Transnet Market Demand Strategy

1 Transnet Market Demand Strategy10 April 2012 ContentsContentsMarket Demand Strategy overviewCapital investment programmeCapital investment programmeOperational efficienciesFinancial impactSocio-economic impactSocio-economic impactRisks and implementation planConclusion1 PAGEM arket Demand StrategyMarket Demand Strategy R300bncapital investment programme Expanding rail, port and pipeline infrastructureIiit ttktd d Increasein capacity to meet Market Demand Continued financial stability and strength Significantproductivity andoperational efficiencyimprovements Significant productivity and operational efficiency improvements Shift from road to rail reducing the cost of doing business and carbon emissions Enabling economic growth Job creation, skills development, localisation, empowerment and tftit iti2 PAGE transformation opportunitiesBased on Transnet 's solid foundations,it aims to capture identified growth opportunities over thenext 7yearsover the next 7 yearsCapital investment(Rbn)Enablers300118N7L7+154%Pe rsonnel( 000 FTEs)Enablers 5974 Next 7 yearsLast 7 years6898+25%TFR Export coal(mt)TFR Export iron ore(mt)Volume68988353+44%+57%TFR GFB(mt)Maritime Containers ( 000 TEUs)Volume Highlights7,646 4,344 17080+76%+113%( 000 TEUs)Revenue(Rbn)6812846+178%+76%EBITDA( Rbn)Cashflows from operating activities (Rbn)

2 Financial Highlights51166819+219%+258%3 PAGEpg2018/192011/12 LETotal growthX%2011/12 Latest estimateMDS will enable growth in key commodities and will position South Africa globally asand will position South Africa globally key thermal coal increasingly important 4thlargest supplier of iron ore to leading manganese exporter leading logistics hubfor sub-Saharan globally recognised benchmark for container and heavy haul operations4 PAGET ransnet's capital investment over the next 7 years will be a significant step be a significant step investment Rb3001 Maintenance vs. Expansion %MaintainExpandRbn30014237586312/13 11/12 /7-yearCorporate Plan/5-yearCorporate Plan4147564839373125 Total18/1917/1816/1715/1614/1513/1412/13 11/12 LE5 PAGE1 Includes PSP initiatives of ~R5bnThe majority of the investments will be in GeneralFreight and Freight RailGeneral Freight and Freight RailCommodity split(Rbn)MajorprogrammesCommodity split (Rbn)Major programmesGFB rail capacity growth to meet Market Demand volumes from 79,7mt to 170,2mt30269 Export CoalGFBBulkBreak BulkIncrease export coal to 97,5mt including Waterberg24253215139 Containers (Ports)Export Iron OreExport CoalBulkPiped ProductsOtherDivisional split (Rbn)gIncrease exportiron ore to 82,5mtIncrease in fleet and improvementto the infrastructure32 Increase exportmanganese to 12mt33474 TPLTPTTRETFRC ompletion of the New Multi-Product Pipeline (NMPP)

3 411201 OtherTPLTNPATREO ther6 PAGEThis will result in additional capacity across allcommoditiesacross all commodities Capacity expansion between9598+44%Export coal(mt)Capacity expansion between 2015 2017 Rail capacity from 2018 in line with Market demand687579848484959818/1917/1816/1715/ 1614/1513/1412/1311/12 LEExportiron ore(mt) Port capacity expansion between 2014 2016 Capacity from 2019 in line ithk t dd5360626262707883+57%()GFBwith Market Demand Progressive increase YoY to meet ma ket demand809097115137151161170+113%18/1917/ 1816/1715/1614/1513/1412/1311/12 LEGFB(mt)meet Market Demand Market Demand met in 2017+76%80909718/1917/1816/1715/1614/151 3/1412/1311/12 LEMaritime containers( 000 TEUs) Container growth of 76% expected as capacity at ports exceeds demand18/197,64617/187,09416/176,53015/1 66,08714/155,57613/145,25012/134,82111/1 2 LE4,3447 PAGELET here will be strong growth in General FreightThere will be strong growth in General FreightContainers on rail ( 000 TEUs)Domestic iron ore (mt)+119%18,017,516,614,510,98,98,87,7+1 34%7128339241,0261,1391,2641,4651,558 Eskom coal (mt)Liquid bulk (mK )18/1917/1816/1715/1614/1513/1412/1311/1 2 LE11/12 LE18/1917/1816/1715/1614/1513/1412/13+30 5%3,53,53,43,02,92,82,82,4+46%7,312,013, 517,223,025,727,329,6 Manganese (mt)Automotives ( 000 units)18/1917/1816/1715/1614/1513/1412/1 311/12 LE11/12 LE18/1917/1816/1715/1614/1513/1412/13g() ()

