Okay. Good afternoon. Welcome to our 2019 Investor Update Presentation. Thank you for joining us here today in person or via the webcast. Today we have Ivan Glazenberg, our CEO Steve Kalman, our CFO and Peter Freyberg, our Head of Industrial Assets giving an update on our prospects for the next 3 years.
I'll hand it over to Ivan.
Okay. Good afternoon. I'll first present then Steve Peter and then Steve. And to give an idea, our investment case, we always talk about how we differentiate Glencore for the other mining companies and the advantage we have, etcetera, and where we see the markets and what we see going forward. So we'll talk about all these issues and then we'll go in more detail.
Peter will give more detail on the production and Steve on the financials. So if you look at the markets today, where do we see the markets today, what's happening in the markets, it's clear the markets are pretty well balanced. The markets look very tight and we've seen a large amount of destocking of the inventories, whether you're talking LME, chef E, off LME, etcetera. We've seen inventories run down in most of the commodities which we handle. What we do see happening is getting the commodities out of the ground is in more difficult regions and the easier stuff is disappearing.
We've got to go to Africa, we've got to go to Russia, we've got to go to more difficult regions to get the commodities which we produce. So we think supply is starting to tighten up because of the difficulties in mining in those regions. We believe we're well positioned for key future growth because of the type of commodities we have, urbanization, another 2,000,000,000 people coming into the world over the next 10 years, etcetera, electrification, the mobility, electric vehicles and the decarbonization of energy which is occurring in the world today. So we believe with the demand that we see in these with these different scenarios and the supply side which I spoke about, we believe markets should start potential, which is a strong potential for our commodities and we should be moving into more positive territory. Our business, we've got a unique combination of our assets and the marketing, which Wes talked about.
We've got a large marketing business. We talk about it, the amount we make in the marketing business and we always said with EBIT of SEK2.2 billion to SEK3.2 billion and it continues to be strong and it assists us in ensuring that we're marketing our products which come from our mine in the best available manner. We've got large long life assets. We now if you look at all our assets, they're 1st quartile assets, they low cost producers and they have a long reserve life. And if you just take example, which people seem to ignore about the quality of our assets and Peter will talk about it later, if you just look at copper today, we got 3 of the best copper mines in the world today.
If you have a look at Catanga and we'll talk about Catanga in detail with this cobalt and the benefit of this cobalt credit, one of the lowest cost producers in the world when it ramps up to 300,000 tonnes. If you look at Calawasi, Calawasi operating well, it's a mine that will produce 500,000 tonnes. It has the potential over time to build up to 1,000,000 tonnes. It has the reserve base to do that. And we all know Antamina is one of the lowest cost mines.
If you look whether you call it a zinc mine or copper mine because of the byproducts that it gets from the material. So we have a great set of copper assets. If you look at our zinc assets across the board, our coal assets, 1st quartile long term large life reserve mines. We've always said, if you look, we've also got growth, which are internal growth projects. Peter will take your details through some of those, where we can expand the production of our assets across the board and we've given a detailed chart on that.
The marketing, as I said earlier, has been countercyclical. We know when commodity prices have fallen in the past, the marketing has still been strong and the marketing has been within the $2,200,000,000 to $3,200,000,000 range. When markets are tight and commodity prices higher, we perform better and Steve will talk you through some of the marketing prospects going forward. It's a highly cash, the balance sheet. We've said we're going to run a robust balance sheet.
We're going to aim to have a net debt to EBITDA one to 1 ratio. We go to maximum limit that we will have on the debt of CAD16 1,000,000,000 which Steve will give details about later. So we'll continue to maintain a strong robust balance sheet going into the future. Highly cash generator business with CapEx coming down and going down to sustaining CapEx in the future down to SEK3.7 billion roundabout there. And you have a look at the free cash flow we'll generate.
So at today's spot commodity prices, we'll be generating around about CAD4 $400,000,000 free cash. So that's pretty significant going forward. What is our big creating value in our business? We have got an experienced management team. As you know, most of our management team have been in the company for a large length of time.
Most of the people within the trading business have been 15, 20 years there. And we've also got good asset managers around the world who are taking care of the assets. Where we also like to say that we differentiate a bit in the market, we focus on value creation and therefore we're not all about growing and building mines just for the sake of building mines. If we believe mines don't keep the right NPV, there's no reason to reinvest the capital back into the business. And we'd rather return cash back to shareholders, whether we do share buybacks or dividends, the idea is not just to growth for growth sake.
We're very cautious where we put our money back into the business, whether it's acquisitions, whether it's expansions on brownfield expansions, greenfields, we're always concerned about greenfields, but we're very focused on getting the right value for our cash and rather returning it to shareholders than putting it back in the ground. Flexible business, we adapt to change quickly and you've seen we're very much focused on volume. We're not there about just creating value for the sake of we're all about value, sorry, not volume. You don't see us expanding mines, as I said earlier, for the sake of just having a bigger volume. You will see us pulling back on volume.
And we get a lot of flack or people say we didn't hit our volume targets and Peter will talk about that later. And a lot of the reason we don't hit sometimes is not our volume targets because we took a decision to cut back on volume because we'd rather leave the material in the ground than pull it out when it doesn't create value and it's not adding extra value to the asset. So you've seen us do it in the past and it's a continued thing that we do in Glencore. We always assessing all our minds and we say, does it make sense to increase the volume? The material is going to stay in the ground anyway, no reason to pull it out when it doesn't make it doesn't create value.
And you've seen us do it. We did it in the past in zinc when the zinc price was $1300 you remember in 2015 we cut back production and we know effect it had on the zinc price. We believe rather pull it out of the ground later on, which we're doing today when the zinc price is towards GBP 2,400. The same, you saw us do it in coal, We've done it in coal over the years many times when the market was weak, rather leave it back in the ground. You've seen us do it continually in Colombia, whether it is at the Cerrone operation, whether it's at the Prodeco operation.
If we feel it does not make economic sense, if the markets cannot take those tons into the market and it won't create value, we pull back. We've done it at coal. And more recently, you saw what we did in the DRC at Muntanda, we decided to the Mutanda mine. It didn't make economic sense with the cobalt price where it was or the copper price where it was, put the mine on care maintenance. It therefore will be dug out of the ground.
As you know, we'll talk about it, Peter will give more details about it in 2, 3 years' time when it makes economic sense, we'll put Matanda when we study the sulfides, we'll then decide when to bring it back into full production. But meanwhile, that's very important within Glencore, it's all about value rather than volume, rather leave it in the ground, pull it out at the right time and it may affect our volume targets, but from a value point of view, it makes clear sense. So with that, Peter will talk about as I spoke about the volume, the details of the mines, the operations, how they're performing today. I'll leave it to you, Peter.
Thanks very much, Ivan. I'll take us through the operational side of the business. The outlook over the 3 year period is essentially flat production in terms of copper equivalent tons. And what we are seeing is that we have got changes obviously in our zinc and oil and increases over the period that I'll take you through. But this offsets some of the reductions we're seeing such as the shutting down of Nutanda that is currently underway.
Just in terms of the growth that we talk about within the presentation, obviously we've seen the benefits of some of the investments that we've been doing over time with Katanga ramping up and finally that will be coming back on stream early next year. I'll talk a bit about those details certainly with where we are going with Katanga at the moment. We're seeing some reasonably robust growth in zinc driven by a couple of areas, but one of them again being something that we've invested in to offset future declines that we have at some of the operations within Kazakhstan and within South America and Canada. Coal, we're seeing fairly flat, although we do have a project coming in, it has been held up a bit with permitting, but coming in nevertheless. And nickel, we will talk a bit about what's happening at Konyamba.
I know that's one of the focus assets that people are interested in. The declines are pretty much where we expect and what you've heard about before with Matanda coming out of the system and obviously some of the late life assets such as Metagami in Peru. What we are seeing is the benefit of some of the long term work from investments that we've been doing. We are seeing how we respond to the cycle again, Nutanda is a good example of that having determined this year that in the current market and partially as a result of the new fiscal regime and tax structure within the DRC that business wasn't giving us return, it makes sense to park that up, notwithstanding the fact that it is a source of a large volume of cobalt, again value ahead of volume. But really what this does demonstrate and when Steve takes you through the earnings is the power of this diversified model that we have and its ability to give a sensible return through the cycle if we don't just chase even in the bottom parts of the cycle, we don't just chase the volumes when they lose money.
I'm not going to go through the details on this because we'll be talking to them on each commodity group. But obviously the intention areas will be copper, zinc is quite interesting to see how that grows over the next several years and also our oil business, which is showing some output growth there and value growth and Steve will touch on the earnings benefit of that. Talking about the focus assets and these are the ones that we spent a fair amount of time discussing at the last presentation. Just a quick update on Katanga, we have essentially achieved everything we said in the last meeting and we continue to remain on track to deliver. We're pretty comfortable with the $235,000,000 target that we set ourselves earlier this year on the copper side, having understood some of the challenges that we had and we're hitting that on a very, very consistent basis now.
