Glencore Plc · LSE:GLEN
Glencore — Investor Day (December 2014)
23 slides from Glencore's investor day presentation, Dec 10, 2014
Slide 1: Investor Day
Tintaya concentrator, Peru 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 - Nickel | Kenn
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: Ivan Glasenberg, CEO
Lion chrome smelter, South Africa Ivan Glasenberg CEO
Slide 4: Summary
Summary • Capital misallocation, not a lack of demand, remains a key issue for the sector • Clear need to differentiate by commodity – correlation has broken down • Glencore’s positioning provides superior insulation and material price optionality • Established portfolio of Tier one industrial asset
Slide 5: Capital allocation is a key issue for the sector
Electronic scrap recycling, Horne copper smelter, Canada Capital allocation is a key issue for the sector
Slide 6: Demand favours base over bulk again in 2014
Demand favours base over bulk again in 2014 … Global demand growth 12% Previous 5 year average 2014 10% 8% 6% 4% 2% 0% Copper Zinc Al Ni Thermal Coal Iron Ore Oil Source: Glencore estimates, various broker reports, Wood Mackenzie. 6
Slide 7: Capital allocation in the sector remains iron ore centric
… however, capital allocation in the sector remains iron ore centric … Production growth 2013A -2016E (Cu equivalent) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Glencore Peer 1 Peer 2 Peer 3 Peer 4 Met Coal Thermal Coal Iron Ore Metals Oil and Gas Source: Company websites, Glencore estimates. Note,
Slide 8: … and price performance reflects oversupply fears
… and price performance reflects oversupply fears Year to date price change Oil Iron ore Coal Nickel Aluminium Zinc Copper -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% Source: Bloomberg as at 3 December 2014, Wood Mackenzie, Deutsche Bank, Glencore estimates. 8
Slide 9: Differentiation by commodity is critical
Wheat crop in Bute, Australia Differentiation by commodity is critical
Slide 10: Our global footprint is truly diversified
Our global footprint is truly diversified … 10
Slide 11: … by commodity and activity
… by commodity and activity … BHP: Copper 38% Zinc 4% Nickel 7% Oil 26% Coal 7% Copper 20% Oil 4% Iron Ore 52% Other 1% Marketing metals 25% Marketing energy 6% Marketing agri 13% Corp and other (4%) Iron Ore 40% Iron Ore 73% Coal 8% Aluminium 10% Copper 25% Copper 10% Diamonds 25% Coal 2% Other 2%
Slide 12: … with key drivers earning 98% of EBIT
… with key drivers earning 98% of EBIT … Cu Zn Ni Coal Marketing Deficit Deficit Transitioning to deficit Rebalancing Resilient “Consensus” surplus An additional 3-3.5Mt of Balanced 2015 and Some high cost supply Defensive earnings, elusive so far, zinc supply needed over deficits thereafter, shutti
Slide 13: … supported by positive fundamentals and prices
… supported by positive fundamentals and prices Consensus price forecasts 2014=100 140 Thermal Coal 130 120 Aluminium Nickel 110 Copper 100 Zinc 90 Iron Ore Oil 80 70 2013 2014 2015 2016 2017 2018 Source: Consensus broker research, 4 December 2014. 13
Slide 14: Established portfolio of Tier one industrial assets
Assay lab, Mount Isa Mines, Australia Established portfolio of Tier one industrial assets
Slide 15: Established portfolio of Tier One assets
Established portfolio of Tier One assets … 15
Slide 16: … with synergies and cost savings embedded in cost structures
… with synergies and cost savings embedded in the commodity cost structures … Illustrative C1 metals cash cost curve / Inverse FOB cash margin thermal coal >$2bn industrial merger synergies and other Cu cost savings achieved Cu 2013 2016F FeCr Post-integration 2013 cost efficiencies 2016F and focus
Slide 17: … with major optionality for future brownfield growth
… with major optionality for future brownfield growth, as and when appropriate Commissioning 2015 Commissioning 2016 2016+ brownfield growth options Copper Copper Copper Nkana Synclinorium: new Antapaccay expansion: Coroccohuyaco shaft to extend section life by Concentrator upgrade to Mutanda Sulphi
Slide 18: Marketing – a defensive earnings driver
Chemoil terminal, Singapore Marketing – a defensive earnings driver
Slide 19: Marketing – a unique, low-risk, defensive earnings driver
Marketing – a unique, low-risk, defensive earnings driver • Relatively low cost of capital and Marketing EBIT ($M) stable cost base underpin 0 1,000 2,000 3,000 4,000 predictable and high ROE • Resilient earnings capability in a 2008 falling price environment • Minimal exposure to flat price risk •
Slide 20: Sustainability gaining traction
Espinar farmer near Antapaccay/Tintaya copper mines, Peru Sustainability gaining traction
Slide 21: Governance and sustainability
Governance and sustainability Safety LTIFR(1) 2009 to 2014YTD • Regrettably 15 fatalities year to date (26 in 2013) 3.50 • Reduction on 2013 reflects ‘SafeWork’ focus on safety 3.00 leadership, culture and implementation of Fatal Hazard 3.00 2.73 Protocols • Significant performance improvement at DR
Slide 22: Our priorities for 2015
Zinc balls, Nordenham, Germany Our priorities for 2015
Slide 23: Our priorities for 2015
Our priorities for 2015 • Successfully deliver remaining key growth projects • Koniambo, McArthur River, Katanga, Chad oil fields • Ensure continued operating efficiency, targeting Q1 costs/margins • Maintain strong investment grade credit rating • Maintain disciplined deployment of capital to maxim