sell-side analyst visit copper

Sell-side analyst visit Copper

30 September 2014

Forward looking statements

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2

Agenda

• Welcome – Senior Management Team • Who we are and introducing our Senior Management Team

• Telis Mistakidis – Head of Copper • Global and Australian copper update

• Mike Westerman – Chief Operating Officer Copper Assets North Queensland • Ernest Henry Underground Mine • Mount Isa Copper Operations

• Deon Van Der Mescht – Chief Executive Officer CSA Mine

• Cobar: future growth options

• Questions

3

Glencore global copper

Copper overview

5

Third largest global mined copper producer

• 2013 mined pro-forma production of 1,497kt

Largest trader of copper concentrate and metal

• 2013 marketed volumes exceeded 2.8Mt copper units (in both concentrates and metal)

2013 mined copper production (kt)

Source: Glencore, company reports.

0 500 1000 1500

Glencore 2015

Rio Tinto

Anglo American

BHPB

Glencore

Codelco

Freeport

Glencore copper assets

6 Industrial assets comprise: 14 mines, 6 smelters, 5 refineries and 14 EW circuits, assets in 36 countries, marketing offices spread across five continents

Cu 2015

Copper asset portfolio optimised

7

c.$300M

industrial merger synergies and other cost savings by end

2014

Post-integration cost efficiencies and focus now

ingrained in industrial asset

structures

Q1

first quartile cost positions for industrial assets on track for end

2015

$7.9bn

combined Glencore and Xstrata expansionary copper capex since

2009(1)

Q1 Q2

Illustrative C1 metals cash cost curve

Note: (1) Excludes Las Bambas.

Cu 2012

Unit mine costs leveraged lower through expansion of lower-cost volumes by 2015:

• DRC Copper: $1.48/lb • Collahuasi: $1.75/lb • Antapaccay: $1.00/lb • Antamina: $0.47/lb

North Queensland copper assets

Copper Assets North Queensland (NQ) – overview

9

Copper Assets North Queensland • 2,584 employees (including contractors) • Significant contributor to the Queensland economy

Mount Isa Copper Operations • Two underground copper mines – Enterprise, X41 • Commenced Copper Mining in 1966 • 1800m deep • Life of Mine to 2020; reserves of 40Mt @ 2.43%

Ernest Henry Mining Pty Ltd

• Original Open pit – closed 2011 • Underground mining commenced 2009 • Life of Mine 2026; reserves of 74Mt @ 1.04% Cu, 0.53g/t Au

Copper Smelter • 900kdmtpa capacity • Scheduled closure in 2016 Refinery • 300ktpa capacity

2013 NQ transformation

10

Safety performance improved

Production maintained

• At time of acquisition (May 2013), the NQ copper business was forecast to generate a negative full year cash flow

• Key decisions and actions taken to achieve a positive cash flow outcome: • Removal of negative margin revenue

streams » Magnetite operations » Mount Margaret open pits

• Review of sustaining and expansionary capital expenditure

• Simplification of management structure to align with value delivery

• In 2013, NQ copper assets delivered a

positive free cash flow, achieving a 7 month turnaround

33.544.555.566.57

60

70

80

90

100

110

120

Jan 13Mrz 13Mai 13Jul 13Sep 13Nov 13Jan 14Mrz 14Mai 14

HPI

FR

DIS

R

DISR

HPFR

0

50

100

150

200

250

-

,5

,10

,15

,20

,25

Cu

in C

on (k

t) Fu

ll Ye

ar

Cu

in C

on (k

t)

Actual Budget

NQ transformation – consolidation of assets along the value chain

11

Copper ore sourced from Mount Isa

Copper concentrator

Copper smelter Copper anode

Townsville copper refinery

(cathode)

