Metso Capital Markets Day 2013 presentations: Andrew Benko, President, Mining and Construction


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Metso Capital Markets Day 2013 presentations: Andrew Benko, President, Mining and Construction

  1. 1. In a strong position to lead the future of mining Andrew Benko President, Mining and Costruction November 27, 2013 London, UK
  2. 2. 1 Mining and Construction today 2 The long-term capex outlook for mining is solid 3 Less is the new more - Metso’s solutions for more efficient minerals processing 4 Conclusions
  3. 3. Our Mining and Construction businesses today A leading, full-scope supplier of sustainable technologies and services for the mining and construction industries Net sales 2012: EUR 3,492 million Personnel 11,721 Services Mining Construction Integrated performancebased services offering increased productivity and profitability Offering that supports our customers throughout the value chain of mining Solutions that cover the entire aggregates production process 48% of net sales 37% of net sales 15% of net sales Our customers: Mines, quarries and construction sites 3 © Metso Capital Markets Day 2013
  4. 4. Industry-leading expertise • • • • • 4 Wide expertise and in-depth knowledge to increase customers’ process efficiency over the life-cycle of equipment and processes Reliable technologies and extensive services to support operations and minimize downtimes Truly global services presence and capabilities. We serve our customers wherever they are We provide integrated solutions to enable customers to process material at the lowest cost-per-ton, while prioritizing health, safety, and environmental performance Committed to driving sustainable industry development with continuous innovations © Metso Capital Markets Day 2013 #1 services provider #1 in construction crushing and screening #1 Market position in mining crushers and grinding mills
  5. 5. Significant shift in our footprint December 2005 Total number of personnel: 8,785 October 2013 Total number of personnel: 12,054 12% 9% 40% 21% 22% 10% 20% 17% Europe and CIS North America Asia-Pacific South and Central America Africa and Middle East Europe and CIS North America Europe, CIS and North America: APAC, South America, Africa and Middle East: 5 © Metso Capital Markets Day 2013 33% 16% Asia-Pacific South and Central America Africa and Middle East 57%  49% 43%  51%
  6. 6. Mining and Construction in 2013 1-9/2013 Change from 1-9/2012 Orders received, EUR million 2,164 -18% Net sales, EUR million 2,286 -11% 289 -4% EBITA-%* 12.6% +0.9 -points ROCE-% (operative, 2013 YTD) 25.2% -3.3 % -points EBITA*, EUR million Improved EBITA-% despite lower volumes       6 Continued refinement of our services footprint Very focused price increases Tight cost control Agile asset light project model Globalization of procurement actions Flexible operating model © Metso Capital Markets Day 2013 Maintain services orders  Continue to grow life-cycle services business  With the acquisition of Spanish grinding media company, Sabo, we became a full comminution services provider  The acquisition of the JX foundry in China expands our services offering in Asia-Pacific  New services centers in Chile, Peru, Mexico, USA, and Canada * before non-recurring items
  7. 7. Succesful downturn management Strong profitability through improved margins and tight cost control EUR million 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2006 2007 2007 2008 2008 Services net sales, rolling 12 months • • • • 7 2009 2009 2010 2010 Capital net sales, rolling 12 months Share of services business Footprint shifts: - Consolidation in Europe and USA, expansion in China Global procurement organization Improved price management © Metso Capital Markets Day 2013 2011 * before non-recurring items 2011 2012 2012 2013 EBITA-% *, rolling 12 months % 16 14 12 10 8 6 4 2 0
  8. 8. Strong services orders in Mining and Construction Decline in major mining projects, construction flat 8 © Metso Capital Markets Day 2013
  9. 9. Technology leadership in energy-efficient comminution strengthened 1. Continued developments in grinding technology - Offer significant savings in energy and process costs HRC (high-pressure grinding mill), VERTIMILL, and SMD (stirred media detritor) technologies 2. Continued strong focus on grinding safety - Anglo American Chile names Metso the best safety partner of 2012 3. Two of the world’s largest fully mobile, track-mounted in-pit crushing plants - 9 Supplied to Altay Polimetally LLP in Kazachstan and Samarco in Brazil © Metso Capital Markets Day 2013
