3Q12_PRODUCTION_PREVIEW：A_STRONG_PRODUCTION_QUARTER_EXCEPT_FOR_PLATINUM-2012-10-10.ppt

top picks,hold,hold,buy,buy,buy,buy,buy,buy,buy,hold,hold,hold,buy,buy,buy,buy,sell,130,deutsche bank markets research,europe united kingdom metals & mining,industry 3q12 production preview,date 8 october 2012 industry update rob clifford,a strong production quarter, except for platinum recovering production into a weaker demand outlook had it not been for the boost in base and precious metals prices provided by qe3, the quarter would have been characterised by a strong production recovery and growth in many cases, driving down prices. relative to q410, copper, nickel, iron ore, thermal coal, gold and silver are record production levels for the companies under our coverage. although not at record levels, zinc and coking coal are still at decent levels. platinum and aluminium are the notable exceptions. in the chart below, we show the combined production by commodity of the companies that we have under coverage. we are forecasting most commodities to be at or close to record levels, with the exception of: aluminium capacity curtailments remain in force at norsk hydro and rio, whilst bhpb is still recovering from anode defects in its operations. pgms the strike at lonmin and the curtailment of two of aquariuss operations, namely marikana and everest should see pgm production down slightly on q2. however, the illegal strikes at anglo platinum will not have a significant impact on this quarter. we suspect however that productivity across the industry was not particularly good, given the current labour environment in south africa. miner valuation/risk we value the miners using discounted cash flow analysis of the life of mine cash flows for each of the operations. key risks include interest rate hikes for precious metals and a china consumption slowdown. additional risks include deviations in exchange rates, commodity prices and production levels from expectations. capex deviations from plan for growth projects also impact our valuation. figure 1: cumulative production of companies under coverage,research analyst (+44) 20 754-58339 grant sporre research analyst (+44) 20 754-58170 rio tinto (rio.l),gbp2,986.50 randgold (rrs.l),gbp7,775.00 african minerals (amiq.l),gbp312.75 companies featured anglo american (aal.l),gbp1,812.50 african barrick (abgl.l),gbp471.80 african minerals (amiq.l),gbp312.75 antofagasta plc (anto.l),gbp1,322.00 aquarius platinum limited (aqp.l),gbp47.50 bhp billiton plc (blt.l),gbp1,929.50 boliden ab (bol.st),sek113.10 enrc plc (enrc.l),gbp333.20 fresnillo (fres.l),gbp1,966.00 ferrexpo plc (fxpo.l),gbp207.00 kazakhmys plc (kaz.l),gbp738.00 lonmin plc (lmi.l),gbp549.00 norsk hydro (nhy.ol),nok28.05 nyrstar nv (nyr.br),eur4.88,120 110 100 90 80 70 60 50,rebased at 100 for 4q10,rio tinto (rio.l),gbp2,986.50 randgold (rrs.l),gbp7,775.00 vedanta resources (ved.l),gbp1,101.00,buy buy buy,cu,al,ni,zn,iron ore,coking