The theme of my talk this year is Transforming Ourselves and Transforming the Industry. When we set out on our sustainability journey three years ago, we knew that the commitment we were making was going to drive fundamental changes at Novelis. And it has, faster than we even imagined. Novelis has adopted not only a new metal strategy, but a new business strategy, which impacts everything that we do. Over the past three years alone, we have invested 500 million dollars in assets and technology and we have become the number one recycler of aluminum in the world. We are well on our way to our 2020 goal. It is an exciEng Eme. Increasingly, as we transform ourselves with aggressive changes in our own recycling strategy, we are seeing the rest of the industry respond as well with changes to their own strategies. 1 One of the key objecEves of our recycling strategy is to cut our greenhouse gas emissions. As you all know, most of the greenhouse gas emissions associated with flat rolled products are driven by the producEon of primary metal, rather than the transformaEon of this metal into coils. When we make our products from 80% recycled metal in 2020, Novelis will have cut its greenhouse gas emissions in half over 10 years, while increasing producEon by roughly 50% over the same period. That’s a big change. But it’s only part of the total story. Another important objecEve of our recycling strategy is to become more self sufficient in the producEon of sheet ingot – the key raw material for our rolling mills. Yesterday, Jack Clark spoke about the huge opportuniEes for aluminum in the automoEve industry. The light weighEng imperaEve in the automoEve industry will drive massive growth in aluminum consumpEon worldwide for the next decade. Growth like the industry has not seen since the widespread adopEon of the aluminum beverage can in the 1980s. This growth in flat rolled products demand will create a corresponding growth in demand for sheet ingot… As we think about how we will supply the sheet ingot to grow our business in future, there are really only three opEons: 1) Buy it from a third party like a primary metal producer 2) Make it ourselves from primary metal, or 3) Make it ourselves from recycled metal Given the opEons, it is absolutely clear to us that the best long term strategy for Novelis is to 2 The most expensive metal input to our system has always been purchased sheet ingot. As primary producers seek higher returns and conEnue to drive toward short term profits, we see them shipping more metal into LME warehouses rather than shipping direct to customers. We also see them pushing to raise prices for purchased sheet ingot. Both of these behaviors encourage rollers like Novelis to make their own sheet ingot, and also encourage the use of recycled metal vs primary metal. These are compelling reasons for Novelis to invest in our own efficient, sustainable producEon. 3 So how have we been doing against the commitments that we made three years ago? Here’s the big picture – Novelis recently announced that last year, 46% of our global shipments were produced from recycled content, up from a baseline of 33% in 2010. To put this in perpecEve, this means that Novelis has increased its intake of scrap aluminum by 350,000 tonnes per year since 2011. In the coming year, we expect that for the first Eme, more than 50% of our products worldwide will be produced from recycled metal. Importantly, our growth in recycling over the past three years has firmly established Novelis as the leading recycler of aluminum in the world, and we expect our lead to grow in the years to come as our new projects ramp up. But our ambiEons do not stop there. By 2020, our intake of recycled metal will roughly double from today’s levels and we will produce 80% of our products from sustainable recycled metal. Bo`om line -­‐ we have built great momentum toward our goal and we are more determined than ever to get there. 4 Not only is our recycling agenda moving quickly, it is sEll acceleraEng as we bring more assets and capabiliEes to market. This slide will give you a sense of just a few of the things that are happening at Novelis. Over the past year, we have accomplished a great deal… but there is sEll much more to be done. We do not underesEmate the size of the challenge, but we are delivering on it and will conEnue to do so. These are just some of the headlines. I will talk about some of the larger items as we move through the presentaEon. 