2017 Preliminary Resultsb9d5e11c-5460-438f... · 2/21/2018 · 2017 Marketing Adjusted EBIT: $3.0bn Preliminary Results 2017 7 Strong marketing performance (+3% y/y, +10% like-for-like)(1)

Preliminary Results 2017

21 February 2018


1

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. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. 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 discussed in Glencore’s 2016 Annual Report, which will be updated in the 2017 Annual Report that will be published in early March 2018.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. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the UK Financial Conduct Authority and the Listing Requirements of the Johannesburg Stock Exchange Limited), 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 no statement in this document should be interpreted to mean that earnings per Glencore share for the current or future financial years would necessarily match or exceed the historical published earnings per Glencore share.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 making of this document does not constitute a recommendation regarding 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


Coal train from the Calenturitas mine, Prodeco, Colombia

• Our strongest performance so far◦ Adjusted EBITDA(1,2) of $14.8 billion, up 44%; Adjusted EBIT(1,2) of $8.6 billion, up 118%◦ Net income attributable to equity holders of $5.8 billion, up 319%◦ Funds from operations of $11.6 billion, up 49%◦ Recommended 2018 distribution of $2.9 billion ($0.20c/share)(3) payable in two equal tranches (May/September)

• Marketing delivers again◦ Marketing Adjusted EBIT of $3.0 billion, up 3% (up 10% like for like)(4)

◦ Strong performances from Metals and minerals and Energy products segments, up 28% and 9% respectively◦ Broadly consistent like-for-like contribution from Agricultural products in difficult market conditions

• Another strong unit cost/margin performance has boosted our Industrial earnings◦ Industrial EBITDA up 60% to $11.5 billion◦ Mine unit cash costs/margins generally better year on year (Cu: 87c/lb, Zn: -16c/lb (10c/lb ex Au), Ni: 191c/lb, Coal: $32/t margin)◦ Some emerging inflationary pressures and FX impacts more than offset by higher by-product credits

• Conviction to create value through partnerships, M&A and organic reinvestment◦ Conservative financial policies underpin balance sheet strength and flexibility: Net debt of $10.7 billion(5) within $10-$16bn target range◦ $1.6 billion invested in capital efficient growth (Volcan, Mutanda)(6) offset by $1.0 billion of cash in through partnerships (Trevali, HG

Storage, BaseCore)◦ Expansionary capex of $1 billion; total capex of $4.2 billion


32017 Highlights

Notes: (1) Refer to basis of presentation on page 7 of the Preliminary Results 2017. (2) refer to note 2 page 55 and Alternative Performance Measures page 118 for definition and reconciliation of Adjusted EBITDA/EBIT. (3) See slide 26 for basis of calculation. (4) Like for like basis adjusts 2017 Marketing EBIT to 100% interest in Glencore Agriculture Limited. (5) Excluding $0.7bn Net debt assumed as part of the Volcan transaction close to year end, refer to page 121 of the Preliminary Results 2017. Refer slide 14 for Volcan accounting treatment. (6) HVO and Chevron South Africa announced in 2017, pending closure in 2018 subject to customary regulatory approvals.

Safety


4

Nine fatalities from nine incidents in 2017• Kazakhstan 2, Bolivia 2, South Africa 2, Zambia 1, Italy 1, Peru 1

Board and senior management committed to improving safety performance

2017 progress:• Reduction in fatalities from 16 in 2016• 1st year without a multiple fatality incident• African Copper: 1 fatality in 2017, lowest in history for this focus

asset region• 88% of our Assets (155 of 177) reported zero work-related

fatalities in the last five years (2013 to 2017)• LTIFR 1.02, 46% improvement vs 2013 baseline• TRIFR 3.09, 62% improvement vs 2013• 90% reduction in New Occupational Disease cases compared

to 2013 baseline

c.146,000 employees and contractors at the end of 2017(1)

Total recordable injury frequency rate (per million hours)

8.05

5.00

4.354.05

3.10

4.50 4.50

4.70

4.25

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

2013 2014 2015 2016 2017

GlencoreICMM (23 companies)

Notes: 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. (1) Excludes Glencore Agriculture Limited.

Financial performanceSteven Kalmin – Chief Financial Officer


Copper anode, Mount Isa copper smelter, Australia


62017 Financial highlights

A record year Leading mine costs(1)

Marketing volumes(2)

Conservative funding structure

Robust cash flow coverage ratios

Acquisitions

Partnerships (cash in)

Distributions(3)

Recommended

Adjusted EBITDA

+44%$14.8bn

AdjustedEBIT

+118%$8.6bn

Marketing Adj.EBIT

+3%$3.0bn

Net Income toequity holders

+319%$5.8bn

Funds from operations

+49%$11.6bn

Net funding +1%$32.9bn

Net debt -31%$10.7bn(4)

