Our Nickel Business

Our nickel business

Toronto June 21, 2007

1 Disclaimer

”This presentation may contain statements that express management’s expectations about future events or results rather than historical facts. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected in forwardlooking statements, and CVRD cannot give assurance that such statements will prove correct. These risks and uncertainties include factors: relating to the Brazilian and Canadian economies and securities markets, which exhibit volatility and can be adversely affected by developments in other countries; relating to the iron ore and nickel businesses and their dependence on the global steel industry, which is cyclical in nature; and relating to the highly competitive industries in which CVRD operates. For additional information on factors that could cause CVRD’s actual results to differ from expectations reflected in forward-looking statements, please see CVRD’s reports filed with the Brazilian Comissão de Valores Mobiliários and the U.S. Securities and Exchange Commission.”

2 Creating shareholder value

Murilo Ferreira Chief Executive Officer CVRD Inco

3 Building shareholder value

Accelerated strategic growth plan

Strategic importance of CVRD Inco to CVRD

CVRD Inco is in the best position to grow nickel production over the next few years

4 A lack of investment in large nickel projects has resulted in a supply deficit

50 “Goro-size” 40

30 Full capacity not achieved New Primary Capacity 20 Intermediate only 10

0 VBN Goro Cawse Raglan Bulong Cosmos Tati Exp. Tati Mt. Keith Mt. Forteleza Coral Bay Montcalm Emily Ann Emily Cerro Exp.Cerro Aguablanca Malay Sally PT Inco Exp Inco PT Eramet Exp. Eramet McCreedy E. Murrin Murrin Murrin Maggie Hays Jinchuan Exp. Tambang Exp. Falcondo Exp. Loma de Niquel

1992 1994 1995 1996 1998 1999 2002 2003 2005 2006 2008

Source: CVRD Inco Limited 5 Nickel demand remains strong

Stainless steel accounts for two thirds of world nickel consumption

As Chinese economy continues to develop, there still remains room for significant stainless steel consumption growth

India and other emerging countries have strong potential

6 The world’s best nickel assets: a balance of sulphide and laterite properties

7 CVRD Inco has the expertise and discipline required to bring on new nickel production

8 Excellent safety record

Never satisfied until disabling injuries are eliminated

Our Canadian operations recognized for operating the safest metal mine in Canada for the last three years

Our Indonesian operations have achieved among the industry’s best safety results – and improving

9 Financial performance

CVRD Inco Consolidated EBITDA $ millions

3,772

1,677 1,600

516

2003 2004 2005 2006

10 Unwavering commitment to the communities in which we operate and the environment

11 Conclusion

Growing our nickel production to meet demand

Disciplined investment approach

Respect for the environment and the communities in which we operate

Creating shareholder value

12 Delivering Value

Mark Cutifani Executive Vice President & Chief Operating Officer CVRD Inco

1 Agenda

We are building new pathways…

Introducing our nickel operations The operations story…delivering value » Resources……………………..our platform for growth » Operations performance….our focus on delivering » Growing the business…..building on our strengths » Creating the future…identifying new opportunities Building sustainability Summary and wrap

…to create value for our shareholders and our communities.

2 Introducing our nickel operations

MANITOBA VOISEYS BAY CLYDACH SUDBURY KOREA NICKEL ACTON INMETCO PORT COLBORNE TNC JINCO TAIWAN NICKEL Principal Mines & Operations PTI VERMELHO Development Properties ONÇA PUMA GORO Other Metal Refineries JV Refineries ”The leading nickel operations”

3 The resource story…

4 We have the resources…

Voisey’s Bay (100%) Newfoundland and Labrador Increasing portfolio diversification… 1.5

~12 years 1.0 mine life Manitoba Operations (100%) (reserves only) Thompson 0.1 1.0 0.5 0.8 0.8 0.8 PT Inco (61%) ~15 years Indonesia 0.6 mine life 0.0 6.0 (reserves only) Vermelho Brazil 0.4 5.0 ~32 years 3.0 mine life 4.0 0.2 0.5 0.3 ~40 years (reserves only) mine life 3.0 5.5 (reserves only) 0.0 0.1 2.0 2.0 3.1 1.0 1.0 2.0 Ontario Operations (100%) 0.0 0.5 Sudbury 3.0 0.0 ~30 years mine life Goro (74%) 2.0 Onca Puma (reserves only) Brazil New Caledonia 2.0 4.0 1.0 ~25 years ~30 years 2.1 0.9 mine life 3.0 mine life (reserves only) (reserves only)

0.0 0.6 1.0 2.2 2.0 Contained Nickel in Ore 1.4 Reserves and Mineral Resources 1.0 1.8 1.1 Proven and probable ore reserves 0.0 0.0 Measured and indicated mineral resources …underpins long life, low cost operations. Inferred mineral resources 5 (All figures in millions of tonnes) We have the resources…

We have been building our metal inventories…

14 Mineral reserves 12 10 8 8.3 6 2.4 2.8 3.4 4.4 4

2 4.1 4.0 3.7 3.3 3.3 0 2002 2003 2004 2005 2006

Sulphide Laterite ..and our “mineral balance sheet” is geared for growth.

