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Scaw Metals September 2014 Coverage Report

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PRINT

Sheq Management 01 July 2014, p.28-29

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Built 01 August 2014, p. 8

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Bushbuckridge News 29 August 2014,p. 5

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MTS Criterion 01 September 2014, p.22

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African Mining 01 September 2014, p.96

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Civil Engineering Contractor 01 September 2014,p.56

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Alberton Record

03 September 2014, p.31

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Business Day 04 September 2014, p.2

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Financial Mail 11 September 2014,p. 20-22

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SAKE24-Rapport 14 August 2014, p.2

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City Press Business 14 September 2014,p.3

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The New Age 19 September 2014,p.23

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Business Report (Mercury) 19 September 2014,p.20

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Business Report (Pretoria News) 19 September 2014, p. 18

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Business Day, Companies & Markets 19 September 2014, p. 13

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Business Report (Cape Times) 19 September 2014, p.20

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Business Report (The Star) 19 September 2014, p.18

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City Press, Business 21 September 2014, p. 3

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Business Report (Cape Times) 23 September 2014, p. 3

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Business Report (Mercury) 23 September 2014, p.19

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Business Report (Star) 23 September 2014, p.19

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Business Report (Pretoria News) 23 September 2014, p.17

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Alberton Record 24 September 2014, p.47

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ONLINE

Business Day Live

A decade of decline for embattled but crucial foundries

04 September 2014

http://www.bdlive.co.za/business/industrials/2014/09/04/a-decade-of-decline-for-embattled-but-

crucial-foundries

SOUTH Africa’s foundries have been in decline for more than a decade though there are still some centres of excellence. About 180 companies are involved in alloying metals for a wide variety of applications and about 20 produce the bulk of the output, mostly for the automotive sector. South Africa had about 450 foundries in the 1980s and just over 200 in 2003. Between 2007 and 2011 another 13% closed and employment in the industry declined by 30%. Mark Krieg, executive director of the Aluminium Federation South Africa, says the metals castings industry has been in "dramatic decline". This includes nonferrous metals such as aluminium and copper, and ferrous metals with high iron content. The recent turmoil in the mining sector contributed to a big drop in demand for digging-machine blades and ore-truck compartments capable of carrying loads of hundreds of tonnes; and grinding media — metal balls that crush rocks. Strikes also resulted in imports replacing the production of goods such as manhole covers, pumps and valves. "About 80% of manufactured products have castings in them," Mr Krieg says. "The foundry sector is one of the foundation stones for all manufacturing, and also tool and die making," he says. Tool and die making involves artisanal machinists making jigs, dies, moulds, machine tools, cutting tools, gauges and other products used in manufacturing ranging from cellphones to aircraft. Mr Krieg says manufacturers need to produce in volume to compete with imports and to create economies of scale. Short-term tariff protections are needed to help establish industries. "Plug some of the holes with regard to import duties," he says. More efficient use of energy and a loosening of punishing environmental protection policies will help the industry, he says. South Africa also needs much-improved skills education and technology innovation. Some of South Africa’s iron casting furnaces are 25 years old. In China, these average seven years. Mr Krieg says there is a mismatch between South Africa’s scrap metal inputs and the latest foundry technologies. "We are getting poor quality at a premium price," he says.

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The industry is at a crossroads, says Scaw Metals. "Due to the continuing poor local demand over the last couple of years, the remaining players have not invested in the required capital equipment and new technologies," Ufikile Khumalo, Scaw’s executive chairman, says. The increasing input cost of raw materials and electricity, poor and inconsistent local demand for foundry products, and rising imports are all contributing to the decline.

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Financial Mail

MINING: Changing landscape

11 September 2014

http://www.financialmail.co.za/coverstory/2014/09/11/mining-changing-landscape

SOUTHERN Africa is no longer the compelling destination for global mining groups that it once was. This year there has been a spate of announcements of sales or "demergers" from BHP Billiton, Anglo American and Rio Tinto. Over the past 10 years, the list is even longer. One view on the trend is that it shows how African governments’ policies are discouraging investment in mining. An opposite view is that this is the inevitable effect of mines getting older. They get to a point where they can be operated profitably by smaller enterprises only, not large conglomerates. Last month Billiton said it would put its smaller, shorter-life mining assets — many of which are in Southern Africa — into a separate entity temporarily dubbed Newco. Anglo American Platinum (Amplats), a subsidiary of Anglo American, confirmed in July it would exit its more labour-intensive platinum mines. Rio Tinto has sold its stake in its costly Mozambican coal projects for US$50m — against the $3,7bn it paid for them — to International Coal Ventures of India, citing logistical difficulties. A gradual withdrawal has been taking place for years, as these three groups have been shedding what they regard as "noncore" assets. The need to become leaner and more efficient has accelerated in the past five years of weakening commodities prices. There have been closures, shelved projects and asset sales across the globe by companies both big and small. But for particular reasons, there has been a disproportionate exit from Southern Africa. It is rumoured Billiton tried to sell its SA coal mines for at least two years before deciding to form Newco. It closed its Bayside aluminium smelter earlier this year. Two years ago it sold its 37% stake in Richards Bay Minerals to Rio Tinto. In 2012, it abandoned plans to build an aluminium smelter in the Democratic Republic of Congo, citing construction costs. The smelter would have been the major customer supporting an expansion of the Inga hydroelectric power station. Billiton CEO Andrew Mackenzie has now announced that after a review of the business, management has decided to separate its large, long-life resources in copper, iron ore, coal and petroleum from the smaller, shorter-life assets in coal and base metals. In an environment where expansion capital is constrained, the bigger businesses were getting the greater share of it.

