Solutions and life cycle services for the entire Minerals Processing value chain Life cycle solutions

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1 Solutions and life cycle services for the entire Minerals Processing value chain Life cycle solutions Kalle Härkki President of Minerals Processing business area Outotec December 4, London

2 Minerals Processing Comprehensive offering for processing of virtually all ore types Sustainable solutions from pre-feasibility studies to complete plants and life cycle services. More than a century of experience and strong R&D capabilities for continuous creation of world-leading technologies in-house. Solutions for Concentrators Comminution Flotation Dewatering Services Operation & maintenance Peers and competitors Andritz, BGRIMM, CITIC, FLSmidth, Krupp Polysius, Metso, PERI, Tenova (Delkor), Thermo Fisher, WesTech, Xstrata Technology 2 Dec 4

3 Minerals Processing Sales and operating profit *) development Sales Operating profit, %*) *) excl. one time items and PPA 0 20 % 18 % 16 % 14 % 12 % 10 % 8 % 6 % 4 % 2 % 0 % Highlights in Q1-Q3 Strong service sales, lower sales from capex Profitability impacted by lower overall sales and service product mix (higher share of expert service vs proprietary spares) Significant minerals processing technology orders from Grupo Peñoles (EUR 47 million) EUR million Q1-Q Q1-Q Change % Q Q Sales Operating profit from business operations *) Operating profit margin from business operations, % *) The unrealized and realized exchange gains related to currency forward contracts increased profitability by EUR 3.6 (0.0) million in Q1-Q Dec 4

4 Strategic intent and focus in the value chain The leading provider of sustainable minerals and metals processing solutions and an innovative provider of sustainable energy and water processing solutions Minerals processing Refining Industrial water treatment Energy Sustainable end-to-end solutions from feasibility studies to complete plants and life cycle services for virtually all ore types Extensive range of sustainable process solutions for virtually all types of ores and concentrates and sulfuric acid, turn-key delivery and life cycle services Solutions to produce water that meets environmental discharge standards, maximize water recycling and reduce water and energy consumption Innovative solutions for biomass, coal, sludge, agricultural and industrial by-products, sorted waste as well as oil winning from oil shale and phosphorus recycling from sewage sludge ashes. Extensive research facilities and resources, numerous BAT technologies 4 Dec 4

5 Outotec offers sustainable lifecycle solutions for full concentrator plants R&D and testing COMMINUTION Crushing, screening, grinding Optimized energy consumption Optimal grinding media consumption DEWATERING Thickening, Clarifying, Tailings treatment Maximized water recovery Optimized chemical consumption Filtration High separation efficiency Optimized project execution Operation and maintenance Shutdown services FLOTATION High recovery rate Optimized energy and chemical consumption Upgrades & Modernization Supply chain management AUTOMATION PLATFORM Advanced process controls Remote monitoring Automation equipment Quality, Environment, Health, Safety Process expertise Maximized plant productivity Optimized operating costs 5 Dec 4

6 MP: Flotation upgrade: Çayeli Bakir letmeleri A.. (Turkey) Key facts: Owned by First Quantum Minerals Underground Cu/Zn Mine in northeastern Turkey Cu Conc: 150,000 tpa & Zn Conc: 100,000 tpa Overall contract value: over a period of 3 years (Ongoing) Customer benefits: Better metallurgical performance Flotation cells used energy reductions Reduction in operational costs due to lower wear Estimated customer value: Approximately 1% increase in recovery for both Copper and Zinc circuit = /Y Power savings estimated to be /Y 6 Dec 4

7 OUTOTEC S CONCENTRATOR SOLUTION - VIDEO 7 Dec 4

8 Numerous concentrator equipment in operation 1,100 grinding mills 10,000 flotation units 1,800 thickeners 3,500 filters Outotec Grinding mills LKAB,Sweden Outotec Tankcell flotation units Kevitsa, Sodankylä, Finland Extensive research facilities and resources, numerous BAT technologies 8 Dec 4