6 We have the resources…

Reserves¹ millions of tonnes of contained nickel

CVRD 11.6

Norilsk Nickel 6.0

BHP Billiton 4.6

Minara 1.5

Xstrata 1.3

Anglo American 1.1 1 P&P reserves Sources: AME Mineral Economics and CVRD Inco

…and we are well positioned compared to our competitors.

7 The operations story…

8 Focussed on value

Nickel focus is driven by our revenue mix… At today’s prices nickel represents 83% of revenues¹ Precious OtherCobalt Metals 4% 2% 9%

Other Cobalt Metals Copper Precious 2% 1% 5% 16%

Copper 9%

Primary Nickel 69%

Primary On long term pricing assumptions Nickel nickel represents 69% of revenues 83%

…and we are focussed on “mining money” … not just nickel.

9 ¹ CVRD Inco revenues Focussed on value

Thompson Electronickel Slab and Rounds Carbonyl Nickel Pellet, P Pellet Flats

Acton PGM’s Port Colborne Co Metal Carbonyl Nickel Powder

10 Focussed on value

We have been growing our business…

Nickel production 287(e) 1 (000s of tonnes) 16 251 Other** 238 222 15 64 Voisey’s Bay 36 188* 75 75 76 66 70 PT Inco 53 49 35 37 47 Manitoba

110 98 95 75 94 Ontario

03 04 05 06 07 …through organic growth and operating improvements. ¹ Includes finished nickel produced under toll-smelting and refining arrangements covering purchased intermediates with third parties. * 3-month strike in Sudbury ** Arrangement to toll smelt and refine any excess purchased concentrate from Australia; CVRD Inco will market the finished nickel 11 Focussed on value

We remain focussed on managing efficiencies…

Nickel Unit Cash Cost Per Pound 2006 Nickel Production and C1 After By-Product Credits Cash Cost by Company 1

$2.65

7.0

6.0 $2.10 5.0 4.0

3.0

2.0 CVRD US $/lb

1.0

0.0 0Norilsk 500 1000 1500 2000 2500 -1.0

-2.0

-3.0 Cumulative Production (Mlbs) 2005A 2006

1) Source and Copyright: Brook Hunt.

…despite increasing energy and other key input costs.

12 Financial performance

Financial performance continues to improve…

CVRD Inco Consolidated EBITDA $ millions

3,772

1,677 1,600

516

2003 2004 2005 2006

…underpinned by production growth, cost reductions and prices.

13 Ontario operations…driving change.

• Operating in the Sudbury Basin for over 100 years

Victor – • Integrated mining and Coleman/ Undeveloped McCreedy East processing operation that Mine produces Nickel, Copper, Cobalt and Precious Metals Garson Mine Blezard – • Processing facilities in Copper Inco Mines Undeveloped Inco Processing Plants Stobie Mine Cliff include Clarabelle Mill North Mine – Clarabelle Mill Copper Cliff Smelter Creighton Mine Copper Refinery – Copper Cliff Smelter and South Mine Nickel Refinery Kelly Lake Mine Matte Processing Pre -Feasibility Stage Totten Mine Feasibility Stage – Copper Cliff Nickel Refinery • Cobalt Refining and Precious • Cu:Ni ratio in the blended ore ~ 1.2:1 with Metals upgrading in Port differing ratios in each mine Colborne, Ontario • Current annual mining rate ~ 10.5 m tons, 200 m • Clydach Nickel Refinery in Wales lbs Ni, 255 m lbs Cu, 400 k oz PGMs 14 • Precious Metals Refining in Acton The “Sudbury Story”…

In 2004 Sudbury was facing a crossroads in its future…

4.00 Total costs

3.00 Cash costs Costs US$/lb Increasing 2.00

2.42 2.70 1.00 2.17 1.35 1.07 1.24

2000 2001 2002 2003 2004 2005F

…the key decision…fix it or scale it back to its high grade core.

15 The “Sudbury Story”…

The strategy to recover Sudbury targeted 3 domains… Flow Sheet Redesign – Exploration targeting high margin ore increments – Maximise contribution from high margin mining areas – Reconfigure flow sheet for simplification & value maximization Asset Management – Implement asset integrity program – Focus capability program to increase production by 15% – Introduce new business processes to reduce costs by 15% Production Management and Control – Implement integrated planning process – Implement feed management and operating control strategy – Integrate people strategy with operations management strategy

…and was focussed on our approach to managing the business.

16 The “Sudbury Story”…

We set aggressive targets and “sold the vision”…

Improvement Potential

0.18 Flow Sheet optimization.

Cash 0.27 Production Mgmt & Control Cost WHAT IS Asset Management $/lb $2.70 0.09

COULD BE $2.16 2004 2007

…we worked with every manager…to be the leaders of change.

