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Sydney Mining Club 7 November 2002

Sydney Mining Club 7 November 2002. Presentation by Peter Coates CEO Xstrata Coal. The Agenda. The transformation of Xstrata Plc Xstrata Coal’s origins Xstrata Coal today The outlook for the thermal coal market. Xstrata Plc. International, diversified natural resources company

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Sydney Mining Club 7 November 2002

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  1. Sydney Mining Club7 November 2002 Presentation by Peter Coates CEO Xstrata Coal

  2. The Agenda • The transformation of Xstrata Plc • Xstrata Coal’s origins • Xstrata Coal today • The outlook for the thermal coal market

  3. Xstrata Plc • International, diversified natural resources company • Diversified portfolio of high-quality, cash generative metals and mining businesses • Xstrata Coal • Xstrata Zinc • Xstrata Alloys • Based in Switzerland and listed on the London Stock Exchange • New international shareholder base • Admitted to the FTSE 100 Index in June 2002

  4. Transformation of Xstrata To create a platform from which value couldbe created, growth credibility pursuedand existing potential unlocked • The key challenges were: • US$ 1 billion capitalisation, – lack of critical mass • 2 quality assets (ferroalloys and zinc) not diversified by earnings profile or pricing cycle • Growth constrained by: high gearing (85% debt to equity ratio); an illiquid stock and a domestic shareholder base

  5. Xstrata’s origins

  6. Coal Acquisition • Coal assets: Ideal vehicle for transportation • Complemented quality of the portfolio • New commodity, pricing, earnings and geographical exposure • Scale to unlock new listing and international shareholder base • Transaction had to stand on financial merits: • Conservative assumptions: Acquisition makes returns in excess of cost of capital at long-run coal price of US$26/ton and US:Australian dollar exchange rate of 63c

  7. Roadshow Summary • In total, Xstrata’s IPO roadshow covered some 190 institutions worldwide, with an 89% success rate • 11 day programme • Meetings with investors in 13 cities in 7 countries • 66 one-on-ones • 15 groups meetings • 5 video or tele-conferences

  8. The new Xstrata • Successful IPO placed Xstrata in strong position • Company effectively transformed

  9. Top Shareholders: Public Data No of shares % Glencore International AG 101,040,000 40.0 Capital Group of Companies 35,409,006 14.7 Fidelity 7,639,144 3.0 Undisclosed UK - 32.5% of total register Undisclosed CH - 9.8% of total register (Total shares in issue: 252.6 million)

  10. Xstrata Plc Revenue by Commodity - 2001 2001 Proforma Revenue – US$1,875 million

  11. Xstrata Plc Revenue by Commodity - 2002 Six months to 30 June 2002 – US$957.9 million

  12. Xstrata has global leading positions in its selected markets Thermal coal exports (2001) mt

  13. Xstrata has global leading positions in its selected markets • Refined zinc production (2001) kt

  14. Xstrata has global leading positions in its selected markets • South African ferrochrome (2001) kt

  15. Xstrata Coal • One of world’s largest exporters of thermal coal • Australia • 14 mines – approximately 32 Mt managed production/ 27.5 mt consolidated production • 20% of Australian thermal exports • South Africa • 12 mines – approximately 14 Mt managed production/ 16mt consolidated production • 20% of South African exports

  16. Xstrata Coal’s origins

  17. Cerrejon, Columbia

  18. The Genesis of Glencore Coal • 1995 – Glencore purchase of Prodeco assets • Carbones del Cerrejon • Calenturitas • Lenquazacue • Puerto Zuniga • Development of Mine and Port • Carbones del Cerrejon to 4mtpa • Puerto Zuniga to 6 mtpa • 1998 – Sell down and consolidation • Sale of 50% of CdelC to Anglo • Merger of CdelC with Rio’s Oregenal • Later – Further consolidation • Exit of Rio • Buy in of BHP • Purchase of Carbocol share of CZN • Purchase of Exxon share of CZN

  19. On the Acquisition Trail • 1998Cumnock Coal Ltd(Underwritten Rights Issue) • Mt Owen OC (BHP) • 1999Teralba UG, West Wallsend UG, Westside OC (HIH) Liddell OC (Savage Resources) • United UG (White Industries) • 2000 Bulga OC, Sth Bulga UG and Baal Bone UG (Cyprus) • 2001 Ulan UG and OC Mines (Exxon) • Duiker Mining Ltd (On-market takeover) • 2002Ravensworth East OC, Narama OC (Rio)

  20. Xstrata Coal Australia

  21. Xstrata Coal South Africa

  22. Leading NSW coal producer

  23. Strong outlook for thermal coal demand

  24. Australia’s thermal coal supply - Major potential for expansion

  25. In Summary • Xstrata Plc is a leading international, diversified natural resources company • Xstrata Coal is one of the world’s largest exporters of thermal coal • Well-positioned to capture future growth in coal market

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