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Preliminary Results 201820 February 2019
Preliminary Results 2018
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 2017 Annual Report, which will be updated in the 2018 Annual Report that will be published in early March 2019.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
Preliminary Results 2018
Preliminary Results 2018
SummaryRecord Adjusted EBITDA and returns to shareholders, more to come
3
Distributions and announced buybacks
$5.2bn$2.84bn distribution, $0.32bn trust
purchases$2bn announced buybacks
Adjusted EBITDA(1)
Net income pre-significant items
$15.8bn
$5.8bn
+8% YoY
+5% YoY
Notes: (1) Refer basis of presentation on page 7 of the Preliminary Results 2018, refer to note 2 page 52 and Alternative Performance Measures page 106 for definition and reconciliation of Adjusted EBITDA/EBIT. (2) See slide 33
75%Implied payout ratio
$5.2bn of 2018 equity cash flow of $6.9bn(2)
New buybacks announced today
$2+1bn$2bn minimum to Dec 2019;
+$1bn upon delivery of targeted non-core disposals
Illustrative 2019 shareholder returns$2.75bn distribution (20¢)
$2-3bn new buybacks
$4.8-5.8bn
High quality, high margin assets generated record results …
… compelling returns for shareholders …
… and the cash return story should continue
Preliminary Results 2018
4Sustainability performanceOur approach reflects our commitment to operate transparently and responsibly
1.4 1.02 1.06
2016 2017 2018
4.05 3.08 3.18
2016 2017 2018
23.1 21.6 18.5
2016 2017 2018
11.9 11.6 11.8
2016 2017 2018
84 90 95
2016 2017 2018
16 9 13
2016 2017 2018
Fatalities
Lost time injury frequency ratePer million hours worked(1)
Total recordable injury frequency ratePer million hours worked(1)
CO2Scope 1Million tonnes(2)
CO2Scope 2Million tonnes(2)
Community investment spendUS$ 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.
Preliminary Results 2018
5Governance and Ethics
Following the publication of the new UK Corporate Governance Code, the Board has established a new Ethics, Compliance and Culture committee (ECC).
The Code introduces new provisions requiring the Board to establish the Company’s purpose, values and strategy and ensure that these and its culture are aligned.
The ECC will therefore:
• be responsible for Group's ethics and compliance in place of the audit committee
• oversee the Group's culture• monitor engagement with the Group's employees. For this
purpose three Non-Executive Directors will have specific geographic responsibilities
• be responsible for broader stakeholder engagement including suppliers and customers
As a result, three committees are now in place to provide leadership and oversight for the Board across the Group's main risks - financial, sustainability and ethical - and to support its wider strategic considerations.
Preliminary Results 2018
6Climate changeFurthering our commitment to the transition to a low carbon economy
Following engagement with the investor signatories of the Climate Action 100+, we are furthering our commitment to the transition to a low carbon economy(1)
• As one of the world’s largest diversified mining companies, we have a key role in enabling transition to a low carbon economy
• We do this through our well positioned portfolio that includes copper, cobalt, nickel, vanadium and zinc –commodities that underpin this transition
• We aim to prioritise capital investment to grow production of commodities essential to the energy and mobility transition
• We aim to limit our coal production capacity broadly to current levels
• Our commitment includes:• Paris-consistent capital discipline• Developing new longer-term Scope 1 and 2 reduction targets• Regular review of progress• Alignment with TCFD recommendations• Corporate climate change lobbying review
2018 2019F 2020F 2021F
Copper Cobalt Zinc Nickel Coal
Glencore production growth 2019-2021 (2018=100)
Cobalt
Zinc
Copper
CoalNickel
Total capex by segment ($bn)
3.9 3.6 3.6 3.2
1.0 1.4 1.31.2
2018 2019F 2020F 2021FMetals and Minerals Energy
Notes: (1) See RNS 20 February 2019, “Furthering Our Commitment to the Transition to a Low Carbon Economy”
Notes: (1) Excludes recent Volcan investment, currently under assessment. (2) The number of tailings storage facilities is calculated based on a definition that we keep under review.Preliminary Results 2018
Tailings Storage Facility (TSF) Management 7
Detailed assessment/audit of all material TSFs over the past three years(1,2)
• Significant asset footprint accumulated over the past 45 years through M&A (MIM/Falconbridge/Noranda/Xstrata) and organic growth
Our approach
• Dam Safety Assurance Program commenced in 2016 with a foundational assessment against more than 100 criteria related to best practice for dam safety and governance. We work in partnership with one of the world’s leading experts - Klohn Crippen Berger (KCB)
• Standards: All material TSFs are assessed against national regulations and guidelines and against criteria aligned with international guidelines from the Canadian Dam Association (CDA), the Australian National Commission of Large Dams (ANCOLD) and the International Commission of Large Dams (ICOLD).
