2010 03-12 presentation to the market-4_q09_2009

Paranapanema´s presentation4Q09 and 2009 Earnings

Released on March 12, 2010

1

Agenda

Overview of the Group 03Restructurings in 2008 and 2009 10Tax Restructuring 16Copper Division 19Fertilizer Division 25Economic and Financial Data 29Risk Management Policy 37Outlook 43

2

Page

Overview of the Group

3

4

5

Prior to merger of Eluma

After merger of Eluma

Merger of Caraíba at Nov 13, 2009Merger of Eluma at March 31, 2010

CARAÍBA

INCORPORATED LTD.

CARAÍBA ENERGIA

LTDA.

99.09%98.81% 100.00% 100.00%

CDPC Distribution Center

100.00%

CARAÍBA

INCORPORATED LTD.

CARAÍBA ENERGIA

LTDA.

99.09% 100.00% 100.00%

CDPC Distribution Center

100.00%

Shareholder Distribution per Segment Reference Date 12/31/2009

Current Shareholding Structure

Mercado

* Consolidated position of Paranapanema S.A. on 03/15/2010.

7

23.96% 17.23% 11.82% 7.35% 39.19%

Major Shareholders

* Position on 02/28/2010.

Capital increase from the merger of Eluma: 319.2 million and capital of R$2,096 million

Dilution of 0.46%

Common 316,706,399 99.69%Preferred 993,865 0.31%

Total 317,700,264 100.00%

Free Float 316,624,727 99.66% Common99.69%

Preferred0.31%

Rótulos de Linha Total of Shares % Total Common % Common Preferred % Pref.Pension Funds 135,856,595 42.8% 135,856,595 42.9% - 0.0%Banks with Portifolios 57,660,707 18.1% 57,660,676 18.2% 31 0.0%Foreign Investiment Funds 42,918,558 13.5% 42,823,657 13.5% 94,901 9.5%Individuals 38,375,961 12.1% 37,720,422 11.9% 655,539 66.0%Investment Funds 21,651,300 6.8% 21,651,300 6.8% - 0.0%Non-Institutional Corporates 17,894,014 5.6% 17,714,042 5.6% 179,972 18.1%Investiment Clubs 2,963,393 0.9% 2,962,265 0.9% 1,128 0.1%Brokerage houses 312,294 0.1% 311,200 0.1% 1,094 0.1%Others 43,112 0.0% 6,113 0.0% 36,999 3.7%Treasury stocks 24,330 0.0% 129 0.0% 24,201 2.4%Total 317,700,264 100.0% 316,706,399 100.0% 993,865 100.0%

THE LARGEST COPPER SEGMENT GROUP IN BRAZILL

COPPER DIVISION FERTILIZER DIVISION

70% 28% 2%Share of Net Revenues 9M09

8

IR site implemented on 12/03/2007 Share Trading Policy implemented Information Policies Voting Manual for shareholders at General Meetings Management Committees:

• Finance• Taxation• Risks• HR• Budget

Financial Risk Management Policy on 08/11/2009 100% Tag Along on common shares Joined the arbitration chamber contemplated in the bylaws Dividends of 25% of adjusted net income Company joins Novo Mercado of the BM&FBovespa in 2010 100% of voting shares

9

Restructurings in 2008 and 2009

•Financial• Corporate

• Tax

10

R$ million 12/31/07 12/31/08 12/31/09

Total debt

Cash and equivalents

2,031

866

668

685

486

668

Net Debt (Cash) 1,165 (18) (181)

Capital Stock

Shareholders Equity

967

(56)

2,067

1,193

2,089

1,408

• 06/13 to 11/13/08: Paranapanema’s non operating debt resolved with payment of R$1.5 billion to creditors/shareholders, 50% settled in cash and 50% by converting debt to common shares in a record time of only 5 months.

