Figure 2: GSM is the Lowest Cost Producer on the 2010 Western World Silicon Metal Cost Curve Operating

Cost (per metric ton)

$2,300 $2,100 $1,900 $1,700 $1,500 $1,300 $1,100 $900 $700 $500 1 2 3 A 4 B C D E F G H I J K L M N O P 5 Q R S
Notes: 1) Numbers represent GSM facilities. 1= Alloy, WV (49% of the capacity was sold to Dow Corning Corp.); ) Corp.) 2=Selma, AL; 3=Beverly, OH; 4=Niagara Falls, NY; 5= Breu Branco, Brazil (this facility was sold to Dow Corning Corp. in Nov., 2009). 2) Costs are Ex-works and exclude depreciation expense works Source: Company presentation presentation/CRU, 2010

Consolidated Market Has Strong Barriers to Entry

The western world silicon metal merchant production is fairly concentrated with the top 4 producers (FerroAtlantica 23%, Elkem 16%, GSM 13%, and AMG 10%) representing almost two thirds of the market. We also note there are significant barriers to entry given the power intensity of the production process as well as the given high conversion ratio of raw materials to silicon metal. Lead times (from concept to commissioning) typically range 3 5 years including a complicated permitting 3-5 process. Also, the proximity of raw materials needs to be relatively close given it requires about 6.6 tons of raw materials to produce one ton of silicon metal. Additionally, stable and a long term supply of low cost electricity is also crucial long-term given that power typically represents roughly 35%-40% of production costs. 40% We believe GSM long-term power supply contracts are cost advantageous and GSMs term offer stable, favorably priced long long-term commitments. For instance, in connection with reopening the Niagara Falls, New York plant, and as an incentive to reopen the plant, the company received a public sector package including 40 megawatts of public-sector hydropower through 2013 with a potential seven year extension. Additionally, a potential extension power hedge agreement has been entered for a term of 24 months ending in June 2012, for approximately 20% of the total power required by this facility. This hedge covers the anticipated power required not supplied by the long long-term power contract over the term of the hedge agreement. ntract

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