INVESTMENT OPPORTUNITIES 2018 OF Niche projects CONTENT

1. Agro-industrial complex 3

2. Mining and smelting industry 32

3. Chemistry and petrochemistry 54

4. Machinery & car parts production 62

5. Energy industry 65

6. Transport and logistics 69

7. Tourism 74

8. Public-private partnership 81 INTRODUCTION

In order to increase invest- ment attractiveness of the Republic of Kazakhstan and stimulate investments into the national economy, “National Company" Kazakh Invest” JSC in collaboration with Deloitte and PwC has prepared investment proposals for 73 niche projects in various priority sectors of the national economy:

• Agro-industrial complex (28) • Mining and smelting industry (21) • Chemistry and petrochemistry (7) • Machinery and car parts production (2) • Energy industry (3) • Transport and logistics (4) • Tourism (5) • Public-private partnership (3).

The purpose of the investment proposals is to provide a brief description of projects having the potential to modernize and diversify the national economy and promote the export potential of Kazakhstan.

Detailed business plans and financial models have been developed for each project with more details on the project, market analysis, key financial indicators and competitive advantages. Business plans and financial models are readily available after signing a short memorandum of cooperation and information confidentiality agreement. AGRO-INDUSTRIAL COMPLEX

3 Expansion of a poultry meat production complex

Project description Alel Agro is the largest poultry producer in Kazakhstan with a production capacity of 51 thd tonnes of poultry meat p.a. (26% of the market share in Kazakhstan). It is planned to expand the capacity to 165 thd tonnes and export the output. There is a substantial export potential in China, UAE and CIS countries with the total capacity of the market of imported poultry more than 1 million tonnes p.a. At the same time, the number of exports of poultry meat to Uzbekistan increased from 57 tonnes in 2016 to 172 tonnes in 2017.

Project location Investment highlights

RUSSIA Upfront investment $329 MM

NPV $107 MM KAZAKHSTAN

IRR 20% CHINA ZHAMBYL Payback period 8 years

Market analysis Competitive advantage I. 50% of poultry meat consumed in Kazakhstan is I. Now the business accounts for 26% of the entire imported. Also, a forecasted growth in consumption inner market. The management of this enterprise presents a case for safe-haven hinter market. already designed a comprehensive plan and Poultry meat, 2018E and 2022F, thd tonnes arranged offtake contracts to increase the market share to 50%. 2018E 398 Net import Actual and expected market share and production volumes, % 2022F 597 Production Fact 26% II. The potential realization markets - China and (46 thd tonnes) Plan UAE - are currently on a growth trend. Also, bulk of 40% (165 thd tonnes) the imports are from the countries with significantly higher import costs relative to Kazakhstan. Poultry import in thd tonnes of China and UAE, respectively II. Proximity to potential sales markets of Uzbekistan +9% and Kyrgyzstan. +14% 506 450 394 390 64 III. Availability of own agro brands: Alel, ameral fresh, 38 15 53 57 80 62 74 tasty chick and own parent flock, feed mill and 295 382 259 362 equipment of leading technology suppliers.

2015 2016 2013 2016 Others USA Brazil Argentina Value proposition Target Investor Mandate This project will allow taking advantage of import • Access to external markets substitution in the market with the further • Supply of broiler technologies possibility of exporting products.

Sources: EU Commission, Statistics Committee of the Ministry for national economy of the RK, Union of Poultry Farmers of Kazakhstan 4 Expansion of a poultry meat production complex

Project description The current production capacity of 8 thd tonnes p.a. is to be increased to 20 thd tonnes p.a. The existing company already exports its product to Kyrgyzstan. Thus, the end markets are Kazakhstan (80%) and Kyrgyzstan (20%). The project owner has a land plot of 536 hectares and the necessary infrastructure. The initiator expressed willingness to cover part of the required upfront investment.

Project location Investment highlights

Upfront investment $34 MM RUSSIA

NPV $21 MM

KAZAKHSTAN IRR 24%

Payback period 6 years

ZHAMBYL

Market analysis Competitive advantage I. Kyrgyzstan imports >60% of poultry meat it I. The initiator has a well-established sales of consumes. Kazakhstan only supplied about 8% of products to Kyrgyzstan, which accounts for 20% of Kyrgyzstan’s total import. the total production. Importers of poultry meat to Kyrgyzstan, thd tonnes II. Close proximity to sales markets: 270 km. To 30.5 23.7 0.4 Kazakhstan Bishkek (the capital of Kyrgyzstan). 0.6 22.0 12.9 1.7 1.8 Others III. Price advantage when exporting to Kyrgyzstan. 4.5 0.2 16.0 China 14.0 15.5 Russia Prices by countries exporting to Kyrgyzstan in 2017, thd USD/ tonne 3.2 5.4

2015 2016 2017 Russia 1.20

II. Kazakhstan imports ~50% of poultry meat Belarus 1.23 -3% consumption. This and the forecasted growth in consumption present a case for a safe-haven hinter Kazakhstan 1.17 market. Poultry meat, 2018E and 2022F, thd tonnes

2018E 398 Net import Value proposition Production 2022F 597 This project allows to capitalize on existing trade relationship with Kyrgyzstan by expanding the Target Investor Mandate production volume and provide import substitution. ▪ Supply of broiler technologies ▪ Foreign distributor

Sources: EU Commission, Statistics Committee of the Ministry for national economy of the RK, Union of Poultry Farmers of Kazakhstan 5 Construction of a broiler poultry farm

Project description

The project consists of a construction of a full-cycle broiler poultry farm with a floor housing and capacity of 20 000 tonnes of poultry meat p.a. At least 50% of the total production will be sold chilled and at least 50% of the output will be exported to the Eurasian Customs Union, Central Asia and Middle East countries. the Initiator of the project already owns a well-developed poultry farm with a 120 mln annual eggs production and a distribution network for poultry products.

Project location Investment highlights

NORTH Upfront investment $34 MM RUSSIA KAZAKHSTAN

NPV $27 MM

KAZAKHSTAN IRR 27%

Payback period 7 years

Market analysis Competitive advantage

I. Export prices will be notably higher than the Cost of feed takes up 60% of the total production prices for domestic sale. This and the low export cost of poultry meat. Feed is 50% wheat. level of poultry meat (about 6 thd tonnes) favour the case of exporting the end product. Prices by offtaking countries in 2017, thd USD/tonne Annual average poultry feed price* in 2017, thd tenge/tonne Other 40% Kyrgyzstan 1.8 Project’s Russia 1.9 location 39 China 2.2 -11% Other Feed 60% Kazakhstan 1.2 Kazakhstani 43 regions II. Kazakhstan imports ~50% of poultry meat consumption. This and the forecasted growth in consumption present a case for safe-haven hinter *wheat of class 4 market. Poultry meat in 2018E and 2022F, thd tonnes

2018E 398 Net import Value proposition Production This project allows to capitalize on existing low 2022F 597 cost feed compared to the rest of the country, know-how and provides safe marketing Target Investor Mandate option.

▪ Supply of broiler technologies ▪ Long-term growth ▪ Foreign distributor

Sources: EU Commission, “Kazakh-Zerno” informational and analytical agency, Statistics Committee of the Ministry for national economy of the RK, Union of Poultry Farmers of Kazakhstan 6 Construction of a broiler poultry farm

Project description The project plan is a construction of a very efficient and brand new full-cycle broiler poultry farm based on floor housing. The maximum capacity of the production line is 10 thd tonnes of quality and very delicious poultry meat p.a. Investing in this business is particularly lucrative at the moment and the business is an unparalled investment vehicle since the initiator of the project has designed the farm using leading edge technologies. Currently, the company plans to sell its produce to inner market and neighboring countries including Kyrgyzstan and Uzbekistan. Project location Investment highlights

Upfront investment $22 MM RUSSIA

NPV $10 MM

KAZAKHSTAN IRR 18%

Payback period 10 years TURKESTAN REGION

Market analysis Competitive advantage

I. Export prices will be notably higher than the Kazakhstan exports poultry meat to Kyrgyzstan in prices of domestic sales. This and the low export small amounts, but at a lower price than level of poultry meat (about 6 thd tonnes) favour Kyrgyzstan’s main supplier – Russia. the case of exporting the end product. Prices by countries exporting to Kyrgyzstan in 2017, thd Prices by offtaking countries in 2017, thd USD/tonne USD/tonne

Kyrgyzstan 1.8 Russia Russia 1.9 China 2.2 Belarus60% Kazakhstan 1.2 Kazakhstan II. Kazakhstan imports ~50% of poultry meat consumption. This and the forecasted growth in consumption present a case for safe-haven hinter market. Poultry meat in 2018E and 2022F, thd tonnes Value proposition

2018E 398 Net import This project allows to capitalize on the existing Production trade relationship with Kyrgyzstan by 2022F 597 expanding the production volume and provide import substitution. Target Investor Mandate

▪ Supply of broiler technologies ▪ Long-term supply of capital ▪ Foreign distributor

Sources: Statistics Committee of the Ministry for national economy of the RK, Union of Poultry Farmers of Kazakhstan, International Trade Centre (ITC) 7 Expansion of the turkey meat producing farm

Project description The project plans the expansion of turkey meat production plant to 20 thousand tonnes, creation of a breeding reproducer and modernization of the deep processing plant. Current production capacity is 9.5 thousand tonnes of turkey meat in live weight and 7.7 thousand tonnes in slaughter weight. The company produces more than 85 products from turkey meat: sausage, smoked and other delicacies. There is a land plot of more than 200 hectares.

Project location Investment highlights

Upfront investment $44 MM RUSSIA

NPV $49 MM KAZAKHSTAN

IRR 18%

CHINA Payback period 11 years

TURKESTAN REGION

Market analysis Competitive advantage Kazakhstan already exports turkey meat to Russian The only company in Kazakhstan that grows and Kyrgyzstan. Moreover there came up a need in turkeys and manufactures products from its meat in substitution of imports for a turkey meat. industrial scale. Kazakhstan’s export of turkey Kazakhstan’s export price of Company has long term offtake contracts with 4 meat, tonnes turkey meat, USD/tonne wholesale buyers: 2 in Kazakhstan, 1 in Russia and 1 2 954 2 965 2 549 in Kyrgyzstan. 16 23 6 Kyrgyz- 1 652 Kazakhstan has the lowest price on product in 2 938 2 942 stan 2 543 Russian import market Russia 2 097 Russia import price on turkey meat in 2017, USD/tonne 2015 2016 2017 2017 Kyrgyzstan Russia China 2 746

Kazakhstan’s import of turkey Kazakhstan’s import price of Brazil 2 238 meat, tonnes turkey meat, USD/tonne 894 France Kazakhstan 1 701 122 97 Poland Russia 1 098 Kazakhstan has the cheapest import price in 40 25 Russia 2017 Russia among importers of turkey meat 82 72

2015 2016 2017 Target Investor Mandate Value proposition

• Supply of technologies This project allows to capitalize on existing • Access to external markets industrial base and take advantage of expanding export volumes in CIS countries.

Sources: Statistics Committee of the Ministry for national economy of the RK, UN Comtrade 8 Expansion of the duck production farm

Project description The project plan is to expand production of ducks from 150 tonnes to 6 thousand tonnes of poultry meat per year and 3.3 million heads of poultry per year. The initiator is a large agricultural holding in the North Kazakhstan region, which produces grains, oilseeds, leguminous crops and breeds cattle. It also has 430 thousand hectares, 540 units in the machine-tractor park and a storage capacity of 550 thousand tonnes.

Project location Investment highlights

NORTH KAZAKHSTAN REGION Upfront investment $26 MM

NPV $13 MM КАЗАХСТАН КАЗАХСТАНKAZAKHSTAN IRR 17%

Payback period 9 years

Market analysis Competitive advantage There is an increase in imports of duck meat over I. The sale price of duck meat, which JSC the past 4 years. The growth accounted for 27%, “Atameken agro” charges, is 35% lower than the which shows an increase in demand for the product price of imported duck meat. in the Kazakhstan market. Sale price of duck meat, thd USD/tonne Import and export of duck meat in Kazakhstan, tonnes Price of 2.1 “Atameken agro” JSC 2,803 +27% Imported price 3.3

II. Average price of bird feed in North Kazakhstan 1,376 1,306 region is 10% lower than the average price in other Import regions. Export 675 Average price of bird feed, tenge/kg 90 25 25 50 North 39 Others 43 2015 2016 2017 2018 During 2014-2017, main importers in Kazakhstan Bird feed is one of the main operating were the following countries: Hungary (58%), expenditures, which accounts for 60% of total Russaia (28%) and USA (14%). At the same time, operating expenditures. Kazakhstan exported duck meat to: Russia (28,24 tonnes) and UAE (0,01 tonnes). Target Investor Mandate Value proposition Competency to transfer technologies The project allows to occupy a niche in the domestic market as the largest producer of duck meat and produce 6 000 tonnes of poultry meat per year.

Sources: Statistics Committee of the Ministry for national economy of the RK, Union of Poultry Farmers of Kazakhstan 9 Construction of a feed yard and a cattle meat processing plant

Project description The project plan is to expand existing meat production and processing (steaks, sausages, offals) for export. The company exports 6 thd heads of sheep to Iran and more than 300 heads of cattle to Uzbekistan p.a. The company has already 20 ha land plot and estimates to sell 40 thd heads equivalent amount of meat p.a. The initiator was recognized as one of “100 new persons of Kazakhstan” for his business achievements and trusted relations with buyers.

Project location Investment highlights

RUSSIA NORTH Upfront investment $16 MM KAZAKHSTAN WEST A KAZAKHSTAN EAST NPV $15 MM KAZAKHSTAN KAZAKHSTAN

ALMATY IRR 25% JAMBYL SOUTH KAZAKHSTAN TURKESTAN CHINA Payback period 7 years REGION UZBEKISTAN

IRAN Market analysis Competitive advantage On the domestic beef market in Kazakhstan, meat The cost of exported beef has a price advantage in is provided by more than 90%. the global market. Volumes of cattle of the Kazakhstan market, thousand heads Price advantage in the Russian market in 2017, USD/kg

Kazakhstan Belarus Columbia Serbia Brazil Uruguay The main markets for Kazakhstan meat are Russia, Argentina Kyrgyzstan and Uzbekistan. Export of cattle meat from Kazakhstan by country, 2017, tonnes

Russia

Kyrgyzstan Value proposition

Uzbekistan This project allows an investor to take advantage of growing export of meat to Iran and Uzbekistan. UAE Price and quality are key potential drivers of sales.

Target Investor Mandate ▪ Able to provide an offtake contract ▪ A supplier of technologies

Source: Interntaional Trade Centre (ITC), economy.gov.kz, worldbank.org, stat.uz 10 Construction of a cattle feedlot

Project description The project aim is to expand existing feedlot from 3,500 cattle to 25,000 cattle of rapid fattening, followed by the production of meat, meat products and sausages to 4,500 tonnes per year. The construction of plant was started in 2014, as well as the introduction of advanced breeding technologies, keeping and fattening livestock. It is also planned to purchase fodder crops, which will be sown on the feed area for intensive fattening of livestock.

Project location Investment highlights

Upfront investment $19 MM

NPV $10 MM KAZAKHSTAN

KARAGANDA IRR 18%

Payback period 7 years CHINA

Market analysis Competitive advantage

I. China is a fast-growing and lucrative market. The price of Kazakhstani bovine meat is compatible Import volumes of frozen meat in China 2014-2017, thd tonnes with other importers to China and Russia. 689 Bovine meat (frozen) import prices of China in 2017, USD/tonne 573 79 New Zealand 467 52 106 Others Australia 5,400 91 70 196 Uruguay Uruguay 4,400 295 155 124 Brazil 4,300 40 110 Australia 33 123 104 89 Brazil Kazakhstan 3,900 132 149 171 198 Bovine meat (fresh and chilled) import prices of Russia, 2017, 2014 2015 2016 2017 thd USD/tonne II. Another perspective offtaker of bovine meat is Russia. Argentina 16,2 Uruguay 9,9 Bovine meat import in Russia, thd tonnes Brazil 9,0 101.9 103.5 4,3 92.1 Serbia 1,5% 4,7% 4,3 5,3% 92.0 Colombia 87.3 3,6 0,2% Belarus Kazakhstan 3,5 Kazakhstan Other countries Belarus

2013 2014 2015 2016 2017 Value proposition Target Investor Mandate This project allows to take advantage of ▪ Long cheap financial resources exporting to China while having cost ▪ Technologies competitive advantage within China’s importer countries.

Source: International Trade Centre (ITC), Ministry for national economy of the RK, Statistics Committee of the Ministry for national economy of the RK, UN Comtrade 11 Construction of feedlot and meat processing plant in West Kazakhstan

Project description

The project plan is to construct a meat processing plant with a capacity of 80-120 heads per shift and feedlot for 10 thousand heads per year. The initiator has a land plot of 37.5 hectares and a building for a plant in the village of Yanaykino, Zelenovsky district in the West Kazakhstan region. It is planned to purchase equipment for the meat processing plant, create a feedlot, purchase livestock and carry out construction and installation work. The planned market for products will be Kazakhstan and China. Project location Investment highlights

Upfront investment $17 MM

WK NPV $28 ММ Kazakhstan IRR 58% China Payback period 1 year

Market analysis Competitive advantage I. Import of frozen bovine (boneless) to China, thd. tonnes I. Subsidies that cover 25% of all capital expenditures and pay $ 0.55 per kg (per 1 kg +26% increase in live weight). Over the past 4 years Import of bovine in China II. Kazbia has a competitive advantage in price, grew more than 2.5 times, the proposed price of products is 17% lower than CAGR is 26% that of a competitor with the lowest price.

2013 2014 2015 2016 2017 Prices of the main importer countries in China for 2017, US dollars / tonnes II. Over the past 4 years, the average growth of the livestock population of cattle farms WK is 13%, Kazbia 3,500 which is a favorable condition for the project in the Uruguay 4,223 form of - a growing resource base. Argenitina 4,287 The dynamics of the amount of cattle in West Kazakhstan Brazil 4,415 farms, thousand heads New Zealand 5,475 +45% Australia 5,882

2015 2016 2017 2018 Target Investor Mandate Value proposition ▪ Long cheap financial resources ▪ Meat Distribution Channels to China Participation in this project will allow investor to ▪ Ability to provide an offtake contract export frozen beef to China and monetize the ▪ Experience in Chinese market growth of consumer demand for meat in China.

Sources: Statistics Committee of the Ministry for National Economy of the RK, International Trade Centre 12 Beef production

Project description: Market background: Construction of a site for fattening cattle and a • Export prospective - the total volume of meat processing complex imports of neighboring countries exceeded 944 thousand tones of beef in Investment amount: 2016. US$ 40 536 – 41 700 thousand • Competitiveness – The fact that beef is Production capacity: generally US$ 4.5/kg cheaper in production of 7,115 tons of beef per year Kazakhstan than in neighbouring Production: beef countries. Project location: • Low production cost – The availability of Implementation of the Project on an industrial cheap fodder and the cheapness of scale is possible in 11 regions of the Republic skilled labor. of Kazakhstan • Resources – availability of pasture land in Realization period: Kazakhstan more than 180 million 24 years, including 1 year of construction hectares for livestock and meat Target markets: Russia, China, Kazakhstan production. Suppliers: Kazakhstan cattle breeding farms • State support is provided for the entire production chain and takes the form of Consumers: the markets of China and investment preferences Russia; wholesale market of Kazakhstan

Key investment indicators

120,000 60%

49% 100,000 44% 50% 42% 39% 39% 38% 80,000 36% 40%

27% 28% 60,000 25% 30% US$ thousandUS$

40,000 16% 20%

20,000 10% 41,168 32,346 40,818 41,494 73,322 40,536 23,599 41,700 80,909 41,478 35,564 40,737 67,011 41,694 40,988 56,278 40,844 80,616 41,154 63,953 3,661 105,074 0 0% Akmola Aktobe Almaty West-Kaz. Zhambyl Karagandy Kostanay South-Kaz. Pavlodar North-Kaz. East-Kaz.

Investment amount NPV IRR, %

Prospective regions Quality indicators of the project

Export potential Climatic conditions Raw material availability

Akmola High Suitable Medium

Aktobe High Suitable High

Almaty High Favorable High

West-Kaz. High Suitable High

Zhambyl Medium Favorable Below average

Karagandy Medium Suitable High

Kostanay High Acceptable Medium

South-Kaz. Medium Favorable High

Pavlodar High Suitable Medium

North-Kaz. High Suitable Below average

East-Kaz. Regions with the best investment indicators High Favorable High

13 Mutton production

Project description: Market background: Construction of a site for fattening cattle and a • Demand growth - According to the OECD, meat processing complex global mutton consumption grew by an Investment amount: average of 150,000 tones in 2012-2016. US$ 31 669 – 33 389 thousand • Competitiveness – Mutton is US$ 3.5/kg Production capacity: production of 6,842 cheaper in Kazakhstan than in tons of marketable mutton per year neighbouring countries. Production: mutton • Low production cost – The availability of cheap fodder and the cheapness of skilled Project location: labor. Implementation of the Project on an industrial scale is possible in 11 regions of the Republic • Resources – availability of pasture land in of Kazakhstan Kazakhstan more than 180 million hectares for livestock and meat Implementation period: production. 24 years, including 1 year of construction • State support is provided for the entire Target markets: Russia, China, Kazakhstan production chain and takes the form of Suppliers: Kazakhstan cattle breeding farms investment preferences. Consumers: the markets of China and Russia; wholesale market of Kazakhstan

Key investment indicators

70,000 60%

60,000 46% 50%

50,000 34% 40% 32% 30% 40,000 25% 30% 20% 19% 19% 20% 17% US$ thousandsUS$ 30,000 15% 20%

20,000 10% 9,758 7,890 7,599

10,000 7,462 0% 4,884 30,660 30,149 30,900 37,983 30,425 23,091 30,803 33,384 30,458 30,178 31,044 59,771 30,398 29,879 30,435 18,188 1,256 0 -10% Akmola Aktobe Almaty West-Kaz. Zhambyl Karagandy Kostanay South-Kaz. Pavlodar North-Kaz. East-Kaz.

