how Glencore engages with this young age group to understand their view.
For instance, are you approached by leading young climate activists to meet with you and discuss their views? Are the NGOs you confer with representatives of that young age group? Can you please talk to this? Thank you.
Yes. Thank you very much, Jennifer, for a very good question. And thank you for dialing in. I'm sorry we're not able to meet in person this year. I think we have it's fair to say we have a very extensive engagement on the climate debate, and you're seeing that in the actions we're taking and the things that we're doing.
So we engage very broadly across the climate dialogue with shareholders and NGOs, many of whom have young people amongst their representation. And I think relative to other companies in our sector, we've taken a relatively progressive approach to the whole challenge of climate, recognizing where the world is moving and in particular, where the young generation is moving.
Thank you.
If we can move on, I think, operator, to the next question.
Of course. And we have another question coming from the line of Julia Korchitschegova, I believe. Please go ahead.
Yes, thank you. So this is a question that I would like to ask on behalf of participants in the Climate Action 100 plus initiative. First of all, we would like to express our gratitude for the constructive dialogue that the Chairman has exchanged with us on behalf of the Board over the last few years and would like to ask a question about CapEx, the capital expenditure plans. We Glencore indeed prioritizes This allows us to see that Glencore indeed prioritizes investments into low carbon materials, such as copper, nickel and zinc. But what we would like to ask either Mr.
Haywood or Mr. Larsenberg is the timing when is the board management planning to disclose the capital investment plans and most importantly the methodology and core assumptions that are used in the analysis of their alignment with the goals of the Paris Agreement. And by assumptions, I mean primarily discount rates, commodities prices, shadow carbon price, also technologies and demand for all types of products as established in your statement of 2019, please?
Okay. Thank you, Julia. Thank you for the question and thank you for participating this morning. And thank you for acknowledging our constructive engagement with you and your colleagues over the course of the last few years. We have, as you've said, made fairly extensive disclosure on our capital allocation.
We made it in the context of our 2019 annual report, clearly describing the expansionary projects that we're undertaking, all of which, as you say, were in materials that are essential for a low carbon energy transition. We do it on an annual basis in our strategic update where we review 3 years ahead our plans in terms of production and capital investment. We can discuss with you what more might be appropriate, but I think we've been fairly explicit in making it clear that our expansionary capital is going into the materials that are necessary for the energy transition, whilst only investing into our fossil fuel businesses, capital that is, in essence, not really even sustaining them. And hence, our projection of our Scope 3 emissions over the next 15 years to fall very significantly. So I'm happy to discuss with you further what else we might be able to do.
But I think we've been fairly explicit how we're allocating our capital and on the basis for it.
Question from Julian Georgiosko. Please go ahead.
Hi. Good morning. I'm asking a question on behalf of ShareAction, the AGM activist charity. We're pleased to see that Glencore had committed to set a new long term target for scope 1 and 2 emissions that support the Paris goals, which the company will disclose later this year. However, these operational emissions account for less than 10% of Glencore's overall carbon footprint compared to Scope 3 emissions, which are 92% of total emissions.
Although Glencore has disclosed a projection that the Scope 3 emissions will decrease by 40% by 2,035, the company is yet to formalize this in a fixed target. Management of Scope 3 emissions can make Glencore more resilient to the projected decarbonization of the sectors it services and reassure its shareholders that there is a plan to mitigate the financial risks associated with the low carbon energy transition. Therefore, in addition to its Scope 1 and 2 targets, will Glencore also commit to setting absolute emission reduction targets for Scope 3 emissions in line with the Paris goals? Thank you.
Thank you very much, Julien. I don't want to get into a debate about sort of the semantics between projections and targets, but I do want to reemphasize that the projection we've made is a direct consequence of the capital allocation that we are making. And I think it's much more robust than any of the so called targets that other people have out there because you can actually see that the actions we're taking last year, this year and on an ongoing basis you'll be able to measure will result in the projection that we're taking. I think we have a sort of slightly different view as to how to look forward in this space. And we think a projection of the outcomes consequence of the inputs that we're making is a much more powerful way of articulating the direction of travel for the business than to have targets under which there is no substance.
So again, we can continue to discuss this. But as far as we're concerned, the projection is real. It's going to happen. And you will see it unfolding over the next 4 or 5 years. There's no doubt about that.
As you see us allocate capital to the base metal business, which is essential for the energy transition. Can we move on to the next question, please?
And we will now be taking a question from the line of Glenn. Please go ahead.
Thanks to Tony and Ivan for the presentations. I think like Jennifer, it was we want to acknowledge the progress in global dialogue between Industrial and Lanco and the building of a trust based relationship. It has been a long and sometimes difficult process, but a good transparent and open approach has seen us through some of the most difficult conversations we've had with Glencore. We'd also like to acknowledge the positive attitude in this process of the HR Corporate team, particularly Derek, Gerda and Anna. We also wish to thank the team for availing themselves to attend our regional and global trade union leadership meetings.