  10. 10. Construction strategy progressing 1. Acquisition of Shaorui - Shaorui is one of the leading mid-market crushing and screening equipment producers in China Expands our access to the China/Asia mid-market. Completed in September 2013 2. Joint venture with LiuGong - 50%-50% joint venture to develop the track-mounted crushing and screening business in China Combining our know-how of the track-mounted crushing and screening business and technology with LiuGong’s extensive distribution resources (~900 outlets) and manufacturing capabilities in China Pending approvals from the Chinese authorities 3. Acquisition of the JX steel foundry - Improves our capabilities to supply wear parts to our construction industry customers in China and other markets in Asia-Pacific Completed in August 2013 4. Consolidate the production of Barmac crushers from Matamata, New Zealand to Metso Park in India 10 © Metso Capital Markets Day 2013
  11. 11. The long-term capex outlook for mining is solid
  12. 12. Mining industry megatrends and business drivers Business drivers • Change in stakeholder demands • Lower upfront investment with Megatrends Demographics and demand: China, India, South-East Asia, Brazil and Russia Political risks and investor impatience • Recovery • Higher availability • Decreased people intensity at • Urbanization • Emphasis on cost first, growth second • Environmental impact Declining ore grades: copper, iron, ore and gold less risk the rock face - Decreased energy and water consumption per ton Waste handling and waste reduction • Increasing metals consumption • Harder ores and larger volumes increase wear and energy costs • ‘Geological’ inflation estimated at ~4.5% per year over the last 10 years 12 © Metso Capital Markets Day 2013 • Project delays and shift in geographical focus Supply limitations in minerals production will sustain metals prices Personnel shortage and HSE
  13. 13. Long-term demand for mining equipment driven by declining ore grades • For constant gold production, the amount of ore processed has increased 700% in 40 years • Copper - In the last 10 years the average head grade for the major producing mines has declined from nearly 1.0% to 0.7% • China, which produces over 40% of the world’s iron ore, has seen Fe grade slide from 32% to 20% over the last 10 years. 13 © Metso Capital Markets Day 2013 Source : BHP Billiton and Metso
  14. 14. We are the leader in comminution Market value > EUR 14 billion Exploration Exploration for mineral resources • Remote sensing • Geophysical /geochemical tests • Samples Feasibility studies Sandvik Atlas Copco Boart Longyear Development Extraction Materials handling Comminution Separation Refining Drilling and modeling of the ore body Selection of appropriate mining technique Capital investment in mine infrastructure Mining of the ore body Rock breaking Surface mining Underground mining Mined minerals transported to processing site Use of loaders, trucks, trains, at the face mining systems and conveyors Materials are crushed and ground to achieve finer particles Particles sized for optimum recovery of minerals specie Flotation, leaching, sedimentation, and filtration are used to increase mineral content to an economic level Refining to increase mineral concentration e.g. through pyro-metallurgy and electro-winning Furukawa Komatsu Joy Global Caterpillar Metso Mining and Construction FLSmidth Outotec Citic Heavy Industries Terex Weir (pumps) Sigdo-Coppers One Steel 14 © Metso Capital Markets Day 2013 Citic Heavy Industries
  15. 15. Modest recovery in 2015, solid growth capex thereafter Mining capex is driven by replacement and brownfield activity Global mining capex (USD billion) 160 141 140 126 118 120 100 109 100 95 108 135 116 80 Mining capex 100% Engineering services 10-15% Infra, civils, site preparation 15-20% Equipment 30-35% 60 40 Materials 20 0 15 2010 © Metso 2011 2012 2013 2014 2015 2016 2017 2018 Capital Markets Day 2013 SOURCE: Metso management estimate 35%
  16. 16. High demand for more efficient and new solutions for minerals processing Growing demand for process and equipment intelligence and automation 16 © Metso Capital Markets Day 2013 Mining long-term market outlook: Good demand for capital and services  More gradual, but good growth expected High demand for performancebased life-cycle services
  17. 17. Less is the new more Metso’s solutions for more efficient minerals processing
  18. 18. Metso’s views on energy-efficient minerals processing Crushing and grinding consume ~ 3% of the world's electricity. Metso’s new-generation High-pressure grinding roll is one of the most energy-efficient comminution methods available, and can eliminate traditional tumbling mills in some applications. Metso’s mobile inpit crushing and conveying systems reduce the need for trucks. Metso's VERTIMILLTM Vertical Grinding Mill can bring up to 40% savings in energy consumption while improving finer grinding results. 18 © Metso Capital Markets Day 2013 The focus in separation is increasing energy efficiency by improving coarse particle flotation recovery. The more water we manage to separate, the more water can be recycled. Process optimization and automation can offer significant improvements in energy efficiency and productivity.
