Kumba Iron Ore Limited · JSE:KIO
Kumba Iron Ore — ESG Presentation (September 2014)
30 slides from Kumba Iron Ore's sustainability presentation, Sep 9, 2014
Slide 1: Delivering Sustainable Value
DELIVERING SUSTAINABLE VALUE 9 September 2014
Slide 2: Disclaimer
DISCLAIMER Certain statements made in this presentation constitute forward-looking statements. Forward-looking statements are typically identified by the use of forward-looking terminology such as ‘believes’, ‘expects’, ‘may’, ‘will’, ‘could’, ‘should’, ‘intends’, ‘estimates’, ‘plans’, ‘assumes’ or
Slide 3: Kumba in Perspective
AngloAmerican KUMBA IRON ORE KUMBA IN PERSPECTIVE GROWTH Real Mining. Real People. Real Difference.
Slide 4: Who is Kumba?
WHO IS KUMBA? • A member of the Anglo American Group • A leading supplier of high-quality iron ore to the global steel industry • Operates primarily in South Africa with three mines, located in the Northern Cape and Limpopo provinces • First pure-play iron ore miner to list on the JSE (2006) at a sh
Slide 5: Vision, values, strategic pillars and measures of value
Measure of value– We like to know, as a company, if we are performing as well as we Vision – Our vision is what we can. To know this we hope to be as a company – we want need to measure to be a leading value-adding ourselves. We do this supplier of iron ore to the global against these seven steel in
Slide 6: 2013 Key Features
2013 KEY FEATURES FINANCIAL PERFORMANCE OPERATIONAL PERFORMANCE • Revenue of R54.5 billion, up by 20%, Sishen Kolomela Thabazimbi mainly due to Where Kathu, Northern Postmasburg, Thabazimbi, – 2% increase in realised average export Cape Northern Cape Limpopo prices (US$125/tonne) Production 2013 30.
Slide 7: People are central to our business
PEOPLE ARE CENTRAL TO OUR BUSINESS • We focus on creating and sharing value Staff turnover rate • Employment for 13,000 people, 84% of whom 15.2% are from surrounding communities 12.2% • Continued focus on achieving zero harm 7.2% 7.6% 4.2% 4.0% – Regrettably, a colleague lost his life in April 2014
Slide 8: Board
BOARD Fani Titi Chairman, Independent Norman Mbazima non-executive director Chief Executive Officer Zarina Bassa Gert Gouws Frikkie Kotzee Khanyisile Kweyama Dolly Mokgatle Independent Non-executive director Chief Financial Officer Non-executive director Independent non-executive director non-execut
Slide 9: Executive Committee
EXECUTIVE COMMITTEE Norman Mbazima Frikkie Kotzee Andrew Loots Francois Louw Billy Mawasha Chief Executive Officer Chief Financial Officer Executive Head: Executive Head: Executive Head: Operations Projects Technical Services Yvonne Mfolo Alex Mgadzah Timo Smit Virginia Tyobeka Executive Head: Execu
Slide 10: South African Growth
SOUTH AFRICAN GROWTH Targeting ~5Mt in the next 3 to 5 years, through incremental growth at Sishen and Kolomela SHORT- TO MEDIUM-TERM GROWTH Project name Description Stage Mtpa Jig -1mm Development of beneficiation facility targeting -1mm to +0.2mm Progressed to feasibility study. ~1 jig discard Inv
Slide 11: Long-term growth strategy unchanged
LONG-TERM GROWTH STRATEGY UNCHANGED LONG-TERM GROWTH • Sishen mine – Studies in progress to determine value-accretive options to deploy UHDMS and other low-grade technologies • Kolomela expansion phase 3 – Further increase production through growth from additional pits • Second footprint into Africa
Slide 12: Creating Value
CREATING VALUE PRODUCTIVITY
Slide 13: A recognised responsible corporate citizen
A RECOGNISED RESPONSIBLE CORPORATE CITIZEN • Listed on the JSE SRI Index since 2010 – Achieved “Best Performer” status in 2010 and 2011 • Consistently improving disclosure scores on the Carbon Disclosure Project (CDP) since 2010 – Recognised in CDP’s Global 500 Climate Disclosure Leadership Index in
Slide 14: Value-added statement
VALUE-ADDED STATEMENT 2013 2012 2011 R million % R million % R million % Value added Value added by operating activities 35,677 99.7 29 532 99.7 37,702 99.4 Revenue 54,461 45,446 48,553 Less: Cost of material and services (18,784) (15,914) (10,851) Value added by investing activities Interest income