Glencore Port Operations

Mount Isa Mine

Copper ore sourced from Ernest Henry

Copper concentrator

Ernest Henry Mining

NQ transformation – streamlining management structure

12

Streamlined management structure

20x Senior Management 45x Corporate

Office

Chief Executive

Xstrata Copper

Corporate Functions

Brisbane Office

Chief Operation Officer NQ

MICO

EHM

Cu Smelter

HR

Finance

Corporate Affairs

EHM UG Project

Chief Operating Officer NQ

Chief Mining Officer

Chief Processing

Officer

Chief Financial Officer

• Previous management structure very siloed and unconducive to integrated production

• Streamlined structure enables: » Effective decision making across three

geographical locations » Sharing of resources across the NQ copper

assets, reducing capital requirements » Ability to leverage Glencore expertise in

shipping and logistics » Standardisation of work practices to

maximise value

NQ transformation – reducing the 2013 cost base

13

Operating Expenditure initiatives • Management restructure and streamline • Negative margin operations removed • Improved productivity • Renegotiation of contracts 18% Headcount Reduction • Staged approach to headcount reduction

• Production profiles sustained • No impact on safety • Focus on Contractor reduction

• Rationalisation of support services and duplication

• Consolidation of Business on site

30 % reduction in sustaining

capital expenditure 25% reduction in expansionary

capital expenditure

Capital Expenditure initiatives • Low probability study work terminated • Marginal investment cases abandoned • Gold plated solutions removed

3 % reduction in operating costs

EHM – Ernest Henry Underground Mine

EHM – transition to a long life, low cost underground producer

15

Sub level caving process EHM underground mine plan

• From 1995 to 2011 successful open pit • Innovative Sub level caving utilised to achieve viable low cost, low grade ore operation • $589M brownfield project approved in December 2009 to convert from underground trucking

operation • Develops to over 1,000m below the surface and 475m below the open pit • Extends life of mine to 2026 • Hoisting commenced end of May 2014 • Production rates ramp up to 6.0Mtpa in 2015, exceeding feasibility expectations

EHM – underground mining flowsheet

16

Transfer System Feeders Trunk Conveyor Automation

Crushing System Transfer Level Automation Crusher operation

Sub Level Cave Caving initiated Transfer Automation Resources and

Reserves Ore Passes

Hoisting System Loading Station Winder System Surface System Feeders Conveyor

Other Ventilation system In Pit Dewatering Underground Dewatering

EHM – major project infrastructure

17

600m overland conveyor Underground primary crusher

Underground surge bin Loading station

0%1%2%3%4%5%6%

Jan 14 Feb 14 Mrz 14 Apr 14 Mai 14 Jun 14 Jul 14 Aug 14

Cumulative Milling Variance 2014

Glencore Owned Smelter Slag 3rd Party

-4%

-2%

0%

2%

4%Ja

n 13

Feb

13M

rz 1

3Ap

r 13

Mai

13

Jun

13Ju

l 13

Aug

13Se

p 13

Okt

13

Nov

13

Dez

13

Jan

14Fe

b 14

Mrz

14

Apr 1

4M

ai 1

4Ju

n 14

Jul 1

4Au

g 14

Sep

14

Au Recovery Variance

-3%-2%-1%0%1%2%3%

Jan

13Fe

b 13

Mrz

13

Apr 1

3M

ai 1

3Ju

n 13

Jul 1

3Au

g 13

Sep

13O

kt 1

3N

ov 1

3D

ez 1

3Ja

n 14

Feb

14M

rz 1

4Ap

r 14

Mai

14

Jun

14Ju

l 14

Aug

14Se

p 14

Cu Recovery Variance

EHM – concentrator

18

Operational improvements yielding results Background • Historically utilised as a single-line single-ore

concentrator • Evolution of the plant enabled processing of

additional feed sources, including low-grade ores, smelter slag, and 3rd party ores

2014 YTD operational improvements • Opportunity to introduce low-milling rate

operational strategy, improving grind size and overall recoveries:

» Cu recovery improved 0.3% post change » Au recovery improved 2.9% post change

• Utilisation of additional plant capacity: » Milled tonnes up 4% YTD » Unit costs (AUD/t) down 6% YTD

• Asset management strategy remains a core focus:

» Underlying plant runtime >92%

EHM – unit cost performance and project upside

Current performance in line with expectations • Early ramp up to 6.0Mt planned for 2015, 12 months ahead of schedule • Mining unit costs reduced by 50% • 42% reduction in EHM C1 Unit costs by end of 2015, taking operation from 4th Quartile to 2nd

Quartile

Upside emerging • Cave productivity already above nameplate capacity of 6.0Mtpa • Ability to enhance grade (by up to 5%) due to Cave draw flow predictability • Low rate milling strategy delivering higher than expected recoveries • Leveraging Mount Isa expertise and productivity agenda

19

EHM – possible mine extension 2025 to 2030

• Orebody currently open at Depth • Potential to increase current Resource to below 1200 sub level • Explore DD intersections from 1992-94 surface campaign of 42m @ 1.37% Cu • Mineralisation adjacent EJ and open at depth and along strike of existing ore domains

• Low grade halo conversion at higher recoveries and higher production rates

20

EH631 - 190m @ 0.76%

1200 RL

EHM SLC orebody

Drilling Target

EHM – potential for mine extension 2025 to 2030

• Additional drilling enables recovery of low grade material along footwall of the main sub level cave (SLC)

• Additional mining to the east of the main SLC

Footwall Overdraw East Extension

Without FW rings With FW rings

21

Mount Isa Copper Operations (MICO)

MICO – overview

23

• 6.4Mt production rate via underground Sub Level Open Stoping methods

• Mining 4km along strike & between 500m and 1800m below surface production from ~50 stopes/annum.

• Extraction from two mines spilt approximately 60:40 in tonnage

Remaining Reserve Depleted Reserve

Enterprise Mine

23Mt @ 3% Cu

X41 Mine 30Mt @ 1.8% Cu

X41

Sha

ft

M62

Sha

ft

2 km

4 km

Mount Isa Copper Mine • Underground Mining commenced in 1966 • 1,200 km of development drives • Over 200Mt of ore recovered from mine

N

U62

Sha

ft

R62

Sha

ft

MICO – overview

24

4km

• Aged Asset with high grades and very productive infrastructure • Demonstrated ability to reliably deliver high volumes of copper at robust margins • Requires focus on operational discipline and management of variability (complexity):

» Development ~12km primary / 9km rehabilitation per year » Large number of active mining areas spread out towards extremities of ore bodies » Labour and equipment intensive » Mobile fleet comprising 10 Jumbos, 3 cable bolters, 6 production drills, 11 trucks, 15

loaders

MICO – operational discipline achieving results: mobile equipment

25

Truck utilisation trend LHD utilisation trend

• Disciplined tracking of idle, standby and delay times enabling significant utilisation improvement

• Increased utilisation of truck and loader fleet allows for absorption of additional tkms as transfer approaches 2.5 rehandle ratio

• Underground shift changes remain key idle time driver, with mine firings, distance to work area and mine complexity significant contributors

Jumbo idle time (per unit per day)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

,0

,10

,20

,30

,40

,50

,60

,70

2010 2011 2012 2013 Est 2014

Thou

sand

Hou

rs

Operating Hours UofA Availability

0%10%20%30%40%50%60%70%80%90%

,0

,10

,20

,30

,40

,50

,60

,70

,80

2010 2011 2012 2013 Est 2014

Thou

sand

Hou

rs

Operating Hours UofA Availability

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Hou

rs Id

le ti

me

MICO – operational discipline achieving results: concentrator

26

Ore milling rate performance Concentrator unplanned downtime

Embedded approach to asset management • Increased processing volumes • Improved plant performance • Reduction in reactive maintenance and

contractor demand Systematic approach to controlling variation • Mitigate repeat events – sustain the

baseline • Drives continuing incremental improvements • Devolved accountability and ownership

Incremental copper recovery improvement

420

440

460

480

500

Jun

11

Sep

11

Dez

11

Mrz

12

Jun

12

Sep

12

Dez

12

Mrz

13

Jun

13

Sep

13

Dez

13

Mrz

14

Jun

14

Ore

Mill

ing

Rat

e (tp

h)

