CVRD Day at NYSE New York

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CVRD Day at NYSE New York Powered By Docstoc
					    CVRD NYSE
    Seminar
    November 18th, 2002




1
    Disclaimer
    ”This presentation may contain statements that express
    management’s expectations about future events or results rather
    than historical facts. These forward-looking statements involve risks
    and uncertainties that could cause actual results to differ materially
    from those projected in forward-looking statements, and CVRD
    cannot give assurance that such statements will prove correct. These
    risks and uncertainties include factors: relating to the Brazilian
    economy and securities markets, which exhibit volatility and can be
    adversely affected by developments in other countries; relating to
    the iron ore business and its dependence on the global steel
    industry, which is cyclical in nature; and relating to the highly
    competitive industries in which CVRD operates. For additional
    information on factors that could cause CVRD’s actual results to
    differ from expectations reflected in forward-looking statements,
    please see CVRD’s reports filed with the Brazilian Comissão de
    Valores Mobiliários and the U.S. Securities and Exchange
    Commission.”

2
    Speakers

       Delivering the Promises - Roger Agnelli, CEO
       Macroeconomic Outlook, Financial Performance and
        Corporate Governance - Fabio Barbosa, CFO
       Ferrous Minerals - Market Trends and Strategy -
        Armando Santos, Executive Director of Ferrous Minerals
       Non Ferrous Minerals - Strategy and Projects -
        Diego Hernández, Executive Director of Non Ferrous Minerals
       Aluminum - Industry Trends, Strategy and Projects -
        Antonio Miguel Marques, Executive Director of Holdings and Business
        Development
       Concluding Remarks - Roger Agnelli, CEO


3
    Delivering the Promises




                    Roger Agnelli,
             Chief Executive Officer



4
    CVRD Strategic Movements

    Since the restructuring of the ownership of its controlling shareholder Valepar,
    it has made several strategic movements to create shareholder value.

       Corporate Governance Model.
       Management Model.
       Strategic Focus.
       Portfolio Asset Management.
       Completion of Privatization.
       Organic Growth Opportunities and Value Creation.




5
    Corporate Governance Model

                                                       Board of Directors
       Shareholders
                                                       focused on strategic
                                                       planning and supervision
                                                       of Company’s
     Board of Directors                                performance.
                      Strategic         Committees
                                                       Committees help to
                          Finance                      facilitate and to improve
                                                       quality of Board of
                            Governance and Ethics      Directors decisions.

                               Executive Development   Executive Board was
            CEO                                        empowered and has a
                                    Audit
                                                       clear definition of its roles
                                                       and responsibilities.
      Executive Board


6
        Management Model
            A new organizational structure aimed at focusing on core businesses and capturing
             synergies among business areas.

                                                Ferrous Minerals             Armando Santos

                                                   Logistics                 Guilherme Laager

                                             Non-Ferrous Minerals            Diego Hernández

                 CEO                   Holdings and Business Development     Antonio Miguel Marques

             Roger Agnelli                   Planning and Control            Gabriel Stoliar

                                                    Finance                  Fabio Barbosa

                                    Human Resources and Corporate Services   Carla Grasso

           Implementation of shareholders value management:
              a) value metrics to improve project evaluation and performance
                 measurement;
              b) development of a value creation oriented culture;
              c) development of a common language to facilitate communication
                 with capital markets.
7
    Strategic Focus
       We are a global mining company aiming to create shareholder value.

                                   •   Maintain market leadership in iron ore
                 Iron Ore
                                   •   Expand pelletizing capacity

                                   •   Develop existing portfolio of copper projects
                 Copper            •   Expand resource base through exploration
                                   •   Opportunistic acquisitions, joint-venture investments

                                   •   Increase bauxite and alumina production capacity
                Aluminum
                                   •   Expand resource base through exploration
                                   •   Opportunistic acquisitions, joint-venture investments

                                   •   Increase focus on provision of logistics solutions to
                 Logistics             third party customers
                                   •   Maximize return on existing infrastructure complex

                                   •   Selective investments in hydroelectric generation
             Power Generation          assets
                                   •   Generation capacity as a hedge against price and
                                       supply volatility


8
    Portfolio Asset Management

    From a conglomerate to a diversified mining company


       Consolidation of global leadership in the iron ore market.
         –   Assets acquired --> US$ 1,728 million.
       Acquisitions to allow full exploitation of the synergies associated to the
        Carajás mineral province.
         –   Full control of Sossego and Salobo copper & gold projects -->
                                        US$ 93 million.
       Acquisition of assets to capture a higher value from aluminum business
        strategy --> US$ 44 million.
       Sale of non-core assets - steel, pulp, paper & forestry, non-core
        transportation --> US$ 1,350 million.