Slide 15: Value-added statement
VALUE-ADDED STATEMENT 2013 2012 2011 R million % R million % R million % Distributed to shareholders 13,707 38.3 18,006 60.8 17,912 47.2 Dividends to owners of the company 10,500 13,428 13,742 Dividends to non-controlling interests 3,207 4,578 4,170 Value reinvested 2,506 7.0 2,836 9.6 3,670 9.7 Dep
Slide 16: Strong cash generation in 2013
STRONG CASH GENERATION IN 2013 • R31.4 billion cash generated from operations* Utilisation of R31.4 million cash generated from operations: • Dividends of R13.7 billion 0.4 (0.8) – R10.5 billion to shareholders Shareholders' dividends – R3.2 billion to empowerment partners 3.3 Non-controlling intere
Slide 17: Sharing the benefits with our people
SHARING THE BENEFITS WITH OUR PEOPLE • R254 million spent in 2013, mainly in host communities – Education, skills, health and welfare, youth, enterprise and infrastructure development • R84.5 million committed to Social and Labour Plan (SLP) projects in 2013 • 11 early childhood development centres
Slide 18: Sharing the benefits with BEE shareholders
SHARING THE BENEFITS WITH BEE SHAREHOLDERS • R23.5 billion returned to BEE shareholders since listing • Envision employee share scheme – R2.7 billion paid to 6,200 employees below management level in 2011 at the maturity of the first phase – R775 million in dividends paid to employees since listing
Slide 19: Mining Charter review
MINING CHARTER REVIEW • Mining Charter review expected to confirm that Kumba complies; including in the main aspects of – Ownership – Procurement – Employment equity – Human resource development – Development of mining communities – Housing • 2013 performance exceeded Mining Charter targets in the f
Slide 20: Creating and sustaining value
CREATING AND SUSTAINING VALUE Factors that we can control in a challenging iron ore price environment • Improving on safety to sustain a safe working environment for our people • Focus on increasing revenue and improving unit costs, through: – Increasing production from Northern Cape operations – Gr
Slide 21: Creating and sustaining value
CREATING AND SUSTAINING VALUE Factors that we cannot control – Iron ore prices – ZAR/US$ exchange rate – Legislation Cash generated is used to: – Invest in capital to grow the business R7.5 billion to R8.2 billion capex to be spent in 2014 – Pay dividends to shareholders (including BEE shareholder
Slide 22: Material Issues: Risk Management
MATERIAL ISSUES RISK MANAGEMENT
Slide 23: Our approach to risk
OUR APPROACH TO RISK • Kumba’s risk management objectives are intended to achieve the following: – Ensure that our desire to grow and sustain our business beyond our current operations is supported by an effective risk framework that promotes resilience under adverse and changing business conditions
Slide 24: Our material issues
OUR MATERIAL ISSUES 1. Enhancing valuable partnerships • Kumba’s business does not exist in isolation • It depends on a number of key partnerships, which influence good corporate citizenship, our licence to operate and performance optimisation 2. Proactively adapting to a changing landscape • Kumba
Slide 25: Material Issue 1: Enhancing valuable partnerships
MATERIAL ISSUE 1: ENHANCING VALUABLE PARTNERSHIPS Key features 24
Slide 26: Material Issue 2: Proactively adapting to a changing landscape
MATERIAL ISSUE 2: PROACTIVELY ADAPTING TO A CHANGING LANDSCAPE Key features 25
Slide 27: Material Issue 3: Resolving our legal matters
MATERIAL ISSUE 3: RESOLVING OUR LEGAL MATTERS Key features 26
Slide 28: Material Issue 4: Delivering a sustainable future
MATERIAL ISSUE 4: DELIVERING A SUSTAINABLE FUTURE Key features 27
Slide 29: Investment Case
INVESTMENT CASE • Committed to delivering sustainable returns – ~10% dividend yield; one of the highest in the industry • Continue to be a responsible corporate citizen through delivering and exceeding on SLPs and Mining Charter requirements • Focus on delivering on operational targets • Increasing
Slide 30: Thank You
KUMBA IRON ORE THANK YOU Real Mining. Real People. Real Difference.