Anglo American Plc · LSE:AAL
Anglo American — Merrill Lynch Conference 2004
29 slides from Anglo American's conference presentation, May 12, 2004
Slide 1: Anglo American: A World of Difference
ANGLO AMERICAN A WORLD OF DIFFERENCE Merrill Lynch Conference 12 May 2004 This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Finan
Slide 2: Why Anglo American?
Why Anglo American? A nglo A m erican p lc A ng lo P latin um A n g loG o ld D e B eer s C o al B ase M etals Ind u strial P ap er and F errou s M etals 74.1% 47% 45% 100% 100% M in erals P ackag ing and In du stries 100% 100% 100 % High quality assets Financial strength Strong cashflow return
Slide 3: Diversified Profile
Diversified Profile Geographic headline Headline earnings by business unit - 2003 earnings mix - 2003 Platinum Industrial 12% Minerals Rest of Europe 16% World 26% 22% Paper and Diamonds Packaging 23% 22% Americas 18% South Ferrous & Gold Industries Base 10% Africa 6% 34% Metals Coal 12% 14% 3
Slide 4: Shareholder value
Shareholder value Significant increase in shareholder value since 1999¹ 225 200 175 150 125 100 75 50 May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar 99 99 99 99 00 00 00 00 00 00 01 01 01 01 01 01 02 02 02 02 02 02 03 03 03 0
Slide 5: Strategy
Strategy Focused strategy based on: Growth through projects Growth through acquisitions Value from cost cutting and efficiencies 5
Slide 6: Production Growth
Production Growth m ozs ’000 tonnes 2.36 2,4 800 709 2,2 2.02 600 2,0 1,8 Through 400 424 organic 1,6 1,4 200 1,2 1,0 Platinum +17% growth and 0 Copper +67% 1999 2000 2001 2002 2003 acquisition 1999 2000 2001 2002 2003 m tonnes 105 AA plc has ’000 tonnes 50 47 85 87 shown 40 30 65 62 significant 30
Slide 7: Production Growth
Production Growth m tonnes 000 tonnes 80 3000 67.2 70 2500 2,381 60 26.7 Through 2000 50 40 1500 923 30 20 organic 1000 500 10 0 Aggregates +152% growth and 0 Packaging Papers +158% 1999 2000 2001 2002 2003 1999 2000 2001 2002 2003 acquisition m tonnes AA plc has Units m 1,5 3000 2,723 1.04 shown 25
Slide 8: Growth through Projects
Growth through Projects A balanced $6bn approved Project Portfolio Kleinkopje Merebank Isibonelo W.L. Tailings Buxton $56m $150m $65m $186m Key: $173m Base Metals Skorpion Ticor Diamonds Richards Bay Finsch $454m Moab Khot. $191m Paper & Packaging $221m $130m $690m Industrial Minerals Cerrejón Plati
Slide 9: An extensive unapproved Project Pipeline
An extensive unapproved Project Pipeline NAME PRODUCT LOCATION ESTIMATED COST ($BN) WESTERN COMPLEX COAL SOUTH AFRICA 0.3 MORRO SEM BONE NICKEL BRAZIL 0.7 GAMSBERG ZINC SOUTH AFRICA 1.0 QUELLAVECO COPPER PERU 0.9 BARRO ALTO NICKEL BRAZIL 0.7 SISHEN SOUTH IRON ORE SOUTH AFRICA 0.3 HOPE
Slide 10: Exposure to China
Exposure to China Operations & Projects Trading: $1.1bn Tarmac quarry Other $170m Boart mining equipment Platinum $420m manufacturing Gold $120m Paper and packaging plants Iron Ore $130m Coal and platinum exploration Diamonds $250m 10
Slide 11: Key acquisitions: Delivering value
Key acquisitions: Delivering value Mondi Europe Acquired: since 1999 Price: $1.7bn Tarmac EBITDA/Total Cap: 23% Acquired: Mar 2000 Price: $1.1bn EBITDA/Total Cap: 16% Syktyvkar Coal Colombia & Acquired: Mar 2002 CDG Price: $0.3bn Acquired: 1997- 2002 EBITDA/Total Cap: 23% Price: $0.5bn EBITDA/Total
Slide 12: Delivering Value from Cost Savings
Delivering Value from Cost Savings 2003 Maintenance Admin & Overhead Labour $217m Materials & Supplies $12m Targeted Achieved $30m $100m $34m 2002 $250m $279m $3m $3m 2003 $200m $335m $18m $141m $7m 2004 $250m $94m $9m $2m Restructuring Procurement Operating & synergies efficiencies 12
Slide 13: Key Financials
Key Financials Group Turnover: $24.9bn EBITDA: $4.79bn Headline Earnings: $1,694m Gearing: 26.6% Single A credit rating 13
Slide 14: Currency & commodity impact
Currency & commodity impact 900 850 10.00 9.50 Negative 800 750 Average price: 692 $/oz impact of 9.00 700 8.50 Average ZAR/US$: 7.55 650 weaker US$: 8.00 600 7.50 550 Platinum +28% $578m 7.00 500 6.50 6.00 ZAR/US$ 28% stronger Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Slide 15: Anglo Base Metals
