Anglo American plc · LSE:AAL
Anglo American — Merrill Lynch Conference 2005
27 slides from Anglo American's conference presentation, May 2005
Slide 1: Anglo American: Meeting the World's Needs
ANGLO AMERICAN MEETING THE WORLD’S NEEDS Merrill Lynch Conference May 2005 This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Fina
Slide 2: Summary
Summary Introduction Strategy overview Precious Metals: A unique portfolio Strong future growth options 2 Anglo American plc
Slide 3: A unique product mix
A unique product mix.. 2004 2004 Geographical headline Headline earnings earnings by business unit 9% 15% 18% 6% Platinum 26% Gold 14% South Africa 14% Diamonds Europe Coal Americas Base Metals Rest of World 13% Industrial Minerals 10% 14% Paper and Packaging 45% Ferrous Metals 39% 3 Anglo American
Slide 4: A strong record of shareholder returns
A strong record of shareholder returns Double digit earnings/dividend growth Headline 188.0 earnings per share 123.0 125.0 120.0 114.0 84.0 CAGR:16% 77.0 Dividend 70.0 per share 47.5 49.0 51.0 54.0 CAGR:15% 31.0 37.5 1998* 1999 2000 2001 2002 2003 2004 US cents *pro-forma 4 Anglo American plc
Slide 5: Consistently outperforming the FTSE 100
Consistently outperforming the FTSE 100 250 200 Anglo plc TSR rebased 150 100 50 FTSE 100 TSR rebased 0 1999 2000 2001 2002 2003 2004 2005 5 Anglo American plc
Slide 6: Strategy
Strategy 6 Anglo American plc
Slide 7: Group strategy
Group strategy GROWTH THROUGH GROWTH THROUGH VALUE FROM COST PROJECTS ACQUISITIONS CUTTING AND EFFICIENCIES Grow shareholder value Invest where Invest in NPV+ we have core opportunities competence Ability to identify, acquire and develop world-class asset positions Business Cost of World-class Peopl
Slide 8: Acquisitions: transforming the asset base
Acquisitions: transforming the asset base M an to Co Fr s al an Bau am Bl Co g -2 ts an ch rnf lo loG 004 co ss rok An 999 ac m Ru ell c An tin 004 s (1 Pl 99- bi old ) h La Di ch m Sa (1 e Sy A Co ba z o Co Sh ma gl um ) a 2 a m d in c k 9 sp ett De Da ers As Ro kt Ku m o an p Ta in or ei i ut e yv
Slide 9: Investing over the Cycle: Ideal profile
Investing over the Cycle: Ideal profile Downturn Bottom of the Cycle Upturn & peak Commence greenfield Make acquisitions Sell non core assets projects Commission projects Ramp up projects to full Assess acquisitions production Commence de- Increase capex bottlenecking projects Redu
Slide 10: Acquisitions at the bottom of the cycle
Acquisitions at the bottom of the cycle.. $500m $900m $1.3bn Copper Coal Shell Coal Disputada price South America 2004 EBITDA 2004 EBITDA 2004 EBITDA RETURN: RETURN: RETURN: 36% 15% 48% Coal price (RB FOB/API 4) 1999 2000 2001 2002 2003 2004 2005 ..now reaping the benefits of higher prices 10 Anglo
Slide 11: Significant growth in Base Metals and Coal
Significant growth in Base Metals and Coal Indexed Production Indexed Headline 400 volumes earnings 1100 Base Metals (tonnes) 350 Zinc 900 300 700 250 500 200 Coal Copper 300 150 Coal 100 100 1999 2000 2001 2002 2003 2004 1999 2000 2001 2002 2003 2004 -100 11 Anglo American plc
Slide 12: Are we in a super cycle?
Are we in a super cycle? 300 Nov. 1972 - Apr. 1974 280 indexed, low = 100 (nominal money) 260 Nov. 1986 - June 1988 240 220 Nov. 1993 - Jan. 1995 Apr 2003 - Apr 2005 200 180 160 Apr. 1978 - Feb. 1980 140 Jan 1999 - Jan 2000 120 100 0 2 4 6 8 10 12 14 16 18 20 22 24 Months from trough to peak 12 Angl
Slide 13: Increased threat to supply/demand balance from new funding?
