BS SteelMng Cement St Jul06

8/6/2019 BS SteelMng Cement St Jul06

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PLEASE SEE THE ADDENDUM AT THE END OF THIS REPORT FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATION.

Emerging Market

Equity Research

JULY 25,2006

GEM Steel, Mining & CementMonthly Review & OutlookCVRD, Mittal, PCU, Kazakhmys and Ternium Top Picks

TOP PICKS.Our list (ordered by market cap) includes: CVRD leading global share,high FCF, earnings visibility, strong volume growth/expansions; Mittal size/scale/diversification advantages, business momentum, upstream integration,

upside from M&A; PCU robust copper fundamentals, high dividends, scarcityvalue, M&A target; Kazakhmys (see below); and Ternium high FCF, low-costproducer, strong management, limited competition. All are rated Outperform.

SECTORSPOTLIGHT GLOBAL STEEL/IRON. Global steel output surged in June,with China up over 18% from a year ago to a new record, and ex-China showing itshighest growth rate since December 2002. Production gains result from increasedcapacity (mainly China), solid demand, inventory restocking, and notably the strongincentive from higher prices. High Chinese output remains a key risk factor forprices, and we think the discipline of global steel producers may again be challenged.While price momentum remains very strong in the second and third quarter, it looksincreasingly inevitable that some pricing gains will be given back later in the year.

COMPANY SPOTLIGHT KAZAKHMYS. On July 18, we initiated coverage ofKazakhmys, the worlds tenth-largest copper producer with an Outperform rating. Weare bullish on tight copper fundamentals (primarily on the supply side) and note themany company positives, including substantial reserves/growing output, low-costproduction, strong free cash flow, lack of price hedges, scarcity value for pure-playcopper equities, and solid positioning to be a regional consolidator.

VALUATION UPDATE.Steel stocks in our selected universe gained 2% on average inthe 30 days ended July 24; mining rose 8%, and cement/construction was up 4%.Trading volume fell 26% month on month, but is up 92% year on year. The averageEV/EBITDA was 10 bps lower at 5.0x.

Research Analysts:Daniel C. Altman, CFA Marina Rohe Paul J. Rosenberg(212) 272-5929 (212) 272-8578 (212) [email protected] [email protected] [email protected]


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Page 2 GEM STEEL, MINING & CEMENT: MONTHLY REVIEW &OUTLOOK

Table of Contents Page

Top Picks Update...............................................................................................................................................................3

Sector Spotlight Global Steel/Iron: Rise Cause for Concern? .....................................................................................4

Company Spotlight Kazakhmys: Initiating Coverage with Outperform Rating...........................................................6

Sector Valuation Monthly Highlights...........................................................................................................................9

Sector Liquidity Monthly Highlights..........................................................................................................................10

Stock Performance Monthly Highlights .....................................................................................................................11

Selected Global Steel, Mining & Cement Comparable Sheet .........................................................................................12Global Steel & Mining Comparables...............................................................................................................................16

Latin/Global Steel Stock Charts ......................................................................................................................................17

Bloomberg Index Charts..................................................................................................................................................19

Latin/Global Mining Stock Charts...................................................................................................................................20

Latin Cement & Construction Stock Charts ....................................................................................................................23

ADR Short Interest ..........................................................................................................................................................24

Stock Performance vs. Domestic Index...........................................................................................................................26

Stock Performance vs. Bloomberg Industry Index..........................................................................................................29

Stock Performance vs. Domestic Currency .....................................................................................................................32

Stock Performance vs. Underlying Commodity..............................................................................................................35

Correlation Charts............................................................................................................................................................38

Holding Company Discounts & Spreads.........................................................................................................................41

Appendix I Monthly Industry Data

Industrial Production, by Country ..................................................................................................................................45

Leading Economic Indicators.........................................................................................................................................46

Global Steel Production...................................................................................................................................................47

U.S. Steel Production & Utilization ................................................................................................................................50

Brazilian Steel Production & Shipments ........................................................................................................................51

Global Steel Sheet Quarterly Production and Consumption...........................................................................................52

Global Steel Sheet Quarterly Net Exports ......................................................................................................................53

China Key Industry Trade Statistics............................................................................................................................54

China Import/Export Statistics .......................................................................................................................................56

Global/U.S. Steel Pricing................................................................................................................................................57Latin American Steel Pricing..........................................................................................................................................60

Brazilian Domestic Steel Pricing....................................................................................................................................61

Domestic Chinese Steel Pricing......................................................................................................................................62

Monthly U.S. Steel Imports: Value and Prices by Country and Product........................................................................63

Monthly U.S. Steel Exports: Value and Prices by Product ............................................................................................66

Global Commodity Prices and Exchanges Stocks..........................................................................................................67

China Raw Material & CVRD Iron Ore Prices ..............................................................................................................70

Natural Gas Prices ..........................................................................................................................................................70

Freight Rates...................................................................................................................................................................71

Chilean Copper and Molybdenum Production ...............................................................................................................72

Alumina Contract and Spot Prices..................................................................................................................................72

Commodity Price Assumptions Table ............................................................................................................................72Monthly Auto Production & Sales: South Korea/Brazil.................................................................................................73

Global Rig Count............................................................................................................................................................74

Rig Counts vs. WTI Price & Tenaris Top 4 Markets .....................................................................................................74

Selected OCTG Prices ....................................................................................................................................................74

U.S. Construction Spending by Sector/Seasonally Adjusted..........................................................................................75

Appendix II GEM WatchHighlights

Steel & Mining ...............................................................................................................................................................79

All pricing is as of the market close on July 24, 2006, unless otherwise indicated.


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BEAR, STEARNS & CO. INC. Page 3

Top Picks Update

We like CVRD, given its leading global market share, high FCF, good earnings

visibility/defensiveness, and strong volume growth/expansions. We see upside in

Mittal due to size/scale/diversification advantages, business momentum,

unparalleled global market reach, strong upstream integration, upside from M&A,

and turnaround potential/underutilized capacity. Despite near-term concerns, we

favor Southern Copper due to strong copper fundamentals, high dividend yield,

scarcity value, and its status as a potential M&A target. We also like Kazakhmys

due to the tight copper market, substantial copper reserves/growing output, low-cost

production, strong free cash flow, lack of price hedges, and solid positioning to be a

regional consolidator. We favorTernium as well, which offers high FCF, low-cost

production, experienced management, and limited domestic competition.

Exhibit 1. GEM Steel, Mining & Cement Sector: Top Picks (by Market Cap.) Key Investment Positives and Key Risk Factors

Company Ticker Rating/Target* Key Investment Positives Risks to Our Target Price

CVRD RIO Outperform ** Strong Volume Growth/Expansions ** Profit Taking for Commodity Equities

$31.50 ** High FCF/Margins ** Volume/Pricing Upside Dependent on China

** Earnings Visibility/Defensiveness ** Acquisitions

Mittal MT Outperform ** Size/Scale/Diversification/Market Reach ** Generous Acquisition Price/Terms for Arcelor

$45.00 ** Momentum in Results ** Integration Issues/Execution Risk

** Upside from M&A, Upstream Integration ** Steel Prices Look to Have Peaked

S. Copper PCU Outperform ** Robust Outlook for Copper Fundamentals ** Significant Volume Losses Due to Ongoing Strikes

$125.00 ** Stocks Pricing In Lower Than Expected Copper Prices ** 2Q Hedge Loss Could Exceed US$250 mn

** 10+% Dividend Yields, Potential M&A target ** Taxation Risk in Peru

Kazakhmys KAZ Outperform ** Substantial Reserves/Growing Output ** Kazakhstan Country Risk

$27.00 ** Low-Cost Production/Strong FCF ** Potential Conflicts of Interest for Management

** Positioned to Be Regional Consolidator ** Complex and Escalating Tax Program

Ternium TX Outperform ** High FCF/Low Cost Production ** Hugo Chavez Risk in Venezuela

$33.00 ** Experienced, Value-Added Management ** Low Float/Liquidity

** Limited Domestic Competition/High Mexican Prices ** Significant Non-Ownership of Assets

* Year-End 2006. Valuation methodology based on either P/E or EV/EBITDA and Sum-of-the-Parts.Source: Bear, Stearns & Co. Inc. estimates. Sector Rating: Market Weight.

