South32

FOR FUTURE 
GENERATIONS

ANNUAL 
REPORT 
2021

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ACKNOWLEDGEMENT

We acknowledge and pay our respects  
to the Indigenous and Tribal Peoples  
of the lands, waters and territories on which 
South32 is located and where we conduct 
our business around the world. 

We respect and acknowledge the unique 
cultural and spiritual relationships that 
Indigenous and Tribal Peoples have to the 
land, waters and territories, and their rich 
contribution to society.

In the spirit of respect and reconciliation, 
we will continue to support initiatives that 
strengthen culture and ways of life so that 
their legacy continues and extends  
to future generations.

Contents

OPERATING AND 
FINANCIAL REVIEW

About us 

Overview 

South32 at a glance 

From the Chair 

From the CEO 

Our business model 

Our strategy 

Progress against our strategy 

Our contribution 

Risk management 

Financial and operational 
performance summary 

GOVERNANCE 

Board of Directors 

Directors’ report 

Lead Team 

Remuneration report 

www.south32.net

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FINANCIAL REPORT

Consolidated income statement  95

Consolidated statement  
of comprehensive income 

Consolidated balance sheet 

96

97

Consolidated cash flow statement  98

Consolidated statement  
of changes in equity 

99

Notes to the financial statements 100

Directors' declaration 

Lead auditor’s independence 
declaration 

Independent auditor’s report  

RESOURCES AND 
RESERVES 

Information 

Competent persons 

Accompanying tables 

INFORMATION

Shareholder information 

Glossary of terms and 
abbreviations 

Corporate directory 

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See the documents that make up the rest of our reporting suite at https://www.
south32.net/investors-media/investor-centre/annual-reporting-suite, including:

Corporate Governance Statement

Sustainable Development Report

Sustainability Databook

Modern Slavery Statement

Tax Transparency and Payments to Governments Report

Disclaimer:
This Annual Report is a summary of the operations, activities and performance of South32 Limited (ABN 84 093 732 
597) and its controlled entities and joint arrangements(1) for the year ended 30 June 2021 and its financial position as 
at 30 June 2021. 

South32 Limited is the parent company of the South32 Group of companies. In this report, unless otherwise stated, 
references to South32, the South32 Group, the Company, we, us and our refer to South32 Limited and its controlled 
entities and South32-operated joint arrangements, as a whole. Unless otherwise stated, financial information in this 
report is presented on the basis as described in the Notes to the Financial Statements basis of preparation on page 
100 and includes South32 and its controlled entities and joint arrangements (including operated and non-operated 
joint arrangements). South32 Limited shares trade on the ASX, JSE and LSE under the listing code of S32. Monetary 
amounts in this document are reported in US dollars, unless otherwise stated. 

Metrics describing sustainability and HSEC performance apply to operated operations that have been wholly owned 
and operated by South32, or that have been operated by South32 in a joint arrangement, from 1 July 2020 to 30 June 
2021. South32’s Sustainability Databook is available at  www.south32.net. 

Forward-looking statements
This report contains forward-looking statements. While these forward-looking statements reflect South32’s 
expectations at the date of this report, they are not guarantees or predictions of future performance or statements 
of fact. They involve known and unknown risks and uncertainties, which may cause actual results to differ materially 
from those expressed in the statements contained in this Annual Report. For further information regarding South32’s 
approach to risk, please see page 24 of this Annual Report. South32 makes no representation, assurance or 
guarantee as to the accuracy or likelihood or fulfilment of any forward-looking statement or any outcomes expressed 
or implied in any forward-looking statement. Except as required by applicable laws or regulations, the South32 Group 
does not undertake to publicly update or review any forward-looking statements, whether as a result of new 
information or future events. Past performance cannot be relied on as a guide to future performance. South32 
cautions against reliance on any forward-looking statements or guidance, particularly in light of the current economic 
climate and the significant volatility, uncertainty and disruption arising in connection with COVID-19. 

Information on likely developments in the Group’s business strategies, prospects and operations for future financial 
years and the expected results that could result in unreasonable prejudice to the Group (for example, information 
that is commercially sensitive, confidential or could give a third party a commercial advantage) has not been included 
below in this report. The categories of information omitted include forward-looking estimates and projections 
prepared for internal management purposes, information regarding the Group’s operations and projects, which are 
developing and susceptible to change, and information relating to commercial contracts.  

Non-IFRS
This report includes certain non-IFRS financial measures, including underlying measures of earnings, effective tax 
rate, returns on invested capital, cash flow and net debt. Non-IFRS measures should not be considered as 
alternatives to an IFRS measure of profitability, financial performance or liquidity. 

For an explanation of how South32 uses non-IFRS measures, see page 34. 

The meanings of individual non-IFRS measures used in this report are set out in the Glossary on page 165.

(1)  In this Annual Report, references to ‘joint arrangements’ mean operations that are not wholly owned by South32, 
such as joint ventures and joint operations. Joint arrangements are classified in accordance with IFRS 11 Joint 
Arrangements.

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About us

SOUTH32 IS A 
GLOBAL MINING 
AND METALS 
COMPANY

We produce bauxite, alumina, aluminium, metallurgical coal, manganese,  
nickel, silver, lead and zinc at our operations in Australia, Southern Africa  
and South America. With a focus on growing our base metals exposure,  
we also have two development options in North America and several 
partnerships with junior explorers around the world. 

1

Making a difference

Our purpose is to make a difference by developing natural 
resources, improving people’s lives now and for generations  
to come. We are trusted by our owners and partners to realise  
the potential of their resources.

See some of the ways we make a difference on page 20

Optimise, Unlock, Identify

Our purpose is underpinned by a simple strategy which  
is focused on optimising the performance of our operations, 
unlocking their potential and identifying new opportunities  
to create value for all our stakeholders. 

Read more about our strategy on page 12

Care, Trust, Togetherness and Excellence

While our strategy outlines what we do to achieve our purpose, 
our values of care, trust, togetherness and excellence guide 
how we do it. Every day, our values shape the way we behave 
and the standards we set for ourselves and others.

Learn more about our people on page 20 of our Sustainable Development Report

South32 Annual Report 2021Operating and Financial ReviewOverview

YEAR 
IN REVIEW

Total Recordable Injury Frequency (TRIF)(1)

FY21 Scope 1 greenhouse gas emissions against FY15 baseline

4.3

FY21

FY20

FY19

4.3

4.2

4.5

2

Community investment(2)

US$22.2m

FY21

FY20

FY19

US$22.2m 

US$24.5m 

US$17.3m 

Underlying EBITDA(3)

US$1,564m

FY21

FY20

FY19

US$1,564m 

US$1,185m 

US$2,197m 

16% below

FY21

FY20

FY19

16% below

10% below 

9% below 

Payment of taxes and royalties

US$569m

FY21

FY20

FY19

US$569m 

US$751m 

US$981m 

Shareholder returns(4)

US$670m

FY21

FY20

FY19

US$670m 

US$426m 

US$765m 

(1)  TRIF was adversely affected by a reduction in the total number of hours worked, see page 14.
(2)  Community investment consists of direct investment, in-kind support and administrative costs, see page 22.
(3)  This is a non-IFRS measure. For an explanation of how South32 uses non-IFRS measures, see page 34.
(4)  In respect of the June 2021 financial year. Includes fully franked dividends (interim ordinary US$67 million, final ordinary US$164 million and final 

special US$93 million) and on-market share buy-back of US$346 million.

South32 Annual Report 2021Operating and Financial Review“ 
We plan to deliver our medium-term emissions 
reduction target by investing in efficiency projects, 
shifting to low-carbon energy and adopting new 
technologies. At the same time we are increasing  
our exposure to the base metals required for  
a low-carbon future."

Graham Kerr, CEO

Highlights

〉  Announced a new medium-term 
target to halve our operational 
carbon emissions by 2035 from  
our FY21 baseline.

〉  Reshaped our portfolio by 

completing the divestment of  
South Africa Energy Coal and the 
TEMCO manganese alloy smelter.

〉  Achieved record production at 

Worsley Alumina, Brazil Alumina  
and Australia Manganese.

〉  Exceeded our initial production 

guidance at South Africa 
Manganese, Cerro Matoso  
and Cannington.

〉  Progressed the pre-feasibility 

study for the Taylor Deposit and  
a scoping study for the Clark 
Deposit at Hermosa.

〉  Delivered first ore from  

the higher-grade Queresas  
and Porvenir project  
at Cerro Matoso.

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Operating and Financial Review 
 
 
South32 at a glance

DIVERSIFIED 
PORTFOLIO WITH  
A BIAS TO BASE 
METALS

AMBLER METALS

Copper, Lead, Gold, Silver & Zinc

ROOSEVELT PROJECT

FREEGOLD VENTURES

Copper, Zinc, Lead, Silver & Gold

Copper & Gold

Office

4

Upstream operations

Downstream processing facilities

Development option

Exploration partnership/project

South32 investment

FY21 Key Commodity Underlying EBITDA 

US$2.1b(1)

4%

23%

29%

15%

44%

27%

58%

By Commodity

By Geography

Aluminium value chain

Base & precious metals

Manganese ore

Metallurgical coal

Australia

Africa

Americas

JUPITER PROJECT

Copper, Zinc, Lead, Silver & Gold

VANCOUVER

EMX ROYALTY CORP

Copper & Gold

SILVER BULL RESOURCES

Zinc, Silver, Lead & Copper

HERMOSA

Zinc, Lead, Silver & Manganese

CERRO MATOSO

Nickel

BRAZIL ALUMINA

Alumina

MINERAÇÃO RIO DO NORTE (MRN)

Bauxite

AUSQUEST

Copper & Gold

SABLE RESOURCES

Copper & Gold

MINSUD RESOURCES

Copper, Gold & Molybdenum

See Segment Reporting in Note 4 to the financial statements for more information

(1)  Includes manganese on a proportional consolidation basis and excludes South Africa Energy Coal (-US$123 million), manganese alloys (-US$24 million), the Brazil Alumina 

aluminium smelter (-US$3 million), Hermosa (-US$6 million), Group and unallocated costs (-US$93 million) and statutory adjustments (-US$300 million).

(2)  During FY21, we divested our interest in South Africa Energy Coal and the TEMCO manganese alloy smelter.

South32 Annual Report 2021Operating and Financial ReviewOur commodities
We produce alumina, aluminium, ferronickel, 
silver, lead and zinc, which have applications in 
construction, transport, consumer goods, renewable 
energy generation and battery storage and we 
mine metallurgical coal and manganese ore which 
are used to produce steel. We have operations and 
development options in Australia, Africa and  
the Americas and a geographically diverse  
customer base.

Discover more about our business model on page 10

Portfolio outlook
We are actively reshaping our  
portfolio to increase our exposure  
to the base metals critical in the transition  
to a low-carbon world. In addition, we are 
building our pipeline of opportunities by 
investing through the drill bit. We currently 
have more than 20 greenfield exploration 
partnerships and projects targeting base 
metals around the world.(2)

Discover more about our strategy on page 12

ADVENTUS MINING CORPORATION

Zinc, Lead & Silver

LONDON

JOHANNESBURG

HOTAZEL
MANGANESE MINES

Manganese ore

MOZAL
ALUMINIUM

Aluminium

HILLSIDE ALUMINIUM

Aluminium

HARRY'S LAKE PROJECT

Nickel

5

NORTH QUEENSLAND RESOURCES

Copper, Zinc, Lead, Silver & Gold

CANNINGTON

Silver, Lead & Zinc

SINGAPORE

PEGMONT MINES

Copper

GEMCO

Manganese ore

IFFLEY PROJECT

Zinc, Lead & Silver

AUSQUEST

Nickel

PERTH HEAD OFFICE

WORSLEY ALUMINA

Alumina

AUSQUEST

Copper, Lead, Silver & Zinc

AUSQUEST

Copper & Gold

ILLAWARRA
METALLURGICAL COAL

Metallurgical coal

South32 Annual Report 2021Operating and Financial ReviewFrom the Chair

A TRANSFORMATIVE 
YEAR FOR SOUTH32

The challenges presented by COVID-19 have remained with us 
throughout the last year. We have lost colleagues and our people 
have faced incredibly difficult times with the loss of loved ones 
and the many other impacts associated with the virus. 

6

Through it all our people have continued to 
work tirelessly to protect and support our 
people, our communities and our business. 
The Board pays tribute to everyone at 
South32, in particular the teams at our 
operations, for their continued focus on 
minimising the risk of infection and for 
the way they have stepped up to support 
each other and their communities in this 
challenging time. We are truly grateful to 
them all. 

In May 2021 we were deeply saddened 
by the death of Mr Petros Sibeko, a 
contractor who was working at the 
Klipspruit Extension Project at South Africa 
Energy Coal. We express our sympathies 
to Mr Sibeko’s family, friends and 
colleagues. Following Mr Sibeko’s death an 
investigation was undertaken to establish 
the cause and, most importantly, identify 
what steps we need to take to learn and 
improve. The Board has reviewed the 
findings and heard from management  
on the changes which were implemented  
in response.

After some volatility early in the financial 
year, commodity prices improved by the 
end of FY21. Our operations performed 
well throughout the year and delivered 
Underlying earnings before interest,  
tax, depreciation and amortisation  
of US$1.564 billion and free cash flow  
of US$825 million(1). The Group’s  
statutory profit after tax declined by  
US$130 million to a loss of US$195 million  
following the recognition of impairment 
charges totalling US$728 million  
(US$510 million after tax) in relation to 
Illawarra Metallurgical Coal and a loss on 
the sale of South Africa Energy Coal of 
US$159 million.

We ended the financial year with a net cash 
balance of US$406 million. We returned 
US$670 million to our shareholders in 
respect of the period. This included  
US$439 million as part of our ongoing 
capital management program, with  
US$346 million allocated to our on-market 
share buy-back and US$93 million returned 
in the form of a special dividend to be paid 
in October 2021.

During the year we completed the 
divestment of South Africa Energy 
Coal, marking a pivotal step in the 
transformation of our portfolio and the 
delivery of our strategy. Throughout 
the divestment process, the Board and 
management team focused on our vision 
of making the business sustainable for the 
long-term and transitioning it to become 
Black-owned and operated, consistent with 
South Africa’s transformation agenda. We 
are pleased to have completed the sale 
and fulfilled these objectives for the benefit 
of all those who depend on the business. 
We also divested the TEMCO manganese 
alloy smelter in Australia and placed the 
Metalloys manganese alloy smelter in 
South Africa on care and maintenance.

Climate change has remained a strong 
focus for the Board as part of its oversight 
of material sustainability issues, and also 
remains an area of significant interest for 
many of our stakeholders. This year we 
achieved our first short-term target and 
set a medium-term target to halve our 
operational carbon emissions (Scope 1 and 
2) by 2035, based on our FY21 baseline. 
This is both ambitious – which is necessary 
to achieve our net zero goal – and realistic, 
recognising that there is no definitive 
‘best pathway’ to net zero and some of the 
innovations we will need are not yet fully 
developed. 

Our approach to climate change is 
aligned with our purpose, integrated with 
our strategy and is focused on two key 
objectives – decarbonising our existing 
business and reshaping our portfolio for 
a low-carbon future by increasing our 
exposure to base metals. We will deliver 
this through decarbonising our existing 
operations, securing green energy, 
designing our growth projects to be carbon 
neutral and supporting the development 
of low-carbon technology. The Board 
sees this commitment as fundamental to 
the future of South32 and as a result has 
modified the executive long-term incentive 
(LTI) plan to include performance on our 
climate change commitments, with  
10 per cent of the LTI awards to be 
determined by the Board based on  
our action and progress. 

In recent years, we have added a number of 
growth options to our portfolio with a bias 
to base metals. We have also reassessed 
our portfolio’s resilience to transition risk 
using a scenario in which global warming is 
assumed to be limited to 1.5°C above pre-
industrial levels, to illustrate the resilience 
of our portfolio in a rapid transition. Our 
analysis shows demand growth for most 
of our commodities in a 1.5°C aligned 
scenario.

In line with our purpose, we want to make 
sure we are developing natural resources in 
a way that benefits our stakeholders. Trust 
and transparency are essential to the way 
we operate and we work closely with all 
of our stakeholders, considering different 
perspectives and working together to 
create shared value. 

(1)  Free cash flow from operations including net distributions from our manganese equity accounted investments (EAI). 

South32 Annual Report 2021Operating and Financial Review“ 
The divestment of South Africa 
Energy Coal marked a pivotal step  
in the transformation of our portfolio 
and the delivery of our strategy.”

Many of our operations and projects 
intersect areas of cultural significance 
and in FY21 we completed a review of our 
cultural heritage performance in Australia. 
The review informed where we need to 
update our approach to Aboriginal and 
Torres Strait Islanders’ Cultural Heritage 
and led to the development of a set of 
principles to guide our engagements 
on this important topic. The Board was 
briefed on the review findings and will 
continue to receive reports on progress 
towards addressing areas identified for 
improvement. Similar reviews in other 
jurisdictions where we operate are planned 
for FY22.

Our Innovate Reconciliation Action Plan, 
launched in September 2020, set new, 
more ambitious goals to build constructive 
relationships with Aboriginal and Torres 
Strait Islander Peoples. It is based on 
mutual trust and the recognition that we 
need to be an active partner to create 
positive, mutually beneficial outcomes. 
Good progress has been made in several 
areas including procurement, engagement 
and training. 

Workplace culture is an important part 
of driving long-term value creation for 
all stakeholders. The Board, CEO and 
Lead Team set the direction and tone 
for our culture. We work to create clarity 
and shared understanding with our 
people through regular connection and 
engagement, so that we are all working 
together to fulfil our purpose, deliver on our 
strategy and live our values. 

The pandemic has continued to disrupt 
the Board’s practice of regularly visiting 
operations and offices in the nine countries 
in which we work. These visits provided 
the opportunity for Directors to better 
understand the daily experiences of our 
people, the workforce culture and the 
communities we operate in. The Board is 
staying connected with our operations by 
way of virtual operational overviews and 
briefing sessions conducted as part of the 
scheduled Board programs. 

We are committed to providing a safe 
and inclusive workplace, one in which no 
form of harassment is tolerated. It has 
been concerning to see recent reports of 
incidents of harassment in our industry, 
and across society more broadly. We 
treat harassment, in all its forms, as a 
serious risk and we are aware that it 
is often under-reported. Victims and 
observers are strongly encouraged to 
report any incidents, knowing they will 
be treated with confidentiality, respect 
and sensitivity. We have reviewed the risk 
of sexual harassment at all our locations 
and identified several improvement 
opportunities including targeted 
campaigns that are underway to  
confirm our zero-tolerance approach.

Inclusion supports a culture where people 
feel free to speak up, and we believe in the 
benefits of building an inclusive and diverse 
team in South32. We continue to measure 
our progress against several targets to 
improve the representation of women 
across the business and Black People in 

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South Africa. We are pleased to report 
that the representation of women on our 
Operational Leadership Team increased 
year-on-year, however there is more work 
to do to meet our target of 20 per cent. 
During the year, we became a signatory 
to 40:40 Vision, an investor-led initiative 
to achieve gender balance in executive 
leadership across all ASX200 companies by 
2030. The global response to the COVID-19 
pandemic has changed perceptions 
of flexible work and highlighted the 
benefits it can bring to our business and 
our people. We are leveraging this shift 
across all our locations as we believe it 
will help strengthen our employee value 
proposition.

Looking ahead, we are strongly positioned 
to continue to deliver against our strategy 
despite the ongoing impacts of the 
COVID-19 pandemic. We will continue to 
prioritise work to protect our people, our 
assets and our communities. The work that 
was completed this year to reshape our 
portfolio will enable Graham and his team 
to focus on future growth opportunities 
that will create sustainable long-term value.

On behalf of the Board, I would like to thank 
our shareholders for their ongoing support 
and reiterate our thanks to our people for 
their unwavering commitment in these 
most difficult of times. 

Karen Wood 
Chair

South32 Annual Report 2021Operating and Financial ReviewFrom the CEO

RESILIENCE IN 
CHALLENGING TIMES

This year has come with many challenges – for our people,  
our communities, and our business. No one has been immune  
to the devastating impacts of COVID-19. I’ve been immensely proud  
to see our people around the world unite and show courage  
and resilience during these difficult times. 

8

We are deeply saddened by the death 
of our colleague, Mr Petros Sibeko, a 
contractor working at South Africa Energy 
Coal's Klipspruit Extension Project, 
following an incident involving the use of 
an Elevated Work Platform in May this year. 
It's devastating that Mr Sibeko did not 
return home at the end of his shift and our 
thoughts are with his family, friends and 
colleagues. We completed an investigation 
into the incident and shared learnings 
across the company, so that a similar event 
does not happen again, at any of our sites. 

In FY20, we commenced our reporting 
practices to disclose fatalities for 
contractor activities associated with our 
operations that take place in locations 
where we do not have control. Sadly, 
one person from a contracting company 
was fatally injured while carrying out 
work to pave the public road between 
the municipality of Planeta Rica and our 
Queresas and Porvenir Project. 

Our teams have been working hard to 
improve our safety performance, and four 
of our operations recorded their lowest 
Total Recordable Injury Frequency (TRIF) to 
date. We also saw a reduction in recordable 
injuries for the period, however our TRIF 
increased to 4.3 and our year-on-year 
performance did not meet our  
20 per cent reduction target. We will never 
be truly successful until we eliminate 
fatalities and significant incidents. We are 
focused on improving our safety systems, 
as well as influencing the organisations 
we work with to improve safety outcomes, 
so that everyone goes home safe and 
well. During the year our people and 
communities continued to face the many 
challenges brought about by COVID-19 – 
illness, the loss of loved ones, uncertainty 
and isolation – to name but a few. Our 
response to the pandemic remained 
unchanged and we focused on keeping 

our people safe and well, maintaining safe 
and reliable operations and supporting our 
communities. 

Among our workforce, many people 
contracted COVID-19, and encouragingly, 
most of them recovered. Sadly we lost 
some of our colleagues to the virus during 
the year, and on behalf of everyone at 
South32, my thoughts remain with their 
families, friends and colleagues. We 
continue to uphold the necessary controls 
to protect our people and minimise the 
risk of exposure to COVID-19. We have 
supported government vaccination 
programs by procuring vaccines for our 
workforces in Colombia and Mozambique 
and at our GEMCO operation in the 
Northern Territory, Australia. To support 
employees through the COVID-19 
pandemic, we increased engagement 
activities across the business and shared 
resources to help our leaders engage their 
teams during a period of great uncertainty. 

We worked with our communities to 
provide support when and where it was 
needed most and implemented community 
response plans at all sites. We invested an 
additional US$2.5 million in our COVID-19 
Community Investment Fund this year, 
taking the total invested since the start 
of the pandemic to US$7.6 million. Our 
contributions have supported local health 
clinics with medical equipment and 
improved water supply, mobile classrooms 
for schools, relief for small businesses, 
essential supplies and improved access to 
water for families. We are actively engaged 
with governments and health authorities 
regarding the vaccine roll-out plans and 
have supported community vaccination 
programs in South Africa, Colombia, 
Mozambique, Arizona and on Groote 
Eylandt in the Northern Territory.

We delivered a strong operating result for 
the year and achieved several production 
highlights, including records at Worsley 
Alumina, Brazil Alumina and Australia 
Manganese, where the refinery finished the 
year strongly, operating above nameplate 
capacity. Volumes improved by 21 per cent 
at our South Africa Manganese operation, 
following its recovery from COVID-19 
related disruptions in the prior year. 

We made significant progress reshaping 
our portfolio during the year, completing 
the divestment of South Africa Energy Coal 
to Seriti Resources and two trusts for the 
benefit of employees and communities in 
June 2021. This is a transformative step for 
South32, as it simplifies our business and 
substantially reduces our capital intensity. 
Through the divestment, we achieved our 
vision of putting South Africa Energy Coal 
on a pathway to becoming a sustainable 
business and transitioning it to Black 
ownership consistent with South Africa’s 
transformation agenda.

We are actively repositioning our portfolio 
to increase our exposure to the base 
metals critical in a low-carbon world. At 
Hermosa, following work on the pre-
feasibility study through the year, we 
released an updated Mineral Resource 
estimate for Taylor, which confirms the 
potential for a long-life zinc-lead-silver 
project, with study work confirming a 
preference for a dual shaft development 
that prioritises early access to higher grade 
ore. The Taylor Deposit pre-feasibility study 
was scheduled for completion prior to 
the end of the June 2021 quarter but has 
been delayed given the impact of ongoing 
COVID-19 related workforce restrictions. 
We expect to report outcomes of a scoping 
study for the Clark Deposit, which is 
evaluating the potential for a manganese 
product for use in electric vehicle batteries, 
in the first half of FY22. 

South32 Annual Report 2021Operating and Financial Review“ 
We have a strong foundation to build 
from with our operations performing 
well, a strong balance sheet,  
high quality growth options  
in attractive commodities and  
a plan to decarbonise our business.”

The Ambler Metals joint venture in Alaska, 
where we have a 50 per cent shareholding, 
is progressing a pre-feasibility study for the 
high-grade Arctic copper and zinc deposit. 
Earlier this year, Ambler Metals entered into 
an agreement with the Alaska Industrial 
Development and Export Authority (AIDEA) 
to jointly fund pre-development activity for 
the Ambler Access Road after the AIDEA 
received Federal permits. The road has 
potential to unlock the region and pre-
development activities are under way.

In addition, we are building our pipeline 
of opportunities by investing through 
the drill bit. We currently have more than 
20 greenfield exploration partnerships 
and projects targeting base metals 
predominantly in the Americas and 
Australia.

In February, the New South Wales 
Independent Planning Commission (IPC) 
refused the application for the Dendrobium 
Next Domain (DND) project at Illawarra 
Metallurgical Coal. We have requested 
a judicial review of the IPC’s decision. 
Separately, the State Legislative Council 
has passed a motion requesting that any 
future development of DND be declared 
as state significant infrastructure. This 
would enable the Minister to determine 
the project upon the submission of an 
alternative mine plan by South32. We 
continue to assess options for the project, 
including a revised mine plan, and we 
expect to be able to provide a further 
update relating to the project by the end  
of the 2021 calendar year.

In May 2021 we announced our target to 
halve our operational carbon emissions 
(Scope 1 and 2) by 2035 compared with 
our FY21 baseline. We have a plan to 
deliver this target through decarbonising 
our existing operations, securing green 
energy, designing our growth projects to 
be carbon neutral and adopting low carbon 
technology.

Our decarbonisation plans are focused  
on the operations which accounted for  
90 per cent of our Scope 1 and 2 emissions 
in FY21 – Worsley Alumina, Illawarra 
Metallurgical Coal and our aluminium 
smelters. We are undertaking short-term 
emissions reduction activities focused on 
process and energy efficiency projects 
as well as studying the transition of our 
energy intensive assets to lower carbon 
alternatives over the medium-term. Our 
prefeasibility study for the Taylor Deposit 
at Hermosa incorporates low-carbon 
design initiatives and we are focusing our 
exploration activities on the commodities 
needed to support the energy transition. 

As part of our broader strategy, this 
plan will shift the carbon intensity of our 
business and re-position our portfolio for  
a low-carbon future. 

Wherever we operate we proudly support 
our local communities and during 
FY21, we invested US$22.2 million in 
community initiatives and activities in 
line with our four strategic community 
investment priorities. We also rolled 
out our Community Investment Impact 
Measurement Framework to improve how 
we measure the outputs and outcomes of 
our community investment. 

In Australia, we partnered with the 
Australian Indigenous Leadership Centre 
and Anindilyakwa Land Council, to launch a 
program designed to enable and empower 
young people on Groote Eylandt, where 
GEMCO is located. The Anindilyakwa 
Future Leaders Program was developed 
in collaboration with Traditional Owners 
and is focused on developing leadership 
capability and governance skills – two 
areas that will enable this community to 
thrive long into the future. 

When I reflect on the year that’s been, it’s 
important to recognise that it has been 
incredibly challenging for each of us. I’ve 
been proud to see our people around the 
world unite and show immense courage 
and resilience in the face of COVID-19. 
As we look to the future, we have a 
strong foundation to build from with our 
operations performing well, a strong 
balance sheet, high quality growth options 
in attractive commodities and a plan to 
decarbonise our business.

9

Graham Kerr 
Chief Executive Officer

South32 Annual Report 2021Operating and Financial ReviewOur business model

CREATING 
LONG-TERM VALUE

As a global mining and metals company, we create value by producing commodities 
that are used in all aspects of modern life. Our operations, development options and 
exploration projects and partnerships are diversified by commodity and geography. 
We work to minimise the impact of our operations and aim to create enduring social, 
environmental and economic value.

Our pipeline of development options and early stage exploration partnerships is central 
to our strategy to reshape and improve our portfolio to create long-term value. 

Our operations focus on safe and reliable production, minimising their impact and 
continually improving their competitiveness.

E
N
M

I

Bauxite(1) 
Manganese ore 
Metallurgical coal 
Nickel ore(1)
Lead
Silver 
Zinc 

I

E Alumina
N
F
E
R

T Aluminium 
L
Ferronickel 
E
M
S

Our marketing team generates revenue from the sale of our commodities and purchases raw materials 
from global markets. They also build a view of commodities and their markets that informs our strategy, 
business planning and investment decisions. 

Construction

Transport 

Energy 

Consumer  
goods 

Our strategy guides how we optimise the performance of our operations, unlock their potential and identify 
new opportunities to create value for all our stakeholders.

For more information on Progress against our strategy in FY21, see page 14

(1)  We mine and refine bauxite to produce alumina; we mine and smelt nickel ore to produce ferronickel. 

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Mine
Manganese ore and metallurgical coal are 
used to produce steel for construction of 
buildings and infrastructure. Manganese is 
also required for steel recycling. We are the 
world’s largest producer of manganese  
ore from our operations in Australia and  
South Africa. 

We produce premium hard coking coal from 
Illawarra Metallurgical Coal in Australia and 
supply approximately two per cent of the 
seaborne market as well as the domestic 
steel industry. 

Lead, silver and zinc from our Cannington 
mine have a range of applications. 
Approximately 65 per cent of global lead 
production is used in batteries. Silver is 
widely used in solar power and electronics 
and zinc protects steel from corrosion.

Refine
Alumina is the key raw material used to 
produce primary aluminium. Worsley 
Alumina and Brazil Alumina mine and refine 
bauxite which is used to produce alumina. 
Approximately 60 per cent of the production 
from Worsley Alumina is shipped to our 
aluminium smelters in South Africa and 
Mozambique, with the remainder going into 
the seaborne market. Worsley Alumina is 
one of the world’s largest alumina refineries.

Smelt
Aluminium is often referred to as the metal  
of the future. It is lightweight, durable, 
strong, resistant to corrosion, and 
recyclable and it can conduct electricity, 
meaning it has a wide range of applications 
including construction, electrical wiring, 
transportation, packaging and consumer 
goods such as electronics and household 
items. Hillside Aluminium in South Africa 
is the largest aluminium smelter in the 
southern hemisphere. 

Cerro Matoso mines nickel ore which is 
smelted in electric arc furnaces to produce 
ferronickel. The majority of ferronickel is used 
to make stainless steel for household items, 
surgical instruments and vehicle parts.

Our commodities in a low-carbon future

1
1

Construction

Energy

Steel produced from 
manganese ore and 
metallurgical coal is essential in 
construction. Modern steel supports 
energy efficiency solutions to enable 
low-carbon operation of buildings.  
Aluminium is also key in construction 
as it is lightweight, structurally strong 
and is resistant to corrosion. Zinc is 
instrumental in protecting key elements 
of essential infrastructure from 
corrosion.

Silver is a key component 
for the production of solar 
photovoltaic cells, which have 
become the leading option in 
renewable energy. Lead batteries  
are the mainstay of storage technologies 
for renewable energy sources. Zinc is 
used to protect steel components of wind 
turbines from corrosion and exposure 
to harsh weather conditions. Nickel-
containing materials are increasingly being 
used to generate, transmit and store 
power in modern battery polymers in 
renewable energy generation.

Transport

Consumer goods

The use of aluminium instead of other 
materials can reduce the carbon 
emissions of a vehicle given its relatively 
light weight. Lead is a key material for the 
starter or auxiliary batteries in vehicles. 
Almost every electrical connection in a 
vehicle uses silver and its intensity in 
electric vehicles is around two times 
higher compared to vehicles with 
internal combustion engines. 
Nickel-containing stainless 
steel is found in passenger 
trains and subway 
systems. 

Silver is widely used in consumer 
electronics, including mobile phones 
and computer equipment. Aluminium 
can substitute single-use plastics for 
packaging, such as in the food and 
beverage industry and is also widely 
used in electronics. Nickel-containing 
stainless steel and aluminium  
have various applications  
in household items.

South32 Annual Report 2021Operating and Financial ReviewOur strategy 

A STRATEGY 
TO ACHIEVE 
OUR PURPOSE 

At South32 we believe that, when done sustainably,  
the development of natural resources can change  
people’s lives for the better. 

This is integral to our purpose – to make a difference by developing natural 
resources, improving people's lives now and for generations to come. We are 
trusted by our owners and partners to realise the potential of their resources. 

Our purpose is underpinned by a simple yet powerful strategy:

2
1

We optimise our business  
by working safely, minimising 
our impact, consistently 
delivering stable and 
predictable performance,  
and continually improving  
our competitiveness.

I

value of our business 
through our people, 
innovation, projects 
and technology.

E We unlock the full 
S
M
T
P
O

I

We identify  
and pursue 
opportunities  
to sustainably 
reshape our 
business for the 
future, and create 
enduring social, 
environmental and 
economic value.

K
C
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L
N
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I

Y
F
T
N
E
D

I

South32 Annual Report 2021Operating and Financial ReviewOur strategy outlines what we do to achieve our 
purpose and our values of Care, Trust, Togetherness 
and Excellence guide how we do it. Our values shape 
the way we behave and the standards we set for 
ourselves and others.

Our values

Care
We care about people, the communities  
we’re a part of and the world we depend on.

Trust
We deliver on our commitments and rely on each other  
to do the right thing.

Togetherness
We value difference and we openly listen and share,  
knowing that together we are better. 

Excellence
We are courageous and challenge ourselves 
to be the best in what matters.

We deliver on our purpose and strategy by aligning our workforce behind 
seven ‘breakthroughs’ – commitments which shape our business plans 
across South32, enabling us to focus on what’s important.

FY21 was a significant year for the company, as the divestment of South 
Africa Energy Coal (SAEC) had a transformational impact on the business. 
We have also continued to respond to the COVID-19 pandemic with our 
focus on keeping our people safe and well, maintaining safe and reliable 
operations, and supporting our communities.

Our approach to climate change is integrated with our strategy and is 
focused on decarbonising our existing business and adding growth options 
to increase our exposure to the base metals required in a low-carbon world. 

Within 12 months of South32 being established, we committed to 
support the Paris Agreement and set a long-term goal of achieving net 
zero operational carbon emissions by 2050. This year we achieved our 
first short-term target of keeping our Scope 1 emissions below our FY15 
baseline. In May 2021, we announced a new medium-term target to halve 
our operational carbon emissions (Scope 1 and 2) by 2035, compared to the 
FY21 baseline. 

We are working towards our target considering the needs of all our 
stakeholders. This includes assessing the physical resilience of our 
operations to the impacts of climate change, investing in decarbonisation in 
line with our capital allocation framework and planning for a Just Transition 
where our people and communities may be affected by the changes 
needed for a low-carbon future. Our performance on climate change now 
forms part of our executive long-term incentive plans so remuneration 
outcomes reflect the achievement of significant milestones and long-term 
value protection and creation.

Our FY21 commitments and performance against those commitments, 
including our actions on climate change, reshaping our portfolio and our 
COVID-19 response, are summarised on the following pages.

Risk framework and corporate 
governance 
We are governed by robust risk 
management and corporate governance 
frameworks. For more information, see 
pages 24 to 33 for our Risk management 
section and our Corporate Governance 
Statement which can be found at  
www.south32.net. 

Capital management framework
Our capital allocation priorities are to 
maintain safe and reliable operations 
and an investment grade credit rating 
throughout the cycle. We intend to 
distribute a minimum 40 per cent of 
Underlying earnings as dividends to our 
shareholders following each six-month 
reporting period. We encourage internal 
competition for excess capital, which can 
include further investment in new projects, 
acquisitions, greenfield exploration, share 
buy-backs or special dividends. 

After a suspension of the capital 
management program in FY20 due 
to COVID-19 related uncertainty, we 
recommenced our on-market share 
buy-back in October 2020. We returned 
US$670 million to our shareholders in 
respect of FY21 via ordinary dividends, a 
special dividend and our on-market share 
buy-back. The Board further expanded 
our capital management program 
to US$2 billion in August, leaving  
US$252 million to be returned  
by 2 September 2022. 

Capital allocation
(Capital allocation since FY16)

3% 3%

17%

36%

US$9.4b
allocated

21%

20%

Net cash to balance sheet
Capital expenditure  
(including equity accounted investments)
Ordinary dividends

Capital management program

Acquisitions

Greenfield exploration

1
3

South32 Annual Report 2021Operating and Financial ReviewProgress against our strategy

Working safely

OPTIMISE OUR BUSINESS

Total Recordable Injury Frequency 
(TRIF)

4.3

Total Recordable Illness Frequency 
(TRILF)

1.1

Our FY21 commitments:
 – A 20 per cent reduction in Total Recordable Injury Frequency (TRIF) compared to FY20;

 – A reported significant hazard frequency of "30"; and

 – A 10 per cent reduction in material health exposures from adjusted baseline.

Progress during the year: 
We are deeply saddened by the death of our colleague, Mr Petros Sibeko, a contractor 
working at South Africa Energy Coal’s (SAEC) Klipspruit Extension Project, following an 
incident involving the use of an Elevated Work Platform (EWP) on 12 May 2021. We express 
our deepest sympathies to Mr Sibeko’s family and colleagues to whom we provided 
counselling and support. We completed an investigation into the incident and shared 
learnings across the company. Following this incident, we also commenced a global review 
of the safety features of EWPs and the way we use them in our operations and projects.

In FY20, we commenced our reporting practices to disclose fatalities for contractor 
activities associated with our operations that take place in locations where we do not have 
control. Sadly, one person from a contracting company appointed by Cerro Matoso was 
fatally injured while carrying out work to pave the public road between the municipality 
of Planeta Rica and our Queresas and Porvenir project. We offered our support to the 
contractor company following the incident.

Our TRIF increased to 4.3 despite a reduction in recordable injuries and four operations 
reporting their lowest TRIF to date. Our year-on-year performance did not meet our  
20 per cent reduction target. Our TRIF was adversely impacted by a reduction in the total 
number of hours worked following the sale of SAEC and Tasmanian Electro Metallurgical 
Company (TEMCO) and a reduction in the workforce at Metalloys. To set our TRIF target for 
FY22, we have adjusted the baseline to account for the removal of SAEC and TEMCO from 
the portfolio which will mean we measure our FY22 performance against a TRIF of 6.0. 

4
1

Proactive hazard reporting is key to our approach to safety, and we exceeded our target 
with a reported significant hazard frequency of "41". We also saw a reduction in near 
misses and actual significant impact events.

We achieved a reduction in the number of people exposed above the Occupational 
Exposure Limits (OEL) at South Africa Manganese and Hillside Aluminium, contributing to 
a six per cent overall reduction in potential material exposures greater than 100 per cent 
of the OEL. Unfortunately, planned exposure reduction measures at Mozal Aluminium 
were delayed due to COVID-19. Our occupational exposure data represents the workplace 
exposures determined through our hygiene monitoring program. Sampling was concluded 
in June 2021 and therefore excludes the divested SAEC and TEMCO operations.

Our response to the COVID-19 pandemic continued throughout FY21 and critical controls 
remain in place at all our operations, offices and projects, as we are still experiencing 
waves of coronavirus infections in some locations. We are actively engaged with 
governments and health authorities regarding their vaccine rollout plans and have offered 
our support, providing access to our facilities to store and deliver vaccines and opening 
vaccination centres at some of our operations. Read more about our response to COVID-19 
in our Sustainable Development Report on page 12.

South32 Annual Report 2021Operating and Financial ReviewStable and predictable performance while minimising impact

OPTIMISE OUR BUSINESS

Production vs budget

101%

Scope 1 and 2 emissions (CO2-e)

21.6Mt

FY21 community investment

US$22.2m

1
5

Our FY21 commitments:
 – Production within 97-103 per cent of budget;

 – Cost within US$50 million of FY21 budget;

 – Capital expenditure within five per cent of capital budget and less than 20 per cent 

break-in projects;

 – Achieve the emissions forecast of 24,649kt CO2-e (inclusive of Scope 1 and 2); and 
 – Implement community investment plans for each operation.

Progress during the year: 
In FY21, we achieved production at 101 per cent of budget (including SAEC until it was 
divested on 1 June 2021). Three operations – Worsley Alumina, Brazil Alumina and Australia 
Manganese – achieved record production. We also beat our initial production guidance 
at South Africa Manganese, Cerro Matoso and Cannington. For more information on our 
operating performance, see pages 44 to 53.

Costs were US$3 million above budget and we achieved 84 per cent of budget for 
sustaining capital and major capital. We had 18 per cent break-in projects compared to 
the sustaining capital plan at the start of FY21. 

In FY21, our Scope 1 and 2 emissions were 21.6Mt CO2-e, a seven per cent reduction 
compared to FY20 with lower fugitive emissions from Illawarra Metallurgical Coal (IMC) as 
we realised higher rates of post-drainage gas capture efficiency, and curtailed production 
from SAEC and the manganese alloy smelters. We achieved our first short-term target of 
keeping our Scope 1 emissions below our FY15 baseline. 

We completed a review of the water target for Hillside Aluminium to support the needs of 
the water catchment, including local communities. Mozal Aluminium and Worsley Alumina 
remained on track to meet their water targets. 

During FY21, we invested US$22.2 million in community initiatives and activities, which 
includes US$2.5 million invested in our targeted COVID-19 Community Investment Fund in 
FY21, in addition to the US$5.1 million from FY20. The funds were used to support health 
and education, social and economic recovery, community resilience, vaccine roll-out 
and addressing the risk of gender-based violence. For more information on how we are 
supporting communities through the pandemic, see pages 20 to 23.

We concluded a comprehensive review of the way we manage Aboriginal and Torres Strait 
Islanders’ cultural heritage in Australia and led to the development of a set of principles 
to guide our engagements on this important topic. We plan to undertake similar reviews 
in other jurisdictions where we operate in FY22. We also rolled out cultural awareness and 
heritage training for employees across the company.

South32 Annual Report 2021Operating and Financial ReviewProgress against our strategy continued

Our people are connected and engaged

UNLOCK THE VALUE OF OUR BUSINESS

Our FY21 commitments:
 – Meet our measurable objectives to increase the representation of employees and leaders who are women; and

 – Meet our measurable objectives for representation of Black People in our South African workforce and leadership.

Progress during the year: 
This year, our performance either improved against or remained consistent for four of our seven diversity commitments(1).

Several changes, including the divestments of TEMCO and SAEC during the period have directly impacted the employee profile for 
a number of our metrics. The representation of women across the company decreased to 18 per cent, down from 19 per cent in 
FY20, while the representation of women on our Board and Lead Team was stable year-on-year. Representation of women on our 
Operational Leadership Team increased year-on-year, however there is more work to do to meet our target of 20 per cent. Thirty-seven 
per cent of all our new hires were women and we achieved gender-balanced recruitment into our development roles, with 44 per cent 
offered to women.

Representation of Black People in our workforce in South Africa improved in FY21, reaching 86 per cent and meeting our target, 
however representation of Black People in management roles declined three per cent to 52 per cent.

A global inclusion and diversity working group was formed to undertake a diagnostic review and assess actions to achieve an 
immediate and a longer-term improvement in our people’s experience of inclusion and diversity in the workplace, with an action plan 
being implemented in FY22. We became a signatory to 40:40 Vision, an investor-led initiative to achieve gender balance in executive 
leadership across all ASX200 companies by 2030.

We launched our global flexible work standard in December 2020, which supports our efforts to attract and retain diverse talent.  
We also launched our new leadership model, which sets out the core leadership accountabilities, competencies, and behaviours 
expected of all our people. 

6
1

Due to the impact of COVID-19, our annual employee survey did not take place in FY21 but we will undertake more regular employee 
‘pulse’ surveys in FY22. With limited opportunities for leadership to visit operations during the COVID-19 pandemic, we increased other 
engagement activities to support employees through this challenging time, including global calls that gave employees an opportunity 
to hear from and ask questions of our senior leaders in an open forum.

(1)  Our inclusion and diversity performance has been measured in our scorecard from FY20. All scorecard metrics have consistently excluded the contribution of SAEC as this 

operation has been managed as a standalone business since the June 2019 quarter.

Technology and innovation unlock value

Our FY21 commitments:
 – Implement South32’s approach to innovation, improvement and technology;

 – Implement technology enabler programs focused on adoption of critical technology across South32; and

 – Implement cyber security improvements to reduce material risk across South32.

Progress during the year: 
In response to COVID-19, our technology and health teams collaborated to rapidly develop and deploy a fast and effective pre-shift 
screening tool, which is being used across our sites globally. The tool helps identify employees with potential COVID-19 risk factors, so 
they do not enter the workplace to carry out their shift – helping to keep our people and local communities safer. In 12 months, more 
than one million screening assessments were completed.

This year, we’ve made progress in advancing our Cyber Security Program to improve our cyber resilience. We defined and 
implemented a model to help embed best practice cyber security capabilities, including skills, governance, controls, and behaviours. 
We also deployed solutions to mature our capability and continued our ongoing work to build a cyber-aware culture throughout the 
company. We have reduced our cyber risks and consider our Cyber Security Program fit for purpose given our current risk profile.

Technology and innovation will be key enablers for mining in the transition to a low-carbon future. Our Innovate32 process has been 
designed to enable the assessment, development and deployment of low-carbon technologies for our existing operations and for the 
design of the carbon neutral Next Generation Mine, including at Hermosa.

In FY21 we became a founding member of the Electric Mine Consortium, which aims to accelerate progress towards a fully electrified 
zero carbon, zero particulates mine. Our participation in the Consortium helps us make informed decisions about technology options 
and readiness, while also accelerating the rate at which we learn, through direct and indirect trials. 

We are also a founding member of the Heavy Industry Low-carbon Transition Cooperative Research Centre (HILT CRC) which brings 
together industry, education and government partners to fund research into technology driven solutions for a low-carbon industry 
transformation. The HILT CRC was recently awarded A$39 million from the Australian Government over ten years which is backed by an 
additional A$176 million of funding and in-kind support from industry, government and research institutions.

South32 Annual Report 2021Operating and Financial ReviewUNLOCK THE VALUE OF OUR BUSINESS

Project execution

Our FY21 commitments:
 – Complete the pre-feasibility study (PFS) for the Taylor Deposit at Hermosa; 

 – Unlock the value in our portfolio by delivering on key projects across our operations; and

 – Complete the feasibility study for Eagle Downs.

Progress during the year: 
Following work on the Taylor PFS through the year, we released an updated Mineral Resource estimate for the deposit in July 2021 
which confirmed higher zinc, silver and lead grades, partially offsetting a reduction in tonnage. The Taylor Deposit PFS was scheduled 
for completion prior to the end of the June 2021 quarter but has been delayed given the impact of ongoing COVID-19 related 
workforce restrictions. Study work to date has confirmed a preference to pursue a dual shaft development that prioritises early access 
to higher grade ore, identified through our improved understanding of the updated Taylor Mineral Resource estimate(1). Preliminary 
outcomes of a scoping study for the Clark Deposit indicate the technical viability to produce battery grade manganese and we are 
advancing marketing studies to evaluate customer opportunities for these products.

The PFS at the Ambler Metals Joint Venture continued during FY21. Earlier this year, Ambler Metals entered into an agreement with the 
Alaska Industrial Development and Export Authority (AIDEA) to jointly fund pre-development activity for the Ambler Access Road after 
AIDEA received Federal permits. The road has potential to unlock the region and pre-development activities are underway.

We approved development of the Queresas and Porvenir project at Cerro Matoso, which is a high returning, low capital option that is 
expected to contribute to higher average ore grades over the next six years. We also approved the Ore Sorting and Mechanical Ore 
Concentration project at Cerro Matoso which is expected to maintain payable nickel production by offsetting natural grade decline 
beyond FY23.

In February 2021, the New South Wales Independent Planning Commission (IPC) refused the application for the Dendrobium Next 
Domain (DND) project at IMC. We have commenced proceedings to seek a judicial review of the IPC’s assessment and the State 
Legislative Council has supported a Private Members’ Bill requesting the Minister for Planning and Public Spaces make an order 
declaring any future development for the Dendrobium mine extension project be declared state significant infrastructure under New 
South Wales law. This would enable the Minister to determine the project upon the submission of an alternative mine plan by South32. 
We are assessing options for the broader IMC complex, including a revised DND mine plan, and expect to provide an update by the 
end of the 2021 calendar year.

1
7

Following completion of the Eagle Downs Metallurgical Coal feasibility study in the December 2020 quarter, we determined not to 
proceed with the project at this time. The study indicated the potential for a long-life operation, however the expected returns  
did not support the allocation of capital in accordance with our capital management framework. The project has been placed on hold 
while the partners assess options.

(1)  For more information refer to the market announcement "Hermosa Project – Mineral Resource Estimate Update" dated 21 July 2021.

South32 Annual Report 2021Operating and Financial ReviewProgress against our strategy continued

IDENTIFY OPPORTUNITIES

Create enduring social, environmental and economic value

Our FY21 commitments:
 – Define medium-term operational carbon emissions reduction target and glidepath;

 – Progress decarbonisation studies and energy planning; and

 – Implement our Community Investment Impact Measurement Framework.

Progress during the year: 
We have set a new medium-term target to halve our Scope 1 and 2 carbon emissions by 2035 from a FY21 baseline, and we have 
defined short-term activities to progress and broaden our decarbonisation studies. 

At Worsley Alumina, our efficiency projects to reduce energy consumption are progressing through study phases. Mud-washing, the 
most advanced efficiency project, is in pre-feasibility study (PFS) and is on-track for completion in FY22. Transitioning the energy 
source from predominantly coal to lower carbon alternatives will be the most significant driver of emissions reduction and a PFS for 
conversion of the existing coal-fired boilers to natural gas is also on-track for completion in FY22. The shift from energy coal to natural 
gas is designed as an interim step until renewable energy options such as hydrogen or electrification are commercially viable at scale. 
We are working with government and industry to support the development of low-carbon energy markets in Western Australia.

Our key decarbonisation actions at IMC relate to increasing the efficiency of gas drainage and assessing technologies for reducing 
methane associated with ventilation. In partnership with Commonwealth Scientific and Industrial Research Organisation (CSIRO), we 
are supporting the development of ventilation air methane abatement technologies that aim to increase the effectiveness of methane 
capture at low concentrations. A trial of the technology is expected to be completed by March 2022, which will inform the technical 
capability of its potential deployment.

At Hillside Aluminium we are conducting a trial of the AP3XLE technology, currently being deployed at Mozal Aluminium,  
to increase energy efficiency. We are fast-tracking studies of ways to obtain affordable, low-carbon electricity for Hillside Aluminium. 
The initial outcomes suggest that renewable energy could be technically feasible. Work is ongoing, with PFS outcomes expected in 
mid-2022. While we complete these studies, we will engage with the South African Government, Eskom and other potential partners  
to identify options for new renewable energy infrastructure.

8
1

During FY21, our investments in community initiatives and activities were in line with our four strategic community investment 
priorities. We invested US$22.2 million with 32 per cent to support education and leadership; 41 per cent to support good health and 
social wellbeing; 20 per cent to widen economic participation; and seven per cent to strengthen natural resource resilience. We also 
introduced our Community Investment Impact Measurement Framework to improve how we measure the outputs and outcomes  
of our community investment.

We made good progress implementing our Innovate Reconciliation Action Plan following its launch in September 2020, including  
an increase in procurement of goods and services from Aboriginal and Torres Strait Islander businesses by 18 per cent year-on-year.

South32 Annual Report 2021Operating and Financial ReviewIDENTIFY OPPORTUNITIES

Sustainably reshape our business for the future

Our FY21 commitments:
 – Complete divestment of SAEC; and

 – Complete the review of our manganese alloy smelters. 

Progress during the year: 
We completed the divestment of SAEC to Seriti Resources, and two trusts for the benefit 
of employees and communities, in June 2021. This is a transformative step for South32. 
We achieved our two-fold vision through the divestment, by positioning the business to 
be sustainable for the long-term, for the benefit of its employees, customers and local 
communities and transitioning it to become a Black-owned and operated business, 
consistent with South Africa’s transformation agenda.

We also completed the divestment of the TEMCO manganese alloy smelter in Australia,  
with an effective accounting date of 31 December 2020, and concluded a restructure 
of the workforce at Metalloys in July 2020 after the smelter was placed on care and 
maintenance during the 2020 financial year. 

Taken together these actions substantially reduce our Scope 3 emissions and our capital 
intensity, increase group margins and provide greater balance sheet flexibility.

We also progressed our strategy of investing in exploration partnerships and our own 
portfolio of 100 per cent owned projects. We invested US$18 million during FY21 in early 
stage greenfield exploration opportunities. While COVID-19 restrictions persist across the 
majority of our exploration jurisdictions, critical controls permit continued activity globally 
with multiple programs underway in Australia, USA, Canada, Argentina, Peru and Ireland. 
We also directed US$39 million towards exploration programs at our existing operations 
and development options during FY21.

Invested in early stage greenfield 
exploration opportunities 

US$18m

1
9

South32 Annual Report 2021Operating and Financial ReviewOur contribution

MAKING A DIFFERENCE  
NOW AND FOR 
GENERATIONS TO COME

We’re committed to creating value through environmental and social 
leadership. We work hard to be responsible stewards of the environment 
and treat natural resources with care so that they are available for future 
generations. We care about the people and groups who are interested in 
what we do and want to have a say, or who are impacted by our operations.

0
2

South32 Annual Report 2021Operating and Financial ReviewAt South32 we believe that, when done sustainably, the development of 
natural resources can change people’s lives for the better. From supporting 
our communities through COVID-19, to providing jobs and business 
opportunities, contributing to governments through paying taxes and 
royalties, developing local suppliers and supporting community programs we 
can make a significant contribution to the way people live and work.

Supporting our diverse communities

There is socio-economic diversity across the communities, regions  
and countries where we work. 

We understand the value of creating opportunities in our communities. We want 
our communities to benefit from our presence, providing employment and business 
opportunities, supporting community programs, empowering suppliers and supporting  
the South African Government’s transformation objectives.

Building relationships based on trust

Delivering on our commitments and being a trusted partner is essential  
to the way we operate. 

We believe trust and transparency are essential to the way we operate. That means being in 
touch with the broader community – considering different perspectives and working together 
to create shared value. We manage our impacts and create enduring social, environmental 
and economic value in our communities by developing tailored community investment and 
stakeholder engagement plans based on research and engagement. We address community 
concerns through local complaints and grievance processes.

Read more about our work with communities at www.south32.net

2
1

Indigenous and Tribal Peoples cultural heritage 

We respect the unique cultural and spiritual relationships that Indigenous and 
Tribal Peoples have to the land, waters and seas, and their rich contribution to 
society and we are committed to working together to build lasting, meaningful 
relationships for the benefit of all. 

Many of our operations and projects intersect areas of cultural significance and we understand 
we have a critical role to play in preserving cultural heritage. Guided by our values of care, trust, 
togetherness and excellence we continually work to strengthen and enhance our approach to 
preserving cultural heritage.

Read more about our approach to Indigenous and Tribal Peoples cultural heritage at www.south32.net

Governance and transparency

In line with our Code of Business Conduct, we are committed to the highest 
standards of integrity and accountability and conduct our business in a way 
that respects human rights. 

This includes transparency in how community investment is allocated, supporting sound 
governance of partner organisations, sourcing responsibly, and encouraging capacity building 
so resources reach those who need it most. 

Read more about our Code of Business Conduct at www.south32.net and our approach to human rights 

in our Sustainable Development Report

South32 Annual Report 2021Operating and Financial ReviewOur contribution continued

Investing in what matters most

Our community investment in FY21(1)

US$22.2m

We are proud of our community investment programs, 
designed in collaboration with our communities and 
stakeholders to reflect their priorities. 

In FY21, we implemented our Community Investment 
Impact Measurement Framework to measure the outputs 
and outcomes of our community investment and allow us 
to understand how projects are contributing to desired 
outcomes. It has also become a monitoring tool to make 
program adjustments, upscale or replicate successful 
initiatives, and overall improve our investment approach.

Education  
and leadership

Economic  
participation 

2
2

Quality education is the 
foundation of economic and 
social prosperity and supports 
the development of emerging 
and future community leaders.

Economic opportunity and 
participation ensure that local 
and regional economies are 
resilient now and sustainable 
into the future.

32%

20%

directed towards projects that 
support learning and development, 
nurture future leaders and promote 
equal access to education.

directed towards projects that 
support local employment, 
sustainable livelihoods and  
diversified local economies.

10

emerging Indigenous leaders are 
taking part in the Anindilyakwa Future 
Leaders Program on Groote Eylandt 
helping them to gain leadership 
and governance qualifications and 
pursue meaningful careers in their 
communities.

450

students participated in the Star 
Schools program, supported by Hotazel 
Manganese Mines. The program 
is designed to improve education 
outcomes for high school students.

US$100,000

in COVID-19 relief grants were 
provided to locally owned and 
operated small businesses and non-
profit organisations near our Hermosa 
project, helping them to continue to 
operate and retain their workforce.

5 

times more income was earned by 
farmers near our Mozal operation in 
Mozambique in FY21, when compared 
to 2018. This was made possible by 
their participation in our AGROMOZAL 
program. 

Good health and  
social wellbeing

Health and social wellbeing  
are integral to sustainable 
development and contribute  
to vibrant communities. 

41%

directed towards projects that 
support community health and social 
wellbeing and promote inclusion.

R2 million

was invested with the Gender Based 
Violence and Femicide Response 
Fund1, who are working to raise 
awareness and inspire change, to 
address gender-based violence and 
femicide in South Africa.

62

Hispanic and Latino women at 
Hermosa engaged in a mental  
health support group, with  
members reporting an improvement 
in resiliency outcomes.

(1)  Community investment consists of direct investment, in-kind support and administrative costs and includes US$1.3 million in community investment made through our 
corporate functions, US$19.9 million in community investment made through operations (see pages 44 to 53 for further information) and US$1.0 million in community 
investment made through Hermosa.

South32 Annual Report 2021Operating and Financial ReviewUS$7.6m 

invested to support our communities through COVID-19.

We have been working closely with our communities 
through the COVID-19 pandemic to identify and address 
health and economic risks. In FY20 we set up our COVID-19 
Community Investment Fund and invested US$5.1 million  
to aid our local communities in COVID-19 prevention, 
preparedness, response and recovery. In FY21 we invested 
an additional US$2.5 million to support health and 
education, social and economic recovery, community 
resilience, vaccine roll out and the societal response  
to combat gender-based violence. The support we have 
provided includes medical equipment, personal protective 
equipment and improved water supply to health facilities, 
financial relief to small businesses, funding for food parcels 
and water distribution, and setting up mobile classrooms 
and providing mental health support for teachers and 
school staff.

Read more about our response to COVID-19 in our Sustainable Development Report 

on page 12

2
3

Natural resource  
resilience

Communities that live  
in balance with their natural 
environments are resilient  
and sustainable. 

7%

directed towards projects that 
support communities to thrive 
within their environments and use 
natural resources in responsible and 
sustainable ways.

22,000

hectares of land at our Cannington 
operation has been treated to 
reduce, eradicate and prevent weeds. 
This contributed to biodiversity 
conservation and protection,  
as well as improved economic 
wellbeing and increased capacity  
of local landholders.

882

households located near our  
African operations have received 
improved access to water and 
sanitation services. 

South32 Annual Report 2021Operating and Financial ReviewRisk management

MANAGING OUR RISKS 
TO PROTECT  
OUR PEOPLE AND 
MAXIMISE VALUE

Risk management is fundamental to maximising the value of our business and 
informing its strategic direction. Effective risk management enables us to identify 
priorities, allocate resources, demonstrate due diligence in discharging legal and 
regulatory obligations, and meet the standards and expectations of our stakeholders. 

4
2

Our approach to risk management is 
governed by our risk management 
framework, which has been in place since 
the Demerger of South32 from BHP in 2015. 
The minimum mandatory requirements 
for the management of risks that have a 
material impact on our purpose, strategy 
and business plans are defined in our 
material risk management standard.

Material risks
Our System of Risk Management and 
assurance processes are based on the 
three lines model, which describes how 
key organisational roles work together 
to facilitate strong risk management 
and assurance. This approach is used to 
manage our material risks and enables  
us to:

The framework and the standard are 
delivered through our System of Risk 
Management which is aligned to the 
principles of the International Standard 
for Risk Management AS/NZS ISO 
31000:2018. This approach applies to all 
employees, Directors and contractors of 
the company and its subsidiaries. Our risks 
are regularly assessed and managed at 
both a company-wide strategic level and 
at a material tactical level for operations, 
functions and projects.

 – Provide stable and consistent 

processes, tools and routines to identify 
and regularly assess the most impactful 
risk and opportunities;

 – Ensure predictable outcomes and 

prevent unforeseen events with material 
impacts;

 – Ensure risks are well understood 
and managed at all levels of the 
organisation; and 

 – Eliminate risks where appropriate or 
improve our processes using a risk-
based approach.

Risks assessed as material are routinely 
reported to the South32 Lead Team and 
reviewed by the Risk and Audit Committee 
as well as the Sustainability Committee; 
assisting the Board to carry out its role 
in overseeing our risk management and 
assurance practices. 

We report transparent real-time risk 
data through our risk management tool, 
Global360. This software connects data 
relating to the management of our risks, 
events, hazards and assurance actions. 
Aside from helping us manage our 
operations and functions, reliable data 
on material risks contributes towards 
the monitoring and management of our 
strategic risks. This provides insight into 
trends and emerging themes that can 
trigger a review of our business plans or 
inform a change in strategic direction.

Strategic risks
Our strategic risks are risks which can 
affect our ability to achieve our strategic 
objectives. They have the capacity to 
affect the whole, or a significant part of our 
organisation and therefore tend to have 
significant impacts, both negative and 
positive. With that in mind, our strategic 
risks and associated management 
responses are evaluated every year. The 
review process is informed by external and 
internal events that could have a potential 
impact on our organisation, as well as 
emerging themes across our material risks. 
In FY21, we identified 12 strategic risks 
which could influence our plans and the 
sustainability of our business.

South32 Annual Report 2021Operating and Financial ReviewClimate change 

Climate change and the response of South32, our markets and broader society to it, poses a risk to both our 
portfolio (i.e. demand for our commodities, costs and profit margins, social licence, regulatory exposure) and 
to our physical assets, infrastructure, supply chains and people. 

We regularly assess these dynamic risks through a framework that includes policy, market and physical 
factors, and use climate change scenarios to stress test these risks and opportunities against our portfolio, 
operations and communities.

Our response includes:
 – We are actively shifting our portfolio towards those commodities 
that will be required in a low-carbon future (with a bias to base 
metals);

 – We support the objectives of the Paris Agreement and have set  
a medium-term operational carbon emissions reduction target 
of 50 per cent by 2035, and a goal of net zero carbon emissions  
by 2050; 

 – We seek to understand and stress-test our portfolio 

performance in a range of future climate scenarios (inclusive of 
a 1.5°C aligned scenario in FY21), considering both opportunities 
and threats, to inform our business strategy; 

 – We use climate modelling data to inform us of the level of risk to 
our operations and operational plans and identify controls in the 
short-, medium- and long-term to address these risks; 

 – We engage regularly with investors, governments, industry 
partners, membership-based sustainability organisations, 
Environmental Social Governance (ESG) proxy advisors and ESG 
activist groups to identify and monitor emerging climate risks, 
opportunities and trends; 

 – The achievement of our emissions reduction targets is linked to 

remuneration; 

 – We invest in research and development, both directly and 

through partnerships, to develop technology and innovative 
solutions necessary for the transition to a low-carbon future;

 – We develop and implement energy efficiency, carbon abatement 
and renewable and low carbon energy projects to reduce our 
operational emissions; and 

 – We’re transparent in our disclosure of climate change-related 

opportunities and threats in our annual reporting, in accordance 
with the recommendations of the Task Force on Climate-
related Financial Disclosures. Further detail on this risk and its 
management is detailed in our Sustainable Development Report.

2
5

Risk exposure trend 2021

↑

Mapping to strategic objectives(1)
 – Stable and predictable performance while minimising impact

 – Create enduring social, environmental and economic value

 – Technology and innovation deliver value

 – Sustainably reshape our business for the future

Opportunities
Aligning our business strategy, including how we operate 
and what we produce, with stakeholder expectations, future 
technologies and evolving climate policy and regulation, ensures 
our portfolio sustains a favourable outlook in a low-carbon future 
as we shift towards base metals.

Identifying and implementing energy efficiency projects to 
reduce our emissions, has the potential to deliver financial and 
other environmental benefits through reduced operating costs 
(e.g. less purchased electricity) and related inputs (e.g. reduced 
water consumption).

Threats
If we do not manage our portfolio to be resilient to changing 
commodity demands, climate policies (including greenhouse gas 
emission restrictions, pricing, taxation and trade regulations) 
and developments in technology (including energy sources and 
commodity substitution), nor reduce our emissions in line with 
the goals of the Paris Agreement, our reputation and social 
licence will be negatively impacted, our costs may increase, profit 
margins decrease, and demand for our products may reduce. 
This may result in ‘stranded asset exposures’ in relation to 
emissions-intensive commodities and our associated assets.

Similarly, failure to build the resilience of our business and 
operations to the physical impacts of climate change (including 
both the increase in the frequency and intensity of extreme 
weather events, and gradual onset impacts such as increases in 
average temperatures and changing precipitation patterns) could 
negatively impact the health and safety of our people, our supply 
chains, communities, access to key operational inputs (e.g. water), 
business continuity and distribution to market, while incurring 
additional costs to maintain, adapt, repair or replace our assets 
and infrastructure.

Failure to manage the above risks may increase our legal 
exposures, while limiting our ability to access capital and 
insurances, retain and attract employees and grow our business 
in existing and new jurisdictions.

Climate change may also impact our ability to secure 
development approvals, permits or licences, or their extension.

Refer to related risks of ‘Portfolio reshaping’, ‘Major events or 
natural catastrophes’ and ‘Security of supply of logistics chains, 
and critical goods and services’.

(1)  As referenced in the Progress against our strategy section on pages 14 to 19.

South32 Annual Report 2021Operating and Financial ReviewRisk management continued

Ensuring that our people go home safe and well

A safe and healthy working environment is fundamental to living our values.

Risk exposure trend 2021

←→

Mapping to strategic objectives
 – Working safely

Opportunities
Ensuring that our people go home safe and well drives the culture 
we aspire to and sets our expectations of each other.

Threats
The impact of not having a safe working environment can be 
devastating for our employees, contractors and communities. 
It can alter lives, impact shareholder returns, stakeholder 
confidence and ultimately our licence to operate.

Our response includes:
 – In everything we do, we focus on the health and safety of our 

people, contractors and communities;

 – We have a system of risk management, comprehensive 

internal health and safety policies, standards and systems with 
associated performance requirements designed to prevent and 
mitigate potential exposure to health and safety risks; 

 – We engage, develop and train our people so that our work is well 

designed and executed; 

 – We investigate actual and potential significant events, ensure 

controls are in place, and share our learnings across the 
organisation;

 – We continuously improve our work environment to make it safer, 

healthier and more productive for our people; and

 – We have an independent assurance function, following the three 
lines model, that reviews our material risks and the associated 
controls, to test how effective they are.

Actions by government, tax authorities and political risks 

6
2

Changes in legislation, regulation and policy have the potential to impact our strategic objectives and the 
way we work. This includes broader policy decisions and regulatory changes, related but not limited to, 
changes to royalty and taxation policy, nationalisation of mineral resources, renegotiation or nullification of 
contracts, leases, permits or agreements, and environmental and social performance requirements. 

