APIMEC MEETING São Paulo – November 26, 2010 and Rio de Janeiro – December 20, 2010
Transcript
1. APIMEC MEETING So Paulo November 26, 2010 and Rio de Janeiro
December 20, 20101 1
2. AGENDAOPENINGSECTORINDUSTRYCORPORATERESULTSFINANCIAL AND
RISK MANAGEMENTOUTLOOK 2
3. OPENINGPresented by: Luiz Antonio de Souza Queiroz Ferraz
Junior Chief Executive Officer DIAS DVILA - BA SANTO ANDR
SP(UTINGA) 3 SANTO ANDR SP(CAPUAVA) SERRA - ES
4. From now on, Paranapanema will experience a new phase Given
the conclusion of an important financial, tax and corporate
restructuring process, the company has achieved: financial strength
focus on profitability focus on quality focus on technology
Strategy:1. Investment focused on: gains of scale and
competitiveness Strong organic growth cycle from 2009 on
Investments with longer maturity terms R$56.5 million invested in
2009. In 2010-13, R$510 million will be assigned to: 20% expansion
in refined copper production capacity Expansion of over 50% in the
production of semi-manufactured copper products (tubes and
laminated products) Copper recycling: improvement of concentrate
and scrap mix , aiming at changing from a ratio of 83% / 17% to 70%
/ 30% by 20122. Projects: studies in progress for: Precious metals
plant (gold and silver) Mineral rights: In 2011, studies will be
conducted on Paranapanemas 105 mineral rights registered with DNPM,
which includes tin ore, copper, chrome, lead, tin alloy,
molybdenum, gold, silver, nickel, titanium and zinc reserves, among
others, aiming at checking the size of reserves and exploration
possibilities in the States of Amap, Par, Roraima, Rondnia and Rio
Grande do Sul. 44
5. 3. Disposal of assets not related to our core business4.
Strategy and targets: Successful achievement of market share target
in the domestic market: 67% Search for gains of scale and
competitiveness , with reduction of fixed costs Focus on
profitability.5. Strategic partnerships: Strategic partnerships
being analyzed for the development of research studies related to:
Reduction of costs Guarantee of long term supplies More competitive
prices6. Organizational restructuring: corporate governance New
organizational structure with creation and improvement of
management committees approvedby the board of directors.7. Outlook
Period from 2010 to 2016 expected to be extremely promising,
especially on the domestic market Expected growth in GDP and
sectors demanding copper products, supported by sports events and
PACgovernment project, which will leverage our business. 55
6. Correlated to The Brazilian economy will grow at an
accelerated GDP growth pace that may exceed 5%, but in a
sustainable Global consumption manner. Growth of emerging countries
Copper production chain has reported consumption growth from 1% to
2% above the Brazilian growth Increase in investment infrastructure
average. Real estate and civil construction markets Emergent
countries growth above the global average Increase in the use of
clean energy (solar, wind and ethanol) Local and foreign direct
investment in Brazil, which Transportation and automotive sectors
ceased to be the country of future to be the country of
present.66
7. SECTOR Copper division Players in the Brazilian copper chain
Global copper production indicators Global indicators of refined
copper production Refined copper industry in Brazil Prospective
Demand for Refined CopperPresented by Marco Martins Chief
Commercial Director 7
8. Brazilian Copper Chain Number of Revenues in Share % Sectors
Companies 2009 (US$ million) Mining 3 1,444 22% Refining 3 1,300
20% Lamination companies Semi- 5 799 12% manufactured Lamination
companies - Rods 17 1,138 17% Wires and Cables 210 1,877 29% Total
238 6,558 100% Sources: Sindicel and ABC Small number of players at
the beginning of the Brazilian copper chain Brazilian copper
concentrate production is sufficient to meet demand from refiners
Wires and cables sector includes multinational and family companies
Only 2 companies are listed on the BM&FBovespa stock exchange
(Vale and Paranapanema) Wires and cables is the largest sub-sector
in Brazils copper chain88
9. Important national and global companies are present in the
