Presented by: Siyabonga Gama at the 2009 Railways and Harbours Conference in Cape Town.

1. Catalyzing South Africa’s Competitiveness and
Growth Through Rail
Siyabonga Gama
CE, Transnet Freight Rail
5 March 2009

2. FOCUS OF MY REMARKS
• Where is the growth that we are focusing on?
• How can country logistics be improved and what
impact does this have on growth?
• Specifically what is Transnet doing to catalyze
growth in South Africa?
2

3. TOTAL ENERGY COAL CONSUMPTION HAS ACCELERATED OVER
THE PAST FIVE YEARS
CAGR Consumption
Import* Import*
Total Domestic
Historical global energy coal demand
Mt
Key drivers
Unexpected demand
Slow growth
• Chinese domestic acceleration
demand has been the
main driver of total
demand growth with
a CAGR of 5% p.a.
7.1%
since 1990. In 2006 it 4 799
4 474
contributed 46% to 4 268 684
4 053
1.0%
global consumption 660
3 709 598
574
3 409
3 277
3 236 532
3 111
• Asian demand 2 923 479
466
433
310
318
(excluding China)
grow at 6% p.a. 4 115
3 814
3 670
since 1990 and was 3 479
3 177
2 930
2 801 2 803 2 811
2 605
the main contributor
to seaborne demand
growth
1990 1995 2000 2001 2002 2003 2004 2005 2006 2007
3.5% 7.4%
3
* Includes both seaborne and overland coal trade

4. WHILE RISKS EXIST ON THE DEMAND AND SUPPLY FRONTS, THE
FUNDAMENTAL PICTURE IS BROADLY ONE OF GROWTH
Energy coal export supply and demand (Mt)*
Pre-crisis Demand- CAGR 3.0%
Soft Landing Demand**- CAGR 2.9%
Crash & Burn Demand**- CAGR 2.6%
• Demand side risks
Post crisis
driven by GDP growth
supply range** scenarios and timing/
delays of power plant
completion
• Supply could be more
Base negatively influenced
supply (around 50Mt), due to
coal project delays
• Overall, continued
growth in export
energy coal
2007 08 09 10 11 12 13 14 2015
* Normalised to 6000 kcal/kg
4

5. TFR PLANS TO GROW COAL VOLUMES TO ESKOM BY SIX TIMES
OVER THE NEXT 8 YEARS
Mtpa
Growth drive by
- Majuba
- Grootvlei
- Hendrina
- Camden
- Kusile
- Duvha
25.7 6x
5.1*
2008 2015
* Current rail volume
5
Source: Eskom long-term coal strategy

6. HISTORICALLY CONTAINER VOLUMES HAVE GROWN VOLUMES HAVE
GROWN BY A MULTIPLE OF 2-2.5 TIMES GDP
000 TEU
4 500 4 230
+10% 3 934
4 000 3 711
3 415
3 500
3 014
3 000
2 632
2 413
2 500 Import/Export
2 000
1 500
1 000
500 Transshipment
0
2003 04 05 06 07 08 09
GDP 3.2 3.0 4.6 4.4 4.5 4.4 1.2 (f)
growth
%
6

7. COUNTRIES CAN PURSUE TWO LEVERS TO CREATE VALUE FROM
TRANSPORTATION AND LOGISTICS
• Enhance basic transport facilities (ports,
airports, railroad)
Build
• Grow transport services (air, sea,
infrastructure
warehousing, transshipments)
• Develop/attract logistics service
providers
Creating
Transnet
value from
strategically
transport
important- acts
and logistics
on both levers
• Improve efficiency of industry supply
Improving
chains
supply chain
• Increase competitiveness of industries
competitiveness
that are highly dependent on logistics
through logistics
• Boost overall economic growth through
productivity gains
7

8. THE AIM OF IMPROVING SUPPLY CHAINS IS TO REDUCE TWO TYPES OF
LOGISTICS COSTS: DIRECT AND INDIRECT
% logistics costs as part of revenue
EUROPE EXAMPLE
Direct costs Indirect costs
Traditionally Known, but not properly Known, but not Neither known nor
measured measured considered measured
costs logistics costs
14-24
4-8
3-5
1-2
2-3
4-6
Transportation, Inventory Administrative Obsolescence/ Lost margin on Total supply
warehousing, carrying costs and IT markdowns missed sales chain costs
and handling (stock-out)
8

9. RAIL IS THE MOST CAPITAL INTENSIVE PART OF THE EXPORT COAL
SUPPLY CHAIN
Required capital investment for 91 Mt p.a.
Rbn
>40
12*
TFR RBCT Mines
* Estimate
9

