Anglo American Plc · LSE:AAL
Anglo American — Investor Day (December 2014)
118 slides from Anglo American's investor day presentation, Dec 9, 2014
Slide 1: Stability, Capability, Potential
STABILITY, CAPABILITY, POTENTIAL Investor presentation, 9 December 2014 Los Bronces Minas-Rio De Beers
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: Agenda
AGENDA Progress to date Mark Cutifani 1.30pm 20 mins Capital management René Médori 1.50pm 10 mins Technical leverage Tony O’Neill 2.00pm 20 mins Business Unit updates 2.20pm 30 mins Platinum Chris Griffith Base Metals Duncan Wanblad Iron Ore Brazil Paulo Castellari Break 2.50pm 20 mins Business Uni
Slide 4: Organisation: The Leadership Team
ORGANISATION The Leadership Team… Chief Executive Mark Cutifani Strategy, Human Technical Executive Business Kumba Iron Ore Base Metals Resources and Finance Coal Platinum De Beers Director Development Iron Ore Brazil and Minerals & Corporate Sustainability & Commercial RSA Affairs Tony Peter René N
Slide 5: Key Themes
KEY THEMES Our approach to building performance is simple…and continuous… Value CAPABILITY Realise Potential Build Capability Establish Stability Operations Brownfield options STABILITY Resource potential Markets Debottleneck Priority capital options People Operating Model “FutureS
Slide 6: What Are You Going To Hear?
WHAT ARE YOU GOING TO HEAR? We will update you on our progress to date… Delivery on Commitments – Performance update – Progress on EBIT & ROCE targets Progress on Improvements – Operating performance – Technical and marketing developments – Business Unit progress Capital Management – Capex and
Slide 7: Progress to Date
PROGRESS TO DATE MARK CUTIFANI
Slide 8: After 12 Months
AFTER 12 MONTHS Global economic uncertainty has increased… Global Economy – China infrastructure growth slows – US resurgence built off lower energy costs – Europe and others struggle to reset Commodities and Prices – Oil and bulks under supply pressure – Base and precious metals share solid fun
Slide 9: Supply Dominates Prices
SUPPLY DOMINATES PRICES Supply of iron ore and coal from majors dominates bulk prices… Indexed commodity price (1 Jan 2014 = 1) 28 Nov 1.1 2014 variance 1.0 (8)% 0.9 Peer 1 ~(11)% 0.8 Peer 2 ~(22)% Peer 3 ~(26)% 0.7 Peer 4 ~(31)% 0.6 01 Jan 14 01 Feb 14 01 Mar 14 01 Apr 14 01 May 14 01 Jun 14 01 Jul
Slide 10: Delivering on Commitments
DELIVERING ON COMMITMENTS We have delivered on our immediate restructuring milestones… Minas-Rio > FOOS delivered ahead of revised budget > Final capex $400m lower than expected Sishen hit 35Mt production target Platinum restructure > Divestment process underway Copper turnaround > Los Bronces
Slide 11: Operational Performance – Safety
OPERATIONAL PERFORMANCE – SAFETY Our safety improvement has been significant… Loss of life 20 0.010 0.009 0.010 Fatal incidents 0.008 0.008 0.007 0.008 15 0.006 Reflects focus on high risk activities, standards FIFR 10 20 and controls. 17 0.003 0.004 5 15 13 15 Platinum strike had a ~15% impact.
Slide 12: Operational Performance – Environment
OPERATIONAL PERFORMANCE – ENVIRONMENT Our environmental controls performance is improving… Environmental incidences (potential reputational impact) Environment incidents 30 Measuring what we need to improve has Average become part of our culture. 25 20 Our focus on improving control of our opera
Slide 13: Operating Performance – Production
OPERATING PERFORMANCE – PRODUCTION Performance improvements across every commodity… 9 months 2014 versus 9 months 2013 (% change) +26% +15% +15% +10% +8% +6% +4% +2% Nickel Iron Ore (1) Export De Beers Export Platinum (3) Copper Group Met Coal Thermal Coal (Cu equ.) (1) (Australia/Canada) (SA/Colomb
Slide 14: Operating Performance – Versus Budgets
OPERATING PERFORMANCE – VERSUS BUDGETS We have improved our delivery on plans (despite platinum strike)… 2012: Three Quarters to Q3 2012 2014: Three Quarters to Q3 2014 Priority assets achieving Priority 1 Asset budget Other 65% • Venetia • Collahuasi • Capcoal • Moranbah • Jwaneng • Los Bronces • C
Slide 15: Operating Performance – Costs
OPERATING PERFORMANCE – COSTS We have made significant inroads on costs… 9 months YTD 2014 versus 9 months 2013 (% change) USD (1)% (4)% (4)% (4)% (6)% (7)% (11)% Group Copper(2) Platinum De Beers (4) Iron Ore (5) Export Thermal Export Met Coal (Cu equ.)(1) normalised Coal (SA)(6) (Australia)(6) for
Slide 16: Operating Performance – Costs