5 Increasingly, we are seeing other stakeholders in the supply chain respond to changing dynamics in the scrap industry. We recognize that we are only one factor in this equaEon, but we are certainly seeing evidence that our aggressive strategy is having an impact on others in the industry. I have grouped these responses into three categories. First, we are seeing retrenching and consolidaEon among less efficient players in the market. The combinaEon of sustained, low LME prices and increased compeEEon for scrap units is pueng pressure on scrap margins and is causing certain players to rethink their long term compeEEve posiEons. This is resulEng in a variety of changes including plant closures, assets divesEtures, and some bankruptcies – especially in Europe. UlEmately, we believe that this will be good for the industry as it will drive recyclers to be more efficient and will maximize the recovery of recycled metal in the supply chain. We have also seen consumers moving away from using tollers to process scrap units as scrap margins Eghten. More on this later. The second type of response that we have seen to changing market condiEons are those who intend to compete with Novelis long term for scrap units. These are compeEtors who believe, as we do, that scrap based producEon is the right model for the future. In addiEon to our own capacity expansions, we have seen a number of compeEtors adding aluminum recycling capacity in North America, Europe, and MENA. The third category is perhaps the most interesEng. Our sheet customers, especially in the automoEve space, are increasingly recognizing the value of our closed loop recycling model and are partnering with us to reuse scrap in the most efficient way to maintain its value in the supply 6 Over the next few slides, I am going to touch on some of the major elements of Novelis’ recycling strategy. First and foremost, we are improving our operaEng efficiencies every day through the use of new technology. This is key to maintaining our long term compeEEve posiEon in the market. Second, we are diversifying the types of scrap that we bring in to our system and growing our parEcipaEon in market segments where we have tradiEonally been less acEve. We are also building closed loop recycling systems with our customers to ensure that good quality scrap gets recycled back into the same product whenever possible. We are expanding both our capacity and our commercial buying acEvity in almost every market around the world. Lastly, we are developing new alloys which have the ability to absorb scrap while maintaining superior product performance. Jack spoke about some examples of these in his talk yesterday. 7 I’d like to spend a li`le bit of Eme on the importance of technology in the recycling business. Many people look at the recycling industry as a relaEvely low technology business. We could not disagree more. For decades, Novelis has been the market leader in the recycling of used beverage cans. One key reason for this is that we believe that we have the best process in the world for converEng UBCs back into new cans. Now we are stepping up our game even further. In the past 3 years, we have conEnued to add new technology to our system both to increase our flexibility and to reduce our costs. I am not going to talk about all of these, but let me highlight one example from each category. We have installed advanced decoaEng technology in several of our plants which helps us to process poor quality UBCs more efficiently. This allows us to buy materials that others cannot... For the right price, of course ! On the cost side we are using new, proprietary furnace designs in some of our plants to increase the melt rates and to reduce dross generaEon. We are very opEmisEc about these new designs and we believe that they will be a real game changer for us. 8 So why does all this talk about technology ma`er? Well – first, some of the technology that we are installing in our new faciliEes is aimed at making our process more flexible. When we shred, sort, and upgrade our incoming scrap streams, we can broaden the number of types of scrap that we can use and we can reduce the impact of variability in the raw materials. More importantly, though – good technology improves metal yield from scrap melEng. Metal recovery is the single most important cost driver in any recycling facility… so our view is that if you get this right, everything else follows. Novelis is fortunate to have some of the best scienEsts and engineers in the industry. Our people generate new ideas every day to improve our melEng processes and to increase our metal recovery from scrap. This gives Novelis long term compeEEve advantage in the scrap business by ensuring that we are the lowest cost processor of scrap in the market. So in short – good technology is the foundaEon for success in the recycling business. 9 10 Over the past 4 years, Novelis has commi`ed 500 million dollars to build new recycling assets around the globe. From our exisEng asset footprint in 2011, we have added major new recycling faciliEes on every conEnent. This started in Asia with our Yeongju beverage can recycling facility . Our new recycling line in Brazil was successfully commissioned in April. Today, we are also announcing the producEon of the first ingots from our largest and most ambiEous project in Nachterstedt, Germany. In addiEon to these large capacity expansion projects, we also have made a number of other investments in our exisEng faciliEes to improve their recycling capabiliEes. Last year, we upgraded our Latchford recycling facility in the UK to enable it to process closed loop automoEve customer scrap from JLR. We are also building a similar facility in Oswego, New York which is designed to consume automoEve scrap from the North American OEMs, starEng with process scrap from the F-­‐150 program. EssenEally all of these new capacity expansions will be on line and fully operaEonal by late 2014. By then, Novelis will have almost doubled it’s recycling capacity to 2.1 million tonnes per year. … We plan to keep pulling away from the compeEEon over the next 5 years. In order to reach our 80% recycled content target, we will need to build another major recycling center on every conEnent by 2020. 