Aeci Ltd · JSE:AFE
Aeci — Investor Day (October 2014)
160 slides from Aeci's investor day presentation, Oct 28, 2014
Slide 1: Investor Day AECI: Strategy Unpacked
INVESTOR DAY AECI: STRATEGY UNPACKED 28 October 2014
Slide 2: Agenda
AGENDA 1 9:30 Welcome and introduction Mark Dytor AECI’S STRATEGIC GROWTH PILLARS 10:00 Mining solutions: Explosives Schalk Venter 11:15 Mining solutions: Mining chemicals Theunis Botha 12:15 Lunch 13:00 Food additives Dean Murray 13:45 Water solutions Louis du Toit 14:20 Agrochemicals Edwin Ludick
Slide 3: Business Update
1 BUSINESS UPDATE OA=CI
Slide 4: Performance Summary
PERFORMANCE SUMMARY 3 12-month rolling average TRIR of 0,49 ALL WORKERS TRIR 1,0 Maximum tolerable level 0,8 0,6 0,4 0,2 0,0 10 11 12 13 14
Slide 5: Business Environment
BUSINESS ENVIRONMENT 4 SA mining volumes Jan ’09 – Sep ’14 Base: 2010 = 100 Source: Stats SA y-o-y = -10,1%
Slide 6: Business Environment Continued
BUSINESS ENVIRONMENT CONTINUED 5 Mining › SA ◦ Strikes – R300m+ impact (Jan. – Aug.), mainly in AEL and Senmin › Rest of Africa ◦ Mining activity in Central Africa robust ◦ Gold mining volumes in West Africa under pressure – declining gold price › Indonesia ◦ Low thermal coal prices – closure of sma
Slide 7: Commodity Prices
COMMODITY PRICES 6 Historical price performance – platinum and gold Source: Bloomberg
Slide 8: Commodity Prices (US$/tonne)
COMMODITY PRICES (US$/TONNE) 7 Historical price performance – iron ore and coal Source: Bloomberg
Slide 9: Business Environment
BUSINESS ENVIRONMENT 8 SA manufacturing volumes Jan ’06 – Sep ’14 Base: 2010 = 100 Source: Stats SA y-o-y = -1,2%
Slide 10: Business Environment Continued
BUSINESS ENVIRONMENT CONTINUED 9 SA manufacturing › No change ◦ Sector growth not tracking GDP growth ◦ Energy constraints ◦ Weak demand impacts margin and volume growth ◦ No significant improvement in exports by customers ◦ Customers rationalising and reducing production capacity due to cost compet
Slide 11: Acquisitions and Projects
ACQUISITIONS AND PROJECTS 10 › Clariant water treatment acquisition fully integrated ◦ Profit hurdles are being met › BBRI ANS plant (Indonesia) technically complete and operational › AEL’s Australian entry progressed ◦ MOU signed ◦ Explosives bulk emulsion plant has arrived in Bajool ◦ On track for
Slide 12: Post-Retirement Obligations De-risking Projects
POST-RETIREMENT OBLIGATIONS DE-RISKING PROJECTS 11 › Agreement signed between the Company and the AECI Pension Fund in March ’14 Progress: › Conversion from DB to DC fund offered to all active members – majority have accepted to transfer › Outsourcing of Pension Fund’s obligation in respect of pensi
Slide 13: In Summary
IN SUMMARY 12 › Platinum mines appear to have resumed normal operations › Normalised Group results (explosives and chemicals) in Sept.
Slide 14: Strategic Overview
HC OVE RVI OA=CI good chemistry
Slide 15: Current Group Structure
CURRENT GROUP STRUCTURE 14 Freedom supported by a framework
Slide 16: Freedom Supported by a Framework
“FREEDOM SUPPORTED BY A FRAMEWORK” 15 “Freedom supported by a framework” at the heart of the corporate strategy
Slide 17: Strategy Summarised
STRATEGY SUMMARISED & WATER SOLUTIONS ImproChem Water & Energy Solutions Ace] ALU AGROCHEMICALS PORTFOLIO OF SPECIALTY CHEMICALS BUSINESSES OA=CI good chemistry
Slide 18: Strategy
STRATEGY 17 SA-based explosives and specialty chemicals company with regional and international businesses in Africa and SE Asia. Other markets of interest are Australia and Latam Strategic focus › Mining solutions (explosives and chemicals)
Slide 19: A Vision for AECI
A VISION FOR AECI 18 › AECI Mining Solutions ◦ Mining Explosives ◦ Mining Chemicals
Slide 20: Mining Solutions: International Footprint
MINING SOLUTIONS: INTERNATIONAL FOOTPRINT 19
Slide 21: Growth Pillars: Water, Agrochemicals, Food Additives in Africa
GROWTH PILLARS: WATER, AGROCHEMICALS, FOOD ADDITIVES IN AFRICA 20 SA-based explosives and specialty chemicals company with regional and international businesses in Africa and SE Asia. Other markets of interest are Australia and Latam Strategic focus › Mining solutions (explosives and chemicals) › Wa
Slide 22: African Footprint
AFRICAN FOOTPRINT 21 Water solutions, agrochemicals, food additives
Slide 23: Growth Pillar: Specialty Chemicals in SA
