Presentations 4 q09

11

Presentation to Investors

Presentation to Investors – 4Q09 Results

Contents

• Company History

• Highlights

• Refractory Products

• Group Profile

• Mineral Reserves

2

• Mineral Reserves

• Production Process and Capacities

• Competition

• Key Figures

• Competitive Advantages vs. Risks

• Stock Performance

Company History

1939

• Foundation –Magnesita Ltda. was established after the discovery of a large amount of magnesite in the Brumado mines

1969 1990 2007 2008 2009

• Listing –In 1969, Magnesita S.A. was listed on the São Paulo Stock Exchange (BOVESPA).

• CPP –Following the collapse of import tariffs for refractories in Brazil, Magnesita created a revolutionary

• Control Change –

GP and Gávea acquired Magnesita S.A.’s control, held two tender bids and purchased

• April. Novo Mercado –

After the merger of the controlled companies Magnesita S.A. and Partimag, there was a reverse split of Magnesita

• Oct. Capital Increase –

The controlling shareholders and BNDES approve a R$350 million capital

3

Brumado mines (Bahia State).

• Industrial operations began in 1944

revolutionary business model, CPP - “Cost per Performance”

and purchased shares in the market.

Magnesita Refratários S.A.’s (formerly Rpar Holding) shares, which have been traded under Novo Mercado rules since then.

• September. LWB Acquisition - On 09.08.08, Magnesita Refratários S.A. announced the acquisition of LWB Refractories and became the third largest refractory company worldwide.

capital increase.

3

Highlights

Leading Market Position Worldwide

Vertically Integrated Business Model

1

3

Strong & Experienced Management Team

8

Long Standing Relationships with Blue-Chip Customer Base

2

4

Long-Life of Mineral Reserves with High Quality

Solution Based Business Model

4

5Attractive Industry Dynamics with Significant Potential to Export the CPP model

6

Up-to-date Technology

7

Group Profile

York

Valenciennes

Flaumont

HildenOberhausenHagen

Kruft

ChizhouKaohsiung

Taiyuan

• The only fully integrated magnesian and dolomitic refractory producer worldwide, offeringrefractory solutions for steel, cement and glass production, among others;

• 28 manufacturing and mining facilities in four continents, with 7,000 people and over300 clients worldwide;

• Two decades of expertise in the Cost per Performance model, in partnership with the topsteel companies worldwide. 5

Brumado

Coronel Fabriciano

Contagem

Ramalho (Arg) - RASA

Shareholders Composition Profile – 03/31/10

Controlling group

GP38.5%

INVESTMENT FUNDS AND CLUBS

12.4%

BROKERS/BANKS/ DISTRIBUTORS/ INSURANCE

4.7%

OTHERS1.4%

Controlling group = 50.4%

RHONE8.3%

GAVEA3.6%

FOREIGNERS18.2%

INDIVIDUAL12.9%

Refractory Products

• Refractories are heat-resistant materials manufactured in a widevariety of compositions and shapes according to their application.

Main Refractory Consumers Worldwide

77

Processes above

1,200º C

Steel70%

Cement7%

Ceramic5%

Glass4%

Chemical 4%

Non-ferrous5%

Others5%

7

1 tonne of cement = ~ 0.6 kg1 tonne of steel = ~ 12 kg 1 car = ~ 10 kg 1 aircraft = ~ 1.1 tonnes

How much refractory is needed to produce:

Refractory Products

8

1 tonne of cement = ~ 0.6 kg

8

1 tonne of steel = ~ 12 kg 1 car = ~ 10 kg 1 aircraft = ~ 1.1 tonnes

� 9,000 tonnes of steel

� 70,000 m³ of concrete

� 103,000 m² of glass

� 2,700 tonnes of aluminium

� + others

Burj Al Arab Hotel = ~200 tonnes

� 463,000 tonnes of steel

� 27 millions m³ of concrete

Three Gorges Dam Hydroletric= ~11,000 tonnes

Magnesian

Dolomitic

Steel production (FBI 2001=100)

