Anglo American Plc · LSE:AAL
Anglo American — BMO Global Metals and Mining Conference 2018
29 slides from Anglo American's conference presentation, Feb 26, 2018
Slide 1: BMO Global Metals and Mining Conference
BMO GLOBAL METALS AND MINING CONFERENCE 26 February 2018 Kumba Iron Ore – Sishen mine
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: A Fundamentally Different Business
A FUNDAMENTALLY DIFFERENT BUSINESS MORE EFFICIENT MORE COMPETITIVE BETTER RETURNS Number of assets1 Unit costs2 Free cash flow3 ($bn) 4.9 47% 26% (1.7) 2012 2017 Production2 EBITDA margin4 ROCE5 19% 11% 9% 33% 2012 2017 3
Slide 4: Portfolio Upgrading Continued in 2017
PORTFOLIO UPGRADING CONTINUED IN 2017 Gahcho Kué Grosvenor Minas-Rio Stage 3 installation licence awarded Delivered on time & under budget First longwall complete on 26 Jan 2018 2017/18 disposals and closures ensure effective capital deployment • Union, Platinum, sale completed • New Largo, SA Domes
Slide 5: Portfolio Uniquely Differentiated
PORTFOLIO UNIQUELY DIFFERENTIATED Revenue by product6 Capital employed by geography6 Other Other 6% 10% PGMs Thermal coal 17% 14% Australia Brazil 8% 25% Diamonds Met coal (De Beers) 15% 21% Chile 13% Iron ore South Africa 14% Copper 25% Namibia & 13% Botswana 19% Asset focused strategy Quality asse
Slide 6: Enhancing Our Competitive Position
ENHANCING OUR COMPETITIVE POSITION EBITDA margins7 EBITDA margin7 35% 40% 40% 27% Improvement driven by 31% Productivity 26% 21% Cost efficiency Premium products 2015 2016 2017 Supportive macro environment EBITDA margin Mining EBITDA margin 6
Slide 7: 2017 – Delivering on Our Commitments
2017 – DELIVERING ON OUR COMMITMENTS EBITDA Net debt Free cash flow3 $8.8bn $4.5bn $4.9bn up 45% vs 2016 down $4bn vs 2016 Up 93% vs 2016 Cost & volume improvement8 ROCE5 Total dividend $1.1bn 19% 102c/sh exceeding $1.0bn target up 8pp vs 2016 40% of underlying earnings 7
Slide 8: Self-Help Underpins Stronger Price Environment
SELF-HELP UNDERPINS STRONGER PRICE ENVIRONMENT EBITDA variance: 2017 vs. 2016 ($bn) 2.4 0.3 Met Coal Currency 1.1 Thermal Inflation (1.0) Copper 8.8 108 PGMs 7.4 Iron Ore Diamonds 6.1 2016 Price9 Currency / inflation10 Cost & volume8 Associates & other11 2017 8
Slide 9: Further $3-4bn Cost & Volume Improvement Target
FURTHER $3-4BN COST & VOLUME IMPROVEMENT TARGET 2018 target Cost & volume improvement – 2013-2022 $0.8bn $3-4bn ~$7-8bn To deliver $5bn since 2013 $4.2bn Total 2018-2022 target $3-4bn Two-thirds from further operational efficiencies and project delivery 2013-2017 2018-22 Total One-third from technol
Slide 10: Continued Capex Discipline
CONTINUED CAPEX DISCIPLINE 2017 capital expenditure12 2018 capex guidance13 $2.2bn $2.6-2.8bn $bn Longer term capex guidance13 4.0 $2.6-2.9bn pa 1.9 2.5 2.2 1.0 0.4 0.7 0.6 Excludes unapproved growth projects 0.6 1.4 1.3 1.0 2015 2016 2017 SIB Stripping & development Expansionary 10
Slide 11: Balance Sheet Strength and Delivering Returns
BALANCE SHEET STRENGTH AND DELIVERING RETURNS A resilient balance sheet Delivering returns to shareholders Net debt14 ($bn) Total 2017 dividend 8.5 4.5 $1.3bn Interim and proposed final dividend 2016 2017 Net debt / EBITDA H2 final dividend 1.4x 40% of H2 underlying earnings – in line with policy 0.