Committed Avail. liquidity $12.9bn

Cu4.0Mt

+14%

Zn2.8Mt

+40%

Pb1.0Mt

+11%

Ni204kt

-8%

Ferroalloys

8.7Mt+14%

Ali/Alu10.7Mt

-6%

Cobalt

42kt+8%

T.Coal106.3Mt

+1%

Crude Oil

1.2bnbbl+33%

$1.6bn •Volcan voting shares

•Mutandaminority

$1.0bn •HG Storage•Basecore• Trevali

$2.9bn • $1bn base from Marketing

• $1.9bn from Industrial

Cu87c/lb

Zn-16c/lb10c/lb ex Au

Ni191c/lb

Coal$32/t

margin

FFO to Net debt

108%+119%

Net debt toAdj. EBITDA

0.72x-52%

Committed available liquidity $12.9bn

Bonds issued $2.0bnBonds repaid $4.4bn

Industrial Capex

$4.0bn • $1bn growth• $3bn sustaining

Notes: (1) Refer slide 22 for calculation and reconciliation to reported Adjusted EBITDA. (2) Copper, zinc, and lead estimated metal unit contained in metal and concentrates (3) See slide 26 for calculation. (4) Excluding $0.7bn Net debt assumed as part of the Volcan transaction close to year end, refer to page 121 of the Preliminary Results 2017. Refer slide 14 for Volcan accounting treatment.

2017 Marketing Adjusted EBIT: $3.0bn


7

Strong marketing performance (+3% y/y, +10% like-for-like)(1)

reflecting supportive conditions, in line with improved fundamentals for key commodities

Metals and mineralsMarketing Adjusted EBIT up 28% over 2016, with strong contributions from most commodity departments. Copper (including cobalt), zinc and nickel benefited from tightening market conditions while ferroalloys was helped by improved steel industry fundamentalsEnergy ProductsUp 9%, in line with solid contributions from both oil and coal. The oil result was aided by a meaningful increase in volumes while coal benefited from the continued impacts of Chinese supply restrictions and generally tighter supply conditionsAgricultural Products(2)

Like for like, Adjusted Marketing EBIT was down 26% compared to 2016, but up 7% at the Adjusted EBITDA level, due to a higher depreciation charge in 2017. Overall satisfactory result, given the general industry margin pressures. Following sale of a 50% interest in December 2016, reported Adjusted EBIT, was down 63% compared to 2016

Marketing Adjusted EBIT ($M)

15622005

909

990

522

192

2016 2017

Metals and Minerals Energy ProductsGlencore Agriculture Corp and Other

Notes: (1) Like for like basis adjusts 2017 Marketing EBIT to 100% interest in Glencore Agriculture Limited for full year. (2) The above data represent Glencore’s interest in Glencore Agriculture Limited, being 49.9% post 1 December 2016, and 100% pre the sale date. Following the completion of the sale, the results from Agricultural products have been combined under Marketing activities and the 2016 comparatives (relating to Industrial 2016 EBITDA/EBIT of $138 million and $104 million respectively) have been reclassified from Industrial to Marketing activities. See page 32 and Note 2 of the Preliminary Results 2017.

29193012

2018 guidance: Marketing – continued delivery of stable cash flows


8

Forward Marketing EBIT guidance of $2.2-3.2bn• Continuation of current market conditions would suggest a

2018 performance in the upper-half of the range• Achieving such upper end of the guidance range is lent support

by a combination of:o Production/volume growtho Tight / tightening physical market conditionso Deployment of additional working capital vs. recent yearso Higher interest rates

Marketing: stable earnings with high cash conversion • Earnings generated from the handling, blending, distribution

and optimisation, in substantial scale, of physical commodities, augmented by arbitrage opportunities

• Highly diversified by commodity / geography• Defensive but with upside in constructive marketing conditions• Strong earnings base, low cost of capital and low capex

intensity produce consistently high returns on equity

Marketing Adjusted EBIT ($M)

0

500

1000

1500

2000

2500

3000

3500

200

8

200

9

2010

2011

2012

2013

2014

2015

2016

2017

2018

E

2012 2013 2014 2015 2016 2017

Marketing Adjusted EBIT

Indexed

Industrial Adjusted EBITDA

Indexed

Long-term guidance

range: $2.2-$3.2bn

FY:$

2.2

-$

3.2b

n

Marketing earnings resilience (Indexed)

2017 Industrial Adjusted EBITDA up 60% to $11.5bn


9

Record Industrial performance with EBITDA up 60% to $11.5bn, reflecting higher commodity prices, offset by some weather and volume related impacts, moderate cost inflation and FX impacts in our key operating jurisdictions

Metals and minerals• EBITDA mining margin of 38% vs 33% in 2016• Adjusted EBITDA up 37%, in line with significantly higher prices

(cobalt +108%, zinc +38% and copper +27%). Modest offset from lower production and the associated impact on costs, as well as the weaker US dollar against various producer currencies

Energy Products• EBITDA coal mining margin of 41% vs 31% in 2016• Adjusted EBITDA up 139%, reflecting higher year on year coal prices, up

c.30-35%, offset by weather and strike related volume impacts and some inflationary cost pressures

