Glencore plc/ADR (GLCNF) Q2 2026 Earnings Call Transcript

Good morning, good afternoon. Thank you for joining us for our first half 2026 results. A particular welcome to those joining from Australia. Speaking today, Gary Nagel, CEO, Stephen Kalman, CFO, and also joining us is our Chief Operating Officer, Xavier Wagner. I'll hand over to Gary. Thanks, Martin. Good morning from Switzerland and for those in other parts of the world. Good afternoon, good evening, and maybe a very early morning for those in North America and South America. We've put out our results presentation, so we'll take you through that. If we move into the presentation and start on slide four, which is a familiar slide, which should be a familiar slide to all of you, is our financial scorecard, our half-year financial scorecard, starting on the industrial side. Operationally, a very solid first half of the year. Our teams, our operational teams, delivering production within the market guidance range. We continue to perform operationally two full years in a row within the guidance range and now through this first half year within our guidance range, we've restated or kept our guidance for the remainder of this year. On the industrial side, a $6.5 billion adjusted industrial EBITDA. that's driven materially by a very strong metals and minerals contribution up year-on-year primarily driven by higher prices they have been high input costs and Steve will talk a little bit about that later as we get into the costs but a very strong metals and minerals contribution the energy and steel making coal contribution also very strong we've seen higher prices through Newcastle energy coal driven up by higher energy prices and we've seen strong demand for steel making coal through the first half of the year again some offsets through increased particularly diesel costs and we'll go through those a little bit later we've also seen some higher refining margins and given our refining exposure in both Singapore and and particularly Cape Town that's landed up allowing us to have a six and a half billion dollar adjusted industrial EBIT dial for the first half of the year on the marketing side a 3.3 billion adjusted marketing EBIT. It's a near record first half result. I think we've only had one other half, which has been higher than that. And that's largely as a result of disrupted energy markets, disrupted freight markets, and it's created significant arbitrage opportunities, dislocations, and trading opportunities. Clearly, we all know what's driven that, and therefore an exceptionally strong performance from our energy business, and particularly oil and gas, but coal also contributing nicely towards that result. On the metals and minerals side, also a very strong result, lower than last year, but you will remember that last year was a record year, so a very pleasing result on metals and minerals, but obviously not competing this year with a very strong oil and gas business. So the two together have allowed us to publish a financial result in adjusted EBITDA for the first half of the year of $10.1 billion adjusted EBITDA, and that's leading to a net debt of $10.2 billion. Steve will talk you through how that's made up and the contribution or how much of that is marketing leases and how we look at debt. A very cash-generative first half, funds from operations up 158% at $8.1 billion. And as a result, we're able to declare a top-up shareholder return this year of $1.5 billion. That's going to be $1 billion in cash and the positiveness and confidence we have in our business. We're also declaring a half a billion dollar barback of our own stock over the coming six months. Moving on to slide five, it's a bit of a scorecard update of what we presented in December of last year at our Capital Markets Day on our copper portfolio and our leading portfolio that will take production back up to a circa 1 million tons of annualized production by 2028. And then our growth portfolio, which will take us to somewhere around 1.6 million tons target by 2035. And, of course, that could be higher should we accelerate any of the projects beyond what we currently planned. So if we go through each of these in a little bit more detail, starting on the top left with Alambrera Restart, and you would have noticed the photo maybe on the front cover of our presentation is the first blast in Alambrera. the guys at the business have done a good job color coding that and color scheming the blast in the colors of the Argentinian flag so very proud of that and so we are ahead of schedule in fact at Alambrera we originally were expecting to see first production in the first half of 28 we now believe we'll see first production in the back end of 27 so therefore an improvement on the schedule on Alambrera moving on to the DRC and we did announce this earlier in a year. But at KCC, we've secured the land package that was longstanding and something that we had been working for many, many years with Jekamines to secure. We've done that in a very good manner with Jekamines. As we explained earlier, that extends the life of mine of KCC. It improves productivity. There's certainly cost improvements as a result that comes out of that. And that gives us our pathway back to 300,000 tons of copper a year out of KCC, which underpins that million tons a year by 2028 at MUMI we've gated the feasibility study for the sulfides that gate that was gated in April 2026 and it will be followed by an investment committee committee review and that feasibility and project remains on track and on schedule in Peru Antipakai we got two boxes in Antipakai maybe we can talk about them together we did announce the acquisition of the Quechua land that's completed and fully integrated within our business the drilling program on Quechua will start soon and at the same time on Corica Waiko permitting and land access is advancing having both of those within the Antipakai district gives us maximum flexibility where we can develop Corica Waiko first or we may pivot and develop Quechua first and leave Corica Waiko later it's just a hugely mineralized deposit and having more optionality within the resource base gives us material flexibility and an upside back to Argentina the bigger project there which is Mara feasibility engineering is underway we will be submitting our environmental permits application in the coming weeks as soon as that's submitted and that takes approximately one year to get approval but once submission is done there are no more restrictions or limitations in terms of being awarded the RIGI. Our RIGI application is in and we expect a RIGI award soon after the submission of the environmental application. Al Pacan which is the the big greenfield project on the border of Chile and Argentina, you would have seen that the Glacier Protection Act was amended and passed into law by the Argentinian government that removes a any of the existing restrictions around the glaciers and our ability to now take that that project into feasibility a number of trade or studies are being done the drilling campaign in such has been substantially completed we still do drill in certain areas to make sure we're not going to build infrastructure on areas where we may want to mine later and we're targeting environmental permit submission sometime in the first half of next year. Moving up north to the United States, the new range copper nickel project Northmet land acquisition package was secured towards the end of July and the federal wetland permit applications been submitted also in July and we're targeting to gate this to feasibility in the back end of this year. On Kiowasi and I know Duncan spoke quite a lot about it on his call. The leaching restart is underway and we do expect first cathode out of that leaching facility by the end of this year as well. In terms of the fourth line, the feasibility study is also underway. We approved it, the board approved it in February 2026. That work is underway and we continue to keep that on schedule. Moving on to slide six, we did announce this morning that we are going to establish a secondary listing on the Australian Stock Exchange. We're targeting a October 2026 listing and our ambition is to achieve a minimum ASX 200 inclusion within 12 months. Now the ASX 200 requires one and a half billion dollars or one and a half Australian billion dollars of stock held on the ASX line. We believe that is fully achievable and our ambition goes well beyond the ASX 200. We believe soon thereafter we can in fact get ASX 100 inclusion which requires approximately five and a half billion Australian dollars on the Australian line why do we believe we can get there if you look at the if you look at the green wagon wheel below you can see what we've done in South Africa in South Africa a little bit like Australia we did it we we had to have a secondary listing there and organically and over time we've built up a big shareholding in Australia in South Africa we have approximately eight percent of our register in South Africa right now held on the JSE line that's equivalent to just under 10 billion Australian dollars so as a proxy for what we've done in South Africa we can certainly see that as a read across to Australia and there's no reason to believe why we cannot have ASX 100 inclusion in a short period of time so why are we doing this well the main reason we're doing this is actually a lot of reverse inquiry Steve and I were down in Australia in the early half of this year meeting with a number of investors and there was a lot of interest in our company very much interest in investing in our company investing in our copper story and our copper play as you know the Australian Stock Exchange lacks material copper exposure particularly with the with Oz Minerals and Metals Acquisition Corp no longer being listed there they are some copper exposure plays but they are limited now so there's a there's an interest in our copper pipeline, our copper projects, our base copper business, but more generally in Glencore as a whole, in the value creation that we're after in Glencore. We have a number of super funds who are invested already in Glencore, and we've had a number of them say to us that they are restricted in terms of how much they can invest in Glencore because of internal rules around how much needs to be invested on the ASX and how much they can invest in the offshore line. And they have said to us that if there was an ASX line, they'd be able to invest a lot more in Glencore. So we see the ability to access these pools of capital. They are very deep pools of capital there. The way the structure is set up around pension funds and the super funds in Australia, where there's a mandatory contribution to these funds, these funds keep growing every year. And Australians are smart investors, they understand the mining industry given the nature of the economy, they understand it very well and therefore they understand our business very well and there seems to be a growing demand for our stock so the other benefit of the ASX versus perhaps some other exchanges around the world is the ability to get index inclusion on a quite a mathematical and simplified basis and as I spoke through it earlier on on the slide our ability to get into ASX 200 and ASX 100 over a period of time so that provides us enhanced financial flexibility having ASX securities as well and it's really underpinned by the fact that we have a very large Australian business. We have over 17,000 direct employees. We contribute materially to the Australian economy. We produce coal, we produce copper, we produce zinc, we produce nickel. We're well known in Australia and it makes a lot of sense for our company. And with that I'll turn over to Steve to take you through the financial performance.

