Anglo American Plc · LSE:AAL

Anglo American — FY2013 Earnings Presentation

49 slides from Anglo American's earnings presentation, Feb 14, 2014

  1. Slide 1: Preliminary Results Year Ended 31 December 2013

    PRELIMINARY RESULTS YEAR ENDED 31 DECEMBER 2013 14 February 2014 Polokwane smelter control centre

  2. 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

  3. Slide 3: Business Performance

    BUSINESS PERFORMANCE MARK CUTIFANI

  4. Slide 4: Highlights

    HIGHLIGHTS The benefits of our improvement work are starting to come through… Operating profit H2 • Group underlying operating profit of $6.6bn, up 6% 11.1 9.8 H1 • Underlying earnings down 7% to $2.7bn; EPS $2.09 $ bn 6.3 6.6 5.0 2.5 3.3 • Operating profit improvement driven by improving production

  5. Slide 5: Safety, Health & Environment

    SAFETY, HEALTH & ENVIRONMENT Making solid progress but more work required on major risks… 20 Safety Safety 20 2.50 18 17 • Fatality rates – critical focus on management of 16 15 2.00 major hazards 14 13 Injury frequency rate 14  Lost Time Injury rates continue to improve – Fatal incidents 12 1.50 1

  6. Slide 6: Iron Ore and Manganese

    IRON ORE AND MANGANESE Sishen challenges offset by Kolomela, price and FX gains… Sishen quarterly production (Mt) RESULTS 8.6 • Kumba Iron Ore operating profit $3,047m, flat on 2012; 8.4 7.6 47% of Group total; attributable ROCE 100% 6.4 • Manganese operating profit $210m; 3% of Group total; attribu

  7. Slide 7: Metallurgical Coal

    METALLURGICAL COAL Productivity improvements and cost reductions offset by lower coal price… FOB cash cost reduction (AUD/t)(1) RESULTS -18% • Operating profit of $46m, 89% decline; driven by 24% decline in hard coking coal price; 1% of Group total; attributable ROCE 1% 106 95 • Operating profit inc

  8. Slide 8: Thermal Coal

    THERMAL COAL SA quality, costs and prices impact profit…restructuring in progress… Lower export thermal coal prices RESULTS • Operating profit of $541m, a 32% decline; 8% of Export thermal Group total; attributable ROCE 23% Export thermal South Africa Colombia • South Africa contributed $356m, down

  9. Slide 9: Copper

    COPPER Higher production and lower unit costs offset price decline… Copper production vs. 2012 (Kt) RESULTS +17% • Operating profit of $1,739m, flat despite price decrease; 26% of Group total; 775 attributable ROCE 25%(1) 51 (7) PERFORMANCE 71 660  Production of 775 Kt, 17% increase • Higher throug

  10. Slide 10: Nickel

    NICKEL Lower prices and Loma de Níquel closure impact performance…Barro Alto improving Barro Alto total material smelted vs. nickel production RESULTS 200 3.5 • Operating loss of $(44)m (2012: $26m including 180 3.0 a $57m insurance recovery); attributable 160 2.5 ROCE (2)% 140 Ni Produced (kt) Ore

  11. Slide 11: Niobium and Phosphates

    NIOBIUM AND PHOSPHATES Lower costs and FX gains offset by lower fertiliser prices… Niobium production growth RESULTS Boa Vista Boa Vista Fresh Rock project • Operating profit of $150m(1), 11% decrease; 2% 8,000 of Group total; attributable ROCE 24% • Niobium operating profit $89m,10% increase, attri

  12. Slide 12: Platinum

    PLATINUM FX gains and higher production offset weaker prices and cost increases Mogalakwena – a significant resource RESULTS • Operating profit of $464m (2012: $(120)m loss); Area represents total reserves 4E (troy ounces)(1) 7% of Group total; attributable ROCE 6% 50 PERFORMANCE  Platinum sales of

