Anglo American Plc · LSE:AAL
Anglo American — H1 2019 Earnings Presentation
95 slides from Anglo American's earnings presentation, Jul 25, 2019
Slide 1: 2019 Interim Results
2019 INTERIM RESULTS 25 July 2019
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: 2019 Interim Results Agenda
2019 INTERIM RESULTS AGENDA Summary & A Sustainable Business Mark Cutifani Financials Stephen Pearce Growing Quality & Positioned for the Future Mark Cutifani 3
Slide 4: Sustainable, Long-Term Focus
SUSTAINABLE, LONG-TERM FOCUS Production volumes1 EBITDA2 Mining EBITDA margin3 2% $5.5bn 46% Dividend & Buyback4 Free cash flow5 ROCE6 $1.8bn $1.6bn 22% 4
Slide 5: Safety, Health & Environment
SAFETY, HEALTH & ENVIRONMENT Safety Health Environment Group TRCFR7,8 Fatalities Occupational health – new cases7,9 Major incidents7,10 15 209 30 4.66 175 11 159 4.02 9 111 101 15 5.42 96 6 6 5 3.55 3 3.17 2.66 6 6 2.20 4 11 2 1 2013 2014 2015 2016 2017 2018 H1 2019 2013 2014 2015 2016 2017 2018 H1
Slide 6: Managing Tailings Safely
MANAGING TAILINGS SAFELY Industry leading dam safety management Tailings dams in our portfolio Group Technical Specialists Internal risk assurance Independent Downstream/ other TRP BU Technical Standard expert Engineer of Record Upstream Southern Australia Operation Africa 6 levels of assurance: 2 i
Slide 7: Fundamentally Different Business
FUNDAMENTALLY DIFFERENT BUSINESS Production, productivity & unit costs 2012 to H1 2019 Number of assets 220 200 +103% 50% 180 productivity11 160 140 Production volumes1 120 100 80 108 8% 60 40 2012 2013 2014 2015 2016 2017 2018 H1 2019 Unit costs Production index - Copper Equivalent (Cu Eq)1 Product
Slide 8: Leading Competitive Position
LEADING COMPETITIVE POSITION Competitive Sustainable Differentiated Average quality adjusted cost curve position Net debt:EBITDA Cu Eq growth1 2018-2023 ~20-25% 0.9x 47% Peer range ~15% 36% Peer 34% range Peer 0.3x range ~5% 0.0x Anglo Peers12 Anglo Peers13 Anglo Peers13 8
Slide 9: A Sustainable Business
A SUSTAINABLE BUSINESS Mark Cutifani Palladium grain Copper, nickel, steel (iron ore and metallurgical coal)
Slide 10: Step-Change in Performance & Sustainability
STEP-CHANGE IN PERFORMANCE & SUSTAINABILITY P101 Operating Model Exceeding industry best-in-class equipment & process performance FutureSmart Technical change MiningTM Game-changing technology; data analytics; sustainability Incremental improvement Step-change 10
Slide 11: FutureSmart Mining - Productivity & Sustainability
FUTURESMART MINING™ - PRODUCTIVITY & SUSTAINABILITY Concentrated Mine™ Waterless Mine Precision Efficiency less energy, water & capital reducing consumption Modern Mine Intelligent Mine Smart Systems Digitalisation precision in execution data driven design 11
Slide 12: Innovation Driving Sustainability
INNOVATION DRIVING SUSTAINABILITY 1900 Today Future? 40kg Cu: 0.5% Cu 6m3 water 4% Cu 3m3 water 24t waste 160 KWhr 1t waste 10 KWhr 1t ore 8t ore 40kg Ever increasing scale Precise. Predictable. Reliable 12
Slide 13: Sustainability at the Heart of Our Business
SUSTAINABILITY AT THE HEART OF OUR BUSINESS FutureSmart MiningTM Trusted Corporate Leader 30% Improvement in energy efficiency by 2030 Thriving Communities Operational efficiency Fewer surprises Access to resources 50% Reduction in water abstraction by 2030 Healthy Healthy Environment environment 30