GROWTH PILLAR: SPECIALTY CHEMICALS IN SA 22 SA-based explosives and specialty chemicals company with regional and international businesses in Africa and SE Asia. Other markets of interest are Australia and Latam Strategic focus › Mining solutions (explosives and chemicals) › Water solutions, agroche
Slide 24: Balance of Specialty Chemicals Cluster
BALANCE OF SPECIALTY CHEMICALS CLUSTER 23 3 JVs Akulu Marchon Specialty Minerals SA Chemfit Experse Surfactant Technologies Chemical Initiatives ChemSystems Resinkem Crest Chemicals SANS Technical Fibers Industrial Oleochemical Products
Slide 25: Growth by Acquisition
GROWTH BY ACQUISITION 24 SA-based explosives and specialty chemicals company with regional and international businesses in Africa and SE Asia. Other markets of interest are Australia and Latam Strategic focus › Mining solutions (explosives and chemicals) › Water solutions, agrochemicals and food add
Slide 26: 1H14 Revenue Split
1H14 REVENUE SPLIT IN THIS CONTEXT 25 众众众䢢 43% Explosives 众众众 14% Mining chemicals 众众众䢢 11% Agriculture 众众众䢢 24% Manufacturing 众众众䢢 8% Property
Slide 27: Group Mining Revenue
GROUP MINING REVENUE 26 Revenue by mineral mined 1H14 众众众䢢 20% Coal 众众众䢢 17% Copper, cobalt, chrome, nickel 众众众䢢 16% Gold 众众众䢢 15% Platinum 众众众䢢 8% Quarry, construction, civil 众众众䢢 6% Diamond 众众众䢢 5% Iron ore 众众众䢢 2% Uranium 众众众䢢 1% Phosphate 众众众䢢 10% Other
Slide 28: Specialty Chemicals
SPECIALTY CHEMICALS 27 Revenue by market sector 1H14 众众众䢢 29% Mining 众众众䢢 21% Agriculture 1 2 众众众䢢 8% Food and beverage 1 众众众䢢 6% Oil and refining 众众众䢢 6% Chemical industry 1 1 1 众众众䢢 5% Textiles and leather 众众众䢢 5% Detergents 众众众䢢 4% Toiletries, cosmetics 䢢 1% Steel and metals and pharmaceuticals 䢢
Slide 29: AEL Mining Services
OA=CIr Mining Services — good chemistry
Slide 30: About AEL Mining Services
ABOUT AEL MINING SERVICES 29 Developer, producer and supplier of commercial explosives, initiating systems and blasting services for mining, quarrying and construction markets Our Purpose Our Brand Essence AEL unearths wealth by providing Meticulous care the mining industry with carefully controlled
Slide 31: About AEL Mining Services Continued
ABOUT AEL MINING SERVICES CONTINUED 30 Leading international explosives company Over 80 Market share Revenue of One of top Net assets operations in leadership US$730m 4 globally of US$360m 23 countries in Africa in ’13 R&D 3 823 people spend 3% internationally of revenue
Slide 32: Mining Methods
MINING METHODS 31 Excellent innovation and results in opencast, quarrying, massive mining, coal mining, board and pillar, narrow reef, tunnelling, other specialised mining techniques
Slide 33: Capability
CAPABILITY 32 Platinum Gold Coal Copper Customised blasting solutions for a wide variety of mining sectors Diamond Iron ore Zinc Aluminium Bornite Hematite Cobalt Malachite
Slide 34: Global Mineral Production Value
GLOBAL MINERAL PRODUCTION VALUE 33 Mineral production value of top mining countries (US$bn, ’10) Australia 72 China 69 Brazil 47 Chile 31 Russia 29 South Africa 27 India 26 USA 23 Peru 19 Canada 14 Indonesia 12 Ukraine 9 Mexico 8 Kazakhstan 7 Source: Global Industry Analysts, The Beijing Axis Analys
Slide 35: Mining Industry Perspective
MINING INDUSTRY PERSPECTIVE 34 › Growth in commodities in the long term GROWTH IN GLOBAL COMMODITY DEMANDS: ’10 – ’30 (%) › Mining houses drive for cost control › Uncertainty in demand patterns Nickel › Quality > Quantity in project pipeline Copper › M&A activity – already in gold sector Alumium › I
Slide 36: Global Explosives Industry
GLOBAL EXPLOSIVES INDUSTRY 35 Global explosives industry produced around 16m tonnes output worth almost US$17bn in ’12. Asia and USA/Canada the largest markets for explosives, collectively accounting for 73% of global volumes. ’14F ’18F Sales revenue US$18bn Sales revenue US$22bn 1 1 (Mn metric tonn
Slide 37: Global Market Share
GLOBAL MARKET SHARE 36 Orica and Dyno Nobel the largest players, collectively accounting for 40% of global market share. Their market share largely unchanged since ’05. GLOBAL MARKET SHARE BREAKDOWN OF LEADING PLAYERS IN THE EXPLOSIVES INDUSTRY ’05 ’12 众众众䢢 Orica Mining Services 众众众䢢 Incitec Pivot/
Slide 38: International Positioning
INTERNATIONAL POSITIONING 37 Orica Dynoo Austin Aust in m Maxam AEL L Exsa xsa a B Britanite O Orica D Dyno Ena E Enaex
Slide 39: International Expansion Strategy
INTERNATIONAL EXPANSION STRATEGY 38 AEL’s international strategy: leverage leading position and brand to expand in selected international markets › Follow a customer › Organic growth › Acquisitions ` Leverage strengths of: › Safety › Value proposition › Innovation capability › Global sourcing › R&D
