magnesita institutional june2013

Magnesita Refratários S.A.Magnesita Refratários S.A.

JuneJune, 2013, 2013

Disclaimer

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 toand 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.any information or statement contained therein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.

2

Summary

Industry overview

Company overview

Financial HighlightsFinancial Highlights

3

Refractory industry overview

Industry overview

What are refractories: Fireproof materials

consumed within various production processes,

providing heat, chemical and mechanical

resistance in industrial furnaces

Raw material: Minerals with high melting point,

Monolithic

1 ton of steel = ~10 kg of refractories

1 ton of cement

Types of refractories Consumption (average)

Refractories are crucial consumables for manufacturing processes with high temperatures

Refractories are continuously consumed during steel production…

Electric Arc Fumace Steel Refining

Facility

Iron Ore

STEEL LADLES

Volume: 70 tonnes

Life Expectancy: 1 month

…and cement production

Preheater Tower

CLINKER COOLER

Volume: 500 tonnes

Life Expectancy: 1 - 3 years

including magnesite, dolomite and alumina. Raw

material quality and assured supply are essential

Represents ~3% of COGS in steel manufacturing

and less than 1% in cement

Bricks

Pre castables, valves and slide gates

1 ton of cement = ~0.6 Kg of refractories

FumaceFacility

Continuos Casting

Basic Oxygen

Furnace

Recycled Steel

Direct Reduction

Coal Injection

Coal

Coke Oven

Limestone

Blast Furnace

NaturalGas

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

Source: Company


PREHEATER TOWER

Volume: 1,000 tonnes


ROTARY KILN

Volume: 250 tonnes

Life Expectancy: 10 months

4

Refractory: USD25 billion global industry

Source: Freedonia.estimates 2011 Source: Company estimates .

Main consumers worldwide Fragmented industry – Global market share (in USD)

RHI ~ 9%

SteelNon-ferrous

(aluminum, copper, nickel, silver, zinc)

Nonmetallic(cement, glass, lime)

Global players

Segment players

Vesuvius-~10%

Magnesita ~ 5%

~10%

Chineseplayers

~37%~15%

~15%

Refratechnik

Magnesita is a global player with a unique business model in the industry

Steel (aluminum, copper, nickel, silver, zinc)

Other

Regional players~10%

ShinagawaKrosakiANHQinghuaMagnezit

~13%

~60%~10%

RefratechnikSaint GobainCalderysMinteq

Small local players

ManufacturingOnly

MiningRefractorymanufacturing

ServicesFull (performance-based)

Different business model across the value chain… …lead to different margins levelsSource: Bloomberg

~16%

Fully Integrated

Only

CPP-Integrated

Higher margins; difficulty to replicate +-

IntegratedManufacturing

IntegratedServices 25,7%

Vesuvius

30,4%

21,6%

RHI Shinagawa

17,7%

Magnesita

17,4%

Krosaki

5

Gross Margin (2012)

Summary

Industry overview

Company overview


6

Company 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

Magnesita is a global leader in refractories solutions and industrial minerals

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

Highest vertical integration level in the industry (~80%), fully self-sufficient in high-grade magnesite

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

Significant number of mineral rights in Brazil

Solid financial fundamentals

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

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

7

Business highlights

Enginering, assembly and

Refractory Solutions ServicesIndustrial Minerals

Magnesita leverages its competitive advantages throughout the whole value chain

Refractories with tailor made

UPSTREAM DOWNSTREAM

Details/description

Current: Talc, caustic magnesia and magnesia sinter

Development: Graphite and talc expansion

Enginering, assembly and

installation of refractories

Value-added services, including

spot contracts

Applications

Talc: Plastic, cosmetics, pharmaceuticals, food, ceramics, pulp and paper, etcCaustic magnesia: Fertilizers, abrasives, animal nutrition, etcSinter: refractories

formulations and shapes as

well as strong technical service

Two commercial models (CPP

and conventional)

Steel

Industrial (cement, non-

ferrous, non-metallic)

Steel

Industrial (cement, non-

ferrous, non-metallic)

Mining

Net revenues(2012)

R$ 148 million

(6% of the total revenues)

R$ 130 million


Gross margin(2012)

11%43%

R$ 2.186 million


31%

8

Experienced management team

Octavio Pereira Lopes - CEO� Successful as CEO of Equatorial and as a

Managing Director at GP Investments

Previous

experience

Joined Magnesita in 2007 as board

member and became CEO in 2012

Industry experience

Over 70 years of combined experience in the industry

Otto Levy Reis - VP Commercial

Vinícius Silva - VP Minerals

José Roberto Beraldo - CFO

Felipe Sommer- VP People and MGMT

Luis Rodolfo Bittencourt - VP R&D

Functional Team

Operational Team

� Solid financial background

� Senior roles and extensive

experience in global companies

� Over 70 years of combined

Industry Experience: +11 years

Joined Magnesita in 2008


27 years in Magnesita





Peter Estermann - COO Global

Martin Bartmann - Global Supply Chain

Eduardo Moretti - COO China

� Over 70 years of combined

experience in the industry

� Close relationships with

key players and clients in the

industry








9

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

Valenciennes and Flaumontunits production (FRA)