country, such as: Paranapanema (formerly Caraba Metais) REFINING
Minerao Caraba Minerao Caraba Vale MINING Vale Yamana Gold
PROVIDERS OF There are 17 companies LAMINATING installed in the
country, 11 of which are also PROVIDERS SERVICES manufacturers of
wires OF FOR COPPER and cables. LAMINATING Cecil WIRE RODS
Paranapanema (formerly SERVICES Eluma) FOR SEMI- Ibrame The segment
includes more MANUFACTU Termomecnica than 200 small, midsize and
WIRES AND large Brazilian companies, as RED well as multinationals
such PRODUCTS CABLES as: Draka-Telcon, Furukawa, General Cable,
Nexans and Prysmian. Sources: Sindicel and ABC 99
10. Source: Brook Hunt Sep/10Since 2008 ... The world
production of copper concentrate increased at an average rate of
2.1% p.a.; The global demand for copper concentrate by refining
companies (smelters) rose 0.7% p.a. on average; The global demand
for refined copper grew 3% p.a. on average; and The world
consumption of refined copper increased at an average rate of 2.1%
p.a. 10 10
11. Recovery of cathode premiums vs. copper prices on LME
London Metal Exchange, expected for 2011, compared with 2010 The
Treatment Charge (TC) and the Refining Charge (RC) correspond to
the deduction of the discount allowed by miners to refiners on the
metal prices on LME. Average copper prices have been highly
volatile(offer and demand + hedge funds), havingincreased at an
average rate of 22.2% p.a.from 2003 to 2010, and 2% p.a. since 2008
The shutdown/interruption of activitiesof refiners in China and
India favored theincrease in TC/RC on the sport market in the2nd
half of 2010 Prices of refined copper byproducts(gold, silver and
sulphuric acid) are alsorelevant indicators. Sources: Brook Hunt
Set/10; Cru Monitor and LME 11 11
12. Apparent Consumption of Refined Copper in Brazil 2010/09
CAGR Products (Thousand t) 2008 2009 2010* Variation 2008-10
Refined copper production 230.0 227.0 220.0 -3.1% -2.2% Changes in
inventories 1.1 -16.9 0.0 NS NS Refined copper imports 251.0 203.5
280.0 37.6% 5.6% Refined copper exports -93.1 -88.6 -80.0 -9.7% NS
Apparent consumption in Brazil 389.0 325.0 420.0 29.2% 3.9%
Population (millions) 189.6 191.9 194.0 1.1% 1.2% per capita
consumption(Kg/inhabitant) 2.05 1.69 2.16 27.8% 2.7% Sources:
Sindicel Industry Association; Brazilian Copper Association (ABC);
MIDIC/Secex; IBGE Geography and Statistics Institute and Brook Hunt
(Sep/2010) *EstimatedParanapanemas strategic actions: Domestic
market expansion from 53% (9M09) to 67% (9M10) of total; Expansion
in sales of products with higher value added, such as rods and
stretched copper wires; Expansion in installed capacity from
240,000 t/year to ~280,000 t/year until 2013 at Bahias unit; CAPEX
of ~R$ 330 million in refined copper expansion from 2010 to 2013;
Logistic services to clients, reducing delivery terms, financial
costs and transportation management risks with the creation of CDPC
Copper Products Distribution Center in Itatiaia, State of Rio de
Janeiro; Intermodal logistics: cabotage, road and rail
transportation. 12 12
13. The wires and cables segment is present in all economic
activities: civil construction, infra- structure (energy,
transportation, sanitation and telecommunications), manufacturing
(automobile , consumer electronics, mining, agricultural and
livestock industry). Manufacturers installed in the country use
hedge technology in production and development processes,
guaranteeing equality of conditions to compete worldwide. Energy
(electric, wind, solar, biodiesel and ethanol) Wires and cables
manufactured in Brazil are used in a variety of applications, such
as: Civil construction (low tension) Energy distribution (medium
and high tension) Electrical-electronics (enameled wires and
others) Telecommunications(wires and metal cables; fiber optics and
coaxial cables) Oil industry (umbilical cables, cables for
submerged pumps, and cables for submerged pumps for the mining
industry) Sources: Sindicel and ABC 13 13
14. SECTOR Copper Division Importance of Eluma brand in the
segment of semi-manufacturedproducts Distribution of revenues from
semi-manufactured products Perspectives on the consumption of