Thanks Gary and welcome all to today's half-year results release call. I'll run through some slides from which should look very familiar to you We've been through reporting cycles over the many years. The first slide on page eight is really some high-level numbers, many of which Gary's actually covered on, and there'll be further detail at least on marketing and industrial and debt outcomes as we have later on. Maybe calling out a couple numbers that won't be covered later on. They tend to be less relevant in terms of cash and valuation, but net income, $4.4 billion for the half was a very strong addition to the equity base within our books. We did have 700 million of significant positive items, and there was 600 million or so of gains on disposal of assets. We sold a small parcel of our century shares during the year to bring us down to 30% comfortable being at that level. It was around 0.3. We also continued to look at accretive opportunities around the parts of the portfolio, maybe end of life assets. We sold the kid mining operations in Canada, also in Q2. and with that structure that also released some some large rehab provisions that we otherwise had and that reported a gain of also about 250 300 million the other point just to call out on this first slide is the increase in the readily marketable inventories as that doesn't sort of work its way down into internet debt but you would expect an increase in this environment number one prices is going to correlate with that particular we got certain volumes there where price increases across many of our key commodities in which we do hold reasonable inventory positions. So price was a major factor and the major factor. Brent prices from the start of the year to June went up 20% into the $73 a barrel. Zinc prices from start to finish up 16%. Copper was also up 7%. There was also some higher volumes in some commodities. Some of the disruption across Middle East conflict has created longer journeys, different freight routes, global trade friction so that days on hand generally in inventories has ticked up a little bit as you would expect in this particular environment. The shape of the wagon wheel at the bottom is a good shape around the diversification contribution of the business copper on the industrial side was the strongest business particularly now that we split steel making and energy coal into its own separate components. Marketing is was obviously a large contribution as well but quite diversified and And a very solid copper existing and growing business, particularly, as Gary said, with the expansions back to a million tons and ultimately 1.6 million tons. On page nine, if we just focus on the industrial performance, I'll look at the waterfall bridge on the next slide, which is most telling around the materiality of the various movements. But overall, this business was up 72% to $6.5 billion. High commodity prices, the key feature, offset by some input cost increases, not some, quite material, Middle East conflict, both direct and indirect secondary effects. We'll look at that later on. Stronger producer currencies as well we had across, particularly Australian dollar and the South African Rand. The metals business was the largest increase and is the largest aggregate industrial business, up from $2.4 billion to $4.5 billion. The high metal prices, we'll see the impact of that on the next slide. Positively, we also had quite a strong volume performance, contributing a positive variance across the metals business, particularly higher copper and cobalt sales now that we are able to sell some cobalt, given the quotas that are now working in the DLC and we're delivering into our quotas. The copper business itself, overall copper went up from $1.1 billion, We'll look at a slide later on to over $3 billion of EBITDA contribution this year. And pleasingly, the African business, which just 12 months ago posted very little EBITDA of only $0.1 billion, went from $0.1 billion to over $1 billion of EBITDA during this particular net was very much volume. You need the tons given the size and scale of those operations. We did increase production by 55,000 tons during the period out of Africa from 83,000 tons to 138 which was up 66 percent as well we are going through a period of lower gold production out of our kazink operation it's transitioning to ultimately to an underground operation it's also expanding deeper in the open pit there is some investment it's going through a lower period and at some point that will snap back to quite material gold production not dissimilar from where it's been in sort of historical period we'll look at some of the offset from the landed prices for diesel sulfur and sulfuric acid and some of the next slides. The energy business made up of coal, but also our industrial oil footprint that we have as well, somewhat gets lost within the overall Glencore. But if we look at the bottom there, we did post a 300 million increase out of the oil industrial. There's a small upstream oil and gas portfolio, but we have the refining business, particularly down in South Africa, around 100,000 barrels a day of processing capacity. And overall, the oil business went from 164 million to 432 million and coal benefited largely from increases in both energy coal as well as steel making coal energy coal getting getting a bit also from the LNG availability that we had during this particular period the industrial bridge as I mentioned before us at 3.8 billion to 6.5 as often the case on the slides price tends to tends to out feature many of the other variances given exposure generally within within this industry so 3.8 billion positive price movements within that our overall copper business was 1.8 the zinc business was 0.5 nickel 0.2 and the other 0.3 and the coal business added 1 billion of positive price variance you can see on the bottom left we've noted some of the major contributors in terms of average price increase of copper up 39 percent period on period zinc 22 gold 50 to 100 percent and the various coal complexes as well contributed pleasingly and we would hope to hope and expect to report increasingly positive volume variances particularly as the copper growth moves through to the 28 29 period and then into the 30s as well period on period there was a net 200 million positive volume contribution that was primarily out of the copper business, which was 0.6, the biggest contributors there being Africa, which I mentioned before, as well as Antimena, which increased its copper production during the period 50% at the expense of lower zinc. It's going through a higher copper, lower zinc period, so large contributions from Antimena. The zinc business itself was down 0.3 there, primarily the gold exposure that we have within the Kazink, which is a byproduct out of our Kazakhstan business. and EVR dropped 0.1 of volume variance in that period with being lower on recoveries and yields. We expected H2 recoveries, we'll talk later on. The cost variance, as you expect in this environment, just given the nature and scale of our business, was a negative 1.1. Two major impacts to call out was the direct energy inputs, which is diesel, mainly affecting our copper and coal businesses where you have some large-scale, big-fleet utilization, high open-pit operations that we have as well. And you had also secondary Middle East impacts, particularly on our DRC assets in relation to sulfur and sulfuric acid. We do expect much of what's in that cost variance to be relatively transient. Once there's resolution and calmer markets and supply chains normalize out of what's happening within the Middle East, you would expect those prices across all those categories to return to some sensible level compared to where they traded within Q2. To give you some sense on some of those price variances, within Q2 Brent price, for example, that averaged $91.3 a barrel compared to $61 at the beginning of the year. So that's up 50%. That's just on the crude side. The products were actually significantly higher as there was a scramble to secure both feedstock as well as the demand that came from inventories and the like. Within Australia, where we're a big consumer of diesel, there was record Australian diesel premiums, which is the premium both for refining capacity and physical delivery that was on top of the Brent crude that we see on our screens all the time. Within DRC, asset prices compared to budget, which is when we would have thought around price points at the beginning of the year or cost points. DRC asset prices up 40% for us against budget, and sulfur price at Murren, which is a big user of sulfur as part of each HFL process, against budget, it was up 67% sulfur prices. So there has been a big cost impact, as I said, largely transient. How long this lasts for is anyone's guess at this particular point. I suspect for as long as it lasts, we'll see negatives in cost, but we're going to be compensated more out of the price impacts as that supply is generally constrained within those businesses. Those currencies were Australian dollar a bit stronger, and it was 0.3 of that 0.4, and South African rand was 0.1. They were both up around 10%. Positive variance within the other I mentioned before was the stronger refining contribution coming out of the oil business. If we look at marketing on page 11, very strong contribution, 3.3, as Gary mentioned, up 142%. Largely, the increased delta was out of our oil and gas business through its various products from crude to gas. to refine products, to freight and the likes. Just mathematically, we thought it useful. I think the graph on the bottom right is very useful around a very long-term history, 19 years track record within this business is where we've been within that range. You can see a strongly and consistently cash generator over the cycle. It's allowed material distributions back to shareholders, reinvestment within growth in the business as well. The big spike out there, the 6-4, was back in in Russia Ukraine period 2022 what we've done just to plot a number we've taken the half year of the 3.3 billion and we've looked at the midpoint of the middle and top end of our current range so our range 2.3 to 3.5 the midpoint is 2.9 so we picked the midpoint of that in the top end which is 3.2 and that's where you get the 4.9 just to put a mathematical placeholder I think as Gary mentioned basis conditions that's a that's sort of a good sensible number that we think is it is neither conservative nor nor necessarily aggressive we'll need to see how the world plays out over the next sort of six months July started off reasonably well as well so you can see a very strong performance more recently consistently achieving above the above the particular range if we look at the net debt capital allocation again the graph that we show from opening net debt to closing net debt of 10.2 reduction of 1 billion strong cash flow generation 8.1 billion that we have there then we'll look at a slide on capex later on but there was cash flow 4 billion expense during this particular period there was some either one-off and non-traditional capex which i'll talk to there were certain uh payments that we made to affect the uh securing of land at kcc which we announced back in february that that after many many years had had reached its resolution and that liberates and allows that business to reach its full potential as we go forward and we're starting to also spend more money than historically around as gary went through those slides on the copper pipeline um something like in antipakai koreg waika we're starting to secure some land and various other early works that's happening towards progressing those particular projects. So we split out CAPEX later on between what's the more traditional CAPEX and then we've got our copper growth projects. We're starting to spend a bit more money in copper growth, which I think is evident that there is both movement and momentum within that particular area. We generated 0.2 billion of net investment disposals. Primarily, there was 300 million, a small parcel of the century shares, which we sold in Q1. Increase in non-RMI working capital. This had to be very tightly managed and watched and controlled and monitored clearly during a period of high commodity prices, increased volatility, very large margin call environment that we had as well. This was fairly modest compared to the big out turn that we had back in 2022. And the big difference here is that it's been volatility more at the shorter end of positions and shorter end of delivery of oil and gas and metals and the like back in 2022 was very much from the LNG story where we had movements around TTF that was many many multiples of what we've seen in this particular environment but at point nine I think it's been quite well managed and quite controlled within that point four billion is non RMI inventories we've got some cobalt in Africa. I'll talk a little bit about that later on until we're able to ultimately export that and sell it into the markets. $1.2 billion, the net margin calls and physical forward transactions. We went to town across sort of how that all works in terms of the working capital cycle. That was quite well managed, quite well contained. We'll see subject to prices and variations that may unwind, it may stay there, it's subject to obviously the trading book and the likes and volatility and prices as we move through, but I think you'll all agree given the marketing earnings of 3.3 and the volatility and how much has been put on the balance sheet that's been well managed and is relatively modest with good paybacks in terms of working capital. There's also a little bit goes through this category that doesn't necessarily still on the balance sheet, but it just sits in working capital on the cash flow statements where we spend rehab to deliver on our rehab obligations and bring down that provision there was point three billion that was spent there that's not coming back that's obviously more akin to an operating cash flow pleasingly it's worth noting I know some of you track that our rehab revision if you look at the balance sheet actually came down seven hundred million a point seven billion four billion of that did relate to disposals of subsidiaries we had kid we had lady Loretta went a Columbia port all of which had some rehab obligations that we've discharged that over to the buyer. So I think all very accretive transactions, notwithstanding that they may not have generated upfront cash to bring down the rehab liability by 0.7 during the period and 0.4 just bases disposals and we'll continue to look for opportunities that may present themselves there. Our debt was down to 10.2. We just jump onto page 13. How we've thought about capital returns is fairly consistent with how we've approached over the last 12 months, starting at taking out the marketing leases and the second share of the distribution from the one that was declared at the beginning of the year. That would get our pro forma net debt, if you like, back to the $10 billion. But as we've done over three periods now, we do have the value of the bungie stock. It's worth currently about $3.5 billion. It's out of lockup at the period. Do not expect us to be doing anything necessarily tomorrow or soon. Or anything that's disorganized or messy. We're looking for a Longer-term or not necessarily longer term but maximum value creation for Blancor over how that asset is ultimately monetized Working in coordination with the Bungie team. We're very supportive of Greg and John and the team and what they're doing They posted good results the other day. The business looks like it's got momentum There's good synergies. We like the thematics of everything going on We're happy to sit on that stock for a while as we navigate the best pathway towards eventually monetization but it's now it's liquid it's it's a strong valuation it's surplus capital in our view and we think it's it's it's but conservative and appropriate from shareholder perspective to be dispersing already or to be advancing some of the eventual monetization of that towards shareholders that's where the 1.5 billion we've chosen a billion of cash a half a billion of buyback if you look at that in relation to three and a half billion of value one and a half. That's only around 40%. So that's quite conservative. That's roughly a thinking that I think is sensible. We'll continue to think around in advance of eventual monetization that 40%. So it still retains $2 billion of surplus capital beyond the $1.5 billion that we have announced today, split between cash and buybacks. We look at the capital within the business as well. The main thing to call out relative to guidance at the beginning of the year, which is $6.5 billion, we've pushed that up five percent on average over three years to reflect the inflationary environment that we've been in. Somewhat higher than, I would say, general CPI. You've had factors across weaker U.S. dollar, high energy cost, general industrial capital goods. If you go out there and secure your caterpillar machinery, your dozers, your excavators, you want to put a construction project out there, civil engineering, you would generally find that you'd be looking at five percent over a blend of projects that we have some are more expensive some are less expensive some in different currencies some have efficiencies but five percent is what is what we've applied across having done some thinking and some work and then looking at some tangible tenders that have gone out for some of these projects the first half of the year the 3.9 billion is what means what's been capitalized onto onto industrial capex compared to 3.4 something to call out which is what I referred to earlier on, is that most of that increase was in respect of the copper portfolio investments, particularly to secure land access to support that copper growth and operational flexibility. So if you look at the bottom down there, $0.3 billion was spent to secure the land access at KCC. That's all been done. It's all registered. We're raring to go, and that's all part of the future sort of planning, and we'll be delivering quite soon on that particular package that was secured. Antivakai Kurokawaika, also one of those projects as well. Also 0.3, some ongoing spend across Mara El Pachon and New Range and the like. And you can see on the top right, copper is where the big increase period on period. It's a lot of it's to do with those copper growth projects, but generally 5%. Probably tracking similar annualized at the first half to where we are at the second half in terms of the run rate. Of the 6.8 billion average, we were always expected to be a little bit higher in the year 2026 over 27, 28. There is a heavier CapEx investment period, particularly EVR. They finish up their water treatment projects. That then tapers off in a year or two and finishing up a few projects, which we're wrapping up now around Onaping Depth and some of the Kalawasi growth projects that they've had in the past. If we look across to slide 15, I think it's important to just take stock of the results where we were for the first half. will then roll into cost evolutions and then give you a 2026 full-year illustrative EBITDA guidance. It's good at dissecting the $10.1 billion page. 26 has all the details and the numbers within the appendix, but the copper business on the left, you can see where peer-on-peer went from $1.1 billion to the $3 billion, and volume also helped there particularly. It wasn't only prices and costs that came down, but we're up 15% in volume within the copper business. As I said, Africa was plus 55 and Tamina plus 28, and we lost MICO, the Mount Isa copper operation, which shut around July last year. Realized prices was up about 40 percent, costs actually, both volume and primarily on a volume basis. We're actually down at 208. We were down from 225 in the first half of last year. So a strong margin and strong contribution on the copper side for the first half with good volume momentum coming through. The zinc business compared to 12 months ago is 0.9 to 0.9, notwithstanding that we had some volume reductions as well. Lady Loretta, another mine that's part of the ISA complex, shut towards the end of last year through end of life. There was volume reductions down there, but higher realized prices cost sort of as you were, and that's with the lower gold prices as well. The steelmaking coal and the energy coal, we've seen margin expansion across both realized prices portfolio realized prices 2069 for steel making calls up 24% energy coal was up 19% on on 93.9 and EVR or steel making coal tracking a little bit lighter in terms of in terms of volume so you'll see a pickup in h2 when we look at the full year 26 outcrop as well so all the details are back in back on page 26 if you want to look at that I think important to just focus on costs And then we'll wrap up with a 26 illustrative number across the zinc business. Very strong byproduct business, of course. Yes, it produces zinc, but we produce a lot of gold. We produce silver. We produce lead as well within that business as well. Compared to the beginning of the year, earlier guidance was for a bigger negative. The main difference as to why it's still negative and slightly lower negative is to reflect the fact that the precious metals byproduct value has decreased in mark-to-market terms since we're sitting here in February. Gold prices were $48.54. They're now a little over $4,000, so it was $82,000, now $58.7 as well. So that reflects in lower byproduct credits and a slightly less negative cost per ton of zinc produced within that particular business. What we have done is reflect in the full-year number the sale of KID on the 1st of June, 2026, which actually implied a production upgrade because we didn't change our overall zinc guidance for the year, which was 20,000 tons of zinc. Both those extra zinc volumes as well as the fact that there is higher sales expected, H2 over H1, all of that contributes towards actually a lower full-year cost for zinc compared to the first half. You can see we've gone from pre-byproduct 283 to 254, somewhat counterintuitive given cost evolutions, but strong volume benefits and the upgrade, also the volume that we have over there. Within the various coal businesses, relatively modest increases from cost guidance from February, notwithstanding some of the higher prices, particularly on diesel. We haven't assumed, we've assumed going forward that there is some moderation. Brent crude in the 70s, Q2 was obviously much higher than that, But that correlates with prices to some extent as well. We've had some favorable effects, particularly in Canada. And in both businesses, steelmaking as well as energy, there is some uplifting volumes from H2 to H1. So in both those commodities, you've got the full year cost performance coming below where H126 is, as calculated, which 2026 forecast is an average for the year. So the actual outturn for the second half will even be lower to deliver that mathematical blend between the two. We'll look at the outturn on that also later on. The copper unit cost, page 17, slightly busier slide, but worth just spending a few minutes on this, given where we've seen some of the biggest impact, particularly in costs having to be absorbed, bigger byproduct impacts, streaming impacts, and a little change in what we're doing also around operational efficiency and value-add initiatives that we're doing within the Africa business. The first area just to call out, and we highlighted that both in the production report in Q1 and Q2 last week, was that now we're increasingly not taking the cobalt production to its final salable hydroxide form. There's multiple benefits in that. There is some variable costs in doing that, but it's also more energy-intensive. It's reagent-intensive. it's space intensive the security concerns around around bagged cobalt so we say we're releasing it more into solution which is quite far into the process when we do come back and liberate that and produce a final hydroxide for future sale that's quite easy to do down the track that's also why we're using reported cobalt production much lower in the levels of the going through and you can expect that and why cobalt production final cobalt production guidance was withdrawn a while ago because this is a month to month quarter by quarter proposition as to what's the the most value creative way of doing that the implications of that is that the cobalt in solution the balance sheet at least is capitalized as a much lower value than what what hydroxide would be this has led to a temporary non-cash increase in the derived costs of 11 cents per pound compared to the February guidance this is clearly going to reverse as the material ultimately gets processed and sold, and when it does do, it's going to artificially reduce the cost that we then report at that point because we've already expensed the cost at this point and are capitalizing at a very low level. So there was 11 cents impact there relative to the guidance that we were at the beginning Mathematically, that would have translated that's about $200 billion of reduced EBITDA and a high unit calculated cost on a full year basis of 810,000 tons of sales. The other key area in which we've tracked the February guidance on a pre-buy product from 230 to 277 is very much these transitory effects around fuel, sulfur, and sulfuric acid. DLC assets for us are incredibly exposed to these costs, both in its location, landlocked, freight advantages, clearing borders, taxes, impasse, everything that's logistically involved in securing and keeping critical levels of supply there. The other thing, we're producing cathode and not selling concentrate. We haven't got the benefits of the low TCRCs that comes through the Latin American portion as well that we have. So location processing methods are very relevant over there. We've shown in the graph at the bottom 30 cents per pound of fuel, sulfur and sulfuric acid, and the graph on the right shows how the evolution of those prices landed costs across what is fuel in Latin America, fuel in DLC, sulfuric acid, and sulfur in those You get the triple whammy of the landed costs, not only product price. You've got to deal with freight. You've got to taxes and duties. There's all these elements that ultimately manifest. We think these are transitory. They are part of the cost base. and the process and the focus very much in Q2 was on security of supply the instructions here from the teams from copper from the procurement teams was do what we need to do to make sure that this asset continues to focus on production deliver production there's no controllable losses pay what you have to do work out what you do switch swap whatever sort of was was necessary at the time and clearly the that was important to get through what was a very sort of unpredictable and sort of crazy period around raw materials and the likes. All of this, if you look at the copper growth we've delivered on tons, you look at the EBITDA performance in Africa, for example, first half 2025, 45 million. H-126, over a billion dollars. The key is to get tons out the ground there. And if it costs you a little bit more because you need to focus on just making sure that you secure these products and materials, then that is what it is to some extent. Of course, we're not going to be wasteful. We're going to be thoughtful. We're going to be sensible. We're going to create competition in the market as much as possible. But it's had a large impact in where we are today, at least for a full year out turn of two or three cents a pound on mine costs. And then you add a little bit of your, and then the byproducts and some of the streaming effect that does work its way up through the system. We think that's given those costs and the key thing out of this business in this environment 14,000 copper we want tons in terms of how that's how that translates then into the illustrative 226 ever dark we focus just on the copper business or to the left so this is this is baking in six months of actuals and six months of indicative results for 26 basis the curve that prevailed around the end of June and the cost environment that we see for the for the rest of the six months as well production mix doesn't have as much of an impact around copper zinc and energy coal the one we'll see later on it does where second off first off is 44 and 56 if you look back at our production report which we showed as well so copper at 840 production slight upgrade given there was previously some kid tons of around 10,000 that was in there at a realized price conservative now against 14,000 I think that was using 13 and a half thousand or so was the price so if we ran this at a true spot number today you'd find some high numbers within the copper business and overall six five with a bit of development project coming through on the zinc side you're at you're at 1.9 billion on steel making coal you're at 2.7 that's much higher than what we were in first half which is 1.1 so you got one six and second half and that is very much a an h1 h2 split we were at 13.5 million tons in first half 17.5 million tons in the second half to give the 31 full year and energy coal is 1.1 again a slight tick up in terms of volumes as well annualized pretty much the other which is the oil the aluminum the ferro alloys the nickel and some corporate overhead and that's where I spoke about the 4.9 billion EBIT number on marketing which was first half plus half of the half of the top end and that gives 5.6 billion of EBITDA. We were 3.6 for the first half, so you've got 2 billion modelled for the second half, all of which this shows a sort of extrapolating out pretty much 1 plus 1 equals 2, around $20 billion of our 10.1. We do have a pickup within the industrial business, some in copper and some in steel-making coal. So with that, I'll hand back to Gary. A lot of good momentum and cash generation in the business.

