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Glen investor-day-2014-print

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Mauro Bassotti
Mauro Bassotti

Investor Day

Economy & Finance
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11 Tintaya concentrator, Peru 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:40 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A Investor Day 10 December 2014
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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities. 2
Ivan Glasenberg CEO Lion chrome smelter, South Africa
Summary •Capital misallocation, not a lack of demand, remains a key issue for the sector •Clear need to differentiate by commodity – correlation has broken down •Glencore’s positioning provides superior insulation and material price optionality •Established portfolio of Tier one industrial assets/cost structure in the right commodities •Glencore Marketing is a unique, low-risk, defensive earnings driver •Our balance sheet strategy, attributes and execution are key value creators •Unparalleled track record of value creation since 1994, based on material management ownership •Our sustainability efforts are gaining traction 4
Capital allocation is a key issue for the sector Electronic scrap recycling, Horne copper smelter, Canada
0% 2% 4% 6% 8% 10% 12% Copper Zinc Al Ni Thermal Coal Iron Ore Oil Previous 5 year average 2014 Demand favours base over bulk again in 2014 … 6 Source: Glencore estimates, various broker reports, Wood Mackenzie. Global demand growth
… however, capital allocation in the sector remains iron ore centric … 7 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Glencore Peer 1 Peer 2 Peer 3 Peer 4 Met Coal Thermal Coal Iron Ore Metals Oil and Gas Production growth 2013A -2016E (Cu equivalent) Source: Company websites, Glencore estimates. Note, does not include commodities where production declines are expected.
-60% -50% -40% -30% -20% -10% 0% 10% 20% 30% Copper Zinc Aluminium Nickel Coal Iron ore Oil … and price performance reflects oversupply fears 8 Year to date price change Source: Bloomberg as at 3 December 2014, Wood Mackenzie, Deutsche Bank, Glencore estimates.
Differentiation by commodity is critical Wheat crop in Bute, Australia
Our global footprint is truly diversified … 10
… by commodity and activity … 11 Oil 26% Copper 20% Iron Ore 52% Other 1% Iron Ore 73% Aluminium 10% Copper 10% Coal 2% Diamonds 5% Iron Ore 40% Coal 8% Copper 25% Diamonds 25% Other 2% BHP: Copper 38% Zinc 4% Nickel 7% Coal 7% Oil 4% Marketing metals 25% Marketing energy 6% Marketing agri 13% Corp and other (4%) Source: company reports, EBIT H1 2014.
… with key drivers earning 98% of EBIT … 12 0 10 20 30 40 50 60 70 80 90 100 38% 4% 7% 7% 42% Cu Deficit “Consensus” surplus elusive so far, increasing downside risk to supply in 2015/16 Zn Deficit An additional 3-3.5Mt of zinc supply needed over next 5 years to balance the market Marketing Resilient Defensive earnings, less sensitive to falling prices. Benefits from own source production Coal Rebalancing Some high cost supply shutting, new investment delayed. Coal essential to meet energy demand Ni Transitioning to deficit Balanced 2015 and deficits thereafter, substantial from 2018 Data: H1 2014 EBIT.
70 80 90 100 110 120 130 140 2013 2014 2015 2016 2017 2018 … supported by positive fundamentals and prices 13 Consensus price forecasts 2014=100 Source: Consensus broker research, 4 December 2014. Nickel Aluminium Zinc Copper Iron Ore Oil Thermal Coal
Established portfolio of Tier one industrial assets Assay lab, Mount Isa Mines, Australia
Established portfolio of Tier One assets … 15
… with synergies and cost savings embedded in the commodity cost structures … 16 Cu 2016F >$2bn industrial merger synergies and other cost savings achieved Post-integration cost efficiencies and focus now ingrained in industrial asset structures Q1 first quartile cost positions achieved in 2014; further improvements expected Q1 Q2 Q3 FeCr 2013 2016F Ni 2016F Thermal Coal 2016F Illustrative C1 metals cash cost curve / Inverse FOB cash margin thermal coal Zn 2016F Cu 2013 Zn 2013 Ni 2014F
… with major optionality for future brownfield growth, as and when appropriate 17 2016+ brownfield growth options Copper Coroccohuyaco Mutanda Sulphides Zinc Mararovskoe Dolinno Nickel Raglan 40ktpa Raglan Phase II Coal Mt Owen extension Rolleston Phase II expansion GGV expansion Optimum / Zonnebloem Commissioning 2015 Copper Nkana Synclinorium: new shaft to extend section life by 25 years DRC Power: first 162MW refurbished turbine (G27) at Inga Tintaya mill restart: restart Tintaya mill to process higher Antapaccay ore volumes Commissioning 2016 Copper Antapaccay expansion: Concentrator upgrade to increase throughput Oil: >800 MM bbls of risked prospective resource potential in Chad Chad exploration: Doseo/Borogop, DOBI/DOI, DOH blocks Chad development: Kibea and nearby discoveries Bolongo – Cameroon Diega – Equatorial Guinea Oil Krim (DOB/DOI): Chad Note: Cu equivalent annual growth including the above committed projects only of c. 5.4% expected 2014-2018. Coal Bulga: 20 year life extension at current production rates Commissioning 2017 Copper Mopani Deeps: new shaft infrastructure to provide a 25% increase in own source production and a 20% reduction in mine cash costs
Marketing – a defensive earnings driver Chemoil terminal, Singapore
Marketing – a unique, low-risk, defensive earnings driver 19 •Relatively low cost of capital and stable cost base underpin predictable and high ROE •Resilient earnings capability in a falling price environment •Minimal exposure to flat price risk •Difficult to replicate •A key differentiator among the diversified peers •Credit rating/cost of funds advantage relative to trading peers •Industry leading own source production volumes create significant optionality •Provides unrivalled global intelligence / market knowledge and insight •Commodity direction •Corporate activity/opportunities •Customer and supplier behaviour •Unique scale, diversification and skill Marketing EBIT ($M) 0 1,000 2,000 3,000 4,000 2008 2009 2010 2011 2012 2013 2014+ Historical guidance range: $2 to $3bn Revised guidance range (post Xstrata and Viterra): $2.7 to $3.7bn
Sustainability gaining traction Espinar farmer near Antapaccay/Tintaya copper mines, Peru
Governance and sustainability Safety •Regrettably 15 fatalities year to date (26 in 2013) •Reduction on 2013 reflects ‘SafeWork’ focus on safety leadership, culture and implementation of Fatal Hazard Protocols •Significant performance improvement at DRC, Zambia, Bolivia and Kazakhstan operations (64,500 employees and contractors) •Targeting ‘SafeWork’ rollout to all 200,000 employees and contractors by February 2015 (100,000 YTD) Governance •Consolidation of Board: A. Hayward, Chair; P. Grauer SID; Patrice Merrin, new NED •Published policies on bribery and corruption, carbon and human rights Memberships •ICMM, UN Global Compact, EITI •Voluntary Principles on Security and Human Rights (application in progress) 21 LTIFR(1) 2009 to 2014YTD 3.00 2.73 2.51 2.04 1.93 1.57 1.00 1.50 2.00 2.50 3.00 3.50 2009 2010 2011 2012 2013 2014 YTD Note: (1) Lost time incidents (LTIs) are recorded when an employee or contractor is unable to work following an incident. Glencore records LTIs which result in lost days from the next calendar day after the incident whilst Xstrata recorded LTIs which resulted in lost days from the next rostered day after the incident – therefore the combined LTI figure is not based on data of consistent definition (historically, prior to merger). LTIFR is the total number of LTIs recorded per million working hours.
Our priorities for 2015 Zinc balls, Nordenham, Germany
Our priorities for 2015 23 •Successfully deliver remaining key growth projects •Koniambo, McArthur River, Katanga, Chad oil fields •Ensure continued operating efficiency, targeting Q1 costs/margins •Maintain strong investment grade credit rating •Maintain disciplined deployment of capital to maximise free cash flow growth •Glencore considers portfolio not only marginal NPV •Confidence to: •grow base dividend •recycle excess capital to shareholders •be opportunistic, but within our capital allocation framework •Focus on continuing improvements in our health, safety, sustainability and governance performance
2244 Thermal coal, Rolleston mine, Australia Investor Day 10 December 2014 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:40 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A
25 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities.
Steven Kalmin CFO La Jagua Mine, Prodeco, Colombia
Summary •Robustly profitable industrial operations post merger integration •Marketing enhances earnings stability, flexibility and optionality •Rigorous focus on opex/capex and working capital •Clear and consistent framework for capital allocation •Expansionary capital geared to the right commodities and opportunities •Optimal balance sheet structure for returns, liquidity and cost of capital •We will continue to focus on return of excess capital to shareholders •interim distribution +11% •$1bn equity buyback now c.65% completed 27
Robustly profitable industrial operations •$36bn expansionary capital since 2009 •Mix skewed to the “right” commodities •Tier 1 cost profile and resource base for the Group’s largest commodities and across most of the broader portfolio •Superior pricing vs indices due to marketing network and infrastructure •>$2bn of overhead and operational cost savings post Xstrata transaction •Sustaining capex confirmed around $4.0bn p.a. •expected to fall closer to $3.5bn p.a. by 2017 •no major grade issues/declines for the foreseeable future 28 12.7 3.6 7.1 1.1 8.5 3.0 0.5 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Total 2009-H1 2014 Ags Oil Coal Ferroalloys/PGM Nickel Zinc Copper Expansionary capex 2009-H1 2014
Marketing enhances earnings/cashflow stability, flexibility and optionality EBIT guidance range of $2.7-3.7bn •Still positive but low correlation with commodity prices •Consistent profit generator over 4 decades •Reflects market position and diversification •Current trading in line with this range Highly cash flow generative •Minimal fixed assets/capex required •Efficient capital structure •By itself, underpins bulk of current base distribution Working capital effect (inversely correlated with commodity prices) ensures cashflow can be insulated in periods of lower prices Strong track record of improving margins within industrial businesses •Leveraging market intelligence on commodity fundamentals, including customer and supplier behaviour 29 Marketing EBIT ($M) Historical guidance range: $2 to $3bn Revised guidance range (post Xstrata and Viterra): $2.7 to $3.7bn 0 1,000 2,000 3,000 4,000 2008 2009 2010 2011 2012 2013 2014+
Marketing: a low risk, high ROE business 30 0 20 40 60 80 100 120 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Low risk model Consolidated VaR: 1 Day 95% ($M) 37% 42% 36% 42% 30% 32% 34% 36% 38% 40% 42% 44% 2011 2012 2013 2014F Average: 39% Capital employed easily adjusted to price environment High ROE(1) •>95% of marketed volumes are hedged or pre- sold to mitigate price risk exposure •The 2 key risks are actively managed: •Credit risk – mitigated by: counterparty risk analysis, extensive use of letters of credit, credit insurance and having collateral •Market risk – mitigated by: derivatives used to hedge market risk assumed in physical marketing, adherence to VaR limits, regular stress testing •Fast turning inventory and receivables – average conversion cycle of 32 days (30 June 2014) Average:$33M VaR Limit: $100M Notes: (1) ROE calculation: refer to page 202 and 203 of Glencore’s 2013 Annual Report for assumptions and calculations. (2) Illustrative, based on $2.7bn EBIT, being the bottom end of guidance range. (2) 0 50 100 150 200 250 300 0 5 10 15 20 25 30 Q1 05 Q3 05 Q1 06 Q3 06 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Current capital employed CCI Index (rebased to 100)
Marketing represents the physical movement of commodities from production source to customers/consumers Sources of income (and market intelligence) • Arbitrage opportunities – product, time, geography • Blending strategies – optimising qualities; delivery of products in line with contractual requirements • Financing – working capital terms • Risk management – manage counterparty and market risk exposure • Storage/warehousing – access to and having logistics assets in strategic locations • Freight – access to fleet, information on trade flows • Economies of scale on all of the above Marketing volumes 2013 H1 2014 Copper Mt 2.8 1.5 Zinc Mt 3.2 1.6 Lead Mt 0.7 0.4 Nickel Mt 226 84 Ferroalloys Mt 3.8 2.2 Alumina/aluminium Mt 13.1 6.0 Iron ore Mt 33.2 29.6 Thermal coal Mt 84.4 46.1 Crude oil/oil products Mbbls 1,113.5 547 Agricultural products Mt 68.7 30.6 Revenues $M 192,819 93,617 31 Producer Port Shipping Warehouse Delivery to Industrial Customers Industrial Consumers Extraction Marketing Customer Inland storage & logistics 3rd party supply
Glencore’s flexible capital model 32 Capital centrally funded and allocated Marketing c.$20bn of capital employed •working capital average turnover cycle of ~30-35 days •Quality/nature of asset base (inventories and receivables) allows ~80% to be debt-funded •Marketing financing is frequently refreshed; average duration of debt facilities versus underlying turn is a highly conservative 20x •2014 earnings benefit from Viterra and Xstrata •Guidance range RoE is 40%-65% Industrial c.$90bn of capital employed •target of 30-40% debt-funded; or <2.5-3x Net Debt/EBITDA •target RoE is 20-25% for new capital/projects •earnings to benefit from ramp-up of Koniambo, Australia Zinc, African copper belt, etc •portfolio optimisation will also boost returns on equity
Expansionary capex geared to the right commodities and opportunities 33 Focus on modular/brownfield/flexible investment •revised Caracal capex program primarily limited to producing assets – approval of further exploration capex subject to market conditions and results of nearby program Copper equivalent production CAGR of 5.5% to 2018; >75% attributable to metals Capex/opex under constant review: •Askaf Iron Ore project under review in response to weaker price outlook •suspension of Australian coal operations for three weeks in response to low price environment Copper equivalent growth 2014F-2018F 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Oil Coal Ferroalloys Nickel Zinc/Lead Copper Industrial capex $bn(1) 2013A 2014F 2015F 2016F 2017F August 2014 forecast 11.1(2) 8.7(2) 6.6 Capitalised interest 0.28 0.19 Koniambo variance 0.38 0.21 Project suspensions (0.30) Caracal (50% ownership increase) 0.18 0.57 Net capex deferrals/reductions (0.64) 0.63 December 2014F 8.9 7.9 6.6 4.8 Notes: (1) Excludes marketing capex. (2) Excludes Las Bambas
Industrial capex details 34 0 1 2 3 4 5 6 2014F 2015F 2016F 2017F Metals Coal Oil Ags Capitalised interest Expansionary capex ($bn) Sustaining capex ($bn)(1) 0 1 2 3 4 5 6 2014F 2015F 2016F 2017F Metals Coal Ags 4.9 3.6 2.4 1.2 4.1 4.3 4.2 3.6 – 26% Note: (1) Metals sustaining capex annual ranges: Copper $1.7-2bn, Zinc $700-900M, Nickel 250-300M, Ferroalloys c.$150M. Includes deferred stripping.