Slide 14: Inherent Growth in Production & Margins
INHERENT GROWTH IN PRODUCTION & MARGINS Growth in production1 ~135 108 100 2012 H1 2019 2023 Growth in margin3 30% 46% ~45-50% 14 14 14
Slide 15: Financials
FINANCIALS Stephen Pearce Forevermark diamonds
Slide 16: H1 2019 – Continued Delivery
H1 2019 – CONTINUED DELIVERY EBITDA2 Capital expenditure16 40% payout ratio dividend $5.5bn $1.4bn 62c/sh Underlying EPS15 Net debt17 Share buyback (up to) $1.58/sh $3.4bn $1bn 16 16
Slide 17: $5.5bn EBITDA Driven by Strong Bulks Pricing
$5.5BN EBITDA DRIVEN BY STRONG BULKS PRICING Diamonds Copper $518m $789m 55% mining EBITDA margin 44% mining EBITDA margin $5.5bn PGMs Bulks $824m $3,358m 38% mining EBITDA margin 47% mining EBITDA margin 17 17
Slide 18: Improvement Driven by Minas-Rio & Prices
IMPROVEMENT DRIVEN BY MINAS-RIO & PRICES EBITDA2 variance: H1 2019 vs H1 2018 ($bn) 0.1 (0.1) (0.2) (0.3) Cost & volume Diamonds Met Coal improvement 0.7 0.3 (0.3) (0.2) 0.3 Iron Ore 108 5.6 5.5 4.6 H1 2018 Price18 Currency Minas-Rio Cost & Other H1 2019 & CPI19 recovery volume20 18 18
Slide 19: Resilient Balance Sheet
RESILIENT BALANCE SHEET Net debt17 ($bn) Net debt:EBITDA2,17 Gearing ratio21 IFRS lease 4.0 adjustment 0.4x 12% 3.4 10% 0.6 0.3x 0.3x 9% 2.8 2.8 H1 2018 FY 2018 H1 2019 H1 2018 FY 2018 H1 2019 H1 2018 FY 2018 H1 2019 19 19
Slide 20: Delivering Returns to Shareholders
DELIVERING RETURNS TO SHAREHOLDERS 2019 interim dividend Dividend per share Payout ratio $0.8bn 62c/sh 40% $3.4bn ordinary dividends +27% vs H1 2018 of underlying earnings since 2017 20 20
Slide 21: Balanced Returns to Shareholders
BALANCED RETURNS TO SHAREHOLDERS Share buyback (up to) Total returned since 2017 Balanced returns $1bn $4.4bn ~80:20 Dividends:buybacks since 2017 21 21
Slide 22: Balanced Capital Allocation
BALANCED CAPITAL ALLOCATION Capital allocation framework5,22 H1 2019 ($bn) $1.3bn attributable free cash flow5 1.6 Add back discretionary spend $0.7bn 2018 final dividend paid (1.3) Other adjustments (H1 2019 dividend declared: $0.8bn) $0.5bn Quellaveco spend funded by Mitsubishi16 Discretionary cap
Slide 23: Attractive High-Returning Growth Options Drive Near-Term Capex
ATTRACTIVE HIGH-RETURNING GROWTH OPTIONS DRIVE NEAR-TERM CAPEX Capex16 ($bn) $4.7 - 5.2bn $3.8 - 4.1bn expanded portfolio 1.5-2.0 e.g. Quellaveco 0.6-0.9 $2.8bn Growth 0.3 ~3.2 ~3.2 2.8-3.1 Sustaining 2.5 2018 2019 2020-21 Long-term per annum Excludes Mitsubishi share of Quellaveco capex16: $0.4bn ~
Slide 24: High Margin, High Return, Fast Payback Options
HIGH MARGIN, HIGH RETURN, FAST PAYBACK OPTIONS 2019 growth capex16 2020-21 growth capex16 $0.6bn to $0.9bn ~$1.5bn to $2bn pa driven by Quellaveco and technology projects subject to board approvals Disciplined capital allocation framework drives project selection23 Our share: From: Quellaveco (Coppe
Slide 25: Targeting $3-4bn Cost & Volume Improvement
TARGETING $3-4BN COST & VOLUME IMPROVEMENT Delivered 2013-201720: $2-3bn $3-4bn $4.2bn Growth projects (2021-2022) Technology & Innovation (2020-2022) Operating Model & P101 (2019-2022) ~$0.4bn $0.4bn 201820 201920 2020-2220 25 25
