Glencore Plc · LSE:GLEN
Glencore — Investor Day (December 2019)
33 slides from Glencore's investor day presentation, Dec 3, 2019
Slide 1: 2019 Investor Update
2019 Investor Update 3 December 2019
Slide 2: Important notice concerning this document including forward looking statements
Important notice concerning this document including forward looking statements 1 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 terminol
Slide 3: Our investment case
Our investment case Ivan Glasenberg – CEO 2019 Investor Update
Slide 4: Our investment case
Our investment case 3 Our markets Our business Creating value • Tightly balanced and destocked • Unique combination of assets and • Integration of sustainability throughout • Easily accessible, high-quality resources marketing our business are increasingly scarce • Diversified portfolio of new energ
Slide 5: Operational Update
Operational Update Peter Freyberg – Head Industrial Assets 2019 Investor Update
Slide 6: Production Update Summary
Production Update 5 Summary Diversified portfolio of generally large long-life low-cost Copper equivalent production forecast – own source assets Key changes • Largely flat production profile over the next three years • Higher zinc and oil with generally steady coal and nickel (+) Increasing oil vol
Slide 7: Production Update Summary: Group guidance
Production Update 6 Summary Group guidance – own source(1) 2019F 2020F 2021F 2022F Copper - excl. African Copper kt 1010 ± 20 975 ± 25 980 ± 25 930 ± 25 Copper - African Copper(2) kt 375 ± 15 325 ± 25 355 ± 25 370 ± 25 Copper - Group kt 1385 ± 35 1300 ± 50 1335 ± 50 1300 ± 50 Cobalt kt 43 ± 2 29 ± 4
Slide 8: Ramp-up / Development assets progressing to plan
Production Update 7 Ramp-up / Development assets progressing to plan Katanga • Targeting annualised steady state production of 300ktpy Cu and 30ktpy Co towards the end of 2020 • The first of Katanga’s two cobalt dryers has been restarted. Realisation of full drying capacity expected mid-2020 Mopani
Slide 9: Production update: Copper and cobalt
Production update 8 Copper and cobalt Copper guidance Copper guidance (kt) – own source(1,2) • Modest decline over the outlook period, primarily 1385 ± 35 1300 ± 50 1335 ± 50 1300 ± 50 reflecting the transition of Mutanda to care and maintenance in Q4 2019 375 ± 15 325 ± 25 355 ± 25 370 ± 25 • Optio
Slide 10: Production update: Coal
Production update 9 Coal Coal guidance Coal guidance (Mt) – own source • 2019 production guidance reduced by 5Mt to 140Mt, reflecting recent Colombian volume reductions as well as a Coal production capacity cap – 150Mtpy safety stoppage in South Africa 140 ± 2 140 ± 5 135 ± 4 136 ± 5 • Flat producti
Slide 11: Production update: Zinc
Production update 10 Zinc Zinc guidance (kt) – own source(1,2) Zinc guidance • Production increases through the outlook period with near- 1400 ± 30 term higher Antamina zinc grades and commissioning of 1265 ± 30 Zhairem in Kazakhstan 1200 ± 30 1110 ± 25 Kazzinc • Zhairem – first production expected
Slide 12: Production update: Nickel
Production update 11 Nickel Nickel guidance Nickel guidance (kt) – own source(1) • Flat production profile across the outlook period with the planned ramp up of Koniambo offsetting some modest 128 ± 5 126 ± 6 129 ± 7 expected declines from INO’s existing mines, before they 125 ± 5 recover from 2023
Slide 13: Production update: Oil
Production update 12 Oil Oil equivalent guidance (mbbl) – entitlement interest(1) Oil guidance • Increasing equivalent oil entitlement interest over the 12.7 ± 0.4 outlook period, driven by material growth in Equatorial Guinea (primarily LNG) and liquid volumes in Chad and 11.0 ± 0.4 Cameroon Equato
Slide 14: Future growth options
Production Update 13 Future growth options Significant pipeline of internal brownfield and greenfield growth options for when markets inevitably require these commodities Cu 70Mt M+I Resources Co (1) Zn 57Mt M+I Resources (1) 14bt M+I Resources(1) Coroccohuayco: Peru Mutanda sulphides: DRC Volcan pr
Slide 15: Safety update
Safety update 14 Unacceptable number of fatalities in 2019 • Copper: Mopani – six, DRC – three • Zinc – five • Coal – one • Alloys – one Immediate actions • Fatality reduction interventions at Mopani and Kazzinc to address conditions and behaviours • Corporate-led deep dive SafeWork assessments at t
Slide 16: Financial Update
Financial Update Steven Kalmin – Chief Financial Officer 2019 Investor Update
Slide 17: 2020 unit cash costs/margins
2020 unit cash costs/margins 16 Cu Zn Ni Production: 1.30Mt, -85kt vs 2019E Production: 1.27Mt,+155kt vs 2019E Production: 125Kt, -3kt vs 2019E Production: 135Mt, -5Mt vs 2019E Unit costs: 120 ¢/lb, -36 ¢/lb vs 2019E Unit costs: 25 ¢/lb (57 ¢/lb ex Au) Unit costs: 396 ¢/lb, unchanged Unit costs: The
Slide 18: Capex update: 2020-2022 guidance
Capex update 17 2020-2022 guidance – Industrial capex average of c.$5.0bn per annum Sustaining capex Capex outlook ($bn) Industrial Oil portfolio • Average $3.7bn • Deployment of capital into E&P To allow better like for 5.0 like comparison: (Chad, Cameroon, EG) and the Expansionary capex 2019F prim
Slide 19: Marketing Guidance update
Marketing 18 Guidance update 2019 Marketing Adjusted EBIT Long-term Marketing Adjusted EBIT ($M) • Tracking within our long-term range, including 3.5 accounting for the previously reported negative H1 2019 3.2 non-cash cobalt mark-to-market impact 2.9 3.0 2.8 2.8 Long-term Marketing Adjusted EBIT 2.
