31 October 2016 South32 Limited (Incorporated in Australia under the Corporations Act 2001 (Cth)) (ACN 093 732 597) ASX / LSE / JSE Share Code: S32 ISIN: AU000000S320 south32.net

MARKETING UPDATE

South32 Limited (ASX, LSE, JSE: S32) Chief Executive Officer, Graham Kerr and Head of Marketing, Peter Finnimore, will present to investors and analysts today in London, United Kingdom. The presentation will cover the structure of our marketing function, the contracting strategy for some of our key commodities and our long term view of these markets.

The presentation is attached and will also be available on our website at: https://www.south32.net/investors-media/reports-and-presentations

About South32

South32 is a globally diversified mining and metals company with high quality operations in Australia, Southern Africa and South America. Our purpose is to make a difference by developing natural resources, improving people’s lives now and for generations to come. We are trusted by our owners and partners to realise the potential of their resources. We have a simple strategy to maximise the potential of our assets and shareholder returns by optimising our existing operations, unlocking their potential and identifying new opportunities to compete for capital.

FURTHER INFORMATION

INVESTOR RELATIONS

Alex Volante Rob Ward T +61 8 9324 9029 T +61 8 9324 9340 M +61 403 328 408 M +61 431 596 831 E [email protected] E [email protected]

MEDIA RELATIONS

Diana Wearing Smith James Clothier T +61 8 9324 9198 T +61 8 9324 9697 M +61 436 482 290 M +61 413 319 031 E [email protected] E [email protected]

Further information on South32 can be found at www.south32.net.

JSE Sponsor: UBS South Africa (Pty) Ltd 31 October 2016

Registered Office: Level 35, 108 St Georges Terrace, Perth Western Australia 6000, Australia ABN 84 093 732 597 Registered in Australia MARKETING UPDATE

• 31 OCTOBER 2016 •IMPORTANT NOTICES

• THIS PRESENTATION SHOULD BE READ IN CONJUNCTION WITH THE “FINANCIAL RESULTS AND OUTLOOK – YEAR ENDED 30 JUNE 2016” ANNOUNCEMENT RELEASED ON 25 AUGUST 2016, WHICH IS AVAILABLE ON SOUTH32’S WEBSITE (WWW.SOUTH32.NET).

• FORWARD LOOKING STATEMENTS

• This presentation contains forward-looking statements, including statements about trends in commodity prices and currency exchange rates; demand for commodities and production forecasts; plans, strategies and objectives of management. These forward-looking statements reflect expectations at the date of this presentation, however they are not guarantees or predictions of future outcomes. They involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual outcomes to differ materially from those expressed in the statements contained in this presentation. Readers are cautioned not to put undue reliance on forward-looking statements. Except as required by applicable laws or regulations, the South32 Group does not undertake to publicly update or review any forward looking statements, whether as a result of new information or future events. Past performance cannot be relied on as a guide to future performance. The denotation (e) refers to an estimate or forecast year.

• NO OFFER OF SECURITIES

• Nothing in this presentation should be read or understood as an offer or recommendation to buy or sell South32 securities, or be treated or relied upon as a recommendation or advice by South32.

• RELIANCE ON THIRD PARTY INFORMATION

• Any information contained in this presentation that has been derived from publicly available sources (or views based on such information) has not been independently verified. The South32 Group does not make any representation or warranty about the accuracy, completeness or reliability of the information. This presentation should not be relied upon as a recommendation or forecast by South32.

• NO FINANCIAL OR INVESTMENT ADVICE – SOUTH AFRICA

• South32 does not provide any financial or investment 'advice' as that term is defined in the South African Financial Advisory and Intermediary Services Act, 37 of 2002, and we strongly recommend that you seek professional advice.

