HR Strategic Planning – “The basis” CVRD Strategy Organic growth New projects Ongoing needs M&A’s HR “The enabler, the basis of Strategic “CVRD HR Starting point” an HR that make sense” Planning 5 years outlook with annual check-ins : HR strategy prioritizing Education & Internal Development 32
Career & Succession – “Cycle & numbers” Variable Career& Payment Succession Employee Committees Assessment Leader & Employee More than 400 in Employee 2006… Feedback dialogue Team Development Plan Succession Internal Planning Talent Pool Retention Strategies Coaching & External Development Recruitment Succession Readiness : 92% of managerial 81% Internally Career & Succession position filled internally follow ups 19% Externally 33
Valer Corporate University CVRD Corporate University Valer represents the company’s corporate education strategy, driving the learning and development of the professionals in the CV R D value chain. It is focused on articulated projects, with an overriding emphasis on sustained professional formation, the development of production capacity and the formation of leaders empowered to transform. 34
VALER in numbers Commitment with CVRD’s growth - CVRD has increased 10 times its investments in Education over the last 5 years. Doing more with less - CVRD educational strategy has increased hours of training in relation to benchmark with excellence and efficiency. Education Programmes - responsible for 60% of CVRD’s technical positions : • Strong social inclusiveness tool increasing employability and • Support the company sustainability strategy. 35
VALER Strategic Partners 36
Procurement related activities within capital intensive organizations Across all capital intensive industries, companies treating procurement as a strategic function, generate faster and higher value � Supplier related optimizations lead to: revenue/margins increase, loss minimization and cost reductions (up to 4% increase over previous savings); � In mergers and acquisitions processes, procurement related synergies are often higher than 30% of the total merger value; � Supply Management best practices unlock significant value in large Capex projects (~ 25% more value); � Expanding procurement perimeter along the spending categories generate compliance and savings (> 5% higher); � Organizations have to guarantee that suppliers are aligned with their main compliances structures such as social and environmental responsibility; 37 Source: Booz Allen & Hamilton, CAPS Research and The Executive Board
Global Procurement at a glance: Commercial reach Finland Norway Sweden Holland Canada Switzerland Grand Britain Germany Belgium Austria France Japan Shanghai, China USA Greece China Italy India Brazil HQ Brazil Australia Chile South Africa Argentina USD 5.5 bi total spending from strategic categories and ■ projects implementations for 2008 Strategic Suppliers 400 Suppliers, 152 international from 29 countries ■ Procurement Offices 23 categories with long-term strategic alliances ■ 38
CVRD uses leading-edge processes/negotiation tools � Acts as a global procurement team with centers of excellence in Brazil, Canada, Europe and Asia � Establishes global partnerships in order to sustain its growth strategy and operations improvement � Uses product lifecycle sourcing (design-to-source) in order to address Low Cost Countries (LCC) � Adopts flexible bidding processes enabling suppliers to add value on the negotiation � Manages nearly 100% of its total spend through its ERP system (Benchmark = 78%) � Electronically enables all its suppliers via its ERP/Procurement Portal System (Benchmark = >50%) 39 Benchmarks and Trends source: Aberdeen Group, The Executive Board, Quadrem, Gartner Group, ATKearney
Procurement success is driven by a large source of value creation drivers � Global procurement structure � Centralization of main processes for all global operations � Specialized category managers � Renewed procurement staff � Diversified talent portfolio background People VALUE CREATION Tools Processes � Global demand consolidation network � Strategic sources every single category � Supplier Profile Database � Uses TCO methodology to set negotiation targets � Price analysis and evolution tools � Vendor list enhancement throughout a global � CAPEX price evolution toolkit network � Contracts P&L monitoring � Supplier integration for operational � Price benchmarking among industries improvement � Online access to bids historical record � Monitor technical KPIs and continuous development � Electronically enabled negotiation tools (RFx, Reverse Auctions, Quotes Comparison) � Develops commercial agreements optimizing tax and logistics 40
