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COMMODITY NEWSBRIEFS: 24 JUNE 2015 Please 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.net

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The information contained in this publication is for general information purposes only. The information is provided by Transnet Freight Rail, a division of Transnet Limited, and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the publication, or the information, products, services, or related graphics contained in the publication for any purpose. Any reliance you place on such information is therefore strictly at your own risk. In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of profits arising out of, or in connection with, the use of this publication. This publication may refer to other publications which are not under the control of Transnet Freight Rail. We have no control over the nature, content and availability of those other publications. The inclusion of any other publications or other website links does not imply a recommendation or endorse the views expressed within them. Every effort is made to keep the content of the publication correct and complete. However, Transnet Freight Rail takes no responsibility for, and will not be liable for information in the publication being incorrect or incomplete. Transnet Freight Rail also does not guarantee the availability of the publication at any specific intervals

STEEL See article “MORGAN STANLEY SLASHES NICKEL FORECASTS ON DETERIORATING MACRO OUTLOOK” under heading NON-FERROUS METALS CHEMICALS OMNIA KEEPING AFLOAT DESPITE TOUGH MARKET CONDITIONS (Engineering News, 24/6/2015) Despite a tough financial year, marked by weaker performance in its mining division and a flat performance in its chemicals division, owing to a struggling manufacturing sector, JSE-listed chemicals company Omnia achieved a 3% increase in headline earnings a share to R14.65 for the 12 months to March 31, compared with R14.28 in the 2014 financial year. The group’s revenue rose 3.5% year-on-year to R16.8-billion, while its gross profit increased by 9% to R3.9-billion. Further, its earnings before interest, taxes, depreciation and amortisation rose to R1.82-billion, owing to the higher depreciation and amortisation charge of R353-million. Speaking at a presentation of the company’s results, in Bryanston, CEO Rod Humphris said the company had faced a challenging year with volumes being under pressure, margin squeeze, competitive pricing and mine closures. He highlighted that Omnia’s agriculture division kept it buoyant, with good growth in sales. The division's operating profit Increased by 52% year-on-year to R656-million, owing to overall sales increasing 6%, an increase in cash sales in Zambia and Zimbabwe and higher production volumes at its nitric acid 2 complex and its downstream granulation plants. The company also attributed the positive growth to record sales volumes of liquids and specialty fertilisers, a reduction in raw materials costs owing to tighter management of the various supply chain factors and a weaker rand, which was net positive on the operating margin. FERTILIZER See article “OMNIA KEEPING AFLOAT DESPITE TOUGH MARKET CONDITIONS” under heading CHEMICALS

