1

Earnings call – 3Q11November 10,2011

2

Highlights

Growth in refractory solutions• YTD, refractory volume grew 8.1% while ex-China steel market grew 6.2%• Minerals recovered vs. 2Q11 but still below potential when compared to 3Q10 • Services was flat vs. 2Q11 but below 3Q10 due to completion of spot contract

Record high operating cash flow generation•R$ 461 million YTD operating cash flow•R$ 118.7 million EBITDA with a margin of 21.1% vs. 17.7% in 2Q11 and 19.0% in 3Q10•R$ 148 million working capital reduction vs. 3Q10 (47-day shorter cash conversion cycle)

Gross margin trending up• 31.7 % of gross margin vs. 31.4% in 2Q11• 32.2% vs. 31.1% in refractory solutions (performance improvement while pressured by raw materials)

Vertical integration projects on track• Brumado - in progress, financing postponed until november, start-up in 1Q12• Graphite – acquisition of surface rights, enviromental license expected by 1Q12, start-up in 4Q12

3

Net revenues and refractory volume

R$ '000Quarter % Year-to-date %

3Q11 2Q11 3Q10 QoQ YoY 9M11 9M10

Refractory solutions

Volume (t) 262,891 294,434 255,940 (10.7) 2.7 835,124 772,888 8.1

Revenues 496,708 526,424 494,111 (5.6) 0.5 1,518,900 1,482,393 2.5

Minerals

Volume (t) 172,235 145,984 180,746 18.0 (4.7) 448,347 721,012 (37.8)

Revenues 28,157 19,844 35,876 41.9 (21.5) 82,475 89,206 (7.5)

Services

Revenues 36,604 36,749 40,550 (0.4) (9.7) 118,402 116,593 1.6

TOTAL

Revenues 561,469 583,017 570,537 (3.7) (1.6) 1,719,777 1,688,192 1.9

4

Refractory solutions by sector

Net revenue by sectorR$ million

+4.1%

3Q11

434.3

2Q11

457.7

3Q10

417.2

2Q11

68.7

3Q10

62.4

76.9-18.9%

3Q11

9M10

+3.7%

9M11

1,312.51,265.8

9M11

-4.7%

206.4

9M10

216.6

Steel

Industrial

5

Regions 1M11 Total

North America 1 14

Europe 1 8

Asia 1 4

South America 1 34

TOTAL 4 60

New CPP contractsNumber of contracts

CPP contractsNumber of contracts

Refractory Solutions - CPP

35% of revenues from the steel sector

60595959565247

42403631272624

4Q

11

3Q

11

2Q

11

1Q

11

4Q

10

3Q

10

2Q

10

1Q

10

4Q

09

3Q

09

2Q

09

1Q

09

20

08

Bef

ore

20

08

60

24

Tota

l

4Q

11

1

3Q

11

0

2Q

11

01

Q1

13

20

10

16

20

09

14

20

08

2

Bef

ore

20

08

6

Gross margin by product line

Gross margin%

Quarter YTD

3Q11 2Q11 3Q10 9M11 9M10

Refractory solutions 32.2 32.1 35.6 32.6 36.3

Minerals 50.6 51.9 38.5 46.3 40.2

Services 10.4 11.3 13.8 11.8 15.2

TOTAL 31.7 31.4 34.2 31.8 35.0

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Cash generation and net income

Net incomeR$ million

EBITDAR$ million, %

Cash flow from OperationsR$ million

+9%

+12%

3Q11

34.4

2Q11

30.8

3Q10

31.6

2.2 x

4.6 x

3Q11

188.4

2Q11

85.8

3Q10

41.3

+9%

+15%

3Q11

118.7

21.1

2Q11

103.2

17.7

3Q10

108.5

19.0

R$ 461 million YTD

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Working capital and cash conversion cycle

47 -day shorter cash convesion cycle vs. 3Q10

Cash conversionDays

Working capitalR$ million

R$ 148 million reduction vs. 3Q10 (additional R$ 43 millionover 2Q11 at constant currency)

747.7

-16%

3Q11 adj

3Q11

787.7

2Q11

790.6

1Q11

805.2

4Q10

832.6

3Q10

935.4

139146146153161

193

135145

129129129154

697665564840

3Q11 adj3Q112Q111Q114Q103Q10

Suppliers

Inventories

Cash conversion cycle

9

IndebtednessR$ million

NetDebt/EBITDA 3.0 x

Indebtedness

2.1 x 2.1 x

1,894

1,636 1,757

1,444

854 900

3Q10 2Q11 3Q11

10

Financing Nov/11

Environmental License Concluded

Start-up Mar/12

(1) According to Industrial Minerals

Investment: R$ 220 million through 2012

Financing: 80% at attractive rates

Production: increase in capacity by 120 ktpa

Magnesite (Brumado-BA) Graphite (Almenara-MG)

Description

Milestone Deadline

Timetable

Financing Jun/12

Environmental License Mar/12

Start-up Dec/12

Investment: R$ 80 million through 2012

Financing: 80% at attractive rates

Production : capacity of 40 ktpa

Description

Milestone Deadline

Timetable

Verticalization projects remain “on track”