1. BrasilEcodieselFuelingBrazilwithBiodiesel Biofuel Supply Chain Summit 2009 SupplyChainSummit2009 Ghent 09/15/09

2. BrazilianExperienceonRenewableFuels 3. BrazilianExperienceonRenewableFuels EnergyMatrix 100%87,1%90%80%70%60% 54,6%50%45,4% 0%40%30%20% 12,9%10% 0% World(2007) Brazil(2008) Renewable NonrenewablesRENEWABLEANDCLEANENERGYISALREADYAREALITYINBRAZILRENEWABLE AND CLEAN ENERGY IS ALREADY A REALITY IN BRAZILSource:ResenhaEnergticaBrasileira MinistriodeMinaseEnergia 4. TheBrazilianBiodieselProgramIntroduced in2005,it was based on:, Energy matrix diversification with an ecofriendly,sustainable andrenewable f fuel. Reduction of mineral oil and diesel importsofmineraloil anddieselimports. Socialdevelopment andjob creation whileincentivating family farming,mainly intheNortheast ofthe country.y Better useofavailable lands. 5. Biodiesel:BrazilianMarketDieselmarket:potentialmarketsizeforbiodiesel.Di l k tt ti lk t i f bi di lDieselisthemainBrazilianfuel,42%ofalloilderivativefuelsandmorethan50%oftransportsectorfuels. Brazilian Mineral Diesel Market (000 m3) 50.000 47,000*44,188 46,478 45.000 39,663 39,361 37,971 40,947 40 768 42,20639 663 39 361 37 971 40 947 40,768 42,206 40.000 2007 200836,5818.3% 35.000 30.000 25.000 20.000 15.000Imports 10.000(000m3)5.000InternalProduction(000m3) 2000 20012002 2003 2004 2005 2006 200720082009Domesticmarketextremelysignificant,allowingforthedevelopmentandconsolidationoftheDomestic market extremely significant allowing for the development and consolidation of thesector.5Source:NationalAgencyforPetroleum,NaturalGasandBiofuels ANP. (*)2009Forecast 6. Transportationfuelsmix Gasoline CGasoline + A h dG li Anhydrous Eth Ethanol l21,8 + 7,7 = 29,5% Gasoline:21,80%Diesel:49,20% AnhydrousEthanol:7,70% A h d Eth l 7 70% Hydrated Ethanol: 17 20% HydratedEthanol:17,20% Ethanol (total)7,7%+17,2%=24,9% Diesel (total) B100:1,30%49,2% + 1,30% = 50,5% NaturalGas:2,80% Source:MME ResenhaEnergticaBrasileira ResultadosPreliminaresde2008(Maio/2009) 7. NationalBiodieselProgram wheredowestandBiodieselLaw:Mandatoryusetoleverageproduction.July2008 y July2009y2010on 2010 on 2005 2005 2007 Firsthalf2008 Fi t h lf 2008 June20092010 AuthorizedBlendof Mandatory2% Mandatory3% Mandatory4%Mandatory5%upto2%MinimumBlend MinimumBlend MinimumBlendMinimumBlendExpectedanticipationof5%blend,ashappenedwith3%and4%... Brazilian Biodiesel Production (000 m3) 2,500 2 500 2,500 ProductionIncreasesshowthesuccess 2,000 1,645oftheprogram p g 1,5001,168 1,000 402 Currentblendpercentagesareonlythep g y5000.7 69initialstimulus:higherblendsand pureB100alreadyfeasibleinengines.200520062007 2008 2009 2010 Production ProductionForecast7 Source:NationalAgencyforPetroleum,NaturalGasandBiofuels ANP.(1)ForecastconsidersB4in2S09andB5in2010. 8. TheEthanolParallel Governmentpolicyandsupport TechnologicalEvolution: Agricultural:theproductivityofsugarcaneincreasedfrom55t/hain1975to85t/hain2008 Industrial:intheEthanolproductionandintheautomotiveindustry WorldTrend PotentialforBraziltobecomealeaderDomesticalternativewithimpactintheTradeBalanceDomestic alternative with impact in the Trade BalanceBrazilianBiodieselcanachieve,inlesstime,thesamestageethanoltook40years! Itwillhappenwithimmediateinvestmentsandresources! ill h i hidiid!8 9. TheBrazilianBiodieselSector Thebiodieselprogramwasintroducedin2005andBrazilhasbecome,already,theworlds5thlargestproducer. In2010,B5willbeintroduced,representinga25%increaseinthedemand. Extensiveavailableareas,climate,strongandincreasingdomesticExtensive available areas climate strong and increasing domesticmarketfavorthegrowthoftheindustry. Besidesthetraditionalfeedstock(Soybean,Sunflower,Cottonandd hdlf dk( b fl danimalfats/grease),therearemanyviableoptionsofnonediblevegetableoil Castor,Jatropha,Palm,Macaba,Babau,etc. Astheindustrymatures,Brazilwillbecomemorecompetitiveintheinternacionalmarket. 