Transnet Freight Rail News Briefs Page 1 of 7

COMMODITY NEWSBRIEFS: 30 MARCH 2015 Please note that these articles are available in electronic format and can be requested and delivered via e-Mail.

(http://intra.spoornet.co.za) Natasha.Havenga@transnet.net

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FAST MOVING CONSUMER GOODS SUGAR HITS FRESH SIX-YEAR LOW (Business Report, 30/3/2015) Raw sugar futures touched a fresh six-year low on Friday, weighed by a strengthening dollar and abundant supplies, while arabica coffee and cocoa dipped in light volumes. Raw sugar futures on ICE edged lower in early trading to 12.22 cents a pound, the lowest since April 2009, pushed down by a recovery of the dollar against a basket of currencies and ample supplies and stocks. “The dollar is working against the sugar market, and the supply side is particularly heavy,” said Tracey Allen, commodity analyst with Rabobank. She noted strength in the whites-over-raws sugar premium, trading at around $91.50 per ton between the May whites and raw contracts, underpinned by steady cash white sugar demand. In its latest monthly report, Rabobank cut its global 2014/15 sugar deficit forecast to 0.7 million tons, from a 1.8 million tons deficit previously, due to benign growing weather. Producer selling in Brazil has recently weighed on raw sugar prices due to the tumbling real, but the currency has since bounced up from last week's 12-year low. May raw sugar futures were down 0.07 cent, or 0.6 percent, at 12.27 cents a pound at 12h01 GMT, after touching the 6-year low. May white sugar futures traded down $1.20, or 0.3 percent, at $362.00 a ton. FUEL PETROL PRICE TO INCREASE BY R1.62/ℓ IN APRIL (Engineering News, 30/3/2015) The petrol price will increase by R1.62/ℓ next week, while diesel would increase by R1.24/ℓ, the Department of Energy (DoE) revealed on Friday. The DoE said the adjustment was based on local and international factors. It pointed out that the price of petrol (ULP 95) in Gauteng, at R12.89/ℓ in April, would nonetheless be lower than the R14.39/ℓ in April 2014. Meanwhile, the price of illuminating paraffin would increase by 36c/ℓ, while liquefied petroleum gas would increase by 85c/kg. CONSTRUCTION, BUILDING MATERIALS & CEMENT PROPOSED AFRISAM, PPC MERGER COLLAPSES (Engineering News, 30/3/2015) Talks over a proposed merger between heavyweight South African cement producers AfriSam and PPC have collapsed, after the parties were unable to reach consensus on the terms of the deal. AfriSam made a nonbinding, conditional proposal to PPC on December 10 for a merger of the two companies, sending PPC’s share value up some 4%. The two firms had since been engaged in “extensive” discussions. “Over the last few months, we applied our minds extensively to the proposed

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merger with AfriSam. Ultimately, we decided not to proceed with the proposed deal,” PPC CEO Darryll Castle said in a statement on Friday. PPC added that it was committed to its strategy of enhancing the company’s position in Southern Africa and expanding its footprint into other African countries. AfriSam, meanwhile, said it would continue to implement its growth strategy of sustainable value enhancement for all stakeholders. BASIL READ RECORDS R820M LOSS IN CHALLENGING MARKET (Engineering News, 30/3/2015) A challenging construction sector, difficult contractual environment and poor operational performance have contributed to JSE-listed construction company Basil Read reporting an R820.9-million aftertax loss for the year ended December 31, 2014. “Lossmaking contracts across all construction disciplines, coupled with a struggling engineering division, have overshadowed stable performances by the mining and developments divisions,” CEO Neville Nicolau said in a statement on Friday. Overhead costs have been reduced through a rightsizing exercise to an appropriate level of administrative staff, satellite offices have been closed and a critical evaluation of the overhead cost-base has been performed to eliminate unnecessary expenditure. The group was reorganised into an operational structure comprising two major divisions, construction and mining, assisted by a centralised support team. “It was hard to see the operating lines,” Nicolau said, adding that costs were reduced from R586-million in 2014 to a budgeted R280-million for 2015. This entailed a reduction from 9% of revenue, to 5%, while the staff complement was reduced fom 583 to 250. CHROME & MANGANESE BAUBA MAKES FIRST CHROME SHIPMENT IN PLATINUM EXPLORATION FUNDING MOVE (Mining Weekly, 30/3/2015) The JSE-listed Bauba Platinum, which is mining and selling chrome ore to fund its platinum exploration, this week shipped the first run-of-mine output from its maiden chrome horizon blast at the Moeijelik operation. Bauba last year entered into a two-year chrome-ore supply agreement with ASA Metals, which is augmenting supply from its own chrome mine and smelter located some 30 km from Moeijelik. Assay results of the first 2 100 t of chrome yielded the expected 39% chrome grade and met the remaining product specifications of the chrome-ore supply agreement with ASA, a joint venture between Eastern Asia Metals Investment of China and the provincially owned Limpopo Economic Development Enterprise of South Africa. Bauba CEO Syd Caddy said in a stock exchange news announcement that, given the drilling results, the chrome content is likely to increase with corresponding improved revenue results. Following Bauba’s R150-million acquisition of 60% of the prospecting rights over the Moeijelik and Waterkop farms in Limpopo, Bauba subsidiary Bauba A Hlabirwa Mining Investments last year obtained a bulk sample authorisation and a mining permit over Moeijelik, where opencast chrome mining is under way. MINERAL MINING TOO MUCH OF EVERYTHING SPURS COMMODITY EXODUS AS PRICE WARS RAGE (Mineweb, 30/3/2015) Investors are bailing out of commodity funds at the fastest pace on record, and the exodus shows no signs of ending. Investors are bailing out of commodity funds at the fastest pace on record, and the exodus shows no signs of ending. U.S. exchange-traded funds linked to broad baskets of raw materials saw a net outflow of $1.23 billion over the first three months of the year, the most of any quarter since the securities were created in 2006, data compiled by Bloomberg show. Bank of America Corp. says ample supplies have unleashed price wars, and Goldman Sachs Group Inc. predicts a 20 percent drop for commodities already near a 13-year low. Morgan Stanley and Societe Generale SA also have cut forecasts for a whole range of items. Rising supplies created bear markets over the past year as drillers unlocked more oil and natural gas, copper mines expanded and farmers harvested record corn and soybean crops. The strongest dollar in at least a decade encouraged countries with weaker currencies to export more. While the U.S. economy is strengthening, Europe is still contending with its debt crisis and growth is slowing in China, the top user of everything from iron ore to pork. The Bloomberg Commodity Index of 22 raw materials is down 4.8 percent since the end of December, after slumping on March 18 to the lowest since June 2002. Crude oil, which averaged almost $96 a barrel in the three years through 2013, touched a six-year low of $42.03 on March 18. Agriculture led the quarter’s retreat, with double-digit declines in the quarter for wheat, coffee and sugar. The commodity index is heading for a fifth straight annual drop, the longest slide since the data began in 1991. The slump ended a decade-long super-cycle of demand fueled by double-digit growth in China. After prices surged to records for everything from corn and copper to crude oil and gold, production surged. Commodity exporters have boosted

