Anglo American Plc · LSE:AAL
Anglo American — Investor Presentation (December 2020)
41 slides from Anglo American's investor presentation, Dec 11, 2020
Slide 1: Investor Update Call
INVESTOR UPDATE CALL 11 December 2020
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: Driving Towards a Safe & Healthy Future
DRIVING TOWARDS A SAFE & HEALTHY FUTURE Safety Health Environment Group TRCFR1,2 Fatalities1 Occupational health – new cases1,3 Significant incidents1,4 5.4 30 209 4.7 4.0 175 159 3.6 15 3.2 111 15 11 2.7 96 101 9 2.2 2.1 6 6 5 39 6 6 4 4 2 14 2 1 1 2013 2014 2015 2016 2017 2018 2019 Q3 YTD 2013 201
Slide 4: Committed to Delivery
COMMITTED TO DELIVERY Effectiveness Efficiency Sustainability >10% 15-20% 7 Performance Free cash flow5 ROCE6 pillars embedded 44
Slide 5: COVID Response
COVID RESPONSE Responsible & holistic approach Reinforcing our contribution to host communities “WeCare” – focused on Socio-economic Lives & Livelihoods contribution Safe & disciplined Jobs & social operations recovery investment Flexibility & re-phasing of Local procurement projects & initiatives &
Slide 6: A Transformed, Robust Business
A TRANSFORMED, ROBUST BUSINESS Mining EBITDA margin7 Cu Eq production8 Portfolio Restructuring ~45-50% 42% ~42% 30% Operating Model & Technical Improvements 2012 2019 2020F9 2023F 66
Slide 7: 2020: A Solid Portfolio Performance
2020: A SOLID PORTFOLIO PERFORMANCE Diamonds Copper PGMs Bulks Recovering demand Production on track Strong mining performance Minas-Rio strong performance Business transformation – Water challenges mitigated ACP back in operation Solid performance at Kumba focus on value delivery Industry supply re
Slide 8: The Numbers
&S AngloAmerican THE NUMBERS Stephen Pearce Real Mining. Real People. Real Difference.
Slide 9: Balanced and Disciplined Approach
BALANCED AND DISCIPLINED APPROACH Cash returns Resilient balance sheet ~$5bn <1.5x Dividends & buybacks since 2017 Bottom of cycle net debt:EBITDA10 Attractive growth Strong margin ~20% ~45-50% Cu Eq production – by 20238 Mining EBITDA margin7 99
Slide 10: 2020 Full Year Guidance
2020 FULL YEAR GUIDANCE Capex11 Inventory build Cu Eq unit cost8,12 ~$4.0bn ~$1.7bn 2% Lower due to Covid & FX PGMs & diamonds 9% lower production driven by Covid Depreciation13 Net interest paid Tax rate13,14 ~$2.7bn ~$0.4bn ~32% Lower due to FX ~$0.8bn in P&L13 30-33% going forward 10 10
Slide 11: High-Returning Growth Options and Business Improvement Drive Near-Term Capex
HIGH-RETURNING GROWTH OPTIONS AND BUSINESS IMPROVEMENT DRIVE NEAR-TERM CAPEX Capex11 ($bn) ~$0.6bn11 carried over from Woodsmith ~0.5 2020 into 2021 & 2022 1.5-2.0 1.5-2.0 Growth 1.5-2.0 Collahuasi ~0.3 desal ~0.3 Woodsmith ~$0.5bn capex in 202111 Lifex ~0.7 ~0.9 ~0.8 ~3.0 Lifex spend in Diamonds, B
Slide 12: Improvement Initiatives on Track for 2022 Delivery
IMPROVEMENT INITIATIVES ON TRACK FOR 2022 DELIVERY Operating Model & P101 Technology & Innovation Project Delivery Copper mine & plant Bulk Ore Sorting Quellaveco (Copper) Minas-Rio Coarse Particle Recovery Marine Namibia (Diamonds) ~$1.5bn15 up to ~$1.0bn15 up to ~$1.5bn15 12 12
Slide 13: Disciplined, Margin Enhancing Growth
DISCIPLINED, MARGIN ENHANCING GROWTH Cu Eq production8 2021 unit costs8,12 ~20-25% ~3% 13 13
Slide 14: Value Added Growth
VALUE ADDED GROWTH Mark Cutifani
Slide 15: Copper: World Class Growth