We continue to see upside forUsiminas (Outperform; price target: US$43) due to its

high margins, dividends and FCF, its low valuation, and its exposure to the high-

priced Brazilian markets. We are positive on Buenaventura (Outperform; price

target: US$35) due to its attractive absolute and relative valuation, our positive

outlook for gold, and the underestimated contribution of the Cerro Verde copper

mine. We continue to like Posco (Outperform; price target: US$78), given its high

FCF, absolute/relative valuation, leading technology, access to the high-end steelmarket in China, and size/scale. We also like Bradespar (Outperform; price target:

US$41)due to the expected appreciation of CVRD, an excessive holding company

discount, transparent valuation and low reinvestment risk. Risks to our target prices

include lower commodity prices, weaker global demand, and financial-market

uncertainty.

TOP PICKS:CVRD,

MITTAL,PCU,

KAZAKHMYS,

TERNIUM


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Sector Spotlight Global Steel/Iron: Rise Cause for Concern?

Key Data Highlights from IISI June Report (released July 19):

June growth rate at 13%. Global crude steel production in June rose 13% year overyear, or 11.7 mmt, to 103.8 mmt. The growth rate was the highest since December2004 and up 250 bps from the revised May level. Output rose 2% on a month-on-

month basis (adjusting for the same number of days).

China still the main growth driver, though less than half. Production (previouslydisclosed) rose 18.5% from a year ago, or 5.7 mmt, to 36.6 mmt the fourth straightmonth of record production. China was 35% of the global total and was just underhalf of the growth for the first time since 2002. On a per-day basis, production grew5% month on month.

Ex-China output was much higher. Steel output ex-China grew 10% year overyear, or 6 mmt the highest growth rate since December 2002 and the fifth straightmonth of rising production (versus the 2% year-over-year decline in second-half2005 in the face of falling prices). Top gainers included Ukraine (+23%), the U.S.

(+17%), and the U.K. (+15%). Output also grew in the two other major producerregions, the E.U. (+12%) and Japan (+3%). Russia was up 13% from last year, whileSouth Korea rose 9%. Low-cost Brazil fell 4% (the 13th consecutive decline),affected by the CSN outage. Ex-China was flat month on month.

Pig iron growth slightly exceeds steel. May pig iron output grew a stronger 14%year over year to 73.5 mmt (+1% month on month) as growth is more weighted toChina, which has primarily integrated facilities (the pig iron/steel ratio was slightlylower month on month, implying a higher minimill proportion). China rose 22% froma year ago to 35.1 mmt and was 48% of the global total. Ex-China pig iron outputgrew 8%, slightly below the rise for steel.

Net exports from China set new record. Separately, preliminary data showed Chinaas a net exporter of steel/slab in June (3.6 mmt) for the sixth straight month. Themonthly net export figure broke the May record by almost 1 mmt and takes the first-half 2006 amount to 10.4 mmt (versus 2.4 mmt in first-half 2005 and net imports insecond-half 2005). We think the growth in net exports is resulting from highproduction levels (due to increased prices), export opportunities, and selling ahead ofVAT tax changes.

Apparent Chinese consumption rises less than production. Adjusting for netexports, apparent consumption of steel in China grew 7% year over year in June(versus 19% for production) - the data may be distorted by inventory destockingand/or double counting. For first-half 2006, apparent consumption is up 14% year

over year (versus 18% for production).

Bottom line

Global steel output is surging given increased industry capacity (mainly in China),

solid demand, inventory restocking, and the strong incentive from higher steel prices

(the global average is up ~US$100/mt year to date). High Chinese output is once

again a key risk factor for prices, and we think the discipline of global steel producers

may again be challenged as inventories rebuild and/or growth slows later in the year.


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While price momentum remains very strong in the second and third quarter, it looks

increasingly inevitable that some pricing gains will be given back later in the year.

This note was originally published in the July 20, 2006 Latin America Watch.

Pricing is as of market close July 19, 2006.


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Company Spotlight Kazakhmys: Initiating w/Outperform

On July 18, we initiated coverage of Kazakhmys, the worlds tenth-largest copper

producer at roughly 2.4% of global production, with an Outperform rating at the

previous days closing price of GBp1,156, or US$21.02/share.

Investment Positives

Bullish view on copper. Copper is benefiting from a very tight supply/demanddynamic, which has propelled exchange inventories to minimal levels (roughly three

days of consumption) and prices to historic highs. The most compelling story is on

the supply side, where output growth is being constrained by both structural issues

(declining grades, few new major ore discoveries, labor/equipment shortages,

water/power availability, etc.) as well as the byproduct of high

utilization/profitability (accidents, labor strikes, etc.). Meanwhile, new projects are

increasingly located in areas with higher political risk, much greater capital costs, and

longer buildout periods.

On the demand side, secular trends such as infrastructure development and

urbanization in developing countries underpin strong growth. Barring a major globalslowdown, we expect supply/demand tightness for the remainder of the decade. We

conservatively forecast copper prices to average US$3.00/lb in 2006, US$2.40/lb in

2007, and US$2.00/lb in 2008.

Long reserve life with growing output. Kazakhmys has proven and probable

reserves of 18 mmt of contained copper, placing it among the top ten worldwide. We

look for solid output growth, most notably from a large US$650 million, 160- to 170-

kmt greenfield project called Aktogay. Aktogay could be approved by September

2006 and begin production in 2009. With an average population density of

approximately 5.6 people per square kilometer, Kazakhstan is one of the most

sparsely populated countries in the world a key positive for mining given its highenvironmental impact.

Strong cash flow with acquisition growth opportunities. Kazakmhys is already

sitting on a net cash balance and is forecast to average US$1.2 billion in FCF during

2006E-2008E. As the largest domestic mining company, with an extensive track

record, experienced management, and existing infrastructure, we think it is well

positioned to acquire smaller mining assets in Kazakhstan. With few competitors, we

see a domestic acquisition strategy as likely additive to returns, supportive of

company growth, and providing diversification into other metals.

Low-cost producer. Kazakhmys benefits from low-cost labor in Kazakhstan, self-sufficiency in electricity (it owns its thermal power plants, which use coal extracted

from its own mines at 1 per KWh), and significant zinc, gold, and silver byproduct

revenues (about 20% of mining sales). Kazakhmys had a cash cost of 45/lb in 2005,

likely in the second quartile of the global cost curve (mostly behind producers which

have molybdenum as a byproduct).

Strategic location to supply key consumers. Kazakhmys is located in central Asia

and borders the northwest of China, which is a key copper consumer (about 25% of

world demand and 50% of the companys consolidated revenues). Kazakhmys


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estimates an average transportation cost of about US$15/mt to the China border,

which compares favorably to about US$50/mt from Chile to China. The company

also has exposure to Germany, the third-largest copper-consuming country, through

its fabricated products subsidiary.

