Mining and Metals Scenarios to 2030 World Economic Forum Michael Tost, Mining Lekgotla 2013

1. Mining and Metals Scenarios to 2030World Economic ForumMichael Tost, Mining Lekgotla 2013

2. A not-for-profit organisation,committed to improving the state of the world Our Mission and Background …delivering unique value to the participants Multi-stakeholder Brings together leaders in business with government, NGOs, international organizations, academics and civil society on a neutral platform Long-term issues Creates dialogues, insights and actions on critical global issues posing a risk to business and society Global Reach • Committed to improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas. • Impartial:tied to no political, partisan or national interests • Global: based in Geneva, with offices in New York, Beijing and Tokyo High-level events in all the key regions throughout the year, based on the long-standing, strong networks with the governments Cross-industry Convenes CEOs and senior executives from over 1,000 global companies from 20 industries

3. Communities Impact Insight Interaction The World Economic Forum – Our Value Creation Process

4. The Mining & Metals Community, with 28 Partner Companies 4 Strategic Partners 25 Industry Partners Mining & Metals • Alcoa • ArcelorMittal • Basic Element • SCM Holdings • Aditya Birla Group • Anglo American • Antofagasta Plc • Africa Rainbow Minerals • AngloGold Ashanti • Barrick Gold Corporation • Glencore International • ICT Group, Inc. • Lynas Corporation Ltd. • MetalloInvest • Metinvest Holding • MKS S.A. • Mosaic • Newmont Mining Corp. • Nyrstar N.V. • OCP Group • Quexco • Rio Tinto Group • Royal Bafokeng Holdings • Sun Group • Teck Resources Ltd. • Trimex Group • Uralkali • Vale 1 As of July 2013 SOURCE: World Economic Forum

5. Communities Insight Mining and Metals Initiatives Responsible Mineral Development Initiative (2009 – ongoing) • Objective:Explores the views, priorities and concerns of key stakeholders on mineral development. The Responsible Mineral Development Initiative provides a multidimensional view of Value Created from Mining • 2013 and Beyond: To identify a relevant and innovative future work programme for the Forum • New Models of Infrastructure Investment • Downstream challenges and opportunities in steel and aluminum • Contribution of Mining to a Sustainable World. 2030 and beyond Report Phase II (2011) Report Phase III (2012) • Water Resources Group • New Vision for Agriculture • Partnering Against Corruption • New Energy Architecture • Future of Manufacturing • Driving Sustainable Consumption • Health and Wellness Objective:Methodology to prioritize infrastructure projects with the greatest impact on economic growth and social uplift, and how should be prepared, procured and delivered Engagement: M&M, Infrastructure Companies, Finance Strategic Infrastructure (2012, ongoing) Led by other Communities

6. CONTEXT & OBJECTIVES OF THE SCENARIOS WORK 2009: Financial crisis, high uncertainty in the markets, strong tensions betweengovernments, business and NGOsregarding the role of the mining & metalsindustry in the provision of social and environmentalsustainability Objectives: • Stimulate dialogue and mutual understanding between the public and private sectors and civil society regarding the future of the mining and metals sector in a non-threatening context • Deepen insight into the complex context in which the sector operates by bringing together multidisciplinary and multi-stakeholder perspectives • Provide useful tools to improve strategic decision-making, and identify strategies for collaborative action

7. PARTICIPANTS TO THE MINING AND METALS SCENARIOS TO 2030 PROCESS Steering Board African Rainbow Minerals Ltd (ARM) Alcoa Inc. Anglo American Plc ArcelorMittal Basic Element International Finance Corporation (IFC) Newmont Mining Corporation Rio Tinto Plc System Capital Management United Industrial Corporation (OPK) Advisory Board Amnesty International ASEAN Federation of Mining Associations and Chamber of Mines of the Philippines Aspermont UK The Balloch Group Caromb Consulting Care International Center for China in the World Economy (CCWE), Tsinghua University CSIRO Minerals Down Under Flagship Foreign Affairs and International Trade Canada Government of Chile International Council on Mining and Metals (ICMM) Instituto Brasileiro de Mineração (IBRAM) Prospectors & Developers Association of Canada (PDAC) TechnoServe Inc. Transparency International Wesizwe Platinum Ltd

8. MULTISTAKEHOLDER SCENARIO DEVELOPMENT PROCESS Over 20 workshops ~300 participants l

9. Regional Regional Asia Asia spread spread Stable Stable Unstable Unstable dominates dominates Closed Closed Open cross Open cross - - Ideological Ideological Ideological Ideological cross cross - - border border border flow border flow convergence convergence divergence divergence flow flow Free market Free market Controlled Controlled Extreme Extreme Cyclical Cyclical market market volatility volatility volatility volatility Decisive Decisive Passive Passive GDP GDP GDP GDP response response response response growth growth decline decline Incremental Incremental Radical Radical response response response response MAJOR UNCERTAINTIES UNDERLYING THE FUTURE OF THE MINING & METALS LANDSCAPE Geo-economic landscape Geopolitical landscape Environmental outlook Economic outlook

10. FROM WHICH 3 RELEVANT AND CHALLENGING SCENARIOS EMERGED

11. OVERVIEW OF SCENARIOS video

12. In 2030, the world is divided and countries are defined economically by whether or not they belong to the Green Trade Alliance (GTA), formed in 2016 to promote “environmental sustainability without compromising competitiveness.” GTA countries, including some industrialised, resource-rich and developing countries, have experienced a period of accelerating innovation and lifestyle changes. While there is strong alignment among GTA countries, non-GTA countries operate independently. • Global overview: • GDP growth of approx 2% average, but in GTA countries new indicators increasingly factor in social and environmental issues into GDP calculations • Environmental standards are used as the basis for protectionist measures by GTA countries: capital comes with “green ties” or “no ties” depending on the originating bloc • Differing standards within each bloc mean different pressures on the minerals sector, with companies operating in GTA countries innovating around minerals stewardship • Tense relationships between GTA and non-GTA countries as they use different approaches to compete for resources

