Exxaro Resources Limited · JSE:EXX
Exxaro Resources — South African Coal Exports Conference 2009
27 slides from Exxaro Resources's conference presentation, Feb 5, 2009
Slide 1: Powering through the storm
Powering through the storm Danie Mouton Carbon Manager, Growth Exxaro Resources Ltd South African Coal Exports Conference 2009 Cape Town 5 February 2009
Slide 2: Sunday Times, 25 January 2009
2 Sunday Times, 25 January 2009
Slide 3: Agenda
Agenda 3 • Introduction to Exxaro • World economic crisis – Severity and impact • World economic crisis – All doom and gloom? • Coal – Blown away or riding the storm? • Conclusion
Slide 4: Introduction to Exxaro
Introduction to Exxaro 4 Our commodities At a glance… COAL One of the largest South African based the fourth largest coal producer in diversified resources company South Africa An ALSI Top 40 company, listed on the MINERAL SANDS JSE one of the world's top three producers Over 9 000 employees o
Slide 5: The world economic crisis – severity and impact
5 The world economic crisis – severity and impact
Slide 6: World crisis – GDP growth
World crisis – GDP growth 6 10 8 6 Growth Rate (% Change) 4 2 0 -2 Stock market September 11 Oil crisis Oil crisis Asian crisis crash Dotcom bubble -4 burst Jan-71 Jan-73 Jan-75 Jan-77 Jan-79 Jan-81 Jan-83 Jan-85 Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Jan
Slide 7: Impact: Stock exchange indices
Impact: Stock exchange indices 7 JSE Industrial Index Dow Jones Industrial Index Source: DowJones
Slide 8: Impact: USA home and auto markets
Impact: USA home and auto markets 8 US NAHB/Wells Fargo Housing Market Index US Auto Sales (million units at seasonally adjusted annual rate) 80 70 60 50 Index 40 30 20 10 0 Jul-05 Jul-06 Jul-07 Jul-08 Jan-05 Jan-06 Jan-07 Jan-08 Sources: NAHB & Wells Fargo, WSJ Online
Slide 9: Impact: Commodity prices
Cu & Zn Prices (US$/t) 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Copper Oct-02 Jan-03 Apr-03 Jul-03 Zinc Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Brent Crude Jan-05 Apr-05 Jul-05 Impact: Commodity prices Oct-05 Jan-06
Slide 10: The world economic crisis – all doom and gloom?
10 The world economic crisis – all doom and gloom?
Slide 11: The trees or the forest?
The trees or the forest? 11 ULTRA LONG-TERM REAL 2008$ COPPER PRICE 18000 16000 Oil price shocks 14000 12000 Great Depression Prce (US$/t) 10000 8000 6000 4000 2000 0 1933 1943 1978 2003 1908 1913 1918 1923 1928 1938 1948 1953 1958 1963 1968 1973 1983 1988 1993 1998 2008 Sources: Barclays Capital, A
Slide 12: China – The awakened dragon
China – The awakened dragon 12 Source: Deutsche Bank
Slide 13: Other emerging economies
Other emerging economies 13 14.0 12.0 10.0 Growth (% Change) 8.0 6.0 4.0 2.0 0.0 -2.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 China Emerging Markets World Advanced Economies Source: Global Insight
Slide 14: Commodity prices – recovery?
Commodity prices – recovery? 14 160 Real LT Prices 140 $1680/t 120 $500/t 100 Index (2008 = 100) $712/t 80 $66/t 60 USc74/mtu 40 $115/t 20 0 2008 2009 2010 2011 2012 Zinc Rutile Zircon Steam Coal Iron Ore Fines Hard Coking Coal Sources: Citigroup, Barclays Capital, Brook Hunt, Deutsche Bank, JB Were
Slide 15: Exchange rate – protection?
Exchange Rate 4 5 6 7 8 9 10 11 12 13 Jan-00 May-00 Sep-00 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 Exchange rate – protection? May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 Source: I-Net 15
Slide 16: The glass is half full!
The glass is half full! 16 • Lower energy costs (oil price) • Rational filtering of asset quality • Slow-down of capex escalation • Greater willingness and incentive to form synergistic alliances • Diversification potential (some assets are cheap now…) • Skills retention
Slide 17: Coal – Blown away or riding the storm?
17 Coal – Blown away or riding the storm?
Slide 18: What is coal's role in the world?
What is coal’s role in the world? 18 Source: World Coal Institute, 2008
Slide 19: Does coal have a future role to play?
Does coal have a future role to play? 19 • Fossil fuels remain dominant source of energy – 83% of the overall increase in energy demand • Coal sees the biggest increase in demand in absolute terms (59% by 2030), while non-hydro renewables grow fastest, but from a small base Source: IEA, 2006
Slide 20: Is there enough coal?
20 YSN uoljesepe ueissny eulyd eIpu| eljeusny BOW US aUules A) ueysyyezey Sill Pue|Od XX Is there enough coal? = ~ 7 100 - 50 5 0 T T oa fo oOo WwW N = SONASA PAA HSBC «> mw Anthracite and bituminous m™ Sub-bituminous and lignite
Slide 21: SA export competitiveness
SA export competitiveness 21 SA in lower half of cost curve
Slide 22: Logistics is the key
Logistics is the key 22 Products Mineral Deposit/ Rights Mineral Conversion through Technology Resource Mineral Reserve Market Logistics ROM Mining Beneficiation Losse Losse Losse Losse Losse Losse Losse Losse s s s s s s s s 20%margin Typical 3%losses Loss due 10% 3 to 5% 6% to slimes 60 to 120% Du
Slide 23: It's time to work together
It’s time to work together 23 In order to have reached its annual capacity target of 76Mtpa during 2008, producers would have had to produce, TFR would have had to rail, and RBCT would have had to ship an average of 6.3Mtpm during the year. Source: Barlow Jonker, 2009
Slide 24: Conclusion
24 Conclusion
Slide 25: Power through the storm – together
Power through the storm – together 25 • Cost discipline • Improve efficiencies • Spend cash wisely • Create alliances • Minimise value losses across value chain – exploit synergies • Collectively develop logistical solutions for the coal business BUSINESS AS IT USUALLY SHOULD BE
Slide 26: Final thought
Final thought 26 “As the credit crunch threatens to become a global downturn, corporate leaders have a choice: pull in their horns and ride out the storm or look for opportunities to pick up bargain-basement assets that will help them grow and create future value for shareholders. If past is prologu
Slide 27: Thank you
S.° drt POWERING POSSIBILITY
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