semi-manufactured productsPresented by Wilson Nunes Executive
Superintendent Director for Semi-Manufactured Products 14
15. Brazilian industry of Total Paranapanema 2009 % Market
semi-manufactured products Market (Division of semi- Share in 2009
manufactured products) Eluma Brand Revenues (US$ millions) 799 353
44% Taxes (US$ millions) 137 46 34% Electricity consumption (GWh)
250 91 36% Direct jobs 3,886 1,400 36% Installed capacity (1,000 t)
203 72 35% Effective production (1,000 t) 130 55 43% Exports (US$
million) 85 62 73% Sources: Paranapanema, Sindicel and ABC
Paranapanema investments in semi-manufactured products division:
~R$175 million from 2010 to 2013 Increase in installed capacity
from 72,000 t/year to 110,000 t/year in 2012, and 130,000 t/year
until 201315 15
16. Diversification as competitive advantage Entry in the
segment of copper wires and bus bars as from 2009 Semi-manufactured
products rose 37% in revenues and 21% in volume in 9M10 against
9M09 16 16
17. Favorable Brazilian and global economic outlook for
2009-2016; Estimates on demographic trends in Brazil: 2009 2016
CAGR* p.a. Population (in millions of inhabitants) 190 209.3 1.2% #
of households (in millions) 57.7 71.4 2.7% *CAGR: Compound average
growth rate Source: ABRAMAT / FGV - Dec/09Housing investments: From
2009 to 2016 (In billions of Reais) Annual average % of GDP
Investments 227.1 6.3% New housing 147.8 4.1% Source: ABRAMAT / FGV
- Dec/0917 17
18. INDUSTRY PRIMARY COPPER BUSINESS Copper Production Chain
Production Capacity State of Bahia Production Flow Chart Principal
Production Cost Pointers Investments in 2010 and 2011/2013 -
OpportunitiesPresented by Marcos Souza Industrial Director 18
19. PRODUCTION OF DE SEMI-MINING FOUNDRY AND MANUFACTURED
COPPER LOGISTICS REFINING PRODUCTS AND COPPER ALLOYS Copper
extraction from Copper concentrate is SEMI-MANUFACTURED
Distribution of PRODUCTS mines; processed in the Paranapanema and
Continuous lamination Copper ore contents foundry, resulting in
process; Eluma copper products between (0.5% and 99.5% pure anode.
Products: laminates, bars, through the 2%); The electrolytic
refining wires, seamless tubes and CDPC(Copper Products process
transforms stretched copper wires Distribution Center) Processed at
the mine, and copper alloys (fed by it is transformed into anodes
into 99.99% Itatiaia State of Rio cathodes and scrap); copper
concentrate pure cathodes (purity Copper alloys + zinc = de
Janeiro, to the with about 30% of needed to obtain brass;
Southeast, South and copper, 30% of sulphur, optimal electrical
Copper alloys + tin = Mid-West Regions; features). bronze. Next to
major clients; in addition to gold, silver and other Fast delivery
. MANUFACTURED elements. PRODUCTS 75% equity purchased Products
with highest on the foreign market added value ; (Chile). Tubes,
connections and hidrolar used in civil construction. Suppliers
Relevant presence in the Copper Division: 98% of total revenues19
19
20. Electrolytic Copper ........................ 240,000 t/year
Wire Rods .......................................220,000 t/year
Drawn Wire ................................... 18,000 t/year
Sulphuric Acid .................................570,000 t/year
Oleum ................................................70,000 t/year
Oxygen Free Rods ......................... 6,000 t/year
Gold*.............................................. 2,000 kg/year
Silver*.............................................. 32,000
kg/year Ferrous Slag**..................................360,000
t/year * Typical values contained in anode slimes ** Materials used
in the segments of cement production, paving and metal structure
blasting.20 20
22. State-of-the-Art technology Production scale Level of
Application Full use of opportunities for byproducts: Sulphuric
Acid and byproducts Gold and silver Other metals/products for
cement/paving industry Operating indicators of technological
limits: Income Consumption of energy and input Maintenance and
productivity costs 22 22
23. Investments in 2010 Bahias unit focused on the recovery and
updating of principal equipment New line of stretched products,
increasing production capacity to 45,000 t/year Increase in the
