update on projects presentation
TRANSCRIPT
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Project Development Update
Conference Call
Project Development Update
Conference Call
080710
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Disclaimer
The material that follows is a presentation of general background information about MPX Energia S.A. and its subsidiaries (collectively, “MPX” or the “Company”) as of
the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made
concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of this information.
This presentation may contain certain forward-looking statements and information relating to MPX 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 like “may”, “plan”, “believe”, “anticipate”, “expect”, “envisages”,
“will likely result”, or any other words or 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, any of its affiliates, directors, officers, agents or employees nor any of the placement agents 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 does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything
contained herein shall form the basis of any contract or commitment whatsoever. Recipients of this presentation are not to construe the contents of this summary as
legal, tax or investment advice and recipients should consult their own advisors in this regard.
The market and competitive position data, including market forecasts, used throughout this presentation were obtained from internal surveys, market research, publicly
available information and industry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in any material
respect, we have not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or by industry or
other publications. MPX, the placement agents and the underwriters do not make any representation as to the accuracy of such information.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without MPX’s prior written
consent.
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Integrated and diversified generation portfolio
Size (MW) MPX (MW)
Coal 5,900 5,540
Natural Gas 3,300 3,300
Hydro 380 260
Diesel 23 12
9,603 9,112
UTE Porto de Itaqui (Maranhão)(360 MW + 360 MW)
UTE Porto do Pecém (Ceará)(720 MW + 360MW)
UTE Porto do Açu (Rio de Janeiro)(2,100 MW + 3,300 MW)UTE Castilla (Chile)
(1,400 MW)
UTE MPX Sul(Rio Grande do Sul)(600 MW)
UHE Baixo Iguaçu (Paraná)(350 MW)
UTE Serra do Navio (Amapá)(23 MW)
PCH Capivara (Amapá)(30 MW)
* Already considering 100% of UTE Açu and UTE Castilla, according to the relevant fact released on February 20, 2008
Coal Mines Colombia
MPX will be a leading integrated and diversified energy producer
Seival Coal Mine(Rio Grande do Sul)
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Brazilian Power Market OverviewBrazilian Power Market Overview
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Spot Prices Indicate Need for New Capacity
Rationing in 2001: consumptiondeclined to 1998 levels.
� Short-term situation aggravated by structural deficit.
� ENA in the month of January 2008 was the 2nd worstin the data series ����average spot price close to the ceiling price
History – Southeast (~ 60% of the Brazilian market)
Rationing result: structural energy surplus (decline inconsumption + Thermoelectric Plant Priority Program(PPT)), combined with subsequent favorable hydrologicalperiods →→→→ low spot prices.
Spot price LoadENA(Hydropower)
EAR(Stored Energy)
GW
avg
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Forecasted Marginal Operating Costs (CMO)
218.87218.43164.16128.1588.60North
212.00219.75161.38133.4890.44Northeast
261.05230.61176.91142.1086.88South
267.55240.55178.14141.3276.47Southeast/Midwest
20122011201020092008SUBSYSTEM
Base Scenario – CMO (R$ / MWh)
70
110
150
190
230
270
2008 2009 2010 2011 2012
Southeast/Midwest
South
Northeast
North
R$ / M
Wh
Source: ONS
MPX will have over
2,600 GWh in energy
available for sale in
2011, from Itaqui and
Pecém plants
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MPX BrazilMPX Brazil
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• Contract price: US$ 503.5 million
• EPC contracts assure the start up of the operations in 2011
• Bonus mechanisms to accelerate COD1
• Down payment for long lead items already made
• Civil works to start in Nov 2008
EPC
• Eligibility for BNDES and IDB financing secured
• BNDES and IDB due diligence phase starting on July 14
• Bridge loan contracts of US$ 160 million
Funding
• Preliminary License granted by State Environmental Authority
• 3 Public Hearings in the State of Maranhão finalized and issues raised addressed by the environmental study
• IBAMA cross-checking entire process
• Installation License shall be jointly granted by State Authority and IBAMA before Oct 2008
