View
223
Download
2
Category
Preview:
Citation preview
Sydney Mining Club7 November 2002
Presentation by Peter CoatesCEO Xstrata Coal
2
The Agenda
• The transformation of Xstrata Plc
• Xstrata Coal’s origins
• Xstrata Coal today
• The outlook for the thermal coal market
3
Xstrata Plc
• International, diversified natural resources company
• Diversified portfolio of high-quality, cash generative metals and mining businesses• Xstrata Coal • Xstrata Zinc• Xstrata Alloys
• Based in Switzerland and listed on the London Stock Exchange
• New international shareholder base• Admitted to the FTSE 100 Index in June 2002
4
Transformation of Xstrata
To create a platform from which value couldbe created, growth credibility pursued
and existing potential unlocked
The key challenges were:
• US$ 1 billion capitalisation, – lack of critical mass
• 2 quality assets (ferroalloys and zinc) not diversified by earnings profile or pricing cycle
• Growth constrained by: high gearing (85% debt to equity ratio); an illiquid stock and a domestic shareholder base
5
Xstrata’s origins
Xstrata AG converts to plc and acquires Duiker & Enex for US$2.5bn – US$1.5bn equity offering: 7x oversubscribed– US$1.4bn international debt facility
Xstrata AG converts to plc and acquires Duiker & Enex for US$2.5bn – US$1.5bn equity offering: 7x oversubscribed– US$1.4bn international debt facility
Xstrata plc enters FTSE 100 Xstrata plc enters FTSE 100
Acquisition of FerroAlloy assets in South Africa and other international assets
Acquisition of FerroAlloy assets in South Africa and other international assets
Glencore acquisition of Duiker
Glencore acquisition of Duiker
Glencore acquires coal assets in Australia: creation
of Enex
Glencore acquires coal assets in Australia: creation
of Enex
Xstrata AG (Sudelektra)(established 1926)
Xstrata AG (Sudelektra)(established 1926)
Glencore acquires38.5% Xstrata AG
Glencore acquires38.5% Xstrata AG
GlencoreGlencore
1990 - 20021990 - 2002
19901990
June 2002June 2002
March 2002March 2002 Xstrata AG converts to plc and acquires Duiker & Enex for US$2.5bn – US$1.5bn equity offering: 7x oversubscribed– US$1.4bn international debt facility
Xstrata AG converts to plc and acquires Duiker & Enex for US$2.5bn – US$1.5bn equity offering: 7x oversubscribed– US$1.4bn international debt facility
Xstrata plc enters FTSE 100 Xstrata plc enters FTSE 100
Acquisition of FerroAlloy assets in South Africa and other international assets
Acquisition of FerroAlloy assets in South Africa and other international assets
Glencore acquisition of Duiker
Glencore acquisition of Duiker
Glencore acquires coal assets in Australia: creation
of Enex
Glencore acquires coal assets in Australia: creation
of Enex
Xstrata AG (Sudelektra)(established 1926)
Xstrata AG (Sudelektra)(established 1926)
Glencore acquires38.5% Xstrata AG
Glencore acquires38.5% Xstrata AG
GlencoreGlencore
1990 - 20021990 - 2002
19901990
June 2002June 2002
March 2002March 2002
6
Coal Acquisition
• Coal assets: Ideal vehicle for transportation• Complemented quality of the portfolio
• New commodity, pricing, earnings and geographical exposure
• Scale to unlock new listing and international shareholder base
• Transaction had to stand on financial merits:• Conservative assumptions: Acquisition makes returns in
excess of cost of capital at long-run coal price of US$26/ton and US:Australian dollar exchange rate of 63c
7
Roadshow Summary
• In total, Xstrata’s IPO roadshow covered some 190 institutions worldwide, with an 89% success rate
