ANGLO AMERICAN A WORLD OF DIFFERENCE

Transcription

1 ANGLO AMERICAN A WORLD OF DIFFERENCE Anglo Coal Investor Roadshow November 2004 This presentation is being made only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial 1 Services and Markets Act 2000 (Financial Promotion) Order 2001 (the Order ) or (b) high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order (all such persons together being referred to as relevant persons ). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. 1

2 Key Facts 14% of AA plc s 2003 Headline earnings, 11% (H1 2004) Geographically diverse earnings base EBITDA US$500 m (2003), US$280 m (H1 2004) Total free cash generated since 1999 US$1.5 bn EBITDA by Region 44% 34% Australia South Africa South America 22% 2

3 Anglo Coal relative to its peers Mt - Saleable Production Export Metallurgical Export Thermal Domestic 50 0 Peabody Rio Tinto BHPB Shenhua Arch Coal Anglo Coal 3 Consol strata AEI Massey Source: Publicly available data Anglo Coal is 6 th largest..but 4 th largest of the global players 3

4 Location Map London Marketing Office Beijing Representative Office Mine Cerrejon Colombia Attributable Production (2003) Employees Attributable EBITA (2003) Export Export Domestic Met Thermal 7 Mt 3983 US$100 m Venezuela Export Export Domestic Mine Met Thermal CdG Attributable Production (2003) Employees Attributable EBITDA (2003) 2 Mt 1059 US$11 m South Africa Mine Export Export Dom e s tic Met Thermal Goedehoop Kleinkopje Bank Greenside Landau Isibonelo Kriel Mafube New Denmark New Vaal Attributable Production (2003) Em ploye e s Attributable EBITDA (2003) 52 MT 7275 US$172 m Australia Mine Export Export Domestic Met Thermal German Creek Moranbah North Jellinbah Moura Dartbrook Drayton Callide Attributable Production (2003) Employees Attributable EBITDA (2003) 26 Mt 2120 US$217 m 4 An increasingly GLOBAL footprint 4

5 Market shares of 5 largest suppliers Export Thermal Coal Export Metallurgical Coal 52% 69% 6% 7% 5% 5% 4% 7% 7% 4% 10% 24% Anglo Coal strata BHPB PT Bumi Rio Tinto Others Anglo Coal strata BHPB (includes Mitsubishi) Canada (Fording & Teck) Rio Tinto Others 5 Source: Publicly available data & Anglo Coal analysis Anglo Coal has a competitive share in both markets 5

6 EBITDA & ROCE US$ m % 26% 16% 17% 15% 16% H South Africa Australia South America ROCE 30% 25% 20% 15% 10% 5% 0% EBITDA CAGR 26% EBITDA return (1999 to H1 2004) ~ 28% Average EBITDA return on acquisitions ~18% 6 Excellent returns on capital ROCE ROCE affected by coal prices, F rates and production Target for Anglo Coal to achieve minimum ROCE of 15% over rolling 3-year period 6

7 EBITDA Margin EBITDA Margin comparable with competitors 35% (2002), 28% (2003), 26% (H1 2004) Margins in 2003 were negatively impacted by lower coal prices & stronger F rates 2004 margin impacted by production problems at Moranbah North 7 40% 35% 30% 25% 20% 15% 10% 5% 0% EBITDA Margin Anglo Coal Rio Tinto BHPB strata H Source: Publicly available data Competitive EBITDA margin 7

8 World Energy Consumption - by Fuel 700 In EJ Nuclear- 5% Renew - 3% Gas - 26% World primary energy consumption increased by 2.9% For the second year running, coal was the fastest growing fuel, increasing by 6.9%, driven by China, Russia, Japan and North America Oil - 41% Coal - 23% More generally Coal fuels almost 40% of the world s power generation Coal as a raw material underpins some 70% of the world s steel industry Source: RMI analysis, IEA 2004, EIA IEO 2004, BP Statistical Review 2003, IFP Coal is key source of energy present & future 8

9 Seaborne Thermal Coal Market in 2003/2004 US$/t Nominal Jan-03 European heat wave drives prices up Hydro shortage High aircon demand Nuclear cooling problems River transport problems 01-Feb Mar Apr May Jun-03 TFS API 2 = Price Index for CIF Rotterdam basis 6000 kcal/kg NAR TFS API 4 = Price Index for FOB Richards Bay basis 6000 kcal/kg 9 NAR 01-Jul Aug Sep Oct-03 Freight Rates surge on the back of Chinese demand and ship supply. Richards Bay/Rotterdam route goes to US$28/t compared to US$8/t in early Nov Dec Jan Feb-04 Implied Freight TFS API 2 TFS API 4 01-Mar Apr-04 Uncharted territory 01-May Jun Jul Aug Sep-04 Typical lull in buying during European summer. Freight rates increasing again South Africa freight differentials with Australia, Indonesia, China regionalise supply forcing prices higher. Source: Argus/McCloskey s Coal Price Index Report 9

10 Seaborne Metallurgical Coal Price Evolution Japanese Fiscal Year Australia/Japanese Steel Mill HCC Reference Price FOB Queensland Spot Prices at +US$100/t for marginal tonnage US$/t Nominal Source: Publicly available data Historic cyclicity..future looks strong 10

11 Project Pipeline Russia China Cerrejon US$50 m 2 Mtpa Export Thermal 2007* * Year of full production Isibonelo US$65 m 5 Mtpa Sasol 2006* 11 Mafube Western Complex Kayuga US$55 m 4 Mtpa Export Thermal 2005* Dawson Valley Indonesia Grasstree US$106 M 4 Mtpa Export Met 2007* Lake Lindsay An exciting mix in existing and new geographies 11

12 New Business Development Coal Bed/Mine Methane Moura (Australia) Waterberg (South Africa) German Creek (Australia) VPLP Victorian Power & Liquids Project Power and low sulphur diesel Carbon capture & storage Government support Coal Gasification China iwan Chemical by-products Emissions reduction 12 Long lead time High capital New skills Potential high returns Growth! Operational Excellence! Market Driven! 12

13 Outlook 2004 Sound operating performance across operations in all regions Operational problems at Moranbah North Higher costs inflationary pressures weaker US$ Higher average realised prices versus 2003 Thus, H will be stronger than H Positive outlook price & operating performance 13 13

14 Summary World Class Assets Operational Excellence Market Driven Russia People & Skills Development New Business Development China Colombia Venezuela Indonesia South Africa Australia 14 14