Industrial Adjusted EBITDA by segment ($M)

Industrial Adjusted EBITDA bridge ($M)

60308281

1503

3599

2016 2017

Metals and Minerals Energy Products Corp and Other

7,205

11,538

7205

6300865

866 337 322 600 177 11538

2016

EB

ITD

A

Pric

e

Vol

um

e

Co

st

Infla

tio

n FX

Co

alH

edg

ing

Oth

er

2017

EB

ITD

A

Cost: including Australian coal strikes, higher royalties, lower grades at Antapaccay, and generally higher fuel and other energy costs

Volume: Mutandaweather, Mopani power, Alumbrera end of mine variability, coal strikes, sale of Africa zinc

FX: ZAR: -9%, KZT: -5%, AUD: -3%

Evolution of Industrial mining unit cash costs/margins


10

Strong 2017 mine cost/margin performances across the business reflected in flat/improved year on year costs/margins

• Modest inflationary pressures and unfavourable FX movements more than offset by higher by-product credits

Further improvement being generally guided for 2018, basis January 2018 commodity prices, underpinned by volume growth, continued operational cost focus and higher by-product credits(1)

• Copper: 80c/lb: Higher volumes and cobalt and zinc by-product credits expected to more than offset modest USD cost and FX pressures

• Coal: $37/t margin: Improved margin reflects benefit of increased prices, partially offset by a higher blended portfolio unit cost calculation (revenue-linked royalties, FX impact from stronger producer currencies, higher fuel prices and product mix) and an increased portfolio mix adjustment that reflects divergence in pricing of non-NEWC coals.

• Nickel: 180c/lb: higher cobalt and copper by-product credits more than offset impact of declining PGM and copper grades in Sudbury. Koniambo operating costs continue to be capitalised until end 2018

• Zinc: -31c/lb (-4c/lb ex Au): General inflation/FX pressures more than offset by higher lead, copper and gold credits

Cu costs(2) vs price (c/lb)

Ni costs(2) vs price (c/lb)

136 87 87 80

250221

280324(3)

2015A 2016A 2017A 2018E

269 265 191 180

516436 472

643(3)

2015A 2016A 2017A 2018E

41

-5 -16-31

16 10-4

87 95

131161(3)

2015A 2016A 2017A 2018E

Zn costs(2) vs price (c/lb)

40 39 46 52

1618

3237

2015A 2016A 2017A 2018E

Coal costs(2) vs margin ($/t)

Ex Au Ex AuEx Au

Notes: (1) By-product pricing as per January 2018 commodity prices. (2) Disclosed cost is full cost including all cash costs to allow reconciliation and generation of EBITDA as per slide 22. See slide 21 and 22 for production volumes underlying 2018 full year cost guidance. (3) Spot cash LME as at 16 February 2018.

Industrial Capex – $4bn in 2017, c.$4.5bn annual average 2018-2020


11

Industrial capex ($bn)

Industrial Capex ($bn) By segment ($bn)

2017 Industrial capex of $4bn, in line with earlier guidance• $3bn sustaining capex; $1bn expansionary capex• Expansionary capex focused on Katanga, Mopani and

Koniambo

2018-2020 Sustaining capex: average c.$3.3bnKey capex additions by commodity:• Coal: HVO acquisition• Oil: Chad West drilling programme

2018-2020 Expansionary capex: average c.$1.2bnKey capex highlights/additions by commodity:• Copper: Collahuasi and Antamina optimisation, Katanga acid

plant/cobalt process improvements, Mopani• Zinc: Zhairem• Nickel: Raglan Phase II, Onaping Depth, Sudbury Process Gas • Coal: United OC

1.93.0

1.8

4.7

7.7

10.5

12.911.3

8.6

5.7

3.3 4.0

200

6

200

7

200

8

200

9p

f

2010

pf

2011

pf

2012

pf

2013

pf

2014

2015

2016

2017

3.4 3.4 3.2

1.4 1.3

0.8

2018E 2019E 2020ESustaining Expansionary

3.8 3.73.2

1.0 1.0

0.8

2018E 2019E 2020E

Minerals and Metals Energy

4.8 4.7

4.0

Conservative financial policies guide balance sheet strength and flexibility


12

Net funding ($ billion)

FFO to Net debt

Net debt ($ billion)(1)

Net debt to Adj. EBITDA

49

5254

5047

4139

3330

32.9

2013 2014 2015 2016 2017

35 3638

31 30

2624

1614 10.7

2013 2014 2015 2016 2017

Manage around Net debt cap of c.$16bn

28%

29% 29%

33%30%26%

25%

50%

74%

108%

2013 2014 2015 2016 2017

2.8 2.7 2.8

2.4

2.73.0 2.9

1.5

1.1

0.7

2013 2014 2015 2016 2017

Targeting maximum 2x augmented by Net debt cap of c.$16bn

Conservative capital and financial structure• Committed available liquidity of $12.9bn at 31 December• Issued $2bn of bonds with maturities of 5 and 10 years.

