2019 Investor Update3 December 2019
2019 Investor Update
Important notice concerning this document including 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 “outlook”, "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. 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 disclosed in Glencore’s 2018 Annual Report.
For example, our future revenues from our assets, projects or mines will be based, in part, on the market price of the commodity products produced, which may vary significantly from current levels. These may materially affect the timing and feasibility of particular developments. Other factors include (without limitation) the ability to produce and transport products profitably, demand for our products, changes to the assumptions regarding the recoverable value of our tangible and intangible assets, the effect of foreign currency exchange rates on market prices and operating costs, and actions by governmental authorities, such as changes in taxation or regulation, and political uncertainty. 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.
Except as required by applicable regulations or by law, 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 past performance cannot be relied on as a guide to future performance. 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 companies in which Glencore plc directly and indirectly has an interest are separate and distinct legal entities. In this document, “Glencore”, “Glencore group” and “Group” are used for convenience only where references are made to Glencore plc and its subsidiaries in general. These collective expressions are used for ease of reference only and do not imply any other relationship between the companies. Likewise, the words “we”, “us” and “our” are also used to refer collectively to members of the Group or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.
1
Our investment caseIvan Glasenberg – CEO
2019 Investor Update
2019 Investor Update
3Our investment case
Our markets Our business Creating value
• Tightly balanced and destocked
• Easily accessible, high-quality resources are increasingly scarce
• Well positioned for key future growth trends- Urbanisation / rising living standards- Electrification of mobility- Decarbonisation of energy
• Growing market deficit potential for our commodities
• Unique combination of assets and marketing
• Diversified portfolio of new energy materials and high quality coal
• Large long-life assets with generally first quartile cost positions
• Significant pipeline of internal growth options to supply future needs
• Countercyclical resilience of Marketing cash flows
• Robust and flexible balance sheet• Highly cash generative business
throughout the cycle - illustrative 2020 FCF of c.$4.4bn at current pricing
• Integration of sustainability throughout our business
• Experienced management team
• Relentless focus on maximising value creation through balancing business reinvestment/growth and shareholder returns
• Flexible business model that adapts quickly to changing conditions
• Disciplined approach to value over volume
Operational UpdatePeter Freyberg – Head Industrial Assets
2019 Investor Update
Diversified portfolio of generally large long-life low-cost assets• Largely flat production profile over the next three years• Higher zinc and oil with generally steady coal and nickel
volumes across the outlook period, offset by the transition of Mutanda to care and maintenance
• Continued focus on operational improvement, supported by our GT and XPS technology businesses
Growth• Copper – Katanga, Mopani • Cobalt – Katanga • Zinc – Zhairem, Antamina• Coal – United Wambo• Nickel – Koniambo• Oil – Equatorial Guinea, Chad, Cameroon
Declines• Copper and cobalt – Mutanda, non-copper department
by-product production at Kidd, Sudbury and Kazzinc• Zinc – Depletion of current reserves: Matagami and
Iscaycruz• Nickel – INO modest decline ahead of new production
from 2023
2019 Investor Update
5Production UpdateSummary
Copper equivalent production forecast – own source
End 2019F End 2020F End 2021F End 2022F
(+) Mopani smelter restart
(+) United Wambostart up
(-) MutandaCare and
Maintenance
(+) Katanga annualised steady state
(+) Zhairem: first production
(+) Antamina: high Zn production 2020/21
Key changes
(-) Cu: Kidd, Sudbury and Kazzinc by
product(-) Zn: Matagami and
Izcaycruz
(+) Increasing oil equivalent volumes: Chad, EG, Cameroon
2020-2022
2019 Investor Update
6Production UpdateSummary
Group guidance – own source(1)
Notes: (1) With the exception of coal, mid-point 2019F production guidance as per Third Quarter 2019 Production Report, Page 17. (2) Reflecting the lengthy Mopani smelter maintenance shutdown in H2 2019, 2019F African copper production includes c.9kt of copper contained in concentrate that will either be held for sale or processed to produce cathode when the smelter restarts. (3) Excludes Volcan. (4) Coal 2019F guidance reduced by 5Mt to 140Mt, reflecting recent Colombian volume reductions as well as a safety stoppage In South Africa.
