Brazilian Port Sector A New Model for Port Development Stavanger November 2010 Presentation by Engineer José Ricardo Ruschel dos Santos

1. Information on Brazil 2. Growth of Containerization 3. Brazil Takes Off 4. Regulatory Framework 5. Brazil Invests in Its Ports 6. Fostering Private Investments 7. Conclusion Brazilian Port Sector A New Model for Port Development Privatization of Port Operations

Information on Brazil Brazil is located in the north east of South America and has a geographical surface area of 8.5 million km2. It borders every nation on the South American continent except Ecuador and Chile. The capital is Brasilia, and the official language is Portuguese. Brazil’s current population is estimated to be approximately 192 million, making it the fifth most populated country in the world ranking behind China, India, the United States and Indonesia. Brazil’s population has increased steadily at a rate of 1.2% since 2004 and is forecast to continue to grow over the period from 2008 to 2012 to reach an expected population of approximately 203 million in Brazil is a federative republic comprised of 26 states which are subdivided into 5,560 municipalities and a federal district.

1. Information on Brazil 2. Growth of Containerization 3. Brazil Takes Off 4. Regulatory Framework 5. Brazil Invests in Its Ports 6. Fostering Private Investments 7. Conclusion Brazilian Port Sector New Model for Port Development Privatization of Port Operations

Brazil’s Ports Cargo Flow Cargo Handling - Development and Forecast

Container Handling Development and Forecast Brazil’s Ports Cargo Flow TEU’s

1. Information on Brazil 2. Growth of Containerization 3. Brazil Takes Off 4. Regulatory Framework 5. Brazil Invests in Its Ports 6. Fostering Private Investments 7. Conclusion Brazilian Port Sector New Model for Port Development Privatization of Port Operations

Brazil has the seventh largest economy in the world by purchasing power parity and the eighth largest at market exchange rates. Brazil's GDP is the highest of Latin America with large and mature mining, agricultural, technology, manufacturing, and service sectors. Rating agencies have upgraded Brazil’s long-term foreign currency sovereign debt rating.

Export products include: – alcohol, sugar, coffee, orange juice, soy, corned beef, tobacco, poultry, pork. – Niobium, iron, manganese, bauxite (aluminium), magnesite, ornamental stones, tin, graphite. – Aircraft, automobiles, steel, ethanol, textiles, footwear and electrical equipment.

Agribusiness Main Products Brazil´s Position in World Ranking ProducersExporters Ethanol 1º1º1º1º 1º1º1º1º Sugar 1º1º1º1º 1º1º1º1º Coffee 1º1º1º1º 1º1º1º1º Orange Juice 1º1º1º1º 1º1º1º1º Soybean Products 2º2º2º2º 1º1º1º1º Beef 2º2º2º2º 1º1º1º1º Tobacco 2º2º2º2º 1º1º1º1º Chicken Products 3º3º3º3º 1º1º1º1º Pork Products 4º4º4º4º 4º4º4º4º

Brazil The Impact of New Oil Discoveries The massive oil deposits discovered in the Brazilian off-shore pre-salt layers should provide a huge boost to the long-term outlook of the energy sector Port Operations in Brazil – a New Paradigm

12 International Reserves US$ billion Source: Brazilian Central Bank * Position in Out/2010

Brazil’s macroeconomic fundamentals have significantly improved in recent years, and its economy is forecast to grow by an annual average of 5.5% to 2013.

1. Information on Brazil 2. Growth of Containerization 3. Brazil Takes Off 4. Regulatory Framework 5. Brazil Invests in Its Ports 6. Fostering Private Investments 7. Conclusion Brazilian Port Sector A New Model for Port Development Privatization of Port Operations