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Graham Kerr, CEO designate of Newco, emphasised in an interview that Billiton was not leaving SA. It would retain its listing on the JSE and continue to look at opportunities that met its criteria of large, long-life assets. "We are still assessing petroleum. Our confidence in SA as a centre for the resources industry will be reflected in some of our decisions. Listing Newco on the JSE gives investors another choice of resources companies. "As we firm up the new board and leadership team, it will have strong SA representation. We are going to run our African operations out of SA. I see important opportunities in Africa that we need to pursue. We have never before had a single accountable person for all our businesses in SA. We will have a new CEO of the SA operations and we will give him more power. "Another important aspect is that Newco will set up its global shared services centre here, creating another 200 skilled jobs. Newco will be more flexible than Billiton and able to assess a broader set of opportunities," says Kerr. He says the decision on Newco was not based on country, but on size and scale of the assets. "There are challenges around the globe for the resources industry and those in SA are not unique. For example, there are challenges around productivity and logistics in South America and Australia." Anglo American has exited a number of operations in the past few years. Those in SA include the sell-down of its stake in Anglo-Gold Ashanti between 2005 and 2009, because it says pure-play gold companies attract higher valuations than those within a diversified mining group. Over several years, its subsidiary, De Beers, sold all but one diamond mine in SA, Venetia. In April 2012 Anglo sold Scaw Metals SA to an Industrial Development Corp-led consortium. Last year Anglo decided not to proceed with the $555m acquisition of a stake in the Revuboe coking coal project in Mozambique. Amplats has previously flagged plans to sell its Union mine. In July CEO Chris Griffith confirmed Amplats would also sell its huge Rustenburg mines complex and its share of the Pandora joint venture. By 2020, Amplats wants to have 80% of its production from mechanised operations. Analysts say it is the only one of the platinum miners that is in a position to achieve this target. Though Amplats’s first mention of the move to mechanised operations predated the lengthy strike by the Association of Mineworkers & Construction Union (Amcu) this year, there is no doubt that mechanised mining offers investors a lower-risk and more attractive option than labour-intensive mines, especially in an environment of militant labour. But that is not the reason that Amplats has given. Griffith says management time and capital are finite and that it has been decided to focus on assets that can deliver "higher margins, lower costs and improved return on capital".

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Anglo American communication manager Shamiela Letsoalo says the group has a substantial portfolio in SA and will continue to invest in the country. It employs more than 99 000 people here, and more than 32% of group operating assets, 43% of revenue and 63% of operating profit originate from SA. Anglo is looking at all longer-term expansion options for the Mogalakwena open-cast platinum mine and is investing $2bn in Venetia underground to extend the life of the resource beyond 2040, she says. Rio Tinto’s exit of a large portion of its Southern African interests has taken place over a decade and includes sales of its interests in Zimbabwe, Palabora copper mine in SA and coal exploration properties in Limpopo province. It abandoned plans to build an aluminium smelter at Coega, a project it inherited when it took over Alcan, partly because Eskom could not provide the electricity. It now retains only Richards Bay Minerals in SA, Rossing Uranium in Namibia and the Murowa diamond mine in Zimbabwe. Rio Tinto spokesman Illtud Harri says the group made a significant investment in SA when it acquired Billiton’s share of Richards Bay Minerals. The exit from Palabora was driven by the fact that the company’s future lay in processing magnetite, an area that is not a core skill for the group, rather than being SA-related. "We have divested assets in Australia, the US, Mozambique as well as SA, as we have reshaped our portfolio and cut capex," he adds. One global mining group investing substantial sums in coal and ferrochrome in SA and looking for other opportunities in Africa is Glencore. It has made no secret of its plans to exit the platinum interests inherited from its merger with Xstrata, but says this is because it cannot trade platinum. At a presentation to media last week, CEO Ivan Glasenberg said Glencore would invest in any part of the world where it could get decent returns for its shareholders. SA needed foreign investment to develop its coal mines, he said. Glencore was making that investment. But if the operating environment did not allow Glencore to make its targeted returns, it would take its money elsewhere. One of Glasenberg’s presentation slides, based on consensus analysts’ forecasts, showed that three of the fastest-appreciating commodities to 2018 were likely to be nickel, aluminium and thermal coal, which are going to form the backbone of Billiton’s Newco. Those taking a negative view on Southern African asset sales by the big groups might admit some of the difficulties faced by miners is beyond the control of governments: weak commodities prices, ageing mines or geological difficulties. But other issues could be addressed if policy were more investor-friendly: militant labour and communities, lack of skills, underinvestment in transport and power, and uncertain legislation.