thermal,gold,silver,pgm,coal,coal,4q10,1q11,2q11f,3q11,4q11,1q12,2q12,3q12f,_ deutsche bank ag/london all prices are those current at the end of the previous trading session unless otherwise indicated. prices are sourced from local exchanges via reuters, bloomberg and other vendors. data is sourced from deutsche bank and subject companies. deutsche bank does and seeks to do business with companies covered in its research reports. thus, investors should be aware that the firm may 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 and analyst certifications are located in appendix 1. mica(p) 072/04/2012.,8 october 2012 metals & mining 3q12 production preview production results calendar for 3q12 figure 2: mining companies results calendar for 3q12,monday 08-oct-12,tuesday 09-oct-12,wednesday 10-oct-12,thursday 11-oct-12,friday 12-oct-12,ved - 2q12 prod,fxpo - 3q12 prod,15-oct-12 fres - 3q12 prod,ims 22-oct-12,16-oct-12 rio - 3q12 prod 23-oct-12 aqp - 1q13 report,17-oct-12 bhp - 1q13 prod 24-oct-12 nyr - ims,18-oct-12 25-oct-12 aal - 3q12 prod,19-oct-12 26-oct-12 abg - 3q12 results,nhy - 3q12 results,boliden - 3q12 report kaz - 3q12 prod,ims,29-oct-12,30-oct-12,31-oct-12,01-nov-12,02-nov-12,anto - 3q12 prod,05-nov-12,06-nov-12,07-nov-12,08-nov-12,09-nov-12,ved - interim results rrs - 3q12 results,enrc - 3q12 prod,ims,12-nov-12,13-nov-12,14-nov-12,15-nov-12,16-nov-12,lmi - 4q12 prod source: deutsche bank, company website page 2,anto - 3q12 results,deutsche bank ag/london,8 october 2012 metals & mining 3q12 production preview aggregate metal production for stocks under coverage figure 3: quarterly production numbers,units,4q10,1q11,2q11f,3q11,4q11,1q12,2q12,3q12f,qoq,yoy,base metals,copper aluminium nickel zinc,kt kt kt kt,1302 1800 76 636,1196 1834 66 727,1253 1950 74 721,1184 1951 70 739,1332 1982 79 748,1241 1850 75 774,1325 1777 86 766,1376 1808 86 755,4% 2% 0% -1%,16% -7% 23% 2%,bulks,iron ore coking coal thermal coal,mt mt mt,98 18 67,88 14 66,99 17 66,105 19 71,108 18 71,95 16 70,107 18 72,109 19 78,2% 4% 7%,4% -3% 10%,precious metals,gold silver pgm,k oz k oz k oz,977 29570 1894,868 25395 1507,1037 29647 1558,1024 27185 1705,962 30067 1581,879 28568 1191,963 32173 1549,1053 33216 1528,9% 3% -1%,3% 22% -10%,source: company reports, deutsche bank,deutsche bank ag/london,page 3,8 october 2012 metals & mining 3q12 production preview african barrick gold looking for a qoq improvement, but q4 will be the big one figure 4: quarterly production numbers,units,4q10,1q11,2q11,3q11,4q11,1q12,2q12,3q12f,qoq,yoy,bulyanhulu tulawaka buzwagi north mara attributable production attributable sales,koz koz koz koz koz koz,68.6 11.9 44.5 54.6 179.6 201.6,66.3 13.7 56.3 37.6 173.9 172.0,69.3 15.1 41.6 46.0 172.0 185.1,62.1 14.1 60.7 45.5 182.4 183.6,64.4 16.0 37.9 41.7 160.1 158.8,61.8 11.2 36.3 35.4 144.6 145.4,69.8 7.4 34.5 41.5 153.1 157.2,66.6 10.3 45.1 56.3 178.4 178.4,-5% 40% 31% 36% 16% 13%,7% -27% -26% 24% -2% -3%,source: company reports, deutsche bank,page 4,deutsche bank ag/london,8 october 2012 metals & mining 3q12 production preview african minerals a rain impacted quarter before the steady ramp-up figure 5: quarterly sales numbers,units,3q11,4q11,1q12,2q12,3q12f,4q12f,qoq,yoy,2011,2012f,iron ore sales,lump fines all in 32 total,mt mt mt mt,0.0 0.0 0.0 0.0,0.0 0.0 0.2 0.2,0.3 0.4 0.4 1.1,0.0 0.0 1.5 1.5,0.2 0.2 0.2 0.6,0.5 0.4 1.0 1.9,-100% -100% 257% 33%,na na na na,0.0 0.0 0.2 0.2,1.0 1.0 3.1 5.1,source: company data, deutsche bank,deutsche bank ag/london,page 5,8 october 2012 metals & mining 3q12 production preview anglo american expecting a strong quarter with little impact from strikesso far figure 6: quarterly production numbers,units,4q10,1q11,2q11,3q11,4q11,1q12,2q12,3q12f,qoq,yoy,platinum segment,platinum palladium rhodium nickel equiv refined platinum diamonds (100% basis) copper segment nickel segment,koz koz koz tons koz 000 cts tons tons,872 503 111 5,000 640 8,532 154,400 4,400,533 288 85 4,800 568 7,396 138,800 6,100,641 374 80 5,500 593 8,137 150,300 6,600,647 376 75 4,900 667 9,305 139,900 6,500,710 393 97 5,100 583 6,489 170,000 9,900,403 235 54 4,700 593 6,208 168,400 12,000,623 356 75 5,400 584 7,241 161,100 10,900,653 372 79 5,657 582 7,001 159,381 11,937,5% 5% 5% 5% 0% -3% -1% 10%,1% -1% 5% 15% -13% -25% 14% 84%,iron ore & manganese,iron ore manganese alloys,kt kt,11,808 77,9,945 69,11,534 76,12,183 78,12,427 78,11,679 55,12,917 30,13,077 55,1% 85%,7% -29%,met coal (australia),metallurgical thermal,kt kt,3,892 3,728,2,165 3,002,3,949 3,088,4,015 3,978,4,061 3,359,3,743 2,570,4,846 3,287,4,382 3,150,-10% -4%,9% -21%,thermal coal,rsa metallurgical rsa thermal export +,kt kt,103 5,885,80 5,079,83 5,264,76 5,198,84 5,846,58 5,286,16 5,801,16 5,506,0% -5%,-79% 6%,domestic,eskom colombia export,kt kt,9,485 2,316,8,275 2,609,8,783 2,538,8,751 2,852,9,487 2,753,7,763 2,953,8,326 3,105,8,112 2,953,-3% -5%,-7% 4%,source: company data, deutsche bank,page 6,deutsche bank ag/london,8 october 2012 metals & mining 3q12 production preview antofagasta improving production on the back of esperanza figure 7: quarterly production numbers and cash costs,units,4q10,1q11,2q11,3q11,4q11,1q12,2q12,3q12e,qoq,yoy,group total,total production of payable copper total production of payable moly total production of payable gold cash cost - pre by-product credits cash cost - post by-product credits,kt kt koz c/lb c/lb,127.5 2.1 9.3 157.7 123.4,129.8 2.3 22.1 155.8 107.8,158.7 2.6 48.6 159.4 103.8,165.0 2.4 54.3 155.1 100.5,187.0 2.6 71.8 151.3 97.3,162.9 3.1 63.5 163.6 98.1,173.2 3.4 72.6 158.2 99.3,181.6 2.7 78.4 167.1 103.6,5% -20% 8% 6% 4%,10% 13% 44% 8% 3%,los pelambres,payable copper in concentrate payable moly payable gold cash costs - pre by-products cash costs - post by-products,kt kt koz c/lb c/lb,92.3 2.1 145.3 98.0,91.2 2.3 7.2 130.8 75.2,101.2 2.6 10.9 130.7 75.2,104.9 2.4 8.8 127.8 82.5,114.4 2.6 12.9 123.5 79.5,95.9 3.1 11.9 