Transnet Freight Rail News Briefs Page 1 of 9 COMMODITY ...

COMMODITY NEWSBRIEFS: 8 JULY 2013Please note that these articles are available in electronic format and can be requested and delivered via e-Mail.(http://intra.spoornet.co.za)Natasha.Havenga@transnet.netINTERMODALHOW ACCURATE ARE TRANSNET’S GROWTH FORECASTS? (FTW, 5/8/2013)The accuracy of Transnet’s statistical forecasts of container volume growth – and consequently its substantial investments– have been called into question. The reason, says Dave Watts, maritime director of the SA Association of FreightForwarders (Saaff), is because the current Transnet estimates are being used to justify investments of more than R75 billionon port development to cope with this expected growth. Watts gave a comparison from his recent study visit to the Port ofLos Angeles on the West Coast of the US. Mark Gregg- Macdonald, Transnet’s group executive for planning and monitoring,told FTW that the group’s estimates showed that demand for container capacity in the current Port of Durban was expectedto grow from the current 2.5m TEUs a year to more than 12m TEUs by 2040. “Container volumes have grown five-fold overthe past 30 years,” he added, “and are forecast to grow again by five-fold over the next 30 years.” He also highlighted thatthe new dig-out port was vital to keep up with these projections. But five-fold growth far outstrips LA’s doubling of volumes by2030.TPT DEVISES REGIONAL PORTS PLAN (FTW, 8/7/2013)South Africa, as one of the key emerging economies, is in a prime position to benefit from the global economic power shift,provided the country’s infrastructure can meet new global demands, says Transnet Port Terminals (TPT). The company isactively looking at ways to increase its footprint into Africa by forging strategic partnerships with other regional ports, TPTCEO, Karl Socikwa, said at the Ports and Harbours Show in Sandton last week. Responding to a question about increasedport developments elsewhere on the continent, including East and West Africa, Socikwa said: “We are excited about theprogress of other ports on the continent. Everyone will benefit from a fully developed competent transport infrastructure inAfrica.” TPT is devising a regional ports plan to improve integration.PREFEASIBILITY WORK STARTS ON DURBAN DIG-OUT PORT (Engineering News, 8/7/2013)Prefeasibility work that will deliver the final spatial design and plan for Durban’s R100-billion-plus dig-out port began thisweek; however, this is just the start of an extremely “rigorous” process before the first phase is delivered in early 2020,Durban dig-out port programme director Marc Descoins said. Speaking at the Transport Forum, in Durban, on Thursday, hestated that a great deal of front-end research had been done. “The fatal flaws analysis yielded many risks but no showstoppers,”he said, adding that, while there may be some alterations to layouts and phases, the overall concept was unlikelyto change. The 800 ha site was located about 11 km from the existing Durban port. “That poses a lot of questions about thelogistics around eThekwini. How do we service this port? The new port and the existing port need to coexist, not just in termsof servicing industry, but also in terms of facilitating developments within the existing harbour that need to take place.”Descoins pointed out that if State-owned Transnet went ahead with proposed port improvements at the existing facility,capacity would be taken offline. Additional capacity through the dig-out port would be needed to compensate for that. He saidthere were plans to ramp up capacity in the existing Durban port from the 2.7-million twenty-foot equivalent units (TEUs)handled last year to 4.8-million TEUs. The additional capacity would be added through the proposed Salisbury Island Infill.However, although negotiations are under way with the Department of Public Works to lease land on which to build additionalcontainer-handling