Preliminary Results 2019 - Glencore81a00dd0-e05c-4d... · Preliminary Results 2019 ... Marketing underpinned by oil’s performance ... (LTIs) are recorded when an employee or contractor

Preliminary Results 201918 February 2020

Preliminary Results 2019

Important notice concerning this document including forward looking statementsThis 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, which will be updated in the 2019 Annual Report that is expected to be published in late February 2020.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.

HighlightsIvan Glasenberg – Chief Executive Officer



2019 Scorecard 3

Healthy cash generation despite significantly lower commodity prices• 2019 Adj. EBITDA(1) of $11.6bn, down 26% in line with lower prices• Cash generated by operating activities before working capital changes of $10.3bn, down 22%• Shareholder returns of $5bn, including $2.7bn distribution and $2.3bn buyback (including $0.3bn from 2018’s programme)• Net capex cash flow of $5bn(2)

Solid margin and cost performance for our key commodities• Impact of lower prices on EBITDA margins somewhat moderated by solid cost performance in our key commodities:

• Metals and Minerals EBITDA mining margin (excluding ramp-up/development assets) of 37% (41% in 2018). • Coal EBITDA mining margin of 36% (46% in 2018)

• Full year cost performance in our key commodities: copper (ex African copper) 81c/lb, zinc 13c/lb (47c/lb ex-gold), nickel (ex Koniambo) 277c/lb and thermal coal $45/t ($26/t margin)

Marketing underpinned by oil’s performance• Marketing Adjusted EBIT of $2.4 billion, down 2% year-on-year. Strong second half metals’ performance and robust oil

results largely offset the cobalt headwinds experienced in the first half

Balance sheet / Cash flow coverage in good shape• Available committed liquidity of $10.1bn, bond maturities capped around $3bn in any given year• Net debt of $17.6bn, after $1.25bn of IFRS 16 related lease liabilities• 2020 focus on reducing Net debt/Adjusted EBITDA ratio closer to 1x and net debt towards the $14-$15 billion range(3)

• Recommended 2020 base distribution of $0.20 per share ($2.6 billion), payable in two equal instalments, comfortably covered (c.1.5x) by current annualised business free cashflow generation

Notes: (1) Refer basis of presentation on page 5 of the Preliminary Results 2019 report, refer to note 1 page 31 and Alternative Performance Measures page 112 for definition and reconciliation of Adjusted EBITDA/EBIT. (2) Net capex cash flow refers to Net purchase and sale of property, plant and equipment. (3) Excluding Marketing related finance lease liabilities ($0.6bn as at 31 December 2019). Some return of cash margin calls in respect of Marketing’s hedging activities and monetisation of select non-core long-term assets could aid in this process


Sustainability performance

1.22 1.02 1.06 0.99

2016 2017 2018 2019

3.72 3.08 3.18 2.86

2016 2017 2018 2019

2016 2017 2018 2019

0 0 0 0

2016 2017 2018 2019

84 90 95 90

2016 2017 2018 2019

169 13 17

2016 2017 2018 2019

Fatalities

Lost time injury frequency ratePer million hours worked(1)

Total recordable injury frequency ratePer million hours worked(1)

CO2Scope 1&2Million tonnes(2)

EnvironmentalIncidentsCategory 4/5 (number)(3)

Community investment spendUS$ million

Notes: (1) Lost time incidents (LTIs) are recorded when an employee or contractor is unable to work following an incident. LTIs are recorded when an incident results in lost days from the first rostered day absent after the day of injury. The day of the injury is not included. LTIFR is the total number of LTIs recorded per million working hours. LTIs do not include Restricted Work Injuries (RWI) and fatalities. TRIFR = Total sum of Fatalities, Lost Time Injuries, Restricted Work Injuries and Medical Treatment Injuries per million hours worked. (2) Data subject to final verification and may change. (3) Category 4 and 5 represents major and catastrophic incidents respectively

4

34.6 33.4 30.6 29.2

Scope 1Scope 2


5Our commitment to the transition to a low-carbon economy2019 performance against our commitment(1)

Our commitment includes:

1Paris-consistent strategy / capital discipline

• Our 2019 capital expenditure(2)

was weighted towards energy transition materials, including:• African copper and cobalt• Nickel in Canada

• Natural depletion of our coal resource base in Colombia and to a lesser extent South Africa and Australia (and oil), will contribute to reduction of our absolute Scope 3 emissions over time

• We project a c.30% reduction in Scope 3 emissions by 2035(3)

