TURKEY MINING SUMMIT 4-7 June 2012 Hilton Istanbul Hotel, Turkey ETİ MADEN „„World Leader in Boron Sector‟‟ ETİ MADEN AND GLOBAL BORON MARKET Orhan YILMAZ, PhD Chairman and General Manager . 1 ETİ MADEN . Date of Establishment: 1935 – 1935 -1998 ETİBANK – 1998 -2004 ETİ Holding A.Ş. – 2004 -….. Eti Mine Works General Management . Main Field of Activity: The production and sales of boron products. Legal Status: State owned company . Management Systems: – Integrated Management Systems • Quality Management System TS-EN-ISO 9001: 2008 • Environmental Management System TS-ISO-EN-14000 • Occupational Health & Safety Management System TS-İSG-OHSAS 18001 • General requirements for competence of test and calibration laboratories TS-EN ISO/IEC 17025 . 2 World Boron Mineral Reserves RUSSIA 8% KAZAKHSTAN USA 1% CHINA 7 % 4% TURKEY % 72 PERU BOLIVIA 2% 2% CHILE 3 % ARGENTINA 1% . 3 BORON IN USE CONCENTRATED BORON PRODUCTS • Colemanite, tincal and ulexite etc. concentrated ores GLASS BORON CHEMICALS • Borax pentahydrate, borax decahydrate, anhydrous borax, boric DETERGENT acid, sodium perborate monohydrate, anhydrous boric acid and etc. AGRICULTURE SPECIALTY BORON PRODUCTS • Boron carbide, zinc borate, boron nitride, boron hydride, ferrobor & CERAMIC other boron compounds. INDUSTRIES DEPENDING ON BORON • Insulation and textile grade OTHER fiberglass, borosilicate glass, ceramic, detergent etc. 4 Boron Minerals Produced By Eti Maden; Colemanit, Tincal and Ulexite Following four minerals Colemanite and comprise around 90 % of tincal are the most commercially use. widely-used boron minerals. Colemanite (Ca2B6O11.5H2O) . Tincal (Na2B4O7.10H2O) Turkey is the . Ulexite (NaCaB5O9.8H2O) world‟s major . Kernite (Na2B4O7.4H2O) source of colemanite. 5 World Boron Consumption by End-Use in 2011 Ferro-boron Others 2% 10% Detergents Fiberglass . Consumption of borates 6% 46% in fiberglass is concentrated in China, Agriculture the world’s largest 11% producer of textile-grade material, and in the USA, the world’s largest producer of insulation- Ceramics grade material. 15% Borosilicate glass 10% . 6 Boron Products & Production Sites of Eti Maden BANDIRMA EMET KIRKA BİGADİÇ BORON WORKS BORON WORKS BORON WORKS BORON WORKS • Borax Decahydrate • Boric Acid • Etibor-48 (Borax • Ground Colemanite / • Borax Pentahydrate • Concentrated Pentahydrate) Ulexite • Boric Acid Colemanite • Etibor-68 (Anhydrous • Concentrated • Boron Oxide borax) Colemanite / Ulexite • Calcined Tincal • Natural Zeolite • Etidot-67 (Agri Boron) (Compacted) • Sodium Perborate . 7 Eti Maden in Figures; Production&Capacity 2500 2.125 2000 1.725 1.365 1500 1.272 1.277 1.100 1000 2.100 730 1.780 570 1.312 1.400 1.102 THOUSAND TONS 500 923 1.021 1.002 715 435 420 436 518 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 P Production Capacity . 8 Eti Maden in Figures; Sales 1200 1.048 1100 1000 1.018 854 900 800 647 829 700 600 535 452 629 500 390 399 519 400 322 276 435 233 225 228 384 Million USA $ USA Million 300 201 367 299 200 252 215 209 207 100 186 18 16 15 21 24 23 23 15 16 17 18 25 30 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 P Domestic Sales Export Total Sales . 