  13. Slide 13: Diamonds

    DIAMONDS Improved demand, cost and favourable FX drove performance… Production increase – largely due to Jwaneng recovery (Mct)(1) RESULT 31.2  Operating profit of $1,003m, 15% of Group total; 27.9 42% increase on 2012 on pro-forma basis; 6.4 Q1 attributable ROCE 11% 7.9 Q2 PERFORMANCE  Production

  14. Slide 14: Financials

    FINANCIALS RENE MEDORI

  15. Slide 15: Full Year 2013 Results

    FULL YEAR 2013 RESULTS Underlying EPS ($/share) Key financials 2.58 2.48 $bn 2013 2012(1) Change Underlying EBITDA 9.5 8.9 7% 33% Underlying operating 6.6 6.3 6% profit 1.41 Effective tax rate 32.0% 29.0% 1.11 0.98 Underlying earnings 2.7 2.9 (7%) 0.87 Capital expenditure(2) 6.3 6.0 4% 11% Net debt

  16. Slide 16: Full Year Operating Profit Variances

    FULL YEAR OPERATING PROFIT VARIANCES 2013 vs. 2012 ($bn) (0.1) 6.6 6.3 (1.7) 1.7 0.3 (0.3) 0.4 (0.1) Traded Bulks (0.6) 5.7 0.7 (0.8) 1.3 ZAR (0.8) 33% 11% 2012 Price(1) Exchange Inflation(2) Volume(3) Cash Dep’n & De Associates Structural 2013 costs(4) Amor’n(5) Beers (6) and JVs & other (1) Price

  17. Slide 17: Price Variance – Bulks

    PRICE VARIANCE – BULKS 2013 vs. 2012 ($m) Iron ore sales(1) (Mt) Metallurgical coal sales(2) (Mt) Moving to shorter term contracts Higher-margin mix Realised Iron ore price $122/t $125/t $178/t(3) $140/t(3) 177 39.7 39.1 16.5 100% 100% 15.5 24% 21% Premium Export 51% 63% Metallurgical sales 80% 56%

  18. Slide 18: Price Variance – Base and Precious

    PRICE VARIANCE – BASE AND PRECIOUS 2013 vs. 2012 ($m) Copper price and MtM(1) (cents/lb) 31 Dec 2011 31 Dec 2012 31 Dec 2013 De Beers(2) Provisional pricing: Provisional Provisional 345c/lb pricing: 359c/lb pricing: 334c/lb 88 420 MtM: ($278m) MtM: +$47m MtM: $(92)m 400 380 360 340 320 300 Copper (6

  19. Slide 19: Exchange Variance

    EXCHANGE VARIANCE 2013 vs. 2012 ($m) Rand depreciated 24% against the USD in 2013 ZAR / USD 1,700 12.0 +24% 11.0 Other(1) 110 10.0 AUD 242 9.0 8.0 33% 7.0 2012 average: 8.21 2013 average: 9.65 6.0 Jan 2012 Jun 2012 Jan 2013 Jun 2013 Dec 2013 1,348 ZAR AUD depreciated 14% against the USD in 2013 11%

  20. Slide 20: Sales Volume Variance

    SALES VOLUME VARIANCE(1) 2013 vs. 2012 ($m) Sales volumes: 2013 vs. 2012 (% change) 713 19% Thermal Coal 7 Metallurgical Coal 102 Platinum 183 7% 6% Copper 467 2% (1%) Other(2) (40) (40) (6) Copper Platinum Metallurgical Thermal Coal(4) Kumba Kumba Coal(3) Iron ore(5) (1) Total Business Unit varianc

  21. Slide 21: Cash Cost Movements

    CASH COST MOVEMENTS Higher production and cost savings led to a 2% Above CPI mining inflation driven reduction in real cash costs, despite continued largely by South Africa above CPI mining inflation 8% 3% 3% 2% 2% 2% Above CPI Group: 1% (2012: 1%) 1% inflation – 1% Impact of cost reduction/producti