We aim to effectively manage this uncertainty through engagement with key stakeholders and industry 
associations, monitoring of political activity, policy, legislative and regulatory changes, and by ensuring we 
have access to specialised knowledge.

Risk exposure trend 2021

↑

Mapping to strategic objectives
 – Stable and predictable performance while minimising impact

 – World class project execution

 – Sustainably reshape our business for the future

 – Create enduring social, environmental and economic value

Opportunities
Proactive engagement leading to strong relationships with 
governments provides a mutual understanding of drivers 
for decision-making. This increases clarity around policy and 
regulatory environments, enables appropriate and tailored 
responses to issues, and provides investment certainty.

Threats
Legislation adverse to our business and regulatory or policy 
decisions taken by governments can result in operational 
disruption, affect future planning or lead to cessation of 
operations or non-investment in operations or projects.

Our response includes:
 – We have specialised knowledge through in-house expertise 
or the use of external experts, including tax management 
capability, tax advice and external affairs advice; 

 – We monitor political activity, policy, legislative and regulatory 

changes in the jurisdictions we operate in, and we also engage 
with relevant authorities;

 – We engage with key stakeholders in all jurisdictions where we 

operate, in accordance with our Stakeholder Engagement Plans; 

 – We work through selected industry associations to influence how 

the industry is positioned; and

 – We produce an annual Tax Transparency and Payments to 

Governments Report, which shows how we meet our regulatory 
tax obligations.

South32 Annual Report 2021Operating and Financial ReviewPortfolio reshaping

Our objective is to outperform by offering our shareholders exposure to high-quality operations  
in commodities with a strong and sustainable outlook, in jurisdictions where we believe we can operate –  
in line with our values.

Risk exposure trend 2021

↑

Mapping to strategic objectives
 – World class project execution

 – Sustainably reshape our business for the future

Opportunities
We invest for value in our preferred commodities and 
jurisdictions. We do this by progressing our internal development 
options, by acquiring exploration opportunities, development 
projects or existing operations and by divesting non-preferred 
exposures that we believe will not generate an acceptable 
shareholder return.

Threats
If we don’t invest in a disciplined way, execute projects to budget 
and plan or divest non-preferred exposures for value, we could 
reduce shareholder returns. Climate change, and the transition to 
a low-carbon economy, may present both risks and opportunities 
for our portfolio commodity composition. This is discussed under 
'Climate change' on page 25.

Our response includes:
 – Our strategy informs the decisions we make about portfolio 
composition. We formally evaluate our strategic positioning 
annually with the Board and provide updates throughout the 
year;

 – We have a dedicated greenfields exploration team focused 
on building a pipeline of low-cost, high-quality resource 
development options;

 – We maintain a life of operations planning process. By evaluating 
the embedded options in our operations, we can progress with 
selected organic options at the right time;

 – We apply a rigorous project development process and have 
experienced and dedicated project execution capability; 

 – We follow strong due diligence processes for acquisitions and 

new business ventures;

 – We carry out an annual review of commodity prices and 

exchange rates, to develop long-term views for our portfolio 
commodities and foreign exchange rates for the jurisdictions 
where we operate;

 – We apply a standardised valuation methodology with consistent 

key macroeconomic assumptions;

 – We have a mature and independent peer review process, which 
we rigorously follow to inform key investment decisions; and

 – We actively manage portfolio change with dedicated specialists 

to deliver integration and separation benefits.

2
7

Global economic uncertainty and liquidity 

Our aim is to manage uncertainty related to changing macroeconomic conditions. We do the same when it 
comes to the volatility in commodity, currency and capital markets, given the impact they can have on our 
earnings, balance sheet and ability to pursue our strategy.

Risk exposure trend 2021

←→

Mapping to strategic objectives
 – Sustainably reshape our business for the future

 – Create enduring social, environmental and economic value

Opportunities
We prioritise an investment grade credit rating and a disciplined 
approach to allocating capital, which keeps our balance sheet 
strong, providing us with financial flexibility regardless of market 
conditions. By creating competition for capital and investing 
selectively in our existing operations and growth options, external 
opportunities, or by making returns to shareholders, we aim to 
maximise total shareholder returns over time.

Threats
A significant or sharp deterioration in economic conditions can 
adversely impact market demand, commodity prices, and/or 
exchange rates which has the potential to significantly reduce 
profitability, cash flow and returns to shareholders. A reduction in 
liquidity available in capital markets has the potential to impact 
our balance sheet and ability to pursue our strategy.

Our response includes:
 – We have a diverse portfolio of operations, commodities and end 

markets which strengthens our resilience to the disruption of any 
one commodity, geography or operation;

 – We prioritise a strong balance sheet and an investment grade 
credit rating, so that we remain in control through economic 
cycles;

 – We test our financial strength across a range of scenarios, 

including a depressed demand and pricing environment. We also 
maintain a minimum liquidity buffer;

 – We adjust our capital allocation plans according to market 

conditions;

 – We maintain strong relationships with high-quality customers 

and suppliers from all around the world;

 – We mostly sell our products with reference to floating, market-
based prices, which are broadly correlated with floating global 
currency markets and the input costs we’re exposed to; and

 – We carry out an annual review of commodity prices and 

exchange rates, which we use to inform our operational plans. 
This process is supplemented by tri-annual updates.

South32 Annual Report 2021Operating and Financial ReviewRisk management continued

Major events or natural catastrophes 

Our operations and logistics networks can be disrupted by events such as pandemics, natural disasters, 
extreme weather events and major process or infrastructure failures.

Risk exposure trend 2021

↑

Mapping to strategic objectives
 – Working safely

 – Stable and predictable performance while minimising impact

Opportunities
Achieving stable and predictable performance enhances the 
value proposition to our shareholders, other stakeholders and 
the communities in which we operate. The better we prepare 
for and learn from events, the better we are placed to respond 
and reduce the impact of future events – strengthening our 
organisational resilience.

Threats
Failure to manage major events or natural catastrophes could 
result in a significant event or other long-term damage that 
could harm the company’s financial performance and licence to 
operate. The role of climate change in increasing the frequency 
and severity of natural catastrophes is addressed under 'Climate 
change’ on page 25.

Our response includes:
 – When facing potential catastrophes, we put safety and wellbeing 

at the heart of everything we do;

 – We use a system of risk management in design, construction 

and operation phases, to analyse risks, and design and 
implement plans that prevent or limit business impacts;

 – We utilise climate modelling data to inform our long-term plans 
and project pipelines, and conduct risk assessments of the 
physical impacts of climate change for our assets;

 – We have business continuity and disaster response plans in 
place with trigger action response scenarios. We’ve tested 
these to make sure we can respond rapidly to major events and 
safely restore our operations, protecting the health and safety of 
people and the communities in which we operate; 

 – We have assurance functions independent of our operating 
activities, in line with the three lines model, that provide 
assurance against our own comprehensive internal standards 
including equipment integrity, tailings dam management and 
technical stewardship. Where relevant, we work with external 
experts, relevant industry bodies and technology suppliers, to 
provide additional assurance and input; and

 – We purchase insurance coverage against many, but not all, 

potential losses or liabilities arising from major events or natural 
catastrophes. This coverage has a deductible cost to the 
company and limits that mean full financial coverage cannot be 
achieved.

8
2

South32 Annual Report 2021Operating and Financial ReviewPredictable operational performance 

Loss of predictable operational performance will prevent us from reliably delivering on our strategic 
objectives. We build resilience and predictability into our business by sustaining our ability to keep our 
people safe and well, meeting our regulatory and social obligations, managing cost inflation and consistently 
providing quality products to our customers.

Risk exposure trend 2021

↑

Mapping to strategic objectives
 – Working safely

 – Stable and predictable performance while minimising impact

Opportunities
We mature our Operating System to control and continuously 
improve our operations and processes, delivering stable and 
predictable performance and unlocking the full value of our 
business. We invest in our operations to sustain and improve 
production capacity that generates reliable cash flow to deliver 
on our strategic objectives.

Threats
If we can’t safely and consistently achieve our production, cash 
flow or profitability targets, it could negatively impact our ability 
to deliver on our strategic objectives and negatively impact 
shareholder returns.

Our response includes:
 – We have embedded, and continuously verify and improve our 
safety and risk management systems across our business 
(including our pandemic response);

 – We have an effective Asset Management system in place at each 
operation and review our asset health, asset integrity and capital 
investments on a regular basis;

 – We actively verify, and improve, the effectiveness of our 

Operating System by embedding best operating practices 
including operational planning, work design and standards, 
process control and improvement practices;

 – We actively manage risks to our resource and reserve, mine 
and operational planning including reconciliation of Mineral 
Resources and Ore Reserves to production, plan and spatial 
compliance and management of geotechnical risks;

 – We manage an integrated system of long- and short-

term planning and scheduling processes that considers 
environmental, social and governance (ESG) themes and 
optimises the value from our resources; 

 – We actively manage product delivery and supply chain risks 

including effective sales and operational planning processes, 
monitoring of raw material supply, and management of target 
inventory operating windows; and

 – We carry out rigorous quality assurance programs over our 

products and operations.

2
9

South32 Annual Report 2021Operating and Financial ReviewRisk management continued

Shaping our culture and managing diverse talent 

To deliver our strategic objectives, we must actively shape our culture to attract, leverage and retain our 
diverse talent. Culture and talent are fundamental aspects of an empowered workforce that delivers 
predictable operational performance and continuous improvement.

Risk exposure trend 2021

↑

Mapping to strategic objectives
 – Our people are connected and engaged

Opportunities
By fostering an environment that is conducive to our aspired 
culture, we will have even higher levels of employee engagement 
and teams that are empowered to innovate and drive 
performance. 

By having an inclusive and diverse workplace, in every aspect, 
we can improve our ability to attract and retain talent, and better 
deliver safety and operational performance, together.

Our flexible work practices and global operating model provides 
greater access to talent which can be positioned across the 
company to better meet business challenges and capture 
opportunities.

0
3

Threats
If we are unable to embed our preferred culture, we will likely 
have lower levels of engagement, disconnected teams that 
lack diversity and operate in silos, and relationship rather than 
performance-based decision making. Over time, this would 
likely constrain innovative thinking and may lead to significant 
shareholder value erosion and reputational damage. 

A stimulus related recovery in commodity markets has seen 
competition for talent rise and voluntary turnover rates increase, 
whilst COVID-19 has restricted travel and limited face-to-face 
interaction between our key leaders and geographically disperse 
talent pool.

Our response includes:
 – Our Board and Lead Team actively measure and discuss culture 
using a Culture Tensions framing model. This process acts as 
a health check and allows us to assess positive or negative 
change, and test whether we are making progress towards 
our preferred culture that better balances relationships with 
performance, and systems and processes with innovation 
and empowerment. This process is supplemented by periodic 
employee 'pulse' surveys that measure employee engagement 
and test whether our culture is enabling the delivery of our 
strategic objectives;

 – We have an Inclusion and Diversity Policy and Framework which 
sets out our commitments, strategy, measurable objectives and 
approach to performance reporting;

 – We have a Code of Business Conduct which sets out our 
expected standards of conduct, with formal training and 
assessment routines in place. Anyone can report a business 
conduct concern, anonymously if preferred, or by using our 
confidential and independently administered EthicsPoint 
reporting hotline;

 – We have a new leadership model which strengthens alignment 

to our preferred culture and behaviours, and is integrated across 
our people systems and processes;

 – We design our reward elements to position ourselves relative 
to the market, enabling us to attract appropriate skills and 
experience, engage employees and drive performance; 

 – We have a Performance and Goals Process which supports 
our reward philosophy and ensures that aligned leadership 
behaviours and performance are recognised and rewarded;

 – We routinely review our talent, creating individualised plans to 

further their development;

 – We support employees who undertake further education and 
training related to their current or future career with South32;

 – We utilise secondments to support the delivery of business 

objectives while also providing employees with development 
opportunities and exposure to other roles or areas of the 
business; and

 – We have an internal Flexible Work Standard which empowers 
our leaders to engage with their teams to determine the 
ways of working that balance individual, team and business 
requirements.

South32 Annual Report 2021Operating and Financial ReviewMaintain competitiveness through innovation and technology

Technology and innovation are advancing at a rapid pace. Companies which are unable to effectively 
leverage technology and innovation will find themselves failing to deliver against shareholder expectations 
on returns, unable to attract and retain talent, or in the example of decarbonisation, failing to maintain a 
licence to operate.

Risk exposure trend 2021

↑

Mapping to strategic objectives
 – Technology and innovation deliver value

 – Create enduring social, environmental and economic value

Opportunities
To stay competitive, we position our organisation to effectively 
identify, develop and adopt sustainable business models for 
technology and innovation in our operations and projects. Priority 
innovation opportunities for South32 are identified and delivered 
through Innovate32, our strategy-aligned, value-focused, 
innovation portfolio. This approach will enable us to deliver 
on shareholder return expectations and position us for future 
business opportunities.

Threats
Failure to keep pace with, and leverage advances in technology 
and innovation could result in reduced shareholder returns and 
impact our licence to operate.

Cyber security incidents could pose multiple risks including 
disruption to new projects and operations, theft, disclosure or 
corruption of information.

Failure to adopt automation, electrification and digital systems 
could result in deteriorating performance across safety, 
productivity, returns and carbon emissions.

Our response includes:
 – We have a clearly defined approach to innovation, improvement 

and technology; 

 – We have organised to deliver specific programs focused 
on adoption and improvement of critical technology 
capabilities across multiple time horizons including cyber 
security, connectivity, underground mine automation and 
decarbonisation;

 – We have a value-based ‘portfolio’ approach to testing and 

scaling up innovation across the company;

 – We have rigorous internal technology standards and processes 

(technology ‘ways of working’); 

 – We benchmark our digital technology performance against 
industry best practice and have organised the coordination 
and integration of technology advances into South32’s growth 
portfolio;

 – We actively manage cyber security and data centre risks through 

a system of risk management and have increased our cyber 
security controls in response to COVID-19 and an increase in 
remote working; and

 – We monitor internal customer satisfaction and manage 

customer support.

3
1

South32 Annual Report 2021Operating and Financial ReviewRisk management continued

Security of supply of logistics chains, and critical goods and services

Together with our customers and suppliers we manage our inbound and outbound supply chains. Critical 
goods and services include raw materials, energy, water, gas, heavy mobile equipment, tyres, technology, 
corporate services and logistics (which includes road, rail, air and shipping).

Risk exposure trend 2021

↑

Mapping to strategic objectives
 – Stable and predictable performance while minimising impact

 – Create enduring social, environmental and economic value

Opportunities
Optimal and sustainable management of supply chain risk 
positions our business to operate safely and reliably, at the lowest 
possible cost and in a manner that meets or exceeds societal 
expectations.

Threats
The disruption of our supply chains could materially impact 
our operations by affecting production, operating costs and 
damaging our reputation.

The impact of a global pandemic and geopolitical tension are 
more difficult to manage and have the potential to significantly 
disrupt trade flows.

Failure to meet minimum ethical supply chain standards has the 
potential to damage our social licence to operate (this is further 
addressed under ‘Evolving societal expectations’ on page 33).

2
3

Climate change has the potential to increase the frequency and 
severity of extreme weather events which may threaten our 
supply chains, particularly logistics and the availability of critical 
goods and services (this is addressed under 'Climate change’ on 
page 25).

Our response includes:
 – We understand, assess and continually monitor the risks in 

our supply chains through embedded routines and processes. 
This extends to the risks associated with the supply of critical 
goods and services; materials with potential shortage risk; 
critical suppliers and categories; vendor liquidity; and outbound 
logistics providers. Internal and external data is integrated so we 
have an accurate understanding of existing and emerging risks;

 – We use this understanding of risk to deploy controls to support 

predictable operations. This includes working closely with 
our vendors and operations to better match availability with 
demand; developing alternative sources of supply; optimising 
inventory levels; flexing commercial terms and adjusting our 
business continuity plans;

 – We build strong strategic partnerships with key in and outbound 
supply chain partners on a long-term, mutually beneficial basis;

 – We have a clearly defined transformation strategy and 

enterprise and supplier development programs in South Africa 
aimed at building and growing small and medium enterprises;

 – We have Reconciliation Action Plan targets to develop and 
support Aboriginal and Torres Strait Islander enterprises in 
Australia;

 – We have local procurement initiatives designed to increase 

opportunities for local suppliers;

 – We actively review and manage payment terms to support small 
and local businesses in all jurisdictions in which we operate; and

 – We understand the risk of modern slavery in our supply chains 

and have processes in place to manage this risk.

Maintain, realise or enhance the value of our Mineral Resources and Ore Reserves 

We intend to realise the potential of the resources and reserves we are entrusted to develop. We work to 
continually optimise our operations through sound technical and economic understanding of our resources 
and reserves.

Risk exposure trend 2021

←→

Mapping to strategic objectives
 – Stable and predictable performance while minimising impact

 – World class project execution

 – Create enduring social, environmental and economic value

Opportunities
We continue to enhance our understanding of our resources and 
reserves. We leverage this enhanced understanding through 
the annual planning cycle to define and assess additional 
opportunities to add value to our business.

Threats
If we fail to continually optimise our operations and projects,  
it will have a significant impact on shareholder returns, 
the benefits our stakeholders receive and ultimately, the 
sustainability of the company.

Our response includes:
 – We report Mineral Resources and Ore Reserves (including Coal 

Resources and Coal Reserves) in accordance with the JORC Code 
as required in Chapter 5 of the ASX Listing Rules; 

 – We apply an annual planning process, that considers the impact 
of climate change on our Ore Reserves, structured to maximise 
value throughout the life of our operations; 

 – We have capital prioritisation, capital allocation and planning 

processes which prioritise the highest-value options across our 
portfolio;

 – We apply a rigorous project development process that includes 
independent peer review of project risks and approval tollgates; 
and

 – We have an internal closure standard which requires that our full-
life of operations value incorporates closure and rehabilitation 
liabilities.

South32 Annual Report 2021Operating and Financial ReviewEvolving societal expectations 

The expectations of resource companies by employees, government, investors, lenders, host communities, 
non-governmental organisations (NGOs) and broader society continue to evolve. Our stakeholders may have 
divergent views and wants.

We actively engage our stakeholders to understand and respond to their views and identify ways we can 
create enduring social, environmental and economic value.

We aim to effectively manage this through regular stakeholder engagement and external monitoring on a 
wide range of financial and ESG issues (including climate change). 

Risk exposure trend 2021

↑

Mapping to strategic objectives
 – Stable and predictable performance while minimising impact

 – Create enduring social, environmental and economic value

Opportunities
Proactive, collaborative and transparent engagement with our 
stakeholders builds relationships based on trust and shared 
understanding. Our ongoing licence to operate is built on our 
contribution to our stakeholders and broader society.

Threats
Failure to meet evolving societal expectations for ESG 
performance could damage our reputation and negatively impact 
our licence to operate, limiting our ability to access capital, retain 
and attract employees and grow our business in existing and new 
jurisdictions.

Our response includes:
 – Our purpose and strategy expressly balance economic 

outcomes with social and environmental outcomes, now and into 
the future. In the decisions we take, we look to minimise impact, 
respect human rights and create enduring social, environmental 
and economic value for all our stakeholders;

 – We undertake internal and external stakeholder analysis and 
engagement on a wide range of financial and ESG issues, 
including an annual materiality analysis to understand 
our material ESG issues. Our approach is aligned with the 
International Council on Mining and Metals (ICMM) Mining 
Principles, The United Nations Global Compact Ten Principles 
and Global Reporting Initiative Sustainability Reporting 
Standards;

 – We work to build strong, positive and meaningful relationships 

with local communities, and we listen to their views. We regularly 
complete and review community perception surveys, human 
rights impact assessments, social baseline studies and impact 
and opportunity assessments;

3
3

 – We review and amend our community investment program 
annually to align with community and stakeholder priorities. 
We measure the outputs and outcomes of our community 
investments to ensure they are having the desired impact;

 – We engage with Indigenous and Tribal Peoples across our 
operations to ensure we understand our commitments to 
manage cultural areas of significance. Our engagement with 
Indigenous and Tribal Peoples throughout the life of our 
operations is sensitive to and respects cultural protocols; 

 – We participate in sustainability reporting transparency initiatives 

and ESG rating agencies reviews that assess and score our 
performance; and

 – We transparently report on our risks, opportunities, regulatory 
obligations, commitments and areas where we’re working that 
are relevant to our stakeholders.

South32 Annual Report 2021Operating and Financial ReviewFinancial and operational performance summary

DELIVERING STRONG 
OPERATING RESULTS  
IN CHALLENGING TIMES

We set production records at three operations, 
progressed our portfolio transformation and  
increased returns to our shareholders.

In discussing the operating results of the 
Group, the focus is on Underlying earnings 
and ROIC. Underlying earnings is the key 
measure that is used by the Group to 
assess its performance, make decisions 
on the allocation of resources and assess 
senior management’s performance.

In addition, the performance of each of 
the Group’s operations and operational 
management is assessed based on 
Underlying EBIT. Management uses this 
measure because financing structures 
and tax regimes differ across the Group’s 
operations and substantial components 
of tax and interest charges are levied at 
a Group level rather than an operational 
level.

4
3

The Group uses both International Financial 
Reporting Standards (IFRS) and non-IFRS 
financial measures such as underlying 
measures of earnings, effective tax rate 
(ETR), return on invested capital (ROIC), 
cash flow and net cash, to assess the 
Group’s performance. The Directors 
believe that the non-IFRS measures are 
important when assessing the underlying 
financial and operating performance of the 
Group and its operations. The meanings of 
individual non-IFRS measures used in this 
report are set out in the Glossary on  
page 164. 

Underlying earnings, Underlying earnings 
before interest and tax (EBIT) and 
Underlying earnings before interest, tax, 
depreciation and amortisation (EBITDA) 
are included on page 102 in note 4 to 
the financial statements. We believe that 
Underlying earnings, Underlying EBIT 
and Underlying EBITDA provide useful 
information, but should not be considered 
as an indication of, or an alternative to, 
profit/(loss) after tax as an indicator of 
actual operating performance or as an 
alternative to cash flow as a measure of 
liquidity. 

In order to calculate Underlying earnings, 
Underlying EBIT and Underlying EBITDA, 
the following items are adjusted as 
applicable each period, irrespective of 
materiality: 

 – Exchange rate (gains)/losses on 
restatement of monetary items;

 – Impairment losses/(reversals);

 – Net (gains)/losses on disposal and 

consolidation of interests in businesses;

 – (Gains)/losses on non-trading derivative 
instruments and other investments 
measured at fair value through profit or 
loss;

 – Major corporate restructures;

 – Earnings adjustments included in profit/
(loss) of equity accounted investments;

 – Exchange rate variations on net debt; 

and

 – Tax effect of earnings adjustments.

In addition, South32 management 
retains the discretion to adjust for other 
significant non-recurring items that are 
not considered reflective of the underlying 
performance of the Group’s operations.

South32 Annual Report 2021Operating and Financial ReviewFinancial key performance indicators for FY21
Financial highlights

US$M

Revenue(1)
Profit/(loss) before tax and net finance costs
Profit/(loss) after tax and net finance costs
Basic earnings per share (US cents)(2)
Ordinary dividends per share (US cents)(3)
Special dividends per share (US cents)(4)
Other financial measures
Underlying EBITDA
Underlying EBITDA margin
Underlying EBIT
Underlying EBIT margin
Underlying earnings
Basic Underlying earnings per share (US cents)(2)
ROIC
Ordinary shares on issue (million)

FY21(5)

6,337
(94)
(195)
(4.1)
4.9
2.0

1,564
26.4%
844
14.1%
489
10.3
6.2%
4,675

FY20

6,075
261
(65)
(1.3)
2.1
1.1

1,185
21.9%
446
8.4%
193
3.9
2.4%
4,846

Change

4%
(136%)
N/A
N/A
133%
82%

32%
4.5%
89%
5.7%
153%
164%
3.8%
(4%)

(1)  Revenue includes revenue from third party products and services.
(2)  FY21 basic earnings per share is calculated as Profit/(loss) after tax divided by the weighted average number of shares for FY21 (4,771 million). FY21 basic Underlying earnings 
per share is calculated as Underlying earnings divided by the weighted average number of shares for FY21. FY20 basic earnings per share is calculated as Profit/(loss) after 
tax divided by the weighted average number of shares for FY20 (4,892 million). FY20 basic Underlying earnings per share is calculated as Underlying earnings divided by the 
weighted average number of shares for FY20.

(3)  FY21 ordinary dividends per share is calculated as H1 FY21 ordinary dividend announced (US$67 million) divided by the number of shares on issue at 31 December 2020  

(4,781 million) plus H2 FY21 ordinary dividend announced (US$164 million) divided by the number of shares on issue at 30 June 2021 (4,675 million).

(4)  FY21 special dividends per share is calculated as H2 FY21 special dividend announced (US$93 million) divided by the number of shares on issue at 30 June 2021 (4,675 million).
(5)  FY21 includes the discontinued operation South Africa Energy Coal for 11 months.

External factors and trends 
affecting the Group’s result
The following describes the main external 
factors and trends that have had a material 
impact on the Group’s financial position 
and results of operations. Details of the 
Group’s most significant risk factors and 
how they are mitigated can be found in 
Risk management on pages 24 to 33 of the 
Annual Report. 

Management monitors particular trends 
arising from external factors with a view 
to managing the potential impact on the 
Group’s future financial position and results 
of operations. 

Commodity prices and changes in 
product demand and supply

Estimated impact on Underlying EBIT of a 
+/- 10% change in commodity price

3
5

South32 produces metals and ores, prices 
of which are driven by global demand and 
supply for each of these commodities. 
Commodity prices were generally higher in 
FY21 compared to FY20 as most physical 
markets strengthened on the back of a 
solid global economic recovery and easing 
of COVID-19 restrictions. The prices that 
the Group obtains for its products are a 
key driver of business performance, and 
fluctuations in these markets affects 
its results, including cash flows and 
shareholder returns. 

US$M

Aluminium(1)
Alumina
Manganese ore(2)
Metallurgical coal
Nickel
Silver
Lead
Zinc

FY21

208
155
91
71
43
33
23
16

(1)  Aluminium sensitivity shown without any associated 

increase in alumina pricing.

(2)  The sensitivity impacts for manganese ore are on a 

pre-tax basis. The Group’s manganese operations 
are reported as an equity accounted investment. 
As a result, the profit after tax for manganese is 
included in the Underlying EBIT of South32.

South32 Annual Report 2021Operating and Financial ReviewFinancial and operational performance summary continued

The following table shows the quoted market prices of the Group’s most significant commodities in FY21 and FY20. These prices differ 
from the realised prices on the sale of production due to contracts to which the Group is a party, differences in quotational periods, 
quality of products, delivery terms and the range of quoted prices that are used for contracting sales in different markets.

Quoted commodity prices

Year ended 30 June

Alumina(1) (US$/t)
Aluminium (LME Cash)(2) (US$/t)
Metallurgical coal(3) (US$/t)
Manganese ore(4) (US$/dmtu)
Nickel (LME Cash)(2) (US$/t)
Silver(5) (US$/toz)
Lead (LME Cash)(2) (US$/t)
Zinc (LME Cash)(2) (US$/t)

Average Value

Closing Value

FY21

283
2,023
122
4.63
16,241
25.4
1,978
2,653

FY20

277
1,678
144
4.96
14,009
16.9
1,901
2,211

Change

2%
21%
(15%)
(7%)
16%
50%
4%
20%

FY21

286
2,523
194
5.15
18,450
25.8
2,320
2,946

FY20

262
1,602
116
5.02
12,790
17.8
1,789
2,057

Change

9%
57%
67%
3%
44%
45%
30%
43%

(1)  Platts Alumina Index (PAX) Free on Board (FOB) Australia – market price assessment of calcined metallurgical/smelter grade alumina.
(2)  LME Cash represents the Official Seller price for nickel, zinc and lead and the A.M. Official price for aluminium.
(3)  Platts Low-Vol Hard Coking Coal Index FOB Australia – representative of high-quality hard coking coals.
(4)  FastMarkets Manganese Ore 44 per cent Mn CIF Tianjin China.
(5)  Daily London Bullion Market Association (LBMA) Silver Fix.

The following summarises the pricing 
trends of our most significant commodities 
for FY21. The price change reflects the 
average of FY21 over FY20.

Alumina: The average FOB Australia price 
for the year was two per cent higher than 
FY20. While a strong recovery in global 
aluminium demand supported the market 
in FY21, it remained well supplied due to 
increased production from China. 

6
3

Aluminium: The average LME cash 
settlement price for the year was 21 per 
cent higher than FY20. The price increase 
was driven by the global demand recovery, 
tight scrap availability and a ceiling for 
Chinese primary capacity at around  
45 million tonnes per year, which led to 
domestic supply growing at a slower pace 
than demand. 

Metallurgical coal: The FY21 average 
Platts Premium Low Vol Hard Coking 
Coal price was 15 per cent lower than 
FY20. The price declined as China’s tight 
import regulations led to the diversion of 
Australian export volumes, which created 
an oversupplied ex-China market before 
trade flows rebalanced through the year. 

Manganese ore: The average Manganese 
Ore Metal Bulletin 44 per cent CIF China 
price was seven per cent lower than 
FY20. While the global demand recovery 
remained a key driver, an increase in 
seaborne supplies followed an easing of 
post-COVID-19 restrictions which impacted 
the market balance. 

Nickel: The FY21 average LME cash 
settlement price was 16 per cent higher 
than FY20, driven by strong global demand 
growth from both the stainless steel and 
electric vehicle battery segments.

Silver: The FY21 average LBMA silver price 
was 50 per cent higher than FY20. The 
significant price gain was underpinned by 
a sharp rebound in industrial demand and 
strong investor appetite for silver.

Lead: The FY21 average LME cash 
settlement price was four per cent higher 
than FY20. Tight concentrate supply and a 
post-pandemic rebound in battery demand 
in North America and Europe provided 
price support. 

Zinc: The FY21 average LME cash 
settlement price was 20 per cent higher 
than FY20, as a prolonged supply 
disruption stemming from COVID-19 
related impacts helped to underpin prices.

Other external factors
A recovery in global demand as countries 
emerged from COVID-19 lockdowns, 
coupled with supply restraint by major 
producers, led to a recovery in oil prices 
in FY21. Oil prices were approximately five 
per cent higher in FY21 compared to FY20. 
This contributed to inflationary pressure in 
mining costs.

While there remains a gap between 
climate change ambition and action, 
activity in carbon offset and credit markets 
was supported by more countries and 
companies pledging long-term net zero 
targets or strengthening short-term 
emission reduction goals. Australian 
carbon credit units (“ACCUs”) were, on 
average, five per cent higher in FY21 as 
compared to FY20, reaching a new high 
of A$19.30/t at the close of FY21. Both our 
Australian and South African operations 
are subject to emissions reporting and 
domestic carbon pricing regimes. Carbon 

pricing policies and associated regulatory 
mechanisms may restrict emissions 
or increase costs for companies with 
liable emissions. We annually review the 
signposts for changes in carbon pricing 
policy and how it affects us. 

Exchange rates
The Group is exposed to exchange rate risk 
on foreign currency sales, purchases and 
expenses, as no active currency hedging 
is undertaken. As the majority of sales are 
denominated in US dollars, and the US 
dollar plays a dominant role in the Group’s 
business, funds borrowed and held in US 
dollars provide a natural hedge to currency 
fluctuations. Operating costs and costs of 
locally-sourced equipment are influenced 
by fluctuations in local currencies, primarily 
the Australian dollar, Brazilian real, 
Colombian peso, Euro and South African 
rand. 

The Group is also exposed to exchange 
rate translation risk in relation to net 
monetary liabilities, being foreign currency 
denominated monetary assets and 
liabilities, including debt, tax and other 
long-term liabilities. Details of the exposure 
to foreign currency fluctuations are set out 
in note 19 to the financial statements on 
pages 126 to 133. 

South32 Annual Report 2021Operating and Financial ReviewThe following table indicates the estimated impact on FY21 Underlying EBIT of a change in the significant currencies to which the Group 
is exposed against the US dollar. The sensitivities give the estimated impact on Underlying EBIT based on the exchange rate movement 
in isolation. The sensitivities assume all variables except for exchange rates remain constant. There is an inter-relationship between 
currencies and commodity prices where movements in exchange rates can cause movements in commodity prices and vice versa. This 
is not reflected in the sensitivities below. These sensitivities should therefore be used with care.

Estimated impact on Underlying EBIT of a +/-10% change in producer currencies relative to the US dollar

US$M

Australian dollar(1)
South African rand(1)
Colombian peso
Brazilian real

FY21

188
104
23
9

(1)  The sensitivity impacts for manganese ore are on a pre-tax basis. The Group’s manganese operations are reported as an equity accounted investment. As a result, the profit 

after tax for manganese is included in the Underlying EBIT of South32.

The following table shows the average and period end closing exchange rates of the most significant currencies that affect the Group’s 
results:

Exchange rates(1)

Year ended 30 June

Australian dollar(2)
Brazilian real(3)
Colombian peso(3)
South African rand(3)
Euro(4)

Average Value

Closing Value

FY21

0.75
5.39
3,660
15.42
1.19

FY20

0.67
4.47
3,542
15.66
1.11

Change

12%
(21%)
(3%)
2%
7%

FY21

0.75
5.00
3,757
14.33
1.19

FY20

0.69
5.48
3,759
17.26
1.12

Change

9%
9%
0%
17%
6%

(1)  Positive per cent change in FX indicates strengthening currency relative to US$.
(2)  Displayed as US$ to A$ based on common convention.
(3)  Displayed as local currency to US$.
(4)  Displayed as US$ to € based on common convention.

Global risk sentiment, monetary policies and commodity prices continue to be key drivers of currency markets. In FY21, producer 
currencies generally strengthened against the US dollar, recovering losses registered at the height of the COVID-19 pandemic in FY20. 
As economies exited from lockdowns, the accommodative monetary policies and strong global recovery boosted sentiment and 
risk appetite, resulting in a weaker US dollar. Elevated commodity prices and strong exports bolstered the currencies of some of the 
commodity dependent economies, such as Australia and South Africa. However, debt sustainability concerns and domestic instability 
also exerted downward pressure on a few emerging market currencies including the Brazilian real and Colombian peso in FY21. The 
Central Bank of Brazil implemented steep rate hikes which lent support to the Brazilian real towards the end of FY21. 

3
7

South32 Annual Report 2021Operating and Financial ReviewFinancial and operational performance summary continued

2021 Financial year 
summary

Our response to COVID-19
Our response to the COVID-19 pandemic 
continued throughout FY21 and the Group 
took significant measures to safeguard our 
communities, employees and contractors, 
and keep our operations running. Our 
critical controls remain in place at all our 
operations, offices and projects, as waves 
of COVID-19 infections continue in some 
of the locations where we operate. We are 
actively engaged with governments and 
health authorities on their vaccine roll-
out plans and have offered the use of our 
facilities and logistics support.

During FY21 we adapted the way that 
we work to deliver a solid operating 
performance while navigating the ongoing 
challenges of COVID-19. We continued to 
focus on cost control and productivity 
improvements, simplifying our functional 
structures, reducing our corporate costs, 
and delivering production broadly in line 
with guidance.

As we look to FY22, we continue to monitor 
the ongoing impacts of the pandemic 
closely. Accordingly our FY22 production, 
Operating unit cost and capital expenditure 
guidance is subject to further potential 
impacts from COVID-19.

8
3

Performance summary
The Group’s statutory profit after tax 
declined by US$130 million to a loss of 
US$195 million in FY21 following the 
recognition of impairment charges totalling 
US$728 million (US$510 million post-tax) in 
relation to Illawarra Metallurgical Coal and a 
loss on sale of US$159 million following our 
divestment of South Africa Energy Coal. 

The Illawarra Metallurgical Coal impairment 
charge reflects the increased approval 
uncertainty created by the New South 
Wales Independent Planning Commission’s 
(IPC) decision to refuse our application 
for the Dendrobium Next Domain (DND) 
life extension project and the resultant 
potential impact on the economics of 
the broader complex. We have scaled 
back activity on the project while we 
consider alternative options following 
the IPC decision. The loss incurred on the 
divestment of South Africa Energy Coal 
reflects the recognition of the vendor 
support package (refer to note 31 on 
page 144 for further details) that we 
provided to Seriti Resources Holdings 
Proprietary Limited (Seriti) to underpin the 
sustainability of the business.

Excluding these one-off charges, strong 
operating performance and higher prices 
for most of our commodities translated 
into a 153 per cent increase in Underlying 
earnings to US$489 million. Our production 
performance, including three records, 
partially offset cyclical inflation and 
stronger producer currencies. 

 – US$439 million as part of our ongoing 
capital management program, with 
US$346 million allocated to our on-
market share buy-back (172 million 
shares at an average price of A$2.68 
per share), and the Board resolving to 
pay a US$93 million fully franked special 
dividend in October 2021.

Specific highlights for FY21 included:

 – Record production at Worsley Alumina 
and Brazil Alumina with both refineries 
benefitting from higher plant availability; 

 – Record production at Australia 

Manganese and a 21 per cent year-
on-year increase at South Africa 
Manganese with both operations 
exceeding guidance;

 – A 14 per cent increase in zinc equivalent 
production at Cannington with strong 
underground performance enabling the 
acceleration of a higher-grade mining 
sequence during the year;

 – A nine per cent increase in production 
at Illawarra Metallurgical Coal with the 
return to a three longwall configuration 
delivering greater efficiencies; 

 – First ore from the higher-grade 

Queresas and Porvenir project (Q&P 
project) and successful refurbishment 
of a furnace at Cerro Matoso, laying the 
foundation for a 28 per cent increase in 
nickel production in FY22; 

 – The announcement of our target to 
achieve a 50 per cent reduction in 
operational carbon emissions (Scope 
1 and 2) by 2035, which steps up 
our ambition on climate change and 
supports a pathway to net zero by 2050; 
and

 – Successful divestment of South Africa 
Energy Coal, the TEMCO manganese 
alloy smelter and a portfolio of non-core 
precious metals royalties during FY21, 
simplifying and improving our portfolio.

We finished the period with net cash of 
US$406 million, having generated free 
cash flow from operations, including 
distributions from our manganese equity 
accounted investments, of US$825 million. 
Reflecting our strong financial position 
and demonstrating the continuation of 
the disciplined and flexible approach we 
are taking to our capital management 
program, we returned US$670 million to our 
shareholders in respect of FY21 comprised 
of:

 – A US$66.5 million fully franked interim 
ordinary dividend paid in April 2021 
in respect of H1 FY21, and the Board 
resolving to pay a US$164 million fully 
franked final ordinary dividend in 
respect of H2 FY21; and

Having returned seven per cent of our 
market capitalisation to shareholders 
in respect of FY21, and having also 
established a strong track record of 
returning excess capital in a timely and 
efficient manner, the Board has further 
expanded our capital management 
program by US$120 million to US$2 billion, 
leaving US$252 million to be returned by 
2 September 2022.

Earnings
The Group’s statutory profit after tax 
declined by US$130 million to a loss of 
US$195 million in FY21. Consistent with 
our accounting policies, various items are 
excluded from the Group’s statutory profit 
to derive Underlying earnings including: 
impairment losses (US$764 million pre-tax) 
primarily at Illawarra Metallurgical Coal;  
net losses on the disposal of our  
interest in South Africa Energy Coal  
(US$159 million pre-tax); exchange rate 
losses on restatement of monetary items 
(US$69 million pre-tax); gains made 
from the sale of a portfolio of non-core 
precious metals royalties (US$55 million 
pre-tax); gains on non-trading derivative 
instruments and other investments 
measured at fair value through profit 
or loss (US$37 million pre-tax); major 
corporate restructures (US$23 million 
pre-tax); losses associated with earnings 
adjustments included in our equity 
accounted investments (US$15 million  
pre-tax); exchange rate losses 
associated with the Group’s non US dollar 
denominated net debt (US$52 million  
pre-tax); and the tax expense for all pre-tax 
earnings adjustments and exchange rate 
variations on tax balances (US$306 million). 
Further information on these earnings 
adjustments is included on page 108.

The Group’s Underlying EBITDA increased 
by US$379 million (or 32 per cent) to  
US$1.6 billion in FY21, with Revenue four 
per cent higher, as sales volumes increased 
and our realised prices for aluminium, silver, 
zinc and nickel all improved. Higher base 
metals prices were partially offset by lower 
realised prices for our bulk commodities, 
with metallurgical coal and manganese ore 
prices declining.

South32 Annual Report 2021Operating and Financial ReviewOur strong operating result and higher 
prices translated into an improved Group 
operating margin of 26 per cent. Our cost 
base (excluding third party product cost 
and ceased & sold operations) remained 
largely unchanged, despite higher power 
costs at Hillside Aluminium and the 
inflationary impact of global freight rates 
and stronger producer currencies. Savings 
in our corporate spend and inventory 
movements meant our controllable cost 
base reduced, offsetting the impact of the 
cyclical cost pressures.

Underlying EBIT increased by  
US$398 million (or 89 per cent) to  
US$844 million as depreciation and 
amortisation decreased by US$19 million 
to US$720 million. Underlying earnings 
increased by US$296 million (or  
153 per cent) to US$489 million despite 
the de-recognition of tax assets at South 
Africa Energy Coal associated with its 
divestment, meaning our Underlying ETR 
remained elevated in FY21. The divestment 
of South Africa Energy Coal was completed 
on 1 June 2021, with the operation 
contributing an Underlying earnings loss 
of US$194 million to the Group’s result for 
FY21 (FY20: US$208 million loss).

Operating costs
FY21 and FY20 comparative underlying 
operating costs are set out below, 
excluding earnings adjustment items 
impacting operating costs. Earnings 
adjustment items are detailed on page 108 
in note 4(b)(i) to the financial statements.

US$M

Operating cash costs
Third party commodity 
purchases
Depreciation and 
amortisation expense
Total operating costs 
included in Underlying 
EBIT

FY21

4,616

FY20

4,711

468

585

720

739

5,804

6,035

Capital expenditure
We allocate capital in line with our strategy 
and capital management framework to 
optimise our business, unlock the full value 
of operations and identify and pursue 
opportunities to create value. In FY21 
the Group continued to prioritise capital 
to ensure the safety and reliability of our 
operations, progress life extension and 
innovation and improvement projects, and 
fund our current and future greenfield 
growth to sustainably grow ROIC. 

US$M

FY21

FY20

 – Capital expenditure at South Africa 

Safe and reliable capital 
expenditure
Improvement and life 
extension capital 
expenditure
Growth capital 
expenditure
Intangibles and the 
capitalisation of 
exploration expenditure
Divested operation – 
South Africa Energy Coal
Total capital expenditure 
(excluding equity 
accounted investments)
Equity accounted 
investment capital 
expenditure (including 
intangibles and capitalised 
exploration)
Total capital expenditure 
(including equity 
accounted investments)

(325)

(364)

(63)

(33)

(72)

(115)

(30)

(69)

(76)

(164)

(566)

(745)

(72)

(91)

(638)

(836)

Total capital expenditure, excluding equity 
accounted investments, decreased by 
US$179 million to US$566 million as:

 – Safe and reliable capital expenditure, 

excluding equity accounted investments 
and divested operations, decreased 
by US$39 million (or 11 per cent) to 
US$325 million, with spend at Illawarra 
Metallurgical Coal declining following 
the substantial investment in prior 
periods to return to a three longwall 
configuration; 

 – Improvement and life extension 

capital expenditure, excluding equity 
accounted investments and divested 
operations, increased by US$30 million 
(or 91 per cent) to US$63 million as we 
accelerated development of the Q&P 
project at Cerro Matoso and undertook 
pre-commitment spend on studies and 
critical path items associated with the 
DND project at Illawarra Metallurgical 
Coal; 

 – Growth capital expenditure decreased 
by US$43 million (or 37 per cent) to 
US$72 million with the rate of spend at 
Hermosa declining due to the impact of 
COVID-19 workforce restrictions and our 
completion of the voluntary remediation 
program in the prior year; 

 – Our spend on intangibles and the 

capitalisation of exploration expenditure 
decreased by US$39 million (or 57 per 
cent) to US$30 million as COVID-19 
travel restrictions led to the deferral of 
an update to our information technology 
systems and restricted our ability to 
undertake exploration activity; and

Energy Coal decreased by US$88 million 
(or 54 per cent) to US$76 million as 
the rate of significant investment into 
the business to secure its long-term 
sustainability under the ownership of 
Seriti slowed and the divestment was 
completed on 1 June 2021. 

Total capital expenditure associated 
with our manganese equity accounted 
investments declined by US$19 million 
to US$72 million as we completed non-
processing infrastructure upgrades at 
GEMCO and divested TEMCO.

Net finance costs
The Group’s Underlying net finance costs, 
excluding equity accounted investments 
and discontinued operation, of  
US$109 million in FY21, largely reflects  
the unwinding of the discount applied to 
our closure and rehabilitation provisions  
(US$59 million) and interest on our 
lease liabilities (US$55 million), primarily 
at Worsley Alumina. Costs for our 
discontinued operation (US$43 million) 
are mostly related to the unwind of the 
discount applied to our closure and 
rehabilitation provisions at South Africa 
Energy Coal. 

Tax expense
The Group’s Underlying income tax 
expense, which excludes tax associated 
with equity accounted investments, was 
US$203 million for an Underlying ETR of 
37.3 per cent in FY21. While a significant 
reduction from the prior year, the ETR 
remained elevated during FY21 due to the 
de-recognition of tax assets associated 
with losses at South Africa Energy Coal 
prior to its divestment. From FY22 we 
expect the rate to more closely reflect the 
corporate tax rates of the geographies 
where the Group operates which include: 
Australia 30 per cent, South Africa  
28 per cent, Colombia 31 per cent, 
Mozambique zero per cent and Brazil 
34 per cent. We continue to monitor for 
potential changes to tax legislation in these 
geographies.

The Underlying income tax expense for our 
manganese equity accounted investments 
was US$177 million, including royalty 
related taxation of US$53 million at GEMCO 
(Australia Manganese), for an Underlying 
ETR of 51.9 per cent (FY20: 43.7 per cent). 
The temporary increase in the Underlying 
ETR was driven by the de-recognition 
of certain deferred tax assets in our 
Australian business during FY21.

3
9

South32 Annual Report 2021Operating and Financial ReviewFinancial and operational performance summary continued

Cash flow
The Group’s free cash flow from operations, 
excluding equity accounted investments, 
increased by US$369 million to  
US$639 million in FY21, following a  
24 per cent reduction in capital 
expenditure and lower cash tax payments 
that tend to lag an improvement in 
profitability. We also received (net) 
distributions of US$186 million from our 
manganese equity accounted investments 
(FY20: US$313 million) as our two ore 
producing operations continued to 
perform strongly, while the alloy business 
incurred one-off costs associated with 
the suspension of Metalloys and sale 
of TEMCO. Cash generated from our 
Group operations was largely unchanged 
(+US$37 million to US$1.4 billion) as strong 
operating performance and a broad based 
price recovery across our commodities 
more than offset the prior period’s benefit 
of a substantial unwind in working capital 
(US$287 million). 

Free cash flow from operations, excluding 
equity accounted investments

US$M

FY21

FY20

Profit/(loss) from 
continuing and 
discontinued operations
Non-cash items
(Profit)/loss from equity 
accounted investments
(Profit)/loss from sale of 
operations
Change in working capital
Cash generated 
Total capital expenditure, 
excluding equity 
accounted investments, 
including intangibles and 
capitalised exploration
Operating cash flows 
before financing 
activities and tax, and 
after capital expenditure
Interest (paid)/received
Income tax (paid)/received
Free cash flow from 
operations

(94)
1,419

261 
927 

(133)

(100)

159
61
1,412

-
287
1,375 

(566)

(745)

846
(44)
(163)

630 
(25)
(335)

639

270

Although lower than the prior period, 
working capital unwound by a further 
US$61 million with provisions increasing 
by US$95 million, and trade and other 
payables by US$264 million. The latter 
driven by higher raw material input costs 
and the accrual of additional power 
charges under our new pricing agreement 
for our Hillside Aluminium smelter  
(US$83 million). The accrual reflects the 
increase in the smelter’s new tariff for the 
period 1 August 2020 to 30 June 2021 and 
is expected to unwind as payments are 
made across 24 months. These movements 
were partially offset by increases in trade 
and other receivables (US$156 million) 
and inventories (US$142 million), reflecting 
higher commodity prices. Our debtor days 
remained broadly unchanged at 24 (FY20: 
23 days).

Working capital movement reconciliation

US$M 

 FY21

FY20

Trade and other 
receivables
Inventories
Trade and other payables
Provisions and other 
liabilities
Working capital 
movement 

(156)
(142)
264

95

61

367
208
(184)

(104)

287

0
4

Earnings analysis

The following key factors influenced Underlying EBIT in FY21, relative to FY20. 

Reconciliation of movements in Underlying EBIT (US$M)(1)(2)(3)

1,000

500

446 

Uncontrollable

401

(73)

(185)

115 

(61)

238 

11 

(30)

(18)

Net finance
costs and tax

(152)

(203)

844 

489

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(1)  Sales price variance reflects the revenue impact of changes in commodity prices, based on the current period’s sales volume. Price-linked costs variance reflects the 

change in royalties together with the change in input costs driven by changes in commodity prices or market traded consumables. Foreign exchange reflects the impact of 
exchange rate movements on local currency denominated costs and sales. Volume variance reflects the revenue impact of sales volume changes, based on the comparative 
period’s sales prices. Controllable costs variance represents the impact from changes in the Group’s controllable local currency cost base, including the variable cost impact 
of production volume changes on expenditure, and period-on-period movements in inventories. The controllable cost variance excludes earnings adjustments including 
significant items.

(2)  Underlying net finance costs and Underlying income tax expense are actual FY21 results, not year-on-year variances.
(3)  South32’s ownership share of operations is as follows: Worsley Alumina (86 per cent share), Hillside Aluminium (100 per cent), Mozal Aluminium (47.1 per cent share), Brazil 

Alumina (Alumina 36 per cent share, Aluminium 40 per cent share), Illawarra Metallurgical Coal (100 per cent), Australia Manganese (60 per cent share), South Africa Manganese 
(60 per cent share), Cerro Matoso (99.9 per cent share), Cannington (100 per cent), Hermosa (100 per cent), and Eagle Downs Metallurgical Coal (50 per cent share).

South32 Annual Report 2021Operating and Financial Review 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings analysis

FY20 Underlying EBIT
Change in sales price

US$M

Commentary

446
401

Higher average realised prices for our commodities, including: 

Aluminium (+US$363 million)

Silver (+US$123 million)

Zinc (+US$65 million)

Nickel (+US$65 million)

Partially offset by lower average realised prices for:

Metallurgical coal (-US$182 million)

Manganese ore (-US$35 million)

Alumina (-US$3 million)

Net impact of price-linked costs

(73) Higher electricity costs (-US$103 million), primarily at Hillside Aluminium 

Higher distribution and freight costs across our operations (-US$39 million)

Lower caustic soda prices at Worsley Alumina (+US$27 million) and Brazil Alumina 
(+US$6 million)

Lower bauxite prices at Brazil Alumina (+US$18 million)

Change in exchange rates

Lower aluminium smelter raw material costs (+US$12 million), including pitch and coke
Stronger Australian dollar (-US$189 million)

(185)

Change in inflation

Change in sales volume

Stronger South African rand (-US$23 million)

Weaker Brazilian real (+US$16 million)
Southern Africa (-US$29 million)

Australia (-US$24 million)
Higher volumes at:

(61)

115

South Africa Manganese (+US$79 million)

Cannington (+US$66 million)

Worsley Alumina (+US$41 million)

Australia Manganese (+US$40 million)

Partially offset by lower volumes at:

Cerro Matoso (-US$91 million)

Mozal Aluminium (-US$31 million)

Controllable costs

238

Inventory movements (+US$249 million), resulting from the drawdown of metallurgical 
coal and aluminium finished goods in the prior period

Reduction in controllable costs for our corporate functions (+US$29 million) 

Impact of higher volumes (-US$15 million) primarily at South Africa Manganese, 
Worsley Alumina and Illawarra Metallurgical Coal

Higher caustic usage (-US$13 million) at Worsley Alumina

Increased pot relining activity (-US$12 million) at Hillside Aluminium

Ceased and sold operations

11 Movement in loss-making ceased and sold operations (South Africa Energy Coal, 

Other
Interest & tax (equity accounted 
investments)
FY21 Underlying EBIT

TEMCO alloy smelter and Bayside aluminium smelter)
Lower joint venture recoveries partially offset by EBIT earned on third party trading

(30)
(18) Higher ETR in our jointly controlled manganese operations

844

Further analysis of operations performance is outlined on pages 44 to 53.

4
1

South32 Annual Report 2021Operating and Financial ReviewFinancial and operational performance summary continued

Net debt and sources of liquidity
Our policies on debt and treasury 
management are as follows:

 – Commitment to maintain an investment 

grade credit rating;

 – Diversification of funding sources; and

 – Generally maintain borrowings and 

excess cash in US dollars.

Gearing and net debt
The table below presents net cash/(debt) 
and net assets of the Group, based on the 
balance sheet as at 30 June 2021:

US$M

FY21

FY20

Cash and cash  
equivalents
Current external debt
Non-current external debt
Net cash
Net assets

1,613
(408)
(799)
406
8,954

1,315
(355)
(662)
298
9,562

Given the net cash position of the Group, a 
gearing ratio is not presented.

Funding sources
In addition to cash flow from operations as 
a primary source of funding, the Group at 
the time of this report, has a committed 
US$1.45 billion revolving credit facility 
which is a standby arrangement to the 
Group’s US dollar commercial paper 
program and is not subject to financial 
covenants at the Group’s current credit 
rating. Certain financing facilities in relation 
to specific operations are the subject of 
financial covenants that vary from facility 
to facility; however, these are considered 
normal for such facilities.

As at 30 June 2021, the Group’s cash  
and cash equivalents on hand were 
US$1.6 billion. Details of our major standby 
arrangement are as follows:

US$M

Available 
FY21

Revolving credit facility(1)

1,450

Used 
FY21

-

(1)  The Group has an undrawn revolving credit 

facility which is a standby arrangement to the 
US commercial paper program. This facility was 
extended in July 2020 by one year and expires in 
February 2023.

Additional information regarding the 
maturity profile of the Group’s debt 
obligations and details of our major 
standby agreement is included in note 19 
to the financial statements on pages  
126 to 133.

Balance sheet and capital 
management
The Group’s generation of free cash flow 
from operations, including net distributions 
from our manganese equity accounted 
investments, of US$825 million supported 
a US$108 million increase in the Group’s 
net cash balance to US$406 million at 
30 June 2021, after we funded the return of 
a further US$460 million to shareholders in 
the period. Our lease and other  
interest bearing liabilities increased by 
US$190 million primarily due to recognition 
of our commitment to fund rehabilitation 
activity at South Africa Energy Coal 
operations by way of 10 annual instalments 
totalling US$200 million. 

Consistent with our unchanged capital 
management framework and commitment 
to maintain an investment grade credit 
rating, both Standard and Poor’s and 
Moody’s reaffirmed their respective BBB+ 
and Baa1 credit ratings for the Group 
during the period. 

Reflecting our strong financial position and 
demonstrating the disciplined and flexible 
approach we are taking to our capital 
management program, we recommenced 
our on-market share buy-back in October 
2020 as COVID-19 related operational risks 
subsided, returning US$346 million during 
the period in addition to paying  
US$115 million in ordinary dividends. In 
accordance with our ordinary dividend 
policy, the Board has resolved to pay a fully 
franked ordinary dividend of US 3.5 cents 
per share (US$164 million), representing  
46 per cent of Underlying earnings in 
respect of H2 FY21.

Our capital management framework is 
designed that our options compete for 
excess capital to create shareholder value, 
while our capital management program 
seeks to return capital to shareholders  
in a timely and efficient manner.  
Following the aforementioned return of  
US$346 million to shareholders in FY21, 
our capital management program had 
US$225 million remaining to be returned 
to shareholders as at 30 June 2021. 
Consistent with the flexible approach we 
are taking to the execution of our program, 
the Board has resolved to pay a fully 
franked special dividend of US 2.0 cents 
per share (US$93 million) and to increase 
the amount committed under the program 
by US$120 million. This increases the total 
amount to be returned under our capital 
management program to US$2 billion since 
its commencement, with US$252 million 
remaining to be returned by 2 September 
2022.

2
4

South32 Annual Report 2021Operating and Financial ReviewOperations analysis
A summary of the underlying performance of the Group’s operations is presented below and more detailed analysis is presented on 
pages 44 to 53.

Operations table (South32 share)(1)

US$M

Worsley Alumina
Brazil Alumina
Hillside Aluminium
Mozal Aluminium
Illawarra Metallurgical Coal
Australia Manganese
South Africa Manganese
Cerro Matoso
Cannington
Third party products and services(2)
Inter-segment / Group and unallocated(3)
Total
Equity accounting adjustment(4)
South32 Group (excluding South Africa Energy Coal)
South Africa Energy Coal
South32 Group

Revenue

Underlying EBIT

FY21

1,173
400
1,511
578
758
730
369
493
757
378
(573)
6,574
(1,098)
5,476
861
6,337

FY20

1,118 
399 
1,276 
508 
924 
763 
342 
519 
476 
340 
(550)
6,115
(1,105)
5,010
1,065 
6,075

FY21

143
63
293
98
(103)
304
55
122
350
10
(139)
1,196
(202)
994
(150)
844

FY20

160
(15)
103
(24)
52
328
54
107
105
(2)
(73)
795
(184)
611
(165)
446

(1)  South32’s ownership share of operations is as per footnote (3) on page 40.
(2)  FY21 Third party products and services sold comprise US$43 million for aluminium, US$10 million for alumina, US$23 million for coal, US$206 million for freight services,  

US$92 million for aluminium raw materials and US$4 million for manganese. Underlying EBIT on third party products and services comprise US$8 million for aluminium, nil for 
alumina, US$1 million for coal, nil for freight services, US$1 million for aluminium raw materials and nil for manganese. FY20 Third party products and services sold comprise 
US$42 million for aluminium, US$14 million for alumina, US$33 million for coal, US$165 million for freight services, US$86 million for aluminium raw materials and nil for 
manganese. Underlying EBIT on third party products and services comprise US$2 million for aluminium, (US$4 million) for alumina, nil for coal, (US$2 million) for freight services, 
US$2 million for aluminium raw materials and nil for manganese.

(3)  Group and unallocated Underlying EBIT includes Hermosa -US$8 million (FY20 -US$5 million) and the recognition of one-off charges in H2 FY21. 
(4)  The equity accounting adjustment reconciles the proportional consolidation of the South32 manganese operations to the treatment of the manganese operations on an equity 

accounted basis (including third party product).

4
3

South32 Annual Report 2021Operating and Financial Review 
Financial and operational performance summary continued

WORSLEY  ALUMINA

Location: 
Western Australia, Australia

South32 share: 
86%

South32 holds an 86 per cent interest in 
Worsley Alumina, while Japan Alumina 
Associates (Australia) Pty Ltd owns  
10 per cent and Sojitz Alumina Pty Ltd 
owns four per cent.

Bauxite is mined near the town of 
Boddington, 130 kilometres south-east 
of Perth. It is transported by overland 
conveyor to the alumina refinery near Collie 
and turned into alumina powder, before 
being transported by rail to Bunbury Port. 
It is then shipped to smelters around 
the world, including South32’s Hillside 
Aluminium and Mozal Aluminium smelters 
in Africa. 

Worsley Alumina is one of the largest 
contributors to our operational carbon 
emissions. Short-term emissions reduction 
activities include a mud-washing project 
to optimise energy consumption. We are 
studying a transition from coal to gas as an 
interim step, followed by the subsequent 
deployment of renewable energy. 

4
4

South32 share

Alumina production (kt) 
Alumina sales (kt) 
Realised alumina sales 
price (US$/t)
Operating unit cost 
(US$/t)

FY21

FY20

3,963 
4,004 

3,886 
3,782 

293 

296 

214 

210 

South32 share (US$M)

FY21

FY20

Revenue
Underlying EBITDA
Underlying EBIT
Net operating assets
Capital expenditure
Safe and reliable
Improvement and life 
extension

Community investment

1,173 
318 
143 
2,667 
55 
51 

1,118 
322 
160 
2,789 
48 
44

4 
1.1

4
0.3

Safety
TRIF was 6.8 for Worsley Alumina in FY21, a 
38 per cent decrease year-on-year. 

Volumes
Worsley Alumina saleable production 
increased by two per cent (or 77kt) to a 
record of 3,963kt in FY21, with the refinery 
finishing the year strongly, setting a 
quarterly record and operating above 
nameplate capacity of 4.6Mtpa (100 
per cent basis). The refinery’s record 
performance in FY21 was enabled by 
improvement initiatives in the calcination 
circuit and record alumina hydrate 
production.

Operating costs
Operating unit costs increased by two per 
cent in FY21 to US$214/t as the benefits 
of record production volumes, lower 
caustic soda prices (FY21: US$302/t, 
FY20: US$366/t) and reduced contractor 
spend were more than offset by a stronger 
Australian dollar and a planned increase 
in our caustic usage rates (FY21: 102kg/t, 
FY20: 93kg/t).

Financial performance
Underlying EBIT decreased by 11 per cent 
(or US$17 million) in FY21 to US$143 million 
as a one per cent decline in the average 
realised price of alumina (-US$10 million), a 
stronger Australian dollar (-US$58 million) 
and a drawdown of finished goods  
(-US$29 million) were partially  
offset by increased sales volumes  
(+US$65 million), a reduction in contractor 
and consultant spend (+US$12 million) and 
lower expenditure on caustic soda  
(+US$9 million).

We realised a modest premium to the 
PAX on a volume weighted M-1 basis for 
alumina sales in FY21, due to the structure 
of legacy supply contracts with our Mozal 
Aluminium smelter. Contracts with the 
smelter are linked to the LME aluminium 
price and alumina indices on an M-1 basis, 
with caps and floors embedded within 
specific contracts that reset every calendar 
year. All other alumina sales were at market 
based prices.

Capital expenditure
Capital expenditure increased by  
US$7 million in FY21 to US$55 million 
as we continued to invest in additional 
bauxite residue disposal capacity, further 
improvements in processing infrastructure 
that will support production creep and 
initial works to support the development of 
new mining areas. 

Community investment
We invested US$1.1 million in communities 
around Worsley Alumina in FY21, with a 
focus on environmental protection and 
restoration, economic diversification 
and supporting education and cultural 
programs for Aboriginal and Torres Strait 
Islander peoples.

South32 Annual Report 2021Operating and Financial ReviewBRAZIL  ALUMINA

Location: 
Pará and Maranhão, Brazil

South32 share: 
Alumina - 36%, Aluminium - 40%

South32 investment: 
Bauxite - 14.8%

South32 holds 14.8 per cent interest  
in the non-operated bauxite mine MRN,  
a 36 per cent share of the non-operated 
Alumar alumina refinery and a  
40 per cent share in the Alumar  
aluminium smelter, which is currently  
on care and maintenance.

The MRN mine is an open-cut strip mining 
operation. Mined ore is hauled to primary 
crushers and then transported by conveyor 
belt to the beneficiation plant. The bauxite 
produced from the MRN mine is sold to its 
shareholders. South32’s share of bauxite 
produced from the MRN mine is supplied 
to the Brazil Alumina refinery. Together 
with our partners at MRN we continue 
to progress the life extension project’s 
pre-feasibility study. The project has the 
potential to extend the life of the mine 
by more than 20 years at a relatively low 
capital cost.

The alumina produced from the refinery is 
exported through the Alumar Port.

Financial performance
Alumina Underlying EBIT increased by 
US$71 million in FY21 to US$66 million as 
the refinery benefitted from lower bauxite 
costs (price and consumption,  
US$26 million), a weaker Brazilian real 
(+US$16 million), lower depreciation 
(+US$14 million) and the recognition of 
historical tax credits (+US$16 million). 

Aluminium Underlying EBIT improved by 
US$7 million in FY21 to a loss of  
US$3 million as we continued to incur 
costs to maintain the smelter on care and 
maintenance.

Capital expenditure
Capital expenditure decreased by  
US$9 million to US$25 million in FY21 as 
our rate of investment in bauxite residue 
disposal capacity reduced.

4
5

South32 share

Alumina production (kt) 
Alumina sales (kt)
Realised alumina sales 
price (US$/t)
Alumina Operating unit 
cost (US$/t)

FY21

FY20

1,398 
1,391 

 1,383 
 1,392 

288 

 287 

203 

 244 

South32 share (US$M)

FY21

FY20

Revenue
Alumina
Aluminium

Underlying EBITDA

Alumina
Aluminium

Underlying EBIT

Alumina
Aluminium

Net operating assets/
(liabilities)
Alumina
Aluminium

Capital expenditure
Safe and reliable
Improvement and life 
extension

400 
400 
- 
114 
117 
(3) 
63 
66 
(3) 

571 
570 
1 
25 
25 

399
399
-
50
60
(10)
(15)
(5)
(10)

568
584
(16)
34
33

- 

  1 

Volumes
Brazil Alumina saleable production 
increased by one per cent (or 15kt) to a 
record 1,398kt in FY21 as the refinery 
continued to benefit from strong plant 
availability, realising the benefits of the  
De-bottlenecking Phase One project. 

Operating costs
Operating unit costs decreased by 17 per 
cent in FY21 to US$203/t as the refinery 
achieved record output, combined with 
lower bauxite usage rates and pricing 
during the period. The operation also 
recognised one-off historical tax credits 
that provided a benefit to unit costs of 
US$12/t.

South32 Annual Report 2021Operating and Financial ReviewFinancial and operational performance summary continued

HILLSIDE  ALUMINIUM

Location: 
KwaZulu-Natal, South Africa

South32 share: 
100%

The Hillside Aluminium smelter is located in 
Richards Bay in the South African province 
of KwaZulu-Natal and is 100 per cent 
owned and operated by South32 with a 
solid metal production capacity of 720kt 
per year. 

Hillside Aluminium is the largest aluminium 
smelter in the southern hemisphere. The 
smelter produces high-quality, primary 
aluminium for the domestic and export 
markets. 

To support the development of the 
downstream aluminium industry in South 
Africa a portion of liquid metal is supplied 
to Hulamin and other local companies that 
produce products for the domestic and 
export markets. 

Hillside Aluminium is a major contributor 
to our operational carbon emissions. A 
feasibility study of the AP3XLE energy 
efficiency technology is underway and 
we are also studying low carbon energy 
sources for the smelter.

6
4

The smelter sources its alumina from our 
Worsley Alumina refinery with prices linked 
to the PAX on an M-1 basis, with alumina, 
coke, pitch and aluminium tri-fluoride 
accounting for 50 per cent of the smelter’s 
cost base in FY21 (FY20: 54 per cent). 

Financial performance
Underlying EBIT increased by  
184 per cent (or US$190 million) in FY21 to 
US$293 million as a 21 per cent increase 
in the average realised price of aluminium 
(+US$262 million) and lower raw material 
input costs (+US$44 million) more than 
offset an increase in costs from the new 
power agreement (-US$100 million).  
Pot relining activity also increased  
(-US$12 million) at the smelter in FY21,  
with 120 pots relined at a cost of  
US$244 thousand per pot (FY20: 65 pots  
at US$248 thousand per pot).

Capital expenditure
Capital expenditure increased by  
US$4 million in FY21 to US$17 million.

Community investment
We invested US$3.0 million in communities 
around Hillside Aluminium in FY21, with 
a focus on local skills and economic 
development, education and strengthening 
healthcare services.

South32 share

Aluminium production (kt) 
Aluminium sales (kt) 
Realised sales price 
(US$/t)
Operating unit cost 
(US$/t)

FY21

717 
707 

FY20

718
723

2,137 

1,765

1,631 

1,531

South32 share (US$M)

Revenue
Underlying EBITDA
Underlying EBIT
Net operating assets
Capital expenditure
Safe and reliable
Improvement and life 
extension

Community investment

FY21

1,511 
358 
293 
733 
17 
17

-
3.0

FY20

1,276
169
103
794
13
12

1
2.0

Safety
TRIF was 0.5 for Hillside Aluminium in FY21, 
a 55 per cent decrease year-on-year. 