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CHROME & MANGANESE S.AFRICA FERROCHROME INDUSTRY SEES BIG JOB LOSSES IF POWER PRICES HIKED (Reuters, 24/6/2015) South Africa's ferrochrome industry will be thrown into crisis if cash-strapped power utility Eskom is allowed to hike prices, with mines forced to close and as many as 200,000 jobs at risk, an industry group said on Tuesday. Eskom, struggling to maintain power supplies and laden with debt, has asked the National Energy Regulator of South Africa to approve a 9.58 percent price increase. While down from an original request of 12.7 percent, ferrochrome producers say that, on top of increases earlier this year, it would deal a hammer blow to the industry. "The increase in electricity prices will further increase production costs and lead to the closure of most smelters in South Africa," Jacobus Zaayman, a representative from the Ferro-Alloy Producers Association of South Africa, told a public hearing held by the regulator to consider tariff hikes. Zaayman said as many as 200,000 jobs could go. It was not clear how many workers the industry employs. South Africa is one of the world's biggest producers of ferrochrome, an alloy of chromium and iron used mainly to make stainless steel. "The mining industry is at a tipping point. We have absorbed as much as we could. Mine closures are a reality," said Monique Mathys, head of economics at South Africa's Chamber of Mines, which lobbies for metal producers. The industry is grappling with weak demand from China, the world's biggest consumer, where construction activity slows during the summer months. MINERAL MINING MINES CHAMBER APPEALS FOR NON-TARIFF ESKOM FUNDING AS INDUSTRY NEARS ‘TIPPING POINT’ (Mining Weekly, 24/6/2015) The imposition of an additional power tariff increase would severely jeopardise the sustainability of the South African mining industry, the Chamber of Mines warned at hearings hosted by the National Energy Regulator of South Africa (Nersa) in Johannesburg on Tuesday. Eskom has applied for a selective reopening of the third multi-year price determination, which began on April 1, 2013 and will continue until March 31, 2018. Chamber of Mines economics head Monique Mathys warned that the mining industry was at a “tipping point” and that further tariff increases would jeopardise the profitability of “even more mining operations”, while undermining their ability to make future investments. The chamber estimated that 60% of gold mines and 80% of platinum operations were already lossmaking or marginal and that the proposed hike could result in 20 000 to 40 000 retrenchments in addition to those already notified. Mining companies were also increasingly constrained in their ability to invest, owing to negative equity returns over the past five years, rising net debt and limited growth opportunities. “[Therefore], we do not support the proposed funding mechanism through a tariff hike given the current crisis situation, where the sustainability of the majority of the sector is in question,” Mathys said, noting that electricity had been the fastest rising inflationary component in a sector where costs had surged more generally. She argued that alternate funding mechanisms were required to address negative economic impacts, including “traditional shareholder recapitalisation methods”. NON-FERROUS METALS MORGAN STANLEY SLASHES NICKEL FORECASTS ON DETERIORATING MACRO OUTLOOK (Mining Weekly, 24/6/2015) Morgan Stanley slashed its nickel price forecasts for the second half of the year on Tuesday as demand from stainless steel producers is undermined by a deteriorating outlook for global growth. The bank cut its third quarter 2015 nickel price forecast by 12% to $13 228/t; and its fourth quarter outlook by 10% to $13 448/t. Nickel was particularly hard hit among commodities because 70% of all primary nickel goes into a single sector - stainless steel - where producers respond to any signs of a global growth slowdown by aggressively selling down stocks, Morgan Stanley said. The bank also cut its platinum and hard coking coal forecasts, and raised its aluminium forecast for the fourth quarter. TRANSNET SA’S RAIL REVITALISATION AMBITIONS LAUDED AS MORE OPPORTUNITIES ARISE (Engineering News, 24/6/2015) US Secretary for Transportation Anthony Foxx has lauded South Africa’s rail revitalisation efforts as State-owned Transnet and US-based General Electric (GE) developed one of the “best localisation case studies”. Speaking at a US State delegation tour of Transnet’s Koedoespoort locomotive facility, east of Pretoria, on Tuesday, GE Transportation president and

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CEO Russell Stokes said the partnership, which started over seven years ago, had delivered on key priorities of South Africa’s National Development Plan and would continue to do so as the duo entered the next phase of its partnership. Transnet and GE in 2009 signed an agreement for the supply of 100 diesel-electric locomotives to Transnet. This was followed, in 2012, by a further order for 43 locomotives that would be used on the Phalaborwa–Richards Bay corridor, the Sishen–Saldanha iron-ore corridor, the Witbank–Nelspruit–Komatipoort line and to transport coal to Eskom power stations. To date, over 150 000 hours of locomotive assembly-related technical and nontechnical skills training had been undertaken by both GE and Transnet employees, with 82 Transnet Engineering (TE) employees having received training from GE and with 382 new jobs created. Significant localisation had also been achieved, with the programme benefiting from a GE injection of more than R1.8-billion as part of the South African government’s competitive supplier development programme, while 20 local black economic empowerment-rated suppliers had partnered with the two companies to help deliver the planned locomotives over the past five years. Since embarking on the South Africa–US partnership in 2009, Transnet and GE had delivered over 140 locomotives on time and within budget – and with over 35% local content – with the final 60 to be unveiled before the end of July, TE CEO Thami Jiyane added. This year, as GE worked towards delivering 233 evolution series diesel electric locomotives to Transnet as part of the freight logistics group’s 1 064 locomotives programme, local content would rise to over 55%, with GE committed to continuing its contribution to skills and small and medium-sized enterprise development, Stokes added. TRANSNET OUT TO WOO INVESTORS AFTER SECURING DEALS (Business Day, 24/6/2015) Transnet is due to embark on a road show to woo international investors after the release of its annual results next month, it said yesterday. This comes after the logistics and freight company secured R3bn in funding from Germany’s KfW Development Bank this week, to finance 240 locomotives that will be built by Bombardier at Transnet’s facilities in Durban. Transnet has raised 90% of the funding it needs for the locomotives. Almost all the locomotives will be manufactured in SA, while 70 others will be manufactured elsewhere. Transnet is embarking on its biggest recapitalisation programme to date as part of its R300bn market demand strategy. The road show will see Transnet updating investors on its operations, performance and “recent executive developments”, it said. Transnet is also on track to achieve the R27bn funding it needs for this year. GENERAL ONGOING POWER CRISIS POSES LARGEST RISK TO S AFRICA'S GROWTH – IMF (Engineering News, 24/6/2015) South Africa's power supply crisis poses the biggest obstacle to growth, while state support to ailing utility Eskom and increased public sector wages may weigh on public finances, the International Monetary Fund (IMF) said on Tuesday. The global lending body singled out delays in easing electricity shortages, and to policy and regulatory uncertainties, as chief constraints to economic growth in Africa’s most developed economy. "As the electricity crisis has deepened, only a muted recovery to 2% growth is expected in 2015-16," the IMF said in a report. Treasury said government was addressing the electricity constraints by investing in power infrastructure, in a statement responding to the IMF's report. The IMF praised the Treasury's efforts to narrow deficits, but also voiced concerns about the government's ability to reign in state expenditure in the face of escalating funding requirements by Eskom. "Substantial fiscal risks stem from further support to Eskom," the body said. "And the envisaged nuclear power plants could entail a large public debt increase." Government's financial package for Eskom includes a R23-billion injection to help the utility plug a funding gap of around R200-billion. Eskom, battling strikes, technical delays and cost overruns to complete three power plants expected to add over 9 000 MW to the grid, said early in June that a R60-billion loan from the state would be converted into equity, in order to fund projects by boosting its lending profile. South Africa aims to build six new nuclear power plants by 2030 at an estimated cost of between R400-billion to R1-trillion ($33-billion to $82-billion).

