《Grant_Sporre_Anna_Mulholland_Paul_Young_Rodrigo_Barros_Jorge_Beristain-BRICS_MINING_CONFERENCE：CONFERENCE_WRAP-2012-11-15.ppt》由会员分享，可在线阅读，更多相关《Grant_Sporre_Anna_Mulholland_Paul_Young_Rodrigo_Barros_Jorge_Beristain-BRICS_MINING_CONFERENCE：CONFERENCE_WRAP-2012-11-15.ppt（43页珍藏版）》请在三一办公上搜索。
1、Buy,Buy,Hold,Hold,Buy,Hold,Buy,Buy,Deutsche BankMarkets Research,EuropeUnited KingdomMetals&Mining,IndustryBRICS MiningConference,Date14 November 2012Industry UpdateRob Clifford,Conference WrapSweating the assets for more returnsLast week,Deutsche Bank hosted its 9th Annual BRICs Metals and Miningco
2、nference.While 2012 has been a tough year and summer particularly so,focus on the sector has increased as we head into the end of the year.Therewas a very clear focus from the company presentations on sweating theexisting assets as a primary focus for increasing returns and maintainingdividend polic
3、ies.Capex studies have been curbed,but existing projects arevery much being pushed to feed the expected medium term demand fromChina.Precious metals companies also remain focussed on exploration todevelop their own growth options.Troubled times with a brighter future.The outlooks by the miners that
4、presented at the conference were all fairlysimilar;volatility in the near term followed by more certainty as China resumesits role as a commodity sink(albeit at a lower consumption growth rate than ithad previously sustained).There were nuanced differences in the outcomes foreach of the commodities.
5、The miners are being much more selective in theirchoices for commodities than they were last year(where growth in any andevery commodity was being examined).A number of the companies are eitherselling or ceasing to grow in certain commodities(eg Rio-Energy andaluminium,BHP-aluminium,ARM Chrome,Cliff
6、s thermal coal,Vale nickel)Squeezing the assets maximise margin not productionThe key theme from the conference was the increased focus of the companieson squeezing more margins from the existing asset base.This is planned to beachieved through 1)Cost cutting re-looking at contractor use,maintenance
7、schedules,equipment utilisation 2)Managing production moving fromproducing tonnes at any cost to trying to eke additional tonnes out at noadditional cost.Revisiting capexThere were no companies announcing cuts to existing projects,but all havetrimmed the range of future projects significantly.On exi
8、sting projects,thecompanies are looking at areas where capex can be cut or lowered where notalready committed(re-tender now price pressures are lower progressprojects at a slower rate).Most of the companies presenting explicitly statedtheir intention to maintain existing dividend policies.,Research
9、Analyst(+44)20 754-Grant SporreResearch Analyst(+44)20 754-Anna Mulholland,CFAResearch Analyst(+27)11 775-Paul YoungResearch Analyst(+61)2 8258-2587paul-Rodrigo BarrosResearch Analyst(+55)11 2113-Jorge Beristain,CFAResearch Analyst(+1)203 863-Companies FeaturedARM(ARIJ.J),ZAR180.16BHP Billiton Plc(B
10、LT.L),GBP1,953.50Boliden AB(BOL.ST),SEK113.30Cliffs(CLF.N),USD35.90Kazakhmys PLC(KAZ.L),GBP683.00Aurubis(NAFG.DE),EUR49.26Randgold(RRS.L),GBP6,930.00Rio Tinto(RIO.L),GBP3,089.50,Vale(VALE.N),USD17.70,Buy,_Deutsche Bank AG/LondonAll prices are those current at the end of the previous trading session
11、unless otherwise indicated.Prices are sourcedfrom local exchanges via Reuters,Bloomberg and other vendors.Data is sourced from Deutsche Bank and subjectcompanies.Deutsche Bank does and seeks to do business with companies covered in its research reports.Thus,investors should be aware that the firm ma
12、y have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.DISCLOSURES ANDANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1.MICA(P)072/04/2012.,14 November 2012Metals&MiningBRICS Mini
13、ng ConferenceTable Of ContentsCompany/speaker highlights.3Michael lewis,Deutsche Bank.Global head of commodities research.3Boliden,Lennart Evrell,CEO“We like all our metals.We particularly like our by-products.”.5BHP Billiton,Andrew Mackenzie,Chief Executive Non-Ferrous.“We want to bend thetrend”.8R
14、andgold Resources,Mark Bristow,CEO“The more things change,the more they staythe same”.13Cliffs Natural Resources,Cliff Smith,Senior Vice President of Global Businessdevelopment.“We are committed to keeping the dividend policy”.20African Rainbow Minerals,Mike Schmidt,CEO.“We are not gold bulls,we are
15、 copperbulls”.21Rio Tinto,Guy Elliott,CFO.“We will materially reduce sustaining capex in the comingyears”.22SSY,John Kearsey,Head of Reasearch.“There were 4 new carriers delivered every dayearlier this year”.24Hochschild Mining,Charles Gordon,Head of Investor Relations“our strategy haschanged to one
16、 of organic growth”.26Deutsche Bank Finance,Scott March,MD.“unconventional financing will become thenew conventional financing”.29Aurubis,Erwin Faust,CFO.“Everyone needs light bulbs and fridges and not everyonehas them yet”.30Vale,Roberto Castello Branco,Director Investor Relations.“I like watching
