Anglo American plc · LSE:AAL
Anglo American — Investor Day (2005)
114 slides from Anglo American's investor day presentation, 2005
Slide 1: Anglo American: Meeting the World's Needs - Investor Day 2005
ANGLO AMERICAN MEETING THE WORLD’S NEEDS Investor Day 2005 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 2000 (Financial Promotion)
Slide 2: Agenda
Agenda Tony Trahar Group strategy (45 mins) Ralph Havenstein Platinum (30 mins) BREAK Tony Redman Technical (30 mins) Simon Thompson Base Metals (30 mins) Tony Trahar Wrap-up (10 mins) 2 Anglo American plc
Slide 3: Group Strategy
Group Strategy Tony Trahar 3 Anglo American plc
Slide 4: Group structure: 3 key areas make up the portfolio
Group structure 3 key areas make up the portfolio Precious Metals and Minerals Paper and Packaging 4 Anglo American plc
Slide 5: Transforming the asset base
Transforming the asset base M an to Co Fr s al an Bau am Bl Co g -2 ts an ch rnf lo loG 004 co ss rok An 999 ac m Ru ell c An tin 004 s (1 Pl 99- bi old ) h La Di ch m Sa (1 e Sy A Co ba z o Co Sh ma gl um ) a 2 a m d in c k 9 sp ett De Da ers As Ro kt Ku m o an p Ta in or ei i ut e yv be l ni or d
Slide 6: A unique product mix
A unique product mix.. 2004 2004 Geographical headline Headline earnings earnings by business unit 9% 15% 18% 6% Platinum 26% Gold 14% South Africa 14% Diamonds Europe Coal Americas Base Metals Rest of World 13% Industrial Minerals 10% 14% Paper and Packaging 45% Ferrous Metals 39% 6 Anglo American
Slide 7: A growing contribution over 5 years
A growing contribution over 5 years Metals and Minerals contributions to headline earnings 65% Coal Base Metals Ferrous Metals and Industries Industrial Minerals 41% 35% 30%* 1999 2001 2003 2004 *percentage of Anglo total (not including corporate or exploration) 7 Anglo American plc
Slide 8: A strong record of shareholder returns
A strong record of shareholder returns Double digit earnings/dividend growth Headline 188.0 earnings per share 123.0 125.0 120.0 114.0 84.0 CAGR:16% 77.0 Dividend 70.0 per share 47.5 49.0 51.0 54.0 CAGR:15% 31.0 37.5 1998* 1999 2000 2001 2002 2003 2004 US cents *pro-forma 8 Anglo American plc
Slide 9: Consistently outperforming the FTSE 100
Consistently outperforming the FTSE 100 250 200 Anglo plc TSR rebased 150 100 FTSE 100 TSR rebased 50 1999 2000 2001 2002 2003 2004 2005 9 Anglo American plc
Slide 10: Impact of Rand volatility
Impact of Rand volatility May 00 – June 05: PPI = +31.2% May 00 – June 05: CPIX = +36.2% The swing of the Rand from R7.00 to R12.00 & back to around R6.00 has had permanent consequences for costs 140.0 12.50 135.0 CPIX 11.50 130.0 125.0 10.50 120.0 PPI 9.50 115.0 110.0 8.50 105.0 7.50 100.0 May 2000
Slide 11: Group strategy
Group strategy GROWTH THROUGH GROWTH THROUGH VALUE FROM COST PROJECTS ACQUISITIONS CUTTING AND EFFICIENCIES Grow shareholder value Invest where Invest in NPV+ we have core opportunities competence Ability to identify, acquire and develop world-class asset positions Business Cost of World-class Peopl
Slide 12: Investment strategy
Investment strategy Strategy How do we set our investment strategy? • Strategy is set as part of the annual Board review & is continuously re-appraised as part of a bottom-up/top-down intensive review program • The acquisition strategy is shaped by market opportunities and valuations • The project p
Slide 13: Investment strategy: Opportunities
Investment strategy Investment Opportunities What types of opportunities do we look at? • Acquisitions, greenfield and brownfield projects Who prepares investment proposals? • Business units and Centre develop investment opportunities • Centre vets all business unit proposals • Larger proposals go t
Slide 14: Investment strategy: Evaluation
Investment strategy Evaluation How are projects evaluated? • Project or acquisition concept agreed with Exbo • Detailed feasibility study undertaken for projects and due diligence for potential acquisitions • Corporate Finance applies detailed investment evaluation guidelines to ensure projects are
