Wesfarmers Limited · ASX:WES
Wesfarmers — Investor Day (March 2023)
80 slides from Wesfarmers's investor day presentation, Mar 23, 2023
Slide 1: WesCEF Investor Briefing and Site Tours announcement
23 March 2023 The Manager Company Announcements Office Australia Securities Exchange Dear Manager, WESCEF INVESTOR BRIEFING AND SITE TOURS Following is a presentation that will be given as part of an investor briefing and operational site tours of the Wesfarmers Chemicals, Energy and Fertilisers bus
Slide 2: Investor briefing and site tours
23 MARCH 2023 Wesfarmers Chemicals, Energy & Fertilisers Investor briefing and site tours
Slide 3: Introduction and Overview
Introduction and Overview Ian Hansen Managing Director WesCEF
Slide 4: Acknowledgement of traditional custodians
I acknowledge the traditional custodians of the land we are meeting on, the Whadjuk Noongar people. I acknowledge and respect their continuing culture and the contribution they make to the life of this region.
Slide 5: Schedule
Schedule Thursday 23 March 2023 Friday 24 March 2023 Presentation Kwinana Site Tour Mt Holland Site Tour • Overview of WesCEF businesses • Tour of Kwinana production facilities • Operational tour of Mt Holland – Operations – Ammonia and Ammonium Nitrate site – Strategies and competitive (AN) – Mine
Slide 6: Presentation agenda
Presentation agenda Item Presenter Role Page Introduction and Overview Ian Hansen Managing Director, WesCEF 2 Financial, HSEQ and People Alex Willcocks Chief Financial Officer, WesCEF 15 Decarbonisation Mussaret Nagree GM Climate Opportunities 23 Ammonia and Ammonium Nitrate Leigh Meyers GM Ammonia/
Slide 7: WesCEF overview
WesCEF overview • A portfolio of complementary businesses with clear competitive advantages • Safe operations and sustainable management • Market-leading operating performance driven by a focus on reliability and continuous productivity improvements • A proven history of sensible, timely deployment
Slide 8: WesCEF Executive Leadership Team
WesCEF Executive Leadership Team Presenting today Julie Watson Joe Perkins Sheldon Renkema David Zacher Ian Hansen Alex Willcocks General Manager General Manager General Manager General Manager Managing Director Chief Financial Officer HSEQ & Human Resources Business Major Projects Technical Service
Slide 9: Covalent leadership – Wesfarmers representatives
Wesfarmers representatives Covalent leadership – Presenting today on the Covalent Management WesCEF secondees Committee Ryan Hair Ross Martelli Ric Colgan Ian Hansen Chief Executive Project Director Chief Financial WesCEF Officer Officer Managing Director Plus others in engineering, commercial and t
Slide 10: WesCEF Operating Model
WesCEF Operating Model defines WesCEF’s vision and how it contributes to the overarching Wesfarmers objective. *30% is relative to 2020 baseline. Refers to Scope 1 and 2 emissions. See slide 24 for Net Zero 2050 assumptions. WesCEF | 2023 Investor Briefing | 9
Slide 11: Strategic position and focus
Strategic position and focus Chemicals Energy Fertilisers Lithium Production, sales and Production, sales and Import, production, sales and Management company of JV distribution of Ammonia, AN, distribution of LPG and LNG, distribution of fertilisers and with SQM (50:50). Developing Description Sodi
Slide 12: WesCEF's national footprint
WesCEF’s national 5. Darwin Kleenheat import footprint1 and distribution 5 • 1,500+ employees • 16 manufacturing plants • 4 major hazard facilities • 150+ chemical customers 6. Moura QNP joint venture 6 • 4,000+ fertiliser customers • 270,000+ energy customers 3 • Strong community engagement 1. Murd
Slide 13: Integrated Kwinana operations with access to key infrastructure
Integrated Kwinana operations with access to key infrastructure Critical Kwinana infrastructure: Covalent Kleenheat • Direct access to Lithium Covalent Kleenheat natural gas Lithium Perth CBD • Priority port access • Rail corridor connecting to WesCEF eastern Kwinana goldfields Rail corridor • Major
Slide 14: Natural gas in Western Australia
Natural gas in Western Australia • The Western Australian gas market is disconnected from the east coast – The WA Domestic Gas Policy requires domestic sale equivalent to 15% of LNG production from each LNG export project over its life Carnarvon Basin • The WA market has traditionally been supplied
Slide 15: Divisional integration
