Anglo American plc · LSE:AAL
Anglo American — Investor Presentation (October 2009)
60 slides from Anglo American's investor presentation, Oct 7, 2009
Slide 1: Anglo Ferrous Metals – Minas Rio Project
Anglo Ferrous Metals – Minas Rio Project Investor Presentation – Brasilia 7 October 2009
Slide 2: Cautionary statement
Cautionary statement Disclaimer: This presentation has been prepared by Anglo American plc (“Anglo American”) and comprises the written materials/slides for a presentation concerning Anglo American. By attending this presentation and/or reviewing the slides you agree to be bound by the following con
Slide 3: Presentation Outline
Presentation Outline Overview Management 1. Introduction to Anglo Ferrous Metals (AFM) Business Profile Safety 2. Iron Ore Market Overview Industry Fundamentals Strategy 3. Iron Ore Operations Global Footprint Operational Overview 4. Minas Rio Business Case System Overview 5. Minas Rio System Manage
Slide 4: Overview of Anglo Ferrous Metals
Overview of Anglo Ferrous Metals AFM is poised to be a major player in the structurally attractive iron ore industry Anglo Ferrous Metals AFM has undergone significant restructuring over past five years to become a major player in the attractive iron ore industry With the objective of owning Kumba I
Slide 5: Management team
Management team Anglo Ferrous Metals is building an integrated management team Philip Baum AFM CEO Craig Chris Stephan Norman Dalton Bernie James Timo Sarah Miller Griffith Weber Mbazima Nosé Pryor Harman Smit Louw CFO Kumba Iron Ore AFB CEO SCAW CEO Special Projects Business Strategy Marketing HR &
Slide 6: Financial Profile
Financial Profile Anglo Ferrous Metals’ importance to the Anglo American Group continues to increase Operating Profit (US$ Millions) Operating profit for H1 2009 was $857M (40% of Anglo) 3,500 Invest to grow business focused on carbon steel raw materials 3,000 2,500 Commodity price boom and portfoli
Slide 7: Iron Ore Growth Story
Iron Ore Growth Story Anglo American’s existing iron ore assets have the potential to produce in excess of 150Mtpa by 2016 Current and Potential Iron Ore Production – 100% 180 160 Projects currently in implementation Conceptual 140 Projects or approved will result in 80Mtpa (SEP2, production 120 Min
Slide 8: Safety
Safety Our Number 1 priority Anglo Ferrous Metals Safety Summary Anglo Ferrous Brazil Safety Summary 60 % improvement in LTIFR despite a changing risk 6 million LTI free man-hours (132 days). profile. 99 % improvement in safety performance. Kumba’s Thabazimbi mine achieved two years LTI-free in Sept
Slide 9: Presentation Outline
Presentation Outline Overview 1. Introduction to Anglo Ferrous Metals Management Business Profile Safety Industry Fundamentals 2. Iron Ore Market Overview Strategy 3. Iron Ore Operations Global Footprint Operational Overview 4. Minas Rio Business Case System Overview Management 5. Minas Rio System P
Slide 10: Strong Demand Growth
Strong Demand Growth Seaborne Iron Ore demand growth driven by BRIC urbanization—and China still has some way to go, as have other developing nations World Seaborne Iron Ore demand (2000–2013F) 1,200 2008– 2008–2013F CAGR Demand for Seaborne Iron Ore has increased strongly as steel production 2000–
Slide 11: Attractive Fundamentals
Attractive Fundamentals Iron Ore has been one of the most attractive commodities over the current cycle with benchmark prices quadrupling during the last decade Benchmark Iron Ore Fines Price 160 (c/dltu), real 2009 terms 140 120 Iron Ore prices have increased by 369% 100 80 between 2003 and 2008 60
Slide 12: Key Industry Trends
