Magnesita institutional april2013_eng

1 1

Magnesita Refratários S.A Institutional Presentation

April 2013

2

The material that follows is a confidential presentation of general background information about Magnesita Refratários S.A. and its consolidated subsidiaries

(“Magnesita" or the "Company") as of the date of the presentation. It is information in summary form and does not purport to be complete and is not intended to

be relied upon as advice to potential investors.

No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the

information presented or contained in this presentation. Neither the Company nor any of its affiliates, advisers or representatives, accepts any responsibility

whatsoever for any loss or damage arising from any information presented or contained in this presentation. The information presented or contained in this

presentation is current as of the date hereof and is subject to change without notice and its accuracy is not guaranteed. Neither the Company nor any of its

affiliates, advisers or representatives make any undertaking to update any such information subsequent to the date hereof. This presentation should not be

construed as legal, tax, investment or other advice.

[Data in this presentation was obtained from various external data sources, and the Company has not verified such data with independent sources. Accordingly,

the Company makes no representations as to the accuracy or completeness of such data, and such data involves risks and uncertainties and is subject to change

based on various factors].

This presentation contains forward-looking statements. Such statements are not statements of historical facts, and reflect the beliefs and expectations of

Magnesita’s management. The words "anticipates", "wishes", "expects", "estimates", "intends", "forecasts", "plans", "predicts", "projects", "targets" and similar

words are intended to identify these statements. Although the Company believes that expectations and assumptions reflected in the forward-looking statements

are reasonable based on information currently available to the Company's management, the Company cannot guarantee future results or events. You are

cautioned not to rely on forward-looking statements as actual results could differ materially from those expressed or implied in the forward-looking statements.

This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities, and neither any part of this

presentation nor any information or statement contained therein shall form the basis of or be relied upon in connection with any contract or commitment

whatsoever.

Disclaimer

3 3

Index

Industry and Company overview

Company Strategy

Financial Highlights

4

What is a refractory?

Refractories are crucial for manufacturing processes with high temperatures

Fireproof materials consumed within various production

processes, retaining physical and chemical characteristics

when exposed to extreme conditions

Provides heat, chemical and mechanical resistance in

industrial furnaces and other equipments in iron and

steel production and kilns in cement and lime production

Raw material quality and assured supply are essential

~US$ 25 billion industry globally

Represents ~3% of COGS in steel manufacturing *Source: Industrial Minerals Magazine, December 2010.

Others 5%

Steel 70%

Cement 7%

Glass 4%

Chemical 4%

Non-ferrous 5%

Ceramic 5%

Bricks

Valves and slide gates

Monolithic

Magnesite Application: steel, cement and other industrial sectors Dolomite Application: mini mills and stainless steel Alumina Application: steel, cement and other industrial sectors

1 ton of steel = ~10 kg of refractories

1 ton of cement = ~0.6 Kg of refractories

Vesuvius

10.5% RHI

9.2%

Magnesita 5.9%

Shinagawa;

5.0% Krosaki +

Tata 4.8% Saint-

Gobain 3.4%

Others

61.2%

*Company estimates.

Main raw material families

Main consumers worldwide* Fragmented industry* Product overview

Types of refractories Consumption (average)

5

Electric Arc Fumace

Steel Refining Facility

Continuos Casting

Basic Oxygen Furnace Recycled Steel

Direct Reduction

Coal Injection

Iron Ore

Coal

Coke Oven

Limestone Blast Furnace

Natural Gas

ELECTRIC ARC FURNACE

Volume: 120 tonnes

Life Expectancy: 1 month

BLAST FURNACE

Refractory Volume: 900

tonnes

Life Expectancy: 15 years

TORPEDO CAR

Volume: 200 tonnes

Life Expectancy: 2 years

CONVERTER

Volume: 800 tonnes

Life Expectancy: 6 months

CONTINUOUS CASTING

Volume: 25 tonnes

Life Expectancy: 10 hours

STEEL LADLES

Volume: 70 tonnes

Life Expectancy: 1 month

Source: Company

Steel industry: represents approximately 85% of Magnesita’s refractories revenues

Refractories are continuously consumed during steel production…

What is a refractory?

6

… which Also Happens During Cement Production

Rotary Kiln

Preheater Tower

PREHEATER TOWER

Volume: 1,000 tonnes

Life Expectancy: 5 - 10 years

ROTARY KILN

Volume: 250 tonnes

Life Expectancy: 10 months

CLINKER COOLER

Volume: 500 tonnes

Life Expectancy: 1 - 3 years

Cement industry: represents approximately 10% of Magnesita’s refractories sales

Clinker Cooler

Source: Company

What is a refractory?