Our balance sheet advantage Asturiana de Zinc, electrolysis plant, Spain
•Maintenance of strong Baa/BBB levels remains a financial target/priority •Moody’s and S&P’s investment grade credit ratings at Baa2 (stable) and BBB (stable) •Considered optimal capital structure: •supports marketing activities – positively differentiated credit positioning from most trading competitors •enables Glencore to efficiently grow cashflow, earnings and dividends per share •provides abundant access to capital markets allowing efficient and prudent balance sheet and liquidity management Robust balance sheet being further strengthened 36 $4.9bn funds from operations in H1 2014, up $650M year on year 33.8% FFO to Net debt Minimum: >25% Target: >30% 2.41x Net debt to Adjusted EBITDA Minimum: <3x Target: <2.5x BBB/Baa illustrative target metrics(1) FFO/Adj. Net Debt(2) Adj. Net Debt(2)/EBITDA Notes: (1) Estimated rating metrics based on Glencore’s calculation of Adjusted Net debt. (2) Net debt calculated as Net Funding less Readily Marketable Inventories, including net consideration of $5 billion from the Las Bambas disposal and the Caracal acquisition in July 2014. FFO and EBITDA are last 12 months. 20% 25% 30% 35% 40% 45% FY 2012 H1 2013 FY 2013 H1 2014 1.75x 2.00x 2.25x 2.50x 2.75x 3.00x 3.25x FY 2012 H1 2013 FY 2013 H1 2014 BBB+/ Baa1 BBB- /Baa3 BBB/ Baa2
75 85 95 105 115 125 135 145 2013 2014 2015 2016 2017 2018 Optimal balance sheet structure for equity returns, liquidity and cost of capital 37 Strong Baa/BBB optimising market access and funding cost Declining weighted average funding cost (%) Recent CDS vs peers Commodity outlook supports our rating & equity yield Nickel Aluminium Zinc Copper Iron Ore Oil Thermal Coal 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 0 100 200 300 400 500 600 700 800 900 Nov-04 Jan-06 Mar-07 May-08 Jul-09 Sep-10 Nov-11 Jan-13 Mar-14 A-Rated G-Spread BBB-Rated G-Spread GLEN USD and EUR Issuance (RHS axis) 0 50 100 150 200 250 300 350 03/05/2013 03/09/2013 03/01/2014 03/05/2014 03/09/2014 Rio Tinto BHP Glencore Anglo American Source: Bloomberg, Barclays, Glencore, consensus estimates. 2.5 3.0 3.5 4.0 4.5 2009 2010 2011 2012 2013 2014
We will continue to focus on return of excess capital to shareholders •As a minimum base distribution to remain competitive within sector as growth phase completes •Excess capital to be returned to shareholders in the most efficient manner via appropriate application of base distribution progression, supplemented by buyback continuation and/or special distributions •Interim distribution +11% •$1bn equity buyback now c.65% complete 38 Excess operating free cash flow Source: Factset as of 5 December 2014. 14.2% 9.7% 7.8% 7.4% 3.7% 0% 2% 4% 6% 8% 10% 12% 14% 16% Glencore Peer 1 Peer 2 Peer 3 Peer 4 2016 consensus FCF yield Capital structure maintain strong BBB/Baa credit metrics M&A / Brownfield projects screen growth options against capital allocation criteria Returns to shareholders including ongoing buyback programme Criteria: •risk •return •cash payback Strong BBB/Baa believed to be the optimal rating target supporting the balance between our growth strategy and shareholder returns •High-returning opportunistic M&A and brownfield growth opportunities screened against rigorous capital allocation criteria •Investment opportunities also screened against returns generated from buybacks •Generates growth in profits and FCF •Ongoing buyback program should underpin EPS accretion as well as P/E multiple
Q&A Lion chrome smelter, South Africa
Our management structure 40 Nickel Our functions structure CEO Ivan Glasenberg CFO Steven Kalmin Metals & Minerals Energy Agriculture Ferroalloys Marketing Stuart Cutler Industrial Gary Nagle Marketing Kenny Ives Industrial Peter Johnston Iron Ore Marketing Jyothish George Industrial Mark Eames Zinc Marketing Daniel Maté Industrial Chris Eskdale Copper Marketing & Industrial Telis Mistakidis Aluminium Marketing & Industrial Andrew Caplan Coal Marketing Tor Peterson Industrial Peter Freyberg Oil Marketing & Industrial Alex Beard Agricultural Products Marketing & Industrial Chris Mahoney CEO Ivan Glasenberg CFO Steven Kalmin Legal Ken Klassen – Corporate Development – Treasury and Trade Finance – Accounting – Insurance – Tax – Procurement – Legal – Compliance – IT – IS – Health and Safety – Sustainable Development – Community Relations – Public Affairs – Investor Relations – Group Strategy HR Gerda Schwindt IT Cyril Reol SD Michael Fahrbach Risk Management Carlos Perezagua Communications and Strategy Paul Smith Internal Audit Nam Phong Ho Board Audit Committee Experienced management team with a proven track record of value creation
Ernest Henry copper concentrator, Australia Investor Day 10 December 2014 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:45 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A | Telis Mistakidis 40 products | Chris Mahoney
42 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities.
Copper Telis Mistakidis Alumbrera copper concentrator, Argentina
Topics 1.Glencore Copper Department •Overview •Description 2.Katanga Mining •Production issues •Power 3.Antapaccay •Tintaya concentrator restart •Antapaccay mini expansion 4.Copper Market – where is the surplus? 44
Glencore copper in context •Third largest global mined copper producer and the world’s largest copper supplier •Integrated assets (mines, smelters and refineries) and marketing 45 2013 copper production (kt) 0 500 1,000 1,500 2,000 2,500 3,000 Competitor 1 Competitor 2 Glencore Competitor 3 Competitor 4 Competitor 5 Glencore 2014F supply Source: Glencore, annual reports.
Glencore copper assets 46 Mined Cu N America 90k MT Asia 60k MT Australia 260k MT Africa 500k MT S America 660k MT Horne/CCR 300k MT Isa/Pasar 600k MT Mopani 200k MT Altonorte 300k MT Kazzinc 70k MT Smelter/Refinery
Capability across the copper raw materials chain Mt Isa Cobar Antapaccay Katanga Nkana Townsville Altonorte Horne Pasar Mopani Mt Isa CCR Pasar Mopani EHM Marketing 3rd party 3rd party 3rd party Alumbrera Collahuasi Antamina 3rd party 3rd party 3rd party Lomas Bayas 3rd party Mopani SXEW 3rd party Mutanda Mufulira •Integrated industrial assets and marketing •One million MT custom smelting and refining •Capability to process complex concentrates with precious metals and deleterious elements. Mining Smelting Refining 47
Mined production growth 48 Own source mined copper production (kt) Note: does not include copper from Kidd, Kazzinc and Ni operations Merger 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F Total copper Former Xstrata
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2012A 2013A 2014F 2015F 2016F 2017F African Copper Collahuasi Antamina Other South America Australia By-product Mined production growth by region 49 Own source mined copper production (kt) Source: Glencore
210 165F 16 16 2 8 2 120 130 140 150 160 170 180 190 200 210 220 Cu prodution budget Power direct Power (indirect) & Mechanical Electrical Projects delays Reduced sulphide / ASCu Cu production actual Cu Cathode (‘000) Katanga 2014 production issues 50
Standby generators deployment 51 Generating Capacity UNITS MW KTC 4 2 2 2 KTO 1 2 1 1 1 1 Luilu 1 2 KOV (Convert to Co-Gen) 4 7 Sub – Total 17 Co-Gen 1 (New at Luilu:leach,CCDs) Generator farm (6.6 and 15kV) 6 10 Sub - Total 27 Co-Gen 2 (New at Luilu:EW2/3) Generator farm (33kV) 6 10 Total 37 Now April
Global Power Project – update 52 Description •450MW for Kamoto Copper Company and partners •350MW of new power and 1000MW transmission from INGA to Kolwezi •Project cost – $368M, Lots 1 to 14 •Reimbursed via 40% credit to power bills •Additional 10% withheld for maintenance fund •75MW available to the population Power milestones •Transmission from INGA to Kolwezi from 40MW to 250MW Q1 2013 •25MW (Nzilo) Q4 2014 •165MW (G-27) Q4 2015 •165MW (G-28) Q2 2017 Project status •G27 disassembled and shipped to factory for repair •60% of transformers for the converter station have passed factory acceptance. Remaining 40% to be tested before year end. Commissioning expected January 2016 •Synchronous condenser #2 awaiting confirmation from SNEL, expected December 2014 •Fungurume transformer being commissioned now
Global Power Project – timeline 53 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Lot 3 Unit 3 - Nzilo Quick Fix Lot 4 Unit G27 Inga refurbishment Lot 5 Unit G28 Inga refurbishment Lot 6 Convertor transformer DC Link Pole 1 Lot 7 Convertor transformer DC Link Pole 2 Lot 8 OHL PDI-SCI Reinforcement Lot 9 Additional Harmonic filters Lot 10 Additional Synchronous compensator Lot 11 RO Upgrading HV equipment Lot 12 Auto-transformer SCK-RO #1 Installation Lot 13 Auto-transformer SCK-RO #1 Installation Lot 14 Studies and Final design Additional power from lots 3, 4 & 5 Additional power available on the grid 25 Cumulative power added 25 2013 2014 2015 2016 2017 25 165 165 190 165 165 355
Katanga ramp-up drives future production growth 54 Copper cathode production (kt); Capex $M Source: Glencore 22 42 52 58 61 87 165 242 274 286 301 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 50 100 150 200 250 300 350 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F Cu k Tonnes Cu Cathode Production CAPEX
Katanga ramp-up drives future production growth 55 Copper cathode production (kt); Capex $M Source: Glencore 22 42 52 58 61 87 165 242 274 286 301 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 50 100 150 200 250 300 350 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F Cu k Tonnes Cu Cathode Production CAPEX
New CM5 SAG Mill installed and commissioned 56
New oxide floatation cells installed and commissioned 57
New concentrate roaster commissioned 58
Solvent Extraction commissioned 59
200ktpa EW2 in production 60
First cathodes harvested from 80ktpa EW3 expansion 61
Antapaccay – Tintaya Concentrator Restart Tintaya restart •Existing Tintaya concentrator to process 20 ktpd of ore from Antapaccay mine •Startup in May 2015 •34kt per year Cu in concs for LOM avg. 43kt per year Cu in concs for the first 5 years •Capex of $64M: •Mining: $25M •Concentrator: $27M •Infrastructure & Other: $12M •Capital Intensity: $1.9M per 1,000t of Cu production •Project NPV10% of $290M •Project IRR of 119% •Government approvals received this month 62
Antapaccay – Incremental Plant Expansion Expansion of Antapaccay plant: •Process 82 ktpd of ore from Antapaccay mine using existing infrastructure in 2016 •capacity incrementally increased; 70 ktpd (design) to 77 ktpd (current) and now 82 ktpd •total Cu in concs >200ktpa (inc Tintaya) •9kt per year Cu in concs for LOM avg. 11kt per year Cu in concs for the first 5 years •Capex of $34M: •Mining: $7M •Plant: $27M •Capital Intensity: $3.8M per 1,000t of Cu production •Project NPV 10% of $140M •Project IRR of 117 % 63 42 10 157 209 0 50 100 150 200 250 77 ktpd Antapaccay 20 ktpd Tintaya 5 ktpd Antapaccay Cu Cont. in Conc. (kt per yr) Cu in concentrate per year
Tier 1 asset portfolio and cost structure 64 Q1 First quartile cost position achieved for asset portfolio in 2014 Post-integration cost efficiencies achieved. Focus now on industrial asset structures Q1 Q2 Q3 Illustrative Copper C1 cash cost curve 2013A $1.65/lb Unit mine costs drop through brownfield expansion by 2016: •African copper: $1.60/lb •Collahuasi: $1.47/lb •Antapaccay: $1.00/lb •Antamina: $0.14/lb •Australia: $1.70/lb 2014F $1.42/lb 2016F $1.36/lb c.$300M industrial merger synergies and other cost savings by end 2014
Copper market Altonorte anodes, Antofagasta Port, Chile
0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 LME SHFE COMEX Global Exchange stocks are at lowest levels since 2008 66 Source: Bloomberg, Reuters
Global copper warehouse stocks are reducing further 67 722k 245k 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Jan 2013 Jun 2013 Jan 2014 Jun 2014 Dec 2014 LME COMEX SHFE CHINA BONDED Global warehouse copper stocks (kt Cu) Source: Bloomberg, Reuters, Glencore estimates
0 500 1,000 1,500 2,000 2,500 3,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 Chinese Copper scrap imports are falling 68 19% yoy 13% yoy Chinese copper scrap net imports (kt contained Cu) Source: China customs data
2011 2012 2013 2013 vs 2012 2013 Jan- Oct 2014 Jan- Oct YoY Chg 2014E YoY Chg Copper Cathode Imports 2'825 3'396 3'198 (5.8%) 2'557 2'948 15.3% 3'538 10.6% Exports 156 274 293 7.1% 246 220 (10.7%) 264 (10.0%) Net Imports 2'669 3'122 2'905 (7.0%) 2'311 2'728 18.1% 3'274 12.7% Domestic Production 5'197 5'824 6'840 17.4% 5'763 6'420 11.4% 7'704 12.6% Primary 3'386 3'939 4'686 19.0% 3'755 4'316 14.9% 5'179 10.5% Secondary 1'811 1'885 2'153 14.3% 2'008 2'104 4.8% 2'525 17.2% Apparent Consumption 7'865 8'946 9'745 8.9% 8'074 9'148 13.3% 10'978 12.7% Copper Scrap Imports - gross weight 4'687 4'859 4'373 (10.0%) 3'549 3'187 (10.2%) 3'824 (12.5%) Content 45.0% 50.0% 50.0% 50.0% 50.0% Adjusted Imports - mtu 2'109 2'430 2'186 (10.0%) 1'774 1'594 (10.2%) 1'912 (12.5%) Exports 2 1.5 1 (48.4%) 1 1 1 58.3% Net Imports 2'108 2'428 2'186 (10.0%) 1'774 1'593 (10.2%) 1'911 (12.6%) Domestic Production 924 1'064 1'226 15.2% 1'022 1'179 15.4% 1'415 15.4% Apparent Consumption 3'032 3'492 3'412 (2.3%) 2'796 2'772 (0.9%) 3'326 (2.5%) Chinese imports and apparent consumption 69 15% yoy Source: China customs data China Nonferrous Metals Industry Association
Minus: Kennecott 100k Escondida 150k Alumbrera 50k Surplus now 90k MT? Demand vs Supply per ICSG and Wood Mackenzie 70 Source: ICSG, Wood Mackenzie Global copper short-term outlook, November 2014 Implications of the estimates: •Implied mine production growth of ~1 million MT between 2014 and 2015 (6% growth) •Where is the supply coming from? 2014 2015 ICSG Apr ‘14 Estimate ~400 kt surplus ~600 kt surplus ICSG Oct ‘14 Estimate ~300 kt deficit (Δ 700 kt lower) ~390 kt surplus (Δ 210 kt lower) WoodMac Nov ‘14 Estimate 180 kt surplus 202 kt surplus Copper Demand/Supply balance estimates
Latest 2015 supply forecasts may still be very optimistic Source: Wood Mackenzie Global copper short-term outlook, November 2014 71 +320kt? • Production double counted Frontier at Mopani. 2014 production is 720 kt; • Production and commissioning issues. 2015 to be 850 kt +87kt? • OT phase 2 not next year as company states only open pit next year +72kt? Where does this come from? +328kt? • Major projects commissioned in 2014 (DMH, Caserones, Sierra Gorda) • Escondida lower by ~150kt • Codelco lower by ~90kt (cathodes) • Toromocho operating at 25% capacity • Las Bambas delayed to 2016 • Constancia commissioning? +353kt? • Major projects commissioned in 2014 (Morenci, Eagle, Mt Milligan, Nunavik) • Operational incidents (Mt Polley tailings dam failure – mine shut down, Buenavista- spillage in river and schedule pushed out into 2016) • Kennecott lower production (100kt) +350kt? • Indonesian concentrates export permits • Production and labour issues at Grasberg - operating at 80% +50kt? Alumbrera lower production +200kt? • DRC running at 950kt in 2014. To go to just over 1 mt in 2015 ~1.8 million MT?
2015 copper supply forecast keeps changing 22,000 22,500 23,000 23,500 24,000 24,500 25,000 2010 Q1 2010 Q3 2011 Q1 2011 Q3 2012 Q1 2012 Q3 2013 Q1 2013 Q4 2014 Q2 72 2015 supply forecast as estimated in each period (kt Cu) Source: Wood Mackenzie Global copper long-term outlook Q1 2010 to Q3 2014, Glencore estimates -1.6Mt •Project deferrals; •Commissioning delays; •Revised mine plans. •Brookhunt and ICSG give 390 kt surplus guidance •Taking the previous slide, deduct 1.8 Mt = Deficit of 1.4 - 1.6 Mt for 2015? •Consumption - the world is emerging from the biggest recession in 100 years Make your own mind up?
