Anglo American Plc · LSE:AAL
Anglo American — Bank of America Merrill Lynch Global Metals & Mining Conference 2011
26 slides from Anglo American's conference presentation, May 10, 2011
Slide 1: Bank of America Merrill Lynch Global Metals & Mining Conference 2011
BANK OF AMERICA MERRILL LYNCH GLOBAL METALS & MINING CONFERENCE 2011 Cynthia Carroll Chief Executive 10 May 2011 Barro Alto, first metal
Slide 2: Commodity price correction in the short term
COMMODITY PRICE CORRECTION IN THE SHORT TERM INDUSTRIAL TRADED COMMODITIES HAVE FALLEN FROM RECENT HIGHS Brent crude oil -10% since 28th April Nickel -16% since 21st Feb Cu -13% since 14th Feb 2
Slide 3: Strong emerging market growth will continue
STRONG EMERGING MARKET GROWTH WILL CONTINUE GROWING MIDDLE CLASS IN EMERGING CHINA AND US WILL CONTINUE TO DRIVE ECONOMIES WILL CONTINUE TO DRIVE DEMAND INFRASTRUCTURE GROWTH Middle Classes by region, mn US$ billion, constant 2005 prices and exchange rates 1000 Investment in infrastructure 900 800 2
Slide 4: 2010 financial results driven by strong operational performance and higher prices
2010 FINANCIAL RESULTS DRIVEN BY STRONG OPERATIONAL PERFORMANCE AND HIGHER PRICES FINANCIAL OVERVIEW Underlying EPS – $ Key financials 4.36 2.14 4.13 ($bn) 2010 2009 change Core operating profit(1) 9.1 4.5 +104% Operating profit 9.8 5.0 +97% Effective tax rate 31.9% 33.1% 2.90 Underlying earnings 5.
Slide 5: Major improvement in safety performance
MAJOR IMPROVEMENT IN SAFETY PERFORMANCE • Safety practices embedded and delivering Fatalities further improved results, particularly at SA underground operations and at Projects 50 44 40 68% reduction • 90% of our operations were without fatalities, 40 28 including 100% of 30 20 14 – Nickel, Copper,
Slide 6: 2010 operational highlights
2010 OPERATIONAL HIGHLIGHTS Copper Nickel Platinum • Operating profit up • Operating profit • Operating profit 40% to $2.8bn significantly higher $837m • Production down 7% at $96m • Production up 5% at to 623 kt – expected • Production up 2% 2.57 moz, productivity lower grades up 23% since 2008 – •
Slide 7: Outperformance of asset optimisation and procurement targets 1 year early
OUTPERFORMANCE OF ASSET OPTIMISATION AND PROCUREMENT TARGETS 1 YEAR EARLY Asset Optimisation Procurement $m +86% $m 2,150 2011 323 +52% $1bn target2 800 279 87 1,158 526 208 2011 81 466 $1bn 201 target1 1,548 253 749 247 192 2009 2010 2009 2010 OMI Core- one-off benefits Core - sustainable benefits
Slide 8: Inflationary pressures accelerating
INFLATIONARY PRESSURES ACCELERATING Electricity, labour and diesel Impact most marked in Above CPI cash cost driving mining inflation Chile and SA…. movements % increase on Q1 2010 Overall % increase on Q1 2010 Chile South Africa Australia Group average 8% 14% 112% 28% 26% 25% 11% 21% 8% 18% 5% 10%
Slide 9: Strengthening commodity currencies impacting costs
STRENGTHENING COMMODITY CURRENCIES IMPACTING COSTS ZAR/US$ Exchange Rate 8.6 8.4 Q1 10 VS Q1 11 7% Strengthening 8.2 8.0 7.8 7.6 2010 Avg: R7.32 7.4 7.2 Q1 2011 Avg: R7.00 7.0 6.8 6.6 6.4 Jan 2010 Mar 2010 May 2010 Jul 2010 Sep 2010 Nov 2010 Jan 2011 Mar 2011 AUD/US$ Exchange Rate 1.25 Q1 10 VS Q1 1
Slide 10: Favourable cost curve positioning with majority of production in lower half
FAVOURABLE COST CURVE POSITIONING WITH THE MAJORITY OF PRODUCTION IN THE LOWER HALF OF THE COST CURVES Export Thermal Coal1 Copper2 350 150 300 250 100 FOB US$/t 200 Usc/lb 150 50 100 Mafube 50 0 0 100 200 300 400 500 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 Cumulative Mt, Export thermal Cu
Slide 11: Platinum: turnaround in operating performance
PLATINUM : TURNAROUND IN OPERATING PERFORMANCE Steps taken to restructure Platinum, the benefits of which are already being seen Safety (LTIFR) Production Costs (Rand) Productivity Net Debt (Rbn) LTIFR Refined Platinum Cash costs/equivalent M2 per employee (LTI / 200,000 hours) Production (Moz) refi
Slide 12: A unique and well diversified portfolio
A UNIQUE AND WELL DIVERSIFIED PORTFOLIO Attributable earnings by Business Unit1 Attributable earnings by geography % % PRECIOUS 2% BULKS 15% 47% 5% 9% 6% 22% 42% 44% 9% 37% 38% 10% BASE 1% 12% Platinum Copper Met Coal KIO ROW Australia/Asia De Beers Nickel Thermal Coal Samancor South America South A
Slide 13: In structurally attractive commodities