10. CUSTOMER COLLABORATION HAS LED TO A STEP UP IN COAL LINE
PERFORMANCE TEMPO
Wagons per week
2,100
• We made up for the underperformance
within 12 weeks- we have delivered
over 25,000 wagons over contracted
volumes in the last 12 weeks
• Coal production and logistics have been
in sync in the past weeks- however coal
production is at risk of falling behind
• We are ready to produce 1.5mt per
week (equal to over 70mtpa) by June
this year- up from 1.4mt per week now-
to support our coal customers in
securing contracts
-300
March 26-Nov 16 Nov 17- March 1
2008 2009
under-delivery over-delivery
10

11. TIGHTLY MANAGING THE END-TO END SUPPLY CHAIN IS KEY FOR
GROWING SOUTH AFRICAN COAL EXPORTS
Covered by
rail freight
1 2 3 4 5
Transport in
Mining (Un-) loading (Un-) loading
country of
Loading at mine Shipping
the coal at port at port
origin
(+TNPA)
Selected
companies
6 7 8 9 10 Gene-
Transport in rating
Handling at (Un-) loading (Un-) loading Feeding at
destination
port* at port at customer customer electri-
geography
city
Selected
companies
11
* Screening, washing, blending and storage of coals

12. NATCOR CONTAINER VOLUMES HAVE GROWN DESPITE THE
WEAKENING ECONOMIC ENVIRONMENT
TEUs
Natcor- Total Superhighway
274.249 157.352
+10%
250.382
+55%
Over 25,000
truck loads 101.456
taken off the
road
Apr 07- Feb Apr 08- Feb Apr 07- Feb Apr 08- Feb
08 09 08 09
12

13. RAIL PUNCHES WELL BELOW ITS WEIGHT BASED ON TOTAL
SUPPLY CHAIN COSTS- BIG OPPORTUNITY FOR TRANSNET
Current market
share
Ideal intermodal split by corridor based on supply chain cost analysis
Assumptions / Methodology
Percentage share
• Total supply chain cost per TEU is
calculated for each container
commodity (makes up 75-80% of
total container volumes)
22
• Long haul container volumes for
each commodity are then allocated Road 45
on lowest supply chain cost mode
for each corridor
• Total volumes per mode are
calculated using the weighting of
container commodities share of total
volumes
• Assume that 2003/4 container
volume breakdown by commodity Rail
would be constant
• Bulk commodities were excluded 15%
even if they are sometimes
5%
containerised, as this is a temporary
situation of container repositioning
Durban Cape Town
13
Source: Transnet tariff book ; Drewry report ; LOGOS model ; Hub Team analysis

14. THE CORRIDOR CONCEPT HAS DELIVERED A BIG UPLIFT IN IRON
ORE TEMPO OVER THE LAST YEARS
Mt delivered per week
880,000
• Iron ore capacity has been improved by
adding assets and improving turnaround
1.7x
time
525,000
• Iron ore operating system has been
upgraded- our 342 wagon iron-ore
trains are now the longest operational
trains in the world
• Provided customer demand holds up,
we plan to achieve a tempo of close to
one million tons per week in the next
financial year
2005 2008
14

15. HOW TO ENGAGE US?
• Commercial approach- not a utility
• Sustainability- we are serious about this
• Recognize broad mandate
15

16. CUSTOMER COLLABORATION HAS LED TO A STEP UP IN COAL LINE
PERFORMANCE TEMPO MAR 26 – 23 FEB 2009
Mt Delivered tonnes
Customer and RBCT cancellations
Normalisation for weeks of limited service**
Minimum contract level till 26 March 09
Actual delivered capacity over last 12 weeks
1,55
1,54 1,51
1,47 1,47
1,46 1,45 1,44 1,44
0,09 0,12 1,43 0,10
0,03 1,39
0,04 1.400
0,03 0,09
0,06
0,09
1,32 1,24
0,15
1,20 0,06 0,20 1.235
0,03
0,03 0,15
0,40
0,83
0,06
1,45
1,44
1,42 1,41
1,39 1,38
1,34
1,33 1,29
1,17 1,23 1,21
1,17
1,01
0,77
23-Nov 30-Nov 7-Dec 14-Dec 21-Dec 28-Dec 4-Jan 11-Jan 18-Jan 25-Jan 2-Feb 9-Feb 16-Feb 23-Feb
Mar-26
– Nov-16
** Normalised for days that the service was not running (2 days in Xmas week and 1 day in New Years week)
* Net TFR cancellations after additional trains serviced, calculated by scheduled volume minus customer cancellations minus actual railed
16
Source: RBCT YTD actuals and cancellations; TFR YTD actuals