1

INTERNATIONAL NICKEL STUDY GROUP17TH SESSION – LISBON – PORTUGAL

NICKEL PANORAMA IN BRAZILA VIEW OF A COUNTRY PRODUCER

Jones BeltherMineral Exploration Director

Votorantim Metais

10-11 May 2007

Largest zinc producer in Latin America

Lagest nickel producer in Latin America

Competitive production costs

3rd largest Brazilian producer of long steel

Integrated Production

Proprietary generation of 60% of its energy needs

Competitive advantage in ore supply

Votorantim Metais

2

Votorantim Metais has plants in 4 Brazilian states, 1 facility in Peru and 1 plant in Colombia.

Zinc – 405 kypy

2 Mines

3 Plants

Nickel – 27 ktpy

Steel Colombia – 315 ktpy

Head Office

2 Mines and Processing

1 Plant 1 Plant

7 Mines

Hydroelectric plants

Igarapava/MG – 210 MW (23.93%)Sobragi/MG – 60 MW (100%)Picada/MG – 50 MW (100%)Campos Novos/SC – 880 MW (20%)Amador Aguiar/MG – 450 MV (12.63%)

Steel Brazil – 470 ktpy

1 Plant

7 Branches

6 Sales offices

Votorantim Metais

Mineral Exploration Office

Ouro Níquel CobreZinco Alumínio Chumbo

US

$/

lb

US

$/

lbU

S$

/lb

US

$/

oz

• The base metals (Cu, Pb, Zn, Ni) prices are facing the highest levels historically considering current dollar.

• Gold is the great mineral exploration investment carrier and presently shows prices almost equivalent to the seventy decade, in current dollar.

• Metal prices follows cycles, but the long term world economy growth indicate a wider cycle in comparison to the ones observed in the past.

• The world economy growth looks much more rational and tend to last longer than previous cycles, maintaining high metal consumption and consequently high prices.

• The Mineral Exploration perspective is good for the future and investment will maintain high with lower annual growth than the two previous years.

0

100

200

300

400

500

600

700

19

74

19

78

19

82

19

86

19

90

19

94

19

98

20

02

20

06

0

4

8

12

16

20

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Strong metal demand drives metal prices to highest historical levels

3

Metal Economics Group 2006

Relative nickel price

Relative copper price

Relative gold price

US

$B

PF

PF – Price variation factor

The investment in mineral exploration surpassed the historical levels and in 2006 was higher than historical peak of 1997. 2007 is expected to has a evenhigher amount.

1.8 1.92.3 2.2

2.52.9

3.5

4.65.2

3.7

2.8 2.62.2 1.9

2.4

3.8

5.1

7.5

0

1

2

3

4

5

6

7

819

89

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

0

1

2

3

4

5

Mineral Exploration investment has increased substantialy recently and will keep high

• The variation on investment folowing metal prices cycles is more proeminent for junior along the years.

• The major companies show 50% of variation on investment following metal price cycles, while juniorsreach up to 86%.

• Metal price variations influence drastically the junior and intermediate companies.

• Great part of the juniors investments comes from major companies through JV´s or strategic alliances.

0

2

4

6

8

1997 1998 1999 2000 2001 2002 2003 2004 2005 20060.5

1.0

1.5

2.0

2.5

3.0

Majors Juniors Intermediate Gov't/Other

Nickel Gold Copper Zinc

5.2

3.7

2.8 2.62.2 1.9

2.4

3.8

5.1

7.5

US

$ B PF

Positive metal price variations estimulatethe juniors to invest in mineral exploration

Metal Economics Group 2006

PF – Price variation factor

4

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Latin America Canada Africa Australia USA Pacific and Asia Rest of the world

US$B

Mineral Exploration investment in the main regions of the world

Historically Latin America receives the major part of the world investment

• In 2006 the investment in Latin America totaled US$ 1.7B.

• Mexico, Peru, Brazil, Chile e Argentina lead the investment ranking.

• The present high metal price cycle may extend for further years stimulating Mineral Exploration investments.

• This high investment panorama makes evident the good mineral potential of Latin and South America. The majority of investment in Latin America is concentrated in South American countries.

• Brazil needs infrastructure improvements and increments Government investment in basic geological, geochemical and geophysical data to attract even more investment. The country mineral potential is very good, economy is stable and the country is safe.