7

Magnesita Overview

70 years expertise in refractories and industrial minerals

3rd largest player in the refractory sector worldwide, present in the main steel markets

1st in the steel and cement industries in Brazil and South America

1st in the stainless steel industries in North America and Europe

Highest vertical integration level in the industry (close to 80%)

Best, largest and lowest-cost magnesite mine in the world outside China.

Significant number of unexplored mineral rights in Brazil

Solid financial fundamentals

Magnesita is a global leader in refractories solutions and industrial minerals

Magnesita in numbers

Revenues of R$ 2.46 billion in 2012

Production in 4 continents, supplying globally to more than 850 clients worldwide

6,500 employees

28 industrial facilities with a nominal capacity of 1.6 million tons/year of refractories

8 8

Business segments highlights

Net revenues (2012)

R$ 148 million

(6% of the total revenues)

R$ 130 million

(5% of the total revenues)

Gross margin (2012)

11% 43%

Details/ description

Current: Talc, caustic magnesia and magnesia sinter

Development: Graphite and talc expansion

Assembly and installation of

refractories

Other adjacent services inside

steel mills, including spot

contracts

Refractory Solutions Services

Applications

Talc: Plastic, cosmetics, pharmaceuticals, food, ceramics, pulp and paper, etc Caustic magnesia: Fertilizers, abrasives, animal nutrition, etc Sinter: refractories

Industrial Minerals

Magnesita leverages its competitive advantages throughout the whole value chain

Refractories with tailor made

formulations and shapes as

well as strong technical service

Two commercial models (CPP

and conventional)

R$ 2.186 million

(89% of the total revenues)

31%

Steel

Industrial (cement, non-

ferrous, non-metallic)

Steel

Industrial (cement, non-

ferrous, non-metallic)

Mining

UPSTREAM DOWNSTREAM

9

Global scale, local presence

Products and services breadth and depth

Access to high-quality materials

Global scale, local presence

Products and services breadth and depth

Relationship with clients

Technology

Key drivers

Fully Integrated

Manufacturing Only

CPP-Integrated

Higher margins; difficulty to replicate + -

Access to high-quality materials Integrated Manufacturing

Technology, local presence Integrated Services

Mining Refractory manufacturing

Services Full TCO (performance -based)

*Source: Bloomberg

17,4%

Shinagawa Krosaki

17,7%

RHI

21,6%

Vesuvius

25,7%

Magnesita

30,4%

Gross margin in 2012* (%)

Business segments highlights

Magnesita’s unparalleled business model delivers higher margins than other players

10 10

Sales Office Refractory production Mines

Unique global footprint

28 industrial facilities in 4 continents, with a nominal

capacity of 1.6 million tons of refractories/year

Global scale, with local presence in key markets, with an integrated supply chain

Sales per region 2012

York unit production (USA)

Contagem

units production (BRA)

Coronel Fabriciano

unit production (BRA)

San Nicolás unit

production (ARG)

Valenciennes and Flaumont

units production (FRA)

Hagen-Halden, Oberhausen and Kruft

units production (DEU)

Chizhou unit production (CHN)

Taiyuan JV’s unit production (CHN)

York Dolomite Mine (USA)

Qingyang dolomite mine (CHN)

Sinterco Dolomite JV (BEL)

Magnesite mine (Brumado - BRA)

Chromite mine (BRA)

Talc mine (BRA)

Europe

Asia

NAM

22%

8%

18% 49% SAM

Others

2%

Taiwan JV’s unit production (CHN)

11

Ownership structure and corporate governance practices

Only common shares

2 independent board members

Free float 58.8% (minimum required is 25%)

Tag-along rights to all shareholders

Quarterly results in English in accordance with

International Financing Report Standards (IFRS)

Shares included in the IGC (Index of Differentiated

Corporate Governance) and ITAG (Index of Tag Along)

Listed in the Novo Mercado segment, which correspond to the best practices of corporate governance

