Glencore Plc · LSE:GLEN
Glencore — BMO Capital Markets 2018 Global Metals & Mining Conference
26 slides from Glencore's conference presentation, Feb 26, 2018
Slide 1: BMO Capital Markets 2018 Global Metals & Mining Conference
BMO Capital Markets 2018 Global Metals & Mining Conference 26 February 2018
Slide 2: Important notice concerning forward looking statements
1 Important notice concerning this document including forward looking statements This document contains 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 use of forward looking terminol
Slide 3: Ivan Glasenberg, Chief Executive Officer
Ivan Glasenberg Chief Executive Officer BMO 2018 Global Metals & Mining Conference Coal train from the Calenturitas mine, Prodeco, Colombia
Slide 4: Summary
Summary 3 • A strong commodity environment: robust demand and tighter supply ◦ Sychronised global growth and emerging inflation supports prices in most commodities ◦ Over-supply has been eliminated in our key commodities, while copper supply disruption risks remain acute • Technological advances imp
Slide 5: This time last year… cautious optimism was emerging
This time last year… cautious optimism was emerging 4 BMO – 2018 Global Metals & Mining Conference
Slide 6: Today… this seems sustainable
Today… this seems sustainable 5
Slide 7: The world is enjoying synchronised global growth
The world is enjoying synchronised global growth... 6 Robust economic growth across the major economies … … is generating copper demand growth in all key markets YoY change in G20 countries GDP ($bn)(1) Cumulative change in copper demand (kt)(2) 7000 600 6000 Asia (ex China) Europe 500 North America
Slide 8: Signs of inflation may mean commodities stay stronger for longer
… which, combined with signs of inflation, may mean commodities stay “stronger for longer” 7 Signs of inflation are emerging after a long hiatus … … and historically, inflation is good for commodities 5Y US yields, inflation and Manufacturing PMI (RHS) (1) Average annualised returns during Fed hikin
Slide 9: Commodity fundamentals continue to improve, demand never a constraint
Commodity fundamentals continue to improve, demand has never been a constraint … 8 Resilient demand across commodities… … is a continuation of a long term trend Annual demand growth by commodity(1) Copper demand 1900 to 2017 (ktpa)(2) 12.0% 16000 10.0% 8.0% 8000 6.0% 4000 4.0% 2000 2.0% 0.0% 1000 Ir
Slide 10: Oversupply in most commodities has been eliminated
… and oversupply in most commodities has been eliminated 9 Shifting to deficit … … while 2018 supply disruption risks remain acute Cumulative change in annual metal balance (kt)(1) Cumulative copper production under negotiation in 2018 (kt)(2) 4500 1000 c.20% of copper supply has labour negotiations
Slide 11: Sustaining supply will become increasingly challenging
Sustaining supply will become increasingly challenging … 10 Copper mine project pipeline has more than halved Exploration has been increasingly unsuccessful LME Copper (LHS $/t) vs Project pipeline (RHS indexed)(1) Global copper resources growth, 5 yr rolling ave YoY(2) 10,000 250 7.0% 9,000 6.0% 8,
Slide 12: Compounded by new sources of potential demand
… compounded by new sources of potential demand 11 Estimated average metal use per vehicle(1) • Electric vehicles (EVs) – have the potential to be a disruptive force underpinning demand for our commodities • The rapid emergence of EVs reflects the near simultaneous alignment of key drivers: ◦ Enviro
Slide 13: Will higher prices encourage overcapacity?