Thanks, Steve. very comprehensive review. We'll finish off just where we sit for 2026, our priorities and how we uniquely positioned. Sadly, we have had a regression in some of our safety measures and metrics. We've lost four of our colleagues through two incidents. This has been a real wake-up call for us in this business. Safety is our number one priority every single day of the week in everything that we do we've made tremendous progress over the years and having these two incidences and losing four of our colleagues is has been a as I say a wake up very jarring for us as management very difficult for our operations there is significant work being done to redouble our efforts to strive for zero harm and 100% safe environment for our business we're learning from these we're working hard, we're doubling down and this is not something we can accept. It is our number one priority. In terms of our business and operational excellence, we continue to deliver operationally in a disciplined cost manner to make sure we get the tons out as we promised to the market. Our first-off production guidance or outlook or output has been delivered within the guidance and are on track for the full-year guidance to meet our full-year guidance. Costs have been impacted as Steve took you through by some of the very higher diesel, sulfur and the likes, but operationally we're very comfortable with how the business is performing across the board, both on the bulks and the metal side. Organic growth is a key priority for us. I took you through slide, I think it was slide five on our copper portfolio, our leading copper portfolio, which we continue to de-risk and successfully grow. We're well positioned to achieve our million tons of baseline copper production by 2028 and our 1.6 million ton ambition by 2035. As I've said, that 1.6 million can be higher if we decide to accelerate and do multiple projects at the same time, depending on market conditions. And as mentioned earlier, and very pleasing that even the Alambrera restart ahead of schedule, and we're hoping to see tons in the back end of 27 as opposed the first half of 28 so that's ahead of schedule we maintain a very strong balance sheet and a commitment to a minimum investment grade credit rating so very strong balance sheet very cash-generative business and that'll ultimately leads to what we have for at the end of the day which is value creation for shareholders we want to deliver predictable base shareholder returns and we top up when our framework allows that during the course of 2026 we've announced three and a half billion dollars of returns to shareholders and And to enhance our share registry, we've also now stayed our listing in October on the ASX exchange. And with that, we'll turn it back over to the operator for Q&A.

Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To register your question, please press star 1 1 again. We will now take our first question. From the line of Jason Faircliffe from Bank of America, please go ahead.

Yep. Good morning, guys. Thanks a lot for the presentation. Two quick ones from me. First would be just on your new BFFs in the DRC, so Orion Critical Minerals and the DFC. I'm just wondering if we could get a bit of an update. Has anything happened since the non-binding MOU back in Feb?

Thanks, Jason. Morning. Thanks for your question. On Orion, yes, we're making very good progress with Orion CMC. They've got a very good team working on the due diligence. We have had a slightly slower process than both of us would have hoped for because of Ebola. Not that Ebola is impacting our operations. In fact, the Ebola area is nearly 2,000 kilometers away, So it doesn't impact our operations, but as you know, there's some travel restrictions into the DRC for people who need to travel to the US. If you go to the DRC, you cannot travel to the US for three weeks afterwards. So the ability to get to site and complete due diligence and meet with management and things has been slightly slower than expected, but we are making good progress with them. We do expect in the second half of this year, this half of the year, to be able to finalize that process.

Okay. Second question, just on trading, and if you like your self-imposed risk limits. If we go back to 22, we had that extreme volatility on the back of the Ukraine war, and I think you ended up having to go to the board to get exceptions for exceeding risk limits. Now, we haven't seen similar announcements this time. I'm just wondering, how different is it?

Have you changed the way you manage risk in the trading business at all, or is it just a different situation? um we i mean if you took it pure metrics of var you haven't seen the extreme swings that you saw in 2022 um we have had we kept our our board uh fully uh briefed on on where we are there have been some waivers but at a much lower end and much less extent than we saw in 2022 the volatility hasn't been extreme as extreme if you remember in 2022 you saw thermal coal prices hitting 400 a ton. So you had much more extreme volatility in 22, which meant that these breaches of any VAR limits and the waivers that we received from the board was something that became more recourse in 22. In 26, yes, we've seen much higher VAR implied volatility in the market. There have been certain areas where we've gone to the board for waivers, but it's been a much lower limits and much lower breaches than we saw in 22.