Slide 40: Regional Revenue Split
REGIONAL REVENUE SPLIT 39 Rest of Africa South Africa International Revenue ’12 R2,3bn Revenue ’12 R3,2bn Revenue ’12 R0,8bn Revenue ’13 R2,9bn Revenue ’13 R3,6bn Revenue ’13 R0,9bn Revenue ’14 Revenue ’14 Revenue ’14 (forecast growth) 4,2% (forecast growth) (4,4%) (forecast growth) (14,6%) Revenue
Slide 41: AEL Core Capabilities
AEL CORE CAPABILITIES 40 Product and Advanced rock Nitrates Sustainable application on ground assets development R&D services Explosives Blast expertise Global Partnership products and mining logistics capabilities capability optimisation Understanding Initiation Remote Surface the future of systems
Slide 42: Value-Add Model: Forward Integration
VALUE-ADD MODEL: FORWARD INTEGRATION 41
Slide 43: Integrated Blasting Services
INTEGRATED BLASTING SERVICES 42
Slide 44: AEL Strategic Journey '12 – '14
AEL STRATEGIC JOURNEY ’12 – ’14 43 Strategy IS profitability AN/Explosives Expansion and growth Business optimisation Stabilise ISAP 3 Modderfontein Africa 3 Enhancement of Low cost, reliable 3 Indonesia 3 profit through: Powder development 3 RSA 3 BBRI Revenue enhancement Close Dets Campus 3 Techni
Slide 45: AEL Strategic Journey from '15
AEL STRATEGIC JOURNEY FROM ’15 44 Strategy New product introduction AN/Explosives Expansion and growth Value proposition Continued R&D Modderfontein Africa Enhancement of profit investment Low cost, reliable Indonesia and customer loyalty SA through: Product management BBRI RONA delivery New territo
Slide 46: South African Growth
SOUTH AFRICAN GROWTH 45
Slide 47: SA Iron Ore Explosives Market Share – '14 and Beyond
SA IRON ORE EXPLOSIVES MARKET SHARE – ’14 AND BEYOND 46 AEL secured a 5-year supply contract › AEL iron ore market share = 35% TOTAL EXPLOSIVES VOLUMES (Kt/a) 90 79 80 76 69 70 60 60 50 45 40 30 25 20 10 0 14 15 16 17 18 19
Slide 48: SA Coal Market (%)
SA COAL MARKET (%) 47 Corporate structure changes in the coal market AngloAmerican AngloAmerican 3 Thermal Coal 3 Thermal Coal 11 22 Exxaro 22 Exxaro 5 25 BHP Billiton BHP Billiton 9 Sasol Sasol 20 Xstrata 20 Glencore 14 14 Optimum Other 16 Shanduka 16 Other
Slide 49: Impact
IMPACT 48 Coal volume growth – new contracts › AEL market share gain from 31% to 47% in ’15 TOTAL EXPLOSIVES VOLUMES (Kt/a) 200 180 180 182 180 174 164 160 140 120 98 100 80 60 40 20 0 14 15 16 17 18 19
Slide 50: Revenue Split
REVENUE SPLIT 49 › Portfolio reflects AEL’s growth beyond Outside SA (predominantly surface) SA and the narrow reef underground SA Surface SA Underground gold and platinum mining sectors, in line with strategy › AEL needs to diversify further into 100% 32 37 41 43 47 49 51 52 50 other territories to
Slide 51: Rest of Africa Market Size
REST OF AFRICA MARKET SIZE 50 AEL ’13 revenue: US$m 58 17 69 1 100 18 29 Source: AEL Internal Analysis ’13 Exchange 10:1 (ZAR:US$)
Slide 52: Rest of Africa: Estimated Market Growth to '17
REST OF AFRICA: ESTIMATED MARKET GROWTH TO ’17 51 AEL ’13 revenue: US$m 111 Estimated market growth: % 58 157 17 14 69 50 4 505 1 100 93 9 18 29
Slide 53: International
INTERNATIONAL 52 BBRI Plant in Indonesia
Slide 54: Indonesia
INDONESIA 53 › All contracts awarded in ’10 have been extended › 9 emulsion manufacturing plants producing 100ktpa+ of bulk emulsion › 19 mobile manufacturing units › 2 underground units › Support infrastructure for 9 mine sites › More than 350 employees › Technical centre of excellence in Sangatta
Slide 55: BBRI Investment – Update
BBRI INVESTMENT – UPDATE 54 › US$23m investment for 42,6% equity share in BBRI in three phases, completed in Q3 ’14 › AEL safety procedures implemented with no safety incidents to date › Production commenced in March ’14 › Peak instantaneous run-rate of 87% of capacity already achieved › Plant focus
Slide 56: BBRI Investment – Supply Chain Integration
BBRI INVESTMENT – SUPPLY CHAIN INTEGRATION 55 › 12 000t of ANS delivered to KPC › ANS successfully converted to explosives using AEL’s standard on-site equipment › Blasts 100% successful at KPC, blasting more than 45 million BCMs
Slide 57: AEL Indonesian Growth/Expansion Plan
AEL INDONESIAN GROWTH/EXPANSION PLAN 56 250 200 150 Kt/a bulk explosives Copper and gold Gold 100 Coal 50 0 2013 2014 2015 2016 2017 2018 Source: AEL internal analysis