Slide 15: Investment strategy: Approval/Execution
Investment strategy Approval/ Execution What does the investment committee do? • Vets all investment proposals • Ensures Exbo/Board assess proposals on a like-for-like basis Integrating new project or acquisitions: • Execution by multi-disciplinary teams • Detailed integration plan required in advan
Slide 16: Investment strategy: Monitoring
Investment strategy Monitoring Acquisitions/Projects are monitored through: • Annual budget process • Regular performance reporting • Business improvement plans • Annual business valuation • Close-out reviews – lessons learnt • Remuneration tied to ROCE improvement/costs/efficiencies 16 Anglo Americ
Slide 17: Investment strategy
Investment strategy Investment Approval/ Strategy Evaluation Monitoring Opportunities Execution • Annual Board Review • Projects and • Projects / acquisition • Investment Committee • Annual capex review acquisitions concept agreed with approves everything • Continuously re- Exco requiring Exco / boa
Slide 18: Investing over the Cycle: Ideal profile
Investing over the Cycle: Ideal profile Downturn Bottom of the Cycle Upturn & peak • Commence greenfield • Make acquisitions • Sell non core assets projects • Commission projects • Ramp up projects to full • Assess acquisitions production • Commence de- • Increase capex bottlenecking projects • Redu
Slide 19: Acquisitions at the bottom of the cycle
Acquisitions at the bottom of the cycle.. $500m $900m $1.3bn Copper Coal Shell Coal Disputada price South America 2004 EBITDA 2004 EBITDA 2004 EBITDA RETURN: RETURN: RETURN: 36% 15% 48% Coal price (RB FOB/API 4) 1999 2000 2001 2002 2003 2004 2005 ..now reaping the benefits of higher prices 19 Anglo
Slide 20: Are we in a super cycle?
Are we in a super cycle? 300 Nov. 1972 - Apr. 1974 280 indexed, low = 100 (nominal money) 260 Nov. 1986 - June 1988 240 220 Nov. 1993 - Jan. 1995 Apr 2003 - Apr 2005 200 180 160 Apr. 1978 - Feb. 1980 140 Jan 1999 - Jan 2000 120 100 0 2 4 6 8 10 12 14 16 18 20 22 24 Months from trough to peak 20 Angl
Slide 21: A unique precious metals exposure
A unique precious metals exposure 21 Anglo American plc
Slide 22: A unique precious metals exposure
A unique precious metals exposure • World’s no 1 platinum producer • Robust demand outlook • Strategy to expand in line with Platinum 9% increased demand remains Platinum 2004 • 2nd largest gold producer Gold Headline 6% • Declining industry reserve base earnings • AGA well positioned with significa
Slide 23: Anglo Platinum leading primary supply growth
Anglo Platinum leading primary supply growth Platinum Supply & Demand 000 oz 1999-2004 7000 6000 5000 4000 3000 2000 Anglo Platinum - increasing 1000 market share 0 1999 2000 2001 2002 2003 2004 Anglo Platinum Other SA Russia North Am erica Others Dem and Source: Johnson Matthey 23 Anglo American pl
Slide 24: Platinum jewellery: an exciting Asian growth story
Platinum jewellery – an exciting Asian growth story Value of jewellery markets in US$ continues to grow Value in $’000 2000000 1800000 1600000 • Fundamentals remain strong 1400000 • Jewellery market in China 1200000 softer but resilient 1000000 800000 • China now the largest 600000 consumer (44%) 40
Slide 25: Diamonds: strong Asian retail growth
Diamonds – strong Asian retail growth Retail growth has been particularly strong in Asia and diamonds are becoming entrenched in cultural tradition India China Diamond wedding ring (DWR) Market growth retail in local currency acquisition amongst recently 21% married women +24% 84% +9% +9% 73% +16% 6
Slide 26: ...and robust growth in the USA
…and robust growth in the USA US total market value at $31.5 billion, up 8% over 2003 50 USA DJ Market Size 1980-2004 (+4%) 45 46.1 (mil) 40 35 (+8%) 30 $31.5 (bil) 25 20 15 10 5 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Pieces Value Source: De Beers 26 Anglo American plc