9
     Completion of Privatization


     On March 2002, the final phase of CVRD privatization was concluded
     with a successful Global Offering of 78,787,838 common shares owned
     by the Brazilian Government.

        Price of US$ 24.50 per ADR.

        Gross proceeds of US$ 1.9 billion.

        Allocation - 56% international tranche/44% Brazilian tranche (incl greenshoe).

        Investors from 18 countries acquired CVRD shares.

        Approximately 600,000 new Brazilian retail shareholders.

        Significant increase of free float and liquidity.




10
     Free Float Increased as a Result of the
     Global Offering
     Dec 1999                    Total Capital                Free Float
                                                                       Brazilian Investors
          Valepar - Principal                                                  36%
                Shareholder
                      27.5%
                                           Free
                                           Float
                                          38.5%


                       Others
                       34.0%                                   64%
                                                   Foreign Investors




     Sept 2002                                                   Brazilian Investors
                                                                             30%
          Valepar - Principal
                Shareholder
                      27.5%                Free
                                           Float
                                          59.4%


                        Others
                        13.1%                                  70%
                                                   Foreign Investors
11
      Organic Growth Opportunities and Value Creation
       CVRD has a project pipeline for 2003/2007 involving capital expenditures of
       approximately US$ 6 billion.

                2002                2003               2004                  2005               2006             2007

     Iron Ore                                                                         Semi-              Brownfield Projects
                                           Ponta da           Metallics
                       São Luís                                                     finished
       and              Pellets            Madeira
                                                                                                         Greenfield Projects
                                            Pier III
      Pellets
                                                                                    Alunorte
                          Alunorte      MRN                   Paragominas
     Aluminum             Alumina      Bauxite
                                                                                    Alumina

                                                           Sossego     118
      Copper                                                                                      Cristalino Alemão      Salobo
                                                               IB Phase 4

      Nickel                                                                                                           Vermelho


     Industrial                        PPSA Phase 3                                  Taquari                          PPSA Phase 4
                                          Kaolin                                    Vassouras                            Kaolin
      Minerals                                                                       Potash

                   Tubarão                 Praia Mole
                   Fertilizer               Maritime
                  Warehouse                 Terminal
     Logistics                              Phase II
                     Praia Mole
                      Maritime                    Grain Terminals
                  Terminal Phase I

Hydroelectric                              Candonga
                                                                     Capim           Capim              Foz do          Santa
                            Funil
Power Plants                                     Aimorés
                                                                    Branco I        Branco II          Chapecó          Isabel



12     Expected after taxes rates of return higher than 15%
     CVRD has been a Consistent Value Adder
                                                                           26%
                                                    24%

                              20%
      17%

                         Economic Profit = US$ 1,445 million


                                     WACC 12%



      1999                    2000                  2001                  9M 02*

          Polymineral reserves - from iron ore to PGMs -, world class assets,
           availability of core competencies in mining and logistics and cost &
           investment discipline allow us to expect a continuous value creation.




13
       * annualized
       Macroeconomic Outlook,
     Financial Performance and
         Corporate Governance




                      Fabio Barbosa,
                 Chief Financial Officer



14
     Short Term Macroeconomic Outlook
     Global GDP growth prospects are not bright

        2003 is likely to be the third consecutive year of below trend growth due to
         an engineless global growth dynamic.

        Leading indicators are signalling a US sluggish growth for the near future.

        IMF cut its Euroland growth forecast for 2002 from 0.9% to 0.75% and from
         2.3% to 2.0% for 2003. Current ECB monetary policy is pro-cyclical.

        Japanese export-led recovery is losing steam. There are indicators that the
         fragile economic recovery may have peaked.

        China is the notable exception in a struggling global economy. Export
         growth, infrastructure spending and FDI are powering fast GDP growth.
         China is becoming a powerful driver of metals and mining markets. It is
         boosting the demand for steel, iron ore, alumina and copper.