facilities, which would provide additional capacity of at least 1.4-million TEUs, plans to reinstate a fullnaval base in Durban could mean that this land is no longer available, increasing the need for the dig-out port. Descoinsstated that demand was the key driver for the dig-out port. He said Transnet envisaged a very substantial increase in freightvolumes, from 2.7-million TEUs in 2012 to between 9-million and 12-million TEUs by 2040. In addition, he said majorshipping lines were driving radical changes in the types and sizes of vessels that were likely to visit Durban.Transnet Freight Rail News Briefs Page 1 of 9

LESSONS FOR SA FROM LARGEST US PORT (FTW, 5/7/2013)Why are South Africa’s wharfage charges four times higher than those at the Port of Los Angeles? On a recent visit to NorthAmerica’s largest gateway, Dave Watts, maritime director of the SA Association of Freight Forwarders (Saaff), spent sometime at the port where he found wharfage charges raised against terminal operators in the region of US$48 per TEU,compared to the equivalent of about US$200 here. The LA Port Authority is a division of the City, and is a non-profit, taxexemptentity. “It acts as landlord and is responsible for infrastructure, security and pilotage,” Watts said. “All income, largelyconsisting of rental and wharfage remains with the authority. It is utilised exclusively for the benefit of the port – coveringoperational expenses, maintenance and infrastructure development – unlike here, where the income largely serves tosupport Transnet’s overall bottom line. “Virtually all other port activities are in the hands of private enterprise.”GRAINSA MAIZE PRICE SEEN GAINING (Business Report, 8/7/2013)South African corn futures gained as the market is still concerned about production output in the country, according to ananalyst at Senwes (Pty) Ltd. “There are still concerns about corn production and the supply of white corn in the country,”Thys Grobbelaar, an analyst at Klerksdorp, South Africa-based Senwes, said today. White corn for delivery in December, themost active contract, climbed 1.1 percent to 2,305 rand ($231) a metric ton by the close on the South African FuturesExchange. The yellow variety, for delivery in September, rose 0.8 percent to 2,235 rand a ton. South Africa will probably reap11.38 million metric tons of corn, the country’s Crop Estimates Committee said on June 25. That compares with a medianestimate of 11.3 million tons by six analysts in a Bloomberg survey and the May 23 forecast of 11.4 million tons. Wheat fordelivery in December gained 0.5 percent to 3,441 rand a ton.CHROME & MANGANESEQ3 FERROCHROME PRICE DOWN 11% (Mining Weekly, 8/7/2013)The European benchmark ferrochrome price for the third quarter of 2013 had been settled $1.12/lb, ferrochrome producerMerafe Resources said on Friday. This was an 11% decrease on the settled price of $1.27/lb in the second quarter of theyear. (Whole article)ARM DELIVERS BUSINESS OVER POLITICS MESSAGE (MiningMx, 8/7/2013)Politics and business parted ways for Patrice Motsepe whose company African Rainbow Minerals (ARM) on June 19approved its part in the building of a $329m – R3.3bn – ferromanganese smelter in Sarawak, Malaysia. The investment willbe through a consortium that also includes China Steel with a 19% stake and Japan’s Sumitomo (27%). The balance is heldthrough Assmang which ARM controls in a 50:50 joint venture with Assore, the Sacco family company. In terms of theproposal, Assmang will sell 300,000 tonnes of manganese ore mined in South Africa to the project, presumably at marketprices. China Steel has the right to buy between 31,000 to 32,000 tonnes of ferromanganese from the project. What’sparticularly interesting about the development is that it runs conspicuously counter to the South African government’sbeneficiation strategy which has earmarked steel production, and steel-feed products such as the steel strengtheningproperties of ferromanganese, as