Glencore presentation Glencore presentation London, 3 rd November 2011
Glencore investment proposition p p � Unique market position in integrated trading q p g g � High growth and return, diversification � Significant barriers to entry � Best in class equity value creation track record � From $1.2 bn in 1996 to $45 bn equity currently � Unique M&A approach focused on ROE � Unique M&A approach focused on ROE � Best in class alignment between management and shareholder interests � Owners not renters of assets � Best in class volume growth in industrial assets � Portfolio on time / to budget � Growth drives marketing operations G th d i k ti ti � Robust balance sheet / cash generation Glencore is the best in class way to gain exposure to structural growth in global commodity demand GLENCOÂE I 2
Glencore at a glance g Integrated commodity producer and marketer Key highlights Key highlights Integrated business segments Integrated business segments Integrated commodity producer and marketer, active in � every step of the supply chain One of the world’s largest physical marketers for the � majority of its core commodities j it f it diti Metals and Minerals Energy Products Agricultural Products Diversified industrial asset portfolio - complements � sourcing, distribution and marketing operations � Zinc / copper / � Oil � Grains lead � Coal / coke � Oils / oilseeds Robust financial and operational track record “through � � Alumina / � Cotton / sugar � Cotton / sugar th the cycle” l ” aluminium � Ferroalloys / Experienced management team - proven track record of � nickel / cobalt / profitability, value creation and risk management iron ore Key financials Key statistics ($ bn) � More than 57,500 employees (including over 2,700 in 184 marketing operations) spread across over 40 countries 152 145 145 Key investments in K i t t i K Key investments in non- i t t i 106 106 listed companies: listed companies: 7.7 6.8 6.6 6.2 6.2 5.3 � 50.7% Kazzinc � 34.4% Xstrata 3.9 3.3 � 73.1% Mopani p � 74.8% Katanga � 74.8% Katanga � 40.0% Mutanda (1) (2) (1) (2) Revenue Adjusted EBITDA Adjusted EBIT � 29% Optimum Coal � 100% Prodeco � 8.8% UC Rusal 2008 2009 2010 H1 2011 (annualised) � 100% Murrin Murrin (4) � 54.2% Century Aluminum (3) N t Notes: (1) Excluding exceptional items (1) E l di ti l it � E&P portfolio (various shareholdings) (2) Adjusted EBITDA and adjusted EBIT includes associates and dividend income (3) Including 9.8% two cash-settled total return swaps (4) As of recent successful Minara takeover GLENCOÂE I 3
Glencore overview Unique Global Infrastructure Various Rusal Various Rusal Biopetrol Century Xstrata Xstrata Companies Recylex Rusal Xstrata Various Russneft Xstrata Companies Kazzinc / Century Altyntau Portovesme Sherwin Xstrata Pasar Xstrata Perkoa Chemoil Prodeco Prodeco Rusal Xstrata Mutanda Los Quenuales Rio Vermelho Rusal Xstrata E&P Initiatives Xstrata Sinchi Wayra Cobar Punitaqui Shanduka / AR Zinc AR Zinc Moreno Moreno Katanga Katanga Xstrata Xstrata Optimum Optimum Xstrata Xstrata Mopani Mopani Xstrata Xstrata Murrin Murrin Murrin Murrin Xstrata Xstrata Main Offices Offices Alumina/ Independent Offices Aluminium Zinc/Copper Nickel Coal Grain Oil Xstrata Zinc/Copper Zi /C Xstrata Nickel X t t Ni k l Xstrata Coal X t t C l Xstrata Alloys X t t All C Century t GLENCOÂE I 4
Full integration through the value chain g g Position throughout the value chain allows Glencore to capture value at each stage � Producers typically more focused on sale of own products than third-party marketing while other marketing peers do � not have Glencore’s scale and access to own supply not have Glencore s scale and access to own supply Glencore’s core competencies span the value chain Marketing, Marketing, Upstream Processing / production production refining refining Storage and freight Storage and freight Storage and freight Storage and freight Zinc / copper / erals lead Metals and Mine Alumina / aluminium Ferroalloys / y M nickel / cobalt / iron ore Oil ucts Energy Prod Coal / coke n/a n/a Products Agricultural Agri. products Key: GLENCOÂE I 5 Significant presence Lesser presence
