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BofAML Global Metals, Mining & Steel Conference 2017Ivan Glasenberg CEO
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2
Summary
Lomas Bayas copper mine, Chile
Summary
• The right commodities for the future
• The commodities that fuel economic growth are changing as key emerging markets mature
– The transition from early to mid and late cycle commodities benefits our core assets (copper, cobalt, nickel, zinc, thermal coal)
• Government policies and transformational shifts in technology have accelerated the economic breakeven point for electric vehicles and energy storage systems
• The electric vehicle revolution is underway and its impact is likely to be felt faster than expected – potentially creating material new sources of demand for enabling underlying commodities (copper, nickel, cobalt, lithium and manganese)
• Investment in new frontiers will be necessary to ensure supply is up to the challenge
• Sustaining copper mine supply is increasingly challenging – mined grades continue to fall, sector reinvestment has collapsed, exploration success has been limited and the future pipeline of projects is at pre-supercycle lows
• Higher commodity prices and a willingness to access resources in new geographies will be required to ensure supply can feed demand over the longer run
• Well positioned for the challenges and opportunities that lie ahead
• Our highly cash generative defensive business model, including marketing, adapts quickly to changing conditions
• Relentless focus on maximising value creation through balancing business reinvestment/growth and shareholder returns
• Backed by a world-class management team, entrepreneurial culture and track record of value creation
4
The right commodities for the future
From despair early last year …
6
… to emerging optimism in the new year …
7
… to an uncertain outlook today …
8
… there is still scope for cautious optimism in the short-term
• Despite market concerns around Chinese monetary tightening, a repeat of the extreme weakness seen in 2015 appears less likely given stronger external demand and higher private sector investment
• Infrastructure contractor order data indicate positive Chinese demand momentum through 2017
• Key regional manufacturing data remain positive, European manufacturing PMI at six year highs
• Forecast 2017 demand growth remains positive
• Supply disruptions/cutbacks support improving fundamentals for most base metals and thermal coal
Strong Q1 Chinese infrastructure contractor order intake(1)
-20%
0%
20%
40%
1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17
y/y growth 4-quarter trailing growth
9
Expansionary manufacturing conditions persist(3)
46.0
48.0
50.0
52.0
54.0
56.0
58.0
Ma
y-1
4
Jul-
14
Sep-1
4
Nov-1
4
Jan
-15
Ma
r-15
Ma
y-1
5
Jul-
15
Sep-1
5
Nov-1
5
Jan
-16
Ma
r-16
Ma
y-1
6
Jul-
16
Sep-1
6
Nov-1
6
Jan
-17
Ma
r-17
USA Eurozone China
2017 demand forecasts remain positive(2)
0%
2%
4%
6%
Al
Cu
Zn
Pb Ni
Iron
Ore
T.C
oa
l
2003-2015 CAGR2011-2016 CAGR2017F
Notes: (1) Citi Research, 4 May 2017, 1Q’17 order intake up 45%y/y, Infrastructure contractor order intake in China. (2) Annual demand growth, Source: Wood Mackenzie, Morgan Stanley, Citi Research, Glencore
estimates. (3) Manufacturing PMI data, Markit for USA and Eurozone, Caxin for China.