Scarcity value. Kazakhmys is one of the few pure-play copper companies available

to investors this is especially the case if Phelps Dodge diversifies into nickel via

acquisition. Its shares are highly liquid (30-day ADTV of nearly US$70 million) andare listed on the London Stock Exchange. Although we believe Kazakhmys key

shareholders will pursue a domestic acquisition strategy, we think it could ultimately

become an M&A target for a larger, more diversified company if conditions permit.

Investment Risks

Commodity price/sentiment/forecasting risk. As a commodity producer with

limited diversification, the company remains highly levered to the copper price a

factor over which it has no control. While we think the shares are discounting a much

lower copper price, a major correction in the metal price could be an important

barrier for stock performance. The shares are also susceptible to top-down investor

concerns about global growth, emerging markets, and interest rates. This partlyaccounts for the ~20% drop in the shares off their highs. Separately, there is

forecasting risk in our estimates given the short company track record as a U.K.-

listed company (it began trading in October 2005), the lack of quarterly results, and

no regular conference calls.

Country risk. Although Kazakhstans debt is considered investment grade by the

key rating agencies, the country still experiences a relatively high inflation rate,

which could pressure costs (revenues are U.S. dollar-denominated, while costs are

35% local currency). In addition, several of its exploration regulations and tax laws

are fairly recent and subject to government interpretation. Recent Kazakh

government actions in the energy sector (against foreign operators) have raised someinvestor concerns about reprivitization risk. We think Kazakmhys, as a domestic

producer in the mining sector, will most likely be sheltered from this risk.

Potential conflicts of interest. The three key shareholders hold top management

positions in the company (chairman of the board, CEO, and CFO). This could create

a conflict of interest if they decide to purchase mining assets outside the company. In

March 2006, Vladimir Kim (chairman of the board and 40% owner) acquired a 25%

interest in a holding company for the mining business of Eurasia Natural Resources

(EKH). In consideration of the potential conflict of interest, Vladimir Kim offered a

call option to Kazakhmys (at a 10% premium to his offer price). We think

transactions done outside the company by its owners, if repeated, could create a realor perceived overhang for the shares.

Complex and escalating tax program. In addition to the 30% corporate rate,

Kazakhmys has a complex tax program based primarily on the IRR of the company

(in part using trailing/current copper prices and the profitability of the mine). The

level of taxation reduces the companys earnings visibility and affects the earnings

upside in a high copper price/profit environment. In 2005 the company had an


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effective tax rate of 35%, expected to rise to around 38% in 2006E the maximum

level of taxation is seen in the low 40s.

Valuation

Upside to the target. Our end-2006 price target is US$27/share (GBp1,550), based

on 10x 2007E EPS (net of interest income) plus ~US$3/share of expected year-end

net cash. We expect cash on hand, after dividend payments, will be used to expand

copper output and make acquisitions, thus we prefer to value it separately.

The target multiple is similar to that used for other copper companies in our coverage

list. We believe strong growth, low-cost assets, high share liquidity, and a good

labor/environmental position offset country/ownership risk. Our target is roughly

13.5x our 2008E earnings, which assume a US$2/lb copper price. We look for a

nearly 4% estimated dividend yield based on the current share price. Key risks

include lower commodity pricing/volumes and financial-market uncertainty.

DCF gives us a similar price target. Our DCF analysis leads us to a similar

valuation, based on a WACC of 11.5% and a 5.0x EV/EBITDA multiple for the

terminal value. We use a long-term copper price of US$1.75/lb, less than half of thecurrent spot price, to reflect increased future supply. We think this estimate could be

conservative in light of the difficulty and high costs of developing major new

reserves.

Company Description

Kazakhmys is the world tenth-largest copper producer, with annual volumes of about

400 kmt representing 2.4% of the worlds copper production. Kazakhmys also has

lesser interests in zinc, gold, and silver. The company is incorporated in the U.K., but

its mining assets are located in Kazakhstan. In addition, the company has a

fabrication facility in Germany producing wire, tubes, bars, and flat copper products.

Kazakhmyss three top managers hold 67% of the company (Vladmir Kim 40%,Yong Keu Cha 16%, Oleg Novachuk 11%); the remainder is free float. The shares

trade solely on the London Stock Exchange (FTSE).

This note was originally published in the July 18, 2006 Global Emerging Markets

Watch. Pricing is as of market close July 17, 2006.


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Sector Valuation Monthly Highlights

The average price to adjusted earnings for 2007E is 7.9x (flat versus last month),

while the EV/EBITDA multiple is 5.0x (-10 bps). The highest five companies

have an average EV/EBITDA of 6.9x, while for the lowest five, it is only 3.4x.

We look for an average sector dividend yield of 4%, with Southern Copper

leading the way with a potential 14%. The average sector operating FCF yield is

15%, with all but two companies in double digits.

We look for average 2007E revenue and EBITDA growth of 7% and 4%,

respectively, due to higher iron ore and commodity prices and the expansion at

Cerro Verde. Meanwhile, we look for an average EBITDA margin of 39%, with

Cerro Verde (73%) and Antofagasta (71%) achieving the highest levels.

Exhibit 2. GEM Steel, Mining & Cement Sector: Valuation Rankings, 2007E

Revenue Growth '07E EBITDA Growth '07E EBITDA Margin '07E Net Debt/ EBITDA '07E

erro er e erro er e erro er e na tee

Arcelor Brasil % China Steel % Antofagasta % Cerro Verde NMrce or ras out ern opper aza mysTenaris % Ternium % Grupo Mexico % Buenaventura NMCSN % Tenaris % CVRD % Antofagasta NM

na tee aza mys enar sICA % Mittal % CSN % Posco .Buenaventura % CVRD % Tenaris % Grupo Mexico .

ern um er au ern um out ern opper .Mittal % CSN % Arcelor Brasil % Ternium .Gerdau SA % Cemex % Usiminas % Arcelor Brasil .

emex s m nas - uenaventura er au .Usiminas % Posco - % China Steel % Usiminas .Posco % Buenaventura - % Posco % CVRD .

rupo ex co - rupo ex co - emex tta .Southern Copper - % Southern Copper - % Gerdau SA % CSN .Kazakhmys - % Kazakhmys - % Mittal % ICA .

nto agasta - nto agasta - emex .

verage .

P/Adj. E '07E* EV/ EBITDA '07E Dividend Yield '07E FCF YLD '07E **

ICA . ICA . Southern Copper % Cerro Verde %enar s . enar s . rupo ex co rupo ex co

Cemex . Cemex . China Steel % ICA %CSN . CVRD-ON . Usiminas % Ternium %

nto agasta . uenaventura . rce or ras nto agastaChina Steel . CVRD-PN . CSN % Mittal %Kazakhmys . China Steel . Ternium % Posco %

uenaventura . . - Arcelor Brasil . Gerdau SA . Kazakhmys % Usiminas %CVRD-ON . Arcelor Brasil . Antofagasta % Arcelor Brasil %

er au . aza mys . - out ern opper Southern Copper . Southern Copper . Gerdau SA % Kazakhmys %Posco . Usiminas . Posco % CVRD-PN %

- . tta . tta emexUsiminas . Antofagasta . Buenaventura % CVRD-ON %

tta . osco . emex er auTernium . Grupo Mexico . Tenaris % China Steel %Grupo Mexico . Ternium . Cerro Verde % Buenaventura %

erro er e . erro er e . enar s

verage . .

Source: Bear, Stearns & Co. Inc. estimates. * Removes FX/Monetary Adjustment ** (EBITDA- Net Interest Expense - Working Capital Capex) / Market Capitalization.

