Magnesita apres institutional_agosto13_ eng

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

August, 2013August, 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

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. Bricks

Monolithic

Types of refractories Main consumers worldwide

Refractories are crucial consumables for manufacturing processes with high temperatures

Source: Freedonia.estimates 2011

SteelNon-ferrous

(aluminum, copper, nickel, silver, zinc)

Nonmetallic(cement, glass, lime)

~15%

~15%

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

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

Pre castables, valves and slide gates

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

Other

~60%~10%

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

Technology

Key drivers

ManufacturingOnly

Mining Refractorymanufacturing

Services

Full TCO(performance-based)

Business highlights

Magnesita’s unparalleled business model

Global scale, local presence

Products and services breadth and depth

Access to high-quality materials

Global scale, local presence

Fully Integrated

CPP-Integrated

Access to high-quality materialsIntegratedManufacturing

Technology, local presenceIntegratedServices

Products and services breadth and depth

Relationship with clients

CPP-Integrated

+-

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

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

Magnesita is a global leader in refractories solutions and industrial minerals

#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 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

Engineering, 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

Engineering, 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. Previous

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

Peter Estermann - COO Global

Vinícius Silva - VP Minerals

José Roberto Beraldo - CFO

Felipe Sommer- VP People and MGMT

Functional Team

Operational Team

� Solid financial background

� Senior roles and extensive

experience in global companies

� Over 70 years of combined

experience in the industry

� Close relationships with

Industry Experience: +11 years

Joined Magnesita in 2008







Vinícius Silva - VP Minerals

Martin Bartmann - Global Supply Chain

Luis Rodolfo Bittencourt - VP R&D

key players and clients in the

industryIndustry Experience: +27 years

27 years in Magnesita




9

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

Unique global footprint

Valenciennes and Flaumontproduction units (FRA)

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

Sinterco Dolomite JV (BEL)

York production unit (USA)

Contagem production units (BRA)

production units (FRA)

Chizhou production unit (CHN)

York Dolomite Mine (USA)

Qingyang dolomite mine (CHN)

Magnesite mine (Brumado - BRA)

Chromite mine (BRA)

Talc mine (BRA)

Sales per region 1H13

Taiwan JV’s production unit (CHN)

DMR production unit (CHN)

production units (BRA)

Coronel Fabricianoproduction unit (BRA)

San Nicolásproduction unit (ARG)

Sales per region 1H13

Sales Office MinesRefractory production

10

. .22%

13%19%

8%

39%

Europe

Brazil

North America

South America

Other

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

leveraging and developing our minerals base

III-Expand industrial I-Ensure leadership II-Grow selectively

New strategic visionO

ne

glo

ba

l o

rga

niz

ati

on

III-Expand industrial minerals base

I-Ensure leadership in our core markets

IV-Maintain a global low cost production base

II-Grow selectivelyand 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

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


Vertically integrated low-cost producer

Continuous investments in R&D and technology

Specialized technical assistance

South America

Long standing relationship with blue-chip customers


~20% in mini-mills~60% in stainless steel

~15% in mini-mills

~65% in steel

~60% in cement

*Company estimates

Specialized technical assistance

Logistic advantages due to privileged locations

Captive CPP contracts with long-term alignment of interests

Brand recognition and historical leadeship

12

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

II – Grow selectively and aggressively

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

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

IndustrialIndustrial 17%

Global market share (in USD)

RHI ~ 9%

Vesuvius-~10%

Magnesita ~ 5%

~10%

Chineseplayers

~37%

40%

Steel60%

Steel

83%

13

Source: Company estimates .

Regional players

Segment players

Global players

~10%

ShinagawaKrosakiANHQinghuaMagnezit

~13%

RefratechnikSaint GobainCalderysMinteq

Small local players

~16%

Source: ¹Company figures and ²Freedonia.

