Bahamas. Market Strategy ... Risks involved in the expansio

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Expansion into the Bimini Islands, Bahamas
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Presentation Agenda

• Company Profile
• Industry Overview
• Product Overview
• Bahamas Expansion
• Mode of Entry
• Finance
• Market Strategy
• Recommendations
• Summary

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Company Profile

• If you've visited Walt Disney World, flown into
  the Miami International Airport, or driven the
  roadways of Florida, then you've already
  experienced a little bit of what Rinker Materials
  Corporation is all about. If you live or work in
  Florida chances are that your house and office
  contain our building materials and we're already
  part of your everyday life.

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Industry Overview

• The most important aspect of the construction
  aggregate industry is finding the natural
  resources, but
  
• Natural Resources are getting harder to find in
  Florida,
  
• Aggregate Mines are getting harder to locate and
  permit,
  
• Demand for product is increasing,
• Product must be imported.

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Industry Overview

• Three modes of material transport
• Truck,
• Train,
• Ship,

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Product Overview

• The building blocks of buildings are found and
  made from
  
• Crushed Stone mined in Miami, West Coast and
  North Florida,
  
• Sand mined in center of Florida Peninsula, and
• Cement is produced from limestone in mills in
  Miami, Brooksville, and the Gainesville area.
  

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Bahamas Expansion

• A potential aggregate source has been found near
  the Bimini Islands, Bahamas
  
• High quality limestone,
• Construction grade sand,
• 80 Miles east of Miami,
• Easy access to Florida Ports by barge,
• Potential area has low labor costs, and
• Easy to permit and construct.

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Finance

• Rinkers expansion into the Bahamas is expected
  to costs just under 15 million.

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Operating Cost

• Advantages of locating in the Bahamas
• Low labor cost abundant and available,
• Low transportation costs (via barge),
• Minimal material handling costs, and
• Low environmental impacts and costs.

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Mode of Entry

• Rinker is an international business with
  headquarters in Sydney, Australia. Operations
  in
  
• Australia
• Southeast Asia,
• China,
• United States, and
• Soon Bahamas

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Mode of Entry

• Rinker already imports/exports raw materials
  from/to
  
• Brazil,
• China,
• Caribbean, and
• Soon Bahamas

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Market Strategy

• The fundamental tenet of Rinkers strategy is to
  maintain a selected share of the ready-mix
  concrete and concrete block market at the highest
  possible price in order to maximize production in
  the companys quarries, sand mines, and cement
  mills.

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Risks

• Risks involved in the expansion near the Bimini
  Islands, Bahamas
  
• 3 years before any production,
• Potential of severe weather-hurricanes,
• Higher maintenance costs from the saltwater
  environment
  
• Must generate required power-diesel and
  generators,
  
• Resources in Cuba could present future
  competition.

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Risks

• If we do not challenge ourselves to take some
  risks, we are doomed to fail to the innovators of
  tomorrow!

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Recommendations

• Rinker needs to pursue the Bahamas endeavor to
• Ensure supply of aggregate,
• Lower future production costs,
• Increase profit margins,
• Increase market share, and
• Maintain Rinkers longstanding dominance in
  Floridas concrete industry.

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Summary

• Floridas Population will grow over 50 in 30
  years.
  
• Domestic Aggregate Reserves cannot fulfill
  current need.
  
• Current Domestic Resources will be exhausted in
  30 years.
  
• Aggregate imports will continue to increase.

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Summary

• Bimini Island mine location will
• Increase available reserves,
• Enjoy lower labor, production and transportation
  costs,
  
• Serve major Florida markets with low cost
  aggregate, and
  
• Enable Rinker to maintain its market
  leadership.
  

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Questions? Comments?