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In a note to clients on the BHP Billiton spin-off, Investec Securities in the UK said one of the elements of the portfolio adjustment "may have to do with the specific adverse conditions faced by SA mining over the past few years with no sign of improvement in the midterm as regards conditions that may attract foreign investment into SA mining". "The biggest blockage to mining investment in SA and a catalyst for disinvestment is uncertainty about where the legislation is going," attorney Hulme Scholes of Malan Scholes said last week at a presentation highlighting concerns over proposed Mineral & Petroleum Resources Development Act amendments. Peter Major, mining consultant at Cadiz Corporate Solutions, says the big local and international mining groups have been in SA a long time and maintained their investments throughout the sanctions era of the 1970s and 1980s. They are not driven by social responsibility considerations, but by the risk-adjusted return they earn on investment and capital employed, he says. Over the years, they have made huge investments in SA, taking a long-term view on expected returns. Major says he has never heard a big company saying it wanted to exit SA. Once a big corporate has established a presence here, it wants to keep it because it is costly and time-consuming to enter a new country. But looking forward, it is almost impossible to make an attractive risk-adjusted return in SA, Major says. With an average annual total return of about 16%-18% offered by the JSE’s top 40 index, a mining house needs to make at least 10%-15% above that to justify tying up its capital for many years and the range of other risks that mining faces. Those include issues like power shortages, militant labour, changing mineral and black empowerment legislation, and security of tenure. The loss of the big corporates is a tragedy for SA, Major says. Big corporates are far easier to hold to account on issues like health and safety, paying taxes and fulfilling other social obligations. But the SA government takes a completely different view of SA’s attractiveness, raising doubts whether it is even listening to the business community. At the Africa Down Under conference in Perth last week, SA mineral resources minister Ngoako Ramatlhodi enthused about SA’s attractions, including its "vast mineral resources, our predictable legislative framework, our competitive industry, our skilled workforce, our research capability and our stable macroeconomic fundamentals ... [SA] is full of opportunities for entrepreneurs and investors". Bakgatla Investments CEO Noah Greenhill says the spin-off of assets by the big groups could be viewed as a reallocation of resources rather than an exit from SA. Though Anglo, Billiton and Rio Tinto are no longer involved in SA, it creates an opportunity for other operators to turn these assets around, he says. They need good operators that will focus on them as entrepreneurs, not as part of a conglomerate. A success story in the mining sector is Sibanye

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Gold, which took over assets that Gold Fields had done little with, and was making them work harder, Greenhill says. Another example, which Greenhill did not mention but underscores his point, is the success that London-listed Petra Diamonds has had with diamond mines it bought from De Beers. But is there any positive angle if these assets are bought by Chinese and Indian investors, some of whom have been criticised for cutting corners on their social obligations in Africa? Greenhill says it doesn’t matter whether the mines are owned by Rio Tinto or a Chinese company. "The key for me is that there are good assets here, and since the Minerals Act requires some SA participation, we can engage with the new owners to find a structure that suits everybody." Greenhill doubts whether the divestment trend says anything in particular about the investment climate in SA. "There has to be a willing buyer and a willing seller and each will have a diametrically opposed view of that asset," he says. "It is also a function of the price, which will indicate the market’s appetite for that asset." Perhaps these changes show that the sun is finally setting on the influence that the big London-and Australian-headquartered mining conglomerates have had on this region for the past 150 years. Their departure is no cause for regret if a new generation of owners, whether local or foreign, will invest equally in job creation and fulfilling the huge social and environmental obligations placed on mining companies.

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City Press.co.za

IDC, China ink deal to take on ArcelorMittal by 2017

14 September 2014

http://www.citypress.co.za/business/idc-china-ink-deal-take-arcelormittal-2017/

The state’s long campaign to break the steel monopoly of ArcelorMittal SA (Amsa), took a decisive step this week with the Industrial Development Corporation (IDC) announcing it may have a new R50 billion “low-cost iron and steel facility” up and running in 2017. The IDC announced a memorandum of understanding with China’s Hebei Iron and Steel to complete a feasibility study for the new plant – hopefully before April next year. The envisaged steel plant will ultimately produce 5 million tons of steel a year compared with the total capacity of about 7 million tons at all Amsa plants in South Africa. It will be largely based on the immense magnetite iron-ore resource the IDC and the same Chinese partner took control of early this year when they bought Palabora Mining Company from Anglo American and Rio Tinto for R3.5 billion. The project has been in the works for years, and the IDC announced it was doing the initial prefeasibility study in 2012. The first phase of the new steel plant is planned for 2017, IDC CEO Geoffrey Qhena told City Press this week. He signed the memorandum of understanding with Hebei in Tianjin, where the IDC is part of the South African delegation at the World Economic Forum meeting held there this week. As with the Palabora deal, the major party is Hebei Iron and Steel and the China-Africa Development Fund (CAD). It does not include the two other parties to the Palabora deal – commodity traders Tewoo and General Nice Development. The eventual shares in the project are not being made public yet, but according to Qhena, the IDC’s stake is likely to be larger than the 20% it took in Palabora. At the same time, it is “unlikely” the IDC will control it by owning more than 50%, according to Qhena. The role the IDC played in conceptualising the steel mill and funding the prefeasibility study “will be reflected in the shareholding”, says Qhena. It will be the IDC’s largest steel investment since it built the Saldanha steelworks in a joint venture with the old Iscor between 1996 and 1999. It later sold its 50% stake. The IDC will also not say how much of the estimated capital expenditure of up to $5 billion (R55 billion) it will fund, except to say it will put up its portion in debt and in equity. If the

