Mining Tire Update

Dan Gove
2007 Mining Forum September 26, 2007

Agenda - Tire Update

Tire Industry Overview Tire Shortage Facts Outlook by Tire Segment Summary Q&A

Global Tire Industry ($100 Billion)

Other
21.3%

Bridgestone
18.2%

Toyo Kumho Cooper Hankook Yokohama Sumitomo Pirelli Continental Goodyear

17.3%

Michelin
17.7%

Global Tire Industry ($100 Billion)

Heavy Truck (Highway)
26%

Earthmover OTR

6%

Two Wheel 5% Agricultural 2.5% Aircraft 0.5%

60%

Passenger Car & LT Truck

Whats in an Earthmover tire?

Organic Chemicals 11% Carbon Black 14.5%

Natural Rubber 41%

Steel Cable 11.5% Synthetic Rubber 22%

Material costs doubled in the last 5 years.

Off The Road (OTR) Tire Shortage

The OTR tire shortage is real
The tire companies did not see the upturn in business and were not prepared for the surge in demand.

Tire companies were slow to invest in new capacity

Due to the high investment required and traditional low returns in that segment of their business vs. other segments. New capacity takes 18 months to 2 years to bring on line.

Tire supply is limited by curing capacity

By design to keep curing presses fully burdened.

Raw Material
Is not limiting supply, but costs are up considerably

End users without tire contracts

Were hit hard

Tire Types: Radial vs. Bias Ply Tires

Radial is new technology a modern tire
Better traction, ride & life . a better value Higher load & speed applications need radials => trucks Bias Ton-MPH = 100%, Radial Ton-MPH = 130% Haulage units require radials to achieve best results Nearly all tire capacity installed in last 20 years is radial capacity Off road is trend from bias to radials => 3% per year Truck & Passenger tires already all radial

Bias tires helped close the OTR gap during shortage

Old, underutilized capacity was fired up to help get more tires Radial growth trend will continue after shortage Bias tire is usually the low price tire Bias tire does have a place => a stiffer tire

18+ Tire Brands offered at Cat

Michelin Bridgestone/Firestone Goodyear Triangle Euro Tire Yokohama Titan
Continental/General Goodyear Ag Cat Brand Skid Steer

Dunlop Mitas GPX (Galaxy/Primex) Nokian Pirelli Alliance Toyo Torch Purcell -- Retreads

Constrained supply requires many suppliers to cover total needs

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OTR Tire Segmentation

Segment
Manufacturers Rim Size Type Industries Machines

Small & Ag
Many Brands Small to Lg Cos Smaller than 24 & Ag style tires 90% Bias Building Const., Forestry & Paving SSL, TH, BHL, CWL, WEX, FP, Paving Prods.

Medium
Many Brands Small to Lg Cos 24 & 25 rim size 60% Radial Quarry & Construction SWL, MWL, AT, MG,

Large
Several Brands Med & Lg Cos 29 to 49 rim size 80% Radial Quarry, Mining & Construction 988-992, 770777, WTS, UGM

Giant
3 Key Brands 3 Companies 51 to 57 LWL 51 to 63 LMT 90% Radial Most sold direct Mining 785-797, 993, 994

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Small Tire Outlook

Less than 24 inch sizes and Ag type tires

BHL, SSL, CWL, WEX, Paving & Forest Products

Adequate volumes of small tires are available

Free supply for most brands

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Medium Tire Outlook

24 & 25 inch sizes
AT, SWL, MWL, MG & Small Scrapers

Adequate volumes of Medium tires are available

Not yet free supply for all brands. Some brand switching required until 2010 Chinese suppliers have added considerable radial tire capacity over the past two years Bias tire capacity is readily available

Be flexible on your brand selection

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Large Tire Outlook

29 to 49 inch sizes
770 to 777 trucks, 988 to 992 wheel loaders, scrapers, 24H motor grader

Large Tire Shortage will last into 08 / 09 for some sizes New Michelin Brazil (large & med) tire plant starts up in late 2007 Many companies are adding radial tire capacity to existing plants
Bridgestone, Yokohama, Triangle, Euro Tire, China

Retreads are an option, but used tire casings are hard to find.

Be flexible on your brand selection

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Giant Tire Outlook

51, 57 & 63 inch sizes
785 to 797 Trucks, 993 & 994 Wheel Loaders

Most Giant Mining Truck tires are sold direct

Tire company to end user Few sales through OEM

Large Loaders are generally sold with tires

Lower volumes, constrained but adequate supply Bias ply tires are an option for truck loading application Radial tires are needed for load and carry applications

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Giant Tire Outlook

Existing Manufacturing Locations
Michelin
Lexington, South Carolina Vitoria, Spain

Bridgestone/Firestone
Shimonoseki, Japan (Bridgestone Brand Radial Tires) Bloomington, Illinois for Large Loader Tires (Firestone Brand Bias Tires)

Goodyear
Topeka, Kansas Tatsuno, Japan (joint venture with Toyo)

Yokohama - Onomichi, Japan (bias tires, radial tires under development) Euro Tire - Ukraine (bias tires, radial tires under development) Titan/General - Bryan, Ohio (bias tires, radial tires under development) Belshina - Belarus (bias tires, radial tires under development) China - Various (bias tires, radial tires under development)

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Giant Tire Outlook

Tire Industry Capacity Giant Tire supply still gapped
Estimated gap is 10%+

Do not see supply catching up with demand until 2011

Capacity increases are coming on line from existing suppliers

Michelin in South Carolina Bridgestone & Yokohama in Japan Retreading: Purcell has radial mold-cure press in Missouri

New radial capacity planned

China, Ukraine & Ohio

Management of existing tire supply is critical

Improved tire care & maintenance has increased tire life 20% to 30% Must continue to improve tire life

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Summary Mining Tires

Many Tire Companies are Expanding Capacity
Will improve Large & Giant tire availability

Giant Tire supply gapped until 2011

Depends on how fast viable tire capacity goes on line

Management of existing tire supply is critical

Continue to extend tire life Be flexible on the tire brands you use

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Thank You, Questions ?

Dan Gove
2007 Mining Forum September 26, 2007