i n v e s t o r p a c k

1
i n v e s t o r p a c k
2
Market Information

• JSE Top 40 index position 22
• Free float 41
• Market cap 3.1bn
• Daily value traded 6.1m for past 12 months
• Annualised turnover 77 of total issued shares
• Major shareholders
• LNM Group 50.01 (2 global steel producer)
• IDC 8.8
• Institutional 41
• South Africa 28
• International 13

Good liquidity and high turnover
3
Company Profile

• 1928 Iscor established as parastatal
• 1989 Iscor privatised and listed on JSE
• 1994 Start of major re-engineering program
• 2001 Unbundling of mining division as Kumba
  Resources
• 2001 LNM Holdings N.V. buys initial stake in
  Iscor
• 2002 Iscor enters into BAA with LNM
• 2004 LNM/Iscor merger approved LNM holding
  goes over 50
• 2004 Name changed to Ispat Iscor
• Steel industry ranking
• Africa 1
• Global 29

Largest regional steel producer
4
Successful Restructuring History

• Major re-engineering 1994-2001
• significant headcount reduction (30 000 people)
• steel grades down from 302 to 50
• inefficient capacity closed (1mtpa)
• moved to lowest quartile on global cost curve
• Value added products
• Flat 61
• Long 72
• Mining division (Kumba) unbundled November 2001
• iron ore mining rights retained to ensure supply
  at cost
• Market value increase since unbundling (Nov
  01) 500

Including effect of rights issue in April 2002
Major value release
5
Production

• Operations
• 3 integrated steel mills
• 1 steel mini-mill
• surplus coke batteries producing market coke
• captive iron ore (toll-mined by Kumba Resources)
• Output
• Steel 6.4 mtpa
• Market Coke 400 ktpa for ferro-chrome industry

Largest regional steel producer
6
Geographic Location

• Flat Products
• Vanderbijlpark
• ? 3.1 Mtpa final product
• Saldanha
• ? 1.3 Mtpa final product
• Long Products
• Newcastle
• ? 1.7 Mtpa final product
• Vereeniging
• ? 0.3 Mtpa final product
• ? 6.4 Mtpa final product
• Market Coke
• Vanderbijlpark and Newcastle
• ? 400 ktpa
• Iron ore supply at cost 3

Overview of operations
Thabazimbi
Johannesburg
Vereeniging
Vanderbijlpark
Newcastle
Sishen
Durban
South Africa
Saldanha
Cape Town
Steel plants
Captive iron ore source
Southern African location
7
Geographic Sales
South Africa
Rest of Africa
Total Africa
Far East
European Union
North America
1H03
Middle East
2H03
1H04
Other

0
10
20
30
40
50
60
70
80
Switch to better paying markets
8
Domestic Market

• Sound South African economic fundamentals
• Good prospects for long-term sustainable growth
• Underlying demand recovery throughout 2004
• Other Africa market share growing strongly
• Domestic margins 100/t gt non-African exports

000t
Imports
1 700
14
12
1 500
10
1 300
Consumption
8
Imports
1 100
6
900
4
700
2
0
500
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
Switch to sustainable growth
9
Domestic Pricing Policy

• Domestic prices based on International Parity
  Principle
• Downstream industry support programme (70m pa)
  through
• export rebates
• strategic concessions
• long-term contracts (auto industry, packaging)
• Competition Commission (Feb 2004) ruling that
  Iscor pricing policy is fair and reasonable
  complainants have lodged appeal
• Government has asked for review of downstream
  support programme
• Current import duty 5
• risk of removal considered low
• SAs duty amongst lowest in world

