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Metso Capital Markets Day 2013 presentations: Andrew Benko, President, Mining and Construction
1. In a strong position to lead
the future of mining
Andrew Benko
President, Mining and Costruction
November 27, 2013
London, UK
2. 1
Mining and Construction today
2
The long-term capex outlook
for mining is solid
3
Less is the new more - Metsoâs
solutions for more efficient
minerals processing
4
Conclusions
3. Our Mining and Construction businesses today
A leading, full-scope supplier of sustainable
technologies and services for the mining and
construction industries
Net sales 2012: EUR 3,492 million
Personnel 11,721
Services
Mining
Construction
Integrated performancebased services offering
increased productivity
and profitability
Offering that supports our
customers throughout
the value chain of mining
Solutions that cover the entire
aggregates production process
48% of net sales
37% of net sales
15% of net sales
Our customers: Mines, quarries and construction sites
3
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Capital Markets Day 2013
4. Industry-leading expertise
â˘
â˘
â˘
â˘
â˘
4
Wide expertise and in-depth knowledge to
increase customersâ process efficiency
over the life-cycle of equipment and
processes
Reliable technologies and extensive
services to support operations and
minimize downtimes
Truly global services presence and
capabilities. We serve our customers
wherever they are
We provide integrated solutions to enable
customers to process material at the
lowest cost-per-ton, while prioritizing
health, safety, and environmental
performance
Committed to driving sustainable industry
development with continuous innovations
Š Metso
Capital Markets Day 2013
#1
services
provider
#1
in construction
crushing and
screening
#1
Market
position
in mining
crushers and
grinding mills
5. Significant shift in our footprint
December 2005
Total number of personnel: 8,785
October 2013
Total number of personnel: 12,054
12%
9%
40%
21%
22%
10%
20%
17%
Europe and CIS
North America
Asia-Pacific
South and Central America
Africa and Middle East
Europe and CIS
North America
Europe, CIS and North America:
APAC, South America, Africa and Middle East:
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Capital Markets Day 2013
33%
16%
Asia-Pacific
South and Central America
Africa and Middle East
57% ď 49%
43% ď 51%
6. Mining and Construction in 2013
1-9/2013
Change from 1-9/2012
Orders received, EUR million
2,164
-18%
Net sales, EUR million
2,286
-11%
289
-4%
EBITA-%*
12.6%
+0.9 -points
ROCE-% (operative, 2013 YTD)
25.2%
-3.3 % -points
EBITA*, EUR million
Improved EBITA-% despite lower volumes
ď¤
ď¤
ď¤
ď¤
ď¤
ď¤
6
Continued refinement of our services footprint
Very focused price increases
Tight cost control
Agile asset light project model
Globalization of procurement actions
Flexible operating model
Š Metso
Capital Markets Day 2013
Maintain services orders
ď¤ Continue to grow life-cycle services business
ď¤ With the acquisition of Spanish grinding media
company, Sabo, we became a full
comminution services provider
ď¤ The acquisition of the JX foundry in China
expands our services offering in Asia-Pacific
ď¤ New services centers in Chile, Peru, Mexico,
USA, and Canada
* before non-recurring items
7. Succesful downturn management
Strong profitability through improved margins and tight cost control
EUR million
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2005 2006
2006
2007
2007
2008
2008
Services net sales, rolling 12 months
â˘
â˘
â˘
â˘
7
2009
2009
2010
2010
Capital net sales, rolling 12 months
Share of services business
Footprint shifts:
-
Consolidation in Europe and USA, expansion in China
Global procurement organization
Improved price management
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Capital Markets Day 2013
2011
* before non-recurring items
2011
2012
2012
2013
EBITA-% *, rolling 12 months
%
16
14
12
10
8
6
4
2
0
8. Strong services orders in Mining and Construction
Decline in major mining projects, construction flat
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Capital Markets Day 2013
9. Technology leadership in energy-efficient
comminution strengthened
1. Continued developments in grinding technology
-
Offer significant savings in energy and process costs
HRC (high-pressure grinding mill), VERTIMILL, and
SMD (stirred media detritor) technologies
2. Continued strong focus on grinding safety
-
Anglo American Chile names Metso the best safety
partner of 2012
3. Two of the worldâs largest fully mobile, track-mounted
in-pit crushing plants
-
9
Supplied to Altay Polimetally LLP in Kazachstan and Samarco
in Brazil
Š Metso
Capital Markets Day 2013
10. Construction strategy progressing
1. Acquisition of Shaorui
-
Shaorui is one of the leading mid-market crushing and screening
equipment producers in China
Expands our access to the China/Asia mid-market.
