Russia Through a Lens Deloitte Research Centre | Fourth Issue | 3Q 2016

Russia through a lens Deloitte Research Centre | Fourth issue | 3Q 2016

Macroeconomic outlook Steel and iron market Top steel producers – 2015 Recommended visit Key Russian macroeconomic report 2016 Worldwide and in Russia Practical conference indicators in 3Q 2016 Depreciating Russian rouble on corporate innovations offsets financial losses and Tech Days of steel-makers Page 04 Page 12 Page 14 Page 19 Russia through a lens

Content

Page 04 Page 12 Page 20

We are pleased to present the latest edition of Russia Through a Lens, the macroeconomic journal produced 04 12 by Deloitte Research Centre in Moscow. Russia in figures Research Centre Established in December 2015, the journal is published Macroeconomic outlook market analysis quarterly and falls under the Research Centre’s (GDP, inflation, trade indicators, Steel and iron market report. monitoring activities. currency rate, Central Bank key rate, top-pricing, etc.). In Russia Through a Lens, we focus on current key trends in the Russian economy and present our research key findings.

If you have any questions or suggestions regarding this 17 18 research, please do not hesitate to contact us: [email protected] Top M&As Global wind Top-5 deals in Russia. Top news about Sino- Russian relations.

03 Russia through a lens | Russia in figures Russia in figures

GDP

GDP per year 50% 150, 000 25% 29% 30% 130, 000 24% 24% 19% 12% 6% 10% 4% 10% 110, 000 –6% –0.6% 8.2% 8.5% 5.2% 4.5% 4.3% 3.5% 1.3% 0.7% –3.7% –10% 90, 000 –7.8% 77,945.1 80,804 80,319.5 –30% 70, 000 66,926.9 71,016.7 59,698.1 –50% 50, 000 46,308.5 –70% 41,276.8 38,807.2 30, 000 26,917.2 33,247.5 –90% 21,609.8 10, 000 –110% 0 –130% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F Source: Rosstat, Ministry of GDP, bln RUB GDP growth (at current prices) GDP volume indices Economic Development (forecast)

The data for the period from 2011 includes changes in the balance of payments developed related to the implementation of the international according to the methodology provided methodology for housing services evaluation; to the by the Sixth Edition of the Balance evaluation of capital consumption, taking into account of Payments and International Investment its current market value; to the conformation of data Position Manual (BPM6) introduced on exports and imports with the data presented by the International Monetary Fund.

3Q GDP

25,000 21,294 21,337 20,407 20,000 18,543 17,442 15,664 15,000 11,542 12,086 10,411 10,000 8,903 7,276

5,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F*

GDP, bln RUB

Additional information:

• Ministry of Economic Development forecasts in Q3 2016 Forecasts for 2016: is lower than in Q2 2016: +0.6% in 2017, +1.7% in 2018, +2.1% in 2019.

Ministry of Central Russian academy of Standard A. Kudrin, Gaidar International JPMorgan • The Central Bank forecasts +0.5 Economic Bank sciences institute & Poors ex-Minister Institute Monetary to 1% and the IMF forecasts +1% Development of economic of Finance Fund in 2017. forecasting (IEF RAS) • Institute of Economic Forecasting -0.3% to - of the Russian Academy of -0.6% -1.0% -1.3% -1% -2% -1.2% -0.6% 0.7% Sciences (IEF RAS) forecasts in 2017: +1.5% in 2018: +2.2%

04 Russia through a lens | Russia in figures

Inflation

Inflation, %

14.0 13.3 12.94

12.0 11.9 12.2 11.4

10.0 8.8 9.0 8.0 8.8

6.6 6.1 6.5 6.0 6 4.9 5.8 4.4 4.0 4.1 4 4

2.0

0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015 2016 2017 2018 2019 2020

Rosstat (Fact) Central Bank (forecast) Ministry of Economic Development (forecast)

Forecasts:

Source 2016

International Monetary Fund 6.6%

World Bank 5.9%

Gaidar Institute 6.5–7.0%

Gaidar Institute (Consumer Price Index) 7.7%

Inflation in August in 2016: 6.9 percent* Inflation target in 2017: 4 percent**

*The inflation figure is the consumer price growth rate over the corresponding month of the previous year. **The inflation target is set for the consumer price growth rate over the corresponding month of the previous year (Central Bank).

