PRESENTATION

1. MARKET DYNAMICS FOR MONGOLIAN
COKING COAL IN THE CHINESE MARKET
Mongolian Mining Summit, Perth , 30 October 2013

2. ANGLO AMERICAN AT A GLANCE
Anglo American is one of the top 5 diversified global mining companies
Global Headquarters: London
Stock Exchange Listings: London and Johannesburg
Over 100,000 full time employees
Gross revenue in 2012: US$28.7 billion
Operating Profit 2012: US$6.2 billion
Our commodity businesses:
• Iron ore and Manganese (4th largest producer globally)
• Metallurgical coal (2nd largest producer in Australia and 3rd largest exporter globally)
• Thermal coal (6th largest exporter globally)
• Copper (8th largest producer globally)
• Nickel (8th largest producer globally)
• Niobium (2nd largest producer globally)
• Phosphates
• Platinum group metals (global leader, 40% of global production)
• Diamonds (global leader, 35% of global rough diamond production by value)

3. 3
Headquartered in London with 12 corporate and representative offices and 96 mining operations
A GLOBAL PLAYER
Platinum
Diamonds
Copper
Nickel
Iron Ore and Manganese
Thermal Coal
Corporate &
representative offices
Key
Headquarters
Metallurgical Coal
Niobium and Phosphates

4. ANGLO AMERICAN IN MONGOLIA
Anglo American is a new entrant in the Mongolian mining scene
• The Company opened a representative office in Ulaanbaatar in late 2012
What is the current focus of our activities in Mongolia?
• Building knowledge of the local mining industry and business environment
• Building relationships with Government, Business and Civil Society Stakeholders
• Establishing our brand and values in Mongolia
• Positioning ourselves for future opportunities
• Examining opportunities in copper and metallurgical (hard coking) coal
As part of this establishment process we seek to establish Anglo American
as the partner of choice for Mongolia.
• We have already been supporting an Enterprise Development program in
Mongolia as part of our Corporate Social Responsibility agenda.
• We have hosted a Socio-Economic Assessment Toolbox workshop
• We are supporting mining and water management initiatives in the Gobi region led
by the IFC

5. MANAGING SOCIAL ISSUES
Respect human rights
Deliver lasting, positive net benefit
Identify and manage social impacts
Efficiently utilise resources
Obey all laws and regulations
Ensure contractors follow our standards
Set targets, review performance
Develop staff competencies
Engage employees and stakeholders
Report and investigate incidents

6. WE UNDERTAKE TARGETED CSR ACTIONS
ENSURING WE UNDERSTAND THE LOCAL CONTEXT
• Our Socio-Economic Assessment Toolbox
(SEAT) is at the heart of our management of
social performance and developmental
issues
• SEAT is an award-winning manual that
provides extensive guidance on:
– Profiling and engaging with host
communities
– Assessing positive and negative impacts
– Managing relationships with host
communities
– Contributing to community development
• SEAT provides extensive guidance on
understanding our local context, and how we
as a company should respond
• Available at www.angloamerican.com/seat

7. Our approach to community development is based on
understanding local contexts and leveraging our core business
to create sustainable upliftment. We are piloting research to
enhance our understanding of development impacts.
• Leveraging our $14.8 billion supply chain
(approximately 100 x social investment
budget each year)
• Ensuring that host communities have the
best possible chance of securing the
increasingly skilled jobs on our operations
• Focusing in particular on how local
municipalities can use tax revenues to
provide effective public services
• Offering equity and loans on a commercial
basis to support local entrepreneurs, both
within and outside our supply chain
• Design projects so that mine infrastructure
(water, power, health etc) can be shared use
where practicable, to share costs and
broaden benefits delivered
• Providing grants to welfare-enhancing
initiatives where more market-based
approaches are not possible.
Local Procurement
Local Training and
Recruitment
Governmental
Capacity
Development
Enterprise
Development
Synergies from
Mine Infrastructure
Social Investment
*
*Source: 2012 data from Sustainable Development Report
SUPPORTING LOCAL SOCIO-ECONOMIC DEVELOPMENT

8. SUPPORTING ENTERPRISE DEVELOPMENT
8
Anglo American enterprise
development (ED) programmes
created and supported almost
65,000 jobs in 2012.
Why Enterprise Development?
• ED creates sustainable
businesses and livelihoods
• ED local suppliers can reduce
mining operating costs by
supplying locally produced
goods and services
• ED is one of the most cost-
effective ways to deliver socio-
economic benefits and secure
our licence to operate
*Source: 2012 data from Anglo American Sustainable Development Report

9. THE CURRENT MARKET SITUATION FOR
MONGOLIAN COAL
• Mongolian Met Coal Exports to the end of Sept 2013
• 11.38 million tons of coal - down 20.3 % yoy
• Valued at US$ 783 million - down 54.7% yoy
Some key questions
• What has happened to Mongolian coal exports since Q1 13 and
how do the results relate to Chinese Market conditions?
• What are the main factors driving the current situation?
• What is the real price of Mongolian HCC in the Chinese Market?
• What are Mongolia’s competitor countries doing?
• Why are there discounts to Mongolian coal producers ?
• What needs to be done to ensure that Mongolia remains a
competitive and viable producer in the long term?