VALUATION LEVELS

DOWN


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Sector Liquidity Monthly Highlights

Trading levels for the 30-day period ended July 24 fell 25% month over month,with only 10% of the stocks in the universe showing increased activity.

Volume was 96% higher than the average of the year-ago 30-day period, andover six times higher than the average of three years ago. CVRD had the most

liquid shares during the past month, followed by Mittal and Tenaris.

Mittal, China Steel, and Kumba Resources increased the most versus last month.Norilsk, Ternium and Mittal South Africa were among the top decliners.

Exhibit 3. GEM Steel, Mining & Cement Avg. Daily Trading Volume** (in US$ 000)

(A) (B) (C) (D)

Last 30-Days Previous 1 Year Ago 3 Years Ago A/B A/C A/D

CVRD 262,219 445,147 147,484 10,369 -41% 78% NM

Mittal Steel 215,255 112,540 38,835 65 91% NM NM

Tenaris 184,986 280,379 55,454 3,079 -34% 234% NM

Cemex 146,042 219,021 58,423 18,140 -33% 150% NM

Posco 144,448 176,572 98,336 37,613 -18% 47% 284%

Southern Copper 140,669 165,272 41,060 929 -15% 243% NM

Kazakhmys 65,769 66,399 NM NM -1% NM NM

Antofagasta 41,423 61,618 29,671 1,245 -33% 40% NM

Norilsk 40,626 96,562 27,957 4,602 -58% 45% NM

CSN 39,783 63,608 29,532 5,787 -37% 35% NM

Gerdau 33,371 56,386 17,763 3,249 -41% 88% NM

China Steel 31,852 28,448 45,775 73,413 12% -30% -57%

Usiminas 30,572 51,506 25,394 4,527 -41% 20% NM

Tata Iron & Steel 26,234 27,774 10,552 26,537 -6% 149% -1%

Grupo Mexico 18,688 25,928 13,831 361 -28% 35% NM

Mechel 14,175 22,284 14,154 NM -36% 0% NM

Buenaventura 13,835 25,149 6,348 3,953 -45% 118% 250%Arcelor Brasil 11,872 17,885 NM NM -34% NM NM

Bradespar 9,678 13,240 2,902 494 -27% 234% NM

ICA 7,057 9,955 5,163 396 -29% 37% NM

Kumba Resources 7,020 6,788 2,606 2,445 3% 169% 187%

Mittal South Africa 6,802 12,494 11,609 4,520 -46% -41% 50%

Ternium 5,059 9,818 NM NM -48% NM NM

Penoles 1,285 2,359 240 135 -46% NM NM

Acesita 1,093 1,464 1,913 913 -25% -43% 20%

Acindar 908 1,232 1,729 1,557 -26% -47% -42%

Siderar 851 1,274 1,002 154 -33% -15% NM

Cerro Verde 621 1,002 286 2 -38% 117% NM

Imsa 451 666 443 48 -32% 2% NMGCC 309 383 348 83 -19% -11% 274%

Average 50,098 66,772 25,512 7,870 -25% 96% 537%

Avg Top-5 190,590 246,732 79,706 13,853 -23% 139% NM

Avg Top-10 128,122 168,712 58,528 9,092 -24% 119% NM

Avg Bottom-10 2,860 4,312 2,534 1,025 -34% 13% 179%

--- % change versus ---

Source: Bloomberg. ** Combines all classes of local and ADR shares for each company.

SHARE LIQUIDITY

DOWN


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Stock Performance Monthly Highlights

For the 30-day period ended July 24, stocks in our selected global universe rose5% on average. Steel companies were up 2% during the period, mining gained8%, and cement/construction rose 4%.

Arcelor (+14%) was the biggest gainer among the steel universe over the pastmonth. Cerro Verde (+32%) and ICA (+15%) were the best performers in

mining and cement/construction, respectively.

U.S. Steel (-6%) was the worst-performing steel stock. Rio Tinto (-3%) and Fluor(-3%) were the laggards in the other two sectors.

Exhibit 4. Global Steel, Mining & Cement: Sector Performance June 23 July 24 & YTD

Price (US ) Mkt Cap (mn) Last -Days YTD % Ch. High % Ch. LowSteel

Arcelor . , 7 % % - % %Mittal South Africa 10.69 4,768 11% 10% -12% 44%Gerdau . ,7 5 % % - % %CSN .7 7, % % - % 7 %Nippon Steel .7 , % 5% - % 5 %

Tenaris 7. , 7 5% 5% - % %Usiminas 33.01 7,242 4% 16% -22% 120%Mittal . 5 , % % - % %

Arcelor Brasil 5. 5 , % % - 7% %Ternium . , 7 - % % - % %Posco . ,7 - % % - % %Nucor 5 . 5,7 7 - % 5 % - % %JFE Holdings 7.5 , - % % - 5% 7%China Steel . , - % 7% -7% 5%Mechel .5 ,7 -5% - % - 7% %U.S. Steel 5 . 7,5 - % 5% - % 7 %

Mining

Cerro Verde . , % % - % 5 %Norilsk .5 , 5 % % - % %

Grupo Mexico . 7, % % - % 7 %Southern Copper 5.7 , % % - % %Kumba Resources .55 5, % 5% - % 7 %Kazakhmys .5 , % % - % 5%BHP-Billiton 42.32 127,701 4% 27% -14% 45%Bradespar .5 , % % - 5% 77%

Anglo American .77 5 ,5 % % - 7% %Newmont 5 . , % - % - % %Buenaventura . , % -7% - 5% %CVRD . 5 , % % - % %

Antofagasta 7. 7, - % % - 5% %Rio Tinto . , 7 - % % - % 5 %

Cement/Construction

ICA . , 5% % - % 5 %Cemex . ,5 7 % % - 7% %Holcim 7 .5 7, % % - % 5%Lafarge .5 ,7 - % % - % %Fluor 5. 7,557 - % % - 7% %

Indexes

Mexican Bolsa , NA % % - % %Bovespa ,5 5 NA 7% 5% - % %Merval 5 NA 5% % - 5% %S&P 5 , NA % % -5% 7%Kospi . NA % % - % %

----52 Week----

Source: Bloomberg.

STOCKPERFORMANCE

UP


12/96


13/96


14/96


15/96


16/96


17/96


Exhibit 10. Latin Steel Stock Charts, July 24, 2006

Ternium ADR - USD

$19

$22

$25

$28

$31

Jul-

06

Jul-

06

Jun-

06

May-

06

May-

06

Apr-

06

Mar-

06

Feb-

06

Feb-

06

CSN ADR - USD

$5

$14

$23

$32

$41

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Tenaris ADR - USD

$2

$14

$26

$38

$50

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Usiminas Local - USD

$0

$11

$22

$33

$44

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Arcelor Brasil Local - USD

$8

$11

$14

$17

$20

Jul-

06

Jun-

06

May-

06

May-

06

Apr-

06

Mar-

06

Feb-

06

Jan-

06

Dec-

05

Nov-

05

Gerdau ADR - USD

$0

$5

$10

$15

$20

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Siderar Local - USD

$0

$3

$6

$9

$12

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Acindar Local - USD

$0.00

$0.40

$0.80

$1.20

$1.60

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Source: Bloomberg; Bear, Stearns & Co. Inc.