The cobalt which previously had given us some challenges late last year, early this year is all on spec. We did have some issues starting up the dryers. The first dryer is now in operation running at about 60%, the second dryer will kick in early next year. So we don't have any we don't see any issues with achieving our targets that we set ourselves for next year and that have been well publicized in terms of producing salable on spec cobalt. The asset plants we signaled last time that it would be late Q1 for a start up that remains on track for that.
The Elektra winning plant, particularly Elektra winning plant 2 where we've got a major anode replacement program on track as we said previously. So Katanga is going real well. We've got new management team in there to some extent, we brought some extra people in. We're now very comfortable with the structure that we have in place and the skills and pretty good about where that project is going. The Pioneer, as you're all aware, we had to enter into an early rebuild on the smelter that is tracking well.
The rebuild should be finished towards the end of this year and we expect ramp up in the Q1 next year. Kanyamba, Kanyamba as I think everybody is aware we had a pretty tough first half. 2nd half has been very consistent operation. We have seen the best power plant performance that we've ever had at Konyamba with most almost all of the power generated through the coal units and they are performing very, very consistently now. And in fact, we've had some we've had 43% improvement in power generated into the met plant.
Smelter, the improvements there, we've had again significant improvements on furnace online time in the second half, which has increased by over 50% and obviously the ferronickel production goes with that. Noting that in the first half we had some scheduled downtimes, but we are getting consistent operating days to the extent that we've had our best 60 continuous 60 day period in that plant in the history of Konyamba. And together with that, you'll obviously get other improvements such as improved recoveries where we've seen a 14% improvement in recovery in the second half compared to the first half. So although our nickel output isn't where we want it to be in the long term at this point in time, we are trending at levels that allow us to achieve the sort of targets that we've been setting ourselves for next year and that appear in the guidance that you will see later on. And that allows us to continue to build in terms of reliability and steady operation, which means that over the next few years we're going to be targeting around 30,000 to 40000 tons per annum and we continue to target 50,000 ton annual output as a long term target.
So really as far as I'm concerned, some progress with the focused assets and certainly my team fully understand the importance and the value associated with delivering against these assets, making sure these assets perform. Just looking at copper guidance, again, reasonably flat through the period and we have separated out the African assets from the rest of the world. There is a modest decline, which going from this year into next year is fundamentally more tender. And then we see the results I guess of a steady state operation coming in, in those African assets, particularly Katanga as it ramps up we expect it to reach its steady state sort of levels towards the end of 2020. And as I said previously that's on schedule.
There are some copper tons that do come out of the system, but they're principally at non copper managed assets. So you've got reduction in corporate operations such as the integrated nickel operations in Canada. You got a small reduction of copper coming out of Kazink and obviously mines like Kidd Mine as well. The cobalt guidance at 43,000 tons this year reflects Matanda still operating and then we are as you probably have seen in the media, we're in the process of actually shutting Matanda right now. And you see the decline in cobalt tons coming out.
The 29 is mostly achieved at Katanga, the 29 guidance plus or minus 4. There's obviously as you'd be aware some tonnage coming out of other operations such as Maran and the smaller amounts out of the Canadian operations as well. Looking at coal guidance, we've revised this year down a little bit. It's principally come about because of the reduction within some of the Colombian operations and we've also had to have a safety outage at 1 of our South African mines. We do see the tons decline into next year.
That's fundamentally as a result of some higher ratios at some of the Australian operations and But after But after that the profile flattens out. Within that profile there is also the United operation which is a 50% joint venture of which our share is ultimately 2,500,000 tonnes over the period. It starts it's really starts producing towards the end of 2020. So each area generally steady sort of production and as we'll talk about in the marketing later and there's some slides on it, in a world where it is difficult to permit mines and where we are seeing coal demand growth, you'd expect that the returns on that tonnage should start to look quite interesting. As I foreshadowed earlier on, zinc has got quite an interesting profile and you'll see there's quite a bit of variability across our diverse portfolio that we have there.
We are seeing and included in that is the Antamina zinc where we're seeing some very significant increases over the next couple of years. It's just the nature of the Skyrne deposit, you go through these periods of high zinc and in fact there's a little bit more zinc than copper in the next couple of years. But that then declines again and that's the top of that bar chart. But also we are commissioning our Zairem project in Kazakhstan and that ramps up next year and then grows very rapidly, produces a very significant amount of zinc in 2021, but then trends towards its steady state sort of output of around 150,000 tons of zinc per annum from 2022, 2023 onwards. Australia, very steady output at McArthur River and George Fisher, Lady Loretta complexes and South America something of an up and down, we have not included in those numbers, you'll see it in the footnote our Vulcan business which is quite an important tonnage for us.
It isn't included in that. But within our South American operations, we are seeing a bit of a decline towards the end of the period as a couple of the mines such as Iskall Kruse come out of the system. But we have Vulcan which is a very important resource for us that will fill those gaps over time. So really interesting zinc story. Nickel guidance, I talked to what is happening at Kanyamba and as I said, I'm actually pretty pleased with the steady state that it's at.
We're not happy with its absolute level of output at this point in time, but we will be in the 30,000 to 40,000, the lower end of the 30,000 to 40,000 range next year and we will see that grow over the period with the ultimate target as I said being around 50,000 tons. But we are getting great performance out of the power station and the met plant itself is starting to perform in a predictable and perhaps more reliable way. I know you'll see that integrated nickel operations we actually have tons coming down. We've known this for some period of time and it's a result of the Sudbury operations volumes coming down, which is something that we've seen for a while. However, because of decision making that was made some years ago as to when to ramp up the Onopeng deck, we have a bit of a decline, but then it picks up again.
And in fact in 2020, just beyond 2022, we see the nickel output in the integrated nickel operations normalize again. The projects that we have there were the 2 new Raglan operations on schedule. I sat with that team about 10 days ago and went through the projects in Canada and we're satisfied with the way that they're heading. Marin, Marin, Marin continues to be a good performer. Its output is very consistent through the period and it continues to have that sweetener of a little bit of cobalt in there, which when we get a good cobalt price is very beneficial for that operation.
Oil, this is and Steve will talk later on about the earnings associated with this E and P profile. But we are building up from something that was in terms of EBITDA 150 to over 650 over this period which is pretty exciting for the whole business. It's associated with some decent work that's happened in Chad in terms of the Bevila oilfield that is sitting at the bottom of that bar chart. And from the work that we've done we're seeing some steady growth in volumes there. Then what we are seeing in Equatorial Guinea is actually the oil equivalent of the gas that we're producing.
And we are in the process of bringing in the gas project in the Alen field. And we expect that that will be really kicking in and starting to produce from quarter 1 2021, a very, very positive project with very short paybacks. So it's something that's been a good development for us. And obviously, Cameroon is a little bit of cream on top of that with the volumes increasing in Cameroon as we get the Bolongo field producing. So steady over the period in terms of volumes, But we do need to look into the future in terms of what options we have to increase output when markets in the when the markets are right to do that.
And as you know, we don't like to bring the volumes on until we think the market can accommodate those volumes without damaging the rest of our business. And we have a we do have a tremendous suite of opportunities and options across our mining portfolio. So you'll see the projects listed there. I think you'll all be familiar with sorts of resources and reserves that we have in those business. But Korokawaika project for example is very well positioned so that we can maintain levels of output at our end of the Cay operation in Peru that typically runs at around 200,000 tons of copper and Korokawaikos there on its boundary as the grades go down and Antibukai provides us the option to obviously invest there and maintain those sorts of levels of output.
Ivan spoke earlier on about the Kola Wasi project or opportunities that is a reserve and a resource that just goes on and on and on for decade after decade. And obviously as the market demand increases and we're talking a bit later on about electric vehicles and decarbonization and the impact that has on demand for copper. But having projects such as Kolawasi sitting over some projects, highly productive, highly profitable mine, but having that optionality sitting within Kolawasi to grow that business is of massive value to us as well. And then also obviously want to talk about Matanda. We've taken that offline.
We are progressing the studies there at the pre feasibility stage and we will decide how we and what we do with that when the time is right. There are a number of factors that we will need to consider including cobalt supply demand, but also the tax regime and progress that's been made within the DRC as to whether or not that facilitates bringing that asset back sooner rather than later. Nickel, we are progressing those projects, the nickel room depth which is technologically a very advanced operation. It will be the first all electric haul mine underground. It is reaching depths and temperatures that other mines don't.
But we remain very confident that that is a it's a great project and it allows us to take our iron ore complex back to the levels that they previously at in terms of nickel output. And obviously the 2 Raglan projects. And there's more upside around those Raglan projects in terms of the ore body there. It's a tremendous ore body and is a very important contributor to that region. Zinc, I touched on Vulcan earlier on.
It is an incredibly prospective area. We have a wide range of projects within Vulcan that are being studied. There are a couple that are already being brought on in terms of small open pits over the next year or so. And that remains an interesting prospect for us in terms of growing our interest in that business if that's a doable venture. In Kazakhstan, we are currently getting to the last 6 to 9 months of the construction around the Xaram project.
