Wesfarmers Limited · ASX:WES
Wesfarmers — Investor Day (October 2019)
64 slides from Wesfarmers's investor day presentation, Oct 2, 2019
Slide 1: WesCEF Investor Briefing and Site Tour
2 October 2019 The Manager Market Announcements Office Australian Securities Exchange Dear Manager, WESCEF INVESTOR BRIEFING AND SITE TOUR Following is a presentation that will be given at a briefing and operational site tour of the Wesfarmers Chemicals, Energy and Fertilisers business on Thursday 3
Slide 2: Wesfarmers Chemicals, Energy & Fertilisers Investor briefing and site tour
About Wesfarmers Wesfarmers Chemicals, Energy & Fertilisers Chemicals, Investor briefing and site tour Energy & Fertilisers To be held on Thursday 3 October 2019
Slide 3: Introduction
Introduction David Baxby Managing Director, Wesfarmers Industrials Division
Slide 4: Agenda
Agenda Item Presenter Role Page Introduction and Kidman Update David Baxby Managing Director, Wesfarmers Industrials 2 Overview of WesCEF Ian Hansen Chief Executive Officer, WesCEF 9 Safety, Environment and People Liane Unewisse GM HR, HSEQ & Communications 21 Ammonia / Ammonium Nitrate Ryan Hair GM
Slide 5: WesCEF position within the Wesfarmers portfolio
WesCEF position within the Wesfarmers portfolio FY19 EBIT $1,626m FY19 EBIT $540m FY19 EBIT $167m FY19 EBIT $519m FY19 EBIT $122m WesCEF | 2019 Investor Briefing | 4
Slide 6: Strategic priorities
Strategic priorities Suggest using photo of plant WesCEF’s strategic priorities are to: • Leverage existing infrastructure and incrementally expand capacity as market conditions allow • Pursue ongoing operational efficiencies and automation opportunities • Apply innovation and technology to develop
Slide 7: WesCEF Executive Leadership Team
WesCEF Executive Leadership Team Ian Hansen Ric Colgan Ross Martelli Liane Unewisse Crispin Collier Chief Executive Officer Chief Financial Officer Director General Manager General Manager Major Projects Human Resources Business Development HSEQ & Communications Ryan Hair Barney Jones Tanya Rybarczy
Slide 8: Acquisition of Kidman Resources
Acquisition of Kidman Resources Acquisition of Kidman successfully completed, with WesCEF holding a 50% interest in the Transaction status Covalent JV and the Mt Holland Lithium Project alongside SQM Work progressing on the Definitive Feasibility Study, with Final Investment Decision expected Key mi
Slide 9: Overview of Mt Holland Lithium Project
Overview of Mt Holland Lithium Project Mine site (Earl Grey Lithium deposit): • Resources: 189Mt @ 1.5% Li20 (7.0Mt of lithium carbonate equivalent) • Reserves: 94Mt @ 1.5% Li20 Proposed Concentrator: • 2Mt per annum spodumene concentrator • To produce spodumene concentrate for Kalgoorlie use in lit
Slide 10: Overview of WesCEF
Overview of WesCEF Ian Hansen Chief Executive Officer, WesCEF
Slide 11: WesCEF | 2019 Investor Briefing | 10
WesCEF | 2019 Investor Briefing | 10
Slide 12: Strategic position and focus
Strategic position and focus Chemicals Energy Fertilisers Production, sales & distribution of Production, sales & distribution of LPG Import, production, sales & Description Ammonia, AN1, Sodium Cyanide & & LNG, retailer of natural gas & distribution of fertilisers & specialty products electricity a
Slide 13: Key customers
Key customers Business Product Geography Sector Key Customers Ammonia WA Nickel BHP, Minara, internal Iron Ore/other Ammonium Nitrate WA Orica, Dyno Nobel, Rio Tinto, Downer Mining/Fertilisers (internal) Ammonium Nitrate QLD Coal BMA, Curragh Sodium Cyanide WA / Global Gold Newmont, KCGM, Anglo, Gol
Slide 14: WesCEF's national footprint
WesCEF’s national footprint 3 • 1,300+ employees • 16 manufacturing plants • 5 major hazard facilities • 300 chemical customers 4 • 4,300+ fertiliser customers • ~265,000+ energy customers • Strong community engagement 1 6 2 1 Murdoch – WesCEF Corporate Office, Kleenheat Corporate Office & Customer
Slide 15: Kwinana location
Kwinana location • 50 years of continuous WesCEF operations • Strategically located industrial complex with access to: – Dampier to Bunbury natural gas pipeline (DBNGP) – Rail corridor – Priority berthing rights – Water & electricity infrastructure – Highly skilled workforce – Reagents produced by n
Slide 16: CSBP Kwinana Site Overview
CSBP Kwinana Site Overview Fertilisers Ammonia/Ammonium Nitrate Sodium Cyanide
Slide 17: Kleenheat Kwinana Production Facility
Kleenheat Kwinana Production Facility