• Post 2018 maturities capped at c.$3bn in any one year• Repaid $4.4bn of maturing bonds

Commitment to strong BBB/Baa Investment Grade• Targeting a maximum 2x Net debt/Adjusted EBITDA

through the cycle, augmented by an upper Net debt cap of c.$16bn

• Net funding of $32.9bn and Net debt of $10.7bn at year end(1)

• RMI(2) up $5.1bn, primarily due to significantly higher commodity prices, and to a lesser extent, deploying additional inventory funding to seize attractive risk-adjusted marketing opportunities/returns

• Robust cash flow coverage ratios at 31 December:• FFO to Net Debt of 108%• Net debt to Adjusted EBITDA of 0.72x

Optimised capital structure provides less risk, more flexibility and stability of distributions

Notes: (1) Excluding $0.7bn Net debt assumed as part of the Volcan transaction close to year end, refer to page 121 of the Preliminary Results 2017. Refer slide 14 for Volcan accounting treatment. (2) See Alternative Performance Measures pg 121 of the Preliminary Results 2017.

Capital allocation


13

Capital allocation framework seeks to balance the preservation of our optimal capital structure, with attractive business reinvestment / growth opportunities and shareholder distributions

2017 capital allocation:• -$1.0bn fixed base distribution paid, -$1.6bn acquisitions,

+$1.0bn disposals, $4.8bn Net debt reduction towards lower end of c.$10bn-$16bn target range

2018 recommended distribution (based on 2017 equity cash flows)• $1.0 bn fixed base distribution from Marketing• $1.9 bn variable distribution, representing 36% of Industrial free

cash flow, above the 25% policy minimum(1)

• Higher distribution reflects strength in underlying 2017 cash flow, balance sheet position and 2018 outlook

• Variable component continuously reviewed in the context of overall balance sheet requirements, surplus capital position and prevailing conditions and outlook

• Opportunity to top up as appropriate at interim reporting

Distribution payout of 52% of net income pre-significant items

2017 Equity cash

flows

Maintain strong

BBB/BaaStart ND: $15.5bn• 1.51x ND/Adj.EBITDA• 50% FFO/ND• Baa3/BBB-

M&A + Other: -$1.9bn• -$1.6bn acquisitions• +$1.0bn disposals• -$1.3bn FX revaluation

movements, margin receipts on debt hedging instruments, other

Distribution paid in 2017: -$1.0bn

Recommended 2018 Distribution, basis 2017 cash flows: $2.9bn comprising:$1.0bn from Marketing$1.9bn from Industrial (36% Industrial FCF)(1)

M&A + Other

Distribution

Equity Cash Flow: $7.7bn(1)

$14.8bn adj. EBITDA less $1.4bn tax, $1.2bn net interest, $4.2bn capex, $0.2bn dividends to minorities, $0.1bn other

End ND: $10.7bn• 0.72x ND/Adj.EBITDA• 108% FFO/ND• Baa2/BBB

Note: (1) See slide 26 for calculation

Volcan acquisition accounting treatment


14

42.3% of Class A (voting) shares acquired on 9th November 2017(1)

• Cash consideration of $734M in 2017• Total voting shares interest increased from 20.7% to 63%• Glencore’s economic interest (including Class B non-voting

shares, excluding treasury) increased from 7.7% to 23.3%

It is our current intention to internally report on / treat this investment in accordance with equity accounting principles, in parallel with full consolidation for IFRS reporting purposes

• Fair values are provisional, will be completed within 12 months of acquisition

• From the date of acquisition, the operation contributed $160 million of revenue and $Nil of attributable income

• Volcan’s net debt as at 31 December 2017 was $704M(2)

Fair value of Volcan net assets acquired(1)

Non-current assets 4816Property, plant and equipment 4656Other 160

Current assets 397Inventories 80Accounts receivable 206Cash and cash equivalents 81Other 30

Non-controlling interest -1733

Non-current liabilities -1789Borrowings -629Deferred tax liabilities -986Provisions -174

Current liabilities -598Borrowings -175Accounts payable -386Other financial liabilities -37

Total fair value of net assets acquired 1093Less: cash and equivalents acquired -81Less: amounts previously recognized as other investments -359Net cash used in acquisition of subsidiaries 653

Notes: (1) See note 24, page 95 of the Preliminary Results 2017. (2) See Alternative Performance Measures, page 121 of the Preliminary Results 2017.

