WELCOME TO MOZALTogether, we make a differenceNamibia NamibiaBotswana BotswanaSouthAfricaZimbabwe ZimbabweRichards Bay Richards BayDURBAN DURBANMAPUTO MAPUTOMap: not to scale Map: not to scaleMozambique MozambiqueSmelter LocationOverview 506 000 tpa primary aluminium smelter constructed in two phases Aluminium Pechiney AP30S technology Approx. US $2bn total (historical) funding $1.1bn non-recourse project funding, internationally syndicated Shareholding:BHP Billiton 47%Mitsubishi 25%IDC of SA 24%Government of Mozambique 4%Loan FundingLenders GrandTotalUS$ milInternational Finance Corporation (IFC) 113.9Commonwealth Development Corporation (CDC) 52.1PROPARCO 29.6Deutche Investitions und Entwickluingsgesellschaft (DEG) 30.7Development Bank of Southern Africa (DBSA) 82.5EIB 32.9COFACE lenders (agent BNP Paribas) 189.3MOZFUND CGIC/SAECA supported lender 445.3Japan Bank for International Cooperation (JBIC) 60.2Export Development Corporation (EDC) 24.1Grand Total 1060.6The ProcessAlumina + CarbonElectricityAluminium MetalRAW MATERIALS ARRIVE AT THE MATOLA HARBOURTRANSPORTED FROM HARBOUR STORAGE TO SITE STORAGECARBON MATERIALS ARE SORTEDGREEN ANODES ARE PREPAREDCARBON BAKE FURNACECARBON RODDING SHOPREDUCTION PROCESSCASTHOUSEFROM FURNACE TO CASTING LINEINGOT PRODUCTION AND PREPARATION FOR DISPATCHTRANSPORTED BY SEA TO EUROPEMilestones14 May1998Phase 1 go-ahead announced in London18 June 2000 Firstmetal cast22 December 2000 Last pot started potline 121 June 2001 Phase 2 go-ahead7 April 2003 First metal potline 220 August 2003 Last pot started potline 2Phase 1: 31 months from go ahead to full commissioning, >US$100m under budgetPhase 2: 26 months from go ahead to full commissioning,+- US$195m under budgetTwo world records ~in MozambiqueAchievementsEXPANSION PHASE 2 Zero reportable environmental incidents Construction workforce peaked at 5033 - 70% Mozambican US$94m expended in the Mozambican economy Excellent IR climate zero manhours lost in 14 million worked Benchmark construction safety record - LTIFR 1.03OPERATIONS One of the industrys lowest cost producers Highest pot efficiency for AP30 technology for 2001/2002 period Strict environmental control ytd Fluoride emissions below 0.4kg/t Al Best-in-class start up for potline 2 in terms of speed, efficiencyquality and safety Exceptional metal quality Zero reportable environmental incidentsWhy Mozambique?COMPETITIVE POWER SUPPLYEFFICIENT HARBOURINVESTMENT INCENTIVESRAW MATERIALS SUPPLYA World ClassPrimaryAluminiumSmelterA World ClassPrimaryAluminiumSmelter+ INTEGRATION/LINKAGESThe DifferenceThe Difference+ PEOPLE Mozal consumes 900mW Four times Mozambiques total consumption Matches available output of Cahora BassaElectricity SupplyZAMBIAMOZAMBIQUEZIMBABWEMALAWIMAPUTOINDIAN OCEANBEIRAINHAMBANERICHARDS BAYDURBANPANDE GASSAVELIMPOPOMEPANDAUNCUATETEPRETORIAZAMBEZILEGEND :RIVERSTRANSMISSION LINESMAIN ELECTRICITYGENERATINGREGION OFR.S.A.APOLLORSABOTSWANAKARIBASWAZI -LANDQUELIMANEPEMBENACALACAHORABASSATANZANIAJOHANNESBURGCOMPETITIVE POWER SUPPLYEFFICIENT HARBOURINVESTMENT INCENTIVESRAW MATERIALS SUPPLYA World ClassPrimaryAluminiumSmelterA World ClassPrimaryAluminiumSmelter+ INTEGRATION/LINKAGESThe DifferenceThe Difference+ PEOPLEWhy Mozambique? Matola Aluminium Terminal opened in March 2000 1 200 000 tons of raw materials 506 000 tons of export Linked to the Maputo development corridor (Johannesburg-Maputo) Privatisation complete (April 2003) Rail concession signedThe HarbourCOMPETITIVE POWER SUPPLYEFFICIENT HARBOURINVESTMENT INCENTIVESRAW MATERIALS SUPPLYA World ClassPrimaryAluminiumSmelterA World ClassPrimaryAluminiumSmelter+ INTEGRATION/LINKAGESThe DifferenceThe Difference+ PEOPLEWhy Mozambique?Raw materials supplyAustralia USA S.A. / Japan Moz/S.A.BAUXITE2 000 000 tCRUDE OIL COAL (TAR)120 000tHYDROCahora BassaESKOMALUMINA1000 000 tPET. COKE180 000 tPITCH45 000 tELECTRICITY900 MWALUMINIUM506 000 tpaCOMPETITIVE POWER SUPPLYEFFICIENT HARBOURINVESTMENT INCENTIVESRAW MATERIALS SUPPLYA World ClassPrimaryAluminiumSmelterA World ClassPrimaryAluminiumSmelter+ INTEGRATION/LINKAGESThe DifferenceThe Difference+ PEOPLEWhy Mozambique?Product quality% of production020406080100FY2001 FY2002 FY 2003FY 2004 YTDP2025P1020P0610P0406Health Comprehensive Occupational Health program HIV/AIDS awareness creation inside and outside the company Mozambiques first Managed Health care PlanSafety Full managements system based on BHPB standards and zero harm philosophy CIFR - improved result compared to other start-ups in South Africa, Australia, CanadaEnvironment No major incidents ISO 14001 certified by BVQI