ANALYST PRESENTATION
17 November 2006 Disclaimer
Opinions expressed herein are by nature subjective to known and unknown risks and uncertainties. Changing information or circumstances may cause the actual results, plans and objectives of Kumba Iron Ore Limited (the “Company”) to differ materially from those expressed or implied in the forward looking statements. No representation is made as to the completeness or correctness of the opinions, forecasts or data discussed or contained herein. Neither the Company, nor any of its affiliates, advisors or representatives accept any responsibility for any loss arising from the use of any opinion expressed or forecast or data herein and do not undertake to publicly update or revise any of its opinions whether to reflect new data or future events or circumstances.
2 Kumba Iron Ore’s (“KIO’s”) Analyst Presentation Contents
¾ Company overview
¾ Senior management and board profiles
¾ Operational overview
¾ Project pipeline and growth projects
¾ Market overview
¾ Mission and vision
¾ Strategy
3 KIO - a focused and empowered iron ore player
¾Pursuant to the Kumba Resources empowerment transaction, KIO will be unbundled and separately listed on the JSE
¾On listing KIO will:
• Be the only pure play iron ore company listed on the JSE
• Become a 64.9% held subsidiary of Anglo American plc, a core and strategic asset for the group
4 KIO, through SIOC, will be fully empowered
¾KIO will own 74% of Sishen Iron Ore Company ("SIOC")
• The remaining 26% of SIOC will be black-owned on implementation of the Kumba Resources empowerment transaction
• The 2014 equity ownership targets of the Mining Charter will be met
• KIO has commenced application for conversion of its old order mineral rights to new order mining rights
5 Group ownership structure (post unbundling and listing)
Industrial Development Corporation Anglo American plc Minorities
13.4% 64.9% 21.7%
KIO*
74%
SIOC Exxaro* 20%
26%
BEE SIOC Community Development Trust ownership 3%
SIOC Employee Share ParticipationSIOC ESPS Scheme 3%
* Listed on the JSE
6 Overview of KIO’s assets
SIOC
Investments in other Operations and projects within companies by SIOC Kumba Iron Ore Holdings BV SIOC
100%
Sishen mine Kumba International BV 50% Pietersburg Iron Ore Company (Proprietary) Ltd Sishen Expansion Project I 100% owned subsidiaries 50% Sishen Expansion Zandrivierspoort Project Project II Kumba International Trading BV
Sishen South Project
Kumba Hong Kong Limited
Export Logistics Channel
Kumba Shipping Hong Kong Limited 50% Thabazimbi mine Trans Orient Ore Supplies Limited Groler Investments Limited Phoenix Project
Key: Operational companies Investment companies Growth projects Mines
7 Senior management and board profiles
8 Senior Management
Ras Myburgh – Chief Executive Officer ¾Formerly General Manager of Sishen Iron Ore Company: February 2006 ¾Previous positions in Kumba Resources - General Manager: Transformation and Empowerment and Managing Director: Kumba Resources’ Coal division
Vincent Uren – Chief Financial Officer ¾17 years experience in Anglo American’s Corporate Finance department ¾Involved in a number of diverse and complex local and international transactions
9 Senior Management (continued)
Fergus Marupen – General Manager, Human Resources ¾ Formerly General Manager, Human Resources for Kumba Resources ¾ Previous positions include Assistant General Manager (HR) at Heavy Minerals/Ticor and at the former Iscor Quarries
Francois Louw – General Manager, Commercial ¾ Since September 2005, Francois has been Project Director for Kumba’s Northern Cape iron ore interests ¾ Previously he was Manager, Strategic Projects in the iron ore business and General Manager, Operations at Ticor South Africa
Christo van Loggerenberg – General Manager, Projects and Technical ¾ Formerly Business Development Manager for Kumba Resources iron ore business ¾ He started his career at Iscor Mining in 1981 as metallurgical engineer at Grootegeluk Coal Mine
10 Senior Management (continued)