Longer term fundamentals are more compelling: The commodities that fuel maturing economies are changing …
• Not all commodities are equal, differentiation is increasingly important
• Key emerging markets are maturing
• The early cycle commodities that underpinned the supercycle boom in fixed asset investment are being displaced as demand patterns shift in favour of mid and late cycle commodities in line with rising levels of income per capita
• Our “Tier 1” commodity portfolio of metals, thermal coal and agricultural products is well placed to benefit from this transition
10
0
20
40
60
80
100
0 5 10 15 20 25 30 35 40 45 50
$US GDP per capita (real 2010)
Mid cycle
Late cycle
GLEN Peer 1 Peer 2 Peer 3 Peer 4
Early Cycle Mid Cycle Late Cycle
Iron O
re, C
okin
g c
oal,
Manganese
Cobalt,
Oil/
Gas, P
GM
s
Dia
monds, T
herm
al C
oal,
Agricultura
l pro
ducts
Copper,
Zin
c, N
ickel,
Alu
min
ium
, Lead
Glencore most exposed to mid
and late cycle commodities(2)
Illustrative commodity intensity
curves(1)
Early cycle
Com
moditie
s w
eig
hte
d b
y contr
ibution to 2
018F
EB
ITD
A
Notes: (1) Stylised intensity curves based on developed countries, indexed to 100 at maximum. (2) Source UBS, commodities weighted by contribution to 2018F EBITDA
• China’s dominance of global commodities demand is not without precedent
• The UK and USA accounted for levels of demand during their industrialisiation phases that were higher than China’s share of global demand today
• The rapid industrialisation and urbanisation of developing economies represents a material enlargement of the global consumer base that will underpin the transition away from early cycle commodities as incomes rise
• The looming EV/ESS revolution looks set to unlock material new sources of demand for enabling underlying commodities
• Rapid technology advances in battery chemistry along with strong government support is accelerating the economic break even point of electric vehicles vs combustion engines
• Emerging transportation sector goals aimed largely at pollution/carbon reduction can only be met with new forms of mobility 0%
10%
20%
30%
40%
50%
60%
70%
18
00
18
09
18
18
18
27
18
36
18
45
18
54
18
63
18
72
18
81
18
90
18
99
19
08
19
17
19
26
19
35
19
44
19
53
19
62
19
71
19
80
19
89
19
98
20
07
20
16
11
Share of global copper demand(1)
UK
USA
China
… supporting a positive long-term demand outlook
Source: (1) 18 April 2017, Bernstein European Metals and Mining: What if China were the US?, page 4.
The electric vehicle revolution needs our commodities
• The electric vehicle revolution is happening and its impact is likely to be felt faster than expected
• Virtually all automotive players now accelerating their investment in / adoption of EV technologies
• Governments mandating increasingly aggressive emission targets that can only be met by alternative forms of mobility
• Supply chains are evolving rapidly with battery producers becoming critical players
• EV/ESS transition will require a significant change in material flows of the global economy including the installation / rebuild / replacement of supporting EV infrastructure
• China emerging as the global leader in EV
• Supported by a $361bn investment target in renewable energy generation by 2020(4)
• Targeting 5 million cumulative EV sales and 4.8 million charging points by 2020(5)
• 8% of 2018 vehicle sales potentially required to be domestically produced EV. 2016 vehicle sales of 28 million units (EV:300k)(6)
12
The impact of electrification per vehicle: c.160kg Cu
Car (EV-ICEV)(7)
+ c.100kg Copper
(Contained in Cu motors
and inverters for motors
and charging
Battery (250kg)(7)
(NCM 1,1,1)
+ c.38kg Copper
+ c.11kg Cobalt
+ c.11kg Nickel
Charging Point(5)
+ c.20kg Copper
• Ambitious global targets …
• Major countries targeting cumulative sales of 13.4 million BEV/PHEV vehicles by 2020, and an estimated c.52 million by 2025(5)
• … will have an outsize impact on metals markets
• 2020e: +c.373kt Cu demand, +c.40kt Ni demand(5)
• 2025e: +1.65Mt Cu demand, +c.210kt Ni demand(5)
• 2035e: Rapid adoption scenario where c.95% of global vehicle sales are EV would require: +20Mt Cu, +1.8Mt Ni, +679kt Co(7)
• Higher commodity prices are required to incentivise reinvestment to offset a declining resource and aging asset base
Source: (1) Autocar, 27 February 2017, Norway to phase out petrol and diesel cars by 2025. (2) The Guardian, 18 April 2016, Netherlands moots electric car future with petrol and diesel ban by 2025. (3) The Independent, 1
May 2017, India to make every single car electric by 2030 in bid to tackle pollution that kills millions. (4) Reuters, 5 January 2017, China to plow $361 billion into renewable fuel by 2020. (5) Exane BNP Paribas, 18 April
2017, Electric dreams (are made of these). (6) FT, 30 April 2017, Carmakers grapple with China’s electric vehicle drive. (7) Bernstein European Metals and Mining, 18 April 2017, The Electric Revolution, Part 2: Raw
Material Bottlenecks and commodity winners in the green economy.