Slide 26: Balanced & Disciplined Approach
BALANCED & DISCIPLINED APPROACH Attractive growth1 Strong margin3 Resilient balance sheet ~20-25% ~45-50% <1.5x Cu Eq production – by 2023 Mining EBITDA margin bottom of the cycle net debt:EBITDA2,17 26 26
Slide 27: Growing Quality
GROWING QUALITY Mark Cutifani Minas-Rio
Slide 28: What Growth Means to Us
WHAT GROWTH MEANS TO US Growth in... quality volume margins returns within disciplined capital allocation framework 28 28
Slide 29: Minas-Rio – Strong Ramp Up
MINAS-RIO – STRONG RAMP UP FY 2019 guidance upgraded Production 19-21Mt26 FOB unit cost $24-27/t H1 2019 FOB realised price $92/t26 Açu port Tailings dam lift Best-in-class design Convert installation to operating licence by end 2019 Engineered construction Subject to State approval More robust than
Slide 30: Projects Update
PROJECTS UPDATE Quellaveco (Copper) Marine Namibia (Diamonds) Aquila (Met Coal) All major work areas mobilised & on-track Approved May 2019 Approved July 2019 Plant earthworks complete ~3 year build schedule Grasstree lifex, high quality met coal Concrete placement for plant under way Construction u
Slide 31: Positioned for the Future
POSITIONED FOR THE FUTURE Mark Cutifani Modern infrastructure (copper, iron ore, metallurgical coal)
Slide 32: Asset Quality Plays to Global Demand Themes
ASSET QUALITY PLAYS TO GLOBAL DEMAND THEMES Diamonds Copper PGMs Bulks World leader World class growth World leader High quality niche Consumer World Greener World Electrified World 32 32
Slide 33: Resilient Portfolio Benefits from Macro Trends
RESILIENT PORTFOLIO BENEFITS FROM MACRO TRENDS ~1.4 billion global population increase by 2035 2000 2018 2035 China 2000 2018 2035 India 2000 2018 2035 Africa Resilient portfolio 2000 2018 2035 South America 57% greener & consumer Rural population Urban population 43% high quality bulks (of Cu Eq pr
Slide 34: Our High Quality Products
OUR HIGH QUALITY PRODUCTS Diamonds – world leader27 64-67% Fe grade iron ore27 Realised price Realised price Other top producers Top 4 iron ore producers Volume Volume PGMs – world leader27 82% is high quality met coal27 Basket price Realised price per Pt oz Other top Other top primary producers pro
Slide 35: Investment Proposition
INVESTMENT PROPOSITION “Leading capabilities actively improving a world-class asset base to drive sustainable, competitive returns” Assets Capabilities Returns Focus on quality Operating Model Capital discipline Long life FutureSmart MiningTM Dividend payout ratio Technology & Sustainability Low cos
Slide 36: Q&A – Products That Improve People's Lives
Q&A Copper: electrification supporting renewables PGMs: air quality & lower emissions Diamonds: aspiration & growing prosperity Quality bulks: modern infrastructure development PRODUCTS THAT IMPROVE PEOPLE’S LIVES 36 36
Slide 37: Footnotes
FOOTNOTES 1. Copper equivalent production is calculated using long-term consensus parameters. 16. Cash expenditure on property, plant and equipment including related derivatives, Excludes domestic / cost-plus production. Production shown on a reported basis. net of proceeds from disposal of property
Slide 38: Appendix
Real Mining. Real People. Real Difference.
