BofAML Global Metals, Mining & Steel Conference 2017 Ivan - PowerPoint PPT Presentation

BofAML Global Metals, Mining & Steel Conference 2017 Ivan Glasenberg CEO

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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 Strong Q1 Chinese infrastructure contractor order intake (1) appears less likely given stronger external demand and higher private sector investment y/y growth 4-quarter trailing growth 40% • Infrastructure contractor order data indicate positive Chinese demand momentum through 2017 20% • Key regional manufacturing data remain positive, European manufacturing PMI at six year highs 0% • Forecast 2017 demand growth remains positive -20% • Supply disruptions/cutbacks support improving 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 fundamentals for most base metals and thermal coal 2017 demand forecasts remain positive (2) Expansionary manufacturing conditions persist (3) 58.0 USA Eurozone China 2003-2015 CAGR 6% 56.0 2011-2016 CAGR 54.0 2017F 4% 52.0 50.0 2% 48.0 0% 46.0 Al Cu Zn Pb Ni Iron Ore T.Coal May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 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 9 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, Illustrative commodity intensity Glencore most exposed to mid differentiation is increasingly curves (1) and late cycle commodities (2) important Mid cycle 100 • Key emerging markets are Diamonds, Thermal Coal, maturing Commodities weighted by contribution to 2018F EBITDA Cobalt, Oil/Gas, PGMs Agricultural products • The early cycle commodities that 80 underpinned the supercycle boom in Late cycle fixed asset investment are being displaced as demand patterns shift in favour of mid and late cycle 60 commodities in line with rising levels of income per capita • Our “Tier 1” commodity Early cycle 40 Copper, Zinc, Nickel, portfolio of metals, thermal Iron Ore, Coking coal, coal and agricultural products Aluminium, Lead is well placed to benefit from 20 Manganese this transition $US GDP per capita (real 2010) 0 0 5 10 15 20 25 30 35 40 45 50 GLEN Peer 1 Peer 2 Peer 3 Peer 4 Early Cycle Mid Cycle Late Cycle Notes: (1) Stylised intensity curves based on developed countries, indexed to 100 at maximum. (2) Source UBS, commodities weighted by contribution to 2018F EBITDA 10