Notes: (1) RNS Furthering our commitment to the transition to a low-carbon economy, 20 February 2019. (2) Preliminary Results 2019, Industrial activities capital expenditure, page 18. (3) RNS Glencore’s commitment to the transition to a low-carbon economy and Review of 2019 performance and Scope 3 emissions projection, 18 February 2020. (4) Glencore Sustainability Report 2018, page 10. (5) https://www.glencore.com/dam:jcr/6e8173bd-7d2e-494c-bd57-4c23957094ea/2018-sd-membership-review-final.pdf

2 New 2020 public Scope 1 and 2 targets

• To date we have achieved a c.10% reduction in Scope 1 and 2 emissions intensity since 2016 – vs our target of 5%(4)

• New longer-term Scope 1 and 2 targets that support the Paris goals will be released during 2020

4 Alignment with TCFD

• We continue to implement the recommendations of the TCFD in our annual reporting.

5 Corporate climate change lobbying

• Review of trade associations completed in 2019(5)

3Review of progress

• Annual update on performance disclosed on our website and in our Annual and Sustainability reports

https://www.glencore.com/media-and-insights/news/Furthering-our-commitment-to-the-transition-to-a-low-carbon-economy

https://www.glencore.com/media-and-insights/news/glencores-commitment-to-the-transition-to-a-low-carbon-economy

https://www.glencore.com/dam:jcr/6e8173bd-7d2e-494c-bd57-4c23957094ea/2018-sd-membership-review-final.pdf


Cobalt: strategic long-term partnershipsGlencore plays an important role in supplying the materials that enable the energy and mobility transition

Cobalt long-term contracts

10 February 2020“Up to 21,000 tonnes of cobalt contained in cobalt hydroxide between 2020 and 2024”

19 November 2019“Up to c.30,000 tonnes of cobalt contained in hydroxide between 2020 and 2025. With this contract, SK Innovation can produce batteries for 3 million EVs”

7 October 2019“A minimum of 61,200 tonnes of Cobalt between 2020 and 2024”

29 May 2019“Long-term revolving agreement for the supply of cobalt hydroxide to Umicore’sbattery materials value chain”

Enabling the energy and mobility transition• Cobalt is a key lithium-ion battery raw material,

essential for the electric vehicle and mobile phone markets

Our cobalt hydroxide marketing strategy• Long-term supply agreements with

geographically diversified key players along the lithium-ion battery supply chain

Our commitment to responsible production• Our DRC cobalt operations will be

independently audited each year against the “Cobalt Refinery Supply Chain Due Diligence Standard”.

• This standard is defined by the Responsible Mining Initiative (RMI)

Providing security of supply to our customers• Long term availability of responsibly sourced

cobalt from a reliable supplier for our customers

2019 Financial performanceSteven Kalmin – Chief Financial Officer



2019 Financial scorecardLower earnings in line with weaker prices and operational challenges at our ramp-up/development assets

Marketing Adj. EBIT ($)

2.4bn-2% y/y, robust oil results and a strong H2

Metals’ performance, offset the cobalt headwinds experienced in H1

Funds from operations ($)

7.9bn-32% vs 2018, reflecting a material lag effect (mismatch) of taxes paid in 2019 in respect

of 2018 earnings

Net debt ($)

17.6bn+19%, after recognition of $1.3bn of

incremental lease liabilities in 2019 due to IFRS 16, and $5.3bn of distributions and

buybacks, including $0.3bn to minorities

Distributions and buybacks ($)

5.0bn$2.7bn base distribution paid in 2019 plus $2.3bn of buybacks (including $0.3bn in

respect of 2018’s programme)

Adjusted EBITDA ($)(1)

11.6bn-26% y/y, mainly reflecting lower

commodity prices, and operational challenges at our ramp-up / development

assets

Industrial Adj. EBITDA ($)

9.0bn-32%, primarily driven by lower y/y

commodity prices (mainly cobalt and coal) and lower than expected cobalt sales at Katanga, due to delayed drying capacity

commissioning

Net capex cash flow ($)(2)

5.0bn+1%, vs 2018

Net income ($)

-0.4bnAfter c.$2.8bn of impairments, mostly related to

Colombian coal, Chad oil and African copper. Net income pre-significant items -58% to $2.4bn

Notes: (1) Refer basis of presentation on page 5 of the Preliminary Results 2019, refer to note 1 page 31 and Alternative Performance Measures page 112 for definition and reconciliation of Adjusted EBITDA/EBIT. (2) Net capex cash flow refers to net purchase and sale of property, plant and equipment.

