Xstrata Copper Our transformational growth and potential

Transcription

1 Xstrata Copper Our transformational growth and potential Asia Copper Conference 29 November 2012 Andrew Greville, Executive General Manager Business Development and Strategy Xstrata Copper 1

2 Disclaimer This document and the presentation are being made only to and directed only at (A) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order ) or (B) other persons to whom it may otherwise be lawfully communicated (each a relevant person ). This presentation and its contents are confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose without the written consent of Xstrata plc ( Xstrata ). This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities, or a proposal to make a takeover bid in any jurisdiction. Neither this document nor the fact of its distribution nor the making of the presentation constitutes a recommendation regarding any securities. This presentation is being provided to you for information purposes only. Certain statements, beliefs and opinions contained in this presentation, particularly those regarding the possible or assumed future financial or other performance of Xstrata, industry growth or other trend projections are or may be forward looking statements. Forward-looking statements can be identified by the use of forwardlooking terminology, including the terms believes, estimates, anticipates, expects, intends, plans, goal, target, aim, may, will, would, could or should or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond Xstrata s ability to control or predict. Forward-looking statements are not guarantees of future performance. No representation is made that any of these statements or forecasts will come to pass or that any forecast result will be achieved. Neither Xstrata, nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this presentation will actually occur. You are cautioned not to place undue reliance on these forward-looking statements. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Services Authority), Xstrata is not under any obligation and Xstrata expressly disclaims any intention or obligation to update or revise any forwardlooking statements, whether as a result of new information, future events or otherwise. This presentation may contain references to cost curves. A cost curve is a graphic representation in which the total production volume of a given commodity across the relevant industry is arranged on the basis of average unit costs of production from lowest to highest to permit comparisons of the relative cost positions of particular production sites, individual producers or groups of producers across the world or within a given country or region. Generally, a producer s position on a cost curve is described in terms of the particular percentile or quartile in which the production of a given plant or producer or group of producers appears. To construct cost curves, industry analysts compile information from a variety of sources, including reports made available by producers, site visits, personal contacts and trade publications. Although producers may participate to some extent in the process through which cost curves are constructed, they are typically unwilling to validate cost analyses directly because of commercial sensitivities. Inevitably, assumptions must be made by the analyst with respect to data that such analyst is unable to obtain and judgment must be brought to bear in the case of virtually all data, however obtained. Moreover, all cost curves embody a number of significant assumptions with respect to exchange rates and other variables. In summary, the manner in which cost curves are constructed means that they have a number of significant inherent limitations. Notwithstanding their shortcomings, independently produced cost curves are widely used in the industries in which Xstrata operate. No statement in this presentation is intended as a profit forecast or a profit estimate and no statement in this presentation should be interpreted to mean that earnings per Xstrata share for the current or future financial years would necessarily match or exceed the historical published earnings per Xstrata share. The distribution of this presentation or any information contained in it may be restricted by law in certain jurisdictions, and any person into whose possession any document containing this presentation or any part of it comes should inform themselves about, and observe, any such restrictions. By attending the presentation and/or accepting or accessing this document you agree to be bound by the foregoing limitations and conditions and, in particular, will be taken to have represented, warranted and undertaken that you have read and agree to comply with the contents of this notice including, without limitation, the obligation to keep this document and its contents confidential and that you are a relevant person (as defined above). 2

3 Copper market

4 Copper market overview Supply and demand growth subdued in 2012 Limited global demand growth Index of quarterly refined copper demand, Q1 2008=100 USA Japan Germany China High rate of mine disruption e kt Cu Limited global mine supply recovery in % % mine supply growth 6% 70 4% 2% +2.8% 50 Q Q3 Q Data: Xstrata Copper, WBMS Q3 Q Q3 Q Q3 Q Q3e 0% -2%

5 Copper demand will recover in the medium and long term Robust growth forecast in Macroeconomic growth to recover in % y/y US residential construction 000 units Housing Starts Building Permits 3,500 World IP World GDP China power cable output km thousand Urbanisation remains a key driver of demand growth in the long term % Urban Population Brazil Russia China 2011 India 2025 South Korea Japan China 2025 USA Germany , India ,500 Jan-11 Jul-11 Jan-12 Jul-12 Jan - 11 Jul - 11 Jan - 12 Jul - 12 Data: US Census Bureau, CEIC, UN Population Division, Oxford Economics Forecasting 10 GDP per capita (PPP US$M)