Outstanding achievements by enabling procurement as a core value 12.54% 15% 4500 3,884 � Cost saving programs 3,465 4000 sponsored by top 3500 L E S S L E S S I S M O M O R R E E 3000 management 1,910 2500 7.38% 5% 6.81% 2000 1500 � Multi-functional technical 1000 500 groups to challenge -5% 0 specifications and stimulate 2005 2006 2007 YTD & innovation Strategic Spend Savings US$ Millions � Combined action plans with 6.03% 2007 YTD until August suppliers aiming productivity 3.14% increase and total cost Procurement Commercial optimization Performance � Contingency and crisis 2006 2007 YTD management plans in place -1.53% to assure production -2.21% continuity Accumulated Brazilian Inflation CVRD Accumulated Inflation Index Note: Inflation Index only consider operational expenses 41
Demian Fiocca Executive Director Information Technology and Corporate Management 42
A track record of fast organic growth Capex Projects 7.5 Capital invested US$ billion Projects delivered 4.9 7 3.0 2.9 4 4 3 3 4 2 1.1 0.9 0.4 2002 2003 2004 2005 2006 2007e 2008p 43
Geographic and product diversification accelerated by M&A RDMN CVRDI Tethys Mining RDME CVRD Inco RD Asia Tokyo RD Asia Shanghai Yankuang Longyu CVRD Venezuela PTInco Albrás Rio Doce índia Alunorte Bayovar CADAM CMTR Goro MRN Urucum PPSA Rio Doce Austrália CVRD Ferro Gusa Samarco Carajás Itabrasco CLMA Belvedere MBR Kobrasco Rio Doce Mozambique FCA Nibrasco RDM Hispanobrás Rio Doce South Africa AMCI TVV Docenave Valesul Rio Doce Argentina Arg. CVRD - Operations CVRD - RDs CVRD INCO – Operations CVRD INCO – Commercial Exploration / Proyect 44
A renewed challenge to excellence ■ Rapid expansion brought unprecedented size and diversity ■ Strong growth opportunities to capture within a market with solid long term fundamentals. ■ Need to keep corporate foundations in good shape to cope with new complexity and preserve efficiency 45
Excellence as a world class company ■ Corporate performance: at par with comparable global companies (HR, IT, Procurement…….) according to independent studies ■ Focus on excellence in corporate functions: dedicated area of Information Technology and Corporate Management ■ To keep CVRD fast growth under close coordination ■ To improve performance and increase reliability through global standards, processes and systems ■ To increase asset productivity and provide a safe environment by sponsoring a broader adoption of automation technologies 46
To steadily leverage economies of scale and integrate new acquisitions efficiently, CVRD is continuously perfectioning its corporate foundation… Standardization Flexibility Global Simplicity Local Needs Global Agility Local Agility … through some key initiatives … 47
… international deployment of its core processes and corporate systems, … Until 2006 ERP Brazil - 5000 users 2007 More 9 companies 2100 users CVRD International, FCA, MBR… 2008 Roll out to other companies Beyond 48
… an Enterprise Business Intelligence Model, … Where do we create more value? ... Production control Niquel Inventory control Copper Production control Parts management Inventory control Which trends Logistics Iron Ore Production control can I benefit Parts management Order control Inventory control most of? Logistics Production control Purchasing Parts management Order control Inventory control Logistics CVRD’s CV Parts management Purchasing Order control Bu Busin siness Logistics Purchasing Intelligenc gence e Order control Which will the Purchasing best product portfolio in the coming years? 49
.. and broader adoption of automated solutions for mining and logistics … CVRD Automation Improvement Investments (US$ MM) New Projects Optimization 330 Resulting in: •Better asset utilization 210 •Higher productivity •Higher efficiency 200 118 84 •Improved Safety 30 60 30 15 15 •Reduced operational risk 2004 2005 2006 2007e 2008p 50
… to accomplish our mission Information Technology and Corporate Management Area ■ To achieve the IT Strategic goals through the establishment of guidelines, architecture development e solutions optimization ■ To apply automation technologies that contribute to operational excellence, safe workplace e environmental sustainability ■ To lead and coordinate corporate excellence efforts, pursuing continuous improvement in governance, processes, rule making and compliance. 51
