INVESTMENT OPPORTUNITIES 2018 OF KAZAKHSTAN Evrak doğrulamak için: https://e-belge.sanayi.gov.tr/ Belge Kodu: ef96e957-da93-41e0-a52a-45eaeea945d8e5b4d352-3513-470e-ab6c-b78e0b57b6daNiche projects ile erişebilirsiniz. Machinery construction and metallurgy Production of copper pipes Project overview: Market prerequisites: Construction of a copper pipes production • Import substituition – Kazakhstan does plant not have copper pipes production plant. Investment amount: US$ 59,345 thousand Demand in the domestic market is fully covered by imported goods. Products: copper pipes with external diameter of 6-46 mm as per ASTM standard • Export potential. Kazakhstan’s geographical location and the high Location: demand for copper pipes in China, Special Economic Zone Saryаrka, Russia, Ukraine and Belarus Karaganda city demonstrates opportunity to boost sales. Project implementation period: • Stable growth of raw materials 24 years, including 1 year of construction production. In 2016, Kazakhstan Target markets: Kazakhstan, Russia, China, produced 408,435 tonnes of refined, Belarus, Ukraine and Austria unprocessed and unalloyed copper Suppliers: local suppliers of raw materials, (+ 3.5% compared to 2015). foreign equipment suppliers Consumers: companies operating in the fields of gas supply, heat supply and automotive industry Project profitability Key investment indicators 250,000 30% 26% Indicator Result 25% 200,000 20% 18% 18% Investment amount, US$ thousands 59,345 20% 150,000 14% 15% Project NPV, US$ thousands 22,587 100,000 US$ thousandsUS$ 10% IRR, % 21.4% 50,000 46,536 33,338 5% EBITDA margin, % 19% 95,043 187,842 235,898 0 0% Payback period, years 6.4 Year 2 Year 3 Year 4 Year 14 Year 24 Discounted payback period, years 9.6 Revenue, US$ thousands EBITDA margin, % Plant location Special economic zone provides a special legal regime and preferences to its residents, such as, provision of land plots for the secondary land use (sublease) and infrastructure facilities for lease (sublease) to the persons engaged in ancillary services. Additionally, businesses in the special economy zone receive the exemption from taxes and custom payments until 2036. Kazakhstan’s geographical location provides convenient access to markets in neighboring countries, which expands export potential for the produced products. The high demand for copper pipes in China, Russia, Ukraine, Belarus and Austria demonstrates opportunity to boost sales. KAZAKH INVEST: January 2018 1 Evrak doğrulamak için: https://e-belge.sanayi.gov.tr/Investment Belge Kodu: proposal ef96e957-da93-41e0-a52a-45eaeea945d8e5b4d352-3513-470e-ab6c-b78e0b57b6da ile erişebilirsiniz. Machinery construction and metallurgy 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$ thousandsUS$ 14% 10,000 20% EBITDA margin, % 27% 5,000 10% Payback period, years 5.1 19,705 24,856 28,463 31,926 36,377 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 1 Evrak doğrulamak için: https://e-belge.sanayi.gov.tr/Investment Belge Kodu: proposal ef96e957-da93-41e0-a52a-45eaeea945d8e5b4d352-3513-470e-ab6c-b78e0b57b6da ile erişebilirsiniz. Machinery construction and metallurgy Production of power transformers Project overview: Market prerequisites: The expansion of production of Alageum Electric • Availability of basic materials – almost group of companies, Kazakhstan’s only all of the basic materials and manufacturer of 110 kV and 220 kV power components necessary for the transformers implementation of the Project are Investment amount: US$ 13,000 thousand available in Kazakhstan. Products: 110 kV and 220 kV power • Demand – from mining businesses and transformers power transmission companies. Location: • Competitive advantage – affordable prices for products (in comparison with Tassay industrial zone, Shymkent city imported analogues) and compliance Project implementation period: with quality standards. 