34 MAIN PUBLIC PORTS AMAZONASPARÁ AMAPÁ RORAIMA RODÔNIA MATO GROSSO TOCANTINS GOIÁS DO SUL MARANHÃO PIAUÍ CEARÁ RIO GRANDE DO NORTE PARAÍBA PERNAMBUCO ALAGOAS BAHIA MINAS GERAIS SÃO PAULO ESPÍRITO SANTO PARANÁ SANTACATARINA RIO GRANDE DO SUL SERGIPE RIO DE JANEIRO ACRE Port of MANAUS Port of SANTARÉM Port of BELÉM Port of VILA DO CONDE Port of ITAQUI Port of FORTALEZA Port of AREIA BRANCA Port of NATAL Port of CABEDELO Port of SUAPE Port of MACEIÓ Port of SALVADOR Port of ARATU Port of ILHÉUS Port of BARRA DO RIACHO Port of VITÓRIA Port of RIO DE JANEIRO Port of ITAGUAÍ Port of SÃO SEBASTIÃO Port of SANTOS Porto de PARANAGUÁ Port of SÃO FRANCISCO DO SUL Port of ITAJAÍ Port of IMBITUBA Port of PORTO ALEGRE Port of RIO GRANDE Port of MACAPÁ Port of RECIFE Port of NITERÓI Port of FORNO Port of ANTONINA Port of ANGRA DOS REIS Port of PELOTAS Port of PECÉM 128 Private Terminals

Government confirms regulatory framework... Brazilian Constitution, 1988 The Federal Government is responsible for port operations, either directly or through delegation (authorization, concession or permission) – art. 21, XII, f Legislation on ports is the exclusive responsibility of the Federal Government – art. 22, X Port services may only be delegated through public bidding processes - art. 175 Port Modernization Laws Law 8.630, 1993 and Law , 2007 Two modes of port operation: I – Public II – Private –Exclusive, related to throughput of own cargos –Mixed use, related to throughput of own and third-party cargos –Tourism, related to passenger transportation –Transfer stations Creation of ANTAQ Law , 2001 National Waterways Agency responsible for regulation and supervision of port system Creation of SEP Law , 2007 Ministry for Ports, responsible for the definition of policies, directives and public investment in the Brazilian port system Decree 6.620, 2008 Strengthens the present regulatory framework and establishes rules for the concession of new ports and establishes rules for concession of new ports

Port Modernization: chosen model Public use terminalsPrivate use terminals Implementation Obligatory public bidding processAuthorized by Public Authority Period Up to 50 years (including extension) Obligation to render services in a continues manner. No limit set, limited to original type of service authorized Possibility of interruption of authorization in accordance with legal terms Installations Revert at end of contractDo not revert at end of contract Services Open to all Rates charged are subject to supervision Not open to all Serves owner exclusively (own cargo) or mixed (own cargo, complemented with third-party cargo) Possibility of selecting users and cargo Manpower Hired via OGMONo hiring restrictions Regulated by ANTAq Resolution 55/2002 – Norm for concession of port areas and installations Consolidates and standardizes conditions within concession contracts Resolution 517/2005 – Norm for construction and operation of private terminals Required to supply necessary installations and equipment to meet own cargo needs. Privatization of public port operations and the creation of mixed-use private terminals Port Operations in Brazil – the New Paradigm

Brazilian Ports Organization Chart Brazilian State Ministry for Ports (SEP) Port Authority Concession, authorization and permission holders ANTAQ

Brazilian Ports Operational Chart Ministry for Ports (SEP) Port Authority Concession, authorization and permission holders End Users CAP (Port Authority Council)

1. Information on Brazil 2. Growth of Containerization 3. Brazil Takes Off 4. Regulatory Framework 5. Brazil Invests in Its Ports 6. Fostering Private Investment 7. Conclusion Brazilian Port Sector A New Model for Port Development Privatization of Port Operations

BRAZIL – TRANSPORT MODES DISTRIBUTION

Brazilian Growth Acceleration Program – PAC I  PORTS: US$ 1.9 billion – National Dredging Program = US$ 900 million – Improvements of Port Infrastructure and Land access = US$ 1.0 billion

Creates the Brazilian Port Dredging Program;Creates the Brazilian Port Dredging Program; Introduces the concept of Output Based Dredging Contracts;Introduces the concept of Output Based Dredging Contracts; Establishes the competence of the Ministry for Ports to implement the Program.Establishes the competence of the Ministry for Ports to implement the Program. Brazilian Port Dredging Program - Law n° / 2007

