Glencore : Swiss Energy Strategy 2050

Swiss Energy Strategy 2050

A miner's perspective

Kenny Ives, Head of Nickel Marketing

Bern, 17 January 2020

Wind power generation, Raglan nickel mine, Canada

Important notice concerning this document including forward looking statements

1

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.

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.

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Swiss Energy Strategy 2050, A miner's perspective

Overview

2

1. Context and key observations
2. Glencore and the mining industry can be key enablers of the energy and mobility transition
3. Concluding remarks

Swiss Energy Strategy 2050, A miner's perspective

Context &

Key observations

Swiss Energy Strategy 2050, A miner's perspective

Key observations

4

The world's reliance on fossil fuels remains high(1)

• More than 80% of global energy demand met by fossil fuels in 2018
• This is unlikely to change materially by 2040 under current and announced policy intentions

GHG emissions continue to increase(2)

• 2017: +1.5%, 2018: +2.1%, 2019F: +0.6%

Future emissions need to fall rapidly to meet Paris Agreement goals

Higher living standards, poverty reduction and urbanisation all require affordable and reliable energy (UN SDG 7)

• Another 1.9bn people in the world by 2050 will add to the challenge(3)

The policy response needs to be global

• Unaligned national and or regional measures will be muted by emission developments elsewhere

Mining companies need to mobilise additional resources to enable the transition to renewables, energy storage systems and the transformation of global mobility systems

Global primary energy demand forecasts under current policy intentions(1)

Renewables: 14%

Nuclear: 5%

2018

Fossil fuels: 81%

Renewables: 21%

Nuclear: 5%2040

Fossil fuels: 74%

Swiss Energy Strategy 2050, A miner's perspective	Notes(1) IEA, World Energy Outlook 2019, Stated Policies Scenario. The Stated Policies Scenario reflects the impact of existing policy frameworks and
	today's announced policy intentions. (2)https://www.wri.org/blog/2019/12/co2-emissions-climb-all-time-high-again-2019-6-takeaways-latest-climate-
	data. (3) United Nations, World Population Prospects 2019,https://population.un.org/wpp/

Mining has a key role to play in decarbonising tomorrow's world

Swiss Energy Strategy 2050, A miner's perspective

Glencore in Switzerland

6

Founded in Switzerland over 40 years ago, we are one of the world's largest globally diversified natural resource companies

Glencore operations and offices

At our Swiss headquarters in Baar, we employ more than 850 people, making us one of the major employers in Central Switzerland

Our Swiss location is the centre of our global business

• Key personnel are based here, including CEO, CFO and divisional heads
• With the exception of oil, all our commodity businesses are run from Baar with support of locally based management

Swiss Energy Strategy 2050, A miner's perspective

Our global footprint

7

Responsibly sourcing the commodities that advance everyday life

• We are present at every point in the value chain from where commodities are sourced to where they are consumed
• We employ 158,000 people globally and are invested and active in all major geographies, producing 60 commodities from 150 sites
• We live our core company values: Safety, Entrepreneurialism, Simplicity, Responsibility and Openness

Swiss Energy Strategy 2050, A miner's perspective

Enabling the transition

8

Mining and commodities have shaped the modern world we live in today

The mining industry has underpinned the fundamental shift in global living standards since the Industrial Revolution

• The single greatest increase has emerged from China's urbanisation and industrialisation over the last 40 years with c.750 million people lifted out of extreme poverty since 1990

Mining and the commodities we produce are part of our everyday life

• Steel in construction, copper in power grids, aluminium in packaging, coal for cement production, power generation and steel making, nickel and cobalt in high performing alloys and battery packs and stainless steel for food contact materials and medical appliances

Mining is even more relevant today - the metals needed to decarbonise energy underpin:

• Battery backed energy storage
• Electrification of mobility
• 5G, artificial intelligence, big data and a more connected world

Chinese people living in poverty (LHS M)(1)

vs Chinese fixed asset investment (RHS billion RMB)(2)

800	$81.2 trillion	70000
	fixed asset	60000
	investment
600	since 1981
	50000
		40000
400
		30000
200		20000
		10000
0		0