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

Magnesita’s

strategic

positioning

Unlocking our internal expertise and the industrial minerals opportunity in Brazil

� 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

The Brazilian

opportunity

Focused

Opportunity � 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

Opportunity

set

14

1.Preliminary5 to 10 analysis

per year

2.DevelopmentGraphite

Talc expansion

3.Installation

III – Expand industrial minerals base

4.OperationalDBM, Talc, CCM

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

�Complete geological work

and reserve certification

�Environmental license

� Industrial project

�Commercial development

�Medium capex; medium risk

per year Talc expansion

�Preliminary geological

work

�Market analyses

�Low capex; high risk

�Investment in the

industrial plant

�High capex; low risk

� Cash flow generation

� Maintenance capex

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

15

IV - Maintain a global low cost production base

Sinterco Dolomite JV (Belgium)31 million tonnes of reserves

Expected life: 30 yearsNorth American facility (PA-USA)

European facilities (3 in Germany and 2 in France)

DMR facility (Dalian-China)

Opportunities for further industrial and supply chain optimization

Brumado (Bahia-Brazil)

830 million estimated tonnes of

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

South American facilities (MG-Brazil and Argentina)

Asian facility (Chizhou-China)

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

(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

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

Financial highlights (BRL mln)

+8,5%

2.46417,2%

15,5%15,1%14,5%18,7%17,7%

45%49%

Magnesita¹CSNGerdauUsiminas

CAPEX Gross margin Magnesita vs clients

+1,3%

1H13

1.261

1H12

1.244

2012

2.464

2011

2.319

2010

2.276

2009

1.927

+12,7%

+3,1%

1H13

217

1H12

193

15,5%

2012

373

15,1%

2011

337

14,5%

2010

425

2009

340

CAPEXBrumado expansion

25%

3%

12%

34%

30%

24%

12%

-3%

30%

33%

14%

1%

34%

45%

18%

14%

33%

36%

17%

11%

38%

26%

34%

2008 2009 2010 2011 2012 1H13

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

18

2012

257

74165

118

2011

171

120

1H12

92

44

60

51

1H132010

78

2009

37

Debt and Leverage

Total Excluding Perpetual Bond

1.205

3,0x

1.058

2,8x2,9x2,9x

Net debt / EbitdaEBITDA* LTMNet Debt

2,9x

Net Debt Net debt / EbitdaEBITDA* LTM

Solid balance with no refinancing risk

Amortization Schedule (R$ million) Net Debt per currency

2Q12

397

1.205

2Q13

373

1.058

4Q12

352

1.002

4Q11

338

971

*EBITDA excluding non recurring *EBITDA excluding non recurring

2Q12

397

4Q12

639536

373

2Q13

1,6x

352490

1,4x

338

971

4Q11

1,4x

Perpetual bond

19

2018+

1.500

946

554

2017

77

2016

78

2015

112

2014

33

2013

38

Jun-13

633

Cash position

Amortization

Perpetual bond

Others

EUR

-4%-3%

USD73%

19%13%

104%

BRL12%

-14%

Jun-13

Dec-12

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

20

Annex

21

Strong support from shareholders

Only common shares

2 independent board members

Free float 58.6% (minimum required is 25%)

Listed in the Novo Mercado segment (Ticker: MAGG3), which correspond to the best practices of corporate governance

Ownership structure Corporate Governance

34,2%GP

Controlling GroupFree 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)

Latin America and worldwide leadership in Private Equity

Active management

58,6%

7,2%

Free Float

Rhône

Controlling Group

ADR Level I (Ticker: MFRSY)Active management

Culture of promotion by merit

Proven track record in the Brazilian and global capital markets,

with various success cases

22

OTC: Over- the-counter market

Program established in 2010

1 ADR = 2 ordinary shares

MFRSY

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

+3%

138118120

82

206209

162

+2%

229+3%

12811411198

+4%

59

+7%

58

+4%365

308300

238

North America Europe CISSouth & Central America MEA Asia ex-China

Market growth forecast and Magnesita’s share %

%

Magnesita’s share

Mkt growth (CAGR)

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

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

2009

82

16%

2013(f)2012(e)

2009 2017(f) 2017(f)2013(f)

2012(e)

2009

9.6% 0.3%

2017(f)

59

2013(f)

50

2012(e)

48

2009

38

2012(e)

42

2009

35

2017(f)

58

2013(f)

45

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

2009

65% 2.1% 1%

+5%

North America Europe Asia Others

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

South & Central America

140130123115

+7%

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

2011

345328317327

+4%

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

2011

+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%

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

23

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

The acquisition was concluded on July 31, 2013

24

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

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

25

Refractory assembly in rotary kiln

Investor Relations contacts:

Octavio Pereira Lopes CEO

Eduardo Gotilla Global Finance & IRO

Daniel Domiciano SilvaInvestor Relations

Phone: 55 11 3152-3203/3241

26

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

www.magnesita.com

MFRSY