18/96


Exhibit 11. Global Steel Stock Charts, July 24, 2006

US Steel

10

27

44

61

78

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Tata Iron & Steel Local - USD

$0

$4

$8

$12

$16

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Mittal ADR - USD

$20

$26

$32

$38

$44

Jul-

06

May-

06

Mar-

06

Jan-

06

Nov-

05

Sep-

05

Jul-

05

May-

05

Mar-

05

Jan-

05

Arcelor Local - USD

$10

$21

$32

$43

$54

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Nucor

$5

$20

$35

$50

$65

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Posco ADR - USD

$20

$34

$48

$62

$76

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

China Steel Local - USD

$0.25

$0.50

$0.75

$1.00

$1.25

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Nippon Steel

$0.50

$1.50

$2.50

$3.50

$4.50

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03



19/96


Exhibit 12. Bloomberg Index Charts, July 24, 2006

US Steel Index

40

120

200

280

360

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Asia Steel Index

90

140

190

240

290

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

World Mining Index

100

150

200

250

300

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

US Mining Index

55

90

125

160

195

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Japan Steel Index

150

450

750

1,050

1,350

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Europe Steel Index

65

125

185

245

305

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Asia Mining Index

90

160

230

300

370

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Europe Mining Index

65

135

205

275

345

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03



20/96


Exhibit 13. Latin Mining Stock Charts, July 24, 2006

CVRD ON ADR - USD

$0

$8

$16

$24

$32

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Buenaventura ADR - USD

$16

$20

$24

$28

$32

Jul-06

Apr-06

Dec-05

Aug-05

May-05

Jan-05

Sep-04

May-04

Feb-04

Southern Copper - USD

$10

$35

$60

$85

$110

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Bradespar Local - USD

$5

$15

$25

$35

$45

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

CVRD PN ADR - USD

$0

$7

$14

$21

$28

Jul-06

Apr-06

Dec-05

Aug-05

May-05

Jan-05

Sep-04

May-04

Feb-04

Antofagasta - USD

$2

$4

$6

$8

$10

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Grupo Mexico Local - USD

$0

$1

$2

$3

$4

Jul-06Apr-06

Dec-05

Aug-05

May-05

Jan-05

Sep-04

May-04

Feb-04

Cerro Verde Local - USD

$1.00

$3.50

$6.00

$8.50

$11.00

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04 Source: Bloomberg; Bear, Stearns & Co. Inc.


21/96


Exhibit 14. Global Mining Stock Charts, July 24, 2006

WMC Resources - Local

$0

$2

$4

$6

$8

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Alcoa

$10

$20

$30

$40

$50

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

BHP ADR

$8

$19

$30

$41

$52

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Rio Tinto ADR

$70

$115

$160

$205

$250

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Inco Limited

$17

$31

$45

$59

$73

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Alcan

$25

$34

$43

$52

$61

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Norilsk - Local

$20

$56

$92

$128

$164

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Anglo American - Local

$480

$720

$960

$1,200

$1,440

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03



22/96


Exhibit 15. Global Mining Stock Charts, July 24, 2006

Newmont

$21

$32

$43

$54

$65

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Placer Dome - Local

$7

$12

$17

$22

$27

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Phelps Dodge

$13

$36

$59

$82

$105

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Xstrata - Local

$3

$15

$27

$39

$51

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Barrick Gold

$13

$19

$25

$31

$37

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

FMG - Local

$0.00

$2.50

$5.00

$7.50

$10.00

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Freeport McMoran

$15

$31

$47

$63

$79

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Oct-

03

Kazakhmys - Local

$8

$13

$18

$23

$28

Jul-

06

Jun-

06

May-

06

Apr-

06

Mar-

06

Feb-

06

Jan-

06

Dec-

05

Nov-

05

Oct-

05



23/96


Exhibit 16. Latin Cement & Construction Stock Charts, July 24, 2006

Moctezuma Local - USD

$0.50

$1.00

$1.50

$2.00

$2.50

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

ICA ADR - USD

$10

$19

$28

$37

$46

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Consorcio ARA ADR - USD

$17

$27

$37

$47

$57

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Corporacion GEO ADR - USD

$0

$5

$10

$15

$20

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Cemex ADR - USD

$6

$14

$22

$30

$38

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Cementos Lima Local - USD

$0.50

$0.75

$1.00

$1.25

$1.50

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

GCC ADR - USD

$0

$1

$2

$3

$4

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04

Consorcio Hogar ADR - USD

$2

$3

$4

$5

$6

Jul-

06

Apr-

06

Dec-

05

Aug-

05

May-

05

Jan-

05

Sep-

04

May-

04

Feb-

04



24/96


Exhibit 17. ADR Short Interest Ratio, July 2006

Buenaventura

0

1

2

3

4

J ul -03 Jan-04 Jul -04 Jan-05 J ul -05 Jan-06 J ul -06

Posco

0

2

4

6

8

J ul-03 Jan-04 Jul-04 Jan-05 J ul-05 Jan-06 Jul-06

CVRD ON

0

3

6

9

12

Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06

Mittal

0

3

6

9

12

Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06

Tenaris

0

3

6

9

12


Southern Copper

0

4

8

12

16


Gerdau

0

3

6

9

12


CSN

0

3

6

9

12


Down 0.2 m/m

Down 0.6 y/y

Up 1.1 m/m

Up 1.9 y/y

Up 1.1 m/m

Down 0.6 y/y

Up 0.5 m/m

Down 1.6 y/y

Up 0.5 m/m

Down 1.5 y/y

Up 0.1 m/m

Down 1.2 y/y

Up 0.5 m/m

Up 1.4 y/y

Down 0.4 m/m

Down 0.4 y/y



25/96


Exhibit 18. ADR Short Interest Ratio, July 2006

Phelps Dodge

0

2

4

6

8

J ul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06

Nucor

0

2

4

6

8

J ul-03 Jan-04 Jul-04 J an-05 Jul-05 Jan-06 J ul-06

Cemex

0

3

6

9

12


.

ICA

0

6

12

18

24


US Steel

0

3

6

9

12


Newmont Mining

0

2

4

6

8


Rio Tinto

0

5

10

15

20


BHP Billiton

0

2

4

6

8


Down 0.1 m/m

Down 0.4 y/y

Up 1.0 m/m

Down 4.4 y/y

Up 0.3 m/m

Down 2.7 y/y

Up 0.7 m/m

Down 0.9 y/y

Up 0.7 m/m

Down 1.2 y/y

Up 0.5 m/m

Down 0.5 y/y

Up 0.8 m/m

Down 0.8 y/y

Down 0.1 m/m

Down 1.8 y/y



26/96


Exhibit 19. Stock Performance vs. Domestic Index, July 24, 2006

Usiminas Local (USD) vs Bovespa (USD)

$0

$11

$22

$33

$44

Jul-06Feb-06Aug-05Mar-05Sep-04Apr-04Oct-03

3,000

7,500

12,000

16,500

21,000

Usiminas Bovespa

CSN ADR vs Bovespa (USD)

$0

$10

$20

$30

$40


3,000

7,500

12,000

16,500

21,000

CSN Bovespa

Arcelor Brasil Local (USD) vs Bovespa (USD)

$8

$11

$14

$17

$20

Jul-06Jun-06May-06Apr-06Mar-06Jan-06Dec-05

13,500

15,300

17,100

18,900

20,700

Arcelor Brasi l Bovespa

Gerdau ADR vs Bovespa (USD)

$0

$5

$10

$15

$20


3,000

7,500

12,000

16,500

21,000

Gerdau Bovespa

Posco ADR vs Kospi (USD)

$20

$35

$50

$65

$80


0.50

0.80

1.10

1.40

1.70

Posco Kospi

China Steel (USD) vs TWSE (USD)