17 Integrated flow sheet…

Ni Oxide CNR FMW Pellets & Powders Ontario to Mkt Clarabelle CC Matte CCNR Mill Smelter MYN Ni/Cu Processing FEN Pellets & Conc Powders to Mkt TOL Ni/Co Acton 6 Underground Cu Conc PGM Mines – CuNi ores To mkt Cu Anode Ni Oxide Conc To mkt PGM to Sinter - Mkt Mkt Port Colborne Co Metal Low Grade to Mkt Manitoba Cu Conc Recycle Ni Matte 2 Underground Mines – Ni ores Thompson Thompson Thompson Mill Smelter Ni Refinery Ni Conc Plating Ni to Mkt Co Hydrate to Mkt Voisey’s SAS to Mkt HG Ni Conc Open Pit VBN Mill Ni/Cu ore

MG Ni Conc Toll Smelting & Refining …”managing the Cu Conc to OO 18 To mkt value chain”. The “Sudbury Story”…

The strategy for change has delivered exceptional results…

Improvement Domains

Flow Sheet optimization 0.18 0.22

Cash 0.27 Production Mgmt & Control 0.25 Cost WHAT IS $/lb $2.70 0.09 0.09 Asset Management

COULD BE $2.16 2004 2006

…and established a new framework for managing the business.

19 The “Sudbury Story”…

The strategy for change has delivered exceptional results… Transfer By Prices Product $3.00- FX 0.20 0.30 Cash Inflat. $2.50 2004 - 0.40 1.28 Cost Cash $/lb $2.00- Business $2.17 Improvement

$1.50 - 0.56 2006 Cash $1.23

…and established a new framework for managing the business.

20 The “Sudbury Story”…

We have shifted the operations and what we can deliver…

Improving operating efficiencies

4.00 Cash costs

3.00 Total costs US$/lb 2.00

2.42 2.74 1.00 2.17 1.35 1.07 1.24 1.23

2000 2001 2002 2003 2004 2005 2006

…and the results are providing a new growth platform.

21 Manitoba operations

February 1956 – Discovery of Thompson Ore Body March 1961 – Ramped up to full production (Western world’s first fully integrated Nickel Operation) Currently have two operating underground mines: Thompson and Birchtree Integrated Processing facility – Mill Clean nickel ores in both mines – Smelter with limited copper or PGM’s – Electronickel Refinery Current annual mining rate ~ – Cobalt Hydrate to market 2.5 m tons, 36ktpa Ni from Target production rate of 60ktpa own source, 20ktpa Ni from Current focus on new exploration VBN prospects…1D/Pipe

22 Manitoba operations

23 Voisey’s Bay operations

100% ownership in 1996 Agreement in principle reached in 2002 – Development agreement defines two phases – mine/mill in Voisey’s Bay and a demonstration and commercial plant in Newfoundland – IBA’s with Innu and Inuit Construction began in 2003 on the Ovoid and Concentrator Current Ovoid production ~ – Completed in 2005 with first 60ktpa nickel and 35ktpa copper concentrate shipment in Nov 2005 Milling capacity of 6000 tpd Demo Plant commissioned in 2005 3 Concentrates Refinery targeted for 2011 – High grade nickel – Thompson, Sudbury, 3rd party customer – Middlings grade nickel/copper - Sudbury – Marketable copper – 3rd party customer 24 Voisey’s Bay operations

Integrated mining and smelting operations in Sorowako, Indonesia Produce nickel in matte Produced 70,000 tonnes of nickel in 2006

26 PT Inco - Indonesia

Contract of Work (COW)

Original COW was signed in July 1968 for 30 years, from the start of commercial production on April 1st, 1978 to March 31st, 2008

The 1968 COW was Modified and Extended in January 1996 for an additional 30 years through 2025, subject to further extensions

Embarked in 1996 on an expansion to increase production capacity by 50% to 150 million pounds a year of low-cost nickel in matte; completed expansion in 1999 at a cost of $630 million

We’ve exceeded production capacity annually since 2003

Total investment since 1968 amounts to approximately $2.4 billion

27 Contract of Work Area

South Sulawesi 118,387 ha Central Sulawesi 36,635 ha Southeast Sulawesi 63,506 ha Total 218,529 ha COW Area

Sulawesi

Jakarta PT Inco Petea Sorowako Bahodopi Malili M (Port) at ano SOROAKO L Petea

MALILI West East Block Block

Process Plant Soroako Towuti L Outer Pomalaa Area

Future site of Karrebe Dam Balambano Larona Hydro Hydro Dam Dam 010 Mining Areas Other Concessions Km.