15
     Short Term Macroeconomic Outlook
     Brazil

    Major changes in the Brazilian macroeconomic policy regime are not likely.
       –   Tight monetary policy limiting pass-through of the BRL depreciation to
           domestic prices.
       –   GDP growth: slow pace.
       –   Growth of agricultural output, exports and a repressed demand for
           logistics services will continue to fuel CVRD railroad and port services
           expansion.
       –   A smaller current account deficit - from US$ 27 billion in May 2001 to
           US$ 13 billion in September 2002 - seems sustainable, although
           additional real depreciation of the BRL is not expected. Market expects
           further reductions in current account deficit - US$ 11 billion by yearend.
       –   Strong fiscal stance: primary fiscal surplus of 3.88% of GDP in 2002
           and 3.75% in 2003.
       –   Manageable public debt.
16
     3Q02 iron ore and pellets sales reached a
     record high
                                                               thousand tons
                             Iron Ore      Pellets

                                                                  42,388
                                                      41,098
               38,281   38,054    37,986                           4,847
                                             36,707   4,939
      34,433   4,812    4,430     5,060       3,902
      3,629


                                                                  37,541
                                                      36,159
      30,804   33,469   33,624    32,926     32,805




      1Q 01    2Q 01     3Q 01     4Q 01      1Q 02   2Q 02        3Q 02



17
     Despite Brazil’s slow GDP growth, 3Q02 CVRD
     railroad transportation also reached an all
     time high                             million ntk


                            General Cargo                   3,890
                                                    3,655
                3,433                       3,401
                        3,338    3,214
        2,999




        1Q 01   2Q 01   3Q 01    4Q 01      1Q 02   2Q 02   3Q 02



18
      Gross Revenues 3Q 02
      By destination and currency

                       By Market                       By Currency

                    Emerging                           BRL -
                      Asia                          Denominated
                     10.3%                           Revenues
            Japan                                      16%
            5.6%
                                       Brazil
     Middle East                      34.5%
        4.5%




                                      Other Latin
             Europe                    America
             33.5%                      5.5%
                                                                     USD - Linked
                                    USA
                                                                      Revenues
                                   6.2%                                 84%



                   3Q02 Gross Revenues = US$ 1,133 million
19
     BRL depreciation hurt earnings through its
     impact on CVRD’s net foreign liabilities

        400                                                            US$ million



                                                               149
                                                      49



                                            74
                                                                             150
                                163




                    511

      Operating   Fx Losses   Financial    Equity   Capital   Others     Net Income
       Income                  Result     Income     Gains


20
     Quarterly net earnings - Sensitivity to
     exchange rate volatility
                                                                    US$ million

                Real Depreciation
                                             702
                Real Appreciation


         354
                                                    275

                      100           131 *


                                                             14
                                                                         150

        1Q 01        2Q 01        3Q 01     4Q 01   1Q 02   2Q 02       3Q 02

     * Fx losses were offset by
       capital gains from Cenibra sale
21
     On the other hand, growing sales and a
     weaker BRL are boosting free cash flow

                                            US$ million

                                     541


                       388




          140




          1Q 02        2Q 02        3Q 02


22
     Strong and steady cash flow allows CVRD to finance its
     investments and to meet dividends expectations of its
     shareholders with a good dividend yield story



                    Year                      Dividend Yield
                                                    %
                     1997                            3.4
                     1998                            8.1
                     1999                            6.8
                     2000                            2.5
                     2001                           11.8

                     Average (97/01)                 6.5
                     2002E                           6.8

         * 2002 Interest on Shareholders Equity equal to R$ 4.985 per share




23
     A sound balance sheet
     Debt Leverage
                              US$ million           Total Debt / EV
                                                    Total Debt / LTM EBITDA
                 Total Debt

                                                                     29.2%
                                                27.2%     27.1%
         3,935      3,914
                              3,579




                                            %




                                                                              X
                                                2.28x     2.17x
                                                                     2.02x




         1Q 02      2Q 02     3Q 02              1Q 02     2Q 02      3Q 02

24
     A sound balance sheet
     Interest Coverage

                         EBITDA / Interest Expenses

                                                      9.29x


           8.07x
                                7.35x




               1Q 02               2Q 02                3Q 02



25
     Corporate Governance
     Following the implementation of its corporate governance model, announced in
     October 2001, CVRD is developing new initiatives designed to improve its
     corporate governance practices, strengthening financial transparency,
     information disclosure and protection to investor rights.