141.0 75.6,101.3 3.4 14.5 133.5 78.0,100.4 2.7 11.3 140.0 78.0,-1% -20% -22% 5% 0%,-4% 13% 28% 10% -5%,esperanza,payable copper payable gold cash costs - pre by-products cash costs - post by-products,kt kt c/lb c/lb,7.4 15.0 302.4 144.9,21.9 37.7 260.1 114.1,25.2 45.5 241.3 72.4,35.6 58.9 201.0 59.1,30.5 51.7 206.1 61.7,37.7 58.1 180.2 58.9,44.2 67.2 200.0 79.4,17% 16% 11% 35%,75% 48% -17% 10%,el tesoro,copper cathodes from el tesoro,kt,18.2,15.1,18.0,20.0,22.8,24.7,22.0,22.5,2%,12%,and tesoro north-east open pits,copper cathodes from rom total copper cathodes cash costs,kt kt c/lb,5.7 23.8 192.8,5.2 20.3 195.2,6.9 24.9 173.0,4.5 24.5 161.9,4.6 27.4 161.4,3.5 28.2 147.8,2.5 24.5 167.4,3.75 26.2 156.8,50% 7% -6%,-17% 7% -3%,michilla,copper cathodes cash costs,kt c/lb,11.3 184.3,11.0 192.2,10.7 192.7,10.3 205.6,9.6 268.5,8.3 323.2,9.7 306.0,10.9 310.0,12% 1%,5% 51%,transport,rail tonnage transported road tonnage transported,kt kt,1619 506,1524 461,1651 473,1618 481,1627 481,1490 442,1538 380,1788 442,16% 16%,11% -8%,water,water volume sold,000 m3,12392,12296,11689,11765,12545,12960,12695,12695,0%,8%,source: company data, deutsche bank,deutsche bank ag/london,page 7,8 october 2012 metals & mining 3q12 production preview aquarius platinum production significantly down due to the shuttering of marikana and everest. kroondal performance is key. figure 8: quarterly production numbers,unit,dec-10,mar-11,jun-11,sep-11,dec-11,mar-11,jun-11,sep-12e,qoq,yoy,production by mine,kroondal marikana everest mimosa ctrp platinum mile total,koz koz koz koz koz koz koz,119.4 32.8 25.1 47.0 1.5 4.1 230,95.8 23.9 27.7 51.3 1.3 10.1 217,89.2 21.4 27.0 55.6 0.7 4.7 202,88.9 26.0 23.1 53.8 0.7 3.1 196,86.8 28.8 18.7 50.5 1.1 3.3 189,76.9 26.4 15.9 52.1 1.4 3.5 176,82.2 21.5 15.3 54.6 1.7 2.8 178,87.1 0.0 0.0 26.8 2.0 3.0 119,6% -100% -100% -51% 13% 5% -33%,-2% -100% -100% -50% 197% -4% -39%,production by mine attributable,kroondal marikana everest mimosa ctrp platinum mile total,koz koz koz koz koz koz koz,59.7 16.4 25.1 23.5 0.7 2.1 128,47.9 12.0 27.7 25.6 0.6 5.0 122,44.6 10.7 27.0 27.8 0.3 2.3 114,44.5 13.0 23.1 26.9 0.3 2.1 110,43.4 14.4 18.7 25.2 0.6 3.3 106,38.5 13.2 15.9 26.0 0.7 3.5 98,41.1 10.8 15.3 27.3 0.9 2.8 98,43.6 0.0 0.0 13.4 1.0 3.0 61,6% -100% -100% -51% 13% 5% -38%,-2% -100% -100% -50% 197% 43% -45%,source: company data, deutsche bank,page 8,deutsche bank ag/london,t,t,t,t,8 october 2012 metals & mining 3q12 production preview bhp billiton a steady quarter, with the switch from gas to liquids starting to pay off. figure 9: quarterly production numbers,units,dec-10,mar-11,jun-11,sep-11,dec-11,mar-12,jun-12,sep-12e,qoq,yoy,petroleum,crude oil & condensate natural gas natural gas liquid total petroleum,000 bbl bcf 000 bbl mboe,20,652 82.5 2,842 37.25,19,200 84.9 2,442 35.79,18,652 131.8 2,637 43.25,18,482 177.4 3,356 51.40,18,866 214.5 3,362 57.98,19,200 84.9 2,442 35.79,15,726 221.3 3,758 56.36,17,888 215.9 3,727 