Flexibility in the blend- Factoring in the variables within Colombian Metallurgical Coals A Brazilian Experience

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1 SIDERCO TRADING S.A. Flexibility in the blend- Factoring in the variables within Colombian Metallurgical Coals A Brazilian Experience Douglas Fagundes Moreira, SIDERCO

2 Disclaimer The presentation may contain forecasts about future events. Such forecasts merely reflect the expectations of the Speaker s standpoint. Such terms as anticipate, believe, expect, forecast, intend, plan, project, seek, should, along with similar or analogous expressions, are used to identify such forecasts. These predictions evidently involve risks and uncertainties, whether foreseen or not by the Speaker. Therefore, the future results of operations may differ from current expectations, and readers must not base their expectations exclusively on the information presented herein. The Speaker is not obligated to update the presentation/such forecasts in light of new information or future developments.

3 Strategies for optimising the use of Colombian Met Coals - CMC Douglas Fagundes Moreira, SIDERCO

4 Strategies for Optimising. The current outlook for the Colombian Metallurgical Coal Sector has been and will be affected by the World surplus of met coal offers and lack of demand in the Atlantic Rim. Consequently, the market context of Latin America will be changed and we can preview.more exposure of sudden price variations of International Premium Coking Coal Prices as we have seen the recent realignment the Colombian Met Coal prices.

5 Strategies for Optimising. The changes of marketing strategies from the Pacific metcoal producers as well as from US Miners aiming to increase / keep the market share in Latin America Market. So, the Colombian Metallurgical Coal Sector shall develop new guidelines as follows: Keep the investments in Logistics to ensure capacity on the rail / barges / at the export ports at lower rates ; Improve the trade legislation in order to wide the benefits and synergies of ocean freights taxes among the Latin America Ports. Rise the Investments in Geological Search, aiming to increase the productivity and operational cost reduced

6 Strategies for Optimising. Beyond these steps, the Colombian Metallurgical Coal Miners shall develop new operational procedures and standards as from the mine site to ensure the level of quality applied in products and services For this scope, the main focus shall aim Keep the investments in new Coal Blending Yards; Schedule Coal Blendings involving similar coal qualities in the same mining region in order to avoid/ reduce the quality dispersion; Special Quality Follow up Program (involving Ash Chemistry, CSR, Reflectance, Petrographics- V types Distribution) Sampling, Stability

7 Strategies for Optimising. The development of Taylor Made Products can consolidate the image and reputation that Colombia became a Center of Customized Solutions of Met coal Blendings and Solid Fuels Products; The Brazilian Steel Mills are making their 2015 Budget. There are mills just testing small portions - less than 5 %, and others forecast upto 40 % of Colombian Metallurgical Coal. The real and workable percentage of Colombian Coals in Brazilian Blends will depend the real competitiveness of Colombian Prices to face the Seaborne Competition

8 Synergies between Colombian Metcoals and Brazilian Petcoke Douglas Fagundes Moreira, SIDERCO

9 Synergies Col Metcoal and Bra Petcoke The Brazilian petcoke is low ash, serving a carbon supplier and ash reductor. It has a widespread use in the Brazilian Siderurgy and its main characteristics are low content of ashes (less than 0,1 %) and low sulphur content ( less than 0,8 % ), allowing to use less high quality metcoal The above characteristics provide to Brazilian Mills a operational flexibility to use Met Coals with higher contents of ash and sulphur like Colombians - in Brazilian Blends. In addition, the above chemical synergy can be optimized with the low level of Volatile Matter in PetCoke (upto 11%) which subject its percentage of use into the Blending- can improve the Coke Yield.

10 Significance of fluidity and vitrine Implications of these in the blend Douglas Fagundes Moreira, SIDERCO

11 Glossary Fluidity : A coking test used worldwide which measures the fluidity characteristics of coal. Fine Coal ( not pulverized) is heated slowly and as it melts and passes through its plastic range, its fluidity is measured and expressed as maximum fluidity in dial divisions per minute (DDPM). Vitrinite : It is the most common and most important maceral group in bituminous coals. Vitrinite is generally subdivided into Vitrinite A, which has the normal reflectance value for the coal, and Vitrinite B which is of slightly lower reflectance. Vitrine is considered a reactive maceral, burning readily during combustion and becoming fluid during carbonization. A Blend, on the other hand, will likely cover number of Vitrinoid types and present a non symmetrical distribution,also called a REFLECTOGRAM.

12 Significance of fluidity and vitrine There is a necessity to increase the supervision when we are blending differents Colombians Coals. In my point of view, BEYOND the Fluidity and Vitrinite the following points shall be checked: Petrography: Quantity of Reactive and Inerts Macerals, V types distribution and the respective reflectances to build the Reflectogram; Rheology : Max Gieseler Fluidity, Contraction/Expansion, Initial Softening and Resolidification Temperatures Ash Chemistry: % Basic Oxides(Fe2O3, CaO, MgO, Na2O, K2O) and % Acid Oxides(SiO2 and Al2O3) -> Coke Reactivity Prediction