NorNickel GMK · RUS:GMKN
NorNickel GMK — Norilsk Nickel — VTB Capital Russia Calling! 2013
33 slides from NorNickel GMK's conference presentation, May 21, 2013
Slide 1: Investor Presentation
Investor Presentation VTB Capital RUSSIA CALLING! May 21-23, 2013 London
Slide 2: Disclaimer
Disclaimer The information contained herein has been prepared using information available to OJSC MMC Norilsk Nickel (“Norilsk Nickel” or “NN”) at the time of preparation of the presentation. External or other factors may have impacted on the business of Norilsk Nickel and the content of this presen
Slide 3: Norilsk Nickel At a Glance
Norilsk Nickel At a Glance Key highlights Key financials World leader in nickel and palladium with top 5 positions US$ mln 2006 2007 2008 2009* 2010* 2011 2012 in platinum, cobalt, rhodium and a strong presence in Revenue 11,923 17,119 13,980 8,542 12,775 14,122 12,065 copper EBITDA 7,736 10,253 5
Slide 4: Unique Mineral Resource Base
Unique Mineral Resource Base Norilsk Nickel possesses extensive mineral resources based on the deposits of the Norilsk industrial region, as well as the Kola peninsula, and international assets in Southern Africa and Australia Norilsk Nickel is one of the leading companies in the world in terms of
Slide 5: The Lowest Cash Cost Producer
The Lowest Cash Cost Producer Norilsk Nickel benefits from a favourable cost position among large Nickel producers The only large Nickel producer with negative cash cost: costs are more than recovered through the sale of other metals produced -US$ 3.17 cash cost per lb of Nickel produced Verti
Slide 6: Solid Financial Position vs. Peers
Solid Financial Position vs. Peers Strong financial performance compared to largest global diversified miners EBITDA Margin* Interest Coverage Net Leverage Ratio BHP BHP BHP 42% 35,5x 0,7x Billiton Billiton Billiton Norilsk Norilsk 41% Rio Tinto 23,0x 0.8x Nickel Nickel Norilsk Anglo Vale 37% 20.8x
Slide 7: Norilsk Nickel's Shareholders Return
Norilsk Nickel’s Shareholders Return1 Indexed Share Price Dynamic % 190 170 150 130 110 90 70 50 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Norilsk Nickel Nickel Peers Diversified Mining Peers TSR1 2009 – 2012 48% 50 40% 30 18% 11% 15% 11% 9% 10 (10) Average:
Slide 8: Market Positions by Production in 2012
Norilsk Nickel – Market Positions by Production in 2012 Norilsk Nickel is world leader in nickel and palladium production with strong positions in platinum, copper, cobalt and rhodium Nickel 100% = 1,760 kt Palladium 100% = 6,653 koz Platinum 100% = 6,081 koz 3000 300 17% 3000 41% 39% 13% 2000 200 2
Slide 9: Production Update & 2013 Outlook
Production Update & 2013 Outlook Nickel, ‘000 tonnes Copper, ‘000 tonnes 297 295 300 389 275 - 285 378 364 360 - 366 23 14 5-6 62 58 67 45 - 50 11 366 363 355 – 230 – 352 360 236 237 234 235 2010 2011 2012 2013F 2010 2 011 2 012 2013F Palladium, ‘000 ounces Platinum, ‘000 ounces 2,861 693 695 683 65
Slide 10: Metal Markets
y NN NORILSK NICKEL Metal Markets
Slide 11: Nickel Market in 2012 and Outlook for 2013-2014
Nickel Market in 2012 and Outlook for 2013-2014 Nickel supply and consumption, ‘000 t Key potential drivers of Nickel market in 2013-2014: 1,844 Price upside risk: 1,761 1,769 1,617 1,614 1,680 - Expected cuts of production, primarily NPI: at current prices 1,501 1,433 around 40% of all nickel pro
Slide 12: NPI: Key Swinging Factor in Nickel Market Equation
NPI: Key Swinging Factor in Nickel Market Equation NPI emerged as response to nickel price escalation in mid- NPI costs forward trends 2000s and is currently produced and consumed by China only NPI is high cost production due to significant energy intensity of process and transportation costs fo
Slide 13: Palladium Market Balance
Palladium Market Balance As of May 2013 no major supplies on the market from Global supply & demand balance Russian state palladium reserves -11% decline in Pd supply in 2012 due to South African unrests and mines put on care & maintenance +7% growth in demand for autocatalysts mainly due to N
Slide 14: Palladium Demand: Consumption
Palladium Demand: Consumption Palladium consumption is projected to grow driven by the auto Car sales are holding up well… industry (67% of gross palladium demand): continuing growth of palladium demand in autocats as EM and US car markets have favorable outlook China revives subsidies to buyers
Slide 15: Copper Market
Copper Market Rising Supply and Uncertain Demand Copper Price Evolution (USD/t) Supply surpassed demand by some 1% in 2012, due to $11,000 new capacities and weaker physical demand $10,000 $9,000 Overall new capacities and ongoing projects may $8,000 accelerate supply growth (2.3% increase in re
Slide 16: FY 2012 Financial Update
y NN NORILSK NICKEL FY 2012 Financial Update
Slide 17: Revenue and EBITDA Dynamics
Revenue and EBITDA Dynamics Revenue 14,122 Revenue decreased by 15% in 2012 y-o-y due 12,775 825 12,065 to decrease in market prices of base and 649 1,004 8,542 precious metals produced by the Group: 467 Average Ni LME price down by 23% $ mln 13,297 12,126 11,061 8,075 Average Cu LME price dow
