South African Energy Landscape

1. South African Energy Landscape Sipho Nkosi CEO Exxaro Resources Limited Merrill Lynch | Global Metals & Mining Conference | May 2009

2. Introduction to Exxaro Our commodities At a glance… COALthe fourth largest coal producer in South Africa MINERAL SANDSone of the world's top three producers of zircon and chlorinatable TiO2 slag BASE METALS AND INDUSTRIAL MINERALSthe only zinc producer in South Africa IRON ORE 20% holding in Sishen Iron Ore Company • South Africa’s largest diversified resources company • One of the top 40 companies on the JSE • 10 135employees • Head office in Pretoria, South Africa • Revenue: R13,8bn* • Net operating profit: R2,5bn* * Annual results for 12 months ended 31 December 2008 2

3. Opportunity in Africa • $563bn required to meet Africa’s 20 year power needs • Annual electricity demand growth of 4.4% over next 25 years • 270GW expansion by 2030 (7xcurrent size of SA’s utility - Eskom) • Crucial need private sector investment which points to significant power sector reforms • South Africa would have to deal with tariff structures that remain below the cost of production (set to grow further…) • Need to diversify energy mix and adoption of renewable technologies • IPP’s still achieve 20% returns in Africa versus 15% in South America and 2.5% in Eastern Europe

4. Cost of unserved electricity in RSA Cost of unserved electricity in South Africa R18 000/MWhr SA Megaflex tariff R270/MWhr

5. Cost of load shedding during 2008 in RSA Cost of Electricity in South Africa R7,500/MWhr SA Megaflex Tariff R270/MWhr

6. Cost of electricity in Nigeria and RSA Nigeria 140 million people 3000MW grid electricity Balance on own generation At a cost of R4,500/MWhr RSA 60 million people 36000MW grid electricity Megaflex Tariff R270/MWhr

7. Matching supply and moderate demand Generation Capacity vs Electricity Demand 100,000 Short term IPP Can we match moderate demand growth? Opportunities 90,000 Yes..., in future..., but how? Long term IPP 80,000 Opportunities 70,000 Available Capacity Short term: How? Peakers, EOS, Renewables? 60,000 Minus 19% Reserve Margin 50,000 MW High Demand 40,000 Growth 30,000 Moderate Demand 20,000 Growth 10,000 Linear (Low Demand Growth) - 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Year Demand is already suppressed 7

8. Market matching supply and moderate demand Short Term IPP Opportunities SA Generation Capacity New Base Load (Eskom/IPP) to balance demand 90000 Eskom Base Load IPP Tender: 2008 GAP = New LT IPP opportunities > 10,000-25,000MW MTPPP's Cahora Bassa (Extended contract in 2008) 80000 Cahora Bassa (Old contract) New Renewable Energy: Eskom as Single Buyer Base Load IPP tender 70000 New Eskom Wind Short term: Peakers, EOS, Renewables? New Eskom Nuclear & PBMR Medupi, Kusile - New Eskom Base Load 60000 IPP Co-gen Medupi New IPP (Other): Eskom as Single Buyer 50000 + Kusile IPP Wind IPP Hydro IPP Bagasse MW 40000 IPP Coal fired New Eskom pumped storage (2) De-mothballing 30000 New "DME" IPP Peaking Stations (2) New Nuclear Co-gen New Eskom Peaking (2) Eskom Coal-fired "De-Mothballed” (3) 20000 Eskom Nuclear (1) Eskom pumped storage (2) 10000 Eskom hydroelectric (6) Eskom gas turbines (2) Existing Eskom coal-fired (10) 0 Capacity Summary 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Year @19% (15%+4%) Supply reserve margin 8

9. 18 Prognosis for the reserve margin Eskom Base case 10% demand savings 5% demand savings 2010 Soccer World Cup % net capacity reserve margin Key assumptions • Electricity Growth: 4% p.a • Supply side assumptions: Eskom supply base case plans including some IPPs • Excludes some renewable options, co-generation and possibly innovative options • Demand savings calculation – Annual energy is reduced by 5% or 10%, and then the peak demand is calculated to derive the projected reserve margin ‘03 ‘05 ‘07 ‘09 ‘11 ‘13 ‘15 Source: Eskom ECS Presentation; October 2008

10. A problem a decade in the making… • SA reserve margin in South Africa, has been steadily declining over the last ten years due to increasing demand and limited generation capacity. • In 2006, there were incidents of regional load shedding due to network inadequacies and insufficient regional generation resources. • In 2007, the first incident of national load shedding was experienced due to the inability to supply demand with the operational generation capacity. • After successfully navigating the winter peak demand period (~37 GW), during the generation maintenance season in October, November and December 2007 there were several more incidents of load shedding. • In January 2008, there was almost daily load shedding for 2 weeks leading to a Government declaration of a national power emergency and a plan of action on the 25th of January 2008. • This had a severe impact on production levels in all sectors of the economy and dented the image of Eskom and South Africa. Solutions present us with opportunity to leverage macro-economic benefits from the build programme and creating a more energy productive economy - the right thing from a climate change and global competitiveness point of view

11. Eskom generation resources and imports Supply side overview Demand side overview + 28 000km of Transmission lines (over 132kV to 765 kV AC) covering an area similar to the part of Western Europe from Berlin to Madrid. • 25 Operational Power Stations. • 38 979 MW of operational capacity. • Just over 80% coal-fired. Mix of nuclear, open cycle gas turbines, hydro and pumped storage plant in remaining 20%. • Imports of about 1520MW. • Returning 3 mothballed coal-fired stations, building 2 coal-fired and a pump storage station and expanding OCGT station. • 29% of South Africa’s energy demand provided by electricity. • Forecast of about 38GW peak demand in 2008 and over 250TWhrs of energy demand. • Largest 138 customers consume nearly 40% of the energy. • Largest 40 000 customers consume nearly 75% of the energy. • Approximately 8 million customers consume about 20 to 25% of the energy. Consistent tight supply-demand balance with a very extended electricity transport system 11

12. SA’s electricity supply industry historical overview White Paper on Energy policy drives country electricity strategy Eskom & Govt engage on new plant Decision on ES1 reversed. Medupi decision taken Construction of Medupi begins Direct correlation between the declining reserve margin and the increase in load factor and plant unavailability. This also put pressure on coal stockpiles. At the same time there was relatively small levels of new generation capacity added to the system.

