1

Corporate Presentation

2

This presentation may contain certain forward-looking statements and information relating to Paranapanema S.A. (the

“Company”) that reflect the current views and/or expectations of the Company and its management with respect to its

performance, business and future events. Forward-looking statements include, without limitation, any statement that may

predict, forecast, indicate or imply future results, performance or achievements, and may contain words and/or any other

phrases of similar meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you

that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations,

estimates and intentions expressed in this presentation.

In no event, neither the Company nor any of its subsidiaries, affiliates, directors, officers, agents or employees shall be liable

before any third party (including investors) for any investment or business decision made or action taken in reliance on the

information and statements contained in this presentation or for any consequential, special or similar damages.

This presentation and all its contents are proprietary information and may not be reproduced or otherwise disseminated in

whole or in part without the prior written consent of the Company. The information contained in this presentation is subject to

change from time to time without notice and the Company is under no obligation to keep you advised of such changes

Disclaimer

3

1

2 5

4

3

6Company Overview

Financials

Copper Sector

Agenda

Business Model

PMAM at a glance

4

1

2 5

4

3

6Company Overview

Financials

Copper Sector

Agenda

Business Model

PMAM at a glance

5

Market(finished products)

PMAM at a glancePositioning overview

Semi-Finished(rods, wires, tubes,

bars, laminates, etc.)

MINING SMELTING & REFINING DOWNSTREAM(Products)

PMAM’s PresenceCopper flowchart

Largest Brazilian supplier of copper rods and wires

3 processing plants for refined copper and scrap

Sole Brazilian cathode producer

Primary Copper~280 kt

Copper Products~180 kt

Sole Brazilian smelter and refiner, with strong positioning in the value chain

By-products(H2SO4, anodic slime and slag)

Cathode(~99.9% copper)

Anode(~99.5% copper)

Blister(~98% copper)

Copper Concentrate

(~28% copper)

Copper Ore (1.0% copper)

Gold

Silver

PMAM is present

Cathodes Sales~100 kt

Scrap

6

Operations

Products and Brazilian Market Share (2014)*

BRAZILPERU

CHILE

Primary Copper & Copper Products

Copper Concentrate

Copper Products

Copper Products

~2,000 employees

Cathode53% Share

Rods and Wires42% Share

Tubes 46% Share

Rolled30% Share

Bars15% Share

*Source: Company, Sindicel and CRU

PMAM at a glanceBusiness segments and operations

Diversification between products and markets protects margins

Segments Breakdown (% of 2Q15 Revenues)

Copper ProductsB2B and B2C

(semi-finished and finished products)

By-products(B2B products)

100% of refined copper in Brazil

Very low associated cost

Different types of sectors and clients

Domestic Market

Export Market

Primary Copper (refining - cathodes)

2Q15

12%

88%

68%

32%

37%

63%

30%

57%

13%

7

1961 Paranapanema was established

1971 IPOKey Operations

Mining & Construction

Focused on Non-ferrous metalsBecame largest Brazilian Copper producer

Capacity Expansion and Technology upgrade by 2012

Listed on BM&FBovespa’s Novo Mercado

Paranapanema 2018 Project (PMA-2018)Recovery begins in 2013

Re-defined business model: Returns on added capacity

Change in management: Managing-by-the-penny

Management alignment: Variable compensation

Long-term gains and better processes legacy

PMAM at a glanceRecent organizational emphasizes corporate governance

New management has shifted focus to increase ROIC

Timeline Shareholding Structure

Locals

24%

17%

12%7%6%

11%

11%

12%Foreign

Individuals

8

PMAM at a glancePMA 2018: long term plan to sustain profitability and stabilize results

Maximizing productivity on existing assets

Growing above market average

Adding selected new opportunities surrounding existing assets

Increase ROIC metrics

MeritocracyCultural ReshapeProcess

ROIC-centered management reflected in share price

9

124 151 140

120

2013 2014 2016E 2018E

124

69

144 120

114%

57%

120%

100%

2013 2014 2016E 2018E

257 238 280 290

2013 2014 2016E 2018E

2,047 2,0721,840 1,748

615 554 515 489

2013 2014 2016E 2018E

Note: E = expected

PMAM at a glancePMA 2018 KPIs: a guidance to recovery

Cathode Production (Kt) Working Capital (# days)

