Slide 1: Preliminary Results 2013
Preliminary Results 2013 4 March 2014 Queensland thermal coal operations, Australia
Slide 2: Basis of preparation and disclaimer
Basis of preparation and disclaimer Basis of preparation The unaudited pro forma financial information detailed below and where otherwise noted has been prepared as if the acquisition of Xstrata plc and full consolidation of such had taken place as of 1 January 2012 to illustrate the effects of the
Slide 3: Ivan Glasenberg, Chief Executive Officer
Ivan Glasenberg Chief Executive Officer Lydenburg ferrochrome smelter, South Africa
Slide 4: Glencore – the most diversified major
Glencore – the most diversified major • Strong inaugural full year results • Resilient performance from marketing activities • Continued delivery of growth assets • Improving position in cost curve for industrial assets • Significant real cost reductions • Benefits of diversified model • Xstrata acq
Slide 5: Steven Kalmin, Chief Financial Officer
Steven Kalmin Chief Financial Officer Nickel crowns, Nikkelverk refinery, Norway
Slide 6: Key 2013 financial highlights – pro forma
Key 2013 financial highlights – pro forma(1) US$M H2 2013 H1 2013 2013 2012(2) % change Revenue 239,673 236,236 1 Adjusted EBITDA (3) 7,049 6,022 13,071 13,086 - Adjusted EBIT (3) 4,252 3,182 7,434 8,591 (13) Net income attributable to equity holders pre- 2,539 2,044 4,583 5,970 (23) significant ite
Slide 7: Marketing 2013 financial performance
Marketing 2013 financial performance Adjusted EBIT 2012 vs 2013 (US$M) Credible marketing Agriculture: performance again in Metals & Minerals: Energy: well supplied grain 2013. Adjusted EBITDA constructive physical strong recovery in coal markets with limited and EBIT up 17% and 11% market condition
Slide 8: Industrial 2013 financial performance
Industrial 2013 financial performance Adjusted pro forma EBITDA/EBIT 2012 vs 2013 (US$M) Metals & Minerals: Strong industrial performance EBITDA and EBIT +2% Energy: Agriculture: with higher volumes and cost and -11% respectively. EBITDA and EBIT fell Despite a 26% jump in reductions largely offsett
Slide 9: Additional $349M of merger cost synergies have been identified
Additional $349M of merger cost synergies have been identified • Passage of time and the continuing “Phase 3” operational asset efficiency Marketing: review has identified a further $349M $450M of cost synergies • Marketing margin enhancement opportunities unchanged • Additional $58M annual interest
Slide 10: Revised cost synergy breakdown
Revised cost synergy breakdown Cost synergies by type 2014 (US$M) Cost synergies by commodity 2014 (US$M) 700 679 900 812 619 800 600 Total cost Total cost 700 synergies: synergies: $1,904M(1) 500 $1,904M(1) 600 Incremental Incremental synergies of 400 synergies of 500 $349M $349M 409 400 288 300 57
Slide 11: Price weakness substantially offset by volume and cost efficiencies
Price weakness in key commodities was substantially offset by volume and cost efficiencies as well as favourable FX Industrial pro forma adjusted EBIT pre-exceptional items – 2013 vs 2012 (US$M) 7,000 6,461 6,000 1,020 389 5,078 5,000 1,221 (997) 4,000 1,344 3,000 2,000 (4,360) 1,000 0 2012 Adj. Pri
Slide 12: 2014 EBIT sensitivity
2014 EBIT sensitivity US$M Indicative full year(1) 10% movement in copper price 1,200 10% movement in zinc price 280 10% movement in lead price 80 10% movement in nickel price 170 10% movement in ferrochrome price 135 10% movement in gold price 140 10% movement in silver price 90 10% movement in coa
Slide 13: Robust balance sheet
Robust balance sheet (1) Key debt metrics – pro forma • Robust liquidity position with $13bn of committed undrawn credit facilities and cash H2 13 US$bn 31 Dec 13 31 Dec 12 as at 31 December 2013 annualised • Strong cashflow coverage ratios: Gross debt 55.2 52.8 • FFO to Net debt at 29.0% Net fundin
Slide 14: 2013 industrial capex breakdown
2013 industrial capex breakdown Metals & Minerals: $9,274M Energy: $3,398M Total: $12,818M(1) 5,958 6,000 6,000 9,000 8,759 8,000 5,000 1,303 5,000 2,704 7,000 4,000 4,000 6,000 961 3,316 5,000 3,000 200 3,000 2,704 4,059 4,000 1,054 694 1,045 2,000 2,000 3,000 5,958 3,396 2,000 1,000 1,000 3,316 1,