Slide 39: Guidance Summary
GUIDANCE SUMMARY Earnings Capex1 Other Volumes: See slide 43 2019 $3.8-4.1bn Quellaveco copper project Unit costs: See slide 44 - Growth $0.6-0.9bn - Our share of capex included in capex guidance 2019 depreciation: ~$3bn - Sustaining ~$3.2bn 2019 effective tax rate: 29-31% 2020-2021 $4.7-5.2bn - Mit
Slide 40: H1 2019 Simplified Earnings by BU
H1 2019 SIMPLIFIED EARNINGS BY BU $m (unless stated) De Beers Copper PGMs Kumba Minas-Rio Met Coal Thermal Coal Nickel Other1 Total Sales volume (mined) 15.5Mct2 307kt 612kt Pt3 21.4Mt 10.6Mt 9.9Mt4 13.6Mt5 18.6kt Benchmark price n/a $6,165/t6 n/a $91/t7 $106/t8 $191/t9 $69/t10 $12,324/t6 Product pr
Slide 41: H1 2019 Simplified Earnings by BU - Notes
H1 2019 SIMPLIFIED EARNINGS BY BU - NOTES PGMs basket price Coal blended price & unit cost Own mined volumes Coal weighted average market Price Volume Revenue Unit cost Price Volume PGMs basket prices & unit cost Platinum $833/oz 612koz $509m HCC $205/t 8.2Mt Palladium $1,401/oz 535koz $749m PCI $12
Slide 42: Earnings Sensitivities
EARNINGS SENSITIVITIES Impact of 10% change Sensitivity Analysis – H1 20191 in price / FX Commodity / Currency 30 June spot Average realised EBITDA ($m) Copper (c/lb)(2) 271 280 193 Platinum ($/oz) 818 831 61 Palladium ($/oz) 1,524 1,400 86 Rhodium ($/oz) 3,365 2,840 32 Kumba: 108 Iron Ore ($/t) 118
Slide 43: Production Outlook
PRODUCTION OUTLOOK Units 2017 2018 2019F 2020F 2021F Diamonds1 Mct 33 35 ~31 33-35 35-37 (previously 31-33) Copper2 kt 579 668 ~630-660 ~620-680 ~590-650 Platinum3 Moz 2.4 2.5 ~2.0-2.14 ~2.0-2.24 ~2.0-2.24 Palladium3 Moz 1.6 1.6 1.3-1.44 1.3-1.44 1.3-1.44 Iron ore (Kumba)5 Mt 45 43 42-43 43-45 43-45
Slide 44: Unit Costs Performance by Business Unit
UNIT COSTS PERFORMANCE BY BUSINESS UNIT De Beers (US$/ct)1 Copper (C1 USc/lb) PGMs (US$/Pt oz)2 Kumba (FOB US$/t) 60 62 ~65 134 135 135-140 1,561 1,551 <1,600 32 34 ~35 2018 H1 2019 2019F 2018 H1 2019 2019F 2018 H1 2019 2019F 2018 H1 2019 2019F Minas-Rio (FOB US$/t)3 Met Coal (US$/t)4 Thermal Coal S
Slide 45: Life Extensions Will Deliver Value; Higher Near-Term Sustaining Capex
LIFE EXTENSIONS WILL DELIVER VALUE; HIGHER NEAR-TERM SUSTAINING CAPEX 2019-21 sustaining capex1 Long-term sustaining capex1 ~$3.2bn pa ~$2.8-3.1bn driven by lifex for expanded portfolio Lifex projects – subject to disciplined capital allocation framework Venetia Underground (Diamonds) ~$0.2bn pa 5 M
Slide 46: Quellaveco – Financial Modelling
QUELLAVECO – FINANCIAL MODELLING Ownership Anglo American 60%, Mitsubishi 40% Accounting treatment Fully consolidated with a 40% minority interest Shareholder loans from minority shareholder to be consolidated in Anglo American Group net debt Project capex (nominal) $5.0-5.3 billion (100% basis - An
Slide 47: Quellaveco – Accounting
QUELLAVECO – ACCOUNTING Anglo American consolidates 100% of Quellaveco’s P&L and Balance Sheet. Mitsubishi’s 40% share is shown as a non-controlling interest. After the initial $0.8bn equity injection by Mitsubishi, the project is expected to be funded 60:40 through shareholder debt. Group net debt
Slide 48: De Beers – Supplying to Demand
DE BEERS – SUPPLYING TO DEMAND Sales Average Realised Underlying Mining Production1 Unit cost3 Capex (Cons.)2 price index price EBITDA margin4 H1 2019 15.6Mct 15.5Mct 118 $151/ct5 $62/ct $518m 55% $278m vs. H1 2018 $11% $13% $4% $7% $7% $27% 0pp #78% Underlying EBITDA ($m) 712 (93) 632 34 (21) (113)
Slide 49: Copper – Price Offsetting Strong Operational Performance
COPPER – PRICE OFFSETTING STRONG OPERATIONAL PERFORMANCE Underlying Mining Production Sales1 Realised price1 C1 unit cost2 Capex EBITDA margin3 H1 2019 320kt 307kt 280c/lb 135c/lb $789m 44% $242m vs. H1 2018 #2% 0% $6% $5% $18% $8pp $34% Underlying EBITDA ($m) 966 (154) 60 26 (24) (85) 789 H1 2018 P