• Dam Safety Audits: Regular surveillance and dam safety inspections on a quarterly to annual basis for operating sites, annual dam safety inspections for closed sites. Full corporate audit (detailed technical / governance) every 12-18 months by KCB
• Governance: Clearly identified roles/responsibilities, change management processes, action tracking and documentation
• Verification: All corrective actions are subject to verification
We support a TSF classification system and requirements for external review, with transparent disclosure to stakeholders and communities
TSF inventory, including Non-operated JVs(1,2)
140TSFs
51%Upstream
49%Centreline
& Downstream
31%Active
69%Closed
High potential consequence facilities are under active management programs designed to increase factor of safety according to international standards
65 active75 closed
2018 Financial performanceSteven Kalmin – Chief Financial Officer
Preliminary Results 2018
Preliminary Results 2018
2018 Financial scorecardRecord Adjusted EBITDA and returns to shareholders
9
Marketing Adj. EBIT ($)
Net debt ($)
Funds from operations ($)
Distributions and announced buybacks
2.4bn 11.6bn
14.7bn $5.2bn
-17%, result impacted by alumina and cobalt
challenges in H2
+2% vs 2017
+$4.5bn, after $3.9bn M&A and $4.9bn distributions and completed
buybacks in 2018Within $10-$16bn target range
Net funding up modestly from 2017
$2.84bn base distribution of 2017 cash flows, $0.32bn
trust purchases and $2bn of announced buybacks
Adjusted EBITDA ($)(1)
Capexnet cash outlay ($)
Industrial Adj. EBITDA ($)
Net income ($)
15.8bn 13.3bn
4.9bn 3.4bn
+8%, record result +15%, buoyed by higher average pricing and
increased production
+29%, higher capex from HVO and Hail Creek
acquisitions, some cost inflation and project
progression, including Katanga, Zhairem and INO
-41%; Net income pre-significant items +5% to
$5.8bn
Notes: (1) Refer basis of presentation on page 7 of the Preliminary Results 2018, refer to note 2 page 52 and Alternative Performance Measures page 106 for definition and reconciliation of Adjusted EBITDA/EBIT.
Preliminary Results 2018
Industrial2018 Adjusted EBITDA: $13.3bn
Industrial Adjusted EBITDA
7.2 7.1 4.0 6.0 8.3 8.5
3.4 2.8
2.3
1.5
3.6 5.3
-0.2 -0.4 -0.4 -0.3 -0.3 -0.5
2013 2014 2015 2016 2017 2018
Corp and Other Glencore AgricultureEnergy Products Metals and Minerals
$10.5bn$9.8bn
$6.0bn
$7.3bn
$11.5bn
$13.3bn
10
EBITDA mining margin
34%
30%
21%
33%
40%
38%
28%
26%
29%
32%
41%
46%
2013 2014 2015 2016 2017 2018
Metals and Minerals Coal
Record Industrial performance• Adjusted EBITDA up 15% to $13.3bn • Stronger year-on-year commodity prices, higher copper,
cobalt and coal production, partially offset by cost inflation, (net of FX benefits) and reduced third party smelting profitability
Metals and Minerals• EBITDA mining margin of 38% (40% in 2017)• Adjusted EBITDA up 2%, in line with higher average prices
and increased Katanga production, offset by inflationary cost increases (net of FX), lower custom smelting profitability and the base effect of our African zinc assets sold in 2017
Energy Products• Coal EBITDA mining margin of 46% (41% in 2017)• Adjusted EBITDA up 48%, largely reflecting higher prices
and the incremental contribution of the HVO and Hail Creek acquisitions in 2018
Preliminary Results 2018
IndustrialAdjusted EBITDA bridge
Variance 2018 vs 2017 ($M)
11,538
13,2752,039
432
353 380
1,347 120
2017 Price Volume Cost FX Coal hedge Other 2018
11
Volume: Katanga and Lady Loretta restarts, acquisitions of HVO and Hail Creek, offset by the sale of Africa Zinc in 2017
Price: Copper +6%Nickel +26%Cobalt +32%Realised coal +11 to 22%Oil +31%
Cost: Inflation (including new DRC Mining Code) across the African copper assets, elevated CPI in Argentina, Lady Loretta restart costs, higher energy and commodity input costs, declining grades at Raglan and Sudbury, lower custom smelting profitability, and higher revenue linked royalties at some assets
FX: Mainly:AUD +c.$135MARS +c.$100M
Preliminary Results 2018
Industrial2018 key commodity performance
Copper Zinc Nickel Coal
$4.7bnEBITDA
87 87
104
2016A 2017A 2018A
1610
24
-5-16
-4
2016A 2017A 2018A
265
191211
2016A 2017A 2018A
3946 47
1832
40
2016A 2017A 2018A
Margin ($/t)
Ex gold
• 1.454Mt (+144kt YoY)• 30% Group EBITDA• 166¢/lb calculated
EBITDA margin
• Production +144kt: mainly Katanga restart less Alumbrera depletion
• c.$80M EBITDA deferred from 22kt lower copper sales vs production and $134m EBITDA opportunity cost from Katanga cobalt sales suspension (3.9kt)
• Unit costs: +17¢/lb: higher gross costs including energy and DRC mining code impact plus items noted above - sales vs production impact and Katanga cobalt sales suspension
• 1.068Mt (-22kt YoY)• 15% Group EBITDA• 133¢/lb calculated
EBITDA margin
• 124kt (+15kt YoY)• 5% Group EBITDA• 379¢/lb calculated
EBITDA margin
• 129Mt (+9Mt YoY)• 33% Group EBITDA• $40/t calculated
EBITDA margin
12
$2.3bnEBITDA
$0.8bnEBITDA
$5.2bnEBITDA
• Production slightly lower: Lady Loretta ramp-up less African disposals in 2017
• Unit costs: +12¢/lb: lower by-product prices, some general cost inflation and margin compression in Canada as some of the operations approach end of life.
