Agl Energy Limited · ASX:AGL
Agl Energy — Corporate Update (May 2012)
37 slides from Agl Energy's corporate update, May 10, 2012
Slide 1: ASX Release
AGL Energy Limited Level 22, 101 Miller Street Locked Bag 1837 T: +61 2 9921 2212 ABN: 74 115 061 375 North Sydney, NSW 2060 St Leonards NSW 2065 F: +61 2 9921 2395 AUSTRALIA AUSTRALIA www.agl.com.au ASX Release 10 May 2012 Loy Yang Power Presentation Attached is a presentation to be made today by L
Slide 2: Loy Yang Power AGL Analyst Site Visit
Great Energy Alliance Corporation Loy Yang Power AGL Analyst Site Visit 10 May 2012
Slide 3: Disclaimer
Disclaimer Future performance This Presentation contains certain “forward looking statements”. Forward looking statements can generally be identified by the use of forward looking words such as, “expect”, “anticipate”, “likely”, “intend”, “should”, “could”, “may”, “predict”, “plan”, “propose”, “will
Slide 4: Contents
Contents 1. Business Overview 2. Operations – Power Station 3. Operations – Mine 4. Environment 5. Market and Carbon Overview 6. Business Development 7. Employees 8. Summary 3
Slide 5: Business Overview
BUSINESS OVERVIEW Ian Nethercote 4
Slide 6: Executive Summary
Executive Summary Loy Yang Power is a 2,210MW brown coal base load generator and integrated mining operation Loy Yang A (LYA) is the largest power station in Victoria • Produces approximately 30 per cent of Victoria’s electricity requirements • LYA is one of the lowest short run marginal cost th
Slide 7: Business Overview
Business Overview VICTORIA ~160km to Melbourne Melbourne Loy Yang A Site Power Station Specifications Loy Yang Mine Capacity 1 2,210MW Mine Type Open-cut configuration. Operationally integrated with LYA & Location Traralgon, Victoria LYB power stations No. of Units 1 ABB (Alstom) & 3 Kraftwerk Union
Slide 8: Key Business Highlights
Key Business Highlights Essential Generation Asset Largest power station in Victoria by capacity, 3rd largest in Australia by capacity Provides approximately 30% of Victorian electricity Competitive Position One of the lowest marginal cost thermal producers in the National Electricity Market (
Slide 9: Management Overview and Structure
Management Overview and Structure • The LYP management team includes some of Australia’s most experienced personnel in the Australian electricity and mining sectors with significant experience in operating a base load generator in a competitive market environment. LYP Management LYMMCo Management Ch
Slide 10: Management Profiles
Management Profiles Member Position Profile Ian Chief • Appointed Chief Executive in February 1999 after previously being Director of Operation and Marketing Nethercote Executive • 35+ years of electricity industry experience and has held a number of key strategic and line management positions withi
Slide 11: GEAC: Financial Performance
GEAC: Financial Performance 12 Months to ($M) 31 Dec 2011 31 Dec 2010 Change Generation Volume (GWh) 15,073 15,637 -3.6% Average price ($/MWh) 37.23 39.44 -5.6% Generation Revenue 561.1 616.7 -9.0% Other Revenue 83.8 75.4 11.1% Expenses (286.4) (285.5) 0.3% Depreciation (117.9) (114.5) 2.9% Borrowin
Slide 12: Historical Capex (Previous 5 Years)
Historical Capex (Previous 5 Years) • LYP has had a well planned and targeted capital $100m Historical Power Station Capex investment program for both the Power Station $87m and the Mine to maintain reliability and $80m $69m performance levels $56m $60m • Investment of ~$450M into the Power Station
Slide 13: Operations: Power Station
OPERATIONS: POWER STATION Chris Badger 12
Slide 14: Power Station Historical Performance
Power Station Historical Performance • Historic performance of the Power Station has been strong • Equivalent Availability Factors (EAF) of 91% reflective of industry best practice • Historically, trip rates for the Power Station have Historical Availability (% ) been below the average trip rate of
Slide 15: Management & Maintenance Approach of Power Station
Management & Maintenance Approach of Power Station • LYP has adopted a Whole of Life (WOL) approach to maintenance and management of the Station • WOL strategies are revised annually and managed across specialised personnel, who develop 5 year, 1 year, and 3 monthly asset maintenance plans • The pla
Slide 16: Management & Maintenance of Power Station
Management & Maintenance of Power Station • Generation Enhancement project complete with work on Unit 2 finalised in 2011 2011 (Actuals) Plant Capital Expenditure Split • 6 yearly major outage intervals Environmental, Health and Station Other Safety • Annual reviews of the asset management strategy
Slide 17: Operations: Mine
OPERATIONS: MINE Jack Wilson 16
Slide 18: Mine Overview
Mine Overview • Mine is an open-cut configuration with reserves of Loy Yang Mine ~1.78 billion tonnes, sufficient for use by LYP and Total Coal Resource • 7.7 billion tonnes LYB for at least 50 years at current usage rates Coal Reserves (ML) • 1.78 billion tonnes • Mining is carried out using 3 larg