Key Industry Trends Global iron ore grades are declining due to diminishing availability of high grade resources Production vs. Fe grade (2000–2020) Iron Ore grades are declining driven by Global iron ore production (Mt) 3,500 56% 3,000 55% – Increased production in low-grade regions 2,500 Grade (Fe
Slide 13: Supply Pressures
Supply Pressures Seaborne iron ore is a consolidated industry—and developing new sources of supply is highly capital intensive Capex Estimate—Greenfield Developments (1) The “Big Three” iron ore producers supply nearly 70% of seaborne iron ore Serra Sul 11,297 Large suppliers have curtailed output i
Slide 14: Presentation Outline
Presentation Outline Overview 1. Introduction to Anglo Ferrous Metals Management Business Profile Safety 2. Iron Ore Market Overview Industry Fundamentals Strategy 3. Iron Ore Operations Global Footprint Operational Overview 4. Minas Rio Business Case System Overview Management 5. Minas Rio System P
Slide 15: Anglo Iron Ore Strategy
Anglo Iron Ore Strategy Anglo’s strategy is to supply premium, high quality iron ore products in the face of the declining quality of global iron ore supplies Demand Growth for Iron Ore Products (2000–2013) Two key trends will support demand for premium 1,200 2008– 2008–2013F iron ore products CAGR
Slide 16: Anglo Iron Ore Strategy
Anglo Iron Ore Strategy Minas Rio & Sishen are expected to be among the lowest cost in the industry, generating a substantial cash margin on high quality products Sishen lump ore quality comparison Cost curve 2013 120 Ore Fe % Tumbler Index2 % Q1 Q2 Q3 Q4 Kumba 66.3% 93.0% 100 FOB cost1, 2009 terms
Slide 17: Anglo Ferrous Metals Operational Footprint
Anglo Ferrous Metals Operational Footprint Anglo Ferrous has a unique iron ore resource footprint, with large, high quality resource bases in South Africa and Brazil South Africa Brazil Thabazimbi Amapá 2 State 2 Sishenand SishenSouth Minas Gerais 1 State Santana Port 1 Saldanha 525km Port Slurry Pi
Slide 18: Sishen – a World Class Asset
Sishen – a World Class Asset Sishen produces one of the best premium lump products globally Quality of Global Lump Products 100 Lump is highly valued by steelmakers, as it can be fed directly into the 95 Rio—Hamersley Anglo—Sishen blast furnace without the need for sintering or pelletizing 90 Portma
Slide 19: Sishen – a World Class Asset
Sishen – a World Class Asset Sishen is a world-class iron ore asset with a leading cash cost position, significant resources and scalable production profile FOB Iron Ore Cost Curve, 2008 120 Q1 Q2 Q3 Q4 Anglo has transformed Sishen into a FOB cost ($/t) 100 world-class exporter of iron ore 80 – Acqu
Slide 20: Sishen South Project
Sishen South Sishen South Project FOB Iron Ore Cost Curve 2013 FOB cost (1) 2009 terms($/t) One million man-hours achieved without an LTI Q1 Q2 Q3 Q4 Project continues, despite current market conditions, on time and on budget Sishen South First production remains on schedule for 1H 2012, full produc
Slide 21: Presentation Outline
Presentation Outline Overview 1. Introduction to Anglo Ferrous Metals Management Business Profile Safety 2. Iron Ore Market Overview Industry Fundamentals Strategy 3. Iron Ore Operations Global Footprint Operational Overview 4. Minas Rio Business Case System Overview 5. Minas Rio System Management P
Slide 22: Regional Supply Trends
Regional Supply Trends Brazil and Australia are the key iron ore growth regions – Given industry consolidation, there are few entry opportunities in Australia Global Iron Ore Seaborne Supply (2004–2008) Brazil Advantages for Anglo Entry Point 950 04-08 2008 Highly cost advantaged (lowest FOB cost) d
Slide 23: Minas Rio Business Case
