Kennecott Utah Copper Finance Community Update 24 September 2009
Overview Mine and Plant Assets Future Growth Options Summary
Rio Tinto Copper has an attractive portfolio of existing assets and projects, of which KUC is a corner stone Source: Rio T...
KUC has produced more copper than any mine in history <ul><ul><li>KUC is an integrated mine to cathode operation and inclu...
KUC is three times safer than the industry average  Source: Industry Rates from latest edition of the Bureau of Labor Stat...
Our focus on value creation is supported by a commitment to sustainable development   <ul><li>How we do this: </li></ul><u...
KUC has experienced continued strong financial performance Financial Performance 247 Comments <ul><li>Strong financial per...
Measures have been taken to address market downturn 247 <ul><ul><li>Reduced capex to sustaining levels </li></ul></ul><ul>...
Significant focus on reducing cash expenditure 247 <ul><ul><li>Unit costs have benefited from both cost reductions and hig...
KUC labor agreement expires September 2009 <ul><ul><li>Approximately 1900 employees; 600 professional staff and 1300 hourl...
Overview Mine and Plant Assets Future Growth Options Summary
Bingham Canyon Mine Production  2004 – 2009 Total Tonnes Mined ( Millions) Source: Rio Tinto <ul><ul><li>Flexible pit desi...
Copperton Concentrator Source: Rio Tinto <ul><ul><li>Pebble crushing circuit driving sustainable throughput improvements <...
Smelter & Refinery Cathode Production 2004 – 2009 <ul><ul><li>Flash smelting and patented flash converting technologies ca...
Precious metals and molybdenum remain attractive by-products... Source: Rio Tinto Molybdenum 2004 – 2009 Pounds produced (...
... leaving KUC favorably positioned on the cost curve over the long term Unit cash costs before by-product credits Sulfur...
Overview Mine and Plant Assets Future Growth Options Summary
Sources: 1900-1928 McGraw Hill (1931), 1929-2008 CRU Global copper consumption <ul><li>Compound Annual Growth Rate (CAGR) ...
Global copper reserves and grades are decreasing  Global copper reserves are falling . . . . . . and grades are decreasing...
KUC remains a long life operation with significant reserves and resources Contained Metal in Reserves and Resources 247 Co...
Bingham Canyon – potential tip of the iceberg Bingham Canyon <ul><li>Geophysical data have traced the Bingham Canyon stock...
Overview Mine and Plant Assets Future Growth Options Summary
<ul><ul><li>World class ore body, significant by-products </li></ul></ul><ul><ul><li>Substantial ore reserves </li></ul></...
The Oquirrh Mountains viewed from the Kennecott Inland Sea Shorebird Reserve at the Great Salt Lake. Questions?
Kennecott Utah Copper Finance Community Update 24 September 2009
Upcoming SlideShare
Loading in …5
×

North American investment community tour - Salt Lake City

1,972 views

Published on

North American investment community tour - Salt Lake City
Andrew Harding, chief executive officer, Kennecott Utah Copper

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,972
On SlideShare
0
From Embeds
0
Number of Embeds
741
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • Block caving : leaders, with practical expertise at Northparkes, Palabora and Argyle Automation : successfully introduced automated information systems and mobile equipment in Palabora and Northparkes Flash-converting smelter : technology successfully developed at KUC Sulphide leaching : patented approach and rolling out to prove technology at scale (La Granja)
  • North American investment community tour - Salt Lake City

