Anglo American Plc · LSE:AAL
Anglo American — FY2021 Earnings Presentation
64 slides from Anglo American's earnings presentation, Feb 24, 2022
Slide 1: Anglo American FY2021 results, 24 February 2022
24 February 2022 Processing plant, Quellaveco Anglo American
Slide 2: Introductory comments
Introductory comments Stuart Chambers Chairman 2 Anglo American
Slide 3: Cautionary statement
Cautionary statement Disclaimer: This presentation has been prepared by Anglo American plc (“Anglo American”) and comprises and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the written materials/slides for a presentation concern
Slide 4: 2021 results agenda
2021 results agenda 2021 overview and look ahead Mark Cutifani The numbers Stephen Pearce Positioned for a sustainable future Mark Cutifani 4 Anglo American
Slide 5: 'WeCare' approach: Covid & resilience
‘WeCare’ approach: Covid & resilience Responsible & holistic approach protecting lives & livelihoods in our workforce & communities Robust operating protocols & controls Rigorous testing approach Mental health & gender-based violence support Successful vaccine program delivered 5 Anglo American
Slide 6: SHE performance – drive for a safe & healthy future
SHE performance – drive for a safe & healthy future Safety Health Environment Group TRCFR1,2 Fatalities1 Occupational health – new cases1,3 Level 3 & above significant incidents1,4 5.42 30 209 3.17 101 96 2.66 15 H1: 2.33 2.21 2.14 6 2.24 39 9 30 H2: 2.16 16 2 5 4 1 1 1 2 1 2013 2017 2018 2019 2020
Slide 7: Driving a healthy environment & thriving communities
Driving a healthy environment & thriving communities Energy GHG emissions Social Way Compliance mGJ CO2 equivalent emissions Social Way Implementation5 106 18 18 17 97 16 16 87 15 49% 84 85 81 23% 91% 96% 89% Social Way 3.0 standards far exceed Social Way 2.0 2013 2017 2018 2019 2020 2021 2013 2017
Slide 8: FY 2021 results
FY 2021 results Production6 EBITDA7 Mining EBITDA margin8 5% $20.6bn 56% Unit cost, FX neutral9 EPS7 ROCE10 10% $7.22/sh 43% Up 16% including FX 8 Anglo American
Slide 9: 2021 – solid operating performance
2021 – solid operating performance Diamonds Base Metals11 Ongoing demand recovery Solid Copper performance Business transformation accelerated 2021 water challenges mitigated Solid unit cost performance Stable Nickel performance PGMs Bulks12 Significantly improved production Robust Iron Ore performa
Slide 10: Our improvement journey
Our improvement journey Portfolio restructuring P101 cost & volume Technical reconfiguration Incremental growth & debottlenecking Operating Model & processes New projects Mining EBITDA margin8 Margin based on long- term consensus commodity prices (which are ~36% lower than the 2021 basket price) 56%
Slide 11: Significant improvement in our cost curve position
Significant improvement in our cost curve position Average margin adjusted cost curve14 position over time -20% 49% -8% -21% 45% +13% +3% 43% 41% 39% 37% 36% 29% 27% 22% Peer 1 Peer 2 Peer 3 Peer 4 201314 2021F 11 Anglo American
Slide 12: The numbers
The numbers Stephen Pearce Anglo American Hong Kong, Central District
Slide 13: FY 2021 results
FY 2021 results EBITDA7 EPS7 Net debt $20.6bn $7.22/sh $3.8 bn Unit cost, FX neutral9 Shareholder returns15 Free cash flow16 10% $6.2bn $9.6bn Up 16% including FX Ordinary & special dividends and buyback 13 Anglo American
Slide 14: Strong margins drive record EBITDA
Strong margins drive record EBITDA Diamonds Base Metals 12 $1.1bn $4.3bn 47% mining EBITDA margin8 60% mining EBITDA margin8 $20.6bn 17 PGMs Bulks 13 $7.1bn $8.1bn 62% mining EBITDA margin8 55% mining EBITDA margin8 14 Anglo American
Slide 15: Prices, operational recovery/improvement drive earnings