0

1000

2000

3000

4000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014YTD

Unp

lann

ed M

aint

enan

ce (m

in/m

onth

)

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Jun

12

Sep

12

Dez

12

Mrz

13

Jun

13

Sep

13

Dez

13

Mrz

14

Jun

14

Incr

emen

tal C

oppe

r Rec

over

y

MICO – future resource potential: underground

27

X41 MINE

R62 SHAFT

U62 SHAFT

North 3500 Remake

Potential target size – 43Mt

HWL Basement

Potential target size – 17Mt S3500/W-block

Potential target size – 3.5Mt

BQF Perched (Current)


ENTERPRISE

North 3000 Remake


N

BCZ Blind


SSW 1100


650 OB


Blind East 3500

Potential target size – 1.5Mt

Target Size

N3000 remake ~30Mt

3500 remake ~40Mt

W Block South ~3.5Mt

SSW 1100 OB ~10Mt

Perched HWL ~17Mt

Buck Quartz Fault ~40Mt

N650 OB ~17Mt

SW 1100 OB ~4Mt

MICO – future resource potential: surface resources

28

Black Rock Open Cut

Leach Circuit Concept

Background • Progression of several open pit studies

completed since the 1970’s, hampered by infrastructure and metallurgy challenges

• The BROC cutback addresses these challenges:

» Pit has been optimised on Copper ore types only

» Designed not to interfere with high replacement cost infrastructure

» Metallurgical test work programs producing promising results on treatability of BROC ores

Potential • Extension of current pit depth to 225m and

600m from N – S • 50m nominal standoff from infrastructure

restricts pit boundary • Total Strip ratio of 5.4 (or 4.0 inclusive of

Pb/Zn Ore)

Copper smelter and refinery

Mount Isa Copper Smelter - overview

30

2014 Copper smelter • 200 employees • 22 FTE contractors • 900 kdmtpa Concentrate capacity • 97.5% recovery • Acid plant owned and operated by

Incitec Pivot

Copper Smelter Equipment • 35kwmt concentrate storage

capacity • Isasmelt Vessel • 2 x Rotary Holding Furnace • 4 x Piece smith Converters • 2 x Anode Furnaces • 1 x Anode Wheel (80t/hr)

Auxiliary equipment

• ESP Leach Plant (4 tph capacity) • Converter Slag/Reverts Crushing

Plant (60tph capacity) • CRL electrolyte recovery process

Mount Isa Copper Smelter

31

Isasmelt campaign life

Converter campaign life

0

50

100

150

200

250

1 2 3 4 5 6 7 8 9 10 11

Refr

acto

ry L

ife (W

eeks

)

Campaign #

100

150

200

250

300

350

400

2001 2004 2006 2009 2012 2014 2017

# of

Cha

rges

Com

plet

ed

Year C1 Charges C2 Charges C3 Charges C4 Charges

Asset Management • Smelter outage June 2014

» Refractory replacement across 4 vessels » Significant overhaul of primary smelter

off-gas treatment system • Converter hood replacement program in

progress to sustain SO2 capture through to closure

• Strong, integrated IPL/MIM planning process achieved 24% improvement in off-gas treatment in 2014

Outlook • Isasmelt refractory capable of 4+years • Scheduled for closure - December 2016 • Personnel retention process in place through

to smelter closure • Treatment of third party concentrate

32

Standing on pallet rack rail

Fell to this spot

Townsville Copper Refinery

Tankhouse Parameters • ISA Process Technology • 37 sections, 3 operating circuits, 1162 operating cells • 2 crop cathode cycle, 8 day crop 1, 10 day crop 2

CRL Operations • Cathode annual production target 288,500t • Slimes annual production target approx. 900t • Cathode registered on LME and SHFE

