DRIVING CHANGE, DEFINING OUR FUTURE - …

1 KUMBA IRON ORE LIMITED INTEGRATED REPORT 2015 DRIVING change , DEFINING OUR FUTUREK umba Iron Ore Limited Integrated Report 2015 OUR APPROACH TO REPORTINGINTRODUCTIONNAVIGATING OUR 2015 REPORTSI ntegrated report [IR]A succinct review of our strategy and business model, operating context, governance and operational performance, targeted primarily at current and prospective report [SR]Reviews our approach to managing our significant economic, social and environmental impacts, and to addressing those sustainability issues of interest to a broad range of financial statements [AFS]Detailed analysis of our financial results, with audited financial statements, prepared in accordance with IFRS. Ore Reserves and Mineral Resources report [ORMR]Reported in accordance with the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC 2007; July 2009 amended).

2 Online [WEB]Each of these reports, with additional updated information, is available on our website: more information, change , DEFINING OUR FUTUREThis is our fifth annual integrated report. We have adopted an integrated approach to managing and reporting on our activities since the Company s inception. Our strategy and management practices are informed by a sound appreciation of the resources and relationships that Kumba depends on to create value. REPORTING SCOPE AND BOUNDARYThis report provides information relating to Kumba s strategy and business model, operating context, material risks and opportunities, and governance and operational performance for the period 1 January 2015 to 31 December 2015. The report covers our Sishen, Kolomela and Thabazimbi mines, our corporate office in Centurion, the Saldanha port operations and marketing.

3 In addition, we have published annual financial statements (AFS), a sustainability report (SR), and an Ore Reserves and Mineral Resources report (ORMR). The reporting process for all our reports has been guided by the principles and requirements contained in the International Financial Reporting Standards (IFRS), the IIRC s International <IR> Framework, the GRI s G4 Sustainability Reporting Guidelines, the King Code on Corporate Governance 2009 (King III), the JSE Listings Requirements and the Companies Act, 71 of 2008. OUR APPROACH TO MATERIALITY This report provides information that we believe is of material interest to current and prospective investors, and to any other stakeholder who wishes to make an informed assessment of Kumba s ability to generate value over the short, medium and long term.

4 Rather than provide a simple listing of material issues , we have sought to ensure that all the information in this report relates to matters affecting value creation at Kumba. Understanding our business (pages 6 to 7), our business model (pages 8 to 9) and our activities and impacts across our value chain (pages 10 to 11) forms the basis for appreciating how Kumba creates value, and for identifying those issues impacting value. Our ability to create value is determined by our operating context (pages 24 to 27) and by our response to the resulting risks and opportunities (pages 32 to 37). Making an informed assessment of our response requires an appreciation of our strategy (page 38), our performance (page 40), our leadership team (pages 14 to 17), and our governance practices (page 79).

5 Additional information not seen to be material for these purposes, but that may be of interest to other stakeholders, is provided in our AFS, SR and use a combined assurance model to provide us with assurance obtained from management and from internal and external assurance providers. Deloitte and Touche assured our Annual Financial Statements 2015 (see page 30 of AFS), while PricewaterhouseCoopers (PwC) assured key sustainability information in our Sustainability Report 2015 (see page 68 of the SR). Both of those processes inform our Integrated Report 2015, which contains both financial and non-financial indicators. In accordance with the Kumba Iron Ore Resource and Reserve audit schedule, no independent third party reviews were conducted in 2015.

6 External reviews are scheduled for Kolomela in 2017 and Sishen in 2018. Our Audit Committee provides internal assurance to the board on an annual basis on the execution of the combined assurance plan. The group s financial, operating, compliance and risk management controls are assessed by the group s internal audit function, overseen by the Audit Committee. The Audit Committee report is on pages 17 to 20 of the AFS. Kumba Iron Ore Limited Integrated Report 20151 KEY FEATURESCONTENTSIFCOur approach to reporting1 Key features2 Salient featuresOUR BUSINESS3 Chairman s review6 Our business8 Our business model10 Our value chain activities and impacts12 Creating sustainable value14 Our leadershipOUR OPERATING CONTEXT AND STRATEGY19 Chief executive s review 24 Our operating context28 Addressing stakeholder interests32 Material risks and opportunities 38 Our strategy40 Delivering on our strategy: Performance summaryOUR PERFORMANCE42 Our strategic focus areas.

7 Performance54 Chief financial officer s review66 Operational performance72 Ore reser ves and mineral resourcesGOVERNANCE79 Corporate governance88 Letter from the Chairman of the Human Resources and Remuneration Committee 90 Remuneration and performance ADMINISTRATION102 Contact informationFront cover1. Petrus Ludwick and Gideon le Roux, electrical technicians at Sishen mine working on the anti-rollback system circuit board developed for the Komatsu haul trucks at the Mar y Louise Vos and Enosen Shea, nurses at the Postmasburg primar y health care clinic, provide treatment and medical care to patients. The clinic was built by Kolomela mine for the community of Postmasburg. 3. Sishen mine s fleet of mega-size haul trucks ensures ef ficient hauling of waste and ore.

8 4. Dimpho Sephiri, Mafoka Mahloane and Gomolemo Comoletiale, learnership students at the Tshipi skills development centre at Sishen mine learning plumbing skills. 5. Operators, Taneil Steenkamp and Zenia Esau doing a pre-shift safety check and completing the necessary documentation at Kolomela loss of lifePRODUCTION OF 7%RECORD EXPORT SALES OF 8%CONTROLLABLE COSTS down R4 billionHEADLINE EARNINGS PER SHARE (HEPS) OF 66%due to 42% reduction in iron ore priceNo dividendsFORWARD-LOOKING STATEMENTS This report contains certain forward-looking statements with respect to Kumba s financial condition, results, operations and businesses. These statements and forecasts involve risk and uncertainty as they relate to events and depend on circumstances that occur in the FUTURE .

9 There are various factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking RESPONSIBILITY The Kumba board, supported by the Audit Committee, has taken overall responsibility and accountability for this report. Executive management, assisted by a dedicated reporting team, is responsible for the preparation and consolidation of this report. The board has collectively reviewed this report and confirms the integrity of the content therein. The board believes that this report is a balanced and appropriate presentation of the profile and performance of Kumba. Upon recommendation from the Audit Committee, the board approved this report on 10 March 2016. Fani Titi Chairman 10 March 2016 6.

10 The Northern Cape operations are ser viced by a dedicated iron ore rail link, the Sishen/Kolomela-Saldanha iron ore expor t channel (IOEC), which transpor ts iron ore to domestic customers and to Saldanha Bay where it is shipped to expor t markets. Back cover7. The Tom Selmer is a German registered ore carrier loading ore at the Saldanha iron ore terminal. The ship is capable of carr ying 172,000 tonnes of ore destined for China. The loading process takes about 36 hours to A train at Kolomela mine in the Nor thern Cape. The mine produces direct shipping ore for the expor t market. 9. Dudley Fielding, process controller; Johannes Jacobs, foreman; Kelebogile Smok, plant operator; Kopano Kehltlkile, plant operator; Saul Mofammere, operator; Matthews Kiwidi, reclaim operator and Veronica Lepadisa, system administrator all working at the Kolomela mine load out station conducting a pre-shift safety meeting.