IDG AGRI an unparalleled timber and Agri- business opportunity in west africa Investor Presentation March 2014 IDG AGRI Pan-African Food & Fuel Investment opportunity IDG overview Project description „The time has come for African agriculture. Southeast Asia has become crowded, competitive, and expensive for doing agribusiness, chipping away at profit margins. We see higher profit potential in Africa for exports – and for domestic sales.“ New foreign investor in Africa World Bank Report on Agribusiness Africa 2013 2 IDG AGRI Pan-African Food & Fuel The unique investment opportunity • IDG is building a formidable food & fuel leader out of Africa, creating one of the largest palm oil and sugarcane farms across West-Africa. • IDG established outstanding relationships with Presidents, key Ministries, local chiefs and landowners as prerequisite for a sustainable business operation. • IDG acquired more than 300.000 hectares of highly suitable lands in several west-african countries, with initial focus on Sierra Leone and Nigeria. • In Sierra Leone, IDG signed longterm lease concessions for min. 124.000 ha of superior land for palmoil/sugarcane farming and biofuel refinery. • Initial assessment by expert team also evidences rich existence of virgin forrests of Mahagony, African Redwood, African Teak (Iroko), Sapele and some Walnut and Teak. • Lands provide excellent infrastructure access through established main roads and are in proximity to large deep water ports. • Overwhelming local community support for the project. • Wood logging and export permits in Sierra Leone are secured. • The unparalleled are size, the perfect climatic conditions, the high quality of the african soil and hardwood types, the strong access infrastructure, the easy export through near-by ports, the full legitimacy of the operations and the positive local community support confirm the unique business opportunity. • Strategic investors are offered the sales of 100% of IDG‘s timber extraction rights and/or a 50% stake in IDG‘s agri-business operations. 3 Our core business: Creating a leading IDG AGRI Pan-African Food & Fuel food & fuel player out of Africa • Become a major global producer of sustainable palm oil and sugarcane 100N • Secure west-african territories as one of the world‘s last frontier for suitable farms (within +-70 of Equator) • Leverage the climatic advantages and large landbanks to diversify into Equator vegetable oils, sugar and bio-fuel • Unique country and product diversification as competitive advantage 0 • Use the geographical benefits to cost- 10 S efficiently serve the domestic and western markets • Advanced agricultural concepts to ensure superior eco-sustainability 4 IDG AGRI Pan-African Food & Fuel Our value business model IDG AGRI Establish Africa‘s best-run and greenest Support West-Africa in transforming into an agri food&fuel player agri powerhouse again Produce Process Refine Oil Palm Green Food Sugarcane Green Fuel Transport & Store • Diversify crops • Integrated, large-scale, low-cost value chain • Diversify products • Diversify regions • Best-in-class management partners • Diversify markets • Expand volumes • Realize scale and synergies • Expand volumes Superior Sustainability 3600 Sustainable Farming 3600 Bio-Energy 3600 Engagement Innovation to stay ahead • Responsible land expansion • Biomass utilisation • Community Empowerment Fund • R&D Center • Meet/exceed RSPO principles • Waste Management • Smallholder Empowerment • Strategic Research partnerships • Low-Input Sustainable • Carbon credits • Bottom-to-Top communication • Technology partnerships 5 Agriculture IDG AGRI Pan-African Food & Fuel The challenge • Exploding global demand for vegetable oils, sugar and biofuel creates massive supply gap and pushes prices up. • Consumption of palm oil and sugar expected to double over the next 10 years due to population growth and growing middle classes. This also drives massive need for wood for house construction. • Steep growth in Biofuel consumption as more countries introduce blending fuel legislation. Political instabilities in Crude Oil exporting countries drive search for alternatives. • Shortage of land in traditional palm oil and sugarcane markets, such as Malaysia, Indonesia and Brazil, drvien by protectionist policies, stop of illegal cultivation policies, environmental desasters and limited suitable land. • Weather phenomenon having an impact on supply as evidenced by the recent droughts in Brazil and California. • Banning of illegal farming and logging practises around the world. 6 The macro-economic commodity IDG AGRI Pan-African Food & Fuel drivers are well-known... Per Capita Consumption 7 ...with cheap food and biofuel seen as IDG AGRI Pan-African Food & Fuel „Bygone Era“ by FAO and OECD Higher consumption of crop foods... ...leading to broad price increases to 2022 ...and annual growth in output to slow... 8 Palm oil consumption projected to IDG AGRI Pan-African Food & Fuel double in next 10 years... 