magnesita institutional outubro 13 eng

Magnesita Refratários S.A.

October, 2013

MFRSY

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 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.

2

Summary

Industry overview

Company overview

Financial Highlights

3

Refractory industry overview

Refractories are continuously consumed during steel production…

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

…and cement production

Preheater Tower

CLINKER COOLER

Volume: 500 tonnes

Life Expectancy: 1 - 3 years

PREHEATER TOWER

Volume: 1,000 tonnes

Life Expectancy: 5 - 10 years

ROTARY KILN

Volume: 250 tonnes

Life Expectancy: 10 months

Industry overview

Refractories are fireproof materials consumed within

various production processes, providing heat, chemical

and mechanical resistance in industrial furnaces

Their raw material are minerals with high melting point,

including magnesite, dolomite and alumina.

Crucial, but represents ~3% of COGS in steel

manufacturing and less than 1% in cement

Refractories are consumables: ~10Kg per ton of steel;

~0.6Kg per ton of cement

Bricks

Pre castables, valves and slide gates

Monolithic

Types of refractories Main consumers worldwide

Refractories are crucial consumables for manufacturing processes with high temperatures

4

Source: Freedonia.estimates 2011

Steel Non-ferrous

(aluminum, copper, nickel, silver, zinc)

Nonmetallic (cement, glass, lime)

Other

~60%

~15%

~15%

~10%

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

+ -

Access to high-quality materials Integrated Manufacturing

Technology, local presence Integrated Services

Mining Refractory manufacturing

Services Full TCO (performance -based)

*Source: Bloomberg (Krosaki and Shinagawa refer to 1Q13. Fiscal Year ends in march)

Business highlights

Magnesita’s unparalleled business model

Gross Margin in 1H13* (%)

27,2%

Vesuvius

33,6%

23,6%

RHI Shinagawa

16,5%

Magnesita

16,3%

Krosaki

5

Summary

Industry overview

Company overview


6

Company overview

More than 100 years of expertise in refractories and industrial minerals

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

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

#1 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 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 more than 1 million tons/year of refractories produced in 2012

7

Business highlights

Net revenues (2012)

R$ 148 million

(6% of the total revenues)

R$ 130 million


Gross margin (2012)

11% 43%

Details/ description

Current: Talc, caustic magnesia (CCM), magnesia sinter (DBM), chromite and byproducts

Development: Graphite and talc expansion

Engineering, assembly and

installation of refractories

Value-added services, including

spot contracts

Refractory Solutions Services

Applications

Talc: Plastic, cosmetics, pharmaceuticals, food, ceramics, pulp and paper, etc CCM: Fertilizers, abrasives, animal nutrition, etc DBM: 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


31%

Steel

Industrial (cement, non-

ferrous, non-metallic)

Steel

Industrial (cement, non-

ferrous, non-metallic)

Mining

UPSTREAM DOWNSTREAM

8

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

Unique global footprint

York production unit (USA)

Contagem production units (BRA)

Coronel Fabriciano production unit (BRA)

San Nicolás production unit (ARG)

Valenciennes and Flaumont production units (FRA)

Hagen-Halden, Oberhausen and Kruft production units (DEU)

Chizhou production unit (CHN)

York Dolomite Mine (USA)

Qingyang dolomite mine (CHN)

Sinterco Dolomite JV (BEL)

Magnesite mine (Brumado - BRA)

Chromite mine (BRA)

Talc mine (BRA)

Sales per region 1H13

Taiwan JV’s production unit (CHN)

DMR production unit (CHN)