Slide 18: WesCEF Financial Performance
WesCEF Financial Performance Divisional EBIT and ROC 500 35 Earnings before interest and tax ($m) 400 28 Return on Capital (%) 300 21 200 14 100 7 0 0 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 (100) (7) EBIT H1 EBIT H2 Non operating items ROC divisional (RHS) WesCEF | 2019 Investor
Slide 19: Portfolio Management and Investment
Portfolio Management and Investment Formation of Unigas + Pilot LNG (WA) plant commissioned $105M investment ppietctirat ; ALWA ASU in construction of tial Mives iment mueaectenGen commissioned _ $511M acquisition of LPG Train1 + Launch of Bangladesh LPG JV for HiSmelt Coregas (Linde Gas) 1988 2000
Slide 20: WesCEF | 2019 Investor Briefing | 19
WesCEF | 2019 Investor Briefing | 19
Slide 21: Innovation & Commercialisation Advanced Analytics
Innovation & Commercialisation Advanced Analytics Foster sustainable growth through creating an Leveraging strong history of data driven decision innovative mindset making Innovation focussed on continuous improvement and Key focus areas step out growth opportunities • Growing team of data scientist
Slide 22: Safety, Environment & People
Safety, Environment & People Liane Unewisse General Manager, HR, HSEQ & Communications
Slide 23: Safety approach & performance
Safety approach & performance To have a workplace free of high potential incidents Ongoing improvements in safety performance Total Recordable Injury Frequency Rate (TRIFR)1 18 16 14 12 10 TRIFR Occupational Health & Safety 8 Manages potential impact on workers 6 4 2 Process Safety 0 Manages impact
Slide 24: Environmental responsibility
Environmental responsibility Focus on improving environmental impact through: • Greenhouse gas reductions ‒ Implementation of technology over the last 10 years has reduced CO2 emissions by 80% ‒ Further information available in Wesfarmers Annual Report in line with Task Force on Climate-Related Fina
Slide 25: Investment in our people
Investment in our people Continued investment in the capabilities of our people: • Ensuring competence of hundreds of operational employees in dozens of safety and technical skills • Every year induct, train and supervise over 2,000 contractor employees as they undertake a range of maintenance and s
Slide 26: Ammonia & Ammonium Nitrate
Ammonia & Ammonium Nitrate Vision: To be a leader in chemical and mining solutions Ryan Hair General Manager, Ammonia / AN & Operational Services
Slide 27: Ammonia/Ammonium Nitrate production processes, products and uses
Ammonia/Ammonium Nitrate Production processes, products and uses CO2 Customers Nickel Natural Gas AGR Carbon Dioxide Ammonium Fertiliser Nitrate solution Steam Ammonia NAAN Diesel/Oil NA Customers Air Ammonia AN Emulsion Wet Blasting AN Production Emulsifier Air Nitric acid Acid/Other Fertiliser Wat
Slide 28: Plant capacities
Plant capacities Nameplate Capacity Current Capacity Plant Year Commissioned (ktpa) (ktpa) Ammonia 225 255 2000 AN 1 (solution) 200 275 1996 AN 2 (solution) 235 275 2008 AN 3 (solution) 260 275 2014 Total AN 695 825 Prill Plant 350 620 2008 Emulsion1 >100 2017 Over time, disciplined investment and o
Slide 29: Ammonium nitrate flexibility and optionality
Ammonium nitrate flexibility and optionality • CSBP is a reliable supplier of Ammonia and WA AN Supply and Demand Ammonium Nitrate (AN) - #1 AN supplier in WA 1,200 • History of ongoing investment and continuous improvement 900 • Ability to switch AN production between 600 kt Explosives Grade AN (EG
Slide 30: Site Layout
Site Layout Overview of ammonia facilities Ammonia imports with priority berthing rights 40kt Ammonia storage 255ktpa Ammonia plant
Slide 31: Overview of ammonium nitrate facilities
Overview of ammonium nitrate facilities 3x NAAN plants Nitric Acid & 825ktpa ANSol storage 8.5kt Prill plant Emulsion plant 620ktpa >100ktpa Bulk storage 20kt Bag storage 15kt
Slide 32: Nitric acid plant performance
Nitric acid plant performance • Average nitric acid plant availability of Average Plant Availability1,2 94.3% - in the top 35% of global nitric acid 100 producers3 • Nitric Acid Train 3 availability of 96%; 90 scheduled for first major maintenance shutdown in 1H20 80 Availability (%) • FY14 availabi
Slide 33: Ammonia plant performance
Ammonia plant performance Ammonia plant daily rate tpd1 800 750 700 650 600 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20YTD Net Throughput Ammonia performance highlights focus on delivering continuous improvements in plant performance 1. Tonnes per day while the plant is online WesCEF | 2019 Investo