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IDC’s share is between 20% and 50%, its part of the funding will likely be between R10 billion and R20 billion. The “key thing” the feasibility study will have to establish is where to build the steel plant, according to Qhena. One option is the Palabora Mining Company in Limpopo, near the source of its ore. Another is near the source of demand, the Witwatersrand. Coastal sites are also under consideration, given that much of the steel is likely to head to other African markets, he says. State plans to build a new steel company when Amsa is struggling financially and using less than its full capacity have been criticised before. “Steel plants, by their nature, go through cycles,” adds Qhena. The expectation that the southern African region will continue to grow at relatively high rates “should make it sustainable”. PRICING The point of the new steel plant is to introduce “competitive prices” to the local steel market, according to the IDC media statement this week. But there will not be any “developmental price” agreement or price control, according to Qhena. The new steel plant also will not rely on a subsidised supply from Palabora or become vertically integrated with it. “If we got in and the steel price did not fall, we will have failed,” he adds. The promise of cheaper steel mostly rests on the fact that magnetite ore is cheaper than the hematite ore used by Amsa. That advantage might not last forever as magnetite prices have been escalating. Last year, Palabora saw magnetite prices rise by 23% to R1 231 a ton due to surging demand. Palabora seemingly already acts as Hebei’s integrated iron ore supplier. It has ramped up its magnetite sales from less than 2 million tons in 2008 to 6.5 million tons last year with plans to increase that to 10 million tons. Palabora is technically a copper mining company, but magnetite now makes up most of its revenues, with virtually all of its R2 billion in profits last year coming from the mineral. A decade ago, the company was selling less than 300 000 tons of magnetite a year. The vast majority of sales go to a single unnamed customer in Asia (probably Hebei), according to Palabora’s last annual report as a listed company.

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Stopping Hebei from using Palabora as a magnetite supply for Chinese steel mills is “one of the reasons” the IDC invested in it to begin with, according to Qhena. “We will ensure the ore is here. We will beneficiate most of it.” THE STATE AND STEEL The IDC has been putting significant amounts of money into the steel value chain, mostly related to the mills that use scrap metal as an input instead of iron ore. . In 2012, it bought 74% of Scaw Metals from Anglo American for R3.4 billion. Scaw produces steel products from scrap metal. . The IDC funded the R400 million Agni Steels project in Coega, which became operational this year. It owns 10% of the company alongside an Indian majority shareholder and a BEE consortium. Like Scaw, Agni uses scrap to produce steel. . The IDC earlier put R100 million into Iron Mineral Beneficiation Services, a company converting useful fine ore into briquettes that can be used instead of scrap. It owns 33% of this. The other major thrust of state support for steel is regulating the inputs. Since January last year, the International Trade Administration Commission of SA has introduced an export control system for scrap metal that favours local producers, including those the IDC has bought or helped develop. There have also been hints that iron ore could be declared a “strategic mineral” to curb exports.

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Engineering News.co.za

Afrox signs R400m Scaw oxygen supply contract extension

18 September 2014

http://www.engineeringnews.co.za/article/afrox-signs-r400m-scaw-oxygen-supply-contract-extension-2014-09-18 JSE-listed African Oxygen (Afrox) has signed a ten-year extension for the supply of 50 t/d of oxygen to steel and steel products manufacturer Scaw Metals Group’s Wadeville works, in Gauteng. Afrox said the new agreement, encompassing previous updates of old agreements, would be worth more than R400-million in the longer term.

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Bdlive.co.za

AVE: R 35 602

Afrox seals R400m oxygen deal

19 September 2014

http://www.bdlive.co.za/business/industrials/2014/09/19/afrox-seals-r400m-oxygen-deal

AFRICAN Oxygen (Afrox) on Thursday signed a 10-year contract extension with Scaw Metals Group to supply 50 tonnes of oxygen a day to Scaw’s Wadeville steel works in Johannesburg. The JSE-listed company says the new agreement, which encompasses updates of previous agreements, is worth more than R400m in the longer term. "Scaw Metals has been a long-time customer and we are delighted to have been awarded this contract extension," Afrox MD Brett Kimber said on Thursday. "For Afrox this is recognition of the improvements made in our tonnage plant reliability, which in the first half of 2014 attained levels of 99%, nationally." The group is well into the process of rolling out a R1.5bn development programme in SA, the biggest in its history. This includes building a R300m air separation unit in the Coega Industrial Development Zone near Port Elizabeth, along with its R200m air separation unit launched in Pretoria West in April last year. Mr Kimber has long warned that poor gross domestic product growth in the country constrained gas and chemicals products suppliers. He has said that a resurgent economy is still a "far off prospect", but the supplier of industrial, medical and commercial gases will continue to invest for the long-term.

