China’s Changing Role in the Global Economy: - Implications and Opportunities for the Resource Industry Johannesburg, 3 October 2013 Kobus van der Wath Founder and Group Managing Director, The Beijing Axis kobus@thebeijingaxis.com International Advisory and Procurement

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A number of megatrends are reshaping the global landscape – China is at the forefront of these trends 2 1 Continued Asia Growth Story Centrality of Renewable Energy Sources Global Integration Across the Value Chain China’s Rise… 3 Rise of Digital Media & Social Technologies Is China Still a Megatrend? 9 Re-energised Political Consciousness Demographic Shift – Aging Societies vs. Migratory Ones An Ascendant S. America Megatrends 4 A Slowing Western World… Rising Emerging Market Consumption 8 Security Issues Driven by Non-state Actors Increasing Energy Needs Despite Limited Resources Food Security & Access to Water 5 Increasing Number of Resurgent African Countries Unrealised BRICS Potential.. 7 6 Source: Various; The Beijing Axis Analysis

Key global factors The backdrop China’s rise … labour market and supply shock as a producer … engine as a consumer … investor New competitive lines and forces, winners/losers – the rise of Asia, BRICS, etc. A two-speed global economy over the medium and long-term A lasting GDP trajectory in Africa, Asia and Latin America – governance, growth, stability, infrastructure, confidence, etc. The issues now Europe broken … fragile developed markets – and knock-on effects? China’s landing – soft or hard? Implications for growth and resource demand? Tapping into the China story vs. over-reliance on China and need to diversify economic ties Strategic intelligence – to make decisions in boardrooms around the world in order to reposition Source: The Beijing Axis Analysis

Emerging economies are outperforming developed economies in terms of economic growth. By 2015, the Asia-Pacific region is expected to account for one-third of the world’s GDP Regional GDP Comparison (2012, 2015F) GDP Average Growth Rate (2012-2015F) A bubble this size represents GDP = USD 1,000 bn Asia-Pacific is expected to account for the largest share of the world’s GDP by 2015F Asia-Pacific will add 1.5 times Africa’s 2012 GDP by 2015 Rising real incomes and high commodity prices will continue to drive Africa’s growth Africa Other Asia South America Asia-Pacific Forecast world average GDP growth until 2015F 2012 to 2015F 3.9% BRICS 2015F GDP (USD bn) 2012 Growth Rate (%) 2012 GDP Per Capita (USD) China 11,020 7.8% 6,091 India 2,308 5.0% 1,489 Russia 2,544 3.4% 14,037 Brazil 2,800 0.9% 11,340 South Africa 411 2.5% 7,508 North America Developed economies are expected to continue to lose share in the world’s GDP over the coming years Share of World’s GDP Europe 2012 to 2015F Source: IMF; The Beijing Axis Analysis

China’s rapid economic growth has positioned it as the world’s second-largest economy - likely to overtake the US around 2025 to become the world’s largest economy Top Economies’ GDP, excl. US (USD bn, 1990-2015F) China Rank 10 9 7 8 6 5 4 3 2 …2? India Rank 12 14 15 13 11 9 10 …8? Rank 2012 2015F 2000: China surpassed Italy 2007: India surpassed Korea 2 2 3 3 4 4 1995: China surpassed Canada 2005: China surpassed France 5 6 6 7 Q2 2010: China surpassed Japan 7 5 8 10 2006: China surpassed UK 9 8 1996: China surpassed Brazil 10 9 18 16 2015: Brazil to surpass UK and France 29 28 2007:China surpassed Germany Note: Forecasted GDP growth based on IMF Economic Outlook Source: IMF; The Beijing Axis Analysis

