Anglo American plc · LSE:AAL
Anglo American — Investor Day (January 2009)
36 slides from Anglo American's investor day presentation, Jan 20, 2009
Slide 1: Base Metals Division Investor Seminar
Base Metals Division Investor Seminar 20 January 2009 Brian Beamish, CEO AngloBase 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 Markets Act 20
Slide 2: Introductory Remarks
Introductory Remarks Cynthia Carroll, CEO Anglo American Plc Anglo Base Metals Division Investor Seminar – January 2009 1
Slide 3: Presentation Outline
Presentation Outline Safety 1 Introduction to AngloBase Management Profile Locations Strategy 2 Business Overview Operational Overview & Cost Position Cost Analysis Copper 3 Market Overview - Outlook Zinc Nickel Portfolio Review Operational Excellence 4 Value Delivery Exploration Technology & New Ma
Slide 4: Presentation Outline
Presentation Outline Safety 1 Introduction to AngloBase Management Profile Locations Strategy 2 Business Overview Operational Overview & Cost Position Cost Analysis Copper 3 Market Overview - Outlook Zinc Nickel Portfolio Review Operational Excellence 4 Value Delivery Exploration Technology & New Ma
Slide 5: Safety – Our Number Priority
1 Safety – Our Number 1 Priority ■ Safety excellence is our top priority ■ Vision to achieve Zero Harm through effective management of safety in all managed operations and projects ■ Barro Alto project achieved 973 days (8.22 million man hours) without a Lost Time Injury ■ 9 of our 12 managed operat
Slide 6: Experienced Management Team
1 Experienced Management Team ■ Flat management structure ■ New additions to the management team ■ Dedicated safety, marketing and technical capabilities Brian Beamish CEO Terry Burgess Allen Ramsay Peter Whitcutt Greg Ruthven Duncan Wanblad Walter De Simoni John Mackenzie Graham Brown Business Head
Slide 7: Introduction to AngloBase
1 Introduction to AngloBase ■ Over the last 3 years, AngloBase has 2008 H1 Group Operating Profit AngloBase Operating Profit ($M) 4,338 been the largest profit contributor within 3,897 Anglo plc AngloBase 2,457 60% 40% 1,708 1,276 ■ In recent years, significant changes in the asset base have markedl
Slide 8: Geographical Footprint
1 Geographical Footprint Pebble Lisheen Loma de Niquel Michiquillay Jacare Quellaveco Codemin Collahuasi Barro Alto Mantos Blancos Copebras Mantoverde Catalao Skorpion Gamsberg El Soldado Copper Black Mountain Chagres Nickel Los Bronces Zinc Niobium Phosphate Exploration Anglo Base Metals Division I
Slide 9: Presentation Outline
Presentation Outline Safety 1 Introduction to AngloBase Management Profile Locations Strategy 2 Business Overview Operational Overview & Cost Position Cost Analysis Copper 3 Market Overview - Outlook Zinc Nickel Portfolio Review Operational Excellence 4 Value Delivery Exploration Technology & New Ma
Slide 10: AngloBase Strategy
2 AngloBase Strategy Maximise shareholder value through finding, Management Agenda acquiring, developing and operating large, long life, low cost base metal businesses in a Zero Strategic Agenda Operating Agenda Harm, socially and environmentally responsible ■ Optimise and deliver ■ Zero Harm manner
Slide 11: Copper Operations
2 Copper Operations Los Bronces (100%) El Soldado (100%) ■ Open pit mine in central Chile ■ Open pit and underground mine in ■ Production 230kt Cu, 2.6kt Mo in Central Chile 2007 ■ Production 70kt Cu in 2007 ■ Mine life >25 years ■ Mine life has been extended to 15 ■ Development project in progress
Slide 12: Copper Positioning
2 Copper Positioning ■ Two-thirds of existing production in lower half of cost curve Estimated 2008 Direct cash (C1) cost net of by-products 300 ■ Weighted average C1 costs for copper portfolio around the middle of the cost curve 250 El Soldado Net C1 Cash Cost (c/lb) Mantos Blancos Mantoverde ■ Bet
Slide 13: Zinc Operations & Positioning