• Funds raised:

06/13/08: Private capital increase of R$ 514 million

08/20/08: 6th Convertible Debenture Issue of R$ 920 million for 30 months, 1st series and 11 years, 2nd series

08/22/08: 1st Debenture Conversion, liquidating the 1st series

08/26/08: 2nd Debenture Conversion, with partial liquidation of the 2nd series

08/28/08: 3rd Debenture Conversion, with partial liquidation of 2nd series

11/13/08: 4th and final Debenture Conversion, with total liquidation

11/13/08: divestment of Tin Division, with the sale of Taboca/Mamoré to Peruvian group, Minsur, for R$850 million, R$415 million net, after contingencies and debt

11

• Only debt remaining is of an operational nature at the subsidiaries(Advances against foreign exchange contracts - ACC and prepayment of exports-PPE);

• Reduction of 27% in the total debt in 2009 compared to 2008;

•2009 closed with no operating debt at Paranapanema;

• Net cash at Eluma of R$213.4 million and consolidated net cash of R$181.4 million.

12

R$ thousand 12/31/09 12/31/08 12/31/09 12/31/08 12/31/09 12/31/08 Change % 12/31/07Total debt 36,024 67,167 49,774 11,250 486,290 667,608 -27.2 2,031,054 Short term 25,577 39,123 49,774 11,250 402,439 441,906 -8.9 1,749,859 Operating 25,577 39,123 49,774 11,250 402,439 390,053 3.2 620,071 Non-operating - - - - - 51,853 -100.0 1,129,788 Long term 10,447 28,044 - - 83,851 225,702 -62.8 281,195 Cash and cash equivalents 249,457 148,171 5,571 183 667,721 685,315 -2.6 865,900 Debt (Cash), net (213,433) (81,004) 44,203 11,067 (181,431) (17,707) 924.6 1,165,154

Paranapanema ConsolidatedEluma Cibrafértil

13

14

•Justification for merges of Caraíba Metais and Elumasimplification of the equity structure of the companies controlled by Paranapanema;reduction in administrative costs;substantial synergy gains, given the complementary nature of the product ranges offered and the location of the manufacturing units;higher investment capacity in new product research and development;productivity gains arising from larger-scale production and distribution of the products offered by the companies;more efficient corporate structure;greater speed of response in executing strategic, administrative and commercial decisions;Caraíba shareholders will remain shareholders of a publicly quoted company; andgreater liquidity for the shares issued by Paranapanema.

15

16

Taxation Restructuring

Joining the Tax Debit Installment Payment Program

Law 11.941/09 and PM 470/09

• Search for solutions for tax contingencies estimated at around R$1.58 billion for Paranapanema and its subsidiaries;

• 10/28/09: BDM resolves to irrevocably join the tax debit liquidation and installment payment program in the case of Paranapanema S.A and Eluma S.A., as permitted by Law 11.941/09 and PM 470/09;

• 09/30/09: in view of this subsequent event, the impact of joining was already factored in for the 3rd quarter of 2009;

• 11/30/09: cut-off date for companies to formally join the tax debit installment program;

• The decision regarding tax debit installments and settlement took into account the probability of losses estimated by tax experts: (i) IPI – Presumed Credit on the Purchase by Eluma of untaxed or zero tax-rated Raw Materials, considered as a probable loss; and (ii) IOF tax in the case of Paranapanema, as a possible loss, but with no jurisprudence on the subject matter.

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• The total amount of the adhesion shown below is distributed as follows: R$91.6 million will be paid in cash, of which R$18.2 million in 12 installments and the remainder at sight;

The remaining balance will be paid by fiscal losses and negative social contribution tax base.

•The tax restructuring has placed the financial statements in a new and solid situation, reducing the costs of managing these tax liabilities, while providing a solution for all fiscal contingencies and radically changing the perception of Paranapanema’s consolidated risk and market value

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Statement of Operations - R$ thousand Paranapanema Eluma Consolidated

Income tax and social contribution payable (638,445) (66,328) (704,773) Reversion of original provision 566,594 94,947 661,541 Deferred income tax and social contrubution 358,964 (11,557) 347,407

287,113 17,062 304,175

2009

Copper Division

ParanapanemaEluma

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• Industries requiring copper worldwide :

Civil construction

Transportation (air, sea and land)

Automotive (hybrid cars, trucks)

Infrastructure (electricity and telecommunications)

Electroelectronics

Cooling and heating

Clean energy (solar, biodiesel, ethanol)

