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8/3/2019 20100628 JPM Asia Pacific Conference NY CB Final
1/16
1
Company
Presentation
ClaudioBastos
SeniorVP&CFO
2
Sulawesi
JapanSouthKorea
Taiwan
China
Sorowako
PTIsOperations
Australia
MakassarJakarta
8/3/2019 20100628 JPM Asia Pacific Conference NY CB Final
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ValeIncoLimitedowns58.7%
directlyand0.4%indirectly
throughValeIncoJapan
ValeIncoLimitedisrequired
byCoWtomaintaingreater
than50%interestinPTI
Ultimatecontrolling
shareholderisVale
(NYSE:VALE)
20yearsoflistingonIndonesia
StockExchange
PTIOwnership
58.7
20.1
20
1.2ValeInco
Sumitomo
MetalMining
Public
OtherMinority
4
ContractofWork(CoW)ispartofthe
importantPTIsassetsforlongterm
operationinIndonesia.
CurrentCoWrunsthroughDecember2025.
Itcoversnickeloredepositinthreemajors
provincesinSulawesiwithatotalareaof
about218,000hectares.
ContractofWork
8/3/2019 20100628 JPM Asia Pacific Conference NY CB Final
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NickelMarket
Potentialforstrongstainlessproductiongrowthas
theeconomyrecoversandrestockingtakesplace
StainlessimprovingstronglyinQ110:Asiarobust,
USbacktopeaklevels(inJan),improvementsinEU
Nonstainlessimprovingfromlowlevels
Scrapavailabilitytightasstainlessrampsup(36
monthlag)
Rising
nickel
and
chrome
prices
reinforce
stainless
restockingdemand
6
PTIsmajorstrengths
Largenickelorereservesprovidesecure,
longtermfeed
Lowcosthydroelectricpower
Aggressivelypursuingcostandproductivity
improvements Highpotentialforfurtherfutureexpansion
Capableofrespondingtonickelmarketdemands
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Reserves
Threemajorminingareas:SorowakoEastBlock,
SorowakoWestBlockandPetea allinSouth
Sulawesi.
PTIestimatesorereservescansupportoperations
forapproximately30yearswithcurrenttechnology.
Upsidepotentialthroughongoingdrillingat
Bahodopi(CentralSulawesi),Pomalaa(SouthEast
Sulawesi),Sorowakoouterareaandcoastalareas.
8
Reserves
1.79121.1TotalReserves
1.7038.8Probable
1.8482.3Proven
%GradeMt
AsofDecember31,2009
OreReserves
(inmillionmetrictons)
A32%decreasefrompreviousyearslargelyduetoincompletepre
feasibilitystudy(FEL)attheprocessplantimprovements thiswillbe
reclassifiedbacktoreservesoncethestudycompleted,changeinendof
mininglifetoreflectthenewmininglaw,andminedepletion.
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Lowcosthydropowersupplies
Larona,165
Karebbe,90
Balambano,110
MBDGDiesel,30
SteamTurbine,24
CATDiesel,24
HydroelectricPower
(MWinaverage)
AuxiliariesBackup
Inconstruction
10
316.7
317.1
317.5
317.9
318.3
318.7
319.1
319.5
319.9
1 3 5 7 911
13
15
17
19
21
23
25
27
29
31
33
35
37
39
41
43
45
47
49
5 1 1 3 5 7 9
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
41
43
45
47
49
5 1 1 3 5 7 9
11
13
15
17
19
21
23
25
Production WeekNo.
TowutiWaterLevel(mASL
390.5
391.0
391.5
392.0
392.5
393.0
MatanoWaterLevel(mASL
Towutil La ke Ma ta noLake
Minimumreservoirlevel requiredfor fullhydroelectricpowergeneration
Reservoirfull
HydroReservoirLevels(frombeginningof2008untilApril2010)
Runningatfullhydrocapacityinenergysavemode
Recentlyspillingthe
watertomaintainthe
maximumlakelevel
8/3/2019 20100628 JPM Asia Pacific Conference NY CB Final
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Animprovementperformance:
4Q09comparedto1Q10
25.5 29.8ProfitMargin %
39.4 41.2GrossMargin %
60.0 76.2Earnings US$million
106.1 121.7EBITDA US$million
13,733 14,182AverageRealizedPrice
US$/metricton
17,030 19,811Production metrictons
12
8,3458,320
599
132
1366975898
7,500
8,000
8,500
9,000
9,500
4Q09 Fuel s&lubricants
Supplies Employee
costs
Services&Contracts
Taxesandinsurance
O thers 1Q10
COGSperunitremainsthesame
Increase
Decrease
Majorcontributorto
thehighercost
8/3/2019 20100628 JPM Asia Pacific Conference NY CB Final
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Continuingwithinitiativesonincreasing
efficiencyandcostenhancement
Integratedbusinessplanning anefficiencyimprovement
Assetmanagementframeworkandfrontlineplanningand
scheduling
Capitalmanagementsystem
Integratedcontractorstrategyframework
ERP,ZBB,ValueTree
Continueenergyconservationprogram
Maturity
of
other
initiatives
ie shared
services
and
global
procurement
14
76.4 71.6 76.8 72.467.3
19.817.0
05 06 07 08 09 4Q09 1Q10
(thousandmetrictonsofnickelinmatte)
Productioninthe1Q10ishighercomparedto