9 Outotec Services

10 Services has met its growth targets Annual Service Sales Q1-Q EUR million Service sales Service sales Q1-Q3 Growth has been achieved through: Strengthening local presence Addressing installed base Productizing service offering Organizational development Scalable operational model Acquisitions and successful integration 10 Dec 4

11 Life cycle value for customer Life Cycle Solution Technology & Process design Operations & Maintenance Remote services Automation & Plant systems Materials management Project delivery Plant process layout Proprietary equipment Process guarantees O&M management and execution Pricing of operations phase driven by produced tons Remote support and continuous process monitoring Integrated production, maintenance and plant automation systems Spare and wear parts delivery and inventory management Combined capex and service deliveries Resourcing & training Value for Customer Proven technology Process design meets ore characteristics Energy efficiency, less emissions Plant safety Long term guarantee Less unexpected breakdowns Decreased life-cycle cost Best competences and practices made available in remote destinations Online visibility to production process enables fast problem solving Efficient plant management, reporting and development Continuous improvement Easy purchasing channel Optimized site inventory level Guaranteed availability of spares Smooth transition from project to operations Strong Outotec commitment to fast start-up 11 Dec 4

12 Key drivers for owners to outsource Talent scarcity Need to outsource risks Potential for optimization Shift in owner mindset Description Talent especially close to mining site scouting has become more difficult and mine owners cannot find the required capabilities Owners are becoming more risk averse and trying to leverage operators to mitigate risks associated with operating activities Operators have more technical expertise in operating plants and can hence optimize the production Owners do not see, to a high degree, operation as part of their core responsibility EXAMPLE At the RCC Mikheevsky plant, customer requested to have long term performance guarantees (Capex + O&M) EXAMPLE At Crystal Ilmenite smelting plant, the customer provides blue collar workforce but requires Outotec to build a high performing operations solution and support operations 12 Dec 4

13 Case: RCC Mikheevsky Concentrator - O&M Contract signed in January 2013, EUR 140 million*), 6+ years Value proposition With Outotec s maintenance strategy, unplanned downtime can be reduced at customer plant E.g. by increasing plant throughput 2%, customer generates annually USD 5-8 million more revenue (depending on copper price) Find balance between reagent consumption (cost) and recovery rate (quality) E.g. by increasing copper recovery by 0.5%, customer generates annually USD 3-5 million more revenue (depending on copper price) Pricing of operations phase driven by produced tons Scope of delivery Operation and Maintenance, planning & execution incl. manpower Remote process and equipment condition monitoring Supply of spare and wear parts, reagents and grinding media Comprehensive, tailored training programs to guarantee smooth and efficient plant ramp-up *) Not included in Outotec s Q3/2013 backlog 13 Dec 4

14 OUTOTEC S SERVICE OFFERING/O&M - VIDEO 14 Dec 4

15 Growing to 1B by 2017 Growth enablers Capturing the potential of all business areas installed base Leveraging local presence and capabilities Productization and bundling service offering Full utilization of supply and delivery capabilities Expanding operation and maintenance services Inorganic growth by acquisitions Services sales target EUR 1 billion by the end of Growth is planned to be achieved through organic growth, acquisitions, strengthening local presence and new life cycle service offerings. 15 Dec 4

16 Outotec offers sustainable lifecycle solutions for full concentrator plants COMMINUTION Crushing, screening, grinding Optimized energy consumption Optimal grinding media consumption DEWATERING Thickening, Clarifying, Tailings treatment Maximized water recovery Optimized chemical consumption Filtration High separation efficiency FLOTATION High recovery rate Optimized energy and chemical consumption AUTOMATION PLATFORM Advanced process controls Remote monitoring Automation equipment Quality, Environment, Health, Safety Process expertise Maximized plant productivity Optimized operating costs 16 Dec 4

17 Q&A