So that comes in next year with not so big tonnages next year, but the year after that starts bringing some very significant tonnages. But we also further have a number of options there where we can grow our zinc business as demand comes about. And on coal, we've always talked about the fact that we do see demand continuing at current levels, particularly with growth in thermal power stations in Asia. And we have a fair amount of optionality there to bring projects in to meet that demand as it arises. And some of them are continuations of existing operations such as Glendale and Nagoula and Bulga as well as the HVO extension.
And we've all seen what the power of those reserves at HVO are, but also more recent prospects such as the Valeria project that we acquired from Rio Tinto about 18 months ago. Probably the most important thing I can end on in terms of the operational update is where we are with safety. And last time I spoke to you, we said that we were in a bad place and the results were unacceptable. And the reality is we're still in that bad place in terms of the number of fatalities that we've had year to date, 16 in all. And if we look at the details in there, you can see that the majority of them are in our copper African operations.
But we've also had a significant number of fatalities in our zinc business. Our coal business has had a fatality as well as our alloys business both of those occurring in South Africa. This is something that has shocked the business to the core. We know that this is something that we have to deal with and we are dealing with it. In terms of the African operations right from when we started having a problem in Zambia, we brought in a very significant team to work through that business.
And certainly, if you look at Mopane today, it's a very, very different business to what it was when we had those fatalities. It continues to have challenges, but we have looked at the actual management structure within Mapani and made very significant changes there In terms of how accountabilities are structured, in terms of how training is done, we've changed the rosters on the line. We have done a major review of the contract operations within that business. And we do believe that we have set the Pioneer on a course for it to be successful in terms of its safety outcomes. Similarly, the DRC, we've got a lot of new people that are on the ground there.
We've brought in some additional resources to help us work through the problems that we have there to make sure that we fully understand every aspect of those operations, all of the hazards associated with it and that we eliminate those issues. So within our African operations, we've had very significant interventions. I personally have been within those operations 6 times this year and we will continue to remain a senior management focus on those until they're absolutely right. As far as zinc is concerned, currently we have a team of 30 people working through our zinc operations, addressing some of the what we think are shortcomings there. It's proving to be a very cooperative and very structured and hopefully very successful process.
I was there about 3 weeks ago. I'm there again next week working with the intervention team plus the K'Zinc management team. We are going to eliminate these fatalities. And we know what we have to do. Where we have safe work working well in our business across our suite of 150 assets, it works very, very well.
And we have a very large number of assets that run year after year, large suites of assets that run year after year without serious incident. So we do know how to do it. We just need to make sure that these focus assets, the challenge assets that we've got it in place and working. We're not in a good place when it comes to safety. We do know what we have to do.
We are doing it and we will turn it around.
Hi, everyone in the room and those that may be listening or watching through the web. Peter has taken a few slides that I historically would have covered in this presentation. So it's like my load, so we'll just jump straight into some of the financial building blocks and the way we see the business in terms of closing in on 2019, but more importantly as we look towards 2020. So as in previous periods, we've tried to give you some expectations on some cost buildups for 2020. And I can give maybe a few points beyond that.
So copper was the key one that we clearly had with some underperformance at Katanga Mupane in a cost sense and in the delayed sales of cobalt, all these things of course with applying cobalt as a byproduct towards the copper costs that we have within that business. So the in terms of the graphs, you can see at the bottom, 'eighteen was obviously actuals, the 2019 H1 update that was the full year guidance update that we gave back in August. We're not going to be freshening that up now. We don't see any great need to do that at the moment and we'll obviously in a couple of months, we will see you all again for actual delivery in respect of the 2019 performance. But the 2020 is then predicated on the production profile that Peter went through, as well as what our cost expectations are for 2020.
So we will we think we will be turning the corner reasonably materially on the copper business as we go from 2019 into 2020. You can see hopefully that's a peak of $156,000,000 $120,000,000 So ex Africa, we've been pretty stable at that $101,000,000 down into the 80s. That's the rest of the business, including Africa peaking at that $156,000,000 reducing to $120,000,000 with some further downward pressure on that unit cost towards 2021 once Katanga is towards the 300 and we've normalized our level of cobalt sales and the cost structure is again more optimized around the particularly the asset plant coming in through the first half next year, which will significantly reduce the cost structure of that business as well. So later on, you'll see based on the 1,300,000 tonnes copper at that cost structure, we'll be doing it at spot prices today on copper and various bioproducts around $3,600,000,000 of EBITDA in copper, which will be a pickup on this year, notwithstanding the reduction in Wetanda. Those were not contributing cash flows from both the free cash flow or an EBITDA given the copper, cobalt and cost structure and tax structure within that particular business.
On zinc, nothing's changed in terms of overall cost structure. It just looks spreadsheet wise like you've got some tick up in unit cost per ton of zinc produced. It's just we're adding quite a bit of zinc. Mathematically, that zinc is not proportionally bringing the byproducts like the gold we have as well. You obviously have the Vasikovsky operation, which is steady at around the 500,000.
But the growth in zinc tonnes, as Peter mentioned, primarily coming Jairam, a little bit of lead, but essentially a zinc operation and the Peru, the restart of Iskar Cruises as well. So quite a big pickup, 150,000 tonne you can see on the zinc side. And you're just throwing less byproduct absolute volume across bigger tons. You reduce the structure, but the overall shape of that business at the 2020 would produce around $1,700,000,000 of EBITDA in the zinc business as well. Nickel at the 125,000 tonnes flat cost structure, there's stable unit cost, 2nd quartile cost structure as we see that particular business as well, that producing EBITDA around €700,000,000 at that level as well, going through a little bit of a dip in I INO, exactly as Peter said, through the depletion of some of the older projects and the new investments we're doing in the Onopin depths around Sudbury as well as the regular extension should see that.
It's just outside the forecast period when you see that additional pickup beyond into 2023. And then the coal is the dip next year, as Peter said, down to 135. That's a bit coming out of Australia and a little bit coming out of Colombia, fairly stable cost structure. And the way we see current net pricing, it's quite a complicated model that we throw all the ingredients into of Newcastle. But you've got stable domestic pricing in some countries.
You've got the coking coal byproducts. You've got the various quality differentials. You've seen some closing of the gap between some of the European, South African FOB pricing in the last 3 or 4 weeks. I think there's on some benchmarks we've seen some $30 per ton increases particularly API 4s and the likes coming out of Colombia. So that's all thrown into the big pot and you have an average realization of around 70 or so at current pricing giving a $23 a ton margin across our 135 tonnes, which is around $3,100,000,000 of EBITDA into 2020.
So where we have lost I mean, where we have managed tonnage around the overall market, where we have reduced tonnage, generally it hasn't come at the expense of cash flow. On the contrary, it may have been converting negative consumption of cash flow into a more positive cash flow environment. You've seen it. I mean, we don't give the numbers over here, but ferrochrome also in South Africa is a good example of that as well, where you can see earlier on in the profile dropping about 100,000 tonnes or so ferrochrome, and that is very much in response to the current weaker ferrochrome pricing environment as well. If we then move into CapEx as well, A few things have changed, either the footprint, some of the accounting, I've tried to do a bit of a like for like, but overall fully loaded CapEx around $5,000,000,000 over the next 3 years 2020 to 2022.
That's up from around $4,800,000,000 when we're here 12 months ago, looking at average from 'nineteen to 'twenty 1. In the middle of the chart, I'll try to show what's more of a like for like comparison against last year and what's either additional accounting and or accounting and or footprint within the business as well that would explain some of the movements. So we've got an average effectively $200,000,000 per annum uplift over December. There are various ups and downs and I'll talk about some of those, but essentially also the Astron business, that's the downstream refinery and marketing distribution down in South Africa, which we closed in May this year. That wasn't part of any of the numbers that we had last year.
There was an expectation that that would close. It was taking a while, but it wasn't baked into any of the numbers at that particular point of time. Now we can also come and show what the cash flow and EBITDA profile of that business as well looks going forward. The impact of the new leasing standard, you'll all be familiar in your various coverage universe. I think you've been modestly affected by it compared to some other big oil and gas companies and the likes, where pretty much all your previous operating leases have now been capitalized.
And will also similar type transactions will be similar treated going forward as debt like and CapEx obligations going forward. That itself is around 200,000,000,200,000 for periods 2019 2020 of things that were already baked into our business plans that are now coming on as effectively CapEx and capitalized as now. A good example of this, for example, in the next year or 2, we'll have to replace a big icebreaker ship up in Raglan given the territory up there it needs to work. This is a piece of equipment when you do buy it. It has a life of about 20 years.
This is a typical leasing type of vehicle that you have. We've been running with operating lease expense. That's a piece of kit that's going to have to replaced in the next 12, 18 months. It's somewhere in the order of $100,000,000 That's got a change in geography in terms of where it goes. So that's essentially in the some of that sort of infrastructure type things that may have been lease led in the past.
We've also got some which would be no different, I would imagine within the industry itself. We've looked long and hard around all the different 150 sites and looked at where we need to allocate and spend a little bit more money around even being more conservative and robust around tailings dam structures and reinforcements and just building in more and more buffers around some of the technical probabilities and statistics and events that goes into. So these are being led through the industry. They're led through Canadian standards. There's a variety of the industry moving towards trying to obviously get the market comfortable around that reserve you listed obviously look.
