Dry Bulk Terminals vs. Offshore Transshipment ICHCA International Conference “ Changes to Trade & Shipping in the 21 st Century ” Busan, S. Korea May 2008 Seabulk Systems Inc.1

2 The Fundamental Concept of “Transshipment” Transshipment requires the ‘port’ to move to the ship, instead of the ship moving to the port.

Seabulk Systems Inc.3 Shipping in the 21 st Century  An increasingly interdependent and highly interconnected world of trade in both goods and services  Seaborne cargo volume exceeds all other modes of transport combined  Port congestion always leads to serious bottlenecks, creating scarcity and severe wastage of resources  Efficient movement of bulk materials will dictate the fortunes of food and energy sectors in the very near future

Seabulk Systems Inc.4 Shipping in the 21 st Century  Port infrastructure and real estate will be proven to be an increasingly major cost factor in all parts of the world.  Reliable transshipment solutions for both imports and exports will be sought at all high-volume ports.  Self-unloading bulk carriers equipped with continuous unloaders will be employed more commonly.  Efficiency in land movement of cargo will demand equivalent efficiency from the marine sector also.

Seabulk Systems Inc.5 Shipping in the 21 st Century  Annual world seaborne trade of coal is in excess of 900 million tonnes (out of a total estimated production of five billion tonnes).  Annual world seaborne trade of iron ore is expected to be well in excess of 600 million tonnes (out of a total estimated requirement of 1.5 billion tonnes, not including the 0.5 billion tonnes in scrap metal consumed worldwide)  At present, the world does not have the port capacity to meet future volumes.

Seabulk Systems Inc.6 Shipping in the 21 st Century Therefore…, We will have to boost the current capacity to load bulk cargo into export vessels through innovative ideas like offshore transshipment and / or transportation in unconventional and alternate forms, such as coal slurry or iron ore slurry carried in specially constructed vessels.

PORT DEVELOPMENT Seabulk Systems Inc.7

8 LAND ACQUISITIONS (Duration : About 6 Months) Waterfront land (for ship berths) On-shore land (for storage and handling) Water lot lease (for marine structures) Right-of-way land (for rail and road access) Typical Port Development Sequence

Seabulk Systems Inc.9 PERMITS (Duration : About 18 – 24 Months) Building Permits Environmental Permits -Air Quality -Noise Quality -Water Quality (Run-off) -Navigable Water -Fisheries -Land Use Typical Port Development Sequence

Seabulk Systems Inc.10 CONSTRUCTION (Duration : About 3 Years) Civil Marine Stockyard Equipment Loader / Unloader Rail Handling Equipment Electrical Controls Typical Port Development Sequence

Seabulk Systems Inc.11 To be Inserted Marginal Wharf Bridgetown, Barbados

Seabulk Systems Inc.12 Port of Quebec Quebec City, Canada

Seabulk Systems Inc.13 Duration (Years) 1.Land Acquisitions ~ Permits ~ 1.5 – Construction ~ 3.0 Total Duration~ 5.0 – 5.5 Yrs Typical Port Development Sequence

A Powerful Solution for the New Era of Marine Transport Seabulk Systems Inc.14

The route length dictates a Cape-vessel The delivery logistics need a Panamax- vessel solution If the geographic realities appear insurmountable Does not presently exist Lacks the necessary characteristics Cannot be developed on-time Needs funding beyond the scope of the Project If the “traditional” Port Transshipment is complementary to long-term port development Many successful ports use transshipment as their extension or expansion solution The TRANSSHIPMENT option warrants consideration Seabulk Systems Inc.15 When to Transship …..

ASAP Shipping at minimum 8,000,000 tpa is CRITICALCapesize Shipment Capability is CRITICALLong-Term (10 years) Marine Risk Mitigation is CRITICALProject EBITDA = $10.00 per tonneProject Opportunity Cost of Capital = 30% per annum Seabulk Systems Inc.16 Typical Assumptions …..

24 Months = $4.08 / t 18 Months = $3.24 / t 6 Months = $1.22 / t 12 Months = $2.30 / t Operating Cost Available to Accelerate First Delivery Without Eroding NPV of Project EBITDA Seabulk Systems Inc.17

Replaces Capex with Opex ….. $10,000,000 CAPEX $0.38 / t OPEX At 30% OCC, each $10,000,000 CAPEX equals $0.38/ t OPEX Seabulk Systems Inc.18

The Math ….. 30% ConstructionOperation $95.8 M8 Mt per year for 10 $ % Const'nOperation $95.9 M8 Mt per year for 10 $ % Const'nOperation $95.9 M8 Mt per year for 10 $ % ConstructionOperation $3.9 M$10 M $3.9 M8 Mt per year for 10 $0.38 Seabulk Systems Inc.19

Sub-Total ….. 24 Months Earlier = $4.08 OPEX Save $30M CAPEX = $1.14 OPEX $5.22 per tonne OPEX WITH ZERO NET IMPACT ON PROJECT FEASIBILITY Seabulk Systems Inc.20

Eliminates Demurrage Risk ….. As Berth Occupancy approaches 30%, Demurrage becomes inevitable At 60% Berth Occupancy, average Vessel Waiting Time equals average Vessel Loading Time Risk at $30,000 per day (Panamax demurrage) = $30K x 2 days / 60Kt = $1.00 per tonne Risk at $70,000 per day (Cape-size demurrage) = $70K x 3 days / 175Kt = $1.20 per tonne The Seabulk solution is a single contract and a single rate – from the load berth to the discharge berth Seabulk Systems Inc.21

Why it Works …..? This can only be accomplished with cape-size vessels New geo-centres of consumption dictate COMPETITIVE DELIVERY across LONGER ROUTES SPOT-MARKET transport solutions are incompatible with LONG-TERM delivery contracts Multi-party transport arrangements leave all the RISKS for the PRODUCER and CONSUMER to share Traditional Handle the RISKS at a competitive RATE Seabulk consolidates bulk handling, trans-shipment and cape-size shipping EXPERIENCE to Seabulk Systems Inc.22

The Seabulk Solution ….. Long-Term Production Long- Term Transport Long- Term Demand The Seabulk Solution re-writes the basic risk-sharing equation Seabulk Systems Inc.23

Seabulk Systems Inc.24 Transshipment - Evolution

Summary… Transshipment Offers a Viable Alternative to the Port. Seabulk Systems Inc.25