Transformation Cost and SG&A (R$/t) Capex (R$ Million) and as % of Depreciation

10

Priority

OPERATINGEXCELLENCE

Impact Results

Cost controlTransformation cost/t: Reduced by 5% (2014x2013)

SG&A: Reduced by 17% (2014x2013)

Cast & Roll ramp-up From 40% to 68% capacity utilization

Capex Reduced by 65% (R$69MM – vs. ‘14 budget)

HUMANCAPITAL

Board of DirectorsAudit CouncilCommittees

70% replaced, Independent Chairman40% replaced

Monthly operational cycle

HeadcountC level change

-15% (2014 x 2013)65% (1/3 downsized / 50% replaced)

Long term planning 5 year business plan – PMA 2018OTHER

PMAM at a glanceEnhancements achieved so far

11

Gross Profit and Gross Margin EBITDAa and EBITDAa Margin Free Cash Flow 1

Net Profit and Net Margin

1 Free Cash Flow: operating cash flow - capex2 Plain 2014 EBITDA Margin, Bloomberg data

Accumulated Profit/Losses Peers – EBITDA Margin (%)2

0.5 2.0

5.2

9.6

14.0 14.4

Jiangxi Aurubis PMA MagnesitaUsiminas Ferbasa

Locals exposed to Metallurgy

Smelters

(R$ MM e %)

PMAM at a glanceFinancials

-15

-72

131 80 74

-108-1,3%

-6,6%

10,6%

6,1%6,1%

-9,3%

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Net Profit Net Margin

-234

-303

-169

-97

32

-73

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

75 80 105

123 125

5

6,9% 7,4%8,5%

9,4%10,3%

0,4%

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Gross Profit Gross Margin

57 73

109 120 109

4

5,2%

6,7%

8,8% 9,1% 9,0%

0,4%

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

Adjusted EBITDA Adjusted EBITDA Margin

152

-29

397

84168

-450

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

12

1,079 999

1,590

174

304 70 42

Cash 2015 2016 2017 2018 2019 Gross Debt

Working Capital (R$ Million)

Net Debt/LTM EBITDAaCash & Debt (R$ Million)

PMAM at a glanceFinancials: strong balance sheet and efficient working capital usage

Maturity Schedule (R$ Million)

Cash = ~2 years of amortization

1.165 1.246 1.333 1.590

1.995

506 257 285

511

868

659

988 1.048 1.079 1.127

2Q14 3Q14 4Q14 1Q15 2Q15

Gross Debt Net Debt Cash

2,2x

1,5x

1,5x

1,0x

0,8x

1,6x

2,5x

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

665

381 348 326

783

2Q14 3Q14 4Q14 1Q15 2Q15

13

2010 2011 2012 2013 2014

PMAM at a glanceSector overview: copper market outlook

0

5

10

15

20

25

30

35

40

1992 1997 2002 2007 2012 2017 2022 2027

Possible Projects

Probable Projects

Highly Probable Projects

Base Case Production Capability

Primary Demand

Global copper imbalance to sustain high TC/RCs that together with efficient risk management should continue to benefit margins

Global Copper Production and Primary Demand (Mt)1 TC/RCs (US$/t and R$/t) 2 – Quoted Benchmark

1 Source: Wood Mackenzie March 2015 2TC/RC = Treatment Charge/Refining Charge (discount miners give to smelters to transform concentrate in refined copper)3 Bloomberg, Company data

Smelters: Industry Bottleneck (Mt) 1 Metal Premium (US$/t) – Cathode3

Domestic Premium

Exports Premium 16 16 17

18 19 1921

15 15 16 1617 18

19

2010 2011 2012 2013 2014 2015E 2016E

Concentrate Production Smelter Production

254 310 352 388510

610

447 519 688

838

1,199

1,824

2010 2011 2012 2013 2014 2015 YTD

US$/t R$/t

14

Comparable smelter valuations Country Capacity (Kt) Costs (US$ M) Cost/t

First Quantum Sentinel Smelter Zambia 300 690 2,300

Jinchuan Copper (phase 1) China 400 2,000 5,000

Freeport / PT Aneka Tambang (estimate)