4Q09(whenwecarriedouta3furnaceweeksshutdown)duetomaintenancedeferralto2Q10
Ofwhich1,800metric
tonsrecordedas
nickelinmatte
inventories
8/3/2019 20100628 JPM Asia Pacific Conference NY CB Final
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Costofgoodsareundercontrol
5.84
7.958.91
11.07
7.728.32 8.35
0
2
4
6
8
10
12
2005 2006 2007 2008 2009 4Q09 1Q10
(inUS$thousands/metricton) Impactofhigherinputprices
16
Currentchallenges
Operatinginaturbulentsituation with
volatilecommodityprices(nickelandinputs)
BuildingKarebbeontimeandonbudget
Operatingunderhighsocioeconomic
pressures
Preparingforsustainablegrowth
8/3/2019 20100628 JPM Asia Pacific Conference NY CB Final
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Karebbeismovingahead
Allfabricationpackagesare
progressingasplanned
Projectprogresssummary
overall50%completion
Theprojectcompletionwillbein
thesecondhalf2011
Thisfacilitywillenableusto
reduceannualunitcashcosts
TotalcapitalbudgetofUS$410
million
18
Karebbe MainCivilWorksProgress
June2009 March2010
8/3/2019 20100628 JPM Asia Pacific Conference NY CB Final
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11,629
18,356
29,881
17,724
11,227
13,733 14,182
2005 2006 2007 2008 2009 4Q09 1Q10
(US$permetricton)
Amodestaveragerealizedpriceincreasein1Q10comparedto4Q09
+3.3%qoq
20
ImprovedEBITmargin
267.8
513.4
1,173.0
359.3
170.4
60.0 76.2
38.4
47.5
55.0
72.1
35.331.1
35.3
0
20
40
60
80
2005 2006 2007 2008 2009 4Q09 1Q10
0
300
600
900
1200
1500
Netearnings(US$million)EBITmargin(%)
EBITMargin NetEarnings
+27.2%qoq
8/3/2019 20100628 JPM Asia Pacific Conference NY CB Final
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EBITDA
1,759.7
550.1
327.8
821.4
442.4
106.1 121.7
2005 2006 2007 2008 2009 4Q09 1Q10
(inUS$million)
+14.7%qoq
22
ROCE
105.8 110.0 102.3
185.3
33.3 33.0
137.9
29
49
108
32
1523*20*
0
40
80
120
160
2005 2006 2007 2008 2009 4Q09 1Q10
0
40
80
120
160
200CapitalExpenditures(US$million)ROCE(%)
ROCE
CashCapital
Expenditures
*Annualized
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MajorCapitalHighlights
Karebbethirdhydrogeneratingfacilitieswitha
capitalplanofUS$410million.
Repairofelectricfurnaceno.2.
24
ProductionOptimizationProject
TheCompanyisinthemiddleofseveralstudiesonhowtofurtheroptimizetheoperationofourfacilitiesinSorowako debottleneckingproject;
Reviewingourbusinesstoidentifyareasforefficiencyandproductivityimprovements,includingenhancingprocessstabilityandequipmentreliability;
Ongoingoptimizationprojectsetsthestageforfurtherproductionincreases;
8/3/2019 20100628 JPM Asia Pacific Conference NY CB Final
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0.36
0.67
0.31
0.19
0.30
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
2006 2007 2008 2009 2010as per
March2010
Actual 3YrAvg
SafetyUpdates
LostTimeInjuryRate PTIEmployeesandContractors
(For1,000,000ManHours)
TargetofPTILTIFR
2010is0.28
We will continue to maintain focus on the current proven safetyprogramstocontinuetoreduceinjuries
Maintaining10%bestamongworldwideminingcompanies
26
Nurserywithcapacityof1milliontreesperyear(app.700hectares)
PTIrestored37nativetypesofvegetationto100hectaresofrehabilitated,postminingland
Returningpostminingareastotheiroriginalecosystems
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AllKilnESPs inOperations
December2009afterproject
completion
Kiln1,2,3ESPsstacks;
theoldstackshavebeenremoved
November2007beforetheproject
started
OldK1stack OldK2/3stack
28
Makassar
SorowakoBahodopi
Pomalaa
Malili
Sulawesi
Petea
PTI
Longrangedevelopment
PTIsubmitteditsfeasibility
reportonaprocessing
facilityinPomalaatothe
governmentofIndonesia.
Basedoncurrentcondition
andindependentanalysis
andusingrelevant
assumptions,theprojectis
noteconomicallyfeasible.
PTIcontinuestopursueand
analyzethefeasibilityofthe
project.
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Makedividendpaymentsbasedonavailablecash,
uptoamountofretainedearnings,afterprudently
makingprovisionforworkingcapital,debtservice
requirementsandcapitalexpenditures.
DividendPolicy
RecentDividendPayments:
2009interimdividend declaredinNovember2009andpaidon
December29,2009 US$110millioninaggregate.
Specialdividend outof2008retainedearningsdeclaredatMarch5,
2010EGMSandpaidonApril14,2010 US$141millioninaggregate.
30
Cashisthemajordriverofthe
Company
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PTI:
Thelargestlateriticnickeloperationin
theworld
www.ptinco.co.id