Investment amount NPV IRR, %

Prospective regions Quality indicators of the project

Export potential Climatic conditions Raw material availability

Akmola High Suitable Medium

Aktobe High Suitable High

Almaty High Favorable High

West-Kaz. High Suitable High

Zhambyl Medium Favorable Below average

Karagandy Medium Suitable High

Kostanay High Acceptable Medium

South-Kaz. Medium Favorable High

Pavlodar High Suitable Medium

North-Kaz. High Suitable Below average

East-Kaz. High Favorable High

Regions with the best investment indicators

14 Pork production

Project description: Market background: Construction of a site for fattening pigs and • Export prospects - Total pork imports into meat processing complex Kazakhstan exceeded 1,875 thousand Production capacity: production of 11 tonnes in 2016. thousand tons of commercial pork per year • Competitiveness – Production: commercial pork Prices for pork in Kazakhstan are approximately US$ 1.6 lower than in Project location: neighbouring countries. Implementation of Project on an industrial • Low production cost – Cheap fodder and the scale is possible in 4 regions of the Republic of relative low cost of skilled labor. Kazakhstan • Resources – availability of pasture land in Implementation period: Kazakhstan more than 180 million hectares 24 years, including 1 year of construction for livestock and meat production. Target markets: Russia, China, Kazakhstan • State support is provided for the entire Suppliers: Kazakhstani pig farms production chain and takes the form of Consumers: the markets of China and investment preferences. Russia; the wholesale market of Kazakhstan

Key investment indicators Payback period

100,000 60% 52% 90,000 Payback period, Discounted 50% Region 80,000 years payback period 70,000 36% 36% 40% 60,000 Akmola 3.6 4.4 50,000 30%

US$ thousandsUS$ 18% 40,000 Kostanay 3.0 3.4 20% 30,000 20,000 10% Pavlodar 5.0 10.3

10,000 7,329 39,426 48,302 39,789 88,427 39,808 39,282 46,459 0 0% North-Kazakhstan 3.7 4.5 Akmola Kostanay Pavlodar North-Kaz.

Investment amount NPV IRR, % Prospective regions Quality indicators of the project

Raw materials Export potential Climatic conditions availability (pigs)

Akmola High Favorable High

Kostanay High Favorable High

Pavlodar High Favorable Medium

North-Kaz. High Favorable High

Regions with the best investment indicators

15 Dairy processing plant

Project description: Market background: Construction of a modern dairy processing plant • Reliance on imports – Imports account for with a full production cycle approximately 20% of dairy products Investment amount: consumed in Kazakhstan. US$ 22 026 – 22 326 thousands • Insufficient milk processing – Only around Production capacity: 18% of all unpasteurized milk was actually Number of farms - 14 with 200 heads of milk processed in Kazakhstan in 2016. cattle, unpasteurized milk production – 17,864 • Production deficit – The country has a tones, unpasteurized milk processing – 11,769 shortfall of additional production capacities tones, pasteurised milk production – 4,206 of 175 thousand tones of sour milk, 60 tones, sour milk poduction – 2,337 tones, thousand tones of sour cream, 50 cheese – 88 tones, butter - 133 tones, cottage thousand tones of cottage cheese and cheese – 144 tones and sour cream – 245 tones other diary products. Project location: • Export potential – In additional significant Implementation of Project on an industrial scale domestic importance, dairy products have is possible in 10 regions of the Republic of great export potential Kazakhstan • Government support is provided along the Implementation period: entire production chain, and includes 24 years, including 1 year of construction investment preferences, concessional Target markets: Kazakhstan loans and subsidies to investors to reduce production costs, and tax and import Suppliers: representatives of collective farms, customs duty breaks. farm and households Consumers: retail food distribution networks for the population Key investment indicators

25,000 25%

23% 22% 20,000 21% 20% 19% 15,000 18% 17% 17% 17%

15% 10,000 14%

12%

5,000 3,616 10% US$ thousandsUS$ 6,671 22,271

- 7% 658 22,235 13,599 17,633 22,026 22,326 22,511 22,201 11,019 22,129 22,204 10,563 22,202 10,341 22,178 10,370 22,098 22,293 19,922 0 Akmola Aktobe Almaty West-Kaz. Zhambyl Karagandy Kostanay Kyzylorda South-Kaz. Pavlodar East-Kaz. 5% -5,000

-10,000 0%

Investment amount NPV IRR, % Quality indicators of the project

South- Region Akmola Aktobe Almaty West-Kaz. Zhambyl Karagandy Kostanay Kyzylorda Pavlodar East-Kaz. Kaz.

Domestic Below Medium Medium High Medium Medium Medium Medium High Medium High consumption average Below Below Below Oblast market Medium Medium High High Medium High Medium High average average average Below Below Milk price Medium High High Medium Medium High Medium High Medium average average Dairy products Below Below Medium High High Medium Medium Medium Medium Medium Medium price average average

Regions with the best investment indicators

16 Construction of a trout farm

Project description

The project provides for the organization of the activities of a commercial fish breeding enterprise in the basins along the Chilik river, , as well as in the cages at the Bartogai reservoir. The total volume of production will be 7 200 tonnes of trout fish per year. The company is the largest producer of rainbow trout in the Republic of Kyrgyzstan. The current capacity of production and processing of products is 600 tonnes of rainbow trout per year.

Project location Investment highlights

RUSSIA Upfront investment $16 MM

NPV $37 MM KAZAKHSTAN

ALMATY IRR 41% REGION CHINA

Payback period 5 years

Market analysis Competitive advantage I. Main exporter of trout fish products to The company is the largest producer of rainbow Kazakhstan is Russia with share ~98%. trout in the Republic of Kyrgyzstan, and it has Trout fish import and production in long-term offtake contracts with Russia for the Import of trout fish Kazakhstan, tonnes whole amount of produced trout fish. 496 products to Kazakhstan 16 declined ~2,4 times and Trout fish import prices of Russia vs prices of producer in 307 production increased Kazakhstan, USD/tonne 213 38 ~2,8 times during 480 41 2015-2017 269 Kazakhstan 4 000 172 Import Turkey 4 131 Production 2015 2016 2017 Belarus 4 596

II. Main exporters of trout fish products to Russia Armenia 5 721 are Armenia and Turkey with share ~95%. Iran 5 794 Trout fish import to Russia During 2015-2017, by country, thd tonnes 3.6 import of trout fish Kazakhstan has comparative price advantage 3.0 4% products to Russia among other importers in Russian market. 6% increased 2,4 times 2.2 48% 28% 5% 25% Others Turkey 70% 66% 48% Armenia Value proposition 2015 2016 2017 The project has the benefits of location, possibility Target Investor Mandate of efficient use of water resources for trout production, and potential for import Long cheap financial resources substitution and increase export volume.

Sources: Statistics Committee of the Ministry for national economy of the RK, International Trade Centre 17 18 Sturgeon farming Key investment indicatorsinvestment Key stores, restaurants, cafes, etc.) cafes,etc.) restaurants,stores, grocery (supermarkets, chains distribution Consumers roe of fertilized producers and Suppliers Target 24 Project of Kazakhstan Republic of the regions 14 in possible is scale industrial Location (bester) sturgeon Capacity US Investment markets foreign and in sale domestic and in fish of farmingcommercial Aof modern creation overview Project

Prospective regions Prospective US$ thousand 10000 15000 20000 25000 30000 5 5 000 $ years 0 Regions with Regions with 25,363 25,363 cage lines cage lines Akmola markets , 25 488 periodimplementation : : including 17% :

13 459 Implementation of the an on Project 1,000 1,000 tones companies specialized in fish food food in fish specialized companies : – amount: the most the representatives of main food food of main representatives Aktobe 25,525 25,525 25 420 18% :

15 791 subsequent with per per year Kazakhstan, : 1 favorable investment favorable investment indicators Almaty

25 525 of year construction 16% thousand

11 035 of chilled frozenand Atyrau 25 366 18%

Investment amount, US$ thousand 16 785 Russia, West-Kaz. 18% : Oblast Almaty 25 413 processing 15 766 Dzhambul China 25 387 18% 15 209

25 487

13 067 17% Kostanai East North Pavlodar South Mangistau Kyzylorda Kostanai Karaganda Dzhambul West Atyrau Almaty Aktobe Akmola NPV,US$ thousand Quality indicators of indicators Quality Project 25 425 18% • • • prerequisites Market • - - Kazakhstan -

- Kazakhstan 14 600 Oblast Kazakhstan Kazakhstan Kyzylorda figure will will figure to the According kg; of capita consumption of fish; consumerand importer Export demand domestic not cover does only reached sturgeon Production in Kazakhstan fishing for sturgeon place status,in is a endangered moratorium catches. Banindustrial on species is a priority in reducing reducing a in is priority species 2017 Programme Development for Industry State support from Kazakhstan producers is which countries manyfrom lost the of import products market Russian

25 432 18% 14 838 - 2021 Mangistau Water resources potential. potential. 18%

IRR, % 25 363 Medium Medium Medium Medium Medium Medium Medium Medium Medium Medium High Low Low Low 16 600 50 reach deficit farming South-Kaz. .

25 461 In the State Agricultural 17% 12 987 due to the China is the is largest China . favorable for favorable I : Pavlodar n kg of valuable fish of valuable 18% Favourable Favourable Favourable Favourable Favourable Favourable Favourable Acceptable Acceptable Acceptable Acceptable Acceptable Acceptable Acceptable OECD forecasts OECDforecasts this 2016 Climate 25 424 fish in in 14 897 312 North-Kaz. 2026. 2026. Due to Due to its in China in 18% sanctions has sanctions farmed . 25 455 whichtonnes, 14 019 development per imports. The East-Kaz. . 18% Medium Medium Market 25 487 High High High High High High High High High High High Low

14 173 42 is 15% 16% 16% 17% 17% 18% 18% 19% Trout farming

Project overview: Market prerequisites: A full cycle of trout production, including • Ban on industrial catches. In incubation of larvae, cultivation of commercial Kazakhstan, trout is bred in small fish in cage lines and subsequent processing quantities in cool mountain lakes in the of fish in the refrigeration facilities east and south of the country, which Investment amount: US$ 22,299 thousand prevents it from being caught for industrial purposes. Capacity: 1,450 tonnes of frozen and chilled rainbow trout per year • Production deficit. In 2016 farmed trout Location: Implementation of the Project on reached only 269 tonnes, which does an industrial scale is possible in 14 regions of not cover domestic demand. the Republic of Kazakhstan • Import replacements. Demand for trout Project implementation period: is mostly met by imports. In 2016, 24 years, including 1 year of construction Kazakhstan imported 524 tonnes of trout, which is double the amount Target markets: Kazakhstan farmed. Suppliers: companies specialized in fish food and producers of fertilized roe • State support. In the State Agricultural Industry Development Programme for Consumers: representatives of main food 2017-2021 farming of valuable fish distribution chains (supermarkets, grocery species is a priority in reducing imports stores, restaurants, cafes, etc.)

Key investment indicators

17% 17% 16% 16% 16% 16% 16% 16% 16% 12 000 15% 15% 15% 15% 18% 14% 16% 10 000 14% 8 000 12% 10% 6 000 8% 4 000 490 3 6% US$ thousand US$ 4% 2 000

6 409 6 206 9 952 9 048 9 735 7 019 6 367 7 010 8 662 9 448 5 841 7 966 6 736 7 2% 0 0% Akmola Aktobe Almaty Atyrau West-Kaz. Dzhambul Karaganda Kostanai Kyzylorda Mangistau South-Kaz. Pavlodar North-Kaz. East-Kaz.

NPV, US$ thousand IRR, %

Prospective regions Quality indicators of Project

Market Oblast Water resources Climate development Akmola Medium Acceptable Medium Aktobe Medium Acceptable Medium

Almaty High Favourable Medium

Atyrau Low Favourable Medium

West-Kazakhstan Low Acceptable Medium

Dzhambul Medium Favourable Medium

Karaganda Medium Acceptable Medium

Kostanai Medium Acceptable Medium Mangis- Kyzylorda Medium Favourable Medium tau Mangistau Low Favourable High

South-Kazakhstan Medium Favourable Low

Pavlodar Medium Acceptable Medium

North-Kazakhstan Medium Acceptable Medium

Regions with the most favorable investment indicators East-Kazakhstan Medium Favourable Medium

19 Production of sunflower oil

Project description The project plan is to build a modern oil extraction plant with a capacity of 310 thousand tonnes of sunflower seeds. As raw materials, sunflower seeds will be purchased from producers of the Kostanay region, with whom preliminary supply contracts have been concluded. The sales market for this project will be 2 own factories in Almaty and Karaganda, where it is planned to supply 80% of the produced sunflower oil. The remaining 20% of the production is planned to be exported to the markets of Uzbekistan and Kyrgyzstan. Project location Investment highlights

Upfront investment $114 MM KOSTANAY REGION NPV $95 MM

KAZAKHSTAN IRR 33%

CHINA Payback period 6 years

Market analysis Competitive advantage I. Russia accounts for more than 99% of total I. Guaranteed market. 80% of the production of the imports of sunflower oil. Eurasian Foods produced sunflower oil is planned to be used at Corporation is a major consumer of Russian their enterprises for the further processing of more sunflower oil. But the price of exporters is much products. higher than the cost of production of the initiator. II. Successful brand. The company has successful Import and export volumes of sunflower oil by Kazakhstan, thd tonnes product lines of “3 Zhelaniya”, "Shedevr", “Zlatye 83 72 61 gory", which are sold annually in volumes of more 35 10 15 than 120 000 tonnes of products. III. Import substitution. At the moment, the 2015 2016 2017 company buys crude sunflower oil from Russian Import Export producers. II. There has been a steady increasing trend in import of sunflower oil by both Kyrgyzstan and Import price and production cost of the initiator, Uzbekistan with the only competitor for USD/tonne Kazakhstan being Russia. Compound import volume of sunflower oil by Kyrgyzstan 797 and Uzbekistan, thd tonnes -19% 7 642 6 4 5 Kazakhstan 2 2 Russia

2015 2016 2017 Target Investor Mandate Value proposition

An investor should: The project will allow the investor to fill the ▪ Have an access to foreign markets production deficit in Kazakhstan and to monetize the ▪ Be a supplier of technologies guaranteed sales market. ▪ Be able to provide long-term investment

Sources: Statistics Committee of the Ministry for national economy of the RK 20 Production of flax oil

Project description The project plan is to construct an oil plant with a capacity of 20 thousand tonnes of linseed oil per year. It is planned to install 10 acceptance points, to build a railway deadlock. The initiator of project has in his ownership necessary territory for the plant. He also land area of 16 thousand ha used for growing flax and rape seeds. It is also planned to purchase flax from small farms of the North-Kazakhstan region, that is one of the leaders in production of flax seeds in Kazakhstan.

Project location Investment highlights

NORTH KAZAKHSTAN Upfront investment $20 MM

NPV $36 MM KAZAKHSTAN

IRR 33% CHINA Payback period 5 years

Market analysis Competitive advantage

Kazakhstan exports most produced flax oil to I. High average oil yield from flax seeds in North China. The amount of arable land is 831 thd ha in Kazakhstan Region - 50% of the total mass. Kazakhstan. There is a potential of exporting Usually the standard yield is 30-40%. product to Japan. II. Kazakhstan has a cost advantage among other Flax oil export, tonnes China’s import countries in exporting product to China. volume, tonnes Other countries 33 000 China`s oil import prices in 2017, USD/tonne China 17 400 +703% Other countries 1% 47% CAGR Kazakhstan 800 99% Kazakhstan Turkey 830 53% 270 2 400 7% 100% 93% USA 880 2017 2015 2016 2017 Belgium 950 Japan import, tonnes Japan`s oil import prices, USD/tonne 1 908 Germany 1 000 Other countries Belgium 1 200 39% Belgium USA 2 000 New 61% 11 700 Value proposition Zealand This project allows to take advantage of exporting Target Investor Mandate product having a cost advantage compared to ▪ Offtake large volumes of oil other importers. ▪ Be a supplier of technologies ▪ Long-term investments

Sources: Statistics Committee of the Ministry for national economy of the RK, UN Comtrade 21 Soya beans processing

Project overview: Market prerequisites: Construction of technologically advanced soya • Solid local demand growth. According to beans processing plant for food production Kazakhstan Ministry of Agriculture, the Investment amount: US$ 87,226 thousand annual protein deficit among the local population is more than 100 thousand Capacity: 25.5 thous. tones of soybean tonnes (based on a daily rate of 50 grams refined oil; 1.5 thous. tones of soy lecithin; per person). 20 thous. tones of fat-free soy flour; 10 thous. tones of soy concentrate; 20 thous. • Export potential. Kazakhstan exports one tones of soy isolate; 43.5 thous. tones of third of the soybean oil produced in the soybean meal country. In 2016, Uzbekistan was the largest importer (4,398 tonnes) followed Location: Almaty Oblast by China (578 tonnes). Russia has been Project implementation period: identified as one of priority markets to 24 years, including 1 year of construction export soya bean meal. China has the Target markets: China, Russia, Kazakhstan, biggest export potential as its annual soya Uzbekistan bean oil consumption exceeds 15 mln Suppliers: collective farms, farms, tonnes and is growing from year to year. households • Availability of raw materials. Over the past Consumers: producers of mixed fodders, 5 years, soya bean harvest has grown by food products, livestock farms, wholesale and 14%. Almaty Oblast is the leader in retail chains, public catering growing soya beans. • State support through the provision of investment preferences, preferential loans and subsidies, as well as tax and customs concessions on equipment imports.

Key investment indicators Revenue forecast

250 000 30% 25% 26% 26% 26% 26% Indicator Results 200 000 25% Investment amount, 20% 87,226 US$ thousand 150 000 15% Project NPV, US$ thousand 19,630 100 000 10% 56 173 56 US$ thousandUS$ IRR 16% 50 000 5% 119 631119 483125 451177 350233 Payback period, years 8.4 0 0% Year 2 Year 3 Year 4 Year 14 Year 24 Discounted payback period, 15.2 Revenue, US$ thousand EBITDA margin, % years Local partner Production in Almaty region Assar Group LLP was established in 2005. Its Almaty Oblast is the leader in oil seeds major activity is the export and import of production in Kazakhstan with market share grain products and all types of fuels and 97%. In this regard, the city of Taldykorgan, lubricants. Almaty Oblast was selected for Project Company has established sales distribution implementation. channels in Kazakhstan and abroad, mainly in In 2016 Almaty Oblast produced 12 thousand China and Russia. tonnes of soybean oil, which accounted for 79% of total oil production in the country.

22 Production of tomato paste

Project description The project plan is construction of a tomato processing plant, the final product of which will be tomato paste. The initiator of the project already has a land plot of 3 thd ha and building. The projected processing capacity is 1.5 thousand tonnes of tomato per day, which would provide 200-250 tonnes of tomato paste. Besides import phasing, the owners target at exporting the end product to CIS countries, China, and Europe.

Project location Investment highlights

Upfront investment $23 MM

NPV $63 MM KAZAKHSTAN

IRR 43%

KYZYLORDA CHINA Payback period 4 years

Market analysis Competitive advantage Kazakhstan imports more than half of its tomato Kazakhstan exports paste to China in limited paste consumption. Only 5-8% of production is amounts, but at a lower price than China’s main exported. The total harvest of tomatoes in suppliers – USA and Italy. Kazakhstan was ~740 thd tonnes in 2017. This presents a case for safe-haven hinter market. Import prices of China, USD/kg Tomato paste consumption in Kazakhstan’s export unit value, 0.99 Kazakhstan, thd tonnes USD/tonne 0.8 1.19 Russia 0.8 2017 18 14 32 0.8 0.8 0.76 Tajikistan 2.0 2016 13 10 23 0.7 0.9 China 0.8 2015 14 10 24 0.7 0.8 United States of America Kyrgyzstan 1.1 Italy Import Production 2015 2016 2017 Kazakhstan Tomato paste imports by Tomato paste imports by China, thd tonnes Germany, thd tonnes Similar situation in volumes potential is observed 7.9 8.0 5.5 0.4 253 in Germany, so that Kazakhstan has an 3.0 0.6 2.2 51 Others opportunity to engage in exports of tomato paste 0.41% 53 51 1.0 53 1.8 Kazakh- Spain to Europe. 5.4 stan’s 149 3.9 3.1 1 4 9 Italy share

2015 2016 2017 2017 Others Italy USA Value proposition Target Investor Mandate This project allows to take advantage of import • Supply of production technologies substitution in Kazakhstan and exporting • Access to external markets potential with cost advantage compared to other importers.