Thank you 73
Appendix: Copper asset update Kantanga Phase V, EW3 under commissioning, DRC
Katanga expansion nearing completion
New KOV pit crusher completed 76
Installation of new concentrate stockpile shed 77
Heap leach extension complete 78
79 DRC power project Refurbishment of Inga Unit G27, DRC
Mopani – synclinorium and deeps project update New acid plant, Mufilira smelter, Zambia
Synclinorium – Project Site 81
Synclinorium – New Winder Main Shaft 82
Synclinorium – New Winder 83
Synclinorium – New Winder House 84
Synclinorium – Sub Station 85
Synclinorium – New Generator Building 86
Synclinorium – Loading Station – 1231m level 87
Synclinorium – Loading Station – 1231m Level 88
Synclinorium – Ventilation Shaft 89
Mufulira Deeps – Raise Bore – 500m Lift 90
Mindola Deeps – 4960L 91
92 Newlands CHPP, Australia Draft schedule 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:40 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A Investor Day 10 December 2014
93 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities.
Coal Tor Peterson, Peter Freyberg Abbot Point, Australia
Delivering Leading Value Leading Diversified Portfolio •170 Mtpa capacity •Industry leading margins •Underground/Opencut •Export/Domestic •Thermal/Coking •3 continents Operational Excellence •Environment •Community •Safety •Equipment •Project delivery Market Driven •Supply discipline •Blending synergies •Trading leverage Shareholder Returns •Expansionary capital spend down 75% •EBITDA margin 26% 95 ~$50/t FOB cash cost achieved in 2014 ~150Mt of consolidated production in 2015F c.26% EBITDA margin in H1 2014 c.90Mt of marketed volumes 2014
Leading managed coal portfolio 96 Industrial assets comprise 22 coal complexes totaling 196 million tonnes capacity (170mt consolidated capacity), with operations and assets in 3 countries and key marketing offices spread across 19 countries 0 10 20 30 40 Others BHP Anglo Drummond Glencore Mt COLOMBIA 0 10 20 30 40 50 60 Sasol Exxaro BHPB Anglo Glencore Mt SOUTH AFRICA 0 20 40 60 80 100 Anglo Peabody Rio Tinto BHPB Glencore Mt AUSTRALIA #1 in high energy export coal Significant position in export metallurgical coal Diversified global footprint Additional 90Mt of traded and agency tonnage Data: Managed coal production, Australia proforma for full year Clermont. Includes export and domestic coal sales 22 operating coal complexes Exporting equity coal through 9 ports 40Mtpa, low cost rail business Clermont
Delivering industry leading margins 97 *Reflects publically reported June 2014 half year results of major diversified coal competitors Glencore Coal mining business EBITDA margin first half 2014*
Coal markets update Thermal coal, Rolleston mine, Australia
Export thermal Export coking Domestic thermal 3rd Party Responding to the market Relatively strong marketing contribution in challenging environment Supply discipline •Considered supply response •Flexible portfolio Market arbitrage •Domestic versus export •Flexible origination Blending synergies •Quality control •Tailored products Significant marketing contribution •Trading and freight leverage 99 A diversified portfolio (sales volumes)
Coal remains fundamental to Asian energy demand IEA New Policies scenario by 2025 •Globally, net 440 GW of new coal fired generation capacity required •530 GW new capacity primarily in Asia •83 GW closed primarily in USA and EU •Asian coal demand to increase by more than 1Btpa* •500Mtpa demand increase outside China •Africa/Turkey and Latin American coal demand to increase by 75Mtpa* •South Africa and Brazil as key drivers •Resource constrained Asia drives seaborne coal demand growth •Korea, Philippines, Malaysia, Vietnam •Indian import growth required to supplement domestic supply 100 0 200 400 600 800 1000 1200 China India Other Asia Africa & Sth Am. USA ROW GW 2012 2020 2025 Net 440GW new coal-fired power stations Sources: IEA WEO2014, New Policies Scenario, Current Policies Scenario * based on 2012 average global energy content 4920kcal/kg nar A further 255 GW of coal fired generation (800Mtpa* coal), would be required in Asia by 2025 under IEA Current Policies scenario.
0 200 400 600 800 1000 USD/t Million Tonnes Expect further rationalisation and delayed investment 101 Source: Glencore FOB seaborne thermal coal cash margins at current market prices (US$/t) c.25% of seaborne supply remains cash negative •Producers with USD cost base most impacted •USA thermal exports down 16Mt •Indonesia bituminous exports declined 8Mt •Short-term mine plan changes are unsustainable Glencore export thermal coal average +ve -ve 0
Investment delays will lead to price recovery •Long term demand fundamentals remain intact •Demand growth is more than just a China story •Some high cost supplies are closing •Resource depletion restricts supply •New capacity investment delayed •Positive longer term outlook 102 Volume Time Seaborne thermal coal market Historical demand 7% pa Base demand 4.5%pa Existing Supply Committed Supply Investment required
Coal industrial business overview
We deliver – safely 104 Group coal safety performance GCOM: pre-shift safety discussion Emergency preparedness training
We deliver … with sustainable land outcomes 105 Liddell rehabilitation Cattle trial on rehabilitated land
We deliver … using leading environmental technologies 106 Water treatment plant Environmental monitoring Generation using waste gas
We deliver … value to the communities we operate in 107 Community projects Consultation Australia Consultation Colombia Reconciliation Action Plan
We deliver through industry leading operational performance 108 Opencuts: +26% productivity Undergrounds: No.1 in Australia Improvement in Tier 1 loading unit performance Saleable production (Mt) based on FY13/14
We deliver by focusing on margins •Reduced overheads •Optimisation of underground rosters •20% improvement in reliability of underground development •Increased productivities – 26% improvement in productivity of Tier 1 shovels & excavators •Removal of high cost production •Rationalisation of contractor spend •Negotiations with key suppliers •New production firmly in first quartile (Ulan West, Tweefontein, Wonderfontein, Clermont) 109 $1.8bn cost savings through efficiencies since 2012
Production volumes nearing steady state as legacy projects are delivered 110 *Production figures on a consolidated basis except Cerrejón 33% equity interest Own source consolidated production (Mt) 0 25 50 75 100 125 150 175 2012A 2013A 2014F 2015F 2016F 2017F Australia thermal SA thermal Colombia thermal Australia coking Australia SS
Coal assets – update and future opportunities Ravensworth North, Australia
112 We deliver value in operations – Clermont case study The past The future Note 1: In-Pit crushing and conveying system Value Delivered $60m NPV Reduced haulage costs Glencore mine planning expertise identifies efficiencies achievable through alternative hauling strategies Productivity Digger fleet consistently performed below Glencore standards, foregoing ~1Mtpa in annual coal production Increased productivity Improved fleet utilisation Revised organisation structure Increase production optionality $100m NPV Coal preparation Costly partial washing Coal preparation Identified opportunity to bypass all coal $80m NPV Haulage costs Expensive ex-pit hauls due to relocation of IPCC1 in 2012 following operational issues
•50:50 Joint Venture with Peabody •Synergies realised through: •Removal of surface boundary constraints •Removal of stratified lease interaction •Optimised open cut mine planning •Access under-utilised mine and rail infrastructure •Low capital •Mine managed by Glencore, separate marketing •6 Mtpa •100Mt reserves 113 We deliver synergies – United / Wambo Joint Venture Lease consolidation (red line) Wambo CHPP United Coal and Allied Wambo rail loop Wambo UG United / Wambo (Stratified) Wambo United / Wambo (Stratified) Glencore & Peabody co-operation unlocking material value for shareholders
Open Cut Development Eastern Emplacement Noise and visual bund We work hard for our License to Operate: Bulga LOM extension •Performance driven culture •Detailed planning and assessment •Clear understanding of stakeholder engagement -Community -Government •Proven track record -Safety -Environmental -Community inclusion 114 Bulga Optimisation Project Approved Dec 2014
We deliver projects – on time, on budget 115 - 2 4 6 8 - 5 10 15 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Strip ratio Production (Mt) ROM Product Strip ratio Ravensworth North Tweefontein Optimisation Project Ulan West Rav North production build up TWF – new rapid train load out Ulan West – first shear
Conclusion 116 Challenging market -Coking coal in balance, however low prices are expected to lead to further supply reductions -Thermal coal heading towards supply deficits -Margins will need to increase to support any new capacity Quality resources -Well positioned with unrivalled optionality Capital discipline -Capital only invested if meets high internal return requirement Delivering value -Leading diversified portfolio -Industry leading productivities -Operational excellence -Market driven -Realise synergies through M & A -Shareholder returns
Q&A
Appendix 118
Supply growth exceeded demand •Chinese repositioning creating uncertainty Demand growth forecast at +4.5% pa (+40Mtpa) over next 3 years •Supply growth expected to lag Thermal coal margins will need to increase to support investment in new capacity Market update – thermal coal supply and demand 119 0 200 400 600 800 1,000 1,200 2011 2012 2013 2014F 2015F 2016F 2017F China India Japan Korea Taiwan Germany Other -70 -60 -50 -40 -30 -20 -10 0 10 20 2011 2012 2013 2014F 2015F 2016F 2017F Seaborne thermal coal demand (Mt) Supply Demand Balance (Mt) 1,076 792 880 931 946 966 1,019 Source: Glencore
Demand reduction from 2013 to 2014 •Supply growth is being constrained due to demand growth and lower prices during 2013 / 2014 Constrained demand growth forecast •< 2% over the next 3 years Current metallurgical coal margins are expected to lead to further supply reductions Market update – metallurgical coal supply and demand 120 0 50 100 150 200 250 300 350 400 2011 2012 2013 2014F 2015F 2016F 2017F China India Japan Korea Taiwan EU Other -14 -12 -10 -8 -6 -4 -2 0 2 2011 2012 2013 2014F 2015F 2016F 2017F Seaborne metallurgical coal demand (Mt) Supply Demand Balance (Mt) 261 280 312 301 320 326 327 Source: Glencore
Investor Day 10 December 2014 Zinc ingot, Asturiana de Zinc, Spain 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:40 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A
122 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities.
Zinc Daniel Maté, Chris Eskdale Removing dross from top of furnace, CEZ zinc refinery, Canada
Zinc summary Zinc market fundamentals remain strong and continue to improve Our industry leading zinc business combines world class zinc assets with our marketing reach and expertise Unique combination of mines and smelters in a single company •mined production of 1.4Mt in 2013 rising to 1.6Mt by 2016 – #1 globally •smelter production of ~1.36Mt – #1 globally. Brings additional exposure to ~250kt zinc units through over-recovery / escalator capture •resource base provides weighted average mine lives >40 years on current Measured and Indicated resource •key growth projects provide additional zinc and cost/capital efficiencies at an attractive stage of the price cycle Industrial assets and marketing flows managed under one roof, two-way information flow •one global concentrates/metal book and one pool of knowledge. •market input guides assets to produce the economically optimal product mix •sharing of best practices across global zinc assets •mine output and 3rd party tonnage flowing to destination of optimal economic return 124
Global zinc market Concentrate loading facility for McArthur River zinc mine, Australia
World zinc metal consumption 2012A – 2019F •Consumption growth in 2012-2014 has been c.3.7% y-o-y •2014 is expected to be in a deficit of 260-270kt •Stocks (LME + SHFE and bonded warehouse in China) have declined for each of the last 12 consecutive quarters •This translates to incremental metal demand of 550-600kt of zinc metal per year 126 Yearly global zinc metal consumption (kt Zn) 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F Source: Glencore estimates, Wood Mackenzie, CRU.
127 Where will these units come from?
Concentrates requirement, production and deficit outlook 128 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 2015 2016 2017 2018 2019 Non-China mined Zn concs production (kt Zn) 368 758 506 360 293 0 100 200 300 400 500 600 700 800 900 1000 2015 2016 2017 2018 2019 Additional Zn concs required (kt Zn) •Approximately additional 3Mt of zinc in concentrates is needed in the next 5 years to meet forecast metal demand (and balance the current c.260-270kt metal deficit) •Non-Chinese mine production is forecast to add a net 600-650kt of zinc in concentrates over 2015-2019 •Non-Chinese monthly zinc mine production will start declining in Q3 2015 and flatten afterwards •Closure of Century and Lisheen mines is expected to remove ~600kt of zinc contained per year •The market can only be balanced by higher Chinese mine production, further drawdowns from metal stocks and/or yet to be approved mine projects Source: Glencore estimates, Wood Mackenzie, CRU.
270 235 335 -55 185 315 310 308 205 183 368 758 506 360 293 $1,382 $3,275 $3,242 $1,875 $1,655 $2,161 $2,194 $1,948 $1,910 $2,161 0 500 1,000 1,500 2,000 2,500 3,000 3,500 -100 0 100 200 300 400 500 600 700 800 2005 2007 2009 2011 2013 2015F 2017F 2019F Chinese mine production •During the last 10 years, Chinese mine production has on average increased 225kt per year •To meet global zinc metal demand, Chinese mine production would need to increase by c.2-2.5Mt of zinc in concentrates over the next 5 years – an average of c.450-500kt per year 129 Annual change in Chinese zinc mine production (kt zinc in concentrate) Zinc concs production growth: 8.2% Zinc concs production growth: 7.5% REQUIRED Zinc concs production growth: 8.9% c.450-500kt p.a. c.225kt p.a. LME Zn price Zn $/t kt Zn Source: Glencore estimates, Wood Mackenzie, CRU. 2014F 2016F
Mine deficit can only partially be covered by available stock 130 155 545 293 147 80 368 758 506 360 293 0 100 200 300 400 500 600 700 800 2015 2016 2017 2018 2019 Concentrate deficit Chinese production increase based on 3 year average Gap between Chinese concs required and forecast (kt Zn) 0 200 400 600 800 1000 1200 1400 1600 1800 2012 2013 2014 2015 2016 2017 2018 2019 Forecast zinc metal stocks* (kt Zn) •Assuming Chinese mine production increases c.210-220kt per year, there will be a global deficit of c.1.0-1.5Mt of zinc in concentrates over the forecast period •Deficit of concentrates will result in drawdown of metal stocks •2014 forecast inventory drawdown of 263kt 1’200 1’100 Source: Glencore estimates, Wood Mackenzie, CRU. *Reported Exchange Stocks + GIAG estimate of BWHSE stocks. c.213kt p.a.
Price is closely correlated to available stock levels •Historically, zinc prices have responded to the upside as the “stocks:consumption” ratio approaches 3 weeks of zinc metal consumption 131 $779 $828 $1,048 $1,382 $3,275 $3,242 $1,875 $1,655 $2,161 $2,193 $1,948 $1,910 $2,161 3.6 4 3.2 1.9 0.4 0.7 1.5 3.4 4.4 5 6.5 5.6 4.4 0 1 2 3 4 5 6 7 0 500 1,000 1,500 2,000 2,500 3,000 3,500 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F LME Zn price Stocks consumption ratio LME zinc price ($/t) vs stocks to consumption ratio (weeks) Inverse weeks stocks:consumption ratio LME Zn price $/t Source: Glencore estimates, Wood Mackenzie, Bloomberg, CRU.
Zinc metal stocks outlook •Stocks are forecast to fall below the critical “stocks:consumption” inflection point of 3 weeks consumption 132 -3 -2 -1 0 1 2 3 4 5 Downside (2.8% zinc demand growth) Base (3.8% zinc demand growth) Upside (4.8% zinc demand growth) Sensitivity of zinc metal stocks to global zinc demand Feb 2016 Apr 2016 Oct 2016 Inflection point Weeks consumption Source: Glencore estimates, Wood Mackenzie, CRU. 2014F 2015F 2016F 2017F 2019F 2018F
Zinc industrial overview McArthur River zinc mine metallurgical plant, Australia
Glencore zinc assets 134 Industrial assets comprise: 24 mines, 7 zinc smelters, 6 lead smelters/refineries with operations and assets in 12 countries and key marketing offices spread across 5 continents, ~50k employees
A large long-life, low-cost, optimised asset base Expansions – delivery of 3 Australian projects •capex spend on budget •Lady Loretta project ahead of schedule “Steady State” operations •benchmarking and subsequent cost reduction/turnaround projects – savings of ~$50 million •smelters – commercial and technical integration •cost synergies of >$100 million achieved vs. initial integration assessment of $70 million •zinc sustaining capex declining to normalised levels of around $700-900 million from 2016 135 Illustrative Zinc C1 cash cost curve Q1 Q2 Q3 Q4 Zn: 2013 61 c/lb Zn: 2016 43 c/lb Australian expansions underpin a sustainable reduction in C1 cash costs 1.6Mt low-cost zinc production by 2016 +40 yrs mine life, based on current M+I resource of c.52Mt Note: Glencore estimated C1 cash cost in real terms.