Peet Kotze – General Manager, Sishen Iron Ore Mine ¾ General Manager, Sishen Iron Ore Mine – a post he has held from January 2004 ¾ Formerly Production Superintendent at Grootegeluk Coal Mine and mine manager at Leeuwpan Coal Mine and Thabazimbi Iron Ore Mine
Aart van den Brink – Mine Manager, Thabazimbi Iron Ore Mine since 2005 ¾ Formerly Superintendent at Grootegeluk and Mining Manager at the Thabazimbi and Grootegeluk Mines
11 KIO board profiles
¾ Executive Chairman of Afripalm Resources Lazarus Zim ¾ Former Chief Executive Officer of Anglo American South Africa and Chairman of Anglo Chairman Coal operations ¾ President of the Chamber of Mines and on the boards of Anglo American South Africa, Mondi SA Limited, Sanlam Limited and Telkom SA Limited
¾ Chairman and Chief Executive of Anglo American’s Ferrous Metals and Industries and Philip Baum acting Chief Executive Anglo American South Africa Non-executive ¾ Member of the boards of Anglo American South Africa, Anglo Platinum, Tongaat Hulett and Kumba Resources ¾ Formerly Chief Executive of Anglo American Corporation Zimbabwe, Chief Operating Officer of Anglo American Corporation
Gert Gouws ¾ Chief Financial Officer of the Industrial Development Corporation Non-executive ¾ Serves as a director on several boards Including Umicore Autocat SA (Chairman) and Algorax (Chairman)
¾ Non-executive Chairman of Kumba Resources Allen Morgan ¾ Formerly at Eskom where he was appointed to Eskom’s general board Independent in 1992 and served as Executive Director: Marketing and non-executive Electrification and Eskom Chief Executive (1994 -2000)
12 KIO board profiles (continued)
Peter Matlare ¾ Commercial Director of Vodacom South Africa Independent ¾ Formerly Chief Executive Officer of the SABC (2001 – 2005) non-executive
Nkosana Moyo ¾ Managing Partner Africa of Actis Capital LLP Independent ¾ Formerly the Senior Adviser to the International Finance Corporation (2001- 2003), non-executive Managing Director of Batani Capital Finance (1997 – 2000), Managing Director of Standard Chartered Bank, Tanzania (1995 -1996) and the Minister of Industry and International Trade in Zimbabwe
Dolly Mokgatle ¾ Executive Director of Peotona Capital Independent ¾ Non-executive Chairman of EDI Holdings and the Deputy Chairman of the National non-executive Energy Regulator of South Africa
13 Operational overview
14 KIO’s principal operating assets – Sishen mine
Sishen mine 2005 2004 Tonnes treated (Mtpa) 31.8 32.8 Waste mined (Mtpa) 58.6 54.7 Stripping ratio (1) 1.8 1.7 Total production (Mtpa) 28.5 27.9 Total sales (Mtpa) 28.9 27.5 Total production cost (R'm) 1,540 1,353 Total capex (R'm) 243 170
¾ Focused on beneficiation of high-grade iron ore (beneficiated Fe>60%) ¾ Majority of product (c.22Mtpa) exported via Saldanha port facility ¾ Production reached a peak of 28.5Mtpa in 2005 ¾ Life of mine - 2028 ¾ Agreement with Mittal Steel to supply 6.25Mtpa of product for the life of mine
(1) Measured as total waste:total ore Source: Kumba Iron Ore Competent Persons Report 15 KIO’s principal operating assets – Thabazimbi mine
Thabazimbi mine 2005 2004 Tonnes treated (Mtpa) 3.1 3.1 Waste mined (Mtpa) 25.0 34.5 Stripping ratio (1) 7.5 11.2 Total production (Mtpa) 2.5 2.5 Total sales (Mtpa) 2.5 2.5 Total production cost (R'm) 388 370 Total capex (R'm) 40 104
¾ Mittal Steel captive operation ¾ Short life operation with haematite mineral reserves that give a life of mine (“LOM”) of 4 years ¾ Project Phoenix, a life extension project could extend the LOM by further 20 years
(1) Measured as total waste:total ore Source: Kumba Iron Ore Competent Persons Report 16 Salient historical operating statistics
Iron Ore 2002(F) 2003(F) 2003(H2) 2004(C) 2005(C) Production Sishen mine (Kt) 25,903 26,168 13,470 27,609 28,458 Thabazimbi mine (Kt) 2,421 2,389 1,270 2,503 2,530 Total (Kt) 28,324 28,557 14,740 30,112 30,988 Sales Sishen mine exports (Kt) 19,916 20,946 10,004 20,923 22,113
(F) Financial Year ended 30 June (H2) Six months ended 31 December due to the change of Financial Year (C) Calendar Year ended 31 December
17 KIO’s products