Sources: Statistics Committee of the Ministry for national economy of the RK, International Trade Centre (ITC) 23 Construction of a complex for the production of baby food

Project description The project plan is the construction of a complex for the production of baby food with a capacity of 25 000 tonnes per year (20 000 tonnes of baby food on the base of milk and 5 000 tonnes on vegetables). The implementation of the project involves 3 stages: 1 - construction of a new plant for the production of baby food; 2 - construction of a dairy farm for 2,4 thousand heads; 3 - creation of an irrigation array for 5 000 ha for the development of the resource base (with expansion up to 10 000 ha).

Project location Investment highlights

PAVLODAR Upfront investment $17 MM REGION NPV $15 MM КАЗАХСТАН KAZAKHSTAN IRR 28%

Payback period 5 years

Market analysis Competitive advantage One of the factors in the demand for baby food is a I. Own resource base: it is planned to build a farm steady increase in the birth rate. with 2.4 thousand heads for the production of the Number of newborns in Kazakhstan, thd people highest quality own milk. 399 398 401 373 381 387 390 390 II. High water flow: Irtish river basin has substantial amount of water and has average water flow of 9 bln m³ a year. High quality milk can be achieved due to Irtish river, which gives 2011 2012 2013 2014 2015 2016 2017 2018 advantage in terms of water supply in comparison with other producers. The demand for baby food based on milk and dairy products for children from 0 to 4 years reaches up Indicators of water resources availability in river basins, cubic to 180 thousand tonnes per year. Production in kilometers Kazakhstan is 11.5 thousand tonnes, which covers Irtish 26 less than 7% of the demand. Import, production and demand for baby food based on milk Balhash - Alakol 15 in Kazakhstan, thd tonnes/year 180.0 Ishim 3 0.4 11.6 Production Import 168.0 Potential demand

Target Investor Mandate Value proposition

Competency to transfer technologies The project allows to capitalize on the growing demand for milk-based baby food products and to meet unsatisfied domestic demand for products.

Sources: Committee on Statistics of the Republic of Kazakhstan, General Scheme for Integrated Use and Protection of Water Resources 24 Modernization of the starch plant for the production of citric acid

Project description The project plan is to modernize facility for deep processing of maize, with final product as citric acid. The planned capacity of processing citric acid is 10 000 tonnes per year. The company owns a land of 3 000 ha and currently processes maize to produce starch and molasses. Maize is mainly purchased from agricultural enterprises in Almaty region. Currently, the company has offtakes on existing product line with main consumers as Khamle and Rakhat.

Project location Investment highlights

RUSSIA Upfront investment $22 MM

NPV $33 MM KAZAKHSTAN

ALMATY IRR 31% REGION CHINA Payback period 6 years

Market analysis Competitive advantage

The share of import of citric acid consumption in Domestic price of citric acid will be 30% cheaper most CIS countries is ~90%. Raw material for citric in comparison with import price of China, which acid is maize, which has annual increase in has a status of cheapest exporter of product to CIS production of ~5% in Kazakhstan. countries. The company already has offtakes with large Import of citric acid, thd tonnes 44.6 Kazakhstan confectionary companies. ~90% of citric 4.9 acid in CIS Import price vs domestic price in 2017, USD/tonne countries is 39.7 imported from China China 1 046 3.0 2.0 0.0 0.4 2.0 2.6 -30% Others China Uzbekistan Kazakhstan Russia Kazakhstan 732

Production of maize in Import prices in Kazakhstan Kazakhstan, thd tonnes in 2017, USD/tonne

734 762 785 664 China 1 046 Value proposition Germany 1 689 This project allows to take advantage of import Russia 1 797 2014 2015 2016 2017 substitution on a market, while having cost competitive advantage. Target Investor Mandate

• Supply of production technologies • Access to external markets

Sources: Statistics Committee of the Ministry for national economy of the RK, UN Comtrade 25 Deep processing of wheat grain

Project description: Market background: Construction of a plant for processing wheat • Growing domestic demand - the total grain into valuable food and chemical products nationwide consumption of these Investment amount: products exceeded 118,800 tones in US$ 51,552 – 103,624 thousand 2016; Capacity: Processing of 150 to 300 тыс. • Import substitution - the country does thousand tons of grain per year not have own production facilities for deep processing of wheat; Project location: The Project can be implemented commercially in • State support - investment preferences, 6 regions of the country soft loans, subsidies, tax and customs privileges; Realization period: 24 years, including construction period • Low production cost is achieved due to the availability of cheap raw materials Target markets: Kazakhstan (the annual gross wheat harvest of 14-15 Suppliers: Kazakhstan grain companies and million tones makes Kazakhstan one of traders the world's major wheat producers). Consumers: meat processing and cattle breeding enterprises, manufacturers of textiles, medical preparations, bread, bakery and confectionery products Key investment indicators*

32% 32% 90,000 31% 30% 29% The volume of output, tons 28% 30% 80,000 150,000 tons of 300,000 tons of Production wheat grain wheat grain 70,000 25%

60,000 20%

2nd grade flour 20,000 40,000 thousandsUS$ 50,000 Gluten 10,000 20,000 15% 40,000 Modified starch 10,000 20,000 51,673 82,577 51,818 70,447 51,632 84,830 51,731 72,623 51,612 86,742 51,552 80,627 30,000 10% Glucose 45,000 90,000 Akmola Almaty Karagandy Kostanay Pavlodar Noth Kaz. Oblast Oblast Oblast Oblast Oblast Oblast Starch B 15,000 30,000 Investment amount, US$ thousands NPV, US$ thousands IRR, % Mixed feed 150,000 300,000 Prospective regions Quality indicators of the project

The level of access to raw Market density Transportation expenses Competitors materials

High + Low Absent Oblast Akmola Akmola

High - High Present Oblast Almaty Almaty

Average + Low Absent Oblast Karagandy Karagandy

Average + Low Absent Oblast Kostanay Kostanay

Average + Low Absent Oblast Pavlodar Pavlodar

Average + Low Absent Oblast Noth Kaz. Kaz. Noth

Regions with the best investment indicators *at a plant capacity of 150,000 tons

26 Potato starch production

Project description: Market background: Construction of an industrial complex for processing • Import substitution – the starch market in potatoes and production of starch and protein, to be Kazakhstan shows high dependence on used as a livestock feed import and growing demand. Annual Investment amount: consumption of starch and starch products US$ 46,172 – 46,205 thousand amounts to 49 thousand tonnes; Production capacity: over 10 thousand tones of • No production of potato starch exists in potato starch and 8.8 thousand potato protein Kazakhstan; Project location: • Potential for exporting – import growth in implementation of Project on an industrial scale is neighbouring countries opens up possible in 2 regions of the Republic of Kazakhstan opportunities for taking over a target niche in the starch markets of China, Implementation period: Russia and Uzbekistan; 24 years, including 1 year of construction • Availability of raw materials – low Target markets: Kazakhstan, China, Russia, production cost of products can be Uzbekistan achieved due to existence of cheap raw Suppliers: representatives of collective farms, farm materials in sufficient amounts (gross and households potato harvest in Kazakhstan amounted to Consumers: food industry, pulp and paper 3,546 thousand tonnes in 2016). industry, textile industry, pharmaceutical industry, chemical industry Revenue forecast Key investment indicators 60 42% 50 Discounted 40% 40% 40% Investment Payback NPV, US$ IRR, payback 40% 40% Region amount, US$ period, 40 40% thousand % period, thousand years 39% 39% 39% years 30 38% 38% US$ millionsUS$ 20 38%

Karagandy 10 46,205 19,365 23% 4.9 8.5 Oblast 26 28 30 40 51 0 36% Year 2 Year 3 Year 4 Year 14 Year 24 Pavlodar 46,172 21,986 24% 4.8 7.9 Oblast Revenue, US$ millions EBITDA, % (Pavlodar Oblast) EBITDA, % (Karagandy Oblast) Quality indicators of the project

Karagandy Pavlodar • Potential for exporting. High export Indicator Oblast Oblast potential of Pavlodar Oblast is determined by the proximity of export markets (Russia Potential for exporting Medium High and China). • Availability of raw materials. By the end of 2016, the bulk of the entire potato crop Climatic conditions Favorable Favorable was in the Pavlodar Oblast (11.5%). • The climatic conditions of the Karaganda Market in a region Medium Medium Oblast and Pavlodar Oblast are the most favorable in the RK for growing potatoes.

Availability of raw High High materials

27 Sugar beet processing

Project description: Market background: Construction of an industrial complex to • Product demand– high sugar consumption of process sugar beet and raw sugar, and to 20.2 kg per capita. produce sugar • Export potential – total imports in 2016 Investment amount: amounted to 734 thousand tonnes US$ 216,733 – 217,030 thousand • Raw materials base – Abundance of high- Production capacity: 200 thousand tones of yield beet-farming land, which reduces the sugar per year cost of production and labour costs. Project location: North Kazakhstan Oblast or • State support is provided along the entire Dzhambul Oblasts production chain and takes the form of Implementation period: investment preferences, cheap loans and 24 years, including 1 year of construction investor subsidies, and tax and import customs duty exemptions. Target markets: Kazakhstan, China, Russia Suppliers: representatives of collective farms, farm and households Consumers: food industry, pulp and paper industry, textile industry, pharmaceutical industry, chemical industry.

Revenue forecast

Key investment indicators 350 25% Discounted 20% Investment Payback 20% 19% NPV, US$ IRR, payback 300 18% 19% Region amount, US$ period, 20% thousand % period, thousand years 250 years 200 18% 18% 17% 15% 16% 17% 150 Noth 10%

Kazakhstan 216,733 64,384 15% 8.9 16.6 millionsUS$ 100 Oblast 5% 50 78 164 171 228 289 Zhambyl 217,030 37,988 14% 9.7 20.8 0 0% Oblast Year 2 Year 3 Year 4 Year 14 Year 24

Revenue, US$ millions EBITDA, % (Zhambyl Oblast) Prospective regions EBITDA, % (Norh Kazakhstan Oblast)

North Kazakhstan Zhambyl Zhambyl Oblast: Indicator Oblast Oblast • Market in the region: sugar production levels (388 thousand tones in 2016) one of the highest in the country in 2016; Potential for exporting High Medium • Raw material base: the highest gross beet harvest after Almaty Oblast (116 thousand Climatic conditions Favorable Favorable tonnes in 2016). North Kazakhstan Oblast: • Climatic conditions: beet yield with a sugar Market in a region Medium High content of 15-17% could reach 50-55 tones per hectare (average yield in southern

Availability of raw regions is 25-27 tones); Medium High materials • Raw material base: the gross beet harvest amounted to 11 thousands tones in 2016. Regions with the best investment indicators

28 Construction of a greenhouse complex

Project description

The project plan is construction of a greenhouse complex of 12 ha located in Uralsk, West Kazakhstan region. The complex will allow to grow up to 4 400 tonnes of cucumbers and 3 400 tonnes of tomatoes per year. At the moment the company already has a complex of 12 ha with capacity of production up to 7 200 tonnes of vegetables located in Almaty city. The greenhouse complex will be built according to the Dutch technologies of the company “Dalsem”. The company is planning to export their product to Russia.

Project location Investment highlights

Upfront investment $39 MM RUSSIA WEST KAZAKHSTAN REGION NPV $14 MM KAZAKHSTAN

ALMATY IRR 16% REGION

Payback period 8 years

Market analysis Competitive advantage I. Kazakhstan had ~4% of market share of Russian 1. Long-term offtake contracts: company has import of cucumbers in 2017. During 2015-2017, long-term offtake contracts for the whole amount of Cucumbers import to Russia Kazakhstan’s export of produced vegetables, which exports to Russia. by country, thd tonnes cucumbers to Russia 146 increased ~7 times 2. Price advantage: Kazakhstan has comparative 1% 134 116 4% Kazakhstan price advantage among other importers in Russian 32% 2% 20% 15% 17% 20% 19% Others market. 14% 21% 19% China Import prices of vegetables to Russia, 2017, USD/tonne 36% 42% 38% Belarus Top-3 suppliers of tomatoes (share ~70%) and Kazakhstan Iran 2015 2016 2017 Azerbaijan 988 II. Kazakhstan had ~1% of market share of Russian Kazakhstan 1 004 Morocco 1 232 import of tomatoes in 2017. During 2015-2017, China 1 244 Tomatoes import to Russia Kazakhstan’s export of by country, thd tonnes tomatoes to Russia Top-3 suppliers of cucumbers (share ~75%) and Kazakhstan 665 increased over 30 times 0% 516 Belarus 834 462 Kazakhstan 1% 1% Kazakhstan 1 071 64% 26% Others 32% China 1 226 21% 27% Morocco 13% 21% Iran 1 241 19% 13% 30% China 10% 21% Azerbaijan 2015 2016 2017 Target Investor Mandate Value proposition Long cheap financial resources preferably in This project allows to capitalize export of vegetables Russia’s ruble through having competitive export prices.

Sources: Statistics Committee of the Ministry for national economy of the RK, International Trade Centre 29 Expansion of a greenhouse complex

Project description

The project plan is construction of a greenhouse complex of 8ha, which will grow up to 5 000 tonnes of tomatoes. At the moment the company already has a complex of 12 ha with capacity of production up to 7 200 tonnes of vegetables located in Almaty city. The greenhouse complex will be built according to the Dutch technologies of the company “Dalsem”. The company also has established offtakes and cooperates with companies such as “Magnum”, “Lime Group” and others.

Project location Investment highlights

Upfront investment $26 MM RUSSIA

NPV $12 MM KAZAKHSTAN

ALMATY IRR 18% REGION CHINA

Payback period 8 years

Market analysis Competitive advantage I. Main exporters of tomatoes to Kazakhstan are Company has long-term offtake contracts for the Uzbekistan and China, with aggregate volume whole amount of produced vegetables, 50% of ~90% of total import in 2017. which exports to Russia and 50% goes to internal Tomatoes import to Kazakhstan Average import prices of market of Kazakhstan. by country, thd tonnes tomatoes, USD/tonne 80 Company possesses greenhouse complex of 5th 66 10% generation with most developed technologies. 7% 54 China 633 41% 42% 18% Uzbekistan 772 17% Imported tomatoes price in Russia vs prices of producer in 51% 65% 49% Kazakhstan, USD/tonne Others Uzbekistan Azerbaijan 9 8 8 2015 2016 2017 China II. Kazakhstan had ~1% of market share of Russian Kazakhstan 1 004 import of tomatoes in 2017. Morocco 1 232 During 2015-2017, Tomatoes import to Russia by Kazakhstan’s export of China 1 244 country, thd tonnes tomatoes to Russia 665 increased more than 30 10% Kazakhstan has comparative price advantage 516 times 13% 462 among other importers in Russian market. 13% 21% 30% Azerbaijan 19% 21% China 64% 27% 21% Morocco 33% 28% Others Value proposition 2015 2016 2017 Target Investor Mandate This project allows to capitalize on implementation of modern greenhouse complex. Also, it allows to Long cheap financial resources provide import substitution and export vegetables through having competitive export prices.

Sources: Statistics Committee of the Ministry for national economy of the RK, International Trade Centre 30 Construction of commercial greenhouse

Project description: Market background: Creation of an integrated business for • Production deficit – the climate in cultivation of tomatoes and cucumbers in a Kazakhstan means there is a significant closed ground off-season, which due to the lack of Investment amount: greenhouses, results in significant US$ 25,639 – 25,779 thousands vegetable shortages. Production capacity: 5,940 tons of • Export potential – in 2016, Russian border cucumbers a year, 7,050 tons of tomatoes a town tomato and cucumber imports year amounted to an estimated 18,535 tones. Project location: implementation of Project • State support is provided for the entire on an industrial scale is possible in 3 regions production chain and takes the form of of the Republic of Kazakhstan investment preferences, cheap loans and investor subsidies, and tax and import Realization period: customs duty exemptions. 24 years, including 1 year of construction Target markets: Kazakhstan, Russia Suppliers: producers of fertilizers, seeds and mineral cubes for the further cultivation of vegetable crops Consumers: retail food distribution networks for the population

Revenue forecast* Key investment indicators 50 000 32% 32% 32% NPV, Payback Discounted Investment US$ IRR, period, payback 45 000 32% Region amount, US$ thousa % years period, 40 000 31% thousand 31% nd years 35 000 . 30 000 31% 31%

Aktobe Oblast 25,693 38,064 33.7% 4,0 4,8 thous 25 000 31% 31% 20 000 31% South US$ 15 000 Kazakhstan 25,779 24,981 27.9% 4,4 5,7 31% Oblast 10 000 5 000 30% Pavlodar Oblast 25,751 31,305 29.1% 4,4 5,7 241 21 622 22 724 23 488 33 015 44 0 30% Year 2 Year 3 Year 4 Year 14 Year 24 Revenue, US$ thous. EBITDA margin, % Quality indicators of the project • Export potential is determined by the Export Climate Market of Market of Region potential conditions tomatoes cucumbers proximity of export markets, such as Russia market. Aktobe Oblast and Pavlodar Oblast are located in the Aktobe Oblast High Suitable High Medium immediate vicinity of Russia; • The "Climate conditions" column grades

South each oblast’s weather in terms of Kazakhstan Low Favorable Low Low applicability for greenhouse construction Oblast and tomato and cucumber cultivation South-Kazakhstan Oblast has the most Pavlodar Oblast High Acceptable High High favorable climate.

Regions with the best investment indicators *Aktobe Oblast

31 MINING AND SMELTING INDUSTRY

32 Construction of the mining and metallurgical facility to mine and process tin ores

Project overview: construction of the mining and Market assumptions: metallurgical facility to process 2 mln tonnes of ore at Available raw materials base – The Syrymbet the Syrymbet deposit (“Project”). deposit is Kazakhstan’s only and world’s biggest Processing capacity: 2 mln tonnes of ore a year undeveloped deposit of explored and classified tin Raw materials: tin, copper and fluorite ore reserves, according to the 2012 JORC Code. Production: Import substitution and potential export – Tin is not produced in Kazakhstan, and the country is Main products: totally dependent on imports. Tin is imported from 1) Tin concentrate - an average of 3,500 tons of tin in Indonesia, Russia, Belgium, Poland and China. The concentrate per year; 2) Tin sublimates - an average latter is the largest tin consumer and accounts for of 4,900 tons of tin in concentrate per year. 48% of the overall import of tin products in the By-products: world. 1) Copper concentrate - an average of 2,000 tons of Rise in prices and demand - The world prices for copper in concentrate per year; 2) Fluorite tin and tin concentrate are currently rising due to concentrate - an average of 173,000 tons of fluorite in the increasing demand for this product as a result of concentrate per year stabilization of the world economy. Initiator: Tin One Mining JSC is operating based on a 30-year subsoil use license in Kazakhstan dated Sept. 23, 1998 (5 yrs of exploration and 25 yrs of mining) Location: North-Kazakhstan Oblast Sales market: Kazakhstan, China, Russia

Key investment indicators Project profitability Indicator Result 350 74% 80% 68% Project implementation period, years 15 300 57% 70% 54% incl. investment stage, years 2 250 51% 60% operational stage, years 13 50% 200 285,136 mln Investment, US$ thousands 40% Project NPV, US$ thousands 380,017 150

US$ 30% Project NPV, US$ thousands (without 16% 276,642 100 accounting for tax preferences) 20% 50 IRR, % 41.2% 10% 242 324 272 302 225 45 EBITDA return, % 51% 0 0% Year 3 Year 4 Year 5 Year 6 Year 7 Year 15 Payback period, years 4.7 Discounted payback period, years 5.3 Revenue, US$ mln EBITDA margin, % Project implementation location: Deposit reserves North-Kazakhstan Oblast Ore, Tin One Mining JSC’s Tin, Category thousand Tin, % plant tonnes tonnes The Syrymbet deposit Measured 46,552 0.46% 214,139 Astana Indicated 9,164 0.33% 30,241 Probable 68,945 0.37% 256,632 Total 124,661 0.40% 501,012

Almaty

KAZAKH INVEST: October 2018 Investment proposal 33 Development of bulk rare earth concentrates production facility in Akmola Oblast

Project overview: This investment project Market assumptions: provides for the performance improvement and the Export potential There is still potential capacity to increase of absolute production capacity of the bulk export the product to nearby markets – Russia and rare earth concentrates production facility (BREC) China. For the last 5 years, annual import of rare through the upgrade of equipment currently used earth compounds averaged 1,243 tonnes in Russia for production of BRECs in . and 12,221 tonnes in China. Оutput capacity: Available sales channels in Kazakhstan BRECs 4,000 tonnes of BRECs for the entire Project will be purchased by Irtysh Rare Earth Company duration LLP, which produces the following rare earth products: various compounds of lanthanum, cerium, Commercial product: BRECs in the form of praseodymium, neodymium, samarium, gadolinium, calcined oxalates polishing powders based on pure cerium oxide. Project location: Industrial Zone No. 6, Further growth of demand for rare earth Stepnogorsk, Akmola Oblast. (Processing); metals According to experts, the Cumulative Annual industrial zone of , Mangistau Oblast (Mining) Growth Rate (CAGR) of the world REM market will Consumer: Irtysh Rare Earth Company LLP reach 9.35% until 2021. (agreement of intent to supply the whole volume of products to be produced)

Key investment data Project profitability 30,000 40% Index Results 25% 27% 27% 21% 30% 25,000 Project implementation period, years 5 20% incl. investment stage, years 1 20,000 10% operational stage, years 4 0% 15,000 Investment amount, US$ thousands 11,118 -23% -10%

US$ thousands US$ 10,000 -20% Project NPV, US$ thousands 14,161 -30% IRR, % 116.1% 5,000 -40% 2,637 EBITDA returns, % 15% 22,917 23,857 24,300 24,572 0 -50% Payback period, years 1.6 Year 1 Year 2 Year 3 Year 4 Year 5 Discounted payback period, years 1.7 Revenue EBITDA margin, %

Project location: Stepnogorsk, Akmola Oblast Product characteristics Index REO/TREO*, % TREO, % 100 Lanthanum oxide 7.7 Cerium oxide 18.2 Stepnogorsk Praseodymium oxide 3.5 Neodymium oxide 12.5 Astana Samarium oxide 3.2 Industrial zone Europium oxide 0.9 of Aktau Gadolinium oxide 4.8 Terbium oxide 0.9 Dysprosium oxide 5.3 Holmium oxide 1.1 Almaty Erbium oxide 2.8 Thulium oxide 0.4 Ytterbium oxide 2.3 Yttrium oxide 36.1 Lutetium oxide 0.4

KAZAKH INVEST: August 2018 Investment Proposal 34 Production and processing of rare- metal ore at the Drozhilov field

Project overview: Market assumptions: Produce and process rare-metal ore at the Drozhilov Growing demand for rare metals. Over the next field in Kostanai Oblast decade, global demand for tungsten is predicted to Commercial product and production output for increase as its use is strongly linked to the the entire Project period: development of the processing industry and vehicle production. Lithium consumption in battery • lithium concentrate – 2,490 thousand tonnes production has increased significantly in recent (lithium – 149 thousand tonnes) years as rechargeable lithium batteries are being used more and more often in portable electronic • molybdenum trioxide – 176.6 thousand tonnes devices and electric car batteries. (molybdenum – 118.3 thousand tonnes) Rising metal prices. In the last three years, the • artificial scheelite – 62.26 thousand tonnes lithium oxide price has increased 2.5 times due to (tungsten trioxide – 48.6 thousand tonnes) growing demand. Average prices for molybdenum Initiator: JV Kazakhstan-Russian Ore Company LLP trioxide grew 20% in the same period. Prices for has a contract in place to explore and produce tungsten derivatives are currently growing. The lack molybdenum and tungsten at the Drozhilov field of available financing and low metal content in ore limit supply and act a stimulus for further rare-metal Project implementation location: Kostanai price rises. Oblast, Denisov District Potential markets: Russia, China Raw materials base. Kazakhstan has the highest tungsten reserves in the world (63% of global reserves). It also has significant molybdenum and lithium reserves.

