glen investor-day-2014-print
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1 1
Tintaya concentrator, Peru
08:00 - Welcome and Overview | Ivan Glasenberg
08:20 - Finance Update | Steven Kalmin
08:45 - Copper | Telis Mistakidis
09:15 - Coal | Tor Peterson & Peter Freyberg
09:45 - Break
10:05 - Zinc | Daniel Maté & Chris Eskdale
10:35 - Nickel | Kenny Ives & Peter Johnston
11:05 - Oil | Alex Beard
11:40 - Break
12:00 - Agricultural products | Chris Mahoney
12:30 - Conclusion and Q&A
Investor Day 10 December 2014
Forward looking statements
This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward looking statements may be identified
by the use of forward looking terminology, or the negative thereof such as "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget",
"scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable
terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements
are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current
predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions
of strategy.
By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not
guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those
discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report.
Neither Glencore 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 document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the
date of this document. 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
Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange
Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking
statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change
in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date.
No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for
the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share.
This document 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. The making of this
document does not constitute a recommendation regarding any securities.
2
Ivan Glasenberg
CEO
Lion chrome smelter, South Africa
Summary
• Capital misallocation, not a lack of demand, remains a key issue
for the sector
• Clear need to differentiate by commodity – correlation has broken down
• Glencore’s positioning provides superior insulation and material price optionality
• Established portfolio of Tier one industrial assets/cost structure in the right
commodities
• Glencore Marketing is a unique, low-risk, defensive earnings driver
• Our balance sheet strategy, attributes and execution are key value creators
• Unparalleled track record of value creation since 1994, based on material
management ownership
• Our sustainability efforts are gaining traction
4
Capital allocation is a key issue for the sector
Electronic scrap recycling, Horne copper smelter, Canada
0%
2%
4%
6%
8%
10%
12%
Copper Zinc Al Ni Thermal Coal Iron Ore Oil
Previous 5 year average
2014
Demand favours base over bulk again in 2014 …
6 Source: Glencore estimates, various broker reports, Wood Mackenzie.
Global demand growth
… however, capital allocation in the sector remains iron ore centric …
7
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Glencore Peer 1 Peer 2 Peer 3 Peer 4
Met Coal Thermal Coal Iron Ore Metals Oil and Gas
Production growth 2013A -2016E (Cu equivalent)
Source: Company websites, Glencore estimates. Note, does not include commodities where production declines are expected.
-60% -50% -40% -30% -20% -10% 0% 10% 20% 30%
Copper
Zinc
Aluminium
Nickel
Coal
Iron ore
Oil
… and price performance reflects oversupply fears
8
Year to date price change
Source: Bloomberg as at 3 December 2014, Wood Mackenzie, Deutsche Bank, Glencore estimates.
Differentiation by commodity is critical
Wheat crop in Bute, Australia
Our global footprint is truly diversified …
10
… by commodity and activity …
11
Oil 26%
Copper 20%
Iron Ore 52%
Other 1%
Iron Ore 73%
Aluminium 10%
Copper 10%
Coal 2%
Diamonds 5%
Iron Ore 40%
Coal 8%
Copper 25%
Diamonds 25%
Other 2%
BHP:
Copper 38%
Zinc 4%
Nickel 7%
Coal 7%
Oil 4%
Marketing metals 25%
Marketing energy 6%
Marketing agri 13%
Corp and other (4%)
Source: company reports, EBIT H1 2014.
… with key drivers earning 98% of EBIT …
12
0 10 20 30 40 50 60 70 80 90 100
38% 4% 7% 7% 42%
Cu Deficit
“Consensus” surplus
elusive so far,
increasing downside
risk to supply in 2015/16
Zn Deficit
An additional 3-3.5Mt of
zinc supply needed over
next 5 years to balance
the market
Marketing Resilient
Defensive earnings,
less sensitive to falling
prices. Benefits from
own source production
Coal Rebalancing
Some high cost supply
shutting, new investment
delayed. Coal essential
to meet energy demand
Ni Transitioning to deficit
Balanced 2015 and
deficits thereafter,
substantial from 2018
Data: H1 2014 EBIT.
70
80
90
100
110
120
130
140
2013 2014 2015 2016 2017 2018
… supported by positive fundamentals and prices
13
Consensus price forecasts 2014=100
Source: Consensus broker research, 4 December 2014.
Nickel
Aluminium
Zinc
Copper
Iron Ore
Oil
Thermal
Coal
Established portfolio of Tier one industrial assets
Assay lab, Mount Isa Mines, Australia
Established portfolio of Tier One assets …
15
… with synergies and cost savings embedded in the commodity cost structures …
16
Cu
2016F
>$2bn
industrial merger
synergies and other
cost savings achieved
Post-integration
cost efficiencies
and focus now
ingrained in
industrial asset
structures
Q1
first quartile cost
positions achieved in
2014; further
improvements expected
Q1 Q2 Q3 Q4
FeCr
2013
2016F
Ni
2016F
Thermal Coal
2016F
Illustrative C1 metals cash cost curve / Inverse FOB cash margin thermal coal
Zn
2016F
Cu
2013
Zn
2013
Ni
2014F
… with major optionality for future brownfield growth, as and when appropriate
17
2016+ brownfield growth options
Copper
Coroccohuyaco
Mutanda Sulphides
Zinc
Mararovskoe
Dolinno
Nickel
Raglan 40ktpa
Raglan Phase II
Coal
Mt Owen extension
Rolleston Phase II expansion
GGV expansion
Optimum / Zonnebloem
Commissioning 2015
Copper
Nkana Synclinorium: new
shaft to extend section life by
25 years
DRC Power: first 162MW
refurbished turbine (G27) at
Inga
Tintaya mill restart: restart
Tintaya mill to process higher
Antapaccay ore volumes
Commissioning 2016
Copper
Antapaccay expansion:
Concentrator upgrade to
increase throughput
Oil: >800 MM bbls of risked
prospective resource potential
in Chad Chad exploration: Doseo/Borogop,
DOBI/DOI, DOH blocks
Chad development: Kibea and
nearby discoveries
Bolongo – Cameroon
Diega – Equatorial Guinea
Oil
Krim (DOB/DOI): Chad
Note: Cu equivalent annual growth including the above committed projects only of c. 5.4% expected 2014-2018.
Coal
Bulga: 20 year life extension
at current production rates
Commissioning 2017
Copper
Mopani Deeps: new shaft
infrastructure to provide a
25% increase in own source
production and a 20%
reduction in mine cash costs
Marketing – a defensive earnings driver
Chemoil terminal, Singapore
Marketing – a unique, low-risk, defensive earnings driver
19
• Relatively low cost of capital and stable cost base underpin predictable and high ROE
• Resilient earnings capability in a falling price environment
• Minimal exposure to flat price risk
• Difficult to replicate
• A key differentiator among the diversified peers
• Credit rating/cost of funds advantage relative to trading peers
• Industry leading own source production volumes create significant optionality
• Provides unrivalled global intelligence / market knowledge and insight
• Commodity direction
• Corporate activity/opportunities
• Customer and supplier behaviour
• Unique scale, diversification and skill
Marketing EBIT ($M)
0 1,000 2,000 3,000 4,000
2008
2009
2010
2011
2012
2013
2014+
Marketing EBIT ($M)
Historical
guidance
range:
$2 to $3bn
Revised
guidance
range (post
Xstrata and
Viterra):
$2.7 to $3.7bn
Sustainability gaining traction
Espinar farmer near Antapaccay/Tintaya copper mines, Peru
Governance and sustainability
Safety • Regrettably 15 fatalities year to date (26 in 2013)
• Reduction on 2013 reflects ‘SafeWork’ focus on safety
leadership, culture and implementation of Fatal Hazard
Protocols
• Significant performance improvement at DRC, Zambia,
Bolivia and Kazakhstan operations (64,500 employees
and contractors)
• Targeting ‘SafeWork’ rollout to all 200,000 employees
and contractors by February 2015 (100,000 YTD)
Governance • Consolidation of Board: A. Hayward, Chair; P. Grauer
SID; Patrice Merrin, new NED
• Published policies on bribery and corruption, carbon
and human rights
Memberships • ICMM, UN Global Compact, EITI
• Voluntary Principles on Security and Human Rights
(application in progress)
21
LTIFR(1) 2009 to 2014YTD
3.00
2.73
2.51
2.04 1.93
1.57
1.00
1.50
2.00
2.50
3.00
3.50
2009 2010 2011 2012 2013 2014YTD
Note: (1) Lost time incidents (LTIs) are recorded when an employee or contractor is unable to work following an incident. Glencore records LTIs which result in lost days
from the next calendar day after the incident whilst Xstrata recorded LTIs which resulted in lost days from the next rostered day after the incident – therefore the
combined LTI figure is not based on data of consistent definition (historically, prior to merger). LTIFR is the total number of LTIs recorded per million working hours.
Our priorities for 2015
Zinc balls, Nordenham, Germany
Our priorities for 2015
23
• Successfully deliver remaining key growth projects
• Koniambo, McArthur River, Katanga, Chad oil fields
• Ensure continued operating efficiency, targeting Q1 costs/margins
• Maintain strong investment grade credit rating
• Maintain disciplined deployment of capital to maximise free cash flow growth
• Glencore considers portfolio not only marginal NPV
• Confidence to:
• grow base dividend
• recycle excess capital to shareholders
• be opportunistic, but within our capital allocation framework
• Focus on continuing improvements in our health, safety, sustainability and governance performance
24 24
Thermal coal, Rolleston mine, Australia
Investor Day 10 December 2014
08:00 - Welcome and Overview | Ivan Glasenberg
08:20 - Finance Update | Steven Kalmin
08:45 - Copper | Telis Mistakidis
09:15 - Coal | Tor Peterson & Peter Freyberg
09:45 - Break
10:05 - Zinc | Daniel Maté & Chris Eskdale
10:35 - Nickel | Kenny Ives & Peter Johnston
11:05 - Oil | Alex Beard
11:40 - Break
12:00 - Agricultural products | Chris Mahoney
12:30 - Conclusion and Q&A
25
Forward looking statements
This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward looking statements may be identified
by the use of forward looking terminology, or the negative thereof such as "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget",
"scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable
terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements
are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current
predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions
of strategy.
By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not
guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those
discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report.
Neither Glencore 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 document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the
date of this document. 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
Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange
Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking
statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change
in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date.
No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for
the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share.
This document 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. The making of this
document does not constitute a recommendation regarding any securities.
Steven Kalmin
CFO
La Jagua Mine, Prodeco, Colombia
Summary
• Robustly profitable industrial operations post merger integration
• Marketing enhances earnings stability, flexibility and optionality
• Rigorous focus on opex/capex and working capital
• Clear and consistent framework for capital allocation
• Expansionary capital geared to the right commodities and opportunities
• Optimal balance sheet structure for returns, liquidity and cost of capital
• We will continue to focus on return of excess capital to shareholders
• interim distribution +11%
• $1bn equity buyback now c.65% completed
27
Robustly profitable industrial operations
• $36bn expansionary capital since 2009
• Mix skewed to the “right”
commodities
• Tier 1 cost profile and resource base
for the Group’s largest commodities
and across most of the broader
portfolio
• Superior pricing vs indices due to
marketing network and infrastructure
• >$2bn of overhead and operational
cost savings post Xstrata transaction
• Sustaining capex confirmed around
$4.0bn p.a.
