Anglo American Plc · LSE:AAL
Anglo American — Investor Day (November 2019)
29 slides from Anglo American's investor day presentation, Nov 12, 2019
Slide 1: Bulks Seminar & Site Visit
BULKS SEMINAR & SITE VISIT Seamus French, Bulks CEO Brisbane, 12 November 2019
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: Bulks Seminar Agenda
BULKS SEMINAR AGENDA Overview Seamus French, Bulks CEO Operational Excellence & Technology Dave Palmer, Head of P101 Iron Ore Market Timo Smit, Head of Iron Ore Marketing Kumba Iron Ore Themba Mkhwanazi, Kumba CEO Minas-Rio & Nickel Bill Bruijn, Brazil CEO Samancor & Cerrejón Seamus French, Bulks CE
Slide 4: Bulks: A High Quality Business
BULKS: A HIGH QUALITY BUSINESS High quality products for Proven track record of Further improvement & future demand operational excellence value growth to come 44
Slide 5: Fundamental Demand Drivers Evolving
FUNDAMENTAL DEMAND DRIVERS EVOLVING Population growth Urbanisation Wealth creation ~1.4 billion global population increase by 2035 2000 2018 2035 China 2000 2018 2035 India 2000 2018 2035 Africa 2000 2018 2035 South America Rural population Urban population 55
Slide 6: Strategic Context Shaped by Multiple Factors
STRATEGIC CONTEXT SHAPED BY MULTIPLE FACTORS Social & political Environment Technology Circular economy & sustainable consumption Mining technology Communities Climate change Advanced manufacturing Future consumers Renewable energy Autonomous vehicles 66
Slide 7: Our Asset Quality Plays to Global Demand Themes
OUR ASSET QUALITY PLAYS TO GLOBAL DEMAND THEMES Diamonds Copper PGMs Bulks World leader World class growth World leader High quality niche Consumer World Greener World Electrified World 77
Slide 8: Bulks a Key Contributor to Anglo American EBITDA
BULKS A KEY CONTRIBUTOR TO ANGLO AMERICAN EBITDA Diamonds Copper $518m $789m 55% mining EBITDA margin 44% mining EBITDA margin $5.5bn H1 2019 EBITDA PGMs Bulks $824m $3,358m 38% mining EBITDA margin 47% mining EBITDA margin 88
Slide 9: Bulks: Sustainable Cash Generation & Returns
BULKS: SUSTAINABLE CASH GENERATION & RETURNS Effectiveness Efficiency Sustainability Minas-Rio Kumba Iron Ore Metallurgical Coal Nickel Thermal coal Manganese 99
Slide 10: Safety & Sustainability Integral to Bulks Business
SAFETY & SUSTAINABILITY INTEGRAL TO BULKS BUSINESS Safety, Health & Environment Sustainability driven by FutureSmartTM TRCFR1,2 Fatalities 3.6 3.4 3.4 3.1 3.1 2.8 2.4 Operational 3 3 3 2 3 2 1 efficiency 2013 2014 2015 2016 2017 2018 YTD 2019 Occupational health – new cases1,3 112 94 95 72 81 Fewer
Slide 11: Portfolio Transformation
PORTFOLIO TRANSFORMATION High quality products for future demand
Slide 12: Bulks: A Fundamentally Different Business
BULKS: A FUNDAMENTALLY DIFFERENT BUSINESS Bulks portfolio upgrade Bulks operating improvement Number of assets Production volumes6 40% 27% Adjusted cost curve5 Unit costs7 Met coal Iron ore Thermal coal Q1 Q2 Q1 2013: Q2 2013: Q3 2013: Q1 30% 12 12
Slide 13: High Quality and Diversified
HIGH QUALITY AND DIVERSIFIED Kumba Metallurgical Coal $1,366m $906m 57% mining EBITDA margin 50% mining EBITDA margin $3.4bn H1 2019 EBITDA Thermal Coal, Minas-Rio Nickel & Manganese $670m $416m 60% mining EBITDA margin 24% mining EBITDA margin 13 13
Slide 14: Competitive Margins Driven by Quality Products
COMPETITIVE MARGINS DRIVEN BY QUALITY PRODUCTS Metallurgical coal Iron ore Adjusted cost curve $/t Adjusted cost curve $/t Q1 Q2 Thermal coal Nickel Adjusted cost curve $/t C1 cash cost curve $/lb Q1 Q2 14 14
Slide 15: Transformation Journey
TRANSFORMATION JOURNEY +200% longwall performance improvement Minas-Rio ramp up to 23Mt Divested lower quality assets Kumba pit re-design (Foxleigh, Callide & SA domestic) 15 15
Slide 16: A Focus on Quality