Slide 27: Significant growth potential
Significant growth potential 27 Anglo American plc
Slide 28: Substantial long term project portfolio
Substantial long term project portfolio APPROVED: UNAPPROVED: $5.2bn $7.8bn QUELLAVECO SISHEN SOUTH MEREBANK Copper Iron ore SIGUIRI $174m $52m ISIBONELO $65m MOAB 2 RICHARDS BAY W.L. TAILINGS COLLAHUASI Gold OBUASI DEEPS $235m $186m EXPANSION Gold INYANDA TICOR 2 Copper FINSCH $30m $54m $130m GAMSB
Slide 29: Substantial long term project portfolio
Substantial long term project portfolio Base Metals Platinum Gold Ferrous Approved: $300m Approved: $1.5bn Approved: $1.3bn Approved: $700m Black Mountain ($110m) W.L. Tailings ($186m) Moab Khotsong ($690m) Inyanda ($30m) Start: 2004 Full prod: 2006 Full prod: 2008 Start: 2003 Full prod: 2008 Start:
Slide 30: Substantial long term project portfolio
Substantial long term project portfolio Paper and Packaging Coal Industrial Minerals Diamonds Approved: $500m Approved: $550m Approved: $40m Approved: $360m Merebank ($174m) Grasstree ($106m) Copebras ($22m) Finsch ($130m) Start: 2005 Full prod: 2006 Start: 2006 Full prod: 2006 Start: 2005 Full prod
Slide 31: Summary
Summary Maintaining strategy of investing at bottom of cycle, reaping rewards at the top Unique precious metals exposure: limited global expansion capacity One of the strongest growth profiles in the industry 31 Anglo American plc
Slide 32: Platinum
Platinum Ralph Havenstein 32 Anglo American plc
Slide 33: Summary
Summary Introduction – worlds largest primary producer Strategy – market driven, value based Markets – unique metal market dynamics Growth – volume, cost and efficiency opportunities 33 Anglo American plc
Slide 34: The world's largest primary producer of platinum
The worlds largest primary producer of platinum 2004 Platinum supply Non SA • Anglo Platinum: 38% of global supply SA 10% 8% Anglo • 20% of global supply produced as a by- Platinum product Norilsk 38% 13% Lonmin 15% Impala 16% Ordinary shares (JSE) : 217.4 million Market capitalisation : US$8.6 bill
Slide 35: Primary platinum production drives strategy
Primary platinum production drives strategy 2004 Revenue split Other Ni 4% • Expansion decisions based on platinum Rh 9% demand growth 8% • Value and return based on rand revenue Pd of basket of metals sold Platinum 10% 69% 35 Anglo American plc
Slide 36: Extensive high quality ore reserves & resources
Extensive high quality ore reserves & resources 36 Anglo American plc
Slide 37: Extensive high quality ore reserves & resources
Extensive high quality ore reserves & resources • 32% of global PGM resources • 43% of South Africa’s PGM resources • Reserve grade 13% higher than SA average • 2004 gross profit margin 23.6% A member of the Anglo American plc group 37 Anglo American plc
Slide 38: Unique competitive advantages
Unique competitive advantages • Extensive high quality ore reserves • Expansion projects in place and delivering • Extensive HDSA JV experience • Superior market intelligence 38 Anglo American plc
Slide 39: Strategy
Strategy • Grow the market for Platinum Group Metals - nurture and grow PGM markets • Expand into market growth - establish and commission multiple green and brownfield sites • Optimize value in current operations - optimize cost efficiency A market driven business Optimize long-term shareholder val
Slide 40: Expand into market growth
Expand into market growth Refined Pt oz (000’s) 3000 Compound growth 2500 • Platinum demand: 3.4% 2000 • Anglo Platinum oz: 7% 1500 1000 500 0 2000 2001 2002 2003 2004 Volume growth and increased market share 40 Anglo American plc
Slide 41: Headline earnings
Headline earnings Earnings (R bn) Rev / Pt oz (R) 9 8 9000 Earnings growth opportunity 7 6 • Production increase 6000 5 4 • Addressing cost base 3 3000 2 1 High R/$ gearing 0 0 2002 2003 2004 Key focus in 2005 – Cost reduction and efficiency improvements A member of the Anglo American plc group 41 A
Slide 42: Reduce the cost base & improve efficiency