COPPER: WORLD CLASS GROWTH Quellaveco Collahuasi Targeting ~20% initial capacity expansion Permitting process ongoing Los Bronces Underground project, adding production/life Permitting process ongoing 2021 Capex11 Construction progressing well ~$1.3 to ~$1.6bn (our share ~$0.8 to ~$1.0bn) >9,000 sta
Slide 16: Woodsmith – Major Resource & Unique Asset
WOODSMITH – MAJOR RESOURCE & UNIQUE ASSET Scale, geology and geography drive Tier 1 potential Suited to modern mining methods Q1 on cost curve; low carbon, organic16 product POLY4 demand driven by qualities & global customers 2020 capex on target for ~$0.3bn Positive market feedback for product Stro
Slide 17: A Sustainable Future
A SUSTAINABLE FUTURE Mark Cutifani
Slide 18: Portfolio Positioned for a Sustainable Future
PORTFOLIO POSITIONED FOR A SUSTAINABLE FUTURE Consumer World Electrified World Greener World Cu Eq production8 ~55% ~65% later later cycle cycle Diamonds Copper PGMs Nickel & manganese Crop nutrients Steel-making17 Thermal coal 18 18
Slide 19: High Quality Bulks for a Developing World
HIGH QUALITY BULKS FOR A DEVELOPING WORLD Growth in quality steel-making products Mt18 Exit from SA thermal coal operations expected within 1.5 to 2.5 years 80 ~30 ~30 Increasing steel demand integral ~17 to economic development 17 ~75 ~61 43 Our focus on high quality helps manage carbon emissions 2
Slide 20: De Beers Positioned for Diamonds Recovery
DE BEERS POSITIONED FOR DIAMONDS RECOVERY Demand recovering Pandemic impacting supply Strong fundamentals 2020 YTD Sales ($m)19 Capacity offline De Beers quality assets 600 300 ~30Mct ~50% Sight: 1 2 3 4 5 6 7 8 9 >20% of industry annual production, Mining EBITDA margin7 response to Covid & closures
Slide 21: Environmental Focus Driving PGM Demand
ENVIRONMENTAL FOCUS DRIVING PGM DEMAND PGM price basket20 Tighter emissions standards Euro 7: +15% PGMs loadings by 2026 ~150% China VI: ~500koz PGMs for heavy diesel vehicles Diverse applications Chemicals, glass manufacturing, emerging demand in food storage Alstom, and 5G technology hydrogen trai
Slide 22: Hydrogen Drives Long Term Platinum Demand
HYDROGEN DRIVES LONG TERM PLATINUM DEMAND A clean & potentially abundant fuel… …supporting greener operations. Hydrogen haul truck High energy density Easy transport & storage Clean at point of use Hydrogen haulage reduces emissions ~4-8oz per truck vs ~2oz for diesel Potential green production Full
Slide 23: Active Route to a Greener World
ACTIVE ROUTE TO A GREENER WORLD Carbon neutral operations Technology minimises by 204021 environmental footprint Chile & Brazil 100% renewable by 2021/22, Bulk Ore Sorting installation Hydrogen haulage in development for Copper, PGMs & Nickel 8 sites carbon neutral Coarse Particle Recovery by 203021
Slide 24: Q&A: Our Investment Proposition
Q&A Our investment proposition Competitive Differentiated Sustainable Assets Capabilities Returns “Leading capabilities actively improving a competitive, world-class asset base to drive sustainable, attractive returns” 24 24
Slide 25: Footnotes
FOOTNOTES All metrics in presentation shown on an underlying basis. 1. Recordable incidents. Data relates to subsidiaries and joint operations over which 11. Cash expenditure on property, plant and equipment including related derivatives, Anglo American has management control. Since 2018 data for fa
Slide 26: Appendix
AngloAmerican APPENDIX Real Mining. Real People. Real Difference.
