Anglo American Plc · LSE:AAL
Anglo American — Merger or Acquisition (November 2011)
21 slides from Anglo American's merger presentation, Nov 4, 2011
Slide 1: Unique Opportunity to Consolidate the World's Leading Diamond Company
UNIQUE OPPORTUNITY TO CONSOLIDATE THE WORLD’S LEADING DIAMOND COMPANY Investor presentation – 4 November 2011
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: Highlights
HIGHLIGHTS •1 Unique opportunity to consolidate control of the world’s leading diamond company •2 Highly attractive industry fundamentals with late development cycle exposure •3 Reinforces long term partnership with Botswana to create long term value •4 Simplified ownership structure will enhance pe
Slide 4: Transaction Summary
TRANSACTION SUMMARY Anglo American would increase its shareholding in De Beers from 45% to 85% for a total Consideration cash consideration of US$5.1 billion assuming the Government of the Republic of Botswana (GRB) does not exercise pre-emptive rights Recently renewed 10-year sales agreement Under
Slide 5: Unique Opportunity to Consolidate Control of the World's Leading Diamond Company
1 UNIQUE OPPORTUNITY TO CONSOLIDATE CONTROL OF THE WORLD’S LEADING DIAMOND COMPANY
Slide 6: De Beers Global Footprint
DE BEERS GLOBAL FOOTPRINT De Beers mines Canada Snap Lake Victor Gahcho Kue project Namibia Namdeb De Beers Marine Namibia Botswana Damtshaa Production by country Jwaneng (CT recovered, 2010) Letlhakane Canada Orapa 5% DBCM Namdeb 23% South Africa 4% Kimberley Namaqualand1 Venetia Voorspoed Debswana
Slide 7: De Beers Business Overview
DE BEERS BUSINESS OVERVIEW Diamond value chain Retail US$71.8bn n.a. US$13.6bn US$14.7bn US$20.4bn n.a. PWP US$19.5bn Sorting, Cutting & Jewellery Exploration Mining Diamond Brands Valuing & Distribution Polishing Manufacture 50% DTC 100% 50% Group Exploration Debswana UK DBDJ 50% DTC 50% 100% Deb T
Slide 8: Large Scale, Higher Margin Assets
LARGE SCALE, HIGHER MARGIN ASSETS Large scale1 Higher margin assets Access to significant reserve base and sustainable 70% of De Beers production is located on the lower half of production / competitive growth position the cost curve 2.5 Hope Alrosa 2.0 Rio Tinto 1.5 Cost/revenue (x) Snap lake Namde
Slide 9: Strong Downstream Expertise and Track Record in Creating Demand
STRONG DOWNSTREAM EXPERTISE AND TRACK RECORD IN CREATING DEMAND WILL UNLOCK FURTHER VALUE De Beers has a track record of creating demand for diamonds in different countries % of first time brides who receive a diamond only engagement ring USA … … Japan … … and now China 50 years 30 years 16 years CA
Slide 10: Well Positioned to Create a Robust Platform for the Long Term
WELL POSITIONED TO CREATE A ROBUST PLATFORM FOR THE LONG TERM Strong financial recovery Production – carats recovered (Mct) Decisive management actions to address cost base 60 and drive profitability in tough market conditions 50 – reduced production in line with prevailing levels of 40 demand 30 –
Slide 11: Highly Attractive Industry Fundamentals with Late Development Cycle Exposure
2 HIGHLY ATTRACTIVE INDUSTRY FUNDAMENTALS WITH LATE DEVELOPMENT CYCLE EXPOSURE
Slide 12: Highly Attractive Industry Fundamentals
HIGHLY ATTRACTIVE INDUSTRY FUNDAMENTALS Key suppliers (by value)1 Demand growth driven by emerging economies2 7% CAGR 100% Others4, 25% De Beers, 36% 80% Emerging economies 60% Zimbabwe, 3% 36% Petra, 1% Gem, 1% 40% Harry Winston, 2% Rio Tinto, 4% Developed BHP Billiton, 4% economies 20% 43% Catoca,
Slide 13: Strong Long Term Fundamentals Based on Structural Supply Deficit
STRONG LONG TERM FUNDAMENTALS BASED ON STRUCTURAL SUPPLY DEFICIT Major diamond discoveries1 Emerging supply demand gap2 New production unable to keep pace with 125 growing demand Siberia 1960’s Orapa 100 1971 Jwaneng Expected demand 1982 (nominal pipeline call) PWP (polished wholesale price) 75 (US$
Slide 14: Majority Control of De Beers Will Strengthen Exposure to Late Cycle Development
MAJORITY CONTROL OF DE BEERS WILL STRENGTHEN EXPOSURE TO THE LATE CYCLE DEVELOPMENT 2010 portfolio composition5 China’s share of global demand 60% Nickel Anglo Copper American 50% Finished BHP Steel 40% Light duty vehicles Rio Tinto 30% 20% Vale Polished diamonds 10% Xstrata 0% 0% 20% 40% 60% 80% 10
Slide 15: Reinforces Long Term Partnership with Botswana to Create Long Term Value
3 REINFORCES LONG TERM PARTNERSHIP WITH BOTSWANA TO CREATE LONG TERM VALUE
Slide 16: Reinforcing Long-Term Partnership with Botswana
REINFORCING LONG-TERM PARTNERSHIP WITH BOTSWANA Diamond industry is of strategic importance to Botswana, contributing c.35% to GDP – recently renewed and extended 10-year sales agreement with De Beers – GRB has a pre-emption right in relation to the transaction enabling it to increase interest in De
Slide 17: Simplified Ownership Structure Will Enhance Performance
4 SIMPLIFIED OWNERSHIP STRUCTURE WILL ENHANCE PERFORMANCE
Slide 18: Building on Existing Areas of Cooperation
BUILDING ON EXISTING AREAS OF COOPERATION Global supply chain and procurement benefits Procurement – implementing system and process advantages – up skilling organisational capabilities Roll-out of Anglo American’s proven asset optimisation framework – opportunity to extend programme beyond successe
Slide 19: Highlights
HIGHLIGHTS •1 Unique opportunity to consolidate control of the world’s leading diamond company •2 Highly attractive industry fundamentals with late development cycle exposure •3 Reinforces long term partnership with Botswana to create long term value •4 Simplified ownership structure will enhance pe
Slide 20: Appendix
AngloAmerican APPENDIX
Slide 21: Pro Forma Accounting Treatments
PRO FORMA ACCOUNTING TREATMENTS • De Beers is currently equity accounted by Anglo Year ended Six months ended 31 December 2010 30 June 2011 American. Upon completion of the transaction, Anglo US$ billion Reported Pro forma Reported Pro forma American will fully consolidate De Beers Revenue 28.0 33.8
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