Slide 15: Capex update
Capex update • 2013 expansionary capex of $8.5bn, including Capex $bn 2013A 2014F 2015F progression of development projects acquired with Investor Day forecast 12.1 8.0(1) 5.9(1) the Xstrata acquisition: Delta on Las Bambas 0.38 - - • Las Bambas - $1.7bn Mopani Deeps 0.06 0.25 0.20 • Koniambo - $1.0
Slide 16: Final distribution
Final distribution Distribution payments (US cents per share) • Increased final distribution reflects confidence in Glencore’s outlook and 20.0 financial position, including deceleration of 15.8 +5% 16.5 15.0 +5% capex and recognition of the level of 15.0 merger synergies achieved • Final distributi
Slide 17: Ivan Glasenberg, Chief Executive Officer
Ivan Glasenberg Chief Executive Officer Murrin Murrin nickel mine and metallurgical plant, Australia
Slide 18: We are confident about our future
We are confident about our future • Strong and improving commodity cost curve positions • Further cost reductions from merger synergies and other • Favourable outlook for our key commodities • Significant capex reduction trajectory – majority of Xstrata’s project pipeline now funded • Strong industr
Slide 19: Repositioning of industrial commodity businesses continuing
Repositioning of industrial commodity businesses continuing – restructuring, cost savings and new volumes are lowering unit costs $2012 C1 illustrative cash cost curve (c/lb) Full merger synergies • Efficiencies from integration and restructuring of the Xstrata to be realised in 2014 assets are alre
Slide 20: The outlook for our key markets remains positive
The outlook for our key markets remains positive Macroeconomic outlook The outlook for the world economy in 2014 is better than has been seen for a number of years • global growth forecast to accelerate on the back of reducing austerity in advanced economies • strength in the US is a major driver, s
Slide 21: Unproductive capex in Xstrata's growth pipeline starting to generate cash flow
Unproductive capex tied up in Xstrata’s growth pipeline is, as expected, starting to generate cash flow Completed/commissioning Construction Copper Zinc • Antamina expansion • McArthur River Phase 3 • Antapaccay • Lomas Bayas II • Ernest Henry Underground Zinc Deferred • Lady Loretta • George Fisher
Slide 22: Key growth projects on schedule to commission 2014/2015
Key growth projects on schedule to commission 2014/2015 – strong pipeline of capital efficient further growth opportunities Commissioning 2014 Commissioning 2015 +2015 brownfield growth options Copper Copper Copper Katanga Phase V: Nkana Synclinorium: Coroccohuyaco increase to 300ktpa New shaft to e
Slide 23: Glencore – the most diversified major
Glencore – the most diversified major (FY 2013 EBIT) (1) BHP: Copper 42% Oil 20% Zinc 8% Copper 23% Nickel 1% Iron Ore 52% Coal 13% Coal 4% Oil 4% Other 1% Marketing metals 22% Marketing energy 8% Marketing agri 3% Corp and other (1%) Rio Tinto: Iron Ore 45% Iron Ore 88% Coal 8% Aluminium 4% Copper
Slide 24: SD/Governance
SD/Governance Safety is our top priority • 26 fatalities in 2013 (27 in 2012): focus on fatality prevention through LTIFR(1) 2009 to 2013 SafeWork 3.50 • Continued improvement in LTIFR: 3.0 (2009) to 1.9 (2013) • All fatal incidents investigated and reviewed by the Board 3.00 • Roll-out of SafeWork
Slide 25: Concluding remarks
Concluding remarks Strong, visible growth in free cash flow over Consensus 2015 free cash flow yield the next two years …. • Favorable commodity mix 10% 9.8% • Significant capex reductions • Strong industrial growth for 2014-16 with 7.9% 7.9% numerous organic and other growth 8% options beyond • Hig
Slide 26: Q&A
Q&A KOV pit, Katanga, DRC
Slide 27: Appendix
Appendix KOV pit, Katanga, DRC
Slide 28: Sector overview
Sector overview KOV pit, Katanga, DRC
Slide 29: Major project update
Major project update Koniambo nickel metallurgical plant, New Caledonia
Slide 30: Major project update – Las Bambas