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Citypress.co.za IDC still has its eye on massive expansion 21 September 2014 http://www.citypress.co.za/business/idc-still-eye-massive-expansion/ The Industrial Development Corporation (IDC) has, for the second time in five years, set itself the target of disbursing R100 billion in five years. That’s the same target it set for the period 2009 to 2014, when it was put under the control of Economic Development Minister Ebrahim Patel’s then new department. It ended up disbursing R47 billion in those five years, which was still a huge jump after the country’s central developmental financier had mostly languished from the late 1990s onwards. The IDC and Patel, whose department is a shareholder, were in a self-congratulatory mood when they presented the corporation’s annual results on Thursday. The IDC “clearly cannot fund unviable projects” and has been trying to build a pipeline of proper projects, said Patel. Fitch Ratings upgraded the IDC’s national issuer rating to AA+, about as high as it can go, on the same day. Fitch put out a glowing press release about how the IDC was virtually guaranteed “extraordinary support” from government if anything ever went wrong, but would not be needing that support any time soon because it is also “extremely” well capitalised and creditworthy in its own right. IDC financial chief Gert Gouws seized the opportunity to stress, more than once, that an upgrade was “against the trend” for a South African state-owned company. The company intends to double its debt from R20 billion to R40 billion by issuing bonds and borrowing from other development finance institutions. This doubles its ability to provide funding for projects. Expansion is not without risk and the IDC is “not comfortable” with its rate of impairment on loans, which is 18%, according to Gouws. The IDC’s workout and restructuring unit, which intervenes when clients are struggling, has seen its activities grow. In 2012, R5.8 billion in loans were under workout, 16% of the total.

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This year, it is R10 billion in loans, 18% of a much larger total and affecting 21% of clients. The IDC approved R13.8 billion in funding in the year to March this year, and disbursed R11.2 billion, still far less than needed to reach the R100 billion five-year target. The company presented the approvals as a record, but the IDC’s funding is still relatively meagre compared with its heyday. If funding approvals are adjusted for inflation by using the value of the rand last year, the past year’s approvals of R13.8 billion pale in comparison next to R22 billion in 1994 and about R16 billion in 1998. Those figures related to megaprojects like the Mozal aluminium smelter in Beluluane Industrial Park in Maputo, Mozambique. The next five years will see the IDC make the largest single investment in more than a decade – a brand new primary steel mill meant to give ArcelorMittal SA a run for its money – and make South Africa a go-to supplier for the infrastructure projects that are expected to balloon on the rest of the continent. The IDC’s shares in various large listed companies, particularly Sasol, remain a major source of its financial strength. “We will not sell them for the sake of selling them,” IDC CEO Geoffrey Qhena said in reply to questions on Thursday. The dividends and capital growth are more important than any cash that selling the shares would provide, he said. Dividends from these listed companies made up half of the IDC’s R6.8 billion revenue in the year, excluding the revenue of its major subsidiaries like Foskor and Scaw Metals. Not quite run of the mill Details emerged this week about the IDC’s plan to help build a major new steel mill in South Africa with a Chinese consortium. Hebei Iron & Steel and the China-Africa Development Fund will take the majority share, probably as high as 70%, according to the IDC’s Gouws. That does not mean the IDC will carry all of the remaining 30% of what is estimated to be a R45 billion project, which would amount to R13.5 billion. The IDC will look for equity and debt partners, says Gouws. The price tag vastly overshadows the rest of the IDC’s multifaceted steel strategy since it fell under the control of the economic development department in 2009.

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The IDC has put about R425 million in funding into a variety of small steel projects, apart from the R3.4 billion acquisition of Scaw Metals last year. The smaller projects include three scrap metal-based “mini-mills” – Unica (Pretoria), Fortune Steel (Nigel) and Agni Steels (Coega) – that will ultimately produce a collective 290 000 tons of steel product a year. The IDC’s investments into these mini-mills is coinciding with the creation of new scrap metal export controls, based on preference prices for local users before anything leaves the country. The controls have been implemented by the International Trade Administration Commission of SA (Itac), which sets tariffs and regulates trade. According to Philip Snyman, Itac’s senior manager for import and export control, it is too soon to tell if the regulations are working to increase the local supply of scrap at reasonable prices. The price preference system came into effect in September last year. The new steel plant has the working title Masorini Iron and Steel on the IDC’s books. According to Qhena, the steel plant is meant to reach full capacity of 5 million tons by 2019 after a first 3 million ton phase is up and running in 2017. A memorandum of understanding on the mill was reached in China last week. The IDC fielded questions on Thursday about the wisdom of building so much new steel capacity while South Africa’s steel monopoly, ArcelorMittal SA, is sitting with idle capacity. The demand for steel throughout southern Africa is set to boom and the IDC can’t wait for that to happen before taking the plunge to build capacity, according to Qhena. The new steel mill is also intended to give ArcelorMittal SA a run for its money by undercutting its prices

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Railwaysafrica.com ‘Africa on Track 2014' 23 September 2014 http://www.railwaysafrica.com/blog/2014/09/23/africa-track-2014/ This Johannesburg Chamber of Commerce and Industry (JCCI) Initiative explores the future of the African railroads. The developments in rail along the Africa transport corridors make the African continent one of the greatest investment regions in our railroad history. The upgrade, expansion and connection of railroads on the continent has meant huge investments in infrastructure, passenger transport, locomotives and rolling stock.To help business better understand and be an integral part of this development, JCCI will be holding a summit on railroad developments. Key speakers will give attendees ‘food for thought’ in their area of expertise and explain the role that supply chains in the industry can play. Among the speakers will be:

Jay Monaco and John Deppen (Amsted Rail)

Andrew Thomas (Grindrod)

Oredus Matheus (Transnet Engineering)

Petrus Mulaudzi (DCD)

Gerhard van Zyl (Efficient Engineering)

Damon Symondson (Scaw Metals)

Ross Hartley (Transnet Engineering)

As the goal of this summit is to bring together key players in the industry to discuss the way forward for Africa, this summit is being offered by Amsted Rail at no cost to all delegates wishing to attend.