Divisional integration Inputs WesCEF processes Outputs Power Utilities and Environmental Retail natural gas sales Natural gas integration services management through WA gas distribution network Sourced through gas distribution network CO2 by-product sales Ammonia plant Ammonia imports Ammonia Nitric
Slide 16: Financial, HSEQ and People
Financial, HSEQ and People Alex Willcocks Chief Financial Officer WesCEF
Slide 17: Track record of capital deployment to meet market needs
Track record of capital deployment to meet market needs and deliver shareholder value Cash capital expenditure Divisional EBT and ROC3 Capex ($m) EBT $m ROC % 500 600 36 500 30 400 400 24 300 300 18 200 200 12 100 100 6 0 0 0 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 1H23 FY23 FY12 FY13
Slide 18: History of portfolio management and investment
History of portfolio management and investment Kleenheat ALWA ASU c.$400m $138m Coregas enters retail Sale of enGEN natural gas commissioned investment investment in transferred to for c.$100m in WA for HiSmelt in AN2 LNG project WIS 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sale of Chlor CSBP an
Slide 19: Opportunities for further investment support long-term growth
Opportunities for further investment support long-term growth Pipeline of major project opportunities Supported by strong enablers Kwinana Ammonia expansion • Increase ammonia production capacity at Kwinana from 270ktpa to c.570ktpa, displacing imported volume Culture of financial discipline • Curre
Slide 20: Investing in our people
Investing in our people Culture Talent pipeline A culture that supports diversity Investing in apprenticeships, and inclusivity, with a focus on traineeships, and programs for customers and the overarching vacation, cadet, graduate and Wesfarmers objective. work experience students. Leadership Depth
Slide 21: Supporting Kwinana, Perth and regional communities
Supporting Kwinana, Perth and regional communities Clontarf Academy Hockey WA regional partnership Telethon Community Cinemas Supporting STEM education Rockingham Regional Environment Centre Perth Fringe Festival WesCEF | 2023 Investor Briefing | 20
Slide 22: Safe Person, Safe Process, Safe Place
Safe Person, Safe Process, Safe Place Occupational Health and Safety Manages potential impact on workers Process Safety Manages potential impact on workers, assets and the wider community • Reduce serious injury risk through the implementation of a Ongoing improvements in safety performance high pot
Slide 23: Environmental responsibility
Environmental responsibility Focus on managing environmental responsibility by: • Ongoing focus on greenhouse gas reductions • Further increasing energy efficiency and heat recovery • Monitoring and minimising emissions • Addressing legacy waste management and land remediation • Diversifying water s
Slide 24: Decarbonisation
Decarbonisation Mussaret Nagree General Manager Climate Opportunities
Slide 25: WesCEF decarbonisation pathway to Net Zero 2050
1 1. Over the period to 2050, WesCEF assumes that new technologies (such as green ammonia and hydrogen) continue to advance and that they become commercially viable and capable of operating at scale well before 2050 and that Government policy is supportive of climate action while maintaining competi
Slide 26: Phase 1: Nitrous oxide abatement, electricity generation and CCU
Phase 1: Nitrous oxide abatement, electricity generation and CCU FY20 Scope 1 and 2 emissions Ongoing emissions management initiatives ktCO2e Abatement catalysts in nitric acid plants In 2012 WesCEF commenced the installation of secondary catalysts in its nitric acid plants. The catalysts turn nitro
Slide 27: Phase 2: 30% reduction by 2030 based on FY20 business mix
Phase 2: 30% reduction by 2030 based on FY20 business mix Phase 2 progress vs target Phase 2 priorities ktCO2e Upgrade abatement catalysts in nitric acid plants 1,000 • Optimising performance of existing secondary 900 abatement catalysts and evaluating additional nitrous oxide abatement technology 8
Slide 28: Phase 3: Foundational work
Phase 3: Foundational work Working with the right partners to enable the third phase of WesCEF’s decarbonisation journey Working with APA to study the transportation of hydrogen along the southern portion of the Parmelia Gas Pipeline. Partnership with Mitsui & Co to explore feasibility of building a
Slide 29: Decarbonisation summary and outlook
