RE-IMAGINING MINING TO IMPROVE PEOPLES LIVES 2019 Annual Results, - - PowerPoint PPT Presentation

RE-IMAGINING MINING TO IMPROVE PEOPLE’S LIVES

2019 Annual Results, 18 February 2020

KUMBA IRON ORE LIMITED

Certain statements made in this presentation constitute forward-looking statements. Forward-looking statements are typically identified by the use of forward-looking terminology such as ‘believes’, ‘expects’, ‘may’, ‘will’, ‘could’, ‘should’, ‘intends’, ‘estimates’, ‘plans’, ‘assumes’ or ‘anticipates’ or the negative thereof or other variations thereon or comparable terminology, or by discussions of, e.g. future plans, present or future events, or strategy that involve risks and uncertainties. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the company's control and all of which are based on the company's current beliefs and expectations about future events. Such statements are based on current expectations and, by their nature, are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance, expressed or implied, by the forward-looking statement. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the company and its subsidiaries. The forward-looking statements contained in this presentation speak only as of the date of this presentation and the company undertakes no duty to, and will not necessarily, update any of them in light of new information or future events, except to the extent required by applicable law or regulation. The conversion of Mineral Resource to Ore Reserves is dependent on the approval of pre-feasibility and feasibility studies by the relevant Kumba and Anglo American Investment Committees. Any exclusive Mineral Resources quoted in this presentation, currently under investigation for conversion to Ore Reserves is based on Kumba’s current interpretation of its potential prior to the completion and approval of the required studies. Only Measured and Indicated Mineral Resources can be converted to Ore Reserves. The Mineral Resources being considered for potential conversion to Ore Reserves includes a material amount of Inferred Resource. Due to the uncertainty that may be attached to some Inferred Mineral Resource, it cannot be assumed that all or part of the Inferred Mineral Resource will necessarily be upgraded to an Indicated or Measured Resource after continued infill drilling. Please refer to the 2019 Mineral Resource and Ore Reserve statement for further information. (https://www.angloamericankumba.com/investors/annual-reporting.aspx)

Disclaimer

1

41 35 20 21 17 158 97 77 41 51

2015 2016 2017 2018 2019

LTI TRC

Safety and sustainability is our core value

Safety Health Environment

28 12 2 7 8

2015 2016 2017 2018 2019

• Elimination of fatalities framework
• Technology enabling improved safety
• Leading indicator drives proactive safety

management

• Focused on reducing exposure to
• ccupational hazards
• Wellness and disease management
• Enhanced environmental management

leading to improved performance

• Increased awareness and monitoring

Occupational diseases (new cases) Major incidents (level 3 – 5)

2 3.5 years fatality free 92% voluntary HIV test

1

2015 2016 2017 2018 2019 Achieved rehabilitation targets

Favourable export demand and higher realised price Strong EBITDA growth and cash generation

Continuing to deliver exceptional shareholder value

3

Exceptional returns Export sales

40Mt

FY18: 40Mt EBITDA

R33.4bn

FY18: R20.6bn Average realised FOB price

US$97.4/t

FY18: US$72.1/t Attributable free cash flow

R17.1bn

FY18: R7.8bn ROCE

83%

FY18: 49% DPS

R46.78

FY18: R30.24

Kolomela pit optimisation: LoM strip ratio reduced to 3.8 Sishen UHDMS Feasibility completed H2 2020e Implemented by H1 2023e Exploration drill programmes

• 2 new prospective targets
• Ploegfontein:

65% completed

• Heuningkranz:

90% completed Zandrivierspoort

• Expiry of prospecting right in

Limpopo

• Strategic focus in Northern Cape

Delivering value through margin enhancement and life extension

4

Delivering cost savings

R920m

FY18: ~R1bn | To date: R1.9bn Enhanced EBITDA margin

52%

FY18: 45% Improved operational efficiency

68%

FY18: 65%

1. Estimates as at 31 December 2019. Please refer to the Kumba 2019 Ore Reserves & Mineral Resource Report for a breakdown of the classification categories

Delivering shareholder returns

R15.1bn

Owners of Kumba (FY18: R9.7bn)

R4.7bn

Empowerment partners (FY18: R3bn) Contributing to South Africa

R7.8bn

Income tax (FY18: R4.1bn)

R2.6bn

Mineral royalty (FY18: R983m) Rewarding employee talent

R5.0bn

Salaries and benefits (FY18: R4.6bn) Supporting local businesses

R13.9bn

BEE business suppliers (FY18: R11.8bn)

