2021 Annual Report Posting Announcement

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•	2021 Annual Report
•	2021 Corporate Governance Statement
•	Appendix 4G: Key to Disclosures - Corporate Governance Council Principles & Recommendations

•	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

•	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

•	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.

•	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.

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•	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

•	We have specialised knowledge through in-house expertise or the use of external experts, including tax management 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.

•	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.

•	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.

•	Working safely
•	Stable and predictable performance while minimising impact

•	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.

•	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.

•	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.

•	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.

•	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

US$'000	FY21	FY20
Short-term employee benefits	6,942	5,759
Post-employment benefits	182	192
Other long-term benefits	286	268
Termination benefits	-	316
Share-based payments	4,611	6,664
Total	12,021	13,199

US$'000	Joint ventures		Associates
US$'000	FY21	FY20	FY21	FY20
Sales of goods and services	239,670	205,880	4,148	3,126
Purchases of goods and services	2	-	51,489	80,887
Interest income	4,912	7,814	-	197
Dividend income	197,164	348,664	-	-
Interest expense	1,816	7,593	-	-
Increase/(decrease) in short-term financing arrangements with related parties	1,000	(14,855)	-	-
Increase/(decrease) in loans with related parties	10,800	35,965	(5,759)	(15,864)

US$'000	Joint ventures		Associates
US$'000	FY21	FY20	FY21	FY20
Trade amounts owing to related parties	206	549	176	161
Other amounts owing to related parties⁽¹⁾	285,000	284,000	-	-
Trade amounts owing from related parties	31,539	57,901	318	422
Loan amounts owing from related parties⁽²⁾⁽³⁾	130,800	120,000	66,656	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.}

•	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.

•	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;
•	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.

a)	The consolidated financial statements and notes on pages 95 to 146were 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.

Investor Relations
Alex Volante T +61 8 9324 9029 M +61 403 328 408 E Alex.Volante@south32.net	Tom Gallop T +61 8 9324 9030 M +61 439 353 948 E Tom.Gallop@south32.net
Media Relations
Miles Godfrey M +61 415 325 906 E Miles.Godfrey@south32.net	Jenny White T +44 20 7798 1773 M +44 7900 046 758 E Jenny.White@south32.net