range of laminates in order to serve other markets and clients in
Brazil and abroadInvestments from 2011 to 2015
Expansion/modernization of electrolytic copper production capacity
to 280,000 t/year by 2013 Increase in external scrap processing
capacity. Estimated reduction of ~14% in specific processing costs
against 2010 More intensive use of copper scrap provides lower
dependency on concentrates, in addition to minimize
investments.Opportunities under analysis Setting up of a Precious
Metals plant Co-generation installation with capacity for 10 MW
(uses the heat from boilers).23 23
24. SECTOR Fertilizers Division CIBRAFERTIL Paranapanemas
fertilizers business Simple Superphosphate market in the State of
Bahia, Northeast Region and Brazil Outlook for the Fertilizers
sectorPresented by: Walter Oliveira Executive Superintendent
Officer
25. Fertilizers producing company (SSP in powder or granulate,
and NPK) Trading ProductionBusiness Trading policy Superphosphate
PlantFertilizers production Industrial sales of Simple Installed
Capacity: 50 t / hourSuperphosphate to be used asLocation: 1 plant
in the Camaari ~300,000 t / year raw material in
fertilizersPetrochemical Complex (State of mixtures; reselling by
mixers andBahia) Product: SIMPLE SUPERPHOSPHATE (SSP) 18% P2O5 and
NPK/NP resellers; andLogistic advantages (distances) Direct sales
to farmers from theSalvador: 45 Km western region of the State of
Raw materials Bahia, southern region of theParanapanema: 5 Km
Phosphate rock with 30% to 32% State of Piau and State ofPort of
Aratu(State of Bahia): 25 Km of P2O5, imported through the
Maranho.Petrobrs Fafen: 2 Km Port of Aratu, from countries
Principal clients: such Israel, Togo, Egypt andPrincipal Clients:
20 Km Algeria Farmers: 38% Heringer: 23%Total Area : 108,336 m 98%
Sulphuric Acid: Fertipar: 20%Total Built Area: 17,834 m
Paranapanema, through the Yara: 5% acid pipeline Mosaic: 5% Other :
9%Strategic role in the integration with Paranapanema due to the
use of the sulphuric acid generated from the metallurgic process.25
25
26. The Brazilian production of SSP should reach ~ 7 million t
/year in 2020; The Northeast Region (important agricultural area)
will rise from a share of 11% in national production in 2010 to
13.5% in 2020, according to estimates; Cibrafrtil expands its
market share in the Northeast Region, of 30.7% in 2010 to 31.3% in
2020 without assigning large investments. SIMPLE SUPERPHOSPHATE
*Until Oct, 2010 and Forecast Cibrafertil/Northeast thousand tons.
1000 8000 900 7000 800 6000 700 thousand tons. 600 5000 500 4000
400 3000 300 2000 200 100 1000 0 0 2006 2007 2008 2009 2010* 2011
2012 2013 2014 2015 2016 2017 2018 2019 2020 Northeast Region
CIBRAFERTIL Brazil Sources: Ministry of Agriculture and Cibrafrtil
26 26
27. New outlook from 2010 on Consolidation of the sector, with
the arrival of Vale to the fertilizers sector, with the production
of phosphated products through acquisitions, and operating only
industrial sales: Fosfertil Bunge mineral reserves and production
units Mosaic Yara Recovery of the sector in 2010, both in volumes
and margins, getting closer to the production record reported in
2007; Good performance of the agricultural sector regarding
commodities such as cotton, sugarcane, soybeans and corn;
Repositioning of principal market players, with Bunge operating
just as a mixer, and Yara and Mosaic concentrated on reselling
imported products; and Cibrafertil performance in 2010 by far
exceeded that of 2009, with good perspectives of ongoing
improvements, considering the estimates for the Brazilian
agribusiness sector. 27 27
28. OPENING SECTOR INDUSTRY CORPORATE RESULTS FINANCIAL AND
RISK MANAGEMENT OUTLOOKPresented by Doris Wilhelm Investor
Relations Officer 28
29. Chronology of Financial and Tax Restructuring and Corporate
and Organizational Reorganizations Mar. 31, 11 Nov. 30, 09 Mar. 22,
10 Organizational restructuring and improvement Adhesion to Tax
Installment Plan Conversion of preferred shares into common shares
of management mechanisms Mar. 31, 10 Sep. 29, 09 Nov. 13, 09 Merge
Eluma S.A. Merge Caraba S.A. intoCreation of CDPC Paranapanema S.A.
