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www.ppc.co.za25 March 2011
Investor Site Visit Western Cape
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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 depotEnjoy the day!
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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
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PPC in southern Africa
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De Hoek
Riebeeck Port Elizabeth
Hercules
Jupiter
Dwaalboom
Colleen BawnBulawayo (Mill)
Gaborone (Mill)
Slurry
Zimbabwe
Botswana
Moz
ambi
que
Namibia
Saldanha (Mill)
PPC CementMontague Gardens (Depot)
George (Depot)
Johannesburg
Cape Town
PPC Aggregates
PPC Lime
Lime Acres
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PPC in the Western Cape Province
De Hoek
Riebeeck
Saldanha (Mill)
George (Depot)
Cape Town
Northern Cape
Western Cape
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7
±140km
±60km
±100km
Montague Gardens (Depot)
Vanryhnsdorp
PPC in the Western Cape
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Orientation
De Hoek
Riebeeck
Saldanha (Mill)
George (Depot)
Cape Town
Northern Cape
Western Cape
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Montague Gardens (Depot)
Vanryhnsdorp
PPC’s Western Cape integrated network
Significant WC limestone reserves
Indicates rail interconnectivity
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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
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Products
OPC (ordinary portland cement)
Construction industry, concrete product manufacturers and ready- mix 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
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Customer segments and projects in the WC
Retailers are the largest customer segment followed by ready- mix 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 yearsAll values listed above are estimated project costs
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Annual cement demand
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-
500 000
1 000 000
1 500 000
2 000 000
2 500 000
3 000 000
3 500 000
4 000 000
4 500 000
5 000 000
SA domestic Western Cape
WC demand analysis
WC market is between 10 -15% of SA domestic market through a cycleSource: CNCI data, Western Cape 2010 - PPC estimate
0
500
1 000
1 500
2 000
10 000
12 000
16 000
8 000
14 000
000
tons
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WC demand analysis (continued)Annual cem ent dem and index
1996 = 100
6 0
8 0
10 0
12 0
14 0
16 0
18 0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
SA Do m e stic W e ste rn Ca p e
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 marketSource: CNCI data, PPC calculations, Western Cape 2010 a PPC estimate
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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 efficiencyLower capital cost spread over a longer periodReduced environmental impact
Capacity (increase of ±50%)
De Hoek: replacement (phase 1) and expansion (phase 3)
Riebeeck: replacement with some expansion (phase 2)
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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 6Capex 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 RiebeeckCapex 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
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Montague Gardens depot Cape Town
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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
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Questions?
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Investor Site Visit De Hoek factory - Piketberg
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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 using2 kilns – DHK5 (1974) and DHK6 (1980)2 cement mills2 rotary packers each capable of 2900 bags per hour2 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
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Cement manufacturing process
crushing plant Kiln feed preparation and blending
coal stockpile
coal mill
raw mill
cement milling & dispatchpre-heater, kiln line & cooler
Limestone mining
clinker storage
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crushing plant limestone blending coal stockpile
coal mill
raw mill
cement milling & dispatchpre-heater, kiln line & cooler
mining limestone
clinker storage
crushing plant limestone blending coal stockpile
coal mill
raw mill
cement milling & dispatchpre-heater, kiln line & cooler
mining limestone
clinker storage
Cement manufacturing process (continued)
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crushing plant limestone blending coal stockpile
coal mill
raw mill
cement milling & dispatchpre-heater, kiln line & cooler
mining limestone
clinker storage
crushing plant limestone blending coal stockpile
coal mill
raw mill
cement milling & dispatchpre-heater, kiln line & cooler
mining limestone
clinker storage
Cement manufacturing process (continued)
Clinker Cooler
Coal Mill
Flame to produce 1400oC
Most thermal energy intensive stage of the process
Most thermal energy intensive stage of the process
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Cement manufacturing process (continued)
Clinker Cooler
Coal Mill
Flame to produce 1400oC
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
Calcination process
Calcium carbonate + heat =» calcium oxide + carbon dioxide
CaCO3 + 1400oC heat =» CaO + CO2
~1.5 tons + 1400oC heat =» 1 ton clinker + 500kg CO2 *
Approximately half of CO2 produced in the clinker process is derived from the dissociation limestone, not from burning coal
* Excludes CO2 from coal and electricity used in the process
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crushing plant limestone blending coal stockpile
coal mill
raw mill
cement milling & dispatchpre-heater, kiln line & cooler
mining limestone
clinker storage
crushing plant limestone blending coal stockpile
coal mill
raw mill
cement milling & dispatchpre-heater, kiln line & cooler
mining limestone
clinker storage
Cement manufacturing process (continued)
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
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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)
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De Hoek upgrade and expansion plan (continued)
Indirect firing system Kiln shell
replacement
Planetary coolers replaced with grate cooler
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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
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Questions?
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Site tour
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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
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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)
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Investor Site Visit Riebeeck Factory – Riebeeck West
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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 using2 kilns – RK1 (1959) and RK2 (1968)
Both kilns run sustainably at 20% over original design capacity2 cement mills1 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)
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Aerial view of factory and mine
Riebeeck West village
Limestone mine
Rehabilitated overburden
dumps
Cement factorySmuts cottage
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Mine rehabilitation
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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
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Riebeeck upgrade and expansion plan - scope
crushing plant Kiln feed preparation and blending
coal stockpile
coal mill
raw mill
cement milling & dispatchkiln line & cooler
mining limestone
clinker storage
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Riebeeck upgrade and expansion plan (continued)
Schematic of current plant layout (RK1 & 2 in yellow)
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Riebeeck upgrade and expansion plan (continued)
Schematic of kiln 3 construction (green)
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Riebeeck upgrade and expansion plan (continued)
Schematic of upgraded layout (RK1 &2 dismantled)
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Questions?
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Site tour
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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
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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 areaProjects 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
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Thank you for spending time with us today
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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).
