1. Material Supply Capacity in the Road Sector Aggregate Producers Perspective May 2006 Alex Hall General Manager Holcim Aggregate and Readymix (KZN)

2. 2 14.05.2015/Ahal Holcim South Africa RPF May 2006 Contents  Market Development  Suppliers to the market  Aggregate Market Map  Specific Requirements of the Road Sector  Capacity Constraints  Reserves  Production /Crushing Capacity  Conclusions

3. 3 14.05.2015/Ahal Holcim South Africa RPF May 2006 Market Developments

4. 4 14.05.2015/Ahal Holcim South Africa RPF May 2006 Contents  Market Development  Suppliers to the market  Aggregate Market Map  Specific Requirements of the Road Sector  Capacity Constraints  Reserves  Production /Crushing Capacity  Conclusions

5. 5 14.05.2015/Ahal Holcim South Africa RPF May 2006 Suppliers to the Market  Commercial Quarries - Mainly Fixed Plant  Borrow Pits  Construction Industry - Mobile Plants  Illegal Operations  Artisinal Miners - Hand Tools

6. 6 14.05.2015/Ahal Holcim South Africa RPF May 2006 Contents  Market Development  Suppliers to the market  Aggregate Market Map  Specific Requirements of the Road Sector  Capacity Constraints  Reserves  Production /Crushing Capacity  Conclusions

7. 7 14.05.2015/Ahal Holcim South Africa RPF May 2006 Market Map 90 million Construction Borrow pit Informal Illegal Licensed suppliers providing returns to the DME CPM Readymix Asphalt Reseller Direct (building & civil) Other ind. Residential Non-residential Civil Other Road (surf) Road (base) Road (sub-base) Concrete (inc. RM & CPM's) Mortar, plaster, screeds, etc Total Aggregate & Sand Market, 2004 (tons) SuppliersChannelIndustry SectorsProduct Application 50% 67% 6% 5% 9% 13% 33% 9% 52% 6% 40% 30% 12% 8% 5%

8. 8 14.05.2015/Ahal Holcim South Africa RPF May 2006 Contents  Market Development  Suppliers to the market  Aggregate Market Map  Specific Requirements of the Road Sector  Capacity Constraints  Reserves  Production /Crushing Capacity  Conclusions

9. 9 14.05.2015/Ahal Holcim South Africa RPF May 2006 Specific Requirements of the Road Sector Typical section through a South African Road Surfacing and Wearing Course Base Course Sub-Base Course Selected layers and/or sub-grade Note: Road stone is the big challenge - specially single size small products!! G6+  Grading loosely specified  PI controlled  CBR controlled G4 + G5  Top size  Grading  PI specified  Workability  Compaction  Often stabilised  CBR or UCS/ITS G1,2,3  Top size  Grading  Flakiness  PI specified  Compaction  Workability  Soundness  Water absorption Road stone or Concrete Stone  Single size  Particle shape  Particle angularity  Cleanliness  Toughness/Hardness  Soundness  Deleterious material  Water absorption  Relative density  Surface texture  PSV

10. 10 14.05.2015/Ahal Holcim South Africa RPF May 2006 Specific Requirements of the Road Sector Material - Properties 21 – 2550 - 55209 - 33013 - 180.34 – 0.672.64 – 2.79Quartzite 10.449380100.32.72Greywacke 32612.10.22.61Siltstone 55 - 61290 - 31812.7 – 13.20.50 – 0.602.69 – 2.72Tillite 1635289150.62.80 – 2.86Dolomite 28.249163 - 19518 - 240.26 – 0.302.91 – 2.93Norite 13.4 – 3347162 - 30013 - 200.40 – 0.522.63 – 2.66Granite 1645322140.452.68Felsite 8 – 12.753 - 58302 - 35412 - 130.30 – 0.532.90 -2.99Dolerite 84956460.362.92Andesite LA Abrasion PSV10% FACT ACVWater AbsARD Road stone potential

11. 11 14.05.2015/Ahal Holcim South Africa RPF May 2006 Contents  Market Development  Suppliers to the market  Aggregate Market Map  Specific Requirements of the Road Sector  Capacity Constraints  Reserves  Production /Crushing Capacity  Conclusions

12. 12 14.05.2015/Ahal Holcim South Africa RPF May 2006 Capacity Constraints Reserves  Permitted reserves are currently not tracked by the DME  Currently permitted reserves are estimated to be in excess of 30 years given forecast market demand  Reserves is not the problem!

13. 13 14.05.2015/Ahal Holcim South Africa RPF May 2006 Capacity Constraints Production/Crushing Capacity  The Aggregate Industry has been characterised by surplus capacity and marginal profitability since it peaked in 1988  Industry players are injecting new capacity as well as refurbishing existing capacity at an unprecedented rate  Mobile crushers are being used to bridge short-term capacity limitations  Demand for smaller and higher specification single size product will always be a problem  These products are expensive to produce particularly when they result in large recycle loads and/or the generation of waste products/unsaleables

14. 14 14.05.2015/Ahal Holcim South Africa RPF May 2006 Understanding Capacity Constraints Example - Basic Crushing Plant = Open Circuit

15. 15 14.05.2015/Ahal Holcim South Africa RPF May 2006 Understanding Capacity Constraints Basic plant running in design mode  Recycle load (oversize >26 mm) = 17.9 t/hr  UTFC is screened and washed from concrete stone generating rejects or flats. The yield is in the region of 40% of 9.5 mm concrete stone *Concrete Stone Specification

16. 16 14.05.2015/Ahal Holcim South Africa RPF May 2006 Understanding Capacity Constraints Example - Basic Crushing Plant = Recycle Circuit

17. 17 14.05.2015/Ahal Holcim South Africa RPF May 2006 Understanding Capacity Constraints Basic plant producing only 9.5 mm and finer  Secondary crusher is closed up to a css of 28 mm from 32 mm  Plant throughput is reduced to 250 t/hr from 350 t/hr  Recycle load (oversize, 26, 19 and 13) = 279.6 t/hr from 17.9. Another crusher is required to crush fines  UTFC production increases by 4 t/hr  Crusher sand production increases by 30 t/hr  It is an expensive process to convert viable product into finer product *Concrete Stone Specification

18. 18 14.05.2015/Ahal Holcim South Africa RPF May 2006 Contents  Market Development  Suppliers to the market  Aggregate Market Map  Specific Requirements of the Road Sector  Capacity Constraints  Reserves  Production /Crushing Capacity  Conclusions

19. 19 14.05.2015/Ahal Holcim South Africa RPF May 2006 Conclusions  Supply problems will not be improved by opening new quarries, specially in urban markets  Some shortages of concrete stone and road base have been reported  No shortage of sub-base!  Shortage of crushing capacity is being addressed  Mobile Crushers  Plant Upgrades  Rigid single size road stone specifications are problematic. Specifiers need to be more pragmatic and flexible