Forecast zinc mine production profile 136 1,399 1,380 1,580 1,620 1,640 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2013A 2014F 2015F 2016F 2017F Australia Kazzinc North America Antamina Other Zinc Glencore Smelting Capacity Own source contained zinc mine production (kt zinc) Source: Glencore, smelting capacity represents 100% production.
Australian expansion projects update Mt Isa Operations: •Capital cost of US$245M for new hoisting shaft and associated infrastructure •Nov 2014 run-rate of 4.3Mtpa ore mined •Hoist commissioning anticipated in Q1 2015 •Sustainable 4.5Mtpa ore mined run rate by Q2 2015 Lady Loretta: •Capital cost of ~US$350M •Project on budget with production ramping up to 1.6Mtpa by H2 2015 •0.6Mt ore mined in 2013 •Current run-rate of 1Mtpa ore mined McArthur River: •Handed over to operations and commenced commissioning in H1 2014 •Ramp-up challenges encountered during H2 2014, particularly in relation to flotation and dewatering circuits •Residual issues well understood and being addressed •Expecting annualised zinc production of 330kt contained metal by end Dec 2014, representing >90% of design capacity MRM Processing Plant Rock bolting, Lady Loretta mine 137
Conclusion •Zinc market fundamentals remain strong and continue to improve •Our industry leading zinc business combines world class zinc assets with our marketing reach and expertise •unique combination of mines and smelters in a single company •industrial assets fully integrated into global marketing flows •Glencore’s key growth projects provide additional zinc and cost / capital efficiencies at an attractive stage of the price cycle •cost position of c.61 c/lb in 2013, falling to c.43 c/lb in 2016 •zinc sustaining capex declining to normalized levels of around $700-900 million from 2016 138
Q&A George Fisher underground mine shift change, Australia
140 Investor Day 10 December 2014 Granulated nickel matte, Sudbury, Canada 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:40 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A
141 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities.
Nickel Kenny Ives, Peter Johnston Exploration drilling, Raglan, Canada
Nickel highlights Nickel market transitioning to deficit; balanced 2015 and deficits thereafter •nickel demand growth conservatively projected at c.4.5% p.a. •substantial deficits forecast over the outlook period Top 3 integrated nickel producer •2013 own source production of 98.4kt, rising to 140-150kt by 2016 •delivery of additional volumes into a growing deficit, underpinned by Koniambo ramp-up –first quartile C1 cost position of around $3.10/lb in 2014, 2016 cost position of c.$4.00/lb •total nickel capex declining from a peak of c.$1.9 billion in 2012 to a normalised level of c.$300-400 million from 2016(1) •SAFENICKEL rolled out across business Full integration of marketing and industrial assets guides investment decisions, M&A activity and product sales •marketed c.200kt of nickel in 2013 and 2014 •focus on profitability vs. units traded •industry leading intelligence and unparalleled global coverage 143 Note: (1) Excludes any unapproved expansionary capital
Sustainable Development 144 Our Social License to operate is granted by our stakeholders and maintained through a strategic approach focused on delivering results Our Strategy Our Safety (TRIFR) 14.6 13.5 10.3 10.9 7.9 6.3 5.6 6.6 2007 2008 2009 2010 2011 2012 2013 2014 YTD Health and Safety •Safety •Security •Health and Hygiene •Community Health and Safety Stakeholder Engagement •Community/ Stakeholder Relations •Internal Communication •Government Relations •Media/External Relations Environmental Stewardship •Energy / GHG •Water •Land Use / Biodiversity •Climate Change Social Responsibility •Human Rights •Corporate Social Investment •Local enterprise development •License to Market •Impact and Opportunity Management •Fatality free since 2012 •Implementation of the Glencore fatal hazard protocols at all operations. •No major environmental incidents for last 3 years
Nickel industrial overview Sudbury environmental lab, Canada
Nickel assets overview 146
Operations Raglan (Nunavik, Northern Québec, Canada) •4 Mines, Mill, Power plant, Concentrator •Primary metals are nickel and copper •Palladium/platinum, cobalt are also produced •Employs approximately 950 people Sudbury (Ontario, Canada) •2 mines, Mill and Smelter •Primary metals are nickel, copper and cobalt •Palladium/platinum are also produced •Employs approximately 1,400 people 147
Operations Murrin Murrin (Western Australia) •Fully integrated hydro metallurgical facility producing LME grade nickel and cobalt •Only Surviving Gen 1 HPAL plant – technology intended primarily for the treatment of Limonitic type ores •Mines, mill, refinery, power plant •Employs approximately 1,100 people Nikkelverk (Kristiansand, Norway) •Refinery •Primary metals refined are nickel, copper, cobalt and precious metals •Capacity to produce 92,000 tonnes of nickel per year •Employs approximately 500 people 148
A large, long-life, low-cost optimised asset base 149 $140M of merger cost synergies realised by end 2014 $4.00/lb C1 to be achieved in 2016F 70% reduction in capex in 2015 Q1 Q2 Illustrative Nickel C1 metals cash cost curve 2016F $4.00/lb 2014F $3.10/lb 140- 150kt low-cost nickel production by 2016 +20yrs mine life, based on current resource of c.13.5Mt
0 20 40 60 80 100 120 140 160 2012A 2013A 2014F 2015F 2016F 2017F Australia Canada New Caledonia Dominican Republic Koniambo guidance 2014: 10 to 18kt Ni 2015: 25 to 40kt Ni 2016: > 50kt Ni to nameplate capacity Koniambo ramp-up drives future production growth 150 Own source contained nickel production (kt) Source: Glencore 102.5 98 +100 120-135 150-160 150-160
3.9 5.3 5.5 5.5 0.8 1.7 3.0 4.0 5.0 6.0 7.0 X Board approval 2007 X Board revision 2011 G Forecast Sep 2013 G Forecast Dec 2014 Project execution Commissioning & ramp up Koniambo construction complete 151 Construction cost ($ billion) 6.3 7.2 Key milestones Commercial production line 1 September 2013 Commercial production line 2 February 2014 Power station line 1 synchronisation April 2014 Power station line 2 synchronisation September 2014 Commercial production Estimated June 2015 •Koniambo construction completed in November 2013; production ramp-up now underway •Power station commissioning issues are expected to be corrected by the end of H1 2015 – no power constraints to production in the interim •Ramp-up of metallurgical production is progressing well; confidence that technology will deliver nominal capacity
Integrated site – metallurgical plant (construction complete) 152
Smelting (new smelting technology) •The metallurgical plant has been operating for over 12 months •both lines have operated at 90% of nominal throughput •furnace power demonstrated at 80MW (100% of design) on both lines •fluid bed reducing process performing well •achieving overall metallurgical expectations •Confidence in overall technology is high 153 Hammer Mill Flash Dryer Calciner Fluid Bed Reducer DC Furnace
Sufficient power is now available to support production •At full nominal smelting rates, the site will demand 215MW of net power, the equivalent of all power consumed on the island of New Caledonia. The site is designed to have a total installed capacity of 404MW (including auxiliary sources) •2 x STG (135MW x 2), 2 x CTG (52MW x 2), Enercal (30MW) and temporary diesel turbines (3 x 20MW) •During commissioning of the steam fired power station in late 2013, significant cracking was identified in boiler tube welds in the heat exchange section of the waste heat boilers. The piping has required remanufacturing •Boiler tube replacement and installation schedule is on track for both units to be operational at full capacity in Q2 2015 154 Production start up has relied heavily on 2 x 52 MW Rolls Royce Combustion Turbines 3 x 20 MW temporary diesel turbines were added in May 2014
Further divestment opportunities 155 Araguaia •Laterite nickel/cobalt project located in Brazil •Measured and indicated resource of 105Mt @ 1.33% Ni and an additional 18Mt of inferred resources @ 1.3% Ni Sipilou •Laterite nickel/cobalt project located in Ivory Coast •Joint venture with SODEMI; current Glencore stake of 94%, diluting to 85% upon issuance of mining license Cosmos •Consists of two underground mines (Prospero and Cosmos) and a concentrator in Western Australia •Cosmos is currently on care and maintenance
Nickel market transitioning to deficit Offloading Sudbury nickel matte at Nikkelverk, Norway
Market remains in surplus with LME stocks increasing 157 LME Ni inventory and price Nickel market balance (kt) •LME nickel price rallied to $21,200/t in May, up 52% from the start of the year. Prices subsequently settled in an $18,000-$20,000/t range, then declined rapidly from Sep, along with commodities in general. Market recently recovered most Sep/Oct losses •The increase in price was primarily driven by the Indonesian ban on nickel ore exports and the anticipation of reduced nickel output •Yet, continuous increases in LME inventory, Chinese metal exports, higher Philippine ore exports, macro- economic downgrades and liquidity issues in China have all impacted sentiment and nickel prices Source: Glencore, LME. China Customs 12,000 14,000 16,000 18,000 20,000 22,000 24,000 26,000 28,000 30,000 80 130 180 230 280 330 380 430 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Inventory (kt) Price (US$/t) -50 0 50 100 150 200 250 300 350 400 450 2010 2011 2012 2013 2014F Nickel market balance Cumulative balance 2014 Chinese metal exports (kt) 0 2 4 6 8 10 12 14 16 18 20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Nickel pig iron output supported by high grade ore stocks 158 Quarterly nickel pig iron production (kt) High and Mid grade Chinese nickel ore inventory (kt) •Significant stockpiles of Indonesian high grade ore (>1.8% Ni) were built in China prior to the export ban (27Mt HG/MG ore) •These stockpiles, blended with Philippine ore, have supported continued high levels of Chinese nickel pig iron (NPI) production in 2014 (c.480Kt Ni) albeit with production decreasing Q on Q •Estimated at over 20Mt at the start of the year, stockpiles of high grade ore in China are currently below 10Mt and trending towards critical levels •Philippine shipments will decrease in the coming months due to the monsoon season. Shipments will not pick back up materially until April when Surigao area exports resume •HG stocks will be at critical levels by April 2015 and seasonality will become a major factor going forward Source: Glencore. 0 40 80 120 160 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4F 2013 2014 0 10 20 30 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Mid grade (MG) High grade (HG)
Philippine ore supplies determine Chinese NPI outlook 159 Philippine ore exports to China (Mt) Chinese nickel pig iron production (kt) •With the Indonesian ban on ore exports sustained (also confirmed by recent Constitutional Court ruling), Chinese inventory of Indonesian high grade ore will ultimately deplete and NPI production will depend on ore exports from the Philippines •2014 Philippine exports to China are forecast at c.52Mt wet ore and constitute LG >50%, MG >30% with the balance HG. Lower average grade ores increase NPI production costs, all things being equal •No game changers elsewhere: New Caledonia may supply 1-2Mtpa additional ore to market while Guatemala may supply up to 30kt Ni contained in higher grade ore to European FeNi plants •Based on our projection of volume and composition of Philippine ore supply, China’s NPI production is forecast to fall from 480kt Ni in 2014 to 400kt Ni in 20151 and 350- 400kt Ni over the outlook period Source: Glencore, Note: (1) Function of HG ore carry out. 0 25 50 2013 2014F 2015F LG <0.8% Ni LG >0.8% Ni MG HG 0 100 200 300 400 500 600 2013 2014F 2015F 2016F 2017F 2018F 2019F
0 500 1000 1500 2000 2013 2014F 2015F 2016F 2017F 2018F 2019F Chinese NPI New projects Existing producers Supply outlook – limited growth amid ore ban 160 •Global nickel supply in 2014 is forecast to be relatively unchanged on 2013 as decreased output from existing producers and Chinese NPI is offset by increased production from new projects •Longer term, Chinese NPI production is forecast at 350-400kt vs. 510kt in 2013. However, increased supply from new projects (all going well) should offset projected losses and overall supply growth is forecast at c.1% p.a. to 2019 •China’s NPI dependence on lower grade ore from the Philippines will increase production costs •Ramp up performances highlight the need for a cautious outlook, with the majority of new projects delayed due to technical, environmental, permitting and social challenges •We assume limited growth in actual Indonesian NPI output. While capacity will be built in a higher price environment, the extent and pace of commissioning is likely to be challenged for a variety of reasons •We forecast less than 100kt Ni in Indonesian NPI by 2019 Source: Glencore Forecast nickel supply (kt) Forecast supply from new projects (kt)
Demand outlook – solid growth in key markets 161 •“While the days of double-digit growth in China are over, the greater size of the economy means lower growth still translates into strong absolute demand… It’s slower not lower.” Julian Kettle, Wood Mackenzie •Primary nickel demand in stainless steel is projected to increase c.5% in 2014, reflecting growth in China, North America, Japan and India. Longer term, we forecast global nickel demand in stainless to increase at a rate >4.5% p.a., predominantly driven by China (Global CAGR 2008-2013: 9.6% p.a.) •Activity in non-stainless applications is also robust with nickel usage projected to increase >8% in 2014. Going forward, non-stainless demand growth is forecast >4% p.a., with strong contributions from China, US and India •Overall, we project solid nickel demand growth of c.4.5% p.a. between 2014 and 2019 (CAGR 2008-2013: 7.1% p.a.) •Put simply, we conservatively expect demand will increase by 75-100Kt Ni per year Source: Glencore Forecast nickel demand by sector (kt) Forecast nickel demand by region (kt) 0 500 1,000 1,500 2,000 2,500 2013 2014F 2015F 2016F 2017F 2018F 2019F Primary nickel in non-stainless Primary nickel in stainless 0 500 1,000 1,500 2,000 2,500 2013 2014F 2015F 2016F 2017F 2018F 2019F China Non China
Expanding deficits to emerge 162 •Assuming the Indonesian ban on ore exports is sustained, market deficits will emerge •Increased supply from new projects (all going well) supports global production growth of c.1% p.a. to 2019 •With nickel demand growth projected at a conservative c.4.5% p.a., the market is expected to transition to deficit, with substantial deficits forecast from 2018 •Long run nickel pricing will largely be determined by the cost of bringing on marginal (low grade) limonite ore processing capacity •We do not see any new low cost technologies that will alter the outlook Source: Glencore Forecast nickel supply/demand (kt) Forecast nickel market balance (kt) 1,600 1,800 2,000 2,200 2,400 2013 2014F 2015F 2016F 2017F 2018F 2019F Supply Demand -300 -200 -100 0 100 200 2013 2014F 2015F 2016F 2017F 2018F 2019F
Q&A Murrin Murrin metallurgical plant, Australia
Investor Day 10 December 2014 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:40 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A Mangara, Chad
165 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities.
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Glen investor-day-2014-print

  • 1. 11 Tintaya concentrator, Peru 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:40 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A Investor Day 10 December 2014
  • 2. 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities. 2
  • 3. Ivan Glasenberg CEO Lion chrome smelter, South Africa
  • 4. Summary •Capital misallocation, not a lack of demand, remains a key issue for the sector •Clear need to differentiate by commodity – correlation has broken down •Glencore’s positioning provides superior insulation and material price optionality •Established portfolio of Tier one industrial assets/cost structure in the right commodities •Glencore Marketing is a unique, low-risk, defensive earnings driver •Our balance sheet strategy, attributes and execution are key value creators •Unparalleled track record of value creation since 1994, based on material management ownership •Our sustainability efforts are gaining traction 4
  • 5. Capital allocation is a key issue for the sector Electronic scrap recycling, Horne copper smelter, Canada
  • 6. 0% 2% 4% 6% 8% 10% 12% Copper Zinc Al Ni Thermal Coal Iron Ore Oil Previous 5 year average 2014 Demand favours base over bulk again in 2014 … 6 Source: Glencore estimates, various broker reports, Wood Mackenzie. Global demand growth
  • 7. … however, capital allocation in the sector remains iron ore centric … 7 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Glencore Peer 1 Peer 2 Peer 3 Peer 4 Met Coal Thermal Coal Iron Ore Metals Oil and Gas Production growth 2013A -2016E (Cu equivalent) Source: Company websites, Glencore estimates. Note, does not include commodities where production declines are expected.
