IMERYS DEVELOPMENT STRATEGY MATERIALS & MONOLITHICS. Christian SCHENCK Executive Vice-President INVESTOR DAY JANUARY 12, 2012 INVESTOR DAY

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1 IMERYS DEVELOPMENT STRATEGY INVESTOR DAY JANUARY 12, 2012 MATERIALS & MONOLITHICS Christian SCHENCK Executive Vice-President INVESTOR DAY

2 MATERIALS & MONOLITHICS HIGHLIGHTS 2011 sales (1) > 1,020 M Approx. 28% of 2011 Group consolidated sales Structured into 2 activities 2011 (2) Sales by activity 2011 (2) Sales by destination Japan/Australia 2% North America (<0.5%) Emerging countries 28% France 45% Europe 24% 4,200 employees worldwide as of Dec. 31, 2011 with Building Materials activity in France only A global footprint with 40 industrial sites in 16 countries (1) 2011 provisional data, non audited (2) 9 months 2011 INVESTOR DAY

3 Building Materials INVESTOR DAY

4 THE FRENCH LEADER IN CLAY BUILDING PRODUCTS Imerys is the French leader in each segment of clay building materials, in a market driven by regional requirements The company develops, produces and sells performing clay based materials Photovoltaic Tiles Chimney Blocks Roof Tiles 65 models 69 colors Thermal Tiles Partition Bricks Structural Blocks INVESTOR DAY

5 A BUSINESS WELL POSITIONED TO CREATE VALUE High multi-regional market shares Each facility has dedicated local mining resources that provide high quality and cost-effective feedstock supplies on the long term (up to 50 years) Combined with a manufacturing excellence shared among all locations to produce: High volumes in large effective plants Sophisticated products With a high standard of quality Sold through local distributors, meeting customers & regulation requirements LOWEST COST TO MARKET AND TRIGGERING INNOVATION TO BE A PRICE LEADER INVESTOR DAY

6 CLAY ROOF TILES: AN ATTRACTIVE AND RESILIENT BUSINESS Roof market in France estimated at 144Mm² in 2010 Pitched roofs represent 50% of the surfaces, and 70% are clay tiles (50Mm 2 *) Clay tiles market share grew from 50% to 70% between 1985 and % 50% 20% Clay roof tiles Natural slates Others Clay tiles markets: 45% new build 55% renovation % 16% 70% * Source: FFTB INVESTOR DAY

7 EARLY 2000: TURNAROUND FOR CLAY BLOCKS Increasing market share for clay blocks in individual housing vs. concrete products Segment Decision-maker Developers Market Share for Clay Products From a traditional mechanical commodity block to a successful value-added product Thermal insulation Easy and quick to install Single-Family Housing Collective Housing Builders Personal Customers Developers Local Administration 20% 6% 46% 15% New products for collective housing A growing market for clay blocks INVESTOR DAY

8 CHALLENGING THERMAL REGULATION FOR HOUSING: AN OPPORTUNITY! 300 Average housing consumption (KWh/m²/) High level of mediatization to address public awareness st TR*: April 1974 For housing, a plan for unparalleled reduction of energy (energy &CO 2 ) % 2 nd TR: March % rd TR: April th : TR % 5 th : TR2005 New housing, a challenging target - 66 % in 2012, Passive housing in % -20% Future TR % -100% Prior * TR: Thermal Regulation New requirements for environmental issues: Indoor air quality Environmental labelling of products (EPD) INVESTOR DAY

9 CLAY BLOCKS: A THERMAL SOLUTION Glue assembly blocks: a thin mortar is applied with a roller with two main benefits: Improve thermal insulation Reduced laying time (by 30%) From being simple load bearing element, block became a significant part of the thermal performance of the wall OPTIBRIC PV R = 0.78 OPTIBRIC PV3+ R = 1.00 OPTIBRIC PV4G R = 1.32 INVESTOR DAY

