1 1 – Qualifications – This document is intended for the shareholders of ALL – América Latina Logística S.A., Triunfo Participações e Investimentos and Vetorial with a view to present the same facts and events described in the Material Fact disclosed on 19/12/2011. Nothing to be presented in this document constitutes a sale, promise to sell, offer to sell, invitation to buy or acceptance of a purchase order for securities (including subscription). Any statement included in this document, related to the business of ALL, Triunfo and Vetorial, operating and financial projections, and goals, constitutes estimates and assumptions made by of the Companies' managements and are made based on information currently available to them. Forward-looking statements are no guarantees of performance. They involve risks and uncertainties and, therefore, may not occur.
Transcript
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1
– Qualifications –
This document is intended for the shareholders of ALL – América Latina
Logística S.A., Triunfo Participações e Investimentos and Vetorial with a
view to present the same facts and events described in the Material Fact
disclosed on 19/12/2011.
Nothing to be presented in this document constitutes a sale, promise to
sell, offer to sell, invitation to buy or acceptance of a purchase order for
securities (including subscription).
Any statement included in this document, related to the business of ALL,
Triunfo and Vetorial, operating and financial projections, and goals,
constitutes estimates and assumptions made by of the Companies'
managements and are made based on information currently available to
them. Forward-looking statements are no guarantees of performance. They
involve risks and uncertainties and, therefore, may not occur.
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Opportunity
Creation of Vetria Mining
Operational Figures
Precedent and Subsequent Conditions
Benefits to ALL and Triunfo
Q&A
Agenda
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Agenda
Opportunity
Creation of Vetria Mining
Operational Figures
Precedent and Subsequent Conditions
Benefits to ALL and Triunfo
Q&A
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Corumbá has large high-quality iron ore reserves
In Brazil there are 3 regions with significant high content
iron ore reserves: Carajás (PA), Iron Quadrangle (MG) and
Corumbá (MS)
Corumbá is the only region with no efficient logistic solution
Corumbá’s ore is known to have a high concentration of
iron (above 62%) and a significant quantity of Lump, which
generate a premium over the price of this ore
These features minimize the transportation impact in final
product cost
Main Mining Integrated Systems
(Mine – Railway – Port)
Next Slide
Source: DNPM/DIDEM – 2009 (Reference year 2007)
Opportunity
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Mines in the region are underutilized
Estimated production of 7 mtpa; potential
extraction capacity of 50 mtpa*
Several mining companies operate in the region
with production far below the potential
* mtpa – million tons per annum Source: DNPM, MetalData
Previous
Slide
Vetria Processing and Mining
Front
Location of Vetria’s mining rights
Opportunity
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Logistics is the main bottleneck
Current outlet from Corumbá and ALL Railway Current outflow through the Paraguay–Paraná waterway by
barge
Restricted capacity and low reliability:
• 3 months of low river level during the year
• Draft restrictions along the river and ports of destination
• High transit time (20 days, 2,700 km)
Capacity expansion is limited
• High investments in expansion
• Environmental restrictions
Existing railway 1,765 km long connecting the cities of
Corumbá and Santos
• No Port exit at Santos
• Railway infrastructure adaptable for the iron ore transportation
Opportunity
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Agenda
Opportunity
Creation of Vetria Mining
Operational Figures
Precedent and Subsequent Conditions
Benefits to ALL and Triunfo
Q&A
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Partnership created an integrated solution (mine-railway-port)
Brazilian company in the infrastructure
industry, operating in the toll roads, port
concession, cabotage and electric power
generation segments
Founded in 1999 and listed on the Novo
Mercado segment since 2007
Controlling company of Portonave, with 1.3
million TEUs/year capacity, and known as
Brazil's most modern cargo port terminal
Created in 1969, Vetorial Mineração
operates in the mining-steelmaking
industry, more specifically in the production
of pig iron and charcoal
Know-how in mining, experienced team of
professionals
One of Brazil's largest pig iron producers
Largest independent logistics services
company in South America, with integrated
railway and highway modals
Founded in 1997 and listed on the BM&F
Bovespa since 2004
Joined the Novo Mercado segment in 2010
33.8% 50.4% 15.8%
Partners Creation of Vetria Mining
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Vetria will own the mine, port and railway assets
Mine: Own mine with estimated ore resources of 1.0 billion tons*
Railway: Investment and Transport Agreement guarantees rail capacity
Port: Multi-purpose terminal area in Santos, with preliminary license already in force
Solid logistics solution with railway and port
* Based on current mining front and Vetorial’s geologists knowledge of the region.
Operational Figures of the Deal Creation of Vetria Mining
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Own mine located at the Urucum Massif, in Corumbá/MS
High-quality ore with current production of 75% Lump and iron content above 62%
Estimated ore resources of 1.0 billion tons
Currently, the mine is operational with installed capacity of 1 mtpa
Low operational cost due to the facility to extract ore
Agreement with ALL ensures railway transportation capacity and connects Corumbá and Santos
Locomotives and railcars will be owned by Vetria and operated by ALL
Railway has access to the mine and port area
Capacity available to Vetria of 27.5 mtpa of ore after investments
Private area, located on the left margin of the Port of Santos with a 1.9 km² total area
Project provides static capacity of 1.3 million tons
Structure with 2 double car dumpers and a berth of 380 meters
Draft for 125,000 ton-ships
Mine
Transportation
Port
Mine with integrated logistics
Structure Creation of Vetria Mining
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Capital Structure isolated from current shareholders
CAPEX for the project feasibility will be realized by Vetria
Capital Structure Creation of Vetria Mining
Equity from investor to make the project viable
Financing structure on Vetria´s balance sheet, with development banks loans
Investment financial support non-recourse to current shareholders
Mine capacity Expansion
Railway modernization
Rolling stock acquisition
Port construction in Santos
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Agenda
Opportunity
Creation of Vetria Mining
Operational Figures
Precedent and Subsequent Conditions
Benefits to ALL and Triunfo
Q&A
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High-quality mine with large-scale mining
Mine Project Details
Low ore and waste proportion (1/16 ~ 6%)
Loading terminal 10km far from the mining front
Operational mine for 1 Mtpa
Mine with operational licenses in force
Estimated mining cost of R$22/ton
Estimated ore resources of 1.0 billion tons
Mapped mineralized area covers 1,280 hectares
Certification to be carried out (JORC)
Mine Operational Figures
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20 mtpa project possible to expand
(mtpa of ore)
Source: Companies
(% of Fe in the main mining projects - Estimate)
Vetria’s project initially provides a volume of 20 mtpa
Logistics infrastructure (railway and port) capacity for
27.5 mtpa
20%
26%30% 32% 32%
35%38% 39% 39% 40% 42%
66% 64%
Volume Ramp-up* Iron content higher than the main projects
*Does not include 1mtpa volume to supply Vetorial Siderurgia
Current level of production helps support volume
ramp-up
Most assets located in a region that permits flexible
access to new port terminals
...