• expected to fall closer to $3.5bn p.a. by 2017
• no major grade issues/declines for the
foreseeable future
28
12.7
3.6
7.1
1.1
8.5
3.0
0.5
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Total 2009-H1 2014
Ags
Oil
Coal
Ferroalloys/PGM
Nickel
Zinc
Copper
Expansionary capex 2009-H1 2014
Marketing enhances earnings/cashflow stability, flexibility and optionality
EBIT guidance range of $2.7-3.7bn
• Still positive but low correlation with commodity prices
• Consistent profit generator over 4 decades
• Reflects market position and diversification
• Current trading in line with this range
Highly cash flow generative
• Minimal fixed assets/capex required
• Efficient capital structure
• By itself, underpins bulk of current base distribution
Working capital effect (inversely correlated with commodity prices) ensures cashflow can be insulated in periods of lower prices
Strong track record of improving margins within industrial businesses
• Leveraging market intelligence on commodity fundamentals, including customer and supplier behaviour
29
Marketing EBIT ($M)
Historical
guidance
range:
$2 to $3bn
Revised
guidance
range (post
Xstrata and
Viterra):
$2.7 to $3.7bn
0 1,000 2,000 3,000 4,000
2008
2009
2010
2011
2012
2013
2014+
Marketing: a low risk, high ROE business
30
0
20
40
60
80
100
120
Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14
Low risk model Consolidated VaR: 1 Day 95% ($M)
37%
42%
36%
42%
30%
32%
34%
36%
38%
40%
42%
44%
2011 2012 2013 2014F
Average: 39%
Capital employed easily adjusted to price environment High ROE(1)
• >95% of marketed volumes are hedged or pre-
sold to mitigate price risk exposure
• The 2 key risks are actively managed:
• Credit risk – mitigated by: counterparty risk analysis,
extensive use of letters of credit, credit insurance and
having collateral
• Market risk – mitigated by: derivatives used to hedge
market risk assumed in physical marketing, adherence to
VaR limits, regular stress testing
• Fast turning inventory and receivables – average
conversion cycle of 32 days (30 June 2014)
Average:$33M
VaR Limit: $100M
Notes: (1) ROE calculation: refer to page 202 and 203 of Glencore’s 2013 Annual Report for assumptions and calculations. (2) Illustrative, based on $2.7bn EBIT, being the bottom end of
guidance range.
(2)
0
50
100
150
200
250
300
0
5
10
15
20
25
30
Q105
Q305
Q106
Q306
Q107
Q307
Q108
Q308
Q109
Q309
Q110
Q310
Q111
Q311
Q112
Q312
Q113
Q313
Q114
Current capital employed CCI Index (rebased to 100)
Marketing represents the physical movement of commodities from production source to customers/consumers
Sources of income (and market intelligence)
• Arbitrage opportunities – product, time, geography
• Blending strategies – optimising qualities; delivery
of products in line with contractual requirements
• Financing – working capital terms
• Risk management – manage counterparty and
market risk exposure
• Storage/warehousing – access to and having
logistics assets in strategic locations
• Freight – access to fleet, information on trade flows
• Economies of scale on all of the above
Marketing volumes 2013 H1 2014
Copper Mt 2.8 1.5
Zinc Mt 3.2 1.6
Lead Mt 0.7 0.4
Nickel Mt 226 84
Ferroalloys Mt 3.8 2.2
Alumina/aluminium Mt 13.1 6.0
Iron ore Mt 33.2 29.6
Thermal coal Mt 84.4 46.1
Crude oil/oil products Mbbls 1,113.5 547
Agricultural products Mt 68.7 30.6
Revenues $M 192,819 93,617
31
Producer
Port Shipping Warehouse Delivery to Industrial
Customers
Industrial
Consumers
Extraction Marketing Customer
Inland
storage
&
logistics 3rd party supply
Glencore’s flexible capital model
32
Capital centrally
funded and allocated
Marketing c.$20bn of capital employed
• working capital average turnover
cycle of ~30-35 days
• Quality/nature of asset base
(inventories and receivables)
allows ~80% to be debt-funded
• Marketing financing is frequently
refreshed; average duration of
debt facilities versus underlying
turn is a highly conservative 20x
• 2014 earnings benefit from Viterra
and Xstrata
• Guidance range RoE is 40%-65%
Industrial c.$90bn of capital employed
• target of 30-40% debt-funded; or
<2.5-3x Net Debt/EBITDA
• target RoE is 20-25% for new
capital/projects
• earnings to benefit from ramp-up
of Koniambo, Australia Zinc,
African copper belt, etc
• portfolio optimisation will also
boost returns on equity
Expansionary capex geared to the right commodities and opportunities
33
Focus on modular/brownfield/flexible
investment • revised Caracal capex program primarily limited to
producing assets – approval of further exploration
capex subject to market conditions and results of
nearby program
Copper equivalent production CAGR of
5.5% to 2018; >75% attributable to metals
Capex/opex under constant review: • Askaf Iron Ore project under review in response
to weaker price outlook
• suspension of Australian coal operations for three
weeks in response to low price environment
Copper equivalent growth 2014F-2018F
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Oil
Coal
Ferroalloys
Nickel
Zinc/Lead
Copper
Industrial capex $bn(1) 2013A 2014F 2015F 2016F 2017F
August 2014 forecast 11.1(2) 8.7(2) 6.6
Capitalised interest 0.28 0.19
Koniambo variance 0.38 0.21
Project suspensions (0.30)
Caracal (50% ownership increase) 0.18 0.57
Net capex deferrals/reductions (0.64) 0.63
December 2014F 8.9 7.9 6.6 4.8
Notes: (1) Excludes marketing capex. (2) Excludes Las Bambas
Industrial capex details
34
0
1
2
3
4
5
6
2014F 2015F 2016F 2017F
Metals Coal Oil Ags Capitalised interest
Expansionary capex ($bn) Sustaining capex ($bn)(1)
0
1
2
3
4
5
6
2014F 2015F 2016F 2017F
Metals Coal Ags
4.9
3.6
2.4
1.2
4.1 4.3 4.2
3.6
– 26%
Note: (1) Metals sustaining capex annual ranges: Copper $1.7-2bn, Zinc $700-900M, Nickel 250-300M, Ferroalloys c.$150M. Includes deferred stripping.
Our balance sheet advantage
Asturiana de Zinc, electrolysis plant, Spain
• Maintenance of strong Baa/BBB levels remains a financial target/priority
• Moody’s and S&P’s investment grade credit ratings at Baa2 (stable) and BBB (stable)
• Considered optimal capital structure:
• supports marketing activities –positively differentiated credit positioning from most trading competitors
• enables Glencore to efficiently grow cashflow, earnings and dividends per share
• provides abundant access to capital markets allowing efficient and prudent balance sheet and liquidity management
Robust balance sheet being further strengthened
36
$4.9bn
funds from operations in
H1 2014, up $650M
year on year
33.8%
FFO to Net debt
Minimum: >25%
Target: >30%
2.41x
Net debt to Adjusted
EBITDA
Minimum: <3x
Target: <2.5x
BBB/Baa illustrative target metrics(1)
FFO/Adj. Net Debt(2) Adj. Net Debt(2)/EBITDA
Notes: (1) Estimated rating metrics based on Glencore’s calculation of Adjusted Net debt. (2) Net debt calculated as Net Funding less Readily Marketable Inventories,
including net consideration of $5 billion from the Las Bambas disposal and the Caracal acquisition in July 2014. FFO and EBITDA are last 12 months.
20%
25%
30%
35%
40%
45%
FY
201
2
H1
201
3
FY
201
3
H1
201
4
1.75x
2.00x
2.25x
2.50x
2.75x
3.00x
3.25x
FY
201
2
H1
201
3
FY
201
3
H1
201
4
BBB+/
Baa1
BBB-
/Baa3
BBB/
Baa2
75
85
95
105
115
125
135
145
2013 2014 2015 2016 2017 2018
Optimal balance sheet structure for equity returns, liquidity and cost of capital
37
Strong Baa/BBB optimising market access and funding cost Declining weighted average funding cost (%)
Recent CDS vs peers Commodity outlook supports our rating & equity yield
Nickel
Aluminium
Zinc
Copper
Iron Ore
Oil
Thermal
Coal
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
0
100
200
300
400
500
600
700
800
900
Nov-04 Jan-06 Mar-07 May-08 Jul-09 Sep-10 Nov-11 Jan-13 Mar-14
A-Rated G-Spread
BBB-Rated G-Spread GLEN USD
and EUR
Issuance
(RHS axis)
0
50
100
150
200
250
300
350
03/05/2013 03/09/2013 03/01/2014 03/05/2014 03/09/2014
Rio Tinto
BHP
Glencore
Anglo American
Source: Bloomberg, Barclays, Glencore, consensus estimates.
2.5
3.0
3.5
4.0
4.5
2009 2010 2011 2012 2013 2014
We will continue to focus on return of excess capital to shareholders
• As a minimum base distribution to remain competitive within sector as growth phase completes
• Excess capital to be returned to shareholders in the most efficient manner via appropriate application of base distribution progression, supplemented by buyback continuation and/or special distributions
• Interim distribution +11%
• $1bn equity buyback now c.65% complete
38
Excess operating free cash flow
Source: Factset as of 5 December 2014.
14.2%
9.7%
7.8% 7.4%
3.7%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Glencore Peer 1 Peer 2 Peer 3 Peer 4
2016 consensus FCF yield
Capital structure
maintain strong
BBB/Baa credit
metrics
M&A / Brownfield
projects
screen growth
options against
capital allocation
criteria
Returns to
shareholders
including ongoing
buyback
programme
Criteria:
• risk
• return
• cash
payback
Strong BBB/Baa believed
to be the optimal rating
target supporting the
balance between our
growth strategy and
shareholder returns
• High-returning
opportunistic M&A and
brownfield growth
opportunities screened
against rigorous capital
allocation criteria
• Investment opportunities
also screened against
returns generated from
buybacks
• Generates growth in
profits and FCF
• Ongoing buyback
program should underpin
EPS accretion as well as
P/E multiple
Q&A
Lion chrome smelter, South Africa
Our management structure
40
Nickel
Our functions structure
CEO
Ivan Glasenberg
CFO
Steven Kalmin
Metals & Minerals Energy Agriculture
Ferroalloys
Marketing
Stuart Cutler
Industrial
Gary Nagle
Marketing
Kenny Ives
Industrial
Peter Johnston
Iron Ore
Marketing
Jyothish George
Industrial
Mark Eames
Zinc
Marketing
Daniel Maté
Industrial
Chris Eskdale
Copper
Marketing &
Industrial
Telis Mistakidis
Aluminium
Marketing &
Industrial
Andrew Caplan
Coal
Marketing
Tor Peterson
Industrial
Peter Freyberg
Oil
Marketing &
Industrial
Alex Beard
Agricultural
Products
Marketing &
Industrial
Chris Mahoney
CEO
Ivan Glasenberg
CFO
Steven Kalmin
Legal
Ken Klassen
– Corporate
Development
– Treasury and
Trade Finance
– Accounting
– Insurance
– Tax
– Procurement
– Legal
– Compliance
– IT
– IS
– Health and
Safety
– Sustainable
Development
– Community
Relations
– Public Affairs
– Investor
Relations
– Group Strategy
HR
Gerda Schwindt
IT
Cyril Reol
SD
Michael Fahrbach
Risk
Management
Carlos Perezagua
Communications
and Strategy
Paul Smith
Internal Audit
Nam Phong Ho
Board Audit
Committee
Experienced management team with a proven track record of value creation
Ernest Henry copper concentrator, Australia
Investor Day 10 December 2014
08:00 - Welcome and Overview | Ivan Glasenberg
08:20 - Finance Update | Steven Kalmin
08:45 - Copper | Telis Mistakidis
09:15 - Coal | Tor Peterson & Peter Freyberg
09:45 - Break
10:05 - Zinc | Daniel Maté & Chris Eskdale
10:35 - Nickel | Kenny Ives & Peter Johnston
11:05 - Oil | Alex Beard
11:45 - Break
12:00 - Agricultural products | Chris Mahoney
12:30 - Conclusion and Q&A
08:00 - Welcome and Overview | Ivan Glasenberg
08:20 - Finance Update | Steven Kalmin
08:45 - Copper | Telis Mistakidis
09:15 - Coal | Tor Peterson & Peter Freyberg
09:45 - Break
10:05 - Zinc | Daniel Maté & Chris Eskdale
10:35 - Nickel | Kenny Ives & Peter Johnston
11:05 - Oil | Alex Beard
11:40 - Break
12:00 - Agricultural products | Chris Mahoney
12:30 - Conclusion and Q&A
42
Forward looking statements
This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward looking statements may be identified
by the use of forward looking terminology, or the negative thereof such as "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget",
"scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable
terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements
are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current
predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions
of strategy.
