Presentation vetria mineração creation


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Presentation vetria mineração creation

  1. 1. 11 – 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.
  2. 2. 2
  3. 3. 3  Opportunity  Creation of Vetria Mining  Operational Figures  Precedent and Subsequent Conditions  Benefits to ALL and Triunfo  Q&A Agenda
  4. 4. 4 Agenda  Opportunity  Creation of Vetria Mining  Operational Figures  Precedent and Subsequent Conditions  Benefits to ALL and Triunfo  Q&A
  5. 5. 5 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
  6. 6. 6 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 annumSource: DNPM, MetalData Previous Slide Vetria Processing and Mining Front Location of Vetria’s mining rights Opportunity
  7. 7. 7 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
  8. 8. 8 Agenda  Opportunity  Creation of Vetria Mining  Operational Figures  Precedent and Subsequent Conditions  Benefits to ALL and Triunfo  Q&A
  9. 9. 9 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
  10. 10. 10 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
  11. 11. 11  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
  12. 12. 12 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
  13. 13. 13 Agenda  Opportunity  Creation of Vetria Mining  Operational Figures  Precedent and Subsequent Conditions  Benefits to ALL and Triunfo  Q&A
  14. 14. 14 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
  15. 15. 15 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 20.020.0 10.0 *Current production *
  16. 16. 16 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$45/ton)  Guaranteed capacity of 27.5 mtpa and operational efficiency Railway Project Details Type of Train (10,000 tons) Basic Design (3 locomotives + 110 railcars) 110 railcars 3 locomotives Railway Operational Figures
  17. 17. 17 Private Port with efficient unloading structure Port Project Details  Private area with 1.9 km²  Railway network crosses the area  Preliminary environmental licenses to port operation already in force  Draft of 15.5m* allowing ships of 125,000 tons  Installation of a berth of 380m  Agile unloading with 2 car dumpers (7,000 tons/h each)  New equipment with low operational cost (R$ 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
  18. 18. 18  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 TotalKorea 1,217 1,037 1,627
  19. 19. 19 Low implementation risk project (brownfield) Mine Railway Port  Operational  Operational  Preliminary license in forceStatus 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
  20. 20. 20 (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 26 125 234 143 179 272 169 304 506 2008 2009 2010 Projetos Anunciados e Não Concluídos (base 2008) Oferta Realizada 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
  21. 21. 21  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
  22. 22. 22 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
  23. 23. 23 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 Brazil´s infrastructure impact Operational Figures
  24. 24. 24 Executive projects Mine – Certification and Project Railway and Port Regulatory Approvals Mining Authorization Events ANTAQ Authorization Environmental licenses Capitalization Works Production Expansion ANTT Authorization Operations expected to begin in 2016 2012 2014 20152013 2016 Timetable Operational Figures
  25. 25. 25 Vetria is an iron ore project with strong competitive advantages  Integrated solution mine-railway-port  High quality iron ore, Lump type, with a current premium of approximately USD15/Ton  Iron ore project independent of main sector players  Low risk Opex and Capex (brownfield and shareholders know-how)  Logistics solution for Corumbá region mines Project summary Operational Figures
  26. 26. 26 Agenda  Opportunity  Creation of Vetria Mining  Operational Figures  Precedent and Subsequent Conditions  Benefits to ALL and Triunfo  Q&A
  27. 27. 27 Main precedent and subsequent conditions:  Proven numbers and quality of reserves (JORC)  Environmental license to operate iron ore in the port  Regulatory bodies’ approval of operational and transportation agreements  Obtainment of funding necessary to carry out investments, including equity  Approval from other regulatory bodies (CADE, CDN, ANTAQ, IBAMA, etc) Precedent and Subsequent Conditions
  28. 28. 28 Agenda  Opportunity  Creation of Vetria Mining  Operational Figures  Precedent and Subsequent Conditions  Benefits to ALL and Triunfo  Q&A
  29. 29. 29 Deal aligned with the Company's new business strategy Railway Surrounding Separated FocusIsolated Risk Free Cash Vetria's project does not have a negative impact on ALL's cash position Vetria and ALL capture value and synergy in the railway surrounding Vetria's separated structure isolates operating and credit risks from railway activity Vetria’s structure is independent from the railway, ensuring a specific management focus on the new business New Bunisses Strategy Benefits to ALL
  30. 30. 30 General cargo transportation capacity increases 4x  Project increases capacity in the Corumbá - Santos corridor from 2.5 to 10 billion RTK’s  Significant expansion of general cargo capacity  Efficiency gain, cost reduction and safety increase Capacity Increased capacity for general cargo transportation Cost Improvement in railway quality reduces operating costs, as Diesel Safety Reduction in accident rate due to renovation of permanent way Capacidade Acidentes Consumo Diesel Liters/thousand GTK Accidents/ Billion RTK/Year -30% -56% +4xCapacity Accidents Diesel Consumption Gain to Railway and Its Users Benefits to ALL
  31. 31. 31 Project maximizes Santa Rita’s value Port Independent FocusIsolated Risk Free Cash The Vetria project does not have a negative impact on Triunfo’s cash position Vetria’s structure is separate from the rail network, allowing the company to focus on management of the new business Vetria’s independent structure isolates operating and credit risks Project with own cargo and mining project upside Benefits for Triunfo
  32. 32. 32 Agenda  Opportunity  Creation of Vetria Mining  Operational Figures  Precedent and Subsequent Conditions  Benefits to ALL and Triunfo  Q&A
  33. 33. 33 Q & A