05 Russia through a lens | Russia in figures

Trade structure

Period Jan-Apr 2016

•• Foreign trade turnover: USD 249,4 billion (-20,8 percent YoY)

•• Trade balance: surplus of USD 57,8 billion (-USD 30,8 billion YoY)

•• Exports: USD 153,4 billion (-27,1 percent YoY)

•• Imports: USD 95,6 billion (-8,0 percent YoY)

Imports from non-CIS countries (period Jan-Jul 2016):

Percentage in imports In monetary In physical Categories from non-CIS countries terms terms

Textiles and 6.1% –7.3% –9.6% footwear

Metal products 5.5% –11.4% –11.7% •• Ferrous metals (– 10.7%) •• Varnishes and paints (–5.6%) Chemical products 20.0% –3.7% 3.8% •• Plastics (–1.9%) •• Pharmacuticals (–3.8%) •• Optical instruments and apparatus (–0.4%) •• Mechanical equipment (–7.3%) Machinery and auto 47.9% –5.1% n/a •• Cars (–27.5%) •• Trucks (–19.1%) •• Beef (–22.5%) Food and raw •• Fish (–13.8%) materials for food 13.3% –10.2% –10.8% •• Cheese and curd (–19.6%) production •• Citrus plants (–6.2%)

Imports from CIS countries (period Jan-Jul 2016):

Percentage in imports In monetary In physical Categories from CIS countries terms terms

Energy products 4.2% –71.0% –16.6% •• Pipes (38.2%) Metal products 12.9% –8.8% 8.6% •• Flat–rolled iron or non–alloy steel products (22%) •• Products of organic chemistry (23.1%) •• Plastics (22.5%) Chemical products 14.6% –21.4% n/a •• Pharmacy (14.6%) •• Varnishes and paints (52%) •• Mechanical equipment (–10.9%) •• Electrical equipment (–12.6%) Machinery and auto 23.3% 0.7% n/a •• Optical instruments and apparatus (–26.4%) •• Cars (–45.0%) •• Trucks (83.3%) •• Pork (–83.1%) Food and raw •• Poultry (–15.9%) materials for food 23.2% n/a 9.2% •• Butter (–5.2%) production •• Cheese (23.8%) •• Milk (1.2%) Textiles and 7.8% 24.9% 39.1% footwear

Source: Federal Customs Service

06 Russia through a lens | Russia in figures

Exports to non-CIS/CIS countries (January-July 2006-2016)

80 72.4 73 74.5 73.4 70.3 70.8 72.7 70 68 69.6 66.4 66.2 60 55.3 53 54.2 50 47 44 43.6 40 40.9 42.3 39.5 35.5 34.8 30

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jan-Jul Percentage in Exports to non-CIS countries Percentage in Exports to CIS countries Source: Federal Customs Service

Exports to non-CIS countries (period Jan-Jul 2016):

Percentage in exports In monetary In physical Categories to non–CIS countries terms terms •• Crude oil (6.2%) •• Oil products (–12.6%) Energy products 62.2% –34.3% 1.8% •• Coal (9.1%) •• Natural gas (11.8%) •• Copper and copper alloys (–7.6%) •• Aluminum (4.8%) Metal products 10.1% –22.3% 3.4% •• Semi–finished iron or non–alloy steel products (3.4%) •• Products of inorganic chemistry (6.4%) •• Fertilisers (–7.6%) Chemical products 6.4% –28.0% –5.5% •• Plastics (–13.2%) •• Pharmaceuticals (–20.7%) •• Rubber (4.8%) •• Mechanical equipment (–41.6%) Machinery and auto 6.5% –6.4% n/a •• Electrical equipment (9.3%) •• Optical instruments and apparatus (33.8%) Food and raw materials for food 4.7% 7.3% 27.40% production •• Lumber (23.9%) •• Plywood (16.5%) Timber, pulp and 3.5% 14.4% n/a •• Cellulose (2.6%) paper products •• Rough wood (9%) •• Newsprint (–4.8%)