China, India and Indonesia are the prominent economies in developing Asia and account for 40% of the contribution of developing markets to the global economy Four high-level drivers USD 72 tn USD 72 tn USD 27 tn USD 8.2 tn USD 8.2/8.6 tn2 USD 8.2 tn USD 8.2 tn Net Exports Northwest Govt. Consumption Expenditure Other Developed Countries Northeast Others Other Developing Countries Others Southwest Tertiary Industry North Private Consumption Expenditure Africa Canada Hunan Italy Russia Hubei Brazil Sichuan U.K. France South Africa Liaoning Developed Asia1 Other Developing Asia Germany Hebei Indonesia Japan Henan India Zhejiang Secondary Industry Other Developing Countries China Shandong Gross Capital Formation East China Jiangsu Africa U.S. Guangdong Primary Industry China Regional dynamics….Industry breakdown…Expenditure approach Note (1): Developed Asia includes Japan, South Korea, Taiwan, Singapore and Hong Kong Note (2) The difference between GDP by province and GDP by industry is due to different statistical caliber. Usually, GDP reported by province is higher than the GDP reported by NBSC. Source: IMF; National Bureau of Statistical of China; The Beijing Axis Analysis

Asian countries are set to grow at an impressive average rate of 5 Asian countries are set to grow at an impressive average rate of 5.8% per year, a pace that is beyond that of any other region - large developing economies in Asia will lead the way Average GDP Growth Forecast for Select Asian Countries (2012-2016F) Emerging Markets Developing Markets Developed Markets Average : 5.8% Source: IMF; ADB; The Beijing Axis Analysis

Due to the diversity within the Asia region, it is useful to group countries based on economic development Tier 1: Emerging Markets Tier 2: Developing Markets Tier 3: Developed Markets 2011 GDP (USD bn) Per Capita GDP (USD) Pakistan 210.2 1,194.3 Bangladesh 113.9 735.0 Sri Lanka 59.2 2,835.4 Myanmar 51.4 842.2 Nepal 19.0 619.5 Brunei 16.4 31,007.9 Cambodia 12.9 900.0 Papua New Guinea 12.7 1,844.5 Mongolia 8.7 3,056.1 Laos 8.3 1,319.6 Timor-Leste 4.5 896.3 Bhutan 1.5 2,287.7 2011 GDP (USD bn) Per Capita GDP (USD) China 7,298.2 5,444.8 India 1,826.8 1,488.5 Indonesia 846.5 3,494.6 Thailand 345.7 4,972.0 Malaysia 287.9 9,656.3 Philippines 224.8 2,369.5 Vietnam 122.7 1,411.2 2011 GDP (USD bn) Per Capita GDP (USD) Japan 5,866.5 45,902.7 South Korea 1,116.3 22,424.1 Taiwan 466.4 20,082.9 Singapore 259.9 46,241.0 Hong Kong 243.7 34,457.0 Note: Countries within each cluster are ranked by GDP size Source: World Bank; The Beijing Axis Analysis

Asia has become a fundamentally important engine of capital, trade and commodity consumption worldwide Asia Pacific as % of World Total (%, 1990, 2000, 2010) GDP FDI Inflows FDI Outflows GDI % of GDP Exports as % of GDP Imports as % of GDP Copper Consumption Steel Consumption *Note: ROW stands for Rest of World and APAC stands for Asia-Pacific Source: CEIC; CRU; UN; World Steel Association; The Beijing Axis Analysis

Total Private Consumption Expenditure (USD tn, 2012) Major Asian economies are yet to see a shift towards consumption-driven growth model – the GDP per capita of developing Asian economies still remains low Global Private Consumption Expenditure (USD tn, 2012) GDP Per Capita Across Selected Countries (USD, 2012) 57% 68% 60% 31% 61% 51% 57% 2% Share of World 100% 26% Represents consumption expenditure as a % of GDP 7% X% 10.7 1% Consumption expenditure is a much smaller share of GDP in China 9% 9% 3.6 6% 10% 2.5 5% 2.1 19% 5% Total Private Consumption Expenditure (USD tn, 2012) Smaller GDP per capita compared to peers, but growing more rapidly 40.5 7.4 18% 31% 1 India 1.05 tn 57% of GDP 2 Indonesia 0.46 tn 53% of GDP Asian Countries 14% 12.4 7% World US Japan China Germany Others (Asia) Others X% Represents CAGR for GDP per capita during the period 2007-2012 Source: World Bank; United Nations; The Beijing Axis Analysis