Slide 19: LYP Mine Licence & Exploration Area
LYP Mine Licence & Exploration Area TRARALGON MAP LEGEND Mining MiningLicence Mining LicenceArea Licence AreaCoal: Area Coal: Coal: 1,600 Mt (4,500 1,500Mt 1,780Mt(1,450 Ha) (4,500 Ha) ha) Exploration Licence Area Coal:1,000Mt Coal: 764Mt (1,670 (1,670ha) Ha) Future Future Mining Mining Blocks Block
Slide 20: Mine Operations & Historic Performance
Mine Operations & Historic Performance Historical Coal Supply Reliabiliy (%) 100% 90% 80% • Historic Coal Supply Reliability (CSR) 70% has been consistently in excess of 100.00% 99.99% 99.96% 99.99% 99.96% 99.72% 99.95% 99.69% 99.85% 99.76% 99.46% 97.54% 99.76% 99.54% 60% 99.50%, with the exception
Slide 21: Management & Maintenance of the Mine
Management & Maintenance of the Mine • Mine asset management developed to focus on: Maximising Mine availability and reliability for coal delivery to LYA and LYB; and Safety at minimum whole of life cost 2011 (Actuals) Plant Capital Expenditure Split • Coal Blending Artesian Development • Additi
Slide 22: Environment
ENVIRONMENT Gerald May 21
Slide 23: Environmental Framework and Obligations
Environmental Framework and Obligations • LYP is an EPA accredited licensee • Environmental risk assessments conducted annually • Environmental Improvement Plan developed annually and addresses outcomes of risk assessments • Environmental Review Committee consisting of regulators and community repre
Slide 24: Market and Carbon Overview
MARKET AND CARBON OVERVIEW Julian Turecek 23
Slide 25: The National Electricity Market (NEM)
The National Electricity Market (NEM) LYP comprises 8.2% of generation output and 4.2% of installed capacity in the NEM Source: 2011 AER State of the Energy Market Source: 2011 AER State of the Energy Market Brown coal generation provides greater proportion of NEM generation over installed capacity
Slide 26: Carbon Ready
Carbon Ready • LYA has been actively preparing for the introduction of the carbon pricing scheme on 1 July 2012 • LYA is also investigating a number of other options to further reduce its carbon emission level including pre-drying of coal, carbon capture and other technologies • The major Victorian
Slide 27: Market Position
Market Position • Loy Yang has the lowest short Pre-Carbon SRMC ($/MWh) Post-Carbon SRMC ($/MWh) Hallett Hallett run marginal cost in the NEM Mintaro GT Colongra Mintaro GT Colongra Uranquinty Dry Creek GT Quarantine Uranquinty • Low cost base-load energy Tamar Valley OCGT Bell Bay Three Quarantine
Slide 28: Electricity Hedge Agreement (EHA)
Electricity Hedge Agreement (EHA) Long term electricity hedge contracts to two aluminium plants Price certainty for 820MW of load Alcoa of Australia Marubeni Aluminium Australia CITIC Nominees Fixed price is indexed Expansion options for > 50% of generation 100% 55% 22.5% 22.5% Long term c
Slide 29: Business Development
BUSINESS DEVELOPMENT Greg Hade 28
Slide 30: Coal Development Landscape
COAL DEVELOPMENT LANDSCAPE Global Lignite Reserves World* Victoria GEAC (* ABARE 09/10) 100% 8.3% 0.63% 400 Bt 33 Bt 2.5 Bt 4,000,000 PJ 330,000 PJ 25,000 PJ Less than 50% of GEAC brown coal reserves committed to existing electricity generation 29
Slide 31: GEAC Coal Vision 2025
GEAC Coal Vision 2025 Leverage maximum value yield from available coal resources at the site to: • Deliver increased business revenues; • Enhance long term business value; and • Improve business sustainability. Total Available Coal Reserves (EL & ML) – 2.5 Bt Estimated Reserve Power Generation – 1.2
Slide 32: Overall Development Options
Overall Development Options ELECTRICITY GENERATION BROWN COAL • Equity Potential EXISTING FUTURE • Support Growth OPERATIONAL EFFICIENCY EMISSIONS REDUCTION HYDROCARBON PRODUCTS FERTILISERS CHEMICALS RESOURCE UTILISATION SYNTHETIC FUELS IMPROVED TECHNOLOGY INCREASED SALES CARBON VALUE-ADD DOMESTIC E
Slide 33: Employees
EMPLOYEES Mark Ryan 32
Slide 34: HR / OH&S
HR / OH&S OH&S Loy Yang Power and Contractor LTIFR • LYP has strong commitment to safety (via the No Harm 2007 - 2011 program) 7 • Detailed Line / Strategic / Board Reporting 6 6 • LYP has a detailed safety plan process (“No Harm”) 5 Managers and workforce groups have detailed safety plans Number
Slide 35: Organisational Composition
Organisational Composition Split of Employees As at 30 April 2012 Mining 265 (46%) Corporate 63 (11%) LYMMco Generation 226 15 (3%) (40%) 34
Slide 36: Summary
SUMMARY 35
Slide 37: Summary
Summary Largest power station in Victoria by capacity, 3rd largest in Australia by capacity One of the lowest thermal marginal cost operators in the National Electricity Market Revenue underpinned by long term coal sales and electricity hedge agreement Historical levels of availability and r