Glencore plc · LSE:GLEN
Glencore — Glencore Sell Side Analyst Visit Copper
42 slides from Glencore's investor presentation, Sep 30, 2014
Slide 1: Sell-side analyst visit: Copper
Sell-side analyst visit Copper 30 September 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: Agenda
Agenda • Welcome – Senior Management Team • Who we are and introducing our Senior Management Team • Telis Mistakidis – Head of Copper • Global and Australian copper update • Mike Westerman – Chief Operating Officer Copper Assets North Queensland • Ernest Henry Underground Mine • Mount Isa Copper Ope
Slide 4: Glencore global copper
Glencore global copper
Slide 5: Copper overview
Copper overview Third largest global mined copper 2013 mined copper production (kt) producer • 2013 mined pro-forma production of Freeport 1,497kt Codelco Largest trader of copper concentrate and metal Glencore • 2013 marketed volumes exceeded 2.8Mt copper units (in both concentrates and metal) BHPB
Slide 6: Glencore copper assets
Glencore copper assets Industrial assets comprise: 14 mines, 6 smelters, 5 refineries and 14 EW circuits, assets in 36 countries, marketing offices spread across five continents 6
Slide 7: Copper asset portfolio optimised
Copper asset portfolio optimised Illustrative C1 metals cash cost curve Cu c.$300M Q1 2012 industrial merger first quartile cost Cu synergies and other positions for industrial 2015 cost savings by end assets on track for end 2014 2015 Post-integration cost efficiencies $7.9bn and focus now ingraine
Slide 8: North Queensland copper assets
North Queensland copper assets
Slide 9: Copper Assets North Queensland (NQ) – overview
Copper Assets North Queensland (NQ) – overview Copper Assets North Queensland • 2,584 employees (including contractors) • Significant contributor to the Queensland economy Mount Isa Copper Operations • Two underground copper mines – Enterprise, X41 • Commenced Copper Mining in 1966 • 1800m deep • Li
Slide 10: 2013 NQ transformation
2013 NQ transformation • At time of acquisition (May 2013), the NQ Safety performance improved copper business was forecast to generate a 120 7 negative full year cash flow 6.5 110 6 100 5.5 • Key decisions and actions taken to achieve a HPIFR DISR 90 5 positive cash flow outcome: DISR 4.5 80 • Remo
Slide 11: NQ transformation – consolidation of assets along the value chain
NQ transformation – consolidation of assets along the value chain Mount Isa Mine Townsville Copper ore sourced from Copper Copper Glencore Port Copper anode copper refinery Mount Isa concentrator smelter Operations (cathode) Ernest Henry Mining Copper ore sourced from Copper Ernest Henry concentrato
Slide 12: NQ transformation – streamlining management structure
NQ transformation – streamlining management structure • Previous management structure very Streamlined management structure siloed and unconducive to integrated Chief production Executive Xstrata Copper • Streamlined structure enables: Corporate Functions Chief Operation Chief Operating Brisbane Off
Slide 13: NQ transformation – reducing the 2013 cost base
NQ transformation – reducing the 2013 cost base Operating Expenditure initiatives • Management restructure and streamline • Negative margin operations removed • Improved productivity • Renegotiation of contracts 3 % reduction in operating costs 18% Headcount Reduction • Staged approach to headcount
Slide 14: EHM – Ernest Henry Underground Mine
EHM – Ernest Henry Underground Mine
Slide 15: EHM – transition to a long life, low cost underground producer
EHM – transition to a long life, low cost underground producer • From 1995 to 2011 successful open pit • Innovative Sub level caving utilised to achieve viable low cost, low grade ore operation • $589M brownfield project approved in December 2009 to convert from underground trucking operation • Deve