By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not
guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those
discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report.
Neither Glencore 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 document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the
date of this document. 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
Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange
Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking
statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change
in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date.
No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for
the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share.
This document 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. The making of this
document does not constitute a recommendation regarding any securities.
Copper Telis Mistakidis
Alumbrera copper concentrator, Argentina
Topics
1. Glencore Copper Department
• Overview
• Description
2. Katanga Mining
• Production issues
• Power
3. Antapaccay
• Tintaya concentrator restart
• Antapaccay mini expansion
4. Copper Market – where is the surplus?
44
Glencore copper in context
• Third largest global mined copper producer and the world’s largest copper supplier
• Integrated assets (mines, smelters and refineries) and marketing
45
2013 copper production (kt)
0
500
1,000
1,500
2,000
2,500
3,000
Competitor 1 Competitor 2 Glencore Competitor 3 Competitor 4 Competitor 5 Glencore 2014Fsupply
Source: Glencore, annual reports.
Glencore copper assets
46
Mined Cu
N America 90k MT
Asia 60k MT
Australia 260k MT Africa 500k MT S America 660k MT
Horne/CCR 300k MT
Isa/Pasar 600k MT Mopani 200k MT Altonorte 300k MT
Kazzinc 70k MT
Smelter/Refinery
Capability across the copper raw materials chain
Mt Isa Cobar Antapaccay Katanga Nkana
Townsville
Altonorte Horne Pasar Mopani Mt Isa
CCR Pasar Mopani
EHM
Marketing
3rd party 3rd party
3rd party
Alumbrera
Collahuasi
Antamina
3rd party
3rd party
3rd party
Lomas Bayas
3rd party
Mopani SXEW
3rd party
Mutanda Mufulira
• Integrated industrial assets and marketing
• One million MT custom smelting and refining
• Capability to process complex concentrates with precious metals and deleterious elements.
Min
ing
S
me
ltin
g
Re
fin
ing
47
Mined production growth
48
Own source mined copper production (kt)
Note: does not include copper from Kidd, Kazzinc and Ni operations
Merger
2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F
Total copper Former Xstrata
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2012A 2013A 2014F 2015F 2016F 2017F
African Copper Collahuasi Antamina Other South America Australia By-product
Mined production growth by region
49
Own source mined copper production (kt)
Source: Glencore
210
165F
16
16
2 8
2
120
130
140
150
160
170
180
190
200
210
220
Cu produtionbudget
Power direct Power (indirect)& Mechanical
Electrical Projects delays Reducedsulphide / ASCu
Cu productionactual
Cu
Ca
tho
de (
‘000)
Katanga 2014 production issues
50
Standby generators deployment
51
Generating Capacity
UNITS MW
KTC 4 2
2 2
KTO 1 2
1 1
1 1
Luilu 1 2
KOV (Convert to Co-Gen) 4 7
Sub – Total 17
Co-Gen 1 (New at Luilu:leach,CCDs)
Generator farm (6.6 and 15kV) 6 10
Sub - Total 27
Co-Gen 2 (New at Luilu:EW2/3)
Generator farm (33kV) 6 10
Total 37
Now
April
Global Power Project – update
52
Description
• 450MW for Kamoto Copper Company and partners
• 350MW of new power and 1000MW transmission
from INGA to Kolwezi
• Project cost – $368M, Lots 1 to 14
• Reimbursed via 40% credit to power bills
• Additional 10% withheld for maintenance fund
• 75MW available to the population
Power milestones
• Transmission from INGA to Kolwezi from 40MW to
250MW Q1 2013
• 25MW (Nzilo) Q4 2014
• 165MW (G-27) Q4 2015
• 165MW (G-28) Q2 2017
Project status
• G27 disassembled and shipped to factory for repair
• 60% of transformers for the converter station have
passed factory acceptance. Remaining 40% to be
tested before year end. Commissioning expected
January 2016
• Synchronous condenser #2 awaiting confirmation
from SNEL, expected December 2014
• Fungurume transformer being commissioned now
Global Power Project – timeline
53
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Lot 3 Unit 3 - Nzilo Quick Fix
Lot 4 Unit G27 Inga refurbishment
Lot 5 Unit G28 Inga refurbishment
Lot 6 Convertor transformer DC Link Pole 1
Lot 7 Convertor transformer DC Link Pole 2
Lot 8 OHL PDI-SCI Reinforcement
Lot 9 Additional Harmonic filters
Lot 10 Additional Synchronous compensator
Lot 11 RO Upgrading HV equipment
Lot 12 Auto-transformer SCK-RO #1 Installation
Lot 13 Auto-transformer SCK-RO #1 Installation
Lot 14 Studies and Final design
Additional power from lots 3, 4 & 5
Additional power available on the grid 25
Cumulative power added 25
2013 2014 2015 2016 2017
25 165
165
190
165
165
355
Katanga ramp-up drives future production growth
54
Copper cathode production (kt); Capex $M
Source: Glencore
22
42
52
58
61
87
16
5
24
2
27
4
28
6
30
1
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F
Cu
k T
on
ne
s
Cu Cathode Production CAPEX
Katanga ramp-up drives future production growth
55
Copper cathode production (kt); Capex $M
Source: Glencore
22
42
52
58
61
87
16
5
24
2
27
4
28
6
30
1
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0
50
100
150
200
250
300
350
2008 2009 2010 2011 2012 2013 2014F 2015F 2016F 2017F 2018F
Cu
k T
on
ne
s
Cu Cathode Production CAPEX
New CM5 SAG Mill installed and commissioned
56
New oxide floatation cells installed and commissioned
57
New concentrate roaster commissioned
58
Solvent Extraction commissioned
59
200ktpa EW2 in production
60
First cathodes harvested from 80ktpa EW3 expansion
61
Antapaccay – Tintaya Concentrator Restart
Tintaya restart
• Existing Tintaya concentrator to process 20 ktpd of ore from Antapaccay mine
• Startup in May 2015
• 34kt per year Cu in concs for LOM avg. 43kt per year Cu in concs for the first 5 years
• Capex of $64M:
• Mining: $25M
• Concentrator: $27M
• Infrastructure & Other: $12M
• Capital Intensity: $1.9M per 1,000t of Cu production
• Project NPV10% of $290M
• Project IRR of 119%
• Government approvals received this month
62
Antapaccay – Incremental Plant Expansion
Expansion of Antapaccay plant:
• Process 82 ktpd of ore from Antapaccay mine using existing infrastructure in 2016
• capacity incrementally increased; 70 ktpd (design) to 77 ktpd (current) and now 82 ktpd
• total Cu in concs >200ktpa (inc Tintaya)
• 9kt per year Cu in concs for LOM avg. 11kt per year Cu in concs for the first 5 years
• Capex of $34M:
• Mining: $7M
• Plant: $27M
• Capital Intensity: $3.8M per 1,000t of Cu production
• Project NPV 10% of $140M
• Project IRR of 117 %
63
42 10
157
209
0
50
100
150
200
250
77 ktpdAntapaccay
20 ktpdTintaya
5 ktpdAntapaccay
Cu C
on
t. in
Con
c. (k
t p
er
yr)
Cu in concentrate
per year
Tier 1 asset portfolio and cost structure
64
Q1 First quartile cost
position achieved for
asset portfolio in 2014
Post-integration
cost efficiencies
achieved. Focus
now on industrial
asset structures
Q1 Q2 Q3 Q4
Illustrative Copper C1 cash cost curve
2013A
$1.65/lb
Unit mine costs drop through brownfield expansion by 2016:
• African copper: $1.60/lb • Collahuasi: $1.47/lb • Antapaccay: $1.00/lb • Antamina: $0.14/lb • Australia: $1.70/lb 2014F
$1.42/lb
2016F
$1.36/lb
c.$300M industrial merger
synergies and other
cost savings by end
2014
Copper market
Altonorte anodes, Antofagasta Port, Chile
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000Jul-0
8
Sep-0
8
No
v-0
8
Jan-0
9
Ma
r-0
9
Ma
y-0
9
Jul-0
9
Sep-0
9
No
v-0
9
Jan-1
0
Ma
r-1
0
Ma
y-1
0
Jul-1
0
Sep-1
0
No
v-1
0
Jan-1
1
Ma
r-1
1
Ma
y-1
1
Jul-1
1
Sep-1
1
No
v-1
1
Jan-1
2
Ma
r-1
2
Ma
y-1
2
Jul-1
2
Sep-1
2
No
v-1
2
Jan-1
3
Ma
r-1
3
Ma
y-1
3
Jul-1
3
Sep-1
3
No
v-1
3
Jan-1
4
Ma
r-1
4
Ma
y-1
4
Jul-1
4
Sep-1
4
LME SHFE COMEX
Global Exchange stocks are at lowest levels since 2008
66 Source: Bloomberg, Reuters
Global copper warehouse stocks are reducing further
67
722k
245k
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jan 2013 Jun 2013 Jan 2014 Jun 2014 Dec 2014
LME COMEX SHFE CHINA BONDED
Global warehouse copper stocks (kt Cu)
Source: Bloomberg, Reuters, Glencore estimates
0
500
1,000
1,500
2,000
2,500
3,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
Chinese Copper scrap imports are falling
68
19% yoy
13% yoy
Chinese copper scrap net imports (kt contained Cu)
Source: China customs data
2011 2012 2013 2013 vs
2012
2013 Jan-
Oct
2014 Jan-
Oct YoY Chg 2014E YoY Chg
Copper Cathode
Imports 2'825 3'396 3'198 (5.8%) 2'557 2'948 15.3% 3'538 10.6%
Exports 156 274 293 7.1% 246 220 (10.7%) 264 (10.0%)
Net Imports 2'669 3'122 2'905 (7.0%) 2'311 2'728 18.1% 3'274 12.7%
Domestic Production 5'197 5'824 6'840 17.4% 5'763 6'420 11.4% 7'704 12.6%
Primary 3'386 3'939 4'686 19.0% 3'755 4'316 14.9% 5'179 10.5%
Secondary 1'811 1'885 2'153 14.3% 2'008 2'104 4.8% 2'525 17.2%
Apparent Consumption 7'865 8'946 9'745 8.9% 8'074 9'148 13.3% 10'978 12.7%
Copper Scrap
Imports - gross weight 4'687 4'859 4'373 (10.0%) 3'549 3'187 (10.2%) 3'824 (12.5%)
Content 45.0% 50.0% 50.0% 50.0% 50.0%
Adjusted Imports - mtu 2'109 2'430 2'186 (10.0%) 1'774 1'594 (10.2%) 1'912 (12.5%)
Exports 2 1.5 1 (48.4%) 1 1 1 58.3%
Net Imports 2'108 2'428 2'186 (10.0%) 1'774 1'593 (10.2%) 1'911 (12.6%)
Domestic Production 924 1'064 1'226 15.2% 1'022 1'179 15.4% 1'415 15.4%
Apparent Consumption 3'032 3'492 3'412 (2.3%) 2'796 2'772 (0.9%) 3'326 (2.5%)
Chinese imports and apparent consumption
69 15% yoy Source: China customs data
China Nonferrous Metals Industry Association
Minus:
Kennecott 100k
Escondida 150k
Alumbrera 50k
Surplus
now 90k
MT?
