KUMBA IRON ORE LIMITED RE-IMAGINING MINING TO IMPROVE PEOPLE’S LIVES Renaissance Capital Conference, 27 May 2020
Disclaimer Certain statements made in this presentation constitute forward-looking statements. Forward-looking statements are typically identified by the use of forward-looking terminology such as ‘believes’, ‘expects’, ‘may’, ‘will’, ‘could’, ‘should’, ‘intends’, ‘estimates’, ‘plans’, ‘assumes’ or ‘a nti cipates’ or the negative thereof or other variations thereon or comparable terminology, or by discussions of, e.g. future plans, present or future events, or strategy that involve risks and uncertainties. Such forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the company's control and all of which are based on the company's current beliefs and expectations about future events. Such statements are based on current expectations and, by their nature, are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance, expressed or implied, by the forward-looking statement. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the company and its subsidiaries. Such forward-looking statements are based on numerous assumptions regarding Kumba’s present and future business strategies and the environment in which Kumba will operate in the future. Important factors that could cause Kumba’s actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, levels of actual production during any period, levels of global demand and commodity market prices, mineral resource exploration and development capabilities, recovery rates and other operational capabilities, the effects of global pandemics and outbreaks of infectious diseases, the availability of mining and processing equipment, the ability to produce and transport products profitably, the availability of transport infrastructure, the impact of foreign currency exchange rates on market prices and operating costs, the availability of sufficient credit, the effects of inflation, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors, activities by governmental authorities such as permitting and changes in taxation or safety, health, environmental or other types of regulation where Kumba operates, conflicts over land and resource ownership rights and such other risk factors identified in Kumba’s most recent Integrated Report. The forward-looking statements contained in this presentation speak only as of the date of this presentation and the company undertakes no duty to, and will not necessarily, update any of them in light of new information or future events, except to the extent required by applicable law or regulation. 2
Capital efficient, resilient business - improving people’s lives Rewarding employee talent Supporting local businesses R5.0bn R13.9bn Salaries and benefits (FY18: R4.6bn) BEE business suppliers (FY18: R11.8bn) R2.4bn Host community suppliers (FY18: R1.4bn) Contributing to South Africa R7.8bn Income tax (FY18: R4.1bn) Building communities R2.6bn R171m Mineral royalty (FY18: R983m) Direct social investment (FY18: R124m) Environmental, Social & Governance Investing SRI Index 3
Safety and sustainability is our core value Environment Safety Health LTI TRC Occupational diseases Major incidents (level 3 – 5) (new cases) 158 92% Achieved 3.5 years voluntary rehabilitation fatality free HIV test targets 97 77 51 28 41 12 8 1 2 7 41 35 20 21 17 0 0 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 ▪ Elimination of fatalities framework ▪ Focused on reducing exposure to ▪ Enhanced environmental management occupational hazards leading to improved performance ▪ Technology enabling improved safety ▪ Wellness and disease management ▪ Increased awareness and monitoring ▪ Leading indicator drives proactive safety management 4
Proactive and dynamic response to COVID WeCare : workforce & Cash conservation & communities business continuity 5
WeCare supports workforce and communities where it is needed most Prevention Response Recovery Integrated workforce and community Implement operating protocols Ensure safe and healthy operations screening and testing Maintain essential services for Community support (incl. health Support education, job training, communities (eg water, energy) training, food parcels) healthcare and livelihoods 6
Cash conservation of R1.3bn to further strengthen our balance sheet Cost savings against target (Rm) Capital expenditure (Rbn) COVID COVID Response Response 6.6 – 7.1 5.6 – 6.1 5.6 1.8-2.0 325 1000 920 2.1-2.3 800 1.2-1.3 2.6 700 0.7-0.9 0.6 960 3.6-3.8 2.8 – 3.0 2.4 FY19 FY20e FY20 revised FY18e FY18a FY19e FY19a FY20e SIB Expansion Deferred stripping 7
Business continuity in challenging times Total production Total sales 37 – 39Mt 38 – 40Mt (Previous 41.5 - 42.5Mt) (Previous 42 - 43Mt) Sishen Kolomela ▪ Production: ▪ Production: ~ 27Mt (Previous ~ 29Mt) ~11Mt (Previous ~ 13Mt) ▪ Waste: 145 – 160Mt (Previous 170 – 180Mt ) ▪ Waste: 45 – 55Mt (Previous 55 – 60Mt) 8
Iron ore stocks at port …steel inventory overhang now 43% lower than peak level in early March Construction activity continues to remain seasonally strong in China.. 300 000 Construction steel daily transactions (tonnes per day, 5DMA) 2018 Total steel stocks at mills & traders (MT) 38 2019 250 000 33 2020 200 000 28 150 000 23 100 000 18 50 000 2020 2019 2018 13 8 0 Jan Apr Jul Oct Jan Apr Jul Oct Dec Dec …mills’ production continued to improve and has potential further …resulting in continued destock of iron ore port stocks, which has upside fallen to 4-year low of 107Mt. 2018 2018 National BF Operating Rates (%) IO Port Stocks (Mt, 41 ports) 80% 2019 160 2019 2020 2020 70% 140 60% 120 100 50% Jan Apr Jul Oct Dec Jan Apr Jul Oct Dec 9
Positioned for recovery Production ramping up and Able to adapt quickly to healthy stock levels market dynamics 10
Committed to delivering our strategy Operating assets at full potential Leveraging endowment Sustainable returns ▪ Optimisation and efficiencies ▪ Enhanced product portfolio ▪ Business resilience ▪ Technology and futuremining ▪ Improved operational efficiency ▪ Cash conservation ▪ Northern Cape exploration ▪ Cost savings initiatives ▪ Capital efficiency 11
KUMBA IRON ORE LIMITED RE-IMAGINING MINING TO IMPROVE PEOPLE’S LIVES Q&A
KUMBA IRON ORE LIMITED INVESTOR RELATIONS Penny Himlok penny.himlok@angloamerican.com T:: +27 12 622 8324 M: +27 82 781 1888 13
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