Transnet Freight Rail News Briefs Page 1 of 8

COMMODITY NEWSBRIEFS: 6 FEBRUARY 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

DISCLAIMER

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

FAST MOVING CONSUMER GOODS DROUGHT EXPECTED TO COST KZN CANEGROWERS MILLIONS (Engineering News, 6/2/2015) With production losses in KwaZulu-Natal expected to reach R574-million, for canegrowers in the drought-stricken areas of the province, “the loss is great”, Canegrowers Research Department analysis shows. Further, rehabilitation costs of some R274-million were expected, as well as a potential loss of earnings for the labour force of about R72-million. “It is important to note that this is not an industry-wide drought and the three northern irrigated areas, which supply 30% of South Africa’s cane production, have not been too adversely affected by drought” said Canegrowers executive director David Wayne in a statement this week. South African Weather Service’s Seasonal Climate Watch for February to June noted that most of the forecast models showed that El Niño Southern Oscillation would remain in a weak El Niño condition for the rest of the summer season up to autumn. The forecasting system was expected to continue to indicate below-normal rainfall conditions for late summer to autumn, with the maximum and minimum temperatures tending to be of cooler. “However, other international forecasting systems indicate a warmer and drier late summer season,” noted the national organisation, representing South Africa’s 23 866 canegrowers. INDUSTRIAL BUSINESS CONFIDENCE SEES MODEST RISE IN JAN (Engineering News, 6/2/2015) In its slowest start to the year since 1997, the South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) rose by one index point to 89.3 in January, reflecting a still-subdued business mood. Describing business confidence as “muddling on”, Sacci economic consultant Richard Downing said on Thursday that, as suggested by the return to below-90 levels in December and January, the improvement in November’s BCI of 90.8 appeared to have been a random increase. “The potential for serious disruptions of the economy and business are already present and will not only restrain economic activity, but may set the economy on an indifferent course in 2015,” he told a media briefing in Rosebank. Downing added that no clear short-term trend from the BCI’s individual sub indices could be established on a month-on-month basis. Only two financial subindices – rand exchange rate and precious metals prices – and three real activity subindices – retail sales, imports and exports – were positive month-on-month – similar to that of December. The below-par business sentiment was spread across activities, Downing found, with seven of the thirteen subindices negative year-on-year. Manufacturing, imports, vehicle sales, building construction, and real private-sector borrowing were the only subindices to improve year-on-year.

Transnet Freight Rail News Briefs Page 2 of 8

IRON IRON ORE SEEN BELOW $40 BY ANDY XIE ON CHINA STEEL SLOWDOWN (Mineweb, 6/2/2015) Iron ore will slump into the $30s a metric ton this year as low-cost supplies rise and steel demand in China shrinks, according to Andy Xie, a Shanghai-based independent economist who’s forecast a rout for years. “When it peaked at $190, I started talking about a collapse and nobody believed me,” Shanghai-based Xie, a former Asia-Pacific chief economist at Morgan Stanley, said in a phone interview on Thursday. “We need to see prices much, much lower. It can still go down through $40 before we bounce back.” The raw material used to make steel will probably average $50 this year, a level that he’s predicted since 2012, said Xie, who’s tracked the Chinese economy for more than two decades. Prices need to decline to a level that’s so painful higher-cost Chinese mines will be forced to give up, he said. Iron ore collapsed 47 percent in 2014 and extended declines this year as surging low-cost output from Rio Tinto Group, BHP Billiton Ltd. and Vale SA spurred a glut just as growth in China slowed. China expanded at the weakest pace last year since 1990 amid a property market slowdown as policy makers sought to shift the economy away from investment toward consumption. The country accounts for about half of global steel production. Ore with 62 percent content delivered to Qingdao, China, peaked at $191.70 a dry ton in February 2011, according to Metal Bulletin Ltd. In September 2012 Xie said prices would drop to $50, probably by mid-2013, repeating a forecast. Prices, which fell every quarter in 2014, sank 1.5 percent to $61.64 on Thursday, the lowest on record going back to May 2009. COAL ESKOM MAY LOOK ELSEWHERE AS COST OF COAL INCREASES FAR FASTER THAN INFLATION (Business Day, 6/2/2015) Eskom’s delivered cost of coal has been rising 20% a year compounded over the past few years, against consumer price index inflation of 6%. With coal accounting for about 30% of Eskom’s operating expenditure, this was an unsustainable situation, especially since the price of electricity was regulated, the acting divisional executive of Eskom’s primary energy division, Vusi Mboweni, told the IHS Energy South African Coal Exports Conference 2015 on Wednesday. "We urge players to ensure our coal industry remains competitive," Mr Mboweni said. "If coal prices itself out of the market, other sources of energy become more viable." Questioned about the increase in the cost of coal, he said it stemmed partly from the types of contracts Eskom has with coal suppliers, which include "cost plus" contracts (where it pays the costs of mining plus a small profit margin). Coal companies have been experiencing pressure on input costs over the past few years. Public attention has recently been focused on Eskom’s financial constraints. The utility is building costly new power stations and suffering from a shortage of power to sell to customers, which reduces its revenue stream. For several years, coal industry players have anticipated Eskom’s "coal cliff" — the loss of tens of millions of tonnes of supply as long-term coal contracts come to an end in 2017-19. Mr Mboweni said Eskom’s projected burn rate, or the amount of coal it is using, had fallen below 2012 projections, which means the "coal cliff" is also reducing. Eskom now estimates it will need to source about 22-million tons of new coal a year over the next few years and is discussing contracts with the mining houses. It also continued to test and analyse the coal coming out of the Waterberg, which would supplement coal from the ageing mines in Mpumalanga. Eskom was sourcing coal from the state-owned African Exploration Mining & Finance Corporation and black-owned entities. Black-owned companies were supplying 40% of Eskom’s coal and this was expected to rise to more than 50% by 2022, Mr Mboweni said. JAPANESE MAY HAVE KEY TO UNLOCKING SPRINGBOK FLATS COAL (Mining Weekly, 6/2/2015) The Japanese may have the key to the unlocking of South Africa’s Springbok Flats where uranium contamination has inhibited coal mining for decades. XMP Consulting geologist Gerhard Esterhuizen has told the IHS Energy South African Coal Exports Conference 2015 that the Japanese claim to have a process of successfully removing the uranium from coal, which, if true, could be applied in the Springbok Flats, which straddles the Limpopo, Gauteng and North West provinces. In an address on the potential of the Limpopo coalfields, Esterhuizen also outlined at the conference attended by Mining Weekly Online how the Soutpansberg coalfield offered South Africa the opportunity to substitute the import of coking coal, which he said was present in the area stretching to the Zimbabwe border. Ariy Consulting principal Henrique Pinheiro, who addressed the conference on coal mining in Mozambique, cautioned that logistics costs were critical to successful

