Anglo American Plc · LSE:AAL
Anglo American — Investor Presentation (March 2021)
28 slides from Anglo American's investor presentation, March 2021
Slide 1: A Leading South African Export Coal Business
A Leading South African Export Coal Business Anglo American Coal South Africa March 2021
Slide 2: Cautionary statement
Cautionary statement Disclaimer: This presentation has been prepared by Anglo American plc (“Anglo American”) and comprises the looking statement contained herein to reflect any change in Anglo American’s expectations with regard thereto or any change i n written materials/slides for a presentation
Slide 3: Today's presenters
Today’s presenters July Ndlovu Deon Smith Chief Executive Officer Chief Financial Officer 2 Anglo American
Slide 4: Our value proposition
Our value proposition Our mission is to remain a sustainable and high-quality thermal coal business with an enviable cash cost position poised to deliver attractive returns through the cycle 1 Leading South African thermal coal exporter 2 Integrated rail and port infrastructure Low cash cost and hig
Slide 5: A transformed business
A transformed business Portfolio materially upgraded over the past 5 years 2015 2020 Domestic - Industrial 13% 35% Export Domestic - 37% Production Industrial mix 50 Mt 30 Mt 54% Export Domestic - 52% 9% ESKOM Domestic - ESKOM Number of mines 9 7 Calorific value1 4,667 5,506 4 Anglo American
Slide 6: 2020 snapshot of our operations
2020 snapshot of our operations 16.5 Mt $38/t $51/t Export production FOB cost per saleable FOB cost per export tonne2 saleable tonne3 137 Mt 756 Mt 5 - 11 years Reserves4 Resources5 Range of asset lives6 5 Anglo American
Slide 7: High quality operations delivering premium products
High quality operations delivering premium products Open cast operations Underground operations 1 Mafube 50% 5 Zibulo 73%11 Reserves7 18 Mt Reserves7 34 Mt 1.8 Resources8 33 Mt 1 5.2 Resources8 409 Mt 6 LOM 11 years LOM 9 years 2 7 5 2 Khwezela 100%9 3 6 Greenside 100% 4 Reserves7 17 Mt MPUMALANGA 0
Slide 8: Improving the lives of our stakeholders
Improving the lives of our stakeholders Safety GHG Emissions Total recordable injuries Fatalities Total CO2 equivalent (Mt CO2e) (29)% (16)% 42 1.00 34 2 30 0.90 0.84 1 1 2018 2019 2020 2018 2019 2020 Inclusive Procurement Diversity Host community spend (R bn) % Females at senior management level an
Slide 9: Important social contributor to South Africa
Important social contributor to South Africa Case study 1 - Improving healthcare at Mafube R21bn12 economic contributions • Built clinic to serve Sikhululiwe agricultural village and environs • Department of Health partnership; R14m investment • Previously residents relied on monthly visits from mob
Slide 10: Our value proposition
Our value proposition Our mission is to remain a sustainable and high-quality thermal coal business with an enviable cash cost position poised to deliver attractive returns through the cycle 1 Leading South African thermal coal exporter 2 Integrated rail and port infrastructure Low cash cost and hig
Slide 11: Leading South African thermal coal exporter
Leading South African thermal coal exporter 2020 attributable export production Mt 16.5 14.8 12.2 9.6 2.7 Anglo American Thermal Coal Peer 1 Peer 2 Peer 3 Peer 4 South Africa 10 Anglo American
Slide 12: Integrated rail and port infrastructure
Integrated rail and port infrastructure Richards Bay Coal Terminal equity entitlement (Mt) 19.8 18.0 • Well positioned on established rail network 15.1 • Secure access to export markets • Optionality through RBCT entitlement 6.0 5.4 3.6 Anglo American Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Thermal Coal
Slide 13: Track record of improvement with further potential
Track record of improvement with further potential Portfolio Management Goedehoop prime section13 • Mafube delivered on time and on budget kt ROM per annum +54% • Navigation (Khwezela) in ramp-up and is poised to deliver further value creation 1,200 • Closing high cost operations Improvement Initiat
Slide 14: Low cost position underpins cash generation
Low cost position underpins cash generation 2021 Global energy adjusted seaborne thermal FOB total cash cost curve14 $/t 120 Q1 Q2 Q3 Q4 100 YTD average15: US$87/t Khwezela 80 Goedehoop Greenside Group Mafube weighted Zibulo 60 average 40 20 0 Cumulative Production Anglo American Coal South Africa S
Slide 15: On a path to restore strong cash flow generation
