Mining Indaba 2009 Exxaro … Harnessing or Weathering the Storm Presentation by Ernst Venter Executive General Manager, Business Growth 10 February 2009.

Mining Indaba 2009 Exxaro … Harnessing or Weathering the StormPresentation by Ernst Venter

Executive General Manager, Business Growth

10 February 2009

2

Contents

• Introduction

• The storm

• The impact

• Is it happening again?

• What will help us survive?

• How will the future look?

• What do we need in Sub-Saharan Africa … notwithstanding the storm

• What are the positives about this event?

• What is Exxaro doing?

• Our track record … and committed growth

• Conclusion

3

Introduction

• Exxaro, powering possibility with a sound asset base and an exciting

growth portfolio

• Will we be able to deliver in the current global economic context?

• Are there even more possibilities for Exxaro in this storm?

• Or should we all adopt a “wait and see” approach?

4

Introduction to Exxaro

COALthe fourth largest coal producer in South Africa, one of the largest suppliers to Eskom MINERAL SANDSone of the world's top three producers of zircon and chlorinatable TiO2 slag

BASE METALS AND INDUSTRIAL MINERALSthe only zinc producer in South Africa

IRON ORE20% holding in Sishen Iron Ore Company

Our commodities … At a glance …

One of the largest South African based diversified resources company

An ALSI Top 40 company, listed on the JSE

Over 9 000 employees

Revenue: R5,8bn*

Net operating profit: R806m*

Operations in South Africa, Australia, Namibia and China

53% BEE ownership

* H1 2008 (6 months) results

5

The Storm …World GDP growth rates

Source: Global Insight

-4

-2

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n-1

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Gro

wth

Ra

te (

% C

ha

ng

e)

World USA Western Europe Japan

Oil crisis Oil crisisStock market

crashAsian crisis

Dotcom bubbleburst

September 11

6

The impact … Stock exchange indices

Source: I-Net

0

5000

10000

15000

20000

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JSE Industrial Index Dow Jones Industrial Index

7

The impact … Copper, zinc coal and oil prices

0

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10000

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n-0

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Cu

& Z

n P

ric

es

(U

S$

/t)

0

20

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120

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Co

al

& O

il P

ric

es

((U

S$

/t &

US

$/b

bl)

Copper Zinc Brent Crude RBCT Steam Coal

Source: I-Net

8

The impact … Copper and zinc LME stocks

0

100

200

300

400

500

600

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800

900

1000

Jan-0

0

May

-00

Sep-0

0

Jan-0

1

May

-01

Sep-0

1

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May

-02

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-03

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LM

E S

toc

ks

(k

t)

Copper Zinc

Source: I-Net

9

The impact … Zinc smelter production cuts

Source: CRU

7% of world production

Similar and even worse cutbacks in steel, nickel and ferro alloy sectors …

10

Is it happening again?

• Ultra-long term real zinc and copper prices

• Showing the major cycles and the fact that even during super cycles,

prices are cyclical

• Is history repeating itself?

• Can we expect a slow or strong recovery?

• Should we invest now to have a 90% probability to get a return of 35%

plus?

11

Is it happening again?

Sources: Barclays Capital, AME

ULTRA LONG-TERM REAL 2008$ COPPER PRICE

0

2000

4000

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18000

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08

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23

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48

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53

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68

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73

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83

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88

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93

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98

20

03

20

08

Prc

e (

US

$/t

)

Great Depression

Oil price shocks

?

12

How deep and how long …

“Uncertain” may seem like an understatement to describe the current

mood in many quarters of the mining industry. The precipitous fall in

prices for every metal but gold, the freezing of credit, and the big

question marks over the future of the world economy have been enough

to send most of us for the antacids, the Scotch, or the subscription

medication of choice. Younger people relatively new to the mining

business have painfully learned that, yes, there is always a downturn.

On the positive side, those of us who have been around longer remember

that there is always an upturn, sooner or later, and that its sharpness

and duration are largely a function of what happens during the downturn.

Source: Michael Chender, CEO Halifax

14

What will pull us through this storm …

Source: Deutsche Bank

15

What will pull us through this storm … Economic growth in China and other emerging economies

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Gro

wth

(%

Ch

an

ge

)

China Emerging Markets World Advanced Economies

Source: Global Insight

16

Future outlook … Index of consensus commodity price forecasts

Sources: Citigroup, Barclays Capital, Brook Hunt, Deutsche Bank, JB Were, Macquarie, Standard Bank

0

20

40

60

80

100

120

140

160

2008 2009 2010 2011 2012

Ind

ex (

2008

= 1

00)

Zinc Rutile Zircon Steam Coal Iron Ore Fines Hard Coking Coal

Real LT Prices

$1680/t

$500/t

$712/t

$66/t

USc74/mtu

$115/t

17

Source: Promethium Carbon 2006

The carbon economy … Still with us …

18

What do we need in Sub-Saharan Africa … and what can we offer?

