POSSIBLE REGULATORYDEVELOPMENTS IN BRAZIL

HOW THEY MAYAFFECT THE INDUSTRY

Carlos Vilhena

2

Mining Around the World

ouro cobre ferro níquel chumbo zinco Gemasdiamante

outros

3

Brazil in the Global Context

PIB > US$ 800 bilhões

Área > 3milhões Km²

Pop > 140 milhões

Russia

EUA

BRASIL

China

Canadá

Austrália

Alemanha

Espanha

Italia

Coréia do Sul

França

ReinoUnido

México

India

Japão

Indonésia

Paquistão

Nigéria

Bangladesh

4

ExporterGlobal Player

Exporter Autosuficient Importer ExternalDependency

Nickel

Magnesium

Kaolin

Cassiterite

Vermiculite

Chromium

Gold

CalcareousRocks

Ind Diamond

Titanium

Copper

Tungsten

Talc

Phosphate

Diatomite

Zinc

Brazilian Mineral Production

Niobium(1st)

Iron (2nd)

Manganese(2nd)

Tantalite (2nd)

Graphite (3rd)

Bauxite (2nd)

OrnamentalRocks (4th)

MetallurgicalCoal

Potash

Sulphur

Rare Earths

Estrategic

5

Evolution of the Production(in billions of US$)

6

Job Generation

First Transformation

Total

Extraction

sUPPLIERSs

MULTIPYINGMULTIPYINGEFFECTEFFECT

1:131:13Fonte MMEFonte MME

Job generation

2 million direct jobs in the Country (160,000 in the extractive industry)2009 data

7

Balance of Trade

in US$ million

Exports

Imports

Balance

in 2006US$ 46 billion

Mining Sector = 14%

in 2007US$ 40 billion

Mining Sector = 25%

in 2008US$ 24 billion

Mining Sector = 53%

Saldo Brasil em 2009US$ 25 bilhões

Setor Mineral = 50%

2010 Previsão

25.000

6.500

18.500

Forecast 2010 = US$ 16 billion

Mining sector = US$ 25 (Exp.) – US$ 6,5 (Imp.) = US$ 18,5billion

8

Balance of Trade (product basis)

2009 P* 2008 P* ∆ 08/09 %

Exportações Brasile iras 152.994 197.942 (22,71)

Exportações Mineral Bens Primários 18.096 11,8 22.841 11,5 (20,77)

Minério de Ferro 13.247 73 16.537 72 (19,89)

Ouro (em barras) 1.384 8 1.032 5 34,11

Nióbio (ferronióbio) 1.060 6 1.647 7 (35,64)

Cobre 803 4 1.196 5 (32,86)

Silício 347 2 509 2 (31,83)

Caulim 253 1 353 2 (28,33)

Minério de Manganês 186 1 616 3 (69,81)

Bauxita 158 1 293 1 (46,11)

Es tanho 13 0,1 103 0,5 (87,38)

Chumbo 9 0,0 19 0,1 (52,63)

Zinco - - 85 0 (100,00)

Outros 636 4 451 2 41,02

Importações Bras ile iras 127.647 - 173.196 - (26,30)

Importações Mineral Bens Primários 5.497 4,3 9.729 5,6 (43,50)

Carvão mineral 2.181 40 3.691 38 (40,91)

Cloreto de Potáss io 2.060 37 3.828 39 (46,19)

Cobre 624 11 1.029 11 (39,36)

Zinco 71 1 162 2 (56,06)

Outros 561 10 1.019 10 (44,95)

Saldo Brasil 25.347 24.746 2,43

Saldo do Setor Minera l 12.599 49,7 13.113 53,0 (3,92)

* Participação no total de Exportação/Importação

Balança Comercial do Setor Mineral

9

Investments in the Mining Sector 2010 a 2014

10

Investments in the Mining Sector 2010 a 2014

11

Investments in the Mining Sector per State (x 1000)

2010 to 2014 - US$ 54 billion

PA – US$ 23.680 (38,2%)Aluminum, Bauxite, Manganese, Copper, Iron, Níckel, Gold

MA – US$ 195Alumina

MG – US$ 24.298 (39,2%)

Bauxite, Alumina, Iron, Phosphate, GoldLogístics

RJ – US$ 1.000

Logístics

BA – US$ 6.010

Iron, Bauxite, Gold e Vanadium

GO – US$ 920

Phosphate, Níckel, Gold

MT– US$ 286

Iron, Gold

RN – US$ 710

Iron

TO – US$ 192

Phosphate and Gold

AL – US$ 450

Copper

CE – US$ 540

Iron, Phosphate. Urânium

SC – US$ 700

Copper e PhosphateRS – US$ 44

Coal

ES - US$ 2.986

Iron e Logistics

12

Investiments in Exploration

Total: US$ 7,3 bilhões

13

• Stronger State Regulating Powers

• Guarantee of Supply

• Democratic Access to mineral properties

• Sustainable development

• Optimum exploitation

• Value addition in the Country

• Attraction of investment

• Increase of research, development and innovation

Source – MME Jan 2010

Government Proposal - Objectives

14

Government Proposal - Measures

• New Administrative Framework

- National Council

- Mining Agency

• New Law and Regulations

- Access

- Granting

- Time for exploration and mining

- Relinquishment / speculation / investment obligations

- Contracts for mining

- Special Areas and Strategic Minerals

• Royalties

15

• Clear definition of the role of the State

• Clear Rules

• Objective criteria

• Security of Tenure

New Regulations - How it should be

16

• Freedom to operate

• Environment requirements

• Government take

• Surface / Land

• Communities

New Regulations - How it should be

17

SÃO PAULO

R. Hungria, 1.100

São Paulo - SP

01455-000 Brasil

T (55-11) 3247-8400 / F 3247-8600

RIO DE JANEIRO

Av.Nilo Peçanha, 11

Rio de Janeiro - RJ

20020-100 BrasilT (55-21) 2506-1600 / F 2506-1660

BRASÍLIA

SAFS Quadra 2, Bloco B, 3°andar

Ed. Via OfficeBrasília - DF

70070-600 Brasil

T (55-61) 3312-9400 / F 3312-9444

cvilhena@pn.com.brcvilhena@pn.com.br

Obrigado.