28 PT Inco - Indonesia

Third hydroelectric generating facility will enable us to increase production capacity to 90,000 tonnes of nickel in matte annually by 2010, while lowering annual unit cash costs by $0.10-to-$0.15 a pound (from 2004 level)

Reduced energy supply risk

Delay in finalizing amendments to a forestry permit

Likely completion date is now Q1/2010

29 The operations story…

The Current Equation¹:

Sudbury 130kt Manitoba 62kt Indonesia 75kt VBN/Other 20kt

Total………………………. 287kt

¹ Includes finished nickel produced under toll-smelting and refining arrangements covering purchased intermediates with third parties.

30 The growth story…

31 Focus on growth

While Inco had repositioned the business for growth…

Nickel production (000s of tonnes) 1 287 1 251 238 222 188

2003 2004 2005 2006 2007F

…CVRD has provided the support and drive to continue… ¹ Includes finished nickel produced under toll-smelting and refining arrangements covering purchased intermediates with third 32 parties. Project pipeline

…to bring projects forward that will continue to drive growth…

Pomalaa

Voisey’s Bay Bahodopi Sorowako Vermelho Pipe Onca Puma HPAL Pomalaa

2007 2008 2009

PTI Goro Optim. Totten Creighton VBN U/G Expansion Deeps Committed Greenfield Goro Development Garson Piaui Copper Cliff Deeps Deeps 1D Deeps Potential Voisey’s Bay Development¹ Refinery

…to consolidate CVRD Inco’s position as “The Nickel Company”.

33 ¹ to be approved Goro – New Caledonia

Goro is a great resource and has long term value potential…

120 million tonnes* of estimated proven and probable mineral reserves High grades*: – Averaging 1.48% nickel and 0.11% cobalt in proven and probable mineral reserves 75 million tonnes of estimated measured and indicated mineral resources 20-year mine plan Initial annual capacity: – 60,000 tonnes of nickel – 4,300-to-5,000 tonnes of cobalt Integrated, top-class team Real potential for expansion Will supply the growing market for decades to come …and we have the team and we the Phase One financial results alone formula to deliver the outcome. undervalue it’s overall potential 34 Goro – New Caledonia

We are rebuilding the approach and the team…

New leadership

Rebuilding the team and the way we do business

Established more progressive criteria for environment elements

Engaging with the Community on the key social issues

Introduced CVRD project management disciplines and associated Governance structures

Recalibrated process technology risks and have incorporated steps that will assist commissioning and circuit functionality and associated flexibility

…and we are listening to the voices of our key stakeholders.

35 Onça Puma - Brazil

We know this technology... Acquired by CVRD in early 2006 Management transferred to CVRD Inco Estimated production of 58,000 tonnes-per-annum of nickel Construction started in July, 2006 – Main contracts awarded, including all furnaces, kilns and dryers – 850 workers on site – Site access road completed Capital cost: US$1.44 billion

...and we have the people. 36 The growth story…

The New Equation¹:

Sudbury 135kt Manitoba 65kt Indonesia 90kt VBN/Other 20kt Goro 60kt Onça Puma 58kt

Total……………………400kt-430kt

¹ Includes finished nickel produced under toll-smelting and refining arrangements covering purchased intermediates with third 37 parties. Future potential…

38 Vermelho - Brazil

Management transferred from CVRD to CVRD Inco

Estimated production of 46,000 tonnes-per-annum of nickel

Estimated capex: US$1.45 billion

39 PT Inco - Indonesia

We have a range of future possibilities and pathways to value…

Sulawesi

PT Inco Multi-phase projects at Sorowako Petea Bahodopi and Pomalaa – Bahodopi Malili option studies High Pressure Acid Leach Pomalaa (HPAL) plant at Sorowako Makassar ...and we have the people.

40 Manitoba operations

Thompson Mine, Longitudinal Section

Looking West

2.25% Ni 6.2m 1D Upper

3600 ft Level Drift 1D Estimated Proven & Probable Mineral Reserves and 1D Lower Mineral Resources 1D Potential to Expand 0 500 3.76% Ni m 2.3m Make additional Inco-source ores available 2.53% Ni 3.99% Ni 3.9m 3.2m

41 Manitoba operations

Thompson Nickel Belt

Ultramafic Hosted Nickel Deposits KEY

Thompson 0 500 km

Pipe Pit Winnipeg 22.9 MT @ 0.76% Ni Inferred Resource City of South Mystery Ospwagan Thompson

Setting Bay

Burntwood River Moak Kipper South Manasan Inferred Resources Historical Estimates: Historical Deposits 100 to 200 M Tonnes (MT) between 0.6% 0 10 Proterozoic and 1.0% Ni in several separate deposits. km Archean Gneiss

42 Voisey’s Bay

Main Block Longitudinal Section (Looking North)

Discovery Hill Zone Ovoid 0 Southeast Extension Far Eastern Reid Brook Deeps Eastern Zone -1000 Deeps Ryan’s Pond

Reid Brook Deep -2000

Reserve Resource 0 1000 2000m Potential Mineral Deposit

43 Ontario operations…Copper Cliff Deep

We are looking at some old pictures…with new glasses!!!