CVRD Logistics Supporting Growth Eduardo Bartolomeo Executive Director of Logistics 52
Logistics overview and strategic drivers Logistics performance and investments Iron ore and coal General cargo Operational excellence drivers “Green railroad” 53
CVRD provides integrated logistics services including railroads and ports terminals OPERATIONAL FIGURES � 10,179 kilometers railroad network � 1,008 locomotives and 41,761 wagons � 6 Ports and Terminals THESE ASSETS PROVIDE FOR… � 16% of cargo transported in Brazil and 30% of the cargo handled in Brazilian Ports � 230.9 million tons of iron ore shipped through CVRD Port Complexes in 2006 � 24.6 million tons of general cargo shipped through port terminals in 2006 EFC FNS (EFC operation) EFVM FERROBAN Trackage right FCA Port Terminals Multimodal Terminal 54
We want the reputation of being the safest and most efficient logistic provider CVRD logistics strategy � Increase competitiveness in mining operations, mainly iron ore and coal � In general cargo, focus on high margin and volume products, mainly steel industry and agribusiness Log-In � Log-In has been created to be competitive in the inter-modal business � More than 27 thousand individual and institutional investors purchased company shares during the IPO Beginning of Beginning of TVV Docenave General Cargo DCNDB operations Argentina operations (1998) ... 2001 2002 2003 2004 2005 2006 2007 Beginning of Log-In conteiner transportation IPO in FCA 55
Productivity growth is supported by focus on operational safety and socio- environmental actions Strategic drivers Socio Safety Productivity Environmental Responsibility � Investments in safety � Operational efficiency � CVRD environmental policy is an action based on ethics and � Focus on accidents reduction � Investments in infrastructure, social commitment automation, technology and � Preventive actions training 56
Logistics overview and strategic drivers Logistics performance and investments Iron ore and coal General cargo Operational excellence drivers “Green railroad” 57
CVRD has increased its shipments at 10.7% per year... Iron ore shipments million metric tons 61.4 Mt 39.2 Mt CAGR: 10.7% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 58
…investing US$ 3.3 billion to expand its railroad and port capacity to meet demand growth… Logistics investments 2003 to 2007 – US$ 3.3 billion US$ million 1,092 784 649 484 274 2003 2004 2005 2006 2007 59
…in the Southern System… Vitória a Minas Railroad investments � Implemented: � Increase of 110 locomotives and 5,100 wagons in the last 5 years � Duplication of Railroad between Brucutu and Costa Lacerda � Expansion of railroad yard at Costa Lacerda � In progress: � Expansion of railroad yards at Drummond and Ipatinga � Expansion of railroad yard in Tubarão Complex � 28 locomotives and 900 wagons (2008/09) Tubarão Port Complex investments Vitória a Minas Railroad – EFVM � In progress: � Overall and services of all existing car dumpers � 5 th car dumper construction (start-up: 1 st Q, 2008) � Performance improvement of conveyor belts and replacement of 2 ship loaders 60
Tubarão Port – construction of 5 th car dumper 61
…as well as in the Northern System Carajás Railroad investments � Implemented: � Increase of 87 locomotives and 4,856 wagons in the last 5 years � Construction and expansion of 10 railroad crossing yards � In progress: � Expansion of 56 railroad crossing yards � Expansion of Carajás and São Luis railroads terminals � 40 locomotives and 3,128 wagons (2008/09) Ponta da Madeira Terminal investments � Implemented: � Addition of Pier III � Construction of 4 th and 5 th ship loaders at pier III Carajás Railroad - EFC � Addition of 3 rd and 4 th loading tracks North South Railroad - FNS � Addition of storage yards G and H, stackers/reclaimers and conveyors � Addition of 3 rd car dumper � In progress: � 4 th car dumper � Stock yard I, stacker/reclaimer and conveyors 62
Railroad crossing and port stock yards Stock yards G and H – Ponta da Madeira Terminal Expansion of Carajás railroad crossing yards – Location 43 63
