Anglo American plc · LSE:AAL
Anglo American — Mining Indaba 2005
27 slides from Anglo American's conference presentation, Feb 8, 2005
Slide 1: Mining in Africa: A great opportunity for investment
Mining in Africa: A great opportunity for investment P. Lazarus Zim Chief Executive Anglo American Corporation of South Africa Limited 8 February 2005
Slide 2: South Africa's political transformation
South Africa’s political transformation… • A stable democracy under a sound constitution. • 3 peaceful & free & fair elections. • One nation, one flag, one anthem. • Free press & independent judiciary. • An established culture of dialogue and debate to resolve issues. • Political transformation has
Slide 3: Remarkable economic transformation: GDP growth
… accompanied by an already remarkable economic transformation Higher & less volatile GDP growth 6.0 5.0 4.0 3.0 % change 2.0 1.0 0.0 Forecast -1.0 (Reuters Consensus) -2.0 1984-93 = 1% pa 1994-2003 = 2.9% pa 2004-07 = 3.8% pa -3.0 84 86 88 90 92 94 96 98 00 02 04 06
Slide 4: Economic transformation: private fixed investment and capital flows
… accompanied by an already remarkable economic transformation Reflected in rising private fixed ... as well as improved capital flows investment ... 12.0 5 Private fixed investment 4 11.5 3 11.0 2 10.5 1 % of GDP % of GDP 0 10.0 -1 9.5 -2 9.0 -3 -4 8.5 1984-93 = -1.2% pa 1994-2003 = 2.2% pa -5 8.0
Slide 5: Economic transformation: fiscal performance and balances
… accompanied by an already remarkable economic transformation Disciplined fiscal performance Improving fiscal balances 55 30.0 50 29.0 28.0 % of GDP Government debt 45 Expenditure 27.0 40 26.0 35 25.0 30 24.0 0 23.0 -1 Revenue 22.0 -2 21.0 -3 20.0 % of GDP Medium-term Framework Economic -4 0.0 -5 2
Slide 6: Economic transformation: lower inflation and interest rates
… accompanied by an already remarkable economic transformation and significantly lower inflation ...provides scope for lower interest rates 20 1984-93 = 14.3% 1994-03 = 7.8% 30 18 16 25 Prime overdraft rate 14 20 12 CPI (CPIX from 1998) 10 % 15 % 8 6 10 Target 4 5 2 Forecast (Reuters Consensus) CPI/
Slide 7: Economic transformation: liquidity and sovereign credit ratings
… accompanied by an already remarkable economic transformation International liquidity position Recognised by improved Sovereign credit ratings 15 10 Moody's S&P Fitch 5 1994 Baa3 BB BB 0 1995 Baa3 BB+ BB -5 2000 Baa3 BBB- BB+ BBB- US$ bn -10 2001 Baa2 BBB- BBB- -15 2002 Baa2 BBB- BBB- -20 2003 Baa2
Slide 8: Rand strength offset higher commodity prices
Although recent Rand strength largely offset higher commodity prices… Gold price - Rand & US Dollars Platinum price - Rand & US Dollars 450 3500 900 7000 Rand/oz 800 400 3000 6000 Rand/oz 700 Rand/oz Rand/oz USD/oz USD/oz 350 2500 5000 600 300 2000 4000 USD/oz USD/oz 500 250 1500 400 3000 99 00 01 0
Slide 9: Mining investment growth has outstripped other sectors
…growth in mining investment has outstripped that of other sectors South Africa: Gross Fixed Capital Formation (constant 2000 prices) 220 Mining & quarrying 200 180 Q1 94 = 100 160 140 Total excl mining 120 100 94 95 96 97 98 99 00 01 02 03 04
Slide 10: Total Anglo American investment in SA
Total Anglo American investment in SA Rm Rm Rm Rm Rm Rm Rm Dec Dec Dec Dec Dec Jun 1999 2000 2001 2002 2003 2004 TOTAL CAPEX 4,529 6,425 10,703 13,390 14,030 6,020 55,097 Replacement 4,529 3,047 2,849 4,631 6,463 2,704 24,223 Expansionary - 3,378 7,854 8,759 7,567 3,316 30,874 Acq of subs 6,934 1,62
Slide 11: Anglo American's investment programme
Anglo American’s investment programme Approved $6bn global project portfolio… Kleinkopje MEREBANK TICOR 2 W.L. TAILINGS ISIBONELO Buxton $56m $150m $54m $186m $65m $173m SIGUIRI FINSCH RICHARDS BAY $52m $130m CERREJÓN Skorpion $17m EL SOLDADO $235m $454m $80m CUIABÁ MOAB COPEBRAS BLACK MTN KHOTSONG
Slide 12: Anglo American's investment programme: Southern Africa
Anglo American’s investment programme Approved $6bn global project portfolio… …of which $4bn is in Southern Africa Kleinkopje MEREBANK TICOR 2 W.L. TAILINGS ISIBONELO Buxton $56m $150m $54m $186m $65m $173m SIGUIRI FINSCH RICHARDS BAY $52m CERREJÓN $130m EL SOLDADO Skorpion $235m $17m $80m $454m CUI
Slide 13: South Africa: A good story
South Africa: A good story • South Africa post-1994 is a much better place for doing business. • Because of South Africa’s size, this has positive implications for the Continent. • SA business – often lead by the mining sector - is seeking to expand across the Continent. • This is occurring against
Slide 14: SA's improved performance impacts the Region and Continent