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iol.co.za Strikes inflict R100m scar on Scaw 23 September 2014 http://www.iol.co.za/business/companies/strikes-inflict-r100m-scar-on-scaw-1.1754835 Johannesburg - The five-month platinum belt strike coupled with the one-month metals strike would cost Scaw Metals R100 million, Ufikile Khumalo, the executive chairman at the integrated steel maker, said last week. The strikes came just as group’s core objectives were to “stabilise, grow and harvest” after it was acquired by the Industrial Development Corporation (IDC) last year from Anglo American. The IDC, the state-owned development financier, acquired 74 percent of Scaw South Africa for R3.4 billion last year as part of the government’s plan to promote competition in the local steel industry and ensure that a “developmental pricing” model to aid its infrastructure plans is adhered to. It had taken the company three and a half years to be sold after the sale process was announced. The company now wanted to bring certainty and stability to its 6 597 employees after being spun off from Anglo, Khumalo said. “I can say that the company is substantially stable now. On a [scale] of one to 10, I would say we are at eight, we are almost there. “We went through a platinum and metals strike and we are trying to get employees to realise their value in the company,” Khumalo added. Scaw had plans to benefit from the government’s multibillion-rand infrastructure roll-out, he said. But like other steel industry, Scaw operated in a challenging climate as many producers had spare capacity and imports were flooding in. Scaw’s large reliance on electricity and the flood of cheap imports of finished goods were threats to the sustainability of the company and the growth of the local industry in general, Khumalo said. “These risks can only be mitigated by close collaboration between the government and the industry to address developmental pricing of electricity and insisting on local manufacturing of value add. A lot of progress is being made in this regard.” Scaw’s majority shareholder, the IDC, announced that the steel maker had posted a R166m loss in the year to March. “A lot of time and energy has been spent on refocusing Scaw to ensure that it plays its role in the IDC industrial policy,” Gert Gouws, the IDC’s chief financial officer, said on Thursday. The IDC had consolidated Scaw into its full financial results in the year to March.

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Scaw is an unlisted entity that was founded in 1920 and operates east of Johannesburg. Its largest customers are the mining and construction sectors. The company is South Africa’s only significant producer of deep-level mining ropes. It has operations in Australia, Italy, Zimbabwe, Ghana, Zambia and Namibia. And it is building a $40m (R442m) grinding media plant in Ghana. “The technical specifications and the design of the Ghana plant is complete and the environmental impact assessment is under way,” Khumalo concluded.

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Engineeringnews.co.za Securing sufficient quality scrap metal is key challenge – Scaw 25 September 2014 http://www.engineeringnews.co.za/article/securing-sufficient-quality-scrap-metal-is-key-challenge-scaw-2014-09-25 JOHANNESBURG (miningweekly.com) - Securing sufficient scrap metal of the correct quality in order to ensure the efficient and sustainable operation of numerous electric arc furnaces is a key challenge currently faced by the Scaw Metals Group of Ekurhuleni. Another challenge also being addressed by Scaw CEO Markus Hannemann and his team – who featured prominently at last week’s Electra Mining Africa Exhibition – is sluggish demand from South Africa’s construction and rail sectors. Scaw’s products have found their way into prestigious sporting arenas like the Olympic Stadium, in Sydney, and the stay cables that support the Nelson Mandela Bridge, inJohannesburg, are the products of Scaw, the majority shareholder of which is the State-owned Industrial Development Corporation, which has a 74% interest in the group. Black economic-empowerment consortium Main Street 510 Pty, which is made up ofInzingwe Holdings, Shanduka Resources and the Southern Palace Group, holds a 21% stake and the company’s employees own the remaining 5% of the company through an employee-share ownership plan trust. Hannemann is hoping that the promulgation of new scrap metal regulations in this month’s government gazette notice will close the loopholes that allow strategic ferrous scrap metal to leave South Africa’s shores and frustrate access to it by local manufacturers like Scaw, which operates large scrap collection and processing facilities that house Africa’s the largest scrap shredder. As 100%-recyclable steel is arguably the most recycled material on earth, every new steel product contains steel scrap. Ninety-three-year-old Scaw produces more than of half-a-million tons of liquid steel a year from scrap and directly reduced iron (DRI) from its three DRI rotary kilns. “We’ve created a South African gem in many respects,” Hannemann tells Mining Weekly. Eagerly awaited by Hannemann is the implementation of the government’s planned infrastructure development programme, into which Scaw is standing by to supply a wide range of niche steel products and services. The company’s cast products division, which produces specialised cast-steel products used in the mining, railway, power andengineering industries, is currently experiencing excess capacity that Hannemann would like to see taken up in the near term. Its five South Africa-located foundries have distribution facilities across Australia and an extensive network that enables the castproducts division to streamline production of a wide

