1. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Copyright © 2012 Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. Global Economic Uncertainty-A Weight on Metals & Mining Credit Quality? Michael Scerbo Managing Director, Corporate Ratings February 2012

2. 2. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. S&P’s Baseline Economic Scenario Sluggish economic growth in the U.S. –Real GDP growth of 2.1% in 2012 and 2.3% in 2013 –Construction remains challenged –Auto production much improved –Total housing starts of 730,000 in 2012 & 990,000 in 2013 Recession in the Eurozone during the first half of 2012 –Eurozone should gradually climb out of its mild recession in second half of 2012 –Real GDP growth of 0% in 2012 and 1% in 2013 China growing at a slower pace –Real GDP growth of 8% in 2012, compared to 9.5% in 2011 Input costs remain at relatively high levels

3. 3. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Our Resulting Base Case Scenario….. Overall, we expect performance to look very similar to 2011, although we remain cautious. Slow and uneven recovery –Pricing to remain volatile –Global exposure benefiting sector participants (APAC vs. U.S. vs. Europe) Producer discipline has aided pricing despite low volumes M&A activity picking up given a desire/need to increase reserves and diversify geographically

4. 4. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Global Metals & Mining Rating Outlook Dispersion Rating outlooks mostly stable for the approximately 120 publicly rated entities Of the approximately 40 investment-grade rated issuers, 32 have stable rating outlooks with the remainder mostly negative Downgrades and upgrades likely to be balanced for rated portfolio in the near-term

5. 5. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Regional Differences In Our Rating Outlooks

6. 6. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Commodities Outlook- Subsector Credit trends in 20122012 outlookKey Risks SteelSlowly improving Gradual growth of U.S. economy results in higher prices and utilization Excess capacity and influx of imports could pressure credit metrics AluminumStable to weakening Slowing global economies could result in sustained lower prices and exacerbate excess supply Overcapacity could result in low prices for an extended period without further production cuts; high inventory levels remain Met coalWeakeningLower met coal prices Steel production in Europe and China is lower; sustained weakness could limit balance sheet improvements Steam coalStable to weakening Continued low demand for electricity from coal generation; environmental and safety regulations will continue to affect operations Competition from natural gas could limit price improvements and limit ability to pass through rising costs; implementation of proposed environmental regulation could make coal less competitive CopperStable Favorable demand/supply dynamic should keep prices relatively high despite slowing global growth Weaker than expected economic growth in China could result in lower prices GoldStable Global uncertainty will continue to support prices Better than expected global economic performance could result in lower prices

7. 7. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Steel: Volatility Expected Service Center Inventories (‘000 tons) US Steel Production Capacity Utilization Source: Metal Service Center Institute Source: AISI

8. 8. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Aluminum: Overcapacity Risk?

9. 9. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Coal: Challenges Continue

10. 10. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Copper: Favorable Dynamics

11. 11. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Gold: Safe Haven?

12. 12. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Key Themes in Our View….. M&A expected to remain a significant factor in industry –Expand size & scope –Replace reserves –Lower costs Capital spending expected also increase –Deferrals during downturn –Results: lower costs, reserve replacement, etc. –Adequate funding given base case assumptions Maturities expected to be manageable

13. 13. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Risks Exist ……. Relative to another recession (chance stands at 25% in U.S. and 40% in Europe) –Weaker industrial demand, business environment, consumer, etc.….reduced demand, pricing and profitability Further increases in raw material costs Build up of inventory levels Global economic uncertainty/issues Slower growth in China and other emerging economies More aggressive debt-financed M&A/shareholder returns

14. 14. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. S&P’s Price Assumptions Standard & Poor's Metals Price Assumptions 20122013Long-term Aluminum ($ per pound)0.95 0.90 Copper ($ per pound)3.2532.25 Nickel ($ per pound)886.75 Zinc ($ per pound)0.8 0.75 Gold ($ per ounce)1,3001,2001,000 As of Jan. 16, 2012.

15. 15. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Appendices

16. 16. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Global Metals & Mining Ratings Distribution

17. 17. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. 60%+ Of Metals & Mining Issuers Are Non-Investment Grade

18. 18. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Related Criteria And Research “Credit Themes: Global Economic Uncertainty Weighs on U.S. and Canadian Metals and Mining Companies” Feb. 7, 2012 “Industry Economic And Ratings Outlook: A Less Optimistic Picture For U.S. Natural Resources,” Jan. 26, 2012 “Issuer Ranking: North American Metals & Mining Companies, Strongest To Weakest,” Jan. 9, 2012 Sector Review: “China’s Sliding Demand For Commodities Could Sap Strength Of Australian Miners,” Feb. 15, 2012 Industry Credit Outlook: “Latin America’s Corporate Credit outlook Is Stable For 2012, But Troubles Abroad Challenge Weaker Issuers,” Jan. 17, 2012 “Standard & Poor’s Revises Its Metals Price Assumptions for 2012, 2013 And Beyond,” Jan. 16, 2012

19. 19. Permission to reprint or distribute any content from this presentation requires the prior written approval of Standard & Poor’s. Analytical Contacts U.S. –Marie Shmaruk, marie_shmaruk@sand.com, (212) 438-6503@sand.com Canada –Donald Marleau, donald_marleau@sandp.com, (416) 507-2526@sandp.com Europe –Andrey Nikolaev, andrey_nikolaev@sandp.com, +33144207329@sandp.com Latin America –Reginaldo Takara, Reginaldo_Takara@sandp.com, 55-11-3039-9740Reginaldo_Takara@sandp.com Asia –May Zhong, may_zhong@sandp.com, 61-3-9631-2164

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