1. This document is issued by The Beijing Axis. While all reasonable care has been taken in the preparation
of this document, no responsibility or liability is accepted for errors or omissions of fact or for any opinions
The changing business expressed herein. Opinions, projections and estimates are subject to change without notice. This
document is for information purposes only, and solely for private circulation. The information contained
landscape within China here has been compiled from sources believed to be reliable. While every effort has been made to ensure
that the information is correct and that the views are accurate, The Beijing Axis cannot be held responsible
for any loss, irrespective of how it may arise. In addition, this document does not constitute any offer,
recommendation or solicitation to any person to enter into any transaction or to adopt any investment
15th Annual Global Iron Ore & Steel Forecast Conference strategy, nor does it constitute any prediction of likely future movements or events in any form. Some
investments discussed here may not be suitable for all investors. Past performance is not necessarily
Perth, 20 March 2012
indicative of future performance; the value, price or income from investments may fall as well as rise. The
Beijing Axis, and/or a connected company may have a position in any of the investments mentioned in this
document. All concerned are advised to form their own independent judgement with respect to any matter
contained in this document.
Lilian Luca
Managing Director, The Beijing Axis Procurement
www.thebeijingaxis.com
-0- -1-
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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 Asia, Africa 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
-4- Source: The Beijing Axis Analysis -5-

2. Regional GDP Comparison (USD bn, 2015F)*
China’s Resource Consumption and Drivers Bubble Size: Nominal GDP (USD
GDP Average Growth Rate (%, 2011E-2015F) Asia-Pacific is expected to
account for the largest share of bn, 2015F)
10 world GDP (34%) by 2015F
Asia-Pacific
Trends in China’s Outbound Investments
Shaded bubbles represent
Rising real incomes 2011E figures
Final Word and high commodity
25,807
Other Asia
prices will drive
growth 4,486 Forecast world
Developed economies are average GDP
2,259 2011E to 2015F
expected to continue to lose growth until
5 Africa 2015F: 3.95%
4,280 South America share in world GDP in the
coming years
2015F GDP 2011* Growth 2010 GDP Per
BRICS
(USD bn) Rate (%) Capita (USD) North America
China 10,903.6 9.2% 4,382.1 19,634
India 2,359.2 7.4% 1,370.8
Russia 1,926.1 4.1% 10,355.7
Brazil 2,546.7 2.9% 10,816.5 20,337
Europe
South Africa 425.6 3.1% 7,274.4 2011E to 2015F % of World GDP (2015F)
0
0% 5% 10% 15% 20% 25% 30% 35% 40%
*Note: Data based on IMF World Economic Outlook
*Note: Other Asia includes Bangladesh, Sri Lanka, Nepal, Pakistan, Bhutan, Burma, North Korea, Kazakhstan, Tajikistan, Turkmenistan and Uzbekistan.
-6- Source: IMF 2012; The Beijing Axis Analysis -7-
Box indicates additional nominal
China’s and India’s Forecast Nominal GDP (USD bn, 2010-2035F*) GDP from now to forecast year Asia-Pacific as % of World Total (%, 1990, 2000, 2010)
China China
GDP FDI Inflows FDI Outflows GDI % of GDP
Moderating Phase Sustainable Growth Phase Drive to Maturity Phase Rest of GDP
ROW* APAC* ROW APAC ROW APAC
India India Gross Domestic Investment
Accelerating Growth Continued Acceleration Growth Moderation Phase 100% 100% 100% 100%
35,000
GDP Per
2010- 2016F- 2026F- China
Year Capita 50% 50% 50%
30,000 2015F 2025F 2035F
2035F (USD)
50%
India
China 8.0% 7.0% 6.5% 22,458
28% 26% 31% 30% 27% 28% 27% 29%