Licensing
• 315 MW sold in the October 2007 auction A-5
• Full pass-through of fuel costs to energy prices
• Annual Fixed Revenue of R$ 231,3 million 2 (escalated by IPCA3)
Energy sales
Details
UTE Porto de Itaqui
Fuel: Coal
Location: Maranhão State, Itaqui Port
Shareholder: 100% MPX
Start-up: Aug/11
1. Commercial operation date2. As of June 20083. IPCA = Consumer Price Index
UTE Porto de Itaqui - 1st phase (360 MW)
Potential Upsides
• Coal trading spread
• Coal freight spread between Colombia-Brazil and Africa-Brazil
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UTE Porto do Pecém - 1st phase (720 MW)
• Contract price: US$ 935.9 million
• EPC contracts assure the start up of the operations in 2011
• Bonus mechanisms to accelerate COD1
• Down payment for long lead items already made
• Construction started in early July 2008
EPC
• Eligibility for BNDES and IDB financing secured
• BNDES and IDB due diligence phase starting on July 14
• Bridge loan contracts of US$ 270 million
Funding
• Installation License Issued – Construction under way
Licensing
• 615 MW sold in the October 2007 auction A-5
• Full pass-through of fuel costs to energy prices
• Annual Fixed Revenue of R$ 437,5 million 2 (escalated by IPCA3)
Energy sales
Details
UTE Porto do Pecém
Fuel: Coal
Location: Ceará State, Pecém Port
Shareholders: 50% MPX / 50% EDP
Start-up: May/11 (360 MW) + Nov/11 (360 MW)
Potential Upsides
• Coal trading spread
• Coal freight spread between Colombia-Brazil and Africa-Brazil
1. Commercial operation date2. As of June 20083. IPCA = Consumer Price Index
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UTE Porto do Pecém - 2nd phase (360 MW)
• Negotiations under way with consortium composed by EFACEC, BC Projetos and led by Maire Engineering. Boilers to be supplied by Doosan Babcock and Turbines by Siemens, both major players
• MoU to be signed before A-5 auction, scheduled for late August 2008
EPC
• Public hearing for Preliminary License finalized in May 08
• Preliminary License to be issued in Jul 2008
Licensing
• Full capacity registered for A-5 auction, scheduled for late August 2008
Energy sales
Details
UTE Porto do Pecém
Fuel: Coal
Location: Ceará State, Pecém Port
Shareholder: 100% MPX
Start-up: 2013
• Eligibility process started with BNDES
Funding
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Fuel: Coal
Location: Rio de Janeiro State, Açu Port
Shareholder: 100% MPX (future strategic partner)
Start-up: Jul/12 (700MW); Jan/13 (700MW); Jul/13 (700 MW)
EPC
• US$ 500 million firm commitment from Santander
• US$ 500 million firm commitment from Unibanco
• Bridge loan contracts of US$ 200 million
• Financial advisory agreement with Santander
• Eligibility process started with BNDES
Funding
• Public hearings for Preliminary License scheduled for July 14 and 15
• Preliminary License to be issued in late July 2008
Licensing
• Participation in A-5 energy auction
• Sale to Free Market within the self-production concept, with option to contract capacity - Negotiations under way
Energy sales (planned)
Details
UTE Porto do Açu • MOU to be signed in early Aug 2008
• Reservation fee to long lead items in order to secure project schedule
UTE Porto do Açu – 1st phase (2,100 MW)
Credit Suisse mandated to find strategic partner
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Free Market - Shared self production + Capacity option
Competitiveness in Free Market enhanced by adding option to contract capacity
CoalSupply
UTEPorto do Açu
Availableaverage MW
Self-Producer’sQuota
Q1
Q2
Plant’sOperations
Management of Energy Requirements
Quotas of each offtakerQuotasself-producer 1
Quotasself-producer 2
Quotasself-producer N
FreeConsumersOR
Capacity Pmt
(fixed)
+
Variable cost
(if dispatched)Qn
Q3
Quotasself-producer N
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Chilean Power Market OverviewChilean Power Market Overview
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6.000
9.000
12.000
15.000
18.000
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Expected Capacity
Required Capacity
Forecasted Supply/Demand Balance (MW)
Energy Demand Increasing Faster than Supply
Source: Santander, CNENote: Projections include only mayor projects such as LNG plants and Hydroayèn
Source: CNE.
Expected Sales (Th. GWh)
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Free Clients Regulated Clients
6.4%
5.5%
Coal generation projects will have to cover the gap between
increasing energy demand and projected supply.
Strong growth in industrial clients energy demand (mining companies) as well as power auctions of distributors from
2012 onward (regulated clients) secures significant
opportunities in the SIC for the next decade.