Exports to CIS countries (period Jan-Jul 2016):

Percentage in exports In monetary In physical Categories to CIS countries terms terms •• Oil products (–15%) •• Coal (–2.8%) Energy products 34.8% –36.0% –3.9% •• Electrical energy (–36%) •• Natural gas (–17.7%) •• Ferrous metals (–10.3%) Metal products 12.0% –16.3% –9.8% •• rolled iron (6.8%) •• Copper and copper alloys (11.6%) •• Pharmaceuticals (15%) •• Products of inorganic chemistry (13.9%) •• Products of organic chemistry (9.3%) Chemical products 16% –5.0% 13% •• Fertilisers (26.6%) •• Plastics (–7.4%) •• Rubber (13.1%) •• Mechanical equipment (–18.3%) Machinery and auto 14.1% –33.3% –36.80% •• Electrical equipment (–5.8%) Food and raw •• Fish (13.5%) materials for food 10.8% –8.1% –0.4% •• Cheese and curd (5.8%) production •• Sunflower oil (11.4%) •• Lumber (–22.1%) Timber, pulp and •• Plywood (–4%) 4.5% –12.3% –10.9% paper products •• Newsprint (–8.4%) •• Cellulose (–8.8%) Source: Federal Customs Service 07 Russia through a lens | Russia in figures

Currency rate

RUB vs. EUR and USD, Jan 2014 – Sept 2016 100 90 80 70 60 50 40 30 20 10 0 1-Jul-15 1-Jul-16 1-Jul-14 1-Jan-15 1-Jan-16 1-Jan-14 1-Jun-15 1-Jun-15 1-Jun-16 1-Jun-14 1-Apr-15 1-Apr-16 1-Apr-14 1-Oct-15 1-Oct-14 1-Dec-15 1-Dec-14 1-Sep-15 1-Feb-15 1-Sep-16 1-Sep-14 1-Feb-16 1-Feb-14 1-Aug-15 1-Aug-16 1-Aug-14 1-Mar-15 1-Mar-16 1-Mar-14 1-Nov-15 1-Nov-14 1-May-15 1-May-16 1-May-14

Euro US dollar Source: Central Bank of Russia

EUR-RUB USD-RUB

100.00

80.00 +3% 75.04 –4% +3% –3% 70.14 72.12 72.36 66.78 63.00 64.61 64.56 60.00

40.00

20.00

0.00 Q3 2015 Q3 2016 September September Q3 2015 Q3 2016 September September 2015 2016 2015 2016 Source: Central Bank of Russia

USD-RUB forecasts EUR-RUB forecasts (average per year) (average per year)

Ministry of Ministry of Gaidar Institute, Apecon (Economic IEF RAS IEF RAS Economic Finance Ranepa and RFTA Forecasting Agency) Development (base scenario)

2016 RUB 67.5 RUB 67,6 RUB 64 RUB 66.1 2016 RUB 72.7

2017 RUB 65.5 RUB 64.8 RUB 64.1 RUB 72 RUB 62 2017 RUB 68.2

2018 RUB 65 RUB 64.1 RUB 63.4 RUB 78 RUB 62 2018 RUB 68.2

2019 RUB 64.4 RUB 62.7 n/a n/a

08 Russia through a lens | Russia in figures

Central Bank key rate

Central Bank of Russia key rate, %

20.0 18.0 16.0 14.0 12.0 10.0 10% 8.0 6.0 4.0 2.0 0 31-Jul-15 31-Jul-16 31-Jul-14 31-Jan-15 31-Jan-16 31-Jan-14 30-Jun-15 30-Jun-16 30-Jun-14 31-Oct-15 31-Oct-14 31-Dec-15 31-Dec-14 30-Apr-15 30-Apr-16 30-Apr-14 31-Aug-15 31-Aug-14 31-Mar-15 28-Feb-15 31-Mar-16 31-Mar-14 28-Feb-14 18-Aug-16 29-Feb-16 30-Sep-15 30-Sep-16 30-Sep-14 31-May-15 30-Nov-15 31-May-16 31-May-14 30-Nov-14

