1. 080710
Project Development Update
Project Development Update
Conference Call
Conference Call
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2. Disclaimer
The material that follows is a presentation of general background information about MPX Energia S.A. and its subsidiaries (collectively, “MPX” or the “Company”) as of
the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made
concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of this information.
This presentation may contain certain forward-looking statements and information relating to MPX that reflect the current views and/or expectations of the Company
and its management with respect to its performance, business and future events. Forward-looking statements include, without limitation, any statement that may
predict, forecast, indicate or imply future results, performance or achievements, and may contain words like “may”, “plan”, “believe”, “anticipate”, “expect”, “envisages”,
“will likely result”, or any other words or phrases of similar meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you
that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this
presentation. In no event, neither the Company, any of its affiliates, directors, officers, agents or employees nor any of the placement agents shall be liable before any
third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this
presentation or for any consequential, special or similar damages.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything
contained herein shall form the basis of any contract or commitment whatsoever. Recipients of this presentation are not to construe the contents of this summary as
legal, tax or investment advice and recipients should consult their own advisors in this regard.
The market and competitive position data, including market forecasts, used throughout this presentation were obtained from internal surveys, market research, publicly
available information and industry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in any material
respect, we have not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or
other publications. MPX, the placement agents and the underwriters do not make any representation as to the accuracy of such information.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without MPX’s prior written
consent.
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3. Integrated and diversified generation portfolio
MPX will be a leading integrated and diversified energy producer
PCH Capivara (Amapá) UTE Serra do Navio (Amapá)
(30 MW) (23 MW)
Coal Mines Colombia
UTE Porto de Itaqui (Maranhão)
(360 MW + 360 MW)
UTE Porto do Pecém (Ceará)
(720 MW + 360MW)
UTE Porto do Açu (Rio de Janeiro)
UTE Castilla (Chile) (2,100 MW + 3,300 MW)
(1,400 MW) UHE Baixo Iguaçu (Paraná)
(350 MW)
UTE MPX Sul
(Rio Grande do Sul)
(600 MW) Size (MW) MPX (MW)
Coal 5,900 5,540
Natural Gas 3,300 3,300
Seival Coal Mine
(Rio Grande do Sul) Hydro 380 260
Diesel 23 12
9,603 9,112
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* Already considering 100% of UTE Açu and UTE Castilla, according to the relevant fact released on February 20, 2008
5. Spot Prices Indicate Need for New Capacity
History – Southeast (~ 60% of the Brazilian market)
ENA EAR Short-term situation
Spot price Load
(Hydropower) (Stored Energy) aggravated by
structural deficit.
Rationing in
2001: ENA in the month of
consumption January 2008 was the
declined to 1998 2nd worst
levels. in the data series
average spot price
close to the ceiling
GWavg
price
Rationing result: structural energy surplus (decline in
consumption + Thermoelectric Plant Priority Program
(PPT)), combined with subsequent favorable hydrological
periods → low spot prices. 5
6. Forecasted Marginal Operating Costs (CMO)
Base Scenario – CMO (R$ / MWh)
SUBSYSTEM 2008 2009 2010 2011 2012
Southeast/Midwest 76.47 141.32 178.14 240.55 267.55
South 86.88 142.10 176.91 230.61 261.05
Northeast 90.44 133.48 161.38 219.75 212.00
North 88.60 128.15 164.16 218.43 218.87
270
Southeast/Midwest
230 South
Northeast MPX will have over
R$ / MWh
190 North 2,600 GWh in energy
available for sale in
150
2011, from Itaqui and
110
Pecém plants
70
2008 2009 2010 2011 2012
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Source: ONS
8. UTE Porto de Itaqui - 1st phase (360 MW)
Details Licensing
UTE Porto de Itaqui
• Preliminary License granted by State Environmental
Authority
• 3 Public Hearings in the State of Maranhão finalized and
issues raised addressed by the environmental study
• IBAMA cross-checking entire process
• Installation License shall be jointly granted by State
Authority and IBAMA before Oct 2008
EPC
Fuel: Coal
• Contract price: US$ 503.5 million