25,000 India 7.5% 7.0% 6.5% 6,070 12% 13% 7% 10%
0% 0% 0% 0%
1990 2000 2010 1990 2000 2010 1990 2000 2010 1990 2000 2010
2010-2028 2028F: China adds 1 US
20,000
2010-2025
2025F: China adds 2 Japans Exports as % of GDP Imports as % of GDP Copper Consumption Steel Consumption
15,000 Rest of GDP Exports Rest of GDP Imports ROW APAC ROW APAC
2010-2020
2020F: China’s economy doubles 100% 100% 100% 100%
10,000 2010-2016
2016F: China adds 1 Germany 2010-2032
2010-2026 2032F: 50% 50% 50% 50%
5,000
Now
2010-2020
2010-2013 2026F: India adds 1 India adds 57% 65% 65%
2013F: India adds 1 2020F: India’s Germany 1 Japan 25% 40% 37% 44%
21% 24% 19%
0 South Africa economy doubles 0%
14%
0%
13%
0% 0%
2010 2015F 2020F 2025F 2030F 2035F 1990 2000 2010 1990 2000 2010 1990 2000 2010 1990 2000 2010
*Note: Forecast GDP growth rate for each period listed in the graph above *Note: ROW stands for Rest of World and APAC stands for Asia-Pacific
Source: IMF; The Beijing Axis Analysis -8- Source: CEIC; CRU; UN; World Steel Association; The Beijing Axis Analysis -9-
China’s Quarterly Y-o-Y GDP Growth Rate (2009- Contribution of Components to China’s GDP Growth China’s Share of Global GDP and Consumption of Selected Commodities (% 1990, 2000, 2010)
2012F) (%, 1998-2012F)
GDP Primary Aluminium Steel Coal
15% 140 Net Exports of Goods and Services ROW China ROW China ROW China ROW China
Gross Capital Formation 100% 100% 100% 100%
120 Final Consumption Expenditure (Household + Government)
Policy easing to
3-year (2009-2011)
provide room for 100 50% 50% 50% 50%
average: 9.4%
growth moderation
10% 41% 45% 47%
80 10% 7%
2% 4% 4% 17% 14% 18% 22%
0% 0% 0% 0%
Effect from stimulus 1990 2000 2010
60 1990 2000 2010 1990 2000 2010 1990 2000 2010
package
40 Refined Nickel Chrome Ore Refined Copper Refined Zinc
2012F y-o-y ROW* China ROW China ROW China ROW China
Government stimulus
5% GDP: 8.0% 100% 100% 100% 100%
package (USD 586 bn) 20
0
2011 y-o-y GDP: 50% 50% 50% 50%
9.2% Falling net exports
-20
contribution 32% 33% 38% 41%
4% 13% 13% 17% 4% 12% 8% 20%
0% 0% 0% 0% 0%
Q1 Q1 Q1 Q1F -40
1990 2000 2010 1990 2000 2010 1990 2000 2010 1990 2000 2010
2010 98 99 00 01 02 03 04 05 06 07 08 09 10 11F 12F
2009 2011 2012F
*Note: ROW stands for Rest of World
Source: CNBS; Deutsche Bank; Morgan Stanley; The Beijing Axis Analysis -10- Source: World Bank; CNBS; CEIC; The Beijing Axis Analysis -11-

3. Steel Consumption Driven by the Major Fixed Asset Investment (USD tn, 2000-2011) China Steel Demand/Supply Forecast (mn tons, China’s Crude Output Target Growth Rate
Components (mn tons, 2002-2011E) USD tn 2005-2012E) 30% 28.2%
mn tons Actual Crude Output
Fixed Asset Investment Production Apparent Consumption
400 Investment Consumption Export Others 5.0 4.7 50% 800
FAI as % of GDP (rhs) China’s government has been 21%
20%
4.1 talking about controlling 712
4.5 45% 683
700 supply growth for years, but 702
the actual production growth 649
4.0 40% 627 10%
has still been strong 610
300 3.3 600 566
3.5 35% 559
FAI rose 23.8% in 2011 - 0%
488 498
3.0 Primary sector was up 25%, 30% 500 10th Five-Year Plan 11th Five-Year Plan 12th Five-Year Plan
secondary sector was up 453 (2001-2005) (2006-2010) (2011-2015)
2.5 422 436
2.5 27.3% and the tertiary sector 25% 388
200 was up 21.1% 400 Top 10* Steel Group Share of Total Output (2005-
348
2.0 1.8 20% 348 2015F) Steel industry consolidation is a
300 60% key initiative of 12th Five Year Plan
1.4
1.5 15%
100 1.1
0.9 200 40%
1.0 10%
0.5 0.7
0.4
0.5 0.4 5% 100 20%
0 0.0 0%
02 03 04 05 06 07 08 09 10 11E 00 01 02 03 04 05 06 07 08 09 10 11 0 0%
2005 2006 2007 2008 2009 2010 2011 2012E 2005 2006 2007 2008 2009 2010 2015F
