Transnet Strategy Progress and review 20 May 2005

Transnet Strategy: Progress and review 20 May 2005 One company, one vision

Agenda • Strategic direction • Implementation plan • Progress • Infrastructure plans One company, one vision

Strategic direction One company, one vision

Our Mandate Government’s strategic agenda for economic development: …the public sector discharges its responsibilities to our people as a critical player in the process of the growth, reconstruction and development of our country by reducing the cost of doing business in our country President Thabo Mbeki, State of the Nation address, May 2004 One company, one vision

Strategic Direction Strategic Intent • Becoming a transport company that focuses on key segments of the market Corporate Head Office • Separate operations and infrastructure Rail Operations Ports Operations Pipeline Operations Rail Infrastructure Ports Infrastructure Pipeline Network • Dispose of non – businesses. Create focus on core business and drive future growth • Restructure and streamline Corporate Centre to enhance accountability, corporate governance and operational efficiencies SA Core Transport Infrastructure One company, one vision

Implementation plan One company, one vision

Implementation programme Lower cost of doing business Targeted sectors Corporate governance and risk management Re-direct the business • Shareholders compact • Memo and articles of assoc • Performance management • IFRS • Legal review 4 Point • EWRMF Human capital development • Corporate HO restructure • Operational synergies • Customer focus • Spoornet Turnaround • Infrastructure development Turnaround Plan • Recruitment and retention • Skills and training • Performance Management • Career management Balance Sheet restructuring • Kumba contract re-negotiation • Pension fund deficit • Unwind MTN share transaction • Transfer SAA to govt • Disposal of non-core businesses Economic development One company, one vision

Progress One company, one vision

Progress since last meeting • • • Kumba contract renegotiated MTN share structure unwind Spoornet turn around plan adopted Major infrastructure projects approved for implementation Key interface projects implemented – Gauteng Durban corridor improvements – Specific client interventions completed • • Governance structures in place Progress on head office restructuring Progress on non-core disposals Development of the enterprise wide risk management framework One company, one vision

Infrastructure plan

Volumes and Investment per Corridor Gauteng Mega Domestic Zone Volume (mt) Value (Rbn) Road 334 19. 5 Rail 17. 8 0. 6 Beit Bridge Gauteng Mega Industrial Zone Maputo Richards Bay Sishen Durban Saldanha East London Cape Town Port Elizabeth

Projects approved • • • Widening and deepening Durban Harbour entrance Durban Pier 1 container terminal Cape Town container terminal Deepening of Cape Town berths Orex export channel expansion project Modernisation and refurbishment of Spoornet fleet Richards Bay multi purpose terminal upgrade Cape Town reefer infrastructure Durban-Johannesburg-Pretoria pipeline

Consolidated infrastructure plan Core business 2005/06 Rm 2006/07 Rm 2007/08 Rm 2008/09 Rm 2009/10 Rm Total Rm Spoornet 2 587 3 339 3 385 3 396 3 383 16 090 NPA 1 727 3 593 3 718 3 882 2 490 15 410 SAPO 895 1 445 1 012 979 758 5 089 Petronet 344 947 993 868 1 072 4 224 5 553 9 324 9 108 9 125 7 703 40 813 Total

Major Rail Projects Improved profitability, efficiency & safety; Increase coal capacity from 71 mta to 86 mta by 2007/08; Increase general freight capacity from 14 mta to 19 mta; 4 mta set aside for BEE; Further investment of R 9 bn required to sustain this capacity; Investment by NPA for additional berth 306 at a cost of R 443 m Coal line capacity expansion (R 2. 5 bn) Upgrade of 200 18 E Locomotives (R 1. 2 bn) Upgrading and over hauling the 6 EI’s to 18 E’s; improvements in reliability and traction; Reduced repair and maintenance costs. Spoornet major projects Wagon Fleet Renewal & modernization (R 4. 1 bn) Upgrade of the wagon fleet; Extend the life of wagons Iron Ore line capacity expansion (R 2. 8 bn) Support economic growth in the Northern Cape; Optimize scarce resources and to capture market demand Affords sustainable profitability and increased productivity; Recover the cost of the investment over the period; Rand based tariff for the remaining period of contract ; Committed investment by SAPO of R 920 m for the expansion of the terminal