10 #1 IN FRANCE WITH MULTI-REGIONAL PRESENCE Roof tiles Wardrecques Phalempin Number 1 in France Main competitors: Terreal, Monier, Wienerberger 3,500 direct customers 13 Industrial sites St Germer de Fly Pargny-sur -Saulx Volumes sold 1,100 KT Tiles and accessories The equivalent of 150,000 houses 65 Models, 69 colours, over 700 models of accessories La Boissière du Doré Vihiers Grossouvre Mably Doyet Quincieux Commenailles Blocks & Chimney blocks Number 1 in France Main competitors: Wienerberger, Bouyer Leroux, Terreal 7 Industrial sites Volumes sold 670 KT of blocks Equivalent of 22,000 houses Gironde sur Dropt St Geours d Auribat Colomiers Vergongheon Damiatte Leguevin Blajan Ste-Foyl Argentière Saint Marcellin Roof tiles Blocks and chimney blocks INVESTOR DAY

11 OPERATIONAL EXCELLENCE: Imerys Terre Cuite, most cost-efficient producer in France Extensive know-how in mining & deposit management Best quality clay for the most efficient process and product quality Thorough review and follow-up of Capex Plant productivity Highly automated production lines Broad range of KPI s used at all levels of the organization to track inefficiencies and quality issues Adequate staff training INVESTOR DAY

12 ENVIRONMENTAL REGULATIONS: INNOVATION & OPPORTUNITIES NEOPLATE for an increased efficiency Innovation Awards Nominee at 2011 Batimat Trade Fair Paris Significant drop of installation time: - 35% And adapted to our photovoltaic roof tiles Opportunities generated by Grenelle de l Environnement regulation Imerys Terre Cuite has developed a number of roof equipments to capture energy: Photovoltaic panel to capture solar energy Panels to heat water Clay roof tiles: chemically neutral to collect water No change in chemical composition of collected rain water unlike all other roofing solutions INVESTOR DAY

13 A BREAK-THROUGH Intuitys: an innovative Clay board, for insulating and partition walls dry mounting on metal framework With a number of benefits: Acoustic performance (noise insulation) Thermal performance (thermal inertia, humidity regulation) Indoor air quality Durability Shock resistance Accepts all kinds of finishing Quick and simple to install INVESTOR DAY

14 INVESTOR DAY

15 A GROWING BUSINESS MOVING FROM MONOLITHIC REFRACTORIES TO COMPLETE SOLUTION Calderys World leader in monolithic refractories 8% CAGR Created by the merger of Lafarge Refractories & Plibrico in 2005 > 100 years of experience The monolithic refractory business model relies on Local sales with tailor made solutions (product adapted to industry specificities, local practices and based on local raw materials) Transversal advantages: a global purchasing power, a constant benchmarking of technical solutions and a globally coordinated R&D effort Growth fuelled by three key elements Innovation in order to develop fit-to-purpose materials Geographical expansion towards high growth areas Expansion from refractory products to complete solution provider INVESTOR DAY

16 REFRACTORY MONOLITHICS Refractories: heat resistant materials acid and basic varieties shaped and unshaped (monolithic) types Monolithics: semi-finished products Usually mixed with water to be installed Transformed by heat (ceramic bond) Formulated products consist of aggregates + binder + additives INVESTOR DAY

17 MONOLITHIC: A SOLUTION GROWING FASTER THAN THE OVERALL REFRACTORY MARKET Monolithics substitute refractory bricks Monolithic as a % of refractory production The Monolithics consumption is expected to grow at 3.5% CAGR over , to reach 35% of the total refractory market The bricks should grow by 1.2% CAGR over the same period Monolithics account for 45% of the total market in developed economies due to several advantages: Joint less lining (no weak point) Ease and speed of installation Adaptable to complex furnace shapes and allow for hot repairs by gunning Short production cycle: can be manufactured and delivered at short notice Percent of Tons Produced 70 Japan Europe 30 China India Year Source: Local associations of refractory producers INVESTOR DAY

18 CALDERYS IS A FOCUS PLAYER WITH A BALANCED PORTFOLIO AND GLOBAL COVERAGE > 65% of sales in steel > 50%, < 65% of sales in steel < 50% of sales in steel High Bricks RHI MAGNESITA Global Geographic coverage VESUVIUS MOST ADVANCED SOLUTIONS LOWER CAPITAL INTENSITY DIVERSIFIED CUSTOMERS Capital intensiveness CALDERYS Low Monolithics REFRATECHNIK THERMAL CERAMICS KROSAKI HARIMA MINTEQ QINGHUA Company size based on 2010 sales Local INVESTOR DAY

