Dry processing: boosting mining operations

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3 AGENDA About New Steel Fines dry processing technology Tailings the fourth wave of mining Dry processing: boosting mining operations 3

4 ABOUT NEW STEEL 4

5 About us New Steel is an iron ore processing company which developed a new water-free technology to concentrate low quality ores and tailings to produce concentrate of up to 68% Fe content at very competitive costs for the new iron ore market reality. Fines Dry Magnetic Separation (FDMS) technology is highly efficient for very fine particles, up to 10 microns. The innovative characteristic of the dry process sets new standards to the mining industry, by boosting economical, environmental and strategic requirements. The process adds value to existing projects by enabling an improved recovery of ore waste, changing them into commercial products, reducing environmental risks and preserving water. 5

6 Dry beneficiation process- greener Historically lump ore has been produced by dry processing ( crushing and screening) Sinter and pellet feed produced by wet processing methods Recently, Vale developed a dry processing method and converted some of its output to dry processing, mainly in Carajás and S11D Main advantages are: Lower production cost Improved mass recovery Higher equipment availability Environmentally friendlier Product uniformity and ability to handle higher-moisture ore Similar chemical composition SINTER FEED 0,15-6,3mm 6

7 Wet screening flowsheet 7

8 Dry screening flowsheet 8

9 FDMS A DIFFERENTIATED TECHNOLOGY

10 Fines dry processing in 4 steps I Drying Process Increases particle desegregation II Air Classifiers Different particle size distribution III Particle size homogenization Enables different parameter setting IV FDMS technology High separation efficiency for fine particles <100# 10

11 FDMS \ Process flow diagram CONFIDENCIAL CRUSHER HOPPER -10mm SCREEN -6mm +0,15mm DRYER CYCLONE -0,15 mm -0,005mm BAG FILTER -0,15mm Magnetic Sinter Feed Non magnetic Tailings Magnetic Pellet Feed Non magnetic 11

12 Fines dry processing - summary of results Feed Fe Content (%) 49,8 38,6 55,0 45,6 Classif. Friable Compact Friable Tailings Mass recovery (%) 66,7 50,9 81,6 53,0 Metallurgical recovery (%) 87,7 85,1 95,4 83,8 Product Fe content (%) 65,5 64,5 67,8 65,2 Product SF/PF PF DRPF PF 12

13 Sustainability remarks Dry processing enables higher mass and metallurgic recovery Allows recovery of iron ore fines fractions under 100 mesh, without losses due to water dislodging The use of natural gas or biomass promotes environmental conservation No atmospheric effluents Greater efficiency of FDMS generates a clean waste that could be exploited by the cement and/or ceramic industry Preservation of watershed and aquifers Reduced size of dry processing plant compared to traditional settings Low energy consumption Increased mine working life Elimination of possibility of tailings dam accidents

14 Brazilian Iron Ore Waves FIRST WAVE: between 1940 and 1960 Exploitation of high grade hematite lump ore Crushing and screening only Ore grade 60% Fe Steel makers blast furnace could not easily accept ore granules at the time without impacting productivity SECOND WAVE: between 1970 and 1980 Fall of high grade production Mining Co started to concentrate friable ores with Fe content as low as 40% Pellet feed started to have a significant share in the production THIRD WAVE: from 2005 Compact itabirite ores of less then 40% Fe content processed into pellet feed and sinter feed with 68% Fe and low silica FOURTH WAVE: will extend the processing of ore from tailing dams and marginal ROM 14

15 Iron ore technological characteristics impact the economic results ROM Low % Fe Coarser particle size / high work index / fine liberation Lower mass recovery: Higher ROM for a given production Greater waste generation Larger sections of crushing Grinding needed and also fine grinding (larger grinding sections) Higher energy consumption Higher reagent consumption Higher CAPEX Higher OPEX Higher CAPEX Higher OPEX 15

16 High-grade reserves are getting depleted Evolution of ferrous content in total iron ore reserves Fe content (%) 68,0 66,0 64,0 62,0 60,0 58,0 56,0 54,0 52,0 50,0 48,0 46,0 44,0-2.4 p.p. (-3.8%) -7.6 p.p. (-12.2%) -8.6 p.p. (-15.9%) Tendency to grade deterioration among the three biggest producers Picture even worse when considering new big entrants such as FMG (playing the 58% market) Depletion of high-grade reserves leading to investments in new processing plants Vale Northern System BHP Billiton Rio Tinto Vale Southern System 1 Source: Company reports, total proved and probable reserves in operating mines (1) Includes both Southeastern and Southern Systems

17 The ore chemistry of major products has also declined, while physical properties have been impacted as well Chemistry and physical properties degradation 34.0% Lump, % share of Rio Tinto sales 32.0% 30.0% 28.0% 26.0% 24.0% 22.0% Source: TEX, Company reports, GTIS, Wood Mackenzie

18 Key Australian and Chinese brands have also been suffering chemistry deterioration Chemistry deterioration of key Australian and Chinese brands 18

19 Most mines in Australia, India, China and Africa present iron content lower than 58% and can have their product portfolio improved Mines with less than 58% Fe content 19

20 Total tailings production is expected to increase from 2016 onwards, particularly concentrate 20

21 Total tailings production is expected to increase from 2016 onwards, with fines and concentrate production quite evenly distributed 21

22 Fines and concentrate tailings quality specs 22

23 Fines and concentrate tailings quality specs 23

24 There can potentially be six main value proposition modes to be chased down Key Low High 1 Value propostition Top line contribution to friable ores mines Description Treatment of materials from friable iron ore mines to free up further saleable products NPV contribution Variants ROM/tailing dams High/medium Fe Large/small mines 2 3 Top line contribution to compact ores mines Securing of DR-quality supply to pellet plants Treatment of materials from compact iron ore mines to free up further saleable products Enrich iron content and dissolve contaminants (in particular Al and Si) for DR-quality applications ROM/tailing dams High/medium Fe Large/small mines Cleaner lump Cleaner sinter Cleaner pellet 4 Growth of damconstrained mines Unleash growth opportunities for companies locked by restricted dam capacity High/medium Fe Large/small mines 5 5 Extension of near-end LOM Value improvement of greenfield projects Extend the life of mine of existing mines approaching exhaustion of reserves Supporting role to greenfield projects to reduce cost, timeline and/or improve feasibility (e.g. licensing) Source: Interviews with New Steel s management team, Wood Mackenzie Years to end of LOM ROM/tailing dams Cape/opex/timeline Friable/compact ore Project feasibility 24

25 THANK YOU 25