$0

$1

$1

$1

$1


110

150

190

230

270

China Steel TWSE

Nippon (USD) vs Nikkei 225 (USD)

$1

$2

$3

$4

$5


60

85

110

135

160

Nippon Nikkei 225

JFE (USD) vs Nikkei 225 (USD)

$10

$20

$30

$40

$50


60

85

110

135

160

JFE Nikkei 225



27/96



US Steel vs S&P 500

$0

$20

$40

$60

$80


950

1,050

1,150

1,250

1,350US Steel S&P

Mittal ADR vs S&P 500

$20

$26

$32

$38

$44

Jul-06Apr-06Jan-06Oct-05Jul-05Apr-05Jan-05

1,100

1,160

1,220

1,280

1,340Mittal S&P

Ternium ADR vs Merval (USD)

$19

$22

$25

$28

$31

Jul-06Jun-06Jun-06May-06Apr-06Apr-06Mar-06Feb-06

450

500

550

600

650

Ternium Merval

Tenaris ADR vs Merval (USD)

$2

$14

$26

$38

$50


210

320

430

540

650

Tenaris Merval

CVRD ADR vs Bovespa (USD)

$0

$8

$16

$24

$32


3,000

7,500

12,000

16,500

21,000

CVRD Bovespa

BHP ADR vs ASX 200 (USD)

$10

$20

$30

$40

$50


1,900

2,500

3,100

3,700

4,300

BHP ASX 200

RTP ADR vs FTSE 100 (USD)

$50

$100

$150

$200

$250


2,250

2,600

2,950

3,300

3,650

RTP FTSE 100

Anglo American ADR vs FTSE 100 (USD)

$5

$10

$15

$20

$25


2,250

2,600

2,950

3,300

3,650

Anglo American FTSE 100



28/96



S. Copper ADR vs Lima Index (USD)

$10

$35

$60

$85

$110


300

1,000

1,700

2,400

3,100Southern Copper Lima Index

Grupo Mexico Local vs Bolsa (USD)

$0.20

$1.10

$2.00

$2.90

$3.80


500

900

1,300

1,700

2,100Grupo Mexico Bolsa

Antofagasta vs IPSA (USD)

$2

$4

$6

$8

$10


1

2

3

4

5

Antofagasta IPSA

Kazakhmys vs FTSE 100 (USD)

$7

$12

$17

$22

$27

Jul-06May-06Mar-06Dec-05Oct-05

2,800

3,000

3,200

3,400

3,600

Kazakhmys FTSE

Cerro Verde vs Lima Index (USD)

$0

$3

$6

$9

$12


300

1,000

1,700

2,400

3,100

Cerro Verde Lima Index

Cemex ADR vs Bolsa (ADR)

$4

$13

$22

$31

$40


500

900

1300

1700

2100

Cemex Bolsa

ICA ADR vs Bolsa (USD)

$6

$16

$26

$36

$46


500

900

1,300

1,700

2,100ICA Bolsa

Buenaventura ADR vs Lima Index (USD)

