Bildplatshållare

Capital Markets DayNovember 2008

Industry trends

Lennart EvrellPresident & CEO

2008-10-281

Kg

per c

apita

GDP per capita PPP adjusted 2005

40 000 45 00035 00030 00025 00020 00015 00010 0005 00000,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

10,0

11,0

12,0 Japan

Russia

Thailand

WorldLatin America

China

IndonesiaVietnamPhilippinesIndiaAfrica

Kazakhstan

Brazil

W Europe

USAAustralia

Canada

Malaysia

Saudi

Growth demand

Potential

Fundamental demand for base metals

HISTORICALLY RECESSIONS HAVE IMPACTED GLOBAL METAL DEMAND, BUT ONLY MODERATELY

0

2

4

6

8

10

12

14

16

18

20

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

Global refined Cu demand 1950-2007

Mt Reconstruction 1950-1970

Stagnation1970-1996

Oil shock initiate demand weakening

China1997-present

Global recession reduces global demand

Source: WBMS; McKinsey analysis

AND PRIMARY DEMAND IS OFTEN LESS AFFECTED..

Thousand tonnes of primary copper consumption (LHS)Million tonnes of iron ore consumption (RHS)

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

1935

1938

1941

1944

1947

1950

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

0

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400

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800

1000

1200

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1600

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2000

Strong correlation between iron ore (steel)

and copper (BM)

20 year cycles: post-war boom

followed by years of infrastructure underinvestment

… urbansisationand infrastructure

(re)building

Fe

Cu

Source: IEA, USGS, UNCTAD, WBMS,ICSG

Potential for continued growth of zinc metal demand

2006 Zinc consumption vs. GDP per capita

0,0

1,0

2,0

3,0

4,0

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7,0

8,0

JapanW Europe

USA

Russia

Korea

World

Latin America

China

IndonesiaIndia

High increase in metal demand

Brazil

Germany

9,0

10,0

11,0

Kg

per c

apita

0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000

GDP per capita PPP adjusted 2005

The USD/SEK exchange rate 2001-2008USD/SEK-Spot

5.00

5.50

6.00

6.50

7.00

7.50

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8.50

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9.50

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11.50

jan-01

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-02ap

r-02

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2ok

t-02

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-04ap

r-04

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r-06

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7jul

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-08ap

r-08

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t-08

A cash cost curve is benchmarking some 90% of the worlds mines (Normal C1)

-2,000

Copper mining; Normal C1 cash costsUSD/tonne; 2007

12,000

4,000

2,000

0

Copper productionThousand tonnes

8,0004,000

-4,000

Aitik

Source chart: Brook Hunt 2007

Cash cost at Boliden’s zinc mines (Normal C1)Cashcost 1. Boliden mines 2008

Boliden Garpen TaraTC 30 30 29Production Cost 160 58 53Credits -172 -78 -9C1 18 10 73

LME Main metal -C1

EBITDA Ex overhead

Little correlation between production cost and cash costTC and credits are very important Volatile with high credits

Cash cost definitionsNormal costing– Main metal >60% of total metal value– All cost allocated to main metal– Oter metals regarded as by-products and credit to cost– A mine will have only one cash costProrata costing– Cost distributed to each metal in relation to value– A mine will have one cash cost for each metalComposite Costing– Combines the two methods– Mines with a main metal >60% in Normal costing, other Prorata

Boliden publishes Normal costing for mines

Cash cost definitions

C1 – TC (TC/RC)– Mining cost– Processing (milling and concentrating)– Transportation– On site administration– Marketing

C2– C1 plus depreciations

C3– C2 plus interest and indirect cost (corporate overhead, exploration…)

Normal costing (C1)

-40

-20

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60

80

100

120

1 2 3 4 5 6 7 8

Cumulative Production (Mt)

Cas

h co

st (c

/lb Z

n)

ActualZnprice, c/lb

Unprofitablemineproduction

Pro rata / Composite / Normal costing (C1)

-40

-20

0

20

40

60

80

100

120

1 2 3 4 5 6 7 8

Cumulative Production (Mt)

Cas

h co

st (c

/lb Z

n)

Pro rata costing without by-products credits

A strong dollar improves Bolidens position

Normal costing (C1)

-40

-20

0

20

40

60

80

100

120

1 2 3 4 5 6 7 8

Cumulative Production (Mt)

Cas

h co

st (c

/lb Z

n)

Weaker USD

Swedish mine

Mexicanmine

Bildplatshållare

Industry trends - zinc

2008-10-2814

Cash cost Zn mines

Zinc productionThousand tonnes

6,0004,0002,000

Zinc mining normal C1 cash costs, USD/tonne; 2007

-4,000

2,000

0

-2,000

BolidenGarpenberg

Tara

2000 USD/ton

726 USD/ton

Aug -02

1115 USD/ton Oct 17 -08

50% of the world capacity at negative cash flow at zinc 1150 USD/tonne

Source chart: Brook Hunt, normal costing

Zinc mine production changes 2008, except disruptions B.H. cash cost 2008 eQ1-08 Country Comments Zinc ktpa Zinc ktpa normal costing 2006$

capcity cut c/lbBalmat USA Put on care and maintenace 60 60 71.8Blaiken Sweden Closed 23 23 77.6Zyryanovsk Kazakhstan Closed 20 20

