Briefing session

14 August 2013

Group Logistics Strategy 2013

Briefing Session

1

Agenda

2

Time Topic Objective Speaker

10:00 – 10:30 Welcome & Introduction Group Logistics Strategy

Purpose of the briefing session

Welcome and opening remarks Leroy M Nsibande

10:30 – 10:45 Vendor Application & SHERQ

Management Systems

How to become an accredited vendor in

ArcelorMittal South Africa Ntokozo Khanyile

10:45 – 11:00 Q&A All

11:00 – 11:15 Preferential Procurement Policy • Explain the impact of the Preferential

Procurement Policy

• Enterprise Development – Interventions

Tometsi Mosai

11;15 – 11:30 Q&A All

11:30 – 12:30 Logistics Business Opportunities in

ArcelorMittal South Africa AOL/SADC

Raw Materials

Domestic Steel

Ports & Harbours

• Overview of logistics related business

opportunities

• Cross border road transportation of steel

to Sub-Saharan African customers

• Steel to the local market/customers

Hennie Odendaal

12:30 – 12:45 Q&A Discuss opportunities All

12:45 – 13:00 Evaluation Criteria Supplier Database

Tender

• Transparent, Fair, Equitable

• Evaluation Criteria: Price, Capacity,

BEE Level, SHERQ

Leroy M Nsibande

13:00 Closure Leroy M Nsibande

Operational Overview

Flat Steel Products shipped*

• Vanderbijlpark Works – 2 250kt (2 478)

• Saldanha Works – 1 092kt (941)

Long Steel Products shipped*

• Newcastle Works – 1 305kt (947)

• Vereeniging Works – 278kt (337)

Iron ore procured*

• 3 444kt (4 584) from Sishen

• 1 234kt (1 409) from Thabazimbi

• 1 285kt (650) others

Coke & Chemicals shipped*

• Coke – 460kt (631)

• Tar – 109kt (117)

*12 months to December 2012

Vereeniging

Works

Johannesburg

Newcastle

Works Sishen

Vanderbijlpark

Works

Thabazimbi

South Africa

Saldanha

Works

Cape Town

Durban

Steel plants

Captive iron ore source

Group Logistics Structure

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Group Manager & Head of Logistics

LM Nsibande

Manager: Ports & Harbours

T van Tonder

Manager: Logistics Group Contracts

H Odendaal

Manager: Logistics Operations

C Loots

Manager: Central Logistics Planning

E Odendaal

Snr Specialist: Raw Material

Livhu Mugwagwa

Specialist: AOL

Rudzani Tshifhumulo

Snr Specialist:

Ports & Harbours

Naresh Singh

Snr Specialist: Domestic

Steel

Ria Vermaak

Adjudication Committee

GIT

R. Palayi

Group Logistics:

Our Vision: To provide integrated logistics solutions to ArcelorMittal South Africa by strategically supporting

our business objectives

Our Mission: To be the benchmark in logistics within ACIS

Our Principle: To Communicate, Coordinate & Collaborate (3Cs)

Purpose of the briefing session….

The purpose of this briefing session is to provide information on:

Accessing transport and logistics business opportunities in ArcelorMittal South Africa

The structure of Group Logistics as a dept. with Procurement & Logistics

ArcelorMittal South Africa’s tender process at a glance

How to get hold of ArcelorMittal South Africa tender documents

Applying to become a vendor in ArcelorMittal South Africa

What information and documents to provide with a tender response

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Logistics spend 2012

Road TPT Raw Material, R281,598,505.00

Road TPT Steel, R899,828,040.87

Rail Transport, R3,305,000,000.00

Sea Freight, R195,868,407.00

Port Costs, R297,378,812.48

Logistics spend overview 2012

What governs our procurement?

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FAIR

COST EFFECTIVE

EQUITABLE

COMPETITIVE

TRANSPARENT

Everyone must be given the same opportunity to tender.

