anglo coal - Anglo American

Anglo Coal
Presentation to Analysts
June 2005
1
Presentation to Analysts: June 2005
1
Agenda and Participants
►
Anglo Coal Overview
Ken Bell SVP International Business Development
►
Anglo Coal Australia Overview
Eric Ford CEO Anglo Coal Australia
►
Dawson Overview
Mike O’Brien GM Dawson
2
Rod Elliott GM Marketing and Transportation
Presentation to Analysts: June 2005
2
Overview of Anglo Coal
Ken Bell
3
Presentation to Analysts: June 2005
3
Overview of Anglo Coal
►
Operations in:
•
•
•
•
South Africa:
9 mines
Australia:
6 mines
2004 Saleable Tonnes (Mt)
By Region
1 equity mine
Colombia:
1 mine
Venezuela:
1 mine
►
Long life mines
►
Good quality reserves
►
Exposure to export and domestic thermal
coal market and export metallurgical coal
market
►
Contributed 13% to AA plc's 2004 headline
earnings
►
Generated US$1.8 billion in free4cash
from 1999 to 2004
Presentation to Analysts: June 2005
26
55
10
South Africa
Australia
South America
4
Anglo Coal Location Map
London
Beijing
Marketing Office
Representative Office
Venezuela
Export
Met
X
Mine
CdG
Export Dom estic
Therm al
X
Attributable Production (2004)
Em ployees
Attributable EBITDA (2004)
2 Mt
1059
US$20 m
South Africa
Mine
Goedehoop
Kleinkopje
Bank
Greenside
Landau
Isibonelo
Kriel
Mafube
New Denm ark
New Vaal
Export
Met
X
X
X
Export Dom estic
Therm al
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Attributable Production (2004)
Em ployees
Attributable EBITDA (2004)
55 MT
7275
US$297m
Presentation to Analysts: June 2005
Colombia
Australia
Mine
Germ an Creek
Moranbah North
Jellinbah
Daw son
Dartbrook
Drayton
Callide
Export
Met
X
X
X
X
Export Dom estic
Therm al
5
Attributable Production (2004)
Em ployees
Attributable EBITDA (2004)
Mine
Cerrejon
X
X
X
X
Export
Met
Export Dom estic
Therm al
X
Attributable Production (2004)
Em ployees
Attributable EBITA (2004)
8 Mt
3983
US$185 m
X
X
X
26 Mt
2120
US$184m
5
Anglo Coal’s Market Share
SOURCE: PUBLICLY AVAILABLE DATA & ANGLO COAL ANALYSIS
Export Metallurgical Coal
Export Thermal Coal
6%
5%
52%
5%
7%
7%
69%
24%
7%
4%
4%
Anglo Coal
PT Bumi
Xstrata
Rio Tinto
BHPB
Others
6
10%
Anglo Coal
Xstrata
BHPB (includes Mitsubishi)
Canada (Fording & Teck)
Rio Tinto
Others
Anglo Coal has a competitive share in both markets
Presentation to Analysts: June 2005
6
Anglo Coal’s Product Portfolio
and Customer Destination
2004 Actual Saleable Coal
By Product Million Tonnes
2004 Actual Product Destination
90 Million Tonnes
17%
7
8
10
31%
10
18
37
South African Domestic
South African Thermal Exports
Australian Domestic
Australian Thermal Exports
Australian Metallurgical Exports
South American Exports
Presentation to Analysts: June 2005
52%
Domestic Market
7
Med-Atlantic Market
Indo-Pacific Market
7
Coal Price History & Projection
US$/T FOB
140
Export Hard Coking Coal (Goonyella Benchmark)
120
Export Thermal Coal (Japan/Newcastle Benchmark
basis 6322 GAR)
100
80
60
40
Presentation to Analysts: June 2005
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
8
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
0
1980
20
8
Key Financials 2003 Vs. 2004
► Revenue
up 29% to US$2.4 bn
► Operating
► Headline
► Free
► Total
Profit up 46% to US$487m
Earnings up 51% to US$351m
Cash Flow up 38% to US$445m
Free Cash of US$1.8 bn generated
from 1999 to 2004
9
Solid Results
Presentation to Analysts: June 2005
9
EBITDA
Significant growth in EBITDA - CAGR 33% since 1999
Average EBITDA margin ~ 30% (1999 to 2004)
US$m 800
700
600
500
400
300
200
100
0
2002
2003
South Africa
Australia
10
South America
40%
35%
30%
25%
20%
15%
10%
5%
0%
2004
EBITDA Margin
Good EBITDA Returns
Presentation to Analysts: June 2005
10
2004 Regional Results
EBITDA (US$m)