OPERATING PERFORMANCE – COSTS However, stripping out the impact of weaker currencies… 9 months YTD 2014 versus 9 months 2013 (% change) 8% 6% 7% SA mining inflation 1% (1)% Local currency (4)% (6)% Group Export Met De Beers (3) (4) Copper(5) (4) Iron Ore(6) Export Platinum (Cu equ.)(1) Coal Thermal
Slide 17: Leadership and Delivery
LEADERSHIP AND DELIVERY We have made significant leadership changes… Leadership restructuring 2012 2014 1 CEO 1 Executive 16 (31%) 11 Business 134 Leaders 88 (34%) Total 151 (34%) 100 …with only 56 (37%) of the original 151 still in the same role. 17
Slide 18: Driving Value – Upping Benefits Identified to $4bn
DRIVING VALUE – UPPING BENEFITS IDENTIFIED TO $4BN We are rebuilding our portfolio and our performance engine… Attributable EBIT $bn @ 30 June 2013 prices and FX 1.5 $7.3bn Embedded 0.4 Identified potential 1.1 1.6 0.6 1.0 $3.3bn 0.9 $4bn of attributable EBIT identified 2012 Projects Asset Reviews V
Slide 19: Driving Value – Upping Benefits Identified to $4bn
DRIVING VALUE – UPPING BENEFITS IDENTIFIED TO $4BN We are rebuilding our portfolio and our performance engine… Attributable EBIT $bn @ 30 June 2013 prices and FX 1.5 $7.3bn Embedded 0.4 Identified potential 1.1 1.6 0.6 $5.2bn 1.0 $3.3bn 0.9 $4bn of attributable EBIT identified 2012 Projects Asset Re
Slide 20: A Step Change in Sustainability Performance
A STEP CHANGE IN SUSTAINABILITY PERFORMANCE Our ambition is spread across three time horizons… We aim to… Change in mining Competitive companies, …reset global conversations. approach to achieve communities and countries community support all win together Net positive Flourishing Work with others to
Slide 21: Key Challenges
KEY CHALLENGES In looking forward the key challenges are… External environment Prices reverting to marginal costs more quickly than expected …places focus on asset quality. Operating performance Continuing positive performance improvements …accelerating the pace of the operating model roll-o
Slide 22: Capital Management
CAPITAL Future Cash flow growth from MANAGEMENT options operations RENE MEDORI Balance Portfolio sheet re-focus flexibility Critical Base sustaining dividend capex
Slide 23: Supply Dominates Prices
SUPPLY DOMINATES PRICES Since last year the environment for bulk commodities has weakened… Indexed commodity price (1 Jan 2014 = 1) 28th Nov 2014 1.5 variance 1.4 1.3 1.2 Nickel +14% 1.1 Diamonds +7% 1.0 PGMs (1)% (8)% 0.9 (13)% Copper Met coal (15)% 0.8 Thermal coal (17)% 0.7 0.6 0.5 Iron ore (50)%
Slide 24: Net Debt
NET DEBT Lower prices are impacting our net debt position… Net debt forecast ($bn) • Previous guidance – net debt expected to peak in 2015 Commodity price – forecast at $15-16bn (pre-disposals) weakness • Current guidance: net debt to peak in ~13.5 – 14.0 2015 at $13.5-14.0bn ~13.0 – post receipt of
Slide 25: Critical Sustaining Capex
CRITICAL SUSTAINING CAPEX We are continuing to develop our key assets… Capitalised stripping and development Stay in business capex excluding capitalised stripping and development ($m) ~$1bn ~$2bn SIB capex post • Moranbah North implementation of Longwalls ~25% • Grasstree (1) Minas-Rio and 2,500 -2
Slide 26: Projects in Execution
PROJECTS IN EXECUTION Major projects in execution are nearing completion… Committed Project Capex Copper equivalent production growth(2) Significant reduction in $bn committed capital Index 3.3 expenditure as projects in execution are delivered 130 Other Venetia CAGR: 5-7% Gahcho Kué Grosvenor 120 1
Slide 27: Capex Outlook
CAPEX OUTLOOK Our overall committed capex is reducing… $bn 6.0-6.2 • Capex in 2014 below guidance of $6.5-7.0bn 5.2-5.5 • Guidance for 2015 reduced from $6.0-6.5bn Projects in execution 3.9 • Limited additional flexibility in 2015 due to high levels of committed capital 3.3 • Continued focus on opti
Slide 28: Capital Allocation
CAPITAL ALLOCATION Rigorous application of project criteria… 1 Payback 2 Cost and margin curve position 3 IRR and NPV 4 NPV / Investment 5 Impact on Group ROCE …to all new investment decisions. 28
Slide 29: Liquidity
LIQUIDITY We have Capitalised support interest from decreases as projectshigh levels in construction of liquidity… are completed. Liquidity ($bn) Interest rate policy and sensitivity 19 Annualised impact of a 1% change in LIBOR 17 15 $140m • Over 90% of gross debt floating over 3M US$ LIBOR with an
Slide 30: Dividend