2 Zinc Operations & Positioning ■ Skorpion well positioned in the lower half of the cost curve Skorpion (100%) Estimated 2008 Direct cash (C1) cost net of by-products 120 ■ Open pit zinc mine in Namibia ■ Production 150kt Zn in 2007 ■ Mine life 7 years 100 ■ Uses proprietary leaching, solvent Net C1
Slide 14: Nickel Operations & Positioning
2 Nickel Operations & Positioning Loma de Niquel (91%) ■ Open pit nickel laterite mine and smelter in Venezuela ■ Production 16kt Ni in 2007 Estimated 2008 Direct cash (C1) cost net of by-products ■ Mine life >25 years but political 20 environment remains challenging 15 Loma de Niquel * Net C1 Cash
Slide 15: Cost Analysis
2 Cost Analysis Los Bronces Skorpion Anglo Base Overall Cash Operating Cost (2008) Cash Operating Cost (2008) Cash Operating Cost (2008) Sulphuric Raw Material Raw Material Costs Energy - Fuel Freight Acid Costs Energy - Fuel Consumables Other 5% Consumables 4% 4% Labour 4% Sulphur Chemical Inputs 4
Slide 16: Sensitivity Analysis
2 Sensitivity Analysis Estimated Commodity Price Sensitivity 10 cent change in copper price ± $120 million in annual operating profit 5 cent change in zinc price ± $30 million in annual operating profit 50 cent change in nickel price ± $20 million in annual operating profit Estimated Exchange Rate S
Slide 17: Presentation Outline
Presentation Outline Safety 1 Introduction to AngloBase Management Profile Locations Strategy 2 Business Overview Operational Overview & Cost Position Cost Analysis Copper 3 Market Overview - Outlook Zinc Nickel Portfolio Review Operational Excellence 4 Value Delivery Exploration Technology & New Ma
Slide 18: Market Overview
3 Market Overview Price Declines Operating Cost Movements Rapid and significant price declines reflecting deteriorating Three principal drivers are lowering near-term mining cost fundamentals curves: Inventories steadily increasing; Ni already well above A stronger US$ and correspondingly weaker
Slide 19: Outlook for the Copper Market
3 Outlook for the Copper Market ■ Forecast short-term weakness but strong fundamentals over the medium to long- term due to persisting supply constraints in a growing market Demand Trends Supply Trends • Trend consumption growth typically 1% less than IP • Perhaps 10 to 15% of operations are now los
Slide 20: Outlook for the Zinc Market
3 Outlook for the Zinc Market ■ A period of oversupply is forecast in the short term, potentially moving into deficit in the medium term Demand Trends Supply Trends • Major consumer of Zn (~55%) • Current price cutting well into cost curve, resulting in • Future trend growth expected to remain aroun
Slide 21: Outlook for the Nickel Market
3 Outlook for the Nickel Market ■ Forecast oversupply in the near-term with improving fundamentals over the long term Demand Trends Supply Trends • Major consumer of Ni (~60%) • Current price biting into cost curve with large scale mine closures, exacerbated by tight credit conditions • Stainless co
Slide 22: Presentation Outline
Presentation Outline Safety 1 Introduction to AngloBase Management Profile Locations Strategy 2 Business Overview Operational Overview & Cost Position Cost Analysis Copper 3 Market Overview - Outlook Zinc Nickel Portfolio Review Operational Excellence 4 Value Delivery Exploration Technology & New Ma
Slide 23: Approach to Adding Value
4 Approach to Adding Value ■ As part of Anglo’s strategic planning, the portfolio of assets, projects and initiatives are under constant review to ensure management focus is invested in the right areas ■ Components driving creation and maximisation of value: Portfolio Review Asset Technology & Explo
Slide 24: Portfolio Review
4 Portfolio Review ■ In light of the recent rapid decline in commodity prices and global economic uncertainty, Anglo Base Metals has rigorously reviewed its operational and project portfolio. Key decisions and actions taken are: Capital Expenditure Operating Assets Total Capital Expenditure for 2009
