Anglo American Plc · LSE:AAL
Anglo American — Investor Presentation (March 2015)
31 slides from Anglo American's investor presentation, Mar 10, 2015
Slide 1: Anglo American Copper Mitsubishi Analysts Visit
ANGLO AMERICAN COPPER MITSUBISHI ANALYSTS VISIT 9 – 10 March 2015 Los Bronces mine
Slide 2: Agenda
AGENDA Our strategy Hennie Faul CEO 3 Overview of the Copper business, Craig Fish CFO 9 Performance and Outlook Focus on Los Bronces Juan Carlos Roman VP – Operations Sur 16 Quellaveco Hennie Faul CEO 24 Key risks and Sustainability issues Hennie Faul CEO 26 Summary and Outlook Hennie Faul CEO 29 2
Slide 3: Our Strategy
AngloAmerican OUR STRATEGY
Slide 4: The Diversified Miner
THE DIVERSIFIED MINER Our strategy and its component parts Responding to a changing world in which: • Mining remains important, but demand growth and prices are normalising The Diversified Miner that takes a • Anglo American has not delivered on its potential values-based approach to business by • A
Slide 5: Strategy
STRATEGY Our approach to building performance is simple…and continuous… Value CAPABILITY Realise Potential Build Capability Establish Stability • Operations • Brownfield options STABILITY • Resource potential • Markets • Debottleneck • Priority capital options • People • Operating Model • FutureSmar
Slide 6: Portfolio and Resource Optionality
PORTFOLIO AND RESOURCE OPTIONALITY We have focused on “Priority 1” opportunities to reshape the portfolio… Priority growth options • Los Bronces District • Quellaveco • Collahuasi further expansion Portfolio optimisation • Mantos Blancos/Mantoverde – Sale process to commence in H1 2015 • El Soldado/
Slide 7: A Step Change in Sustainability Performance
A STEP CHANGE IN SUSTAINABILITY PERFORMANCE Our ambition is spread across three time horizons… We aim to… Change in mining Competitive companies, …reset global conversations. approach to achieve communities and countries community support all win together Net positive Flourishing Work with others to
Slide 8: Key Challenges
KEY CHALLENGES In looking forward the key challenges are… • External environment – Prices reverting to marginal costs more quickly than expected …places focus on asset quality. • Operating performance – Continuing positive performance improvements …accelerating the pace of the operating model roll-o
Slide 9: Overview of the Copper Business, Performance and Outlook
OVERVIEW OF THE COPPER BUSINESS, PERFORMANCE AND OUTLOOK
Slide 10: Our Copper Assets
OUR COPPER ASSETS Q Quellaveco project Q AA ownership: 81.9% 1 Collahuasi AA ownership: 44% 2014 Cu production (44%): 207kt 5 Mantos Blancos AA ownership: 100% 2014 Cu production: 52kt 6 Mantoverde AA ownership: 100% 2014 Cu production: 52kt 3 El Soldado AA ownership: 50.1% 2014 Cu production: 32kt
Slide 11: Copper Results Summary
COPPER RESULTS SUMMARY Copper turnaround since 2012… US$ million FY2012 FY2013 FY 2014 Production (kt) Revenue 5,122 5,392 4,827 775 748 720-750 720-750 710-740 EBITDA 2,288 2,402 1,902 660 EBIT 1,736 1,739 1,193 Underlying earnings 941 803 493 AA Sur Capex – SIB(1)(2) 854 695 572 Capex – Growth(2)
Slide 12: Strategy in Action – Los Bronces Case Study
STRATEGY IN ACTION – LOS BRONCES CASE STUDY The business turnaround since 2012 has established stability in 2014… • Implementation of Anglo American Operating Model • Mitigate long term decline in ore grades • Optimise Contractor Services & Productivity • Massive resource endowment • Operational eff
Slide 13: Los Bronces Operational Performance
Establish Stability LOS BRONCES OPERATIONAL PERFORMANCE Performance at the Los Bronces mine and plants has significantly improved… Mine extraction (ktpd) Control Chart: LB Mine Rock Extraction (ktpd) Confluencia Confluencia Plant plant Feed feed Cont ro :(ktpd) l Chart(ktpd) CF Plant Throughput (ktp
Slide 14: Commodity Prices
COMMODITY PRICES The near-term pressure induced by lower Copper prices… Indexed commodity price (1st Jan 2014 = 1) 1.2 1.1 1.0 Platinum (basket) (-2%) 0.9 Met Coal (-16%) 0.8 Thermal Coal (-16%) Copper (-23%) 0.7 0.6 0.5 Iron Ore (-47%) 0.4 01 Jan 14 01 Apr 14 01 Jul 14 01 Oct 14 31 Dec 14 …gives fu
Slide 15: Response to Weakening Macro Environment
RESPONSE TO WEAKENING MACRO ENVIRONMENT Our portfolio, operating and capital management strategies… Operating Model Capital Management Managing Margins The Portfolio • Mining process changes • Operating model • Operating model focuses • Sale of smaller-scale improve asset capability improvements sup
Slide 16: Focus on Los Bronces
FOCUS ON LOS BRONCES
Slide 17: Summary
SUMMARY One of the world´s largest copper mines… • Location: The Cordillera of the Andes, 3,500m above sea level and 65km east of Santiago • Type: Open pit mine with 2 processing plants, plus Las Tórtolas flotation plant Copper concentrate and Cathodes production, plus molybdenum and other by-produc
Slide 18: Recent History
RECENT HISTORY Is punctuated by a series of quantum capacity expansions… …most recently with the Confluencia plant (LBDP) coming online in 2011. 18
Slide 19: Los Bronces Performance vs. Peers
LOS BRONCES PERFORMANCE VS. PEERS Benchmarking Confluencia´s Sag Mill 40´… Total Los Bronces productivity (2013; cu t/person) Mean time to repair (hr) 86 79 71 2.3 1.9 47 0.6 Los Bronces Mine A Mine B encare Confluencia Mine A Mine B benchmark 2013 Availability (%) Operating time (%) 96.3% 92.7% 94.