DIVIDEND We recognise the critical importance of maintaining the dividend… DPS (cents per share) 85 85 • Dividend is a critical part of our return to investors • Sustainable at current level 53 53 • Flexibility to respond to lower prices through reducing capex 32 • Ability to fund dividend from cash
Slide 31: Portfolio Prioritisation
PORTFOLIO PRIORITISATION We are focusing our capital on our priority assets… Average attributable capital employed at 30 June 2013 exchange rates and commodity prices ($bn) ROCE <10% ROCE 10 ≥15% 49 ROCE ≥15% 45 Copper Kumba • Capex efficiency 35 Thermal Coal Copper Kumba Thermal Coal De Beers • Ass
Slide 32: Summary
SUMMARY We are making the hard choices… • Capex and net debt will peak in 2015 Future Cash flow growth from • Dividend funded from cash flow by 2016 options operations • Continued improvement in capital efficiency Portfolio Balance sheet re-focus flexibility • Focus investment on core portfolio Crit
Slide 33: Technical Leverage
TECHNICAL LEVERAGE TONY O’NEILL
Slide 34: Rebuilding Technical Excellence
REBUILDING TECHNICAL EXCELLENCE Leverage the Business Units’ delivery… We have the right people in place: Technical Leverage • Capability and deep knowledge Building a strong foundation Projects Technical Solutions • Implementing the Operating Model Focus on core assets Geosciences Mining Processing
Slide 35: Building a Strong Foundation
BUILDING A STRONG FOUNDATION Ensuring that we have the right architecture… Operational planning Operating Model – key attributes • Specifications for the most cost effective way to Labour, Materials & Equipment operate a business Plan Operational Planning Set Work Management Do Work management Expen
Slide 36: Results Already Showing at Sishen
Daily Tonnes 20 1 20 4/0 100 000 150 000 200 000 250 000 1 6 20 4/0 /01 1 6 LCL UCL Mean 20 4/0 /04 1 6/ 20 4/0 07 1 6 20 4/0 /10 1 6 20 4/0 /13 1 6 20 4/0 /16 1 6/ 20 4/0 19 1 6 20 4/0 /22 1 6 20 4/0 /25 1 6 20 4/0 /28 1 7 20 4/0 /01 1 7/ 20 4/0 04 1 7 20 4/0 /07 1 7 20 4/0 /10 1 7/ 20 4/0 13 1 7 2
Slide 37: Operating Model – Rolling Out Across the Group
POTENTIAL OPERATING MODEL – ROLLING OUT ACROSS THE GROUP Implementation well progressed at Sishen and Minas Rio… 2014 2015 2016 2017 2018 Sishen - North mine Sishen - rest of mine Kolomela Minas-Rio Mogalakwena Tumela De Beers Los Bronces Moranbah North Australia Coal - other SA Coal - other Phospha
Slide 38: Wave 1 – Focus on the Core Assets
WAVE 1 – FOCUS ON THE CORE ASSETS A tightly managed programme of initiatives… Asset Initiative 1 Initiative 2 Initiative 3 Initiative 4 Initiative 5 Initiative 6 Continue to Review options to Improve drill & Recovery support Operating Model Los Bronces blast performance improvement comprehensive opt
Slide 39: Successful Approach at Minas Rio
SUCCESSFUL APPROACH AT MINAS RIO How we work… 1 Identify initiatives 2 Prioritize and schedule …to deliver the best solutions. 39
Slide 40: Successful Approach at Minas Rio (cont.)
SUCCESSFUL APPROACH AT MINAS RIO (CONT.) How we work… 3 Assign roles & responsibilities Tyler Mitchelson Rodrigo Vilela Charged with delivery Group Lead Business Unit Lead ▪ Prioritise ▪ Approve ▪ Enforce Group Business Unit PMO(1) team PMO(1) team ▪ Coordinate ▪ On site Oversight & ▪ Schedule Group
Slide 41: Do the Fundamentals Better
DO THE FUNDAMENTALS BETTER Intense focus on operational fundamentals… Before Mine geology: • Best practice not shared • Improvement in grade control selectivity • High levels of system variability • Modelled ore-body to recovered product reconciliation Mining practice: Now • Improved drill and blast
Slide 42: What We See
WHAT WE SEE 42
Slide 43: Improving Fundamental Operating Performance
IMPROVING FUNDAMENTAL OPERATING PERFORMANCE It’s the detail that matters… Mining “What good looks like” example Processing “What good looks like” example Drill & blast Mine-to-Plan compliance >90% Processing Adaptive processing to ensure stability stability Load & haul Payloads consistently at
Slide 44: The Opportunity
POTENTIAL THE OPPORTUNITY Consistently better performance… Already beginning to see some results • Coal, Sishen, Minas Rio Operating performance • Stable and capable operations mean lower opex and less capex Health & safety • The probability and frequency of serious incidents is greatly reduced Upli
Slide 45: Longer Term Potential & Opportunities
LONGER TERM POTENTIAL & OPPORTUNITIES Understanding unlocks… Mining areas in the North Pit of Sishen Mine Resource potential • Platinum……………………..........Mogalakwena • Copper………………..Los Bronces / Collahuasi • Diamonds………......Venetia / depth extensions • Coal……………………………Peace River Coal Mining Approac
