OUTLOOK

The rate of recovery from the global recession remains uncertain despite a number of positive indicators.

The group expects the global demand for coal to increase, with the demand for local power station coal anticipated to remain strong. The domestic demand for steam and metallurgical coal is however expected to be firmer but still to remain subdued in 2010.

Coal exports may be affected by the availability of rail and port allocation at RBCT.

For the mineral sands commodities, higher production and sales volumes are anticipated at prices which, although still under pressure, are showing signs of recovery.

The base metals business is expected to remain under pressure in 2010 as a global zinc oversupply situation may result in downward pressure on zinc prices in the second half of 2010, while local demand is anticipated to remain stable.

Based on current market expectations on iron ore price increases anticipated with effect from 1 April 2010 coupled with strong demand, the equity accounted contribution from SIOC may have a positive impact on Exxaro’s earnings.

The introduction of the payment of royalties with effect from 1 March 2010 will have a negative impact on the group’s operating results, most notably for the coal business.

Overall, the group’s consolidated results for 2010 will largely be driven by the recovery in demand and the prices for its commodities, as well as by the trading levels of the local and Australian currencies. The group will continue with its strong focus on capital prioritisation and working capital management together with rigorous cost control.

The financial information on which the outlook statement has been based has not been reviewed or reported on by the company’s external auditors.