  22. Slide 22: Capital Expenditure

    CAPITAL EXPENDITURE Capital expenditure ($bn) Expansionary capital expenditure ($bn) 6.3 2013 2012 6.0 Minas-Rio 1.9 1.4 3.0 3.3 Grosvenor 0.5 0.2 Platinum projects 0.2 0.4 0.8 0.8 Others(5) 0.7 1.0 2.3 2.2 Total 3.3 3.0 2012(1) 2013 Expansionary(2) Stay-in-Business (SIB)(4) Stripping & Development(

  23. Slide 23: Liquidity Headroom and Debt Profile

    LIQUIDITY HEADROOM AND DEBT PROFILE Net Debt ($bn) Liquidity headroom Bond maturity profile ($bn) ($bn) Opening net debt – 1 January 2013 (1) 8.5 Operating cash flow (7.7) 17.0 1.7 Capital expenditure 6.3 1.3 Cash tax paid 1.2 9.3 1.1 Net interest paid(2) 0.5 1.6 1.3 Dividends paid to non-controllin

  24. Slide 24: Special Items

    SPECIAL ITEMS $bn (post tax and NCI) Total 2013 Impairments Of which: (1.9) • Barro Alto impairment (1) (0.5) • Barro Alto furnace write-off (2) (0.2) • Platinum portfolio review (2) (0.2) • Michiquillay (2) (0.3) • Foxleigh (1) (0.2) Onerous Principally Callide coal supply agreement (0.3) contracts

  25. Slide 25: Project and Strategy Update

    PROJECT AND STRATEGY UPDATE MARK CUTIFANI

  26. Slide 26: Minas-Rio Progress on Track

    MINAS-RIO PROGRESS ON TRACK Good progress through December and January – project is 84% complete Pl Pre-stripping activities completed Mine All 23 pieces of mine equipment for 2014 already assembled Tailings dam structure completed Beneficiation 100% transmission line completed and energised(1)

  27. Slide 27: Minas-Rio Schedule Update

    MINAS-RIO SCHEDULE UPDATE Project schedule for FOOS remains end 2014 and capex unchanged at $8.8bn… 2013 2014 H1 H2 H1 H2 Mine access approved Mine fleet All 4 LO’s filed Cave 1 operational Mine suppression Start of 1st off-road Conclusion of pre- Start of pre-stripping truck ready stripping (2M m3)

  28. Slide 28: Business Performance Improvement Evident

    BUSINESS PERFORMANCE IMPROVEMENT EVIDENT Operational improvements emerging……as Asset Review focus shows early results H1 2013 68% Sishen Capcoal • Only 11% of operations had hit budgets in prior Cerrejón 8 quarters… 4 , 5 …not good enough Collahuasi Los Bronces Mogalakwena • The impact of 21% of ope

  29. Slide 29: Focus on Returns – A Key Measure of Performance

    FOCUS ON RETURNS – A KEY MEASURE OF PERFORMANCE We are making good progress in identifying the steps to achieving our ambition… Ongoing LoM Attributable ROCE (%) / EBIT Impact ($bn) (2) (3) strategy reviews 1.3 Identified Upside >15% Defined Plans 1.2 $0.6bn (in 2013) Identified Upside • Platinum re

  30. Slide 30: Production Outlook

    PRODUCTION OUTLOOK COMMODITY 2013 2014 2015 2016 Copper (1) 775 Kt 700-720 Kt 700-720 Kt 700-720 Kt Nickel(2) 34 Kt 30-35 Kt 20-25 Kt 35-38 Kt Iron ore (Kumba)(3) 42 Mt 44-46 Mt 45-47 Mt 46-48 Mt Iron ore (Minas-Rio)(4) - Not material 11-14 Mt 24-26.5 Mt Metallurgical Coal 19 Mt 18-20 Mt 19-21 Mt 20

