Anglo American Thermal Coal Investor Presentation April 2010 0 0 - PowerPoint PPT Presentation

Anglo American Thermal Coal Investor Presentation April 2010 0 0

Agenda 1. Overview of Anglo American Thermal Coal (AATC) 2. Market Overview 3. Strategy & Growth Pipeline 1

Agenda 1. Overview of Anglo American Thermal Coal (AATC) 2. Market Overview 3. Strategy & Growth Pipeline 2

Historical Timeline 1998 1998 1975 1975 1897 Production 1897 Anglo American reaches 53Mt 2009 Vereeniging 2009 merges its various Estates Anglo American coal ventures into 1998 1998 Limited (VEL) splits its coal VEL which Amcoal absorbed incorporated operations into changes its name into Anglo 1998 1941 1949 1998 into a newly focused Thermal 1941 1949 to Anglo American American Acquisition of listed & Metallurgical Production Production Coal Corporation Corporation of Cerrejon company product divisions reaches 5Mt reaches 12Mt Ltd (Amcoal) SA …. . . . . ... . 1900 1930 1940 1950 1960 1970 1980 1990 2000 2009 . . . . . . 1945 1964 1976 2009 1936 1999 1945 1964 2009 1976 1999 1936 Anglo American Production Acquisition of Production Richards Bay VEL combines its buys a reaches 17Mt Shell Coal reaches 98Mt Coal Terminal coal interests with controlling opens those of A&E to interest in VEL form Amalgamated 1999 1999 Collieries, then the Anglo American largest coal group lists in London in Africa Source: Anglo American Thermal Coal 3

Overview of Anglo American Thermal Coal South Africa (2009) Colombia (2009) South Africa (2009) Colombia (2009) Puerto Bolìvar (33%) 1 4 2 9 1 3 5 10 6 8 7 Richards Bay (27%) Mine Holding Total Export Domestic LOM Attributable Mt Mt Years production 2009 1 1. Goedehoop 100% 6.9Mt 6.9 - 10 2. Greenside 2 100% 3.8Mt 3.3 0.5 12 3. Kleinkopje 3 100% 4.4Mt 2.0 2.4 14 4. Landau 100% 4.2Mt 3.9 0.3 11 4 Mine Holding Total Export Domestic LOM Attributable Mt Mt Years 5 5. Kriel 73% 11.2Mt - 11.2 16 production 2009 6 6. New Denmark 100% 3.7Mt - 3.7 31 1 1. Cerrejòn 33% 10.2Mt 10.2 - 23 7 7. New Vaal 100% 17.6Mt - 17.6 18 8 8. Isibonelo 100% 5.1Mt - 5.1 17 EBIT (2009) US$305m 9 9. Mafube 50% 2.2Mt 1.2 1.0 20 10 1 Zibulo 1 73% 0.1Mt 0.0 0.0 17 Export Total production 59.2Mt 17.3 41.8 Eskom Employees 14,446 Other domestic EBIT (2009) US$439m Notes: 1. Zibulo was previously known as Zondagsfontein Project. Steady state production will be 6.6Mtpa 2. Production of AIC assets reported at 100% 4 Source: Anglo American Thermal Coal

A Stable Cash & Earnings Contributor to AA Plc Coal % Contribution to AA EBIT Coal % Contribution to AA EBIT 25% Total Coal Anglo Thermal Coal Anglo Met Coal 20% For 2004-09 Thermal Coal on average 15% accounted for 9% of Anglo American EBIT 10% 5% 0% 2004 2005 2006 2007 2008 2009 AATC has been a consistent contributor to Anglo American profitability Source: Anglo American annual financial statements 5 * For 2004 to 2007 Australia segment previously reported used for Met Coal. Balance of previous Anglo Coal EBIT allocated to Thermal Coal Division

AATC South Africa Safety Performance AATC South Africa Lost Time Injury AATC South Africa Lost Time Injury Frequency Rate & Fatalities Frequency Rate & Fatalities LTIFR Fatalities • 2 Fatalities in 2009 vs. 4 in 2008. Zero for 2010 YTD 0.5 8 • LTIFR improvement of 9.4% Fatalities LTIFR 7 • AATC 2009 fatal injury frequency rate was 0.009 0.4 compared to 0.05 for the RSA coal industry 6 • AATC 2009 LTIFR was 0.29 compared to 0.31 for the RSA coal industry 5 0.3 • Isibonelo more than two years LTI free 4 • Rapid Loading Terminal Zero harm in 2009 0.2 3 • HPI reporting fully implemented 2 0.1 1 0.0 0 2005 2006 2007 2008 2009 Safety is our No. 1 Priority 6 Source: Anglo American Thermal Coal

South African Operations Location 7 Source: Anglo American Thermal Coal

South African Logistics South Africa coalfields rail & port infrastructure South Africa coalfields rail & port infrastructure • Coal railed to Richard Bay Coal Terminal (RBCT) for export • Coal is railed by Transnet Freight Rail (TFR) - with nominal railing capacity of 72Mtpa • In 2009 TFR railed only 61Mt – railing volumes are bottleneck to coal exports • AATC has 27% shareholding in RBCT • RBCT capacity is 72Mt going to 91Mtpa from 2010 - post Phase V expansion 8 Source: Transnet, Anglo American Thermal Coal

