Investment Seminar

South African Investment PromotionSeminar In Beijing

17 April 2014

Table of Contents

1.0 Special Economic Zone1.1 Highlights of Government Policies

1.2 Status of the SEZ Implementation Processes

1.3 Targeted Investors for the SEZs

1.4 Key Elements of the SEZs

1.5 Planned SEZs in South Africa

2.0 Energy Policy and Opportunities In South Africa2.1 Comprehensive Energy Policy

2.2 The South African Electricity Consumption

2.3 The South African Electricity Generation

2.4 Renewable Energy Opportunities

2.5 Objectives of Government on Energy Plan

3.0 Automotive Industry: Policy and Opportunities

3.1 The South African Automotive Manufacturing Hubs

3.2 The East London IDZ

3.3 The Rosslyn Supplier Park-Gauteng

3.4 The Rosslyn Supplier Park-Gauteng

3.5 Local Content Requirements

3.6 The South African Automotive Profile

3.7 Exports to Sub-Saharan Africa

3.Distribution Channels In Africa

1.1 Highlights of Government Policies

Economic Development Policies Focuses on:i.Creation of 5 million decent jobs by 2020

ii.Promoting a globally competitive economy that produces and trades with the rest of the world in innovative & value added products & services

iii.SEZs were identified as one of the tools that could effectively be used to advance the government’s objective of industrialisation;

iv.Regionally spread industrial development

v.Beneficiation of own minerals and natural resources

Key Policies

1.2 Status of the SEZ Implementation Processes

Skills Development (In

Progress)

Supplier Development (In

Progress)

1.3 Targeted Investors for the SEZs

a) Manufacturing enterprises;

b) Internationally Traded Services;

c) International trade and distribution

d) Primarily export oriented

1.4 Key Elements of SEZs

1.5 Planned SEZs in South AfricaAll Sphere of Government

Government Planned SEZs •10 government SEZ Planned -opportunities in all 9 provinces identified and feasibility studies are in progress;

•We expecting 60% FDIs + 40% Domestic Investments

•There are still opportunities for Private Public Partnership (PPP) for SEZs.

2.O Energy Policy and Opportunities In South Africa

2.1 Comprehensive Energy PolicySouth Africa is currently developingcomprehensive Energy Policy which will :i. Provide an energy roadmap for the

country;ii. Guides the development of energy

policies and regulations;iii. Guides the selection of appropriate

technology to meet energy demand ,iv. Guides the investment and development

of energy infrastructure in South Africa, and;

v. Provides alternative energy strategies for the sector.

vi. Eskom is part of Southern African Power Pool, a group of utilities in the region aiming to create a common market for electricity in the region

Key Policy Objectives

2.2 The South African Electricity Consumption

40.90%

36.80%

11.40%

2.70% 8.10%

Electricity Consumption

Industrial Segment Residential Segment Commercial Transportation Others

Overviewi.Eskom has a current nominal installed capacity of 44,175MW

ii.Government addressing electricity supply issues with Eskom and Independent Power Producers (“IPPs”)

iii.Electricity generation dominated by state-owned power company Eskom, which currently produces over 96.7% of the power used in the country

iv.South Africa needs over 45,600 MW new generation capacity by 2030

2.3 The South African Electricity Generation

92.60%

5.70% 1.20% 0.50%0.10%

Electricity Generation

Coal Nuclear Power Pumped Hydroelectric Gas Turbine

Transmission and distributionI.Currently, the transmission of electricity in South Africa is undertaken by Eskom

II.The company has over 28,000 km of transmission lines spanning the entire country

III.Electricity distribution is the final stage in the delivery of electricity to end users, currently undertaken by Eskom, together with 187 municipalities

IV.Municipalities account for 40% of the total electricity sales and 60% of the customer base

2.4 Renewables Energy Opportunities(IRP Determinant)

Technology

MW allocation in accordance with

the Determination

MW capacity allocated in the

First Bid Submission Phase

MW capacity allocated in the

Second Bid Submission Phase

MW capacity for allocation in future

Bid Submission Phases

Onshore wind 1 850.0 MW 634.0 MW 562.5 MW 653.5 MW

Solar photovoltaic 1 450.0 MW 631.5 MW 417.1 MW 401.4 MW

Concentrated solar power 200.0 MW 150.0 MW 50.0 MW 0.0 MW

Small hydro (≤ 10MW) 75.0 MW 0.0 MW 14.3 MW 60.7 MW

Landfill gas 25.0 MW 0.0 MW 0.0 MW 25.0 MW

Biomass 12.5 MW 0.0 MW 0.0 MW 12.5 MW

Biogas 12.5 MW 0.0 MW 0.0 MW 12.5 MW

Total 3 625.0 MW 1 415.5 MW 1 043.9 MW 1 165.6 MW

2.5 Objectives of Government on the Energy Plan

The South Africa Government remains committed to:

i.Ensure security of energy supply;

ii.Diversification of the energy mix that includes clean and renewable resources to meet the needs of our fast

growing economy, without compromising our commitment to access clean, sustainable and affordable energy;

iii.Promotion of energy efficiency across the energy value chain;

iv.Regional integration and support for regional projects, and

v.Commitment to the UN secretary General call for sustainable energy for all, doubling energy efficiency and

doubling the deployment of renewable energy.

3.0 Automotive Industry: Policy and Opportunities

3.1 The SA Automotive Manufacturing Hubs

Automotive Production in SA

Ford (Pretoria) Ranger Bantam

Nissan/Renault (Pretoria) NP200/300 Sandero

BMW (Pretoria) BMW 3 series

Toyota (Durban) Hilux Corolla Fortuner

Mercedes Benz (East London) C class

GM (Port Elizabeth) Chevrolet Utility Isuzu

VW(Uitenhage) Polo Polo Vivo

FAW (Coega)

Automotive hubs in South Africa

3.2 East London IDZ3.2 East London IDZAn established automotive investment solutionAn established automotive investment solution

1. World Class Automotive Supplier Park (ASP)

i. 16ha of Industrial facilities, 20ha expansion in progress

ii. Home to global Suppliers (Johnson Controls, Otto Fuchs etc)

iii. East London IDZ ASP – world-class infrastructure for OEMs and

component manufacturers

iv. Numerous second-tier component manufacturers supplying Mercedes-

Benz are located in the EL IDZ

2. ASP Tugger Route

i. Comprises a vein through the centre of the ASP linking all suppliers to

the “milk-run”

ii. speedy and accurate just-in-time and just-in-sequence supply to

Mercedes-Benz SA

iii. Shared logistics service reduces operation costs

Facilitated by renowned Logistics Service Provider (LSP) UTI

iv. Mercedes-Benz are located in the EL IDZ

3. Secured, State of the Art Vehicle Storage Centre (VSC)

Streamlines the processing of incoming and outgoing vehicles

2,500 covered and 1,154 open bays

4. Competent Skills Pool

5. Science & Technology Park

6. Complete Investor Pre and Post Settlement Support

Multi-Level Car Terminal

Containerisation

3.3 Rosslyn Supplier Park - Gauteng

Business Support Services

SHARED FACILITIES

i. The Central Hub incorporates offices for service providers

ii. 4-star graded conference centre with full conferencing facilities

iii. Central Canteen coffee shop fast food outlet and ATM

iv. Medical Centre to service the tenants of the ASP on a shared

service basis.

ICT

i. Centre of Excellence

ii. Shared funding and resourcing

iii. Economies of scale

iv. Customer service orientation

v. Governance & risk management

vi. Business Continuity & Disaster recovery

vii. Enabling ASP to be a “technology-aware” park

viii. Modular design to allow customers to “slot in”

3.4 Rosslyn Supplier Park -Gauteng

Logistics Optimisation

i.Common logistic centre operated by an independent

service provider - Comprises warehouse of over

34,000m2 and serves ASP tenants and other

automotive customers.

ii.Three logistic service providers based at ASP -

provide a wide range of local and international logistic

services;

iii.Centrally located container depot - Able to handle all

the inbound and outbound container traffic of the park.

Electrical / Electronic

Chassis and Drive-train

Body

Exterior

Interior

3.5 Local Content Requirements

65%: % of total material cost 35%: true local material plus value add as % of total material cost

19%

15%

33%

23%

10%

14%

•Engines•Auto catalysts•Drive shafts•Brakes

•Harnesses•Starter motors•Alternators•Wiper systems•HVAC

•Glass•Paint•Bumpers•Mirrors

•Cockpit•Seats•Door panels•Carpets

•Bonnets•Bootlids•Sideframes•Doors

6%

5%

3%

7%

720000

650000

0

100000

200000

300000

400000

500000

600000

700000

800000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

The South African Automotive Profile

Production Sales Imports Exports

3.6 The South African Automotive Profile

3.7 Exports to Sub-Saharan AfricaSupported by trade Agreements

Source: Ernst & Young’s 2011 Africa attractiveness survey

Trade Agreements in AfricaTrade Agreements in Africa

3.8 Distribution Channels In Africa

Thank You