Into Paranapanema S.A. 29 29
30. Shareholding Structure Principal Shareholders 23.96% Market
38.68% More than 10,000 shareholders 17.23% EWZ LLC 8.32% 11.81%
Distribution of Shareholders by Segment Date of Reference Oct 31,
2010 Common Shares % Pension Funds 136,056,657 42.63% Banks with
Investment Portfolios 56,466,775 17.69% Individuals 49,065,036
15.37% Foreign Investment Funds 34,448,216 10.79% Non-Institutional
Corporations 19,595,398 6.14% Investment Funds 19,214,891 6.02%
Investment Clubs 3,633,774 1.14% Stock Brokers/Distributors 618,243
0.19% Others 53,580 0.02% Treasury 24,372 0.01% Total 319,176,942
100.00%30 30 Consolidated position of Paranapanema S.A. as of
October 31, 2010.
31. Corporate Governance Share Trading and Relevant Disclosure
Policies Review of the Code of Ethics and Conduct Creation and
restructuring of Advisory Committees to the Board of Directors
Audit Committee Finance, Risk and Contingency Committee
Compensation and Management Committee 100% of common shares with
100% Tag Along Review of the bylaws, aiming at adjusting to the new
regulations of the Novo Mercado of BM&FBovespa Engagement of
consulting services for implementation of internal controls based
on SoX principles.Capital Markets Engagement of Market Maker since
January 2009 Improved liquidity with the inclusion of the SmallCap
and IBRx100 indices since the first 4-month period of 2010 Growth
of 127% in the volume of securities traded until October 31, 2010
against the daily average in 2009 Increase of 136.5% in the
financial volume in the same period Business volume tripled in 2010
(as of October 31, 2010) against 2009, while the accumulated
appreciation of the securities in 2010 was 40.8%, exceeding 3% of
the IBOVESPA index and 2.5% of IBRx100. 31 31
32. Concerns about the quality of products and
sustainability... Environment, Community, Clients, Suppliers,
Employees and Investors Adhesion to the Global Compact of the
United Nations in June 2008 Sustainability Report based on GRI
(Global Reporting Initiative) methodology Awards (2009-2010)
Paranapanema was among the five finalists of IR Magazine in the
category Greatest Developments in Investor Relations (RI);Bahias
unit (Caraba brand) received two Top Social ADVB 2009 awards
granted by the Brazilian Association of Sales and Marketing
Managers;Eluma brand received the Rui Otake Award granted by
Revenda magazine to the best product for the civil construction
sector; 4th Mrito Lojista Award as one of the best suppliers of
civil construction materials; and the ANAMACO award, as best
manufacturer of copper tubes and connections. CertificationsISO
9001 Dias Dvila unit (State of Bahia); Utinga and Capuava units
(State of So Paulo) and Serra unit (State of Esprito Santo);ISO
14001 Dias Dvila unit (State of Bahia) and Serra unit (State of
Esprito Santo);ISO 14001 implementation in progress at the Santo
Andr unit UTINGA (State of So Paulo) 32 32
33. OPENING SECTOR INDUSTRY CORPORATE RESULTS FINANCIAL AND
RISK MANAGEMENT OUTLOOKPresented by Doris Wilhelm Investor
Relations Officer
34. Net Revenue - R$ million Sales Volume by Division(t) 44%
49% 2,500.00 0.50 30% 27% 6% 2,000.00 0.00 -0.50 1,500.00 -1.00
1,000.00 287,641 212,357 300,855 171,204 235,308 186,877 176,593
142,721 180,609 131,531 -1.50 500.00 1,760 2,234 669 632 869 752
733 2007 2008 2009 9M09 9M10 -2.00 0.00 3Q09 4Q09 1Q10 2Q10 3Q10
9M09 9M10 Sales Volume of Copper Division(without byproducts)
Fertilizers Net Revenue Change%(same before period) Copper Division
with volume and revenues growth in 9M10 and 3T10 against the same
periods in the previous year and quarter; Copper Division volume
rose 2.3% in 9M10 against 9M09; Copper Division reported a growth
of 62% in revenues and 42% in volume in 9M10 against 9M09; and Net
Revenues increased 27% due to products with higher added value. 34
34
35. Increase in 21% in the volume of semi- Sales Volume of
Refined Copper(t) manufactured Copper products in 9M10 against
9M09. Sales Volume of Semi-manufactured of Copper(t) 224,550
236,938 174,978 133,648 128,815 2007 2008 2009 9M09 9M10 63,091
60,330 42,945 51,794 Copper Division reported 26.6% growth in
volume 63,917 in 1Q10 against 2Q10 and 6.4% against 3Q09 The
highlight was on copper byproducts in 9M10, 2007 2008 2009 9M09
9M10 which rose 16% in 9M09, 13% in 3Q10 (against 3Q09) and 23%
against 2Q10 35 35
36. Consolidated Gross Revenue by Market(R$ million) Positive
evolution in gross revenues in the first nine-month period of 2010.
