Glencore Plc · LSE:GLEN
Glencore — Investor Day (December 2020)
47 slides from Glencore's investor day presentation, Dec 4, 2020
Slide 1: Investor Update 2020
20 Our Update Investor 20 purpose Responsibly sourcing the commodities that advance everyday life 1
Slide 2: Important notice concerning this document including forward-looking statements
Important notice concerning this document including forward-looking statements This document contains, or incorporates by reference, 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
Slide 3: Overview
Overview Ivan Glasenberg Chief Executive Officer Glencore 2020 Investor Update
Slide 4: Key themes shaping our future
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Investment proposition Key macro themes Uniquely positioned Pathway to net zero Strategy for a sustainable future Our investment proposition • Steering a Paris Agreement • Decarbonising energy aligned strategy ... demand requires
Slide 5: Challenges that shape our industry and future world
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Investment proposition Key macro themes Uniquely positioned Pathway to net zero Strategy for a sustainable future Challenges that shape our industry and future world Global population forecast(1) Billion people 9.5 Meeting growing
Slide 6: Decarbonising energy requires more commodities
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Investment proposition Key macro themes Uniquely positioned Pathway to net zero Strategy for a sustainable future Challenges that shape our industry and future world Fossil fuel demand under a Rapid Transition (IEA SDS) 1.5°C path
Slide 7: We are uniquely positioned to supply into these demand profiles
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Investment proposition Key macro themes Uniquely positioned Pathway to net zero Strategy for a sustainable future We are uniquely positioned to supply into these demand profiles under any decarbonisation scenario Glencore is: • a
Slide 8: We are uniquely positioned to help the world decarbonise
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Investment proposition Key macro themes Uniquely positioned Pathway to net zero Strategy for a sustainable future We are uniquely positioned to help the world decarbonise Portfolio profile By 2050 In the and optionality we have se
Slide 9: Leading net zero ambition across the emissions value chain
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Investment proposition Key macro themes Uniquely positioned Pathway to net zero Strategy for a sustainable future Leading net zero ambition across the emissions value chain Unique ability to decarbonise Scope 1+2 Glencore is our t
Slide 10: Portfolio transition and growth options
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Investment proposition Key macro themes Uniquely positioned Pathway to net zero Strategy for a sustainable future We are uniquely positioned to help the world decarbonise We have an extensive portfolio of brownfield and greenfield
Slide 11: Our strategy for a sustainable future
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Investment proposition Key macro themes Uniquely positioned Pathway to net zero Strategy for a sustainable future Our strategy for a sustainable future Our priorities Our purpose Our strategy Responsible Responsible portfolio Resp
Slide 12: Responsible Production
Responsible Production Peter Freyberg Head Industrial Assets Glencore 2020 Investor Update
Slide 13: Production forecast summary 2020 to 2023
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Forecast update Pathway to net zero Committed to operating responsibly Production forecast summary – 2020 to 2023 Copper equivalent production forecast – own source(1) • 2021 production assumes a post-Covid pick-up 4.5 4.4 • Group
Slide 14: Production outlook
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Forecast update Pathway to net zero Committed to operating responsibly Production outlook Key commodities Forecast 2020-2023 Copper 2020F(1) 2021F 2022F 2023F Other payable commodities kt(2) 1,255±25 1,220±30 1,190 1,210 Annual av
Slide 15: Ramp-up / development assets update
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Forecast update Pathway to net zero Committed to operating responsibly Ramp-up / development assets update Katanga EW tankhouse Katanga • Production now annualising near steady state nameplate capacity • Three year project from co
Slide 16: Reducing our operational emissions footprint
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Forecast update Pathway to net zero Committed to operating responsibly Reducing our operational emissions footprint Total emissions reduction pathway to 2035 (Mt) Aligned to Rapid Transition (IEA SDS)+1.5°C 2019 total emissions As