Cash generated by operating activities before WC changes ($)

10.3bn-22% vs 2018

8


Industrial2019 Adjusted EBITDA: $9.0bn

Industrial Adjusted EBITDA

8.5 5.6

5.3

3.9

-0.5 -0.42018 2019

Corp and Other Energy ProductsMetals and Minerals

$9.0bn

Weaker pricing environment• Adjusted EBITDA down 32% to $9.0bn • Headwind from lower commodity prices, notably coal and

cobalt, as well as challenges at our African copper and Koniambo ramp-up/development assets

• Maintained strong cost performance within our base business

Metals and Minerals• EBITDA mining margin of 28% (38% in 2018); solid margin

ex ramp-up/development assets of 37% (41% in 2018)• Adjusted EBITDA of $5.6bn, down 34% in line with lower

commodity prices and challenges across our African copper portfolio, as well as ceasing to capitaliseKoniambo’s operating costs, as was the accounting practice through its development phase

Energy Products• Coal EBITDA mining margin of 36% (46% in 2018)• Adjusted EBITDA down 27%, as lower coal prices more

than offset the higher volumes from Hail Creek and HVO, and FX benefits from the stronger USD

$13.3bnEBITDA mining margins

2019 2018

Copper ex Africa 49% 48%

Copper 29% 40%

Zinc 33% 37%

Nickel ex Koniambo 34% 36%

Nickel 25% 36%

Metals and Minerals ex Africa/Koniambo 37% 41%

Metals and Minerals 28% 38%

Coal 36% 46%

9

200 783

4,253

562 446 34

13,276

8,964

2018A Price Volume Cost FX African copper Other 2019A


IndustrialAdjusted EBITDA bridge

Variance 2019 vs 2018 ($ million)

Volume: Full year contribution from HVO and Hail Creek acquisitions, partially offset by Koniambo and various sales timing differences (inventory movements)

Price: Copper -8%Zinc -13%Nickel +6%Cobalt -57%GC Newc coal -27%Ferrochrome -14%

Cost: Year-over-year change in coal take or pay liabilities (non-cash), affecting the base 2018 period.

Business impacted by extreme levels of inflation in Argentina and inflationary pressure (including power prices) in South Africa

FX: Mainly:AUD +c.$360MZAR +c.$150MKZT +c.$50MARS +c.$130M

African copper:Primarily Mutandascaling down and Mopani’s extended smelter shutdown

10

$3.6bnEBITDA

$0.6bnEBITDA

$1.8bnEBITDA


Industrial2019 key commodity department performance

Copper Zinc Nickel Coal

$3.0bnEBITDA

104156

148

101

8081

2018A 2019 Guidance 2019A

24

43 47

-410 13


211

396 398

288277


Ex Koniambo

47 46 45

40

27 26


Margin

Ex gold

• 1,371kt• 25% Group EBITDA• 109¢/lb calculated

EBITDA margin

• Production: -82.5kt YoY: mainly Mutanda production change, Alumbrera 2018 mine depletion and Mopani smelter outage

• Unit costs: +44¢/lb vs 2018: lower cobalt prices and higher input costs (notably acid) in DRC assets and impact of Mopani smelter outage

• Unit costs ex-Africa: -20¢/lb vs 2018: largely reflecting operational improvements and efficiencies, mainly in South America

• 1,078kt• 15% Group EBITDA• 98¢/lb calculated

EBITDA margin

• 120.6kt• 5% Group EBITDA• 241¢/lb calculated

EBITDA margin

• 139.5Mt• 31% Group EBITDA• $26/t calculated

EBITDA margin

• Production: +9.4kt YoY: restart of Lady Loretta and higher McArthur River production, partially offset by planned lower grades at Antaminaand safety stoppage at Kazzinc

• Unit costs: +17¢/lb vs 2018: primarily reflects lower by-product credits and impact of higher Zn TCs. Underlying gross mine unit costs were broadly steady year-on-year

• Production: -3.2kt YoY: mainly reflects H1 maintenance stoppages at Koniambo

• Unit costs: +187¢/lb vs 2018: after inclusion of Koniambo as a regular “commercial” operation (costs previously capitalised)

• Unit costs ex-Koniambo: +66¢/lb vs 2018: primarily weaker cobalt prices

• Production: +10.1Mt YoY: addition of HVO and Hail Creek, plus recovery at Prodeco, partially offset by dust-related production impacts at Cerrejon