Slide 46: Technological Innovation
TECHNOLOGICAL INNOVATION On the cusp… Work to date • Hard-rock cutting, Automated truck kits, Slurry Pumping Predictive platforms • Integrated 3D data management Areas of opportunities • Manual to mechanised • Reduced water and energy inputs – moist rather than wet Truck Automation kits processing,
Slide 47: World Class Assets
WORLD CLASS ASSETS World-class resources… Sishen Orapa Orapa Los Bronces Moranbah North Grasstree Venetia Collahuasi Minas-Rio Mogalakwena Jwaneng Grosvenor Kolomela …demand capable leadership and business disciplines. Note: Grasstree refers to Capcoal underground 47
Slide 48: Platinum
PLATINUM CHRIS GRIFFITH • Location: South Africa and Zimbabwe • Ownership: 80% • Number of operations:14 Mines, 3 Smelters, 1 Base Metal Refinery, 1 Precious Metal Refinery • Products: Platinum, Palladium, Rhodium, other PGMs, Nickel, Copper • Employees and contractors: ~51,000
Slide 49: Platinum Summary
PLATINUM SUMMARY Despite a challenging labour environment… US$ million FY2012 FY2013 H1 2014 Equivalent refined platinum production (million ounces) Revenue 5,489 5,688 2,718 2.5-2.6 2.5 2.4-2.5 2.6 EBITDA 580 1,048 231 2.2 2.3 2.3-2.4 2.4 ~1.8 EBIT (120) 464 (1) Underlying earnings (225) 287 (1) Ca
Slide 50: Repositioning – The Future Portfolio
REPOSITIONING – THE FUTURE PORTFOLIO With restructuring largely complete, focus moves to repositioning… Restructuring • Consolidation of Rustenburg from five mines into three, and Union from two mines into one is complete • Next phase is optimisation to improve profitability (focusing on value not v
Slide 51: Repositioning – The Future Portfolio
REPOSITIONING – THE FUTURE PORTFOLIO The focus is now on optimising and reconfiguring the portfolio… • Reposition – Optimise (1) POC refers to purchase assets of concentrate Production (Moz) Production - 1H Cost Curve 2.6 • Mogalakwena World’s largest operational 2.3 17% − 300-360-420koz platinum
Slide 52: Business Improvement at Mogalakwena
BUSINESS IMPROVEMENT AT MOGALAKWENA Operational business improvement plans… Average Tonnes +79% Mined Q4 2014 YTD • Effective delivery on targets: Average Tonnes Mined Q1 2013 – Volume: tonnes, metres drilled, throughput – Quality metrics met: grade, fragmentation, water Tonnes mined per day managem
Slide 53: Mogalakwena – Optimising Growth Options
MOGALAKWENA – OPTIMISING GROWTH OPTIONS Optimised Mogalakwena performance ahead of schedule… 80 14 1. Ongoing Waste tonnes mined Tonnes milled (t) 20 concentrator 70 12 20 improvements and (Mt) 60 10 de-bottlenecking 350 50 8 330 300 40 6 2012 2013 2014E 2015E 2016E 2017E 2012 2014 2016 Production M
Slide 54: Platinum Market Balances
PLATINUM MARKET BALANCES Recent events have accelerated the tightening of the market… Cumulative industry oversupply to 2011 450 • Cumulative stocks increased due to reducing 635 (25) demand and continued supply 355 (80) (220) • Cumulative oversupply of over 1.3moz by 2011 Stock 2006 2007 2008 2009
Slide 55: Platinum Market Balances
PLATINUM MARKET BALANCES Reduced supply and demand growth to maintain medium-term deficits… Forecast demand deficit(1) • Significant improvement in outlook for 2014E 2015F 2016F 2017F 2018F 0 platinum due to: (200) – Increasing demand from: Market (deficit) Koz (400) • Autocatalysts (600) • Jeweller
Slide 56: Commercial Focus and Market Development
COMMERCIAL FOCUS AND MARKET DEVELOPMENT Delivering value and brought in-house… Four areas of focus to increase demand for PGMs: 1. Platinum Guild International focus on inelastic jewellery demand in China and India 2. World Platinum Investment Council formed to promote investment demand 3. Rhodi
Slide 57: Base Metals & Minerals
BASE METALS & MINERALS DUNCAN WANBLAD • Location: Chile, Brazil and Peru (Project) • Ownership: 44-100% • Number of operations: 11 • Products: Copper, nickel, niobium, phosphates • Employees and contractors: ~23,500
Slide 58: Copper Summary
COPPER SUMMARY Copper turnaround since 2012… US$ million FY2012 FY2013 H1 2014 Production (kt) Revenue 5,122 5,392 2,555 775 745 720-750 720-750 710-740 EBITDA 2,288 2,402 1,106 660 660 EBIT 1,736 1,739 760 Underlying earnings 941 803 309 3 Los Bronces & Collahuasi Capex – SIB(1) 854 700 249 Capex –
Slide 59: Copper Turnaround Has Continued into 2014