• Production +15kt: mainly Koniamborunning two lines
• Unit costs: +20¢/lb: declining PGM and copper by-products (INO)
• Production +9Mt: Recovery in Australia, additions of HVO and Hail Creek, less Prodeco
• Unit costs: +$1/t: higher revenue-linked royalties, higher fuel prices, partly offset by weaker AUD
Mine costs (¢/lb) Mine costs (¢/lb) Mine costs (¢/lb) Mine costs and margin($/t)
Notes: (1) See Investor Update presentation of 3 December 2018 for further information on alumina and cobalt impactsPreliminary Results 2018
Marketing 2018 Adjusted EBIT: $2.4bn
Marketing Adjusted EBIT ($bn)Market conditions, for the most part, were reasonable, however, were hampered in H2 by a “basis risk” pricing correlation breakdown related to sourcing alumina to meet the LME linked sales commitments as well as cyclically challenging cobalt markets. Adjusted Marketing EBIT -17% y/y
Metals and Minerals Adjusted EBIT -13%• Generally healthy underlying demand and supportive physical
commodity market conditions were outweighed by alumina and cobalt market impacts(1)
Energy Products: Adjusted EBIT -25%• Reflecting the strong 2017 base, oil forward curves being in
backwardation, thereby reducing trading opportunities, and a more cautious approach to coal marketing opportunities from an expected risk/return perspective (11% lower thermal volumes).
Agricultural Products: Adjusted EBIT -79%• Glencore Agri stand-alone EBITDA 23% lower due to poor crop
size in Australia, continued industry margin pressures and US/China trade tensions
• Agricultural products now reported as an associate, i.e. share of Net income (previously proportionately consolidated). 2017 results have been restated to reflect this change
1.6 1.5 1.3 1.6 2.0 1.7
0.60.5
0.8
0.9
1.0
0.7
0.2
0.9 0.5
0.4
0.1
-0.1 -0.1 0.0 -0.1 -0.2 -0.1
2013 2014 2015 2016 2017 2018
Corp and Other Glencore Agriculture Energy Products Metals and Minerals
$2.4bn
$2.8bn
$2.5bn
$2.8bn$2.9bn
$2.4bn
13
Agriassociate accounting treatment
Agriproportionately consolidated from Dec
Agrifully consolidated
Non
-Agr
icom
paris
on
Preliminary Results 2018
Marketing2019 guidance
Long-term Marketing Adjusted EBIT guidance ($M)Long-term Marketing Adjusted EBIT range of $2.2 to $3.2bn• We are confident of an improved year-on-year
performance towards the middle of our long-term guidance range(1)
Performance towards the top end of the long-term range requires the alignment of conditions for many/all commodities that reflect:• Production/volume growth• Tight/tightening physical market conditions• Selective deployment of additional working capital• Higher interest rates
(1) Additional business/volume opportunities from recent M&A (Hail Creek, HVO, Chevron SA, Alesat) expected to offset the accounting impact on EBIT from discontinuation of proportionate consolidation (50%) of Agricultural Products in favourof associate reporting which recognises Glencore’s lower share of Glencore Agriculture Limited’s net income
Long-term guidance range: $2.2-$3.2bn
14
3.2
1.6
2.3
1.92.1
2.4
2.8
2.5
2.82.9
2.4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
200
8
200
9
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
+
2018: $4.9bn• $3.6 sustaining capex, $1.3bn expansionary capex• Expansionary capex primarily at Katanga, Mopani,
Koniambo, INO and Zhairem
2019-2021 Sustaining capex average: c.$3.6bn
2019-2021 Expansionary capex average: c.$1.2bnInvestment in brownfield developments:• Copper: Mopani shafts and new concentrator, Katanga
acid plant / cobalt process improvements, Collahuasi mill expansion to 170ktpd
• Zinc: Zhairem brownfield mine project• Nickel: Raglan Phase II, Onaping Depth, Sudbury
Process Gas • Coal: Mt Owen life extension, Integra (coking coal)
extension• Oil: Alen Gas (Equatorial Guinea)
Preliminary Results 2018
Capex$4.9bn net cash outlay in 2018, c.$4.8bn equivalent annual average 2019-2021
15
4.7 7.7 10.5 12.9 11.3 8.6 5.7 3.3 3.8 4.9 5.0 4.9 4.4
200
9pf
2010
pf
2011
pf
2012
pf
2013
pf
2014
2015
2016
2017
2018
2019
F
2020
F
2021
F
3.6 3.6 3.8 3.4
1.3 1.4 1.11.0
2018 2019F 2020F 2021F
Sustaining Expansionary
Industrial Capex ($bn) By segment ($bn)
3.9 3.6 3.6 3.2
1.0 1.4 1.31.2
2018 2019F 2020F 2021F
Metals and Minerals Energy
Industrial capex history ($bn)
Preliminary Results 2018
Balance sheetConservative financial policies guide strength and flexibility
16
Net funding ($)
FFO to Net debt
Net debt ($)(1)
Net debt to Adj. EBITDA
32.1bn 14.7bn
78.8% 0.93x
+3% vs 2017 +$4.5bn, accounting for $3.9bn of M&A and $4.9bn of shareholder returns. Within
$10-$16bn target range
Strong headline cash generation / debt coverage
