THE PROSPECTS OF REGIONAL DRY BULK SHIPPING IN THE AMERICA S

THE PROSPECTS OF REGIONAL DRY BULK SHIPPING IN THE AMERICA S

Dry bulk market recovery stronger; on recovery path Chemical Tanker LPG (VLGC) LNG Container Dry Bulk OSV Source: Drewry Maritime Financial Research, DMFR

Key indicators Dry bulk Tanker LNG LPG Ports Container OSV Earnings growth (FY17e) Operating profitability (FY17e) Net gearing (FY17e) Stock performance (2017-YTD) Physical markets Improving Low Low Low Improving Improving Distressed Improving Low Moderate Moderate Improving Improving Distressed Manageable Manageable High Moderate Moderate High Distressed High Low Rangebound Rangebound High High Low Trending up Stable Stable Stable NA Stable Distressed Liquidity Trending up Stable Stable Stable High Stable Distressed Freight rates Trending up Down Down Stable NA Stable Distressed Note: Based on sample listed stocks Source: Drewry Maritime Financial Research, DMFR

South America accounts for a significant share of bulk trades; plays a key role Iron Ore 28% Brazil, Chile, Peru Metal concentr ates 27% Chile, Peru Coarse Grains 34% Brazil, Argentina, Paraguay Soyabean 56% Brazil, Argentina, Paraguay, Uruguay

Global dry bulk seaborne trade outlook: modest (Major bulks); optimistic (Minor bulks)

Global Iron ore demand to remain firm, projected to grow by 1.5% annually Iron Ore - Imports historical perspective China Rest of the world World total Share of world Share of world 2000 70 14.3% 360 85.7% 431 2016 1,020 70.0% 437 30.0% 1,457 CAGR 18.2% Iron Ore - Imports outlook 1.2% 7.9% China Rest of the world World total Share of world Share of world 2017 1,044 70.0% 447 30.0% 1,491 2022 1,129 70.2% 479 29.8% 1,607 Incremental demand 85 31 CAGR 1.6% 1.4% 1.5%

Brazil likely to gain back some market share over next five years Iron Ore - Exports Australia Brazil World total Share of world Share of world 2009 363 40.1% 266 29.4% 904 2010 402 40.1% 311 31.0% 1,002 2011 438 41.8% 331 31.6% 1,048 2012 492 44.8% 327 29.8% 1,097 2013 579 45.9% 330 26.1% 1,261 2014 717 51.9% 344 24.9% 1,382 2015 767 55.4% 366 26.5% 1,384 2016 793 55.3% 370 25.8% 1,434

Demand for power generation will drive demand for steam coal Steam coal - Imports outlook India S. Korea China Taiwan Japan EU28 Million 2017 153 94 84 57 132 89 2022 185 105 92.6 63 137 81 CAGR 3.9% 2.3% 2.0% 2.0% 0.8% -1.7%

Demand from Colombia s key trade partner on a decline Steam coal - Exports Australia Indonesia Colombia World total Share of world Share of world Share of world 2009 139 23.1% 233 38.7% 67 11.1% 603 2010 141 20.9% 291 43.0% 69 10.2% 676 2011 148 20.5% 323 44.9% 76 10.6% 720 2012 171 21.7% 347 44.1% 74 9.4% 788 2013 188 22.6% 381 45.8% 73 8.8% 832 2014 201 23.3% 356 41.3% 86 9.9% 862 2015 202 24.8% 327 40.2% 71 8.8% 814 2016 198 24.0% 308 37.3% 74 9.0% 826

Firm demand and stable supply will support grain trade; projected to grow at 2.5% on average 2017 onwards Grains Imports ( ), historical perspective EU Japan Egypt China Iran Saudi Indones S.Korea Algeria Arabia ia 2000 22.6 25 11.2 2.7 7.9 7.1 12.4 6.7 5.1 2007 37.6 24.1 12.8 1 3.6 9.2 12.1 7.3 5.3 CAGR 7.5% -0.5% 1.9% -13.2% -10.6% 3.8% -0.3% 1.2% 0.6% Grains Imports ( ), historical perspective EU Japan Egypt China Iran Saudi Indones S.Korea Algeria Arabia ia 2011 31 23 16 6 4 11 13 11 8 2016 35 24 21 17 9 17 16 13 12 CAGR 2.4% 0.6% 4.8% 22.1% 15.9% 9.2% 4.5% 2.7% 6.9%

Ample availability of stocks with exporting countries will keep the market well supplied Grain - Exports outlook USA Canada Argentina Others 2017 73 22 39 204 2022 77 25 45 228 40%

Prospects promising, however issues remain: Infrastructural challenges: Congestion and availability of sufficient and suitable infrastructure Ports in need of modernisation and deepening Significant proportion of freight is moved to ports by road - exploit potential of inland waterways as an alternative means of transport Investments key to resolving infrastructure problems

Salaverry, Peru Multipurpose port Select investment opportunities 30 years concession Target cargoes: iron and copper ores Initial Investments: USD 215 m Status: Expression of interest ongoing Deadline November/2017 San Juan de Marcona, Peru Multipurpose port Target cargoes: grains, concentrates, fertilisers Initial Investments: USD 378 m Status: Under assessement Paranaguá, Brazil 2 new grain terminals PAR 07 Expected capacity: 5.1 Mt/year Investments: USD 103.8 m PAR 08 Expected capacity: 4.56 Mt/year Investments: USD 126.5 m Status: Under study Tender expected 3Q2018