Transformation through Organic Growth and Operational Excellence Steve de Kruijff, COO Xstrata Copper North Queensland Analyst Visit Ernest Henry Mining – April 2011 1 Xstrata Copper is a fundamental pillar of Xstrata’s diversified model § Headquartered in Brisbane, employing over 17,000 people in eight countries § Top five global mined and refined copper producer – Mined copper production of 913,500 tonnes in 2010 § Revenue of US$14bn and operating profit of US$3.8bn in 2010 § Industry-leading approved project pipeline to further transform business and increase production by more than 50% over next four years Xstrata Copper profit* by country Contribution to Xstrata profit* Argentina Coal 16% 29% Zinc Australia 13% 22% Peru 22% Nickel 9% Alloys 4% Canada 7% Chile Copper 33% 45% *Based on earnings before interest, depreciation, tax and amortisation 2 Continued transformation and growth has created a leading global copper producer... Industry Ranking - 2005 Industry Ranking - 2010 Mined Production Codelco Codelco BHP Billiton Freeport Phelps Dodge Mount Isa Ernest Henry BHP Billiton Freeport Alumbrera Xstrata Copper #4 Rio Tinto + Anglo American Top five share: 36% Xstrata Copper #9 Top five share: 36% Tintaya, Antamina, Kidd, Collahuasi, Lomas Bayas 0 500 1000 1500 2000 0 500 1000 1500 2000 Smelter Production Codelco Codelco Nippon Jiangxi Copper KGHM Mount Isa Xstrata Copper #3 Grupo Mexico + Aurubis Mitsubishi Altonorte Xstrata Copper #19 Top five share: 25% Horne Nippon Mining Top five share: 27% 0 200 400 600 800 1000 1200 1400 0 200 400 600 800 1000 1200 Refined Production Codelco Codelco Phelps Dodge Aurubis Townsville Grupo Mexico + Freeport Nippon Tintaya SxEw Jiangxi Copper KGHM Top five share: 26% Lomas Bayas SxEw Xstrata Copper #5 Top five share: 29% Collahuasi SxEw CCR 0 500 1000 1500 2000 0 500 1000 1500 2000 Source: Brook Hunt, The Long-Term Outlook for Copper, 2nd Quarter Data Volume 2009, 4th Quarter Data Volume 2005. 3 ...with a strong portfolio of geographically diverse assets and projects 4 Further resource growth over last 12 months... § Continual extensions of existing mine lives and growth of project resources § Over 400% increase in resource base since 2005 to almost 90Mt copper in 2010 § Generation of new projects: West Wall § Updates to Frieda River and Antamina in 2011 not included Growth of Xstrata Copper resource base 100 Mt equity contained 90 Cu in mineral resources 80 Greenfield Projects Canada 70 North Chile 60 Southern Peru Minera Alumbrera 50 North Queensland 40 30 20 10 0 2005 2006 2007 2008 2009 2010 Source: Xstrata Copper Ore Reserves and Mineral Resources 2005, 2006, 2007, 2008, 2009 and 2010 5 ...and operational excellence underpins the on-going transformation of assets § Approved projects to provide ›50% increase in production by the end of 2014 – Five brownfield project expansions: Lomas Bayas II, Ernest Henry underground, Antamina expansion, Collahuasi expansion and Tintaya/Antapaccay expansion – One major greenfield expansion: Las Bambas § Further 20% improvement to C1 cash costs over next four years § Further development projects provide option to deliver >1Mtpa additional copper production Continuous cost improvement Production growth profile* kt mined copper C1 cash cost 1800 Feasibility / Scoping 1600 Approved / Implementation Xstrata Xstrata Existing Production Copper 1400 Copper 2010 2015 1200 1000 800 600 400 Xstrata Copper 200 2006 Percentile 0 0 10 20 30 40 50 60 70 80 90 100 2009 2010 2011 2012 2013 2014 2015 2016 Source: Brook Hunt Note: * Life extensions included in existing production 6 Further growth optionality § Collahuasi progressing concept studies into brownfield expansion to >1 million tonnes per annum (100%) copper production § Potential for >1 million tonnes per annum (100%) initial copper production from three major greenfield projects in final feasibility studies § Evaluation of potential new projects to add to Xstrata Copper’s development portfolio – West Wall, Agua Rica Indicative Annual Project Country Development Stage Mineral Resource Production (100%)¹ El Pachón Argentina Final Feasibility 1.8Bt @ 0.51% Cu ~400kt Tampakan Philippines Final Feasibility 2.4Bt @ 0.60% Cu ~450kt Frieda River PNG Final Feasibility 1.9Bt @ 0.45% Cu ~260kt Collahuasi exp Chile Concept studies 7.1Bt @ 0.82% Cu ~500kt Energia Austral Chile Feasibility n/a ~1,100 MW West Wall Chile Advanced Exploration 750Mt @ 0.54% Cu ¹ Average production over first five years 7 North Queensland Division Production capacity § Regional office −Mount Isa § Mount Isa Underground mines −170,000tpa Cu in concentrate § Mount Isa smelter −280,000tpa copper anodes § Ernest Henry open cut mine −90,000tpa Cu in concentrate −110,000ozpa Au in concentrate § Townsville Refinery & Port −300,000tpa