Major project update – Las Bambas Overall project 56% complete at the end of December 2013 – ahead of plan of 54.8% Production profile (kt) On budget with $2.4bn of capex to be spent(1) 600 500 On schedule for commissioning H2 2015 400 Key progress in 2013 300 • Heavy haul road completed - transport
Slide 31: Major project update – Mopani Deeps
Major project update – Mopani Deeps Description Shaft sinking • 2.4Mtpa ore/waste rock and man shaft – Mufulira • 2Mtpa rock and man shaft – Mindola • 6 - 7Mtpa ore milled concentrator – Nkana • Potential completion Q2 2016 • Capital cost – $772M Project highlights • 9Mtpa ore hoisted • 102% increas
Slide 32: Major project update – McArthur River Mine Phase 3 expansion
Major project update – McArthur River Mine Phase 3 expansion • 100% owned Open Pit Mine • 171Mt M+I resource • Mine life (current production) of 31 years reserves, 46 years M+I resource • Current capacity of 3.5Mtpa producing 240kt zinc contained • Phase 3 expansion approved in mid 2012 • Increase i
Slide 33: Major project update – Koniambo
Major project update – Koniambo Xstrata Investor Current Status Construction complete guidance Day guidance • Ramp up underway – Metallurgical Line 1 Commercial Mar 2013 Sep 2013 Sep 2013 Done and 2 now producing commercial grade production Line 1 ferronickel First ore Line 2 Sep 2013 Feb 2014 Feb 2
Slide 34: Major project update – Tweefontein Optimisation Project
Major project update – Tweefontein Optimisation Project Mining infrastructure with North Pit in background • Glencore effective ownership: 79.8% • Capex: $1.1bn • Brownfields expansion of existing operations • replacement of 3 old processing plants with modern plant • construction of rapid loading r
Slide 35: Major project update – Ravensworth North
Major project update – Ravensworth North Asset details Mine development and MIA • 90% Glencore / 10% Itochu • Brownfield project • 8Mtpa, export thermal and semi-soft coking • 23 year mine life • Second quartile cash cost Project details • 89% complete – remaining capital spend relates to delivery o
Slide 36: Major project update – Ulan West
Major project update – Ulan West Project layout Asset details • 90% Glencore / 10% Mitsubishi • 8Mtpa export thermal coal • 14 year mine life • First quartile cash cost at full production Project details • 79% complete • Approved 2010 • Longwall commences mid 2014 Longwall on site Construction updat
Slide 37: Sector overview
Sector overview KOV pit, Katanga, DRC
Slide 38: Mining sector in 2013
Mining sector in 2013 Demand has been and remains healthy … … but prices have fallen in 2013 12 11.0 Copper Zinc Alu Nickel Iron Ore Coal 0% 10 -1% 7.9 -5% 8 7.1 6.6 % growth 5.7 5.9 -7% -7% 6 -10% 4.9 4.6 4.4 4 3.2 -15% -13% 2.6 1.7 2 -20% -19% 0 -22% Copper Zinc Iron ore Alu Nickel Coal -25% 5 yr
Slide 39: Commodity prices reflect too much capex: not weak demand
Commodity prices reflect too much capex: not weak demand • $429bn of capital expenditure by major miners 2005-2013 versus $150bn of net cash returns • expansionary capex = 2.5x acquisitions • resulting supply growth has exceeded that of demand in most commodities • investors have lost patience 2005
Slide 40: Selected commodity market updates
Selected commodity market updates KOV pit, Katanga, DRC
Slide 41: Zinc and Lead outlook
Zinc and Lead outlook Growing consensus that zinc deficit is a reality AND likely to widen significantly over medium term Our previous estimated zinc production gap of 1Mt annual production by 2016 may materialise earlier than expected: • Dec 2013: MMG announces closure of Century mid 2015, up to a
Slide 42: Zinc and Lead outlook
Zinc and Lead outlook Medium term outlook: • Impact of deficit likely to be felt by 2015 rather than 2016. No new headline projects have surfaced to materially add incremental production in 2016 - 2018 • No change to previous estimate of deficit up to 5Mt of annual capacity by 2020 • Project pipelin
Slide 43: Nickel: excess supply generated hefty market surpluses