Significant barriers to entry g y • Insight into market flows and access to real-time information across the globe Scale and global reach • Distinctive ability to seize price differentials and arbitrage opportunities • Distinctive ability to seize price differentials and arbitrage opportunities • Large scale and global sourcing and distribution of commodities is working capital intensive Access to financing and risk • Ability to fund investments in production facilities and industrial activities management skills g • Ability to secure sourcing arrangements through facilitation of producer and/or consumer financing • Ensures a reliable supply of commodities E li bl l f diti Long-term supplier / customer • Enhances credibility with producers and customers alike where reliability and performance relationship are sought after attributes • Significant intellectual capital, which is generally challenging and time-consuming to create Human capital in, or transfer to, a new organization is a key competitive advantage on the marketing side of the business • Global geographic and diversified commodity mix, which is difficult and expensive to Global geographic and diversified commodity mix, which is difficult and expensive to Diversified Diversified reproduce but important to long-term sustainable success geographic and commodity mix • Distinctive factor vis-à-vis majority of other commodity marketers j y y Vertical integration e t ca teg at o • Provides stable source of supply and unique insight into the critical industrial production part of the commodity value chain Glencore business model is not easily replicable by new entrants Glencore business model is not easily replicable by new entrants GLENCOÂE I 6
Best in class value creation track record 2008 1974 1974 1987 / 1988 1987 / 1988 1990 1990 1997 1997 2004 2004 2011 2011 � Merger of Katanga and Nikanor � Establishment of � Transition into an � Acquisition of a � Acquisition of � First public bond � IPO of resulting in a 8.5% holding in the Glencore focused stake in Xstrata integrated producer with majority stake in issue of $950m Glencore combined entity on physical (then Sudelektra Kazzinc acquisition of US smelter marketing of � Purchase of initial 40% stake in AG) and Peruvian mine commodities Vasilkovskoye Gold (via Kazzinc) 1980s 1990s 2000s 2010s 1970s 1981 1993 / 94 1995 2002 2007 2009 2009 – 2010 � Acquisition of a Dutch q � Management g � Glencore � Substantial � Selected � Government approves pp � Issuance of � Issuance of grain trading company, buyout acquires first Glencore Glencore start of West African $2.3bn foundation of Agricultural (“MBO”) building block coal assets aluminium & hydrocarbon projects convertible Products division of Prodeco contributed to alumina assets development phase bond forming contributed to Xstrata plc create UC Rusal Equity value creation since 1996 Equity value creation since 1996 After management buy-out….. …to current 2011 $1.2 bn $45 bn Value creation +3650% vs +102% S&P Index vs. +102% S&P Index +50% FTSE 100 GLENCOÂE I 7
Track record of value creation achieved by world class management team Proven history of class-leading returns Proven history of class-leading returns Last 10 years RoE range (1) % 61% 58% 51% 50% 45% 36% 38% 34% 21% 21% 19% 18% 15% 15% 15% 15% 13% 11% 6% 5% 4% Averages Note: ( ) (1) Net Income / average equity excl. minority interests. Data based on last 10 full reported financial years. Length of historical period for some peers is limited g q y y p y g p p by availability of publicly disclosed financials. Glencore pre-expectionals. GLENCOÂE I 8
Performance is less correlated to commodity prices than peers � Marketing has made a profit every year since completion of the management buyout – Resilient model throughout the cycle � Marketing income is less correlated to commodity prices than that of diversified miners, with key profit drivers being – Margin per unit of commodity, rather than based on absolute value – Service-like fee income – Control of the logistics value chain Control of the logistics value chain – Uniquely positioned for geographical, product and time arbitrages – Market volatility and forward curve / spread opportunities – Unparalleled geographic and product diversification – Scale and market share – E Economies of scale in sourcing, transportation, storage, insurance, finance and risk management i f l i i i i fi d i k – Limited directional trading strategies, including the ability to profit in falling markets GLENCOÂE I 9
Best in class alignment management and shareholder interests Glencore management has considerably more “skin in the game” compared to peers CEO and CFO holdings in peers CEO and CFO holdings in peers 18% 16.82% 16% 14% 12% 10% % O/S 8% 8% % 6% 4% 2% 0.25% 0.11% 0.02% 0.02% 0.01% 0% BHP Billiton BHP Billit Ri Rio Tinto Ti t X t Xstrata t Anglo American A l A i F Freeport t Gl Glencore Glencore total employee ownership currently 83% GLENCOÂE I 10
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