Kelly Lake South Mine North Mine 178/191 Murray

(Looking West) 26 M tonnes Ore 750 M lbs Copper Currently mined-out 575 M lbs Nickel Reserves, Resources & Potential Included

Reserves, Resources & Potential Not Included

44 Ontario operations…Copper Cliff Deep

Upgrading infrastructure creates new possibilities…

Kelly Lake South Mine North Mine 178/191 Murray

5200 L

(Looking West) 29M tonnes Ore 800 M lbs Copper Currently mined-out

Reserves, Resources & Potential Included 618 M lbs Nickel

Reserves, Resources & Potential Not Included

45 Ontario operations…Copper Cliff Deep

…we can establish new positions to exploit adjacent resources.

Kelly Lake South Mine North Mine 178/191 Murray

5200 L

(Looking West)

Currently mined-out

Reserves, Resources & Potential Included 54 M tonnes Ore Reserves, Resources & Potential Not Included 1,500 M lbs Copper 1,200 M lbs Nickel

46 Ontario operations…Copper Cliff Deep

We position ourselves to realize the long term potential.

Kelly Lake South Mine North Mine 178/191 Murray

5200 L

(Looking West) 7000 L

Currently mined-out 110 M tonnes Ore Reserves, Resources & Potential Included

Reserves, Resources & Potential Not Included 2,500 M lbs Copper 2,200 M lbs Nickel

47 Ontario operations…Creighton

2005 2007 17 Millions Tons 28 - 32 Millions Tons 3.1% NI 1.9 – 2.2% NI 2.5% Cu 2.0 – 2.3% Cu

48 The potential story…

The New Equation¹:

Sudbury 135kt Manitoba 65kt Indonesia 90kt VBN/Other 20kt Goro 60kt Onça Puma 58kt Vermelho 45kt Indonesian Prospects 50kt Canadian Prospects 50kt

Total……………500kt-525kt

¹ Includes finished nickel produced under toll-smelting and refining arrangements covering purchased intermediates with third 49 parties. Building sustainability…

50 “Together we are better”

Safe operations

Responsibility to the environment

A good neighbour… focused on long term and mutually beneficial relationships

51 Focus on People

Frequency of disabling injuries for each 200,000 person hours

4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 97 98 99 00 01 02 03 04 05 06 Q1 07

Safety represents our commitment to our people…

52 Reducing our footprint

PT Inco, Indonesia Furnace No. 3 new off gas handling system In environmental compliance since May 2005 Ç production by 1.7 million pounds of nickel per year Furnace No. 4 new off gas handling system installed and commissioned in February 2007 Fully operational PT Inco – Furnace No. 3 Other furnaces will be retrofitted as follows: No. 2 and 1: Q3 and Q4 2007

Sudbury, Ontario Expanded acid plant capacity to accommodate a fluid bed roaster as part of SO2 abatement program Will result in 30% È in SO2 emissions Currently commissioning Converter No. 8 to improve SO2 levels Ontario …the environment is our commitment to the community.

53 A wrap…

54 “Together we are better”

Strongest resource base Competitive and long term operations Tremendous market presence – Where we sell – What we sell – Long term focus on relationships with our customers Growth! Growth! Growth!... profile and future prospects Delivering results and focused on delivery of sustainable value and returns

55 Our business is people, people, people…

Our leadership will set the stage for us to deliver to our potential Our management will create the framework for us to work as a team Our people will be the key to delivering sustainable business results

“Together we are better”

56 Nickel market overview

Peter Goudie Executive Vice President, Marketing CVRD Inco

1 Today’s Agenda

How we got to where we are

What’s happening now?

Longer term outlook

2 The nickel market has seen significant changes over the past year

LME LME cash nickel price and stocks May 16 ’07 LME Stocks Year 2006 to June 15 2007 LME cash price hits $54,200/t Cash (tonnes) ($/ tonne) ($24.95/lb) 40,000 55,000 ($22.68/lb) 35,000 50,000 ($20.41/lb) 45,000 30,000 ($18.14/lb) 40,000 25,000 ($15.88/lb) 35,000 20,000 ($13.61/lb) 30,000 15,000 ($11.34/lb) 25,000 Feb 5 ‘07 10,000 LME stocks ($9.07/lb) dip to 2,982t 20,000 5,000 15,000 ($6.80/lb)

0 10,000 ($4.54/lb) 7-Jun 3-Jan 9-Mar 9-Feb 9-May 24-Jul 10-Apr 27-Apr 12-Jan 26-Jun 31-Jan 17-Oct 28-Mar 21-Aug 14-Nov 28-Feb 19-Sep 26-May 12-Dec 3 Nickel prices rose in excess of expectations – this has been based on fundamentals

