Preliminary Results 2019 18 February 2020 Important notice concerning this document including 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 be identified by the use of forward looking terminology, or the negative thereof such as “outlook”, "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", “shall”, "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy. By their nature, forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore’s control. Forward-looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those disclosed in Glencore’s 2018 Annual Report, which will be updated in the 2019 Annual Report that is expected to be published in late February 2020. For example, our future revenues from our assets, projects or mines will be based, in part, on the market price of the commodity products produced, which may vary significantly from current levels. These may materially affect the timing and feasibility of particular developments. Other factors include (without limitation) the ability to produce and transport products profitably, demand for our products, changes to the assumptions regarding the recoverable value of our tangible and intangible assets, the effect of foreign currency exchange rates on market prices and operating costs, and actions by governmental authorities, such as changes in taxation or regulation, and political uncertainty. Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document. Except as required by applicable regulations or by law, Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking, to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date. No statement in this document is intended as a profit forecast or a profit estimate and past performance cannot be relied on as a guide to future performance. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. The companies in which Glencore plc directly and indirectly has an interest are separate and distinct legal entities. In this document, “Glencore”, “Glencore group” and “Group” are used for convenience only where references are made to Glencore plc and its subsidiaries in general. These collective expressions are used for ease of reference only and do not imply any other relationship between the companies. Likewise, the words “we”, “us” and “our” are also used to refer collectively to members of the Group or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.
Preliminary Results 2019 Highlights Ivan Glasenberg – Chief Executive Officer
Preliminary Results 2019 2019 Scorecard 3
Healthy cash generation despite significantly lower commodity prices • 2019 Adj. EBITDA(1) of $11.6bn, down 26% in line with lower prices • Cash generated by operating activities before working capital changes of $10.3bn, down 22% • Shareholder returns of $5bn, including $2.7bn distribution and $2.3bn buyback (including $0.3bn from 2018’s programme) • Net capex cash flow of $5bn(2)
Solid margin and cost performance for our key commodities • Impact of lower prices on EBITDA margins somewhat moderated by solid cost performance in our key commodities: • Metals and Minerals EBITDA mining margin (excluding ramp-up/development assets) of 37% (41% in 2018). • Coal EBITDA mining margin of 36% (46% in 2018) • Full year cost performance in our key commodities: copper (ex African copper) 81c/lb, zinc 13c/lb (47c/lb ex-gold), nickel (ex Koniambo) 277c/lb and thermal coal $45/t ($26/t margin)
Marketing underpinned by oil’s performance • Marketing Adjusted EBIT of $2.4 billion, down 2% year-on-year. Strong second half metals’ performance and robust oil results largely offset the cobalt headwinds experienced in the first half
Balance sheet / Cash flow coverage in good shape • Available committed liquidity of $10.1bn, bond maturities capped around $3bn in any given year • Net debt of $17.6bn, after $1.25bn of IFRS 16 related lease liabilities • 2020 focus on reducing Net debt/Adjusted EBITDA ratio closer to 1x and net debt towards the $14-$15 billion range(3) • Recommended 2020 base distribution of $0.20 per share ($2.6 billion), payable in two equal instalments, comfortably covered (c.1.5x) by current annualised business free cashflow generation
Preliminary Results 2019 Notes: (1) Refer basis of presentation on page 5 of the Preliminary Results 2019 report, refer to note 1 page 31 and Alternative Performance Measures page 112 for definition and reconciliation of Adjusted EBITDA/EBIT. (2) Net capex cash flow refers to Net purchase and sale of property, plant and equipment. (3) Excluding Marketing related finance lease liabilities ($0.6bn as at 31 December 2019). Some return of cash margin calls in respect of Marketing’s hedging activities and monetisation of select non-core long-term assets could aid in this process Sustainability performance 4
16 17 9 13 Fatalities 2016 2017 2018 2019
Lost time injury 1.22 1.02 1.06 0.99 frequency rate (1) Per million hours worked 2016 2017 2018 2019
Total recordable injury 3.72 3.08 3.18 2.86 frequency rate (1) Per million hours worked 2016 2017 2018 2019