An extensive product range is offered: ¾ 25mm Lump ore for direct charge to Blast Furnaces ¾ 20mm Lump ore as a cost-effective Pellet replacement ¾ 27mm DR ore for Direct Reduction Shaft Furnaces ¾ 8mm Coarse Sinter ore for blending with concentrates in Sinter Plants ¾ 5mm Fine ore for Sinter Plants
Distinguishing features of Sishen's operation and products are: ¾ The high Fe (iron) content of the ore ¾ Superior sizing characteristics ¾ Consistent product quality ¾ Reliability of supply ¾ ISO 9002 & 14001 accreditation
18 KIO products – comparative value
¾ High Fe content • Fines: World Average = 62.6% Sishen = 65.0% • Lump: World Average = 64.7% Sishen = 66.0% ¾ Low alumina: silica ratio ¾ Low decrepitation in materials handling and in blast furnaces ¾ High dynamic strength in blast furnaces ¾ Consistency of product quality (chemically and sizing) ¾ Low moisture content • increased flow characteristics in cold climates • improved handling • lower transportation cost / Fe unit • less energy required ¾ High resistance to mechanical impact – less Fines generated ¾ Higher permeability of BF burden – enhanced productivity
19 KIO production / exports
United Kingdom Korea France Austria 5% Japan Germany Italy Romania Korea 23% Japan China W Europe China 35% 35% Other 2%
South Africa
¾ Balanced geographical spread ¾ Improving the customer value proposition through Value-In-Use concept ¾ Committed to consistently produce products of the highest quality, underpinned by investment in new technology, quality management and adherence to related ISO standards
20 Project pipeline and growth projects
21 Project pipeline Ideas Potential MRM Pre- Independent feasibility Approve reviews ZRP 1.5 Mt Implement Technical Optimization Feasibility Mining review SEP 2 Phase 1 SEP 2 11-15 Mt Phase 2 C-Material +20 Mt Sishen Sishen South SEP Phoenix South Sishen Phase 3 13 Mt 3 Mt 9 Mt Pellets 6 Mt
1.5 Mt Plant
Sishen Faleme DMS Decision 12 Mt Expansion 2 Mt Customer
Decision
Decision
22 Capacity growth – production
Growth Prospects
90.0 80.0 70.0 Faleme Pellets 60.0 SEP 2 Phase 1 Phoenix 50.0 Sishen South Mtpa 40.0 Thabazimbi SEP 30.0
20.0 Sishen 10.0
- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: KIO
23 Capacity growth – export channel
KIO’s Northern Cape Growth Million Tons Pipeline will be underpinned by 70 Transnet’s export channel expansions 60
50 ¾ Phase 1a: 41Mtpa capacity approved in 2005 40 ¾ Phase 1b: 47Mtpa capacity 30 announced
20 ¾ Phase 2: 67Mtpa capacity study to 10 be completed in Q12007
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 ¾ Phase 3: 91Mtpa capacity envisaged for 2011 ACTUAL FORECAST
ACTUAL CURRENT EXPANSION PLANNED
Source: Transnet 24 Growth projects
¾ Project extended from 10Mtpa to 13Mtpa in August 2006 ¾ Apply jig technology to extract c.13Mtpa of additional saleable ore from Sishen Expansion 21Mtpa of feedstock – about 8Mtpa material previously accounted for as Project I waste and 13Mtpa from new run-of-mine material (SEP 1) ¾ Increase resource utilisation and reduce stripping ratios for the Sishen mine Construction ¾ Production is anticipated to commence by mid-2007, ramping up to full capacity by 2009
¾ Exploitation of additional low iron content material Sishen Expansion ¾ A bankable feasibility study for this project is due to be completed in 2007, Project II with production currently anticipated to commence by 2011 Pre-feasibility ¾ Currently confirming product specifications and evaluate alternative production capacities, mining technology options and mine plans
¾ New opencast operation near Postmasburg, executed in 2 phases Sishen South ¾ Phase 1: development of 3 – 9Mtpa mine that will form part of the next Project Sishen-Saldanha export channel expansion Feasibility ¾ Capital cost currently estimated at c.R2.5 billion for a 9Mtpa mine
25 Growth projects (continued)
¾ Extend the life of the Thabazimbi mine by c.20 years, producing both lump and fine ore Phoenix Project ¾ A feasibility study currently underway, and an investment decision on project could be made during 2006, with 2.5 – 3Mtpa of production beginning 2009 Feasibility ¾ Maintain annual production rates at Thabazimbi mine after depletion of the current mine reserves