COPPER TURNAROUND HAS CONTINUED INTO 2014 Performance at the Los Bronces mine and plants has significantly improved… Mine extraction (ktpd) Control Chart: LB Mine Rock Extraction (ktpd) Confluencia Confluencia Plant plant Feed feed Cont ro :(ktpd) l Chart(ktpd) CF Plant Throughput (ktpd) 2013 Q1 201
Slide 60: Structural Headwinds a Challenge at Los Bronces
STRUCTURAL HEADWINDS A CHALLENGE AT LOS BRONCES Plans are in place to mitigate the impact… Grades are variable and declining Average haulage distance increase 80% from 2012 to 2016 Grade -11% % Average haulage distance (km) 0.89% +80% 0.84% 0.83% 0.77% 6.3 0.74% 0.74% 5.6 5.8 5.2 4.2 3.5 2012 2013 2
Slide 61: Copper Turnaround Has Continued into 2014
COPPER TURNAROUND HAS CONTINUED INTO 2014 After good progress to stabilise the Collahuasi mine in 2014… Mine extraction (ktpd) Control Chart: Collahuasi Mine Extraction (ktpd) Plant feed (ktpd) Plant Control Chart: Feed (ktpd) Collahuasi Ore feed (ktpd) 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q
Slide 62: Operational Improvements Have Been Embedded
OPERATIONAL IMPROVEMENTS HAVE BEEN EMBEDDED Increased production versus prior forecasts… Copper production increased to 2017 Variable copper grades (% Cu)(1) 2013 guidance 2014 guidance 0.95% +6% 720-750 720-750 745 710-740 0.90% 700 700 700 0.85% 0.80% 0.75% 2014E 2015 2016 2017 2013 2014E 2015 201
Slide 63: Quellaveco Project
QUELLAVECO PROJECT A significant orebody with attractive grades… • Located in southern Peru, at >3,500 metres in an Quellaveco cross section established mining district - strong social/political support GRADE • An attractive cost curve position with CuEq grades over > 1.0% 0.90% in initial years 0.6
Slide 64: Longer Term Brownfield Options in Copper
LONGER TERM BROWNFIELD OPTIONS IN COPPER Significant resources to sustain production with expansion potential… Los Bronces District • Main development focus is on the Los Sulfatos orebody, which is one of the largest untapped high-grade deposits in the world − Principally replacement ore for the cur
Slide 65: Longer Term Brownfield Options in Copper
LONGER TERM BROWNFIELD OPTIONS IN COPPER Significant resources to sustain production with expansion potential… Collahuasi • Development of Rosario Sur and Oeste pit areas will enable Rosario cathode production to continue − Debottlenecking could increase production to 65ktpa from ~30ktpa currently •
Slide 66: Barro Alto Nickel Furnace Rebuilds
BARRO ALTO NICKEL FURNACE REBUILDS Step change in Barro Alto’s stability led to 2014 production exceeding target… Significant improvement in performance Furnace rebuild commenced in October EF1 + EF2 Throughput: Jan,13-Oct,14 Ramp-up curves (ore smelted, t) Nominal capacity 100 UPPER LIMIT EF1 LOWER
Slide 67: Iron Ore Brazil
IRON ORE BRAZIL PAULO CASTELLARI • Location: Brazil • Ownership: 100% Mine & pipeline and 50% Port Terminal • Number of operations: 1 • Products: High quality iron ore pellet feed @~68% Fe • Employees and contractors: ~4,000 (steady-state)
Slide 68: Shipped First Ore on 25 October 2014
SHIPPED FIRST ORE ON 25 OCTOBER 2014 Minas-Rio is a priority 1 asset… • An exceptional inclusive resource base – 5.3bn tonnes • Fully integrated operation – from mine to port • 160k tonnes of premium product en route to customers in China • 290k tonnes stockpiled at Port Açu, ready for further shipm
Slide 69: Delivered Ahead of Schedule and Below Budget
DELIVERED AHEAD OF SCHEDULE AND BELOW BUDGET Delivered Minas-Rio safely and responsibly... Delivered project at $8.4 billion capex 8.4 0.4 8.8 0.8 7.6 Forecast 2015 / Total project Previous FY 2014 2016 estimate 800 400 150 100 150 Port Pre Mine & Other (1) Total Operations Ben Plant ...in line with
Slide 70: Large Reserve & Resource Base
LARGE RESERVE & RESOURCE BASE Long-term value from a first tier deposit... • 1.4Bt of Ore Reserves and 3.9 Bt of Mineral Resources • Upside reserve potential from an already large Beneficiation Plant resource base Located in the State of Minas Gerais – Brazil • Easy to mine material due to geologi
Slide 71: Cash Costs and SIB Capex
CASH COSTS AND SIB CAPEX Competitive operating costs… FOB Cash Cost Global Iron Ore Cost Curve - 2016 ($/dmt, FOB) 1st 18 yrs. Avg. (Real 2014 Terms wmt) • Minas-Rio is in the 2nd quartile of the cash cost curve Mine $10/t - $11/t 200 Beneficiation $9/t 150 Pipeline $2/t 100 Filtration $1/t Minas-Ri
Slide 72: Premium Pellet Feed Product
