Anglo American Plc · LSE:AAL
Anglo American — Anglo Platinum — Corporate Update (April 2010)
39 slides from Anglo American's corporate update, Apr 12, 2010
Slide 1: Site Visit: Mogalakwena Mine and Polokwane Smelter
Site Visit: Mogalakwena Mine and Polokwane Smelter April 12th 2010 1 2008 Annual results
Slide 2: Agenda
Agenda • Welcome and Introduction • Overview of Platinum industry and Anglo Platinum – Neville Nicolau, CEO • Presentation on Mogalakwena Mine – Ted Muhajir, General Manager • Question and Answer session 2 Site Visit April 12th 2010
Slide 3: Market Overview
MARKET OVERVIEW 3 Site Visit April 12th 2010
Slide 4: Global platinum supply: only 4 major players – extremely high geographical concentration
Global platinum supply: only 4 major players – extremely high geographical concentration 2009: Global platinum supply: 6,060m oz Other 16% Norilsk Anglo Platinum 11% 40% Lonmin 11% Impala 22% • c.20% of platinum is produced as a by-product to nickel or palladium 4 Site Visit April 12th 2010
Slide 5: Unique metal market dynamics
Unique metal market dynamics • Diverse application base • Balance of elastic and inelastic applications – beneficial price role from 2H08 • Geographically diverse demand % 50 45 40 35 30 25 20 15 10 5 0 Autocatalysts Jewellery Industrial* Investment (net) *Includes Chemical, Electrical, Glass, Petro
Slide 6: Platinum market: In deficit for 10 of last 13 years
Platinum market: In deficit for 10 of last 13 years Net surplus/(deficit) ‘000 oz 100 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 0 -100 -200 -300 -400 -500 -600 -700 -800 Source: Johnson Matthey, Anglo Platinum estimates 6 Site Visit April 12th 2010
Slide 7: Autocatalyst demand driver: emissions legislation
Autocatalyst demand driver: emissions legislation • Continued tighter legislation - Euro V 2011 • Continued increase in diesel car popularity – cost and emissions efficiency • Early voluntary particulate filter fitment • Heavy duty vehicle retrofitting - high loadings • Vehicle volume growth in Chin
Slide 8: Autocatalyst demand driver: emissions legislation timetable
Autocatalyst demand driver: emissions legislation timetable Brazil South Korea Euro III (HDD) Euro IV (HDD) India India South Korea Euro III (HDD) Euro IV (HDD) Rest of World K-ULEV India Brazil Brazil L4 Brazil L5 Euro 3 (national) Euro IV (HDD) Euro 4 Euro 3 (national 1) (national 1) China Euro II
Slide 9: Autocatalyst demand rebuilding
Autocatalyst demand rebuilding 2009 • Vehicle stock adjustments exacerbated poor production performance in mature markets • Stimulus schemes boosted small car sales favouring palladium • Chinese vehicle production growth exceptional 2010 • Vehicle production forecast to increase to match sales • Die
Slide 10: Asia delivers on platinum jewellery
Asia delivers on platinum jewellery Global jewellery demand Oz 000's 2500 2000 Other 1500 North Am Europe Japan 1000 China 500 0 2004 2005 2006 2007 2008 2009 • Asian markets – provide the volume Jewellery demand 2009 6% 3% • Rest of World – provides influence and style 8% China 13% Japan • Chinese
Slide 11: Platinum jewellery: unique source of price support
Platinum jewellery: unique source of price support Shock-absorber effect at differing price levels • Jewellery demand: price elastic vs. Industrial demand: price inelastic • Demand balance results in lower price volatility Price tension (upward pressure on price): • Strong consumer demand • Sophisti
Slide 12: Platinum jewellery: China is different
Platinum jewellery: China is different Primary consumer – demographics and behaviour • Better educated urban employee between 20 and 40 • Buys her own plain platinum pieces; fashion and emotion • Average value of her purchase: US$250 • Remained employed through global crisis • Well aware of the low
Slide 13: Investment: a growing source of visible demand
Investment: a growing source of visible demand • Platinum and palladium ETFs introduced in April-May 2006 by ETF Securities and Zurcher Kantonal Bank and in January 2010 in the US by ETF Securities • Platinum ETF holdings currently at 947k oz, including 309k oz in US ETF • Palladium ETF holdings cur