34.6 33.4 30.6 29.2 CO2 Scope 2 Scope 1&2 Scope 1 (2) Million tonnes 2016 2017 2018 2019 Environmental Incidents 0 0 0 0 Category 4/5 (number)(3) 2016 2017 2018 2019
Community investment 84 90 95 90 spend US$ million 2016 2017 2018 2019
Preliminary Results 2019 Notes: (1) Lost time incidents (LTIs) are recorded when an employee or contractor is unable to work following an incident. LTIs are recorded when an incident results in lost days from the first rostered day absent after the day of injury. The day of the injury is not included. LTIFR is the total number of LTIs recorded per million working hours. LTIs do not include Restricted Work Injuries (RWI) and fatalities. TRIFR = Total sum of Fatalities, Lost Time Injuries, Restricted Work Injuries and Medical Treatment Injuries per million hours worked. (2) Data subject to final verification and may change. (3) Category 4 and 5 represents major and catastrophic incidents respectively Our commitment to the transition to a low-carbon economy 5 2019 performance against our commitment(1)
Our commitment includes:
Paris-consistent New 2020 public Review of Alignment strategy / capital Scope 1 and 2 targets progress with TCFD 1 discipline 2 3 4 • Our 2019 capital expenditure(2) • To date we have achieved a • Annual update on • We continue to was weighted towards energy c.10% reduction in performance disclosed implement the transition materials, including: Scope 1 and 2 emissions on our website and in recommendations of • African copper and cobalt intensity since 2016 – vs our our Annual and the TCFD in our Sustainability reports annual reporting. • Nickel in Canada target of 5%(4)
• Natural depletion of our coal • New longer-term Scope 1 and resource base in Colombia and 2 targets that support the Corporate to a lesser extent South Africa Paris goals will be released climate change and Australia (and oil), will during 2020 5 lobbying contribute to reduction of our absolute Scope 3 emissions • Review of trade associations over time completed in 2019(5) • We project a c.30% reduction in Scope 3 emissions by 2035(3)
Preliminary Results 2019 Notes: (1) RNS Furthering our commitment to the transition to a low-carbon economy, 20 February 2019. (2) Preliminary Results 2019, Industrial activities capital expenditure, page 18. (3) RNS Glencore’s commitment to the transition to a low-carbon economy and Review of 2019 performance and Scope 3 emissions projection, 18 February 2020. (4) Glencore Sustainability Report 2018, page 10. (5) https://www.glencore.com/dam:jcr/6e8173bd-7d2e-494c-bd57-4c23957094ea/2018-sd-membership-review-final.pdf Cobalt: strategic long-term partnerships Glencore plays an important role in supplying the materials that enable the energy and mobility transition
Cobalt long-term contracts Enabling the energy and mobility transition Cobalt is a key lithium-ion battery raw material, • 29 May 2019 essential for the electric vehicle and mobile “Long-term revolving agreement for the phone markets supply of cobalt hydroxide to Umicore’s Our cobalt hydroxide marketing strategy battery materials value chain” • Long-term supply agreements with geographically diversified key players along the 7 October 2019 lithium-ion battery supply chain “A minimum of 61,200 tonnes of Cobalt Our commitment to responsible production between 2020 and 2024” • Our DRC cobalt operations will be independently audited each year 19 November 2019 against the “Cobalt Refinery Supply “Up to c.30,000 tonnes of cobalt contained Chain Due Diligence Standard”. in hydroxide between 2020 and 2025. With this contract, SK Innovation can produce • This standard is defined by the batteries for 3 million EVs” Responsible Mining Initiative (RMI)
Providing security of supply to our customers 10 February 2020 • Long term availability of responsibly sourced “Up to 21,000 tonnes of cobalt contained in cobalt from a reliable supplier for our customers cobalt hydroxide between 2020 and 2024”
Preliminary Results 2019 2019 Financial performance Steven Kalmin – Chief Financial Officer
Preliminary Results 2019 2019 Financial scorecard 8 Lower earnings in line with weaker prices and operational challenges at our ramp-up/development assets
Adjusted EBITDA ($)(1) Industrial Adj. EBITDA ($) Marketing Adj. EBIT ($) 11.6bn 9.0bn 2.4bn -26% y/y, mainly reflecting lower -32%, primarily driven by lower y/y -2% y/y, robust oil results and a strong H2 commodity prices, and operational commodity prices (mainly cobalt and coal) Metals’ performance, offset the cobalt challenges at our ramp-up / development and lower than expected cobalt sales at headwinds experienced in H1 assets Katanga, due to delayed drying capacity commissioning Cash generated by operating activities Net income ($) Funds from operations ($) before WC changes ($) -0.4bn 7.9bn 10.3bn After c.$2.8bn of impairments, mostly related to -32% vs 2018, reflecting a material lag effect -22% vs 2018 Colombian coal, Chad oil and African copper. (mismatch) of taxes paid in 2019 in respect Net income pre-significant items -58% to $2.4bn of 2018 earnings
