2015 Global Metals MiningSteel Conference GLEN

7/23/2019 2015 Global Metals MiningSteel Conference GLEN

1/20

2015 Global Metals, Mining & Steel ConferenceBarcelona, 12 May 2015


2/20

Forward looking statements

This document contains statements that are, or may be deemed to be, forward looking statements which are prospective in nature. These forward looking statements may beidentified by the use of forward looking terminology, or the negative thereof such as 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 orcomparable 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. Suchstatements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Forward-looking statements are not based on historical facts, but ratheron current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition anddiscussions of strategy.

By their nature, forward looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencores control. Forward looking statements are notguarantees 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, thosediscussed in the Principal Risks and Uncertainties in Glencores Annual Report 2014.

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 orimplied 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 asof 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 theFinancial Conduct Authority and the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited and the Listing Requirements of the Johannesburg StockExchange Limited), Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking to update or revise any forwardlooking 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 beenno 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 sharefor 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 thisdocument does not constitute a recommendation regarding any securities.

2


3/20

Summary

The mining sector is suffering a cris is of conf idence

Oversupplying markets regardless of demand is damaging the credibility of the industry Worst performing sector over the last twelve months

Commodity investment flows now $60bn below their 2012 peak

Prices, equities and credit ratings all impacted

Supply/Demand fundamentals matter

Critical to understand the evolution of supply and demand Key emerging markets are maturing the demand cycle will transition away from early cycletowards medium and late cycle commodities as fixed asset investments are completed

Not all commodit ies are equal differentiation is crucial

Our key commodities are in deficit or transitioning towards deficit

Glencore by far the most diversified resources company

Unrivalled marketing business and geographic footprint

Significant operational leverage when prices inevitably recover

Leading positions and growth optionality in the right commodities

Owner management team with a commitment to return excess capital - $9.3bn since IPO

3


4/20

Tintaya concentrator, Peru

Where are we ?


5/20

12 months ago the mining sector was looking more positive

Management changeacross the majors wasproviding a moredisciplined focus

Mining sectorunderperformance wasreducing

Plans for significant capexcuts and shareholderdistributions

5Source: Glencore presentation at 2014 Global Metals, Mining & Steel Conference, Miami, May 2014.


6/20

Today, the worst performing sector

6

Last 12 months: indices, mining lagging the market Funds are flowing out of the sector ($bn)(1)

Last 12 months: prices (oversupply in bulk) Last 12 months: major mining peers

Source: Bloomberg, 6 May 2015. (1) Barclays, The Commodity Investor, 15 April 2015

5%

17%

9%6%

1%

(17%)(17%) (19%)

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

Stoxx

Globa

l1800

Tec

hno

logy

Au

tos

Rea

lEs

tate

Stoxx

E

urope

Mining

Basic

Resources

Oil&Gas

HSBCGlo

ba

lMining

-41.9%

-36.7%

-24.8%

-20.3%

-5.4%

9.3%

16.3%

-38.8%

-31.3%

-25.2%

-16.6%

-6.4%

-1.5%

Ironore

Oil

Therma

l

Coal

Nickel

Copper

Zinc

Al

Peer1

Peer2 P

eer3

Pee

r4

Peer5

Glencore

66

80

103

55

3540 44

42

30

40

50

60

70

80

90

100

110

2010 2011 2012 2013 2014 Jan-15 Feb-15 Mar-15

Cumulativecommodity

investment flowssince 2010


7/20

40

60

80

100

120

140

160

180

200

May14

Jun14

Jul 14 Aug14

Sep14

Oct14

Nov14

Dec14

Jan15

Feb15

Mar15

Apr15

20

30

40

50

60

70

80

90

100

110

May14

Jun14

Jul14

Aug14

Sep14

Oct14

Nov14

Dec14

Jan15

Feb15

Mar15

Apr15

Today, the worst performing sector

7

Significant reduction in earnings forecasts .. .. credit ratings and CDS(1)also impacted

Peer 1

Peer 2

GLEN

Peer 32015 forecastnet income

GLEN

Peer 3

Peer 2

Peer 1

Source: Bloomberg, 6 May 2015. (1) 5 year CDS, 6 May 2014=100

Peer 4


8/20

-2%

0%

2%

4%

6%

8%

10%

Copper Zinc Aluminium Nickel Thermal Coal Iron Ore Oil

Annual average 2011 to 2014

2015F

Demand favours base over bulks again in 2015

8Source: Glencore estimates, various broker reports, Wood Mackenzie.

Global demand growth


9/20

but ignore demand and market balance at your peril

9

If we dont supply it,

somebody else will

This is rational, normal economics

..the fundamentals have not changed.

Prices dont dip down to tier one

levels, it just doesnt happen.

we are winning huge

benefits for shareholders

our iron ore strategy makes

perfect commercial sense

Were doing this because it makes sound

economic sense

We have t he oppor t uni t y t o subst ant i al l yi ncr ease our i r on or e pr oduct i on t hr oughpr oduct i vi t y and get t i ng mor e out of t heexi st i ng i nf r ast r uct ur e You tell me the logic of

pouring iron ore into adepressed market. That isnot commercially sound

Im not quite sure why anyonewould want to be the last manstanding in a low-price, low-returnenvironment

Source: Bloomberg; The Australian; Management Today.


