The document summarizes trends in the global mining industry. It notes that demand is being driven by growth in emerging markets while supply is challenging due to declining ore grades and remote mine locations. This has led to higher commodity prices and costs for miners. Miners have announced over $300 billion in capital expenditures, with profits of $110 billion and cash reserves over $100 billion. China is presented as continuing to outperform growth targets and not having reached peak steel demand yet. All miners are facing cost pressures and deals and investment in Mongolia have increased substantially. The outlook is for continued demand from emerging markets and ongoing supply challenges.

1. What would you like to grow?
whatwouldyouliketogrow.com.au
Asia: Regional
Commodity Needs and
Outlook
Where to next …Tim Goldsmith
Partner, PwC
8 September 2011

2. What would you like to grow?PwC
The new game
• Demand is stoked by growth in the emerging markets
• Supply is challenging due to declining grades and new mines in
remote locations
• Cost base of the industry has changed, leading to sustained
higher commodity prices and reduced margins
• Higher level of confidence from CEOs than seen in several
years, with strong belief in the emerging markets story
• Over $300 billion capex announced by the Top 40 miners – 1/3
in 2011
• Profits of Top 40 miners $110 billion, cash reserves over $100
billion
• Net debt down to 8%
1

3. What would you like to grow?PwC
China – a history of delivery
2
• The market continues to be nervous
about China’s ability to manage its
economy
• Historically China has outperformed
5 Year Plan targets
• 7% growth target in 5 Year Plan a
floor
• Not a ceiling

4. What would you like to grow?PwC
Steel intensity
3

5. What would you like to grow?PwC
Many large Chinese provinces are just
beginning to climb the steel intensity curve
4

6. What would you like to grow?PwC
Copper “gap”
5

7. What would you like to grow?PwC
Cost pressures felt by all
6
Source: BHP Billiton
BHP Billiton Western Australian Iron Ore cash costs
(US$/t)

8. What would you like to grow?PwC
Mining Deals 2011 mid-year update
Global mining M&A deal volumes and values rally during 1H 2011
7
• Record 1,379 deals worth
$71 billion announced
• Deal volumes and values
up 10% and 25% over
same period 2010
• Second half M&A
grinding to a halt – deal
value down 32% in July
and a further 25% in
August

9. What would you like to grow?PwC
Mining Deals 2011 mid-year update
• Mining activity by volume in
Mongolia at record
annualised levels (13
transactions in 2011 to date)
• Activity by value already
surpassed previous high
8
• Steelmaking ingredients, led by
coal and iron ore were the top
elements in focus
• Coal represented 26.5% of total
value, iron ore 11.8%
• Mongolian Coal Corp.
acquisition of QGX Coal
contributed $950 million
0
4
8
12
16
20
-
200
400
600
800
1,000
1,200
2005 2006 2007 2008 2009 2010 1H 2011
NumberofTransactions
US$(millions)
Mining M&A Activity in Mongolia
Value Volume

10. What would you like to grow?PwC
Outlook
9
• Demand fuelled by emerging markets
• Supply challenges remain and will continue
• Mining high on the political agenda
…the game has changed

11. What would you like to grow?
Contact Details
© 2010 PricewaterhouseCoopers. All rights reserved. In this document, “PwC” refers
to PricewaterhouseCoopers, which is a member firm of PricewaterhouseCoopers
International Limited, each member firm of which is a separate legal entity
Tim Goldsmith, PwC Global Mining Leader
Telephone: +61 3 8603 2016
Mobile: +61 419 201 877
Email: tim.goldsmith@au.pwc.com