Indonesia 300 2,200 7,333

Average (in US$) 1,630 4,878

Country Capacity (Kt) Market Cap (US$ M)* Cost/t

Paranapanema Brazil 280 416 1,486

PMAM at a glanceHigh substitution cost restraining increase in smelting capacity

Smelting capacity demands large investments, not to mention working capital. Therefore, additional capacity is unlikely at current TC/RCs levels

Source: Macquarie Research*PMAM3 share price of R$3.94 and US$/R$ rate of 3.02 as of May 11, 2015

15

EBITDA Margin (%) – Smelters/Refiners Net Margin (%)

EV/EBITDA 2015 P/E 2015

Source: Bloomberg. 2014 figures and multiples updated as of May 11, 2015

0.5

2.0

5.2

Jiangxi Aurubis PMA

0.4

0.9

2.6

Jiangxi Aurubis PMA

13.2

8.2

5.8

Jiangxi Aurubis PMA

29.0

14.4

5.9

Jiangxi Aurubis PMA

PMAM at a glanceComparable companies

Smelters with similar operation to Paranapanema are the correct peers to be compared with

16

PMAM at a glanceYTD share price performance (+5%*)

Source: Bloomberg* Until August 3, 2015

jan

-14

jan

-14

mar

-14

abr-

14

mai

-14

mai

-14

jun

-14

jul-

14

ago

-14

set-

14

ou

t-1

4

no

v-1

4

dez

-14

jan

-15

fev-

15

mar

-15

abr-

15

mai

-15

jun

-15

jul-

15

PMA Aurubis Vale Gerdau Usiminas Magnesita Fesa Ibov Copper CSN

(Base 100)

17

Establishing a culture of cost and asset efficiency

ROIC driving decision-making process

Strict capital usage policy

Risk management minimizing results volatility

1

2

3

4

5

PMAM at a glanceKey investment highlights

6

Sustainable results maximizing shareholders’ returns

7

18

1

2 5

4

3

6Company Overview

Financials

Copper Sector

Agenda

Business Model

PMAM at a glance

19

Constitution in 1961 – heavy construction IPO in 1971 Pension funds take over the control (1996)

Concentration in non-ferrous (largest copper producer in Brazil) Financial (2005), corporate and fiscal restructuring (2009) Private capital increase (2008)

Investment plan for expansion and modernization – R$702 million Organizational restructuring Construction of tubes plant in Utinga (Santo André – SP)

Sale of non core assets Dias d’Ávila (BA) capacity expansion Entrance to Novo Mercado (BM&FBOVESPA)

Launch of new tubes plant in Utinga Change of CEO (commodity sector professional) New risk management policy

Processes reengineering 60% of the leadership is replaced PMA 2018 Project

Operational Efficiency + Risk Management = Sustainable Results2015 - 2018

2014

2013

2012

2011

2000 - 2010

1960 – 1999

Company OverviewHistory marked by several restructurings and poor risk management

Current focus is to maximize capacity utilization, reduce costs and improve risk management seeking sustainable and improved results

PM

A co

ntracto

r and

m

iner

Transitio

n to

cop

per

refiner

Stable resu

lts and

gro

wth

20

Business Segments*

Pri

mar

y C

op

pe

r

(34

%)

Co

pp

er

Pro

du

cts

(59

%)

Co

-pro

du

cts

(7%

)

Rods: 220 kt Wires: 80 kt

Tubes: 35 kt Laminates: 26 kt Bars: 12 kt Fittings: 4 kt

Dia

s d

’Ávi

laU

tin

ga

and

Se

rra

Dia

s d

’Ávi

laD

ias

d’Á

vila

H2SO4

Sulphuric Acid: 560 kt

Gold

Silver

Anodic Slime: 540 t Slag: 396 kt

Cathodes: 280 kt

*Numbers refer to installed capacity and percentages refer to share of 2014 Net Revenues

Company OverviewBusiness segments and installed capacity

21

Co

mp

etit

ors

Domestic:- Ibrame - Prysmian

Foreign:- Codelco (Chile)- ILO (Peru)- Aurubis (Germany)- Antofagasta (Chile)- Glencore (UK/Switzerland)

Domestic:- Termomecânica- Cecil- Ibrame- Plasinco

Foreign:- Nacobre and IUSA (Mexico)- Ceper and Indeco (Peru) - Nexans (Canada) - Aurubis (Germany)