Source: Central Bank of Russia

The refinancing rate is 10 percent Bank of Russia will be equal to the key rate of the (from 19 September 2016). Central Bank of Russia set at the respective date.

In accordance with a decision of the Board of From 1 January 2016, the Central Bank of Russia will Directors of the Bank of Russia, effective 1 January not set a separate value for the refinancing rate of the 2016, the value of the refinancing rate of the Central Central Bank of Russia.

Indexes (daily): August 2014 – September 2016

2100 1900 1700 1500 1300 1100 900 700 500 31-Jul-15 31-Jul-16 31-Jan-15 31-Jan-16 30-Jun-15 30-Jun-16 31-Oct-15 31-Oct-14 31-Dec-15 31-Dec-14 30-Apr-15 30-Apr-16 31-Aug-15 31-Aug-14 31-Mar-15 28-Feb-15 31-Mar-16 18-Aug-16 29-Feb-16 30-Sep-15 30-Sep-16 30-Sep-14 31-May-15 30-Nov-15 31-May-16 30-Nov-14

MICEX Index, RUB RTS Index, RUB Source: Moscow Exchange

09 Russia through a lens | Russia in figures Top-pricing (nickel, gold, aluminium)

Nickel Maximum for the period 21,000 19,250 19,000 19,040 18,800 18,325 18,505 17,000 16,265 16,275 15,911 15,000 15,740 15,165 14,677 15,150 14,095 13,980 13,950 13,000 12,600 12-year 12,395 12,015 minimum 11,000 11,040 10,635 10,330 9,425 10,795 10,060 10,045 9,000 8,820 8,530 9,315 9,770 8,855 8,610 8,495 8,465 7,000 1-Jul-15 1-Jul-16 1-Jul-14 1-Jan-15 1-Jan-16 1-Jan-14 1-Jun-15 1-Jun-16 1-Jun-14 1-Apr-15 1-Apr-16 1-Apr-14 1-Oct-15 1-Oct-14 1-Dec-15 1-Dec-14 1-Sep-15 1-Feb-15 1-Sep-16 1-Sep-14 1-Feb-16 1-Feb-14 1-Aug-15 1-Aug-16 1-Aug-14 1-Mar-15 1-Mar-16 1-Mar-14 1-Nov-15 1-Nov-14 1-May-15 1-May-16 1-May-14

Nickel, LME, $/t Source: Finam Holdings

Nickel forecast:

Source 2016 2017 Goldman Sachs USD 8,500 USD 10,000 Morgan Stanley USD 8,629 USD 9,921 World Bank USD 9,200 USD 10,029 IMF USD 8,506 USD 8,532

Gold and aluminium

2,300 Maximum for the period 2,097 2,100 2,037 2,014 1,988 1,920 1,900 1,800 1,891 1,950 1,864 1,784 1,853 1,815 Minimum for the period 1,754 1,829 1,740 1,700 1,785 1,691 1,672 1,673 1,706 1,605 1,572 1,626 1,620 1,572 1,501 1,640 1,615 1,500 1,481 1,557 1,501 1,521 1,329 1,449 1,357 1,328 1,289 1,328 1,288 1,284 1,295 1,300 1,192 1,245 1,323 1,313 1,246 1,285 1,251 1,284 1,207 1,183 1,187 1,142 1,142 1,214 1,182 1,233 1,217 1,100 1,1741,151 1,174 1,114 1,122 1,095 1,071 1,061 900 1-Jul-15 1-Jul-16 1-Jul-14 1-Jan-15 1-Jan-16 1-Jan-14 1-Jun-15 1-Jun-16 1-Jun-14 1-Apr-15 1-Apr-16 1-Apr-14 1-Oct-15 1-Oct-14 1-Dec-15 1-Dec-14 1-Sep-15 1-Feb-15 1-Sep-16 1-Sep-14 1-Feb-16 1-Feb-14 1-Aug-15 1-Aug-16 1-Aug-14 1-Mar-15 1-Mar-16 1-Mar-14 1-Nov-15 1-Nov-14 1-May-15 1-May-16 1-May-14 Gold, COMEX, $/t oz Aluminium, LME, $/t Source: Finam Holdings