The supply challenge
Copper anodes, Townsville refinery, Australia
0%
20%
40%
60%
80%
100%
120%
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
E
20
18
E
Sustaining copper mine supply is progressively more challenging
0.7%
0.9%
1.1%
1.3%
1.5%
1.7%
19
90
19
94
19
98
20
02
20
06
20
10
20
14
20
18
e
20
22
e
20
26
e
20
30
e
20
34
e
20
38
e
14
Mined copper grades continue to
decline(1) …
Sector reinvestment has
collapsed (1,2) …
Average copper
grade processed
Source: (1) Bernstein European Metals and Mining, 8 March 2017, Copper & Gold – Not a production wall … it’s a production cliff! (2) Selected producers includes Rio Tinto, BHP Billiton, Anglo American, Glencore, Vale,
First Quantum, South 32, Antofagasta. Estimates for 2016-2018 based on company guidance and approved projects only.
Aggregated
capex/EBITDA for
selected major
producers
Average
Exploration has been
increasingly unsuccessful (1) …
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
19
01
19
20
19
39
19
58
19
77
19
96
20
15
Growth rate in
global copper
resource base by
year of discovery
– 5yr y/y rolling
average
y/y change
0
50
100
150
200
0
2000
4000
6000
8000
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
Sustaining copper mine supply is progressively more challenging
15
0
5000
10000
15000
20000
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
20
22
20
24
20
26
20
28
20
30
20
32
20
34
0
5
10
15
20
25
30
35
40
45
50
Supply is peaking in 2018 and declines thereafter at
3.5% CAGR with no reinvestment (3)
$bn capex
copper
Copper
capex (LHS)
Copper
mine
supply
Source: (1) Copper mine project pipeline comprises the total production volume of projects categorised as highly probable and probable by Wood Mackenzie’s Global copper long-term outlooks from 2001 to 2016, indexed
change from 2001. (2) Annual average LME cash copper price, source Wood Mackenzie and Bloomberg. (3) Bernstein European Metals and Mining, 8 March 2017, Copper & Gold – Not a production wall … it’s a
production cliff!
LME
Copper
(LHS $/t)(2)
Copper mine
project pipeline
(RHS indexed
2001=100)(1)
Copper mine project pipeline now below
pre-supercycle lows
kt copper
A declining resource base and aging assets will require miners to access new resources in key new geographies to meet future demand
16
MexicoCopper, Iron
Ore, Thermal
Coal, Zinc
ColombiaThermal Coal
EcuadorCopper
VenezuelaCopper,
Thermal Coal,
Nickel
TurkeyCopper
Mauritania,
Sierra
Leone,
GuineaIron Ore
Equatorial Guinea,
CameroonOil & Gas
MozambiqueThermal Coal
South AfricaIron Ore, Thermal Coal,
Coking Coal, Zinc, FeCr,
Nickel, Diamonds
TanzaniaNickel
PanamaCopper
UkraineIron Ore, Thermal
Coal, Coking Coal,
Agriculture
Republic of
CongoIron Ore
DR CongoCopper, Cobalt,
Diamonds
BotswanaCopper, Nickel,
Diamonds
RussiaCopper, Nickel, Iron Ore, Thermal
Coal, Coking Coal, Zinc, Agriculture
MongoliaCopper, Thermal
Coal, Coking Coal
IranCopper, Iron
Ore, Zinc
Philippines, Papua
New Guinea, New
CaledoniaCopper, Nickel
IndonesiaThermal coal,
Coking coal,
Nickel
IndiaCopper, Iron Ore,
Zinc, Thermal
coal, Nickel,
Agriculture
ChinaCopper, Thermal Coal,
Coking Coal, Iron Ore,
Zinc, Nickel, Aluminium,
Agriculture
BrazilCopper, Iron
Ore, Nickel,
Agriculture
ArgentinaCopper, Agriculture
PolandCopper, Agriculture
ZambiaCopper
KazakhstanCopper, Zinc,
Iron Ore, FeCr,
oil
17
We already have a footprint in many of these countries (and a track record of navigating challenging jurisdictions) …
…comprising a large-scale low-cost asset portfolio of the right “Tier 1” commodities …
18
2016 Copper Cobalt Zinc Lead Nickel FeCr Coal
Glencore own
source production(1)1.4Mt 28kt 1.1Mt 294kt 115kt 1.5Mt 125Mt total
115.4Mt Thermal
Idled capacity c.0.4Mt c.0.20kt c.0.5Mt c.100kt
Global mine supply(2) 20Mt c.97kt 12.4Mt 5.3Mt 2.0Mt c.10.8Mt 864MtThermal Coal
Production ranking(3) Top 3 Top 3 Top 3 Top 3 Top 3 Top 3 Top 3
Full mine cost(4) 87c/lb By-product16c/lb
-5c/lb with Au CrBy-product 265c/lb $18/t margin
Average price(1) 220c/lb $12/lb 95c/lb 85c/lb 436c/lb 90c/lb $57/t
Cost quartile(5) 1st By-product 1st By-product 1st/2nd 1stHigh margin
seaborne
supplier
Marketing volumes
sold(1)3.5Mt c.38kt 2Mt 900kt 221kt 2.2Mt 108Mt
Source: (1) 2016 Preliminary results. (2) Source Morgan Stanley – The Price Deck 2Q 2017 for 2016 total Cu, Zn, Pb, Ni and Thermal Coal supply. Macquarie Commodities Compendium, 19 January 2017 for FeCr and Co.
