Anglo American Plc · LSE:AAL
Anglo American — Bank of America Merrill Lynch 2017 Global Metals, Mining & Steel Conference
28 slides from Anglo American's conference presentation, May 2017
Slide 1: Delivering On Our Potential
DELIVERING ON OUR POTENTIAL Bank of America Merrill Lynch 2017 Global Metals, Mining & Steel Conference: May 2017
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: Today…A Fundamentally Different Business
TODAY…A FUNDAMENTALLY DIFFERENT BUSINESS Number of assets1 Headcount2 A more Down 40% Down 39% efficient business… Unit costs2 Production2 …an improved Down 31% competitive position… Up 8% Attributable free cash flow3 ($bn) Attributable ROCE3 2.6 15% …generating more cash 9% and higher returns. -1.7
Slide 4: Setting the Scene
SETTING THE SCENE Global growth outlook (real GDP)4 Improving growth rates driven by Declining growth but off a much emerging markets higher base 6.7% 6.6% 6.2% 5.7% 3.5% 3.6% 3.8% 3.1% World China 2016 2017 2018 2022 • Demand outlook broadly positive – global growth averaging ~3.5% in the next five
Slide 5: Delivering on Commitments
DELIVERING ON COMMITMENTS Minas-Rio – First Ore on Ship (FOOS) Conveyor at Iron OreatTerminal, Sishen iron Portore of mine Açu,
Slide 6: Safety & Environment
SAFETY & ENVIRONMENT Loss of life and TRCFR5 – committed to achieving zero harm 1.3 Group TRCFR 1.1 0.9 0.8 15 0.7 13 11 6 6 0 2012 2013 2014 2015 2016 Q1 2017 Environmental incidents6 – improving trend reflects better planning 30 22 15 6 4 2 2012 2013 2014 2015 2016 Q1 2017 Divested businesses De B
Slide 7: More Resilient – Delivered Through Self-Help
MORE RESILIENT – DELIVERED THROUGH SELF-HELP Cost and volume EBITDA improvement ($bn) 4.1 1.0 1.5 1.6 2013 - 2015 2016 2017 Improvement Target 7
Slide 8: Portfolio Streamlined – Focus on Quality
PORTFOLIO STREAMLINED – FOCUS ON QUALITY Number of assets7 -31 68 45 41 37 2013 2015 2016 2017 (current) Coal Platinum Copper De Beers Nickel Niobium & Phosphates Iron Ore & Manganese 8
Slide 9: Operating Model – Driving Efficiencies
OPERATING MODEL – DRIVING EFFICIENCIES Operating model in theory… Productivity Delivered…No Capex… 1 2 3 Unit Pre-implementation: Unstable process Stabilise process Reduce variation Increase capability Steps 1 and 2 act to ‘stabilise’ a 5,500 process and ‘reduce variation’. 5,000 4,500 Step 3 fu
Slide 10: Marketing Model Helping Drive Higher Margins
MARKETING MODEL HELPING DRIVE HIGHER MARGINS Iron ore fines FOB price comparison - (index) 2007 2016 Peer 1 90 Peer 1 103 Peer 2 100 Peer 2 104 Peer 3 100 Peer 3 106 Anglo 87 Anglo 112 10
Slide 11: Productivity – Improving, With More to Come
PRODUCTIVITY – IMPROVING, WITH MORE TO COME 110 108 11
Slide 12: Driving Higher Margins…
DRIVING HIGHER MARGINS... EBITDA margin (%) 2012 2013 2014 2015 2016 2017 @ Spot Hl Reported EBITDA margin |__| See-through margin’? ——— Anglo American basket price’ AA basket price: 2012 = 100; 2017 spot= 78 12
Slide 13: …Drives Cash Flow and Returns
…DRIVES CASH FLOW AND RETURNS 13
Slide 14: Disciplined Capital Allocation
DISCIPLINED CAPITAL ALLOCATION Minas-Rio – First Ore on Ship (FOOS) Conveyor at Iron OreatTerminal, Sishen iron Portore of mine Açu,
Slide 15: Disciplined Capital Allocation
DISCIPLINED CAPITAL ALLOCATION Capital Allocation framework Targets and priorities Restoring balance sheet flexibility… Cash flow Target Net Debt/EBITDA <1x at spot prices. Discretionary after capital sustaining Enable counter-cyclical investing. options capital Reinstatement of dividend a prior
Slide 16: Capital in Control – Fewer Assets, More Efficient
CAPITAL IN CONTROL – FEWER ASSETS, MORE EFFICIENT Capital expenditure ($bn)12 2.5 ~2.5 ~2.5 0.5 1.0 0.8 0.6 1.2 1.0 2016 2017F 2018F13 Expansionary capex Stripping & development SIB 16