Completed in September 2013
2. Joint venture with LiuGong
-
50%-50% joint venture to develop the track-mounted crushing and
screening business in China
Combining our know-how of the track-mounted crushing and screening
business and technology with LiuGongâs extensive distribution
resources (~900 outlets) and manufacturing capabilities in China
Pending approvals from the Chinese authorities
3. Acquisition of the JX steel foundry
-
Improves our capabilities to supply wear parts to our construction
industry customers in China and other markets in Asia-Pacific
Completed in August 2013
4. Consolidate the production of Barmac crushers from Matamata,
New Zealand to Metso Park in India
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Capital Markets Day 2013
12. Mining industry megatrends and business drivers
Business drivers
⢠Change in stakeholder demands
⢠Lower upfront investment with
Megatrends
Demographics
and demand: China,
India, South-East Asia,
Brazil and Russia
Political risks and investor
impatience
⢠Recovery
⢠Higher availability
⢠Decreased people intensity at
⢠Urbanization
⢠Emphasis on cost first,
growth second
⢠Environmental impact
Declining ore grades:
copper, iron, ore and
gold
less risk
the rock face
-
Decreased energy and water
consumption per ton
Waste handling and waste reduction
⢠Increasing metals
consumption
⢠Harder ores and larger
volumes increase wear
and energy costs
⢠âGeologicalâ inflation
estimated at ~4.5% per
year over the last 10
years
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Capital Markets Day 2013
⢠Project delays and shift
in geographical focus
Supply limitations in
minerals production will
sustain metals prices
Personnel shortage and
HSE
13. Long-term demand for mining equipment
driven by declining ore grades
⢠For constant gold production, the
amount of ore processed has
increased 700% in 40 years
⢠Copper - In the last 10 years the
average head grade for the major
producing mines has declined
from nearly 1.0% to 0.7%
⢠China, which produces over 40%
of the worldâs iron ore, has seen
Fe grade slide from 32% to 20%
over the last 10 years.
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Capital Markets Day 2013
Source : BHP Billiton and Metso
14. We are the leader in comminution
Market value > EUR 14 billion
Exploration
Exploration for mineral
resources
⢠Remote sensing
⢠Geophysical
/geochemical tests
⢠Samples
Feasibility studies
Sandvik
Atlas Copco
Boart Longyear
Development
Extraction
Materials handling
Comminution
Separation
Refining
Drilling and modeling of
the ore body
Selection of appropriate
mining technique
Capital investment in mine
infrastructure
Mining of the ore body
Rock breaking
Surface mining
Underground mining
Mined minerals
transported to
processing site
Use of loaders, trucks,
trains, at the face mining
systems and conveyors
Materials are crushed and
ground to achieve finer
particles
Particles sized for
optimum recovery of
minerals specie
Flotation, leaching,
sedimentation, and
filtration are used to
increase mineral content
to an economic level
Refining to increase
mineral concentration e.g.
through pyro-metallurgy
and electro-winning
Furukawa
Komatsu
Joy Global
Caterpillar
Metso Mining and Construction
FLSmidth
Outotec
Citic Heavy Industries
Terex
Weir (pumps)
Sigdo-Coppers
One Steel
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Citic Heavy Industries
15. Modest recovery in 2015, solid growth capex thereafter
Mining capex is driven by replacement and brownfield activity
Global mining capex (USD billion)
160
141
140
126
118
120
100
109
100
95
108
135
116
80
Mining capex
100%
Engineering
services
10-15%
Infra, civils,
site preparation
15-20%
Equipment
30-35%
60
40
Materials
20
0
15
2010
Š Metso
2011
2012 2013 2014 2015 2016 2017 2018
Capital Markets Day 2013
SOURCE: Metso management estimate
35%
16. High demand
for more efficient
and new solutions
for minerals
processing
Growing demand
for process and
equipment
intelligence
and automation
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Capital Markets Day 2013
Mining
long-term
market outlook:
Good demand
for capital and services
ď More gradual,
but good growth
expected
High demand
for performancebased life-cycle
services
17. Less is the new more
Metsoâs solutions for more efficient
minerals processing
18. Metsoâs views on energy-efficient minerals processing
Crushing and grinding consume ~ 3% of
the world's electricity.
