South32 Ltd. · ASX:S32
South32 — Mining Indaba 2016
11 slides from South32's conference presentation, February 2016
Slide 1: Manganese – The Need for a Sustainable Future
MANGANESE – THE NEED FOR A SUSTAINABLE FUTURE • GRAHAM KERR CHIEF EXECUTIVE OFFICER • FEBRUARY 2016
Slide 2: Important Notices
• IMPORTANT NOTICES The purpose of this presentation is to provide general information about South32 Limited. This presentation should be read in conjunction with the Annual Financial Report as at 30 June 2015 and the other announcements made by South32 in accordance with its continuous disclosure o
Slide 3: South32 – Global Mining and Metals
• SOUTH32 – GLOBAL MINING AND METALS 12 operations Alumina and Bauxite Aluminum Energy Coal 10 commodities Large integrated alumina An aluminium producer with Third-largest energy coal 7 countries (including Marketing) refineries with high quality industry leading aluminium exporter in South Africa
Slide 4: South32 Today
• SOUTH32 TODAY • We’re running our business differently • We have a simple business strategy ⎯ Optimise our existing operations ⎯ Unlock their potential ⎯ Identify new opportunities to compete for capital • We are focused on value, not volume • Our new way of working enables our operational people
Slide 5: Commodity Markets Remain Challenging
• COMMODITY MARKETS REMAIN CHALLENGING RBA index of commodity prices (index 2005=100) Commodity prices returning to norm 350 • Commodity industry cyclical, and high demand 300 growth and prices during China boom were 250 unsustainable 200 • Commodity producers face headwinds from 150 structural and
Slide 6: South Africa Accounts for Bulk of Global Manganese Resource
SOUTH AFRICA ACCOUNTS FOR BULK OF GLOBAL MANGANESE RESOURCE Manganese resource base1 (contained manganese) CIS 1 billion tonnes • Mid-grade deposits • Captive ores, underground mines 500 million • Export potential tonnes 100 million tonnes Ukraine (Mid-grade) China Kazakhstan (Mid-grade) • Low-grade
Slide 7: Steel and Manganese Demand Growth Slowing Down
• STEEL AND MANGANESE DEMAND GROWTH SLOWING DOWN • Global steel and manganese demand •Mn ore price (index, CY2015=100) (US$/dmtu, real Jan 2016) 120 16 Steel production (LHS) Manganese (LHS) Price (RHS) 14 100 12 80 10 60 8 6 40 4 20 2 0 - 2000 2005 2010 2015 Source: IMnI, CRU, Metal Bulletin, South
Slide 8: China's Steel Demand Has Peaked and Markets Remain in Oversupply
• CHINA’S STEEL DEMAND HAS PEAKED AND MARKETS REMAIN IN OVERSUPPLY • China crude steel • (Mt) Net exports • Steel market status 1,000 Apparent consumption Steel production • Global steel output down, amidst weak demand and 800 low profitability across most regions 600 • China domestic steel consumpt
Slide 9: More Manganese Supply to Exit the Market
• MORE MANGANESE SUPPLY TO EXIT THE MARKET • Manganese implications and outlook • Amidst the manganese demand slowdown, • Manganese ore cost curve increased low-cost South African supply has • (US$/t, 44% Mn, CIF China) displaced higher-cost marginal suppliers • Price decline exacerbated by a cost c
Slide 10: Manganese Outlook
• MANGANESE OUTLOOK Industry outlook • Commodity prices returning to norm • Economic headwinds to continue • Global steel output down and manganese demand slowdown • No demand side rescue • Manganese market oversupplied • South Africa plays a key role in creating a sustainable manganese industry Sou
Slide 11: South32
SOUTH32