Investor Site Visit

Western Cape
25 March 2011
www.ppc.co.za 1

Todays program
07h45 Welcome at PPCs Montague Gardens depot 08h00 Overview of PPCs Western Cape operations 08h45 By bus to PPCs De Hoek factory, Piketberg (2 hours) 10h45 Presentation and site tour at De Hoek factory 12h45 By bus to PPCs Riebeeck Factory, Riebeeck West (1 hour) 13h45 Presentation and site tour at Riebeeck factory 15h00 Lunch and final Q&A in Riebeeck West 16h30 Depart by bus for return journey (1.5 hour) 18h00 Arrive at Cape Town airport or Montague Gardens depot

Enjoy the day!

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Todays objectives
Investors
An overview of PPCs operations in the Western Cape province (WC) First-hand knowledge of cement manufacturing processes and equipment A better understanding of PPCs modernisation plans in the WC Meeting a wider group of PPC management

PPC
Interaction with important stakeholders Showcase our operations in the WC Clearly articulate our modernisation and expansion plans for the WC

PPC in southern Africa

Botswana Namibia
Gaborone (Mill) Slurry

Zimbabwe
Bulawayo (Mill)

Dwaalboom Hercules
Johannesburg

Jupiter

Lime Acres

Saldanha (Mill) De Hoek Montague Gardens (Depot)

Cape Town

Riebeeck

Port Elizabeth George (Depot)

PPC Cement PPC Aggregates PPC Lime

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Mozambique

Colleen Bawn

PPC in the Western Cape Western Cape Province

Vanryhnsdorp

Northern Cape

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De Hoek Saldanha (Mill) 60km 140km 100km Riebeeck

Western Cape

Montague Gardens (Depot)

George (Depot)

Cape Town

PPCs Western Cape integrated network Orientation

Northern Cape
Vanryhnsdorp

Significant WC limestone reserves Indicates rail interconnectivity

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Saldanha (Mill) De Hoek

Western Cape
Riebeeck

George (Depot) Montague Gardens (Depot)

Cape Town

PPCs Western Cape integrated network

Exploiting the closest, significant limestone reserves to the Cape Town market
Vanryhnsdorp and Saldanha limestone reserves not owned by PPC

All WC sites connected by both rail and road All WC sites can distribute bulk or bag to customers De Hoek factory, 220 employees, capacity ~1.2mtpa cement Riebeeck factory, 180 employees, capacity ~ 600ktpa cement Saldanha factory, 40 employees, capacity ~ 500k tons of slag per annum
Currently limited to ~240k tons per annum due to slag availability

Montague Gardens and George depots, (20 operations employees) Exports possible through Cape Town harbour

Products
OPC (ordinary portland cement)
Construction industry, concrete product manufacturers and readymix concrete producers

RHC (rapid hardening cement)

Specialised applications where high early strength concrete is required e.g. brick and roof tile manufacturers

Surebuild (general purpose cement)

A premium multipurpose cement

All products are available in bag and bulk

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Customer segments and projects in the WC

Retailers are the largest customer segment followed by readymix concrete producers and concrete product manufacturers

Planned infrastructure projects ~R13bn

New N1/N2 toll road BRT (bus rapid transit) project Retail/shopping centres Distribution depots for retailers Mitchells Plein Hospital
Includes only the major projects for the next 3 to 5 years All values listed above are estimated project costs

R4.8bn R4.6bn (phase 1A) >R1.6bn ~R1.3bn R400m

Note:

WC demand analysis
Annual cement demand
1616 000 000 14 14 000 000 1212 000 000
3 500 000 5 000 000 4 500 000 4 000 000

1010 000 000

000 tons

3 000 000 2 500 000 2 000 000 1 500 000 1 000 000 500 000 SA domestic 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Western Cape 2008 2009 2010

8 000 8 000 2 000 6 000 1 500

4 000

1 000 500
2 000

00

WC market is between 10 -15% of SA domestic market through a cycle

Source: CNCI data, Western Cape 2010 - PPC estimate
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WC demand analysis (continued)

An n u a l c e m e n t d e m a n d in d e x
1996 = 100
180

160

140

120

100

80 S A Do m e stic 60 2004 2001 2002 2003 1996 1997 1998 1999 2000 2005 2006 2007 2008 2009 2010 W e ste rn Ca p e

SA domestic demand back to 2004/2005 levels and WC demand back to 2002 levels WC demand has been more volatile than the overall SA domestic market
Source: CNCI data, PPC calculations, Western Cape 2010 a PPC estimate
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WC replacement and expansion plan

Why?
Kilns are old (average 40 years) but well-maintained and still produce good quality cement however much less energy efficient Impact of new environmental legislation (from 2015) will require significant capex investment To align WC capacity with future market demand Brown fields preferred to green fields approach:
Deliver the same capacity and energy efficiency Lower capital cost spread over a longer period Reduced environmental impact

Capacity (increase of 50%)

De Hoek: replacement (phase 1) and expansion (phase 3) Riebeeck: replacement with some expansion (phase 2)

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WC replacement and expansion plan (continued)

3 phases, including Riebeeck and De Hoek
Phase 1 A new clinker cooler, coal firing system and bag filter for De Hoek kiln 6
Capex R 280m - Currently in progress to be completed early 2012

Phase 2 New kiln 3 and upgrading of kiln feed and cement milling capacity at Riebeeck
Capex R 1,300m Commencing 2012 to be completed 2016

Phase 3 Further increased capacity and energy efficiency of De Hoek kiln 6 by installing a pre-calciner
Capex R 1,400m Commencing 2016 to be completed 2018

Other advantages of this plan?