$10

$16

$22

$28

$34


300

1,000

1,700

2,400

3,100

Buenaventura Lima Index



29/96


Exhibit 22. Stock Performance vs. Bloomberg Industry Index, July 24, 2006

Posco ADR vs Asia Steel Index

$20

$35

$50

$65

$80


100

150

200

250

300

Posco Asia Stee l Index

CSN ADR vs US Steel Index

$0

$10

$20

$30

$40


50

125

200

275

350

CSN US Steel Index

Usiminas Local (USD) vs US Steel Index

$4

$15

$26

$37

$48


50

125

200

275

350

Usiminas US Steel Index

Gerdau ADR vs US Steel Index

$0

$5

$10

$15

$20


50

125

200

275

350

Gerdau US Steel Index

China Steel Local vs Asia Steel Index

$0.50

$0.75

$1.00

$1.25

$1.50


100

150

200

250

300

China Steel Asia Steel Index

Nippon Local vs Japan Steel Index

$1

$2

$3

$4

$5


400

600

800

1,000

1,200

Nippon Japan Steel Index

1

JFE Local vs Japan Steel Index

$15

$23

$31

$39

$47


400

600

800

1,000

1,200

JFE Japan Steel Index

Arcelor Brasil Local (USD) vs US Steel Index

$8

$11

$14

$17

$20

Jul-06Jun-06May-06Mar-06Feb-06Dec-05Nov-05

160

210

260

310

360

Arcelor Brasil US Steel Index



30/96



CVRD ADR vs World Mining Index

$2

$9

$16

$23

$30


100

150

200

250

300

CVRD ON World Mining Index

Mittal ADR vs US Steel Index

$20

$26

$32

$38

$44

Jul-06Apr-06Jan-06Oct-05Jul-05Apr-05Jan-05

130

190

250

310

370

Mittal US Steel Index

Tenaris ADR vs US Steel Index

$2

$14

$26

$38

$50


50

130

210

290

370

Tenaris US Steel Index

Ternium ADR vs US Steel Index

$20

$23

$26

$29

$32

Jul-06Jun-06May-06May-06Apr-06Mar-06Feb-06

225

265

305

345

385

Ternium US Steel Index

BHP ADR vs World Mining Index

$10

$20

$30

$40

$50


100

150

200

250

300

BHP World Mining Index

\

Anglo American ADR vs World Mining Index

$8

$12

$16

$20

$24


100

150

200

250

300

Anglo American World Mining Index

US Steel vs US Steel Index

$15

$32

$49

$66

$83


50

130

210

290

370

US Steel US Steel Index

Rio Tinto ADR vs World Mining Index

$80

$125

$170

$215

$260


100

150

200

250

300

Rio Tinto World Mining Index



31/96



Cerro Verde (USD) vs World Mining Index

$0

$3

$6

$9

$12


100

150

200

250

300

Cerro Verde World Mining Index

G. Mexico (USD) vs World Mining Index

$0

$1

$2

$3

$4


100

150

200

250

300

Grupo Mexico World Mining Index

Kazakhmys (USD) vs World Mining Index

$5

$11

$17

$23

$29

Jul-06May-06Apr-06Feb-06Dec-05Oct-05

140

180

220

260

300

Kazakhmys World Mining Index

Antofagasta (USD) vs World Mining Index

$2

$4

$6

$8

$10


100

150

200

250

300

Antofagasta World Mining Index

Buenaventura ADR vs World Mining Index

$15

$20

$25

$30

$35


100

150

200

250

300

Buenaventura World Mining Index

ICA vs US E&C Index

$5

$15

$25

$35

$45


100

150

200

250

300

ICA US E&C Index

Southern Copper vs World Mining Index

$15

$40

$65

$90

$115


100

150

200

250

300

PCU World Mining Index

Cemex vs World Bldg Materials Index

$10

$17

$24

$31

$38


100

135

170

205

240

Cemex World Bldg Materials Index



32/96


Exhibit 25. Stock Performance vs. Domestic Currency, July 24, 2006

Nippon Local vs Japanese Yen

$1

$2

$3

$4

$5


90

100

110

120

130

/US$

Nippon Yen

CSN ADR vs Brazilian Real

$3

$12

$21

$30

$39


2.0

2.5

3.0

3.5

4.0

R$/US$

CSN Real

Arcelor Brasil Local (USD) vs Brazilian Real

$8

$11

$14

$17

$20

Jul-06Jun-06May-06Apr-06Mar-06Jan-06Dec-05Nov-05

2.0

2.1

2.2

2.3

2.4

R$/U

S$

Arcelor Brasi l Real

Usiminas Local (USD) vs Brazilian Real

$0

$11

$22

$33

$44


2.0

2.5

3.0

3.5

4.0

R$/US

$

Usiminas Real

Gerdau ADR vs Brazilian Real

$0

$5

$10

$15

$20


2.0

2.5

3.0

3.5

4.0

R$/US

$

Gerdau Real

China Steel (USD) vs Taiwanese Dollar

$0.25

$0.50

$0.75

$1.00

$1.25


30.0

31.5

33.0

34.5

36.0

NT$/US$

China Steel NT$

Posco ADR vs Korean Won

$15

$31

$47

$63

$79


900

1,000

1,100

1,200

1,300

KRW/US$

Posco Won

JFE Local vs Japanese Yen

$10

$20

$30

$40

$50


90

100

110

120

130

/US$

JFE Yen



33/96



US Steel vs US$/Euro

$10

$28

$46

$64

$82


0.60

0.70

0.80

0.90

1.00

US

$/

US Steel US$/

Mittal ADR vs US$/Euro

$2

$14

$26

$38

$50

Jul-06Mar-06Dec-05Aug-05Apr-05Jan-05

0.70

0.75

0.80

0.85

0.90

US$/

Mittal US$/

Tenaris ADR vs Argentine Peso

$2

$14

$26

$38

$50


2.5

2.7

2.9

3.1

3.3

ARP

/US$

Tenaris Peso

CVRD ADR vs Brazilian Real

$0

$8

$16

$24

$32


2.0

2.5

3.0

3.5

4.0

R$/US$

CVRD Real

BHP vs Australian Dollar

$10

$20

$30

$40

$50


0.5

0.6

0.7

0.8

0.9

AUD/US$

BHP AUD

Rio Tinto ADR vs British Pound

$50

$100

$150

$200

$250


1.4

1.6

1.8

2.0

2.2

US$/

CVRD Pound

Anglo America ADR vs British Pound

$5

$10

$15

$20

$25


1.4

1.6

1.8

2.0

2.2

US$/

Anglo Amer ican Pound

Ternium ADR vs Argentine Peso

$19

$22

$25

$28

$31

Jul-06Jun-06May-06May-06Apr-06Mar-06Feb-06

2.9

3.0

3.1

3.2

3.3

ARP/US$

Ternium Peso



34/96



Cemex ADR vs Mexican Peso

$4

$13

$22

$31

$40


9.6

10.3

11.0

11.7

12.4

P$/US$

Cemex Peso

Southern Copper ADR vs Nuevo Sol

$10

$35

$60

$85

$110


3.2

3.3

3.4

3.5

3.6

PEN/U

S$

Southern Copper Nuevo Sol

Grupo Mexico (USD) vs Mexican Peso

$0

$1

$2

$3

$4


9.6

10.3

11.0

11.7

12.4

P$/US$

Grupo Mexico Peso

Kazakhmys (USD) vs British Pound

$8

$13

$18

$23

$28

Jul-06May-06Apr-06Feb-06Dec-05Oct-05

1.6

1.7

1.8

1.9

2.0

US$

/

Kazakhmys Pound

Antofagasta vs Chilean Peso

$0

$3

$6

$9

$12


400

500

600

700

800

CLP/U

S$

Antofagasta Peso

Buenaventura ADR vs Nuevo Sol

$12

$18

$24

$30

$36


3.2

3.3

3.4

3.5

3.6

PEN/US$

BVN Nuevo Sol

Cerro Verde vs Nuevo Sol

$0

$3

$6

$9

$12


3.20

3.30

3.40

3.50

3.60

PEN/US$

Cerro Verde Nuevo Sol

ICA ADR vs Mexican Peso

$8

$18

$28

$38

$48


9.6

10.3

11.0

11.7

12.4

P$/US$

ICA Peso



35/96


Exhibit 28. Stock Performance vs. Underlying Commodity, July 24, 2006

Arcelor Brasil Local vs. HR (Avg.) CSN ADR vs. HR (Avg.)

Usiminas Local (USD) vs. HR (Avg.)

China Steel Local (USD) vs. HR (Japan)

Gerdau ADR vs. Rebar (U.S.)

Posco ADR vs. HR (Japan)

Nippon vs. HR (Avg.) JFE vs. HR (Avg.)

0

10

20

30

40

Jul-01 Jul-02 Jul-03 Jul-04 Jul-05 Jul-06

U

S$

150

300

450

600

750

US

$/mt

CSN ADR HR (Avg.)

0

10

20

30

40


US$

150

300

450

600

750

US$/mt

Usiminas HR (Avg.)

0

6

12

18

24


US$

200

325

450

575

700

US$/mt

Gerdau ADR Rebar (U.S.)

8

11

14

17

20

Nov-05 Jan-06 Mar-06 May-06 Jul-06

U

S$

510

545

580

615

650

US

$/mt

Arcelor Brasil HR (Avg.)

12

28

44

60

76


US$

150

300

450

600

750

US$/mt

Posco ADR HR (Japan)

0.25

0.50

0.75

1.00

1.25


US$

150

300

450

600

750

US$/mt

China Steel HR (Japan)

1

2

3

4

5


U

S$

150

300

450

600

750

US

/mt

Nippon HR (Japan)

10

20

30

40

50

Sep-02 Jun-03 Mar-04 Dec-04 Sep-05 Jun-06

U

S$

150

300

450

600

750

US$/mt

JFE HR (Japan)

Source: Bloomberg; Bear, Stearns & Co. Inc.; CRU Monitor; Pipe Logix. Average HR Price of EU, US and Japan Export.


36/96


Exhibit 29. Stock Performance vs. Underlying Commodity/Spreads, July 24, 2006

Mittal ADR vs HR (Avg.) US Steel vs HR (Avg.)

Ternium vs. HR (Avg.) Tenaris vs. Casing

CVRD-P vs Fines (Carajas) BHP vs Fines (Carajas)

Anglo American vs Fines (Carajas)Rio Tinto vs Fines (Carajas)

9

21

33

45

57

Dec-04 Jun-05 Dec-05 Jun-06

US$

300

450

600

750

900

U

S$/mt

Mittal ADR HR (Avg.)

5

22

39

56

73


US$

150

300

450

600

750

U

S$/mt

US Steel HR (Avg.)

19

22

25

28

31

Jan-06 Mar-06 May-06 Jul-06

U

S$

510

545

580

615

650

US

$/mt

Ternium HR (Avg.)