Prices, operational recovery/improvement drive earnings EBITDA7 $bn 0.3 (0.2) 0.9 (1.5) 1.1 10.2 20.6 19.6 108 9.8 2020 Price18 Currency Covid ACP Cost & Other 2021 & CPI19 recovery recovery volume20 15 Anglo American
Slide 16: Cyclical inflationary headwinds driven by strong prices
Cyclical inflationary headwinds driven by strong prices 2021 unit cost performance9 2022 unit cost outlook Producer country FX headwinds 6% Inflation & input costs expected to increase in 2022 3% 16% Partly offset by higher expected 4% (4%) 2% volumes 10% 5% CPI Input costs Volumes Maintenance Other
Slide 17: Capex recovering post initial Covid impact
Capex recovering post initial Covid impact Capex22 $bn 5.2 2021 higher due to partial recovery from Covid delays / supply chain disruptions 4.1 1.8 Growth capex includes $0.8bn for Growth 1.5 Quellaveco & $0.5bn for Woodsmith 2.2 2022 capex to increase by ~$0.9-1.4bn 3.4 due to Covid rollover & high
Slide 18: Strong cash generation drives robust balance sheet
Strong cash generation drives robust balance sheet Net debt $bn $1.7bn reduction in net debt 5.5 1.1 PGM prices & customer prepayment result in working 3.8 capital reduction 2.4 (1.8) Robust cash generation across all business units Supporting disciplined, value-adding growth 202023 Working Cash Gro
Slide 19: Healthy dividend pay-out with additional returns
Healthy dividend pay-out with additional returns 499 c/sh 50 c/sh $0.6 bn H2 special dividend $0.6bn 80 c/sh $1.0 bn Buyback Special dividend announced for H2 2021 leading to… 80 c/sh $1.0 bn H1 special dividend 69% Total payout ratio in 2021 289 c/sh $3.6bn Base dividend 40% of underlying earnings
Slide 20: Transparent taxes & royalties in host countries builds trust
Transparent taxes & royalties in host countries builds trust UK $7.1 bn $0.4bn Taxes and royalties24 Paid in host country Brazil Other Africa Australia/Asia 89%24 increase from 2020 $0.5bn $0.7bn $0.4bn Chile $1.0bn South Africa $4.0bn 20 Anglo American
Slide 21: Balanced capital allocation framework
Balanced capital allocation framework 2021 allocation of capital Sustaining attributable free cash flow16 2021 dividend at 40% of underlying earnings15 Growth capex22 ($1.8bn) & additional shareholder returns ($2.6bn15) 21 Anglo American
Slide 22: Cost and volume improvements on track
Cost and volume improvements on track $3.5-4.5bn Projects: 2022-23 Up to $2.0bn Quellaveco Marine Diamonds Namibia 2021 delivery vs 2017 Technology & Innovation: 2020-23+ Predictive Maintenance Bulk Ore Sorting rollout Up to Coarse Particle Recovery $2.5bn Operating Model & P101: 2017-23 $1.4bn Copp
Slide 23: Balanced, disciplined and sustainable approach
Balanced, disciplined and sustainable approach Cash returns Attractive growth $12.3bn ~18 % Dividends & buybacks since 201715 Production growth by ~20236 Resilient balance sheet Capital employed by geography26 Other Chile 13% & Peru 0.2x Australia 23% 9% Botswana 12% 2021 Net debt:EBITDA7 & Namibia
Slide 24: Positioned for a sustainable future
Simple conversion of existing divider. Looks a bit old fashioned now I think compared to the rest of the fresh, modern style Positioned for a sustainable future Mark Cutifani Odaiba - Tokyo
Slide 25: Driving towards a sustainable future
Driving towards a sustainable future Greener World Electrified World Consumer World Cu Eq production6 Met Coal Diamonds Transition enabling High quality Copper Iron Ore ~85% Future enabling Crop Nutrients Nickel & PGMs Manganese 25 Anglo American
Slide 26: By 2040 - operations carbon neutral & 50% cut in Scope 3
By 2040 - operations carbon neutral & 50% cut in Scope 3 See footnotes 27 & 28 26 Anglo American
Slide 27: Quellaveco video
Quellaveco video Papujune processing plant Link to be added following the results call 27 Anglo American
Slide 28: Quellaveco on track for mid 2022 delivery
