TGC REPORT FOR TRANSNET FINCO South African Council for the Project and Construction Management Professions Project Pipeline in the Logistics Value Chain TGC REPORT FOR TRANSNET FINCO REPORTING PERIOD: END JUNE 2016 MEETING DATE: 14 JULY 2016

Expansionary capital spend per strategic objective In keeping with the slowdown in market demand the spend on volume and revenue protection exceeds that on expansionary objectives... Expansionary capital spend per strategic objective Total 7 year spend, Rbn Transnet approved capital plan Total 7 year spend, % 111,1 6,6 R277.8bn 100% 0,9 0,1 0,0 0,0 2,6 98,8 0,4 1,9 40% Volume Protect - Maint.Volume Protect - Maint.Volume Protect - Maint. Other Revenue ProtectOther Revenue ProtectOther Revenue Protect Volume Protect - UpgradeVolume Protect - UpgradeVolume Protect - Upgrade Volume Expan.Volume Expan. Other  Volume Protect - ReplaceVolume Protect - ReplaceVolume Protect - Replace Health and SafetyHealth and SafetyHealth and Safety Regulatory and ComplianceRegulatory and ComplianceRegulatory and Compliance Environ. Other Expans.Other Expans. Total Sustaining capital investment per strategic objective Total 7 year spend, Rbn 60% 166,7 13,5 18,0 7,8 1,5 0,7 0,4 26,6 23,6 29,6 45,0 Expansionary Volume Protect - Maint.Volume Protect - Maint.Volume Protect - Maint. Other Revenue ProtectOther Revenue ProtectOther Revenue Protect Volume Protect - UpgradeVolume Protect - UpgradeVolume Protect - Upgrade Volume Expan.Volume Expan. Other  Volume Protect - ReplaceVolume Protect - ReplaceVolume Protect - Replace Health and SafetyHealth and Safety Regulatory and ComplianceRegulatory and ComplianceRegulatory and Compliance Environ. Other Expans.Other Expans. Total Sustaining Volume and revenue protection

~83% of the capital investment is geared towards the growth and protection of volumes and revenue Programme Approved Capital Plan Business outcome Key Projects and Spend Transnet is investing to support growth to the Port of Richards Bay for key strategic commodities DBT Expansion RBY Liquid Bulk DBT 3rd Tippler Bayvue rail yard exp. R 2.4 bn R 1.5 bn R 1.4 bn Richards Bay 13,9 Iron Ore Export 14,8 The programme entails sustaining of the current 60mtpa capacity on the Iron Ore line Copex SAL IOT – 3rd tippler R 9.4 bn R 2.1 bn This project entails increase of capacity of Manganese export Manganese – Phase 2 Manganese – Phase 1 R17.1 bn R 0.7 bn Manganese 18,3 Completion of the Coal 81 expansion programme Doubling of the Overvaal tunnel Feasibility studies to grow beyond 81mtpa of capacity Capitalised Maintenance to sustain current capacity Copex Overvaal Export Coal (81) Waterberg R13.3 bn R 3.5 bn R 2.3 bn R 1.4 bn Coal 21,8 Natcor and Durban Precinct 48,8 This programme refers to the expansion of Durban containers from 3.4m TEU’s to 5.2mTEU’s and sustaining capacity Salisbury Island Pier 1 – Phase 2 DCT berth deepening R20.0 bn R 7.8 bn GFB 113,1 Investment in Port and rail infrastructure and equipment to support projected GFB volume growth from 88mtpa to 141.6mtpa Rolling Stock copex and acquisition Permanent Ways R81.7 bn R20.8 bn Total 230,7

Transnet approved capital plan Total 7 year spend, % Due to a large market share still remaining in the containers business, port facilities in Durban will be a focus for expansion Transnet approved capital plan Total 7 year spend, % Expansionary capital spend per major asset Total 7 year spend, Rbn 111,1 5,8 0,2 1,4 1,9 9,6 15,2 R277.8bn 12,3 100% 43,7 21,1 40% Port FacilitiesPort Facilities Locomotives Wagons Permanent WaysPermanent Ways Pipeline NetworkPipeline Network Land, buildings and structuresLand, buildings and structuresLand, buildings and structuresLand, buildings and structures Machinery and equipmentMachinery and equipmentMachinery and equipment Floating CraftFloating Craft Intangible assets and otherIntangible assets and otherIntangible assets and other Total Sustaining capital investment per major asset Total 7 year spend, Rbn 166,7 60% 12,6 2,4 12,4 4,7 8,9 36,1 29,4 28,7 31,6 Port FacilitiesPort Facilities Locomotives Wagons Permanent WaysPermanent Ways Pipeline NetworkPipeline Network Land, buildings and structuresLand, buildings and structuresLand, buildings and structuresLand, buildings and structures Machinery and equipmentMachinery and equipmentMachinery and equipment Floating CraftFloating Craft Intangible assets and otherIntangible assets and otherIntangible assets and other Total Expansionary Sustaining

Rail and engineering make up 60.5% of total asset capex Transnet approved capital plan Total 7 year spend, % Capital Investment per major asset Total 7 year spend, Rbn 18,2 277,8 14,2 41,6 12,8 14,7 51,2 R277.8bn 52,7 100% 6,7% 72,3 Port FacilitiesPort Facilities Locomotives Permanent WaysPermanent Ways Wagons Machinery and EquipmentMachinery and EquipmentMachinery and Equipment Land, buildings and structuresLand, buildings and structuresLand, buildings and structuresLand, buildings and structures Pipeline NetworkPipeline Network Intangible assets and OtherIntangible assets and OtherIntangible assets and Other Total 32,8% Capital Investment per major asset (Rail and Engineering) 41,6 165,5 50,5 8,4 2,9 9,3 52,7 60,5% Locomotives Permanent Ways Wagons Machinery and EquipmentMachinery and Equipment Land, buildings and structuresLand, buildings and structures Intangible assets and OtherIntangible assets and Other Total Capital Investment per major asset (Ports) 89,9 72,3 3,9 3,8 0,7 0,0 9,2 Pipelines and other Ports Port Facilities Land, buildings and structuresLand, buildings and structures Machinery and EquipmentMachinery and Equipment Floating Craft Permanent Ways Intangible assets and OtherIntangible assets and Other Total Rail and Engineering

TGC 10 Year Capital Portfolio 24.5 bn 42 bn 6.3 bn 6 bn 6.5 bn 0.45 bn 9.5 bn 0.15 bn PROJECT TYPE NO. OF PROJECTS RAND VALUE Current Project * 95 27.8 bn Future projects ** 90 58.3 bn New *** 8 10.2 bn TOTAL 193 93.3 bn * Current - Rollover Projects from previous financial year ** Future – projects that have no PSA *** New – projects that have started in the current financial year – PSA signed in this FY

Current Challenges Impacting the Construction Sector The current state of the South African and global economies points to… … will have a direct impact on our environment A low growth economy – The South African economy is now projected to grow at 0% by the World Bank; this impacts the labour market Commodity prices have been contracted due to low demand by China and other commodity buyers; this has meant low volumes across most commodity exports Slowed growth globally has led to lack of robust investment in new projects (scarcity of funding) Emerging market economies are experiencing volatility in currencies Impact of any downgrading of sovereign or company profile Validate demand in the medium to long term to determine feasibility Optimisation of capital in the tight financial environment is an ongoing process that could impact projects Constant review of projects and feasibility of projects in light of volatile commodity demand and pricing