Bangkok 11 th – 14 th November 2012 Shangri-La Hotel Moderators: Group 1 Matt Latimore Keith Denholm Group 2 Lars Bartram Leon Hendrikz Group 3 Brian Davis Jim Lennon Group 4 Kirk Yamanaka Ken Carnes Group 5 Neil Bristow Gordon Eberth

Poll Regarding Coal Contracts Contract TypeGroup 1Group 2Group 3Group 4Group 5Total Annual021*047 6 Nonthly00*3*4411 Quarterly91214*5949 Monthly00*3*249 Spot/Index433*3619 Combination3423*6743 *Denotes it was included in the combination figures

Coking Coal Pricing - Discussion This produced in-depth debate and formed a major part of both consumers and producers concerns for the industry going forward. There are two poles operating in the market where different interests are in conflict: Coal Producers Common sense of Short term pricing Steel Industry stability & volatility desired There were major discussions on quarterly pricing as a mini benchmark guideline for coal negotiations. This benchmark should be produced by the industry itself. Shorter time pricing allows different coals to be used by the buyer and give more flexibility. Financial banks Speculators Trust Funds

Steel Industry Problems Over capacity and bad steel prices = lower profit and no investment. Steel customers do not like volatile pricing Raw materials are creating huge variations in price for steel products and affecting steel demand. There is a major increase in the influence of political conditions to steel (e.g. Arcelor closure of plant) Asian exports of steel to Europe, not just China (Korea & Japan also a concern. The future competitive nature of steel to other raw materials. The EEC outlook – very bleak for Europe as a whole. Environmental and carbon taxes – taxation as another cost to the steel companies.

Steel Industry Problems [cont.] Coal quality: As the coal price goes down, there are questions about the actual coal quality being delivered. Also: The long term availability of high grade coals? Do steel mills need new technologies to cope with these coals? Can mills actually live with lower grade coke and still meet finished metal product standards & yield? Also: The impact of new projects in Africa and its impact on the overall supply side. Will it force good quality coking coal out of the market? Global warming (alias climate change). Huge storms in Australia are affecting coal mining and this has a massive, immediate impact on price.

Coking Coal Producer Problems Profitability - costs up, margins down, currency, labour, fuel, explosives, government taxes, time expense for new projects, coal mine inspectors. No incentive for new investment. Government stability tax. Multinational coal producers - put investment where profit is highest Logistics - with no investment, and if the market does pick up, the industry will not be in any position to respond quickly. Contract performance and consistent coal off-take. Budgeting issues to senior management. Reducing costs of production – production costs have gone through the roof in recent years. Selling tonnage in an oversupplied market.

Coking Coal Producer Problems [cont.] How to manage your business and cope with incompetent senior corporate management. What has happened to experienced coal marketing teams? Take or Pay contracts for rail, increase the producers fixed costs.

Coking Group Debate - China China was discussed at length and there are, in some cases, more questions than answers when it comes to this major industry giant and its impact globally. Key thoughts: What is going to happen with slower growth in China? What is the global impact if China stops coking coal imports completely? Some groups thought that Jim Lennons figures for imports were slightly over-optimistic. MAJOR CONCERN: Domestic Chinese coal mines are now extending credit to 6 months for steel mill customers.