Slide 17: Expansion Potential Without Undue Risk
EXPANSION POTENTIAL WITHOUT UNDUE RISK Longer-term positioning Capital allocation considerations Exceptional resource endowment. Attractive commodity fundamentals. Copper Focus onLong-term outlook long life, low cost assets. Long-term High quality growthoutlook opportunities. Industry lead
Slide 18: Investment Proposition
INVESTMENT PROPOSITION Minas-Rio – First Ore on Ship (FOOS)Conveyors at Iron OreatTerminal, Sishen iron Portore of mine Açu,
Slide 19: The Anglo American Investment Proposition
THE ANGLO AMERICAN INVESTMENT PROPOSITION Assets Capabilities Returns • High quality assets. • Operating model. • Balance sheet strength. • Portfolio upgrading. • Innovation. • Dividends a priority. • Diversified. • Marketing. • Strict investment criteria. • Low cost growth potential. • Sustainabili
Slide 20: A Differentiated Portfolio
A DIFFERENTIATED PORTFOLIO Capital employed by product14 A truly diversified business PGMs De Beers Copper Broad cross-cycle product exposure. Iron ore Coal Other Capital employed by geography14 South Africa Rebalancing geographic Other southern Africa diversification – South Africa Brazil ~25%
Slide 21: Why Anglo American?
WHY ANGLO AMERICAN? • Market-leading positions. Assets • Uniquely diversified with high quality asset base. • Rebuilding operating capabilities. Capabilities • Innovation leadership supporting improvements. • Attractive low cost expansion options. Returns • Balance sheet supports “Returns on…and…of
Slide 22: Appendix
APPENDIX
Slide 23: The Anglo American Investment Proposition
THE ANGLO AMERICAN INVESTMENT PROPOSITION Assets Capabilities Returns • High quality assets – provide • Operating model – to establish best in • Balance sheet strength – flexibility to earnings protection through the cycle. class operating credentials. invest through the cycle. • Portfolio upgrading
Slide 24: A Differentiated Portfolio
A DIFFERENTIATED PORTFOLIO Capital employed by product14 EBITDA by product14 PGMs De Beers Copper Iron ore Coal Other Capital employed by geography14 EBITDA by geography14 South Africa Other Southern Africa Brazil Chile & other South America Australia Other 24
Slide 25: Financial Guidance – Key Metrics
FINANCIAL GUIDANCE – KEY METRICS Financial metrics and net debt 2017F $bn EBITDA cost and volume improvement 1.0 Capex12 ~2.5 Attributable free cash flow (based on average 2016 realised prices) ~2.0 Net debt (based on average 2016 realised prices) <7.0 Balance sheet target – using long term consensu
Slide 26: Production Outlook
PRODUCTION OUTLOOK15 Units 2015 2016 2017F 2018F 2019F Diamonds16 Mct 29 27 31-33 Platinum17 Moz 2.3 2.4 2.35-2.40 ~2.5 ~2.118 Copper 19 Kt 709 577 570-600 630-68020 590-650 Metallurgical coal21 Mt 21 21 19-21 20-22 20-22 Thermal coal22 Mt 28 29 29-31 29-31 29-31 Iron ore (Kumba)23 Mt 43 41 40-42 40
Slide 27: Spot Prices
SPOT PRICES Commodity / Currency Units Spot price at 28 April Iron Ore (62% CFR China) $/t 67 Hard Coking Coal (FOB Australia) $/t 188 Thermal Coal (FOB South Africa) $/t 74 Copper(2) c/lb 258 Nickel(3) c/lb 430 Platinum $/oz 946 Palladium $/oz 824 Rhodium $/oz 1,010 South African Rand ZAR/USD 13.37
Slide 28: Footnotes
FOOTNOTES (1) 2013 to 2016. (12) Capex defined as cash expenditure on property, plant and (2) 2012 to 2016. equipment including related derivatives, net of proceeds from (3) Attributable free cash flow is defined as net cash inflows from disposal of property, plant and equipment and includes direct
Anglo American — Bank of America Merrill Lynch 2017 Global Metals, Mining & Steel Conference on 6ix