Gold forecasts:

Source 2016 2017 Morgan Stanley USD 1,269 USD 1,300 Barclays USD 1,100 HSBC USD 1,205 World Bank USD 1,250 USD 1,219 Goldman Sachs Group USD 1,280 USD 1,250

Aluminium forecasts:

Source 2016 2017 2018 Goldman Sachs Group USD 1,450 USD 1,400 USD 1,350 World Bank USD 1,575 USD 1,626 USD 1,679 Morgan Stanley USD 1,543 USD 1,620 USD 1,764

10 Russia through a lens | Russia in figures Top-pricing (oil, gas)

Brent oil, natural gas

120 Maximum for the period 6 112 106 109 108 108 109 100 4.9 4.8 106 103 5 4.6 4.6 4.1 4.4 4.4 86 4.0 80 4.0 95 4 3.8 3.9 Minimum for 68 67 3.017 60 2.9 65 2.8 the period 2.956 2.7 2.7 2.7 2.868 3 58 2.7 2.7 2.5 2.836 62 2.6 63 52 53 2.3 2.3 2.4 2.2 2.14 2.283 40 53 55 1.954 48 50 1.7 47 50 47 49 2 45 38 36 50 40 43 20 37 1

0 0 1-Jul-15 1-Jul-16 1-Jul-14 1-Jan-15 1-Jan-16 1-Jan-14 1-Jun-15 1-Jun-16 1-Jun-14 1-Apr-15 1-Apr-16 1-Apr-14 1-Oct-15 1-Oct-14 1-Dec-15 1-Dec-14 1-Sep-15 1-Feb-15 1-Sep-16 1-Sep-14 1-Feb-16 1-Feb-14 1-Aug-15 1-Aug-16 1-Aug-14 1-Mar-15 1-Mar-16 1-Mar-14 1-Nov-15 1-Nov-14 1-May-15 1-May-16 1-May-14

Natural gas, NYMEX, USD/mmbtu Brent crude oil, ICE, USD/bbl Source: Finam Holdings

Natural gas forecasts:

Source 2016 2017 2018 World Bank USD 2.3 USD 3 USD 3.5 Standard & Poors USD 3 USD 3.25

Crude oil forecasts:

Source 2016 2017 2018 U.S. Energy Information USD 42.54 USD 51.58 Administration World Bank USD 43 USD 53.2 USD 59.9 Central Bank of Russia Base scenario: USD 40 Ministry of Economic Base scenario: Development USD 41 USD 40 USD 40 Standard & Poors USD 42.5 USD 45 USD 50 USD 41 USD 40 USD 40 Gaidar Institute USD 42.5 USD 45 USD 50 USD 36 USD 42 USD 51 to 2021 European Central Bank USD 42.8 USD 47.4 USD 50.6 Goldman Sachs USD 43 USD 53 IEF RAS USD 44 USD 55 USD 59.3

11 Russia through a lens | Research Centre market analysis Research Centre market analysis Steel and iron market report 2016