(3) Wood Mackenzie for Cu, Ni, Pb, Zn. SNL for Co. AME for Thermal coal. Heinz H Pariser for FeCr. Glencore estimate for coal. (4) See slide 21 of Preliminary Results 2016 presentation for basis of calculation. Full mine
cost includes all cash costs to allow reconciliation and generation of EBITDA. (5) Glencore estimates
… underpinned by a highly cash generative marketing business with global reach
• Our marketing activities involve the physical movement of commodities to where they are in most demand
• We generate earnings as a fee-like income from physical asset handling and arbitrage, as well as blending and optimisation opportunities
• Lower sensitivity to commodity prices and volatility
• Marketing is countercyclical from a cash flow perspective, as funding requirements are highly linked to commodity prices. The business requires less working capital during periods of falling prices, which helps mitigate the generally negative effects of lower prices on our industrial assets
• Virtually all our marketed volumes are hedged or pre-sold to minimise price exposure. Our use of hedging instruments results in profitability being overwhelmingly determined by volume activity and associated value-added supply chain margins, and other marketing conditions, rather than by the absolute flat price itself
• A low cost of capital, stable cost base and low capex requirements underpin resilient and high returns on equity
19
0
500
1000
1500
2000
2500
3000
3500
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7F
Long-term
Guidance range:
+2017: $2.2-$3.2bn
Marketing Adjusted EBIT ($M)
Gu
ida
nc
e:
$2
.3b
n t
o $
2.6
bn
Reduction to
reflect the sale
of 50% of
Glencore
Agriculture
Investing for the future
Drag line, Tweefontein coal mine, South Africa
Investing for the future
Earnings genuinely diversified by activity, commodity, currency and geography (1)
21
Leading low cost portfolio
of “Tier 1” commodities
positioned to feed the
changing needs of maturing
economies
• Key supply positions in the
commodities (copper / cobalt / nickel)
that underpin the looming EV/ESS
revolution
• Major producer/trader of other mid and
late cycle commodities such as zinc,
thermal coal and agricultural products
• Significant copper and zinc capacity
awaiting restart
North
America
South
America
South Africa
CISAustralia
EuropeOther AfricaCopper
Zinc
Ferro
alloys
Agri
Oil
Marketing
Nickel
Coal
Notes: (1) 2016 Adjusted EBITDA split calculated pre-coal hedging impact and corporate overheads. Geographic split based on operating asset EBITDA.