PREMIUM PELLET FEED PRODUCT A quality product that will bring value to our customers... 0% 2% Minas-Rio • Increased market demand for high quality ore benefits Minas-Rio Alumina + silica content 4% Brazil • Minas-Rio High quality pellet feed product North America • Direct Reduction – ~68% Fe China O
Slide 73: The Focus Is Now on Ramp Up
THE FOCUS IS NOW ON RAMP UP 18-20 months ramp-up requires world-class performance... Product Ramp-up (Mtpa - wet basis) & FOB Cash Cost • Strong operational performance since FOOS FOB ($/ wmt) Product (mt) 26.5 24-26.5 • Fully mobilised workforce ~$60/t • Licensing process to continue in line with B
Slide 74: Video
VIDEO 74
Slide 75: Break
BREAK 75
Slide 76: Coal
COAL SEAMUS FRENCH • Location: Australia, South Africa, Canada, Colombia • Ownership: Various • Number of operations: 19 (including JVs) • Products: Metallurgical and thermal coal • Employees and contractors: ~21,500 (excluding Colombia)
Slide 77: Summary
SUMMARY Creating a high margin global Coal Business… Maximise value of existing assets High margin global Coal business • Metallurgical assets: 2014 Metallurgical coal margin (US$ per tonne) 50 AA – Secured H1 margin position 40 30 – Delivered 21% cost reduction 20 10 – Created two of Australia’s be
Slide 78: Australian Assets Summary
AUSTRALIAN ASSETS SUMMARY Creating a H1 metallurgical margin position… Metallurgical coal production (Mt) US$ million FY2012 FY2013 H1 2014 24-25 24 21 20-21 20 21-22 21 18 19 Revenue 3,889 3,396 1,509 EBITDA 953 672 307 EBIT 481 106 18 Underlying 338 111 (14) 2012 2013 2014E 2015 2016 2017 earnings
Slide 79: Longwalls in Australia
LONGWALLS IN AUSTRALIA Operating Model dramatically improved performance… • Operating Model delivered 120% to 140% productivity Operating Model Outcome Moranbah uplift and 61% unit cost reduction (ROM kt/day) Grasstree (ROM kt/day) Dawson (waste kbcms/ day) 288 22 24 199 • Strengthened leadership an
Slide 80: Open-Cut Australia Transformation
OPEN-CUT AUSTRALIA TRANSFORMATION Productivity improvement across all open-cut assets… • Operating Model delivered 20% productivity uplift Open Cut Productivity and 8% cost reduction ROM Tonnes / FTE +19% • Over 50% of all primary equipment within 20% of 8,400 9,400 9,500 10,000 benchmark, 15% set t
Slide 81: South Africa and Cerrejon Summary
SOUTH AFRICA AND CERREJON SUMMARY H1 margin assets… Export thermal coal production (Mt) US$ million FY2012 FY2013 H1 2014 29 29 28-30 29 29 28-30 28-30 29 28 Revenue 3,447 3,004 1,347 EBITDA 1,019 778 373 EBIT 840 584 273 Underlying 563 414 199 earnings Capex – SIB(1) 277 262 58 2012 2013 2014E 2015
Slide 82: South African Assets and Cerrejon
SOUTH AFRICAN ASSETS AND CERREJON Opportunity to improve cost position… • SA Export Cost Position – Challenge to reduce unit costs in real terms with 7% 2014 Global Thermal coal cost curve (US$ per tonne) mining inflation 160 SA Cerrejon – Combination of cost reduction and productivity 140 120 impro
Slide 83: Portfolio Review
PORTFOLIO REVIEW Pare back portfolio to high margin assets… 2014 Metallurgical coal margin (US$ per tonne) • Asset review complete H1 2015 and sales 50 40 AA process to commence H2 2015 30 20 10 0 • Callide and Dartbrook assets available for sale -10 -20 now -30 -40 -50 -60 • Reviewing options to re
Slide 84: Growth
GROWTH Grosvenor project progressing well …. • Grosvenor (5 Mtpa, hard coking coal longwall) – First Earth Pressure Balancing Machine (EPBM) used to drive a drift in underground coal – Port and rail secured at discount to investment proposal cost – Development now critical path and ahead of plan usi
Slide 85: Kumba Iron Ore
KUMBA IRON ORE NORMAN MBAZIMA • Location: South Africa • Ownership: 69.7% • Number of operations: 3 (Sishen, Kolomela, Thabazimbi) • Export product: 66% lump iron ore, 34% fines iron ore • Employees and contractors: ~14 000
Slide 86: Kumba Iron Ore Summary
KUMBA IRON ORE SUMMARY Improved operational performance in 2014 … US$ million FY2012 FY2013 H12014 Production (Mt) 47 47-48 48-50 49 48-50 48 Revenue 5,572 5,643 2,466 48 EBITDA 3,239 3,266 1,293 EBIT 3,042 3,047 1,182 11 Underlying earnings 1,107 1,171 434 43 42 Capex – SIB(1) 448 539 264 Capex – G
Slide 87: Sishen
SISHEN Production on track to achieve 37 Mt in 2016… 2014 operational performance recovery Sishen’s mining profile • Strategic redesign completed 45 300 • Improved exposed ore position 40 37 37 250 Production (Mt) 36 Waste (Mt) 35 Catch-up of 2014 pre-strip waste backlog 35 31 200 30 • Additional co