Can expedite or delay phase 3 to match market demand Optimal utilisation of limestone resources

Each phase will be discussed in more detail at the respective factories

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Montague Gardens depot

Cape Town
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Montague Gardens depot

Bulk handling and packaging facility completed in 1980 Includes WC sales, marketing and administration offices
35 sales and marketing employees

Bulk handling and packaging facility

Receives bulk cement from De Hoek and Riebeeck factories by rail Bulk cement storage capacity 18 000t (OPC and Surebuild) Ability to dispatch both bagged and bulk cement by road

Key advantage
Ability to optimise rail/road logistics between plants and Cape Town market Ability to service customers with short lead times

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Questions?

www.ppc.co.za 16

Investor Site Visit

De Hoek factory - Piketberg
www.ppc.co.za 17

Introduction to De Hoek factory

History
Limestone discovered in 1919 by the Hermon Piquetberg Lime Company Cape Portland Cement started production of cement in 1923 In 1983 name changed to PPC

Integrated cement factory

Products Surebuild and Rapo in bag/bulk dispatched by road and rail Capacity to produce 1.2mtpa of cement using
2 kilns DHK5 (1974) and DHK6 (1980) 2 cement mills 2 rotary packers each capable of 2900 bags per hour 2 automated cement bag palletisers

On-site limestone reserves for more than 30 years Coal from Saldanha (230km) and Limpopo province (1800km) by rail All other raw materials locally sourced

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Cement manufacturing process

crushing plant Kiln feed preparation and blending coal stockpile

Limestone mining

coal mill

raw mill

pre-heater, kiln line & cooler

clinker storage

cement milling & dispatch

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Cement manufacturing process (continued)

mining limestone crushing plant limestone blending coal stockpile

coal mill

raw mill

pre-heater, kiln line & cooler

clinker storage

cement milling & dispatch

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Cement manufacturing process (continued)

mining limestone crushing plant limestone blending coal stockpile

coal mill

raw mill

pre-heater, kiln line & cooler

clinker storage

cement milling & dispatch

Most thermal energy intensive Most thermal energy intensive stage of the process stage of the process

Flame to produce 1400 C

Clinker Cooler

Coal Mill

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Cement manufacturing process (continued)

Raw meal feed to the kiln:
~90% limestone
Source of calcium carbonate

~10% other (shale, sand, iron)

Flame to produce 1400 C
o

~1.5 ton raw meal = 1 ton clinker

Clinker Cooler Coal Mill

Calcination process
Calcium carbonate + heat = calcium oxide + carbon dioxide CaCO3 + 1400oC heat = CaO + CO2 ~1.5 tons + 1400oC heat = 1 ton clinker + 500kg CO2*

Approximately half of CO2 produced in the clinker process is derived from the dissociation limestone, not from burning coal * Excludes CO
2 from

coal and electricity used in the process

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Cement manufacturing process (continued)

mining limestone crushing plant limestone blending coal stockpile

coal mill

raw mill

pre-heater, kiln line & cooler

clinker storage

cement milling & dispatch

Clinker is finely ground with gypsum (to control the setting time of cement) CEM I (pure cement) consists predominantly of clinker and gypsum Extended cements contain extender materials, such as limestone, fly ash or slag
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De Hoek upgrade and expansion plan

Phase 1 (De Hoek kiln 6)
Currently in progress and due for completion in early 2012 Kiln shell and inlet seal replacement New grate type clinker cooler Indirect coal firing conversion and installation of a modern kiln burner New bag filter for kiln exhaust gas

Advantages
New shell = improved kiln uniformity and refractory life Rapid cooling of clinker improves grindability and handling Multi-channel burner = burning of alternative/waste fuels Improved kiln thermal efficiency = lower fuel consumption and higher output Increased coal mill capacity = use of lower grade coal Reduced kiln dust emissions Enables future capacity expansion (Phase 3)

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De Hoek upgrade and expansion plan (continued)

Indirect firing system Kiln shell replacement

Planetary coolers replaced with grate cooler

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De Hoek upgrade and expansion plan (continued)

Phase 3 (De Hoek kiln6)
Timing of this phase is flexible and will be aligned with market demand as it develops Main features will include the installation of a kiln pre-calciner and the upgrade of kiln feed, coal milling and other ancillary equipment to cater for the increased kiln6 capacity