    1. 1. Kennecott Utah Copper Finance Community Update 24 September 2009
    2. 2. Overview Mine and Plant Assets Future Growth Options Summary
    3. 3. Rio Tinto Copper has an attractive portfolio of existing assets and projects, of which KUC is a corner stone Source: Rio Tinto Freeport JV Oyu Tolgoi Sulawesi (nickel) Northparkes Palabora Escondida La Granja Eagle (nickel) Resolution Pebble Bingham Exploration Tamarack (nickel) Codelco JV Projects Operations
    4. 4. KUC has produced more copper than any mine in history <ul><ul><li>KUC is an integrated mine to cathode operation and includes the following assets: </li></ul></ul><ul><ul><ul><li>Bingham Canyon mine </li></ul></ul></ul><ul><ul><ul><li>Copperton concentrator </li></ul></ul></ul><ul><ul><ul><li>Garfield smelter and refinery complex </li></ul></ul></ul><ul><ul><li>KUC is the second largest copper producer in the USA and in addition, has valuable gold, molybdenum and silver product streams </li></ul></ul><ul><ul><li>Over the past few years, brownfield exploration has uncovered: </li></ul></ul><ul><ul><ul><li>A world-class molybdenum deposit sitting underneath the Bingham Canyon open pit </li></ul></ul></ul><ul><ul><ul><li>Additional porphyry mineralisation below the southern pit wall </li></ul></ul></ul><ul><ul><ul><li>Multiple targets with further potential both in the Bingham Canyon orbit and the Oquirrh Range </li></ul></ul></ul><ul><ul><li>KUC has significant surface land holdings and mineral rights with significant exploration potential </li></ul></ul>Overview 247 Integrated Mine to Refinery Complex BINGHAM CANYON MINE Ore Crusher Conveyor Oquirrh Mountains Barney’s Canyon Inactive Tailings Active Tailings Pipeline Bingham Canyon Smelter Refinery Power Plant Concentrator Storage Reservoir
    5. 5. KUC is three times safer than the industry average Source: Industry Rates from latest edition of the Bureau of Labor Statistics Report – Table 1. Incidence rates of nonfatal occupational injuries and illnesses 2007. KUC’s all injury frequency rate compares favorably across industries
    6. 6. Our focus on value creation is supported by a commitment to sustainable development <ul><li>How we do this: </li></ul><ul><li>Keep our employees and contractors safe </li></ul><ul><li>Protect and, where possible, enhance the environment </li></ul><ul><li>Support and collaborate with communities surrounding our operations </li></ul><ul><li>Ensure our products are safe and useful to society </li></ul><ul><li>Remain profitable to provide jobs key to the local economy </li></ul>
    7. 7. KUC has experienced continued strong financial performance Financial Performance 247 Comments <ul><li>Strong financial performance through the commodity cycle </li></ul>Underlying earnings ($M) EBITDA ($M)
    8. 8. Measures have been taken to address market downturn 247 <ul><ul><li>Reduced capex to sustaining levels </li></ul></ul><ul><ul><li>Significant reductions in opex </li></ul></ul><ul><ul><li>Manpower reductions in first quarter </li></ul></ul><ul><ul><li>Vendor / contractor engagement </li></ul></ul><ul><ul><li>Business improvement delivery </li></ul></ul><ul><ul><li>Working capital reductions </li></ul></ul><ul><ul><li>Keystone studies continue at slower pace </li></ul></ul>Nominal metal prices index 1 Jan 2007 = 100
    9. 9. Significant focus on reducing cash expenditure 247 <ul><ul><li>Unit costs have benefited from both cost reductions and higher production </li></ul></ul><ul><ul><li>Business improvement program drives value improvements </li></ul></ul><ul><ul><li>Significant re-investment in operations over past few years </li></ul></ul><ul><ul><li>Pit optionality and Molybdenum Autoclave Process (MAP) engineering is continuing </li></ul></ul>Unit cost index 2004 = 100 Capital Expenditure ($ millions)
    10. 10. KUC labor agreement expires September 2009 <ul><ul><li>Approximately 1900 employees; 600 professional staff and 1300 hourly </li></ul></ul><ul><ul><li>Hourly employees are primarily represented by four labor unions: </li></ul></ul><ul><ul><ul><li>United Steelworkers of America </li></ul></ul></ul><ul><ul><ul><li>International Association of Machinists and Aerospace </li></ul></ul></ul><ul><ul><ul><li>International Brotherhood of Electrical Workers </li></ul></ul></ul><ul><ul><ul><li>Operating Engineers. </li></ul></ul></ul><ul><ul><li>Good relationship with represented work force </li></ul></ul><ul><ul><li>Negotiations commenced late August 2009 </li></ul></ul><ul><ul><li>Contingency operating plan is in place </li></ul></ul>
    11. 11. Overview Mine and Plant Assets Future Growth Options Summary
    12. 12. Bingham Canyon Mine Production 2004 – 2009 Total Tonnes Mined ( Millions) Source: Rio Tinto <ul><ul><li>Flexible pit design allows molybdenum production to vary with market in short term </li></ul></ul><ul><ul><li>Continued stripping on East pushback (Giant Leap) </li></ul></ul><ul><ul><li>$73m investment in mining equipment to accelerate pre-stripping and ore delivery </li></ul></ul>