11 One of our big success stories over the past two years has been our new beverage can recycling center in Yeongju, Korea. The execuEon of this project has been world class from the very beginning. This facility is up and running at its full design capacity of 265,000 tonnes per year, just over 18 months aker it produced its first ingots. This is an amazing operaEonal achievement. As we have ramped up the Yeongju plant, we believe that Novelis has become the largest buyer of used beverage cans in South East Asia. This is a major achievement as well, considering that Novelis has historically had only a very small market presence in Asia. From a technology standpoint, Yeongju has served as a proving ground where we have tested and developed new processes which are now being implemented in other Novelis plants worldwide. 12 As I menEoned earlier, our recycling investment in Pindamonghaba, Brazil has also recently started operaEon. This facility will more than double our capacity for UBC processing in South America and will allow us to keep up with the rapid growth of the beverage can market in Brazil. Here you can see a few photos of the completed facility. This facility builds on the success of our Korean project and shares much of the same world class technology. We believe that this will help us to ramp up producEon at the new Pinda facility even faster than we did in Korea. So far, our iniEal producEon results are encouraging. During its first month of operaEon in April, the center operated at a third of its design capacity. That’s a very strong start for a new plant. 13 As I menEoned earlier, our recycling investment in Pindamonghaba, Brazil has also recently started operaEon. This facility will more than double our capacity for UBC processing in South America and will allow us to keep up with the rapid growth of the beverage can market in Brazil. Here you can see a few photos of the completed facility. This facility builds on the success of our Korean project and shares much of the same world class technology. We believe that this will help us to ramp up producEon at the new Pinda facility even faster than we did in Korea. So far, our iniEal producEon results are encouraging. During its first month of operaEon in April, the center operated at a third of its design capacity. That’s a very strong start for a new plant. 14 When you talk about our big bold moves in recycling, there is nothing that is bigger or bolder than our new recycling facility in Nachterstedt, Germany. It’s a $US 250 M investment and it will be the largest aluminum recycling center in the world. Today, Novelis has issued a press release announcing that the first producEon sized ingots have now been produced from the Nachterstedt facility at the end of May. This is an important milestone towards producEon of regular commercial volumes later in the summer. The official opening of the facility is on schedule for the fall of 2014. As you look at the recent photos from the construcEon site, I want to emphasize how Nachterstedt will help Novelis to make a major step change in its use of recycled metal in Europe. This plant incorporates the best pracEces from every other Novelis recycling facility worldwide. It also uses a number of new technologies which will give the facility flexibility to process a wide range of scraps. With this asset, we are going to be able to create constant local demand for scrap units which either go into other industries today or are exported to China. This is good for Novelis, and good for the industry as well. The most efficient way to run a closed loop recycling system is to recycle scrap where it is generated, and to recycle it back into itself. We have now created the capacity to do that in Europe. 15 And now, I’d like to take 30 seconds to show you a short video clip of the construcEon. I showed half of this video last year… now here’s the rest. So there you have it… 18 months of hard work condensed down to just a few seconds. But it has been very rewarding for me personally to see this project come together. It is a very impressive facility and the project team has done a fantasEc job in execuEng such a large and complex project. 