Will higher prices encourage overcapacity …? 12 Sector capex plans have risen beyond trough levels but still Lower capex plans limit new supply growth near-term remain low, reflecting: Total sector capex ($bn) vs copper spot price ($/lb, RHS)(1) • Modest capex inflation 100 4.50 • Remaining spend on
Slide 14: The market still thinks so
… the market still thinks so 13 Despite the mining sector’s strong performance over the past The miners have never been cheaper in relative terms … two years, it is yet to re-rate: One year forward EV/EBITDA (1) • High prices have deleveraged balance sheets, 12.0 • Mining expansionary capex pipeline
Slide 15: Uniquely positioned
Uniquely positioned BMO 2018 Global Metals & Mining Conference Copper anodes, Altonorte copper smelter, Chile
Slide 16: Our commodity mix is compelling
Our commodity mix is compelling 15 Copper: looming supply challenges Glencore most exposed to mid/late cycle commodities(1) • Demand: robust demand, critical to electric vehicle adoption • Supply: underinvestment, grade declines & elevated strike risk Cobalt: enabling the electric vehicle story • De
Slide 17: Resilient and proven cash generative business model
Resilient and proven cash generative business model 16 Industrial: “Tier 1” Assets in “Tier 1” Commodities Strong cash margins across our key Industrial assets(1) • Genuinely diversified by geography and commodity 120% • Major producer of copper, cobalt, zinc, nickel and thermal coal 103% ex Au • Th
Slide 18: Conviction to create value through organic reinvestment
Conviction to create value through organic reinvestment… 17 Nickel Zinc Copper • Adding value in a capital efficient manner, INO Extension Zhairem (Kazzinc) Katanga acid plant in compelling commodities • c.$170M annual spend on • $400M brownfield mine • $237M construction cost ◦ Extensive growth opt
Slide 19: … and M&A and partnerships
… and M&A and partnerships 18 Agriculture Oil Copper Royalties • Strong deal origination skills Glencore Agriculture HG Storage Ernest Henry BaseCore Metals ◦ Unique ability to source & structure deals • 49.99% sold to CPP/BCIMC at • 51% sold to HNA for $775M • 30% economic stake + 100% • 50% of sel
Slide 20: Uniquely positioned
Uniquely positioned 19 • Compelling commodity mix ◦ Leading global producer of “Tier 1” commodities: copper, cobalt, nickel, zinc & thermal coal ◦ “Tier 1” commodity outlooks underpinned by persistent supply challenges and robust demand ◦ Best-placed large cap company for the looming energy and mobi
Slide 21: Appendix
Appendix BMO 2018 Global Metals & Mining Conference
Slide 22: 2017 Financial highlights
2017 Financial highlights 21 A record year Leading mine costs(1) Conservative funding Acquisitions Cu Zn structure $1.6bn • Volcan voting shares Adjusted +44% 87c/lb -16c/lb • Mutanda 10c/lb ex Au EBITDA $14.8bn minority $12.9bn Committed Ni Coal available liquidity Adjusted +118% 191c/lb $32/t Part
Slide 23: 2018-2020 production guidance
2018-2020 production guidance 22 2018 Commodity Guidance(1) Weighting Copper: +330kt to 2020 FY 2017A FY 2018 FY 2019 FY 2020 H1 H2 • Katanga: KML guidance: c.150kt 2018, c.300kt 2019 Copper - Base production kt 1304.8 1315 ± 30 1300 ± 30 1340 ± 30 • Mopani +90ktpa, phased ramp-up, late 2018 to 2020
Slide 24: Evolution of Industrial mining unit cash costs/margins
Evolution of Industrial mining unit cash costs/margins 23 Strong 2017 mine cost/margin performances across the business Cu costs(2) vs price (c/lb) Zn costs(2) vs price (c/lb) reflected in flat/improved year on year costs/margins 324(3) 161(3) • Modest inflationary pressures and unfavourable FX move
Slide 25: Illustrative spot annualised cashflows
Illustrative “spot” annualised cashflows 24 Group $ billion Copper(5) Guidance Zinc(6) Guidance Nickel(7) Guidance Copper EBITDA 7.1 Total copper production (kt) 1465 Total zinc production (kt) 1090 Net production excl Koniambo (kt) 99 Zinc EBITDA 3.5 Cu from Zn & Ni departments. (kt) -147 Zn from C
Slide 26: Long mine-lives and significant resource optionality in Tier 1 commodities
Long mine-lives and significant resource optionality in “Tier 1” commodities 25 • Long-life low-cost assets in many of the world’s premier mining districts ◦ Supports sustainable long-term cash flows • Significant mine-life extension potential embedded in all key commodities ◦ Copper: Antapaccay bro
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