Major Port Projects Durban Port Investments • Durban 2005 expansion program • Widening of the entrance channel • Pier no 1 container terminal • Deepening of Berrths (R 4. 5 bn) Port of Ngqura (R 4. 1 bn) Alignment with govt. objective to foster economic development ; The port expected to be operational by Oct 2005; No dedicated traffic to this port; Several options being considered for the revenue generation; Ports (NPA & SAPO) major projects Cape Town Container Terminal expansion (R 1. 9 bn) Stimulates & sustains economic activity in the Western Cape; Increase in stacking capacity by 226 k TEU by 2008 and to 1. 6 m TEU by 2017; To meet productivity expectations of customers;

NPA Strategic Projects RBCT Coal Export berth Durban 2005 Reconstruction of Island View Deepening and widening Dbn Pier 1 resurfacing Cato Creek Car Terminal Port of Ngqura Expansion of Cape Town CT 2 tugs for Durban Security Sub total Other Total ETC Rm 443 921 180 1 500 689 142 4 157 1 376 120 220 05/06 Rm 225 324 65 100 72 71 656 43 60 61 1 677 242 1 919 06/07 Rm 207 84 57 143 283 71 955 591 60 129 2 580 07/08 Rm 46 605 240 524 30 1 445

SAPO Strategic Projects Project Description Capital Expenditure Major projects Actual 04/05 R 588 m ETC Revised CAPEX Budget 04/05 R 623 m 05/06 CAPEX Budget R 894 m Spent to date Impact Durban Container Terminal R 768 m • R 352 m • 6 New Container cranes, and capacity to 1. 6 m TEU • Brings terminal to international best practice on Cranes per 100 m of quay Pier 1 Container Terminal Durban R 747 m • R 0 • Caters for Additional container capacity of 550 000 TEU’s • Caters for growth until 2008 • Reduces delays R 597 • R 12 m • • Iron Ore Expansion Saldanha R 920 m • R 694 m • Meet export growth requirements • Tonnage beyond 42 mt p. a. Richards Bay MPT Equipment replacement R 166 m • R 5 m • ADC Cranes • Forlifts • Skips for Ferros slabs & pig Iron Cape Town Container Terminal Equipment Renewal & Expansion Program 6 new container cranes 26 four high straddle carriers Increases throughput capacity to 20% Higher stacking density achieved

MAJOR PROJECT: PETRONET • New Multi-purpose pipeline (R 3 bn) – Replacement of ageing asset; – Addresses the high risks of failure on the environment; – Provide additional capacity to meet the expected capacity constraints; – Alignment with govt. ’s objective of economic growth and a supply of environmentally safe transport mode for petroleum products.

SPECIFIC CAPITAL PROJECTS IN PROGRAMME WITH CORRIDOR FOCUS PETRONET 1. 2. 2. Our New Multi Product Pipeline (NMPP) to enhance our capacity - needs between Durban and Gauteng. To be completed 2010. Cost : R 3 billion. 3. Our refractionator project to ensure that Petronet meets the quality of petroleum product specification of Government by early 2006. Cost : R 100 million 3. 4. Debottlenecked gas line (phase 2) to Kwazulu-Natal’s industries (Lilly 2 project) Cost : R 400 million. 4. 5. Petroleum pipeline from Maputo to Gauteng (Part from Nelspruit to Witbank). Cost : R 620 million. PPT-1213

SPECIFIC CAPITAL PROJECTS IN PROGRAMME WITH CORRIDOR FOCUS PETRONET 5. Complete implementation of Telecontrol project. Cost : R 100 million 6. Our terminalling and logistics initiative. Cost : R 300 million 7. Extension of the Multi-products pipeline from Gauteng to Beit Bridge (initial phase of project in 2010). Cost : R 100 million Total in period 2005 – 2010 : R 4. 6 billion PPT-1214

Transnet One company, one vision