Key findings In 2016, political and economic events have in steel consumption from 1998 to 2015, Top-5** challenges facing continued to have a lasting effect on the second only to China. The construction steel-makers in 2016: global metals market. Instability and the industry is a major consumer of rolled •• Currency risk (40 percent) resulting lack of confidence can be felt both metal products in ASEAN countries, locally and internationally. accounting for 73.5 percent of the demand. •• Shortcomings of government regulation of the industry (40 percent) The trends from 2015 have resulted in In 2015 steel output in Russia decreased •• Low foreign investment appeal metal products oversupply and weaker by 1.5 percent to 69.4 million tonnes. (36 percent) demand that has triggered a further In January-May 2016, the smelters decrease in steel prices, with prices in the produced 28.7 million tonnes of steel and •• Corruption (25 percent) steel and iron market hitting a 10-year low: 24.8 million tonnes of finished ferrous •• Lack of qualified managing staff products, with an annual output down 2.4 •• In 2015, the global output was down (25 percent) percent and 2.2 percent, respectively. 2.8 percent to 1,613 million tonnes* Top-3** factors that could potentially •• In 2015, the global consumption of steel In 2015 the demand for steel in Russia drive development in steel-making was down 3 percent to 1,500 million contracted by 10 percent to about 39 companies: tonnes.* million tonnes. Specifically, the demand •• Lower labour costs (37 percent) from the construction industry as the During the first five months of 2016, global largest consumer of rolled products as well •• Higher local demand in Russia steel output was 667 million tonnes, down as from the car manufacturing industry (36 percent) 1 percent on the same period in 2015. dropped by 12 percent and 25 percent, •• Lower production costs (36 percent) respectively. Although the manufacturing geography has Top-5** priority growth strategies generally remained the same, the amount On the Russian market, decreasing demand for steel-makers in 2016: of steel produced by the top-10 leaders resulted in rolled metal product imports •• Expansion into new markets (83 percent) over the first five months of 2016 is down 2 dropping by 27.3 percent to account for 9.7 percent. percent of the market. •• More efficient production and technologies (77 percent) The Indian steel-making industry has seen Despite a decrease in demand, the •• Business development through the highest growth rate in 2016. In May smelting industry saw its net financial organic growth (73 percent) 2016, India produced over 8 million tonnes result* reach a historical high of RUB 572.4 of steel, up 4.9 percent on the same period billion in 2015, hitting an annual growth •• Higher prices for end products in 2015. rate of 3.2 times. A weakening Russian (67 percent) rouble has boosted the competitiveness •• New product launches (67 percent) Despite a global decrease in steel of Russian metal products, resulting in consumption, some regions have seen an a sharp growth of exports and helping increase, with African countries taking the steel-makers offset losses caused by falling lead. In addition to Africa, ASEAN countries global prices. also witnessed an 8 to 9 percent growth

*Net financial result is defined based on accounting data for all business operations of entities, representing a difference between profit (+) and loss (-) arising out of the sales of products (work or services), property, plant and equipment, other assets and non-operating income reduced by related expenses. **Based on the annual survey by Deloitte CIS.

12 Russia through a lens | Research Centre market analysis

13 Russia through a lens | Research Centre market analysis

Top global steel producers

Top 20 steel producing companies in 2015 (million tonnes) Countries where the Top 20 are located

Russia, 3% Germany, 3% ArcelorMittal (USA) 97.136 Brazil, 3%

Hesteel Group (China) 47.745 India, 4%

NSSMC (Japan) 46.374 South Korea, 10% POSCO (South Korea) 41.975

Baosteel Group (China) 34.938

Shagang Group (China) 34.214 China, 45% Ansteel Group (China) 32.502

JFE Steel Corporation (Japan) 29.825 Japan, 13% Shougang Group (China) 28.553

Tata Steel Group (India) 26.314

Wuhan Steel Group (China) 25.776 *USA, including ArcelorMittal

Shandong Steel Group (China) 21.692 USA*, 19%

HYUNDAI Steel Company (South Korea) 20.481

Nucor Corporation (USA) 19.624 Major steel producing countries in 2015 (million tonnes) Maanshan Steel (China) 18.82 Germany, 42.7 South Korea, 69.7