Key investment data Project economics

Index Results 610,000 41% 45% Project implementation period, years 26 36% 40% 510,000 including the investment stage, years 1 35% 410,000 26% 30% operational stage, years 25 24% 25% 310,000 550,063 Investment, US$ thousands 88,556 20% 13% Project NPV, US$ thousands 332,269 210,000 450,777 15% 46.6% 76,662 10% IRR, % thousands US$ 110,000

11,630 302,916 5% EBITDA returns, % 30% 10,000 0% Payback period, years 6.6 Year 2 Year 5 Year 7 Year 20 Year 26 Discounted payback period, years 7.0 Revenue EBITDA margin, %

Project location: Kostanai Oblast Drozhilov field reserves

Metals, thousand Content, % Reser- tonnes ves, Astana mln tonnes Drozhilov field Mo W Li Mo W Li

Pro- 140 263 64.3 0.19 0.05 Almaty ven

Calcu- 131 78 88.3 121 0.06 0.03 0.45 lated

Esti- 300 150 150 0.05 0.05 mated

KAZAKH INVEST: August 2018 Investment Proposal 35 Construction of Tymlai Mining, Chemical and Metallurgical Complex

Project overview: Market prerequisites: Construction of a mining, chemical and metallurgical Stable demand. High historical production growth complex for the production of derivative products rates and strategic importance for the further development of industries using steel and titanium from processing of titanium magnetite ores. The dioxide as raw materials create a steady demand for complex consists of two production facilities: a the products produced within the Project. mining and processing plant at the Tymlai ore field Import substitution and export. The lack of and a chemical and metallurgical plant in the SEZ production of titanium dioxide in Kazakhstan, and a Pavlodar. small amount of production in the CIS, creates Production volume: prospects for sales. Regarding alloyed types of steel, the volume of imports for the last 5 years were in 1) Titanium dioxide – 601 thousand tonnes per average 828 thousand tonnes in the Russian year; 2) Special steel – 1956 thousand tonnes per Federation and 2,627 thousand tonnes per year in year; 3) Silicon dioxide – 76 thousand tonnes per the PRC. Moreover, currently there are forward year. contracts for the supply of special types of steels Products: 1) titanium dioxide pigment; 2) special being already signed. steel grades; 3) silicon dioxide; Initiator: TENIR-Logistic LLP Location: Zhambyl Region, Kordai District; SEZ Pavlodar Potential customers: Kazakhstan, nearby countries

Key investment indicators Project profitability Indicator Result 4,000 56% 70% 55% 56% 56% 56% Project implementation period, years 29 3,500 54% 60% 3,000 incl. investment stage, years 7 41% 50% 2,500 operating stage, years 26 40% 2,000 Investment amount, $US thousands 2,585,904 30% 1,500 Project NPV, $US thousands 5,465,840 US$ millions US$ 1,000 20% IRR, % 46.4% 333 500 339 10% EBITDA margin, % 57% 1,735 1,778 3,638 3,714 2,091 0 0% Payback period, years 7.5 Year Year Year Year Year Year Year Discounted payback period, years 8.1 4 5 6 7 8 9 29

Revenue, US$ mln EBITDA margin, %

Location of project implementation: Kordai Ore field reserves district of Zhambyl region; SEZ Pavlodar Industrial reserves Prognosed resources Name of the ore (mln tonnes) (mln tonnes) deposit C1 C2 P1 P2 SEZ Pavlodar Tymlai 226 Sarysai 100 60 44 Astana Akdala (South) 70 40 20 Akdala (North) - - 30 229 Akterek - - 10 47 00km Total: 396 100 104 276 13 Total C1+C2+ 876 +P1+P2 Almaty Tymlai ore field

KAZAKH INVEST: August 2018 Investment proposal 36 Development of Batalinskoye and Krasnoarmeyskoye copper ore deposits

Project description: Market conditions: The Project involves construction of copper ore Large copper reserves. Kazakhstan holds the 6th beneficiation industrial plant at Batalinskoye and place in the world for its copper reserves of 36.6 million tonnes, which accounts for 4.7% of global Krasnoarmeyskoye deposits that are located in reserves. Kostanay Oblast. High demand. It is expected that refined copper Product: copper concentrate (incl. subsequent demand will have a constant growth for the processing at Kazzinc LLP’s plant in Ust- following years because copper is the major factor in Kamenogorsk Oblast, which will then be sold to end economic activity and modern technological society. customers). The expected demand growth for the refined copper will reach 2.99% in 2018 and 2.15% in 2019. Initiator: Mystau LLP. Price growth. Global market prices for refined Location: Denisovsky district, Kostanay Oblast. copper demonstrate increasing dynamics related to Potential markets: non-ferrous metal processing increased demand for that product as a result of plants in CIS, China and Europe. global economic stabilization. According to the forecasts, a moderate increase in copper prices is expected during the following years: 2020 – US$ 6833, 2021 – US$ 6849 per tonne. Export potential. The trade deficit in products such as copper sheets, strips and tapes indicates the import substitution potential. Also, Kazakhstan has an opportunity to increase its exports to China and neighbor countries.

Key investment indicators of the Project Project profitability

400,000 60% Indicator Results 50% 350,000 43% 44% 45% 50% Project implementation period, years 17 41% 300,000 39% incl. investment stage, years 2 40% 250,000 29% operational stage, years 15 200,000 30% Investment amount, US$ thousands 298,600 150,000 110,705

US$ US$ thousands 20% 163,693 Project NPV, US$ thousands 100,000 56,758

21,756 10% IRR, % 22.5% 50,000 253,937 329,443 300,074 368,432 EBITDA margin, % 31-53% - 0% Payback period, years 7.9 Year 3 Year 4 Year 5 Year 7 Year 9 Year Year 10 17 Discounted payback period, years 10.3 Revenue, US$ thousands EBITDA margin, %

Project location: Denisovsky district, Kostanay Oblast Deposit reserves

Balance Batalinskoe and Indicator Unit reserves by Krasnoarmeyskoe deposits С2 category Astana Batalinskoye Copper thous. Tonnes 561.7

Ore thous. Tonnes 130,899.7

Content % 0.43-0.45 Krasnoarmeyskoye Copper thous. Tonnes 203.9 Almaty Ore thous. tonnes 85,050.20 Content % 0.24

KAZAKH INVEST: August 2018. Investment proposal 37 Development of iron ore deposits in Chumekskaya field in the East Kazakhstan Oblast

Project description: Market assumptions: The project involves completion of exploration works High demand. Demand for iron ore, primarily due at the Chumekskaya iron ore field in East to the demand for steel, directly reflects the Kazakhstan Oblast, with subsequent extraction and development trends of the world economy. sale of iron-bearing ores. According to estimates from Commercial product and annual volume of The Eсonomist Intelligence Unit («EIU»), in the production: foreseeable future, steel production will grow by 4% in 2019 amounting to 1692 million tonnes. iron ore – 5,691 thousands tonnes Export potential. Since the production of iron ore Based on preliminary research data, the given ore in the country fully provides domestic demand for deposits stand out for the high quality and this product, the main share of pellets and compliance with the most stringent technological concentrate, produced in the republic, is supplied requirements of metallurgical enterprises. This beyond its limits. At the same time, the key sales means that there is no need for additional markets (90%-99% are in Russia and China. Being technological processing. After extraction and ore- the largest producers of iron ore, China and Russia preparation, the ore will be ready for sale. are also considered as the world’s largest consumers Initiator: Lacus Mining LLP and imports, since these countries occupy a leading Location: Kurchumsky district, East Kazakhstan position in the production of steel all over the world. Oblast In 2017 total annual imports of iron ore of China and Russia amounted to 1084 million tonnes. Consumer market: ferrous metal processing plants of China and Kazakhstan.

Key investment indicators Project Profitability

Index Results 800,000 70% 56% 58% Project implementation period, years 36 700,000 55% 53% 60% Including the investment stage, years 6 600,000 46% 50% Operational stage, years 30 500,000 816,792 40% Investment, US$ thousands 400,000 242,629 30% Project NPV, US$ thousands 300,000 IRR, % 19.2% 20% US$ thousands US$ 200,000 EBITDA returns, % 54% 100,000 10% 375,491 487,557 544,418 668,761 640,617 Payback period, years 9.9 0 0% Discounted payback period, years 14.0 Year 7 Year 15 Year 20 Year 30 Year 36 Revenue EBITDA margin, % Project location: Kurchumsky district, East Kazakhstan Oblast Proprietary estimation of field reserves Ore, Iron Type of reserves million content, % tonnes Chumekskaya field Astana Martite, magnetite ores 179 62.5

Disseminated mineralization 317 62.5

Reserves were estimated according to National Recourses Committee standards on the basis of geophysical works carried out Almaty in 2017 and historical exploration data from 1965. A report on geophysical works at Chumekskoye field was prepared by ITSETI LLP (ТОО ИЦЭТИ) in November 2017.

KAZAKH INVEST: September 2018 Investment proposal 38 Potential marketsPotential to the Ai close town, relatively and in located Location at Airight processing copper exclusive Initiator EW processing extraction Productionprocess Capacity than Product of 5000 production copper cathode towards be will targeted whichplant industrial processing The descriptionProject East locationProject K Discounted payback period Payback period EBITDA returns, IRR Project NP Investment Project implementationperiod August ey . Incl , % Project considers the the Project considers - 99,99%). 99,99%). investment indicators ofProject indicatorsthe investment Kazakhstan Oblast Kazakhstan . 2018. Investment stage tonnes : : : : Operational V cathode copper copper cathode Urjar – , AK East , 5000 – US$ thousands US$ US$ US$ thousands open flotation andleaching flotation heap , Minerals - years Indicator % per per year. District, km.away40 District, from TheOblast. be Plant will Kazakhstan tonnes : - pit; pit; : stage : : Kazakhstan, Russia and China.and Russia Kazakhstan, LLP , of cathode copper per year. of copper cathode , years , years construction construction ( Astana years pure copper of nocopper pure – , years the owner of the owner the district copper Ai - - Karaaul Karaaul with with a plant for cathode copper production copper cathode plant for - of copper ore ore of copper Karaaul - Construction of hydrometallurgical Construction , ore ore and SXand capacity capacity Results 2 25 45 Ayagoz Almaty deposit. 4 4 4. 3 10 11 less less 1 , , , 1 .9 396 643 6% Investment proposal % 4 . KAZAKH INVEST: KAZAKH - “ InterregionalonCommissionreserves Ai expected during the following the following during expected is prices copper in a moderate forecasts, increase stabilization. economic global for that as demand a of result product increased to related dynamics demonstrate increasing copper growth Price 2.15% and2019. 2.99% reach2018 in in will copper for expected The demand the growth refined society. technological modern and activity economic the factor major in is copper because years following a for the have growth demand constant will Highdemand reserves. million of 36,6 reserves forcopper the world its in place copperLargereserves conditionsMarket US$ thousands profitabilityProject countries. neighbor to and exports Chinaits to increase anopportunity Kazakhstanhaspotential. Also, substitution import the tapes and indicates strips sheets, as copper Exportpotential US$ 2021 6997, g/ Content Silver content Copper tonnes thousand Copper Vostkazedra 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Indicator 5,000 - tonne Karaaul - , tonnes , , % , tonnes Revenue, US$ thousands US$ Revenue, Year 2 Year 54%

deposit reserves (The Report(The of deposit reserves 16,388 , which accounts for 4,7% for 4,7% of global accounts which, . . ” Oxide Global for refined Global market prices It is expected that refined copper that It copper expected is refined Year 4 Year – 49% 17 . 2 1 2 US$ 7250 . . The trade deficit in products such trade Theproducts deficit in . . 21 48 Open

34,438 : 6 79 ore Year 6 Year 36% - . pit

35,287 the 6th Kazakhstanholds mining per per Year 9 Year Sulphide According to the to According years: 2020 2020 years: 38% 23 ores 7 1 8

. . 40,665 tonne . . 01 89 8 75 Year 10 Year EBITDA margin, % margin, EBITDA 31%

42,130 . Year 11 Year – 33% Sulphide ground mining Under 16 ores 6 1 43,480 6 . . . . 42 56 9 92 - 0% 10% 20% 30% 40% 50% 60% 39 Production and processing of gold and silver ores at Kumysti deposits area

Project description: Market assumptions: Extraction and processing of gold and silver ores at Raw materials availability – Low COGS is Kumysti filed (the "Project") achieved due to the availability of own cheap raw Commercial products: gold and silver materials base. Kazakhstan holds the 6th place in concentrates the world for the amount of its explored gold reserves. Silver reserves in Kazakhstan are Output capacity: discovered in more than 100 ore fieds. 640 kg of gold and 3.9 tonnes of silver per annum Export potential – Taking into account the fact Project implementation period: 11 years that 24% of the global demand for gold comes from Initiator: Central Asia Mining Co LLP. The company China, Kazakhstan has a huge export potential. explores alluvial gold in Kumysti area. Kazakhstan has exported 4,500 tonnes of gold- bearing ore to China in 2017. Also, one of the other Project implementation location: Тurkestan main importers of Kazakhstan gold is Russia, which Oblast, Suzaksky district has imported 7,349 tonnes of gold-bearing ore in Potential markets: The concentrate will be 2017. processed at production facilities of KazTsink LLP In addition, China and Russia are among the top 10 and Tau-Ken Altyn LLP with subsequent sale of the silver importing countries as of 2017. final product to these companies or to other consumers.

Key investment indicators Project profitability

Index Results 35,000 68% 80% 68% 67% 67% Project implementation period, years 11 30,000 70% 51% incl. investment stage, years 1 25,000 60% 50% operational stage, years 10 20,000 26% 40% Investment, US$ thousands 41,775 15,000 30%

Project NPV, US$ thousands 34,852 thousands US$ 10,000 20% IRR, % 41.7% 5,000 10% 29,358 29,305 30,076 32,156 13,780 8,546 EBITDA returns, % 60.1% 0 0% Payback period, years 3.6 Year 2 Year 3 Year 4 Year 6 Year Year 10 11 Discounted payback period, years 4.2 Revenue, US$ thousands EBITDA margin, % Project location: Kumysti field reserves Turkestan Oblast, Suzaksky district Gold Name of the deposit Silver reserves, Category (ore occurrence) reserves, kg. kg. Mynshukur (aaluvial) 309.8 619.6 C1 Altyntau (hard-rock) 320 960 P1 Astana Terbakty (hard-rock) 770 2,310 P2 Aktobe (hard-rock) 2,000 6,000 P2 Shovan (hard-rock) 359 2,154 С1+С2

Zholbarysty (hard-rock) 835 5,010 С1+С2 Almaty Kumysti field Kelinshektau (hard- 2,205 13,230 С1+С2 rock) Verhne-Kumysti (hard- 879.4 5,276.4 С1+С2 rock) Nizhne-Kumysti (hard- 875.3 5,251.8 С1+С2 rock)

KAZAKH INVEST: August 2018 Investment Proposal 40 Development of South Zhaur tungsten ore deposit

Project description: Market conditions: Mining and processing of rare-metal ores from South Raw material base – Kazakhstan holds the 6th Zhaur deposit in Karaganda Oblast. place in the world for its tungsten reserves of 2 Products: million tonnes, which accounts for 63% of global reserves. Availability of significant molybdenum • 57% concentrate of tungsten trioxide reserves (160 thousand tonnes) in Kazakhstan • 50% concentrate of molybdenum opens up a potential for reviving the molybdenum Production process: mining industry in the future. • Open-pit Metal price growth – The lack of readily available financing and low metal content in the ore deposits • Sulphide-scheelite flotation, including grinding in are the main reasons for the limited supply of metal one stage, sulphide flotation and scheelite in the market, which in the future, may serve as an flotation. incentive for further price increases for tungsten and Maximum processing capacity: molybdenum. 4,000 thousand tonnes of commodity ore per Growing demand– According to the forecasts, over annum. the next 10 years, global demand for tungsten will Initiator: JV Saryarka Tungsten LLP. increase from 72,552 to 121,679 tonnes (5.3% CAGR). The development of the steel industry Location: Karaganda Oblast, Shetsky district affects the growing demand for molybdenum. In the Project implementation period: 35 years long term it is expected that the growth rate of demand for this metal will be equal to 3.6% per annum until 2024.

Key investment indicators of the Project Project profitability

Indicator Results 250,000 60% 50% 52% Project implementation period, years 35 47% 49% 50% 200,000 41% Incl. Investment stage, years 2 42% 40% Operational stage, years 33 150,000 Investment, US$ thousands 70,942 30% 100,000 Project NPV, US$ thousands 173,323 20%

IRR, % 32.7% US$ thousands 50,000 10% 103,009 130,893 166,994 205,156 51,973

EBITDA returns, % 49% 79,872 - 0% Payback period, years 5.4 Year 3 Year 4 Year 10 Year 20 Year 30 Year 35 Discounted payback period, years 6.7 Revenue, US$ thousands EBITDA margin, %

Project location: South Zhaur deposit reserves (JORC) Karaganda Oblast Balance reserves by С2 category Indicator Composition, Quantity, tonnes % Astana Ore 122,189,700 Tungsten 198,953 0.163 South Zhaur trioxide district Molybdenum 13,062 0.010

Almaty Bismuth 6,408 0.005

KAZAKH INVEST: Аugust 2018 г. Investment proposal 41 Development of gold and lead deposits at the Mayatas field in Karaganda Oblast

Project overview: Market assumptions: The project considers additional exploration and High and stable demand. Global gold consumption construction of an industrial plant for extraction and level remains stable and high. It is widely used in beneficiation of gold and polymetallic ores at various technologies and jewelry, and it is used as a Mayatas ore field in Kostanay Oblast. currency back-up. Also, according to industry Commercial products and average annual forecasts, global lead consumption will exceed output: production volumes by 10,000 tonnes in 2019 Processing of 700 thousand tonnes of ore per year because of constant supply cuts. (containing gold and lead). Concentrates are Import substitution. Industry analysis shows that planned to be processed at the production facilities the production capacity in Kazakhstan does not of Kazzinc LLP (and at other plants) with subsequent cover the domestic demand for gold. Average sale of the final product in the domestic and foreign annual growth in imports of gold ore in the period markets. from 2010 to 2014 was equal to 93%. Also, despite Initiator: Mayatas LLP (100% subsidiary the observed stable growth in the volumes of lead organization of КazLead LLP). and lead ore production over the past few years in Kazakhstan, the level of market demand covered by Project implementation location: district, domestic production was only equal to 46%. Kostanay region Export potential. Today, China is the main importer of lead ores and concentrates from Kazakhstan. In 2016, China has imported a record amount of metal from Kazakhstan – 51,595 tonnes.