Okay. Thanks a lot, Gary.

Thank you. We will now take the next question from the line of Liam Fitzpatrick from Deutsche Bank. Please go ahead.

Good morning, Gary and Steve. Two questions from me. First one on the ASX listing. Can you share any of your own analysis in terms of how you think this could improve your multiple overtime? And how high do you think the ASX ownership could get over, say, the next two to three years? And then the second one, just also on disposals, any commentary on KazZinc and what's going on behind the scenes there?

Not much we can say on KazZinc, Liam. On the ASX, look, as I said earlier, we've had a lot of reverse inquiry of investors who want to invest in our share. They see the implied value in our share. They see the underlying value. They see the growth story. They see our copper portfolio. they see the cash generation of this business, the quality of the business, and they want to invest more in our stock. For various reasons within their own funds, they are restricted on what they can invest. So very pleasing that we can put this listing down in Australia and see that demand eventuate into holdings in our stock. And with that extra demand, we would naturally see a potential multiple re-rate or multiple uplift. In terms of the volume or value, let's say the volume or percentage holding of our stock in Australia. I mean, it's not, there's no hard and fast rule here or hard and fast goal. We do have an ambition to at least be ASX 200 within 12 months. That's a billion and a half Aussie on the ASX line. We do certainly believe we can get to the ASX 100, which is five and a half billion, give or take five and a half billion Aussie on the ASX line. And what gives us comfort on that is, as I said earlier, is on the South African line, where we have 8% of our register in South Africa, which is close to 10 billion So there's no reason to believe the Australian market, which also has that same level of understanding of the resource industry, interest in mining, and also for different reasons, some capital, which is restricted in some shape or form from being able to invest in us in the London line. So there's no reason to believe we can't get any close to the South African line or even beat the South African line in terms of the amount of value sitting on the Australian line.

Thank you.

Thank you. We will now take the next question from the line of Matt Green from Goldman Sachs. Please go ahead.

Hi, good morning, gents. Congratulations on the result. Steve, if I can just ask you on the billion dollar cost out program, how is that tracking?

You've touched a lot on the presentation today on some of the external cost pressures, but I think overall costs were reasonably well contained so how much of this has been external and perhaps you could just touch on the controllable costs increases that you've seen and how that sort of ties in with the cost our program thanks man i'm actually pleased you raised that because it is a call out to the teams that have been focused also on that continued journey it was 12 months ago we were sort of had the had the target and we said that half of that would expect to be delivered in 226 already so they were relatively i mean 225 they were pretty well advanced so that was locked in There was about a billion 500 came through the business by the end of the end of 25, pretty much at target around sort of where we are at the moment, 80, 90 percent of the way there. So that would have been somewhat, unfortunately, sort of sort of sort of out shadowed and outflanked by some of these other sort of external factors. But those, at least, when these transitive factors on cost and fuel and diesel reverse, those others have been permanently delivered and permanently embedded in the business as well. So the team's done a good job and they have delivered.

That's great. And Gary, perhaps one for you, more for a hypothetical question. We're seeing, obviously, copper concentrate market's been incredibly tight and the spread between benchmark and spot TCRC is pretty wide. Some of the miners seem to be, there seems to be a bit of momentum here to move away from benchmarks. So I just wanted to ask, what's Glencore's view on where this market could evolve into next year? And on a net basis, what could it mean for your company?

I mean, yeah, it makes sense given the dynamics that we're seeing in the market that, you know, these long-term benchmarks, and we've seen it in many other commodities, Matt, where you've seen, for example, the, I mean, it's a small thing, but the Chrome benchmark has fallen away. The Newcastle coal benchmark is virtually non-existent anymore. Having these long-term benchmarks within a market which trades more and more on the spot market and is more volatile, it makes sense to actually trade these things more on the spot market than have these long-term benchmarks. So not surprising for us. It's very, you know, we have no problem with it, given that we're a producer, but important, a trader marketer as well, where we can take advantage of the continued volatility and movement in these in these differentials and the TCRCs. So for us, you know, we think quite beneficial.

That's great. Thank you.

Thank you. we will now take our next question from the line of miles also from UBS please go ahead great thank you maybe a few quick questions the sale to Orion if we annualize first half it's four and a half times EBITDA and yeah that's before yeah we're seeing the Mutanda expansion and KCC operating fully are you sure that that's the right move to kind of lower kind of your ownership at such a low valuation? So first question.

Good question, Miles. What we've agreed in the non-binding MOU is to enter into a process with them where they would buy 40% of our operations and we give a, I mean it was actually a rate, there was a range of values and it was an indicative range in the non-binding MOU subject to them doing due diligence. Now, in that time, certain things have happened. Markets change, valuations change. You've seen cobalt prices move, copper prices move. They're obviously doing the due diligence on the comfort they get on our operations around having access to the land. As I said, we've got the Matanda sulfides feasibility through the process. So that was just an indication of value. That's not a locked-in value that we are going to sell at. Like we're, you know, and to the first question from Jason, which is the right question, update on it. It is progressing. But what happens in the second half of the year, they have to finish their due diligence. And then we have to sit down and have a commercial discussion with them and agree something that makes sense for both parties. So that number that was put in the announcement is not a locked in number. One has to look at all elements that feed into this. It's their due diligence, the market, the outlook, the multiples, as you rightly say, Miles. But there's also the strategic element of having the U.S. effectively as a shareholder of those operations with Glencore, a joint shareholder, and building out that business together. So all those will come into the mix when we sit down with Orion, once they finish their due diligence, to work out what the real commercial terms of this transaction look like.

Okay, so we could see more than 40% of $9 billion. And maybe the other kind of surprise in the first half is, you know, some of the cold prices. They really have not responded to the energy shortage. I mean, what's happening there? Do you kind of see potential for thermal coal to lift or should we live with a 120, 130 type price for the foreseeable?

Well, I think we have seen them lift. They are, you know, sort of 130, 135. They were lower pre the conflict. So you probably have, let's give it, say, 15 or 20 back since pre the conflict. So, yes, what's very different this time around to what we saw in 2022, so your question is a good question, and I did mention earlier to Jason's point, we saw coal at 400 back in 22. In 1922, Europe was the driver of additional coal demand, where Europe used to import sort of 30 million tons of coal. In 1922, they imported 82 million tons of coal, and that drove the coal demand because they didn't have the gas online that they could bring in U.S. LNG and re-gasify for use to replace Nord Stream. In this instance, it hasn't been a European story. This has been a story about Asia and their ability to attract LNG. They have been paying higher prices for energy, but they have also been buying additional coal to be able to run their utilities using coal. So there is a, we have seen an uptick in some demand, and that's why you would expect prices to increase like they have. But it's not to the same extent that we saw in 2022, where effectively, if Europe didn't buy coal at any price, the lights were going off. So that's why I think you haven't seen such a massive rise in coal prices, but you have seen a rise in coal prices. What I think we have seen, and this is very interesting for the long term, because everybody Everybody's, of course, we're all fixated on the short term, and if the car price is down $5 or $10, and then the share price goes down, or if it's up $5 or $10, the share price goes up. We know that. But what we have seen is there's a clear recognition from both countries and utilities around the world that energy reliability and the ability to continue to provide energy through crisis is critical. And two energy crises in four years has really sharpened their minds, and they're resolved. There's a view, and it's becoming a much stronger view, that putting all your eggs in one basket, as Europe did in 2022 with Russian gas, that putting all your eggs in one basket is a fuddy. It's not something one should do. So we are seeing that many generators are looking to extend the life of their coal fleet, keep them running. It may be very nice to burn LNG, whether from a cost perspective or a climate perspective, but they want to keep their coal fleet going in the event that they don't know where the energy crisis is, the next energy crisis comes from. So longer term for energy coal, there seems to be a step up in base demand, which would obviously play into a higher long-term coal price.

Thank you. We will now take a next question. From the line of Alan Gabriel from Morgan Stanley, please go ahead.

Thank you for taking my question and good morning everyone. A couple of them. I think the first question is for Steve on Bungie. So you still have two billion dollars in surplus capital. What does it take for you to move that into a different bucket that fits into your pro forma net debt and find its way back to shareholders? And also as an extension to that, orion minerals um can you give us a bit more clarity on the structure that you're thinking about for the deed um just to figure out if that also feeds into your performance and that calculation um that's that's the first question thanks so what was the second part of that quick question alan or which mineral are you talking about orion orion yes yes oh if we get the funds from that cell okay yes yeah i mean in terms of in terms of bangi it's uh it's i mean like everything in life you don't I mean our policy is around our sort of distribution is that it's largely going to be sort of money in the bank in terms of sort of

distribution and not in anticipation of but Bungie was the one that we had put in a separate category if you like as being something that clearly long term is not going to be part of our business it's something that has a day-to-day tradable liquid benchmark that someone can look sort of towards and say sort of Glencore is paying out a percentage of that that's more sort of validatable and more sort of transparent. So that sort of 2 billion, in fact, I mean, all of it, ultimately, I mean, if we were to in, let's say, I mean, 12 months time, we were to monetize half of that, well, then sort of 60% of that, because we're only paying out 40%. So there's still 60% clearly up for grabs, but as So as the value or as part of that gets monetized in whatever makes sense over time, in whatever fashion makes sense, well, then whatever haircut, because we're taking a haircut, we're being conservative, that haircut will then sort of translate as delivered and earned. It's not there at the moment. That's why we are being conservative. But the full two billion is clearly up for grabs. So over time, as that gets monetized in the most value created way for us.