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CURRENCIES AND PRICES

3 mnth to 23 Jun 15

(Mail & Guardian, 24/6/2015)

JSE AS AT 17:00PM 23 JUNE 2015

All Share Index 23/06 52,592

+ 402.68 + 0.77%

Industrials Index 23/06 44,312

+ 205.81 + 0.47%

Financials Index 23/06 43,702

+ 384.05 + 0.89%

Top 40 Index 23/06 47,002

+ 409.30 + 0.88%

Industrial 25 Index 23/06 67,290

+ 463.31 + 0.69%

Financial 15 Index 23/06 16,621

+ 178.25 + 1.08%

Resources 10 Index 23/06 42,143

+ 530.94 + 1.28%

Alt-X Index 23/06 1,321

+ 2.07 + 0.16%

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WORLD INDICATORS

FOREX

Rand/Dollar 06:30 12.1880

+ 0.09 + 0.74%

Rand/Pound

06:30 19.1442

+ 0.04 + 0.19%

Rand/Euro 06:30 13.6222

- 0.10 - 0.70%

COMMODITIES

Gold (usd/oz) 06:30 1,177.13

- 9.77 - 0.82%

Platinum (usd/oz)

06:30 1,068.93

+ 7.93 + 0.75%

Brent (usd/barrel) 06:27 64.45

+ 1.11 + 1.75%

WORLD MARKETS

Wall St (DJIA) 23/06 18,144

+ 24.29 + 0.13%

Germany (DAX)

23/06 11,543

+ 502.44 + 4.55%

Japan (Nikkei) 06:30 20,879

+ 450.76 + 2.21%

(Business Report, 24/6/2015)

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(TFR Commercial Management: Business Performance Dept)