Fortaleza Natal Rio de Janeiro Santos – Dredging Itajaí S. Francisco do Sul Rio Grande Recife Suape – Outside Canal Salvador e Aratu Cabedelo Paranaguá Angra dos Reis Itaguaí – Phase 2 National Dredging Program Procurement to be initiated Under procurement contracted Concluded Legend: Suape – Internal Canal Santos – Rock Blasting Itaguaí – Phase 1 US$ 900 million Vitória

Improvements of Port Infrastructure Construction of berths and ramps Mooring and V.T.M.S. systems Port avenues Breakwater expansion Infrastructure modernization

Vitória US$ 77,2 million Vila do Conde US$ 70 million Santos - US$ 135 million Rio Grande - US$ 314 million Suape US$ 53,4 million São Francisco do Sul - US$ 45 million Maceió US$ 16,4 million Luis Correia US$ 21 million Itaqui US$ 177 million Areia Branca Us$ 91 million Improvements of Port Infrastructure Ongoing Construction : US$ 1.0 billion

GROWTH ACCELERATION PROGRAM – PAC II GROWTH ACCELERATION PROGRAM – PAC II 48 Seaport Development Projects 21 Ports US$ 3,0 billion Projects Quantity Dredging 12 Port Infrastructure 24 Logistic Intelligence 5 Passenger Terminals – World Cup

Growth Acceleration Program – PAC II Santos – Left and Right Marginal highways, underpass, Piers Alamoa and Barnabé, Wharf Reinforcement, Dredging and Wharf Realignments US$ 795,5 bi Rio Grande – Porto Novo Wharf Phase 3, Dredging US$ 80,5 mi Areia Branca – Dredging US$ 54,4 mi Imbituba – Dredging US$ 30,5 mi Vitória – Berth, Storage Area and Deep Water Port US$ 111,1 mi Itaguaí – Dredging 3 and 4 US$ 147,2 mi Paranaguá – Grain Silo US$ 25 mi Itajaí – Berth Reinforcement and Retroarea US$ 80,5 mi Salvador – Breakwater Extension and Passenger Terminal US$ 55,5 mi Barra do Riacho – Dredging US$ 43,3 mi Pecém – 2 Berths for Solid Bulk US$ mi Natal – Extension to Wharf and Passenger Terminal US$ 60 mi Maceió – Dredging - US$ 13,8 mi Barra do Furado – Dredging - US$ 30,5 mi Santarém – Extension to Multi- Use Terminal 1 and Construction of MUT 2 US$ 84.4 mi Luís Correia – Dredging US$ 15.5 mi PAC 2 LOGISTIC INTELLIGENCE Paperless Port National Port Logistics Plan Implementation of VTMS Intelligent Cargo Management of Solid Waste Rio de Janeiro – Wharf Reinforcements, Dredging, Passenger Terminal and Pier US$ 163,8 mi Mucuripe – Container Terminal - US$ 33.3 mi Itaqui – Grain Terminal US$ mi Suape – Solid Bulk Terminal US$ 166,6 mi

1. Information on Brazil 2. Growth of Containerization 3. Brazil Takes Off 4. Regulatory Framework 5. Brazil Invests in Its Ports 6. Fostering Private Investments Brazilian Port Sector A New Model for Port Development Privatization of Port Operations

Private Terminal Ponta Ubu US$ 167 million Vila do Conde US$ 859,0 million Santos US$ 3,1 billion Suape US$ 27 million Itaguaí US$ 1.4 billion Private Investments – Infrastructure Private Terminal Cotegipe US$ 73 million Rio de Janeiro US$ million Açu US$5,5 billion Imbituba US$ 269 million Ongoing Construction : US$ 15.3 billion Rio Grande US$ 248 million Itaqui US$ 1,5 billion Port of Aratu US$ 4 million Itapoá US$ 350 million Ferrus US$1,4 billion

Brazilian Port Sector A New Model for Port Development Thank you! Privatization of Port Operations