Investor Site Visit Western Cape 25 March 2011 www.ppc.co.za 1
Today s program 07h45 Welcome at PPC s Montague Gardens depot 08h00 Overview of PPC s Western Cape operations 08h45 By bus to PPC s De Hoek factory, Piketberg (±2 hours) 10h45 Presentation and site tour at De Hoek factory 12h45 By bus to PPC s 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! 2
Today s objectives Investors An overview of PPC s operations in the Western Cape province (WC) First-hand knowledge of cement manufacturing processes and equipment A better understanding of PPC s 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 3
PPC in southern Africa Zimbabwe Namibia Botswana Gaborone (Mill) Slurry Hercules Bulawayo (Mill) Colleen Bawn Dwaalboom Mozambique Jupiter Johannesburg Lime Acres Saldanha (Mill) Montague Gardens (Depot) De Hoek Riebeeck Port Elizabeth PPC Cement PPC Aggregates Cape Town George (Depot) PPC Lime 4
PPC in the Western Cape Western Cape Province Vanryhnsdorp 7 Northern Cape 1 Saldanha (Mill) De Hoek ±60km ±140km ±100km Riebeeck Western Cape Montague Gardens (Depot) George (Depot) Cape Town 5
Orientation PPC s Western Cape integrated network Vanryhnsdorp 7 Significant WC limestone reserves Indicates rail interconnectivity Northern Cape 1 Saldanha (Mill) De Hoek Riebeeck Western Cape Montague Gardens (Depot) George (Depot) Cape Town 6
PPC s 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 7
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 8
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 R4.8bn BRT (bus rapid transit) project R4.6bn (phase 1A) Retail/shopping centres >R1.6bn Distribution depots for retailers ~R1.3bn Mitchells Plein Hospital R400m Note: Includes only the major projects for the next 3 to 5 years All values listed above are estimated project costs 9
WC demand analysis Annual cement demand 16 16 000 5 000 000 14 14 000 000 4 500 000 000 tons 12 12 000 000 10 10 000 000 8 000 8 2 000 6 000 4 000 000 3 500 000 3 000 000 2 500 000 2 000 000 1 500 4 000 1 000 1 500 000 1 000 000 2 000 500 00 SA domestic Western Cape 500 000-1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 WC market is between 10-15% of SA domestic market through a cycle Source: CNCI data, Western Cape 2010 - PPC estimate 10
WC demand analysis (continued) 180 Annual cement demand index 1996 = 100 160 140 120 100 80 60 SA Domestic Western Cape 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 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 11
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) 12
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 13
Montague Gardens depot Cape Town www.ppc.co.za 14
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 15
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 18
Cement manufacturing process Limestone mining crushing plant Kiln feed preparation and blending coal stockpile coal mill raw mill pre-heater, kiln line & cooler clinker storage cement milling & dispatch 19
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 20
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 Most thermal thermal energy energy intensive intensive stage stage of of the the process process Flame to produce 1400 o C Clinker Cooler Coal Mill 21
Cement manufacturing process (continued) Raw meal feed to the kiln: ~90% limestone Source of calcium carbonate ~10% other (shale, sand, iron) ~1.5 ton raw meal =» 1 ton clinker Flame to produce 1400 o C Clinker Cooler Coal Mill Calcination process Calcium carbonate + heat =» calcium oxide + carbon dioxide CaCO 3 + 1400 o C heat =» CaO + CO 2 ~1.5 tons + 1400 o C heat =» 1 ton clinker + 500kg CO 2 * Approximately half of CO 2 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 22
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 23
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) 24
De Hoek upgrade and expansion plan (continued) Indirect firing system Kiln shell replacement Planetary coolers replaced with grate cooler 25
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 26
Questions? www.ppc.co.za 27
Site tour 28
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 29
De Hoek s 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) 30
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) 32
Aerial view of factory and mine Riebeeck West village Smuts cottage Cement factory Limestone mine Rehabilitated overburden dumps 33
Mine rehabilitation 34
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 *Current estimate and may vary according to final design and equipment specifications 35
Riebeeck upgrade and expansion plan - scope mining limestone crushing plant Kiln feed preparation and blending coal stockpile coal mill raw mill kiln line & cooler clinker storage cement milling & dispatch 36
Riebeeck upgrade and expansion plan (continued) Schematic of current plant layout (RK1 & 2 in yellow) 37
Riebeeck upgrade and expansion plan (continued) Schematic of kiln 3 construction (green) 38
Riebeeck upgrade and expansion plan (continued) Schematic of upgraded layout (RK1 &2 dismantled) 39
Questions? www.ppc.co.za 40
Site tour 41
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 42
PPC Riebeeck s 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 crèches (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 43
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, PPC s 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 PPC s auditor either in accordance with 3.4(B)(VIII)(1)(AA) OR 3.4(B)(VIII)(1)(BB). 45