Key investment indicators Project economics

Index Results 50,000 65% 64% 70% 45,000 Project implementation period, years 13 55% 60% 40,000 48% incl. the investment stage, years 3 35,000 42% 42% 50% operational stage, years 10 30,000 40% 25,000 Investment, US$ thousands 21,581 20,000 30% 15,000 20% Project NPV, US$ thousands 57,910 9,329 10,000 10%

IRR, % 93.9% thousands US$ 19,496 5,000 2,248 27,873 31,656 44,926 EBITDA returns, % 52% 0 0% Year 2Year 3Year 4Year 5 Year Year Payback period, years 3.8 10 13 Discounted payback period, years 3.9 Revenue, US$ thousands EBITDA margin, %

Project location: Arkalyk district, Kostanay Mayatas field reserves region Metal Fields Ore Content quantity Gold Uvalnoye Astanа 6,800 Yuzhnoye 1.18 thousand 8,024 kg. Mayatas ore field Daykovskoyе g./tonne tonnes Other Lead 5,426 97,770 Zarechnoye thousand 1.8% Almaty tonnes tonnes

KAZAKH INVEST: October 2018 Investment Proposal 42 Development of the Berkarinskoye deposit in the East Kazakhstan Oblast

Project description: Market prerequisites This investment project (the "Project") involves High demand. The expected demand growth for development of the Berkarinskoye field in East the refined copper will reach 2.99% in 2018 and Kazakhstan Oblast, which includes additional 2.15% in 2019. exploration, extraction, and processing of ore According to data by the Silver Institute, over the containing copper and silver. last five years, there was a worldwide silver deficit Product: Refined copper, refined silver (in 2017, the deficit was 35 million ounces [810 Project initiator: Nouvelle Mining LLP tonnes]). At the same time, annual metal production is declining (a decrease of 4% in 2017). Location: The Berkara site is located on the territory, which is a part of city Price growth. According to forecasts, a moderate administration in East Kazakhstan Oblast increase in copper prices is expected in medium- term time perspective. Consumer market: Export potential. The trade deficit in products such Copper - plants processing non-ferrous metals in as copper sheets, strips and tapes indicates the CIS, China and Europe. import substitution potential. Also, Kazakhstan has Silver - refining plants of Kazakhstan, Russia and an opportunity to increase its exports to China and China neighbor countries. Also, there is a potential for exporting silver to China and to Russia. According to the results of 2017, these countries are among the top 10 largest world silver importers.

Key investment indicators Project profitability Indicator Result 90,000 62% 63% 70% 56% Project implementation period, years 12 80,000 49% 60% 70,000 44% incl. investment stage, years 3 . 43% 50% 60,000 Operating stage, years 9 50,000 30% 40% 24,091 thous Investment amount, US$ thous. 40,000 30% Project NPV, US$ thous. 60,155 30,000 US$

21,300 22,286 20%

IRR, % 51.2% 20,000 21,750 10,000 10,440 10% EBITDA margin, % 62% 45,165 76,353 77,947 0 0% Payback period, years 6.0 Year Year Year Year Year Year Year Discounted payback period, years 6.5 4 5 6 7 8 9 12

Revenue, US$ thous. EBITDA margin, %

Location: The Berkara site is located on the Proprietary calculation of Eastern Berkara territory, which is a part of Semey city reserves, 2018 administration in East Kazakhstan Oblast Cut-off Copper Silver Ore, Ore type grade, content, content, tonnes % % g/tonne Astana Oxidized 0.5 1,896,900 1.29 - ores Berkara field Mixed ores 0.5 1,384,801 2.03 19.3

The presented data is the result of preliminary estimates of Almaty reserves for East Berkara site, performed in Micromine based on the drilling results of 2016-2017.

KAZAKH INVEST: August 2018 Investment proposal 43 Expansion of mining and processing of copper-nickel ores of the Maksut deposit

Project description Market prerequisites: expansion of mining and processing plant of copper- Availability of raw materials – The estimated nickel ores of the Maksut deposit in the East reserves of the Maksut deposit according to the JORC Kazakhstan oblast (Project). 2012 Code are 26.8 million tonnes of ore with a copper content of 0.44% and nickel of 0.35% Project goal Growing demand – Demand for refined copper is increase in mining and processing of copper-nickel expected to grow by 2.99% in 2018 and by 2.15% in ores of the Maksut deposit beneficiation plant from 2019. According to the World Bureau of Metal 400 thousand tonnes to 1.4 million tonnes of ore Statistics in 2017, the shortage of refined nickel on per year the world market amounted to about 96 thousand Project initiator tonnes. mining company BAST JSC, developing the copper- Rising metal prices – According to the forecast data nickel ores of the Maksut deposit. of the World Bank, it is expected of rising of the price Products and average annual production after of copper (2018 – US$ 6,800; 2021 - US$ 6,849). As expansion: of from 2018 to 2022 the average nickel price per • 21% copper concentrate - 24.3 thousand tonnes year will increase by 3%. • 4% nickel concentrate - 57.8 thousand tonnes Availability of customers – The mining and processing complex Maksut is an operating enterprise Processing capacity after expansion: which produces copper and nickel concentrates. 1.4 million tonnes of ore per year Concentrates are successfully in great demand in Project location: China, Russia, Uzbekistan. The company has long- term contracts for the sale of concentrates. Abay district, East Kazakhstan oblast

Key investment indicators of the Project Project Profitability

Indicator Results 70,000 36% 40% 60,000 32% 35% Project implementation period, years 20 29% 24% 30% incl. investment stage, years 2 50,000 20% 25% operational stage, years 18 40,000 20% Investment amount, US$ thousands 24,979 30,000 15% Project NPV, US$ thousands 43,749 20,000 US$ thousands US$ 10% IRR, % 41.3% 10,000 5% 11,311 38,188 49,337 61,720 43,663 EBITDA margin, % 30% 0 0% Year 1 Year 3 Year 10 Year 19 Year 20 Payback period, years 4.0 Discounted payback period, years 4.8 Revenue EBITDA margin, %

Project Location: Abay District, East Kazakhstan oblast Mineral Resource Report of the Maksut deposit in accordance with the JORC Code as of July 27, 2017

Resource Avg. Cu Avg. Ni Astana Tonnage category content, % content, % Maksut deposit

Indicated 26.8 mln 0.44 0.35

Almaty Probable 16.7 mln 0.38 0.28

Всего 43.5 mln 0.41 0.33

KAZAKH INVEST: August 2018 Investment proposal 44 Extraction and processing of coking coal from Samarskoye deposit

Project description Market prerequisites: This investment project (the "Project") involves Potential for exporting – In Russia there is a construction of a complex for extracting and shortage of "K" type high quality coal (20% of the processing of coking coal from Samarskoye deposit planned output at Samarsroye deposit). In China, a in Karaganda Oblast. policy is being implemented to reduce coal Project initiator production. These factors suggest an existence of Valdisere Mining LLP opportunity for exporting to those markets. Production and average annual output: Constantly growing prices. Recently, the market • concentrate of “gas fat" and “fat" types of coking has seen an increase in prices for both coal and coals (semi-soft coking coals) - 2686 thousand products processed from it (namely a coal coke as a tonnes result of higher prices for coking coal). In the period • concentrate of grade “coking fat" and “coking" of 2013-2017, the average increase in producer coking coals (hard coking coal) - 1133 thousand prices for coal and brown coal was 12% and 5%, tons respectively. • energy coal - 955 thousand tons High market demand. Constantly developing • By-product (low quality coal) - 637 thousand tons industrial sector dictates the need for ever- Project location: Nurinsky district, Karaganda increasing supply of quality raw materials for the Oblast production of coke. Consumer markets: Kazakhstan, China, Russia

Key investment indicators Project profitability 55% 57% 1 200 51% 51% 60% Indicator Result 47% 47% 1 000 50% Investment amount, US$ 438,276 thous. 800 34% 33% 40% Project NPV, US$ thous. 590,665 600 30% IRR, % 31.08% 400 20% US$ millions US$ 235 97 EBITDA margin, % 55% 200 99 10% 434 582 796 867 0251 Payback period, years 6.32 0 0% Year Year Year Year Year Year Year Year Discounted payback period, 7.51 7 8 9 10 11 12 18 24 years Revenue, US$ mln EBITDA Margin, %

Project location: Nurinsky district, Karaganda Deposit resources Oblast Estimated reserves 751 mln tonnes

Astana Kazakhstan Balance Off-balance reserves reserves 268 mln tonnes 483 mln tonnes Samarskoye deposit

Allowed for extracting* Almaty 105 mln tonnes

• Volatile – 34-40% Sulfur – 1,8-2,2% • Phosphorus – 0,03-0,06% *permission for extracting the rest of balance reserves can be obtained • A, % - 9% without difficulties • Y, mm - 22

KAZAKH INVEST: October 2018 Investment proposal 45 Steel production at the Velikhovskoye deposit in Aktobe Oblast

Project Description: Market assumptions: The project provides for the construction of a Steady demand for steel. High rates of historical complex for the production of steel, through the production growth and the strategic importance of beneficiation and processing of iron-bearing ores at further development of industries using steel as raw the Velikhovskoye Yuzhnoye deposit in the Aktobe materials create a stable demand for the products region. that the project is going to produce. Raw materials: Further growth in demand for steel. According Low alloy construction steel, carbon construction to the forecasts of the International Steel steel, quality carbon construction steel Association, the global volume of demand for steel and steel products will increase by 1.8% and 0.7% Initiator: Aktobe-Temir-VS Subsidiary, JSC in 2018 and 2019 respectively. Location: Kargalinsky district, Aktobe oblast Potential for import substitution and export of Potential markets: Kazakhstan, Russia, China steel. The existence of the trade deficit over the past few years shows a good potential for import substitution and the availability of stable demand for steel on the domestic market of Kazakhstan. Also, due to the geographical proximity of large world steel consumers such as Russia and China, there is good export potential for the supply of products to these countries.

Key investment indicators Project Profitability

Index Results 900 39% 40% 800 38% 39% Investment, US$ thousands 550,727 700 38% 38% 39% 37% 600 38% Project NPV, US$ thousands 421,198 500 37% 38% 37% IRR, % 25.9% 400 37% 300 37% EBITDA returns, % 38% millions US$ 200 36% 100 36% Payback period, years 6.8 306 471 596 625 622 611 821 0 35% Discounted payback period, years 8.8 Year 4Year 5Year 6Year 7Year 8 Year Year 14 23 Revenue, US$ mln EBITDA margin, %

Project location: Kargalinsky district, Aktobe Estimation of resources according to JORC Oblast Average Cut-off Type Category tonnage Content grade Fe (%)

Magnetite resources, Measured 16 112,851,680 20.91 Velikhovskoye South ore body – I Martite resources Deposit Astana Measured 16 4,455,263 20.86 <30% Fe Magnetite resources, Inferred 16 344,762,786 20.02 ore body – I Magnetite resources, Inferred 16 9,829,786 20.18 ore body – II Martite resources Inferred 16 17,570,097 19.59 <30% Fe Martite resources Almaty Inferred 20 4,991,815 41.00 >30% Fe

Total - - 494,461,430 20.43 Report on the Mineral Resources of the Velikhovskoye South deposit in accordance with the JORC Code for February 2, 2012

September 2018 KAZAKH INVEST: Investment Proposal 46 Extraction and processing of gold-bearing ores at Shokpar and Gagarin deposits

Project overview: Market assumptions: Extraction and processing of gold-bearing ores of Raw materials availability – Low COGS is the Shokpar and Gagarin deposits (the "Project") achieved due to the availability of own cheap raw Commercial product: bulk concentrates of gold materials base. Kazakhstan holds the 6th place in and silver. the world for the amount of its explored gold reserves. Silver reserves in Kazakhstan are Output capacity: 17,531 kg of gold and 90,764 kg discovered in more than 100 ore fieds. of silver over the whole project operating period. Export potential – Taking into account the fact Production process: Mining – open-pit and that 24% of the global demand for gold comes from underground; Processing – direct collective flotation China, Kazakhstan has a huge export potential. Project implementation period: 14 years, incl. Kazakhstan has exported 4,500 tonnes of gold- the development of deposits in the meantime. bearing ore to China in 2017. Also, one of the other Initiator: main importers of Kazakhstan gold is Russia, which has imported 7,349 tonnes of gold-bearing ore in Tau-Ken Samruk National Mining Company LLP – 2017. national operator of mining assets in Kazakhstan, which has a priority right to acquire a license for In addition, China and Russia are among the top 10 exploration and extraction of mineral resources. silver importing countries as of 2017. Project implementation location: Zhambyl Oblast Potential markets: Kazakhstan

Key investment data Project profitability Index Results 44% 80,000 44% 50% 42% 45% Project implementation period, years 14 70,000 36% 37% 40% 60,000 incl. investment stage, years 2 32% 35% operational stage, years 12 50,000 30% 40,000 25% Investment amount, US$ thousands 63,346 30,000 20% Project NPV, US$ thousands 37,391 15%

US$ thousands US$ 20,000 IRR, % 21.1% 10% 10,000 41,655 63,121 68,921 70,870 41,340 18,473 5% EBITDA margin, % 42% - 0% Payback period, years 6.1 Year 4 Year 5 Year 9 Year Year Year 12 13 14 Discounted payback period, years 7.6 Revenue EBITDA margin, % Project location: Shokpar field reserves and resources Zhambyl Oblast Reserves Resources С2 P1 Ore 2,105 thous. tonnes 2,121.8 thous. tonnes Astanа 15,151.8 kg (7.2 15,600 kg (7.4 Gold g/tonne) g/tonne) 89.7 tonnes (42.6 78.6 tonnes (37 Silver g/tonne) g/tonne)

Gagarin field reserves and resources Shokpar and Gagarin deposits Almaty Reserves С2 Ore 1,659.6 thous. tonnes Gold 9,430.3 kg (5.7 g/tonne) Silver 85.4 tonnes (51.5 g/tonne) KAZAKH INVEST: August 2018 Investment Proposal 47 Development of Zhezdybassay copper deposits in Mangistau Oblast

Project overview: Market assumptions: th This investment project (the "Project") involves Large copper reserves. Kazakhstan is ranked 6 construction of an industrial complex for the in the world for copper reserves, which is 4.7% of extraction and beneficiation of copper ores at world reserves or 36.6 million tonnes in volume Zhezdybassay deposit and at nearby located terms. deposits in the Mangystau region. Copper High demand. Demand for the refined copper is concentrate is planned to be processed into cathode forecasted to increase by 2.99% and 2.15% in 2018 copper at the copper plant KazZink, with its and 2019, respectively. subsequent sale as a final product. Rise in prices. According to the World Bank’s Commercial product: cathode copper (in sheets) forecast, the moderate rise in prices for copper is Project initiator: Tekhnogran Aktobe LLP expected. Project implementation location: Mangistau Export potential. Trade deficit in considered district, Mangistau Oblast copper products indicates potential for import substitution. Moreover, Kazakhstan has the Potential market: Non-ferrous metals processing opportunity to boost export to the People’s Republic plants of neighbouring countries, China and Europe of China and neighbouring countries.

Key investment data Project economics Index Results 45,0 60% 70% 57% 59% Project implementation period, years 17 40,0 54% 60% including the investment stage, years 4 35,0 45% 50% 30,0 40% Operational stage, years 13 25,0 40% US$

Investment, US$ thousands 23,000 % 20,0 30%

Project NPV, US$ thousands 29,435 mln 15,0 12,5 20% IRR, % 29.5% 10,0 8,9 10% EBITDA returns, % 39-61% 5,0 32,9 36,0 38,6 35,4 - 0% Payback period, years 7.4 Year 3Year 6Year 8 Year Year Year Discounted payback period, years 8.7 10 12 17 Revenue, US$ mln EBITDA margin, %

Project implementation location: Mangistau Reserves of Project’s deposits district, Mangistau Oblast Amount Deposits/ Reserves, Ore, Copper of Mineral resources mln grade, copper, occurrences category tons % thous. tonnes Zhezdybassay С2+Р1 6.7 0.58 39.2 Astana Dolnapinskoye С2+Р1 1.8 0.6 10.8 Sarshasaiskoye Р1 2.4 0.6 14.0 East- Shairskoye Р1 1.1 0.8 8.8 Kyzyltanskoye С2+Р1 0.8 0.6 4.8 Zhezdybassi and other Shaniyazskoye Р1 0.09 1.1 1.0 Aktau deposits Koktas Р1 0.36 0.4 0.9 Other Almaty occurrences and Р1 2.1 0.5 10.5 areas Total: С2+Р1 15.3 90.0

KAZAKH INVEST: August 2018 Investment Proposal 48 Development of the zinc-copper Alexanderovskoye deposit in East Kazakhstan Oblast

Project Description: Market assumptions: The project involves construction of an industrial Growing demand. complex for the extraction and beneficiation of zinc- The demand for refined copper is expected to grow copper ores at the Alexanderovskoye deposit in East by 2.99% in 2018 and by 2.15% in 2019. Kazakhstan Oblast. Demand for refined zinc, will reach 14,389 thousand Product and average annual production: tonnes in 2020, increasing by 1.8% in 2019 and by 1.9% in 2020. Copper concentrate - 6,881 tonnes (963 tonnes of copper) Potential for exporting. Zinc concentrate – 22,696 tonnes (10,213 tonnes of Kazakhstan has a geographical advantage which allows an increase of exporting of the product to zinc) China. Kazakhstan, being the main exporter of Processing power: copper products to the Russian Federation, can 360 thousand tonnes of ore increase the volumes of supplies of copper concentrates. Initiator: In China (the largest consumer of zinc), the demand “Varsa Mining” LLC for refined zinc is expected to grow from 6,596 Location: thousand tonnes in 2018 to 7,257 thousand tonnes in 2020. Kazakhstan, unlike Peru and Australia, has Kurshim district, East Kazakhstan Oblast a convenient geographical location for exporting Consumer markets: products to China. Processing plants of non-ferrous metals in the CIS Kazakhstan is also the main exporter of zinc countries, China and Europe concentrates to Russia.

Key investment indicators Project Profitability

Indicator Result 35,000 45% 44% 50% 41% 43% Project implementation period, years 8 30,000 35% 40% incl. investment stage, years 3 25,000 operational stage, years 5 20,000 30% Investment, US$ thousands 15,620 15,000 20% Project NPV, US$ thousands 11,997 10,000

US$ thousands US$ 10% IRR, % 49.1% 5,000 25,847 27,508 29,513 19,992

EBITDA returns, % 42% 0 25,864 0% Payback period, years 4.7 Year 4 Year 5 Year 6 Year 7 Year 8 Revenue EBITDA margin, % Discounted payback period, years 5.1

Project location: Kurshim district, East Kazakhstan Oblast Alexanderovskoye deposit reserves

Calculation Indicators Category Ед. изм. of reserves

Sulphide zinc- thousand Astana С –С 13,000 copper ore 1 2 tonnes Alexanderovskoye Zinc content % 3.83

Copper content % 0.34

Calculation of zinc tonnes 49,799 reserves Calculation of Almaty tonnes 4,394 copper reserves * Initiator’s proprietary calculations in 2018, based on drilling results KAZAKH INVEST: October 2018 Investment proposal 49 Development of tungsten ores of the Koktenkol deposit

Project Description Market prerequisites: Development of tungsten ores at the Intermediate Availability of raw materials – The spatial section of the Koktenkol deposit (Project) isolation of the tungsten and molybdenum mineralization of the Koktenkol deposit allows you Project Initiator to organize the primary mining of shallow-lying Dala Mining LLP is a private Kazakhstani company tungsten ores of the Intermediate section. that is the copyright holder of the Contract for the development of tungsten and tungsten- Export potential – In 2017, world imports of molybdenum ores of the Koktenkol deposit. tungstates amounted to 11,049 tonnes. The main buyers of ammonium paratungstate in the Output and average annual capacity: international market are the USA, Germany and • ammonium paratungstate (APT) – 3,000 tonnes Japan. The development of the automotive and • molybdenum oxide - 600 tonnes mining industries in these countries opens up • copper hydroxide - 300 tonnes prospects for the supply of products. Growing demand – Over the next 10 years, Manufacturing process: well in-situ leaching (ISL) using oxalic and hydrochloric acids. global demand for tungsten is projected to increase from 72,552 tonnes to 121,679 tonnes Location: Karaganda oblast, Shetsky district (CAGR 5.3%). The growth in demand for tungsten Sales market: Germany, Japan is closely related to the development of the manufacturing industry and the production of automobiles.