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shipments as their currencies weakened. Not all commodities face surpluses. Standard Chartered says global demand for aluminum, zinc, nickel and tin will exceed output in 2015. Macquarie Group Inc. predicts the metals will rally. In markets like coal, iron ore, copper and oil, surging output has put commodity producers in price wars that show no signs of easing, Bank of America analysts led by Francisco Blanch said in a March 19 report. Compounding the problem is the dollar, which may “compress” global growth by $2 trillion this year, they said. TRANSNET TRANSNET SUSPENDS EXEC (Business Report, 30/3/2015) Freight and rail parastatal Transnet is pursuing fraud and corruption charges against a top executive, alleging it has lost nearly R500 million in revenue. Bheka Xaba, sales executive in the freight and rail division, has been suspended on allegations of abusing his position to reduce prices for big clients in exchange for financial favours, including paid holidays and luxury vehicles. He appeared in the Pretoria Commercial Crimes Court this week, and investigations are continuing. An internal disciplinary process is under way, with investigators securing documents that are understood to provide a picture of the scale of the alleged fraud and losses to the railway company. It is understood that Transnet management picked up evidence suggesting prices were being cut for select clients. Management then ensured that all companies were charged the correct tariffs. One of the companies allegedly involved, IFC Rail, went into business rescue. The company was eventually liquidated last month. The company’s creditors included Transnet, First National Bank and Absa. According to well-placed sources, an internal forensic investigation also discovered conflicting relationships between Xaba and owners of the companies involved and some of their BEE partners. It appeared that some were sponsoring Xaba and his family through gifts. It is also alleged that Xaba and his family went on trips and holidays with officials of the companies for which he is said to have cut prices. It is understood that in one instance, a travel agent who booked flights and accommodation for Xaba and his family produced documents that showed their flight tickets had been paid for by the owner of one of the companies alleged to have been involved. Xaba has said he cannot comment as he remains an employee and this is an internal matter. Transnet spokesman Sandile Simelane refused to give details of the procedures under way against Xaba. However, he confirmed that the disciplinary process had begun and that criminal complaints had been filed against the sales executive. It is understood that fellow Transnet employees warned that the prices approved for certain companies were irregular. It is alleged that subordinates were told to write motivations for the irregular prices. This is said to have been done in anticipation of possible audits of the transactions. CURRENCIES AND PRICES

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ALSI: 3 mnth to 27 Mar 15

(Mail & Guardian, 30/3/2015)

JSE AS AT 17:00PM 27 MARCH 2015

All Share Index 27/03 51,810

+ 206.23 + 0.40%

Industrials Index 27/03 45,989

+ 457.32 + 1.00%

Financials Index 27/03 44,768

+ 73.74 + 0.16%

Top 40 Index 27/03 45,679

+ 211.58 + 0.47%

Industrial 25 Index 27/03 64,924

+ 820.83 + 1.28%

Financial 15 Index 27/03 17,031

+ 21.04 + 0.12%

Resources 10 Index 27/03 41,404

- 1,008.91 - 2.38%

Alt-X Index 27/03 1,232

+ 9.72 + 0.79%

WORLD INDICATORS

FOREX

Rand/Dollar 06:39 12.0565

+ 0.06 + 0.53%

Rand/Pound

06:40 17.8528

+ 0.07 + 0.42%

Rand/Euro 06:40 13.0798

+ 0.04 + 0.30%

COMMODITIES

Gold (usd/oz) 06:36 1,194.55

- 10.55 - 0.88%

Platinum (usd/oz)