R2.4bn

Host community suppliers (FY18: R1.4bn) Building communities

R171m

Direct social investment (FY18: R124m)

Creating shared value and improving people’s lives

5 SRI Index Environmental, Social & Governance Investing

Reimagining Mining, Improving People’s Lives

MARKETING AND OPERATIONAL OVERVIEW

6

380 344 275 169 313 327 273 174

Vale Rio Tinto BHP FMG Guidance (mid-point) Actual/expectation

Unexpectedly strong Chinese demand coincided with supply disruptions

Platts IODEX average (US$/dmt) China pig iron production1 (Mt)

Brumadinho TC Veronica

Big 4 miners iron ore shipments, actual vs guidance2 (2019 Wet Mt)

696 701 748 768 809

2015 2016 2017 2018 2019

1% 7% 3% 5%

7

30 50 70 90 110 130 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 US$/dmt, cfr Qingdao

2015 $56 2016 $58 2017 $71 2018 $70 2019 $93

2015 2016 2017 2018 2019 2020

Source: Platts, Company reports 1. World Steel Association (WSA) 2. Early 2019 company guidance

Premia underpinned by ‘flight to quality’, but limited by mill margins

Platts lump premium (US$/dmtu) High grade premium and mill margins (Monthly average, US$/dmt)

8

0.0 0.1 0.2 0.3 0.4 0.5 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20

Period average Daily lump premium

LT view ~$0.21 2015 2016 2017 2018 2019 2020

2015 $0.14 2016 $0.15 2019 $0.27 2017 $0.15 2018 $0.25 YTD $0.25

5 10 15 20 25 30 50 100 150 200 250 300 42005 Feb-16 Feb-17 Feb-18 Feb-19 China hot metal spread - LHS 65-62 differential - RHS 2015 2016 2017 2018 2019 2020

1

Source: Platts, Mysteel

• 1. Hot metal spread = Tangshan billet price/1.13 - (1.6x62%Fe)-(0.72xPLV Shanxi CFR China)

Baosteel Desheng CITIC Qingdao Sanming Guangxi Shenglong Shagang CITIC Tongling Ansteel Liuzhou

225 233 244 288 319 328 330 338 327 162 177 206 242 261 261 268 274 273 47 66 99 153 167 171 169 168 174 299 303 306 317 335 345 344 366 313

2011 2012 2013 2014 2015 2016 2017 2018 2019

Big 4 miners iron ore shipments (Wet Mt)

Rio Tinto BHP FMG Vale

Greater reliance on seaborne ore as mills move to the coast

Seaborne iron ore demand will rise as mills shift to coastal provinces… …but seaborne iron ore supply growth from the big 4 is tapering off

Hebei Steel Shougang Liuzhou Steel Baosteel Others Planned/ UC Sinogiant

9

Source: Company reports

Shifting steel making capacity to coastal regions to gain market access Meet environmental agenda to reduce emissions through cleaner, larger blast furnaces, with higher quality raw materials Moving away from populated provinces

Diversified customer portfolio results in higher premia

Traditional market share in Kumba’s total sales (%) Price premium over Platts 62 FOB (US$/dmt)

10 14 18 21 25 20 17 17 19 17

2015 2016 2017 2018 2019 Europe/MENA/Americas Japan and Korea

6 12 11 17 18

2015 2016 2017 2018 2019

30 35 31 40 42

10

Source: Iron Ore Marketing

Our quality is our competitive advantage

2019 average Fe content comparison (%) 2019 realised price comparison US$/dmt, FOB

64.2 64.5 60.8 60.7 57.8

Kumba Vale Rio Tinto BHP FMG

97 76 (Est.) 86 85 73

Kumba Vale Rio Tinto BHP FMG

67 3 28 25 6

Kumba Vale Rio Tinto BHP FMG

2019 lump:fine ratio comparison (%)

11

Source: Company reports, Woodmackenzie

13.8 15.4

1H19 2H19

Mt 12% 82.8 98.3

1H19 2H19

Mt 19%

Total waste mined

181.1Mt

FY18: 182Mt Total production volumes

29.2Mt

FY18: 29.2Mt

Sishen – challenging start to the year, recovery demonstrated in H2

Reduced LTIs

14%

FY19: 12 (FY18: 14) Competitive Fe quality

64.3%

FY18: 64.6% Lump:Fine ratio

71.4%

FY18: 71.8%

12

Kolomela – solid mining performance, lower production due to DMS upgrade

Total waste mined

63.2Mt

FY18: 56Mt Total production volumes

13.2Mt

FY18: 13.9Mt Reduced LTIs

40%

FY19: 3 (FY18: 5) Competitive Fe quality

64.1%

FY18: 64.3% Lump:Fine ratio

58.1%

FY18: 58.7%

30.9 32.3

1H19 2H19

Mt 5% 6.3 6.9

1H19 2H19

Mt 10%

13

Operational efficiency – focused on improving equipment reliability

Sishen Owner Fleet OEE (%) Kolomela Owner Fleet OEE (%)