Volumes
Hillside Aluminium saleable production 
decreased by 1kt to 717kt in FY21 as the 
smelter continued to test its maximum 
technical capacity, despite the impact to 
production from increased load-shedding. 

Operating costs
Operating unit costs increased by seven 
per cent in FY21 to US$1,631/t as the 
benefit of lower raw material input costs 
was more than offset by higher charges 
from a new power agreement for the 
smelter that has been operating under an 
interim arrangement since 1 August 2020. 
Subsequent to the end of the period, we 
finalised the new agreement with Eskom 
which secures the smelter’s energy supply 
until 2031. The new tariff is South African 
rand based, with a rate of escalation linked 
to the South Africa Producer Price Index. 

South32 Annual Report 2021Operating and Financial ReviewMOZAL  ALUMINIUM

Location: 
Maputo, Mozambique

South32 share: 
47.1%

South32 has a 47.1 per cent share of Mozal 
Aluminium, while Mitsubishi Corporation, 
through MCA Metals Holding GmbH, 
holds 25 per cent, Industrial Development 
Corporation of South Africa Limited holds 
24 per cent and the Government  
of the Republic of Mozambique holds  
3.9 per cent (through preference shares). 
Mozal Aluminium is located 20 kilometres 
west of Mozambique’s capital city Maputo 
and has a solid metal production capacity 
of 580kt (on a 100 per cent basis) per year.

Mozal Aluminium is the only aluminium 
smelter in Mozambique and the second 
largest aluminium smelter in Africa. It 
produces standard aluminium ingots.

To support the development of the 
downstream aluminium industry in 
Mozambique a portion of liquid metal is 
supplied to Midal Cables, a local company 
that produces products for the domestic 
and export markets.

South32 share

Aluminium production (kt)
Aluminium sales (kt)
Realised sales price 
(US$/t)
Operating unit cost 
(US$/t)

FY21

265 
262 

FY20

268
279

2,206 

1,821

1,702 

1,785

South32 share (US$M)

FY21

FY20

Revenue
Underlying EBITDA
Underlying EBIT
Net operating assets
Capital expenditure
Safe and reliable
Improvement and life 
extension

Community investment

578 
132 
98 
456 
11 
10 

1
1.8

508
10
(24)
436
11
11

-
1.5

Safety
TRIF was 0.5 for Mozal Aluminium in FY21, a 
38 per cent decrease year-on-year.

Volumes
Mozal Aluminium saleable production 
decreased by one per cent (or 3kt) to 
265kt in FY21, with the smelter performing 
strongly in Q4 FY21, despite the impact of 
increased load-shedding. The strong finish 
to the year followed COVID-19 workforce 
restrictions that impacted operations 
during Q3 FY21. 

Operating costs
Operating unit costs decreased by five per 
cent in FY21 to US$1,702/t as raw material 
input costs decreased for alumina, coke, 
pitch and aluminium tri-fluoride, which 
combined to account for 42 per cent of the 
smelter’s cost base (FY20: 46 per cent). 

The smelter sources its alumina from 
our Worsley Alumina refinery with 
approximately 50 per cent priced as a 
percentage of the LME aluminium index 
under a legacy contract and the remainder 
linked to the PAX on an M-1 basis, with 
caps and floors embedded within specific 
contracts that reset each calendar year. 

Financial performance
Underlying EBIT increased by  
US$122 million in FY21 to US$98 million 
following a loss in FY20. The smelter's 
return to profitability was enabled by a  
21 per cent increase in the average realised 
price of aluminium (+US$101 million), 
favourable movements in finished goods 
inventory (+US$48 million) and lower raw 
material input prices (+US$20 million) that 
were partially offset by lower sales volumes 
(-US$31 million). 134 pots were relined 
across FY21 at a cost of US$252 thousand 
per pot (FY20: 112 pots at 
US$278 thousand per pot).

Capital expenditure
Capital expenditure was unchanged at 
US$11 million in FY21 as the smelter 
continued to roll out the AP3XLE energy 
efficiency technology in its pot relining 
program. 

Community investment
We invested US$1.8 million in communities 
around Mozal Aluminium in FY21, with 
a focus on education and employment, 
health and wellbeing and sustainable 
agricultural development.

4
7

South32 Annual Report 2021Operating and Financial ReviewFinancial and operational performance summary continued

SOUTH  AFRICA  ENERGY  COAL

Location: 
Mpumalanga, South Africa

South32 share: 
100% divested

South Africa Energy Coal is located in the 
South African province of Mpumalanga and 
was 100 per cent owned and operated by 
South32 until 1 June 2021, at which time 
we concluded the sale of the business to a 
subsidiary of Seriti and two trusts for the 
benefit of employees and the community.

8
4

South32 share 

FY21(1)

FY20

Energy coal production 
(kt)
Domestic sales (kt)(2)
Export sales (kt)(2)
Realised domestic sales 
price (US$/t)(2)
Realised export sales 
price (US$/t)(2)
Operating unit cost 
(US$/t)(3)

18,086 
22,672
10,375  12,638
9,715

8,025 

33 

50 

48 

25

53

42

South32 share (US$M)

FY21(1)

FY20

Revenue(4)
Underlying EBITDA
Underlying EBIT
Net operating assets/
(liabilities)
Capital expenditure
Safe and reliable
Improvement and life 
extension

Community investment

861 
(123) 
(150) 

1,065
(118)
(165)

- 
76 
23 

53 
5.2

(178)
164
42 

122 
5.0

Safety
Sadly, in May this year a contractor, 
Mr Petros Sibeko, was fatally injured while 
working on the construction of a workshop 
at the Klipspruit Extension Project. TRIF 
was 1.6 for South Africa Energy Coal  
in FY21, an 11 per cent decrease  
year-on-year. 

Financial performance
South Africa Energy Coal was divested 
on 1 June 2021. Prior to the divestment, 
the operation realised an EBIT loss of 
US$150 million in FY21 as Operating unit 
costs increased by 14 per cent to US$48/t. 
Capital expenditure decreased by US$88 
million in FY21 to US$76 million as the 
substantial investment of recent periods 
to ensure the operation’s sustainability 
under Seriti’s ownership continued, and 
the Klipspruit Life Extension project was 
completed.

Community investment
We invested US$5.2 million in communities 
around South Africa Energy Coal in 
FY21, including in education and skills 
development, community health, 
community infrastructure and supporting 
local economic development.

(1)  South Africa Energy Coal FY21 reflects 11 months.
(2)  Volumes and prices do not include any third party trading that may be undertaken independently of equity production.
(3)  Operating unit cost is Revenue less Underlying EBITDA, excluding third party sales, divided by sales volumes.
(4)  South Africa Energy Coal Revenue includes domestic and export sales Revenue. 

South32 Annual Report 2021Operating and Financial ReviewILLAWARRA  METALLURGICAL  COAL

Location: 
New South Wales, Australia

South32 share: 
100%

Located in the southern coalfields of New 
South Wales, Illawarra Metallurgical Coal 
is 100 per cent owned by South32 and 
operates two underground metallurgical 
coal mines, Appin mine and Dendrobium 
mine, and West Cliff and Dendrobium coal 
preparation plants. Illawarra Metallurgical 
Coal also manages the Port Kembla Coal 
Terminal (PKCT) on behalf of a consortium 
of partners. Illawarra Metallurgical Coal 
produces premium-quality, hard coking 
coal for steelmaking and energy coal. 

Operational emissions from Illawarra 
Metallurgical Coal are predominantly from 
the release of gases from the underground 
coal seams during mining operations and 
our decarbonisation activities are focused 
on increasing the efficiency of gas drainage 
and assessing technologies for reducing 
ventilation air methane.

South32 share

FY21

FY20

Metallurgical coal 
production (kt)
Energy coal production 
(kt)
Metallurgical coal sales 
(kt)(1)
Energy coal sales (kt)(1)
Realised metallurgical 
coal sales price (US$/t)
Realised energy coal 
sales price (US$/t)
Operating unit cost 
(US$/t)(2) 

South32 share (US$M)

Revenue(3)
Underlying EBITDA
Underlying EBIT
Net operating assets
Capital expenditure
Safe and reliable
Improvement and life 
extension

Exploration expenditure
Exploration expensed
Community investment

6,170 

5,549

1,475 

1,457

6,074 
1,542 

5,842
1,442

115 

145

40 

87 

FY21

758 
94 
(103) 
612 
188 
151 

37 
14 
5 
1.0

51

93

FY20

924
243
52
1,356
199
181

18 
16
7
0.7

Safety
TRIF was 19.6 for Illawarra Metallurgical 
Coal in FY21, a 16 per cent increase year-
on-year. 

Volumes
Illawarra Metallurgical Coal production 
increased by nine per cent (or 639kt) to 
7.6Mt in FY21 as the operation’s return to 
a three longwall configuration delivered 
greater efficiencies through the use of 
alternate dual longwalls at the Appin mine, 
and we monetised low-margin coal wash. 

4
9

Operating costs
Operating unit costs decreased by six per 
cent in FY21 to US$87/t as the operation 
benefitted from increased sales volumes, 
including the monetisation of low-margin 
coal wash material, and a favourable 
movement in finished goods inventory 
that more than offset a stronger Australian 
dollar. 

Financial performance
Underlying EBIT decreased by  
US$155 million in FY21 to a loss of  
US$103 million as lower average realised 
prices (-US$205 million) and a stronger 
Australian dollar (-US$56 million), more 
than offset the benefits of a favourable 
movement in finished goods inventory 
(+US$70 million) and increased sales 
volumes (+US$39 million). 

Capital expenditure 
Safe and reliable capital expenditure 
decreased by US$30 million in FY21  
to US$151 million as our rate of spend  
on underground development  
(FY21: US$77 million) and the substantial 
investment made to support a return  
to a three longwall configuration returned 
to historical levels.

Improvement and life extension capital 
expenditure increased by US$19 million 
to US$37 million as we incurred pre-
commitment spend on studies and critical 
path items for the DND project. During Q3 
FY21 the IPC refused our application for 
the DND project (as per page 17). We have 
scaled back activity on the project while we 
consider alternative options following the 
IPC decision.

Community investment
We invested US$1.0 million in communities 
around Illawarra Metallurgical Coal in 
FY21, with a focus on education, health, 
community support and services, and local 
economic development.

(1)  Volumes and prices do not include any third party trading that may be undertaken independently of equity production.
(2)  Operating unit cost is Revenue less Underlying EBITDA, excluding third party sales, divided by sales volumes.
(3)  Illawarra Metallurgical Coal Revenue includes metallurgical coal and energy coal sales Revenue.

South32 Annual Report 2021Operating and Financial ReviewFinancial and operational performance summary continued

AUSTRALIA  MANGANESE

Location:  
Northern Territory and Tasmania, Australia

South32 share:  
Ore - 60%, Alloy - 60% divested

0
5

Australia Manganese consists of GEMCO in 
the Northern Territory. South32 owns  
60 per cent of GEMCO and Anglo American 
Plc holds the remaining 40 per cent. The 
TEMCO manganese alloys smelter (TEMCO) 
was wholly owned by GEMCO until the 
completion of its divestment with an 
effective date for accounting purposes  
of 31 December 2020.

GEMCO is an open-cut strip mining 
operation, producing high-grade 
manganese ore and is located in close 
proximity to Asian export markets. 

South32 share

FY21(1)

FY20

Manganese ore 
production (kwmt) 
Manganese alloy 
production (kt)
Manganese ore sales 
(kwmt)

External customers
TEMCO

Manganese alloy sales 
(kt)
Realised external 
manganese ore sales 
price (US$/dmtu, FOB)(2)(3)
Realised manganese alloy 
sales price (US$/t)(2)
Ore Operating unit cost 
(US$/dmtu)(3)(4)
Alloy Operating unit cost 
(US$/t)(4)

3,529 

3,470

51 

110

3,621 
3,506 
115 

3,440
3,300
140

59 

116

4.13 

4.39

958 

940

1.52 

1.55

1,034 

905

South32 share (US$M)

Revenue(5)

Manganese ore 
Manganese alloy
Intra-segment 
elimination

Underlying EBITDA
Manganese ore 
Manganese alloy

Underlying EBIT

Manganese ore 
Manganese alloy
Net operating assets

Manganese ore
Manganese alloy
Capital expenditure
Safe and reliable
Improvement and life 
extension

Exploration expenditure
Exploration expensed
Community investment

FY21(1)

730 
685 
57 

(12) 
385 
389 
(4) 
304 
308 
(4) 
234 
234 
- 
55 
53

2
2 
1
1.7

FY20

763
668
109

(14)
400
396
4
328
329
(1)
242
293
(51)
67
64

3
2
1
1.1

Safety
TRIF was 6.3 for GEMCO in FY21, a  
11 per cent increase year-on-year. 

Volumes
Australia Manganese saleable ore 
production increased by two per cent (or 
59kwmt) to a record 3,529kwmt in FY21 
despite the impact of higher than average 
rainfall during the wet season. The primary 
concentrator continued to achieve strong 
output as we drew down previously 
established run of mine stocks, while 
output from the PC02 circuit remained 
above nameplate capacity, contributing  
10 per cent of total production (FY20:  
12 per cent).

Manganese alloy saleable production 
decreased by 54 per cent (or 59kt) to 51kt 
in FY21 as we completed the divestment  
of TEMCO. 

Operating costs
FOB manganese ore Operating unit costs 
decreased by two per cent in FY21 to 
US$1.52/dmtu as the operation benefitted 
from higher sales volumes due to improved 
equipment productivity and lower planned 
maintenance, that more than offset the 
impact of a stronger Australian dollar. 

Financial performance
Manganese ore Underlying EBIT decreased 
by six per cent (or US$21 million) in FY21 
to US$308 million as a stronger Australian 
dollar (-US$21 million), lower realised prices 
(-US$21 million) and higher customer 
freight rates (-US$11 million) were partially 
offset by increased sales volumes  
(+US$40 million) and reduced maintenance 
expenditure (+US$3 million). 

Manganese alloy Underlying EBIT 
decreased by US$3 million in FY21 to a 
loss of US$4 million as we completed the 
divestment of TEMCO.

Capital expenditure 
Capital expenditure decreased by  
US$12 million in FY21 to US$55 million 
as we completed non-processing 
infrastructure upgrades at GEMCO and 
divested TEMCO during the year.

Community investment
We invested US$1.6 million in communities 
around GEMCO and TEMCO in FY21, 
with a focus on supporting economic 
development, education and health 
programs for Aboriginal and Torres Strait 
Islander peoples at GEMCO and local 
education, economic development and 
community wellbeing at TEMCO.

(1)  Reflects the effective completion date for the sale of TEMCO for accounting purposes of 31 December 2020.
(2)  Realised ore prices are calculated as external sales Revenue less freight and marketing costs, divided by external sales volume. Realised alloy prices are calculated as sales 

Revenue, including sinter Revenue, divided by alloy sales volume. Ore converted to sinter and alloy, and sold externally, is eliminated as an intracompany transaction.

(3)  Manganese Australia FY21 average manganese content of external ore sales was 44.4 per cent on a dry basis (FY20: 44.6 per cent). 97 per cent of FY21 external manganese 
ore sales (FY20: 95 per cent) were completed on a CIF basis. FY21 realised FOB ore prices and Operating unit costs have been adjusted for freight and marketing costs of 
US$63 million (FY20: US$46 million).

(4)  FOB ore operating unit cost is Revenue less Underlying EBITDA, freight and marketing costs, divided by ore sales volume. Alloy operating unit cost is Revenue less Underlying 

EBITDA divided by alloy sales volumes and includes costs associated with sinter sold externally.
(5)  Revenues associated with sales from GEMCO to TEMCO are eliminated as part of the consolidation.

South32 Annual Report 2021Operating and Financial ReviewSOUTH  AFRICA  MANGANESE

Location:  
Northern Cape and Gauteng, South Africa

South32 share:  
Ore - 44.4%, Alloy - 60%

South Africa Manganese consists of two 
manganese mines and the Metalloys 
manganese alloy smelter which was placed 
on care and maintenance in FY20. 

Hotazel Manganese Mines (HMM) is located 
in the Kalahari Basin. South32 holds a  
60 per cent interest in Samancor Holdings 
(Pty) Ltd and Anglo American Plc holds the 
remaining 40 per cent. Samancor indirectly 
owns 74 per cent of HMM, which gives 
South32 its ownership interest of  
44.4 per cent. The remaining 26 per cent of 
HMM is owned by B-BBEE entities. 

South32 holds an effective 60 per cent 
interest in Samancor Manganese (Pty) Ltd 
(Metalloys manganese smelter).

South32 share

FY21

FY20

2,264 

1,878

- 

53

South32 share (US$M)

Revenue(4)

Manganese ore(5) 
Manganese alloy
Intra-segment 
elimination

Underlying EBITDA
Manganese ore(5) 
Manganese alloy

Underlying EBIT

Manganese ore(5) 
Manganese alloy
Net operating assets
Manganese ore(5)
Manganese alloy
Capital expenditure
Safe and reliable
Improvement and life 
extension

Exploration expenditure
Exploration expensed
Community investment

FY21

369 
362 
7 

- 
72 
92 
(20) 
55 
75 
(20) 
182 
242 
(60) 
16 
16

-
1 
1 
2.1

FY20

342
305
50

(13)
81
106
(25)
54
88
(34)
237
281
(44)
23
22

1
1
1
2.3

Manganese ore 
production (kwmt) 
Manganese alloy 
production (kt)
Manganese ore sales 
(kwmt)

External customers
Metalloys

Manganese alloy sales 
(kt)
Realised external 
manganese ore sales 
price (US$/dmtu, FOB)(1)(2)
Realised manganese alloy 
sales price (US$/t)
Ore Operating unit cost 
(US$/dmtu)(2)(3)
Alloy Operating unit cost 
(US$/t)(3) 

2,236 
2,236 
- 

1,865
1,772
93

Safety
TRIF was 1.8 for HMM in FY21, a 22 per cent 
decrease year-on-year. 

11 

55

3.53 

3.76

648 

909

2.48 

2.25

N/A 

1,364

Volumes
South Africa Manganese saleable ore 
production increased by 21 per cent (or 
386kwmt) to 2,264kwmt in FY21 as the 
operation recovered from an extended 
shutdown in response to COVID-19 
restrictions and subdued market conditions 
in the prior year. 

We did not produce any manganese alloy in 
FY21 as our Metalloys manganese alloy 
smelter remained on care and maintenance. 

5
1

Operating costs
FOB manganese ore Operating unit costs 
increased by 10 per cent in FY21 to  
US$2.48/dmtu as the operation lifted 
volumes, increasing its use of higher cost 
trucking in response to market demand. Prior 
period costs had benefitted from the impact 
of a one-off royalty tax credit settled in FY20.

Financial performance
Manganese ore Underlying EBIT decreased 
by 15 per cent (or US$13 million) in FY21 to 
US$75 million as a six per cent reduction in 
average realised prices (-US$14 million), 
higher customer freight rates (-US$43 million) 
and the recognition of royalty tax credit in 
the prior period (-US$13 million) were 
partially offset by increased sales volumes  
(+US$84 million).

Manganese alloy Underlying EBIT improved 
by US$14 million in FY21, to a loss of  
US$20 million, as we incurred one-off costs 
associated with the smelter’s placement on 
care and maintenance.

Notwithstanding the decline in index prices, 
our average realised price for external sales 
of South African ore was a two per cent 
premium to the medium grade 37 per cent 
manganese lump ore index (FOB Port 
Elizabeth, South Africa) in FY21. This followed 
adjustments to our product mix, with our 
lower quality fines product making up a 
smaller proportion of total sales (FY21:  
7 per cent, FY20: 13 per cent). 

Capital expenditure
Safe and reliable capital expenditure 
decreased by US$6 million in FY21 to  
US$16 million despite continued investment 
in asset integrity projects and the 
replacement of mobile equipment.

Community investment
We invested US$2.1 million in communities 
around South Africa Manganese in FY21, with 
a focus on education, health and local 
economic development.

(1)  Volumes and prices do not include any third party trading that may be undertaken independently of equity production. Realised ore prices are calculated as external sales 
Revenue less freight and marketing costs, divided by external sales volume. Ore converted to alloy, and sold externally, is eliminated as an intracompany transaction. 
Manganese ore sales are grossed-up to reflect a 60 per cent accounting effective interest.

(2)  Manganese South Africa FY21 average manganese content of external ore sales was 39.9 per cent on a dry basis (FY20: 40.1 per cent). 76 per cent of FY21 external manganese 
ore sales (FY20: 72 per cent) were completed on a CIF basis. FY21 realised FOB ore prices and Operating unit costs have been adjusted for freight and marketing costs of 
US$55 million (FY20: US$33 million).

(3)  FOB ore Operating unit cost is Revenue less Underlying EBITDA, freight and marketing costs, divided by ore sales volume. Alloy Operating unit cost is Revenue less Underlying 

EBITDA divided by alloy sales volumes.

(4)  Revenues associated with sales from Hotazel Manganese Mines (HMM) to Metalloys are eliminated as part of the consolidation.
(5)  Consistent with the presentation of South32’s segment information, South Africa Manganese ore production and sales have been reported at 60 per cent. South32 has a 44.4 

per cent ownership interest in HMM. 26 per cent of HMM is owned by a B-BBEE consortium comprising Ntsimbintle Mining (nine per cent), NCAB Resources (seven per cent), 
Iziko Mining (five per cent) and HMM Education Trust (five per cent). The interests owned by NCAB Resources, Iziko Mining and HMM Education Trust were acquired using 
vendor finance with the loans repayable via distributions attributable to these parties, pro rata to their share in HMM. Until these loans are repaid, South32’s interest in HMM is 
accounted at 54.6 per cent.

South32 Annual Report 2021Operating and Financial ReviewFinancial and operational performance summary continued

CERRO  MATOSO

Location: 
Córdoba, Colombia

South32 share: 
99.9%

Cerro Matoso is an integrated nickel laterite 
mine and smelter located in the Cordoba 
area of northern Colombia, consisting of a 
truck and shovel open-cut mine and  
a processing plant. South32 owns  
99.9 per cent of Cerro Matoso. Current and 
former employees own 0.02 per cent, with 
the balance of shares held in a reserve 
account following a buy-back. 

Cerro Matoso is a major producer of nickel 
contained in ferronickel which is used to 
make stainless steel. Ore mined is blended 
with ore from stockpiles, which is then 
dried in rotary kilns and smelted in two 
electric arc furnaces where ferronickel is 
produced.

In FY21 we approved the low capital 
Q&P project, which will contribute higher 
feed grades, and the Ore Sorting and 
Mechanical Ore Concentration Project 
(OSMOC), which is expected to maintain 
payable nickel production by offsetting 
natural grade decline beyond FY23.

2
5

Operating costs 
Operating unit costs increased by nine 
per cent in FY21 to US$4.01/lb despite a 
weaker Colombian peso, as the furnace 
refurbishment contributed to a 17 per cent 
decline in sales volumes.

Financial performance
Underlying EBIT increased by 14 per cent 
(or US$15 million) in FY21 to US$122 million, 
with the extended furnace shut lowering 
sales volumes (-US$91 million), more than 
offset by a 15 per cent rise in the average 
realised nickel price (+US$65 million), lower 
energy usage (+US$16 million), a weaker 
Colombian peso (+US$7 million) and lower 
depreciation (+US$7 million). 

Capital expenditure 
Safe and reliable capital expenditure 
was unchanged in FY21 at US$30 million. 
Improvement and life extension capital 
expenditure increased by US$6 million to 
US$15 million in FY21 as we invested in the 
Q&P and OSMOC projects.

Community investment
We invested US$3.3 million in communities 
around Cerro Matoso in FY21, with a focus 
on providing access to land for ethnic 
communities, supporting education and 
community housing.

South32 share

Ore mined (kwmt)
Ore processed (kdmt)
Ore grade processed  
(%, Ni)
Payable nickel production 
(kt) 
Payable nickel sales (kt) 
Realised nickel sales 
price (US$/lb)
Operating unit cost  
(US$/lb)(1)
Operating unit cost 
(US$/t)(2)

FY21

3,238 
2,385 

FY20

2,839
2,761

1.63 

1.65

34.1 
33.5 

40.6
40.6

6.68 

5.80

4.01 

3.69

124 

120

South32 share (US$M)

FY21

FY20

Revenue
Underlying EBITDA
Underlying EBIT
Net operating assets
Capital expenditure
Safe and reliable
Improvement and life 
extension

Exploration expenditure
Exploration expensed
Community investment

493 
197 
122 
405 
45 
30

15
- 
- 
3.3

519
189
107
425
39
30

9
4
2
3.8

Safety
TRIF was 5.7 for Cerro Matoso in FY21,  
a 54 per cent increase year-on-year. 

Volumes
Cerro Matoso payable nickel production 
decreased by 16 per cent (or 6.5kt) to 
34.1kt in FY21 following a major furnace 
refurbishment in Q2 and Q3 FY21.

(1)  Operating unit cost is Revenue less Underlying EBITDA, excluding third party sales, divided by sales volumes. 
(2)  Cerro Matoso Operating unit cost per tonne is Revenue less Underlying EBITDA divided by ore processed. Periodic movements in finished product inventory may impact 

Operating unit costs as related marketing costs may change.

South32 Annual Report 2021Operating and Financial ReviewCANNINGTON

Location: 
Queensland, Australia

South32 share: 
100%

Located in north-west Queensland, 
Cannington is 100 per cent owned by 
South32 and is one of the world’s largest 
producers of silver and lead. 

Cannington consists of an underground 
hard rock mine and surface processing 
facility, a road-to-rail transfer facility and 
a concentrate handling and ship loading 
facility at the Port of Townsville. 

Silver, lead and zinc are extracted from 
the ore using grinding, sequential flotation 
and leaching techniques that produce 
high-grade, marketable lead and zinc 
concentrates with a high silver content. 

We expect to transition to a 100% truck 
haulage operation in Q4 FY22.

South32 share

Ore mined (kwmt)
Ore processed (kdmt)
Ore grade processed  
(g/t, Ag)
Ore grade processed  
(%, Pb)
Ore grade processed  
(%, Zn)
Payable zinc equivalent 
production (kt)(1)
Payable silver production 
(koz)
Payable lead production 
(kt) 
Payable zinc production 
(kt)
Payable silver sales (koz)
Payable lead sales (kt)
Payable zinc sales (kt)
Realised silver sales price 
(US$/oz)
Realised lead sales price 
(US$/t)
Realised zinc sales price 
(US$/t)
Operating unit cost  
(US$/t ore processed)(2) 

FY21

2,819 
2,746 

FY20

2,792
2,839

185 

156

5.7 

3.5 

4.7

3.3

380.2 

332.6

13,655 

11,792

131.8 

110.4

67.7 
13,736 
131.7 
69.0 

66.7
12,109
108.1
68.7

25.4 

16.5

1,862 

1,648

2,357 

1,416

124 

113

South32 share (US$M)

FY21

FY20

Revenue
Underlying EBITDA
Underlying EBIT
Net operating assets
Capital expenditure
Safe and reliable
Improvement and life 
extension

Exploration expenditure
Exploration expensed
Community investment

757 
416 
350 
195 
43 
41

2
2 
2 
0.4

476
155
105
214
52
52

-
4
4
0.5

5
3

Safety
TRIF was 7.2 for Cannington in FY21,  
a 148 per cent increase year-on-year. 

Volumes
Cannington payable zinc equivalent 
production increased by 14 per cent 
(or 47.6kt) to 380.2kt in FY21. Strong 
underground mine performance supported 
the acceleration of a higher-grade mining 
sequence, which was extracted in Q4 FY21.

Operating costs
Operating unit costs increased by  
10 per cent to US$124/t in FY21 as a 
stronger Australian dollar, and lower mill 
throughput following the prior period’s 
draw down of inventory, were partially 
offset by efficiencies in consumables usage 
and energy spend.

Financial performance
Underlying EBIT increased by  
233 per cent (or US$245 million) in FY21  
to US$350 million as higher average 
realised prices (+US$215 million), increased 
sales volumes (+US$66 million), and 
efficiencies in consumables usage and 
energy spend (+US$7 million), were partially 
offset by a stronger Australian dollar 
(-US$28 million) and higher price-linked 
royalties (-US$12 million). 

Capital expenditure
Capital expenditure decreased by 
US$9 million in FY21 to US$43 million 
as we lowered our rate of investment in 
underground development and additional 
tailings storage capacity in accordance 
with our capital plan for the operation. 

Community investment
We invested US$0.4 million in communities 
around Cannington in FY21, with a focus on 
education, community wellbeing and social 
infrastructure.

(1)  Payable zinc equivalent (kt) was calculated by aggregating revenues from payable silver, lead and zinc, and dividing the total Revenue by the price of zinc. FY20 realised prices 

for zinc (US$1,416/t), lead (US$1,648/t) and silver (US$16.5/oz) have been used for FY20 and FY21. 

(2)  Cannington Operating unit cost is Revenue less Underlying EBITDA divided by ore processed. Periodic movements in finished product inventory may impact Operating unit 

costs as related marketing costs may change.

South32 Annual Report 2021Operating and Financial ReviewFinancial and operational performance summary continued

Third party product sales
The Group differentiates the sale of its production from the sale of third party products due to a significant difference in profit margin 
earned on these sales. The table below shows the breakdown between the Group’s production and third party products: 

US$M

Group Production
Revenue
Related operating costs (net of other income)
Group production Underlying EBIT
Margin on Group production
Third party products
Revenue
Related operating costs (net of other income)(1)
Third party Underlying EBIT
Margin on third party products

(1)  Includes depreciation and amortisation.

FY21

FY20

5,837
(5,162)
675
11.6%

500
(479)
21
4.2%

5,492
(5,237)
255
4.6%

583
(600)
(17)
(2.9%)

The Group engages in third party trading for the following reasons:

 – To ensure a consistent supply of materials to its customers;

 – As a result of production variability and occasional shortfalls from the Group’s operations; and

 – To enhance value through product blending and supply chain optimisation.

Outlook

Production
In FY21 we achieved record production at Worsley Alumina, Brazil Alumina and Australia Manganese while beating our initial market 
guidance at South Africa Manganese, Cerro Matoso and Cannington. While remaining subject to further potential impacts from 
COVID-19, FY22 guidance is unchanged with the exception of non-operated Brazil Alumina and our underground base metals operation 
Cannington. Separately, volumes at Mozal Aluminium and Cerro Matoso are expected to lift from FY21 following our investment in high 
returning improvement projects to increase production into currently favourable markets for aluminium and nickel. 

4
5

Production guidance (South32’s share)(1)

FY21

FY22e(2)

FY23e(2)

 Key guidance assumptions

Worsley Alumina
Alumina production (kt)

Brazil Alumina (non-operated)
Alumina production (kt)

Hillside Aluminium
Aluminium production (kt)

Mozal Aluminium
Aluminium production (kt)

3,963

3,965

4,000 The refinery is expected to maintain nameplate capacity in FY22 and 

target creep into FY23.

1,398

↓1,300

1,395 Repair work on one of the two bauxite ship unloaders which was 

damaged subsequent to the end of the period is expected to impact 
production in H1 FY22. 

Production volumes are expected to recover in FY23, increasing by 
seven per cent as the refinery returns to normalised rates.

717

720

720 Smelter to continue to test its maximum technical capacity. 

Guidance remains subject to load-shedding.

265

273

273 Expected to realise the benefits of the AP3XLE energy efficiency 

project in FY22 with production expected to increase three per cent.

Guidance remains subject to load-shedding.

Illawarra Metallurgical Coal
Total coal production (kt)
Metallurgical coal production (kt)
Energy coal production (kt)

7,645
6,170
1,475

7,300
6,300
1,000

7,500 Total saleable coal production is expected to decline by five per cent 
6,600
900

to 7.3Mt in FY22 with fewer planned sales of low-margin coal wash 
material. Metallurgical coal volumes are expected to increase by two 
per cent to 6.3Mt, despite an additional longwall move (three in total) 
being scheduled.

The operation is expected to produce 7.5Mt in FY23 with metallurgical 
coal volumes increasing by a further five per cent to 6.6Mt.

Australia Manganese
Manganese ore production (kwmt)

3,529

3,500

3,400 Our low cost PC02 circuit is expected to continue to operate above 

nameplate capacity, supporting secondary product volumes and 
production levels commensurate with FY21’s record rate.

South32 Annual Report 2021Operating and Financial Review 
 
 
 
Production guidance (South32’s share)(1) continued

FY21

FY22e(2)

FY23e(2)

 Key guidance assumptions

South Africa Manganese
Manganese ore production (kwmt)

2,264

2,200 Subject to 
demand

Planned production volumes are predicated on market conditions 
remaining attractive for the sale of lower quality fines product and our 
use of higher cost trucking.

FY23 guidance subject to market demand.

Cerro Matoso
Ore to kiln (kt)
Payable nickel production (kt)

2,385
34.1

2,850
43.8

2,850 Production is expected to increase by 28 per cent in FY22 and remain 

43.5

steady in FY23 as the operation benefits from the refurbishment of 
one of its furnaces and receives its first full year of ore from the higher 
grade Q&P project.

Cannington
Ore processed (kdmt)
Payable zinc equivalent production 
(kt)(3) 
Payable silver production (koz)
Payable lead production (kt)
Payable zinc production (kt)

2,746
319.0

↑2,750
↑278.3

2,850 Production is expected to benefit from the operation’s planned 
313.9

transition to 100 per cent truck haulage in Q4 FY22 and the 
continuation of underground mine efficiencies that supported 
production growth in FY21.

13,655 ↑11,647
↑112.6
↑63.9

131.8
67.7

13,500
122.0
72.0

(1)  South32’s ownership share of operations is as per footnote (3) on page 40.
(2)  The denotation (e) refers to an estimate or forecast year.
(3)  Payable zinc equivalent (kt) was calculated by aggregating revenues from payable silver, lead and zinc, and dividing the total Revenue by the price of zinc. FY21 realised prices 

for zinc (US$2,357/t), lead (US$1,862/t) and silver (US$25.4/oz) have been used for FY21, FY22e and FY23e.

Costs and capital expenditure
We continue to pursue cost and volume efficiencies across our business to offset the impact of stronger producer currencies and 
cyclical inflation in labour, price-linked royalties and raw materials. While these factors are expected to have an effect on unit costs, 
steepening industry cost curves, our business is well placed to realise volume improvements and pursue productivity benefits to 
partially offset their impact, and capture additional margins from improved market conditions. Although Operating unit cost guidance is 
not provided for our aluminium smelters, their cost profile will continue to be influenced by the South African rand and the price of raw 
material inputs.

Operating unit cost performance and guidance(1)(2)

FY20

FY21

FY22e(3)(4)

Commentary

5
5

Worsley Alumina 

(US$/t)

210

214

241

Brazil Alumina 
(non-operated)

(US$/t)

244

203

Not 
provided

Hillside Aluminium

(US$/t)

1,531

1,631

Not 
provided

Mozal Aluminium

(US$/t)

1,785

1,702

Not 
provided

Illawarra Metallurgical 
Coal

(US$/t)

93

87

101

FY20 versus FY21: Record volumes, lower caustic soda prices and reduced 
spend on contractors more than offset by a stronger Australian dollar and higher 
caustic usage rates.

FY22 key guidance assumptions: Higher caustic soda prices, price-linked 
freight and a planned transition to a higher cost mining area.
FY20 versus FY21: Record volumes, lower bauxite costs (usage and prices), and 
the recognition of one-off historical tax credits (-US$12/t) during the period.

FY22 key guidance assumptions: Not provided but expected to be impacted by 
lower sales volumes, higher bauxite costs and prior year’s one-off tax credit. 
Incremental costs are also expected due to the bauxite ship unloader failure 
subsequent to the end of the period. 
FY20 versus FY21: Higher power charges and a stronger South African rand, 
partially offset by lower raw material input costs.

FY22 key guidance assumptions: Not provided but we expect the cost profile to 
continue to be influenced by the South African rand, price of raw material inputs 
and a planned increase in pot relining.
FY20 versus FY21: Stronger South African rand, more than offset by lower raw 
material input costs.

FY22 key guidance assumptions: Not provided but we expect the cost profile to 
continue to be influenced by the South African rand and the price of raw material 
inputs.
FY20 versus FY21: Higher volumes from the return to a three longwall 
configuration and our monetisation of low-margin coal wash material.

FY22 key guidance assumptions: Fewer planned sales of low-margin coal wash 
material, higher price-linked royalties, incremental maintenance activity and 
longwall moves.

South32 Annual Report 2021Operating and Financial Review 
 
 
 
 
 
Financial and operational performance summary continued

Operating unit cost performance and guidance(1)(2) continued

FY20

FY21

FY22e(3)(4)

Commentary

Australia Manganese 
ore (FOB)

(US$/dmtu)

1.55

1.52

1.68

South Africa 
Manganese ore (FOB) 

(US$/dmtu)

2.25

2.48

2.57

Cerro Matoso

(US$/t)(5)

(US$/lb)

Cannington 

(US$/t)(6)

120

3.69

124

4.01

141

4.12

113

124

121

FY20 versus FY21: Record volumes from improved equipment productivity and 
lower planned maintenance.

FY22 key guidance assumptions: Stronger Australian dollar, an expected 
decline in product yield and a planned increase in strip ratio.
FY20 versus FY21: Additional costs from the use of higher cost, opportunistic 
trucking, to maximise margins.

FY22 key guidance assumptions: Stronger South African rand and increased 
trucking costs partially offset by labour efficiencies.
FY20 versus FY21: Lower volumes (-16 per cent) as we completed a major 
furnace refurbishment in the year.

FY22 key guidance assumptions: Increased sales volumes more than offset by 
higher price-linked royalties and electricity prices.
FY20 versus FY21: Lower mill throughput, following the prior year’s drawdown of 
inventory and a stronger Australian dollar, partially offset by efficiencies in our 
consumables usage and energy spend.

FY22 key guidance assumptions: Higher throughput, production efficiencies 
and the impact of inventory movements more than offset a stronger Australian 
dollar.

(1)  South32’s ownership share of operations is as per footnote (3) on page 40.
(2)  Operating unit cost is Revenue less Underlying EBITDA, excluding third party sales, divided by sales volumes. Operating cost is Revenue less Underlying EBITDA excluding third 

party sales.

(3)  FY22 Operating unit cost guidance includes royalties (where appropriate) and the influence of exchange rates, and includes various assumptions for FY22, including: an 

alumina price of US$289/t; an average blended coal price of US$140/t for Illawarra Metallurgical Coal; a manganese ore price of US$4.79/dmtu for 44 per cent manganese 
product; a nickel price of US$7.93/lb; a silver price of US$25.84/troy oz; a lead price of US$2,165/t (gross of treatment and refining charges); a zinc price of US$2,846/t (gross of 
treatment and refining charges); an AUD:USD exchange rate of 0.75; a USD:ZAR exchange rate of 15.00; a USD:COP exchange rate of 3,650; and a reference price for caustic 
soda; all of which reflected forward markets as at June 2021 or our internal expectations.

(4)  The denotation (e) refers to an estimate or forecast year.
(5)  US dollar per tonne of ore to kiln. Periodic movements in finished product inventory may impact Operating unit costs.
(6)  US dollar per tonne of ore processed. Periodic movements in finished product inventory may impact Operating unit costs.

6
5

Capital expenditure
Our investment in Safe and reliable capital expenditure, excluding equity accounted investments, is expected to increase by  
US$62 million to US$410 million in FY22 as we upgrade coal clearance and ventilation infrastructure at Illawarra Metallurgical Coal’s 
Appin mine and establish additional bauxite residue disposal capacity at Brazil Alumina.

Improvement and life extension capital expenditure, excluding equity accounted investments, is expected to decrease by US$46 million 
to US$70 million in FY22 reflecting a reduction in spend attributable to South Africa Energy Coal (US$53 million) following its divestment. 
While we expect to maintain some activity at our DND project in FY22, this is expected to be lower than our rate of spend in FY21. 
Partially offsetting these reductions, we expect to increase our investment in decarbonisation projects, processing improvements and 
new mining area access at Worsley Alumina and projects at Cerro Matoso to further lift volumes beyond FY23.

Growth capital expenditure of US$45 million is expected at our Hermosa project in H1 FY22 as we progress the Taylor pre-feasibility 
study. Guidance excludes our expectation for investment in orebody dewatering and other critical path activities for the potential 
development of the Taylor Deposit in FY22 that remain subject to internal approvals. 

Capital expenditure at our Manganese operations is expected to increase by US$24 million to US$95 million in FY22 as we invest in mine 
life extension projects at GEMCO’s Eastern Leases and rail infrastructure upgrades in South Africa.

South32 Annual Report 2021Operating and Financial Review 
 
 
 
 
 
Capital expenditure guidance (South32’s share)(1)(2)

US$M

FY20

FY21

FY22e(3)

Worsley Alumina 
Brazil Alumina
Hillside Aluminium 
Mozal Aluminium
South Africa Energy Coal
Illawarra Metallurgical Coal
Cerro Matoso
Cannington 
Safe and reliable capital expenditure (excluding equity accounted investments)
Worsley Alumina 
South Africa Energy Coal
Illawarra Metallurgical Coal – Dendrobium Next Domain
Cerro Matoso
Other operations
Improvement and life extension capital expenditure (excluding equity accounted 
investments)
Hermosa
Eagle Downs
Growth capital expenditure
Total capital expenditure (excluding equity accounted investments)
Total capital expenditure (including equity accounted investments)

Equity accounted investments capital expenditure guidance (South32’s share)(1)(2)

44
33
12
11
42
181
30
52
405
4
122
18
9
3

156
104
11
115
676
766

51
25
17
10
23
151
30
41
348
4
53
37
15
7

116
64
8
72
536
607

43
54
22
10
-
215
23
43
410
18
-
15
20
17

70
45(4)
-
45
525
620

US$M

FY20

FY21

FY22e(3)

Australia Manganese 
South Africa Manganese 
Safe and reliable capital expenditure (equity accounted investments)
Australia Manganese 
South Africa Manganese 
Improvement and life extension capital expenditure (equity accounted investments)
Total capital expenditure (equity accounted investments)

64
22
86
3
1
4
90

53
16
69
2
-
2
71

47
18
65
10
20
30
95

5
7

(1)  South32’s ownership share of operations is as per footnote (3) on page 40.
(2)  Total capital expenditure comprises Capital expenditure and evaluation expenditure. Capital expenditure comprises Safe and reliable capital expenditure (Deferred stripping, 
Regulatory compliance, Risk reduction, and Sustained performance), Improvement (Decarbonisation) and Life extension capital expenditure, and Growth (development of our 
current and future greenfields growth) capital expenditure.

(3)  The denotation (e) refers to an estimate or forecast year.
(4)  Guidance for Hermosa Growth capital expenditure reflects H1 FY22.

Other expenditure guidance
Group and unallocated costs, excluding greenfield exploration, are expected to reduce by US$13 million to US$100 million in FY22 
following the recognition of one-off charges in H2 FY21. We remain on-track to deliver US$50 million in annualised savings from FY22 
(compared to FY20), as we further simplify the Group’s functional structures and footprint.

Underlying net finance costs (excluding equity accounted investments) are expected to decrease by US$42 million to approximately 
US$110 million in FY22 following our divestment of South Africa Energy Coal and resultant reduction in the Group’s closure and 
rehabilitation provisions.

We have a prospective portfolio of greenfield exploration partnerships targeting base metals in Australia, the Americas and Europe. 
FY22 guidance for greenfield exploration expenditure to progress these early stage projects is US$26 million (FY21: US$18 million).  
In addition, we expect to capitalise US$44 million of exploration expenditure in FY22 (FY21: US$30 million), including US$25 million at our 
Hermosa project (FY21: US$16 million).

Depreciation and amortisation, and tax expense
Depreciation and amortisation (excluding equity accounted investments) is expected to reduce by US$90 million to approximately 
US$630 million in FY22 following our divestment of South Africa Energy Coal and the recognition of an impairment to our Illawarra 
Metallurgical Coal operation. Depreciation and amortisation for our manganese equity accounted investments is expected to increase 
by US$15 million to US$113 million in FY22.

The Group’s Underlying ETR, while a significant reduction from the prior year, remained elevated during FY21 due to the de-recognition 
of tax assets associated with losses at South Africa Energy Coal prior to its divestment. From FY22 we expect the rate to more closely 
reflect the corporate tax rates of the geographies where the Group operates.

South32 Annual Report 2021Operating and Financial ReviewBoard of Directors

e
c
n
a
n
r
e
v
o
G

Ms Karen Wood BEd, LLB (Hons), 65
Chair and Independent Non-Executive Director
Appointed 1 November 2017  
(Chair from 12 April 2019) 

Chair of the Nomination and Governance Committee
Location: Australia 

Mr Graham Kerr BBus, FCPA, 50
Chief Executive Officer since October 2014 
Managing Director, appointed 21 January 2015

Location: Australia 

Mr Kerr has been our Chief Executive Officer since October 2014 and 
is responsible for running all parts of our business. He led South32 
through the Demerger from BHP in 2015 and its public listing in three 
countries and has overseen the development and implementation of 
our strategy.

Mr Kerr is passionate about health, safety and sustainability, with a 
strong track record in global resource development. He joined BHP 
in 1994 and was appointed Chief Financial Officer in November 2011. 
Previously, Mr Kerr was President of Diamonds and Specialty Products 
and worked in a wide range of operational and commercial roles across 
BHP.

As President of Diamonds and Specialty Products, Mr Kerr was 
accountable for the Ekati Diamond Mine in Canada, the Richards Bay 
Minerals Joint Venture in South Africa, diamonds exploration in Angola, 
the Corridor Sands Project in Mozambique and the development 
of BHP’s potash portfolio in Canada. Prior to that, Mr Kerr held the 
positions of Chief Financial Officer Stainless Steel Materials, Vice 
President Finance Diamonds and Finance Director for the Canadian 
Diamonds Company, all for BHP. In 2004, Mr Kerr left BHP for a two-year 
period when he was General Manager Commercial for Iluka Resources 
Ltd.

Mr Kerr holds a Business degree from Edith Cowan University 
and studied at Deakin University to become a Certified Practicing 
Accountant.

Other Directorships and Offices:
 – Chair, CEOs for Gender Equity.

During her career, Ms Wood has attained executive and leadership 
skills which she brings to her role as Chair of South32. She has 
comprehensive experience in public policy, social performance, 
community, people, remuneration and regulatory and legal compliance.

She has held various senior global leadership roles with BHP, including 
Group Company Secretary, Chief People Officer and President 
Corporate Affairs. She was a member of BHP’s leadership team and 
served as Chair of The Global Ethics Advisory Panel, the Disclosure 
Committee and as Chief Governance Officer.

8
5

Ms Wood gained extensive expertise as a key adviser to BHP’s 
Board and CEO on matters of governance, composition of leadership 
teams, development and succession planning, organisational design 
and culture, remuneration structures and stakeholder relations. 
Following the merger between BHP Limited and Billiton plc in 2001, 
she established the multi-jurisdictional governance framework for the 
merged entity. Ms Wood joined BHP as Group Company Secretary in 
2001 and retired in 2014.

Before joining BHP, Ms Wood held the role of General Counsel and 
Company Secretary with Bonlac Foods Limited.

Ms Wood’s governance experience is broadened by her membership 
of the Takeovers Panel (Australia) from 2000 to 2012 and her roles 
with the Australian Securities and Investment Commission (Business 
Consultative Panel) and the Australian Federal Government's Business 
Regulatory Advisory Group.

Following her retirement from BHP, Ms Wood chaired the BHP 
Foundation, where she oversaw grant provisions for not-for-profit 
organisations to deliver large, long-term global programs in the areas 
of natural resource governance, human capability and social inclusion, 
and conserving and sustainably managing natural environments.

She is currently a Non-Executive Director of Djerriwarrh Investments 
Limited (and member of the Audit Committee and the Investment 
Committee), a member of Chief Executive Women, member of the 30% 
Club Australia and a Fellow of Monash University. 

Current ASX listed directorships: 
 – Djerriwarrh Investments Limited: Independent Non-Executive 

Director since July 2016. 

Other Directorships and Offices: 
 – Board Member and Member of the Audit & Risk Management and 
Appointments and Remuneration Committees, State Library  
of Victoria;

 – Council Member, State Library of Victoria Foundation Council;
 – Director, Robert Salzer Foundation; and
 – Member, Business Council of Australia (Chairman’s Group).

South32 Annual Report 2021Mr Frank Cooper AO BCom, FCA, FAICD, 65
Independent Non-Executive Director
Appointed 7 May 2015 

Chair of the Risk and Audit Committee 
Location: Australia 

Mr Guy Lansdown BSc (Engineering (Civil)),  
MSc (Engineering (Project Management)), 60 
Independent Non-Executive Director
Appointed 2 December 2019 

Location: Mexico 

Mr Cooper’s combined experience gives him a good understanding 
of the challenges of operating in different cultural and political 
environments. He brings this to South32, alongside a strong focus on 
organisational philosophy, values and standards.

Mr Lansdown complements the South32 Board with his extensive 
experience in early and late stage greenfield and brownfield project 
development and delivery, together with his strong technical 
background and strategic leadership abilities.

Mr Cooper is a chartered accountant with over 40 years of experience 
in the finance and accounting profession. His prior appointments 
include Partner at Ernst & Young, Partner at PricewaterhouseCoopers, 
and Managing Partner for Arthur Andersen in Perth, during which time 
he specialised in the mining, energy and utility sectors.

Mr Lansdown is a civil engineer with almost 40 years’ experience 
in project development and mining, including as an executive at 
Newmont Mining Corporation where he was most recently Executive 
Vice President Discovery and Development. In that role he led 
Newmont’s exploration and major project development.

Mr Cooper is currently a Non-Executive Director of Woodside 
Petroleum Limited (including Chair of the Audit & Risk Committee and 
member of the Human Resources & Compensation Committee and 
Nominations & Governance Committee). Until 2006, he was a Director 
of Alinta Infrastructure Limited and Alinta Funds Management Limited.

Mr Cooper was awarded an Officer of the Order of Australia in 2014 and 
was named West Australian of the Year in the Professions category in 
2015.

Mr Cooper is also a Fellow of the Australian Institute of Company 
Directors and Chartered Accountants Australia and New Zealand. 

Current ASX listed directorships: 
 – Woodside Petroleum Limited: Independent Non-Executive 

Director since February 2013. 

Other Directorships and Offices: 
 – Commissioner and Chairman, Insurance Commission of Western 

Australia;

 – Member, WA Council of the Australian Institute of Company 

Directors (from February 2016 to 23 June 2021);
 – Pro Chancellor, University of Western Australia;
 – Trustee, St John of God Health Care; and
 – Director, St John of God Australia Limited.

During his 20-year career with Newmont Mining Corporation, 
Mr Lansdown held many senior positions, including Senior Vice 
President of Project Development and Technical Services USA, 
Vice President of Project Development USA, Executive Manager 
Boddington Australia, Operations Manager Minera Yanacocha Peru and 
Engineering and Development Director Australia.

5
9

Prior to joining Newmont, Mr Lansdown held various roles contributing 
to his global business experience, including Associate and Projects 
Manager at Knight Piesold in the USA and a Director of Projects at 
Group Five in South Africa. He has worked in North and South America, 
Asia, Australia and Africa.

Mr Lansdown is currently President and Director of his US consulting 
company Project Excellence Inc., which offers a range of services 
including strategic planning, project development, organisational 
design and independent project reviews.

He is also President and Director of two charities, Un Futuro Mejor 
Inc. and Fundación Lansdown A.C., which provide opportunities for 
disadvantaged youth in Mexico to reach their full potential. 

Other Directorships and Offices: 
 – President and Director, Project Excellence Inc.;
 – President and Director, Un Futuro Mejor Inc.; and
 – President and Director, Fundación Lansdown A.C.

South32 Annual Report 2021GovernanceBoard of Directors continued

Dr Xiaoling Liu  
BEng (Extractive Metallurgy), PhD (Extractive Metallurgy), 
FAusIMM, FTSE, GAICD, 64
Independent Non-Executive Director
Appointed 1 November 2017 

Dr Ntombifuthi (Futhi) Mtoba 
CA(SA), DCom (Honoris Causa), BCompt (Hons), HDip Banking Law, 
BA (Econ)(Hons), BA (Arts), 66
Independent Non-Executive Director
Appointed 7 May 2015 

Location: Australia 

Location: South Africa 

Dr Liu is a metallurgical engineer with a 26-year career at the Rio Tinto 
Group. Dr Liu’s strong operational, technical, strategic, marketing and 
risk management skills are an important contribution to the South32 
Board.

Dr Mtoba is a chartered accountant with an extensive career in 
business and community engagement in South Africa. In addition, she 
brings valuable sustainability and environmental experience to the 
South32 Board.

0
6

Dr Liu’s roles at Rio Tinto included General Manager and Managing 
Director positions in smelting operational management. She held other 
senior positions, including Managing Director Technical Services where 
she led Rio Tinto’s global technical services unit, and President and 
Chief Executive Officer of Rio Tinto Minerals where she ran integrated 
mining, processing, and supply chain operations in the United States, 
Europe and Asia.

Since her retirement from Rio Tinto in 2014, Dr Liu held the position 
of Non-Executive Director of Iluka Resources Limited until April 2019 
and Non-Executive Director of Newcrest Mining Limited (including as a 
member of the Human Resources & Remuneration Committee, Audit 
& Risk Committee and Nominations Committee) until November 2020. 
Dr Liu is currently a Non-Executive Director of Incitec Pivot Limited 
(including as a member of the Audit & Risk Committee and Chair of the 
HSEC Committee). These roles have contributed to Dr Liu’s skills and 
experience in remuneration, acquisitions and divestments.

Dr Liu has been the Chancellor, Queensland University of Technology 
since January 2020. She held the office of Director, Melbourne Business 
School until October 2019. She has also served as a board member of 
the California Chamber of Commerce and Vice President of the Board 
of the Australian Aluminium Council.

Dr Liu is a Fellow of the Australian Academy of Technological Science 
and Engineering, a Fellow of the Australasian Institute of Mining and 
Metallurgy and a member of Chief Executive Women. 

Current ASX listed directorships: 
 – Incitec Pivot Limited: Independent Non-Executive Director since 

November 2019.

Previous ASX listed directorships: 
 – Newcrest Mining Limited: Independent Non-Executive Director 

from September 2015 to November 2020; and

 – Iluka Resources Limited: Independent Non-Executive Director 

from February 2016 to April 2019 

Other Directorships and Offices: 
 – Chancellor, Queensland University of Technology.

Dr Mtoba joined Deloitte and Touche South Africa in 1988, specialising 
in financial services. She became one of the first African Black women 
to be appointed as a Partner by one of the Big Four accounting firms 
and was later appointed the first African woman Deputy Chairman and 
then Chairman of Deloitte Southern Africa.

Dr Mtoba has been a member of the International Monetary Fund 
Advisory Group of Sub-Saharan Africa, the World Economic Forum 
Global Advisory Council, the B20 Financing Growth and Infrastructure 
Task Force and the B20 Transparency Task Team. She was also the 
first woman president of the Association for the Advancement of Black 
Accountants of Southern Africa.

Additionally, she has served as Chair of Council of the University of 
Pretoria, President of Business Unity South Africa, and board member 
of the Public Accountants and Auditors Board, the South African 
Institute of Chartered Accountants, the New Partnership for Africa’s 
Development Business Foundation and African Union Foundation.

Dr Mtoba is engaged in the regional and global community. In 2019, 
Dr Mtoba was appointed as a Director of the International Women’s 
Forum (South Africa). She is a former board member of the United 
Nations Global Compact.

In October 2020, Dr Mtoba was appointed as a Non-Executive Director 
of the Public Investment Corporation Limited (having previously served 
as a Board member and Investment Committee Chair). In February 
2021, she was appointed Deputy Chairperson and is Chair of the Audit 
Committee of Public Investment Corporation Limited. 

For her contributions, Dr Mtoba has received numerous awards, 
including Most Outstanding Leadership Women of the Year (Africa 
Economy Builders, 2018). She is also a Harvard Advanced Leadership 
Initiative Fellow (2017). 

Other Directorships and Offices: 
 – Lead Independent Director and Audit Committee Chair, Discovery 

Bank Limited;

 – Director, Discovery Bank Holdings Limited;
 – Founding Trustee, ZMDT;
 – Trustee and Audit Committee Chair, Nelson Mandela Foundation; 
 – Trustee and Audit Committee Chair, National Education 

Collaboration Trust (NECT); and

 – Independent Non-Executive Director and Deputy Chairperson, 

Public Investment Corporation Limited.

South32 Annual Report 2021GovernanceMr Wayne Osborn Dip Elect Eng, MBA, FAICD, FTSE, 69
Independent Non-Executive Director
Appointed 7 May 2015 

Chair of the Remuneration Committee 
Location: Australia 

Mr Keith Rumble BSc, MSc (Geology), 67
Independent Non-Executive Director
Appointed 27 February 2015 

Chair of the Sustainability Committee 
Location: South Africa 

Mr Osborn brings over 40 years of experience from the mining, 
resources and manufacturing sectors to the South32 Board.

Mr Osborn was Managing Director of Alcoa in Australia from 2001 until 
2008, leading an integrated business comprised of bauxite mining, 
alumina refining, coal mining, power generation and aluminium 
smelting. This included operations in Victoria and Western Australia. 
His prior role at Alcoa included accountability for its Asia-Pacific 
manufacturing operations in China, Japan, Korea and Australia. He 
joined Alcoa in 1979 after working as an engineer in the iron ore and 
telecommunications sector.

Since 2008, Mr Osborn has worked as a Non-Executive Director in the 
mining, construction and energy industries. He was also Chairman of 
the Australian Institute of Marine Science, Chairman of the Western 
Australia Branch of the Australia Business Arts Foundation and 
Vice President of the Chamber of Commerce and Industry, Western 
Australia.

Mr Osborn is currently a Non-Executive Director of Wesfarmers Limited 
(including membership of the Remuneration Committee and the 
Nomination Committee).

He has been awarded a WA Business Leader Award in 2007 for his 
work with the Australian Business Arts Foundation and an Australian 
Institute of Company Directors Award for Excellence in 2018.

Mr Osborn is a Fellow of the Australian Academy of Technological 
Sciences and Engineering and International Fellow of the Explorers 
Club (New York). 

Current ASX listed directorships: 
 – Wesfarmers Limited: Independent Non-Executive Director since 

March 2010.

Mr Rumble has more than 40 years of experience in the resources 
industry, specifically in titanium and platinum mining. He also has 
experience managing a portfolio of private equity assets in the 
resource sector in Russia, India and other emerging markets. This 
combination of skills and knowledge are a valuable contribution to the 
South32 Board.

Mr Rumble has held various leadership roles including CEO of SUN 
Mining (a wholly-owned entity of the SUN Group), CEO of Impala 
Platinum (Pty) Ltd and President and CEO of Rio Tinto Iron and Titanium 
Inc in Canada. He also worked for Verref, a division of the Anglo 
American Corporation, prior to joining Richards Bay Minerals in 1980, 
working in smelting and metallurgy, progressing to General Manager 
and later CEO in 1996.

6
1

Mr Rumble has been a Non-Executive Director of a variety of private 
companies, including Platinum Mining Corporation of India PLC, 
Barplats Holdings Limited, Western Platinum (Pty) Limited, Eastern 
Platinum (Pty) Limited and Sarplat Investments Limited. He was also an 
independent Non-Executive Director at BHP Billiton plc, BHP Limited 
and at JSE listed Aveng Limited.

In November 2019, Mr Rumble retired as a Member of Board of 
Governors, Rhodes University and was appointed an Honorary Life 
Governor (Rhodes University).

Mr Rumble completed the Stanford (US) Executive Program in 1990. 

Other Directorships and Offices: 
 – Director, Acetologix Pty Limited;
 – Director, Enzyme Technologies (Pty) Limited;
 – Director, Elite Wealth (Pty) Limited; and
 – Trustee, World Wildlife Fund, South Africa.

South32 Annual Report 2021GovernanceDirectors’ report

This report is presented by our Directors, 
together with the Group’s Financial report, 
for the financial year ended 30 June 2021. 

The report is prepared in accordance with 
the requirements of the Corporations Act, 
with the following information forming part 
of the report: 

 – Operating and financial review on the 

inside front cover to page 57;

 – Director biographical information on 

pages 58 to 61 and Company Secretary 
biographical information on page 64;

 – Remuneration report on pages 68 to 93;

 – Note 19 (a) Financial risk management 

objectives and policies on pages 126 to 
129;

 – Note 20 Share capital on page 134;

 – Note 21 Auditor’s remuneration on page 

135;

 – Note 23 Employee share ownership 

plans on pages 136 to 139;

 – Directors’ declaration on page 147;

 – Auditor’s independence declaration on 

page 148;

 – Resources and Reserves on pages 153 

to 160;

 – Shareholder information on pages 161 

to 163; and

 – Corporate directory (inside back cover).

2
6

Directors and meetings 
At the date of this report, the Directors in 
office were: 

Karen Wood 
Appointed 1 November 2017 

Graham Kerr 
Appointed 21 January 2015 

Frank Cooper AO  
Appointed 7 May 2015 

Guy Lansdown  
Appointed 2 December 2019

Dr Xiaoling Liu 
Appointed 1 November 2017 

Dr Ntombifuthi (Futhi) Mtoba 
Appointed 7 May 2015 

Wayne Osborn 
Appointed 7 May 2015 

Keith Rumble 
Appointed 27 February 2015 

Board and Committee meetings 
and Director attendance
There are nine regularly scheduled 
meetings of the Board each year. Six of 
these are usually held face-to-face over 
three days and are held in one of our main 
geographic areas of operation to allow 
Directors to conduct site visits. Committee 
meetings are also held during this time. 
A further three meetings are convened 
each year to consider annual disclosures, 
including half and full year results, and are 
usually held virtually. Additional meetings 
are convened as required to address 
business critical issues. 

During FY21 there were a total of 19 
Board meetings. The additional meetings 
were held to receive regular updates on 
management’s response to COVID-19, 
oversee the divestment of the South 
Africa Energy Coal (SAEC) business and 
consider other business critical issues and 
continuous disclosure obligations. Two 
strategy sessions were held, in January and  
June 2021.

Our continued response to the COVID-19 
pandemic, and related travel disruptions, 
has seen our virtual format continue for 
all Board and Committee meetings. This 
practice will likely continue until such 
time that travel and social distancing 
restrictions are eased. Our Board has also 
used a hybrid approach (ie. physical and 
virtual format) to bring some Directors 
together for meetings in jurisdictions 
where it has been possible to do so. 

Although our Board was unable to conduct 
any site visits during FY21, it continued 
to stay connected with our operations by 
way of operational overviews and briefing 
sessions conducted as part of the Board 
programs.

To help it carry out its responsibilities, our 
Board has established four standing Board 
Committees. From time to time, the Board 
creates other committees to address 
important matters and areas of focus for 
the business. For example, a committee 
was established to oversee the divestment 
of the SAEC business.

All Non-Executive Directors have a 
standing invitation to attend all Committee 
meetings, with the consent of the relevant 
Committee Chair. In practice, all Directors 
generally attend all meetings.

You can find information about our 
Directors’ qualifications, experience, special 
responsibilities and other directorships on 
pages 58 to 61.

You will find the number of Board and 
Committee meetings held in FY21, as well 
as the Directors who attended them, in 
Table 1.1.

Our Chair sets the agenda for each Board 
meeting, with the CEO and the Company 
Secretary. The meetings typically include:

 – Minutes of the previous meeting and 

matters arising;

 – Report from our Chair;

 – Update on various governance matters;

 – CEO’s report;

 – Finance report;

 – Commercial report;

 – Reports on major projects and strategic 

matters;

 – Board Committee Chair reports;

 – Continuous disclosure checkpoint; and

 – Closed sessions with Directors and 
closed sessions with Non-Executive 
Directors only.

In between meetings, our Board receives 
regular reports from senior management 
on matters, including (but not limited to):

 – Sustainability (including health and 

safety) performance;

 – Financial and production performance; 

and

 – Government relations and political 

affairs.

Further, our Board receives updates on 
emerging issues such as climate change, 
cultural heritage, community matters, 
business integrity and litigation. It also 
receives regular reports for discussion 
on operational, culture and leadership, 
corporate governance and other business 
matters, including market updates, market 
research and investor relations activities.

As part of their ongoing education 
and training, during FY21 our Board 
received external briefings on various 
matters including climate change, human 
rights, Indigenous and Tribal Peoples’ 
engagement including cultural heritage 
and cultural awareness, remuneration 
matters and evolving ESG matters.

South32 Annual Report 2021GovernanceTable 1.1 Board and Committee Meeting Attendance in FY21

Director

K Wood 
G Kerr (CEO)
F Cooper
X Liu
G Lansdown
N Mtoba
W Osborn
K Rumble

Board

Nomination and 
Governance Committee

Remuneration  
Committee

Risk and Audit  
Committee

Sustainability  
Committee

Eligible(1)

Attended(2)

Eligible(1)

Attended(2)

Eligible(1)

Attended(2)

Eligible(1)

Attended(2)

Eligible(1)

Attended(2)

19
19
19
19
19
19
19
19

19
19
19
19
19
19
19
19

3
-
3
3
3
3
3
3

3
3
3
3
3
3
3
3

7
-
7
-
-
-
7
7

7
7
7
7
7
7
7
7

-
-
14
14
14
14
-
-

14
14
14
14
14
14
14
14

7
-
-
7
7
-
7
7

7
7
7
7
7
-
7
7

Member

Chair

(1)  Indicates the number of meetings held during FY21 while the Director was a member of the Board or Committee.
(2)  Indicates the number of meetings the Director attended during FY21.

Principal activities, state of affairs 
and review of operations 
Principal activities 
In FY21, the principal activities of the 
Group were mining and metal production, 
from a portfolio of assets that included 
alumina, aluminium, bauxite, energy 
coal, metallurgical coal, manganese ore, 
manganese alloy, nickel, silver, lead and 
zinc. 

On 4 January 2021, Groote Eylandt Mining 
Company Pty Ltd legally completed the 
sale of its shareholding in Tasmanian 
Electro Metallurgical Company Pty Ltd 
(TEMCO) to an entity within GFG Alliance. 
On 1 June 2021, the Group also completed 
the sale of its shareholding in SAEC to 
Seriti Resources Holdings Pty Ltd and two 
trusts for the benefit of employees and 
communities. 

There were no other significant changes in 
the Group’s principal activities during the 
year. 

State of affairs 
There were no significant changes in the 
Group’s state of affairs during the year, 
other than the divestment of the Group’s 
interests in TEMCO and SAEC, and as set 
out in the Operating and financial review 
and Shareholder information on the inside 
front cover to page 57, and 161 to 163 
respectively. 

Review of operations
We’ve set out a review of the Group’s FY21 
operations in the Operating and financial 
review on the inside front cover to page 
57. It includes likely developments in the 
Group’s operations in future financial years 
and expected results.

Dividends 
We paid the following dividends during 
FY21:

Remuneration and share interests 
Table 1.2 Directors’ Relevant Interests in 
South32 Limited Shares

Total 
dividend

Payment 
date

US$48 
million

8 October 
2020

US$67 
million

8 April 
2021

Dividend 

Final dividend of US  
1 cent per share (fully 
franked) for the year 
ended 30 June 2020 
Interim dividend of US 
1.4 cents per share 
(fully franked) for the 
half year ended 
31 December 2020 

Matters since the end of the 
financial year 
On 19 August 2021, the Directors resolved 
to pay a fully franked final dividend of US 
3.5 cents per share (US$164 million) and 
a fully franked special dividend of US 2.0 
cents per share (US$93 million) in respect 
of the 2021 financial year. The dividends 
will be paid on 7 October 2021. The 
dividends have not been provided for in the 
consolidated financial statements and will 
be recognised in the 2022 financial year.

On 19 August 2021, the Group also 
announced an increase to the existing 
capital management program, announced 
on 27 March 2017, of US$120 million to a 
total of US$2.0 billion. This leaves US$252 
million expected to be returned by 
2 September 2022.

