Anglo American Plc · LSE:AAL
Anglo American — Investor Day (June 2012)
31 slides from Anglo American's investor day presentation, Jun 14, 2012
Slide 1: Anglo American Thermal Coal Investor & Analyst Briefing
ANGLO AMERICAN THERMAL COAL Investor & Analyst Briefing 14 June 2012
Slide 2: Disclaimer
DISCLAIMER 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 conditions. T
Slide 3: Contents
CONTENTS 1. OUR BUSINESS 2. MARKETS & OUTLOOK 3. STRATEGY & ASSET OPTIMISATION 4. KEY PROJECTS 5. SUMMARY 3
Slide 4: Summary
SUMMARY • World class assets in South Africa and Colombia • Thermal Coal is a consistently performing business – Stable cash generating business and consistent contributor to Anglo American operating profit – Positioned competitively on the industry seaborne margin curve – Leading EBIT margin relati
Slide 5: Our Business
OUR BUSINESS
Slide 6: Our Business at a Glance
OUR BUSINESS AT A GLANCE South Africa Location of operations Mine Holding Mine Export Domestic Total attributable life (Mt) (Mt) production 2011 (Years) Limpopo 1. Goedehoop 100% 11 5.2 - 5.2Mt Waterberg Basin Basin 2. Greenside 100% 11 2.9 - 2.9 Mt 3. Kleinkopje 100% 13 1.7 2.7 4.4 Mt Witbank Basin
Slide 7: Mining Method Choice Is Critical to Reserve Extraction Optimisation
MINING METHOD CHOICE IS CRITICAL TO RESERVE EXTRACTION OPTIMISATION Surface / opencast mining Underground mining Doze over shovel & truck Dragline strip mining Bord & pillar mining Longwall mining Mafube Landau Goedehoop New Denmark Cerrejón Kleinkopje Greenside New Vaal Kriel Export Eskom Isibonelo
Slide 8: Continuously Striving to Ensure a Safer Working Environment
CONTINUOUSLY STRIVING TO ENSURE A SAFER WORKING ENVIRONMENT LTIFR Number of incidents • A safe working environment positively contributes LTIFR (LHS) 200 to productivity Total Recordable (RHS) 1.2 • Isibonelo received South African National Safety HPIs (RHS) Award in 2011 • Safety performance improv
Slide 9: Committed to Being a Responsible and Sustainable Miner
COMMITTED TO BEING A RESPONSIBLE AND SUSTAINABLE MINER Environment Winter school classes at Empucukweni Secondary School HIV – Voluntary Counselling and In 2011, significant resources were Testing was at record levels in 2011, invested in programmes that are with 97% of employees participating aimed
Slide 10: Delivering Consistent Returns
DELIVERING CONSISTENT RETURNS Thermal Coal EBIT Thermal Coal return on assets1 $m ROA % 15% 1,500 11% 11% 6% 7% 1,200 900 775 736 48% 600 447 427 35% 414 28% 25% 300 20% 482 375 305 309 204 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Colombia SA Contribution to AA plc (%) • In 2011, approxim
Slide 11: Leading EBIT Margins
LEADING EBIT MARGINS Competitor analysis: EBIT margin Competitor analysis: 2012 Seaborne margin curve EBIT Margin % US$ / t AATC mean margin 40% 80 Seaborne mean margin 60 20% 40 20 0% 0 0.10 0.20 0.30 0.40 2007 2008 2009 2010 2011 Saleable production 762 0.50 Mt 0.60 0.70 0.80 0.90 AATC mines Peer
Slide 12: Productivity Improvements and Asset Optimisation Have Contributed to Strong EBIT Growth
PRODUCTIVITY IMPROVEMENTS AND ASSET OPTIMISATION HAVE CONTRIBUTED TO STRONG EBIT GROWTH Productivity (ROM production excl. Cerrejón) Incremental business improvement $m Asset Optimisation ROM tonnes/FTE 200 Supply Chain 6,500 +5% CAGR 100 0 0 2008 2009 2010 2011 2012e 2008 2009 2010 2011 Strong EBIT
Slide 13: Markets & Outlook
MARKETS & OUTLOOK
Slide 14: Short Term Structural Weaknesses Are Placing Pressure on Coal Prices
SHORT TERM STRUCTURAL WEAKNESSES ARE PLACING PRESSURE ON COAL PRICES API4 Richard’s Bay Structural change: shale gas US$/t • Extended period of low natural gas prices 200 • USA pushing excess supply of marginal coal into FOB Richard‟s Bay seaborne markets 150 • Natural gas prices in the USA are sign
Slide 15: But Coal Still Remains an Attractive Vehicle to the Future Growing Global Energy Market
BUT COAL STILL REMAINS AN ATTRACTIVE VEHICLE TO THE FUTURE GROWING GLOBAL ENERGY MARKET Fuel Mix: Comparison of commentators World will continue to depend on coal as (Electricity generation by fuel mix in TWhr) source of energy Other 35,468 Nuclear 31,942 • World energy demand predicted to grow Natu
Slide 16: Indian Power Sector Growth Reliant on Thermal Coal and Imports
INDIAN POWER SECTOR GROWTH RELIANT ON THERMAL COAL AND IMPORTS Drivers supporting growth in Indian coal imports • Coal-fired generation capacity is being developed in coastal locations in western and southern India, which will use 40-100% imported coal • Chronically short of power, with a „power def