SA’s improved performance impacts positively on the Region & increasingly the Continent Due to its size South Africa impacts on the Continent Gross National Income Population % of Sub- Saharan Per 2002 figures USD bn Africa capita (millions) South Africa $113 36% $2 520 45 Rest of Southern Africa* $
Slide 15: SA's improved performance impacts the Region: GDP growth
SA’s improved performance impacts positively on the Region & increasingly the Continent GDP growth - 1990-2002 8 7 6 % per annum 5 4 3 2 1 Per capita incomes 0 now growing in most S Africa* Zambia S-Saharan Africa Angola Zimbabwe Namibia Mauritius Lesotho Malawi Tanzania Botswana Mozambique Swazilan
Slide 16: Significant improvement on pre-1994 performance
Significant improvement on pre-1994 performance South Africa's boom/bust cycle of the GNP per capita - 1980-91 '80s 8.0 8 But some successes Declining per capita 7 incomes 6.0 6 4.0 % per annum 5 4 2.0 % change 3 0.0 2 1.4% pa 1 -2.0 0 -4.0 -1 South Africa* Zambia Mauritius Zimbabwe Malawi Angola Na
Slide 17: SA business as a regional investor
SA business as a regional investor 1993 2004 - 18 of SA top 100 listed companies - 40 of SA top 100 listed companies invested in rest of Africa invested in rest of Africa - 232 investments in 27 countries employing 72 000 people 7 Source: Who Owns Whom, Africa Inc, Nov 2004
Slide 18: Favourable global environment for mining producers
• Favourable global environment for mining producers. • Accompanied by renewed global focus on Africa. • As the major source of many of the globe’s unexploited mineral reserves, Africa in particular stands to benefit from the improved environment for mining. 8
Slide 19: Favourable global environment: China's share of consumption
Favourable global environment now reinforces improved business climate Copper 40 China's Share of World First-use Metals 30 Consumption Nickel 20 Zinc (%) 10 1994 0 2004 2010 Aluminium Fe Ore Note: Fe ore is sea-borne. Ni includes Ni content of stainless imports. Source: MSU, WBMS, INSG, Macquarie (
Slide 20: LME inventories and base metals price index
Favourable global environment now reinforces improved business climate LME Inventories* and Base Metals Price Index 3.5 Jan 1997 to Dec 2004 120 3.0 * Cu includes Comex. Nickel 110 2.5 Al Stocks, Mt Lead Price Index 1990=100100 2.0 90 1.5 Zn 1.0 80 0.5 70 Cu 0.0 60 Jan 97 Jan 98 Jan 99 Jan 00 Jan 01
Slide 21: 2005: Africa in the global spotlight
2005: Africa in the global spotlight • 2005 WEF (Davos) – unprecedented focus on Africa. • Strong African presence & participation: Presidents Mbeki, Obasanjo, Mkapa. • PM Tony Blair has placed Africa high on the agenda of his G8 & EU presidencies. • Awaiting Report of the Africa Commission. • Growi
Slide 22: What we need to do: peace and security
Africa in the global spotlight: What we need to do • Peace & security are vital. – Will make the full exploitation of Africa’s mineral wealth possible. – We applaud the AU, Ecowas & President Mbeki’s current peace making efforts. – The current focus of time and resources on peace making is necessary
Slide 23: What we need to do: investor friendly policies
Africa in the global spotlight: What we need to do • Continue to promote investor friendly policies. • Ensure regulatory and policy certainty. • For example: in SA the rules are clear – New Mining legislation – Mining Charter. • The key challenge and focal area is that of implementation. • It is vit
Slide 24: What we need to do: government and business partnerships
Africa in the global spotlight: What we need to do • Promote strong partnerships between government and business. • Public Private Partnership (PPP) – much more that a buzzword. • PPP is a necessity – especially in mining. • Mining projects are high risk, capital intensive, infrastructure and power
Slide 25: Africa's business challenges are manageable
Africa’s business challenges are manageable • Anglo American sees transformation as a strategic imperative. • This is driven at CEO level through the Transformation Committee with strong operational interface. • We will continue to focus on: – Employment Equity – Ownership – Procurement – Enterprise
Slide 26: Anglo American's BEE track record
Anglo American’s BEE track record – Procurement & Enterprise dev. TOTAL TOTAL Rm NOMINAL REAL (since inception) (2003 money) Procurement 9,532 11,142 Development (SMEI’s) 706 783 Large Transactions 13,193 17,382 Future: Continued 20% - 30% per annum procurement growth Major BEE focus in Anglo Pl
Slide 27: Summary & conclusions
Summary & conclusions • Africa is at a critical historical crossroads. • The developed world is indicating its willingness to assist. • Global economic circumstances provide a supportive backdrop. • Vital that we, as Africa, seize the moment. • Confident that mining will play a leading role in drivi