19 A STRONG INTERNATIONAL NETWORK WITH LOCAL TECHNICAL PRESENCE 2,000 employees in 30 countries 16 plants on 5 continents - industrial presence in India and China since R&D centers, 11 Design Offices and > 100 technical experts Leeds (United Kingdom) Puerto Ordaz (Venezuela) Oosterhout (The Netherlands) Sézanne (France) Åmål (Sweden) Fiorano (Italy) Höganäs (Sweden) Neuwied (Germany) Vladimirovka (Ukraine) Györ (Hungary) Katni (India) Zhangjiagang (China) Kao-Shu (Taiwan) Nagpur (India) Unanderra (Australia) Vereeniging (South Africa) INVESTOR DAY

20 A DIVERSIFIED AND BALANCED CUSTOMER PORTFOLIO Calderys serves all industries that use refractories and has a portfolio of > 1,000 products Calderys is a long-term partner of many industrial leader and is constantly working with customers to improve their operational performance No customer accounts for more than 5% of sales By market segment (%) 18% I&S 3% Foundry 47% Thermal 18% Petrochem Other 14% IRON & STEEL FOUNDRY & ALUMINIUM POWER CEMENT PETROCHEM Arcelor-Mittal, China Steel, NLMK, Severstal, Tata Steel, ThyssenKrupp, Metinvest, Daimler, PSA, Teksid, Toyota, Alcoa, EMAL, Qatalum, Rio Tinto Alcan, Bharat HEL, Danieli Centro Combustione, Foster Wheeler, Metso Power, CBMI, Heidelberger, Holcim, Italcementi, Jaypee, Lafarge, Formosa Group, Shell, Total, BP, 25% By geography (%) 10% 12% 9% 5% Germany Sweden France Other W. Europe E. Europe & CIS 18% Asia 21% Others More than 50% of sales in developing countries INVESTOR DAY

21 FUNDAMENTAL CONTRIBUTION OF INNOVATION Innovation is key to adapt to both customer requirements and local practices Calderys constantly upgrades / adapts its solutions with the support of three world-class R&D centers Top priorities of Calderys R&D: Reduce customer equipment downtime: e.g. Quick-Dry (QD) materials, hot repair materials Improve health & safety: e.g. dust-free materials Increase lining life: e.g. alkali resistant versions Facilitate installation (speed, easiness and reliability): e.g. Low Porosity Dense Gunning materials & precast solutions Increase energy savings: e.g. precast solutions in diamond shape for Reheat Furnace roofs ALL THOSE FEATURES CONTRIBUTE TO IMPROVE TOTAL COST / PERFORMANCE RATIO The refractory lining is resistant to high temperatures and to stresses caused by thermal, corrosive and abrasive conditions INVESTOR DAY

22 GROWTH FUELED BY GEOGRAPHICAL EXPANSION Structuring acquisition in India in 2007: Ace Refractories, leader in monolithics Specific growth strategy in Asia Opportunity to enter the fast growing Indian market with a profitable and well established company, while also Capitalizing on a strong management team that can also support Imerys future development in India Improving our understanding of end user needs in emerging countries Transferring of business and technical knowledge within the group needs BUILD A PLATFORM IN INDIA, STRATEGIC COUNTRY FOR IMERYS 30% 25% 20% 15% 10% 5% 0% % of Asia sales in total revenues Selected acquisitions of monolithic manufacturers: QA Refractories (South Africa) in 2005 Svenska Silikawerken (Sweden) in 2008 Recent opening of sales offices in Turkey, Dubai, Vietnam, Mexico INVESTOR DAY

23 MONOLITHICS FROM PRODUCTS TO COMPLETE SOLUTION PROVIDER Calderys does not only sell refractories but also able to design solutions and manage a whole project including installation of refractories This capability helps to Enhance technical dialogue with customers in selecting the most appropriate solution: products cannot be chosen by customers out of a catalogue Increase sales: merchandise, installation Position Calderys as a technical partner both on refractories knowledge and engineering & construction for future maintenance jobs Differentiate from small competitors Maintain price leadership Project contributed to ¼ of Calderys growth in the last 5 years INVESTOR DAY