We want to thank Lango also for the initiative to reach out to industrial oil to discuss COVID-nineteen and the company's approach and for Glengo to hear what our affiliates were telling us. This has stood us in good stead in dealing with specific local context challenges such as in South Africa and Zambia. We hope to continue along this path as the situation developed in the spirit of cooperation and dialogue as we've done in the DRC. However, we have a desperate situation in Latin America at LANCO Operations in Peru, Colombia and Chile. And I want to talk about Peru in particular.
A union leader has described the situation in Peru as bordering on a scandal where COVID-nineteen is running havoc with mine workers' life, with a situation compounded by a direct attack on trade union rights and collective bargaining in particular. This is not surprising when you demobilize the critical resource of the trade union during a crisis, a lesson I'm sure we have learned very well in South Africa, Zambia and the DRC, where that resource was successfully leveraged. Workers at Antamina have denounced the complete absence of meaningful social dialogue. They claim that 2 60 workers tested positive for COVID-nineteen at a single mine in Antamina. Even more so, they say that the country's first COVID-nineteen death was an Antamina worker.
By 12th May, the mining industry in Peru had 250 2 new COVID-nineteen infections. This dire situation prompted both industrial and our affiliates in Peru to write to the President of Peru, Martin Vicara, and the Minister of Energy and Mines, Susana Villaca, to demand greater security measures in the workplace in order to guarantee the lives of workers. This tragedy happens in the midst of a declared state of emergency that has granted mining essential service status on condition of a strict health protocol. My question is this, can we get a commitment from Glencore in this AGM that the situation in Peru will receive the same attention consistent with our global dialogue practice? Thank you very much.
Okay. Thank you very much, Glenn, for your question and for your acknowledgment of the relationship that we built and established over the last couple of years. And let me just say that we are equally happy with the way in which the relationship has progressed with Industrial. So thank you for your approach to engagement. I think in the matter of Peru, Peru is clearly having a very difficult time with COVID-nineteen.
And certainly, the situation seems to become be becoming worse as we speak. It's clear they have yet to reach the peak of the pandemic in Peru. We are currently, as I understand it, liaising with the unions in Antamina, and we're very happy to engage with yourselves as we go through that process. And working together on these issues is clearly the right way forward. So I suggest we sort of take this offline, Glenn.
We're already in an active engagement with the unions in Peru. It's clear that Peru is very challenged at this moment, the country, and it's important that we do what we can together to deal with the situation. Thank you very much. Operator, are there further questions?
There are no further questions at this time. Thank you, Glenn Profane. Sorry. I do have another question now coming through actually. And that question is coming from, all right, the line, if you're happy to take it.
Yes, of course. Yes, from who, sir?
It's from Walburg Liet. Sorry. Thank you.
Yes, sure.
Yes. Good morning. Can you hear me all right?
We can. Thank you, Valburg.
Okay. Thank you. I'm also a member of the Climate Action 100 plus Industrial Initiative. So I want to echo my colleague Julia, who's just said that we appreciate the ongoing and constructive dialogue with Glencore. And also, given the strain of current times, we're particularly pleased that you've organized this live webcast.
So thank you very much for doing that. My question is around climate policy engagement.
Yes.
And I think the backdrop here was the COVID-nineteen crisis, health crisis, and I see references in media and literature that I read that, but we're all facing a twin crisis. And then I guess the question is, can the current health crisis be used as an opportunity to use the recovery to accelerate the transition to net 0? So my question to you is, can you and this is a bit broader than Industry Association lobbying, which we're very grateful that you've commenced a portion on. That's very helpful. But whether you can describe key actions, dialogues that you already have initiated or planning to initiate with policymakers, peers, other stakeholders leading up to COP26 that will enhance or align with your stated ambitions?
Thank you.
Thank you very much, Wahlberg. And thank you for the acknowledgment of our engagement with you and your colleagues. As you've said, we have published and will continue to publish on a regular basis the trade associations that we're members of and ensuring that their positions are aligned with Paris or perhaps we're not completely aligned, seek to bring them into line. I think with respect to the broader issue of policy engagement, we obviously engage in many different ways, in many different forums as a group. And I think the way that I would describe it is we had a pretty clearly stated policy around how we're aligning our business with Paris.
And that comes across in all of our interactions and discussions with policymakers at many different levels and many different dialogues. I think I was thinking this morning of a particular example would be our advocacy for carbon capture and storage in Australia, which we believe is essential if the energy transition is to be achieved, carbon capture and storage will be a fundamental part of it. And we have been outside of any trade associations, we've been actively engaging with policymakers to try and get that project off the ground. So that's a specific example of sort of things that we do broad based. Let me see if there are I hope that's okay, Valbrook.
Let me see if there are any other questions that people would like to ask.
No. I'm afraid that at this time, there were no further questions. So I would like to take a look
at that. Okay. Well, thank you. Okay. Thank you very much, operator.
Well, it seems that we've exceeded our targets, which is always a good thing to do. Thank you very much for those who participated in today's events. And I very much looking forward to seeing you all in person at the AGM of next year and perhaps some of you, I'm sure, sometime between then and now once the world returns to some sort of new normal. In the meantime, please stay safe and well, everyone, and thank you very much again for joining our call this morning.
That does conclude our conference for today. Thank you all for participating. You may now disconnect.