Slide 34: Case study: Making better use of data in nitric acid plant
Production Case study:uplift Making through better better use of use dataof indata nitric acid plant • Bottleneck is Nitric Acid • Nitric Acid rate limiter is Air flow • Air flow is reduced in higher temperatures, but is influenced by other factors, including operator control • November 2018: recomm
Slide 35: Sodium Cyanide
Sodium Cyanide Vision: To contribute to the success of our customers with an uncompromising focus on people, safety and the environment. Barney Jones General Manager, Chemicals Joint Ventures & AV/Modwood
Slide 36: Overview of Sodium Cyanide business
Overview of Sodium Cyanide business • Australian Gold Reagents (AGR), is a joint venture between CSBP (75%) and Coogee Chemicals (25%) • CSBP is the operating and sales agent • Manufactures Sodium Cyanide for recovery of gold in Solution Plant 1 mining • Only producer of Sodium Cyanide in Western Au
Slide 37: 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 38: AGR Global Customer base
AGR Global Customer base
Slide 39: Sodium Cyanide production process
Sodium Cyanide production process Ammonia Hydrogen Gas Cyanide Air Sodium Cyanide Sodium Cyanide Gold & Silver Hydrogen solution solution recovery Cyanide Caustic Soda Sodium Cyanide solution Raw Material Solid Sodium Gold & Silver Cyanide recovery Product Water Use/Customer WesCEF | 2019 Investor B
Slide 40: Value-added services represents a key part of the product offering
Value-added services represents a key part of the product offering AGR offers services to ensure the safe and efficient use of Sodium Cyanide 1. Transport • Audits of logistics providers • Route reviews for transport 2. Training • Training of customers’ team in safe handling of Sodium Cyanide 3. Int
Slide 41: 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 demand 3,500 2.0 1,200 Kilotonnes per annum (ktpa) 2,800 1.8 900 Mined gold (t) Grade (g/t) 2,100 1.6 600 1,400 1.4 700 1.2 300 0 1.0 0 CY12 CY10 CY11 CY13 CY14 CY15 CY16 CY17
Slide 42: Sodium Cyanide production growth
Sodium Cyanide production growth Sodium Cyanide – Annual Production 100 80 Kilotonnes per annum (ktpa) 60 40 20 0 FY95 FY06 FY91 FY92 FY93 FY94 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Solution Solids Since 1991, annual produc
Slide 43: Kleenheat
Kleenheat Vision: The energy solutions provider of choice Mark Gadsby General Manager, Kleenheat
Slide 44: Kleenheat is a WA-focused energy solutions provider
Kleenheat is a WA-focused energy solutions provider Liquefied Petroleum Gas (LPG) Liquefied Natural Gas (LNG) Natural Gas (NG) Electricity WesCEF | 2019 Investor Briefing | 43
Slide 45: Market overview
Market overview LPG Retail1 Electricity Retail - South West LPG LNG NATURAL GAS ELECTRICITY Interconnected System (SWIS) Kununurra Natural Gas Retail LNG Retail #4 Competitive #1 #1 #2 contestable position ~55% share 55% share 27% share market in WA Port Hedland Dominated by Mature, Active Synergy;
Slide 46: LPG Distribution and Retail
LPG Distribution and Retail • Established in WA over 60 years ago • Declining domestic market driven by autogas market • Market share leader decline • Servicing all LPG markets (bulk, • Supply from own production forklift, residential, autogas and leisure) (WA) and import facility (NT) • Bulk uses i
Slide 47: LPG production facility
LPG production facility LPG production at Kwinana Production Facility (KPF) 1988 (train 1) Commissioned 2000 (train 2) Propane, butane Products and condensate Capacity 350,000 tpa Production (all products) ~150kt Availability ~98% Propane storage 26kt Butane storage 13kt WesCEF | 2019
Slide 48: LPG production process
LPG production process KPF value extraction process • Largest domestic-focused LPG facility in WA • Processes LPG via available flow from Methane: boils @ -161°C Dampier to Bunbury Natural Gas Pipeline LNG facility (clean gas feed) • Domestic and export markets Propane: boils @ -41°C • Value drivers
Slide 49: Key drivers of LPG business
Key drivers of LPG business Plant performance Saudi Contract Price 100 1,000 98 800 AUD per tonne Per cent 96 600 94 400 The Saudi CP, the predominant 92 Strong plant performance has partially 200 international marker for LPG, is mitigated adverse external factors set monthly and exhibits volatility