Slide 17: Favourable Geographical Location
FAVOURABLE GEOGRAPHICAL LOCATION SA thermal coal exports can swing relatively easily and profitably between the Pacific and Atlantic basins AATC Richard’s Bay sales volumes by region Both markets have partially independent dynamics and 16.3 Mt 16.1 Mt 16.4 Mt 16.5 Mt can have price differences in sh
Slide 18: Overall View on Market Long Term
OVERALL VIEW ON MARKET LONGTERM Long term: thermal coal stabilises through continued Asian demand and rationalisation of supply $170 Period of introduction • China and India will drive this rebound with of higher cost marginal coal rapidly growing economies which are heavily $150 reliant on coal Per
Slide 19: Strategy & Asset Optimisation
STRATEGY & ASSET OPTIMISATION
Slide 20: Our Strategy
OUR STRATEGY Be the most profitable thermal coal producer, with a global growth strategy that targets participation in the most attractive supply regions • Zero harm and achieve ‘Resilient’ safety Business maturity of • Ensure impact of operational excellence Today • Export portfolio optimisation th
Slide 21: Thermal Coal Has a Culture of Continuous Improvement and Technology Adoption
THERMAL COAL HAS A CULTURE OF CONTINUOUS IMPROVEMENT AND TECHNOLOGY ADOPTION Asset optimisation Technology strategy and adoption % Availability (key equipment) Implementing 6 technology projects in 2012 focused on AATC 94 business processes 92 • Underground: equipment automation 90 • Opencast: auton
Slide 22: Utilising Additional Infrastructure Capacity
UTILISING ADDITIONAL INFRASTRUCTURE CAPACITY • Opportunity for additional export volume exists with Mt improved Transnet performance 30 • We are making best use of rail capacity and railed 16.9 Mt 25 during the 2011 calendar year, 4% more than entitlement due to: 20 - Superior loading terminal effic
Slide 23: Optimising Our Export Portfolio
OPTIMISING OUR EXPORT PORTFOLIO Improving overall margin through yield improvement Success story 1: Zibulo Colliery 80% Geology dependent volume improvement with Zibulo Colliery converted earlier to produce a product changes 5850 kcal/kg (6000 kcal/kg previously) and 70% increased production from mi
Slide 24: Revenue Drivers
REVENUE DRIVERS Export sales Domestic sales • Key drivers are sales volumes and spot pricing • Generate stable cash flows and profits with low capex and working capital requirements • Sensitive to pricing and exchange rates • Provides economies of scale and reduces cost base • Since 2007, Thermal Co
Slide 25: Cost Drivers
COST DRIVERS Cost vs. mining cost drivers Cost distribution 2011 (South African export mines) Mining cost drivers ZAR/Saleable tonne (2011 Real) 2007 = 100 3.3% 16.8% Labour and contractors 500 300 35.5% Maintenance and stores 400 Rail, wharfage & selling costs 200 5% 300 Consumables (diesel and exp
Slide 26: Carbon Tax Management
CARBON TAX MANAGEMENT Final carbon tax legislation in South Africa is expected to be finalised by July 2013 and implemented in 2014. • Tax is likely to be levied on methane emissions originating from coal mining activities • Proposal is for carbon tax to be levied on all our mines – domestic coal co
Slide 27: Key Projects
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Slide 28: South African Organic Growth Delivery
SOUTH AFRICAN ORGANIC GROWTH DELIVERY Zibulo Colliery capital investment of $500m • The 6.6 Mtpa Zibulo mine reached commercial operating levels in the fourth quarter of 2011, ahead of schedule • Significant contribution to BEE, as this is the first major project developed by Anglo American Inyosi C
Slide 29: Strong Organic Growth Options in Colombia
STRONG ORGANIC GROWTH OPTIONS IN COLOMBIA Cerrejón P500 Phase 1 - approved • The US$1.3 billion expansion project will increase Cerrejón‟s production and export capacity by 8 Mtpa to 40 Mtpa (100% basis) • Anglo American approved its US$437 million share of the project with joint venture partners •
Slide 30: Summary
SUMMARY
Slide 31: Summary
SUMMARY • World class assets in South Africa and Colombia • Thermal Coal is a consistently performing business – Stable cash generating business and consistent contributor to Anglo American operating profit – Positioned competitively on the industry seaborne margin curve – Leading EBIT margin relati