Slide 14: Palladium: Moving into a sustained production deficit
Palladium: Moving into a sustained production deficit • Increasing autocatalyst demand from BRIC car production and sales • Palladium use in diesel catalysts: 25-30% of PGM loadings medium to longer-term • Investment activity and Exchange Traded Funds continue to increase • Potential for further jew
Slide 15: Company Overview
COMPANY OVERVIEW 15 Site Visit April 12th 2010
Slide 16: Our Strategy
Our Strategy Our strategy is to maximise value by understanding and developing the market for platinum group metals, to expand our production into that opportunity and to conduct our business safely, cost-effectively and competitively Safe, Profitable Platinum 16 Site Visit April 12th 2010
Slide 17: World leader in platinum production
World leader in platinum production • The world’s largest primary producer of platinum, c.40% market share 2009 2008 2007 • Refined production (000’ oz): Platinum 2,452 2,387 2,474 Palladium 1,361 1,319 1,390 Rhodium 350 299 329 PGMs 4,751 4,531 4,787 • Headline Earnings: Rm 710 13,292 12,325 US$ m
Slide 18: Primary platinum production drives our strategy
Primary platinum production drives our strategy • Expansion decisions based on platinum demand 2009: split of gross revenue by metal growth Other Nickel 5% • Value and return based on rand revenue of 6% basket of metals sold Rhodium 12% •Anglo Platinum basket price: net sales revenue (all metals) pe
Slide 19: South Africa Bushveld Complex and our operations
South Africa Bushveld Complex and our operations 19 Site Visit April 12th 2010
Slide 20: Extensive high quality ore reserves and resources
Extensive high quality ore reserves and resources • Proved and probable reserves of 1,315 Mt @ 4.03 g/t: 170.5m oz (4E) – Implied life of mines: c.55 years • Measure and Indicated resource: 2,406 Mt @ 3.95 g/t: 305m oz (4E) – Implied life of mines: c.50 years • Total implied life of mines (reserves
Slide 21: Our wholly-owned mines: FY09 statistics
Our wholly-owned mines: FY09 statistics M2 per total Refined Pt % operating Cash operating cost per Mine area Mine (Shafts) Production UG2 employee equivalent refined Pt oz Comments Siphumele (1, 2 & 3 2 and 3 shafts on care shafts) 110.6 56 4.2 13,297 and maintenance Bathopele (East and Central sha
Slide 22: Our Joint-Venture Operations: FY09 statistics
Our Joint-Venture Operations: FY09 statistics Cash operating cost per FY09 equivalent M2 per total AP Other mined FY09 refined Pt operating Mine ownership Structure information ounces PoC* % UG2 oz employee 50% Royal Managed by Bafokeng Anglo BRPM 50% Resources Platinum 84.5 88.8 1 9,992 6.5 50% Afr
Slide 23: Unique competitive advantages
Unique competitive advantages • Extensive high quality ore reserves • Building flexibility into portfolio of long-life assets • Superior market intelligence • Extensive HDSA JV experience • Conversion of all mining rights granted, including at project level 23 Site Visit April 12th 2010
Slide 24: Latest financial results: 2009 highlights
Latest financial results: 2009 highlights • Safety: continued progress – 4 month fatality-free record as at 20 January 2010 • Financial results: – Headline Earnings down 95% to R710 million due to the metal price decline • Strong recovery in PGM prices since 2H09 and continued positive market outloo
Slide 25: Key opportunities and issues for Anglo Platinum
Key opportunities and issues for Anglo Platinum Safety: – Focus on achieving zero harm Cost management: – Targeting unit costs to remain flat until 2011 – Three-stage process of (i) reducing employee numbers and improving productivity, (ii) reducing overhead and allocated costs; (iii) improving effi
Slide 26: Safety is our first value
Safety Safety is our first value Zero is possible 26 Site Visit April 12th 2010
Slide 27: Solid progress towards 'zero-harm'
Solid progress towards ‘zero-harm’ • Marked improvement in safety: • LTIFR down 32.5% since 2007 • 4Q09 fatality free, a first in the history of the Company • Fatality-free shift achievements in 2010: – Dishaba Mine: 3.5 million; Tumela Mine: 4 million; Khuseleka 1 Shaft: 2 million; Khomanani 1 Shaf