Slide 12: Strong Cash Flow Transforming Balance Sheet
STRONG CASH FLOW TRANSFORMING BALANCE SHEET Capital allocation framework • Free cash flow of $4.9bn 5.3 • Add back $0.3bn ‘discretionary capital’ spend Cash flow Discretionary after capital sustaining options capital15 • Reduced net debt by $4.0bn • Paid interim dividend of $0.6bn (5.0) • Other adju
Slide 13: Portfolio – Asset Quality Focus
PORTFOLIO – ASSET QUALITY FOCUS Longer term positioning Quality asset focus Exceptional resource endowment High quality growth opportunities Copper Long life, low cost assets Los Bronces, Collahuasi & Quellaveco Discretionary Capital Diamonds Industry leader with diversification Capacity to respond
Slide 14: Capital Allocation in Diamonds to Be Demand Led
CAPITAL ALLOCATION IN DIAMONDS TO BE DEMAND LED Millennials: the largest source of market demand Consumer demand Rest of world 45% Millennials’ market share in key markets16 USA India Gulf China Diversified customer base Areas of focus Other gifts Bridal • Marketing: Increasing spend to support dema
Slide 15: Asset Focused PGM Strategy
ASSET FOCUSED PGM STRATEGY European diesel only ~15% of platinum demand17 The world’s leading PGM business European light duty autocats $2,590/oz Industrial & other ~15% Mogalakwena Other ~40% Base metals Other autocats ~15% 54% Palladium 2017 margin19 Jewellery Platinum ~30% Basket price The ICE/hy
Slide 16: Positioned for Steel Industry Structural Changes
POSITIONED FOR STEEL INDUSTRY STRUCTURAL CHANGES 2017 average Fe content (%) – peer comparison Focus on premium products 67.0 Kumba production 64.0 60.8 60.7 64.1 64%Fe of which two thirds is lump 57.7 Peer 1 Peer 2 Peer 3 Peer 4 Kumba Minas-Rio Minas-Rio production 67%Fe Widening iron ore quality s
Slide 17: High Quality Brownfield Growth Optionality
HIGH QUALITY BROWNFIELD GROWTH OPTIONALITY Near term low cost growth potential Longer term asset optionality Moranbah Grosvenor (Met Coal) Copper Los Bronces underground >40% IRR ~25% increase in plant capacity Copper Collahuasi Capital of ~$200m De Beers Jwaneng & Orapa Marine Namibia vessel (De Be
Slide 18: Quellaveco – A World Class Copper Resource
QUELLAVECO – A WORLD CLASS COPPER RESOURCE Ore Reserves20 Copper Eq production ~1.3bnt Reserve grade of 0.58%TCu21 ~300kt Average first 10 years Additional Mineral Resources20 Long life ~1.5bnt At a grade of 0.35%TCu21 ~30 years Significant additional endowment Low cost De-risked • Community and gov
Slide 19: Realising Our Full Potential
REALISING OUR FULL POTENTIAL A unique endowment Growth optionality 2017 average life of mine Production growth potential 30 years ~3% 2018-22 CAGR Life of mine average (years) Copper Eq production growth index ~3% CAGR >125 30 30 109 100 Today 5 year target 2012 2017 2022 19
Slide 20: Our Investment Proposition
OUR INVESTMENT PROPOSITION Assets Capabilities Returns Focus on quality Operating Model Strong balance sheet Diversified portfolio Innovation leader Capital discipline Low cost growth Marketing quality products Dividend payout ratio “World class assets & leading capabilities to deliver a world class
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Slide 22: Appendix
APPENDIX De Beers - Forevermark
Slide 23: Footnotes
FOOTNOTES 1. 2013 to 2017. Includes impact of announced disposals and assets 10. Inflation variance calculated using CPI on prior period cash closed or placed on care and maintenance. operating costs that have been impacted directly by inflation. 2. 2012 to 2017. 11. Includes associates and prior pe
Slide 24: Portfolio Overview – Simplified
PORTFOLIO OVERVIEW – SIMPLIFIED De Beers Copper PGMs Botswana Debswana Mogalakwena Los Bronces South Africa DBCM Chile Collahuasi Amandelbult Namibia Namdeb South Other operations Africa Processing Canada Canada Peru Quellaveco Other operations Trading GSS Iron ore Coal Nickel & Manganese Australia
Slide 25: Safety, Health & Environment
SAFETY, HEALTH & ENVIRONMENT Safety Health Environment Fatalities Occupational health – new cases Major incidents 15 200 30 11 140 9 15 90 6 6 65 63 6 4 2 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 • ‘Elimination of Fatalities’ taskforce • Improved working environment
Slide 26: Production Outlook
PRODUCTION OUTLOOK Units 2016 2017 2018F 2019F 2020F Diamonds1 Mct 27.3 33.5 34-36 ~32 ~32 Copper2 Kt 577 579 630-6603 600-660 600-660 (Previously 630-680) (Previously 590-650) Platinum4 Moz 2.4 2.4 2.3-2.4 ~2.05 ~2.05 (Previously 2.5) (Previously 2.1) Palladium4 Moz 1.5 1.6 1.5-1.6 1.3-1.45 1.3-1.4
Slide 27: Unit Cost Performance by Business Unit
UNIT COST PERFORMANCE BY BUSINESS UNIT De Beers (US$/ct)1 Copper (C1 USc/lb) Platinum (US$/Pt oz)2 Kumba (FOB US$/t)3 BWP CLP ZAR ZAR 9.85 615 12.31 12.31 +7% -6% +8% +14% 67 63 ~70 137 147 ~150 1,330 1,443 ~1,615 31 ~35 27 2016 2017 2018F 2016 2017 2018F 2016 2017 2018F 2016 2017 2018F Minas-Rio (F
Slide 28: Earnings Sensitivities – 2017
EARNINGS SENSITIVITIES – 2017 Impact of 10% change Sensitivity Analysis – 20171 in price / FX Commodity / Currency 31 December spot Average realised EBITDA ($m) Copper2(c/lb) 325 290 352 Platinum ($/oz) 925 947 157 Palladium ($/oz) 1,057 876 96 Rhodium ($/oz) 1,700 1,094 17 Iron Ore ($/t) 74 71 389
Slide 29: Debt Maturity Profile at 31 December 2017
DEBT MATURITY PROFILE AT 31 DECEMBER 2017 Debt repayments ($bn) at 31 December 2017 1.9 1.8 1.4 1.3 1.3 1.4 1.4 1.0 0.7 2018 20191 2020 2021 2022 2023 2024 2025 2026 2027 Euro bonds US$ bonds Other bonds Subsidiary financing % of portfolio 53% 38% 6% 3% Capital markets 97% Bank 3% US bonds Euro bond
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