So I guess there's some additional money that's been built in and allocated within the budget during that particular period. And those are all negatives in terms of some extra Astrone, there's some extra leasing, there's some extra TSF that's gone in there, less on the other side, there's been offsetting savings just around project not using all the contingencies and FX savings that have come through. Mutandar, for example, obviously in scope has obviously come out as that. So looking at 2019, like for like, we would have been 4.6, so there's an extra 4 point 4 that's coming around capitalization at leases and obviously the Astrone next year as well will be 5.5 fully loaded, 5.1 on a like for like, 4.7 and it does go on to 2022, which is the period currently will be beyond the current investment cycle. That's not to say we're not going to come in and initiate and talk about some of those other growth options at the appropriate time that Peter spoke towards as well.
We're also doing a little bit more work around some of the various studies drilling feasibility wise that does allow one to push the button and to monetize some of these projects. There's a bit more that's gone into some of those studies, be it PolyMet, be it El Pashon, Mount Isa copper, there's a bit more money that's gone into overall drilling and studies across that business. On the far right, so oil, it's hopefully it will generate a return. We think that the returns, the IRRs, the paybacks are sufficiently robust, particularly in the E and P side and certainly over time on the on the Astron side. So what does the potential EBITDA of that industrial business look like going forward from a rounding era?
Clearly, in 2018 and even this year in 2019 to its sort of $65 a barrel, you get over $6.50 in 20 22 and with a exactly at the time that your CapEx profile also then peaks and starts turning south, you have significant free cash flow generation coming out of this business at that particular point in time. The marketing part of the business, unfortunately not going to tell you too much or update too much on that front other than suffice to say we'll be within the range even after the cobalt mark to market adjustment that we spoke about back in the June number. That was a $350,000,000 non cash amount that was announced, of course, with the pickup in cobalt prices, particularly on the back of Matanda going into care and maintenance, it sort of came back to about $18 it's now back or so into the 16s, of course, some of that $3.50 would have would not be that number. It would be a lesser number, but even post cobalt, the fully absorbed number as we go through to the end of the year, we'll be tracking within the range as we go forward. So we would I think 9.50 net of cobalt for first half.
So the combined effect of all that will move us into the range as we speak as well. In the absence of anything that you know, we know the business itself, the performance of the overall business, we think that market conditions for 2020, middle of the long term range is a fair sort of anchor for now as we move forward in terms of the marketing range as well. So we'll come in 5 in a month or 2 and we'll tell you where we finished up for the year. In terms of building blocks, cash flow generation, it's spot, so despite some tonnage declines, be it in chrome, be it sort of pulling a bit of Colombian coal, whether it be some of the other business that hasn't come at the expense of cost structure and margin generation. That's exactly the thesis both Eivind and Peter spoke to the value over volume thesis.
So this is building up the way we would see a 2020 illustrative cash flow generation. EBITDA spot price is 12.4 dollars made up of the copper, zinc, nickel, coal. The other is in the 0.4 dollars which is a combination of oil for alloys, other bits and pieces less the $350,000,000 or so of SG and A. And the marketing EBITDA, that's midpoint EBITDA at the 2 percent of $2,700,000 that we just spoke about, 2.7 cash taxes, interest and other coming through based on that generation. That's obviously interest rates have been coming down a bit.
So we've seen some reduction in funding costs from just below sort of 3.9 to more like 3.7 or something on an overall blended between our fixed and floating exposure that we have. And that's CapEx, cash CapEx at the 5.5 less the 200 of capitalized leases. So that's going to be the cash generation of spot prices that we go through. In the appendix, on Page 31, I'm not going to go there on the slide itself, but we have provided some of the sensitivities against those assumptions as we say at the moment. So top 4 would be copper, 10% sensitivity against those numbers around 700,000,000.7 against current prices.
Aussie dollar interestingly makes it at number 2 on the podium around the 10% followed by coal and zinc are the top 4 as we go through those. Then we will just finish up a page on balance sheet and capital structure generally as well. As you know, this year 2019 distributions and buybacks, there was a $2.7 base distribution, dollars 0.20 paid in respect of 'eighteen cash flows. The $2,000,000,000 share buyback program is nearing completion, will be done by the end of the year. Again, Appendix 29, I think it was, shows the latest share count and the projection towards the end of 2019.
We would have bought back a little over 7% I think of the overall share since share buyback started July last year. And the all in purchase price, if you've been tracking that is less the dividends that have obviously been saved through foregoing that on the shares would roughly be sort of at the money, so at the money sort of circa about where we bought it. 2020, you know the minimum distribution policy that's obviously anchored in around being able to model something. Given the free cash flow generation, dollars 4,400,000,000 that I've just obviously run through the current prices would be seeking in the absence of any updated and further news around macro and developments that of course we would reflect the latest news and understanding and projections of the business and prospects of the business going forward in February, but we'd obviously would seek to match 20 nineteen's distribution of $0.20 when we get to the end of the year, being comfortably well covered, dollars 4,400,000,000 cash flow today covering that $2,600,000,000 1.7 times. We would obviously we have our Chairman here in the audience.
He'll be presiding over a meeting in a couple of months to clearly discuss and appoint on what's the appropriate level for 2020. Net debt maintained the 10% to 16% range augmented. What I have put a footnote now there in footnote 1 is reflecting the new leasing standard, industrial leasing. I'm not looking to make any adjustment to that particular range. So the icebreaker I mentioned, obviously any fleets that we may choose in the future to lease or via contractors to bring onto the balance sheet that will be certainly covered within the range.
I'd be looking to exclude within that range, not for the purpose of net debt EBITDA ratios and whatnot, but the marketing leasing that will come onto our balance sheet that is around €600,000,000 at the end of October. I don't know what it's going to be from month to month because every time we go out there and charter a vessel for 15 months to handle this within our trading business, maybe $10,000,000 a month, whatever you're paying, suddenly there's a $30,000,000 lease liability or something for a very short term things. So you can see those €600,000,000 it's primarily chartered vessels and storage facilities within the business and more than 50% of that those commitments expire within a period of 2 years. So these are very short term sort of consumable logistics type aspects of our marketing business that can go down to 0, it can go to 1,000,000,000. These things are clearly not part of your long term capital structure.
So just for the purpose of 10 to 16, I think the guidance should be seen in the context of normalizing for that. But at the net debt EBITDA level, we're 1.24 at June, as Ivan said, we'd look in the current period to try and move that more and forwards towards one times as opposed to not letting it go up. It's not dying a ditch sort of one times, if it's 105, 107, 117, these are all pretty conservative numbers as you would all attest to. Non core asset disposals, yes, the $1,000,000,000 target is still something which we are chasing internally from non core long term asset monetizations. We've completed about $300,000,000 not much of a sort of fanfare around that stuff.
It's a whole collection of various shipping assets and other infrastructure, smaller stakes in listed companies and likes and some other monetizations, but it does add up. It was around $300,000,000 and a variety of other areas in the same infrastructure, shipping, long term loans, long term receivables, VAT, there's all sorts of things from which could ultimately liberate and unlock some cash that that's part of that asset that clearly within a modeling or an asset sense is not something that you'd otherwise be accounting for building into the underlying cash flow of the business as well. So with that, we'll let Ivan wrap it up.
As I said earlier, we got the right commodities. I don't want to repeat on this slide too much. But as I said, and has been proven over the last 2 years, if you look at both nickel and zinc, there's been a deficit. And because of that deficit, you take nickel over 2017, 2018, it was about 150,000 tonne deficit in 2017, about 180,000 tonne deficit in 2018 and 2019 a bit less around about 60,000 tonne deficit we believe. So if you look at nickel, we've reduced the stocks considerably over the last 2, 3 years and we're down to 15 days consumption, which is extremely low, very low for zinc.
As you see the graph, there's been a zinc deficit over the last 2, 3 years and we run down to 3 days consumption sitting in inventories around the world. And the same goes for copper. If you look at copper, what is interesting, demand for copper has not been great. We all know what's been happening in China in the 1st part of the year. It's picking up now towards the end of the year that we see more grid spending and there's more spending on the grid.
So demand is picking up for demand of copper, but it has not been great during the year. But even if you look at it with the mines that are reducing production and new mines coming up to production, we don't believe there was much supply growth during the year. In fact, we believe a slight deficit. So even with falling demand, we still had a drawdown of inventories down to 10 day inventory. And as you can see from the graph there, that's extremely low if you look at historical euros.
So we believe the commodities which we handle the key commodities, copper, zinc, nickel, there is a shortage. There is potentially demand picks up around the world, especially with copper hopefully next year with more grid spending, more consumption of copper, we will see the market starting to pick up as the inventories are at these low levels. So we will need a lot more supply coming into the market. So looking where we're well positioned, as I said earlier, with urbanization occurring around the world, especially in China more urbanization, increasing the population, another 2,000,000,000 people in the population by the year 2,050. That benefits all our commodities.
