GLOBAL IRON ORE & STEEL FORECAST/media/Files/A/Anglo...2011/03/23 · Our view of the Global...
Transcript of GLOBAL IRON ORE & STEEL FORECAST/media/Files/A/Anglo...2011/03/23 · Our view of the Global...
GLOBAL IRON ORE & STEEL FORECASTQUALITY IRON ORE – A BRAZILIAN & SOUTH AFRICAN PERSPECTIVE
James Harman
Head of Business Development, Iron Ore & Coal
23 March 2011
CONTENTS
Anglo American
– World class mining company
– Strong financial position
– Diversified across the most attractive commodities
Our view of the Global economy
– Global economy
– Steel outlook
Anglo American’s Quality Iron Ore Business
– Major growth being developed
– South Africa – a unique position
– Brazil – 5 billion tonne + resource
– Anglo American’s quality advantage
– Australia
ANGLO AMERICAN
4
OUR AMBITION IS TO BE THE LEADING GLOBAL MINING COMPANY
Platinum
Diamonds
Copper
Nickel
Iron ore and Manganese
Metallurgical Coal
Thermal Coal
Corporate &
representatives offices
Key
E Exploration offices
5
Outlook20152009
100%
80%
60%
40%
20%
0%
Export Thermal
Coal
Hard Coking
Coal
Export Iron Ore
PlatinumNickelCopper
WORLD CLASS MINING COMPANY
• 1. Source: Anglo American; 2. Core revenue split; 3. Source: AME, Brook Hunt, a Wood Mackenzie company, Johnson Matthey. Thermal Coal represents share of internationally traded market, nickel and copper represent share of world
mined production, 4. Source: AME, Brook Hunt, a Wood Mackenzie company, Anglo Platinum. Estimated % of attributable production in each half of the cost curve after delivery of near term pipeline by 2015
Outperforming the industry1
Delivering commodity positionsin lower half of cost curves4
Iron Ore & Manganese
24%
Met Coal12%
Thermal Coal
10%
Copper18%
Nickel2%
Platinum24%
Diamonds10%
Strengthening balance sheet
Barro Alto
Los Bronces
Kolomela
Minas Rio
2010: Proceeds from asset sales $3.3bn
2011: Key projects start production
2010 2011 2012
Well diversified portfolio2 Structurally attractive commodities3
100%
H1
H2
World class project pipeline
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
2
4
6
8
10
12
2005 2006 2007 2008 2009 2010
Op Profit ($bn) Op Profit Margin (%)
Anglo American operating profit
Anglo American profit margin
50%
Thermal coal imports
China’s share of global consumption (%)
62%
60%
43%
38%
32%
27%
21% 11%
Nickel
Platinum
Palladium
Met Coal
Iron ore
Steel
Copper
2013
Industry profit margin
6
STRONG FINANCIAL POSITION
Results shown before special items and remeasurements and including share of associates
1) Core operations exclude Tarmac, Scaw, Zinc, Copebrás, Catalão, Coal Canada and
Tongaat Hulett/Hulamin
2) Capital expenditure is presented net of cash flows on related derivatives
Underlying EPS – $
4.36 2.14 4.13
Key financials
($bn) 2010 2009 change
Core operating profit(1) 9.1 4.5 +104%
Operating profit 9.8 5.0 +97%
Effective tax rate 31.9% 33.1%
Underlying earnings 5.0 2.6 +94%
Capex(2) 5.0 4.8
EBITDA 12.0 6.9 +73%
Net debt 7.4 11.3 (35%)
2.90
1.46
0.91
1.23
1.84
H2 2010
2.29
H1 2010H2 2009H1 2009H2 2008H1 2008
7
9%5%
22%
9%
10%
1%
37%
6%
UNIQUE AND WELL DIVERSIFIED PORTFOLIO
Samancor
KIO
Thermal Coal
Met Coal
Nickel
Copper
De Beers
Platinum
42%
12%
44%
2%
South Africa
Australia/Asia
South America
ROW
Attributable earnings by Business Unit1
%
Attributable earnings by geography %
PRECIOUS
1 Core businesses
OUR VIEW OF THE GLOBAL
ECONOMY
9
30
35
40
45
50
55
60
65
2010200920082007
0
100
200
300
400
500
0
20
40
60
80
100
c/lb
2010200920082007 31 Dec 10
70
75
80
85
90
2010200920082007
OVERALL MACRO ECONOMIC AND MARKET CONTEXT
• Source: Anglo Commodity Research1. Industrial Recovery 2. Weak USD
3. Strong commodity currencies help drive high
commodity prices
4. Markets remain volatile, but more optimistic about
the global economic outlook
USD indexed to exchange rate basket
ChinaUS
0
50
100
150
2010200920082007
Metals
USDCLP
USDAUD
USDBRL
USDZAR
Sept –
Lehman
failure
Nov –
US
QE2
Copper spotVIX index
Manufacturing activity May –
Greek
rescue
package
Purchasing managers’ index, 50 = no change