Reduce the cost base & improve efficiency • Remains a key focus in 2005 • Implementation commenced • Efficiency initiatives • Cost reduction initiatives • Incremental benefits in 2005 and 2006 Safe and sustainable production 42 Anglo American plc
Slide 43: Efficiency initiatives: back to basics
Efficiency initiatives – back to basics Targeted primary development Focus on increased and to improve stoping flexibility concentrated immediately (short term additional cost) available stopeable face Rationalise mining methods and Move all stope teams up the standards - breast mining ‘learning cur
Slide 44: Cost reduction initiatives
Cost reduction initiatives Wider implementation of new Stores: 28% cash op. costs supply chain – commodity and Standardization – minimize process approach models and suppliers Reduction in ratio of support Focussed reductions where staff to production staff appropriate - enhanced by concentration of
Slide 45: Unique metal market dynamics
Unique metal market dynamics Application 2004 Region 2004 North America 18% Rest Jewellery Autocat of world 34% 42% (net) Europe 11% 31% China 19% Industrial Japan 24% 21% • Diverse application base • Balance of elastic and inelastic applications El • Geographically diverse demand Pe C G i ca ec O h
Slide 46: Autocatalyst consumption increase due to stricter emission legislation
Autocatalyst consumption increase due to more stringent emission legislation million ounces 9 8 7 6 5 4 3 2 1 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 Platinum Palladium Rhodium Total • Palladium support of platinum demand growth • Palladium to grow in gasoline and enter diesel catalysis 46 An
Slide 47: Firm autocatalyst platinum demand
Firm autocatalyst platinum demand • Light duty diesel engines – rapid growth • Heavy duty diesel engines – including retrofitting • Vehicle volume growth in China – medium term • More stringent emission standards • Automakers should take comfort with elasticity of jewellery demand 47 Anglo American
Slide 48: Japan
Japan ‘000 ozs Pt price ($) 1500 900 800 1200 700 600 900 500 400 600 300 300 200 100 0 0 1999 2001 2003 Mature platinum jewellery market with strong bridal underpin at current price levels 48 Anglo American plc
Slide 49: Jewellery: consistent US$ value growth
Jewellery – consistent US$ value growth US$ millions 2000 1500 1000 500 0 1997 1999 2001 2003 China Japan USA Europe Other China - Market growth and bridal programme offer opportunity 49 Anglo American plc
Slide 50: China: platinum jewellery retail margin healthy
China - platinum jewellery retail margin healthy 300 275 Margins 250 squeezed 225 200 RMB per gram 175 Palladium entry 150 125 100 75 50 25 0 1997 1998 1999 2000 2001 2003 2004 2005 Average Shanghai Price RMB/gram 2002 Average JM Base Price RMB/gram Healthy retail margin and strong consumer demand 5
Slide 51: Strategy to expand in line with increased demand
Strategy to expand in line with increased demand • Current and future platinum demand remains robust • Rand strength reduced project returns and operational profitability • Expansion continues – matched to economics & demand • Platinum production - in 2005: 2.6m oz - in 2006: 2.7m to 2.8m oz • 2005
Slide 52: Increased production capacity
Increased production capacity Refined Pt oz (000’s) Tons milled (m) 3500 40 3000 35 • CAGR: Pt oz 7.0% 30 2500 tons 9.5% 25 2000 • Planned grade reduction: 20 1500 (4E) 6.3% 15 1000 • Increase in % UG2 10 500 5 26% - 48% 0 0 2000 2001 2002 2003 2004 Mining capacity increased by 9.5% per annum 52 Ang
Slide 53: Strategic imperatives for expansion
Strategic imperatives for expansion • Match growth in primary production with demand • Maintain flexibility in expansion programme • Create enhanced production capacity at competitive unit cost 53 Anglo American plc
Slide 54: Key business issues
