Ann: Mozal Aluminium Update, page-8

Some good background information there, Ash.

One of our biggest attributes is we are diversified across a number of mines, in a number of commodities, spread across various countries. A problem at one site is not the end of the world. Unfortunately, because we are so diversified, we seem to go from one problem to another as these sites -- at let's just say exotic locations, develop issues. It's hard to think of a time in recent issue where a challenge has not been present. We inherited most of our sites in 2015 in the BHP spin-off. I'd like to think they aren't the types of locations we'd be looking at voluntarily choosing to operate in were South32 to be assembling assets to form a new ASX-listing in 2025.

Thank goodness we quickly disposed of our South African thermal coal operations years ago.

Just in the past year or so we've had the Worsley environmental (non) approval scare, the GEMCO tropical cyclone damage, the Mozal civil unrest scare, and a collapse in the nickel price. Now, it's a lack of agreement over electricity to the Mozal site. The common theme is these problems have all been resolved -- reasonably satisfactorily -- in due course. We received the Worsley approvals, rebuilt GEMCO with an insurance cheque paid, the civil unrest has seemingly improved, and we have sold Cerro Matoso.

The optimist in me wants to think this will also be resolved in the fullness of time. How? I have no idea. The current agreement has 8 months to run. We contribute 3% of Mozambique's GDP, are presumably a major tax payer and employer. And the government is the major owner of the electricity company we're negotiating with, as well as a minor shareholder in Mozal. One would hope self interest on the part of South32 and particularly the Mozambique government would ensure this gets resolved....somehow. It is not in the Mozambique government's interests for Mozal to close any more than it was in the South Australian government's interests for Whyalla to close. A deal will simply have to be done and now S32 has alerted the ASX to the possibility of closure, hopefully pressure will be on Mozambique to work it out.

I love the diversified base metals exposure of South32 but these continual issues are partly why I've been adding to my BHP position this year rather than South32.