• 11 day programme• Meetings with investors in 13 cities in 7
countries• 66 one-on-ones• 15 groups meetings• 5 video or tele-conferences
8
The new Xstrata
• Successful IPO placed Xstrata in strong position
• Company effectively transformed
New Xstrata Former Xstrata AG
Proforma net cash from operations
US$340m US$33m
Net debt to equity ratio 19.6% 84.7%
Debt to EBITDA <1.5x 3.6x
9
Top Shareholders: Public Data
GlencoreCapitalFidelityUndisclosed UKUndisclosed CH
No of shares%
Glencore International AG 101,040,00040.0
Capital Group of Companies 35,409,00614.7
Fidelity 7,639,144 3.0
Undisclosed UK - 32.5% of total register
Undisclosed CH - 9.8% of total register (Total shares in issue: 252.6 million)
10
Xstrata Plc Revenue by Commodity - 2001
Coal62%
Alloys17%
Zinc20%
Other1%
2001 Proforma Revenue – US$1,875 million
11
Xstrata Plc Revenue by Commodity - 2002
Alloys18.2%
Zinc21.6%
Other0.2%
Coal60.0%
Six months to 30 June 2002 – US$957.9 million
12
Xstrata has global leading positions in its selected markets
0 10 20 30 40 50
BHP Billiton
Xstrata
Rio Tinto
Anglo American
Thermal coal exports (2001) mt
13
Xstrata has global leading positions in its selected markets
Refined zinc production (2001) kt
0 200 400 600 800 1,000
Korea Zinc
Pasminco
Umicore
Xstrata
Teck Cominco
Noranda
14
Xstrata has global leading positions in its selected markets
South African ferrochrome (2001) kt
0 200 400 600 800 1,000
Xstrata
Samancor
Hernic
Assmang
ASA metal
15
Xstrata Coal
One of world’s largest exporters of thermal coal
• Australia• 14 mines – approximately 32 Mt managed
production/ 27.5 mt consolidated production• 20% of Australian thermal exports
• South Africa• 12 mines – approximately 14 Mt managed
production/ 16mt consolidated production• 20% of South African exports
16
Xstrata Coal’s origins
17
Cerrejon, Columbia
18
The Genesis of Glencore Coal
• 1995 – Glencore purchase of Prodeco assets• Carbones del Cerrejon• Calenturitas• Lenquazacue • Puerto Zuniga
• Development of Mine and Port• Carbones del Cerrejon to 4mtpa• Puerto Zuniga to 6 mtpa
• 1998 – Sell down and consolidation• Sale of 50% of CdelC to Anglo• Merger of CdelC with Rio’s Oregenal
• Later – Further consolidation• Exit of Rio• Buy in of BHP• Purchase of Carbocol share of CZN• Purchase of Exxon share of CZN
19
On the Acquisition Trail
1998 Cumnock Coal Ltd (Underwritten Rights Issue)
Mt Owen OC (BHP)
1999 Teralba UG, West Wallsend UG, Westside OC (HIH) Liddell OC (Savage Resources)
United UG (White Industries)
2000 Bulga OC, Sth Bulga UG and Baal Bone UG (Cyprus)
2001 Ulan UG and OC Mines (Exxon)Duiker Mining Ltd (On-market takeover)
2002 Ravensworth East OC, Narama OC (Rio)
20
Xstrata Coal Australia
21
Xstrata Coal South Africa
22
Leading NSW coal producer
ESTI MATED OWNERSHIP OF SALEABLEESTI MATED OWNERSHIP OF SALEABLECOAL PRODUCTI ON I N NSWCOAL PRODUCTI ON I N NSW
Xstrata29%
Rio Tinto26%
Anglo6%
BHPB12%
Centnal11%
Other16%
23
Strong outlook for thermal coal demand
Thermal coal imports by major Asian countries (Mt)
0
50
100
150
200
250
Japan Korea Taiwan ASEAN Total
1999
2010
24
Australia’s thermal coal supply - Major potential for expansion
Australian export thermal supply potential (mtpa)
0
50
100
150
200
2000 2001 2002 2003 2004 2005 2010 2015
New
Expansion
Existing
25
In Summary
• Xstrata Plc is a leading international, diversified natural resources company
• Xstrata Coal is one of the world’s largest exporters of thermal coal
• Well-positioned to capture future growth in coal market
Recommended