• 34% of the net revenues in 2009• Composition: 63% of magnesite sinter• Main use: steel production

Carbon Steel

Specialty Steel

90

190

290

390

490

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

China World (Ex-China) World

200

Refractory – Main Families and Uses

Stainless steel production (FBI 2001=100)

99

Aluminous

• 35% of the net revenues in 2009• Composition: 60% of dolomite sinter• Main use: specialty steel production

• 21% of the net revenues in 2009• Composition: 54% of alumina• Main use: cement production

Cement

100

125

150

175

200

2001 2002 2003 2004 2005 2006 2007 2008

World Asia

100

150

200

250

300

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

China World (Ex-China) World 9

Cement production (FBI 2001=100)

75%

36%

After the LWB acquisition

The Cost per Performance Model

Before the LWB acquisition

Opportunity

25%

75%

Magnesita + LWB

64%

100%

Magnesita LWB

10

Opportunity

CPP

Volume

Rationale of The Cost per Performance Model

Raw Material

Monitoring Costumer Process

R&D Center

• High-grade raw material

M30 Magnesite sinter

Dolomite Sinter

• Equipment maintenance

• Engineering and process

management

• Logistics & Inventory Handling

• Product tests

• Continuous improvement

• Innovation

• Solutions for market

demands• High productivity

Profitability

demands

Final Price = Base Price + (∆ x steel produced)

• High productivity

• Cost reduction

• High refractory performance

11

Refractory – Life Expectancy (LE)

Blast Furnace

Torpedo Car

Ladle

Casting

• Amount of refractory: 900 tonnes• LE: 15 years

• Amount of refractory: 200 tonnes

• Amount of refractory: 70 tonnes• LE: 150 runs (1 month)

• Amount of refractory: 25 tonnes

12

Converter Rotary Kiln

• Amount of refractory: 200 tonnes• LE: 1,500 runs (2 years)

• Amount of refractory: 800 tonnes• LE: 5,500 runs (6 months)

• Amount of refractory: 25 tonnes• LE: 10 hours

• Amount of refractory:Burning: 250 tonnesHeating: 350 tonnes

• LE:Burning: 10 monthsHeating: 5 years

Note: Average values 12

Mineral Reserves

Magnesite 831 - - -Dolomite 51 25 31 18Talc (Magnesite) 2 - - -Chromite 2 - - -Clays 20 - - -Pyrophilite 1 - - -Graphite 36 - - -

Mineral reserves (million tonnes)

• On average, 3 tonnes of magnesite are needed to produce 1 tonne of M-30 sinter and 4 tonnes of magnesite are needed to produce 1 tonne of M-10 sinter;

• On average, 4 tonnes of dolomite are needed to produce 1 tonne of dolomite sinter.

Life(years)

5564

1508

759

185

13

Production Capacity (thousand tonnes/year)

sinter.

475

320

60 48

Dolomite Sinter

Magnesite Sinter

Magnesia Oxide

Talc

Production Process – Magnesite Sinter

14

RAW MATERIAL’SSILO

MIXER

PRESS

PILE IN

BURN CARS

SINTER’SBAY

CRUSHER

Production Process – Burned Refractory

WEIGHING

HOT AIR DRYER

TUNNER KILN

UNLOAD PILE

TO PLATE

CUT AND MILLING MACHINE

SELECTION AND PACKING

MILL

15

Production Capacity (1,000 tonnes/year)

200 256

USA

BELGIUM

FRANCEGERMANY

CHINA

DolomiteSinter

Refractories

127 180

337

Refractories DolomiteSinter

Refractories

65120

CAPACITYRefractories:1.43 million tonnes

Magnesite Sinter: 320 thousand tonnesDolomite Sinter: 475 thousand tonnes30

320

590

SOUTH AMERICA

CHINADolomiteSinter

Refractories

DolomiteSinter

RefractoriesMagnesiteSinter 16

Steel Production (million tonnes)

