Anglo American Plc · LSE:AAL
Anglo American — Bank of America Merrill Lynch 2018 Global Metals, Mining and Steel Conference
34 slides from Anglo American's conference presentation, May 15, 2018
Slide 1: Building Consistent Delivery
BUILDING CONSISTENT DELIVERY Bank of America Merrill Lynch 2018 Global Metals, Mining and Steel Conference 15 May 2018 Diamonds – Jwaneng mine, Botswana
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: Potential Turned Into Delivery
POTENTIAL TURNED INTO DELIVERY Assets Capabilities Returns Quality Operating Model Strong balance sheet Diversification Innovation Capital discipline Growth Marketing Sustainable dividend “World class assets & leading capabilities to deliver a world class business” 3
Slide 4: A Fundamentally Different Business
A FUNDAMENTALLY DIFFERENT BUSINESS MORE EFFICIENT MORE COMPETITIVE BETTER RETURNS Number of assets1 Unit costs2 Free cash flow4 ($bn) 4.9 47% 26% (1.7) 2012 2017 Production2 EBITDA margin3 ROCE5 19% 11% 9% 33% 2012 2017 4
Slide 5: 2017 – Delivering On Our Commitments
2017 – DELIVERING ON OUR COMMITMENTS Strong operating performance Earnings and cash flow Margins and returns Production volumes6 EBITDA8 EBITDA margin9 5% $8.8bn 40% Cost & volume improvements7 Free cash flow4 ROCE5 $1.1bn $4.9bn 19% Production improvements continuing into 2018 with Q1 delivering a
Slide 6: Balance Sheet Strength and Delivering Returns
BALANCE SHEET STRENGTH AND DELIVERING RETURNS A resilient balance sheet Delivering returns to shareholders Net debt10 ($bn) Sustainable dividend policy 8.5 4.5 40% payout of underlying earnings 2016 2017 Net debt / EBITDA Total 2017 dividend 1.4x 0.5x $1.3bn returned to shareholders 2016 2017 6
Slide 7: Continued Delivery Targeted
CONTINUED DELIVERY TARGETED Cost/Volume Production Capex Improvement 2018-2022 target ~3% CAGR growth potential Longer term capex guidance11 $3-4bn ~3% CAGR $2.6-2.9bn >125 Two-thirds from operational Excludes unapproved growth projects 109 efficiencies & project delivery 100 One-third from technolo
Slide 8: A Unique Portfolio
A UNIQUE PORTFOLIO Platinum – Mogalakwena mine, South Africa
Slide 9: Portfolio Uniquely Differentiated
PORTFOLIO UNIQUELY DIFFERENTIATED Revenue by product12 Capital employed by geography12 Other Other 6% 10% PGMs Thermal coal 17% 14% Australia Brazil 8% 25% Diamonds Met coal (De Beers) 15% 21% Chile 13% Iron ore South Africa 14% Copper 25% Namibia & 13% Botswana 19% Asset focused strategy Quality as
Slide 10: Portfolio – Asset Quality Focus
PORTFOLIO – ASSET QUALITY FOCUS Longer term positioning Quality asset focus Exceptional resource endowment High quality growth opportunities Copper Long life, low cost assets Los Bronces, Collahuasi & Quellaveco Discretionary Capital Diamonds Industry leader with diversification Capacity to respond
Slide 11: De Beers: The World's Leading Diamond Business
DE BEERS: THE WORLD’S LEADING DIAMOND BUSINESS Best-in-class business Consumer focused product 2017 EBITDA margin13 Global demand Rest of world 54% India USA Gulf China Leading margin position and Diversified 37% market share14 customer base14 Other gifts Bridal De Beers Peer 1 Peer 2 Others Female
Slide 12: Asset Focused PGM Strategy