Slide 58: Australian Mineral Production
AUSTRALIAN MINERAL PRODUCTION 57 Australia is one of the world’s largest producers of ferrous and non-ferrous metals. Bauxite, manganese, iron ore and gold among the prominent minerals. Source: Global Industry Analysts, The Beijing Axis Analysis
Slide 59: Ammonia and a Future Scenario
AMMONIA AND A FUTURE SCENARIO 58 Summary of ammonium nitrate (AN) and ammonia (NH3) sector analysis › NH3 and IGAN markets will be long, resulting in lower prices – will favour AN sourcing over production › NH3 and AN prices will be under further pressure by increasing adoption of shale gas in the U
Slide 60: Australian Market Make-up
AUSTRALIAN MARKET MAKE-UP 59 Number of mines Iron Ore Predominantly Coal Bajool, Port Elmer Gold and 1 Iron Ore Predominantly Coal Source: AEL internal analysis
Slide 61: Australian Market Size
AUSTRALIAN MARKET SIZE 60 Australia’s explosives market was 2,5m tonnes in ’12, representing 4% CAGR for ’04 –’12. Forecast to reach 3,4m tonnes by ’18. Source: Global Industry Analysts, The Beijing Axis Analysis
Slide 62: Australia Step-Out Strategy
AUSTRALIA STEP-OUT STRATEGY 61 › Indonesian hub will underpin expansion › Existing supply chain for Indonesia expanded to Australia › Strong relationships with existing Australian customers › AEL has attracted good Australian mining and explosives expertise with strong experience in the region › AEL
Slide 63: Bajool Plant, Equipment and Offices – Manufacturing
BAJOOL PLANT, EQUIPMENT AND OFFICES – MANUFACTURING 62
Slide 64: Bajool Licences and Legal Compliance
BAJOOL LICENCES AND LEGAL COMPLIANCE 63 › Operations ◦ Department of Natural Resources and Mines in QLD is the main regulator » Licences to manufacture, store, import, transport, sell, use etc. » Products must be approved ◊ UN Test Series 8 a, b, c and d ◊ Will be entered on the list of “Approved Ex
Slide 65: Bajool Government Explosives Reserve
BAJOOL GOVERNMENT EXPLOSIVES RESERVE 64
Slide 66: Bajool Government Explosives Reserve Continued
BAJOOL GOVERNMENT EXPLOSIVES RESERVE CONTINUED 65
Slide 67: AEL Bajool Plant Layout
AEL BAJOOL PLANT LAYOUT 66
Slide 68: Emulsion Plant Being Unloaded at the Bajool Site
EMULSION PLANT BEING UNLOADED AT THE BAJOOL SITE 67
Slide 69: Bajool Earthworks Update
BA OOLEARTHWORKS UPDATE 68 OA=CI good chemistry
Slide 70: Australian Explosives Volume Growth Potential
AUSTRALIAN EXPLOSIVES VOLUME GROWTH POTENTIAL 69 TOTAL VOLUME (Kt/a) 300 245 250 200 170 160 150 100 77 50 0 15 16 17 18 Source: AEL internal analysis
Slide 71: Mining Chemicals Senmin
4 MIN NGCHEMICALS SE\MIN {Aga OA=CI
Slide 72: Senmin, Sasolburg
SENMIN, SASOLBURG 71
Slide 73: Supply Specialty Chemicals to Mineral Concentrators
SUPPLY SPECIALTY CHEMICALS TO MINERAL CONCENTRATORS 72 Mainly for: Flotation Flocculation
Slide 74: Global Market for Specialty Chemicals
GLOBAL MARKET FOR SPECIALTY CHEMICALS 73 GLOBAL VALUE (US$ MILLION) GLOBAL VOLUME (TONNES ’000) ’13 ’13 Value: US$2,6bn Volume: 890 000t 470 Collectors 195 Collectors Frothers Frothers 1303 196 438 Flocculants Flocculants 100 Solvent extractants Solvent extractants 499 Grinding aids 138 Grinding aid
Slide 75: Global Market Growth (US$m)
GLOBAL MARKET GROWTH (US$M) 74 Product ’08 ’13 % Flocculants 473 499 5 Collectors 359 470 31 Frothers 183 196 7 Solvent extractants 146 176 20 Grinding aids 961 1 303 73 Total 2 122 2 643 25 Source: Specialty Chemicals Update, IHS Chemical (2013)
Slide 76: Regional Market for Specialty Chemicals – '13
REGIONAL MARKET FOR SPECIALTY CHEMICALS – ’13 ('000 TONNES) 75 112 61 52 339 90 110 84 59 › C Collectors, ll frothers, f h flocculants, fl l depressants, d solvent l extractants, grinding d aids d › Senmin = 8% – 10% of global value
Slide 77: Senmin's Business Model
SENMIN’S BUSINESS MODEL 76 › Value added model ◦ Total chemical reagent package ◦ High technical service ◦ Capital investment at customer sites › Supply chain ◦ Strategic raw material supply and production capability › Technology ◦ Acquired and in-house development › Market ◦ Target: further growth
Slide 78: Senmin Manufacturing Capacity
SENMIN MANUFACTURING CAPACITY 77 Nameplate Utilisation Plant capacity (t) ’13 (%) Feedstock production Carbon disulphide 20 000 70 Acrylamide 36 500 55 Product line production Xanthate (formulations) 70 000 80 Speciality collectors 12 000 50 Natural/modified polymers 21 600 40 PAM 20 000 60
Slide 79: Business Model and Supply Chain