Slide 16: EHM – underground mining flowsheet
EHM – underground mining flowsheet Sub Level Cave Caving initiated Transfer Automation Resources and Reserves Ore Passes Hoisting System Loading Station Winder System Surface System Feeders Conveyor Crushing System Other Transfer Level Automation Ventilation system Crusher op
Slide 17: EHM – major project infrastructure
EHM – major project infrastructure 600m overland conveyor Underground primary crusher Underground surge bin Loading station 17
Slide 18: EHM – concentrator
EHM – concentrator Background Operational improvements yielding results • Historically utilised as a single-line single-ore Cumulative Milling Variance 2014 concentrator 6% 5% • Evolution of the plant enabled processing of 4% additional feed sources, including low-grade 3% ores, smelter slag, and 3r
Slide 19: EHM – unit cost performance and project upside
EHM – unit cost performance and project upside Current performance in line with expectations • Early ramp up to 6.0Mt planned for 2015, 12 months ahead of schedule • Mining unit costs reduced by 50% • 42% reduction in EHM C1 Unit costs by end of 2015, taking operation from 4th Quartile to 2nd Quarti
Slide 20: EHM – possible mine extension 2025 to 2030
EHM – possible mine extension 2025 to 2030 1200 RL EHM SLC orebody Drilling Target EH631 - 190m @ 0.76% • Orebody currently open at Depth • Potential to increase current Resource to below 1200 sub level • Explore DD intersections from 1992-94 surface campaign of 42m @ 1.37% Cu • Mineralisation adjac
Slide 21: EHM – potential for mine extension 2025 to 2030
EHM – potential for mine extension 2025 to 2030 Footwall Overdraw East Extension • Additional drilling enables recovery of low • Additional mining to the east of the main SLC grade material along footwall of the main sub level cave (SLC) Without FW rings With FW rings 21
Slide 22: Mount Isa Copper Operations (MICO)
Mount Isa Copper Operations (MICO)
Slide 23: MICO – overview
MICO – overview Mount Isa Copper Mine N • Underground Mining commenced in 1966 • 1,200 km of development drives • Over 200Mt of ore recovered from mine 4 km 2 km X41 Shaft X41 Mine Enterprise R62 Shaft U62 Shaft 30Mt @ 1.8% Cu Mine M62 Shaft 23Mt @ 3% Cu Remaining Reserve Depleted Reserve • 6.4Mt pr
Slide 24: MICO – overview
MICO – overview • Aged Asset with high grades and very productive infrastructure • Demonstrated ability to reliably deliver high volumes of copper at robust margins • Requires focus on operational discipline and management of variability (complexity): » Development ~12km primary / 9km rehabilitation
Slide 25: MICO – operational discipline achieving results: mobile equipment
MICO – operational discipline achieving results: mobile equipment Truck utilisation trend LHD utilisation trend ,70 90% ,60 80% ,80 90% 70% Thousand Hours Thousand Hours ,50 ,70 80% 60% 70% ,60 ,40 50% 60% ,50 ,30 40% 50% ,40 30% 40% ,20 ,30 20% 30% ,20 20% ,10 10% ,10 10% ,0 0% ,0 0% 2010 2011 2012
Slide 26: MICO – operational discipline achieving results: concentrator
MICO – operational discipline achieving results: concentrator Ore milling rate performance Concentrator unplanned downtime 500 4000 Unplanned Maintenance (min/month) Ore Milling Rate (tph) 480 3000 460 2000 440 1000 420 Mrz 12 Mrz 13 Mrz 14 Jun 11 Sep 11 Dez 11 Jun 12 Sep 12 Dez 12 Jun 13 Sep 13 Dez
Slide 27: MICO – future resource potential: underground
MICO – future resource potential: underground Target Size N3000 remake ~30Mt N 3500 remake ~40Mt W Block South ~3.5Mt SSW 1100 OB ~10Mt Perched HWL ~17Mt 650 OB Buck Quartz Fault ~40Mt SSW 1100 Potential target size – 7Mt N650 OB ~17Mt Potential target size – 10Mt R62 SHAFT SW 1100 OB ~4Mt U62 SHAFT
Slide 28: MICO – future resource potential: surface resources
