Powering through the storm Danie Mouton Carbon Manager, Growth Exxaro Resources Ltd South African Coal Exports Conference 2009 Cape Town 5 February 2009

2 Sunday Times, 25 January 2009

3 Introduction to Exxaro World economic crisis – Severity and impact World economic crisis – All doom and gloom? Coal – Blown away or riding the storm? Conclusion Agenda

4 Introduction to Exxaro COAL the fourth largest coal producer in South Africa MINERAL SANDS one of the world's top three producers of zircon and chlorinatable TiO 2 slag BASE METALS AND INDUSTRIAL MINERALS the only zinc producer in South Africa IRON ORE 20% holding in Sishen Iron Ore Company Our commoditiesAt a glance…  One of the largest South African based diversified resources company  An ALSI Top 40 company, listed on the JSE  Over employees  Revenue: R5.8bn* (±US$ 0.8bn)  Net operating profit: R806m* (±US$107m)  Operations in South Africa, Australia, Namibia and China  53% BEE ownership * H (6 months) results

5 The world economic crisis – severity and impact

6 Source: Global Insight World crisis – GDP growth

7 Impact: Stock exchange indices Source: DowJones JSE Industrial Index Dow Jones Industrial Index

8 Impact: USA home and auto markets Sources: NAHB & Wells Fargo, WSJ Online US NAHB/Wells Fargo Housing Market Index US Auto Sales (million units at seasonally adjusted annual rate)

9 Impact: Commodity prices Source: I-Net

10 The world economic crisis – all doom and gloom?

11 The trees or the forest? Sources: Barclays Capital, AME Great Depression Oil price shocks

12 China – The awakened dragon Source: Deutsche Bank

13 Source: Global Insight Other emerging economies

14 Sources: Citigroup, Barclays Capital, Brook Hunt, Deutsche Bank, JB Were, Macquarie, Standard Bank Commodity prices – recovery?

15 Source: I-Net Exchange rate – protection?

16 The glass is half full! Lower energy costs (oil price) Rational filtering of asset quality Slow-down of capex escalation Greater willingness and incentive to form synergistic alliances Diversification potential (some assets are cheap now…) Skills retention

17 Coal – Blown away or riding the storm?

18 What is coal’s role in the world? Source: World Coal Institute, 2008

19 Does coal have a future role to play? Source: IEA, 2006 Fossil fuels remain dominant source of energy – 83% of the overall increase in energy demand Coal sees the biggest increase in demand in absolute terms (59% by 2030), while non-hydro renewables grow fastest, but from a small base

20 Is there enough coal?

21 SA in lower half of cost curve SA export competitiveness

22 Logistics is the key Mineral Resource Logistics Market Products Mineral Reserve Mineral Deposit/ Rights Losse s Conversion through Technology MiningBeneficiation Losse s ROM Losse s Typical OC Mine 10% losses 3 to 5% dilution 6% to slimes 85% organic eff 3%losses Due to Quality variation 60 to 120% Of Costs 20%margin Loss due To over/under spec At least 45% of value destruction across value chain Source: Exxaro company analysis

23 It’s time to work together In order to have reached its annual capacity target of 76Mtpa during 2008, producers would have had to produce, TFR would have had to rail, and RBCT would have had to ship an average of 6.3Mtpm during the year. Source: Barlow Jonker, 2009

24 Conclusion

25 Power through the storm – together Cost discipline Improve efficiencies Spend cash wisely Create alliances Minimise value losses across value chain – exploit synergies Collectively develop logistical solutions for the coal business BUSINESS AS IT USUALLY SHOULD BE

26 Final thought “As the credit crunch threatens to become a global downturn, corporate leaders have a choice: pull in their horns and ride out the storm or look for opportunities to pick up bargain-basement assets that will help them grow and create future value for shareholders. If past is prologue, more will follow the first course – which is a mistake.” M&A strategies in a down market The McKinsey Quarterly, September 2008

27 THANK YOU