Con?dential and subject to legal privilege Glencore integration planning 30 January 2013 PWC Sydney PWC Sydney Contents Section Page 1 Integration of Glencore's Australian assets 2 List of New Entities 1 14 I Integration of Glencore 's Australian assets Section 1 Background and rationale Post the acquisition of Viterra, Australia will become a key territory in the Glencore group. Accordingly, the group structure will require reevaluation. As Glencore is moving towards having a policy of owning similar assets in one jurisdiction under single holding companies, Glencore is proposing to have a single entry point into Australia (to the extent possible). The key reasons for this include: • • • • • • • simplifying the Australian holding structure realising commercial synergies (e.g. country manager, single back office, remove areas of duplication); moving to single accounting and tax consolidation; treasury management of the commodity businesses within Australia (i.e. single entry point enabling cash recycling between businesses within Australia); better manage foreign exchange risks for accounting purposes; reduce risk of equity impairment; borrowing against a strengthened local borrowing group without recourse to the ultimate parent; refinancing the Australian group internally. Whilst it is highly desirable to have all operating entities / assets held under a single holding company, if this gives rise to commercial constraints or significant costs, there may be exceptions to having a single entry point. PwC 2 Simpli?ed Glencore group structure Century Loan Glenmurrin Loan [A$1.231bn] interest free [A$293m] 95% interest pa with quarterly Repayable 31 December 2012 payments. Manning NOV 2014 Glenmurrin Overdraft Mina" Loan limit [A3400m] [US$3om] drawn down LIBOR +2961? With LIBOR +1.50% for borrowings payments LIBOR +0.25% for depos' - 5 year term expiring Feb 2017 Glencore International (J ersev) Glencore International AG (Swiss) I Swiss Other I Australia Glencore AG (Swiss) Glencore Investment AG (Swiss) PH Australia Minara Resources Tavern Rentals (Calcrete) Rentals (Village) Rentals (C ogen) Murrin Murrin Investments Abednego Nickel Canning Basin Investment enlore MGM Gold Badgelot Hanacorp Murrin Murrin Overdra? limit deposited LIBOR +1.10% for borrowings LIBOR +0.25% for deposits GIPL Glencore Glencore (Nickel) Nickel Holdings Glencore Grain Glencopper NT NSW Base Metals Copper NT (dormant) Glencopper SA Cyprium (dormant) Copper SA (dormant) Gleneopper NSVV dormant Glencore Land 596 .00596 0.33% 99.6796 Glencobar AG (Swiss) 3496 adelan (dormant) Acelight Glideco (dormant) obar Management (dormant) Integration of Glencore?s Australian assets Pre-transaction Steps Investors Glencore Temporary loan Swiss Canada Australia Netherlands Other Australia Holdco Australia Holdco 3 Australiaco Viterra Australia GIPL MEC Group Pre-transaction Steps 1. Foreign Investment Review Board (FIRB) approval has been obtained. 2. Stamp duty clearance should be obtained in NSW, Victoria and WA (see Section 4 for high level CRE requirements) 3. [Removed] 4. [Removed] 5. [Removed] Background Australia Holdco intends to acquire all of the shares in the Australian water?s edge (En) companies that are currently in the GIPL MEC group - GIPL and Glencore Grain (from Glencore International AG) 0 Glencore Nickel Holdings, Amshell and Badgelot (from Glencore Investment AG) Glencopper NT, NSW Base Metals, Copper NT, Glencopper SA and the other dormant Australian subsidiaries (from Singpac Investment Holding) - Glencore Land (from Renaisco BV) - Caledan and Glideoo (from Glencobar AG) The following slides set out the potential steps for the transfer of these entities to the Australia Holdco MEC group. Integration of Glencore?s Australian assets Integration of GIPL, Glencore Australia and Glencore Grain Potential Steps Glencore Investors Temporary loan Discount Finance Swap structure notes Australia Australia Holdco 3 Amalco Nickel Glencore Holdco Grain Australiaco Viterra Australia Swiss Canada Australia Glencore Australia Australia Holdco MEC Group Other 6. 7. 10. 11. 12. 13. 14. [Removed] GIAG enters into a tripartite agreement with Australia Holdco and Australia Holdco 3 under which: 0 GIAG transfers the shares in GIPL, Glencore Australia and Glencore Grain to Australia Holdco 3; - In consideration for the transfer, Australia Holdco 3 issues shares to Australia Holdco; and - Australia Holdco issues shares to GIAG. The agreement should be conditional on the execution of the transfer agreements for the remaining Glencore entities. Australia Holdco 3 contributes GIPL to Nickel Holdco in exchange for shares. GIAG issues two promissory notes to GGFL by way of a USD denominated temporary loan. The ?rst promissory note (P Note V) should be equal 400m], being the value of 29 February 2012 interest bearing loan from GIAG. - The second promissory note (P Note AA) should be equal to 293.188m], being the value of Glenmurrin?s 30 November 2007 interest bearing loan from GIAG. a) GGFL assigns Note and Note AA