OutlookIvan Glasenberg – Chief Executive Officer


La Jagua coal, Prodeco, Colombia

Our commodity mix is compelling


16

Copper: looming supply challenges• Demand: robust demand, critical to electric vehicle adoption• Supply: underinvestment, grade declines & elevated strike risk

Cobalt: enabling the electric vehicle story• Demand: EV batteries, super alloys, consumer electronics• Supply: geological scarcity, by-product of Cu, Ni

Zinc: supply constraints• Demand: increasing galvanising rates in EM • Supply: underinvestment and environmental restrictions

Lead: underpinned by supply challenges• Demand: robust battery and energy storage dynamics• Supply: underinvestment and environmental restrictions

Nickel: crucial to electric vehicles• Demand: EV batteries, critical alloys, austenitic stainless• Supply: Declining sulphides, long lead time, scarce Class1 Ni

Thermal Coal: Powering Asian growth & urbanisation• Demand: key to EM industrialisation & growth• Supply: underinvestment, declining energy content

Glencore most exposed to mid/late cycle commodities(1)

GLEN Peer 1 Peer 2 Peer 3 Peer 4Early Cycle Mid Cycle Late Cycle

Example commodities by cycle stage:Early: Iron Ore, Coking coal, ManganeseMid: Copper, Zinc, Nickel, Aluminium, LeadLate: Cobalt, Oil/Gas, PGMs, Diamonds, Thermal Coal, Agricultural products

Notes: (1) Source UBS, commodities weighted by contribution to 2018F EBITDA as at 13 February 2018

Resilient and proven cash generative business model


17

Industrial: “Tier 1” Assets in “Tier 1” Commodities• Genuinely diversified by geography and commodity• Major producer of copper, cobalt, zinc, nickel and thermal coal• These commodities combine persistent industry supply

challenges with robust underlying demand• Sustainably low-cost long-life assets in many of the world’s

premier mining districts

Marketing: Proven high ROE business• Unique, asset-supported, highly diversified earnings base• Consistent earnings and high cash conversion• Defensive but with upside in constructive market conditions

Strongly cash generative at current prices• 2018 illustrative Group FCF of c.$9.6bn from EBITDA of c.$19.7bn

at spot/forward prices(2)

Strong cash margins across our key Industrial assets(1)

Marketing earnings resilience (Indexed)

2012 2013 2014 2015 2016 2017

Marketing Adjusted EBIT

Indexed

Industrial Adjusted EBITDA

Indexed

Note: (1) Cash margin is spot cash LME (for Copper, Zinc, Nickel) as at 16 February 2018, less 2018 unit cost as detailed in slide 10, expressed as a percentage of relevant commodity price. Cash margin for coal based on 2017 actual EBITDA mining margin of 41%. Disclosed cost is full cost including all cash costs to allow reconciliation and generation of EBITDA. (2) See slide 23 for calculations.

77%102% ex Au

67%

41%

120%

Copper Zinc Nickel Coal

• Compelling commodity mix◦ Leading global producer of “Tier 1” commodities: copper, cobalt, nickel, zinc & thermal coal◦ “Tier 1” commodity outlooks underpinned by persistent supply challenges and robust demand◦ Best placed large cap company for energy and mobility transformation

• Cash generative & unique business model◦ Diversified portfolio of “Tier 1” Industrial Assets – sustainably low-cost & long-life◦ Marketing is highly cash generative across the cycle◦ 2018 illustrative(1) FCF of c.$9.6bn from EBITDA of c.$19.7 bn at spot/forward prices

• Able and willing to grow our business◦ We define growth as growth in cash flows◦ Reactivate idled capacity as appropriate◦ Low-cost brownfield options ◦ Bolt-on acquisitions focused on existing commodities/geographies◦ Strong track record of investment

• Conservative financial policies◦ Optimal Net debt(2) range of $10-16bn; Net debt /EBITDA < 2.0x through the cycle; commitment to strong BBB/Baa Investment Grade◦ Distribution policy reflects business strengths: fixed $1bn base distribution from Marketing plus a minimum payout of 25% of Industrial

FCF, based on prior year cash flows◦ Prudent reinvestment and recycling of capital


18Our outlook

Note: (1) See slide 23 for calculation. (2) Net debt defined as gross debt less cash and cash equivalents and readily marketable inventories.

Q&A


Copper anodes, Altonorte copper smelter, Chile

Appendix


Antapaccay flotation circuit, Antapaccay Copper, Peru

2018-2020 production guidance


21

Copper: +330kt to 2020 • Katanga: KML guidance: c.150kt 2018, c.300kt 2019• Mopani +90ktpa, phased ramp-up, late 2018 to 2020• Alumbrera closure in 2018

Cobalt: +36kt to 2020• Higher cobalt production at Katanga and Mutanda• INO and Murrin Murrin production volumes stable

Zinc/Lead: +210kt/+68kt to 2020• Reflects anticipated restart of Lady Loretta in H1 2018, higher Antamina

grades and initial Zhairem production in 2020

Nickel: +33kt to 2020• Reflects ramp up of Koniambo

Coal: +16Mt to 2020• Addition of HVO (c.7Mtpy) and 47.5% of United OC (c.2Mt in 2020)• Normalisation following Australia/Colombia temporary strike and weather

effects

Oil: +2 Mbbl to 2020• Growth from Chad West drilling programme• Includes existing producing fields in Chad West and EG only

