Anglo American plc · LSE:AAL
Anglo American — Investor Presentation (June 2023)
16 slides from Anglo American's investor presentation, June 2023
Slide 1: The Role of Mining in a Transitioning World
AngloAmerican The Role of Mining ina Transitioning World June 2023
Slide 2: Quotations on wealth, mineral deposits and productivity
“Wealth is matter which has been consciously and intelligently transformed from a condition in which it is less to a condition in which it is more serviceable to human need. Without wealth man cannot exist .” Hilaire Belloc, “The Servile State”, 1912 "The total volume of workable mineral deposits is
Slide 3: Economic growth is synonymous with accumulation of commodities in physical capital stock
The history of economic growth and development is synonymous with the accumulation of commodities in the world’s physical capital stock 100,000 Annual Evolution of Global Steel Stock vs. Real Global Stock of Steel vs GDP - 113 Country Analysis (Area = GDP 1900-2019 Annual Steel Demand per Capita) 70
Slide 4: Rise of China continues a well established historical pattern
And while the rise of China has captured the headlines, it represents simply the sequential continuation of a well established historical pattern Percentage of Global Copper Consumption Percentage of Global Iron Ore Consumption 70% 80% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 180018
Slide 5: UN SDG #1 No Poverty: what will it really take?
UN Sustainable Development Goal #1 “No Poverty”…What will it really take? Copper Demand Implications of SDG#1 (excluding “green” Required Per Capita Uplift in Physical Capital - Copper copper) 250 233 3,000 2,438 200 2,500 2,257 Kg Copper per Person 2,079 2,000 Mt Copper 150 1,500 100 61 1,000 480 5
Slide 6: Decarbonisation brings huge increase in material intensity
Whatever the precise form of the decarbonisation pathway for the global economy, the one fixed point is the huge increase in the material intensity of the process. Material Intensity of Transportation - EVs vs ICEs Material Intensity of Energy - Renewable vs Fossil 250 18,000 16,000 200 14,000 12,00
Slide 7: The real issue is the mining industry's ability to meet demand
The real issue is not the future of demand but of the mining industry’s ability to meet this demand. Total Global Copper "Resource Base" Evolution 116-Year CAGR in Copper Consumption by Origin 4.0% 2000 Kamoa 3.5% 0.4% 3.4% 1750 0.4% 3.0% 0.4% CAGR 1.7% Total "Resource Base" - Mt Cu 1500 2.5% Escond
Slide 8: Long run supply growth rests on incentives and technology
The long run growth in supply, and hence economic development, rests on the interplay between incentives (i.e. price and cost of capital) and technology. 1918 - World's Largest Mines Ore Reserves Reserve Grade Contained Metal 2023 - World's Largest Mines Ore Reserves Reserve Grade Contained Metal Mt
Slide 9: The super-cycle and the inflection in mining productivity
The recent “super-cycle” saw a return to long run demand growth trend but, more importantly, an inflection in the long run trend in mining productivity. Demand for Copper - 1900 to 2017 Productivity in Mining (Copper)- 1910 to 2017 131072 3.E+04 China’s emergence in the early 2000s It is in the supp
Slide 10: Interplay of demand and productivity explains structural price periods
It is this interplay that explains the emergence of new structural periods in the price of commodities. Metal Demand and Mined Productivity 32768 Copper Demand 128000 Mining Productivity 2000s on – mining productivity starts to flat line, “low hanging fruit” has Labour Productivity in Mining - Tonne
Slide 11: Incremental gains versus Schumpeterian moments of creative destruction
We must be careful to distinguish between incremental gains and true “Schumpeterian” moments of creative destruction in the industry. Labour Productivity in U.S. Copper Mining 256 Gains in the 1980s/90s driven by a change in the nature of the capital equipment used in mining, in particular by an inc
Slide 12: Productivity step change driven by scale of equipment
The most recent step change in mining productivity was driven by scale…from 40t to 400t haul trucks…it is this “order of magnitude” change that is required to offset grade declines. Mining Productivity and Scale of Capital Equipment - Caterpillar Trucks 120,000 450 400 Mining Labor Productivity - To
Slide 13: Mining is the most productive use of labour
Mining is the most productive use of labour in the modern economy... productivity in the supply of raw materials underpins the productivity of every other activity. Factor Share of Value Add by Sector 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Capital cost shares Labor cost shares © Anglo American,
Slide 14: Stated preference versus revealed preference: valuation by sector
However, while our stated preference is for a just transition to a sustainable future…our revealed preference tells a markedly different story. 50 Valuation by Sector 45 45 40 35 30 EV/EBITDA 27 25 24 25 21 20 20 18 16 16 16 15 15 12 10 10 8 6 6 5 4 5 0 © Anglo American, 2023
Slide 15: Higher real commodity prices
So what does this all mean…higher real commodity prices. Copper - Real 2022$ Gold - Real 2022$ Iron Ore - Real 2022$ 25,000 7,000 350 22,861 322 6,173 6,000 300 20,000 5,000 250 15,000 4,000 200 10,000 8,822 3,000 150 121 7,292 2,000 1,801 100 5,000 1,411 73 2,814 1,000 50 28 412 0 2002 2022 2022 20
Slide 16: Thank you
Thank you © Anglo American, 2023