Anglo American plc · LSE:AAL
Anglo American — Anglo Coal — Investor Presentation (June 2005)
40 slides from Anglo American's investor presentation, June 2005
Slide 1: Anglo Coal Presentation to Analysts
Anglo Coal Presentation to Analysts June 2005 1 Presentation to Analysts: June 2005 1
Slide 2: Agenda and Participants
Agenda and Participants ► Anglo Coal Overview Ken Bell SVP International Business Development ► Anglo Coal Australia Overview Eric Ford CEO Anglo Coal Australia ► Dawson Overview Mike O’Brien GM Dawson 2 Rod Elliott GM Marketing and Transportation Presentation to Analysts: June 2005 2
Slide 3: Overview of Anglo Coal
Overview of Anglo Coal Ken Bell 3 Presentation to Analysts: June 2005 3
Slide 4: Overview of Anglo Coal
Overview of Anglo Coal ► Operations in: • South Africa: 9 mines 2004 Saleable Tonnes (Mt) • Australia: 6 mines By Region 1 equity mine • Colombia: 1 mine • Venezuela: 1 mine 26 ► Long life mines 55 ► Good quality reserves 10 ► Exposure to export and domestic thermal coal market and export metallurgi
Slide 5: Anglo Coal Location Map
Anglo Coal Location Map London Marketing Office Beijing Representative Office Venezuela Export Export Dom estic Mine Met Therm al CdG X X Attributable Production (2004) 2 Mt Em ployees 1059 Attributable EBITDA (2004) US$20 m South Africa Export Export Dom estic Mine Met Therm al Goedehoop X X Austra
Slide 6: Anglo Coal's Market Share
Anglo Coal’s Market Share SOURCE: PUBLICLY AVAILABLE DATA & ANGLO COAL ANALYSIS Export Thermal Coal Export Metallurgical Coal 6% 5% 52% 7% 5% 69% 7% 7% 24% 4% 4% 10% Anglo Coal Xstrata BHPB (includes Mitsubishi) Anglo Coal Xstrata BHPB Canada (Fording & Teck) PT Bumi Rio Tinto Others 6 Rio Tinto Oth
Slide 7: Anglo Coal's Product Portfolio and Customer Destination
Anglo Coal’s Product Portfolio and Customer Destination 2004 Actual Saleable Coal 2004 Actual Product Destination By Product Million Tonnes 90 Million Tonnes 17% 7 8 10 31% 10 18 37 52% South African Domestic South African Thermal Exports Domestic Market Australian Domestic 7 Australian Thermal Expo
Slide 8: Coal Price History & Projection
Coal Price History & Projection 140 US$/T FOB Export Hard Coking Coal (Goonyella Benchmark) 120 Export Thermal Coal (Japan/Newcastle Benchmark 100 basis 6322 GAR) 80 60 40 20 0 8 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2
Slide 9: Key Financials 2003 Vs. 2004
Key Financials 2003 Vs. 2004 ► Revenue up 29% to US$2.4 bn ► Operating Profit up 46% to US$487m ► Headline Earnings up 51% to US$351m ► Free Cash Flow up 38% to US$445m ► Total Free Cash of US$1.8 bn generated from 1999 to 2004 9 Solid Results Presentation to Analysts: June 2005 9
Slide 10: EBITDA
EBITDA Significant growth in EBITDA - CAGR 33% since 1999 Average EBITDA margin ~ 30% (1999 to 2004) US$m 800 40% 700 35% 600 30% 500 25% 400 20% 300 15% 200 10% 100 5% 0 0% 2002 2003 2004 South Africa Australia 10 South America EBITDA Margin Good EBITDA Returns Presentation to Analysts: June 2005 1
Slide 11: 2004 Regional Results
2004 Regional Results Revenue (US$m) EBITDA (US$m) Operating Profit (US$m) 433 205 164 1109 297 244 840 184 79 South Africa Australia South America Headline Earnings (US$m) Capex (US$m)* Net Operating Assets (US$m)* 45 398 116 81 923 162 73 13711 1634 *Annual Financial Statements exclude Anglo Coal’
Slide 12: Outlook 2005
Outlook 2005 ► Anticipate sound operating performance across operations in all regions ► Higher costs • Inflationary pressures continue across all regions • Weaker US Dollar impacting on South African Rand and Australian Dollar ► Higher average realised prices versus 2004 Anglo Coal has sold signifi
Slide 13: Project Pipeline
Project Pipeline Russia China Cerrejon Expansion Dawson Grasstree Mafube Isibonelo Saddlers Creek Western Lake Lindsay Moranbah Complex 13 South Grosvenor Monash Energy Presentation to Analysts: June 2005 13
Slide 14: New Business Development
New Business Development ► Coal Bed/Mine Methane • Dawson (Australia) • Waterberg (South Africa) • German Creek (Australia) ► Monash Energy Long lead time • Power and low sulphur diesel High capital New skills • Carbon capture & storage Potential high returns • Government support ► Coal Gasification
Slide 15: In Conclusion..