Slide 27: Guidance Summary
GUIDANCE SUMMARY Earnings Capex1 Other Volumes: See slide 28-29 2020 ~$4.0bn Quellaveco copper project Previously: $4.0-4.5bn Unit costs: See slide 30 - Growth ~$1.4bn - 2020 capex: 100% ~$1.3bn; Previously: $1.3-1.5bn 2020 depreciation: ~$2.7bn our share ~$0.8bn - Sustaining ~$2.6bn Previously: 100
Slide 28: Production Outlook
PRODUCTION OUTLOOK Units 2019 2020F 2021F 2022F 2023F (New) Diamonds1 Mct 31 ~26 33-35 30-33 30-33 Previously: 25-27 Previously: 34-36 Previously: 33-35 Copper2 kt 638 640-650 640-680 680-790 890-1,000 Previously: 630-660 Previously: 620-680 Previously: 700-810 Platinum Group Metals3 Moz 4.4 3.6-3.8
Slide 29: Production Outlook – Supplementary Guidance
PRODUCTION OUTLOOK – SUPPLEMENTARY GUIDANCE Units 2019 2020F 2021F 2022F 2023F (New) Chile: 580-640 Chile: 590-650 Copper2 kt 638 640-650 640-680 Previously: 600-660 Previously: 630-660 Previously: 620-680 Peru: 100-150 Peru: 300-350 Pt: 1.9-2.1 Pt: 1.9-2.1 Pt: 1.7-1.8 Previously: 2.0-2.2 Previously
Slide 30: Unit Costs Performance by Business Unit
UNIT COSTS PERFORMANCE BY BUSINESS UNIT De Beers (US$/ct)1 Copper (C1 USc/lb)2 PGMs (US$/PGM oz)3 Kumba (FOB US$/t)4 63 ~60 ~55 126 ~110 ~120 703 ~720 ~700 33 ~32 ~34 2019 2020F 2021F 2019 2020F 2021F 2019 2020F 2021F 2019 2020F 2021F Minas-Rio (FOB US$/t)5 Met Coal (US$/t)6 Thermal Coal SA export (
Slide 31: Attractive Greenfield and Brownfield Options
ATTRACTIVE GREENFIELD AND BROWNFIELD OPTIONS Long life greenfields and fast returning brownfields Our share: From: Quellaveco (Copper) $2.7bn to $2.8bn1 +180ktpa 2022 ~4 year payback >15% IRR >50% margin Marine Namibia (Diamonds) ~$0.2bn +0.5Mctpa 2022 ~3 year payback >25% IRR >60% margin Woodsmith
Slide 32: Life Extensions Will Deliver Value; Higher Near-Term Sustaining Capex
LIFE EXTENSIONS WILL DELIVER VALUE; HIGHER NEAR-TERM SUSTAINING CAPEX Sustaining capex1: 2020 2021 2022 2023 Long-term ~$2.6bn ~$3.7bn ~$4.2bn ~$4.1bn ~$3.0bn helped by deferrals & favourable Fx deferrals from 2020, lifex & Fx + lifex Lifex projects – subject to disciplined capital allocation framew
Slide 33: Quellaveco Financial Modelling
QUELLAVECO FINANCIAL MODELLING Ownership Anglo American 60%, Mitsubishi 40% Accounting treatment Fully consolidated with a 40% minority interest Shareholder loans from minority shareholder consolidated in Anglo American net debt Project capex (nominal) $5.3-5.5 billion (100% basis - Anglo American s
Slide 34: Quellaveco Accounting
QUELLAVECO ACCOUNTING Anglo American consolidates 100% of Quellaveco’s P&L and Balance Sheet. Mitsubishi’s 40% share is shown as a non-controlling interest. After the initial $0.8bn equity injection by Mitsubishi, the project is now funded 60:40 through shareholder debt. Group net debt by the end of
Slide 35: Innovation & Technology
INNOVATION & TECHNOLOGY Highlights recap from our October Sustainability event
Slide 36: Innovative Technologies in Development & Roll-out
INNOVATIVE TECHNOLOGIES IN DEVELOPMENT & ROLL-OUT Bulk Ore Sorting Sensors determine ore content prior to processing Waste rejected early: • Grade uplift: +7% to 20% • Energy, water & cost savings Capital cost $10m to $70m (volume dependent) 12 months full scale testing at El Soldado complete, 9% av
Slide 37: Innovative Technologies in Development & Roll-out
INNOVATIVE TECHNOLOGIES IN DEVELOPMENT & ROLL-OUT Coarse Particle Flotation Flotation process changed Allows material to be crushed to larger particle size: • Throughput increase: +15% to 20% • 20% energy reduction • Up to 85% water recovery with hydraulic dry stack Capital cost $10m to $50m El Sold
Slide 38: Innovative Technologies in Development & Roll-out
INNOVATIVE TECHNOLOGIES IN DEVELOPMENT & ROLL-OUT Hydraulic dry stack Hydrogen powered haulage Engineer tailings facilities that dry out in weeks Full cost comparable to diesel today, parity by 2030 Geotechnically stable ~4-8oz per truck vs ~2oz for diesel Can be repurposed and terraformed 50% to 70
Slide 39: Technology Minimises Our Environmental Footprint
TECHNOLOGY MINIMISES OUR ENVIRONMENTAL FOOTPRINT Energy usage GHG emissions Water abstraction 30% 30% 50% reduction by 2030 reduction by 2030 reduction by 2030 2020 2030 2040 8% 30% 30% Carbon energy reduction improvement in absolute reduction neutrality energy efficiency in GHG emissions across our
Slide 40: Responsible Exit: SA Thermal Coal Operations
RESPONSIBLE EXIT: SA THERMAL COAL OPERATIONS Portfolio Progress on Reductions Exit: SA Thermal Coal operations Production (Mt)1 Current production capacity 80 ~30 ~20Mtpa 2012 2020F Water reclamation plant Responsible approach to transition De-merger most likely route with primary JSE listing % Grou
Slide 41: 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 Emma Waterworth emma.waterworth@angloamerican.com Tel: +44 (0)20 7968 8574 41 41
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