….IN STRUCTURALLY ATTRACTIVE COMMODITIES China’s share of global consumption (%) 11% 21% Thermal 62% Coal 27% Palladium imports Met Platinum Coal 32% Nickel Iron ore 60% Copper 38% Steel 43% Source: AME, Brook Hunt, a Wood Mackenzie company, Johnson Matthey. Thermal Coal represents share of internat
Slide 14: Well advanced on the strategic path
…WELL ADVANCED ON THE STRATEGIC PATH ● Next wave of projects delivering 100% volume growth over the next decade ● $70bn project pipeline (incl. approved The “next wave of growth” projects) with > 60 potential unapproved projects ● Key strategic growth projects delivering 50% growth by 2015 Deliverin
Slide 15: The near term pipeline will increase production by 50% to 2015
THE NEAR TERM PIPELINE WILL INCREASE PRODUCTION BY 50% TO 2015, WITH FURTHER VOLUME GROWTH BEYOND THAT 100% 200 Selected projects Jacaré I, Morro Sem Boné 180 50% Indexed production growth (2009 = 100) Michiquillay, Collahuasi 160 Barro Alto 140 Various Platinum Los Bronces Projects Quellaveco 120 1
Slide 16: Los Bronces expansion largest new source of copper
LOS BRONCES EXPANSION LARGEST NEW SOURCE OF COPPER Los Bronces is the largest new source of copper expected during the next two years in a supply constrained environment Source: BernsteinResearch,16 March 2011 16
Slide 17: Barro Alto delivered and further projects fast approaching commissioning
BARRO ALTO DELIVERED AND FURTHER PROJECTS FAST APPROACHING COMMISSIONING Approved % Complete Progress Project • Completed on time - Line 1 first metal tapped on 30th March. First saleable metal 5th April BARRO ALTO 100% • Completed on budget – capex $1.9bn Nickel, Brazil • First metal Line 2 expecte
Slide 18: Next wave of projects set for approval
NEXT WAVE OF PROJECTS SET FOR APPROVAL Quellaveco Copper Project, Peru • Average production of 225 ktpa over the first 10 years • Feasibility study complete. Subject to Board approval in 2011 pending water permits • First production estimated in 2015 • Capex estimated ~ $3bn • Targeted to operate in
Slide 19: Summary
SUMMARY • Operational excellence is delivering significant bottom line enhancement • Major volume growth underway one of the largest near term expansion profiles – with $16bn approved in the next 3 years – 50% growth to 2015 • Strengthening balance sheet supported by major non-core disposal programm
Slide 20: Q&A
Q&A
Slide 21: Appendix
AngloAmerican APPENDIX
Slide 22: Delivering near-term growth: Barro Alto, Brazil
DELIVERING NEAR-TERM GROWTH Barro Alto, Brazil • Barro Alto 36 ktpa nickel project produced first metal on schedule, March 2011 • Open pit mining and proven processing technology – standard rotary kiln – electric furnace • Life of mine 20 yrs; 47.5 Mt @ 1.68% Ni, with an Additional Measured and Indi
Slide 23: Delivering near-term growth: Los Bronces, Chile
DELIVERING NEAR-TERM GROWTH Los Bronces, Chile • Los Bronces 278 ktpa copper expansion on schedule for first production Q4 2011 • Production at Los Bronces scheduled to increase to 490 ktpa over first 3 yrs, average 400 ktpa over first 10 yrs • Positioned firmly in the lower half of the cost curve,
Slide 24: Delivering near-term growth: Kolomela, South Africa
DELIVERING NEAR-TERM GROWTH Kolomela, South Africa • Kolomela 9 Mtpa iron ore project on schedule for first production Q2 2012 • At full capacity the mine will deliver 9 Mtpa of high quality seaborne iron ore • Reserves of 202.4Mt at an average grade of 64.3% Fe (cut-off at 48% Fe) • Measured and In
Slide 25: Delivery of project pipeline: Minas-Rio, Brazil
DELIVERY OF PROJECT PIPELINE Minas-Rio, Brazil • Significant progress made with licences and permits; Mining permit in August and LI part 2 in December • LI part 2 is final primary installation licence, supports commencement of the civil works for beneficiation plant and tailings dam, expected to st
Slide 26: World class project pipeline with significant further growth optionality
WITH SIGNIFICANT FURTHER GROWTH OPTIONALITY FROM A WORLD CLASS PROJECT PIPELINE Approved Feasibility Future Growth Options BMR Unki Siphumelele Venetia Thembelani 1 Khomanani Base and Precious Jwaneng Cut 8 Expansion Mer Decline Underground UG2 Gahcho Mer Decline Siphumele Kué UG2 Khuseleka Dishaba
Anglo American — Bank of America Merrill Lynch Global Metals & Mining Conference 2011 on 6ix