Net capex cash flow ($)(2) Net debt ($) Distributions and buybacks ($) 5.0bn 17.6bn 5.0bn +1%, vs 2018 +19%, after recognition of $1.3bn of $2.7bn base distribution paid in 2019 plus incremental lease liabilities in 2019 due to $2.3bn of buybacks (including $0.3bn in IFRS 16, and $5.3bn of distributions and respect of 2018’s programme) buybacks, including $0.3bn to minorities
Preliminary Results 2019 Notes: (1) Refer basis of presentation on page 5 of the Preliminary Results 2019, refer to note 1 page 31 and Alternative Performance Measures page 112 for definition and reconciliation of Adjusted EBITDA/EBIT. (2) Net capex cash flow refers to net purchase and sale of property, plant and equipment. Industrial 9 2019 Adjusted EBITDA: $9.0bn
Weaker pricing environment • Adjusted EBITDA down 32% to $9.0bn Industrial Adjusted EBITDA • Headwind from lower commodity prices, notably coal and cobalt, as well as challenges at our African copper and $13.3bn EBITDA mining margins Koniambo ramp-up/development assets 5.3 • Maintained strong cost performance within our base 2019 2018 business Copper ex Africa 49% 48% $9.0bn Metals and Minerals Copper 29% 40% • EBITDA mining margin of 28% (38% in 2018); solid margin 3.9 Zinc 33% 37% ex ramp-up/development assets of 37% (41% in 2018) Nickel ex Koniambo 34% 36% • Adjusted EBITDA of $5.6bn, down 34% in line with lower Nickel 25% 36% commodity prices and challenges across our African Metals and Minerals copper portfolio, as well as ceasing to capitalise 37% 41% ex Africa/Koniambo Koniambo’s operating costs, as was the accounting practice through its development phase Metals and Minerals 28% 38% Coal 36% 46% Energy Products 8.5 5.6 • Coal EBITDA mining margin of 36% (46% in 2018) • Adjusted EBITDA down 27%, as lower coal prices more -0.5 -0.4 than offset the higher volumes from Hail Creek and HVO, 2018 2019
and FX benefits from the stronger USD Corp and Other Energy Products Metals and Minerals
Preliminary Results 2019 Industrial 10 Adjusted EBITDA bridge
Variance 2019 vs 2018 ($ million)
Volume: Full year contribution from FX: 13,276 HVO and Hail Creek Mainly: acquisitions, partially offset by AUD +c.$360M Koniambo and various sales ZAR +c.$150M 4,253 timing differences (inventory KZT +c.$50M movements) ARS +c.$130M 446 200 562 783 34 8,964 African copper: Cost: Primarily Mutanda Price: Year-over-year change in scaling down and Copper -8% coal take or pay liabilities Mopani’s extended Zinc -13% (non-cash), affecting the smelter shutdown Nickel +6% base 2018 period. Cobalt -57% Business impacted by GC Newc coal -27% extreme levels of inflation in Ferrochrome -14% Argentina and inflationary pressure (including power prices) in South Africa
2018A Price Volume Cost FX African copper Other 2019A
Preliminary Results 2019 Industrial 11 2019 key commodity department performance
Copper Zinc Nickel Coal
• 1,371kt • 1,078kt • 120.6kt • 139.5Mt • 25% Group EBITDA $3.0bn • 15% Group EBITDA $1.8bn • 5% Group EBITDA $0.6bn • 31% Group EBITDA $3.6bn • 109¢/lb calculated • 98¢/lb calculated • 241¢/lb calculated • $26/t calculated EBITDA margin EBITDA EBITDA margin EBITDA EBITDA margin EBITDA EBITDA margin EBITDA
• Production: -82.5kt YoY: mainly • Production: +9.4kt YoY: restart of • Production: -3.2kt YoY: mainly • Production: +10.1Mt YoY: addition of Mutanda production change, Lady Loretta and higher McArthur reflects H1 maintenance stoppages HVO and Hail Creek, plus recovery at Alumbrera 2018 mine depletion and River production, partially offset by at Koniambo Prodeco, partially offset by dust- Mopani smelter outage planned lower grades at Antamina • Unit costs: +187¢/lb vs 2018: after related production impacts at • Unit costs: +44¢/lb vs 2018: lower and safety stoppage at Kazzinc inclusion of Koniambo as a regular Cerrejon cobalt prices and higher input costs • Unit costs: +17¢/lb vs 2018: primarily “commercial” operation (costs • Unit costs: Thermal FOB cash cost (notably acid) in DRC assets and reflects lower by-product credits and previously capitalised) -$2/t vs 2018: mostly due to impact of Mopani smelter outage impact of higher Zn TCs. Underlying • Unit costs ex-Koniambo: +66¢/lb vs favourable movements in AUD and • Unit costs ex-Africa: -20¢/lb vs 2018: gross mine unit costs were broadly 2018: primarily weaker cobalt prices ZAR largely reflecting operational steady year-on-year improvements and efficiencies, mainly in South America
Mine costs (¢/lb) Mine costs (¢/lb) Mine costs (¢/lb) Thermal mine costs and margin($/t) 47 148 43 Ex gold 396 398 47 46 45 156 104 24 10 13 80 Ex Africa 211 277 40 Margin -4 288 101 81 Ex Koniambo 27 26
2018A 2019 Guidance 2019A 2018A 2019 Guidance 2019A 2018A 2019 Guidance 2019A 2018A 2019 Guidance 2019A
Preliminary Results 2019 Marketing 12 2019 Adjusted EBIT: $2.4bn