• Unit costs: Thermal FOB cash cost -$2/t vs 2018: mostly due to favourable movements in AUD and ZAR

Mine costs (¢/lb) Mine costs (¢/lb) Mine costs (¢/lb) Thermal mine costs and margin($/t)

Ex Africa

11

1.74

1.09

0.74 1.32

-0.07 -0.05

2018 2019

Corp and OtherEnergy ProductsMetals and Minerals


Marketing 2019 Adjusted EBIT: $2.4bn

Marketing Adjusted EBIT ($bn)Steady performance (Adjusted EBIT -2% y/y), with a strong H2 metals’ performance and robust oil results largely offsetting the challenging cobalt market conditions experienced in H1

Metals and Minerals Adjusted EBIT -37%• Stronger H2 performance, recovering from a weak H1

characterised by the onset of trade tensions and challenging cobalt markets, which triggered inventory writedowns on material sourced from Glencore mines in earlier periods

Energy Products: Adjusted EBIT +78%• Robust contribution from oil

We maintain our long-term Marketing Adjusted EBIT guidance range of $2.2 to $3.2 billion

$2.37bn$2.41bn

12

3.2

1.6

2.3

1.9

2.12.4

2.8

2.5

2.82.9

2.42.4

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

200

8

2010

2012

2014

2016

2018

2020

+

Long-term guidance range:

$2.2-$3.2bn


13Industrial Capex

2019 Sustaining capex• $4bn

2019 Expansionary capex• $1.3bn

2019 Net purchase and sale of property, plant and equipment• $5.0bn cash outflow

2020-2022• Average of $5.0bn per annum• Capex profile includes:

• Astron oil refinery• Capitalisation of previous

operating leases – IFRS 16• Some TSF reinforcements to

meet more conservative scenario probability thresholds

Capex outlook ($bn)2019 Capex cash impact ($M)

4.03.7

3.2

1.51.3

1.0

2020F 2021F 2022F

Expansion

Sustaining

5.55.0

4.2

Key expansionary capital projects include:• Katanga Acid plant ➝2020• Zhairem➝2020• United ➝2021• INO nickel projects ➝2023• Astron oil refinery ➝2025• Oil drilling programmes (in sustaining below)

2019 Industrial capex

2019 Marketing capex (mostly leases)

IFRS 16 Leases / other

Sale of PP&E

Net PP&E cash


Balance sheetConservative financial policies provide balance sheet strength

Net funding ($) Net debt ($)

34.4bn 17.6bn+7% vs 2018; reflecting adoption of new lease accounting standard

+$2.8bn, including new leasing standard and after

$5.3bn of shareholder returns. Readily Marketable

Inventories (RMI) ($)

16.8bn-4%. Targeting RMIs consistently <$20bn

through the cycle

Liquidity ($)

10.1bnAvailable committed

undrawn credit facilities and cash

Liquidity and funding• Committed available liquidity of $10.1bn at 31 December• Bond maturities managed around c.$3bn ceiling in any

one year

Commitment to strong BBB/Baa Investment Grade• Moody’s: Baa1 (stable), S&P: BBB+ (stable)• Long-term target of maximum 2x Net debt/Adjusted

EBITDA, augmented by the upper band of our Net debt target range of $10bn to $16bn(1)

• 2020 focus on reducing ratio closer to 1x, and Net debt towards the c.$14-$15 billion(1) range in the current economic environment. Supporting this process could include:• Monetisation of select non-core long-term assets• Net return of cash margin calls in respect of

Marketing’s hedging activities(2)

• Solid cash flow coverage ratios:• FFO to Net Debt of 44.8%• Net debt to Adjusted EBITDA of 1.51x

14

1.2517.56 16.31

14.71

2019A IFRS 16 Leases 2019 Comparable 2018A

2019 Net debt on a comparable basis to 2018 ($bn)

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 December 2019, representing primarily chartered vessels and various storage facilities, where the majority of such commitments expire within 2 years. (2) Due to December 2019 strength in commodity prices, in particular, copper and oil up 6% each, c.$0.8 billion of additional cash collateral was paid in the month relating to our metals and energy marketing business’ hedging activities

Capital allocationBalancing shareholder returns, capital structure and growth

2020 proposed distribution in respect of 2019 cash flows:◦ 20 ¢/share (c.$2.6bn)

2020 equity cash flows will be prioritised for:◦ Net debt – reducing Net debt/Adjusted EBITDA ratio

closer to 1x and net debt towards the $14-$15 billionrange(1). Some return of cash margin calls in respect of Marketing’s hedging activities and monetisation of select non-core long-term assets could aid in this process

◦ Buybacks – accounting for above, as and when surplus free cash flow generation/balance sheet capacity allows

15

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 December 2019, representing primarily chartered vessels and various storage facilities, where the majority of such commitments expire within 2 years. (2) FFO materially impacted by the lag of income taxes paid in 2019, in respect of 2018 profitability (reduction in balance sheet income tax payable of $755 million), as well as $238 million of taxes paid in 2019, expected to be offset against future taxes due or refunded. (3) Totals may not add due to rounding.