25% growth in volume in 9M10 against 9M09, to 181,000 tons Gross
Revenue by Market(%) 33% 51% 47% 49% 47% 4,763 2,355 2,408 4,285
1,534 1,460 2,109 1,109 1,000 2,250 2,035 2,994 2,634 1,762 872
2007 2008 2009 9M09 9M10 Gross Revenue Domestic Market Foreign
Market Increase of 25% in revenues of the Copper 67% 49% 53% 51%
53% Division, due to the growth of 62% in the domestic market in
9M10; Successful strategy focused on the domestic 2007 2008 2009
9M09 9M10 Foreign Market Domestic Market market: 67% of total sales
36 36
37. Quarterly Gross Profit(Loss) - R$ million Gross
Profit(Loss) R$ million 0.50 70.00 60.00 7% 10% 4% 4% 0% 0.00 50.00
40.00 -0.50 30.00 180 110 -1.00 92 20.00 (42) 10.00 (14) -1.50 27
27 49 62 0.00 (1) -2.00 -10.00 3Q09 4Q09 1Q10 2Q10 3Q10 2007 2008
2009 9M09 9M10 Gross Profit Gross Margin(% of Net Revenue)
Significant recovery in gross profit, with margin of 5% in 9M10
against negative margin of 2.4% in 9M09, exceeding the amount
reported in 2007 Gross profit has been consistent throughout the
quarters, except for 3Q10, since the increase in costs exceeded
that of revenues. 37 37
38. Quarterly Net Income(Loss) - R$ million Net Income(Loss) R$
million 0.50 40% 350.00 300.00 3% 8% -7% -4% 0.00 250.00 200.00
-0.50 150.00 133 194 43 100.00 -1.00 (110) (109) 50.00 25 304 51
0.00 -1.50 (44) (32) -50.00 -2.00 -100.00 2007 2008 2009 9M09 9M10
3Q09 4Q09 1Q10 2Q10 3Q10 Net Income (Loss) Net Margin(% of Net
Revenue) Sound recovery of R$43 million in net income and net
margin of 2% in 9M10 against loss of R$110 million in 9M09. 38
38
39. Quarterly Adjusted EBITDA - R$ million Adjusted EBITDA - R$
million 0.50 70.00 60.00 5% 9% 3% 2% -1% 0.00 50.00 40.00 -0.50
30.00 167 20.00 72 88 -1.00 10.00 (41) 21 18 38 58 (59) 0.00 -1.50
(8) -10.00 -2.00 -20.00 2007 2008 2009 9M09 9M10 3Q09 4Q09 1Q10
2Q10 3Q10 Adjusted EBITDA Adjusted EBITDA Margin Adjusted EBITDA
totaled R$88 million, with margin of 3.9% of net revenues in 9M10,
reporting significant growth against 9M09. 39 39
40. OPENING SECTOR INDUSTRY CORPORATE RESULTS FINANCIAL AND
RISK MANAGEMENT OUTLOOKPresented by Joo Ceneviva Corporate Finance
and Risk Manager 40
41. To define Performance business and monitoring risk and
management measurement objectives To design and Identification
implement and hedge measurement strategies of risks To define hedge
objectives and limits41 41
42. Value to Shareholders Ensure Optimization of Efficiency of
Meeting Revenues Operating Costs Assets expectations Profitability
Contractual Cash flow Compliance/ Default obligations Regulations
Strategic Risks: Governance, Business Model Operating Risks:
Processes, Personnel, IT, Environment Financial Risks: Market,
Liquidity, Credit Regulatory Risks: Legal, Tax42 42
43. Mining/ Foundry and Refining Semi-Manufactured Scrap
(Caraba) (Eluma) Costs (R$) EBITDA Product Chart not in scale
Product Premium EBITDA (US$) Cathodes EBITDA Premium (US$) PMA
Cathodes TC/RC (US$) Costs (R$) Copper Copper Copper Price Price
Price (LME and MP (LME e Cathode Sale of(LME and US$) Acquisition