Q2-08Duddar Palistan Delayed start up now late 2008Broken Hill Australia Production downsized in response to lower prices 91 55 57.5Endeavour Australia High grading but unchanged production 64.9Hellyer Australia Taiullings recovery put on care and maintenace 30 30 87.7Pillara (Lennard Shelf) Australia Put on care and maintenace 70 70 61.5Monte Cristo Brazil Put on care and maintenace 12 12El Brocal Peru Put on care and maintenace 16 16Galmoy Eire Closure planned for 2011 70 20 73.9 3 year shutdownAljustrel Portugal Production plan revised down 30% 14

Q3-08Rau-Rapu Philippines Production halted, Chapter 11 protection 14Iscaycruz Peru Closure 2011, one year earlier 53.8Rosaura Peru Closure 2009, one year earlierGolden Grove Australia Reduced production 15 36.2

Q4-08Tennessee zinc mines USA Put on care and maintenace 57 57 83.6Caribou Canada Put on care and maintenace 50.8Aljustrel USA

Project defferedPerkoa Burkina Faso 72.8Black Angel Greenland 97.2Vazante Brazil Approved expansion has been cancelled 50 36.9

Smelter cutbacksHorsehead Corp USA closes one of 6 zinc furnaces

Announced production cutbacks at zinc mines

Mine closures / C&M announcements• 4% of mine capacity announced to be closed

• 8% of capacity including probable closures

Cash conversion cost for zinc smelters

Cash conversion costs in zinc smelting2007; USc/lb60

30

20

10

0

50

40Odda

Kokkola

Source chart: Brook Hunt

Low prices in past cyclesUSD/ton Zn16-okt 123390 %ile 154075%ile 132050%ile 1144

Similar cycle Early '00sLowest %ile touched 33%Current cost at %ile 715%ile average worst year 83%Current cost at %ile 1430

Worst downcycle period Early '90sLowest %ile touched 33%Current cost at %ile 715%ile average worst year 62%Current cost at %ile 1210

Source MacquarieResearch, Brook Hunt, Oct 2008

Bildplatshållare

Industry trends - copper

2008-10-2820

Copper prices in USD and SEK

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C u in S E KC u in U S D

SEK USD

-2,000

Copper mining; Normal C1 cash costsUSD/tonne; 2007

12,000

4,000

2,000

0

Copper productionThousand tonnes

8,0004,000

-4,000

Copper cash cost (Normal C1) 2008 Brook Hunt 22 okt 2008

Aitik

Nov -01 1319 USD/ton

4000 USD/ton

Oct 17 -08 4701 USD/ton

30% higher cash cost on update 22 oct 2008

Source chart: Brook Hunt 2007

Cost development copper mines 2002-2007

2002 2003 2004 2005 2006 2007e 2007/2002

Minesite costs, Usc/lb 39 43 52 61 73 85 118%

Freihgt & Marketing 3 3 4 4 5 5 95%Custom Sales - Long term 17 16 13 27 41 20 18%Smelting & Refining 14 14 15 22 29 20 43%

Gold credits -8 -9 -8 -12 -13 -14 87%Molybdenum credits -2 -3 -11 -24 -18 -24 1386%By-product credits -11 -14 -21 -40 -36 -44 312%

Cash cost 1 45 46 49 48 71 66 47%

Sustaining capital 7 7 7 10 12 15 110%

• C1 has increased by 50%, credits have strong contributions

• Mine site cost more than doubled 2002-2007

Source: Brook Hunt 22 Oct 2008

50

40

30

20

10

0

Copper smelting; Net cash costs2007; USc/lb

60

Source chart: Brook Hunt

Copper smelters, net cash cost

Rönnskär

Harjavalta

• Copper smelters have high flexibility and can process many materials

• Cash cost is difficult to use to evaluate copper smelters

• Boliden processes many materials including E-scrap and nickel

Low prices in past cyclesUSD/ton Cu16-okt 468090 %ile 385075%ile 297050%ile 2310

Similar cycle Early '00sLowest %ile touched 83%Current cost at %ile 3520%ile average worst year 90%Current cost at %ile 3850

Worst downcycle period Early '80sLowest %ile touched 75%Current cost at %ile 2970%ile average worst year 82%Current cost at %ile 3410

Source MacquarieResearch, Brook Hunt, Oct 2008

Strategic rationale from deals by miners/smelters

Description ExampleSmelting/mining

Fast–trackgrowth

– With constraints on organic growth, acquisition provides faster growth

– Lundin –Tenke

Miners

Secureresources

– Secure resources to supply mid stream assets (scarce market)

