Glencore plc · LSE:GLEN
Glencore — 2016 Global Metals, Mining & Steel Conference
23 slides from Glencore's conference presentation, May 10, 2016
Slide 1: 2016 Global Metals, Mining & Steel Conference
2016 Global Metals, Mining & Steel Conference Miami, 10 May 2016
Slide 2: Forward looking statements
Forward looking statements This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward looking statements may be identified by the use of forward looking terminology, or the negative thereof such as “outlook”, "plans
Slide 3: Summary
Summary • Commodity prices now close to pre-supercycle levels • Record low sector margins are setting the scene for the next price upswing • Current margins cannot sustain current production levels over medium-term • Top 5 Diversified capex has fallen from a peak of $71bn in 2012 to $24bn in 2016F •
Slide 4: Where are we?
Where are we?
Slide 5: Where are we?
Where are we? Industry margins are at record lows(1) … … along with commodity prices(2) Indexed: 2003=100 70% 60% 50% 40% 2003 to 2015 average: 38% 30% 20% Copper Iron ore Zinc 10% Thermal Coal Met Coal Aluminium 0% Nickel Jan 03 Feb 06 Mar 09 Apr 12 May 15 2003 2005 2007 2009 2011 2013 2015 Notes:
Slide 6: How did we get here?
How did we get here? The sector invested Supply in most commodities has increased > $1 trillion of capex ($b)(1) materially since 2003(2) 1000 Indexed: 2003=100 +110% Aluminium 800 Diversifieds: $470bn Bulks: $140bn +80% Iron ore Base Metals: $196bn +79% Thermal coal Precious: $199bn +72% Lead 600 +
Slide 7: How did we get here?
How did we get here? … helping to lower mining unit costs(1) … But less than $350bn has been generated Indexed: 2003=100 in free cash flow as volume driven price declines more than offset lower costs $ billion operating cash flow less capex 60 40 Copper 20 Iron ore Thermal coal 0 Zinc -20 2003 2005
Slide 8: How did we get here?
How did we get here? Demand is still positive for base metals(1)… … helping to rebalance supply with demand(2) Market balance kt (Mt for Iron ore) 6% 800 600 4% 400 Surplus 2% 200 0 0% Deficit -200 -2% 2003-2015 CAGR 2015 2016F -400 2016F -4% -600 Aluminium Zinc Copper Iron Ore Lead Nickel Aluminium
Slide 9: The future can be different
The future can be different • Sector fundamentals remain attractive • Capex of $1 trillion has generally been invested in long life assets • Sector has reasonable barriers to entry • Miners have far greater flexibility on growth capex than any other sector • Long-term demand outlook for commodities
Slide 10: We are well positioned for the future
We are well positioned for the future
Slide 11: Prepared for current and even lower prices
Prepared for current and even lower prices • Decisive management of our balance Earnings diversified by commodity(1) … sheet and asset portfolio: Copper 25% • repositioning our capital structure for a Zinc 12% lower price environment – improvement to Nickel 5% c.2x ND/EBITDA by year end Coal 23% • m
Slide 12: Unrivalled marketing business and geographic footprint
Unrivalled marketing business and geographic footprint • Marketing earnings are generated from Marketing EBIT ($M) 0 1'000 2'000 3'000 4'000 the global handling, blending, distribution Interest and optimisation of PHYSICAL 2008 expense commodities, augmented by arbitrage 2009 Historical allocation (
Slide 13: Repositioning our capital structure – asset sales on target
Repositioning our capital structure – asset sales on target Debt bridge ($bn) • $2.6bn of asset disposals announced in Net April 2016: funding $49.7 $8.5 • $2.5bn for 40% equity stake in Glencore Agricultural unit • $100M for disposal of Komarovskoye mine in Net funding Kazakhstan $41.2 $0.5 $4-
Slide 14: Repositioning our capital structure – annualised cash flow generation
Repositioning our capital structure – annualised cash flow generation remains >$3bn at spot prices(5) Debt bridge ($bn) • Marketing and Industrial Asset operational Net and cost performance in line with funding $49.7 $8.5 expectations and cost guidance over Q1 2016 • Impact of a stronger US$ over
Slide 15: The future can be different
The future can be different The future can be different, but the ultimate outcome will be heavily influenced by actions from here onwards • Capital has not been lost, only the return is uncertain • Earnings potential can be vastly improved by accepting lessons from 2003-15 • Accept that volume growt
Slide 16: Q&A
Q&A
Slide 17: Glencore background
Glencore background
Slide 18: Glencore at a glance
Glencore at a glance Key facts and figures • Leading integrated producer and marketer of commodities, with worldwide activities in the production, refinement, processing, third party procurement, storage and transport Metals and minerals Energy products Agricultural of those products products • More
Slide 19: Sustainability and governance
Sustainability and governance Safety LTIFR(1) 2010 to 2015 • Regrettably 8 fatalities from 2 events (10 fatalities from 2.74 7 events in 2015) – 2 fatal events both at “Focus Assets” 2.49 – Katanga Copper Mine, 7 fatalities in the slope failure 52% reduction event • Q1 LTIFR 1.17 (1.32 in 2015), 11%
Slide 20: Where we operate
Where we operate omatens 7 © Offices fm Oil infrastructure assets ‘fa Pacorini Metals warehousing = Agriculture storage Commodities ‘® Copper %® Zinc % Nickel
Slide 21: Our values
Our values Safety Our first priority in the workplace is to protect the health and well-being of all of our people. We take a proactive approach to health and safety; our goal is continuous improvement in the prevention of occupational disease and injuries Entrepreneurialism Our approach fosters the
Slide 22: Our business model
Our business model Explore, acquire & Extract & produce Process & refine Blending & optimising Logistics & delivery develop We mine and beneficiate Our expertise and Our presence at every Our logistics assets allow Our exploration activities minerals across a broad technology advantages stage of the
Slide 23: Our board
Our board Anthony Hayward Leonhard Fischer Chairman H Non-Executive Director A(C), N, R • Former CEO of BP • CEO of BHF Kleinwort Benson • Non-executive chairman of Group S.A. (formerly RHJ Genel Energy (LON) International S.A) (EBR) • Chairman of Kleinwort Benson Bank Ltd and BHF-Bank AG Ivan Glase
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