Marketing Adjusted EBIT ($bn) Steady performance (Adjusted EBIT -2% y/y), with a strong H2 metals’ performance and robust oil results 3.5 $2.41bn 3.2 largely offsetting the challenging cobalt market $2.37bn conditions experienced in H1 0.74 2.9 1.32 3.0 2.8 2.8 Metals and Minerals Adjusted EBIT -37% 2.3 • Stronger H2 performance, recovering from a weak H1 2.5 2.1 2.4 characterised by the onset of trade tensions and 2.5 1.74 2.4 2.4 challenging cobalt markets, which triggered inventory 2.0 writedowns on material sourced from Glencore mines 1.9 Long-term in earlier periods 1.5 guidance range: 1.6 $2.2-$3.2bn 1.09 Energy Products: Adjusted EBIT +78% 1.0 • Robust contribution from oil
We maintain our long-term Marketing Adjusted EBIT 0.5 guidance range of $2.2 to $3.2 billion 0.0 -0.07 -0.05 2012 2016 2018 2014 2010 2008
2018 2019 2020+ Corp and Other Energy Products Metals and Minerals
Preliminary Results 2019 Industrial Capex 13
2019 Sustaining capex 2019 Capex cash impact ($M) Capex outlook ($bn)
• $4bn 2019 Marketing capex (mostly Key expansionary capital projects include: leases) Katanga Acid plant 2020 2019 Expansionary capex • ➝ • Zhairem 2020 Sale of ➝ • $1.3bn United 2021 PP&E • ➝ INO nickel projects 2023 • ➝ Astron oil refinery 2025 2019 Net purchase and sale of • ➝ property, plant and equipment • Oil drilling programmes (in sustaining below) IFRS 16 • $5.0bn cash outflow Leases / 5.5 other 5.0 1.5 2020-2022 1.3 Expansion 4.2 • Average of $5.0bn per annum 2019 Industrial Net PP&E 1.0 4.0 • Capex profile includes: capex cash 3.7 • Astron oil refinery 3.2 • Capitalisation of previous operating leases – IFRS 16 • Some TSF reinforcements to meet more conservative scenario Sustaining probability thresholds 2020F 2021F 2022F
Preliminary Results 2019 Balance sheet 14 Conservative financial policies provide balance sheet strength
Net funding ($) Net debt ($) Liquidity and funding • Committed available liquidity of $10.1bn at 31 December • Bond maturities managed around c.$3bn ceiling in any one year 34.4bn 17.6bn +7% vs 2018; reflecting +$2.8bn, including new adoption of new lease leasing standard and after Commitment to strong BBB/Baa Investment Grade accounting standard $5.3bn of shareholder • Moody’s: Baa1 (stable), S&P: BBB+ (stable) returns. Readily Marketable Long-term target of maximum 2x Net debt/Adjusted • Inventories (RMI) ($) Liquidity ($) EBITDA, augmented by the upper band of our Net debt target range of $10bn to $16bn(1) • 2020 focus on reducing ratio closer to 1x, and Net debt 16.8bn 10.1bn (1) towards the c.$14-$15 billion range in the current -4%. Targeting RMIs Available committed economic environment. Supporting this process could consistently <$20bn undrawn credit facilities and include: through the cycle cash • Monetisation of select non-core long-term assets • Net return of cash margin calls in respect of 2019 Net debt on a comparable basis to 2018 ($bn) Marketing’s hedging activities(2) 1.25 • Solid cash flow coverage ratios: 17.56 16.31 • FFO to Net Debt of 44.8% 14.71 • Net debt to Adjusted EBITDA of 1.51x
2019A IFRS 16 Leases 2019 Comparable 2018A
Preliminary Results 2019 Notes: (1) Excluding Marketing related finance lease liabilities in respect of previously classified operating leases required to be capitalised under the new IFRS leasing standard, effective 1 January 2019. Such amount was c.$0.6bn as at 31 December 2019, representing primarily chartered vessels and various storage facilities, where the majority of such commitments expire within 2 years. (2) Due to December 2019 strength in commodity prices, in particular, copper and oil up 6% each, c.$0.8 billion of additional cash collateral was paid in the month relating to our metals and energy marketing business’ hedging activities Capital allocation 15 Balancing shareholder returns, capital structure and growth
2019 Capital allocation 2019 Capital allocation - cash ($ billion)(3)
Shareholder Returns Net acquisitions of • $5.3 billion - Distributions and buybacks subsidiaries and investments Growth/Reinvestment Net working • $147 million - M&A + Other capital release • $5.0 billion – Net capex cash flow Net capex cash flow 2020 proposed distribution in respect of 2019 cash flows:
◦ 20 ¢/share (c.$2.6bn) 2020 equity cash flows will be prioritised for:
◦ Net debt – reducing Net debt/Adjusted EBITDA ratio closer to 1x and net debt towards the $14-$15 billion range(1). Some return of cash margin calls in respect of Marketing’s hedging activities and monetisation of Distributions and select non-core long-term assets could aid in this buybacks process Funds from Surplus cash Buybacks – accounting for above, as and when (2) ◦ operations movement surplus free cash flow generation/balance sheet capacity allows
Preliminary Results 2019 Notes: (1) Excluding Marketing related finance lease liabilities in respect of previously classified operating leases required to be capitalised under the new IFRS leasing standard, effective 1 January 2019. Such amount was c.$0.6bn as at 31 December 2019, representing primarily chartered vessels and various storage facilities, where the majority of such commitments expire within 2 years. (2) FFO materially impacted by the lag of income taxes paid in 2019, in respect of 2018 profitability (reduction in balance sheet income tax payable of $755 million), as well as $238 million of taxes paid in 2019, expected to be offset against future taxes due or refunded. (3) Totals may not add due to rounding. 2020 Modelling guidance