Metsoâs new-generation
High-pressure grinding
roll is one of the most
energy-efficient
comminution methods
available, and can
eliminate traditional
tumbling mills in some
applications.
Metsoâs mobile inpit crushing and
conveying
systems reduce
the need for
trucks.
Metso's VERTIMILLTM
Vertical Grinding Mill can
bring up to 40% savings in
energy consumption
while improving finer
grinding results.
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Capital Markets Day 2013
The focus in separation is
increasing energy efficiency by
improving coarse particle flotation
recovery.
The more
water we
manage to
separate,
the more
water can
be recycled.
Process optimization
and automation
can offer significant
improvements
in energy efficiency
and productivity.
19. The worldâs biggest fully mobile,
track-mounted in-pit crushing plant
⢠In-pit crushing system
delivered to the Altay
Polimetally LLP copper
mine in Kazakhstan
⢠The key part of the
system is the Lokotrack
⢠The complete mobile system weighs over 800 tons
⢠The whole mobile system
is electric driven, as the
operational temperatures
at the mine site vary from
+35oC to -35oC
Capacity of 2,500
tons per hour
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Capital Markets Day 2013
20. Antamina mine in Peru
Increased production and energy efficiency
Customer goal:
â˘
CompaĂąĂa Minera Antamina wanted to increase
mill throughput, but increasing ore hardness
presented a problem
Metsoâs delivery:
â˘
â˘
Our Process Technology and Innovation
team (PTI) assisted Antamina in increasing
throughput by implementation of a Process
Integration and Optimization (PIO) project
PIO involves the development of integrated
mine-to-plant operating and control strategies that
maximize throughput, minimize overall cost-perton, minimize energy consumption and maximize
profitability
Key benefits:
â˘
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Throughput grew from 2,600 tph in 2006 with
a specific energy consumption of 14 kWh/t
to a throughput of 4,500 tph in 2010 with a
specific energy assumption of 10.5 kWh/t.
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Capital Markets Day 2013
25%
energy savings for Antamina
21. Boliden AB Aitik copper mine in Gällivare, Sweden
Requirement for maximum uptime a common goal since 1930
Customer goal:
â˘
Bolidenâs Aitik mine aims to increase
uptime.
Metsoâs delivery:
â˘
In 2012, Metso and Boliden agreed
on a three-year extension to the existing
services contact, including the supply
of mill-lining solutions and the
preventive maintenance of the
grinding circuit. Metso is responsible for
planning the shut-down process to be as
efficient as possible.
Key benefits:
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Boliden will gain critical production
and efficiency increases. As the contract
is a cost-per-ton agreement, both parties
share the common goal.
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Capital Markets Day 2013
Bolidenâs uptime increased
from 95% to
97%
22. Belo Monte Hydroelectric Plant, Brazil
The world's third-largest hydroelectric plant
Equipment, automation, services, and
parts for building the roads and barriers
at the site
â˘
Belo Monte contributes to Brazil's
economical growth by providing clean and
renewable energy. The challenge was
finding reliable partners to help build the
infrastructure around the plant in a reliable,
efficient and safe way
Metsoâs solution:
Automated crushing plants with online
maintenance, service and spare parts,
equipped with the latest technology and
operated by skilled labor.
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Capital Markets Day 2013
Safe operation with
automated start & stop,
and full diagnostics of
entire plant
Easy online reports for
crushing efficiency,
Production, and
maintenance
Over 30%
increase in production with
automation
23. Anglo Gold Ashanti â Iduapriem mine in Ghana
A life-cycle of improved results
1997
2002
In 1997, Metso
recommended
potential
improvements at
the site.
2003
In 2002, the site added a second
SAG mill and signed a mill lining
supply and services contract with
Metso.
In 2003, Metso process
engineering conducted a review of
the post-expansion grinding circuit.
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Capital Markets Day 2013
2005
In 2005, Metso executed a
mining and milling process
integration and optimization
project.