10/20

Wheat crop in Bute, Australia

Differentiation by commodity is crucial


11/20

36% 5% 7% 5% 42%

CoalRebalancing

Some supply shuttingand new investmentdelayed. Coal essentialto meet energy demand

Our key commodities

Accounted for 95% of EBIT in 2014

Market balances for many of our commodities are transitioning into deficit

11Data: 2014Adjusted EBIT.

CuDeficit

Consensus surpluselusive so far,increasing downsiderisk to supply in 2015/16

ZnDeficit

An additional 3-3.5Mt ofzinc supply needed overthe next 5 years tobalance the market

MarketingResilient

Defensive earnings,less sensitive to fallingprices. Benefits fromown source production

NiTransitioning to deficit

Balanced 2015 anddeficits thereafter;substantial from 2018


12/20

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Early Cycle Mid Cycle Late Cycle

12

Peer 1 Peer 2 Peer 3 Peer 4

Significant Glencore exposure to mid and late demand cycle commodi ties

Source: UBS, weighted by contribution to 2018F EBITDA

CopperZincNickelAluminiumLead

Oil & GasPGMsDiamondsThermal Coal

Iron OreCoking coalManganese

underpining the maturing growth of emerging economies


13/20

13Source: UBS, Glencore estimates, company reports, broker reports, 2018F surplus/(deficit) for each commodity calculated as a percentage of 2018Fdemand and applied to respective 2018F EBITDA. Peer 1: 10.0%, Peer 2: 9.3%, Peer 3 5.7%, Peer 4: 0.5%, Glencore: -3%.

2018F weighted average commodity surplus / (deficit)

provides us with the right commodities mix

Peer 1 Peer 2 Peer 3 Peer 4

Commo

dities

insurplus

as

a%

ofdeman

d

we

ightedby

EBITDA

Commo

dities

in

deficitasa

%o

f

deman

dwe

ightedby

EBITDA


14/20

Conclusions

14

The mining sector is suffering a cris is of conf idence

Oversupplying markets regardless of demand is damaging the credibility of the industry Worst performing sector over the last twelve months

Supply/Demand fundamentals matter

Critical to understand the evolution of supply and demand

Key emerging markets are maturing the demand cycle will transition away from early cycletowards medium and late cycle

Not all commodit ies are equal differentiation is crucial

Our key commodities are in deficit or transitioning towards deficit

Glencore by far the most diversified resources company

Unrivalled marketing business and geographic footprint

Significant operational leverage when prices inevitably recover Leading positions and growth optionality in the right commodities

Owner management team with a commitment to return excess capital - $9.3bn since IPO

Asturiana de Zinc electrolysis plant Spain


15/20

Asturiana de Zinc, electrolysis plant, Spain

Q&A

VM

Alumbrera copper concentrator Argentina


16/20

Alumbrera copper concentrator, Argentina

Appendix


17/20

Sustainability and governance

Safety Regrettably 16 fatalities in 2014 (26 in 2013)

Reduction on 2013 reflects SafeWork focus on safetyleadership, culture and implementation of Fatal HazardProtocols

118,000 employees completed SafeWork awareness

Governance Consolidation of Board: A. Hayward, Chair; P. Grauer

SID; Patrice Merrin, new NED Reviewed Code of Conduct and policies on bribery andcorruption, human rights and position on carbon. Re-issued in 2015

External Recognition and Memberships ICMM, UN Global Compact, EITI, PACI (Partnering

Against Corruption Initiative World Economic Forum)

Voluntary Principles on Security and Human Rights Mopani Copper awarded Company of the Year from

Zambia for EITI reporting transparency

17

LTIFR(1)2009 to 20142.96

2.74

2.49

2.06

1.87

1.58

2009 2010 2011 2012 2013 2014

Note: (1) Lost time incidents (LTIs) are recorded when an employee or contractor is unable to work following an incident. In the past Glencore recorded LTIs which resulted in lost days from the next calendarday after the incident whilst Xstrata recorded LTIs which resulted in lost days from the next rostered day after the incident - therefore the combined LTI figure is not ba sed on data of consistent definition(historically, prior to merger). From 2014 Glencore records LTIs when an incident results in lost days from the first rostered day absent after the day of the injury. The day of the injury is not included. LTIFR isthe total number of LTIs recorded per million working hours. LTIs do not include Restricted Work Injuries (RWI) and fatalities (fatalities were included up to 2013). Historic data has been restated to excludefatalities and to reflect data collection improvements.

47% reduction


18/20

0.4

0.6

0.8

1

1.2

1.4

1.6

1980 1985 1990 1995 2000 2005 2006 2009 2010 2013 2015 2020 2025

18Source: Wood Mackenzie

Mined copper head grades at twice the reserve grade are not sustainable

Growing risks to long-term copper supply

Mined copper head grade

Reserve grade

Forecast


19/20

Chinese GDP growth rate is falling

19Source: World Bank national accounts data, and OECD National Accounts data files

Chinese GDP Growth y-o-y (percent)

6

7

8

9

10

11

12

13

14

15

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


20/20

0

2,000

4,000

6,000

8,000

10,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

2,000

4,000

6,000

8,000

10,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Chinese yearly GDP Growth is much larger today in absolute terms

20Source: Bloomberg

Chinese GDP (current $bn)

2006 vs 2005:$2.3tn x 20.2%= $450bn

2014 vs 2013:$9.2tn x 7.4%= $680bn

2015 @ 5%2015 @ 6%2015 @ 7%

Documents

2015 Global Metals MiningSteel Conference GLEN