Mining Industry Trends and Global Commodity Markets

Transcription

1 Mining Industry Trends and Global Commodity Markets Presentation by Cynthia Carroll, Chief Executive Anglo American plc 13 November 2007 China Mining Conference

2 Agenda Introduction to Anglo American The current dynamics of commodity markets The emergence of international Chinese producers Key supply constraints: - Skills -Energy - Infrastructure and logistics - Water - Community consent 1

3 Anglo American - History Founded in 1917 Opened up South African gold fields Grew to be Africa s largest company Moved primary listing to London in 1999 Restructured to become focused mining company 150,000 employees and permanent contractors Active in 40 countries 2

4 Our Businesses Anglo American plc Platinum (75% of Anglo Platinum) Gold 17% of AngloGold Ashanti (shareholding being progressively reduced) Diamonds (45% of De Beers) Coal 100% Base Metals 100% Industrial Minerals 100% Ferrous Metals 100% (67% of Kumba Iron Ore; 49% Minas-Rio project Brazil; 100% Scaw Metals) 3

5 Anglo Projected Expansions Project Pipeline* $8-9bn $8.2bn of approved projects $6-7bn $5-6bn $4-5bn c.$20bn in brownfield and greenfield unapproved projects many forecast to be in 1 st or 2 nd quartile of cost curve Potential to*: - Double copper production of 655kt by Double nickel production of 48kt by Treble iron ore production of 31mt by 2015 Base Metals Platinum Iron Ore Coal - Double metallurgical coal production of 10mt by 2015 *includes both approved and unapproved projects 4

6 Anglo American in China AngloGold Ashanti s Gold Exploration projects in Xinjiang, Qinghai, Gansu, Sichuan Anglo Coal s Xiwan Project in Shaanxi Tech coop with Yankuang Kumba s Zinc Smelter JV in Chifeng AA Rep. Office 2002 AngloGold Ashanti Office 2004 Anglo Coal Office 2003 Tarmac s office DTC office PGI office Anglo Platinum s exploration Project in Sichuan Tarmac s Quarry in Huzhou De Beers Office in Hong Kong 5

7 Stronger for Longer 'Cycles' in Base Metals Prices Indexed with Start of Cycle = 100 NB - Nominal Money MSU Anglo Base /pMet2 indexed, 300 low = 100 (nominal money) 250 Nov Jan Nov Apr Nov June 1988 Nov June 1966 Apr Oct Jan Jan 2000 Apr Feb months from start of cycle (trough) to peak

8 Industry Consolidation Top 5 Cu & Zn Mine Producers' % Share of Global Mine Output % Of World Production Copper Producers Zinc Producers 40 Rio 30 ZCCM Asarco Xstrata Hindustan P.Dodge Rio BHPB F'p McM O/Kump Centomin M.I.M. Noranda Zinifex Glencore Teck C. 0 Codelco Codelco Xstrata Teck C Source: Brook Hunt/MSU 7

9 Estimated % increase in Copper Mine Project Capex Budgets (end-2004 and early 2007) Prominent Hill Lumwana Andina (70-90kt/d) Gaby Sur One One Eight Northmet Mantos de La Luna Petaquilla Piedras Verdes Mirador Galore Creek Phoenix Reko Diq Boddington Quellaveco Salobo I Codelco Norte Exp Rio Blanco Source Brook Hunt MSU /Proj Cost Increases 8 %

10 Estimated Reserves Keep Growing 500 Global Mined Copper and Reserves (Mt Cu) Reserves Reserves Mined Reserves 1950 Mined Mined Source: USGS, WBMS, Anglo MSU MSU /Cu Reserves 9

11 Recent Chinese International Investments on minerals and mining 10

12 International Benchmarks 11

13 Supply Constraints Skills Energy Infrastructure and logistics Water Community consent 12

14 Skills Skills shortages have emerged as major challenges Limited output of relevant technical graduates More interventionist approach at artisan level Chinese graduate recruitment Premium on in-career training and talent management Diversity/Women in Mining 13

15 Energy Generating capacity has lagged growth Energy in security becoming significant operational issue Increased scope for self-generation Efficiency and carbon intensity reduction targets Growing scientific consensus around climate change Clean coal imperative Importance of greater certainty on post-kyoto framework FUTURGEN 14

16 Infrastructure Rail and port bottlenecks impacting supply and financial results Governments need to keep their side of the bargain Infrastructure partnerships 15

17 Water Demand growing in parallel with development Reduced rainfall in some countries Potential source of conflict with other users Need to innovate - waste water - water conservation - production processes - water trading 16

18 Community Consent Mining generating fewer jobs for local people Community consent increasingly important Mishandling of community issues results in lost projects or major delays Need to evolve new benefit sharing models 17

19 Conclusions Economic conditions remain strong Demand for major metals robust: stocks low China s new international players key partners Supply side constraints likely to continue Sustainable development considerations need to be integrated with core business planning 18