9 Sales of Eti Maden Vs Main Competitor 1,000,000 900,000 800,000 700,000 B2O3) 600,000 on 500,000 400,000 Based ( 300,000 Ton 200,000 Eti Maden 100,000 Main Competitor 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 . 10 MMG Grubu 25 Mart 2012 Eti Maden in Figures; Regional Boron Export (Far East, Europe, USA) 1,600,000 1,400,000 1,200,000 1,000,000 800,000 Tons 600,000 400,000 200,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012P Far East 97,362 97,684 105,007 147,050 290,278 419,254 548,506 597,372 754,126 614,469 974,129 1,191,325 1,428,887 Europe 573,810 558,930 472,588 458,517 469,010 472,928 487,640 538,074 473,938 336,435 417,168 454,711 500,333 USA 239,604 205,197 161,890 181,217 172,344 211,986 266,043 160,040 204,398 94,951 187,223 274,557 289,284 . 11 Consumption of Boron Products in the World (Million Tons) 2000 3,1 2002 2,7 2005 3,3 2010 4,0 2011 4,3 Global Suppliers&Market Shares SUPPLIER 2000 2002 2005 2010 2011 %36 %42 %47 ETİ MADEN %31 %30 World Leader World Leader World Leader USA 33 37 35 25 24 OTHERS 36 33 29 33 29 Russia . 12 China South America Eti Maden in Turkish Economy Eti Maden is stated as 1st in public rank and 16st in general rank in the list of “Top 1000 Exporters of Turkey*” *TEA (Turkish Exporters Assembly) . 13 Eti Maden in Turkish Economy •Eti Maden rose to 43rd in rank of general evaluation from the level of 56th in 2009 and placed in 6th as gross profit rank in the list of “500 Large Enterprises*” in 2010. Export 829 million US$ Sales Revenue Gross Profit 854 million US$ 2011 488 million US$ Dividend paid to treasury 300 million US$ . 14 *ISO (Istanbul Chamber of Industry) Eti Maden in Turkish Economy 2011 Corporate Income Tax Ranking In the list of 2011 No Corporate Title Corporate Income 1 MERKEZ BANKASI A.Ş. Tax Ranking Eti 2 TÜRK TELEKOMÜNİKASYON A.Ş. Maden is at 15th (in 3 TURKCELL İLETİŞİM HİZMETLERİ ANONİM ŞİRKETİ general), however 4 TÜRKİYE GARANTİ BANKASI A.Ş. at 4th among the 5 YAPI VE KREDİ BANKASI A.Ş. producer 6 TÜRKİYE HALK BANKASI A.Ş .GENEL MÜDÜRLÜĞÜ corporates. 7 TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI 8 T.C.ZİRAAT BANKASI A.Ş. GENEL MÜDÜRLÜĞÜ 9 İŞ BANKASI A.Ş. GENEL MÜDÜRLÜĞÜ 10 TÜPRAŞ TÜRKİYE PETROL RAFİNERİLERİ A.Ş. 11 TÜRKİYE PETROLLERİ A.O. 12 FİNANSBANK ANONİM ŞİRKETİ 13 ELEKTRİK ÜRETİM ANONİM ŞİRKETİ 14 AKBANK T.A.Ş. 15 ETİ MADEN 17 EREĞLİ DEMİR VEÇELİK FAB.T.A.Ş. 23 TÜPRAG METAL MADENCİLİK SANAYİ VE TİC.A.Ş. 27 KOZA ALTIN İŞLETMELERİ A.Ş. 35 ÇAYELİ BAKIR İŞLETMELERİ A.Ş. 15 MMG Grubu 25 Mart 2012 How succeeded 1 • Focused on core business Focusing • Outsourced some secondary activities Strategy 2 • Adapted new technologies in our chemical Cost processes, Minimisation • Automated some man-made activities and Strategy increased efficiency. 3 Research and • Developed new technology and new end- Development use market. Strategy . 16 COMPLETED INVESTMENTS (2002-2007) 2002 . THIRD BORAX PENTAHYDRATE PLANT, KIRKA, Capacity ESKİŞEHİR (2002) 240.000 t/y 2003 . SULFURIC ACID PLANT, BANDIRMA, BALIKESİR 2004 . SECOND GRINDING PLANT, BİGADİÇ, BALIKESİR 2005 . BORIC ACID PLANT, EMET, KÜTAHYA 2007 . SODIUM PERBORATE PLANT (EXPANSION), BANDIRMA, BALIKESİR . CONCENTRATOR PLANT (EXPANSION), BİGADİÇ, BALIKESİR . BORON OXIDE PLANT (SECOND LINE), BANDIRMA, BALIKESİR III.BORAX PENTAHYDRATE PLANT, . CALCINED TINCAL PLANT, KIRKA, ESKİŞEHİR KIRKA, ESKİŞEHİR . 