Slide 20: Implementation of Anglo American Operating Model
Build Capability IMPLEMENTATION OF ANGLO AMERICAN OPERATING MODEL Anglo American Operating Model to be rolled out in 2015 at Los Bronces, going live in December 2014 2015 2016 2017 2018 Los Bronces 1 2 3 4 5 6 7 8 Project Detailed Configure Gap Critical Site Role GO Set-up Training Workshop Analysis
Slide 21: Los Bronces Is a World-Class Asset
LOS BRONCES IS A WORLD-CLASS ASSET With over 8BT of mineral reserves and resources, 65km from Chile’s capital Los Bronces Los Bronces Sur Los Sulfatos 21
Slide 22: Reserves and Resources
Realise Potential RESERVES AND RESOURCES Los Bronces is one of the largest copper deposits in the world… Top-20 copper project deposits by contained copper in Mill Reserves (Highly probable, possible, probable) 2.00 1.50 Los sulfatos Ore body(1) Cu (%) Grade Golpu • High potential to expand capacity
Slide 23: Los Bronces District
Realise Potential LOS BRONCES DISTRICT Significant resources to sustain production with expansion potential… • Main development focus is on the Los Sulfatos orebody, which is one of the largest untapped high-grade deposits in the world − Principally replacement ore for the current mine plan, to main
Slide 24: Quellaveco
AngloAmerican QUELLAVECO
Slide 25: Quellaveco Project
QUELLAVECO PROJECT A significant orebody with attractive grades… • Located in southern Peru, at >3,500 metres in an Quellaveco cross section established mining district - strong social/political support GRADE • An attractive cost curve position with CuEq grades over > 1.0% 0.90% in initial years 0.6
Slide 26: Key Risks and Sustainability Issues
KEY RISKS AND SUSTAINABILITY ISSUES
Slide 27: Approach to Sustainability
APPROACH TO SUSTAINABILITY Together, we create sustainable value that makes a real difference Pillars of Value KPI Safety and FIFR(1) • We will lead the industry in resource Health NCOD(1) development, mining and operational TRCFR(1) innovation to drive margins that support the Environment Energy co
Slide 28: Structural Headwinds a Challenge at Los Bronces
STRUCTURAL HEADWINDS A CHALLENGE AT LOS BRONCES Plans are in place to mitigate the impact… Grades are variable and declining Average haulage distance increase 80% from 2012 to 2016 Grade -11% % Average haulage distance (km) 0.89% +80% 0.84% 0.83% 0.78% 6.3 0.74% 0.74% 5.6 5.8 5.2 4.2 3.5 2012 2013 2
Slide 29: Summary and Outlook
SUMMARY AND OUTLOOK
Slide 30: Operational Improvements Have Been Embedded
OPERATIONAL IMPROVEMENTS HAVE BEEN EMBEDDED Increased production versus prior forecasts… Copper production increased to 2017 Variable copper grades (% Cu)(1) 2013 guidance 2014 guidance 0.95% +7% 748 720-750 720-750 710-740 0.90% 700 700 700 0.85% 0.80% 0.75% 2014E 2015 2016 2017 2013 2014 2015 2016
Slide 31: Strategy
STRATEGY Our approach to building performance is simple…and continuous… Value CAPABILITY Realise Potential Build Capability Establish Stability • Operations • Brownfield options STABILITY • Resource potential • Markets • Debottleneck • Priority capital options • People • Operating Model • FutureSmar