Preliminary Results 2019 2020 unit cash costs/margins 17 Key commodities
Copper Zinc Nickel Coal Production: 1.30Mt ± 50kt Production: 1.27Mt ± 30kt Production: 125kt ± 5kt Production: 135Mt ± 4Mt Unit costs: 120 ¢/lb Unit costs: 23 ¢/lb (58 ¢/lb ex Au) Unit costs: 351 ¢/lb Unit costs: Thermal FOB cash Unit costs ex-Africa: 82 ¢/lb Unit costs ex-Koniambo: 227 ¢/lb cost $45/t
• Forecast first quartile position • Forecast first quartile position • Forecast second quartile position • Forecast first quartile cash margin • Targeting c.100 ¢/lb group mine unit • Cost increase reflects forecast lower • Improved 2020 cost guidance curve cash costs by 2021 with achievement by-product credits per tonne of reflects stronger cobalt and PGM • Stable unit costs of steady state production at proportionately higher Zn metal credits • Declining margin in line with lower Katanga produced and some impact of overall net pricing higher Zn TCs. Underlying gross mine unit costs are broadly steady year-on-year Mine costs (¢/lb) Mine costs (¢/lb) Mine costs (¢/lb) Mine costs(1) and margin ($/t)
58 398 47 148 45 45 47 351 120 Ex gold 104 40 24 Margin @ 23 Ex Koniambo 81 82 $74/t Newc 13 211 101 277 26 Ex Africa 24 -4 227
2018A 2019A 2020 2018A 2019A 2020 2018A 2019A 2020 2018A 2019A 2020 Guidance Guidance Guidance Guidance
Preliminary Results 2019 Notes: (1) Thermal FOB cash costs Production Update 18 2020 guidance unchanged
Group guidance – own source(1)
2019A 2020F 2021F 2022F Copper - excl. African Copper kt 1001 975 ± 25 980 ± 25 930 ± 25 Copper - African Copper(2) kt 370 325 ± 25 355 ± 25 370 ± 25 Copper - Group kt 1371 1300 ± 50 1335 ± 50 1300 ± 50
Cobalt kt 46 29 ± 4 32 ± 4 32 ± 4 Zinc(2) kt 1078 1265 ± 30 1400 ± 30 1200 ± 30 Nickel kt 121 125 ± 5 126 ± 6 129 ± 7 Ferrochrome kt 1438 1340 ± 25 1450 ± 25 1450 ± 25 Coal(3) Mt 140 135 ± 4 136 ± 5 140 ± 5 Oil – entitlement interest Mbbl 5.5 6.5 ± 0.2 11.0 ± 0.4 12.7 ± 0.4
Preliminary Results 2019 Notes: (1) Full Year 2019 Production Report, 4 February 2020, Page 17. (2) Excludes Volcan. (3) Group coal production within 150 million tonne coal cap 2020 illustrative “spot” annualised cashflows 19 Mid-February spot commodities/FX
Ex-Africa Group $bn Copper(5) Guidance Guidance Zinc(7) Guidance Copper EBITDA 3.4 Total copper production (kt) 1300 975 Total zinc production (kt) 1265 Cu from other depts (kt) -110 -110 Zn from Cu department (kt) -152 Zinc EBITDA 1.6 Net relevant production (kt) 1190 865 Payability deduction (kt) -165 Nickel EBITDA 0.7 Realised Cu price - 96% LME (c/lb) 251 251 Net relevant production (kt) 948 Coal EBITDA 3.2 Full cash cost (c/lb) -120 -82 Spot Zn price (c/lb) 98.1 Other Industrial EBITDA(1) 0.4 Margin (c/lb) 131 169 Cost guidance (c/lb) -23 Margin ($/t) 2896 3709 Margin (c/lb) 75.5 Marketing EBITDA(2) 2.9 Spot annualised Adj. EBITDA ($M) 3446 3230 Margin ($/t) 1666 Group EBITDA 12.2 Spot annualised Adj. EBITDA ($M) 1579 Cash Taxes, Interest + other -2.6 Industrial Capex(3) -5.3 Coal(6) Guidance Nickel(8) Guidance Illustrative spot free cash flow(4) 4.3 Total coal (Mt) 135 Production (kt) 125 Relevant NEWC price ($/t) 74 Spot Ni price (c/lb) 599 Portfolio mix adjustment @ February 2020 ($/t) -5 Cost guidance (c/lb) -351 Thermal cost guidance ($/t) -45 Margin (c/lb) 248 Margin ($/t) 24 Margin ($/t) 5465 Spot annualised Adj. EBITDA ($M) 3240 Spot annualised Adj. EBITDA ($M) 683
Notes: Totals may not add to rounding. (1) Other industrial EBITDA includes Ferroalloys, Oil and Aluminium less c.$350M corporate SG&A. (2) Marketing Adjusted EBITDA of $2.9bn is calculated from the mid-point of the of the $2.2- $3.2bn EBIT guidance range plus $200M of Marketing D+A. (3) Net cash capex including JV capex in 2020E, but excluding c.$200M of capitalised leases compared to Slide 13. (4) Excludes working capital changes and distributions. (5) Copper spot annualised adjusted EBITDA calculated basis mid-point of 2020 production guidance Slide 18 adjusted for copper produced by other departments. Spot LME price as at 13 February 2020. Costs include by-products, TC/RCs, freight, royalties and a credit for custom metallurgical EBITDA. (6) Coal spot annualised adjusted EBITDA calculated basis mid-point of production guidance Slide 18. Relevant forecast NEWC price of $74/t, Glencore estimate as at 13 February 2020, less $5/t portfolio mix adjustment and mine costs of $45/t (Slide 17) giving a $24/t margin to be applied across overall forecast group mid-point of production guidance of 135Mt. (7) Zinc spot annualised adjusted EBITDA calculated basis mid-point of production guidance Slide 18 adjusted for zinc produced by other departments less payability adjustment. Spot LME price as at 13 February 2020. Cost includes credit for by-products and custom metallurgical EBITDA. (8) Nickel spot annualised adjusted EBITDA calculated basis mid-point of production guidance Slide 18. Spot LME price as at 13 February 2020.