Commodity Guidance(1) 2018 Weighting

FY 2017A FY 2018 FY 2019 FY 2020 H1 H2

Copper - Base production kt 1304.8 1315 ± 30 1300 ± 30 1340 ± 30

Katanga KML(2) guidance kt 4.9 150 300 300

Copper – Group production kt 1309.7 1465 ± 30 1600 ± 30 1640 ± 30 48% 52%

Cobalt - Base production kt 27.4 28 ± 3 31 ± 3 31 ± 3

Katanga KML(2) guidance kt 11 34 32

Cobalt – Group production kt 27.4 39 ± 3 65 ± 3 63 ± 3 45% 55%

Zinc kt 1090.2 1090 ± 30 1160 ± 30 1300 ± 30 45% 55%

Lead kt 272.5 300 ± 10 320 ± 10 340 ± 10 42% 58%

Nickel kt 109.1 132 ± 5 138 ± 5 142 ± 5 45% 55%

Ferrochrome kt 1531 1600 ± 30 1625 ± 30 1625 ± 30 50% 50%

Coal Mt 120.6 134 ± 5 138 ± 5 137 ± 5 50% 50%

Oil – entitlement interest Mbbl 5.1 4.9 ± 0.2 6.2 ± 0.2 7.1 ± 0.2 50% 50%

2017-2020 key growth:Copper: +25%, Cobalt: +133%, Zinc: +19%, Lead: +25%, Nickel: +30%, Ferrochrome: +6%, Coal: +14%, Oil: +39%

Note: (1) As per guidance on page 18 of the Production Report for the 12 months ended 31 December 2017, 1 February 2018. Coal guidance for 2019 and 2020 adjusted by 5Mt to reflect sale of Tahmoor and South Africa accounting change. (2) Katanga Mining Limited press release, 11 December 2017, “Katanga Mining announces commissioning of the core of the first train of Whole Ore Leach plant and provides an operational update”.


22

Notes

2017 copper full cash costs of 87c/lbwas flat year-on-year.

Modest FX and weather / volume related unit cost

pressures, offset by higher zinc and cobalt by-product

prices

Notes

Improved 2017 zinc full cash cost of -16c/lb relative to

guidance of -9c/lb mainly reflects the benefit of higher lead,

copper and gold by-product credits

Notes

Improved 2017 nickel full cash cost of 191c/lbrelative to

guidance of 213c/lb reflects the benefit of higher cobalt and

copper by-product credits

Notes

Portfolio mix adjustment increase from $6/t guidance to

$10/t actual reflects divergence of the various global

pricing/quality indices as well as lower HCC and semi-soft

prices in H2 2017

2017 Industrial mine costs/margin reconciliation

Zinc(1) Guidance ActualTotal Zinc production (kt) 1105 1090

Zn from Cu department (kt) -125 -128

85% payability (kt) -149 -154

Net relevant production (kt) 831

Act. relevant production (kt) 808

Average 2017 Zn price (c/lb) 131 131

Full cash cost (c/lb) 9 16

FY Margin (c/lb) 140 147

FY Margin ($/t) 3091 3242

Implied EBITDA ($M) 2569 2620

Reported 2017 EBITDA ($M) 2620

Coal(1) Guidance ActualTotal Coal (Mt) 124.0

Actual production (Mt) 120.6

Average Cal17 NEWC ($/t) 88 88

Portfolio mix adjustment ($/t) -6 -10

Full cash cost ($/t) -46 -46

FY Margin ($/t) 36 32


Less coal economic hedging

- Actual ($M) -380 -380

EBITDA ($M) 4141 3483


Nickel(1) Guidance ActualTotal Nickel (kt) 115.0 109.1

Less Koniambo (kt) -20.0 -17.5

Net relevant production (kt) 95.0

Act. relevant production (kt) 91.6

Average 2017 Ni price (c/lb) 472 472

Full cash cost ($/t) -213 -191


FY Margin ($/t) 5718 6203


Inventory adjustment ($M) 65


Copper(1) Guidance ActualTotal Copper production (kt) 1310 1310

Cu from Zn & Ni depts. (kt) -146 -144

Katanga/Mopani prodn (kt) -63 -47

Net relevant production (k/t) 1102

Act. Relevant production (k/t) 1119

Average 2017 Cu price (c/lb) 280 280

Full cash cost (c/lb) -86 -87


FY Margin ($/t) 4277 4262Less African Cu relevant losses while production curtailed- Guided at H1 2017 ($M) -250

- Actual ($M) -354


Inventory Adjustment ($M) -55


Note: (1) Guidance based on 2017 Half-year results presentation, 10 August 2017 and the Investor update presentation, 12 December 2017.


23

Notes:(1) Other industrial EBITDA includes Ferroalloys, Oil and Aluminium less c.$350M corporate SG&A. (2) Marketing Adjusted EBITDA calculated using the mid point of Marketing Adjusted EBIT guidance on Slide 21 + $200M of Marketing D+A. (3) Industrial capex including JV capex plus marketing capex of c.$135M in 2018E. (4) Excludes working capital changes and distributions.