No favouritism

The process must be open, showing there is nothing

exclusive or to hide

Open and fair competition must be promoted

Decisions must promote equity in South Africa, with preference

to the previously disadvantage or BEE companies

The best value for money must be obtained

ArcelorMittal South Africa will act in the following manner when procuring

logistics services

ArcelorMittal tender process at a glance…

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Tender is advertised

Newspaper

Website

Tender Notice Board

Collect tender

Document

Email

Fax

Attend briefing session

(where applicable)

Complete tender form

And assemble relevant

documents,

information and costing

for your tender response

Submit your tender

Before the closing

date and time

Render the

contracted service

Unsuccessful tenderers

are informed that they

were unsuccessful

If successful, you

are awarded

the tender and you

will be required to

sign a contract

1 2

8

3 4

7 6 5

Vendor application &

ArcelorMittal SA performs

vendor

audit on SHERQ systems

Performance

Evaluation

Monthly

Vendor Application & SHERQ Management Systems

Ntokozo Khanyile

Vendor registration requirements

• The following documents are required before vendor registration

• Certified copies of the required documentation must accompany the fully completed ArcelorMittal

vendor application form. Applications will be rejected should any of the required supporting

documentation as listed below not be attached to the vendor application form:

• Registration certificate of:

- Private or Public Company (CM1 or CM6 Certificate of incorporation)

- Closed Corporation (CK1 or CK2 – Founding Statement for Closed Corporation or amendment

thereof)

• VAT Registration certificate

• TAX Clearance certificate

• Registration certificate at Compensation Commissioner (Letter of Good Standing)

• Cancelled cheque or letter from Financial Institution confirming bank details

• The Applicant must hold a valid BBBEE certificate of at least level 5, issued by an accredited

verification agents

• ISO 9001 - Quality accreditation or compliance certificate (If available)

• ISO 14001 - Environmental accreditation or compliance certificate (If available)

• OSHAS 18001 – Health and Safety accreditation or compliance certificate (If available)

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SHERQ Requirements

Arcelormittal and contractors are required by the OHS Act 85 of 1993 to provide a safe

work environment and protect the safety and health of their work forces. Arcelormiital

South Africa has +- 1300 contractors on site contractors including transport contractors .

All potential transport contractors will be audited by Vendor management to confirm their

legal and SHERQ compliance with ArcelorMittal requirements. The audit is base on ISO

14001 , ISO 9001 and OHSAS 18001.

The minimum score to achieve is 65% in all three standards , If a vendor does not

achieve a score of 65% or more for the assessment, a second audit will be arranged . If

the vendor fail the second audit , it will be permanently black listed and it will never be

ably apply for the vendor code with Arcelormittal

If the vendor pass the audit , a vendor code will be allocated , then it is expected that the

vendor prepares a safety file before any work is performed .

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Preferential Procurement Policy

Tometsi Mosai

Preferential Procurement Policy

“Broad Based Black Economic Empowerment (BBBEE) is an integrated and

coherent socio-economic process, located within the context of the country’s

national transformation programmes, ArcelorMittal South Africa Limited commits

itself to actively support and contribute to the development and growth of BBBEE

enterprises in the Republic of South Africa”.

Policy Objectives

• Creating an enabling environment for BBBEE enterprises to access available

procurement opportunities within ArcelorMittal South Africa.

• Increasing participation by small and medium enterprises (SMME’s) that are

black owned and black women owned.

• Contributing to the growth of the small and medium sized BBBEE enterprises

by ensuring that a target percentage of expenditure on goods and services is

procured from such enterprises.

• Contributing to the development of the small and medium sized BBBEE

enterprises through initiatives that are aimed at improving their business

sustainability.

Order of Preference

1. Black Women Owned (BWO) and managed entities with exempted micro-enterprise

(EME).

2. Black Owned (BO) and managed entities with exempted micro-enterprise (EME) status.

3. Black Women Owned and managed entities (BWO) with qualifying small enterprise status (QSE).

4. Black Owned and managed entities (BO) with qualifying small enterprises status (QSE).

5. Black Women Owned and managed entities (BWO) with generic enterprise (GE) status.

6. Black Owned and managed entities (BO) with generic enterprise (GE) status.

7. Contribution level ranking where contribution level 1 is the most preferred and level 8 is the least preferred.

Preferential Procurement -Benefit

Supplier Development Interventions

• Partnership agreement with ABSA

– Invoice clearing facility.

– Vendor financing.

• Partnership agreement with B1SA

– Advisory services on BBBEE compliance.

• Targeted procurement

– “Set a side” procurement opportunities for exclusive participation by a

designated group of companies.

