2020Competitiveness of Clean and Renewable Energy From Biomass

2009 Brazil Energy Conference

Increasing international concerns on energy security and

CO2 emission reduction Ethanol is part of the

Brazilian strategic agenda

Strong domestic ethanol market

growth coupled with international

expansion

Increasing potential for electricity from biomass in Brazil

Sector in evolution• Consolidation/new

actors• Focus on operational

excellence• Sustainability

Potential for innovation and break-through

technology

Competitiveness:

2

• Oil production cost• Ethanol production

cost

Macro trends 2009-2020 open great opportunities for energy from biomass

3

Source: LCA , Unica

Milling (mm ton) 426 565 940 1.200

Ethanol mix 45% 60% 68% 75%

Sugar Production (mm ton) 31 41 4530

2006 2008 2015 2020

1325

5569

Billion liters – fuel market

CAGR13%

Significant growth of Brazilian Ethanol Market

4

Significant growth of Brazilian Ethanol Market

mm

m3

- PVC and Polyethylene

- Additive in gasoline to increase octane in place of MTBE

18 %a.a

Green Plastics

ETBE

Chemicals

Brazilian ethanol demand (industrial uses)

5

USAE.U.

Japan

India

China

2008

18

2020

110

5

60Billion liters

Brazillian export potential

World Demand (Ex Brazil)

International Market Expansion

Source: LMC e FAO

2009

2010 20112012

20132014

20152016 2017 2018 2019 2020

Rising Production Cost of and Oil and Energy

Projection of Supply and Energy Cost

Source: Booz Allen / IEA

Oil Prices WTI

Corn Ethanol

Sugar Cane Ethanol

Heavy OilPre-Salt

OPEP & Conventional

OilOthers SourcesC

ash

Cos

t (U

S$/b

oe)

MM barrels of oil equivalent per day

Electricity from Biomass

7

GW

Source: EPE

0,6%

2,8%

% of the biomass energy on the total installed domestic potential.

High potential to increase the presence of electricity from biomass in the Brazilian energy matrix.

Growth of Brazilian economy drives prices to a good ROCE.

Increase of Ethanol Competitiveness

Ethanol at gas station x oil

8

98

6384 87

97109

122137 143 147 152 157 162

49 42 40 39 39 38 37 36 35 35 35 35 35

Oil Price WTI Ethanol cost at gas station – adjusted for oil evolution

Ethanol cost at gas station – present scenario

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

6146 47 48 51 52 56 56 54 53 55 57

50

Ebitda

50%Ebitda

20%

9

Rapid consolidation in the industry

20%

20202008

16%

Mills with capacity over 4

mm ton

Market Consolidation

TOP 10

32% 50%28%

2009Center-South

Market

70%

10

2020 Trends

Leaders with capacity over 100 mm ton/year.

Necessary investments (2009-2020) over US$ 45 billion (debt + equity)

New actors: traders and oil companies

Strong interest of capital market

Ranking Crop 08/09

Milling Brazil: 1.200 mm tonMilling Brazil: 565 mm ton

Cosan(Nova América)

Dreyfus(Santelisa)

Tereos

Moema

Usaçúcar

Alto Alegre

Carlos Lyra

São Martinho

Tércio W.

Zillo Lorenzetti

52,6

31,5

13,8

12,7

12,3

12,1

12,1

12,0

11,8

10,2

34,3ETH

(Crop 2015)

Rapid consolidation in the industry

ETH Vision

Sustainability Culture & PeopleCompetitiveness

Build a leading company in bioenergy (ethanol and co-generation of electricity), focused on value creation for its shareholders through:

12

ETH business model: based on competitiveness and integration

Synergies

Standardization

Integrated Production

Clusters

SCALE

Long-Term Contracts

High return on capital

Biomass energy production

ELECTRICITY

New markets and product development

Pricing skills

Competitive Logistics Customer Focus

INTEGRATION

I n o v a t i o n & T e c n o l o g y

ETH 2015

13

Energy SalesEthanol Sales

2,1 millionMWh

3,0 billion liters

Potential EBITDARevenues

50%US$ 2,5billion

New Opportunities

Opportunities in supply chain

Internationalization

Integration in the value chain

Market Leader

2020Competitiveness of Clean and Renewable Energy From Biomass

2009 Brazil Energy Conference