Slide 17: Asset carbon efficiency
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Forecast update Pathway to net zero Committed to operating responsibly Asset carbon efficiency Our copper business is already well positioned Canadian nickel assets also well placed Copper • First quartile carbon intensity positio
Slide 18: CCUS is a crucial technology
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Forecast update Pathway to net zero Committed to operating responsibly CCUS is a crucial technology Large-scale deployment of carbon capture, utilisation Project Status and storage is key for reaching net-zero emissions(1) • Ongoi
Slide 19: Addressing our safety performance
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Forecast update Pathway to net zero Committed to operating responsibly Addressing our safety performance Performance Definition & Objectives | Scope & Application | Roles • Fatalities 8 YTD vs 17 in 2019 & Responsibilities Enhance
Slide 20: Driving consistent HSEC & Human Rights performance
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Forecast update Pathway to net zero Committed to operating responsibly Driving consistent HSEC & Human Rights performance Three year strategy for the business • Targeting all aspects of HSEC and Human Rights • All external and int
Slide 21: Responsible Portfolio Management
Responsible Portfolio Management Steven Kalmin Chief Financial Officer Glencore 2020 Investor Update
Slide 22: Capital allocation supports our business strategy
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Capital allocation Marketing Modelling guidance Capital allocation supports our business strategy Optimal capital Shareholder Business structure distributions reinvestment Key priorities Key priorities Key priorities • Strong bala
Slide 23: Capital structure
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Capital allocation Marketing Modelling guidance Capital structure Net debt ($billion) Medium-term targets Including $0.9bn of Marketing IFRS 16 leases and impact of oil Including $0.6bn of working capital reset Net debt / 25.9 Mar
Slide 24: Shareholder returns
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Capital allocation Marketing Modelling guidance Shareholder returns Fixed distribution payout policy c.$19bn of shareholder returns since IPO ($billion)(3) Marketing Industrial asset 6 20 cash flows attributable free cash flows(1)
Slide 25: Growth: Capex update 2021 to 2023
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Capital allocation Marketing Modelling guidance Growth: Capex update – 2021 to 2023 Average sustaining Average expansionary Capex outlook – 2020 vs 2019 initial guidance(1) capex capex 5.5 $3.4bn $1.2bn 5.0 5.0 4.6 4.4 4.0 4.2 201
Slide 26: Marketing update
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Capital allocation Marketing Modelling guidance Marketing update Long-term Marketing Adjusted EBIT ($ billion) 2020 Marketing Adjusted EBIT 3.5 3.2 3.2 • 2020 earnings forecast around the top end of our 2.9 3.0 2.8 2.8 2020 $2.2
Slide 27: 2021 Mine cash costs/margins
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Capital allocation Marketing Modelling guidance 2021 Mine cash costs/margins(1) Copper(2) Zinc Nickel Coal $/lb total cash cost $/lb total cash cost $/lb total cash cost $/t Thermal FOB cash cost 0.87 -0.11 4.19 47.4 0.27c/lb ex A
Slide 28: 2021 Illustrative spot annualised free cash flow
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Capital allocation Marketing Modelling guidance 2021 Illustrative spot annualised free cash flow(1) Copper Adj.EBITDA(2) $5.6bn Group Adj.EBITDA 1.118Mt Cu @ $14.1 $2.29/lb margin Zinc Adj.EBITDA bn $3.0bn 979kt Zn(3) @ $1.375/lb
Slide 29: Responsible Product Use
Responsible Product Use Ivan Glasenberg Chief Executive Officer Glencore 2020 Investor Update
Slide 30: Decarbonising energy requires multiples of current mine supply
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Our industry challenge Circular economy Green commodities Decarbonising energy requires multiples of current mine supply Our industry is particularly relevant today - we Annual average copper demand growth under a Rapid Transition
Slide 31: Circular economy
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Our industry challenge Circular economy Green commodities Circular economy Our business model Glencore operates some of the world’s leading metallurgical assets, specialising in the recovery of copper and precious metals from elec
Slide 32: Marketing green metals