of copper cathodes 8 North Queensland Division 2010 Highlights § 2010 production of 232kt copper in concentrate from Mount Isa underground mines and Ernest Henry − equivalent to 25% of Xstrata Copper’s total annual copper production § Contributed 22% of Xstrata Copper’s EBITDA of $3.8bn § Recorded Real Unit Costs savings of US$96 million in 2010 § Townsville Refinery & Port produced a record 287kt of copper cathode 9 Mount Isa copper operations § U/G Ore reserves (Proved /Probable): 64mt @ 2.5% cu § U/G Mineral resources (Measured/Indicated/Inferred): 200mt @ 2.0% cu § Open Cut Mineral resources (Indicated/Inferred) : 283mt @ 1.1% cu § Underground drilling exploration programme focused on mineralisation associated with existing orebodies. § Concept study underway into a large scale zinc and copper open pit as an extension to the current Black Star open pit mine § Feasibility study underway into potential of inert grinding and or leaching of residual copper and cobalt from the Mount Isa concentrator tailing − Pilot plant trial § Mount Isa Mines received 2010 Australian Export Award – Minerals & Energy Category § Continuing improvement in safety performance – 2010 LTIFR of 0.7 (Qld Mining Industry LTIFR , 3.5) 10 Copper market update 11 Multi-decade structural price trends are not unprecedented Copper Price (real terms) US$/t 14000 Industrialisation of the USA 12000 Rebuilding of Europe, the growth of Japan and the Oil shock 10000 Industrialisation of China 8000 and other BRICs 6000 4000 2000 0 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 The industrialisation of China and other BRICs represents a demand shift similar to that seen in USA, Europe and Japan 12 Developing world growth is reshaping the global economy... Contribution to Global GDP Global urban migration % urbanised 100% 80% Rural 60% China 40% India 20% Urban 0% 1950 1960 1970 1980 1990 2000 2010 2020 2030 China will have 221 one million plus Emerging markets are expected to account population cities by 2025 – compared to for more than 50% of global GDP by 2030 Europe with 35 today Source: BofA Merrill Lynch, IMF , UN Department of Economic & Social Affairs , McKinsey Global Institute 13 ... generating a structural shift in commodity demand Populous nations have a multiplier effect on commodity demand Commodity intensity¹ Energy consumption per capita (kWh/capita) Mid-cycle commodities (Indexed to 100 at maximum) e.g. Copper, lead and zinc 15'000 100 USA: 3,873bn kWh Late cycle commodities e.g. Platinum, nickel 75 10'000 Japan 50 Early cycle commodities Europe China: ~7,000bn kWh by 2020 e.g. Steel, iron ore 5'000 20 China: 3,438bn kWh Chinese GDP: ~$2.5k/capita US GDP: ~$50k/capita Indonesia 0 India 0 5 10 15 20 25 30 35 40 45 $50k Indian GDP: ~$1k/capita 0 0 2'000 4'000 GDP per capita (real, 2005 USD) Population (cumulative bn) Increasing intensities generate a demand China’s per capita energy consumption is shift for commodities in emerging markets expected to double by 2020 • As a percentage of US intensity peak, China today is: • Demand is also expected to grow strongly in India, 12% Copper, 1% nickel and 30% iron ore Indonesia and Brazil Source: IMF, USGS, CIA Factbook Note: 1 Stylised intensity curves based on developed countries 14 Existing copper production continues to underperform § Maintaining current production Primary copper head grades, % rates is increasingly challenging as the industry faces: 1.5 1.4 – Falling head grades and 1.3 deeper mines 1.2 – Labour disputes and technical 1.1 issues 1 § Mine supply underperformed again 0.9 in 2010 – actual vs plan shortfall 1980 1985 1990 1995 2000 2005 2010 2015 2020 totalled 700kt. § Lower grades, technical issues, Mine production actual vs plan labour disputes, sovereign risk and 2005 2006 2007 2008 2009 2010 project ramp up difficulties 0 -100 continue to generate high rates of -200 disruption. -300 -400 § Underperformance has continued -500 -600 -700 in 2011, with production guidance -700 -800 revised lower at a number of -800 -917 -900 -952 -987 -966 major mines. -1000 Data: Brook Hunt Copper Mine Costs, Brook Hunt Long-Term Outlook for Copper – 1st Quarter Data Volume 2011, Xstrata Copper estimates 15 Supply recovery is impeded by project constraints § Although high copper prices have Probable copper mine project supply encouraged new mine supply, the 7000 kt copper response has lagged recovering demand, and constraints on growth remain. 6000 Although the mine project pipeline § Economic uncertainties and volatility has recovered from the economic of capital and operating costs remain crisis, forecast output from new 5000 mine projects over the next five impediments to the financing of years remains below 2009 levels. projects § Future supply growth is concentrated 4000 in