Anglo American plc · LSE:AAL
Anglo American — Investor Day (October 2008)
38 slides from Anglo American's investor day presentation, Oct 28, 2008
Slide 1: Coal Investor Seminar
Coal Investor Seminar 28 October 2008 Ian Cockerill, CEO Anglo Coal Anglo Coal Investor Seminar – October 2008 0
Slide 2: Introductory Remarks
Introductory Remarks Cynthia Carroll, CEO Anglo American Plc Anglo Coal Investor Seminar – October 2008 1
Slide 3: Balancing current market challenges while positioning for future profitable growth
Balancing current market challenges while positioning for future profitable growth Near-term: Global financial crisis and economic slowdown significantly impacting demand and metal prices, with some trading at or below marginal cost Anglo is actively responding to mitigate the near-term financia
Slide 4: Anglo Coal – an increasingly important contributor to Anglo American
Anglo Coal – an increasingly important contributor to Anglo American Full Year 2007 Op Profit Coal 6% Diamonds ($614m) 5% A core portfolio business: increasing Ferrous contribution to group operating profit from Metals Base Metals improving operations and market strength 15% 46% Platinum Pioneer
Slide 5: Presentation Outline
Presentation Outline 1. Introduction 2. Coal Market Characterisation 3. Current Market Fundamentals 4. Anglo Coal Competitive Advantages 5. Longer Term Market Outlook 6. Conclusions and Q&A Anglo Coal Investor Seminar – October 2008 4
Slide 6: Introduction to the Anglo Coal Team
Introduction to the Anglo Coal Team Ian Botha Neil Dhar Business CFO Development Francois Roger Wicks Jacques Strategy Marketing Ian Cockerill CEO Margaret Gareth Pickworth Llewellyn HR S&SD Alex Hathorn Seamus French Ben Magara Craig Wiggill Technical Australia South Africa Americas Anglo Coal Inve
Slide 7: Safety and Sustainable Development Remain High Priority
Safety and Sustainable Development Remain High Priority Safety LTIFR 12 months rolling Sustainable Development Highlights 0.60 Water treatment – Emalahleni plant 0.50 HIV/AIDS programme touches 80% of staff in South Africa 0.40 0.30 0.20 0.10 0.00 Jan-08 May-08 Mar-08 Mar-07 Sep-08 May-07 Nov-07
Slide 8: Energy vs. Climate Change – Our Response
Energy vs. Climate Change – Our Response Global Energy vs. Climate Change Debate Examples of Advocacy Examples of Action Emissions reduction at Capcoal and Moranbah operations - methane capture and power production Anglo/Johnson – Matthey Low Emissions Technology Project Anglo Coal Investor Seminar
Slide 9: Overview of Key Themes
Overview of Key Themes Downward pressure - demand softening but logistics and forex offsets Lower, but positive growth in BIC regions Supply constraints still present but moderating Higher cost structures will preclude a return to historic cyclical lows Anglo Coal positioned for continued
Slide 10: Presentation Outline
Presentation Outline 1. Introduction 2. Coal Market Characterisation 3. Current Market Fundamentals 4. Anglo Coal Competitive Advantages 5. Longer Term Market Outlook 6. Conclusions and Q&A Anglo Coal Investor Seminar – October 2008 9
Slide 11: Complex Multi-Product Market
Complex Multi-Product Market RANK LOW Rank (very high moisture) a proxy for geological age HIGH Rank (very low moisture) Wide range Curve is a generic indicator of a of Anglo export combination of key coking properties in met coal products Metallurgical Coals (such as CSN, in key producing Fluidity,
Slide 12: Coal Production and Consumption is Geographically Diverse
Coal Production and Consumption is Geographically Diverse China Australia Russia Korea Coal Consumption Btpa Colombia Taiwan Germany US Indonesia 2.5 India South Production 1.00 Poland Japan Brazil Export 15% 0.80 Africa 0.60 Canada UK 0.40 0.20 0.00 Consumption -0.20 -0.40 -0.60 -0.80 Domestic 85%
Slide 13: Mix of Contract Types and Pricing Frameworks
Mix of Contract Types and Pricing Frameworks Prices Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Prices JFY 07/08: JFY 08/09: HCC US$ 96/mt Previous Year Prices New Japanese Fiscal Year Prices – Export Met and Thermal Coal HCC US$ 300/mt Therm. US$ 68/mt Therm. US$ 125/mt Ind. FY 07/08 Previous