You can see definitely, with infrastructure, consumer spending, etcetera, should be good for all our commodities. Thermal coal, we know we are competing with renewable energy. We know we are competing with renewable energy. We know we are competing with renewable energy. We know we are competing with renewable energy.
We know we are Thermal coal, we know we are competing with renewable energy and you will have more renewable energy. And therefore, coal will have to coexist with renewable energy. But coal still forms a large baseload of the energy supply in the world and electricity generation. So to give you an idea, if you look at the energy in the world, we believe today, well, we know today, coal represents roundabout 26% of the world's energy supply. By the year 2030, we believe that will go down to roundabout 22%, 23%.
However, even with the reducing to those levels, because you got to remember, renewables cannot fill this gap. Today, renewables represents what I think around about 7% of electricity supply. It will potentially grow by the year 2030 to 18%. So therefore, coal still has to form a big part of that baseload. Now as I said earlier, again down from 20 6% of energy production down to 23% of energy coming from thermal coal, you're still going to burn more thermal coal.
Today, the world consumes roundabout 7,500,000,000 tonnes of thermal coal. In 2,030, even with the decrease down 23%, we'll be consuming roundabout 7,600,000,000 tonnes of thermal coal. So even if you look at just pure electricity, forget just energy, electricity today, coal produces around about 38% of the world's electricity. By the year 2030, we predict it will go down to 29%. Even at that level, electricity today consumes roundabout 3,500,000,000 tonnes of coal, going down to 29% will still consume around about 3,600,000,000 tonnes of coal.
So therefore, the consumption of coal will continue to increase even with this. Now renewables can fill the gap, but not enough of the gap. So we believe coal has a future and will be required for the baseload energy in the world going forward. Electrification, we all know about the EVs and major commodities. We're predicting roundabout SEK580 1,000,000 electric vehicles will be existing in the world by the year 2,040.
And I'll go into more detail what we see going forward by the year 2025. But naturally that bodes well for the bulk commodities, nickel, cobalt and copper, which we all know is going to be utilized in the vast demand in electric vehicles. Thermal coal, once again I've spoken about it. Demand continues and especially in Asia and I'll give you a graph on that later on to talk the effect of the demand for thermal coal and the increase of thermal coal in Asia. Decarbonization of energy, wind, solar, the amount of copper that's going to be required in those traditional energy systems.
Renewables will create more use of the copper naturally. And as we said, the battery system, storage systems, and that's going to have an effect on both nickel and cobalt. And so that even as we go more into renewables, we'd be utilizing more of these commodities. And once again, I said thermal coal will have to coexist with renewables. Carbon capture storage I think will become an important part of the energy use in the coal fired stations.
They're left to have more carbon capture to ensure that we burn coal a lot cleaner. So looking going forward sorry, wrong one. Just as I spoke earlier about if you talk about CO2 emissions by 2,030, we'll require an additional copper, an extra 22,000,000 tonnes of copper by the year 2030. So that gives you an idea today what the copper market is around about 24,000,000 tonnes, we'll need to use over the next 10 years another 22,000,000 tonnes, which gives you an idea we will have to grow around about 3.6% annually copper production. And as you know, during 2018, we've only grown at about 2.6%.
So it gives you an idea just if you look at windmills, solar, etcetera, the amount of copper that's going to be required by the year 2030 with this decarbonization effect, very good for the copper demand. Looking at that, if you look at electric vehicles, what is the effect? We've spoken about this before at various conferences and the effect of nickel demand and cobalt demand on electric vehicles. Today, the world produces roundabout, what's it, about 2,700,000 electric vehicles a year and 100,000,000 tonne 100,000,000 dollars car market per annum. So we utilize roundabout 95 metric tonnes of nickel in today's 2,700,000 vehicles.
Going forward to 2025, we predict that there'll be about 11,500,000 electric vehicles being produced per year. To get there, we're going to have to produce another 330,000 tonnes of nickel per annum to meet that demand. Today, we produce which is utilizing electric vehicles at the 2,700,000 roundabout95 1,000 tonnes, we're going to have to increase 330,000 tonnes taking it to 425,000 tonnes of nickel per year produced by the year 2025. And today, we produce roundabout 2,400,000 tonnes of nickel. Cobalt is even bigger a bigger story.
If you look at cobalt today, As I said, the same story, 2,700,000 vehicles being produced today, utilizing roundabout27,000 tonnes of cobalt. Going forward to the year 2025, once again, 115,000,000 electric vehicles. We're going to lead another 73,000 tonnes of cobalt. That's taking us up to 100,000 tonnes of cobalt per year. Noting today, we only produce about 120,000 tonnes of cobalt.
So there's no doubt the effect of electric vehicles will have an extremely positive effect on the demand for cobalt and nickel going forward. Coal, as I said before, this gives you an idea of what's happening in a world with coal. As I said, it's still going to be base load. We're still going to be burn more coal by the year 2030 than we do today even with a decline or percentage of the energy mix. But gives you an idea, if we take a look at all the new coal fired stations being built around the world today, especially in Asia, by the year 2,030, we're going to see demand growth increased by about 160,000,000 tonnes.
The slide just the graph down below shows you the new capacity which has been built, which areas Asia, North Asia plus 20,000,000 tonnes Southeast Asia plus 55 percent Subcontinent plus 55 percent Middle East plus 30 percent. That gives you an idea of 160,000,000 tonnes new coal seaborne, I'm talking about seaborne coal is required in the world today. So the demand does increase. What is happening on supply? And those are not that's not stories, that's new coal fire stations we know are being built and will be up and running by the year 2,030.
So we're talking Bangladesh, Pakistan, India, China, those areas, Malaysia, Philippines, they are being built. So we're going to need that over there. What's happening on supply? We all know supply is getting more difficult to get financed to open up new coal mines getting difficult. Peter spoke about the permitting issues that you get in various countries to get permits.
It's getting tougher. The other thing is Indonesia. Today we all know Indonesia producers are exports around about 425,000,000 tonnes of coal, around about 42% of the world's demand. New coal fire stations being built in Indonesia. Indonesia is not going to continue exporting 425,000,000 tonnes, 450,000,000 tonnes of coal.
It will decrease and therefore we're going to get this supply shortage. There's no question and that graph shows you over there how drastic the supply shortage can be going forward. If you even look at our operations in Colombia, Prodejo has got a shorter life, Cerrone doesn't have a massive long life. So therefore, you do have depleting coal mines throughout the world. If you ever look at the coal mines in South Africa, we know which ones are depleting and what's happening over there, what's happening in Australia, not many new coal mines being built.
So if you have a look at that graph, if you do have the planned new supply, provided people can get the finance, provided you can get the permits, you still got a large deficit going forward. If you take if people don't pull those new mines and there's no expansion, we've got a bunch of mines. Peter gave you an idea of where we could expand our operations. But if we do nothing and we let our mines deplete without that planned new supply, look at the gap we have there. So that's the question, what can fill that gap?
Renewables ain't going to fill that gap. There's not many other places the world's going to go. So it gives you an idea. Even though coal is so called a negative commodity, but the demand and the power consumption, which the world needs, especially the impoverished nations, and as I mentioned, the ones where they are all building these new coal fired stations, they're going to need the supply from these operations. And as I say, if the planned new supply doesn't come into existence, we can have a deficit.
So that gives you an idea the different commodities we have and what our priorities going forward. I think we've covered most of these points. Peter gave a detailed description, issues on health and safety and how he's dealing with those. And he's got a big program. He gave the full details of that to ensure that Glencore is fatality free going forward.
Ramping up the ramp up development assets, We spoke in detail about them last time. Peter updated you how they're performing now. And Katanga, the one that we had the concern previously is performing well. The Mopane smelter will start in 2020 and Koneamba is the last ones we got to get operating stably and to eventually get it to its 50,000 tonnes nameplate capacity. How soon Peter will get it there?
Let's wait and see. Operating efficiency and capital discipline. We spoke about capital discipline, how important it is in our company. It's not about just building new mines, increasing production. It's all about what is better to this company, returning cash to shareholders or keeping it in the company to ensure it adds to the value of the NPV of the portfolio and we look at that all the time.
Balance sheet we spoke about, Steve gave the full details. We've got a robust balance sheet. We'll maintain a robust balance sheet going forward. And we will live within those criteria, which we have laid down for the company. The last thing we always talk about is the transition to a new generation of leadership that will continue to occur in this company.
We've said we've gone this I think I'm the 3rd generation of the leaders of this company. There are a few of us still left, the old guard. And we got to transition to the new management during the year and we'll do that very shortly. We'll start having the transition moving forward to ensure that we've got a top younger new generation to take over the company going forward. Believe with all those issues, the confidence and the stability of the company is well set for the future.
And that gives you an idea, making sure all these priorities are put in place. We believe we're in a good position going forward and the company will achieve its required results going forward. Thank you.