Decarbonisation summary and outlook • Focus on greenhouse gas emissions performance relative to baseline and improvement in emissions intensity • High degree of confidence in 30% reduction by 2030 and striving towards committed target of Net Zero by 2050 ‒ Achievement of target is expected to avoid
Slide 30: Ammonia and Ammonium Nitrate
Ammonia and Ammonium Nitrate Leigh Meyers General Manager Ammonia / Ammonium Nitrate
Slide 31: Ammonia/Ammonium Nitrate Production processes
Ammonia/Ammonium Nitrate Production processes AN Emulsion Natural Gas Ammonia Ammonia Nitric acid Nitric acid Air Carbon Dioxide Catalysts AN Solution Ammonia AN Prill WesCEF | 2023 Investor Briefing | 30
Slide 32: Plant capacities
Plant capacities Initial nameplate capacity Current capacity Plant Year commissioned (ktpa) (ktpa) Ammonia 2000 225 270 NAAN 1 (solution) 1996 200 275 NAAN 2 (solution) 2008 235 275 NAAN 3 (solution) 2014 260 275 Total AN 695 825 Prill Plant 2008 350 620 Emulsion 2017 >100 Over time, disciplined inv
Slide 33: Ammonia
Ammonia • WesCEF’s ammonia requirement is approximately 520ktpa, of which c.270ktpa is manufactured with the remainder imported • Regulatory approvals for ammonia expansion project currently being assessed; FID expected late calendar year 2024, subject to approval timing • Ongoing improvement in pla
Slide 34: Ammonium nitrate flexibility and optionality
Ammonium nitrate flexibility and optionality CSBP AN supply and WA mining demand • CSBP is a reliable supplier of ammonia and AN, and Kt is the #1 supplier of AN in WA 1,200 • History of ongoing investment and continuous 1,000 improvement • Majority of CSBP AN is sold as Explosives Grade 800 AN (EGA
Slide 35: Nitric acid plant performance
Nitric acid plant performance Average plant rate • Record overall production achieved through Tonnes per day2 continuous improvement and investment in data 650 analytics 645 640 • Average online Nitric Acid Plant rates have 635 improved 5.8% since FY16 through incremental 630 investment and engineer
Slide 36: Ammonia and AN summary and outlook
Ammonia and AN summary and outlook • Strong long-term partnerships with large counterparties • An unwavering focus on safe and sustainable management • Market-leading operating performance driven by a culture of enhanced reliability and continuous productivity improvements • Progressing ammonia prod
Slide 37: Sodium Cyanide
Sodium Cyanide Barney Jones General Manager Chemicals Joint Ventures and AV/Modwood
Slide 38: Overview of Sodium Cyanide business
Overview of Sodium Cyanide business AGR sodium cyanide production • Australian Gold Reagents (AGR) is a joint venture ktpa between the operating and sales agent CSBP (75%) 100 and Coogee Chemicals (25%) 80 • Sodium cyanide is used for recovery of gold in mining 60 • Australia is the second largest g
Slide 39: Sodium cyanide production process
Sodium cyanide production process Ammonia Natural Gas Hydrogen Cyanide Sodium Cyanide Solid Sodium Water Air solution Cyanide Caustic Soda WesCEF | 2023 Investor Briefing | 38
Slide 40: Three different products are provided to meet customer needs
Three different products are provided to meet customer needs Solution Solid to Solution Solids • 30% sodium cyanide • ~98% sodium cyanide • ~98% sodium cyanide • Delivered ready for use • Requires onsite mixing • Requires onsite mixing • No onsite water needed • Requires water onsite • Requires wate
Slide 41: AGR Global Customer Base
AGR Global Customer Base WesCEF | 2023 Investor Briefing | 40
Slide 42: Value-added services represents a key part of the product offering
Value-added services represents a key part of the product offering • Transport – Audits of logistics providers – Route reviews for transport • Training – Training of customers’ teams in safe handling of sodium cyanide • International Cyanide Management Institute (ICMI) compliance – Assistance for cu
Slide 43: Global gold production, grade and demand for sodium cyanide
Global gold production, grade and demand for sodium cyanide Global gold production Global gold grade Sodium cyanide – global demand1,2 4,000 1.35 900 1.30 800 Mined Gold (t) 3,000 700 1.25 600 (ktpa) 1.20 Grade (g/t) 500 2,000 1.15 400 1.10 300 1,000 200 1.05 100 0 1.00 0 CY18 CY14 CY15 CY10 CY11 CY
Slide 44: Sodium cyanide summary and outlook
Sodium cyanide summary and outlook • Over 30 years of operation without a significant safety or environmental incident • Facilitated the growth in Western Australian gold production, and a key partner for tier one mining companies both domestically and overseas • Market-leading operating performance