10. TheBrazilianBiodieselSector(cont.)Theindustryhasbeenworkingwith,aproximately,50%ofits capacity.Theindustryismostlikelytofaceaconsolidationprocessinthe Th i d t i t lik l t f lid ti i th nearfuture.Verticalizationorsomesortofcontrolofthefeedstockwillbe essentialforsurvival. essential for survivalEfficiencyintheindustrialprocessandproductivityinthe agriculturesidewillbeextremelyimportantwhenthefreemarket takesplace. p 11. ThecompetitiveadvantagesofBrazil 12. TechnologyorRawMaterial:KeySuccessFactor?100%10%10% OtherInputsand 80%GeneralExpenses 60%Methanol/Ethanol80%% 40%VegetableOil 20% 0% BiodieselCostStructure Bi di l C t St t TechnologyWellKnown! MainInputisVegetableOil,involumeandcost. Notanentrybarrier. Secondmaininputismethanol. Achieveuniformqualityinlargescale productionandwithdifferentvegetable So,itsavariablecostindustry.oilsisthechallenge!oils is the challenge!KnownTechnology+VariableCostIndustry= Accesstorawmaterialisthekeysuccessfactor.12 13. BiodieselProducionbyRawMaterial B il Bi di l P d i b R M i l Brazil jan/09 feb/09 mar/09 apr/09 may/09 jun/09Soya71.16%73.68% 85.37% 76.37% 81.33% 81.10%Animal Fat 24.54% 19.25% 10.94% 19.36% 16.11% 14.03%Cottom3.25% 4.96%1.59%2.04%0.00%2.97%Others1.05% 2.11%2.1% 2.36%2.56%1.90%Total100% 100% 100% 100% 100% 100% 14. OptimizedMixofOilsintheLongTermSOYACOTTONSUNFLOWER CASTORJATROPHAPALM%ofoil 18 20 15 2040 4545 50 30 3918 22intheseedsin the seedskgofoil400 350700700 1,500 3,000perhectareTechnologically DevelopedPerennialEdibleAvoidcompetitionforfoodlands;DiversifyRisks!Highercontentofoilperhectare; Optimizelandusage! Takeadvantageofregionalpotentialofcrops; Occupyidleareas,withpoorsoilcorrection! 15. Brazil:Land,Climate,RegularRainfall,SunAMAZONREGION:Noplantationexpansion,avoidingdegradationNORTHEAST:Availableland,mostlyinadequateforfoodproduction;Excellentforalternativecrops,such p,asCastorandJatropha;Contributiontosocialdevelopment.BRAZIL - Area Million haTotal 851Suitable for Agriculture340Cultivated72Pastures172Available96 Source: FGVAgro 2 Brazil EU Business Summit, Dec 22, 2008. Keynote Speaker Roberto Rodrigues.CENTERWEST,SOUTHandCENTER WEST SOUTH andSOUTHEAST:Currentmainproductionareas 16. FuelDistributionBasesandDieselconsumptionNorth 9% Northeast 15% Midwest 11% Southeast 45%South 20% 17. BrasilEcodieselSAHighlights 18. BrasilEcodieselonthemap MajorbiodieselproducerinBrazilandtheonlyonewithnationwidepresenceBiodiesel Plants 580 ths m3 p.y.BiodieselPlants 580thsm p.y.6operationalmultifeedstock CrushingUnits 2operationalMultiseed 1,600tpd 3CertificationLaboratories(CE,TOeRS) 3 Certification Laboratories (CE TO e RS)Farms:41,500hectaresofownland+17,000leased 19. Investmentsinagriculture InitialinvestmentinCastorbasedonfamily taest e t Casto based o a yfarming disappointingresults InvestmentinexperimentswithJatropha ppplantation 5,000hectares MostlikelythecompanywillhaveJatrophaasthemainalternativefeedstock 20. Company sFinancialRestructuring Companys Financial RestructuringDebt (in ths R$)1T092T09 After 2nd Capital RaiseShort Term 120,106 92,54312,877( )(+) Long Term g, 177,991 136,912,80,499 ,(=) Total Debt 298,097 229,455 93,376(-) Cash7,416 2,321151,66(=) Net Debt 290,681 227,134-58,284 21. Issuestobetackledby theBiodieselIndustry 22. Issuestobetackledbytheindustry Worlwideinvolvementofsocietyintheglobalwarmingissueandinthebiofuelsdiscussion. Theneedtolowerthecostofbiodieselproduction. Definition of the most suitable feedstock for each region.Definitionofthemostsuitablefeedstockforeachregion. Geneticallymodifiedseedswillplayadecisiveroleinpproductivityofthenonediblefeedstock. y ThewaterfootprintandNxOemissionswillbecomerecurrentissuesinbiofuelsdiscussions. Artificialcomercial/specificationbarriers,suchasthelanduserestrictionsandthedifferentnationalcertificationssoastoprotectlocalindustries,hinderingworldsupplyofbiodiesel. 23. Biodieselisanindustryinitsinfancy od ese s a dust y ts a cyTheproductionofoilseedbiodieseloccursinconjunctionwiththeproductionofproteins j tiith thd tift i Mineraloilshouldbedirectedtothechemistryyindustry,whichisahighervalueaggregatorHow much does it cost not to produce biodiesel? Howmuchdoesitcostnottoproducebiodiesel? Biodiesel:nowarrequired 24. Thank you! Contacts: Investor RelationsPhone: 55 21 2546-5031 ri@brasilecodiesel.com.br @www.brasilecodiesel.com.br