Slide 1: 2016 Results
2016 RESULTS 21 February 2017
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT Disclaimer: This presentation has been prepared by Anglo American plc (“Anglo American”) and comprises the written materials/slides for a presentation concerning Anglo American. By attending this presentation and/or reviewing the slides you agree to be bound by the following con
Slide 3: Delivering Change, Building Resilience
DELIVERING CHANGE, BUILDING RESILIENCE 1 Delivering on • Free cash flow target exceeded…$2.6bn vs $0.4bn. commitments • Net debt at $8.5bn…………..well below $10bn target. 2 Operational • Operating model driving productivity improvements. improvement • EBITDA margin up 5% points…despite lower prices. 3
Slide 4: 2016 Preliminary Results: Business Performance
2016 PRELIMINARY RESULTS BUSINESS PERFORMANCE Mark Cutifani De Beers Diamond Jewellery
Slide 5: Delivering on Our Commitments
DELIVERING ON OUR COMMITMENTS Actual Target EBITDA(1) $6.1bn $4.5bn(2) Cost & volume improvements $1.5bn $1.6bn ~ Capital expenditure(3) $2.5bn <$2.7bn Attributable free cash flow $2.6bn $0.4bn(2) Net debt $8.5bn <$10bn Net debt / EBITDA(1) 1.4x <2.5x Note: Based on targets set in February
Slide 6: Safety & Environment
SAFETY & ENVIRONMENT Safety: Loss of life and TRCFR(1) Safety 1.3 Group TRCFR • Fatal incidents extremely disappointing – focus on 1.1 critical controls post restructuring. 0.9 0.8 13 15 0.7 • 24% improvement in total recordable injury rates is 11 encouraging. 6 6 • Innovation programme supports ong
Slide 7: Delivered Increased Production
DELIVERED INCREASED PRODUCTION FY 2016 versus FY 2015 (% change) 47% 3% 8% increase at 6% 2015’s ore grades. 2% 2% 76% (5)% Kumba(5) Minas-Rio (10)% Copper(1) SA export coal Coal Australia(2) De Beers(3) Platinum(4) Iron Ore Nickel Group Total(6) & Cerrejón (1) Copper normalised for Anglo American N
Slide 8: 9% Improvement in Unit Costs
9% IMPROVEMENT IN UNIT COSTS(1) FY 2016 versus FY 2015 (% change) US$ basis (5)% (6)% (8)% (9)% (10)% (13)% (13)% (19)% (53)% Kumba(7) Minas Rio (24)% Copper(2) SA export coal(3) Coal Australia(4) De Beers(5) Platinum(6) Iron Ore Nickel Group(1) (1) Copper-equivalent unit cost includes only Anglo Am
Slide 9: $1.5bn EBITDA Cost & Volume Improvement
$1.5BN EBITDA COST & VOLUME IMPROVEMENT Incremental EBITDA improvement ($bn) - 2016 0.4 De Beers (0.1) 1.5 1.2 Coal Operating Other efficiencies Input costs (0.1) Labour (0.2) Los Bronces Met Coal Exploration weather(1) and geological strike impact issues Overheads Cost Volume Platinum non-cash Tota
Slide 10: Margins Improving 5% Points Despite Lower Prices
MARGINS IMPROVING 5% POINTS DESPITE LOWER PRICES Indexed prices (1 Jan 2015 = 1)(1) and EBITDA margins Margin focus EBITDA margin Basket price Average annual • EBITDA and free cash flow basket price improved through: Index 26% Portfolio upgrading. 1.1 21% Improved productivity and costs. 1.0 L
Slide 11: De Beers – Strong Recovery
DE BEERS – STRONG RECOVERY Realised Underlying EBITDA Sales Average Production(1) Unit cost(2) Capex price EBITDA margin (Cons.) price index 2016 27.3Mct $187/ct $67/ct $1,406m 23% $526m 30.0Mct(3) 118 vs. 2015 $5% $10% $19% #42% #2pp $25% #50% $13% Underlying EBITDA ($m) 2016 Performance 1,406 • Im
Slide 12: Platinum – Portfolio Upgrading Continues
PLATINUM – PORTFOLIO UPGRADING CONTINUES Realised Unit Underlying EBITDA Production(1) Capex Pt sales Headcount Basket price(2) cost(2)(3) EBITDA margin 2016 2,382 koz $1,753/oz $1,330/oz $532m 12% $314m 2,416 koz 28,250 vs. 2015 #2% $8% $12% $26% $3pp $14% $2% $38% Underlying EBITDA ($m) 2016 Perfo
Slide 13: Copper – Strong Cost Reductions