6 Copper supply remains constrained Cost escalation will limit new projects Majority of new mine projects located in South America Other 5% Africa 19% Capital cost escalation... 35% 30% 25% 28% S America 39% potential new mine production ~5Mt Asia 11% Australia 9% 20% 15% 10% 5% Falling head grades Primary Copper head grade, % Data: Xstrata Copper, Wood Mackenzie N America 17% 0% Data: Wood Mackenzie...drives high capital intensity of new projects $/tpa cu equivalent Historic Construction Project Data: Wood Mackenzie

7 Xstrata Copper

8 World s fourth largest copper producer Strong platform for further growth Top five global mined and refined copper producer with copper output of 889,000 tonnes in 2011 Diversified geographic exposure Mined Copper Production (kt) in Robust cost position in the second quartile 2012 is a transformational year as older mines are replaced by new lower-cost production from H2 Projects under construction to further transform business and increase production by more than 50% to c.1.5mtpa in 2015 Codelco Freeport BHPB Xstrata Anglo 2011 C1 Normal cash costs (c/lb) Xstrata Copper Future growth options provide significant optionality Data: Xstrata Copper 0% 50% 100% 8

9 Strong geographically diverse portfolio Fourth largest copper producer with more than 20,000 employees, 15 assets and 7 major projects in eight countries 9

10 Grown rapidly over last decade... Production almost doubled since Xstrata Copper business unit was formed following MIM Holdings acquisition in 2003 XCu EBITDA: $481.8M* XCu production: 497kt Phase 4: Selective growth Australia Argentina Australia Argentina XCu EBITDA $4.9bn XCu production: 889kt Phase 3: Transformation and organic growth Phase 2: Optimisation of asset base through operational excellence Mount Margaret 2011 Australia Chile North America Argentina Peru Australia Chile North America Argentina Peru Falconbridge 2006 Tintaya 2006 Phase 1: Mergers and acquisitions * Pro forma including MIM Group acquisition from

11 Transformational organic growth Delivering growth and transformation with volumes increasing from second half of 2012 Delivering long-life, low cost operations with embedded further growth potential Commissioning 4 projects in 2012 Las Bambas full production from 2015 New growth will transform the business in terms of asset quality and cost competitiveness Significant reduction in real unit costs with majority of production in first half of cost curve Substantial increase in average mine life and resource base Provides further capital efficient brownfield growth potential - including Antapaccay and Las Bambas Xstrata s share, * For at least first five years Commissioning four projects in 2012 Antamina 130ktpd Antapaccay 160ktpa Q1 Q2 Q3 Q4 Project Mount Margaret 30ktpa Xstrata s interest Production Lomas Bayas II 75ktpa Start-up Lomas Bayas II 100% 75 ktpa H211 ROM H212 Leach Ernest Henry u/g 100% 50 ktpa H Decline H2 13 Shaft Antamina 130ktpd 33.75% 40 ktpa H Mount Margaret 100% 30 ktpa H Antapaccay 100% 160 ktpa* H Las Bambas 100% 400 ktpa* H

12 Under evaluation: Brownfield pipeline provides value leverage ktpa Copper Collahuasi phase 3 expansion, Chile: Feasibility Study In Pre- +250ktpa copper Agua Rica, Argentina (MAA): In Feasibility Study - Alumbrera +50ktpa copper Coroccohuayco, Peru (Tintaya): In Pre-Feasibility Study +90ktpa copper Lomas Bayas Sulphides, Chile: In Pre-Feasibility Study Lomas Bayas Early stage Antamina expansion, Peru: In Scoping Study All estimated copper production figures on a 100% basis 12

13 Under evaluation: Greenfield pipeline provides optionality +400ktpa copper El Pachón, Argentina: Updating Feasibility Study. Mineral Resource: 0.47% copper, plus Mo and Ag credits +450ktpa copper Tampakan, Philippines: completed Feasibility Study. Mineral Resource: 0.51% copper, plus Au credits +260ktpa copper Frieda River, Papua New Guinea: In Feasibility Study. Mineral Resource: 0.4% copper, plus Au credits Early stage West Wall, Chile: In Scoping Study. Initial Mineral Resource: 0.54% copper All estimated copper production figures on a 100% basis, for the first five years Our mineral resource statements are available at 13