Domestic:- Termomecânica

Foreign:- Aurubis (Germany)

Pro

du

cts

Copper Rod Drawn Bare WireCathodes

Laminates

Copper Products

Semi-Finished Finished

Primary Copper (smelting and refining)

Co-ProductsSemi-Finished

Copper Products

Finished

Industrial Tubes Bars and Profiles

Tubes Connections Wires

Anodic Slime

Sulphuric Acid

Iron Silicate

Domestic:- Galvani- Vale

Foreign:- Aurubis (Germany)- Glencore (UK/Switzerland)

Company OverviewBusiness segments and competition overview

22

44%

56%

78%

22%

35% 65%

34%

58%

8%

49%

27%

9%

4%3%

10%

Argentina

Japan

USA

UKOthers

International Trading

Companies

32%

27%

7%

7%

6%

5%

3%2%

12%

Eletroelectronics

CivilConstruction

Enamelled

Re-sale

Energy

Mecanic andMetallurgy

CoolingFertilizer

Others

2014 Revenue Per Segment and Markets

Domestic Market

Export Market

Revenue Per Sector

Primary Copper(refining - cathodes)

Copper ProductsB2B and B2C (semi-

finished and finished products)

By-products(B2B products)

Exports Per Region

100% of refined copper in Brazil

Very low associated cost

Different types of sectors and clients

Company OverviewRevenue breakdown per segment

Segment diversification and strong positioning reduces impacts from markets fluctuations

23

Production plants

Distribution center

Paranapanema has 3 processing plants and one distribution center

Proximity between facilities and main customers (South and Southeast regions, country’s highest GDPs) is a strategic advantage

Imported copper concentrate arrives at Aratú Port (Bahia), 24 km distant from the plant

Estimated 62% market share in scrap origination all over Brazil

Sulfuric acid sales (by-product) within a 50km radius

Copper Concentrate Origin

Utinga – Santo André (SP)

Production of copper and brass bars, wires,

laminates, tubes and bronze

Serra – (ES)Production of copper and

bronze fittings for civil construction

Dias D’Ávila – (BA)Smelting and refining of

primary copper, cathodes, rods, drawn wire and by-

products

ChileMain supplier

of copper concentrate

PeruSupplier of

copper concentrate

Production Facilities and Raw Materials Supply

Company OverviewWell located facilities: smart logistics and arbitrage between domestic and export sales

Casting

Refining

Electrolysis

Lamination

Stretching

Copper concentrate

(Third-party raw materials)

Estimated time between purchasing concentrate and

delivering products

1 m

on

th1

0

Day

s1

0

Day

s2

2

day

s1

0

Day

s1

0

Day

s

Total cycle: 90 days

Production Timing

24

1

2 5

4

3

6Company Overview

Financials

Copper Sector

Agenda

Business Model

PMAM at a glance

25

Risk Management

- R$ 5 bi

- R$ 4 bi

Tota

l Re

ven

ues

Met

al R

eve

nu

es

TC/R

C +

P

rem

ium

s +

By-

pro

du

cts

Metal C

ost

Financial + D&ACT* +SG&A

EBTEBITDA

*CT: transformation cost

Risk Management Premium Management Costs Control

Mitigate FX and commodity volatility impact on results— Hedge of metal exposure— Strict dollar-denominated cash flow

hedge Well structured governance, policies and

controls

TC/RC Optimization of premium matrix Price premiums denominated in US

dollars Premiums not linked to LME quotes Arbitrage between products to maximize

premiums

Implementation of Zero Base Budgeting Leveraging on improved technologies Processes/plants consolidation Increasing operational leverage More efficient funding structure Transformation costs mostly in Reais

(95%)

Business ModelPremium management and cost control aligned with efficient risk management

USD

USD USD

BRL

USD

26

Robust market risk governance structure with risk policy defined by the Board of Directors and overseen by a Risk Committee on a weekly basis

Risk strategy seeks to minimize or eliminate items with no control such as metal prices and FX rates, so management can focus on improving transformation and logistic costs, premiums, volume mix and SG&A expenses

PMA’s market risk policy does not allow speculative positions, and established segregation of duties to ensure accuracy of metal and FX rate exposures

Market Risk Hedge Strategy

PMA hedges its exposures against movements of metal prices, foreign exchange, and interest rates