10. CHINESE IMPORT VOLUMES
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Mongolia
Total China Import
Source - Anglo American Mongolia, SXCoal
t/month

11. MONGOLIAN MET COAL EXPORTS AS A PERCENTAGE
OF TOTAL CHINESE MET COAL IMPORTS
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
0%
10%
20%
30%
40%
50%
60%
70%
Mongolian imports as % of total
Source - Anglo American Mongolia, SXCoal

12. MET COAL PRICES JAN 2011- MAY 2013
Source – Anglo American Mongolia and Beijing, Steelfirst
50
100
150
200
250
300
350
400
450
CFR China Peak DownsUSD/t

13. MET COAL PRICES FEB 2013- OCT 2013
Source – Anglo American Mongolia , SXCoal
120.00
130.00
140.00
150.00
160.00
170.00
180.00
190.00
15-Feb
22-Feb
1-Mar
8-Mar
15-Mar
22-Mar
29-Mar
5-Apr
12-Apr
19-Apr
26-Apr
3-May
10-May
17-May
24-May
31-May
7-Jun
14-Jun
21-Jun
28-Jun
5-Jul
12-Jul
19-Jul
26-Jul
2-Aug
9-Aug
16-Aug
23-Aug
30-Aug
6-Sep
13-Sep
20-Sep
27-Sep
4-Oct
11-Oct
Low vol cfr Jingtang (USD/t)USD/t

14. MONGOLIAN HCC PRICES (EX WAREHOUSE GANQIMAODU)
FEB 2012 - OCT 2013
Source – Anglo American Mongolia , SXCoal, Steelfirst
50
100
150
200
250
300
350
400
450
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
CFR China
Peak Downs
Mgl met coal
USD/t

15. Source – Anglo American Mongolia, SXCoal
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Mongolia Total China Import
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
0%
10%
20%
30%
40%
50%
60%
70%
Mongolian imports as % of totalQueensland Floods
ETT/Chalco
dispute

16. WHAT ARE OTHER SUPPLIERS DOING?
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Australia Mongolia Russia USA Canada Indonesia Total China Import
Source - Anglo American Mongolia, SXCoal
mln t/month

17. 0.0
50.0
100.0
150.0
200.0
250.0
300.0
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Generalised Chinese Domestic Producer Cost Curve for HCC
USD/t CFR Bohai Sea
Current CFR Bohai Sea port coal price US$163
CAN WE EXPECT A SUPPLY RESPONSE FROM CHINESE
DOMESTIC PRODUCERS?
Source – Anglo American Mongolia and Beijing, SXCoal
US$/t

18. AVERAGE PRICE PER TONNE (USD) RECEIVED FOR
MONGOLIAN MET COAL
Source – Anglo American Mongolia , Mongolian NSO
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
1/12 2/12 3/12 4/12 5/12 6/12 7/12 8/12 9/12 10/12 11/12 12/12 1/13 2/13 3/13 4/13 5/13 6/13 7/13 8/13 9/13
US$/t

19. WHY DO MONGOLIAN PRODUCERS RECEIVE LOW PRICES?
• Local prices are not directly comparable to international seaborne prices
• Most Mongolian coal crosses the border raw (unwashed)
• Traders buy raw coal and wash it facing a loss of tonnage on washery yield
• The dirtier the coal the lower the yield and the lower the price to the producer
• Inconsistent quality
• Because coal is raw, quality varies from shipment to shipment and it appears
that traders are quoting based on the worst case quality received
• Seams are mixed, or roof and floor material included in exports reducing both
quality and consistency
• Unreliable Supply
• Irregular tonnages means that traders cannot enter into long term supply
agreements with offtakers and must trade spot often with lower price outcomes
• Congested transport systems and border crossings compound the challenges
faced by suppliers contributing to unreliable deliveries and increases costs for
buyers.

20. DESPITE LOW OPERATING COSTS SOME OTHER COSTS
ARE HIGH
• High cost border crossings – both sides of the border face constraints,
but in particular on the Mongolian side of the border
• Reference price setting by Government for Royalty calculation
• Due to absence of rail re-handling costs are high at several points along
the supply chain
• 17% VAT and border crossing charges of around $7.00 per tonne
Current border crossing logistics
Urgently need rail to remain competitive

21. POSSIBLE SOLUTIONS
• Most of the factors mentioned are under the control of the coal producer
or the Government
• Inconsistent quality – raw coal
• A move to washed coal production is essential to ensure consistent quality -
to reduce transportation costs and trader discounting
• Re-handling costs
• An efficient standard gauge rail system is required to ensure single handle
and no border re-handle as well as to reduce re-handling inside China
• Border crossings need upgrading for rail transit and 24 hour per day
operations
• Royalties need to reflect actual contract prices otherwise producers can
be taxed out of business
• Chinese pricing power – without standard gauge rail, Chinese off-takers
will retain their pricing power. Bonded cargo carriage through China is
needed in order to access international seaborne prices – this is not
possible without standard gauge rail in Mongolian territory

22. CONCLUSIONS
• The Chinese market for hard coking coal remains quite strong (around
70mt/yr and still growing) – however Mongolia is continuing to lose market
share
• Producer issues: Consistent quality, reliable supply and stable
relationships with off-takers are necessary for Mongolian producers to win
back market share and achieve better pricing
• Government issues: Enhancing the competitiveness of the Mongolian
coking coal industry requires a number of issues to be resolved:
• Progress on improving bulk cargo transportation (standard gauge rail) and
border crossing logistics
• Reducing re-handling by improving transportation logistics
• Ensuring that Mongolian coal is subject to a fair and reasonable royalty regime
• Mongolia has a comparative advantage in terms of proximity to the
Chinese market. Both the industry and the Government need to work
together to improve the competitiveness of the Mongolian Coal sector,
otherwise Mongolia may continue to lose market share.

23. THE PARTNER OF CHOICE FOR MONGOLIA
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