2007 forecasts vs monthly average cash Monthly Sept 2004 - June 2007

2007 $/tonne Monthly average LME cash 50,000 Reuters Consensus Survey 20071 Reuters Consensus Survey 2006 (mid-year)1 Reuters Consensus Survey 20061 40,000

30,000

20,000

10,000

0 Sep 05 May Sep 06 May Sept 07 May

¹ Mean of analyst forecasts for 2007 nickel price 4 Current limited supply growth is the result of events which occurred many years ago

Russian Nickel Consumption The collapse of the East Bloc in the 1990-1994, 2006 1990s led to a massive drop in Russian nickel demand, resulting in 250 huge exports of surplus nickel to 208 the West. 200 168 83% collapse Low nickel prices during this period 150 (until 2003) led to under- 92 investment in new supply 100 62 50 35 Recent attempts to bring new 20 projects on-line have met with 0 delays 1990 1991 1992 1993 1994 2006 – technical/cost challenges Source: CVRD Inco

Fundamental Equation

Historical Strong demand Unique underinvestment ++=resulting from Chinese characteristics Surge in price in new supply industrialization of nickel

5 In recent years, industrial development in China has driven strong world nickel demand growth

000s of tonnes Chinese nickel demand

325 Chinese nickel demand Stock build 275 Consumption has grown by 26% Stock drawdown CAGR since 2000 225 – ~ 75% of world 175 nickel demand 125 growth (2000-2006) – ~ 20% of world 75 nickel demand in 25 2006 -25 1999 2000 2001 2002 2003 2004 2005 2006 Growth Chinese nickel demand Consumption 42% 30% 23% 30% 22% 15% 48% is forecast to continue Demand 42% 39% 4% 52% 6% 39% 27% to grow strongly in 2007 Industrial production 11.4% 9.9% 12.6% 17% 16.7% 16.4% 16.6%

6 Source: CVRD Inco Inventories historically very low

LME LME cash nickel price and stocks LME Stocks Year 2006 Cash (tonnes) ($/ tonne) ($18.14/lb) 40,000 40,000

($15.88/lb) 35,000 35,000 30,000 ($13.61/lb) 30,000 25,000 ($11.34/lb) 20,000 25,000

15,000 ($9.07/lb) 20,000 10,000 15,000 ($6.80/lb) 5,000

0 10,000 ($4.54/lb) 3-Jan 3-Oct 7-Aug 10-Jul 24-Jul 5-Sep 11-Apr 27-Apr 12-Jun 26-Jun 17-Jan 31-Jan 17-Oct 31-Oct 14-Mar 28-Mar 14-Nov 28-Nov 21-Aug 14-Feb 28-Feb 19-Sep 12-May 26-May 12-Dec 28-Dec 7 Prices have remained volatile as the nickel price has become the key market balancing mechanism in the absence of inventories

LME cash nickel price Daily change January 4 2000 to June 15 2007 US$/tonne

4,000

3,000

2,000

1,000

-1,000

-2,000

-3,000

-4,000 2000 2001 2002 2003 2004 2005 2006 2007

8 Market context at the start of 2007

LME stocks near zero, world supply chain tight

Strong industrial production growth = good nickel demand

Limited supply increase

The market needed to balance in 2007 and major changes were necessary to do this

9 Introducing…

10 Nickel chrome pig iron has been beneficial in bringing new nickel supply to the market

kt of ore Philippines Indonesia New Caledonia 1800 Nickel ore imports from the Philippines, Indonesia, and 1600 New Caledonia 1400

1200 Processed through blast or 1000 electric arc furnaces to

800 produce low nickel-high iron

600 products

400 Being used in Chinese 200 stainless steel industry at 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr significant discounts to LME 2006 2007

Source: GTIS 11 There are limits to nickel chrome pig iron consumption

Consumption considerations: Metal Balance:

Steel & NI-CHRO- Ferro- Nickel % Cr, Ni, Fe PIG + chrome + + Stainless = Scraps

– Low Ni content in NI-CHRO-PIG means it can only make-up a portion of the primary nickel1 requirement (exception in some 200 series) – E.g. ~ 35% of primary nickel1 in T304 can come from NI-CHRO-PIG containing 4% nickel – Varies by stainless grade – Varies with Ni content in NI-CHRO-PIG Impurity control – impact on productivity Variable compositions – frequent sampling Typically only added in electric-arc-furnace Estimated Chinese market size of 80-100kt based on 4-5% nickel content in NI-CHRO-PIG, reflecting current scrap availability in China

12 1 Nickel from sources other than stainless scrap Questions remain about future growth and sustainability

Questions remain: Environmental impact Government regulations in ore exporting countries Ore availability

13 Substitution can be expected to continue as the world must prioritize its use of limited nickel availability

Limited nickel supply has forced the world to prioritize its use of nickel through rising prices (i.e. demand substitution) – Substitution is a natural market mechanism and has had to occur to bring demand in line with available supply – Occurs first in more price sensitive applications – Examples: shift towards lower/no nickel grades in stainless, decreased nickel use in decorative plating; impact typically greater in consumer/decorative applications