Slide 45: Kleenheat
Kleenheat Tanya Rybarcyzk General Manager Kleenheat
Slide 46: Kleenheat is a WA-focused energy solutions provider
Kleenheat is a WA-focused energy solutions provider Market overview LPG LPG Retail Wholesale Distribution LNG Natural gas Kununurra Natural Gas Retail LNG Retail Competitive #1 #1 #1 #2 position ~95% share ~42% share ~52% share ~28% share Port Hedland Mature, Mature, Active Market declining declinin
Slide 47: LPG production and distribution
LPG production and distribution • Established over 65 years ago and the only current WA-focused LPG producer • Supply from own production (WA) and import facility (NT) • Servicing all LPG markets (bulk, forklift, residential, autogas and leisure) • Bulk uses include industrial heating, food producti
Slide 48: Key drivers of LPG business
Key drivers of LPG business Plant performance Saudi Contract Price 100 1,200 1,000 95 800 AUD per tonne Per cent 90 600 Strong plant performance has partially mitigated 400 The Saudi CP, the predominant 85 adverse external factors international marker for LPG, is 200 set monthly and exhibits volatil
Slide 49: LNG
LNG LNG sales volume • Plant commissioned in 2008 with a capacity of Strong sales growth since FY18 86 ktpa • EVOL LNG business services remote power generation by offering a cleaner alternative to diesel • Over 391,000 tCO2e avoided1 using LNG instead of FY21 FY16 FY17 FY18 FY19 FY20 FY22 diesel as
Slide 50: Retailing natural gas and electricity
Retailing natural gas and electricity Natural gas Brand strengths • Commenced retailing to the WA market in March 2013 WA born and bred • Around 220,000 customers (~ 28% share, #2 position) Local customer service • No physical assets: account management and marketing business Spontaneous Ongoing val
Slide 51: Kleenheat summary and outlook
Kleenheat summary and outlook • Kleenheat Production Facility and storage are key strategic assets • Strong brand awareness; Canstar’s award for Most Satisfied Customers - Natural Gas 2022 • Strong market positions in LPG, LNG and natural gas with capability to leverage growing WA mining sector • St
Slide 52: CSBP Fertilisers
CSBP Fertilisers Mark Scatena General Manager Fertilisers
Slide 53: Fertiliser business overview
Fertiliser business overview Industry Context • Demand for food and fibre continues to grow, underpinned by rising global incomes and population • Australia has a comparative advantage in agriculture, with WA the largest grain-producing region • WA fertiliser market structure benefits from direct di
Slide 54: Strong long-term fertiliser demand outlook and improving yields
Strong long-term fertiliser demand outlook and improving yields WA projected fertiliser demand Improved yield – trials research and range innovation Yield Three Springs (t/hectare) 2022 Field Trial Results 4.0 Urea Sustain 3.5 Flexi-N 3.0 Urea 2.5 2.0 1.5 1.0 0 20 40 60 80 100 Source: CSBP Fertilise
Slide 55: Market-leading proposition and difficult to replicate assets
Market-leading proposition and difficult to replicate assets Strong CSBP offer Exclusive CSBP capabilities and offer in WA High efficiency solids import at Kwinana; Solids fertiliser manufacture (compounds priority port berth access and superphosphate) Import, storage and despatch capacity in all Ac
Slide 56: Differentiated offer leveraging agronomic and digital capabilities
Differentiated offer leveraging agronomic and digital capabilities to grow the overall market and CSBP’s share Qualified and experienced Soil and plant nutrition CSBP1sales account hub to plan, implement managers and agronomists and review season via to support nutrition decisions farm mapping, sate
Slide 57: Supporting growers' decarbonisation and sustainability
Supporting growers’ decarbonisation and sustainability Understanding and Educating and Developing and Researching and measuring advocating deploying solutions partnering WesCEF | 2023 Investor Briefing | 56
Slide 58: Fertilisers summary and outlook
Fertilisers summary and outlook Have photo on RHS • Leadership position in growing and attractive addressable of slide market • Differentiated and difficult to replicate customer proposition • Focus on continuous improvement to offer the best nutrition advice, supply reliability and customer experie
Slide 59: Questions?