Hedge instruments comprises derivatives (swaps and NDFs) and/or financial assets and liabilities (Debt, Payables, Receivables). PMA does not operate directly in any Mercantile Exchange and is not affected by daily margin calls

Metal exposure daily VaR is USD 250,000 (copper price variation) and FX Net Exposure is covered between 70-100% for up to 12 months forward

Differently from other soft commodity players, PMA keeps metal cost floating through swap transaction and fixes the cost when inventory is sold

-15,0%

-10,0%

-5,0%

0,0%

5,0%

10,0%

15,0%

1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14

Gross Margin Avg. USD Change Avg. LME Change

Hedge efficiency = low volatility in margins

2014 exposure in: 10% movement in asset value (USD M impact)

USD 43

Copper 1

Zinc neutral

Lead neutral

Tin neutral

Gold neutral

Silver neutral

USD M impact in Gross Profit 44

2014 Net EBIT Sensitivity

Business ModelMarket risks and hedge strategies highlights

27

Mine Negotiation

• PMA buys copper with TC/RC discount [TC/RC] over LME with M+3 QP

• E.g.: M+3 LME – US$ 500/t TC/RC

Shipping date

• Mine ships the Cu Concentrate with temporary LME – TC/RC with QP of M+3

• E.g.: US$ 6.000/t - US$ 500/t

QP Settle date

• Result = The price to be paid is the average LME of the 3rd month from shipping date less TC/RC.

• E.g. US$ 6500/t – 500/t = US$ 6000/t

Financing

• PMA finance the purchase of the copper (in USD) with fixed QP using Letter of Credit / Forfait.

Sales Negotiation

• Commercial team agrees pricing calculation with customer

• E.g.: (LME QP + Premium)*USD rate + Interest (to cover payment terms)

Invoicing date

• QP in sales are usually past prices (E.g. S-1 or average LME of last week).

• The USD portion of the price is converted into BRL upon invoicing using the agreed PTAX

Receivables

• Domestic sales are collected in BRL

• Exports has M+1/+2 QPs and are collected in USD.

Purchase Flow (Cu Concentrate) Sales Flow (Primary and Copper Products)

Copper market uses a Quotation Period (QP) of the LME as a price reference + Premium to define the settlement price of a transaction

Business Model – Copper Market StandardsMetal hedging to neutralize metal prices volatility

Total Result: + ∆ Copper + TC/RC + Premium - ∆ Copper

=+ TC/RC + Premium

28

Results of copper metal hedging are reclassified from finance revenue/expenses to inventory, adjusting the historical metal cost to market value

PMA hedges its volume exposure with SWAPs (NDFs), selling inventory with fixed QP in the nearby and buying copper in the future with open QP

Metal fair value hedge accounting program allows inventory Mark-to-market (MtM), which monthly variations on LME should be offset by variations on the derivative side

Within the month sales (and QP confirmation) the derivative volume is liquidated with the same sales volume

Using QP derivatives, PMA brings sales QP to LME month average, whilst inventory and its monthly variation are also marked-to-market using LME monthly average. In this way, both LMEs for sales and cost are under the same LME QP neutralizing its effect

Business ModelMetal hedge to neutralize metal prices volatility

29

USD Long

95% of PMA’s revenue are in USD

(around USD 1.3 bi/year)

USD Short

90% of PMA’s debtand suppliers are in USD

(around USD 0.9 bi/year)

USD Net

PMA’s uses NDFs to hedge USD net exposure

Net Exposure:

- PMA’s has a risk management team responsible for monitoring USD exposure.

- Exposure is covered between 70-100% for up to 12 months forward

Hedge accounting: the result of USD hedging instruments is classified as Other Comprehensive Income under Shareholder’s Equity account.