14 Demand would have been an estimated 180kt higher if supply had permitted

10-year World Nickel Demand Actual vs. Projected (function of IP) Over last 40 years nickel kt of nickel demand has grown at 1.1x Industrial Production growth Projected demand ~180kt (IP function) Demand would have ~140kt grown to 1,630kt in 2007 1700 ~130kt Actual/ assuming the historical 1600 ~60kt forecast 1500 demand relationship remained true 1400 (if nickel stocks had been 1300 available) 1200 1100 The gap between 2007 1000 forecasted demand of 900 1,450kt and projected 800 demand (based on IP) of 1997 1998 1999 2000 2001 2002 2003 2004 20051,630kt 2006 2007 is ~180kt

15 In the last period of high prices, “substituted” demand returned as prices fell

10-year World Nickel Demand Actual vs. Projected (function of IP)

kt of nickel Demand was relatively flat in 1988, 1989 during period of high nickel prices Projected demand (IP function) The remainder of the 1000 Actual Influx of demand 1990s remained one of 900 Russian ‘scrap’ the strongest periods 30-40kt 800 for nickel demand growth 700

600 1992 and 1993 were 500 impacted by high 400 ‘scrap’ shipments out price 87 88 89 90 91 92 93 94of 95 Russia 96 $/lb 2.22 6.27 6.04 4.03 3.70 3.18 2.40 2.88 3.74 3.40

16 2007 nickel market fundamentals remain strong

Economic growth remains healthy

Demand for nickel and stainless steel is strong

– Non-stainless nickel markets are robust

– China’s strong growth continues

Short-term volatility must be expected

Nickel inventories are low

17 Despite US weakness, global industrial production growth has remained strong – driven by China

IP Growth Forecasts % Change y/y

2004 2005 2006e 2007f 2008f

G7* 2.6 2.0 3.6 2.1 2.7 USA 2.5 3.2 4.0 1.9 3.0 Canada 1.8 1.0 (0.5) 0.2 2.1 Japan 5.2 1.5 4.5 2.6 3.2 Big 4 Europe* 1.8 0.6 3.1 2.5 2.0 Asia (excluding Japan)* 13.3 12.5 13.5 12.6 12.0 Thailand 11.7 9.1 7.4 5.6 6.6 South Korea 10.1 5.8 10.8 6.9 8.4 Taiwan 10.5 4.0 5.5 4.3 5.3 India 8.4 8.2 10.5 9.1 8.5 China 16.7 16.4 16.6 16.1 14.9 Total of (G7 + Asia)* 6.7 6.1 7.6 6.5 6.5

Source: Consensus Forecasts, June 11,2007 ; * Inco calculation 18 The OECD Area leading indicator points to tentative signs of a turning point with stronger growth in the months to come

6 month rate of annual rate of change smoothed % 12

0 2000 2001 2002 2003 2004 2005 2006 2007

-4

OECD Area + 6 NME* OECD area -8

* OECD area (29 countries) + 6 non-member economies (China, India, Russia, Brazil, Indonesia & South Africa)

Source: OECD Composite Leading Indicator June 8, 2007 (latest monthly data to April, 2007) 19 2007 forecast stainless production growth of 7.1% y-o-y

World Total (000s of tonnes) 2005 2006e 2007(f)

Stainless Steel 24,336 28,544 30,570 Production*

(% Change) -1.1% 17.3% 7.1%

Austenitic Ratio** 74.7% 77.0% 73.7%

Scrap Ratio 49.9% 48.0% 46.9%

* Includes Chinese private mills ** Nickel-containing stainless

Source: CVRD Inco 20 Chinese ramp-up of stainless capacity is driving significant changes in the world stainless steel market

Chinese Stainless Steel Chinese Stainless Net Imports Production – kt/yr Monthly 2006-2007 kt kt

8,000 Chinese stainless capacity 225 expected to reach 13 million M t tonnes by 2008 7,000 200 16 14 175 6,000 12 10 8 6 150 5,000 4 2 0 125 2004 2005 2006 2007 2008f 4,000 100 3,000 75

2,000 50

1,000 25

0 0 JFMAMJJASONDJFMA '00 '01 '02 '03 '04 '05 '06e '07f

Source: CVRD Inco Source: ISSB

21 The stainless market continues to shift to lower nickel grades

300 series stainless steel 300 series stainless has as % of total stainless dropped from 71% in 2001 steel production to 66% in 2006 and is forecast to drop to below 62% in 2007 74%

72% 2001-2007(f) annual stainless production growth 70% – 200 series - 26% 68% – 300 series - 6% 66% – 400 series - 10%

64% Prices of ferro-chrome and 62% manganese used in 400 and 200 series have been 60% 2001 2002 2003 2004 2005 2006 2007f increasing rapidly