Supply / Demand Gap
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MPX ChileMPX Chile
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Fuel: Coal
Submarket: SIC
Location: 3rd Region, near Copiapó City
Shareholder: 100% MPX (future strategic partner)
Start-up: Jul/12 (350MW); Jan/13 (350MW); Jul/13 (350 MW); Jan/14 (350MW)
EPC
Funding
• Environmental process started in Sept 2007
• Environmental Impact Assessment to be filed at CONAMA (Environmental Authority) in 3Q08
• Installation License to be issued in 1Q09
Licensing
• Binding agreements expected for end of Sept 2008
Energy sales
Details
• 4 proposals under evaluation
• EPC selection process to be closed by Aug 2008
• Reservation fee for long lead items
UTE Castilla
MPX Chile - UTE Castilla (1,400 MW)
• US$500 MM long term financing from Santander
• Bridge loan contracts of US$ 100 million
Santander mandated to find strategic partner
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Coal SupplyCoal Supply
18
0
2
4
6
8
10
12
14
2008 2009 2010 2011 2012 2013 2014 2015
Coal Supply Forecasted Ramp-up
Studies and definition oflogistics alternatives
“Full Capacity”*12 Mtpy coal production
Cerrejon andCesar
DepartmentsExploration–
AUG/2008
On GoingExplorations
including possibilityof new acquisitions –
2009/2010
Colombianmines
productionstart-up
1.5
4.0
10.0
12.0 12.0
Colombian properties already acquired
MPX has made significant progress in order to secure coal supply to its plants
Coal ProductionTon (MM)
New acquisitions * Not including Seival Mine
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MilestonesMilestones
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MPX Milestones Roadmap
Notes:NTP – Notice to Proceed; EPC – Engineering, Procurement and Construction; MOU – Memorandum of Understanding; PPA – Power Purchase Agreement
1H081H08 2H082H08 1Q091Q09
UTE Porto do Açu (2.100 MW): Environmental Impact Study
filing
UTE Porto de Itaqui:
Installation License
1st phase UTE Porto do Açu: Preliminary License
( 2,100 MW)
1st phase UTE Porto do Açu: Installation License
( 2,100 MW)
UTE Seival II: Preliminary License
UTE Seival II: Installation License
UTE Castilla: Installation License
UTE Porto de Itaqui: Environmental Impact Study
filing
UTE Castilla: financing Term Sheet
UTE Castilla: Long term financing contract
UTE Porto do Pecém: Bridge
loan
UTE Porto do Pecém: Long term financing contract
UTE Porto do Açu: Long term financing contract
UTE Porto de Itaqui: Long term financing contract
UTE Porto de Itaqui: Bridge loan
UTE Castilla: EPC contract signature
2nd phase UTE Porto do Pecém: MOU for EPC
2nd phase UTE Porto do Pecém: EPC contract
signature
UTEs Porto de Itaqui and Pecém: EPC contract
signature
Porto de Itaqui and Pecém: NTP for EPC and down
payment long lead items
UTE Porto do Açu:
MOU for EPC
UTE Porto do Açu: EPC contract signature
UTE Porto do Açu: NTP for EPC and down payment long
lead items
UTE Seival II: EPC contract
signature
UTE Porto do Açu: Eligibility for BNDES long term financing
Coal mine acquistion in the
international market
UTE Castilla: Letter of intents
for PPA UTE Castilla: PPAs signature
1st phase UTE Porto do Açu: MOU for PPAs
1st phase UTE Porto do Açu: PPAs signature
Legend:
Environmental Licensing
Funding
Engineering and Construction (EPC)
Power Marketing and Coal Supply
Accomplished Events
Additional Events
UTE Porto do Açu and Castilla30% stake transference from
Centennial to MPX
Solar Energy: Yinglipartnership
UTE Seival II: NTP for EPC and down payment long lead
items
2nd phase UTE Porto do Pecém: NTP for EPC and down payment
long lead items
2nd phase UTE Porto do
Pecém: Preliminary License
UTE Porto do Açu: strategic partner selection
UTEs Porto do Açu e Castilla: Bridge loan
UTE Seival II: MOU for PPAs
R&D- Solar energy: Site identification and Basic
design
UTE Castilla: strategic partner selection
Participation in the A-5 auction for new energy
UTE Castilla:
MOU for EPC
UTE Castilla: “Limited NTP”for EPC (down payment for
long lead items)
1st phase UTE Porto do Açu: PPAs signature
1st phase UTE Porto do Açu: MOU for PPAs
ANEEL’s approval to the structure of the Açu project