  • 8. -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% Copper Zinc Aluminium Nickel Coal Iron ore Oil … and price performance reflects oversupply fears 8 Year to date price change Source: Bloomberg as at 3 December 2014, Wood Mackenzie, Deutsche Bank, Glencore estimates.
  • 9. Differentiation by commodity is critical Wheat crop in Bute, Australia
  • 10. Our global footprint is truly diversified … 10
  • 11. … by commodity and activity … 11 Oil 26% Copper 20% Iron Ore 52% Other 1% Iron Ore 73% Aluminium 10% Copper 10% Coal 2% Diamonds 5% Iron Ore 40% Coal 8% Copper 25% Diamonds 25% Other 2% BHP: Copper 38% Zinc 4% Nickel 7% Coal 7% Oil 4% Marketing metals 25% Marketing energy 6% Marketing agri 13% Corp and other (4%) Source: company reports, EBIT H1 2014.
  • 12. … with key drivers earning 98% of EBIT … 12 0 10 20 30 40 50 60 70 80 90 100 38% 4% 7% 7% 42% Cu Deficit “Consensus” surplus elusive so far, increasing downside risk to supply in 2015/16 Zn Deficit An additional 3-3.5Mt of zinc supply needed over next 5 years to balance the market Marketing Resilient Defensive earnings, less sensitive to falling prices. Benefits from own source production Coal Rebalancing Some high cost supply shutting, new investment delayed. Coal essential to meet energy demand Ni Transitioning to deficit Balanced 2015 and deficits thereafter, substantial from 2018 Data: H1 2014 EBIT.
  • 13. 70 80 90 100 110 120 130 140 2013 2014 2015 2016 2017 2018 … supported by positive fundamentals and prices 13 Consensus price forecasts 2014=100 Source: Consensus broker research, 4 December 2014. Nickel Aluminium Zinc Copper Iron Ore Oil Thermal Coal
  • 14. Established portfolio of Tier one industrial assets Assay lab, Mount Isa Mines, Australia
  • 15. Established portfolio of Tier One assets … 15
  • 16. … with synergies and cost savings embedded in the commodity cost structures … 16 Cu 2016F >$2bn industrial merger synergies and other cost savings achieved Post-integration cost efficiencies and focus now ingrained in industrial asset structures Q1 first quartile cost positions achieved in 2014; further improvements expected Q1 Q2 Q3 FeCr 2013 2016F Ni 2016F Thermal Coal 2016F Illustrative C1 metals cash cost curve / Inverse FOB cash margin thermal coal Zn 2016F Cu 2013 Zn 2013 Ni 2014F
  • 17. … with major optionality for future brownfield growth, as and when appropriate 17 2016+ brownfield growth options Copper Coroccohuyaco Mutanda Sulphides Zinc Mararovskoe Dolinno Nickel Raglan 40ktpa Raglan Phase II Coal Mt Owen extension Rolleston Phase II expansion GGV expansion Optimum / Zonnebloem Commissioning 2015 Copper Nkana Synclinorium: new shaft to extend section life by 25 years DRC Power: first 162MW refurbished turbine (G27) at Inga Tintaya mill restart: restart Tintaya mill to process higher Antapaccay ore volumes Commissioning 2016 Copper Antapaccay expansion: Concentrator upgrade to increase throughput Oil: >800 MM bbls of risked prospective resource potential in Chad Chad exploration: Doseo/Borogop, DOBI/DOI, DOH blocks Chad development: Kibea and nearby discoveries Bolongo – Cameroon Diega – Equatorial Guinea Oil Krim (DOB/DOI): Chad Note: Cu equivalent annual growth including the above committed projects only of c. 5.4% expected 2014-2018. Coal Bulga: 20 year life extension at current production rates Commissioning 2017 Copper Mopani Deeps: new shaft infrastructure to provide a 25% increase in own source production and a 20% reduction in mine cash costs
  • 18. Marketing – a defensive earnings driver Chemoil terminal, Singapore
  • 19. Marketing – a unique, low-risk, defensive earnings driver 19 •Relatively low cost of capital and stable cost base underpin predictable and high ROE •Resilient earnings capability in a falling price environment •Minimal exposure to flat price risk •Difficult to replicate •A key differentiator among the diversified peers •Credit rating/cost of funds advantage relative to trading peers •Industry leading own source production volumes create significant optionality •Provides unrivalled global intelligence / market knowledge and insight •Commodity direction •Corporate activity/opportunities •Customer and supplier behaviour •Unique scale, diversification and skill Marketing EBIT ($M) 0 1,000 2,000 3,000 4,000 2008 2009 2010 2011 2012 2013 2014+ Historical guidance range: $2 to $3bn Revised guidance range (post Xstrata and Viterra): $2.7 to $3.7bn
  • 20. Sustainability gaining traction Espinar farmer near Antapaccay/Tintaya copper mines, Peru
  • 21. Governance and sustainability Safety •Regrettably 15 fatalities year to date (26 in 2013) •Reduction on 2013 reflects ‘SafeWork’ focus on safety leadership, culture and implementation of Fatal Hazard Protocols •Significant performance improvement at DRC, Zambia, Bolivia and Kazakhstan operations (64,500 employees and contractors) •Targeting ‘SafeWork’ rollout to all 200,000 employees and contractors by February 2015 (100,000 YTD) Governance •Consolidation of Board: A. Hayward, Chair; P. Grauer SID; Patrice Merrin, new NED •Published policies on bribery and corruption, carbon and human rights Memberships •ICMM, UN Global Compact, EITI •Voluntary Principles on Security and Human Rights (application in progress) 21 LTIFR(1) 2009 to 2014YTD 3.00 2.73 2.51 2.04 1.93 1.57 1.00 1.50 2.00 2.50 3.00 3.50 2009 2010 2011 2012 2013 2014 YTD Note: (1) Lost time incidents (LTIs) are recorded when an employee or contractor is unable to work following an incident. Glencore records LTIs which result in lost days from the next calendar day after the incident whilst Xstrata recorded LTIs which resulted in lost days from the next rostered day after the incident – therefore the combined LTI figure is not based on data of consistent definition (historically, prior to merger). LTIFR is the total number of LTIs recorded per million working hours.
  • 22. Our priorities for 2015 Zinc balls, Nordenham, Germany
  • 23. Our priorities for 2015 23 •Successfully deliver remaining key growth projects •Koniambo, McArthur River, Katanga, Chad oil fields •Ensure continued operating efficiency, targeting Q1 costs/margins •Maintain strong investment grade credit rating •Maintain disciplined deployment of capital to maximise free cash flow growth •Glencore considers portfolio not only marginal NPV •Confidence to: •grow base dividend •recycle excess capital to shareholders •be opportunistic, but within our capital allocation framework •Focus on continuing improvements in our health, safety, sustainability and governance performance
  • 24. 2244 Thermal coal, Rolleston mine, Australia Investor Day 10 December 2014 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:40 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A
  • 25. 25 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities.
  • 26. Steven Kalmin CFO La Jagua Mine, Prodeco, Colombia
  • 27. Summary •Robustly profitable industrial operations post merger integration •Marketing enhances earnings stability, flexibility and optionality •Rigorous focus on opex/capex and working capital •Clear and consistent framework for capital allocation •Expansionary capital geared to the right commodities and opportunities •Optimal balance sheet structure for returns, liquidity and cost of capital •We will continue to focus on return of excess capital to shareholders •interim distribution +11% •$1bn equity buyback now c.65% completed 27
  • 28. Robustly profitable industrial operations •$36bn expansionary capital since 2009 •Mix skewed to the “right” commodities •Tier 1 cost profile and resource base for the Group’s largest commodities and across most of the broader portfolio •Superior pricing vs indices due to marketing network and infrastructure •>$2bn of overhead and operational cost savings post Xstrata transaction •Sustaining capex confirmed around $4.0bn p.a. •expected to fall closer to $3.5bn p.a. by 2017 •no major grade issues/declines for the foreseeable future 28 12.7 3.6 7.1 1.1 8.5 3.0 0.5 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Total 2009-H1 2014 Ags Oil Coal Ferroalloys/PGM Nickel Zinc Copper Expansionary capex 2009-H1 2014
  • 29. Marketing enhances earnings/cashflow stability, flexibility and optionality EBIT guidance range of $2.7-3.7bn •Still positive but low correlation with commodity prices •Consistent profit generator over 4 decades •Reflects market position and diversification •Current trading in line with this range Highly cash flow generative •Minimal fixed assets/capex required •Efficient capital structure •By itself, underpins bulk of current base distribution Working capital effect (inversely correlated with commodity prices) ensures cashflow can be insulated in periods of lower prices Strong track record of improving margins within industrial businesses •Leveraging market intelligence on commodity fundamentals, including customer and supplier behaviour 29 Marketing EBIT ($M) Historical guidance range: $2 to $3bn Revised guidance range (post Xstrata and Viterra): $2.7 to $3.7bn 0 1,000 2,000 3,000 4,000 2008 2009 2010 2011 2012 2013 2014+
  • 30. Marketing: a low risk, high ROE business 30 0 20 40 60 80 100 120 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Low risk model Consolidated VaR: 1 Day 95% ($M) 37% 42% 36% 42% 30% 32% 34% 36% 38% 40% 42% 44% 2011 2012 2013 2014F Average: 39% Capital employed easily adjusted to price environment High ROE(1) •>95% of marketed volumes are hedged or pre- sold to mitigate price risk exposure •The 2 key risks are actively managed: •Credit risk – mitigated by: counterparty risk analysis, extensive use of letters of credit, credit insurance and having collateral •Market risk – mitigated by: derivatives used to hedge market risk assumed in physical marketing, adherence to VaR limits, regular stress testing •Fast turning inventory and receivables – average conversion cycle of 32 days (30 June 2014) Average:$33M VaR Limit: $100M Notes: (1) ROE calculation: refer to page 202 and 203 of Glencore’s 2013 Annual Report for assumptions and calculations. (2) Illustrative, based on $2.7bn EBIT, being the bottom end of guidance range. (2) 0 50 100 150 200 250 300 0 5 10 15 20 25 30 Q1 05 Q3 05 Q1 06 Q3 06 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 Q3 12 Q1 13 Q3 13 Q1 14 Current capital employed CCI Index (rebased to 100)
  • 31. Marketing represents the physical movement of commodities from production source to customers/consumers Sources of income (and market intelligence) • Arbitrage opportunities – product, time, geography • Blending strategies – optimising qualities; delivery of products in line with contractual requirements • Financing – working capital terms • Risk management – manage counterparty and market risk exposure • Storage/warehousing – access to and having logistics assets in strategic locations • Freight – access to fleet, information on trade flows • Economies of scale on all of the above Marketing volumes 2013 H1 2014 Copper Mt 2.8 1.5 Zinc Mt 3.2 1.6 Lead Mt 0.7 0.4 Nickel Mt 226 84 Ferroalloys Mt 3.8 2.2 Alumina/aluminium Mt 13.1 6.0 Iron ore Mt 33.2 29.6 Thermal coal Mt 84.4 46.1 Crude oil/oil products Mbbls 1,113.5 547 Agricultural products Mt 68.7 30.6 Revenues $M 192,819 93,617 31 Producer Port Shipping Warehouse Delivery to Industrial Customers Industrial Consumers Extraction Marketing Customer Inland storage & logistics 3rd party supply
  • 32. Glencore’s flexible capital model 32 Capital centrally funded and allocated Marketing c.$20bn of capital employed •working capital average turnover cycle of ~30-35 days •Quality/nature of asset base (inventories and receivables) allows ~80% to be debt-funded •Marketing financing is frequently refreshed; average duration of debt facilities versus underlying turn is a highly conservative 20x •2014 earnings benefit from Viterra and Xstrata •Guidance range RoE is 40%-65% Industrial c.$90bn of capital employed •target of 30-40% debt-funded; or <2.5-3x Net Debt/EBITDA •target RoE is 20-25% for new capital/projects •earnings to benefit from ramp-up of Koniambo, Australia Zinc, African copper belt, etc •portfolio optimisation will also boost returns on equity
  • 33. Expansionary capex geared to the right commodities and opportunities 33 Focus on modular/brownfield/flexible investment •revised Caracal capex program primarily limited to producing assets – approval of further exploration capex subject to market conditions and results of nearby program Copper equivalent production CAGR of 5.5% to 2018; >75% attributable to metals Capex/opex under constant review: •Askaf Iron Ore project under review in response to weaker price outlook •suspension of Australian coal operations for three weeks in response to low price environment Copper equivalent growth 2014F-2018F 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Oil Coal Ferroalloys Nickel Zinc/Lead Copper Industrial capex $bn(1) 2013A 2014F 2015F 2016F 2017F August 2014 forecast 11.1(2) 8.7(2) 6.6 Capitalised interest 0.28 0.19 Koniambo variance 0.38 0.21 Project suspensions (0.30) Caracal (50% ownership increase) 0.18 0.57 Net capex deferrals/reductions (0.64) 0.63 December 2014F 8.9 7.9 6.6 4.8 Notes: (1) Excludes marketing capex. (2) Excludes Las Bambas
  • 34. Industrial capex details 34 0 1 2 3 4 5 6 2014F 2015F 2016F 2017F Metals Coal Oil Ags Capitalised interest Expansionary capex ($bn) Sustaining capex ($bn)(1) 0 1 2 3 4 5 6 2014F 2015F 2016F 2017F Metals Coal Ags 4.9 3.6 2.4 1.2 4.1 4.3 4.2 3.6 – 26% Note: (1) Metals sustaining capex annual ranges: Copper $1.7-2bn, Zinc $700-900M, Nickel 250-300M, Ferroalloys c.$150M. Includes deferred stripping.