On a path to restore strong cash flow generation Generated over $550m of operating cash flows in 2018, continuing the trend from 2017 Operating cash flows16 Benchmark price17 $/t $m Realised export price18 $/t 98 87 YTD average15 80 72 65 558 55 48 56 5 2018 2019 2020 2021 2019 and 2020 impacted by
Slide 16: Thermal coal to remain a highly competitive source for electricity generation
Thermal coal to remain a highly competitive source for electricity generation 2020 2030 Global thermal coal power 9,235 TWh 10,391 TWh generation19 Renewables Other 10% Renewables 20% Oil 2% 2% Other Thermal coal Nuclear Thermal coal 1% 31% 10% 35% Oil Global power 26,141 1% 32,891 generation19 TWh
Slide 17: Demand outlook from our key export destination is positive
Demand outlook from our key export destination is positive Indian demand to grow while South African export supply declines 192 • India is the largest export market for 183 180 South African thermal coal 159 162 – Currently 17% of global seaborne demand and growing • Existing South African thermal c
Slide 18: These positive fundamentals support higher prices
These positive fundamentals support higher prices Wood Mackenzie expecting higher prices for an extended period Market prices, $/t20 120 • Market is gearing towards higher-energy, 110 less emissions-intensive thermal coal • Our high calorific export products are 100 well-suited to this environment 9
Slide 19: Robust and transparent approach to capital allocation
Robust and transparent approach to capital allocation Anglo American Capital Allocation Framework • Balanced and disciplined approach to allocating strong cash flow generation • Track record of selecting and bringing attractive life extension (lifex) options into LOM production • Strict criteria on
Slide 20: Low risk, high return, brownfield life extension options
Low risk, high return, brownfield life extension options Khwezela 100% Progressing to feasibility study phase 5 – 11 LOM +10 years (2037) +4.6Mt production 5 – 19 years Zibulo 73% years Range of asset lives6 2-seam concept in pre-feasibility phase Range of asset lives6 LOM +10 years (2039) +6.8Mt pr
Slide 21: High quality projects offer optionality
High quality projects offer optionality Significant resource endowment 1 Elders Project 2 Dalyshope Project • Underground exploration project • Opencast exploration project • Pre-feasibility and feasibility studies completed in 2015 and • Currently in feasibility study phase 2018/19 respectively • L
Slide 22: Right-sized organisational model
Right-sized organisational model Lean operating structure and established leaders Focused on safety and business improvement Small corporate function • Elimination of fatalities CEO • Deliver maximum operating performance • Maintain our discipline on costs CFO / COO Executive • ‘Buy better and use b
Slide 23: Experienced management team
Experienced management team Executive management team • Accomplished management team July Ndlovu Deon Smith Johan Van Schalkwyk Chief Executive Officer Chief Financial Officer Chief Operating Officer • Decades of experience 30 15 24 • Track record of delivering productivity improvements Leslie Marti
Slide 24: Recap on our value proposition
Recap on our value proposition Our mission is to remain a sustainable and high-quality thermal coal business with an enviable cash cost position poised to deliver attractive returns through the cycle 1 Leading South African thermal coal exporter 2 Integrated rail and port infrastructure Low cash cos
Slide 25: Appendix
Appendix
Slide 26: Leading and promoting black ownership
Leading and promoting black ownership Driver of transformation and creator of new thermal coal businesses to service the economy Sale of New Largo project to New Largo Coal, owned by Seriti Resources and Coalzar, both 2018 majority owned and controlled by HDPs, and the IDC Sale of Eskom-tied mines (
Slide 27: Supplementary data
Supplementary data 2018 2019 2020 Export sales volumes (Mt)22 19.2 19.8 18.2 Export saleable production (Mt) 18.4 17.8 16.5 Benchmark price17 ($/t) 98 72 65 Realised export price18 ($/t) 80 55 48 Realised domestic price ($/t) 24 19 17 FOB cost per saleable tonne2 ($/t) 44 45 38 FOB cost per export s
Slide 28: Footnotes
Footnotes 1. Weighted average calorific value based on total saleable reserves attributable to Anglo American Coal South Africa including from mineral resource deposit operations of Goedehoop and Greenside in kcal/kg, as at 31-Dec-15 and 31-Dec-20 2. FOB cost per saleable tonne, excluding royalties