Slide 88: Waste Tonnes Moved by Sishen's Operated Fleet
WASTE TONNES MOVED BY SISHEN’S OPERATED FLEET Major improvement in efficiencies… UCL UCL UCL LCL LCL LCL ...resulted in increased waste movement. 88
Slide 89: Operating Model
OPERATING MODEL Implemented in August 2014 as planned… • Implemented at ore and internal waste operations at Sishen North Mine. • Already delivering three significant benefits: 1. Improving scheduled work from 20% to ~70% 2. 23% efficiency improvement in total tonnes handled 3. 50% reduction in wait
Slide 90: Kolomela
KOLOMELA Continues to perform strongly at LoM production of ~11 Mtpa… • Strong 2014 performance – Waste mining in 2014 to increase to ~ 50Mt in Kolomela’s mining profile line with increased mining activities 15 50 13 • LoM production capacity increased to 11 Mtpa 10.8 11.5 11 12 40 Production (Mt) –
Slide 91: Response to Declining Iron Ore Prices
RESPONSE TO DECLINING IRON ORE PRICES Critical changes made… 5 key initiatives: 1. Reconfiguring operating plans to focus on lowest cost production units to fill rail capacity 2. Assess Thabazimbi mine as part of the portfolio 3. Reduction in SIB capex of ~20% in 2015 and a further ~10% in 2016 4. R
Slide 92: Kumba Summary
KUMBA SUMMARY The priority is… • We have turned the corner at Sishen • Roll out of the operating model – commenced at Sishen North • Targeting ~7Mt production increase (2Mt at Kolomela and remainder at Sishen) – at minimal capex • Taken clear steps to address cost base • Established a robust continu
Slide 93: Marketing
MARKETING PETER WHITCUTT
Slide 94: Anglo American's Commercial Transformation
ANGLO AMERICAN’S COMMERCIAL TRANSFORMATION We are transforming our commercial activities… 2011-2013 2013-2014 2014 2015 and beyond 4 Target Commercial Excellence 3 Ensure integrated value delivery • 3rd party to complement Strengthen physical portfolio 2 functional focus • Move closer to end custome
Slide 95: Capturing Commercial Margin Is Our Priority
CAPTURING COMMERCIAL MARGIN IS OUR PRIORITY We are actively using 4 levers within marketing… % of value Lever Example initiatives contribution by lever 1 Outlook Marketing • Moving closer to customers 60% • Improved price realisation Excellence 2 • Blending of products for optimal value in use 15% P
Slide 96: Platinum: New Minor PGM Strategy
PLATINUM: NEW MINOR PGM STRATEGY Significant earnings uplift from direct sales in PGMs… Iridium and ruthenium performance Targeted sales channels 31 5 20 4 6 2011 2012 2013 2014E 2011 2014 Sales volume: Ir + Ru (ounces) Contracted Sales Short-term sales End-user sales Improved contractual structure
Slide 97: Kumba: Fines Quality Upgrade
KUMBA: FINES QUALITY UPGRADE We are working closely with operations… • Pushing the quality for fines product higher to produce higher-grade standard product, and differentiate our product from oversupply of lower-grade fines • Higher grade standard product by improving Fe content and reducing the si
Slide 98: Copper: Getting the Right Price
COPPER: GETTING THE RIGHT PRICE Implementation of a new concentrates sales book… Key elements Outcomes 1 Create flexibility within • Create value opportunites by allocating material to a broader base of sales portfolio customers • Focus on reliable partners, share a similar understanding of long-ter
Slide 99: Shipping: Vessel Optimisation
SHIPPING: VESSEL OPTIMISATION We continue to optimise our shipping portfolio… Illustration only • Continuing to link freight trades – Iron ore from South Africa to China – Coal from Indonesia and Australia to India • Time charter vessels taken on charter to optimise voyages from South Africa to Chin
Slide 100: Positioning the Future
POSITIONING THE FUTURE MARK CUTIFANI
Slide 101: Current to Future State
CURRENT TO FUTURE STATE The turnaround and delivery on critical projects… Minas-Rio Coal • Project delivered at $8.4bn • Australia's leading longwalls • Focus on 18 to 20 month • Open cut transformation ramp-up and productivity Kumba improvement • Restructure cost base • SA export productivity • Tar
Slide 102: Production Outlook
PRODUCTION OUTLOOK Previously we have over-promised and under-delivered… 2013 2014 2015 2016 2017 Copper (1) 775Kt ~745kt 720-750kt 720-750kt 710-740kt Previously 730-745kt Previously c.700kt Previously c.700kt Nickel(2) 34kt ~37kt 20-25kt 40-45kt 42-45kt Previously 35-37kt Previously 35-37kt Iron o
Slide 103: Beyond 2016 – Setting the Scene