Well positioned for the
challenges and opportunities
that lie ahead
• Highly cash generative
defensive business model,
including marketing, that adapts
quickly to changing conditions
• Relentless focus on maximising
value creation through
balancing business
reinvestment/growth and
shareholder returns
• Backed by a world-class
management team,
entrepreneurial culture and track
record of value creation
22
Power generation, Raglan Nickel, Canada
Historical sector performance
Nickel crowns, Nikkelverk, Norway
Post 2006 – sector chased expected volume growth
15
20
25
30
35
40
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
F
20
22
F
• Excessive focus on demand forecasting
• Metal demand assumed to almost double 2005-2020
• Emerging market urbanisation
• 2x long-term historic growth trend
• Bubble charts became the norm
• Many shareholders/analysts were cheerleaders
• Increasingly marginal projects proposed and approved
• “If I don’t someone else will” supply mantra
• Fear of missing out on higher prices/market share
• Market rewarded growth pipelines however tenuous
• 8%-12% CAGR volume growth targeted
• To match expected volume growth
• Everyone else’s supply assumed to be “constrained” amid extreme shortages of people/mills/trucks etc
• Managements failed to notice the contradiction
24
The global copper market was forecast to double in
size by 2020 (Mt Cu)
2008 Forecast
global copper
market (1)
2016 Q4
Forecast global
copper market (2)
Notes: (1) Source industry peer presentation. (2) Wood Mackenzie Global copper long-term outlook Q4 2016, annual copper demand
Resulting in a sustained period of over-investment …
25
0
200
400
600
800
1000
1200
2003 2005 2007 2009 2011 2013 2015
Precious: $211bn
Base Metals: $206bn
Bulks: $149bn
Diversifieds: $496bn
Sector invested more than $1 trillion of capex(1) ...
2003 2005 2007 2009 2011 2013 2015
… and significantly increased supply in most
commodities(2) …
+110% Aluminium
+80% Iron ore+79% Thermal coal
+72% Lead
+79% Coking coal
+47% Copper
+47% Nickel+45% Zinc
Notes: (1) Cumulative capex from 2003 segmented by company type, Source: Citi Research, Morgan Stanley. (2) Annual supply indexed to 2003, Source Citi, Morgan Stanley, Wood Mackenzie, USGS
… leading to sustained deflation 2011-2015 …
2003 2005 2007 2009 2011 2013 2015 2003 2005 2007 2009 2011 2013 2015
26
… helping to lower mining unit costs (1) ... … along with commodity prices (2) …
Copper
Iron ore
Zinc
Thermal
coal
Copper
AluminiumNickel
Met Coal
Iron ore
Thermal CoalZinc
Notes: (1) C1 cash costs (50th percentile) indexed to 2003, Source Bernstein, Wood Mackenzie, Morgan Stanley. (2) Indexed to 2003, Source: Citi, Morgan Stanley, Bloomberg, Wood Mackenzie. (3) Sector annual
free cash flow from 2003 to 2015 defined as operating cash flow less reported capex. Source Citi Research, Factset
0%
1%
2%
3%
4%
5%
6%
7%
Alu
min
ium
Coppe
r
Zin
c
Le
ad
Nic
kel
Iron
Ore
The
rma
l C
oal
2003-2015 CAGR 2011-2016 CAGR
27Notes: (1) Sector annual free cash flow from 2003 to 2015 defined as operating cash flow less reported capex. Source Citi Research, Factset. (2) Annual demand growth, Source: Wood Mackenzie, Morgan Stanley,
Citi Research, Glencore estimates.
-20
0
20
40
60
2003 2005 2007 2009 2011 2013 2015
… generating just $370bn of free cash flow(1) …
$bn operating cash
flow less capex
… despite demand growth (2)
… and weak cash flows, despite healthy demand growth
Appendix
Cobalt, Mutanda mine, DRC
Our business model
We move commodities from where they are plentiful to where they are needed …
… sourcing physical volumes from our industrial assets and third parties that we market around the world …
… to generate margin opportunities that underpin a high-return low-risk business with a 40+ year track record of profitability
29
Fully integrated from mine to customer
• Scale and commodity diversity
• Proven ability to respond rapidly to changing industry dynamics
• Core competences in commodity marketing, logistics, risk management and financing
• Leading industrial asset portfolio of the right commodities for the future along with strong growth prospects
• Diversified position across multiple commodities, suppliers and customers
• World-class management team, entrepreneurial culture and track record of value creation
30
Exploration
Mining /
Producing
Processing /
Refining
Blending &
Optimising /
Logistics
Marketing &
Trading
Exploration
Mining /
Producing
Processing /
Refining
Blending &
Optimising /
Logistics
Marketing &
Trading
Traditional
MinerTrader
A strong investment grade balance sheet
• Capital structure repositioned to provide greater balance sheet strength and flexibility
• Net funding and Net debt reduced by $14.7bn and $14.1bn respectively to $32.6bn and $15.5bn over the last 18 months
• $2.6bn of executed bond tenders in October and December 2016 caps post-2017 maturities at c.$3bn in any one year (down from $4-$5bn)
