Kumba Iron Ore Limited · JSE:KIO
Kumba Iron Ore — H1 2022 Earnings Presentation
48 slides from Kumba Iron Ore's earnings presentation, Jul 26, 2022
Slide 1: Interim results 26 July 2022
&S AngloAmerican umba Iron Ore )2? Interim results 26 July 2022
Slide 2: Disclaimer
Disclaimer This presentation is for information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy shares in Kumba. Further, it does not constitute a recommendation by Kumba Iron Ore Limited or any other party to sell or buy shares in Kumbalron Ore Limited
Slide 3: Presenters
Ag Mpumi Zikalala Bothwell Mazarura Mpumi Zikalala
Slide 4: Committed to sustainable delivery
Committed to sustainable delivery Robust Operational Pathways fundamentals excellence to value
Slide 5: Safe production & solid financial performance
Safe production & solid financial performance Safety EBITDA Attributable free cashflow >6 years R23.1bn RI.7on Fatality-free production H1 2021: R44.4bn H1 2021: R31.5n Production Enduring value contribution Dividend declared 17.8Mt RS1bn R9.2bn H12021: 20.4Mt H1 2021: RS1.0bn H1 2021: R23.4bn
Slide 6: Safe, healthy & responsible operations
Safe, healthy & responsible operations Safety Health & wellness Environment mT) =—TRC Occupational diseases (new cases) Freshwater used (ML) 51 41 39 20 15 Beeb a= ep ee 2018 2019 2020 2021 12022 2018 2019 2020 2021 12022 2018 2019 2020 2021 May 2022 Safety reset focusing on risk reduction culture &
Slide 7: Towards a healthier environment
Towards a healthier environment Scope 1: 53% of direct emissions Scope 2: 47% of direct emissions Scope 3: Indirect emissions Zero GHG emissions by 2040 Haulage efficiency initiatives Hydrogen-fuel cell trucks \ Zimbabwe { Mozambigu e Namibia [ Botswana 5. pies te \ eee l\ (Aironet a vow Oia, ) [i R
Slide 8: Enduring value contribution
Enduring va R3.6bn | | 78% R3.16n R5.0b6n | | R2.1bon R73m
Slide 9: Operational performance
erational performance
Slide 10: Headwinds impact value chain
adwinds impact value chain Waste mined Production Ore railed to port Sales Finished stock a 95.5Mt" y 17.8Mt y 19.0Mt y 19.7Mt “ 45Mt NV, H1 2021: 98.5Mt! H1 2021: 20.4Mt H1 2021:19.7Mt H1 2021: 19.5Mt H1 2021: 6.1Mt 1. IncludesKapstevel South waste of 7.4MtinH1 2021 &6,1Mtin H1 2022 10
Slide 11: Kolomela improving, Sishen strong recovery in Q2
Kolomela improving, Sishen strong recovery in Q2 Kolomela waste & production (Mt) Sishen waste & production (Mt) - (8%) ——_ Q1 2022 Q22022 Q1 2022 Q22022 Significant impacts, recovery into H2 [~ 12% ann 58 7 or Qi 2022 Q22022 Qi 2022 Q22022 Improved stability & strong recovery in Q2 Double Sishen’s
Slide 12: Logistics constraints impacting sales
Logistics constraints impacting sales Logistics performance (Mt) Short term interventions (2022) Target quarterly average capacity Q3 2020 Q4 2020 Q12021 Q22021 mmm Railed to port (Mt) — —Rail capacity Q32021 Q42021 sss Export sales (Mt) — —Port capacity Q1 2022 Q22022 Reducing speed restrictions Lo
Slide 13: Supply weakness & China stimulus support prices
Supply weakness & China stimulus support prices China Pig Iron Production (Mt Annualized) Iron ore prices buoyed by China stimulus Hot Metal Production usg$/t (4.7%) . . 2022: Annual quota of RMB 3.65tn SPB, 250 RMB 3.Sin estimated tobe issuedin 1H, | 1 additional quotas to come in 2H \ 200 2021:RMB
Slide 14: Financial performance
Financial performance
Slide 15: Resilient financial results