Sales Office Mines Refractory production

9

. . 22%

13% 19%

8%

39%

Europe

Brazil

North America

South America

Other

Experienced management team

Octavio Pereira Lopes - CEO

Otto Levy Reis – COO

Vinícius Silva - VP Minerals

Martin Bartmann - Global Supply Chain

José Roberto Beraldo - CFO

Felipe Sommer- VP People and Mngmt

Luis Rodolfo Bittencourt - VP R&D

Functional Team

Operational Team

Successful as CEO of Equatorial. Previous

Managing Director at GP Investments

Solid financial background

Senior roles and extensive

experience in global companies

Over 100 years of

combined experience in the

industry

Close relationships with

key players and clients in the

industry

Industry Experience: +11 years Joined Magnesita in 2008

Industry Experience: +27 years 27 years in Magnesita



Previous experience

Joined Magnesita in 2007 as board member and became CEO in 2012

Joined Magnesita in 2012

Joined Magnesita in 2012

Industry experience

Over 100 years of combined experience in the industry

10

Rick Gladfelter – Head of Operations

Jim Pirano – Commercial Head of Industrial



On

e g

lob

al o

rgan

izat

ion

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

leveraging and developing our minerals base

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

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

New strategic vision

I – Ensure leadership in our core markets

12

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

Vertically 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 leadeship

Access to high quality and low cost raw materials, specially good for industrial customers

Global footprint, global scale with an integrated supply chain

Best-in-class technical and R&D capabilities with brand recognition

Increasing reach of our sales force with a new commercial structure

Historically low exposure in several important markets

Magnesita refractory sales (1H13)¹

Refractories consumption Global Market²

Opportunities for growth in a fragmented global industry Opportunities for diversification into non steel industries

Industrial

40%

Steel 60%

Industrial 17%

Steel

83%

II – Grow selectively and aggressively

13

Source: Company estimates .

Global market share (in USD)

RHI ~ 9%

Regional players

Segment players

Global players

Vesuvius-~10%

Magnesita ~ 5%

~10%

Shinagawa Krosaki ANH Qinghua Magnezit

~13%

Chinese players

~37% Refratechnik Saint Gobain Calderys Minteq

Small local players

~16%

Source: ¹Company figures and ²Freedonia.

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

III – Expand industrial minerals base

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)

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

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

Magnesita’s strategic

positioning

The Brazilian opportunity

Focused Opportunity

set

14

Unlocking our internal expertise and the industrial minerals opportunity in Brazil

Complete geological work and reserve certification

Environmental license

Industrial project

Commercial development

Medium capex; medium risk

1.Preliminary 5 to 10 analysis

per year

2.Development Graphite

Talc expansion

3.Installation

Preliminary geological work

Market analyses

Low capex; high risk

Investment in the industrial plant

High capex; low risk

Cash flow generation

Maintenance capex

III – Expand industrial minerals base

Graphite project Talc expansion

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

Leader in Brazil, producing ~40kton/y

~50% gross margin

Low environmental license and geological risk

Commercial development underway

Project should double capacity over next 2 years

4.Operational DBM, Talc, CCM

15

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

IV - Maintain a global low cost production base

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

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

DMR facility (Dalian-China)

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

16

Opportunities for further industrial and supply chain optimization

Summary

Industry overview

Company overview


17

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

Steady organic growth

Proven resilience in adverse market conditions

CAPEX funded comfortably with operational cash flow

25%

3%

12%

34%

30%

24%

12%

-3%

30%

33%

14%

1%

34%

45%

18%

14%

33%

36%

17%

11%

38%

49%

26%

34%

2008 2009 2010 2011 2012 1H13

Magnesita¹ CSN Gerdau Usiminas

CAPEX

Source: Companies report (only parent company for Usiminas and CSN) ¹Magnesita in 2011 was adjusted due to accounting reallocation

Financial highlights (BRL mln)