BEYOND 2016 – SETTING THE SCENE We are very clear on where we are taking the business… Value CAPABILITY Realise Potential Build Capability Establish Stability Operations Brownfield options STABILITY Resource potential Markets Debottleneck Priority capital options People Operating Mod
Slide 104: The "Diversified Miner"
THE “DIVERSIFIED MINER” We have a unique portfolio… H1 2014 EBIT by commodity (excluding Corporate and Exploration - % of total) Peer 1 Peer 2 Peer 3 Peer 4 Anglo American Iron ore Zinc Petroleum Fertilisers Coal Platinum Aluminium Nickel Copper Diamonds Alloys Other …with a clear and differentiated
Slide 105: Diversification and Value
DIVERSIFICATION AND VALUE Diversification comes in three primary forms... Commodity Geographic Cycle stage EBIT EBIT EBIT (excluding Corporate and Exploration - % of total) (excluding Corporate and Exploration - % of total) (excluding Corporate and Exploration - % of total) 28% 27% 35% 45% 14% 5% 39
Slide 106: Portfolio Restructure
PORTFOLIO RESTRUCTURE We are working on our asset divestment package… LafargeTarmac 2015 sale on track (conditional on Holcim/Lafarge merger) Platinum Union in discussions with interested parties Rustenburg finalising preparations for exit Bokoni/Pandora in discussions with primary stakeho
Slide 107: Anglo American - 2017 Organisation
ANGLO AMERICAN - 2017 ORGANISATION We are changing the character of the business… Employee and Contractor numbers (000) 37% 162 29 5 58 3 10 12 ~102 104 Contractors Employees 2013 Baseline Platinum Copper LafargeTarmac Other Minas-Rio Restructured JV (50% share) subject to portfolio portfolio review
Slide 108: Anglo American - 2017 Productivity
ANGLO AMERICAN - 2017 PRODUCTIVITY As we focus on high productivity asset developments and efficiencies... Productivity +83% 34 33 25 20 20 19 2012 2013 2014 2015 2016 2017 Headcount - change Production - change …we improve our competitive cost structures and margins. Note: Based on total AA product
Slide 109: Portfolio and Resource Optionality
PORTFOLIO AND RESOURCE OPTIONALITY We have focused on “Priority 1” opportunities… • Kolomela and Sishen de-bottlenecking • Underground operation mechanisation Platinum Iron Ore • Sishen low-grade ore • Mogalakwena optimisation • Minas-Rio de-bottlenecking (post ramp-up) • Quellaveco • Barro Alto bro
Slide 110: Business Model and Where We Deploy Capital
BUSINESS MODEL AND WHERE WE DEPLOY CAPITAL We understand where on the value chain to focus… Exploration Development Mining Processing Marketing End-user Resource Project Efficient mining Maximising Pricing & Understanding endowment management methods recovery value in use the customer Coal Phosphate
Slide 111: Conclusion
CONCLUSION MARK CUTIFANI
Slide 112: 2015 Deliverables
2015 DELIVERABLES A clear set of deliverables… 1 Minas Rio • Ramp up to ~80% capacity by year end 2 Portfolio • Disposal process underway 3 Operating model • Delivery on execution schedule 4 South Africa thermal coal • Cost restructuring 5 Kumba • Restructure materially progressed …as our transforma
Slide 113: Our Investment Proposition
OUR INVESTMENT PROPOSITION We are a self-help story…building our performance foundations… Operating stability…………………………to support ongoing incremental improvement. Hardware and technical focus………………..…..getting the best out of what we have. products……………………………getting the right price for our produ
Slide 114: Questions
QUESTIONS
Slide 115: Appendix
APPENDIX
Slide 116: ROCE and Attributable ROCE – Definition
ROCE AND ATTRIBUTABLE ROCE – DEFINITION Return on capital employed (ROCE) is a ratio that measures the efficiency and profitability of a company’s capital investments. It indicates how effectively assets are generating profit for the size of invested capital. ROCE is calculated as underlying EBIT di
Slide 117: Driving Value – Delivery
DRIVING VALUE – DELIVERY On track to $4bn of incremental attributable EBIT by 2016… Projects - $0.9bn Asset Reviews –$1.0bn Value Leakage - $1.1bn Identified potential - $1bn • Minas-Rio • Copper: Los Bronces & • Overhead reduction • Kolomela to 13mtpa – ~26.5Mt in 2016 Collahuasi throughput and $0.
Slide 118: Generic Control Chart - Explanation
GENERIC CONTROL CHART - EXPLANATION Red points - special cause; 7 consecutive Control Limits recalculated due to points either: Special Cause – data point deliberate and sustainable change in a) Above the mean above Control Limit performance b) Below the mean c) Ascending points Copy of Generic Cont