2

Agreement between Iscor and IDC

Structure of Kumba unbundlingStructure of Kumba unbundling

Integration of SaldanhaIntegration of Saldanha

Rights issue in Iscor post unbundlingRights issue in Iscor post unbundling

26 September 2001

3

Agenda

Introduction

Ownership of iron ore

Integration of Saldanha

Final IDC Holdings

Iscor rights issue

Rationale for the rights issue

Debt allocation

Other issues

Timetable and conditions precedent

Conclusion

4

Introduction

Iscor’s 1 March 2001 unbundling proposal: a further step in 5 yr programme of releasing value for all shareholders

IDC required as part of unbundling:

ownership of iron ore for Iscor

full recapitalisation of Saldanha

integration of Saldanha into Iscor

Agreement now reached between Iscor and IDC

Agreement meets requirements of all stakeholders

5

Ownership of iron ore

Iscor retains ownership of 6.25 Mtpa of Sishen iron ore from 1 July 2001 (current production – 27 Mtpa)

Total iron ore requirements then received at cost plus 3%

Additional R400 mill p.a. EBITDA for Iscor

Creates a more robust steel operation

Reduced debt allocation ensures no destruction of value in Kumba

Kumba free to:

- further expand Sishen (27 Mtpa to 33 Mtpa) and

- develop Welgevonden (10 Mtpa)

Iscor retains right to participate in Kumba’s local iron ore expansions only i.r.o. any further domestic requirements

- Iscor remains vertically integrated steel producer

- Kumba value remains intact with significant expansion potential

6

Integration of Saldanha

Saldanha debt R5.8 bn at hedged values (30 June 2001) to be fully refinanced

by Iscor and IDC

Iscor to acquire IDC 50% stake in fully refinanced Saldanha

IDC to contribute 50% of Saldanha operating funding requirements to June

2002 - R250m cash to Iscor post unbundling

IDC receives 10 million Kumba shares and 20 million post-unbundled Iscor

shares as consideration

If Saldanha funding requirements > R500m can request 50% of excess from

IDC in consideration for post unbundled Iscor shares at market price

Iscor positioned for integration of SA steel industry

7

Final IDC holdings

Current IDC holding – 31.5 million shares – 11.5%

Holding post Saldanha integration and unbundling

Kumba – 14.7%

SteelCo – 17.6% (pre rights issue)

8

Iscor rights issue

Vertically integrated Iscor requires recapitalisation to limit debt

IDC will underwrite R1.67 billion Iscor rights issue post-unbundling

Timing: after interim results announcement in February 2002

Price at 25% discount to market

IDC to underwrite Iscor recapitalisation

9

Preferred option is rights issue in Steelco

Unbundling would not be possible without iron ore ownership for Iscor

Leaving debt of R4.3bn in Kumba with reduced R400m EBITDA destroys value in “hard” currency Kumba, with no financial flexibility to develop projects

Debt thus left in “softer” currency Iscor

R3.6bn debt in Iscor not acceptable to lending banks

Hence Iscor debt has to be refinanced

Options available to Iscor are:

No unbundling - maximum value release foregone

Kumba overgeared - destroying certain value in the “hard’ currency

Steelco overgeared - not acceptable to lending banks

Rationale for the rights issue

10

Debt allocation

13695Off-balance sheet debt

Kumba will hold AST shares: value approximately R400 million.

2 6771 895Effective debt allocation

-(1 670)Rights issue

-

-

2 900

(250)

Saldanha Steel recapitalisation

Saldanha funding from IDC

-(363)Ticor proceeds

2 5411 183Net debt at 30/6/2001

KumbaIscor

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Other issues

Iscor Board supports IDC’s wish to vote & dispose of Iscor and Kumba

shares without restriction

Proposals to shareholders to be voted as one indivisible transaction

Strategic equity partner desirable, but not conditional

12

Timetable and conditions precedent

Documentation posted to Iscor shareholders 23 Oct

Iscor shareholders’ meeting 15 Nov

Unbundling date 19 Nov

Approvals required

Iscor shareholders

Lending banks (i.r.o. debt allocation)

Competition Commission (only i.r.o. Saldanha integration)

JSE/SRP

13

Conclusion

PROPOSAL MEETS ALL STAKEHOLDER REQUIREMENTS

ISCOR

becomes focused integrated steel producer

recapitalised to limit debt

positioned for rationalisation of SA steel industry

favourable procurement creates more robust operation

KUMBA

becomes focused metals/minerals producer

value remains intact

positioned for strong growth

significantly stronger balance sheet compared to March proposal

Major value release for shareholders