Resilient financial results Average realised FOB price EBITDA margin HEPS US$136/t 94% R56.13 H1 2021: US$216/t H1 2021: 70% H1 2021:R72.78 Cost savings Break-even price DPS R604m US$66/t H1 2021:R370m H1 2021: US$56/t R28./0 H1 2021:R72.70 15
Slide 16: Premium prices for premium products
Premium prices for premium products Fe qualities (%) Lo Rio Tinto FMG 3 2 Kumba BHP Rio Tinto Vale FMG. Source: ron Ore Marketing Ex-China market share 53% Price premium over Platts 62 FOB (US$/wmt) Lump premium+Fe — = Price premium kala 2015 2019 2020 2021 H1 2022 H1 2022 Realised price FOB (US$/wm
Slide 17: EBITDA driven by lower benchmark prices
EBITDA driven by lower benchmark prices Sales volumes Premium C1 costs Average R/US Average FOB price Inflation Freight rates H1 2022 19.7 Mt US$1.0/t US$43/t R15.40 US$136/t 5.9% US$20.0/t H1 2021 19.5 Mt US$2.8/t US$40/t R14.54 US$216/t 4.0% US$15.9/t Rm (852) (24596) =e (292) | 22) al 0% 48% H1 2
Slide 18: Costs reflect tough operating conditions
Costs reflect tough operating conditions Sishen’ (R/t (RA) Cost savings (Rm) (101) (38) 432 11% Kolomela(R/t) (8) 117 2 324 47% ™ Overheads FY2021 —_Inflationand —-Miningand WIP and Production Costsavings ——- H1.2022 Unit cost = Optimised mine plan costescalation maintenace scones guidance = P101 Op
Slide 19: Robust margin despite headwinds
Robust margin despite headwinds 216 TSWELEL@PELE Delivery by 2022 Enhanced price premium 2US$2/t above lump & Fe premium Improve operational efficiency P101 benchmark performance 35 34 29 40 43 Cost savings initiatives H1 2018 H1 2019 H1 2020" H1 2021 H1 2022 C1 unit cash cost <US$44/t? C1 unit cash
Slide 20: Capex focus on asset reliability & project delivery
Capex focus on asset reliability & project delivery Capex" Rbn Expansion capex 10-11 Kapstevel South: Total spend ~R7bn UHDMS: Total spend ~R3.6bn P101 efficiency programme SIB capex 3.6 HME & plant availability & reliability 24 Pz Pos Piz | Environmental infrastructure & plant upgrades [09 | Techno
Slide 21: Robust, efficient balance sheet
Robust, efficient balance sheet Disciplined capital allocation Dividend declared R28.70 Dividend payout ratio 80% Dividend yield" Rbn 99 oo 12.3 FY 2021 Cash flow after Bose Discretionary H12022 Interim Proforma Net cash sustaining capital dividends capital Net cash dividend net cash i Kumba shareho
Slide 22: Creating shareholder value
Creating shareholder value Shareholder value creation (2018 — H1 2022) Rbn 2018 2019 2020 2021 @ Attributable free cashflow 1. Excluding dividends declared to minorities H12022 2018 2019 mBase dividend 2020 33.2 8.1 2021 Top-up dividend H12022 Attributable free cashflow R85bn Total dividends! R87bn
Slide 23: Outlook
iv O O —
Slide 24: Steel crucial enabler of energy transition
Steel crucial enabler of energy transition Hydrogen Electrical vehicles & energy storage Electricity networks Nuclear power Geothermal] ——______ Source: IEA Solar PV Wind power Hydro Concentrated solar power Bioenergy 24
Slide 25: Future is bright for green steel & high-grade iron ore
Future is bright for green steel & high-grade iron ore Steel intensity of renewables 10-30x fossil-based power Global DRI capacity (Mt) Steel intensity of power generation, index . 22% 26% 9% share of iron production 13% Coal Nuclear ccGT? Solar Onshore Offshore Floating 2022 2030 2040 2050 wind win
Slide 26: Focus on near-term priorities
Focus on near-term priorities Operational excellence Cost optimisation Realise full value of premium product Prepare for upcoming rain season Improve operational efficiency Build Saldanha stocks Operational & value chain stability Supply chain & contractor management Improve product quality Ramp-up