to Australia Holdco. Australia Holdco issues a series of USD 10m discount notes to GGFL as consideration. b) Aus Swap Co enters into a foreign currency swap with Glencore Finance Bermuda in order to swap the value of the discount notes issued by Australia Holdco into an AUD exposure. c) Glencore Finance Bermuda enters into a back-to-back foreign currency swap with Glencore Capital Ltd. Australia Holdco contributes Note and Note AA to Australia Holdco 3 in exchange for ordinary shares. Australia Holdco 3 contributes Note and Note AA to Nickel Holdco in exchange for ordinary shares. Nickel Holdco contributes Note and Note AA to GIPL in exchange for ordinary shares. a) GIPL uses Note to repay its AUD 400m interest bearing loan to GIAG. Note is cancelled by operation of law. b) GIPL contributes Note AA to its wholly owed subsidiary, Glenmurrin, in exchange for ordinary shares. c) Glenmurrin uses Note AA to repay its 30 November 2007 interest bearing loan from GIAG. Note AA is cancelled by operation of law. Integration of Glencore?s Australian assets Integration of GIPL, Glencore Australia and Glencore Grain (cont) Potential Steps 15. [Removed] Glencore Investors Discount notes Finance Swap structure Australia Australia Holdco 3 Amalco Nickel Glencore Holdco Grain Australiaco Viterra Australia Swiss Canada Australia Glencore Australia Australia Holdco MEC Group Other 16. a) GIAG issues a promissory note (P Note W) to Australia Holdco in exchange for ordinary shares in AustraJia Holdco. The value of Note should be equal to the AUD 1.231bn] interest free loan owed by GIPL to GIAG b) Australia Holdco contributes Note to Australia Holdco 3 in exchange for ordinary shares in Australia Holdco 3. c) Australia Holdco 3 contributes Note to Nickel Holdco in exchange for ordinary shares in Nickel Holdco. d) Nickel Holdco contributes Note to GIPL in exchange for ordinary shares in GIPL. e) GIPL transfers Note to GIAG in satisfaction of the interest free loan owing to GIAG. Note is then cancelled by operation of law. This step will be completed after the transfer of the Glencore entities. To be con?rmed/to consider Location and value of assets of GIPL and Glencore Grain. Consider the net asset position of the subsidiaries of GIPL. Integration of Glencore?s Australian assets Glencore Nickel Holdings, Amshell and Badgelot Glencore Potential Steps 17. Glencore Investment AG enters into a multipartite agreement with GIAG, Australia Holdco and Australia Holdco 3 under which: Glencore Investment AG transfers the shares in Glencore Nickel Holdings, Investors Amshell and Badgelot to Australia Holdco 3; In consideration for the transfer, Australia Holdco 3 issues ordinary shares to Australia Holdco; Australia Holdco issues shares to and SUNS . . . . Discount Finance 311:; :Lrigebtedness to Glencore Investment AG 18 documented in the form of Australia notes Swap Glencore AG The agreement should be conditional on the execution of the transfer agreements for Holdco (Swiss) the remaining Glencore entities. . 18. [Removed] Australla Glencore 19. Australia Holdco 3 contributes Amshell, Glencore Nickel Holdings and Bedgelot to 3 Investment Nickel Holdco in exchange for ordinary shares in Nickel Holdco. AmalCO 1 To be con?rmed/to consider oldceo - Whether shares in Glencore Nickel Holdings, Amshell and Badgelot are TAP (currently assumed Amshell may be). Glencore Location and value of assets. Stamp duty CRE relief should be available for assets are GIPL Amshell Nickel Badgelot located in WA (Assumed all). Holdin -. 5 Elimination of liability to Glencore Investment AG by way of a dividend return of capital waiver (via Glencore AG). Australiaco Viterra Australia Swiss Canada Australia Netherlands 7 Other Integration of Glencore?s Australian assets Glencopper NT, NSW Base Metals, Copper NT, Glencopper SA Potential Steps 2o. Singpac Investment Holding enters into a multipartite agreement with GIAG, Australia Holdco and Australia Holdco 3 under which: - Singpac Investment Holding transfers the shares in Glencopper NT, NSW Base Metals, Loan Copper NT, Glencopper SA Glencopper NSW, Copper SA and Cyprium to Australia Holdco 3; - In consideration for the transfer, Australia Holdco 3 issues ordinary shares to Australia Temponry Holdco; Glencore Australia Holdco issues ordinary shares to and indebtedness to Singpac Investment Holding is documented in the form of a loan note. Finance Swap structure Discount Australia notes Holdco The agreement should be conditional on the execution of the transfer agreements for the remaining Glencore entities. 