Slide 1: Investor update 1 December 2016
George Fisher zinc mine, Mount Isa Mines, Australia Investor update 1 December 2016
Slide 2: Forward looking statements
Forward looking statements This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward looking statements may be identified by the use of forward looking terminology, or the negative thereof such as “outlook”, "plans
Slide 3: Highlights
Whole Ore Leach construction site, Katanga copper, DRC Highlights Ivan Glasenberg - CEO
Slide 4: Summary
Summary Debt reduction plan nearing completion and capital structure repositioned • On track for $16.5-$17.5bn Net debt by end 2016; down $12.5bn(1) in just 18 months • Divestment processes successfully completed at $6.3bn vs original target of $1-2bn • Success of deleveraging programme recognised b
Slide 5: Creating long-run sustainable returns
New Glencore berth facilities at the Port of Townsville, Australia Creating long-run sustainable returns Steven Kalmin - CFO
Slide 6: Net debt c.$16.5-$17.5bn: debt reduction plan nearing completion
Debt reduction plan nearing completion • End 2016 Net funding and Net debt Debt bridge ($bn) estimates unchanged at $31-32bn Glencore Agriculture, and $16.5-$17.5bn respectively GRail and Ernest Henry Net • Proportionate vs full consolidation of completed in H2 2016 funding $39.0 $1.7 Glencore A
Slide 7: Targeting greater balance sheet strength and flexibility
Targeting greater balance sheet strength and flexibility • Strong BBB/Baa ratings target Net debt/Adjusted EBITDA and maintenance remains a top priority Historical maximum 3.0 • Our proactive actions in 2015/2016 leverage target of 3x 2.9 demonstrate our commitment 2.8 • Targeting maximum 2x Net 2.8
Slide 8: Business strongly cash generative, even at Q1 2016 lows
Business strongly cash generative, even at Q1 2016 lows 2016 Q1 trough annualised FCF of c.$2.7bn(1) underpinned by: Marketing: • diverse business provides a level of stable cash flows, • flexible capital structure Industrial: • Extensive reinvestment in asset base: +$38bn since 2009; • Mid/late cyc
Slide 9: 2017 guidance - production
2017 guidance - production • 2017 key changes Commodity Unit Guidance Guidance • Copper: 65kt reduction includes lower FY 2016 FY 2017 production at Alumbrera as it reaches end Copper kt 1,420 ± 15 1,355 ± 25 of life, a 20kt reduction from the sale of Zinc kt 1,100 ± 15 1,190 ± 25 30% of EHM and low
Slide 10: 2017 guidance - industrial capex c.$4bn
2017 guidance - industrial capex c.$4bn(1) 2016 expected to come in below previous $3.5bn guidance Sustaining capex 2017F: 2016F: • 2017F: $3bn: (+$0.3bn) $3.0bn $2.7bn • Key changes by commodity: • Copper: higher deferred stripping at Katanga in preparation for Copper Whole Ore Leach (WOL) commissi
Slide 11: 2017 guidance - mine costs
2017 guidance - mine costs • Significant reductions in 2016 Cu copper and zinc cost structures Costs (c/lb)(1) expected to be sustained into 2017 Cal 2017 LME(5): 136 96 94 • Supported by favourable FX movements, 267c/lb 2015A 2016E Revised 2017 Guidance healthy by-product credits and extensive cost
Slide 12: 2017 guidance - marketing
2017 guidance - marketing • 2016 Marketing EBIT expected Marketing EBIT ($M) towards the upper end of the Sale of 50% recently tightened guidance range 4000 of Glencore Agri ($2.5 to $2.7bn) in line with Addition of supportive market conditions over 3500 Xstrata and Viterra H2 2016 synergies • 2017
Slide 13: Capital allocation: distribution policy
Capital allocation to maximise value creation from cash flows: Distribution policy • 2017 cash distribution of $1bn, paid in equal tranches in H1 and H2 2017 • New distribution policy to apply from Maintain strong BBB/Baa 2018 (in respect of 2017 cash flows) comprising: capital structure • Fixed $1b
Slide 14: Capital allocation: clear reinvestment criteria
Capital allocation to maximise value creation from cash flows: Clear reinvestment criteria • Success in resources is about having the right commodities / business mix and making the right reinvestment Maintain strong BBB/Baa decisions capital structure • Curtailed capacity to be returned at right ti
Slide 15: Positioned for the future
Nickel crowns, Nikkelverk Norway Positioned for the future Ivan Glasenberg - CEO
Slide 16: Positioned for the future
Positioned for the future The right Marketing resilience Highly cash Low-cost growth commodities to feed generative options in copper maturing economies and zinc Leading large scale low-cost Earnings generated from Optimisation of capital Latent capacity to be portfolio of commodities with physical
Slide 17: Appendix
Rebuild workshop, Mount Isa Mines, Australia Appendix
Slide 18: Sustainability and governance
Sustainability and governance • Safety LTIFR(1) 2010 to October 2016 • Regrettably 14 fatalities from 6 incidents YTD 12 fatalities from 4 incidents at our “focus assets” 2.74 • Remain resolved to eliminate fatalities; extra resource support provided to our main concern 2.49 areas • Assurance focus
Slide 19: Notes
Notes Slide 8: Business strongly cash generative, even at Q1 2016 lows • (1) Q1 2016 estimated annualised EBITDA of c.$7.7bn, basis lowest spot prices during the quarter, after estimated cash taxes and interest of $1.4bn, estimated industrial capex of $3.5bn and $0.1bn of marketing capex. Excludes w
Slide 20: Notes
Notes Slide 11: 2017 guidance – mine costs • (1) 2016F copper unit costs calculated on guided mid-point of department production of 1.27Mt less c.45kt forecast production at Mopani (excluding c.150kt of forecast copper production as by-product in the zinc and nickel divisions). 2017F copper unit cos
Slide 21: Koniambo update
Koniambo, New Caledonia Koniambo update
Slide 22: Line 1 modifications proven; Line 2 rebuild in 2017
Line 1 modifications proven; Line 2 rebuild in 2017 • Line 1 furnace repairs de-risked Metal production from Line 1 during 2016 • Year to date performance of the redesigned Line 1 has demonstrated operational integrity, strong on-line time, and reliability of the technology • Restructuring and resiz