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De Beers Finance Seminar DE BEERS FINANCE SEMINAR Image: Gahcho Kué pit and process plant Image: Aggregating / Sorting Image: Forevermark by TBZ The Original Bracelet CAUTIONARY STATEMENT Disclaimer: This presentation has been prepared by Anglo American plc (“Anglo American”) and comprises the written materials/slides for a presentation concerning Anglo American. By attending this presentation and/or reviewing the slides you agree to be bound by the following conditions. This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy shares in Anglo American. Further, it does not constitute a recommendation by Anglo American or any other party to sell or buy shares in Anglo American or any other securities. All written or oral forward-looking statements attributable to Anglo American or persons acting on their behalf are qualified in their entirety by these cautionary statements. Forward-Looking Statements This presentation includes forward-looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding Anglo American’s financial position, business, acquisition and divestment strategy, plans and objectives of management for future operations (including development plans and objectives relating to Anglo American’s products, production forecasts and reserve and resource positions), are forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Anglo American, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Anglo American’s present and future business strategies and the environment in which Anglo American will operate in the future. Important factors that could cause Anglo American’s actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the availability of mining and processing equipment, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as changes in taxation or safety, health, environmental or other types of regulation in the countries where Anglo American operates, conflicts over land and resource ownership rights and such other risk factors identified in Anglo American’s most recent Annual Report. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this presentation. Anglo American expressly disclaims any obligation or undertaking (except as required by applicable law, the City Code on Takeovers and Mergers (the “Takeover Code”), the UK Listing Rules, the Disclosure and Transparency Rules of the Financial Conduct Authority, the Listings Requirements of the securities exchange of the JSE Limited in South Africa, the SWXSwiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and any other applicable regulations) to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in Anglo American’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Nothing in this presentation should be interpreted to mean that future earnings per share of Anglo American will necessarily match or exceed its historical published earnings per share. Certain statistical and other information about Anglo American included in this presentation is sourced from publicly available third party sources. As such it presents the views of those third parties, but may not necessarily correspond to the views held by Anglo American. No Investment Advice This presentation has been prepared without reference to your particular investment objectives, financial situation, taxation position and particular needs. It is important that you view this presentation in its entirety. If you are in any doubt in relation to these matters, you should consult your stockbroker, bank manager, solicitor, accountant, taxation adviser or other independent financial adviser (where applicable, as authorised under the Financial Services and Markets Act 2000 in the UK, or in South Africa, under the Financial Advisory and Intermediary Services Act 37 of 2002). AGENDA Section 1: Demand Drivers………………………………………………………………. 30 mins Section 2: Group Overview……………………………………………………………..... 30 mins Q&A Section 3: Upstream………………………………………………………………………… 20 mins Section 4: Downstream……………………………………………………………………. 10 mins Summary & Q&A 2 The De Beers Group of Companies DEMAND DRIVERS DIAMOND INDUSTRY OVERVIEW Diamond demand almost exclusively jewellery driven Global polished diamond demand has remained roughly flat (1) % demand over the last 3 years at ~$25bn while rough sales have been more volatile, impacted by midstream dynamics JewelleryIndustrial Investment Autocatalyst 34% GDP 47% 2014 2015 2016 22% 99% 8% 4% Personal Diamond jewellery sales ($bn) Disposable Income 45% 40% 1% 81 79 80 Jewellery Diamonds Gold Platinum Retail Polished diamond demand ($bn)(1) Source: De Beers, World Gold Council, Johnson Matthey May 2016 Jewellery 25 25 25 Manufacturing A greater proportion of value comes from larger diamonds Cutting, Same value ($500k), different volume – No two diamonds are alike Midstream Polishing & Trading Rough diamond sales ($bn) Rough Distribution 19 14 16 & Trading (10ct) (100ct) (2000ct) Source: 2016 De Beers Insight Report; De Beers analysis 4 The De Beers Group of Companies (1)Measured in polished wholesale terms GDP Personal Disposable Income Jewellery manufacturing KEY DEMAND DRIVERS Cutting, polishing & trading Long term polished demand closely correlated to GDP US and China remain key, driving overall demand Indexed polished demand vs. indexed GDP for the US Polished demand (polished wholesale price; nominal) (1990 = 100) 2011: $23bn 2016: $25bn Other Other 26% 22% USA 38% 47% USA Gulf 7% Long term relationship 8% clear, although short Gulf 5% 6% Japan term divergences occur 11% 6% Japan 10% Indexed polished demand India 13% Indexed GDP India China* China* Source: De Beers analysis Source: De Beers analysis; *Excluding Hong Kong and Macau GDP forecasts weighted by region underpin growth estimates Polished demand has largely tracked GDP (in USD) % GDP growth (real / local currency / unadjusted) 2016 2017 Polished demand (polished wholesale price; nominal; $bn) 7.1 6.9 6.7 6.7 25.4 25.5 24.5 25.2 Constant FX 23.0 23.6 0.6 0.8 (2014 rates) USD terms 2.7 24.8 24.7 2.2 2.1 2.3 1.6 1.4 1.0 0.3 USA China India Japan Gulf World 2011 2012 2013 2014 2015 2016 Source: Oxford Economics, August 2017 Source: 2016 De Beers Insight Report and company analysis 5 The De Beers Group of Companies GDP Personal Disposable Income Jewellery manufacturing CURRENCY IMPACT Cutting, polishing & trading Non-US demand impacted by USD strengthening USD strengthening impact felt in India, China & Japan Global diamond jewellery demand Global jewellery demand growth and related exchange rates 2016 = $80bn YoY Ave. FX Local growth % USD growth % change % 2015 US China Non-US $41bn 3 (2)% 1 $34bn India (4) (5)% (9) Japan 0 (14)% (13) $5bn US linked USA 5 5 Source: De Beers Analysis partially offset by lower producer costs in USD terms Global (2) Currencies versus USD (indexed to 100) 2016 110 100% China USDUS$ 1 (6)% (5) 100 BasedBased India (9) (5)% (13) 90 Non-USD Non- Japan 80 Based (3) 10% 8 US$ 70 Based USA 4 4 60 Global 0 Jan ‘14Jan ‘15 Jan ‘16 Jan ’17 Upstream Pula Rand Costs Source: FactSet Source: De Beers analysis 6 The De Beers Group of Companies Personal Disposable Income Jewellery manufacturing Cutting, polishing & trading MIDSTREAM Rough distribution & trading Midstream profitability / returns are driven by a number of … one of which is the relationship between rough and factors … polished prices … Index Sustainable Cutting, polishing, manufacturing margin 120 Polished • Labour / manufacturing costs Rough 110 demand sales • Technology development 100 2014 $25bn • Stock levels 2014 $19bn Polished 2015 $25bn 90 2015 $14bn Rough 2016 $25bn • Finance cost and availability 2016 $16bn 80 2013 20142015 2016 2017 Source: De Beers analysis ... with returns also dependent on the amount and … with De Beers’ share of the rough market ~mid-30% mix in stock … Stock to sales ratio 36% 33% 35% Jewellery retail 31% Normal levels Jewellery manufacturing Cutting / polishing High Low Normalising 2014 2015 2016 H1 2017 20132014 2015 2016 Source: De Beers analysis Source: 2016 De Beers Insight Report; De Beers analysis 7 The De Beers Group of Companies GROUP OVERVIEW DE BEERS GROUP OVERVIEW Ownership structure Anglo American (85%) Government of the Republic of Botswana (15%)
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