    13. 13. Copperton Concentrator Source: Rio Tinto <ul><ul><li>Pebble crushing circuit driving sustainable throughput improvements </li></ul></ul><ul><ul><li>Bulk floatation circuit and super cell delivering higher recoveries </li></ul></ul><ul><ul><ul><li>Copper and molybdenum recoveries up 2% and 5%, respectively </li></ul></ul></ul><ul><ul><ul><li>Second super cell to be commissioned in H2 2009 </li></ul></ul></ul>Production 2004 – 2009 Tonnes copper produced ( thousands) Ore milled per day (thousands)
    14. 14. Smelter & Refinery Cathode Production 2004 – 2009 <ul><ul><li>Flash smelting and patented flash converting technologies capture 99.9% of sulfur emissions </li></ul></ul><ul><ul><li>In 2008 waste heat used to generate 80% of the smelter’s electrical energy needs </li></ul></ul><ul><ul><li>Fixed rail conveyor commissioned in H2 2008 increasing cathode capacity 9% to 327ktpa </li></ul></ul><ul><ul><li>Furnace rebuilds scheduled October 2009 and May 2010 </li></ul></ul>Tonnes Cathode ( Thousands) Source: Rio Tinto
    15. 15. Precious metals and molybdenum remain attractive by-products... Source: Rio Tinto Molybdenum 2004 – 2009 Pounds produced ( Millions) Price per pound <ul><ul><li>Continue to mine open pit for optimal copper, gold and molybdenum balance </li></ul></ul><ul><ul><li>Short term flexibility to vary molybdenum production with market </li></ul></ul><ul><ul><li>MAP to deliver additional benefits (project delayed pending economic conditions) </li></ul></ul>Gold 2004 – 2009 Ounces produced (Thousands) Price per ounce
    16. 16. ... leaving KUC favorably positioned on the cost curve over the long term Unit cash costs before by-product credits Sulfuric acid Gold and silver Molybdenum 2009 H1 Source: Rio Tinto. Assumes 2009 H1 production and prices
    17. 17. Overview Mine and Plant Assets Future Growth Options Summary
    18. 18. Sources: 1900-1928 McGraw Hill (1931), 1929-2008 CRU Global copper consumption <ul><li>Compound Annual Growth Rate (CAGR) in demand over the last 100+ years is approx. 3.4% </li></ul><ul><li>China overtook the US in 2003 as the largest consumer of copper </li></ul><ul><li>The proportion of global copper consumed in China will grow as per capita consumption increases </li></ul>0 5 10 15 20 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Consumption in millions of tonnes per annum
    19. 19. Global copper reserves and grades are decreasing Global copper reserves are falling . . . . . . and grades are decreasing Global copper reserves (years of annual production) Average reserve grade (% copper) . . . providing a significant challenge for exploration teams *2008 estimated based on 2007 data Source: Brook Hunt <ul><li>In the last decade on average, 8 Mt of contained copper have been added to global reserves each year. </li></ul><ul><li>Assuming a long-term growth in demand of 2.5% until 2030, an average of 30 Mt of contained copper will need to be added each year just to maintain current reserve life. </li></ul>
    20. 20. KUC remains a long life operation with significant reserves and resources Contained Metal in Reserves and Resources 247 Copper (kt) Molybdenum (kt) Gold (koz) <ul><ul><li>Mining based on current ore reserves through approximately 2019 </li></ul></ul><ul><ul><li>2008 resource additions indicate potential mine life through 2036 </li></ul></ul><ul><ul><li>Mine expansion (Keystone) pre-feasibility study scheduled for completion in late 2010 </li></ul></ul><ul><ul><li>Future mining options include new push back and/or underground developments </li></ul></ul>
    21. 21. Bingham Canyon – potential tip of the iceberg Bingham Canyon <ul><li>Geophysical data have traced the Bingham Canyon stock and potentially other intrusives to depth </li></ul><ul><li>Drilling to explore these targets is planned for 2009/2010 </li></ul><ul><li>There is a potential large porphyry system in the Bingham Canyon orbit </li></ul>
    22. 22. Overview Mine and Plant Assets Future Growth Options Summary
    23. 23. <ul><ul><li>World class ore body, significant by-products </li></ul></ul><ul><ul><li>Substantial ore reserves </li></ul></ul><ul><ul><li>Technology and capabilities to develop resources </li></ul></ul><ul><ul><li>Location provides competitive advantage </li></ul></ul><ul><ul><li>Asset quality supports strong cash flow through cycle </li></ul></ul><ul><ul><li>Modern plants, facilities and equipment </li></ul></ul><ul><ul><li>Meeting our environmental challenges </li></ul></ul><ul><ul><li>Stable political and social environment </li></ul></ul><ul><ul><li>Productive and capable workforce </li></ul></ul>Summary – Kennecott Utah Copper is a top tier asset
    24. 24. The Oquirrh Mountains viewed from the Kennecott Inland Sea Shorebird Reserve at the Great Salt Lake. Questions?
    25. 25. Kennecott Utah Copper Finance Community Update 24 September 2009

    ×