international UKAS and ANZAS accreditationHealth, Safety and the Environment0.680.610.460.390.36 0.360.3801'01 '02 '03 J A S O N DTotal Fluoride Emission to Air (kg/t Al) Limit0.905.363.20 3.173.613.563.26 3.220246'00 '01 '02 '03 J A S O N DCIFR incl. Contractors Plan40060080010001200140016000 2 4 6 8 10 12 14 16 18 20 22 24Capacity (million tpy)($/tonne)Mozal position up to 31/12/2006 - adjusted to include M1 and M2 Mozal position up to 31/12/2012Mozal position after 01/01/2013Cost positionCash cost of production at 3 month LME of $1400 (2002 terms)Source Brook HuntCost components27 % of Mozal costs are directly linked to the LMEFixed Cost Components9%19%17%25%30%Plant power & fuelConsumables &reliningMaintenanceSalariesAdmin36%5%24%2%0%10%20%30%40%50%60%70%80%Fixed CostPitchCokePower &AluminaReal Terms Cash Cost (Base 2001)Including Sustaining Capex (US$/ton)0%10%20%30%40%50%60%70%80%90%100%2001 2002 2003Conversion cost Alumina & Power Total cost target Conv cost targetCash break evenUS$554/tuntil 31 December 2006US$634/tbetween 2007 and 2012US$623/tafter 31 December 2012LME price to break even on acash basisLME price to break even on a cash basis plus loan repayments and interest 2004/05 (Includes M2 loan repayments)US$1040/tCOMPETITIVE POWER SUPPLYEFFICIENT HARBOURINVESTMENT INCENTIVESRAW MATERIALS SUPPLYA World ClassPrimaryAluminiumSmelterA World ClassPrimaryAluminiumSmelter+ INTEGRATION/LINKAGESThe DifferenceThe Difference+ PEOPLEWhy Mozambique?Our people Phase 2 project labour peaked at 5033 Total direct employees: 1089 Mozambican nationals: 90.5% Union: SINTIME Unionised employees: 23% Indirect job creation 3500 Aged: 20 - 45 years Minimum qualification: Class 10/Basic technicianTraining and development 18 650 man days training (Based on 2002 and 2003). This averages outto 10 days training per employee per year. The American benchmark is4 days per employee 600 modules were developed 7.7 million USD training cost 230 maintainers trainedOngoing initiatives Talent Management Undergraduate bursary scheme Graduate development program Engineering profession upliftment (BEAM) Operator/maintainer skills extension Supervisory capacity building programCOMPETITIVE POWER SUPPLYEFFICIENT HARBOURINVESTMENT INCENTIVESRAW MATERIALS SUPPLYA World ClassPrimaryAluminiumSmelterA World ClassPrimaryAluminiumSmelter+ INTEGRATION/LINKAGESThe DifferenceThe Difference+ PEOPLESuccess factorsStrategic LinkagesThe project fits within the economic transition in Mozambique which started in the early 90sQuality of LifeJobCreationEconomicEnergyOPTIMISECAHORA BASSAMARKET FOR ENERGYINITIATE A MEGA PROJECTMOZALPROJECTKICKSTARTMOZAMBIQUEINDUSTRYLINKAGES&INDUSTRIAL PARKFIGHT POVERTYCOMMUNITYDEVELOPMENTMOZAMBIQUEMOZALEconomic Impact Mozal in 2002 = 53% of exports and 28% of imports 2002 real GDP growth 8% (Mozal 2.1%) Net positive impact on balance of payments around $100m at steady state Mozambique export earnings US $220m to US $1bn Powerful Demonstration Effect New economic linkages e.g alumina supply contract Improved electricity supply Realisation of newmechanisms through Smart Partnerships Industrial Free Zone legislation Customs clearance vastly speeded up Catalyst for Beloluane Industrial ParkSocial Contribution Mozal Community Development Trust established in 2001 Budget of $2m per annum Focus in immediate vicinity of the smelter Projects related to community infrastructure, health, small enterprisedevelopment, education, sports and culture Projects screened for sustainability, poverty relief contribution and addressing identified social impacts Partnering approach with NGOs and agencies 47 projects executed in 2002Beloluane Village School in 1998 No roof No electricity No water No classes when raining 130 pupils Grades 1-5 Up to 20% daily absenteeism (malaria)Beloluane Village School in 1998 700 pupils Grades 6&7 Water/electricity Sports field Program extended to 4 more schools 25 classrooms 4500 pupils Secondary school being built Malaria incidence dramaticallyreducedOur visionRecruitment of Mozal staff directly from the local community Government relocation program 900 subsistence Machambafarmers 3 yr Agricultural upliftment project Crop yields dramatically increased Successful diversificationAgriculture DevelopmentConclusion A successful expansion, completed with an excellent safety record, in record time, under budget, in Mozambique A world class operation at the bottom of the cost curve An integrated approach led to improved social environmental and economic benefitsCarry on making a difference together Carry on making a difference together