18

Gross margin Magnesita vs clients

+1,3%

+8,5%

1H13

1.261

1H12

1.244

2012

2.464

2011

2.319

2010

2.276

2009

1.927

+12,7%

+3,1%

1H13

217

17,2%

1H12

193

15,5%

2012

373

15,1%

2011

337

14,5%

2010

425

18,7%

2009

340

17,7%

2012

257

74 165

118

2011

171

120

1H12

92

44

60

51

1H13 2010

78

2009

37

CAPEX Brumado expansion

Debt and Leverage

Amortization Schedule (R$ million) Net Debt per currency

Total Excluding Perpetual Bond

2Q13

397

1.205

3,0x

4Q12

373

1.058

2,8x

2Q12

352

1.002

2,9x

4Q11

338

971

2,9x

Net debt / Ebitda EBITDA* LTM Net Debt

19

*EBITDA excluding non recurring *EBITDA excluding non recurring

2Q13

397

639

1,6x

4Q12

373 536

1,4x

2Q12

352 490

1,4x

4Q11

338

971

2,9x

Net debt / Ebitda EBITDA* LTM Net Debt

Solid balance with no refinancing risk

2020+

1.485

931

554

2017

77

2016

78

2015

112

2014

33

2013

38

Jun-13

633

2018

8

2019

8

Cash position

Amortization

Perpetual bond

Others -4% -3%

EUR 19%

13%

-14%

USD 73%

104%

BRL 12%

Jun-13

Dec-12

Key messages

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

Focused on delivering superior returns to shareholders

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

Solid financial fundamentals

20

21

Annex

Strong support from shareholders

Only common shares

2 independent board members

Free float 58.6% (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 (Ticker: MAGG3), 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

58,6%

34,2%

7,2%

Free Float

Rhône

GP

Controlling Group

22

ADR Level I (Ticker: MFRSY)

OTC: Over- the-counter market

Program established in 2010

1 ADR = 2 ordinary shares

MFRSY

Results 1H13

In spite of the poor performance of its core markets, Magnesita has improved its results in 2013

-5%

1H13

84

1H12

89 -6%

1H13

43

1H12

46 -5%

1H13

23

1H12

24

Performance of Magnesita’s core markets (mln tonnes)

1H13

424

33,6%

1H12

383

30,8%

1.244

+1,3%

1H13

1.261

1H12 1H13

217

17,2%

1H12

193

15,5%

Net revenues (R$ mln)

Steel production EU-27

Steel production USA

Steel production South America

Gross profit (R$ mln) EBITDA (R$ mln)

Cement sales Brazil

+2%

1H13

34

1H12

33

23

557

-2,6%

1H13

542

1H12

Volume* (Kton)

*Refractory volume (do not include industrial minerals)

Source: ¹CRU (Report May/2013) and ²Company estimates

Crude steel production¹ (mln ton) and Magnesita’s market share² (%)

+3%

2017(f)

138

2013(f)

118

2012(e)

120

2009

82

16%

2013(f)

206

2012(e)

209

2009

162

+2%

2017(f)

229 +3%

2017(f)

128

2013(f)

114

2012(e)

111

2009

98

9.6% 0.3%

+4%

2017(f)

59

2013(f)

50

2012(e)

48

2009

38

2012(e)

42

2009

35

+7%

2017(f)

58

2013(f)

45

+4%

2017(f)

365

2013(f)

308

2012(e)

300

2009

238

65% 2.1% 1%

North America Europe CIS

140130123115

+7%

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

2011

345328317327

+4%

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

2011

South & Central America MEA Asia ex-China

+5%

2014(f)

3.093

2013(f)

2.947

2012(e)

2.781

2011

2.618

133124116108

+7%

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

2011

338315295270

+7%

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

2011

25% <5% <1% 60% <1%

North America Europe Asia Others

Source: ¹CW Group (Report Feb/2013) and ²Company estimates

Market growth forecast and Magnesita’s share

24

Cement production¹ (mln ton) and Magnesita’s market share² (%)

South & Central America

%

%

Magnesita’s share

Mkt growth (CAGR)

25

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 it a highly strategic location for refractory production

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

Location: Dalian is an important export hub in China with excellent logistics

Capacity: 50.000 tons/year

The acquisition was concluded on July 31, 2013

Recent aquisitions

DMR external view China

CHINA

Maintain a global low

cost production

base

Grow selectively

and aggressively

26

Refractory assembly in rotary kiln

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 for refractories used in cement production in Brazil

The acquisition of 51% of Reframec was completed on June 28, 2013

Recent aquisitions Ensure

leadership in our core

markets

27

Investor Relations contacts:

Octavio Pereira Lopes CEO

Eduardo Gotilla

Global Finance & IRO

Daniel Domiciano Silva Investor Relations

Phone: 55 11 3152-3203/3241

[email protected] www.magnesita.com

MFRSY