Presentation to Portfolio Committee on Public Enterprises
Norman Mbazima- CEO Anglo American Thermal Coal
Cape Town 28th January 2010
2
Discussion points
Coal supply and security of supply
Current stock levels
Quality of coal
Other matters
3
Mozambique
Botswana
ZimbabweNamibia
Reliable long-term supplier for Eskom
AATC has long term relationships with customersHistorical relationship with Eskom is the corner stone of SA coal business
AATC pursues further opportunities with Eskom and local customers depending on production availabilityAATC serves local pulp/paper, cement, and steel industry
Our productsOur products Our approachOur approach
~4,550 kc/kg1 Eskom
~4,870 kc/kg2Sasol
~6,550 kc/kg4 Export
Note: All data in this presentation is based on 8+4 budget figures1. 19.1MJ/kg 2. 20.4 MJ/kg 3. 27.7 MJ/kg, incl. met coal 4. 27.4 MJ/kg. Approximate nar value (FOB): 5,980 kc/kgSource: AA; AATC; BCG analysis
Eskom relationship and volumes lay the foundation for Anglo's SA business
Avg. CV (air dry) (2010E)
59%
9%3%
29%
2007
61%
9%4%
27%
2008
61%
9%3%
28%
2009 8+4
61%
9%2%
28%
2010 Plan
Eskom
Sasol
Otherinland
Export
South Africa
Swaziland
Lesotho
Export/Domestic
Greenside
Kleinkopje
Goedehoop
LandauMafubeZondagsfontein
New Vaal
New Denmark
Kriel
Isibonelo
Domestic (2010)
AATC domestic sales split
~6,610 kc/kg3 Other
AATC continues embedded and enduring partnership with EskomShare of total Eskom burn tons ~28%
• AATC consumes ~5% of electricity in SA
4
Security of Supply
• We will meet our contractual obligations and work with Eskom to evaluate the potential for lifex beyond the current life of existing mines
5
Overview of mines
Mine name Sales tons (2010) Established End Planned expansions Power Station
Kriel 10.250 1979 2029 2012 / 2014 Kriel
New Vaal 17.300 1987 2050 2016 / 2020 Lethabo
New Denmark 4.810 1990 2041 Tutuka
Kleinkopje 2.250 2022 Majuba
Landau 210 2025 2016 Duvha/Hendrina
Mafube 939 2027 Arnot/Camden
Zondagsfontein 729 2029 Majuba/Kusile
Total Eskom 36.550
6
Coal Supply 2010
• We are committed to meeting the Eskom tonnage requirement for 2010 and continue to seek opportunities to provide additional tonnes
7
Sales to Eskom for 2010 and beyond are contracted for
Composition of 2010 Eskom volumesComposition of 2010 Eskom volumes Description of categoriesDescription of categories
730
939
211
60
17,300New Vaal
4,810New Denmark
10,250Kriel
Goedehoop
2,250Kleinkopje
Landau
Mafube
Zondagsfontein
5,93230,618 36,550Total Eskom
0 20,000 40,000
Eskom 2010 planned volumes covered by long-term and medium term contracts …
MineMine Volume in ktVolume in kt • Demand covered via Coal supply agreement (CSA)
– 20+ years for Cost+– No short-term demand change
• Annual volume budget agreement– 11% of volume sold to Eskom via medium
term contractsSet for 2010 sales planMedium-term demand volume depending
on AATC price position
Co
st+
m
ine
sF
ixe
d p
ric
e m
ine
s
8
Stock Levels
• Stocks are in-line with the Eskom targeted levels for 2010 and we expect to maintain these levels throughout the year
• All mines are currently above Eskom’s system average of 36 days
9
Coal Quality
• We expect to meet our contractual obligations and through initiatives like the Optimal Coal Processing Initiative (OCPI) we are working with Eskom to improve power station performance
• Challenges:•Geology•Adverse weather conditions
10
Other matters
• Discussing New Largo supply to Kusile power station
• Future projects and Eskom demand
• Lifex
11
Eskom is our largest customer and a significant stakeholders
We are committed to ensuring security of supply for the countryWe lead the Coal Working Group during Electricity Challenges in 2008, to ensure that stockpiles returned to comfortable levels and to identify logistical synergies key to improving other logistical challenges
Constructing new mines to meet Eskom’s new build programme
We are committed to meeting our contractual obligations in terms of quality and quantity
We continue to invest in and look for energy efficiency solutions at all our operations
Message