LATIN AMERICA24%

CANADA19%

OTHERS18%

AFRICA16%

AUSTRALIA11%

USA8%

PACIFIC4%

Mexico23.8%

Peru20.3%

Brazil17.9

Chile13%

Colombia 2.4%

Argentina11%

Equador 2.5%

Guatemala 2%

Suriname 1.8%Bolívia 1.7%

Venezuela 1.4%

Panama 0.7%Guiana 1.4%

Fonte Metal Economics Group 2006

Latin America leads the investment in Mineral Exploration in the world

5

Source: MEG, 2006

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

Au

stra

lia

Can

ad

aU

nit

ed

Sta

tes

Peru

Ch

ile

Bra

zil

Mexic

oA

rgen

tin

aS

ou

th A

fric

aIn

do

nesi

a

Can

ad

aA

ust

rali

aU

nit

ed

Sta

tes

Peru

Bra

zil

Ch

ile

So

uth

Afr

ica

Mexic

oR

uss

iaA

rgen

tin

a

Can

ad

aA

ust

rali

aU

nit

ed

Sta

tes

So

uth

Afr

ica

Bra

zil

Peru

Ch

ile

Mexic

oR

uss

iaA

rgen

tin

a

Can

ad

aA

ust

rali

aU

nit

ed

Sta

tes

Peru

So

uth

Afr

ica

Mexic

oR

uss

iaB

razil

Ch

ile

Mo

ng

olia

Can

ad

aA

ust

rali

aU

nit

ed

Sta

tes

Ru

ssia

Peru

Mexic

oS

ou

th A

fric

aC

hile

Bra

zil

Arg

en

tin

a

Can

ad

aA

ust

rali

aU

nit

ed

Sta

tes

Mexic

oR

uss

iaP

eru

So

uth

Afr

ica

Bra

zil

Mo

ng

olia

Ch

ina

US$ B

2001 2002 2003

2004

2005

2006

6o 5o 5o 8o 9o

8o

Brazil is among the 10 most atractive countries for investment in Mineral Exploration

PRODUCTION Ton / year

100 to 250

70 to 10030 to 7015 to 300 to 15

• The large nickel producers to date are Canada, Russia, Australia, Asia and Central America.

• Brazil has a couple of medium size operations for lateritic and sulfide nickel ore and still leads the production of eletroclitic nickel production in South America.

• The country has historically a low potential for nickel sulfide, but extremely high potential for laterites.

In the nickel world Brazil has a discrete position at present...

Norilsk

Mount Keith Leinster

Black Swan

PT IncoPt Aneka

Buli

SLN Doniaambo

Jinchuan

Pechenga

Sudbury

Voiseys Bay

Falcondo

Moa NickelPunta Gorda

Cerro Matoso Loma de Niquel

6

PRODUCTION Ton / year

30 to 70

15 to 30

0 to 15

• In terms of project Brazil leads together with Oceania and Asia.

• Brazil is a typical tropical country that has a large amount of mafic-ultramafic complexes to develop lateritic nickel ore.

• The majority of the projects are located in the central and south of the north region in areas of good infrastructure and surrounded by a very entrepreneur community.

...but this will change very soon with the project portfolio of Brazil

Koniambo

Goro

Ravensthorpe

Schevchenko

Nonoc

Gag IslandHalmahera

Ambatovy

Kabanga

Musongati

Honeymoon Well

IporáMontes Claros

Barro Alto

Fe-Ni VM

São João do Piauí

Onca-Puma

Vermelho

Serra do Tapa

Jacarezinho

Jacaré

Morro Do Niquel

Santa RitaSem Boné

Morro do Leme Morro do Engenho

Água Branca

Boa Vista

Palestina

Sta RosaSta FéSta Cruz

Vale do SolTerra Morena

Água Limpa

PRODUCTION Ton / year

30 to 70

15 to 30

0 to 15Early stage projects

Codemin 10 AngloAmericano do Brasil 5 PrometálicaNiquelandia 23 VMSerra da Fortaleza 10 VMTOTAL 48Jacaré 45 Anglo Barro Alto 40 Anglo Sem Boné+Morro do Leme 20 Anglo Onça-Puma 47 CVRD Vermelho 45 CVRD Jacarezinho 25 CVRD São João do Piauí 25 CVRD Serra do Tapa 25 Falconbridge Santa Rita 15 MirabelaSanta Fé + Iporá 20 Teck Cominco Montes Claros 25 VM Fe-Ni VM 10 VM Morro do Engenho - CPRMÁgua Branca - CVRD Palestina - MirabelaVale do Sol - CODELCOTerra Morena - CODELCOÁgua Limpa - CODELCOSanta Rosa - Teck Cominco Santa Fé (Pará) - CODELCO

390

Project / Mine Production Company

AD

VAN

CED

PR

OJE

CT

EAR

LY S

TAG

E PR

OJE

CTS

TOTAL

MIN

E

Brazil has a large nickel project portfolio in different stages of development

7

9,1769,176

7,6837,683

4,1144,114

878878 3003001,1261,126 989989

595595 281281 1001000

2,000

4,000

6,000

8,000

10,000

Iro

n O

re

Nic

kel

Alu

min

a

Bau

xit

e

Alu

min

um

Co

pp

er

Go

ld

Ph

osp

hate

Zin

c

Nio

biu

m

US

$M 5,2925,292

• Brazil is the largest producer of iron ore and will consolidate its prominent position also in other commodities.

• Nickel is the next metal that Brazil will figure as the largest producer in the world around 2012-15.

• In aluminum the investments are really high and will consolidate the country as one of the largest producers.

• In copper the investments are high and will reduce the external dependence.

• In gold Brazil still lack basic infrastructure in the Amazon Region where is placed a very good potential for this metal.