MICO – future resource potential: surface resources Background Black Rock Open Cut • Progression of several open pit studies completed since the 1970’s, hampered by infrastructure and metallurgy challenges • The BROC cutback addresses these challenges: » Pit has been optimised on Copper ore types on
Slide 29: Copper smelter and refinery
Copper smelter and refinery
Slide 30: Mount Isa Copper Smelter - overview
Mount Isa Copper Smelter - overview 2014 Copper smelter • 200 employees • 22 FTE contractors • 900 kdmtpa Concentrate capacity • 97.5% recovery • Acid plant owned and operated by Incitec Pivot Copper Smelter Equipment • 35kwmt concentrate storage capacity • Isasmelt Vessel • 2 x Rotary Holding Furna
Slide 31: Mount Isa Copper Smelter
Mount Isa Copper Smelter Asset Management Isasmelt campaign life • Smelter outage June 2014 250 » Refractory replacement across 4 vessels Refractory Life (Weeks) 200 » Significant overhaul of primary smelter 150 off-gas treatment system • Converter hood replacement program in 100 progress to sustain
Slide 32: Townsville Copper Refinery
Townsville Copper Refinery CRL Operations • Cathode annual production target 288,500t • Slimes annual production target approx. 900t • Cathode registered on LME and SHFE Tankhouse Parameters • ISA Process Technology • 37 sections, Standing 3 operating on pallet circuits, 1162 operating cells rack ra
Slide 33: Townsville Port Operations
Townsville Port Operations Facility Berth 8 – Townsville Port • All weather berth • 3 storage sheds, total capacity of 160kt • Dedicated rail loop and tippler Environmental Authority Approvals • Concentrates (Zn, Cu, magnetite, revert and dross) – 3.86MTPa • Lead concentrate – 140kTPa • Fertiliser –
Slide 34: Third-party processing
Third-party processing • Currently progressing options on tolling both copper ore and concentrates through the EHM and Mount Isa concentrators and smelter to supplement own sources. » Allowing local mines to leverage our existing asset base for processing copper ores and concentrates » Smelter value
Slide 35: Cobar
Cobar
Slide 36: CSA Mine – historical overview
CSA Mine – historical overview • Discovered in 1871 Sinking No.1 Shaft (Feb. 1962) • Current operation began in 1967 • Initially produced Cu/Ag/Zn/Pb – now Cu/Ag only • Acquired by Glencore in 1999 ending a year long shut down • 25Mt of ore extracted to date • Highest grade copper mine in Australia
Slide 37: CSA Mine – today
CSA Mine – today • High grade asset with aged infrastructure CSA Mine No.2 Shaft • Amongst the three deepest mines in Australia – currently 1,640m below surface • Producing 1.1Mtpa of copper/silver ore (4.6% Cu, 15.2g/t Ag) • Producing 162ktpa of copper/silver concentrate (28.5% Cu, 80g/t Ag) • Conc
Slide 38: CSA Mine – additional potential cost reduction
CSA Mine – additional potential cost reduction Upgrade of current infrastructure CSA Mine Processing Plant • Ventilation and hoisting capacity to facilitate execution of new infrastructure, replacing trucking at depth • Majority of current infrastructure upgrades to be completed by end 2015 and allo
Slide 39: CSA mine – significant resource growth potential
CSA mine – significant resource growth potential Shaft No.2 s No.1 Historic Western & Eastern System Workings QTS South Mineral Resource 0.3Mt @ 7.4% Cu (22 Kt Cu) Remaining Western & Eastern Resources 2.2Mt @ 4.4% Cu (97 Kt Cu) Sh aft b ase 1.1km b elow su rface QTS North Mineral Potentia l Resourc
Slide 40: Conclusion
Conclusion
Slide 41: Summary
Summary The future of our Australian Copper operations is via expanded mining and concentrate production • We are continuing to invest in our business • Major projects are progressing in line with targeted expectations • We have mature assets – efficient mining and processing techniques, improving p
Slide 42: Q&A
Q&A