Anode Weight 350kg

Cathode Weight 75kg

Anodes per cell 45/44

Anode Scrap Rate 17.8%

Current Efficiency 95.5%

Time Efficiency 96.0%

Current Density 326 amps/sqm

Cell Current 26,500 amps

Kunz Cranes 2

Townsville Port Operations

33

Berth 8 – Townsville Port Facility • All weather berth • 3 storage sheds, total capacity of 160kt • Dedicated rail loop and tippler

Environmental Authority Approvals • Concentrates (Zn, Cu, magnetite, revert

and dross) – 3.86MTPa • Lead concentrate – 140kTPa • Fertiliser – 1.2MTPa

Relocation Project to Berth 8 • $86 million investment (jointly funded) to

relocate to a new berth • Offers:

» 2.5 times more shiploading capacity » Greater berth efficiency » Significant improvements in

environmental performance

Third-party processing

34

• Currently progressing options on tolling both copper ore and concentrates through the EHM and Mount Isa concentrators and smelter to supplement own sources.

» Allowing local mines to leverage our existing asset base for processing copper ores and concentrates

» Smelter value-add to copper product stream through removal of logistic constraints and delays

» Established logistics chain to market

CSA Mine – historical overview

36

Sinking No.1 Shaft (Feb. 1962)

CSA Mine (Jan. 1964)

• Discovered in 1871 • Current operation began in 1967 • Initially produced Cu/Ag/Zn/Pb – now Cu/Ag

only • Acquired by Glencore in 1999 ending a year

long shut down • 25Mt of ore extracted to date • Highest grade copper mine in Australia

CSA Mine – today

37

• High grade asset with aged infrastructure • Amongst the three deepest mines in

Australia – currently 1,640m below surface • Producing 1.1Mtpa of copper/silver ore (4.6%

Cu, 15.2g/t Ag) • Producing 162ktpa of copper/silver

concentrate (28.5% Cu, 80g/t Ag) • Concentrate transported by rail from mine to

Newcastle – sold to smelters overseas. • Reserves: 5.8Mt @ 4.4% Cu, 17.3g/t Ag • Resources: 11.5Mt @ 5.7% Cu (2.7Mt

Measured, 3.1Mt Indicated, 5.7Mt Inferred – Dec 2013)

• Current Life of Mine – 10 years

CSA Mine No.2 Shaft

CSA Mine – additional potential cost reduction

38

CSA Mine Processing Plant Upgrade of current infrastructure • Ventilation and hoisting capacity to facilitate execution

of new infrastructure, replacing trucking at depth • Majority of current infrastructure upgrades to be

completed by end 2015 and allow/facilitate: » initiation of new infrastructure establishment » increased development of resource, particularly in the

new QTS Central ore body

Increase current ore resource to enhance project capital returns

• Potential exists to double current resource within the new QTS Central ore body and the down plunge extent of the QTS North ore body

• Magnitude and success of the ore resource increase will dictate the size of the new infrastructure investment

QTS Central • Discovered 2014 • Inferred: 1.0Mt @ 6.1% Cu • Open at depth

Known anomaly • @ +5% Cu

Potential • @ +5% Cu

Ore body open at depth (2-3 km below surface)

Decl ine base 1.6km below surface

QTS North Mineral Resource

8.9Mt @ 5.9% Cu (525 Kt Cu)

Potential • @ +5% Cu

Inferred Resource

Indicated Resource

Measured Resource

Depleted

Historic Western & Eastern System Workings

Remaining Western & Eastern Resources

2.2Mt @ 4.4% Cu (97 Kt Cu)

QTS South Mineral Resource 0.3Mt @ 7.4% Cu (22 Kt Cu)

No.2 No.1 Shaft

s

Shaft base 1.1km below surface

CSA mine – significant resource growth potential

Conclusion

Summary

The future of our Australian Copper operations is via expanded mining and concentrate production

• We are continuing to invest in our business • Major projects are progressing in line with targeted expectations • We have mature assets – efficient mining and processing techniques, improving productivity

and lowering costs is critical for our future • Significant resources and reserves remain for potential future development • We remain committed to high standards in the areas of health, safety, environment and

community

41

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