• Targeting P101 benchmark efficiency
• Double-sided loading to improve tempo
• Payload, DOH and truck speed
• ptimisation
• In-pit dumping, shorter haul distances
• Optimised shift system

14

60 65 68

2017 2018 2019

8% 5% 55 66 67

2017 2018 2019

20% 2%

P101 initiatives

• Increased 7302 truck DOH by 1.5hrs
• Improved 7302 truck payload
• Offset by maintenance on 9962 shovels
• Solid 2800 shovel performance
• Improved 9601 truck payload
• Offset by maintenance on 41001 shovels

1. Sishen: P101 - 4100 shovels; 960 trucks 2. Kolomela: P101 - 996 shovels; 730 trucks

Rail performance significantly improved, while total sales reflects lower domestic offtake

Railed to port

42Mt

FY18: 40.6Mt Export sales

40Mt

FY18: 40Mt Total sales

42.2Mt

FY18: 43.3Mt

15

Domestic sales

2.2Mt

FY18: 3.3Mt Finished product inventory

6.4Mt

FY18: 5.3Mt

Reimagining Mining, Improving People’s Lives

FINANCIAL OVERVIEW

16

HEPS FY18 R50.88 R30.28 DPS FY18 R46.78 R30.24

Enhancing shareholder returns

Margin enhancement Financial discipline Sustainable returns

Average realised FOB price FY18 US$97/t US$72/t EBITDA margin FY18 52% 45% Cost savings FY19 target R920m R700m Break-even price FY18 US$45/t US$41/t

17

93.4 79.4 97.4 14.0 3.2 11.9 1.9

1.0 Platts 62 Index CFR China Saldanha - Qingdao freight Platts 62 index FOB Saldanha Fe premium Lump premium Marketing premium Timing Realised FOB FY19 price

Price premia reflect continued focus on quality and diversification

Kumba FY19 realised FOB price (US$/dmt) Average market prices:

• P62 Index CFR China price

+34% average: US$93/dmt

• Fe premium:

average: ~US$1.5 per 1% Fe

• Lump premium:

average: US$0.27/dmtu (US$17/dmt) vs. US$0.25/dmtu in 2018

• Marketing:

P65-62 differential -50% to US$11/dmt

• Timing effects:

Products generally priced in month of arrival

18

$18

Price drivers

Revenue driven by market price and currency gains

Revenue increased by 41% Revenue drivers Controllables

• Sales volumes down 2% due

to lower domestic offtake

• Market premium +US$1.4/t to US$18.0/t

(FY18: US$16.6/t) Non-controllables

• Average realised FOB export price up

35% to US$97/t (FY18: US$72/t)

• Average R/US$ exchange rate 9% weaker

at R14.45 (FY18: R13.24)

19

(871) 438 13 351 938 4 704 41 048 58 670 4 677 5 615

FY18 Volume Market Premium Market Price Shipping Currency FY19

Rm Mining operations Shipping

64 285 45 725 Controllables Non-controllables

Unit cash cost – maintenance and cost escalation partly offset by savings

20

12 5 36 50 1 (13) (21) (15) 290 345 Sishen

(Rm)

6% 13% 10 12 18 6 2 13 (26) (13) 248 270

FY18 Inflation Cost escalation Mining Maintenance WIP Production volume Deferred stripping Cost savings FY19

Kolomela

(Rm)

9% 0%

1 1

Non-controllables Controllables

• 1. Excluding impact of deferred stripping on unit cost: Sishen = FY19: R68/t (FY18: R47/t); Kolomela = FY19: R48/t (FY18: R22/t)

Unit costs impacted by increased maintenance and WIP utilisation

Maintenance costs for 2019 Guidance for 2020

608 655 2 246 3 509

Maintenance FY18 Scheduled Unscheduled Maintenance FY19

Rm

Maintenance

• 2019: total maintenance R3.5bn, R1.3bn up year-on-year

(R655m unscheduled)