Anglo Base Metals Radical restructuring of portfolio Strong focus on improving capital and operating efficiency Attractive low cost brownfield expansion opportunities Good greenfield project pipeline Well positioned to benefit from upturn in base metal prices 15
Slide 16: A Radical Restructuring
A Radical Restructuring 2001 2004 COLLAHUASI (44%) COLLAHUASI (44%) HBMS (100%) HBMS (100%) MANTOS BLANCOS (99.9%) MANTOS BLANCOS (99.9%) MANTOVERDE (99.9%) CODEMIN (90%) CORE MANTOVERDE (99.9%) CODEMIN (90%) BLACK MOUNTAIN (100%) BLACK MOUNTAIN (100%) PALABORA (29%) PALABORA (29%) NAMAKWA SANDS (10
Slide 17: Copper Market Overview
Copper Market Overview Refined Copper Stocks * (left scale) 1500 150 and LME Prices (right scale) 1250 130 'Nominal' cents per pound 1000 thousand tonnes 110 750 90 500 70 250 * LME + Comex 0 50 jan 92 jan 93 jan 94 jan 95 jan 96 jan 97 jan 98 jan 99 jan 00 jan 01 jan 02 jan 03 jan 04 c 17
Slide 18: Competitive Position
Competitive Position C1 100Cost (2004 c/lb) 2003 Copper Mine Direct Cash C1 Operating Costs (c/lb) 90 as a function of Annual Mine Output ('000 t) Individual Mine Output shown by Area of Circle 80 (Normal Costing, Paid Production) 4 70 1. Collahausi (44%) 2. Los Bronces (100%) 3 3. El Soldado (100%)
Slide 19: Acquisitions: Minera sur Andes
Acquisitions: Minera sur Andes Acquired for US$1.3 bn in November 2002 2003 operating profit US$128m and ROCE 10% (at an average Cu price of 81 c/lb) US$17m p.a. of synergies identified to date – full benefit from 2004 onwards Additional proven and probable reserves identified to date 368Mt
Slide 20: Copper Project Pipeline
Copper Project Pipeline Collahuasi Rosario Project: Maintains production >400,000t/y; Further major expansion potential Bronces expansion phase I: Incremental 14,000 t/y Cu El Soldado “big pit”: Incremental 12,500 t/y Cu, extends life to 2022 Chagres smelter debottlenecking: 158,000 to 184,0
Slide 21: Zinc
Zinc Significant zinc producer (360,000 tpa) $454m Skorpion project set to be one of lowest cost producers Lisheen ownership increased to 100% Exports from China constrained by concentrate shortage Longer term outlook influenced by significant mine depletion and limited new investment 21
Slide 22: AngloGold Ashanti
AngloGold Ashanti AngloGold/Ashanti $1.4bn merger completed Combined annual production c.7m oz Strong reserve position: 84 m ozs Significant potential at Obuasi Deeps 22
Slide 23: Anglo Platinum
Anglo Platinum Global leader in PGMs – c. 40% Pt mkt share Platinum demand remains robust Pt production in 2006 forecast at 2.9m oz (+26% from 2003) $2bn capital investment programme 23
Slide 24: Coal
Coal Strong thermal and coking markets Constraints on Chinese and Indonesian thermal coal availability Australian H1 production impacted by Moranbah North – recovery to full output H2 Cerrejón set to increase by 6m tpa to 28m tpa by 2007 24
Slide 25: IMD and Paper and Packaging
IMD and Paper and Packaging Industrial Minerals Largest UK producer of aggregates & blacktop $200m of acquisitions in continental Europe since 2000 - now the leading aggregates producer in Czech Republic and the leading paver producer in Poland (new EU entrants) New quarry in China being commi
Slide 26: Paper and Packaging
Paper and Packaging Sales growth vs. ROCE 1999-2003P* - Average pre-tax return on capital employed (ROCE), % - 20 Mondi 15 Value creation Sappi SCA Cost of capital 10 UPM 8-12% Domtar Stora Enso M-Real J. Smurfit Value 5 destruction MeadWestvaco Int’l Paper Average growth rate 8.0% 0 -10 0 10 20 30
Slide 27: Iron ore: A new market
Iron ore: A new market Acquired 67% of Kumba Resources 4th largest exporter of iron ore Significant expansion potential:- SA – Sishen South (± 10 mtpa) Australia – Hope Downs (± 25 mtpa) 27
Slide 28: Outlook
Outlook Macro outlook positive Geographic and commodity diversity will underpin performance Strong EBITDA generation, good growth for 2004 28
Slide 29: Anglo American: A World of Difference
ANGLO AMERICAN A WORLD OF DIFFERENCE Merrill Lynch Conference 12 May 2004 This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Finan