International parity pricing model
10
Invoiced Export Prices
US/t (cf)
630
Hot rolled coil
Low carbon wire rod
580
530
480
Based on order book expectations
430
380
330
280
230
180
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Source Ispat Iscor
Record high prices
11
Global Steel Demand
mt
WSD forecast
1 200
China
1
4
Rest of world
3
3
7
1 000
6
3
6
6
6
0
8
4
10
800
22
21
2
22
600
400
4
0
2
3
6
9
2
3
-4
200
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source World Steel Dynamics
China driving growth in steel demand
12
China Supply and Demand
mt
WSD forecast
350
Consumption
China forecast to become net exporter by 2008
Production
300
250
200
150
100
50
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source World Steel Dynamics
China expected to become net exporter
13
World Steel Consumption Trends
World Steel Consumption and GDP Per Capita,
1950-2010
2010
7 000
Phase 3
6 500
6 000
Asian crisis
1999
2004
5 500
2002
Collapse of USSR led
1997
to steel consumption
1994
5 000
1989
collapse in Eastern
Phase 2
Europe
4 500
1983
1979
Post war expansion to
US/capita (1995)
4 000
1975
1973
1970 led to predictions
1971
of seemingless
1970
3 500
endless growth
3 000
1961
First and second oil prices and
2 500
1954
subsequent recessions led to
Phase 1
massive light-weighting of steel-
2 000
containing products
1 500
50
55
60
65
70
75
80
85
90
95
100
105
110
115
120
125
130
135
140
145
150
155
160
kg steel/capita
Source Macquarie Research
Per capita steel demand entering growth phase
14
Global Input Price Trends
Based to 100
Based to 100
170
800
Coking coal - contract (LHS)
Freight rates (RHS)
Iron ore fines - contract (LHS)
Coke (RHS)
160
700
Scrap (RHS)
150
600
140
500
130
400
120
300
110
200
100
100
90
0
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Source Ispat Iscor
Global input prices still under pressure
15
Raw Material Integration
Domestic supply agreements
Internally sourced (at cost)
Imported
Actual 1H04 data
Cost benefit for raw material integration
16
Key Performance Indicators
2H03
1H03
1H04
Exchange rate impacting good productivity
performance
17
Headline Earnings
Rm
2H03
1H03
1H04
10 544
Revenue
9 175
9 312
2 948
Comparable operating profit
1 504
1 871
(14)
Financing cost - net interest expense
(16)
(31)

(133)
- long-term provision
top-up
(53)
(28)
(914)
Tax
(492)
(608)
179
Equity earnings
67
48
(4)
Minority interest
(3)
1
2 062
Comparable earnings
1 007
1 253

311
- in USm
145
156
(511)
BAA remuneration
(429)

Restructuring costs
(116)


Power contract settlement

(110)
Headline earnings
462
1 143
1 551
After tax
Lower discount rate accounts for R100m
Record earnings
18
Comparable Headline Earnings Trend
Rand million
US million
240
1 500
1 393
212
210
1 350
1 200
180
1 050
150
900
120
750
669
655
99
657
97
596
600
90
79
77
450
352
60
48
300
30
150
0
0
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04

R8.32/
R7.73/
R7.40/
R6.72/
R6.75/
R6.57/
Average R/US spot rate
Steel cycle overshadows Rand strength
19
Key Result Drivers
Negative
Positive
1H04 vs 1H03

• HRC cash cost per tonne (Rands) -4
• Domestic sales volume 22
• HRC US price 40
• Exchange rate 21
• Operating margin 20 28

Excluding BAA remuneration (1H04) power
contract settlement (1H03)
Strong Rand only negative factor
20
Sensitivity Analysis
Headline Earnings
Operating Income
EPS (SAc)
Variable
Change
Based on impact for full six months forecast
July-December 2004
Significant gearing to major variables
21
Financial Ratios
2H03
1H03
1H04
Margins approaching cyclical peak levels
22
Distribution to Shareholders

• In view of our strong cash flow
• Current distribution policy being reviewed
• Capital reduction proposal to be put to
  shareholders before end-2004
• Programme of capital reduction to be instituted
• Current stated capital R14/share
• No interim dividend declaration

Surplus capital to be returned to shareholders
23
3-Year Focus

• Further quantum reduction in costs
• Increase production from current assets by 1mtpa
• Focus on value-add projects
• Lowest quartile producer (delivered EU cost
  basis)
• Defer South African steel industry consolidation