24 MONOLITHICS: A CONSTANTLY IMPROVING SYSTEM Capture value downstream, from material supplier to service provider: an integrated system! R&D Manufacturing Project Management Dry-out & Commissioning Raw Material Selection Engineering & Design Logistics & Delivery Installation & Supervision Technical Support CONTINUOUS IMPROVEMENT OF OUR SOLUTIONS INVESTOR DAY

25 MINERALS FOR CERAMICS, REFRACTORIES, ABRASIVES & FOUNDRY HIGHLIGHTS 2011 Sales (1) > 1,180M approx. 32% of Group s sales 5,600 employees worldwide as of Dec. 31, 2011 A global footprint with 93 industrial sites in 24 countries 2011 Sales by activity (2) A large global business Minerals for Refractories & Oilfields 26% 39% Fused Minerals Minerals for Ceramics 26% 9% Graphite & Carbon Minerals for Ceramics, Refractories, Abrasives & Foundry (1) 2011 provisional sales, non audited (2) 9 months 2011 Minerals for Ceramics Minerals for Refractories & Oilfields Fused Minerals Graphite & Carbon INVESTOR DAY

26 FUSED MINERALS: WORLWIDE LEADER Products Applications End-markets Fused Minerals: alumina, bauxite, zirconia, magnesia, etc. Bonded abrasives, Coated abrasives, Refractories, Technical ceramics, Laminates/ Paintings, Chemicals, etc. Iron & Steel, Foundry, Automotive, Industrial equipment, Electronics/Electrical, Construction (new), Energy, etc. Bonded abrasives Coated abrasives Sand blasting Refractories Oxygen sensors 2011 Sales* > 450 M leading market positions on specialties Fused minerals for abrasives: World #1 Fused zirconia: World #1 Trends Assets Unique fusion technology and know-how Key to control critical functional properties: abrasive efficiency, durability, heat dissipation, opacity, color, purity, etc. Global presence Industrial assets in Europe, North and South America, China Imerys R&D center: CARRD in Villach (Austria) * 2011 provisional sales, non audited INVESTOR DAY

27 MINERALS FOR REFRACTORIES & OILFIELDS: HIGH-ALUMINA PERFORMANCE PRODUCTS Products Applications End-markets Andalusite, Mullite, Chamottes, Ball Clays, Bauxite, Bentonite, Fused Silica, etc. Refractories, Investment casting, Oil & Gas exploration Refractories Cement Investment casting Oil & gas Steel, Aluminum, Glass, Foundry, Cement, Energy 2011 Sales* > 330M, leading position on acidic applications Minerals with high alumino-silicate content: World #1 Fused silica: World #1 Assets High-quality mineral resources Extensive reserves of high-alumina and high-purity clays (US, France) World largest andalusite reserves; unique range of crystal sizes and purity (France, South Africa, China, Peru) Sophisticated and proprietary manufacturing processes Control of chemistry, crystallography, homogeneity, particle size, etc. Raw material selection Global sales and logistics network Service and final processing centers located close to end-markets * 2011 provisional sales, non audited INVESTOR DAY

28 MINERALS FOR CERAMICS: SPECIALTY PRODUCTS FOR CERAMIC INDUSTRIES Products Applications End-markets Kaolin, Clays, Feldspar, Quartz, Talc, Ready-made Bodies & Formulations, etc. Sanitaryware, Tableware, Ceramic tiles, Technical ceramics, etc. Construction (new and renovation), Tableware, Energy, Automotive, Semiconductor, Electronics, etc. Sanitaryware Tableware Floor & wall tiles Electro porcelain Crucible for solar cells Technical ceramics 2011 Sales* > 310M, leading market position on high-end minerals Raw materials & ceramic solutions (bodies): sanitary ware: World #1, tableware: EMEA #1 Kaolin for glazes: World #1 World-class mineral assets UK (Cornwall, Devon, Dorset), France, Thailand, Turkey Assets Market reference World-known brands, associated with high product quality (e.g. whiteness, plasticity, purity, strength) and process efficiency (e.g. rheology, mechanical resistance, deformation) Technical know-how on customers processes Imerys R&D center in Limoges, France Global presence: Assets in EMENA, North America, Asia * 2011 provisional sales, non audited INVESTOR DAY