        Dividend policy
          – Each year CVRD will announce, until January 31, a minimum dividend per
            share in USD to be paid in April and October, in line with the expected
            performance for the Company.
          – During the year, depending on the actual performance of the Company, CVRD
            may pay an additional dividend per share in April and October.
        Disclosure policy.
          – Creates a Disclosure Committee.
          – Enforces simultaneity of information flows.
          – Eliminates information asymmetry.
          – Intensive use of information technology to ensure global diffusion of
            information.


26
     Corporate Governance

        CVRD securities trading policy

          —   Minimizes risks of privileged information use by CVRD management
              on its own benefit.

          —   Limits management purchases and sales of CVRD securities to
              stock options programs and individual medium term investment
              programs.

          —   Establishes blackout periods for trading.

        Code of Ethics for CVRD financial managers

          —   Requires high standards of ethics from professionals who deal with
              insider information and large sized financial transactions.


27
     Ferrous Minerals - Market
          Trends and Strategy




           Armando Santos, Executive
            Director of Ferrous Minerals




28
     Steel Market Trends
     World steel consumption is forecast by IISI to increase 5% in 2003.
                           Apparent Consumption of Finished Steel (Mt)

                                                      802             841
                                                             + 10%
                                          CHINA       195
                                                                      215


                                                             + 1%
                                  OTHER ASIA          208             211


                                                             + 3%
                                                                      212
                                        EUROPE        205


                                                             + 5%
                                        OTHERS        194             203



                                                      2002            2003

       World Crude Steel Production (Mt)              880            925     (+ 5%)

      Source: IISI (Consumption); CVRD (Production)

29
      Steel Market Trends
     Steel prices have been recovering sharply since the beginning of 2002

                                                                                            Base April 1994 = 100
      120
                                                 Asian crisis
                                               preludes global
                                                price decline
      110                                                                   Most recent
                                                                            cyclical peak

      100



       90
                   Asian boom boosts
                      global prices
       80



       70
                                                                                                          CRUspi
                                                                                                         recovery

       60
        04/94           04/95          04/96    04/97       04/98   04/99     04/00         04/01       04/02


     Source: CRU
30
         Iron Ore Market Trends
         Lead by further growth in Chinese imports, the seaborne iron ore market
         should grow by 4% in 2003

                                 Seaborne Iron Ore Demand (Mt)

                                                               490
                                  450            470
                                                        + 9%
                         CHINA
                                         + 20%
                                                 110           120
                                   92
                                                                          China’s participation
                                         + 1%           + 3%          in world seaborne demand:
                                                                              2001 = 20%
                                                                              2002 = 23%
                                                                              2003 = 24%




                                  2001           2002          2003
     Source: CVRD Statistics

31
     CVRD Strategy in Iron Ore and Pellets


        Combine large scale production with tailor made
         products and technical marketing in order to furnish
         burden solutions for our clients;

        Continue to grow with the Chinese market;

        Expand pellet sales in the growing direct charge market
         (lump and pellets).




32
     CVRD Iron Ore and Pellet Sales Forecast


     Sales are forecast to grow by 6% in 2002(*)
                                                                      million tons
                                                                       US GAAP
                                                              166

                            149




                            2001                               2002
          Total Sales for CVRD + Urucum + Ferteco (since Apr/01).
          (*) Compares data on Ferteco full year basis.


33
     CVRD Iron Ore and Pellet Sales
     Geographical Distribution
     CVRD sales are balanced between Europe (32%), Asia (29%) and Americas
     (34%)




                                             Europe: 32%

            North America: 4%
                                                   Middle East/India: 3%   Asia: 29%



                                             Africa: 2%
                          Domestic
                          Market: 28%



             South America: 2%


                         Total Forecast for 2002: 166 million tons
34
     CVRD Manganese Ore and Ferro Alloy Facilities
      Manganese ore mines are located in Brazil. Ferro alloy plants are located in
      Brazil and France

                                                                       RDME




                                       Azul
                                       Mine




                                                  MMN       SIBRA


                                                 SMM

                                      Urucum            RANCHARIA
                            CORUMBA
                                      Mine         BARBACENA
      Ferro Alloy Plants                       SANTA RITA

      Manganese Ore Mines

      Reforestation Areas

      Hydroelectric Power Plants
35
     Strategy in Manganese and Ferro Alloys


     Our strategy is based on:


        Increasing of reserves through exploration in Brazil;


        Improving processes in mines and plants;


        Better use of fine ore;


        Expanding presence in growth markets.




