Samruk-Kazyna National Welfare Fund Investment opportunities

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Samruk-KazynaNational Welfare FundInvestment
opportunities

• July 2010

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Samruk-Kazyna

• Overview
• National Welfare Fund consolidates key state
  assets in more than 400 subsidiary companies
• Key player of the industrial and innovation
  development program
• Effective tool in implementation of the
  Anti-crisis program
• primary role in stabilization of financial sector
  by means of direct participation in 4
  largest commercial banks of the country
• primary role in stabilization of the real estate
  market
• direct support of the small and medium size
  businesses
• manages mortgage refinance program
• Main objectives
• Achieving sustainable growth of state economy
• Promoting modernization and diversification of
  state economy
• Increasing the effectiveness of the holding and
  all of its affiliates
• Promoting and implementing large-scale investment
  projects

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Samruk-Kazyna

• Main assets

Sector Participation in companies Description Assets, end of 2009 mln
Oil Gas KazMunayGas National oil gas company 34 100
Transportation Kazakhstan Temir Zholy National railway operator 6 650
Air Astana National carrier 211
Communications Kazakhtelecom National telecommunication company 2 316
KazPost National post operator 235
Power Samruk-Energy National power generating company 1 490
KEGOC National electricity grid operating company 1 282
Financial Development Bank of Kazakhstan Development bank 2 519
Kazyna Capital Management Equity funding 366
BTA, Kazkommertsbank, Halyk Bank, Alliance Bank Commercial banks 53 179
Mining Kazatomprom Nuclear industry 2 614
Tauken Samruk Mining industry 8 000
Chemical Pharmaceuticals United Chemical Company National chemical company 16 433
Chemical Pharmaceuticals SK Pharmacy National medicine and medical equipment distribution company 3 240
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Oil Gas

• Overview
• Oil and gas sector 30 of Kazakhstan s GDP
• Proved oil reserves - 6.5 bn tons
• Gas reserves 7 trillion cubic meters (3.9 of
  world reserves)
• The production of oil in Kazakhstan has increased
  by 52 (2002-2009) while the production of gas
  has increased by 37 in the same period
• Samruk-Kazyna participation in the sector
• KazMunayGas - vertically integrated national oil
  and gas company
• Development perspectives
• Production growth due to field developments
  (Kashagan, Khvalynskoye, Block N etc.)
• Transport infrastructure development launch of
  Trans-Caspian Transportation System,
  Kazakhstan-China pipelines extension,
  construction of Beineu-Shymkent gas pipeline,
  Aktau ports development
• Development of local refinery capacities up to 17
  mln tons / processing upgrading
• Development of petrochemical branch
• Investment opportunities
• Atyrau Oil Refinery - Oil deep processing
  Complex construction (1.1 bn)
• Pavlodar Oil Refinery (1 bn)
• Construction of petrochemical plant in Atyrau
  (6.3 bn)

More information about investment projects in
annex
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Power

• Current trends
• Considerable gap in electricity supply between
  energy excessive northern regions of Kazakhstan
  and energy-dependent southern regions of the
  country
• Local production capacities are depreciated by
  almost 70
• Competitive advantage
• Access to low-cost fuel due to large local
  reserves of coal, oil and gas
• Opportunity to develop renewable energy resources
• Development perspectives
• Construction of 6 new thermal power plants (coal
  or nuclear) until 2030
• Construction of new hydropower plants
• Samruk-Kazyna participation in the sector
• Samruk-Energy - operates major power plants in
  Kazakhstan
• KEGOC - operates the national power grid, owns
  and operates all main and interregional
  transmission lines and master substations across
  the country
• Investment opportunities
• Balkhash thermal power station (2.4 bn)

Electricity consumption in Kazakhstan (forecast),
bn kWth
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Transportation Telecommunications