Results: reduced operating
costs, increased availability and
throughput.
2008 2009
2013
In 2008, Anglo Gold expanded
the mine based on Metsoâs
recommendations: a second ball
mill and a complete new crushing
plant replaced the old one.
Metso signed a 3-year life-cycle
services contract, including on-site
maintenance and parts supply.
24. "An action plan has been drawn up on site to implement
Metsoâs recommendations and I am delighted to report that
we are seeing immediate benefits with regards to circuit
throughput.
An upgrade of this circuit was conducted in 2009 and the
plant was subsequently rated at 4.38 Mtpa. Indications are
that we will now be capable of achieving 4.7 Mtpa.
A quick calculation suggests an increase in value to the
operation of approximately $400m over the life of the mine.â
Ian Smit, Vice President, Metallurgy, Anglo Gold Ashanti
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Capital Markets Day 2013
25. Improving customer performance by integrating
services, smart machines, automation and
process design
⢠Metsoâs life-cycle services, together
with smart machines, improve
maintainability and help avoid
unplanned downtime.
⢠Metsoâs integration and optimization
consulting services deliver production
increases from 5-30% with reduced
operating costs and energy
consumption.
⢠Metsoâs process automation systems
increase productivity through
improved safety, reduced energy and
water consumption, and lower costs.
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Capital Markets Day 2013
26. Metso in mining: intelligent mining solutions
Process technology and automation making us truly different
Highest
availability,
recovery and
throughput
Intelligence in minerals processing
Mining automation
Process optimization solutions
Energy efficiency
Safety improvements
Capacity improvements
Spare and
wear parts
solutions
Globalized
services
footprint
Lowest cost
per ton
offerings
Capital equipment
Transition from being an equipment and transactional services supplier to an
intelligent solutions provider is ongoing across Metso
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Capital Markets Day 2013
27. We are ready for the future of mining
Conclusions
ď¤ Mining capex to return to the growth path
ď¤ Minerals processing machinery cannot get much bigger in size
ď¤ Raw materials and other resources will become scarcer
ď¤ More efficiency in energy use and operations needed
ď¤ We will help our customers with their future challenges through our
intelligent offering and leading services capabilities
ď¤ Further operational excellence will support our profitability
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Capital Markets Day 2013
28.
29. Examples of our mining product range
Proven mining
crushers and
screens capable
of a long service
life in challenging
applications
29
Š Metso
World's most
comprehensive
range of grinding
equipment
Capital Markets Day 2013
Reliable pumps
for demanding
minerals
processing
Pyro-processing
solutions for:
⢠Pelletizing
⢠Lime production
⢠Industrial waste
processing
Services to
achieve optimum
performance
on a sustainable
basis
30. Metsoâs minerals exposure in 2013
% of net sales/mineral
Total
Capital equipment
Services
Iron
29%
38%
21%
Copper
20%
22%
18%
Gold
15%
6%
23%
Aggregates
23%
25%
21%
Other
13%
9%
17%
100%
100%
100%
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Š Metso
Capital Markets Day 2013
31. We serve the key players in the mining industry
Customer groups
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â˘
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31
Mines and mineral processing plants
Engineering houses
Energy and metal industry
Š Metso
Capital Markets Day 2013
32. Mining and Construction
Business model
Customer
base
Services
Sales &
service
90%
Metso direct sales and
service network
90% Metso direct sales and
70% Metso direct sales and
10%
Dealers in commodity
products and certain
markets
10% Dealers in commodity
30% Authorized dealers in
50%
Metso production of
wears, spares, and
pumps
20% Metso production of
70% Metso production of
50%
Outsourcing of
Metso-engineered
equipment and
component manufacturing
80%
Manufacturing
32
Š Metso
Geographically defined,
several major and dozens of
big players; long-term focus
Capital Markets Day 2013
Mining
Geographically defined,
several major and dozens of
big players; long-term focus
service network
products and certain
markets
core components
Outsourcing of
Metso-engineered
equipment and
component manufacturing
Construction
Fragmented segment, few
large and thousands of small
players; short-term focus
service network
the contractor segment
equipment, parts,
and components
30%
Subcontracting components,
castings and assembly,
outsourcing some Metsoengineered components