Slide 14: Logistics a Key Component of the Supply Chain
Logistics a Key Component of the Supply Chain Long distance Coal reserves voyage Beneficiation Rail link Loading Port U/G & O/C (FOB Mining Sales) L/T contract with mine mouth power stations Annual or S/T contract with Power, steel, cement domestic industrial customers plant at discharge Trans-shipm
Slide 15: Presentation Outline
Presentation Outline 1. Introduction 2. Coal Market Characterisation 3. Current Market Fundamentals 4. Anglo Coal Competitive Advantages 5. Longer Term Market Outlook 6. Conclusions and Q&A Anglo Coal Investor Seminar – October 2008 14
Slide 16: Sustained Recent Demand Growth
Sustained Recent Demand Growth Export Thermal Coal Demand (Mt) Premium Hard Coking Coal Demand (Mt) 800 160 3.4% CAGR 6.7% CAGR 700 140 600 120 500 100 400 80 300 60 200 40 100 20 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2000 2001 2002 2003 2004 2005 2006 2007 Note: Based on AME and other publicl
Slide 17: Europe and N.E. Asia Drive Demand for Export Coal
Europe and N.E. Asia Drive Demand for Export Coal % Share of Export Coal Demand, 2007 100% Export coal demand currently driven by R.O.W. North developed economies – Japan and EU 25 Other America 80% India Asia India 60% China China and US historically exporting surplus S. Korea consumption – now
Slide 18: Differing Cost Structures Across Export Coals
Differing Cost Structures Across Export Coals Indicative Med-Atlantic Export Thermal Cost Curve Indicative Premium Hard Coking Coal FOB (US$/mt, adjusted @ 6000 kcal/kg NAR @ FOB) Cash Cost (US$/mt @ FOB) Lower quartiles Russia the Australia dominated by high cost dominates Canada typically Colombia
Slide 19: H1 2008 Supply Side Challenges – Response from Higher Cost North America
H1 2008 Supply Side Challenges – Response from Higher Cost North America Annualised H1 Export Thermal Supply Increase (2007-2008, Mt), at June 2008 15 0 Australia – infrastructure bottlenecks, weather -15 South Africa – power, tonnage diversion and China South Indo- Poland Aus- US Africa nesia trali
Slide 20: Supply Side Challenges Drove Strong Price Growth
Supply Side Challenges Drove Strong Price Growth Thermal Coal Prices (API4) Hard Coking Coal Quality adjusted, Mt and US$/mt FOB RBCT Mt and US$/mt Goonyella FOB Hay Point Jul Avg. 200 ($168/t) 300 2008 Spot Price Range 250 150 200 100 150 Current Spot Levels Jan Avg. ($100/t) 100 50 50 0 0 2000 200
Slide 21: Presentation Outline
Presentation Outline 1. Introduction 2. Coal Market Characterisation 3. Current Market Fundamentals 4. Anglo Coal Competitive Advantages 5. Longer Term Market Outlook 6. Conclusions and Q&A Anglo Coal Investor Seminar – October 2008 20
Slide 22: Geographically Diverse Production Base
Geographically Diverse Production Base Canada South America South Anglo Coal Australia Africa Canada Venezuela Share of Op. Profit (CdG) 2008H1: $731M Colombia (Cerrejon) Canada South America Australia South Anglo Coal Africa Australia Anglo Coal South Africa Global Headquarters Share of Production
Slide 23: Low Cost Operations
Low Cost Operations Indicative Med-Atlantic Export Thermal Cost Curve Indicative Hard Coking Coal FOB Cash (US$/mt, adjusted @ 6000 kcal/kg NAR @ FOB) Cost (US$/mt @ FOB) Anglo Coal Anglo Coal (Predominantly South (Australia) Africa and Colombia) Mine by Mine Production Mine by Mine Production Note:
Slide 24: Major Producer in Both Export Segments
Major Producer in Both Export Segments Estimated % Share of Production from large scale, long life Market Export Production operations 30% Export Thermal High quality coking coal brands from Export Metallurgical Australia (close to Goonyella 20% (incl. PCI, SSCC) benchmark) Established export
Slide 25: Diverse Customer Base and Longstanding Relationships
Diverse Customer Base and Longstanding Relationships Export Thermal % Share of Anglo Coal Sales Tonnage Evenly balanced exposure to global energy demand Risk diversified over large number of major utility 100% Other company customers Asia 80% Indo- Pacific India Export Metallurgical 60% Produc
Slide 26: Building on the Turnaround