ASSET FOCUSED PGM STRATEGY The world’s leading PGM business European diesel only ~15% of platinum demand16 $2,590/oz European light duty autocats 1. Mogalakwena Other ~15% Base metals Industrial & other ~40% 54% Palladium Platinum Other autocats ~15% 2017 margin15 Jewellery Basket price ~30% 2. Aman
Slide 13: Portfolio Positioned for a Changing World
PORTFOLIO POSITIONED FOR A CHANGING WORLD Growing A Greener Electrification Middle Class World and Innovation ~1Mt copper ~37Mct diamonds (De Beers) ~5Moz PGMs ~70Mt high grade iron ore ~21Mt premium coking coal ~30Mt export thermal coal ~75kt nickel and ~3.5Mt manganese 13
Slide 14: Disciplined Growth for Value
DISCIPLINED GROWTH FOR VALUE Metallurgical Coal – Grosvenor, Australia Diamonds – Gahcho Met ore –Brazil Copper Iron Coal –Los – Minas-Rio Grosvenor Bronces first shear plant
Slide 15: Capital Discipline Will Be Maintained
CAPITAL DISCIPLINE WILL BE MAINTAINED Capital allocation framework Key principles • Only one major project at a time • Syndicate major greenfield projects Cash flow • Strict discretionary capital investment Discretionary after criteria: capital sustaining options capital19 • IRR > WACC + 5% • Steady
Slide 16: Growing Mining Margin
GROWING MINING MARGIN Margin uplift Mining EBITDA margin (%) 10pp 5-10pp since 2012 from Operating Model and ~50% portfolio upgrading 10pp 40% 30% Further ~5-10pp uplift to be achieved through • Brownfield expansion (~1-3 years) • Innovation (~3-5 years) • Projects (~5+ years) 2012 2017 2022 target
Slide 17: High Quality Brownfield Growth Optionality
HIGH QUALITY BROWNFIELD GROWTH OPTIONALITY Near term low cost growth potential Longer term asset optionality Moranbah Grosvenor (Met Coal) Copper Los Bronces underground >40% IRR ~25% increase in plant capacity Copper Collahuasi Capital of ~$200m De Beers Jwaneng & Orapa Marine Namibia vessel (De Be
Slide 18: Innovation Driving Sustainability and Value
INNOVATION DRIVING SUSTAINABILITY AND VALUE Operating Model Technology Sustainability Increased efficiency Coarse particle recovery 30% water reduction Improved productivity The intelligent mine 30% energy saving Reduced maintenance Remote UG mining Reducing risk to staff 18
Slide 19: Quellaveco – A World Class Copper Resource
QUELLAVECO – A WORLD CLASS COPPER RESOURCE Ore Reserves19 Copper Eq production ~1.3bnt Reserve grade of 0.58%TCu20 ~300kt Average first 10 years Additional Mineral Resources19 Long life ~1.5bnt At a grade of 0.35%TCu20 ~30 years Significant additional endowment Low cost De-risked • Community and gov
Slide 20: Why Anglo American?
WHY ANGLO AMERICAN? Copper – Las Tortolas Tailings Dam, Chile
Slide 21: Potential Turned Into Delivery
POTENTIAL TURNED INTO DELIVERY Assets Capabilities Returns Focus on quality Operating Model Strong balance sheet Diversified portfolio Innovation leader Capital discipline Low cost growth Marketing quality products Dividend payout ratio “World class assets & leading capabilities to deliver a world c
Slide 22: Appendix
APPENDIX Copper – Los coal, Thermal Landau collieries, South Africa Bronces Thermal coal – Landau collieries, De Beers -South Africa Forevermark
Slide 23: Portfolio Overview
PORTFOLIO OVERVIEW De Beers Copper PGMs Botswana Debswana Mogalakwena Los Bronces South Africa DBCM Chile Collahuasi Amandelbult Namibia Namdeb South Other operations Africa Processing Canada Canada Peru Quellaveco Other operations Trading GSS Iron ore Coal Nickel & Manganese Australia Metallurgical