Ownership structure Corporate Governance

Latin America and worldwide leadership in Private Equity

Active management

Culture of promotion by merit

Proven track record in the Brazilian and global capital markets,

with various success cases

58,8%

34,0%

7,2%

Free Float

Rhône

GP

Controlling Group

12 12

Index

Industry and Company overview

Company Strategy

Financial Highlights

13 13

Our strategy

A new strategic vision sustained by four pillars

Vision: Be the best provider of refractories solutions and industrial minerals,

leveraging and developing our minerals base

Continue to develop high quality, low cost raw material sources to support our current businesses as well as new businesses where we can have a sustainable competitive advantage

Strive to keep offering high quality and innovative products, unrivaled services and cost performance

Optimize production globally to improve efficiency and support growth

Develop global supply chain management

Pursue long term growth opportunities in selected markets where we can deliver superior value to our customers and shareholders

III-Expand industrial minerals base

I-Ensure leadership in our core markets

IV-Maintain a global low cost production base

II-Grow selectively and aggressively

▪ Meritocracy

▪ Ethics

▪ Profit

▪ Management and Method

▪ Customer

▪ People

▪ Agility and Transparency

▪ Respect for Safety, Environment and Communities

Our values

On

e g

lob

al o

rga

niz

ati

on

14 14

I - Ensure leadership in our core markets

Vertical integrated low-cost producer

Continuous investments in R&D and technology

Specialized technical assistance

Logistic advantages due to privileged locations

Captive CPP contracts with long-term alignment of interests

Brand recognition and historical leadership

South America

Dolomitics in North America

Dolomitics in Western Europe

Long standing relationship with blue-chip customers

Our differentiated competitive position and leadership in core markets support our growth as they recover

~50% in stainless steel ~20% in mini-mills

Magnesita’s share* in core markets Magnesita’s competitive advantages in its core markets

~60% in stainless steel ~15% in mini-mills

~65% in steel ~60% in cement

*Company estimates

15 15

II - Grow selectively and aggressively

Pursue long term growth opportunities in select markets where we can deliver superior value

Access to high quality and low cost raw materials

Exposure to emerging markets

Global scale with a integrated supply chain

Best-in-class technical and R&D capabilities

Increasing reach of our sales force

Historically low exposure in several important markets

Source: ¹CRU and ²Company estimates

Crude Steel Production¹ (mln ton) and Magnesita’s share² (%)

Opportunities for diversification into non steel industries

Magnesita refractory sales (2012)

Refractories consumption - Global Market

Opportunities for geographic diversification in steel Opportunities for geographic diversification in cement

13812211880

2017(f) 2013(f) 2012(e) 2009

16%

228204202

162

2012(e) 2009 2017(f) 2013(f)

131115112

98

2009 2017(f) 2012(e) 2013(f)

9.6%

0.3%

60514738

2017(f) 2013(f) 2012(e) 2009

56434034

2013(f) 2017(f) 2012(e) 2009

363305293

226

2012(e) 2009 2017(f) 2013(f)

70% Steel

30%

Industrial Industrial 16%

84%

Steel

65% 2.1%

1%

North America Europe

CIS

140130123115

2012(e) 2011 2014(f) 2013(f)

345328317327

2014(f) 2012(e) 2013(f) 2011

Central & South America

MEA

Asia ex-China

2014(f)

3.093

2013(f)

2.947

2012(e)

2.781

2011

2.618

Cement Production¹ (mln ton) and Magnesita’s share² (%)

133124116108

2012(e) 2011 2014(f) 2013(f)

338315295270

2014(f) 2012(e) 2013(f) 2011

25% <5% <1%

60% <1%

North America Europe Asia

Central & South America

Others

Source: ¹CW Group and ²Company estimates

16

III - Expand industrial minerals base

The industrial minerals opportunity in Brazil

→ Initial portfolio of attractive mineral rights

→ 70 years of mining experience in Brazil (DBM, CCM, talc, etc)

→ Expertise in geology, research and environmental requirements

→ Knowledge of local stakeholders management

→ Dedicated team to prospect, analyze and develop business

→ Brazil is fertile; very favorable geography

→ It has been historically unexplored

→ Viewed as a reliable source (vs China) Brazil’s opportunity

Magnesita is very well positioned to occupy the “white space” in Brazil

Magnesita’s strategic positioning

→ Attractive due to global unbalance of supply and demand

→ Minerals out of big players’ radar

→ Logistic is not predominant

→ Commercial development is necessary

→ US$2bi – US$10bi global markets

Focused 0pportunity set

17 17

1.Preliminary 5 to 10 analysis

per year

2.Development Graphite

Talc expansion

3.Installation 4.Operational DBM, Talc, CCM

III - Industrial minerals strategy

Our goal is to have at least one project per year moving to the next phase

• Preliminary geological work • Market analyses • Low capex; high risk

• Complete geological work and reserve certification •Environmental license • Industrial project •Commercial development • Medium capex; medium risk