133 125 81

2007 2008 2009E

240 229 168

2007 2008 2009E

749 782 842

North AmericaEurope

Asia

17

2007 2008 2009E

861 829 629

490 500575

2007 2008 2009E

World (Ex-China) China

48 48 38

2007 2008 2009E

Source: World Steel Association

1,351 1,3291,204

South America

World

Cement Production (million tonnes)

93 84 75

2007 2008 2009E

372 350 324

2007 2008 2009E

2,047 2,119 2,207

North America

Europe + CIS

Asia

Source: Marketing Intelligence - Magnesita

2007 2008 2009E

1,563 1,571 1,551

1,360 1,400 1,470

2007 2008 2009E

World (Ex-China) China

93 100 100

2007 2008 2009E

18

2,923 2,971 3,021South America

World

390

580

594

896

1,597

ANH

Shinagawa

Krosaki

Magnesita

RHI

Competition

Net Revenues 2008 (€ million) - Generalists

Global

Asia/Japan

North America

Global

Asia/JapanVesuvius 12%

RHI 12%

Others 53%

Market Share Based on Revenues

19

Net Revenues 2008 (€ million) - Specialists

300

300

575

1,730

Minteq

Refratechnic

Saint-Gobain

Vesuvius

Note: Revenue figures, except those for Magnesita and RHI, were estimated by Industrial Minerals

Global

Global

Global

Global

Magnesita 7%

Shinagawa+ JFE 7%

KROSAKI 6%

ANH 3%

Others 53%

Revenue by:

Operating Location vs. Costumer Location

Revenue by

Product

Key figures – 4Q09

58.0%

23.9%

54.8%

20.9%

Services

5.6%

Other Minerals

3.4% Sinter

3.7%

2020

R$ 537.7 million

14.5%

23.9%

3.7%

11.0%

20.9%

11.1%

2.1%

South America North America Europe Asia Others

Production Destination

Refractories

87.4%

41% 39% 40% 46% 47%

59%

61% 60%54%

53%

4Q08* 1Q09 2Q09 3Q09 4Q09

Domestic Market Export Market

Key Figures – Last 12 Months

203.8

180.7190.9

219.9

238.7

4Q08* 1Q09 2Q09 3Q09 4Q09

Net Revenues (R$ million)

565.0

451.0 454.2 483.6537.7

Refractories Sales (1,000 tonnes)

Domestic Market Export Market

6.2%9.9%

15.8%

22.8%25.8%

35.1 44.471.6

110.1138.8

-0,1

0

0,1

0,2

0,3

0

50

100

150

200

250

300

4Q08* 1Q09 2Q09 3Q09 4Q09

R$ million Margin %

21

2,059 2,1041,918

1,434 1,414

12.31.08 03.31.09 06.30.09 09.30.09 12.31.09

* Note: Pro-forma data include the figures for the subsidiary LWB, for the purpose of comparison

EBITDA Net Debt (R$ million)

-132.2

-61.9

-12.2

24.4 20.1

4Q08* 1Q09 2Q09 3Q09 4Q09

Key Figures

Net Income 2009 (R$ million)Net Income (R$ millions)

35.1

- 64.8

South America Other Units

22

• Due to changes in accounting practices in late 2008, the goodwill paid on the purchase of shares for expected future profitability was reclassified to Intangible Assets. Thus, expenses on goodwill amortization are no longer recorded on the Income Statement.

• Increased sales volume and anti-crisis measures and adjustments improved performance and indicate a positive trend.