• Overview
• Strategic geographical location
• High dependence of the economy on transport
  infrastructure
• Samruk-Kazyna participation in the sector
• Kazakhstan Temir Zholy - national company,
  monopoly railway operator
• Air Astana - leading domestic airline
• Kazakhtelecom - major player on the
  telecommunication market
• Investment opportunities
• Production of passenger rail carriers (60 mln)
• Construction of the railway Zhetygen Korgas
  (border with China) (1.1 bn)

Routes in KZ Length (thsd km)
Railway 14,2
Auto routes 93,6
Air ways 61
Water routes 3,9
Freight turnover in Kazakhstan, bn tkm
Passenger turnover in Kazakhstan bn pkm
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Metals Mining

• Overview
• Large reserves of Uranium, Lead, Zinc, Gold, Coal
  
• 2008 production of ferrous metals - 4.5 bn
• production of precious and
  non-ferrous metals 4.4 bn
• Share of metals and mining sector in total
  industrial production of Kazakhstan 20
• Objective production of high value added
  products
• Samruk-Kazyna participation in the sector
• Tauken-Samruk - national mining company
• Kazatomprom - national nuclear company,
  implements the industry development program of
  Kazakhstan aimed at creation of a vertically
  integrated complex of nuclear fuel cycle
• Investment opportunities
• Upgrade of cast iron plant (457 mln)
• Steel rails production (309 mln)
• Polycrystalline production (388 mln)

Natural resource World Rank by World Rank by
Natural resource reserves production
Uranium 2 3
Lead 2 11
Zinc 2 8
Chromium 2 2
Manganese 3 6
Gold (ore) 4 10
Iron 5 12
Copper 5 10
Coal 8 10
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Chemicals

• Resources
• Kazakhstan is 11th in the world in mineral
  production
• Second largest proved supplies of sulfuric acid
  in the world
• Kazakhstan possesses 1/3 of proved phosphorite
  reserves in CIS and over 5 of world reserves
• Current trends
• Growing demand for fertilizers in Russia and
  China
• Annual chemicals production grew 2,6 times in
  2004-2008 years period
• Local companies produce phosphorus, sodium
  bichromate, phosphoric fertilizers, nitric
  fertilizers, chromic compounds, plastics, tires,
  general mechanical rubber goods
• There is a potential of products diversification
  (organic and nonorganic chemical products,
  special chemicals)
• Samruk-Kazyna participation in the sector
• United Chemical Company - consolidates state
  assets in chemical sector
• Investment opportunities
• Mineral fertilizers Kok-Dzhon (1.9 bn)
• Construction of phosphorite fertilizers plant
  (600 mln)
• Sulphuric Acid production (65 mln)

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Pharmaceuticals

• Current trends
• Market size around 900 mln
• Growing local consumption 20 average annual
  growth
• Local production is growing, but covers only 10
  of domestic market
• 90 of consumed pharmaceuticals are imported
• Samruk-Kazyna participation in the sector
• SK Pharmacy - national medicine and medical
  equipment distribution company
• Key advantages
• Growth of domestic production
• Transparency in government purchases
• Demand for improved quality of products
• Investment opportunities
• Construction of pharmaceuticals plant in Astana
  and expansion of production in Shymkent (81 mln)
• National medicine and medical equipment
  distribution company (80 mln)