No other matters or circumstances have 
arisen since the end of the financial year 
that have significantly affected, or may 
significantly affect, the operations, results 
of operations or state of affairs of the 
Group in subsequent accounting periods.

Director 

K Wood 
G Kerr (CEO)(1) 
F Cooper 
G Lansdown
X Liu 
N Mtoba 
W Osborn 
K Rumble 

Number of shares in which a 
relevant interest is held as at 
the date of this Directors’ 
report 

367,825 
9,928,233
128,010 
80,000
60,000 
69,386 
174,104
161,380 

6
3

(1)  At the date of this Directors’ report, Mr Kerr’s total 

interest includes 3,804,621 South32 Limited ordinary 
shares and 6,123,612 rights over South32 Limited 
ordinary shares held under the South32 Equity 
Incentive Plan.

Rights and options over South32 
Limited shares 
No rights or options over South32 Limited 
ordinary shares are held by any of our Non-
Executive Directors. 

Our Chief Executive Officer and Managing 
Director, Graham Kerr, holds rights over 
South32 Limited ordinary shares, granted 
under the South32 Equity Incentive Plan. 
You can find more details about this in the 
Remuneration report on page 83. Graham 
Kerr does not hold any options over 
South32 Limited shares.

The total number of rights over South32 
Limited ordinary shares on issue as at 
30 June 2021 is set out in note 23 Employee 
share ownership plans to the financial 
statements on pages 136 to 139.  
There were no options on issue as at 
30 June 2021.

No options or rights have been granted 
since the end of FY21. 

South32 Annual Report 2021Governance 
Directors’ report continued

As of the date of this report, the total 
number of rights over South32 Limited 
ordinary shares on issue is 48,656,835.  
The Remuneration report contains details 
of rights on issue. No shares have been 
issued on vesting of rights during or since 
the end of FY21. 

Company Secretaries 

Kelly O’Rourke LLB, BCom, MAICD

Kelly O’Rourke was appointed to the role of 
Chief External Affairs Officer in November 
2020. Kelly’s role was subsequently 
expanded to Chief Legal and External 
Affairs Officer with effect from 1 July 2021 
and she was also appointed Joint Company 
Secretary on this date. You can find out 
more about Kelly on page 67.

Claire Tolcon LLB, BComm, GCertCorpMgt, 
FGIA

Claire Tolcon is our Manager Company 
Secretariat & Corporate Counsel. She was 
appointed Joint Company Secretary on 
30 October 2020. Before joining South32 in 
2017, Claire held the role of General Counsel 
and Company Secretary for a number of 
ASX listed entities, prior to which she was 
a partner of a corporate law firm in Perth. 
She holds a Bachelor of Laws and Bachelor 
of Commerce from Murdoch University and 
a Graduate Diploma of Applied Finance and 
Investment from Kaplan.

Nicole Duncan BA (Hons), LLB, MAICD, 
FGIA, FCG

Nicole Duncan was the Chief Legal Officer 
of South32 Limited during FY20 and was 
appointed as Company Secretary on 
21 January 2015. Nicole left the business 
in July 2021 and resigned as Company 
Secretary with effect from 1 July 2021. 

Indemnities and insurance 
We support and hold harmless Directors 
and employees, including employees 
appointed as Directors of a Group 
company, who incur personal liability to 
others as a result of working for us (while 
acting in good faith), to the extent we are 
able under law. 

Rule 10.2 of the South32 Constitution 
requires that we indemnify each Director 
and each Company Secretary on a 
full indemnity basis and to the extent 
permitted by law against liability incurred 
by them in their capacity as an officer of 
any member of the Group. The Directors 
and the Company Secretaries named 
in this report have the benefit of this 
indemnity (as do individuals who formerly 
held one of these positions). 

As permitted by our Constitution, South32 
Limited has entered into Deeds of 
Indemnity, Access and Insurance with each 
of our Directors, Company Secretaries and 
the CFO under which we agree to indemnify 
those persons on a full indemnity basis 
and to the extent permitted by law. We 
purchase Directors' and Officers' liability 
insurance which insures against certain 
liabilities (subject to exclusions) in respect 
of current and former Directors and 
Officers of the Group.

Due to confidentiality obligations and 
undertakings of the insurance, we can’t 
disclose any further details about the 
premium or insurance.

During FY21 and as at the date of this 
Directors’ report, no indemnity in favour of 
a current or former Director or Officer of 
the Group has been called on.

Corporate Governance 
Under ASX Listing Rule 4.10.3, 
ASX listed entities are required to 
benchmark their corporate governance 
practices against the fourth edition 
of the ASX Corporate Governance 
Council’s Corporate Governance 
Principles and Recommendations (ASX 
Recommendations).

South32 is compliant with all relevant 
fourth edition ASX Recommendations.

Our Corporate Governance Statement is 
available at www.south32.net/who-we-
are/risk-governance. It also contains the 
information required under the UK Financial 
Conduct Authority’s Disclosure Guidance 
and Transparency Rules (DTR).

Auditor 
Our External Auditor has provided an 
independence declaration in accordance 
with the Corporations Act, which is set out 
on page 148 and forms part of this report. 

The External Auditor also provides 
our Directors with an independent 
assurance conclusion. This relates to 
certain sustainability information, and 
is in accordance with the International 
Standards on Assurance Engagements 
ISAE 3000 Assurance Engagement other 
than the Audits and Reviews of Historical 
Financial Information and ISAE 3410 
Assurance of Greenhouse Gas Statements. 

We’ve included a copy of the External 
Auditor’s assurance report in the 
Sustainability Databook, available at  
www.south32.net. 

4
6

Non-audit services 
All non-audit services provided by our 
External Auditor are considered and 
approved in accordance with the process 
set out in our Provision of Non-Audit 
Services Policy. 

No non-audit services were undertaken  
by, and no amounts for non-audit services 
were paid to, our External Auditor. Refer to  
note 21 Auditor's remuneration to the 
financial statements on page 135.

Political donations and community 
investment 
Our Code of Business Conduct sets out 
our approach to political donations and 
community investment. 

In FY21, we didn’t contribute funds to any 
politician, elected official or candidate for 
public office in any country. On occasion, 
our representatives attend political 
functions that charge an attendance fee 
where attendance is approved beforehand 
in accordance with our internal approval 
requirements. We record the details of 
attendances and the relevant costs at a 
corporate level. 

In FY21, we contributed US$22.2 million for 
the purposes of supporting community 
programs that comprised direct investment, 
in-kind support and administrative costs. 
For more information on our community 
investment, please visit www.south32.net/
community-society/community-investment.

Proceedings on behalf of South32 
No proceedings have been brought 
or intervened in on our behalf, nor any 
application made under section 237 of the 
Corporations Act.

Environmental performance 
Performance in relation to 
environmental regulation 
We seek to be compliant with all applicable 
environmental laws and regulations 
relevant to our operations.

We classify environmental incidents 
based on actual and potential impact type 
as defined by our internal material risk 
management standards. 

In FY21, we had no environmental events 
that resulted in a major impact to the 
environment. 

Fines and prosecutions 
We received a $15,000 fine for pollution 
of water associated with our Illawarra 
Metallurgical Coal operation. The fine, 
issued by the NSW Environment Protection 
Authority, was in response to the pollution 
event that occurred at our Kemira Valley 
Coal Loading Facility in August 2020. 

Refer to the Water Section of our 2021 
Sustainable Development Report for more 
details in relation to the event. 

South32 Annual Report 2021GovernanceRounding of amounts 
We’ve applied the Australian Securities 
and Investments Commission (ASIC) 
Corporations (Rounding in Financial/
Directors’ Reports) Instrument 2016/191 to 
this report. This means the amounts in the 
financial statements have been rounded to 
the nearest million US dollars, unless stated 
otherwise.

Responsibility statement 
The Directors state that to the best of their 
knowledge: 

a)  The consolidated financial statements 
and notes on pages 95 to 146 were 
prepared in accordance with applicable 
accounting standards, give a true 
and fair view of the assets, liabilities, 
financial position and profit and loss 
of the Group and the undertakings 
included in the consolidation taken as a 
whole; and 

b)  The Directors’ report includes a 
fair review of the development 
and performance of the business 
and the position of the Group and 
the undertakings included in the 
consolidation taken as a whole, together 
with a description of the principal risks 
and uncertainties they face. 

This Directors’ report is made in 
accordance with a resolution of the Board. 

Karen Wood  
Chair 

Graham Kerr  
Chief Executive Officer  
and Managing Director 

Date: 2 September 2021

6
5

South32 Annual Report 2021GovernanceLead Team

Graham Kerr  
BBUS, FCPA, 50
Chief Executive Officer  
and Managing Director
See page 58 for Graham Kerr’s 
qualifications and experience.

6
6

Mike Fraser  
BCom, MBL, 56
Chief Operating Officer
Mike Fraser became our Chief 
Operating Officer in April 2018, 
having been Chief Operating 
Officer for the Africa region 
from January 2015. He is 
responsible for the Group’s 
aluminium and manganese 
operations in Africa and the 
Cerro Matoso operation in 
Colombia. 

Before joining us, Mike was 
President, Human Resources 
with BHP. Before this, he was 
Asset President of Mozal 
Aluminium in Mozambique. He 
has also worked in various roles 
in BHP’s coal, manganese and 
aluminium businesses. During 
his career, Mike held leadership 
roles in a large internationally 
diversified industrial business, 
and has worked in Australia, 
Mozambique, South Africa and 
the United Kingdom.

Mike holds a Master of Business 
Leadership and a Bachelor of 
Commerce from the University 
of South Africa.

Katie Tovich  
BCom, CA, GAICD, 51
Chief Financial Officer
Katie Tovich became our Chief 
Financial Officer in May 2019, 
having been Vice President 
Corporate Affairs and Investor 
Relations, as well as Head of 
Treasury. She is responsible for 
Financial Reporting, Financial 
Analysis, Treasury, Business 
Evaluation, Tax, Investor 
Relations, Risk and Group 
Assurance. Her responsibility 
for Corporate Affairs, including 
Community, transitioned to 
our new Chief External Affairs 
Officer on 1 November 2020. 

Katie brings more than 25 years 
of global experience in the 
resources sector. Before joining 
us, she held senior finance 
and marketing roles at BHP in 
Australia and Asia, including 
Vice President Corporate 
Finance, Head of Finance 
Worsley Alumina and Vice 
President Finance Marketing 
– Carbon Steel Materials. 
Earlier in her mining career, she 
held finance and marketing 
leadership positions at WMC 
Resources Limited in Australia 
and North America.

Katie holds a Bachelor of 
Commerce from the University 
of Tasmania and is a member 
of Chartered Accountants 
Australia and New Zealand.

Jason Economidis  
MBA (Executive), 52
Chief Operating Officer
Jason Economidis became our 
Chief Operating Officer in July 
2020, assuming accountability 
for Australia Manganese, 
Cannington, Illawarra 
Metallurgical Coal and Worsley 
Alumina. Prior to this, Jason 
was Vice President Operations 
at Illawarra Metallurgical Coal.

Jason is an experienced mining 
executive having worked in the 
sector in Australia and overseas 
for more than 25 years. He 
joined South32 from Orica, 
where he held the position of 
Vice President Coal and was 
responsible for 25 mining 
operations across Queensland 
and New South Wales.

Jason has held several other 
senior positions in the industry 
including General Manager of 
the Coppabella and Moorvale 
Complex for Peabody Energy, 
Chief Operating Officer of 
Vale Coal Australia, General 
Manager of Goonyella-Riverside 
and Caval Ridge, Vice President 
Health, Safety, Environment and 
Community for BHP, and Chief 
Operating Officer of Discovery 
Metals, based in Botswana. 

Jason holds a Master of 
Business Administration 
(Executive) from the 
Australian Graduate School of 
Management.

South32 Annual Report 2021GovernanceVanessa Torres  
BSc (Chemical), MEng, DEng, 51 
Chief Technical Officer 
Vanessa Torres became our 
Chief Technical Officer in 
July 2020. She is responsible 
for Technology, Innovation, 
Business Optimisation, Risk 
Management, Capital Projects 
as well as Health, Safety, 
Environment and Technical 
Stewardship. 

Vanessa joined South32 
in August 2018 as Chief 
Technology Officer. Before 
this, she was Vice President 
Operational Infrastructure for 
BHP Western Australia Iron Ore. 
She has over 28 years of global 
mining experience across 
Australia, Canada, Brazil, Peru 
and New Caledonia, and has 
held various senior roles at BHP 
and Vale in strategy, projects, 
business development, and 
operations. 

Vanessa holds Doctorate and 
Master degrees in Minerals 
Engineering from the University 
of Sao Paulo, and a Bachelor 
of Science from the Federal 
University of Minas Gerais, 
Brazil. She was also a Visiting 
Scholar at the University of 
British Columbia, Canada, 
where her research focused 
on the application of artificial 
intelligence to the mining 
industry. 

Brendan Harris  
BSc, CPA, 49
Chief Human Resources and 
Commercial Officer
Brendan Harris became our 
Chief Human Resources 
and Commercial Officer 
in November 2020 and is 
responsible for our Human 
Resources, Marketing and 
Supply functions. Before his 
role was expanded, Brendan 
was our Chief Commercial 
Officer between January and 
November 2020.

Brendan joined South32 as 
our inaugural Chief Financial 
Officer, looking after Financial 
Reporting, Management 
Reporting, Treasury, Business 
Evaluation, Tax, Corporate 
Affairs, Investor Relations, 
Risk and Assurance, and Brazil 
Alumina. Brendan played a 
key role in the Demerger from 
BHP in 2015 and South32’s 
public listing in three countries, 
in addition to developing 
our capital management 
framework.

Before joining us, Brendan 
was Head of Investor Relations 
at BHP, based in the United 
Kingdom and then Australia, 
having been Vice President 
Investor Relations Australasia. 
During his career, he also held 
roles in investment banking, 
including Executive Director 
Metals and Mining Research at 
Macquarie Equities.

Brendan holds a Bachelor 
of Science in Geology and 
Geophysics from Flinders 
University.

Kelly O’Rourke  
LLB, BCom, MAICD, 42
Chief Legal and External Affairs 
Officer
Kelly O’Rourke was appointed 
to the role of Chief Legal and 
External Affairs Officer in 
July 2021 and is responsible 
for Legal, Company 
Secretary, Business Integrity, 
Communications, Community, 
Government and Sustainability 
Strategy. Prior to this, Kelly 
was our Chief External Affairs 
Officer, having been appointed 
to the Lead Team in November 
2020. 

Kelly joined South32 in 2016 
as Head of Corporate Affairs 
and Investor Relations and 
later became Vice President 
Corporate Affairs. She 
previously worked at BHP for 
nine years where she held 
senior roles in Legal, Business 
Development, Mergers and 
Acquisitions and the Office of 
the Chief Executive. 

Kelly has more than  
15 years’ experience in 
the mining industry across 
legal, commercial, business 
development, mergers and 
acquisitions, corporate affairs 
and community roles, and has 
worked in Australia, the United 
Kingdom, Asia, Europe, Africa 
and the Americas.

Kelly holds a Bachelor of Laws 
(Distinction) from The University 
of Western Australia and a 
Bachelor of Commerce from 
Curtin University.

Simon Collins  
BE (Mining), MBA, 48
Chief Development Officer
Simon Collins has been our 
Chief Development Officer 
since October 2018. He is 
responsible for Greenfields 
Exploration, Projects 
and Industry Evaluation, 
Acquisitions and Divestments, 
Brazil Alumina and the Hermosa 
project. He also represents 
South32 on the Board of 
Directors of Ambler Metals 
LLC and TSX-V listed Elemental 
Royalties Corp.

Simon brings over 25 years’ 
experience in the resources 
industry in senior leadership 
and business development 
roles. Before joining South32, he 
worked for BHP for more than 
a decade, providing leadership 
to the business development 
teams in Australia, Belgium, 
Singapore and the United 
Kingdom. He began his career 
in mine operations initially in 
Australia and then South Africa.

Simon holds a Master of 
Business Administration from 
London Business School and 
a Bachelor of Engineering 
(Mining) from the University of 
New South Wales.

6
7

South32 Annual Report 2021GovernanceRemuneration report

Letter from our Remuneration Committee Chair
Dear Shareholders,

On behalf of the Board, I am pleased to present the Remuneration report for the financial 
year to 30 June 2021 (FY21).

Remuneration Policy Review
The Board and Remuneration Committee believe our remuneration policy has served 
stakeholders well since Demerger . Our policy has always aimed to strike the right 
balance, where remuneration outcomes incentivise and reward our Executives, while 
ensuring they reflect overall business performance and the shareholder experience. Our 
actual pay outcomes, being the realised value of rewards received since Demerger , are 
testament to this alignment, as illustrated in diagram 1.2.

It is, however, appropriate for us to regularly review our remuneration arrangements to ensure they deliver on their intended purpose. 
The Remuneration Committee has considered our strategic commitments to further reshape our portfolio and halve our operational 
carbon emissions (Scope 1 and 2) by 2035 compared to our FY21 baseline, as these elements will underpin the long-term success of our 
business and delivery of value to shareholders. 

Following extensive review, the Remuneration Committee has approved specific enhancements to our Reward Framework to further 
connect strategy, long-term shareholder value creation and executive remuneration, whilst also recognising the need for even greater 
restraint. From FY22, important changes to variable pay include:

 – A 33 per cent reduction in the face value of the long-term incentive (LTI) for all Executive key management personnel (KMP). This 

means the face value of the CEO’s LTI reduces from 300 per cent to 200 per cent of Fixed Remuneration, which results in a  
19 per cent decrease in Total Reward (based on face value) for the CEO from FY22;

 – The incorporation of two strategic measures for 20 per cent of our LTI, directly linking executive remuneration to our ambitious but 
realistic approach to climate change and the transition of our portfolio towards the base metals required for a low-carbon future;

 – An increase in the weighting of the financial measures in the short-term incentive (STI) to achieve an appropriate balance of measures 

across the elements of variable pay, given the inclusion of strategic measures in the LTI; and

 – A shift from an index to a constituent group of companies for the global mining comparator group in the LTI, against which two-thirds 

of relative total shareholder return performance is measured, to better align our approach to market practice.

8
6

Notwithstanding these changes which have resulted in a material reduction in Total Reward (as outlined in more detail on page 87), 
there will be no adjustment to the quantum of Fixed Remuneration or target STI.

We have appreciated the opportunity to engage with a number of investors and other external stakeholders ahead of making these 
changes and acknowledge the constructive feedback that we have taken on board.

Our performance 
We delivered a strong operating result in FY21, including record production at Worsley Alumina, Brazil Alumina, and Australia 
Manganese, and exceeded our initial production guidance at South Africa Manganese, Cerro Matoso and Cannington. Our teams worked 
hard to control costs and working capital, successfully mitigating increasing signs of inflationary pressure.

Our teams showed incredible resilience to the impacts of COVID-19, particularly in Southern Africa, Colombia and Brazil. Our response to 
the COVID-19 pandemic rightly remained our priority as we focused on keeping our people safe and well, maintaining safe and reliable 
operations, and supporting our communities. 

Together, these efforts underpinned a significant increase in the Group’s profitability. Underlying EBIT grew by 89 per cent to  
US$844 million (US$446 million in FY20) and free cash flow increased by 42 per cent to US$825 million(1) (US$583 million in FY20).  
US$670 million was returned to shareholders in respect of the period via the distribution of fully franked dividends and the continuation 
of our on-market share buy-back.

We also significantly reshaped our portfolio with the divestment of both South Africa Energy Coal (SAEC) and the TEMCO manganese 
alloy smelter, and the decision to place the Metalloys manganese alloy smelter on care and maintenance. In parallel we continued to 
advance studies at Hermosa, our base metals development option in Arizona, and build upon our global exploration footprint that is 
designed to add longer-term development options. 

Having met our multi-year objective to maintain Scope 1 emissions below our FY15 baseline, we set a medium-term goal to halve our 
operational carbon emissions by 2035 compared to our FY21 baseline. We also recognise the need to contribute to the communities 
where we operate. Our contribution takes many forms and in FY21 it included investment of US$22.2 million. 

Despite a reduction in recordable injuries for the period, and four of our operations recording their lowest Total Recordable Injury 
Frequency (TRIF) to date, our TRIF increased by two per cent to 4.3 and did not meet our 20 per cent year-on-year reduction target. 
While our TRIF outcome at a Group level was disappointing, we made good progress in proactive hazard reporting which is key to our 
approach to improving safety outcomes.

The collective strength of our performance across the year has been recognised in our Business Scorecard, where an overall outcome of 
101 per cent (out of a possible 150 per cent) was achieved (refer to pages 78 to 79 for additional detail).

(1) Free cash flow from operations including net distributions from our manganese equity accounted investments (EAI).

South32 Annual Report 2021GovernanceApplication of the Business Modifier
The Business Modifier component of the STI considers overall business outcomes or other factors that are not specifically contemplated 
in the Business Scorecard, such as the shareholder experience or unexpected material external events.

For FY21, the Board considered a number of factors, including:

 – The loss of our colleague, Mr Petros Sibeko, in May 2021 when he was fatally injured while working as a contractor at South Africa 

Energy Coal; and 

 – The response of our teams to COVID-19, notably their resilience and resourcefulness that underpinned our strong operating results 

and positive shareholder experience across the year.

Notwithstanding our strong results, the Board decided to apply a negative Business Modifier to reflect the fatality as this is a failure to 
meet our commitment that our people will return home safely from their shift every day. This reduced the Business Scorecard outcome 
by 20 per cent for the CEO and the COO Africa, and five per cent for all other Executive KMP.

As part of its deliberations, the Board also contemplated the impairment at Illawarra Metallurgical Coal that led to a statutory loss 
at the Group Level (see page 80). The Board concluded that the uncertainty in the current approvals landscape, that resulted in the 
impairment, was beyond management’s control. In addition, the Board considered the shareholder experience during the year, including 
our strong cash generation that enabled the payment of dividends, the continuation of our capital management program and strong 
share price appreciation. Consequently, the Board elected not to further penalise Executive KMP by increasing the negative impact of 
the Business Modifier. 

As a result, the CEO’s overall STI outcome was 81 per cent (or 54 per cent of maximum). The Board believes this to be a fair outcome, 
taking all factors into account, including overall reward for FY21 (see page 81).

LTI failed to meet vesting thresholds
The LTI is the component of executive remuneration most closely linked to the shareholder experience as it rewards Executives for the 
delivery of returns that exceed peer benchmarks across a four-year period.

South32 delivered TSR of 31 per cent over the four-year performance period of the FY18 LTI, which fell short of the threshold level 
required for vesting, meaning the FY18 LTI awards lapsed in full.

Continued restraint applied for FY22
The CEO will not receive an increase in his Fixed Remuneration for FY22 and Fees for the Non-Executive Directors will also remain 
unchanged. The rates for our Director travel allowance have also been adjusted lower and will be applied when mobility increases as 
the global economy reopens. Discretionary increases in Fixed Remuneration have, however, been granted to Katie Tovich and Jason 
Economidis to reflect their continued development in their roles.

6
9

The Remuneration Committee is confident that our long-standing approach to remuneration will be enhanced by the changes being 
made from FY22. The addition of the strategic measures in the LTI and the increased weighting being applied to the financial measures 
in the STI are designed to focus the organisation on those critical activities that will underpin the long-term success of the business.

The Remuneration Committee has also shown restraint and a willingness to apply discretion where needed and will continue to do so, to 
ensure executive remuneration reflects overall business performance, the creation of long-term value and the shareholder experience. 

We thank you, our shareholders, for your ongoing support.

Wayne Osborn  
Chair, Remuneration Committee

South32 Annual Report 2021GovernanceRemuneration report continued

FY21 at a glance

Record production at:

Worsley Alumina 
Brazil Alumina 
Australia Manganese

Underlying EBIT up 89% on FY20(1)

FY21 Total Shareholder Return(2)

US$844m

42.3%

Total Shareholder Return (TSR)(2)
Diagram 1.1 – South32 TSR relative to comparator groups

CEO Remuneration Outcomes
Diagram 1.2 – South32 share price (A$) vs. CEO Actual pay 
(A$'000)(3)

150%

100%

50%

0%

-50%

FY17

0
7

$
A
e
c
i
r
p
e
r
a
h
S

$5.00

$4.00

$3.00

$2.00

$1.00

$-

FY18

FY19

FY20

FY21

FY17

FY18

FY19

FY20

South32

Sector Index

World Index

South32

Sector Index

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

FY21

(1)  This number has not been prepared in accordance with IFRS.
(2)  Rolling 22-day average.
(3)  See page 72 for further information on actual pay.

The following table outlines historic business performance outcomes.

Table 1.1 – Business performance

Performance measures(1)

Underlying EBIT (US$M)
Underlying earnings (US$M)
Closing net cash/(debt) (US$M)
Movement in adjusted ROIC (percentage point)(2)
Closing share price on 30 June (A$)
Dividends/special dividends paid (US cents)
Total Recordable Injury Frequency (per million hours worked)

FY21

844
489
406
0.7
2.93
2.4
4.3

FY20

446
193
298
0.0
2.04
5.0
4.2

FY19

1,440
992
504
(1.4)
3.18
13.0
4.6

FY18

1,774
1,327
2,041
(6.8)
3.61
13.7
5.1

FY17

1,648
1,146
1,640
(1.1)
2.68(3)
4.6
6.1

(1)  The financial information in this table has not been prepared in accordance with IFRS. Refer to page 108 of the Annual Report for a reconciliation to statutory earnings.
(2)  The movement in adjusted ROIC is by reference to the previous performance period and removes the effect of changes in commodity prices, commodity price linked costs, 

market traded consumables, foreign exchange rates and movements in the Group’s Underlying ETR, including our manganese equity accounted investments on a proportional 
consolidated basis, divided by the sum of fixed assets (excluding any rehabilitation asset, the impairment of SAEC and our equity accounted manganese alloy smelters, and 
unproductive capital associated with Major project capital) and inventories.

(3)  The opening share price on 1 July 2016 was A$1.57.

South32 Annual Report 2021Governance 
 
Executive remuneration aligned to performance

Fixed 
Remuneration

No increase was applied to Fixed Remuneration for any Executive KMP during FY21.

FY21 STI

FY18 LTI

In FY21, Management responded quickly to COVID-19 and remained focused on keeping our 
people safe and well, maintaining safe and reliable operations and supporting our communities. 

We delivered strong operating results while managing costs, made significant progress in 
reshaping our portfolio, continued to build our pipeline of opportunities, progressed our 
decarbonisation plans and invested US$22.2 million in community initiatives and activities. This 
performance has been recognised in the Business Scorecard outcomes.(1)

The Board has, however, determined to apply a negative Modifier for Executive KMP in 
recognition of the fatality at SAEC. This included a negative Business Modifier of 20 per cent for 
the CEO and COO Africa, and 5 per cent for the COO Australia and CFO. 

The overall STI outcome for Executive KMP ranged from 54 per cent to 77 per cent of 
maximum, with the CEO receiving 54 per cent.

Although our TSR outcome was 42 per cent for FY21 and 31 per cent over the four-year 
performance period (FY18-FY21), it was below the thresholds when measured against the 
performance hurdles, resulting in all FY18 LTI rights lapsing.

South32 allows employees who are promoted into Executive KMP roles to retain unvested 
awards that had been granted under the Management Share Plan (MSP)(2) while in their prior 
role, which are a combination of performance rights and retention rights. South32 does not 
offer retention rights to permanent members of the Lead Team, including those that are KMP.  
A number of MSP retention rights that were granted to Katie Tovich and Jason Economidis 
vested in FY21.

7
1

Actual pay for Executive KMP (see page 72) was below target value for Total Reward, primarily 
as a result of the FY18 LTI not vesting and the Board’s decision to apply a negative Business 
Modifier in determining the STI outcome.

FY21 Total  
Reward

The Board considers all components of remuneration in reviewing the FY21 reward outcomes 
to ensure alignment to our Guiding Principles (see page 73) and believes FY21 actual pay is fair 
for the Executive KMP and shareholders, based on performance for the year.

Diagram 1.2 illustrates the alignment of CEO actual pay to shareholder experience for the past 
five years.

In order to further enhance our Reward Framework and reinforce alignment to our business 
strategy, a number of changes will be implemented for Executive KMP from FY22. These 
include:

 – A reduction of the face value of the LTI by 33 per cent (which also reduces the face value of 

Total Reward for the CEO by 19 per cent);

FY22 Reward  
Framework

 – The introduction of climate change and portfolio management as strategic measures in the LTI 
as these elements will underpin the long-term success of our business and delivery of value to 
shareholders;

 – An increase in the weighting of the financial measures in the STI to achieve an appropriate 

balance of measures across the elements of variable pay; and

 – A shift from the index to particular constituents of the global mining comparator group for one 

element of the relative TSR measure.

See page 87 for details on these changes.

(1)  See page 80 for commentary on the impairment recorded in FY21 and the resultant statutory loss.
(2)  South32 does not offer retention awards to permanent members of the Lead Team, including those that are KMP. All LTI awards that have been granted to permanent 

members of the Lead Team have performance hurdles based on relative Total Shareholder Return (TSR). Roles below the Executive KMP participate in the MSP, that grants a 
portion of the awards in performance rights aligned to the Executive KMP LTI, and a portion in retention rights with a service-based hurdle. When individuals are promoted 
internally into Executive KMP roles, they retain the unvested MSP awards that will then vest while they are Executive KMP.

South32 Annual Report 2021GovernanceRemuneration report continued

Actual pay for Executive KMP in FY21
Actual pay is the realised value of reward received by Executive KMP in relation to the financial year, rather than potential pay awarded.  
We disclose actual pay to enable our shareholders to better understand the actual reward that is delivered to our Executives through 
our Reward Framework (including the application of Board discretion) and how this is aligned to the performance of South32 over time. 

The intention of our Reward Framework (see our Guiding Principles on page 73) is to deliver actual pay outcomes that reflect company 
performance and the shareholder experience. The Board and Remuneration Committee believe that our actual pay outcomes since 
Demerger have achieved this objective, as illustrated in diagram 1.2.

The actual pay for Executive KMP in FY21, as outlined below, includes:

 – Fixed Remuneration earned in FY21 (including pension/superannuation); 

 – Other cash and non-monetary benefits earned in FY21;

 – Total FY21 STI earned (including cash and deferred rights) based on performance during this financial year (details on page 81); and

 – LTI awards that vested based on performance and/or service conditions to 30 June 2021 (details on page 83).

The amount of actual pay is likely to vary substantially, either up or down, from potential pay and from Target Remuneration (see page 
75) because a significant portion of our Executive KMP pay is ‘at risk’ and based on challenging performance measures.

Table 1.2 – Actual Pay in respect of FY21 (A$’000) 

Executive KMP

Mr Graham Kerr  
Chief Executive Officer

Mrs Katie Tovich  
Chief Financial Officer

Mr Mike Fraser  
Chief Operating Officer Africa

Mr Jason Economidis(4) 
Chief Operating Officer Australia (Acting)

Fixed 
Remuneration

Other(1)

STI Cash

STI Deferred

LTI(2)(3)

Actual Pay

FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20

1,815
1,815
830
830
1,000
1,000
713
-

27
21
12
10
78
40
64
-

879
690
573
383
484
380
273
-

879
690
573
383
484
380
137
-

-
-
163
154
-
-
145
-

3,600
3,216
2,151
1,760
2,046
1,800
1,332
-

(1)  Other includes insurances, notional interest on interest free loans, tax advice provided to Executive KMP and a relocation allowance paid to Jason Economidis of A$18,000 to 

assist with his relocation from New South Wales to Queensland.

(2)  Value of LTI is based on a closing share price on 30 June 2021 of A$2.93 (FY21) and 30 June 2020 of A$2.04 (FY20).
(3)  LTI includes Management Share Plan (retention) awards granted to Katie Tovich and Jason Economidis prior to becoming KMP which vested subsequent to their appointment 

as KMP (see page 83).

2
7

(4)  Jason Economidis was appointed as Acting Chief Operating Officer and became a member of Executive KMP on 1 July 2020. Fixed Remuneration includes base salary of 

$500,000, an acting allowance of $125,000 and superannuation contributions of $87,500.

South32 Annual Report 2021GovernanceOur Reward Framework
The pages of the Remuneration report that follow (together with Table 1.1 – Business Performance) have been prepared in accordance 
with section 300A of the Corporations Act 2001 (Cth) (Act) and audited as required by section 308(3C) of the Act. These sections relate to 
those persons who were KMP of South32 during FY21, being the Executive KMP named on page 72 and the Non-Executive Directors of 
South32 Limited.

Remuneration governance(1)
The roles and responsibilities of our Board, Remuneration Committee, management and external advisors in relation to remuneration for 
Executive KMP and employees at South32 are outlined below.

Board

Our Board maintains overall responsibility for overseeing the remuneration policy, and the principles and processes 
that underpin it. They approve the remuneration arrangements for our CEO and Non-Executive Directors. Changes 
to the Director fee pool and equity grants to the CEO are approved by shareholders.

The Remuneration Committee approves reward arrangements for our Executive KMP (other than the CEO) and 
oversees the remuneration and benefits framework for all employees of South32.

Remuneration 
Committee

By taking advice from other Board Committees (such as the Sustainability, and Risk and Audit Committees), the 
Remuneration Committee helps the Board oversee our remuneration policy, its specific application to the CEO, 
Executives and Non-Executive Directors and, in general, our employees.

The Remuneration Committee provides oversight to ensure our remuneration arrangements are equitable and 
aligned to the long-term interests of shareholders, operate within our risk framework, and support our purpose, 
strategy and values.

CEO and  
Management

Our CEO makes recommendations to the Remuneration Committee regarding our Executives, and how the 
remuneration policy and framework applies to our employees.

Management provides information and recommendations to the Remuneration Committee to help them consider 
and implement approved arrangements.

Exernal Advisors

We may engage external advisors either directly by the Remuneration Committee, or through management. These 
advisors provide information on remuneration-related issues, including benchmarking information and market data.

There were no remuneration recommendations received by the Remuneration Committee from external advisors in 
relation to KMP in FY21.

We seek information and analysis from a range of data sources. This allows us to make decisions that are informed, objective, weighted 
and aligned to the requirements of the company, and consistent with our Guiding Principles.

7
3

(1)  See page 84 for further information on our service contracts.

Reward practices and outcomes

Purpose and Strategy

The way we work

Shareholders

Performance

Market

Our Guiding Principles

Our culture is at the core 
of how we deliver our 
purpose and strategy. 
You’ll see it reflected in 
our values, the decisions 
we take, the courage 
we show in challenging 
situations and the legacy 
we leave.

Supporting this is a 
strong belief that culture 
can be actively shaped 
through a focus on what 
we prioritise, what we 
measure, what we reward 
and who we appoint.

Our Reward Framework 
focusses Executives 
and management on 
delivering superior total 
shareholder returns.

We do this through 
share ownership 
and LTI performance 
measures aligned to the 
shareholder experience.

We value feedback and 
regularly check-in with 
investors and proxy 
advisors.

We ensure our reward 
outcomes are aligned 
to performance by 
providing a large part 
of Executive pay ‘at risk’ 
based on challenging 
financial and non-
financial measures.

STI outcomes reflect 
performance over the 
financial year, while 
LTI outcomes reflect 
performance over a four-
year period.

We ensure our reward is 
competitive and allows 
us to attract and retain 
talented Executives.

We benchmark our 
reward levels in 
consideration of similar 
sized companies in the 
ASX, as well as our global 
mining peer group.

We align short-term and 
long-term performance 
measures to our purpose 
and strategy. This 
includes our efforts to:

 – Optimise our business 
by working safely, 
minimising our 
impact, consistently 
delivering stable 
and predictable 
performance and 
continually improving 
our competitiveness;

 – Unlock the full value 
of our business 
through our people, 
innovation, projects 
and technology; 

 – Identify and pursue 
opportunities to 
sustainably reshape 
our business for the 
future; and

 – Achieve sector-
leading total 
shareholder returns.

South32 Annual Report 2021GovernanceRemuneration report continued

Components of our reward for FY21(1)

Our intention

Attract and retain talented 
Executives to lead South32

The majority of pay at risk reflects our commitment to pay for performance  
and deliver value to shareholders

Reward business and individual  
performance in the financial year

Drive long-term performance  
and ownership behaviours

Component

Fixed Remuneration

Short-Term Incentive

Long-Term Incentive

The why

The how

4
7

Our approach  
in FY21

Fixed Remuneration is set with 
reference to the median of our 
peer groups, reflecting each 
Executive KMP’s 
responsibilities, location, skills 
and experience.

STI focuses efforts on our key priorities to 
ensure success for South32 both in the 
financial year and into the future. It 
motivates Executive KMP to achieve 
challenging performance objectives. Our 
STI reflects performance during the year 
and measures outcomes within 
management’s control.

LTI is aligned to the shareholder 
experience and delivery of lasting total 
shareholder returns.

Base salary and 
superannuation(2).

50 per cent paid in 
cash annually. 

50 per cent 
delivered in rights 
to South32 shares, 
deferred for two 
years.

Rights to receive South32 shares, subject 
to TSR performance measured over a 
four-year period, relative to two 
comparator groups.

We benchmark our Fixed 
Remuneration and Total 
Reward against two key peer 
groups that reflect the 
markets in which we operate. 
Our peer groups are:

 – An ASX peer group based 
on companies with half 
to double our market 
capitalisation (excluding 
foreign domiciled entities 
and real estate investment 
trusts); and

 – A global mining peer 

group of 14 companies 
with a similar market 
capitalisation, commodity 
mix and/or geographic 
spread (see Our Global 
Mining Peer Group below).

Quantum (% of Fixed Remuneration):

Quantum (% of Fixed Remuneration):

Target Value Max. Value

Executive KMP(2)

120%

180%

Business Scorecard: The Business 
Scorecard reflects a balance of financial 
and non-financial measures that are a 
priority for us in the financial year.

The financial measures remove the impact 
of commodity prices and foreign exchange 
to ensure that we reward for items 
management can control.  

The quantum for FY21(1) was determined 
on face value as a percentage of Fixed 
Remuneration:

Face Value

Target Value

CEO
Other KMP(2)

300%

120%
200% to 250% 80% to 100%

Comparator groups:

 – Two-thirds relative to a mining sector 
index (IHS Markit Global Mining Index 
with constrained weighting by company 
and sector); and

■ Sustainability (25%)

■  Financial: Production, cost and 

capital expenditure (25%)

 – One-third relative to a world index 

(Morgan Stanley Capital International 
(MSCI) World Index).

■■  Financial: Adjusted ROIC (25%)

Vesting: 

■ Strategic Goals (25%)

100% vesting

Business Modifier: As Scorecard measures 
do not always reflect all aspects of 
performance across a year, and to mitigate 
any unintended reward outcomes, the 
Board has the discretion to apply a 
Modifier to the Business Scorecard 
outcome. The Modifier may be applied to 
Executive KMP on an individual or group 
basis, having regard to the perspectives of 
stakeholders including employees, 
shareholders and communities. 

Individual Performance and Behaviours:  
The Board also considers an Executive 
KMP’s individual performance, taking into 
account their areas of responsibility and 
how outcomes have been achieved 
(including alignment with our values).

40% vesting

0% vesting

TSR 
= index

TSR > index 
by 5.5% pa

There is no retesting if the performance 
condition is not met at the end of the 
performance period.

Our Global 
Mining Peer 
Group

The Global Mining Peer Group that we use as one of our reference points for benchmarking Fixed Remuneration and Total 
Reward levels includes the following companies:

 – Agnico Eagle Mines, Alcoa, Anglo American, Antofogasta, Barrick Gold, Boliden AB, Eramet SA, First Quantum Minerals, 

Fortescue Metals Group, Freeport McMoRan, Newcrest Mining, Newmont, Teck Resources and Vedanta

(1)  See page 87 for further information on the components of our reward for FY22.
(2)  As Jason Economidis is acting in role, he has retained much of his prior reward arrangements. This arrangement provides both the company and Mr Economidis with the 
flexibility to move into a permanent Lead Team role or return into a senior management role outside the Lead Team should either of these options be appropriate at the 
relevant time. His Fixed Remuneration includes an acting allowance of $125,000. He has a Target STI of 90 per cent of base salary, of which one third is awarded in rights 
to South32 shares, deferred for two years. His deferred STI is less than the other Executive KMP as he is also granted Management Share Plan (MSP) retention rights. 
Mr Economidis continued to participate in the MSP that grants a portion of the LTI awards in performance rights, aligned to the Executive KMP LTI, and a portion in retention 
rights with a service-based hurdle. These MSP retention rights have a face value of A$200,000, being 40 per cent of his base salary of A$500,000. In FY21, recognising that 
Mr Economidis is acting in a KMP role, he received an LTI award (i.e. performance rights) that is aligned to that of the other Executive KMP, with a face value of 200 per cent of 
his base salary and a target value of 80 per cent.

South32 Annual Report 2021Governance 
Target Remuneration for FY21
South32 sets Target Remuneration for each Executive KMP at a competitive level to attract and retain the appropriate talent in the 
markets in which we operate. Our Target Remuneration is informed by the South32 Reward Framework (see page 73) that outlines the 
key factors the Board takes into consideration in setting executive remuneration and the strategic drivers of pay at South32.

It is important to ensure reward levels fairly reflect the responsibilities and contribution of the Executives and that outcomes are aligned 
to performance and the delivery of total shareholder returns. As a result, a portion of our Executive remuneration is at risk, based on 
challenging performance measures. 

Target Remuneration, as outlined below, assumes on-target performance for the STI and considers the difficulty of achieving LTI 
performance hurdles given broader industry and South32-specific share price volatility. The figures reflected in the graph below are 
therefore based on STI paid at 100 per cent of target and LTI that is 40 per cent of the face value (see page 74 for details on face value). 

Based on these principles, the annualised Target Remuneration as at 30 June 2021 for Executive KMP for a full year is summarised 
below.

Diagram 1.3 – FY21 Target Remuneration (A$’000)

Mr G Kerr

1,815

1,089

1,089

2,178

6,171
(71% at risk)

Mrs K Tovich

830

498

498

664

2,490
(67% at risk)

Mr M Fraser

1,000

600

600

1,000

3,200
(69% at risk)

Mr J Economidis(1)

713

300

0
5
1

600

1,763
(60% at risk)

Components

Fixed Remuneration

STI (Cash)

STI (Deferred rights)

LTI

0

2,000

4,000

6,000

(1)  Jason Economidis was promoted to Acting Chief Operating Officer on 1 July 2020. As Mr Economidis is acting in the role, his Reward Framework reflects his previous role, 

including the award of retention rights as part of the Management Share Plan. He therefore receives proportionately less in Deferred STI (which are also issued as retention 
rights). This arrangement provides both the company and Mr Economidis with the flexibility to move into a permanent Lead Team role or return into a senior management role 
outside the Lead Team should either of these options be appropriate at the relevant time.

Target remuneration relative  
to peer groups (unaudited) 
South32 has operations and offices on six 
continents and competes for talent in a global pool.

Diagrams 1.4 and 1.5 illustrate the moderate 
approach adopted by South32 in positioning CEO 
Fixed Remuneration and Total Reward for FY21 
compared to relevant benchmarks, being the 
ASX peer group and the Global Mining Sector 
peer group (see page 74). The level of Fixed 
Remuneration for the CEO is below the median for 
both of our peer groups. 

As an additional reference, we have also included 
supplementary peer groups reflecting companies 
on the LSE (UK) and in the S&P 500 (US) that are 
half to double the market capitalisation of South32 
Limited, based on the markets in which we also 
compete for executive talent.

7
5

South32
1,815

South32
6,171

Diagram 1.4 – CEO Fixed Remuneration vs. Peers

0
0
0
$
A

’

3,000

2,000

1,000

0

ASX Peers

Global Peers

UK

US

Diagram 1.5 – CEO Total Reward vs. Peers

0
0
0
$
A

’

20,000

15,000

10,000

5,000

0

ASX Peers

Global Peers

UK

US

 South32 

 Median 

 Upper and lower quartiles

South32 Annual Report 2021GovernanceRemuneration report continued

Range of possible remuneration outcomes
As actual business and individual achievement over the performance period determines reward outcomes, the amount of actual pay 
(see page 72) received by an Executive each year will vary.

The diagram below illustrates the range of possible remuneration outcomes for the CEO, based on several performance outcome 
scenarios.

Diagram 1.6 – Range of remuneration outcomes (A$’000)

Minimum

1,815

1,815
(all reward at risk is forfeited)

Target

1,815

2,178

2,178

6,171
(71% at risk)

Outstanding

1,815

3,267

5,445

0

2,000

4,000

6,000

8,000

10,000

Components

Fixed Remuneration

STI (Cash & Deferred rights)

LTI (performance rights)

10,527
(83% at risk)

In the Minimum scenario, no STI or LTI is paid. The CEO would receive Fixed Remuneration, inclusive of superannuation, of A$1.815 
million. 

A Target outcome would be achieved where the business meets the challenging STI performance hurdles, resulting in STI being paid at 
Target levels (i.e. 67 per cent of maximum opportunity, or 120 per cent of Fixed Remuneration, with half deferred into shares) and the LTI 
meeting the TSR performance threshold and 40 per cent of shares vesting. Future share price movements are not included in the value 
of the Deferred STI or the LTI.

To deliver an Outstanding outcome for the STI (i.e. at maximum STI, or 180 per cent of Fixed Remuneration, with half deferred into 
shares) South32 would need to meet the robust stretch targets across all metrics in the Scorecard. For the LTI to vest in full, the South32 
TSR would need to outperform both the sector index and the world index by more than 23.9 per cent over the four-year performance 
period. Future share price movements are not included in the value of the Deferred STI or LTI.

6
7

Fixed Remuneration for FY21
In FY21, there were no increases to Fixed Remuneration for Graham Kerr, Katie Tovich or Mike Fraser. Jason Economidis commenced in 
his current role as Acting Chief Operating Officer on 1 July 2020. 

Table 1.3 – Fixed Remuneration for Executive KMP in FY21

Executive KMP

Mr G Kerr
Mrs K Tovich
Mr M Fraser
Mr J Economidis(1)

(1)  Fixed Remuneration for Jason Economidis is only shown for the period he was a member of KMP (from 1 July 2020).

FY20 Fixed 
Remuneration 
(A$)

FY21 Fixed 
Remuneration 
(A$)

1,815,000
830,000
1,000,000
-

1,815,000
830,000
1,000,000
712,500

Increase 
%

0
0
0
-

South32 Annual Report 2021GovernanceShort-Term Incentive for FY21
Determining STI awards
Diagram 1.7 – Determination of STI Awards

South32 
Business Outcome

INDIVIDUAL 
Outcome

Overall 
STI OUTCOME

x

A1

A2

B

C

x

=

BUSINESS 
SCORECARD

0%-150% 
Target 100%

BUSINESS 
MODIFIER

Discretion +/-

INDIVIDUAL PERFORMANCE 
and BEHAVIOURS

(0%-150%)

Max 180% 
Target 120% 
(of Fixed Remuneration)

As outlined in components of our reward (page 74), the STI is intended to focus and reward Executive KMP for delivering on our key 
business priorities and success for South32 both in the financial year and into the future. The overall STI outcome is determined by 
assessing three key inputs – the Business Scorecard, the Business Modifier and individual performance and behaviours. 

The Business Scorecard, approved by the Board before the financial year begins, includes a balanced range of challenging measures 
that consider both our financial and non-financial performance, and helps our Executive KMP focus on outcomes that are within their 
control and a priority for the year.

The Business Modifier considers overall business outcomes or other factors that are not specifically contemplated in the Business 
Scorecard, such as the shareholder experience, fatalities or other significant safety or environmental events.

7
7

Together, the Business Scorecard and the Business Modifier determine the South32 Business Outcome.

Individual performance is measured based on delivery against the relevant operations’, projects’ or functions’ business plans. Our 
people are also assessed on demonstrated behaviour aligned with our values (i.e. both on what is achieved and how it is achieved).

What this means in practice
Including STI performance measures that are within the control 
of the Executives means that the Business Scorecard outcomes 
will not always mirror underlying South32 financial outcomes. 

However, the Board has designed the STI, including the use 
of the Business Modifier and Individual Outcomes, to ensure 
Executives are rewarded for delivering strong performance 
across areas within their control throughout the cycle, taking 
into account overall business performance and shareholder 
experience.

Diagram 1.8 demonstrates the disciplined approach to STI 
Outcomes applied by the Board over the past five years.

Diagram 1.8 – CEO STI outcome vs. South32 Underlying Earnings

x
a
M

f
o
%

100%

75%

50%

25%

0%

64%

58%

55%

54%

42%

1400

1200

1000

800

600

400

200

-

M
$
S
U

FY17

FY18

FY19

FY20

FY21

South32 Underlying Earnings US$M

STI % of Max

South32 Annual Report 2021Governance 
 
Remuneration report continued

A1 FY21 Business Scorecard

Table 1.4 – FY21 Business Scorecard outcomes
Weight
Scorecard measure

Performance

Sustainability

Safety: 

25%

Poor

Outcome (Target = 25%)

Zero

Target Maximum

26%

A 20 per cent reduction in TRIF compared to FY20.

We saw a reduction in recordable injuries for the period and four of our operations 
recorded their lowest TRIF to date. However, our TRIF increased by two per cent to 4.3 
meaning our year-on-year performance did not meet our 20 per cent reduction target.

We are deeply saddened that a contractor working at SAEC was fatally injured in an 
incident involving the use of an elevated work platform in May 2021. South32 recognises 
the fatality in our STI through the Business Modifier (see page 80).

Significant Events and Hazards:

Good

Ensure 90 per cent of significant event 
investigations completed and signed off within the 
allocated timeframe plus achieve a significant 
hazard frequency of "30".

Eighty-three per cent of significant event investigations were signed off within the 
allocated timeframe.

Delivered a good significant hazard frequency of "41".

Health:

Fair

A 10 per cent reduction in material exposures from 
the baseline, plus develop an FY22 plan to reduce 
by 20 per cent the number of workers exposed 
above 200 per cent of the OEL.

Material exposures reduced by six per cent compared to the baseline(1). Plans have been 
developed to reduce the number of workers exposed above 200 per cent of the OEL by 
15 per cent in FY22.

Environment: 

Excellent 

Achieve Scope 1 and 2 emissions forecast of 
24,649kt CO2-e(2) and Scope 1 emissions below 
10,653kt CO2-e(2) (10 per cent below FY15 baseline). 
Define our public target and glidepath narrative 
and progress the critical decarbonisation studies, 
energy planning and offsets approach.

In FY21, our combined Scope 1 and 2 emissions(3) were below our FY21 forecast, and our 
Scope 1 emissions were more than 15 per cent below our FY15 baseline. 

In May 2021, we released our medium-term target to halve our operational carbon 
emissions (Scope 1 and 2) by 2035, stepping up our ambition on climate change and 
pathway to net zero. 

We have progressed studies for our decarbonisation and energy transition projects at 
our most carbon intensive operations.

8
7

Community:

Excellent

Implement Operational and Strategic Community 
Investment Plans on time and on budget. Mature 
our ‘outcome’ and ‘impact’ measurement through 
the continued implementation of the Community 
Investment Impact Measurement Framework.

Demonstrate an improvement in community 
outcomes across the four key ‘outcome’ indicators: 
education and leadership, economic participation, 
natural resource resilience, and good health and 
social wellbeing.

FY21 Community spend was on budget. We matured our approach to measuring the 
outputs and outcomes of our community investments through the application of our 
Community Investment Impact Measurement Framework. 

In FY21, we saw improved outcomes across our four investment priority areas, which are 
reported in our Sustainability Development Report. 

Critical support was provided to communities and governments during the COVID-19 
pandemic.

In addition, a social performance framework was completed and is being piloted.

Risk Management:

Excellent

More than 90 per cent on time completion of 
planned control management activities plus deliver 
second line assurance over 15 per cent of material 
and strategic risks.

In FY21, 93 per cent of controlled management activities were completed on time and 
second line assurance was delivered over 40 per cent of material risks.

(1)  Baseline for Occupational Exposure Limits (OEL) excludes SAEC and TEMCO. More information can be found on page 14.
(2)  FY21 emission forecast and FY15 baseline include the updated methane Global Warming Potential factor in Australia.
(3)  A pro-rata calculation was applied for SAEC and TEMCO given their divestment part way through the year so that our emissions performance was not overstated in the FY21 

Business Scorecard. 

South32 Annual Report 2021GovernanceScorecard measure

Weight

Performance

Financial: Production, cost  
and capital expenditure

25%

Production: 

Good

Outcome (Target = 25%)

Zero

Target Maximum

26%

97 – 103 per cent of revenue equivalent 
production.

FY21 revenue equivalent production was 101 per cent.

Cost: 

Good

Within US$50 million of FY21 budget (adjusted for 
FX, price-linked and other costs).

Cost, adjusted by US$12M for the incremental impact of COVID-19, was US$3M above 
budget.

Capital Expenditure: 

Fair

Within five per cent of FY21 sustaining capital 
expenditure budget (adjusted for FX), within 5 per 
cent of FY21 budget and schedule for major capital 
projects spend (adjusted for FX), and less than 20 
per cent break-in projects.

Financial: Adjusted ROIC

25%

Achieve budget FY21 Adjusted ROIC, consistent 
with our cost, production and capital expenditure 
targets.

Strategic priorities

25%

Complete the divestment of South Africa Energy 
Coal in line with commercial terms.

Execute and announce the divestment of the 
Manganese Smelters at TEMCO and Metalloys.

Progress portfolio optimisation sequence and 
plan.

Progress pre-feasibility (PFS) and feasibility studies 
at Hermosa and the independent peer review at 
Eagle Downs. Determine and proceed with plan.

Achieve FY21 Inclusion and Diversity targets and 
implement activities to increase engagement 
above pre-COVID-19 levels.

In FY21, both sustaining capital expenditure and major capital projects expenditure were 
84 per cent of budget. Break-in projects were at 18 per cent.

Good

In FY21, adjusted ROIC was 3.1 per cent against the budget level of 3.1 per cent.

25%

24%

Fair

Transaction completed on 1 June 2021 broadly in line with commercial terms.

Good

TEMCO divestment completed on 4 January 2021 and the Metalloys smelter placed on 
care and maintenance.

7
9

Good 

Progress made on a number of projects in addition to SAEC and TEMCO.

Fair

At Hermosa, the PFS was delayed given the impact of COVID-19. An updated mineral 
resource estimate for Taylor was released, with positive indicators. At Eagle Downs, the 
feasibility study was completed in H1 FY21 and progress has been made in determining 
the preferred path.

Good

Met targets with regard to representation of women on our Board, in our Lead Team and 
across our organisation(3). Below target for women at some leadership levels and for 
Black People in Management in South Africa. Proactive activities undertaken to increase 
employee engagement through the COVID-19 impacted period.

Subtotal

Target = 100% 
Maximum = 150%

101%

(3)  FY21 performance measured against FY20 data that excludes SAEC. More detail can be found on page 16.

South32 Annual Report 2021GovernanceRemuneration report continued

A2 FY21 Business Modifier

The Business Modifier is an integral component of the STI that considers overall business outcomes or other factors that are not 
specifically contemplated in the Business Scorecard, such as:

 – the shareholder experience;

 – unexpected material external events, including the impact of a global pandemic or significant disruption to global trade;

 – fatalities and significant safety or environmental issues;

 – significant reputational issues; or

 – an assessment of risk, culture or any other item that the Board considers appropriate.

The Modifier, based on Board discretion, ensures that STI outcomes reflect overall business performance, including both what has been 
delivered and how it has been achieved. The outcome may also be positive or negative, or may be applied to an Executive KMP on an 
individual or a group basis depending on the factors under consideration.

For FY21, the Board considered a number of factors before deciding on the application of the Business Modifier: 

 – In May 2021, Mr Petros Sibeko, a contractor working on the Klipspruit Extension Project at South Africa Energy Coal was fatally 

injured following an incident involving the use of an elevated platform. We are deeply saddened by this event and will never be truly 
successful until we eliminate fatalities and significant incidents.

 – We delivered strong operating results, including record production at Worsley Alumina, Brazil Alumina and Australia Manganese, 
while controlling our costs and reducing capital expenditure. In FY21 the business delivered underlying EBIT of US$844 million 
(US$446 million in FY20), free cash flow of US$825 million(1) (US$583 million in FY20) and returned US$670 million to our shareholders 
(US$424 million in FY20). Under the circumstances, our strong operating results for FY21 are an excellent achievement.

 – Our teams remained resilient to the ongoing challenges provided by COVID-19, which were most acute in Southern Africa, Colombia 
and Brazil. Our response to the pandemic is unchanged and we continue to make every effort to keep our people safe and well, 
maintain safe and reliable operations and support our communities.

On balance, and considering the actual pay outcomes, encompassing Fixed Remuneration, STI and LTI, the Board applied a negative 
Business Modifier to Executive KMP to reflect the fatality. For the CEO and the COO Africa, a Business Modifier of negative 20 per cent 
has been applied. For all other Executive KMP, a Business Modifier of negative five per cent has been applied to the overall STI outcome.

0
8

As part of its deliberations, the Board also discussed the impact of the New South Wales (NSW) Independent Planning Commission’s 
refusal of our application for the Dendrobium Next Domain (DND) life extension project at Illawarra Metallurgical Coal (IMC). This decision 
was unexpected, both for management and other external stakeholders, and reflected a fundamental shift in the approvals landscape. 
Subsequently, the NSW State Legislative Council passed a motion requesting that any further development of DND be declared as 
state significant infrastructure. Given the resultant level of uncertainty in the approvals process, we impaired the carrying value of 
Illawarra Metallurgical Coal by US$728M (post tax ~US$510M), which led to a statutory loss at the Group level in FY21. In light of the 
prevailing circumstances, the Board concluded that the contributing factors to the impairment were beyond management’s control. The 
Board also considered the shareholder experience during the year, including our strong cash generation that enabled the payment of 
dividends, the continuation of our capital management program and strong share price appreciation. Consequently, the Board elected 
not to further penalise Executive KMP by increasing the negative impact of the Business Modifier. 

Table 1.5 summarises the application of the Business Modifier since FY17.

Table 1.5 – Application of the Business Modifier by the Board (multiplier applied to the Business Scorecard outcome)

CEO: 

COO Africa:

Other Executive KMP:

Modifier for
FY21

-20%

-20%

FY20

-30%

-30%

-5%
One fatality in 
South Africa and 
statutory loss  
as a result of the 
impairment

-15%
One fatality in South 
Africa and a decline 
in earnings and 
share price

Modifier applied in previous years
FY18
FY19

No modifier  
applied

-15%

-15%

-5%
One fatality in South 
Africa and the 
impact of the Appin 
mine suspension  
in FY17

FY17

-2.5%

-5%

-
One fatality in  
South Africa

(1)   Free cash flow from operations including net distributions from our manganese equity accounted investments (EAI).

South32 Annual Report 2021GovernanceB FY21 individual performance

Our Board determines the Individual Scorecard measures for Executive KMP in relation to what was delivered, as demonstrated in the 
performance of the Executive’s portfolio, and how it was delivered, which considers demonstrated leadership and behaviour aligned to 
our values, risk framework and governance processes.

While the Board acknowledged FY21 was an excellent year for the CEO under difficult circumstances, when reflecting on Graham Kerr’s 
performance the Board agreed not to apply an individual outcome, deeming the overall South32 business outcome to be appropriate 
for the CEO.

Individual outcomes were applied to the other Executive KMP, reflecting the performance of their areas of accountability. These 
outcomes ranged from 95 per cent to 120 per cent, as indicated in Table 1.6 below.

C Overall FY21 STI outcomes

Overall STI outcomes for FY21 are determined through our Board’s assessment of the Business and Individual Outcomes, as outlined in 
Table 1.6.

Table 1.6 – STI earned by Executive KMP in respect of FY21 performance

Executive KMP

Mr G Kerr
Mrs K Tovich
Mr M Fraser
Mr J Economidis(3)

Business 
Scorecard 
Outcome %

Modifier  
+/- %

Individual 
Outcome %

Overall 
STI Outcome 
% of Target

Total

STI Awarded 

Cash 

(A1)
101
101
101
101

(A2)
-20
-5
-20
-5

(B)
100(2)
120
100
95

A1 x (1+A2) x B
81
115
81
91

(A$’000)
1,758
1,146
968
410

(A$’000)(1)
879
573
484
273

Deferred 
Rights 

(A$’000)
879
573
484
137

Percentage of maximum STI

Awarded  
(%)

Forfeited (%)

54
77
54
61

46
23
46
39

(1)  The Cash portion of the STI will be paid in cash in September 2021. The deferred rights to receive South32 shares are anticipated to be granted in or around December 2021 

and will be due to vest in August 2023. The rights remain subject to continued service with the South32 Group. 

(2)  The Board determined to apply the overall South32 Business Outcome to the CEO, Graham Kerr. His Individual Outcome was therefore deemed to be 100.
(3)  As Jason Economidis is acting in role, he has retained much of his prior reward arrangements. He has a reduced portion of Deferred STI as he is granted retention rights as part 

of the Management Share Plan awards that are applicable to his prior role. See page 74 for further information on Mr Economidis’ reward arrangements.

8
1

South32 Annual Report 2021Governance 
Remuneration report continued

Long-Term Incentive
FY18 LTI and Management Share Plan Performance Award
Our FY18 LTI awards were tested for vesting subject to service and performance conditions to 30 June 2021. These awards are subject 
to TSR performance conditions over four years, with two-thirds measured in reference to a mining sector index (the IHS Markit Global 
Mining Index) and one third with reference to a world index (the MSCI World Index). The four-year period for this award was from 1 July 
2017 to 30 June 2021.

For the LTI Awards to vest in full, they would need to outperform both indices by at least 23.9 per cent over the performance period  
(5.5 per cent per annum cumulative). Given that our TSR failed to meet the threshold level of performance required against both 
comparator indices (see Diagram 1.9 and Table 1.7), these awards lapsed in full in August 2021.

South32 employees in management roles below the Lead Team participate in the Management Share Plan (MSP).  We granted Katie 
Tovich and Jason Economidis their FY18 MSP Performance Awards before becoming Executive KMP. These awards have the same 
performance and vesting conditions as our FY18 LTI Awards and have therefore also lapsed in full in August 2021.

Diagram 1.9 – Indicative TSR performance: South32 vs comparators

Diagram 1.10 – Vesting Outcome

150%

100%

50%

0%

)

R
S
T

(
n
r
u
t
e
R
r
e
d
o
h
e
r
a
h
S

l

l

a
t
o
T

100% vesting

40% vesting

0% vesting

TSR 
= index

TSR > index 
by 5.5% pa

Sector Index

World Index

-50%

FY17

2
8

FY18

FY19

FY20

FY21

South32

Sector Index

World Index

Table 1.7 – South32 LTI Award vesting outcome

Sector Index
World Index

TSR performance(1)(2)

Vesting 
outcome

Index 
weighting

Index (A)

South32 (B)

125%
69%

31%

Required for 
100% vesting

Index+23.9%
Index+23.9%

Achieved (B-A)

(94%)
(38%)

(C)

0%
0%

(D)

2/3
1/3

Weighted 
vesting 
outcome

(C x D)

0%
0%
0%

(1)  TSR performance reflects the one-month average return from 30 June 2017 at the start of the performance period, to the one-month average return to 30 June 2021 at the 

end of the performance period.

(2)  The Board and Remuneration Committee use information from an external provider to inform them of the performance of the relevant index to assess the vesting outcome for 

the LTI.

FY19 Management Share Plan Retention Award
While South32 does not offer retention rights to permanent members of the Lead Team, we allow employees who are promoted into 
Executive KMP roles to retain unvested awards that had been granted under the Management Share Plan (MSP) while in their prior role.  
MSP awards are a combination of performance rights and retention rights.

We granted the FY19 MSP Retention Awards to Katie Tovich and Jason Economidis before they became members of KMP. Given the 
retention-focused objective of these awards, the vesting conditions are service-based (with a service condition to 30 June 2021) with no 
additional performance conditions. As the service condition was met, our Board approved these awards to vest in full in August 2021. 
The structure of the MSP is detailed on page 92.

South32 Annual Report 2021Governance 
 
 
 
LTI outcomes in FY21
Table 1.8 – South32 LTI awards vested or lapsed/forfeited

Executive KMP

Award

Mr G Kerr
Mrs K Tovich

Mr M Fraser
Mr J Economidis

FY18 LTI
FY18 MSP Performance
FY19 MSP Retention
FY18 LTI
FY18 MSP Performance
FY19 MSP Retention

Number of 
rights granted

Number of 
rights vested

Number of 
rights lapsed/ 
forfeited

Value at 
grant(1) 
(A$’000)

Value lapsed/
forfeited(2) 
(A$’000)

2,026,717
189,312
55,725
925,572
73,156
49,481

-
-
55,725
-
-
49,481

2,026,717
189,312
-
925,572
73,156
-

5,310
496
204
2,425
192
181

5,310
496
-
2,425
192
-

Value of Share 
price 
movement(3) 
(A$’000)

Value at 
vesting(4) 
(A$’000)

-
-
(41)
-
-
(36)

-
-
163
-
-
145

(1)  ‘Value at grant’ is the number of rights granted multiplied by the grant determination price in June 2017 of A$2.62 (FY18 LTI/FY18 MSP Performance) and June 2018 of A$3.66 

(FY19 MSP Retention), based on the Volume Weighted Average Price (VWAP) over the last 10 trading days in June of the respective year.

(2)  ‘Value lapsed/forfeited’ is the number of rights lapsed/forfeited based on performance relative to the performance measures, multiplied by the grant determination price of 

A$2.62 (for the FY18 LTI/FY18 MSP Performance).

(3)  ‘Value of share price movement’ is the number of shares that vested, multiplied by the difference between the grant determination price of A$3.66 (for the FY19 MSP Retention) 

and the share price at 30 June 2021 of A$2.93. This reflects the value added/(lost) due to the change in share price since the start of the performance period.

(4)  ‘Value at Vesting’ is the number of shares that vested in August 2021, multiplied by the closing share price of South32 shares on 30 June 2021 of A$2.93.

LTI granted in FY21
As part of our FY21 LTI Plan, we granted performance rights to Executive KMP in December 2020. These awards have a four-year 
performance period and are subject to performance hurdles (outlined on page 74).

As Jason Economidis was acting in the COO role in FY21, he continued to participate in the MSP that grants a portion of the LTI awards 
in performance rights, aligned to the Executive KMP LTI, and a portion in retention rights with a service-based hurdle. As he receives the 
MSP retention rights, he is allocated proportionately less Deferred STI. The FY21 MSP Retention Awards have a three-year service-based 
vesting condition only (see Table 1.14 for key terms for the MSP). In recognition that Mr Economidis is acting as a member of Executive 
KMP, he was granted the same level of LTI award as the other Executive KMP.

Shareholders approved, under ASX Listing Rule 10.14, the grant of rights for the CEO at the AGM on 29 October 2020.

As outlined in the 2020 Notice of Meeting, in light of the drop in the South32 share price from FY19 to FY20, the Board exercised its 
discretion to determine that, for the CEO, the value of the FY21 LTI that can be received in the year of vesting will be limited to twice the 
grant value of the award.

8
3

Any value above that level that would otherwise be received based on testing against the performance conditions, will be forfeited or, in 
exceptional circumstances and at the Board’s discretion, deferred for a further period. The discretion to defer vesting of a portion of the 
award in excess of the maximum value, would be exercised in accordance with our Guiding Principles (set out on page 73) with particular 
regard to alignment with the experience of our shareholders. 

The vesting outcome applied to the CEO at that time will inform the Board’s application of discretion with regard to the vesting value for 
other Executive KMP.