2019F 2020F 2021F 2022FCopper - excl. African Copper kt 1010 ± 20 975 ± 25 980 ± 25 930 ± 25
Copper - African Copper(2) kt 375 ± 15 325 ± 25 355 ± 25 370 ± 25
Copper - Group kt 1385 ± 35 1300 ± 50 1335 ± 50 1300 ± 50
Cobalt kt 43 ± 2 29 ± 4 32 ± 4 32 ± 4Zinc(3) kt 1110 ± 25 1265 ± 30 1400 ± 30 1200 ± 30Nickel kt 128 ± 5 125 ± 5 126 ± 6 129 ± 7Ferrochrome kt 1450 ± 25 1340 ± 25 1450 ± 25 1450 ± 25Coal(4) Mt 140 ± 2 135 ± 4 136 ± 5 140 ± 5Oil – entitlement interest Mbbl 5.5 ± 0.2 6.5 ± 0.2 11.0 ± 0.4 12.7 ± 0.4
Katanga
• Targeting annualised steady state production of 300ktpy Cu and 30ktpy Co towards the end of 2020
• The first of Katanga’s two cobalt dryers has been restarted. Realisation of full drying capacity expected mid-2020
Mopani
• Smelter restart expected from early 2020
Koniambo
• Continued focus on stabilising the operation and reducing metallurgical plant downtime
• 30-40ktpy Ni in FeNi planned over the next 3 years, c.50ktpy Ni in FeNi long-term target
2019 Investor Update
7Production UpdateRamp-up / Development assets progressing to plan
Katanga sulphuric acid plant
2019F 2020F 2021F 2022F
Copper - excl. African Copper African Copper
Production updateCopper and cobalt
8
Copper guidance (kt) – own source(1,2)
Cobalt guidance (kt) – own source(1)
2019F 2020F 2021F 2022F
43 ± 2
29 ± 432 ± 4 32 ± 4
Notes: (1) Mid-point 2019F production guidance as per Third Quarter 2019 Production Report, Page 17. (2) Reflecting the lengthy Mopani smelter maintenance shutdown in H2 2019, 2019F African copper production includes c.9kt of copper contained in concentrate that will either be held for sale or processed to produce cathode when the smelter restarts.
375 ± 15 325 ± 25 355 ± 25 370 ± 25
1010 ± 20 975 ± 25 980 ± 25 930 ± 25
Copper guidance• Modest decline over the outlook period, primarily
reflecting the transition of Mutanda to care and maintenance in Q4 2019
• Option to restart Mutanda at some point, subject to market conditions and feasibility study validation
• African copper production: Katanga expected to reach annualised steady state capacity by the end of 2020
• Copper production, excluding African copper, lower in line with expected declines (primarily grade related) in non-copper department assets (Kidd, INO and Kazzinc)
Cobalt guidance• Mutanda care and maintenance in 2019, partially offset by
forecast higher Katanga cobalt production over the outlook period
• As above, option to restart Mutanda at some point subject to market conditions
2019 Investor Update
1385 ± 35 1300 ± 50 1335 ± 50 1300 ± 50
Production updateCoal
9
2019F 2020F 2021F 2022F
Coking Coal Semi-soft CoalAustralia Thermal Export Australia Thermal DomesticSA Thermal Export SA Thermal DomesticProdeco Cerrejon
Coal guidance (Mt) – own source
140 ± 2135 ± 4 136 ± 5 140 ± 5
Notes: (1) See RNS 20 February 2019, “Furthering Our Commitment to the Transition to a Low Carbon Economy”.