9 ...driven by its superior product IDG AGRI Pan-African Food & Fuel attributes and new markets Most resource-efficient Exploding emerging Unique product Demand for biodiesel: oil crop markets demand: characteristics: • Continuously increasing • S u p e r i o r a r e a • Rising population • Trans-fat free use as low-cost productivity (1 ha palm especially in Africa and • No genetic modification feedstock for bio-diesel has productive output Asia possible with around 15-20% of of 15 ha of soya) • Strongly growing • Highest „flash point“ of total produce • L o w e s t - c o s t o i l : middle classes all edible oils • Further growth driven requires the least input • Strong urbanisation • Increasing use in food by more and more amount like fertilizers, changes eating habits (margarine, instant country mandates for fuel and pesticides • General catch-up on fat noodles, chocolate, bio-diesel and • G e n e r a t e s m o r e c o n s u m p t i o n f r o m processed foods) increasing energy prices employment per unit +-20kg to western • Consumer goods • Production expected to area than most other levels of +-55kg i n c l u d e s o a p s , grow by +4.5% p.a., large scale farming, detergents, cosmetics, doubling output to 41bn such as soybeans pharmaceuticals litres by 2022 Biodiesel production forecast (bn liters) 50 World Palm Oil Consumption By Type (mn t) 40 +90% RoW 30 20 RoW 10 EU/NA EU/NA 0 2012 2022 Source: OECD Agri Report 2013 10 World sugar production is growing IDG AGRI Pan-African Food & Fuel rapidly, driven by sugarcane output... • World sugar production is now more than 170 mio tonnes p.a. • The growth comes primarily from sugarcane with Brazil & India being the leading producers • Key consumption drivers are increasing population & income and significant rise of ethanol production from sugarcane. • Brasil as largest sugarcane producer uses more than 50% of output for ethanol production. Sugar production by country - 2011 11 ...as sugarcane is a key feedstock in the IDG AGRI Pan-African Food & Fuel booming biofuel/ethanol market... Biofuel world production by type (bn litres/year) Biofuels are at historical highs: Biofuel World Production (mn barrels/day) • Steep growth in biofuel consumption to appr 100bn l p.a. • Driven by high crude oil prices, mandates (in E.U. and U.S.) and flexi- fuel vehicles in Brazil • Additional biofuel incentives across the globe will accelerate growth further Biofuel world production by region (mn barrels/day) Ethanol with 75% biofuel share: • US and Brazil with 90% global market share • Sugarcane and maize as key feedstock for Ethanol; account for 50% of Brazil‘s sugarcane, 40% of U.S. maize • Biodiesel is growing, initially driven by E.U. mandates; accounts for 15% of global vegetable oil usage and 65% in E.U 12 Source: 2012 BP Statistical Review of World Energy Sugarcane will further grow the sugar IDG AGRI Pan-African Food & Fuel market as feedstock for food and biofuel World sugar production (mio t) World sugarcane production (mio t) World biofuel production (bn l) Developing RoW Food Biofuel Biodiesel Ethanol 250 2500 250 200 2000 200 +22% +17% +68% 150 1500 150 100 1000 100 50 500 50 0 0 0 2012 2022 2012 2022 2012 2022 Source: FAO/OECD Agri Report 2013 The sugar market grows ...driven by more sugarcane ...which jumps ethanol output steadily... for biofuel production... over the next years • Global sugar production to • Sugarcane production increases • World output of ethanol is increase by +2.1% p.a. up to >210 by +300mio tonnes to >2 bn forecast to jump 68% to 167 bn mio tonnes p.a. by 2022 tonnes p.a. liters, growing +4% p.a. • Developing countries extend their • Biofuel production is predicted to • This is mainly driven by the sugar consumption through a) use 29% of world sugarcane biofuels mandates in US and EU overproportional population output and Brazil‘s growing domestic growth, b) rising incomes and demand for flex-fuel vehicles changing diets, c) increased and US exports to fill its industrial usage of sugar avanced biofuel mandate 13 Palm oil has the highest geographic entry IDG AGRI Pan-African Food & Fuel barriers amongst soft tropical commodities • Grows only in very narrow tropical band +-7° around equator and requires an evenly dispersed rainfall. • There are only 3 zones where palm oil cultivation is possible Latin America West Africa Southeast Asia • +-900.000 planted hectares • +-1.100.000 planted hectares • +-12.000.000 planted hectares • <50.000 ha planted annually • +-25.000 ha planted annually • Very limited expansion space due to • No publicly listed companies • 5 listed companies with >US$1 bn geographical and environmental • Most of Brazil off-limited due to market cap restrictions environmental restrictions • >70 listed companies with >US$100 bn market cap • Controls >65% of global edible oil exports 14 West-Africa as the ideal agribusiness IDG AGRI Pan-African Food & Fuel platform in general.... 1200 Projected value of food markets, Land availability for large and sustainable Sub-Saharan Africa (US$ bn) 1000 expansion: 800 • 60% of the world‘s areable land reserves lay in Africa +300% Urban (McKinsey) 600 • Cost of land lower vs rest of world v Rural • Large already cultivated available for sustainable 400 reactivation.