Transnet Freight Rail is a division of Transnet SOC Ltd Reg no.: 1990/000900/30

An Authorised Financial Services Provider – FSP 18828

Transnet Freight RailAnnual Customer Conference 2013

Keynote Address

Mr Siyabonga Gama

Chief Executive Officer

4th – 6th September 2013

2

Freight Rail Overview

Freight Rail transports 14% of the nations freight tonnage annually or 35%

of ton kilometers

Owns and maintains a network of ~22 000 route km connected to ports

and the rail networks of neighbouring countries

Network of 30 100 track km is 1067mm or Cape Gauge

Operates World Class Heavy Haul export corridors

Operates ~1 050+ trains per day

Serves ~450 key accounts

Conveys 98 commodity groups over more than 4 000 origin – destination

combinations

Transports 4.5mt per week

Moved 208 million tons in the 2012/13 financial year

Employs 31 511 people

Why the Market Demand Strategy?

3

Job Creation

Reducing the Cost of Logistics

Catalyst for Economic Growth

Road-Rail Freight Industry Imbalance-

Meet Customer Demand & Improve Service Delivery

Regional Integration

Market Demand Strategy

4

Market Growth

Operational Efficiency

Operations efficiency & execution

Reliable, safe scheduled railway

Efficient Operations practices

Capital Investment Accountability

High Performing Customer Focused Business Units

People

Strategic Workforce Plan

Inspirational and Empowerment Programmes

Safety

Mature safety performance

Technology to reduce human error & equipment failure

Sustainable Rail Environment Rail Policy development aligned with DPE & DOT to promote Road to Rail shift

Capacity created ahead of demand

World class capital execution function

Customer service culture

Road- Railer solutions

PSPs & Regional integration

Market Demand Strategy –A Robust Plan for Growth, Modernisation &

Continuous Improvement

5Transnet Freight Rail is a division of Transnet SOC Ltd Reg no.: 1990/000900/30

An Authorised Financial Services Provider – FSP 18828 52011 2013 2017 2020

Preparation for GrowthIntensive capital investment and

operating efficiency 0 – 2 years

Sustained GrowthConsistent, reliable and maintained

Scheduled Railway 2 – 5 years

Consolidate High tempo & high volume growth;

high performing organisation in service provision to customers

5 – 7 years

Performance organisation Improving service

reliability & predictability

People Strategy – Training and development High Performance Customer

Centric Culture

Business Model –Customer-facing BUs

Manpower PlanIncreased Employee base &

skills for volume growth

Funding Strategy• PSPs

Sustaining & Expansionary investment programme & Improved operations Locomotives; Infrastructure; Wagons;

Technology

Prioritised investment for Growth focus• Mining – Common user facilities, Junior miners,

Coalfields, Eskom, Waterberg, Northern Cape & North East Mining Expansion

• Manufacturing – Containers, Intermodalism• Rural Development – Branch line access• Africa

Investment for Growth• Domestic Intermodal

• Inland Terminals• Manufacturing sector – wagons

for beneficiated products

Operate in reformed Rail Policy Environment

Correct Road-Rail Modal Balance

Operating a Scheduled

Railway

Job CreationRailway skills and

enterprise development

Sustainable Railway Business Model

Safety performance improvement.

Measurement, Recognition & Consequences

Systematic approach to safety

Excellent Safety Performance is the Standard – Safety is

Manageable

Transnet Freight Rail Strategic Rail Track Map This is a Journey

6

220

360

320

300

240

340

260

200

180

160

140

120

100

80

60

40

280

2018/19

350,2

2017/18

334,4

2016/17

305,7

328,5

2015/16

283,5

321,8

2014/15

261,8

309,4

2013/14

230,0

278,8

2012/13

208,0

268,1

2011 / 2012

201,0

247,2

334,0

Freight Rail Volumes

Market Demand

Magnetite

GF Coal

Eskom Coal

Manganese

Waterberg GF Exports

Containers

Regional Integration

Volume GrowthStriving to Meet Customer Demand

Enabling Programmes to achieve National Objectives through Strategic Integrated

Projects (SIPs)

Transnet InvolvementSIP Programmes

• Waterberg Integrated Development

• Durban-Gauteng Development Region

• South Eastern Node & Corridor

• Saldanha-Northern Cape Corridor

Catalytic Projects

Geographic SIPS

Spatial SIPS

Regional Infra SIPS

Unlocking the Northern Mineral Belt (Waterberg)