16 So I’d like to take a few minutes to talk about the aluminum scrap market and how we plan to parEcipate in it. The first point on this chart is that the scrap market is actually growing quite quickly. People in the industry tend to think of scrap supply as constant, while only demand for scrap increases. This is absolutely not the case. In fact, the scrap market is expected to grow rapidly between now and 2020… almost 6% a year worldwide, driven in part by growth in automoEve demand. It’s funny, but even though Novelis is a major global recycler of aluminum, we have tradiEonally only bought from a very small segment of the market. Historically, as much as 75% of our scrap inputs came from the beverage can market alone. Now, we know that the beverage can market only represents a small fracEon (15-­‐20%) of the total available scrap in the world. We clearly need to diversify our inputs and buy from other areas of the market – building and construcEon, transportaEon, electrical scrap, and foil. Even if we exclude casEng alloys, which are difficult for us to use, the market is clearly full of opportuniEes for us to grow our market share. 17 Now let’s look forward at what kinds of scrap Novelis will need to buy in future. Novelis is already the world’s leading recycler of aluminum beverage cans and we expect to conEnue to grow this posiEon over Eme. You can see this in the green bar on this graph. There are two things that I would really like you to take away from this chart. First, the explosive growth in the use of aluminum in the automoEve market, will generate a huge amount of customer process scrap. Between 30 and 40% of every coil that we ship to an automoEve customer is turned into scrap at the stamping facility. By far the most efficient use of this scrap is to bring it back to our recycling faciliEes in a closed loop and to turn it straight back into another automoEve coil for the same customer. This closed loop system for customer scrap has been in place for many years in the beverage can industry and has been hugely successful. We have already established a similar system with several major automoEve OEMs including Ford in the US and JLR in Europe. This closed loop automoEve process scrap is expected to grow rapidly and will grow to more than 10% of Novelis’ total scrap inputs by 2020. The second point to note here is that the great majority of our new volumes come from non can scrap. To grow our use of these material, we will need to install more 18 The rapid growth in aluminum consumpEon in the automoEve industry creates fantasEc opportuniEes for closed loop recycling. We strongly believe that closed loop systems are the best way to handle the process scrap from stamping operaEons. As I menEoned earlier, as much as 30-­‐40% of a typical automoEve coil is turned into scrap during the stamping process. The best way to manage this stamping scrap is simply to bring it back from our customers and use it to produce new automoEve coils. This simplifies the supply chain for the customer, provides an important new metal input for the producer, and increases the recycled content of the future coils shipped to the OEM. In the past, many of the automoEve OEMs who buy our coils have not returned stamping scrap to us today because the volumes were too small to jusEfy this. As a result, the stamping scrap was sold into the open market and was used for other applicaEons. Now, as our automoEve relaEonships grow exponenEally, the economies of scale on these large programs allow closed loop recycling to be done efficiently. 19 So how much new scrap is generated by the growth of aluminum body in white sheet? Today, the auto industry consumes about 350 kT of body in white sheet globally. This generates something like 100 kT of stamping scrap, most of which is sold into other applicaEons as we have discussed. By 2020, our projecEons show that use of aluminum sheet for body in white will grow to 1.8 million tonnes, and the corresponding scrap stream will grow to over half a million tonnes per year. We expect a great majority of this scrap to be returned directly to mills to be converted straight back into new automoEve coils for customers. This is the highest value use for this scrap and will ensure that the coils for the automoEve industry contain the maximum possible recycled content. This is good for producers, and is good for our OEM customers as well. 20 So, in summary: Novelis is making bold, aggressive moves in the aluminum recycling space. These changes have made us the number 1 recycler of aluminum worldwide. We have commi`ed 500 million dollars to improve our recycling capacity and technology over the past three years, with more to follow as we grow to produce 80% of our products from recycled metal. Technology is the foundaEon for success in the recycling business. Novelis has some of the best engineers and scienEsts in the business and this gives us long term compeEEve advantage in the market. And finally, we are fully commi`ed to both the principles of closed loop recycling and to our 80% recycled content objecEve. We are well on our way toward delivering both. Thank you for your Eme. 21 22