US$) Sales Products US$) time43 43
44. Total Debt/ 12M EBITDAAmounts in R$ thousands Dec-09 Mar-10
Jun-10 Sep-10 4.87 Total Debt 486,290 458,605 376,198 530,172 Short
Term 402,439 393,328 325,458 501,717 Long Term 83,851 65,277 50,740
28,455 Cash 667,721 671,912 520,206 521,595 2.65 1.91 Net Debt
-181,431 -213,307 -144,008 8,577 1.36 EBITDA 199,519 31,853 59,481
-12,855 12M EBITDA 99,783 172,977 275,758 277,998 Dec-09 Mar-10
Jun-10 Sep-10 44 44
45. OPENINGSECTORINDUSTRYCORPORATERESULTS FINANCIAL AND RISK
MANAGEMENTOUTLOOK 45
46. 2007 2008 2009 2010 Creation of PAC*1 Oil findings in the
pre- Brazil chosen to host Creation of PAC*2 Brazil chosen to host
the salt layer the 2016 Olympic 2014 FIFA World Cup Games*PAC =
Growth Acceleration Program of the federal government Source:
Federal Government website 46 46
47. PAC 1 Investments of US$179 billion Strong assignment of
funds to the economyLogistics (highways, railways, ports, airports
and waterways) US$31 billionEnergy (Power generation and
transmission; production, US$153 billionexploration and
transportation of oil, natural gas andrenewable fuels)Social and
Urban (sanitation, housing, subways, urban US$95 billiontrains, Luz
para Todos program and water resources) Source: Federal Government
website Investments will stimulate the demand for copper in coming
years. CARABA and ELUMA brands are well positioned to compete on
the market... ... due to the expansion in the capacity to offer
high quality products, with adequate profitability. 47 47
48. PAC 2 Investments of US$816 billionPeriod from 2011 to 2014
US$497 billionSanitation US$32 billionHealth, day care centers and
schools US$13 billionHousing US$154 billionWater and Luz para Todos
electricity program US$17 billionTransportation US$58 billionEnergy
US$223 billionPeriod from 2014 on US$319 billionTransportation
US$2.5 billionEnergy US$316.5 billion Source: Federal Government
website Sectors with increased growth potential regarding copper
consumption48 48
49. Brazil will host four major sports events.2011 The Army
Olympics, in Rio de Janeiro2014 FIFA World Cup2016 Olympic
GamesThese important events will result inadditional investments of
US$33.0 billion.This requires investments in infrastructure, which
will result in copper consumption Source: FGV / Abramat Dec/09 49
49
50. Brazilian macroeconomic outlook favorable in 2010-2016,
with GDP growth of ~5% p.a. Positive Outlook for the demand of
copper products Relevant factors for the Brazilian copper chain due
to: Investments in infrastructure Investments in electricity and
clean energy Investments in civil construction Gap between housing
demand and supply 2014 FIFA World Cup in Brazil 2016 Olympic Games
in Brazil Brazil offers excellent investment opportunities Growth
estimates for BRIC countries Demand from Asia and other emerging
markets, rising above the global average Strategic actions planned
by the Company to increase profitability (strategic partnerships
and copper recycling) Opportunity sources: mining rights and sale
of non-operating assets 50 50