Glencore Plc · LSE:GLEN
Glencore — Investor Presentation (December 2017)
27 slides from Glencore's investor presentation, Dec 12, 2017
Slide 1: Investor update 12 December 2017
Cut Nickel cathode, Nikkelverk, Norway Investor update 12 December 2017
Slide 2: Important notice concerning forward looking statements
Important notice concerning this document including forward looking statements This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward looking statements may be identified by the use of forward looking terminolog
Slide 3: Highlights
Copper cathode, Townsville copper refinery, Australia Highlights Ivan Glasenberg - CEO
Slide 4: Glencore in four elements
Glencore in four elements Compelling commodity mix • Leading global producer of “Tier 1” commodities: copper, cobalt, nickel, zinc & thermal coal • “Tier 1” commodity outlooks underpinned by persistent supply challenges and robust demand • Best placed large cap company for Electric Vehicle revolutio
Slide 5: Compelling commodity mix in a changing world
Compelling commodity mix in a changing world • Copper: where is “the wall of supply”? Glencore most exposed to mid / late Demand: robust demand, critical to electric vehicle adoption Supply: underinvestment, grade declines & elevated strike risk cycle commodities(1) • Cobalt: enabling the electric v
Slide 6: Resilient and proven cash generative business model
Resilient and proven cash generative business model Industrial: “Tier 1” Assets in “Tier 1” Commodities Strong cash margins across our Industrial assets(1) • Genuinely diversified by geography and 104% commodity – Major producer of copper, cobalt, zinc, nickel and 71% 85% ex Au thermal coal • These
Slide 7: Conviction to create value through partnerships and M&A
Conviction to create value through partnerships and M&A … Agriculture Oil Copper Royalties Strong deal origination skills • Unique ability to source and Glencore Agriculture HG Storage Ernest Henry BaseCore Metals structure deals using well 49.99% sold to CPP/BCIMC 51% sold to HNA for $775M 30% econ
Slide 8: … and organic reinvestment
… and organic reinvestment Nickel Zinc Copper • Adding value in a capital efficient manner, INO Extension Zhairem (Kazzinc) Katanga acid plant in compelling commodities • c.$170M annual spend on • $400M brownfield mine • $237M construction cost • Extensive growth options across the portfolio brownfi
Slide 9: Long mine-lives and significant resource optionality in “Tier 1” commodities
Long mine-lives and significant resource optionality in “Tier 1” commodities Peer Iron Ore Long-life low-cost assets in many of the world’s premier mining districts average • Supports sustainable long-term cash flows reserve life(3): Significant mine-life extension potential embedded in all key comm
Slide 10: Investing for the future
Zinc balls, Investing for the future Steven Kalmin - CFO
Slide 11: 2018-2020 guidance – Industrial capex average of c.$4.5bn per annum
2018-2020 guidance – Industrial capex average of c.$4.5bn per annum Average c.$0.5bn p.a. uplift over December 2016 guidance of Industrial capex ($bn) c.$4.0bn p.a. reflects: 4.8 4.7 • c.$0.4bn cumulative Chad West “short payback” drilling programme 4.0 4.0 (higher price realisations) 1.4 1.3 1.1 0.