Preliminary Results 2019 Our 2020 priorities
2019 Investor Update Our 2020 priorities 21
Operating Ramp-up / Strong Health & efficiency & development balance Management Confidence safety Capital assets sheet discipline
• Deliver a step- • Deliver Katanga • Deliver • Commitment to • Transition to • Stability and change in safety 2020 guidance of budgeted strong BBB/Baa new generation consistency of performance 270ktpy Cu and operational Investment Grade of leadership operational and volumes at/near financial • Implementation 29ktpy Co • Targeting first quartile performance of an enhanced • Mopani smelter reduction in costs/margins and sharper restart ND/Adj. EBITDA • Return excess focused fatality • Maximise free towards 1x and Net capital to • Successful cash flow debt towards the shareholders reduction commissioning of programme generation $14-$15bn range the new Katanga • Be disciplined Acid plant • Focus on • Buybacks as and within our capital through H1 2020 portfolio NPV when surplus free allocation per share cash flow / balance framework • Koniambo sheet capacity operational allows stability
Preliminary Results 2019 Q&A
Preliminary Results 2019 Appendix
Preliminary Results 2019 2019 Industrial mine costs/margin reconciliation 24
2019 2019 Ex-Africa 2019 2019 Copper(1) Guidance Actual Actual Zinc(1) Guidance Actual Total copper production (kt) 1385 1371.2 1001 Total production (kt) 1110 1077.5 Cu from other depts (kt) -140 -130 -130 Zn from Cu department (kt) -104 -102 Net relevant production (kt) 1245 Payability deduction (kt) -151 -147 Actual relevant prod. (kt) 1241 871 Net relevant production (kt) 855 Actual Cu sales 1245 1228 866 Actual relevant production (kt) 828 Realised Cu price (c/lb) 261 257 254 Relevant zinc sales (kt) 851 Full cash cost (c/lb) -156 -148 -81 Actual Zn sales 828 Margin (c/lb) 105 109 173 Realised Zn price (c/lb) 116 111 Margin ($/t) 2315 2403 3814 Full cash cost (c/lb) -10 -14 Implied EBITDA ($M) 2882 Margin (c/lb) 105.6 97.3 Reported 2019 EBITDA ($M) 2951 3303 Margin ($/t) 2328 2144 Implied 2019 EBITDA ($M) 1981 Reported 2019 EBITDA ($M) 1775
2019 2019 Ex-Koniambo 2019 2019 Nickel(1) Guidance Actual Actual Coal(1) Guidance Actual Total production (kt) 128 Total production (Mt) 140 Actual production 121 97 Actual production (Mt) 139.5 Net relevant production (kt) 128 Net relevant production (Mt) 140 Actual Ni sales (kt) 118 95 Actual relevant production (Mt) 139.5 Realised Ni price (c/lb) 632 639 642 Realised 2019 NEWC ($/t) 84 78 Full cash cost (c/lb) -396 -398 -277 Portfolio mix adjustment ($/t) -11 -7 Margin (c/lb) 236 241 365 Full cash cost ($/t) -46 -45 Margin ($/t) 5214 5313 8047 2019 Margin ($/t) 27 26 Implied 2019 EBITDA ($M) 667 Implied 2019 EBITDA ($M) 3780 Reported 2019 EBITDA ($M) 626 760 Reported 2019 EBITDA ($M) 3624
Preliminary Results 2019 Note: (1) 2019 Guidance based on the Investor Update presentation, December 2019, 2019 Half Year results presentation, 7 August 2019, Full Year 2019 Production Report, 4 February 2020. 2020 key EBITDA sensitivities 25
Approximate estimated impact on FY2020 EBITDA of a 10% change: $M Copper price 740 Australian export thermal coal price 350 Australian hard coking coal price 115 Zinc price 270 Cobalt price 90 Nickel 180 AUD vs USD 520 ZAR vs USD 145 CAD vs USD 160 CLP vs USD 55
Preliminary Results 2019 Listed entity market valuations and selection of other entities 26
Listed entities % owned Market value $M Russneft 25.0% 614 EN+ 10.6% 793 Volcan 23.3%(1) 429 Rosneft 0.6% 436 Century 47.4% 251 Yancoal 6.8% 173 Other(2) Various 192 Total 2888
Selection of other entities US oil infrastructure BaseCore (50% owned royalty company) Sale of Mototolo – deferred consideration
Preliminary Results 2019 Notes: Market values as at 12 February 2020. (1) Economic interest based on aggregate market cap derived from both share classes. (2) Other includes Trevali Mining, Polymet, Recyclex, Oz Minerals, Paranapanema and Merafe Debt maturity profile – capital market notes 27 $23.4bn as at 31 December 2019(1)
10.1
Managing annual debt maturities to around $3bn
Liquidity @ 2020 2021 2022 2023 2024 2025 2026 2027 post 2027 31.12.2019
USD EUR GBP CHF AUD JPY
Preliminary Results 2019 Notes: (1) Note 20, Pages 76 and 77, Preliminary Results 2019, excludes Volcan bond. Own source production 28 2013-2019 History