1990 1994 1998 2002 2006 2010 2014 2018

Swiss Energy Strategy 2050, A miner's perspective	Source: (1) The World Bank, Poverty and Equity Data Portal, http://povertydata.worldbank.org/poverty/country/CHN. (2) Bloomberg, NBS, IMF, World
	Bank, Xinhuanet

Commodities that Glencore produces

9

We are a major responsible supplier of many of the enabling commodities needed for the transition

		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	1.45Mt	42kt	124kt	273kt	1.1Mt	9.1kt	118Mt
	production(1)
	Global	20.7Mt	124.5kt	2.4Mt	4.9Mt	12.9Mt	95kt	6 billion
	supply(2)							tonnes

Swiss Energy Strategy 2050, A miner's perspective	Source: (1) Annual Report 2018, pages 76, 88. (2) Macquarie Commodities Compendium, 12 December 2019, 2018 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

Nickel supply and demand

10

A case study of nickel's key role in enabling the transition to a low/net-zero carbon future

Nickel is a relatively small market at 2.45Mt

• Aluminium: 65Mt, copper: 23.5Mt

Stable demand growth underpinned by:

• Austenitic stainless steel: >65% of nickel demand and used in infrastructure, construction, architecture, food contact surfaces, automotive, aerospace, oil and gas and LNG
• >20% nickel containing alloys: high-end industrial use, particularly in LNG, wind farms, solar, aerospace, nuclear and medical
• • Consumes more than 400kt of primary nickel annually with increasing demand as material performance requirements and safety factors increase

Current nickel market (Mt Ni)(1)

Batteries

Plating

2.45Mt Stainless

Nickelsteel alloys

Annual average demand growth

Last 30 years	Last 10 years
5%	6%

Swiss Energy Strategy 2050, A miner's perspective

Nickel and cobalt use in batteries

11

Electrification

of Mobility

• Significant demand growth emerging as the world adopts new NMC and NCA battery chemistries
• • Nickel battery demand: c.50kt in 2010, c.200kt in 2019F, >500kt in 2025F (inc400kt Ni in EV)
  • Nickel in Electric Vehicles forecast at 800kt by 2030
  • Trend for higher EV penetration, larger battery size and higher nickel chemistries (811 vs 622) suggest even higher nickel demand than forecast
• Lifecycle of nickel and cobalt well understood and readily recyclable
• • Majority of nickel containing steels/alloys are recycled
  • Glencore processed 35kt of recycled material to recover 5kt nickel and 3kt cobalt in 2019
• We are investing more than $2bn developing the next generation of Canadian nickel sulphide mines while upgrading our metallurgical facilities to responsibly supply nickel from our global operations

Nickel demand in electric vehicles (kt Ni)(3)

+330kt of new EV nickel demand by 2025

2018 nickel market: 2.4Mt

2019F2025F

Cobalt demand in electric vehicles (kt Co)(3)

+73kt of new EV cobalt demand by 2025

2018 cobalt market: 120kt

2019F2025F

Swiss Energy Strategy 2050, A miner's perspective

Notes(1) Glencore estimates, B3, based on 11.5Mt new passenger EV sales by 2025, ca. 10% penetration rate.

Copper demand

12

•

•

Decarbonisation of energy:

What holds for nickel and cobalt is equally true for copper

• Decarbonisingenergy primarily impacts electricity generation, industrial processes and mobility
• Renewable energy sources are much more copper intensive that conventional energy generation - additionalcopper required in generators, transformers, inverters and extra copper cabling
• Implementation of current CO2 emission policies is forecast to require an additional 22 million tonnesof copper by 2030.(1)

Meeting this demand will require the mining industry to invest billions of dollars in capital each year to prolong the life of existing mines and develop new resources that are increasingly scarce

Decarbonisation requires a lot of copper

Additional cumulative Cu demand needed (Mt Cu)(1)

26

							2018 Refined copper supply: c.23.5Mt(2)
22
			Current
				Government
				policies to			Copper supply needs to
18				reduce CO2			grow 3.6% every year
					between now and 2030 to
				emissions by
						meet modelled government
				2030 will require			targets(1):
				an additional			2000-2018 annual average
14				cumulative 22Mt
				of copper by			copper supply growth: 2.6%(2)
				2030(1)
10
			2018A