13. In 2030, the world is committed to realising the benefits of global interconnection but has become far more complex and multipolar. Power comes from control of resources as well as possession of capital, with resource-rich countries increasingly playing by their own rules and influencing the global system. Civil society has gained power, resulting in various local laws that affect global corporations, but no unified global system exists. • Global overview: • Strong global growth of 4%, high demand for commodities and high prices, cross-border flows of material and capital very open • Increasing dominance of mining and metals sector by emerging countries • Resource-rich countries have increasing power in the global system, and look to capture social gains through retaining processing and manufacturing • Local laws protect local environments, but there is no significant progress towards a widely adopted CO2 reduction agreement • Growing acceptance that it is too late to prevent climate change, focus on adaptation

14. In 2030, the era of globalisation is a distant memory as nations prioritise narrow self-interest. They hoard domestic resources, enter cartels based on regional and ideological alliances and resource blocs, and engage in neo-colonialism and import substitution strategies. • Global overview: • Global growth is low, averaging 1.5% annually. Protectionism is high, commodity prices are volatile • Markets are shaped by state interventionism while trade is defined by a complex web of protectionist barriers and preferential agreements. International institutions fade into irrelevance • Capital is limited for the mining sector and country risks limit international investment, particularly in emerging markets and low-income countries • Local control of resources is of paramount concern: resources and technologies that are most readily available domestically are favoured, irrespective of impact on the environment

15. FEEDBACK FROM THE WORKSHOP Where are we shifting towards? What are the most important distinguishing factors in the three scenarios? What are the most important differences for both minerals and capital markets in 2030 in the three scenarios? For each scenario, what are the signs we see today that indicate the world might be moving in this direction? SOME FINDINGS : Role of sustainability (GDP+) - Demand for minerals is more polarized (some minerals crash, others are in high demand). Prices are generally higher because they have to pay for higher standards. But they are also more stable, less volatile. - Capital: Capital is widely available within the GTA, but perhaps there is even a risk of a "green bubble“; technology will have a strong role - Signposts: Environmental unrest, even in China; German “Energiewende”, product labels/shifting customer values

16. FEEDBACK FROM THE WORKSHOP Where are we shifting towards? What are the most important distinguishing factors in the three scenarios? What are the most important differences for both minerals and capital markets in 2030 in the three scenarios? For each scenario, what are the signs we see today that indicate the world might be moving in this direction? SOME FINDINGS : Power of communities (and employees?) - Minerals: Demand is very high as domestic demand (to produce domestic goods) adds on to already high global demand - Capital: Similarly, new domestic sources of capital add onto an already fluid global capital market - Signpost: SA's focus on beneficiation, Multipolar world vs current global structures (WTO, UN  G20, G8, G2, G0?), increased influence of communities

17. FEEDBACK FROM THE WORKSHOP Where are we shifting towards? What are the most important distinguishing factors in the three scenarios? What are the most important differences for both minerals and capital markets in 2030 in the three scenarios? For each scenario, what are the signs we see today that indicate the world might be moving in this direction? SOME FINDINGS : State owned enterprises / China - Minerals: Demand comes from actors' concerns about future supply - Capital: Capital access is shadowy and politicized, highly uncertain role of technology - Signpost: SA's “Declaration of strategic minerals“, EU policies, China’s role in Africa, Export restrictions (agriculture, minerals)

18. FEEDBACK FROM THE WORKSHOP What do these scenarios mean for South Africa? What are the challenges and opportunities for South Africa’s mineral resources as recipients of global investments? What are the challenges and opportunities for South Africa’s mining companies as players in global markets? SOME FINDINGS : - Joining the GTA is both a challenge (because it represents a significant policy step-up) and an opportunity (because it would unleash leap-frogging opportunities, and could propulse SA ahead of other BRICs); “Green tape” - Domestically: The power of the local is an opportunity to establish better community relations, but also a challenge as it will make it even harder to come to a common vision of SA's mining future; Globally: Is SA at the crossroads of centers of power (strategic location), or is it merely far away from all of them?; “Smart tape” - SA has the capacity to adapt to and navigate in such a shadowy world; but is that really an opportunity the country wants to exploit? Can a country so dependent on global trade really strive in a world of closed borders, even with so many natural riches?; “Red tape”

19. FEEDBACK FROM THE WORKSHOP Response options for South Africa Which scenario offers the most opportunities for South Africa looking out to 2030? Which scenario offers the most challenges for South Africa looking out to 2030? Which is least relevant? Pick one of the three scenarios that you see as most relevant to South Africa and assume that the future will definitely look like this scenario. How can stakeholders of South Africa’s mining and metals industry collaborate in order to enhance the economic, social and environmental sustainability of South Africa’s mining and metals sector in this world? SOME FINDINGS : Establish a joint understanding of “Mining in SA – past, current and in the future” and agree what role each actor has; Build trust to engage Education System is key “New models for infrastructure investment” Productivity: New incentives needed, agree on the role of technology; - 1) 2) 3)

20. Mining and Metals Scenarios to 2030World Economic ForumFor more information:http://www.weforum.org/reports/mining-metals-scenarios-2030/http://www.weforum.org/industry-partners/groups/mm-mining-metals/index.htmlhttp://www.weforum.org/issues/strategic-foresightmichael.tost@weforum.org