Location: Maranhão State, Itaqui Port
• EPC contracts assure the start up of the operations in 2011
Shareholder: 100% MPX • Bonus mechanisms to accelerate COD1
• Down payment for long lead items already made
Start-up: Aug/11
• Civil works to start in Nov 2008
Energy sales
• 315 MW sold in the October 2007 auction A-5 Funding
• Full pass-through of fuel costs to energy prices • Eligibility for BNDES and IDB financing secured
• Annual Fixed Revenue of R$ 231,3 million 2 (escalated by • BNDES and IDB due diligence phase starting on July 14
IPCA3)
• Bridge loan contracts of US$ 160 million
Potential Upsides
• Coal trading spread
1. Commercial operation date
• Coal freight spread between Colombia-Brazil and Africa- 2. As of June 2008
Brazil 3. IPCA = Consumer Price Index 8
9. UTE Porto do Pecém - 1st phase (720 MW)
Details
UTE Porto do Pecém
Licensing
• Installation License Issued – Construction under way
EPC
• Contract price: US$ 935.9 million
• EPC contracts assure the start up of the operations in 2011
Fuel: Coal
• Bonus mechanisms to accelerate COD1
Location: Ceará State, Pecém Port • Down payment for long lead items already made
Shareholders: 50% MPX / 50% EDP • Construction started in early July 2008
Start-up: May/11 (360 MW) + Nov/11 (360 MW)
Energy sales
Funding
• 615 MW sold in the October 2007 auction A-5
• Full pass-through of fuel costs to energy prices
• Eligibility for BNDES and IDB financing secured
• Annual Fixed Revenue of R$ 437,5 million 2 (escalated by
• BNDES and IDB due diligence phase starting on July 14
IPCA3) • Bridge loan contracts of US$ 270 million
Potential Upsides
• Coal trading spread
1. Commercial operation date
• Coal freight spread between Colombia-Brazil and Africa- 2. As of June 2008
Brazil 3. IPCA = Consumer Price Index 9
10. UTE Porto do Pecém - 2nd phase (360 MW)
Details
UTE Porto do Pecém
Licensing
• Public hearing for Preliminary License finalized in May 08
• Preliminary License to be issued in Jul 2008
EPC
Fuel: Coal • Negotiations under way with consortium composed by
EFACEC, BC Projetos and led by Maire Engineering. Boilers
Location: Ceará State, Pecém Port to be supplied by Doosan Babcock and Turbines by
Siemens, both major players
Shareholder: 100% MPX
• MoU to be signed before A-5 auction, scheduled for late
Start-up: 2013 August 2008
Energy sales Funding
• Full capacity registered for A-5 auction, scheduled for late • Eligibility process started with BNDES
August 2008
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11. UTE Porto do Açu – 1st phase (2,100 MW)
Details Licensing
• Public hearings for Preliminary License scheduled for July
14 and 15
• Preliminary License to be issued in late July 2008
EPC
UTE Porto do Açu • MOU to be signed in early Aug 2008
Fuel: Coal
• Reservation fee to long lead items in order to secure
project schedule
Location: Rio de Janeiro State, Açu Port
Shareholder: 100% MPX (future strategic partner) Funding
Start-up: Jul/12 (700MW); Jan/13 (700MW); Jul/13 (700 MW) • US$ 500 million firm commitment from Santander
• US$ 500 million firm commitment from Unibanco
Energy sales (planned) • Bridge loan contracts of US$ 200 million
• Financial advisory agreement with Santander
• Participation in A-5 energy auction
• Eligibility process started with BNDES
• Sale to Free Market within the self-production concept,
with option to contract capacity - Negotiations under way
Credit Suisse mandated to find strategic partner
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12. Free Market - Shared self production + Capacity option
Competitiveness in Free Market enhanced by adding option to contract capacity
Quotas of each offtaker
Coal Quotas
Supply self-producer 1
Available Q1
average MW
Quotas
self-producer 2
Q2
Free
OR Self-Producer’s Quotas Consumers
Quota self-producer N
Q3
Capacity Pmt
(fixed)
UTE +
Porto do Açu Variable cost Quotas
(if dispatched) self-producer N
Qn
Plant’s Management of
Operations Energy Requirements
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14. Energy Demand Increasing Faster than Supply
Forecasted Supply/Demand Balance (MW) Expected Sales (Th. GWh)
18.000 Expected Capacity
6.4%
Required Capacity Supply / Demand Gap
45.000
15.000 40.000 5.5%
35.000
30.000
12.000 25.000
20.000
9.000
15.000
10.000
5.000
6.000 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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Free Clients Regulated Clients
Coal generation projects will have to cover the gap between Strong growth in industrial clients energy demand (mining
increasing energy demand and projected supply. companies) as well as power auctions of distributors from
2012 onward (regulated clients) secures significant
Source: CNE.
opportunities in the SIC for the next decade.
