Anglo American plc · LSE:AAL
Anglo American — Investor Day (October 2009)
37 slides from Anglo American's investor day presentation, Oct 8, 2009
Slide 1: Anglo Base Metals – Copper: Unlocking value from a world-class deposit
Anglo Base Metals – Copper Unlocking value from a world-class deposit Brian Beamish Chief Executive, Anglo Base Duncan Wanblad Head of Copper Miguel Duran CEO Anglo American Chile 8 October 2009
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: Agenda
Agenda Brian Beamish, CEO Anglo Base 1. Introduction Duncan Wanblad, Head of Copper 2. Copper Market Overview Duncan Wanblad, Head of Copper 3. Copper Business Overview Miguel Duran, CEO Anglo American Chile 4. Los Bronces Expansion Project Delivery Questions and Answers Site Visit Overview 2
Slide 4: Delivering Growth Through Successful Project Execution
Delivering Growth Through Successful Project Execution The Los Bronces project is aligned with Anglo’s growth strategy to focus on large, long life, expandable, low cost assets, with project execution supported by the “Anglo Projects Way” • Outstanding safety performance is an indicator of the 1 Saf
Slide 5: Agenda
Agenda Brian Beamish, CEO Anglo Base 1. Introduction Duncan Wanblad, Head of Copper 2. Copper Market Overview Duncan Wanblad, Head of Copper 3. Copper Business Overview Miguel Duran, CEO Anglo American Chile 4. Los Bronces Expansion Project Delivery Questions and Answers Site Visit Overview 4
Slide 6: Copper Demand Outlook
Copper Demand Outlook The copper market is forecast to benefit from strong demand fundamentals over the medium to long-term Refined Copper Consumption • The copper market has experienced a marked 30 slowdown 2008–2020F • An even more serious collapse in demand CAGR 2.9% 25 2003–2008 has been averted
Slide 7: Chinese Demand Outlook
Chinese Demand Outlook China accounted for 28% of global first-use copper consumption in 2008 and will remain the principal engine for demand growth over the next 10 years Refined Copper Consumption per capita (First-Use) • Industrialisation and urbanisation of a 18 population of 1.35bn 16 Germany •
Slide 8: Chinese Demand Outlook
Chinese Demand Outlook China relies heavily on imports to satisfy its growing demand for copper Net Chinese Imports of Copper Materials • China is not well endowed with copper 8 resources • In particular, the need for concentrate to feed 6 its rapidly expanding smelter sector will become more acute
Slide 9: Copper Supply Outlook
Copper Supply Outlook Supply side challenges still present, with major mines reaching maturity; the next generation of greenfield projects faces different challenges Global Copper Mine Production • Existing operations have underperformed by (Excludes ‘possible’ projects) 0.9 to 1.3Mtpa of mined copp
Slide 10: Copper Markets: Our View
Copper Markets: Our View The copper market remains very attractive due to expected demand growth and supply side challenges ABM Copper Supply Demand Outlook • The combination of strong demand growth and 25 7.8 Mt of new mine supply declining existing supply results in a required by 2020 requirement
Slide 11: Agenda
Agenda Brian Beamish, CEO Anglo Base 1. Introduction Duncan Wanblad, Head of Copper 2. Copper Market Overview Duncan Wanblad, Head of Copper 3. Copper Business Overview Miguel Duran, CEO Anglo American Chile 4. Los Bronces Expansion Project Delivery Questions and Answers Site Visit Overview 10
Slide 12: Copper Strategy
Copper Strategy Delivering on the strategy • Copper continues to be a very attractive industry – Long term outlook is positive – Limited sources of new supply – Attractive historical industry returns • Anglo’s strategy is to actively invest in high-quality assets to unlock the full potential of the
Slide 13: Copper in Anglo Base Metals Portfolio
Copper in Anglo Base Metals Portfolio Anglo American’s copper production has the potential to double to 1.3 million tonnes per year by 2017 Attributable Contained Copper Production 1,400 • Growth projects, particularly Los Bronces, are well-timed to benefit from expected 1,200 cyclical recovery and
