Anglo American: Deutsche Bank BRICS Metals and Mining Conference


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Chief Executive Cynthia Carroll presented at the Deutsche Bank BRICS Metals and Mining Conference in London.

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Anglo American: Deutsche Bank BRICS Metals and Mining Conference

  1. 1. DEUTSCHE BRICS METALS ANDMINING CONFERENCECynthia Carroll, Chief Executive2 November 2011
  2. 2. CAUTIONARY STATEMENTDisclaimer: This presentation has been prepared by Anglo American plc (“Anglo American”) and comprises the written materials/slides for a presentation concerning AngloAmerican. By attending this presentation and/or reviewing the slides you agree to be bound by the following conditions.This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy shares in Anglo American. Further, it does not constitutea recommendation by Anglo American or any other party to sell or buy shares in Anglo American or any other securities. All written or oral forward-looking statements attributable toAnglo American or persons acting on their behalf are qualified in their entirety by these cautionary statements.Forward-Looking StatementsThis presentation includes forward-looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, thoseregarding Anglo American’s financial position, business and acquisition strategy, plans and objectives of management for future operations (including development plans andobjectives relating to Anglo American’s products, production forecasts and reserve and resource positions), are forward-looking statements. Such forward-looking statements involveknown and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American, or industry results, to be materiallydifferent from any future results, performance or achievements expressed or implied by such forward-looking statements.Such forward-looking statements are based on numerous assumptions regarding Anglo American’s present and future business strategies and the environment in which AngloAmerican will operate in the future. Important factors that could cause Anglo American’s actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodit y market prices, mineral resource exploration anddevelopment capabilities, recovery rates and other operational capabilities, the availability of mining and processing equipment, the ability to produce and transport productsprofitably, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty andeconomic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or safety, health, environmental orother types of regulation in the countries where Anglo American operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American’smost recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-lookingstatements. These forward-looking statements speak only as of the date of this presentation. Anglo American expressly disclaims any obligation or undertaking (except as requiredby applicable law, the City Code on Takeovers and Mergers (the “Takeover Code”), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Services Authority,the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SWX Swiss Exchange, the Botswana Stock Exchange and the Namibian StockExchange and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in AngloAmerican’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.Nothing in this presentation should be interpreted to mean that future earnings per share of Anglo American will necessarily match or exceed its historical published earnings pershare.Certain statistical and other information about Anglo American included in this presentation is sourced from publicly available third party sources. As such it presents the views ofthose third parties, but may not necessarily correspond to the views held by Anglo American.No Investment AdviceThis presentation has been prepared without reference to your particular investment objectives, financial situation, taxation position and particular needs. It is important that you viewthis presentation in its entirety. If you are in any doubt in relation to these matters, you should consult your stockbroker, bank manager, solicitor, accountant, taxation adviser or otherindependent financial adviser (where applicable, as authorised under the Financial Services and Markets Act 2000 in the UK, or in South Africa, under the Financial Advisory andIntermediary Services Act 37 of 2002.). 2
  3. 3. A CONSISTENT STRATEGY AND SIMPLIFIEDORGANISATION DELIVERING RESULTS Well diversified portfolio(1) Improving productivity performance(3) Diamonds Iron Ore 150 & Manganese Copper 11% 140 26% 130 Kumba Platinum 23% 120 110 Met Coal 11% Platinum Met Coal 100 2% Nickel 11% 90 16% Thermal Coal 80 Copper 2008 2009 2010 Q1 Q2 11 11 Structurally attractive commodities(2) Delivering commodity positions in China’s share of global consumption 2010 (%) lower half of cost curves(4) 0% 20% 40% 60% 80% 100% Met Coal 62% 2008 Iron Ore 54% Export Iron Ore 2011 Steel 41% Export Hard 2008 Coking Coal 2011 Copper 38% 2008 Nickel 33% Copper 2011 Platinum 25% Nickel(5) 2011 Palladium 21% Thermal Coal 2009 11% Platinum 2011 Imports (1) Core revenue split (2) Source: AME, Brook Hunt - a Wood Mackenzie company, Johnson Matthey. Thermal Coal represents share of internationally traded market, nickel and copper represent share of world mined production (3) Productivity based on material moved, mined or processed per operational headcount, excluding projects. Kumba refers to 3 Sishen only (4) Source: AME, Brook Hunt - a Wood Mackenzie company, Anglo American Platinum. Represents % of attributable production in lower half of the cost curve (5) In 2008 all Nickel operations in H2