Slide 28: Turning Anglo Platinum around: some key actions taken
Turning Anglo Platinum around: some key actions taken • Restructuring of our largest mines into smaller, more manageable units • Introducing a matrix management structure at Head Office • Instilling cost management into our corporate culture • Matching our capex spend to our production profile • Sol
Slide 29: Cost management being instilled across the group
Cost management being instilled across the group Target: flat nominal cash operating costs per equivalent refined platinum ounce FY09-FY11 A three-step process to reinforce cost management: 1. Employee complement reduction and productivity improvements 2. Correct allocation of costs across mines; re
Slide 30: Solid progress in meeting cost target
Solid progress in meeting cost target •Rand cash operating costs per equivalent refined platinum ounce flat in 2009 versus 2008 2009: split of cash operating costs* Toll refining Sundries 1% 14% Utilities Labour 8% 38% Stores 26% Contractors 13% *Includes On-mine costs (comprise mining and concentra
Slide 31: FY09 saw a turning point in cost management
FY09 saw a turning point in cost management • Cash operating unit costs essentially flat year-on-year – Cash operating costs per equivalent refined platinum ounce of R11,236 vs. R11,096 in 2008, a c.6% reduction in real terms – Cash operating cost per tonne milled decreased 5% to R453 in nominal ter
Slide 32: Improving our infrastructure efficiencies
Improving our infrastructure efficiencies Surface outcrop First generation Second and third generation shafts decline shaft access vertical shaft Southern African Bushveld Platinum Merensky reef Average Depth 0 – 1200m 4-6 g/t, narrow width mining ‘Short’ distance between UG2 reef reefs 40 – 100m 3-
Slide 33: Improving our infrastructure efficiencies
Improving our infrastructure efficiencies • Improving mine development layout and design of new mining areas – Example: transition from manual to hybrid mining at Union • Shaft optimisation to fully utilise capacity and maximise low cost ounces – Examples: • Reduce activity at Union Merensky Deeps a
Slide 34: Moving to lower half of cost curve
Moving to lower half of cost curve 34 Site Visit April 12th 2010
Slide 35: Asset Optimisation and Supply Chain deliver value
Asset Optimisation and Supply Chain deliver value • Asset Optimisation FY09 operating profit Main contributing projects: benefit: •Mogalakwena volume increases – R2,731 million or $332 million* •Smelter capacity improvements •Labour productivity improvements •Steel ball reduction in milling circuits
Slide 36: Declining grade and recovery – an industry issue
Declining grade and recovery – an industry issue • Increasing proportion of UG2: lower grade and recovery Built up head grade % UG2 70 4.5 •Increased UG2 mined vs. total output: 4.0 60 2004: 48% to 2009: 55% 3.5 50 3.0 • Built-up head grade decreased from 2.5 40 2004: 4.16 to 2009: 3.31 g/tonne mill
Slide 37: Project pipeline management: rigorous capital allocation management
Project pipeline management: rigorous capital allocation management • Approved projects form pipeline of $5 billion • Stay-in-business and Project capital expenditure reduced from R14 billion ($1.5b) in 2008 to R8 billion (c.$1b) per annum for 2010 and 2011 Selected Major 2009 2010 2011 2012 2013 20
Slide 38: Balance sheet management: Successful R12.5 billion Rights Issue
Balance sheet management: Successful R12.5 billion Rights Issue • R12.5 billion, equating to 24,891,473 million shares • Issue price of R502.18, set at 25% discount to Theoretical Ex-Rights Price (5 February 2010) • Anglo American followed its rights (79.72%) and fully underwrote the balance of the
Slide 39: In summary
In summary • Fundamentally attractive market: – Strategic industrial metals – Strong demand recovery – restocking, autocat demand returning, Chinese jewellery remains strong – Geological concentration and scarcity of PGMs – Stable industry structure – well established fabricators and users – concent