Quellaveco on track for mid 2022 delivery Operations – Autonomous haul trucks Quellaveco Greenfield copper project On track for mid 2022 delivery despite Covid challenges • First ore delivered October 2021 • Processing plant – Line 1 ~90% complete, pre-commissioning underway • Water dam complete – p
Slide 29: Quellaveco – a world class asset
Quellaveco – a world class asset Papujune processing plant Growth: ~10% CuEq growth (~300ktpa29) Unit costs: since approval, first 5 years’ unit cost down from ~96c/lb to ~85c/lb (2018 real basis)(nominal: ~105c/lb to ~95c/lb) Production: +400kt29 of production brought forward – significant value en
Slide 30: Portfolio complemented by high value growth options
Portfolio complemented by high value growth options31 Moranbah-Grosvenor Mogalakwena Collahuasi Phase 2 Sakatti Woodsmith (Metallurgical Coal) (PGMs) (Copper) (Copper) (Crop Nutrients) ~2025 from ~2026 ~2028 ~2028 ~TBC ~$0.3bn capex on Number of options being Next stage expansion, Rich polymetallic
Slide 31: Value-adding, future-enabling growth
Value-adding, future-enabling growth >90% growth capex ~50 % margin 32 allocated to future-enabling products projects focus on high quality, low-cost assets Cu Eq production6 +35% +21% +18% Baseline portfolio ~2023 ~2025 ~20306 Met Coal Iron Ore PGMs Copper Crop Nutrients 31 Anglo American
Slide 32: Purpose: to re-imagine mining to improve people's lives
Purpose: to re-imagine mining to improve people’s lives Effectiveness Efficiency Sustainability >10 % 15-20% 7 Free Cash Flow33 ROCE 10 Pillars of Value (on capital employed) 2021 31% 43% Embedded 32 Anglo American
Slide 33: Q&A: Our investment proposition
Q&A Our investment proposition Competitive Differentiated Sustainable assets capabilities returns Strong cost position Technology-led EBITDA improvement $3.5-4.5bn Long term growth +35%6 Sustainability leader Disciplined capital allocation To ask a question, Standard International Dial-in: UK +44 (0
Slide 34: Footnotes
Footnotes 1. Recordable incidents. Data relates to subsidiaries and joint operations over which Anglo American has capital expenditure (sustaining/lifex only), net interest paid, dividends paid to minorities and capital management control. Since 2018 data for fatalities, TRCFR and environmental metr
Slide 35: Appendix
Appendix 35 Anglo American Mogalakwena North Concentrator
Slide 36: Simplified earnings & guidance
Simplified earnings & guidance 36 Anglo American Papujune Dome at Quellaveco
Slide 37: 2021 simplified earnings by BU
2021 simplified earnings by BU De Beers $m (unless stated) (Diamonds) Copper Nickel PGMs Iron Ore1 Met Coal Other 2 Total Sales volume (mined share) 33.4Mct3 641kt 42.1kt 3,442koz4 63.3Mt 14.1Mt5 Average benchmark price n/a $9,326/t6 $18,497/t6 n/a $169/t $211/t7 Product premium/discount per unit n/
Slide 38: 2021 simplified earnings by BU - notes
2021 simplified earnings by BU - notes PGMs basket price Iron Ore realised price Met Coal blended price Own mined Realised PGMs basket price Volume Revenue Total iron ore Kumba Minas-Rio Market price Volume Platinum $1,088/oz 1,546koz $1,682m Market price28 $169/t $160/t $185/t HCC $226/t 10.8Mt Pal
Slide 39: Guidance summary
Guidance summary Earnings Capex¹ (numbers in brackets are previous guidance) Other Volumes See slide 40-41 2022 $6.1-6.6bn ($6.2-6.7bn) Quellaveco copper project Growth $1.6-2.1bn ($1.7-2.2bn) Unit costs See slide 42 • Includes Woodsmith ~$0.6bn (~$0.7bn) • 2022 capex3: 100% $0.8-1.1bn; our share $0
Slide 40: Production outlook
Production outlook Units 2019 2020 2021 2022F 2023F 2024F Diamonds1 Mct 31 25 32 30-33 30-33 30-33 Copper2 kt 638 647 647 660-750 910-1,020 910-1,020 Previously 680-760 Platinum Group Metals3 Moz 4.4 3.8 4.3 4.1-4.5 4.1-4.5 4.1-4.5 Iron ore4 Mt 66 62 64 63-67 64-68 67-71 Metallurgical coal5 Mt 23 17
Slide 41: Production outlook – supplementary guidance