Business Opportunity

Hennie Odendaal

Road transport of steel- domestic and export

Enquiries will be issued before the end of 2013 for the road transport of steel – all

tonnages reflects estimated annual tonnages:

• From Pretoria to domestic customers + 81,000 tons

• From Vanderbijlpark to Durban and Richards Bay and domestic customers

approximately 69,000 tons.

• From Vereeniging to Durban and Richards Bay and domestic customers +

approximately 70,000 tons

Enquiries will also be issued for:

• The receiving, packing and handling of + 76,800 tons of tin products at

ArcelorMittal Vanderbijlpark as well as the transport thereof to Durban for

export and to domestic customers.

• The receiving, packing and handling of + 67,000 tons of DWI products at

ArcelorMittal Vanderbijlpark as well as the transport thereof to domestic

customers

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Opportunities in SADC countries

• Available opportunities SADC region are:

• More details about volume per route per country will be available on the main tender

• Maximum of 3-year contracts commencing on 1 January 2014

VANDERBIJLPAKR WORKS TO: NEWCASTLE WORKS TO: VEREENIGING WORKS TO: PRETORIA WORKS TO:

Country Estimated tons/Month Country Estimated tons/Month Country Estimated tons/Month Country Estimated

tons/Month

Namibia 82 Malawi 59 Botswana 60 Botswana 56

Malawi 381 Swaziland 108 Zambia 90 Mozambique 150

Botswana 2 083 Zimbabwe 395 Zambia 150

Zimbabwe 2 176 Namibia 620 Zimbabwe 200

Zambia 4 291 Botswana 1 250

Mozambique 4 754 Zambia 4 388

Mozambique 5 438

13 767 12 260 150 556

Import Coal

• Total coal imports 1.7 million ton per annum

• Predominantly rail

• Road needed when rail fails

Destinations

• Richards Bay to Newcastle 20,000 per month

• Richards Bay to Vanderbijlpark 20,000 per month

Additional information

• Side tippers only

• 20-30 loads per day to each business unit

• Estimated payload 34 ton

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Ports and Harbours contracts

Service – Contracts expiring within

the next year - 2014

ESTIMATED Volumes

Tally of export steel at Saldanha Steel 660 kt pa

Tally of export steel at Richards Bay 41 kt pa

Warehousing, consolidation &

transportation of import consumables

70 kt pa

~ 2 400 containers pa

Service – Other contracts expiring in 2015

Stevedoring of iron ore pellets, coke and steel in Saldanha & Richards Bay

Freight forwarding (Ocean and Air) and clearing of Import Consumables

Combined conditioning, loading, stowing, securing and surveying of AMSA

shipments in Durban & Richards Bay

Surveying of steel in Richards Bay

Evaluation Criteria

Leroy M Nsibande

Evaluation Criteria

24 24

Competitive Price

Capacity

BBBEE Level

SHERQ Systems

• Value for money

• Total Cost of Ownership, etc.

• Preferably Level 1 – 5

• As per ArcelorMittal Preferential Procurement Policy

• Commercially - (Financial position of prospective supplier)

• Technically – vehicles to execute contract (i.e. vehicle type, etc)

ArcelorMittal South Africa will evaluate tenders based on the criteria listed

below:

NB: Price

1

2

3

4

• Based on our SHERQ system as per vendor application onto our

database

Capacity Set-asides • Supplier Development

• SMME Development

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Thank you !

Contact Details

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Hennie

Odendaal(Manager)

Hennie.odendaal@arcelormittal.com • (016) 889-4256

• 0832725758

Rudzani

Tshifhumulo(Specialist)

Rudzani.tshifhumolo@arcelormittal.com • (016) 889 2799

• 060 500 4325

Livhuwani

Mugwagwa(Specialist)

Livhuwani.mugwagwa@arcelormittal.com • (016) 889 3531

• 083 450 9452

Ria Vermaak(Specialist) Ria.Vermaak@arcelormittal.com • (016) 889 4167

• 083 304 0289

Naresh Singh(Specialist) Naresh.singh@arcelormittal.com • (016) 889 3153

• 083 452 7396

Refilwe Palayi(Specialist) Refilwe.Palayi@arcelormittal.com • (016) 889 2206

Tometsi Mosai

(Preferential

Procurement)

Tometsi.mosai@arcelormittal.com. • 016 889 3056