Needs:

• Energy

• Logistical integrity

• Rail transport

• Capital equipment

• Financing

• Skills

• Security of tenure

• Alliances and strong collaboration between State, private sector and utilities

19

Energy … Who will make up the gap? IPPs?

Eskom Reserve Margin 2008 to 2017

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

%

Reserve Margin Scenario 1 Reserve Margin Scenario 2 Eskom Published Reserve Margin Safe Reserve Margin

Medupi and Kusile late

Medupi and Kusile on time

20

Alternative forms of energy …

• Hydro electricity … long lead

• Nuclear … delayed, expensive

• Renewables …

- solar

- wind

• Coal bed methane/LNG

Inga?

21

Logistical infrastructure and rail capacity

Aus

MarientalKang

• Giving Botswana another rail route to the sea, especially for coal exports• Getting TFR capacity in line with RBCT expansion, i.e. 91 Mtpa• Expanding Sishen-Saldanha rail capacity

Morupule3+ bn tonnes of coal

Mmamabula4+ bn tonnes of coal

Waterberg74 bn tonnes of coal

RBCT

NWCIron ore resources

22What can we offer?

23

Southern Africa … Everything under the sun!

24“Chindia” - Staking out its claims in Africa

Copper, oil and gas, ferro alloys, platinum, iron ore

25

Africa’s newest species … Bears and Pumas!

The other two BRICs – Brazil and Russia – are active in Africa too

26

What are the positives about this event?

• A process of rational filtering ito asset quality

• Strong catalyst for synergistic alliances and collaboration

• Strong incentive to form an Africa Incorporated mindset to strengthen

resilience

• Diversification potential

• Skills retention

27

What is Exxaro doing?

• Protect integrity of current assets

• Cost discipline

• Minimise value losses across value chain

• Improve efficiencies

• Spend cash wisely on high quality initiatives

• Create alliances

• Develop logistical solutions for coal business

• Improve our skills base

28

Protecting and improving quality of current asset base …

The challenge for exploration and mining companies and their suppliers is

how to respond to the new circumstances of the downturn while

positioning themselves for an eventual rebound. Companies have been

forced to look hard at costs, cash positions, financing possibilities,

merger and acquisition possibilities, exploration strategy, personnel

issues, and legal, social, and ethical obligations. Exactly how they

conduct these examinations may make all the difference to their future

success.

Source: Michael Chender, CEO Halifax

29

So, how are we protecting our value chain?

MineralResource

Logistics Market

Products

MineralReserve

MineralDeposit/Rights

Losses

Losses

Losses

Losses

Conversion through Technology

Mining Beneficiation

Losses

ROM

Losses

Losses

Losses

Typical OC Mine

Typical UG Mine

14 3 6 2

6452

5

31

30

Focused execution of high quality initiatives…

Pre-feasibility Feasibility Construction Ramp-up/OperationCoal Mineral Sands Ferrous

Belfast

3.0Mtpa

Belfast

3.0MtpaMoranbah

South

3.5Mtpa

Moranbah

South

3.5Mtpa

Dongara*

200ktpa

Port Durnford*

550ktpa*

Medupi

14.6Mtpa

Medupi

14.6Mtpa

Market Coke

450ktpa

Market Coke

450ktpa

Toliara

Sands*

560ktpa

Toliara

Sands*

560ktpa

Alloy Stream20ktpa

Alloy Stream20ktpa

Diepspruit

1.3Mtpa

Diepspruit

1.3Mtpa

Char

160ktpa

Char

160ktpa

Mafube

5.0Mtpa

Mafube

5.0Mtpa

Inyanda

1.5Mtpa

Inyanda

1.5MtpaBlesbok expansion

2.4Mtpa

Blesbok expansion

2.4Mtpa

Eerstelingsfontein

1.0 Mtpa

Eerstelingsfontein

1.0 Mtpa

Turkey exploration

Turkey exploration

Fairbreeze*

300ktpa

Fairbreeze*

300ktpa

Kwinana

40ktpa

Kwinana

40ktpa

Waterberg mine

16Mtpa

Waterberg mine

16Mtpa

Energy

31

Where to from here?

If the past is any guide, several years from now we will be looking at

major new players whose names we haven't yet heard of, and marveling

at the unexpected growth of companies we hardly notice today. These

companies will have done things with costs that no one believed possible,

made deals that seemed counterintuitive at the time but that positioned

them perfectly for the upturn, and created new business models that

seemed to anticipate changes in the landscape.

Source: Michael Chender, CEO Halifax

32

Our track record …

• Improved production volumes in 2008

• Two new coal projects successfully commissioned in 2008

(Inyanda and Mafube)

• Massive Grootegeluk Medupi expansion on track

• High quality project pipeline … viable with current conditions

• Sintel Char plant being commissioned

• Increased presence in coal export market

33

Conclusion

• Harnessing is the right way

• All is not doom and gloom … create the capability to look through the storm

- there is a blue ocean out there

• Be diligent, rigid and disciplined ito new investments

• The opportunities are still out there …

34

THANK YOU