13. Critical electricity situation since January ’08 Notes • The size of the deficit for the next few years was determined to be an average of 3000MW and 26TWhrs and this is the amount that needs to be reduced in the power system demand to ensure balance • To set an example, a focus was to drive down demand in the over 100,000 Government buildings throughout the country • The supply side options required a co-ordination of Government efforts to support the traditional new-build programme • An enabling framework for co-generation and other IPPs to be concluded Security of Supply Demand-Side Options Sectoral Interventions Supply-Side Options (long-term adequacy to 2015) Power Conservation Programme (PCP) Government Buildings Eskom Build Programme (New build & RTS) Demand-side behavioural change Freight Rail Co-generation (3500 MW) Fast-tracking of existing DSM initiatives OCGT IPP (1000 MW) Cost of Supply: A social dialogue between all key players was convened in May 2008 using a multi-stakeholder organisation (NEDLAC) to facilitate the discussion around the cost of supply. The regulator has publicly stated its view on a 5 year price path and Government has committed to financial support and possible guarantees for Eskom debt. Security of Supply : Government launched a National Response Plan on the 25th of January 2008:

14. A three-phased roadmap to recovery 4000 MW Current status 3000 MW System Security Recovery Transition Power conservation Program and supply side options Transition Power Rationing 4 years 4 weeks 4 months 1 March 1 February 1 July 2012 • Phase 1: Stabilisation Program The focus of this period was to immediately restore the ability to supply securely. This meant: • Reducing Generation output reductions due to coal supply problems. • Containing the unplanned generation outages. • Sustaining the 10% demand reduction by key industrial customers • Implementing a 10% demand reduction by embedded large power users, metros and municipalities • Phase 2: Power Rationing The focus of this period was to implement power rationing and prepare for the peak winter demand period. • A continuation of the 10% voluntary curtailment and/or pre-emptive load shedding to meet the targeted reductions. • Additional essential maintenance and improvement of Generation performance • Stakeholder endorsement of the approach to long-term recovery. • Phase 3: Power Conservation • Phase The current period requires a sustained focus on demand reduction and ensuring new capacity comes on line as planned. • Demand reduction requires an Energy Conservation Program for large consumers, an intensive rollout of demand side initiatives for the mass market and a pricing signal that drives energy efficiency. • Focus on on-time delivery of cogeneration and new generation capacity.

15. Conclusions • Underlying savings or reduction to-date once weather is taken into account is about 2 to 3%. If not sustained and increased vulnerability to single incidents is increased. We therefore need to focus on ways to achieve the required 10% saving. • Focus on energy efficiency while minimising economic impact which requires rapid resolution with all stakeholders. • Medium term outlook requires an energy balance where efficiency improvements provides opportunity for economic growth while ensuring sustainable generation plant performance. • 5 to 10 year prognosis is dependant on on-time commissioning of the build programme and other supply side initiatives. With the increased infrastructure costs, the current credit crisis and uncertainty on the tariff price path, the prognosis could worsen. However an opportunity also exists to leverage benefits from the build programme and to create an energy efficient/productive economy.

16. Exxaro’s immediate approach… Medupi Grootegeluk Expansion Project Medupi means: The soft rain that brings prosperity

17. Exxaro’s current properties Six farms from which both power stations will be supplied from. New order mining rights have been applied for. Inferred Daarby Fault Current Pit Measured Inferred Indicated Five additional farms where we have exploration rights Eenzaamheid Fault

18. Medupi’s production capacity to meet fuel demand of Eskom’s new power station 18 • The feasibility study forms the basis for project execution. • Eskom requires an additional dedicated source of coal from the Grootegeluk Mine for use by Eskom in the Medupi Power Station, or any other of Eskom’s power stations. • The objective of the Exxaro Medupi Project is to provide 14.6 million tons per annum of coal to Eskom’s Medupi power station. • This will be achieved through expansion of the current Grootegeluk open-cast mine and beneficiation of the resultant run-of-mine material through two new processing circuits, Grootegeluk 7 and 8. The Exxaro Medupi project will commence with coal delivery at the end 2011 and full commissioning complete by the end of 2013. • A feasibility study was undertaken to define the most efficient solution and to investigate opportunities for enhancing Exxaro’s return on investment on this project. The base case feasibility study has been completed and a decision was required from the board on the correct course of action to follow to progress the project and to commit funds for implementation.

19. Medupi power station Medupi Power Station 4800MW

20. What is the impact on Grootegeluk and Lephalale • The mine will grow from 58 Mtpa in total and 19 Mtpa of product to about 110 Mtpa in total and 35 Mtpa, which will significantly increase the operating income, cash flow and return of investment. • During construction up to 7 000 jobs will be created on the construction site at the Medupi Power Station. Construction at the mine will create up to 2 000 jobs. The local community will benefit from these. • At least 60% infrastructure growth is expected, which will have a positive impact. • This project will set the scene for future growth from the Exxaro Coal project pipeline.

21. THANK YOU www.exxaro.com