THE INCREASING IMPORTANCE OF CEMENTITIOUS MATERIALS : A GLOBAL UPDATE ON GBFS

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THE INCREASING IMPORTANCE OF CEMENTITIOUS
MATERIALS A GLOBAL UPDATE ON GBFS

• THE GLOBAL SLAG CONFERENCE STRASBOURG, FRANCE
  NOVEMBER 10TH, 2008

CHARLES ZEYNEL ZAG INTERNATIONAL INC
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ZAG WOULD LIKE TO GIVE SPECIAL THANKS TO THE
FOLLOWING FOR THEIR INFORMATION

• Exane Bnp Paribas paris london
• Deutsche Bank - london
• Collins stewart - london
• Portland Cement Association usa
• US Geological Survey washington dc
• Jp Morgan- nyc hong kong
• Morgan Stanley - nyc
• Marsoft - boston
• Louis Dreyfuss - stamford
• National Slag Fly Ash Associations
• National Regional Cement Construction
  Associations
• Steel Companies Power Companies
• Shipping Companies Brokers
• International Cement Companies reports
• Customers Suppliers

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• JUST 2 MONTHS AGO
• Cement Today Is a 2.5 Billion MT Global Business
  With Excellent Long Term Growth Prospects
• By 2010 Cement Capacity is Predicted To Increase
  another 800 Million MT To 3.3 Billion MT
• Despite US Western Europe Downturns, Major
  Increases in The Emerging Regions
• In 2008 Global Trade of Cement, Clinker and
  Related Materials will approach 200 Million MT

Property of ZAG International Inc
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• JUST TWO MONTHS AGO
• Freight Has Been the Major Variable In The
  Cost Equation and
• Is Driving Some Fundamental Decisions
• Sustainability Environmental Considerations
  are
• Increasingly Important can no Longer be
  Ignored
• Use Of Cementitious Materials Could Double To
  500
• Million MT by 2010

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GLOBAL CEMENT DEMAND August 2008 View(YEAR TO
YEAR CHANGE)
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GLOBAL CEMENT PRICING(YEAR TO YEAR CHANGE)
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• IN JUST WEEKS THE WORLD HAS CHANGED
• A TRUE PARADIGM SHIFT
• RUSSIA CEMENT DEMAND FALLS PRECIPITOUSLY
• MIDDLE EAST SLOWS DOWN
• TURKISH PRODUCERS NO LONGER SOLD OUT
• EXPORT CEMENT PRICING COLLAPSES
• CEMENT COMPANIES START DRASTIC MEASURES
• FREIGHT MARKET COLLAPSES
• SHIPBUILDING CANCELLATIONS
• STEEL INDUSTRY DOWNTURN

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• YET GIVEN THE CURRENT ECONOMIC TURMOIL
• AND AN UNCERTAIN FUTURE,
• NOW MORE THAN EVER IS
• THE TIME TO CONSIDER THE ISSUE OF
• RENEWAL SUSTAINABILITY
• Renewable Sustainable Energy
• Renewable Resources Materials
• Sustainable Growth

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CO2 Emissions from Industrial Processes

Europe
Asia
North Central America
Africa
South America
Oceania
--------------- 5 000 000 --------------- 3 000
000 --------------- 1 000 000 ---------------
100 000 in thousand tons
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2008 Sources of Energy Power
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Generation of Greenhouse Gases

• 2004
• USA 1.5B
• CHINA 1.4B
• 2007
• USA 1.6B
• CHINA 1.7B
• 2020
• CHINA 3.1B

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Generation of C0² in Clinker Cement Production
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• Generation of co² in Clinker Cement
• 50 Production Process
• chemical conversion of limestone to calcium oxide
  inherently produces carbon dioxide
• Every ton of limestone generates 579kg of C0²
• Basic Technology unchanged
• Difficult to reduce Co² significantly without
  major technology breakthrough
• 40 Fuel Burning
• Electric kilns are inefficient
• Nuclear is not sustainable nor acceptable
• Main focus is on Alternative fuels
• 5 Electricity
• 5 Transportation