BUSINESS MODEL AND SUPPLY CHAIN 78
Slide 80: Strength in African Markets
STRENGTH IN AFRICAN MARKETS 79 › Known brand ◦ Operated in SA for 40 years › Market knowledge ◦ Platinum and base metals ◦ Copper ◦ Nickel ◦ Diamonds ◦ Uranium › African producer based in Sasolburg
Slide 81: Products
REAGENT SUITE, - MT) pay , a é Va ‘Vavrange of solid and liquid inetal sulphide collectors SENKOL (collectors) Dea ay Me KANTHATES (collectors) A range-of formulated collectors i OA=CI good chemistry
Slide 82: Products Continued
a ASC aluble frothers such as carboxymethylcellulose, Si ian = || gum,and other natural polymers ae Seige a for gangue depression —_~ Fi as . — =4 c M ‘ € SENMIN any - : 7 a ~ vast 4 ; * . =cr 0. oe + oazcr =“ a _ OA=CI good chemistry
Slide 83: Products Continued
PRODUCTS cont NUED REAGENT SUITE SENFLOC (flocculants) A range of polyelectrolyte “g x flocculants and coagulants for Rah solids thickening, \\ water recovery, clarity and theology modification « SENMIN naecr Ye OA=CI good chemistry
Slide 84: Cost-Effective and for African Market
COST-EFFECTIVE AND FOR AFRICAN MARKET 83 › Multiple manufacturing lines › Competitive overhead costs › Single safety, quality and environmental centre › Major feedstocks in close proximity
Slide 85: Full Service Model
FULL SERVICE MODEL 84 › Reagents applied at customer sites › Agreed KPIs and reporting › Quality control, delivery, mixing, ordering and inventory reconciliation, dose optimisation › Audits and safety › Improvement initiatives
Slide 86: Technology and R&D Capability and Capacity
TECHNOLOGY AND R&D CAPABILITY AND CAPACITY 85 World-class technical team › Biotechnology › Polymer chemistry › Surface chemistry › Rheology › Metallurgy › Engineering
Slide 87: R&D
R&D 86 › Four main challenges for mining industry ◦ Availability of fresh water ◦ Energy costs and availability ◦ Environmental impact ◦ Diminishing grades and increased complexity of ores
Slide 88: R&D New Molecules
R&D 87 New molecules › Complex ores › Frothers › Collector formulation › Polymers › Biotechnology
Slide 89: New Technical and R&D Centre
NEW TECHNICAL AND R&D CENTRE 88
Slide 90: Completion Expected May '15
COMPLETION EXPECTED MAY ’15 89
Slide 91: Strategy
STRATEGY 90 Current Medium term Long term › Following AEL
Slide 92: Anticipated Mining Chemicals Growth in Africa
ANTICIPATED MINING CHEMICALS GROWTH IN AFRICA 91 Product (’000 tonnes) ’13 ’18 % 1. Flocculants 77 98 27 2. Collectors 87 103 18 3. Frothers 18 21 17 4. Natural/modified polymers 45 53 18 Total 227 275 21
Slide 93: Mining Projects in Africa
MINING PROJECTS IN AFRICA 92 Source: SNL Database, 2014
Slide 94: African Projects by Country and Mineral Type
AFRICAN PROJECTS BY COUNTRY AND MINERAL TYPE 93 Country Preproduction Feasibility Exploration Major minerals Angola 2 4 5 Diamonds, phosphate, iron ore Botswana 2 6 27 Copper, gold, coal, diamonds Burkina Faso 1 7 14 Gold DRC 6 12 10 Copper, cobalt, diamonds, iron ore Ghana 1 3 18 Gold, tantalum, di
Slide 95: Strategy
STRATEGY 94 Latam market: US$154m Australian market: US$152m ’13 LATAM (US$m) ’13 AUSTRALIA (US$m) 25 60 Collectors Collectors 61 Frothers Frothers Flocculants 89 39 Flocculants 33 Target market share 20% – 25% by ’16 Following AEL
Slide 96: Senmin Market Share: Targeted Growth by '18
SENMIN MARKET SHARE: TARGETED GROWTH BY ’18 95 › Targeting 60% – 70% in Africa › Targeting 12% – 15% of global value
Slide 97: AECI Foods Strategy
5 AECI FOODS STRATEGY
Slide 98: AECI Foods Strategy
AECI FOODS STRATEGY 97
Slide 99: Facts and Figures
FACTS AND FIGURES 98 › F&B = 5,8% of SA GDP in ’13 (Stats SA) › BMI projections ◦ Private household F&B consumption growth = average 3,2% real ’14 – ’22 ◦ Food consumption ’13 – ’17 expected to grow by 40% in rand terms to R569bn › Historical real growth rate of 4%/year in food additives › Growth an
Slide 100: SA Food and Beverage Market Overview
SA FOOD AND BEVERAGE MARKET OVERVIEW 99
Slide 101: Food Additives: Markets Continued
FOOD ADDITIVES: MARKETS CONTINUED 100 Flavours › Major share of value potential › Enhance and create long-lasting flavours – make food attractive and exciting › Focus: sweet and savoury markets › Serviced mainly by foreign multinationals ◦ But growth in local companies with own IP in past 10 years ›
Slide 102: Food Additives: Markets Continued