Managing to c.1x cap in the current economic environment
with LT target of max. 2x through the cycle
Readily Marketable Inventories (RMI) ($)
17.4bn-16%. Targeting RMIs consistently <$20bn
through the cycle
Liquidity ($)
10.2bnAvailable committed
undrawn credit facilities and cash
Liquidity and funding• Committed available liquidity of $10.2bn• Post 2018 bond maturities managed at c.$3bn in any one
year
Commitment to strong BBB/Baa Investment Grade• Moody’s: Baa2 (positive outlook), S&P: BBB+ (stable)• Targeting c.1x Net debt/Adjusted EBITDA cap
in the current uncertain economic environment • Long-term target of maximum 2x, augmented by an upper
Net debt cap of c.$16bn• Strong cash flow coverage ratios:
• FFO to Net Debt of 78.8%• Net debt to Adjusted EBITDA of 0.93x
Optimised capital structure provides balance sheet strength, good flexibility and stability of distributions
2019 Modelling guidance
Preliminary Results 2018
Preliminary Results 2018
Industrial2019 key commodity outlook - spot commodities / FX
Copper Zinc Nickel Coal
$4.4bn(1)
EBITDA
87 87
104
125
2016A 2017A 2018A 2019E
1610
2436
-5-16
-48
2016A 2017A 2018A 2019E
265
191 211
379
2016A 2017A 2018A 2019E
3946 47 48
1832
40 37
2016A 2017A 2018A 2019E
Margin ($/t)
Ex gold
• 1.500Mt (+46kt YoY)• 28% Group EBITDA• 146¢/lb illustrative
EBITDA margin
• Production: +46kt: mainly Katanga ramp-up less Mutanda revised mine plan
• Unit costs: +21¢/lb: lower cobalt sales volume and cobalt spot realised price assumptions. Expected to reverse in 2020 with higher cobalt sales revenue. 2019 costs would be 33¢/lb lower using Dec Investor Update cobalt sales volume/price assumptions
• 1.195Mt (+127kt YoY)• 14% Group EBITDA• 114¢/lb illustrative
EBITDA margin
• 138kt (+14kt YoY)• 4% Group EBITDA• 184¢/lb illustrative
EBITDA margin
• 145Mt (+16Mt YoY)• 34% Group EBITDA• $37/t illustrative
EBITDA margin
18
$2.3bnEBITDA
$0.6bnEBITDA
$5.4bnEBITDA
• Production: +127kt: mainly Lady Loretta ramp-up
• Unit costs: +12¢/lb: lower by-products (lower lead and copper prices), higher TCs and lower earnings contribution from smelters
• Production: +14kt: INO and Koniambo
• Unit costs: +168¢/lb: Koniamboincorporated into unit costs (higher unit cost while ramping up), lower by-product credits / higher costs at Murrin Murrin (planned maintenance)
• Production: +16Mt: Full year of HVO and Hail Creek volumes, recovery from Prodeco following a period of additional mine development
• Unit costs: +$1/t: weaker AUD countering various input cost pressures
Mine costs (¢/lb) Mine costs (¢/lb) Mine costs (¢/lb) Mine costs and margin($/t)
92
Notes: (1) Copper EBITDA would be c.$1.0bn higher using December Investor Update cobalt sales volumes and price assumptions (equivalent to 33c/lb on copper unit costs)
Preliminary Results 2018
Production guidanceUpdate
2018A 2019F 2020F 2021F Δ 2018-2021FCopper – Base kt 1301.3 1215 ± 20 1215 ± 20 1215 ± 20Copper - Katanga guidance(2) kt 152.4 285 ± 15 285 ± 15 285 ± 15Copper - Group kt 1453.7 1500 ± 35 1500 ± 35 1500 ± 35 +3%
Cobalt – Base 31.1 31 ± 3 31 ± 5 30 ± 5Cobalt - Katanga guidance(2) kt 11.1 26 ± 2 32 ± 2 38 ± 2Cobalt - Group kt 42.2 57 ± 5 63 ± 7 68 ± 7 +74%
Zinc(3) kt 1068.1 1195 ± 30 1335 ± 30 1395 ± 30 +28%Lead kt 273.3 345 ± 10 390 ± 10 370 ± 10 +30%Nickel kt 123.8 138 ± 5 140 ± 5 138 ± 5 +10%Ferrochrome kt 1580 1690 ± 30 1640 ± 30 1640 ± 30 +2%Coal Mt 129.4 145 ± 3 145 ± 3 145 ± 3 +10%Oil – entitlement interest Mbbl 4.6 6.2 ± 0.2 7.4 ± 0.2 13.0 ± 0.2 +183%
Group guidance – own source(1)
19
Mutanda update• Sulphide reserve feasibility study planned for completion by the end of 2019, following which an investment decision will be considered• Re-optimised mine plan to extend life of the oxide resource is now expected to reduce annual production to c.100ktpy Cu and c.25ktpy Co • New mine plan ensures continuity of operations in the event of a positive sulphides investment decision and the associated development
timeline
Notes: (1) 2019F, 2020F and 2021F copper and cobalt production reflects new 100ktpa Mutanda production plan. (2) Katanga Mining Press release, 3 December 2018, “Katanga Mining Announces Commissioning of Phase 2 of the whole ore leach plant and provides an operational update”. (3) Excludes Volcan
Notes: (1) See slide 40 for underlying scenario assumptions (2) Copper EBITDA would be c.$1.0bn higher and free cash flow c.$0.7bn higher using December Investor Update cobalt sales volumes and price assumptions
20Illustrative spot free cash flow scenario analysis(1)
Free cash flow through the cycle: c.$5-10bn
Unsustainable
0 2000 4000 6000 8000 10000 12000 14000 16000
Trough$3.6bn
Downside$4.9bn
Spot$6.8bn(2)