Revenue (US$m)
Operating Profit (US$m)
433
205
297
1109
840
164
244
79
184
South Africa
Headline Earnings (US$m)
Australia
Capex (US$m)*
45
South America
Net Operating Assets (US$m)*
398
923
81
116
162
73
13711
1634
*Annual Financial Statements exclude Anglo Coal’s
share of Associates’
Presentation to Analysts: June 2005
11
Outlook 2005
►
►
Anticipate sound operating performance across
operations in all regions
Higher costs
Inflationary pressures continue across
all regions
Weaker US Dollar impacting on South
African Rand and Australian Dollar
Higher average realised prices versus 2004
Anglo Coal has sold significant amount of
12
2005 tonnage at current
high prices
•
•
►
Presentation to Analysts: June 2005
12
Project Pipeline
Russia
China
Cerrejon
Expansion
Dawson
Grasstree
Mafube
Isibonelo
Western
Complex
Presentation to Analysts: June 2005
13
Lake
Lindsay
Grosvenor
Saddlers Creek
Moranbah
South
Monash Energy
13
New Business Development
►
►
►
Coal Bed/Mine Methane
• Dawson (Australia)
• Waterberg (South Africa)
• German Creek (Australia)
Monash Energy
• Power and low sulphur diesel
• Carbon capture & storage
• Government support
Coal Gasification
• China – Xiwan
• Chemical and Power
• Emissions reduction14
Presentation to Analysts: June 2005
Long lead time
High capital
New skills
Potential high returns
14
In Conclusion..
Significant earnings and cash flow contributor
to AA plc
► Exposed to domestic and export coal markets
► Good quality long life reserves
► Diversified geographical base
► Proven track record for operating in existing
and new geographies
► Good growth opportunities within existing
operations
► Continue to optimise existing operations and
15
develop new assets and
business initiatives
►
Presentation to Analysts: June 2005
15
Overview of
Anglo Coal Australia
Eric Ford
16
Presentation to Analysts: June 2005
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Anglo Coal in Australia
ƒ Long
Life
ƒ Quality
Reserves
ƒ Growth
Strategy
17
Presentation to Analysts: June 2005
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2004 Sales by Coal Type
35 Million Tonnes
10.4
14.5
10.1
Domestic Thermal Coal
18
Export Metallurgical Coal
Presentation to Analysts: June 2005
Export Thermal Coal
18
Key Financials 2004
► Revenue
US$ 840m
► Operating Profit US$ 79m
► Headline Earnings US$ 73m
► Capex 2004 US$ 137m
► Strong cash flow position
► Performance impacted by Moranbah North
19
Presentation to Analysts: June 2005
19
Coal Sales Projection
Anglo Share Of Coal Sales (Mtpa)
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
2004
2005
Domestic
E xport Metallurgical
Presentation to Analysts: June 2005
2006
20
2007
2008
2009
E xport T hermal
E xpansions (including Dawson)
20
Projects
► Significant
•
•
growth ahead:
Brownfield
Grasstree
Dawson
Coal Seam Methane
Greenfield
Lake Lindsay
Moranbah South
Grosvenor
Saddlers21Creek
Monash Energy
•
•
•
•
•
•
•
•
Presentation to Analysts: June 2005
21
Outlook 2005
► Metallurgical
► Export
Thermal
► Domestic Thermal
► Coal Seam Methane
► Skills
► Materials
► Contractors
► Legislation
22
Presentation to Analysts: June 2005
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Conclusion
► Strong
► Good
global environment
expansion projects
► Operational
►M
excellence
& A opportunities
23
Presentation to Analysts: June 2005
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Dawson Overview
Mike O’Brien
24
Presentation to Analysts: June 2005
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Dawson Location
25
Presentation to Analysts: June 2005
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Historic Slide
Sales
Million's
Tonnes
Number of
Employees
1,400
DL4 DL5
BE