17、Chinesecement production as a fair gauge of activity”.32Kazakhmys,Andrew Southam,Deputy CFO.“We save 12 months on Aktogay by usingthe Bozshakol engineering designs”.34,Page 2,Deutsche Bank AG/London,14 November 2012Metals&MiningBRICS Mining ConferenceCompany/speaker highlightsMichael lewis,Deutsche
18、Bank.Global head of commoditiesresearch.In DBs view,the key themes that will impact the commodity markets through 2013include:The US not moving into recession,that the Euro area will muddle through andcontagion on emerging markets will be contained,the S&P is expected to rally throughyear end,the US
19、 ficscal cliff will keep the US dollar weak,and that commodity demandgrowth will remain soft with prices therefore becoming closely tied to productionevents.In this environment,the DB commodities team favours the outlook for preciousmetals.Figure 1:Commodity outlook for 2013Source:Deutsche BankChina
20、 will continue to play a dominant role in global demand for commodities and thishas been particularly highlighted by the freight,steel,coal and iron ore markets thathave been among the worst performing commodities this year and are commodities inwhich China dominates the demand.The full Chinese lead
21、ership transition is notcomplete until March 2013,at which point reforms and a new stimulus programmemay emerge.Figure 2:Chinas political and economic transition timetable.Source:Deutsche BankA key trading theme is to be long the Capesize dry freight market as fleet growth is setto slow,and there is
22、 a sharply backwardated forward curve.,Deutsche Bank AG/London,Page 3,14 November 2012Metals&MiningBRICS Mining Conference,Figure 3:Potential and probable Tax and Spendingchanges in 2012Source:Deutsche Bank,Figure 4:Commodity price performance around the USTreasury debt downgrade in August 2011Sourc
23、e:Deutsche Bank,We view the US fiscal cliff as most bullish for the precious metals complex since it willsustain negative real interest rates and keep the US dollar weak.It also threatens totrigger another credit downgrade event in the US.Figure 5:US oil consumption&non-farm payrollSource:Deutsche B
24、ank,Bloomberg Finance LPThere remain significant headwinds for the US.US oil consumption has been a one yearleading indicator for US payroll employment.Recent oil market trends would suggestthe US will struggle to generate strong jobs growth.However,oil consumption may bebeing distorted by fuel effi
25、ciency improvementsIn oil,DB believes that the oil price represents a tipping point.Oil producers,particularlyin the Middle East,require a significantly higher oil price today to cover fiscal outlays.On DB measures,OPEC cant live with USD80/bbl oil or below(Brent basis).Forconsumers,Rising oil price
26、s will eventually trigger demand rationing.One way to,Page 4,Deutsche Bank AG/London,14 November 2012Metals&MiningBRICS Mining Conferenceestablish the tipping point is to look at oils share of world GDP.Above USD125/bbl(Brent equivalent)oils share of global GDP moves to levels which start to bite.,F
27、igure 6:Breakeven oil PricesSource:Deutsche Bank,Figure 7:Oils shae of Global GDPSource:Deutsche Bank,Boliden,Lennart Evrell,CEO“We like all our metals.Weparticularly like our by-products.”Despite some low grades at some of the mines,Boliden has managed tomaintain a solid position on the cost curve
28、through mining efficiency and by-products.Aitik continues through a period of lower grades in the mine plan,and will be for the next few years.,Figure 8:Copper mine cost curveSource:Boliden,Figure 9:Zinc mine cost curveSource:Boliden,In terms of mining costs,Boliden believes that the world has suffe
29、red higherinflation and relative to Scandinavia so operating conditions are more positiveon a relative basis.In direct contrast to most mining jurisdictions,Sweden islooking at lowering the corporate tax from 26 to 22%which would have ameaningfully positive impact on the companys cash flows.,Deutsch
30、e Bank AG/London,Page 5,14 November 2012Metals&MiningBRICS Mining ConferenceTo sustain manageable costs at their very low grade Aitik mine automation iskey and Aitik is extreme when it comes to automation enabling it to be one ofthe worlds most efficient mines.Boliden believes it is very important t
31、o continue to stress test costs to knowwhere the limits are despite the metal prices.As shown in the chat below,bothcosts and prices show significant movement at the peaks.The company madethe observation that trough prices are predictable,but peak prices are not.Figure 10:Copper price and costs.Sour
32、ce:Deutsche BankThe company has worked to dramatically improve its life of mine as shown inthe charts below.Tara has the lowest mine life,the company is finding moreeach year,however less than it mines.At this stage,the mine will close in2018.,Page 6,Deutsche Bank AG/London,14 November 2012Metals&Mi
33、ningBRICS Mining ConferenceFigure 11:Resource base and mine life indicationSource:BolidenDemand outlook.Demand is not good anywhere,but Boliden thinks ongoingurbanisation trends will be positive for its products and into the medium termwill include India picking up after China plateaus.Boliden is se