Nickel: excess supply generated hefty market surpluses • Despite healthy demand growth in the 2010-2013 Nickel market balance (kt) period 2010-2013, surging supply growth 200 resulted in significant nickel surpluses 150 • The nickel market has been heavily oversupplied for a number of years but 100
Slide 44: Indonesia's export ban will impact market significantly
Indonesia’s export ban will impact market significantly • Nickel demand growth is forecast to 2013 - 2016 Nickel Supply/Demand (kt) continue at ca. 6.3%pa over the period to Supply Demand 2016 2,200 • In January this year, Indonesia 2,000 implemented a full ban on unprocessed nickel ore exports as o
Slide 45: Market Update – thermal coal supply and demand
Market Update – thermal coal supply and demand Seaborne thermal coal supply (Mt) 1,200 Seaborne thermal coal demand (Mt) 1,200 1,091 1,055 989 998 1,015 1,013 1,000 940 957 1,000 937 970 887 887 794 794 800 800 600 600 400 400 200 200 0 0 2011 2012 2013 2014F 2015F 2016F 2017F 2011 2012 2013 2014F 2
Slide 46: Market Update – metallurgical coal supply and demand
Market Update – metallurgical coal supply and demand Seaborne metallurgical coal supply (Mt) 400 Seaborne 400 metallurgical coal demand (Mt) 343 343 344 339 350 350 337 329 335 315 325 315 300 300 282 282 264 264 250 250 200 200 150 150 100 100 50 50 0 0 2011 2012 2013 2014F 2015F 2016F 2017F 2011 2
Slide 47: Thermal projects continue to reduce costs, supporting margins
Thermal projects continue to reduce costs, supporting margins FOB thermal coal cash margins at current market prices ($/t) Glencore Major 1 Major 2 Major 3 Major 4 Indo 1 Indo 2 Other Million Tonnes 0 100 200 300 400 500 600 700 800 900 Source: Glencore 47
Slide 48: Other information
Other information KOV pit, Katanga, DRC
Slide 49: Strong 2013 performance across the business
Strong 2013 performance across the business Marketing EBIT +11% Industrial EBITDA (4%), EBIT (21%) • Underpinned by higher volumes, supportive • Lower commodity prices and mine closures in physical markets and arbitrage opportunities nickel and zinc mostly offset by stronger copper volumes, particul
Slide 50: A leading producer in key commodities
A leading producer in key commodities #1 Export thermal coal production (Mt) Mined copper production (kt) #2 98 1,824 1,497 1,492 1,233 55 43 40 35 587 543 31 Glencore Bumi BHPB Siberian Adaro AAL Codelco Glencore Freeport BHPB Southern AAL Energy McMoRan Copper #1 Mined zinc production (kt) Export
Slide 51: Project pipelines for the major miners
Project pipelines for the major miners Copper equivalent growth 2013A – 2016E 100% 90% 80% Platinum 70% Copper Oil and Gas 60% Aluminium Gold 50% Zinc Nickel 40% Lead Iron Ore 30% Thermal Coal Met Coal 20% 10% 0% GlencoreXstrata Rio Tinto Vale BHP Billiton Anglo American Source: Company websites, Gl
Slide 52: Marketing – growth
Marketing – growth Marketing gross profit(1) (US$M) Marketing has made a profit every year since the management buyout in 1994 4,500 Underpinned by: 4,000 • GDP growth, especially in emerging markets • Industrial asset growth 3,500 • Market share gains • Marketing growth generally has low capex 3,00
Slide 53: Marketing – countercyclical cashflow profile
Marketing – countercyclical cashflow profile Current capital employed(1) (US$bn) vs commodity markets 30 300 Q2 08 – Q1 09: • Rapid fall in commodity prices from the mid-2008 peaks 25 • Glencore’s operations released 250 c.$8bn of CCE, more than offsetting any impact of the fall in profitability. 20
Slide 54: Marketing – working capital net cycle
Marketing – working capital net cycle Working capital ($bn) Comparison with trading peers 50 120 Days on hand 40 28.4 28 days 100 30 80 20 6.5 10 36 days 60 16.6 Average 47.5 days 0 . . 40 -10 (33) (26.1) days 20 -20 32 days -30 0 RMI Inventory (ex RMI) (1) Glencore Noble Bunge ADM Wilmar Olam Trade
Slide 55: Solid credit profile across the cycle
Solid credit profile across the cycle S&P rating AA-9 A+8 A7 • Rio Tinto’s $38bn • Xstrata $5.9bn rights • Rio Tinto’s $14.8bn acquisition of Alcan issue in March 2009 rights issues in June A-6 in July 2007 and July 2009 BBB+5 • Xstrata $18.8bn acquisition of BBB4 Falconbridge in August 2006, and su