21. [Removed] Holdcos Australia To be con?rmed/to consider Holdco 3 Location and value of assets. Stamp duty CRE relief should be available for assets are located in NSW (Assumed all). Elimination of liability to Singpac Investment Holding by way of a dividend return of capital waiver (via Glencore Finance Bermuda). Amalco Base Metals Copper I (dormant) I I I Glencopper Glencopper NT Australiaco Vitel?l?a Australia (dmnam) Copper SA (dormantSwiss Glencopper - Canada. NSW - Australla dormant 8 Other A 1181142 EPICICQJIQEC 9:91:11- Integration of Glencore?s Australian assets Glencore Land Glencore Potential Steps 22. Australia Holdco 3 acquires Glencore Land. The value of Glencore Land is currently assumed to be nil. 23. [Removed] Holdcos Canada Australia Other Australia Holdco Australia Holdco 3 Glencore Land Australia co Viterra Australia Australia Holdco MEC Group SWISS Finance Swap Structure 99-6796 0.33% 596 9596 Integration of Glencore?s Australian assets Cuprum Potential Steps 24. Australia Holdco 3 acquires Cuprum (dormant). Glencore The value of Cuprum is currently assumed to be nil. To be con?rmed/to consider Nil valuation of Cuprum Finance Swap Structure Australia I I I i Holdco 99.67% I I I I I Holdcos I Australia a 033% Holdco Amalco i 0.005% I 9999596 Australia co Viterra Australia i I I AnstraliaHoldeoMECGroup i - SWISS - Canada - Australia 10 El Other Integration of Glencore?s Australian assets Potential Steps Caledan and Glideco Glencore Investors Discount Australla notes Holdco Australia Holdcos 01 3 Amalco Caledan Glideco Finance Swap Structure Acelight Cobar Management (dormant) Australia Viterra Australia Glencobar AG (Swiss) - Swiss - Canada Australia Holdco MEC Group - Australia Other 25. 26. 27. 28. 29. 3o. 31. 32. 33- Glencobar AG enters into a multipartite agreement with GIAG, Australia Holdco and Australia Holdco 3 under which: - Glencobar AG transfers the shares in Caledan and Glideco to Australia Holdco 3; - In consideration for the transfer, Australia Holdco 3 issues ordinary shares to Australia Holdco; - Australia Holdco issues shares to and 0 indebtedness to Glencobar AG is documented in the form of a loan note. The agreement should be conditional on the execution of the transfer agreements for the remaining Glencore entities. GIAG issues a promissory note (P Note AB) to GGFL by way of a USD denominated temporary loan. Note AB should be equal to 43m], being the value of Acelight?s loan outstanding to GIAG. GGFL transfers Note AB to Australia Holdco. Australia Holdco issues a series of USD 10m discount notes to GGFL as consideration. Aus Swap Co enters into a foreign currency swap with Glencore Finance Bermuda in order to hedge its USD exposure arising under the discount notes issued by Australia Holdco into an AUD exposure. - n.b. consider whether the exposure hedged by this foreign currency swap could be incorporated into the swap entered into at step 10(b). Glencore Finance Bermuda enters into a back-to?back foreign currency swap with Glencore Capital. 0 n.b. consider whether the exposure hedged by this foreign currency swap could be incorporated into the swap entered into at step 10(b). Australia Holdco contributes Note AB to Australia Holdco 3. Australia Holdco 3 issues ordinary shares to Australia Holdco as consideration. Australia Holdco 3 contributes Note AB to Caledan . Caledan issues ordinary shares to Australia Holdco 3 as consideration. Caledan contributes Note AB to Acelight. Acelight issues ordinary shares to Caledan as consideration. Acelight uses Note AB to repay its loan from GIAG. Note AB is cancelled by operation of law. To be con?rmed/to consider Location and value of assets. Stamp duty CRE relief should be available for assets are located in NSW (Assumed all). Eliminating liability to Glencobar AG by way of a dividend return of capital waiver. 11 Unwinding Archer Stichting Proposed steps Potential steps 1. GIAG directs Archer Stichting to transfer all of its assets to GIAG. Glencore 2. Archer Stichting is wound up. Australian tax implications 0 Where the shares in Finges Investment BV do not constitute taxable Australian property (TAP) Archer Stichting?s disposal of its interest in Finges Investment BV should not give rise to adverse Australian tax consequences further I analysis should be undertaken to determine whether the shares in Finges Investment BV are TAP. - Stamp Duty KWM to advise on implications SUNS Finance Australia Stfuwap Holdco Dutch tax implications Australian . TBC subsidiaries Holdcos Swiss tax implications TBC Amalco 595 9596 I Australia Viterra Australia Australia Holden MEC Group SWISS Canada Australia 12 Other SUNS Integration of Glencore Australian assets Closing structure Glencore Grain UK Glencore Nickel Holdin; Swiss Canada Australia Discount New UK 1 Mtes Australia Holdco MRPS 3 Glldeco Glencopper NSW Base Glencopper Management 'l (dormant) (dormant) I UK Finco Glencore I Australia Amalco I Receivaqu I Australia Glencore Glencore Nickel I Land Grain Caledan Holdco (CA3 I denom.) . . iteua I Australia Acehght I I Badeglot I Viterra Viterra Viterra Asia Europe USA Netherlands Other 13 I List of New Entities Section 2 List of new entities Abbreviated Entity Name Immediate Shareholder State of Incorporation Nickel Holdco Glencore Australia Finance Holdings Pty Limited (Australia Holdco 3) Victoria PwC 15 www.pwc.com.au This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2012 PricewaterhouseCoopers All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. 15