Join select group of steel companies earning in
excess of WACC
24
Outlook for 2004

• Positive steel business environment
• ongoing global consumption growth
• prices increasing from current levels
• continued strength in domestic demand
• Operations
• ongoing cost reduction
• increased throughput
• Earnings
• Q3 up on Q2

Positive outlook
25
Investment Case

• Competitive producer
• vertically integrated
• lowest cost quartile focus
• part of major global steel group
• naturally protected domestic market
• Growth potential
• growing, more profitable regional market
• sweat current assets for extra 1mtpa
• expansion of market coke operations
• domestic steel industry consolidation
• Gearing to Chinese growth
• steel market fortunes dependent on continued
  Chinese growth
• Ispat Iscor revenue directly linked to
  international steel prices

Competitive low-cost producer
26
M a r k e t D a t a
27
Steel Equity Performance
Base to 100, all prices in US
600
Ispat Iscor
Gerdau
CSN
500
POSCO
400
Severstal
Bluescope
Arcelor
300
Nucor
US Steel
200
100
0
Aug 03
Aug 04
Aug 02
Feb 03
Apr 03
Jun 03
Dec 03
Jun 04
Jun 02
Oct 02
Dec 02
Oct 03
Feb 04
Apr 04
Source Bloomberg
Ispat Iscor amongst best performers
28
Steel Equity P/Es (Forward)
14
12
10
8
6
4
2
0
CST
SAIL
CSN
TISCO
POSCO
NUCOR
GERDAU
ARCELOR
US STEEL
BAOSHAN
SEVERSTAL
INTL STEEL
ISPAT ISCOR
CHINA STEEL
VOESTALPINE
THYSSENKRUPP
STEEL DYNAMICS
BLUESCOPE STEEL
ONESTEEL LIMITED
Source Bloomberg, 24 August 2004
Ispat Iscor still attractively valued
29
Steel Equity Price/Book
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
CST
CSN
TISCO
POSCO
NUCOR
GERDAU
ARCELOR
BAOSHAN
US STEEL
ONESTEEL LIMITED
INTL STEEL
SEVERSTAL
ISPAT ISCOR
USIMINAS SA
CHINA STEEL
VOESTALPINE
THYSSENKRUPP
STEEL DYNAMICS
Source Bloomberg, 24 August 2004
Ispat Iscor still attractively valued
30
Steel Equity Market Capitalisation
USm
14 000
12 000
10 000
8 000
6 000
4 000
2 000
0
CST
CSN
TISCO
NUCOR
POSCO
GERDAU
US STEEL
BAOSHAN
ARCELOR
STEEL DYNAMICS
ONESTEEL LIMITED
SEVERSTAL
ISPAT ISCOR
USIMINAS SA
CHINA STEEL
VOESTALPINE
INTERNATIONAL STEEL
THYSSENKRUPP
BLUESCOPE STEEL
Source Bloomberg, 24 August 2004
Mid-sized market cap
31
e x t r a s l i d e s
32
Relationship with LNM

• Iscors long-term desire to link-up with a major
  steel group
• Business assistance agreement signed with LNM
  (Jan 02)
• remuneration linked to performance
• target cost savings (excl. labour first 1)
  R350m to R700m pa
• LNM reward 5-10 Iscor issued shares or cash
  equivalent
• Sustainable savings to June 2004 R1 326m per
  annum
• cost savings target exceeded by 132
• R613m (value of 25.7m shares) paid to LNM Dec 03
• R731 (value of 18.9m shares) paid to LNM Aug 04
• BAA expires at end-2004
• allowance for renegotiation
• approval of minority shareholders required

Value from international tie-up
33
Business Assistance Agreement
Savings achieved
Remuneration due
Cum of shares
of max target
Number of shares (m)
Settled
Rm pa
Rm
Jun 03
5.8
388
613
Dec 03
58
25.7
(cash)
(cash)
Dec 04
Further savings expected
1 344
44.6
Measured from Jul-Dec 01 base, indexed
BAA payback approximately 1 year
34
BAA Savings Analysis
By Savings
Annualised Savings (Rm)

