Newlands CHPP, 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 Draft schedule 1
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Abbot Point, Australia Coal Tor Peterson, Peter Freyberg
Delivering Leading Value Shareholder Returns Operational Excellence Market Driven Supply discipline Blending synergies Trading leverage Expansionary capital spend down 75% EBITDA margin 26% Leading Diversified Portfolio 170 Mtpa capacity Industry leading margins Underground/Opencut Export/Domestic Thermal/Coking 3 continents Environment Community Safety Equipment Project delivery ~150Mt ~$50/t c.90mt c.26% of consolidated production in 2015F FOB cash cost achieved in 2014 of marketed volumes 2014 EBITDA margin in H1 2014 4
Leading managed coal portfolio Glencore Drummond Anglo BHP Others COLOMBIA Mt Glencore Anglo BHPB Exxaro Sasol SOUTH AFRICA Mt Glencore BHPB Rio Tinto Peabody Anglo AUSTRALIA Mt 0 10 20 30 40 0 10 20 30 40 50 60 0 20 40 60 80 100 #1 in high energy export coal Significant position in export metallurgical coal Diversified global footprint Additional 90Mt of traded and agency tonnage 22 operating coal complexes Exporting equity coal through 9 ports 40Mtpa, low cost rail business Clermont 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 Data: Managed coal production, Australia proforma for full year Clermont. Includes export and domestic coal sales 5
Delivering industry leading margins Coal mining business EBITDA margin first half 2014* Glencore *Reflects publically reported June 2014 half year results of major diversified coal competitors 6
Thermal coal, Rolleston mine, Australia Coal markets update
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 A diversified portfolio (sales volumes) 3rd Party Domestic thermal Export coking Export thermal 8
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 Net 440GW new coal-fired power stations GW 1200 1000 A further 255 GW of coal fired generation (800Mtpa* coal), would be required in Asia by 2025 under IEA Current Policies scenario. Asian coal demand to increase by more than 1Btpa* 500Mtpa demand increase outside China 800 2012 2020 2025 Africa/Turkey and Latin American coal demand to increase by 75Mtpa* South Africa and Brazil as key drivers 600 400 Resource constrained Asia drives seaborne coal demand growth Korea, Philippines, Malaysia, Vietnam Indian import growth required to supplement domestic supply 200 0 China India Other Asia Africa & Sth Am. USA ROW Sources: IEA WEO2014, New Policies Scenario, Current Policies Scenario * based on 2012 average global energy content 4920kcal/kg nar 9
Expect further rationalisation and delayed investment FOB seaborne thermal coal cash margins at current market prices (US$/t) USD/t Glencore export thermal coal average +ve 0 -ve 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 0 200 400 600 800 1000 Million Tonnes Source: Glencore 10
Volume 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 Seaborne thermal coal market Historical demand 7% pa Base demand 4.5%pa New capacity investment delayed Investment required Positive longer term outlook Committed Supply Time Existing Supply 11
Coal industrial business overview
We deliver safely Emergency preparedness training Group coal safety performance GCOM: pre-shift safety discussion 13
We deliver with sustainable land outcomes Liddell rehabilitation Cattle trial on rehabilitated land 14
We deliver using leading environmental technologies Water treatment plant Environmental monitoring Generation using waste gas 15
We deliver value to the communities we operate in Community projects Consultation Australia Consultation Colombia Reconciliation Action Plan 16
We deliver through industry leading operational performance Opencuts: +26% productivity Improvement in Tier 1 loading unit performance Undergrounds: No.1 in Australia Saleable production (Mt) based on FY13/14 17
We deliver by focusing on margins $1.8bn cost savings through efficiencies since 2012 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) 18
Production volumes nearing steady state as legacy projects are delivered Own source consolidated production (Mt) 175 150 125 100 75 50 25 0 2012A 2013A 2014F 2015F 2016F 2017F Australia thermal SA thermal Colombia thermal Australia coking Australia SS *Production figures on a consolidated basis except Cerrejón 33% equity interest 19
Ravensworth North, Australia Coal assets update and future opportunities
We deliver value in operations Clermont case study The past Haulage costs Expensive ex-pit hauls due to relocation of IPCC 1 in 2012 following operational issues The future Reduced haulage costs Glencore mine planning expertise identifies efficiencies achievable through alternative hauling strategies Value Delivered $60m NPV Productivity Digger fleet consistently performed below Glencore standards, foregoing ~1Mtpa in annual coal production Coal preparation Costly partial washing Increased productivity Improved fleet utilisation Revised organisation structure Increase production optionality Coal preparation Identified opportunity to bypass all coal $100m NPV $80m NPV Note 1: In-Pit crushing and conveying system 21
We deliver synergies United / Wambo Joint Venture 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 Lease consolidation (red line) Wambo United / Wambo (Stratified) Wambo CHPP United / Wambo (Stratified) Wambo UG United Wambo rail loop Coal and Allied Glencore & Peabody co-operation unlocking material value for shareholders 22
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 Approved Dec 2014 Bulga Optimisation Project Eastern Emplacement Open Cut Development Noise and visual bund 23
Production (Mt) Strip ratio We deliver projects on time, on budget Ravensworth North Tweefontein Optimisation Project Ulan West Rav North production build up TWF new rapid train load out Ulan West first shear 15 8 6 10 4 5 2-2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 - ROM Product Strip ratio 24
Conclusion 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 25
Q&A
Appendix 27
Market update thermal coal supply and demand Seaborne thermal coal demand (Mt) 1,200 966 1,019 1,000 946 931 880 792 800 1,076 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 600 400 200 0 2011 2012 2013 2014F 2015F 2016F 2017F China India Japan Korea Taiwan Germany Other Supply Demand Balance (Mt) 20 10 0-10 -20-30 -40-50 -60-70 2011 2012 2013 2014F 2015F 2016F 2017F Source: Glencore 28
Market update metallurgical coal supply and demand Seaborne metallurgical coal demand (Mt) 400 350 312 326 327 320 301 300 280 261 250 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 200 150 100 50 0 2011 2012 2013 2014F 2015F 2016F 2017F China India Japan Korea Taiwan EU Other Supply Demand Balance (Mt) 2 0-2 -4-6 -8-10 -12-14 2011 2012 2013 2014F 2015F 2016F 2017F Source: Glencore 29