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Peter Johnston, Head of Nickel Assets, Glencore delivered this presentation at the New Caledonia Nickel conference in July 2013. For more information about the event, please visit …

Peter Johnston, Head of Nickel Assets, Glencore delivered this presentation at the New Caledonia Nickel conference in July 2013. For more information about the event, please visit www.newcaledonianickel.com

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  • 1. New Caledonia Nickel Conference July 1, 2013
  • 2. Glencore Xstrata Diversified natural resource company with 190,000 employees, more than 90 offices in 50 countries. Operations comprise over 150 mining and metallurgical sites, offshore oil production assets, farms and agricultural facilities. 2
  • 3. Glencore Xstrata 3
  • 4. How we create value Our Values Entrepreneurialism Simplicity Safety Responsibility Openness 4
  • 5. Our Approach to Sustainability • Sustainability is integral to how we do business. We believe our long-term success requires us to prioritize sustainability throughout our business. • We are committed to improving our performance in human rights, health and safety, environmental protection and compliance. • Glencore Xstrata Corporate Practice is our corporate governance framework and the program through which we manage sustainability. 5
  • 6. Nickel Overview • World’s fourth largest producer of refined nickel with fully integrated operations • One of the world’s largest recyclers and processors of nickel and cobalt bearing materials • Employs over 5,000 workers* in nine countries. *including contractors 6
  • 7. Nickel Assets 7
  • 8. Operations Raglan (Nunavik, Northern Québec, Canada) • 4 Mines, Mill, Power plant, Concentrator • Accommodation and Administration facilities • Primary metals are nickel, copper • Palladium/platinum, cobalt are also produced • Employs approximately 950 people Sudbury (Ontario, Canada) • 2 Mines, Mill and Smelter • Primary metals are nickel, copper and cobalt • Precious metals are also produced (platinum and palladium) • Employs approximately 1,400 people 8
  • 9. Operations Murrin Murrin (Western Australia) • Fully integrated hydro metallurgical facility producing LME- grade nickel and cobalt • Only Surviving Gen 1 HPAL plant – technology intended primarily for the treatment of Limonitic type ores • Mines, mill, refinery, power plant • Employs approximately 1,100 people Nikkelverk (Kristiansand, Norway) • Refinery • Primary metals are refined nickel, copper, cobalt and precious metals • Capacity to produce 92,000 tonnes of nickel per year • Employs approximately 500 people 9
  • 10. Operations Falcondo (Dominican Republic) • Surface mining operation producing nickel in ferronickel • Facilities include four mines, a metallurgical plant, a crude oil refinery and a 200 megawatt thermal power plant • 85% interest • Employs approximately 900 people at 50% production capacity 10
  • 11. Projects Koniambo (New Caledonia) • Facilities include a pyrometallurgical nickel smelter, a power station, coal and gas plants, and other infrastructure, including a private deep water private port, a 12-km overland conveyor and a desalination plant • Joint venture with high local participation • Koniambo expected to produce 60,000 tonnes annually; first metal produced in 2013; on track to achieve full production capacity by end of 2014 • 25-year mine plan with additional resource potential capable of extending mine life 50+ years • Successful development will result in a tier one operation with first quartile cash costs Kabanga (Tanzania) • Estimated resources of 37 million tonnes at 2.63% nickel • Joint venture, managed by Glencore • Located in northwestern Tanzania • Potential nickel production of more than 40,000 tonnes per year of nickel-in-concentrate at full production 11
  • 12. Nickel Stocks 12 80,000 100,000 120,000 140,000 160,000 180,000 200,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000 $22,000 $24,000 Ni Price (US$/t) LME Stocks (t)
  • 13. NPI (Nickel Pig Iron): Unrefined Fe-Ni with low Ni content 13 • NPI production less than 30kmt (Ni unit) in 2006, mostly from blast furnace (BF) production • SS mills could source Ni and Fe through NPI at a low price and reduce their production costs; demand for NPI increased, but supply was limited • Some producers saw a very good margin, leading to many new market entrants building NPI plants • Addition of electric arc furnace (EAF) production, mostly in 2010/11, added to traditional BF production • Since mid-2011 there has been a noticeable decrease of mid-grade NPI as a result of higher costs, and an increased in rotary kiln electric furnace (RKEF) production, which will dominate the NPI market gradually • Total NPI production increased almost ten- fold by 2011 to 280kmt • We estimate NPI production reached 370kmt+ in 2012 NPI production (Ni Unit, kmt) 0 50 100 150 200 250 300 350 400 2006 2007 2008 2009 2010 2011 2012 Low Ni NPI Mid Ni NPI High Ni NPI
  • 14. Supply of Nickel Ore 14 Growth in NPI production is driven by Indonesian ore supply • Indonesia mostly supplies high grade ore (1.8% Ni and above) • Philippines volume misleading as mostly high Fe, low Ni ore driven by iron ore market • New Caledonia not a factor today Latest trends (Jan - May 2013) • Indonesian imports (17.3Mwt) up 15% yoy, but decreasing from Dec 2012 peak • Philippines imports (8.2Mwt) up 41% yoy, still driven by low-grade ore • Despite depressed ore prices, resilient high- grade ore supply • Massive ore stockpiles in China at ~24Mwt Indonesia 2014 export ban to shape Ni supply/demand balance • Indonesia can continue to feed NPI ore supply needs for the foreseeable future • Only the ban can change the picture and impact NPI supply… • … but uncertain due to local processing challenges and vested interests 0 1 2 3 4 5 6 7 8 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 2007 2008 2009 2010 2011 2012 2013 New Caledoni a Philippin es China Ni ore imports (in Mwt) since 2007
  • 15. Summary 15 • Nickel market in over-supply • Nickel stocks at record levels • Chinese nickel pig iron now the dominant producer • Many new projects have contributed to the surplus • China is the only real growth market at the moment • Glencore Nickel is well positioned for the future and always looking for opportunities