Minas Rio Business Case Rationale for acquisition Iron ore is a structurally attractive market, in which Anglo has been looking to expand its presence for some time Tier one asset opportunities are rare Large long life resource Expandable Low cost with integrated logistics infrastructure High qualit
Slide 24: Presentation Outline
Presentation Outline 1. Introduction to Anglo Ferrous Metals 2. Iron Ore Market Overview 3. Iron Ore Operations 4. Minas Rio Business Case System Overview 5. Minas Rio System Management Project Highlights 1. Mine/Plant 2. Pipeline 3. Port Costs and Expansion Potential 24
Slide 25: Minas Rio – a Major New Tier One Iron Ore Project
Minas Rio – a Major New Tier One Iron Ore Project Minas Rio is a multi billion ton resource with its own logistics system and expansion potential to 80 million tons per year One of the world’s largest Pipeline Construction, Minas Pump Station Gerais mining projects acquired by Anglo American in 2007
Slide 26: Anglo Ferrous Management Technical Expertise
Anglo Ferrous Management Technical Expertise Highly experienced local senior management team with extensive support from Anglo Technical Division and Anglo Research Laboratories 23 years in Brazil and Australia, in leadership positions for iron ore and steel Stephan Weber AFB CEO projects. Metallurg
Slide 27: Process Flow
Process Flow Minas Rio ore is extracted and processed in the state of Minas Gerais and then transported as slurry to the Açú Port in the state of Rio de Janeiro Extracted from the Process to upgrade Fe Ore slurry transported Ore is dewatered for ground content via pipeline shipment Approximate Opera
Slide 28: Product Quality
Product Quality Minas Rio has the highest quality pellet feed ore in the market Brazil Alumina + Silica content (%) Australia 10 Canada Rio (Hamersley Iron) - Hamersley System Anglo American Rio (Robe River) - Mesa J India BHP - Yarrie China 8 NMDC - Bailadila Russia AA (Kumba) - Sishen Rio - Simand
Slide 29: Licensing Detail
Licensing Detail Required licensing to deliver project Main Licenses & Permits Mine/Plant Pipeline Port Landowner release (consents) 2008-2010 2008-2010 N/A LP:Licença Prévia (Preliminary License) Dec 2008 Aug 2007 Dec 2006 ASV: (Vegetation Suppression License) May 2009 Early 2010 N/A LI:Licença de
Slide 30: Minas Rio Project Overview
Minas Rio Project Overview Tier one integrated iron ore project First production in 2012 with full ramp-up to 26.5Mtpa in 2013 Scaleable resource and infrastructure with potential to deliver additional 53Mtpa or more Benefiting from Anglo-owned integrated logistics solution through slurry pipeline a
Slide 31: Development Schedule
Development Schedule Minas Rio targeting first ore shipment in mid-2012 2009 2010 2011 2012 1 Mine and Plant Commissioning October 2011 First Ore through Beneficiation Plant 2 Pipeline Commissioning May 2012 First Ore through Pipeline Filtration Commissioning 3 Port Commissioning June 2012 First Ore
Slide 32: Presentation Outline
Presentation Outline 1. Introduction to Anglo Ferrous Metals 2. Iron Ore Market Overview 3. Iron Ore Operations 4. Minas Rio Business Case System Overview Management 5. Minas Rio System Project Highlights 1. Mine/Plant 2. Pipeline 3. Port Costs and Expansion Potential 32
Slide 33: Minas Rio Mine
1. Minas Rio Mine Minas Rio Mine Located in Minas Gerais State, Brazil Serro 40km 100% owned by Anglo Ferrous Brazil Itapa Will be a major producer of high Minas Gerais State Serra do Sapo quality pellet feed with conventional open pit operation with a strip ratio of 0.5 for first five years Minas-R
Slide 34: Project Timeline