34、lling zincpredominantly into Northern Europe.Its prime customers are in Scandinaviawhere it is often the sole supplier it is seeing volumes drop to thesecustomers as weakness in Europe continues.Its secondary customers are inthe rest of Europe,where it is often one of a number of suppliers while the
35、secustomers are also seeing demand weakness,Boliden is winning volumes hereas the customers preferentially take more local product.Its tertiary sales aresimply into traders and the LME.On Metal markets.Boliden thinks that the zinc price is right in the corner of thesupply and demand curve which mean
36、s that the price could spike on smallchanges and ongoing price volatility is expected.In terms of supply anddemand dynamics,mine closures are well known as are new projects,expansions and grade are not so well known,but relatively predictable.Out to2016,zinc supply growth is much lower than copperGr
37、owth projects.The Rnnskr Escrap expansion ramp up has gone well andthe company has been able to stick to its aggressive ramp up schedule.Kankberg commissioning has started with full impact expected from next year.Free cash flow remains a bit low as the company progresses through theGarpenberg capex
38、ramp up.Garpenberg is the big project on the go at themoment-it is on time despite having some problems with shaft sinking thathas required it to come in from the middle and sink the lower half of the shaftfirst.Kokkola is progressing its silver recovery project and will increasingly begetting highe
39、r silver containing conc.eg Garpenberg feed will be higher silvergrade.Future projects.Laver was mined during the war when it was subsidised butthen shut down after the war.Exploration has looked for extensions of highergrade over the years,but found none.Recently however a geologic model has,Deutsc
40、he Bank AG/London,Page 7,14 November 2012Metals&MiningBRICS Mining Conferenceconfirmed Laver as a very large Aitik type mineralisation.It is currently anexploration result and not a resource yet.The Grade looks to be a bit lowerthan Aitik,but it is all the way to the surface and very wide so the str
41、ippingratio is extremely low.At the moment,Boliden has doubled Aitik and could take higher.Debottlenecking could take the operation to 45 mtpa.The company isundertaking permitting to 60Mtpa to allow options.It is very very early in thestudy of the option,but needed to talk about it because the permi
42、tting processhad to start.Wont comment on supplier relationship.At Aitik,the operation has equipmentthat is suboptimal for the job and is having to manage this equipment.Maintenance is higher than expected and Boliden is having to be smarter withscheduling to overcome this including the requirement
43、for a few moretrucks.issue is not production outcome,but on costs.BHP Billiton,Andrew Mackenzie,Chief Executive Non-Ferrous.“We want to bend the trend”BHPB put forward the case that it has demonstrated good industry leadershipfor the past 10 years and intends to continue to do so for the next 10 yea
44、rs.Aprogramme of balanced investment with shareholder returns(dividends andshare buybacks)under any price environment should enhance their reputationin the market.Ultimately,it remains confident in the outlook for its businessand believes it will pull away from competition independent of price in ye
45、ars tocome.As an example of industry leadership,BHP Billiton believes that it hasbeen one of the fastest movers in protecting margins and returns,despite itsrelative size.BHP Billiton believes its approach can be seen in the recent financialperformance,as well as sector leading returns.The company i
46、s particularlypleased with the US$24.4b of net operating cash flow in 2012,which is thesecond highest on record,despite the challenging environment.Figure 12:Highlighting the strong net operating cashflowSource:BHP BillitonThe company highlighted cash returns,partly,in our view,in response tomountin
47、g shareholder pressure for more dividends.The full year dividend inFY12 is 112cps,up 11%,with the progressive dividend being grown at a CAGR,Page 8,Deutsche Bank AG/London,14 November 2012Metals&MiningBRICS Mining Conferenceof 26%over the past 10 years.BHP Billion is the only UK listed diversifiedmi
48、ner that can claim to have a progressive dividend policy,as BHPBs peers allcut theirs.This has resulted in a superior TSR versus peers.Figure 13:Total shareholder returns dividends,share buybacks and equity raisingsSource:BHP Billiton,Peers include Rio Tinto,Anglo American and XstrataAlthough the co
49、mpany have always talked about a focus on costs,themessage has become much more explicit,and instead of talking about costinflation in a fairly passive manner,the company is looking to“Bend the trend”and is targeting a substantial reduction in costs and non-essential capex.Initiatives include the op
50、timisation of contractor usage and rates,reducingsupplier costs and reviewing general overheads,combined with de-bottlenecking installed capacity and reducing business development costs.Theimproving grade profile at Escondida has a big impact on unit costs in the basemetals divisions,Figure 14:Grade