C: Questions oe Wesfarmers Chemicals Energy & Fertilisers
Slide 60: Lithium
Lithium Ian Hansen Managing Director WesCEF
Slide 61: Joint Venture proponents and structure
Joint Venture proponents and structure Mt Holland Lithium Joint Venture • 50+ year history of chemical WES SQM • Global expertise in the development, operations in Kwinana, production, marketing and sale of 100+ year history of operating in 50% 50% chemical products, including lithium Australia hydr
Slide 62: WesCEF lithium value proposition
WesCEF lithium value proposition Australian made Security of Supply We operate in a trusted jurisdiction Proven mining and chemical experience Integrated mine to refinery Quality Long project life High quality, low impurity chemical product Material provenance verification Environmental, Social Targ
Slide 63: Lithium market
Lithium market Lithium demand outlook • Strong demand outlook for battery grade lithium kt LCE 3,000 • Driven by increasing penetration of battery EVs electric vehicles (BEV) and battery energy 2,500 Other Batteries storage systems (BESS) Industrials • Forecast BEV and BESS demand growth of Derivati
Slide 64: Covalent Lithium Investor Briefing
Covalent Lithium Investor Briefing MARCH 2023
Slide 65: World class hard rock resource
World class hard rock resource Grade (% Li2O) 2.5 High quality Mt Holland resource enables a low- 2.0 cost, long-term lithium Mt Holland production business 1.5 1.0 Operating Development Exploration 0.5 Bubble size: Contained Li2O (kt) - 0 50 100 150 200 250 300 350 400 450 Source: WesCEF analysis b
Slide 66: Project overview • Mt Holland and Kwinana
Project overview • Mt Holland and Kwinana The Project Comprises • Mine and Concentrator: Located at Mt Holland in WA’s Goldfield’s region. Will produce ~380ktpa of spodumene MT HOLLAND LITHIUM DEPOSIT concentrate. • Resources: 186Mt @ 1.53% Li2O • Refinery: Located in Kwinana. Spodumene (7.0Mt of li
Slide 67: Project update
Project update Status Current timetable Capital Costs • First ore was mined in • Project construction commenced: • Capital costs impacted by December 2022 July 2021 COVID-19 delays and WA labour • Concentrator >85% complete, • First production from Mt Holland costs early commissioning has concentrat
Slide 68: Mt Holland concentrator: process design
The Mt Holland project has followed a multi-pronged approach to ensure MT HOLLAND CONCENTRATOR: that industry best practice design and operability strategies are included PROCESS DESIGN in the concentrator design. Tailings Storage Facility Spodumene Ore Spodumene TO KWINANA Concentrate ~1.5% Li2O Co
Slide 69: WesCEF | 2023 Investor Briefing | 68
WesCEF | 2023 Investor Briefing | 68
Slide 70: Kwinana refinery: process design
KWINANA REFINERY: Designed to produce tier one battery-grade lithium hydroxide. PROCESS DESIGN SPODUMENE Kwinana Refinery Battery Grade Lithium Hydroxide CONCENTRATE FROM MT HOLLAND Calcination & Causticisation & Acid Roast Leaching Purification Crystallisation Lithium Hydroxide Spodumene Water adde
Slide 71: WesCEF | 2023 Investor Briefing | 70
WesCEF | 2023 Investor Briefing | 70
Slide 72: WesCEF | 2023 Investor Briefing | 71
WesCEF | 2023 Investor Briefing | 71
Slide 73: Project economics
Project economics Spodumene concentrate Lithium hydroxide economics economics • Focus on maximising production • Focus on minimising the time to prior to the commissioning of the achieve nameplate quality refinery production • R&D underway to maximise • Commercialisation options for resource recover
Slide 74: Summary
Summary • Mt Holland mine and concentrator: – A globally significant hard rock lithium deposit: high grade with a c.50-year mine life at 380ktpa concentrator capacity or c.25-year mine life if expanded to 760ktpa concentrator capacity – The concentrator is based on well-understood mineral processing
Slide 75: Lithium growth opportunities
Lithium growth opportunities Expansion of the Mt Holland mine and concentrator • Covalent is undertaking a feasibility study to evaluate doubling the production capacity of the mine and concentrator • Capitalise on forecast market demand and accelerate free cash flows • Primary crushers and most non
Slide 76: Lithium sales strategy
Lithium sales strategy Spodumene concentrate • Strong interest from tier one customers seeking to secure spodumene concentrate volumes • First earnings from sale of spodumene concentrate expected in 1HCY24, with WesCEF’s share of sales volume expected to be approximately 50kt in 1HCY24 • Concentrato
Slide 77: Questions?
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Slide 78: WesCEF outlook
WesCEF outlook • Continue to provide high-quality and reliable supply of products and services to our customers • Progress timely opportunities to leverage existing infrastructure and assets to expand production capacity with a disciplined returns focus • Optimise business processes by investing in
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Slide 80: Glossary of terms
Glossary of terms Acronym Term/Definition Acronym Term/Definition ASU Air separation unit ktpa Kilo tonnes per annum AN Ammonium nitrate LCE Lithium carbonate equivalent AN1, AN2, AN3 CSBP Ammonium nitrate plants 1, 2 and 3 Li2O Lithium oxide AV Australian Vinyls LNG Liquefied natural gas BESS Batte