21 st Metal Bulletin Bauxite and Alumina Conference

Transcription

1 21 st Metal Bulletin Bauxite and Alumina Conference Otavio Carvalheira VP Commercial, Alcoa Mining February,

2 Cautionary Statement Forward-Looking Statements This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements. Forward-looking statements include those containing such words as anticipates, estimates, expects, forecasts, intends, outlook, plans, projects, sees, should, targets, will, or other words of similar meaning. All statements that reflect Alcoa s expectations, assumptions or projections about the future other than statements of historical fact are forward-looking statements, including, without limitation, forecasts concerning global demand growth for bauxite, alumina, and aluminum, or end market conditions; targeted financial results or operating performance; statements about Alcoa s strategies, outlook, and business and financial prospects; and statements regarding Alcoa s portfolio transformation. Forward-looking statements are subject to a number of risks and uncertainties and are not guarantees of future performance. Important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: (a) material adverse changes in aluminum industry conditions, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices and premiums, as applicable, for primary aluminum, alumina, and other products, and fluctuations in indexed-based and spot prices for alumina; (b) deterioration in global economic and financial market conditions generally; (c) unfavorable changes in the markets served by Alcoa; (d) the impact of changes in foreign currency exchange rates on costs and results, particularly the Australian dollar, Brazilian real, Canadian dollar, euro, and Norwegian kroner; (e) increases in energy costs or the costs of other raw materials, or the unavailability or interruption of energy supplies; (f) Alcoa s inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations (including increasing revenues and improving margins in its Engineered Products and Solutions and Global Rolled Products segments and moving its alumina refining and aluminum smelting businesses down on the industry cost curves) anticipated from its restructuring programs and productivity improvement, cash sustainability, technology, and other initiatives; (g) failure to advance or successfully implement, to achieve commercialization of, or to realize expected benefits from, new or innovative technologies, equipment, processes, or products; (h) Alcoa s inability to realize expected benefits, in each case as planned and by targeted completion dates, from sales of non-core assets, or from newly constructed, expanded, or acquired facilities, or from international joint ventures, including the joint venture in Saudi Arabia; (i) political, economic, and regulatory risks in the countries in which Alcoa operates or sells products, including unfavorable changes in laws and governmental policies, civil unrest, imposition of sanctions, expropriation of assets, or other events beyond Alcoa s control; (j) the outcome of contingencies, including legal proceedings, government investigations, and environmental remediation; (k) the impact of cyber attacks and potential information technology or data security breaches; (l) the risk that Firth Rixson or other acquired businesses will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; and (m) the other risk factors summarized in Alcoa s Form 10-K for the year ended December 31, 2014 and other reports filed with the Securities and Exchange Commission. Alcoa disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law. Market projections are subject to the risks discussed above and other risks in the market. 2

3 Alcoa Mining Business at a Glance Key Indicators Proven Reserves* of 199 million bdmt Total bauxite production** of 46 million bdmt per year (~17% share of total world production) 8 mines in 5 countries, in which: 3 non-integrated (11.5 bdmt/yr production in 2014) mines Three joint ventures: MRN, CBG and Saudi Arabia JV 3,300 employees and contractors worldwide Located in countries holding the main global reserves of bauxite: Guinea, Australia and Brazil (~60% of Global Reserves) Excellent EHS performance and leader in Land Stewardship and Sustainability Brazil *AWAC and/or Alcoa share (proportion) of reserve. ** 2014 annual production tonnage. Excluded Jamaica operations Source: Alcoa K and internal analysis Australia 3

4 Production Reserves Brazil has a consolidated bauxite industry Brazilian Bauxite Industry Key Facts 3rd largest bauxite reserves, 2.6B mt 3rd largest producer, ~34M mt (wet) in 2013 Advanced technology Bauxite beneficiation, highly developed mine planning and innovative mining methods Regulatory environment established Established logistics in major mines Expertise in bauxite processing Skilled workforce High level in safety and environmental practices Reference in stakeholder engagement Operational reliability Excellent ore quality Bauxite Ranking 1 st 2 nd 3 rd 1 st 2 nd 3 rd Guinea Australia Brazil Australia China Brazil Source: USGS and Alcoa Analysis. Alcoa refers to Alcoa + AWA 4

