HOUSTON MATERIAL HANDLING SOCIETY

MEETING

NOVEMBER 18, 2008

“I hope I can stay awake through this guys presentation.”

“They overfeed us then put on this

right after dinner to talk about things

I already know.”

“What’s in this for me?”

Come away with a better understanding of the key elements driving capital projects

Hopefully you will

Develop ideas that improve the marketability of your services and the netback of your projects and products

WE

An equipment manufacturer and general construction organization

Specializing in the design and construction of dry bulk material handling and storage systems

Design

Agrico Sales

FabricateErect

ElectrifyAnd help start up

the projects we build

Engineer

Agrico Sales

•Provides a confidential budget quote to modify a facility

This saves time and money determining if a project meets guidelines for investment

We do this at no cost to you

We Build

Agrico’s recent customers include:

ExxonJacobs EngineeringMarathon Ashland PetroleumPetro-Canada/BantrelGreat Lakes Carbon/Aimcor (now Oxbow)Ferrominera OrinocoCII Carbon (multiple projects)Bunge GrainAnsac

“What’s in this for Bob?”

We hope this presentation causes you to remember Agrico Sales as you develop dry bulk projects

Key elements in handling dry bulk

Safety

Environmental Soundness

Reliability and ease of maintenance

Efficient product movement

Safety

In addition to all of the usual safety concerns in a process i.e. refinery, dry bulk handling can add the dimension of mobile equipment such as front-end loaders and trucks

In addition to trucks and front end loaders there may be belt conveyors, reclaimers, etc. which require guards and possibly restricted areas

Environmental

Like safety, environmental has several levels of governmental and corporate regulations to govern its handling and storage every step of the way

In addition to this, dry bulk operations are often considered an eyesore even if all environmental considerations are met

Water sprays at transfers or load points and stockpiles

Chemical additives to water sprays

Scrapers, drip pans & totally enclosed belt conveyors

Wash down systems

Dust collectors

Covered storage

Settling ponds

Environmental equipment:

Reliability and ease of maintenance

Handling systems often need to operate every day. The basics of good preventive maintenance apply to this equipment involved just as it does on other operating units

When building new or revising an existing handling facility, build in as much flexibility as possible because…

Things Change!

Efficient delivery to the market placeThere are many ways to move dry bulk and several of these are often employed between you and the end user

Mobile equipmentPneumaticsBelt conveyorsTrucksRailcarsBargesOcean going ships

Handling methods:

THE TRANSPORTATION COST OF A PRODUCT CAN BE A LARGE PORTION OF THE TOTAL COST.

WHILE PRODUCT/PROCESS CHANGES CAN BE VERY EXPENSIVE TO MAKE, THE COST OF DELIVERING IT TO THE MARKEPLACE CAN BE RELATIVELY EASY (INEXPENSIVE) TO CHANGE

THE ABOVE TWO BULLETS CAN GREATLY IMPACT PROFITABILITY

Basic principles of dry bulk movement:

Old delivery system Ship railcars 90 miles (includes cost to ship heel back to refinery) 13.00

Contractor dig coke from Cars with backhoe 1.65

Truck 1/4 mile to a grizzly over a hopper 1.25

Contractor breaks lumps through the grizzly to load barges 1.80

Railcar demurrage 4.00

Barge movement to Gulf coast 4.75

Store coke in barges until 1 day before it is needed 4.50

Contractor dig coke from barges & load rail cars 2.45

Rail coke 3 miles to production facility 3.50

Unload railcars 2.00 • Total $38.90

$/ST

Improved delivery system

Ship railcars 90 miles 10.00

Terminal unload cars with Backhoe and remove – heels through the bottom & load barges 4.05

Barge movement 3.65

Pay contractor to unload Barges to plant storage 2.40• Total

$20.10

$/ST

A Difference of $18.80/st

Or 50%

Which is 27% of delivered cost of the product

General rules of thumb for dry bulk movements:Deliver product to the primary method

of conveyance as soon as possible

If water movements are involved, move your product to water as early as possible

Eliminate handling steps whenever possible

General rules of thumb for dry bulk movements:

Use the lowest cost method of conveyance for the distance involved

Move shipments in the largest lots possible

General rules of thumb for dry bulk movements:

Explore methods of improving the total logistic chain with the end user

There is strength in multiple modes of shipping or multiple carriers

Summary

Optimizing logistics will have a positive financial impact no matter what the market conditions

A few extra dollars per ton can help when struggling to improve profits or stay in the black

This can often be the justification needed for capital projects

QUESTIONS ?

Agrico Sales, IncPhone: (504) 436-9400

Fax: (504) 254-6458

E-Mail: brieck@agricosales.com

Website: agricosales.com

Address: 14900 Intracoastal Dr.

New Orleans, LA 70129

USA