Slide 50: PGMs – Strong Basket Price
PGMS – STRONG BASKET PRICE Realised basket Underlying Mining Production1 Pt sales2 Unit cost3 Capex price2 EBITDA margin4 Pt: 992koz H1 2019 1,009koz $2,685/Pt oz $1,551/Pt oz $824m 38% $217m Pd: 674koz vs. H1 2018 $1% / $4% $10% #16% $3% #61% #8pp 0% Underlying EBITDA ($m) (56) 891 180 (31) (9) 824
Slide 51: Kumba Iron Ore – High Iron Ore Prices
KUMBA IRON ORE – HIGH IRON ORE PRICES Realised price Unit cost Underlying Mining Production Sales Capex (FOB)1 (FOB) EBITDA margin H1 2019 20.1Mt 21.4Mt $108/t $34/t $1,366m2 57% $186m vs. H1 2018 $11% #1% #57% $3% #138% #21pp #35% Underlying EBITDA ($m) (39) 1,458 116 (88) 1,366 (4) 834 547 H1 2018
Slide 52: Minas-Rio – Strong Performance Following Restart
MINAS-RIO – STRONG PERFORMANCE FOLLOWING RESTART Realised price Unit cost Underlying Mining Production Sales Capex (FOB) (FOB) EBITDA margin H1 2019 10.8Mt (wet) 10.6Mt $92/wmt $21/t $670m1 60% $92m vs. H1 2018 #243% #230% #31% n/a n/a n/a #493% Underlying EBITDA ($m) 670 47 172 347 104 33 (22) 186
Slide 53: Metallurgical Coal – Production Timing
METALLURGICAL COAL – PRODUCTION TIMING Metallurgical Metallurgical FOB realised Underlying Mining Unit cost3 Capex production1 sales1 price2 EBITDA margin H1 2019 10.0Mt 9.9Mt $187/t $68/t $906m4 50% $253m vs. H1 2018 $7% $8% $4% #3% $20% $5pp #16% Underlying EBITDA ($m) 1,132 1,130 (56) 63 (9) (199
Slide 54: Thermal Coal – Impacted by Lower Prices
THERMAL COAL – IMPACTED BY LOWER PRICES Underlying Export prod. Sales FOB price3 Unit cost4 Mining margin EBITDA SA Capex SA1 / Col SA2 / Col SA / Col SA / Col SA6 / Col SA5 / Col H1 2019 9.0Mt / 4.2Mt 9.2Mt / 4.4Mt $64/t / $62/t $46/t / $36/t $14m / $76m 4% / 28% $83m vs. H1 2018 #3% / $19% #6% / $
Slide 55: Nickel – Lower Prices
NICKEL – LOWER PRICES Realised C1 unit Underlying Mining Production1 Sales1 Capex price cost EBITDA margin H1 2019 19.6kt 18.6kt 563c/lb 410c/lb $52m 22% $20m vs. H1 2018 #1% $7% $11% #8% $41% $9pp #35% Underlying EBITDA ($m) 88 (42) (5) 59 18 (3) 52 (4) H1 2018 Price FX Inflation Cost & Volume Othe
Slide 56: De Beers: World Leader in Diamonds
DE BEERS: WORLD LEADER IN DIAMONDS Best-in-class business… …focused on consumers Global demand3 EBITDA mining margin1 Rest of world ~55% India Gulf USA China Trading margin2 Female self purchases4 Millennials5 6-8% ~25% ~60% of demand of US demand 1. Represents the underlying EBITDA margin for the m
Slide 57: A Growing, World Class Copper Business
A GROWING, WORLD CLASS COPPER BUSINESS Quality assets with growth High value portfolio with long term potential Collahuasi ~240ktpa 1 (our share) ~1Mtpa at ~120c/lb 1 Los Bronces ~360ktpa 1 With further growth potential from: • existing assets Quellaveco • new projects • exploration ~300ktpa 1 1. Re
Slide 58: Quellaveco – A World Class Copper Project
QUELLAVECO – A WORLD CLASS COPPER PROJECT Attractive returns Focus on execution Successfully syndicated Low cost with significant All key permits in place, further potential execution benefitting from early works IRR Payback Mitsubishi subscription > 15% 4 years $851m Real, post-tax From first produ
Slide 59: World Leader in PGMs
WORLD LEADER IN PGMs Asset focused Own mined production split by volume $3,354/oz Mogalakwena Other Platinum 2% 6% Base metals Palladium 8% 3% 57% Palladium Rhodium Gold 46% Mining EBITDA margin Platinum Ruthenium Basket price Iridium 35% Other Own mined production split by revenue Amandelbult Targe
Slide 60: PGMs
PGMS Platinum demand1 Basket price driven by Pd and Rh European light duty autocatalysts Other autocatalysts ~16% ~20% Rhodium +340% Industrial & other Jewellery ~37% ~28% ICE/hybrid demand is set to grow2 Palladium +116% ~120m units 95m units ~110m units 10-20% 2% 5-10% PGM Basket +62% 98% 90-95% 8
