PROSPECTS FOR THE SOUTH AFRICAN COAL INDUSTRY Presentation by Sipho Nkosi CEO, Exxaro Resources Coaltrans Europe 2010, A

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3. Content Whither the SA coal industry? Covering some of the background and history of the SA coal industry, The growth of the industry players, aspects of the MPRDA and the Mining Charter and the introduction of BEE players. Investment and development in South African coal industry Hopefully shedding light on rail and port status, the future of logistics/infrastructure, the attractiveness of SA as an investment destination, some comments on skills. Whither Exxaro? Where is Exxaro growing to? 2

4. Whither the SA coal industry? 3

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7. SA coal – 2000 to Date 6

8. SA coal – 2000 to DateSaleable production per company (2009)

9. SA Coal - BBBEE entry in South Africa Early empowerment period (1994 – 2000), characterised by: - Ad-hoc transfer of equity Indications of wide-scale privatisations National Empowerment Fund Private sector schemes encouraging broad-based black participation. Focused empowerment (2000 – present), more formalised approach, characterised by: - Broad Based Black Economic Empowerment Act The development of industry-specific charters The DTI Codes of Good Practice BEE scorecards Mining Charter (2002) min black ownership 15% by 2009 and 26% by 2014 Limited time for old to new conversion else the mining rights revert back to the State Mining Charter – requirement that ownership measured by attributable units of production. The offset of Historically Disadvantaged South Africans ownership commitments 8

10. SA Coal - BBBEE entry in South Africa (cont) Between 1997 & 2009 up to 100 BEE companies attempted to enter the coal industry in any one year. However, success was not as easily attained, mainly due to: - Accessibility to coal reserves Funding Mining and operating skills Marketing skills Coal expertise Legislation Economic and logistical conditions Source XMP consulting 2009 9

11. SA Coal - BBBEE entry in South Africa (cont) 10

12. How did it go? In 2002 only two BBBEE companies produced 10% of SA coal (increased to 29 in 2008 resp. for almost 50%) What drove them? Changes in the mining legislative framework The nature of coal mining in South Africa - MPRDA's use-it-or-Iose-it principle. The pre-requisite 26% BEE ownership of mining companies for the conversion of old-order mining rights to new-order mining rights. The granting of prospecting and mining rights for new projects Were they successful? Yes, especially when considering the community involvement, employment and benefits emanating from well-structured corporate social responsibility programmes But what do you see in your own BBEEE counter-parties 11

13. Investment and development in South African coal industry 12

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17. Investment in SA mining industry? 16

18. Investment in SA mining industry (last 5yrs) Coal Optimum Coal – $1,2 billion listing on JSE Anglo - Zibulo = $0,5 billion; New Largo = $1,7 billion (Mining Weekly) BECSA – DMO = $0,975 billion; Klipsruit (Phola) = $0,5 billion Sasol – Thubelisha project = R4,5 billion & Impumulelo = R1,5 billion Riversdale – Mozambique Benga Coal Project = $0,27 billion Vale – Mozambique Moatize = $1,3 billion CoAL, Shanduka ….but its not only in Coal …. You don’t need to look far to recognise continued confidence in the SA mining industry 17

19. Skills in the SA mining industry WHAT’S THE WORRY? The required skills are being lost/diluted due to: - Reduced investment, competing international markets and exchange rates Legislation, environmental concerns and skills Increased international commodity and energy demand the SA ‘Brain drain” Exxaro and the industry is in the midst of a ‘skills war” The third biannual Mining Survey by Landelahni Business Leaders in South Africa indicated that the SA mining industry faces serious skills shortages 1998 to 2008, passing degree and diploma graduates totaled 13.7% of enrollments These results not even speaking of the artisan skills required in the industry. SO WHAT CSR and governance requirements. The availability of skills facilitates proper operation of assets. The future of the industry is at stake!! 18

20. SOUTH AFRICA – whither EXXARO 19

21. Exxaro growth and expansion 20

22. Exxaro growth and expansion 21

23. The Waterberg … SA’s coal-fired future? Exxaro’s development plan 22

24. Concluding remarks Yes! Exxaro is a large, exciting and expanding company but we are part of an exciting and stable country – South Africa Continued and new investment in the South African coal industry will sustain South Africa’s enviable position of being able to supply both the East and West of the globe with a significant commodity and mineral range of products We are proud to be South African and look forward to your business! 23

25. Concluding remarks Recall the World Cup? And expectations? … WAIT … There is more….. 24

26. THANK YOU