Table 1.9 – FY21 LTI grants

Executive KMP

Award

Mr G Kerr
Mrs K Tovich
Mr M Fraser
Mr J Economidis

FY21 LTI
FY21 LTI
FY21 LTI
FY21 MSP Retention Award
FY21 MSP Performance Award

Reward determination(1) 
(calculated at the start of the performance period 1 July 2020)

Grant  
(December 2020)

Face Value  
(% of Fixed 
Remuneration)(2)

Face value 
(A$’000)

Target value(3) (% 
of Fixed 
Remuneration)

Target value 
(A$’000)

300
200
250
40
200

5,445
1,660
2,500
200
1,000

120
80
100
40
80

2,178
664
1,000
200
400

Number  
of rights 
granted(4)

2,695,544
821,782
1,237,623
99,009
495,049

(1)  The grant of awards is based on the face value as outlined in Components of our reward (see page 74).
(2)  For Jason Economidis, face value is calculated as a percentage of his salary (A$500,000). 
(3)  The target value considers the difficulty of achieving performance hurdles and anticipated share price volatility.
(4)  The number of rights granted to Executive KMP in December 2020 is calculated by dividing the face value by the VWAP of South32 shares traded on the ASX over the last 

10 trading days of June 2020 (Grant Price), being A$2.02. The Fair Value at grant for accounting purposes, as calculated by PwC, was A$1.18 per right for the FY21 LTI Award 
granted to the CEO, $1.30 per right for FY21 LTI Award granted to other Executive KMP and the FY21 MSP Performance Award, and $2.28 per right for FY21 MSP Retention 
Award.

South32 Annual Report 2021Governance 
Remuneration report continued

Terms and conditions of rights awarded under equity plans

Type of equity

Dividend and  
voting rights

Cessation of 
employment

We deliver deferred STI and LTI equity awards (including Transitional Performance and MSP awards) in the form 
of share rights. These are rights to receive fully paid ordinary shares in South32 Limited(1) subject to meeting 
specific performance and vesting conditions (Rights). As the Rights are an element of remuneration, no amount is 
payable by employees to be allocated the Rights. If the Rights vest, no consideration or exercise price is payable 
for the allocation of shares. As Rights are automatically exercised, they do not have an expiry date.

Rights carry no entitlement to voting, dividends or dividend equivalent payments.

Unless our Board determines otherwise:

 – Resignation or termination for cause: all unvested Rights lapse;

 – Death, serious injury, disability or illness that prevents continued employment or total permanent disability: all 

unvested Rights vest immediately; and

 – Other circumstances, generally: 

 – Deferred STI awards vest immediately; 

 – LTI and MSP Performance awards are pro-rated and the reduced portion remains on foot and eligible for 

vesting in the ordinary course, subject to any applicable performance hurdles; and

 – MSP Retention awards are pro-rated and the reduced portion vests immediately. 

Change of control

Our Board can determine the level of vesting (if any) having regard to the portion of the vesting period elapsed, 
performance to date against any applicable performance conditions and other factors they deem appropriate.

Malus and 
clawback

Our Board can reduce or clawback all vested and unvested STI and LTI awards in certain circumstances to ensure 
Executives don’t obtain an inappropriate benefit. These circumstances are broad, and can include: 

 – An Executive engaging in misconduct; 

 – A material misstatement of our accounts results in vesting; 

 – Behaviours of Executives that bring us into disrepute; and 

 – Any other factor our Board deems justifiable.

4
8

Rights 
to participate 
in new issues

A participant can’t take part in new issues of securities in relation to their unvested Rights. However, the relevant 
plan rules include specific provisions dealing with rights issues, bonus issues and corporate actions, and other 
capital reconstructions. 

(1)  References in this Remuneration report to ‘South32 shares’ are references to fully paid ordinary shares in South32 Limited.

Minimum Shareholding Requirements and service contracts

Minimum 
Shareholding 
Requirement

A Minimum Shareholding Requirement (MSR), equal to 100 per cent of Fixed Remuneration for Executive KMP, 
drives a long-term focus and alignment with our shareholders. The MSR applies to all Executive KMP and must 
be obtained within five years of appointment as a KMP(1).

See page 92 for current shareholdings of our Executive KMP.

Contracts are entered into by Executive KMP in their personal capacity. The key terms are consistent for all 
Executive KMP, and include:

 – No fixed term;

 – Six months’ notice by either party or payment by the company in lieu of notice; or

 – Termination without notice for serious misconduct; or

Our service 
contracts

 – Two months’ notice by the Executive where a fundamental change occurs that materially diminishes their 

status, duties, authority or terms and conditions (receiving payment in lieu of six months’ notice)(2).

The maximum payment in lieu of notice won’t exceed six months’ Fixed Remuneration. Executive KMP will be 
subject to several post-employment restraints for a period of up to six months after their employment with 
the Group ends. Shareholder approval was granted at the 2018 Annual General Meeting (AGM) in relation 
to termination benefits for Executive KMP for a further three years and further shareholder approval will be 
sought to refresh this approval at the 2021 AGM.

(1)  The minimum shareholding requirement does not apply to Jason Economidis as he is acting in role. 
(2)  As Jason Economidis is acting in role, the clause does not form part of his contract.

South32 Annual Report 2021GovernanceNon-Executive Director remuneration
Remuneration policy
As a global company, it’s important that we offer competitive Director fees to help us attract the appropriate level of experience from 
a diverse global pool. These fees reflect the size, complexity and global nature of our business and acknowledge the responsibilities of 
serving on our Board.

To ensure the independence of our Non-Executive Directors, their remuneration does not have an ‘at risk’ element.

We pay committee fees to recognise the additional responsibilities associated with participating on a Board Committee.

We pay a fixed fee to our Board Chair for all responsibilities, including participation on any Board Committees.

FY21 Non-Executive Director fees and fee pool
We review fees every year and may get external advice to help us do so. We based the review of FY21 fees on data provided by external 
consultants, which resulted in no increase in the Chair and Non-Executive Directors’ fees for FY21. Committee fees also remained 
unchanged.

The maximum aggregate amount we can pay our Non-Executive Directors is still A$3.9 million per annum (Fee Pool). Before making any 
changes to this, we will always seek shareholder approval.

The table below outlines the fee levels for FY21.

Table 1.10 – FY21 Board fees (effective 1 September 2020)

Fee

Description

Board Fees

Committee Fees

Board of Directors

Chair of the Board 

Other Non-Executive Directors

Risk and Audit, Remuneration and Sustainability Committees

Committee Chair

Members

FY21 fee  
(A$ per annum)

Increase %

578,000

189,250

46,000

23,000

0

0

0

0

Minimum shareholding requirements
Each Non-Executive Director is required to accumulate a minimum shareholding level of one year’s base fees within a reasonable period. 
You can find more details of their current shareholdings in Table 1.15.

Travel allowance
As a global company, our Board meetings are ordinarily held in Australia, South Africa and other locations, where travel restrictions allow 
(see page 63 for more details). Site visits are also an important part of our usual Board program, giving Directors:

 – A better understanding of workplace culture through interactions with site-based employees;

8
5

 – An improved understanding of local and operational risks;

 – A chance to participate in continuous education; and

 – On-the-ground experience.

As these meetings, site visits and other engagements take time and commitment, particularly if they’re in remote locations, we would 
usually give our Directors an allowance to compensate for this.

However, with COVID-19 and its impact on global travel, our Board has not had the opportunity to all meet physically or undertake site 
visits this financial year and as such, no travel-related payments were made in FY21.

Having reviewed Director travel allowances, we have decided to substantially reduce them from FY22 in the event travel is possible (see 
page 89 for further details).

South32 Annual Report 2021GovernanceRemuneration report continued

FY21 Non-Executive Director remuneration
In Table 1.11, we’ve set out the statutory disclosures required under the Corporations Act and in accordance with Australian Accounting 
Standards, in respect of FY21 remuneration paid to Non-Executive Directors.

Table 1.11 – Non-Executive Director remuneration (A$’000)

Non-Executive Director

Ms Karen Wood

FY21 term

Full year

Mr Frank Cooper AO

Full year

Mr Guy Lansdown(3)

Full year

Dr Xiaoling Liu

Full year

Dr Ntombifuthi Mtoba

Full year

Mr Wayne Osborn(4)

Full year

Mr Keith Rumble(5)

Full year

TOTAL

Short-term benefits

Post-employment 
benefits

Board & 
Committee 
fees

Non-monetary 
benefits(1)

Other cash 
allowances & 
benefits(2)

Superannuation

556
555
237
237
235
137
214
214
212
208
237
272
305
279
1,996
1,902

-
-
-
-
2
-
-
-
2
2
-
-
2
2
6
4

-
41
-
25
-
34
-
32
-
50
-
49
-
58
-
289

22
21
22
21
-
-
22
21
-
3
22
21
-
3
88
90

Total

578
617
259
283
237
171
236
267
214
263
259
342
307
342
2,090
2,285

FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20
FY21
FY20

(1)  Includes assistance for tax return preparation in FY20 and FY21.
(2)  Includes travel allowance paid in FY20.
(3)  Guy Lansdown joined the Board as an independent Non-Executive Director on 2 December 2019. FY20 details reflect this appointment date.
(4)  FY20 fees for Wayne Osborn include backpay for FY19, relating to his role as interim Chair of the Nomination and Governance Committee. The total payment made relating to 

this role for the period 1 August 2018 to 31 December 2019 was A$35,417 (i.e. A$25,000 per annum).

(5)  Keith Rumble received remuneration of ZAR 539,750 for his role as a Non-Executive Director of South32 SA Coal Holdings (Pty) Ltd during FY21 (ZAR 262,889 in FY20). This 

figure is included in Board and Committee fees above based on a foreign exchange rate of AUD1:ZAR11.60 (AUD1:ZAR10.51 in FY20).

6
8

South32 Annual Report 2021GovernanceLooking forward to FY22
Our purpose is to make a difference by developing natural resources, improving people’s lives now and for generations to come. We are 
trusted by our owners and partners to realise the potential of their resources.

Our purpose is underpinned by our simple yet powerful strategy which is focused on optimising the performance of our operations, 
unlocking their potential and identifying new opportunities to create value for all our stakeholders. This has seen us significantly simplify 
and reposition our portfolio for a low carbon future, and we’ve added multiple growth options and a pipeline of greenfield exploration 
projects with a bias to base metals. We’re also working hard to minimise our impact as emphasised by our recent commitment to halve 
operational carbon emissions (Scope 1 and 2) by 2035.

Our Reward Framework is designed to be fit-for-purpose through the business cycle, allowing the Board to find the right balance 
between remuneration outcomes that reward and incentivise our Executives, while also reflecting overall business performance and 
shareholder experience.

Although we have maintained a consistent approach to remuneration since Demerger and believe shareholders will be best placed if 
we retain the core elements of our Reward Framework, there are now opportunities for enhancement. The recent divestments of SAEC 
and TEMCO, the pending completion of the Taylor pre-feasibility study and our aim to halve operational carbon emissions (Scope 1 
and 2) by 2035, mean the timing is now right for us to embed those enhancements into our executive Reward Framework from FY22. 
These changes, which are outlined below, will further enhance the link between executive remuneration and our business strategy and 
priorities.

Long-term incentive
We are enhancing our LTI design for FY22 through three adjustments that are summarised in diagram 1.11.

Diagram 1.11 - South32 Long-Term Incentive - weighting of measures and reduction in value for the CEO from FY21 to FY22

FY21 LTI (CEO)

FY22 LTI (CEO)

300% of FR(1)
A$5,445,000

Relative TSR
vs MSCI Index

Relative TSR
vs Global
Mining Index

Strategic Measures

1

Relative TSR
vs MSCI Index

Relative TSR
vs Global Mining
Constituents

2

LTI face value 
reduced by 33%

200% of FR
A$3,630,000

3

1   The introduction of strategic measures 

into the LTI, making up 20 per cent of the 
performance hurdles for the incentive.

2   A shift from the Index to particular 

constituents of the global mining 
comparator group from which one element 
of relative TSR is measured.

3   A reduction in the face value of the awards.

8
7

(1)  Figures reflect reward for South32 CEO, based on Fixed 

Remuneration (FR) of A$1,815,000.

Introduction of strategic measures
We will be incorporating two strategic measures into the LTI that are aligned to our long-term business priorities. Namely, our approach 
to climate change and the transition of our portfolio towards those future facing base metals, as these elements will underpin the long-
term success of our business and the protection and creation of value for shareholders. The strategic measures will have a weighting of 
10 per cent each, for a total weighting of 20 per cent of the LTI performance hurdles.

Climate change measure:

We have announced plans to reduce our operational carbon emissions (Scope 1 and 2) by 50 per cent between FY21 and 2035, relative 
to our FY21 baseline, by implementing our Decarbonisation Strategy, which includes:

 – The advancement of conceptual projects through our capital investment tollgates, and the successful commissioning of identified 

emissions reduction projects; 

 – The ongoing assessment of new technologies and alternative energy sources; and

 – Continued participation and direct investment in research and development partnerships.

Consistent with our purpose, we will work to provide a Just Transition towards net zero in a way that supports our people, local 
communities and other stakeholders.

Portfolio management measure:

We are planning to further reshape our business for a low carbon world and increase our exposure to future facing base metals by:

 – Building a high-quality portfolio of greenfields and brownfields exploration and development options;

 – Optimising our existing portfolio by responsibly transferring ownership of non-core operations or transitioning them to closure;

 – Developing or acquiring operations which are cash generative through the cycle, improving the overall quality of our business; and

 – Maintaining discipline by adhering to our proven Capital Management Framework.

South32 Annual Report 2021GovernanceRemuneration report continued

Assessing performance for the strategic measures:

The success of these strategic initiatives will be measured on our ability to make material progress in these areas, whilst protecting 
and creating shareholder value as we navigate this business-critical transformation. Transparent disclosure for these two strategic 
measures will be provided at the end of each 12-month period in the Remuneration report so that external stakeholders have sufficient 
information to track and judge progress.

Key elements of these awards include:

 – For FY22, each measure will make up 10 per cent of the LTI;

 – Performance will be measured over a four-year performance period; and

 – The Board will retain full discretion when determining the final vesting outcome.

Vesting outcomes for the strategic measures will be determined by the Board following the end of the four-year performance period on 
30 June 2025. The Board’s rationale in assessing performance and determining these vesting outcomes will be clearly articulated.

Shift from index to constituents for the global mining comparator group
For FY22, 80 per cent of the LTI will continue to be assessed on the basis of our TSR performance when compared to two comparator 
groups:

 – A global mining comparator group for two thirds of this element. 

Where we have used the IHS Markit Global Mining Index in the past, we will shift to a fixed constituent group of companies. This 
constituent group will be made up of all companies that comprise the IHS Markit Global Mining Index at the start of the performance 
period and will be locked in for the four-year performance period (with Board discretion to make adjustments to take into account 
events such as takeovers, mergers or Demergers that may occur during the performance period). The threshold for vesting will be 
the median (P50) of this group, with the stretch being the upper quartile (P75). These changes will bring South32’s approach more in 
line with market practice; and

 – A world comparator group for one third of this element. 

We will continue to adopt the Morgan Stanley Capital International (MSCI) World Index over the four-year performance period, with no 
change to the vesting criteria.

We believe that maintaining an overall weighting of 80 per cent for TSR performance will ensure the LTI retains its core purpose of 
directly aligning CEO and Executive KMP long-term incentive payments with returns received by shareholders. 

8
8

Reduction in face value
The face value of the LTI for the CEO will reduce by 33 per cent, from 300 per cent to 200 per cent of Fixed Remuneration from FY22, 
with proportionate reductions in the LTI face value for other Executive KMP. These reductions in face value reflect the changes that have 
been taking place in the broader market and improve alignment with our Guiding Principles (see page 73).

Notwithstanding the reduction in face value, we will not change the Target LTI or Target Total Reward for the CEO, or other Executive 
KMP, as we believe these remain appropriate for their roles (see page 75). 

This means that the Total Reward (based on face value) for the CEO will reduce by 19 per cent from FY22. The face value Total Reward 
for Executive KMP will reduce by between 12 per cent and 18 per cent.

South32 Annual Report 2021GovernanceFixed Remuneration
There will be no increase to Fixed Remuneration in FY22 for Graham Kerr or Mike Fraser. Katie Tovich and Jason Economidis will 
receive modest Fixed Remuneration increases to A$870,000 and A$730,740, respectively. The CEO’s Fixed Remuneration will remain at 
A$1,815,000 per annum.

Short-term incentive
The value of the STI will remain unchanged from FY21. However, with the inclusion of climate change and portfolio management as 
strategic measures in the LTI, we have reviewed the STI measures and weightings to ensure that:

 – There is no double-counting between STI and LTI measures;

 – We have an appropriate balance of measures across the elements of variable pay; and

 – We align the performance measures with the most appropriate performance period.

For FY22, the overall design and key performance metrics of the STI will remain unchanged, with our Business Scorecard focused on 
maintaining safe, reliable and profitable operations. 

Performance Metrics

Measures

FY21 weighting FY22 weighting

Change to measures

Sustainability

Financial

Safety, Health, Risk Management & 
Community

Adjusted Return on Invested Capital

Production, cost and capital expenditure

Strategic Items

Key elements of the FY22 Business Plan

25%

25%

25%

25%

28.3%

28.3%

28.3%

15%

Adjusted to increase the 
weighting of the financial 
measures in the STI given the 
inclusion of the strategic 
measures in the LTI for FY22.

X

Business Modifier

Consider factors that are not specifically 
contemplated in the Scorecard

+/-

+/-

=

South32 Business Outcome Reflects our performance over the financial year

Director fees
There will be no increase to Non-Executive Director fees in FY22.

As from FY22, the travel allowance has been reduced by at least 36 per cent. Other than for domestic travel to a regularly scheduled 
Board meeting, where air travel to a Board commitment is greater than three hours but less than 10 hours to the destination, a one-off 
allowance of A$5,000 per trip now applies (FY21 was A$7,840). Where air travel is greater than 10 hours to the destination, the allowance 
per trip is now A$10,000 (FY21 was A$16,800). 

The travel allowance is only paid where travel is undertaken.

8
9

South32 Annual Report 2021GovernanceRemuneration report continued

Statutory disclosures
Statutory remuneration table for Executive KMP
In the following table, we’ve set out the statutory disclosures required under the Corporations Act and in accordance with the Australian 
Accounting Standards. The amounts shown reflect the remuneration for each member of Executive KMP that relates to their service  
in FY21.

Table 1.12 – Statutory remuneration of Executive KMP in FY21 (A$’000)

Executive KMP

Mr G Kerr

Mr M Fraser

Mrs K Tovich

FY21
FY20
FY21
FY20
FY21
FY20
Mr J Economidis(5) FY21
FY20
FY21
FY20

TOTAL

Short-term benefits

Post  
employment 
benefits

Termination 
benefits

Other 
long-term 
benefits(3)

Share based  
payments(4)

Total 
Remuneration

Cash  
bonus(1)

Non-
monetary 
benefits(2) Superannuation

879
690
573
383
484
380
273
-
2,209
1,453

27
21
12
10
78
40
46
-
163
71

23
21
25
25
21
21
88
-
157
67

Salary

1,765
1,713
755
772
905
888
624
-
4,049
3,373

LTI

2,746
3,856
618
632
1,296
1,794
425
-
5,085
6,282

STI

798
833
324
159
430
451
43
-
1,595
1,443

165
166
74
74
92
91
46
-
377
331

6,403
7,300
2,381
2,055
3,306
3,665
1,545
-
13,635
13,020

-
-
-
-
-
-
-
-
-
-

Percentage  
of total 
remuneration 
which is 
performance 
tested
69%
74%
64%
57%
67%
72%
48%
-

(1)  STI is provided half in cash (which is included in the cash bonus column of the table) in September 2021 following the end of the performance period and half in deferred rights 
(which is included in the share-based payments column of the table). The value of the deferred equity portion is amortised over the vesting period. As Jason Economidis is 
currently acting in the COO role, 66.7 per cent of his STI is provided in cash in September 2021 with the remaining 33.3 per cent paid in deferred rights.

(2)  Non-monetary benefits are non-pensionable and include such items as insurances and personal tax assistance.
(3)  Other long-term benefits is the accounting expense of annual and long-service leave accrued in FY21.
(4)  The related awards were not actually provided to the Executive KMP during FY21. The figures are calculated in accordance with Australian Accounting Standards and are the 
amortised fair values of equity and equity-related instruments that have been granted to Executive KMP. See page 91 for information on awards outstanding during FY21.

(5)  Fixed Remuneration for Jason Economidis is only shown for the period he was appointed as a member of KMP (1 July 2020).

0
9

South32 Annual Report 2021GovernanceDetails of rights held by Executive KMP
In the following table, we’ve set out more information about the rights over South32 shares held by Executive KMP, including the 
movements in rights held during FY21. See page 84 for terms and conditions about our Equity Incentive Plans. 

Table 1.13 – Detail and movement of rights over South32 shares held by Executive KMP during FY21

Award(1)(2)

Executive KMP

Mr G Kerr
FY20 Deferred STI (S)
FY21 LTI (P)
FY19 Deferred STI (S)
FY20 LTI (P)
FY18 Deferred STI (S)
FY19 LTI (P)
FY18 LTI (P)
FY17 LTI (P)
Mrs K Tovich
FY20 Deferred STI (S)
FY21 LTI (P)
FY19 Deferred STI (S)
FY20 LTI (P)
FY20 Transitional LTI (P)
FY19 MSP Retention (S)
FY19 MSP Performance (P)
FY18 MSP Retention (S)
FY18 MSP Performance (P)
FY17 MSP Performance (P)
Mr M Fraser
FY20 Deferred STI (S)
FY21 LTI (P)
FY19 Deferred STI (S)
FY20 LTI (P)
FY18 Deferred STI (S)
FY19 LTI (P)
FY18 LTI (P)
FY17 LTI (P)
Mr J Economidis
FY21 MSP Retention (S)
FY21 MSP Performance (P)
FY20 MSP Retention (S)
FY20 MSP Performance (P)
FY19 MSP Retention (S)
FY19 MSP Performance (P)
FY18 MSP Retention (S)
FY18 MSP Performance (P)

Opening 
Balance

Number

9,129,396
 -
 -
352,097 
1,696,261 
325,725
1,450,819
2,026,717
3,277,777
1,434,750
 -
 -
27,518
517,133
129,283
55,725
139,314
75,725
189,312
300,740
4,233,533

180,724
778,816
176,645
674,863
925,572
1,496,913
493,671
-

62,305
155,763
49,481
123,704
29,262
73,156

Grant 
Date

Granted in 
FY21(3) 

Vested in FY21

Forfeited or other  
change in FY21 

 Closing 
balance

Anticipated 
vesting date

Number

Number(4)

04-Dec-20
04-Dec-20
06-Dec-19
06-Dec-19
07-Dec-18
07-Dec-18
13-Dec-17
02-Dec-16

04-Dec-20
04-Dec-20
06-Dec-19
06-Dec-19
06-Dec-19
07-Dec-18
07-Dec-18
13-Nov-17
13-Nov-17
17-Nov-16

04-Dec-20
04-Dec-20
06-Dec-19
06-Dec-19
07-Dec-18
07-Dec-18
13-Dec-17
02-Dec-16

04-Dec-20
04-Dec-20
06-Dec-19
06-Dec-19
07-Dec-18
07-Dec-18
07-May-18
07-May-18

2,976,532 
280,988
2,695,544
-
-
 -
 -
 -
 -
977,812
156,030
821,782
 -
 -
 -
 - 
 - 
 - 
 - 
 - 
1,392,437 
154,814
1,237,623
 -
 -
 - 
-
 - 
-
594,058 
99,009
495,049
 - 
-
 - 
-
 - 
-

325,725
 -
 -
-
-
325,725
 -
 -
 -
75,725
 -
 -
-
-
-
 -
 -
75,725
 -
 -
176,645 
 -
 -
-
-
176,645
-
 -
-
29,262
 -
-
 -
-
 -
-
 29,262
-

%(5)

9
 -
 -
-
-
100
-
-
-
20
 -
 -
-
-
-
-
-
100
-
-
11
 -
 -
-
-
100
-
-
-
100
-
-
-
-
-
-
100
-

Number

3,277,777
 -
 -
-
-
-
-
-
3,277,777 
300,740 
-
 -
-
-
-
 - 
 - 
 - 
 - 
300,740 
1,496,913 
 -
 -
-
-
 -
-
 -
1,496,913
  - 
-
-
-
-
-
-
-
-

%(5)

91
 -
 -
-
-
-
-
-
100
80
 -
 -
-
-
-
-
-
-
-
100
89
 -
 -
-
-
-
-
-
100
0
-
-
-
-
-
-
-
-

Number

 8,502,426
280,988
2,695,544
352,097
1,696,261
-
1,450,819
2,026,717
-
2,036,097 
 156,030 
821,782 
27,518 
517,133 
129,283 
55,725 
139,314 
-
189,312 
 -
3,952,412 
154,814 
1,237,623 
180,724 
778,816 
 - 
674,863 
925,572 
 - 
 1,058,467 
99,009 
 495,049 
 62,305 
 155,763 
 49,481 
 123,704 
- 
 73,156 

Aug-22
Aug-24
Aug-21
Aug-23
Aug-20
Aug-22
Aug-21
Aug-20

Aug-22
Aug-24
Aug-21
Aug-23
Aug-22
Aug-21
Aug-22
Aug-20
Aug-21
Aug-20

Aug-22
Aug-24
Aug-21
Aug-23
Aug-20
Aug-22
Aug-21
Aug-20

Aug-23
Aug-24
Aug-22
Aug-23
Aug-21
Aug-22
Aug-20
Aug-21

(1)  At the time of vesting, the quantum of all awards that vest based on performance and/or service conditions will automatically convert to ordinary South32 shares for nil 

consideration in the participant’s name. Any Rights that do not vest will immediately lapse, hence there is no expiry date associated with the awards. (S) - Service only or (P) - 
Performance and Service conditions apply. As Rights are subject to service and/or performance conditions, the minimum possible total value of Rights granted under South32 
Equity Plans for future financial years is nil and the maximum possible total value is the number of Rights multiplied by the market price of South32 shares on the date of 
vesting.

(2)  Further details regarding each of the prior year equity grants are described in past South32 Annual Reports.
(3)  The fair value for awards granted in FY21 is the grant date fair value for accounting purposes being A$2.37 for the FY20 Deferred STI Award, A$1.18 for the FY21 LTI Award 

granted to the CEO, A$1.30 for the FY21 LTI Award and FY21 MSP Performance Award granted to other KMP and A$2,28 for the FY21 MSP Retention Award. Shareholders 
approved, under ASX Listing Rule 10.14, the grant of rights for the CEO at the AGM on 29 October 2020.

(4)  Rights converted to ordinary South32 shares for nil consideration on 21 August 2020. The South32 closing share price on this date was A$2.23. 
(5)  Percentage based on the maximum number of Rights available to vest in FY21.

9
1

South32 Annual Report 2021Governance 
 
 
 
 
 
 
 
 
 
 
Remuneration report continued

Details of awards for Katie Tovich and Jason Economidis
Before becoming Executive KMP, Katie Tovich and Jason Economidis already held several awards granted under the MSP. Jason 
Economidis continues to participate in the MSP as Acting Chief Operating Officer (see page 83 for further details).

The details of these awards and the Transitional Performance Award (LTI) granted to South32 employees promoted into the Lead Team 
are outlined in Table 1.14. For additional terms of the rights granted under the two plans, see Terms and conditions of rights awarded 
under equity plans (page 84).

Table 1.14 – Key terms and performance conditions of awards(1)
Award

Key Terms and Performance Conditions

Management 
Share Plan

The Management Share Plan is our LTI plan for eligible management employees below Lead Team level. The Plan has 
two elements:

 – Retention rights with a three-year vesting and service period from 1 July to 30 June, vesting in August three years 

from grant provided employees remain employed by us; and

 – Performance rights with a four-year performance and service period from 1 July to 30 June, vesting in August four 
years from grant, subject to the same performance and vesting conditions as our LTI for Executive KMP (see page 
74). There is no retesting if the performance condition is not met and any rights that don’t vest will immediately 
lapse/be forfeited.

Rights won’t attract any entitlement to voting, dividends or dividend equivalent payments.

Katie Tovich participated in the Management Share Plan prior to being appointed to the Lead Team. As Acting Chief 
Operating Officer, Jason Economidis continues to participate in the Management Share Plan and this has been used 
to deliver his FY21 LTI award.
This one-off award is granted to cover the gap in vesting on appointment as a member of the Lead Team and is due 
to the transition from the Management Share Plan (three-year retention rights and four-year performance rights) to 
the LTI plan for Executive KMP (four-year performance rights).

Transitional 
Performance 
Award

This award is subject to the same TSR performance conditions as our LTI awards for Executive KMP (see Components 
of our Reward on page 74), namely two-thirds relative to a mining sector index (IHS Markit Global Mining Index) and 
one-third relative to a world index (MSCI Word Index), except this award has a three-year performance period, from 
1 July 2019 to 30 June 2022 for Katie Tovich.

2
9

For the award to vest in full, it would need to outperform both indices by 17.4 per cent (5.5 per cent per annum 
cumulative). 

There is no retesting if the performance condition is not met and any rights that don’t vest will immediately lapse/be 
forfeited.

Rights won’t attract any entitlement to voting, dividends or dividend equivalent payments.

(1)  See page 84 for key terms of the LTI.

Shareholdings of KMP 
The Minimum Shareholding Requirement for Executive KMP is summarised on page 84.

For Non-Executive Directors, the approach used to determine the Minimum Shareholding Requirement of one year’s base fee, is the 
cost to the Non-Executive Director to acquire the shares. Apart from Guy Lansdown (who was appointed in December 2019), all Non-
Executive Directors meet this requirement. The percentage of fees reflected in the table below is based on our share price at 30 June 
2021.

Table 1.15 – South32 shares held directly, indirectly or beneficially by each KMP, including their related parties 

Non-Executive Directors

Ms K Wood

Mr F Cooper AO

Mr G Lansdown

Dr X Liu

Dr N Mtoba

Mr W Osborn

Mr K Rumble

Executive KMP

Mr G Kerr

Mrs K Tovich

Mr M Fraser

Mr J Economidis

Held at  
30 June 2020

Received on 
vesting of 
rights

Received as 
remuneration

Other net 
change(1)

Held at  
30 June 2021

% of Board Fees/ 
fixed 
remuneration(2)

367,825

128,010

-

60,000

69,386

125,704

161,380

-

-

-

-

-

-

-

3,292,285

356,541

3,228,249

-

325,725

75,725

176,645

29,262

-

-

-

-

-

-

-

-

-

-

-

-

-

45,000

-

-

48,400

-

-

-

367,825

128,010

45,000

60,000

69,386

174,104

161,380

3,618,010

432,266

(79,491)

3,325,403

-

29,262

186

198

70

93

107

270

250

584

153

974

17(3)

(1)  Other net change includes purchases and sales of vested shares to cover tax liabilities. 
(2)  Based on the closing share price of South32 shares as at 30 June 2021 of A$2.93.
(3)   Expressed as a percentage of base salary (A$500,000).

South32 Annual Report 2021GovernanceAdditional information
Transactions with KMP
There are no amounts payable to any KMP at 30 June 2021.

On 22 June 2021 an interest free loan of A$823,906 was made to Mike Fraser in relation to South African income tax payable on 
his South32 remuneration. There is no maturity date for this loan. The most recent official rate of interest published by the South 
African Revenue Service for loan fringe benefits to South African employees is 4.50 per cent. As at 30 June 2021, the full loan remains 
outstanding.

Otherwise during FY21, there were no transactions between KMP or their close family members and the South32 Group. 

There are no loans with any other KMP.

A number of Directors of the Group have control or joint control of other entities (also known as personal entities). There have been no 
transactions between those entities and no amounts were owed by or to the South32 Group during the year.

This Remuneration report was approved by our Board on 2 September 2021.

9
3

South32 Annual Report 2021GovernanceFinancial report

Consolidated income statement 

Consolidated statement of comprehensive income 

Consolidated balance sheet 

Consolidated cash flow statement 

Consolidated statement of changes in equity 

Notes to financial statements – Basis of preparation 

1.  Reporting entity 

2.  Basis of preparation 

3.  New standards and interpretations 

Notes to financial statements – Results for the year 

4.  Segment information 

5.  Expenses 

6.  Tax 

7.  Dividends 

8.  Earnings per share 

Notes to financial statements – Operating assets  
and liabilities 

9.  Trade and other receivables 

10.  Inventories 

11.  Property, plant and equipment 

12.  Intangible assets 

13.  Impairment of non-financial assets 

14.  Trade and other payables 

15.  Provisions 

4
9

Notes to financial statements – Capital structure  
and financing 

16.  Cash and cash equivalents 

17. 

Interest bearing liabilities 

18.  Net finance costs 

19.  Financial assets and financial liabilities 

20.  Share capital 

Notes to financial statements – Other notes 

21.  Auditor’s remuneration 

22.  Pension and other post-retirement obligations 

23.  Employee share ownership plans 

24.  Contingent liabilities 

25.  Subsidiaries 

26.  Equity accounted investments 

27. 

Interests in joint operations 

28.  Key management personnel 

29.  Related party transactions 

30.  Parent entity information 

31.  Discontinued operation 

32.  Subsequent events 

Directors' declaration 

Lead auditor’s independence declaration 

Independent auditor’s report 

95

96

97

98

99

100

100

100

101

102

102

110

110

113

113

114

114

114

115

118

119

122

123

125

125

125

126

126

134

135

135

135

136

139

140

140

142

142

143

144

144

146

147

148

149

South32 Annual Report 2021Financial ReportConsolidated income statement 
for the year ended 30 June 2021

US$M

Continuing operations
Revenue:

Group production
Third party products and services

Other income
Expenses excluding net finance costs
Share of profit/(loss) of equity accounted investments
Profit/(loss) from continuing operations
Comprising:

Group production
Third party products and services
Profit/(loss) from continuing operations
Finance expenses
Finance income
Net finance costs
Profit/(loss) before tax from continuing operations
Income tax (expense)/benefit
Profit/(loss) after tax from continuing operations

Discontinued operation
Profit/(loss) after tax from a discontinued operation
Profit/(loss) for the year

Attributable to:
Equity holders of South32 Limited

Profit/(loss) from continuing operations for the year attributable to the equity holders of 
South32 Limited:
Basic earnings per share (cents)
Diluted earnings per share (cents)

Profit/(loss) for the year attributable to the equity holders of South32 Limited:
Basic earnings per share (cents)
Diluted earnings per share (cents)

(1)  Refer to note 31 Discontinued operation.

The accompanying notes form part of the consolidated financial statements. 

Note

FY21

FY20 
Restated(1)

4
4

5
26

18

6

31

8
8

8
8

5,102
374
5,476
157
(5,571)
141
203

193
10
203
(178)
17
(161)
42
100
142

(337)
(195)

4,670
340
5,010
123
(4,788)
93
438

440
(2)
438
(129)
35
(94)
344
(186)
158

(223)
(65)

(195)

(65)

3.0
3.0

(4.1)
(4.1)

9
5

3.2
3.2

(1.3)
(1.3)

South32 Annual Report 2021Financial ReportConsolidated statement of comprehensive income 
for the year ended 30 June 2021

US$M

Profit/(loss) for the year
Other comprehensive income
Items not to be reclassified to the Consolidated Income Statement:
Investments in equity instruments designated as fair value through other comprehensive income 
(FVOCI):

Net fair value gains/(losses)
Income tax (expense)/benefit

Equity accounted investments – share of other comprehensive income/(loss), net of tax
Gains/(losses) on pension and medical schemes
Income tax (expense)/benefit recognised within other comprehensive income
Total items not to be reclassified to the Consolidated Income Statement
Total other comprehensive income/(loss)
Total comprehensive income/(loss)

Attributable to:
Equity holders of South32 Limited

The accompanying notes form part of the consolidated financial statements. 

Note

FY21

(195)

FY20

(65)

26
15

47
(15)
(3)
1
-
30
30
(165)

(65)
20
21
2
-
(22)
(22)
(87)

(165)

(87)

6
9

South32 Annual Report 2021Financial ReportConsolidated balance sheet 
as at 30 June 2021

US$M

ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Current tax assets
Other 
Total current assets
Non-current assets
Trade and other receivables
Other financial assets
Inventories
Property, plant and equipment
Intangible assets
Equity accounted investments
Deferred tax assets
Other
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Interest bearing liabilities
Other financial liabilities
Current tax payables
Provisions 
Deferred income
Total current liabilities
Non-current liabilities
Trade and other payables
Interest bearing liabilities
Deferred tax liabilities
Provisions
Deferred income
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital 
Treasury shares
Reserves
Retained earnings/(accumulated losses)
Total equity attributable to equity holders of South32 Limited
Non-controlling interests
Total equity

The accompanying notes form part of the consolidated financial statements. 

Note

FY21

FY20

16
9
19
10

9
19
10
11
12
26
6

14
17
19

15

14
17
6
15

20
20

1,613
527
15
716
13
38
2,922

259
121
74
8,938
189
380
348
11
10,320
13,242

777
408
11
27
239
-
1,462

2
799
265
1,759
1
2,826
4,288
8,954

13,597
(22)
(3,567)
(1,053)
8,955
(1)
8,954

1,315
531
19
735
27
36
2,663

303
172
77
9,680
248
460
123
11
11,074
13,737

627
355
1
9
274
5
1,271

3
662
339
1,899
1
2,904
4,175
9,562

13,943
(49)
(3,566)
(765)
9,563
(1)
9,562

9
7

South32 Annual Report 2021Financial ReportConsolidated cash flow statement 
for the year ended 30 June 2021

US$M

Operating activities
Profit/(loss) before tax from continuing operations
Profit/(loss) before tax from a discontinued operation
Adjustments for:

Non-operating significant items 
Depreciation and amortisation expense
Impairment losses
Employee share awards expense
Net finance costs
Share of (profit)/loss of equity accounted investments
Loss on disposal of a discontinued operation
(Gains)/losses on derivative instruments and other investments measured at fair value through 
profit or loss (FVTPL)
Other non-cash or non-operating items

8
9

Changes in assets and liabilities:
Trade and other receivables
Inventories
Trade and other payables
Provisions and other liabilities
Cash generated from operations
Interest received
Interest paid
Income tax (paid)/received
Dividends received
Dividends received from equity accounted investments 
Net cash flows from operating activities
Investing activities
Purchases of property, plant and equipment
Exploration expenditure
Exploration expenditure expensed and included in operating cash flows
Purchase of intangibles
Investment in financial assets
Acquisition of interest previously held by non-controlling interests
Acquisition of subsidiaries and jointly controlled entities, net of their cash 
Disposal of a discontinued operation, net of their cash
Cash outflows from investing activities
Proceeds from sale of property, plant and equipment and intangibles
Proceeds from financial assets
Net cash flows from investing activities
Financing activities
Proceeds from interest bearing liabilities
Repayment of interest bearing liabilities
Purchase of shares by ESOP Trusts
Share buy-back
Dividends paid
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents, net of overdrafts, at the beginning of the financial year
Foreign currency exchange rate changes on cash and cash equivalents
Cash and cash equivalents, net of overdrafts, at the end of the financial year

(1)  Refer to note 31 Discontinued operation.

The accompanying notes form part of the consolidated financial statements. 

Note

FY21

FY20 
Restated(1)

42
(340)

(55)
720
772
32
204
(133)
159

(44)
(6)

(156)
(142)
264
95
1,412
26
(70)
(163)
3
197
1,405

(536)
(54)
25
(1)
(152)
-
-
(70)
(788)
40
140
(608)

12
(52)
-
(346)
(115)
(501)
296
1,315
2
1,613

344
(222)

-
739
-
29
139
(100)
-

152
7

 367
208
(184)
(104)
1,375
44
(69)
(335)
1
349
1,365

(676)
(61)
28
(36)
(259)
(3)
(73)
-
(1,080)
1
206
(873)

31
(55)
(23)
(269)
(246)
(562)
(70)
1,406
(21)
1,315

16

South32 Annual Report 2021Financial ReportConsolidated statement of changes in equity 
for the year ended 30 June 2021

Attributable to equity holders of South32 Limited

US$M

Balance as at 1 July 2020
Profit/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Transactions with owners:

Dividends
Shares bought back and cancelled
Accrued employee entitlements for 
unvested awards, net of tax
Employee share awards forfeited, net of tax
Sale of shares by ESOP Trusts 
Employee share awards vested and lapsed
Tax recognised for employee awards  
vested and lapsed

Balance as at 30 June 2021

Balance as at 1 July 2019
Profit/(loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Transactions with owners:

Acquisition of interest previously held by 
non-controlling interests
Dividends
Shares bought back and cancelled
Accrued employee entitlements for 
unvested awards, net of tax
Employee share awards forfeited, net of tax
Purchase of shares by ESOP Trusts 
Employee share awards vested and waived
Tax recognised for employee awards vested 
and waived

Balance as at 30 June 2020

Share 
capital

Treasury 
shares

Financial 
assets 
reserve(1)

Employee 
share 
awards 
reserve(2)

13,943
-
-
-

-
(346)

-
-
-
-

-
13,597

14,212
-
-
-

-
-
(269)

-
-
-
-

-
13,943

(49)
-
-
-

-
-

-
-
3
24

-
(22)

(105)
-
-
-

-
-
-

-
-
(23)
79

-
(49)

(54)
-
32
32

-
-

-
-
-
-

-
(22)

(9)
-
(45)
(45)

-
-
-

-
-
-
-

-
(54)

81
-
-
-

-
-

31
(5)
-
(66)

7
48

109
-
-
-

-
-
-

21
(10)
-
(39)

-
81

Retained 
earnings/ 
(accumulated 
losses)

(765)
(195)
(2)
(197)

(115)
-

-
-
-
32

Other 
reserves(3)

(3,593)
-
-
-

-
-

-
-
-
-

Total

9,563
(195)
30
(165)

(115)
(346)

31
(5)
3
(10)

-
(3,593)

(8)
(1,053)

(1)
8,955

(3,590)
-
-
-

(3)
-
-

-
-
-
-

(448)
(65)
23
(42)

-
(246)
-

-
-
-
(42)

10,169
(65)
(22)
(87)

(3)
(246)
(269)

21
(10)
(23)
(2)

Non-
controlling 
interests

(1)
-
-
-

-
-

-
-
-
-

-
(1)

(1)
-
-
-

-
-
-

-
-
-
-

Total 
equity

9,562
(195)
30
(165)

(115)
(346)

31
(5)
3
(10)

(1)
8,954

10,168
(65)
(22)
(87)

(3)
(246)
(269)

21
(10)
(23)
(2)

-
(3,593)

13
(765)

13
9,563

-
(1)

13
9,562

(1)  Represents the fair value movement in financial assets designated as FVOCI.
(2)  Represents the accrued employee entitlements to share awards that have not yet vested.
(3)  Primarily consists of the common control transaction reserve of US$3,569 million, which reflects the difference between consideration paid and the carrying value of assets 

and liabilities acquired, as well as the gains/losses on disposal of entities as part of the Demerger of the Group in 2015.

The accompanying notes form part of the consolidated financial statements. 

9
9

South32 Annual Report 2021Financial ReportNotes to financial statements – Basis of preparation

This section sets out the accounting policies that relate to the consolidated financial statements of South32 Limited (referred to as 
the Company) and its subsidiaries and joint arrangements (collectively, the Group) as a whole. Where an accounting policy, critical 
accounting estimate, assumption or judgement is specific to a note, these are described within the note to which they relate. These 
policies have been consistently applied to all periods presented, except as described in note 3 New standards and interpretations. 

The Group continues to respond to COVID-19, adjusting to the different phases of the pandemic across the jurisdictions where it 
operates, focussing on keeping its people well, maintaining safe and reliable operations and supporting its communities. 

The Group generated US$1,405 million net cash flows from operating activities during the year, finishing the period with net cash of 
US$406 million (cash and cash equivalents of US$1,613 million less lease liabilities of US$687 million and other interest bearing liabilities 
of US$520 million). The Group also has an undrawn US$1,450 million revolving credit facility which supports its strong liquidity position.

The Group has considered the impact of COVID-19 on each of its significant accounting judgements and estimates. Key assumptions 
that underpin the assessment of indicators for impairment and impairment reversal of assets continue to be the Group’s main area of 
estimation uncertainty and are described in note 13 Impairment of non-financial assets. While no further significant estimates have 
been identified as a result of COVID-19, the pandemic has increased the level of uncertainty in all future cash flow forecasts applicable 
when considering the valuation of asset, liability and equity balances of the Group. 

The consolidated financial statements of the Group for the year ended 30 June 2021 were authorised for issue in accordance with a 
resolution of the Directors on 2 September 2021.

1.  Reporting entity
South32 Limited is a for-profit company limited by shares incorporated in Australia with a primary listing on the Australian Securities 
Exchange (ASX), a standard listing on the London Stock Exchange (LSE) and a secondary listing on the Johannesburg Stock Exchange 
(JSE).

The nature of the operations and principal activities of the Group are described in note 4 Segment information.

2.  Basis of preparation
The consolidated financial statements are a general purpose financial report which: 

 – Have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other 
authoritative pronouncements of the Australian Accounting Standards Board (AASB), International Financial Reporting Standards 
(IFRS) and other authoritative pronouncements of the International Accounting Standards Board (IASB);

 – Have been prepared on a historical cost basis, except for derivative financial instruments and certain other financial assets and 

liabilities which are required to be measured at fair value;

0
0
1

 – Are presented in US dollars, which is the functional currency of the Group’s operations, and all values are rounded to the nearest 

million dollars (US$M or US$ million) unless otherwise stated, in accordance with ASIC Corporations Instrument 2016/191;

 – Present reclassified comparative information where required for consistency with the current year’s presentation;

 – Adopt all new and amended accounting standards and interpretations issued by the AASB that are relevant to the operations of the 
Group and effective for reporting periods beginning on or after 1 July 2020. Refer to note 3 New standards and interpretations for 
further details; and

 – Do not early adopt any accounting standards and interpretations that have been issued or amended but are not yet effective as 

described in note 3 New standards and interpretations. 

(a)  Basis of consolidation 
The consolidated financial statements comprise the financial statements of the Group. A list of significant controlled entities 
(subsidiaries) at year end is contained in note 25 Subsidiaries. 

The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting 
policies. 

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

(b)  Foreign currency translation
The functional currency of the Group’s operations is the US dollar as this is assessed to be the principal currency of the economic 
environments in which they operate. 

Transactions denominated in foreign currencies are initially recorded in the functional currency using the exchange rate ruling at the 
date of the underlying transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the rate of 
exchange at year end. Exchange gains or losses on retranslation are included in the Consolidated Income Statement, with the exception 
of foreign exchange gains or losses on foreign currency provisions for closure and rehabilitation which are capitalised in property, plant 
and equipment for operating sites.

The exchange rates used have been obtained from Bloomberg.

South32 Annual Report 2021Financial Report3.  New standards and interpretations
(a)  New accounting standards and interpretations effective from 1 July 2020
The following new accounting standards and interpretations have been published that are effective for the 30 June 2021 reporting 
period:

 – Amendments to AASB 3 - Definition of a Business;

 – Amendments to AASB 101 and AASB 108 - Definition of Material; and

 – Amendments to references to the Conceptual Framework in IFRS standards.

The Group has reviewed these amendments and concluded that none have a significant impact on the Group. 

(b)  New accounting standards and interpretations issued but not effective
The following new accounting standards and interpretations have been published that are not effective for the 30 June 2021 reporting 
period:

 – Amendments to AASB 101 - Classification of Liabilities as Current or Non-current;

 – Amendments to AASB 9, AASB 7, AASB 4 and AASB 16 - Interest Rate Benchmark Reform Phase 2;

 – Amendments to AASB 137 - Onerous Contracts, Costs to Fulfil a Contract;

 – Amendments to AASB 3 - Updating a reference to the Conceptual Framework;

 – Amendments to AASB 116 - Property, Plant and Equipment, Proceeds before Intended Use;

 – Amendments to AASB 10 and AASB 128 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture; and

 – Annual Improvements 2018-2020. 

The Group has reviewed these amendments and improvements and concluded that none will have a significant impact on the Group. 
The Group does not intend to early adopt any of the new standards or interpretations. It is expected that where applicable, these 
standards and interpretations will be adopted on each respective effective date.

1
0
1

South32 Annual Report 2021Financial ReportNotes to financial statements – Results for the year

This section focuses on the results and performance of the Group. This covers both profitability and the resultant return to shareholders 
via earnings per share. 

4.  Segment information
(a)  Description of segments
The operating segments (also referred to as operations) are organised and managed separately according to the nature of products 
produced. 

Certain members of the Lead Team (the chief operating decision makers) and the Board of Directors monitor the segment results 
regularly for the purpose of making decisions about resource allocation and performance assessment. The segment information for the 
manganese operations is presented on a proportional consolidation basis, which is the measure used by the Group’s management to 
assess their performance.

The principal activities of each operating segment are summarised as follows:

Operating segment

Principal activities

Worsley Alumina
Hillside Aluminium
Mozal Aluminium
Brazil Alumina
Illawarra Metallurgical Coal (IMC)
Eagle Downs Metallurgical Coal
Australia Manganese
South Africa Manganese
Cerro Matoso
Cannington
Hermosa
South Africa Energy Coal (SAEC)(3)

Integrated bauxite mine and alumina refinery in Australia
Aluminium smelter in South Africa
Aluminium smelter in Mozambique
Alumina refinery in Brazil
Underground metallurgical coal mines in Australia
Metallurgical coal exploration and development option in Australia
Integrated producer of manganese ore and alloy(1) in Australia
Integrated producer of manganese ore and alloy(2) in South Africa
Integrated laterite ferronickel mining and smelting complex in Colombia
Silver, lead and zinc mine in Australia
Base metals exploration and development option in the United States 
Open-cut and underground energy coal mines and processing operations in South Africa

2
0
1

(1)  On 4 January 2021, Groote Eylandt Mining Company Pty Ltd (GEMCO) legally completed the sale of its shareholding in Tasmanian Electro Metallurgical Company Pty Ltd 

(TEMCO) to an entity within GFG Alliance (GFG). The effective completion of the sale for accounting purposes was 31 December 2020.

(2)  The Metalloys manganese smelter has not recommenced production since the Group’s decision with its joint venture partner to place it on care and maintenance during the 

year ended 30 June 2020.

(3)  On 1 June 2021, the Group completed the sale of its shareholding in SAEC to a wholly-owned subsidiary of Seriti Resources Holdings Pty Ltd (Seriti) and two trusts for the 

benefit of employees and communities. Refer to note 31 Discontinued operation.

All operations are operated by the Group except Brazil Alumina, which is operated by Alcoa.

(b)  Segment results 
Segment performance is measured by Underlying EBIT and Underlying EBITDA. Underlying EBIT is profit before net finance costs, 
tax and other earnings adjustment items including impairments. Underlying EBITDA is Underlying EBIT before depreciation and 
amortisation. A reconciliation of Underlying EBIT, Underlying EBITDA and the Group’s consolidated profit after tax is set out on the 
following pages. Segment revenue is measured on the same basis as in the Consolidated Income Statement. 

The Group separately discloses sales of group production from sales of third party products and services because of the significant 
difference in profit margin earned on these sales. 

It is the Group’s policy that inter-segment transactions are made on a commercial basis.

Group and unallocated items/eliminations represent group centre functions and consolidation adjustments. Group financing (including 
finance expenses and finance income) and income taxes are managed on a Group basis and are not allocated to continuing operating 
segments. 

Total assets and liabilities for each continuing operating segment represent operating assets and liabilities which predominantly 
exclude the carrying amount of equity accounted investments, cash, interest bearing liabilities, tax balances and certain other financial 
assets and liabilities. The carrying amount of investments accounted for using the equity method represents the balance of the Group’s 
investment in equity accounted investments, with no adjustment for cash, interest bearing liabilities, tax balances and certain other 
financial assets and liabilities.

South32 Annual Report 2021Financial Report4.  Segment information continued
(b)  Segment results continued

Revenue recognition 

Revenue is measured based on the consideration specified in the contract with a customer and excludes amounts collected on behalf of 
third parties. Revenue is not reduced for royalties and other taxes payable from group production. 

The following is a description of the principal activities from which the Group generates its revenue: 

Revenue from the sale of commodities
The Group primarily sells the following commodities: alumina, aluminium, energy coal, metallurgical coal, manganese ore, ferronickel, 
silver, lead and zinc. The sales of these commodities are considered to be performance obligations as they are the contractual promises 
by the Group to transfer distinct goods to customers.

The transaction price allocated to each performance obligation is recognised as the performance obligation is satisfied. Satisfaction 
occurs when control of the promised commodity is transferred to the customer.

For the sale of commodities, revenue is therefore recognised at a point in time, net of treatment and refining charges (where applicable). 
The majority of the Group’s sales agreements specify that title passes on the bill of lading date (the date the commodity is delivered 
to the shipping agent) and is assessed to be the point of time in which control over the commodity passes to the customer. For these 
sales, revenue is recognised on the bill of lading date. For certain sales, title passes and revenue is recognised when the goods have 
been delivered to the customer. 

For certain commodities, the sales price is determined on a provisional basis at the date of sale and adjustments to the sales price 
subsequently occur based on movements in quoted market or contractual prices up to the date of final pricing. The period between 
provisional invoicing and final pricing is up to 180 days. Revenue on provisionally priced sales is recognised based on the estimated 
fair value of the total consideration receivable. The revenue adjustment mechanism embedded within provisionally priced sales 
arrangements has the characteristics of a commodity derivative. Accordingly, the fair value of the final sales price adjustment is  
re-estimated continuously and changes in fair value are disclosed separately as ‘Other’ revenue. In all cases, fair value is estimated by 
reference to forward market prices. 

Revenue from the provision of freight services
The Group sells most of its commodities on either FOB or CIF Incoterms. In the case of CIF Incoterms, the Group is responsible for 
shipping services after the date at which control of the commodities passes to the customer at the port of loading. The provision of 
shipping services in these types of arrangements are a distinct service (and therefore a separate performance obligation) to which a 
portion of the transaction price should be allocated and recognised over time as the shipping services are provided. The Group also 
provides third party freight services which are recognised as the shipping service is provided.

1
0
3

The Group does not disclose sales revenue from freight services separately as it does not consider this necessary in order to 
understand the impact of economic factors on the Group. 

South32 Annual Report 2021Financial ReportHillside 
Aluminium

Mozal 

Aluminium Brazil Alumina

Illawarra 
Metallurgical 
Coal

Eagle Downs 
Metallurgical 
Coal

Australia 

Manganese(1)

South Africa 

Manganese(1)

Cerro Matoso

Cannington

Hermosa

elimination

adjustment(1)

Notes to financial statements – Results for the year continued

4.  Segment information continued
(b)  Segment results continued

30 June 2021 

US$M 

Revenue from customers
Other(3)
Total revenue

Group production
Third party products and services(4) 
Inter-segment revenue 
Total revenue

Underlying EBITDA 
Depreciation and amortisation
Underlying EBIT 
Comprising:
Group production excluding exploration expensed
Exploration expensed
Third party products and services(4)
Share of profit/(loss) of equity accounted investments(5)
Underlying EBIT
Net finance costs
Income tax (expense)/benefit
Underlying earnings
Earnings adjustments(6) 
Profit/(loss) after tax

4
0
1

Worsley 
Alumina

1,174
(1)
1,173

605
-
568
1,173

318
(175)
143

143
-
-
-
143

1,507
4
1,511

1,511
-
-
1,511

358
(65)
293

293
-
-
-
293

Exploration expenditure
Capital expenditure(7)
Equity accounted investments 
Total assets(8)
Total liabilities(8) 

-
55
-
3,674
1,007

-
17
-
1,156
423

577
1
578

578
-
-
578

132
(34)
98

98
-
-
-
98

-
11
-
579
123

400
-
400

400
-
-
400

114
(51)
63

63
-
-
-
63

-
25
-
647
76

748
10
758

758
-
-
758

94
(197)
(103)

(97)
(5)
-
(1)
(103)

14
188
2
997
385

-
-
-

-
-
-
-

-
-
-

-
-
-
-
-

-
8
-
193
8

Continuing operations

729

1

730

730

-

-

730

385

(81)

304

305

(1)

-

-

304

2

55

-

604

370

369

-

369

364

-

5

369

72

(17)

55

56

(1)

-

-

55

1

16

-

387

205

479

14

493

493

-

-

493

197

(75)

122

122

-

-

-

122

45

-

-

629

224

746

11

757

757

-

-

757

416

(66)

350

352

(2)

-

-

350

2

43

-

510

315

Group and 

unallocated 

items/ 

Statutory 

(195)

(1,097)

(195)

(1,098)

-

-

378

(573)

(195)

(93)

(28)

(121)

(113)

(18)

10

-

(121)

(1)

(4)

-

(1,094)

(1,098)

(300)

98

(202)

(361)

2

-

157

(202)

-

-

-

-

-

-

-

(6)

(2)

(8)

(8)

-

-

-

(8)

Discontinued 

operation

South Africa 

Energy Coal(2)

862

(1)

861

735

126

-

861

(123)

(27)

(150)

(153)

-

11

(8)

(150)

(43)

(1)

(194)

(143)

(337)

76

-

-

-

-

Total

5,437

39

5,476

5,102

374

-

5,476

1,687

(693)

994

853

(25)

10

156

994

(109)

(202)

683

(541)

142

54

460

380

Group

6,299

38

6,337

5,837

500

-

6,337

1,564

(720)

844

700

(25)

21

148

844

(152)

(203)

489

(684)

(195)

54

536

380

16

64

-

47

1,972

22

4

-

2,683

1,852

(3)

(71)

378

(789)

(747)

13,242

4,288

13,242

4,288

(1)  The segment information reflects the Group’s interest in the manganese operations and is presented on a proportional consolidation basis, which is the measure used by 

the Group’s management to assess their performance. The manganese operations are equity accounted in the consolidated financial statements. The statutory adjustment 
column reconciles the proportional consolidation to the equity accounting position.

(2)  The SAEC operating segment has been classified as a discontinued operation. Refer to note 31 Discontinued operation.
(3)  Other revenue predominantly relates to fair value movements on provisionally priced contracts. 
(4)  Revenue on third party products and services sold from continuing operations comprise of US$43 million for aluminium, US$10 million for alumina, US$23 million for coal, 
US$206 million for freight services and US$92 million for aluminium raw materials. Underlying EBIT on third party products and services sold from continuing operations 
comprise of US$8 million for aluminium, US$nil for alumina, US$1 million for coal, US$nil for freight services and US$1 million for aluminium raw materials. 

(5)  Share of profit/(loss) of equity accounted investments includes the impact of earnings adjustments to Underlying EBIT, net of tax.
(6)  Refer to note 4(b)(i) Earnings adjustments.
(7)  Capital expenditure excludes the purchase of intangibles and capitalised exploration expenditure. 
(8)  Total assets and liabilities for each operating segment represent operating assets and liabilities which predominantly exclude the carrying amount of equity accounted 

investments, cash, interest bearing liabilities, tax balances and certain other financial assets and liabilities.

South32 Annual Report 2021Financial Report4.  Segment information continued

(b)  Segment results continued

Revenue from customers

30 June 2021 

US$M 

Other(3)

Total revenue

Group production

Third party products and services(4) 

Inter-segment revenue 

Total revenue

Underlying EBITDA 

Depreciation and amortisation

Underlying EBIT 

Comprising:

Underlying EBIT

Net finance costs

Income tax (expense)/benefit

Underlying earnings

Earnings adjustments(6) 

Profit/(loss) after tax

Exploration expenditure

Capital expenditure(7)

Equity accounted investments 

Total assets(8)

Total liabilities(8) 

Group production excluding exploration expensed

Exploration expensed

Third party products and services(4)

Share of profit/(loss) of equity accounted investments(5)

Worsley 

Alumina

1,174

(1)

1,173

605

-

568

1,173

318

(175)

143

143

-

-

-

1,507

4

1,511

1,511

1,511

-

-

-

-

-

358

(65)

293

293

143

293

55

-

-

3,674

1,007

17

-

-

1,156

423

577

1

578

578

-

-

578

132

(34)

98

98

-

-

-

98

11

-

-

579

123

400

400

400

-

-

-

400

114

(51)

63

63

-

-

-

63

25

-

-

647

76

Coal

748

10

758

758

-

-

758

94

(197)

(103)

(97)

(5)

-

(1)

(103)

14

188

2

997

385

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

8

-

8

193

Hillside 

Aluminium

Mozal 

Aluminium Brazil Alumina

Illawarra 

Metallurgical 

Eagle Downs 

Metallurgical 

Coal

Australia 
Manganese(1)

South Africa 
Manganese(1)

Cerro Matoso

Cannington

Hermosa

Group and 
unallocated 
items/ 
elimination

Statutory 
adjustment(1)

Continuing operations

729
1
730

730
-
-
730

385
(81)
304

305
(1)
-
-
304

2
55
-
604
370

369
-
369

364
-
5
369

72
(17)
55

56
(1)
-
-
55

1
16
-
387
205

479
14
493

493
-
-
493

197
(75)
122

122
-
-
-
122

-
45
-
629
224

746
11
757

757
-
-
757

416
(66)
350

352
(2)
-
-
350

2
43
-
510
315

Total

5,437
39
5,476

5,102
374
-
5,476

1,687
(693)
994

853
(25)
10
156
994
(109)
(202)
683
(541)
142

Discontinued 
operation

South Africa 
Energy Coal(2)

862
(1)
861

735
126
-
861

(123)
(27)
(150)

(153)
-
11
(8)
(150)
(43)
(1)
(194)
(143)
(337)

-
76
-
-
-

Group

6,299
38
6,337

5,837
500
-
6,337

1,564
(720)
844

700
(25)
21
148
844
(152)
(203)
489
(684)
(195)

54
536
380
13,242
4,288

1
0
5

-
-
-

-
-
-
-

(6)
(2)
(8)

(8)
-
-
-
(8)

(195)
-
(195)

-
378
(573)
(195)

(93)
(28)
(121)

(113)
(18)
10
-
(121)

(1,097)
(1)
(1,098)

(1,094)
(4)
-
(1,098)

(300)
98
(202)

(361)
2
-
157
(202)

16
64
-
1,972
47

22
4
-
2,683
1,852

(3)
(71)
378
(789)
(747)

54
460
380
13,242
4,288

South32 Annual Report 2021Financial ReportWorsley 
Alumina

Hillside 
Aluminium

Mozal 

Aluminium Brazil Alumina

Illawarra 
Metallurgical 
Coal

Eagle Downs 
Metallurgical 
Coal

Australia 

Manganese(1)

South Africa 

Manganese(1)

Cerro Matoso

Cannington

Hermosa

elimination

adjustment(1)

Group and 

unallocated 

items/ 

Statutory 

Continuing operations

Notes to financial statements – Results for the year continued

4.  Segment information continued
(b)  Segment results continued

30 June 2020 

US$M 

Revenue from customers
Other(3)
Total revenue

Group production
Third party products and services(4) 
Inter-segment revenue 
Total revenue

Underlying EBITDA 
Depreciation and amortisation
Underlying EBIT 
Comprising:
Group production excluding exploration expensed
Exploration expensed
Third party products and services(4)
Share of profit/(loss) of equity accounted investments(5)
Underlying EBIT
Net finance costs
Income tax (expense)/benefit
Underlying earnings
Earnings adjustments(6) 
Profit/(loss) after tax

6
0
1

1,119
(1)
1,118

568
-
550
1,118

322
(162)
160

160
-
-
-
160

1,276
-
1,276

1,276
-
-
1,276

169
(66)
103

103
-
-
-
103

507
1
508

508
-
-
508

10
(34)
(24)

(24)
-
-
-
(24)

-
11
-
531
95

399
-
399

399
-
-
399

50
(65)
(15)

(15)
-
-
-
(15)

-
34
-
663
95

937
(13)
924

924
-
-
924

243
(191)
52

59
(7)
-
-
52

-
-
-

-
-
-
-

-
-
-

-
-
-
-
-

16
199
3
1,617
261

2
11
-
184
10

Exploration expenditure
Capital expenditure(7)
Equity accounted investments 
Total assets(8)
Total liabilities(8) 

-
48
-
3,379
590

-
13
-
1,058
264

(1)  The segment information reflects the Group’s interest in the manganese operations and is presented on a proportional consolidation basis, which is the measure used by 

the Group’s management to assess their performance. The manganese operations are equity accounted in the consolidated financial statements. The statutory adjustment 
column reconciles the proportional consolidation to the equity accounting position.

(2)  The SAEC operating segment has been reclassified as a discontinued operation. Refer to note 31 Discontinued operation.
(3)  Other revenue predominantly relates to fair value movements on provisionally priced contracts. 
(4)  Revenue on third party products and services sold from continuing operations comprise of US$42 million for aluminium, US$14 million for alumina, US$33 million for coal, 
US$165 million for freight services and US$86 million for aluminium raw materials. Underlying EBIT on third party products and services sold from continuing operations 
comprise of US$2 million for aluminium, (US$4) million for alumina, US$nil for coal, (US$2) million for freight services and US$2 million for aluminium raw materials. 

(5)  Share of profit/(loss) of equity accounted investments includes the impact of earnings adjustments to Underlying EBIT, net of tax.
(6)  Refer to note 4(b)(i) Earnings adjustments.
(7)  Capital expenditure excludes the purchase of intangibles and capitalised exploration expenditure. 
(8)  Total assets and liabilities for each continuing operating segment represent operating assets and liabilities which predominantly exclude the carrying amount of equity 

accounted investments, cash, interest bearing liabilities, tax balances and certain other financial assets and liabilities.