1. Project Timeline Mine completion schedule Project Milestones Key Outstanding Items Major Achievements Ongoing drilling campaign MG State Public Utility 2009 and metallurgical testing and Decrees for: earthworks started Initial Installation License (LI) 230KV transmission line for Ph1 to Beneficia
Slide 35: Mine site
1. Mine site Construction is expected to commence in 2010 pending final licenses Mine site Drill rig at Minas Rio 35
Slide 36: Minas Rio Mine - Serra do Sapo
1. Minas Rio Mine - Serra do Sapo Original topography with iron grade projection 36
Slide 37: Drilling Program
1. Drilling Program Over 100,000 meters have been drilled to date Serra do Sapo - Drilling Itapa - Drilling area in Q1/Q2 Drilling Program (Km drilled) area in Q1 50 45 40 35 30 25 45 20 15 32 31 30 25 10 21 5 0 1 '05 '06 '07 '08 '09 '10 '11 Projected 37
Slide 38: Ore Types
1. Ore Types Ore types at Minas Rio Friable Itabirite Semi Compact Itabirite Compact Itabirite Friable Itabirite has been extensively leached over millions of years which leads to higher Fe content, low processing energy consumption and easy removal of contaminants 38
Slide 39: Resources
1. Resources Anglo Ferrous Brazil is achieving high confidence on resources and metallurgical quality Itabirite Resources (Mt) 2007 2008 Excellent metallurgical Mt Mt % Fe recovery of ~82% Friable: Measured and Indicated 483 1,297 Concentration Friable: Inferred 831 560 increases Fe grade to Total F
Slide 40: Mine Plan – Phase 1
1. Mine Plan – Phase 1 Pre-stripping -- March 2010 to September 2011 40
Slide 41: Mine Plan – Phase 1
1. Mine Plan – Phase 1 First Five Year Plan -- Ramp-up October 2011 to May 2013 41
Slide 42: Mine Plan – Phase 1
1. Mine Plan – Phase 1 First Five Year Plan -- Full Capacity June 2013 to December 2017 42
Slide 43: Ore Quality – First Five Year Plan Sampling
1. Ore Quality – First Five Year Plan Sampling Sampling program results obtained in 2009 for the First Five Year Plan Five years program: -Blending of 4t samples from drillcore representing first five years ROM - Processing in pilot Pilot Plant scale evaluating process behavior. First five years pit
Slide 44: Ore Quality – Global Sampling
1. Ore Quality – Global Sampling 2009 results obtained from all Minas Rio sections Products Fe SiO2 Al2O3 P Mn TiO2 P.F. Ca Mg Global S.sapo sample 68,5 0,57 0,19 0,021 0,053 0,05 0,19 0,010 0,06 17 sections - global IF 69,2 0,29 0,26 0,015 0,048 0,08 0,29 0,023 0,03 17 sections - global ISC 69,2 0,
Slide 45: Process Flow sheet
1. Process Flow sheet Plant Capacity to Produce 26.5Mtpa of Pellet Feed Crushing Concentration Tailing Thickener Roller Press Primary Crushing (*)Primary Grinding Desliming Recovery Water Flotation Pipeline Secondary Crushing and Screening Regrinding (**) Filtering Stockpile Concentrate Thickener (*
Slide 46: Presentation Outline
Presentation Outline 1. Introduction to Anglo Ferrous Metals 2. Iron Ore Market Overview 3. Iron Ore Operations 4. Minas Rio Business Case System Overview Management 5. Minas Rio System Project Highlights 1. Mine/Plant 2. Pipeline 3. Port Costs and Expansion Potential 46
Slide 47: Minas Rio Pipeline
2. Minas Rio Pipeline To be updated Minas Rio Pipeline Well tested logistics method in Brazil built by highly experienced local Pipeline extension: 525Km, contractors passing through 32 municipal districts from Minas Gerais and Rio de Initial underground 26 inch Janeiro States pipeline with 26.5Mtpa
Slide 48: Project Timeline
2. Project Timeline Pipeline completion schedule Project Milestones Key Outstanding Items Major Achievements ASV for Emergency Dam at 2009 Spread III landowners release Pump Station 2 Earthworks started Spread II ASV license ASV for the 138 KV Start of construction spread III Spread II landowners re