57.59,14% -2% -1% 2%,-3% 22% 11% 12%,aluminium,alumina aluminium,kt kt,1,025 314,959 305,1,026 313,1,060 315,1,001 313,959 305,1,039 248,1,175 251,13% 1%,11% -20%,base metals,copper lead zinc gold silver uranium molybdenum,kt ounces k oz,302.3 64,925 36,945 51,626 11,571 957 485,273.6 51,910 40,252 49,559 9,056 1063 334,272.3 58,578 34,733 45,545 9,877 1015 418,220.2 55,659 23,444 39,439 9,151 1000 595,280.3 66,992 28,298 44,007 10,903 909 766,273.6 51,910 40,252 49,559 9,056 1063 334,312.5 63,667 30,748 40,569 11,539 1080 464,287.8 64,812 29,458 50,410 11,345 1073 987,-8% 2% -4% 24% -2% -1% 113%,31% 16% 26% 28% 24% 7% 66%,diamonds and specialty products,diamonds,000 carats,676,551,576,457,481,551,413,552,34%,21%,stainless steel materials,nickel,kt,43.0,33.0,38.2,35.1,38.4,33.0,42.7,41.5,-3%,18%,iron ore,iron ore,kt,33,666,33,231,35,526,39,572,41,072,33,231,40,891,42,140,3%,6%,manganese,manganese ore manganese alloy,kt kt,1829 192,1352 172,1790 190,2019 194,1806 195,1352 172,2066 75,1950 125,-6% 67%,-3% -35%,metallurgical coal,metallurgical coal,kt,7787,6670,7922,9291,8493,6670,8109,7350,-9%,-21%,energy coal,energy coal,kt,16513,17543,18338,18460,16919,17543,18484,18760,1%,2%,source: company data, deutsche bank,deutsche bank ag/london,page 9,t,8 october 2012 metals & mining 3q12 production preview boliden a slightly weaker quarter due to routine refurbishments figure 10: quarterly production numbers and summary financials,units,4q10,1q11,2q11,3q11,4q11,1q12,2q12,3q12f,qoq,yoy,metal production,zinc copper lead gold silver,kt kt kt kg t,79 21 13 1121 69,73 21 13 857 59,72 20 12 993 54,74 20 14 1001 62,64 20 11 828 56,74 19 13 898 55,76 20 14 945 62,69 18 13 930 56,-9% -10% -5% -2% -9%,-7% -9% -6% -7% -9%,refined production,zinc copper lead lead alloys gold silver sulphuric acid,kt kt kt kt kg kt,117 85 4 13 3905 113 413,116 82 5 11 3375 124 406,111 76 2 12 2967 123 344,118 90 2 7 3337 122 436,114 88 2 12 3170 120 411,118 85 5 11 3869 151 433,116 82 3 11 4540 149 374,104 86 2 9 4026 122 348,-10% 6% -42% -17% -11% -18% -7%,-12% -4% 15% 35% 21% 0% -20%,financials,revenues mine ebit margin smelter ebit margin total ebit npat eps,sek m sek m % sek m % sek m sek m sekps,10120 1,217 43% 1,026 11% 1,942 1,413 5.2,10158 1,156 44% 84 1% 1,359 961 3.5,9896 1,064 40% 156 2% 1,134 804 2.9,10553 1,047 41% 140 1% 1,180 837 3.1,9716 646 27% 410 4% 1,075 787 2.9,10321 822 33% 631 6% 1,499 1,089 4.0,10364 726 31% 78 1% 769 516 1.9,9310 758 32% 406 4% 1124 757 2.8,-10% 4% 420% 46% 47% 47%,-12% -28% 190% -5% -10% -10%,source: company data, deutsche bank,page 10,deutsche bank ag/london,t,t,8 october 2012 metals & mining 3q12 production preview enrc expecting a pick-up after an uncharacteristically weak q2 figure 11: quarterly production numbers,units,4q10,1q11,2q11,3q11,4q11,1q12,2q12,3q12f,qoq,yoy,ferro-alloys ore production,saleable chrome ore internal consumption saleable manganese,kt kt kt,982 807 218,926 786 172,959 800 281,921 762 359,762 