MWMA Fall Summit

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MWMA Fall Summit

• Aluminum Market Trends
• October 20, 2005

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Novelis Overview
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Novelis Worldwide Footprint
North America
Employees
3,000
Revenues
3.0Bn
Shipments
1,115kt
Note Rolled products shipments only. Financial
and shipment figures based upon 2004.
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Novelis Markets Served
Focused on aluminum rolled products markets,
including
Flexible Semi-rigid Packaging
Automotive and Transportation
Building Construction
Distribution Services
Printing Lithography
Cans Closures
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Strength of Novelis ? Metal Supply Management

• Worlds largest purchaser of aluminum
• Leader in aluminum recycling
• Able to produce 70 of sheet ingot in-house

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Aluminum Supply Demand Global Estimate
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Global Aluminum Discussion

• Aluminum historically a cyclical industry
• Prices Rise Investment increases
• Capacity comes in large increments
• New capacity typically exported energy
• Capacity growth gt demand growth
• Prices Fall Capacity at high end of cost curve
  curtailed
• NA and European capacity at risk
• Capacity reduction hesitant due to economics
• Current market would typically signal peak of
  cycle, expect decline.

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2002 Aluminum Consumption
Total North America Aluminum Consumption 10,025
Kt
Total Western World Aluminum Consumption 28,575
Kt
Scrap Based 9,070 Kt Prime Based 19,505 Kt
Scrap Based 3,220 Kt Prime Based 6,805 Kt
Total North America Aluminum
Post Consumer Scrap Consumption 2,250Kt
Total North America Aluminum Scrap Consumption
3,200 Kt
2,250Kt
950 Kt
725 Kt
Based on internal Alcan Estimates Scrap includes
Post Consumer and Customer Scrap Material
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North America UBC Supply Chain
Beverage Consumers
Recyclers/ Collectors
800, Scrap Dealers, Curbside, Buy-Back, etc
Purchasers
Novelis, A-BRC, ARC, Wise, Others
Can Sheet Manufacturers
Alcan, Alcoa, ARCO, Wise
Can/Lid Manufactures
Rexam, Ball, Crown, MCC
Breweries/Fillers
Coke, Pepsi, A-B, Miller, Others
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Life Cycle of the Aluminum Can
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Recycling Rate vs. UBC Prices - North America
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Used Beverage Can Recycling Rate
CA doubles CRV
MA
DE
NY
HI
CA
Reynolds exits and ARC begins to reduce equipment
Alcoa ceased media campaign
ME
MI
CT
OR
VT
IA
ABRC Formed
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U.S. Scrap Exports
China enters the Market
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Global Aluminum - Scrap Dynamics

• US Dollar Weak Weak reduces price on USA
  scrap in other currencies. Offset if
  ultimate product sale is based on LME Will
  increase USA scrap demand if final sale in local
  f/x
• China Factor Central policy reducing
  profitability of smelters (energy)
• Secondary development appears to be getting
  support
• Infrastructure will be developed, but will lag
  demand
• Inexpensive ocean freight from USA (trade
  surplus)
• Commodity Funds If funds artificially inflate
  LME, will scrap spreads
  artificially widen? Will scrap continue to
  follow fundamentals, while LME is
  driven by other factors?
• Fundamentals If N.A. primary production
  loses in global picture, will N.A.
  secondary market follow the same trend?
  Domestic consumption stable, scrap will be
  generated, logistics will keep significant in
  domestic market.

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Recycling Aluminum Makes Economic and
Environmental Sense
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Aluminum Can Recycling Rates 2004
Size of Can Market
16 Bn
190 Bn
0.3 Bn
0.9 Bn
10 Bn
6 Bn
99 Bn
30 Bn
Novelis estimate
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U.S. Beverage Container Recycling Rates
1990-2005F
Source NAPCOR, Packaging Strategies, GPI, CMI
Published Rates Thru 2004 for Aluminum Thru
2002 for PET Glass
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Packaging Material Recycling Revenue and Cost
The aluminum can is the only package that
consistently pays more than its own recycling
cost. The can subsidizes the recycling stream
for all other package materials.
Weighted Average Cost of Recycling (208)
Source Stewardship Ontario, 2004 Ontario Blue
Box Data
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Aluminums Recycling Advantages
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Novelis Sponsorships
Aluminum Can Council Cans for Habitat America
Recycles Day
www.recyclecurbside.org
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Novelis Sponsorships
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• Grand Prairie, TX partnered with Chick-fil-A

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• Community Special Events
• Salt Lake Citys community art project encouraged
  residents to create a recycling symbol filled
  with aluminum cans

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Milwaukee Mayor Barrett Certifying Guinness Book
of World Records Attempt
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Charlotte Mayor Patrick McCroy recognizes Cans
For Cash Winners Odessa Mayor Larry Melton and
Knoxville Mayor Bill Hasalam during the
Environmental Committee Meeting. Brenda Pulley,
Corporate and Governmental Affairs Novelis
Incorporated and Assistant EPA Administrator
Stephen L. Johnson also congratulate the winners.

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How Can We Work Together?
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www.recycle.novelis.com
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Net Import (Export) US
Million lbs.
CAGR 90-04 CAGR 01-04 Net imports of
Ingot 18.6 8.5 Net
imports of Scrap dross 3.8
(118.7)
Source Aluminum Association