• Committed available liquidity of $16.7bn at end of 2016, comfortably covers bond maturities for the next five years
• Strong BBB/Baa ratings target and maintenance remains a top priority
• Proactive actions in 2015/2016 demonstrate our commitment
• Credit ratings upgraded to BBB (positive) /Baa2 (stable)
• Targeting maximum 2x Net debt/Adjusted EBITDA through the cycle
• Delivery of robust cash flow coverage ratios at year end 2016:
– FFO to Net Debt of 50%
– Net debt to Adjusted EBITDA of 1.51x
• Optimised capital structure provides less risk, more flexibility and stability of distributions
31
Net debt ($bn)
FFO to Net debt
28%
29% 29%
33%
30%
26%
25%
50%
H12013
FY2013
H12014
FY2014
H12015
FY2015
H12016
FY2016
34.835.8 37.6
30.5
29.6
25.9
23.6
15.5
H12013
FY2013
H12014
FY2014
H12015
FY2015
H12016
FY2016
49.2
52.2 54.4
49.847.3
41.239.0
32.6
H12013
FY2013
H12014
FY2014
H12015
FY2015
H12016
FY2016
Net debt to Adjusted EBITDA
Net funding ($bn)
2.8
2.7
2.8
2.4
2.7
3.02.9
H12013
FY2013
H12014
FY2014
H12015
FY2015
H12016
FY2016
1.51x
Targeting maximum 2x
Maximising value creation through capital allocation
Maintain strong
BBB/Baa
Equity cash flows
$1bn fixed Marketing distribution
Min. 25% Industrial
distribution
M&A + Other
• Our capital allocation framework balances preservation of our optimal capital structure along with business reinvestment/growth and shareholder distributions
• 2017 cash distribution of $1bn, to be paid in equal tranches in H1 and H2 2017
• 2018 cash distribution (in respect of 2017 cash flows) will comprise:
• Fixed $1bn base distribution reflecting the resilience, predictability and stability of Marketing cash flows
– Comfortably covered from trough cash flow generation in 2016 and further supported by structurally lower gearing and a longer/smoother bond maturity profile
• Variable distribution representing a minimum payout of 25% of Industrial free cash flows
• Fixed and variable distribution components to be confirmed annually
• Based on prevailing conditions and outlook
• Variable distribution percentage potentially increased, as appropriate
• In context of overall balance sheet requirements, surplus capital position and subject to prevailing conditions & outlook
• Cash distribution generally favoured versus buyback given inherent volatility in prices
32
1
2
34
5
Notes: (1) Equity cash flows defined as Adjusted EBITDA less tax, interest and other, sustaining and expansionary capex and dividends paid to minorities. (2) Fixed marketing distribution of $1bn represents c.50%
of pre-WC Marketing free cash flow, (3) Minimum 25% Variable distribution from Industrial free cash flow. (4) M&A + Other includes consideration around portfolio optimisation, asset monetisation, recycling and
debt reduction. Reinvestment screened against rigorous criteria.
(1)
(2)
(3)
(4)
0
500
1000
1500
2000
2500
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
Coal, 5.8Coal, 5.6
0
5
10
15
20
25
2030New Policy
2013Actual
Renewable Bio Energy Hydro Nuclear
33Sources: (1) Glencore analysis. (2) IEA WEO 2016. 2030 New Policy Scenario reflects policies that governments have implemented by mid-2015, as well as those that the IEA expects governments to implement over the next 25
years. (3) Btce : billion tonnes of coal equivalent – standardised coal quantity using coal with energy content of 7000kcal/kg or 29.31 GJ/t. Converted to metric tonnes based on global average coal energy of 4850kcal/kg nar. (4)
Platts World Electric Power Plant Database, Glencore analysis, IEA WEO 2016. Information about how our business operates, our position on climate change and how we are managing the opportunities and challenges of climate
change across our business are detailed in http://www.glencore.com/assets/sustainability/doc/sd_reports/GLEN-Climate-change-considerations-for-our-business-20160613.pdf
Global primary energy demand (Btce)(2,3)
19.3Btce
23.1Btce
Installed coal generating capacity
(GW) (4)
China
North America
Europe
India
Other Asia
Mediterranean
Japan
Taiwan
Asia
dominates
future coal
demand
• Drivers of seaborne coal demand in Asia well known
• Supply deficit supports existing assets and demand for high-energy coal
• Glencore assets well positioned on the industry cost curve
• Global energy demand growth requires all fuel sources
• IEA modelling of nationally determined contributions shows absolute coal demand continues to grow to meet the needs of growing populations, especially in Asia
• Overall portfolio well positioned to respond to climate change opportunities (nickel, cobalt, copper)
• Board-level commitment to identify opportunities to reduce GHG footprint and respond to risks posed by climate change
0
200
400
600
800
1000
1200
1400
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
Industry natural
supply decline at
5% p.a.
