1. 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

2. 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

3. ~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

4. 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

5. 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

6. 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

7. 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