2019 Capital allocation - cash ($ billion)(3)

Net working capital release

Funds from operations(2)

Distributions and buybacks

Net capex cash flow

Net acquisitions of subsidiaries and investments

2019 Capital allocationShareholder Returns• $5.3 billion - Distributions and buybacks

Growth/Reinvestment• $147 million - M&A + Other• $5.0 billion – Net capex cash flow

Surplus cash movement

2020 Modelling guidance


-4

13

2324

47

58

2018A 2019A 2020Guidance


2020 unit cash costs/marginsKey commodities

Ex gold

Production: 1.30Mt ± 50kt Unit costs: 120 ¢/lbUnit costs ex-Africa: 82 ¢/lb

Production: 1.27Mt ± 30ktUnit costs: 23 ¢/lb (58 ¢/lb ex Au)

Production: 125kt ± 5ktUnit costs: 351 ¢/lbUnit costs ex-Koniambo: 227 ¢/lb

Production: 135Mt ± 4MtUnit costs: Thermal FOB cash cost $45/t

Mine costs (¢/lb) Mine costs (¢/lb) Mine costs (¢/lb) Mine costs(1) and margin ($/t)

104

148

120

10181 82


Ex Africa211

398

351

277

227


Ex Koniambo

47 45 45

40

26 24


Margin @ $74/t Newc

17

• 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• Improved 2020 cost guidance

reflects stronger cobalt and PGM credits

• 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

ZincCopper Nickel Coal

Notes: (1) Thermal FOB cash costs


18Production Update2020 guidance unchanged

Group guidance – own source(1)

Notes: (1) Full Year 2019 Production Report, 4 February 2020, Page 17. (2) Excludes Volcan. (3) Group coal production within 150 million tonne coal cap

2019A 2020F 2021F 2022FCopper - excl. African Copper kt 1001 975 ± 25 980 ± 25 930 ± 25Copper - African Copper(2) kt 370 325 ± 25 355 ± 25 370 ± 25Copper - Group kt 1371 1300 ± 50 1335 ± 50 1300 ± 50

Cobalt kt 46 29 ± 4 32 ± 4 32 ± 4Zinc(2) kt 1078 1265 ± 30 1400 ± 30 1200 ± 30Nickel kt 121 125 ± 5 126 ± 6 129 ± 7Ferrochrome kt 1438 1340 ± 25 1450 ± 25 1450 ± 25Coal(3) Mt 140 135 ± 4 136 ± 5 140 ± 5Oil – entitlement interest Mbbl 5.5 6.5 ± 0.2 11.0 ± 0.4 12.7 ± 0.4

2020 illustrative “spot” annualised cashflowsMid-February spot commodities/FX

Notes: Totals may not add to rounding. (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 13. (4) Excludes working capital changes and distributions. (5) Copper spot annualised adjusted EBITDA calculated basis mid-point of 2020 production guidance Slide 18 adjusted for copper produced by other departments. Spot LME price as at 13 February 2020. 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 18. Relevant forecast NEWC price of $74/t, Glencore estimate as at 13 February 2020, less $5/t portfolio mix adjustment and mine costs of $45/t (Slide 17) giving a $24/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 18 adjusted for zinc produced by other departments less payability adjustment. Spot LME price as at 13 February 2020. Cost includes credit for by-products and custom metallurgical EBITDA. (8) Nickel spot annualised adjusted EBITDA calculated basis mid-point of production guidance Slide 18. Spot LME price as at 13 February 2020.