Key investment indicators Project profitability 250,000 35% Indicator Result 31% 29% 28% 30% Project implementation period, years 36 200,000 22% 25% incl. investment stage, years 2 17% 150,000 20% operational stage, years 34 13% 15% Investment, US$ thousands 77,769 100,000 10% 89,425

Project NPV, US$ thousands 35,900

US$ thousands US$ 50,000 5% 110,050 124,730 159,447 195,808 IRR, % 26.5% 16,395 0 0% EBITDA returns, % 25% Year 3 Year 7 Year Year Year Year Payback period, years 7.9 10 20 30 36 Discounted payback period, years 9.3 Revenue EBITDA margin, %

Project location: Karaganda Oblast Reserves of the Intermediate site Ore, W gen, Cu gen, Cu gen, thous. W gen, % tonnes % tonnes tonnes 87,340 0.315 274,798 0.222 95,000 Astana

Koktenkol deposit

Almaty

KAZAKH INVEST: October 2018 Investment Proposal 50 , amount Investment Discounted payback period payback Discounted Payback period margin EBITDA IRR NPV Project koeOblast Aktobe location Project Janu Domestic market Domestic market Selling 24 : period implementation Project Aktobe Location steel produce60% to Concentrate withaniron contentof at least Product Capacity amount Investment build Development of Project overview Key investment indicators investment Key years ary concentrate concentrate 2018 Oblast, Oblast, : , , : : including construction period US$ thousands US$ Indicator 8- , million tonne/year years , Aktobe Shalkar : Kokbulak : , US$ thousands US$ enrichment plant enrichment Russia and China and Russia : : - , Steel ProductionLLP US$ 418,986 thousand years district iron ore depositoreiron and Result 418, 36,668 14.9% Investment 24% 16. KAZAKH INVEST: 986 9 . 3 4 Kokbulak proposal

US$ thousands 1,000,000 Total C2 Total C1 C2 Total: C2 C1 Total C1 B Market prerequisites Market • • • Kokbulak deposit deposit Kokbulak profitability Project 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 Class : : : High demand High reserves ore reserveswith a 2% ofshare global ranks11ththe in worldterms in of iron Export potential developmenttrends economicglobal steel, which,in turn, directly reflects of all, conditionedbythe demand for Large iron ore reserves ore iron Large China (90 China exported, predominantly to Russiaand is concentrate andpellets produced domestic demandfull, in theof bulk iron ore produced in Kazakhstanmeets 0 Year 4 Year 12% Reserves, tonnes million Revenue, US$ thousands US$ Revenue, 276,913 648.8 238.1 295.9 410.7 295.9 611.2 561.9 361.2 198.1 163. 49.3 . iron ore deposit - Year 5 Year 1 23% 99%) 471,748 - Central zone Central Off South zone North zone North Iron Fe, % Fe, reserves . - Year 6 Year 21% – balance 27.2 28.3 35.2 26.6 35.2 38.1 37.9 42.1 39.4 37.8 41.3 626,980 Sinc :

ore demand is,first Year 7 Year e 20% the volume of 640,858 – EBITDA margin, % P Kazakh 2 O 5 , % Year 8 Year 18% 1.03 1.09 1.38 0.99 1.38 1.39 1.36 1.46 1.57 1.48 1.67 654,925 stan Year 24 Year Sulphur, 5% . % 0.11 0.09 0.11 0.09 0.06 0.06 0.06 0.08 0.09 0.06 906,006 0.1 0% 5% 10% 15% 20% 25% 51 Production of metal powder

Project overview: Market prerequisites: Setting up a metal powder production with • Lack of competition - the plant of the the use of water atomization method on JSC present project will be the first plant in Excavator base its field in Kazakhstan. Investment amount: US$ 23,308 thousand • Export potential. Currently, the largest Products: consumer of metal powders is China, which imported about 116 thousand PZhR Iron powder tons in 2016. Location: • Low production cost. Kazakhstan South Kazakhstan Oblast produces industrial steel scrap in Project implementation period: excess amounts, therefore, it can be 24 years, including 1 year of construction used as the main raw material in the Target markets: Kazakhstan, Russia and production of metal powders, which will China significantly reduce the cost of production. Suppliers: local metallurgical enterprises and scrap buyers Consumers: production sites

Project profitability Key investment indicators

40 000 80% Indicator Result 35 000 70% Investment amount, US$ 23,308 30 000 60% thousands 48% 25 000 50% Project NPV, US$ thousands 6,795 40% 40% 20 000 40% IRR, % 23.3% 25% 15 000 30% US$ thousands US$ 14% 10 000 20% EBITDA margin, % 27%

5 000 10% Payback period, years

19 705 24 856 28 463 31 926 36 377 5.1 0 0% Year Year 3 Year 4 Year 14 Year 24 Discounted payback period, years 7.7 Revenue, US$ thousands EBITDA matgin, %

Initiator of the project Excavator JSC The initiator and executor of the project, Excavator JSC, was founded in 1958. The Company provides a plot (divisible) with existing factory buildings for plant construction Metal powder production plant*

Strategic investor’s equity *New LLP will be established to implement this project and to obtain investment preferences. participation

KAZAKH INVEST: January 2018 Investment proposal 52 Production of longitudinally welded pipes

Project overview: Market prerequisites: Construction of a plant for the production of • Local demand – niche market for steel longitudinally welded steel pipes pipes with diameters from 273 to 630 Investment amount: US$ 24,215 thousand mm does exist. Products: • Competition. Steel pipes categorized as commodity product and its main Steel longitudinally welded steel pipes with competitive advantage is price. Given diameters from 273 to 630 mm. the low production costs peculiar to Location: longitudinally welded pipes production, Special Economic Zone Saryаrka, the price of the produced steel pipes will be significantly lower than that of Karaganda city its substitutes. Project implementation period: • Import substitution. The project is 24 years, including 1-2 years of construction being created to replace imported Target markets: Kazakhstan products with domestic pipes. Suppliers: local and Russian suppliers of raw materials Consumers: own dealer network of metal traders and a network of metal warehouses

Project profitability Key investment indicators

180 000 17% 17% 20% 16% 160 000 14% Index Results 15% 140 000 Investment amount, US$ 24,215 120 000 10% thousands 100 000 Project NPV, US$ thousands 20,292 5% 80 000 -4% IRR, % 25.9%

US$ thousands US$ 60 000 0%

40 000 32 917 -5% EBITDA margin, % 16% 20 000 10 219 64 752 119 046 156 750 0 -10% Payback period, years 7.1 Year 2 Year 3 Year 4 Year 14 Year 24 Discounted payback period, years 9.5 Revenue, US$ thousands EBITDA margin, % The total potential steel pipe market * was ~ 94 billion tenge in 2016

Potential market Potential market Sector Summary volume in Kazakhstan volume in Kazakhstan (2016) (thousand km) (2016) (billion tenge)

Heating Steel pipes are used in mains house construction and 6.7 Housing infrastructure projects. They are used in ~87 and Water communication systems, public pipelines overpasses, water and gas 14 utilities pipelines etc. Gas ~7 pipelines 16.2

Total 36.9 ~111

*Gas and oil trunk lines are not considered, since their diameter exceeds the diameter of the produced pipes

KAZAKH INVEST: January 2018 Investment proposal 53 CHEMISTRY AND PETROCHEMISTRY Construction of the base oil production plant in Turkestan Oblast

Project overview: Market assumptions: Construction of Group I, II and III base oil Availability of customers and raw materials - production plant in Turkestan oblast There is a need to supply raw materials to HILL Raw materials: Corporation’s operating plant for compounding Straight-run fuel oil from “PetroKazakhstan Oil lubricating oils. Straight-run fuel oil is the main raw Products” (PKOP) oil refinery. material for the Project, which will be supplied by Commercial products: PetroKazakhstan Oil Products LLP (“PKOP”), an oil high-quality base oils of Group I (1200SN), Group II refinery in located 350 m from the future (60N, 150N, 350N), and Group III (650N) plant. Output capacity: Import substitution and export potential – 255 thousand tonnes of base oils per annum Kazakhstan doesn’t produce base oils, which are used by local enterprises as a basis for creating Initiator: lubricants and motor oils. The foreign market HILL Corporation Group, the only major producer of (China) is attractive for exporting due to the lubricating oils in Kazakhstan. existence of high demand. Preliminary agreements Project location: for selling products in Kazakhstan and in China have Turkestan Oblast, Shymkent city industrial zone already been concluded. Volume of oil exports is Consumer markets: expected to reach 183 thousand tonnes per year. Kazakhstan, China

Key investment data Project profitability

Index Results 800,000 66% 68% 65% Project implementation period, years 24 700,000 65% 66% 65% incl. the investment stage, years 4 600,000 64% 500,000 62% operational stage, years 20 400,000 57% 60% Investment, US$ thousands 729,238 300,000 58% 770,807 thousands US$ Project NPV, US$ thousands 200,000 56% IRR, % 26.3%

100,000 481,443 593,640 656,470 713,267 54% 243,962 EBITDA returns, % 65% 0 52% Payback period, years 6.5 Year 4 Year 5 Year 15Year 20Year 24

Discounted payback period, years 8.5 Revenue EBITDA margin, %

Project location: Turkestan Oblast, Shymkent Planned output capacity city industrial zone Product Volume, tonnes Share Base oils 254,738 100% Base oil 60N 20,000 8% Astana Base oil 350N 36,044 14% Base oil SN1200 40,470 16% Base oil 650N 60,950 24% Base oil 150N 97,274 38% Secondary products 240,000 100% PKOP oil Drilling fluid 18,000 8% refinery Almaty HILL Plant Naphtha 50,542 21% Deasphaltizate 75,074 31% Diesel fuel 96,026 40%

KAZAKH INVEST: August 2018 Investment Proposal 55 Construction of a motor fuel and petrochemicals production plant

Project overview: Project involves building a Market assumptions: “Standard Petroleum” oil refinery for producing Availability of raw materials. Total recoverable motor fuel and petrochemicals in Turkestan Oblast. hydrocarbon resources in Kazakhstan are Refining capacity: 1.85 million tonnes per year. estimated to amount to 15 bi llion tonnes. Raw materials used: oil, gas condensate and Proven reserves amount to 5.5 billion tonnes. their mixtures from the Kenlyk field. Kazakhstan is a global leader in terms of proven oil reserves. Product: 1) eco-class 5 Ai-95 gasoline; 2) eco- class 5 winter and arctic diesel; 3) gas-motor Import substitution. As of now, Kazakhstan oil propane-butane fuel (LPG); 4) oil coke refineries only meet 70% of domestic demand for (preliminary stage – М150 fuel oil); 5) motor fuel. Demand for light petroleum products is petrochemicals: a mixture of aromatic compounds met through imports from Russia. In Russia and (benzol, toluene and xylene - BTX), isopropyl China, there is a growing demand for alcohol, naphthalene, polymers and carbamide; 6) petrochemicals, specifically for polymers, electricity naphthalene and benzol. Initiator: Standard Petroleum & Co LLP (a part of Growing polymer demand. According to АS a major integrated holding company, which Marketing and METI, polymer demand has grown includes a hydrocarbon exploration, drilling, on average by nearly 20% over the last five years. production, and trading operations). Packaging industry development is the key driver of the growing global demand for polymers. Location: Turkestan Oblast. Sales market: Kazakhstan, China and Russia.

Key investment indicators Project profitability Index Results 1,400,000 30% 25% 25% 25% Project implementation period, years 24 1,200,000 25% 2 1,000,000 incl. investment phase, years 17% 18% 20% operating phase, years 22 800,000 15% Investment amount, US$ thousands 300,000 600,000 1,197,637 1,121,941 10% 188,141 400,000 902,633

Project NPV, US$ thousands 460,711 thousdands US$ 3% 5%

IRR, % 31.2% 200,000 652,750 428,236 EBITDA margin, % 22.8% 0 0% Year 3 Year 4 Year 6 Year 7 Year Year Payback period, years 5.9 20 24 Discounted payback period, years 7.2 Revenue EBITDA margin, % Project location: Turkestan Oblast Maximum plant output (on the final commissioning phase), thous. tonnes per year Product Volume Vehicle fuel 430 - 440 Astana Diesel 280 - 290 Low pressure polyethylene 172 - 180 Naphthalene 160 - 180 BTX 152 - 160 Kenlyk field Oil coke 88 - 92 Standard Almaty Polypropylene 65 - 70 Petroleum Isopropyl alcohol 60 – 76 Plant Carbamide 60 – 65 LPG 36 - 40 Electricity up to 80 MW/hour KAZAKH INVEST: August 2018 Investment proposal 56 Construction of a liquefied natural gas producing plant

Project overview: Market assumptions: The project involves construction of a plant for the Availability of resources. Kazakhstan, with its production of liquefied natural gas (LNG) in Zhambyl plentiful natural gas reserves, has a potential to take Oblast. a leading position among the CIS countries in the Output capacity: 47,520 tonnes of LNG per year. realm of liquefied gas production. Low level of gasification in Kazakhstan. Commercial product: Liquefied natural gas According to Oblast Akimats (local authorities), Initiator: Astana-Trans-Oil LLP gasification level in Kazakhstan was equal to Project implementation location: Sholdala 47.38% by the end of 2017. According to the General gasification scheme, gasification coverage village, suburbs of the city of , Zhambyl Oblast of the country will reach 56% by 2030. This Main consumers: statistics shows a presence of an excellent potential 1) Household consumers. Gasification of inhabited for the development of the LNG industry in areas (Akmola, North Kazakhstan, Pavlodar, Kazakhstan. Karaganda, East-Kazakhstan Oblasts); Other beneficial factors. There is no LNG production in Kazakhstan at the time of compiling 2) Vehicles and agricultural machinery; this analysis. Thus, given the lack of competition, 3) Small energy facilities; insufficient level of gasification in Kazakhstan and a number of advantages of LNG compared to other 4) Low-mobility and stationary heavy equipment. types of fuel (cost efficiency, energy efficiency, 5) Enterprises environmental benefits, safety), there is a good potential for the development of LNG industry in Kazakhstan.

Key investment data Project economics Index Results 60,000 52% 53% 52% Investment, US$ thousands 48,588 53% 50,000 52% Project NPV, US$ thousands 64,629 51% 52% 40,000 52% IRR, % 23.3% 51% EBITDA returns, % 51% 30,000 50% 50% 51% Payback period, years 6.0 20,000 50%

Discounted payback period, years 7.9 thousand US$ 50% 10,000 49% 22,172 31,016 32,807 35,201 49,969 2,799 0 49% Year 2 Year 3 Year 4 Year 5 Year 6 Year 24

Revenue, US$ thousand EBITDA margin, % Project location: Sholdala village, suburb of Product sales provision Taraz town, Zhambyl Oblast At this moment memorandums on LNG supply have been signed with the following companies: • Trans Gas LLP • MCPS Horgos • KazTransGas Onimderi JSC Astana • Shchuchinsko-Borovskaya resort area • Regionstroy LLP, Astana Oblast • Arys depot, Arys Kazakhstan railway station

Almaty Taraz

KAZAKH INVEST: October 2018 Investment Proposal 57 Expansion of dry cyanide sodium production in Zhambyl Oblast

Project overview: expansion of production Market assumptions: capacity of the dry sodium cyanide plant up to Growing demand – 85 tonnes of gold produced in 30 thousand tonnes per year 2017 by domestic gold mining companies required Production output for the entire Project period: more than 40 thousand tonnes of reagents, which is 3 times higher than production output of sodium 30 thousand tonnes of sodium cyanide cyanide in Kazakhstan. Raw materials: ammonia, caustic soda, natural Import substitution and export – Kazakhstan’s gas and air domestic need for sodium cyanide is mainly met by Commerical products: basic product - sodium imports from Russia and China. About 90% of cyanide, by-product - ammonium sulfate sodium cyanide in the world is used to process gold. Imports of sodium cyanide to Russia and China Initiator: Talas Investment Company LLP, which is increased in 2014-2017 amid the increasing gold a part of Ontustik Financial, Trade and Industrial production as their domestic enterprises couldn’t Corporation Group fully meet demand for this reagent. Neighbouring Project implementation Location: Industrial zone countries Kyrgyzstan and Tajikistan are completely dependent on imports of sodium cyanide. of Karatau, Zhambyl Oblast Potential markets: Kazakhstan, Russia, China, other near-abroad countries

Key investment data Project economics Index Results 70,000 33% 35% 32% 31% 30% 31% Project implementation period, years 24 60,000 27% 30%

including the investment stage, years 3 50,000 25% Operational stage, years 21 40,000 20%

Investment, US$ thousands 21,051 % 30,000 15%

Project NPV, US$ thousands 41,013 18,893

US$ thousands 20,000 10% IRR, % 36% 10,000 5% EBITDA returns, % 22-33% 27,442 36,883 43,247 49,179 60,232 - 0% Payback period, years 5.1 2020 2021 2022 2023 2031 2041 Discounted payback period, years 5.9 Revenue, US$ thousands EBITDA margin, %

Project location: industrial zone of Karatau, Planned capacity of the plant Zhambyl Oblast 2018F- Index 2017 2020F 2021F 2022F 2019F*

50- Load, % 100% 100% 70-80% 100% Astana 60%

Capacity, 15,00 7,500- 10,500- 13,500- 15,000 tonnes 0 9,000 12,000 15,000

Current capacity +Future capacity

Almaty Talas Investment Company LLP

KAZAKH INVEST: August 2018 Investment Proposal 58 butadiene latex Thermoplastic Thermoplastic Capacity Investment amount: Investment 2 (phase of butadiene (phaseand1) synthetic rubber a productioncyclethat includesthe production Constructionof butadiene productionplant with Project overview . markets sales andthe consumersof keybutadiene export industry processing Kazakhstan the of demands Consumers oilfields base materials Raw Tajikistan,Romania, Afghanistan,Moldova China, Poland, Turkey, Target markets: including1 year of construction : period implementation Project Location year (TPE); (TPE); (SBL); (SBL); Janu processing products processing Structure elastomer Styrene Nitrile butadiene butadiene Nitrile (ADN) Adiponitrile rubber (NBR) ary 11% 11% ; 4% 2018 ; (ABS) styrene 4% ). : : butadiene butadiene Atyrau Acrylic Acrylic production of 13% of global demand for butadiene butadiene for demand of global : ; Project Polychloroprene Polychloroprene Oblast Oblast : (CR); (CR); realisationmeethelps the : Kashagan US$ 1,487,699 thousand 250 1% ( NIPT SEZ) thousand tons per per tons thousand and and 2 Polybutadiene Polybutadiene 5 rubber (SBR) (BR); (BR); Tengis years butadiene butadiene Styrene 27% Investment proposal 29% KAZAKH INVEST: , ; Revenue forecast • • • Market prerequisites: Market Discounted payback period payback Discounted Payback period margin EBITDA IRR NPV Project , amount Investment Butadiene synthetic and

US$ thousands indicators investment Key 1 1

200 400 600 800 000 200 gas. effective domestic application of associated will introduceanalternative method for the topic for thedomesticin economy use its through gas associated of volumes theof recycling issueever High demand andtheir derivatives. cover the demand for chemical products that domestic productioncapacity cannot the articles building, the production of industrial rubber items are used commonlyin machine gas gas Effectiveutilization of associated petroleum High dependence on import and building materials

000 000 000 000 000 000 chemical industry chemical - 0 d Revenue, thousandsUS$ , ue , US$ thousands US$ Indicator Year 6 Year rubber ABS resin,pipes, textiles, clothing 59% discussion. , to the 482 344 years - Y US$ thousands US$ ear 7 ear synth 61%

613 768 oil production,growthin , Project implementation Year 8 Year e years

60% trade balance balance trade tic production 677 731 and etc rubber and rubber is is - Year 14 Year increasing becoming a - 59% analysi

804 252 . Year 24 Year Results EBITDA, % 1,312,037 1,487,699 54%

1 014 889 shows s 10.97 o 58% 22% 9.08 f 50% 52% 54% 56% 58% 60% 62%

% 59 Barite manufacturing

Project overview: Market prerequisites Construction of barite enrichment plant to • Demand growth – domestic consumption in produce barite concentrate Kazakhstan has increased by 33%, reaching Investment amount: US$ 53,997 thousand 311 thousand tons in 2017. Moreover a Capacity: 75,000 tons per year, with a full gradual increase in oil production is expected production cycle from extraction to due to the implementation of large-scale beneficiation of barite ores. projects at Kashagan, Tengiz and Location: Karachaganak (oilfields). Zhambyl Oblast, “Taraz Chemical Park” Special • Low GoGS – low production cost can be Economic Zone achieved due to the availability of own cheap Project implementation period: raw materials (in the COGS structure, raw 24 years, including 1 year of construction materials costs take up 31%). Target markets: Turkmenistan, Azerbaijan, • Resources – according to the US Geological Russia, Kuwait, Saudi Arabia, Oman, USA, Survey, Kazakhstan has the world's leading Norway, Netherlands, Germany position in the availability of barite Suppliers: raw material – Narkyzil and resources. Oijaylau, equipment - USA • Consumers: oil and gas producers State support – provision of tax, customs and other preferences.