Key Figures – By Region

1,048.0

878.6


2009 Net Revenues (R$ million)

38,6%

25,3%

404.8

222.1

-1,3%

3,7%

8,7%

13,7%

18,7%

23,7%

28,7%

33,7%

38,7%

100,0

150,0

200,0

250,0

300,0

350,0

400,0

450,0

500,0


R$ million Margin %

2009 Gross Profit

South America81%

Asia6%

North America

6%

Europe7%

23

Workforce in 12.31.09

299.8

65.2

28.6%

7,.%

-10,0%-9,2%-8,4%-7,6%-6,8%-6,0%-5,2%-4,4%-3,6%-2,8%-2,0%-1,2%-0,4%0,4%1,2%2,0%2,8%3,6%4,4%5,2%6,0%6,8%7,6%8,4%9,2%10,0%10,8%11,6%12,4%13,2%14,0%14,8%15,6%16,4%17,2%18,0%18,8%19,6%20,4%21,2%22,0%22,8%23,6%24,4%25,2%26,0%26,8%27,6%28,4%29,2%30,0%

0,030,060,090,0120,0150,0180,0210,0240,0270,0300,0330,0360,0390,0420,0450,0


R$ million Margin %

2009 EBITDA

TOTAL = 6,938

COGS Breakdown – 2009

31.7%28.7%

31.8%35.1% 34.1%

385.7

321.6 309.9 313.9

354.1

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

35,0%

40,0%

200

250

300

350

400

450

500

550

4Q08* 1Q09 2Q09 3Q09 4Q09

R$ million Gross Margin

COGS vs. Gross Margin

Key Figures - Costs

24

R$ million Gross Margin

60.3 52.1 47.6 49.1 50.5

72.363.1

50.4 47.3 52.0

4Q08* 1Q09 2Q09 3Q09 4Q09

Selling expenses General and administrative expenses

SG&A Expenses (R$ million) Direct Costs (Estimated**)

102.5

132.6115.2

98.0 96.4

Fixed33%

Variable67%

By Type

** Considering the historical data of the product mix and capacity use

Local35%

Foreign65%

By Currency


227

16 5

315 315 315

696

Net Debt

Amortization schedule after the bond issue (R$ million)

2010 2011 2012 2013 2014 2015 2020

2525

• With the US$ 400 million bond issue, Magnesitais in a more comfortable position regarding debt;

• Apart from advanced contract exports (ACC’s), there is no significant disbursements until 2013 .

Local48%Foreign

52%

By Currency

Competitive Advantage vs. Business Risks

• Global Presence;

• Fully integrated in dolomite and magnesite sinter;

• Great availability of high-grade raw materials;

• Solution-based business model;

• Strategic partnerships with technology providers;

• Global Presence;

• Fully integrated in dolomite and magnesite sinter;

• Great availability of high-grade raw materials;

• Solution-based business model;


• High concentration of costumers:

o Steel: 10 groups account for 50% of revenues

o Cement: 7 groups account for 55% of revenues

• Heavy dependence on the steel market.

• High concentration of costumers:

o Steel: 10 groups account for 50% of revenues

o Cement: 7 groups account for 55% of revenues

• Heavy dependence on the steel market.

Advantages Risks

26


• Development of technologies through a modern Research & Development Center;

• Aggressive cost management model.


• Development of technologies through a modern Research & Development Center;

• Aggressive cost management model.0

20

40

60

80

100

0

2.000

4.000

6.000

8.000

10.000

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

Steel Production - Brazil

Refractory Sales - SA

Stock Performance

01/02/09 = 100

R$ million

20

25

30

35

15

0

20

0

25

0

2727

01/02/09 = 100

R$

0

5

10

15

0

50

10

0

Jan-09

Feb-09

Mar-09

Apr-09

May-09

Jun-09

Jul-09

Jul-09

Aug-09

Sep-09

Oct-09

Nov-09

Dec-09

Fina

nc

ial Vo

lum

e (in

R$

millio

n)

MA

GG

3IB

OV

ESP

A

Flavio Rezende BarbosaChief Financial and Investor Relations Officer

Adriana Fernandes LanaInvestor Relations Manager

2828

Investor Relations Manager

Phone: (+55 31) 3368-1069

Lucas Lima FerreiraInvestor Relations Analyst

Phone: (+55 31) 3368-1068

[email protected] www.magnesita.com.br

Thanks for your Attention