Slide 50: LNG business overview
LNG business overview • EVOL LNG business services remote power generation, marine, export and industrial markets by offering a cleaner alternative to diesel • Over 225,000t CO2-e avoided1 in WA power generation, and over $80m in savings2 to those customers • Economic delivery range is ~1,000 km • V
Slide 51: LNG Customers
LNG Customers Remote power Good pipeline of prospects with strong mining activity in WA Contracted Opportunities Marine Early prospects 30+ tonnes per day 20-30 tonnes per day Industrial 10-20 tonnes per day 0-10 tonnes per day WesCEF | 2019 Investor Briefing | 50
Slide 52: LNG production facility
LNG production facility LNG production at Kwinana Production Facility (KPF) Commissioned 2008 Liquefied Natural Products Gas (LNG) Capacity 200 tpd FY19 production 140 tpd Availability ~96% LNG storage 1,600 t WesCEF | 2019 Investor Briefing | 51
Slide 53: Key drivers of LNG business
Key drivers of LNG business Diesel price WA gold production and gold price 35 250 1,800 30 1,600 Gold price (AUD/tonne) Gold production (tonnes) 25 200 1,400 1,200 20 150 $/GJ 1,000 15 800 100 10 Strong gold mining activity Gold production (LHS) 600 In most markets, LNG competes 50 supporting LNG de
Slide 54: Retailing natural gas
Retailing natural gas • Commenced retailing to the WA market in March 2013 • Around 200,000 customers (~ 27% share, #2 position) • No physical assets: account management and marketing business • Serving residential, small to medium enterprise (SME), commercial and industrial markets • Crowded market
Slide 55: Retailing natural gas – Customer growth and satisfaction
Retailing natural gas – Customer growth and satisfaction Net promoter score (relationship basis) 60 Brand strengths 50 • WA born and bred Net promoter score 40 30 • Local customer service 20 • Ongoing discounts Reflects strong focus on customer 10 service and delivering value • Community involvement
Slide 56: Fertilisers
Fertilisers Vision: Trusted to deliver the best for growers Ian Hansen Chief Executive Officer, WesCEF
Slide 57: Western Australian agriculture
Western Australian agriculture • Nutrient deficient soils South West Region, WA – Requires nitrogen, phosphates and potassium (NPKs) • Long-term declining sheep numbers – Shift from pastures to crops • Small dairy, beef and horticulture sectors Annual rainfall • Dominated by broadacre cropping (mm)
Slide 58: Overview of CSBP Fertilisers
Overview of CSBP Fertilisers • Largest supplier of granular and liquid fertilisers developed specifically for WA soils and Key products and conditions services • Value-adding services and AgTech products • Product and service development • Manufacturer and importer of wide range of quality nitrogen,
Slide 59: Fertiliser facilities at Kwinana
Fertiliser facilities at Kwinana Granular and Liquid Import NPK Granulation Plant Superphosphate Manufacture Flexi N Manufacture Granular Storage Liquids Storage Customer Service Centre WesCEF | 2019 Investor Briefing | 58
Slide 60: Flexi-N Development
Flexi-N Development • CSBP introduced liquid Flexi-N (UAN1) to the WA market in 2003 as an alternative to solid nitrogen e.g. Urea • Leverages underutilised, fully-depreciated storage assets and CSBP’s AN solution production capacity • Local manufacturing supplemented by large shipments via a dedica
Slide 61: Flexi-N Development (continued)
Flexi-N Development (continued) WA Market nitrogen volumes (nutrient tonnes) • UAN now represents over 30% of total WA nitrogen requirements; Flexi-N the market 500 leader • Growth in nitrogen, especially UAN, driven by: 400 – Higher yielding crop varieties Kilottonnes (kt) 300 – Increased planted a
Slide 62: Decipher Investment
Decipher Investment • Launched Decipher as the Geospatial Information System platform for agriculture in October 2017, based on an evolution of CSBP’s research into this area • Powered by Google Earth Engine, Decipher enables growers and their advisors to easily visualise farm data enabling informed
Slide 63: Divisional Integration
• Power integration Divisional Integration • Utilities and services • Environmental management Air CO2 Sales Ammonia Plant Nitric Acid Plant Ammonia sales to nickel industry Water AN Solution AN Solution Plant sales for explosives Natural Gas via DBNGP1 AN Prill sales Prilling Plant Distribution & l
Slide 64: Wesfarmers Chemicals, Energy & Fertilisers
Wesfarmers Chemicals, Energy & Fertilisers