Coal guidance• 2019 production guidance reduced by 5Mt to 140Mt,
reflecting recent Colombian volume reductions as well as a safety stoppage in South Africa
• Flat production by 2022 with nearer-term volumes (2020 and 2021) impacted by permitting delays (United Wambo)
• Production volumes comfortably within our commitment to limit capacity to levels at the time of announcement(1) -broadly 150Mtpy
Colombia• Cerrejon volumes adjusted to 26Mtpy (100%) in line with
challenging Atlantic market conditions. Prodeco volumes are flat over the outlook period, however decline thereafter
Australia• Permitting delays have shifted United Wambo (c.5Mtpy at
100%) first production towards the end of 2020
South Africa• Stable volumes across the outlook period
Coal production capacity cap – 150Mtpy
2019 Investor Update
Production updateZinc
10
2019F 2020F 2021F 2022FKazzinc Australia North AmericaSouth America Cu dept - Antamina
Zinc guidance (kt) – own source(1,2)
1110 ± 25
1265 ± 30
1400 ± 30
1200 ± 30
Zinc guidance• Production increases through the outlook period with near-
term higher Antamina zinc grades and commissioning of Zhairem in Kazakhstan
Kazzinc• Zhairem – first production expected in 2020. Temporary
spike in 2021 from parallel-running of Zhairem and Maleevsky, which depletes over the medium term
Australia • Steady production over the outlook period
North and South America• Production volumes in 2022 impacted by the depletion of
current reserves at Matagami in Canada and Iscaycruz in Peru, and a return to more ‘normal’ levels of zinc production from Antamina
Notes: (1) 2019F production guidance as per Third Quarter 2019 Production Report, Page 17. (2) Excludes Volcan.2019 Investor Update
Nickel guidance• Flat production profile across the outlook period with the
planned ramp up of Koniambo offsetting some modest expected declines from INO’s existing mines, before they recover from 2023 as new projects get commissioned
Koniambo• Focus on stabilising the operation and minimising
downtime of the metallurgical plant• 30-40ktpy Ni in FeNi planned over the next 3 years; c.50ktpy
Ni in FeNi long-term target
INO• Production profile reflects some modest expected depletion
of existing mines, while new volumes from Raglan Phase II and Onaping Depth are realised from 2023
Murrin Murrin• Consistent production of 36-39ktpy, depending on
maintenance timing
Production updateNickel
11
2019F 2020F 2021F 2022F
INO Murrin Murrin Koniambo
Nickel guidance (kt) – own source(1)
128 ± 5 125 ± 5 126 ± 6 129 ± 7
Notes: (1) 2019F production guidance as per Third Quarter 2019 Production Report, Page 17. 2019 Investor Update
Oil guidance• Increasing equivalent oil entitlement interest over the
outlook period, driven by material growth in Equatorial Guinea (primarily LNG) and liquid volumes in Chad and Cameroon
Equatorial Guinea• Higher volumes from 2021 as the Alen field transitions to its
LNG development phase
Chad• Steady growth through the outlook period, with production
from the Badila and Mangara fields supplemented later by the Krim field
Cameroon• Increasing volumes from the Bolongo field (Glencore
interest 37.5%)
Production updateOil
12
2019F 2020F 2021F 2022F
Chad Equatorial Guinea Cameroon
Oil equivalent guidance (mbbl) – entitlement interest(1)
5.5 ± 0.26.5 ± 0.2
11.0 ± 0.4
12.7 ± 0.4
Notes: (1) 2019F production guidance as per Third Quarter 2019 Production Report, Page 17. 2019 Investor Update
Significant pipeline of internal brownfield and greenfield growth options for when markets inevitably require these commodities
2019 Investor Update
13Production UpdateFuture growth options
Coroccohuayco: Peru
El Pachon: Argentina
Polymet: USA
Collahuasi expansion: Chile
Agua Rica (integrated with Alumbrera): Argentina
Mutanda sulphides: DRC
Lomas Bayassulphides: Chile
Mutanda sulphides: DRC Volcan projects: Peru
Obruchevskoye: Kazakhstan
Novo-Leninogorsky:Kazakhstan
Chekmar: Kazakhstan
VasilkovskoyeUG: Kazakhstan
Pallas Green: Ireland
Hackett River: Canada
Argent: South Africa
Nooitgedacht: South Africa
Zonnebloem P2: South Africa
Valeria: Australia
Glendell North: Australia
Mangoola North: Australia
Bulga extension: Australia
HVO extension: AustraliaNickel Rim Depth: Canada
Moose Lake: Canada
Norman West: Canada
Raglan Phase 2 extensions:Canada
70Mt M+I Resources(1) 57Mt M+I Resources(1) 14bt M+I Resources(1)
4.6Mt M+I Resources(1)
Notes: (1) Measured and Indicated contained relevant commodity in resource calculated on corresponding tonnages and grades presented in the 2018 Resources and Reserves report and adjusted to reflect Glencore’s attributable interest.
