We intend, from 2012 onwards, to operate in our own, new terminal, with 60,000m2, located in an area in the Cocaia Island. The terminal will be authorized to operate with its load and also with third- party loads', and shall feature a 18.5 m operational hull depth enabling it to receive Cape size type ships. The financial model proposed for making the terminal's construction feasible is to be backed by both private and public capital.

In relation to verticalization of the iron ore production chain, Suape has ideal conditions for the implementation of a pelletization plant, due to the supply of our iron ore. National and foreign metallurgical groups have demonstrated their considerable interest in our ore.

We have built together with the Suape Port(considered to be the best national public port by Secretaria Especial de Portos (Special Ports Department), a history of  successful partnership and sustainable growth. For having chosen Suape as our operational port and for having become a part of this history, we believe we occupy a highly credible position in relation to the bodies, operational institutions and authorities concerned.

Transhipping

Transhipment is defined as an operation whereby a load is directly transferred from a watergoing vessel to another, without crossing  land. Such a modality of operation makes the loading of large-sized ships viable (Cape size type, for instance, with a capability for 200,000 tons of load) in shallow coastal regions, with no need for building a port terminal.

Due to the lack of depth near the coast, smaller boats (such as barges) can be loaded in shallower waters,  and then transport the loads to areas distant enough from the shore to allow ships with more hull depth  to approach. These ships moor with buoys attached around them which provide stability. Then the barges are tied to them with the cranes that perform the operation of unloading themselves and loading the ships.

Rio Grande do Norte’s shore is 120km  from our production plant in Jurucutu. Twelve nautic miles from the coast lies a 25m sea crevice, deep enough to allow the reception of Cape size type ships. Studies performed over a five-year period show that the conditions of navigability in this area allow for safe and efficient transshipping operations. Operations similar to this one are performed in several places around the world, and there's now a trend towards reducing the cost of investment in port facilities.

Currently, in this same region of Rio Grande do Norte a similar operation is already performed, with the use of barges for the transportation of salt up to the ship loading point. Transhipping carried out away from the port is ideal for bulk type loads, not being used in container displacement operations, given the need for using a truck transporting the load.

We received three proposals from port operators that conduct this type of operation in several regions around the world. These companies' know-how will enrich our own technical knowledge as qualified port operators. Thus, we shall have the market's shortest distance guarantee between the plant and the ship, in addition to the CAPEX reduction, meaning lower logistics cost and increased efficiency, a competitive edge unlikely to be surpassed.

Sea Transportation

In the last two years there has been an astronomical increase in the value of sea freight. The high for that period was around 500% (from US$22.00 in 2006 to US$120.00 in 2008), due to the high demand fueled by global trade growth and an increase in navigation distance resulting from economic growth, mostly in China and India.

Due to this increase, sea freight, which used to represent about 30% of the CIF value of ore sale, has hit the mark of 60% of CIF, today oscillating between 45% and 50%. With a fat-free production and terrestrial logistic cost, freight negotiation clout and the expertise and influence of the largest trading company linked to China's mining and metallurgy segment as our shareholder, Noble, we are in a privileged position in the CIF sale market.

In addition to this competitive advantage, we boast the possibility of ensuring an absolute plus, by exploiting the return loads from China for storage and distribution from our terminal in Suape. Noble Trading's know-how, which commercializes billions of load tons a year, will be extremely useful. With this, we open up the possibility of having freighted ships totally dedicated to our operations; this will allow a reduction in freight cost and a better freight -CIF value ratio.