36
     Manganese and Ferro Alloys Sales Forecast
        Manganese Ore and Ferro Alloy sales are a function of steel production.
        No new Ferro-Alloy capacity is coming on line worldwide in 2003.



               Manganese Sales (Mt)                     Ferro Alloy Sales (Mt)

                                 2.1
               1.9                                                          0.43
                                                       0.37




              2001             2002E                   2001              2002E


         E = CVRD estimates


37
     Non Ferrous Minerals -
      Strategy and Projects




               Diego Hernández,
              Executive Director of
              Non Ferrous Minerals




38
     CVRD Copper Strategy

        CVRD copper strategy is based on organic growth with eventual
         opportunistic acquisitions to fast track its insertion in the business,
         looking at:

         1- Define BNDES participation in Carajás projects.

         2- Implementation of Sossego, 118, IB Phase IV; and then Alemão,
            Cristalino and Salobo as CVRD operations, not as subsidiaries, in
            order to capture all the operating and administrative synergies.

         3- Keep the exploration effort at Carajás to improve CVRD reserves
            base and projects life.

         4- Start exploring abroad to replace the mainstream effort at Carajás in
            the future.


39
Carajás Copper & Gold and Nickel District
Shareholding Structure


                            Salobo
                            CVRD     67%
                            BNDES    33%*
                            * Convertible debenture


     IB Phase IV & Alemão
     CVRD      67%          Iron Ore Mine
     BNDES     33%



                                               Sossego                Cristalino

                                               CVRD      100%         CVRD     50%

                                               BNDES     0%           BNDES    50%


                             118                         Vermelho
       50 km                 CVRD    50%                 CVRD       100%
40
                             BNDES   50%                 BNDES      0%
     Sossego & 118 - Sulphide and Oxide
     Project Integrated Plan
     Instead of two independent projects, CVRD will operate Sossego & 118 as an integrated
     mine, with three open pits (Sossego, Sequeirinho and 118) feeding two plants: a flotation
     plant for sulphide ore and a SxEw plant for oxide ore.
                                                                                               Sossego         118
                            Additional oxide ore from Sossego to
                            118/Oxide Project: 17 million tonnes     Progress                 construction   PFS concl.
                            with 1.47% Cu                                            Sulphide (million tonnes)196
                                                                                                  50
     118/Oxide                                                       Grade (% Cu)                1.0%          1.2%
                                                                     Oxide (million tonnes)        17           57
                                                                     Grade (% Cu)               1.46%          1.0%
                                                  Sossego
                                                                     Stripping ratio (w/o)       3.58           2.8
                                                                     Process                   flotation       SxEw
                                                                     Copper recovery             92%           68%
                                                                     Concentrate output (kty) 470
                                                                     Concentrate grade          30% Cu
                                                                     Cathode output (kty)                       40
                                                                     Copper production (kty)      140           40
                                                                     Gold recovery               80%
                         Additional sulphide ore from 118 to
                         Sossego Project: > 50 miliion tonnes with   Mine life (y)                16            11
                         Copper grade >= 1.2 % Cu                    CAPEX (US$ million)          384           150
41
     IB Phase IV & Alemão
     Project Integrated Plan

     IB Phase IV concept is to adapt existing gold mine facilities and anticipate copper
     concentrate production from Alemão deposit. The IB Phase IV pit will reduce Alemão pre-
     stripping (from 150 to 103 million tonnes), representing a synergy of US$ 50 million.


                                                                                IB Phase IV    Alemão
             Alemão                                     Progress                 PFS concl. Appraisal S.


                                                        Sulphide (million tonnes)    15          200
                                                        Grade (% Cu)                1.57%      1.52%
                                                        Grade (g/t Au)              1.37        0.92
                                                        Stripping ratio (w/o)        7.5         5.7
                                                        Process                             flotation
                                                        Copper recovery             93%         90%
                                IB Phase IV             Gold recovery               80%         80%
                                                        Concentrate output (kty) 110             670
                                                        Copper production (kty)      36          210
                                                        Mine life (y)                 6           14
                                                        CAPEX (US$ million)          55          508




42
     Cristalino Project

     Second drilling campaign was completed.