COPPER – STRONG COST REDUCTIONS Realised C1 unit Underlying EBITDA Material Production(1) Capex Sales price cost(2) EBITDA margin mined 2016 577kt 225c/lb 137c/lb $903m 29% $563m 578kt 265Mt vs. 2015 $19% $1% $11% $4% #3pp $15% $18% Underlying EBITDA ($m) 2016 Performance • Production down 19%, driv
Slide 14: Coal Australia – Margin Focus Continues
COAL AUSTRALIA – MARGIN FOCUS CONTINUES Metallurgical FOB realised Underlying EBITDA Moranbah Unit cost(3) Capex production(1) price(2) EBITDA margin LW cutting hours 2016 20.9Mt $112/t $51/t $996m 39% $523m 94 hrs / wk vs. 2015 $2% #24% $7% #70% #14pp $38% #13% Underlying EBITDA ($m) 2016 Performan
Slide 15: Coal SA and Colombia – Productivity Improvements
COAL SA AND COLOMBIA – PRODUCTIVITY IMPROVEMENTS Underlying EBITDA Export prod. FOB price(1) Unit cost(2) Run of mine per EBITDA margin SA Capex SA / Col SA / Col SA / Col FTE(3) SA / Col SA / Col 2016 17.9Mt / 10.7Mt $60/t / $56/t $34/t / $28/t $473m / $235m 22% / 39% $90m 6,200 vs. 2015 #3% / $4%
Slide 16: Kumba Iron Ore – Break-even Price Falls to $29/t
KUMBA IRON ORE – BREAK-EVEN PRICE FALLS TO $29/T Realised Unit cost Underlying EBITDA Break-even Production Capex Sishen waste price (FOB)(1) (FOB)(1) EBITDA margin price 2016 41.5Mt $64/t $27/t $1,347m 48% $160m 137Mt $29/t vs. 2015 $8% #21% $13% #33% #13pp $69% $38% $41% Underlying EBITDA ($m) 201
Slide 17: Iron Ore Brazil (Minas-Rio) – Ramp-up Continues
IRON ORE BRAZIL (MINAS-RIO) – RAMP-UP CONTINUES Realised price Unit cost Underlying EBITDA Production Capex(2) Sales (FOB)(1) (FOB)(1) EBITDA margin 2016 16.1Mt (wet) $54/wmt $28/wmt $(6)m nm $109m 16.2Mt vs. 2015 #76% #32% $53% nm nm $88% #91% Product - (Mt - wet) 2016 Performance • Ramp-up at Mina
Slide 18: Nickel – Operating Stability, Record Production
NICKEL – OPERATING STABILITY, RECORD PRODUCTION Realised C1 unit Underlying EBITDA Barro Alto Production(1) Capex Sales(1) price cost(2) EBITDA margin ore feed 2016 44.5kt 431c/lb 350c/lb $57m 13% $62m 44.9kt 2.4Mt(3) vs. 2015 #47% $13% $19% nm nm #138% #40% #60% Barro Alto C1 unit cost (USc/lb) Bar
Slide 19: 2016 Preliminary Results: Financials
2016 PRELIMINARY RESULTS FINANCIALS René Médori Mafube Colliery, Load and haul operations
Slide 20: Results – Strong Recovery & Net Debt Reduction
RESULTS – STRONG RECOVERY & NET DEBT REDUCTION Key financials(1) ($bn) 2016 2015 Change EBITDA 6.1 4.9 25% Effective tax rate (%) 25% 31% (6pp) Earnings per share ($/share) 1.72 0.64 169% Capital expenditure(2) 2.5 4.0 (37)% Attributable free cash flow(3) 2.6 (1.0) nm Disposal proceeds(4) 1.8 1.7 1%
Slide 21: Cost & Volume Improvements Drive Higher Earnings
COST & VOLUME IMPROVEMENTS DRIVE HIGHER EARNINGS EBITDA variance: 2016 vs. 2015 ($bn) (0.1) Coal Aus 0.2 Iron Ore Coal SA 0.3 (0.1) 0.1 De Beers 0.5 (0.3) Platinum (0.3) Diamonds (0.1) (0.2) Other (0.1) Total cost & volume: $1.5bn 1.2 Bulks 0.7 (0.6) 6.1 Base & precious 4.9 4.9 2015 Price(1) Currenc
Slide 22: $4.4bn Reduction in Net Debt
$4.4BN REDUCTION IN NET DEBT Net debt ($bn)(1) Opening net debt – 1 January 2016 12.9 • Cash flow from operations reflects realisation of $1.5bn in cost and volume improvements. Cash flow from operations (5.4) Working capital (0.4) • Cash tax paid lower principally as result of: I. utilisation of ta
Slide 23: $5.3bn Reduction in Gross Debt
$5.3BN REDUCTION IN GROSS DEBT Gross debt ($bn) Bond maturity profile ($bn) -27% 19.6 19.8 2.5 1.9 14.5 1.8 2014 2015 2016 2017 2018 2019 Liquidity headroom ($bn) • Bond buybacks of $1.7bn; $1.83bn in debt retired. Cash Undrawn committed facilities 15.8 • BNDES loan repayment of $1.7bn. 15.1 14.8 6.
