Sipho Nkosi Chief Executive Officer Exxaro Resources Limited Merrill Lynch Global Metals and Mining Conference Miami, USA May

2 Content Who is Exxaro? Exxaro’s strategy RSA environment -What is happening in RSA since recession? -What challenges does RSA economy face? -What challenges does RSA mining industry face? Exxaro response Country response Conclusion

3 Introduction to Exxaro COAL the fourth largest coal producer in South Africa. Largest supplier to Eskom 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 South Africa’s diversified resources company  One of the top 40 companies on the JSE  Approximately employees  Head office in Pretoria, South Africa  Market capitalisation ~R45bn  Revenue: R15,0bn*  Net operating profit: R1,74bn*  Dividend: 200cps*  * for year-ended 31 December 2009

4 Powering possibility through our strategy Exxaro wants to: Be a South African diversified resources company with global assets Be a long-term sustainable business Produce 75Mtpa coal and 750kt reductants by 2015 Diversify into sought-after commodities (iron ore and energy) Operate successfully in any environment Create strategic alliances with key local and international partners Bring to fruition its exciting pipeline of growth projects

5 Project pipeline and opportunities OwnershipScope Estimated capex StatusEstimated start-up SandsKwinana expansion (Australia 100%) (Approval Feb 2008) 40ktpaAUD117mConstruction2Q10 CoalMedupi (Approval May 2006) 14,6MtpaR9bn Detail engineering 2Q12 SandsDry mine replacement (Australia 100%) ktpa TBDPre-feasibility2011 CoalBelfast 3-5MtpaTBDPre-feasibility2011 EnergyCo-generation20MWTBDFeasibility2012 CoalChar phase 2140ktpaTBDFeasibility2013 EnergyWind energy100MWTBDPre-feasibility2013 CoalMoranbah South (Australia 50%)4,5MtpaTBDConcept2014 EnergySolar plant20MWTBDPre-feasibility2014 CoalMarket coke750ktpaTBDPre-feasibility2014 CoalThabametsi17MtpaTBDPre-feasibility2015

6 What happened in RSA since recession? SA economy exited recession during 3Q09 with 3,2% real GDP growth recorded in 4Q09 CPI inflation under control and mostly within target range Reserve Bank cut rates to 6,5% from 7,0% Strong currency weighed heavily on corporate earnings however Foreigners continue to be strong buyers of SA equity (US$8,9bn) Resources led the rally on JSE on continuing signs of a global recovery and strong demand for some commodities RSA Government continues to invest aggressively into infrastructure (electricity, rail, roads, SWC stadiums etc)

7 What challenges face SA economy? Despite significant progress made in getting the economy back on to a higher growth path (3,3% 1994 to 2009), the country faces major unemployment and poverty challenges SA’s labour participation rate at 42% is low vs peers, its unemployment rate is high (>20%), its levels of income inequality are very high (Gini coefficient 0,59) and too many people are caught in the poverty trap Government has now placed the creation of meaningful employment as a central pillar of economic policy All parties recognise that higher levels of sustainable, balanced and labour absorbing economic growth is key to reducing unemployment and poverty.

8 Too much of the economy’s recent growth has been driven by credit fuelled non-tradable demand side, and tradable export sectors have languished…..

9 To ensure more balanced and higher levels of growth the country needs its tradable export sectors to grow at a faster pace This is where mining fits in Mining has a very large foreign exchange earning, GDP multiplier and employment creation foot print But questions need to be asked and answered as to what role mining can play in the future: -Does South Africa have the environment to support a growing mining industry? -What role can mining play in the economy? -What are the factors affecting the competitiveness (and growth) of the mining sector and can we fix them?

10 Does RSA have the mineral resource potential?

11 What role can mining play in the economy? Mining industry the essential core of SA economy Creates 1 million jobs ( direct and indirect) Accounts for about 18% of GDP (8% direct, 10% indirect and induced) Critical earner of foreign exchange >50% Accounts for 18% of investment (9% direct) Attracts significant foreign savings (>30% of value of JSE) 18,5% of corporate tax receipts ( R22 billion, R33 billion) 50% of volume of Transnet’s rail and ports 93% of electricity generation via coal power plants 15% of electricity demand About 37% of country’s liquid fuels via coal (R30 billion worth)

12 What challenges does SA mining industry face? Mine closures for safety related issues (some valid, some not) Binding infrastructure constraints (electricity, rail) Red tape constraints (e.g. water licenses) Policy uncertainty Human capital constraints Stagnant productivity and rapidly escalating costs Volatility in rand-dollar exchange rate, and then The global crisis hit! but … Mining production declined in period 2006 to 2008, despite significant increase in investment in that period. Challenges included: The lack of growth in the mining sector is also due to a combination of drivers eroding the sector’s competitiveness

13 Can we fix the problems? Exxaro’s response to challenges and opportunities includes: 1.Safety ~ CEO safety summit and continuous awareness campaigns 2.Infrastructure Electricity ~ Co-generation and facilitating various renewable energy discussions Rail ~ Close co-operation with rail and port authorities 3.Red tape and policy uncertainties ~ Chamber of Mines and various stakeholder forums where industry issues are discussed 4.Human capital constraints ~ Extensive bursary and learning programmes 5.Escalating costs ~ CI and BI culture 6.Rand/dollar exchange rate ~ Uncontrollable, hence position on cost curve NB

14 Can the country fix these problems? SA ranked reasonably well in ease of doing business Infrastructure – at a general level SA’s infrastructure is ranked as reasonable, but specific constraints have emerged (rail and electricity) Social license to operate (safety, health, environment, etc) important component of the industry’s long-term license to operate Sustainable mining into the 21 st century a case for change, whereby the industry stakeholders need to work together in helping to improve on the social license to operate, including the continued improvement in technology to ensure a sustainable sector into the future Macro-economic stability – the issue of the volatility in the rand exchange rate has been raised (especially its impact on L/T planning) Political stability – SA is a stable constitutional democracy. Parties agree that transformation is a key component of promoting stability and long-term license to operate Specific initiatives taken to address the above include…

15 Stakeholder response to challenges Formation of MIGDETT competitiveness task team to jointly look at macro- economic issues that could have a material impact on the competitiveness of the mining industry General agreement by all role players that objectives of MPRDA of promoting a sustainable, safe, environmentally responsible, growing and transformed industry are NB and globally aligned Role of Chamber of Mines to ensure: –Issue of lack of clarity in the laws, and view that certain administrative discretionary powers create uncertainty is raised –The issue of time periods for processing and granting rights raised –The issue of understanding the high refusal and rejection rates raised The promotion of exploration and small scale mining Developing trust amongst players

16 The country and Exxaro face numerous challenges and opportunities to unlock significant underlying potential. Do we believe we can do it? Exxaro can ~ It has the strategy and ability The country can ~ Willingness by all stakeholders to improve competitiveness and unlock potential Exxaro has a strong and rosy future Conclusion

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