Brazil, 33.3 Thyssenkrupp AG (Germany) 17.339

Gerdau SA (Brazil) 17.033

Russia, 70.9 Tianjin Bohai Steel (China) 16.269

Novolipetsk Steel (NLMK) (Russia) 16.049 United States, 78.8

Jianlong Group (China) 15.141

India, 89.4

China, 803.8

Japan, 105.2

World crude steel production (million tonnes) 1 604 1 634 1 538 1 553 1 591 1 433 1 343

1 239

850 644

189 1950 1975 2000 2008 2009 2010 2011 2012 2013 2014 2015

Source: World Steel Association

14 Russia through a lens | Research Centre market analysis

Top Russian steel producers

Top 4 steel producing companies in 2015 (million tonnes)

NLMK 16.05

EVRAZ 14.35

MMK 12.24

Severstal 11.45

Industry outlook Company outlook

Manufacturing sector Manufacturing sector

50% 50% 12% 88%

Steel-makers Steel-makers 67% 33% 7% 93%

Negative view Positive view Negative view Positive view

Output of intermediate and finished products (million tonnes)

70.4 70.5 69.4 66.8 68.9 60 59.2 61.2 60.3 55 53.7 48 50.5 49.9 51.5

9.2 9.7 10.1 11.3 11.4 3.6 4.7 5.4 5.6 5.6

2010 2012 2013 2014 2015 Pig iron Steel Finished ferrous Flat-rolled coated products Steel tubes

Arcelormittal’s total output is higher than the Source: RSSS, World steel association, combined output of Russia’s top-5 steel producers Deloitte Research Survey Results

15 Russia through a lens | Research Centre market analysis

Import and export of steel by region

Top-5 steel producing companies in 2015 (million tonnes)

Region EU Other CIS NAFTA Other Africa and China Japan Other Oceania Total European American the Middle Asian imports countries countries East countries

EU 106.4 5.5 14.5 0.4 2 1.4 8.5 0.3 4.9 0.1 14 4.1

Other European 10.3 0.7 8.8 0 1 0.1 3.2 0.4 1.3 0 25.8 countries

CIS 1.3 0.4 8.7 0 0 0 1.6 0.1 0.3 0 12.5

NAFTA 7.3 2.5 3.1 17.4 6.4 0.6 4.4 4.3 9.1 0.4 55.5

Other American 1.4 1.1 0.6 1.3 2.9 0 8.4 1.4 1.3 0 18.3 countries

Africa 7.3 3.2 6.8 0.2 0.4 1.6 9.2 1.3 1.4 0 31.3

Middle East 1.8 4.9 4.7 0.1 0.2 0 10.7 1.7 4.9 0.1 29.1 IMPORT China 1.3 0.2 0 0.1 0.1 0 – 5.2 6.1 0 13.2

Japan 0.1 0 0 0 0 0 1.3 – 4.5 0 5.9

Other Asian 2.9 0.1 4.4 0.4 1.7 0.8 63.5 25.9 23 0.3 122.9 countries

Oceania 0.2 0 0 0 0 0.1 0.8 0.2 2.2 0.3 3.8

Total exports 140.2 18.5 51.7 19.9 14.8 4.7 111.6 40.8 59 1.2 462.4

Including inter- 33.8 17.8 43 2.5 11.9 3.1 111.6 40.8 36 0.9 301.4 regional exports

Net exports –3.9 –7.3 39.2 –35.6 –3.5 –55.7 98.4 34.9 –63.9 –2.6

EXPORT Source: World Steel Association

16 Russia through a lens Top M&As* (Russian companies)

Target Industry Bidder Seller company Deal value Additional information company company (USD, mln)

Gazprom E&R Gazprom Vnesheconombank 1918.6 Gazprom PJSC has signed a definitive (3.59% stake) agreement to buy back its 3.59% stake shares from Vnesheconombank. Rationale: The transaction will enhance VEB’s liquidity. Background: Earlier in 2010, VEB acquired a 2.7% stake from E.ON AG.