Key business issues • Robust business model – implemented • New executive team and structure • Reducing the cost base – cost and efficiency focus • Strong Rand and weak US$ – project returns – operational profitability • Wage negotiations – May 2005, tough environment • S A legislative environment –
Slide 55: South African legislative environment
South African legislative environment • BEE on track – significant HDSA ownership in place • Firm commitment to broad based BEE • Conversion process commenced - several applications submitted • Partner relationships enhanced - ongoing Government engagement Anglo Platinum well placed to achieve compl
Slide 56: Summary
Summary • Solid fundamentals for PGM demand • Strategy to expand in line with increased demand remains • Firm commitment to sustainable BEE • Regulatory risks - understood & being addressed • Value optimization ongoing - key focus in 2005 • Robust business model to deliver on costs and growth A memb
Slide 57: Anglo Technical Division
Anglo Technical Division Tony Redman 57 Anglo American plc
Slide 58: Where the Technical Division fits
Where the Technical Division fits Technical Executive Exploration Division Board Division Paper & Ferrous & Anglo Industrial Anglo Anglo Packaging Industries Platinum Minerals Coal Base 58 Anglo American plc
Slide 59: Functional structure
Functional structure AA plc CEO Technical Director Anglo Geosciences Mining Metallurgy Engineering Projects Oversight Research Geophysics Mining Applied Mineralogy Project Management Services Project Reviews Geology Ventilation & Analytical Services Project Eng and Design SHE / SD Occupational Hygie
Slide 60: Roles of the Technical Division
3 Roles of the Technical Division Future Technology Group Assurance • Design / technical feasibility of • Support technology strategy development capital projects • Early warning on technical risks • Technology scanning • Sustainability of Group’s • Implement R & D technical capabilities BU Support
Slide 61: Mining life cycle
Mining life cycle Level of uncertainty Exploration Conceptual study Pre-feasibility Feasibility Detailed design Construction Operations Mining & Processing Closure & Post Closure OPERATIONAL efficiencies CAPITAL INTENSIVE important – continuous Need to reduce uncertainties and minimize technical ris
Slide 62: Adding value to exploration
Adding value to exploration 62 Anglo American plc
Slide 63: Spectrem
Spectrem Drilling •870 holes, Airborne EM •50,460 meters •240 line Kilometres •> $500,000 •$18,000 •> 3 years •2 hours flying Spectrem: reducing the time and cost of exploration 63 Anglo American plc
Slide 64: Extending AEM capabilities
Extending AEM capabilities • High spatial resolution – low moment AeroTEM I • Bipolar – Triangular Pulse • 5 m diameter (19.6 m2) • 250 A / 8 turns • 40 000 A m2 • 150 / 125 / 90 / 75 Hz • 16 on-time / 16 off-time channels AeroTEM II AeroTEM II Airborne electro-magnetic system used in mountainous te
Slide 65: Geoscience R&D
Geoscience R&D Stable Multi-system platforms Airborne remote sensing systems will benefit from using an airship as a stable platform 65 Anglo American plc
Slide 66: 3-D Seismic Surveys
3-D Seismic Surveys Benefits of mapping ahead of capital developments: • Styldrift - Discovery of 100m fault not detectable in drilling leading to redesign of proposed mine. • Rustenburg - Discovery of major fault which led to relocation of proposed shaft. • Conservative estimates of up to $80 milli
Slide 67: SQUID
SQUID SQUID (Super Conducting Quantum Interference Device) 10 times better EM sensitivity SQUID used in exploring for buried conductive targets 67 Anglo American plc
Slide 68: Adding value to operations
Adding value to operations 68 Anglo American plc
Slide 69: Technology adding value to Mining
Technology adding value to Mining Moab Headgear The Blair winder at AngloGold AngloGold Ashanti Ashanti’s Moab Khotsong mine World’s deepest Shaft (3106m ) Single winding to over 3000 metres is now possible 69 Anglo American plc
Slide 70: Technology adding value to Mining