24 years, including 3 years of construction • Growth of export potential - low level of Target markets: CIS countries import duties in neighboring countries. Suppliers: local and foreign suppliers of raw materials Consumers: grid companies, in particular, energy distribution companies Project profitability Key investment indicators 140,000 100% Indicators Result 80% 120,000 Investment amount, US$ 60% 13,000 29% 30% 30% thousands* 100,000 26% 40% 20% Project NPV, US$ thousands 9,053 80,000 0% 60,000 IRR, % 20.2% -41% -20% US$ thousandsUS$ 40,000 -40% EBITDA margin, % 26-30% 26,159 -60% 20,000 -80% Payback period, years 6.3 3,180 42,042 91,420 120,374 0 -100% Year 2 Year 3 Year 4 Year 14 Year 24 Discounted payback period, years 10.0 Revenue, US$ thousand EBITDA margin, % * 49.33% share acquisition Project timeline The project was launched in 2016. To date the majority of the capital expenditures have already been incurred by the project holder Asia Trafo LLP. 2016-2018 2019-2020 Year 24 Construction started, intangible assets, technological equipment, 49.33% share acquisition*: overhead cranes and special US$ 13,000 thousand machinery acquired Construction period Production and sale stage * 49.33% share is one of the basic assumptions of this investment project and is subject to further discussion. KAZAKH INVEST: January 2018 1 Evrak doğrulamak için: https://e-belge.sanayi.gov.tr/Investment Belge Kodu: proposal ef96e957-da93-41e0-a52a-45eaeea945d8e5b4d352-3513-470e-ab6c-b78e0b57b6da ile erişebilirsiniz. Metallurgy and mechanical engineering Launch of long products manufacturing at Aktau Foundry in Aktau city Project description: Market background: This investment project provides for the launch of Growth in consumer demand for long products. production of long products at the Aktau Foundry, According to Metal Expert forecasts, in the non- carried out as part of a comprehensive residential construction sector, the main drivers of reengineering program. demand will be actively initiated government programs and measures to stimulate industrial Production capacity: production and investment. In the conservative 180,000 tones/year scenario, demand is expected to grow by 3-5%. Project objectives: Import substitution. Growth in consumer demand •Creation of an efficient integrated business for long has sharpened competition between domestic product production and its sale on domestic and producers and suppliers from the Russian foreign markets; Federation. Also, in Kazakhstan there are no enterprises producing a full range of long products. •Obtaining high quality, competitive products using Export Development. Over the past five years, advanced approved production technologies Kazakhstan mainly exported rebars (among long corresponding to the world class level of the long products). In the structure of exports, the share of products manufacturing. Tajikistan in the total volume of exports of rebars is Products: rebar, I-beam, structural channel, angle. 73% (86,663 tons); Russian Federation and Initiators: ALZ LLP and BCC Invest. Kyrgyzstan account for 11% (13,217 tons) and 10% (12,031 tons), respectively. Key investment indicators Project profitability 30% Indicator Results 250,000 25% 26% 22% Investment amount, US$ thousands 79,348 200,000 15% 11% 12% 13% 20% Project NPV, US$ thousands 59,687 150,000 IRR, % 15.9% 100,000 10% EBITDA margin, % 19% 50,000 140,554 134,421 146,270 151,734 198,625 240,821 247,970 US$ thousands US$ Payback period, years 9.7 0 0% Year Year Year Year Year Year Year 4 5 6 7 15 23 24 Discounted payback period, years 16,4 Revenue, US$ thousands EBITDA margin, % Technological process: Project loaction: Furnace-charge preparation Mangystau oblast, Aktau, Industrial area Furnace-charge loading into the furnace Steel desulfurization Nur-Sultan Steel deoxidation Drainage of steel into the Aktau Foundry intermediate ladle Steel casting into CCM(a) mold Pulling the ingots with the dummy bar Almaty Workpiece cooling Final product Evrak doğrulamak için: https://e-belge.sanayi.gov.tr/KAZAKH Belge Kodu: INVEST: ef96e957-da93-41e0-a52a-45eaeea945d8e5b4d352-3513-470e-ab6c-b78e0b57b6da