2

14

26

38

50

Dec-02 Dec-03 Dec-04 Dec-05

U

S$

650

900

1,150

1,400

1,650

US$/mt

Tenaris Casing

0

7

14

21

28


US$

27

41

55

69

83

U

S$/mt

RIO-P Fines (Carajas)

7

17

27

37

47


US$

27

41

55

69

83

US$/mt

BHP Fines (Carajas)

60

105

150

195

240


US$

27

41

55

69

83

US$/mt

Rio Tinto Fines (Carajas)

5

10

15

20

25


US$

27

41

55

69

83

US$/mt

Anglo AmericanFines (Carajas)



37/96


Exhibit 30. Stock Performance vs. Underlying Commodity/Spreads, July 24, 2006

Grupo Mexico vs Copper Southern Copper vs Copper

Antofagasta vs. Copper Kazakhmys vs. Copper

Cerro Verde vs. Copper BVN ADR vs. Gold

Antofagasta vs. Molybdenum PCU vs. Molybdenum

0

1

2

3

4


US$

0

1

2

3

4

U

S$/lb

GMexico Copper

2

27

52

77

102


US$

0

1

2

3

4

US$/lb

Southern Copper Copper

0

3

6

9

12


U

S$

0.20

1.20

2.20

3.20

4.20

US

$/lb

Antogafasta Copper

0

7

14

21

28

Oct-05 Dec-05 Feb-06 Apr-06 Jun-06

U

S$

0.20

1.20

2.20

3.20

4.20

US

$/lb

Kazakhmys Copper

0

3

6

9

12

Jul-01 Jul -02 Jul -03 Jul-04 Jul-05 Jul-06

U

S$

0.20

1.20

2.20

3.20

4.20

US

$/mt

Cerro Verde Copper

0

9

18

27

36


US$

250

360

470

580

690

U

S$/oz

BVN ADR Gold

0

3

6

9

12


US$

0

10

20

30

40

U

S$/lb

Antogafasta Moly

8

33

58

83

108


US$

0

10

20

30

40

U

S$/lb

Southern Copper Moly



38/96


Exhibit 31. Correlation Charts, July 24, 2006

Arcelor Brasil Local (USD) vs Gerdau ADR

8

11

14

17

20

Jul-06Jun-06May-06Apr-06Mar-06Jan-06Dec-05

8

11

14

17

20Arcelor Brasil Gerdau

CSN ADR vs Usiminas Local (USD)

0

10

20

30

40


0

11

22

33

44

CSN Usiminas

Gerdau ADR vs Nucor

0

5

10

15

20


10

25

40

55

70

Gerdau Nucor

CSN ADR vs Posco ADR

0

10

20

30

40


10

27

44

61

78

CSN Posco

Mittal ADR vs Arcelor Local (USD)

20

26

32

38

44

Jul-06May-06Mar-06Dec-05Oct-05Aug-05May-05Mar-05

18

27

36

45

54

Mittal Arcelor

Posco ADR vs China Steel (USD)

14

30

46

62

78


0.60

0.75

0.90

1.05

1.20

Posco China Steel

Posco ADR vs Nippon (USD)

14

30

46

62

78


1

2

3

4

5

Posco Nippon

CSN ADR vs US Steel

0

10

20

30

40


0

20

40

60

80

CSN US Steel



39/96



CVRD ADR vs Bradespar (USD)

$2

$9

$16

$23

$30


$5

$15

$25

$35

$45

CVRD Bradespar

Ternium ADR vs Gerdau ADR

$19

$22

$25

$28

$31

Jul-06Jun-06May-06Mar-06Feb-06

$0

$5

$10

$15

$20

Ternium Gerdau

ICA ADR vs Fluor

$10

$19

$28

$37

$46


$30

$50

$70

$90

$110

ICA Fluor

Cemex ADR vs Lafarge (USD)

$4

$13

$22

$31

$40


$55

$75

$95

$115

$135

Cemex Lafarge

CVRD ADR vs BHP ADR

$2

$9

$16

$23

$30


$5

$17

$29

$41

$53

CVRD BHP

CVRD ADR vs Kumba Resources (USD)

$2

$9

$16

$23

$30


$2

$7

$12

$17

$22

CVRD Kumba

Tenaris ADR vs Grant Prideco

$2

$14

$26

$38

$50


$5

$18

$31

$44

$57

Tenaris GP

CVRD ADR vs Rio Tinto ADR

$2

$9

$16

$23

$30


$70

$115

$160

$205

$250

CVRD Rio Tinto



40/96



Kazakhmys (USD) vs Phelps Dodge

$7

$12

$17

$22

$27

Jul-06Jun-06Apr-06Feb-06Jan-06Nov-05

$50

$65

$80

$95

$110

Kazakhmys PD

Grupo Mexico (USD) vs Southern Copper

$0

$1

$2

$3

$4


$10

$35

$60

$85

$110

GMexico S. Copper

Antofagasta (USD) vs Kazakhmys (USD)

$2

$4

$6

$8

$10

Jul-06Jun-06Apr-06Feb-06Jan-06Nov-05

$0

$7

$14

$21

$28

Antofagasta Kazakhmys

G. Mexico (USD) vs Antofagasta (USD)

$0

$1

$2

$3

$4


$2

$4

$6

$8

$10

GMexico Antofagasta

Cerro Verde vs Phelps Dodge

$0

$3

$6

$9

$12


$10

$35

$60

$85

$110

Cerro Verde PD

Buenaventura ADR vs Newmont

$10

$17

$24

$31

$38


$22

$33

$44

$55

$66

BVN Newmont

Grupo Mexico (USD) vs Phelps Dodge

$0

$1

$2

$3

$4


$10

$35

$60

$85

$110

GMexico PD

Cerro Verde vs Buenaventura ADR

$0

$3

$6

$9

$12


$10

$17

$24

$31

$38

Cerro Verde BVN



41/96


Exhibit 34. Holding Company Discounts and Spreads, July 24, 2006

GMexico Discount to Estimated NAV

-48%

-39%

-30%

-21%

-12%

Mar-

05

May-

05

Jul-

05

Sep-

05

Nov-

05

Jan-

06

Mar-

06

May-

06

Jul-

06

Bradespar Discount to Estimated NAV

-40%

-34%

-28%

-22%

-16%

Mar-

05

May-

05

Jul-

05

Sep-

05

Nov-

05

Jan-

06

Mar-

06

May-

06

Jul-

06

Met Gerdau Discount to Estimated NAV

-33%

-26%

-19%

-12%

-5%

Mar-

05

May-

05

Jul-

05

Sep-

05

Nov-

05

Jan-

06

Mar-

06

May-

06

Jul-

06

RIO/RIO-P Discount

5%

10%

15%

20%

25%

Jul-

06

May-

06

Feb-

06

Dec-

05

Sep-

05

Jul-

05

Apr-

05

Jan-

05

Nov-

04

Aug-

04

Ternium/Siderar Spread

0.50

1.00

1.50

2.00

2.50

Jul-

06

Jul-

06

Jun-

06

May-

06

May-

06

Apr-

06

Mar-

06

Feb-

06

Feb-

06

Gerdau/GNA Spread

-0.10

0.20

0.50

0.80

1.10

Jul-

06

May-

06

Feb-

06

Dec-

05

Sep-

05

Jul-

05

Apr-

05

Jan-

05

Nov-

04

Aug-

04

Arcelor/Arcelor Brasil Spread

0.80

1.20

1.60

2.00

2.40

Jul-

06

Jun-

06

May-

06

May-

06

Apr-

06

Mar-

06

Feb-

06

Jan-

06

Dec-

05

Nov-

05

BVN/Newmont Spread

0.35

0.45

0.55

0.65

0.75

Jul-

06

May-

06

Feb-

06

Dec-

05

Sep-

05

Jul-

05

Apr-

05

Jan-

05

Nov-

04

Aug-

04 Source: Bloomberg; Company filings; Bear, Stearns & Co. Inc.


42/96


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43/96


Appendix I Monthly Industry Data


44/96


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45/96


Exhibit 35. Industrial Production by Country, (Y/Y % Change)

Mexico

-10%

-5%

0%

5%

10%

15%

Jun-06Dec-05Jun-05Dec-04Jun-04Dec-03Jun-03

.

United States

-4%

-2%

0%

2%

4%

6%

Jun-06Dec-05Jun-05Dec-04Jun-04Dec-03Jun-03

Japan

-10%

-5%

0%

5%

10%

15%

May-06Nov-05May-05Nov-04May-04Nov-03May-03

EU

-6%

-3%

0%

3%

6%

Documents

BS SteelMng Cement St Jul06