Cu Co
Ni
Zn
Safety update
Unacceptable number of fatalities in 2019• Copper: Mopani – six, DRC – three• Zinc – five• Coal – one• Alloys – one
Immediate actions• Fatality reduction interventions at Mopani and Kazzinc to
address conditions and behaviours• Corporate-led deep dive SafeWork assessments at
targeted assets
Reinforcement of Fatality Reduction Programs, comprising six key elements:• Major interventions• SafeWork reviews• Safety cases• Assurance• Leadership development• Improved integration planning
We believe that all Glencore operations can be fatality free• The updated Fatality Reduction Program builds on our
investment in SafeWork with the goal of achieving a step-change in performance
14
2019 Investor Update
Financial UpdateSteven Kalmin – Chief Financial Officer
2019 Investor Update
-4
10
2524
43
57
2018A 2019H1 update
2020Guidance
2019 Investor Update
2020 unit cash costs/margins
Ex gold
Production: 1.30Mt, -85kt vs 2019EUnit costs: 120 ¢/lb, -36 ¢/lb vs 2019EUnit costs ex-Africa: 82 ¢/lb
Production: 1.27Mt,+155kt vs 2019EUnit costs: 25 ¢/lb (57 ¢/lb ex Au)+15 ¢/lb (+14 ¢/lb ex Au) vs 2019E
Production: 125Kt, -3kt vs 2019EUnit costs: 396 ¢/lb, unchanged Unit costs ex-Koniambo: 287 ¢/lb
Production: 135Mt, -5Mt vs 2019EUnit costs: Thermal FOB cash cost $47/t, +1$/t vs 2019E
Mine costs (¢/lb) Mine costs (¢/lb) Mine costs (¢/lb) Thermal mine costs and margin ($/t)
104
156
120
10180 82
2018A 2019H1 update
2020Guidance
Ex Africa211
396 396
288 287
2018A 2019H1 update
2020Guidance
Ex Koniambo
47 46 47
40
2723
2018A 2019H1 update
2020Guidance
Margin @ $80/t Newc
16
• Forecast first quartile position • Targeting c.100 ¢/lb group mine unit
cash costs by 2021 with achievement of steady state production at Katanga
• Forecast second quartile position• Stable unit costs
• Forecast first quartile cash margin curve
• Stable unit costs • Declining margin in line with lower
overall net pricing
• Forecast first quartile position• Cost increase reflects forecast lower
by-product credits per tonne of proportionately higher Zn metal produced and some impact of higher Zn TCs. Underlying gross mine unit costs are broadly steady year-on-year
Cu Zn Ni
2019 Investor Update
17Capex update2020-2022 guidance – Industrial capex average of c.$5.0bn per annum
Sustaining capex• Average $3.7bn
Expansionary capex• Average $1.3bn
Average c.$0.2bn per annum uplift over December 2018 guidance• Mainly change in footprint,
reflecting the acquisition of Astron(oil refinery and related distribution)
• Impact of new leasing standard (IFRS 16)
• Some Tailings Storage Facility reinforcements to meet more conservative scenario probability thresholds
Capex outlook ($bn) Industrial Oil portfolio• Deployment of capital into E&P
(Chad, Cameroon, EG) and the recent acquisition of the Astronrefinery is forecast to generate meaningful EBITDA in the coming years