19


Group $bnCopper EBITDA 3.4Zinc EBITDA 1.6Nickel EBITDA 0.7Coal EBITDA 3.2Other Industrial EBITDA(1) 0.4Marketing EBITDA(2) 2.9Group EBITDA 12.2Cash Taxes, Interest + other -2.6Industrial Capex(3) -5.3Illustrative spot free cash flow(4) 4.3

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) 251 251 Net relevant production (kt) 948Full cash cost (c/lb) -120 -82 Spot Zn price (c/lb) 98.1Margin (c/lb) 131 169 Cost guidance (c/lb) -23Margin ($/t) 2896 3709 Margin (c/lb) 75.5Spot annualised Adj. EBITDA ($M) 3446 3230 Margin ($/t) 1666

Spot annualised Adj. EBITDA ($M) 1579

Coal(6) Guidance Nickel(8) Guidance

Total coal (Mt) 135 Production (kt) 125Relevant NEWC price ($/t) 74 Spot Ni price (c/lb) 599Portfolio mix adjustment @ February 2020 ($/t) -5 Cost guidance (c/lb) -351Thermal cost guidance ($/t) -45 Margin (c/lb) 248Margin ($/t) 24 Margin ($/t) 5465Spot annualised Adj. EBITDA ($M) 3240 Spot annualised Adj. EBITDA ($M) 683

Our 2020 priorities

2019 Investor Update


21Our 2020 priorities

Health & safety

Ramp-up / development

assets

Operating efficiency &

Capital discipline

Confidence

• Deliver a step-change in safety performance

• Implementation of an enhanced and sharper focused fatality reduction programme

• 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

• 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 and Net debt towards the $14-$15bn range

• Buybacks as and when surplus free cash flow / balance sheet capacity allows

Q&A


Appendix



2019 Industrial mine costs/margin reconciliation

Note: (1) 2019 Guidance based on the Investor Update presentation, December 2019, 2019 Half Year results presentation, 7 August 2019, Full Year 2019 Production Report, 4 February 2020.

24

2019 2019 Ex-Africa 2019 2019Copper(1) Guidance Actual Actual Zinc(1) Guidance ActualTotal copper production (kt) 1385 1371.2 1001 Total production (kt) 1110 1077.5Cu from other depts (kt) -140 -130 -130 Zn from Cu department (kt) -104 -102Net relevant production (kt) 1245 Payability deduction (kt) -151 -147Actual relevant prod. (kt) 1241 871 Net relevant production (kt) 855Actual Cu sales 1245 1228 866 Actual relevant production (kt) 828Realised Cu price (c/lb) 261 257 254 Relevant zinc sales (kt) 851Full cash cost (c/lb) -156 -148 -81 Actual Zn sales 828Margin (c/lb) 105 109 173 Realised Zn price (c/lb) 116 111Margin ($/t) 2315 2403 3814 Full cash cost (c/lb) -10 -14Implied EBITDA ($M) 2882 Margin (c/lb) 105.6 97.3Reported 2019 EBITDA ($M) 2951 3303 Margin ($/t) 2328 2144

Implied 2019 EBITDA ($M) 1981Reported 2019 EBITDA ($M) 1775

2019 2019 Ex-Koniambo 2019 2019Nickel(1) Guidance Actual Actual Coal(1) Guidance ActualTotal production (kt) 128 Total production (Mt) 140Actual production 121 97 Actual production (Mt) 139.5Net relevant production (kt) 128 Net relevant production (Mt) 140Actual Ni sales (kt) 118 95 Actual relevant production (Mt) 139.5Realised Ni price (c/lb) 632 639 642 Realised 2019 NEWC ($/t) 84 78Full cash cost (c/lb) -396 -398 -277 Portfolio mix adjustment ($/t) -11 -7Margin (c/lb) 236 241 365 Full cash cost ($/t) -46 -45Margin ($/t) 5214 5313 8047 2019 Margin ($/t) 27 26Implied 2019 EBITDA ($M) 667 Implied 2019 EBITDA ($M) 3780Reported 2019 EBITDA ($M) 626 760 Reported 2019 EBITDA ($M) 3624


252020 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

Listed entity market valuations and selection of other entities

Listed entities % owned Market value $MRussneft 25.0% 614EN+ 10.6% 793Volcan 23.3%(1) 429Rosneft 0.6% 436Century 47.4% 251Yancoal 6.8% 173Other(2) Various 192Total 2888

Selection of other entitiesUS oil infrastructureBaseCore (50% owned royalty company)Sale of Mototolo – deferred consideration

Preliminary Results 2019 Notes: Market values as at 12 February 2020. (1) Economic interest based on aggregate market cap derived from both share classes. (2) Other includes Trevali Mining, Polymet, Recyclex, Oz Minerals, Paranapanema and Merafe

26

Notes: (1) Note 20, Pages 76 and 77, Preliminary Results 2019, excludes Volcan bond.Preliminary Results 2019