Transnet Freight Rail News Briefs Page 3 of 8

development in the southern African country. Pinheiro outlined that the 3.98-million tonnes that were exported through the port of Beira in 2013 and 4.87-million tonnes in 2014 had done so at a loss because of low yields and high logistics costs. He doubted whether true coking coal would form more than 25% of exports from Mozambique and most would be thermal coal, which would impact on the justification of large expenditure being outlaid on logistics infrastructure. GRAIN CLIMATE THREAT TO OUR FOOD (The Times, 6/2/2015) New research shows that maize crop yields could decline by up to 20% as a result of climate change, hitting South Africa's poor rural communities hard. The study was conducted by researchers from the universities of Cape Town, Venda and Fort Hare and tabled in parliament yesterday by the financial and fiscal commission. The researchers studied household vulnerability to climate change in Nkonkobe in Eastern Cape and Thulamela in Limpopo. Most of the 4000 households studied were involved in subsistence farming and no commercial farmers were surveyed. Using a "household vulnerability index" which measures a household's ability to withstand disasters associated with climate change, such as drought or flooding, the study found that people in Eastern Cape would be more vulnerable than those in Limpopo. A climate change impact model predicted that average maize yields in Eastern Cape would decline by 8%-15% until about 2050 and after that by 6%-14%. In Limpopo, maize yields could potentially increase by around 13% initially, but were predicted to decline by up to 19.6% after 2050. The study found that those with the least financial, social and physical assets would be hardest hit. CURRENCIES AND PRICES

ALSI: 3 mnth to 5 Feb 15

Transnet Freight Rail News Briefs Page 4 of 8

(Mail & Guardian, 6/2/2015)

JSE AS AT 17:00PM 5 FEBRUARY 2015

All Share Index 5/02 51,689

+ 57.88 + 0.11%

Industrials Index 5/02 47,788

+ 167.78 + 0.35%

Financials Index 5/02 42,760

- 17.50 - 0.04%

Top 40 Index 5/02 45,451

+ 38.77 + 0.09%

Industrial 25 Index 5/02 64,257

+ 313.02 + 0.49%

Financial 15 Index 5/02 16,352

- 26.31 - 0.16%

Resources 10 Index 5/02 43,866

- 350.49 - 0.79%

Alt-X Index 5/02 1,526

- 15.97 - 1.04%

WORLD INDICATORS

FOREX

Rand/Dollar 06:33 11.3077

- 0.16 - 1.41%

Rand/Pound

06:30 17.3039

- 0.09 - 0.49%

Rand/Euro 06:30 12.9645

- 0.04 - 0.32%

COMMODITIES

Gold (usd/oz) 06:33 1,266.02

- 3.88 - 0.31%

Platinum (usd/oz)

