Kumba Iron Ore Limited · JSE:KIO
Kumba Iron Ore — Investor Presentation (November 2006)
35 slides from Kumba Iron Ore's investor presentation, Nov 17, 2006
Slide 1: Analyst Presentation
ANALYST PRESENTATION 17 November 2006
Slide 2: Disclaimer
Disclaimer Opinions expressed herein are by nature subjective to known and unknown risks and uncertainties. Changing information or circumstances may cause the actual results, plans and objectives of Kumba Iron Ore Limited (the “Company”) to differ materially from those expressed or implied in the f
Slide 3: Contents
Kumba Iron Ore’s (“KIO’s”) Analyst Presentation Contents ¾ Company overview ¾ Senior management and board profiles ¾ Operational overview ¾ Project pipeline and growth projects ¾ Market overview ¾ Mission and vision ¾ Strategy 3
Slide 4: KIO - a focused and empowered iron ore player
KIO - a focused and empowered iron ore player ¾ Pursuant to the Kumba Resources empowerment transaction, KIO will be unbundled and separately listed on the JSE ¾ On listing KIO will: • Be the only pure play iron ore company listed on the JSE • Become a 64.9% held subsidiary of Anglo American plc, a
Slide 5: KIO, through SIOC, will be fully empowered
KIO, through SIOC, will be fully empowered ¾ KIO will own 74% of Sishen Iron Ore Company ("SIOC") • The remaining 26% of SIOC will be black-owned on implementation of the Kumba Resources empowerment transaction • The 2014 equity ownership targets of the Mining Charter will be met • KIO has commenced
Slide 6: Group ownership structure (post unbundling and listing)
Group ownership structure (post unbundling and listing) Industrial Development Corporation Anglo American plc Minorities 13.4% 64.9% 21.7% KIO* 74% SIOC Exxaro* 20% 26% BEE SIOC Community Development Trust ownership 3% SIOC Employee Share SIOC ESPS Participation Scheme 3% * Listed on the JSE 6
Slide 7: Overview of KIO's assets
Overview of KIO’s assets SIOC Investments in other Operations and projects within Kumba Iron Ore Holdings BV companies by SIOC SIOC 100% 50% Sishen mine Kumba International BV Pietersburg Iron Ore Company (Proprietary) Ltd Sishen Expansion Project I 100% owned subsidiaries 50% Sishen Expansion Zandr
Slide 8: Senior management and board profiles
Senior management and board profiles 8
Slide 9: Senior Management
Senior Management Ras Myburgh – Chief Executive Officer ¾Formerly General Manager of Sishen Iron Ore Company: February 2006 ¾Previous positions in Kumba Resources - General Manager: Transformation and Empowerment and Managing Director: Kumba Resources’ Coal division Vincent Uren – Chief Financial Of
Slide 10: Senior Management (continued)
Senior Management (continued) Fergus Marupen – General Manager, Human Resources ¾ Formerly General Manager, Human Resources for Kumba Resources ¾ Previous positions include Assistant General Manager (HR) at Heavy Minerals/Ticor and at the former Iscor Quarries Francois Louw – General Manager, Commer
Slide 11: Senior Management (continued)
Senior Management (continued) Peet Kotze – General Manager, Sishen Iron Ore Mine ¾ General Manager, Sishen Iron Ore Mine – a post he has held from January 2004 ¾ Formerly Production Superintendent at Grootegeluk Coal Mine and mine manager at Leeuwpan Coal Mine and Thabazimbi Iron Ore Mine Aart van d
Slide 12: KIO board profiles
KIO board profiles ¾ Executive Chairman of Afripalm Resources Lazarus Zim ¾ Former Chief Executive Officer of Anglo American South Africa and Chairman of Anglo Chairman Coal operations ¾ President of the Chamber of Mines and on the boards of Anglo American South Africa, Mondi SA Limited, Sanlam Limi
Slide 13: KIO board profiles (continued)
KIO board profiles (continued) Peter Matlare ¾ Commercial Director of Vodacom South Africa Independent ¾ Formerly Chief Executive Officer of the SABC (2001 – 2005) non-executive Nkosana Moyo ¾ Managing Partner Africa of Actis Capital LLP Independent ¾ Formerly the Senior Adviser to the International
Slide 14: Operational overview
Operational overview IRON ORE
Slide 15: KIO's principal operating assets – Sishen mine
KIO’s principal operating assets – Sishen mine Sishen mine 2005 2004 Tonnes treated (Mtpa) 31.8 32.8 Waste mined (Mtpa) 58.6 54.7 Stripping ratio (1) 1.8 1.7 Total production (Mtpa) 28.5 27.9 Total sales (Mtpa) 28.9 27.5 Total production cost (R'm) 1,540 1,353 Total capex (R'm) 243 170 ¾ Focused on
Slide 16: KIO's principal operating assets – Thabazimbi mine
KIO’s principal operating assets – Thabazimbi mine Thabazimbi mine 2005 2004 Tonnes treated (Mtpa) 3.1 3.1 Waste mined (Mtpa) 25.0 34.5 Stripping ratio (1) 7.5 11.2 Total production (Mtpa) 2.5 2.5 Total sales (Mtpa) 2.5 2.5 Total production cost (R'm) 388 370 Total capex (R'm) 40 104 ¾ Mittal Steel
Slide 17: Salient historical operating statistics
Salient historical operating statistics Iron Ore 2002(F) 2003(F) 2003(H2) 2004(C) 2005(C) Production Sishen mine (Kt) 25,903 26,168 13,470 27,609 28,458 Thabazimbi mine (Kt) 2,421 2,389 1,270 2,503 2,530 Total (Kt) 28,324 28,557 14,740 30,112 30,988 Sales Sishen mine exports (Kt) 19,916 20,946 10,00