When the hedge is closed, the result is recognized in P&L.Accounting

Business ModelCash flow hedging and hedge accounting to avoid FX rates volatility

30

Operational efficiency and higher ROIC will position PMA as a dividend play

Risk management

Increasing Marginsand ROIC

Discipline in capital usage

Capacity utilization + costs reduction

Relevant market share in a region with protected premiums

Focus in operational and commercial efficiency

Reduce capital applied to business, especially inventories

Metal and cash flow hedges strongly reducing volatility on results

Business ModelEquity story: copper fixed income

31

1

2 5

4

3

6Company Overview

Financials

Copper Sector

Agenda

Business Model

PMAM at a glance

32

Sales Volume*(K t)

Production stoppages during 1H14 (maintenance)

5% recovery in production volume during 2H14

* Sales volume net of intra-operating eliminations

Production Volume(K t)

Sustainable trend already clear, despite production and sales impacted by domestic environment and production stoppages

244

366

305

2012 2013 2014

246

330

267

2012 2013 2014

Net Revenues(R$ M)

4,026

5,549

4,734

2012 2013 2014

Better commercial arbitrage opportunity between products and markets than in 2013

Lower sales volume and LME quote in 2014 impacted Revenues

FinancialsProduction, Sales and Revenues

33

Transformation cost down 5% even considering 2014 inflation

Gross Profit and Gross Margin(R$ M)

Margin gain: higher operating efficiency and Transformation Cost reduction

COGS(R$ M)

184

395 384

4.6%

7.1%

8.1%

-01%

00%

01%

02%

03%

04%

05%

06%

07%

08%

,0

50,0

100,0

150,0

200,0

250,0

300,0

350,0

400,0

450,0

2012 2013 2014

Gross Profit Gross Margin

3,361

4,570

3,798

480

584

5533,842

5,154

4,350

2012 2013 2014

Metal Cost Transformation Cost

-5%

Efforts to reduce Transformation Cost resulted in Gross Margin gain, despite decrease in Net Revenues

FinancialsCOGS and Gross Profit

34

Operating efficiency, costs reduction and hedge accounting are reflected in EBITDA and Net Profit

20 times growth

2015: Accumulated Losses could be fully compensated

Adjusted EBITDA (R$ M)

Recurring EBITDA Margin gain

Net Profit(R$ M)

20x higher

(206)

6

124

2012 2013 2014

125

332358

3.1%

6.0%

7.6%

2012 2013 2014

EBITDA EBITDA Margin

FinancialsAdjusted EBITDA and Net Profit

35

Efforts in reducing expenses and risk management policy contributed to results recovery

Financial Result(R$ M)

Hedge Accounting adoption already presented relevant effect in 2014 Efforts in expenses review resulted in 15% decrease in recurring expenses

Zero Base Budgeting will allow further reductions

Recurring Expenses(R$ M)

-15%

138

168

143

2012 2013 2014

(71)

(163)

22

2012 2013 2014

FinancialsExpenses and Financial Result

36

-261

-482

604

2012 2013 2014

Free Cash Flow (R$ M)

Debt Maturity Schedule (R$ M) Net Debt/LTM Adjusted EBITDA

Cash & Debt (R$ M)

FinancialsImproving Balance Sheet and Free Cash Flow

1,079 999

1,590

174

304 70 42

Cash 2015 2016 2017 2018 2019 Gross Debt

Cash = ~2 years of amortization

1.165 1.246 1.333 1.590

1.995

506 257 285

511

868

659

988 1.048 1.079 1.127

2Q14 3Q14 4Q14 1Q15 2Q15

Gross Debt Net Debt Cash

2,2x

1,5x

1,5x

1,0x

0,8x

1,6x

2,5x

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15

37

1

2 5

4

3

6Company Overview

Financials

Copper Sector

Agenda

Business Model

PMAM at a glance

38

Malleable & Ductile

Corrosion Resistant,

Machinable & Formable

Excellent Conductor &

Heat Transferer

Copper Key Physical Properties

Copper’s benefits extend beyond mechanical characteristics:

- Essential to the health of plants, animal and humans. Deficiencies, as well as excesses, can be detrimental to health

- Recycling: copper is one of the most recycled off all metals. Virtually all products made from copper can be recycled and recycled copper loses none of its chemical or physical properties

- Energy Efficiency: copper can improve the efficiency of energy production and distribution systems

- Antimicrobial Properties: copper and copper alloy products can be used to eliminate pathogens and reduce the spread of diseases

Copper SectorCopper is the base of society’s infrastructure and is present everywhere