In Conclusion.. ► Significant earnings and cash flow contributor to AA plc ► Exposed to domestic and export coal markets ► Good quality long life reserves ► Diversified geographical base ► Proven track record for operating in existing and new geographies ► Good growth opportunities within existing o
Slide 16: Overview of Anglo Coal Australia
Overview of Anglo Coal Australia Eric Ford 16 Presentation to Analysts: June 2005 16
Slide 17: Anglo Coal in Australia
Anglo Coal in Australia Long Life Quality Reserves Growth Strategy 17 Presentation to Analysts: June 2005 17
Slide 18: 2004 Sales by Coal Type
2004 Sales by Coal Type 35 Million Tonnes 10.4 14.5 10.1 Domestic Thermal Coal Export Thermal Coal 18 Export Metallurgical Coal Presentation to Analysts: June 2005 18
Slide 19: Key Financials 2004
Key Financials 2004 ► Revenue US$ 840m ► Operating Profit US$ 79m ► Headline Earnings US$ 73m ► Capex 2004 US$ 137m ► Strong cash flow position ► Performance impacted by Moranbah North 19 Presentation to Analysts: June 2005 19
Slide 20: Coal Sales Projection
Coal Sales Projection Anglo Share Of Coal Sales (Mtpa) 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 2004 2005 2006 2007 2008 2009 Domestic E xport T hermal E xport Metallurgical 20 E xpansions (including Dawson) Presentation to Analysts: June 2005 20
Slide 21: Projects
Projects ► Significant growth ahead: • Brownfield • Grasstree • Dawson • Coal Seam Methane • Greenfield • Lake Lindsay • Moranbah South • Grosvenor • Saddlers Creek 21 • Monash Energy Presentation to Analysts: June 2005 21
Slide 22: Outlook 2005
Outlook 2005 ► Metallurgical ► Export Thermal ► Domestic Thermal ► Coal Seam Methane ► Skills ► Materials ► Contractors ► Legislation 22 Presentation to Analysts: June 2005 22
Slide 23: Conclusion
Conclusion ► Strong global environment ► Good expansion projects ► Operational excellence ► M & A opportunities 23 Presentation to Analysts: June 2005 23
Slide 24: Dawson Overview
Dawson Overview Mike O’Brien 24 Presentation to Analysts: June 2005 24
Slide 25: Dawson Location
Dawson Location 25 Presentation to Analysts: June 2005 25
Slide 26: Historic Slide
Historic Slide Number of Sales Employees Million's Tonnes 1,400 8 DL4 DL5 BE Marion 1,200 1370 8200 7 DL6 Highw all Em ployees Marion Mining 6 1,000 8200 Rail line to Gladstone 5 800 4 600 3 400 Annual Tonnes 2 200 Underground Mining ceases 1 Aug 94 0 0 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 7
Slide 27: Reserves
Reserves Mt 250 250,000,000 Proven Probable Other 200 200,000,000 Payback: April 2011 150 150,000,000 100 100,000,000 50 50,000,000 00 27 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Presentation to Analysts: June 2005 27
Slide 28: Coal Rank
Coal Rank ► Well understood rank trend dictates coal quality and products ► Rank reduces from ~ 1.6 in north to 0.7 in south ► Ranges from: ► sub-anthracite in north ► hard coking in the centre 28 ► to thermal in the south Presentation to Analysts: June 2005 28
Slide 29: Dawson Pit
Dawson Pit 68 29 Presentation to Analysts: June 2005 29
Slide 30: Dawson Pit
Dawson Pit 68 30 Presentation to Analysts: June 2005 30
Slide 31: Capital Expenditure
Capital Expenditure ► Total capital expenditure is US$653m • US$225m mining equipment • US$294m conveyors,coal handling and preparation infrastructure • US$134m Infrastructure and land ► Agreements for the provision of port and rail infrastructure in place 31 Presentation to Analysts: June 2005 31
Slide 32: Operating Costs
Operating Costs ► The expansion and recapitalisation of Dawson will deliver improvements in unit operating costs of 15% ► This is achieved through a combination of economies of scale, improved mining schedules, and the use of larger more efficient equipment 32 Presentation to Analysts: June 2005 32
Slide 33: Seam Gas
Seam Gas Overburden C Seam A Seam D Seam D Lower Seam (approx 800m in coal) Moura is currently contracted to produce 6.5 PJ per annum (approximately 5% of the Queensland market) 33 The extraction and sale of seam gas may provide future carbon credits Source: Geogas Systems Presentation to Analys
Slide 34: Environment and Community
Environment and Community ► Strong community support ► Agreements with traditional owners ► Special Act Lease complies with mainstream environmental management practices ► New mining plan addresses historically approved rehabilitation liability ► ISO14001 and AS4801 compliant ► Nature refuge ‘Willaw
Slide 35: Dawson Overview
Dawson Overview Rod Elliott 35 Presentation to Analysts: June 2005 35
Slide 36: Coal Brands
Coal Brands ► Metallurgical Coal • Moura C • Dawson HV Prime Coking • Dawson LV • Moura ‘K’ Soft Coking • Soft coking ► Thermal Thermal • Moura 36 Presentation to Analysts: June 2005 36
Slide 37: Dawson Product Mix
Dawson Product Mix 14 (Mtpa) Total Sales Tonnes (Mtpa) 12 10 8 6 4 2 0 Part Year 2002 A 2003 A 2004 A 2005 F 2006 F 2007 F 2008 F 2009 F 37 T h er m al C o al S o ft C o k in g /P C I C o al Har d C o k in g C o al Presentation to Analysts: June 2005 37
Slide 38: Marketing Strategy
Marketing Strategy ► Established brands and market presence ► Term contracts covering thermal and metallurgical coal ► Strong portfolio of buyers: • Asian thermal coal focus • Diversified metallurgical coal sales strategy ► Reliable infrastructure: • Queensland Rail • Port of Gladstone ► Anglo and M
Slide 39: Dawson
Dawson 39 Presentation to Analysts: June 2005 39
Slide 40: Questions & Answers
Questions & Answers 40 Presentation to Analysts: June 2005 40