Marion
1370 8200
1,200
Em ployees
1,000
800
Rail line to
Gladstone
8
7
DL6 Highw all
Marion Mining
8200
6
5
4
600
3
400
Annual Tonnes
2
Underground
Mining ceases
Aug 94
200
0
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
0
1
Thiess Peabody Mitsui Coal formed
Presentation to Analysts: June 2005
BHP acquires
26 58%
Peabody /
Anglo /
BHP acquires further 22% Mitsui JV CNA /
Mitsui JV
Mitsui JV
26
Reserves
Mt
250
250,000,000
Proven
Probable
Other
Payback: April 2011
200
200,000,000
150
150,000,000
100
100,000,000
Presentation to Analysts: June 2005
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
27
2013
2012
2011
2010
2009
2008
2007
2006
2005
00
2014
50
50,000,000
27
Coal Rank
►
Well understood rank
trend dictates coal quality
and products
►
Rank reduces from ~ 1.6
in north to 0.7 in south
►
Ranges from:
► sub-anthracite in north
► hard coking in the
centre
28
► to thermal in the south
Presentation to Analysts: June 2005
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Dawson Pit 68
29
Presentation to Analysts: June 2005
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Dawson Pit 68
30
Presentation to Analysts: June 2005
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Capital Expenditure
► Total
•
•
•
capital expenditure is US$653m
US$225m mining equipment
US$294m conveyors,coal handling and
preparation infrastructure
US$134m Infrastructure and land
► Agreements
for the provision of port and
rail infrastructure in place
31
Presentation to Analysts: June 2005
31
Operating Costs
► The
expansion and recapitalisation of
Dawson will deliver improvements in
unit operating costs of 15%
► This
is achieved through a combination
of economies of scale, improved mining
schedules, and the use of larger more
efficient equipment
32
Presentation to Analysts: June 2005
32
Seam Gas
Overburden
C Seam
A Seam
D Seam
D Lower Seam
(approx 800m in coal)
ƒ Moura is currently contracted to produce 6.5 PJ per annum
(approximately 5% of the Queensland market)
33
ƒ The extraction and sale of seam gas may provide future carbon credits
Source: Geogas Systems
Presentation to Analysts: June 2005
33
Environment and Community
► Strong
community support
► Agreements with traditional owners
► Special Act Lease complies with
mainstream environmental management
practices
► New mining plan addresses historically
approved rehabilitation liability
► ISO14001 and AS4801 compliant
► Nature refuge ‘Willawa’ established
34
Presentation to Analysts: June 2005
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Dawson Overview
Rod Elliott
35
Presentation to Analysts: June 2005
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Coal Brands
► Metallurgical
Coal
• Moura C
• Dawson HV
• Dawson LV
Prime Coking
• Moura ‘K’
• Soft coking
Soft Coking
► Thermal
• Moura
Presentation to Analysts: June 2005
36
Thermal
36
Dawson Product Mix
14
(Mtpa)
Total Sales Tonnes (Mtpa)
12
10
8
6
4
2
T h er m al C o al
Har d C o k in g C o al
Presentation to Analysts: June 2005
2009 F
2008 F
2007 F
37
2006 F
2005 F
2004 A
2003 A
Part Year
2002 A
0
S o ft C o k in g /P C I C o al
37
Marketing Strategy
► Established
brands and market presence
► Term contracts covering thermal and
metallurgical coal
► Strong portfolio of buyers:
Asian thermal coal focus
Diversified metallurgical coal sales strategy
► Reliable infrastructure:
Queensland Rail
Port of Gladstone
38
► Anglo and Mitsui global
marketing strength
•
•
•
•
Presentation to Analysts: June 2005
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Dawson
39
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Questions
& Answers
40
Presentation to Analysts: June 2005
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