THE SUGAR INDUSTRY AT A GLANCE 26 600 growers 25 200 small scale growers 1 400 commercial growers including 323 black growers 14 sugar mills 90 000 Jobs 2,2 million tons of sugar p/a 12 billion rand annual income Estimated 1 Million livelihoods

Total Ex-Factory Costs COST COMPETIVENESS Rank Total F.O.B. Stowed Costs 1 Nicaragua 2 Guatemala 3 Thailand 4 Brazil (C.S.) 5 Colombia 6 Honduras 7 El Salvador 8 South Africa 9 Zimbabwe 10 Swaziland Rank Total Ex-Factory Costs 1 Nicaragua 8 Zambia 2 Guatemala 9 Swaziland 3 Brazil (C.S.) 10 Honduras 4 Colombia 11 El Salvador 5 Malawi 12 Bolivia 6 Thailand 13 South Africa 7 Zimbabwe 14 Sudan Source: LMC International; Worldwide survey of sugar and HFCS Production Costs; 2012 Report

LAND AND AGRARIAN REFORM An increase from 5% in 1994 to 21% of freehold transferred Black growers produce 2.5 million tons of cane Settlement of claims will see 50% of land ownership in hands of black growers Land reform in sugar leading the way

DEVELOPMENTS FROM SUGARCANE RENEWABLE ENERGY DEVELOPMENTS FROM SUGARCANE Globally more sugar industries are transforming to co-produce sugar, ethanol and electricity World’s two largest cane producers, Brazil and India, have access to sugar, regulated electricity and ethanol markets South African sugarcane value chain is cost but not revenue competitive

DEVELOPMENTS FROM SUGARCANE RENEWABLE ENERGY DEVELOPMENTS FROM SUGARCANE South Africa - urgent need for additional power generation Renewable energy as electricity and ethanol part of dti sugar industry strategy

SUGAR INDUSTRY COGENERATION VALUE PROPOSITION All 14 sugar mills match fuel supply with own energy use 100% cogeneration implemented at all 14 mills Generic Sugar Industry Proposal New Power Island Medium to High pressure power island Develop additional area under cane Develop additional fibre sources Mill Energy Efficiency and Agricultural Yield Improvements Cogeneration supplies steam to sugar mill Sugar mill procures electricity from grid Power station critical to operation of sugar mill Tariff based on capital return, operating and fuel cost

POTENTIAL IN SUGARCANE AGRICULTURE AND PROCESSING Global trends Diversify product offering Improves revenue & cost effectiveness Brazil leading in ethanol India leading in electricity Electricity & Steam Currently fuel supply to match own energy use At high efficiency 2 to 7 times more electricity Other Products: Animal feed, paper, chemicals Future – cellulosic ethanol 15% Fibre 15% Sugar Tops and leaves not currently utilized, is about equal to sugarcane fibre Fibre Sugar to market Sugars to fuel ethanol Water free (blend to E10) Water containing (Fuel Flex Vehicles) Sugarcane – one of most efficient plants to convert sunlight to energy Season – ethanol could extend existing 8 months Sugarcane Molasses

SUGAR INDUSTRY COGENERATION VALUE PROPOSITION Project timing Biomass competitive advantage of KZN and southern Mpumalanga Extensive economic and social development All 14 mills in this area - no RE projects to date in these areas Agriculture and rural development Jobs and skills development Sustainable land reform Socio-economic development build on and expand existing programs and initiatives Green – renewable – emission reduction Industrialisation

SUGAR INDUSTRY COGENERATION VALUE PROPOSITION DESCRIPTOR RENEWABLE COGENERATION SUGARCANE FIBRE Primary Renewable Fuel Sugarcane Fibre (includes bagasse and leaves) Typical Sugarcane Harvest Season April – December Total Planned Electricity Generation Capacity (MW) 712 Commercial Operate Dates 2014 – 2024 No. of projects 15 Locality KwaZulu-Natal   Mpumalanga

SUGAR INDUSTRY COGENERATION VALUE PROPOSITION DESCRIPTOR RENEWABLE COGENERATION SUGARCANE FIBRE Total Project Cost (ZAR million) 20,402 Project Starting Tariffs Range of tariffs dependant on the Project specific requirements Tariff Indexation Approach Key industry sugar drivers are not CPI linked. A basket indexation proposed (on a project by project basis if required) Local content value – Construction (ZAR million) 12,690   Local content % - Construction 68 Job creation - Construction Phase 7023 Job creation - Operations Phase 437 Job creation – Fuel Phase 25 326 Total Jobs 32 786

Quality and quantity of jobs Construction – 7 023 Operation – 437 Agriculture – 25 326

COMPARATIVE ASSESSMENT ACROSS RENEWABLE TECHNOLOGIES TECHNOLOGY SOLAR WIND HYDRO CSP SUGAR Window(s) 1+2 2 proposed MW Allocation 1049 1 197 14 200 712 Total project cost (Rm) 33 985 23 621 631 15 848 20 402 Local content value – construction (Rm) 11 988 6 767 421 4 029 12 690 Local content % (construction) 35.3% 28.6% 66.7% 25.4% 68% Job creation (construction) 14 943 3 448 261 1 827 7 023 Job creation (operations) 415 193 7 120 437 Job creation (fuel) N/A 25 326 TOTAL JOBS 15 358 3 641 268 1 947 32 786 Consolidated industry impact Level of development at different stages

WAY FORWARD Members of the SA sugar have responded to Request for Registration and Information (RFRI) – 12 July Require an enabling procurement programme fulfilling both the electricity (Department of Energy) and sugar industry (dti) objectives Contractual agreements Procurement approach and timing Process to engage on low hanging fruit projects Inclusion of biomass cogeneration in long term energy plans e.g. IRP and IEP

Thank You