Slide 61: Structural Trends Favouring High Quality Bulks
STRUCTURAL TRENDS FAVOURING HIGH QUALITY BULKS Iron ore: focus on premium products Metallurgical coal: world class operations Kumba production Minas-Rio production High quality portfolio Mining EBITDA margin ~64%Fe ~67%Fe 82% 50% of which 68% is lump Pellet feed products Hard coking coal Production
Slide 62: Portfolio Overview
PORTFOLIO OVERVIEW De Beers Copper Botswana (Debswana) Los Bronces Namibia (Namdeb) Collahuasi South Africa (Venetia) Quellaveco project Trading PGMs Bulks Minas-Rio (Iron ore) Mogalakwena Kumba (Iron ore) Amandelbult Moranbah-Grosvenor (Met coal) Processing Thermal coal, Nickel & Manganese 62 62
Slide 63: Business Unit Leadership
BUSINESS UNIT LEADERSHIP De Beers – Bruce Cleaver Base Metals – Ruben Fernandes Strategy – Duncan Wanblad PGMs – Chris Griffith Bulks – Seamus French Marketing – Peter Whitcutt 63 63
Slide 64: Asset Quality: Differentiated Portfolio
ASSET QUALITY: DIFFERENTIATED PORTFOLIO Revenue by product1 Capital employed by geography1 Nickel and Manganese Other 5% 6% Thermal coal PGMs Australia 8% 19% 11% Brazil 23% Met coal 12% Diamonds (De Beers) 17% Chile, Peru & Colombia Iron ore 22% 20% South Africa Copper Namibia & 25% 17% Botswana 15
Slide 65: Our Asset Improvement Journey
OUR ASSET IMPROVEMENT JOURNEY Group 2019 2013 Group 36th percentile 49th percentile Diamonds (De Beers) Copper PGMs Iron Ore Met Coal Thermal Coal Manganese Nickel Nickel & Manganese Average margin adjusted Q1 Q2 Q3 Q4 cost curve position1 1. Estimate. Source: Wood Mackenzie; Anglo American Platinum
Slide 66: Leading Margin Curve Improvement
LEADING MARGIN CURVE IMPROVEMENT Average margin adjusted cost curve position1 (%) 49% 47% 13 p.p. 45% 43% 38% 36% 36% 36% 34% 27% Peer 1 Peer 2 Peer 3 Peer 4 Anglo 2013 2019 1. Estimate. Source: Wood Mackenzie; Anglo American Platinum; De Beers; CRU; McKinsey Minespans. Includes non-AA mined. 66 66
Slide 67: High Quality Diversified Portfolio
HIGH QUALITY DIVERSIFIED PORTFOLIO ~1Mt copper #8 producer currently, #5 post Quellaveco ~37Mct diamonds (De Beers) #1 producer by value, #2 by volume ~5Moz PGMs #2 producer; #1 refiner ~75Mt high grade iron ore #5 export producer (post Minas-Rio ramp up) ~30Mt premium coking coal #3 export producer
Slide 68: Commodity Outlook
COMMODITY OUTLOOK Medium-to-long term commodity outlook • Demand to remain robust in medium to long term. China remains main driver for demand. Green economy Copper presents upside. • Supply expected to tighten from 2020s. • Growing disposable income drives demand. Long term, demand broadly correlat
Slide 69: Prospective Districts in Diversified Geographies
PROSPECTIVE DISTRICTS IN DIVERSIFIED GEOGRAPHIES Brazil Cu-Au >22,000km2 granted & under application. Sakatti Chidliak Zambia Cu-Co Arizona >10,000km2 granted (Zambezi West) Ecuador Brazil Zambezi West Quellaveco Angola Mt Isa South & Diamantina Australia Cu Los Bronces Mogalakwena >10,000km2 grante
Slide 70: IFRS 16: New Accounting Standard for Leases
IFRS 16: NEW ACCOUNTING STANDARD FOR LEASES • Leases mainly corporate offices, jewellery stores & shipping; also some mining equipment • Previously accounted for ‘off-balance sheet’ with lease costs taken to underlying EBITDA New accounting from 2019 • Lease commitments brought onto the balance shee
Slide 71: Debt Maturity Profile
DEBT MATURITY PROFILE Debt repayments ($bn) 1.9 1.4 1.4 1.1 1.0 0.8 0.7 0.5 0.6 0.5 0.0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029+ Subsidiary Euro Bonds US$ Bonds GBP bond Other Bonds Financing % of portfolio 44% 48% 4% 1% 3% Bank 2% Capital markets 97% Other 1% US bonds GBP bond Subsid
Slide 72: Operating Model, Technology and Innovation