the centrepice of its job-creating, industrialisation policy. Kieran Daly, head of miningresearch at Macquarie First South Securities Research said at first glance the investment of ARM’s R900m share in China’sbackyard didn’t seem to make sense. On closer inspection, however, the cheap power supply means the ferromanganesewill be produced some 20% to 30% cheaper than Assmang’s South African smelters and therefore operate in the bottom halfof ferromanganese cost curve of less than $800/t. In any event, a prices of less than $1,000/t, the majority of Assmang’sSouth African ferromanganese production was loss-making and while Assmang’s South African ferromanganese capacity isabout 450,000 tonnes a year, actual utilisation was closer to 200,000 tonnes a year, Daly said. “So while the Malaysiansmelter will generate a market for 300,000 tonnes/year of ore we suspect that this will be ore that would have otherwise beendestined for loss-making SA smelters,” Daly said. “All in, Assmang will thus avoid the South African alloy loss while makinggood margin on the diverted ore as well as getting its share of the Malaysian smelter’s profits,” he said. The developmentwas yet another signal message to South Africa.TRANSNETTransnet Freight Rail News Briefs Page 2 of 9

SIP 2 KEY TO UNLOCKING CAPACITY ALONG SA’S FREIGHT CORRIDORS – TRANSNET (Engineering News,8/7/2013)Government’s Strategic Infrastructure Project (Sip) 2 would be key to unlocking economic development and providing muchneeded capacity along key freight corridors in South Africa, provided that the diverse range of public and private sectorstakeholders planned and coordinated the roll-out of infrastructure, Transnet Group strategy GM Irvindra Naidoo told theTransport Forum, in Durban, on Thursday. Sip 2 was aimed at strengthening the logistics and transport corridors betweenthe major industrial hubs in the country. “We have a long-term plan and, if everybody comes together and works together, wecan achieve a lot. A key challenge is to get everyone to agree on where we are going and how we are going to get there,” hesaid. Naidoo identified the differing agendas of local and provincial authorities, as well as clashes with the private sector, aspotential roadblocks. He said conflicts between the public and private sector had, in the past, prevented the realisation of thebenefits of linking infrastructural projects. “We need to create more opportunities where we get together and talk. What wehave seen in the past is that we have diverse plans so we tend to waste infrastructure.” The Durban–Gauteng corridor, by farthe most important economic corridor in the country, is expecting massive increases in freight volumes. “In 20 years, we willhave double the amount of freight. We have to make sure that infrastructure can keep up. We don’t want to get into asituation – particularly on the port side – where we find that demand is outstripping capacity. Then we start to get congestionand unreliability, which has a whole lot of negative implications,” he said. Figures presented by Naidoo indicated a 152%increase in freight along the corridor, from 762-million tons a year in 2011 to 1.93-billion tons a year in 2041 at a 3.1%compound annual growth rate. At the ports, he said they had been dealing with 2 600 vessel-equivalent units a year (or 3864 actual vessels) in 2011. This was expected to grow to 7 000 vessel-equivalent units. “In the hinterland, we are dealingwith 2 800 trucks. We are expecting this to grow to 8 300. If we look at the Gauteng corridor, in particular, we currently havearound 4 200 trucks going up the corridor to Gauteng. We expect to bring the number of trucks on the corridor down to 2700,” he said. The amount of freight will grow and, with it, the number of trucks in the short term. However, Naidoo isconfident that this will lessen again with the increase in alternative forms of transport, such as rail.SA SETS UP INFRASTRUCTURE TO VERIFY