Apparel

• Industries requiring copper in Brazil: the same, boosted by already approved government economic stimulus measures and others still in the pipeline, which are driving consumption and demand for copper in several industries such as:

(i) consumption: popular refrigerator substitution program; (ii) solar energy: new municipal legislation determies the use of clean (solar) energy and the popular housing program; (iii) electrical energy: “Luz Para Todos” (“Light for Everyone”) is also likely to encourage the industry; (iv) civil construction: “Minha Casa Minha Vida” (“My Home, My Life”) foresees construction of 1 million homes; (v) extension to the IPI tax exemption or reduction period: electroelectronics: extended IPI benefits on certain white goods until 10/31/09; automotive: benefits for cars were extended to 09/30/09; and for trucks: exemption until 12/31/09, with the gradual return of taxation after these periods; (vi) Reduction in IPI: capital goods: machinery and equipment intended for industry and special funding facilities for small and mid-size

companies via BNDES and Banco do Brasil; and some civil construction items; and (vii) Reduction of PIS and COFINS taxes: motorcycles up to 12/31/09, with the industry agreeing to retain jobs. 20

21

Strategic actions by Paranapanema:Expand the domestic market, taking up the slack left by imports;Expand sales of higher value-added products, like bars and drawn wire; Offer clients more logistics services, reducing time frames, quantities and transport management risk by creating the CDPC.

Apparent Consumption of Refined Copper in Brazil

Products (thousand t) 2004 2005 2006 2007 2008C¹ 2009¹Change

2009/2008CAGR

2004-09

Refined copper production 208.0 199.0 219.7 218.4 227.8 208.4 -8.5% 0.0%Variation in inventories -7.8 1.4 0.1 -4.0 3.3 1.7 -49.5% NSRefined copper imports 154.1 167.4 175.4 217.9 251.0 203.5 -18.9% 5.7%Refined copper exports -21.9 -32.9 -56.0 -102.0 -93.1 -88.6 -4.8% 32.3%Apparent consumption in Brazil 332.4 334.9 339.2 330.3 389.0 325.0 -16.5% -0.4%Population (in million) 180.7 186.4 186.4 186.5 189.6 191.9 1.2% 1.2%Per capita consumption (kg per inhab.) 1.84 1.80 1.82 1.77 2.05 1.69 -17.5% -1.6%Sources: Sindicel - Sindicato da Indústria de Condutores Elétricos, Trefilação e Laminação de Metais Não Ferrosos do Estado de São Paulo;

ABC - Associação Brasileira do Cobre; MDIC/Secex; IBGE e Brook Hunt

¹ Estimated population /4 Kt of refined copper from Vale and Mineração Caraíba.

C=Changed

Principal Players

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Paranapanema is a foundry and refiner capable of operating in the entire copper production chain using copper concentrate from Chile

23

Description of the Process Description of the Business

Smelting

Refining

Electrolysis

Rolling

Drawing

Copper concentrate

(Third-party raw materials)

Estimated time between purchasing and taking delivery of raw material

1 m

on

th[1

0]D

ays

n Primary business drivers at Caraiba:

TC/RC (Treatment Charge/Refining Charge): LME –transformation cost (Copper smelting and refining rates)

Premium: LME + premium on revenues from sales of finished products

Exchange rate

Supply and demand for metal commodities

RevenuesSales of cathodes + Rods + Wire

LME + Premium

CostPurchase of copper concentrate

LME – TC/RC

Operating

costsOperating expenses= OPEX

+

-

-

Profit drivers

Premium + TC/RC + By-products – OPEX=

Total cycle: 90 days

• Significant sector diversification in different transformation industries•Competitive advantage and good thermometer of economic activity• Entry into the copper wire and bar segments with the Bus Bar project•Launch of new products like flexible cables (insulated electric wiring)

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Civil Construction28%

On-Selling15%

Eletrical-Eletronics11%

Machanics and Metallurgy

8%

Automotive11%

Clothing5%

Refrigeration16%

Others2%

Military Material4%

Net Revenues by Segment 2009

Civil Construction26%

On-Selling22%

Eletrical-Eletronics10%

Machanics and Metallurgy

6%

Automotive13%

Clothing4%

Refrigeration14%

Others2%

Military Material3%

Net Revenues by Segment 2008

Fertilizer Division

Cibrafértil

25

26

Strategic role in integrating with Paranapanema, to take advantage of the sulphuric acid generated by the metallurgy process

27

0

1,000

2,000

3,000

4,000

5,000

6,000

0

100

200

300

400

500

600

2003 2004 2005 2006 2007 2008 2009

thou

sand

of

ton.