Slide 49: Pipeline Construction
2. Pipeline Construction 100% of the pipes have been acquired and delivered to sites along route Pump Station #2 Site Pipe Stockyard at Carmésia 49
Slide 50: Presentation Outline
Presentation Outline 1. Introduction to Anglo Ferrous Metals 2. Iron Ore Market Overview 3. Iron Ore Operations 4. Minas Rio Business Case System Overview Management 5. Minas Rio System Project Highlights 1. Mine/Plant 2. Pipeline 3. Port Costs and Expansion Potential 50
Slide 51: Açu Port
3. Açu Port Açu Port 100% owned by LLX Minas Rio - 49% Anglo Ferrous Brazil; 51% LLX Minas-Rio Pipeline Mines 524 Km from Mines to Açu Port Storage capacity: 2.5mt (>30 days Phase 1 mine production) 524 Km Loading: 10,000 tph Açu Port Access bridge: 3,000m long Max vessel size: 250,000dwt Filtering
Slide 52: Project Timeline
3. Project Timeline Port completion schedule Project Milestones Key Outstanding Items Major Achievements ASV for Açu landfill 2009 Civil works and construction Road quarry LI for offshore sand pit for Hydraulic landfill landfill Access bridge Decreto de Lavra for Açu 2010 Dredging Quarry Iron ore pi
Slide 53: Project Construction
3. Project Construction Aerial view of port site Future Future Iron Iron Ore Ore Stockyard: Stockyard: capacity capacity 2,500,000 2,500,000 tons tons Concurrent Concurrent Berthing Berthing Future Future area area of of the the Filtering facilities: Filtering facilities: 12 12 Larox Larox filters f
Slide 54: Dredging
3. Dredging Dredging work is on schedule Highlights Being performed by SHANGHAI DREDGING COMPANY (SDC) Volume of 12,500,000 m3 already executed The total volume to be executed is 18,000,000 m3. 2 DREDGING VOLUMES [m³] -18,50 3 15.000.000 Accumulated Volume (m³) -18,50 13.000.000 11.000.000 4 1 -18,5
Slide 55: Port Bridge
3. Port Bridge Canti traveller driving the piles at axle 104 ~2 Km 55
Slide 56: Presentation Outline
Presentation Outline 1. Introduction to Anglo Ferrous Metals 2. Iron Ore Market Overview 3. Iron Ore Operations 4. Minas Rio Business Case System Overview Management 5. Minas Rio System Project Highlights 1. Mine/Plant 2. Pipeline 3. Port Costs and Expansion Potential 56
Slide 57: Operating and capital costs
Operating and capital costs Minas Rio has expected Capex of US$3.6bn with Opex of US$13/t Minas Rio CAPEX Minas Rio OPEX US$m (nominal) US$/tonne (real 2008) 4,000 1,179 3,627 14 13 SHEQ+SG&A 12 Dewatering 3,200 Pipeline 10 1,395 2,400 8 Plant 1,600 6 1,053 4 800 2 Mine 0 0 Spent Committed Uncomitte
Slide 58: Operating and capital costs
Operating and capital costs Compared to other suppliers, AFB has a strong position, with Q1 costs and exceptionally high chemical quality with the Minas Rio project Iron Ore Cost Curve 2013 120 Q1 Q2 Q3 Q4 100 FOB cost1, 2009 terms ($/t) 80 Sishen & Sishen South 60 Minas-Rio 40 20 0 0 200 400 600 80
Slide 59: Expansion potential
Expansion potential Minas Rio has significant upside potential Pre-feasibility study under way +4 billion tonne known resource base plus large targets can support significant expansion Additional production potential of 53Mtpa or more Will maintain low operating cost through ownership of integrated
Slide 60: Summary
Summary Highly experienced team First production in 2012 with full ramp-up to 26.5Mtpa in 2013 with significant expansion potential (53Mtpa plus) Benefits from Anglo-owned integrated logistics solution through slurry pipeline and Açu port Anglo has materially increased Minas Rio’s iron ore resource
Anglo American — Investor Presentation (October 2009) on 6ix