Revenue forecast Key investment indicators

45 000 67% 67% Indicator Results 40 000 66% 66% 66% 66% 66% 67% 35 000 66% Investment amount, 53,997 30 000 66% US$ thousands 25 000 Project NPV, US$ thousands 23,271 66% 20 000 IRR 22%

US$ thousands US$ 15 000 65% EBITDA margin 66-67% 10 000 65% 5 000 Payback period, years 7.38 15 447 20 709 23 951 24 852 25 690 29 623 40 065 0 64% Discounted payback period, years 10.99 2021 2022 2023 2024 2025 2030 2041

Revenue, US$ thousands EBITDA, % Project implementation location: Project implementation stages: Zhambyl Oblast, “Taraz Chemical Park” Special Economic Zone • The first stage (3 years) - the construction period, which involves the acquisition, installation and Zhambyl Almaty construction of necessary equipment Oblast Oblast and structures. South Kazakhstan • Second stage – the production period Oblast Shu at which barite ore will be mined. • Third stage - planned to commence ore beneficiation and selling the final product in full capacity. Taraz Shymkent Bishkek

KAZAKH INVEST: January 2018 Investment proposal 60 Potassium sulphate production

Project overview: Market prerequisites: Construction of a high-capacity potassium • High import volumes - local production sulphate production plant capacity will not meet demand for chemical Investment amount: US$ 535,756 thousand products and derivatives, and this is true for Capacity: production of 300 thousand tons of mineral fertilisers. potassium sulphate • Competitiveness - Surplus sulphur, which is Location: extracted together with oil and gas, and the Zhambyl Oblast (Taraz SEZ) or Atyrau Oblast existence of commercial sulphur dioxide will (NIPT SEZ) facilitate value-added competitive production. Project implementation period: • High demand – State guaranteed demand 24 years, including 1 year of construction contributes to the gradual increase in the Target markets: The main sales markets for demand for mineral fertilisers, maintaining potassium sulfate in the Caspian region, the the growth of organic fertilisers. Transcaucasus and the Middle East are Azerbaijan, Iran, Turkey • State support along the entire production Raw materials base: the nearest potash mines chain by providing investment preferences. of Western Kazakhstan Consumers: markets of Kazakhstan, Transcaucasia and the Middle East Application of mineral fertilisers per unit of Key investment indicators area, kg/ha

Indicator Results

21 million ha – area of Zhambyl Oblast Atyrau Oblast agricultural land 5.5 kg/ha Investment amount, 537,808 535,756 (nitrogen- 8.4 kg/ha US$ thousands phosphate (organic) Project NPV, potassium) 11,351 84,942 US$ thousands IRR 15% 21% 19.3 – mineral 0.67 kg/ha 1.4 kg/ha fertiliser volume (potassium) (nitrogen) EBITDA margin 44% 52% per unit of area Payback period, 10.40 8.90 years 2.3 kg/ha 5.3 kg/ha (nitrogen- Discounted payback (phosphate – 20.80 12.80 potassium) phosphate) period, years

2.3 kg/ha 1.4 kg/ha (nitrogen – potassium) (phosphate)

Raw materials base Raw materials Infrastructure – proximity to main Available qualified Oblast Export potential base – proximity to development sulphuric acid sales human resources potassium ore channels

Atyrau Oblast Medium Appropriate - - High

Zhambyl Oblast High Favorable + + Medium

Regions with the most favorable investment indicators KAZAKH INVEST: January 2018 Investment proposal 61 MACHINERY CONSTRUCTION AND METALLURGY

62 Production of agricultural machinery

Project overview: Market prerequisites: Construction of a plant for the production of • Import substitution – the volume of agricultural machinery imports of tractors and combine Investment amount: harvesters is more than 3 times higher US$ 19,950 – 64,454 thousand than the production of this agricultural machinery in the country. Products: combine harvesters, tractors • High level of deterioration of Location: agricultural machinery in the country. Implementation of the project on an industrial According to official data, more than scale is possible in 3 regions of the Republic of 93% of tractors and 71% of combine Kazakhstan (North Kazakhstan, East harvesters in Kazakhstan are to be Kazakhstan, Kostanai oblast) written off. Project implementation period: • Low cost of production. Construction of 24 years, including 2 years of construction knocked down machine-building Target markets: CIS countries enterprises with an initial 49% level of Suppliers: local and foreign suppliers of localisation of production level, followed equipment and components by an increase to 90% by 2041, is beneficial in terms of costs and import Consumers: agricultural producers, farm substitution. holdings and farms Key investment indicators

Plant power, units Indicator Results Indicator Results Scenario 1 Scenario 3 Investment Investment 20,871 19,950 Output goods amount amount Project NPV 11,988 Project NPV 2,064 IRR 26% IRR 17% EBITDA margin 8%-12% EBITDA margin 9%-12% Tractors Combines Payback period, Payback period, 6.40 8.00 years years

Scenario 1 Scenario 3 Indicator Results Indicator Results 549 137 Scenario 2 Scenario 4 Investment Investment 64,454 19,950 amount amount Scenario 2 Scenario 4 Project NPV 10,214 Project NPV 19,060 1968 295 IRR 18% IRR 32% EBITDA margin 3%-7% EBITDA margin 11%-13% Payback period, Payback period, 8.10 5.60 years years Prospective regions

North K.  Geographical advantages Kostanai Convenient area in terms of logistics due to the proximity to suppliers of East Kazakhstan equipment and components, as China and Russia

 Arable land (sales market) These oblasts, and in particular Kostanay oblast has the largest arable land in the country

Scenario with the best investment indicators

KAZAKH INVEST: January 2018 Investment proposal 63 Tyre manufacturing

Project overview: Market prerequisites: Construction and modernization of an • Import substitution – in Kazakhstan industrial complex with existing infrastructure there are no existing tyre production to produce tyres for passenger cars plants. Investment amount: US$ 68,539 thousand • Demand – Due to slow economy Products: growth, significant demand for budget tyres can be observed in the last 5 low-cost summer tyres with a radius of R14, years. R15 and R15 • Export potential – Neighbouring Location: countries, such as Azerbaijan, South-Kazakhstan oblast Kyrgyzstan and Tajikistan, do not have Project implementation period: tyre production plants, whereas other CIS countries have a constant demand 24 years, including 1 year of construction for new tyres. Many CIS countries have Target markets: CIS countries no import tariffs. Suppliers: foreign suppliers of raw materials Consumers: dealers and the public

Revenue forecast Key investment indicators

36% 200 000 34% 40% Indicator Result 33% 32% 180 000 35% 160 000 25% 30% Investment amount, US$ thousands 68,539 140 000 120 000 25% 100 000 20% Project NPV, US$ thousands 6,546 80 000 15% 60 000 US$ thousands US$ 10% IRR, % 14.50%

40 000 26 283 20 970 17 175 5% 20 000 140 930 185 324 EBITDA margin, % 25-37% 0 0% Year 2 Year 3 Year 4 Year 14 Year 24 Payback period, years 10.1 Revenue, US$ thousands EBITDA margin, % Discounted payback period, years 18.7 Target market

The climate that requires the use of winter tyres

The climate that does not ~70% of RK vehicle fleet require the use of winter tyres

Market ratio: summer and winter tyres

~30% of RK vehicle fleet 58% 42%

KAZAKH INVEST: January 2018 Investment proposal 64 ENERGY SECTOR Expansion of gas turbine power station GTES-200 Uralsk

Project description: Market prerequisites: Expansion of the existing gas turbine power station High electricity prices in the region (GTES-200 Uralsk) by modifying it into a combined- The Western energy zone is isolated from the cycle system (operated through gas and steam). country's energy system and does not have an Power capacity: 300 MW access to cheap electricity from the Northern Energy Location: Kazakhstan, West-Kazakhstan Oblast, Zone. Electricity prices for industrial enterprises Zelenovsky District, Beles village (main consumers) in Atyrau Oblast are the highest in the country, while in West Kazakhstan Oblast - Project initiator: Batys Power LLP they rank among the highest across the country. Existing debt obligations of the Initiator: Increase in energy consumption Almost the about US$ 100 million (the possibility of refinancing entire oil and gas industry is concentrated in Atyrau a foreign currency loan into KZT (tenge) Oblast and West Kazakhstan Oblast. These regions denominated loan is being considered) house enterprises that are carrying out or have already completed major modernization projects (e.g. enterprises such as Atyrau Refinery, Karachaganak Petroleum Operating, Tengiz, CPC), which leads to an increase in electricity consumption. Proximity to raw material resources GTES-200 Uralsk has an underwater pipeline connected to the Key investment indicators major pipeline "Soyuz", which ensures provision of Indicator Results an uninterrupted supply of natural gas. In addition, West-Kazakhstan Oblast is one of the leading Project implementation period, years 24 oblasts in the Republic of Kazakhstan in terms of gas reserves and gas production. This ensures stability incl. investment stage, years 6 and diversification potential for supplying gas for the operating stage, years 18 operation of the power plant.

Investment amount, US$ thous. 340,000 Establishing electricity exports The creation of a unified electricity market within the framework of Project NPV, US$ thous. 217,018 the Eurasian Economic Union will enable the Project to set up exports of electricity to Russia and Belarus, IRR, % 17.5% where electricity prices will be set by market EBITDA margin, % 47-60% conditions. GTES-200 Uralsk is connected to the power system of Russia through the Stepnaya Payback period, years 11.4 electrical substation and has sufficient transmission Discounted payback period, years 15.5 capacities for large-scale export deliveries.

Project scheme Project profitability

Existing power station (100 MW) 250,000 70% 59% 59% 59% • GE MS 9001E gas turbine 60% 200,000 47% Expansion (300 MW) 44% 50% • 2 GE MS 9001E gas turbines 150,000 40% • Expansion of an operational cycle of gas turbines % by modifying it into a combined-cycle system, 30% 100,000

through addition of: 68,914 US$thousands 20% - Waste heat recovery units 50,000 - К-60-7,4 type steam turbine 10% 114,803 157,542 167,837 201,543 All of the infrastructure required for the - 0% expansion of the power plant has already been 2021 2024 2025 2035 2040 built Revenue, US$ thousands EBITDA margin, %

October 2018 KAZAKH INVEST: Investment proposal 66 Construction of a hydroelectric power plant

Project description

The project plan is to build a hydroelectric power plant on the river in the Almaty oblast. The design capacity is 82 MW. The area of the plant on the Koksu riverfront amounts to 100 hectares that meets the requirements for the sufficient power generation. The government has already approved the blueprints for the construction of the power plant. The initiator of the project has a Power Purchasing Agreement with Financial settlement centre of renewable energy for 15 years.

Project location Investment highlights

RUSSIA Upfront investment $38 MM

NPV $12 MM KAZAKHSTAN

ALMATY IRR 21% CHINA Payback period 7 years

Market analysis Competitive advantage Currently 35% of electricity consumed in the oblast I. There is a 15-year offtake contract for 100% of is purchased outside of the oblast. energy generation. Oblast’s economy is forecasted to grow at a CAGR of II. The law On support of the usage of RES set fixed 6% till 2022 which will drive the demand for tariffs for renewable energy adjusted yearly for energy. inflation and foreign currency exchange rate. The Electrical energy balance in Almaty region, 2017, bn kWh tariff is 70% indexed by CPI and 30% by exchange rate. Purchase 1.1 RES energy tariff change from 2015 to 2017 Production 2.0 117 25 1 07 1 2 0 1 00 Consumption 3.1 20 1 00 80 15 The initiator is also negotiating with Chinese 60 offtakers. 10 19 21 17 40 China`s imports of Prices of electrical energy by exporting 5 electrical energy, country, USD/MWh 20 mln MWh 6.42 Korea 34 0 0 Hong Kong, 2015 2016 2017 94 6.21 6.19 China CPI Tariff, tenge/kWh Myanmar 25 Russia 43 2015 2016 2017 Target Investor Mandate Value proposition

• Long-term financing This project allows to take advantage of electrical • Supply of technologies energy supply shortage in Almaty region.

Sources: Statistics Committee of the Ministry for national economy of the RK, UN Comtrade, Official internet-resource of Almaty city 67 Construction of a hydro power plant in Almaty Oblast

Project description: Market prerequisites Construction of a cascade of small hydropower Lack of electricity in the region plants (HPP) on the Buyen River (and on its tributaries Koksai and Burkettybien) in Almaty Almaty Oblast (including Almaty) is experiencing Oblast shortages of electricity. About 30% of the electricity consumed in the region comes from the energy- Power capacity: 18.2 MW excessive Northern energy zone or is imported from Location: Republic of Kazakhstan, Almaty Oblast, Kyrgyzstan (neighboring country). In 2017, the Aksu district, 100 km to the north-east from volume of electricity generation amounted to 7.4 bln Taldykorgan, 30 km to the south-east from the kWh, with the volume of consumption reaching 10.4 village of Zhansugurov bln kWh (deficit of 3 bln kWh). According to the Project Initiator: “Kazgidrokaskad” LLP Ministry of Energy of the Republic of Kazakhstan, the shortage of electricity in the Southern energy Consumer Market: Almaty Oblast zone (including the Almaty Oblast and the city of Applied technology: Almaty) in 2017 amounted to 9.2 bln kWh and Hydroelectric installations with Pelton turbines according to their forecasts it will remain at approximate level of 9 billion kWh per year until Key Investment Indicators 2024.

Indicator Results The growth of electricity consumption In 2017, electricity consumption in the Almaty Project implementation period, years 23 Oblast amounted to 10.4 bln kWh, which is a 9% increase compared with 2013 (the average annual incl. investment stage, years 3 growth rate over the past five years was equal to 2.1%). In order to reduce the size of the electricity operational stage, years 20 deficit in the region, it is necessary to put significant Investment amount, US$ thous. 30,081 additional energy generating capacities into the operation in the future. Project NPV, US$ thous. 30,607 Government support

IRR, % 19.4% The sector of Renewable Energy Sources ("RES") is actively supported by the state. Today, RES sector EBITDA margin, % 87% enterprises are exempt from electricity transmission fees. Also, they are guaranteed to have predictable Payback period, years 7.3 and long-term tariffs, as well as a full purchase of all generated electricity. Discounted payback period, years 9.6

Technical characteristics and components of Project profitability the Project: 14,000 89% 89% Project components: 88% 88% • Cascade of small hydro power plants on the 12,000 88% Buyen River (14 MW): 87% 10,000 87% − HPP-1 (7.6 MW); 86% − HPP-2 (1.4 MW); 8,000 86% − HPP-3 (2.5 MW); 6,000 85% 85% − HPP-4 (2.5 MW). US$thousands • Small hydropower plant on the rivers of 4,000 84% Koksai and Burkettybien (tributaries of the Buyen River): 2,000 83% 7,789 9,091 9,130 4.2 MW. 10,398 11,008 11,939 Project’s average yearly electricity production: - 82% 2022 2024 2032 2036 2038 2041 89.9 GWh Revenue, US$ thousands EBITDA margin,%

KAZAKH INVEST: October 2018 Investment proposal 68 TRANSPORT AND LOGISTICS Creation of a multimodal transportation hub at the Astana International Airport

Market prerequisites: Project Description: Creation of a multimodal transportation hub at the Strategic location Astana Airport has a unique Astana International Airport which in turn will chance to become a transcontinental air bridge, since in a 8 hour flight radius there are 2.3 billion people, become a center of a new Aerotropolis with which includes populations of China, India and commercial and residential objects, industrial zone, Russia. logistical companies, recreational and touristic Growth of passenger and freight traffic at the facilities airport Average annual growth rate of freight traffic Location: project will be implemented in Astana at the Astana airport amounted to 8% (CARG since city at the current Astana International Airport. 2013 until 2017), while passenger traffic increased from 2.6 million to 4.3 million passengers in the same Services provided: period. According to Lufthansa Consulting Astana • Service of aircraft, service of passengers, cargo airport will see passenger traffic of 13 million services and storage, multimodal cargo passengers and freight traffic of 117 thousand tons in 2030. services; New destinations Due to the beginning of the • Development of the Aerotropolis: attracting functioning of the Financial Center in the city of private investors into the industrial and Astana and in accordance with the Nation’s Plan (Step commercial zones and for construction of 67) new destinations will be launched to New York, recreational, touristic and residential facilities. Tokyo and Singapore. This will lead to an additional increase in passenger and freight traffic at the airport. Freight traffic from China Located in-between two major exporters and importers of the world: China and EU, will allow the multimodal hub to service the transit of goods between China and Europe. Key Investment Indicators Structure of the multimodal hub and the Aerotropolis Indicator Results Project implementation period, years 24 Aerotropolis incl. investment stage, years 10 operational stage, years 14 Investment, US$ thousands 430,975 Multimodal hub Project NPV, US$ thousands 967,264 Cargo terminal IRR, % 21.3% Rail connection and logistics Freight apron EBITDA returns, % 3-51% center Payback period, years 9.7 Fueling station Second airstrip Discounted payback period, years 11.7 Project profitability Industrial zone 700,000 60% 49% Nodal assembly High-tech manufacturing 600,000 48% 45% 46% 50%

500,000 38% Commercial zone 40% 400,000 Financial Hotels IT and outsourcing 30% corporations 300,000

204,046 Education 20% Medical companies Residential quarters US$ US$ thousands 200,000 96,685 facilities

10% 100,000 Recreational facilities 9% 291,411 404,500 417,068 610,322 - 0% Mall and exhibition Amusement parks 2019 2023 2027 2030 2031 2041 centers Outlet-centers

Revenue, US$ thousands EBITDA margin, %

KAZAKH INVEST: August 2018 Investment Proposal 70 Construction of transportation and logistics center in Ust-Kamenogorsk

Project description: Market assumptions: Construction of a modern transportation and Favorable location East Kazakhstan Oblast borders logistics center (TLC) in the East Kazakhstan Oblast, with China and Russia, which will give UTLC more in the city of Ust-Kamenogorsk, which provides a full prospects to develop as the local transportation and range of commercial services for transportation and logistics hub connecting Western China and the logistics (Ust-Kamenogorsk TLC, UTLC) Eastern regions of Russia. UTLC has a great chance Cargo turnover capacity: 0.5 million tonnes of of becoming a transportation and logistics gateway cargo turnover per year to Siberia. Project location: East Kazakhstan Oblast, Ust- Increase in foreign trade in East Kazakhstan Kamenogorsk, along the road connecting Ust- Oblast Over the period of 2015-2017, foreign trade Kamenogorsk and Almaty turnover of East Kazakhstan Oblast has seen an Services provided: average annual increase of 6%. Notably, China and • customs and brokerage services, as well as other Russia were the main trade partners. This suggests services for registration of all cargo categories the existence of reliable demand for warehousing, transportation and customs services. • cargo handling at terminals Growth in wholesale and retail trading volumes • provision of railway docks, open storage areas, Annual growth in the volumes of wholesale and warehouses and office premises retail trade in East Kazakhstan Oblast during the years of 2016 and 2017 was equal to 19% and 15% respectively. Considering a positive correlation between trading volume increases and increases in the occupancy of warehouses, it is expected that the Key investment data demand for services of UTLC will be rising. Index Results Growth in the volume of industrial product shipments from East Kazakhstan Oblast to Project implementation period, years 24 other regions of the country There was a 401% incl. investment stage, years 4 increase in the volume of shipped industrial operational stage, years 20 products from East Kazakhstan Oblast to other Investment, US$ thousands 29,674 regions of the country over the 2014-2016 period. Project NPV, US$ thousands 24,920 This creates an additional demand for distribution, storage and sorting of goods services. IRR, % 24.8% Low level of competition Currently, there are no EBITDA returns, % 87% similar enterprises in East Kazakhstan Oblast that Payback period, years 6.3 provide a full range of high-quality services related Discounted payback period, years 8.8 to transportation and logistics.

Quality indicators Project profitability

25,000 100% TLC facilities: 86% 88% 89% 89% 90% • TLC warehouse with a temporary storage 75% 72% zone (dry and climatic) 20,000 80% • Cargo container terminal: loading and 70% unloading platform with a railway, 15,000 60% container platforms, temporary storage 50% zone and a container crane 10,000 40% US$ thousands 30% • Parking lot for cars and trucks 5,029 3,985 • Admin and accommodation complex 5,000 20%

• Repair workshop with a garage for special 10,469 11,647 14,391 20,040 10% equipment - 0% TLC area: 10 hectares Year 3 Year 4 Year 5 Year 10Year 15Year 24 Revenue, US$ thousands EBITDA margin, %

KAZAKH INVEST: August 2018 Investment Proposal 71 Construction and operation of a container terminal at station

Project Description: construction of a modern Potential consumers multi-functional freight terminal (“Terminal”) near • Logistics companies (DHL, Kuehne & Nagel, DB the Dostyk railway station Schenker Logistics); Location: on a 150 ha land plot, between the main • Exporters/importers to and from Kazakhstan; railway and the Kazakhstan-China highway, 7 km • Transport and logistics companies engaged in south-west of the Dostyk railway station transit of cargo through Kazakhstan. Project initiator: Dostyk TransTerminal LLP Market Prerequisites: Capacity: Demanded transport corridor Terminal will be 100,000 units of 20-foot containers (“TEU”) per year located on the Europe-China corridor. Transit Primary activities: container cargo volume on this corridor has been growing two-fold every year since 2014. In 2017 it • Transshipment of container cargo; reached 201 thousand TEU • Transshipment of general, oversized, heavy and Dynamic growth in goods turnover through other types of cargo; Dostyk station. Transit container cargo volume • Other transport and logistics services (brokerage, passing through the station on the Europe-China cargo and container warehousing) corridor reached 114 thousand TEU in 2017. At the moment goods turnover volume passing through the station is only limited by the carrying capacity of the station.

Key Investment Indicators Project profitability

Indicator Results 18,000 88% 85% 85% 16,000 84% 86% Investment period 2018-2019 14,000 84% 12,000 80% 82% Investment amount, US$ thousands 26,099 10,000 78% 80% 8,000 78% NPV, US$ thousands 24,878 6,000 76% US$ thousands IRR, % 24.1% 4,000 74%

2,000 10,149 12,241 14,186 16,192 72% 8,920 Payback period, years 6.3 - 70% Year 4 Year 5 Year 10 Year 15 Year 20 Discounted payback period, years 8.8 Revenue, US$ thousands EBITDA margin, %

Location of the Project: Project life cycle:

The project will be implemented in stages. • At the first stage, it is planned to commission of a Terminal with 2x2 railway lines (1,435 mm and 1,520 mm). The launch of the first phase is scheduled for September 2019; • The subsequent stages will increase the capacity of the Terminal to 150-200 thousand TEU; There is a land fund and infrastructure to create a Dostyk Multifunctional Business Zone consisting of an terminal industrial and logistic zone near the Terminal.