Thank you very much. Sergey Donsko of CEM. Three short questions, if I may. On Page 16, the cost guidance, specifically at nickel, Looking at this chart, I think that it looks like Konyamba is going to have costs in the ballpark of about 15,000 tons, which taking into account sustaining CapEx means the minus probably trading what right now. Is this all that can be expected from Konyamba going forward until prices increase and hopefully bring it into a more cash flow positive territory or you expect some cost reductions down the road?
Second question, cobalt shipments at Katanga, I think that from 3rd quarter results, it's the mine continued to ship below production. When do you expect copper shipments to normalize and basically come in line with production volumes Q4 next year? And finally, on zinc production profile, you expect production to increase by basically 300,000 tons to drop to by 200,000 tons in 2023, which looks a bit counterintuitive. You're basically increasing production exactly when the market has seems to found a sort of patch, which goes a bit against your value over volume strategy. Did you consider maybe taking a more gradual approach to expansions or was it possible at all?
Thank you.
Steve, you can add on some of those cobalt you got those numbers.
Okay. I mean, Connie Amber, you're right mathematically that it's about trading water at the moment at the sort of annualizing towards 30,000, let's say, in terms of tonnages at the current pricing of 14,500. But that's clearly not where we expect Konioma to be long term, nor where some of the potential upside may be in nickel margins. So there's work to get it. We're annualizing at 30, it's not where we're going to be for the full year this year.
We talk about 30 to 40 as being the range where it's going to be over the next 2 or 3 years. So at that level it can start either higher prices or just that increase in production and cost absorption. And now from having gone through project to an operational like we would do at every asset, they are looking at where there may be additional cost efficiencies, which is easier to do when you are in a more steady state and sort of rather than a continuous sort of project monitoring mode. So yes, it's treading water, which is not a bad place relative to where it's been, let's say, over the last 2 or 3 years. And once you start seeing the progression towards a long term, 50,000, pick your nickel price, it should start being a cash contributor.
Is it going to be the sort of obviously nickel price? It'll contribute nicely over a long period of time because it does have a very long life and extensive reserve base as it has within that business. Anything else on the front end of Peter or that?
No, I think that covers it. We have a number of initiatives there, obviously getting the volume up will make a big difference. And we are looking at cost cutting opportunities within the business. So working on both the numerator and the denominator to make it more profitable.
Katanga Cobalt shipments has been obviously a slow period for cobalt ships, not that the market necessarily needed more cobalt to be shipped. So it just would have affected Katanga's own standalone prospects, which it is obviously as a separate company, but it's had 2 issues to deal with, one of which was uranium content that was identified about 12 months ago. It's currently processing content that's almost 100% compliant now within the applicable regulations. That's been steadily increasing during the 2019. The second ratio, which has then been the sort of delay in further generating both saleable as well as executing those sales is the dry capacity, which was delayed anywhere between 3 4 months.
And that's now just up and running now. We've had the 1st dry, as Peter said, operating 60% capacity, then dry will come on next year. So there'll be a progressive process where it's going to be able to sell what it's currently producing, which is much saleable. So if you assume 100% in spec, 60% of what they're producing and increasing over time, that's saleable, it will start getting shipped across the border. And there'll be a catch up over time of the backlog that either needs to get dried as well as the place of Wotanda in terms of the sort of market facing volume that's obviously coming through.
What's that?
No, but just on Ketanga, on the cobalt sales, that's really not the end of the world. In the market, that's how we should be supplying it into the market. By the time we do catch up and you're selling your own production against the market, hopefully the market will be in a position that can absorb that and that's the right place to be. So right now with a bit of a backlog, not the end of the world suits us.
Just on the zinc volumes then, we are seeing and you have seen on the graph that the zinc coming out of Antamina goes up and then reduces again in 2022. That's just a characteristic of the ore body and we go through this very, very significant increase actually starts kicking in next year for the next 2 years. And then there's also a release of large release of zinc in 2021 from Jarem project. So we're going from 0 Jarem ramps up to a very significant amount and then only gets to a steady state 2022, it actually drops down again. And at that stage Moleski mine is starting in Kazakhstan is also starting to reduce.
So there is a bit of a balloon there, but we start living out after that. I think
if you say should we be doing it because it's value over volume kind of thing is beyond our control really, Antamina, because it's a product, it's just coming. There's nothing you can do about the reserve body. So even if I say to the guys, can we reduce the zinc from that operation, etcetera, it's impossible. You've just hit that reserve body where you got to do it produce that amount of zinc.
But I think also knowing that we have this profile, you sort of spike up and then you go down in 2022, you have I mean antamina normalizes and you have some of the smaller assets in Canada and Peru deplete reserves. This is a production profile. The sales profile could also look different. So I mean, that's also something you could see some temporary just build up in inventories and sell it over a longer period in time. So that's also something that one manages within the business.
Liam, it's Patrick from Deutsche Bank. Two questions on the asset base. The first one, I mean, you mentioned the quality at the start, but you do have a long tail. So is there any ambition over time to expand the divestment program? Or are you pretty happy with the asset base as it sits?
And then secondly, perhaps one for Peter, if we look beyond the problem assets at the broader asset base that you have, I mean, do you see a lot of scope to improve operations and take out costs? And is there any timing or sort of quantification that you can put around that? Thank you. Okay.
I'll talk about the tail. Yes, we always look at the tail. We do have a bunch of assets there that really don't add much value, but some of them do help on the trading business and therefore it's a debate smelters, etcetera, which ones do you keep, don't you keep, does it help on the trading? So we're reviewing it all the time. So yes, I think we will be getting rid of some of the tail assets, some of it Steve's got his $1,000,000,000 some of that some are bigger even if you talk some of the listed investments we can look at and when we do dispose of those that will be a bigger mine.
Some the tail won't give big value, but it takes a lot of management time away. So we continue looking at that. That's what Peter keeps looking at. But that's the debate what value it brings to the trading. Can that market turn?
You take for example, Bolivia. Bolivia, our Bolivian assets have a good reserve base. It's a great reserve. We never intended developing those assets big because of the political situation in the country. So we're carefully monitoring the political situation there.
We'll see what happens. And if it does become an investment for India environment, we could relook at Bolivia and see what we do there. So that's the way when we look at the tail, we got to look at various ones. There are certain smelters we could get, we want to get rid of, don't make economic sense to own and we continue to look at that.
Peter? Just on across the suite of assets in terms of what improvements we can make, the focus that we are having on safety is resulting in some structural changes in those areas where we've got in some structural changes in those areas where we've got challenges, but there are departmental changes. And I actually think that the one will flow into the other. We've got different processes that are in place and we will see efficiency improvements. So a lot of the assets are a big part of the portfolio is going to be managed slightly differently going forward in terms of operational excellence and making sure that we have reliable steady performance that's linked to safety, but it always is also linked to productivity and output and therefore costs.
So yes, I do think there are going to be improvements and those changes are happening have happened and continue to happen where they need to happen. So I expect to see that over the next 12 to 18 months we'll start to see some benefits from that.
Like all the other mining companies, we're looking at technology, etcetera. We've got Glencore Technology, the old the Hazza smelting unit, which has a large technology unit. We've got XPS in Canada, which is also looking at different processing methods. So we're looking at that. Like all the other mining, we're looking at electric machinery, as Peter said, in we got the deeper electric, fully electric, we're not buying underground in Canada at Sudbury.
So like all the other money we could feed us continue looking at that where we can cut costs with extra technology, etcetera.
It's Ian Russo from Barclays. Just a couple of questions from me. First of all, on the operational sort of performance and guidance. Just comparing Mapani's guidance to what you said in the August results and it looks like it's already 30% to 35% downgrade to the profile. If you can just maybe talk about that.
And then perhaps just more broadly, I mean, obviously, you talk about stability and consistency of operational and financial performance in that slide, Ivan. And I at what stage do you feel you'll have confidence in the operational guidance you give us so that the market can ascribe more, I guess, a higher multiple on these guidance and that we shouldn't expect any further downgrades going forward. And then just on the increase in the CapEx guidance, Steve, you haven't really talked much about the Astron business. Obviously, the returns in the first half didn't look spectacular, it was loss making. Could you maybe just sort of talk more broadly about that and maybe some of the other investments sort of higher CapEx and what returns are actually these businesses bringing given you've spent about $1,000,000,000 acquiring that business?
Quickly on the Mapani, you've got 2 assets sitting in 1 bar and if you subtract 1 from the other you're going to get to perhaps the wrong answer. We are we have got a little bit of conservatism in that guidance for the African copper assets. But my comments about ramping up Katanga, I believe continue to be valid and that's what we're aiming at. And obviously, we are scheduling to restart the furnace the smelter at Mopane in January. So we've added the 2 together, but we are making sure that when you think about the total volumes and then you model us going forward that we can give you something that we can deliver.
There's a bit of conservatism in that.
To your question, when can I have the confidence that we're going to deliver on it all? Remember, we've got 150 assets around the world. All our assets are running beautifully. No issues on the assets. So where did we have the issues?
You take all our Australian coal mines, South African coal mines, you take our ferrochrome operation, etcetera. Some have cut back volume out of choice, as I said earlier, but generally, we're hitting on all our assets, we're hitting our volume predictions. Where we've been missing is these ramp up assets. And that's what Peter spoke about. Those are the 3, Mopane, Katanga, Koneamba.
