Anglo American Plc · LSE:AAL
Anglo American — Merger or Acquisition (April 2021)
42 slides from Anglo American's merger presentation, Apr 8, 2021
Slide 1: A Leading South African Export Thermal Coal Business
A Leading South African Export Thermal Coal Business 8 April 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: Agenda
Agenda Responsible transition Mark Cutifani Leading South African thermal coal exporter July Ndlovu Well positioned, low cost operator Deon Smith Sustainable future Mark Cutifani 3 Anglo American
Slide 4: Delivering a responsible transition
Delivering a responsible transition Portfolio evolution Capital discipline Sustainable success Future-enabling products Competition for capital Transparency & accountability Unlocking value Growing greener products Set business up for success 4 Anglo American
Slide 5: The proposed demerger
The proposed demerger South African thermal coal assets transferred to Thungela Resources Limited Overview Pro-rata distribution: 1 share in Thungela for every 10 Anglo American shares held Primary listing on JSE & standard listing on LSE Subject to shareholder approval on 5 May 2021 Process All oth
Slide 6: Thungela Resources – Leading South African thermal coal exporter
Thungela Resources – Leading South African thermal coal exporter July Ndlovu - CEO 6
Slide 7: Thungela value proposition
Thungela value proposition A 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 assets, well-positioned to benefit from fav
Slide 8: A robust ESG framework underpins our licence to operate
A robust ESG framework underpins our licence to operate Responsible Environmental Shared value for decision-making & stewardship stakeholders leadership Efficient use of resources Safety, health & wellbeing Ethical culture Climate risk management Inclusion & empowerment Governance & disclosure Biodi
Slide 9: A high quality thermal coal business
A high quality thermal coal business Premium, low cost Export Optionality product focused 5,500 kcal/kg 16.5 Mt 137 Mt Calorific value1 Export production with Reserves2 integrated logistics Q2 ~80% 756 Mt Low cost position with Revenue generated Resources3 provide improvement potential from export s
Slide 10: High quality operations delivering premium products
High quality operations delivering premium products Open cast operations Underground operations 1 Mafube 50% 5 Zibulo 73%8 Reserves4 18 Mt Reserves4 34 Mt 1.8 Resources5 33 Mt 1 5.2 Resources5 409 Mt 6 LOM 11 years LOM 9 years 2 7 5 2 Khwezela 100%6 3 6 Greenside 100% 4 Reserves4 17 Mt MPUMALANGA 0.
Slide 11: Experienced management team focused on delivery
Experienced management team focused on delivery Decades of experience Track record of delivery Lean corporate structure Responsibility focused at mine-site 30 15 24 25 21 24 11 July Ndlovu Deon Smith Johan Van Schalkwyk Leslie Martin Carina Venter Lesego Mataboge Mpumi Sithole CEO CFO COO Technical
Slide 12: Well positioned, low cost operator
Well positioned, low cost operator Deon Smith - CFO 12
Slide 13: Track record of improvement with further potential
Track record of improvement with further potential Portfolio management Goedehoop prime section10 kt ROM per annum Mafube delivered on time & budget +54% Navigation (Khwezela) in ramp-up & poised to deliver further value 1,200 Closed high cost operations 780 Improvement initiatives Anglo American Op
Slide 14: Low cost position underpins cash generation
Low cost position underpins cash generation 2021 Global energy adjusted seaborne thermal coal FOB total cash cost curve 11 $/t 120 Q1 Q2 Q3 Q4 100 YTD average price12: US$91/t Khwezela 80 Goedehoop Greenside Group weighted Mafube 60 Zibulo average 40 20 0 Cumulative production Thungela Coal South Af
Slide 15: Thermal coal to remain a key source of power generation
Thermal coal to remain a key source of power generation 2020 2030 Global thermal coal power 9,235 TWh 10,391 TWh generation13 Renewables Other 10% Renewables 2% 20% Oil Thermal coal 2% Thermal coal Other 31% Nuclear 35% 1% 10% Oil Global power 26,141 1% 32,891 generation13 TWh Nuclear 10% TWh Natura
Slide 16: Demand outlook from our key export destination (India) is positive
Demand outlook from our key export destination (India) is positive Indian demand to grow while South African export supply declines India is the largest export market for South African thermal coal 192 180 183 Currently 17% of global seaborne 159 162 demand and growing 78 72 66 Existing South Africa
Slide 17: Positive fundamentals support higher prices
Positive fundamentals support higher prices Wood Mackenzie expecting higher prices for an extended period Nominal market prices, $/t14 Market gearing towards higher- 120 energy, less emissions-intensive thermal coal 110 100 YTD average12 US$91/t 90 80 Our high calorific value export 70 products well
Slide 18: Robust and transparent approach to capital allocation
Robust and transparent approach to capital allocation Lifex 1. Sustaining 2. Green optionality & capital15 fund16 additional returns Operating free cash Base ≥30% base flow17 dividend dividend >30% 4. Lifex 3. Base options & dividend additional Green fund16 Greenfund returns Sustaining capital15 • B
Slide 19: Significant endowments provide optionality beyond life of mine
Significant endowments provide optionality beyond life of mine Mt 20 16 Attractive replacement projects options with 756Mt Resources3 subject to disciplined capital framework & macro environment 12 8 Fast payback, low risk, lifex options can sustain >10Mt export-focused production 4 0 2020 2025 2030