31 OCTOBER 2016 SOUTH32 MARKETING UPDATE SLIDE 2 •A GLOBAL MARKETING TEAM SERVING DIVERSIFIED MARKETS

Americas 4%

Australia 9%

Southern Africa 14%

Marketing Centre London

Europe 28%

From TEMCO MRN Other Asia 11% Cerro Matoso Bauxite Nickel Alumar Alumina From Singapore 11% To Cerro Matoso China To USA South Korea 5% GEMCO Global Marketing Centre Manganese ore India 5% Singapore Marketing Centre Mozal Japan 6% Johannesburg Cannington Aluminium Silver, Lead, Zinc China 7% Hotazel Hillside Illawarra Coal Manganese ore Aluminium Worsley Metallurgical coal Metalloys Alumina FY16 revenue by market Manganese alloys South Africa Energy Coal TEMCO Notes: Energy coal Manganese alloys 1. Image is a diagrammatical representation of primary markets for our products 2. Singapore marketing centre is a wholly owned subsidiary of South32 Limited 31 OCTOBER 2016 SOUTH32 MARKETING UPDATE SLIDE 3 ACTIVELY PURSUING VALUE FOR OUR PRODUCT

Passive Active Equity Optimisation Hybrid Model Traders

Integrated Marketing Third Party Product Proprietary Trader Agent Marketing Optimisation Short Term Optimiser

Marketing operates along the spectrum to create value for South32

South32 marketing is • South32 marketing delivers

• Responsible for selling our products and purchasing strategic raw materials • Understanding of the quality of South32’s products to ensure a market price that reflects the value in use of our product • Managing the supply chain for our sales and strategic raw materials purchases • Deep freight and logistics knowledge and optimised supply chain outcomes

• Buying and selling third party product where we have a market or logistics • A trusted partnership with our customers and our suppliers knowing what advantage each partner values most

• Gathering market intelligence to assist in defining the South32 view of the • Market insights to inform regional and corporate strategy to maximise value commodity markets

• Our centralised structure and multi-national, multi-lingual team allows us to collaborate, make faster and better decisions, and better manage risks (counterparty, credit, and market)

31 OCTOBER 2016 SOUTH32 MARKETING UPDATE SLIDE 4 MANGANESE ORE MARKET OVERVIEW

1 2 • Manganese ore price and China port stocks • Manganese ore trade flows

• (US$/dmtu; Mt) • (Mt, Mn content unadjusted) CY14 Mn Ore Port Stocks Increasing ore supply tightness due CY15 Exports Mn ore 44% Mn, CIF China to rail disruptions in South Africa, CY16 YTD³ Imports 18 environmental-related stoppages in 8 China, limited stocks and strong 7.5 steel output 7 15 Australian high grade supply cuts Chinese import offset in part by increase in mid demand has 6.0 End user demand recovered as 6 grade South African supply remained destocking cycle completed, while ore 12 strong in CY16 supply remained tight from closures 5 4.5 4 9

3.0 3 6 Manganese ore in oversupply 2 1.5 Destocking by end users 1 3

0

Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16

India

Brazil

Asia

Africa

South China

World

Others

Gabon Ghana

Rest of Rest of Rest Australia

Long term outlook: • Manganese intensity in steel is expected to decline due to changing mix of steel production in China from construction-driven long products to consumer-driven flat products Notes: • The impact of steel recycling on manganese demand is less pronounced than other steel inputs due to its loss in the process 1. Sources: SteelOrbis, Metal Bulletin – 44% CIF China index 2. Sources: GTIS, South32 analysis • China’s high import dependency expected to continue due to lower supply from domestic grade decline and orebody depletion 3. CY16 YTD reflects up to September 2016 annualised • Future marginal supply is likely to come from South Africa where the ZAR rate will impact the cost curve

31 OCTOBER 2016 SOUTH32 MARKETING UPDATE SLIDE 5 •MANGANESE ORE MARKETING

1 2% 2% FY16 sales revenue by region 3% • Internal consumption (Temco and Metalloys) Where we sell our products • Exports predominately to China, South Korea, India 8% and Europe