Efficiencies
858
65
Procurement
468
35
Total BAA Savings
1 326
100

By Plant
Annualised Savings (Rm)

Vanderbijlpark
506
38
Saldanha
251
19
Newcastle
378
29
Vereeniging
190
14
Total BAA Savings
1 326
100
BAA savings spread over group operations
35
Currency Strength

• Rand has strengthened 37 against US over past
  24 months
• Rand relatively stronger than currencies of
  competitor countries
• Costs 65 Rand-based
• Focus to maintain position on cost curve
• 3-yr programme
• restructuring
• improvement projects
• efficiency programmes

Pro-active initiatives to counter strong Rand
36
Capital Projects
Planned Completion

• Newcastle
• pulverised coal injection 1H05
• Vanderbijlpark
• Blast Furnace C throat armour
  repair Completed
• Blast Furnace D interim repair 2H04
• Roofer galvanising line 1H06
• Coke chemicals
• market coke expansion 2H06
• Thabazimbi
• iron ore mine life expansion project

Still to be approved
Significant spend for value-add
37
Environmental

• Environmental master plans approved
• All steel operations ISO 14001 certified
• Major environmental projects in progress
• Vanderbijlpark
• main water treatment plant
• coke oven gas water cleaning
• Newcastle
• reverse osmosis water treatment plant

Focus on environmental compliance
38
Cash Flow
Rm
2H03
1H03
1H04
Strong cash flow
39
Capital Expenditure
Fcast
Rm
1H03
1H04
2H03
2H04
Increased value-add and environmental spend
40
Sales Volumes
000t
3 500
Export
3 101
Domestic DSP
Domestic other
3 000
2 500
2 000
1 664
1 569
1 509
1 500
588
722
470
984
960
939
1 000
176
134
150
622
565
548
500
443
390
500
395
438
350
787
792
923
460
496
594
114
114
98
0
72
70
84
2H03
1H03
1H04
2H03
1H03
1H04
2H03
1H03
1H04
Vanderbijlpark
Saldanha
Long products
Total
Duferco Steel Processing re-roller mainly for
export
Strong domestic sales growth
41
Liquid Steel Production
000t
4 000
3 595
3 490
3 477
3 500
3 000
2 500
1 870
1 829
2 000
1 811
1 500
1 073
1 080
1 085
1 000
645
606
563
500
0
Vanderbijlpark
Saldanha
Long products
Total
Production affected by Saldanha breakout
42
Flat Product Prices Hot Rolled Coil
US/t cf
850
US Midwest
Germany
750
Far East
650
550
450
350
250
150
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Source CRU
Geographical divergence
43
Long Product Prices - Wire Rod
US/t cf
750
US Midwest
Germany
Far East
650
550
450
350
250
150
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Source CRU
Geographical divergence
44
Ispat Iscor Cash Cost Base
Iron ore
General
7
6
Coal Local
7
Labour
15
Coal Import
7
Services
Scrap/DRI/Pellets
3
6
Consumables
Other raw material
4
4
Electricity, gas petroleum
10
Alloys coating
9
Spares repairs
Refractories
4
Transport
8
10
Total production cost base H1 2004 R6.5 billion
Cash cost breakdown
45
Raw Material and Energy Impact
US Integrated plant with coke
US Integrated plant without coke
350
350
135/ton
81/ton
300
300
250
250
200
200
/ton
/ton
150
150
100
100
50
50
0
0
Q1 02
Q2 04
Q1 02
Q2 04
US Minimill flat products
Ispat Iscor
350
400
300
350
199/ton
300
40/ton
250
250
200
/ton
/ton
200
150
150
100
100
50
50
0
0
Q1 02
Q2 04
Q3 02
Q2 04
Coking coal
Coke
Iron ore/sinter/pellets
Pig iron
Scrap
DRI
Energy
Source World Steel Dynamics
Iscors cost push relatively muted