Building on the Turnaround Production (Mt) Operating Profit ($M) Mineral rights confirmed 50 Americas 1200 in South Africa 1000 40 Aust- ralia 800 Americas New management teams 30 in place on most 600 Australian operations Aust- 20 ralia South 400 Africa 10 200 South Both South Africa and Afri
Slide 27: Continued Focus on Cost and Productivity – Asset Optimisation
Continued Focus on Cost and Productivity – Asset Optimisation Equipment Performance Benchmarking (%) Utilisation high, Revenue Callide Drayton availability requires Greenside Equipment performance benchmarking and improvement improvement 100 Pit coal recovery maximisation Logistics optimisatio
Slide 28: Expansion Projects Largely Complete, Growing Export Production
Expansion Projects Largely Complete, Growing Export Production Anglo Coal Share of Production (Mt) Lake Lindsay: 4Mt of Bowen Basin HCC and 80 SSCC for the export market (Anglo share = 70%) Dawson: 5.7Mt of Bowen Basin HCC, SSCC and export thermal (Anglo share = 51%) 60 Export Thermal Projects
Slide 29: Near & Long Term Project Pipeline Options
Near & Long Term Project Pipeline Options Horizon Cerrejón P50 Americas Cerrejón P40 Roman Heidelberg Mini-Pit Heidelberg UG New Largo South Africa Elders OC Elders UG Capcoal Dartbrook Saddlers Creek Moranbah South Lake Vermont Dawson Moranbah Grosvenor Australia North Theodore South 2009 - 2012 20
Slide 30: Building an Asset Base for the Future
Building an Asset Base for the Future Business opportunities beyond conventional coal are expanding Dawson, Coal bed methane (CBM) exploitation allows safer Botswana CapCoal, Waterberg mining, emissions reduction, power generation and Moranbah could extend the business model in existing regions Spri
Slide 31: Presentation Outline
Presentation Outline 1. Introduction 2. Coal Market Characterisation 3. Current Market Fundamentals 4. Anglo Coal Competitive Advantages 5. Longer Term Market Outlook 6. Conclusions and Q&A Anglo Coal Investor Seminar – October 2008 30
Slide 32: Thermal Coal to Remain the Primary Fuel for Electricity Generation
Thermal Coal to Remain the Primary Fuel for Electricity Generation World Electricity Generation by Fuel Type (Twh) 40,000 World electricity demand forecast to nearly double by 2030 (China and India Renewables drive ~45% of incremental demand) 30,000 (mostly Hydro) Nuclear Coal a large low cost f
Slide 33: Thermal Coal Most Exposed to China / India Growth – Both Becoming Net Importers
Thermal Coal Most Exposed to China / India Growth – Both Becoming Net Importers Forecast China and India Net Thermal Coal Imports (Mt) 600 500 Both regions expanding coal 400 India powered generation infrastructure 300 200 China production challenged by China safety issues 100 0 India challeng
Slide 34: Brazil, India to Drive Demand Growth for Metallurgical Coal
Brazil, India to Drive Demand Growth for Metallurgical Coal Met coal demand growth will be Share of Forecast Incremental Export Met dependent on Indian and Brazilian steel Coal Demand 2008 – 2012 (%) production 100 Rest of Low Vol Customers highly dependent on Australia World PCI – 65% of HCC su
Slide 35: No Near Term Sources of New Production, Especially in Metallurgical Coal
No Near Term Sources of New Production, Especially in Metallurgical Coal Poland, Kuzbass Elga and Germany Tavan Tolgoi N.E & S.E. BC Shanxii Kalimantan Appalachia Bowen Basin 65% of HCC supply 60% of PCI supply Moatize Existing basins, close Current major Emerging Greenfields, to domestic demand, ex
Slide 36: Presentation Outline
Presentation Outline 1. Introduction 2. Coal Market Characterisation 3. Current Market Fundamentals 4. Anglo Coal Competitive Advantages 5. Longer Term Market Outlook 6. Conclusions and Q&A Anglo Coal Investor Seminar – October 2008 35
Slide 37: Conclusions
Conclusions Market volatility creating demanding conditions Near term focus on costs, productivity, and project completion Recent expansion phase almost complete – new, low cost production available Significant project pipeline, but timing flexible to suit market conditions 18 operations,
Slide 38: Question and Answer session
Question and Answer session Anglo Coal Investor Seminar – October 2008 37