Cibr

afér

til/

Nor

thea

st R

egio

nth

ousa

nd o

f to

n.PRODUCTION OF SIMPLE SUPERPHOSFATE

CIBRAFERTIL NORTHEAST REGION BRAZILSources: Ministry of Agriculture and Cibrafértil.

28

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

0

100

200

300

400

500

600

700

800

thou

sand

of t

on.

Cibr

afér

til/N

orth

east

Reg

ion

thou

sand

of t

on.

CIBRAFERTIL NORTHEAST REGION BRAZILSources: Ministry of Agriculture and Cibrafértil.

FORECAST PRODUCTION OF SIMPLE SUPERPHOSPHATE

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Economic and Financial Date4Q09 and 12M09

• Revenue and volume growth for the 4th consecutive quarter in 2009

30

Paranapanema S/A - Consolidated

Result in R$ thousand 4Q08 1Q09 2Q09 3Q09 4Q09Change

4Q09/4Q08Change

4Q09/3Q092008 2009

Change 2009/2008

Gross revenues 773,072 598,372 726,189 784,497 884,498 14.4% 12.7% 4,284,931 2,993,556 -30.1%Domestic market 476,140 328,903 360,706 419,630 424,609 -10.8% 1.2% 2,249,717 1,533,848 -31.8%Foreign market 296,932 269,469 365,483 364,867 459,889 54.9% 26.0% 2,035,214 1,459,708 -28.3%

Net revenues 521,251 493,341 597,707 668,660 752,205 44.3% 12.5% 3,481,354 2,511,913 -27.8%Gross profit (26,865) (56,257) (12,322) 27,043 27,463 NS 1.6% 179,539 (14,073) -107.8%EBIT (Result of activity) 380,786 (62,286) (64,211) (35,558) 179,187 -52.9% NS 509,356 17,132 -96.6%Net income (loss) 236,284 (62,480) (3,353) (43,681) 303,543 28.5% NS 133,014 194,029 45.9%Number of shares outstanding ex-treasury (in thousand) 313,796 313,796 313,796 313,796 317,700 1.2% 1.2% 313,796 317,700 1.2%EBITDA 404,152 (41,341) (43,300) (15,095) 199,519 -50.6% NS 611,108 99,783 -83.7%Shareholders' equity 1,193,231 1,130,751 1,126,815 1,082,402 1,407,699 18.0% 30.1% 1,193,231 1,407,699 18.0%Total assets 3,320,395 2,759,970 2,816,696 3,103,550 2,845,063 -14.3% -8.3% 3,320,395 2,845,063 -14.3%Margins - % of net revenues Change bp Change bp Change bpGross margin -5.2% -11.4% -2.1% 4.0% 3.7% (300) 610 5.2% -0.6% (580)EBIT margin 73.1% -12.6% -10.7% -5.3% 23.8% (770) 540 14.6% 0.7% (1,390)EBITDA margin 77.5% -8.4% -7.2% -2.3% 26.5% (740) 490 17.6% 4.0% (1,360)Net income margin 45.3% -12.7% -0.6% -6.5% 40.4% 610 (590) 3.8% 7.7% 390

% Share 4Q08 1Q09 2Q09 3Q09 4Q09 Change 4Q09/4Q08

Change 4Q09/3Q09

2008 2009 Change 2009/2008

Gross revenues 100.0% 100.0% 100.0% 100.0% 100.0% 0 0 100.0% 100.0% 0Domestic market 61.6% 55.0% 49.7% 53.5% 48.0% (260) 380 52.5% 51.2% (130)Foreign market 38.4% 45.0% 50.3% 46.5% 52.0% 260 (380) 47.5% 48.8% 130

• Sales volume rose steadily in all divisions in 2009;