FOOD ADDITIVES: MARKETS CONTINUED 101 Processed ingredients › Lake Foods does not operate here › Market = R65bn/year (Frost & Sullivan) › Very different market dynamics ◦ Greater external influence – grown/natural raw materials › Production of pastes and powders: milk, hydrogenated vegetable powder,
Slide 103: AECI Food Strategy
AECI FOOD STRATEGY 102 › Develop and execute a sustainable growth strategy › Lake Foods is the lead Group company in the food additives strategy ◦ Increase revenue from about R400m in ’13 to R1bn by full-year ’17 › Acquisitions and products development in the existing business key for growth › Quali
Slide 104: Lake Foods: Vision and Strategy
LAKE FOODS: VISION AND STRATEGY 103 Vision › To become a major supplier of food ingredients and services to the industrial, retail and food service markets, initially in SA and then to expand into the export market Strategy › To focus on expanding the existing product range within the company and ag
Slide 105: Lake Foods
LAKE FOODS 104 › Represents international manufacturers and suppliers of specialty ingredients and commodities for the diary, beverage, wine, meat, poultry, bakery, health, nutrition industries ◦ Cobito: functional food additives for processed poultry ◦ Afoodable: liquid marinades and sauces for the
Slide 106: Lake Foods: Value Proposition
LAKE FOODS: VALUE PROPOSITION 105 › Qualified and highly skilled sales and marketing staff ◦ Application laboratory and technical specialists – formulation development and pilot plant application trials ◦ Technical expertise for implementation at customer’s manufacturing facility ◦ Development of cu
Slide 107: Lake Food Solutions
LAKE FOOD SOLUTIONS 106 Application Meat pilot plant: Bowl cutter Mincer and filler Brine injector Clipper for sausage casings Smoker and cooker Bakery pilot plant: Hobart X2 Kelvinator gas stove and oven Prover and oven Diary: Emulsion application 100ℓ Evaporation 20ℓ/hr Soft cheese 100ℓ Soft serve
Slide 108: Lake Foods: Market Focus
DAIRY PROCESSED MEAT AND SEAFOOD BEVERAGES INGREDIENTS: FRUIT PREPS CONFECTIONARY SOUPS AND SAUCES BAKERY PARTNERS Filtrafio| Dica Lows, wane €= Budenheim COCOA OA=CI good chemistry
Slide 109: Total Market Split
TOTAL MARKET SPLIT 108 众众众䢢 25% Meat 众众众䢢 23% Dairy 众众众䢢 21% Poultry 众众众䢢 10% Health 众众众䢢 7% Bakery 众众众䢢 7% Beverage 众众众䢢 5% Glucose 众众众䢢 5% Edible oil
Slide 110: Lake Foods: Business Model
LAKE FOODS: BUSINESS MODEL 109 › Current products and services for industrial food market (B2B) › Cobito and Afoodable acquisitions added manufacturing dimension ◦ Small part of retail food market segment – supply to dealer-owned brands › Future: products and services for retail food market and food
Slide 111: Development of the AECI Food Business
DEVELOPMENT OF THE AECI FOOD BUSINESS 110
Slide 112: AECI Food Strategy: African Growth
AECI FOOD STRATEGY: AFRICAN GROWTH 111
Slide 113: Conclusion
CONCLUSION 112 › Outlook for F&B very optimistic › Lake Foods structure ◦ Facilitates strong operational leg to manage key activities ◦ Ensures the company complies with legislative standards and practices › Acquisitions key for delivery of this growth strategy
Slide 114: AECI Water Solutions Strategy
6 AECI WATER SOLUTIONS STRATEGY WATER, OIL, ENERGY AND GAS
Slide 115: AECI Water Solutions Strategy (incl. Oil and Gas)
AECI WATER SOLUTIONS STRATEGY (INCL. OIL AND GAS) 114
Slide 116: ImproChem's History
I MPROCHEM'S H STORY anikem > ONDEO 1968 2001 2012 4+ t+ yy t+ 1961 1997 2003 2014 Alexander O 100% Martin LAN ; ver ee AECI “— Clariant orporation OWNED E NALCO-CHEMSERVE OA=CI good chemistry
Slide 117: Water and Process Technology Market
WATER AND PROCESS TECHNOLOGY MARKET 116 Sub-Sahara = R15bn
Slide 118: ImproChem: Sales by Industry Segment – '13
IMPROCHEM: SALES BY INDUSTRY SEGMENT – ’13 117 众众众䢢 34% Oil and refining 众众众䢢 22% Mining 众众众䢢 13% Food and beverage 众众众䢢 9% Chemical 众众众䢢 0% Engineering 众众众䢢 2% Potable 众众众䢢 5% Steel and metals 众众众䢢 14% Other
Slide 119: Water Treatment Chemicals
WATER TREATMENT CHEMICALS 118 Sub-Saharan African market overview (% of est. US$730m) 众众众䢢 24% Corrosion inhibitors 众众众䢢 10% Scale control 众众众䢢 34% Coagulants and flocculants 众众众䢢 11% Biocides and disinfectants 众众众䢢 5% Chelating agents 众众众䢢 5% Anti-foams 众众众䢢 3% pH adjusters and stabilisers 众众众䢢 8%
Slide 120: Water Treatment Segmentation
WATER TREATMENT SEGMENTATION 119
Slide 121: African Water Treatment Key Markets – Estimated