06:36 1,133.75

- 4.25 - 0.37%

Brent (usd/barrel) 06:39 56.00

- 3.19 - 5.39%

WORLD MARKETS

Wall St (DJIA) 27/03 17,713

+ 34.43 + 0.19%

Germany (DAX)

27/03 11,868

+ 3.01 + 0.03%

Japan (Nikkei) 06:39 19,443

+ 157.08 + 0.81%

(Business Report, 30/3/2015) COPPER A – SETTLEMENT PRICE – FORWARD RATES - Dollar/rand 4pm close:

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(TFR Commercial Management: Business Performance Dept)

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Petrol/ Diesel Price

YR2015

07-Jan-

15

04-Feb-

15

04-Mar-

15

01-Apr-

15

06-May-

15

03-Jun-

15

01-Jul-

15

05-Aug-

15

02-Sep-

15

07-Oct-

15

04-Nov-

15

02-Dec-

15

COASTAL

95 LRP (c/l) 1083.00 990.00 1086.00

95 ULP (c/l) 1083.00 990.00 1086.00

Diesel 0.05% (c/l) 997.49 895.49 969.49

Diesel 0.005% (c/l) 1001.89 899.89 973.89

Illuminating Paraffin (c/l) 697.728 595.728 668.728

Liquefied Petroleum Gas

(c/kg) 1829.00 1679.00 1833.00

GAUTENG

93 LRP (c/l) 1102.00 1009.00 1105.00

93 ULP (c/l) 1102.00 1009.00 1105.00

95 ULP (c/l) 1124.00 1031.00 1127.00

Diesel 0.05% (c/l) 1028.09 926.09 1000.09

Diesel 0.005% (c/l) 1032.49 930.49 1004.49

Illuminating Paraffin (c/l) 747.928 645.928 718.928

Liquefied Petroleum Gas

(c/kg) 2011.00 1861.00 2015.00

YR2014

01-Jan-

14

05-Feb-

14

05-Mar-

14

02-Apr-

14

07-May-

14

04-Jun-

14

02-Jul-

14

06-Aug-

14

03-Sep-

14

01-Oct-

14

05-Nov-

14

03-Dec-

14

COASTAL

95 LRP (c/l) 1320.00 1359.00 1395.00 1398.00 1383.00 1361.00 1392.00 1392.00 1325.00 1320.00 1275.00 1206.00

95 ULP (c/l) 1320.00 1359.00 1395.00 1398.00 1383.00 1361.00 1392.00 1392.00 1325.00 1320.00 1275.00 1206.00

Diesel 0.05% (c/l) 1260.55 1284.75 1311.95 1299.15 1269.37 1245.79 1259.79 1254.17 1228.79 1215.79 1154.79 1101.49

Diesel 0.005% (c/l) 1263.95 1288.15 1316.35 1304.55 1274.77 1249.19 1263.19 1258.57 1234.19 1221.19 1161.19 1106.89

Illuminating Paraffin (c/l) 963.828 975.828 991.828 953.028 934.028 924.028 947.028 940.028 921.028 907.028 855.028 805.728

Liquefied Petroleum Gas

(c/kg) 2260.00 2314.00 2372.00 2350.00 2346.00 2319.00 2377.00 2365.00 2257.00 2269.00 2164.00 2039.00

GAUTENG

93 LRP (c/l) 1336.00 1375.00 1411.00 1416.00 1401.00 1379.00 1408.00 1408.00 1341.00 1343.00 1298.00 1229.00

93 ULP (c/l) 1336.00 1375.00 1411.00 1416.00 1401.00 1379.00 1408.00 1408.00 1341.00 1343.00 1298.00 1229.00

95 ULP (c/l) 1357.00 1396.00 1432.00 1439.00 1424.00 1402.00 1433.00 1433.00 1366.00 1361.00 1316.00 1247.00

Diesel 0.05% (c/l) 1287.15 1311.35 1338.55 1329.75 1299.97 1276.39 1290.39 1284.77 1259.39 1246.39 1185.39 1132.09

Diesel 0.005% (c/l) 1290.55 1314.75 1342.95 1335.15 1305.37 1279.79 1293.79 1289.17 1264.79 1251.79 1191.79 1137.49

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Illuminating Paraffin (c/l) 1009.728 1021.728 1037.728 1003.228 984.228 974.228 997.228 990.228 971.228 957.228 905.228 855.928

Liquefied Petroleum Gas

(c/kg) 2442.00 2496.00 2554.00 2532.00 2528.00 2501.00 2559.00 2547.00 2439.00 2451.00 2346.00 2221.00

(SAPIA online)

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