39

Tubes and accessories, gas heating, bars,

switch, sockets, electric energy

wires and cables

Civil Construction

Electric vehicles,

brake pads, radiators and heat diffusors

Automotive Sector

Copper-nickel alloys to prevent corrosion

Naval Construction

Water and gas tubes, electronic connectors, heat diffusors, electric

engines and cables

Industry

Wires and connectors

Telecommunications

Circuits, wires and

connectors

Eletroelectronics

Copper alloys used in buttons, zipper, buckle,

jewelry, surgical instruments and

military applications

Dressing, Decoration and Specialties

Wires and energy cables, solar panels,

wind turbine and ethanol production

Energy

Copper SectorCopper is widely used in all sectors

40

1.0

2.5

0.3

1.4

2.2

2.72.9

3.1

2012 2013 2014 2015E 2016E 2017E 2018E 2019E

7.7 7.77.4

7.1 6.8 6.6 6.4 6.3

2012 2013 2014 2015E 2016E 2017E 2018E 2019E

3.4 3.3 3.33.5

3.7

4.1 4.0 4.0

2012 2013 2014 2015E 2016E 2017E 2018E 2019E

Global GDP Growth (%) China GDP Growth (%) Brazil GDP Growth (%)

Global economy with sustainable growth in coming years will support copper demand

Despite Chinese deceleration, growth rates are still very high, while Brazil presents a high potential growing market

Source: IMF

Copper SectorGlobal GDP drives copper demand

41

Concentrate Production (Mt) Smelter Production (Mt) Refined Consumption (Mt)

China is the most important player accounting for 44% of global consumption

China also holds a disproportionate amount of global stocks

Strong growth of copper mining supply in 2013/2014 puts award pressure leading to higher TC/RC (large discount to

smelters)

Expected growth in refined consumption will surpass growth in production, supporting higher premiums

Refined copper prices to come under downward pressure over the next few years

Source: WoodMackenzie, December 2014

11.1 10.9 11.0 11.4 11.2 11.6

4.3 4.7 5.3 6.0 7.1 7.7

2011 2012 2013 2014 2015E 2016E

15.4 15.6 16.317.5 18.3

19.3

14.8 15.2 16.5 17.0 17.7 18.7

1.4 1.51.6 1.7 1.7

1.8

2011 2012 2013 2014 2015E 2016E

16.2 16.818.1

18.7 19.520.5

11.8 11.4 11.4 11.9 12.3 12.6

7.8 8.2 9.2 9.9 10.3 10.7

2011 2012 2013 2014 2015E 2016E

19.6 19.620.6 21.8 22.6

23.3

RoW China RoW China RoW China

Copper SectorProduction , refining and consumption drive copper price

42Source: WoodMackenzie, LME

Copper SectorRecent drop in copper prices caused by macro scenario and oil prices

5.000

5.500

6.000

6.500

7.000

7.500

Improving economic sentiment and declining LME stocks boost prices

Sharp price fall leads to

scrap vacuum

Weak manufacturing data and credit issues

in China

SRB buying

Quingdao warehouse

fraud uncovered

Generally positive macro-indicators and falling

stocks supports prices

Prices slides as global

growth fears escalate as oil price tumbles

Strong USD pressuring

commodities

LME

US$

/t

43

0

5

10

15

20

25

30

35

2000 2005 2010 2015E 2020E 2025E 2030E 2035E

mill

ion

to

nes

North America Europe China Other Asia Row

0

5

10

15

20

25

30

35

40

45

2000 2005 2010 2015E 2020E 2025E 2030E 2035E

mill

ion

to

nn

es

Construction Electrical Network Industrial Machinery Transport Consumer & general

Wire rod74%

Billet13%

Cake/Slab13%

Electrical conductivity

59%

Heat transfer

9%

Aesthetics/malleable

28%

Signal transfer

4%

Refined Consumption by Region Total Consumption by Industry Sector

By First Use By Market Sector By Property

Construction30%

Electrical Network

19%Industrial

Machinery11%

Transport12%

Consumer & general

28%

Source: WoodMackenzie, December 2014

Copper SectorSustainable global copper consumption growth

44

China (kt) Brazil (kt)

0

5000

10000

15000

20000

25000

30000

35000

1960 1970 1980 1990 2000 2010 2020 2030

1970 - 19793.4% growth p.a.

1960 - 19694.7% growth p.a.

1980 - 19891.8% growth p.a.

1990 - 19993% growth p.a.

2000 - 20091.5% growth p.a.

2010 - 20193% growth p.a.