  4. 4. MATERIAL GROWTH IN THE SHORT AND LONG TERM 220 >100% 200 180Indexed production growth (2010 = 100) >65% 160 >35% 140 120 Continuing to 100 Nickel Existing invest in Future growth Copper operations Near term exploration options 80 & approved approvals and projects restocking the PGM pipeline 60 40 Met Coal 20 Thermal Coal Iron Ore 0 2010 2014 Medium term Future options growth Indexed production growth charts exclude Diamonds, Manganese, niobium and phosphates as at 29 July 2011. 4
  5. 5. MOVING TO INDUSTRY LEADING COST POSITIONS Export Hard Copper Nickel Platinum Export Iron Ore Coking Coal100%80% 2nd half cost60% curve40% 1st half20% cost curve 0% 2008 2015 2008 2015 2009 2015 2008 2015 2008 2015 Anglo American Platinum cost curve based on internal estimates; all other data sourced from 3 rd party data providers. Source: AME, Brook Hunt - a Wood Mackenzie company, Anglo American Platinum 5
  6. 6. LONG TERM DEMAND GROWTH REMAINS HEALTHY Chinese Regional Urbanisation(1) 2009 China’s expected growth 2010 to 2018 Heilongjiang Truck output 100% Jilin Inner Mongolia Liaoning Xinjiang Huang River Beijing Car output 85% Tianjin Hebei Shanxi Qinghai Shandong Ningxia Gansu Jiangsu Urban floor space 84% Shaanxi Henan Anhui Tibet Shanghai Hubei Chongqing Sichuan Zhejiang Yangtze River Hunan Jiangxi Steel for ship building 82% Guizhou Fujian Xun River Yunnan Guangdong Guangxi Hong Kong Macau Expressways (Km) 78% >80% 70%-80% Hainan 60%-70% 50-60% <50%(1) The analysis excludes Taiwan. Source: NBS, CEIC, Anglo American Analysis 6
  7. 7. SET TO BENEFIT FROM THE SHIFTIN COMMODITIES DEMANDChinese share of global demand60% Nickel50% Copper40% Finished Steel Light duty vehicles30%20% Polished diamonds10% 0% 2000 2005 2010 2015 2020 Source: Anglo American Commodity Research 7
  8. 8. SUPPLY CONSISTENTLY UNDER DELIVERS Infrastructure project delays Copper industry grade declines, Copper mine a long term downward trend underperformance ‘04 – ‘11e 3 1.7 9.0 1.6 8.0 2 2 ? 2010 1.5 7.0 planned Copper grade Cu % 2 6.0 1.4Years 5.0 1.3 4.0 1 1.2 1 3.0 1.1 2.0 1.0 1.0 0 0.9 0.0 DBCT 7X Northern RBCT Oakajee 1990 2000 2010 2020 2004 2005 2006 2007 2008 2009 2010 2011 Missing Port & Link Rail Pit Walls Strikes Technical Ramp-up Weather Grades Other Source: Anglo American, Brook Hunt - a Wood Mackenzie Company 8
  9. 9. FUTURE SUPPLY WILL BE IMPACTEDBY INCREASING CAPITAL INTENSITY$ per t/yr Cu 25,000 Conc Producers SxEw Annual Prod Scale kt/yr Cu 20,000 Projects Under Construction Projects Probable 15,000 10,000, 30 5,000 15 5 0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025Source: Brook Hunt – Wood Mackenzie 9
  10. 10. STRATEGIC PROJECT MANAGEMENT APPROACHDelivering four longwalls in the same region offers fantastic synergy Project Delivery Our Approach Target Outcomes Benefits Objectives Project Cost Planned growth profile 1. One standard Longwall Progressive engineering 120% 100% requires a project that: & CHPP design & management efficiencies 80% & cost reductions 60% • Achieves lower 40% 20% capital costs 2. Partnerships with Joy Reduced delivery 0% Mining Machinery & lead times 1 2 3 4 • Provides greater Hatch schedule Start-up Time 120% predictability Strategic equipment 3. Standard organisation sourcing 100% 80% • Reduces risk structures & integrated 60% resourcing 40% • Enhances AAMC’s Construction safety and 20% 0% public profile and productivity gains 4. Integrated community 1 2 3 4 corporate engagement and reputation management Improved production ramp-up Operability 115% (Moranbah 2020) and operability • Enhances SHEC 110% 105% outcomes 5. Dedicated port terminal Team continuity and 100% 95% of 30 Mt performance 90% 1 2 3 4 Number of Longwalls 10
  11. 11. DELIVERING VALUE FROM A CONSISTENT STRATEGY• Consistent strategy and simple organisational Operational improvements realised across businesses structure delivering results Indexed productivity(2) (2008 = 100) 150 Copper• Comprehensive improvements undertaken 140 over the last three years 130 Kumba• Delivering on key near-term growth projects, 120 110 Met coal major volume growth is under way Platinum 100• Operations moving down the cost curve 90• Longer term fundamentals remain unchanged 80 2008 2009 2010 Q1 11 Q2 11• Supply challenges and increasing capital Material growth in the short and long term intensity underpinned longer term Indexed production growth (2010 = 100) 220 >100% fundamentals 200 180 >65%• Strategic project management is a key enabler 160 >35% 140 for future projects delivery 120 Existing Near term Future operations 100 & approved approvals growth• Anglo American is well placed to deliver future 80 60 projects ($16bn) options growth 40 20 0 2010 2014 Medium term Future options growth (1) 100% basis (2) Productivity based on material moved, mined or processed per operational headcount, excluding projects. Kumba refers to Sishen only 11