Copper (kt) Zinc (kt) Lead (kt) Nickel (kt) Cobalt (kt) 1546 1445 315 46 124 1502 1399 1493 1387 308 121 42 1454 115 298 1426 295 109 28 27 1371 101 280 98 23 1094 1090 21 1068 1078 96 19 1310 273 273
2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019
Ferrochrome (kt) Coking coal (Mt) Semi-soft coking coal (Mt) Thermal coal (Mt) Oil entitlement interest (Mbbl)
1580 9.2 6.4 136.8 10.6 1523 1531
1462 126.3 1438 123.9 7.5 122 7.3 7.5 118 7.4 4.5 115.4 4.2 1295 6.1 110.5 6.0 5.9 4.0 3.9 5.5 3.6 5.0 5.0 1238 5.3 3.5 4.6
2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019 2013 2014 2015 2016 2017 2018 2019
Preliminary Results 2019 Buyback update 29 Shares eligible for distribution
Buy back program completed on 6 December 2019 Shares eligible for distribution (million shares) • $4bn of shares purchased since July 2018 • 1.1 billion shares purchased Issued share capital: 14,586 • GBP average of 2.83/share • USD average of 3.64/share
14300 Shares eligible for distribution as at 31 December 2019 H1 18: 14,254 (thousand shares):
Issued share capital 14,586,200 Shares eligible for distribution: issued FY 18: 13,832 13800 Less Treasury shares (@ 31 Dec 2019) 1,261,887 share capital less Less Trust shares(1) 129,992 treasury and trust Shares eligible for distributions 13,194,321 shares H1 19: 13,550
13300
FY 19F: 13,194 (1)
H1 15: 12,937 12800 FY14 H115 FY15 H116 FY16 H117 FY17 H118 FY18 H119 FY'19
Preliminary Results 2019 Source: Glencore, as of 31 December 2019. (1) Refer Note 16, Preliminary Results 2019, Page 72 Responsibly sourcing the commodities that advance everyday life 30
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 strategy 1) Health: Become a leader in the protection and improvement of our people’s and communities’ wellbeing 2) Safety: Become a leader in workplace safety, eliminating fatalities and injuries 3) Environment: Minimise any negative impact from our operations 4) Community and human rights: Foster sustainable growth and respect human rights wherever we operate
Preliminary Results 2019 2020 Distribution timetable 31 In respect of 2019 cash flows
First tranche of proposed distribution 2020 Applicable exchange rate reference date (Johannesburg Stock Exchange (JSE)) Close of business (UK) 9 April Applicable exchange rate announced on the JSE 14 April
Last day to effect removal of shares cum distribution between Jersey and JSE registers 14 April at commencement of trade
Last time to trade on JSE to be recorded in the register for distribution 21 April Ex-distribution date (JSE) 22 April Ex-distribution date (Jersey) 23 April Distribution record date for JSE Close of business (SA) 24 April Distribution record date in Jersey Close of business (UK) 24 April Deadline for return of currency elections form (Shareholders on Jersey Register only) 27 April Removal of shares between the Jersey and JSE registers permissible from 28 April Applicable exchange rate reference date (Jersey) 1 May Annual General Meeting (shareholder vote to approve aggregate 2020 distribution) 6 May H1 distribution payment date 22 May
Preliminary Results 2019 Well positioned
Preliminary Results 2019 Commodities that Glencore produces 33 We are a major responsible supplier of many of the enabling commodities needed for decarbonisation
Cu Co Ni Pb Zn V Coal Copper Cobalt Nickel Lead Zinc Vanadium Thermal Coal
Application Batteries Batteries Batteries Batteries Batteries Batteries Low-cost Solar Power Wind Power Solar Power Solar Power Solar Power Solar Power baseload Wind Power Mobility Wind Power Wind Power Wind Power Wind Power power Mobility Electronics Mobility Electronics Electronics Grid Electronics Grid Cement Grid Grid manufacture
Glencore 1.37Mt 46kt 121kt 280kt 1.08Mt 9.1kt 124Mt production(1)
Global 20.6Mt 140.5kt 2.45Mt 5.1Mt 13.1Mt 108kt c.6 billion supply(2) tonnes
Preliminary Results 2019 Source: (1) Full Year 2019 Production Report. (2) Macquarie Commodities Compendium, 12 December 2019, 2019 mine supply for copper, lead, zinc and vanadium. Cobalt based on refined production. Coal – IEA Coal 2019 – Analysis and forecast to 2024, assuming 78% of 2018 global coal production is steam coal production. Nickel – Glencore estimate. Well positioned for key future growth trends 34 Nickel and cobalt