• Gemco and Wessels produce high grade oxide ore 9% 39% (> 44%Mn), Mamatwan produces semi carbonate ore (~37% Mn) Product types • GEMCO PC02 (~40% Mn) project completed in FY16 • Australia and South Africa produce sinter for internal consumption and external markets (~ 44% - 54% Mn) 37% • Market price reflecting value in use of the ore Contract strategy • Opportunistic third party product is placed Other Asia China India Europe Middle East Africa Americas • There are no industry standard manganese contracts or pricing approaches • Market, especially China, is predominantly fixed price negotiated at prevailing market prices for delivery in Relative share 1Q17 of Manganese ore sales Pricing and price exposure the following month • Index transactions are generally priced with a quotation period of Month or Month -1 Internal • In a falling market fixed sales typically outperform Sales volumes by External index. Vice versa in a rising market end market

Sales volumes by Fixed Index contracting approach²

Sales volumes by Month -1 Month pricing approach² Notes: 1. Revenue breakdown by country excludes intercompany sales and third party product 2. Reflects allocation of external Manganese ore sales

31 OCTOBER 2016 SOUTH32 MARKETING UPDATE SLIDE 6 •METALLURGICAL COAL MARKET OVERVIEW

1 2 Monthly average HCC price • Metallurgical coal trade flows

(US$/t) • (Mt) CY14 Exports Imports 250 CY15 CY16 YTD³ China supply impacted by 200 276 day rule, Australia supply impacted by 200 production disruptions 160 Increased Chinese US supply begins Reduced North imports due to impact of to exit, stabilising America supply as a 276 day rule, regional 150 prices 120 result of bankruptcy weather and credit and other financial stimulus constraints 80 100

40 China credit easing stimulates demand. 50 Supply is impacted by weather in Australia, disruptions in Mozambique and US producer

bankruptcy proceedings

JKT

India

China

States United

Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Canada Australia

Long term outlook: • The metallurgical coal market continues to grow, albeit modestly, driven by steel use in industrialisation and urbanisation Notes: • Recent price movement heavily impacted by short term supply factors, unlikely to continue in the long term 1. Source: Platts 2. Sources: GTIS, HDR • India will be the key driver for demand growth given outlook for steel production and lack of domestic hard coking coal supply 3. CY16 YTD reflects up to August 2016 annualised • Marginal supply likely to come from Australia or North America

31 OCTOBER 2016 SOUTH32 MARKETING UPDATE SLIDE 7 •METALLURGICAL COAL MARKETING

FY16 sales revenue by region 1% • Domestic steelmakers (BlueScope and Arrium) Where we sell our products • Exports predominately to India, Japan, South Korea, Taiwan and Europe 17%

• Illawarra Metallurgical Coal produces a premium hard 38% Product types coking coal and limited thermal coal (FY16: 84%/16%) 20% • Market price reflecting value in use premium Contract strategy • Zero hedging undertaken • Opportunistic third party product placed 24% • Premium received to HCC low vol FOB Australia index due to coal quality Australia Other Asia India Europe Americas • Sales are largely negotiated with a mechanism to fall Pricing and price exposure back to index1 • Limited exposure to quarterly benchmark • Prices realised on a Month or Month -1 basis Relative share of 1Q17 Metallurgical coal sales

Sales volumes by External end market

Sales volumes by Term Spot contracting approach Quarterly Sales volumes by Negotiated with pricing approach index fall back Notes: 1. Where a sale for a shipment is negotiated with a customer and mutual price agreement cannot be reached the contract reverts to index Spot fixed

31 OCTOBER 2016 SOUTH32 MARKETING UPDATE SLIDE 8 •ALUMINA MARKET OVERVIEW

Alumina monthly price1,2 China bauxite imports3

(US$/t) • (Mt annualised) South-West China domestic price (US$/t) Indonesia India Australia Malaysia Guinea Other Australia FOB price (US$/t)

500 100 Start of Indonesian Decreasing Chinese ban on ore exports prices prompted by refinery curtailments 400 75

300 50

Rising bauxite 200 supply from Malaysia 25

100 Chinese smelter restarts and rising South-West China domestic price

provides support for Australia FOB price

Q2 CY13 Q2 CY13 Q3 CY13 Q4 CY14 Q1 CY14 Q2 CY14 Q3 CY14 Q4 CY15 Q1 CY15 Q2 CY15 Q3 CY15 Q4 CY16 Q1 CY16 Q2 CY16 Q3 Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 CY13 Q1