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• Initiatives Legislation
• 1990 USA CLEAN AIR ACT SO2 TRADING SYSTEM TO
  REDUCE ACID RAIN BY 50 BY 2010
• JAN 1991 SWEDEN 1st CARBON TAX ON USE OF OIL,
  COAL NATURAL GAS
• Dec11, 1997 KYOTO PROTOCOL Global International
  convention on climate change to reduce greenhouse
  gases
• (36 DEVELOPED COUNTRIES PLUS EU, 137 DEVELOPING
  COUNTIRES HAVE RATIFIED BUT NOT USA)
• Jan 2005 EU ETS (EU Emissions Trading Scheme)
  under Kyoto Protocol is worlds only mandatory
  Carbon trading program
• Quebec 2007 1 Green Tax on cement

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• Initiatives Legislation
• Australia June 2007 Carbon Trading Scheme to be
  introduced by 2012 new PM Rudd wants it by 2010
  
• 2007 California Law AB -22 enacts Carbon
  Emission Curb
• April 2007 US Supreme Court Rules Greenhouse
  Gases are Pollutants Under the Clean Air Act
• Feb 2008 BC Canada 10/ton Carbon Tax on EFF
  July 1 2008 Plus 5 per Year Until 30 by 2012
• 2009 -2018 RGGI NY STATE/9 NE States Mandate
  CAP Trade System of C0²
• JAN 20, 2008 NEW U.S APPROACH

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U.S.AOBAMA ENVIRONMENTAL PROGRAM

• GLOBAL WARMING IS REAL, IS HAPPENING NOW AND IS
  THE
• RESULT OF HUMAN ACTIVITIES. WE BELIEVE WE HAVE A
  
• MORAL, ENVIRONMANTAL ECONOMIC AND SECURITY
• IMPERATIVE TO ATTACK CLIMATE CHANGE IN A SERIOUS,
• SUSTAINABLE MANNER

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U.S.AOBAMA ENVIRONMENTAL PROGRAM

• REDUCE CARBON EMISSIONS BY 80 BELOW 1990 LEVELS
  BY 2050 - IMMEDIATELY IMPLEMENT A NATIONAL MARKET
  BASED CAP-AND-TRADE SYSTEM
• INVEST IN A CLEAN ENERGY ECONOMY TO CREATE JOBS
• DOUBLE GOVT INVESTMENT IN BASIC RESEARCH
• INVEST IN SKILLED CLEAN TECHNOLOGIES WORKFORCE
• CREATE A CLEAN TECHNOLOGIES VENTURE FUND
• SET NEW NATIONAL STANDARDS
• NATIONAL LOW CARBON FUEL (LCFS) 10 REDUCTION
  BY 2020
• 25 OF ELECTRICITY FROM RENEWABLE SOURCES BY 2025
• 30 OF FEDERAL GOVT ELECTRICITY USE FROM
  RENEWABLE SOURCES BY 2025

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U.S.AOBAMA ENVIRONMENTAL PROGRAM

• IMPROVE ENERGY EFFICIENCY
• MAKE FEDERAL GOVT LEADER IN SAVING ELECTRICITY
• BY 2025 ALL NEW BUILDINGS CARBON NEUTRAL OR ZERO
  EMISSIONS
• GRANT PROGRAMTO STATES THAT IMPLEMENT NEW CODES
• INCENTIVES TO POWER COMPANIES TO IMPROVE ENERGY
  EFFICIENCIES
• CREATE GREEN JOB CORPS
• INVEST IN A DIGITAL SMART GRID IN CONCERT WITH
  STATES UTLITIES
• DOUBLE FUEL ECONOMY STANDARDS WITHIN 18 YEARS
• RETOOLING TAX CREDITS AND LOANS TO AUTOMOBILE
  COMPANIES
• INVEST IN DEVELOPING ADVANCED VEHICLE TECHNOLOGY