Metal Production (Kton)Iron 176,900Nickel 204Alumina 7,600Bauxite 15,500Aluminum 70Copper 228Gold 0.037Phosphate 4,800Zinc 70Nióbium 10

The investment in mining projects between 2007-2011 will reach US$25B

0

100

200

300

400

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

BRAZIL

AUSTRALIARUSSIA

CANADA

INDONESIANEW CALEDONIA

JAPAN CUBA

MADAGASCAR

S. AFRICACOLOMBIA

The nickel projects that Brazil has in its portfolio may establish the country on top of the metal producers rank. The great majority of the projects are lateritic either for smelting (Ferro-nickel) or HPAL with production capacities over 25,000 ton / year each.

Brazil will lead world nickel production around 2012-15

8

Main nickel producers in the world present and future390

334

285

227194 190

174 173

62 57

0

50

100

150

200

250

300

350

400

Brazil

Australi

a

Russia

Indonesia

New C

aledonia

Canad

aCuba

Japan

Madag

asca

r

South Africa

261244 234

167

9678 75

54 48 42

0

50

100

150

200

250

300

350

400

Australi

a

Russia

Canad

aJa

pan

IndonesiaCuba

New C

aledonia

ColombiaBraz

il

Finland

2007 2015

• Brazil will lead the world nickel production raking if all the projects are constructed and perform according to their projected production capacity.

• Brazil is the country of large lateritic nickel deposits and several companies are developing its smelting (Ferro-nickel) and HPAL (High Pressure Acid Leach) projects.

• All the projects are located in well developed infrastructure with sufficient energy supply.

The leadership in production may change very soon after construction of the new projects

0

50

100

150

200

250

300

350

400

Codem

in

America

no do

Bras

il

Niquela

ndia

Serra d

a Fort

aleza

TOTAL

Jaca

ré

Barro Alto

SemBon

é+Morr

o do Le

me

Onça-P

uma

Vermelh

o

Jaca

rezinh

o

São Jo

ão do

Piau

í

Serra d

o Tap

a

Santa

Rita

Santa

Fé + Iporá

Montes

Clar

os

Fe-Ni V

M

TOTAL

10 523 10 48

4540

20

47

4525

2525 15

2525 10 390

MINES PROJECTS

SULF

IDE

SULF

IDE SU

LFID

E

VM VM

ANGLO CVRD XSTR

ATA

MIR

ABEL

A

TEC

K C

OM

INC

O

AN

GLO

PRO

MET

ALIC

A

TON

(x 1

000)

A consistent project portfolio in Brazilsupports this production increment

9

74.1%

20.4%5.2% 0.3%

Nickel and cobalt commercial breakdown in Brazil

60.1%22.1%

5.5%

2.0%

4.4%

0.7%1.8%2.8% 0.6%

46.7%31.6%

0.4%2.5%

1.7% 0.5%

8.6%

2.0%

5.9%

ExportStainless steel

Steel and Ferro-alloysLocal TradersSuper alloys Chemicals

Non-ferrous alloysElectroplating Nickel parts

77.4%

16.6%

0.8%5.2%

ExportChemicals

Super alloysCutting tools

2005 2006N

ICK

ELC

OB

ALT

20,761 ton 21,228 ton

1,201 ton 889 ton

Nickel and cobalt export breakdown in Brazil

2005 2006

NIC

KEL

CO

BA

LT

78.6%

5.0%

1.4%7.94%

7.0%

74.5%

15.5%

6.9%3.0%

AsiaNorth America

South AfricaSouth AmericaEurope

57.7%34.4%

6.5% 1.4%

66.2%

27.3%

2.1%4.4%

12,483 ton 9,922 ton

929 ton 659 ton

10

Brazil Peru Chile Mexico

AustraliaCanada

0

2

4

6

8

10

1996 1998 2000 2002 2004 2006

Mining Percentage of GDP

%

• The future of mining in Brazil is

ascendant and the new projects will

maintain a high growth rate.

• Comparing to other traditional

mining countries Brazil had a more

expressive growth in the mining

sector. If more basic data is

generated by Government this

growth rate will be even higher.

• Brazil needs better infrastructure

and competitive energy cost to

sustain this growth rate in mining.

• In base and precious metals Brazil

still have a large way to grow, but

a lot dependent on infrastructure

improvement in the Amazon

Region.

The mining percentage of GDP grown substantially in the late eight years

• Brazil is a stable country with a very entrepreneur community and it is worth investing in it.

• Mineral Exploration investment in Latin America and Brazil is very high along the years and the results start to show up.

• Brazil has a discrete participation in the nickel world, but the project portfolio will lead the country to the top of producers rank.

• A large number of projects is under construction in Brazil comprising several mineral commodities and investment totals US$25B.

• In nickel Brazil has a total of 11 advanced projects with great part of them under construction at the moment. Another series of early stage projects is under development and may be accelerated with the actual metal price cycle.

• Mining participation in GDP grown substantially in the past 08 years and the growth will continue positive in the country.

Conclusions