Slide 18: EBITDA Analysis
EBITDA Analysis Adjusted EBITDA decreased by 32% y-o-y mostly due to substantial decrease in metal prices Adjusted EBITDA margin remained at healthy 41% Cost of metal sales increased by 2% y-o-y mostly due to: increasing expenses on consumables and spares growth of 3rd parties services E
Slide 19: 2012 Cash Costs Breakdown
2012 Cash Costs Breakdown Cash costs before by-product credits remained flat at Consumables & Spares $5 billion y-o-y as a result of cost control measures, $1,309 mln lower expenses on raw materials and rouble 26% depreciation against US dollar Acquisition of raw materials & semis $918 mln Labou
Slide 20: Debt & Liquidity Position
Debt & Liquidity Position As of YE 2012 total debt amounted to US$ 5 bn with a US$ 1 The Highest Rating Among Peers bn cash pile Balanced debt portfolio comprising both bank and capital market instruments Strong liquidity reserve formed of available cash & cash equivalents and bank lines Com
Slide 21: CAPEX
CAPEX Hefty CF Generation CAPEX amounted to $2.7 billion in 2012 Investments in mineral resource base of Polar 5,514 Division and Kola MMC: 4,702 3,401 3,434 — mining of new sections of ore bodies; 2009 2010 2011 2012 (1,061) — increase of ore production; (1,728) (2,201) (2,713) OCF САРЕХ — repl
Slide 22: Russian Operations: Investments in Production
Russian Operations: Investments in Production Ore extraction Enrichment Smelting $558 mln $48 mln $172 mln $490 mln – key mines of Polar >$36 mln – expansion of $115 mln – upgrading Nadezhda Division Talnakh enrichment plant; Metallurgical Plant $40 mln – Chita design project tailings storag
Slide 23: Strategic Priorities for 2013
Strategic Priorities for 2013
Slide 24: Strategic Priorities
Strategic Priorities Rebalanced value-centered group strategy in place by the end of 2013 Reinforcement of Throughout the organisation - adding highly experienced professionals to improve in key Management Team competence areas and create a globally competitive team Sharper Investment / Reassess
Slide 25: Focus on the Environmental Programmes
Focus on the Environmental Programmes Compliance with Environmental Standards Performance indicators for last 5 years* Reduction of pollutant emissions with priority to sulphur -21% Wastewater discharge dioxide and solid particles Pollutants discharged with Reduction of polluted wastewater disch
Slide 26: Enhanced Governance and Shareholder Consensus
Enhanced Governance and Shareholder Consensus “The settlement of a dispute between major shareholders should provide the company with a solid platform for further improvement of strategic, operational and corporate governance issues” Gareth Penny , Chairman of the new Board of Directors The new el
Slide 27: A New Shareholder Structure
A New Shareholder Structure From December 2012, Interros and UC Rusal have a signed agreement with Crispian Investment Limited Key Takeaways Crispian is to become a new significant shareholder of Norilsk Nickel by purchasing shares from Interros and UC Rusal Following redemption of all quasi-tre
Slide 28: Sustainable Development
y NN NORILSK NICKEL Sustainable Development
Slide 29: Sustainability and Effective CSR Governance
Sustainability and Effective CSR Governance Rational water resource use Managing land and enhancing biodiversity Keeping our CSR staff safe Governance and healthy Employing, developing and motivating staff Human Stakeholders rights and engagement social partnership 28
Slide 30: Working For Benefit Of The Country
Working For Benefit Of The Country Being a significant player in Russian economy The Company’s share A significant tax-payer: aggregate tax payments in 2011 amounted ca $3.4 bn 1% in Russia’s GDP A big employer: over 81,000 people work in Norilsk Nickel (96% in Russia). A major employer offering
Slide 31: Tackling The Key Challenge Of SO2 Emissions
Tackling The Key Challenge Of SO2 Emissions In Polar Division implements a system of measures aimed at SO2 emissions at Polar Division reduction of SO2 emissions to Maximum Permissible Emissions 2,011 which includes: 2004 – 2011: - 5% 1,955 Development of the concentration facilities of the Talnak
Slide 32: Corporate Social Programmes for Personnel
Corporate Social Programmes for Personnel Budget of social programmes exceeds $176 mln Annual compensation Corporate housing of travel and baggage programmes expenses (>$85 mln) Corporate sport events Non-governmental ($1.4 mln) pension programmes ($27.2 mln) Mass cultural events Vacation at health
Slide 33: IR Contact Details
IR Contact Details Mikhail Borovikov Investor Relations Officer Elena Romanova Investor Relations Vera Timoshenko Investor Relations Tel: +7 495 786 83 20 Fax: +7 495 797 86 13 e-mail [email protected], [email protected], [email protected], [email protected] 11, Bolshaya Tatarskaya, Moscow, R