  31. Slide 31: Attributable ROCE.....The Portfolio Focus

    ATTRIBUTABLE ROCE.....THE PORTFOLIO FOCUS 2013 achieved 2012 achieved Business Unit attributable ROCE(1) attributable ROCE(1) (%) (%) Kumba 100% 108% IOB (1)% (0)% Copper 25% Manganese Thermal Coal 35% 24% 11% Metallurgical Coal 1% 9% N&P 32% Thermal Coal 23% 35% Thermal Coal 23% Copper(5) 29% Coppe

  32. Slide 32: Conclusion

    CONCLUSION We know where we are and what we have to do…  Q4 recovery across a number of key operations; 2013 performance driven by increased contribution from Platinum and De Beers  Driving Value providing strong improvements but working into 2014 headwinds…Sishen waste removal and copper grades k

  33. Slide 33: Appendix

    AngloAmerican APPENDIX

  34. Slide 34: Portfolio Position – Asset Performance

    PORTFOLIO POSITION – ASSET PERFORMANCE Structured approach to asset driven portfolio strategy… Assets Copper Diamonds Iron Ore Niobium/Phosphates Coal Manganese Bubble size = 2013 operating profit: Nickel <US$50m US$50-100m Platinum >US$100m Q1 Q2 Q3 Q4 Industry Margin / Cost Curve Quartile …where c

  35. Slide 35: Portfolio Position – Asset Performance

    PORTFOLIO POSITION – ASSET PERFORMANCE Structured approach to asset driven portfolio strategy… 81% % of 2013 Total EBIT 60 60 Target asset Smaller, higher cost assets 50 position 40 30 21 20 17 10 2 0 Q1 Q2 Q3 Q4 Industry Margin/Cost Curve Quartile …majority of profits from low cost assets. Source:

  36. Slide 36: Definition: Attributable ROCE

    DEFINITION: ATTRIBUTABLE ROCE The attributable operating profit of $4,369 million (2013), is the underlying operating profit attributable to equity shareholders of Anglo American plc Attributable ROCE Definitions: • Return on capital employed is a ratio that measures the efficiency and profitability

  37. Slide 37: Impairment and Disposal Adjustments

    IMPAIRMENT AND DISPOSAL ADJUSTMENTS Items added back for the purposes of calculating Attributable ROCE Not removed from capital Removed from opening 2013 $m (post tax) Recognised in accounts employed for 15% ROCE Capital Employed in 2012 target Barro Alto (Nickel) impairment 529 - 529 Barro Alto (Ni

  38. Slide 38: Reconciliation of Total Capital Employed to Average Attributable Capital Employed

    RECONCILIATION OF TOTAL CAPITAL EMPLOYED TO AVERAGE ATTRIBUTABLE CAPITAL EMPLOYED 31 Dec 31 Dec 31 Dec $bn 2013 2012 2011 Net assets 37 44 43 Less: financial asset investments (2) (2) (3) Add: net debt 11 9 1 Less: De Beers Fair value adjustment on 45% pre-existing stake(1) (1) (2) - Closing total c

  39. Slide 39: Attributable ROCE

    ATTRIBUTABLE ROCE 2013 2012 Key Business Average Average Units Operating Capital ROCE Operating Capital ROCE Profit ($bn) Employed (%) Profit ($bn) Employed (%) ($bn) ($bn) Iron Ore and 1.7 8.9 19% 1.6 7.6 21% Manganese Metallurgical Coal 0.0 4.6 1% 0.4 4.6 9% Thermal Coal 0.5 2.3 23% 0.8 2.2 35% Co

  40. Slide 40: Capital Expenditure

    CAPITAL EXPENDITURE(1) $m 2013 2012(2) Iron Ore and Manganese 2,517  2,139 Metallurgical Coal 1,050  1,028 Thermal Coal 217  266 Copper 1,011  1,214 Nickel (28)(3)  100 Niobium and Phosphates 237  94 Platinum 608  822 Diamonds 551  161 Other Mining and Industrial 53  171 Exploration 1  6 C