And then for Orion Minerals?

I mean, Orion Minerals is the same, like any sort of M&A, I guess for us it needs to see how it ultimately gets realized. And that, again, goes towards sort of mechanically bringing down our debt and with the sort of 10 billion caps from our perspective, at least with Orion, would still be appropriate to be able to fully consider that for distributions to shareholders. I mean, the 10 billion cap, as I've said on previous calls, that cannot be locked in stone forever. There may be, if our business significantly shrinks in size or it significantly expands in size, then that $10 billion can toggle up or down based on an assessment of sort of financial strength relative to a strong BBB credit that we have. If we were to have spun out our coal business, that was obviously something that was socialized a couple of years ago. For the Glencoex coal, it couldn't have been $10 billion. Now, maybe once the copper growth comes through and we're one and a half, then maybe $15 is the right number. So for a minority share in Orion, it doesn't affect the $10 billion, at least in our sort of consideration. So all of that would come back. But what needs to consider around either the addition or sale thereof as to what potentially changes that over time, hopefully directionally up, because we want to be a growing business, not a shrinking business.

And the second question is probably for Gary. Gary, some of your peers are increasingly active on managing their portfolios, more aggressively looking for non-core assets to sell or monetizing infrastructure just to be a bit more capital efficient, do you see similar opportunities across your portfolio or are you contemplating formalizing a program similar to what your peers are doing in that sense?

And then we look at these things. You will remember in sort of 20, what was it, 21, 22, 23, we went through quite an extensive period of sale of non-core tail assets, we called it at the time, things that were not fit for purpose for our business and and didn't really move the needle match whether they were short life or for various other reasons didn't make sense so you'll remember that and we had that whole list of assets that we we moved through so there's not you know it's not like we have a long tail of non core assets they are assets that we do then ultimately do sell and and and you know Steve mentioned earlier we sold the port in Colombia we sold the kid mine and that we transferred with that a quite a big rehab liability that goes with it later retta we sold which was more of a business development massive the life had come to an end but by selling it to the next door neighbor they could extend their life we have some marketing arrangements over it there is a small transfer of some rehab obligation so those things do happen in a in an ordinary course but we don't have the sort of long list of quiet of non-core assets to sell because we went through that process three or four years ago where we've tidied up the portfolio very nicely with regards to infrastructure side assets yes we are looking at that and there may be some opportunities in our business Steve Steve's Steve's over there and he's looking at a couple of options and ideas obviously that's an issue around cost of capital cost of cost of funding and doesn't make sense for the business we have spent some you know a lot of capital at places like kawasi on the diesel plant in EVR on the water treatment plants so we do have the types of infrastructure that does lend itself to these kind of structures and transactions. Obviously, we want to do it not just blindly, but something that makes value sense, economic sense. And if there aren't a couple we're looking at, and if they do come up, it makes sense for us, then we would execute on them.

Thank you. We will now take the next question from the line of Ian Rousseau from Barclays. Please go ahead.

Thank you. Morning, Chance. Just a couple of questions, Firstly, just on the copper growth projects, you mentioned firstly on Kwewasi on the leaching potential to get to cathodes in Q4 this year. This seems to be a lot faster than the 28 timelines. I just wanted to get a sense of how has the scope of the project changed, what production should look like over the next few years. And then Kwekawaiko, again, seems like the catcher sort of opportunity and flexibility you were saying is exciting. But does that risk sort of delaying the FID decision, which I think you were still targeting for this year? And then just on the second question on the ASX listing, you mentioned sort of the opportunity for a valuation multiple. Just wanted to check, would you, as I guess some of your assets in Australia paying Aussie tax, would you be able to pay a portion of your dividends as frank? I mean, does that work for CDIs, and maybe just does this impact some of the reverse inquiries you've had from some of the listed Aussie mining companies you've spoken to recently?

On the franking, no, we don't get a franking dividend. This is just a pure secondary listing. It's not a dual listing like some of the other competitors have, so there's no franking on that one. Just to go back to copper growth and the leaching, yes, I mean, that leaching project is is slightly ahead of schedule and we hope to see tons soon. I wouldn't, you know, in terms of modeling the number of tons, it's going to be very small at this stage. You know, there's obviously the ability to increase that with the low-grade and oxidized stockpiles that we have that we can feed through that. So it's not something that we'd say, you know, we're accelerating massive amounts of volume. But what's pleasing is that project is proceeding ahead and we will see some tons sooner than we thought. but as I say, it's not material. We need to invest some money in that fund to be able to bring it up over time to be able to actually make that a material contributor towards the volume within Koyawasi. On Antipakai, Korokawaiko, Ketua, we're not looking necessarily to change timing or delay timing. It just gives us maximum optionality and flexibility. Now, of course, you know, maybe we do delay something six months. If we see something is a better value proposition by going to Ketra versus going to Korokawaiko and that it delays things six or twelve months well why wouldn't we that's not the base case we're not planning to do that at this stage but we do have that maximum flexibility and optionality given the size of the mineral or the extent of the mineralization of the region you know this is not a it's not a race to bring on the times it's about it's a race to bring on value for shareholders and if a delay of six or 12 months means you get better value to begin on a deposit that may be a lower capital intensity or higher volume or another operating cost that's fine but as we said today we're not looking to change the timetable we believe that we can keep to that timetable as I said within that portfolio of leading projects that we have we have a number of levels we can pull so even if we did decide to delay one we can accelerate others and you know Alambrera by itself is already going to produce tons in the first half of its second half of 27 as opposed to the first half of 28. Maybe we accelerate the Mutandasal path. So, you know, having that multiple project levers that we can pull across the board, if one is pushed out in timing through our own choice, because it delivers us maximum value through optionality and changes, well, we can always compensate for that if we want to somewhere else in the portfolio.

Okay, thank you.

Thank you. We will now take the next question from the line of Chris LaFamina from Jefferies. Please go ahead.

Hey, guys. Thanks for taking my question. So I just wanted to ask on the trend over the years in RMIs, which have been trending higher. I mean, I get it. You have gaming market share. Prices are higher. EBIT has been rising. So it's all good. But we also have a changing kind of geopolitical backdrop where you have deglobalization and distorted supply chains and, you know, moving stuff around the world is becoming more difficult. So my question is whether there's anything kind of fundamentally different in marketing that requires you to sit on higher RMIs going forward than you have in the past because of, you know, effectively deglobalization. I understand, again, that gives you a better opportunity to drive higher eBay of that business, but should we assume RMI is going to be higher going forward on average?

Chris, it's hard to be definitive one way or another. I mean, RMI is clearly working in terms of supporting a business that has, and I like that chart on that sort of slide where you can see recent performance and how that's structurally been moving north, and maybe I've got to revisit our range again. but the I mean in terms of RMI the departments it's not a free lunch I mean every every minute of every day they're paying for the stuff and it's there to recover sort of hurdle rates within the marketing business that is covering all costs and it's generating incremental return for the business if it didn't make sense to have that ton of copper sitting somewhere a ton of aluminum or that oil and storage it would it would disappear in a New York second so it's all sort of working pretty well. It's all quality. It's all, you can kick the tires at all the material. It's delivering the sort of results. So I'm all kind of happy around the sort of fundamentals. Now, to what extent is that foreshadows a structural world where supply chains are going to be creaking more and the friction and days on hand and shipping routes and Section 232 has obviously been a big factor in what's happened around anticipation thereof. U.S. copper stocks are kind of where they are. We're obviously participating in at, as sort of everyone else does, that's sort of there for opportunity set and generating commercial outcomes. So it seems, I mean, it's at, I would think it's foolish levels at the moment. So hopefully, not hopefully, care for what you wish for, but it could come down if things normalize a little bit. But that's not how things are presented over the last three or four years.

Do you still get the same credit from the rating agencies? I think it was 80% of the value of the RMI as a cash equivalent. Is that still the case? Okay.

Thank you. We will now take the next question from the line of Ephraim Ravi from Citi. Please go ahead.

