Canadian Cement & Construction Outlook Spring Board Meeting April 29, 2008 David Czechowski, Sr. Canadian Economist The U.S. is in the hospital. Canada is sick but still showing up for work

Economic & Construction Overview Economist magazine says 4th best in the world to do business Issues: Employment/$/Debt/Commodity prices Inflation off the radar Q4GDP: slowest in last four years

Cement Consumption During Recessions Million ? Tonnes 12 10 8 42% drop in 80-81 recession. Return CA to a 5.6 mmt market? 6 4 69 73 77 81 85 89 93 97 01 05 08 Canadian Recession U.S. Recession

Employment Growth Canada U.S. 3.0 2.5 2.0 1.5 1.0 0.5 0.0 04 05 06 07 Forecast 2008 1.5% 2009 1.0% 2010 1.1% 2011 1.2% Year-Year Percent Change 3.0 2.5 2.0 Canada 1.5 U.S. Recession Housing Market Collapse Foreclosures accelerating Credit Risk Aversion now Spreading Labor Markets in Decline Outlook not favorable Consumer Confidence Tumbling Consumer debt loads signaling a retrenchment Energy Costs Stealing from growth and stimulus Fiscal/Monetary Actions Long to develop 1.0 0.5 U.S. 0.0 04 05 06 07 08

Residential Sector Housing Starts Forecast 2008 - 7.5% 2009 - 2.7% 260 Housing Starts Units (000) Forecast 2008 - 7.5% 2009 - 2.7% 2010 0.9% 2011 1.4% Subprime never an issue Credit tightening underway 240 220 200 3 Month Moving Average 180 05 06 07 08

Nonresidential Sector Office vacancy rates down in all top 5 metros

Cement Markets

Cement Imports 000 Tonnes 1200 + 48% 900 Clinker 600 Cement 300 99 00 01 02 03 04 05 06 07 08

Canadian Share of U.S. Imports 2004 2005 2006 2007 Asia 29.5% 36.0% 53.9% 50.3% Canada 21.1% 16.1% 14.1% 23.4% Europe 19.7% 18.5% 13.0% 8.4% Latin America 20.9% 17.4% 11.4% 12.4% Mexico 5.3% 6.5% 6.3% 7.7% Other 3.6% 5.5% 1.3% 0.5%

Cement Exports Forecast 2008 - 1.0% 2009 1.0% 2010 2.0% 2011 2.1% Million Tonnes $/Mt 8.0 90 Clinker Cement Customs Value (FOB) 85 6.0 + 10% 80 4.0 Freight rates dragging on U.S. import flows as well as lack of demand 75 2.0 70 65 90 92 94 96 98 00 02 04 06 07

Cement Capacity Utilization New Capacity: Lafarge, Exshaw, AB +900,000 On Stream: 2010 Percent 95 U.S. 90 85 80 75 96 97 98 99 00 01 02 03 04 05 06 Source: PCA Labor/Energy Input Survey

SCM Consumption 2007 1.423MMT + 10.3% Million Tonnes 1.5 1.4 1.3 1. 0 Jan +19% Feb +28% 1.1 1.0 0.9 00 01 02 03 04 05 06 07

Portland Cement Consumption Forecast 2008 0.0% 2009 1.6% 2010 2.4% 2011 2.8% Million Tonnes 11.0 10.0 + 3% 9.0 8.0 7.0 99 00 01 02 03 04 05 06 07 08 09 10 11

Portland Cement Consumption Index 2000=1.0 2.0 British Columbia 1.8 9% 1.6 Prairies 1.4 4% Atlantics Performance Indicators Will Slow Employment Growth Advances at a Slower Pace Stubborn C$ funding consumer spending but will drag on trade Debt levels may slow consumer Residential Construction Markets Weak this Year and Next Fatigue in both Singles and Multiples Nonresidential Construction Maintains Rise Supportive but at a slower pace Engineering Construction Opportunity in Place Requirements plentiful with adequate funding available 1.2 4% Quebec 4% Ontario 1.0 - 1% 0.8 00 01 02 03 04 05 06 07 08 09 10 11

Risks Prolonged or Deeper U.S. Recession Ultimately Canada could not escape Canadian Consumer Retrenches Debt levels become unmanageable Commodity Price Collapse Global financial and economic meltdown pressures commodity prices and drags on growth Nearly 5 years of +8% consumer debt outstanding Mortgage debt +92% since 2000