• Basis $65/bbl, EBITDA generation is forecast to exceed $650M by 2022
153
>650
2018A 2019F 2020F 2021F 2022F
Forecast Industrial Oil EBITDA ($M)
3.9
4.7
4.4
5.1
4.9
4.6
5.0
0.3
0.3
0.4
0.42019F
2020F
2021F
2022F
To allow better like for like comparison: primarily Astron, some capitalisation of previous operating leases and progression of various mine project studies (eg. Polymet/El Pachon)
2018 Guidance
Sustaining$3.7bn
2019 Guidance
Sustaining$4.0bn
Sustaining$3.7bn
Sust.$3.2bn
5.0
5.5
5.0
4.2
MarketingGuidance update
Long-term Marketing Adjusted EBIT ($M)2019 Marketing Adjusted EBIT• Tracking within our long-term range, including
accounting for the previously reported negative H1 2019 non-cash cobalt mark-to-market impact
Long-term Marketing Adjusted EBIT• Unchanged guidance range of $2.2 to $3.2bn• Current market conditions suggest 2020 earnings towards
the middle of the long-term range
Performance towards the top end of the long-term range requires the alignment of conditions for many/all commodities that reflect:• Production/volume growth• Tight/tightening physical market conditions• Selective deployment of additional working capital• Higher interest rates
Long-term guidance range:
$2.2-$3.2bn
18
2019 Investor Update
3.2
1.6
2.3
1.92.1
2.4
2.8
2.5
2.82.9
2.4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
200
8
200
9
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
+
2020 illustrative “spot” annualised cashflows
Notes: (1) Other industrial EBITDA includes Ferroalloys, Oil and Aluminium less c.$350M corporate SG&A. (2) Marketing Adjusted EBITDA of $2.9bn is calculated from the mid-point of the of the $2.2-$3.2bn EBIT guidance range plus $200M of Marketing D+A. (3) Net cash capex including JV capex in 2020E, but excluding c.$200M of capitalised leases compared to Slide 17. (4) Excludes working capital changes and distributions. (5) Copper spot annualised adjusted EBITDA calculated basis mid-point of 2020 production guidance Slide 6 adjusted for copper produced by other departments. Spot LME price as at 26 November 2019. Costs include by-products, TC/RCs, freight, royalties and a credit for custom metallurgical EBITDA. (6) Coal spot annualised adjusted EBITDA calculated basis mid-point of production guidance Slide 6. Relevant forecast NEWC price of $80/t, as at end November 2019, less $10/t portfolio mix adjustment and mine costs of $47/t (Slide 16) giving a $23/t margin to be applied across overall forecast group mid-point of production guidance of 135Mt. (7) Zinc spot annualised adjusted EBITDA calculated basis mid-point of production guidance Slide 6 adjusted for zinc produced by other departments less payability adjustment. Spot LME price as at 26 November 2019. Cost includes credit for by-products and custom metallurgical EBITDA. (8) Nickel spot annualised adjusted EBITDA calculated basis mid-point of production guidance Slide 6. Spot LME price as at 26 November 2019.