Demand vs Supply per ICSG and Wood Mackenzie
70 Source: ICSG, Wood Mackenzie Global copper short-term outlook, November 2014
Implications of the estimates:
• Implied mine production growth of ~1 million MT between 2014 and 2015
(6% growth)
• Where is the supply coming from?
2014 2015
ICSG Apr ‘14 Estimate
~400 kt
surplus
~600 kt
surplus
ICSG Oct ‘14 Estimate
~300 kt
deficit
(Δ 700 kt lower)
~390 kt
surplus
(Δ 210 kt lower)
WoodMac Nov ‘14
Estimate
180 kt
surplus
202 kt
surplus
Copper Demand/Supply balance estimates
Latest 2015 supply forecasts may still be very optimistic
71 Source: Wood Mackenzie Global copper short-term outlook, November 2014
+320kt?
• Production double counted Frontier at Mopani. 2014 production
is 720 kt;
• Production and commissioning issues. 2015 to be 850 kt
+87kt?
• OT phase 2 not next year as company states only open pit next
year
+72kt? Where does this come from?
+328kt?
• Major projects commissioned in 2014 (DMH, Caserones, Sierra
Gorda)
• Escondida lower by ~150kt
• Codelco lower by ~90kt (cathodes)
• Toromocho operating at 25% capacity
• Las Bambas delayed to 2016
• Constancia commissioning?
+353kt?
• Major projects commissioned in 2014 (Morenci, Eagle, Mt
Milligan, Nunavik)
• Operational incidents (Mt Polley tailings dam failure – mine shut
down, Buenavista- spillage in river and schedule pushed out
into 2016)
• Kennecott lower production (100kt)
+350kt?
• Indonesian concentrates export permits
• Production and labour issues at Grasberg - operating at 80%
+50kt? Alumbrera lower production
+200kt?
• DRC running at 950kt in 2014. To go to just over 1 mt in 2015
~1.8 million MT?
2015 copper supply forecast keeps changing
22,000
22,500
23,000
23,500
24,000
24,500
25,000
2010 Q1 2010 Q3 2011 Q1 2011 Q3 2012 Q1 2012 Q3 2013 Q1 2013 Q4 2014 Q2
72
2015 supply forecast as estimated in each period (kt Cu)
Source: Wood Mackenzie Global copper long-term outlook Q1 2010 to Q3 2014, Glencore estimates
-1.6Mt
• Project deferrals;
• Commissioning delays;
• Revised mine plans.
• Brookhunt and ICSG give 390 kt surplus guidance
• Taking the previous slide, deduct 1.8 Mt = Deficit of 1.4 - 1.6 Mt for 2015?
• Consumption - the world is emerging from the biggest recession in 100 years
Make your
own mind up?
Thank you
73
Appendix: Copper asset update
Kantanga Phase V, EW3 under commissioning, DRC
Katanga expansion nearing completion
New KOV pit crusher completed
76
Installation of new concentrate stockpile shed
77
Heap leach extension complete
78
79
DRC power project
Refurbishment of Inga Unit G27, DRC
Mopani – synclinorium and deeps project update
New acid plant, Mufilira smelter, Zambia
Synclinorium – Project Site
81
Synclinorium – New Winder Main Shaft
82
Synclinorium – New Winder
83
Synclinorium – New Winder House
84
Synclinorium – Sub Station
85
Synclinorium – New Generator Building
86
Synclinorium – Loading Station – 1231m level
87
Synclinorium – Loading Station – 1231m Level
88
Synclinorium – Ventilation Shaft
89
Mufulira Deeps – Raise Bore – 500m Lift
90
Mindola Deeps – 4960L
91
92
Newlands CHPP, Australia
Draft
schedule
08:00 - Welcome and Overview | Ivan Glasenberg
08:20 - Finance Update | Steven Kalmin
08:45 - Copper | Telis Mistakidis
09:15 - Coal | Tor Peterson & Peter Freyberg
09:45 - Break
10:05 - Zinc | Daniel Maté & Chris Eskdale
10:35 - Nickel | Kenny Ives & Peter Johnston
11:05 - Oil | Alex Beard
11:40 - Break
12:00 - Agricultural products | Chris Mahoney
12:30 - Conclusion and Q&A
Investor Day 10 December 2014
93
Forward looking statements
This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward looking statements may be identified
by the use of forward looking terminology, or the negative thereof such as "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget",
"scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable
terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements
are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current
predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions
of strategy.
By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not
guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those
discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report.
Neither Glencore 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 document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the
date of this document. 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
Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange
Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking
statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change
in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date.
No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for
the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share.
This document 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. The making of this
document does not constitute a recommendation regarding any securities.
Coal Tor Peterson, Peter Freyberg
Abbot Point, Australia
Delivering Leading Value
Leading Diversified Portfolio
• 170 Mtpa capacity
• Industry leading margins
• Underground/Opencut
• Export/Domestic
• Thermal/Coking
• 3 continents
Operational Excellence
• Environment
• Community
• Safety
• Equipment
• Project delivery
Market Driven
• Supply discipline
• Blending synergies
• Trading leverage
Shareholder Returns
• Expansionary capital spend down 75%
• EBITDA margin 26%
95
~$50/t
FOB cash cost
achieved in 2014
~150Mt
of consolidated
production in 2015F
c.26%
EBITDA margin in
H1 2014
c.90Mt
of marketed volumes
2014
Leading managed coal portfolio
96
Industrial assets comprise 22 coal complexes totaling 196 million tonnes capacity (170mt consolidated capacity), with operations and assets in 3 countries and key
marketing offices spread across 19 countries
0 10 20 30 40
Others
BHP
Anglo
Drummond
Glencore
Mt
COLOMBIA
0 10 20 30 40 50 60
Sasol
Exxaro
BHPB
Anglo
Glencore
Mt
SOUTH AFRICA
0 20 40 60 80 100
Anglo
Peabody
Rio Tinto
BHPB
Glencore
Mt
AUSTRALIA
#1 in high energy export coal
Significant position in export metallurgical coal
Diversified global footprint
Additional 90Mt of traded and agency tonnage
Data: Managed coal production, Australia proforma for full year Clermont. Includes export and domestic coal sales
22 operating coal complexes
Exporting equity coal through 9 ports
40Mtpa, low cost rail business
Clermont
Delivering industry leading margins
97 *Reflects publically reported June 2014 half year results of major diversified coal competitors
Glencore
Coal mining business EBITDA margin first half 2014*
Coal markets update
Thermal coal, Rolleston mine, Australia
Export thermal
Export coking
Domestic thermal
3rd Party
Responding to the market
Relatively strong marketing
contribution in challenging
environment
Supply discipline
• Considered supply response
• Flexible portfolio
Market arbitrage
• Domestic versus export
• Flexible origination
Blending synergies
• Quality control
• Tailored products
Significant marketing contribution
• Trading and freight leverage
99
A diversified portfolio (sales volumes)
Coal remains fundamental to Asian energy demand
IEA New Policies scenario by 2025
• Globally, net 440 GW of new coal fired generation capacity required
• 530 GW new capacity primarily in Asia
• 83 GW closed primarily in USA and EU
• Asian coal demand to increase by more than 1Btpa*
• 500Mtpa demand increase outside China
• Africa/Turkey and Latin American coal demand to increase by 75Mtpa*
• South Africa and Brazil as key drivers
• Resource constrained Asia drives seaborne coal demand growth
• Korea, Philippines, Malaysia, Vietnam
• Indian import growth required to supplement domestic supply
100
0
200
400
600
800
1000
1200
China India OtherAsia
Africa &Sth Am.
USA ROW
GW
2012
2020
2025
Net 440GW new coal-fired power stations
Sources: IEA WEO2014, New Policies Scenario, Current Policies Scenario * based on 2012 average global energy content 4920kcal/kg nar
A further 255 GW of coal
fired generation (800Mtpa*
coal), would be required in
Asia by 2025 under IEA
Current Policies scenario.
0 200 400 600 800 1000
USD/t
Million Tonnes
Expect further rationalisation and delayed investment
101 Source: Glencore
FOB seaborne thermal coal cash margins at current market prices (US$/t)
c.25% of seaborne supply remains cash negative • Producers with USD cost base most impacted
• USA thermal exports down 16Mt
• Indonesia bituminous exports declined 8Mt
• Short-term mine plan changes are unsustainable
Glencore export
thermal coal average
+ve
-ve
0
Investment delays will lead to price recovery
• Long term demand fundamentals
remain intact
• Demand growth is more than just a
China story
• Some high cost supplies are closing
• Resource depletion restricts supply
• New capacity investment delayed
• Positive longer term outlook
102
Vo
lum
e
Time
Seaborne thermal coal market
Historical demand
7% pa
Base demand
4.5%pa
Existing Supply
Committed Supply
Investment
required
Coal industrial business overview
We deliver – safely
104
Group coal safety performance
GCOM: pre-shift safety discussion
Emergency preparedness training
We deliver … with sustainable land outcomes
105
Liddell rehabilitation
Cattle trial on rehabilitated land
We deliver … using leading environmental technologies
106
Water treatment plant Environmental monitoring
Generation using waste gas
We deliver … value to the communities we operate in
107
Community projects Consultation Australia
Consultation Colombia Reconciliation Action Plan
We deliver through industry leading operational performance
108
Opencuts: +26% productivity Undergrounds: No.1 in Australia
Improvement in Tier 1 loading unit performance
Saleable production (Mt) based on FY13/14
We deliver by focusing on margins
• Reduced overheads
• Optimisation of underground rosters
• 20% improvement in reliability of
underground development
• Increased productivities – 26%
improvement in productivity of Tier 1
shovels & excavators
• Removal of high cost production
• Rationalisation of contractor spend
• Negotiations with key suppliers
• New production firmly in first quartile
(Ulan West, Tweefontein,
Wonderfontein, Clermont)
109
$1.8bn
cost savings through efficiencies
since 2012
Production volumes nearing steady state as legacy projects are delivered
110 *Production figures on a consolidated basis except Cerrejón 33% equity interest
Own source consolidated production (Mt)
0
25
50
75
100
125
150
175
2012A 2013A 2014F 2015F 2016F 2017F
Australia thermal SA thermal Colombia thermal Australia coking Australia SS
Coal assets – update and future opportunities
Ravensworth North, Australia
112
We deliver value in operations – Clermont case study
The past The future
Note 1: In-Pit crushing and conveying system
Value Delivered
$60m NPV
Reduced haulage costs Glencore mine planning
expertise identifies efficiencies
achievable through alternative
hauling strategies
Productivity Digger fleet consistently performed
below Glencore standards,
foregoing ~1Mtpa in annual coal
production
Increased productivity Improved fleet utilisation
Revised organisation structure
Increase production optionality
$100m NPV
Coal preparation Costly partial washing
Coal preparation Identified opportunity to
bypass all coal
$80m NPV
Haulage costs Expensive ex-pit hauls due to
relocation of IPCC1 in 2012
following operational issues
• 50:50 Joint Venture with Peabody
• Synergies realised through:
• Removal of surface boundary constraints
• Removal of stratified lease interaction
• Optimised open cut mine planning
• Access under-utilised mine and rail infrastructure
• Low capital
• Mine managed by Glencore, separate marketing
• 6 Mtpa
• 100Mt reserves
113
We deliver synergies – United / Wambo Joint Venture
Lease consolidation (red line)
Wambo CHPP
United
Coal and
Allied
Wambo
rail loop
Wambo UG
United / Wambo
(Stratified) Wambo
United / Wambo
(Stratified)
Glencore & Peabody co-operation
unlocking material value for
shareholders
Open Cut Development
Eastern Emplacement
Noise and visual bund
We work hard for our License to Operate: Bulga LOM extension
• Performance driven culture
• Detailed planning and assessment
• Clear understanding of stakeholder
engagement
- Community
- Government
• Proven track record
- Safety
- Environmental
- Community inclusion
114
Bulga Optimisation Project
Approved Dec
2014
We deliver projects – on time, on budget
115
-
2
4
6
8
-
5
10
15
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Str
ip r
ati
o
Pro
du
cti
on
(M
t)
ROM Product Strip ratio
Ravensworth North Tweefontein Optimisation Project Ulan West
Rav North production build up TWF – new rapid train load out Ulan West – first shear
Conclusion
116
Challenging market
- Coking coal in balance, however low prices are expected to lead to further supply reductions
- Thermal coal heading towards supply deficits
- Margins will need to increase to support any new capacity
Quality resources
- Well positioned with unrivalled optionality
Capital discipline
- Capital only invested if meets high internal return requirement
Delivering value
- Leading diversified portfolio
- Industry leading productivities
- Operational excellence
- Market driven
- Realise synergies through M & A
- Shareholder returns
Q&A
Appendix
118
Supply growth exceeded demand
• Chinese repositioning creating uncertainty
Demand growth forecast at +4.5% pa
(+40Mtpa) over next 3 years
• Supply growth expected to lag
Thermal coal margins will need to increase
to support investment in new capacity
Market update – thermal coal supply and demand
119
0
200
400
600
800
1,000
1,200
2011 2012 2013 2014F 2015F 2016F 2017F
China India Japan Korea
Taiwan Germany Other
-70
-60
-50
-40
-30
-20
-10
0
10
20
2011 2012 2013 2014F 2015F 2016F 2017F
Seaborne thermal coal demand (Mt)
Supply Demand Balance (Mt)
1,076
792
880 931
946 966
1,019
Source: Glencore
Demand reduction from 2013 to 2014
• Supply growth is being constrained due to demand
growth and lower prices during 2013 / 2014
Constrained demand growth forecast
• < 2% over the next 3 years
Current metallurgical coal margins are
expected to lead to further supply
reductions
Market update – metallurgical coal supply and demand
120
0
50
100
150
200
250
300
350
400
2011 2012 2013 2014F 2015F 2016F 2017F
China India Japan Korea
Taiwan EU Other-14
-12
-10
-8
-6
-4
-2
0
2
2011 2012 2013 2014F 2015F 2016F 2017F
Seaborne metallurgical coal demand (Mt)
Supply Demand Balance (Mt)
261
280
312 301
320 326 327
Source: Glencore
Investor Day 10 December 2014
Zinc ingot, Asturiana de Zinc, Spain
08:00 - Welcome and Overview | Ivan Glasenberg
08:20 - Finance Update | Steven Kalmin
08:45 - Copper | Telis Mistakidis
09:15 - Coal | Tor Peterson & Peter Freyberg
09:45 - Break
10:05 - Zinc | Daniel Maté & Chris Eskdale
10:35 - Nickel | Kenny Ives & Peter Johnston
11:05 - Oil | Alex Beard
11:40 - Break
12:00 - Agricultural products | Chris Mahoney
12:30 - Conclusion and Q&A
122
Forward looking statements
This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward looking statements may be
identified by the use of forward looking terminology, or the negative thereof such as "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to",
"budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or
comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved.
Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but
rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition
and discussions of strategy.
By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not
guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those
discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report.
Neither Glencore 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 document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as
of the date of this document. 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 Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock
Exchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward
looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been
no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date.
No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share
for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share.
This document 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. The making of this
document does not constitute a recommendation regarding any securities.
Zinc Daniel Maté, Chris Eskdale
Removing dross from top of furnace, CEZ zinc refinery, Canada
Zinc summary
Zinc market fundamentals remain strong and continue to improve
Our industry leading zinc business combines world class zinc assets with our
marketing reach and expertise
Unique combination of mines and smelters in a single company
• mined production of 1.4Mt in 2013 rising to 1.6Mt by 2016 – #1 globally
• smelter production of ~1.36Mt – #1 globally. Brings additional exposure to ~250kt zinc units
through over-recovery / escalator capture
• resource base provides weighted average mine lives >40 years on current Measured and
Indicated resource
• key growth projects provide additional zinc and cost/capital efficiencies at an attractive stage of
the price cycle
Industrial assets and marketing flows managed under one roof, two-way
information flow
• one global concentrates/metal book and one pool of knowledge.
• market input guides assets to produce the economically optimal product mix
• sharing of best practices across global zinc assets
• mine output and 3rd party tonnage flowing to destination of optimal economic return
124
Global zinc market
Concentrate loading facility for McArthur River zinc mine, Australia
World zinc metal consumption 2012A – 2019F
• Consumption growth in 2012-2014 has been c.3.7% y-o-y
• 2014 is expected to be in a deficit of 260-270kt
• Stocks (LME + SHFE and bonded warehouse in China) have declined for each of
the last 12 consecutive quarters
• This translates to incremental metal demand of 550-600kt of zinc metal per year
126
Yearly global zinc metal consumption (kt Zn)
10,000
11,000
12,000
13,000
14,000
15,000
16,000
17,000
2012 2013 2014F 2015F 2016F 2017F 2018F 2019F
Source: Glencore estimates, Wood Mackenzie, CRU.
127
Where will these units come from?
Concentrates requirement, production and deficit outlook
128
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2015 2016 2017 2018 2019
Non-China mined Zn concs production (kt Zn)
368
758
506
360 293
0
100
200
300
400
500
600
700
800
900
1000
2015 2016 2017 2018 2019
Additional Zn concs required (kt Zn)
• Approximately additional 3Mt of zinc in concentrates is needed in the next 5 years to meet
forecast metal demand (and balance the current c.260-270kt metal deficit)
• Non-Chinese mine production is forecast to add a net 600-650kt of zinc in concentrates over
2015-2019
• Non-Chinese monthly zinc mine production will start declining in Q3 2015 and flatten
afterwards
• Closure of Century and Lisheen mines is expected to remove ~600kt of zinc contained per year
• The market can only be balanced by higher Chinese mine production, further drawdowns from
metal stocks and/or yet to be approved mine projects
Source: Glencore estimates, Wood Mackenzie, CRU.
270 235
335
-55
185
315 310 308
205 183
368
758
506
360 293
$1,382
$3,275
$3,242
$1,875
$1,655
$2,161 $2,194
$1,948
$1,910
$2,161
0
500
1,000
1,500
2,000
2,500
3,000
3,500
-100
0
100
200
300
400
500
600
700
800
2005 2007 2009 2011 2013 2015F 2017F 2019F
Chinese mine production
• During the last 10 years, Chinese mine production has on average increased 225kt per year
• To meet global zinc metal demand, Chinese mine production would need to increase by
c.2-2.5Mt of zinc in concentrates over the next 5 years – an average of c.450-500kt per year
129
Annual change in Chinese zinc mine production (kt zinc in concentrate)
Zinc concs production
growth: 8.2%
Zinc concs production
growth: 7.5%
REQUIRED Zinc concs
production growth: 8.9%
c.450-500kt p.a.
c.225kt p.a.
LME Zn price
Zn $/t kt Zn
Source: Glencore estimates, Wood Mackenzie, CRU.
2014F 2016F
Mine deficit can only partially be covered by available stock
130
155
545
293
147 80
368
758
506
360
293
0
100
200
300
400
500
600
700
800
2015 2016 2017 2018 2019
Concentrate deficit
Chinese production increasebased on 3 year average
Gap between Chinese concs required and forecast (kt Zn)
0
200
400
600
800
1000
1200
1400
1600
1800
2012 2013 2014 2015 2016 2017 2018 2019
Forecast zinc metal stocks* (kt Zn)
• Assuming Chinese mine production increases c.210-220kt per year, there will be a
global deficit of c.1.0-1.5Mt of zinc in concentrates over the forecast period
• Deficit of concentrates will result in drawdown of metal stocks
• 2014 forecast inventory drawdown of 263kt
1’200 1’100
Source: Glencore estimates, Wood Mackenzie, CRU.
*Reported Exchange Stocks + GIAG estimate of BWHSE stocks.
c.213kt p.a.
Price is closely correlated to available stock levels
• Historically, zinc prices have responded to the upside as the “stocks:consumption” ratio approaches 3 weeks of zinc metal consumption
131
$779 $828
$1,048
$1,382
$3,275 $3,242
$1,875
$1,655
$2,161 $2,193
$1,948 $1,910
$2,161
3.6
4
3.2
1.9
0.4
0.7
1.5
3.4
4.4
5
6.5
5.6
4.4
0
1
2
3
4
5
6
70
500
1,000
1,500
2,000
2,500
3,000
3,500
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F
LME Zn price
Stocks consumption ratio
LME zinc price ($/t) vs stocks to consumption ratio (weeks)
Inverse weeks
stocks:consumption
ratio
LME Zn price $/t
Source: Glencore estimates, Wood Mackenzie, Bloomberg, CRU.
Zinc metal stocks outlook
• Stocks are forecast to fall below the critical “stocks:consumption” inflection point of 3 weeks consumption
132
-3
-2
-1
0
1
2
3
4
5
Downside (2.8% zinc demand growth)
Base (3.8% zinc demand growth)
Upside (4.8% zinc demand growth)
Sensitivity of zinc metal stocks to global zinc demand
Feb 2016 Apr 2016 Oct 2016
Inflection point Weeks consumption
Source: Glencore estimates, Wood Mackenzie, CRU.
2014F 2015F 2016F 2017F 2019F 2018F
Zinc industrial overview
McArthur River zinc mine metallurgical plant, Australia
Glencore zinc assets
134
Industrial assets comprise: 24 mines, 7 zinc smelters, 6 lead smelters/refineries with operations and assets in 12 countries and key marketing offices spread across
5 continents, ~50k employees
A large long-life, low-cost, optimised asset base
Expansions – delivery of 3 Australian projects
• capex spend on budget
• Lady Loretta project ahead of schedule
“Steady State” operations
• benchmarking and subsequent cost
reduction/turnaround projects – savings of
~$50 million
• smelters – commercial and technical
integration
• cost synergies of >$100 million achieved vs.
initial integration assessment of $70 million
• zinc sustaining capex declining to normalised
levels of around $700-900 million from 2016
135
Illustrative Zinc C1 cash cost curve
Q1 Q2 Q3 Q4
Zn: 2013
61 c/lb
Zn: 2016
43 c/lb Australian expansions
underpin a sustainable
reduction in C1 cash costs 1.6Mt
low-cost zinc
production by 2016
+40 yrs
mine life, based on
current M+I resource of
c.52Mt
Note: Glencore estimated C1 cash cost in real terms.
Forecast zinc mine production profile
136
1,399 1,380
1,580 1,620 1,640
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2013A 2014F 2015F 2016F 2017F
Australia Kazzinc North America
Antamina Other Zinc Glencore Smelting Capacity
Own source contained zinc mine production (kt zinc)
Source: Glencore, smelting capacity represents 100% production.