Slide 20: 2020 illustrative “spot” annualised cashflows
2020 illustrative “spot” annualised cashflows 19 Ex-Africa Group $bn Copper(5) Guidance Guidance Zinc(7) Guidance Copper EBITDA 3.6 Total copper production (kt) 1300 975 Total zinc production (kt) 1265 Cu from other depts (kt) -110 -110 Zn from Cu department (kt) -152 Zinc EBITDA 1.7 Net relevant pr
Slide 21: Capital allocation
Capital allocation 20 Balancing shareholder returns, capital structure and growth 2019 distributions and buybacks total $4.7bn: ◦ $2.7bn base distribution (20 ¢/share), basis 2018 cash flows ◦ $2.0bn share buyback program 2020 distribution in respect of 2019 cash flows ◦ Minimum: $1bn from marketing
Slide 22: Well positioned
Well positioned Ivan Glasenberg – Chief Executive Officer 2019 Investor Update
Slide 23: Despite weaker 2019 demand, base metals are fundamentally in good shape
Well positioned 22 Despite weaker 2019 demand, base metals are fundamentally in good shape Markets are tightly balanced … … and heavily destocked Supply demand balance, as % of demand(1) Global visible inventory, days consumption(2) Copper 30 10 days’ 10% consumption 20 Surplus 10 5% 0 60 Zinc 0% 40
Slide 24: Key future growth trends
Well positioned 23 Key future growth trends … Urbanisation and rising Electrification Decarbonisation of living standards: of Mobility: energy: 2bn increase in global Up to 580M EVs on +1,000GW of wind population by 2050 (1) the road by 2040 (2) power by 2029 (3) Benefits all commodities across Mate
Slide 25: … are major new sources of demand
Well positioned 24 … are major new sources of demand Decarbonisation requires a lot of copper Electrification of mobility requires nickel and cobalt Additional cumulative Cu demand needed(1) Nickel demand in electric vehicles (kt Ni)(3) Current Government policies to +330kt of new reduce CO2 emissio
Slide 26: Energy demand fundamentals also support an ongoing role for coal
Well positioned 25 Energy demand fundamentals also support an ongoing role for coal, primarily in Asia As the global population expands and living standards Structural deficits emerging improve, more energy is needed Seaborne thermal coal supply demand balance (Mt)(1) • New coal fired generating cap
Slide 27: Our 2020 priorities
Our 2020 priorities 2019 Investor Update
Slide 28: Our 2020 priorities
Our 2020 priorities 27 Operating Ramp-up / Strong Health & efficiency & development balance Management Confidence safety Capital assets sheet discipline • Deliver a step- • Deliver Katanga • Deliver • Commitment to • Transition to • Stability and change in safety 2020 guidance of budgeted strong BBB
Slide 29: Appendix
Appendix 2019 Investor Update
Slide 30: Buyback update: Shares eligible for distribution
Buyback update 29 Shares eligible for distribution $2bn buy back – c.$90M remaining Shares eligible for distribution (million shares) • 566 million shares purchased since 22 February 2019 • 1.071 billion shares purchased since buybacks commenced in July 2018 Issued share capital • Current $2bn buyba
Slide 31: Listed entity market valuations and selection of other entities
Listed entity market valuations and selection of other entities 30 Listed entities % owned Market value $M Russneft 25.0% 638 EN+ 10.6% 625 Volcan 23.3%(1) 398 Rosneft 0.6% 428 Century 47.4% 297 Yancoal 6.8% 181 Other(2) Various 216 Total 2784 Selection of other entities US oil infrastructure BaseCo
Slide 32: 2020 key EBITDA sensitivities
2020 key EBITDA sensitivities 31 Approximate estimated impact on FY2020 EBITDA of a 10% change: $M Copper price 740 Australian export thermal coal price 350 Australian hard coking coal price 115 Zinc price 270 Cobalt price 90 Nickel 180 AUD vs USD 520 ZAR vs USD 145 CAD vs USD 160 CLP vs USD 55 2019
Slide 33: Glencore Technology: Technology solutions for our industry
Technology solutions for our industry 32 Glencore has been leading industry technology for decades: Primus, CTSCo, Onaping Depth electric mine GLENCORE TECHNOLOGY • Global leader in metals and minerals processing technology for • Team of world-class more than 30 years metallurgists, engineers, • Sup