  19. 19. The world’s biggest fully mobile, track-mounted in-pit crushing plant • In-pit crushing system delivered to the Altay Polimetally LLP copper mine in Kazakhstan • The key part of the system is the Lokotrack • The complete mobile system weighs over 800 tons • The whole mobile system is electric driven, as the operational temperatures at the mine site vary from +35oC to -35oC Capacity of 2,500 tons per hour 19 © Metso Capital Markets Day 2013
  20. 20. Antamina mine in Peru Increased production and energy efficiency Customer goal: • Compañía Minera Antamina wanted to increase mill throughput, but increasing ore hardness presented a problem Metso’s delivery: • • Our Process Technology and Innovation team (PTI) assisted Antamina in increasing throughput by implementation of a Process Integration and Optimization (PIO) project PIO involves the development of integrated mine-to-plant operating and control strategies that maximize throughput, minimize overall cost-perton, minimize energy consumption and maximize profitability Key benefits: • 20 Throughput grew from 2,600 tph in 2006 with a specific energy consumption of 14 kWh/t to a throughput of 4,500 tph in 2010 with a specific energy assumption of 10.5 kWh/t. © Metso Capital Markets Day 2013 25% energy savings for Antamina
  21. 21. Boliden AB Aitik copper mine in Gällivare, Sweden Requirement for maximum uptime a common goal since 1930 Customer goal: • Boliden’s Aitik mine aims to increase uptime. Metso’s delivery: • In 2012, Metso and Boliden agreed on a three-year extension to the existing services contact, including the supply of mill-lining solutions and the preventive maintenance of the grinding circuit. Metso is responsible for planning the shut-down process to be as efficient as possible. Key benefits: • 21 Boliden will gain critical production and efficiency increases. As the contract is a cost-per-ton agreement, both parties share the common goal. © Metso Capital Markets Day 2013 Boliden’s uptime increased from 95% to 97%
  22. 22. Belo Monte Hydroelectric Plant, Brazil The world's third-largest hydroelectric plant Equipment, automation, services, and parts for building the roads and barriers at the site • Belo Monte contributes to Brazil's economical growth by providing clean and renewable energy. The challenge was finding reliable partners to help build the infrastructure around the plant in a reliable, efficient and safe way Metso’s solution: Automated crushing plants with online maintenance, service and spare parts, equipped with the latest technology and operated by skilled labor. 22 © Metso Capital Markets Day 2013 Safe operation with automated start & stop, and full diagnostics of entire plant Easy online reports for crushing efficiency, Production, and maintenance Over 30% increase in production with automation
  23. 23. Anglo Gold Ashanti – Iduapriem mine in Ghana A life-cycle of improved results 1997 2002 In 1997, Metso recommended potential improvements at the site. 2003 In 2002, the site added a second SAG mill and signed a mill lining supply and services contract with Metso. In 2003, Metso process engineering conducted a review of the post-expansion grinding circuit. 23 © Metso Capital Markets Day 2013 2005 In 2005, Metso executed a mining and milling process integration and optimization project. Results: reduced operating costs, increased availability and throughput. 2008 2009 2013 In 2008, Anglo Gold expanded the mine based on Metso’s recommendations: a second ball mill and a complete new crushing plant replaced the old one. Metso signed a 3-year life-cycle services contract, including on-site maintenance and parts supply.
