International Perspective US$ / Nickel / Coal ANDI - Colombia Genera February 2015    Chancery House 517, Tower 2 Bright China Chang An Building Augusto Leguía Norte 2000 Corporate Drive B/407, Citi Point, J.B. Nagar 53-64 Chancery Lane London WC2A 1QS Nº 100 of.506 Suite 410 Wexford, PA 15090 Next to Kohinoor Hotel Las Condes Andheri Kurla Road, Andheri (E) 7 Jianguomennei Avenue Beijing 100005, China Santiago USA Mumbai 400059 India UK Chile Tel: +44 20 7903 2000 Tel: +86 10 6510 2206 Tel: +56 2 2231 3900 Tel: + 1 724 940 7100 Tel: +91 96 1947 5403 Fax: +44 20 7903 2172 Fax: +86 10 6510 2207 Fax: +56 2 2231 4314 Fax: + 1 724 940 4488 Fax: +91 22 6687 5758

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Presentation topics US$ - Continued dollar strength Nickel – Indonesia export ban & NPI Coal – China still key; Colombia a competitive producer

CRU believes nickel has the best short term prospects 2015 annual average price forecast (nominal $ or benchmark) versus 2013 average actual prices Hot > 15% Warm 5% to 15% Cold -5% to 15% Freezing < -15% Mild 0% to 5% Cool 0% to -5% Nickel, Sulphuric Acid, Tin, Palladium, Bauxite, Sulphur, Cobalt Zinc, Silicon, Molybdenum, Chrome Ore, Alumina, Aluminium, Phosphate DAP, Ferrochrome, Metalics Scrap, Silico-Manganese, Lead, Platinum, Ammonia, Thermal Coal, Oil, Met Coal, Urea, Phosphate Rock, Copper, Potash, Manganese, Gold, Iron Ore Silver

Global economic performance is diverging USA’s upswing and China’s slowdown are causing currencies to realign Plunging oil prices are net positive for the outlook Modest economic recovery in 2015 – US is key The $ is going from strength-to- strength Significant uncertainty and risk Upside: Oil prices low, US take- off, Indian strength Downside: China crash, Eurzone woes & ‘Grexit’, Geo-politics: Russia, Mid-East, oil stress 6

The US dollar and commodity prices have moved inversely over the years ‘As US dollar soars, commodities get crushed’ – CNBC ‘Copper slumps to 5-1/2-year low on strong dollar’ – Reuters ‘Strong U.S. Dollar to challenge global fertilizer demand’ – Capital Press ‘Dollar rally only just getting started...expect more downward pressure on commodity prices’ – FT Dollar Strengthens CRU CONSULTING 7

Why might prices and the USD move inversely? SUPPLY FACTORS Strong dollar makes revenues look even better against local costs Greater profit margin Producers see incentive to increase supply where possible DEMAND FACTORS Foreign demand for commodities down when USD is strong USD-denominated assets more expensive ‘Imported inflation’ may lead to tighter monetary policy CRU CONSULTING 8

Dollar moves are just one factor pushing prices around Market dynamics differ for each commodity. Dollar impacts on a commodity’s price will vary. CRU CONSULTING 9

Dollar strength to continue By broadest measure, US dollar up by > 9% since last summer CRU CONSULTING 10

Nickel outlook

Nickel market deficits: Stainless steel growth to outpace nickel supply Apparent consumption stainless steel flat products, million tonnes Global Ni balance ‘000 t CAGR 3.4% CAGR 15.2% 12 CRU CONSULTING Data: CRU, LME

Philippine exports increase Will Indonesian ore ban bring NPI boom to an end? Background 2005-2009 NPI industry emerges RKEFs emerge as lowest cost producers using high-grade laterite from Indonesia 2013 Imports >40Mt ore from Indonesia January 2014 Indonesia banned export unprocessed nickel products (<4% Ni) The Future New ore sources NPI costs rise in China ; plant closures Indonesian NPI – lower cost; can volumes be sustained? Can Philippines sustain current ore output? How has the industry responded? Philippine exports increase 13 CRU CONSULTING Data: CRU, LME

Ore key driver of NPI costs Business cost breakdown by technology type, 2014, % Data: CRU

Ore prices have risen with the ban; NPI prices have not Monthly average prices, September 2012 = 100 15 Data: CRU, LME

Cumulative production, ‘000 tonnes Chinese NPI producers occupy upper end of the cost curve in 2014 due to higher ore costs Cost curve for the nickel industry (business costs), 2014, US$/tonne Cerro Matoso VBC Business Costs, $/t nickel Cumulative production, ‘000 tonnes Data: CRU

Coal outlook

A changing thermal coal industry Newcastle, 6,000 kcal/kg spot US$/t FOB 18 CRU CONSULTING

Seaborne thermal markets integrated w/ China’s SE provinces Provincial analysis highlights both opportunities & threats for seaborne The South-East coastal area: consumes ~40% of China's total power generates ~35% of China’s total power produces 4% of China's total coal Coastal coal trade influenced by: Demand factors: Interprovincial transmission Substitution & generation mix Underlying demand intensities Supply factors: Local provincial production and inland supply Seaborne imports Domestic north-south coastal trade XINJIANG QINGHAI INNER MONGOLIA GANSU NINGXIA SHAANXI XIZANG SICHUAN CHONGQING YUNNAN GUIZHOU GUANGXI HAINAN HUNAN JIANGXI ZHEJIANG FUJIAN GUANGDONG MACAU SHANGHAI JIANGSU ANHUI HUBEI HENAN SHANXI SHANDONG HEBEI LIAONING JILIN HEILONGJIANG Data: CRU

India set to overtake China as world’s largest importer

Colombian coal production: Above average quality & below average costs 21

Indonesian & Colombian supply fill most of bottom half – Russian, US & some Australian supply occupy high end of cost curve Seaborne CFR Business Costs – 2014 (US$/tonne) Cumulative Production (Mt) 22 CRU CONSULTING

Industry margins down from 2012 despite cost decreases Industry margins down from 2012 despite cost decreases. Colombia & Indonesia: only 2 major exporters with margins above global average Weighted global and regional US$/t margins, 2012-2014 23 CRU CONSULTING

(+) margins (-) margins Nearly 40% of seaborne production sold at a loss in 2014 Margins by operation US$/t, 2014 (+) margins (-) margins Cumulative Production (Mt) 24 CRU CONSULTING

Nickel & Thermal Coal set for strong price increases over medium term 2018 annual average price forecast over 2013 average actual prices Hot > 15% Warm 5% to 15% Cold -5% to 15% Freezing < -15% Mild 0% to 5% Cool 0% to -5% Zinc, Nickel, Tin, Palladium, Sulphuric Acid, Cobalt, Bauxite, Alumina, Aluminium, Molybdenum, Thermal Coal, Chrome Ore, Platinum, silicon, Ferrochrome, Silico-Manganese, Lead, Manganese, Urea, Met Coal, Oil Phosphate DAP, Copper, Metalics, Scrap, Potash, Ammonia, Phosphate Rock, Sulphur Gold, Iron Ore, Silver

Thank You Taylor Shively – CRU Base Metals Consulting Manager taylor.shively@crugroup.com +56 2 2231 3900 Marcio Goto – CRU Gerente Regional América Latina y el Caribe marcio.goto@crugroup.com +55 11 5051 8124 / cel.: +55 11 997 264 466

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