VIX
Index
31 Dec 10 31 Dec 10
31 Dec 10
US
Quantitative
Easing
%
% %
10
0
100
200
300
400
500
600
700
800
900
1000
US Japan Germany UK China India Brazil
2008 2030
STRONG EMERGING MARKET GROWTH WILL CONTINUE
Source: OECD, Standard Chartered Research
Investment in infrastructure
GROWING MIDDLE CLASS IN EMERGING
ECONOMIES WILL CONTINUE TO DRIVE DEMAND
US$ billion, constant 2005 prices and exchange rates
CHINA AND US WILL CONTINUE TO DRIVE
INFRASTRUCTURE GROWTH
Middle Classes by region, million
Source: McKinsey Global Institute
11
WORLD STEEL PRODUCTION WILL CONTINUE TO GROW
0
100
200
300
400
500
600
700
800
2007
2008
2009
2010F
2011F
2012F
2013F
2014F
2015F
In M
illio
n t
on
nes
North AmericaEuropeChinaCISIndiaOther
Source: Anglo American Analysis
Crude Steel Output Forecast Steel Consumption Forecast
0
100
200
300
400
500
600
700
800
2007
2008
2009
2010F
2011F
2012F
2013F
2014F
2015F
In M
illio
n t
on
nes
North AmericaEuropeChinaCISIndiaOther
Crude Steel Output Forecast Steel Consumption Forecast
0
500
1,000
1,500
2,000
20
07
20
08
20
09
20
10
20
11
F
20
12
F
20
13
F
20
14
F
20
15
F
in M
illi
on
to
nn
es
12
Continued urbanisation in China, in context of GDP growth,
drives finished steel demand
CHINA DRIVING DEMAND AND USE OF HIGHER QUALITY MATERIALS
Finished Steel Consumption kg per capita, vs. urbanisation
URBANISATION IN CHINA WILL DRIVE DEMAND
FOR OUR KEY METALS AND MINERALS
Chinese share of global stainless steel consumption increasing
Stainless steel consumption in China
…WITH A GREATER FOCUS ON HIGH QUALITY
MATERIALS
0
100
200
300
400
500
600
700
800
15 25 35 45 55 65 75 85
Germany
South Korea
Japan
China
Co
nsu
mp
tio
n (
Mt)
1.5
8%
15%
18%
18%
21% 23%
24%
1999 2001 2003 2005 2007 2009
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
40%
35%
30%
25%
20%
15%
10%
5%
9%
12%
21%
33%
1.7
2.3
3.2
4.24.5
5.2
6.0
6.66.2
8.2
Fin
ish
ed
ste
el K
g p
er
ca
pita
Urbanisation %Source: AME, IISI, EIU
ANGLO AMERICAN’S QUALITY
IRON ORE BUSINESS
14
-
20
40
60
80
100
120
140
160
180
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Mt
Unapproved
Construction
Production
ANGLO AMERICAN’S IRON ORE GROWTH STORY
• Projects currently in implementation or
approved will result in ~80 Mtpa production
• Ramp-up and Conceptual projects could
raise capacity to beyond ~155 Mtpa by 2020
Anglo American’s iron ore assets have the potential to produce in excess of 150 Mtpa by 2020
Current and Potential Iron Ore Production – 100%
Minas-Rio Phase 1
Amapá
Kolomela
Sishen Expansion
Sishen
Thabazimbi
Source: Anglo American Analysis
15
Amapá
2010 Production 4.0 Mt
Potential 6.5 Mtpa
Reserves + Resources 238 Mt
Products Pellet Feed, Fines
Logistics Rail & Port
Product Fe Content 62 / 68%
Kumba Iron Ore
2009 Production 41.1 Mt
2010 Production 43.1 Mt
2010 Domestic Sales 7.0 Mt
2010 Export Sales 36.1 Mt
Product Fe Content 64-66%
Products Fines, Lump
Minas-Rio
Target Prod. (Phase 1) 26.5 Mtpa
Potential Capacity > 80.0 Mtpa
Resources 5.7 Bt
Product Fe Content > 68%
Products Pellet Feed, Fines
Slurry Pipeline 100% owned
Açu Port 49% owned
Açu
Port
525km
Slurry
Pipeline
1
Minas Gerais
State
Amapá
State2
Santana
Port
Rio de Janeiro State
1
SaldanhaPort
2
Sishen Mine andKolomela
Thabazimbi
Source: Anglo American Analysis
ANGLO AMERICAN HAS A UNIQUE IRON ORE FOOTPRINT
16
SOUTH AFRICA: CURRENT OPERATIONS – SISHEN
• Kumba Iron Ore (KIO) (65.3% owned by Anglo
American)
• Northern Cape province of South Africa
• One of the largest open-pit mines in the world
• Produced 43.1 Mt in 2010
• Very high quality lump ore with outstanding
physical properties
Source: Kumba Iron Ore; Anglo American
17
• Kolomela 9 Mtpa iron ore project on schedule for first production Q2 2012
• At full capacity the mine will deliver 9 Mtpa of high quality seaborne iron ore
• Expected to operate in the lower half of the cost curve
Source: Kumba Iron Ore; Anglo American
SOUTH AFRICA: PROJECT DEVELOPMENTS – KOLOMELA
18
• Located in Amapá state, in North-East Brazil