• Volume in 4Q09 against 4Q08 was 11% higher, showing a recovery in both semi-finished copper products and in the Fertilizer Division

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Sales volume per product (tons) 4Q08 1Q09 2Q09 3Q09 4Q09Change

4Q09/4Q08Change

4Q09/3Q092008 2009

Change 2009/2008

Paranapanema¹55,851 43,677 52,344 54,142 54,292 -2.8% 0.3% 236,938 204,455 -13.7%

Anode/Cathode² 24,999 22,218 27,914 30,435 27,978 11.9% -8.1% 106,603 108,545 1.8%Rod 23,315 17,560 20,758 19,749 21,751 -6.7% 10.1% 110,415 79,818 -27.7%Drawn wire 3,695 3,061 2,937 3,206 3,820 3.4% 19.2% 14,484 13,024 -10.1%Other copper products 3,842 838 735 752 743 -80.7% -1.2% 5,436 3,068 -43.6%

Byproducts³ 164,661 175,477 207,936 227,188 236,820 43.8% 4.2% 811,211 847,421 4.5%Sulphuric acid 83,502 92,299 125,947 150,506 145,276 74.0% -3.5% 459,302 514,028 11.9%Other4 81,159 83,178 81,989 76,682 91,544 12.8% 19.4% 351,909 333,393 -5.3%

Eluma 14,539 12,584 14,143 16,218 17,385 19.6% 7.2% 63,917 60,330 -5.6%Semi-manufactered copper products 14,539 12,584 14,143 16,218 17,385 19.6% 7.2% 63,917 60,330 -5.6%

Taboca5 654 -100.0% 6,898 0 -100.0%Tin 534 -100.0% 5,358 0 -100.0%FeNbTa alloy 120 -100.0% 1,540 0 -100.0%

Cibrafértil 33,152 15,443 42,621 84,657 44,156 33.2% -47.8% 171,204 186,877 9.2%SSP Fertilizers (powder and granulated) 27,433 10,312 33,713 74,767 39,506 44.0% -47.2% 158,190 158,298 0.1%NPK fertilizers 5,719 5,131 8,908 9,890 4,650 -18.7% -53.0% 13,014 28,579 119.6%

Consolidated Paranapanema 104,196 71,704 109,108 155,017 115,833 11.2% -25.3% 478,957 451,662 -5.7%1 Composition of sales volume reclassified, including the item other copper products.

2 Includes sales of copper anodes.

3 Byproducts are not counted in the total volume of Caraíba.4 Includes anode sludge, oleum and slag.5 Company sold of at november 13, 2008.

Principal Consolidated Indicators and those of the Operating Subsidiaries in 4Q09

32

Principal Consolidated Indicators and those of the Operating Subsidiaries in 12M09

33

• Gross revenue evolved positively during 2009

• 4Q09 revenue was 30% of the year, 14.4% over 4Q08 and 12.7% higher than 3Q09

• Volume of 452 000 t in the 12M09 and in 4Q09 accounted for 26% of the year

• Internal market volume of 91 000 t grew by 24% in 4Q09 over 4Q08 and 108% in relation to 1Q09

• Exports rose by 55% in 4Q09 over 4Q08 and by 26% over 3Q09 and 71% over 1Q09

• Domestic market share averaged 51% of 2009 gross revenue

34

773

598 72

6

784 88

4

4,28

5

2,99

4

476

329

361

420

425 2,

250

1,53

4

297

269

365

365

460 2,

035

1,46

0

4Q08 1Q09 2Q09 3Q09 4Q09 2008 2009

Paranapanema S/AConsolidated Gross Revenue by Market(R$ million)

Gross Revenue Domestic market Foreign market

62%55% 50% 53% 48% 53% 48%

38%45% 50% 47% 52% 47% 52%

4Q08 1Q09 2Q09 3Q09 4Q09 2008 2009

Paranapanema S/AGross Revenue by Market (%)

Foreign market Domestic market

• Ebitda of R$100 million and margin of 4% of net revenue in the 12M09

• Ebitda of R$200 million and margin of 26.5% of net revenue in 4Q09, because of the positive effects of joining the tax debt installment program

• Ebitda of the copper division of R$223 million and margin of 9% in the 12M0935

404

(41)