Slide 27: 2022 full year guidance
2022 full year guidance Waste Production" Sales 190-220Mt 38-40Mt 38-40Mt Sishen: 140-160Mt Sishen: ~26.5Mt Kolomela: SO-60Mt Kolomela: ~12.5Mt Unit cash costs Capital expenditure <US$44/?? R10-11bn Sishen: R500 - 530/t Kolomela: R420-440/t 1, Production: 39-41Mtin 2023 & 41-43Mtin 2024 2, Based on
Slide 28: Reimagining mining to improve people's lives
Reimagining mining to improve people's lives Strong foundation for sustainable value delivery Capabilities Premium quality, high margin assets Operational resilience & strong marketing team Life extension opportunities Efficient capital allocation Sustainability 7 Pillars of value embedded Sustainab
Slide 29: Appendix
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Slide 30: Lump port stocks at relatively low levels
Annexure 1 Lump port stocks at relatively low levels Lump premium & stocks at Chinese ports Platts 62 price ($/dmt) —? P($/dmtu) ~—! % cl ho latts LP ($/dmtu) Lump % of stocks oe 08 20% 06 04 15% 02 0.0 10% 2015 2016 2017 2018 2019 2020 2021 2022 Source: Platts, Mystee! 250 200 150 100 0 2015 2016 2
Slide 31: Average realised price $138/dmt or $136/wmt
Annexure 2 Average realised price $138/dmt or $136/wmt H1 2022 realised FOB price (US$/t) Price drivers +$18/dmt | : (20) H1 2022 Platts H1 2022 Lump P62.CFRY Freight P62 FOB premium (2%moisture) Source: ron Ore Marketing, 1. Straight average of the dally indices between 1 Jan- 30 Jun 2022 Reolised
Slide 32: Life extension projects, key pathways to value
Annexure 3 Life extension projects, key pathways to value Kolomela: Kapstevel South pit Sishen: Ultra high dense media separation plant 49% complete, on track for first ore in H2 2023 All procurement packages placed, pressure on cost of materials Primary focus on waste stripping, construction of maj
Slide 33: 2022 full year guidance
Annexure 4 2022 full year guidance Total production Total sales C1 cash costs Capital expenditure 358 — 40Mt 38 —-4OMt <US$44/t1 R10-11bn 2023 Sishen Kolomela Production ~26.5Mt ~12.5Mt 59 i 4] Mt Waste 140 -160Mt 50 -60Mt 2024 Unit costs R500 - 530/dmt R420 - 440/dmt Strip ratio 4.5,LOM ~3.92| 3.7,
Slide 34: Logistics constraints impact on sales
Annexure 5 Logistics constraints impact on sales Mt H1 2022 H1 2021 % change H2 2021 % change Railed to port (incl. Saldanha Steel) 19.0 19.7 (4) 19.6 (3) Sishen mine (incl. Saldanha Steel) 13.4 13.7 (2) 13.6 (2) Kolomela mine 5.6 6.0 (7) 6.0 (7) Total sales 19.7 19.5 1 20.8 (5) Export 19.7 19.4 2 2
Slide 35: Operating margin reflects lower revenue
Annexure 6 Operating margin reflects lower revenue Rm H1 2022 H1 2021 % change H2 2021 % change Revenue 42977 63616 (32) 38 476 12 Operating expenses (22 396) (21 692) 3 (20 892) 7 Operating profit 20 581 41924 (51) 17 584 17 Operating margin (%)' 48 66 (18) 46 2 Profit for the period 15153 30621 (5
Slide 36: Break-even price driven by higher costs & lower prices
Annexure 7 Break-even price driven by higher costs & lower prices Platts 62% break-even price (US$/t) 4 (0) 4 5 FY 2021 Opex Price SIB Total after Lump Currency Freight Royalties H12022 premium controllables premium [| Controllables $9 Non-controllables $1 id 36
Slide 37: Revenue analysis
Annexure 8 Revenue analysis H1 2022 H1 2021 % change H2 2021 % change Export (Rm) 39 334 60 808 (35) 34078 15 Tonnes sold (wmt) 19.7 19.4 2 20.8 (5) US Dollar per tonne (wmt) 130 216 (40) 109 19 Rand per tonne (wmt) 1997 3134 (36) 1 638 22 Domestic (Rm) = 235 (100) 2 (100) Shipping operations (Rm) 3