Slide 24: $0.4bn Working Capital Improvement
$0.4BN WORKING CAPITAL IMPROVEMENT Working capital movement ($bn) • Customer focused initiatives, including 0.3 De Beers pre-payments. 0.7 • Improvement in supplier payment terms. 3.8 • Inventory management. 0.8 • Lower De Beers inventory of $0.3bn. 3.4 • Partially offset by the impact of an increas
Slide 25: 37% Decline in Capital Expenditure
37% DECLINE IN CAPITAL EXPENDITURE Capital expenditure ($bn)(1) Expansionary capex (37)% 4.0 ($bn) 2015 2016 Minas-Rio 0.5 0.2 1.9 Grosvenor 0.5 0.3 2.5 ~2.5 ~2.5 0.5 Gahcho Kué 0.2 0.2 1.0 0.7 Venetia underground 0.1 0.1 0.8 0.6 Barro Alto 0.2 - 1.4 1.2 1.0 Others 0.4 0.2 (2) 2015 2016 2017F 2018F
Slide 26: $1.8bn of Disposal Proceeds in 2016
$1.8BN OF DISPOSAL PROCEEDS IN 2016 2016 Proceeds(1) ($bn) 1.8 • Sale of Niobium Phosphates to 0.1 China Molybdenum for $1.5bn. 0.2 • Sale of minority stake in Exxaro for $0.2bn. 1.5 • Announced disposal of Union to contribute further to portfolio upgrading. • Value thresholds were not met on Moranb
Slide 27: Business Update
BUSINESS UPDATE Mark Cutifani Minas-Rio – First Ore on Ship (FOOS)Conveyors at Iron OreatTerminal, Sishen iron Portore of mine Açu,
Slide 28: Significant Progress on Change Platform…
SIGNIFICANT PROGRESS ON CHANGE PLATFORM… • Functional Model…implemented and “indirects” reduced 33%. Organisation • Headcount………….….reduced by ~40% across the business. • Assets sold/closed(1)…reduced by 27 to 41…dealing with the tail. Portfolio • Major projects(2)…………………delivered 5 per key commitme
Slide 29: …Delivering Meaningful Progress Since 2012
…DELIVERING MEANINGFUL PROGRESS SINCE 2012. Safety and • Safety…..incidents down 50% but more work needed on fatal risks. environment • Environmental incidents…down 85% due to upgrading standards. • Copper-equivalent production…….up 8%. Operational improvements • Copper-equivalent unit costs…down 31
Slide 30: Productivity Improvements Ongoing
PRODUCTIVITY IMPROVEMENTS ONGOING 110 108 (1) Includes benefits of portfolio upgrading. (2) Cu Equiv (Copper-equivalent) is calculated using long-term consensus parameters. Excludes domestic / cost-plus production. Production shown on a reported basis. (3) Unit cost includes only AA’s equity share o
Slide 31: Portfolio Upgrading Continued in 2016
PORTFOLIO UPGRADING CONTINUED IN 2016 Portfolio upgrading MARGINS AND RETURNS Rustenburg Portfolio clean-up of lower margin / shorter life Callide assets will continue – Union disposal announced in Foxleigh the past week. Niobium and Phosphates Disposals(1) Exxaro Niobium and Phosphates sold for
Slide 32: Building a Resilient Business
BUILDING A RESILIENT BUSINESS De Beers Platinum Copper Bulks and Other Minerals Jwaneng Mogalakwena Sishen Botswana Iron ore Los Bronces Kolomela Orapa Amandelbult and Chile Minas-Rio manganese Venetia • Samancor South Africa South • BRPM Collahuasi • Voorspoed Africa • SA Therma
Slide 33: 2017 Guidance
2017 GUIDANCE Nujoma vessel, Debmarine Namibia
Slide 34: Targeting a Further $1bn Improvement