Production outlook – supplementary guidance Units 2019 2020 2021 2022F 2023F 2024F Chile: 560-600 Chile: 590-650 Chile: 590-650 Copper2 kt 638 647 647 Peru: 100-150 Peru: 320-370 Peru: 320-370 Previously 120-160 Pt: 1.8 Pt: 1.99 Pt: 1.9-2.1 Pt: 1.9-2.1 Pt: 1.9-2.1 Platinum Group Metals – M&C by meta
Slide 42: Unit costs performance by Business Unit
Unit costs performance by Business Unit De Beers (US$/ct)1 Copper (C1 USc/lb)2 PGMs (US$/PGM oz)3 57 58 ~65 ~140 868 ~900 113 120 713 2020 2021 2022F 2020 2021 2022F 2020 2021 2022F Iron Ore (FOB US$/t)4 Met Coal (US$/t)5 Nickel (C1 USc/lb)6 Previously ~$80/t 33 ~35 105 ~450 27 86 ~85 334 377 2020 2
Slide 43: Earnings sensitivities
Earnings sensitivities Impact of 10% Sensitivity Analysis – 20211 change in price / FX Commodity / Currency 31 December spot Average realised EBITDA ($m) Copper (c/lb)2 440 453 582 Platinum ($/oz) 962 1,083 181 Palladium ($/oz) 1,928 2,439 307 Rhodium ($/oz) 14,150 19,613 443 Iron Ore ($/t) 1193 157
Slide 44: Capex recovering post initial Covid impact
Capex recovering post initial Covid impact Capex¹ ($bn) Woodsmith ~0.6 (prev. ~0.7) 1.2-1.7 Growth 1.0-1.5 1.5-2.0 Collahuasi ~0.5 ~0.4 desal Collahuasi ~0.8 ~0.2 Lifex ~0.7 desal ~0.6 ~3.0 Baseline ~3.5 + ~3.4 ~3.3 sustaining Lifex 2022F 2023F 2024F Long-term (real) Totals 6.1-6.6 6.0-6.5 5.6-6.1 (
Slide 45: Life extension capex
Life extension capex Major components of lifex¹ ($bn) Guidance ~0.7 ~0.8 ~0.6 Mototolo – Der Brochen (PGMs) ~0.1 ~0.1 Kolomela (Iron Ore) ~0.2 ~0.2 ~0.1 Venetia (Diamonds) ~0.3 ~0.3 ~0.3 2022F 2023F 2024F Lifex projects – subject to disciplined capital allocation framework Forecast Returns Capex (pa
Slide 46: Breakdown of projects driving growth capex
Breakdown of projects driving growth capex Major components of growth capex¹ ($bn) Guidance 1.0-1.5 1.2-1.7 1.5-2.0 + 0.6 Woodsmith (prev. + 0.7) ~0.22 ~0.1 ~0.5 Mogalakwena (PGMs) Quellaveco 2 (Copper) ~0.62 ~0.4 ~0.2 Moranbah-Grosvenor (Met Coal) Sishen (Iron Ore) ~0.1 Collahuasi 5th ball mill 3 (
Slide 47: Attractive greenfield and brownfield options
Attractive greenfield and brownfield options Growth capex¹ ($bn) Long life greenfields and fast returning brownfields Capex Volume (pa) From¹ Forecast Returns Payback IRR Margin Quellaveco (Copper) ~$2.8bn2 +300kt2 2022 ~4 years >15% >50% Marine Namibia (Diamonds) ~$0.2bn3 +0.5Mct3 2022 ~3 years >25
Slide 48: Technology & innovation will transform the physical footprint of mining
Technology & innovation will transform the physical footprint of mining $0.2–0.5bn pa technology capex to more precisely target metal & mineral with less water, waste & energy Initiative Application Impact Progress • Testing complete at Barro Alto (Nickel) August 2020. ~$35 million capex Deliver imp
Slide 49: Quellaveco financial modelling
Quellaveco financial modelling Ownership Anglo American 60%, Mitsubishi 40% Fully consolidated with a 40% minority interest Accounting treatment Shareholder loans from minority shareholder consolidated in Anglo American net debt Project capex (nominal)1 $5.4-5.5 billion (previously $5.3–5.5bn) (100%
Slide 50: Quellaveco accounting – ramp up & commercial production
Quellaveco accounting – ramp up & commercial production First ore, ramp up and commissioning First ore: October 2021, Commissioning: mid-2022 followed by 12-month ramp up 2022 Production 100-150kt1 (previously 120-160kt) C1 unit cost - nominal ~$1.25/lb2 • Inventory recognised when first ore extract
Slide 51: Quellaveco accounting - debt
Quellaveco accounting - debt After the initial $0.8bn equity injection by Mitsubishi, the project is now funded 60:40 through shareholder debt Group net debt by the end of the project is expected to include ~$1.9bn debt from Mitsubishi (40% of shareholder debt); which is funded from their 40% share