Source: Santander, CNE
Note: Projections include only mayor projects such as LNG plants and Hydroayèn
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16. MPX Chile - UTE Castilla (1,400 MW)
Details Licensing
• Environmental process started in Sept 2007
• Environmental Impact Assessment to be filed at CONAMA
(Environmental Authority) in 3Q08
UTE Castilla • Installation License to be issued in 1Q09
Fuel: Coal EPC
Submarket: SIC • 4 proposals under evaluation
Location: 3rd Region, near Copiapó City • EPC selection process to be closed by Aug 2008
• Reservation fee for long lead items
Shareholder: 100% MPX (future strategic partner)
Start-up: Jul/12 (350MW); Jan/13 (350MW);
Jul/13 (350 MW); Jan/14 (350MW) Funding
• US$500 MM long term financing from Santander
Energy sales • Bridge loan contracts of US$ 100 million
• Binding agreements expected for end of Sept 2008
Santander mandated to find strategic partner
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18. Coal Supply Forecasted Ramp-up
MPX has made significant progress in order to secure coal supply to its plants
“Full Capacity”*
Coal Production 12 Mtpy coal production
Ton (MM)
Studies and definition of
14 logistics alternatives
12.0 12.0
12
10.0
10 Colombian
mines
production
8 start-up
On Going
6 Explorations
Cerrejon and including possibility
of new acquisitions – 4.0
Cesar
4 Departments 2009/2010
Exploration–
AUG/2008 1.5
2
0
2008 2009 2010 2011 2012 2013 2014 2015
Colombian properties already acquired 18
New acquisitions * Not including Seival Mine
20. MPX Milestones Roadmap
1H08 2H08 1Q09
UTE Porto do Açu (2.100 MW): 1st phase UTE Porto do Açu: 1st phase UTE Porto do Açu:
UTE Porto do Pecém: Long UTE Castilla: Installation
Environmental Impact Study Preliminary License term financing contract Installation License
License
filing ( 2,100 MW) ( 2,100 MW)
UTE Porto de Itaqui: UTE Porto de Itaqui: UTE
UTE Porto de Itaqui: Long UTE Seival II: Installation
Environmental Impact Study Seival II: Preliminary License
Installation License term financing contract License
filing
UTE Castilla: financing Term 2nd phase UTE Porto do UTEs Porto do Açu e Castilla: UTE Porto do Açu: Long term UTE Castilla: Long term
Sheet Pecém: Preliminary License Bridge loan financing contract financing contract
UTE Porto do Pecém: Bridge UTE Porto do Açu: Eligibility for 2nd phase UTE Porto do UTE Porto do Açu: NTP for UTE Castilla: “Limited NTP”
Pecém: EPC contract EPC and down payment long for EPC (down payment for
loan BNDES long term financing
signature lead items long lead items)
UTE Porto de Itaqui: Bridge 2nd phase UTE Porto do Pecém: UTE Seival II: EPC contract
2nd phase UTE Porto do UTE Castilla: EPC contract
NTP for EPC and down payment
loan Pecém: MOU for EPC signature signature
long lead items
UTEs Porto de Itaqui and UTE Seival II: NTP for EPC
UTE Porto do Açu: UTE Porto do Açu: EPC 1st phase UTE Porto do Açu:
Pecém: EPC contract and down payment long lead
MOU for EPC contract signature PPAs signature
signature items
Porto de Itaqui and Pecém:
NTP for EPC and down Coal mine acquistion in the UTE Castilla:
UTE Seival II: MOU for PPAs
payment long lead items international market MOU for EPC
ANEEL’s approval to the 1st phase UTE Porto do Açu: 1st phase UTE Porto do Açu: UTE Castilla: strategic partner
structure of the Açu project MOU for PPAs MOU for PPAs selection
UTE Porto do Açu and Castilla UTE Castilla: Letter of intents
30% stake transference from UTE Castilla: PPAs signature
for PPA
Centennial to MPX
R&D- Solar energy: Site
Solar Energy: Yingli identification and Basic 1st phase UTE Porto do Açu:
partnership design PPAs signature
Legend:
Power Marketing and Coal
Environmental Licensing Supply
Participation in the A-5
auction for new energy Funding Additional Events
Engineering and
Construction (EPC)
UTE Porto do Açu: strategic
partner selection Accomplished Events
Notes:
NTP – Notice to Proceed; EPC – Engineering, Procurement and Construction; MOU – Memorandum of Understanding; PPA – Power Purchase Agreement
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