1

Earnings call – 2Q11August 11,2011

2

Highlights

Strong growth in sales and volume, gaining market share

• R$ 583 million in net revenues, growing 9.3% in Refractory Solutions vs. 2Q10

• 13.8 % increase in refractory volume vs. 2Q10

• 17.4 % growth in sales to the industrial sector and 8.2% to the steel sector

Strong net income and cash generation

•R$ 30.8 million net profit, 41 % higher than 1Q11 and 22% over 2Q10

•R$ 103.2 million EBITDA with a margin of 17.7%

•R$ 85.8 million in operating cash flow

•R$ 91 million working capital reduction vs. 2Q10, R$ 15 million vs. 1Q11

Pressured gross margin due to raw material price increases as well as currency effects

• 31.4 % of gross margin (0.9 p.p. lower than the margin in 1Q11)

3

Strong growth driven by Refractory Solutions

Product line Quarter Change%

2Q11 (a) 1Q11 (b) 2Q10 (c) (a/b) (a/c)

Refractory solutions

Volume (t) 294,434 277,799 258,762 6.0 13.8

Revenues (R$ ‘000) 526,424 495,768 481,592 6.2 9.3

Minerals

Volume (t) 145,984 130,128 370,535 12.2 -60.6

Revenues (R$ ‘000) 19,844 34,474 25,496 -42.4 -22.2

Services

Revenues (R$ ‘000) 36,749 45,049 44,652 -18.4 -17.7

TOTAL

Revenues (R$ ‘000) 583,017 575,291 551,740 1.3 5.7

4

Strong growth in Refractory Solutions

11.5%

+9.3%

2Q11 -constant currency

536.9

2Q11

526.4

1Q11

495.8

2Q10

481.6

6.0%

+13.8%

2Q11

294.4

1Q11

277.8

2Q10

258.8

Steel production

Year-over-year

2.6% ex-China5.5% global

Sequential

1.6% ex-China2.4% global

Net revenueR$ million

Refractory volume‘000 tons

17.5% revenue growth vs. 2Q10 outside South America

5

Refractory solutions - growth both in steel and in industrial

Net revenues - Steel sectorR$ million

Net revenues - Industrial sectorR$ million

+8.9%

+8.2%

2Q11

457.7

1Q11

420.4

2Q10

423.1

-8.9%

+17.4%

2Q11

68.7

1Q11

75.4

2Q10

58.5

6

Regions 1H11 Total

North America 1 14

Europe 1 8

Asia 1 4

South America - 33

TOTAL 3 59

New CPP contractsNumber of contracts

CPP contractsNumber of contracts

Refractory Solutions - CPP

31% of revenues from the steel sector

59595652

474240

3631

272624

2Q

10

1Q

10

4Q

09

3Q

09

2Q

09

1Q

09

20

08

Bef

ore

20

08

2Q

11

1Q

11

4Q

10

3Q

10

59

24

16

2009

3

2010 Total2008

2

Before 2008

14

2Q11

0

1Q11

7

Gross profit and gross marginR$ million, %

Minerals

Services

RefractorySolutions

Gross profit and margin per product lineR$ million, %

Gross profit per product line

185.7

32.3

2Q10

199.2

36.1 31.4

2Q11

183.3

1Q11

166.0180.6

37.5 32.1

168.8

33.5

10.3

51.9

13.7

39.7

11.6

45.4

11.3

4.1

2Q111Q11

6.0

13.4

2Q10

7.0

15.7

8

Strong net income and cash flow generation

Net incomeR$ million

+22%

+41%

2Q11

30.8

1Q11

21.8

2Q10

25.1

EBITDAR$ million, %

Cash flow from OperationsR$ million

2Q11

85.8

1Q11

186.4

2Q10

-14%

+10%

2Q11

103.2

17.7

1Q11

93.8

16.3

2Q10

120.6

21.9

-0.3

9

44-day shorter cash conversion cycle

44 -day shorter cash convesion cycle vs. 2Q10

Cash conversionDays

Working capitalR$ million

R$ 91.3 million reduction vs. 2Q10

(additional R$ 15 millionover 1Q11)

790.6

R$ 91 million

2Q111Q11

805.2

4Q10

832.6

3Q10

934.1

2Q10

882.0

145153161

193189

129129129154158

6556484049

2Q111Q114Q103Q102Q10

Suppliers

Inventory

Cash cycle

10

DebtR$ million

1.951

1.631 1.636 1.491

908 854 3.1

2.1 2.1

2Q10 1Q11 2Q11

NetDebt/EBITDA 2.8 x

56.8% lower financial result vs. 2Q10

R$ 54 million reduction in net debt –maintaining 2.1 x EBITDA

2.1 x 2.1 x

11

Financing Sept/11

Environmental License Concluded

Start-up Mar/12

(1) According to Industrial Minerals

Investment: R$ 220 million through 2012

Financing: 80% at attractive rates

Production: increase in capacity by 120 ktpa

Magnesite (Brumado-BA) Graphite (Almenara-MG)

Description

Stage Deadline

Timetable

Financing Dec/11

Environmental License Dec/11

Start-up Dec/12

Investment: R$ 80 million through 2012

Financing: 80% at attractive rates

Production : capacity of 40 ktpa

Description

Stage Deadline

Timetable

Verticalization projects remain “on track”

12

• Sale of land in São Caetano, R$ 19.8 million• Impact on EBITDA, net income and cash in 3Q11

Sale of real estate

• Partner: Sudamin• Annual steel production of 1.9 million tons• Transfer of know-how, supply of raw materialsand technical assistance

Partnership in Colombia

Sudamin

• Partner: Refratários Socialistas de Venezuela• Annual steel production of 5.7 million• Transfer of know-how, supply of raw materials and technical assistance

Partnership in Venezuela

RSV

Consolidation ofleadership in SA

Subsequent Events