Download - Anglo american -_john_mac_kenzie_english
06/04/2011
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The Supply Side OutlookJohn MacKenzie, CEO, Copper
OVERALL MACRO ECONOMIC AND MARKET CONTEXT
2
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
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
USQuantitativeEasing
%
Source: Anglo American Commodity Research
1. 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
%
%
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STRONG EMERGING MARKET GROWTH WILL CONTINUE
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Investment in infrastructure
US$ billion, constant 2005 prices and exchange rates
Middle classes by region (M)
Source: McKinsey Global Institute Source: OECD, Standard Chartered Research
0
100
200
300
400
500
600
700
800
900
1000
US Japan Germany UK China India Brazil
2008 2030
• Growing middle class in emerging economies will continue to drive demand
• China and the US will continue to drive infrastructure growth
THE COPPER MARKET OUTLOOK
4Source: Brook Hunt, a Wood Mackenzie company, December 2010 Long Term Outlook
• We expect a CAGR of approx. 4% between 2010 and 2015. Others are forecasting as much as 6%
• Supply side issues relating to bottlenecks, disruptions and falling ore grades continue to
impact production at existing operations
• Long lead times for new projects
• Only a proportion of the Probable and Possible
projects will come on stream in the timeframe indicated
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2010 2012 2014 2016 2018 2020
Min
e S
up
ply
(kt
Cu
)
Current production Highly probable
Probable Possible
Demand
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ANGLO AMERICAN - A MAJOR COPPER PRODUCER
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El Soldado (100%) Mantos Blancos (100%) Chagres (100%)
Collahuasi (44%)Los Bronces (100%) Mantoverde (100%)
• 623kt copper in 2010, plus molybdenum and silver by-products
• Two world class assets at Los Bronces and Collahuasi
DELIVERING SUBSTANTIAL NEAR TERM GROWTH
• Los Bronces 278ktpa copper expansion on schedule for first production Q4 2011
• Production at Los Bronces scheduled to increase to 490ktpa over first 3 years, average 400ktpa over first 10 years
• Positioned firmly in the lower half of the cost curve, estimated cash costs c. $0.80/lb net of by-products at full production
• At peak production the mine will be fifth largest producing copper mine
• Mine life over 34 years with further expansion potential
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MINIMUM TOTAL ENDOWMENT OF KEY COPPER BELTS
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22%
18%
10%
7%
6%
6%
6%
5%3%
3%
2%
2%
2%
2%
1%
1%
1%
1%
1%
1%
1%
1%
Source: and Metals Economics Group and Anglo American analysis
Top 10 key Cu belts
Other key Cu belts
A FOCUSED EXPLORATION PROGRAMME
8Copper exploration presence
DR Congo
IndonesiaBrazil
Alaska
Colombia
Peru
Chile, Argentina
• Major new Resources announced at Los Sulfatos, San Enrique Monolito and West Wall
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GROWTH IN SUPPLY
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0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Chile
China
Peru
USAAustraliaIndonesiaZambiaRussian FederationCanadaKazakhstanPolandDRC
Other
CAGR 1992 - 2001 CAGR 2001 - 2010
Chile 11.0% 1.5%
N. America -2.5% -2.15
Australia 10.8% -0.3%
Indonesia 16.8% -2.4%
Zambia -5.2% 9.6%
DRC -14.1% 29.7%
• Over the last 2 decades, the top 10 producing countries have supplied ~80% of the total
• Chile grew supply significantly during 1992 -
2001 but has remained relatively flat since then
• North America has decreased from 22% to 12% of global production, overtaken by Peruin 2009
• The fastest growing major supply regions are now Zambia and the DRC
Source: Brook Hunt, a Wood Mackenzie company, December 2010 Long Term Outlook
NEW SUPPLY: LATIN AMERICA CENTRE STAGE
10Source: Brook Hunt, a Wood Mackenzie company, December 2010 Long Term Outlook. 1) Total 2011-2020 includes highly probable and probable projects only
Chile
USA
CanadaIndonesiaAustralia
Russian Federation
Peru
China
PolandZambia
Other
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Total 2001-2010 Total 2011-2020
DRC
1
-
25
50
75
100
125
150
Highly probable
Probable Possible
Nu
mb
er
of
Pro
jects
GF <100ktpa
GF >100ktpa
• There are a limited number of large scale projects (>100ktpa Cu production) in the pipeline
• Over 50% of these large scale greenfieldprojects are located in Latin America
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A STRONG PIPELINE OF PROJECTS
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Other Projects
Los Bronces District (100%) Collahuasi (44%)
Michiquillay, Peru (100%)
Quellaveco, Peru (82%)
Pebble, USA (50%)
• Brownfield projects being studied at the majority of operations
• 3 major greenfield projects in Peru and the US, with approval of Quellaveco expected this year
IDEALLY POSITIONED FOR GROWTH IN A HIGHLY ATTRACTIVE INDUSTRY
• Our strategy is focused on four key value drivers
– Safety & sustainability
– Operational excellence
– Project delivery
– Portfolio management
• Our strong project pipeline has the potential to increase production to over 1.5Mt by 2020
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
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A very positive outlook for copper, with growing societal challenges, and continuing dominance of Latin America
in the copper supply market
Current projects
Existing & approved
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THANKYOU