In addition, new logistics projects are being developed in the Northern System to attend growing demand in iron ore Carajás Railroad � New railroad spur in Carajás region � Carajás main line duplication � 97 locomotives and 6,613 wagons Expansion of Ponta da Madeira Terminal � 1 pier � 2 ship loaders � 2 loading tracks � 4 car dumpers � 6 stock yards Carajás Railroad - EFC North South Railroad - FNS 64
Expansion of Ponta da Madeira Terminal New pier and 2 ship loaders 2 new loading tracks 4 new car dumpers 6 new stock yards 65
Logistics solutions are being studied for our overseas operations � Coal in Mozambique will be transported from Moatize through the Sena Line to Beira Port, where it will be loaded into a self-unloading handymaxes � Coal will be transshipped on to Panamax and Cape Size vessels fifteen kilometers offshore � 1 st stage system capacity: 14 Mty 66
Logistics overview and strategic drivers Logistics performance and investments Iron ore and coal General cargo Operational excellence drivers “Green railroad” 67
General cargo gross revenues increased at 31% per year… Gross revenue evolution Fuel US$ million Building materials 7.2% 745 6.4% 3.0% Others 651 Agriculture 548 38.3% 411 253 45.1% Steel By industry sector (2006 basis) 1H 03 1H 04 1H 05 1H 06 1H 07 CAGR: 31% 68
…improving Operational & Financial performance of Centro Atlântica Railroad Centro Atlântica Railroad - FCA • Railroad sections renewal • Improvement of locomotive fleet • Business re-engineering • Cost reduction program • EBITDA turnaround FCA EBITDA turnaround US$ million 36.4 31.0 FCA Ferroban – FCA Right of Way Southern Coastal Railroad (in construction) Multimodal Terminal (34.6) 2005 2006 1S 2007 69
Plan to develop new logistics infrastructure in Espírito Santo state Litorânea Sul Railroad � New section that will connect Vitória a Minas railroad to Ubu Port and the south of Espírito Santo state Viana � Attraction of steel companies and new general cargo flows � 165 km in length Anchieta � Potential demand can exceed 20 mty Ubu Port � New terminal feasibility study Litorânea Sul Railroad 70
The Norte Sul railroad will provide a new general cargo corridor Norte Sul Railroad - FNS � On October 3 rd CVRD was awarded the concession to operate the 720 Km of FNS � Focus on general cargo exports (mainly soybean, rice and corn) � CVRD’s commitment to socio-economic development in Brazil � 361 km to be built Estrada de Ferro Carajás - EFC Ferrovia Norte Sul - FNS Ferrovia Norte Sul – FNS (em construção) Ferrovia Norte Sul – FNS (planejada) 71
Logistics overview and strategic drivers Logistics performance and investments Iron ore and coal General cargo Operational excellence drivers “Green railroad” 72
“Green Railroad” commitment… Biodiesel - CVRD is the first Brazilian company using B20 in its locomotives � By December 2007, CVRD will become the biggest B20 Until december 2007, EFC and EFVM B20 consumer in Brazil consumption will be 33 million liters/month � This volume equates to the annual CO 2 emissions from a city of 27 thousand inhabitants � Or it would be necessary to plant an area equivalent to 369 Maracanã stadiums of native forest per year Railway sleepers replacement About 400,000 steel sleepers will be replaced per year in both railroads � Approximately 1 million steel sleepers will be installed at EFC and EFVM railroads � Environmental impact will be reduced by substituting wooden sleepers with steel sleepers that have double the lifecycle of wood 73
…philosophy of operational excellence… Initiatives to achieve excellence � Longer trains � Efficient locomotives � Installation of on board computers � Higher axle loads � Improved operational model Carajás Railroad trains/day Locomotives Fuel Efficiency (Liters / GTM x 1000 ) (Number of trains per day) 2.38 AAR * 2006 12.0 2.32 5.6 2.27 2.19 6.9 2.15 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 2003 2004 2005 2006 1S 2007 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 74 * AAR –Association of American Railroads
…and to be the safest logistic provider Initiatives to improve safety � Development of Operational Policy focused on Safety � Training centers for train drivers with simulators � Automation and process control Accident rate (per million train Km) 80 70 60 50 40 30 20 10 - 2002 2003 2004 2005 2006 1H 2007 Centro Atlântica Railroad Vitória a Minas Railroad Carajás Railroad 75