Advantages
Will result in a significant thermal efficiency (coal) improvement Will increase De Hoek kiln 6 output by 100%
Resulting in ~1.3mtpa* modernised cement capacity

Overall De Hoek factory capacity will increase to 1.8mtpa

De Hoek Kiln6 will be upgraded to world-class technology

Together with new Riebeeck kiln 3 will produce the base requirement for WC De Hoek kiln 5 will become the swing unit for the WC
*Current estimate and may vary according to final design and equipment specifications
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Questions?

www.ppc.co.za 27

Site tour

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Site tour plan

Visit mine to view:
Extent of limestone reserves Mining of Zoutkloof and Vondeling pits

Central control room for overview of plant operation Group splits to visit Laboratory/packaging plant Group rotates Return to training centre

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De Hoeks social development initiatives

A number of projects focussing on education, infrastructure and housing
Construction and upgrading of classrooms and facilities at local schools Portable skills training in the community (welding, vehicle maintenance, agriculture and woodwork) Water infrastructure supplied to the Wittewater and Goedverwacht communities Construction of entrance road for Wittewater Construction of business hub for SMMEs at Porterville

Grade R classrooms at Steynville Primary School

(Local contractor used 20 local workers)
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Investor Site Visit

Riebeeck Factory Riebeeck West
www.ppc.co.za 31

Introduction to Riebeeck factory

History
The factory site includes the birth place of General Jan Smuts (1870 - 1950) a national monument maintained by PPC The factory was founded in 1959

An integrated cement factory

Current products OPC and Rapo in bag/bulk, dispatched by road and rail Capacity to produce 600 000 tpa of cement using
2 kilns RK1 (1959) and RK2 (1968)
Both kilns run sustainably at 20% over original design capacity

2 cement mills 1 rotary packer capable of 2000 bags per hour

On-site limestone reserves for more than 100 years Coal from Limpopo province by rail 1700km distance All other raw materials sourced locally and Saldanha (237km)

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Aerial view of factory and mine

Riebeeck West village

Smuts cottage

Cement factory Limestone mine

Rehabilitated overburden dumps

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Mine rehabilitation

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Riebeeck upgrade and expansion plan

EIA process based on revised expansion plan commenced late during 2010 Construction expected to commence during 2012
New kiln (RK3) to replace both existing kilns Kiln feed & coal milling circuits to be upgraded to support larger capacity Cement milling will be upgraded for larger capacity and future product changes Existing mining, raw materials handling, product storage and general site infrastructure can be used

Advantages
Two old cement kilns replaced with one modern cement kiln Significantly improved thermal and electrical efficiency 40% increase in overall factory capacity Brown-fields project with lower capital expenditure New equipment will exceed new environmental requirements

Result:

~850ktpa* cement capacity at world-class efficiency and environmental standards

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*Current estimate and may vary according to final design and equipment specifications

Riebeeck upgrade and expansion plan - scope

crushing plant Kiln feed preparation and blending coal stockpile

mining limestone

coal mill

raw mill

kiln line & cooler

clinker storage

cement milling & dispatch

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Riebeeck upgrade and expansion plan (continued)

Schematic of current plant layout (RK1 & 2 in yellow)

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Riebeeck upgrade and expansion plan (continued)

Schematic of kiln 3 construction (green)

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Riebeeck upgrade and expansion plan (continued)

Schematic of upgraded layout (RK1 &2 dismantled)

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Questions?

www.ppc.co.za 40

Site tour

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Site tour plan

Mine visit to view:
Extent of limestone reserves Current mining operation Future mine layout Rehabilitated overburden dumps

Factory visit to view:

Existing kilns and material flow Location of proposed kiln

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PPC Riebeecks social development initiatives

Our vision is the development of our youth as the building blocks for our future in this country Strategy is to prioritise investment in educating the youth in the area Projects completed or in progress:
Investment in two crches (completed) Construction of three grade R classes (completed) Construction of a youth centre in conjunction with Goedgedacht trust which specialises in youth development programs (in progress)

Youth centre under construction

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Thank you for spending time with us today

www.ppc.co.za 44

Disclaimer
Whilst not intended to contain any profit forecasts or profit estimates, this document including, without limitation, those statements concerning the demand outlook, PPCs expansion projects and its capital resources and expenditure, may contain certain forward-looking views. By their nature, forward-looking statements involve risk and uncertainty and although PPC believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment, other government action and business and operational risk management. While PPC takes reasonable care to ensure the accuracy of the information presented, PPC accepts no responsibility for any damages be it consequential, indirect, special or incidental, whether foreseeable or unforeseeable, based on claims arising out of misrepresentation or negligence arising in connection with a forward-looking statement. This document is not intended to contain any profit forecasts or profit estimates, and unless otherwise stated, has not been reviewed and reported on by PPCs auditor either in accordance with 3.4(B)(VIII)(1)(AA) OR 3.4(B)(VIII)(1)(BB).

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