(43) (1

5)

200

611

100

78%

-8% -7% -2%

27%18%

4%

-90%

-70%

-50%

-30%

-10%

10%

30%

50%

70%

90%

-100.00

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

4Q08 1Q09 2Q09 3Q09 4Q09 2008 2009

Paranapanema S/AEBITDA (R$ million)

EBITDA - R$ million EBITDA Margin (% Net Revenues)

• Net income of R$ 194 million and net margin of 7.7% in the 12M09, 46% over the 12M08

• Net income of R$ 304 million and net margin of 40.4% in 4Q09, from reversal of original provisions and deferred IT and SC which returned from the effect of having paid the debits largely in cash.

36

236

(62) (3

)

(44)

304

133 19

4

45%

-13%-1% -7%

40%

4% 8%

-2.00

-1.50

-1.00

-0.50

0.00

0.50

-100.00

-50.00

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

4Q08 1Q09 2Q09 3Q09 4Q09 2008 2009

Paranapanema S/A - Net Income (R$ million)

Net income (loss) Net margin (% Net Revenues)

37

Risk Management PolicyRisk Management Policy

38

39

40

41

42

43

Outlook

Organic growth at ParanapanemaIn the 12M09, consolidated investments in PARANAPANEMA were R$56.5 million, distributed in:

•Paranapanema Branch in BA ( formerly Caraíba Metais) R$37.9 millionin 12M09 , channeled to (i) capacity expansion; (ii) boiler refurbishment; (iii) technical stoppage in March 2009 to refurbishfurnace tiles; and (iv) reactivation of the plant for producing oxy-free bars concluded, whose major client is Eluma.

• Eluma R$17.2 million in 12M09, channeled to the following programs: (i) conclusion of expansion projects; (ii) improvements in distribution and logistics, quality, informatics and others; (iii) environment, by segregating effluents from the Utinga lake; and (iv) maintenance.

• Investments (CAPEX) for the 2010-2012 period:With the approval of the project for expanding the installed capacity of Paranapanema’s BA Branch ( formerly Caraíba) from 220 to 276 mil t /year, the investments for the period 2010-2012 will be around R$329 million.

Eluma estimates R$175 million between maintenance and future expansion of capacity, the MBD of 08/Feb/10 having approved organic growth, with expansion of installed capacity, from72 000 t / year to approximately 90 000 t / year by 2012, with higher added-value products.

Cibrafértil: investments in the 12M09 were R$1.4 million, intended for improvements and maintenance, with investments of the order of R$2 million a year for the 2010-2012 period.

44

Paranapanema S/ACAPEX

R$ million 2008 2009Change

2009/2008

Paranapanema(Dias D'Ávila Unit) 54,653 37,927 -30.6%Eluma 12,314 17,172 39.5%Cibrafértil 3,778 1,376 -63.6%Taboca* 27,060 - 0.0%

Total 97,805 56,475 -42.3%* Company sold on Nov. 13, 2008.

• For 2010, following conclusion of the financial, corporate and tax restructurings of the last two years, management will now face new and interesting challenges, but in a much more comfortable situation given the current capital structure and the improved adaptation of the balance sheet to international accounting standards, enabling us to establish more ambitious goals, such as:

(i) focus on organic growth by expanding the installed capacity in Bahia (up to 276 000 t/year in primary copper and 30 000 t /year in laminates) and in São Paulo (up to 90 000 t / year in semi-manufactured goods) which will imply investments of R$510 million between 2010 and 2012;

(ii) analysis of the opportunities for strategic partnerships and alliances, in order to maximize the Company’s profitability;

(iii) strategic measures to conquer local and international markets;

(iv) Adding greater value to products, improving margins and competitiveness through economies of scale and permanent reductions in costs;

(v) Reducing the volatility of commodities and the exchange rate on the Company’s result by adopting a corporate hedge policy (to be felt throughout 2010 as a whole, since it began in August/09;

(vi) listing the Company on Novo Mercado, migrating directly from Level 1 to the highest level of Corporate Governance; and

(vii) adapting the organizational structure to the new operating structure of the copper chain within a single company, Paranapanema, while creating a corporate culture intended to maximize shareholder returns.

45