Only possible because we are continuously investing in our employees � Investments in technical know-how, enabling logistics staff to face new challenges � Promoting the qualification and development of more than 4,000 technical professionals 2006 training numbers Professional Qualification Program 1,748 employees Rail Operations Trail 785 employees Machinists Qualification 713 employees Rail Operations Regulation 367 employees Rail Engineer Program 110 employees 76
CVRD’s non–ferrous business In focus José Lancaster Executive Director Copper, Coal, Aluminum 77
Strategy, highlights and visions 78
CVRD continues implementing its strategy for the non-ferrous minerals business Non-ferrous minerals includes copper, coal, aluminum and others (potash, phosphate, kaolin) business units. Additionally handles CVRD’s global mineral exploration - a key driver of growth . Key strategies � Efficient low cost operations (concentrate on cost cutting and efficient maintenance strategies). � Develop a consistent pipeline of high quality projects (Paragominas, New Alumina Refinery, Salobo, Moatize). � Continuous growth through an organic strategy, JV’s and / or opportunistic acquisitions. 79
CVRD continues implementing its strategy for the non-ferrous minerals business Main focus � Aluminum: to develop high quality, low cost bauxite and alumina operations. It also looks for opportunity to vertically integrate the business. � Copper : to continue organic growth through implementation of Salobo I project. Development of Salobo II, Papomono (Chile), 118, Cristalino, Alemão projects. � Coal : to become a large player in the coal business by 2015, producing more than 30 Mtpy of metallurgical and thermal coal . � Potash & phosphate : to position CVRD as a global supplier of raw materials for fertilizers (P & K). � Mineral exploration : to continue worldwide efforts to provide efficient resource replacement and additional growth. 80
2007 highlights � Paragominas first phase (5.4 million metric tons of bauxite) is completed and operating at a 85% rate. This is the first bauxite pipeline to operate in the world. � Phase 3 of Alunorte Refinery (70 % complete) is progressing with total capacity reaching 6.3 MT of alumina by 2008. � Salobo I construction of mine-mill copper concentrate complex (100 Kt) started in August 2007, and commissioning is expected for mid-2010. First long term contract signed with a major European copper smelter. � Acquisition 100% of AMCI HA (Australia) coal company opening an important new frontier for growth. � In 1H07, Chinese coal JV’s (Longyu and Yangkuang) performance exceeded expectations (15% above budget). � Implementation of Bayóvar project underway with commissioning in 2010 (world class phosphate deposit in Northern Peru). Total production capacity of 3.9 Mt of phosphate concentrate to be reached in 2013. 81
Aluminum industry – CVRD Vision � Access to reliable bauxite source is vital. CVRD holds key resources in the Amazon basin and Africa. � Medium and long term market fundamentals should remain strong in the coming years: � Aluminum global consumption grew 7% per year between 2001-2006. We expect a similar growth in the next 5 years. � Most of the growth driven by the Chinese demand (20% p.a.) . � The primary aluminum stocks show a decreasing trend since 2002 (from 9 to 6 weeks). � Higher demand from emerging economies (BRICs, Middle East) and rising production costs (mainly alumina and energy) provide a good support to current prices. � It is forecasted that supply will keep up with demand. However, given the current scenario (high costs, equipment and personnel shortage) we believe some of new projects may face delays. Therefore, we remain optimistic about the medium–term prices. 82
Copper industry – CVRD Vision � Global demand will grow over 4.1 % in 2008-9 (about 600,000 metric tons of new copper production). � Copper prices have risen over the past three years given the strong demand and limited supply. We are bullish on the prices for 2008-9 and on the long term fundamentals. � China and Southeastern Asia continues to drive overall copper demand growth (10%). European demand is moderate (1.7%), while USA remains flat. � Forecasted demand growth will require new supply from greenfield projects under significant pressures: � The head grade on major copper operations is decreasing over time; � CAPEX and OPEX have risen systematically pressured by both technical and structural factors (ex.: weak dollar); � Delay of long lead equipment deliveries (e.g. mills) and short to medium term pressure on key operational items (e.g. tires); � Permitting is more complex and lengthier; � Important projects are located in remote areas and/or challenging political environments. 83