Hagen-Halden, Oberhausen and Kruftunits production (DEU)

Chizhou unit production (CHN)

Taiyuan JV’s unit production (CHN)

Qingyang dolomite mine (CHN)

Sinterco Dolomite JV (BEL)

Unique global footprint

York unit production (USA)

Contagem

San Nicolás unit production (ARG)

York Dolomite Mine (USA)

Magnesite mine (Brumado - BRA)

Chromite mine (BRA)

Talc mine (BRA)

Taiwan JV’s unit production (CHN)

DMR unit production (CHN)

Sales OfficeRefractory productionMines

Sales per region 2012

Contagem units production (BRA)

Coronel Fabricianounit production (BRA)

Europe

Asia

NAM

22%

8%

18%49% SAM

Others

2%

10

Vision:Be the best provider of refractoriessolutions and industrial minerals,

leveraging and developing our minerals base

Expand industrial Ensure leadership Maintain a global low Grow selectively and

New strategic visionO

ne

glo

ba

l o

rga

niz

ati

on

Expand industrial minerals base

Ensure leadership in our core markets

Maintain a global low cost production base

Grow selectively andaggressively

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

▪Meritocracy▪Ethics

▪Profit▪Management and Method

▪Agility and Transparency▪Respect for Safety, Environment and Communities

▪Customer▪People

Our values

11

I – Ensure leadership in our core markets

Dolomitics in North America

Dolomitics in Western Europe

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

~50% in stainless steel

Magnesita’s share* in core marketsMagnesita’s share* in core markets

Vertically integrated low-cost producer

Continuous investments in R&D and technology

Specialized technical assistance

Vertically integrated low-cost producer

Continuous investments in R&D and technology

Specialized technical assistance

Magnesita’s competitive advantages in its core marketsMagnesita’s competitive advantages in its core markets


South America

Long standing relationship with blue-chip customers


~20% in mini-millsLogistic advantages due to privileged locations

Captive CPP contracts with long-term alignment of

interests

Brand recognition and historical leadership

Logistic advantages due to privileged locations

Captive CPP contracts with long-term alignment of

interests

Brand recognition and historical leadership


~15% in mini-mills

~65% in steel

~60% in cement

*Company estimates

12

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 an integrated supply chain

Best-in-class technical and R&D capabilities

Increasing reach of our sales force

Opportunities for diversification into non steel industries

Magnesita refractorysales (2012)

Refractories consumption - Global Market

Industrial

40%

Steel60%

Industrial16%

84%

II – Grow selectively and aggressively

Increasing reach of our sales force

Historically low exposure in several important markets

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

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

13812211880

16%

228204202

162

9.6%

363305293

226

Steel

Steel

84%

1%

North America Europe

140130123115

345328317327

Asia ex-China

3.0932.9472.7812.618

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

25% <5% <1%

North America Europe Asia

Source: ¹CRU and ²Company estimates

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

2009 2017(f)

2013(f)

2012(e)

2009

13111511298

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

2009

0.3%

60514738

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

2009

56434034

2017(f)

2013(f)

2012(e)

2009

2013(f)2012(e)

2009 2017(f)

65% 2.1%

CIS

2014(f)

2013(f)

2012(e)

2011 2014(f)

2013(f)

2012(e)

2011

Central & SouthAmerica

MEA

2014(f)

2013(f)

2012(e)

2011

133124116108

2014(f)

2013(f)

2012(e)

2011

338315295270

2014(f)

2013(f)

2012(e)

2011

<2% <1%

Central & SouthAmerica

Others

Source: ¹CW Group and ²Company estimates

13

Unlocking our internal expertise and 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

Magnesita’s strategic positioning

III – Expand industrial minerals base

→ 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)

The Brazilian opportunity

→ 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

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

→ US$2bi – US$10bi global markets

14

Our goal is to have at least one project moving to the next phase every 12 – 18 months

1.Preliminary5 to 10 analysis

2.DevelopmentGraphite

3.Installation 4.OperationalDBM, Talc, CCM

III – Expand industrial minerals base

Projects in development phase

Graphite project Talc expansion

5 to 10 analysis per year

Graphite Talc expansion

DBM, Talc, CCM

• 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

Graphite project

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

Project should double capacityover next 2 years

15

Sinterco Dolomite JV (Belgium)

31 million tonnes of reserves

Expected life: 30 years

York Dolomite Mine (PA-USA)



IV - Maintain a global low cost production baseOpportunities for further industrial and supply chain optimization

North American facility (PA-USA)

European facilities (3 in Germany and 2 in France) DMR facility (Dalian-China)

Brumado (Bahia-Brazil)

830 million estimated tonnes

of reserves (549 million measured)

Only mine to allow the economical production of 98.3%-grade DBM

Qingyang Dolomite Mine (China)