  41. Slide 41: Expansionary Capex

    EXPANSIONARY CAPEX $m 2013 2012 Iron Ore and Manganese 1,978  1,691 Metallurgical Coal 540  290 Thermal Coal 27  67 Copper 311  360 Nickel (42)  88 Niobium and Phosphates 182  40 Platinum 174  408 Diamonds 88  2 Other Mining and Industrial -  11 Exploration/Corporate - - - Total Expansionar

  42. Slide 42: SIB Capex

    SIB CAPEX $m 2013 2012 Iron Ore and Manganese 456  383 Metallurgical Coal 247  401 Thermal Coal 164  162 Copper 588  636 Nickel 14  12 Niobium and Phosphates 55  50 Platinum 365 - 365 Diamonds 254  92 Other Mining and Industrial 53  153 Exploration/Corporate 45  36 Total SIB Capex 2,242 2,2

  43. Slide 43: Stripping & Development Capex

    STRIPPING & DEVELOPMENT CAPEX $m 2013 2012 Iron Ore and Manganese 83  65 Metallurgical Coal 262  337 Thermal Coal 26  37 Copper 112  218 Nickel - - - Niobium and Phosphates -  4 Platinum 69  49 Diamonds 209  67 Other Mining and Industrial -  7 Exploration/Corporate - - - Total Stripping & De

  44. Slide 44: Analysis of Underlying Operating Profit

    ANALYSIS OF UNDERLYING OPERATING PROFIT $m 2013 2012 Iron Ore and Manganese 3,119  3,011 Metallurgical Coal 46  405 Thermal Coal 541  793 Copper 1,739  1,736 Nickel (44)  26 Niobium and Phosphates 150  169 Platinum 464  (120) Diamonds 1,003  474 Other Mining and Industrial (13)  168 Explora

  45. Slide 45: Analysis of Underlying Earnings

    ANALYSIS OF UNDERLYING EARNINGS $m 2013 2012 Iron Ore and Manganese 1,125  1,046 Metallurgical Coal 60  275 Thermal Coal 397  523 Copper 803  941 Nickel (54)  10 Niobium and Phosphates 92  107 Platinum 287  (225) Diamonds 532  289 Other Mining and Industrial (2)  121 Exploration (190)  (19

  46. Slide 46: Average Market Prices

    AVERAGE MARKET PRICES 2013 2012 Iron ore (FOB Australia) - $/t 127  122 Thermal coal (FOB South Africa) - $/t 80  93 Thermal coal (FOB Australia) - $/t 84  94 Hard Coking Coal (FOB Australia average quarterly benchmark) - $/t 159  210 Copper (LME) - cents/lb 332  361 Nickel (LME) - cents/lb 680

  47. Slide 47: Underlying Earnings Sensitivities

    UNDERLYING EARNINGS SENSITIVITIES(1) Commodity / currency Change in price / exchange rates $m Iron ore + $10/t 144 Metallurgical coal (Hard Coking Coal) + $10/t 74 Thermal coal (API 4) + $10/t 193 Copper + 10cents/lb 105 Nickel(2) + 10cents/lb 4 Platinum + $100/oz 106 Rhodium + $100/oz 13 Palladium

  48. Slide 48: Regional Analysis – Underlying Operating Profit

    REGIONAL ANALYSIS – UNDERLYING OPERATING PROFIT $m 2013 2012 South Africa 4,189  3,374 Other Africa 532  437 Brazil 75  200 Chile 1,849  1,913 Other South America 185  304 North America (129)  (138) Australia and Asia 238  465 Europe (319)  (302) Total underlying operating profit 6,620 6,253

  49. Slide 49: Debt Maturity Profile at 31 December 2013

    DEBT MATURITY PROFILE AT 31 DECEMBER 2013 Debt repayments(1) ($bn) at 31 December 2013 2.9 2.7 2.1 2.0 2.1 1.8 1.5 1.5 1.1 2014 2015 2016 2017 2018 2019 2020 2021 2022+ US Bonds Euro Bonds A$ Bond Other Bonds Corporate bank debt BNDES financing Subsidiary financing other De Beers Corporate BNDES Oth

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