Technology adding value to Mining Mining methane Extracting methane from coal seams generates revenue, electricity and carbon credits 70 Anglo American plc
Slide 71: Technology adding value to Mining
Technology adding value to Mining $1.8 million Capital Expenditure on replacement machines postponed for 2 years, plus repair downtime reduced Load Haul Dumper • Computer model used to design “field-fix” modifications to improve life of machine from 5 000 hours to 15 000 hours • The computer model s
Slide 72: Technology adding value to Mining
Technology adding value to Mining ISA Mill Collahuasi Mills Vertical Roller Mill (VRM) SAG Mills - 40’, 21 MW - Largest in the world Ball Mills - 26’, 15 MW - Largest in the world Improved energy usage and mineral liberation 72 Anglo American plc
Slide 73: Technology adding value to Smelting
Technology adding value to Smelting Ausmelt ACP Furnace • First in this application • Largest Ausmelt in the world Polokwane arc furnace • Largest of type – 68 MW • High power intensity – 250 kW/m2 Namakwa plasma arc furnace • 1 x 25 MW and 1 x 35 MW • Enabled treatment of Ilmenite Unique smelting t
Slide 74: Safer operations
Safer operations Automated survey instrument in Chilean Copper Mine - Anglo American has adopted the latest laser and spatial ground movement measuring techniques to monitor sidewall stability of open pit operations Using an environmental monitoring system, an operator checks the status of the under
Slide 75: Anglo Field Services
Anglo Field Services • Safety audits of environmental monitoring and fire detection systems • Electric motor inspection • Machine Condition Assessment • Rotating machinery • Steel-belt conveyor inspection • Rope condition assessment • Materials testing and Tribology Anglo Field Services provides a r
Slide 76: Environmental Services
Environmental Services As an environmental closure initiative coal discard dumps are systematically being rehabilitated. Work in progress on the closure of Anglo Coal's Hope Dump. A water saving initiative in the Kalahari Desert (Orapa Mine). Development of the use of dewatered fine tailings to buil
Slide 77: Adding value to projects
Adding value to projects 77 Anglo American plc
Slide 78: Successful project execution
Successful project execution • Commenced commissioning in March 2004 • Under budget Skorpion Collahuasi Rosario • Expected to achieve design Zinc capacity (800,000tpa) well Copper ahead of schedule $454m $288m Buxton • World’s first solvent extraction • Commissioned in April 2004 treatment plant for
Slide 79: Successful project execution
Successful project execution Ruzomberok • Fully commissioned ahead of schedule during 2004 Pulp and Paper • Improved smelting recoveries and unit cost reduction $233m ACP • $233m paper and pulp expansion completed end 2004 Platinum • Additional 110,000t of paper and 105,000t of pulp $250m Technical
Slide 80: Focus on Energy
Focus on Energy 80 Anglo American plc
Slide 81: Emerging 5 Point Anglo American Energy Strategy
Emerging 5 Point Anglo American Energy Strategy Energy Use/Intensity/Procurement Energy Sector Monitoring By sector Coal/Oil/Gas/Renewables/Nuclear/ Energy use and intensity monitoring Power/Carbon/SD) Plans to meet new efficiency/intensity targets Regular updates to Divisions Identify new efficienc
Slide 82: Strategic Fuel Resource for Australia
Strategic Fuel Resource for Australia Percentage of Australia’s oil and petroleum products consumption sourced from imports 70 60 50 Percent 40 30 20 10 0 1990 1995 2000 2005 2010 Year Ending 30 June Source: ABARE Energy Projections, Oct 2001, GeoScience Australia • Without major new oil discoveries
Slide 83: Monash site location
Monash site location Location has several advantages for the Monash Project 83 Anglo American plc
Slide 84: Project Components
Project Components FLYNN COAL MINE INTEGRATED INTEGRATED WET COAL POWER WATER GENERATION TREATMENT DRIED COAL GASIFICATION SYNGAS FT REACTOR & MILLING & & GAS PRODUCT DRYING TREATMENT UPGRADE SULPHUR DIESEL NAPTHA CO2 LPG PRODUCT HV POWER STORAGE TRANSMISSION COMPRESSED CO2 LINES PIPELINE PRODUCT PI
