Glencore plc · LSE:GLEN
Glencore — Corporate Update (October 2014)
41 slides from Glencore's corporate update, Oct 2, 2014
Slide 1: Sell-side analyst visit: Nickel
Sell-side analyst visit Nickel 2 October 2014
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 "plans", "expects
Slide 3: Visitor safety induction
Visitor safety induction • Stay with your escort at all times – especially if an emergency occurs • Personal Protective Equipment will be provided: • high-visibility reflective clothing and safety boots • helmet and safety glasses (fit over prescription glasses) • gloves • hearing protection • masks
Slide 4: Agenda
Agenda • Welcome – Senior Management Team • Kenny Ives – Head of Nickel Marketing • Glencore nickel market • Peter Johnston – Head of Nickel Assets • Glencore nickel • Peter Hancock – President • Koniambo Operations • Questions 4
Slide 5: Nickel market outlook
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Slide 6: Nickel market remains in surplus with LME stocks increasing
Nickel market remains in surplus with LME stocks increasing LME Ni inventory and Ni price • LME nickel price rallied to US$21,200/t in May, up 52% since the start of the year. Inventory (Kt) Price (US$/t) 360 Prices have since settled in a US$17,000- 22,000 LME Ni Inventory US$20,000/t range, recent
Slide 7: Nickel demand outlook – solid growth in key markets
Nickel demand outlook – solid growth in key markets Forecast nickel demand by sector (kt) • Primary nickel demand in stainless steel is projected to increase over 5% this year, 2400 Primary Ni in non-stainless Primary Ni in stainless reflecting growth in China and North 2000 America, along with impr
Slide 8: Nickel supply outlook – limited growth amid ore ban
Nickel supply outlook – limited growth amid ore ban Forecast nickel supply (kt) • Nickel supply in 2014 is forecast to decrease 1.4% on the prior year reflecting poor NPI New projects Existing producers performance at existing producers and new 2000 projects, coupled with decreased NPI output 1500 •
Slide 9: Deficits forecast from 2015 herald stock depletion
Deficits forecast from 2015 herald stock depletion Forecast nickel supply/demand (kt) • Provided the Indonesian ban on ore exports is sustained, Chinese NPI production plus 2400 Supply ferronickel output in Japan and elsewhere Demand will be significantly impacted, removing over 2200 300kt nickel un
Slide 10: Indonesia did not benefit from Direct Shipping Ore (DSO)
Indonesia did not benefit from Direct Shipping Ore (DSO) Indonesia Ore Export to China Unit Value (US$/t) • The inherent value of Indonesian nickel ore exports in 2013 was ca. US$10.5bn vs. 60 revenue from DSO of US$1.7bn 50 • By implementing a law that requires domestic processing of all minerals 4
Slide 11: Philippine ore supplies determine Chinese NPI outlook
Philippine ore supplies determine Chinese NPI outlook Philippine ore exports to China (Mt) • Provided the Indonesian ban on ore exports is sustained, Chinese NPI production will LG <0.8% Ni LG >0.8% Ni MG HG ultimately depend on ore exports from the 50 Philippines • We project 2014 Philippine export
Slide 12: Projects to provide additional units, subject to performance
Projects to provide additional units, subject to performance • Nickel supply from greenfield projects and brownfield expansions is forecast at ca. 230kt Ni in 2014 and expected to more than double by 2019 • However, ramp up performance to date highlights the need for a cautious outlook, with the maj
Slide 13: Glencore nickel
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Slide 14: Glencore nickel overview
Glencore nickel overview Top three integrated nickel producer • Production of 98.4kt mined nickel in 2013 rising towards 145kt by 2016 • Future production growth will benefit from higher volumes of lower cost production at Koniambo and Raglan • Our resource base exceeds 13Mt of contained nickel, ind
Slide 15: Glencore nickel assets
Glencore nickel assets Industrial assets comprise 8 mines, 2 smelters, 2 refineries with operations and assets in 7 countries and key marketing offices spread across 15 countries 15
Slide 16: Koniambo
Koniambo
Slide 17: Our history
Our history 2010 – First 2012 – 13km 2014 – 1998 - SMSP 2007 - modules conveyor first commence and Koniambo delivered to major facility smelter line 2 Falconbridge Construction Vavouto successfully commercial Agreement Commences site tested production 1998 - Bercy 2006 - Xstrata 2009 - 2011-– May 20
Slide 18: Greenfield site – 2005 aerial photo of the Vavouto site
Greenfield site – 2005 aerial photo of the Vavouto site 18
Slide 19: Pre-fabricated plant module – first arrival Sept 2010
Pre-fabricated plant module – first arrival Sept 2010 19
Slide 20: Construction phase – top module being raised into position
Construction phase – top module being raised into position 20
Slide 21: Construction complete – November 2013
Construction complete – November 2013 21
Slide 22: Closing out the Project
Closing out the Project Construction cost ($ billion) 7.0 7.0 6.3 1.5 6.0 0.8 5.0 5.3 5.5 5.5 4.0 3.9 3.0 X Board approval 2007 X Board revision 2011 G Forecast 2013 G Forecast 2014 Project execution Commissioning & ramp up Key milestones Commercial production line 1 September 2013 Commercial produc