Coal industry – CVRD Vision � CVRD is still a small player in the coal market (~ 2.9 Mt in 2007) with a portfolio focused on metallurgical coal. � Our goal is to reach 30 Mtpy of coal through development of CVRD Australia projects, Belvedere, Moatize and other projects by 2015. � Current strategy is to supply the steel industry located in Brazil and other markets. � We foresee a balanced seaborne market for coking coal, however potential regional unbalance may generate windows of opportunity. 84
Fertilizer industry – CVRD Vision � A number of factors has impacted the agricultural production worldwide: � “It is still a food game”: world population and GDP growth (about 5 %) will trigger the increase in food consumption (e.g. an average of 1.4 Mha/y of additional land harvested in China); � Rising investments in the production of alternative energy (e.g.: ethanol should double by 2015, according to FAPRI¹); � Limited additional agricultural land available has led to the improvement of soil efficiency through higher consumption of fertilizers. � During the last 12 months, P & K prices increased more than 70%², and industry forecasts remain bullish. � CVRD’s Bayovar Project (Peru) represents the only greenfield phosphate rock project under implementation that targets the seaborne market. ¹ FAPRI - Food & Agricultural Policy Research Institute 85 ² Phosphate rock: from US$ 45/t to US$ 85/t (70-72 BPL, FOB Morocco) and KCl: from US$ 140/t to US$ 240/t. (FOB Vancouver).
Operations & projects 86
Aluminum Efficient project execution and higher prices drove CVRD’s aluminum business revenues to a record high in the 2Q07 MRN (17.8Mt), Alunorte (3.9Mt) Paragominas and Albras (456kt) start up aluminium business quarterly gross revenues production records Valesul MRN (16.7Mt), $800 consolidation Alunorte (2.5Mt) 724 and Albras (435kt) Alunorte production records lines 4&5 674 $700 649 640 638 start up Albras MRN (17.2Mt), $600 MRN expansion consolidation Alunorte (2.6Mt) to 16.3Mt and Albras (446kt) Alunorte line 3 $500 production records start up Albras 429 expansion to 377 $400 430 ktpy Albras 358 354 346 expansion to 327 327 406 ktpy 289 280 $300 254 243 188 $200 167 152 144 98 $100 68 $0 1Q 02 2Q 02 3Q 02 4Q 02 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 87
Aluminum operation and expansion Alunorte expansion Paragominas project � Paragominas first phase ramp-up nearly � The third expansion will consolidate Alunorte completed (5.4 Mtpy): position as the largest alumina refinery in the world � First bauxite mine in the world to use Global physical progress over 70% � a pipeline for ore transportation. completed. � First batch received by Alunorte in March. � Total refinery capacity to reach 6.3 � Expansion to 9.9 Mt of bauxite is Mtpy. 67% completed. To be commissioned in 1H08. � 88
Alumina project under development The development of a new refinery will strength CVRD asset base in the upstream of the aluminum chain. There is still room for growth. � CVRD signed a MoU for the development of a new alumina refinery with an initial production capacity of 1.86 Mtpy. � The new refinery will replicate Alunorte experience. � Bauxite will be supplied by Paragominas. � Given its world class bauxite deposits, CVRD can expand the new refinery up to 7.44 Mtpy. 89
Copper operations Sossego mine � First CVRD copper mine with 3 full years of operation: 90 % of capacity (125 kt Cu) achieved. Exceeded financial returns due to the good startup timing and soaring of copper prices. � More than 1.4 Mt of concentrate already mined and shipped through long term contracts, since the beginning of the operation. � Experience at Sossego consolidated CVRD’s copper mining knowledge to be applied in the development of the Carajás copper project pipeline (Salobo implementation underway). 90
Copper project under construction Salobo � Construction started in August 2007. � Phase 1 designed to produce 100 kt of copper-in-concentrate (@ 38% Cu and 15g/t Au). � Total investment: US$ 897 M. � First long term agreement already signed with a major European copper smelter. � 2 nd phase of Salobo under evaluation (an additional of 100 kty contained copper). 91