Australian expansion projects update
Mt Isa Operations:
• Capital cost of US$245M for new hoisting shaft and
associated infrastructure
• Nov 2014 run-rate of 4.3Mtpa ore mined
• Hoist commissioning anticipated in Q1 2015
• Sustainable 4.5Mtpa ore mined run rate by Q2 2015
Lady Loretta:
• Capital cost of ~US$350M
• Project on budget with production ramping up to
1.6Mtpa by H2 2015
• 0.6Mt ore mined in 2013
• Current run-rate of 1Mtpa ore mined
McArthur River:
• Handed over to operations and commenced
commissioning in H1 2014
• Ramp-up challenges encountered during H2 2014,
particularly in relation to flotation and dewatering
circuits
• Residual issues well understood and being
addressed
• Expecting annualised zinc production of 330kt
contained metal by end Dec 2014, representing
>90% of design capacity
MRM Processing Plant
Rock bolting, Lady Loretta mine
137
Conclusion
• Zinc market fundamentals remain strong and continue to improve
• Our industry leading zinc business combines world class zinc assets with
our marketing reach and expertise • unique combination of mines and smelters in a single company
• industrial assets fully integrated into global marketing flows
• Glencore’s key growth projects provide additional zinc and cost / capital
efficiencies at an attractive stage of the price cycle
• cost position of c.61 c/lb in 2013, falling to c.43 c/lb in 2016
• zinc sustaining capex declining to normalized levels of around $700-900 million from 2016
138
Q&A
George Fisher underground mine shift change, Australia
140
Investor Day 10 December 2014
Granulated nickel matte, Sudbury, Canada
08:00 - Welcome and Overview | Ivan Glasenberg
08:20 - Finance Update | Steven Kalmin
08:45 - Copper | Telis Mistakidis
09:15 - Coal | Tor Peterson & Peter Freyberg
09:45 - Break
10:05 - Zinc | Daniel Maté & Chris Eskdale
10:35 - Nickel | Kenny Ives & Peter Johnston
11:05 - Oil | Alex Beard
11:40 - Break
12:00 - Agricultural products | Chris Mahoney
12:30 - Conclusion and Q&A
141
Forward looking statements
This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward looking statements may be identified
by the use of forward looking terminology, or the negative thereof such as "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget",
"scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable
terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements
are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current
predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions
of strategy.
By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not
guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those
discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report.
Neither Glencore 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 document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the
date of this document. 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
Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange
Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking
statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change
in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date.
No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for
the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share.
This document 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. The making of this
document does not constitute a recommendation regarding any securities.
Nickel Kenny Ives, Peter Johnston
Exploration drilling, Raglan, Canada
Nickel highlights
Nickel market transitioning to deficit; balanced 2015 and deficits thereafter • nickel demand growth conservatively projected at c.4.5% p.a.
• substantial deficits forecast over the outlook period
Top 3 integrated nickel producer • 2013 own source production of 98.4kt, rising to 140-150kt by 2016
• delivery of additional volumes into a growing deficit, underpinned by Koniambo ramp-up
– first quartile C1 cost position of around $3.10/lb in 2014, 2016 cost position of c.$4.00/lb
• total nickel capex declining from a peak of c.$1.9 billion in 2012 to a normalised level of
c.$300-400 million from 2016(1)
• SAFENICKEL rolled out across business
Full integration of marketing and industrial assets guides investment
decisions, M&A activity and product sales • marketed c.200kt of nickel in 2013 and 2014
• focus on profitability vs. units traded
• industry leading intelligence and unparalleled global coverage
143 Note: (1) Excludes any unapproved expansionary capital
Sustainable Development
144
Our Social License to operate is granted by our stakeholders and maintained through a strategic approach focused on delivering results
Our Strategy Our Safety (TRIFR)
14.6
13.5
10.3
10.9
7.9
6.3
5.6
6.6
2007 2008 2009 2010 2011 2012 2013 2014YTD
Health and Safety
• Safety
• Security
• Health and Hygiene
• Community Health
and Safety
Stakeholder Engagement
• Community/
Stakeholder Relations
• Internal
Communication
• Government Relations
• Media/External
Relations
Environmental Stewardship
• Energy / GHG
• Water
• Land Use / Biodiversity
• Climate Change
Social Responsibility
• Human Rights
• Corporate Social
Investment
• Local enterprise
development
• License to Market
• Impact and Opportunity
Management
• Fatality free since 2012
• Implementation of the Glencore fatal
hazard protocols at all operations.
• No major environmental incidents for
last 3 years
Nickel industrial overview
Sudbury environmental lab, Canada
Nickel assets overview
146
Operations
Raglan (Nunavik, Northern Québec, Canada)
• 4 Mines, Mill, Power plant, Concentrator
• Primary metals are nickel and copper
• Palladium/platinum, cobalt are also produced
• Employs approximately 950 people
Sudbury (Ontario, Canada)
• 2 mines, Mill and Smelter
• Primary metals are nickel, copper and cobalt
• Palladium/platinum are also produced
• Employs approximately 1,400 people
147
Operations
Murrin Murrin (Western Australia)
• Fully integrated hydro metallurgical facility producing LME grade nickel and cobalt
• Only Surviving Gen 1 HPAL plant – technology intended primarily for the treatment of Limonitic type ores
• Mines, mill, refinery, power plant
• Employs approximately 1,100 people
Nikkelverk (Kristiansand, Norway)
• Refinery
• Primary metals refined are nickel, copper, cobalt and precious metals
• Capacity to produce 92,000 tonnes of nickel per year
• Employs approximately 500 people
148
A large, long-life, low-cost optimised asset base
149
$140M
of merger cost
synergies realised by
end 2014
$4.00/lb
C1 to be achieved in
2016F
70%
reduction in capex in
2015
Q1 Q2 Q3 Q4
Illustrative Nickel C1 metals cash cost curve
2016F
$4.00/lb
2014F
$3.10/lb
140-
150kt low-cost nickel
production by 2016
+20yrs
mine life, based on
current resource of
c.13.5Mt
0
20
40
60
80
100
120
140
160
2012A 2013A 2014F 2015F 2016F 2017F
Australia Canada New Caledonia Dominican Republic
Koniambo guidance
2014: 10 to 18kt Ni
2015: 25 to 40kt Ni
2016: > 50kt Ni to nameplate capacity
Koniambo ramp-up drives future production growth
150
Own source contained nickel production (kt)
Source: Glencore
102.5
98 +100
120-135
150-160 150-160
3.9
5.3 5.5 5.5
0.8
1.7
3.0
4.0
5.0
6.0
7.0
X Boardapproval 2007
X Boardrevision 2011
G ForecastSep 2013
G ForecastDec 2014
Project execution Commissioning & ramp up
Koniambo construction complete
151
Construction cost ($ billion)
6.3
7.2
Key milestones
Commercial production line 1 September 2013
Commercial production line 2 February 2014
Power station line 1 synchronisation April 2014
Power station line 2 synchronisation September 2014
Commercial production Estimated June 2015
• Koniambo construction completed in November 2013; production ramp-up now underway
• Power station commissioning issues are expected to be corrected by the end of H1 2015 – no power constraints to production in the interim
• Ramp-up of metallurgical production is progressing well; confidence that technology will deliver nominal capacity
Integrated site – metallurgical plant (construction complete)
152
Smelting (new smelting technology)
• The metallurgical plant has been operating for over 12 months
• both lines have operated at 90% of nominal throughput
• furnace power demonstrated at 80MW (100% of design) on both lines
• fluid bed reducing process performing well
• achieving overall metallurgical expectations
• Confidence in overall technology is high
153
Hammer Mill Flash Dryer Calciner Fluid Bed Reducer
DC Furnace
Sufficient power is now available to support production
• At full nominal smelting rates, the site will demand 215MW of net power, the equivalent of all power consumed on the island of New Caledonia. The site is designed to have a total installed capacity of 404MW (including auxiliary sources)
• 2 x STG (135MW x 2), 2 x CTG (52MW x 2), Enercal (30MW) and temporary diesel turbines (3 x 20MW)
• During commissioning of the steam fired power station in late 2013, significant cracking was identified in boiler tube welds in the heat exchange section of the waste heat boilers. The piping has required remanufacturing
• Boiler tube replacement and installation schedule is on track for both units to be operational at full capacity in Q2 2015
154
Production start up has relied heavily on 2 x
52 MW Rolls Royce Combustion Turbines
3 x 20 MW temporary diesel turbines were
added in May 2014
Further divestment opportunities
155
Araguaia
• Laterite nickel/cobalt project located in Brazil
• Measured and indicated resource of 105Mt @ 1.33% Ni and an additional 18Mt of
inferred resources @ 1.3% Ni
Sipilou • Laterite nickel/cobalt project located in Ivory Coast • Joint venture with SODEMI; current Glencore stake of 94%, diluting to 85% upon
issuance of mining license
Cosmos • Consists of two underground mines (Prospero and Cosmos) and a concentrator
in Western Australia • Cosmos is currently on care and maintenance
Nickel market transitioning to deficit
Offloading Sudbury nickel matte at Nikkelverk, Norway
Market remains in surplus with LME stocks increasing
157
LME Ni inventory and price
Nickel market balance (kt)
• LME nickel price rallied to $21,200/t in May, up 52%
from the start of the year. Prices subsequently
settled in an $18,000-$20,000/t range, then declined
rapidly from Sep, along with commodities in general.
Market recently recovered most Sep/Oct losses
• The increase in price was primarily driven by the
Indonesian ban on nickel ore exports and the
anticipation of reduced nickel output
• Yet, continuous increases in LME inventory, Chinese
metal exports, higher Philippine ore exports, macro-
economic downgrades and liquidity issues in China
have all impacted sentiment and nickel prices
Source: Glencore, LME. China Customs
12,000
14,000
16,000
18,000
20,000
22,000
24,000
26,000
28,000
30,000
80
130
180
230
280
330
380
430
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Inventory (kt) Price (US$/t)
-50
0
50
100
150
200
250
300
350
400
450
2010 2011 2012 2013 2014F
Nickel market balance
Cumulative balance
2014 Chinese metal exports (kt)
0
2
4
6
8
10
12
14
16
18
20
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Nickel pig iron output supported by high grade ore stocks
158
Quarterly nickel pig iron production (kt)
High and Mid grade Chinese nickel ore inventory (kt)
• Significant stockpiles of Indonesian high grade ore (>1.8% Ni) were built in China prior to the export ban (27Mt HG/MG ore)
• These stockpiles, blended with Philippine ore, have supported continued high levels of Chinese nickel pig iron (NPI) production in 2014 (c.480Kt Ni) albeit with production decreasing Q on Q
• Estimated at over 20Mt at the start of the year, stockpiles of high grade ore in China are currently below 10Mt and trending towards critical levels
• Philippine shipments will decrease in the coming months due to the monsoon season. Shipments will not pick back up materially until April when Surigao area exports resume
• HG stocks will be at critical levels by April 2015 and seasonality will become a major factor going forward
Source: Glencore.
0
40
80
120
160
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4F
2013 2014
0
10
20
30
Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14
Mid grade (MG) High grade (HG)
Philippine ore supplies determine Chinese NPI outlook
159
Philippine ore exports to China (Mt)
Chinese nickel pig iron production (kt)
• With the Indonesian ban on ore exports
sustained (also confirmed by recent
Constitutional Court ruling), Chinese
inventory of Indonesian high grade ore will
ultimately deplete and NPI production will
depend on ore exports from the Philippines
• 2014 Philippine exports to China are forecast
at c.52Mt wet ore and constitute LG >50%,
MG >30% with the balance HG. Lower
average grade ores increase NPI production
costs, all things being equal
• No game changers elsewhere: New
Caledonia may supply 1-2Mtpa additional ore
to market while Guatemala may supply up to
30kt Ni contained in higher grade ore to
European FeNi plants
• Based on our projection of volume and
composition of Philippine ore supply, China’s
NPI production is forecast to fall from 480kt
Ni in 2014 to 400kt Ni in 20151 and 350-
400kt Ni over the outlook period
Source: Glencore, Note: (1) Function of HG ore carry out.