¾ Kumba Resources and Mittal Steel have developed a framework for a pre- Zandrivierspoort feasibility study, which commenced with exploration activities in 2005 Project ¾ During 2006 and 2007, alternative processing and final product options will be Pre-feasibility evaluated and the parties intend to commit to a detailed bankable feasibility study in 2008
Falémé ¾ Bankable feasibility due to be completed by 2007, with production due at the end of Project 2008 Pre-feasibility ¾ Mine producing 12Mtpa of high-grade ore over 20 years, with ore transported to a new terminal at Dakar, and shipped to Europe
26 Market overview
27 Industry analysis
The iron ore industry remains fundamentally attractive
¾ 2006 demand increase of 5.8% over 2005 to >1 600 Mt ¾ Steady growth in demand forecast until at least 2020 (25% growth from today’s levels) ¾ Demand (particularly sea-borne) growing due to Chinese demand and reduced steel scrap availability ¾ CVRD, Rio Tinto and BHP Billiton will largely be responsible for future sea- borne expansions ¾ Greenfield incentive pricing is expected until at least 2015 and Brownfield incentive pricing after 2025
28 Positive market outlook Crude steel production 2000 - 2005
1200
1000 ¾ Rapid consumption growth of emerging markets driving increased production 800
600
(Mtpa) ¾ Global seaborne iron ore volumes forecast to 400 exceed 700Mtpa in 2006 (644Mtpa in 2005)
200 ¾ Iron ore contract prices have increased dramatically 0 2000 2001 2002 2003 2004 2005 in the past few years – 9% in 2003, 18.6% in 2004, World China 71.5% in 2005 and 19% in 2006
Finished steel per capita consumption 700 ¾ Chinese demand remains strong, and KIO has
600 excellent relationships with its customers in China
500
400
300 (Kg/capital)
200
100
0 2000 2001 2002 2003 2004 2005
Japan EU-25 China India
Source: AME Mineral Economics 29 Major trends / competitor activities
¾ All major suppliers have a pipeline of growth projects and infrastructure expansion
¾ All major suppliers are tying up long term supply contracts with major mills
¾ BHP Billiton embarks on an aggressive new marketing strategy, focusing on China spot and semi-spot market
¾ Formation of JVs between suppliers and steel mills in new projects
¾ Consolidation and alliances amongst steel producers (Arcelor/Mittal, Tata Steel/Corus, NSC/Posco etc.)
30 Mission and Vision
31 KIO - our mission and vision
Kumba Iron Ore Kumba Iron Ore Mission Vision
“To deliver outstanding “To define a new frontier of sustainable value to all our operational and people stakeholders” performance in the mining industry”
32 Strategy
33 KIO's strategy - increase volumes and improve efficiencies to earn enhanced returns
KIO will: ¾ Reduce operating expenses to increase the operating margin through pursuing continuous improvement initiatives in all business areas
¾ Establish and maintain preferred-supplier status in high-margin iron ore markets by differentiating KIO's high quality products, maintaining consistent quality and delivering superior levels of customer service
¾ Progress current growth projects and secure new opportunities to ensure a full pipeline of long-term growth options
¾ Be a responsible corporate citizen in line with the guiding principles of the King II Report on Corporate Governance and continue to improve on safety, health and environmental performance
34 Well poised to compete
¾ In 2005 supplied 3.2% of world’s seaborne traded iron ore
¾ Supplied 8.4% of seaborne lump ore
¾ ca.73% of total annual production exported to 30 customers in various geographies
¾ Over 2 billion tonnes of high quality iron ore resources from two principal mining assets
¾ Ratio of 62% lump to 38% fine ore (competitors have 30% lump to 70% fine ore ratio)
¾ High value-in-use, consistent quality beneficiated iron ore with strong resistance to breakdown
¾ Proven resources and reserves support an increase in production from 32Mtpa to 42Mpta by 2009 and 70Mtpa by 2015
¾ Extensive brownfield and greenfield expansion projects
¾ Stable cash flows to fund full pipeline of long-term growth projects and value-adding acquisitions
¾ Saldanha Bay export port well positioned to service key markets
35