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Annex Investment projects
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List of projects for potential investors
Sector Project Cost, mln Investment opportunity Period/ launch
Oil Gas Atyrau Oil Refinery Oil deep processing Complex construction 1 100 Debt financing 2011-2014
Pavlodar Oil Refinery 1 000 Debt financing 2011-2013
Petrochemical plant in Atyrau 6 300 Debt financing / equity 2009-2012
Power Construction of Balkhash thermal power station 2 400 Debt Financing 2010-2014
Transport Rail passenger carriers 60 Debt financing 2010-2012
Construction of the railway Zhetygen Korgas (border with China) 1 100 Debt financing 2009-2012
Construction of the railway Uzen (Western Kazakhstan) border with Turkmenistan 433 Debt financing 2009-2012
Metals Mining Cast iron plant 457 Debt financing 2010-2012
Steel rails 309 Debt financing 2010-2013
Production of polycrystalline silicon 388 Debt financing / equity 2010-2013
Chemistry Mineral fertilizers (Kok-Dzhon) 1 900 Equity Debt financing 2018
Phosphorite fertilizers 600 Debt financing / equity / equipment / technologies 2010
Sulphuric Acid production 69 Debt financing 2010-2012
Pharmaceuticals Pharmaceutical plant 81 Debt financing / equity / technologies 2009-2011
National medicine and medical equipment distribution company 80 Debt financing / equity / expertise 2009-2010
Total 16273
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Atyrau Oil Refinery Oil deep processing Complex
construction

• Background
• Total project cost 1.1 bn
• Capital structure equity - 1 mln, debt - 1,099
  mln
• Implementation period 2011-2014
• Key project advantages
• High value added production
• Increase in processing depth up to 82
• Production of high-octane refined products
• High ecological standards Euro - V
• Domestic markets share increase for high-octane
  oil products
• Manpower construction 2507, maintenance - 391
• Investment Opportunities
• Debt financing

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Pavlodar Oil Refinery

• Background
• Reconstruction and modernisation of Pavlodar Oil
  Refinery to increase annual production capacity
  to
• motor fuel 2 million tons
• jet fuel 132 thousand tons
• diesel fuel 2 million tons
• fuel oil 252 thousand tons
• Total project cost 1 bn
• Implementation period 2011-2013
• Key project advantages
• High value added production
• Production of high-octane refined products
• High ecological standards Euro - III, IV
• Domestic markets share increase for high-octane
  oil products
• Manpower construction 3100
• Investment Opportunities
• Debt financing

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Petrochemical plant in Atyrau

• Background
• Construction of a petrochemical plant with annual
  production capacity
• 1 stage polypropylene 800 thsd tons
• 2 stage polyethylene 450 thsd tons
• Total project cost 6.3 bn
• Capital structure 27 equity, 73 debt
• Implementation period 2009-2012
• Key project advantages
• High value added production
• High profitability margins (over 50 EBITDA, over
  20 net income margin)
• Manpower construction 12000, maintenance 800
• Investment Opportunities
• Debt financing
• Equity

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Balkhash thermal power station

• Background
• Construction of one 1320 MWt module is under
  consideration
• Possible further extension up to 4000 MWt
• Total project cost 2.4 bn
• Capital structure equity 30, debt 70
• Implementation period 2010 2014
• Key project advantages
• Meet the demand for electricity in Almaty region
• Low production costs
• Investment opportunities
• Debt financing

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Rail Passenger Carriers

• Background
• Production of rail passenger carriers
• Total project cost 60 mln
• Quantity 150 units per year
• Implementation period 2010-2012
• Key project advantages
• Creation of carrier assembling line to meet the
  growing demand in passenger carriers on the
  domestic market
• Investment Opportunities
• Debt financing

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Construction of the railway Zhetygen - Korgas

• Background
• Construction of a railroad connecting Almaty
  region with the Chinese border in Korgas
• Total length 293 km
• Passenger and freight transportation
• Total project cost 1.1 bn
• Capital structure 45,8 equity, 54,2 debt
• Implementation period 2009-2012
• Key project advantages
• Strategic infrastructure concession project
• Risks shared with public authorities
• Investment Opportunities
• Debt financing (45)

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Construction of the railway Uzen border with
Turkmenistan

• Background
• Construction of the new railway road near Caspian
  sea (Uzen-Gyzylgaya-Bereket-Etrek-Gorgan) with
  further link with Russian railroad network
• Total length 670 km, Kazakhstan s part 138,5
  km
• Passenger and freight transportation
• Total project cost 433 mln
• Capital structure 47,2 equity, 52,8 debt
• Implementation period 2009-2012
• Key project advantages
• Strategic infrastructure concession project
• Risks shared with public authorities
• Investment Opportunities
• Debt financing (31)

