Boliden AB · OMXSTO:BOL
Boliden AB — Investor Day (September 2011)
29 slides from Boliden AB's investor day presentation, Sep 6, 2011
Slide 1: Group update and market outlook
Group update and market outlook Capital Markets Day 6 September Lennart Evrell President & CEO
Slide 2: Boliden Group-CMD 2011
Boliden Group-CMD 2011 2 2011-09-06
Slide 3: LTI in Boliden 2002-2011ytd
LTI in Boliden 2002-2011ytd 18,0 15,7 16,0 14,0 13,0 11,9 12,0 11,1 11,2 9,9 10,0 9,1 8,2 8,0 5,5 5,9 6,0 4,0 2,0 0,0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Boliden Group-CMD 2011 3 2011-09-06
Slide 4: Boliden 1995-2010
Boliden 1995-2010 MSEK 1995 2000* 2005 2010 Net sales 8 675 9 825 20 441 36 716 EBIT** 703 -4 932 3 069 5 643 CAPEX 790 1 429 1 335 2 995 Equity 78 10 289 18 846 Gearing 10000% 54% 24% No. of employees 5 404 4 584 4 530 4 412 Ownership Trelleborg Trelleborg, Stockholm Stock Stockholm Stock Toronto S
Slide 5: Boliden time line
Boliden time line Boliden Group 2010 2012 2014 New Boliden Way - Lean Aitik Rönnskär Kankberg Garpenberg Expansion E-scrap Au, Te Expansion Cu-Ag Zn, Ag, Pb Boliden Area Hötjärn Maurliden East Boliden Area Kankberg, Te tailings pond Cu mine Mill/feed leaching logistics Boliden Group-CMD 2011 5 2011-
Slide 6: Macro and metals outlook
Macro and metals outlook September 2011
Slide 7: Metals Markets: Long term
Metals Markets Long term Boliden Group-CMD 2011 7 2011-09-06
Slide 8: Copper demand 1900-2020
Copper demand 1900-2020 million tonnes World Copper Demand 30 2010-2020: +3.6% p.a. China expansion 25 20 1945-1973: +5% p.a. 1982-1990: +2.3% p.a. Post war 1900-1918: + 6.6% p.a. W World slower growth Japan expansion 15 Industrialization in USA and Europe 10 1929-1932: -19% 1990-2009: +2.5% p.a. p.
Slide 9: Metals demand and GDP
Metals demand and GDP kg Cu demand in kg per capita 9 Source: Reuters, Boliden calculations 8 Malaysia Japan W Europe 7 Chile 6 Australia USA China 5 Turkey Canada 4 Thailand 3 Mexico Brazil 2 South Africa L America Vietnam 1 Indonesia India 0 0 5 10 15 20 25 30 35 40 45 50 55 GDP per capita (PPP) t
Slide 10: Metals demand to 2020
Metals demand to 2020 Copper demand per capita (kg) GDP per capita (PPP) thousand US$ 14.0 70 Source: Reuters Datastream, Boliden calculations Source: Reuters Datastream, Boliden calculations 65 USA 12.0 60 55 50 10.0 45 Japan 40 8.0 Japan W Europe W Europe 35 30 6.0 25 USA Brazil 4.0 20 L America C
Slide 11: Metals world
Metals world Population in varius growth phases Stagnation (or decline) Share of world population W Europe, Japan, USA 15,000-20,000 US$ GDP per capita Russia, Argentina, Chile 15% 6% Growth Zone 5-15,000 US$ GDP per 45% capita China, Brazil, Middle East… 34% Below 5,000 US$ GDP per capita I
Slide 12: Copper mine capability
Copper mine capability Mt Copper mine capacity Copper US c/lb Project incentive price 15% IRR 35 Base Case Production Capability 500 Highly probable 30 Probable 450 Primary Demand 400 25 350 6150 $ 20 2020: 300 5500 $ -6 Mt 2018: 250 15 -5 Mt 200 10 150 100 5 50 0 0 2000 2005 2010 2015 2020 2025 0 1
Slide 13: Zinc mine capability
Zinc mine capability Mt Zinc mine capacity Zinc US c/lb Project incentive price 15% IRR 24 Base Case Production Capability 400 22 Highly probable Possible LOM extensions Probable 20 Smelter demand 300 18 3100 $ 16 200 14 100 12 2016: 10 -2.3 Mt 0 2020: 8 2018: -7.7Mt 6 -5 Mt -100 4 -200 2 0 -300 200
Slide 14: Capital cost
Capital cost Copper Zinc capital intensity $/tonne Cu equivalent capital intensity $/tonne Cu equivalent 14,000 3,000 12,000 2,500 10,000 2,000 8,000 1,500 6,000 1,000 4,000 500 2,000 0 0 1985-2000 In Probable Possible All projects 1985-2000 In Probable Possible All projects construction projects pr
Slide 15: Case simulation Cash cost curve
Case simulation Cash cost curve Boliden Group-CMD 2011 16 2011-09-06
Slide 16: Long term
Long term Metals demand China to 2020 Other countries with large populations after 2015 Mines Mine capability constraints Capital intensity increasing Smelters Excess smelter capacity for some years Pricing Base metals to peak high Historical trough levels at downturns Boliden Group-CM