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Our industry challenge Circular economy Green commodities Marketing green metals Fair Cobalt “The partnership between Alliance Glencore and GEM sets an A founding excellent example of low-carbon Glencore is well positioned focusin
Slide 33: Uniquely positioned
Uniquely positioned Ivan Glasenberg Chief Executive Officer Glencore 2020 Investor Update
Slide 34: Uniquely positioned for the future
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Uniquely positioned for the future Our From a start-up trader in We have always focused business model 1974, we are now a on sourcing and supplying has been highly leading global producer, the commodities our adaptable over market
Slide 35: Appendix
Appendix Glencore 2020 Investor Update
Slide 36: Copper
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Key commodity update Modelling Additional information Copper • Largely steady base business with modest decline Production guidance – own source (kt Cu)(1) in non-copper department volumes 1255±25 1220±30 1190 1210 • Katanga produ
Slide 37: Cobalt
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Key commodity update Modelling Additional information Cobalt • Higher Katanga volumes across the outlook in line Production guidance – own source (kt Co)(1) with higher forecast throughput and recoveries 40 40 35±2 African copper
Slide 38: Coal
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Key commodity update Modelling Additional information Coal • Largely flat volumes across the outlook with higher Production guidance – own source (Mt)(2) near-term production on recovery from Covid-19 disruptions and strike at Cer
Slide 39: Zinc
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Key commodity update Modelling Additional information Zinc Production guidance – own source (kt Zn)(1) • Production profile across the outlook period reflects the near-term commissioning of Zhairem, 1250±30 1240 offset by end of m
Slide 40: Nickel
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Key commodity update Modelling Additional information Nickel • Modest production growth across the outlook period, Production guidance – own source (kt Ni)(1) with the planned ramp-up of Koniambo offsetting 125 125 declines at exi
Slide 41: 2021 Illustrative spot annualised free cash flow
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Key commodity update Modelling Additional information 2021 Illustrative spot annualised free cash flow Copper(5) Zinc(6) Group $bn Total copper production (kt) 1220 Total zinc production (kt) 1250 Copper 5.6 Cu from other depts (k
Slide 42: Distribution policy
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Key commodity update Modelling Additional information Distribution policy Base distribution comprises: • $1bn from Marketing cash flows, reflecting resilience, predictability and stability of Marketing earnings; plus • 25% distrib
Slide 43: IEA global energy and emission scenarios
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Key commodity update Modelling Additional information IEA global energy and emission scenarios(1) The Current Pathway: Rapid Transition: Radical Transformation: IEA STEPS IEA SDS IEA NZE2050 The Current Pathway considers the NDCs
Slide 44: Illustrative fossil fuel CO2 emissions pathways
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Key commodity update Modelling Additional information Illustrative fossil fuel CO2 emissions pathways 100% The Current Pathway 90% (IEA STEPS): +2.7°C Rapid Transition (IEA SDS): +1.5°C 80% 70% 60% 50% 40% 30% Radical 20% Transfor
Slide 45: Modelled commodity demand in 2050 vs 2019 under IEA scenarios
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Key commodity update Modelling Additional information Modelled commodity demand in 2050 vs 2019 under IEA global energy and emission scenarios(1) 2019=100% 450% 400% The Current Pathway (IEA STEPS): +2.7°C 350% Rapid Transition (I
Slide 46: The challenge of emissions reduction extends beyond fossil fuels
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Key commodity update Modelling Additional information The challenge of emissions reduction extends beyond fossil fuels Global greenhouse gas emissions – 49.4 billion tonnes(1) By source - 49.4bt: By activity - 49.4bt: “Pathways li
Slide 47: References
OVERVIEW PRODUCTION PORTFOLIO MANAGEMENT PRODUCT USE SUMMARY APPENDIX Key commodity update Modelling Additional information References Slide 7: (1) Third Quarter 2020 Production Report, mid-point of 2020 production guidance, Page 14. (2) Based on contained metal in 2019 Proven and Probable ore reser