South American facilities

Asian facility (Chizhou-China)

production of 98.3%-grade DBM

Expected life: ~200 years

The mine is connected to the port

of Aratu by the FCA railway

South American facilities (MG-Brazil and Argentina)

Raw material flow

Finished product flow

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

16

DMR (manufacturing unit in China)

Low cost production base: The plant is located in the city of Dalian, northeast China,region which owns around 20% of world’s reserves of magnesite, making ita highly strategic location for refractory production

New markets: This new plant will allow us to better serve geographies

Recent aquisitionsMaintain a global low

cost production

base

Grow

selectively

and

aggressively

New markets: This new plant will allow us to better serve geographiesand segments where Magnesita has a marginal presence todayand where we want to expand sales in a selective way

Location: Dalian is an important export hub in China withexcellent logistics

Capacity: 50.000 tons/year

Closing: Expected to occur in ~60 days, after approvalof the Economic and Trade Bureau of Dalian Development Area,in the People s Republic of China.

17

in the People s Republic of China.

DMR external viewChina

CHINA

Reframec (51% of equity)

Ensure leadership in our core markets: The Reframec acquisition reinforces Magnesita's leadership in its core industrial markets in South America, as it expands its services beyond the steel industry

Reframec: Leader in engineering, installation and repair services

Recent aquisitionsEnsure

leadership in our core

markets

Reframec: Leader in engineering, installation and repair servicesfor refractories used in cement production in Brazil

Closing: ~60 days. Post-close, Reframec will continue to operate independently

18

Refractory assembly in rotary kiln

Summary

Industry overview

Company overview


19

Revenues EBITDA and EBITDA margin (excl. non-recurring)

+6,2%+8,5%

Steady organic growth

Proven resilience in adverse market conditions

CAPEX funded comfortably with operational cash flow

14,5%18,7%17,7%

15,1%

Financial highlights (BRL mln)

2.464

2011

2.319

2010

2.276

2009

1.927

+6,2%

2012

373337

425340

2011

14,5%

20102009

+10,7%

2012

15,1%

44,6%48,7%

Magnesita¹CSNGerdauUsiminas

Operational Cash Flow and Capex

552

OCF CAPEX Brumado expansion

Gross margin Magnesita vs clients

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%

26,0%

34,2%

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

20

1Q13 Results

Steel production in Magnesita’s core markets (mln tonnes)

-8%

-5%

11,011,611,9

South America-9%

3%

21,220,723,2

United States

4%

-6%

41,439,743,9

EU-27

Despite the challenging scenario, results have improved in 1Q13

1Q134Q121Q12 4Q134Q121Q12 1Q134Q121Q12

+2%

+1%

18,8%

Revenues (BRL mln)

16,2%

Ebitda margin Ebitda LTMEBITDAEBITDA margin

EBITDA (BRL mln) EBITDA LTM (BRL mln)

21

+1%

1Q13

617,9

4Q12

611,1

1Q12

606,9116

8388

1Q134Q12

13,5%

1Q12

14,4%

401373358352337

4Q12

14,6%

1Q12

14,3%

1Q134Q12

16,2%15,1%

1Q13

14,6%

*E

BIT

DA

exc

lud

ing

no

nre

curr

ing

Debt and Leverage

Total Excluding Perpetual Bond

1.0591.058

2,6x2,8x2,9x2,9x2,7x

Net debt / EbitdaEBITDA* LTMNet Debt

2,7x

Net debt / EbitdaEBITDA* LTMNet Debt

Solid balance with no refinancing risk

Amortization Schedule (R$ million) Net Debt per currency

1.0591.0581.0311.002907

401373357350334

1Q134Q123Q122Q121Q12

*EBITDA excluding non recurring *EBITDA excluding non recurring

Perpetual Bond -14%BRL

566536513486

907

401373357350334

1,4x1,4x1,4x1,4x

1Q12 1Q132Q12 4Q123Q12

22

678

7880621530

964

508

1.472

2018+20172014 2015 20162013Mar-13

Perpetual Bond

Cash

Amortization 2%

80%

-14%BRL

USD104%

13%

19%

Others

EUR

-3%

-2%

Dec-12

Mar-13

Key messages

Global vertical integrated player with unique geographic position

Opportunities for growth and diversification into selected markets and industries

Focused on delivering superior returns to shareholders

markets and industries

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

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

Strong management team and corporate governance practices

Solid financial fundamentals

23

Annex

24

Strong support from shareholders

Only common shares

2 independent board members

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

Ownership structure Corporate Governance

GP 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)

58,8%

34,0%

7,2%

Free Float

Rhône

GP

Controlling Group

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

25

Investor Relations contacts:

Octavio Pereira Lopes CEO and IRO

Eduardo Gotilla Global Finance & IR Director

Daniel Domiciano SilvaInvestor Relations

Phone: 55 11 3152-3203/3241

26

Phone: 55 11 3152-3203/[email protected]

www.magnesita.com