A FOCUS ON QUALITY Bulk commodities (Mt) ~26Mt export ~35Mt export 36 82 ~10Mt domestic ~47Mt domestic 22-24 ~85% HCC ~68% HCC 17 Minas-Rio: ~23Mt, 67% Fe Kumba: 65-66 Kumba: ~43Mt, ~64% Fe, 43 ~42-43Mt, 64.3% Fe, ~60% lump ~68% lump 2012 2019 Iron ore Metallurgical coal Thermal coal 16 16
Slide 17: Thermal Coal's Position in Our Portfolio
THERMAL COAL’S POSITION IN OUR PORTFOLIO Today’s global electricity mix Our thermal coal volumes ~38% Thermal coal 56% vs 2012 Responsible Premium assets 12 year life9 stewardship 17 17
Slide 18: Quality Assets Suited to Future Demand
QUALITY ASSETS SUITED TO FUTURE DEMAND Metallurgical Coal Minas-Rio Kumba High quality portfolio High quality niche High quality niche ~85% ~67% Fe ~64.5% Fe Hard coking coal Pellet feed products of which 68% is lump Asset life8 Asset life Asset life 23 years 48 years 14 years with extension potenti
Slide 19: Operational Excellence
OPERATIONAL EXCELLENCE Proven track record of operational excellence Double sided loading at Kolomela
Slide 20: Best Operating Practice
BEST OPERATING PRACTICE Sharing best practice: Operating excellence Large rope shovel performance +26% +36% 45Mtpa 39Mtpa 29Mtpa (ave) 2015 2019F 2024F Dawson Capcoal Sishen 20 20
Slide 21: History of Delivery in Metallurgical Coal
HISTORY OF DELIVERY IN METALLURGICAL COAL In 2011 we told our investors we will… By 2019 we have… 228kt/wk 130kt/wk Set benchmark for longwall productivity in Australia 65kt/wk Anglo American 2011 Aus benchmark 2011 Moranbah 2019 4.7Mt 3.8Mt Deliver Grosvenor project 0.5Mt 2015 2018 2019 7% 14% Ther
Slide 22: Growing Value
GROWING VALUE Further improvement and growth to come Moranbah Grosvenor wash plant
Slide 23: Improvement Driven by Operating Model
IMPROVEMENT DRIVEN BY OPERATING MODEL Minas-Rio plant recovery Met Coal LW productivity Large shovel efficiency +28% +200% +125% Mass recovery 99%10 from 77% Automation 100% from 45% Planning & scheduling Process stabilisation Recruited best practice operators Performance benchmarking Plant technolo
Slide 24: Step-Change in Performance & Sustainability
STEP-CHANGE IN PERFORMANCE & SUSTAINABILITY P101 Operating Model Exceeding industry best-in-class equipment & process performance FutureSmart Technical MiningTM change Innovative technology; data analytics; sustainability Incremental improvement Step-change 24
Slide 25: P101 Driving Unit Costs Improvement
P101 DRIVING UNIT COSTS IMPROVEMENT Metallurgical Coal Kumba Iron Ore Minas-Rio FOB unit cost11 FOB unit cost11 FOB unit cost11 -12% -6% -18% ~$65/t ~$35/t ~$33/t ~$26/t ~$57/t ~$21/t 2019 LT potential 2019 LT potential 2019 LT potential Longwall productivity Mining equipment efficiency Processing o
Slide 26: Disciplined Growth & Continuity
DISCIPLINED GROWTH & CONTINUITY Moranbah-Grosvenor (Met coal) Aquila (Met coal) Debottleneck wash plant Grasstree lifex, +6 years Maximise longwall potential Premium HCC +4-6Mtpa, $300-400m capex 3.5Mtpa, $226m capex Sishen & Kolomela (Iron ore) Minas-Rio optimisation (Iron ore) Increase operational
Slide 27: Continued Shift Towards High Quality Steelmaking
CONTINUED SHIFT TOWARDS HIGH QUALITY STEELMAKING Bulk commodities Moranbah ~35Mt export 82 36 Grosvenor ~47Mt domestic Premium quality HCC 30 22-24 Minas-Rio ~68% HCC 17 ~30Mt, 67% Fe iron ore 75 65-66 Kumba: Kumba 43 ~45Mt, 64.5% Fe iron ore ~43Mt, ~64% Fe 2012 2019 Long-term Iron ore Metallurgical
Slide 28: Value Accretive Growth for Our Shareholders
VALUE ACCRETIVE GROWTH FOR OUR SHAREHOLDERS Growth in... quality volume margins returns 64-67% Fe grade iron ore >40% EBITDA margin >20% IRR Premium quality HCC Low quartile cost positions Rapid payback within disciplined capital allocation framework 28 28
Slide 29: Footnotes
FOOTNOTES 1. Data relates to subsidiaries and joint operations over which Anglo American has management control. 2. Total Recordable Cases Frequency Rate per million hours. 3. New cases of occupational disease. 4. Reflects level 3-5 incidents. Environmental incidents are classified in terms of a 5-l