Uralkali (20% Chemicals Dmitry Lobyak ONEXIM Group 1650.5 Dmitry Lobyak has acquired a 20% stake stake) (private in Uralkali from Onexim Group. investor) Background: In December 2013, Onexim acquired a 21.75% stake in Uralkali for a consideration of USD 3.54 bln. Dmitry Lobyak is the CEO of Yuras-Oil LLC, the Belarusian-based wholesale supplier of chemical products.

Khrabrovo Transportation Novaport OOO OOO Aeroinvest 170.9 Novaport is 50% owned by AEON Corporation, Airport; which in turn is owned by Mr. Roman Mineralnye Trotsenko. Aeroinvest is part of Sindika Vody Holding, owned by Mr. Arsen Kanokov. International Airport (60% stake)

Softline Group TMT Da Vinci Capital 40 The transaction will enable Softline to expand Management its cloud and service businesses, diversify Ltd. its product offerings and enter into new markets. In 2015 Softline generated revenues of USD 1,181 mln.

M2M Private FSI Asian-Pacific 35.5 In October 2015, ATB had acquired Bank (75% Bank OAO a 25% stake in M2M for an undisclosed stake) (ATB) consideration. As of 1 August 2016, M2M had capital of approximately RUB 4.1 bln (USD 63.2 mln).

*Open information about deal value Source: Merger Market

17 Russia through a lens Global wind Top news: China and Russia

23.09.2016 02.09.2016 02.09.2016 Implementation of renminbi clearing Rosneft and Sinopec joint venture to Chinese companies to invest bank in the Russian Federation design, construct and operate a facility USD 750 mln into soy production The People’s Bank of China (PBC) resolved in Eastern Siberia in Russia today to authorise Bank ICBC (JSC) Rosneft and Sinopec are to draft their Chinese companies from Qinhuangdao (Moscow) to be the renminbi clearing feasibility study on the project for the (Hebei, northern China) intend to invest bank in the Russian Federation. With construction and operation of their gas circa RMB 5 bln (USD 750 mln) into soy this authorisation, the arrangements processing and petrochemical facility in and other crops in the Russian Far East. of the Memorandum of Understanding Eastern Siberia. between the Bank of Russia and the PBC 01.09.2016 on the establishment of renminbi clearing Where the actions are implemented The Russian Direct Investment Fund arrangements in Russia, signed on 25 successfully, the companies will establish will create a joint program with up June 2016, have now been successfully their joint venture to design, construct and to USD 500 mln of investments with implemented. operate the facility. The annual capacity China’s Inventis Investment Holdings of the first stage will be 5 bln cu.m. of RDIF will create a new joint fund with a The establishment of Bank ICBC as the natural gas with an output of up to 3 mtpa major private fund, Inventis Investment renminbi clearing bank is an important of advanced polymers and petrochemical Holdings. It is the largest private fund of milestone in the cooperation between products to be sold mostly on the Russian the Asian region. The relevant agreement China and Russia aimed at strengthening and Chinese markets. was signed on 2 September at the Eastern links between the markets of the two Economic Forum. The joint fund will focus countries. The availability of renminbi 02.09.2016 on the food and agriculture industries, liquidity on the Russian market will New oil production plant as well as on the consumer sector, retail facilitate renminbi transactions settlement in the Amur Region trade, processing, light industry, tourism continuity and promote the use of the Sirius Holding of China is constructing its and transportation. Investments of RDIF renminbi in cross-border transactions oil production plant in the Amur Region. and Inventis into joint projects will be up between companies and financial TASS was informed of this by Mr. Tao to USD 500 mln. institutions. Jian, the Board of Directors President of Sirius Holding. “We have already started Furthermore, the development of a implementing the project. It provides renminbi market in Russia will contribute for the production of oils used in food to the standing of Russia as a regional and cosmetics,” Mr. Tao Jian stated, “The financial hub for renminbi transactions in investment volume is USD 1.44 bln.” Source: Invest in Russia, the Eurasian Economic Union. Central bank of Russia, TASS

18 Russia through a lens

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