31 Mount Pleasant, London WC1X 0AD UK Tel Fax LONDON | BEIJING | PHILADELPHIA | WASHINGTON Petcoke and its role within the aluminium industry McCloskey 6 th Petcoke Conference May 2008 Calvin Graham Consultant CRU Analysis Tel: (+44)

Slide 2 CRU is the world’s leading independent provider of consultancy, business analysis and conferences focusing on the mining, metals, power, cables, fertilizers and industrial chemicals sectors. oFounded in the late 1960s oPrivately owned to ensure its independence oLocated in London, Beijing, Santiago, Sydney, Rio de Janeiro and key centres in the United States oEmploys more than 200 experts Fundamental AnalysisStrategic ConsultancyConferences & Events

Slide 3 oA team of 20 analysts, metallurgists, chemists and economists oA multi-cultural team in the UK and abroad oUndertake research, analysis, client and site visits, innovation oStrength in depth to allow in-depth knowledge in areas such as power, carbon products and semi’s markets oA recognition and emphasis on China, hence our office in Beijing o2008 aluminium conference in Chongqing, China Sep The Aluminium Business Unit

Slide 4 Structure of Presentation Aluminium market outlook Petcoke consumption by the aluminium industry Anode-grade petcoke production forecast Quality and pricing implications for smelters Conclusions

Aluminium price performance LME 3M aluminium price (May 06 – Jun 08)

Forecast: rising operating costs lead to continued strong aluminium prices Highlights: -Reduction in expected market surplus and escalating costs from a weaker US dollar and higher oil prices lead to 2008 price rise -Market balance in 2008 cut to 660,000 tonnes on output disruptions -Strengthening yuan and higher Chinese power prices lead to 2009 price increase, surplus in H all in China -Continued high prices forecast on higher costs expectation and tighter S/D balance Risks: Global recession leads to fall in demand and lower LME prices Yuan appreciates more than our base case, leads to higher prices

Slide 7 Calcinable green coke consumption forecast

Slide 8 Calcinable green coke consumption forecast for the aluminium industry Growth during

Slide 9 World anode grade production has kept up with smelter consumption rates in recent years

Slide 10 This will change over the next few years as the production of new low sulphur cokes stalls

Slide 11 The rapid rise of CPC costs in the last year

Slide 12 The rise and fall of Chinese green coke exports during

Slide 13 Chinese production of high quality cokes will not keep up with the rate of aluminium expansion

Slide 14 Low sulphur levels are not the only concern when judging quality vs. marginal material

Slide 15 Prices in China have diverged with some smelters forced to take lower grade materials: 2008 US$/t FOB 2007

Slide 16 Options for the aluminium industry are fairly limited: 1.Continue to pay higher prices until highest cost smelters close 2.Use lower grade material: either higher metal content or higher sulphur levels 3.Some new smelter projects in the Middle East may set up joint coke/calciner projects 4.Blend lower and higher grade materials together 5.Develop new smelting technology; eg. sulphur scrubbers or inert anodes

Slide 17 Inert Anodes are on the horizon, although still a few years away 1.Ceramic Metal Oxides – Physical properties are a problem, as are chemical reactions with the electrolyte 2.Metal-Based Anodes – such as Fe-Ni-Cu alloys, corrosion and contamination issues 3.Cermets – ceramic/metal mix to take advantage of each set of properties, NiFe 2 O 4 + NiO + Cu is most tested Researched being made by: Moltech Alcoa NAT Argonne National Lab Noranda UC RusAl Chalco Rio Tinto Alcan Hydro etc

Slide 18 Acceptance of lower grade cokes will bring down the price of coke in China Base case assumes an average rise in acceptable sulphur level from 2.5% to 3.3% Calcined coke prices peaking at just over $700/t

Slide 19 Conclusions  We see strong growth in the primary aluminium market: 17.4m tpy of new capacity between 2007 and  In the west, 3.2m tpy of new anode grade green coke demand  The only new major sources of coke for the aluminium industry will be Brazil and China  Quality will decrease and prices for high quality will continue to escalate at smelters continuing to demand tight specifications  Higher quality material will continue to carry a premium, but average prices will stabilise and plateau

Slide 20 Primary Aluminium Raw Materials Calvin Graham Consultant CRU Analysis 31 Mt Pleasant London, WC1X 0AD UK +44 (20) Your contact at CRU: Thank you for your attention. We publish a bimonthly overview of the latest developments in the anode grade carbon market including regional pricing and short term market assessments. Also available on-line at our website. The 5-Year Carbon study – Published each November with a half-yearly update (through a conference call) covering the global carbon market and is a key tool for well-informed decision making. This year we continue to build on our findings about the carbon situation in China, especially concerning future availability of anode grade green petroleum coke.