Slide 18: KIO's products
KIO’s products An extensive product range is offered: ¾ 25mm Lump ore for direct charge to Blast Furnaces ¾ 20mm Lump ore as a cost-effective Pellet replacement ¾ 27mm DR ore for Direct Reduction Shaft Furnaces ¾ 8mm Coarse Sinter ore for blending with concentrates in Sinter Plants ¾ 5mm Fine ore fo
Slide 19: KIO products – comparative value
KIO products – comparative value ¾ High Fe content • Fines: World Average = 62.6% Sishen = 65.0% • Lump: World Average = 64.7% Sishen = 66.0% ¾ Low alumina: silica ratio ¾ Low decrepitation in materials handling and in blast furnaces ¾ High dynamic strength in blast furnaces ¾ Consistency of product
Slide 20: KIO production / exports
KIO production / exports United Kingdom Korea France Austria 5% Japan Germany 23% Italy Romania Korea Japan W Europe China China 35% 35% Other 2% South Africa ¾ Balanced geographical spread ¾ Improving the customer value proposition through Value-In-Use concept ¾ Committed to consistently produce pr
Slide 21: Project pipeline and growth projects
Project pipeline and growth projects 21
Slide 22: Project pipeline
Project pipeline Ideas Potential MRM Pre- Independent feasibility Approve reviews ZRP 1.5 Mt Implement Technical Optimization Feasibility Mining SEP 2 review Phase 1 SEP 2 11-15 Mt Phase 2 C-Material +20 Mt Sishen Sishen South SEP Phoenix Phase 3 South Sishen 13 Mt 3 Mt 6 Mt 9 Mt Pellets 1.5 Mt Plan
Slide 23: Capacity growth – production
Capacity growth – production Growth Prospects 90.0 80.0 Faleme 70.0 Pellets 60.0 SEP 2 Phase 1 Mtpa Phoenix 50.0 Sishen South 40.0 Thabazimbi SEP 30.0 20.0 Sishen 10.0 - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: KIO 23
Slide 24: Capacity growth – export channel
Capacity growth – export channel KIO’s Northern Cape Growth Million Tons Pipeline will be underpinned by 70 Transnet’s export channel expansions 60 50 ¾ Phase 1a: 41Mtpa capacity approved in 2005 40 30 ¾ Phase 1b: 47Mtpa capacity announced 20 ¾ Phase 2: 67Mtpa capacity study to 10 be completed in Q1
Slide 25: Growth projects
Growth projects ¾ Project extended from 10Mtpa to 13Mtpa in August 2006 ¾ Apply jig technology to extract c.13Mtpa of additional saleable ore from Sishen Expansion 21Mtpa of feedstock – about 8Mtpa material previously accounted for as Project I waste and 13Mtpa from new run-of-mine material (SEP 1)
Slide 26: Growth projects (continued)
Growth projects (continued) ¾ Extend the life of the Thabazimbi mine by c.20 years, producing both lump and fine ore Phoenix Project ¾ A feasibility study currently underway, and an investment decision on project could be made during 2006, with 2.5 – 3Mtpa of production beginning 2009 Feasibility ¾
Slide 27: Market overview
Market overview IRON ORE
Slide 28: Industry analysis
Industry analysis The iron ore industry remains fundamentally attractive ¾ 2006 demand increase of 5.8% over 2005 to >1 600 Mt ¾ Steady growth in demand forecast until at least 2020 (25% growth from today’s levels) ¾ Demand (particularly sea-borne) growing due to Chinese demand and reduced steel scr
Slide 29: Positive market outlook
Positive market outlook Crude steel production 2000 - 2005 1200 1000 ¾ Rapid consumption growth of emerging markets 800 driving increased production (Mtpa) 600 ¾ Global seaborne iron ore volumes forecast to 400 exceed 700Mtpa in 2006 (644Mtpa in 2005) 200 0 ¾ Iron ore contract prices have increased
Slide 30: Major trends / competitor activities
Major trends / competitor activities ¾ All major suppliers have a pipeline of growth projects and infrastructure expansion ¾ All major suppliers are tying up long term supply contracts with major mills ¾ BHP Billiton embarks on an aggressive new marketing strategy, focusing on China spot and semi-sp
Slide 31: Mission and Vision
Mission and Vision IRON ORE
Slide 32: KIO - our mission and vision
KIO - our mission and vision Kumba Iron Ore Kumba Iron Ore Mission Vision “To deliver outstanding “To define a new frontier of sustainable value to all our operational and people stakeholders” performance in the mining industry” 32
Slide 33: Strategy
Strategy IRON ORE
Slide 34: KIO's strategy - increase volumes and improve efficiencies
KIO's strategy - increase volumes and improve efficiencies to earn enhanced returns KIO will: ¾ Reduce operating expenses to increase the operating margin through pursuing continuous improvement initiatives in all business areas ¾ Establish and maintain preferred-supplier status in high-margin iron
Slide 35: Well poised to compete
Well poised to compete ¾ In 2005 supplied 3.2% of world’s seaborne traded iron ore ¾ Supplied 8.4% of seaborne lump ore ¾ ca.73% of total annual production exported to 30 customers in various geographies ¾ Over 2 billion tonnes of high quality iron ore resources from two principal mining assets ¾ Ra
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