                                                               Cristalino
                                               Progress                     Appraisal S.
                                               Reserves (million tonnes)        249
                                               Grade (% Cu)                   0.79%
                                               Grade (g/t Au)                   0.15
                                               Stripping ratio (w/o)            2.8
                                               Process                        flotation
                                               Copper recovery                 91%
                                               Gold recovery                   75%
                                               Concentrate output (kty)         350
                                               Copper production (kty)          108
                                               Mine life (y)                     15
                                               CAPEX (US$ million)              350




43
     Salobo Project
     CVRD is about to conclude a final study to select the best approach for Salobo. Four
     different alternatives are being assessed:


                                                                Salobo
            Salobo alternatives

                                              Progress               Re-appraisal Study
      1- CESL (hydrometalurgical)   200 kty   Reserves (million tonnes)    740
                                              Grade (% Cu)                 0.87%
                                              Grade (g/t Au)                 0.52
      2- Brownfield smelter         200 kty
                                              Stripping ratio (w/o)          2.8
                                              Process                        flotation
      3- Greenfield smelter         200 kty   Copper recovery                85%
                                              Gold recovery                  63%
      4- Custom smelter             100 kty   Concentrate grade (% Cu)       38%




44
      Salobo Project
      Possible alternatives



                               CESL     Brownfield   Greenfield    Custom
                                         Smelter      Smelter      Smelter

     Copper production (kt)    200        200           200          200


     Production start-up       2009       2006         2007          2006


     Product                  cathode    cathode      cathode     concentrate




45
     Vermelho Project


     • Exploration                                                    Vermelho
        – 50 x 50 m drilling                 Mar/2003
        – 25 x 25 m drilling                 Mar/2004
                                                        Progress                PFS ongoing

     • Process Demonstration                            Reserves (million tonnes)     171
        – Pilot plant and engineering data   Feb/2003   Autoclave feed grade (% Ni)   1.74%
                                                        Process                       HPAL
     • Engineering Studies
                                                        Nickel recovery (%)           93.8%
        – Prefeasibility study               Oct/2003
        – Final feasibility study            Dec/2004   Nickel output (kty)           45
                                                        Cobalt recovery (%)           92.9%
     • Environmental Permitting                         Cobalt output (kty)           2.2
        – License of installation            Dec/2004




46
     Identified Synergies


     1- Sossego oxide

     2- 118 sulphide

     3- Alemão pre-stripping

     4- Incorporation of copper mines into CVRD operations

     5- Satellite deposits

     6- Logistics

     7- Infrastructure



47
     Projects Schedule
      PROJECTS       STATUS          2002        2003       2004       2005          2006      2007       2008
                                                         Jul/04
     Sossego       Construction                                    Operation
                                     Nov/02
                   Pre-Feasibility            Jul/03
      118/Oxide    Feasibility
                                                                   Jun/05
                                                                              Operation
                   Construction
                                     Sep/02
                   Pre-Feasibility
                                         Mar/03
     IB Phase IV   Feasibility
                                                          Nov/04     Operation
                   Construction
                                               Jul/03
                   Pre-Feasibility
                                                             Dec/04
     Alemão        Feasibility
                                                                                                     Operation
                                                                                            Jun/07
                   Construction
                                          Apr/02
                   Pre-Feasibility
                                                          Jul/04
     Cristalino    Feasibility
                                                                                     Dec/06   Operation
                   Construction
                                                Oct/03
                   Feasibility
     Salobo                                                                 jan/06   Operation
                   Construction
                                                Oct/03
                   Pre-Feasibility                         Dec/04
     Vermelho      Feasibility                                                                   Dec/07   Operation
                   Construction
48
     Aluminum - Industry
     Trends, Strategy and
                  Projects



         Antonio Miguel Marques,
              Executive Director of
             Holdings and Business
                      Development


49
     Aluminum Industry Overview and Outlook


        Demand has picked up, but not enough. Market is burdened by
         excessive supply growth due to restarts of idled smelting capacity.
         An additional capacity of 2.5 million tons is coming on stream from
         2003 to 2005. These events will limit a strong price recovery.

