24 NOVEMBER 2016 David Jollie, Market Analysis Manager/media/Files/A/Anglo-American... · Source:...
Transcript of 24 NOVEMBER 2016 David Jollie, Market Analysis Manager/media/Files/A/Anglo-American... · Source:...
OVERVIEW OF PGM MARKETS24 NOVEMBER 2016David Jollie, Market Analysis Manager
PLATINUM
Miss South Africa Platinum Crown 2013 - 2015
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CAUTIONARY STATEMENT
This presentation has been prepared by Anglo American Platinum Limited (“Anglo American Platinum”) and comprises the written materials/slides for a presentation concerning Anglo American Platinum. By attending this presentation and/or reviewing the slides you agree to be bound by the following conditions.This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy shares in Anglo American Platinum. Further, it does not constitute a recommendation by any of the Anglo American group of companies (“Anglo American”) or any other party to sell or buy shares in Anglo American Platinum or any other securities. All written or oral forward‐looking statements attributable to Anglo American Platinum or persons acting on their behalf are qualified in their entirety by these cautionary statements.The views expressed here contain information derived from publicly available or third party sources that have not been independently verified.Forward‐Looking StatementsThis presentation includes forward‐looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding Anglo American’s financial position, business and acquisition strategy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American’s products, production forecasts and reserve and resource positions), are forward‐looking statements. Such forward‐looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward‐looking statements.
Such forward‐looking statements are based on numerous assumptions regarding Anglo American’s present and future business strategies and the environment in which Anglo American Platinum will operate in the future. Important factors that could cause Anglo American’s actual results, performance or achievements to differ materially from those in the forward‐looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the availability of mining and processing equipment, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American Platinum operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American’s most recent Annual Report. Forward‐looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward‐looking statements. These forward‐looking statements speak only as of the date of this presentation. Anglo American Platinum expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the “Takeover Code”), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Services Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SWX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any other applicable regulations) to release publicly any updates or revisions to
any forward‐looking statement contained herein to reflect any change in Anglo American’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.Nothing in this presentation should be interpreted to mean that future earnings per share of Anglo American Platinum will necessarily match or exceed its historical published earnings per share.Certain statistical and other information about Anglo American Platinum included in this presentation is sourced from publicly available third party sources. As such it presents the views of those third parties, but may not necessarily correspond to the views held by Anglo American.
No Investment AdviceThis presentation has been prepared without reference to your particular investment objectives, financial situation, taxation position and particular needs. It is important that you view this presentation in its entirety. If you are in any doubt in relation to these matters, you should consult your stockbroker, bank manager, solicitor, accountant, taxation adviser or other independent financial adviser (where applicable, as authorised under the Financial Services and Markets Act 2000 in the UK, or in South Africa, under the Financial Advisory and Intermediary Services Act 37 of 2002.).
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Primary supply
Secondary supply
Platinum jewellery
Demand stimulation
1
2
5
6
7 A few thoughts on pricing
3The automotive sector – opportunity or challenge4
Current demand
8 Questions
OVERVIEW
4
Mogalakwena mine
Norilsk
Auto catalyst recycling
Jewellery recycling
WHERE DO THE PLATINUM GROUP METALS COME FROM?
1 Primary supply
5Source: SFA (Oxford)
A declining supply picture emerges at the end of the decade
GLOBAL PLATINUM GROUP METAL SUPPLY
1 Primary supply
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2025202220212020 202420232015 2018 201920172016
Global platinum supply 2015-2025 (000 oz)
CAGR 2015 – 2025: 0.1%
Other miningRecycling South Africa
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Source: SNL
THE PRIMARY CASH COST CURVE2016 cash costs
Spot price, 16 Nov
1 Primary supply
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Source: Venmyn Deloitte
WHAT WILL HAPPEN TO PRIMARY SUPPLY?South African production and capex
Refined platinum production versus capital expenditure (2015 money terms)
1 Primary supply
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WHAT COULD SUPPLY LOOK LIKE?Bring on new supply is challenging
1 Primary supply
Source: Johnson Matthey
9Source: Anglo American Platinum
MODEST GROWTH IN RECYCLING OF PLATINUM FORECAST
2 y2 Secondary supply
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WHY DO PEOPLE BUY THE PLATINUM GROUP METALS?
Images: Platinum guild international; Johnson Matthey
3 Current demand
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Source: SFA (Oxford)
GLOBAL PLATINUM DEMAND BY SECTOR
CAGR 2015 – 2025: 1.0%
3 Current demand
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2021 2024 20252018 2020 2022 202320192015 20172016
Global platinum demand 2015-2025 (000 oz)
JewelleryOther Automotive
12Source: SFA (Oxford)
GLOBAL PALLADIUM DEMAND BY SECTOR
CAGR 2015 – 2025: 1.1%
3 Current demand
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
2015 2016 2017 2025202420232021202020192018 2022
AutomotiveOther
Global palladium demand 2015-2025 (000 oz)
13Source: LMC Automotive, Anglo American Platinum
THE AUTOMOTIVE SECTOR
CAGR 2015 – 2025: 2.9%
4 The automotive sector – opportunity or challenge4 The automotive sector – opportunity or challenge
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
90,000,000
100,000,000
110,000,000
120,000,000
2013 20232022 202520242021202020192014 201820162015 2017
DieselGasolineHybridsElectric
Annual light duty vehicle production
14Source: LMC Automotive
WHAT IS THE FUTURE FOR THE DIESEL ENGINE?