Source: SWS; CNBS; The Beijing Axis Analysis -12- Source: CNBS; Various; The Beijing Axis Analysis -13-
Steel Intensity Comparison of Top 30 Economies* and Other Selected Asian Economies (2010)
Steel Consumption Per Capita
(USD, 2010)
Bubble Size: GDP CAGR Economic Growth Social Development Urbanisation
1,200 (2000-2010) GDP growth to continue at Growing middle-class with an Current rate is low compared
S. Korea 7-8% for the next 5 years increasing purchasing power to developed countries’
Developing economies Developed Economies
Steel consumption
consume less steel per Emerging Economies except China
1,000 declines after
capita, but their
GDP per capita Mainland China
relatively large
reaches USD 25,000
populations ensure With less infrastructure
800 years of steady demand construction, developed Industrialisation Modernisation Structural Change
growth economies have lower Rising labour costs, Investments in improving Shift to a domestic driven Sustained
demand for finished steel improving industry efficiency strategic new industries - economy Resource
600 Spain and increasing R&D telecommunications,
Japan Austria investment transportation, energy, etc.
Demand
Malaysia Germany
Turkey Saudi Arabia Italy Canada
China
400 Russia
Australia
Iran Belgium US
Thailand Poland Import Dependency 5 Year Plan Global External
Sweden France Netherlands
200 China’s demand outstrips Consolidation, moving inland, Factors
UK
India Mexico domestic supply of mineral steady GDP growth, and Arising concerns over debt
Brazil resources sound policy, high tech and
Vietnam Argentina problems in Western
Venezuela value added production economies
0
Philippines South Africa
0 Indonesia 10,000 20,000 30,000 40,000 50,000 60,000
GDP Per Capita (USD, 2010)
The trend line is indicative of the general pattern in steel consumption at different stages of industrialisation
*Note: Switzerland, Norway and Sweden are not included for comparison purposes
Source: IMF; World Steel Association; The Beijing Axis Analysis -14- Source: The Beijing Axis Analysis -15-
 Asia occupies a far more crucial role in the global economy – the world has changed and is China’s Resource Consumption and Drivers
changing still, with many far-reaching implications
Trends in China’s Outbound Investments
 China’s demand drivers remain intact, but there are clearly more risks in the supply/demand
picture
Final Word
 Continuous and robust domestic consumption will drive growth moving forward – China will have
a key influence in resource demand if at lower growth
 China will face the toughest policy challenges ‘ever’ in the next 5-10 years
 Heightened market volatility and redistribution of global influence require a more informed and
strategic decision-making process
 Resources sector will become more ‘competitive’ – players must out-market, not just out-produce
peers – strategic marketing will be a differentiator
-16- -17-

4. China’s Implied Demand and Domestic Production Mineral Product Imports and Exports World’s Top 20 Outward FDI Originators, Flows China OFDI Stock and Flows (USD bn, 2002-2015F)
of Commodities (2010) (USD mn, 1992-2010) (USD bn, 2010)
16,000
15,092 0 50 100 150 200 250 300 350 600
Demand Production 300,000 Flows Stock
14,000 US 560.0
Exports Imports Germany
250,000 France 500
12,000 Hong Kong
China ranked 5th in
China In 2011 alone, China invested
2010
10,000 9,118 200,000 Switzerland in 1,392 overseas projects in
400
Japan China ranked 6th in 132 countries 383.4
8,000 7,620 Russia 2009
7,246
150,000 Canada 317.2
x Belgium 300
6,000 Netherlands
245.8
100,000 Sweden
4,000 3,500 Australia China ranked 13th 200
2,800 Spain in 2008 and 2007 184.0
2,165
2,000 1,775 50,000 Italy