        High cost smelters in the US, Europe and China are likely
         candidates for closure. Low power and labor costs, and good access
         to alumina will drive the shift of smelting capacity to places like
         Iceland, South Africa, Mozambique, Middle East, China and Russia.




50
     Aluminum Industry Overview and Outlook


        Given the expected growth in smelting capacity, driven by some
         producers with no internal alumina production capacity, we believe
         that the alumina price will trade at a higher long term level (from
         12.5% to 13% LME).

        We expect global primary aluminum demand to grow at an average
         annual rate of 2.5% from 2002 to 2015, below GDP long term
         growth trend. This will require an additional capacity of
         approximately 50 million tons of bauxite and 20 million tons of
         alumina.




51
     CVRD Aluminum Strategy

        Our strategic focus is on the upstream of the aluminum production
         chain, bauxite and alumina.

        Opportunistic approach: CVRD may acquire minority equity stakes
         in low cost smelters abroad as a way to become exclusive supplier
         of alumina on a long term basis.

        We do have some important competitive advantages in bauxite and
         alumina production.




52
     Competitive Advantages
     Bauxite and Alumina

        CVRD owns high quality bauxite reserves estimated at 2.68 billion
         tons, representing 11% of world reserves.

        Alunorte, our alumina refinery, has very low conversion costs and
         world class safety and environmental protection standards. Its
         capacity can be expanded up to 6.1 million tons.

        Besides superior asset quality, the competitiveness of the bauxite-
         alumina operation is leveraged by efficient logistics.




53
     CVRD Bauxite Reserves
        Paragominas is the largest bauxite district. Its bauxite is very
         similar to Trombetas in terms of quality: (a) tri-hydrate bauxite; (b)
         no organics; (c) 49% to 50% Al2O3.

                                  Almeirim
                                120 million tons

                                   Trombetas
                                   320 million tons
                                                      Paragominas
                                                       2 billion tons
                                                                        Maranhão
                                                                        Tiracambu
                                                                        240 million tons

                                              Pará




54
     How Good is the Alunorte Project?
     Brownfield Projects
     CAPEX cost - US$ per ton

      Alunorte                         343



      Wagerup                            374



      Jamalco                                  460



      Worsley                                   480


        Sources: Brook Hunt and CVRD

55
     How Good is the Alunorte Operation?
               US$/ton     Global Conversion Cost Curve
                              Conversion Cost = Cash Cost - Bauxite Cost




                          ALUNORTE
                         US$ 65 per ton


                                                       Cumulative Capacity (1,000 tpy)


       Sources: CRU and Aluvale
56
     CVRD Aluminum
     Operations and Logistics


         MARAJÓ
         ISLAND
                                                                      CVRD Mineral Rights -
               Vila do                                                Paragominas District
            Conde Port
                         Albras (Aluminum Smelter)
                         Alunorte (Alumina Refinery)
                                                       Ponta da
                                    JABUTI
                                                       Madeira Port
      TROMBETAS


                  PIPELINE               FUTURO

                         PPSA   PARAGOMINAS

                MILTONEA
                                      GURUPI

                     CAMOAI




                                                        Scale

57    CARAJÁS
     Strategy Execution
     Brownfield Projects


                          Capacity Expansion CAPEX      Start-up
                              million tons  US$ million
                            From         to
     Bauxite
        MRN (Trombetas)     11.0     16.3       223      1Q 03


     Alumina
       Alunorte             1.6      2.4        286   January 2003




58
     Strategy Execution


        We are studying the development of a new bauxite mine, wholly

         owned by CVRD, at the Paragominas bauxite district.

        Simultaneously, we are analyzing further expansions of Alunorte’s

         capacity.




59
     Concluding Remarks




                 Roger Agnelli,
          Chief Executive Officer



60
     Investment Appeal

        A clearly defined long term strategy.
        Good strategy execution: customer focus, cost and investment
         discipline, conservative financial policy, focus on shareholder value
         creation.
        Global market leadership in iron ore - stability with high profitability.
        World class mining assets capable of earning above average market
         returns.
        A pipeline of profitable growth opportunities.
        Strong and stable cash flow allows us to meet dividend expectations
         and capex funding without concerns about short term cash
         disruptions.
        Last but not least, CVRD is traded at a discount to its peers.



61
     CVRD The Best of Brazil




                rio@cvrd.com.br
               www.cvrd.com.br


62

				
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