Transnet Freight Rail News Briefs Page 7 of 9

Petrol/ Diesel Price

YR2015

07-Jan-

15

04-Feb-

15

04-Mar-

15

01-Apr-

15

06-May-

15

03-Jun-

15

01-Jul-

15

05-Aug-

15

02-Sep-

15

07-Oct-

15

04-Nov-

15

02-Dec-

15

COASTAL

95 LRP (c/l) 1083.00 990.00 1086.00 1246.00 1246.00 1293.00

95 ULP (c/l) 1083.00 990.00 1086.00 1246.00 1246.00 1293.00

Diesel 0.05% (c/l) 997.49 895.49 969.49 1090.09 1085.09 1134.09

Diesel 0.005% (c/l) 1001.89 899.89 973.89 1096.49 1091.49 1137.49

Illuminating Paraffin (c/l) 697.728 595.728 668.728 690.828 685.828 727.828

Liquefied Petroleum Gas

(c/kg) 1829.00 1679.00 1833.00 1918.00 1935.00 2035.00

GAUTENG

93 LRP (c/l) 1102.00 1009.00 1105.00 1261.00 1261.00 1308.00

93 ULP (c/l) 1102.00 1009.00 1105.00 1261.00 1261.00 1308.00

95 ULP (c/l) 1124.00 1031.00 1127.00 1289.00 1289.00 1336.00

Diesel 0.05% (c/l) 1028.09 926.09 1000.09 1122.79 1117.79 1166.79

Diesel 0.005% (c/l) 1032.49 930.49 1004.49 1129.19 1124.19 1170.19

Illuminating Paraffin (c/l) 747.928 645.928 718.928 743.828 738.828 780.828

Liquefied Petroleum Gas

(c/kg) 2011.00 1861.00 2015.00 2100.00 2117.00 2217.00

YR2014

01-Jan-

14

05-Feb-

14

05-Mar-

14

02-Apr-

14

07-May-

14

04-Jun-

14

02-Jul-

14

06-Aug-

14

03-Sep-

14

01-Oct-

14

05-Nov-

14

03-Dec-

14

COASTAL

95 LRP (c/l) 1320.00 1359.00 1395.00 1398.00 1383.00 1361.00 1392.00 1392.00 1325.00 1320.00 1275.00 1206.00

95 ULP (c/l) 1320.00 1359.00 1395.00 1398.00 1383.00 1361.00 1392.00 1392.00 1325.00 1320.00 1275.00 1206.00

Diesel 0.05% (c/l) 1260.55 1284.75 1311.95 1299.15 1269.37 1245.79 1259.79 1254.17 1228.79 1215.79 1154.79 1101.49

Diesel 0.005% (c/l) 1263.95 1288.15 1316.35 1304.55 1274.77 1249.19 1263.19 1258.57 1234.19 1221.19 1161.19 1106.89

Illuminating Paraffin (c/l) 963.828 975.828 991.828 953.028 934.028 924.028 947.028 940.028 921.028 907.028 855.028 805.728

Liquefied Petroleum Gas

(c/kg) 2260.00 2314.00 2372.00 2350.00 2346.00 2319.00 2377.00 2365.00 2257.00 2269.00 2164.00 2039.00

GAUTENG

93 LRP (c/l) 1336.00 1375.00 1411.00 1416.00 1401.00 1379.00 1408.00 1408.00 1341.00 1343.00 1298.00 1229.00

93 ULP (c/l) 1336.00 1375.00 1411.00 1416.00 1401.00 1379.00 1408.00 1408.00 1341.00 1343.00 1298.00 1229.00

95 ULP (c/l) 1357.00 1396.00 1432.00 1439.00 1424.00 1402.00 1433.00 1433.00 1366.00 1361.00 1316.00 1247.00

Diesel 0.05% (c/l) 1287.15 1311.35 1338.55 1329.75 1299.97 1276.39 1290.39 1284.77 1259.39 1246.39 1185.39 1132.09

Diesel 0.005% (c/l) 1290.55 1314.75 1342.95 1335.15 1305.37 1279.79 1293.79 1289.17 1264.79 1251.79 1191.79 1137.49

Illuminating Paraffin (c/l) 1009.728 1021.728 1037.728 1003.228 984.228 974.228 997.228 990.228 971.228 957.228 905.228 855.928

Transnet Freight Rail News Briefs Page 8 of 9

Liquefied Petroleum Gas

(c/kg) 2442.00 2496.00 2554.00 2532.00 2528.00 2501.00 2559.00 2547.00 2439.00 2451.00 2346.00 2221.00

(SAPIA online)

Daily prices for 23 June 2015

LME Official Prices, US$ per tonne

Contract

Aluminium

Alloy Aluminium Copper Lead Nickel Tin Zinc NASAAC

Cash

Buyer

1780.00 1680.00 5723.00 1767.00 12660.00 15175.00 2027.50 1760.00

Cash

Seller &

Settlement

1790.00 1680.50 5725.00 1767.50 12665.00 15180.00 2028.00 1770.00

3-months

Buyer

1790.00 1722.00 5733.00 1783.00 12695.00 15190.00 2039.00 1785.00

3-months

Seller

1800.00 1723.00 5734.00 1785.00 12700.00 15210.00 2040.00 1795.00

15-

months

Buyer

15240.00

15-

months

Seller

15290.00

Dec 1

Buyer

1790.00 1808.00 5790.00 1815.00 12830.00 2063.00 1855.00

Dec 1

Seller

1800.00 1813.00 5800.00 1820.00 12930.00 2068.00 1865.00

Dec 2

Buyer

1885.00 5830.00 1835.00 12930.00 2063.00

Dec 2

Seller

1890.00 5840.00 1840.00 13030.00 2068.00

Dec 3

Buyer

1953.00 5850.00 1848.00 12930.00 2053.00

Transnet Freight Rail News Briefs Page 9 of 9

Contract

Aluminium

Alloy Aluminium Copper Lead Nickel Tin Zinc NASAAC

Dec 3 Seller

1958.00 5860.00 1853.00 13030.00 2058.00

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