19
2019 Investor Update
Group $bnCopper EBITDA 3.6Zinc EBITDA 1.7Nickel EBITDA 0.7Coal EBITDA 3.1Other Industrial EBITDA(1) 0.4Marketing EBITDA(2) 2.9Group EBITDA 12.4Cash Taxes, Interest + other -2.7Industrial Capex(3) -5.3Illustrative spot free cash flow(4) 4.4
Ex-Africa
Copper(5) Guidance Guidance Zinc(7) Guidance
Total copper production (kt) 1300 975 Total zinc production (kt) 1265Cu from other depts (kt) -110 -110 Zn from Cu department (kt) -152Net relevant production (kt) 1190 865 Payability deduction (kt) -165Realised Cu price - 96% LME (c/lb) 256 256 Net relevant production (kt) 948Full cash cost (c/lb) -120 -82 Spot Zn price (c/lb) 105Margin (c/lb) 136 174 Cost guidance (c/lb) -25Margin ($/t) 2999 3837 Margin (c/lb) 80Spot annualised Adj. EBITDA ($M) 3570 3320 Margin ($/t) 1773
Spot annualised Adj. EBITDA ($M) 1680
Coal(6) Guidance Nickel(8) Guidance
Total coal (Mt) 135 Production (kt) 125Relevant NEWC price ($/t) 80 Spot Ni price (c/lb) 660Portfolio mix adjustment @ December 2019 ($/t) -10 Cost guidance (c/lb) -396Thermal cost guidance ($/t) -47 Margin (c/lb) 264Margin ($/t) 23 Margin ($/t) 5817Spot annualised Adj. EBITDA ($M) 3105 Spot annualised Adj. EBITDA ($M) 727
Capital allocationBalancing shareholder returns, capital structure and growth
2019 distributions and buybacks total $4.7bn:◦ $2.7bn base distribution (20 ¢/share), basis 2018 cash flows◦ $2.0bn share buyback program
2020 distribution in respect of 2019 cash flows◦ Minimum: $1bn from marketing cash flows + 25% of industrial
free cash flows◦ Seek to match 2019’s base distribution of 20 ¢/share (c.$2.6bn at
current relevant share count)
2020 equity cash flows will be prioritised for:◦ Net debt – maintain $10-$16bn(1) guidance range. Targeting
reduction in Net debt to Adj. EBITDA towards 1x over the next 12 months (1.24x at 30 June)
◦ Buybacks – accounting for above, as and when surplus free cash flow generation allows
Non-core asset disposals◦ Reiterate target of at least $1bn from non-core long-term
asset monetisations during 2019/2020 (c.$0.3bn completed to date)
20
Notes: (1) Excluding Marketing related finance lease liabilities in respect of previously classified operating leases required to be capitalised under the new IFRS leasing standard, effective 1 January 2019. Such amount was c.$0.6bn as at 31 October 2019, representing primarily chartered vessels and various storage facilities, where the majority of such commitments expire within 2 years.
2019 Investor Update
Shareholder returns
Growth
Capital structure
Well positionedIvan Glasenberg – Chief Executive Officer
2019 Investor Update
22
Notes: (1) Wood Mackenzie Q3 2019 Long-Term outlook for zinc. Wood Mackenzie Q3 Long-Term outlook for copper. Wood Mackenzie Q2 2013 Long-Term outlook for nickel for 1995-2007 estimates, Glencore estimates for 2008-2019F. (2) Visible inventories comprise various sources including LME, SHFE, and Comex. Wood Mackenzie has estimated Chinese bonded warehouse stock, included for copper.
… and heavily destocked
Global visible inventory, days consumption(2)
Markets are tightly balanced …
Supply demand balance, as % of demand(1)
-10%
-5%
0%
5%
10%
1995 1999 2003 2007 2011 2015 2019F
Copper Zinc Nickel
Deficit
Surplus
0
30
60
90
Q1 1995 Q1 2001 Q1 2007 Q1 2013 Q1 2019
Nickel
0
20
40
60 Zinc
0
10
20
30Copper
2019 Investor Update
10 days’ consumption
3 days’ consumption
15 days’ consumption
Well positioned Despite weaker 2019 demand, base metals are fundamentally in good shape
2019 Investor Update
23Well positionedKey future growth trends …
Electrification of Mobility: Up to 580M EVs on the road by 2040 (2)
Urbanisation and rising living standards:2bn increase in global population by 2050 (1)
Notes(1) United Nations Population Division, World Population Prospects: The 2019 Highlights, medium-variant projection. (2) BNEF Long-Term Electric Vehicle outlook 2019. (3) Copper and the Green economy – Thoughts from our decarbonisation conference, Bernstein, 30 September 2019. (4) Imperial College London, CIAB study, October 2019.