1,150 1,150 Br. Virgin Is. 117.8
438 202 500 340 128 456 100
350 Singapore 90.6
6
0 S. Korea China ranked 18th in 57.2
0 44.8
Cobalt Ore Aluminium Nickel ('000 Iron Ore Platinum Chrome Ore Copper Ore Zinc Ore Manganese
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Luxembourg 2006 29.9 33.2
('000 tons) (mn tons) tons) (mn tons) ('000 oz) ('000 tons) ('000 tons) ('000 tons) Ore Ireland 0
('000 tons) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2015F
*Note: China OFDI flows for 2011 do not include financial investments from September-December 2011
Source: USGS; BP; WGC; USDA; Various; The Beijing Axis Analysis
18 Source: WIR 2011; The Beijing Axis Analysis -19-
Breakdown of Overseas Investments by Sector Value of China’s Mining and Metals Investments by CHN/HK Outward Deals for Top 30 Countries and Target Sectors (2000-2011)
(USD bn, 2004-2010) Commodity (2010) Government
80 Others Insurance 2
Leasing & Commercial Service Iron Ore Agribusnessinsurance
2% Forestry & Paper 58
Banking and Insurance 2% 1% UK Mongolia Asia
Wholesale & Retail Trade 2% 2% Copper Publishing
Canada 7 272
Holding Companies 1
5% 1 24
Transport, Storage and Postal Service Aluminium
Metal & Steel
60 Manufacturing Leisure & Recreation
Auto/Truck 1
Mining 10% 31% Platinum Chemicals 1
Commercial services include Healthcare
investments in holding Exploration Construction/Building
Textile 1
companies, regional Philippines
Steel Machinery 1
40 headquarters or SPVs that North America 8
Food & Beverage
are often established in Retail 59 2
offshore centres to invest in
Coal 1
17% Utility & Energy 2
other countries and sectors Dining & Lodging
Gold 18
Transportation 9 Indonesia
Consumer Products South America 4
20 Rare Earths 16
Real Estate/Property Number of Deals Australia
28% Telecom 1
Other Base Metals ≥ 300
Professional Services ≥ 200 211
Finance 3 ≥ 100
Oil & Gas
4
China’s investments in chrome, nickel, and manganese are still ≥ 50
Electronics ≥ 30
0 very small compared to other commodities Mining ≥ 15
2
≥ 10
2004 2005 2006 2007 2008 2009 2010 0 100 200 300 400 ≥5 Mining
2010 Mining Investment: USD 5.7 bn
*Note: The Dealogic M&A database was used here, it groups China and Hong Kong outward investments.
Source: MOFCOM; The Beijing Axis Analysis -20- Source: Deutsche Bank; Dealogic; The Beijing Axis Analysis -21-
Share of Imported Iron Ore Owned by China (Mn
tonnes, 2002-2011E)
China Overseas Direct Investment – Key Drivers
700  Going forward, China Iron Steel Association
Imported Iron Ore Owned by China announced that China would seek to derive 40% of
Others ore imports from Chinese-invested sources by 2015
600
and 50 percent by 2020 driven by: Cumulative capital Annual investment Government policies Geopolitical
stock must align flow must adjust set the tone ambitions necessitate
500
- Over-reliance on high priced imports of the ‘reach’
mineral
400 - Shrinking profit margins for Chinese steel
companies
300 - Reduce its reliance on the big global miners Global challengers Internationalised Pursuit of advanced Resource pipelines
look different corporate balance technologies are being built
200  It is estimated that Chinese-invested overseas sheets
sources will bring in 100 million tonnes to 200
100
million tonnes of iron ore annually in the coming
three to five years
Wider industry Strengthening RMB & ‘Go global’ policy to Wider market interest
0 acquisitions Foreign Reserves continue
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E  Australia and West Africa will remain as the key
focused markets for such investments
Source: Various; China Steel Association; The Beijing Axis Analysis -22- Source: The Beijing Axis Analysis -23-