  • 35. Our balance sheet advantage Asturiana de Zinc, electrolysis plant, Spain
  • 36. •Maintenance of strong Baa/BBB levels remains a financial target/priority •Moody’s and S&P’s investment grade credit ratings at Baa2 (stable) and BBB (stable) •Considered optimal capital structure: •supports marketing activities – positively differentiated credit positioning from most trading competitors •enables Glencore to efficiently grow cashflow, earnings and dividends per share •provides abundant access to capital markets allowing efficient and prudent balance sheet and liquidity management Robust balance sheet being further strengthened 36 $4.9bn funds from operations in H1 2014, up $650M year on year 33.8% FFO to Net debt Minimum: >25% Target: >30% 2.41x Net debt to Adjusted EBITDA Minimum: <3x Target: <2.5x BBB/Baa illustrative target metrics(1) FFO/Adj. Net Debt(2) Adj. Net Debt(2)/EBITDA Notes: (1) Estimated rating metrics based on Glencore’s calculation of Adjusted Net debt. (2) Net debt calculated as Net Funding less Readily Marketable Inventories, including net consideration of $5 billion from the Las Bambas disposal and the Caracal acquisition in July 2014. FFO and EBITDA are last 12 months. 20% 25% 30% 35% 40% 45% FY 2012 H1 2013 FY 2013 H1 2014 1.75x 2.00x 2.25x 2.50x 2.75x 3.00x 3.25x FY 2012 H1 2013 FY 2013 H1 2014 BBB+/ Baa1 BBB- /Baa3 BBB/ Baa2
  • 37. 75 85 95 105 115 125 135 145 2013 2014 2015 2016 2017 2018 Optimal balance sheet structure for equity returns, liquidity and cost of capital 37 Strong Baa/BBB optimising market access and funding cost Declining weighted average funding cost (%) Recent CDS vs peers Commodity outlook supports our rating & equity yield Nickel Aluminium Zinc Copper Iron Ore Oil Thermal Coal 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 0 100 200 300 400 500 600 700 800 900 Nov-04 Jan-06 Mar-07 May-08 Jul-09 Sep-10 Nov-11 Jan-13 Mar-14 A-Rated G-Spread BBB-Rated G-Spread GLEN USD and EUR Issuance (RHS axis) 0 50 100 150 200 250 300 350 03/05/2013 03/09/2013 03/01/2014 03/05/2014 03/09/2014 Rio Tinto BHP Glencore Anglo American Source: Bloomberg, Barclays, Glencore, consensus estimates. 2.5 3.0 3.5 4.0 4.5 2009 2010 2011 2012 2013 2014
  • 38. We will continue to focus on return of excess capital to shareholders •As a minimum base distribution to remain competitive within sector as growth phase completes •Excess capital to be returned to shareholders in the most efficient manner via appropriate application of base distribution progression, supplemented by buyback continuation and/or special distributions •Interim distribution +11% •$1bn equity buyback now c.65% complete 38 Excess operating free cash flow Source: Factset as of 5 December 2014. 14.2% 9.7% 7.8% 7.4% 3.7% 0% 2% 4% 6% 8% 10% 12% 14% 16% Glencore Peer 1 Peer 2 Peer 3 Peer 4 2016 consensus FCF yield Capital structure maintain strong BBB/Baa credit metrics M&A / Brownfield projects screen growth options against capital allocation criteria Returns to shareholders including ongoing buyback programme Criteria: •risk •return •cash payback Strong BBB/Baa believed to be the optimal rating target supporting the balance between our growth strategy and shareholder returns •High-returning opportunistic M&A and brownfield growth opportunities screened against rigorous capital allocation criteria •Investment opportunities also screened against returns generated from buybacks •Generates growth in profits and FCF •Ongoing buyback program should underpin EPS accretion as well as P/E multiple
  • 39. Q&A Lion chrome smelter, South Africa
  • 40. Our management structure 40 Nickel Our functions structure CEO Ivan Glasenberg CFO Steven Kalmin Metals & Minerals Energy Agriculture Ferroalloys Marketing Stuart Cutler Industrial Gary Nagle Marketing Kenny Ives Industrial Peter Johnston Iron Ore Marketing Jyothish George Industrial Mark Eames Zinc Marketing Daniel Maté Industrial Chris Eskdale Copper Marketing & Industrial Telis Mistakidis Aluminium Marketing & Industrial Andrew Caplan Coal Marketing Tor Peterson Industrial Peter Freyberg Oil Marketing & Industrial Alex Beard Agricultural Products Marketing & Industrial Chris Mahoney CEO Ivan Glasenberg CFO Steven Kalmin Legal Ken Klassen – Corporate Development – Treasury and Trade Finance – Accounting – Insurance – Tax – Procurement – Legal – Compliance – IT – IS – Health and Safety – Sustainable Development – Community Relations – Public Affairs – Investor Relations – Group Strategy HR Gerda Schwindt IT Cyril Reol SD Michael Fahrbach Risk Management Carlos Perezagua Communications and Strategy Paul Smith Internal Audit Nam Phong Ho Board Audit Committee Experienced management team with a proven track record of value creation
  • 41. Ernest Henry copper concentrator, Australia Investor Day 10 December 2014 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:45 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A | Telis Mistakidis 40 products | Chris Mahoney
  • 42. 42 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities.
  • 43. Copper Telis Mistakidis Alumbrera copper concentrator, Argentina
  • 44. Topics 1.Glencore Copper Department •Overview •Description 2.Katanga Mining •Production issues •Power 3.Antapaccay •Tintaya concentrator restart •Antapaccay mini expansion 4.Copper Market – where is the surplus? 44
  • 45. Glencore copper in context •Third largest global mined copper producer and the world’s largest copper supplier •Integrated assets (mines, smelters and refineries) and marketing 45 2013 copper production (kt) 0 500 1,000 1,500 2,000 2,500 3,000 Competitor 1 Competitor 2 Glencore Competitor 3 Competitor 4 Competitor 5 Glencore 2014F supply Source: Glencore, annual reports.
  • 46. Glencore copper assets 46 Mined Cu N America 90k MT Asia 60k MT Australia 260k MT Africa 500k MT S America 660k MT Horne/CCR 300k MT Isa/Pasar 600k MT Mopani 200k MT Altonorte 300k MT Kazzinc 70k MT Smelter/Refinery
  • 47. Capability across the copper raw materials chain Mt Isa Cobar Antapaccay Katanga Nkana Townsville Altonorte Horne Pasar Mopani Mt Isa CCR Pasar Mopani EHM Marketing 3rd party 3rd party 3rd party Alumbrera Collahuasi Antamina 3rd party 3rd party 3rd party Lomas Bayas 3rd party Mopani SXEW 3rd party Mutanda Mufulira •Integrated industrial assets and marketing •One million MT custom smelting and refining •Capability to process complex concentrates with precious metals and deleterious elements. Mining Smelting Refining 47
  • 48. Mined production growth 48 Own source mined copper production (kt) Note: does not include copper from Kidd, Kazzinc and Ni operations Merger 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F Total copper Former Xstrata
  • 49. 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2012A 2013A 2014F 2015F 2016F 2017F African Copper Collahuasi Antamina Other South America Australia By-product Mined production growth by region 49 Own source mined copper production (kt) Source: Glencore
  • 50. 210 165F 16 16 2 8 2 120 130 140 150 160 170 180 190 200 210 220 Cu prodution budget Power direct Power (indirect) & Mechanical Electrical Projects delays Reduced sulphide / ASCu Cu production actual Cu Cathode (‘000) Katanga 2014 production issues 50
  • 51. Standby generators deployment 51 Generating Capacity UNITS MW KTC 4 2 2 2 KTO 1 2 1 1 1 1 Luilu 1 2 KOV (Convert to Co-Gen) 4 7 Sub – Total 17 Co-Gen 1 (New at Luilu:leach,CCDs) Generator farm (6.6 and 15kV) 6 10 Sub - Total 27 Co-Gen 2 (New at Luilu:EW2/3) Generator farm (33kV) 6 10 Total 37 Now April
  • 52. Global Power Project – update 52 Description •450MW for Kamoto Copper Company and partners •350MW of new power and 1000MW transmission from INGA to Kolwezi •Project cost – $368M, Lots 1 to 14 •Reimbursed via 40% credit to power bills •Additional 10% withheld for maintenance fund •75MW available to the population Power milestones •Transmission from INGA to Kolwezi from 40MW to 250MW Q1 2013 •25MW (Nzilo) Q4 2014 •165MW (G-27) Q4 2015 •165MW (G-28) Q2 2017 Project status •G27 disassembled and shipped to factory for repair •60% of transformers for the converter station have passed factory acceptance. Remaining 40% to be tested before year end. Commissioning expected January 2016 •Synchronous condenser #2 awaiting confirmation from SNEL, expected December 2014 •Fungurume transformer being commissioned now
  • 53. Global Power Project – timeline 53 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Lot 3 Unit 3 - Nzilo Quick Fix Lot 4 Unit G27 Inga refurbishment Lot 5 Unit G28 Inga refurbishment Lot 6 Convertor transformer DC Link Pole 1 Lot 7 Convertor transformer DC Link Pole 2 Lot 8 OHL PDI-SCI Reinforcement Lot 9 Additional Harmonic filters Lot 10 Additional Synchronous compensator Lot 11 RO Upgrading HV equipment Lot 12 Auto-transformer SCK-RO #1 Installation Lot 13 Auto-transformer SCK-RO #1 Installation Lot 14 Studies and Final design Additional power from lots 3, 4 & 5 Additional power available on the grid 25 Cumulative power added 25 2013 2014 2015 2016 2017 25 165 165 190 165 165 355
  • 54. Katanga ramp-up drives future production growth 54 Copper cathode production (kt); Capex $M Source: Glencore 22 42 52 58 61 87 165 242 274 286 301 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 50 100 150 200 250 300 350 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F Cu k Tonnes Cu Cathode Production CAPEX
  • 55. Katanga ramp-up drives future production growth 55 Copper cathode production (kt); Capex $M Source: Glencore 22 42 52 58 61 87 165 242 274 286 301 0 500 1,000 1,500 2,000 2,500 3,000 3,500 0 50 100 150 200 250 300 350 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F Cu k Tonnes Cu Cathode Production CAPEX
  • 56. New CM5 SAG Mill installed and commissioned 56
  • 57. New oxide floatation cells installed and commissioned 57
  • 58. New concentrate roaster commissioned 58
  • 60. 200ktpa EW2 in production 60
  • 61. First cathodes harvested from 80ktpa EW3 expansion 61
  • 62. Antapaccay – Tintaya Concentrator Restart Tintaya restart •Existing Tintaya concentrator to process 20 ktpd of ore from Antapaccay mine •Startup in May 2015 •34kt per year Cu in concs for LOM avg. 43kt per year Cu in concs for the first 5 years •Capex of $64M: •Mining: $25M •Concentrator: $27M •Infrastructure & Other: $12M •Capital Intensity: $1.9M per 1,000t of Cu production •Project NPV10% of $290M •Project IRR of 119% •Government approvals received this month 62
  • 63. Antapaccay – Incremental Plant Expansion Expansion of Antapaccay plant: •Process 82 ktpd of ore from Antapaccay mine using existing infrastructure in 2016 •capacity incrementally increased; 70 ktpd (design) to 77 ktpd (current) and now 82 ktpd •total Cu in concs >200ktpa (inc Tintaya) •9kt per year Cu in concs for LOM avg. 11kt per year Cu in concs for the first 5 years •Capex of $34M: •Mining: $7M •Plant: $27M •Capital Intensity: $3.8M per 1,000t of Cu production •Project NPV 10% of $140M •Project IRR of 117 % 63 42 10 157 209 0 50 100 150 200 250 77 ktpd Antapaccay 20 ktpd Tintaya 5 ktpd Antapaccay Cu Cont. in Conc. (kt per yr) Cu in concentrate per year
  • 64. Tier 1 asset portfolio and cost structure 64 Q1 First quartile cost position achieved for asset portfolio in 2014 Post-integration cost efficiencies achieved. Focus now on industrial asset structures Q1 Q2 Q3 Illustrative Copper C1 cash cost curve 2013A $1.65/lb Unit mine costs drop through brownfield expansion by 2016: •African copper: $1.60/lb •Collahuasi: $1.47/lb •Antapaccay: $1.00/lb •Antamina: $0.14/lb •Australia: $1.70/lb 2014F $1.42/lb 2016F $1.36/lb c.$300M industrial merger synergies and other cost savings by end 2014
  • 65. Copper market Altonorte anodes, Antofagasta Port, Chile
  • 66. 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 LME SHFE COMEX Global Exchange stocks are at lowest levels since 2008 66 Source: Bloomberg, Reuters
  • 67. Global copper warehouse stocks are reducing further 67 722k 245k 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Jan 2013 Jun 2013 Jan 2014 Jun 2014 Dec 2014 LME COMEX SHFE CHINA BONDED Global warehouse copper stocks (kt Cu) Source: Bloomberg, Reuters, Glencore estimates
  • 68. 0 500 1,000 1,500 2,000 2,500 3,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 Chinese Copper scrap imports are falling 68 19% yoy 13% yoy Chinese copper scrap net imports (kt contained Cu) Source: China customs data
  • 69. 2011 2012 2013 2013 vs 2012 2013 Jan- Oct 2014 Jan- Oct YoY Chg 2014E YoY Chg Copper Cathode Imports 2'825 3'396 3'198 (5.8%) 2'557 2'948 15.3% 3'538 10.6% Exports 156 274 293 7.1% 246 220 (10.7%) 264 (10.0%) Net Imports 2'669 3'122 2'905 (7.0%) 2'311 2'728 18.1% 3'274 12.7% Domestic Production 5'197 5'824 6'840 17.4% 5'763 6'420 11.4% 7'704 12.6% Primary 3'386 3'939 4'686 19.0% 3'755 4'316 14.9% 5'179 10.5% Secondary 1'811 1'885 2'153 14.3% 2'008 2'104 4.8% 2'525 17.2% Apparent Consumption 7'865 8'946 9'745 8.9% 8'074 9'148 13.3% 10'978 12.7% Copper Scrap Imports - gross weight 4'687 4'859 4'373 (10.0%) 3'549 3'187 (10.2%) 3'824 (12.5%) Content 45.0% 50.0% 50.0% 50.0% 50.0% Adjusted Imports - mtu 2'109 2'430 2'186 (10.0%) 1'774 1'594 (10.2%) 1'912 (12.5%) Exports 2 1.5 1 (48.4%) 1 1 1 58.3% Net Imports 2'108 2'428 2'186 (10.0%) 1'774 1'593 (10.2%) 1'911 (12.6%) Domestic Production 924 1'064 1'226 15.2% 1'022 1'179 15.4% 1'415 15.4% Apparent Consumption 3'032 3'492 3'412 (2.3%) 2'796 2'772 (0.9%) 3'326 (2.5%) Chinese imports and apparent consumption 69 15% yoy Source: China customs data China Nonferrous Metals Industry Association
  • 70. Minus: Kennecott 100k Escondida 150k Alumbrera 50k Surplus now 90k MT? Demand vs Supply per ICSG and Wood Mackenzie 70 Source: ICSG, Wood Mackenzie Global copper short-term outlook, November 2014 Implications of the estimates: •Implied mine production growth of ~1 million MT between 2014 and 2015 (6% growth) •Where is the supply coming from? 2014 2015 ICSG Apr ‘14 Estimate ~400 kt surplus ~600 kt surplus ICSG Oct ‘14 Estimate ~300 kt deficit (Δ 700 kt lower) ~390 kt surplus (Δ 210 kt lower) WoodMac Nov ‘14 Estimate 180 kt surplus 202 kt surplus Copper Demand/Supply balance estimates
  • 71. Latest 2015 supply forecasts may still be very optimistic Source: Wood Mackenzie Global copper short-term outlook, November 2014 71 +320kt? • Production double counted Frontier at Mopani. 2014 production is 720 kt; • Production and commissioning issues. 2015 to be 850 kt +87kt? • OT phase 2 not next year as company states only open pit next year +72kt? Where does this come from? +328kt? • Major projects commissioned in 2014 (DMH, Caserones, Sierra Gorda) • Escondida lower by ~150kt • Codelco lower by ~90kt (cathodes) • Toromocho operating at 25% capacity • Las Bambas delayed to 2016 • Constancia commissioning? +353kt? • Major projects commissioned in 2014 (Morenci, Eagle, Mt Milligan, Nunavik) • Operational incidents (Mt Polley tailings dam failure – mine shut down, Buenavista- spillage in river and schedule pushed out into 2016) • Kennecott lower production (100kt) +350kt? • Indonesian concentrates export permits • Production and labour issues at Grasberg - operating at 80% +50kt? Alumbrera lower production +200kt? • DRC running at 950kt in 2014. To go to just over 1 mt in 2015 ~1.8 million MT?
  • 72. 2015 copper supply forecast keeps changing 22,000 22,500 23,000 23,500 24,000 24,500 25,000 2010 Q1 2010 Q3 2011 Q1 2011 Q3 2012 Q1 2012 Q3 2013 Q1 2013 Q4 2014 Q2 72 2015 supply forecast as estimated in each period (kt Cu) Source: Wood Mackenzie Global copper long-term outlook Q1 2010 to Q3 2014, Glencore estimates -1.6Mt •Project deferrals; •Commissioning delays; •Revised mine plans. •Brookhunt and ICSG give 390 kt surplus guidance •Taking the previous slide, deduct 1.8 Mt = Deficit of 1.4 - 1.6 Mt for 2015? •Consumption - the world is emerging from the biggest recession in 100 years Make your own mind up?
  • 74. Appendix: Copper asset update Kantanga Phase V, EW3 under commissioning, DRC
  • 76. New KOV pit crusher completed 76
  • 77. Installation of new concentrate stockpile shed 77
  • 78. Heap leach extension complete 78
  • 79. 79 DRC power project Refurbishment of Inga Unit G27, DRC
  • 80. Mopani – synclinorium and deeps project update New acid plant, Mufilira smelter, Zambia
  • 82. Synclinorium – New Winder Main Shaft 82
  • 83. Synclinorium – New Winder 83
  • 84. Synclinorium – New Winder House 84
  • 85. Synclinorium – Sub Station 85
  • 86. Synclinorium – New Generator Building 86
  • 87. Synclinorium – Loading Station – 1231m level 87
  • 88. Synclinorium – Loading Station – 1231m Level 88
  • 90. Mufulira Deeps – Raise Bore – 500m Lift 90
  • 91. Mindola Deeps – 4960L 91
  • 92. 92 Newlands CHPP, Australia Draft schedule 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:40 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A Investor Day 10 December 2014
  • 93. 93 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities.