  24. 24. "An action plan has been drawn up on site to implement Metso’s recommendations and I am delighted to report that we are seeing immediate benefits with regards to circuit throughput. An upgrade of this circuit was conducted in 2009 and the plant was subsequently rated at 4.38 Mtpa. Indications are that we will now be capable of achieving 4.7 Mtpa. A quick calculation suggests an increase in value to the operation of approximately $400m over the life of the mine.“ Ian Smit, Vice President, Metallurgy, Anglo Gold Ashanti 24 © Metso Capital Markets Day 2013
  25. 25. Improving customer performance by integrating services, smart machines, automation and process design • Metso’s life-cycle services, together with smart machines, improve maintainability and help avoid unplanned downtime. • Metso’s integration and optimization consulting services deliver production increases from 5-30% with reduced operating costs and energy consumption. • Metso’s process automation systems increase productivity through improved safety, reduced energy and water consumption, and lower costs. 25 © Metso Capital Markets Day 2013
  26. 26. Metso in mining: intelligent mining solutions Process technology and automation making us truly different Highest availability, recovery and throughput Intelligence in minerals processing Mining automation Process optimization solutions Energy efficiency Safety improvements Capacity improvements Spare and wear parts solutions Globalized services footprint Lowest cost per ton offerings Capital equipment Transition from being an equipment and transactional services supplier to an intelligent solutions provider is ongoing across Metso 26 © Metso Capital Markets Day 2013
  27. 27. We are ready for the future of mining Conclusions  Mining capex to return to the growth path  Minerals processing machinery cannot get much bigger in size  Raw materials and other resources will become scarcer  More efficiency in energy use and operations needed  We will help our customers with their future challenges through our intelligent offering and leading services capabilities  Further operational excellence will support our profitability 27 © Metso Capital Markets Day 2013
  28. 28. Examples of our mining product range Proven mining crushers and screens capable of a long service life in challenging applications 29 © Metso World's most comprehensive range of grinding equipment Capital Markets Day 2013 Reliable pumps for demanding minerals processing Pyro-processing solutions for: • Pelletizing • Lime production • Industrial waste processing Services to achieve optimum performance on a sustainable basis
  29. 29. Metso’s minerals exposure in 2013 % of net sales/mineral Total Capital equipment Services Iron 29% 38% 21% Copper 20% 22% 18% Gold 15% 6% 23% Aggregates 23% 25% 21% Other 13% 9% 17% 100% 100% 100% 30 © Metso Capital Markets Day 2013
  30. 30. We serve the key players in the mining industry Customer groups • • • 31 Mines and mineral processing plants Engineering houses Energy and metal industry © Metso Capital Markets Day 2013
  31. 31. Mining and Construction Business model Customer base Services Sales & service 90% Metso direct sales and service network 90% Metso direct sales and 70% Metso direct sales and 10% Dealers in commodity products and certain markets 10% Dealers in commodity 30% Authorized dealers in 50% Metso production of wears, spares, and pumps 20% Metso production of 70% Metso production of 50% Outsourcing of Metso-engineered equipment and component manufacturing 80% Manufacturing 32 © Metso Geographically defined, several major and dozens of big players; long-term focus Capital Markets Day 2013 Mining Geographically defined, several major and dozens of big players; long-term focus service network products and certain markets core components Outsourcing of Metso-engineered equipment and component manufacturing Construction Fragmented segment, few large and thousands of small players; short-term focus service network the contractor segment equipment, parts, and components 30% Subcontracting components, castings and assembly, outsourcing some Metsoengineered components