Long term outlook: • Healthy outlook for alumina demand, driven by growth in primary aluminium production Notes: • China will remain short alumina units. Unit cost of importing and refining bauxite will provide price support in the short to medium term 1. Sources: Platts, Aladinny, South32 analysis 2. South-West China domestic price excludes VAT (ex-smelter) • Indian market likely to remain unbalanced (short alumina and bauxite) 3. Source: GTIS • Marginal alumina supply likely to come from Indonesia in the long term 31 OCTOBER 2016 SOUTH32 MARKETING UPDATE SLIDE 9 •ALUMINA MARKETING

FY16 sales revenue by region 3% 2%

• Internal consumption (Hillside and Mozal smelters) Where we sell our products • Exports predominately to Middle East, Asia and 10% Europe 26%

13% • Smelter grade alumina that may attract a premium for Product types its value in use characteristics

• Market price reflecting value in use 21% 25% • ~85% sold on long term contracts of 1-3+ years that Contract strategy realise an index price • Some shipments will be sold on a spot basis each quarter to support overall liquidity in the market Other Asia Europe Middle East Africa Americas China India

• Industry pricing has transitioned from LME Aluminium percentage linked pricing to index pricing Relative share of 1Q17 Alumina sales • Other than one legacy contract, no contracts are Pricing and price exposure priced on LME Aluminium percentage linked basis • All term contracts are on an index basis with an Month -1 quotation period Sales volumes by Internal External • Negotiated prices for spot shipments end market Negotiated Sales volumes by Term contracting approach¹

Sales volumes by Month -1 pricing approach¹ Spot Notes: 1. Reflects percentage allocation of external Alumina sales including third party product

31 OCTOBER 2016 SOUTH32 MARKETING UPDATE SLIDE 10 NICKEL MARKET OVERVIEW

LME nickel price and exchange Stocks1 China nickel ore imports and NPI supply2 (LHS: US$/t, RHS: kt) (LHS: Mt ore, RHS: kt) SHFE Stocks (RHS) Indonesia Ore Imports (LHS) LME Stocks (RHS) Philippines Ore Imports (LHS) LME Nickel Price (LHS) Amid falling prices, Chinese China NPI Production (RHS) 25,000 600 Market surplus and Qingdao NPI producers implement 9 50 port scandal reveal a heavily plans to decrease production 45 oversupplied market 500 8 20,000 7 40 35 400 6 15,000 30 5 300 25 4 10,000 20 200 3 Start of Indonesian 15 5,000 ban on ore exports 2 Market deficit and risks to ore 100 10 exports from the Philippines 1 have stabilised price 5

Oct-13 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16

Long term outlook: • Healthy outlook for demand driven by rising output of nickel-bearing stainless steel • China is structurally short of nickel units and will depend on imports to meet demand • Ore availability for Chinese Nickel Pig Iron production from the Philippines and Indonesia is a function of government policy Notes: • Marginal production likely to come from Indonesian NPI production 1. Sources: LME, SHFE 2. Sources: GTIS, SMM

31 OCTOBER 2016 SOUTH32 MARKETING UPDATE SLIDE 11 •FERRONICKEL MARKETING

FY16 sales revenue by region 2%

4% • Exports mainly to Asia Where we sell our products 7% • Small amount of off-specification product sales made 37% • Ferronickel (an alloy of nickel and iron) 18% Product types • 29% nickel content • Sold predominately to stainless steel producers

• Market price reflecting value in use Contract strategy • Zero hedging 32% • Ferronickel is sold based on its nickel content (referencing the LME price for refined nickel) plus a Pricing and price exposure differential (premium or discount) Other Asia China Europe Americas Africa India • Typically South32 product is sold on quarterly or spot contracts Relative share of 1Q17 Ferronickel sales

Off-spec Sales volumes by Spec type Spot Sales volumes by Quarterly contracting approach¹ Month -1 Sales volumes by Month pricing approach¹ Month +1 Notes: 1. Reflects percentage allocation of external Ferronickel sales

31 OCTOBER 2016 SOUTH32 MARKETING UPDATE SLIDE 12