29 GRAPHITE & CARBON: GRAPHITE AND CONDUCTIVE CARBON BLACK POWDER FOR INDUSTRIAL APPLICATIONS Products Applications End-markets Natural & synthetic graphite, conductive carbon black Alkaline & Li-ion Batteries, Hot Metal Forming, Friction, Engineered Polymers, Thermal Management, etc. Energy, Electrical & Electronics, Automotive & Transports, Industrial Equipment, etc. Li-ion batteries Friction Electronics Energy Seamless Tube Assets 2011 Sales * > 100M, leading market positions in graphite powder specialties Graphite for Alkaline batteries: World #1 Conductive additives for Li-Ion batteries: World #1 Lubricants for Seamless Tube production: World #1 Large natural graphite flakes: World #1 Cutting-edge high-temperature processes (synthesis, crystallization) For close control of functional properties: purity, crystalline structure, particle size and shape, specific surface, etc. Natural graphite resources of high-quality (Canada) Imerys R&D center in Bodio, Switzerland Worldwide commercial network addressing global customers with high level of technical needs * 2011 provisional sales, non audited INVESTOR DAY

30 MINERALS FOR CERAMICS, REFRACTORIES, ABRASIVES & FOUNDRY: WELL POSITIONED FOR VALUE CREATION AND GROWTH Value creation potential out of solid specialty business position Growth potential thanks to attractive end-markets INVESTOR DAY

31 VALUE CREATION POTENTIAL AS A RESULT OF SOLID SPECIALTY BUSINESS POSITION High-performance products for demanding industrial environment Functional properties key to customers application Refractoriness, abrasiveness, wear / mechanical resistance, whiteness, plasticity, conductivity, purity, etc. Limited substitution risks as our minerals are essential to customers products or processes Usages very demanding: ceramics, refractories, abrasives, semiconductors, production of oil and gas, mobile energy, etc. Barriers to entry Sophisticated manufacturing processes, around high-temperature operations Fusion, sintering, calcination, etc. Mining assets essential to competitive position Graphite, High-alumina products, Clays, Quartz, etc. Leading market positions in all 4 businesses Fused Minerals: Minerals for abrasives: World #1, Fused zirconia: World #1, Minerals for Refractories & Oilfields: Minerals with high alumina-content: World #1, Fused silica: World #1, Minerals for Ceramics: bodies for sanitaryware World #1, and for tableware: EMEA #1, Kaolin for glazes: World #1 Graphite & Carbon: Alkaline batteries: World #1, Conductive additives for Li-Ion batteries: World #1, Lubricants for Seamless Tube production: World #1, Large natural graphite flakes: World #1 INVESTOR DAY

32 GROWTH POTENTIAL: END-MARKETS Growth Dynamic end-markets Innovation Emerging countries Growth end-markets represent ~40% of sales Sales Mature end-markets c. 35% Main applications with potential > worldwide GDP growth Li-Ion batteries High-purity quartz Oil & gas exploration Waste management, etc. Main end-markets with potential > worldwide GDP growth Automotive Energy Electrical / electronics Environment Air & space Emerging markets c. 30% 5% Rapid growth in emerging countries INVESTOR DAY

33 GROWTH POTENTIAL: PRODUCT INNOVATION, A DENSE PIPELINE IN EACH DIVISION CRAF a major contributor to Group Innovation More than one third of Imerys innovation pipeline, representing more than 300 million* sales potential Three major innovative projects And a dense pipeline Three major projects To target new end-markets: proppants for Oilfield services, high-purity quartz for solar cells and semiconductor industries To reinforce our presence in fast-growing market: Graphite for Li-ion batteries of electrical cars Proppants High Purity Quartz Carbon for Li Ion Sintered Bauxite Abrasives Fused Minerals Sintered rods: new type of abrasive to increase grinding performance High-purity zirconia: new product for advanced Ceramics oxygen sensors for emissions control of cars (Bosch) Ultra high-purity zirconia: zirconium metal for nuclear industry (Cezus Areva) etc. Nuclear Fuel Rods Courtesy of Areva PolyCrystalline, Highly Porous Corundum INVESTOR DAY * Including sales of Quartz Corp JV 10