Benefits all commodities across the spectrum, from basic infrastructure through to discretionary consumer goods
Thermal coal competing with renewables in new energy supply. Coal expected to remain competitive in its current key Asian demand region
Material new source of commodity demand, considerably benefiting nickel, cobalt and copper
Thermal coal provides significant current baseload generation as well as being part of the planned energy growth mix in Asia. LT outlook driven by pace of decarbonisation
Decarbonisation of energy: +1,000GW of wind power by 2029 (3)
Requires redesign of traditional energy systems to run on renewables. Benefits copper, nickel, cobalt and vanadium through battery systems and related biomass/wind/solar grid infrastructure
Thermal coal with CCS has a critical role to play in the successful transition to a low carbon economy(4)
Well positioned… are major new sources of demand
24
Notes: (1) Bernstein, Metals & Mining: Copper and the Green economy – Thoughts from our decarbonisation conference, European Commission Joined Research Centre EDGAR, International Energy Agency (IEA), US Department of Energy, “Government Targets 2030” gradual reduction in emissions – Mid level scenario. (2) Wood Mackenzie, Q3 2019 Long-Term copper outlook. (3) Glencore estimates, B3, based on 11.5Mt new passenger EV sales by 2025, ca. 10% penetration rate.
Additional cumulative Cu demand needed(1) Nickel demand in electric vehicles (kt Ni)(3)
Cobalt demand in electric vehicles (kt Co)(3)
2019F 2025F
2019F 2025F
2019 Investor Update
Electrification of mobility requires nickel and cobaltDecarbonisation requires a lot of copper
2018 nickel market: 2.4Mt
2018 cobalt market: 120kt
+330kt of new EV nickel
demand by 2025
+73kt of new EV cobalt demand
by 2025
22
2018 Refined copper supply:
c.23.5Mt(2)
Current Government policies to reduce CO2 emissions by 2030 will require an additional cumulative 22Mt of copper by 2030(1)
Copper supply needs to grow 3.6% every year between now and 2030 to meet modelled government targets(1):
2000-2018 annual average copper supply growth: 2.6%(2)
2019 Investor Update
25
0
200
400
600
800
1,000
1,200
2010 2015 2020F 2025F 2030F 2035F
Demand Range
Seaborne thermal coal supply demand balance (Mt)(1)
Structural deficits emergingAs the global population expands and living standards improve, more energy is needed• New coal fired generating capacity build in Asia/Middle
East expected to add c.160 million tonnes of coal demand by 2030(1)
• In Asia, coal based power generation is forecast to remain the lowest cost source of baseload power into the mid-2030s(2)
• New Asian generating capacity offsets European declines
Supply increasingly at risk • Development approval delays and shrinking financing
options likely to limit planned future supply• Indonesian seaborne supply (c.42% of seaborne supply in
2018) is expected to reduce as domestic coal generating capacity expands
• Accelerating depletion of the seaborne coal reserve base
Growing risk of failure to meet energy needs and compromised economic growth
Well positioned Energy demand fundamentals also support an ongoing role for coal, primarily in Asia
Notes: (1) Glencore analysis – net global demand growth c.90Mt (2) Coal vs renewables with battery firming, NPS+Carbon Tracker – The Trillion dollar energy windfall
Planned supply
Supply with no reinvestment
New build generating capacity(1)
Region Volume (Mt)North Asia +20South-East Asia +55Sub-continent +55Middle East +30
Supply risk
Our 2020 priorities
2019 Investor Update
2019 Investor Update
27Our 2020 priorities
Health & safety
Ramp-up / development
assets
Operating efficiency &
Capital discipline
Confidence
• Deliver a step-change in safety performance
• Implementation of the Glencore Fatality Reduction Program