Slide 23: Koniambo Nickel SAS Operation Overview
Koniambo Nickel SAS Operation Overview
Slide 24: Koniambo Nickel leadership team
Koniambo Nickel leadership team President Peter Hancock VP Production VP Mine & VP Health & VP Human & Maintenance Engineering Safety Resource Benoit Didier Francois-Gilles Chantal Pelletier Ventura Cote Francoeur VP Finance Director Director Legal Yvon Strategy & External Counsel Pronovost Performa
Slide 25: Safe Nickel – successful & sustainable
Safe Nickel – successful & sustainable Safety • Fatigue prevention: OSPAT system implemented site-wide to assess fitness for work for vehicle operators (mine haul trucks, slag haulers, port stackers) • Alcohol and drug testing: first site in New Caledonia to implement random workplace shift start te
Slide 26: Unique model for stakeholder support
Unique model for stakeholder support Koniambo Nickel is governed by a Trusted 49:51 joint venture with SMSP (a • Koniambo has a strong social license to subsidiary of the North Province of operate because it is viewed by the people New Caledonia holding key mine and of the North Province as a truste
Slide 27: World class laterite nickel deposit (2% cut-off grade)
World class laterite nickel deposit (2% cut-off grade) Resource potential areas Category Sector Mt (Dry) %Ni (meters²) Favorable Mine plan 29.6M Measured + surface area 25 years 70 2.47 Mine plan 25 Indicated * 6.2M (2% cut-off) years Outside mine Inferred * plan 25 years 83 2.53 Mining Plan (25 yea
Slide 28: Koniambo has a unique, high-grade global nickel deposit
Koniambo has a unique, high-grade global nickel deposit Measured and indicated nickel laterite resources Including inferred resources at a 1.5% cut- off, there is an estimated ~400Mt of ore containing 7.6Mt of Ni Source: 2011 Brook Hunt historical data 28
Slide 29: Mine operations overview
Mine operations overview • 25 year high grade nickel 6 pits currently open for mining reserve • 2.5Mtpa of ore mined, crushed and conveyed 13km to the metallurgical plant • Significant future potential development of lower-grade saprolite and limonite resources 2014 2018E Expatriate and local operat
Slide 30: Integrated site – mine ore preparation plant
Integrated site – mine ore preparation plant 30
Slide 31: Integrated site – 13 km ore conveyor to plant
Integrated site – 13 km ore conveyor to plant 31
Slide 32: Integrated site – ore stockpile (500kt capacity)
Integrated site – ore stockpile (500kt capacity) 32
Slide 33: Integrated site – metallurgical plant (60ktpa Ni capacity)
Integrated site – metallurgical plant (60ktpa Ni capacity) 33
Slide 34: Smelting (2 lines each with 1.25Mt/pa ore feed capacity)
Smelting (2 lines each with 1.25Mt*/pa ore feed capacity) Hammer Mill Flash Dryer Calciner Fluid Bed Reducer • The metallurgical plant has been operating for DC Furnace over 12 months • Both lines have operated at 90% of nominal throughput • Furnace power demonstrated at 80MW (100% of design) on bot
Slide 35: Integrated site – power station (270MW capacity)
Integrated site – power station (270MW capacity) • At full nominal smelting rates, the site will demand 215MW of net power, the equivalent of all power consumed on the island of New Caledonia*. The site is designed to have a total installed capacity of 404MW (including auxiliary sources) • The coal-
Slide 36: Sufficient power is now available to support production
Sufficient power is now available to support production • Koniambo experienced delays to the start of its coal-fired power station which during its commissioning, in early 2014 significant cracking was identified in boiler tube welds. The piping has required remanufacturing in India • A temporary st
Slide 37: Koniambo ferronickel product
Koniambo ferronickel product • Koniambo is producing a high-grade, Ferronickel granules attractive to customers high nickel content product with low impurities • Product will be supplied as dry, solid, non-friable shot of 3 to 50mm - suitable for mechanised conveyance • Koniambo port facilities can
Slide 38: Commissioning challenges not unique for a major greenfield
Commissioning challenges not unique for a major greenfield Throughput Phases Key characteristics capacity Phase 1 - Project-Commissioning-Operations co-activity <20% - Late availability of power & utilities - Major equipment failures and design fixes - Daily troubleshooting - New staff operating pla
Slide 39: Short term priorities
Short term priorities • Deliver on our Sustainable Development strategy that provides a safe working environment for our people and responsibly manage our environment • Deliver on the metallurgical technical design performance • Implement a stable and reliable power supply to the plant • Progressive
Slide 40: Key site tour takeaways
Key site tour takeaways Project • Koniambo Project is complete, production ramp-up underway Mine reserves • Koniambo is supplied by a unique, high grade, world-class laterite ore deposit Power • Commissioning issues to be corrected by end of first half of 2015 – no power constraints to production in
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