2020 - 20351.5% growth p.a.

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

1960 1970 1980 1990 2000 2010 2020 2030

1970 - 19798% growth p.a.

1960 - 19693.5% growth p.a.

1980 - 19895.9% growth p.a.

1990 - 19999.6% growth p.a.

2000 - 200915% growth p.a.

2010 - 20195.7% growth p.a.

2020 - 20352% growth p.a.

0

100

200

300

400

500

600

700

800

900

1960 1970 1980 1990 2000 2010 2020 2030

1970 - 197913.1% growth p.a.

1960 - 19698.7% growth p.a.

1980 - 1989-3% contraction p.a.

1990 - 19999.2% growth p.a.

2000 - 2009-0.5% contraction p.a.

2010 - 20192.2% growth p.a.

2020 - 20352.4% growth p.a.

Global (kt)

Global refined copper demand still driven by China (44% of global demand in 2013 – expected 48% in 2020, a 7% CAGR)

Main drivers:— Global GDP growth— Emerging markets growth— Infrastructure and consumer goods sectors— Use of new technologies

Source: WoodMackenzie, December 2014

Copper SectorChina still is the main driver of global copper consumption

45

19.7 20.2 20.822.1

23.024.0 24.3 24.4

2011 2012 2013 2014 2015E 2016E 2017E 2018E

Global Refined Production (Mt) Global Refined Consumption (Mt)

19.6 19.620.6

21.822.6 23.3 23.9 24.4

2011 2012 2013 2014 2015E 2016E 2017E 2018E

Consumption to outpace production in next years, supporting current premium levels

Source: WoodMackenzie, December 2014

Copper SectorRefined copper imbalance continues to benefit smelters

46

TC/RC (US$/t and R$/t)* Metal Premium (Cathode)

Metal Premium is charged by a metal producer to its customer

Theoretically to cover the cost (transportation, warehousing, financing, alloying and marketing costs) of shipping metal to a customer but is a market driven/negotiated commercial term

Premiums are set once a year

Revenue for a refiner and cost to a consumer

Treatment Charge & Refining Charge is a deduction from the payable copper

Theoretically what it takes to convert a tone of concentrates into metal but is a market driven/negotiated commercial term

Charged by a smelter to a mine Realized TC is negotiated annually each year

Revenue for a smelter and cost to a mine

*Considering 30% Cu concentrateSource: Company and Bloomberg

High copper concentrate inventories led to TC/RC growth in recent years together with tightness in physical market contributing to higher premiums

Copper SectorTC/RC and Premiums at historical highs support smelters growth perspectives

2009 2010 2011 2012 2013 2014

Exports Premium

Domestic Premium

254 310 352 388510

610

447 519 688

838

1,199

1,824

2010 2011 2012 2013 2014 2015 YTD

US$/t R$/t

47Source: WoodMackenzie, December 2014

0.6

2.3

0.7

3.6

0.2

13.6

0.7

0.1+2.7

-0.4-0.6

+1.1

-0.4

+0.6

-2.9

+0.4

Demand

Surplus

Deficit

Cathode deficit in China and other regions create exports opportunities, also benefited by USD appreciation

Global Cathode Demand per Region - Mt

2014e demand: 21.8 million t2014e output: 22.1 million t

Copper SectorRegional imbalance creates interesting export opportunities

48

212

175

257

238

280 280

2011 2012 2013 2014 2015E 2016E

214221

269

294

356377

2011 2012 2013 2014 2015E 2016E

452

395419

442 453474

2011 2012 2013 2014 2015E 2016E

Concentrate Production (Kt) Smelter Production (Kt) Refined Consumption (Kt)

Refined consumption still expected to increase despite economic slowdown

Copper consumption growth in Brazil is supported by:

— recovery in domestic industrial production (end of “Port War”)

— growth in primary consumption and Real Estate sectors

— investments in ground transportation, electricity and infrastructure

Paranapanema is the only Brazilian smelter with 100% refined copper domestic production

Source: WoodMackenzie, December 2014

Copper SectorBrazilian copper industry follows the global path, despite consumption affected by economic slowdown

49

IR Contacts:

ri@paranapanema.com.br+55 11 2199-7914/7945/7845

http://ri.paranapanema.com.br

Access our website for more information and download the modeling guide

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