06:33 1,253.13

+ 18.13 + 1.47%

Brent (usd/barrel) 06:27 56.96

+ 2.80 + 5.17%

WORLD MARKETS

Wall St (DJIA) 5/02 17,885

+ 211.86 + 1.20%

Germany (DAX)

5/02 10,905

+ 14.46 + 0.13%

Japan (Nikkei) 06:33 17,639

- 39.45 - 0.22%

(Business Report, 6/2/2015) COPPER A – SETTLEMENT PRICE – 5708 FORWARD RATES - Dollar/rand 4pm close: R11, 35

Transnet Freight Rail News Briefs Page 5 of 8

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

95 ULP (c/l) 1083.00 990.00

Diesel 0.05% (c/l) 997.49 895.49

Diesel 0.005% (c/l) 1001.89 899.89

Illuminating Paraffin (c/l) 697.728 595.728

Transnet Freight Rail News Briefs Page 6 of 8

Liquefied Petroleum Gas

(c/kg) 1829.00 1679.00

GAUTENG

93 LRP (c/l) 1102.00 1009.00

93 ULP (c/l) 1102.00 1009.00

95 ULP (c/l) 1124.00 1031.00

Diesel 0.05% (c/l) 1028.09 926.09

Diesel 0.005% (c/l) 1032.49 930.49

Illuminating Paraffin (c/l) 747.928 645.928

Liquefied Petroleum Gas

(c/kg) 2011.00 1861.00

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

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 5 February 2015

LME Official Prices, US$ per tonne

Contract Aluminium Alloy Aluminium Copper Lead Nickel Tin Zinc NASAAC

Cash Buyer 1825.00 1848.50 5594.50 1845.00 14830.00 18850.00 2107.00 1945.00

Transnet Freight Rail News Briefs Page 7 of 8

Contract Aluminium Alloy Aluminium Copper Lead Nickel Tin Zinc NASAAC

Cash Seller & Settlement 1835.00 1849.00 5595.00 1847.00 14835.00 18900.00 2107.50 1955.00

3-months Buyer 1840.00 1861.50 5585.00 1858.00 14895.00 18915.00 2117.00 1960.00

3-months Seller 1850.00 1862.00 5587.00 1860.00 14900.00 18920.00 2118.00 1970.00

15-months Buyer 18945.00

15-months Seller 18995.00

Dec 1 Buyer 1840.00 1913.00 5555.00 1892.00 14965.00 2145.00 2025.00

Dec 1 Seller 1850.00 1918.00 5565.00 1897.00 15065.00 2150.00 2035.00

Dec 2 Buyer 1953.00 5545.00 1917.00 14905.00 2133.00

Dec 2 Seller 1958.00 5555.00 1922.00 15005.00 2138.00

Dec 3 Buyer 1997.00 5530.00 1917.00 14855.00 2120.00

Dec 3 Seller 2002.00 5540.00 1922.00 14955.00 2125.00

(London Metal Exchange, 6/2/2015)

NOTE: Your attention is drawn to the following: 1. USE

This Newsbrief is intended for the use of Transnet employees only. It is not to be disclosed or disseminated to outside parties, without the consent of a Transnet Freight Rail Manager who is authorised to communicate with external parties. The following specific terms apply: (a) Transnet Freight Rail hereby grants permission to its employees to view the Newsbrief, and copy, print and

use any of its contents, subject to the following conditions:

(b) The Newsbrief shall be used solely for information and/or commercial purposes within Transnet only, and shall not be disseminated to any external party, copied or posted on any external network computer or broadcast in any 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.

(c) Sale or public distribution or copying for sale or public distribution of any material in the Newsbrief is strictly prohibited.

(d) No modifications to the Newsbrief shall be made.

(e) Use for any other purpose is expressly prohibited by Transnet and may result in disciplinary action against any transgressors, and civil and criminal action may also be taken. Violators will be prosecuted to the maximum extent possible.

2. COPYRIGHT, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS

Copyright in the Newsbrief vests in Transnet.

(a) 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 African and international copyright law and all other intellectual property laws.

(b) The compilation (meaning the collection, arrangement and assembly) of all content in the Newsletter is the exclusive property of Transnet Freight Rail and protected by South African and international copyright law and all other intellectual property laws.

Transnet Freight Rail News Briefs Page 8 of 8

(c) The Transnet Freight Rail name and logo are registered trademarks of the company, protected by South

African and international trademark laws and all other intellectual property laws.

(d) 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 copyright information relating to that product, process or service.