  • 94. Coal Tor Peterson, Peter Freyberg Abbot Point, Australia
  • 95. Delivering Leading Value Leading Diversified Portfolio •170 Mtpa capacity •Industry leading margins •Underground/Opencut •Export/Domestic •Thermal/Coking •3 continents Operational Excellence •Environment •Community •Safety •Equipment •Project delivery Market Driven •Supply discipline •Blending synergies •Trading leverage Shareholder Returns •Expansionary capital spend down 75% •EBITDA margin 26% 95 ~$50/t FOB cash cost achieved in 2014 ~150Mt of consolidated production in 2015F c.26% EBITDA margin in H1 2014 c.90Mt of marketed volumes 2014
  • 96. Leading managed coal portfolio 96 Industrial assets comprise 22 coal complexes totaling 196 million tonnes capacity (170mt consolidated capacity), with operations and assets in 3 countries and key marketing offices spread across 19 countries 0 10 20 30 40 Others BHP Anglo Drummond Glencore Mt COLOMBIA 0 10 20 30 40 50 60 Sasol Exxaro BHPB Anglo Glencore Mt SOUTH AFRICA 0 20 40 60 80 100 Anglo Peabody Rio Tinto BHPB Glencore Mt AUSTRALIA #1 in high energy export coal Significant position in export metallurgical coal Diversified global footprint Additional 90Mt of traded and agency tonnage Data: Managed coal production, Australia proforma for full year Clermont. Includes export and domestic coal sales 22 operating coal complexes Exporting equity coal through 9 ports 40Mtpa, low cost rail business Clermont
  • 97. Delivering industry leading margins 97 *Reflects publically reported June 2014 half year results of major diversified coal competitors Glencore Coal mining business EBITDA margin first half 2014*
  • 98. Coal markets update Thermal coal, Rolleston mine, Australia
  • 99. Export thermal Export coking Domestic thermal 3rd Party Responding to the market Relatively strong marketing contribution in challenging environment Supply discipline •Considered supply response •Flexible portfolio Market arbitrage •Domestic versus export •Flexible origination Blending synergies •Quality control •Tailored products Significant marketing contribution •Trading and freight leverage 99 A diversified portfolio (sales volumes)
  • 100. Coal remains fundamental to Asian energy demand IEA New Policies scenario by 2025 •Globally, net 440 GW of new coal fired generation capacity required •530 GW new capacity primarily in Asia •83 GW closed primarily in USA and EU •Asian coal demand to increase by more than 1Btpa* •500Mtpa demand increase outside China •Africa/Turkey and Latin American coal demand to increase by 75Mtpa* •South Africa and Brazil as key drivers •Resource constrained Asia drives seaborne coal demand growth •Korea, Philippines, Malaysia, Vietnam •Indian import growth required to supplement domestic supply 100 0 200 400 600 800 1000 1200 China India Other Asia Africa & Sth Am. USA ROW GW 2012 2020 2025 Net 440GW new coal-fired power stations Sources: IEA WEO2014, New Policies Scenario, Current Policies Scenario * based on 2012 average global energy content 4920kcal/kg nar A further 255 GW of coal fired generation (800Mtpa* coal), would be required in Asia by 2025 under IEA Current Policies scenario.
  • 101. 0 200 400 600 800 1000 USD/t Million Tonnes Expect further rationalisation and delayed investment 101 Source: Glencore FOB seaborne thermal coal cash margins at current market prices (US$/t) c.25% of seaborne supply remains cash negative •Producers with USD cost base most impacted •USA thermal exports down 16Mt •Indonesia bituminous exports declined 8Mt •Short-term mine plan changes are unsustainable Glencore export thermal coal average +ve -ve 0
  • 102. Investment delays will lead to price recovery •Long term demand fundamentals remain intact •Demand growth is more than just a China story •Some high cost supplies are closing •Resource depletion restricts supply •New capacity investment delayed •Positive longer term outlook 102 Volume Time Seaborne thermal coal market Historical demand 7% pa Base demand 4.5%pa Existing Supply Committed Supply Investment required
  • 104. We deliver – safely 104 Group coal safety performance GCOM: pre-shift safety discussion Emergency preparedness training
  • 105. We deliver … with sustainable land outcomes 105 Liddell rehabilitation Cattle trial on rehabilitated land
  • 106. We deliver … using leading environmental technologies 106 Water treatment plant Environmental monitoring Generation using waste gas
  • 107. We deliver … value to the communities we operate in 107 Community projects Consultation Australia Consultation Colombia Reconciliation Action Plan
  • 108. We deliver through industry leading operational performance 108 Opencuts: +26% productivity Undergrounds: No.1 in Australia Improvement in Tier 1 loading unit performance Saleable production (Mt) based on FY13/14
  • 109. We deliver by focusing on margins •Reduced overheads •Optimisation of underground rosters •20% improvement in reliability of underground development •Increased productivities – 26% improvement in productivity of Tier 1 shovels & excavators •Removal of high cost production •Rationalisation of contractor spend •Negotiations with key suppliers •New production firmly in first quartile (Ulan West, Tweefontein, Wonderfontein, Clermont) 109 $1.8bn cost savings through efficiencies since 2012
  • 110. Production volumes nearing steady state as legacy projects are delivered 110 *Production figures on a consolidated basis except Cerrejón 33% equity interest Own source consolidated production (Mt) 0 25 50 75 100 125 150 175 2012A 2013A 2014F 2015F 2016F 2017F Australia thermal SA thermal Colombia thermal Australia coking Australia SS
  • 111. Coal assets – update and future opportunities Ravensworth North, Australia
  • 112. 112 We deliver value in operations – Clermont case study The past The future Note 1: In-Pit crushing and conveying system Value Delivered $60m NPV Reduced haulage costs Glencore mine planning expertise identifies efficiencies achievable through alternative hauling strategies Productivity Digger fleet consistently performed below Glencore standards, foregoing ~1Mtpa in annual coal production Increased productivity Improved fleet utilisation Revised organisation structure Increase production optionality $100m NPV Coal preparation Costly partial washing Coal preparation Identified opportunity to bypass all coal $80m NPV Haulage costs Expensive ex-pit hauls due to relocation of IPCC1 in 2012 following operational issues
  • 113. •50:50 Joint Venture with Peabody •Synergies realised through: •Removal of surface boundary constraints •Removal of stratified lease interaction •Optimised open cut mine planning •Access under-utilised mine and rail infrastructure •Low capital •Mine managed by Glencore, separate marketing •6 Mtpa •100Mt reserves 113 We deliver synergies – United / Wambo Joint Venture Lease consolidation (red line) Wambo CHPP United Coal and Allied Wambo rail loop Wambo UG United / Wambo (Stratified) Wambo United / Wambo (Stratified) Glencore & Peabody co-operation unlocking material value for shareholders
  • 114. Open Cut Development Eastern Emplacement Noise and visual bund We work hard for our License to Operate: Bulga LOM extension •Performance driven culture •Detailed planning and assessment •Clear understanding of stakeholder engagement -Community -Government •Proven track record -Safety -Environmental -Community inclusion 114 Bulga Optimisation Project Approved Dec 2014
  • 115. We deliver projects – on time, on budget 115 - 2 4 6 8 - 5 10 15 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Strip ratio Production (Mt) ROM Product Strip ratio Ravensworth North Tweefontein Optimisation Project Ulan West Rav North production build up TWF – new rapid train load out Ulan West – first shear
  • 116. Conclusion 116 Challenging market -Coking coal in balance, however low prices are expected to lead to further supply reductions -Thermal coal heading towards supply deficits -Margins will need to increase to support any new capacity Quality resources -Well positioned with unrivalled optionality Capital discipline -Capital only invested if meets high internal return requirement Delivering value -Leading diversified portfolio -Industry leading productivities -Operational excellence -Market driven -Realise synergies through M & A -Shareholder returns
  • 117. Q&A
  • 119. Supply growth exceeded demand •Chinese repositioning creating uncertainty Demand growth forecast at +4.5% pa (+40Mtpa) over next 3 years •Supply growth expected to lag Thermal coal margins will need to increase to support investment in new capacity Market update – thermal coal supply and demand 119 0 200 400 600 800 1,000 1,200 2011 2012 2013 2014F 2015F 2016F 2017F China India Japan Korea Taiwan Germany Other -70 -60 -50 -40 -30 -20 -10 0 10 20 2011 2012 2013 2014F 2015F 2016F 2017F Seaborne thermal coal demand (Mt) Supply Demand Balance (Mt) 1,076 792 880 931 946 966 1,019 Source: Glencore
  • 120. Demand reduction from 2013 to 2014 •Supply growth is being constrained due to demand growth and lower prices during 2013 / 2014 Constrained demand growth forecast •< 2% over the next 3 years Current metallurgical coal margins are expected to lead to further supply reductions Market update – metallurgical coal supply and demand 120 0 50 100 150 200 250 300 350 400 2011 2012 2013 2014F 2015F 2016F 2017F China India Japan Korea Taiwan EU Other -14 -12 -10 -8 -6 -4 -2 0 2 2011 2012 2013 2014F 2015F 2016F 2017F Seaborne metallurgical coal demand (Mt) Supply Demand Balance (Mt) 261 280 312 301 320 326 327 Source: Glencore
  • 121. Investor Day 10 December 2014 Zinc ingot, Asturiana de Zinc, Spain 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:40 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A
  • 122. 122 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities.
  • 123. Zinc Daniel Maté, Chris Eskdale Removing dross from top of furnace, CEZ zinc refinery, Canada
  • 124. Zinc summary Zinc market fundamentals remain strong and continue to improve Our industry leading zinc business combines world class zinc assets with our marketing reach and expertise Unique combination of mines and smelters in a single company •mined production of 1.4Mt in 2013 rising to 1.6Mt by 2016 – #1 globally •smelter production of ~1.36Mt – #1 globally. Brings additional exposure to ~250kt zinc units through over-recovery / escalator capture •resource base provides weighted average mine lives >40 years on current Measured and Indicated resource •key growth projects provide additional zinc and cost/capital efficiencies at an attractive stage of the price cycle Industrial assets and marketing flows managed under one roof, two-way information flow •one global concentrates/metal book and one pool of knowledge. •market input guides assets to produce the economically optimal product mix •sharing of best practices across global zinc assets •mine output and 3rd party tonnage flowing to destination of optimal economic return 124
  • 125. Global zinc market Concentrate loading facility for McArthur River zinc mine, Australia
  • 126. World zinc metal consumption 2012A – 2019F •Consumption growth in 2012-2014 has been c.3.7% y-o-y •2014 is expected to be in a deficit of 260-270kt •Stocks (LME + SHFE and bonded warehouse in China) have declined for each of the last 12 consecutive quarters •This translates to incremental metal demand of 550-600kt of zinc metal per year 126 Yearly global zinc metal consumption (kt Zn) 10,000 11,000 12,000 13,000 14,000 15,000 16,000 17,000 2012 2013 2014F 2015F 2016F 2017F 2018F 2019F Source: Glencore estimates, Wood Mackenzie, CRU.
  • 127. 127 Where will these units come from?
  • 128. Concentrates requirement, production and deficit outlook 128 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 2015 2016 2017 2018 2019 Non-China mined Zn concs production (kt Zn) 368 758 506 360 293 0 100 200 300 400 500 600 700 800 900 1000 2015 2016 2017 2018 2019 Additional Zn concs required (kt Zn) •Approximately additional 3Mt of zinc in concentrates is needed in the next 5 years to meet forecast metal demand (and balance the current c.260-270kt metal deficit) •Non-Chinese mine production is forecast to add a net 600-650kt of zinc in concentrates over 2015-2019 •Non-Chinese monthly zinc mine production will start declining in Q3 2015 and flatten afterwards •Closure of Century and Lisheen mines is expected to remove ~600kt of zinc contained per year •The market can only be balanced by higher Chinese mine production, further drawdowns from metal stocks and/or yet to be approved mine projects Source: Glencore estimates, Wood Mackenzie, CRU.
  • 129. 270 235 335 -55 185 315 310 308 205 183 368 758 506 360 293 $1,382 $3,275 $3,242 $1,875 $1,655 $2,161 $2,194 $1,948 $1,910 $2,161 0 500 1,000 1,500 2,000 2,500 3,000 3,500 -100 0 100 200 300 400 500 600 700 800 2005 2007 2009 2011 2013 2015F 2017F 2019F Chinese mine production •During the last 10 years, Chinese mine production has on average increased 225kt per year •To meet global zinc metal demand, Chinese mine production would need to increase by c.2-2.5Mt of zinc in concentrates over the next 5 years – an average of c.450-500kt per year 129 Annual change in Chinese zinc mine production (kt zinc in concentrate) Zinc concs production growth: 8.2% Zinc concs production growth: 7.5% REQUIRED Zinc concs production growth: 8.9% c.450-500kt p.a. c.225kt p.a. LME Zn price Zn $/t kt Zn Source: Glencore estimates, Wood Mackenzie, CRU. 2014F 2016F
  • 130. Mine deficit can only partially be covered by available stock 130 155 545 293 147 80 368 758 506 360 293 0 100 200 300 400 500 600 700 800 2015 2016 2017 2018 2019 Concentrate deficit Chinese production increase based on 3 year average Gap between Chinese concs required and forecast (kt Zn) 0 200 400 600 800 1000 1200 1400 1600 1800 2012 2013 2014 2015 2016 2017 2018 2019 Forecast zinc metal stocks* (kt Zn) •Assuming Chinese mine production increases c.210-220kt per year, there will be a global deficit of c.1.0-1.5Mt of zinc in concentrates over the forecast period •Deficit of concentrates will result in drawdown of metal stocks •2014 forecast inventory drawdown of 263kt 1’200 1’100 Source: Glencore estimates, Wood Mackenzie, CRU. *Reported Exchange Stocks + GIAG estimate of BWHSE stocks. c.213kt p.a.
  • 131. Price is closely correlated to available stock levels •Historically, zinc prices have responded to the upside as the “stocks:consumption” ratio approaches 3 weeks of zinc metal consumption 131 $779 $828 $1,048 $1,382 $3,275 $3,242 $1,875 $1,655 $2,161 $2,193 $1,948 $1,910 $2,161 3.6 4 3.2 1.9 0.4 0.7 1.5 3.4 4.4 5 6.5 5.6 4.4 0 1 2 3 4 5 6 7 0 500 1,000 1,500 2,000 2,500 3,000 3,500 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F LME Zn price Stocks consumption ratio LME zinc price ($/t) vs stocks to consumption ratio (weeks) Inverse weeks stocks:consumption ratio LME Zn price $/t Source: Glencore estimates, Wood Mackenzie, Bloomberg, CRU.
  • 132. Zinc metal stocks outlook •Stocks are forecast to fall below the critical “stocks:consumption” inflection point of 3 weeks consumption 132 -3 -2 -1 0 1 2 3 4 5 Downside (2.8% zinc demand growth) Base (3.8% zinc demand growth) Upside (4.8% zinc demand growth) Sensitivity of zinc metal stocks to global zinc demand Feb 2016 Apr 2016 Oct 2016 Inflection point Weeks consumption Source: Glencore estimates, Wood Mackenzie, CRU. 2014F 2015F 2016F 2017F 2019F 2018F
  • 133. Zinc industrial overview McArthur River zinc mine metallurgical plant, Australia
  • 134. Glencore zinc assets 134 Industrial assets comprise: 24 mines, 7 zinc smelters, 6 lead smelters/refineries with operations and assets in 12 countries and key marketing offices spread across 5 continents, ~50k employees
  • 135. A large long-life, low-cost, optimised asset base Expansions – delivery of 3 Australian projects •capex spend on budget •Lady Loretta project ahead of schedule “Steady State” operations •benchmarking and subsequent cost reduction/turnaround projects – savings of ~$50 million •smelters – commercial and technical integration •cost synergies of >$100 million achieved vs. initial integration assessment of $70 million •zinc sustaining capex declining to normalised levels of around $700-900 million from 2016 135 Illustrative Zinc C1 cash cost curve Q1 Q2 Q3 Q4 Zn: 2013 61 c/lb Zn: 2016 43 c/lb Australian expansions underpin a sustainable reduction in C1 cash costs 1.6Mt low-cost zinc production by 2016 +40 yrs mine life, based on current M+I resource of c.52Mt Note: Glencore estimated C1 cash cost in real terms.