Thank you. Most of the questions have been answered, but a couple of follow-ups. Firstly, on the non-RMI working capital increase of $1.9 billion, This half was much lower than the $7.8 billion or so I think you had in the first half of 2022. You did touch upon a more focus on shorter end of the curve this time. I guess the question is, obviously it was better managed, but were the market conditions on market margin requirement in exchanges or counterparties in general much lower this time around compared to 2022? and did you as Glencoe get better advantages or terms on that front from exchanges or counterparties in terms of margin requirements because you are proactive about it this time compared to 22? Because it's a big delta in terms of non-RMI working capital increase. Thank you.

Yeah, thanks, Ephraim. And it's well observed. I wouldn't say we were more focused on it this year. We were pretty focused on it in 22 as well. It's just that, I mean, And the main factors, frankly, back in 22 was on LNG and NatGas. So TTF at that point has gone nowhere near. Now it's obviously a bit higher during the year, but it went up seven times. Its standard deviation was sort of off the charts. And there was many billions of dollars that was tied up in hedging, exchanges, forward value. So, I mean, our entire sort of physical forward book on LNG net gas today is maybe around $500 million. That equivalent number was sort of $5 to $6 billion back then, just given the standard deviations. And you were having to then, you were in a hedge situation. You tied up more variation margin. The exchanges were, there was more systemic risk. So, of course, the exchanges were increasing the sort of initial margining. that has come off a bit, but not where it was two or three years ago. At the same time, you had the nickel chaos back then, which was also happening at the same time, where they actually stopped trading and revoked to sort of two days of trading. So it was a very different systemic exchange issue and concerns around overall sort of system counterpart risk that's somewhat subdued. So there was a lot more money that was tied up just to bolster up that. We were sort of hostage to that, so you just had to pay up. It was the ticket to play. Gas was a big factor that hasn't been as much of a factor this time around. So does gas come again and go crazy? That's the one part of our book and the overall industry's book that does tend to have longer-term positions around management of risk and hedging both at the producer level, the merchant level, and the consumer level potentially, but we haven't seen as much impact there. But that is a risk. I mean, if gas explodes in the next six months, we'll be sitting here in six months' time with an increase in working capital in the second half as well, which is okay.

Sorry, another question on the coal profitability. The benchmark or the reference prices have gone up, for example, in thermal coal by about, you know, 20-odd bucks from your first half spot illustrated. But your implied margin, a combination of higher cost and portfolio mix adjustment, has gone up only by about $11. So, like, the drop-through of that increased price is, you know, just about 50%, which is, you know, slightly disappointing. But would you say that, like, if coal prices go much higher from here, that drop-through could be bigger because you are not going to get the same amount of cost hit and probably a better portfolio mix adjustment benefit?

Part of the portfolio adjustment, and it's not a perfect – I mean, we have to give you – there's only qualities, there's different time horizons, there's premiums and discounts across the market. So we try and three, four times a year give you the building blocks that you need. Now, of course, if headline new culture price goes up, we do a lot of domestic business as well, Well, particularly in South Africa, some of that's fixed price at very crappy prices until the 30s. That automatically inflates the portfolio adjustments because, of course, you're not getting sort of another dollar. So you're just having to spread your margin over a different sort of denominator, if like. So we've always got higher portfolio adjustments as that headline goes up. I think we'll be out of some of those domestic tons at some point. Some of the Australian domestic, you still get export parity, but not often. It's a fixed price, some of it. So it's the whole mix around qualities, low quality, markets within markets. I think, as Gary's mentioned, China markets, what Indonesia is doing, whether Japan and others are paying premiums, JPU tons to the extent that any of them even sort of exist these days. So the markets are almost changing sort of week by week, and we need to give you the tools to be able to do it. Because, I mean, we find it difficult to model even here, and it's impossible to model on your end. So we need to three or four times give you the tools. And either disappointment or enthusiasm for these numbers, it just reflects the market as it's evolving.

Thank you.

Thank you. We will now take the next question from the line of Ben Davies from RBC Capital Markets. Please go ahead.

Thanks for the call. A couple of quick questions from me. Firstly, just given that you wouldn't get franking credit benefits with a secondary listing, I'm just wondering the value proposition of spinning out the coal, how that stacks up against the secondary listing, and whether you've had any feedback from investors on that potential coal spin-out following the last set of results.

No, that's not being contemplated, Ben. We're not contemplating the coal spin-out. We've had no suggestion from shareholders. We, as shareholders, are very comfortable with our strategy built on a world-class steam coal business, a leading steelmaking coal business, a leading marketing business, and a copper portfolio and pipeline that is terrific. So, shareholders are very comfortable with the portfolio. They like the portfolio. We're rewarding them through returns, and there's no view or intention to just fin our No one's ever said that that's got to stay like that forever. However, if shareholders change their mind in two, three, four, five years and they want us to investigate it again, of course, that's the shareholders own this company and will do that. But that is not the intention.

Sorry, Ben, also in terms of the secondary listing, I guess now compared to maybe two, three, four years ago, if you look at some of the Whitehavens and New Hopes, their registers have also matured and have sort of changed over a little bit in the last three or four years. So in terms of the sort of both sort of investability, appetite for, interest in, coal exposure, either even more concentrated or as part of a diverse portfolio has certainly improved and has increased over the years.

Gotcha. That's very helpful. Just quickly, you probably can't say much, but obviously there's been headlines on Radiant World over the past couple of weeks. But just in terms of how can we think about materiality, if it was a liability, what level would require separate disclosure? Is it a couple hundred million dollars or anything like that? And anything you can share color-wise?

Look, Ben, I mean, we're not going to go into details. All we can say is the exposure in our books is not material. You can do your own materiality calc basis, our earnings basis, our balance sheet basis, the company that we are. and it's, as I say, on the books, this is not a material issue, not a material exposure for us.

Gotcha. Thank you.

Thank you. We will now take the next question from the line of Richard Harts from Berenberg. Please go ahead.

Thanks. Morning guys, just a couple of questions. Firstly, congrats on marketing, but I was just curious that EBITDA margin of metals and minerals at 1.8%, that was pretty low compared to history i think the five-year trading average is more like 2.8 percent so i'm so curious as to why it's so materially below i wonder if you might just be able to help us out there and then secondly just on edr we went out to site a couple of years ago you talked good story but the mine seems to be underperforming so i think h1 annualized you're running at about 20 million tons um the presentation you gave us when we went to canada was 26 to 28 and a half and I appreciate H1 had some sort of one-off issues but I just wonder if you can give us and the market some comfort that you are going to hit those medium term targets of at least 26 million tons from from the EDR assets. Thanks.

Thanks Richard. I think we'll take them in reverse order as we mentioned or Martin mentioned earlier in the call.

David is here so he'll take that question first and then you can take the EBITDA marginal trading. thanks uh yeah as far as evr production goes i think we continue to see you know and make improvements to the underlying performance in that business um we're still very much committed to our medium and long-term uh trajectory for for evr we're doing a lot of work to do this that one of which probably the most important is delivering the frx project that permitting is going is going well. Particularly at the north end of the valley there at the fording operation, I think as we explained at the time between fording and green hills, business is significantly challenged from a permit perspective. As we have some of these short-term issues around both, you know, geotech, water, seasonality, and so on, it means that we don't have the working room available to kind of, you know, absorb those. We will see some short-term hiccups, but the underlying trajectory is very good. The business, you know, from an efficiency perspective continues to improve. So, yes, certainly committed to performing against the presentations that we gave to you guys when you were on site. And yes, you know, other than the short-term interruptions, the fundamentals are very good and continue to improve for EVR.

In terms of the margins, actually, it's not a number that we tend to focus on because the revenue line is somewhat irrelevant also within the marketing business. But, of course, in a higher price environment, you would expect that your derived margin percentage is going to shrink a bit because it's more about the absolute dollars of gross income and dollar per ton that you're able to generate on those flows. So I'd rather have certainly a bigger increase in absolute dollars if that comes at the sort of just mathematically you have a lower margin. That's just an outcome. I actually don't even know what our revenue number is for the six months. That's not something that we necessarily focus on, which is obviously important on the mining side. That's your EBITDA margin. That's your cash buffer, your 40%, 50% that we have. But within the marketing, I wouldn't pay too much attention to the EBITDA margin percentage. It's more around gross income, return on capital.

Okay. I mean, just to perhaps push you slightly, it's just more like when you have a high energy price environment, history shows that you've outformed on a margin standpoint. And I would imagine the same ever so slightly for a metal standpoint. But if you don't look at the margin, then fair enough. I just thought it was an interesting point to call out. And I was curious as to why it was the worst it's been in five years.

It's just the function of the higher prices, The actual earnings in the metals in absolute terms is amongst close to our sort of, it's upper quartile earnings. Last year was a record, so we're off a little bit from that record around the post sort of tariff and premiums and copper opportunities, the tightness, TCRCs. It's all good conditions. It's business as usual at a strong level, I would say. But if your copper price is up 40% and your zinc price is doing what it's doing, then that doesn't always translate into... It would be nice if it was a marginal. I guess you'd have the reverse is true as well. No, it's not. It's an interesting statistic rather than one I would ascribe too much weight on. Okay, helpful. Thank you.