Nickel demand in electric vehicles (kt Ni)(3) Electrification of Mobility +330kt of new • Significant demand growth emerging as the world EV nickel adopts new NMC and NCA battery chemistries demand by • Nickel battery demand: c.50kt in 2010, c.200kt in 2019F, 2025 >500kt in 2025F (inc 400kt Ni in EV) 2018 nickel • Nickel in Electric Vehicles forecast at 800kt by 2030 market: • Trend for higher EV penetration, larger battery size and 2.4Mt higher nickel chemistries (811 vs 622) suggest even 2019F 2025F higher nickel demand than forecast
• Lifecycle of nickel and cobalt well understood and Cobalt demand in electric vehicles (kt Co)(3) readily recyclable • Majority of nickel containing steels/alloys are recycled +73kt of new EV • Glencore processed 35kt of recycled material to recover cobalt demand 5kt nickel and 3kt cobalt in 2019 by 2025 • We are investing more than $2bn developing the next 2018 generation of Canadian nickel sulphide mines while cobalt upgrading our metallurgical facilities to responsibly market: supply nickel from our global operations 120kt 2019F 2025F
Preliminary Results 2019 Notes(1) Glencore estimates, B3, based on 11.5Mt new passenger EV sales by 2025, ca. 10% penetration rate. Well positioned for key future growth trends 35 Copper
Decarbonisation of Decarbonisation requires a lot of copper energy: Additional cumulative Cu demand needed (Mt Cu)(1)
• What holds for nickel and cobalt is equally true for 26 copper
• Decarbonising energy primarily impacts electricity 2018 Refined copper supply: c.23.5Mt(2) generation, industrial processes and mobility 22 • Renewable energy sources are much more copper intensive that conventional energy generation – Current additional copper required in generators, Government policies to Copper supply needs to transformers, inverters and extra copper cabling grow 3.6% every year 18 reduce CO2 • Implementation of current CO2 emission policies is between now and 2030 to forecast to require an additional 22 million tonnes of emissions by meet modelled government (1) copper by 2030.(1) 2030 will require targets : an additional • Meeting this demand will require the mining industry 14 cumulative 22Mt 2000-2018 annual average copper supply growth: 2.6%(2) to invest billions of dollars in capital each year to of copper by prolong the life of existing mines and develop new 2030(1) resources that are increasingly scarce 10 2018A
Preliminary Results 2019 Notes: (1) Bernstein, Metals & Mining: Copper and the Green economy – Thoughts from our decarbonisation conference, European Commission Joined Research Centre EDGAR, International Energy Agency (IEA), US Department of Energy, “Government Targets 2030” gradual reduction in emissions – Mid level scenario. (2) Wood Mackenzie, Q3 2019 Long-Term copper outlook. Energy demand fundamentals also support an ongoing role for coal, primarily in Asia 36
Seaborne coal demand expected to remain broadly stable Structural deficits emerging over the next 5 years Seaborne thermal coal supply demand balance (Mt)(1) • Robust demand growth from new Asian capacity expected to offset lower demand in Europe and the USA 1,200 • Asia’s share of global coal power generation up from c.20% Demand Range in 1990 to almost 80% in 2019 – “coal’s fate is increasingly tied to decisions made in Asian capitals.”(2) 1,000
Supply increasingly at risk 800 • Accelerating depletion of the seaborne coal reserve base Supply Planned • Our production capacity is capped at 150Mtpy and will risk supply decline as our existing portfolio depletes without Supply with no 600 reinvestment reinvestment • Development approval delays and shrinking financing options likely to limit planned future supply 400 Global coal production of all coal Growing risk of failure to meet energy needs and qualities in 2018 reached 8 billion tonnes(3) compromised economic growth 200 • Balance required between the need for affordable/reliable Operating or under construction coal fired power plants at energy and accelerating the shift to renewables July 2019 total 7,136(4) • High quality coal is part of the energy solution 0 2010 2015 2020F 2025F 2030F 2035F
Preliminary Results 2019 Notes: (1) Glencore analysis. (2) 17 December 2019, Keisuke Sadamori, IEA Director of Energy Markets and Security, https://www.iea.org/news/asia-is- set-to-support-global-coal-demand-for-the-next-five-years. (3) BP Statistical Review of World Energy June 2019. (4) Global Coal Plant Tracker, www.endcoal.org/tracker