– Freeport –Phelps Dodge

– Chinalco-Rio Tinto

Smelters

Consolidation– Consolidation to improve pricing

and purchasing power in value chain

– Nyrstar merger (Umicore / Zinifex)

– NA-Cumerio

Smelters

Portfolio restructure

– Reducing risk by diversification– Betting on a single metal and

thus increasing single metal exposure

– Teck Cominco –Aur resources

– Freeport –Phelps Dodge

Smelters/miners

Operationalbenefits

– Cost synergies in e.g. OH, R&D, exploration, procurement, logistics

– Production improvements by optimizing asset structure / leverage know how

– Anglo American –CMDC*

– Norilsk Nickel –Lionore

Smelter/miners

* Cia Minera Disputada de CondesSource: Press clippings; Company websites

Market share of top five companies Percent

Mining

28

34

60

47

30

40

54

58Al

Ni

Cu

Zn**

Refining

30

38Cu

33

37Zn

63Ni

27

41Al

58

Despite strong M&A activity, the level of consolidation has not increased significantly and still shows room for further global consolidation

1995

2007

Examples of consolidated industries***

90

59

54

64

59

84

68

59

50

84Mobile phones

Heavy duty trucks

Cars

Polycarbonate

Agrochemicals

Boliden ABEnhet/verksamhet 27

* data as of 2006 ** China production included in the analysis might underestimate actual poduction

*** Refers to 2000 and 2007Source: Raw Materials Database (controlled production – normal method) as of 20/08/2008

Boliden ABEnhet/verksamhet 28

Boliden is a top 5 zinc refiner, but must double in size to be a top 3 player

* controlling production shares as of 2007 Source: Raw Materials Group (Jul 2008), Company websites

840

754

706

540

535

346

336

319

180

180

Mining Refining 1,092

1,063

905

463

415

395

385

369

352

292

2008; Thousand tonnes of metal content

The zinc market has further consolidated, and margins in midstream have increasedEuropean industry structurePercent of total European Zinc production

67

99Pasminco

State of Poland

MIM Holding 6Boliden 14

Others

30

19Union Miniere

Outokumpu

612

Others

29Xstrata

27Nyrstar*

21Boliden

State of Poland 5Glencore

9

24Boliden

20Outokumpu10

State of Poland

10Glencore

Rio Tinto

27Others 7

9 40 Boliden

21Anglo American

19Lundin Mining

State of Poland 5Trzebionka Others

100% = 824Thousantonnes

Zinc refining

Zinc mining

100% =803tousandtonnes

100% =2,097thousandtonnes

100% =2,177thousandtonnes

* Umicore’s and Zinifex zinc refining assets merged to form Nyrstar in 2008** EBITDA margins; Xstrata’s margin improvement considered as an effect of larger concentrate volumes driving refining demand; Umicore’s zinc

margins declined from 12.9% to 5.3% but mainly active in Zinc specialty products (zinc powders, zinc oxide, zinc building products; Source: Raw materials database

Xstrata’s margins for European zincrefining from 12.9% to 21.9% last 5 years

2000 2007

Glencore

Boliden ABEnhet/verksamhet 30

The copper industry is dominated by large, multinational conglomerates

428

434

460

665

789

801

938

1,155

1,668

1,680

MiningSmelting

985

850

777

600

560

535

500

480

460

450*

Refining 1,780

1,209

837

819

655

624

570

554

533

480

* as of 2006Source: Raw Materials Group (normal controlled production), Company websites

2007; thousand tonnes of metal content

M&A activity has resulted in more consolidated European copper market, but midstream margins have not improvedEuropean industry structurePercent of total European Copper production

59 57 KGHM

10Boliden

State ofPortugl/

Rio Tinto

Geotechmin 5Voest-Alpine 14

Others6

9

66KGHM

14LundinMining

BolidenGeotechmin 2

Inmet

4

other

88

25KGHM

16 NorddeutscheAffinerie

16Freeport McMoRan

11Union Miniere SA

Outokumpu

Boliden16

Others6

34

NorddeutscheAffinerie*

25

KGHM

17Boliden

13Freeport-McMoRan

5

NFI Others

100% = 841Thousandtonnes

100% = 695Thousadtonnes

2000100% =1,848Thousandtonnes

2007100% =2,019Thousandtonnes

Copper mining

Copper smelting

* As of 2008 (acquired Cumerio)Source: Raw materials database

Norddeutsche Affinerie’s EBITDA margins remained stable at 5.8% (from 5.6%)

2000 2007

Mining & Metals companies – share price development recent 5-year period

Mining & Metals companies – share price development recent 2-year period

Mining & Metals companies – share price development since 1st January 2008

Mining & Metals companies – share price development recent 3 months

3 months

Conclusion industry trends

Cyclical industryLow zinc pricesLevel of consolidation is low but increasingSubstantial capacity reductions in industryForecasts from analysts suggest strong period after trough