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U.S.AOBAMA ENVIRONMENTAL PROGRAM

• RESTORE FORCE OF THE CLEAN AIR ACT
• INSTITUTE IMPROVED CLEAN WATER CONSERVATION
  LAWS
• EXPAND LAND CONSERVATION PROTECTION
• MAKE THE U.S A LEADER IN COMBATING CLIMATE CHANGE
  AROUND THE WORLD
• RE-ENGAGE WITH THE U.N. FRAMEWORK CONVENTION
• CREATE GLOBAL ENERGY FORUM OF LARGEST GREENHOUISE
  GAS EMITTERS BASED ON G8 5
• TRANSFER US TECHNOLOGY TO DEVELOPING WORLD
• CONFRONT DEFORESTATION PROMOTE INCENTIVES

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• INDUSTRY EFFORTS TO REDUCE CO²
• POWER
• Clean Coal
• Nuclear
• Renewable Energy
• STEEL
• Fewer Blast Furnaces
• Efficiency Improvements
• Experimental Technologies
• Blast Furnace using Hydrogen as Catalyst Rather
  than Coke to Reduce Iron Oxide to Pure Iron

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• CEMENT INDUSTRY EFFORTS
• Production efficiencies
• Alternative fuels and materials
• Replacing the Binder
• Alkali activated cements
• Biopolymers
• CO2 Entrained Cement
• Cementitious materials

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• Cementitious materials
• Natural Pozzolans
• Silica Fiume
• Pumice
• GBFS Slag, Raw Slag, Slag Granules, Granulated
  Slag
• GGBFS Slag Powder, Ground Slag, Slag Cement
• Coal Combustion Products (CCPs)
• Fly Ash Bottom Ash

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• Benefits of Cementitious Products
• Improved properties Performance
• Lower Co² Emissions
• Less Energy Required
• Reduced raw material usage
• Extended quarry life
• Recycling of steel power materials
• Less maintenance of finished concrete
• Green Product

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2000 - 2010 GBFS (SLAG) Ocean Trading
Volumes (Million MT)

• GBFS
• Impact of Freight Rates
• Fly Ash
• handling challenges

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2007 Global Slag Trading Patterns
1.3
1.5
1.5
0
0.08
1.1
0.25
0.1
0.3
0.2
0.2

• 2007 Total Global Trade gt 16.5 Million MT
• Intra Euro Med E. Europe 3.2 Mill MT
• Intra North Asia 4.5 Million MT
• Middle East 1.4 Million MT

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IMPACT OF FREIGHT RATES (Handy Size Vessels
Ranging From Small to Super)
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2008 World Dry Bulk Shipments2.8 Billion MT
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GBFS SUPPLY DEMAND

• W. EUROPE/E.EUROPE HIGHER DEMAND/TIGHT SUPPLY
• MIDDLE EAST INCREASING DEMAND
• INDIAN SUBCONTINENT NEW CAPACITY VS HIGH DEMAND
• NORTH ASIA JAPAN CHINA
• SE ASIA STEADY DEMAND/POZZOLAN RICH
• OCEANIA STEADY INCREASE IN SLAG CEMENT
• SOUTH AMERICA BRAZIL DOMESTIC DEMAND STRONG
• NORTH AMERICA STEADILY INCREASING DEMAND/NEW
  BLAST FURNACE BIG POTENTIALFOR MUCH MORE SLAG
  CEMENT

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• THE GLASS IS NOT HALF EMPTY
• IT IS HALF FULL
• THERE IS ALWAYS CAUSE FOR OPTIMISM

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U.S. Population is expected to grow by nearly 63
Million persons by 2030
Cement Consumption IS EXPECTED TO INCREASE BY
56 MILLION MT
Ed Sullivan - Chief Economist U.S. PORTLAND
CEMENT ASSOCIATION
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• THANK YOU

CHARLES ZEYNEL ZAG INTERNATIONAL INC