4 11,79,78,07,75,55,54,84,8+144%6486315915 34446366240148+338%8 PAGE18/1917/1816/1715/1614/1513/1412/131 1/12 LE11/12 LE18/1917/1816/1715/1614/1513/1412/13 Significant improvement in rail operational performancewillbe achievedperformance will be achievedGeneral Freight Loco efficiency ( 000 GTK/loco/month)General Freight Wagon turnaround time (days)+35%7,1066,5866,3166,1155,7525,543 5,5005,2467,27,47,78,08,28,69,211,6-38%E xport coal Loco efficiency ( 000 GTK/loco/month)Export coal Wagon cycle time (hours)18/1917/1816/1715/1614/1513/1412/ 1311/12 LE18/1917/1816/1715/1614/1513/1411/12 LE12/13+12%27,20127,20126,86826,86826,86 826,81024,70024,3765656565656565862-10%E xport iron ore Loco efficiency ( 000 GTK/loco/month)Export iron ore Wagon cycle time (hours)18/1917/1816/1715/1614/1513/1411/ 12 LE12/1318/1917/1816/1715/1614/1513/1411/ 12 LE12/13py()pgy()+28%55,00055,00055,00055 ,00055,00055,00044,00043,000767676767676 7890-16%9 PAGE18/1917/1816/1715/1614/1513/1411/12 LE12/1318/1917/1816/1715/1614/1513/1411/ 12 LE12/13 Productivity improvements and improved asset utilisation is expected at the Portsutilisation is expected at the PortsMoves per gross crane hour (GCH) DCT Pier 1 Moves per gross crane hour (GCH) DCT Pier 2+14%+52%2830303030303032232830323335353 518/1917/1816/1715/1614/1513/1412/1311/1 2 LE18/1917/1816/1715/1614/1513/1412/1311/ 12 LE10 PAGEThe Market Demand Strategy will build on Transnet sstrong s strong financial (Rbn)Revenue*(Rbn)EBITDA (Rbn)Revenue (Rbn)7689102115128+178%+258%465464768916 /1715/1618/1917/1814/1513/1412/1311/12 192331394956616818/1917/1816/1715/1614/1 513/1412/1311/12 LELE*Tariff increases on average are limited to CPI +2%Cashflows from operating activities (Rbn)

5 1618232837434751+219%11 PAGE18/1917/1816/1715/1614/1513/1412/131 1/12 LETransnet will maintain a solid financial position andcredit ratingand credit ratingROTA(%)*EBITDA margin(%)ROTA (%)EBITDA margin (%)41,241,848,250,954,9 54,953,3 53,6>40%738,59,911,513,413,313,013,3 12,2%>40%18/1917/1816/1715/1614/1513/141 2/1311/12 7,3,18/1917/1816/1715/1614/1513/1412/131 1/12 Cash interest cover (times)Gearing (%)*LELE37,042,245,346,147,047,345,543,2<50%3,43,63,53,84,24,34,34,8>3,0X17/1816/1715/1614/1513/1412/1311/12 LE18/1918/1917/1816/1715/1614/1513/1412/ 1311/12 LE12 PAGE* Excludes Ports Regulator Clawbackx~70% of capital investment will be funded from operating cashflows Transnet is confident itcanraise the balance externallyit can raise the balance externallyProbable sources of funding(Rbn)Funding cashflows(Rbn)Probable sources of funding (Rbn)Funding cashflows (Rbn)Commercial paperBank loans/otherDFIs/ECAs/GMTND omestic bonds18,623,927,334,640,843,949,3 Cash from operations and other14,12014/1515 42013/1415,62012/13-31,2-37,3-38,848 0-47 4-41,1 Capital investment16% 28%41%15%16%32%33%19%21%33%33%14%2014/15 15,42015/1620,5-1,5-2,2-3,971-1,0-1,180, -48,0-47,441,1-56,3 Loan redemption20%34%29%17%-14,1-15 6-15,4-16 5-11,520 57,1 Funding requirementPotential further sources of funding Second issuance GMTN Private placements-7,1-8,0,15,615,416,5-20,5 Further funding with ECAs Syndicated loan Market Asset-backed financing Bonds in other markets ( Yen, USD, Sukuk)17/1816/1718/1913/1412/1315/1614/1 582,1bn86,5bn13 PAGE(g,, )