Slide 52: Map of Quellaveco
Map of Quellaveco 52 Anglo American
Slide 53: Liquidity
Liquidity 53 Anglo American Quellaveco
Slide 54: Strong liquidity & limited near-term debt maturities
Strong liquidity & limited near-term debt maturities Liquidity11 Debt repayments ($bn)1 2.6 $17.1bn 1.8 +$9.1bn cash 1.6 +$8.0bn undrawn committed facilities 1.3 1.0 0.9 0.7 Majority of cash held centrally in US dollars 0.6 0.5 0.5 0.4 Strong Investment Grade credit metrics and ratings 2022 2023 202
Slide 55: Business Units results
Business Units results 55 Anglo American Benguela Gem (AMV3 vessel) outfitted – Cape Town
Slide 56: Diamonds – strong demand recovery
Diamonds – strong demand recovery Average Realised Underlying Mining Production1 Sales (Cons.)2 price index price3 Unit cost4 EBITDA margin5 Capex 2021 32.3Mct 33.4Mct 115 $146/ct $58/ct $1,100m 47% $565m vs. 2020 29% 56% 11% 10% 2% 164% 7pp 48% Underlying EBITDA ($m) 1,264 (176) 1,100 12 568 (60) (
Slide 57: Copper – solid production & record prices
Copper – solid production & record prices Realised Underlying Mining Production Sales1 price1 Unit cost2 EBITDA margin3 Capex4 2021 647kt 641kt 453c/lb 120c/lb $4,011m 62% $1,773m vs. 2020 0% 1% 52% 6% 115% 17pp 23% Underlying EBITDA ($m) 3,958 4,011 101 (87) (106) 159 2,080 1,864 2020 Price FX In
Slide 58: Nickel – strong demand and prices
Nickel – strong demand and prices Realised Underlying Mining Production1 Sales1 price Unit cost EBITDA margin Capex 2021 41.7kt 42.1kt 773c/lb 377c/lb $320m 45% $29m vs. 2020 4% 2% 37% 13% 55% 9pp 12% Underlying EBITDA ($m) 8 (21) 386 (45) (21) 320 193 206 2020 Price FX Inflation Cost & volume Other
Slide 59: PGMs – good operational recovery & record pricing
PGMs – good operational recovery & record pricing Realised Underlying Mining Production1 Sales2 basket price2 Unit cost3 EBITDA margin4 Capex 2021 4,299koz 5,214koz $2,761/PGM oz $868/PGM oz $7,099m 62% $894m vs. 2020 13% 82% 36% 22% 178% 11pp 57% Underlying EBITDA ($m) (470) 7,099 1,586 (638) 5,098
Slide 60: Iron Ore Total – strong prices for our premium products
Iron Ore Total – strong prices for our premium products Realised price Unit cost Underlying Mining Production1 Sales1 (FOB)2 (FOB)1 EBITDA margin Capex 2021 63.8Mt 63.3Mt $157/t $33/t $6,871m 62% $628m vs. 2020 3% 1% 41% 22% 51% 4pp 21% Underlying EBITDA ($m) 7,355 (219) (119) 284 (338) 6,871 (146)
Slide 61: Kumba (Iron Ore) – solid production & premium prices
Kumba (Iron Ore) – solid production & premium prices Realised price Unit cost Underlying Mining Production1 Sales1 (FOB)2 (FOB)1 EBITDA margin Capex 2021 40.9Mt 40.3Mt $161/t $39/t $4,311m 62% $417m vs. 2020 9% 0% 42% 26% 60% 7pp 18% Underlying EBITDA ($m) 4,549 (227) 284 (168) 4,311 (74) (70) 1,864
Slide 62: Minas-Rio (Iron Ore) – strong prices for premium products
Minas-Rio (Iron Ore) – strong prices for premium products Realised price Unit cost Underlying Mining Production1 Sales1 (FOB)1 (FOB)1 EBITDA margin Capex 2021 22.9Mt 23.0Mt $150/t $24/t $2,560m 61% $211m vs. 2020 5% 3% 40% 16% 37% 1pp 29% Underlying EBITDA ($m) 2,806 8 (45) (170) 2,560 (76) 980 1,86
Slide 63: Metallurgical coal – production recovering & strong prices
Metallurgical coal – production recovering & strong prices Realised Underlying Mining Production1 Sales1 price2 Unit cost3 EBITDA margin Capex 2021 14.9Mt 14.1Mt $200/t $105/t $962m 33% $649m vs. 2020 11% 16% 83% 22% n/a 30pp 5% Underlying EBITDA ($m) (140) 1,055 (21) 10 (117) 962 34 1,156 50 20
Slide 64: Investor Relations
Investor Relations Paul Galloway paul.galloway@angloamerican.com Tel: +44 (0)20 7968 8718 Juliet Newth juliet.newth@angloamerican.com Tel: +44 (0)20 7968 8830 Emma Waterworth emma.waterworth@angloamerican.com Tel: +44 (0)20 7968 8574 Michelle Jarman michelle.jarman@angloamerican.com Tel: +44 (0)20 7