Hydrometallurgical copper plant (UHC) Application of new technology for complex ores CVRD is currently at 90% of construction of a 10 ktpy hydrometallurgical- � copper-plant located in Carajás. The purpose is to consolidate hydromet technology in treating copper sulphide concentrates, using CESL technology. Workforce for operation already trained. � Start up scheduled for 1Q08. � 92
Copper projects under development at different stages Estimated Project Reserves ROM content production Proven & probable Cu Au Cu Mt % (g/t) kty 118 64 0.95 - 36 (Sx-Ew) - - - - Papomono* (Sx-Ew) Cristalino 379 0.66 0.15 100 (Concentrate) Alemão* - - - - Papomono, Chile *PFS ongoing. 93
CVRD coal operations and projects Potential production Yankuang JV (25%) 2.0 Mtpy – Coke ¹ Longyu JV (25%) 6.0 Mtpy – Anthracite ¹ China Belvedere (pre-feas. phase) 8 Mtpy Mozambique Coking coal/PCI Australia CVRD Australia Moatize 11 Mtpy 11 Mtpy Coking coal/PCI/Thermal Coking/Thermal coal ¹ Total production capacity 94
Coal operations CVRD Australia � In April 2007, CVRD acquired 100% of AMCI Holdings Australia Pty Ltd (AMCI HA). � CVRD Australia owns and operates several coal mines and holds mining rights in Australia, through equity unincorporated joint ventures � About 2.9 Mt are estimated to be the CVRD Australia’s production in 2007. � The Australian operations allow CVRD to have an experienced workforce in both underground and open pit operations. JV’s in China � Longyu anthracite JV’s performance in 1H07 exceeded expectations with production of 2.8 Mt compared to a budget of 2.4 Mtpy. � Yankuang coking JV production in 1H07 was also above budget: 0.6 Mt compared to 0.5 Mt. Coke quality is mainly grade A (high quality) and methanol production has already started. * Mines have not reached production @ full capacity. By 2010, it is expected coal production of 11 Mt (US GAAP) equivalent to 8 Mt on equity basis 95
Coal projects Moatize Following the approval of the project development plan by the Mozambican � authorities in early June, the Government of Mozambique approved the mining right for the development and implementation of the Moatize coal project. � The project involves the exploitation of an open pit mine (> 30 years life), with an estimated average annual production of 11 Mt of coal products – 8.5 Mt of metallurgical coal and 2.5 Mt of thermal coal. Belvedere � CVRD has exercised a call option to acquire a 51% interest in the Belvedere Coal JV (hard coking coal with high quality). � CVRD has a further option to raise its stake in the project up to 100% by acquiring the remaining 49% interest at a fair market value to be determined at the time of the exercising of the option. � Feasibility study underway. 96
Potash UOTV, Carnalite & Neuquén � Sole domestic producer, contributing with 12% of Brazilian consumption. � ROM production capacity achieved 3,000 ktpy. � Two other significant opportunities being investigated: � Carnalite (Sergipe - Brazil) � Potash project (Neuquén - Argentina). 97
Phosphate rock Bayóvar � Located in Sechura desert (Peru), Bayóvar project startup is scheduled for mid-2010. � Estimated production of 3.9 Mt of phosphate concentrate. � Life of mine: 27 years. � Total investment (Capex): US$ 479 million, including infrastructure � Implementation phase underway: � Permits and licenses already granted (sea area for pier construction & operation; sea water supply). � Team already defined. Commercial highlights � Initial approach with potential customers underway. � Target markets: South and North America, Oceania and Asia. 98
Mineral exploration 99
CVRD remains focused on long-term organic growth � With the recent acquisitions of INCO and AMCI, CVRD has consolidated its exploration activities under a single “Global Mineral Exploration” hat. Such consolidation allows more efficiency and agility integrating exploration, and mineral technology activities under a global organization. � Total budget for 2007 R&D: US$ 452 million � Pre-F/S, F/S and technology: US$ 302 million � Mineral exploration & project development to pre-feasibility: US$ 150 million 2007 budget per mineral 2007 budget per region South America Other North America Potash Eurasia Bauxite Copper Australasia Iron Ore Africa Nickel Cordillera- S.America 100
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