6 ,MDS is expected to create 588,000 job opportunities at its peak with a large focus on skills andcapacity buildingand capacity buildingR7,6bn to be spent on training Job creation impact of MDS on South Africaover the next 7yearsAdditional 15,000 direct jobs 000 peopleEconomy wide impactIndirect jobsTransnet incl. contractorsIncreased intake in schools of excellence25525224957658854348546020~220 k570 R4,6bnspent on bursariesand grants 317 technicians in training by 2018/19164184200213237255252249368420 Step up recruitment in critical skills and expand annual intake164248251260235203194173145 2,000apprentices at all times Increase engineering bursar intake to 543students in 2018/197417/187216/177315/16716913/14661 2/136411/12LE5918/1914/1514 PAGELEThe impact of infrastructure development willbe felt nation-widewill be felt nationwideProvisional contribution to direct and 7 year capital investmentindirect jobs ( 000)

7 By region1 KwaZulu-NatalWestern CapeEastern CapeMpumalangaLimpopoGautengNorthern CapeNorth WestFree State108136123106110 KwaZuluNatalMpumalangaNorthern Cape83881069918/1917/1816/1715/1614/1513 /1412/1311/12LE15 PAGE1 National countrywide investments R153,3bnLEMDS will promote localisation, transformation and empowermentand empowermentLocalisation initiatives:Potential local content commitment R2,9bnalready spent on local content by international suppliers International suppliers to transfer knowledge and expertiseto up-skill local for locomotives (%)gppsuppliers On-the-job training and apprenticeshipswill be built into international supplier contractsInternational48%pp Provision of jobs and procurement opportunities to rural areaswhere facilities are located Assistance will be provided to small businessLocal52% Assistance will be provided to small business to foster innovation and create jobs ~R4,2bnexpected to be spent over the next 7 years on small business promotionTransformation initiatives.

8 Collaboration with suppliersto meet Government s transformationand empowermentobjectives16 PAGEpjMDS will reduce the cost of doing business bypromoting a shift from road to lower the cost of doing by promoting a shift from road to railbusiness Reduction in logistics costs duetothelowerfactorcostsofrailA shift from road to supply chain cost1 ZAR/TEUdue to the lower factor costs of rail (0,5% of GDP) Additional reduction from efficiency itdtlZAR/TEU57,000-23%improvementsand coastal transshipments Preliminaryachievementsto 44,000lowering the cost of business: Eskom road to rail migration New Multi-Product Pipeline (NMPP) Moving containers on railRailRoad17 PAGE1 Container with vehicle engines imported from Shanghai to GautengMDS will position South Africa as the integrated hub into sub-Saharan Africainto subSaharan AfricaTransnet s Africa Strategy initiatives in progressRailExport ofwagonslocomotivesSouth Africa s commitment As regional leaders, we carry a particular responsibility to serve as champions indriving Export of wagons, locomotivesand rail maintenance services Develop the North-South corridor Growth of the Maputo Corridorresponsibility to serve as champions in driving industrial and infrastructure developmentboth at the regional and continental levels.

9 PidtJ bZJ13 2011 Gooeapu o Co do Increase collaboration:Swaziland rail linkPortsRegional integration potential President Jacob Zuma,June 13, 2011 Promote SA as a regional trans-shipment hub(Port of Ngqura)PipelinesPii fdiiGAfrica s intra-regional trade is low% intra-regional trade of total trade677987 Provision of advisory servicesGroup Position SA as a skills development hub for the rest of Africa1267 AfricaAsiaEuropeAmerica18 PAGEA fricaAsiaEuropeAmericaMDS execution risks have been identified and mitigating actions have been developedmitigating actions have been developedMDS faces both internal and external risksMitigating ActionsStep-up capital execution capabilitiesInternal risksExternal risks Improved capital allocation Portfolio optimisation Improved capital execution Improve procurement processcapabilitiesCapital investment Improve procurement process Build operations centre of excellenceat Rail and Ports Scheduled rail; revised fleet plan andIncrease operational efficienciesCommercialvaluesOperationsra ilScheduled rail.

10 Revised fleet plan and improved network Develop continuous improvementteams to capture operational efficiencies Freight Rail restructured into customer fdbhlldSecurefocused business units that will drive accountability Enhance key account management capabilitiesSecure volumes and customer satisfactionExternal and internal risks that could potentiallyimpact MDS have been identified and assessedcapabilities Develop robust tariff methodologyand align with regulators Secure volumesthrough concluding Take-or-Pay contracts with key customers19 PAGEyySuccess ultimately depends on a broader South African partnership and support SAcitizens will reap benefitsGovernment RegulatorsTransnetSA citizens will reap benefitsPerformancedepartmentsRegulators Greater collaboration thereby creating and enabling environment for successful executionAlignment on tariff methodology and regulatory policy to create regulatory certaintyPerformanceItSuppliersfor successful execution of MDSI nvestorsSupp e sContinued support and access to cost effective funding to meet requirementsPartner with Transnet to deliver capital spend and achieve localisation and empowerment objectivesKey customersLabour unionsmeet requirementsAlignment and col