• 2020: expected scheduled maintenance ~R3.0bn

WIP movement

• 2019: negative Sishen unit cost impact of ~R50/t from WIP

utilisation (lower ex-pit ore volumes)

• 2020: ex-pit ore to exceed plant feedstock requirements

21

~1 000 1 900

FY18 FY19

Cost savings delivered ahead of target

Cumulative cost savings (Rm) Cost savings initiatives 2019 (Rm)

392 198 152 104 40 34

Total: R920m

Mining: Improved drill, blast, tyre and diesel efficiencies Overheads: Fixed cost savings Projects: Project scope and execution optimisation Plant: Reduced consumption of Ferro Silicon and electricity Supply chain: Contract optimisation Engineering: Reduced external spend Target 800 Cumulative target 1 500 22

41 45 42 45 3 2 3 3 (1) (1) (5) (0)

FY18 C1 Costs Price premium SIB Total after controllables Lump premium Currency Inflation and escalation Freight Royalties FY19

$0 $4

Platts 62% break-even price (US$/t)

• Increased controllable costs driven by:

− Higher opex caused by breakdowns − Increased on-mine SIB capex, offset by − Stronger achieved price premium

• Constant non-controllable costs due to:

− Higher lump premium of US$11.90/t (FY18: US$11.10/t) − Currency gains from exchange rate of R14.45/US$ (FY18: R13.24/US$), offset by − Higher input cost inflation and escalation and royalties

Break-even price reflects increased on-mine costs and SIB capex

Controllables Non-controllables

23

20 566 18 241 33 373 646 4 444 13 351 (871) (2 100) (989) (1 535) (139)

FY18 Volume Premium Opex Total after controllables Currency Price Inflation Royalties Shipping FY19

Rm

83% (11%)

EBITDA reflects higher revenue, partially offset by cost increases

Non-controllables Controllables

24

45% 52% EBITDA margin

Capital expenditure to sustain and grow our business

Capital expenditure FY19

2.3 2.4 3.6–3.8 0.5 0.6 1.2-1.3 1.7 2.6 1.8-2.0

FY18 FY19 FY20e

Rbn SIB Expansion Deferred stripping 6.6–7.1 4.5 5.6

SIB:

• Capital spares, plant and other infrastructure spend, and fleet

Deferred stripping:

• Mining in higher strip ratio areas

Expansion:

• Dingleton, UHDMS/Kapstevel feasibility, P101 efficiency programme

SIB:

• Expected to peak 2020, driven by capital spares, fleet renewals

and plant infrastructure. Normalising from 2021 to ~R3bn p.a. Expansion:

• Kapstevel South total spend including pre-stripping ~R5bn

(2020 – 2023)

• UHDMS project total spend ~R3bn (2020 – 2023)
• P101 efficiency programme

Medium term

25

Disciplined capital allocation supports shareholder returns

Capital allocation: FY19 Capital allocation: 2018 – 2019

11.7 12.4 8.4 xx 21.1 (16.6) (3.8) (xx) (xx)

FY18 Net cash Cash flow after sustaining capital Base dividends Discretionary capital FY19 Net cash Final dividend Pro-forma cash retained

Rbn

Kumba shareholders Minorities xx

Minorities

25.7 6.8 4.7 1.1 4.3

R42.6bn

Base dividend Top-up dividend Sustaining capex Expansion capex Deferred strip capex

1 1

26

11.7 12.3 5.5 5.5 21.0 (16.6) (3.8) 5.2 1.6

FY18 Net cash Cash flow after sustaining capital Base dividends Discretionary capital FY19 Net cash Final dividend Pro-forma cash retained

Rbn

6.8

Minorities Kumba shareholders

1. Including dividends declared to minorities

Reimagining Mining, Improving People’s Lives

COMMITTED TO DELIVERING OUR STRATEGY

27

Operating at full potential by 2022

Enhanced product portfolio Improved operational efficiency Cost saving initiatives Total sales of premium products

40%

FY19: 19% P101 benchmark on waste fleet

>100%

FY19: 68% Cumulative target

>R2.6bn

FY20: R960m target To date: R1.9bn

28

Drilling 65% complete ~73Mt mineral resource2 Kolomela LoM stripping ratio

• ptimised from

4.1 – 3.8 ~273Mt mineral resource2 Drilling 90% complete Access obtained to 2 prospective targets

Leveraging our endowment – targeting 20 year life of asset

Sishen and Kolomela Sishen - Technology Northern Cape Exploration Heuningkranz and other targets