0
25
50
2013 2014F 2015F
LG <0.8% Ni LG >0.8% Ni MG HG
0
100
200
300
400
500
600
2013 2014F 2015F 2016F 2017F 2018F 2019F
0
500
1000
1500
2000
2013 2014F 2015F 2016F 2017F 2018F 2019F
Chinese NPI New projects Existing producers
Supply outlook – limited growth amid ore ban
160
• Global nickel supply in 2014 is forecast to be
relatively unchanged on 2013 as decreased
output from existing producers and Chinese NPI
is offset by increased production from new
projects
• Longer term, Chinese NPI production is forecast
at 350-400kt vs. 510kt in 2013. However,
increased supply from new projects (all going
well) should offset projected losses and overall
supply growth is forecast at c.1% p.a. to 2019
• China’s NPI dependence on lower grade ore
from the Philippines will increase production
costs
• Ramp up performances highlight the need for a
cautious outlook, with the majority of new
projects delayed due to technical,
environmental, permitting and social challenges
• We assume limited growth in actual Indonesian
NPI output. While capacity will be built in a
higher price environment, the extent and pace of
commissioning is likely to be challenged for a
variety of reasons
• We forecast less than 100kt Ni in Indonesian
NPI by 2019
Source: Glencore
Forecast nickel supply (kt)
Forecast supply from new projects (kt)
Demand outlook – solid growth in key markets
161
• “While the days of double-digit growth in China
are over, the greater size of the economy
means lower growth still translates into strong
absolute demand… It’s slower not lower.” Julian Kettle, Wood Mackenzie
• Primary nickel demand in stainless steel is
projected to increase c.5% in 2014, reflecting
growth in China, North America, Japan and
India. Longer term, we forecast global nickel
demand in stainless to increase at a rate >4.5%
p.a., predominantly driven by China (Global
CAGR 2008-2013: 9.6% p.a.)
• Activity in non-stainless applications is also
robust with nickel usage projected to increase
>8% in 2014. Going forward, non-stainless
demand growth is forecast >4% p.a., with
strong contributions from China, US and India
• Overall, we project solid nickel demand growth
of c.4.5% p.a. between 2014 and 2019 (CAGR
2008-2013: 7.1% p.a.)
• Put simply, we conservatively expect demand
will increase by 75-100Kt Ni per year
Source: Glencore
Forecast nickel demand by sector (kt)
Forecast nickel demand by region (kt)
0
500
1,000
1,500
2,000
2,500
2013 2014F 2015F 2016F 2017F 2018F 2019F
Primary nickel in non-stainless
Primary nickel in stainless
0
500
1,000
1,500
2,000
2,500
2013 2014F 2015F 2016F 2017F 2018F 2019F
China
Non China
Expanding deficits to emerge
162
• Assuming the Indonesian ban on ore exports is sustained, market deficits will emerge
• Increased supply from new projects (all going well) supports global production growth of c.1% p.a. to 2019
• With nickel demand growth projected at a conservative c.4.5% p.a., the market is expected to transition to deficit, with substantial deficits forecast from 2018
• Long run nickel pricing will largely be determined by the cost of bringing on marginal (low grade) limonite ore processing capacity
• We do not see any new low cost technologies that will alter the outlook
Source: Glencore
Forecast nickel supply/demand (kt)
Forecast nickel market balance (kt)
1,600
1,800
2,000
2,200
2,400
2013 2014F 2015F 2016F 2017F 2018F 2019F
Supply
Demand
-300
-200
-100
0
100
200
2013 2014F 2015F 2016F 2017F 2018F 2019F
Q&A
Murrin Murrin metallurgical plant, Australia
Investor Day 10 December 2014
08:00 - Welcome and Overview | Ivan Glasenberg
08:20 - Finance Update | Steven Kalmin
08:45 - Copper | Telis Mistakidis
09:15 - Coal | Tor Peterson & Peter Freyberg
09:45 - Break
10:05 - Zinc | Daniel Maté & Chris Eskdale
10:35 - Nickel | Kenny Ives & Peter Johnston
11:05 - Oil | Alex Beard
11:40 - Break
12:00 - Agricultural products | Chris Mahoney
12:30 - Conclusion and Q&A
Mangara, Chad
165
Forward looking statements
This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward looking statements may be identified
by the use of forward looking terminology, or the negative thereof such as "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget",
"scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable
terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements
are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current
predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions
of strategy.
By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not
guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those
discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report.
Neither Glencore 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 document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the
date of this document. 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
Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange
Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking
statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change
in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date.
No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for
the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share.
This document 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. The making of this
document does not constitute a recommendation regarding any securities.
E&P portfolio overview
166
Asset Participation
Note: * Glencore operated
Equatorial
Guinea
Participating
Interest
Block I 23.75%
Block O 25.00%
Block X 37.50%
Block V * 80.00%
Block EG 05 * 60.00%
Cameroon Participating
Interest
Matanda * 90.00%
Bolongo * 100.00%
Tilapia 23.33%
Chad Participating
Interest
DOB/DOI * 100.00%
-Mangara Field* 85.00%
-Badila Field* 85.00%
DOH * 100.00%
Doseo/Borogop* 100.00%
Morocco /
Western Sahara
Participating
Interest
Boujdour
Offshore * 38.25%
Foum Ognit 18.75%
E&P portfolio location
• 3D seismic acquisition completed to
further refine development approach
• Diega development planning well
advanced
• Partnership in discussion with the EG
Govt regarding timing for a development
Equatorial Guinea Continued production from Aseng & Alen and future development potential in Diega
167
Aseng (Block I)
Note: * Alen field is located 95% in Block O and 5% in Block I
Alen (Block O) * Diega (Block I / O)
• Active production management and strong reservoir performance at the Aseng oil field
— Plant reliability remains world class at 99% uptime
— Field has outperformed original forecast for the year
— 2014 year end production range of 37-38 kbpd
• 2014 focus has been on further
optimising the Alen facility and
successfully sidetracking one of the
Alen producing wells
— 2014 year end production range of
27-29 kbpd
— Plateau production target of
c. 31-32 kbpd (expected in Q1 2015)
2015 Outlook & Guidance Aseng Alen
Gross Production (Ave) ~33,000 bbls/day 30,000 – 31,000
bbls/day
Combined full cycle unlevered IRR from both blocks in excess of 15% at
current curve pricing
• Drilled an appraisal well (NM-3x) on a
previous discovery (1980 Gulf oil)
• Pre-drill intention was to pursue a gas
reinjection scheme and extract liquids
in phase 1
• Well flowed very rich gas condensate
(greater than anticipated) • Well testing indicated a complex
reservoir system with need for further appraisal to identify true upside potential Considering options and will be looking
to farm out/down to players who could develop this large, but complicated, resource base
Expect to book an impairment in 2014
• Oak discovery made by Glencore in
2012 1st operated well drilled by the
Company
• Three appraisal wells drilled to
determine resource potential /
commercial development opportunity Peak flow rate of 1,500 bopd from Oak
South appraisal well
• Currently shooting 3D seismic over
potential development area and
performing preliminary development
engineering studies Considering potential partnerships for
development
168
• Non-operated - (Noble Energy - operator)
• Reduced interest during the year from 33% to 23% to Woodside
• One exploration well planned for 2015 - Cheetah prospect
Cameroon – appraisal programme completed
Matanda Bolongo Tilapia
• First Glencore rainy season well executed in the Doseo Basin
• Flowed at rates up to 2,880 bopd. Estimated 6,000 bopd unrestricted natural flow • Reserves in the process of being updated based on new well and seismic data
• Validated resource base
Chad – key milestones achieved since Sep 2013 update
169
Badila Field
Kibea Appraisal
Krim Discovery
Mangara Field
• Discovery well drilled in Q4 2013. EXA application submitted and expecting
Government approval shortly
• First oil planned for Q2/Q3 2015 with a phased development scheme: • Phase 1: Truck oil to Mangara (~ 7 km) and produce through Mangara CPF (separate Krim train)
• Phase 2: Construct separate Krim production facility to expand capacity
• Badila 40,000 bfpd CPF Facility completed and commissioned in November 2014
• Total water injectivity capacity at 23,000 – 30,000 bwpd by year end
• Current production at ~ 15,000 bopd
• Mangara 15,000 bopd CPF is now completed and ready to be commissioned
• First production expected in December 2014 / January 2015
Facility expansion achieved
First oil imminent
Fast track development planned
Successful appraisal well drilled
Total Chad West - Outlook & Guidance
2015
Gross Production (Ave) 30 – 37 kbopd
Near term development & production in Western Acreage
• Focussing on near term cash flow from these three fields
• In ~18 months since the initial Glencore farm-in, two fields will have
been brought online
• Third field to follow in Q2 2015
• At current pricing, economics are robust on any incremental
forward spend on these fields
• Underlying field IRR’s >20% on a full cycle basis
• Provides an indication of future value creation
potential from exploration play
170
Mangara Field
Krim Field
Outlook & Guidance
First oil date Dec 14 / Jan 15
Reserves (audited) 70 MM bbls
Outlook & Guidance
First oil date Q2/Q3 2015
Reserves (audited) 19 MM bbls
Outlook & Guidance
First oil date Sep.13
Reserves (audited) 45 MM bbls
Badila Field
Capturing value from the exploration opportunity & existing discoveries in the East Discovered resource represents only ~ 25% of total audited risked resource potential
• Leaves entire exploration play at ground floor entry
• ~800 MM bbls of audited risked prospective resource
• Existing discoveries (Kibea, Maku, Tega, Sako) with resource potential of >100 MM bbls
Modular approach to exploration
• Strategy to target lowest risk prospects with greatest impact to existing facilities and strategic investment
decisions (e.g. Pipeline)
• Responded to current pricing environment with a reduced exploration capex budget
» Capex for 2015 weighted ~75%/25% in favour of Chad West development vs. Chad East exploration/appraisal
• Low cost drilling relative to offshore and greater chance of success with exploration dollars being spread across
multiple targets
• 2D & 3D seismic campaigns underway to better define targets and uncover new prospects
Currently drilling first exploration wells since acquisition
• Beche B, Lore, Sourma
171
Summary of Prospective Resources (Pmean)
Block Gross Resources (mmbbl)
Unrisked Risked
DOB/DOI (PSC 2) 328 107
DOH (PSC 3) 309 65
Doseo/Borogop (PSC 1) 3,074 648
Total 3,711 820
Conclusion
Strong cash generation from two assets in production (EG & Chad) • Equatorial Guinea
– Aseng and Alen continue to perform well with no significant capex commitments until Diega development
• Chad
– Plan to accelerate production from the 3 Western fields/discoveries (Mangara, Badila, Krim) using existing
pipeline infrastructure (Totco / Cotco)
Highly attractive value proposition from the Central & Eastern Acreage in Chad • Highly prospective basin at ground floor entry
– ~800 MM bbls of audited risked prospective resource
• Modular approach with a strategy to target lowest risk prospects with closest proximity to existing facilities entry
– Capex for 2015 weighted ~75%/25% in favour of Chad West development vs. Chad East exploration/appraisal
• Low cost / well relative to offshore and multiple opportunities for success
Disciplined approach to capital and returns • Equatorial Guinea
– Solid full field life project returns even at current spot prices
– Large amount of headroom to breakeven price
• Cameroon
– Considering options on Matanda
– Bolongo Oak development delayed until post seismic results
• Chad
– Purchase price for Caracal equivalent to independent valuation of 2P reserves only. Leaves entire exploration
play at ground floor entry
– Economics are robust on any incremental forward spend on Chad Western developments/fields
172
Oil drill rig, Chad
Q&A
Harvester at Balaklava, Australia
08:00 - Welcome and Overview | Ivan Glasenberg
08:20 - Finance Update | Steven Kalmin
08:45 - Copper | Telis Mistakidis
09:15 - Coal | Tor Peterson & Peter Freyberg
09:45 - Break
10:05 - Zinc | Daniel Maté & Chris Eskdale
10:35 - Nickel | Kenny Ives & Peter Johnston
11:05 - Oil | Alex Beard
11:40 - Break
12:00 - Agricultural products | Chris Mahoney
12:30 - Conclusion and Q&A
Investor Day 10 December 2014
175
Forward looking statements
This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward looking statements may be identified
by the use of forward looking terminology, or the negative thereof such as "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget",
"scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable
terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Such statements
are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but rather on current
predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions
of strategy.