Debt maturity profile – capital market notes$23.4bn as at 31 December 2019(1)

10.1

Liquidity @31.12.2019

2020 2021 2022 2023 2024 2025 2026 2027 post 2027

USD EUR GBP CHF AUD JPY

Managing annual debt maturities to around $3bn

27


Own source production2013-2019 History

1493

1546

1502

1426

1310

1454

1371

2013 2014 2015 2016 2017 2018 2019

Copper (kt)

1238

1295

1462

1523 1531

1580

1438

2013 2014 2015 2016 2017 2018 2019

Zinc (kt) Lead (kt) Nickel (kt) Cobalt (kt)

1399 1387

1445

1094 1090 1068 1078

2013 2014 2015 2016 2017 2018 2019

7.3

6.0 5.9

5.3

6.1

7.5

9.2

2013 2014 2015 2016 2017 2018 2019

315

308

298295

273 273

280

2013 2014 2015 2016 2017 2018 2019

4.5

3.5 3.6

4.24.0 3.9

6.4

2013 2014 2015 2016 2017 2018 2019

98101

96

115

109

124121

2013 2014 2015 2016 2017 2018 2019

126.3

136.8

122

115.4

110.5

118

123.9

2013 2014 2015 2016 2017 2018 2019

19 2123

28 27

42

46

2013 2014 2015 2016 2017 2018 2019

5.0

7.4

10.6

7.5

5.04.6

5.5

2013 2014 2015 2016 2017 2018 2019

Ferrochrome (kt) Coking coal (Mt) Semi-soft coking coal (Mt) Thermal coal (Mt) Oil entitlement interest (Mbbl)

28

Source: Glencore, as of 31 December 2019. (1) Refer Note 16, Preliminary Results 2019, Page 72Preliminary Results 2019

Buyback updateShares eligible for distribution

Buy back program completed on 6 December 2019• $4bn of shares purchased since July 2018

• 1.1 billion shares purchased • GBP average of 2.83/share• USD average of 3.64/share

Shares eligible for distribution as at 31 December 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: 14,586

Shares eligible for distribution: issued share capital less treasury and trust shares

Issued share capital 14,586,200 Less Treasury shares (@ 31 Dec 2019) 1,261,887 Less Trust shares(1) 129,992Shares eligible for distributions 13,194,321

FY 18: 13,832

FY 19F: 13,194 (1)

H1 19: 13,550

H1 18: 14,254

H1 15: 12,937

29


Responsibly sourcing the commodities that advance everyday life

It is our responsibility to not only deliver financial performance but also make a positive contribution to society and operate in a responsible and transparent manner

Our sustainability strategy1) Health: Become a leader in the protection and improvement of our people’s and

communities’ wellbeing2) Safety: Become a leader in workplace safety, eliminating fatalities and injuries3) Environment: Minimise any negative impact from our operations4) Community and human rights: Foster sustainable growth and respect human

rights wherever we operate

30


2020 Distribution timetableIn respect of 2019 cash flows

First tranche of proposed distribution 2020

Applicable exchange rate reference date (Johannesburg Stock Exchange (JSE)) Close of business (UK) 9 April

Applicable exchange rate announced on the JSE 14 April

Last day to effect removal of shares cum distribution between Jersey and JSE registers at commencement of trade 14 April

Last time to trade on JSE to be recorded in the register for distribution 21 April

Ex-distribution date (JSE) 22 April

Ex-distribution date (Jersey) 23 April

Distribution record date for JSE Close of business (SA) 24 April

Distribution record date in Jersey Close of business (UK) 24 April

Deadline for return of currency elections form (Shareholders on Jersey Register only) 27 April

Removal of shares between the Jersey and JSE registers permissible from 28 April

Applicable exchange rate reference date (Jersey) 1 May

Annual General Meeting (shareholder vote to approve aggregate 2020 distribution) 6 May

H1 distribution payment date 22 May

31

Well positioned



33Commodities that Glencore producesWe are a major responsible supplier of many of the enabling commodities needed for decarbonisation

Copper Cobalt Nickel Lead Zinc Vanadium Thermal Coal

Application BatteriesSolar PowerWind PowerMobilityElectronicsGrid

BatteriesWind PowerMobilityElectronicsGrid

BatteriesSolar PowerWind PowerMobilityElectronicsGrid

BatteriesSolar PowerWind Power

BatteriesSolar PowerWind Power

BatteriesSolar PowerWind PowerElectronicsGrid

Low-cost baseload power

Cement manufacture

Glencore production(1)

1.37Mt 46kt 121kt 280kt 1.08Mt 9.1kt 124Mt

Global supply(2)

20.6Mt 140.5kt 2.45Mt 5.1Mt 13.1Mt 108kt c.6 billion tonnes

Source: (1) Full Year 2019 Production Report. (2) Macquarie Commodities Compendium, 12 December 2019, 2019 mine supply for copper, lead, zinc and vanadium. Cobalt based on refined production. Coal – IEA Coal 2019 – Analysis and forecast to 2024, assuming 78% of 2018 global coal production is steam coal production. Nickel – Glencore estimate.