Swiss Energy Strategy 2050, A miner's perspective	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

13

Seaborne coal demand expected to remain broadly stable over the next 5 years

• Robust demand growth from new Asian capacity expected to offset lower demand in Europe and the USA
• Asia's share of global coal power generation up from c.20% in 1990 to almost 80% in 2019 - "coal's fate is increasingly tied to decisions made in Asian capitals."(2)

Supply increasingly at risk

• Accelerating depletion of the seaborne coal reserve base
• Our production capacity is capped at 150Mtpy and will decline as our existing portfolio depletes without reinvestment
• Development approval delays and shrinking financing options likely to limit planned future supply

Growing risk of failure to meet energy needs and compromised economic growth

• Balance required between the need for affordable/reliable energy and accelerating the shift to renewables
• High quality coal is part of the energy solution

Structural deficits emerging

Seaborne thermal coal supply demand balance (Mt)(1)

1,200

Demand Range

1,000

800						Supply
					risk
						Planned
								supply
600					Supply with no
					reinvestment
400
	New build generating capacity(1)
		Global coal production of all coal
	Region		Volume (Mt)
			qualities in 2018 reached 8 billion
200	North Asia		+20
			tonnes(3)
South-East Asia	+55
		Operating or under construction
	Sub-continent	+55
			coal fired power plants at
	Middle East		+30
				July 2019 total 7,136(4)
0
2010	2015	2020F	2025F	2030F	2035F

Swiss Energy Strategy 2050, A miner's perspective	Notes: (1) Glencore analysis - net global demand growth c.90Mt (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

Reducing our CO2 footprint

14

Emissions reduction initiatives

CCS

Electrification

Automation

Connected

Brownfield

Renewables

Energy

mines

priority

roll out

capture

Carbon Capture

Hybrid and fully

Fully automated

Big data, data

Prioritising

We have installed

Furnace offgases

and Storage (CCS) is

electric mining

mine fleets are

analytics, basic

brownfield

2 x 3MW wind

are now being

a key enabler of

equipment

becoming a

artificial

versus greenfield

turbines, and

harvested at a

decarbonisation(1)

options now

reality

intelligence are

investments to

associated

number of sites

Glencore's CTSCo

available

We plan to

already enabling

drive higher

energy storage

to reduce

productivity

returns and

systems at our

primary energy

project is designed

Will be deployed

deploy

gains through

utilise existing

Raglan Ni and Cu

needs

to provide insight

at our new fully

autonomous

improved mine

mining and

mine in Nunavik,

into development

electric Onaping

equipment at

planning and

processing

Northern

Reduces overall

of CCS in an

Depth mine

Onaping Depth

fleet utilisation

infrastructure

Quebec. These

primary energy

industrially scalable,

project in

turbines

intensity by over

safe and cost

Canada's Sudbury

generate c.15% of

20% versus

effective manner

basin

the power the

traditional

isolated site

processes at our

requires,

KNS operation in

displacing over

New Caledonia

4M litres of diesel

annually

Swiss Energy Strategy 2050, A miner's perspective

Notes: (1) IEA 2019 SPS includes doubling of global CCUS volumes by 2030 and five-fold increase by 2050.

Concluding remarks

15

Renewable energy is key to achieving a low-carbon reality

• Getting there requires a fundamental shift in how we power the world

The metals and minerals responsibly produced by the mining industry will underpin this change

• The industry also needs to lead the development and adoption of new technologies and process innovation to both increase its own productivity and accelerate emission reductions

Glencore is well positioned to play a key role in enabling this transition

• We are a responsible supplier of the commodities that are critical for the shift to a low/net-zero carbon reality

We have set ambitious goals for ourselves, including the prioritisation of capital investment into commodities that support the transition and the development of long-term targets to reduce our emissions

Swiss Energy Strategy 2050, A miner's perspective

Q&A

Swiss Energy Strategy 2050, A miner's perspective