Energy for a low-carbon economy 11 November 2010 Presentation by Ernst Venter Executive General Manager Business Growth

Contents South African context The changing energy environment Exxaro’s response –Energy and carbon management programme –Energy business Exxaro’s contribution to national objectives Road ahead 2

South African context 3 Six key sectors and activities: 1.Infrastructure expansion 2.Agriculture and agro-processing 3.Mining and mineral beneficiation 4.Green economy and associated services 5.Manufacturing sectors identified in IPAP 6.Tourism and selected services sectors Six key sectors and activities: 1.Infrastructure expansion 2.Agriculture and agro-processing 3.Mining and mineral beneficiation 4.Green economy and associated services 5.Manufacturing sectors identified in IPAP 6.Tourism and selected services sectors Government objectives for economic growth

4 The energy environment within our economy is changing From: Energy oversupply From: Energy oversupply To: Energy constrained To: Energy constrained

5 The energy environment within our economy is changing From: Cheap electricity From: Cheap electricity To: Rising electricity prices To: Rising electricity prices

6 The energy environment within our economy is changing From: Carbon intensive From: Carbon intensive To: Carbon constrained To: Carbon constrained MtCO 2 e/a

7 Exxaro developed a strategic response to this changing environment Analysis of business environment Business response: Prepare for a low-carbon, energy constrained future + + Energy Supply Shortage Energy Price Pressure Carbon Constrained Future Existing businesses Energy security Carbon footprint Improving energy efficiency Carbon offsets Existing businesses Energy security Carbon footprint Improving energy efficiency Carbon offsets Business growth opportunity Base load IPP Renewable energy Energy and carbon trading Business growth opportunity Base load IPP Renewable energy Energy and carbon trading Develop portfolio of energy projects Specific strategies have been developed to drive implementation of our response

8 Exxaro developed a strategic response to this changing environment Analysis of business environment Business response: Prepare for a low-carbon, energy constrained future + + Energy Supply Shortage Energy Price Pressure Carbon Constrained Future Existing businesses Energy security Carbon footprint Improving energy efficiency Carbon offsets Existing businesses Energy security Carbon footprint Improving energy efficiency Carbon offsets Business growth opportunity Base load IPP Renewable energy Energy and carbon trading Business growth opportunity Base load IPP Renewable energy Energy and carbon trading Develop portfolio of energy projects

Energy and carbon management strategy 9 CURRENT REALITY High carbon economy Reactive to legislation Identified threat & commitment Part of third world – huge window of opportunity High level management commitment Energy strategy FUTURE INTENT Thrive in low carbon economy Pre-empt legislation Improve competitive intelligence Participate in o Clean Energy o Renewable resources o Carbon trading o Co-generation Brand, image & perception Environmental regulatory environment Energy efficiency management drive Mitigation opportunities and clean technologies Low carbon economy Sustainability reporting Energy procurement

… An Exco pledge reconfirms Exxaro to improved energy efficiency and reduction of carbon emissions The Energy & Carbon Management Strategy The EXCO pledges its support for the Energy and Carbon Management programme and reconfirms the commitment to improve energy efficiency by 10% and reduce our carbon emissions with a similar 10% by 2012 The business planning process will cascade this target to practical objectives at each BU These targets will be included in the EGM and BU Managers’ performance contracts

While implementing our strategy, we have made significant progress... Some of our key successes are the: Development and implementation of data processes for effective and efficient reporting Eskom electricity baselines developed (PCP readiness) Energy efficiency champions appointed at all business units Increased awareness on energy efficiency at business units Development and implementation of capital project guidelines Ownership of energy efficiency at business units through clear role definition and empowerment of individuals CDP developed and good exposure received 11

We have achieved tangible successes Design of Grootegeluk Medupi Expansion Project: –Approximately 29% more energy efficient –Zero effluent coal beneficiation –Eco-friendly housing reducing carbon emissions by 60% Co-generation plant at Namakwa Sands smelter in final stages of feasibility to bring about 17% saving in energy and carbon emissions Biodiesel tests successfully conducted at Leeuwpan mine, being followed up with a full concept study 12

13 Exxaro developed a strategic response to this changing environment Analysis of business environment Business response: Prepare for a low-carbon, energy constrained future + + Energy Supply Shortage Energy Price Pressure Carbon Constrained Future Existing businesses Energy security Carbon footprint Improving energy efficiency Carbon offsets Existing businesses Energy security Carbon footprint Improving energy efficiency Carbon offsets Business growth opportunity Base load IPP Renewable Energy Energy and carbon trading Business growth opportunity Base load IPP Renewable Energy Energy and carbon trading Develop portfolio of energy projects

Exxaro Energy’s vision Exxaro Energy’s strategy is based on Exxaro’s view that there is a business opportunity in the Southern African energy environment. Exxaro Energy’s vision is to: 14 Become the leading cleaner energy Independent Power Producer in Southern Africa Become the leading cleaner energy Independent Power Producer in Southern Africa

Wind Power: Two wind farms under development on the West Coast and at Tsitsikamma Solar Power: Conducting pre-feasibility studies for Concentrating Solar and Solar Hybrid power plants in the Limpopo province and Northern Cape Co-generation: Final stages of feasibility for installation of co-generation at Namakwa Sands smelter, various other projects in development Coal Bed Methane: Exploration and drilling to prove economic gas flow in Botswana Base Load IPP: Desk top study completed – utilising cleaner technology and signed > 1000MW of term sheets with potential industrial customers Bio Fuels: Concept study to replace 40million litres of diesel in first phase, increasing energy and food security at the same time Exxaro is developing a portfolio of energy projects 15

Exxaro’s contribution to national objectives 16 Six key sectors and activities: 1.Infrastructure expansion 2.Agriculture and agro-processing 3.Mining and mineral beneficiation 4.Green economy and associated services 5.Manufacturing sectors identified in IPAP 6.Tourism and selected services sectors Six key sectors and activities: 1.Infrastructure expansion 2.Agriculture and agro-processing 3.Mining and mineral beneficiation 4.Green economy and associated services 5.Manufacturing sectors identified in IPAP 6.Tourism and selected services sectors Government objectives for economic growth

The road ahead Exxaro Inspirational leadership through meaningful advocacy, facilitation and commitment Ongoing focus on improving energy efficiency of operations Reducing our carbon footprint and offsetting the balance Successful establishment of a cleaner energy business and implementation of energy projects Exxaro Inspirational leadership through meaningful advocacy, facilitation and commitment Ongoing focus on improving energy efficiency of operations Reducing our carbon footprint and offsetting the balance Successful establishment of a cleaner energy business and implementation of energy projects 17 Government Finalisation of IRP2010 Implementation of REFIT programme Establishment of a COFIT programme Creation of friendly environment for IPPs through: Establishment of an Independent System and Market Operator (ISMO) Support for bilateral energy agreements Friendly grid access and wheeling regulations Practical support to industry for achievement of New Growth Plan Government Finalisation of IRP2010 Implementation of REFIT programme Establishment of a COFIT programme Creation of friendly environment for IPPs through: Establishment of an Independent System and Market Operator (ISMO) Support for bilateral energy agreements Friendly grid access and wheeling regulations Practical support to industry for achievement of New Growth Plan For sustainable energy security in Southern Africa