4 The automotive sector – opportunity or challenge4 The automotive sector – opportunity or challenge
15Source: Platinum Metals Review/Johnson Matthey
% o
f max
imum
em
issi
ons
Euro
5/E
uro
6
HC HydrocarbonCO: Carbon monoxideNOX: Oxides of nitrogen
THRIFTING AND SUBSTITUTION
4 The automotive sector – opportunity or challenge4 The automotive sector – opportunity or challenge
Limited risk, and some opportunity as emission standards tighten
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DEVELOPMENTS IN THE AUTOMOTIVE INDUSTRYA degree of scepticism should be applied regarding future technologies…
4 The automotive sector – opportunity or challenge4 The automotive sector – opportunity or challenge
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0
20
40
60
80
100
120
140
0.00.51.01.52.02.53.03.54.0
Jul 0
8D
ec 0
8M
ay 0
9O
ct 0
9M
ar 1
0Au
g 10
Jan
11Ju
n 11
Nov
11
Apr 1
2Se
p 12
Feb
13Ju
l 13
Dec
13
May
14
Oct
14
Mar
15
Aug
15Ja
n 16
Hybrids and Oil Prices in the USA
Hybrid US Mkt Share (%, LHS)
WTI ($/barrel, RHS)
0%
2%
4%
6%
8%
10%
12%
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
FHEV MHEV PHEV BEV EREV FCEV
Forecast EV Penetration Rates
Source: HybridCars.com, LMC, Bloomberg
THE FUTURE FOR HYBRIDS
FHEV: Full Hybrid Electric VehicleMHEV: Mild Hybrid Electric VehiclePHEV: Plug-in Hybrid Electric Vehicle
BEV: Battery Electric VehicleEREV: Electric Vehicle with Extended RangeFCEV: Fuel Cell Electric Vehicle
4 The automotive sector – opportunity or challenge4 The automotive sector – opportunity or challenge
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ELECTRIC CARS – MYTH AND REALITY
4 The automotive sector – opportunity or challenge4 The automotive sector – opportunity or challenge
Images: Tesla (top left); David Jollie (top right); Nissan (bottom)
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INTERNAL COMBUSTION ENGINE CARS WILL BECOME MORE EXPENSIVE BUT XEV PREMIUMS WILL DECLINE
Source: AutonomieHEV: Hybrid Electric VehiclePHEV: Plug-in Hybrid Electric VehicleBEV: Battery Electric VehicleFCEV: Fuel Cell Electric Vehicle
4 The automotive sector – opportunity or challenge4 The automotive sector – opportunity or challenge
20Source: Johnson Matthey
POTENTIAL FOR JEWELLERY DEMAND - CHINA
5 Platinum jewellery5 Platinum jewellery
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0
500
1,000
1,500
2,000
2,500
2012 2013 2014 2015 2015H2
Number of Chow Tai Fook points-of-sale in greater China
Source: Chow Tai Fook
JEWELLERY DEMAND - RETAILERS
5 Platinum jewellery5 Platinum jewellery
22Source: IMF, World Bank, Glaux Metal
0
100
200
300
400
500
600
70020
0120
0220
0320
0420
0520
0620
0720
0820
0920
1020
1120
1220
1320
1420
1520
1620
1720
1820
1920
20
Growth in GDP components (bn USD)
Consumption
Investment
UNCERTAINTY IN JEWELLERY DEMAND: ECONOMIC GROWTH – CHINA
5 Platinum jewellery5 Platinum jewellery
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Source: Chinese Bureau of Statistics
UNCERTAINTY IN JEWELLERY DEMAND: DEMOGRAPHICS
5 Platinum jewellery5 Platinum jewellery
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STIMULATING DEMAND – OUR STRATEGY
Three key focus areas for further
development
Grow investment demand via the World Platinum Investment Council (WPIC) which will promote Pt as an investment product
Investment demand1
Grow sustainable jewellery demand and reduce demand elasticity. e.g. by growing Pt purchases in the Chinese and Indian bridal segments via the industry funded Platinum Guild International (PGI)
Jewellery demand2
Grow industrial demand through supporting development of new PGM applications (specific focus on accelerating fuel cell adoption)
Industrial demand3
Nea
r Ter
mM
ed-lo
ng
term
6 Demand stimulation6 Demand stimulation
25Source: Johnson Matthey, Austrian Mint, Anglo American Platinum
DEMAND STIMULATION – INVESTMENT
6 Demand stimulation6 Demand stimulation
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STIMULATING INDIAN JEWELLERY DEMANDFrom arranged marriages to true love
6 Demand stimulation6 Demand stimulation
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OVERVIEW OF EXISTING MARKET DEVELOPMENT ACTIVITIES
Investmentmodel
Direct into universities/
research facilitiesDirect investment Equity investment
Indirect investment and/or advocacy programmes, leveraging
partners with similar interests
Example Projects
Leveraged / co-funded
FC Mining Equipment
FC Rural electrification
Research Early stagebusinesses
Maturebusinesses
Product development
FC Vehicle
FC Cofimvaba
6 Demand stimulation6 Demand stimulation
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0
500
1,000
1,500
2,000
2,500
3,000
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
Number of patents referencing each metal
Pt
Pd
Rh
STIMULATING DEMAND - NEW APPLICATIONS
Source: Espacenet, Anglo American Platinum
6 Demand stimulation6 Demand stimulation
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STIMULATING DEMAND - NEW APPLICATIONS FOR PLATINUM
Source: Espacenet, Anglo American Platinum
6 Demand stimulation6 Demand stimulation
30Source: Bloomberg
PRICE PERFORMANCE IN 2016
7 A few thoughts on pricing