17 COMPLETED INVESTMENTS (2008-2011) 2008 . BORAX DECAHYDRATE PLANT (EXPANSION), BANDIRMA, BALIKESİR Capacity . ANHYDROUS BORAX PLANT, KIRKA, ESKİŞEHİR 120.000 t/y 2009 . BORAX DECAHYDRATE PLANT, KIRKA, ESKİŞEHİR . AGRI-BORON (ETİDOT-67), BANDIRMA, BALIKESİR 2010 . REHABILITATION OF STOCK AREAS, BİGADİÇ, BALIKESİR . CAMKOY WASTE RESERVOIR CAPACITY INCREASE, BİGADİÇ, BALIKESİR . NEW STEAM BOILER UNIT, BANDIRMA, BALIKESİR . SINGLE PHASE PENTA PRODUCTION PLAN, KIRKA, ESKİŞEHİR . AGILDERE WASTE RESERVOIR ELEVATION, EMET, KÜTAHYA 2011 II. BORIC ACID PLANT, . FOURTH BORAX PENTAHYDRATE PLANT, KIRKA, ESKİŞEHİR EMET, KÜTAHYA . BORIC ACID PLANT (EXPANSION), EMET, KÜTAHYA . CONCENTRATOR & GRINDING PLANT, BİGADİÇ, BALIKESİR . 18 Targets of Long Term Strategic Plan Targets 2013 2023 . PRODUCTION CAPACITY . PRODUCTION CAPACITY OF BORON CHEMICALS OF BORON CHEMICALS 2.1 MILLION TONS 5.5 MILLION TONS . 19 Employment 6,000 5,020 4,952 5,000 4,743 4,544 4,361 4,047 3,850 4,000 3,705 3,730 3,827 3,815 3,414 3,431 3,000 2,000 1,000 Number of Employees Number of 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 . 20 NEW EMPLOYMENT PAST TEN YEARS AND COMING TEN YEARS INVESTMENT COST FOR THE NEW NUMBER OF EMPLOYMENT CAPACITIES IN 10 YEARS PERIOD FOR THE NEW INVESTMENTS 508,7 MILLION US$ 1.213 PERSON TARGETED ADDITIONAL CAPACITY ESTIMATED EMPLOYMENT FOR UP TO 2023 THE ADDITIONAL CAPACITY 3,8 MILLION TON 2.500 PERSON . 21 RARE EARTH ELEMENTS AND THORIUM RESERVE . Eti Maden posesses the operating license of rare earth elements and thorium reserve located in Eskişehir/Sivrihisar region. The ore is complex in nature. The ore contains REE (Rare Earth Elements) Cerium, Lantan, Neodium, barite and fluorite besides thorium. Mineral contents of the orebody; 37,44% CaF2, 31,04% BaSO4 and 3,14% RRE. Calculated total reserve is about 30.358.268 ton. Amount of those minerals in the orebody: 11.366.135 ton Fluorite, 9.424.424 ton Barite, 953.587 ton REE (CeO2+La2O3+Nd2O3), 8.612.182 ton gang minerals. 22 RARE EARTH ELEMENTS PROJECT . Feasibility study has been carried out. Accordingly, for operation of 10 year period; 10.000 t/y REE, 250 ton/y Thorium, 72.000 ton/y Barite and 70.000 ton/y Fluorite will be produced. Estimated annual revenue of the project is about 1 billion US$. 23 R&D Works Aim; Strategy; Rather than waiting the growth of boron market, . Increase production leading to develop market by efficiency finding new boron products and new usages. Develop new usage areas . Develop new products . Contribute boron technology . 24 R & D Works Completed projects AGRI-BOR SODIUM TRIMETHYL CALCINED ANHYDROUS & BORON OXIDE PERBORATE BORATE TINCAL BORAX ZINC BORATE Ongoing projects SODIUM CALCINED BORON BOROHYDRIDE COLEMANITE SODA . 25 Possible Investment Opportunities in Turkey .Glass Industry – Fiberglass (Reinforcement-Textile Fiberglass) – Glass Wool (Insulation Fiberglass) – Borosilicate Glass .Specialty Boron Products – The primary specialty boron products are boron carbide, boron nitride etc.