Source: CVRD Inco 22 Stainless inventory levels at service centres are falling

US Service Centre Key Chinese stockist

stainless inventories¹ inventory stainless inventories² 000s of shipment tonnes ratio 000s of tonnes

120

100 850 6.5

6.0 800 80 5.5

750 5.0 60 4.5

700 4.0

40 3.5 650 3.0

600 20 2.5 JFMAMJJASONDJFMAMJJASONDJFMAMJFMAMJJASONDJFMAMJJASONDJFMAM 2005 2006 2007 2005 2006 2007

Sources: 1. Metals Service Center Institute (MSCI) 2. ChangRun XingYe E-commerce Co., Ltd. 23 Demand has been strong from high nickel alloy market, driven by the aerospace and energy sectors

Jet aircraft build schedule* & Gas turbine build annual nickel in high-nickel schedule*** alloys demand** Number of aircraft Nickel Number of deliveries demand builds

1,400 160 2,000

1,800 +37% 1,200 150 1,600 140 1,000 1,400 130 1,200 800 120 1,000 600 800 110 400 600 Marine Airbus 100 400 Mechanical drivers Boeing 200 90 Power Generation Ni Demand 200

0 80 0 95 97 99 01 03 05 07(e) 09(e) 04 05 06(e) 07(e) 08(e) 09(e) 10(e)

* Source: Airline Monitor 2007 ** Source: CVRD Inco *** Source: Forecast International, July 2006 24 Don’t simply extend short-term trends, there is natural cyclicality in the market

De-stocking, product mix changes to lower working capital and exposure to nickel prices

results in falling nickel demand from stainless mills > nickel price falls

Price falls results in falling demand from stainless consumers as Nickel price rise – stainless surcharge system guarantees buyers return before future lower stainless prices > surcharge kicks in, strong lower stainless orders demand from re-stocking

W Current situation: h Stainless & non-stainless er consumers initiate buying due to •Stainless inventories e a low inventories and low prices decreasing, low in many re markets w e •Pent-up nickel demand n o waiting to return w ? •LME inventories low 25 We are forecasting the nickel market will balance in 2007

World Nickel Supply/Demand Balance

All figures in 000’s tonnes 2005 2006e Change 2007f Change

World Production 1,285 1,353 5.3% 1,452 7.3%

World Demand 1,279 1,383 8.2% 1,450 4.8%

Balance +6 -30 +5 to -5

Source: CVRD Inco 26 China’s urbanization and industrialization continues

China’s Population

millions 1,400 Rural Urban 1,200

1,000

800

600

400

200

0 1950 1960 1970 1980 1990 2000

Source: China Compendium of Statistics, NBS 27 As the Chinese economy continues to develop, there still remains room for significant stainless steel demand growth; other countries to follow?

Stainless demand per capita Kilograms per capita Taiwan 25 Korea 20

2006 – Chinese stainless 15 4.8 kilograms per capita consumption 6.4 million tonnes demand Japan 10 Vietnam 1.8kg 5 India 1.1kg China

0 0 5 10 15 20 25 30 35 40 Number of years from beginning of period Japan-1950, Korea, Taiwan-1960, China-1984

Source: CVRD Inco 28 High fuel prices and increasing environmental awareness is driving the adoption of hybrid electric vehicles

Each hybrid electric vehicle contains 8-10 kg of nickel Rapid growth: from <100,000 vehicle in ’03 to >500,000 in ’07 Continued growth: 1.1 to 1.5 million vehicles forecast by 2010, 2.5 to 3 million by 2015 65% of HEVs currently sold in North America

Over 10,000 tonnes of nickel per year by 2010

29 CVRD Inco has developed a breakthrough emission control product focused on the diesel vehicle market

Increasingly stringent emission regulations is driving research to reduce emissions from diesel vehicles CVRD Inco has developed a new product bringing performance and cost benefits to the US$7bn global Arvin Meritor report in emission control materials (ECM) German Auto magazine, MTZ, Sept 2006 market – INCOFOAM® HT is a homogeneous alloy foam manufactured in a patented powder metallurgical process

– Its temperature and corrosion resistance are ideal for the severe conditions in the exhaust while its high WASH COATED ALLOY FOAM surface area makes it an excellent catalyst carrier 30 New nickel projects continue to be difficult to bring on

7-to-10 years from permitting to ramp-up High capital cost Complex permitting requirements Challenging technology Often in countries where business and political issues are challenging

Supply from new projects planned to be phased in from 2008, time needed for ramp-up to full production will limit supply growth in the next few years

31 Market Outlook - Conclusions

Look past ‘noise’ in the market generated by uncertainty over direction and short-term market adjustments

Fundamentals remain positive in 2007 and next few years

Demand for nickel remains strong

Economy strong and outlook positive

Chinese growth remains robust and expected to continue

New supply will remain limited in next few years

32 Thank you.

33 CVRD – a global leader