• Deliver budgeted operational volumes at/near first quartile costs/margins
• Maximise free cash flow generation
• Focus on portfolio NPV per share
• Deliver Katanga 2020 guidance of 270ktpy Cu and 29ktpy Co
• Mopani smelter restart early 2020
• Successful commissioning of the new Katanga Acid plant through H1 2020
• Koniambooperational stability
• Stability and consistency of operational and financial performance
• Return excess capital to shareholders
• Be disciplined within our capital allocation framework
Management
• Transition to new generation of leadership
Strong balance
sheet
• Commitment to strong BBB/Baa Investment Grade
• Targeting reduction in ND/Adj. EBITDA towards 1x over next 12 months
• Buybacks as and when surplus free cash flow allows
Appendix
2019 Investor Update
Source: Glencore, as of 26 November 2019. (1) Assumes $2bn buyback completed by year-end at an average GBP2.50 share price and 1.287 GBP/USD. (2) Refer Note 15, 2019 Half-Year Results. Page 46
2019 Investor Update
Buyback updateShares eligible for distribution
$2bn buy back – c.$90M remaining• 566 million shares purchased since 22 February 2019• 1.071 billion shares purchased since buybacks commenced
in July 2018• Current $2bn buyback program to run to year end
Shares eligible for distribution as at 26 November 2019(thousand shares):
Shares eligible for distribution (million shares)
12800
13300
13800
14300
FY14 H115 FY15 H116 FY16 H117 FY17 H118 FY18 H119 FY'19
Issued share capital
Shares eligible for distribution – issued share
capital less treasury and trust shares
Issued share capital 14,586,200 Less Treasury shares (@ 26 Nov 2019) 1,227,808 Less Trust shares(2) 129,993Shares eligible for distributions 13,228,399
FY 18: 13,832
FY 19F: 13,201 (1)
30 June 2019: 13,550
H1 18: 14,254
H1 15: 12,937
29
Listed entity market valuations and selection of other entities
Listed entities % owned Market value $MRussneft 25.0% 638EN+ 10.6% 625Volcan 23.3%(1) 398Rosneft 0.6% 428Century 47.4% 297Yancoal 6.8% 181Other(2) Various 216Total 2784
Selection of other entitiesUS oil infrastructureBaseCore (50% owned royalty company)
2019 Investor Update Notes: Market values as at 26 November 2019. (1) Economic interest based on aggregate market cap derived from both share classes. (2) Other includes Trevali Mining, Recyclex, Oz Minerals, Paranapanema and Merafe
30
2019 Investor Update
312020 key EBITDA sensitivities
Approximate estimated impact on FY2020 EBITDA of a 10% change: $MCopper price 740
Australian export thermal coal price 350
Australian hard coking coal price 115
Zinc price 270
Cobalt price 90
Nickel 180
AUD vs USD 520
ZAR vs USD 145
CAD vs USD 160
CLP vs USD 55
2019 Investor Update
• Global leader in metals and minerals processing technology for more than 30 years
• Supplies services/technology to 22 of the 26 ICMM members• IsaMill – Grinding/Ultrafine grinding: 129 installations across 21
countries• IsaKidd – Copper refining: produces >11 million tpy of copper
from more than 100 licences (c.47% of global copper supply)• Jameson Cell – Flotation: 350 installations across 30 countries• IsaSmelt – Lead and copper smelting: more than 9 million tpy of
copper containing materials smelted with IsaSmelt• Albion Process – Oxidative leaching of base/precious metal
sulphide concentrates
Technology solutions for our industryGlencore has been leading industry technology for decades: Primus, CTSCo, Onaping Depth electric mine
GLENCORE TECHNOLOGY
• Team of world-class metallurgists, engineers, geoscientists, technicans and technologists with real world experience in process development/optimisation, asset integrity management and mine/process automation
• Supplies services to 38 clients across the world’s major mining districts
Source: www.glencoretechnology.com, www.xps.ca
32