LOCAL-CONTENT CLAIMS (Engineering News, 8/7/2013)A new technical instrument has been introduced to support South Africa’s strategy of increasing the level of local content inthe goods and services procured by government and State-owned entities and to add impetus to the country’s reindustrialisationefforts. The tool in question is a South African Technical Specification (SATS) 1286, which will beadministered by a new Local Content Verification Office housed within the South African Bureau of Standards (SABS). Tradeand Industry Minister Dr Rob Davies, who presided over the official launch on Friday, says SATS 1286 sets objective criteriafor the issuance of an audited ‘Local Content Certificate’. The verification process follows on from the initial ‘designation’ ofproducts and services that are required to incorporate minimum thresholds of local content before they can be procured bynational and provincial State departments, municipalities and State-owned companies. The requirement is supported byupdated Preferential Procurement Policy Framework Act (PPPFA) regulations, issued in December 2011. The initialdesignations announced by the Department of Trade and Industry (DTI) cover rail rolling stock, electrical pylons, textile,clothing and footwear, canned or processed vegetables, some oral solid-dose pharmaceutical products, digital television settopboxes, furniture, solar geysers and power and telecommunications cables. But further rounds of designations will beintroduced in future, following research and consultations.See article “PREFEASIBILITY WORK STARTS ON DURBAN DIG-OUT PORT” under heading INTERMODALSee article “TPT DEVISES REGIONAL PORTS PLAN” under heading INTERMODALSee article “HOW ACCURATE ARE TRANSNET’S GROWTH FORECASTS?” under heading INTERMODALGENERALAfrica gets lion’s share of FDI (FTW, 5/7/2013)Transnet Freight Rail News Briefs Page 3 of 9

Foreign direct investment (FDI) flows to African countries increased by 5% to US$50 billion in 2012 even as global FDI fell by18%, according to the annual survey of investment trends by the United Nations Conference on Trade and Development(Unctad). The exceptions are west and southern Africa. FDI flows to Southern Africa fell sharply, from $8.7 billion in 2011 to$5.4 billion in 2012. Inflows to South Africa dropped by 24% in 2012, to $4.6 billion. In Mozambique, however, inflowsdoubled to $5.2 billion to exploit the country’s huge offshore gas deposits. However, FDI outflows from South Africarebounded sharply to $4.4 billion, returning the country to the position of largest source country of FDI in Africa.IMF TO CUT FORECASTS AS EMERGING CHAMPIONS WOBBLE (Business Day, 8/7/2013)A marked slowdown in the world’s top emerging economies will see the International Monetary Fund (IMF) cut its globalgrowth forecast this week, signalling a stark reversal of fortune for the growth champions of the past decade. While theeconomies of the US, Europe and Japan were hard hit by the recession, China, India, Russia and Brazil stepped forwardwith breakneck growth rates to take up the slack, and South Africa was quick to align itself with them in the Brics grouping.IMF MD Christine Lagarde, in an interview on Sunday, said the IMF’s global growth forecast for this year would be scaledback this week — and emerging economies were to blame. "We had a growth forecast of about 3.3%," Ms Lagarde said,referring to the fund’s forecast for this year. "But I fear that considering what we are seeing now in emerging countries inparticular — not developing countries and low-income countries but emerging countries — I fear that we might be slightlybelow that," she told an economists’ conference in the southern French city of Aix-en-Provence. Ms Lagarde said she wouldnot give numbers because the fund would officially publish the data this week. The IMF had already cut its 2013 forecast forglobal growth to 3.3%, in April, down from 3.5% in January. The IMF’s revision raises