Notes:(5) Copper spot annualised adjusted EBITDA calculated basis mid-point of production guidance Slide 21 adjusted for copper produced by other departments. Spot cash LME price as at 16 February 2017. Costs include TC/RCs, freight, royalties and a credit for custom metallurgical EBITDA.

Notes:(6) Zinc spot annualised adjusted EBITDA calculated basis mid-point of production guidance Slide 21 adjusted for zinc produced by other departments less adjustment for 85% payability. Spot cash LME price as at 16 February 2018. Cost includes credit for custom metallurgical EBITDA.

(7) Nickel spot annualisedadjusted EBITDA calculated basis mid-point of production guidance Slide 21. Spot cash LME price as at 16 February 2018.

Notes:(8) Coal spot annualised adjusted EBITDA calculated basis mid-point of production guidance Slide 21. Estimated average 2018 NEWC forward price of $105/t less $16/t portfolio mix adjustment gives a $37/t margin to be applied across overall forecast group production of 134Mt.

Higher cost/portfolio mix guidance vs 2017 (+$6/t & +6/t) reflects FX impact from stronger producer currencies, higher fuel prices, higher royalties as well as expected timing of HVO closing and lower HCC and SSCC pricing.

Illustrative “spot” annualised cashflows

Copper(5) GuidanceTotal copper production (kt) 1465

Cu from Zn & Ni departments. (kt) -147


Spot Cu price (c/lb) 324Cost guidance at January 2018 prices (c/lb) -80

Margin ($/lb) 244

Margin ($/t) 5369

Spot annualised Adj. EBITDA ($M) 7077

Zinc(6) GuidanceTotal zinc production (kt) 1090

Zn from Cu department (kt) -122

85% payability (kt) -145


Spot Zn price (c/lb) 161Cost guidance at January 2018 prices (c/lb) 31

Margin ($/lb) 192

Margin ($/t) 4243


Nickel(7) GuidanceNet production excl Koniambo (kt) 99

Spot Ni price (c/lb) 643Cost guidance at January 2018 prices (c/lb) -180

Margin ($/lb) 463

Margin ($/t) 10212


Coal(8) GuidanceTotal coal (Mt) 134

Average Cal18 NEWC price ($/t) 105Portfolio mix adjustment at January 2018 prices ($/t) -16

Cost guidance at January 2018 prices (c/lb) -52

Margin ($/t) 37


Group $ billionCopper EBITDA 7.1

Zinc EBITDA 3.5

Nickel EBITDA 1.0

Coal EBITDA 5.0

Other Industrial EBITDA(1) 0.3

Marketing EBITDA(2) 2.9

Group EBITDA 19.7

Cash Taxes, Interest + other -5.2

Capex(3) -4.9

Illustrative spot free cash flow(4) 9.6

• Long-life low-cost assets in many of the world’s premier mining districts◦ Supports sustainable long-term cash flows

• Significant mine-life extension potential embedded in all key commodities◦ Copper: Antapaccay brownfield extension (Coroccohuayco), Collahuasi/Antamina expansion potential, Mutanda sulphides,

Lomas Bayas sulphides, Mount Isa extension etc.◦ Zinc: Kazzinc brownfield extensions, Contonga (Peru), brownfield optionality in newly acquired Volcan stake etc.◦ Nickel: Raglan, Sudbury, KNS and Murrin Murrin long-life mining districts◦ Thermal coal: extensive optionality and flexibility from existing operations; life extensions and brownfield developments


24Long mine-lives and significant resource optionality in “Tier 1” commodities

Copper Zinc Nickel Thermal Coal

2017 M+I Mineral Resource: 52Mt(2)

Key long-life assets:• African copper • Collahuasi• Antamina• Antapaccay

2017 M+I Mineral Resource: 57Mt(2)

Key long-life assets:• Mount Isa• McArthur River• Antamina• Kazzinc

Plus resource from the newly acquired Contonga asset and the Volcan stake

2017 M+I Mineral Resource: 4.2Mt(2)

Key long-life assets:• Koniambo• Murrin Murrin• INO

Approved extension projects in Canada significantly extend Raglan and Sudbury district mine lives

2017 M+I Mineral Resource: 8 bt(2)

Brownfield optionality across the portfolio

Plus additional resources from the newly acquired HVO assets

2017Reserve life(1):

19 years

2017Reserve life(1):

20 years2017Reserve life(1):

18 years2017Reserve life(1):

14 years

Notes: (1) Based on contained metal in 2017 proven and probable ore reserves, as reported in the 2017 Reserves and Resources Statement, and weighted by annual production that is based on 2017 actual or life of mine annual average production where more representative. Excludes operations that are closed/on care and maintenance as well as projects that are not currently approved. (2) Measured and Indicated Resource contained metal in 2017 calculated on corresponding tonnages and grades presented in the 2017 Resources and Reserves report and adjusted to reflect Glencore’s attributable interest. Excludes operations that are closed/on care and maintenance as well as projects that are not currently approved.


