Anglo American plc · LSE:AAL
Anglo American — Deutsche BRICS conference 2007
21 slides from Anglo American's conference presentation, Nov 13, 2007
Slide 1: The Longest Wave
The Longest Wave Brian Beamish, CEO Anglo Base Metals Deutsche BRICS conference 13 November 2007 This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and
Slide 2: Drivers of Historical Copper Growth Phases
Drivers of Historical Copper Growth Phases • Historically, major industrialisation phases in Europe, Japan and Korea have driven global copper intensity of use with China being the key driver for the last 5 years 10 Year Increase in Cu Use by Region (%) 35 Wave 1 Wave 2 Wave 3 Wave 4 W. W. Europe, D
Slide 3: Base Metals Demand/Price Cycle
Base Metals Demand/Price Cycle Base Metals Price Nominal Index = Line Annual Global IP Growth = Bars (YOY %) (1990=100) 250 50 50% 200 40 40% Trough to Peak Cycle Duration 150 30 30% 1990=100 Index 100 20 20% Trough to Trough 50 c. 5 Yrs c. 9Yrs c. 6Yrs c. 10Yrs Cycle Duration 10 10% 0 0 0% -50 -10
Slide 4: Base Metals Cyclicity
Base Metals Cyclicity • The current price cycle is unprecedented in duration and especially price gains Base Metals Price Nominal Index = Line (Start of Cycle=100) 400 350 Apr 2003 - 300 Nov. 1972 - Nov. 1963 - Oct 2007 Apr. 1974 June 1966 Nov. 1993 - Nov. 1986 - 250 June 1988 Jan. 1995 200 Apr. 197
Slide 5: Copper Intensity Long Term Path
Copper Intensity Long Term Path • As China industrialises, per capita consumption will increase – key uncertainties are magnitude and timing First-Use Copper per Capita Consumption (kg/person) 30 Taiwan 25 Per Capita GDP > 10,000 US$/yr Per Capita GDP < 10,000 US$/yr 20 Scandinavia Korea 15 Germany
Slide 6: Copper Intensity Path of Growth 'Champions'
Copper Intensity Path of Growth ‘Champions’ • Comparison with previous major copper cycles suggests that China’s high level of copper demand growth may continue for several years longer Copper Consumption Index (2kg per capita = 100) 1200 China – Base = 1995 Japan – Base = 1959 1000 Korea (base = 19
Slide 7: Copper Cost and Price Evolution
Copper Cost and Price Evolution • Despite average copper grade decreases, real costs have declined over time Copper Real C1 Cash Costs (¢/lb) Copper Grade (%Cu) 140 Escondida comes on 1.8 stream Head Grade C1 Cost 1.6 120 1.4 100 SxEw and economies 1.2 of scale (e.g. larger 80 trucks, etc) 1.0 60 0.
Slide 8: Copper Industry Evolution - Costs
Copper Industry Evolution - Costs Cost Components = Bars (¢/lb) C1 Costs = Line (¢/lb) 120 120 TC/RC C1 cost incl. Freight credits 100 Service/Other 100 Energy Labour 80 80 60 60 40 40 20 20 0 0 1994 1996 1998 2000 2002 2004 2006 Credits (¢/lb) -11 -13 -11 -9 -12 -21 -35 8
Slide 9: Copper Price & Cash Margins
Copper Price & Cash Margins • Despite average copper grade decreases and prices declining over time, cash margins have been maintained Nominal Copper Price/ Average C1 Mine Costs 6.0 Price/Cost Ratio 5.0 4.0 1975 - 2003 weighted average C1 mins costs = 1.6 1975 - 2003 Trendline 3.0 2.0 1.0 1975 1978
Slide 10: Forecast Mining Demand / Supply
Forecast Mining Demand / Supply • New projects will have to fill the emerging hypothetical supply gap as existing mines will not meet future demand Mine Supply - Demand (Million tonnes) Mine Includes Stock Adjustments Requirement 25 Mine Requirement 24 CAGR: 4.4% 23 Unspecified lower quality 22 proj
Slide 11: Current Footprint
Current Footprint Collahuasi Open pit copper mine 44% Anglo 195ktpa Cu, 1.5ktpa Mo Los Bronces Open pit mine Mantos Blancos 100% Anglo Open pit copper mine 225ktpa Cu, 2.6ktpa Mo 100% Anglo Production 90ktpa Cu Manto Verde Open pit copper mine El Soldado 100% Anglo Open pit/
Slide 12: Current Footprint
Current Footprint Loma de Niquel Lisheen Open pit nickel laterite mine Underground zinc/lead mine 91% Anglo 100% Anglo 17ktpa Ni 170ktp Zn, 25ktpa Pb Codemin Open pit nickel laterite mine 100% Anglo 10ktpa Ni Catalão / Copebrás Open pit niobium & phosphate mine Cataläo 100% Ang
Slide 13: AngloBase Strategy
AngloBase Strategy Our Goals & Ambitions • To become the most highly valued base metals business in the World • Achieve long term sustainable maximisation of shareholder value through finding, acquiring, developing and operating large, long life, low cost base metal businesses in a Zero Harm, social
Slide 14: Safety & Sustainable Development
Safety & Sustainable Development Safety • Safety has been highlighted as the most important challenge facing Anglo American • AngloBase is committed to the principles of zero harm and safe production • Safety is a non-negotiable requirement underpinning every aspect of what we do • One incident is o
Slide 15: Operational Excellence
Operational Excellence • Maintain focus on cost reduction and operating efficiencies • Grow production to meet demand • Maintain capital discipline Operating efficiency & procurement Volume/profit improvements Capital/other procurement 300 250 $240M Cost reduction US$M 200 $142M 150 $116M $122M 100
Slide 16: Project Update
Project Update Barro Alto Los Bronces • Production of 36ktpa Ni • Incremental production of 170ktpa Cu over first 10 years • Capital cost $1.2Bn • Capital cost $1.7bn • Over 50% of the capital committed to date • Feasibility study completed H1 2007 • First production scheduled for Q1 2010 • Approval
Slide 17: Project Update
Project Update Collahuasi Quellaveco • 4 potential projects - 2 debottlenecking • Production of 200ktpa Cu over 26 year and 2 sulphide leach mine life • Total capital cost $3.2Bn (100% basis) • Capital cost $1.7Bn • Potential to expand to as much as 1Mtpa • Revised feasibility study underway Cu iden
Slide 18: Project Update
Project Update Gamsberg Jacare • Production 300ktpa Zn over 30 year • Licenses acquired in 2000 in central mine life Brazil • Capital cost $1.5Bn • Potential Ni production in excess of Barro Alto • Orebody extensions being drilled at Gamsberg East • Capital cost $1.2Bn + • Drilling on going 18
Slide 19: Project Update
Project Update Michiquillay Pebble • Anglo was successful in the open tender • 50/50 partnership with Northern Dynasty process on 30 April with a bid of $403M for a staged investment of $1.4Bn • This year is focused on reaching • Potential production levels of over agreement with the local community
Slide 20: Growth Prospects
Growth Prospects • Copper production could increase by over 100% and nickel by over 400% by 2017 Copper production (tonnes) Nickel production (tonnes) 1,800 Conceptual projects 160 Conceptual projects Development projects Approved projects 1,600 Current production Current production 140 1,400 120 1,
Slide 21: Summary
Summary • We are experiencing an unprecedented wave in the base metals industry; both in terms of strength and duration • The magnitude of this wave is driven by China and a sluggish industry response • Prices are anticipated to continue to hold above long term equilibrium levels for some time • Ang