Upside$10bn
Supercycle$14.4bn
Through the cycle free cash flow
$M
Preliminary Results 2018
2017$7.7bn
2018$6.9bn
Preliminary Results 2018
2019 illustrative “spot” annualised cashflows
Notes: (1) Other industrial EBITDA includes Ferroalloys, Oil and Aluminium less c.$400M corporate SG&A. (2) Marketing Adjusted EBITDA of $2.8bn is calculated from the mid-point of the of the $2.2-$3.2bn EBIT guidance range plus $75M of Marketing D+A. (3) Industrial capex including JV capex plus marketing capex of c.$100M in 2019E. (4) Excludes working capital changes and distributions. (5) Copper spot annualised adjusted EBITDA calculated basis mid-point of 2019 production guidance Slide 19 adjusted for copper produced by other departments. Spot LME price as at end January 2019, less 4% discount reflecting payabilities on product mix. Costs include by-products, TC/RCs, freight, royalties and a credit for custom metallurgical EBITDA. (6) Nickel spot annualised adjusted EBITDA calculated basis mid-point of production guidance Slide 19. Spot LME price as at end January 2019. (7) Coal spot annualisedadjusted EBITDA calculated basis mid-point of production guidance Slide 19. Spot NEWC price of $100/t, as at end January 2019, less $15/t portfolio mix adjustment and mine costs of $48/t (Slide 18) giving a $37/t margin to be applied across overall forecast group mid-point of production guidance of 145Mt (slide 19). (8) Zinc spot annualised adjusted EBITDA calculated basis mid-point of production guidance Slide 19 adjusted for zinc produced by other departments less payability adjustment Spot LME price as at end January 2019. Cost includes credit for by-products and custom metallurgical EBITDA
Copper(5) GuidanceTotal copper production (kt) 1500Cu from Zn & Ni departments. (kt) -140Net relevant production (kt) 1360Realised Cu price (c/lb) – 96% LME 271Cost guidance (c/lb) 125Margin ($/lb) 146Margin ($/t) 3224Spot annualised Adj. EBITDA ($M) 4384
Zinc(8) GuidanceTotal zinc production (kt) 1195Zn from Cu department (kt) -105Payability deduction (kt) -187Net relevant production (kt) 903Spot Zn price (c/lb) 121Cost guidance (c/lb) -7.5Margin (c/lb) 114Margin ($/t) 2505Spot annualised Adj. EBITDA ($M) 2262
Nickel(6) GuidanceProduction (kt) 138.0Spot Ni price (c/lb) 563Cost guidance (c/lb) -379Margin (c/lb) 184Margin ($/t) 4065Spot annualised Adj. EBITDA ($M) 561
Coal(7) GuidanceTotal coal (Mt) 145.0Spot nearby NEWC price ($/t) 100.0Portfolio mix adjustment @ February 2019 ($/t) -15.0Cost guidance ($/t) -48.0Margin ($/t) 37.0Spot annualised Adj. EBITDA ($M) 5365
Group $bnCopper EBITDA 4.4Zinc EBITDA 2.3Nickel EBITDA 0.6Coal EBITDA 5.4Other Industrial EBITDA(1) 0.4Marketing EBITDA(2) 2.8Group EBITDA 15.8Cash Taxes, Interest + other -3.9Capex(3) -5.1Illustrative spot free cash flow(4) 6.8
21
Preliminary Results 2018
Capital allocation2019 framework
Distributions / buybacks
M&A +Other
Maintain strong
BBB/Baa
Equity cash flows
• Our capital allocation framework balances:◦ Preservation of an optimal capital structure◦ Attractive business reinvestment/growth opportunities◦ Shareholder distributions
• Today we are of the view that its difficult to find a better investment than buying back our own shares◦ Current dislocation between share price levels and the
prospects, strength and embedded optionality in our business
• 2019 equity cash flows will be prioritised for:◦ Buybacks - funded by cash generation◦ Net funding – focus on selective RMI reduction,
consistently targeting levels below $20bn◦ Net debt – maintain $10-$16bn guidance range
• 2019 distributions and shareholder returns◦ $2.75bn base distribution of 2018 cash flows (20c/share)(1)
◦ $2bn new buyback program to end of 2019, with top-up if/as market conditions support, including from$1bn non-core targeted asset disposals
22
Notes: (1) See slide 33 for 2019 Recommended distribution calculation
23Modelled buybacksReducing modelled share capital by up to 9% by end 2019 (from 30 June 2018); amongst the highest FTSE 100 returns yield
Preliminary Results 2018
2019 returns yield: dividend + buyback announcements(1)
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
Mining Peer 1
Glencore
Mining Peer 2
Mining Peer 3
Ord. Dividend Ord. Buyback Buyback (Disposal proceeds)
Share capital reduction scenarios
2018
3.0%
2019
4.3%
2019
6.1%
Cumulative
3.0%
Cumulative
7.1%
Cumulative
8.9%
2018 ($1.7bn) 2019 +$2bn ($2.3bn) 2019 +$3bn ($3.3bn)Reduction in share capital Cumulative reduction in share capital
Date Shares eligible for distributions30 June 2018 14.254bn31 Dec 2018 13.832bn31 Dec 2019F 12.990bn ($3bn buyback)