Durban-Free State-Gauteng Logistics & Industrial Corridor

South Eastern node and corridor development

Unlock Economic Opportunities in North West Province

1

2

3

4

Agri-logistics and rural infrastructure11

Regional Integration for African cooperation and development

17

Saldanha-Northern Cape Development Corridor

5

8

16.5

9.4

66.3

11.8

71.1

125

Land,Buildings &

Structures

Pipeline

Port Facilities

Machinery &

Equipment

Perway

Rolling Stock

A Capital Programme Supporting Growth

The Market Demand Strategy is a catalyst for infrastructure development and

economic growth

9

Sishen

Saldanha

Cape Town

East London

Port Elizabeth

Hotazel

Musina

Kimberley

Polokwane

De Aar

Ngqura

Ermelo

Lephalale

Durban

Richards Bay

Johannesburg

SADC

Containers and Intermodal

Iron Ore

Manganese

Coal

Agriculture/ Timber

Rock-phosphate/ Magnetite

Chrome and Ferrochrome

Phalaborwa

Maputo

10

Area of investment

Utilisation in 2019/20

100%

100%

100%

Terminals: 63%

Ports: 70%

Terminals: 100%

Ports: 98%

Terminals: 74%

Ports: 39%

87%

Existing capacity

71mtpa

58.7 mtpa

85.2 mtpa

Terminals: 5.4 mTEUs

Ports: 7.4 mTEUs

Terminals: 90.1 mtpa

Ports: 196mtpa

Terminals: 15mtpa

Ports: 28 mtpa

4.4 billion litres pa

TFR Coal LineR30.2bn

TFR Ore LineR17.1bn

TFR General Freight

R141.4bn

Maritime Containers

R26.3bn

BulkR27.0bn

BreakbulkR10.2bn

NMPP*R6.9bn

Capacity created over 7 years

21mtpa

23.8 mtpa

90.5mtpa

Terminals: 3.9m TEUs

Ports: 1.0 mTEUs

Terminals: 36.9mtpa

Ports: 14mtpa

Mainly sustaining

4.3 billion litres pa

Future Capacity

92mtpa

82.5 mtpa

175.4 mtpa

Terminals: 9.3mTEUs

Ports: 8.4mTEUs

Terminals: 127.0 mtpa

Ports: 232 mtpa

Terminals: 15 mtpa

Ports: 31 mtpa

8.7 billion litres pa

Capacity Creation To Serve Customer Demand

11

“The recent upswing in the rail share

has occurred more rapidly than

anticipated. The modal shift objectives of

increasing bulk exports of coal and iron

ore; recapturing both export and

domestic bulk markets for other ores;

and making first attempts to increase the

high-value and corridor market

shares are beginning to bear fruit. The

modal shift strategy of increased rail

investment and improved service

levels should receive further support”Source: 9th Annual State of Logistics Survey for South Africa 2012

Rail Turnaround has startedMarket Share Growth

Significant inroads being made by the Container business

12

23%21%20%

18%

13%

38%

34%31%

27%

21%

+16%

2015201420132011 2012

Long HaulTotal Port

Continued implementation of robust strategy for Road to Rail shift - supported by market

development, improvements in operational efficiency and the investment programme

Technology and Process for Intermodal Solutions

Intermodal solutions & Development of Terminals

Using own Real Estate and in co-operation with the private

sector

Common User loading facilities & terminals

Navis terminal operating system shared with ports

14

Imperative to work togetherMitigate Challenges

Slowdown in global economic activity

GDP growth lower than projected

Unexploited Regional growth

Unfavourable exchange rates

High energy costs

High levels of industrial action

Lower commodity prices

Delays in expansion plans

Operational problems

15

Grow tonnages and market share

Modernise and upgrade rolling

stock and infrastructure

Optimise operations

Expand capacity

Deploy rail technology

Develop markets

Build human capacity

Sustainable transport- Green and

carbon efficient supply chains

Benchmark against other Modern

railways

Transnet Freight Rail Grow & Modernise South Africa’s Railway

16

Collaborating for Growth

Transnet Value Chain Focus

Improved service levels across corridors

Shared planning and forecasting– short and

long term

Communicating Needs & Requirements

Aligned development & investment

Modal Integration

Major Project Implementation

Road & Rail Collaboration – Last mile

Public Private Partnerships

Building a workforce that is Skilled, Motivated, Inspired,

Entrepreneurial, Accountable

Adopted philosophy of Lean and Six Sigma – training Champions and

Operations teams

Operations training and capability building

Train driver training simulators for new route and technology training,

scenario training and refreshers

Development of the School of Rail as a Corporate University including

Regional Railways training - collaboration with CFM, NRZ, Swazi Rail and

Botswana Rail

Job creation in accordance with productive rail volume growth

Creating opportunities for unemployed graduates

Standardising Railway Operations and Technical Skills

Developing our People for the Railway of the Future

Operational Discipline

Inspirational Leadership

People Performance & Review

Strategic Clarity

Openness & Trust

Leadership Archetypes

Sustainability strategies :

Reduction of our carbon footprint

Contribution to our operational efficiencies and meeting targets safely

Reduce the cost of doing business by achieving more with less

Application of electricity - regenerative braking technology on 15E and

19E Class Locomotives

Installing energy efficient technology in offices and buildings

We are transport leaders that champion the integration of the green

economy

18

Sustainable TransportRail Strategies

19

Freight Rail is determined to:-

Win back rail friendly tonnages

Develop Partnerships to offer

innovative logistics solutions to the

Southern African region

Continuously improve its service

offering

Meet Customers’ Needs

Reduce the cost of logistics

Contribute to the competitiveness

of South Africa

Conclusion

20Transnet Freight Rail is a division of Transnet SOC Ltd Reg no.: 1990/000900/30

An Authorised Financial Services Provider – FSP 18828

Thank you