questions for South Africa’sgovernment and business, which have pinned their hopes on booming growth in the Brics bloc to help make good thedamage to South Africa’s exports by the prolonged slowdown in Europe. The IMF’s latest move follows a recent World BankGlobal Economic Prospects report suggesting the growth rates of Brics members have long been overstated. It says theworsening of their inflation and current account balances shows they have been unable to sustain rapid growth withoutgenerating price pressures. The report blames domestic supply bottlenecks — arising from weak or poorly enforcedregulations, corruption, inadequate or irregular provision of electricity, or inadequate educational and health investment — forthe price pressures. As the IMF scales back Brics growth, it may similarly have to upgrade other forecasts.CURRENCIES AND PRICESMARKETS AND INDICATORSJSEAlsi 5/07 39,170 - 860.36 - 2.15%Financials 5/07 29,403 - 664.91 - 2.21%Industrials 5/07 40,225 - 854.98 - 2.08%FOREXRand/Dollar 06:33 10.2187 + 0.20 + 1.95%Rand/Pound 06:30 15.1711 + 0.08 + 0.54%Rand/Euro 06:30 13.1001 + 0.15 + 1.14%COMMODITIESGold (usd/oz) 06:33 1,220.40 - 33.10 - 2.64%Platinum (usd/oz) 06:32 1,331.00 + 4.00 + 0.30%Brent (usd/barrel) 06:30 107.98 + 2.22 + 2.10%World MarketsWall St (DJIA) 5/07 15,136 + 147.47 + 0.98%Germany (DAX) 5/07 7,806 - 23.32 - 0.30%Japan (Nikkei) 06:30 14,334 + 24.48 + 0.17%(Business Report, 8/7/2013)Transnet Freight Rail News Briefs Page 4 of 9

(Business Report, 8/7/2013)COPPER A – SETTLEMENT PRICE – 6821FORWARD RATES - Dollar/rand 4pm close: R10, 1873Transnet Freight Rail News Briefs Page 5 of 9

Petrol/ Diesel Price02-Jan-06-Feb-06-Mar-03-Apr-01-May-05-Jun-03-Jul-07-Aug-04-Sep-02-Oct-06-Nov-04-Dec-YR2013131313131313131313131313COASTAL95 LRP (c/l) 1151.00 1192.00 1273.00 1283.00 1210.00 1202.00 1286.0095 ULP (c/l) 1151.00 1192.00 1273.00 1283.00 1210.00 1202.00 1286.00Diesel 0.05% (c/l) 1086.67 1104.47 1162.85 1170.01 1114.45 1110.47 1188.67Diesel 0.005% (c/l) 1091.07 1108.87 1167.25 1175.41 1118.85 1114.87 1193.07Illuminating Paraffin (c/l) 807.128 833.128 890.128 860.328 802.328 803.328 878.328Liquefied Petroleum Gas(c/kg) 2047.00 2120.00 2238.00 2183.00 2102.00 2107.00 2236.00GAUTENG93 LRP (c/l) 1165.00 1206.00 1287.00 1297.00 1224.00 1216.00 1300.0093 ULP (c/l) 1165.00 1206.00 1287.00 1297.00 1224.00 1216.00 1300.0095 ULP (c/l) 1186.00 1227.00 1308.00 1320.00 1247.00 1239.00 1323.00Diesel 0.05% (c/l) 1111.37 1129.17 1187.55 1196.61 1141.05 1137.07 1215.27Diesel 0.005% (c/l) 1115.77 1133.57 1191.95 1202.01 1145.45 1141.47 1219.67Illuminating Paraffin (c/l) 849.028 875.028 932.028 906.228 848.228 849.228 924.228Liquefied Petroleum Gas(c/kg) 2229.00 2302.00 2420.00 2365.00 2284.00 2289.00 2418.0003-Jan-01-Feb-07-Mar-04-Apr-02-May-06-Jun-04-Jul-01-Aug-05-Sep-03-Oct-07-Nov-05-Dec-YR2012121212121212121212121212COASTAL95 LRP (c/l) 1031.00 1065.00 1093.00 1159.00 1187.00 1132.00 1047.00 1069.00 1162.00 1185.00 1175.00 1166.0095 ULP (c/l) 1031.00 1065.00 1093.00 1159.00 1187.00 1132.00 1047.00 1069.00 1162.00 1185.00 1175.00 1166.00Diesel 0.05% (c/l) 1007.29 1006.29 1016.67 1064.27 1073.67 1048.85 986.270 1000.89 1069.89 1109.05 1119.25 1114.25Diesel 0.005% (c/l) 1012.69 1010.69 1020.07 1069.67 1078.07 1053.25 991.670 1007.29 1076.29 1116.45 1125.65 1119.65Illuminating Paraffin (c/l) 752.528 749.528 753.528 774.128 783.128 762.128 704.128 719.128 792.128 825.128 828.128 824.128Liquefied Petroleum Gas(c/kg) 1939.00 1989.00 2025.00 2093.00 2124.00 2025.00 1912.00 1964.00 2093.00 2090.00 2091.00 2056.00GAUTENG93 LRP (c/l) 1043.00 1077.00 1105.00 1177.00 1205.00 1150.00 1061.00 1083.00 1176.00 1197.00 1187.00 1178.0093 ULP (c/l) 1043.00 1077.00 1105.00 1177.00 1205.00 1150.00 1061.00 1083.00 1176.00 1197.00 1187.00 1178.0095 ULP (c/l) 1061.00 1095.00 1123.00 1194.00 1222.00 1167.00 1082.00 1104.00 1197.00 1220.00 1210.00 1201.00Transnet Freight Rail News Briefs Page 7 of 9