AFRICAN WATER TREATMENT KEY MARKETS – ESTIMATED 120 3,6% ’14 revenue - public 26 water treatment 4,2% 60 135 (US$m) 15 22 ’14 industrial water 28 8 treatment revenue 36 3,9% (US$m) 2,2% % Real market growth 200 4,5% 71 110 40 3,7% 17 5 4,5% 206 84 4,4%
Slide 122: Oilfield and Refining Segmentation Structure
OILFIELD AND REFINING SEGMENTATION STRUCTURE 121
Slide 123: African Market Overview: Oil and Gas
AFRICAN MARKET OVERVIEW: OIL AND GAS 122
Slide 124: African Oil and Gas Reserves
AFRICAN OIL AND GAS RESERVES 123 159 9 ’14 gas reserves – tcf 77 12 ’14 oil reserves – bnbls 52 4 Market ratio for chemical demand 100 000 bls/d oil well = US$10m/year 200 000 scf /d gas well = US$200k/year 40 3 3 200 2 1,6 0.5 3 10 13 4 77 Libya oil reserves 0. 0.5 20mbls
Slide 125: ImproChem's Products and Services
IMPROCHEM’S PRODUCTS AND SERVICES 124
Slide 126: Products and Services: Comprehensive Solutions
PRODUCTS AND SERVICES: COMPREHENSIVE SOLUTIONS 125 Measurement Desalination Municipal Utilities solutions Process Industrial Ingredient chemicals and waste water water separations
Slide 127: Products and Services Continued
PRODUCTS AND SERVICES CONTINUED 126
Slide 128: Capabilities
CAPABILITIES 127 o Enter Plant Name Sapref, Durban Enter Ave Return Temp 34.3 C o Enter System Name Main Utilities Cooling Tower Enter Ave Sump Temp 27.7 C o Enter Customer Name Enter Evaporation Constant 0.0019 C Enter Date of Study 25 April 2003 Enter Recirculation Rate 8370 m 3 /h Enter Ave Relat
Slide 129: Technologies
TECHVOLOGES 28 CHEMICAL AND MONITORING SOLUTIONS ENGINEERED SYSTEMS WATER CHEMICAL INDUSTRIAL SERVICES PROCESS PROCESS uE/uae wn: ‘ : eS ta ANALYTICAL AND MONITORING SOLUTIONS OA=CI good chemistry
Slide 130: Technology Partners
TECHNOLOGY PARTNERS 129 › Liquid/solid separation, pollution control, sugar processing › Refinery and chemical process industries treatment technologies › Oil and gas exploration and upstream technology › Fuel additives and performance chemicals › Specialised cooling products for heavy duty machiner
Slide 131: Application Focus in Africa
APPLICATION FOCUS IN AFRICA 130
Slide 132: ImproChem Going Forward
IMPROCHEM GOING FORWARD 131 › Targets ◦ 12% year-on-year revenue growth over next 3 years ◦ Leading water treatment and process chemical supplier in Africa › Market position ◦ Significant market share in SA water treatment, petrochemicals process industries and mining water treatment › Strategy ◦ Im
Slide 133: Opportunities
OPPORTUNITIES 132 › Investigate unqualified markets ◦ Fracking – SA ◦ Oil and gas exploration – East African coast ◦ Oil – Madagascar and Sudan ◦ Reverse osmosis treatment strategy ◦ Engineered services projects ◦ North African market
Slide 134: ImproChem's Revenue Growth
IMPROCHEM’S REVENUE GROWTH 133 Normalised for Clariant acquisition Clariant GE 1 600 IC 1 400 1 200 1 000 800 600 400 200 0 11 10 12 13 Claraint
Slide 135: ImproChem: Africa Footprint Outside SA and Revenue Growth
IMPROCHEM: AFRICA FOOTPRINT OUTSIDE SA AND REVENUE GROWTH 134 Revenue before GE acquisition: R60m/year Madagascar Mauritius IMPROCHEM Reunion
Slide 136: ImproChem: Africa Footprint Outside SA and Revenue Growth
IMPROCHEM: AFRICA FOOTPRINT OUTSIDE SA AND REVENUE GROWTH 135 Revenue after GE acquisition: R180m/year Acquisition Revenue GE W&PTech SSA R140m Tanzania Malawi Madagascar GE Mauritius IMPROCHEM Reunion
Slide 137: ImproChem: Africa Footprint Outside SA and Revenue Growth
IMPROCHEM: AFRICA FOOTPRINT OUTSIDE SA AND REVENUE GROWTH 136 After Clariant acquisition: R300m/a Acquisition Revenue Clariant BLWT Blendtech JV R600m Madagascar CLARIANT Mauritius IC + GE IMPROCHEM DISTRIBUTORS Reunion
Slide 138: Conclusion
CONCLUSION 137 3 › Clariant Water Treatment in Africa › GE Water & Process Tech (SSA) 3 › GE North Africa › Mauritian JV – 100% ownership 3 › African business partner in oil and gas › Water engineering partner or acquisition ◦ Expertise in potable, waste and engineering water treatment ◦ Possible in
Slide 139: Conclusion Continued
CONCLUSION CONTINUED 138 › Water is a key resource for economic growth › Water scarcity is a global concern › NGO investment – access to water for all in Africa › Extensive oil and gas exploration and production ◦ Strong technology via GE ◦ Africa will need final fuel additives › ImproChem ideally p
Slide 140: AECI Agrochemicals Strategy
7 AECI AGROCHEMICALS STRATEGY
Slide 141: Anchored in Nulandis