Slide 85: Technical Division summary
Technical Division summary Skills across wide range of disciplines Successful track record Adding value to the Group 85 Anglo American plc
Slide 86: Base Metals
Base Metals Simon Thompson 86 Anglo American plc
Slide 87: Agenda
Agenda • Review of 2004 • Market outlook • Growth – Approved projects – Unapproved projects – Exploration 87 Anglo American plc
Slide 88: Summary Financial Results
Summary Financial Results Headline Earnings Operating Profit* EBITDA ROCE $1,800 36% 1,626 $1,600 32% $1,400 1,275 28% $1,200 24% 1,042 $1,000 20% Earnings ROCE $800 16% 569 $600 12% $400 330 286 8% 206 150 $200 69 133 4% $0 0% (18) (22) -$200 (4)% 2001 2002 2003 2004 * Before exceptional operating
Slide 89: Headline Earnings 2004 vs 2003
Headline Earnings 2004 vs 2003 $1,400 $1,200 $1,000 Headline Earnings $800 $600 $400 $200 $0 206 1,013 (55) (36) 128 (104) 2 (113) 1,042 Results Price Exch Infl Vol Costs Interest Structural Results 2003 & Other 2004 89 Anglo American plc
Slide 90: Operational Highlights 2004
Operational Highlights 2004 Hudson Bay Sold for $257m Collahuasi Completion of Rosario project ahead of schedule and under budget Mantos Blancos Maintained production in 2004 Los Bronces despite operating difficulties Record production Mantoverde Consistently good performance El Soldado Pit expansio
Slide 91: Operational Highlights 2004
Operational Highlights 2004 Loma de Niquel Good operating performance in difficult circumstances Lisheen Paste fill project completed Codemin Codemin II project Barro Alto Feasibility study Catalão Skorpion Consistent performance Commissioning & ramp up Boa Vista life extension of new technology Nam
Slide 92: Copper
Copper Attributable Production1 Unit Cash Costs Tonnes USc/lb Operation 2004 2003 2004 2003 Los Bronces 231,554 207,844 33 43 Mantos Blancos 94,877 86,895 69 71 El Soldado 68,832 70,448 67 61 Mantoverde 60,111 60,226 65 56 Collahuasi 211,629 173,680 48 41 Average 49 50 Chagres – Blister/ Anodes 165,
Slide 93: Nickel, Niobium & Mineral Sands
Nickel, Niobium & Mineral Sands Attributable Production1 Tonnes Unit Cash Costs USc/lb Operation 2004 2003 2004 2003 Codemin 6,493 6,409 280 205 Loma de Niquel 17,422 17,154 228 187 Average 242 192 Namakwa Sands Slag tapped 169,334 165,845 Iron tapped 98,121 91,100 Zircon 119,086 93,339 Rutile 23,71
Slide 94: Zinc
Zinc Attributable Production1 Unit Cash Costs Tonnes USc/lb Operation 2004 2003 2004 2003 Black Mountain 28,252 25,895 44 41 Hudson Bay 107,002 117,846 39 38 Lisheen 156,290 169,346 40 34 Skorpion 119,205 47,436 36 NA Average 39 36 1 100% of subsidiaries production 94 Anglo American plc
Slide 95: Continuous Improvement
Continuous Improvement US$m Total Cost Volume/Profit Total Savings Improvements 2001 16 8 24 2002 23 0 23 2003 37 11 48 2004 47 67 114 95 Anglo American plc
Slide 96: Copper Outlook
Copper Outlook • Average price in 2004 130 c/lb • 2004 global demand growth 8-9% - the highest for 20 years • Large increase in mine supply (~1.3MT) in 2005 – a combination of new projects/expansions, reactivations in the US and return to full production at Freeport • Smelter bottlenecks will restri
Slide 97: Nickel Outlook
Nickel Outlook • Average price in 2004 of $6.26/lb - a consequence of very tight market conditions and historically low inventories • Nickel supply unable to keep pace with underlying demand • Price-induced substitution and increased scrap availability were the market balancing mechanisms, restricti
Slide 98: Zinc Outlook
Zinc Outlook • 2004 global demand up 5-6% (best since 2000). Large metal market deficit • Market impact of Chinese switched from significant negative to positive (robust demand, large concentrate imports, no net metal exports) • Upside opportunities: – Strength of demand rebound in 2005/6 – Smelter
Slide 99: Increased threat to supply/demand balance from new funding?