Slide 12: Katanga update: commissioning on schedule
Katanga update: commissioning on schedule • Commissioning underway First leach solution from Whole Ore Leach plant • First feed to Whole Ore Leach plant on 21 November • Extensive operational readiness planning • First cathodes on 11 December 2017 • Production profile – KML Guidance(1) • 2018: c.150
Slide 13: Integrated Nickel Operations: phased investment in a positively trending commodity
Integrated Nickel Operations: phased investment in a positively trending commodity • Highlights Sudbury basin • INO brownfields extension supporting c.60ktpy nickel production until 2035 • $1.2bn capex over 2018-2024E – c.$170M annual average Potential future • Additional c.$140M cumulative capex ov
Slide 14: Zhairem (Kazzinc) – brownfield mine development
Zhairem (Kazzinc) – brownfield mine development • Zhairem brownfield development to replace/exceed the Maleevsky and Tishinsky Zhairem - location mines as they gradually reach end of lives (around 2023) • c.$400M capital cost (2018-2020) • Producing c.160ktpa zinc in concentrate over an initial 14 y
Slide 15: Koniambo update
Koniambo update • Operation of Furnace 1 over 2017 has Koniambo metallurgical plant demonstrated strong on-line time, operational integrity and reliability of the redesign • Continued site debottlenecking progress: • Improved power plant operations and reliability • Reduced refinery cycle time • Tap
Slide 16: Oil: Chad West – “short payback” single-rig drilling campaign
Oil: Chad West – “short payback” single-rig drilling campaign • Highlights: Chad West – oil production and • Four phases of drilling based on different fields and development phasing (forecast kbpd) associated reservoir sands • c.$0.4bn cumulative spend 2018-2020E 30 • Chad volumes to more than offs
Slide 17: 2018-2020 guidance – Strong production growth in compelling commodities
2018-2020 guidance – Strong production growth in compelling commodities 2017-2020 key growth: Commodity Guidance • Copper: +25% FY 2017 (1) FY 2018 FY 2019 FY 2020 • Cobalt: +133% Copper - Base production kt 1,310 ± 15 1315± 30 1300 ± 30 1340 ± 30 • Zinc/Lead: +18% / +21% Katanga KML(2) Cu guidance
Slide 18: 2018 Guidance: strong by-product credits support low all-in unit cash costs
2018 Guidance: strong by-product credits(1) support low all-in unit cash costs • Modest calculated unit cash cost increases Copper costs(2) vs. price (c/lb) Coal costs(2) and margin ($/t) across the portfolio, in line with inflation and $/t margin FX developments, partially/fully offset by 301(3) 31
Slide 19: 2018 guidance: Marketing - continued delivery of stable cash flows
2018 guidance: Marketing - continued delivery of stable cash flows Marketing Adjusted EBIT ($M) 2017 Marketing EBIT guidance of c.$2.8bn • Progressively increased throughout the year in line with 3500 Long-term guidance range: $2.2-$3.2bn supportive market conditions 3000 2500 Forward Marketing EBIT
Slide 20: Strong balance sheet and conservative financial policies
Strong balance sheet and conservative financial policies • Commitment to strong BBB Investment Grade • Ensures access to credit markets on attractive terms • Balance sheet fully and conservatively repositioned 1 • Targeting a maximum 2x Net debt/Adjusted EBITDA through the cycle, augmented by an upp
Slide 21: The future needs our commodities
The future needs our commodities Ivan Glasenberg - CEO Cobalt briquettes, Nikkelverk, Norway
Slide 22: The world is changing; electric vehicles will be a disruptive force
The world is changing; electric vehicles will be a disruptive force How much metal is required to realise the Electric Vehicles Initiative target(1) of 30 million electric vehicle sales by 2030? • We commissioned CRU to model the metal requirements across the supply chain, from generation and grid i
Slide 23: The future needs our commodities
The future needs our commodities • The energy and mobility transformation currently underway is forecast to unlock material new sources of demand for enabling underlying commodities including copper, nickel and cobalt • These commodities offer compelling fundamentals when coupled with persistent sup
Slide 24: Appendix
Cut Nickel cathode, Nikkelverk, Norway Appendix
Slide 25: Sustainability and governance
Sustainability and governance Safety LTIFR(1,2) 2010 to 2017 YTD • 8 fatalities from 8 incidents YTD, 5 at focus assets • 2 in Kazakhstan, 2 in Bolivia, 1 in Zambia, 1 each in 2.79 South Africa, Italy and Peru 2.54 • LTIFR 1.07, down 23% compared to 2016(2) • TRIFR 3.16, down 22% compared to 2016(2)
Slide 26: Illustrative ‘spot’ annualised cashflows
Illustrative ‘spot’ annualised cashflows Guidance Guidance $bn Copper(1) 2018E Zinc(2) 2018E Copper EBITDA(1) 5.7 Total copper production (kt) 1465.0 Total Zinc production (kt) 1090.0 By-product prod other Depts (kt) -147.0 By-product prod other Depts (kt) -121.7 Zinc EBITDA(2) 2.7 Katanga & Mopani
Slide 27: Notes
Notes Slide 22 – The world is changing, Electric vehicles will be a disruptive force Scenario parameters: • Technology & markets • Sustained productivity enhancements in renewable and energy storage technologies (including energy density and material efficiency) • A rapid decline in fossil investmen