14 Sector leading sustainability performance has underpinned our development Global recognition for our industry leading performance Significant ongoing improvements in key safety performance indicators 30%, 40% and 57% improvements in TRIFR, LTIFR and DISR in 2011 Application of sustainability principles enabling social licence to operate as well as attracting and retaining talent Environmental best practice is feeding into successful ESIA approval processes Antapaccay July 2010, Las Bambas March 2011 In 2011, Xstrata Copper continued its track record of recognitions for sustainability best practice (28 awards in 2011) Rehabilitation of Xstrata Copper s Gaspé site in Quebec, Canada described as the benchmark for future mine decommissioning projects (Schreyer 2011 award) Xstrata Copper s safety performance Total recordable Injury Frequency Rate (TRIFR) Dow Jones Sustainability Index Named mining sector leader on the Dow Jones Sustainability Index 2011/12 for the fifth consecutive year and Super Sector Leader for the second consecutive year

15 Xstrata Copper in Asia Pacific

16 Tampakan Copper-Gold Project Unprecedented opportunity for local development and regional growth Located on the southern Philippine island of Mindanao, approximately 40 kilometres north of General Santos City One of the largest undeveloped copper-gold deposits in the world 15 million tonnes of contained copper and almost 18 million ounces of gold Annual average production of 375ktpa copper and 360kozpa gold over an initial 17 years Projected total taxes and royalty revenues of USD7.2 billion, providing an unprecedented opportunity for Mindanao and the country Operated by Philippine-based affiliate Sagittarius Mines, Inc. (SMI), whose 40% controlling equity is owned by Xstrata Copper (62.5%) and Indophil Resources NL (37.5%) As the Government s Financial and Technical Assistance Agreement contractor, SMI demonstrating industry leading sustainable development standards 16

17 Frieda River Copper Gold Project A world class resource Located approximately 200 kilometres from the north coast and 70 km from the navigable Sepik River 9.4 million tonnes of contained copper metal and 14.8 million ounces of contained gold Annual average copper production of 190ktpa and 280kozpa gold over 20 years Xstrata Copper assumed management control of the Project in January 2007, and holds 81.82% of the Project in joint venture, with Highlands Pacific Limited holding 18.18%. Feasibility study will be delivered December 2012 Project would potentially comprise: Open pit mining at the Horse-Ivaal-Trukai porphyry copper-gold deposit Processing of ore by conventional crushing, grinding and flotation, to produce a copper-gold concentrate Concentrate pumped via pipeline to a de-watering facility on the Sepik River for transfer to river-going barges Barging of concentrate along the Sepik River for transfer to a concentrate silo vessel and shipment to overseas markets for smelting 17

18 The combined copper businesses of Xstrata and Glencore

19 Glencore and Xstrata Shareholders of both companies have voted to merge Tuesday 20 November shareholders approved all-share merger between Glencore International plc and Xstrata plc Merger remains subject to various regulatory and court approvals Combined company called Glencore Xstrata plc, headquartered in Switzerland Unique business model, fully integrated along the commodities value chain, from mining and processing, storage, freight and logistics, to marketing and sales. World s fourth largest global diversified natural resources company - operations in 33 countries across 18 commodities, 40 marketing offices, 101 mines, 31 concentrators, 25 smelters, 130,000 employees, 264 vessels, and eight ports Both companies have strong organic growth plans across mining reserves with long term growth potential 19

20 The combined copper business More than 40,000 people across more than 30 operations and projects Kidd CCR Horne Xstrata Recycling (East Providence) Xstrata Recycling (San Jose) Xstrata Recycling (Penang) PASAR Antamina Las Bambas Tintaya Antapaccay Collahuasi Lomas Bayas Altonorte Punitaqui Alumbrera El Pachón Katanga Mutanda Mopani Tampakan Frieda River Mount Isa Ernest Henry Townsville ref. Cobar Operations and projects in 11 countries 20

21 Glencore Xstrata copper project portfolio Capitalising on combined near term growth projects Antamina Mount Margaret Antapaccay Lomas Bayas II Ernest Henry UG Las Bambas Katanga and Mutanda exp Year of expected commissioning Cobar exp Mutanda/ Kansuki exp Mopani exp/ smelter Katanga exp Future growth projects Not yet approved. El Pachon Agua Rica Lomas Bayas sulphides Coroccohuayco Collahuasi 1Mtpa Tampakan Frieda River 21

22 Conclusions Xstrata Copper 2012 a transformational year for Xstrata Copper Organic Greenfield and Brownfield growth transforms the quality of our asset portfolio in terms of volume and cost with a strong platform to deliver further optionality 50% copper growth More than 80% of production in the first half of the cost curve The combined Glencore and Xstrata copper business is poised to become a world leader in the sector 22

23 Thank you