Increased threat to supply/demand balance from new funding? Issue volume (US$m) Copper price (US$/lb) 3,000 1.60 Base Metals equity issuance Copper price (smoothed) 1.40 2,500 1.20 2,000 1.00 1,500 0.80 0.60 1,000 0.40 500 0.20 0 - 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 YTD
Slide 100: Approved Projects: Collahuasi Rosario
Approved Projects: Collahuasi Rosario • Production* Throughput increased from 69,000tpd to 110,000tpd. Maintains production at over 400,000tpa Cu • Capital cost* US$626m ($28m under budget) • Status Commissioned 6 weeks ahead of schedule. Operating above design capacity * 100% basis. Anglo has 44% i
Slide 101: Approved Projects: El Soldado
Approved Projects: El Soldado • Production Life extended to over 20 years. Production maintained at 63,000tpa • Capital cost US$83m • Status In progress, stripping commenced on schedule 101 Anglo American plc
Slide 102: Approved Projects: Chagres expansion
Approved Projects: Chagres expansion • Production Capacity increased from 162,000tpa to 184,000tpa • Capital cost US$22m • Status On schedule for shut down in Q4 05 for refurbishment and expansion with commissioning in Dec 05 102 Anglo American plc
Slide 103: Approved Projects: Skorpion
Approved Projects: Skorpion • Production First application of SX technology in a zinc mine. Capacity of 150,000tpa SHG zinc from oxide ore • Capital cost US$446m ($8m under budget) • Status In final phase of ramp up 103 Anglo American plc
Slide 104: Approved Projects: Black Mountain Deeps
Approved Projects: Black Mountain Deeps • Production Life extended by over 10 years. Maintaining production at 1.6Mtpa of Zn/Pb/Cu ore • Capital cost US$125m • Status New main shaft commissioned Q1 05, underground development in progress, production in ramp-up phase 104 Anglo American plc
Slide 105: Approved Projects: Collahuasi Moly
Approved Projects: Collahuasi Moly • Production* To commence in 2006. Full production level will average 7,500tpa Mo • Capital cost* US$47m • Status Engineering complete. Earthworks complete. Commissioning scheduled to commence Q1 06 * 100% basis. Anglo has 44% interest. 105 Anglo American plc
Slide 106: Approved Projects: Codemin II
Approved Projects: Codemin II • Production Life extended to 30 years. Output increased from 6,500tpa to 10,000tpa • Capital cost US$64m • Status Commissioned Dec 04 below budget, ramp up on schedule 106 Anglo American plc
Slide 107: Unapproved Projects: Los Bronces
Unapproved Projects: Los Bronces • Reserve 716Mt @ 0.89% Cu • Resource (in excess of reserve) 1,071Mt @ 0.55% Cu • Production Possible doubling of throughput to 130,000tpd. Additional ~200,000tpa Cu • Capital cost Est. US$800m • Status Conceptual study underway 107 Anglo American plc
Slide 108: Unapproved Projects: Barro Alto
Unapproved Projects: Barro Alto • Reserve 30.2Mt @ 1.84% Ni • Resource (in excess of reserve) 80.1Mt @ 1.41% Ni • Production Possible output of ~40,000tpa Ni • Capital cost Est. US$750m • Status Feasibility being revised and updated. Study due for completion early 2006 108 Anglo American plc
Slide 109: Unapproved Projects: Collahuasi Expansion
Unapproved Projects: Collahuasi Expansion • Reserve 1,434Mt @ 1.0% Cu • Production* Increase production to 600,000tpa? • Status Conceptual study underway * 100% basis. Anglo has 44% interest. 109 Anglo American plc
Slide 110: Unapproved Projects: Quellaveco
Unapproved Projects: Quellaveco • Reserve 938Mt @ 0.64% Cu • Production Possible output of 200,000tpa Cu in concentrate • Capital cost Est. US$850m • Status Feasibility study completed. Obtaining permits * 100% basis. Anglo has 80% interest. 110 Anglo American plc
Slide 111: Unapproved Projects: Gamsberg
Unapproved Projects: Gamsberg • Reserve 145Mt @ 6.04% Zn • Production Possible output of 300,000tpa SHG Zn from an open pit mine, concentrator and refinery • Capital cost Est. US$850m • Status Feasibility study completed. On hold 111 Anglo American plc
Slide 112: Exploration
Exploration • Near mine resource additions – Los Bronces 560mt @ 0.75% Cu – El Soldado 24mt @ 0.8% Cu – Catalao 6mt @ 1.5% Nb2O5 • Exploration projects – Morro Sem Bone, Brazil Est. resource 47Mt @ 1.76% Ni. Conceptual study – Jacare, Brazil Est. resource 430Mt @ 1.33% Ni. Independent review and new
Slide 113: Summary
Summary Strong performance in 2004 Cost pressures will increase in 2005 Market outlook : Above average prices to continue, but industry discipline will be tested Strong project pipeline 113 Anglo American plc
Slide 114: Anglo American: Meeting the World's Needs - Investor Day 2005
ANGLO AMERICAN MEETING THE WORLD’S NEEDS Investor Day 2005 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 2000 (Financial Promotion)