785

(22)

763

763

-

-

763

400

(72)

328

329

(1)

-

-

328

2

67

-

608

366

346

(4)

342

342

-

-

342

81

(27)

54

55

(1)

-

-

54

1

23

-

438

201

516

3

519

519

-

-

519

189

(82)

107

109

(2)

-

-

107

4

39

-

623

198

497

(21)

476

476

-

-

476

155

(50)

105

109

(4)

-

-

105

4

52

-

457

243

-

-

-

-

-

-

-

(5)

-

(5)

(5)

-

-

-

(5)

(207)

(3)

(210)

-

340

(550)

(210)

(28)

(42)

(70)

(53)

(15)

(2)

-

(70)

19

104

-

1,894

36

16

1

-

2,225

1,541

(1,131)

26

(1,105)

(1,105)

-

-

(1,105)

(283)

99

(184)

(387)

2

-

201

(184)

(3)

(90)

436

(800)

(763)

Discontinued 

operation

South Africa 

Energy Coal(2)

1,072

(7)

1,065

822

243

-

1,065

(118)

(47)

(165)

(157)

(15)

(165)

(45)

(208)

(15)

(223)

-

7

2

-

164

21

860

1,038

Total

5,044

(34)

5,010

4,670

340

-

5,010

1,303

(692)

611

440

(28)

(2)

201

611

(100)

(110)

401

(243)

158

61

512

439

12,877

3,137

Group

6,116

(41)

6,075

5,492

583

-

6,075

1,185

(739)

446

283

(28)

(17)

208

446

(145)

(108)

193

(258)

(65)

61

676

460

13,737

4,175

South32 Annual Report 2021Financial Report4.  Segment information continued

(b)  Segment results continued

Revenue from customers

30 June 2020 

US$M 

Other(3)

Total revenue

Group production

Third party products and services(4) 

Inter-segment revenue 

Total revenue

Underlying EBITDA 

Depreciation and amortisation

Underlying EBIT 

Comprising:

Underlying EBIT

Net finance costs

Income tax (expense)/benefit

Underlying earnings

Earnings adjustments(6) 

Profit/(loss) after tax

Exploration expenditure

Capital expenditure(7)

Equity accounted investments 

Total assets(8)

Total liabilities(8) 

Worsley 

Alumina

1,119

(1)

1,118

568

-

550

1,118

322

(162)

160

160

-

-

-

Hillside 

Aluminium

1,276

1,276

1,276

1,276

169

(66)

103

103

-

-

-

-

-

-

48

-

-

3,379

590

13

-

-

1,058

264

507

1

508

508

-

-

508

10

(34)

(24)

(24)

-

-

-

11

-

-

531

95

399

399

399

-

-

-

399

50

(65)

(15)

(15)

-

-

-

34

-

-

663

95

Coal

937

(13)

924

924

-

-

924

243

(191)

52

59

(7)

-

-

52

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

16

199

3

1,617

261

2

11

-

184

10

Group production excluding exploration expensed

Exploration expensed

Third party products and services(4)

Share of profit/(loss) of equity accounted investments(5)

160

103

(24)

(15)

Mozal 

Aluminium Brazil Alumina

Illawarra 

Metallurgical 

Eagle Downs 

Metallurgical 

Coal

Australia 
Manganese(1)

South Africa 
Manganese(1)

Cerro Matoso

Cannington

Hermosa

Group and 
unallocated 
items/ 
elimination

Statutory 
adjustment(1)

Continuing operations

785
(22)
763

763
-
-
763

400
(72)
328

329
(1)
-
-
328

2
67
-
608
366

346
(4)
342

342
-
-
342

81
(27)
54

55
(1)
-
-
54

1
23
-
438
201

516
3
519

519
-
-
519

189
(82)
107

109
(2)
-
-
107

4
39
-
623
198

497
(21)
476

476
-
-
476

155
(50)
105

109
(4)
-
-
105

4
52
-
457
243

Total

5,044
(34)
5,010

4,670
340
-
5,010

1,303
(692)
611

440
(28)
(2)
201
611
(100)
(110)
401
(243)
158

Discontinued 
operation

South Africa 
Energy Coal(2)

1,072
(7)
1,065

822
243
-
1,065

(118)
(47)
(165)

(157)
-
(15)
7
(165)
(45)
2
(208)
(15)
(223)

-
164
21
860
1,038

Group

6,116
(41)
6,075

5,492
583
-
6,075

1,185
(739)
446

283
(28)
(17)
208
446
(145)
(108)
193
(258)
(65)

61
676
460
13,737
4,175

1
0
7

-
-
-

-
-
-
-

(5)
-
(5)

(5)
-
-
-
(5)

(207)
(3)
(210)

-
340
(550)
(210)

(28)
(42)
(70)

(53)
(15)
(2)
-
(70)

(1,131)
26
(1,105)

(1,105)
-
-
(1,105)

(283)
99
(184)

(387)
2
-
201
(184)

19
104
-
1,894
36

16
1
-
2,225
1,541

(3)
(90)
436
(800)
(763)

61
512
439
12,877
3,137

South32 Annual Report 2021Financial ReportNotes to financial statements – Results for the year continued

4.  Segment information continued
(b)  Segment results continued

(i)  Earnings adjustments 
The following table shows earnings adjustments in determining Underlying earnings:

Year ended 30 June 2021

US$M

Continuing 
operations

Discontinued 
operation(1)

Adjustments to Underlying EBIT
Significant items(2)
Exchange rate (gains)/losses on restatement of monetary items(3)
Impairment losses(3)(4)
(Gains)/losses on non-trading derivative instruments and other investments measured at FVTPL(3)(5)
Major corporate restructures(3)(6)
Net (gains)/losses on the disposal of interests in operations(1)
Earnings adjustments included in profit/(loss) of equity accounted investments(7)(8)
Total adjustments to Underlying EBIT
Adjustments to net finance costs
Exchange rate variations on net debt
Total adjustments to net finance costs
Adjustments to income tax expense
Tax effect of earnings adjustments to Underlying EBIT
Tax effect of earnings adjustments to net finance costs
Exchange rate variations on tax balances
Total adjustments to income tax expense
Total earnings adjustments

(55)
35
764
9
23
-
15
791

52
52

(247)
7
(62)
(302)
541

-
34
-
(46)
-
159
-
147

-
-

-
-
(4)
(4)
143

Total

(55)
69
764
(37)
23
159
15
938

52
52

(247)
7
(66)
(306)
684

(1)  Refer to note 31 Discontinued operation.
(2)  Refer to note 4(b)(ii) Significant items. 
(3)  Recognised in expenses excluding net finance costs in the Consolidated Income Statement. Refer to note 5 Expenses.
(4)  Relates to a US$728 million impairment of property, plant and equipment in the IMC segment and a US$36 million impairment of intangible assets included in Group and 

unallocated items. Impairment losses exclude a US$8 million impairment of right-of-use lease assets included in major corporate restructures. Refer to note 13 Impairment of 
non-financial assets.

8
0
1

(5)  Primarily relates to US$8 million included in the Hillside Aluminium segment.
(6)  The major corporate restructure costs relate to the simplification of the Group’s functional structures and office footprint and are included in Group and unallocated items.
(7)  Recognised in share of profit/(loss) of equity accounted investments in the Consolidated Income Statement. Refer to note 26 Equity accounted investments.
(8)  Relates to US$5 million included in the Australia Manganese segment and US$10 million included in the South Africa Manganese segment. Of the US$5 million recorded in the 

Australia Manganese segment, US$4 million relates to GEMCO’s loss on disposal of its shareholding in TEMCO.

Year ended 30 June 2020

US$M

Continuing 
operations

Discontinued 
operation(1)

Adjustments to Underlying EBIT
Exchange rate (gains)/losses on restatement of monetary items(2)
(Gains)/losses on non-trading derivative instruments and other investments measured at FVTPL(2)(3)
Earnings adjustments included in profit/(loss) of equity accounted investments(4)(5)
Total adjustments to Underlying EBIT
Adjustments to net finance costs
Exchange rate variations on net debt
Total adjustments to net finance costs
Adjustments to income tax expense
Tax effect of earnings adjustments to Underlying EBIT
Tax effect of earnings adjustments to net finance costs
Exchange rate variations on tax balances
Total adjustments to income tax expense
Total earnings adjustments

(48)
113
108
173

(6)
(6)

(18)
(2)
96
76
243

(24)
36
-
12

-
-

-
-
3
3
15

Total

(72)
149
108
185

(6)
(6)

(18)
(2)
99
79
258

(1)  Refer to note 31 Discontinued operation.
(2)  Recognised in expenses excluding net finance costs in the Consolidated Income Statement. Refer to note 5 Expenses.
(3)  Primarily relates to US$105 million included in the Hillside Aluminium segment.
(4)  Recognised in share of profit/(loss) of equity accounted investments in the Consolidated Income Statement. Refer to note 26 Equity accounted investments.
(5)  Relates to US$51 million included in the Australia Manganese segment and US$57 million included in the South Africa Manganese segment. Of the US$108 million, impairment 
losses of US$40 million were recorded in the Australia Manganese segment after GEMCO entered into a binding conditional agreement for the sale of its shareholding in 
TEMCO, and US$49 million in the South Africa Manganese segment following the decision to place the Metalloys manganese smelter on care and maintenance.

South32 Annual Report 2021Financial Report4.  Segment information continued
(b)  Segment results continued

(ii)  Significant items
Significant items are those items, not separately identified in note (4)(b)(i) Earnings adjustments, where their nature and amount are 
considered material to the consolidated financial statements. There were no such items included within the Group’s profit/(loss) for the 
year ended 30 June 2020.

Year ended 30 June 2021

US$M

Disposal of royalties(1)
Total significant items

Gross

(55)
(55)

Tax

-
-

Net

(55)
(55)

(1)  Recognised in other income in the Consolidated Income Statement and included in Group and unallocated items.

Disposal of royalties

The Group divested four royalties to a wholly-owned subsidiary of the Elemental Royalties Corporation for US$55 million, which 
comprised US$40 million in upfront cash and US$15 million in equity. These royalties were recognised as intangible assets with a US$nil 
carrying value. The transaction completed on 9 February 2021 and the Group recognised other income of US$55 million (US$55 million 
post tax) in the Consolidated Income Statement.

(c)  Geographical information
The geographical information below analyses Group revenue and non-current assets by location. Revenue is presented by the 
geographical location of customers and non-current assets are presented by the geographical location of the operations.

US$M

Australia
China
India
Japan
Middle East
Netherlands
North America
Singapore
South America
South Korea
Southern Africa
Switzerland
United Kingdom
Other Asia
Rest of Europe
Unallocated assets(2)
Total 

Revenue from external 
customers(1)

Non-current assets

FY21

522
421
207
348
213
480
387
902
32
326
1,075
480
236
216
492
-
6,337

FY20

463
537
269
363
261
573
305
953
4
148
862
483
134
290
430
-
6,075

FY21

5,232
-
-
-
-
-
2,049
106
1,092
-
1,371
-
1
-
-
469
10,320

FY20

5,610
-
-
-
-
-
1,967
106
1,107
-
1,985
-
4
-
-
295
11,074

1
0
9

(1)  Revenue from external customers comprises revenue from continuing operations of US$5,476 million (FY20: US$5,010 million) and revenue from a discontinued operation of 

US$861 million (FY20: US$1,065 million). Refer to note 31 Discontinued operation. 

(2)  Primarily comprises of other financial assets and deferred tax assets. 

South32 Annual Report 2021Financial ReportNotes to financial statements – Results for the year continued

5.  Expenses

US$M

Changes in inventories of finished goods and work in progress
Raw materials and consumables used(2)
Wages, salaries and redundancies
Pension and other post-retirement obligations
External services (including transportation)
Third party commodity purchases
Depreciation and amortisation 
Exchange rate (gains)/losses on restatement of monetary items
(Gains)/losses on derivative instruments and other investments measured at FVTPL(3) 
Government and other royalties paid and payable
Exploration and evaluation expenditure incurred and expensed 
Impairment losses
Lease rentals(4)
All other operating expenses
Total expenses

Note

FY21

Restated(1)

FY20

(72)
1,771
683
61
905
351
693
35
7
160
25
772
51
129
5,571

191
1,599
615
57
869
330
692
(48)
106
162
28
-
33
154
4,788

13

(1)  Refer to note 31 Discontinued operation.
(2)  Raw materials and consumables used exclude realised losses on the settlement of derivative instruments related to electricity purchases of US$8 million  

(FY20: US$120 million).

(3)  Includes (gains)/losses on non-trading derivative instruments and other investments measured at FVTPL of US$9 million (FY20: US$113 million). Refer to note 4(b)(i) Earnings 

adjustments.

(4)  Includes short-term, low-value and variable lease rentals. 

6.  Tax
Income tax expense comprises current and deferred tax and is recognised in the Consolidated Income Statement except to the extent 
that it relates to items recognised directly in the Consolidated Statement of Comprehensive Income.

(a)  Income tax expense

0
1
1

US$M

Current income tax expense/(benefit)
Deferred income tax expense/(benefit)
Total income tax expense/(benefit)

Income tax expense attributable to:
Continuing operations
Discontinued operation(1)
Total income tax expense/(benefit)

(1)  Refer to note 31 Discontinued operation.

FY21

196
(299)
(103)

(100)
(3)
(103)

FY20

Restated(1)

130
57
187

186
1
187

Income tax expense/(benefit)
Income tax expense/(benefit) for the period is the tax payable on the current period’s taxable income/(loss) based on the applicable 
income tax rate for each jurisdiction adjusted for changes in deferred tax assets and liabilities attributable to temporary differences 
and unused tax losses. Current tax is calculated using the tax rates enacted or substantively enacted at period end and includes any 
adjustment to tax payable in respect of previous years. 

South32 Annual Report 2021Financial Report6.  Tax continued
(b)  Reconciliation of prima facie tax expense to income tax expense

US$M

(Profit)/loss before tax from continuing operations 
(Profit)/loss before tax from a discontinued operation(1) 
Deduct: (Profit)/loss from equity accounted investments included in continuing operations
Deduct: (Profit)/loss from equity accounted investments included in a discontinued operation(1)
(Profit)/loss subject to tax
Income tax on (profit)/loss calculated at 30 per cent
Tax rate differential on non-Australian income
Exchange variations and other translation adjustments
Withholding tax on distributed earnings
Derecognition of future tax benefits
Foreign exploration 
Adjustments to prior years
Other

Total income tax expense/(benefit)

(1)  Refer to note 31 Discontinued operation.

FY21

(42)
340
(141)
8
431
(129)
(5)
(66)
3
108
-
(10)
(4)

(103)

FY20 
Restated(1)

(344)
222
(93)
(7)
(22)
7
18
99
-
58
3
-
2

187

1
1
1

Profit from equity accounted investments has been taxed in companies other than South32 Limited, being the companies whose results 
are disclosed as equity accounted investments in the consolidated financial statements.

Refer to note 26 Equity accounted investments for further details of the Group’s equity accounted investments.

(c)  Movement in deferred tax balances
The composition of the Group’s net deferred tax asset and liability recognised in the Consolidated Balance Sheet and the deferred tax 
expense charged/(credited) to the Consolidated Income Statement is as follows:

Deferred tax assets

Deferred tax liabilities

Deferred tax charged/(credited) 
to the Consolidated Income 
Statement(1)

US$M

FY21

FY20

FY21

FY20

FY21

FY20

Type of temporary difference
Depreciation 
Employee benefits
Closure and rehabilitation
Other provisions
Deferred charges
Non tax-depreciable fair value adjustments, revaluations 
and mineral rights
Tax-effected losses
Brazil deferral incentive(2)
Leases
Other
Total 

420
53
166
3
(150)

(123)
2
-
10
(33)
348

243
49
150
4
(160)

(122)
6
-
(14)
(33)
123

(302)
12
49
14
-

(29)
11
(56)
2
34
(265)

(375)
10
30
17
-

(18)
28
(43)
2
10
(339)

(217)
(15)
(18)
(4)
(10)

(1)
4
14
(24)
(28)
(299)

42
(17)
5
5
(1)

(1)
23
(16)
(3)
20
57

(1)  Includes deferred tax expense charged/(credited) to the Consolidated Income Statement relating to a discontinued operation of (US$6) million (FY20: (US$2) million). Refer to 

note 31 Discontinued operation.

(2)  The Group’s Brazilian subsidiary has received a 75 per cent corporate income tax deferral due to the reinvestment of capital. The tax is deferred until earnings are repatriated 

from Brazil. 

Deferred tax is provided using the balance sheet liability method, providing for the tax effect of temporary differences between the 
carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax assessment or deduction 
purposes. The tax effect of certain temporary differences is not recognised, principally with respect to:

 – Temporary differences arising on the initial recognition of assets or liabilities (other than those arising in a business combination or in 

a manner that initially impacted accounting or taxable profit); 

 – Temporary differences relating to investments and undistributed earnings in subsidiaries, joint ventures and associates to the extent 

that the Group is able to control its reversal and it is probable that it will not reverse in the foreseeable future; and

 – Goodwill.

To the extent that an item’s tax base is solely derived from the amount deductible under capital gains tax legislation, deferred tax is 
determined as if such amounts are not deductible in determining future assessable income.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the 
asset can be utilised. Deferred tax assets are reviewed at each balance sheet date and amended to the extent that it is no longer 
probable that the related tax benefit will be realised. Deferred tax assets and liabilities are offset when they relate to income taxes 
levied by the same tax authority and the Group has both the right and the intention to settle its current tax assets and liabilities on a net 
or simultaneous basis.

South32 Annual Report 2021Financial ReportNotes to financial statements – Results for the year continued

6.  Tax continued
(d)  Unrecognised deferred tax assets and liabilities
The composition of the Group’s unrecognised deferred tax assets and liabilities is as follows:

US$M

FY21

FY20

Unrecognised deferred tax assets
Tax-effected losses(1)
Mineral rights
Impairment of investments in subsidiaries
Closure and rehabilitation
Depreciable assets
Other deductible temporary differences
Total unrecognised deferred tax assets
Unrecognised deferred tax liabilities
Taxable temporary differences associated with investments and undistributed earnings in subsidiaries
Total unrecognised deferred tax liabilities

(1)  Represents tax losses that have no expiry.

8
588
978
57
8
-
1,639

(39)
(39)

66
620
816
225
148
25
1,900

(45)
(45)

(e)  Tax consolidation
South32 Limited and its 100 per cent owned Australian resident subsidiaries have formed a tax consolidated group with effect 
from 25 May 2015. South32 Limited is the head entity of the tax consolidated group. Members of the group have entered into a tax 
sharing agreement in order to allocate income tax expense to the wholly-owned subsidiaries on a stand-alone basis. The tax sharing 
arrangement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment 
obligations. The possibility of such a default is considered remote at the date of this report.

Members of the tax consolidated group have also entered into a tax funding agreement. The group has applied its allocation approach 
in determining the appropriate amount of current taxes to allocate to members of the tax consolidated group. The tax funding 
agreement provides for each member of the tax consolidated group to pay or receive a tax equivalent amount to or from the head 
entity in accordance with their notional current tax liability or current tax asset. Such amounts are reflected in amounts receivable from 
or payable to the head entity in their accounts and are settled as soon as practicable after lodgement of the consolidated return and 
payment of the tax liability.

2
1
1

(f)  Tax Transparency Report
More detail of the South32 Group’s tax outcomes, including country-by-country reporting is included in the South32 Tax Transparency 
and Payments to Government Report 2021.

Key estimates, assumptions and judgements

Deferred tax
Judgement is required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised in the 
Consolidated Balance Sheet. Deferred tax assets are recognised only where it is considered more likely than not that they will be 
recovered, which is dependent on the generation of sufficient future taxable profits. Deferred tax liabilities arising from temporary 
differences in investments, caused principally by retained earnings held in foreign tax jurisdictions, are recognised unless 
repatriation of retained earnings can be controlled and are not expected to occur in the foreseeable future.

Assumptions about the generation of future taxable profits and repatriation of retained earnings depend on management’s 
estimates of future cash flows. These depend on estimates of future production and sales volumes, commodity prices, reserves, 
operating costs, closure and rehabilitation costs, capital expenditure, dividends and other capital management transactions. 

Uncertain tax matters
Judgements are required about the application of the inherently complex income tax legislation in Colombia, Brazil and South 
Africa. These judgements are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter 
expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the Consolidated 
Balance Sheet and the amount of other tax losses and temporary differences not yet recognised.

Where the final tax outcomes are different from the amounts that were initially recorded, these differences impact the current 
and deferred tax provisions in the period in which the determination is made. Measurement of uncertain tax and royalty matters 
considers a range of possible outcomes, including assessments received from tax authorities. Where management is of the view 
that potential liabilities have a low probability of crystallising, or it is not possible to quantify them reliably, they are disclosed as 
contingent liabilities.

South32 Annual Report 2021Financial Report7.  Dividends

US$M

Prior year final dividend(1)
Interim dividend(2)
Special dividend
Total dividends declared and paid during the year

FY21

48.5
66.5
-
115

FY20

139.0
53.5
53.5
246

(1)  On 20 August 2020, the Directors resolved to pay a fully franked final dividend of US 1 cent per share in respect of the 2020 financial year. The dividend was paid on 8 October 

2020. 

(2)  On 18 February 2021, the Directors resolved to pay a fully franked interim dividend of US 1.4 cents per share (US$67 million) in respect of the 2021 financial half year. The 

dividend was paid on 8 April 2021. In addition to the ESOP Trusts receiving dividends from South32 Limited, a total of 24,893,905 shares were bought back between the 
declaration and the ex-dividend dates, therefore reducing the interim dividend paid externally to US$66.5 million. 

Franking Account

US$M

Franking credits at the beginning of the financial year
Credits arising from tax paid/payable by South32 Limited(1)
Credits arising from the receipt of franked dividends
Utilisation of credits arising from the payment of franked dividends
Total franking credits available at the end of the financial year(2)

FY21

268
47
63
(49)
329

FY20

261
24
92
(109)
268

(1)  Includes the payment of the Australian FY21 income tax liability of US$10 million due in December 2021.
(2)  The payment of the final franked FY21 dividend declared after 30 June 2021 will decrease the franking account balance by US$110 million. Refer to note 32 Subsequent events.

8.  Earnings per share 
Basic earnings per share (EPS) amounts are calculated based on profit or loss attributable to equity holders of South32 Limited and the 
weighted average number of shares outstanding during the year.

Dilutive EPS amounts are calculated based on profit or loss attributable to equity holders of South32 Limited and the weighted average 
number of shares outstanding after adjustment for the effects of all dilutive potential shares. 

The following reflects the profit/(loss) and share data used in the basic and diluted EPS computations: 

Profit/(loss) attributable to equity holders

US$M

Continuing operations
Discontinued operation(1)
Profit/(loss) attributable to equity holders of South32 Limited (basic)
Profit/(loss) attributable to equity holders of South32 Limited (diluted)

(1)  Refer to note 31 Discontinued operation.

Weighted average number of shares 

Million

Basic EPS denominator(2)
Shares contingently issuable under employee share ownership plans
Diluted EPS denominator

1
1
3

FY21

142
(337)
(195)
(195)

FY21

4,771
14
4,785

FY20 
Restated(1)

158
(223)
(65)
(65)

FY20 
Restated(1)

4,892
12
4,904

(1)  Refer to note 31 Discontinued operation.
(2)  The basic EPS denominator is the aggregate of the weighted average number of shares after deduction of the weighted average number of treasury shares outstanding and 

shares permanently cancelled through the on-market share buy-back program.

Earnings per Share

US cents

Continuing operations 
Basic EPS
Diluted EPS
Attributable to ordinary equity holders of South32 Limited 
Basic EPS
Diluted EPS

(1)  Refer to note 31 Discontinued operation.

FY21

3.0
3.0

(4.1)
(4.1)

FY20 
Restated(1)

3.2
3.2

(1.3)
(1.3)

South32 Annual Report 2021Financial ReportNotes to financial statements – Operating assets and liabilities

This section shows the assets used to generate the Group’s trading performance and the liabilities incurred. Liabilities relating to the 
Group’s financing activities are addressed in the capital structure and financing section, notes 16 to 20. 

9.  Trade and other receivables 

US$M

Current
Trade receivables
Loans to equity accounted investments(1)
Other receivables
Total current trade and other receivables(2)
Non-current
Loans to equity accounted investments(1)
Interest bearing loans receivable from joint operations
Other receivables
Total non-current trade and other receivables(2)

(1)  Refer to note 29 Related party transactions.
(2)  Net of allowances for expected credit losses of US$2 million (FY20: US$6 million).

FY21

FY20

433
10
84
527

187
-
72
259

379
15
137
531

177
26
100
303

Trade receivables generally have terms of up to 30 days. Trade and other receivables which are not held at FVTPL are recognised initially 
at fair value and subsequently at amortised cost using the effective interest method, less an allowance for expected credit losses.

10.  Inventories 

US$M

Current
Raw materials and consumables
Work in progress
Finished goods
Total current inventories
Non-current
Raw materials and consumables
Work in progress
Total non-current inventories

4
1
1

FY21

FY20

323
236
157
716

52
22
74

348
227
160
735

54
23
77

Inventories carried at net realisable value as at 30 June 2021 was US$17 million (FY20: US$69 million). Inventory write-downs of  
US$42 million (FY20: US$33 million) were recognised in the year. 

Inventories are valued at the lower of cost and net realisable value. Cost is determined primarily on the basis of average costs. For 
processed inventories, cost is derived on an absorption costing basis. Cost comprises the cost of purchasing raw materials and the cost 
of production, including attributable overheads. In respect of minerals inventory, quantities are assessed primarily through surveys and 
assays. 

South32 Annual Report 2021Financial Report11.  Property, plant and equipment 

30 June 2021

US$M

Cost 
At the beginning of the financial year
Additions
Foreign exchange movements in closure 
and rehabilitation provisions(1) 
Disposals
Disposal of a discontinued operation(2)
Transfers and other movements
At the end of the financial year
Accumulated depreciation and 
impairments
At the beginning of the financial year
Depreciation charge for the year(3)
Impairments for the year(4)
Disposals
Disposal of a discontinued operation(2)
Transfers and other movements
At the end of the financial year
Net book value at 30 June 2021

 Land and buildings

 Plant and equipment

Right-of-use 
(ROU)

Other

ROU

Other

Other 
mineral 
assets

Assets under 
construction

Exploration 
and 
evaluation

51
3

-
(4)
-
-
50

13
11
8
(4)
-
-
28
22

2,736
-

-
(5)
(525)
93
2,299

1,766
71
41
(5)
(477)
-
1,396
903

905
24

-
(20)
(3)
-
906

241
53
-
(17)
(3)
-
274
632

15,196
506

238
(104)
(3,082)
307
13,061

10,959
475
394
(101)
(2,660)
(66)
9,001
4,060

4,687
-

-
(42)
(404)
227
4,468

1,761
100
293
(42)
(284)
66
1,894
2,574

764
500

-
-
(33)
(637)
594

-
-
-
-
-
-
-
594

81
62

-
-
-
10
153

-
-
-
-
-
-
-
153

(1)  Refer to note 15 Provisions.
(2)  Refer to note 31 Discontinued operation.
(3)  Includes depreciation relating to a discontinued operation of US$23 million. Refer to note 31 Discontinued operation.
(4)  Refer to note 13 Impairment of non-financial assets.

Capital expenditure commitments as at 30 June 2021 were US$83 million (FY20: US$140 million). 

30 June 2020

US$M

Cost 
At the beginning of the financial year
AASB 16 transition adjustment
Additions
Foreign exchange movements in closure 
and rehabilitation provisions
Disposals
Acquisition of subsidiaries and jointly 
controlled entities
Transfers and other movements
At the end of the financial year
Accumulated depreciation and 
impairments
At the beginning of the financial year
Depreciation charge for the year(1)
Disposals
At the end of the financial year
Net book value at 30 June 2020

 Land and buildings

 Plant and equipment

ROU

Other

ROU

Other

Other 
mineral 
assets

Assets under 
construction

Exploration 
and 
evaluation

-
49
2

-
-

-
-
51

-
13
-
13
38

2,669
-
-

-
(12)

-
79
2,736

1,695
74
(3)
1,766
970

798
86
21

-
-

-
-
905

186
55
-
241
664

15,045
-
113

(175)
(15)

-
228
15,196

10,510
463
(14)
10,959
4,237

4,501
-
-

-
-

73
113
4,687

1,646
115
-
1,761
2,926

592
-
596

-
-

-
(424)
764

-
-
-
-
764

28
-
49

-
-

-
4
81

-
-
-
-
81

Total

24,420
1,095

238
(175)
(4,047)
-
21,531

14,740
710
736
(169)
(3,424)
-
12,593
8,938

Total

23,633
135
781

(175)
(27)

73
-
24,420

14,037
720
(17)
14,740
9,680

(1)  Includes depreciation relating to a discontinued operation of US$44 million. Refer to note 31 Discontinued operation.

(a)  Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and impairment charges. Cost is the fair value of 
consideration given to acquire the asset at the time of its acquisition or construction and includes the direct cost of bringing the asset 
to the location and condition necessary for operation and its estimated future cost of closure and rehabilitation.

(b)  Assets under construction
When reserves are determined and development of commercial production is approved, capitalised exploration and evaluation 
expenditure is reclassified to assets under construction. All subsequent development expenditure is capitalised and classified as assets 
under construction, provided commercial viability conditions continue to be satisfied. 

All assets included in assets under construction are reclassified to other categories in property, plant and equipment when the asset is 
available and ready for use in the location and condition necessary for it to be capable of operating in the manner intended.

1
1
5

South32 Annual Report 2021Financial ReportNotes to financial statements – Operating assets and liabilities continued

11.  Property, plant and equipment continued
(c)  Exploration and evaluation expenditure
Exploration is defined as the search for potential mineralisation after the Group has obtained legal rights to explore in a specific area 
and includes topographical, geological, geochemical and geophysical studies and exploratory drilling, trenching and sampling. 

Evaluation is defined as the determination of the technical feasibility and commercial viability of a particular prospect. Activities 
conducted during the evaluation phase include the determination of the volume and grade of the deposit, examination and testing of 
extraction methods and metallurgical or treatment process, surveys of transportation and infrastructure requirements, and market and 
finance studies.

Exploration and evaluation expenditure (including amortisation of capitalised licence and lease costs) is charged to the Consolidated 
Income Statement as incurred except in the following circumstances, in which case the expenditure may be capitalised:

 – The exploration and evaluation activity is within an area of interest which was previously acquired as an asset acquisition or in a 

business combination and measured at fair value on acquisition; and

 – The existence of a commercially viable mineral deposit has been established.

In addition, drilling costs incurred at a producing mine for the purpose of improving confidence of the existing resource may be 
capitalised when the following criteria are satisfied:

 – The drilling occurs within the existing physical boundaries of the area defined as the resource; and

 – The drilling costs are incurred in resources which are economically recoverable.

Capitalised exploration and evaluation expenditure considered to be a tangible asset is recorded as a component of property, plant 
and equipment at cost less impairment charges. Otherwise, it is recorded as an intangible asset (such as certain licence and lease 
arrangements). In determining whether the purchase of an exploration licence or lease is an intangible asset or a component of 
property, plant and equipment, consideration is given to the substance of the item acquired and not its legal form. Licences or leases 
purchased which allow exploration over an extended period of time meet the definition of an intangible exploration lease asset where 
they cannot be reasonably associated with a known Mineral Resource.

(d)  Other mineral assets
Other mineral assets comprise:

6
1
1

 – Capitalised exploration, evaluation and development expenditure (including development stripping) for properties now in production;

 – Mineral rights acquired; and

 – Capitalised production stripping.

Development expenditure
In underground mines, when production and development activity occurs concurrently, development activity is separated from 
production activity, and is capitalised as development expenditure in other mineral assets. Underground mine development activity 
includes the cost associated with gaining access to an ore deposit which gives rise to a substantive change in the future productive 
capacity of the mine.

Development and production stripping
The process of removing overburden and other mine waste materials to access mineral deposits is referred to as stripping. In open-pit 
mining, stripping costs are accounted for separately for each component of an ore body. A component is a specific section within an ore 
body that is made more accessible by the stripping activity. The identification of components is dependent on the mine plan and will 
often comprise a separate pushback or phase identified in the plan.

There are two types of stripping activity:

 – Development stripping is the initial overburden removal during the development phase to obtain access to a mineral deposit that will 

be commercially produced; and

 – Production stripping is the interburden removal during the normal course of production activity. Production stripping commences 

after the first saleable minerals have been extracted from the component.

Development stripping costs are capitalised as a development stripping asset when:

 – It is probable that future economic benefits associated with the asset will flow to the entity; and

 – The costs can be measured reliably.

Production stripping can give rise to two benefits, being the extraction of ore in the current period and improved access to the ore body 
component in future periods. To the extent that the benefit is the extraction of ore, the stripping costs are recognised as an inventory 
cost. To the extent that the benefit is improved access to future ore, the stripping costs are recognised as a production stripping asset if 
the following criteria are met:

 – It is probable that the future economic benefit (improved access to ore) will flow to the entity;

 – The component of the ore body for which access has been improved can be identified; and

 – The costs relating to the stripping activity can be measured reliably.

South32 Annual Report 2021Financial Report11.  Property, plant and equipment continued
(d)  Other mineral assets continued
Production stripping costs are allocated between the inventory produced and the production stripping asset using a life-of-component 
waste to ore (or mineral contained) strip ratio. When the current strip ratio is greater than the life-of-component strip ratio a portion of 
the stripping costs is capitalised to the production stripping asset.

The development and production stripping assets are depreciated on a units of production basis based on the Ore Reserves of the 
relevant components. 

(e)  Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the 
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. 

The Group recognises a ROU asset and a lease liability at the lease commencement date. The ROU asset is initially measured at cost, 
which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, 
plus any initial direct costs incurred and estimated future cost of closure or rehabilitation, less any lease incentives received. The ROU 
asset is subsequently measured at cost less accumulated depreciation, impairment charges and any adjustments for remeasurements 
of the lease liability.

The corresponding lease liability is included within interest bearing liabilities. The lease liability is initially measured at the present 
value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if 
that rate cannot be readily determined, the lessee’s incremental borrowing rate. The lessee’s incremental borrowing rate is the rate of 
interest that a lessee would have to pay to borrow over a similar term, and with similar security, the funds necessary to obtain an asset 
of a similar value to the ROU asset in a similar economic environment. 

Lease payments included in the measurement of the lease liability comprise of the following:

 – Fixed payments, including in-substance fixed payments;

 – Variable lease payments that depend on a rate or an index, initially measured using the rate or index as at the commencement date;

 – Amounts expected to be payable under a residual value guarantee; and

 – The exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal 
period if the Group is reasonably certain to exercise an extension option and penalties for early termination of a lease if the Group is 
reasonably certain to terminate early. 

The lease liability is subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a 
change in future lease payments arising from a change in a rate or an index, if there is a change in the Group’s estimate of the amount 
expected to be payable under a residual guarantee, or if the Group changes its assessment of whether it will exercise a purchase, 
extension or termination option. When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of 
the ROU asset, or is recorded in the Consolidated Income Statement if the carrying amount of the ROU asset has been reduced to nil. 

1
1
7

The nature of the Group’s leases predominantly relates to mining equipment and assets supporting the operations in line with the 
Group’s principal activities, as well as real estate in the form of office buildings.

Leased assets are pledged as security for the related lease liabilities. 

Short-term, low-value and variable leases
The Group has elected not to recognise ROU assets and lease liabilities for short-term and low-value leases. Short-term leases are 
leases with a lease term of 12 months or less, while low-value leases are leases where the underlying asset is considered low value. 
Variable leases are leases with lease payments which are variable but do not depend on a rate or an index. The Group recognises the 
lease payments associated with these leases as an expense in the Consolidated Income Statement on a straight-line basis over the 
lease term. If variable leases have a fixed component, these would be recognised on the Consolidated Balance Sheet. 

Total cash outflows for lease obligations consist of US$104 million (FY20: US$96 million) for lease liabilities recognised on the Consolidated 
Balance Sheet and US$73 million (FY20: US$40 million) for short-term, low-value and variable leases recognised on the Consolidated 
Income Statement.

(f)  Depreciation and amortisation
The carrying amounts of property, plant and equipment are depreciated to their estimated residual values over the estimated useful 
lives of the specific assets concerned. Estimates of residual values and useful lives are reassessed annually and any change in estimate 
is taken into account in the determination of remaining depreciation charges. Depreciation commences on the date of commissioning. 
The major categories of property, plant and equipment are depreciated on a units of production or straight-line basis using the 
estimated lives indicated below. However, where assets are dedicated to a mine or lease and are not readily transferable, the below 
useful lives are subject to the lesser of the asset category’s useful life and the life of the mine or lease:

Buildings
Land
Plant and equipment
ROU assets
Mineral rights
Capitalised exploration, evaluation and development expenditure

25 to 40 years straight-line
not depreciated
3 to 30 years straight-line
based on the shorter of the useful life or the lease term (straight-line)
based on Ore Reserves on a units of production basis
based on Ore Reserves on a units of production basis

South32 Annual Report 2021Financial ReportNotes to financial statements – Operating assets and liabilities continued

12.  Intangible assets
30 June 2021

US$M

Cost
At the beginning of the financial year
Additions
Disposals
Disposal of a discontinued operation(1)
At the end of the financial year
Accumulated amortisation and impairments
At the beginning of the financial year
Amortisation charge for the year(2)
Disposals
Disposal of a discontinued operation(1)
Impairments for the year
At the end of the financial year
Net book value at 30 June 2021

(1)  Refer to note 31 Discontinued operation.
(2)  Includes amortisation relating to a discontinued operation of US$4 million. Refer to note 31 Discontinued operation.

30 June 2020

US$M

Cost
At the beginning of the financial year
Additions
At the end of the financial year
Accumulated amortisation and impairments
At the beginning of the financial year
Amortisation charge for the year(1)
At the end of the financial year
Net book value at 30 June 2020

Goodwill

Other 
intangibles

193
-
-
(54)
139

54
-
-
(54)
-
-
139

325
1
(28)
(20)
278

216
10
(28)
(6)
36
228
50

Goodwill

Other 
intangibles

193
-
193

54
-
54
139

291
34
325

197
19
216
109

Total

518
1
(28)
(74)
417

270
10
(28)
(60)
36
228
189

Total

484
34
518

251
19
270
248

(1)  Includes amortisation relating to a discontinued operation of US$3 million. Refer to note 31 Discontinued operation.

(a)  Goodwill
Where the fair value of consideration paid for a business combination exceeds the fair value of the Group’s share of the identifiable net 
assets acquired, the difference is treated as purchased goodwill. Where the fair value of the Group’s share of the identifiable net assets 
acquired exceeds the cost of acquisition, the difference is immediately recognised in the Consolidated Income Statement. Goodwill is 
not amortised, however, its carrying amount is assessed annually against its recoverable amount. 

(b)  Other intangible assets
Amounts paid for the acquisition of identifiable intangible assets, such as software, licences and contract based intangible assets are 
capitalised at the fair value of consideration paid and are recorded at cost less accumulated amortisation and impairment charges. 
Identifiable intangible assets with a finite life are amortised on a straight-line basis over their expected useful life from when the asset is 
ready for use. The useful lives are as follows:

Software and licences

Contract based intangible assets

5 years

up to 35 years

The Group has no identifiable intangible assets for which the expected useful life is indefinite.

8
1
1

South32 Annual Report 2021Financial Report13.  Impairment of non-financial assets
In testing for indications of impairment and performing impairment calculations, assets are considered as collective groups and referred 
to as cash generating units (CGUs). CGUs are the smallest identifiable group of assets, liabilities and associated goodwill that generate 
cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Formal impairment tests are carried 
out annually for CGUs containing goodwill. In addition, formal impairment tests are performed for all other CGUs when there is an 
indication of impairment. The Group uses discounted cash flow valuations to assess all its CGUs for impairment or impairment reversal 
indicators. For any resultant formal impairment testing, and for CGUs containing goodwill, the Group uses the higher of fair value less 
cost of disposal (FVLCD) and its value in use to assess the recoverable amount. If the carrying value of the CGU exceeds its recoverable 
amount, the CGU is impaired, and an impairment loss is charged to the Consolidated Income Statement.

Previously impaired CGUs are reviewed for possible reversal of a previous impairment at each reporting date. Impairment reversals 
cannot exceed the carrying value that would have been determined (net of depreciation) had no impairment loss been recognised for 
the CGU. Goodwill is not subject to impairment reversal.

For properties not yet in production, any mineral rights acquired, together with subsequent capitalised exploration and evaluation 
expenditure, are regularly reviewed to determine the appropriateness of continuing to carry forward costs in relation to that area of 
interest. Once the technical feasibility and commercial viability of the extraction of Ore Reserves in an area of interest are demonstrated, 
exploration and evaluation assets attributable to that area of interest are first tested for impairment before being reclassified to other 
mineral assets.

The Group recorded the following pre-tax impairments for the year ended 30 June 2021:

US$M

Property, plant and equipment

Right-of-use lease assets(1)
Intangible assets
Total impairment

Note

11

11
12

FY21

728

8
36
772

FY20

-

-
-
-

(1)  Included in the major corporate restructures earnings adjustments. Refer to note 4(b)(i) Earnings adjustments.

No impairment or impairment reversal was recognised for the year 30 June 2020.

(a)  Recognised impairment – 30 June 2021

Illawarra Metallurgical Coal
On 5 February 2021, the Group was advised that the New South Wales (NSW) Independent Planning Commission (IPC) refused the 
application for the Dendrobium Next Domain (DND) life extension project at IMC. The Group has since scaled back activity on the DND 
project while it considers alternative options following the IPC decision. This includes proceedings which have been commenced in the 
Land and Environment Court of NSW for a judicial review of the decision and the potential submission of an alternate mine plan to the 
NSW Minister for Planning and Public Spaces for determination of the project as state significant infrastructure. The decision by the IPC 
has introduced uncertainty over the future of the DND project, the IMC complex and the DND project’s value contribution to the IMC 
CGU recoverable amount assessment.

1
1
9

The Group has since assessed the potential implications of the IPC decision and reviewed the optimised IMC CGU and the resultant 
impact on the carrying value of its assets as at 30 June 2021. The IMC CGU, which is also a reporting segment, consists of the Appin and 
Dendrobium underground metallurgical coal mines, and the West Cliff and Dendrobium coal preparation plants. The Group recognised 
an impairment of property, plant and equipment at its IMC CGU of US$728 million which is included in expenses excluding net finance 
costs in the Consolidated Income Statement. This charge reflects the increased approval uncertainty created by the IPC’s decision to 
refuse the application for the DND life extension project and the resultant impact on the economics of the broader IMC complex. The 
recoverable amount of the IMC CGU was determined as US$550 million based on its FVLCD and reflects judgements in relation to the 
likelihood of future mine life extension projects for, and the Group’s major long-term coal supply arrangements connected with, the IMC 
complex. The fair value measurement is categorised as a Level 3 fair value based on the inputs in the valuation technique (refer to note 
19 Financial assets and financial liabilities).

In the short to medium-term we have applied an actual enacted carbon price less allowable abatements based on existing regulations 
with the expectation that existing allowances will reduce over time as Australia strengthens its climate policies. In the long-term 
we assume a single global carbon price, based on an assessment of policy-driven costs, evolution of technological innovation and 
abatement costs. Our long-term global carbon price of US$40 per tonne is applied to all Scope 1 and 2 emissions and assumes no 
carbon exemptions or allowances are employed.

In determining the FVLCD, a real US$ post tax discount rate range of between 6 and 8 per cent was applied to discount future cash 
flows. The recoverable amount was informed by a production profile and costs based on management’s planning processes. The long-
run metallurgical coal prices, energy coal prices and exchange rates used in the FVLCD determinations are within the following ranges 
as published by market commentators:

Metallurgical coal (US$/t)
Energy coal (US$/t)
Foreign exchange rates (AU$ to US$)

Assumptions used in FVLCD

112 to 160
58 to 78
0.71 to 0.77

South32 Annual Report 2021Financial ReportNotes to financial statements – Operating assets and liabilities continued

13.  Impairment of non-financial assets continued
(b)  Impairment test for CGUs containing goodwill
For the purpose of impairment testing, goodwill has been allocated to CGUs that are expected to benefit from the synergies of the 
business combination and which represent the level at which management will monitor and manage the goodwill.

The carrying amount of goodwill has been allocated to the following CGU:

US$M

Hillside Aluminium
Total goodwill 

Note

12

FY21

139
139

FY20

139
139

Hillside Aluminium
The goodwill arose from the acquisition of Alusaf in Hillside Aluminium (Pty) Ltd and has been allocated to the Hillside Aluminium CGU 
which comprises the Hillside aluminium smelter. The recoverable amount of the Hillside Aluminium CGU was determined based on a 
FVLCD calculation and was categorised as a Level 3 fair value based on the inputs in the valuation technique (refer to note 19 Financial 
assets and financial liabilities). The impairment test for the Hillside Aluminium CGU indicated that no impairment was required. The 
determination of FVLCD was most sensitive to:

 – Production volumes;

 – Aluminium and alumina prices;

 – Foreign exchange rates;

 – Carbon pricing and timing; and

 – Discount rate.

Production volumes – estimated production volumes are based on the life of the smelter as determined by management as part of the 
long-term planning process. Production volumes are influenced by production input costs such as electricity prices, jurisdiction based 
carbon pricing, and the selling price of aluminium.

Aluminium and alumina prices, and foreign exchange rates – key assumptions for aluminium and alumina prices are comparable to 
market consensus forecasts for each of the years of the life of operation. Foreign exchange rates are aligned with forward market rates 
in the short-run and thereafter are within the range published by market commentators.

0
2
1

The table below shows the amount by which these assumptions must change in isolation in order for the estimated recoverable amount 
to be equal to the carrying amount of the Hillside Aluminium CGU, including goodwill. Owing to the complexity of the relationships 
between each key assumption, the analysis was performed for each assumption individually.

Aluminium prices (US$/t)
Alumina prices (US$/t)
Foreign exchange rates (ZAR to US$)

Assumptions used in FVLCD

Change required for the carrying amount to equal 
recoverable amount

1,552 to 2,866
288 to 400
14.5 to 16.0

decrease of 10%
increase of 34%
ZAR strengthening of 20%

Carbon pricing and timing – in determining the FVLCD, the current jurisdiction enacted carbon price, in real terms, of ZAR133 to  
ZAR136 per tonne CO2e is applied for the life of operation for Scope 1 and 2 emissions, net of operation specific abatement allowances.

Discount rate – in determining the FVLCD, a real post-tax discount rate of 7 per cent (FY20: 7.5 per cent), and a country risk premium of 
up to 2 per cent (FY20: up to 2 per cent) are applied to the post-tax cash flows expressed in real terms.

South32 Annual Report 2021Financial Report13.  Impairment of non-financial assets continued

Key estimates, assumptions and judgements
An assessment as to whether there is any indication of impairment and the calculation of a CGU’s recoverable amount requires 
management to make estimates and assumptions about expected production and sales volumes, commodity prices (considering 
current and historical prices, price trends and related factors), foreign exchange rates, Ore Reserves, Mineral Resources, regulatory 
approvals, operating costs, closure and rehabilitation costs, future capital expenditure, allocation of corporate costs, specific 
jurisdiction based carbon prices, where relevant, and global carbon pricing. These estimates and assumptions are subject to 
risk and uncertainty; hence there is a possibility that changes in circumstances will alter these projections, which may impact 
the recoverable amount. In such circumstances, some or all of the carrying amount may be impaired or a previously recognised 
impairment charge may be reversed with the impact recorded in the Consolidated Income Statement.

The key estimates and assumptions used in the assessment of impairment indicators are as follows:

Future production

Commodity prices

Exchange rates

Discount rates

Regulatory approvals

Carbon prices

Life of operation plans based on Proved and Probable Ore Reserve estimates, Mineral Resource 
(excluding Inferred Mineral Resources) estimates, economic life of smelters and refineries and, in 
certain cases, expansion projects, including future cost of production.

Forward market and contract prices, and longer-term price protocol estimates which includes an 
assessment of the impact carbon price assumptions might have.

Observable forward market foreign exchange rates, and longer-term price protocol estimates.

Cost of capital risk-adjusted and appropriate to the resource.

Life of operation plans include assumptions associated with the successful application of ongoing 
and future regulatory approvals.

Actual enacted schemes less allowable abatements, where applicable, and a long-term base case 
estimate of US$40 per tonne (real) applied to all Scope 1 and 2 emissions.

The cost and benefit of achieving the Group’s emissions reduction strategy is included when the Group has a high degree of 
confidence that a project will achieve a reduction, which typically aligns with the related capital project being internally approved. 
The Group’s commodity prices and other key assumptions represent management’s expectations on likely outcomes, with a base 
case estimation of at least a 2°C climate related warming scenario.

Where impairment testing is undertaken, a range of external sources are considered as further input to the above assumptions. 

When assessing for impairment and impairment reversal indicators, the fundamental characteristics of previously impaired CGUs 
are relevant to their sensitivity to key estimates and assumptions. For previously impaired CGUs these include:

 – CGUs with higher operating margins and with life of operation plans longer than 10 years which are less sensitive to short-term 

commodity prices and foreign exchange rates, for example Worsley Alumina;

 – CGUs with lower operating margins which are highly sensitive to movements in commodity prices and foreign exchange rates, 

for example South Africa Manganese and IMC; and

 – CGUs with higher operating margins, shorter life of operation plans and exposure to commodities that display greater price 

volatility, for example Australia Manganese.

The operating assets for previously impaired CGUs are included in note 4(b) Segment results. 

For properties not yet in production, acquired mineral rights together with subsequent capitalised exploration and evaluation 
expenditure require judgement to determine the likelihood of future economic benefits from future development, and whether 
sufficient data exists to indicate that, although a development in the specific area is likely to proceed, the carrying amount of 
the exploration and evaluation asset is unlikely to be recovered in full. When facts and circumstances suggest that the carrying 
amount exceeds the recoverable amount, an impairment test will be required which may result in an adjustment to the carrying 
value of acquired mineral rights together with subsequent capitalised exploration and evaluation expenditure.

1
2
1

South32 Annual Report 2021Financial ReportNotes to financial statements – Operating assets and liabilities continued

13.  Impairment of non-financial assets continued

Key estimates, assumptions and judgements continued
An Ore Reserve is the economically mineable part of the Measured and/or Indicated Mineral Resource that can be legally 
extracted, or where there is a reasonable expectation that approvals for extraction will be granted, from the Group’s properties. 
In order to estimate Ore Reserves, consideration is required for a range of modifying factors, including mining, processing, 
metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental. When reporting Ore Reserves, 
the relevant studies, to at least a pre-feasibility level, must demonstrate that, at the time of reporting, extraction could be 
reasonably justified. Management will form a view of forecast sales prices, based on current and long-term historical average price 
trends. 

Estimating the quantity and/or grade of Mineral Resources requires the location, quantity, grade (or quality), continuity and other 
geological characteristics to be known, estimated or interpreted from specific geological evidence and knowledge, including 
sampling in order to satisfy the requirement that there are reasonable prospects for eventual economic extraction. This process 
may require complex and difficult geological assessments to interpret the data.

The Group reports Ore Reserves and Mineral Resources in accordance with the Australasian Code for Reporting of Exploration 
Results, Mineral Resources and Ore Reserves (JORC Code), and the ASX Listing Rules Chapter 5: Additional reporting on mining 
and oil and gas production and exploration activities. 

Because the economic assumptions used to estimate the Ore Reserves change from period to period, and because additional 
geological data is generated during the course of operations, estimates of the Ore Reserves and Mineral Resources may change 
from period to period. The Group’s planning processes consider the impacts of climate change on its Ore Reserves, including 
assessments of operating costs and the impact of extreme weather events on the expectation of economic extraction. Changes in 
reported Ore Reserves may affect the Group’s financial results and financial position in a number of ways, including the following:

 – Asset recoverable amounts may be affected due to changes in estimated future cash flows;

 – Depreciation, depletion and amortisation charged in the Consolidated Income Statement may change on a units of production 

basis, or where the useful economic lives of assets change;

 – Development and production stripping costs recorded on the Consolidated Balance Sheet or charged to the Consolidated 

Income Statement may change with stripping ratios or on a units of production basis of depreciation; and

 – Decommissioning, closure and rehabilitation provisions may change where estimated Ore Reserves affect expectations about 

the timing or cost of these activities.

The carrying amount of associated deferred tax assets may change due to changes in estimates of the likely recovery of the tax 
benefits.

2
2
1

14.  Trade and other payables

US$M

Current
Trade creditors
Other creditors
Total current trade and other payables
Non-current
Other creditors
Total non-current trade and other payables

FY21

FY20

663
114
777

2
2

558
69
627

3
3

Trade and other payables generally represent liabilities for goods and services provided to the Group prior to the end of the financial 
year which were unpaid at the end of the financial year. These amounts are unsecured. Trade and other payables are included in current 
liabilities, except for those liabilities where payment is not due within 12 months from the reporting date, which are classified as non-
current liabilities.

Trade and other payables, other than financial guarantee contracts and financial liabilities held at FVTPL, are stated at their amortised 
cost and are non-interest bearing. The carrying value of these trade and other payables is considered to approximate fair value due to 
the short-term nature of the payables.

South32 Annual Report 2021Financial Report15.  Provisions

US$M

Current
Employee benefits
Closure and rehabilitation
Other 
Total current provisions 
Non-current
Employee benefits
Closure and rehabilitation
Post-retirement employee benefits 
Other
Total non-current provisions 

30 June 2021

US$M

At the beginning of the financial year
Charge/(credit) for the year to the Consolidated Income Statement:

Employee  
benefits

Closure and  
rehabilitation

188

1,830

Underlying
Discounting(1)
Change in discount rate(2)(3)
Net interest expense(4)
Exchange rate variations
Released during the year

Amounts capitalised for change in costs and estimates
Amounts capitalised for change in discount rate(3)
Foreign exchange amounts capitalised
Amounts taken to retained earnings
Utilisation
Disposal of a discontinued operation(5)
Transfers and other movements
At the end of the financial year

184
-
-
-
21
(2)
-
-
-
-
(152)
(38)
-
201

16
120
(23)
-
51
(3)
271
235
238
-
(21)
(997)
-
1,717

Note

FY21

FY20

195
15
29
239

6
1,702
41
10
1,759

Other

78

22
3
-
-
8
(4)
-
-
-
-
(33)
(30)
(5)
39

184
40
50
274

4
1,790
77
28
1,899

Total

2,173

223
123
(23)
8
96
(9)
271
235
238
(1)
(213)
(1,125)
2
1,998

1
2
3

22

Post-
retirement 
employee 
benefits

77

1
-
-
8
16
-
-
-
-
(1)
(7)
(60)
7
41

(1)  Includes amounts relating to a discontinued operation of US$64 million. Refer to note 31 Discontinued operation.
(2)  Includes amounts relating to a discontinued operation of (US$17) million. Refer to note 31 Discontinued operation.
(3)  The Group has reviewed its discount rates applied to closure and rehabilitation provisions. The corresponding net increase in the provision is capitalised as an asset or charged 

to the Consolidated Income Statement in the case of closed sites. 

(4)  Includes amounts relating to a discontinued operation of US$5 million. Refer to note 31 Discontinued operation.
(5)  Refer to note 31 Discontinued operation.

30 June 2020

US$M

At the beginning of the financial year
Charge/(credit) for the year to the Consolidated Income Statement:

Underlying
Discounting(1)
Net interest expense(2)
Exchange rate variations
Released during the year

Amounts capitalised for change in costs and estimates
Foreign exchange amounts capitalised
Amounts taken to retained earnings
Utilisation
At the end of the financial year

Employee  
benefits

Closure and 
rehabilitation

203

1,868

143
-
-
(10)
(16)
-
-
-
(132)
188

16
102
-
(48)
(9)
106
(175)
-
(30)
1,830

Post-
retirement 
employee 
benefits

92

2
-
8
(17)
-
-
-
(2)
(6)
77

Other

74

37
-
-
(14)
(3)
-
-
-
(16)
78

Total

2,237

198
102
8
(89)
(28)
106
(175)
(2)
(184)
2,173

(1)  Includes amounts relating to a discontinued operation of US$48 million. Refer to note 31 Discontinued operation.
(2)  Includes amounts relating to a discontinued operation of US$5 million. Refer to note 31 Discontinued operation.

South32 Annual Report 2021Financial ReportNotes to financial statements – Operating assets and liabilities continued

15.  Provisions continued
(a)  Employee benefits 
Liabilities for unpaid wages and salaries are recognised in other creditors. Current entitlements to annual leave and accumulating sick 
leave accrued for services up to the reporting date are recognised in the provision for employee benefits and are measured at the 
amounts expected to be paid. Entitlements to non-accumulated sick leave are recognised when the leave is taken.

The current liability for long service leave (for which settlement within 12 months of the reporting date cannot be deferred) is recognised 
in the current provision for employee benefits and is measured in accordance with annual leave described above. The non-current 
liability for long service leave is recognised in the non-current provision for employee benefits and measured as the present value of 
expected future payments to be made in respect of services provided by employees up to the reporting date.

(b)  Closure and rehabilitation 
The mining, extraction and processing activities of the Group normally give rise to obligations for site closure or rehabilitation. Closure 
and rehabilitation works can include facility decommissioning and dismantling, removal or treatment of waste materials, site and land 
rehabilitation.

Provisions for the cost of each closure and rehabilitation program are recognised at the time that environmental disturbance occurs. 
When the extent of disturbance increases over the life of an operation, the provision is increased accordingly. Costs included in the 
provision encompass all closure and rehabilitation activity expected to occur progressively over the life of the operation and at, or 
after, the time of closure, for disturbance existing at the reporting date. Routine operating costs that may impact the ultimate closure 
and rehabilitation activities, such as waste material handling conducted as an integral part of a mining or production process, are not 
included in the provision. Costs arising from unforeseen circumstances, such as the contamination caused by unplanned discharges, are 
recognised as an expense and liability when the event gives rise to an obligation which is probable and capable of reliable estimation.

The timing of the actual closure and rehabilitation expenditure is dependent upon a number of factors such as: the life and nature of the 
asset, which is informed by the demand for commodities, carbon pricing and other variables; the operating licence conditions; and the 
environment in which the mine operates. Expenditure may occur before and after closure and can continue for an extended period of 
time depending on closure and rehabilitation requirements.

Closure and rehabilitation provisions are measured at the expected value of future cash flows, discounted to their present value and 
determined according to the probability of alternative estimates of cash flows occurring for each operation. 

4
2
1

Discount rates used are risk-free interest rates specific to the country in which the operations are located. Material changes in country 
specific risk-free interest rates may affect the discount rates applied.

When provisions for closure and rehabilitation are initially recognised, the corresponding cost is capitalised as an asset, representing 
part of the cost of acquiring the future economic benefits of the operation. The capitalised cost of closure and rehabilitation activities 
is recognised in property, plant and equipment and depreciated accordingly. The value of the provision is progressively increased over 
time due to the effect of discounting unwind and inflation, creating an expense recognised in finance expenses.

Closure and rehabilitation provisions are also adjusted for changes in costs and estimates. Those adjustments are accounted for as a 
change in the corresponding capitalised cost, except where a reduction in the provision is greater than the depreciated capitalised cost 
of the related assets, in which case the capitalised cost is reduced to nil and the remaining adjustment is recognised first against other 
items in property, plant and equipment, and subsequently to the Consolidated Income Statement. In the case of closed sites, changes 
to estimated costs are recognised immediately in the Consolidated Income Statement. Changes to the capitalised cost result in an 
adjustment to future depreciation. Adjustments to the estimated amount and timing of future closure and rehabilitation cash flows are a 
normal occurrence in light of the significant judgements and estimates involved.

(c)  Post-retirement employee benefits
This relates to the provision for post-employment defined benefit pension and medical plans. Refer to note 22 Pension and other post-
retirements obligations.

Key estimates, assumptions and judgements
The recognition of closure and rehabilitation provisions requires judgement and is based on significant estimates and assumptions 
such as: 

 – the requirements of the relevant local legal and regulatory framework; 

 – the magnitude of possible contamination; 

 – the timing, extent, and cost of required closure and rehabilitation activity; and 

 – potential changes in climate conditions. 

These uncertainties may result in future actual expenditure differing from the amounts currently provided.

The provision recognised for each site is periodically reviewed and updated based on the facts and circumstances available at the 
time. 

In addition to the uncertainties noted above, certain closure and rehabilitation activities may be subject to legal disputes and 
depending on the ultimate resolution of these disputes, the final liability for such matters could vary.

If risk-free interest rates were decreased by 0.5 per cent, the provision would increase by approximately US$298 million.

South32 Annual Report 2021Financial ReportNotes to financial statements – Capital structure and financing

This section outlines how the Group manages its capital and related financing activities. 

16.  Cash and cash equivalents
Cash and cash equivalents include cash at bank and on hand as well as short-term deposits. 

US$M

Cash
Short-term deposits
Cash and cash equivalents(1)(2)

FY21

596
1,017
1,613

FY20

465
850
1,315

(1)  Cash and cash equivalents include US$5 million (FY20: US$16 million) which is restricted by legal or contractual arrangements. 
(2)  Cash and cash equivalents include US$285 million (FY20: US$284 million) consisting of short-term deposits and cash managed by the Group on behalf of its equity accounted 

investments. The corresponding amount payable is included in note 17 Interest bearing liabilities.

17.  Interest bearing liabilities

US$M

Current
Lease liabilities
Unsecured loans from equity accounted investments(1)
Unsecured other
Total current interest bearing liabilities
Non-current
Lease liabilities
Unsecured other
Total non-current interest bearing liabilities

FY21

FY20

37
285
86
408

650
149
799

42
284
29
355

609
53
662

(1)  Refer to note 16 Cash and cash equivalents and note 29 Related party transactions.

Bank overdrafts, bank loans and other borrowings are initially recognised at their fair value net of directly attributable transaction costs. 
Subsequent to initial recognition, interest bearing liabilities are measured at amortised cost using the effective interest method. Gains 
and losses are recognised in the Consolidated Income Statement when the liabilities are derecognised. Interest bearing liabilities are 
classified as current liabilities, except when the Group has an unconditional right to defer settlement for at least 12 months after the 
reporting date, in which case the liabilities are classified as non-current. 

(a)  Reconciliation of movements in liabilities to cash flows arising from financing activities

US$M

At the beginning of the financial year
Changes from financing cash flows:
Net repayment of lease liabilities
Net receipt/(repayment) of other interest bearing liabilities

Total changes from financing cash flows
The effect of changes in foreign exchange rates
Increase/(decrease) in lease and other interest bearing liabilities
Disposal of a discontinued operation(1)
Other changes:

Interest expense
Interest paid

At the end of the financial year

(1)  Refer to note 31 Discontinued operation.

Lease liabilities

Other interest 
bearing 
liabilities

Total interest 
bearing 
liabilities

651

366

1,017

(49)
-
(49)
58
27
-

55
(55)
687

-
9
9
(4)
5
144

15
(15)
520

(49)
9
(40)
54
32
144

70
(70)
1,207

1
2
5

South32 Annual Report 2021Financial ReportNotes to financial statements – Capital structure and financing continued

18.  Net finance costs

US$M

Finance expenses
Interest on borrowings
Interest on lease liabilities
Discounting on provisions and other liabilities
Change in discount rate on closure and rehabilitation provisions
Net interest expense on post-retirement employee benefits
Fair value change on financial assets
Exchange rate variations on net debt

Finance income
Interest income
Net finance costs

(1)  Refer to note 31 Discontinued operation.

FY21

FY20 
Restated(1)

15
55
59
(6)
3
-
52
178

17
161

18
51
54
-
3
9
(6)
129

35
94

Interest income and expense are recognised using the effective interest method. 

19.  Financial assets and financial liabilities
(a)  Financial risk management objectives and policies
The Group is exposed to market, liquidity and credit risk. These risks are managed in accordance with the Group’s portfolio risk 
management strategy which supports the delivery of the Group’s financial targets while protecting its future financial security 
and flexibility by taking advantage of the natural diversification of the Group’s operations and activities. A Cash Flow at Risk (CFaR) 
framework is used to capture the benefits of diversification and to measure the aggregate impact of financial risks on those financial 
targets. CFaR is measured on a portfolio basis and is defined as the expected reduction from projected business plan cash flows over a 
one-year horizon in a pessimistic case. In addition to the CFaR framework, deterministic analysis of a range of operational, commodity 
price and foreign exchange rate scenarios is also used to measure the potential impact on financial targets. 

6
2
1

(i)  Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. 
Market risk comprises interest rate risk, foreign currency risk and other price risk, such as equity price risk and commodity price risk. 
Financial instruments affected by market risk include loans and borrowings, deposits, investments in equity instruments designated as 
FVOCI, other investments held at FVTPL and derivative financial instruments. 

Group activities expose it to market risks associated with movements in interest rates, foreign currencies and commodity prices. The 
Group predominantly manages financing costs, currency impacts, input costs and commodity prices on a floating or index basis. This 
strategy gives rise to a risk of variability in earnings which is measured under the CFaR framework.

In executing the strategy, financial instruments may be employed for risk mitigation purposes with a strict Board of Directors approved 
mandate, or to align the total Group exposure to the relevant index target in the case of commodity sales, operating costs or debt 
issuances.

Interest rate risk
The Group is exposed to interest rate risk on its cash and cash equivalents, trade and other receivables, embedded derivatives, trade 
and other payables and interest bearing liabilities from the possibility that changes in interest rates will affect future cash flows or the 
fair value of financial instruments. 

The Group had the following exposure to interest rate risk:

US$M

Financial assets 
Cash and cash equivalents
Trade and other receivables
Derivative contracts
Financial liabilities
Trade and other payables
Interest bearing liabilities
Net exposure

FY21

FY20

1,608
131
-

(14)
(314)
1,411

1,299
150
9

-
(340)
1,118

South32 Annual Report 2021Financial Report19.  Financial assets and financial liabilities continued
(a)  Financial risk management objectives and policies continued

(i)  Market risk continued
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of borrowings and 
financial assets affected. With all other variables held constant, the Group’s profit/(loss) after tax is affected through the impact on 
floating rate borrowings and investments, as follows:

Increase/decrease in basis points

+100
–100

Impact on profit/(loss) after tax

US$M

FY21

15
(4)

FY20

8
(1)

The sensitivity analysis assumes that the change in interest rates is effective from the beginning of the financial year and the fixed/
floating mix and balances are constant over the year. For the purpose of the sensitivity analysis, the decrease of 100 basis points is 
applied to the extent that the underlying interest rates do not fall below zero per cent. However, interest rates and the net debt profile of 
the Group may not remain constant over the coming financial year and therefore such sensitivity analysis should be used with care.

Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign 
exchange rates. The functional currency of the Group’s operations is the US dollar. The Group’s potential currency exposures comprise:

 – Translational exposure in respect of non-functional currency monetary items; and

 – Transactional exposure in respect of non-functional currency expenditure and revenues. 

Certain operating and capital expenditure is incurred by operations in currencies other than their functional currency. To a lesser 
extent, certain sales revenue is earned in currencies other than the functional currency of the operation, and certain exchange control 
restrictions may require funds to be maintained in currencies other than the operations functional currency. When required, the Group 
may enter into forward exchange contracts. 

The principal non-functional currencies to which the Group is exposed to are the Australian dollar, Brazilian real, Canadian dollar, 
Colombian peso, and South African rand. The following table shows the foreign currency risk arising from financial assets and liabilities, 
which are denominated in these currencies:

Net financial assets/(liabilities) – by currency of denomination

1
2
7

US$M

Australian dollar
Brazilian real
Canadian dollar
Colombian peso
South African rand

FY21

(847)
58
19
9
(172)

FY20

(856)
7
(25)
(15)
38

Based on the Group’s net financial assets and liabilities as at 30 June, a weakening of the US dollar against these currencies as 
illustrated in the table below, with all other variables held constant, would increase/(decrease) profit/(loss) after tax and other 
comprehensive income, net of tax, as follows: 

30 June 2021 

Currency movement

US$M

10% movement in Australian dollar
10% movement in Brazilian real 
10% movement in Canadian dollar
10% movement in Colombian peso
10% movement in South African rand

30 June 2020

Currency movement

US$M

10% movement in Australian dollar
10% movement in Brazilian real
10% movement in Canadian dollar
10% movement in Colombian peso
10% movement in South African rand

Profit/(loss) after tax

Other comprehensive 
income, net of tax

(60)
(1)
1
1
(17)

-
7
1
-
-

Profit(loss) after tax

Other comprehensive 
income, net of tax

(60)
(2)
(3)
(2)
4

-
3
-
-
-

South32 Annual Report 2021Financial ReportNotes to financial statements – Capital structure and financing continued

19.  Financial assets and financial liabilities continued
(a)  Financial risk management objectives and policies continued

(i)  Market risk continued

Commodity price risk
Contracts for the sale and physical delivery of commodities are executed whenever possible on a pricing basis intended to achieve a 
relevant index target. Where pricing terms deviate from the index, the Group may choose to use derivative commodity contracts to 
realise the index price. Contracts for the physical delivery of commodities are not typically financial instruments and are carried in the 
Consolidated Balance Sheet at cost (typically at nil). 

Provisionally priced commodity sales and purchases contracts
Provisionally priced sales or purchases contracts are those for which price finalisation, referenced to the relevant index, is outstanding 
at the reporting date. Provisional pricing mechanisms embedded within these sales and purchases arrangements have the character of 
a commodity derivative and are carried at FVTPL as part of trade receivables or trade creditors. Fair value movements on provisionally 
priced sale contracts are disclosed in ‘Other’ revenue. Refer to note 4(b) Segment results. The Group’s exposure at 30 June 2021 to the 
impact of movements in commodity prices on provisionally invoiced sale and purchase volumes was predominantly around nickel, silver, 
lead, zinc, aluminium and alumina.

The Group had 3.6kt of nickel, 3.0Moz of silver, 32.0kt of lead, 9.6kt of zinc, 4.0kt of aluminium and 64.2kt of alumina exposure at 30 June 
2021 (FY20: 2.5kt of nickel, 2.0Moz of silver, 28.8kt of lead, 7.8kt of zinc, 18.7kt of aluminium and 11.6kt of alumina) that was provisionally 
priced. The final price of these sales or purchases will be determined during the first half of FY22. A 10 per cent change in the realised 
price of these commodities, with all other factors held constant, would increase or decrease profit/(loss) after tax by US$26 million 
(FY20: US$16 million). The relationship between commodity prices and foreign currencies is complex and foreign exchange rates and 
commodity prices may move concurrently in response to market conditions. These sensitivities should therefore be used with care.

(ii)  Liquidity risk 
The Group’s liquidity risk arises from the possibility that it may not be able to settle or meet its obligations as they fall due. Operational, 
capital and regulatory requirements are considered in the management of liquidity risk, in conjunction with short and long-term 
forecast information.