Slide 20: Sustainable future
Sustainable future Mark Cutifani 20
Slide 21: A sustainable future for all stakeholders
A sustainable future for all stakeholders Delivering a responsible transition Low cost, export- Well positioned with Creating value for all focused business optionality stakeholders 21 Anglo American
Slide 22: Portfolio positioned for a sustainable future
Portfolio positioned for a sustainable future Greener World Electrified World Consumer World Cu Eq production18 ~55% ~65% Future Future Enabling Enabling Diamonds Copper PGMs Nickel & manganese Crop nutrients Steel-making Thermal coal 22 Anglo American
Slide 23: Q&A Anglo American investment proposition
Q&A Anglo American investment proposition… Competitive Differentiated Sustainable Assets Capabilities Returns 23 Anglo American
Slide 24: 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. Total proved and probable reserves including from
Slide 25: Appendix
Appendix
Slide 26: Appendix contents
Appendix contents Guidance summary 27 Export and domestic pricing 28 Responsible transition: support 29 Rehabilitation and closure costs 30 Strengthening our partnerships 31 Leading and promoting black ownership 32 Improving the lives of our stakeholders 33 Experienced and diverse Board 34 A transfo
Slide 27: Guidance
Guidance Export production Domestic production 2021: 15-16Mt1 2021: Isibonelo ~4.8Mt; Other ~6Mt 2022-2023: ~16Mtpa2 2022+: ~6Mt (combined)3 Capex Export unit cost 2021-2022: R2.6-3.0bn 2021-2022: ~R800-850/t4 (of which SIB is ~R2bn5) 2023+: ~R1.7bn sustaining capex6 Base dividend policy Other ≥30%
Slide 28: Export and domestic pricing
Export and domestic pricing Export pricing Domestic pricing Export price is based on the FOB South Africa benchmark ($/t) Benchmark is based on a 6,000kcal/kg energy content All production from Isibonelo is supplied to Sasol Our product averages ~5,500kcal/kg, Synfuels under a fixed price arrangemen
Slide 29: Delivering a responsible transition
Delivering a responsible transition Setting the business up for Transitional sustainable success support Three year offtake agreement for export product Portfolio upgraded through the sale of the Eskom- Allows Thungela to initially focus on operational tied mines and New Largo project performance an
Slide 30: Rehabilitation and closure costs
Rehabilitation and closure costs R6,450m 45% R3,189m Environmental restoration & of provision is covered by balance is backed by decommissioning provision environmental rehabilitation financial guarantees at 31 December 2020 trust (R2,902m) ~5.5% pa minimum requirement paid into an investment accoun
Slide 31: Strengthening our partnerships
Strengthening our partnerships Employee and Community Partnership Plans Commitment to Direct equity stakes of Creating value for enduring positive 5% each & additional employees and legacy guaranteed dividends1 communities Employees: Minimum dividend of R4,000 pa2 Communities: Minimum dividend of R6
Slide 32: 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 33: 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 34: Experienced and diverse Board
Experienced and diverse Board Independent Non-executive Directors • Seasoned and highly qualified Board Sango Ntsaluba Ben Kodisang Kholeka Mzondeki Thero Setiloane members Chairperson • Diverse range of skills and experience spanning a number of industries, including mining • Board and sub-committe
Slide 35: A transformed business
A transformed business Portfolio materially upgraded over the past 5 years 2015 2020 Domestic - Industrial 13% Export Domestic - 35% Industrial 37% Production mix 50 Mt 30 Mt 54% Export 52% 9% Domestic - Domestic - ESKOM ESKOM Number of mines 9 7 Calorific value1 4,667 5,506 1. Weighted average calo
Slide 36: 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 36 Anglo American
Slide 37: 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 38: 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 flows1 $m 98 91 YTD average4 80 72 65 558 55 48 Benchmark price2 $/t Realised export price3 $/t 56 5 2018 2019 2020 2021 2019 and 2020 impacted by sign
Slide 39: Low risk, high return, brownfield life extension options
Low risk, high return, brownfield life extension options Khwezela 100% Progressing to feasibility study phase 5 – 11 LOM +10 years (2037) +4.6Mt production 5 – 19 years Zibulo 73% years Range of asset lives1 2-seam concept in pre-feasibility phase Range of asset lives1 LOM +10 years (2039) +6.8Mt pr
Slide 40: High quality projects offer optionality
High quality projects offer optionality Significant resource endowment Elders Project Dalyshope Project • Underground exploration project • Open cast exploration project • Pre-feasibility and feasibility studies completed in 2015 and • Currently in feasibility study phase 2018/19 respectively • Loca
Slide 41: Key historical data (USD)
Key historical data (USD) 2018 2019 2020 Export sales volume (kt)1 19,223 19,785 18,153 Export saleable production (kt) 18,359 17,795 16,463 Benchmark price2 ($/t) 98 72 65 Realised export price3 ($/t) 80 55 48 Realised domestic price ($/t) 24 19 17 FOB cost per saleable tonne4 ($/t) 44 45 38 FOB co
Slide 42: Additional historical data (Rand)
Additional historical data (Rand) 2018 2019 2020 Run of mine (kt) 39,982 33,388 32,174 Saleable domestic production (kt) 13,692 11,241 14,015 Domestic sales volume (kt) 13,111 10,858 13,362 Realised export sales price (R/t) 1,060 788 798 Realised domestic sales price (R/t) 318 276 282 FOB cost per e