Mining Methods B. A. Underground Surface/Opencast Mining Mining 1. 2. 1. 2. Doze Over Dragline Bord & Pillar Longwall Shovel & Truck Strip Mining Mining Mining 3. 3. Mini Pit Mining Pillar Extraction • • • • New Denmark Mafube Landau Goedehoop • • • • Heidelberg Waterberg Kleinkopje Greenside • • New Vaal Kriel • • Isibonelo Zibulo • • New Largo Elders • Limpopo Mining method choice critical to reserve extraction optimisation 9 Source: Anglo American Thermal Coal

AATC South Africa Market Position …Anglo Coal SA is a major player in all market segments Total South Africa production for 2009 of approximately 260 Mt Total South Africa production for 2009 of approximately 260 Mt 14% 22% 5% Anglo Exxaro Sasol 9% BHP Xstrata Optimum 20% Others 14% 16% AATC is the leading coal producer in South Africa & holds around a quarter of market share 10 Source: Wood Mackenzie, Company Financial Statements

A 1 st Cost Quartile Thermal Coal Producer 90 90 Port Loading 80 80 Freight Royalties 70 70 Mining & Processing Labour 60 60 50 50 40 40 30 30 20 20 10 10 0 0 0 50 100 150 200 250 300 350 400 450 500 Cumulative Forecast Production, Mt All AATC South African export operations within the 1 st cost quartile of the AME 2010 global cost curve… Opportunity exists to further reduce costs. Project underway to review cost structures and asset portfolio Source: AME FOB Cost Curve 2010 11

RSA Domestic Market: Eskom & Other Domestic production share of total AATC Domestic production share of total AATC Share of total Eskom tonnage RSA tonnage Share of total Eskom tonnage RSA tonnage Production, Mt AATC supplies 60 c.30% of Eskom total Export 27% 50 40 • c. 36Mt to Eskom for power generation 30 • Eskom average CV (air dried) 4,550kc/kg ( 19.1MJ/kg) 62% Eskom • Pricing strategy a combination of long term cost-plus 20 arrangements and some at fixed price + escalation • c. 7Mt of other domestic tonnage including: 10 ‒ 5Mt from Isibonelo supplying to Sasol 11% Other Domestic 0 ‒ 2Mt to a range of other industrial customers AATC a major supplier of coal to Eskom – Opportunity exists to further reduce costs. Project underway to review cost structures and asset portfolio and expected to grow Source: Anglo American Thermal Coal 12

RSA Export Market ACSA operations are currently well positioned on the 2008 AME Cost Curve Export production share of 2009 exports by destination Export production share of 2009 exports by destination total AATC RSA tonnage 2009 exports by customer type country/region total AATC RSA tonnage 2009 exports by customer type country/region Production, Mt Export Sales, Mt Export Sales, Mt 60 16 16 2.4 Mt Utility Traders 3.8 Mt Other Europe Export 27% 50 Steel 12 12 2.0 Mt Other Asia Other 40 11% Domestic 1.0 Mt Israel 7.0Mt Power Utility 1.4 Mt Italy 30 8 8 ARA 1 3.7 Mt 20 62% Eskom Physical Trader 3.4Mt 4 4 10 Industry Supplier 1.2Mt India Importer to India 4.9 Mt 1.0Mt Bank 1.0Mt 0 0 0 30% of AATC SA’s thermal exports to India in 2009 Note: 1. ARA = Amsterdam, Rotterdam, Antwerp 13 Source: Anglo American Thermal Coal

Cost Breakdown ACSA operations are currently well positioned on the 2008 AME Cost Curve AATC South Africa cost breakdown AATC South Africa cost breakdown 2009 Actual 8% • Royalties will be applicable from 2010 – expected to account for 0% 43% 3% ~1% of costs Labour & contractors • Electricity a relatively small share Maintenance & stores 7% of total costs: Eskom power price Rail, wharfage & other selling costs increases will add 1% to overall Consumables costs in 2010 - but will continue to rise Power Royalties 15% Other 24% Labour the major cost component showing cost increases of over 9% per annum over the past 3 years Opportunity exists to further reduce costs. Project underway to review cost structures and asset portfolio 14 Source: Anglo American Thermal Coal

AATC South Africa Margins & ROCE Price & exchange rate Price & exchange rate AATC South Africa EBIT margin Historic adjusted ROCE sensitivity AATC South Africa EBIT margin Historic adjusted ROCE sensitivity US$m Change in ROCE EBIT Margin EBIT 1000 45% 100% US$m EBIT 20 40% EBIT Margin 800 80% 35% 15 30% 600 60% 25% 10 20% 400 40% 15% 5 10% 20% 200 5% 0 US$1/t ZAR0.10 0% 0 0% change in change 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 price against the US$ Stable margins despite turbulent times 15 Source: Anglo American Thermal Coal