Glencore Plc · LSE:GLEN
Glencore — Investor Day (December 2014)
19 slides from Glencore's investor day presentation, Dec 10, 2014
Slide 1: Investor Day
Zinc ingot, Asturiana de Zinc, Spain 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 - Nic
Slide 2: Forward looking statements
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
Slide 3: Zinc
Removing dross from top of furnace, CEZ zinc refinery, Canada Zinc Daniel Maté, Chris Eskdale
Slide 4: Zinc summary
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 2
Slide 5: Global zinc market
Concentrate loading facility for McArthur River zinc mine, Australia Global zinc market
Slide 6: World zinc metal consumption 2012A – 2019F
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
Slide 7: Where will these units come from?
Where will these units come from? 7
Slide 8: Concentrates requirement, production and deficit outlook
Concentrates requirement, production and deficit outlook • 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
Slide 9: Chinese mine production
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 Annua
Slide 10: Mine deficit can only partially be covered by available stock
Mine deficit can only partially be covered by available stock • 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 for
Slide 11: Price is closely correlated to available stock levels
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 LME zinc price ($/t) vs stocks to consumption ratio (weeks) 3,500 LME Zn price $/t 0.4 Inverse weeks 0 0.7 sto
Slide 12: Zinc metal stocks outlook
Zinc metal stocks outlook • Stocks are forecast to fall below the critical “stocks:consumption” inflection point of 3 weeks consumption Sensitivity of zinc metal stocks to global zinc demand 5 Weeks consumption Inflection point Feb 2016 Apr 2016 Oct 2016 4 3 2 1 0 2014F 2015F 2016F 2017F 2018F 2019F
Slide 13: Zinc industrial overview
McArthur River zinc mine metallurgical plant, Australia Zinc industrial overview
Slide 14: Glencore zinc assets
Glencore zinc assets 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 14
Slide 15: A large long-life, low-cost, optimised asset base
A large long-life, low-cost, optimised asset base Expansions – delivery of 3 Australian projects Illustrative Zinc C1 cash cost curve • capex spend on budget • Lady Loretta project ahead of schedule “Steady State” operations • benchmarking and subsequent cost reduction/turnaround projects – savings
Slide 16: Forecast zinc mine production profile
Forecast zinc mine production profile Own source contained zinc mine production (kt zinc) 1,800 1,620 1,640 1,580 1,600 1,399 1,380 1,400 1,200 1,000 800 600 400 200 0 2013A 2014F 2015F 2016F 2017F Australia Kazzinc North America Antamina Other Zinc Glencore Smelting Capacity Source: Glencore, smelt
Slide 17: Australian expansion projects update
Australian expansion projects update Mt Isa Operations: Rock bolting, Lady Loretta mine • 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
Slide 18: Conclusion
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 mar
Slide 19: Q&A
George Fisher underground mine shift change, Australia Q&A