China’s fixed asset investment growth has moderated in recent years but remains solid – investment was focused primarily in urban areas so far, but this will change Fixed Asset Investment (USD bn, 2001-2012) Total Investment in Urban and Rural Areas (USD bn, 1997-2012) % Manufacturing and real estate account for half of the fixed asset investment Urban-focused investments correlate with the rapid urbanisation process Global financial crisis induced stimulus 22% % of GDP 34% 72% X% Represents CAGR for the period 1997-2012 Source: MOFCOM; World Bank; The Beijing Axis Analysis

China is an important investment destination and a global source of capital – FDI inflows outweigh FDI outflows Top 20 World FDI Inflows (USD bn, 2012) Top 20 World FDI Outflows (USD bn, 2012) China ranked 2nd China ranked 3rd; fifth largest investor in Africa FDI inflows in 2012 represent 3.27% of the GDP FDI outflows in 2012 represent 2.27% of the GDP Source: WIR 2013; The Beijing Axis Analysis

China’s outward FDI is diversified across geographies and industries - countries such as Australia and Canada receive a large proportion of their total OFDI from China China’s OFDI Flow by Sector (USD bn; 2004, 2012)* Top Destinations for Chinese Outward Investment (USD bn, 2005-2012) CAGR 46.5% 34.7% 17.9% 28.7% 41.8% 19.3% 57.7% 41.4% 8.5% 1.8% 5.9% 4.2% 1.2% Total South Africa? Pvt. Chinese companies accounted for 9% of the OFDI in 2012, up from 4% in 2010 11.2% 2.1% Represents China share of the country’s total inward investment stock X% 9.5% Note*: Business services includes investment in holding companies, regional headquarters and SPVs often established in offshore financial centers from where investments are made in other countries and sectors; Finance includes investments in the banking industry such bank branch offices, bank affiliated institutions, bank rep. offices and insurance institutions; Wholesale and retailing as well as transportation, warehousing and postal services are closely linked with China export and import activities Source: Heritage Foundation; IMF; MOFCOM; The Beijing Axis Analysis

Companies from the Asia-Pacific region continue to emerge as winners in global markets. Companies from China and India feature prominently in this equation Fortune Global 500’s Geographic Distribution (2005-2012) Asia-Pacific Fortune 500 Country Breakdown (2011) China had just 16 companies in 2005 Asia-Pacific Fortune 500 Industry Breakdown (2011) The domination of American companies in the global rankings has shrunk. Only 143 made the list in 2012 compared to 189 in 2005 Source: Fortune Magazine; The Beijing Axis Analysis

THANK YOU! Kobus van der Wath Beijing, China Cheryl Tang Director & GM, China cheryl@thebeijingaxis.com Hong Kong TBA Secretary Corporate Office 3806 Central Plaza, 18 Harbour Rd Wanchai, HK Singapore Andrew Kagoro Finance & Projects Penthouse & LV 42 Suntec Tower 3, 8 Temasek Blvd Singapore Perth, Australia Kobus van der Wath Founder & Group MD kobus@thebeijingaxis.com Johannesburg, South Africa Dirk Kotze Director & GM, Africa dirk@thebeijingaxis.com London, UK/Europe Matt Pieterse Non-executive Director Russia Desk Lilian Luca (Beijing) Latin America Desk Javier Cuñat (Beijing) Associate Director, Beijing Axis Strategy Yangon, Myanmar Dr. Wong YF Chief Representative India Desk Ankit Khaitan (Singapore) Eastern Africa Desk Walter Ruigu (Beijing) THANK YOU! Kobus van der Wath Founder and Group Managing Director, The Beijing Axis kobus@thebeijingaxis.com International Advisory and Procurement COPYRIGHT© The Beijing Axis Ltd. 2013. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of The Beijing Axis.