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variety of products, including large-girth gear segments; large high-chromium ironcoal-pulverising wear parts; mill liners; slag pots; locomotive frames and cast mono-bloc railway wheels. As an energy-intensive manufacturer with a large reliance on electricity, the need to ensure stable electricity supply at competitive prices is another challenge Scaw is tackling. The company’s grinding media division is the largest producer of cast, high-chrome grinding media in the southern hemisphere and the leading producer of high-chrome and forged grinding balls, serving primarily the African platinum, copper and gold mining industries. The high-chrome ball and forged steel grinding media plants are both located at its Union Junction base in Germiston. The platinum, copper, cement and power generation industries are the main users of high-chrome ball grinding media, for which Scaw holds a technology licence with industry leader Magotteaux. With the platinum-mining sector beginning to ramp up again after suffering the impact of the five-month strike, Hannemann expects demand from the platinum-mining sector to progressively return to normal. The gold mining and copper industries are the main users of forged grinding media, of which Scaw is Africa’s supplier of choice given its expert technology and total cost offering. Billets produced by Scaw’s rolled products division are rolled into reinforcing bar, grinding media feedstock, sections, low-carbon wire rod, high-carbon wire rod, reinforcing coil, mining bar and rounds, products which are either sold externally to a range of customers in the construction and manufacturing industries, or used internally in grinding media and wire rod. Wire Rod Products Formerly known as Haggie Rand, Scaw’s wire rod products division manufactures and distributes specialised steel rope, wire, strand and chain for mining, industrial, construction and offshore oil drilling applications. Its three sub wire rope, wire and strand, and chainproducts divisions each operate their own manufacturing facilities. Steel Wire Rope manufactures ropes for shaft and surface mining, offshore oil and gas exploration, marine applications, conveyors, aerial ropeways, staywire for power lines and earthwire for electrical purposes under the Haggie® brand. The Wire and Strand subdivision, the only South African producer of prestress concrete strand, used to improve the strength ofconcrete in the production of beams, floors and bridges, produces a range of high-carbon wire products for the construction, miningand industrial sectors.

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A significant proportion of prestress concrete strand is exported worldwide as Scaw has achieved the necessary accreditation in all major markets. The Chain Products subdivision, which is based in Vereeniging, produces the highly regarded McKinnon and Max-Alloy products, which are exported to more than 40 countries worldwide. The Chain Products factory also exports a large percentage of its productrange into premium markets such as Europe given the business’s various prestigious accreditations and innovative products. Scaw also owns the Australian PWB Anchor chain business, which has a manufacturing facility in Melbourne and a distribution network throughout Australia. Scaw turns over R7-billion to R8-billion a year and employs 7 000 people including contractors.

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Myza.co.za Net1 Mobile Solutions and FIHRST Deliver the Future to HR and Payroll Administrators 29 September 2014 http://www.myza.co.za/2014/09/net1-mobile-solutions-and-fihrst-deliver-the-future-to-hr-and-payroll-administrators/ South African-based Net1 Mobile Solutions (“N1MS”), a business unit of Net1 UEPS Technologies Inc. (NASDAQ:UEPS)(JSE:NT1) and its Third Party Payment business FIHRST, have announced several innovations in its human resources and payroll processing products and services. The newly enhanced PayPlus is a ground-breaking service that allows employees to buy prepaid airtime, electricity and more at any time and from anywhere using their mobile phone. Built on Advance Value Service (“AVS”) technology, this enhanced version of PayPlus is the future of mobility within the payroll environment and works via USSD, which means every employee can access the services from any mobile phone. Available 24 hours a day, 7 days a week, it offers all workers, especially those in rural areas or who work late shifts, an immediately accessible and convenient solution to buy electricity, airtime and more. FIHRST Connect, the system trusted to process over R75 billion in payments annually, is being upgraded to a Cloud-based solution, WebConnect, that will give access to all of the existing Connect functionality from anywhere, at any time. WebConnect enhances a payroll officer’s role by providing access to payroll data irrespective of their location or time of day. This reduces the need for time spent at the payroll officer’s desk on tedious tasks and makes the month-end process easier, simpler and faster. FIHRST has been successfully processing garnishee orders on behalf of its clients for more than a decade. As part of its continued effort to enhance the payroll environment, it has partnered with legal firm Smit, Jones Pratt (“SJP”), who will add a deeper level of legal participation to all garnishee orders. “This partnership with FIHRST will ensure that any garnishee order is checked prior to implementation, and this then ensures that same is being paid correctly, and that the process is not being abused by external collectors or other attorneys,” says Kim Vermeulen, Senior Partner at SJP. With 15 years of experience in the payroll industry, FIHRST understands its client’s operations, responsibilities and the need for products and services that enhance their payroll function. FIHRST is entrusted to handle over R6.3 billion in salary and wage payments each month, and clients expect it to provide a flawless service to their more than 600,000 employees. “Webconnect, PayPlus and other mobile technologies are opening a world of innovation to HR professionals, enhancing the way payroll officers manage their day to day tasks,” says Philip Belamant, Managing Director of N1MS. “We envision a future for payroll in which employers are able to use mobile wallets to pay wages, whilst providing remotely accessible mobile platforms for employees to take an advance on their salaries or to purchase goods