5 Mines are located in the North and Central Regions of Brazil Brazilian Bauxite Mines Summary Brazilian Mines Oriximina Juruti Paragominas Brasília Barro Alto 8 Poços de Caldas Itamarati Cataguases Miraí Mine Ownership 2013 Reactive Free Alumina Production Silica Moisture Content (wet M mt) Content Content Barro Alto CBA % 1.0% - Itamarati de Minas CBA % 5.2% 13% Mirai CBA % 5.0 % 13% Pocos de Caldas CBA % 4.8% 22% Juruti Alcoa % 4.1% 13% Pocos de Caldas Alcoa % 4.3% 21% Paragominas Hydro (80%), Vale (20%) % 4.5% 12% Trombetas Vale (40%), Alcoa (18%), BHP (15%), Alcan (12%), CBA (10%), Hydro (5%) % 4.6% 12% Total ~34M mt Source: ABAL, CRU, Alcoa internal analysis 5

6 North and Southeast bauxite deposits have distinct characteristics Brazilian Bauxite Mines Summary Brazilian Mines Planar bauxite deposits, facilitating mining Significant stripping ratio Requires beneficiation by washing Hematite is the main iron mineral. Favorable process settling characteristics at Refinery Bayer Process Low amounts of mineral impurities enhancing the quality of the alumina produced. Oriximina Juruti Paragominas Brasília Barro Alto 8 Poços de Caldas Itamarati Cataguases Miraí Brazilian bauxite is a trihydrate bauxite. Gibbsite is the main aluminous mineral; amenable to low temperature Bayer processing Smaller deposits than in the Amazon Found on hill tops and slopes Parts of some of the bauxite deposits are mined as specialty bauxite for chemical and refractory uses. Source: Alcoa internal analysis 6

7 Significant production with 8% annual growth since 2000 Brazilian Production of Bauxite, ktpy Brazilian Production of Bauxite, ktpy 35,000 30,000 +8% 25,000 20,000 15,000 +4% 10,000 +9% 5, Source: ABAL 7

8 Export markets already key for bauxite producers in Brazil Volume of Bauxite Exported and Consumed internally by year, in Million tons 35 Bauxite exports, M tpy Bauxite Internal Consumption, M tpy 20% 20% 25% 21% % 23% 12% 23% 34% 35% 25% % 77 31% 29% 26% 39% 26% 55% 36% 41% 55% 67% 49% 54% 47% 41% 51% 56% 57% 68% 64% 51% 45% 60% 68% 0% 25% Source: ABAL 8

9 United States and Canada are main destinations for Brazilian Bauxite Bauxite Exports by Destination in 2013 and 2014 Exports in 2013 Exports in 2014 China Greece Others 12% 4% 2% Greece Others China 4% 5% 4% 41% United States Ireland 15% 43% United States Ireland 17% 24% Canada Canada 29% Source: Aliceweb 9

10 New Regulatory Framework aims to encourage development of the mining industry Current Regulatory Framework and Main Proposed Changes CURRENT MODEL PROPOSED CHANGES Authority Responsible for Mining Public Policy Ministry of Mining and Energy (MME) National Council of Mining Policy (NCMP) and supplementary by MME Concession Model Concessions Rights Concession Term Preference Right Principle Exploration Authorization (Research permit) and Mining Concession No limitation or until resources are exhausted Bidding Process/ Public Call One title for both: Exploration Authorization and Mining Concession 40 years, renewable for successive periods of 20 years Royalty Calculation Royalty Fee (CFEM) Compensation paid to surface owners over Net Revenue 0.2% -3.0% (Bauxite 3%) 50% of CFEM over Gross Revenue 0.5% -4.0% (will be defined by decree) 20% of CFEM 10

11 Brazil in strong position to increase share in global bauxite market Favorable conditions to exports Strong and effective legal and regulatory frameworks, policies and practices Mining tradition Operational excellence Vast resources High quality bauxite Logistic infrastructure in place 50+ years knowledge of industry 11

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