Source: Glencore, Deutsche Bank, data as of 18 February 2019. (1) Based upon dividends/distributions and buybacks announced in 2019. Glencore - assumes 20c/shr dividend, $2bn buyback plus $1bn buyback using disposal proceeds. Non-Glencore buyback assumptions as per Deutsche estimates. For other companies (except Mining Peer 1) assumes zero buybacks via disposal proceeds as these are typically announced only at the point of asset sale
Funded through organic cash flow
OutlookIvan Glasenberg – Chief Executive Officer
Preliminary Results 2018
Notes: (1) Bloomberg, Economic Policy Uncertainty Index based on Current Price GDP Weights. Long-term average = 100. (2) Bloomberg
Commodity fundamentals still positiveDespite trade/China/Macro fears
Preliminary Results 2018
25
Policy uncertainty is rising(1) … … and trade/China/Macro fears have produced an
economic drag(2)
Global Economic Policy Uncertainty Index
100
150
200
250
300
350
Feb-16 Oct-16 Jun-17 Feb-18 Oct-18
Manufacturing PMI Index
46
48
50
52
54
56
58
60
62
Feb-16 Sep-16 Apr-17 Nov-17 Jun-18 Jan-19Eurozone China USA Japan
Commodity fundamentals still positiveDespite trade/China/Macro fears
Preliminary Results 2018
26
Sector reinvestment remains limited(1) … … demand growth remains solid(2) …
Sector capex ($bn)
1523
37
53
41 44
58
7772
59
42
30 3238
43 42 38 35
200
5
200
6
200
7
200
8
200
9
2010
2011
2012
2013
2014
2015
2016
2017
2018
F
2019
F
2020
F
2021
F
2022
F
0.0%
2.0%
4.0%
6.0%
8.0%
Alu
min
ium
Cop
per
Iron
Ore
Lead
Nic
kel
Ther
mal
Coa
l
Zin
c
2013-2018 CAGR 2018
Average: $43bn
Seab
orne
Notes: (1) Company data, Morgan Stanley Research estimates, January 2019. (2) Company sources for Nickel, Wood Mackenzie monthly reports for Copper, Zinc, Lead, Iron Ore, CRU for Aluminium.
Commodity fundamentals still positiveDespite trade/China/Macro fears
Preliminary Results 2018
27
… and inventories significantly reduced(1)
Global inventories (rebased 100=Dec 2015)
Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18
Days consumptionAverage High Low Today
Copper 17 22 12 13Zinc 13 19 7 8Nickel 69 96 34 34
Copper
Zinc
Nickel
In 2019 continued inventory draw downs are likely(2,3)
What’s the minimum 2019 demand growth needed for inventory draw?
5.6%
1.9%
2.7%
6.5%
0.6%
2.8%
-1.3%
-2.0%
0.8%
Nickel Zinc Copper
2013
-201
8 CA
GR
Dem
and
2018
Dem
and
Minimum demand growth
for continued inventory
draw
Notes: (1) Inventories comprise various sources including LME, SHFE and Comex warehouse stocks. (2) Glencore estimates for Nickel, Wood Mackenzie monthlies Zinc and Copper. (3) See Slides 41,42,43 for underlying data.
28Our investment case
Preliminary Results 2018
-1.0%-2.0%
0.9%
Nickel Zinc Copper
10.6%
8.5%
6.1%
Glencore
Top 10average
Top 20average
Downside$4.9bn
Upside$10bn
Spot$6.8bn
Attractive commodities and high margin assets …
… generating strong and sustainable cashflows …
… and compelling returns for shareholders
• Our commodity fundamentals are in great shape, inventories are low
• Minimal 2019 demand growth required to see continued inventory draws
• Our quality assets deliver high margins
• We should deliver strong annual free cash flow through the cycle of $5-10bn
• Well capitalised assets with minimal growth capex
• Optimized balance sheet
• $5.2bn distributions and buybacks announced in 2018
• $5.8bn likely minimum distributions and buybacks in 2019
• #4 FTSE 100 shareholder return yield in 2019(3)
Minimum demand growth for 2019 inventory draw(1) …
Illustrative free cash flow through the cycle(2) …
FTSE 100: 2019 implied returns yield(3)
Note: (1) See slide 27 (2) See slide 40 (3) See slide 23
Q&A
Preliminary Results 2018
Appendix
Preliminary Results 2018
Preliminary Results 2018
312018 Industrial mine costs/margin reconciliation
Zinc(1) Guidance ActualTotal Zinc production (kt) 1090 1068Zn from other depts (kt) -122 -138Payability deduction (kt) -145 -140Net relevant production (kt) 823Act. relevant production (kt) 791Realised Zn price (c/lb) 129 129Full cash cost (c/lb) 3 4FY Margin (c/lb) 132 133FY Margin ($/t) 2902 2931Implied EBITDA ($M) 2388Reported 2018 EBITDA ($M) 2317
Coal(1) Guidance ActualTotal coal production (Mt) 132.0Actual production (Mt) 129.4Average Cal18 NEWC ($/t) 107 107Portfolio mix adjustment ($/t) -16 -20
Full cash cost ($/t) -52 -47FY Margin ($/t) 39 40Implied EBITDA ($M) 5148Reported 2018 EBITDA ($M) 5159
Nickel(1) Guidance ActualTotal Nickel production (kt) 126.0 123.8Less Koniambo prod. (kt) -30.0 -28.3Net relevant production (kt) 96.0Act. relevant production (kt) 95.5Realised Ni price (c/lb) 590 590Full cash cost ($/t) -180 -211FY Margin (c/lb) 410 379FY Margin ($/t) 9039 8356Implied EBITDA ($M) 868Reported 2018 EBITDA ($M) 798