Slide 17: Metals Markets: Short – Medium term
Metals Markets Short – Medium term Boliden Group-CMD 2011 18 2011-09-06
Slide 18: Economic status
Economic status GDP index Industrial production index 108 120 106 100 104 102 80 100 EU EU 98 60 Japan Japan 96 USA USA 40 94 92 20 90 Source: Reuters 88 0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 EU and USA – much of the decline in Higher production levels in metal 2008/2009
Slide 19: Construction market status
Construction market status Year on European construction market Year on Year on year % 3m moving average data year % US construction market year % 10 20 Monthly -value based China - Fixed asset investments 45 Civil 40 5 10 engineering Public non- residential 35 0 0 Residential 30 Total 25 -5 -10 Tot
Slide 20: Automotive market status
Automotive market status No or lower growth at this point Global car and light vehicles Car production production Quarterly production - million units 5 Other 20% Europe 26% 4 EU China S America 3 6% USA 2 NAFTA Japan 15% China 20% 1 Japan 13% 0 2005 2006 2007 2008 2009 2010 2011 Source: CRU (www.cr
Slide 21: Macro forecast changes after July
Macro forecast changes after July GDP forecast 2012 Industrial production forecast 2012 10.0 16.0 9.0 14.0 8.0 12.0 7.0 6.0 10.0 Annual Annual growth % 5.0 growth % 8.0 4.0 6.0 3.0 4.0 2.0 1.0 2.0 Source: Reuters, Consensus Economics Inc. Source: Reuters, Consensus Economics Inc. 0.0 0.0 Eurozone US
Slide 22: Chinese economy
Chinese economy Economic data show no evidence of slowdown China - industrial production China - GDP growth Year over year Year over year % % 25 16 14 20 12 10 15 8 10 6 4 5 2 Source: Reuters Source: Reuters 0 0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Monthly growth 10-year avera
Slide 23: Construction market in China
Construction market in China Economic data remain strong Production of Production of residential buildings power cable (volume) Year over Year over year % year % 60 120 50 100 40 80 30 60 20 40 10 20 0 0 -10 -20 -20 -40 Source: Reuters Source: Reuters -30 -60 2006 2007 2008 2009 2010 2011 2006 2007
Slide 24: Car market in China
Car market in China Lower growth after a period of extreme Year over year % 160 140 120 Sales 100 Production 80 60 40 20 0 -20 Source: Reuters -40 2006 2007 2008 2009 2010 2011 Boliden Group-CMD 2011 25 2011-09-06
Slide 25: China's economy and metals market
China’s economy and metals market Economy Economic data show some signs of slowdown Construction indicators strong Car market - lower growth after a period of extreme growth Metal using sectors Lower output growth (wire rod, galvanized steel sheet etc.) Metals and mine concentrates No clea
Slide 26: Metal prices – historic trough levels (copper)
Metal prices – historic trough levels Copper price and mine cash cost USD/t Normal C1 USD/t 12000 12000 Source: Brook Hunt - A Wood Mackenzie Company, Boliden calculations 10000 10000 8000 8000 6000 6000 4000 4000 2000 2000 0 0 High price Average price Low price 90th percentile of industry cash cost
Slide 27: Metal prices – historic trough levels (zinc)
Metal prices – historic trough levels Zinc price and mine cash cost USD/t Normal C1 USD/t 5000 5000 Source: Brook Hunt - A Wood Mackenzie Company, Boliden calculations 4000 4000 3000 3000 2000 2000 1000 1000 0 0 High price Average price Low price 90th percentile of industry cash cost 60th percentile
Slide 28: Summary
Summary Metals demand Recovered much of the decline Uncertainty regarding growth rates in mature economies China – high growth, lower growth rate, increasing share of world demand Forecasts 2012-2014 - possibly challenging Metals supply Mine capacity not sufficient to match demand Lower
Slide 29: Boliden sensitivity for business decline
Boliden sensitivity for business decline Comparing 2011 and 2007 Profit trend similar Committed capex similar Cost and capex reduction potential similar Debt and debt structure improved 33% vs 43% Hedge portfolio improved 1,500 MUSD vs 900 MUSD (2,5 years) Hedge prices improved Cu 9,150 vs 6,145 USD