Vetria Production Operational Figures
10,0
20,0 20,0 20,0
7,5 7,5
2016 2017 2018 2040
Initial Projected Capacity Additional Volume
7.5 7.5
20.0 20.0 20.0
10.0
*Current production
*
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New rail assets and transportation agreement ensuring efficiency and
operational cost
Full modernization of the railway
- Replacement of tracks, sleepers and yards
- Speed and reliability gains
- Simple environmental process
Own fleet of 5,600 rail cars and 180 locomotives
Operational cost guaranteed by agreement (R$45/ton)
Guaranteed capacity of 27.5 mtpa and operational efficiency
Railway Project Details
Type of Train (10,000 tons)
Basic Design (3 locomotives + 110 railcars)
110 railcars 3 locomotives
Railway Operational Figures
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Private Port with efficient unloading structure
Port Project Details
Private area with 1.9 km²
Railway network crosses the area
Preliminary environmental licenses to port operation already in force
Draft of 15.5m* allowing ships of 125,000 tons
Installation of a berth of 380m
Agile unloading with 2 car dumpers (7,000 tons/h each)
New equipment with low operational cost (R$ 4/ton)
Static capacity of 1.3 million tons
* After the dredging of the Santos canal, which has been carried out by the government
Port Operational Figures
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High percentage of Lump ore in production
Premium for this type of ore is higher in Europe/USA/Japan/Korea, focus of Vetria's exports
Focus on the markets that demand better quality ore
(million tons – 2011-2017 variation)
Main importers of overseas market
Commercial Strategy Operational Figures
Source: Company and Market Analysts
China Europe Others
Overseas Market
Japan Total Korea
1,217 1,037
1,627
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Low implementation risk project (brownfield)
Mine Railway Port
Operational Operational Preliminary license in force Status
Licenses
Investments
Environmental and regulatory
licenses already issued
Licenses for expanding current
capacity:
Environmental license
License for expanding mining
(DNPM)
Expansion of capacity
Environmental and regulatory
licenses already issued
Environmental license for expanding
yards is required
Installation license including iron ore
operation still required
Port construction Expansion of capacity
Project Highlights Operational Figures
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(million tons of accumulated iron ore - Estimate)
Frustrated supply due to delay of greenfield projects
Source: BHP Billiton
Announced projects were delayed or cancelled
Licenses obtainment
Government approval
Greenfield projects technical difficulties and risks of
implementation
Difficult feasibility of low-content ore
Main delay reasons
Railway and mine already operational
Only licenses to expand yards and mine capacity still
required
Port with preliminary license in force
Lower risk of delay in Vetria
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125
234143
179
272
169
304
506
2008 2009 2010
Projetos Anunciados e Não Concluídos (base 2008)
Oferta Realizada
26125
234143
179
272
169
304
506
2008 2009 2010
Oferta Realizada
Projetos Anunciados e Não Concluídos (no início de 2008)
Total
Effectively supplied
Announced and non-concluded projects (2008 base)
54%
59%
85%
Iron Ore Market Operational figures
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Mine: already open and operational, open site, with a
high content of iron, mainly Lump
Railway: Operational Agreement with tariff and
services established under contract
Port: high efficiency with low operational cost
Mine: treatment and enrichment are simplified due to
the features of the Ore
Railway: Same outline and gauge of the Permanent
Way guarantee predictability of costs and duration of
works
Port: Dredging from terminal to the Santos canal,
foundation, earthwork, equipment etc.
Note: Capex and Opex values are estimates to be confirmed upon conclusion of executive projects
Economic Summary Operational Figures
Estimated total operational cost of R$ 71/ton
Opex R$/Ton
22
45
4 71
Mine Railway logistics
Port Total Opex
CAPEX of R$7.6 billion in infrastructure
CAPEX R$ billion
1,1
2,2
2,3
2,0
7,6
Mine Railway Rolling
stock Port
Capex
Vetria
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Infrastructure project with attractive sources of funding
Non-recourse financing for the Company's
shareholders (no funding or guarantee)
Strategic investor to finance the project's equity
Attractive sources of funding to support CAPEX
Financing structure Operational Figures
55%
70% 80%
60%
Mine Railway Rolling
Stock
Port
(% of CAPEX per financed type)
Expected financing of ~70% of total
investment
Financing from commercial and development
banks
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Project will boost Brazil´s infrastructure development
Modernization of Mato Grosso do Sul to Port of Santos connection
Efficient railway crossing MS state from west to east
Additional logistics alternative in São Paulo state (south of Tietê river)
Logistics capacity expansion and bottle necks solutions