Diesel 0.05% (c/l) 1027.69 1026.69 1037.07 1088.00 1098.37 1073.55 1010.97 1025.59 1094.59 1133.75 1143.95 1138.95Diesel 0.005% (c/l) 1033.09 1031.09 1040.47 1094.37 1102.77 1077.95 1016.37 1031.99 1100.99 1141.15 1150.00 1144.35Illuminating Paraffin (c/l) 788.428 785.428 789.428 816.028 825.028 804.028 746.028 761.028 834.028 867.028 870.028 866.028Liquefied Petroleum Gas(c/kg) 2121.00 2171.00 2207.00 2275.00 2306.00 2207.00 2094.00 2146.00 2275.00 2272.00 2273.00 2238.00(SAPIA online)Daily prices for 5 July 2013LME Official Prices, US$ per tonneContract Aluminium Alloy Aluminium Copper Lead Nickel Tin Zinc NASAACCash Buyer 1780.00 1742.50 6820.00 2035.00 13525.00 19695.00 1805.00 1871.00Cash Seller & Settlement 1790.00 1743.00 6821.00 2035.50 13530.00 19700.00 1805.50 1871.503-months Buyer 1810.00 1786.00 6841.50 2045.00 13600.00 19725.00 1838.00 1871.003-months Seller 1820.00 1787.00 6842.50 2046.00 13605.00 19730.00 1838.50 1880.0015-months Buyer 19790.0015-months Seller 19840.00Dec 1 Buyer 1925.00 1890.00 6890.00 2083.00 13860.00 1918.00 1960.00Dec 1 Seller 1935.00 1895.00 6900.00 2088.00 13960.00 1923.00 1970.00Dec 2 Buyer 1967.00 6945.00 2120.00 14095.00 1977.00Dec 2 Seller 1972.00 6955.00 2125.00 14195.00 1982.00Dec 3 Buyer 2047.00 6990.00 2160.00 14295.00 1987.00Dec 3 Seller 2052.00 7000.00 2165.00 14395.00 1992.00(London Metal Exchange, 8/7/2013)NOTE: Your attention is drawn to the following:1. USEThis Newsbrief is intended for the use of Transnet employees only. It is not to be disclosed or disseminated to outsideparties, without the consent of a Transnet Freight Rail Manager who is authorised to communicate with external parties.The following specific terms apply:(a)(b)(c)Transnet Freight Rail hereby grants permission to its employees to view the Newsbrief, and copy, print anduse any of its contents, subject to the following conditions:The Newsbrief shall be used solely for information and/or commercial purposes within Transnet only, and shallnot be disseminated to any external party, copied or posted on any external network computer or broadcast inany media. Any other use, including the reproduction, modification, distribution, transmission, re-publication,display or performance in any form, of the content of the Newsbrief without written permission from Transnet,is strictly prohibited.Sale or public distribution or copying for sale or public distribution of any material in the Newsbrief is strictlyprohibited.Transnet Freight Rail News Briefs Page 8 of 9

(d)(e)No modifications to the Newsbrief shall be made.Use for any other purpose is expressly prohibited by Transnet and may result in disciplinary action againstany transgressors, and civil and criminal action may also be taken. Violators will be prosecuted to themaximum extent possible.2. COPYRIGHT, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY RIGHTSCopyright in the Newsbrief vests in Transnet.(a)(b)(c)(d)All content included in the Newsletter, such as text, graphics, logos, button icons, images, audio clips,software and information, is the property of Transnet or its content suppliers and protected by South Africanand international copyright law and all other intellectual property laws.The compilation (meaning the collection, arrangement and assembly) of all content in the Newsletter is theexclusive property of Transnet Freight Rail and protected by South African and international copyright law andall other intellectual property laws.The Transnet Freight Rail name and logo are registered trademarks of the company, protected by SouthAfrican and international trademark laws and all other intellectual property laws.Note that any product, processes or service referred to in the Newsletter may be subject to other copyright,patent, trade mark or other intellectual property laws and may incorporate proprietary notices and copyrightinformation relating to that product, process or service.Transnet Freight Rail News Briefs Page 9 of 9