Copper(1) Guidance ActualTotal copper production (kt) 1465 1454Cu from other depts (kt) -147 -137Net relevant production (kt) 1318Actual relevant prod. (kt) 1316Relevant copper sales (kt) 1318Act. Cu sales (-22kt vs. prod.) 1294Realised Cu price (c/lb) 270 270Full cash cost (c/lb) -103 -104Margin (c/lb) 167 166Margin ($/t) 3679 3654Implied EBITDA ($M) 4849Reported 2018 EBITDA ($M) 4730
Note: (1) FY Guidance based on the Investor Update presentation, December 2018, 2018 Half Year results presentation, 8 August 2018, Full Year 2018 Production Report, 1 February 2018. Own source copper sales were 22kt lower than production due to timing of shipments
Preliminary Results 2018
Key underlying EBITDA sensitivities
Approximate estimated impact on FY2019 EBITDA given a change of: $M$100/t on copper price 140
$10/t on NEWC thermal coal price 480
$10/t on coking coal (HCC) price 60
$100/t on zinc price 130
$1/lb on realized cobalt price 100
$1000/t on nickel price 140
Australian (1c AUD/USD) operations 50
South African (1 USD/ZAR) operations 130
Canadian (1c USD/CAD) operations 10
Chile (10 USD/CLP) operations 10
32
Preliminary Results 2018
2019 Recommended distribution calculation
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, buybacks vs. distributions considerations and subject to prevailing conditions and outlook
• Opportunity to top up distributions, as appropriate at interim reporting
Basis 2018 equity cash flows, the Board has recommended a 2019 distribution of $0.20 per share (c.$2.75bn), comprising $1bn from Marketing and 35% of Industrial asset free cash flows
Distribution payout of 48% of Net income pre significant items
2019 Recommended distribution
$M Marketing Industrial Total
Adjusted EBITDA 2,492 13,275 15,767
Non-cash items in associates' EBITDA - (6) (6)
Net capex (incl. JVs) (89) (4,810) (4,899)
Net interest paid (388) (812) (1,200)
Tax paid (167) (2,239) (2,406)
Dividend received from Volcan - 4 4
Dividends paid to minority interests - (343) (343)
Equity cash flow 1,848 5,069 6,917
Industrial distribution % of Industrial cash flows 35%
Minimum distribution 1,000 1,267 2,267
Additional distribution proposed 485 485
Total distribution 1,000 1,752 2,752
Number of eligible shares (M)(2) 13,762
Distribution ($/share) $0.20
33
Note: (1) Refer to Preliminary Results 2018, (2) See note 16 page 73. Eligible shares calculated from 14,586,200,000 ordinary shares as at 15 February less 170,130,000 trust and 654,473,000 treasury shares that do not participate in the distribution.
Source: Glencore, as of 15 Feb 2019. (1) Assumes new $2+1bn buyback completed by year-end at average GBP3.06 share price and 1.29 GBP/USDPreliminary Results 2018
Buyback updateShares eligible for distribution
$2bn buy back – almost complete
• 493m shares purchased since July 2018
New $2+1bn buy back• $2bn - program to run to year end• $1bn – available via targeted disposal proceeds
Shares eligible for distribution as at 15 Feb 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
Shares eligible for distribution – issued share
capital less treasury and trust shares
Issued share capital 14,586,200 Less Treasury shares (@ 15 Feb 2019) 654,473 Less Trust shares(2) 170,130Shares eligible for distributions 13,761,597
FY18: 13832
FY19: 12990 (1)
18 Feb 2019: 13762
34
Notes: (1) Note 20, Pages 77 and 78, Preliminary Results 2018, excludes Volcan bond.Preliminary Results 2018
Debt maturity profile – capital market notes$22bn as at 31 December 2018(1)
0
1000
2000
3000
4000
5000
6000
7000
8000
2019 2020 2021 2022 2023 2024 2025 2026 2027 post 2027
USD EUR GBP CHF AUD JPY
Illustrative 2019 free cash flow c.$6.8bn
35
Downside case free cash flow c.$4.9bn
• Managing annual debt maturities to around $3bn• Conservative debt maturity profile even when considering a downside free cash flow scenario ($4.9bn)
Preliminary Results 2018
Own source production2013-2018 History
14931546
1502
1426
1310
1454
2013 2014 2015 2016 2017 2018
Copper (kt)
12381295
14621523 1531 1580
2013 2014 2015 2016 2017 2018
20.6
23.4
19.7
17.2
18.7
17.3
2013 2014 2015 2016 2017 2018
Zinc (kt) Lead (kt) Nickel (kt) Cobalt (kt)
1399 13871445
1094 1090 1068
2013 2014 2015 2016 2017 2018
7.3
6.0 5.9
5.3
6.1
7.5
2013 2014 2015 2016 2017 2018
22.9 22.7
17.3
12.110.0 10.0
2013 2014 2015 2016 2017 2018
315308
298 295
273 273
2013 2014 2015 2016 2017 2018
4.5
3.5 3.6
4.24.0 3.9
2013 2014 2015 2016 2017 2018
18.619.5
17.6 17.3
14.6
11.7
2013 2014 2015 2016 2017 2018
98 10196
115109
124
2013 2014 2015 2016 2017 2018
48.1
54.652.4 52.5
49.1
59.4
2013 2014 2015 2016 2017 2018
11.011.2 11.1
10.7 10.6
10.2
2013 2014 2015 2016 2017 2018