Slide 14: Current Portfolio (1/3)
Current Portfolio (1/3) Alaska 8 Los Bronces (100%) • Open pit Cu mine in Central Chile 7 producing concentrate and cathodes • Production 236kt Cu, 2.6kt Mo in 2008 • Mine life >30 years 6 • Significant exploration upside at San Enrique and Los Sulfatos 2 3 Collahuasi (44%) 4 • Open pit Cu mine in N
Slide 15: Current Portfolio (2/3)
Current Portfolio (2/3) Alaska 8 Mantoverde (100%) • Open pit, heap leach Cu mine in 7 Northern Chile • Production 63kt Cu in 2008 • Mantoverde sulphide ore life extension 6 pre-feasibility study currently underway 2 3 El Soldado (100%) 4 • Open pit and underground Cu mine in Operations Central Chil
Slide 16: Current Portfolio (3/3)
Current Portfolio (3/3) Alaska 8 Quellaveco (81.9%) • Production of ~175ktpa Cu over 28-year 7 mine life • Feasibility study in final stages, on track for completion in early 2010 6 • Expected to operate in the lower half of the cost curve 2 3 Michiquillay (100%) 4 • Agreement reached with local Ope
Slide 17: Copper Positioning: 2008 Cost Curve
Copper Positioning 2008 Cost Curve • Two-thirds of existing production in lower half of cost curve 400 • Weighted average C1 costs for copper 350 portfolio around the middle of the cost 300 curve 250 c/lb ($2008 real) • Expansions at Los Bronces and 200 Collahuasi, together with the greenfield 150 L
Slide 18: Copper Reserves & Resources
Copper Reserves & Resources Attributable Reserves & Resources (in addition • Growth in the short term will be realised from to reserves) brownfield expansions at Los Bronces and Reserves Los Collahuasi, Bronces Resources • In the longer term, projects in Chile, Peru, and Reserves Alaska will shape t
Slide 19: Major New Resources Discovered
Major New Resources Discovered New high grade, world class deposits confirmed at Los Bronces • Located in a premier copper region, well positioned to exploit one of the world’s great mineral endowments • Existing Reserves of 2.4 Bt at 0.51% Cu (12.2 Mt of contained Los Bronces Cu)(1) support a 30 ye
Slide 20: Major New Resources Discovered: Los Sulfatos Exploration Tunnel
Major New Resources Discovered Los Sulfatos Exploration Tunnel • Development of 8km exploration tunnel using Tunnel Tunnel Boring Machine Boring Machine (TBM) technology to provide future exploration & resource drilling access to Los Sulfatos • Project initiated in 2008 with an estimated cost of $77
Slide 21: Agenda
Agenda Brian Beamish, CEO Anglo Base 1. Introduction Duncan Wanblad, Head of Copper 2. Copper Market Overview Duncan Wanblad, Head of Copper 3. Copper Business Overview Miguel Duran, CEO Anglo American Chile 4. Los Bronces Expansion Project Delivery Questions and Answers Site Visit Overview 20
Slide 22: Los Bronces Overview (1/6)
Project Overview (1/6) Los Bronces Location Project History • 2002: Anglo acquires Disputada from Exxon Mobil for $1.3Bn, adding Los Bronces division to its portfolio • US $6.5Bn in EBITDA generated since acquisition • Payback period of 3 years • 2002: Expansion project began, to increase processing
Slide 23: Los Bronces Overview (2/6)
Project Overview (2/6) Los Bronces – poised to become the 5th largest copper mine in the world Reserves – Sulphide: 1.6Bt @ 0.63%, Leach: 0.8Bt @ 0.26% Mineral Resources Resources – Sulphide: 4.1Bt @ 0.4% (in addition to reserves) Grinding plant to treat sulphide ore 141ktpd and two electro-winning
Slide 24: Los Bronces Overview (3/6)
Project Overview (3/6) Controllable Operating Costs USD 0.59/lb G&A Other 9% Cathode 23% processing Mining Power 7% 34% 20% Lime 5% Services Mill balls 7% 17% Fuel oil 7% Spares Concentrate Labour 11% processing 10% 50% Notes: Controllable operating costs (C0) averaged over the first 10 years of pro
Slide 25: Los Bronces Overview (4/6)