So I think if you take those 3 out of the system, the machine works. Now Katanga next year will also move out of the system. It's going to be fully ramped up. And as Peter says, by the end of 2020, we will be ramped up to 300,000 tonnes, copper 32,000 tonnes, whatever it is, cobalt. So that one will also move out.
So only other 2 is Mopane, which has to ramp up. Hopefully, we'll get it done by the end of 2021 2020 and then that's also off the list and Conyamba's work in progress. So I think the rest of the asset is comfortable. It's the ramp up assets we always got to watch. Like any one of the other mining companies, look where anyone who's got a ramp up asset, how they're performing today.
And I think we've done pretty well. Asset, how they're performing today. And I think we've done pretty well. Yes, we had a bit of a miss on Catango. We didn't hit the 2.85, we're going to hit 2.35, whatever the number is, but not too bad in a second year of production.
And Next year, we should hit the 300,000 tonnes annualized towards the end of the year.
In terms of Astrone, we've obviously it's been what 6 months we've been in the chair over there. As you would know of that investment, yes, there was the acquisition. It also came with a commitment to spend around ZAR6 1,000,000,000 which is about $400,000,000 over a 5 year period of incremental investment beyond what their sort of steady state was already. We're still looking into both technically and optimizing sequencing what those might be. We can put more meat on the bone when those finally approve.
But what we've seen is a couple of areas that are going to be the focus over there. 1, you've got a refinery there that's running about 80% utilization because it's got to go down for a 4 or 5 weeks shut every single year. And this absorbs the company no end. I mean, it takes 6 months to plan for this thing and then they do it over 5 weeks and no sooner or they start to think about the next shutdown. So that's why you're running.
So there is some plans as to how you can get that up to about 95%, 98% even uptime and only take it down maybe every 2 or 3 years for a few weeks. The other thing with everything going on in the oil product market, it's also then things around qualities and the types of product that you're actually then producing around the low sulfur, the blends, the IMOs, the fuel, the local things and there's some CapEx and numbers that we've seen around sort of those are 2 of the bigger ideas in those things. These ought to be projects that incrementally deliver returns of least circa 15%.
But besides that also what Steve talks about with Astrone and the Brazilian asset, they help a lot in the trading having a short on the crude business, etcetera, also helps in the business and it benefits on the trading business. Even though we run them independently, we do get the benefit on the trading side.
And actually the downstream is working very well, generating good cash flows. The refinery now is the one with this CapEx getting it on to. I mean, as I said, it just feels like it's almost day 1 still. I think in February, we'll be able to talk a little bit more about it.
Thanks very much. Paul Gate, Bernstein. Two questions if I could. Just on the commodity market, so first of all, cobalt and then coal. So on cobalt, I'm just wondering, have you seen any change in the sort of artisanal supply in Congo over the last 18 months, obviously, dollars 100,000 a ton sort of incentivized to significant increase as the prices move down?
How is that sort of playing into the sort of supply demand balance? And what is the sort of fundamental ability of that source of supply to continue going forward? And then the second thing was on the coal markets, looking at that sort of deficit that you sort of forecast there, including one of the areas where you could sort of see something stepping in to fill that hole would be domestic production of coal thinking here sort of coal India, also sort of the Chinese domestic production. So just wondering what your sense is on the price elasticity of domestic supply and how that looks under that kind of scenario? What is the ability of China to potentially increase meaningfully from here or indeed sort of coal ended ahead to sort of 1,000,000,000 ton per annum mark?
Thanks very much.
Okay. Thanks, Paul. On artisanals in the DRC, naturally when the price was higher, artisanal with the numbers we got and actually so we'll debate how much is really artisanal mining. And if we look at the numbers in 2018, artisanal mining was roundabout 23,000 tonnes. Today, artisanal in 2019, artisanal mining dropped down to about 12,000 tonnes.
So you have had a significant effect with the lower prices and that going forward. You saw even the economies authorities announced today somehow they want to put a supply tightening or artisanal mining that they don't want this extra tonnage coming on the market and they're going to put some control. I saw some announcement, I don't know exactly where it came, but something that they're going to do there regarding artisanal mining, they've been talking about it for a while. But you are correct, it came down. Now when you talk about coal, yes, we talk about 160,000,000 tonnes.
Can that be fulfilled by their own supply? Now I spoke about seaborne coal, 160. So we're looking at all the coal fired stations that are in areas where it makes clear economic sense only to bring in imported coal. And you talk about coal India, yes, coal India I think is producing roundabout 500,000,000, 600,000,000 tons. Coal India to meet the demand that is required with the new coal fire station being built in India internally has to go to about 1,000,000,000 tons.
Whether they get there that's a debate how soon they can get there. I think we're talking about 2,030 they got to get to 1,000,000,000 tonnes. So I don't think they will get there. So I think you're going to need even more seaborne coal potential. But the way we talk about the 160 and where Aga studies that all the time, he's talking about the coal fired stations they cannot use or unlikely to use because it doesn't make economic sense, local coal and has to rely on imported coal.
So we're not looking at all the coal fired stations being built in India, China, etcetera, which use local coal, we're specifically targeting imported coal. So we believe solidly that that seaborne coal where we talk to 160 cannot be substituted by internal coal.
I guess, 2 sort of related questions. First one is really just on the organization. If we go back to the IPO, the pitch was that Glencore was an organization run by traders and the traders ran the divisions and we had all the traders up there. Today we have an industrial guy up there. Is this the new Glencore?
I mean
it looks like all those guys
are gone and here's Peter, right? Yes. I guess a related question. What is the strategy in oil? Again, Alex is gone.
It seemed like it was a bit of a failed experiment going into Chad and now you're putting money back into it.
All right. Good questions. Yes. Look, when we did go public also, remember, yes, it was the traders and we the assets underneath and we weren't a big asset trading company. We had asset managers Nick sitting alongside the traders.
You remember the model. It wasn't just the traders, traders weren't running the assets. For example, at the time there were different there's a zinc guy ran the assets, there was a copper guy ran some of the assets, etcetera. So it was alongside. When we merged with Xtrada, we clearly did create the trader and the asset manager.
Most of the department well, all the departments had an asset manager in the asset running the assets. For example, Tor Peterson was the coal trader, Peter was the asset manager for coal. If you talk zinc, you had Daniel Marte, the coal trader. Alongside him, you had Chris Extell running the zinc, the same ferroalloys. You had the trader, you had Gary Nagel running the asset.
So that model didn't change. That model still exists today. So exactly the same. Every one of the departments, you've got a trader alongside the asset manager runs the asset, the trader runs the trading, works very close with the asset manager to ensure that we're not back to value over volume. He'll tell him what he believes the market can take, what the market can't take, please, I don't want you just producing for the sake of production, we can't sell it all, back to the zinc story, back to the cobalt story.
That was the trader who said, hang on, we don't need all these tons in the market, we're going to screw the market, we're not going to make money at those mines, it doesn't make sense. So that model still exists. What has happened Peter? And today of course you talk $12,000,000,000 $14,000,000,000 of EBITDA, dollars 2,200,000,000 EBIT. Yes, the trading is an important part of the business to market the tonnage from the asset as best as possible.
3rd party trading very important. So that's not going to change. What we've done with Peter now, let's coordinate all those asset managers that they don't operate in silos. And that's what I felt before, we're operating too much in silos and we weren't getting the message from the top through how we should all run, swapping people around which Peter has already been able to do. You had me at the top, but I couldn't look into every asset as Peter can because he's just focusing now on the assets.
So he's moving people between the different assets. So it was just a matter of evolving, finding the right guy respected by the group who could take full control of all the assets with the asset manager still there. So not that much change from the past. Back to oil, yes, upstream oil didn't turn out great. It's no secret.
We can't sit here and say Chad turned out great. You know Steve's taken a few write downs over Chad over the years. So cannot say our upstream adventure was that great. Unfortunately, we did Equatorial Guinea, the first one, and it turned out well. So maybe the success of the first one was the problem of we thought we did have a good understanding of the upstream business.
Turned out Chad, we did it didn't turn out the way we expected. So we've decided upstream not for us. We've got a bit left as you know, we've got Ecuador, Guinea, we've got Chad and we've got this piece in Cameroon and we continue working that. We go more into Upstream, no. So the Downstream business is more of a trading business you can say.
What we like about the downstream business is there, it creates a short for the trading business, for the crude, for the products, etcetera, with the distribution networks, which we got in Alusat in Brazil, which we got in Astrone in South Africa. Right now that's where we're going to stop. We're going to see how it works. Can we get to grips with this business? How much does it help the trading base having the short and just sitting on the downstream business?
And we'll see how it goes. But upstream, yes, didn't turn out great. Good, Mr. Chairman, oil expert upfront.
Yes. Myles also UBS. A few quick questions. First of all, on the DRC, could you give us a sense where we are with the mining code and discussions with government? Also with the DRC, how quickly could you restart Matanda if the market was there for the volumes?