29

Near term (3 - 5 years) Medium term (5 – 7 years) Implementation time horizon

Focusing on optimisation and efficiencies Kolomela - Exploration Sishen UHDMS project Ploegfontein

Longer term (+7 years)

Feasibility Life of Mine Prefeasibility/concept Early exploration

1. UHDMS: Ultra high density media separation 2. Mineral Resource targeted for UHDMS beneficiation based on site-specific Mineral Resource estimates as at 31 December 2019)

Ongoing

Sishen

• Production:

~ 29Mt

• Waste:

170 – 180Mt

• Unit costs:

R355 – 370/t

• Strip ratio:

4.4, LoM ~3.4

• LoM:

13 years

Kolomela

• Production:

~13Mt

• Waste:

55 – 60Mt

• Unit costs:

R280 – 290/t

• Strip ratio:

to exceed 4, LoM ~3.8

• LoM:

13 years

Guidance for 2020

Total production Total sales Capex

41.5 – 42.5Mt 42 – 43Mt R6.6 – 7.1bn

30

Our value proposition

Asset Capabilities Sustainable returns (2018-2019)

• Premium product portfolio
• Life extension opportunities
• License to operate
• Strong balance sheet
• Safe and flexible production
• P101 efficiency and technology
• Talented people
• Capital discipline
• R54bn EBITDA
• R25bn attributable free cash flow
• ROCE of 83% in 2019, up from 49%
• R32.5bn of dividends declared

31

THANK YOU

Reimagining Mining, Improving People’s Lives

ANNEXURES

33

Mt FY19 FY18 % change 2H19 1H19 % change Railed to port (incl. Saldanha Steel) 42.0 40.6 3 19.7 22.3 (12) Sishen mine (incl. Saldanha Steel) 27.8 27.1 3 12.9 14.9 8 Kolomela mine 14.2 13.5 5 6.9 7.3 (5) Total sales 42.2 43.3 (3) 20.8 21.4 (3) Export 40.0 40.0 — 20.1 19.9 1 Domestic 2.2 3.3 — 0.7 1.5 (6) Total ore shipped 40.0 40.0 — 20.1 19.9 1 CFR (shipped by Kumba) 27.3 26.5 3 14.6 12.7 15 FOB (shipped by customers) 12.8 13.5 (5) 5.6 7.2 (6) Finished product inventory 6.4 5.3 21 6.4 4.5 (31)

Annexure 1: Logistics performance

34

Rm

FY19 FY18 % change 2H19 1H19 % change

Revenue

64 285 45 725 41 29 787 34 498 (14)

Operating expenses

(35 474) (29 429) 21 (18 943) (16 530) 15

Operating profit

28 811 16 296 77 10 844 17 968 (40)

Operating margin (%)1

45 36 9 36 52 (16)

Profit for the period

21 316 12 595 69 — 13 183 (100)

Equity holders of Kumba

16 259 9 615 69 — 10 058 (100)

Non-controlling interest

5 057 2 980 70 — 3 125 (100)

Effective tax rate (%)

27 24 3 27 27 —

Cash generated from operations

34 657 18 906 83 15 435 19 224 (20)

Annexure 2: Operating margin

35

1. Excluding impairment

FY19 FY18 % change 2H19 1H19 % change Export (Rm)

56 113 38 261 47 25 529 30 584 (17)

Tonnes sold (Mt)

40.0 40.0 — 20.1 19.9 1

US Dollar per tonne

97 72 35 86 108 (20)

Rand per tonne

1 402 957 46 1 270 1 537 (17)

Domestic (Rm)

2 557 2 787 (8) 789 1 767 (55)

Shipping operations (Rm)

5 615 4 677 20 3 468 2 147 62

Total revenue

64 285 45 725 41 29 787 34 498 (14)

Rand/US Dollar exchange rate

14.45 13.24 9 14.70 14.20 4

Annexure 3: Revenue analysis

36

17 827 20 934 4 532 5 605 1 833 1 316 923 1 073 307 (965) 6 194 6 501

FY18 Mining operations Stock movement Deferred stripping Escalation, non-cash and forex Shipping Selling and distribution FY19