OPERATING MODEL, TECHNOLOGY AND INNOVATION
Slide 73: Innovation with Purpose
INNOVATION WITH PURPOSE Mining is getting harder: Grades declining; societal expectations increasing Context Increasing scale is not a sustainable solution A focus on greater precision and efficiency is needed Improved the business since 2012, through the operating model: 50% fewer Operating assets;
Slide 74: Anglo American Operating Model: A Differentiated Approach
ANGLO AMERICAN OPERATING MODEL: A DIFFERENTIATED APPROACH Apply a manufacturing approach to Work that is planned, scheduled and mining, through organised & efficient properly resourced is safer & delivers planning & execution of work consistently & at a lower cost Further improvements implemented wi
Slide 75: P101: Focused on the Key Value Drivers
P101: FOCUSED ON THE KEY VALUE DRIVERS Los Bronces case study Mine Plant Drill Blast Load & haul Crush Mill Float & filter Percentage of 2018 direct cost base, Los Bronces = c.5% cost base >45Mtpa +10% >94% >89% Shovel Throughput Operating time Recoveries performance increase 75 75
Slide 76: FutureSmart Mining
FUTURESMART MININGTM Technical innovation Concentrated Mine™ Waterless Mine Precision – less energy, water & capital ~75% of portfolio in water constrained regions Modern Mine Intelligent Mine Safer & more efficient Optimising performance through digitalisation Sustainable Mining Plan Trusted corpo
Slide 77: Concentrated Mine
CONCENTRATED MINETM Challenge: Precision mining with minimal energy, water & capital intensity Approach Concentrate the Mine™ concept: 1. Coarse particle recovery (CPR) 2. Bulk sorting 3. Grade Engineering™ 4. Precision classification 5. Ultrafine recovery 6. Novel leach Value CPR: 20% increase in t
Slide 78: Bulk Sorting: Less Waste to Concentrator
BULK SORTING: LESS WASTE TO CONCENTRATOR Drill Blast Load & haul Crush Mill Float & filter • Uses sensors to determine ore content prior to processing Technology • Gangue is removed using natural heterogeneity of ore bodies • Provides immediate grade assays Benefits • Unlocks production capacity by
Slide 79: Coarse Particle Recovery: Improved Recoveries
COARSE PARTICLE RECOVERY: IMPROVED RECOVERIES Drill Blast Load & haul Crush Mill Float & filter • Flotation process changed to allow for larger diameter material Technology • Ore is liberated & recovered with lower waste volumes • Significant increase in throughput Benefits • Solidified disposal mat
Slide 80: Modern Mine
MODERN MINE Challenge: Everyone goes home safely every day Approach 1. Modernise – Electro-hydraulic drills, gel explosives, no scraper-winches 2. Mechanise – Remote operated ultra- low-profile equipment 3. Continuous cutting – Hard rock cutting machines 4. Swarm robotics – Small self-organising int
Slide 81: Modern Mine
MODERN MINE Challenge: Transformational use of renewables Approach 1. Oversize solar generation 2. Plant tariff demand arbitrage 3. Produce hydrogen with excess 4. Consume hydrogen in trucks Value 30% reduction in GHG emissions at plant 5% increase in truck power with 100% reduction in GHG emissions
Slide 82: Waterless Mine
WATERLESS MINE1 Challenge: ~75% of portfolio located in water constrained regions Approach 1. Coarse particle recovery 2. Dry stacking 3. Dry processing Value Reduced footprint 50% reduction in water intensity Reduced risk posed by tailings storage facilities Removal of expansion constraints 82 82 1
Slide 83: Waterless Mine
WATERLESS MINE1 Challenge: Create a dry stable stack from wet tails & ultimately eliminate wet tailings Approach – reduce risk Reduce risk 1. Fibre-optic sensing 2. Satellite monitoring Approach – dry stack 1. Engineer & construct vs placement 2. Hydraulically place CPR sand with conventional thicke
Slide 84: Intelligent Mine
