IRON ORE BRAZIL MINAS-RIO INTERNATIONAL MEDIA VISIT - 2015 May, 2015
ANGLO AMERICAN: THE DIVERSIFIED MINER Diversified across 10 product groups that span the development cycle Founded in 150,000 employees 1917 and contractors Key Headquarters Corporate & representative offices Iron Ore and Manganese Met and Thermal Coal Copper Nickel Operating Niobium and Phosphates across 5 Platinum continents Diamonds Recognised in Brazil and internationally as a responsible mining company 2
ANGLO AMERICAN IN BRAZIL A long and successful partnership Nickel Exploration Office Nickel Niobium Iron Ore (Minas-Rio) More than Phosphates 40 years in Iron ore export terminal Brazil Brazilian corporate office Phosphates 3
BRAZIL: ECONOMIC AND POLITICAL SCENARIO A challenging set-up in spite of favourable conditions Selected indicators 1 – % Brazilian environment Brazil OECD Modest growth due to tighter monetary and fiscal policies, weak external demand, low levels of investment and infrastructure bottlenecks; GDP Growth Inflation 10 10 • Democracy 6,5% 5,4% 2,6% 5,1% 2,3% 5 1,8% • 5 Quality, but scarce workforce 1,9% 1,8% 1,6% 0 1,4% 0,3% -0,7% • Abundant mineral resources 0 -5 2010 11 12 13 14 15 2016 2010 11 12 13 14 15 2016 • Public demonstrations • Low government approval • Corruption scandals Unemployment rate Fiscal balance • Energy crisis 10 5 7,3% 7,0% 6,8% 0 • -3,4% Water shortage -3,9% 5 -5 5,4% 5,1% -3,0% 4,7% -3,9% -3,1% -10 0 2010 11 12 13 14 15 2016 2010 11 12 13 14 15 2016 Gross public debt currently at R$1,38trillion – ~25% of GDP Sources: ¹ Datafolha Survey – March 18th, 2015 4
MINAS-RIO: SAFETY AS A CORNERSTONE OF PERFORMANCE Benchmark Safety Performance = Leadership, Ownership and Accountability Man-Hours Total Recordable Cases High Potential Incidents Risk Change Management Worked = 170m (TRCFR) HPI = 127 RCM = 96% 40 (million) 35 0.38 0.38 41 96% 26 28 0.23 0.31 85% 31 78% 0.23 0.22 0.23 25 18 0.21 14 42% 5 14 12 4 2 0 0 2011 2012 2013 2014 5
MINAS-RIO: LARGE RESERVE & RESOURCE BASE Long-term value from a Tier 1 deposit with a fully integrated logistics • 2.8 Bt of Total Ore Reserves in addition to 2.6 Bt of Total Mineral Resources* • Easy to mine material due to geological formation • Low strip ratio over LOM ~0.4:1 and easily liberates containments • Reserve life of 45 years • Upside reserve potential from an already large resource base *2014 Annual Report: Serra do Sapo – Friable Itabirite, Hematite and Itabirite estimates: Total Ore Reserves 2.8Bt @ 34.4%Fe in addition to 6 Total Mineral Resources of 2.6Bt @ 31.4%Fe
MINAS-RIO OVERVIEW A fully integrated operational infrastructure – from mine to port BENEFICIATION PLANT MINE IRON ORE TERMINAL FILTRATION PLANT PIPELINE 7
MINAS-RIO PROCESS A fully integrated operational infrastructure – from mine to ship MINE PLANT PIPELINE FILTRATION IRON ORE TERMINAL • • One 230kV • • The longest slurry • Life of mine is Filtration plant located Dedicated iron ore transmission line pipeline in the world estimated at 45 years the Port terminal (50:50 JV (529 Km) DRY PROCESS with Prumo • • One 138kV 30 trucks (230 t) STRUCTURES • Logistics) Crosses 33 transmission line Maximum productivity: • Primary crushing municipalities in 2 580 ton/h • Secondary crushing states (States of STRUCTURES STRUCTURES • • 2 Shovels (22 m³) HPGR Minas Gerais and Rio • • Stockpile Concentrate Productivity: 2100 ton/h de Janeiro) • Stockpile Loading Thickener Dry process capacity: • 1 shovel (26 m³) • • • Clarifier – water Ship size (cape size) 68% of solids in the 55 MTPY (Wet basis) revovery Productivity: 2500 ton/h slurry 4300 tons/h (wet basis) • Capacity: • Filtration (12 ceramic 4 Front end loader: • Approximately 4 days • Stockpile: 1 Million filters) WET PROCESS (15 m³) for the slurry to travel tons STRUCTURE Productivity: 1350 ton/h the pipeline at 6 km/h • Stockpile Loading: • Capacity : Primary grinding avg) • 6,000 t/h 26.5 MTPY (dry Flotation • Cape size – Capacity • basis) Regrinding STRUCTURE STRUCTURES • of ~180.000 tons* (wet • 3200 tons/h (dry Concentrate Open pit operation • 3 surface stations: basis) basis) thickener • Tailings dam 2 pumps stations 1 valve station Wet process capacity : Terminal station • Primary grinding: 55 MTPY (wet basis) • Concentrate Capacity: • thickener: 26,5 MTPY 26.5 MTPY (dry (wet basis) basis) • • Concentrate 3000 tons/h (dry thickener productivity: basis) 3240 tons/h (wet basis) 8 *Available from 2016 onwards
