Glencore plc · LSE:GLEN
Glencore — Deutsche Bank Metals and Mining Conference 2013
26 slides from Glencore's conference presentation, Nov 5, 2013
Slide 1: Deutsche Bank Metals and Mining Conference
1 Deutsche Bank Metals and Mining Conference 5 November 2013 Chris Eskdale Head Zinc Industrial
Slide 2: Forward looking statements
This presentation has been prepared by Glencore Xstrata plc ("Glencore"). Forward looking statements This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. Such statements are qualified in their entirety by the inherent risks
Slide 3: Agenda
Agenda 1 Zinc market fundamentals 2 Glencore Zinc today 3 Assets and marketing – a powerful combination 4 Conclusion 3
Slide 4: Zinc market fundamentals
Zinc market fundamentals
Slide 5: Sources of zinc supply
Sources of zinc supply …. 1 Zinc mine supply (kt contained Zn) Regional share of annual mine production 6000 100% 90% China: 5000 1950 - 0.2kt 80% 2013e – 5,060kt 37% global supply 70% 4000 60% 3000 50% North America: 1950 – c.50% global supply 2013e – c.14% global supply 40% 2000 30% 20% 1000 10% 0
Slide 6: … and zinc demand are changing
… and zinc demand are changing 1 Zinc demand (kt Zn) Regional share of annual consumption 7000 100% China: 90% 6000 1950 - 3kt 2013e – 6,080kt 80% 45% global demand 5000 70% 4000 60% 50% 3000 Americas: 1950 – c.50% global demand 40% 2013e – c.14% global demand 2000 30% 20% 1000 10% 0 0% 2013e 1950 1
Slide 7: Demand expected to remain strong going forward – increasingly dominated by Asia
Demand expected to remain strong going forward – 1 increasingly dominated by Asia • Asia’s growing share of global consumption Forecast share of zinc demand in 2030 growth since 2000 is forecast to continue • Asia will account for almost 80 per cent of zinc demand by 2030 • The developed world share
Slide 8: Can supply meet the demand challenge?
Can supply meet the demand challenge? 1 • Theoretically yes - current identified Future mine production requirements (Mt Zn) resources exceed 230Mt of contained 25 zinc mineralisation. • Balancing demand with supply not only requires additional mine supply to match 20 forecast demand growth, new sup
Slide 9: Glencore Zinc today
1 Glencore Zinc today
Slide 10: Glencore Zinc today
Glencore Zinc today 2 A leading integrated zinc producer • Own source production of 1.5Mtpa mined zinc rising towards 1.8Mtpa by 2015 • A leading cost position with under construction projects creating a first quartile cost position by 2015 • Large long-life resource base – average mine lives in exc
Slide 11: Zinc asset overview
Zinc asset overview 2 Industrial assets comprise 24 mines, 7 zinc smelters, 6 lead smelters/refineries with operations and assets in 12 countries and key marketing offices spread across five continents 11
Slide 12: Zinc resource base
Zinc resource base 2 Contained Zinc Resources (Mt) 90 The world’s largest zinc resource base Enlarged resource base provides for a 80 weighted average mine life of 24 years 76.9 (pro-forma 2012 production) based on 70 reserves or 41 years based on measured and indicated resources 60 Additional major
Slide 13: Transformation of zinc asset cost structure
Transformation of zinc asset cost structure 2 $2012 C1 Zinc illustrative cash cost curve (c/lb) Improving our competitive position • Expect to reduce our average C1 costs in next 3 years • Move from current second quartile into the first quartile 2006 C1: 65c/lb 2012 pro-forma 2015 forecast mined zi
Slide 14: Forecast zinc mine production growth profile
Forecast zinc mine production growth profile 2 Own source contained zinc (kt) 2,000 1,820 1,786 1,800 1,613 1,600 1,532 1,434 1,400 1,200 1,000 800 600 400 200 0 2012A 2013F 2014F 2015F 2016F Australia Kazzinc North America Antamina Other Zinc Source: Glencore 14
Slide 15: Major project update – Bracemac-McLeod
Major project update – Bracemac-McLeod 2 • 100% owned Mine Entrance • 12th mine in the 50 year-old Matagami Mining Camp • Construction started in mid 2010 and mine production started in May 2013 • 3.7Mt M+I resource, with a potential of an additional 2.5Mt below current ore body • Mine life (current
Slide 16: Major project update – McArthur River Mine Phase 3 expansion
Major project update – McArthur River Mine Phase 3 expansion 2 • 100% owned Open Pit Mine • 171Mt M+I resource • Mine life (current production) of 31 years reserves, 46 years M+I resource • Current capacity of 3.5Mtpa producing 240kt zinc contained • Phase 3 expansion approved in mid 2012 • Increase
Slide 17: Major project update – George Fisher expansion
Major project update – George Fisher expansion 2 • 100% owned Ventilation shaft • 145Mt M+I resource • Mine life of 18 years reserves, 32 years M+I resource • 1Mtpa expansion approved in late 2010 New photo here • Expanded capacity of 4.5Mtpa expected to be achieved in June 2014 • Capital cost of US
Slide 18: Major project update – Lady Loretta project
Major project update – Lady Loretta project 2 • 100% owned. Greenfield development Site infrastructure • High grade zinc (with lead and silver) deposit located 135km from Mt Isa • 13Mt M+I resource • Mine life (full production) of 7 years reserves, 8 years M+I resource • Original project announcemen
Slide 19: Further growth options
Further growth options 2 • Multiple options within existing project pipeline - no rush to pursue growth for its own sake • Priority is development of low-cost projects with quickest cash payback • Reviewing previously announced Xstrata projects in context of overall growth portfolio • Additional opt
Slide 20: Assets and Marketing: a powerful combination
2 Assets and Marketing: a powerful combination
Slide 21: Marketing – how we create value
Marketing – how we create value 3 • Glencore is active across the value chain from mines and smelters through to end customers, trading in primary and secondary metals as well as associated by-products • Glencore sources close to 6Mt of zinc/lead concentrates, split into nearly 180 distinct qualitie
Slide 22: Leveraging marketing and operating excellence
Leveraging marketing and operating excellence 3 Glencore Glencore Leveraging knowledge • Marketing excellence • Technology excellence in lead smelting/refining • Talent Platform • One book • One pool of knowledge • Sharing knowledge and Xstrata experience throughout operations and into the trading b
Slide 23: Leveraging marketing and operating excellence
Leveraging marketing and operating excellence 3 Asset only approach Now Proactive / Dynamic Reactive approach • One global concentrates book • Mine output mainly dedicated to feed • Sales position actively traded own smelters, surplus sold when • Mine output and 3rd party tonnage available flowing t
Slide 24: Conclusion
-~_ Conclusion
Slide 25: Conclusion
Conclusion 4 • The key challenge for the zinc industry is incentivising sufficient new mine supply to meet forecast demand through to the end of the next decade. • While sufficient zinc resources have been identified, encouraging necessary new mine supply to match demand is complicated by the many c
Slide 26: * ] (ayy
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