TARGETING A FURTHER $1BN IMPROVEMENT Incremental EBITDA improvement ($bn) 2017 Targeting $1.0bn cost & volume improvement $0.5bn in plan. 4.1 ~$0.25bn identified. ~$0.25bn work in progress. 1.0 1.5 Costs 2017 Focus – apply Operating Model disciplines 1.0 Optimising operational design & manag
Slide 35: Financial Guidance – Key Metrics
FINANCIAL GUIDANCE – KEY METRICS Financial metrics and net debt 2017F $bn EBITDA cost and volume improvement 1.0 Capex(1) ~2.5 Attributable free cash flow (based on average 2016 realised prices) ~2.0 Net debt (based on average 2016 realised prices) <7.0 Balance sheet target – using long term consens
Slide 36: Delivering Change, Building Resilience
DELIVERING CHANGE, BUILDING RESILIENCE • Creating a high quality, long life asset portfolio. Operational improvement • Operating model to help drive margins. • Focused on cash flow generation. • Disciplined capital management. Balance sheet discipline • Reinstatement of dividend targeted for the end
Slide 37: Appendix
APPENDIX Platinum bars at the Precious Metals Refinery
Slide 38: Commodity and Product Prices
COMMODITY AND PRODUCT PRICES Indexed prices (1 Jan 2015 = 1) Market Prices/FX Ave 15 Ave 16 2.1 2015 2016 Var. Ave ‘15 Iron Ore (CFR $/t) 56 58 Vs. 2.0 Ave ’16 HCC Benchmark ($/t) 102 114 1.9 Copper (c/lb) 249 221 1.8 ZAR / USD 12.78 14.70 Met Coal(1) +24% Average annual basket price 1.2 Thermal Coa
Slide 39: Earnings Sensitivities
EARNINGS SENSITIVITIES Sensitivities Analysis – 2016(1) Impact of change ($m) Commodity / Currency Change in price / exchange Achieved EBITDA Iron Ore $10/t 64 397 Hard Coking Coal $10/t 119 119 Thermal Coal (SA) $10/t 60 188 Thermal Coal (Australia) $10/t 55 39 Copper(2) 10c/lb 225 123 Nickel(3) 10
Slide 40: Operating Performance by Business Unit
OPERATING PERFORMANCE BY BUSINESS UNIT DE BEERS (US$/ct)(1) PLATINUM (US$/Pt oz) COPPER (C1 USc/lb)(2) NICKEL (C1 USc/lb) BWP -12% ZAR CLP BRL -19% 10.89 14.70 -11% 676 3.48 83 1,508 -19% Disposal / 1,330 154 restructure 73 1,420 ~1,400 145 ~145 431 67 1,276 137 350 ~60 ~340 2015 2016 2017F 2015 201
Slide 41: Operating Performance by Key Asset
OPERATING PERFORMANCE BY KEY ASSET(1) JWANENG(2) (US$/ct) ORAPA(3) (US$/ct) LOS BRONCES(4) (C1 USc/lb) COLLAHUASI(4) (C1 USc/lb) +18% +5% -22% -19% 40 34 33 ~165 190 ~31 145 148 156 28 27 ~27 137 21 111 ~115 2012 2015 2016 2017F 2012 2015 2016 2017F 2012 2015 2016 2017F 2012 2015 2016 2017F VENETIA
Slide 42: Production Outlook
PRODUCTION OUTLOOK(1) Units 2015 2016 2017F 2018F 2019F Diamonds(2) Mct 29 27 31-33 Platinum(3) Moz 2.3 2.4 2.35-2.40 ~2.5 ~2.1(4) (Previously 2.4-2.5) (Previously 2.5-2.6) Copper (5) Kt 709 577 570-600 630-680(6) 590-650 Metallurgical coal(7) Mt 21 21 19-21 20-22 20-22 (Previously 24-25) (Previousl
Slide 43: Organisation Restructuring – On Track
ORGANISATION RESTRUCTURING – ON TRACK Employee and contractor numbers Support Operations -39% 162,000 157,000 151,000 13,000 128,000 11,500 95,000 95,000 8,700 Other Coal Iron ore De Beers Copper Platinum 2012 2013 2014 2015 2016 2016 43