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and services, such as prepaid airtime or electricity, either with money they already possess, or against future earnings if they are faced with an emergency.” “N1MS and FIHRST are committed to harnessing the excitement and innovation of the mobile revolution and creating simple, practical solutions to everyday challenges for consumers and for employers,” adds Belamant. Customer Testimonials: FIHRST introduced these innovations and updates to its clients at a recent customer event in Johannesburg, where the following feedback was provided: Hein Smith, Payroll Manager of PricewaterhouseCoopers, says that the firm has used FIHRST payroll services since 2003 because it offers stability, has the best credentials in the field, and its core values complement those of his firm. “FIHRST is a business partner for us, we have so much more than a relationship with a service provider with this team,” he says. Silvia Mhlongo is the Wages Payroll Manger of Scaw Metals, and runs nine payrolls, adding that using Nettpays from FIHRST, means that it takes her one day to upload and reconcile payments – instead of the nine days it used to. “Our partnership with FIHRST is brilliant,” she says. “If I’ve got a problem with anything they’re always there to help.” Jaco van der Westhuizen, Group Remuneration and Benefits Manager at Stefanutti Stocks says that the company reduced its payroll systems costs by half when it moved to FIHRST. “We’re paying our people correctly, we’re paying them on time, and we’ve done so for the last nine years that we’ve been working with FIHRST,” he says. Suzanne Love, Director of Suburban Services, has been using FIHRST payroll products for 11 years. “FIHRST takes all your payroll worries away, and I would recommend their systems to anybody,” she says. For more information about FIHRST, its products, and testimonials from clients, visitwww.powerinpartnership.co.za. Notes to Editors About Net1 Mobile Solutions (www.net1mobile.com) Net1 Mobile Solutions is a South African-based technology entity encompassing a combination of world class solutions tailored to the specifically identified needs of the global market. Its diverse product offering is consolidated into five primary business lines: Mobile Banking, MNO Solutions and Prepaid Vending, Third Party Payments, Smart Card Technologies and Cryptography. About FIHRST (www.fihrst.com) Founded in 1999, FIHRST is the leading provider of integrated payroll data and release payments in the industry. FIHRST delivers a fresh and innovative approach to all employers addressing efficiencies, productivity and costs associated with data reconciliation and

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payments at month end. FIHRST is the Third Party Payments business of Net1 Mobile Solutions. About Net1 (www.net1.com) Net1 is a leading provider of alternative payment systems that leverage its Universal Electronic Payment System (“UEPS”), to facilitate biometrically secure, real-time electronic transaction processing to unbanked and under-banked populations of developing economies around the world in an online or offline environment. Net1’s UEPS/EMV solution is interoperable with global EMV standards that seamlessly permit access to all the UEPS functionality in a traditional EMV environment. In addition to payments, UEPS can be used for banking, healthcare management, payroll, remittances, voting and identification. Net1 operates market-leading payment processors in South Africa and the Republic of Korea. In addition, Net1’s proprietary MVC technology offers secure mobile payments and banking services in developed and emerging countries. Net1 has a primary listing on NASDAQ and a secondary listing on the Johannesburg Stock Exchange.

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Railawaysafrica.com Africa on Track 30 September 2014 http://www.railwaysafrica.com/blog/2014/09/30/africa-track-2014-2/

This summit, a Johannesburg Chamber of Commerce and Industry (JCCI) Initiative on 13 November at the Johannesburg Country Club (1 Napier Rd, Auckland Park), aims to explore the future of railways in Africa. Current rail-related developments along Africa’s transport corridors represent one of the greatest investment regions in our railway history. The upgrade, expansion and connection of rail systems on the continent has meant huge investments in infrastructure, passenger transport, locomotives and rolling stock. To help business better understand and be an integral part of this development, JCCI has organised this summit. Key speakers will provide attendees with food for thought in their special areas of expertise and explain the role that supply chains in the industry can play. Speakers will include:

Jay Monaco and John Deppen (Amsted Rail) Andrew Thomas (Grindrod) Oredus Matheus (Transnet Engineering) Petrus Mulaudzi (DCD) Gerhard van Zyl (Efficient Engineering) Damon Symondson (Scaw Metals) Ross Hartley (Transnet Engineering)

As the goal of this summit is to bring together key players in the industry in order to discuss the way forward for Africa, the event is being offered by Amsted Rail at no cost to anyone wishing to attend.

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Broadcast Station: CNBC Africa Program: Open Exchange Date: 18 September 2014 African Oxygen has extended its Scaw Metals Group by ten years. The deal sees Afrox supplying 50 tons of oxygen per share to Scaws Wadeville operations. Station: CNBC Africa Program: Power Lunch Date: 18 September 2014 African Oxygen has extended its Scaw Metals Group contract by ten years. The deal sees Afrox supplying 50 tons of oxygen per day to Scaws Wadeville operations, the deal is worth R400 million. Station: Kaya FM Program: Today with John Perlman Date: 18 September 2014 Sixty five percent of South Africans who use public transport travel in minibus taxis. Its an industry that has 20 000 owners, it employs 200 000 people as drivers. (Int:) Thabane Sithole - Driver (Int:) Tshepo "Slender" Raphatha - Driver Mention: Scaw Metals OPEN LINES Station: Business Day TV Program: Business News Date: 18 September 2014 Afrox has signed a 10 year contract extension with Scaw Metals Group to supply 50 tonnes per day of oxygen to its Wadeville works. The new deal will be worth more than R400 million. Station: Business Day TV Program: Business News Date: 18 September 2014 Afrox has signed a 10 year contract extension with Scaw Metals Group to supply 50 tonnes per day of oxygen to its Wadeville works. The new deal will be worth more than R400 million.