Project Overview (4/6) Geology Technology • Primary crushing: One 60”x89” 750kWh unit • Grinding plant: One 40 ft SAG mill and two 26 ft ball mills • Ore slurry transport: New 52km pipeline alongside the existing one • Flotation: New Cu and Mo flotation plants at Las Tórtolas • Porphyry cluster adja
Slide 26: Los Bronces Overview (5/6)
Project Overview (5/6) Los Bronces Process Flow Open Pit Drilling Blasting Concentrate Production Cathode Production Extraction Low grade ore Leaching dump leaching Solvent extraction (SX) Ore slurry pipeline Grinding Loading & transport Crushing Waste dump Electrowinning (EW) Flotation (Cu & Concen
Slide 27: Los Bronces Overview (6/6)
Project Overview (6/6) Project Facts Operating Facts • Mineral rights 100% owned by Anglo • 52 million tonnes of dry ore treated at the American plant per annum • Expansion of an existing operation, using • 415k tonnes of Cu produced on average over proven technology the first 10 years • All heavy e
Slide 28: Performance – Safe Delivery
Project Performance – Safe Delivery Safety is our number 1 priority • Exceptional project safety performance to date Los Bronces Safety Performance – No fatalities since start of project (7.4 10 Total LTIFR project to date: 0.29 1.6 million man hours) 1.4 8 – LTIFR significantly below Chilean 1.2 in
Slide 29: Performance – Sustainable Development
Project Performance – Sustainable Development Rigorous environmental standards and policies have been applied • Environment Impact Assessment was approved in 2007 and requirements incorporated into project design • Numerous minor local permits in progress and being actively managed by Anglo team • E
Slide 30: Performance – Capital Discipline (1/2)
Project Performance – Capital Discipline (1/2) Capital intensity is in line with industry benchmarks Capital Intensity1 of Copper Projects • Resulting capital intensity of USD6.4/lb is (USD/lb Cu) lower than the weighted average for Salobo 4.1 comparable projects (Vale) Antapaccay 6.3 (Xstrata) Los
Slide 31: Performance – Capital Discipline (2/2)
Project Performance – Capital Discipline (2/2) Forecast capital cost $2.4Bn Spend by Category Contingency 9% • Total spend to date $778M Procurement 31% Indirect/other • 2009 YTD spend $428M 24% • Remaining 2009 spend $199M Engineering 6% • 2010 forecast spend $800 - 1,000M Construction 30% • Total
Slide 32: Performance – Project Execution (1/2)
Project Performance – Project Execution (1/2) Execution risk management • Design development through gated process concept: pre-feasibility; feasibility; basic engineering; and now in execution phase • EPC Contractor Bechtel provides lowest risk delivery options and was also involved in earlier phas
Slide 33: Performance – Project Execution (2/2)
Project Performance – Project Execution (2/2) Overall project progress at 18% in August 2009, in line with plan Engineering Procurement Construction OVERALL % Progress % Progress % Progress % Progress 100% Plan 100% Plan 100% Plan 100% Plan Actual Actual Actual Actual 80% 80% 80% 80% 60% 60% 60% 60%
Slide 34: Performance – Successful Commissioning
Project Performance – Successful Commissioning Clear commissioning plan in place to ensure operational success • Integrated Risk Management – Group approach to Risk Management – Identification, evaluation, rating – Development of strategies – Risk registers • Commissioning plan with clear roles and
Slide 35: Conclusion
Conclusion Key messages from today’s visit Successful execution of large scale, brownfield project with world- 1 class safety performance Low operating costs and risk – proven operating expertise, 2 supported by Anglo group functions 3 Major resource base with significant exploration upside Delivery
Slide 36: Questions and Answers
Questions and Answers AMERICAN
Slide 37: Site Visit Overview
Site Visit Overview • Safety & PPE distribution • Donoso • Tunel Sur • Confluencia • Grinding Plant Confluencia SAG & Ball Mill Foundations at Confluencia Tunnel to Confluencia 36