19 2123
28 27
42
2013 2014 2015 2016 2017 2018
5.1 5.4
3.9
5.6
7.5
9.4
2013 2014 2015 2016 2017 2018
5.0
7.4
10.6
7.5
5.0 4.6
2013 2014 2015 2016 2017 2018
Ferrochrome (kt) Coking coal (Mt) Semi-soft coking coal (Mt) AUS export thermal coal (Mt) AUS domestic thermal coal (Mt)
SA export thermal coal (Mt) SA domestic thermal coal (Mt) Prodeco thermal coal (Mt) Cerrejon thermal coal (Mt) Oil entitlement interest (Mbbl)
36
Preliminary Results 2018
Responsibly sourcing the commodities that underpin 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 operations and apply the
precautionary principle in decision making4) Community and human rights: Foster sustainable growth and respect human
rights wherever we operate
37
Preliminary Results 2018
2019 Distribution timetableIn respect of 2018 cash flows
First tranche of proposed distribution 2019
Applicable exchange rate reference date (Johannesburg Stock Exchange (JSE)) Close of business (UK) 11 April
Applicable exchange rate announced on the JSE 12 April
Last day to effect removal of shares cum distribution between Jersey and JSE registers at commencement of trade 12 April
Last time to trade on JSE to be recorded in the register for distribution 23 April
Ex-distribution date (JSE) 24 April
Ex-distribution date (Jersey) 25 April
Distribution record date for JSE Close of business (SA) 26 April
Distribution record date in Jersey Close of business (UK) 26 April
Deadline for return of currency elections form (Shareholders on Jersey Register only) 29 April
Removal of shares between the Jersey and JSE registers permissible from 29 April
Applicable exchange rate reference date (Jersey) 1 May
Annual General Meeting (shareholder vote to approve aggregate 2018 distribution) 9 May
H1 distribution payment date 23 May
38
Listed entity market valuations and selection of other entities
Listed entities % owned Market value $MRussneft 25.0% 660EN+ 10.6% 528Volcan 23.3%(1) 472Rosneft 0.6% 370Century 47.4% 356Yancoal 6.8% 202Other(2) Various 304Total 2892
Selection of other entitiesUS oil infrastructureBaseCore (50% owned royalty company)American Zinc Recycling (10% owned)
Preliminary Results 2018 Notes: Market values as at February 18 2019. (1) Economic interest based on aggregate market cap derived from both share classes. (2) Other includes Trevali Mining, Polymet, Recyclex, Aurelia Metals, Oz Minerals, Paranapanema and Merafe
39
Preliminary Results 2018
40Illustrative spot free cash flow scenario analysisScenario assumptions
Trough (Q1 2016)
Downside (FY 2016 ave.) Spot Upside Supercycle
EBITDA $bn 9.0 11.1 15.8 21.7 29.0
Free cash flow $bn 3.6 4.9 6.8 10.0 14.4
Copper $/t 4678 4867 6200 7000 10000
Zinc $/t 1686 2094 2670 3250 3750
Nickel $/t 8548 9606 12420 15000 25000
Cobalt (realised) $/lb 7.3 8.1 12.2 24.5 31.5
Thermal Coal (NEWC) $/t 51 65 100 120 140
AUD 1.38 1.34 1.38 1.37 1.35
ZAR 15.8 14.7 13.3 13.9 13.0
CAD 1.37 1.32 1.31 1.33 1.30
Total capex $bn 3.6 3.6 5.1 5.6 6.1
Notes: (1) Source: Wood Mackenzie (2) Source: Wood Mackenzie, adjusted for new Company guidance
2016 2017 2018 2019F 2020F
SupplyDemand
Commodity fundamentals: our key commodities have capacity to buffer a demand slow-down
Preliminary Results 2018
41
Copper: demand growth has been resilient…Copper demand (kt)(1) Copper supply vs. demand scenarios (kt)(2)
… and inventory drawdowns persist in a slow-down
2013 2014 2015 2016 2017 2018
2013-2018 CAGR +2.7%
+2.8% 2013-2018 CAGR demand
0.8% demand
Inventory draw down
2018-2020 supply:
+1.7% CAGR
+1.4% supply growth YoY in 2019
2016 2017 2018 2019F 2020F
SupplyDemand
Commodity fundamentals: our key commodities have capacity to buffer a demand slow-down
Preliminary Results 2018
42
Nickel demand growth has been strong …Nickel demand (kt)(1) Nickel supply vs. demand (kt)(1)
… inventory drawdowns likely to persist in a slow-down, even allowing for strong supply scenarios
2013 2014 2015 2016 2017 2018
2013-2018 CAGR demand
-1.3% demand
2018-2020 supply:+6.4% CAGR
+6.2% supply growth YoY in
2019
Inventory draw down
2013-2018 CAGR +5.6%
+6.5%
Notes: (1) Source: Glencore
Notes: (1) Source: Wood Mackenzie
2014 2015 2016 2017 2018 2016 2017 2018 2019F 2020F
Supply
Demand
Commodity fundamentals: our key commodities have capacity to buffer a demand slow-down
Preliminary Results 2018
43
Zinc demand growth has been resilient (kt)(1) …Zinc supply vs. demand (kt)(1)
… inventory drawdowns are likely even with the potential of significant supply growth
Inventory draw down
2018-2020 supply:
+6.1% CAGR
+6.4% supply growth YoY
in 2019
2013-2018 CAGR demand
-2.0% demand
2013-2018 CAGR +1.9%
+0.6%
Zinc demand (kt)(1)
Recommended