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ANGLO AMERICAN PLC - Anglo American Investor Day

Release Date: 09/12/2014 13:30
Code(s): AGL     PDF:  
Wrap Text
Anglo American Investor Day

Anglo American plc
Incorporated in the United Kingdom
(Registration number: 3564138)
Short name JSE: Anglo
Share code JSE: AGL
Short name NSX: Anglo-AMRC NM
Share code: NSX: ANM
ISIN number: GB00B1XZS820
(the "Company")


Anglo American investor day

Anglo American is today hosting a presentation for investors and analysts which will provide a
detailed update on its operational turnaround and the next phase of transformation to position
the business to outperform, by realising its full potential and delivering enhanced and
sustainable returns to shareholders.

Delivered on all commitments

- Production performance improved in every business across diversified portfolio (6%
  increase on Cu Eq. basis)(1)
- 71% of priority assets now performing above plan (vs. 21% in 2012)
- Minas-Rio project delivered: $400 million below revised budget and ramping up to 26.5Mtpa
- Sishen turnaround on track to restore production to 37Mt by 2016
- Copper turnaround on track, more than offsetting declining grades and ore hardness
- Platinum portfolio structure defined and process aligned with stakeholders
- Coal Australia unit costs down 21%, with longwall productivity up >120%
- 2014 production guidance increased further for iron ore, met coal, thermal coal, copper(2)
  and nickel, to enhance margins

Positioning the business to outperform

- $4 billion of incremental EBIT underpinning ROCE objectives scoped and on track, with
  significant further potential
- On track for 15% ROCE in 2016 at June 2013 prices , reflecting scale of operational
  (3)turnaround; 12% ROCE at current consensus prices for 2016
- Capex guidance reduced by $500-800 million in 2014 and $800-1,000 million in 2015(4)

- Asset divestments identified and sales processes largely under way
- Net debt expected to peak in 2015 at $13.5-14 billion (post the Lafarge Tarmac disposal)
- Dividend expected to be funded from cashflow from 2016
- Technical capabilities restored to implement, and leverage from, stable operating model
- 2017 portfolio targets c.80% productivity improvement from c.35% fewer people, through
  growth and portfolio restructuring

Stability, capability, potential

Mark Cutifani, Chief Executive of Anglo American, said: “We have delivered on our major
commitments to shareholders, delivering Minas-Rio, defining our future platinum business and
resetting the performance of our operations. We have successfully turned around a number of
our priority operations this year, principally in our Copper, Kumba Iron Ore and Coal
businesses. We have delivered higher and more consistent volumes with an unwavering focus
on increased stability, productivity, margins and returns. Our mining operations are the engine
of our business and there is more improvement ahead, as we continue to build the capability to
achieve a higher standard of performance. We are adapting and delivering.

“The Minas-Rio team delivered First Ore On Ship on schedule in October, successfully
navigating the potential bottlenecks of the final development and licensing phases, while
bringing the project in $400 million below the revised budget. We are clear about the asset’s
potential and the differentiated nature of its high quality product and we are ramping up to
26.5 Mtpa over the next 18-20 months to an expected steady state operating cost of $33-35 per
wet metric tonne.

“A platform of operational excellence is fundamental to delivering the potential of this business.
However, there are also a number of additional structural and cultural changes that will
underpin the next phase of transformation. We must be disciplined with our deployment of
physical and financial resources to focus on those assets that will provide us with the greatest
returns and potential upside. We have identified, through our review process, a number of
assets that are likely to deliver greater value under different ownership, enabling us to
concentrate our resources on our most attractive priority assets. A number of sales processes
are under way, however our value hurdles will need to be met prior to divestment.

“We are committed to maintaining a robust capital structure which balances long term business
value growth with sustainable capital returns to shareholders. Anglo American is fortunate to
have a world class resource endowment, including a number of attractive, predominately
brownfield options, for organic growth. We will continue to allocate capital to our most value
accretive options and pursue a syndication approach for major greenfield developments, in line
with managing individual risk exposures and achieving our long term net debt target of
$10-12 billion. We have also reduced our capital expenditure guidance by $500-800 million in
2014 and by up to $1 billion in 2015 to $5.2-5.5 billion. We will see a significant reduction in
committed capex post 2015, leading to greater capital flexibility, as our projects in execution are
completed and contribute to an expected 5-7% annual copper equivalent production growth
rate between 2014 and 2017.

“Our revised operating model is delivering strong results and we are building on those
foundations to complete the next phase of the transformation process in line with the strategic
objectives for 2015 to be outlined today. Our focus on ROCE drives the right behaviours within
the business and we are moving all the levers within our control to deliver the $4 billion of
additional EBIT required for us to meet 15% ROCE in 2016, based on the mid-2013 commodity
price deck. Current market consensus prices for 2016 lead us to a 12% ROCE in 2016 and we
are intensifying our efforts to identify the implied additional $2 billion of EBIT necessary to
increase ROCE to 15%. We are transforming this business, we have a clear direction and we
are creating a different future for Anglo American.”


The presentation, which is available on the Anglo American website, will begin at 1.30pm (UK
time) and can be viewed via live webcast: www.angloamerican.com/investors

The following members of Anglo American’s management team will present:

Mark Cutifani            Chief Executive
René Médori              Finance Director
Tony O’Neill             Group Director – Technical & Sustainability
Chris Griffith           CEO Platinum
Duncan Wanblad            CEO Base Metals & Minerals
Paulo Castellari          CEO Iron Ore Brazil
Seamus French             CEO Coal
Norman Mbazima            CEO Kumba Iron Ore
Peter Whitcutt            Group Director – Strategy, Business Development & Marketing

The presentation is expected to finish at 4.30pm (UK time).


Notes:
(1)
    9 months to 30 September 2014
(2)
    Versus guidance provided in the Q3 2014 Production Report
(3)
    Based on commodity prices and exchange rates at 30 June 2013
(4)
    Versus guidance provided in the Interim Results for the six months ended 30 June 2014


For further information, please contact:

Media                                                    Investors
UK                                                       UK
James Wyatt-Tilby                                        Paul Galloway
Tel: +44 (0)20 7968 8759                                 Tel: +44 (0)20 7968 8718

Emily Blyth                                              Ed Kite
Tel: +44 (0)20 7968 8481                                 Tel: +44 (0)20 7968 2178

South Africa                                             Sarah McNally
Pranill Ramchander                                       Tel: +44 (0)20 7968 8747
Tel: +27 (0)11 638 2592

Shamiela Letsoalo
Tel: +27 (0)11 638 3112


Notes to editors:
Anglo American is a global and diversified mining business that provides the raw materials
essential for economic development and modern life. Our people are at the heart of our
business. It is our people who use the latest technologies to find new resources, plan and build
our mines and who mine, process and move and market our products – from bulk commodities
and base metals to precious metals and diamonds (through De Beers) – to our customers
around the world. Our diversified portfolio of products spans the economic development cycle
and, as a responsible miner, we are the custodians of precious resources. We work together
with our key partners and stakeholders to unlock the long-term value that those resources
represent for our shareholders, but also for the communities and countries in which we operate
– creating sustainable value and making a real difference. Our mining operations, growth
projects and exploration and marketing activities extend across southern Africa, South America,
Australia, North America, Asia and Europe.

www.angloamerican.com


9 December 2014

Sponsor: UBS South Africa (Pty) Ltd

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