SHIPPED FIRST ORE ON 25 OCTOBER 2014 FOOS delivered safely and responsibly within revised plan and budget • First Ore on Ship two months ahead of schedule • Capital saving 0.4 billion - $8.4 billion • Ramp-up: 18 - 20 months post First Ore on Ship • 13 shipments to customers in China, India, Middle East and Europe (by end March) • Production of 1.2 million tonnes (Q1 2015) • The team is well positioned to deliver ramp-up, safely, by Q2 2016 • ~4,000 employees (steady state) • Diversified team with several years of mining experience • Production guidance: 2015: 11 – 14 million tones 2016: 24 – 26 million tones 9 * All tones on wet basis
A MAJOR ACHIEVEMENT Engineering complexity in an evolving environment 33 MUNICIPALITIES 170,000,000 35,600,000 m3 of earthworks man hours worked ≈ ≈ 7 Burj Khalifa (Dubai) 2m PEOPLE - Tallest building in the world. 4,100 light vehicles + mobile equipments 32 FULLY FILLED WEMBLEYS 4,000,000 km/month ≈ 700 Times London-New York 19,000 1,500,000 m of cables tons of steel ≈ ≈ 600,000 m3 of concrete poured 1 PORTUGAL & SPAIN BORDER ≈ 3 EIFFEL TOWERS 2 MARACANAS STADIUM 10
MINAS-RIO VIDEO First Ore on Ship delivered in line with revised plan Minas-Rio 11
COMPETITIVE OPERATING COST POSITION Lower Half of the Cost Curve FOB Cash Cost (post ramp up) Global Iron Ore Cost Curve - 2016 ($/dmt, FOB) 1st 18 yrs. Avg. (Real 2014 Terms wmt) • Minas-Rio in the 2nd quartile of the cash cost curve Mine $10/t - $11/t 200 Beneficiation $9/t 150 Pipeline $2/t 100 Filtration $1/t Minas-Rio Net Port $5/t 50 Other $6/t - $7/t 0 0 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 Mt dry ore $33/t – $35/t (1) Source: CRU’s estimate of FOB costs include mining, processing, transportation and general and admin. SIB Capex ~$5.5/t over 1st 18 years Minas-Rio shown at full production. Note: (1) Includes state royalty, excludes federal royalty, on wet metric ton basis 12
HIGH QUALITY PELLET FEED PRODUCTS With the perfect fit for the evolving iron ore consumer market 0% • Increased market demand for high quality Minas-Rio 2% ore = Minas-Rio • Minas-Rio High quality pellet feed products Alumina + silica content 4% Brazil • Direct Reduction – ~68% Fe North America • Blast Furnace – ~67% Fe Other - Africa China Kumba Iron Ore CIS 6% • Low Silica and Alumina India • Minas-Rio products are priced on a basis Australia - Standard Quality fully reflecting the excellent physical and Australia - High Quality 8% chemical specifications 10% 56% 58% 60% 62% 64% 66% 68% 70% Fe content 1) Chinese production (rich ore equivalent) inferred from a small sample of mines Source: CRU, AME, Anglo American 13
THE FOCUS IS NOW ON SAFE RAMP-UP World-class performance and strong risk management Delivered project at $8.4 billion capex Product Ramp-up (Mtpa - wet basis) & FOB Cash Cost 0.4 8.8 8.4 0.9 7.5 Product (mt) 26.5 24-26 FOB ($/ wmt) ~$60/t LTD 2015 / Total project Saving Previous Feb15 2016 estimate $33-35/t $33-35/t 11-14 380 ~0.7 150 900 120 150 100 2014 2015 2016 2017 Pre Licensing, Port Mine & Other (1) Total Operations conditions Ben Plan & Land and SG&A 1) Includes working capital payments, demobilisation costs & construction contract finalisation 14
STAKEHOLDER SUPPORT: EARNING OUR SOCIAL LICENCE Projects and initiatives focusing on the short, medium and long term requirements Education, Culture and Tourism Infrastructure and Access Health Local labour programme Professional Training Pavement works Senai NGO Partnerships Historical building renovation Tourism support Clinics Renovation Environmental Management Global Programmes Local Economic Development Fauna and Flora Rescue ARPA for Life Local Supplier Development Archaeological and cultural UNGC Entrepreneurship Programmes heritage preservation Conservation Units 15
WORKING TOGETHER There are no limits to what can be achieved if we truly work together OUR VALUES TOGETHER WITH THE COMMUNITY CREATING THE RIGHT ENVIRONMENT % of Total Workforce 100 81 19 • 474 students graduated to date 69 • All of them from local communities 31 • 347 (73%) hired by Anglo American • Mechanic, Electrician, Mine Equipment Operators Local Other IOB Female Male Welder, Operator, etc All of the Mine and Plant operations and Great Place to Work: #1 Large Company in Minas 1st Gerais maintenance employees have been hired from Senai 31 Great Place to Work: #31 Large Company in Brazil 16
IRON ORE BRAZIL MINAS-RIO INTERNATIONAL MEDIA VISIT
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