INTELLIGENT MINE Challenge: Predict & shape operational outcomes Approach 1. Predictive maintenance using digital twins 2. Artificial intelligence for exploration & geosciences 3. Advanced process control using fibre- optic sensors Value 2% recovery/yield 5% process throughput 30% process stability
Slide 85: FutureSmart Mining: Sustainable Mining Plan
FUTURESMART MININGTM: SUSTAINABLE MINING PLAN Environment, Social & Governance
Slide 86: FutureSmart Mining: Sustainable Mining Plan
FUTURESMART MININGTM: SUSTAINABLE MINING PLAN Our Sustainability approach is integral to FutureSmart Mining™: to innovate & deliver step change results across the entire mining value chain. It is centred around three Global Sustainability Pillars & nine Global Stretch Goals: Accountability Trusted C
Slide 87: Our Sustainability Performance
OUR SUSTAINABILITY PERFORMANCE 2013 2014 2015 2016 2017 2018 H1 2019 Target Work-related 15 Zero harm fatal injuries1 11 9 6 6 5 3 15% year-on- TRCFR1 5.49 4.66 4.02 3.55 3.17 2.66 year reduction 2.20 New cases of Year-on-year occupational 209 175 159 111 reduction disease1,2 96 101 11 Energy 8% sav
Slide 88: Our Sustainability Performance
OUR SUSTAINABILITY PERFORMANCE 2013 2014 2015 2016 2017 2018 H1 2019 Target Total fresh water 20% saving by 290 247 250 withdrawals1,2 224 225 200 2020 89 Environmental Year-on-year 30 incidents1,2 15 reduction 6 4 2 6 1 Jobs sustained 111 116 121 125 (‘000)3 77 97 % of localised procurement 23 23 2
Slide 89: Safety, Health and Environment
SAFETY, HEALTH AND ENVIRONMENT Safety - Fatalities Health – New cases of occupational disease Moranbah North 20 February – mobile equipment Musculoskeletal Disorder (7) – actions taken at collision Business Unit level to understand and mitigate causes and risks Los Bronces 19 March – electric shock
Slide 90: Thermal Coal
THERMAL COAL Coal demand Our Production & Capex Profile Thermal coal makes up ~38% of the global electricity mix We have reduced our thermal coal production by 50% since 2012: IEA & other forecasts see a significant role for thermal coal in Production (Mt) Thermal coal1 as % Group revenue the global
Slide 91: Tailings Dams Summary
TAILINGS DAMS SUMMARY Upstream design Downstream design The upstream method starts with the construction of a starter The downstream method begins in most cases with a starter dam. Tailings will naturally separate so that coarse material dam that has a low permeability zone or liner to control & set
Slide 92: Tailings Dams in Our Portfolio
TAILINGS DAMS IN OUR PORTFOLIO Southern Africa Minas-Rio Our dams in southern Africa are well suited due to low rates of The Minas-Rio dam is designed to retain water, one of the most rise, sunny & dry environment, with high evaporation rates, flat robust designs for tailings storage. It is built wi
Slide 93: Tailings Dams Management Process
TAILINGS DAMS MANAGEMENT PROCESS Our Group Technical Standard exceeds regulatory requirements • All tailings storage facilities (TSFs) are built following established minimum design criteria aimed at ensuring structural integrity. Design • Change management is delivered to the highest standards aime
Slide 94: Executive Remuneration
EXECUTIVE REMUNERATION1 Salary Pension Maximum increase of 5% Maximum 30% of salary but new appointments at 15% Base reward2 Expected to build up & hold a percentage of their salary in shares: - CEO: 300% - Other directors: 200% Shorter term: Annual bonus Longer term: LTIP4,5 Maximum award of 210% s
Slide 95: Investor Relations
INVESTOR RELATIONS Paul Galloway paul.galloway@angloamerican.com Tel: +44 (0)20 7968 8718 Robert Greenberg robert.greenberg@angloamerican.com Tel: +44 (0)20 7968 2124 Emma Waterworth emma.waterworth@angloamerican.com Tel: +44 (0)20 7968 8574