By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward looking statements are not
guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those
discussed under “Principal risks and uncertainties” of Glencore’s Annual Report 2013 and “Risks and uncertainties” in Glencore’s 2014 Half-Year Report.
Neither Glencore 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 document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the
date of this document. 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
Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg Stock Exchange
Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forward looking
statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change
in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date.
No statement in this document is intended as a profit forecast or a profit estimate and no statement in this document should be interpreted to mean that earnings per Glencore share for
the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share.
This document 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. The making of this
document does not constitute a recommendation regarding any securities.
Agricultural products Chris Mahoney
Shiploading at Port Giles, Australia
Agricultural products summary
• A global grain and oilseed origination, processing, storage,
handling and marketing business
• 11,700 employees
• operating in 4 regions with marketing offices in 27 countries
– marketing c.67Mt/year,
• comprising c.300 facilities including silos, ports, mills, oilseed and biofuel
processing facilities etc
– processing c.10.4Mt/year
• Our business focus, supported by logistics and processing assets,
is being in the countries of origin, particularly those with large
production and exportable surpluses
• Viterra fully integrated with significant cost savings realised
177
Glencore’s logistics infrastructure (1/2)
Illychevsk
3Mt
220kt
Tilbury
500kt
19kt
Szczecin
1.25Mt
25kt
Muuga
4.0Mt
300kt
Dunaújváros
300kt
7kt
Taman
3.5Mt
84kt
Rostov
1.25Mt
60K
Bahia Blanca
3.0Mt
210kt
Cascadia
6Mt
280kt
Prince Rupert
6Mt
230kt
Thunderbay
2Mt
500kt
Montréal
3Mt
250kt
Port Lincoln
1.9Mt
395kt
Port Giles
800kt
296kt
Pt Adelaide OH
1.9Mt
65kt
Pt Adelaide IH
850kt
338kt
Wallaroo
750kt
765kt
100%
ownership Leased Viterra JV
Name of port
• normalized annual throughput
• storage capacity
Thevenard
600kt
347kt
Newcastle
1.5Mt
150kt
Timbúes
2.7Mt
450kt
Pacific
2Mt
180kt
Grain port facilities
Note: In total 21 port facilities with cumulative 5.2Mt storage capacity. Normalized annual throughput of circa 44Mt.
Source: Company data
178
Glencore’s logistics infrastructure (2/2)
Ukraine
26 facilities
1,26Mt
Bulgaria
2 facilities
64kt
Romania
10 facilities
337kt
Russia
11 facilities
710kt
Hungary
4 facilities
240kt
Kazakhstan
3 facilities
233kt
Poland
5 facilities
180kt
Argentina
8 facilities
372kt
Uruguay
2 facilities
100kt
Canada
63 facilities
1.9Mt
Australia
109 facilities
7.8Mt
Country
• number of storage facilities
• storage capacity
Viterra
Note: In total 243 storage facilities with cumulative 13.2Mt storage capacity.
Storage facilities
Source: Company data
179
Farming and processing assets
Facillities Commodity Production capacity Ownership Country
Crushing
Moreno 3 Sun / Soya 1.29Mt 100% Argentina
Ponta Pora 1 Soya 329kt 100% Brazil
Fokto 1 Multi 508kt 100% Hungary
Usti 1 Sun / Rape 462kt/586kt/60kt 100% Czech
Kharkov 1 Sun 320kt 80-100% Ukraine
Lubmin 1 Rape 165kt 100% Germany
Bodaczew 1 Rape / Soya 600kt/660kt 100% Poland
Ste. Agathe 1 Canola 280kt 100% Canada
Timbúes 1 Soya 6Mt 50% Argentina
Fangchenggang 1 Rapeseed 680kt 49% China
Total crushing assets 12 plants 8.6Mt
Biofuels
Biopetrol 3 Multi 850kt 100% Germany / Netherlands
Advanced Organic Materials 1 Soya 50kt 50% Argentina
Renova 2 Soya 500kt 33.3% Argentina
Total biofuels assets 6 plants 1.1Mt
Rio Vermelho 1 Sugar 3Mt ~90% Brazil
Mills
Mills 6 Wheat 1.2Mt 50-100% Brazil
Mills 4 Rice 400kt 100% Argentina, Brazil and Uruguay
Total mills assets 10 1.6Mt
Farming Farming Multi 180k hct 50-100% Australia, Argentina, Kazakhstan,
Paraguay, Russia and Ukraine
180
Distinct but interdependent businesses
• Earnings are not reliant on prices or positioning
• average VaR year to date 2014 - $8.3M, maximum $16M
• Natural ‘hedge’ within the business:
• big crops are positive for handling and oilseed processing
• crop problems/dislocation can support marketing/trading
• Lower prices = lower working capital
• working capital cycle is 49 days
• Healthy ROCE in 2014 YTD
• Sustaining capex is low; 55% current of annual depreciation
181
Global
storage /
handling
(inc. Viterra)
Farming Softseed
processing /
biodiesel
Europe
Soyabean
processing /
biodiesel
Argentina
Milling
South
America
Trading/Marketing
Agricultural products – key strengths
• In top three grain /oilseed exporters
from Russia, EU, Canada and Australia
• In top three global marketers (seaborne
trade) of wheat, durum wheat, barley,
peas/pulses, canola and sunflower
seed/oil/meal
• First class, large scale assets in
Canada, Australia, Argentina
(Timbues), Russia (Taman) and
Ukraine (Illychevsk)
• Focused on retaining a strong/flexible
trading culture
• Low overhead per tonne vs. peers
182
Wheat in Bute, South Australia
Marketing and handling update
• Prices at post financial crisis lows
• record 2013/14 US crops, good EU and FSU
production and a re-building of PRC corn stocks
due to three years of good production
• however, some new crop production issues
developing (Russia)
• Record 2013 Canadian crop (76Mt) followed
by an average 2014 crop
• September harvest lower at 60Mt, but record
carry over stocks means total availability in
2014/15 will be similar to 2013/14
• quality is very variable and may provide blending
opportunities. Rail situation has improved
• 2014 Australian crop (November harvest) will
be average, down slightly on 2013
• government is advocating open access to ports
• Port capacity additions by competitors
occurring in Australia, Ukraine, USA and
Brazil
• so far no indication of new port building in
Canada, but some country elevator additions
183
Viterra Weyburn grain silo, Australia
Farming and processing update
• Oilseed crush margins in Europe, FSU and Argentina have been reasonable
• no significant additions to crush capacity in these regions with the exception of the Ukraine
• conflict in Ukraine has forced the closure of a competitor’s plant
• EU biodiesel margins have stabilised due to capacity rationalisation
• Wheat milling margins in Brazil remain good and historically consistent
• Farming results will suffer due to lower prices in 2015 – this was mitigated in 2014 due to hedging early in the year
184
Tailem Bend bunker stack, Australia
Population demographics underpin a positive outlook
• Global demand growth supports the
business with 10 year CAGR of: – Corn: 3.5 %
– Beans: 3.3 %
– Wheat: 1.8 %
• Growth in seaborne trade exceeds
demand growth: – Corn: 4 %
– Beans: 6 %
– Wheat: 2.9 %
• 20-25% more food to be moved in
five years time
• New handling infrastructure and
processing capacity will be required
• Existing facilities should earn
attractive returns based on
replacement values
185
Ship loading Port Adelaide, Australia
Q&A
Viterra Balgonie, Regina, Canada
Appendix
Oilseed processing, logistics and marketing are integrated
Represents earnings streams
Origination
elevators /
silos
Port
elevators /
silos
Marketing/
freight
Break bulk
distribution
Rice milling Oilseed crushing Wheat flour milling Biodiesel production
• Provides supply of commodity at
farm cost price. Long term flat
price long position
• Economies of scale to ensure
best practices, machinery and
logistics sharing, low cost
producer
• Ability to hedge single and multi
year in related futures markets
• First hand source of information
on local conditions
• Elevators and port facilities have
their own earnings stream
(storage and through put fees)
• Supportive of the procurement
business enabling purchases
directly from farmers
• Up country storage capacity
critical to the purchase of
grain/oilseeds at harvest
• Crucial to ensure timely delivery
to load ports particularly in an
environment of high capacity
utilization or export bans/quotas
• Logistics delays to the last 10%
of the cargo/program delay its
entirety, cannot rely on third
parties for 100%
• Processing margin provides an
earnings stream
• Supports raw material
procurement, commodity may
be diverted for export
• Products feed into marketing
book (oilseeds, rice)
• Production margin locking and
unlocking (oilseed crush,
biodiesel)
• Milling assets provide an outlet
for wheat
• Procurement margin and carry
trades
• Intra/origin commodity arbitrage
(wheat, corn, barley, softseed)
• Inter commodity arbitrage (feed
compound raw materials, oil
complex).
• Production economics arbitrage
(oilseed crush, biofuels)
• Time spreads
• Freight arbitrage (between
vessel types) and optionality
trades
• Some flat price positions taken
based on real physical market
insight
Procurement / marketing assets Processing assets
Farming Origination and port
elevators Processing assets Marketing
Farming Marketing/
freight
Marketing activities (no assets)
188
3.7 5.7
6.8 7.8
2010 2011 2012 2013 YTD Q3 2014
Crushing & Sugar Cane prod. Biodiesel Rice milling Wheat milling
Operating track record
189
Volumes – Farming (kt)
Volumes – Processing (Mt)
675 657 587
827
674
883
571
2008 2009 2010 2011 2012 2013 YTD Q32014Wheat Barley Corn
Rapeseeds Sunflower Seeds Soybeans
Rice Peas
30 29
31
37
46
68
50
2008 2009 2010 2011 2012 2013 YTD Q32014
Grains Oil/Oilseed Sugar Cotton
Volumes marketed (Mt)
Source: Company data
Note: (1) Includes sugarcane processing volumes of 0.4Mt in 2008, 0.9Mt in 2009, 1.12Mt in 2010 and 0.9Mt in 2011
(1)
8.4
190 190
Tintaya concentrator, Peru
08:00 - Welcome and Overview | Ivan Glasenberg
08:20 - Finance Update | Steven Kalmin
08:45 - Copper | Telis Mistakidis
09:15 - Coal | Tor Peterson & Peter Freyberg
09:45 - Break
10:05 - Zinc | Daniel Maté & Chris Eskdale
10:35 - Nickel | Kenny Ives & Peter Johnston
11:05 - Oil | Alex Beard
11:40 - Break
12:00 - Agricultural products | Chris Mahoney
12:30 - Conclusion and Q&A
Investor Day 10 December 2014
Ivan Glasenberg
CEO
Lion chrome smelter, South Africa
Our priorities for 2015
• Successfully deliver remaining key growth projects
• Koniambo, McArthur River, Katanga, Chad oil fields
• Ensure continued operating efficiency, targeting Q1 costs/margins
• Maintain strong investment grade credit rating
• Maintain disciplined deployment of capital to maximise free cash flow growth
• Glencore considers portfolio not only marginal NPV
• Confidence to:
• grow base dividend
• recycle excess capital to shareholders
• be opportunistic, but within our capital allocation framework
• Focus on continuing improvements in our health, safety, sustainability and governance performance
192
Q&A
Tintaya concentrator, Peru
DVM
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