25Energy and mobility transformation represents significant new potential sources of commodity demand

Based on estimated 53kWh global average battery pack size

Estimated average metal use per vehicle(1)

Metal demand implications across the value chain(1)

Generation and grid infrastructure

Grid storage

Charging infrastructure

Non-ICE vehicles

2020 2025 2030

304 1068 2972

66 299 985

17 80 259

2020 2025 2030

23 115 392

- - -

- - -

2020 2025 2030

24 86 180

20 71 150

7 26 55

2020 2025 2030

40 170 536

- - -

- - -

Cu Kt

Ni Kt

Co kt

• Electric vehicles (EVs) – have the potential to be a disruptive force underpinning demand for our commodities

• The rapid emergence of EVs reflects the near simultaneous alignment of key drivers:◦ Environmental considerations◦ Political mandates◦ Technological progress◦ Consumer experience

• We commissioned CRU(1) to model the metal requirements to enable the Electric Vehicles Initiative(2) target of 30% EV market share by 2030:◦ c.4.1Mtpa of copper (18% of 2017 supply)◦ c.1.1Mtpa of nickel (55% of 2017 supply)◦ 314ktpa of Cobalt (332% of 2017 supply)

• As early as 2020, forecast demand is becoming material, requiring an additional c.390kt of copper, c.85kt of nickel and 24kt of cobalt

Sources: (1) CRU “Mobility and Energy Futures – Perspectives towards 2035”, prepared for Glencore by CRU Consulting. (2) Specifically on transportation, the EVI is a multi-government policy forum comprising 16 major global economies. The initiative seeks to facilitate the global deployment of 20 million EVs by 2020. A further campaign announced in 2017, led by China, targets at least 30% new electric vehicle sales by 2030, collectively across all EVI countries.. http://www.cleanenergyministerial.org/News/new-cem-campaign-aims-for-goal-of-30-new-electric-vehicle-sales-by-2030-85068.

2018 Recommended distribution calculation


26

Distribution policy:• $1bn fixed payment from Marketing free cash flow• Variable payment representing a minimum 25% of

Industrial asset free cash flow• Referenced to prior year earnings• Paid in two equal installments in H1/H2• Variable component continuously reviewed in the context

of overall balance sheet requirements, surplus capital position and subject to prevailing conditions and outlook

• Opportunity to top up distributions, as appropriate at interim reporting

Basis 2017 equity cash flows, the Board has recommended a 2018 distribution $2.9bn, comprising $1bn from Marketing and 36% ($1.9bn) of Industrial asset cash flows

Distribution payout of 52% of Net income pre significant items

2018 Recommended distribution

Marketing Industrial Total (1)

2017 Adjusted EBITDA 3,224 11,538 14,762 Page 7

Non-cash items in associates' EBITDA (39) - (39) Page 122

Capex (incl. JVs) (214) (4,020) (4,234) Page 58

Tax paid (96) (825) (921) Page 37

Tax paid by certain associates and JVs (35) (416) (451) Page 122

Interest paid (216) (948) (1,163) Page 37

Interest paid by certain associates and JVs (36) - (36) Page 122

Dividends paid to minority interests - (194) (194) Page 38

Equity cash flow 2,588 5,135 7,724

Industrial distribution % of Industrial cash flows 36%$/share

Minimum distribution ($M) 1,000 1,284 2,284 $0.16

Additional distribution proposed ($M) 569 569 $0.04

Total distribution ($M) 1,000 1,853 2,853 $0.20

Number of eligible shares (M)(2) 14,265

Distribution ($/share) $0.20

Note: (1) Refer to Preliminary Results 2017, (2) See note 15 page 79. Eligible shares calculated from 14,586,200,000 ordinary shares as at 31 December less 321,309,000 trust and treasury shares that do not participate in the distribution.


27Distribution timetable

H1 2018 distribution timetable

Jersey Johannesburg

Applicable exchange rate determination date (Johannesburg Stock Exchange (JSE) 12 April

Applicable exchange rate announced on the JSE 13 April

Last day to effect removal of shares cum div between Jersey and JSE registers 13 April

Last time to trade on JSE to be recorded in the register for distribution 23 April

H1 Ex-Distribution Date: 26 April 24 April

H1 Distribution record date, by close of business: 27 April 26 April

Deadline currency election (Jersey): 15 May

Deadline for return of currency elections form (Jersey shareholders) 30 April

Removal of shares between the Jersey and JSE registers permissible from 30 April

Applicable exchange rate reference date (Jersey) 2 May

Annual General Meeting (shareholder vote to approve aggregate distribution) 2 May

H1 Distribution payment date 23 May

Planned H2 2018 Distribution September 2018

Documents

2017 Preliminary Resultsb9d5e11c-5460-438f... · 2/21/2018 · 2017 Marketing Adjusted EBIT: $3.0bn Preliminary Results 2017 7 Strong marketing performance (+3% y/y, +10% like-for-like)(1)