Cu Co Ni Pb Zn V Coal


34Well positioned for key future growth trendsNickel and cobalt

Electrification of Mobility

Notes(1) Glencore estimates, B3, based on 11.5Mt new passenger EV sales by 2025, ca. 10% penetration rate.

Nickel demand in electric vehicles (kt Ni)(3)

Cobalt demand in electric vehicles (kt Co)(3)

2019F 2025F

2019F 2025F

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

• Significant demand growth emerging as the world adopts new NMC and NCA battery chemistries• Nickel battery demand: c.50kt in 2010, c.200kt in 2019F,

>500kt in 2025F (inc 400kt Ni in EV)• Nickel in Electric Vehicles forecast at 800kt by 2030• Trend for higher EV penetration, larger battery size and

higher nickel chemistries (811 vs 622) suggest even higher nickel demand than forecast

• Lifecycle of nickel and cobalt well understood and readily recyclable• Majority of nickel containing steels/alloys are recycled• Glencore processed 35kt of recycled material to recover

5kt nickel and 3kt cobalt in 2019

• We are investing more than $2bn developing the next generation of Canadian nickel sulphide mines while upgrading our metallurgical facilities to responsibly supply nickel from our global operations


35Well positioned for key future growth trendsCopper

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.

Additional cumulative Cu demand needed (Mt Cu)(1)

Decarbonisation requires a lot of copper

10

14

18

22

26

2018A

2018 Refined copper supply: c.23.5Mt(2)

Current Government policies to reduce CO2 emissions by 2030 will require an additional cumulative 22Mtof 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)

Decarbonisation of energy:

• What holds for nickel and cobalt is equally true for copper• Decarbonisingenergy primarily impacts electricity

generation, industrial processes and mobility• Renewable energy sources are much more copper

intensive that conventional energy generation –additional copper required in generators, transformers, inverters and extra copper cabling

• Implementation of current CO2 emission policies is forecast to require an additional 22 million tonnes of copper by 2030.(1)

• Meeting this demand will require the mining industry to invest billions of dollars in capital each year to prolong the life of existing mines and develop new resources that are increasingly scarce


36

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 emergingSeaborne coal demand expected to remain broadly stable over the next 5 years• Robust demand growth from new Asian capacity

expected to offset lower demand in Europe and the USA• Asia’s share of global coal power generation up from c.20%

in 1990 to almost 80% in 2019 – “coal’s fate is increasingly tied to decisions made in Asian capitals.”(2)

Supply increasingly at risk • Accelerating depletion of the seaborne coal reserve base• Our production capacity is capped at 150Mtpy and will

decline as our existing portfolio depletes without reinvestment

• Development approval delays and shrinking financing options likely to limit planned future supply

Growing risk of failure to meet energy needs and compromised economic growth• Balance required between the need for affordable/reliable

energy and accelerating the shift to renewables• High quality coal is part of the energy solution

Energy demand fundamentals also support an ongoing role for coal, primarily in Asia

Notes: (1) Glencore analysis. (2) 17 December 2019, Keisuke Sadamori, IEA Director of Energy Markets and Security, https://www.iea.org/news/asia-is-set-to-support-global-coal-demand-for-the-next-five-years. (3) BP Statistical Review of World Energy June 2019. (4) Global Coal Plant Tracker, www.endcoal.org/tracker

Planned supply

Supply with no reinvestment

Supply risk

Global coal production of all coal qualities in 2018 reached 8 billion

tonnes(3)

Operating or under construction coal fired power plants at

July 2019 total 7,136(4)

https://www.iea.org/news/asia-is-set-to-support-global-coal-demand-for-the-next-five-years

http://www.endcoal.org/tracker

Documents

Preliminary Results 2019 - Glencore81a00dd0-e05c-4d... · Preliminary Results 2019 ... Marketing underpinned by oil’s performance ... (LTIs) are recorded when an employee or contractor