Increased threat to supply/demand balance from new funding? Issue volume (US$m) Copper price (US$/lb) 3,000 1.60 Base Metals equity issuance Copper price (smoothed) 1.40 2,500 1.20 2,000 1.00 1,500 0.80 0.60 1,000 0.40 500 0.20 0 - 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 YTD
Slide 14: A unique precious metals exposure
A unique precious metals exposure 14 Anglo American plc
Slide 15: A unique precious metals exposure
A unique precious metals exposure • World’s no 1 platinum producer • Robust demand outlook • Strategy to expand in line with Platinum increased demand remains Platinum 9% 2004 • 2nd largest gold producer Headline • Declining industry reserve base Gold earnings • AGA well positioned with significant
Slide 16: Anglo Platinum leading primary supply growth
Anglo Platinum leading primary supply growth Platinum Supply & Demand 000 oz 1999-2004 7000 6000 5000 4000 3000 2000 Anglo Platinum - increasing 1000 market share 0 1999 2000 2001 2002 2003 2004 Anglo Platinum Other SA Russia North Am erica Others Dem and Source: Johnson Matthey 16 Anglo American pl
Slide 17: Platinum jewellery – an exciting Asian growth story
Platinum jewellery – an exciting Asian growth story Value of jewellery markets in US$ continues to grow Value in $’000 2000000 1800000 1600000 • Fundamentals remain strong 1400000 • Jewellery market in China 1200000 softer but resilient 1000000 800000 • China now the largest 600000 consumer (44%) 40
Slide 18: Diamonds – strong Asian retail growth
Diamonds – strong Asian retail growth Retail growth has been particularly strong in Asia and diamonds are becoming entrenched in cultural tradition India China Diamond wedding ring (DWR) Market growth retail in local currency acquisition amongst recently 21% married women +24% 84% +9% +9% 73% +16% 6
Slide 19: …and robust growth in the USA
…and robust growth in the USA US total market value at $31.5 billion, up 8% over 2003 50 USA DJ Market Size 1980-2004 (+4%) 45 46.1 (mil) 40 35 (+8%) 30 $31.5 (bil) 25 20 15 10 5 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Pieces Value Source: De Beers 19 Anglo American plc
Slide 20: Significant growth potential
Significant growth potential 20 Anglo American plc
Slide 21: Substantial long term project portfolio
Substantial long term project portfolio APPROVED: UNAPPROVED: $5bn $8bn QUELLAVECO SISHEN SOUTH MEREBANK Copper Iron ore SIGUIRI $174m $52m ISIBONELO $65m MOAB 2 RICHARDS BAY W.L. TAILINGS COLLAHUASI Gold OBUASI DEEPS $235m $186m EXPANSION Gold INYANDA TICOR 2 Copper FINSCH $30m $54m $130m GAMSBERG
Slide 22: Major long term growth potential
Major long term growth potential Barro Alto Los Bronces Quellaveco Collahuasi Expansion • Production • Production • Production • Production* Possible output of 20 - Possible doubling of Possible output of Increase production to 40,000tpa Ni throughput to 200,000tpa Cu in 600,000tpa? 130,000tpd, addi
Slide 23: Major long term growth potential
Major long term growth potential Platinum Gold Ferrous Coal • Production • Declining global • $365m Sishen iron ore • Dawson project (51%) Target:2005 – 2.6m oz production profiles in expansion approved - additional 5.7 mtpa 2006 – 2.7-2.8m oz the medium term coking coal to take • Production to go f
Slide 24: Substantial long term project portfolio
Substantial long term project portfolio Base Metals Platinum Gold Ferrous Approved: $300m Approved: $1.5bn Approved: $1.3bn Approved: $700m Black Mountain ($110m) W.L. Tailings ($186m) Moab Khotsong ($690m) Inyanda ($30m) Start: 2004 Full prod: 2006 Full prod: 2008 Start: 2003 Full prod: 2008 Start:
Slide 25: Substantial long term project portfolio
Substantial long term project portfolio Paper and Packaging Coal Industrial Minerals Diamonds Approved: $500m Approved: $550m Approved: $40m Approved: $130m Merebank ($174m) Grasstree ($106m) Copebras ($22m) Finsch ($130m) Start: 2005 Full prod: 2006 Start: 2006 Full prod: 2006 Start: 2005 Full prod
Slide 26: Summary
Summary Maintaining strategy of investing at bottom of cycle, reaping rewards at the top Unique precious metals exposure: limited global expansion capacity One of the strongest growth profiles in the industry 26 Anglo American plc
Slide 27: Anglo American: Meeting the World's Needs
ANGLO AMERICAN MEETING THE WORLD’S NEEDS Merrill Lynch Conference May 2005 This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Fina