Facility No 37 at Highveld Industrial Park Training

Facility No. 37 at Highveld Industrial Park Training Centre Information Memorandum Highveld Steel EMALAHLENI (WITBANK), SOUTH AFRICA August 2016

HIGHVELD INDUSTRIAL PARK: TRAINING CENTER FACILITY

Highveld Steel and Vanadium was founded in 1960 with the objective of building a unique plant with the ability of beneficiating vanadium bearing Titaniferrous ore from the Bushveld Igneous mineral complex. Highveld remains the only company in South Africa with the processing facility to beneficiate this ore reserve for the production of steel as well as vanadium slag. For decades, Highveld was one of the largest employers of engineering and production related skills in the area, with a total workforce of close to 2500 employees at full scale production. Recent developments have resulted in the directors voluntarily filing for business rescue which amongst others opens the opportunity for the sale or leasing of assets as individual operating units. The sale or lease of the fully equipped Training facility offers investors an unique opportunity to acquire a versatile, state-of-the- art training facility, capable of hosting a wide range of training programs including both theoretical and practical training for trade tests. 3

Introduction Facility overview Investment case Manning requirements Additional Considerations 4

INTRODUCTION • Highveld Steel and Vanadium (“Highveld Steel”) was, prior to its business rescue proceedings, South Africa’s second largest steel maker and the only producer of medium and heavy structural sections. • Highveld Steel has contributed significantly to the South African economy, supporting South Africa’s industrial and economic development. De-commissioned operations • During April 2015, the directors of Highveld Steel filed for voluntary business rescue as a result of lack of funding in challenging market conditions and ceased operations during July 2015. • Under the direction of the business rescue practitioners and management, Highveld Steel: o Compromised with creditors to enable suppliers to continue business with Highveld when operations restarts. Preserved assets in care and maintenance mode o Successfully decommissioned the operations under a controlled environment and preserved assets for future startup. o Commenced with care and maintenance on strategic assets. o Identified various assets as future strategic assets which can be sold or leased as loose standing operational units. o Prepared the Training Centre Facilities for future start-up as part of a lease agreement. Identified strategic assets for future sale and leasing 5 • Highveld Steel has identified the Training Centre Facility as a strategic asset which can be mobilised to offer an interested training provider a fully equipped training facility.

Introduction Facility overview Investment case Manning requirements Additional Considerations 6

TRAINING CENTER: FACILITY OVERVIEW Capacity to train in excess of 400 trade learners at any time Fully equipped training centre Various trades successfully presented at centre 7 • The Training Centre formed an integral part of the steelmaker’s operations during full scale operations, • Accommodating more than 400 trade learners at any give time, the training centre formed the heart of the skills development for Highveld’s operations. • With numerous fully equipped training rooms the training centre was until recently accredited to provide the following trade qualifications: • Millwright • Instrumentation • Electrician • Boilermaker • Fitter & Turner • Welder • Rigger • Roll turner • Refractory Mason • Earth Moving Equipment Mechanic

TRAINING CENTER: FACILITY OVERVIEW (CONT. ) • Established training venue supporting both Theoretical & Practical training The well established training centre offers amongst others: • 6 fully equipped lecture rooms for theoretical training. • 15 separate training and assessment facilities for all major trades. • 8 office spaces adequate for administration staff members. • Combined total of 3285 sq. m of training facilities. • Securely located in the centre of Steelworks. • Centrally located close to all major routes and industry including, Eskom, various mines, range of smelter plants, etc. Training Venue Close to 3300 sqm covered training area. Centrally located close to major industry. 8 Facility Number of Areas Total SQM Lecture Rooms 6 420. 4 Electrical Workshops 2 415. 9 Boiler making Shop 4 800. 4 Instrumentation 2 162. 3 Fitting Workshop 3 343. 2 Rigging and Tackle area 2 505. 2 Machining & Turning Workshop 2 638. 1 Total 21 3285. 5

Introduction Facility overview Investment case Manning requirements Additional Considerations 9

TRAINING CENTER : INVESTMENT CASE • The rental of the Training Facility has the following distinct advantages: • Immediate access to market: A project to establish a new Training Facility can take up to 2 years to complete. The lease of the existing facility allows the investor immediate access to the market at a significantly discounted rate when compared to a green fields facility of similar size. • Established : The existing facility has successfully hosted various training interventions and has a proven track record as a preferred training provider in the Emalahleni area. • Strategic location: The training centre is strategically situated close to major routes which allows easy access to various industries and potential clients. • Low Manning requirements: The well established training centre has been operated successfully with a low staff complement and skills required to operate the training centre is readily available in the Witbank area. Immediate access to market Strategically located to supply a range of industries Access to existing infrastructure 10

TRAINING CENTER : INVESTMENT CASE (CONT. ) • Access to existing infrastructure 11 Established Infrastructure: Although the lease agreement will ultimately revolve around the rental of the Training Centre as an entire asset, the investor may have the option to access the following services, at a fee: • Fire and rescue teams including medical station. • Mechanical and electrical workshops to perform selected training related tasks. • Information technology systems such as communication networks, data capturing systems and clocking systems. • Roaming security including access control to site. • Canteen and change-house facilities.

Introduction Facility overview Investment case Manning requirements Additional Considerations 12

TRAINING CENTER : MANNING REQUIREMENTS 11 employees required to operate the plant • A total compliment of 11 employees is required to operate the Centre at full capacity broken down as follows: • The majority of the Training Centre ex employees are located in Witbank. • Following the large scale retrenchment of workers in the broader smelter industry – particularly in Witbank and Middelburg – it is expected that the majority of ex-Highveld employees will still be available to re-employment. • As part of the retrenchment agreement, a new owner / lessor shall reasonably endeavour preferential employment for retrenched Highveld employees. Unit Manager, Talent Management and Development Vacant Majority of work force based in Witbank Snr. Talent and Development Practitioner – Technical Administrator x 3 Technical Training Coordinator 13 Trainer Driven Machinery Trainer Technical x 4

Introduction Facility overview Investment case Manning requirements Additional Considerations 14

TRAINING CENTER : ADDITIONAL CONSIDERATIONS • Mer. Seta funds majority of training costs Typical Trade preparation requires 24 months of training 15 The following needs to be taken into consideration regarding funding of employees during training: • Mer. Seta, through their standard grant awards, will fund up to R 139 350 towards the training of each apprentice. • This payment is made in 4 tranches according to the Memorandum of Understanding signed between the training provider and Mer. Seta. • Typical trade training runs for approximately 24 months (6 months theoretical, 18 months practical). • The minimum weekly allowance to be paid to apprentices amounts to on average R 1500 per week. • Based on the values stated above, the trainer should be able to cover all personnel related cost for the entire period by the grants awarded by Mer. Seta.

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Site map This document is strictly confidential and is not for publication or circulation. All information and ideas are strictly confidential and proprietary and may not be communicated, transmitted or distributed to any party in any form or for any purpose without the express prior written consent. By accepting this document, the recipient both understands and accepts this confidentiality clause. 17

This document is strictly confidential and is not for publication or circulation. All information and ideas are strictly confidential and proprietary and may not be communicated, transmitted or distributed to any party in any form or for any purpose without the express prior written consent. By accepting this document, the recipient both understands and accepts this confidentiality clause. 18

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