  • 136. Forecast zinc mine production profile 136 1,399 1,380 1,580 1,620 1,640 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2013A 2014F 2015F 2016F 2017F Australia Kazzinc North America Antamina Other Zinc Glencore Smelting Capacity Own source contained zinc mine production (kt zinc) Source: Glencore, smelting capacity represents 100% production.
  • 137. Australian expansion projects update Mt Isa Operations: •Capital cost of US$245M for new hoisting shaft and associated infrastructure •Nov 2014 run-rate of 4.3Mtpa ore mined •Hoist commissioning anticipated in Q1 2015 •Sustainable 4.5Mtpa ore mined run rate by Q2 2015 Lady Loretta: •Capital cost of ~US$350M •Project on budget with production ramping up to 1.6Mtpa by H2 2015 •0.6Mt ore mined in 2013 •Current run-rate of 1Mtpa ore mined McArthur River: •Handed over to operations and commenced commissioning in H1 2014 •Ramp-up challenges encountered during H2 2014, particularly in relation to flotation and dewatering circuits •Residual issues well understood and being addressed •Expecting annualised zinc production of 330kt contained metal by end Dec 2014, representing >90% of design capacity MRM Processing Plant Rock bolting, Lady Loretta mine 137
  • 138. Conclusion •Zinc market fundamentals remain strong and continue to improve •Our industry leading zinc business combines world class zinc assets with our marketing reach and expertise •unique combination of mines and smelters in a single company •industrial assets fully integrated into global marketing flows •Glencore’s key growth projects provide additional zinc and cost / capital efficiencies at an attractive stage of the price cycle •cost position of c.61 c/lb in 2013, falling to c.43 c/lb in 2016 •zinc sustaining capex declining to normalized levels of around $700-900 million from 2016 138
  • 139. Q&A George Fisher underground mine shift change, Australia
  • 140. 140 Investor Day 10 December 2014 Granulated nickel matte, Sudbury, Canada 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:40 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A
  • 141. 141 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities.
  • 142. Nickel Kenny Ives, Peter Johnston Exploration drilling, Raglan, Canada
  • 143. Nickel highlights Nickel market transitioning to deficit; balanced 2015 and deficits thereafter •nickel demand growth conservatively projected at c.4.5% p.a. •substantial deficits forecast over the outlook period Top 3 integrated nickel producer •2013 own source production of 98.4kt, rising to 140-150kt by 2016 •delivery of additional volumes into a growing deficit, underpinned by Koniambo ramp-up –first quartile C1 cost position of around $3.10/lb in 2014, 2016 cost position of c.$4.00/lb •total nickel capex declining from a peak of c.$1.9 billion in 2012 to a normalised level of c.$300-400 million from 2016(1) •SAFENICKEL rolled out across business Full integration of marketing and industrial assets guides investment decisions, M&A activity and product sales •marketed c.200kt of nickel in 2013 and 2014 •focus on profitability vs. units traded •industry leading intelligence and unparalleled global coverage 143 Note: (1) Excludes any unapproved expansionary capital
  • 144. Sustainable Development 144 Our Social License to operate is granted by our stakeholders and maintained through a strategic approach focused on delivering results Our Strategy Our Safety (TRIFR) 14.6 13.5 10.3 10.9 7.9 6.3 5.6 6.6 2007 2008 2009 2010 2011 2012 2013 2014 YTD Health and Safety •Safety •Security •Health and Hygiene •Community Health and Safety Stakeholder Engagement •Community/ Stakeholder Relations •Internal Communication •Government Relations •Media/External Relations Environmental Stewardship •Energy / GHG •Water •Land Use / Biodiversity •Climate Change Social Responsibility •Human Rights •Corporate Social Investment •Local enterprise development •License to Market •Impact and Opportunity Management •Fatality free since 2012 •Implementation of the Glencore fatal hazard protocols at all operations. •No major environmental incidents for last 3 years
  • 145. Nickel industrial overview Sudbury environmental lab, Canada
  • 147. Operations Raglan (Nunavik, Northern Québec, Canada) •4 Mines, Mill, Power plant, Concentrator •Primary metals are nickel and copper •Palladium/platinum, cobalt are also produced •Employs approximately 950 people Sudbury (Ontario, Canada) •2 mines, Mill and Smelter •Primary metals are nickel, copper and cobalt •Palladium/platinum are also produced •Employs approximately 1,400 people 147
  • 148. Operations Murrin Murrin (Western Australia) •Fully integrated hydro metallurgical facility producing LME grade nickel and cobalt •Only Surviving Gen 1 HPAL plant – technology intended primarily for the treatment of Limonitic type ores •Mines, mill, refinery, power plant •Employs approximately 1,100 people Nikkelverk (Kristiansand, Norway) •Refinery •Primary metals refined are nickel, copper, cobalt and precious metals •Capacity to produce 92,000 tonnes of nickel per year •Employs approximately 500 people 148
  • 149. A large, long-life, low-cost optimised asset base 149 $140M of merger cost synergies realised by end 2014 $4.00/lb C1 to be achieved in 2016F 70% reduction in capex in 2015 Q1 Q2 Illustrative Nickel C1 metals cash cost curve 2016F $4.00/lb 2014F $3.10/lb 140- 150kt low-cost nickel production by 2016 +20yrs mine life, based on current resource of c.13.5Mt
  • 150. 0 20 40 60 80 100 120 140 160 2012A 2013A 2014F 2015F 2016F 2017F Australia Canada New Caledonia Dominican Republic Koniambo guidance 2014: 10 to 18kt Ni 2015: 25 to 40kt Ni 2016: > 50kt Ni to nameplate capacity Koniambo ramp-up drives future production growth 150 Own source contained nickel production (kt) Source: Glencore 102.5 98 +100 120-135 150-160 150-160
  • 151. 3.9 5.3 5.5 5.5 0.8 1.7 3.0 4.0 5.0 6.0 7.0 X Board approval 2007 X Board revision 2011 G Forecast Sep 2013 G Forecast Dec 2014 Project execution Commissioning & ramp up Koniambo construction complete 151 Construction cost ($ billion) 6.3 7.2 Key milestones Commercial production line 1 September 2013 Commercial production line 2 February 2014 Power station line 1 synchronisation April 2014 Power station line 2 synchronisation September 2014 Commercial production Estimated June 2015 •Koniambo construction completed in November 2013; production ramp-up now underway •Power station commissioning issues are expected to be corrected by the end of H1 2015 – no power constraints to production in the interim •Ramp-up of metallurgical production is progressing well; confidence that technology will deliver nominal capacity
  • 152. Integrated site – metallurgical plant (construction complete) 152
  • 153. Smelting (new smelting technology) •The metallurgical plant has been operating for over 12 months •both lines have operated at 90% of nominal throughput •furnace power demonstrated at 80MW (100% of design) on both lines •fluid bed reducing process performing well •achieving overall metallurgical expectations •Confidence in overall technology is high 153 Hammer Mill Flash Dryer Calciner Fluid Bed Reducer DC Furnace
  • 154. Sufficient power is now available to support production •At full nominal smelting rates, the site will demand 215MW of net power, the equivalent of all power consumed on the island of New Caledonia. The site is designed to have a total installed capacity of 404MW (including auxiliary sources) •2 x STG (135MW x 2), 2 x CTG (52MW x 2), Enercal (30MW) and temporary diesel turbines (3 x 20MW) •During commissioning of the steam fired power station in late 2013, significant cracking was identified in boiler tube welds in the heat exchange section of the waste heat boilers. The piping has required remanufacturing •Boiler tube replacement and installation schedule is on track for both units to be operational at full capacity in Q2 2015 154 Production start up has relied heavily on 2 x 52 MW Rolls Royce Combustion Turbines 3 x 20 MW temporary diesel turbines were added in May 2014
  • 155. Further divestment opportunities 155 Araguaia •Laterite nickel/cobalt project located in Brazil •Measured and indicated resource of 105Mt @ 1.33% Ni and an additional 18Mt of inferred resources @ 1.3% Ni Sipilou •Laterite nickel/cobalt project located in Ivory Coast •Joint venture with SODEMI; current Glencore stake of 94%, diluting to 85% upon issuance of mining license Cosmos •Consists of two underground mines (Prospero and Cosmos) and a concentrator in Western Australia •Cosmos is currently on care and maintenance
  • 156. Nickel market transitioning to deficit Offloading Sudbury nickel matte at Nikkelverk, Norway
  • 157. Market remains in surplus with LME stocks increasing 157 LME Ni inventory and price Nickel market balance (kt) •LME nickel price rallied to $21,200/t in May, up 52% from the start of the year. Prices subsequently settled in an $18,000-$20,000/t range, then declined rapidly from Sep, along with commodities in general. Market recently recovered most Sep/Oct losses •The increase in price was primarily driven by the Indonesian ban on nickel ore exports and the anticipation of reduced nickel output •Yet, continuous increases in LME inventory, Chinese metal exports, higher Philippine ore exports, macro- economic downgrades and liquidity issues in China have all impacted sentiment and nickel prices Source: Glencore, LME. China Customs 12,000 14,000 16,000 18,000 20,000 22,000 24,000 26,000 28,000 30,000 80 130 180 230 280 330 380 430 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Inventory (kt) Price (US$/t) -50 0 50 100 150 200 250 300 350 400 450 2010 2011 2012 2013 2014F Nickel market balance Cumulative balance 2014 Chinese metal exports (kt) 0 2 4 6 8 10 12 14 16 18 20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct
  • 158. Nickel pig iron output supported by high grade ore stocks 158 Quarterly nickel pig iron production (kt) High and Mid grade Chinese nickel ore inventory (kt) •Significant stockpiles of Indonesian high grade ore (>1.8% Ni) were built in China prior to the export ban (27Mt HG/MG ore) •These stockpiles, blended with Philippine ore, have supported continued high levels of Chinese nickel pig iron (NPI) production in 2014 (c.480Kt Ni) albeit with production decreasing Q on Q •Estimated at over 20Mt at the start of the year, stockpiles of high grade ore in China are currently below 10Mt and trending towards critical levels •Philippine shipments will decrease in the coming months due to the monsoon season. Shipments will not pick back up materially until April when Surigao area exports resume •HG stocks will be at critical levels by April 2015 and seasonality will become a major factor going forward Source: Glencore. 0 40 80 120 160 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4F 2013 2014 0 10 20 30 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Mid grade (MG) High grade (HG)
  • 159. Philippine ore supplies determine Chinese NPI outlook 159 Philippine ore exports to China (Mt) Chinese nickel pig iron production (kt) •With the Indonesian ban on ore exports sustained (also confirmed by recent Constitutional Court ruling), Chinese inventory of Indonesian high grade ore will ultimately deplete and NPI production will depend on ore exports from the Philippines •2014 Philippine exports to China are forecast at c.52Mt wet ore and constitute LG >50%, MG >30% with the balance HG. Lower average grade ores increase NPI production costs, all things being equal •No game changers elsewhere: New Caledonia may supply 1-2Mtpa additional ore to market while Guatemala may supply up to 30kt Ni contained in higher grade ore to European FeNi plants •Based on our projection of volume and composition of Philippine ore supply, China’s NPI production is forecast to fall from 480kt Ni in 2014 to 400kt Ni in 20151 and 350- 400kt Ni over the outlook period Source: Glencore, Note: (1) Function of HG ore carry out. 0 25 50 2013 2014F 2015F LG <0.8% Ni LG >0.8% Ni MG HG 0 100 200 300 400 500 600 2013 2014F 2015F 2016F 2017F 2018F 2019F
  • 160. 0 500 1000 1500 2000 2013 2014F 2015F 2016F 2017F 2018F 2019F Chinese NPI New projects Existing producers Supply outlook – limited growth amid ore ban 160 •Global nickel supply in 2014 is forecast to be relatively unchanged on 2013 as decreased output from existing producers and Chinese NPI is offset by increased production from new projects •Longer term, Chinese NPI production is forecast at 350-400kt vs. 510kt in 2013. However, increased supply from new projects (all going well) should offset projected losses and overall supply growth is forecast at c.1% p.a. to 2019 •China’s NPI dependence on lower grade ore from the Philippines will increase production costs •Ramp up performances highlight the need for a cautious outlook, with the majority of new projects delayed due to technical, environmental, permitting and social challenges •We assume limited growth in actual Indonesian NPI output. While capacity will be built in a higher price environment, the extent and pace of commissioning is likely to be challenged for a variety of reasons •We forecast less than 100kt Ni in Indonesian NPI by 2019 Source: Glencore Forecast nickel supply (kt) Forecast supply from new projects (kt)
  • 161. Demand outlook – solid growth in key markets 161 •“While the days of double-digit growth in China are over, the greater size of the economy means lower growth still translates into strong absolute demand… It’s slower not lower.” Julian Kettle, Wood Mackenzie •Primary nickel demand in stainless steel is projected to increase c.5% in 2014, reflecting growth in China, North America, Japan and India. Longer term, we forecast global nickel demand in stainless to increase at a rate >4.5% p.a., predominantly driven by China (Global CAGR 2008-2013: 9.6% p.a.) •Activity in non-stainless applications is also robust with nickel usage projected to increase >8% in 2014. Going forward, non-stainless demand growth is forecast >4% p.a., with strong contributions from China, US and India •Overall, we project solid nickel demand growth of c.4.5% p.a. between 2014 and 2019 (CAGR 2008-2013: 7.1% p.a.) •Put simply, we conservatively expect demand will increase by 75-100Kt Ni per year Source: Glencore Forecast nickel demand by sector (kt) Forecast nickel demand by region (kt) 0 500 1,000 1,500 2,000 2,500 2013 2014F 2015F 2016F 2017F 2018F 2019F Primary nickel in non-stainless Primary nickel in stainless 0 500 1,000 1,500 2,000 2,500 2013 2014F 2015F 2016F 2017F 2018F 2019F China Non China
  • 162. Expanding deficits to emerge 162 •Assuming the Indonesian ban on ore exports is sustained, market deficits will emerge •Increased supply from new projects (all going well) supports global production growth of c.1% p.a. to 2019 •With nickel demand growth projected at a conservative c.4.5% p.a., the market is expected to transition to deficit, with substantial deficits forecast from 2018 •Long run nickel pricing will largely be determined by the cost of bringing on marginal (low grade) limonite ore processing capacity •We do not see any new low cost technologies that will alter the outlook Source: Glencore Forecast nickel supply/demand (kt) Forecast nickel market balance (kt) 1,600 1,800 2,000 2,200 2,400 2013 2014F 2015F 2016F 2017F 2018F 2019F Supply Demand -300 -200 -100 0 100 200 2013 2014F 2015F 2016F 2017F 2018F 2019F
  • 163. Q&A Murrin Murrin metallurgical plant, Australia
  • 164. Investor Day 10 December 2014 08:00 - Welcome and Overview | Ivan Glasenberg 08:20 - Finance Update | Steven Kalmin 08:45 - Copper | Telis Mistakidis 09:15 - Coal | Tor Peterson & Peter Freyberg 09:45 - Break 10:05 - Zinc | Daniel Maté & Chris Eskdale 10:35 - Nickel | Kenny Ives & Peter Johnston 11:05 - Oil | Alex Beard 11:40 - Break 12:00 - Agricultural products | Chris Mahoney 12:30 - Conclusion and Q&A Mangara, Chad
  • 165. 165 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 "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The making of this document does not constitute a recommendation regarding any securities.