Rm

Mining operations Shipping Selling and distribution

28 5531

1

Mining 3 107 Logistics 1 380 33 0401

Annexure 4: Expense drivers

37

• 1. Excluding the mineral royalty and impairment

‹#›

Annexure 5: Expense Analysis

Rm

FY19

FY18 % change 2H19 1H19 % change Cost of goods sold 20,934 17,827 17 10,994 9,940 11 Cost of goods produced 18,951 16,222 17 9,862 9,089 9 Production costs 18,900 17,661 7 10,334 8,566 21 Sishen mine 13,434 12,209 10 7,285 6,149 18 Kolomela mine 5,370 5,079 6 2,986 2,384 25 Thabazimbi mine — 69 (100) — — — Other 96 304 (68) 63 33 91 Inventory movement WIP 51 (1,439) >(100) (472) 523 >(100) A grade 319 (1,250) >(100) (304) 623 >(100) B grade (268) (189) 42 (168) (100) 68 Inventory movement finished product 14 171 (92) (398) 412 >(100) Corporate support and studies 2,122 1,339 58 1,530 592 >100 Forex and other (153) 95 >(100) — (153) (100) Mineral royalty 2,411 876 >100 1,187 1,224 (3) Impairment charge/(reversal) 23 — 100 (33) 56 >(100) Selling and distribution 6,501 6,194 5 3,401 3,100 10 Shipping operations 5,605 4,532 24 3,395 2,210 54 Operating expenses 35,474 29,429 21 18,944 16,530 15

(47) (68) (21) (49) 66 84 30 61 10 13 4 4 12 16 15 17 52 66 27 36 58 66 100 93 57 65 35 40 82 103 58 68

Sishen mine FY18 Sishen mine FY19 Kolomela mine FY18 Kolomela mine FY19 Deferred stripping Other Energy Drilling and blasting Maintenance Outside services Fuel Labour

290 345 248 270

Annexure 6: Sishen and Kolomela mines’ unit cash cost structure (R/t)

39

20 20 12 20 3 3 1 1 4 4 6 5 15 16 10 11 17 16 37 29 17 16 13 13 24 25 21 21

Sishen mine FY18 Sishen mine FY19 Kolomela mine FY18 Kolomela mine FY19 Other Energy Drilling and blasting Maintenance Outside services Fuel Labour

Annexure 7: Sishen and Kolomela mines’ unit cash cost structure (%)

40

Rm

FY19 FY18 Forecast 12 months 31 Dec 2020

Approved expansion 592 506 900 Deferred stripping 2 634 1 669 1 800 – 2 000 Sishen 1 981 1 370 1 000 – 1 100 Kolomela 653 299 800 – 900 SIB 2 377 2 288 3 600 – 3 800 Sishen 1 693 1 691 2 400 – 2 500 Kolomela 684 597 1 200 – 1 300 Unapproved expansion – – 300 – 400 Total approved and unapproved capital expenditure 5 603 4 463 6 600 – 7 100

Annexure 8: Capital expenditure analysis

41

Change per unit of key operational drivers, each tested independently

Sensitivity analysis Unit change EBITDA impact Currency (Rand/US$) R0.10/US$ R390m Export Price (US$/t) US$1.00/t R585m Volume (kt) 100kt R100m Breakeven price impact Currency (Rand/US$) R1.00/US$ US$3.00/t

(560) (535) (410) 560 535 410

(800) (600) (400) (200) 200 400 600 800 Currency Export price Export volume

Sensitivity analysis (1% change) – EBITDA impact (Rm)

Annexure 9: Sensitivity analysis for 2019

1% change to key operational drivers, each tested independently

42

Annexure 10: Structural changes support quality premiums

Lump premium (Platts, US$/dmtu)1 Beijing air quality (PM 2.5)1

• Tighter emissions standards
• Escalating sinter costs
• Sinter displaced by lump

62% vs 65% premium (Platts, %)1 China blast furnace size (%)1,2

• ~250Mt steel capacity reduction
• Bigger blast furnaces
• Steel industry consolidation

43

0.17 0.14 0.15 0.15 0.25 0.28 ~0.21

2014 2015 2016 2017 2018 2019 Long- term

85 80 73 58 54 35

2014 2015 2016 2017 2018 Govt target

9 11 11 23 30 12 ~20

2014 2015 2016 2017 2018 2019 Long- term

50 49 44 43 42 100 6 34 34 36 36 36 33 16 17 20 21 22 61

2014 2015 2016 2017 2018 Japan EU-28 <1000m3 1000-1999m3 >2000m3

3 3 3

Annual average Annual average

1. Source: Beijing Urban Master Plan, 2030; CISA, MIIT, Wood Mackenzie; WSA, CRU 2. CISA member mills only