Anglo American plc · LSE:AAL
Anglo American — Investor Presentation (March 2006)
24 slides from Anglo American's investor presentation, Mar 30, 2006
Slide 1: Ferrous Metals and Industries
FERROUS METALS AND INDUSTRIES Presentation to analysts 30 March 2006 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
Slide 2: Agenda
Agenda • Business overview • Strategy • Iron ore market overview • Conclusion 2 Presentation to analysts – 30 March 2006
Slide 3: 1. Business overview
1. Business overview 3 Presentation toSishen analysts – 30 Plant: ironMarch 2006 ore conveyors
Slide 4: Business overview
Business overview EBIT of $1.5 billion Employees > 35 000 Operations on 6 continents and in 26 countries Positive outlook for key markets Attractive growth opportunities Long-life, high quality ore Leading market positions resources ¾ Iron ore ¾ Iron ore ¾ Manganese ¾ Manganese ¾ Beneficia
Slide 5: Geographic footprint
Geographic footprint Kumba Highveld Scaw Tongaat-Hulett 5 Presentation to analysts – 30 March 2006
Slide 6: Divisional operation
Divisional operation Strong management systems Strategy Capital discipline Centre initiatives Budgets ¾ Mergers and ¾ SHEQ acquisitions ¾ Procurement KPA’s ¾ Greenfield and ¾ Information technology CIP & procurement brownfield expansions ¾ Human resources ¾ Working capital Talent management 6 Presen
Slide 7: Financial highlights
Financial highlights 2005 Highlights 2005 EBIT of $1,456m by operation and country Scaw Boart • Record EBIT of $1 456m (2004: $887m); second largest 8% 5% Tongaat 9% in Anglo Group (23%) Samancor 10% • Return on capital in 2005 of 33% (2004:18%) Kumba • Cash generation (EBITDA) up $548m to $1 779m 3
Slide 8: Financial highlights: EBIT variance analysis
Financial highlights EBIT variance analysis Overall cash cost increase: $m +9.4% 918 51 6 75 1,456 123 40 Kumba: $457m 152 4 Highveld: $386m 887 2004 Price Exchange Volume Inflation Cash costs Non-cash Associates Other 2005 costs 8 Presentation to analysts – 30 March 2006
Slide 9: Safety & sustainable development
Safety & sustainable development Safety ¾ Injury frequency rate continuing to improve ¾ Zero fatalities and zero lost time injuries are the Fatalities (LHS) objective 10 LTIFR (RHS) 1.5 ¾ Safety pre-eminence continues to be driven through Visible Felt Leadership, Behaviour Based Safety 8 1.2 initiat
Slide 10: Cost savings initiatives
Cost savings initiatives Efficiency improvements and cost savings initiatives YTD December 2005 realised $149m in 2005: ¾ Operating efficiency - $83m $149m - offsetting real cash cost increases ¾ Procurement - $66m $71m $149m $103m $35m $26m $16m $12m $6m 2003 2004 2005 Kumba Scaw Highveld Tongaat B
Slide 11: 2. Divisional strategy
2. Divisional strategy 11 Presentation Open to analysts pit iron – 30mining ore Marchoperation 2006
Slide 12: Strategic progress: 2005/06
Strategic progress: 2005/06 • Boart Longyear and Wendt sold for a combined enterprise value of $635m • Samancor Chrome sold for an attributable enterprise value of $225m • Kumba sold Hope Downs Project for $176m after arbitration process • Acerinox and Columbus shareholdings sold for an attributable
Slide 13: Strategic progress: non-core asset disposals
Strategic progress $1.3 billion of non-core asset disposals in 2004 and 2005 635 17 1300 225 156 270 Attributable enterprise value of disposals Terra Acerinox & Samancor Boart & Wendt Other Total Attributable Columbus Chrome Enterprise Value 13 Presentation to analysts – 30 March 2006
Slide 14: Current structure
Current structure Anglo Ferrous Metals and Industries Vanadium Steel Manganese Iron Ore Aluminium Sugar Other Ore & Alloy Highveld Scaw Samancor Kumba Iron Tongaat Tongaat Tongaat Kumba Other Vanadium (100%) Manganese Ore Hulamin Sugar (52%) Starch & Minerals (79%) (40%) (66%) (46%) Glucose (52%) (6
Slide 15: Strategic direction
Strategic direction Key strategic actions • Grow Anglo’s position in iron ore with a view to consolidating it as the cornerstone of the reconfigured Ferrous Metals portfolio • Complete the reorganisation of Kumba to achieve BEE status for its mining businesses and provide Anglo with a direct control
Slide 16: Strategic direction: Kumba BEE
Strategic direction Kumba BEE Current Structure Final Structure Minorities Anglo Ferrous Metals and Minorities Anglo Ferrous Metals and (incl IDC) Industries BEE Minorities (incl IDC) Industries 34% 66% 34% 66% 17% 58% 25% Kumba1 Kumba Iron Ore1 BEE NewCo1 6% 100% 100% 100% Future 100% 74% 20% 100%
Slide 17: Strategic direction: key actions (continued)
Strategic direction Key strategic actions (continued) • Together with BHP Billiton complete the introduction of BEE at Samancor Manganese South Africa • Continue to grow ore production at Samancor Manganese Australia • Complete the disposal of Highveld for value • Complete the introduction of BEE in
Slide 18: Strategic direction: Tongaat-Hulett restructuring
Strategic direction Tongaat-Hulett restructuring Current Structure Final Structure Anglo Minorities Anglo BEE Minorities 20% 52% 48% Tongaat-Hulett(1) IDC Tongaat-Hulett(1) 100% 100% 100% Starch & 30% 50% Sugar Property Glucose 100% 100% 100% Starch & Anglo IDC BEE Minorities Hulamin Sugar Property
Slide 19: 3. Iron ore market overview
3. 3.Iron Ironore oremarket marketoverview overview 19 Presentation Iron ore loaded onto to analysts train, Kumba – 30 ready for resources: March railing Sishen 2006 toMine Saldanha
Slide 20: Iron ore market overview
Iron ore market overview The iron ore industry remains fundamentally attractive • 2005 Demand increase of 3.5% over 2004 to 1 330 Mt • Steady growth in demand forecast until at least 2020 (25% growth from today’s levels) • Demand (particularly sea-borne) growing due to Chinese demand and reduced ste
Slide 21: Iron ore market overview: required expansions
Iron ore market overview Required expansions to meet long-term demand in the base case Iron ore supply and demand, Mt 2 200 Type of expansions 2 000 Category 4: Uncertain future projects with no supporting infrastructure Demand 1 800 Category 3: Uncertain future projects, close to existing infrastru
Slide 22: Sishen produces high quality ore
Iron ore market overview Sishen produces high quality ore • Lump to Fine ratio of 60% to 40% • High grade in excess of 66% Fe • Attracts premium price relative to benchmark 22 Presentation to analysts – 30 March 2006
Slide 23: 4. Conclusion
4. Conclusion 23 Presentation to analysts Iron ore–train 30 March loading2006 facility
Slide 24: Conclusion
Conclusion • Record 2005 performance • Strong iron ore and vanadium prices expected for 2006 • The Division will continue to reshape its portfolio around core businesses, focusing on increased iron ore output • Drive to improve margins through greater operating efficiencies, increased volumes and co