Slide 25: Value Add: Asset Optimisation
4 Value Add: Asset Optimisation ■ Established mindset of continuous improvement generates benefits that equate approximately 7% operating profit annually ■ Collaborative work across operations, divisions and wider Anglo Group encouraging a fresh approach to improving the value of our operations Year
Slide 26: Exploration
4 Exploration ■ Focused portfolio of projects in 15 countries, plus AngloBase Exploration Spend monitoring 5 other countries in key mineral belts 160 140 Near Mine Advanced ■ Proven discovery track record by strong and 120 Early Stage 40 100 US$ mil experienced global teams 80 13 60 62 20 ■ Structur
Slide 27: Technology & New Markets
4 Technology & New Markets ■ Strategic purpose of technology development • To support, enhance and expand existing business • To drive new business • To reduce operating costs ■ Current breakthrough technology development projects • Ore upgrading techniques • New laterite processing technology – Ang
Slide 28: Disciplined Approach to M&A
4 Disciplined Approach to M&A ■ Add sustainable value through M&A by focusing on opportunities in, or with potential to move to, the lower half of the cost curve that have significant scale and long life ■ Strong internal resources and capabilities offer significant advantage ■ In depth knowledge of
Slide 29: Project Pipeline
4 Project Pipeline Los Bronces (Approved) Collahuasi (Unapproved) Pebble (Unapproved) Gamsberg (Unapproved) ■ Increase in average copper ■ $64M de-bottlenecking project ■ Environmental issues remain a ■ Production of up to 400ktpa Zn over production by 170ktpa completed focus 20+ year life of mine ■
Slide 30: Project Delivery
4 Project Delivery ■ Strong project pipeline providing significant scope for organic growth ■ Delivery of project pipeline improves cost positioning in copper, zinc and nickel ■ Growth projects well timed for hypothetical supply ‘gap’ arising across copper, zinc and nickel markets from around 2014 o
Slide 31: Growth Profile
4 Growth Profile 1,600 450 Unapproved projects Attributable Payable Zinc Production (kt) Unapproved projects 400 Operations Approved projects 350 1,400 Operations 300 250 1,200 200 Gamsberg Attributable Payable Copper Production (kt) 150 100 1,000 50 Collahuasi Expansion Zn 0 Quellaveco 08 09 10 11
Slide 32: Presentation Outline
Presentation Outline Safety 1 Introduction to AngloBase Management Profile Locations Strategy 2 Business Overview Operational Overview & Cost Position Cost Analysis Copper 3 Market Overview - Outlook Zinc Nickel Portfolio Review Operational Excellence 4 Value Delivery Exploration Technology & New Ma
Slide 33: Conclusion: Delivering Superior Value
5 Conclusion: Delivering Superior Value ■ Anglo American’s Base Metals Business is well positioned to deliver superior value and contribute to the group’s ambition to become the mining company of choice Solid Corporate Strong, Balanced Track Record in Focused Strategy Foundations Asset Base Operatio
Slide 34: Appendix
Appendix Anglo Base Metals Division Investor Seminar – January 2009 33
Slide 35: Outlook for the Phosphates Market
A1 Outlook for the Phosphates Market ■ Forecast oversupply in the near-term due to world financial crisis but the fundamentals for the medium term continue to look positive Demand Trends Supply Trends • Population growth • Extended period with limited investment impacted on • Growth of total and per
Slide 36: Outlook for the Niobium Market
A2 Outlook for the Niobium Market ■ Demand expected to reduce in the short term in line with steel production, but prices expected to remain stable Demand Trends Supply Trends • Most niobium is used for special steels in infra-structure, • Largest producer controls ~80% of the market automobile and