34 PRODUCT INNOVATION: A DENSE PIPELINE IN EACH DIVISION Refractories & Oilfields High purity fused silica: for precision investment casting etc. Ceramics Service: development of integrated supply of bodies and formulations for large industrial players (e.g. Ikea) Power plants: Aurora TM for better energy efficiency of combustion boilers Technical Ceramics: improved presence with Talc integration etc. Graphite & Carbon Graphite: new products for thermal management, energy production, energy saving & storage Carbon black: new products for high-tech applications e.g. ecological buildings (energy saving), medical (safety) etc. New mineral for investment casting Aurora: fluidized bed prevention of agglomeration Carbon additive for polymer INVESTOR DAY

35 FOCUS: ENTRY OF TALC INTO PORTFOLIO OFFERING NEW GROWTH AVENUE IN TECHNICAL CERAMICS Imerys historical presence in technical ceramics World #1 in high-quality ball clays for electro-porcelain insulators Steatite or Cordierite full-prepared bodies sold to German automotive industry High-alumina bodies (>97% Al2O3), calcined and hydrated alumina micronizing for specialty application Imerys innovation efforts Patented kaolin from Brazil for automotive catalyst supports commercial development Formulation knowledge to develop new specialty bodies: e.g. ballistic protection Leverage on Imerys synergies: 3 Imerys R&D Centers focusing on technical ceramics Leverage Talc Group existing strong market position World #1 in talc for automotive catalyst supports Major supplier of talc for cordierite and steatite bodies INVESTOR DAY

36 FOCUS: BECOMING THE LEADING RAW MATERIALS SUPPLIER FOR AUTOMOTIVE CATALYSTS SUPPORTS Demand expected to double within the next 5 years, driven by two global trends: Increasing demand in developing countries: e.g. +30% p.a. in China Tightening regulation in developed countries: e.g. diesel vehicles, including heavy diesel Ceramic honeycomb = Talc + hydrous kaolin + calcined kaolin + alumina A growing innovative area for Imerys Ceramics, sales of c. 25 M with significant development prospects INVESTOR DAY

37 GROWTH POTENTIAL: DEVELOPMENT OPPORTUNITIES IN EMERGING COUNTRIES CRAF exposure to emerging markets has been rapidly growing Up 7 points in 5 years, to 31% Lowest exposure to Western Europe: 41% offering many further opportunities Fused Minerals New project in Bahrain: competitive energy costs, expansion East China: Fused Zirconia business is a platform for growth into other segments / products USA & Canada 21% Western Europe 42% 2011* Japan & Australia 5% Emerging & Other 32% Refractories & Oilfields China: ramp up of andalusite Yilong production site associated with increased demand for high-performance products Ceramics Turkey: ongoing developments, as Middle-East has become world s 2 nd largest production cluster of traditional Ceramics South East Asia: expansion resulting from existing platform in Thailand Brazil: capitalization on RCC kaolin platform in Brazil to grow presence in local market Graphite & Carbon China (most important market for Graphite): expand presence in mobile energy, engineering materials and carbon additives for polymers INVESTOR DAY * 9 months

38 FUSED MINERALS IN CHINA: A PLATFORM FOR FUTURE GROWTH Acquisition of Astron China in 2008 transformed Imerys position in Fused Zirconia Main end-markets: Specialties: refractories (steel continuous castings), investment casting (precision metallurgy), technical ceramics (e.g.: oxygen sensors), chemicals (e.g.: anti-perspirants), ceramic colors Volumes: ceramic wall and floor tiles Gained presence in Europe and in the US with UCM in 2007 China: largest market for refractories, chemicals, tiles, etc. Astron China: a leading Asian asset-base, with all production sites and most of sales in China Imerys world leader in Fused Zirconia Integration and turnaround now completed Entirely new management team, led by Franco-Chinese General Management and its extensive experience Business portfolio centered on high value-added products Technology transfer to state-of-the-art fusion process and know-how Imerys Fused Minerals China clear market leader in China in Sales (*) > 90 M, double digit operating income profitability * 2011 provisional sales, non audited China Fused Minerals division Sales offices Plants INVESTOR DAY

39 IMERYS FUSED MINERALS IN CHINA: IMERYS POSITION CAN NOW BE LEVERAGED Continuing to grow the Fused Zirconia Business Enhance product offering, in order to capture rapidly-growing demand for specialties Technical transfers, R&D Improve industrial layout Modernization of industrial equipment Increase profitability Pricing policy Focus on high value-added industrial outlet Expanding into other businesses Under local management leadership Downstream: investment / acquisitions Other Fused Minerals INVESTOR DAY