Thank you. We will now take the next question from the line of Alon Olsha from Bloomberg Intelligence. Please go ahead.

Morning, guys. So just two questions. Firstly, on copper costs, at the full-year results, you presented some kind of indicative guidance for 2028 and 2029 copper costs, C1 costs of 118 for 28 and 108 for 29. Just given your raised guidance this year, are you still fairly kind of confident in those numbers or could we see that drifting up? I appreciate, you know, the comments around a lot of the cost increase in this first half or the increase to guidance is transient in nature. But just if you could give some color on your thinking on costs into next year and further out.

Yeah, thanks a lot. I mean, we wouldn't have, I think we need to, let's get through to the end of the year where we have a better sense on the transitory nature of some of these costs where they've settled down once there's more clarity and resolution around some of those supply chain disruptions that we've seen, particularly these ingredients around the fuel and reagents. So that is a factor that's impacted us short-term. Longer-term direction of travel denominator is very important in those derivation of costs, as well as byproduct credits, which has seen since that period of time, we've seen some of the metals, sort of metallic byproducts have actually increased so in copper business we've got zinc we've got various others precious metals which is also ever large exposure is actually contracted since then so we'll need to sort of recut the it's going to be a function of sort of byproduct evolution including cobalt very important within within our copper business we've made some assumptions within that within those numbers as to what period of time we'd be able to increase sales and at what price that product was going to clear out in those outer years which is sort of our own S&D and as much trying to get into the heads of DRC a little bit as to how they were going to manage quotas and prices around floors and caps or the likes of them being able to influence that market in a certain way. So we'll recalibrate all those factors which are the most material in those assumptions around 28-29.

Thanks and then just Final question on thermal coal. So I guess notwithstanding the comments you've made around the conflict in the Middle East and the tightness in energy markets kind of reinforcing thermal coal as a fallback fuel in the energy system, it does appear that the two biggest buyers in the seaborne market, China and especially India, seem to be slowly withdrawing from the market. So there could be a scenario where the seaborne market actually shrinks over the coming years simply because they're boosting their domestic production. But at the same time, what are you seeing on the supply side? Because that's not growing either.

So in terms of your kind of medium term outlook, could you see the market still remaining pretty tight because while demand for seaborne coal might be coming off a bit, supply isn't isn't growing either and kind of how do you see yourself positioned in that market in terms of growing growing share it's always an interesting market and difficult market to predict um I mean yes Chinese domestic coal is growing but it's been growing for the last 15 years or 20 years you know they're now every year is a new record 4.8 billion tons of coal so and that domestic coal doesn't always necessarily replace the imports you know You've seen how imports, they used to have that old cap of 200 million tons of imports and they blew through that and they're still well over 300 million tons of imports these days. So the fact that Chinese domestic growth or domestic is growing is not necessarily an indication of less imports. They are still building coal-fired power stations. It's probably just under 100 gigawatts of coal-fired power stations being built in China today. So they're still growing coal-fired power stations. And it's not only for coal-fired. We've seen an increasing growth in demand for coal to fuels and coal to liquids. Nearly half a billion tons of Chinese domestic production is used exclusively for that and not even in power generation. So a lot of the growth is, in fact, going into other forms of use of coal, and therefore the import of steam coal is still very important for the Chinese market. India as well, yes, coal India is growing, but they're also building coal firepower stations and are still very energy hungry. Look at the growth of that economy and the trajectory of growth and how energy hungry they are. And even now moving into the construction of data centers and the likes, they need all forms of energy they can get. That's not only renewables and coal, but it's not only coal domestically, but coal imports. So on the import side for China and India, we're not uncomfortable. You will see seasonal variations, whether it be weather, whether it be domestic, whether it be accidents, economics will drive what makes the most sense. So we're not concerned with the demand profiles coming out of China and India. The supply side, and you raise a very good point on the supply side, there are, in Australia, certainly no new mines being built and mines are shutting. We're shutting some of our mines as they come to the end of their economic lives or resource endowment. You've seen how we've taken tons off the market in places like Serrahan and would only bring those back on if the market actually needed those tons. Otherwise, we're very happy to run Sirahana at a lower rate. Drummond run at their rate, and they're not increasing any further. South Africa, money constrained by the rail, up and down a little bit, 5, 10 million tons, but there's no big change in South Africa. The interesting one is Indonesia, which has been the big supplier to the export market, and you've seen all the noise around restrictions on exports there. And that's driven around resource preservation for their own use. Like China, Indonesia continues to build coal-fired power station. It's a very strong economy that needs power. They're building a lot of aluminium smelters. They've got a lot of nickel smelters. They want to build data centers. The general industry is very strong and growing, and they need to preserve the resource to provide power domestically. So from a supplier growth perspective, although Indonesia has abundant coal, it's low-quality coal, although they have abundant, they are now starting to intervene in terms of how much can be exported. now we never know whether you know sort of how much what that limit will be and sometimes the limits change and the restrictions change and the life but there certainly is a move towards restricting some sort of exports for domestic use so that does also bode well into the into the supply side of it the supply demand dynamic for seaborne export coal great very clear thank you thank you we will now take our next question from the line of Patrick Mann

from Investec PLC. Please go ahead.

Good morning. Thanks very much for the opportunity. I just wanted to ask on marketing. So on slide 11, you said the indicative full-year adjusted EBIT, you know, if you purely mathematically take the second half as the mid to the top end of your long-term range, then you'd see 4.7 to 5 billion for the year, which obviously implies quite a big slow down from the first half, and I understand the mathematics of it. My question is, have you already seen a slowdown in the opportunities and the profits available in marketing, or, you know, if the current situation persists, is there still upside risk to that number? That's the first question, please.

Patrick, I think, you know, we're only one month in. July, I would say, would be an above average month, but certainly not to the same extent that we saw, you know, the sort of February, March, April period where, you know, things were very extreme in terms of supply disruptions, dislocations and changes. So yes, July, and that feeds into where Steve was saying, Steve's not even taking the, you know, the half middle of the range, taking the top end of the range for the second half. And so that feeds into that narrative that we are looking to say, We'll middle to the top end of the range. July was a good month, and it feeds into that mathematical calc.

Well, I mean, we sort of made some qualitative commentary around the fact that we expect, given geopolitics and the likes, sort of H2, sort of some above normal levels of disruption and volatility to still prevail, but nothing like what we'd seen in sort of H1. And it's particularly the initial reactions to an event where you see the most opportunities as that sort of gets, ultimately you find some sort of new equilibrium and trade flow. So first two or three months, very disruptive, then it settles down and then you're more dealing with the smaller sort of ripples. Does it de-escalate, escalate? These are obviously the sort of important questions. So we just sort of qualitatively, without specifically putting sort of a projection or an estimate out there, we're sort of giving some direction of travel. And, of course, it could be higher or lower, depending on multiple factors.

Great. Thank you. That's very clear.

The second question is, just on the copper price, I don't know if you guys are prepared to maybe just give a view on U.S. tariff potential and risks to copper price, both on the upside and the downside from here. you know everybody's waiting for the for the tariffs and i think um i mean you've seen the run-up about fourteen thousand dollar copper um there is that that's twofold one there has been you know strong demand um out of china but most of it is drawn um by comics and the um and the demand to front run any tariffs uh when do the tariffs come we don't know uh they or when the announcement comes we don't know um there are some stories that may come this week okay um that's That is having a disproportionate impact on spot pricing, no question. The ARB has been open for some time, and that's why you've had the stock build in the U.S. Once those are announced, whatever they are, whatever those tariffs are, whether it's zero, 15, 30, whatever it may be, it's likely to have some sort of pullback in pricing because the market then will have better knowledge of the situation. that are both closed and you'll have these high stockpiles in the U.S., which over time will be drawn down for use in the U.S., not to be exported again because the friction costs of exporting again make it very unlikely that they come out of the U.S. But the U.S. then no longer becomes a buyer once you know what it is and you've got the stock sitting in the U.S.

Great.

Thank you very much.

Thank you. That is all the time we have for questions today. I would now like to turn the conference back to Gary Nagel for closing remarks?

A very strong half for us, both on the production side and the financial side. Some nice announcements this morning around the ASX, an update on our copper portfolio, which is looking very good, our leading copper portfolio. Very exciting time for our business, and therefore we've also announced an additional return to shareholders of one and a half billion. Our confidence in our company underpinned by the fact that 500 million of that is in the form of a barback and a billion dollars in cash. So we look forward to another very strong half in the second half of the year. And as always, we're available for our stakeholders. Thanks very much.