• Fully integrated operation utilising shovel and
truck, beneficiation and rail to the Amazon port
of Santana
• Produced 4.0 Mt of iron ore in 2010
BRAZIL: CURRENT OPERATIONS – AMAPÁ
Source: Anglo American
19
Açu Port
525km
Slurry
Pipeline
Minas Gerais
State
Rio de Janeiro State
BRAZIL: CURRENT PROJECT DEVELOPMENT – MINAS-RIO
• One of the world’s largest
mining projects, acquired by
Anglo American in 2007-2008
• Tier 1 asset
• Situated in an established iron
ore mining area of Brazil
• Integrated mine, pipeline and
port operations
• 5.7 Bt resource
• 26.5 Mtpa Phase 1 production
• >80 Mtpa potential production
• Extremely high quality pellet
feed
• Leading cost position, in the
first quartile of the cost curve
• Project implementation well
advanced
• FOOS planned for Q3 2013
Source: Anglo American
20A B C D E
S2238 m
2.404 m1.816 m2.280 mF G H I J
2.770 m 3.430 m 2.790 m 3.080 m
Stockpile“IC”
Tailing dump
Plant
Sapo Itapanhoacanga
S11.940 m
S3527 m
S4846 m
S5964 m
Crusher
1.670 m
BRAZIL: CURRENT PROJECT DEVELOPMENT – MINAS-RIO
• Anglo has significantly increased Minas
Rio’s iron ore resource since the acquisition
to 5.7 Bt
• Resources consist of two closely located
assets: Itapa and Serra do Sapo
• Phase 1 plan mines the Serra do Sapo friable
resources.
• Minas-Rio will be mined with conventional
truck and shovel open-pit operation with an
average strip ratio of 1.1 over the LOM
Source: Anglo American
Limit Mineral Right Limit Tailing DumpPlant areaConveyors beltMine out pointPit
21
PIPELINE
• Initial underground 26 inch diameter
slurry pipeline with 26.5Mtpa capacity
• Well-tested logistics method in Brazil
built by highly experienced local
contractors
• Slurry propelled by gravity with two
pump stations and one valve station,
developed in three spreads
• Sole use 525km pipeline corridor with
room for at least two pipelines
PORT
• 100% owned by LLX Minas-Rio – 49%
Anglo American; 51% LLX SA
• Anglo American managing port
construction
• 3,000m port access bridge completed
• 10,000 tph loading capacity
• Capesize vessels
• Land available to expand the port and/or
downstream operations
• Long term low tariff agreed
BRAZIL: CURRENT PROJECT DEVELOPMENT – INFRASTRUCTURE
Source: Anglo American
22
BRAZIL: CURRENT PROJECT DEVELOPMENT – PROGRESS
ThickenerClarifier
Substation
Filtering
Building
StationTerminal
Coagulant / Flocculant
• Key components advancing in accordance with
schedule for FOOS Q3 2013
• Significant progress with licenses and permits
• Engineering and major equipment purchases
substantially completed
• Beneficiation plant – earthworks well advanced;
civil works commenced March 2011
• Pipeline – ahead of schedule
• Filtration plant – ahead of schedule
• Port – offshore bridge, iron ore pier completed
Source: Anglo American
23
0%
2%
4%
6%
8%
10%
56% 58% 60% 62% 64% 66% 68% 70%Grade
ANGLO AMERICAN IRON ORE - A QUALITY POSITION
Notes: 1. Chinese production (rich ore equivalent) inferred from a small sample of mines.Source: CRU, AME, Anglo American Analysis
Dotted bubble indicates
processed ore
Bubble size indicates an
average production of 50
Mtpa
China1
Other Africa
CIS
North America
Australia - high quality
Australia - medium quality
India
Brazil Minas-Rio Phase1
Amapá
Sishen
Minas-Rio expansion
Minas-Rio is a high grade, low contaminant expandable resource
Alu
min
a +
silic
a c
on
ten
t
24
ANGLO AMERICAN IRON ORE TRADE FLOWS
Unique iron ore geographic footprint in Brazil and South Africa.
Iron ore in Australia would complement existing production and provide blending opportunities
to service clients in Asia.
?
• Ambition to become the leading global mining company
• Global footprint
• Diversified portfolio across the most attractive commodities
• Strong financial position
• Significant existing high quality iron ore production
• Strong project pipeline towards 150mtpa
• Looking to grow our position in iron ore – Australia?
CONCLUSION
THE LEADING GLOBAL MINING COMPANY
EMPLOYER OF CHOICE
PARTNER OF CHOICE
INVESTMENT OF CHOICE