715 197,755 732 176,974 734 271,942 793 283,-3% 8% 4%,2% 4% -21%,concentrate,internal consumption,kt,90,99,104,104,77,100,101,102,1%,-2%,ferro-alloys saleable production,ferrochrome - high-carbon - medium-carbon - low-carbon ferrosilicochrome silico-manganese ferro-silicon total ferroalloys,kt kt kt kt kt kt kt kt,325 292 12 21 21 42 12 399,323 288 13 23 12 46 13 395,325 289 12 24 15 45 12 398,317 281 14 22 15 47 11 389,294 259 13 22 21 36 10 360,295 261 13 21 23 46 12 376,300 264 12 24 19 47 12 378,318 280 14 24 19 48 13 398,6% 6% 17% 0% 1% 2% 8% 5%,0% -1% 0% 9% 28% 2% 18% 2%,iron ore division,ore extraction (rom) primary concentrate production saleable concentrate,kt kt kt,10,876 4,389 2,013,10,715 4,287 1,675,10,617 4,497 2,004,11,358 4,629 2,550,10,522 4,224 2,230,10,204 4,178 2,021,9,893 3,890 1,803,10,185 4,278 1,778,3% 10% -1%,-10% -8% -30%,production,saleable pellet production,kt,2,132,2,228,2,098,1,677,1,644,1,891,1,796,2,250,25%,34%,alumina & aluminium division,alumina sales aluminium production,kt kt,292 62,285 62,289 62,307 63,307 63,210 62,256 62,295 66,15% 6%,-4% 4%,other non-ferrous division,copper ore extraction (rom) saleable copper contained cobalt ore extraction (rom) saleable cobalt contained,kt kt,343 4,992 284 2,000,398 6,572 246 2,805,366 7,361 245 2,666,486 7,596 242 3,099,420 8,080 325 2,853,429 8,988 338 2,736,418 8,505 341 2,615,465 9,740 370 2,750,11% 15% 9% 5%,-4% 28% 53% -11%,energy division,coal extraction (rom) energy division consumption of,kt kt,5,697 2,358,5,802 2,339,4,363 1,912,4,272 1,940,5,673 2,408,5,866 2,443,4,392 1,972,4,500 3,108,2% 58%,5% 60%,coal,electricity generation sales of electricity to other,gwh gwh,3,789 2,550,3,781 2,446,3,118 2,556,3,161 2,579,3,932 2,426,3,948 2,497,3,229 2,544,3,614 2,891,12% 14%,14% 12%,group divisions source: company data, deutsche bank estimates,deutsche bank ag/london,page 11,t,t,t,t,t,t,t,t,8 october 2012 metals & mining 3q12 production preview fresnillo a steady improvement in silver production lead by saucito figure 12: quarterly production numbers,units,4q10,1q11,2q11,3q11,4q11,1q11,2q11,3q11f,qoq,yoy,total production - attributable,silver silver stream total silver gold lead zinc,koz koz koz oz,9,596 908 10,504 100,822 5,036 5,805,9,083 1,010 10,093 96,407 5,245 5,864,10,461 906 11,367 110,070 5,357 5,565,9,148 919 10,067 119,768 5,340 5,751,9,257 1,088 10,345 122,621 5,501 5,932,8,769 1,027 9,797 121,792 6,265 6,925,9,143 1,133 10,276 127,003 6,579 6,640,9,420 969 10,389 126,694 6,550 6,559,3% -14% 1% 0% 0% -1%,3% 5% 3% 6% 23% 14%,fresnillo mine,silver gold lead zinc,koz oz,9,037 7,401 3,348 3,097,8,532 6,134 3,365 3,221,8,334 6,350 3,374 3,358,6,416 6,075 3,171 2,968,7,014 7,678 3,475 3,076,6,748 8,731 4,277 4,125,6,618 7,149 4,425 4,184,6,701 7,240 4,372 4,189,1% 1% -1% 0%,4% 19% 38% 41%,saucito mine,silver gold lead zinc,koz oz,1,745 8,299 501 245,2,321 12,701 666 533,1,651 11,662 517 349,1,494 11,358 485 349,1,754 10,362 66