• Investment in the industrial plant •High capex; low risk

•Cash flow generation • Maintenance capex

Projects in development phase

Graphite

Become self sufficient supplying our refractory business

Surplus to supply third parties, focusing on high end users

Positive outlook and growing demand from new applications

Restrictions from Chinese exports (~80% of global production)

Environmental license granted in March 2013

Talc expansion

Leader in Brazil, producing ~40kton/y

~50% gross margin

Low environmental license and geological risk

Commercial development underway

18 18

Sinterco Dolomite JV (Belgium)

31 million tonnes of reserves

Expected life: 30 years

Brumado (Bahia-Brazil)

830 million estimated tonnes

of reserves (549 million measured)

Only mine to allow the economical

production of 98.3%-grade DBM

Expected life: ~200 years

The mine is connected to the port

of Aratu by the FCA railway

York Dolomite Mine (PA-USA)

25 million tonnes of reserves

Expected life: 45 years

Qingyang Dolomite Mine (China)

18 million tonnes of reserves

Expected life: 50 years

IV - Maintain a global low cost production base

Opportunities for further industrial and supply chain optimization

North American facility

(PA-USA)

European facilities (3 in

Germany and 2 in France)

South American facilities

(MG-Brazil and Argentina)

Asian facility (Chizhou-China)

Raw material flow

Finished product flow

Brumado has the highest quality of raw material in the world with more than 200 years of reserves

19 19

Index

Industry and Company overview

Company Strategy

Financial Highlights

20 20

Revenues

Financial highlights (BRL mln)

EBITDA and EBITDA margin (excl. non-recurring)

Gross margin vs clients

2.464

2011

2.319

2010

2.276

2009

1.927

+6,2% +8,5%

2012

Steady organic growth

Proven resilience in adverse market conditions

CAPEX funded comfortably with operational cash flow

373337425

340

2011

14,5%

2010

18,7%

2009

17,7%

+10,7%

2012

15,1%

2008 2009 2010 2011 2012

30,4%

22,6%

12,5%

-3,0%

30,0%

32,5%

14,4%

0,7%

34,2%

44,6%

17,6%

14,2%

32,5%

35,5%

16,7%

11,5%

37,5%

48,7%

26,0%

34,2%

Magnesita¹ CSN Gerdau Usiminas

Operational Cash Flow and Capex

Source: Companies report (only parent company for Usiminas and CSN)

¹Magnesita in 2011 was adjusted due to accounting reallocation

257

165

92

2012

342

171

120

51

2011

552

78

2010

365

37

2009

131

OCF CAPEX Brumado expansion

21 21

1.0581.0311.002907957

373357350334336

4Q2012

2,8x

3Q2012

2,9x

2Q2012

2,9x

1Q2012

2,7x

4Q2011

2,9x

Indebtedness and Leverage (BRL mln)

Net debt / Ebitda Ebitda LTM* Net Debt

957

373357350334336

1,4x1,4x

2,7x2,9x

4Q2012

536

3Q2012

513

2Q2012

486

1,4x

1Q2012

907

4Q2011

Net debt / Ebitda Ebitda LTM* Net Debt

19,0%

Others

0,9% EUR

16,4%

USD

63,7%

BRL

852

820

787910116

234

510

2016 2015 2014 2018+

1.362

2017 2013 Dec/12

Cash position

Perpetual bond

Solid balance sheet with no refinancing risk

*EBITDA excl. non-recurring *EBITDA excl. non-recurring

Net debt & leverage Net debt excluding Perpetual Bond & leverage

Amortization schedule Debt per currency

22

Strong management team and corporate governance practices

Global vertical integrated player with unique geographic position

Opportunities for growth and diversification into selected markets and industries

Unique solution-based model (CPP) and performance-based applied R&D

Key Messages

Focused on delivering superior returns to shareholders

Significant value of mineral reserves with opportunities to expand industrial minerals base

Solid financial fundamentals

23

Investor Relations contacts:

Octavio Pereira Lopes CEO and IRO

Eduardo Gotilla

Global Finance & IR Director

Daniel Domiciano Silva Investor Relations Manager

Phone: +55 11 3152-3202/3241

[email protected] www.magnesita.com