Presented by: David Humphrey, Standard Bank Theme: The importance of Infrastructure for Mining

Without supporting Infrastructure a mine is just a hole in the ground……..as West Africa shows Port City Railway Proposed Port Proposed Sundance Railway Assets

Without supporting Infrastructure a mine is just a hole in the ground……..as West Africa shows Port City Railway Proposed Port Proposed Railway Assets

Mine/Heavy Haul Rail Project Dynamics Crucial to any project are: Quality and abundance of mineral resource Market price Distance from market (port/power station etc) Topography and climate Quality of existing rail and port infrastructure Given the right combination, heavy haul mining projects are profitable. High upfront rail and port infrastructure projects can be amortised over life of mine Infrastructure upgrades to enable route to market are major drivers of GDP

South Africa – Infrastructure Requirements - Overview CommodityProject(s)Comments Iron OreKumba/Assmang expansionFurther Upgrades to Orex line is possible ManganeseKalagadi, Samancor,UMK,Kudamane etc Limited rail capacity, yet most valuable export per tonne to South Africa in value terms. Coal13 major producers, numerous minor miners Recent upgrades on RBCT line have increased capacity. Upgrades to help unlock Waterburg region in near to mid term. Greater need to get coal to ESKOM by rail MagnetiteEnormous reserves/stock piles in NELimited route to market to Maputo Standard Bank well connected with most mining houses and opportunities well known Infrastructure requirements understood, and investment on its way Transnet are running a number of processes to increase the efficiencies on all the major rail lines in and around South Africa Need for more water to the Waterberg to develop coal – new pipelines Commentary

South Africa – Recent Developments – Base Load Government decision to allow private sector to build and supply up to 2.5GW of base load coal through an IPP procurement process is significant Each project capped at 600MW First time coal mines, power stations and associated infrastructure can be developed by the private sector Opportunity is exciting, so is the complexity, as each project needs to have access to grid, water, right quality coal over life of mine(s), rail (ideally) to export or distribute coal not required for power etc Standard Bank will be heavily involved and supporting the process Commentary

Summary Infrastructure is critical to any mining project, the heavier the commodity, the more important route to market infrastructure as becomes vital. Supporting infrastructure is only enabled by clear government policy, legislation and regulation within the mining and transport sectors South Africa is moving ahead with very important initiatives in the infrastructure space that will over time unlock major economic growth Whether the model of infrastructure enablement (mostly SOE) is the right one is a separate debate. The main point is the current system works, but may be not as fast as it should – but compare South Africa’s record with that of West Africa and the contrast is obvious.