KAZAKH INVEST: October 2018 Investment Proposal 72 Transport and logistics center (TLC)

Project overview: Market prerequisites: Construction of a modern class A transport and • Demand growth on the domestic market – logistics center (TLC), which will be a part of a Freight turnover volumes have grown from single and integrated TLC network, providing a 95 million tons to 118 million tons during the full range of commercial services for transport period of 2012-2016. and logistics. • Growth in transit volumes – According to Investment amount: US$ 76,406 thousand Strategy Partnership experts, transit Capacity: total area of 59,167 sq. meters and volumes through Kazakhstan's territory are 984 thousand tons of turnover per year expected to reach 36 million tons by 2020. Location: the city of Aktobe, adjacent territory • Enhancing competitiveness – Implemen- to the airport of Aktobe tation of the "Silk Road" project and an increase in the average annual volume of Project implementation period: transportations between Europe and Asia 24 years, including construction period (which, according to forecasts, should reach Target markets: Aktobe and nearby oblasts 800 million tons by 2020) increases the flow Types of products for storing: climatic of cargo through the territory of Kazakhstan. warehouse: food, vegetables, fruits; dry storage • Growth in trade volumes – Growth in warehouse: consumer goods, food products, wholesale and retail trade volumes during household chemicals, household appliances the period of 2013-2016 amounted to 8% and 3% respectively.

Key investment indicators Project profitability

20,000 90% 79% 79% Indicator Result 76% 78% 18,000 74% 80% Investment amount, US$ 76,406 16,000 70% thousands 14,000 60% Project NPV, US$ thousands 10,130 12,000 50% 10,000 40% IRR 11.5% 8,000 30% 6,000 US$ thousandsUS$ EBITDA margin 74-80% 20% 4,000 3,238 Payback period, years 2,000 10% 13,186 17,330

11.4 7,901 9,341 0 0% Discounted payback period, years 24 Year 4 Year 5 Year 6 Year 14 Year 24 Revenue, US$ thousands EBITDA margin, %

Project location: Aktobe Oblast, TLC location advantages the city of Aktobe The geographic location of the oblast has following advantages: 1) bordering with 6 Kazakhstan oblasts (West Kazakhstan Kostanay Oblast, Atyrau Oblast, Mangystau Oblast, oblast West Kaz. Kyzylorda Oblast, Karaganda Oblast, Oblast Kostanay Oblast), as well as with Russia and

Atyrau Aktobe oblast Uzbekistan; 2) proximity to key oblast Karaganda oblast transportation channels ("Western Europe - Western China" highway, Zhezkazgan- Beineu railway). Thus, the transport and Kyzylorda Mangystau oblast logistics center in Aktobe city has potential oblast to become the main logistics center for servicing transit and interregional transportations.

KAZAKH INVEST: January 2018 Investment proposal 73 TOURISM

74 Development of a resort complex on Bolshoe Chebachye and Tekekol lakes

Project description: Market prerequisites: Development of a multifunctional resort complex Growing demand for tourism services The ("Complex") in Burabay resort area, on the shores of average annual growth in the number of domestic Bolshoye Chebachye and Tekekol lakes, with a year- tourists in Kazakhstan in 2013-2017 amounted to round operational schedule. 10%, while the number of outbound tourists was almost left unchanged over the last five years. Location: Average annual growth in the number of inbound , Burabay resort area, the shores of tourists in 2016-2017 amounted to 18%. In 2017, Bolshoye Chebachye and Tekekol lakes the number of inbound tourists (mainly from the CIS Project initiator: countries) amounted to 7.7 million people. Burabay Damu LLP: subordinate organization of the Increase in attendance of Burabay resort area Office of the President's Affairs ("OPA"). Burabay resort area is one of the most popular Governmental support: resorts in Kazakhstan. In 2017, 150,000 people have stayed at its guest stay facilities. While an OPA provides a land plot and the government estimated total attendance of the resort area came finances construction of engineering infrastructure at around 600,000 people over the same period. According to expert forecasts, the average annual growth of the total resort attendance untill the 2030 will be equal to 4.1%. Low market competition level To date, in Burabay resort area there are no tourist facilities providing a similar array of accomodation and leisure services, and with similar quality standards. The only complex with a similar scale and versatility of the provided services is the "8 lakes" Park resort Key investment indicators complex, located near Almaty. Indicator Results Project implementation period, years 24 incl. investment stage, years 13 Capacity projections for the Complex by 2040: operating stage, years 11

Investment amount, US$ thous. 190,151 Capacity of the guest stay facilities: accommodating Project NPV, US$ thous. 53,898 380 thousand tourists per year; IRR, % 17.4% Residential area population: 2000 people; EBITDA margin, % 42% One-off visits to the leisure and entertainment Payback period, years 10.6 facilities of the Complex: 3.3 million per year. Discounted payback period, years 17.9

Key facilities of the Complex: Land plot area • Aqua-park and adventure park; 233 hectares • The ski arena; Guest stay facilities • Center for learning and entertainment; • Family hotel; • Health recreational center; • Hotel for adults; • City center with commercial areas; • Hotel for sports events and meetings; • Sports complex. • Guest cottage houses and villas. Residential area Total capacity of the guest stay facilities: 800 rooms • 340 cottage houses; (1900 beds). • 84 villas. Hotel categories: 4/4+. Construction of all of the facilities of the Complex is divided into 3 phases, with the planned completion of all construction works in 2030.

Leisure and entertainment facilities

75 Construction of "Kokterek" resort town

Project description

The project plan is to build a new resort town "Kokterek" (in the village "Saryagash") in order to develop health tourism by providing services with mineral and thermal waters. The project includes a hotel, a sanatorium, indoor and outdoor swimming pools (thermal water) and spa. The advantage of this project is its proximity to Uzbekistan, source of current tourists in Kazakhstan. Also, the availability of natural mineral water Saryagash.

Project location Investment highlights

Upfront investment $162 MM

NPV $16 MM KAZAKHSTAN

IRR 11%

Payback period 12 years UZBEKISTAN TURKESTAN REGION

Market analysis Competitive advantage

Expected population growth creates demand for I. Share of visitors to resort organizations: the increase in domestic tourism. largest region in Kazakhstan by the volume of Forecast of population growth in short-term in Turkestan visitors in resort organizations is SKO, - 30% of the region, mln people market, most of which, ~55% is in the region of 22.3 22.9 19.6 20.3 20.9 21.6 Saryagash. 18.3 5.0 3.4 3.7 4.0 4.4 4.7 South 3.0 Kazakhstan II. Advantageous geographical location: the resort 15.3 16.2 16.6 16.9 17.2 17.6 17.9 Other area is near historical places of Kazakhstan and in regions 15 km. from Uzbekistan, which will additionally 2018 2025 2030 2035 2040 2045 2050 provide growth of foreign tourists. Growth of visitors in the resort sanatorium of the III. Favorable natural conditions: the project is Turkestan region from 2015-2017. increased by located near the unique sources of mineral waters 50%. of Saryagash, where tourists have been coming Share of Turkestan region Number of users served in from around the world for about 6 years. sanatoriums Saryagash region, served n the sanatorium, thousand people thousand people 46.7 53.9 288 35.8 5.2 7.4 30% 2.0 Turkestan region 46.5 33.8 41.5 70% Other regions Value proposition

2015 2016 2017 2017 The project provides opportunity to use unique Other places Sanatoriums location in Kazakhstan and develop both internal and external tourism. Target Investor Mandate • Long cheap financial resources • Transfer of advanced technologies

Sources: Statistics Committee of the Ministry for national economy of the RK 76 Construction of the “ resort” reсreation area

Project description The project plan is to construct a resort close to the capital of Kazakhstan - Astana. The key driver is a growing population of the most wealthy region of the country and a lack of large resorts near Astana, where in 2017 the population amounted to 973 thd people. The resort has a logistics advantage in a growing segment of the market. It is expected that the company will provide 126 rooms, 15 guest houses, 3 conference rooms and offer SPA, sports and restaurant services for guests.

Project location Investment highlights

Upfront investment $35 MM RUSSIA ASTANA NPV $22 MM KAZAKHSTAN

IRR 19%

CHINA Payback period 7 years

Market analysis Competitive advantage Expected urbanization in Astana drives demand for I. Well-established infrastructure that allows recreational spaces. Expansion of market will boost frequent and fast movement to the location of a necessity for range of variety and number of potential hotel. services available for recreational purposes. II. Distance to the area is twice shorter from Astana Population growth forecasts in Astana, mln people than to other large recreational centres in the region 1,5 0,9 1,2 (Borovoe and Zerendy). This factor can attract citizens of Astana and frequency of tourists is expected to be higher than of competitors. 2017 2020 2030 Number of visitors to touristic areas in the region is Distance of largest resort areas from Astana, km increasing. There is also a steady growth of foreign tourists in Kazakhstan, who are also expected to be Zerendy 319 resort visitors. Number of residents in selected Number of foreign tourists Borovoe 257 touristic area, thd people in Kazakhstan, mln people Akkol resort 115 1112 3,6 1039 3

927

2015 2016 2017 2016 2017 Value proposition

Target Investor Mandate This project proposes to take advantage of the Long cheap financial resources growing tourism demand in the most developed region of country.

Sources: Statistics Committee of the Ministry for national economy of the RK 77 Development of a multifunctional amusement park in Almaty Oblast

Project Description: Market prerequisites: Development of a multifunctional amusement park Growing demand for tourism services– Average «HAPPYLAND PARK» in Almaty Oblast («Project»). annual growth in the number of domestic tourists in Project goal: To provide citizens of Kazakhstan and Kazakhstan in 2013-2017 was 10%. The average Central Asia the opportunity to visit a world-class annual growth in the number of incoming tourists in amusement park. 2016-2017 was 18% (2017 – 7,7 million people). The number of visits to parks and recreation areas in Location: 23 km from Almaty city Kazakhstan was more than 27 million in 2017. Project initiator: «HAPPYLON» group of Geographical location – The park will be located, companies, which belong to an international network 20km from the largest megacity of Kazakhstan with of indoor theme parks and restaurants, providing a population of 1.8 million people alongside the new services for family holidays. highway Almaty – Kapshagai. The target audience of Governmental support: The project corresponds the project covers 162 million people – Kazakhstan, to the objectives of the national concept of Central Asia, border regions of Russia, China and the development of the tourist industry until 2023, Caucasus. which includes the creation of a cultural and tourist cluster “Almaty –free cultural zone of Kazakhstan” Competence of the initiator– HAPPYLON is the leading player in the «Indoor amusement parks» Area of the Park: 193 ha segment on Kazakhstan market, with a share of more than 70%. The company has 12 years of experience in creating and managing projects in the entertainment industry. The number of visitors in 2017 was more than 1 million people. Key investment indicators Project Profitability Indicator Result 80 000 61% 62% 70% Construction period, years 6 59% 70 000 60% 60 000 Investment, US$ thousands 125,989 43% 50% 50 000 87,000 40% Project NPV, US$ thousands 40 000 30% IRR, % 15.1% 30 000

32% 939 19 20 000 20% EBITDA returns, % 55% thousands US$ 10 000 10% 55 314 55 915 63 344 70 2 8822 Payback period, years 8.7 0 0% Year 2 Year 3 Year 7 Year 10 Year 13 Discounted payback period, years 11.7 Revenue EBITDA margin, % Key Project Facilities

Amusement Park, 45 ha: Indoor entertainment center, 5 ha: • Children’s zone – 20 attractions; • Ethnographic park; • Family zone – 20 attractions; • Happy City (Professions Park) and Science • Extreme zone – 10 attractions. Park; • Starting platforms for large attractions and karting. Waterpark, 5 ha:

• Open air – 3 ha, 26 attractions SPA & Resort Hotel, 15 ha: • Indoor – 1 ha, 16 attractions. • Hotel – 200 rooms; • Cottage house town – 150 rooms and 100 Additional segments: houses • Nature park, 20 ha; • Bungalow complex – 100 rooms; • Golf club, 78 ha. • Spa complex– 0,5 ha.

78 Development of a multifunctional amusement park in Shymkent

Project Description: Market prerequisites: Development of a multifunctional amusement park Growing demand for tourism services– Average «HAPPYLAND PARK» in Shymkent («Project»). annual growth in the number of domestic tourists in Project goal: To provide citizens of Kazakhstan and Kazakhstan in 2013-2017 was 10%. The average Central Asia the opportunity to visit a world-class annual growth in the number of incoming tourists in amusement park. 2016-2017 was 18% (2017 – 7,7 million people). The number of visits to parks and recreation areas in Location: : 20 km from the center of Shymkent, on Kazakhstan was more than 27 million in 2017. the shore of the Badam reservoir Geographical location – The park will be located Project initiator: «HAPPYLON» group of 20 km from the agglomeration of Shymkent with a companies, which belong to an international network population of 1.8 million people The target audience of indoor theme parks and restaurants, providing of the project covers 162 million people – services for family holidays. Kazakhstan, Central Asia, border regions of Russia, Governmental support: The project corresponds China and the Caucasus. to the objectives of the national concept of development of the tourist industry until 2023 Competence of the initiator– HAPPYLON is the leading player in the «Indoor amusement parks» Area of the Park: 152 ha segment on Kazakhstan market, with a share of more than 70%. The company has 12 years of experience in creating and managing projects in the entertainment industry. The number of visitors for 2017 was more than 1 million people.

Key investment indicators Project Profitability

Indicator Result 60 000 60% 62% 59% 60% Construction period, years 4 50 000 57% 58% Investment, US$ thousands 56,388 40 000 55% 56% Project NPV, US$ thousands 68,727 30 000 54% IRR, % 18.4% 51% 52% 20 000

US$ thousands US$ 50% EBITDA returns, % 57% 10 000 48% 24 642 24 452 30 355 39 569 49

Payback period, years 7.5 359 15 0 46% Discounted payback period, years 10.1 Year 3 Year 5 Year 7 Year 10 Year 13 Revenue EBITDA margin, % Key Project Facilities

Amusement Park, 45 ha: Indoor entertainment center, 2 ha: • Children’s zone • Starting platforms for large attractions and • Family zone karting. • Extreme zone. • Large food-court – 0.12 ha • Recreational areas Waterpark, 5 ha: • Open air SPA & Resort Hotel, 15 ha: • Hotel & SPA – 200 rooms Additional segments: • Cottage house town – 200 rooms • Nature park, 20 ha; • Bungalow complex – 160 rooms. • Golf club, 78 ha.

79 PUBLIC-PRIVATE PARTNERSHIP

80 Multi-profile Hospital in Almaty

Project overview: Market prerequisites: Construction of a modern multi-profile • High demand for medical services. Almaty hospital to provide a full range of medical and Almaty Oblast report high statistics of services, as well as clinical training for hospitalizations, visits to out-patient medical students and doctor retraining clinics and overload of hospital beds. Investment amount: US$ 125,717 thousand According to 2016 results, the need for in-patient care per 100 thousand Capacity: a hospital for 300 beds and an out- residents in Almaty amounts to 398 patient clinic with a capacity of 150 visits per hospital beds. shift (2 shifts, 300 visits per day) • Proximity to southern regions. The Location: Almaty, S D Asfendiyarov Kazakh majority of country population live in National Medical University (“KazNMU”) southern regions, with high population Project implementation period: density. However, the availability of 15.3 years, including 3,3 years of construction hospital beds in these regions is poor. PPP model: Concession (infrastructure • Highly demanded medical profiles are model) absent among medical services rendered Suppliers: manufacturers of medical by KazNMU clinics. Moreover, the equipment and medicines majority of KazNMU policlinics, including the building of the university, were built Clients: Almaty residents, non-residents, between 1932-1982, which does not foreigners, corporate clients, insurance meet the modern standards of training companies and retraining of medical personnel. Overall, 71% of hospital infrastructure in Almaty are worn out. Key investment indicators Revenue forecast

Indicator Result 93% 35 000 93% Investment amount, US$ ths 125,717 92% 30 000 91% 90% NPV, US$ ths 13,140 25 000 89% 90% 89% 89% IRR 16% 20 000 89% 87% 15 000 88% EBITDA margin 85-93% 87% US$ thousands US$ 10 000 86% Payback period, years 8.2 5 000 85% Discounted payback period, 29 795 29 402 27 958 27 049 23 985 17 766 11.4 0 84% years 2024 2025 2026 2027 2028 2035

Revenue, US$ thousands EBITDA margin, %

Quality indicators

Project participants Clinic structure • Day-stay center; • Private partner Private partner income • Diagnostic department; • State partner (Kazakhstan • Compensation of investment and • Ministry of Health) operating costs; Family Health Center. • Hospital structure • The operator of medical services Management fee; • Additional income • Medical rehabilitation; • (S D Asfendiyarov Kazakh (pharmacy, waste utilization, • National Medical University) Surgical departments; canteen) • Therapeutic departments.

KAZAKH INVEST: January 2018 Investment proposal 81 Integrated Clinic for 1,265 beds in Almaty

Project overview: Market prerequisites: Construction and operation of an Integrated • High demand for medical services. Almaty Clinic under the S D Asfendiyarov Kazakh and Almaty Oblast report high statistics of National Medical University through the hospitalizations, visits to out-patient combination of leading medical and scientific- clinics and overload of hospital beds. research institutes and centres in Almaty According to 2016 results, the need for Investment amount: US$ 336,496 thousand in-patient care per 100 thousand Capacity: a hospital for 1,265 beds, including residents in Almaty amounts to 398 1,065 profile beds, 55 beds for the hospital beds. rehabilitation department and 145 beds for • Proximity to southern regions. The the day hospital majority of country population live in Location: Almaty, S D Asfendiyarov Kazakh southern regions, with high population National Medical University (“KazNMU”) density. However, the availability of hospital beds in these regions is poor. Project implementation period: • Highly demanded medical profiles are 15.3 years, including 3,3 years of construction absent among medical services rendered PPP model: Concession (infrastructure by KazNMU clinics. Moreover, the model) majority of KazNMU policlinics, including Suppliers: manufacturers of medical the building of the university, were built equipment and medicines between 1932-1982, which does not meet the modern standards of training Clients: Almaty residents, non-residents, and retraining of medical personnel. foreigners, corporate clients, insurance Overall, 71% of hospital infrastructure in companies Almaty are worn out.

Key investment indicators Revenue forecast

Indicator Result 93% 90 000 93% Investment amount, US$ ths 336,496 80 000 92% 70 000 91% NPV, US$ ths 35,925 60 000 89% 89% 90% 89% 88% 50 000 89% IRR 16% 40 000 87% 88% 30 000 87% EBITDA margin 85-93% thousands US$ 20 000 822 034 744 281 037 683 86%

10 000 81 81 75 73 65 48 85% Payback period, years 8.2 - 84% Discounted payback period, 2024 2025 2026 2027 2028 2035 11.3 years Revenue, US$ thousands EBITDA margin, %

Quality indicators

Clinic structure Project participants •Surgery Center; • Private partner Private partner income •Center for Cardiology and Internal • State partner (Kazakhstan • Compensation of investment and Diseases; Ministry of Health) operating costs; •Center of Gynecology and • The operator of medical services • Management fee; Perinatology; • • (S D Asfendiyarov Kazakh Additional income •Center of Oncology; National Medical University) (pharmacy, waste utilization, canteen) •Surgery Block; •Pediatric Unit.

KAZAKH INVEST: January 2018 Investment proposal 82 Multi-profile hospital in Karaganda

Project overview: Market prerequisites: Construction of a modern multi-profile • hospital to provide a full range of medical High demand for medical services in the services, as well as clinical training for medical region students and doctor retraining in the latest • High demand for hospital beds. medical advancements According to 2016 results, the need for Investment amount: US$ 125,717 thousand in-patient care per 100 thousand people Capacity: a hospital for 300 beds and an out- in Karaganda amounts to 612 hospital patient clinic with a capacity of 150 visits per beds. A complete coverage of the shift (2 shifts, 300 visits per day) population with in-patient care would Location: require 8,230 hospital beds. Most Karaganda, Karaganda State Medical medical organizations in Karaganda University (“KGMU”) were built in 1930-1990. and are in Project implementation period: adulthood. 15.3 years, including 3,3 years of construction • Educational and scientific activities in PPP model: Concession (infrastructure or health care. Highly demanded medical integration model) profiles are absent among medical Suppliers: manufacturers of medical services rendered by KGMU clinics. equipment and medicines Moreover, the remoteness of medical Clients: Karaganda residents, non-residents, institutions cooperating with the foreigners, corporate clients, insurance university impede the continuity of the companies teaching process for students and tutors. Key investment indicators Revenue forecast Indicator Results

93% Investment amount, US$ ths 125,717 35 000 93% 30 000 92% 90% 91% NPV, US$ ths 13,140 25 000 89% 89% 89% 90% 20 000 87% 89% IRR 16% 15 000 88% 87% 10 000 793 398 954 045 981 762

US$ thousands US$ 86% EBITDA margin 85-93% 5 000 29 29 27 27 23 17 85% - 84% Payback period, years 8.2 2024 2025 2026 2027 2028 2035 Discounted payback period, 11.4 years Revenue, US$ thousand EBITDA margin, %

Quality indicators

Project participants Clinic structure Private partner income • Private partner • Day-stay center; • Compensation of investment and • Diagnostic department; • State partner (Kazakhstan operating costs; • Family Health Center. Ministry of Health) • Management fee; Hospital structure • The operator of medical • Additional income services (pharmacy, waste utilization, • Medical rehabilitation; • KGMU (under infrastructure canteen) • Surgical departments; model)/private partner (under • Therapeutic departments. integration model)

KAZAKH INVEST: January 2018 Investment proposal 83 INVESTMENT OPPORTUNITIES 2018 OF KAZAKHSTAN Niche projects