Slide 24: Safety, Health & Environment
SAFETY, HEALTH & ENVIRONMENT Safety Health Environment Group TRCFR21 Fatalities Occupational health – new cases Major incidents22 15 200 30 0.93 11 0.80 140 9 6 6 15 90 1.08 65 63 0.71 0.63 6 4 2 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 • ‘Elimination of Fatalities’
Slide 25: South Africa – A High Returns Business
SOUTH AFRICA – A HIGH RETURNS BUSINESS EBITDA margin9 35% Free cash flow4 $2.3bn Return on capital employed5 Kumba Iron Ore - Sishen mine, South Africa 23% 25
Slide 26: Positioned for Steel Industry Structural Changes
POSITIONED FOR STEEL INDUSTRY STRUCTURAL CHANGES 2017 average Fe content (%) – peer comparison Focus on premium products 67.0 Kumba production 64.0 60.8 60.7 64.1 64%Fe of which two thirds is lump 57.7 Peer 1 Peer 2 Peer 3 Peer 4 Kumba Minas-Rio Minas-Rio production Widening iron ore quality spreads
Slide 27: Climate Change and Energy
CLIMATE CHANGE AND ENERGY Greenhouse Gas (GHG) emission and savings Energy consumption and savings Million tonnes CO2e % saved Million GJ % saved 7 20 100 15 6 18 80 60 5 10 16 14 40 4 5 12 20 3 0 10 0 2 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 GHG emissions (LHS) % saved against BAU (RHS)
Slide 28: Water and Environment
WATER AND ENVIRONMENT Water usage Environmental incidents 50% operations in water stressed areas Number of major incidents20 30 25 20 • Despite scarcity, no operational impacts from 15 shortages 10 5 • No Level 3 water related incidents in 2017 0 2013 2014 2015 2016 2017 • Vision to operate waterles
Slide 29: Footnotes
FOOTNOTES 1. 2013 to 2017. Includes impact of announced disposals and assets closed or 8. All metrics in presentation shown on an underlying basis. placed on care and maintenance. 9. The margin represents the Group’s underlying EBITDA margin for the mining 2. 2012 to 2017. business. It excludes the
Slide 30: Guidance
GUIDANCE Copper – Collahuasi’s Patache port, Chile Copper – Los coal, Thermal Landau collieries, South Africa Bronces Thermal coal – Landau collieries, South Africa
Slide 31: Production Outlook
PRODUCTION OUTLOOK Units 2016 2017 2018F 2019F 2020F Diamonds1 Mct 27.3 33.5 34-36 ~32 ~32 Copper2 kt 577 579 630-6603 600-660 600-660 Platinum4 Moz 2.4 2.4 2.3-2.4 ~2.05 ~2.05 Palladium4 Moz 1.5 1.6 1.5-1.6 1.3-1.45 1.3-1.45 Iron ore (Kumba)6 Mt 41 45 44-45 44-45 44-45 Iron ore (Minas-Rio)7 Mt 16 1
Slide 32: Unit Cost Performance by Business Unit
UNIT COST PERFORMANCE BY BUSINESS UNIT Based on at 31 December 2017 FX, includes cost inflation offset by ~$350m of identified improvements out of $800m target for 2018. De Beers (US$/ct)1 Copper (C1 USc/lb) Platinum (US$/Pt oz)2 Kumba (FOB US$/t)3 BWP CLP ZAR ZAR 9.85 615 12.31 12.31 +7% -6% +8% +1
Slide 33: Earnings Sensitivities – 2017
EARNINGS SENSITIVITIES – 2017 Impact of 10% change Sensitivity Analysis – 20171 in price / FX Commodity / Currency 31 December spot Average realised EBITDA ($m) Copper2(c/lb) 325 290 352 Platinum ($/oz) 925 947 157 Palladium ($/oz) 1,057 876 96 Rhodium ($/oz) 1,700 1,094 17 Iron Ore ($/t) 74 71 389
Slide 34: Investor Relations
INVESTOR RELATIONS Paul Galloway paul.galloway@angloamerican.com Tel: +44 (0)20 7968 8718 Robert Greenberg robert.greenberg@angloamerican.com Tel: +44 (0)20 7968 2124 Sheena Jethwa sheena.jethwa@angloamerican.com Tel: +44 (0)20 7968 8680 34