ANCHORED IN NULANDIS 140 Leading agrochemical solution provider of choice Supplier of proprietary and Owner of a substantial national third-party products footprint for agrochemical distribution Backed by production, R&D, technical and logistical capabilities
Slide 142: Product and Service Offering
PRODUCT AND SERVICE OFFERING 141 A fully integrated solution across the supply chain Product Product Technical Sales Principals development registrations advisory and support Longstanding 8 R&D 96 plant health 7 agronomists 28 sales support relationships 10 field officers 162 plant 7 technical 175 s
Slide 143: Value Proposition
VALUEPROPOSI TION 142 CUSTOMERS/ FARMERS “tl NULANDIS ~ SUPPLIERS/ AGENTS/ PRINCIPALS DISTRIBUTORS OA=CI good chemistry
Slide 144: Current African Agrochemicals Market: R15bn – R20bn
CURRENT AFRICAN AGROCHEMICALS MARKET: R15BN – R20BN 143 众众众䢢 33% South Africa 众众众䢢 10% Ghana 众众众䢢 10% Morocco 众众众䢢 8% Ivory Coast 众众众䢢 8% Kenya 众众众䢢 8% Egypt 众众众䢢 5% Nigeria 众众众䢢 4% Cameroon 众众众䢢 4% Tunisia 众众众䢢 4% Algeria 众众众䢢 3% Zambia 众众众䢢 2% Malawi 众众众䢢 1% Zimbabwe Source: Nulandis/Frost & Sulli
Slide 145: SA Agrochemicals Market
SA AGROCHEMICALS MARKET 144 PLANT HEALTH (%) PLANT PROTECTION (%) R12bn R5bn 5 2 Herbicides 15 21 32 Insecticides Soil applied Fungicides 10 Fertigation Mating disruption Foliar and biostimulant 5 Adjuvants Nematacides 74 20 16 Growth regulators Source: Nulandis/Croplife SA
Slide 146: Agrochemical Potential in Africa
AGROCHEMICAL POTENTIAL IN AFRICA 145 Indicator Kenya Zambia Ghana Nigeria Tanzania SA Population (million) 44 15 26 175 49 53 GDP ’13 (US$bn) 44,3 27,0 47,2 515,8 31,6 351,0 GDP growth ’14 – ’17 (%) 5,7 7,1 6,9 6,5 7,1 3,8 GDP/capita (US$) 1 000 1 800 1 815 2 947 645 6 623 Agriculture (US$bn) 13,0 3
Slide 147: Strategic Platform
STRATEG C PLATFORM 146 BACKWARD INTEGRATED/UPSTREAM STRATEGIC THRUST KEY MARKET SEGMENTS FORWARD INTEGRATED/DOWNSTREAM STRATEGIC THRUST OA=CI good chemistry
Slide 148: Back-Integrated/Upstream Strategic Focus
BACK-INTEGRATED/UPSTREAM STRATEGIC FOCUS 147
Slide 149: Plant Protection Market Share and Access
PLANT PROTECTION MARKET SHARE AND ACCESS 148 Nulandis agents 175/843 Est. No. of market Region agents share Limpopo/ 29 15% Mpumalanga/ Lowveld Boland 22 28% Swartland 11 23% Breerivier 20 36% Eastern 34 30% Free State Western 31 25% Free State Eastern Cape 9 35% KwaZulu-Natal 19 20% Total 175 28% T
Slide 150: Back-Integrated/Upstream Strategic Focus Continued
BACK-INTEGRATED/UPSTREAM STRATEGIC FOCUS CONTINUED 149
Slide 151: Agrochemical Market Attractiveness for AECI
AGROCHEMICAL MARKET ATTRACTIVENESS FOR AECI 150 Underdeveloped market in Africa Growth 40 years Small holder Portfolio Supplier prospects Own R&D, markets diversification collaboration Food scarcity Technical and Spray programmes Emerging Leverage current and increased production with geared for mar
Slide 152: Nulandis: History and Revenue Growth
NULANDIS: HISTORY AND REVENUE GROWTH 151 Indexed 2001 = 100
Slide 153: Revenue Growth Strategy '14 – '17
REVENUE GROWTH STRATEGY ’14 – ’17 152
Slide 154: Nulandis: African Footprint
NULANDIS: AFRICAN FOOTPRINT 153
Slide 155: Plant Protection Sub-Segments Definitions
PLANT PROTECTION SUB-SEGMENTS DEFINITIONS 154 › Herbicides – products containing active ingredients that are taken up by weeds selectively, killing them off. › Insecticides – products containing an active ingredient designed to control selected insects. › Fungicides – products containing an active i
Slide 156: Plant Protection Sub-Segments Definitions Continued
PLANT PROTECTION SUB-SEGMENTS DEFINITIONS CONTINUED 155 › Growth regulators – these are plant hormones, or synthetic chemicals, that are applied to plants to influence their hormonal processes. This is not a GMO practice. › Nematicides – nematodes are tiny worm-like parasites present in the soil. Th
Slide 157: Closing Remarks
OA=CI good chemistry
Slide 158: Progress Report: Deliverables (per February '14)
PROGRESS REPORT: DELIVERABLES (PER FEBRUARY ’14) 157 Good Achieved progress Expand AECI’s geographical footprint in Africa and in Australia and Latam Drive the Group’s holistic approach to its mining solutions strategy Ramp up BBRI AN plant to capacity Maintain focus on improving AEL’s performance t
Slide 159: Investors' Calendar
INVESTORS’ CALENDAR 158 Financial year-end 31 December ’14 ’14 results released and JHB presentation 24 February ’15 CT presentation 25 February ’15
Slide 160: Thank You
THAN YQU A a OA=CI’ YEARS good chemistry of good chemistry