The Group’s policy on counterparty credit exposure ensures that only counterparties of a high credit standing are used for the 
investment of any excess cash.

8
2
1

Standby arrangements and unused credit facilities
The entities in the Group are funded by a combination of cash generated by the Group’s operations, working capital facilities and 
intercompany loans provided by the Group. Intercompany loans may be funded by a combination of cash, short and long-term debt and 
equity market raisings. Details of the Group’s major standby arrangement are as follows:

30 June 2021

US$M

Revolving credit facility(1)

Available

1,450

Used

-

Unused

1,450

(1)  The Group has an undrawn revolving credit facility which is a standby arrangement to the US commercial paper program. This facility was extended in July 2020 by one year 

and expires in February 2023.

Maturity profile of financial liabilities
The maturity profiles of financial liabilities, based on the contractual amounts, are as follows:

30 June 2021

US$M

Trade and other payables(1) – financial guarantee contract
Trade and other payables(2) – other 
Other interest bearing liabilities
Lease liabilities
Other financial liabilities – derivative contracts
Total

Carrying 
amount

15
754
520
687
11
1,987

On demand or 
less than 1 
year

1 to 5 years

More than 5 
years

93
752
372
91
11
1,319

-
2
98
320
-
420

-
-
75
853
-
928

Total

93
754
545
1,264
11
2,667

(1)  Refer to note 31 Discontinued operation.
(2)  Excludes current input taxes of US$10 million included in other creditors. Refer to note 14 Trade and other payables.

30 June 2020

US$M

Trade and other payables(1)
Other interest bearing liabilities
Lease liabilities
Other financial liabilities – derivative contracts
Total

Carrying 
amount

624
366
651
1
1,642

On demand or 
less than 1 
year

1 to 5 years

More than 5 
years

621
315
92
1
1,029

3
43
294
-
340

-
18
840
-
858

Total

624
376
1,226
1
2,227

(1)  Excludes current input taxes of US$6 million included in other creditors. Refer to note 14 Trade and other payables.

South32 Annual Report 2021Financial Report19.  Financial assets and financial liabilities continued
(a)  Financial risk management objectives and policies continued

(iii)  Credit risk
The Group has credit risk management policies in place covering the credit analysis, approvals and monitoring of counterparty 
exposures. As part of these processes the ongoing creditworthiness of counterparties is regularly assessed. 

Mitigation methods are defined and implemented for higher-risk counterparties to protect revenues, with more than half of the Group’s 
sales of physical commodities occurring via secured payment terms including prepayments, letters of credit, guarantees and other risk 
mitigation instruments. The methods include credit exposure management and overdue accounts monitoring. The cadence on these 
mitigation methods has been maintained since it was increased in the wake of changes in market conditions due to COVID-19. 

There are no material concentrations of credit risk, either with individual counterparties or groups of counterparties, by industry or 
geography.

The Group’s exposure to credit risk is influenced by the individual characteristics of each counterparty or customer. However, 
management also consider other factors that may influence the credit risk of its counterparty or customer base. Where there is credit 
exposure for a new customer, they are assessed for creditworthiness before the Group’s standard payment and delivery terms and 
conditions are offered. For these customers, credit limits are established and reviewed annually or with the release of new information 
materially impacting the customer’s creditworthiness. The Group’s review includes external credit ratings, if available, credit agency 
information, as well as financial institution and industry information.

The carrying amounts of financial assets represent the maximum credit exposure.

Expected credit loss assessment as at 30 June 2021
For trade receivables, the Group uses the simplified approach to recognise impairments based on the lifetime expected credit loss. For 
other receivables, the Group applies the general approach and recognises impairments based on a 12-month expected credit loss.

Impairment allowances are based on a forward-looking expected credit loss model. Where there has been a significant increase in 
credit risk, a loss allowance for lifetime expected credit losses is required. 

An analysis has been performed for each financial asset subject to the expected credit loss assessment to take into consideration any 
increased credit risk exposure as a result of COVID-19 and the likelihood of recoverability. 

Exposures are grouped by external credit rating and security options and an expected credit loss rate is calculated accordingly. Where 
applicable, actual credit loss experience is also taken into account. For remaining receivables without an external credit rating or 
security option, a rating of BB (Standard and Poor’s) is used, on the basis that there is no support that it is investment grade, nor is there 
any evidence of default.

1
2
9

Impairments on loans to equity accounted investments have been measured on the 12-month expected credit loss basis, per the 
general approach. 

(b)  Accounting classification and fair value

(i)  Recognition and initial measurement
All financial assets (with the exception of trade and other receivables without a significant financing component) and financial liabilities are 
initially recognised at fair value plus transaction costs directly attributable to its acquisition or issue (for all items except those classified as 
FVTPL). Trade and other receivables without a significant financing component are initially measured at the transaction price.

(ii)  Financial assets: Classification and subsequent measurement
On initial recognition, financial assets are either measured at amortised cost or at fair value. 

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as FVTPL:

 – It is held within a business model whose objective is to hold assets to collect contractual cash flows; and

 – Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal 

amount outstanding.

Financial assets that are held for trading and whose performance is evaluated on a fair value basis are measured at FVTPL. 

On initial recognition, the Group may irrevocably designate a financial asset to be held at FVTPL that otherwise meets the requirements 
to be measured at amortised cost or for designation as FVOCI, if doing so eliminates or significantly reduces an accounting mismatch 
that would otherwise arise.

On initial recognition of an investment in an equity instrument not held for trading, the Group may also irrevocably elect to present 
subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-by-
investment basis. 

All financial assets not measured at amortised cost or designated as FVOCI are measured at FVTPL. This includes all derivative financial 
assets. 

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing 
financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the 
change in the business model.

South32 Annual Report 2021Financial ReportNotes to financial statements – Capital structure and financing continued

19.  Financial assets and financial liabilities continued
(b)  Accounting classification and fair value continued

(ii)  Financial assets: Classification and subsequent measurement continued

Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest 
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined 
as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular 
period and for other basic lending risks and costs (for example, liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual 
terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or 
amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers:

 – Contingent events that would change the amount or timing of cash flows;

 – Terms that may adjust the contractual coupon rate, including variable rate features;

 – Prepayment and extension features; and

 – Terms that limit the Group’s claim to cash flows from specified assets (for example, non-recourse features).

Financial assets: Subsequent measurement and gains and losses

Classification

Held at FVTPL

Amortised cost

Investments in equity instruments – 
designated as FVOCI

0
3
1

Subsequent measurement

Financial assets held at FVTPL are subsequently measured at fair value. Net gains and losses, 
including any interest, dividend income or movements in provisionally priced sales agreements, are 
recognised in the Consolidated Income Statement. 

Forward exchange contracts and interest rate swaps held for hedging purposes are accounted for as 
either cash flow or fair value hedges. Any derivative instrument fair value change that does not qualify 
for hedge accounting is recognised immediately in the Consolidated Income Statement. 
Financial assets held at amortised cost are subsequently measured at amortised cost using the 
effective interest method. The amortised cost is reduced by impairment losses. Interest income, 
foreign exchange gains and losses and impairments are recognised in the Consolidated Income 
Statement. Any gain or loss on derecognition is recognised in the Consolidated Income Statement.
Investments in equity instruments designated as FVOCI are subsequently measured at fair value. 
Dividends are recognised as income in the Consolidated Income Statement unless the dividend clearly 
represents a recovery of part of the cost of the investment. Other net gains and losses are recognised 
in other comprehensive income and are not reclassified to the Consolidated Income Statement.

The measurement of fair value of financial assets is based on quoted market prices in active markets for identical assets. Where 
no price information is available from a quoted market source, alternative market mechanisms or recent comparable transactions, 
fair value is estimated based on the Group’s views on relevant future prices, net of valuation allowances to accommodate liquidity, 
modelling, credit and other risks implicit in such estimates.

(iii)  Financial liabilities: Classification and subsequent measurement
Financial liabilities are classified as FVTPL, financial guarantee contracts or as measured at amortised cost. A financial liability is 
classified as FVTPL if it is classified as held for trading, it is a derivative, or it is designated as such on initial recognition. Financial 
liabilities held at FVTPL are measured at fair value, and net gains and losses, including any interest expense, are recognised in the 
Consolidated Income Statement. Financial guarantee contracts are initially measured at fair value and subsequently measured at the 
higher of the expected credit loss and the amount initially recognised less the cumulative amount of guarantee fee income recognised, 
with changes in value recognised in the Consolidated Income Statement. Other financial liabilities are subsequently measured at 
amortised cost using the effective interest method. Interest expense and foreign exchange gains or losses are recognised in the 
Consolidated Income Statement. Any gain or loss on derecognition is also recognised in the Consolidated Income Statement.

(iv)  Embedded derivatives
A derivative embedded within a hybrid contract, with a financial liability or non-financial host, is separated from the host and accounted 
for as a separate derivative if: the economic characteristics and risks are not closely related to the host; a separate instrument with the 
same terms as the embedded derivative would meet the definition of a derivative; and the hybrid contract is not measured at FVTPL. 
Embedded derivatives are measured at fair value with changes in fair value recognised in the Consolidated Income Statement. 

A derivative embedded within a hybrid contract containing a financial asset host is not accounted for separately. The financial asset 
host together with the embedded derivative is required to be classified in its entirety as a financial asset held at FVTPL.

(v)  Derecognition

Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights 
to receive the contractual cash flows in a transaction in which substantially all risks and rewards of ownership of the financial asset are 
transferred. Any interest in such derecognised financial asset that is created or retained by the Group is reported as a separate asset or 
liability.

Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. The Group also 
derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in 
which case a new financial liability based on the modified terms is recognised at fair value.

South32 Annual Report 2021Financial Report19.  Financial assets and financial liabilities continued
(b)  Accounting classification and fair value continued
The following table presents the financial assets and liabilities by class at their carrying amounts which approximates their fair value:

30 June 2021

US$M

Financial assets 
Cash and cash equivalents 
Trade and other receivables(1)
Loans to equity accounted investments
Other financial assets:

Derivative contracts 
Other investments – held at FVTPL(2)

Total current financial assets 
Trade and other receivables(1)
Loans to equity accounted investments
Other financial assets:

Investments in equity instruments – designated as 
FVOCI

Total non-current financial assets
Total financial assets
Financial liabilities
Trade and other payables(3)
Lease liabilities
Unsecured other
Other financial liabilities:
Derivative contracts

Total current financial liabilities 
Trade and other payables
Lease liabilities
Unsecured other
Total non-current financial liabilities
Total financial liabilities

Note

Held at FVTPL

Designated  
as FVOCI

Amortised  
cost

Financial 
guarantee 
contracts

16
9
9

9
9

14
17
17

14
17
17

-
120
-

9
6
135
-
-

-
-
135

18
-
-

11
29
-
-
-
-
29

-
-
-

-
-
-
-
-

121
121
121

-
-
-

-
-
-
-
-
-
-

1,613
365
10

-
-
1,988
10
187

-
197
2,185

734
37
371

-
1,142
2
650
149
801
1,943

-
-
-

-
-
-
-
-

-
-
-

15
-
-

-
15
-
-
-
-
15

Total

1,613
485
10

9
6
2,123
10
187

121
318
2,441

767
37
371

11
1,186
2
650
149
801
1,987

1
3
1

(1)  Excludes current input taxes of US$32 million and non-current input and other taxes of US$62 million included in other receivables. Refer to note 9 Trade and other receivables.
(2)  Other investments - held at FVTPL include US$6 million which is restricted by legal or contractual arrangements.
(3)   Excludes current input taxes of US$10 million included in other creditors. Refer to note 14 Trade and other payables.

South32 Annual Report 2021Financial ReportNotes to financial statements – Capital structure and financing continued

19.  Financial assets and financial liabilities continued
(b)  Accounting classification and fair value continued

30 June 2020

US$M

Financial assets 
Cash and cash equivalents 
Trade and other receivables(1)
Loans to equity accounted investments
Other financial assets:

Derivative contracts 

Total current financial assets 
Trade and other receivables(1)(2)
Loans to equity accounted investments
Interest bearing loans receivable from joint operations
Other financial assets:

Investments in equity instruments – designated as FVOCI
Other investments – held at FVTPL

Total non-current financial assets
Total financial assets
Financial liabilities
Trade and other payables(3)
Lease liabilities
Unsecured other 
Other financial liabilities:
Derivative contracts

Total current financial liabilities 
Trade and other payables
Lease liabilities
Unsecured other 
Total non-current financial liabilities
Total financial liabilities

2
3
1

Note

Held at FVTPL

FVOCI Amortised cost

Total

Designated as 

16
9
9

9
9
9

14
17
17

14
17
17

-
80
-

19
99
-
-
-

-
113
113
212

-
-
-

1
1
-
-
-
-
1

-
-
-

-
-
-
-
-

59
-
59
59

-
-
-

-
-
-
-
-
-
-

1,315
393
15

-
1,723
6
177
26

-
-
209
1,932

621
42
313

-
976
3
609
53
665
1,641

1,315
473
15

19
1,822
6
177
26

59
113
381
2,203

621
42
313

1
977
3
609
53
665
1,642

(1)  Excludes current input taxes of US$43 million and non-current input taxes of US$33 million included in other receivables. Refer to note 9 Trade and other receivables.
(2)  Excludes a reimbursable right asset in relation to the closure and rehabilitation provision at SAEC of US$61 million included in other receivables. Refer to note 9 Trade and other 

receivables.

(3)  Excludes input taxes of US$6 million included in other creditors. Refer to note 14 Trade and other payables.

Measurement of fair value
The following table shows the Group’s financial assets and liabilities carried at fair value with reference to the nature of valuation inputs 
used:

Level 1  Valuation is based on unadjusted quoted prices in active markets for identical financial assets and liabilities.

Level 2 

 Valuation is based on inputs (other than quoted prices included in Level 1) that are observable for the financial asset or liability, 
either directly (i.e. as unquoted prices) or indirectly (i.e. derived from prices).

Level 3  Valuation includes inputs that are not based on observable market data.

30 June 2021

US$M

Financial assets and liabilities
Trade and other receivables
Trade and other payables
Derivative contract assets
Derivative contract liabilities
Investments in equity instruments – designated as FVOCI
Other investments – held at FVTPL
Total 

30 June 2020

US$M

Financial assets and liabilities
Trade and other receivables
Derivative contract assets
Derivative contract liabilities
Investments in equity instruments – designated as FVOCI
Other investments – held at FVTPL
Total 

Level 1

Level 2

Level 3

Total

-
-
9
(11)
55
-
53

120
(4)
-
-
-
6
122

-
(14)
-
-
66
-
52

120
(18)
9
(11)
121
6
227

Level 1

Level 2

Level 3

Total

-
11
(1)
32
-
42

80
-
-
-
113
193

-
8
-
27
-
35

80
19
(1)
59
113
270

South32 Annual Report 2021Financial Report19.  Financial assets and financial liabilities continued
(b)  Accounting classification and fair value continued

Level 3 financial assets and liabilities 
The following table shows the movements in the Group’s Level 3 financial assets and liabilities:

US$M

At the beginning of the financial year
Addition of financial assets/(liabilities)
Realised gains/(losses) recognised in the Consolidated Income Statement(1)
Unrealised gains/(losses) recognised in the Consolidated Income Statement(1)
Unrealised gains/(losses) recognised in the Consolidated Statement of Comprehensive Income(2)
At the end of the financial year

(1)  Recognised in expenses excluding net finance costs in the Consolidated Income Statement.
(2)  Recognised in the financial assets reserve in the Consolidated Statement of Comprehensive Income.

FY21

35
(14)
(8)
-
39
52

FY20

189
-
(120)
15
(49)
35

Sensitivity analysis
The carrying amount of financial assets and liabilities that are valued using inputs other than observable market data are calculated 
using appropriate valuation models, including discounted cash flow modelling, with inputs such as commodity prices, foreign exchange 
rates and inflation. The potential effect of using reasonably possible alternative assumptions in these models, based on changes in the 
most significant inputs by 10 per cent while holding all other variables constant, is shown in the following table:

30 June 2021

US$M

Financial assets and liabilities
Investments in equity instruments – 
designated as FVOCI(1)

Trade and other payables(1)

Total 

Carrying 
amount

Significant inputs

10% increase in 
input

10% decrease 
in input

10% increase in 
input

10% decrease 
in input

Profit/(loss) after tax

Other comprehensive income, 
net of tax

Alumina price(2)
Aluminium price(2)
Foreign exchange rate(2)
Coal price(3)
Export volumes(3)

66

(14)
52

-

12
12

-

(8)
(8)

35

-
35

(39)

-
(39)

1
3
3

(1)  Sensitivity analysis is performed assuming all inputs are directionally moving unfavourably and favourably.
(2)  Aluminium and alumina prices are comparable to market consensus forecasts and foreign exchange rates are aligned with forward market rates.
(3)  Coal prices are comparable to market consensus forecasts and export volumes are based on future production estimates.

30 June 2020 

US$M

Financial assets and liabilities
Derivative contracts 

Investments in equity instruments – 
designated as FVOCI

Total 

Carrying 
amount

Significant inputs

10% increase in 
input

10% decrease 
in input

10% increase in 
input

10% decrease 
in input

Profit/(loss) after tax

Other comprehensive income, 
net of tax

Aluminium price 
Foreign exchange rate
Electricity price
Alumina price
Aluminium price 
Foreign exchange rate

8

27
35

(3)

-
(3)

3

-
3

-

34
34

-

(37)
(37)

(c)  Capital management 
The Group allocates capital in line with its strategy and capital management framework. The Group’s priorities for cash flow are to:

 – Maintain safe and reliable operations and an investment grade credit rating through the cycle;

 – Distribute a minimum of 40 per cent of Underlying earnings as dividends to shareholders following each six month reporting period; 

and

 – Maximise total shareholder returns through other alternatives including special dividends, share buy-backs and high return 

investment opportunities which compete for capital.

South32 Annual Report 2021Financial ReportNotes to financial statements – Capital structure and financing continued

20.  Share capital

Share capital
At the beginning of the financial year
Shares bought back and cancelled
At the end of the financial year 
Treasury shares
At the beginning of the financial year
Sale/(purchase) of shares by ESOP Trusts
Employee share awards vested
At the end of the financial year

FY21

FY20

Shares

US$M

Shares

US$M

4,846,267,883
(171,729,870)
4,674,538,013

(22,495,193)
262,531
10,556,477
(11,676,185)

13,943
(346)
13,597

5,005,503,575
(159,235,692)
4,846,267,883

(49)
3
24
(22)

(40,483,171)
(13,118,707)
31,106,685
(22,495,193)

14,212
(269)
13,943

(105)
(23)
79
(49)

Shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion to the number of shares 
held. On a show of hands every holder of shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each 
share is entitled to one vote.

Incremental costs directly attributable to the issue of shares, net of any income tax effects, are recognised as a deduction from equity. 

4
3
1

South32 Annual Report 2021Financial ReportNotes to financial statements – Other notes

21.  Auditor’s remuneration
The auditor of the Group is KPMG. 

US$’000

Fees payable to the Group’s auditor for assurance services 
Audit and review of financial statements
Other assurance services(1)
Total auditor’s remuneration

(1)  Mainly comprises assurance in respect of the Group’s sustainability reporting.

FY21

 FY20

4,452
550
5,002

4,116
580
4,696

22.  Pension and other post-retirement obligations
The Group operates or participates in a number of pension (including superannuation) schemes throughout the world. The funding of 
the schemes complies with local regulations. The assets of the schemes are generally held separately from those of the Group and are 
administered by trustees or management boards. Post the divestment of SAEC, the Group continues to operate one post-retirement 
medical scheme in South Africa. Full actuarial valuations are prepared for the schemes.

Defined contribution pension schemes 
The Group contributed US$76 million (FY20: US$73 million) to defined contribution plans and multi-employer defined contribution plans. 
These contributions are expensed as incurred.

Defined benefit pension schemes (closed schemes)
At 30 June 2021 the Group had defined benefit obligations of US$68 million (FY20: US$67 million) and defined benefit scheme assets 
with a fair value of US$54 million (FY20: US$61 million) with a net liability recognised in the Consolidated Balance Sheet of US$14 million 
(FY20: US$6 million).

The fair value of scheme assets by major asset class is as follows:

Asset class

US$M

Bonds(1) 
Equities
Cash and cash equivalents
Other(2) 
Total

 Fair value

FY21

FY20

38
6
4
6
54

39
7
8
7
61

1
3
5

(1)  Comprises Fixed Interest Government bonds of US$9 million (FY20: US$8 million), Index Linked Government bonds of US$22 million (FY20: US$21 million) and Corporate bonds 

of US$7 million (FY20: US$10 million).

(2)  Primarily comprises of property and alternative investments in Australia.

Defined benefit post-retirement medical schemes (closed schemes)
At 30 June 2021 the Group had post-retirement medical scheme obligations of US$27 million (FY20: US$71 million). The post-retirement 
medical scheme is unfunded. 

Weighted average maturity profile of schemes 
The weighted average duration of the defined benefit obligations are 9 years (FY20: 9 years) and 10 years (FY20: 11 years) for the 
defined benefit pension schemes and post-retirement medical scheme respectively. 

Risks associated with defined benefit pension and post-retirement medical schemes 
The Group’s defined benefit pension and post-retirement medical schemes expose the Group to the risks pertaining to asset value 
volatility, uncertainty in future benefit payments and uncertainty in future contribution requirements.

South32 Annual Report 2021Financial ReportNotes to financial statements – Other notes continued

23.  Employee share ownership plans
At 30 June 2021 the Group had the following employee share ownership arrangements:

Awards granted to Lead Team members(1) 

Long-Term Incentive Plan
Deferred Short-Term Incentive Plan
Executive Transitional Award Plan
Management Share Plan

FY18, FY19, FY20, FY21
FY19, FY20
FY19, FY20, FY21
FY21

(1)  Awards granted on 13 December 2017, 7 December 2018, 6 December 2019 and 4 December 2020.

Awards granted to eligible employees(1)

Management Share Plan
AllShare Plan
Management Transitional Award Plan

FY18, FY19, FY20, FY21
2018, 2019, 2020
FY18, FY19, FY20

(1)    Awards granted on 13 November 2017, 7 May 2018, 7 December 2018, 17 May 2019, 6 December 2019, 15 May 2020, 4 December 2020, 7 December 2020 and 6 May 2021.

All awards take the form of rights to receive one share in South32 Limited for each right granted, subject to performance and/or service 
conditions being met. A portion of the 2018, 2019 and 2020 AllShare Plan awards (participants located in Colombia and Mozambique) 
take the form of rights to receive a cash payment equivalent to the value of South32 Limited shares at the time of payment. Employees 
in Africa are granted rights on the JSE and all other employees are granted rights on the ASX.

Performance conditions are based on the Group’s Total Shareholder Return (TSR) measured separately against two comparator indices 
over the performance period as follows: 

 – One third of performance rights are measured against the Morgan Stanley Capital International (MSCI) World Index; and 

 – Two thirds of performance rights are measured against the IHS Markit Global Mining Index. 

Performance rights vest when the Group’s TSR equals or outperforms the comparator index. Full vesting of performance rights occur 
if the Group’s TSR outperforms both indices by at least 23.9 per cent (5.5 per cent per annum cumulative) over four years. To the extent 
that the performance conditions are not met, awards lapse and no retesting is performed.

Awards do not confer any dividend or voting rights until they convert into shares at vesting. In addition, the awards do not confer any 
rights to participate in a share issue, however, there is discretion under the plans to adjust the awards in response to a variation in 
South32 Limited’s share capital. 

The AllShare JSE plan is eligible to receive a payment equal to the dividend amount that would have been earned on the underlying 
shares awarded to those participants (Dividend Equivalent Payment). The Dividend Equivalent Payment is made to participants once the 
underlying shares are issued or transferred to them. No Dividend Equivalent Payment is made in respect of awards that have lapsed or 
have been forfeited. No other awards are eligible for a Dividend Equivalent Payment.

6
3
1

(a)  Description of share-based payment arrangements

(i)  Recurring share-based payment plans
The awards listed below are subject to the general conditions noted above and may be granted annually subject to approval by 
shareholders at the annual general meeting for awards to the CEO and by the Board of Directors for all other awards. 

FY18, FY19, FY20 and FY21 Long-Term Incentive Plan

The Long-Term Incentive Plan is the Group’s long-term incentive plan for Lead Team members. During the year Jason Economidis, as 
acting Chief Operating Officer, participated in the Management Share Plan and not the Long-Term Incentive Plan.

Awards have a four year performance period from 1 July 2017 to 30 June 2021, 1 July 2018 to 30 June 2022, 1 July 2019 to 30 June 2023 
and 1 July 2020 to 30 June 2024, respectively. 

The FY21 Long-Term Incentive Plan award granted to the CEO is subject to a specific vesting cap imposed by the Board of Directors. For 
other Lead Team members, the Board of Directors retains the discretion to apply a vesting cap to limit the value of the rights which may 
vest in the ordinary course.

FY19 and FY20 Deferred Short-Term Incentive Plan

The Deferred Short-Term Incentive Plan is the Group’s short-term incentive plan for Lead Team members including Jason Economidis. 
FY19 and FY20 Deferred Short-Term Incentive Plan Awards vest in August 2021 and August 2022 respectively, provided participants 
remain employed by the Group. 

FY18, FY19, FY20 and FY21 Management Share Plan 

The FY18, FY19, FY20 and FY21 Management Share Plan is the Group’s long-term incentive plan for eligible employees below the Lead 
Team. The Management Share Plan comprises two elements: 

 – Retention rights vesting in August 2021, August 2022 and August 2023 provided participants remain employed by the Group; and 

 – Performance rights vesting in August 2021, August 2022, August 2023 and August 2024 subject to performance conditions. 

For the FY21 Management Share Plan awards, the Board of Directors retains the discretion to apply a vesting cap to limit the value of 
the rights which may vest in the ordinary course. 

South32 Annual Report 2021Financial Report23.  Employee share ownership plans continued
(a)  Description of share-based payment arrangements continued

(i)  Recurring share-based payment plans continued

2018, 2019 and 2020 AllShare Plan 

The 2018, 2019 and 2020 AllShare Plan is the Group’s employee share plan for employees not eligible to participate in the other 
employee share plans. Awards to the value of at least US$1,250 per employee are granted annually. Awards will vest provided 
participants remain employed by the Group. The vesting period depends on the participants’ location at the grant date:

 – Participants in Africa: August 2021, August 2022 and August 2023; and

 – Participants elsewhere: August 2021 and August 2022.

(ii)  Transitional share-based payment plans 
The awards listed below are subject to the general conditions noted above and are either one-off or will not be granted on an ongoing 
basis.

FY19, FY20 and FY21 Executive Transitional Award Plan

The FY19, FY20 and FY21 Executive Transitional Award Plan is a one-off grant made to Lead Team members in recognition of their 
adjustment from the Management Share Plan (three year retention rights and four year performance rights) to the four year plan at the 
Group. Awards have a three year performance period from 1 July 2018 to 30 June 2021, 1 July 2019 to 30 June 2022 and 1 July 2020 to 
30 June 2023, respectively. 

FY18, FY19 and FY20 Management Transitional Award Plan 

The FY18, FY19 and FY20 Management Transitional Award Plan is a grant made to certain eligible employees to bridge the gap between 
their total target reward at BHP and their total target reward at the Group. FY20 was the last year in which transition awards were made. 
The FY18, FY19 and FY20 Management Transitional Award Plan has the same conditions as the FY18, FY19 and FY20 Management 
Share Plan and comprises both service and performance conditions.

(b)  Modifications to share-based payment arrangements
As a result of the divestment of TEMCO and SAEC, adjustments were made to unvested awards. The Group has amended the service 
period for the 2018 and 2019 AllShare awards granted to participants impacted by the divestments and accelerated the vesting of all 
awards. The SAEC employees who participated in the 2018 and 2019 AllShare plans received a cash payment, inclusive of a Dividend 
Equivalent Payment, based on the share price of the South32 Limited shares they would have received shortly before divestment. For 
the FY18, FY19 and FY20 Management Share Plans, the retention rights were vested at divestment on a pro-rata basis determined by 
service between the start and end of the performance period. Performance rights were partially lapsed at divestment on a pro-rata 
basis determined by service not performed between the start and end of the performance period. The remaining rights on foot are to 
be performance tested against TSR metrics at the end of the relevant performance period. 

1
3
7

(c)  Employee Share Ownership Plan Trusts
The South32 Limited Employee Incentive Plans Trust (the Australian Trust) and the South32 South African AllShare Trust (the South 
African Trust) are discretionary trusts for the benefit of employees of South32 Limited and its subsidiaries.

The trustee for the Australian Trust (CPU Share Plans Pty Ltd) is an independent company, resident in Australia. The trustees for the 
South African Trust are made up of employer and employee representatives per the B-BBEE requirements under South African law. The 
Trusts use funds provided by South32 Limited and/or its subsidiaries to acquire shares to enable awards to be made or satisfied under 
the Group employee share ownership plans.

The shares may be acquired by purchase in the market or by subscription at not less than nominal value. 

(d)  Measurement of fair values
The fair value at grant date of equity-settled share awards is charged to the Consolidated Income Statement, net of tax, over the period 
for which the benefits of employee services are expected to be derived. The corresponding accrued employee entitlement is recorded 
in the employee share awards reserve.

Where awards are forfeited because non-market based vesting conditions are not satisfied, the expense previously recognised is 
proportionally reversed. If awards do not vest due to a market performance condition not being met, the expense is recognised in 
full and the share awards reserve is released to retained earnings. Where awards are waived because the participant voluntarily 
relinquishes their right to receive shares, any expense not yet recognised for the awards are recognised immediately and the accrued 
employee entitlement previously recognised in the employee share awards reserve is released to retained earnings. Where shares in 
South32 Limited are acquired by on-market purchases prior to settling the vested entitlement, the cost of the acquired shares is carried 
as treasury shares and deducted from equity. Where awards are satisfied by delivery of acquired shares, any difference between their 
acquisition cost and the cumulative remuneration expense recognised is charged directly to retained earnings, net of tax. 

South32 Annual Report 2021Financial ReportNotes to financial statements – Other notes continued

23.  Employee share ownership plans continued
(d)  Measurement of fair values continued
The fair value of performance rights is measured using a Monte Carlo methodology. This model considers the following:

 – Expected life of the award;

 – Current market price of the underlying shares;

 – Expected volatility (of the individual company and of each peer group);

 – Expected dividends;

 – Risk-free interest rate; and

 – Market based performance hurdles.

The fair value of retention rights is measured using a Black Scholes methodology. This model considers the following: 

 – Expected life of the award;

 – Current market price of the underlying shares;

 – Expected volatility;

 – Expected dividends; and

 – Risk-free interest rate.

The inputs used in the measurement of the fair values at grant date of the equity-settled share-based payments plans were as follows:

Year ended

30 June 2021

Fair value  
at grant date 
(US$)(1)

Share price  
at grant date 
(US$)

Expected  
volatility 
(%)(2)

Expected life  
(in years)(1)

Risk-free interest 
rate based on 
government bonds 
(%)(1) 

Recurring plans
FY21 Long-Term Incentive Plan(3) 
FY20 Deferred Short-Term Incentive Plan(3)
FY21 Management Share Plan - Retention rights(4) 
FY21 Management Share Plan - Performance rights(4) 
2020 AllShare Plan(3) 
Transitional plans
FY21 Executive Transitional Award Plan(3)

8
3
1

0.88 – 0.97
1.76
1.69 – 1.74
0.97 – 1.01
1.76 – 1.89

1.94
1.94
1.94 – 1.95
1.94 – 1.95
1.94 – 1.95

0.98

1.94

35
35
35
35
35

35

4
2
3
4
2 – 3

3

0.25
0.07
0.16 – 5.17
0.25 – 5.77
0.07 – 5.17

0.16

(1)  Represents the range of grant date fair values, expected life, and risk-free interest rates based on the amount of rights granted on the ASX or the JSE during the year, and the 
variations in offer terms and grant dates of each plan where applicable. The risk-free interest rate and expected volatility does not materially impact service based awards.

(2)  Expected volatility is based on the historical South32 Limited share price volatility at the grant date.
(3)  Grant date 4 December 2020.
(4)  Grant date 4 December 2020, 7 December 2020 and 6 May 2021. 

Year ended

30 June 2020

Recurring plans
FY20 Long-Term Incentive Plan
FY19 Deferred Short-Term Incentive Plan
FY20 Management Share Plan - Retention rights
FY20 Management Share Plan - Performance rights
2019 AllShare Plan
Transitional plans
FY20 Executive Transitional Award Plan
FY20 Management Transitional Award Plan

Fair value  
at grant date 
 (US$)

Share price  
at grant date 
 (US$)

Expected 
 volatility 
 (%)

Expected life  
(in years)

Risk-free interest 
rate based on 
government bonds 
(%) 

0.63
1.68
1.58 – 1.61
0.63
1.68 – 1.76

0.58
0.63 – 1.61

1.73
1.73
1.73
1.73
1.73

1.73
1.73

30
30
30
30
30

30
30

4
2
3
4
2 – 3

3
3 – 4

0.77
0.75
0.70 – 7.33
0.77 – 7.60
0.75 – 7.33

0.70
0.70 – 7.60

South32 Annual Report 2021Financial Report23.  Employee share ownership plans continued
(e)  Reconciliation of outstanding share awards
None of the awards listed below have an exercise price or are exercisable at 30 June 2021.

Number of Rights

Recurring plans
FY17 Long-Term Incentive Plan
FY18 Long-Term Incentive Plan
FY19 Long-Term Incentive Plan 
FY20 Long-Term Incentive Plan
FY21 Long-Term Incentive Plan
FY18 Deferred Short-Term Incentive Plan
FY19 Deferred Short-Term Incentive Plan
FY20 Deferred Short-Term Incentive Plan
FY17 Management Share Plan - Performance rights
FY18 Management Share Plan - Retention rights
FY18 Management Share Plan - Performance rights
FY19 Management Share Plan - Retention rights(1)
FY19 Management Share Plan - Performance rights(1)
FY20 Management Share Plan - Retention rights(1) 
FY20 Management Share Plan - Performance rights(1)
FY21 Management Share Plan - Retention rights 
FY21 Management Share Plan - Performance rights
2017 AllShare Plan(1)
2018 AllShare Plan(1)
2019 AllShare Plan(1)
2020 AllShare Plan

Transitional plans
FY18 Executive Transitional Award Plan
FY19 Executive Transitional Award Plan
FY20 Executive Transitional Award Plan
FY21 Executive Transitional Award Plan
FY17 Management Transitional Award Plan
FY18 Management Transitional Award Plan
FY19 Management Transitional Award Plan
FY20 Management Transitional Award Plan
FY19 Sign-on Award Plan
Total awards

(1)  Retrospective grants related to prior year plans.

Rights at 
beginning of 
the period

Granted during 
the period

Vested during 
the period

Forfeited 
during the 
period

Cancelled 
during the 
period

Rights at end 
of the period

7,845,617
5,766,758
4,906,971
6,365,727
-
1,131,116
1,519,690
-
10,168,647
2,176,175
6,121,556
2,624,957
5,314,766
3,023,809
7,156,355
-
-
3,420,060
5,744,650
9,548,110
-

-
-
-
-
8,221,730
-
-
1,124,803
-
-
-
21,378
53,447
5,091
12,728
3,496,922
8,989,919
1,530
475
37,895
7,068,000

-
-
-
-
-
(1,131,116)
(448,204)
-
-
(2,151,118)
-
(913,157)
-
(657,839)
-
(23,182)
-
(3,417,000)
(4,312,525)
(3,614,325)
(68,800)

-
(352,564)
(581,392)
(1,098,061)
-
-
-
-
-
(25,057)
(295,728)
(310,277)
(808,699)
(458,954)
(1,480,416)
(109,490)
(288,245)
(4,590)
(119,700)
(375,375)
(216,800)

(7,845,617)
-
-
-
-
-
-
-
(10,168,647)
-
-
-
-
-
-
-
-
-
-
-
-

-
5,414,194
4,325,579
5,267,666
8,221,730
-
1,071,486
1,124,803
-
-
5,825,828
1,422,901
4,559,514
1,912,107
5,688,667
3,364,250
8,701,674
-
1,312,900
5,596,305
6,782,400

245,840
81,967
129,283
-
1,644,776
829,372
352,603
210,299
257,000
86,586,104

-
-
-
154,702
-
-
-
-
-

-
-
-
-
-
(173,637)
(23,158)
(9,211)
(257,000)
29,188,620 (17,200,272)

(245,840)
-
-
-
-
(33,540)
(44,522)
(57,905)
-
(6,907,155)

-
-
-
-
(1,644,776)
-
-
-
-

-
81,967
129,283
154,702
-
622,195
284,923
143,183
-
(19,659,040) 72,008,257

1
3
9

24. Contingent liabilities
Contingent liabilities not otherwise provided for in the consolidated financial statements are categorised as arising from:

US$M

Actual or potential litigation 
Total contingent liabilities 

FY21

427
427

FY20

409
409

Actual or potential litigation primarily relates to numerous tax assessments or matters relating to transactions in prior years in Colombia 
and Brazil. Additionally, there are a number of legal claims or potential claims against the Group, the outcome of which cannot be 
foreseen at present, and for which no amounts have been disclosed.

Prior to the Demerger, the Group entered into a Separation Deed with BHP, which deals with matters arising in connection with the 
Demerger. The Separation Deed principally covers the following key terms: assumption of liabilities, limitations and exclusions from 
indemnities and claims, contracts, financial support, Demerger costs and litigation. Actual or potential litigation excludes amounts 
indemnified by BHP, as per the Separation Deed.

The Group has entered into various counter-indemnities of bank and performance guarantees related to its own future performance, 
which are in the normal course of business. Additionally, the Group has provided indemnities against certain liabilities as part of 
agreements for the disposal of business operations. Having taken appropriate legal advice, the Group believes that a material liability 
arising from the indemnities provided is remote.

South32 Annual Report 2021Financial ReportNotes to financial statements – Other notes continued

25.  Subsidiaries
Significant subsidiaries of the Group, which are those with the most significant contribution to the Group’s net profit/(loss) or net assets, 
are as follows: 

Significant subsidiaries 

Country of incorporation 

Principal activity

African Metals Pty Ltd
Arizona Minerals Inc.
Cerro Matoso SA
Dendrobium Coal Pty Ltd
Endeavour Coal Pty Ltd
Hillside Aluminium Pty Ltd
Illawarra Coal Holdings Pty Ltd
Illawarra Services Pty Ltd
South32 Aluminium (Holdings) Pty Ltd
South32 Aluminium (RAA) Pty Ltd
South32 Aluminium (Worsley) Pty Ltd
South32 Cannington Pty Ltd 
South32 Eagle Downs Pty Ltd
South32 Group Operations Pty Ltd
South32 Investment 1 B.V.
South32 Marketing Pte Ltd
South32 Minerals SA
South32 SA Coal Holdings Pty Ltd(1)
South32 SA Investments Ltd
South32 SA Ltd
South32 Treasury Ltd
South32 USA Exploration Inc.

South Africa
United States
Colombia
Australia
Australia
South Africa
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Netherlands
Singapore
Brazil
South Africa
United Kingdom
South Africa
Australia
United States

Investment holding company
Exploration and development
Ferronickel mining and smelting
Coal mining
Coal mining
Aluminium smelting
Investment holding company
Coal preparation plant
Investment holding company
Interest in a joint operation
Interest in a joint operation
Silver, lead and zinc mining
Interest in a joint operation
Administrative services
Interest in a joint operation
Commodity marketing and trading
Interest in a joint operation
Coal mining
Investment holding company
Administrative services
Financing company
Exploration

Effective interest %

FY21

100
100
99.9
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100

FY20

100
100
99.9
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100

0
4
1

(1)  On 1 June 2021, the Group completed the sale of its shareholding in SAEC to Seriti and two trusts for the benefit of employees and communities. Refer to note 31 Discontinued 

operation.

Subsidiaries are entities controlled by the parent entity. Control exists where the parent entity is exposed or has rights to variable 
returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. A 
parent entity has power over the subsidiary, when it has existing rights to direct the relevant activities of the subsidiary which are those 
which significantly affect the subsidiary’s returns. The financial statements of subsidiaries are included in the consolidated financial 
statements for the period they are controlled. 

26.  Equity accounted investments
The Group’s interests in equity accounted investments with the most significant contribution to the Group’s net profit/(loss) or net 
assets, are as follows: 

Significant  
joint ventures 

Australia 
Manganese(1)(2)
South Africa 
Manganese(1)(4)

Country  
of incorporation

Australia

South Africa

Principal activity

Reporting date 

Acquisition date 

FY21

FY20

Integrated producer of 
manganese ore and alloy(3)
Integrated producer of 
manganese ore and alloy(5)

30 June 2021

8 May 2015

30 June 2021

3 February 2015

60

60

60

60

(1)  While the Group holds a greater than 50 per cent interest in the joint ventures, joint control is contractually achieved as joint venture parties unanimously consent on decisions 

over the joint venture’s relevant activities. 

(2)  Australia Manganese consists of an investment in GEMCO. 
(3)  On 4 January 2021, GEMCO legally completed the sale of its shareholding in TEMCO.
(4)  South Africa Manganese consists of an investment in Samancor Holdings Pty Ltd.
(5)  The Metalloys manganese alloy smelter has not recommenced production since the Group’s decision with its joint venture partner to place it on care and maintenance during 

the year ended 30 June 2020.

Ownership interest %

A reconciliation of the carrying amount of the equity accounted investments is set out below:

Investment in equity accounted investments

US$M

At the beginning of the financial year
Share of profit/(loss)(1)(2)
Other comprehensive income/(loss), net of tax
Dividends received from equity accounted investments
Disposal of a discontinued operation(3)
At the end of the financial year

FY21

460
133
(3)
(197)
(13)
380

FY20

688
100
21
(349)
-
460

(1)  Includes earnings adjustments of US$15 million (FY20: US$108 million). Refer to note 4(b)(i) Earnings adjustments. 
(2)  Includes a share of profit/(loss) relating to a discontinued operation of (US$8) million (FY20: US$7 million). Refer to note 31 Discontinued operation.
(3)  Refer to note 31 Discontinued operation.

South32 Annual Report 2021Financial Report26.  Equity accounted investments continued

Carrying amount of equity accounted investments 

US$M

Australia Manganese and South Africa Manganese
Individually immaterial(1)
Total 

(1)  Individually immaterial consists of investments in Samancor Marketing Pte Ltd (60 per cent) and Port Kembla Coal Terminal Ltd (16.7 per cent).

Share of profit/(loss) of equity accounted investments

US$M

Australia Manganese and South Africa Manganese
Individually immaterial(1)
Total

FY21

295
85
380

FY21

135
(2)
133

FY20

350
110
460

FY20

88
12
100

(1)  Individually immaterial consists of investments in Samancor Marketing Pte Ltd (60 per cent), Richards Bay Coal Terminal Pty Ltd (21.1 per cent) and Port Kembla Coal Terminal 

Ltd (16.7 per cent). The share of profit/(loss) from Richards Bay Coal Terminal Pty Ltd (US$8) million (FY20: US$7 million) was included in the disposal of a discontinued operation. 
Refer to note 31 Discontinued operation. 

The following table summarises the financial information relating to each significant equity accounted investment:

US$M

Reconciliation of carrying amount of equity accounted investments 
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets – 100%
Net assets – the Group’s share
Consolidation adjustments
Carrying amount of equity accounted investments 
Reconciliation of share of profit/(loss) of equity accounted investments
Revenue – 100%
Profit/(loss) after tax – 100%
Profit/(loss) after tax – the Group’s share
Consolidation adjustments
Share of profit/(loss) of equity accounted investments
Other balances of equity accounted investments presented on a 100% basis
Cash and cash equivalents
Non-current financial liabilities (excluding trade and other payables and provisions)
Depreciation and amortisation
Interest income
Interest expense
Income tax (expense)/benefit (excluding royalty related tax)

Joint ventures

Australia 
Manganese

South Africa 
Manganese(1)

Australia 
Manganese

South Africa 
Manganese(1)

FY21

FY20

271
812
(233)
(673)
177
106
-
106

1,096
192
115
-
115

-
(222)
(133)
-
(23)
(179)

237
539
(89)
(277)
410
190
(1)
189

524
37
20
-
20

26
(28)
(26)
3
(24)
(8)

374
750
(238)
(661)
225
135
-
135

1,163
182
109
1
110

-
(200)
(117)
3
(27)
(157)

1
4
1

287
554
(123)
(264)
454
218
(3)
215

506
(33)
(24)
2
(22)

20
(31)
(39)
20
(23)
(6)

(1)  South Africa Manganese includes a 60 per cent interest in Samancor Manganese Pty Ltd and 54.6 per cent interest in Hotazel Manganese Mines Pty Ltd.

The Group’s share of contingent liabilities and capital expenditure commitments of significant equity accounted investments as at 
30 June 2021 was US$6 million (FY20: US$2 million) and US$18 million (FY20: US$29 million) respectively.

The Group uses the term ‘equity accounted investments’ to refer to associates and joint ventures collectively.

Associates are entities in which the Group holds significant influence. If the Group holds 20 per cent or more of the voting power of an 
entity, it is presumed that the Group has significant influence, unless it can be clearly demonstrated that this is not the case. Significant 
influence can also arise when the Group has less than 20 per cent of the voting power but it can be demonstrated that the Group has 
the power to participate in the financial and operating policy decisions of the associate. Investments in associates are accounted for 
using the equity method. 

Joint ventures are joint arrangements in which the parties with joint control of the arrangement have rights to the net assets of the 
arrangement. Joint arrangements exist when two or more parties have joint control. Joint control is the contractually agreed sharing 
of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the 
parties sharing control. A separate vehicle, not the parties, will have the rights to the assets and obligations to the liabilities, relating to 
the arrangement. If more than an insignificant share of output from a joint venture is sold to third parties, this indicates that the joint 
venture is not dependent on the parties to the arrangement for funding and that the parties to the arrangement have no obligation for 
the liabilities of the arrangement. Joint ventures are accounted for using the equity method. 

South32 Annual Report 2021Financial ReportNotes to financial statements – Other notes continued

26.  Equity accounted investments continued
Equity accounted investments are initially recorded at cost, including the value of any goodwill on acquisition. In subsequent periods, 
the carrying amount of the investment is adjusted to reflect the share of post-acquisition profit or loss and other comprehensive 
income. After application of the equity method, including recognising the Group’s share of the joint ventures’ results, the value of the 
investment will be assessed for impairment if there is objective evidence that an impairment of the investment may have occurred. 
Where the carrying value of an equity accounted investment is reduced to nil after having applied equity accounting principles (and 
the Group has no legal or constructive obligation to make further payments, nor has made payments on behalf of the associate or 
joint venture), dividends received from the associate or joint venture will be recognised as a ‘Share of profit/(loss) of equity accounted 
investments’.

27.  Interests in joint operations
Significant joint operations of the Group, which are those with the most significant contributions to the Group’s net profit/(loss) or net 
assets, are as follows:

Effective interest %

Significant joint operations

Country of operation

Principal activity

Acquisition date

FY21 

FY20

Ambler Metals(1)
Brazil Alumina
Eagle Downs Metallurgical 
Coal
Mozal Aluminium(1)
Worsley Alumina(2)

United States
Brazil

Australia
Mozambique
Australia

Development studies, resource  
drilling and regional exploration
Alumina refining
Metallurgical coal exploration and 
development option
Aluminium smelting
Bauxite mining and alumina refining

11 February 2020
3 July 2014

14 September 2018
27 March 2015
8 May 2015

50
36

50
47.1
86

50
36

50
47.1
86

(1)  This joint arrangement is an incorporated entity. It is classified as a joint operation as the participants are entitled to receive output, not dividends, from the arrangement.
(2)  While the Group holds a greater than 50 per cent interest in Worsley Alumina, participants jointly approve certain matters and are entitled to receive their share of output from 

the arrangement. 

Joint operations are joint arrangements in which the parties with joint control have rights to the assets and obligations for the liabilities 
relating to the arrangement. The activities of a joint operation are primarily designed for the provision of output to the parties to the 
arrangement, indicating that:

 – The parties have the rights to substantially all the output and economic benefits of the assets of the arrangement; and 

 – All liabilities are satisfied by the joint participants through their purchases of that output. This indicates that, in substance, the joint 

participants have an obligation for the liabilities of the arrangement.

2
4
1

The consolidated financial statements of the Group include its share of the assets and liabilities, revenues and expenses arising jointly 
or otherwise from those operations and its revenue derived from the sale of its share of the output from the joint operation. All such 
amounts are measured in accordance with the terms of each arrangement, which are usually in proportion to the Group’s interest in the 
joint operation. 

The assets in these joint operations are restricted to the extent that they are only available to be used by the joint operation itself and 
not by other operations of the Group. For certain joint operations, the Group has also either pledged, mortgaged or provided a cross 
charge to joint operation partners over assets within the joint operation.

28.  Key management personnel
(a)  Key management personnel compensation

US$’000

Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Total

FY21

6,942
182
286
-
4,611
12,021

FY20

5,759
192
268
316
6,664
13,199

(b)  Transactions with key management personnel
There were no transactions with key management personnel during the year ended 30 June 2021 (FY20: US$nil). 

(c)  Loans to key management personnel
On 22 June 2021, the Group made an interest free loan of US$620 thousand to Mike Fraser in relation to his South African income tax 
payable on his Group remuneration. As at 30 June 2021, the full loan remains outstanding and there is no maturity date for this loan. 
There are no other loans with any key management personnel (FY20: US$nil). Refer to the Remuneration report for further details.

(d)  Transactions with key management personnel related entities
There were no transactions with entities controlled or jointly controlled by key management personnel and there were no outstanding 
amounts with those entities as at 30 June 2021 (FY20: US$nil).

South32 Annual Report 2021Financial Report29.  Related party transactions
(a)  Parent entity
The ultimate parent entity of the Group is South32 Limited, which is domiciled and incorporated in Australia. 

(b)  Subsidiaries, joint ventures and associates 
The interests in subsidiaries, joint ventures and associates are disclosed in notes 25 to 26.

(c)  Key management personnel 
The compensation of, and loans to, key management personnel are disclosed in note 28.

(d)  Pension and other post-retirement obligations 
The pension and other post-retirement obligations are disclosed in note 22.

(e)   Transactions with related parties 

Transactions with related parties

US$’000

Sales of goods and services 
Purchases of goods and services 
Interest income
Dividend income
Interest expense
Increase/(decrease) in short-term financing arrangements with related parties
Increase/(decrease) in loans with related parties

Outstanding balances with related parties

US$’000

Trade amounts owing to related parties
Other amounts owing to related parties(1)
Trade amounts owing from related parties
Loan amounts owing from related parties(2)(3)

 Joint ventures

Associates

FY21

239,670
2
4,912
197,164
1,816
1,000
10,800

FY20

205,880
-
7,814
348,664
7,593
(14,855)
35,965

FY21

4,148
51,489
-
-
-
-
(5,759)

 Joint ventures

Associates

FY21

206
285,000
31,539
130,800

FY20

549
284,000
57,901
120,000

FY21

176
-
318
66,656

FY20

3,126
80,887
197
-
-
-
(15,864)

FY20

161
-
422
72,415

(1)  Other amounts owing to joint ventures relate to short-term deposits and cash managed by the Group on behalf of its equity accounted investments. Interest is paid based on 

the three month London Inter-Bank Offer Rate less a margin of 0.125 per cent and the one month Johannesburg Inter-Bank Agreed Rate.

(2)  Loan amounts owing from joint ventures include an interest bearing loan to GEMCO which is repayable by 2 January 2024. Interest is paid based on the three month London 

Inter-Bank Offer Rate plus a margin of 3 per cent.

(3)  Loan amounts owing from associates include an interest free loan to Port Kembla Coal Terminal Ltd which is repayable by 30 June 2030. 

1
4
3

Terms and conditions 
Sales to, and purchases from, related parties are transactions at market prices and on commercial terms. 

Outstanding balances at year end are unsecured and settlement mostly occurs in cash. 

No guarantees are provided or received for any related party receivables or payables. 

No expense has been recognised in respect of expected credit losses from related parties in FY21.

South32 Annual Report 2021Financial ReportNotes to financial statements – Other notes continued

30.  Parent entity information
(a)  Summary financial information
The individual financial statements for the parent entity, South32 Limited, show the following aggregate amounts:

US$M

Result of parent entity 
Profit/(loss) after tax for the year
Total comprehensive income
Financial position of parent entity at year end
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Total equity of the parent entity
Share capital
Treasury shares
Other reserves
Profit reserve(1)
Retained earnings/(accumulated losses)
Total equity

FY21

FY20

(818)
(818)

30
10,825
1,003
1,014
9,811

13,597
(17)
28
1,604
(5,401)
9,811

514
514

47
11,579
483
500
11,079

13,943
(34)
58
1,719
(4,607)
11,079

(1)  Prior year profits, net of dividends paid, have been appropriated to a profit reserve for future dividend payments.

(b)  Parent company guarantees
The parent entity has guaranteed a US commercial paper program. The parent entity has also guaranteed a Group revolving credit 
facility of US$1,450 million, which backs the US commercial paper program and remains undrawn as at 30 June 2021. This facility was 
extended in July 2020 by one year and expires in February 2023.

The parent entity is party to a Deed of Support with the effect that the Company guarantees debts in respect of South32 Group 
Operations Pty Ltd.

4
4
1

31.  Discontinued operation
A discontinued operation is a component of the Group’s business that represents a separate major line of business or geographical area 
of operations that has been disposed of or is held for sale. Classification as a discontinued operation occurs upon disposal or when the 
operation meets the criteria to be classified as held for sale, if earlier. When an operation is classified as discontinued, the comparative 
income statement is restated as if the operation had been discontinued from the start of the comparative period.

South Africa Energy Coal
During the 2018 financial year, the Group established SAEC as a standalone business and managed it separately from the rest of the 
Group with tailored functional support, systems and governance processes. On 6 November 2019, the Group announced a binding 
conditional agreement for the sale of its shareholding in SAEC to a wholly-owned subsidiary of Seriti and two trusts which will acquire 
and hold equity on behalf of employees and communities. 

The transaction was subject to a number of material conditions which precluded the classification of SAEC as held for sale until the 
conditions were satisfied on 15 May 2021. On 1 June 2021, the Group completed the sale of its shareholding in SAEC to Seriti and two 
trusts for the benefit of employees and communities. 

The discontinued operation represents the entire SAEC operating segment which consists of: the Khutala colliery, an underground 
bord and pillar mining operation; the Klipspruit colliery, a single dragline multi seam open-cut mine that is combined with a truck and 
shovel mini pit; the Wolvekrans Middelburg Complex (WMC); and other SAEC corporate assets. The WMC consists of the Ifalethu and 
Wolvekrans collieries, which are open-cut mines with a number of active pits and are mined using draglines combined with truck and 
shovel operations.

South32 Annual Report 2021Financial Report31.  Discontinued operation continued
(a)  Results of the discontinued operation

US$M

Revenue

Group production
Third party products and services

Other income
Expenses excluding net finance costs
Loss on disposal of the discontinued operation
Share of profit/(loss) of equity accounted investments
Profit/(loss) from the discontinued operation
Finance expenses
Finance income
Net finance costs
Profit/(loss) before tax from the discontinued operation
Income tax (expense)/benefit
Profit/(loss) after tax from the discontinued operation

FY21

FY20

735
126
861
58
(1,049)
(159)
(8)
(297)
(52)
9
(43)
(340)
3
(337)

822
243
1,065
75
(1,324)
-
7
(177)
(54)
9
(45)
(222)
(1)
(223)

Other comprehensive income:
Gains/(losses) on pension and medical schemes
Income tax (expense)/benefit recognised within other comprehensive income
Total other comprehensive income/(loss) from the discontinued operation attributable to the equity 
holders of South32 Limited

-
-

3
(1)

(337)

(221)

Basic EPS (cents)
Diluted EPS (cents)

(b)  Cash flows from the discontinued operation 

US$M

Net cash flows from operating activities
Net cash flows from investment activities
Net cash flows from financing activities
Net decrease in cash and cash equivalents

(c)  Effect of disposal on the financial position of the Group

US$M

Cash and cash equivalents
Trade and other receivables
Other financial assets
Inventories
Property, plant and equipment
Intangible assets
Equity accounted investments
Trade and other payables
Interest bearing liabilities
Provisions 
Deferred income
Deferred tax liabilities
Decrease in net assets

Consideration received, net of transaction costs, satisfied in cash
Cash and cash equivalents disposed of
Net cash outflow

(7.1)
(7.1)

FY21

(180)
(149)
(3)
(332)

1
4
5

(4.5)
(4.5)

FY20

(58)
(176)
(2)
(236)

FY21

(58)
(235)
(167)
(164)
(623)
(14)
(13)
122
(144)
1,125
1
23
(147)

(12)
(58)
(70)

South32 Annual Report 2021Financial ReportNotes to financial statements – Other notes continued

31.  Discontinued operation continued
(c)  Effect of disposal on the financial position of the Group continued
The Group has committed to provide additional support to underpin the sustainability of the SAEC business under the ownership of 
Seriti. This support includes:

 – Providing US$200 million to fund rehabilitation activity at the SAEC operations, by way of 10 annual instalments with the first  
US$27.5 million payment made in July 2021. The liability is interest free and has been discounted to a net present value of  
US$176 million based on a market equivalent interest rate. The financial liability is included in Interest bearing liabilities and is 
measured at amortised cost; 

 – Entering into a US$50 million facility with a subsidiary of Seriti, that will primarily fund costs to be incurred for the restructure of 

certain loss-making mining areas. The commitment to provide the facility had a fair value of US$14 million on divestment. The loan 
commitment is included in Trade and other payables and is classified as FVTPL. The facility was drawn in full by Seriti on 1 July 2021; 
and

 – Providing a guarantee to support Seriti upon entering into a five year working capital facility of up to US$93 million with a South 

African commercial bank. The commitment to provide the guarantee had a fair value of US$15 million on divestment and includes a 
risked value assigned to security provided by SAEC. The commitment is included in Trade and other payables and is classified as a 
financial guarantee contract.

32.  Subsequent events
On 19 August 2021, the Directors resolved to pay a fully franked final dividend of US 3.5 cents per share (US$164 million) and a fully 
franked special dividend of US 2.0 cents per share (US$93 million) in respect of the 2021 financial year. The dividends will be paid on 
7 October 2021. The dividends have not been provided for in the consolidated financial statements and will be recognised in the 2022 
financial year.

On 19 August 2021, the Group also announced an increase to the existing capital management program, announced on 27 March 2017, 
of US$120 million to a total of US$2.0 billion. This leaves US$252 million expected to be returned by 2 September 2022.

No other matters or circumstances have arisen since the end of the financial year that have significantly affected, or may significantly 
affect, the operations, results of operations or state of affairs of the Group in subsequent accounting periods.

6
4
1

South32 Annual Report 2021Financial ReportDirectors’ declaration 

In accordance with a resolution of the Directors of the Company, we state that:

1.  In the opinion of the Directors:

(a) The consolidated financial statements and notes that are set out on pages 95 to 146 of the Annual Report are in accordance with 

the Corporations Act, including:

(i)  Giving a true and fair view of the Group’s financial position as at 30 June 2021 and of its performance for the year ended on that 

date; and

(ii)  Complying with Australian Accounting Standards and Corporations Regulations 2001.

(b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and 

payable.

2.  The Directors have been given the declarations required by Section 295A of the Corporations Act from the Chief Executive Officer 

and Chief Financial Officer for the financial year ended 30 June 2021.

3.  The Directors draw attention to note 2 to the financial statements on page 100, which includes a statement of compliance with 

International Financial Reporting Standards. 

Signed in accordance with a resolution of the Board of Directors.

Karen Wood 
Chair

Graham Kerr 
Chief Executive Officer and Managing Director

Dated 2 September 2021

1
4
7

South32 Annual Report 2021Financial ReportLead Auditor’s Independence Declaration  
under Section 307C of the Corporations Act 2001

To the Directors of South32 Limited

I declare that, to the best of my knowledge and belief, in relation to the audit of South32 Limited for the financial year ended 30 June 
2021 there have been:

i.  no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

ii.  no contraventions of any applicable code of professional conduct in relation to the audit.

Graham Hogg 
Partner

Perth 
2 September 2021

KPMG

8
4
1

KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG 
International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks 
used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under 
Professional Standards Legislation.

South32 Annual Report 2021Financial ReportIndependent Auditor’s Report

To the shareholders of South32 Limited

Report on the audit of the Financial Report

Opinion

We have audited the Financial Report of South32 Limited (the 
Company).

In our opinion, the accompanying Financial Report of the Company 
is in accordance with the Corporations Act 2001, including: 

•  giving a true and fair view of the Group’s financial position as at 
30 June 2021 and of its financial performance for the year ended 
on that date; and

•  complying with Australian Accounting Standards and the 

Corporations Regulations 2001.

Basis for opinion

The Financial Report comprises: 

•  Consolidated balance sheet as at 30 June 2021
•  Consolidated income statement, Consolidated statement of 

comprehensive income, Consolidated statement of changes in 
equity and Consolidated cash flow statement for the year then 
ended

•  Notes including a summary of significant accounting policies
•  Directors’ declaration.

The Group consists of the Company and the entities it controlled at 
the year-end or from time to time during the financial year.

We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is 
sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report 
section of our report. 

We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting 
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the 
Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with 
the Code.

Key Audit Matters

The Key Audit Matters we identified are:

•  Asset valuation
•  Closure and rehabilitation provision
•  Divestment of South Africa Energy Coal

Key Audit Matters are those matters that, in our professional 
judgement, were of most significance in our audit of the Financial 
Report of the current period. 

These matters were addressed in the context of our audit of the 
Financial Report as a whole, and in forming our opinion thereon, and 
we do not provide a separate opinion on these matters.

1
4
9

KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG 
International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks 
used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under 
Professional Standards Legislation.

South32 Annual Report 2021Financial ReportIndependent Auditor’s Report

Asset valuation

Refer to Note 13 Impairment of non-financial assets and Note 26 Equity Accounted Investments to the Financial Report. As at 30 June 2021 
the Group’s balance sheet includes property, plant and equipment of US$8,938m, intangible assets of US$189m, and equity accounted 
investments of US$380m, which were assessed for impairment purposes as part of their respective cash generating units (CGUs). The 
Group recognised US$772m of impairment expense during the year.

The key audit matter

How the matter was addressed in our audit

Our procedures included:

We assessed management’s view of the indicators leading to 
impairment testing for Illawarra Metallurgical Coal CGU. We 
recalculated the impairment charges to the Illawarra Metallurgical Coal 
CGU and compared to the impairment expense recognised. 

We assessed the integrity and consistency of the models used for 
impairment testing and assessment of impairment or reversal 
indicators on a sample basis, including the accuracy of the underlying 
calculation formulas and consistency of modelling to the prior year. 

We assessed the scope, objectivity and competence of the Group’s 
experts responsible for preparation of the resource and reserve 
estimates and compared these estimates to those incorporated in the 
life of operation and development plans where applicable.

We compared the forecast operating cash flows, production volumes, 
capital expenditure and reserve and resource estimates contained in 
the models to the life of operation and development plans 
incorporating the approved budgets. We assessed the accuracy of the 
Group’s previous forecasts to assist with this assessment. 

Using our knowledge of the Group and our industry experience, and 
considering the Group’s strategy and past performance, we assessed 
the feasibility of the forecast operating cash flows, capital expenditure 
and production volumes. 

Working with our valuation specialists, and considering the risk factors 
specific to the Group, we compared the discount rates to publicly 
available market data for comparable entities. We also compared 
foreign exchange rates to published views of market commentators.

We compared forecast commodity prices to published views of market 
commentators on future trends and long-term supply agreements.

We compared carbon assumptions to locally enacted country specific 
schemes and longer term published industry views. 

We considered the sensitivity of the models by varying key 
assumptions, such as forecast commodity prices, foreign exchange 
rates, carbon pricing and discount rates, within a reasonably possible 
range, to identify those CGUs at higher risk of impairment or reversal 
and to focus our further procedures. 

We assessed the disclosures in the Financial Report using our 
understanding obtained from our testing and against the requirements 
of the accounting standards.

0
5
1

The assessment of the existence of impairment or reversal indicators 
and impairment testing of CGUs, where required, was a key audit 
matter given the size of property, plant and equipment, intangible 
assets and equity accounted investments, and the sensitivity of 
valuations to certain assumptions.

Following the identification of an impairment indicator and subsequent 
impairment testing, the Group recognised an impairment in the 
Illawarra Metallurgical Coal CGU.

Historically the Group has impaired the carrying value of several CGUs 
to recoverable amount. Combined with the volatility in both commodity 
and foreign exchange markets, this increases the sensitivity of the 
carrying value of the Group’s CGUs to potential impairment and 
reversal. 

The Group uses sophisticated models to perform their assessment of 
impairment or reversal indicators and impairment testing, where 
required. Our testing included the one CGU which contains goodwill 
(Hillside Aluminium) and Illawarra Metallurgical Coal for which an 
impairment indicator was identified. The models are developed 
in-house, and use life of operation and development plans, approved 
budgets, and a range of external sources as inputs to the assumptions. 
Complex modelling using forward-looking assumptions tends to be 
prone to greater risk for potential bias, error and inconsistent 
application. These conditions necessitate additional scrutiny by us, in 
particular to address the objectivity of inputs, and their consistent 
application.

We focused on the significant forward-looking assumptions the Group 
applied in their models, including:

• 

• 

forecast commodity prices and foreign exchange rates – the 
current economic climate has resulted in significant volatility in 
forecast commodity prices across the Group. The Group’s models 
are sensitive to small changes in these price assumptions, as 
well as changes to foreign exchange rates, particularly the South 
African Rand and the Australian Dollar, increasing forecasting risk
forecast operating cash flows, production volumes, capital 
expenditure and reserve and resource estimates – these are 
determined by the Group based on historical performance 
adjusted for expected changes or development plans, including 
consideration of regulatory approvals. This drives additional audit 
effort specific to the feasibility of the forecasts and consistency 
with the Group’s strategy

•  discount rates - these are complicated in nature and vary 

according to the conditions and environment the CGUs are subject 
to from time to time

•  carbon price – the Group incorporates carbon price assumptions 

in its modelling based on enacted local schemes and assumptions 
around global longer-term pricing and timing. 

The Group uses fair value less cost of disposal models to assess 
recoverable amount when testing for impairment.

We involved valuation specialists to supplement our senior audit team 
members in assessing this key audit matter.

South32 Annual Report 2021Financial ReportIndependent Auditor’s Report

Closure and rehabilitation provision

Refer to Note 15 Provisions to the Financial Report. As at 30 June 2021 the Group’s balance sheet includes current and non-current closure 
and rehabilitation provisions of US$1,717m.

The key audit matter

How the matter was addressed in our audit

Closure and rehabilitation provisioning was a key audit matter due to 
the size of the provision and the judgement we used to audit the 
provision estimates across the multiple sites the Group operates.

Closure and rehabilitation activities are governed by Group policies 
based on legal and regulatory requirements, which differ across 
multiple jurisdictions.

We focused on the following assumptions the Group applied in 
determining the provisions in accordance with the closure and 
rehabilitation plans:

•  nature and extent of activities required across the multiple 

• 

• 

sites, including the magnitude of possible contamination and 
disturbance, which are inherently challenging to assess
timing of when closure and rehabilitation will take place, which 
increases estimation uncertainty given the unique nature of each 
site and long timeframes involved
forecast cost estimates incorporating historical experience, 
which may not be a reliable predictor of such costs, and risk 
adjustments. The Group engages external experts periodically to 
assist in their determination of these estimates

•  economic assumptions, including country specific discount rates, 

which are complicated in nature.

Our procedures included:

We assessed the scope, objectivity and competence of the Group’s 
internal and external experts to provide rehabilitation cost estimates.