Slide 38: Revenue decrease by 32%
Annexure 9 Revenue decrease by 32% Rm Revenue drivers 63616 Controllables Total sales volumes: Flat at 19.7Mt (H1 2021: 19.5Mt) Lump premium: Average US$0.3/dmtu (H1 2021: US$0.52/dmtu) Market premium: $1/t (H1 2021:US$2.8/t) Non-controllables Average Platts FOB price US$136/wmt (H1 2021:US$216/wmt)
Slide 39: Operating expenditure analysis
Annexure 10 Operating expenditure analysis Rm H1 2022 H1 2021 % change H2 2021 % change Raw materials & consumables? 1197 914 31 1264 (5) Net movement in inventories* (1 568) (489) 221 (1212) 29 Inventory written down to NRV 227 83 173 87 161 Contractors’ expenses. 2443 1939 26 2366 3 Deferred strip
Slide 40: Operating expenditure driven by higher mining cost
Annexure 11 Operating expenditure driven by higher mining cost Rm 18580 a7 ez —a— —5— 5950 zt H1 2021 Mining Stock Deferred Non-cash and forex Shipping Selling and H1 2022 operations movement stripping distribution = Mining operations = Shipping = Selling and distribution 1. Excluding mineral royait
Slide 41: Costs impacted by headwinds
Annexure 12 Costs impacted by headwinds Sishen' (R/t) —ii 87 (7) (24) ZZ = = 4 481 432 “| 11% Kolomela(R/t) (1) (8) 117 = @7) 324 : 47% FY 2021 Inflation Cost escalation Mining Maintenance wip? Production _Deferredstripping Cost savings H1 2022 1, Sishen WIP includes -R40/t benefit from C-grade clas
Slide 42: Sishen & Kolomela mines
Annexure 13 Sishen & Kolomela mines Unit cash cost structure (R/t) (29) : (58) : (72) (97) Sishen mine Sishen mine i Kolomela mine Kolomela mine FY 2021 12022 : FY 2021 H1 2022 Deferred stripping m Other Energy = Dring and blasting Maintenance m Outside services mFuel mLabour 42
Slide 43: Sishen & Kolomela mines
Annexure 14 Sishen & Kolomela mines Unit cash cost structure (%) Sishen mine FY 2021 mOther Energy Sishen mine H1 2022 = Drilling and blasting H Kolomela mine FY 2021 ™ Maintenance m Outside services mFuel Kolomela mine mLabour H1 2022 43
Slide 44: EBITDA analysis
Annexure 15 EBITDA analysis Rm H1 2022 H1 2021 % change Total sales volumes’ (Mt) a 194 19.2 09 Benchmark price ($/t) 140 183 (23.6) Product premiums ($/t) 18 54 (66.5) Freight ($/t) (20) (17) 18.2 Realised FOB price ($/dmt) 138 220 (37.4) On-mine unit costs ($/t) (31) (28) 14 Logistics (rail & port
Slide 45: Sensitivity analysis H1 2022
Annexure 16 Sensitivity analysis H1 2022 Sensitivity analysis (1% change) - EBITDA impact (Rm) tvolume Export price (400) Currency 400 (500) (400) (300) (200) (100) ° 100 200 300 Change per unit of key operational drivers, each tested independently 400 500 Sensitivity analysis Unit change EBITDA imp
Slide 46: Capital expenditure analysis
Annexure 17 Capital expenditure analysis Rm H1 2022 H1 2021 2022e Approved expansion 1233 585 4 000-4 200 Deferred stripping 1199 942 2 300-2 700 Sishen 738 706 1 500-1 800 Kolomela 461 236 800-900 SIB 1212 839 3700-4 100 Sishen 921 629 2 600-2 900 Kolomela 291 210 1 100-1 200 Unapproved expansion =
Slide 47: Working capital remains consistent
Annexure 18 Working capital remains consistent Rm 2354 1% H12021 inventories Receival bles Payables H1 2022
Slide 48: Image descriptions
Annexure 19 Image descriptions Slide 14 Rhovol machine - measures sample particle sizes or iron ore which helps in the processing of the ore. Mothusi Selota (Operator) Slide 23 Panoramic night view of Chongqing City in China Slide 24 Solar PV panels, wind farm turbines, hydro-power reservoir dam, co