Secondly, on coal, thinking more strategically now, if you continue to trade at a discount and you perceive it's because of being the largest seaborne producer of coal, what options will you consider to try and address those sort of discount? And then the third question was going back to the very end of your presentation when you talked about management and the year of transition. I didn't quite understand the timeframe here. Are you looking at sort of bringing in sort of new management over the next 12 months or is it in what's your are you here for the next 5 years or so is it down to the 2, 3 years?
Yes. Okay. Let's take the first one. Uttanda, how quick Peter on
that point?
We can turn that on fairly quickly if we needed to. There are some limited oxide reserves, but the long term future is in the sulfides and that study is ongoing. But I don't think we would you saw the profile of the cobalt and you've heard us talk about the sort of growth that we expect in the cobalt market. I think we need to be cautious about how quickly we brought that on. I heard you comment if the market, but I don't think we would need to occur the short term price increase in the cobalt market to bring that back on.
I think we take a long term view in terms of how the sulfide project works and how we ramp it up going through the remaining oxides. There was a question also on the mining code.
The mining code we continue, it is the new code. We had the stabilization agreement on the old mining code and therefore we believe that should still be in existence. So we're reviewing it and we continue talking to the government to see what we can do there. But we're not sitting back. The other one you mentioned, coal.
Yes. What we do is coal. Look, right now coal is there. It generates a large amount of EBITDA for the company. It's something we believe is good for the company going forward.
If anything changes in the future, we've got to review it. But right now, investors have not told us they're going to divest of Glencore because of coal. There has been 1 or just you know, we did do the coal cap. We kept our coal production at 150,000,000 tonnes and that's what we've done to satisfy the investors and that's where we are right now. On management change, we said, I always said and as I said earlier, there's to the 3rd generation coming to the end of the time of the 3rd generation.
And not many of us old guys left. So the old guys will be leaving. How soon we're reviewing it right now, I would imagine it would occur next year. So we're reviewing it right now. We're looking at it when the right time for the management change to take place.
We're going into the New Year. It's time to review it early in the New Year and we will be reviewing it as we get back to work in the New Year and decide where we need these last few management changes. So it should happen during the year. Myself, I've always said that when the new management is in place and I hope we can get the new management in place as early as possible in the New Year. And then we got to see once they're in place, I've always said, when one of those managers, where there's been a lot of rumors who potentially could be there, There's a good crop of people who should take over.
I've always said I don't want to be an old guy running this company. And as soon as those guys are ready to take over, I'll be ready to step aside. So it could happen soon, no exact time. But as soon as I believe they're ready, I will move aside.
Conor O'Leary at Credit Suisse. Two questions. So another one on coal and one on Matanda. So on coal, you talked about the evolution of renewables and some domestic coal. But how does the energy market fit into that given that's probably taken a lot of the sort of price action out of the market this year?
And secondly, on Matanda, you have talked about the future requirements of cobalt. And so presumably, the only realistic way to bring that asset back would be the sulfide project. Have you got any provisional sort of indications on how big or expensive that project is going to be?
Peter, I think it's too early to talk about that project. It's with at the option stage was the pre feasibility stage.
And a lot of things effect for Matanda, the mining code, effect of the mining code went to start up, what the cobalt price is looking at and
as we discussed, we have existing
infrastructure prices. There's still some oxides left. So he's got to review it. So no rush. What's the cobalt price, no rush.
Let's get it right. Let's bring it online where we sorted out a lot of issues in the DOC and the cobalt price. On coal, I didn't quite understand your question on coal.
What's the LNG market? So you've seen a lot of cold gas switching this year and I'm wondering how that fits into your sort of outlook on how much coal you think to be needed on Tmall market?
The debate I'll continue to have with my Chairman, but he's the LNG man. And we always debate how much can we talk about this 160,000,000 tonnes of new coal. We know the coal fired stations are being built, they're there. They can't switch to LNG, but can LNG plants in those countries beat the coal price? We believe that the coal price we're talking about hard for LNG to compete.
We took $85, dollars 90 Coal Newcastle type indicator hard for LNG to compete in those areas. Now if the coal price goes to €120,000 €130,000,000 yes, then your LNG could start kicking in. How much, how fast they can replace? We've got to wait and see. Now I know in Europe, we all said, look what happened in Europe.
Cold consumption in Europe went down, I can't remember what it was a few years ago, but it's come down to 60,000,000 tonnes in a 1,000,000,000 tonne seaborne market. So everybody talks about Europe substitution of LNG gas. Okay, there was a lot of gas also because of gas that came, But Europe wanted to get out of coal, went into gas and they had the gas there. So it's not a big player in the market. But the other and they're paying more for their energy.
Now the other poorer countries are not prepared to pay for high priced LNG even though people may believe it's cleaner or not. That's another debate. But coal is still cheaper at those prices. Thank you.
Good afternoon. Sylvain Brunet with Exane. Two questions for me left. You talked about the old EV story 2020 could be an interesting year. Just wondering if
I'm 25. 20, I'm not sure of yet. I don't know how many EVs are coming in 2020.
If we talk about the battery chain, what is your assessment of how much inventory is there and what they are doing? And my other question is on marketing, which was fairly good guidance. What would be the areas where you've been surprised positively or negatively? Which businesses have done better this year than you would have thought?
Sorry, on marketing? Yes. Oh, on marketing, simple. We all know oil performed well. You've seen the results come out from whether you're talking about the oil companies, whether it's BP, Shell, Total, they're all having great results.
You look at the other oil trading companies, they come out with various results, different timing has been good. So, well, trading results are very good. But the rest has been okay. And as Steve says, we'll give the number to once the year closes, but oil has performed well. Copper Cobalt, not so great.
You know about the situation in the Cobalt division. So therefore, we had the issue on the cobalt, which is the shifting from the one side to the other side. But overall, oil was a good performer. On the battery supply and the short, I don't know that answer to that. Maybe I cobalt guys know that a bit better than me.
I haven't seen the number. I know cobalt where the amount of cobalt sitting battery inventory, no idea.
I mean, it would be fair to say that our sort of order books and just generally engagement with our
of the shutdown of Mtanda where the cobalt price picked up, I think where was it from? And it went from about $12 to $18.50 dollars come back a bit off now down to $16.50 roundabout there. The percentage payables has increased, came down a bit, but definitely increased when we shut when we gave the announcement we shut in Rotunda. Going forward, clear that our prediction is correct in the mind you read about the mind of electric vehicles that are going to be built in Europe, European car manufacturers, but we see it in the mind of people chasing us for long term contracts. And we've said that we will only sign long term contracts with a floating price, but people are still locking in tonnages 5, 10 years going forward.
And we signed a lot of contracts. You see, we keep announcing them as and when we sign them. We've done Umiko, we've done JEM. JEM, we've done
There's various in the pipe, there's BMW.
BMW, we've done. There's a few more coming and as we sign them, we'll announce them.
But that's positive of this battery supply chain if they're obviously
There's no doubt. And clean cobalt supply knowing it comes from an industrial producer like ourselves, most of the companies want to tie up long term contracts.
Just a few specific questions. One, should we expect some working capital release next year specifically from the cobalt inventory sales? One could calculate roughly $200,000,000 could come from there if the cobalt that was produced last year could get sold next year? Secondly, I'm surprised that the thermal mine cost guidance hasn't gone up more, given kind of the production reduction that we are seeing, especially in Colombia, what is sort of the breakeven volumes beyond which kind of more drastic action would need to be taken there? And thirdly, again, on the oil side, going back to the question on chard, there was news flow that it's up for sale.
Is that still the case given the production guidance kind of still looks like there's some growth there? So are you waiting for all that growth to get realized before you kind of put that up for sale?
Steve?
I mean, Cobalt's working capital release, yes, we're obviously holding more than what we would regard as sort of normal optimum level. So to the extent we sell down below the levels we are now, then clearly there'll be a working capital release in this scope over a the medium term to release quite a lot there, whether it's bang smack within a 12 month period for 2020 is not something I can categorically say. But there's obviously the trend is going to be towards working capital release within Cobalt. Thermal costs, I think and again, it comes down to the fact that where tonnage has come down that's been higher cost tons have come down. So you're averaging you have an averaging benefit also from that.
We've got slightly better FX rates in Colombia and South Africa on a sort of comparison. Aussie dollar has been hovering at 68, which is obviously the other factor. Various other consumables, procurement benefits, we've had some savings have also been delivered that are obviously baked into some of those numbers. But there's also a not every tonne of coal is the same as the other tonne and we want to make sure we're taking the most profitable tonnes out. What was the other?
What was your third? Chad. Chad, is this still up for sale? I
think We
look at every asset. Every asset has a potential being up for sale. The right price, we sell anything.
But I mean in terms of value maximization, would you have to sell once the Yes, we look
at its profile. We look as you see, we got a profile and if we can get the right price, we look at it.
But obviously, these numbers we've given you assume that there's no sales.
No sales.
So obviously the CapEx production cash flows is obviously built in and if for whatever reason there was something on that front, would adjust accordingly.
Yes.