Seaborne coal supply decays rapidly
without further investment (Mt)(1)
Glencore portfolio
29% 25%
Glencore’s coal portfolio resilience
(2)
We are well positioned for the challenges and opportunities that lie ahead
34
Earnings diversified by
commodity and geography(1)
North
America
South
America
South Africa
CISAustralia
EuropeOther Africa
Coal
Copper
Zinc
Nickel
Ferro
alloys
Agri
Oil
Marketing
The right commodity mix to
feed the changing needs of
maturing economies
Outstanding costs for our
key commodities – 2017F(2)
Significant growth potential:
capacity awaiting restart
Well capitalised asset base:
modest go forward capex
Strong IG balance sheet:
less risk/more stability
Maximizing value creation
through capital allocation
FCF generative across the
cycle at spot prices on an
annualised basis(3)
Cu+c.400ktpa
Zn+c.500ktpa
Cu
Ni
Zn
Coal
$4.4bn
$2.8bn
$0.6bn
$3.8bn
Spot EBITDA $14.6bn
Spot FCF $6.9bn
50%ND/Adj.EBITDA
FFO/ND
2013 2014 2015 2016
1.5x
Maintain strong
BBB/Baa
Equity cash flows
$1bn fixed Marketing distribution
Min. 25% Industrial
distribution
M&A + Other
Cu Zn
NiThermal
Coal
89c/lb
247c/lb$28/tmargin @ $44/t
Notes: (1) 2016 Adjusted EBITDA split calculated pre-coal hedging impact and corporate overheads. Geographic split based on operating asset EBITDA. (2) See slide 21 for production volumes underlying 2017
cost forecasts. (3) Key commodity department spot annualised EBITDA calculations based on costs on slide 11 and production from slide 21. LME spot prices as of 20 February 2017 for metals, Cal17 NEWC
forward curve for thermal coal as at 20 February 2017. Spot annualised FCF calculated from Spot EBITDA after deducting cash taxes and interest of $3.6bn, capex of $4.1bn. Excludes working capital changes
and distributions.
• Key supply positions in the
commodities (cobalt/nickel) that
underpin the battery chemistry
likely to power future EV and
storage batteries
• Major producer of other mid
and late cycle commodities
such as copper, zinc and
thermal coal
0
2
4
6
8
10
12
14
20
06
20
07
20
08
20
09p
f
20
10p
f
20
11p
f
20
12p
f
20
13p
f
20
14
20
15
20
16
+201
7
c.$4bn
• plus multi-commodity brownfield
growth options when the time is right
-10c/lb10c/lb pre Au
Ind. Other $0.6bn
Mktg $2.4bn
Our values
Safety
Our first priority in the workplace is to protect the health and well-being of all of our people. We
take a proactive approach to health and safety; our goal is continuous improvement in the
prevention of occupational disease and injuries
Entrepreneurialism
Our approach fosters the highest level of professionalism, personal ownership and entrepreneurial
spirit in all our people while never compromising on their safety and well-being. This is important to
our success and the superior returns we aim to achieve for all our stakeholders
Simplicity
We aim to achieve our key deliverables efficiently as a path to industry-leading returns, while
maintaining a clear focus on excellence, quality, sustainability and continuous improvement in
everything we do
Responsibility
We recognise that our activities can have an impact on our society and the environment. We care
profoundly about our performance in relation to environmental protection, human rights and health
and safety
Openness
We value open relationships and communication based on integrity, co-operation, transparency
and mutual benefit, with our people, our customers, our suppliers, governments and society in
general
35
Glencore in numbers
36
Globalfootprint
HighlyDiversified
UniqueMarket insight
Breadth of scale