We evaluated key assumptions used in the closure and rehabilitation 
provision, relevant to the jurisdictions of the sites the Group operates, 
by:

•  comparing the nature and extent of activities costed to the 

Group’s closure and rehabilitation plans and relevant regulatory 
requirements

•  comparing the timing of closure and rehabilitation activities to 
the Group’s resources and reserve estimates and the expected 
production profile contained in the life of operation plans

•  comparing a sample of cost estimates of the activities, 

incorporating risk adjustments, to historical experience and 
underlying documentation, the Group’s external expert estimates, 
and against our knowledge of the Group and its industry

•  working with our sustainability closure specialists to assess the 
reasonableness and completeness of closure activities on a 
sample basis

•  working with our valuation specialists, comparing country specific 
discount rate assumptions to market observable data, including 
risk free rates.

Divestment of South Africa Energy Coal

Refer to Note 31 Discontinued Operation to the Financial Report. The effect of disposal on the financial position of the Group was $147m 
and a loss after tax from the discontinued operation of $337m has been recognised for the year ended 30 June 2021.

The key audit matter

How the matter was addressed in our audit

1
5
1

On 6 November 2019, the Group announced an agreement to divest 
its shareholding in South32 SA Coal Holdings Proprietary Limited 
(SAEC) to a whole-owned subsidiary of Seriti Resources Holdings 
Proprietary Limited (Seriti) and two trusts for the benefit of 
employees and communities (jointly referred to as the Purchasers). 

Several regulatory and third-party approvals needed to be satisfied 
prior to completion of the sale. The divestment completed on 1 June 
2021 following satisfaction of these approvals.

The financial results of SAEC are presented as discontinued 
operations in the Financial Report.

As part of the sale agreement the Group has committed to provide 
additional support to the Purchasers, including:

•  US$200 million to fund rehabilitation activity at SAEC operations 

over a period of time

•  US$50m facility to fund restructure costs
•  Guarantee to a working capital facility of up to US$93m with a 

South African commercial bank.

The fair value of these financial assets and liabilities were 
recognised as part of the net assets and liabilities disposed of.

The divestment is considered a key audit matter due to the:

• 
• 

• 

financial significance of SAEC to the Group
judgement applied by the Group in the identification of the 
disposal group and the presentation of its results as discontinued 
operations including the resulting loss on disposal
judgement involved in determining the fair value of financial 
assets and liabilities recognised at the date of disposal. The 
level of judgement increases where internal models, as opposed 
to quoted market prices are used to determine fair value of 
an instrument, or where inputs to the internal models, such as 
discount rates and probabilities of default loss are not observable.

Our procedures in relation to the divestment of SAEC included:

•  Reading the relevant transaction documents to understand the 

terms and conditions of the divestment

•  Checking the consideration paid for the divestment to the 
transaction documents and underlying financial records

•  Obtaining an understanding of the process for identifying net 

liabilities disposed of. This included walking through the process 
with the Group’s respective business and finance teams to check 
our understanding of the approach and procedures adopted

•  Using our tax specialists, evaluating the associated tax 

implications against the requirements of the tax legislation 

•  Using our valuation specialists, challenging the Group’s valuation 
models for the Financial assets and liabilities recognised on 
disposal. We compared the Group’s valuation methodology to 
industry practice and the criteria in the accounting standards
•  Testing key inputs used in valuation models to comparable data in 
the market, including quoted prices and available alternatives
•  Checking the integrity and accuracy of the Group’s loss on sale 

calculations

•  Assessing the discontinued operations treatment and disclosures 

in the report against the requirements of the accounting 
standards.

South32 Annual Report 2021Financial ReportIndependent Auditor’s Report

Other Information

Other Information is financial and non-financial information in South32 Limited’s annual reporting which is provided in addition to the Financial 
Report and the Auditor's Report. The Directors are responsible for the Other Information. 

Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of 
assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.

In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the 
Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be 
materially misstated.

We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have 
performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. 

Responsibilities of the Directors for the Financial Report

The Directors are responsible for:

•  preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 

• 

2001
implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from 
material misstatement, whether due to fraud or error

•  assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is 

appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless 
they either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. 

Auditor’s responsibilities for the audit of the Financial Report

Our objective is:

• 

• 

to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or 
error; and 
to issue an Auditor’s Report that includes our opinion. 

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing 
Standards will always detect a material misstatement when it exists.

2
5
1

Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be 
expected to influence the economic decisions of users taken on the basis of the Financial Report.

A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board 
website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report.

Report on the Remuneration Report

Opinion
In our opinion, the Remuneration Report of South32 Limited for the 
year ended 30 June 2021, complies with Section 300A of the 
Corporations Act 2001.

Directors’ responsibilities
The Directors of the Company are responsible for the preparation and 
presentation of the Remuneration Report in accordance with Section 
300A of the Corporations Act 2001.

Our responsibilities
We have audited the Remuneration Report included in pages 73 to 93 
of the Directors’ report for the year ended 30 June 2021. 

Our responsibility is to express an opinion on the Remuneration 
Report, based on our audit conducted in accordance with Australian 
Auditing Standards.

KPMG

Graham Hogg 
Partner

Perth 
2 September 2021

South32 Annual Report 2021Financial ReportResources and Reserves

As required by Chapter 5 of the ASX 
Listing Rules, we report Mineral 
Resources and Ore Reserves (including 
Coal Resources and Coal Reserves) in 
accordance with the 2012 Edition of the 
Australasian Code for Reporting of 
Exploration Results, Mineral Resources 
and Ore Reserves (the JORC Code).

In this report, information relating to 
Mineral Resources and Ore Reserves is 
based on, and fairly represents, information 
and supporting documentation prepared 
by our Competent Persons.

A Competent Person is defined in the 
JORC Code. They must have a minimum 
five years of relevant experience in the 
style of mineralisation or type of deposit 
under consideration and the activity being 
undertaken.

Each of our Competent Persons has given 
consent to the inclusion of the information 
in this report in the form and context in 
which it appears. You can find more details 
on each of their professional affiliations, 
employer and areas of accountability on 
page 154. Unless we state otherwise, all 
Competent Persons listed are full-time 
employees at South32, or at one of our 
related entities.

We report Mineral Resources and Ore 
Reserves in 100 per cent terms and 
represent estimates as at 30 June 2021. 
Our Mineral Resource estimations include 
Measured and Indicated Mineral Resources 
which, after the application of all Modifying 
Factors, and development of a mine plan, 
have been classified as Ore Reserves.

We report all quantities as dry metric 
tonnes, unless stated otherwise. 

It’s important to note that Mineral 
Resources and Ore Reserves are 
estimations, not precise calculations. We’ve 
rounded tonnes and grade information 
to reflect the relative uncertainty of the 
estimate, which is why minor computational 
differences may be present in the totals.

Our long-range forecasts are the basis for 
the commodity prices and exchange rates 
used to estimate the economic viability 
of Ore Reserves. Our planning processes 
consider the impacts of climate change on 
our Ore Reserves, including assessments of 
operating costs and the impact of extreme 
weather events on the expectation of 
economic extraction.

Our Ore Reserves are within existing 
permitted mining tenements. Our mineral 
leases are of sufficient duration, or convey 
a legal right to renew the tenure, to enable 
all Ore Reserves on the leased properties 
to be mined in accordance with the current 
production schedules. These Ore Reserves 
may include areas where additional 

At a glance - Resources and Reserves (as at 30 June 2021)

Operations and development options 

Worsley Alumina 
Brazil Alumina (MRN)
Eagle Downs 
Illawarra Metallurgical Coal(2)(3) 
Cerro Matoso 
Australia Manganese 
South Africa Manganese(3) 
Cannington 
Taylor 
Clark 
Arctic
Bornite

Total Ore/Coal 
Reserve (Mt)

Reserve Life 
Years(1)

Total Mineral/
Coal Resource 
(Mt)

242
17

108
31
51
109
20

14
1.3

22
8.0
4.9
44
9.0

1,140
471
1,140
1,210
328
157
224
72
138
55
37
148

(1)  Scheduled extraction period in years for the Total Ore Reserves in the approved Life of Operation Plan. 
(2)   Coal Reserves in this table are presented as Marketable Coal Reserves. Process recoveries are reported in the 

following detailed disclosures for each coal operation. 

(3)   Reserve Life for Illawarra Metallurgical Coal and South Africa Manganese is reported as the life of scheduled  

Coal/Ore Reserves for Bulli and Wessels respectively. The Reserve Life for the remaining operations are stated in 
the following detailed disclosures. 

Our exploration, research  
and development 
Our operations carry out exploration, 
research and development necessary 
to support our activities. Our brownfield 
exploration activities target the delineation 
and categorisation of mineral deposits 
connected or adjacent to our existing 
operations. Our greenfield exploration 
activities focus on the discovery and 
delineation of opportunities outside of our 
operational footprint, with a bias to base 
metals.

During FY21 we continued to expand our 
global exploration footprint. We funded 
greenfield exploration in Australia, Peru, 
Colombia, Argentina, Ireland, Mexico, 
Canada and the United States. Our 
exploration expenditure for FY21 was 
US$57 million (FY20: US$64 million) of 
which US$19 million related to brownfield 
and US$38 million related to greenfield 
(FY20: US$27 million and US$37 million 
respectively).

1
5
3

approvals are required, and it’s expected 
that such approvals will be obtained within 
the timeframe needed for the current 
production schedule.

Our governance arrangements  
and internal controls 
We have internal standards and 
governance arrangements that cover 
regulatory requirements for public 
reporting. To ensure correct and accurate 
public reporting our governance processes 
are managed by the Technical Stewardship 
function in coordination with the Company 
Secretariat function.

Our comprehensive review and audit 
program is aimed at assuring our Mineral 
Resource and Ore Reserve estimates. This 
includes:

 – Annual review of Mineral Resources and 
Ore Reserves declarations and reports;

 – Annual review of reconciliation 

performance metrics for operating 
mines;

 – Periodic internal mine planning and Ore 

Reserve audits; and

 – Independent audits of Mineral 

Resources or Ore Reserves that are new 
or have materially changed.

In FY21, we undertook three independent 
assurance audits of Mineral Resource 
estimates and an internal mine planning 
and Ore Reserve assurance audit. The 
frequency and scope of the audits are 
a function of the perceived risks and 
uncertainties associated with a particular 
Mineral Resource and Ore Reserve.

The accompanying tables, on pages 155 
to 160, outline our Mineral/Coal Resources 
and Ore/Coal Reserves holdings.

South32 Annual Report 2021Resources and ReservesResources and Reserves continued

Competent persons 
Mineral Resources
Worsley: P Soodi Shoar, MAusIMM

Mineração Rio Do Norte (MRN):  
M A H Monteiro, MAusIMM, employed by 
Mineração Rio do Norte S.A.

Cerro Matoso: I Espitia, MAusIMM (CP)

GEMCO: J Harvey, MAusIMM

Mamatwan & Wessels:  
L Lautze, Pr. Sci. Nat., SACNASP

Cannington: P Boamah, MAusIMM (CP)

Taylor: M Hastings, MAusIMM (CP), 
employed by SRK Consulting (US) Inc

Clark: M Hastings, MAusIMM (CP), 
employed by SRK Consulting (US) Inc

Arctic: D F Machuca Mory, PEng., 
employed by SRK Consulting (Canada) Inc; 
T Fouet, MAusIMM (CP)

Bornite: S Khosrowshahi, MAusIMM (CP) 
employed by Golder Associates Pty Ltd;  
T Fouet, MAusIMM (CP)

Ore Reserves
Worsley: G Burnham, MAusIMM

4
5
1

Mineração Rio Do Norte (MRN): 
J P M Franco, MAusIMM, independent 
consultant

Cerro Matoso: A Quiroz, MAusIMM

GEMCO: U Sandilands, MAusIMM

Mamatwan & Wessels:  
A R Maier, Pr. Eng., MSAIMM

Cannington: A Spong, MAusIMM (CP), 
employed by Mining Plus Pty Ltd

Coal Resources
Eagle Downs: M Blaik, MAusIMM, 
employed by JB Mining Services Pty Ltd

Bulli & Wongawilli: M Krejci, MAusIMM

South Africa Energy Coal (SAEC):  
S Kara, Pr. Sci. Nat., SACNASP, employed by 
Seriti Coal Pty Ltd

Coal Reserves
Bulli & Wongawilli: M Rose, MAusIMM

South Africa Energy Coal (SAEC):  
P Mulder, MSAIMM, employed by Seriti Coal 
Pty Ltd

South32 Annual Report 2021Resources and ReservesAlumina
Mineral Resources

As at 30 June 2021

Deposit(1)

Worsley

MRN(2)

Ore Reserves

As at 30 June 2021

Deposit(1)(6)

Worsley(3)

MRN(2)(4)(5)

(1)  Cut-off grade

Measured Mineral Resources

Indicated Mineral Resources

Inferred Mineral Resources

Total Mineral Resources

Material Type

Laterite

MRN Washed

Mt

350

294

% A.Al2O3 % R.SiO2

28.4

49.6

1.4

4.4

Mt

383

43

% A.Al2O3 % R.SiO2

29.2

48.9

2.1

5.0

Mt

405

134

% A.Al2O3 % R.SiO2

Mt

% A.Al2O3 % R.SiO2

28.7

49.9

2.2

3.7

1,140

471

28.7

49.6

1.9

4.2

As at 30 June 2020

South32 
Interest

%

86

14.8

Total Mineral Resources

Mt

% A. Al2O3 % R.SiO2

1,140

481

28.8

49.6

1.9

4.2

Proved Ore Reserves

Probable Ore Reserves

Total Ore Reserves

Reserve Life

Ore Type

Laterite

MRN Washed

Mt

236

15

% A.Al2O3 % R.SiO2

27.7

48.0

1.7

5.9

Mt

6.5

2.1

% A.Al2O3 % R.SiO2

27.9

48.5

1.8

5.1

Mt

242

17

% A.Al2O3 % R.SiO2

Years

27.7

48.1

1.7

5.8

14

1.3

As at 30 June 2020

South32 
Interest

%

86

14.8

Total Ore Reserves

Reserve Life

Mt

257

28

% A.Al2O3 % R.SiO2

Years

27.7

48.3

1.7

5.3

15

2.2

Worsley
MRN

Mineral Resources
Variable ranging from 22-25% A.Al2O3, ≤3.5% R.SiO2 and ≥1m thickness.
≥46% A.Al2O3, ≤7% R.SiO2, ≥1m thickness and ≥30% recovery on weight per cent basis.

Ore Reserves
Variable ranging from 22.5-28% A.Al2O3, ≤3.5% R.SiO2 and ≥1m thickness (except Marradong West ≥2m thickness).
≥46% A.Al2O3, ≤7% R.SiO2, ≥1m thickness and ≥30% recovery on weight per cent basis.

(2)  MRN Washed tonnes and grades represent the expected product based on forecast beneficiation yield.
(3)  Ore delivered to Worsley refinery.
(4)  Ore delivered to Alumar refinery.
(5)  Reserve Life for FY20 restated to 2.2 years following review of calculation using MRN washed tonnes.
(6)  Metallurgical recovery:
  Worsley 91.9%

Alumar  92%

1
5
5

South32 Annual Report 2021Resources and Reserves 
Resources and Reserves continued

Metallurgical Coal
Australia Metallurgical Coal
Coal Resources

As at 30 June 2021

Deposit(1)

Mining 
Method

Illawarra Metallurgical Coal(3)(4)

Measured Coal Resources

Indicated Coal Resources

Inferred Coal Resources

Total Coal Resources

Coal Type

Mt

% Ash

% VM

% S

Mt

% Ash

% VM

% S

Mt

% Ash

% VM

% S

Mt

% Ash

% VM

% S

As at 30 June 2020

Total Coal Resources

Mt

% Ash

% VM

% S

South32 
Interest

%

100

Bulli

Wongawilli

Eagle Downs(2)

Coal Reserves

As at 30 June 2021

UG

UG

UG

Met/Th

Met/Th

Met

172

57

759

11.3

28.6

29.4

24.0

23.5

15.0

0.36

0.59

0.46

297

240

201

12.3

29.7

28.7

23.6

22.2

14.7

0.36

0.57

0.48

320

130

183

13.6

29.7

30.0

22.9

22.4

14.8

0.36

0.57

0.47

789

426

1,140

12.6

29.5

29.4

23.4

22.4

14.9

0.36

0.57

0.47

783

428

50

1,140

12.6

29.5

29.4

23.5

22.4

14.9

0.36

0.57

0.47

Proved 
Coal 
Reserves

Probable 
Coal 
Reserves

Total  
Coal 
Reserves

Proved Marketable  
Coal Reserves

Probable Marketable  
Coal Reserves

Total Marketable  
Coal Reserves

Reserve 
Life

South32 
Interest

Total Marketable 
Coal Reserves

Reserve 
Life

As at 30 June 2020

6
5
1

Deposit(1)(5)(6)(7)

Mining 
Method

Coal 
Type

Illawarra Metallurgical Coal
UG
Bulli
UG
Wongawilli
UG
UG

(1)  Cut-off grade

Met
Met/Th
Met
Th

Mt

14
6.9

Mt

Mt

Mt

% Ash % VM % S

Mt

% Ash % VM % S

Mt

% Ash % VM % S

Years

102
7.2

116
14

12

8.9

24.3

0.36

85

8.9

24.6

0.35

97

8.9

24.6

0.35

22
3.4

4.1
1.4

10.8
28.0

23.9

0.60

4.0
1.6

10.8
28.0

23.3

0.59

8.1
3.0

10.8
28.0

23.6

0.59

Mt

% Ash % VM % S

Years

%

100

99

8.9

24.5

0.35

24
3.0

7.4
2.7

10.8
27.5

24.2

0.60

Coal Resources
No seam thickness cut-off applied, minimum thickness is economic, partial exception for south Bulli.

Coal Reserves
No seam thickness cut-off applied, minimum thickness within the mine layout is economic.

(2)  Coal Resources tonnes are reported on an in situ moisture basis, Ash, VM and S reported as raw.
(3)  Coal Resources tonnes are reported on an in situ moisture basis, Ash is reported as raw, VM and S are reported as potential product on air-dried basis.
(4)  Coal Resources classification changes due to additional drilling and updated resource model.
(5)  Total Coal Reserves are at the moisture content when mined (6% Bulli, 7% Wongawilli), Total Marketable Coal Reserves are the tonnes of coal available at moisture content (8.5% Bulli, 15% Wongawilli Met, 6% Wongawilli Th) and air-dried qualities after the 

beneficiation of the Total Coal Reserves.

(6)  Coal delivered to wash plant.
(7)  Process recoveries: 

Bulli 

84%
  Wongawilli  78%

South32 Annual Report 2021Resources and Reserves 
Energy Coal
South Africa Energy Coal
Coal Resources

As at 30 June 2021

Deposit(1)

Operating mines

Khutala

Klipspruit

Wolvekrans 
Middleburg 
Complex (WMC)

Projects

Davel

Leandra

UG

OC

OC

OC

SP

UG

UG

Th

Th

Th

Th

Th

Th

Th

Naudesbank

OC & UG Th

Pegasus

OC

Th

Coal Reserves

As at 30 June 2021

Measured Coal Resources

Indicated Coal Resources

Inferred Coal Resources

Total Coal Resources

Mining 
Method

Coal 
Type

Mt % Ash % VM % S

KCal/kg 
CV

Mt % Ash % VM % S

KCal/kg 
CV

Mt % Ash % VM % S

KCal/kg 
CV

Mt % Ash % VM % S

KCal/kg 
CV

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

As at 30 June 2020

South32 
Interest

Total Coal Resources

%

-

-

Mt

% Ash % VM

% S

KCal/kg 
CV

117

1,098

706

804

5.0

222

1,799

244

14

32.3

31.7

29.7

26.4

30.0

22.8

29.0

24.6

27.0

21.1

22.4

22.1

22.8

20.8

27.2

22.1

25.5

21.3

1.09

1.15

1.20

1.13

0.84

1.49

1.02

1.06

1.35

4,690

4,800

5,090

5,520

5,140

5,790

4,780

5,630

5,390

As at 30 June 2020

1
5
7

Proved 
Coal 
Reserves

Probable 
Coal 
Reserves

Total 
Coal 
Reserves

Proved Marketable  
Coal Reserves

Probable Marketable  
Coal Reserves

Total Marketable  
Coal Reserves

Reserve 
Life

South32 
Interest

Total Marketable 
Coal Reserves

Reserve 
Life

Deposit(1)

Mining 
Method

Coal 
Type

Mt

Mt

Mt

Mt

% 
Ash

% 
VM

% 
S

KCal/kg 
CV

Mt

% 
Ash

% 
VM

% 
S

KCal/kg 
CV

Mt

% 
Ash

% 
VM

% 
S

KCal/kg 
CV

Years

Operating mines
UG
Khutala
OC
Klipspruit
OC
OC
OC
OC
OC
SP

Wolvekrans 
Middelburg 
Complex 
(WMC)

Th
Th Export
Th
Th Eskom
Th Export
Th Domestic
Th
Th

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

% 
Ash

% 
VM

% 
S

KCal/kg 
CV

Mt

Years

%

-

33.8 21.6 1.07 4,650
59
14.8 22.7 0.69 6,000
65
29.0 21.5 0.90 4,670
80
57
37.6 19.9 0.79 4,310
172 18.9 24.6 0.59 6,220
25.3 22.2 0.93 5,510
58

12
30

24

(1)   South Africa Energy Coal was divested from South32 on 1st June 2021.

South32 Annual Report 2021Resources and ReservesResources and Reserves continued

Nickel

Cerro Matoso
Mineral Resources

As at 30 June 2021

Deposit(1)

Cerro Matoso

Ore Reserves

As at 30 June 2021

Deposit(1)(4)(5)

Cerro Matoso(6)

(1)  Cut-off grade

Measured Mineral Resources

Indicated Mineral Resources

Inferred Mineral Resources

Total Mineral Resources

Material Type

Laterite(2)

SP

MNR - Ore(3)

Mt

115

14

-

% Ni

1.0

1.0

-

Mt

126

39

-

% Ni

0.8

0.8

-

Mt

34

-

% Ni

0.8

-

Mt

275

53

-

% Ni

0.9

0.9

-

South32 
Interest

%

99.9

As at 30 June 2020

Total Mineral Resources

Mt

247

43

17

% Ni

0.9

0.9

0.2

Proved Ore Reserves

Probable Ore Reserves

Total Ore Reserves

Reserve Life

Ore Type

Laterite

SP

Mt

14

7.7

% Ni

1.3

1.1

Mt

1.8

6.8

% Ni

1.4

1.1

Mt

16

15

% Ni

1.3

1.1

Years

8.0

As at 30 June 2020

South32 
Interest

%

99.9

Total Ore Reserves

Reserve Life

Mt

14

16

% Ni

1.2

1.1

Years

8.9

8
5
1

Laterite
SP

Mineral Resources
0.6% Ni
0.6% Ni

Ore Reserves
0.6% Ni
0.6% Ni

(2)  Changes to Mineral Resources due to additional drilling and changes in estimation methodology and economic assumptions.
(3)  MNR no longer satisfy the criteria of "Reasonable Prospects for Eventual Economic Extraction (RPEEE)".
(4)  Ore delivered to process plant.
(5)  Global recovery: 83%.
(6)  Changes to Ore Reserves due to implementation of Ore Sorting and Mechanical Ore Concentration (OSMOC) project.

South32 Annual Report 2021Resources and ReservesManganese
Mineral Resources

As at 30 June 2021

Deposit(1)

Material Type

Australia Manganese

GEMCO

ROM(2)(3)

Sands(4)

South Africa Manganese(4)

Lower Body

Upper Body

M, C, N Zones

X Zone

Top Cut (balance I&O)

Wessels

Mamatwan

Ore Reserves

As at 30 June 2021

Deposit(1)(7)

Ore Type

Australia Manganese

GEMCO(5)

ROM

Sands

South Africa Manganese(6)

Lower Body

Upper Body

M, C, N Zones

X Zone

Wessels

Mamatwan

(1)  Cut-off grade

GEMCO

Wessels
Mamatwan

Measured Mineral Resources

Indicated Mineral Resources

Inferred Mineral Resources

Total Mineral Resources

% Mn

% Yield

Mt

% Mn

% Yield

Mt

77

Mt

27

19

2.3

9.5

% Mn

% Yield

45.0

49

% Mn

% Fe

43.3

13.1

37.1

37.5

30.1

4.4

4.6

6.1

Mt

42

10

Mt

21

73

33

2.3

13

% Mn

% Yield

41.1

19.6

47

Mt

28

44.2

45

% Mn

% Fe

Mt

% Mn

% Fe

42.5

41.0

37.0

35.9

29.3

13.8

18.8

4.6

4.6

6.0

3.8

19

0.3

0.1

44.5

40.1

38.0

15.2

19.7

5.1

30.0

6.2

147

10

Mt

52

92

52

4.6

23

43.7

19.6

47

% Mn

% Fe

43.1

40.8

37.0

36.7

29.6

13.6

19.0

4.5

4.6

6.1

South32 
Interest

%

60

44.4

As at 30 June 2020

Total Mineral Resources

Mt

% Mn

% Yield

138

10

Mt

53

90

56

5.0

22

43.4

20.6

48

% Mn

% Fe

43.0

40.8

37.0

36.5

29.5

13.3

19.0

4.5

4.6

6.2

Proved Ore Reserves

Probable Ore Reserves

Total Ore Reserves

Reserve Life

% Mn

% Yield

Mt

% Mn

% Yield

Mt

% Mn

% Yield

Years

Mt

37

42.9

61

Mt

% Mn

% Fe

4.0

43.9

10.6

17

-

36.5

-

4.4

-

44

7.1

Mt

14

46

49

-

43.2

40.0

59

20

% Mn

% Fe

43.3

40.9

36.4

-

13.3

18.7

4.5

-

4.9

44

15

7.0

7.1

Mt

9.9

46

31

-

45.0

40.0

51

20

% Mn

% Fe

43.0

40.9

36.3

-

14.5

18.7

4.6

-

Ore Reserves
≥40% Mn washed product.
No cut-off grade applied.
≥ 37.5% Mn
No cut-off grade applied.

ROM
Sands

M, C, N Zones
X Zone
Top Cut (balance I&O)

Mineral Resources
≥35% Mn washed product.
No cut-off grade applied.
≥37.5% Mn
No cut-off grade applied.
≥35% Mn
≥28% Mn

(2)  Mineral Resource tonnes are stated as in situ, manganese grades are stated as per washed ore samples and should be read together with their respective mass recovery expressed as yield.
(3)  Changes to Inferred Mineral Resources due to addition of new areas.
(4)  Mineral Resource tonnes and manganese grades are stated as in situ.
(5)  Ore Reserves tonnes are stated as delivered to process plant, manganese grades are stated as expected product and should be read together with their respective mass yields.
(6)  Ore delivered to process plant.
(7)  Metallurgical/Plant recoveries for the operations:

See yield in Ore Reserves Table.
GEMCO 
  Wessels 
88%
  Mamatwan  96%

South32 
Interest

%

60

44.4

As at 30 June 2020

Total Ore Reserves

Reserve Life

Mt

% Mn

% Yield

Years

1
5
9

51

6.1

Mt

15

47

47

2.2

43.4

40.0

61

22

% Mn

% Fe

43.2

40.6

36.6

37.3

13.1

18.9

4.5

4.8

5.7

45

15

South32 Annual Report 2021Resources and Reserves 
 
Resources and Reserves continued

Base Metals
Mineral Resources

As at 30 June 2021

Deposit(1)

Material Type

Mt

g/t Ag

% Pb

% Zn

Mt

g/t Ag

% Pb

% Zn

Mt

g/t Ag

% Pb

% Zn

Mt

g/t Ag

% Pb

% Zn

Measured Mineral Resources

Indicated Mineral Resources

Inferred Mineral Resources

Total Mineral Resources

Cannington
Cannington

Deposit(1)

Hermosa
Taylor(3)

Clark

UG Sulphide
OC Sulphide

39
24

180
108

5.15
3.28

3.24
2.51

3.6
3.3

111
74

3.79
2.75

2.39
1.81

0.4
1.2

90
55

3.26
2.68

1.97
1.33

43
29

174
102

5.02
3.20

3.16
2.38

Measured Mineral Resources

Indicated Mineral Resources

Inferred Mineral Resources

Total Mineral Resources

Material Type

Mt

% Zn % Pb % Mn g/t Ag

Mt

% Zn % Pb % Mn g/t Ag

Mt

% Zn % Pb % Mn g/t Ag

Mt

% Zn % Pb % Mn g/t Ag

29

4.10

4.05

57

UG Sulphide
UG Transition
UG Oxide

82
3.7
33

3.65
6.11
2.49

4.45
4.21

9.39

88
60
57

23
1.4
22

3.62
5.55
2.04

3.82
3.91

8.64

93
64
110

133
5.1
55

3.74
5.95
2.31

4.26
4.13

9.08

82
61
78

Deposit(1)

Material Type

Mt % Cu % Zn % Pb g/t Ag g/t Au Mt % Cu % Zn % Pb g/t Ag g/t Au Mt % Cu % Zn % Pb g/t Ag g/t Au Mt % Cu % Zn % Pb g/t Ag g/t Au

Measured Mineral Resources

Indicated Mineral Resources

Inferred Mineral Resources

Total Mineral Resources

As at 30 June 2020

Total Mineral Resources

Mt

g/t Ag

% Pb

% Zn

49
30

166
96

4.82
3.07

3.06
2.30

Total Mineral Resources

Mt

% Zn

% Pb

% Mn

g/t Ag

162
5.0
55

3.31
4.50
2.31

3.86
3.39

9.08

72
44
78

Total Mineral Resources

Mt

% Cu % Zn % Pb g/t Ag g/t Au

South32 
Interest

%

100

South32 
Interest

%

100

South32 
Interest

%

50

33 3.14 4.43 0.80
40 1.06

49

0.63

4.7 2.55 3.34 0.57
38 1.03
70 2.29

37

0.38

37 3.06 4.30 0.77
78 1.04
70 2.29

47

0.60

37
78
70

3.06 4.30 0.77
1.04
2.29

47

0.60

Deposit(1)(2)(4)

Ore Type

Mt

g/t Ag

% Pb

% Zn

Mt

g/t Ag

% Pb

% Zn

Mt

g/t Ag

% Pb

% Zn

Years

Proved Ore Reserves

Probable Ore Reserves

Total Ore Reserves

Reserve Life

UG Sulphide

18

176

5.29

3.33

1.2

166

5.25

1.97

20

175

5.28

3.24

9.0

20

173

5.35

3.28

11

As at 30 June 2020

Total Ore Reserves

Reserve Life

Mt

g/t Ag

% Pb

% Zn

Years

South32 
Interest

%

100

0
6
1

Ambler
Arctic
Bornite

OC Sulphide
OC Sulphide
UG Sulphide

Ore Reserves

As at 30 June 2021

Cannington
Cannington

(1)  Cut-off grade

Ore Reserves
Net smelter return in A$/t
145

Cannington

UG Sulphide
OC Sulphide

Taylor

UG Sulphide
UG Transition

Clark

UG Oxide

Arctic

OC Sulphide

Bornite

OC Sulphide
UG Sulphide

Mineral Resources
Net smelter return in A$/t
130
58
Net smelter return in US$/t
80
80
Net smelter return in US$/t
175
Net smelter return in US$/t
63.4

0.5% Cu
1.5% Cu

(2)  Ore delivered to process plant.
(3)  Changes to Mineral Resources due to revision in geological model, estimation approach and project economics.
(4)  Metallurgical recoveries: 85% Ag, 87% Pb and 83% Zn.

South32 Annual Report 2021Resources and ReservesShareholder information

Voting rights 
South32 Limited ordinary shares carry voting rights of one vote per share.

Shareholders may hold a beneficial entitlement to dematerialised ordinary shares in South32 Limited, UK Depositary Interests and 
American Depositary Shares (ADS) through the Central Securities Depositories of Strate (Strate), CREST and the Depository Trust 
Company respectively. Each share held dematerialised in Strate, or as a Depositary Interest held in CREST, entitles the holder to one 
vote. Each ADS is represented by five ordinary shares, with ADS voting managed by South32 Limited’s ADS Depositary.

Substantial shareholders
As at 23 July 2021, South32 Limited has three substantial shareholders who, together with their associates, hold five per cent or more of 
the voting rights in South32 Limited, as notified to South32 under the Australian Corporations Act.

Name

Date notice received

Number of shares in notice

Percentage of capital in notice

Schroder Investment Management Australia Limited
BlackRock Group
The Vanguard Group

3 December 2020
11 March 2020
5 July 2021

359,970,206
287,969,025
234,998,773

7.44
5.09
5.027

Distribution of shareholdings and number of shareholders
The following table shows the distribution of South32 Limited shareholders by size of shareholding and number of shareholders and 
shares as at 23 July 2021.

Size of holding

1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total

Number of shareholders

Number of shares

Percentage of capital

123,905
82,962
20,401
18,263
615
246,146

60,157,663
197,220,114
149,074,472
415,858,324
3,852,227,440
4,674,538,013

1.29
4.22
3.19
8.90
82.41
100.00

Distribution of rights holdings and number of rights holders
The following table shows the distribution of rights holders in South32 Limited by size of rights holding and number of rights holders and 
rights as at 23 July 2021.

Size of holding

0 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total

Number of rights holders

Number of rights

Percentage of rights on issue

658
5,911
23
131
93
6,816

522,285
9,793,257
164,125
5,995,458
50,441,581
66,916,706

0.781
14.635
0.245
8.960
75.380
100.00

I

n
f
o
r
m
a
t
i
o
n

1
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South32 Annual Report 2021Shareholder information continued

Twenty largest shareholders in South32 Limited
The following table sets out the 20 largest shareholders of ordinary shares listed on our shareholder register and the details of their 
shareholding as at 23 July 2021.

Name

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total

HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Ltd
Computershare Clearing Pty Ltd 
National Nominees Limited
BNP Paribas Nominees Pty Ltd 
South Africa Control A/C\C
Citicorp Nominees Pty Limited 
HSBC Custody Nominees (Australia) Limited - A/C 2
BNP Paribas Noms Pty Ltd 
BNP Paribas Nominees Pty Ltd Six Sis Ltd 
HSBC Custody Nominees (Australia) Limited 
BNP Paribas Nominees Pty Ltd ACF Clearstream
Citicorp Nominees Pty Limited  
Woodross Nominees Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
CPU Share Plans Pty Ltd 
CPU Share Plans Pty Ltd 
AMP Life Limited
Netwealth Investments Limited 

Number of fully paid shares

Percentage of capital

1,343,686,117
854,784,989
424,720,491
312,640,066
171,184,675
135,865,480
79,938,690
70,664,930
62,322,068
55,067,568
30,539,607
26,881,530
18,917,788
14,972,510
10,790,131
9,828,443
9,741,184
9,390,764
9,112,236
7,349,835
3,658,399,102

28.74
18.29
9.09
6.69
3.66
2.91
1.71
1.51
1.33
1.18
0.65
0.58
0.40
0.32
0.23
0.21
0.21
0.20
0.19
0.16
78.26

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Restricted and escrowed securities
As at 23 July 2021, South32 Limited does 
not have any restricted securities or 
securities subject to voluntary escrow on 
issue.

Shareholders with less than  
a marketable parcel
As at 23 July 2021, there were 12,074 
shareholders on the Australian South32 
Limited register holding less than a 
marketable parcel (A$500) based on the 
closing market price of A$2.95.

On-market purchases of South32 
Limited securities for employee 
incentive plans
During FY21, 67,174 shares were purchased 
on-market and immediately distributed 
to Canadian based employees on vesting 
of rights. The average price at which the 
shares were purchased was A$2.27.

Dividend policy
Our dividend policy is determined by the 
Board at its discretion. Our priorities for 
cash flow are to maintain safe and reliable 
operations and an investment grade credit 
rating through the cycle.

South32 Limited intends to distribute 
a minimum 40 per cent of underlying 
earnings as dividends to its shareholders 
following each six-month reporting period. 
South32 Limited intends to distribute 
dividends with the maximum practicable 
franking credits for the purposes of the 
Australian dividend imputation system.

Dividend determination and 
payment
Our dividends are determined in US dollars.

Dividends for shareholders of South32 
Limited on the Australian register are paid 
by direct credit into their nominated bank 
account in Australian dollars, UK pounds 
sterling, New Zealand dollars or US dollars, 
provided direct credit details and currency 
election information are submitted no later 
than close of business on the dividend 
record date as stated in the relevant ASX 
announcement.

Dividends for shareholders of South32 
Limited on the South African branch 
register and UK Depositary Interest holders 
are paid by direct credit in South African 
rand and UK pounds sterling respectively.

For further information about dividends 
visit www.south32.net/investors-media/
investor-centre/dividends.

Capital management program
Following the recommencement of our 
on-market share buy-back in October 
2020, which had been suspended since 
March 2020 as part of our response to the 
COVID-19 pandemic, the Board expanded 
the capital management program by 
US$250 million on 18 February 2021 and a 
further US$200 million on 18 May 2021. As 
at 30 June 2021, the capital management 
program totalled US$1.88 billion, comprising 
a US$1.59 billion on-market share buy-back 
and special dividends of US$154 million 
(paid in 2018), US$85 million (paid in 2019) 
and US$53 million paid in April 2020. 

As at 30 June 2021 we had returned a total 
value of US$1.66 billion to our shareholders 
under the capital management program. 
Subsequent to 30 June 2021, the Board 
has expanded the capital management 
program by US$120 million to US$2.00 
billion and extended the execution window 
for the remaining program by 12-months to 
2 September 2022.

The on-market share buy-back was 
initially announced on 27 March 2017 and 
purchasing commenced on 19 April 2017. 
During the year ended 30 June 2021, 
South32 Limited purchased 172 million 
shares under the on-market share buy-
back, which represented 3.54 per cent 
of share capital at the beginning of the 
financial year. Total consideration paid for 
these shares was US$346 million.

Between the commencement of 
purchasing under the on-market share 
buy-back on 19 April 2017 and 30 June 
2021, South32 Limited purchased a total 
of 649 million shares, which represented 
12.19 per cent of share capital at the 
commencement of the program. The total 
consideration paid for the shares bought 
back up to 30 June 2021 was  
US$1.36 billion.

All of the shares purchased by South32 
Limited under the on-market buy-back 
have been cancelled.

South32 Annual Report 2021InformationAnnual General Meeting (AGM)
Our 2021 AGM will be held on Thursday 
28 October 2021 at 12.00pm (midday) 
Australian Western Standard Time as a 
hybrid meeting, providing shareholders 
with the opportunity to participate 
via online facilities. We will continue to 
monitor the evolving COVID-19 situation 
and provide an update if this changes. 
Further details regarding the AGM will be 
made available in September 2021, and 
shareholders are encouraged to monitor 
securities exchange releases and the 
company’s website www.south32.net for 
information and updates.

Presentations delivered at the AGM and the 
results of voting will be provided to all stock 
exchanges and will be available at  
www.south32.net.

Stock exchanges
As at 23 July 2021, South32 Limited has a 
primary listing on the Australian Securities 
Exchange, a secondary listing on the 
Johannesburg Stock Exchange, is admitted 
to the standard segment of the Official List 
of the UK Listing Authority and its ordinary 
shares are traded on the London Stock 
Exchange.

South32 Limited also has a Level 1 
American Depositary Receipts program, 
which trades in the United States’ over-the 
counter market.

Shareholder enquiries
Shareholders can access their current 
holding details as well as their transaction 
history, view dividend statements and 
payments made, download statements and 
documents, change their address, update 
their communication preferences and 
banking details, and check their tax details 
online via Computershare’s Investor Centre 
at www.computershare.com

Alternatively, refer to the following 
contacts:

Share registries
Australia
Computershare Investor Services Pty 
Limited 
Yarra Falls 452 Johnston Street 
Abbotsford Victoria 3067 
Australia

Telephone (Australia): 
1800 019 953 
Telephone (International):  +61 3 9415 4169 
+61 3 9473 2500
Facsimile: 

South Africa
Computershare Investor Services (Pty) 
Limited 
Rosebank Towers, 15 Biermann Avenue 
Rosebank, 2196 
South Africa

Telephone: 
Facsimile: 
Email enquiries: 
web.queries@computershare.co.za

+27 11 373 0033 
+27 11 688 5217 

Holders of shares dematerialised into 
Strate should contact their Central 
Securities Depository Participant or 
stockbroker.

United Kingdom
Computershare Investor Services PLC 
The Pavilions, Bridgwater Road 
Bristol BS99 6ZZ 
United Kingdom

Telephone: 
Facsimile: 

+44 370 873 5884 
+44 370 703 6101

Email enquiries: 
web.queries@computershare.co.uk

American Depositary Receipts 
(ADR) 
ADR holders should deal directly with 
Citibank Shareholder Services.

Citibank Shareholder Services 
PO Box 43077 Providence, 
Rhode Island 02940-3077

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6
3

Telephone: 

+1 877 248 4237 
(+1-877-CITIADR) (toll-free within US) 
+1 781 575 4555 (outside of US) 
+1 201 324 3284

Facsimile: 

Email enquiries:  
citibank@shareholders-online.com 
Website: www.citi.com/dr

Branches
In accordance with DTR 4.1.11R(5), South32 
Limited, through various subsidiaries, 
has established branches in a number of 
different jurisdictions in which the business 
operates.

Registered office
Information regarding the South32 
Limited Registered Office is included in 
the corporate directory on the inside back 
cover.

Shareholders are encouraged to access 
all South32 communications electronically 
at www.south32.net. Shareholders that 
wish to receive electronic communications 
can update their preferences online or by 
telephoning the relevant Computershare 
Investor Centre.

South32 Annual Report 2021Information 
 
Glossary of terms and abbreviations

Mining related terms
Alumina
Aluminium oxide (Al₂O₃). Alumina is produced 
from bauxite in the Bayer refining process. It’s 
then converted (reduced) in an electrolysis 
cell to produce aluminium metal.

Ash
Inorganic material remaining after 
combustion of coal.

ASX Listing Rules (Chapter 5): Additional 
reporting on mining and oil and gas 
production and exploration activities
This chapter of the ASX Listing Rules sets 
out additional reporting and disclosure 
requirements for mining entities, oil and gas 
entities, as well as other entities reporting on 
mining and oil and gas activities.

AusIMM
The Australasian Institute of Mining and 
Metallurgy.

Bauxite
Principal commercial ore of aluminium.

Beneficiation
The process of physically separating ore from 
gangue to produce a mineral concentrate 
prior to subsequent processing.

Brownfield
An exploration or development project 
located within an existing mineral province, 
which can share infrastructure and 
management with an existing operation.

4
6
1

Coal Reserve
The same meaning as Ore Reserve, but 
specifically concerning coal.

Coal Resource
The same meaning as Mineral Resource, but 
specifically concerning coal.

Coking coal
Used in the manufacture of coke, which is 
used in the steelmaking process by virtue 
of its carbonisation properties. Coking coal 
is a form of, and may also be referred to as, 
metallurgical coal.

Competent Person
A minerals industry professional who is 
a Member or Fellow of The Australasian 
Institute of Mining and Metallurgy, or of the 
Australian Institute of Geoscientists, or of a 
‘Recognised Professional Organisation’, as 
included in a list available on the JORC and 
ASX websites. These organisations have 
enforceable disciplinary processes, including 
the powers to suspend or expel a member.

A Competent Person must have a minimum 
of five years’ relevant experience in the style 
of mineralisation or type of deposit under 
consideration and in the activity that the 
person is undertaking (JORC Code).

Cut-off grade
The lowest grade, or quality, of mineralised 
material that qualifies as economically 
mineable and available in a given deposit. 
It may be defined on the basis of economic 
evaluation, or on physical or chemical 
attributes that define an acceptable product 
specification (JORC Code).

Energy coal
Used as a fuel source in electrical power 
generation, cement manufacture and various 
industrial applications. Energy coal may also 
be referred to as steaming or thermal coal.

Flotation
A method of selectively recovering minerals 
from finely ground ore using a froth created 
in water by specific reagents. In the flotation 
process, certain mineral particles are induced 
to float by becoming attached to bubbles of 
froth and the unwanted mineral particles sink.

Grade
Any physical or chemical measurement of the 
characteristics of the material of interest in 
samples or product (JORC Code).

Greenfield
An exploration or development project 
located outside the area of influence of our 
existing mine operations/infrastructure.

Indicated Mineral Resource
That part of a Mineral Resource for which 
quantity, grade (or quality), densities, shape 
and physical characteristics are estimated 
with sufficient confidence. This allows the 
application of Modifying Factors in sufficient 
detail to support mine planning and 
evaluation of the economic viability of the 
deposit (JORC Code).

Inferred Mineral Resource
That part of a Mineral Resource for which 
quantity and grade (or quality) are estimated 
on the basis of limited geological evidence 
and sampling. Geological evidence is 
sufficient to imply but not verify geological 
and grade (or quality) continuity (JORC Code).

JORC
Joint Ore Reserves Committee comprising 
representatives of The Australasian Institute 
of Mining and Metallurgy (AusIMM), Australian 
Institute of Geoscientists (AIG) and Minerals 
Council of Australia (MCA) as well as the 
Australian Securities Exchange (ASX), the 
Financial Services Institute of Australasia 
(FinSIA) and the accounting profession.

JORC Code
The Australasian Code for reporting of 
Exploration Results, Mineral Resources and 
Ore Reserves 2012 Edition prepared by the 
JORC.

Laterite
A residual soil or deposit formed by the 
leaching of silica from rocks under specific 
climatic conditions.

Leaching
The process by which a soluble metal can be 
economically recovered from minerals in ore 
by dissolution.

Life of Operation Plan
The combination of an Optimised Base Plan 
and incremental opportunities available to the 
Operation for maximising value.

Marketable Coal Reserves
Represents beneficiated or otherwise 
enhanced coal product where modifications 
due to mining, dilution and processing have 
been considered (JORC Code).

MAusIMM
Member of the Australasian Institute of Mining 
and Metallurgy.

MAusIMM (CP)
Accredited Chartered Professional status of 
members of the AusIMM. These members 
have undergone an assessment of their 
competencies, which are maintained through 
continuing professional development 
activities.

Measured Mineral Resource
That part of a Mineral Resource for which 
quantity, grade (or quality), densities, shape 
and physical characteristics are estimated 
with confidence sufficient to allow the 
application of Modifying Factors to support 
detailed mine planning and final evaluation 
of the economic viability of the deposit (JORC 
Code).

Metallurgical coal
A broader term than coking coal that includes 
all coals used in steelmaking, such as coal 
used for the pulverised coal injection process.

Mineral Resource
A concentration or occurrence of solid 
material of economic interest in or on 
the Earth’s crust in such form, grade 
(or quality), and quantity that there are 
reasonable prospects for eventual economic 
extraction. The location, quantity, grade 
(or quality), continuity and other geological 
characteristics of a Mineral Resource are 
known, estimated or interpreted from specific 
geological evidence and knowledge, including 
sampling. Mineral Resources are sub-divided, 
in order of increasing geological confidence, 
into Inferred, Indicated and Measured 
categories (JORC Code).

Mineralisation
Any single mineral or combination of minerals 
occurring in a mass, or deposit, of economic 
interest (JORC Code).

Modifying Factors
Considerations used to convert Mineral 
Resources to Ore Reserves. These include, 
but are not restricted to, mining, processing, 
metallurgical, infrastructure, economic, 
marketing, legal, environmental, social and 
governmental factors (JORC Code).

MSAIMM
Member of the Southern African Institute of 
Mining and Metallurgy.

Net smelter return (NSR)
An estimate of revenue derived from the sale 
of products and concentrates following the 
application of metallurgical recoveries and 
deducting transport costs, treatment and 
refining charges, penalties and royalties.

OC/OP (Open-cut/open-pit/open-cast)
Surface working in which the working area is 
kept open to the sky.

South32 Annual Report 2021InformationTotal Mineral Resources
The sum of Inferred Mineral Resources, 
Indicated Mineral Resources and Measured 
Mineral Resources.

Transitional climate change risks
Non-physical risks arising from changes to 
policy, technology, legal and markets as the 
world moves to a low-carbon energy system, 
in line with the Paris Agreement objectives.

UG
Underground working in which the working 
area is below the surface of the earth.

Yield
The percentage of material of interest that is 
extracted during mining and/or processing. 
A measure of mining or processing efficiency 
(JORC Code). When used in reference to the 
Mineral Resource estimate yield refers to the 
sample mass recovery following beneficiation.

Ore Reserve
The economically mineable part of a 
Measured and/or Indicated Mineral Resource.

It includes diluting materials and allowances 
for losses, which may occur when the material 
is mined or extracted and is defined by 
studies at Pre-feasibility or Feasibility level 
as appropriate that include application of 
Modifying Factors. Such studies demonstrate 
that, at the time of reporting, extraction could 
reasonably be justified (JORC Code).

PEng
A licenced member of Professional Engineers 
of Ontario (PEO).

Probable Ore Reserve
The economically mineable part of an 
Indicated and, in some circumstances, a 
Measured Mineral Resource. The confidence 
in the Modifying Factors applying to a 
Probable Ore Reserve is lower than that 
applying to a Proved Ore Reserve (JORC 
Code).

Proved Ore Reserve
The economically mineable part of a 
Measured Mineral Resource. A Proved Ore 
Reserve implies a high degree of confidence 
in the Modifying Factors (JORC Code).

Pr.Sci.Nat.
Professional Natural Scientist of the South 
African Council for Natural Scientific 
Professions.

Reserve Life
The scheduled extraction period in years for 
the Total Ore Reserves in the approved Life 
of Operation Plan reported to two significant 
figures.

ROM (Run of Mine product)
Product mined in the course of regular mining 
activities.

SACNASP
South African Council for Natural Scientific 
Professions.

SAIMM
Southern African Institute of Mining and 
Metallurgy.

Sands
Tailings produced as a by-product during 
beneficiation of ore.

Stockpile (SP)
An accumulation of ore or mineral built 
up when demand slackens or when the 
treatment plant or beneficiation equipment 
is incomplete or temporarily unable to 
process the mine output; any heap of material 
formed to create a buffer for loading or other 
purposes, or material dug and piled for future 
use.

Tailings
Those portions of washed or milled ore that 
are too poor to be treated further or remain 
after the required metals and minerals have 
been extracted.

Total Ore Reserves
The sum of Proved Ore Reserves and 
Probable Ore Reserves.

Finance, marketing and  
general terms
AASB
Australian Accounting Standards Board.

Adjusted return on invested capital 
(Adjusted ROIC)
Calculated as Underlying EBIT, adjusted 
for uncontrollable and one-off impacts in 
the current financial year, less the discount 
on rehabilitation provisions included in net 
finance cost, tax effected by the Group’s prior 
period Underlying effective tax rate (ETR) 
including our manganese equity accounted 
investments on a proportional consolidated 
basis, divided by the sum of fixed assets 
(excluding any rehabilitation asset, the 
impairment of Illawarra Metallurgical Coal 
and our equity accounted manganese alloy 
smelters, and unproductive capital associated 
with Growth and Life extension projects) and 
inventories. Our manganese equity accounted 
investments are included in the calculation on 
a proportional consolidation basis. Underlying 
EBIT is adjusted by excluding the current 
period impacts of foreign currency on revenue 
and cost, and commodity prices on revenue 
and associated price-linked costs, less the 
discount on rehabilitation provisions included 
in net finance cost, and tax effected by the 
Group’s prior period Underlying effective tax 
rate.

AGM
Annual General Meeting.

AO
Officer of the Order of Australia.

1
6
5

Australian Securities and Investments 
Commission (ASIC)
The independent Australian Government 
body that is Australia’s integrated corporate, 
markets, financial services and consumer 
credit regulator.

ASX
ASX Limited or Australian Securities 
Exchange.

ASX Listing Rules
The rules governing the listing of an entity 
and the quotation of its securities on the ASX.

B-BBEE
Broad-Based Black Economic Empowerment.

BHP
BHP, formerly known as BHP Billiton, is the 
group of companies headed by, and including, 
BHP Group Ltd and BHP Group plc.

Black People
As defined in the Broad-Based Black 
Economic Empowerment Amendment Act 
2013 (South Africa), a generic term meaning 
Africans, Coloureds and Indians who are 
citizens of the Republic of South Africa by 
birth or descent; or who become citizens of 
the Republic of South Africa by naturalisation 
before 27 April 1994 or on or after 27 April 
1994 and who would have been entitled to 
acquire citizenship by naturalisation prior to 
that date.

Board
The Board of Directors of South32 Limited.

South32 Annual Report 2021InformationGlossary of terms and abbreviations continued

6
6
1

Finance, marketing and  
general terms continued
Carbon emissions (also referred to as 
Greenhouse gas (GHG) emissions)
For our reporting purposes, these are the 
aggregate carbon dioxide equivalent (CO2-e) 
emissions of carbon dioxide (CO₂), methane 
(CH₄), nitrous oxide (N₂O), hydrofluorocarbons 
(HFCs), perfluorocarbons (PFCs) and sulphur 
hexafluoride (SF₆). 

We measure and report emissions according 
to local jurisdictional requirements and the 
World Resources Institute/World Business 
Council for Sustainable Development 
Greenhouse Gas Protocol, which includes:

–  Scope 1 carbon emissions that are direct 

carbon emissions from our own operations, 
including the electricity we generate at our 
sites;

–  Scope 2 carbon emissions that are indirect 
carbon emissions from the generation of 
purchased electricity; and

–  Scope 3 carbon emissions that are carbon 

emissions in our supply chain.

CEO
Chief Executive Officer.

CFO
Chief Financial Officer.

Community investment
Contributions made to support communities 
that we operate in, or have an interest in. 
Our contributions to community programs 
comprise direct investment, in-kind support 
and administrative costs.

Contractor
Any organisation or individual (other than a 
South32 employee) who provides labour to 
South32 pursuant to a contract for service.

Cost, Insurance, and Freight (CIF)
A contractual term defining responsibilities 
and division of cost and risk between buyer 
and seller, in which the seller is responsible for 
clearing the goods for export and bears the 
cost of freight and insurance to the named 
port of destination. The buyer assumes all 
risks and costs for unloading the goods and 
clearing the goods for import. Risk passes 
from seller to buyer once the goods are on 
board the vessel at the port of shipment.

CO2-e
Carbon dioxide equivalent.

COO
Chief Operating Officer.

Corporations Act
Corporations Act 2001 (Cth).

Commodity Price Protocol (CPP)
Refers to the long-term commodity price 
forecasts used internally within South32. 
There is a governance process to ensure 
that a consistent set of macroeconomic 
assumptions are used to develop the 
commodity prices to be applied across 
South32.

COVID-19
Is an infectious coronavirus disease which 
causes respiratory illness. On 11 March 2020 
the World Health Organization declared the 
COVID-19 outbreak a pandemic affecting 
many countries globally.

Demerger
The separation of assets from BHP effected in 
May 2015 to create a separate entity South32 
Limited, listed on the ASX, LSE and JSE.

DTR
UK Financial Conduct Authority’s Disclosure 
Guidance and Transparency Rules. A 
reference to DTR followed by a number is a 
specific rule under the DTR.

EBIT
Earnings before interest and tax.

EBITDA
Earnings before interest, tax, depreciation 
and amortisation.

Effective tax rate (ETR)
Income tax expense/benefit divided by profit/
loss subject to tax; both the numerator and 
denominator exclude equity accounted 
investments.

Employee
Any person in full-time, part-time or casual 
employment engaged by South32 on a 
temporary or permanent basis pursuant to a 
contract of service.

ESG
Environmental, social and governance.

ESOP Trusts
The trusts which purchase and hold South32 
Limited shares for the purpose of the South32 
Equity Incentive Plans. South32 has an 
Australian ESOP Trust and South African ESOP 
Trust for employees located in the respective 
countries.

Executive KMP
Lead Team members who are classified as 
KMP.

External Auditor
KPMG.

Fatality
A health or safety event where an injury or 
occupational illness has caused the death of 
one or more person(s).

Free On Board (FOB)
A contractual term defining responsibilities 
and division of cost and risk between buyer 
and seller, in which the seller is responsible 
for clearing the goods for export and loading 
them on board the vessel at the named port 
of shipment. The buyer assumes all risks and 
costs for goods from this moment forward.

Free cash flow
Free cash flow before interest and tax 
represents operating cash flows including 
dividends received from equity accounted 
investments, before financing activities and 
tax, and after capital expenditure.

FX
Foreign exchange.

FYXX
Refers to the financial year ending 30 June 
20XX, where XX is the two-digit number for 
the year.

Gearing
The ratio of net debt to net debt plus net 
assets.

Global Reporting Initiative (GRI)
GRI is an international independent 
organisation that has established an 
international framework and standards for 
sustainability reporting. South32 prepares 
our Group-level annual Sustainable 
Development Report in accordance with the 
GRI Sustainability Reporting Standards (Core 
option) and the GRI Mining & Metals Sector 
Supplement.

Group
Refers to South32 Limited and its subsidiaries 
and operated joint arrangements.

HSEC
Health, safety, environment and community.

Indigenous and Tribal Peoples
We use the defined term “Indigenous and 
Tribal Peoples” as per the definition and 
guidance set out in the Indigenous and 
Tribal Peoples Convention, 1989 (No. 169). 
We use this term inclusively to encompass 
the diversity of worldwide Indigenous and 
Tribal Peoples, including but not limited 
First Nations, Native Americans, Traditional 
Owners, Aboriginal and Torres Strait 
Islander Peoples and other land-connected 
communities. We recognise that no single 
definition can fully capture the diversity of 
Indigenous and Tribal Peoples.

International Council on Mining and Metals 
(ICMM)
ICMM is an international organisation 
dedicated to improving the social and 
environmental performance of the mining 
and metals industry. As a corporate member, 
South32 commit to implementing and 
reporting on the ICMM Mining Principles, 
which define environmental, social and 
governance requirements. South32 
participates on the ICMM and various working 
groups.

International Financial Reporting Standards 
(IFRS)
Accounting standards as issued by the IASB 
(International Accounting Standards Board).

JSE
Johannesburg Stock Exchange.

Just Transition
A fair, equitable and inclusive social transition 
towards a low-carbon economy.

KMP
Key management personnel are people who 
have authority and responsibility for planning, 
directing and controlling the activities of 
South32 either directly or indirectly.

LBMA
London Bullion Market Association.

Lead Team
All Chief positions within South32.

LME
London Metal Exchange.

LSE
London Stock Exchange.

LTI
Long-term incentive.

South32 Annual Report 2021InformationManagement roles
Management Roles are Leaders with 
an identified job grading based on the 
requirements of their role and salary rate of 
13 or higher.

Margin on third party products
Comprises Underlying EBIT on third party 
products and services, divided by revenue on 
third party products and services.

Materiality
Materiality is the threshold at which an issue 
or topic becomes sufficiently important that 
it should be reported. Beyond this threshold, 
not all material topics will be of equal 
importance and the emphasis should reflect 
the relative priority of these material topics 
and indicators.

Modern Slavery
Modern slavery is used as an umbrella term 
to include the legal concepts of forced 
labour, debt bondage, forced marriage, 
slavery and slavery-like practices, and human 
trafficking. Essentially, it refers to situations 
of exploitation that a person cannot refuse or 
leave because of threats, violence, coercion, 
deception, and/or abuse of power (Walk Free 
Foundation).

MRN (non-operated joint venture)
Mineração Rio do Norte.

MSCI
Morgan Stanley Capital International.

Net cash
Comprises cash and cash equivalents less 
interest bearing liabilities.

Net debt
Comprises interest bearing liabilities, less 
cash and cash equivalents.

Net operating assets
Represents operating assets net of operating 
liabilities which predominantly excludes 
the carrying value of equity accounted 
investments, cash, interest bearing liabilities, 
tax balances and certain other financial 
assets and liabilities.

Occupational Exposure Limit (OEL)
The concentration of a substance or agent, 
exposure to which, according to current 
knowledge, should not cause adverse health 
effects nor cause undue discomfort to nearly 
all workers.

Occupational illness
An occupational illness is any abnormal 
condition or disorder, other than one 
resulting from an occupational injury, caused 
or aggravated by exposures to factors 
associated with employment. It includes acute 
or chronic illnesses or diseases which may be 
caused by inhalation, absorption, ingestion or 
direct contact.

Occupational Safety and Health 
Administration (OSHA)
The OSHA of the United States Department 
of Labor. We adopt these guidelines for the 
recording and reporting of occupational 
injuries and illnesses to ensure that 
classifications are applied uniformly across 
our workforce.

Operating unit cost
Operating unit cost is Revenue less 
Underlying EBITDA divided by sales volume.

Operational carbon emissions
Scope 1 and 2 carbon emissions from our 
operated assets.

Operational Leadership Team
All General Managers and Managers 
reporting to Vice President Operations, and all 
Managers reporting to General Managers at 
an operation. Excludes: Functional Managers 
(such as Human Resources, Finance and 
Supply).

Our People
As defined in our Code of Business Conduct 
– Our People includes South32 Directors, 
executive management, employees and 
contractor staff (e.g. labour hire, temporary or 
agency staff, and secondees).

Paris Agreement
A global climate agreement that was agreed 
under the United Nations Framework 
Convention on Climate Change (UNFCCC) at 
the 21st Conference of the Parties in Paris 
(30 November to 12 December 2015). The 
Paris Agreement sets in place a durable and 
dynamic framework for all countries to take 
climate action from 2020, building on existing 
international efforts in the period up to 2020.

Recordable illnesses
The sum of work-related (fatalities + 
permanent impairment >30 per cent of body + 
lost time illnesses + restricted work illnesses + 
medical treatment illnesses).

Recordable injuries
The sum of work-related (fatalities + 
permanent impairment >30 per cent of body 
+ lost time injuries + restricted work injuries + 
medical treatment injuries).

Return on invested capital (ROIC)
Calculated as Underlying EBIT less the 
discount on rehabilitation provisions included 
in net finance cost, tax effected by the 
Group’s Underlying effective tax rate (ETR) 
including our manganese equity accounted 
investments on a proportional consolidated 
basis, divided by the sum of fixed assets 
(excluding any rehabilitation asset, the 
impairment of Illawarra Metallurgical Coal 
and our equity accounted manganese alloy 
smelters, and unproductive capital associated 
with Growth and Life extension projects) and 
inventories. Our manganese equity accounted 
investments are included in the calculation on 
a proportional consolidation basis.

Senior Leadership Team
Presidents and Vice Presidents reporting to 
members of the South32 Lead Team. 

Shared value
The identification of opportunities that create 
economic value while also advancing the 
environmental and social outcomes of the 
communities and regions in which we operate.

South32 Equity Incentive Plan
An equity incentive plan that allows the 
Board to make offers to employees to acquire 
securities in South32 Limited and to otherwise 
incentivise employees.

S&P 500
Standard and Poor's 500.

STI
Short-term incentive.

Sustainable development
Defined as supporting the needs of the 
present without compromising the ability 
of the future generations to meet their own 
needs.

Total Recordable Injury Frequency (TRIF)
(The sum of recordable injuries x 1,000,000)÷ 
exposure hours. This is stated in units of 
per million hours worked for employees and 
contractors. We adopt the United States 
Government Occupational Safety and Health 
Administration (OSHA) guidelines for the 
recording and reporting of occupational 
injuries and illnesses.

Total Recordable Illness Frequency (TRILF)
(The sum of recordable illnesses x 1,000,000)÷ 
exposure hours, for employees and 
contractors. This is stated in units of per 
million hours worked for employees and 
contractors. We adopt the United States 
Government Occupational Safety and Health 
Administration (OSHA) guidelines for the 
recording and reporting of occupational 
injuries and illnesses.

Total Shareholder Return (TSR)
TSR measures the return delivered to 
shareholders over a certain period through 
the change in share price and any dividends 
paid. It is the measure used to compare our 
performance to that of relevant peer groups 
under the LTI.

Transformation
A national strategy in South Africa aimed 
at attaining national unity, promoting 
reconciliation through negotiated settlement 
and non-racism.

TSX
Toronto Stock Exchange.

Underlying earnings
Underlying earnings is profit after tax 
and earnings adjustment items. Earnings 
adjustments represent items that don’t 
reflect our underlying operations. We believe 
that Underlying earnings provides useful 
information, but shouldn’t be considered as 
an indication of, or an alternative to, profit or 
attributable profit as an indicator of operating 
performance.

Underlying EBIT
Underlying EBIT is profit before net finance 
costs, tax and after any earnings adjustment 
items, impacting profit. It’s reported inclusive 
of our share of net finance costs and tax of 
equity accounted investments. It isn’t an IFRS 
measure of profitability, financial performance 
or liquidity and may be defined and used 
in differing ways by different entities. We 
believe that Underlying EBIT provides useful 
information, but shouldn’t be considered as 
an indication of, or alternative to, profit or 
attributable profit as an indicator of operating 
performance.

Underlying EBIT margin
Comprises Underlying EBIT excluding third 
party product EBIT, divided by revenue 
excluding third party product revenue.

1
6
7

South32 Annual Report 2021InformationGlossary of terms and abbreviations continued

Finance, marketing and  
general terms continued
Underlying EBITDA
Underlying EBIT before depreciation and 
amortisation.

Underlying EBITDA margin
Comprises Underlying EBITDA excluding third 
party product EBITDA, divided by revenue 
excluding third party product revenue.

Underlying effective tax rate (ETR)
Underlying income tax expense/benefit 
divided by underlying profit/loss subject to 
tax; both the numerator and denominator 
exclude equity accounted investments.

Workplace Gender Equality Act 2012
Australian legislation which aims to improve 
and promote equality for both women and 
men in the workplace.

Terms used in resources and 
reserves
A.Al₂O₃
available alumina

Ag
silver

Au
gold

Cu
copper

CV
calorific value

Fe
iron

Met
metallurgical coal

Mn
manganese

Ni
nickel

OC
open-cut/open-pit/opencast

8
6
1

Pb
lead

R.SiO₂
reactive silica

S
sulphur

Th
thermal coal

UG
underground

VM
Volatile Matter

Zn
Zinc

Units of measure
%
percentage or per cent

dmt
dry metric tonne

dmtu
dry metric tonne unit

g/t
grams per tonne

ha
hectare

Kcal/kg
kilo calories per kilogram

kdmt
thousand dry metric tonne

kL
kilolitre

km
kilometre

koz
thousand ounces

kt
kilotonnes

ktCO2-e
kilotonnes of carbon dioxide equivalent

ktpa
kilotonnes per annum

kW
kilowatt

kwmt
thousand wet metric tonnes

m
metre

ML
megalitre

Moz
million ounces

Mt
million tonnes

Mtpa
million tonnes per annum

oz
ounce

t
tonnes

tpa
tonnes per annum

tpd
tonnes per day

tph
tonnes per hour

US$/lb
US dollars per pound

US$/oz
US dollars per ounce

South32 Annual Report 2021InformationCorporate directory

Group Headquarters (Registered Office)
Level 35  
108 St Georges Terrace  
Perth 6000 
Western Australia

Telephone: 
Facsimile: 
Email: 

+61 8 9324 9000 
+61 8 9324 9200 
Company.Secretary@south32.net

South Africa Office
39 Melrose Boulevard 
Melrose Arch  
Johannesburg 2076 

PO Box 61820  
Marshalltown 2107

Telephone: 

+27 11 376 2000

Singapore Marketing Office
16 Collyer Quay 
Unit #18-00 
Income at Raffles 
Singapore 049318

Telephone: 

+65 6679 2600

London Marketing Office
7 Albemarle Street 
London W1S 4HQ  
United Kingdom

Telephone: 

+44 20 7798 1700 

North America Office
Suite 1850 
1066 West Hastings Street 
Vancouver V6E 3X1 
British Columbia 
Canada

Telephone: 

+1 604 915-5680

Share Registrars and Transfer Offices
Contact details for the Company’s share registries  
in Australia, South Africa and the United Kingdom  
are included on page 163.

Information about the ADR Depositary, Transfer Agent 
and Registrar can also be found on page 163.

Printed copies of this Annual Report 
will only be posted to those shareholders 
who have requested a hard copy. Other 
shareholders are notified by email when the 
Annual Report becomes available and given 
details of where to access it electronically.

This Annual Report is printed on paper that is 
FSC® (Forest Stewardship Council) certified and 
manufactured from plantation-grown timber.

Both the paper manufacturer and printer are certified 
to the highest possible internationally recognised 
standard for environmental management.

www.south32.net