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Cast iron plant

• Background
• Construction of metallurgy plant SBS Steel for
  production of cast iron in Aktobe region
• 500 thsd tons of granulated iron annually
• Total project cost 457 mln
• Implementation period 2010 2012
• Key advantages
• Strengthening export potential of Kazakhstan
• Production of high quality iron based on the
  unique patented KOBE Steel technology
• Manpower construction 1800-2300, maintenance -
  500
• Investment Opportunities
• Debt financing

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Steel Rails Production

• Background
• Production of steel rails and rolled steel at KSP
  Steel metallurgy plant
• 200 thsd tons annually
• Total project cost 309 mln
• Capital structure 20 equity, 80 debt
• Implementation period 2010 -2013
• Key advantages
• Meet the growing local demand
• Manpower construction 1000, maintenance - 106
• Investment Opportunities
• Debt financing 247 mln

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Production of polycrystalline silicon

• Background
• Creation of silicon cluster on manufacture of
  mono/poly crystal ingots and silicon plates
• 2500 tons of polycrystalline silicon
• Total project cost 388 mln
• Capital structure 30 equity, 70 debt
• Implementation period 2010 2013
• Key project advantages
• Well-positioned to supply European and Asian
  markets
• Competitive advantage via long-term access to
  low-cost raw materials
• High value added production
• High profitability margins (sales of 594 mln a
  year)
• Competitive advantage due to low transportation
  costs
• Advanced stage of project planning
• Feasibility studies and technical specifications
  completed by leading consultants
• Development Bank of Kazakhstan commenced 150 mln
  loan guarantee for plant construction
• Investment Opportunities
• Debt financing 50 mln
• Equity

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Mineral Fertilizers Production

• Background
• Construction of mineral fertilizers producing
  plant combined with Kok-Djon (Aral-Tobe and
  Kisik-Tobe sites) and Gimmelfarbskoe deposits
• Production of mineral fertilizers -1 mln tones
• Products potassium phosphate, NPK fertilizers,
  yellow phosphorus, phosphoric acid, reactive
  compounds
• Total project cost 1.9 bn
• Expected launch 2018
• Key project advantages
• Availability of natural resources
• Low production costs
• Meeting 100 local demand on mineral fertilizers
  of high quality and exporting
• Manpower 5000
• Investment opportunities
• Equity
• Debt financing

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Phosphorite Fertilizers Production

• Background
• Construction of phosphorite tails and low-grade
  ore processing plant
• Production capacity of 1 mln tons of phosphorite
  fertilizers annually
• Total project cost 600 mln
• Expected launch 2010
• Key project advantages
• Availability of unique technology to produce
  phosphorite fertilizers from low-grade ore
• Large reserves (over 500 mln tons) of low-grade
  ore
• Proximity and access to markets in China
• Strong competitive advantage the lowest
  production cost
• Ability to produce highly-enriched fertilizers
  and develop production of NPK fertilizers jointly
  with KazAzot
• Investment Opportunities
• Debt financing
• Equity
• Equipment Technologies

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Sulphuric acid production

• Background
• Reconstruction of sulphuric acid plant on the
  base of SGHK Ltd aiming to provide Kazatomproms
  uranium producing entities with sulphuric acid
• 180 thsd tons annually
• Total project cost 69 mln
• Capital structure 31 equity, 69 debt
• Implementation period 2010 - 2012
• Key advantages
• Low cost of raw materials
• Manpower construction 300, maintenance 141
• Investment Opportunities
• Debt financing

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Pharmaceuticals plant

• Background
• Construction of a pharmaceuticals plant in Astana
  and expansion of current production of ChimPharm
  (Shymkent)
• Total project cost 81 mln
• Capital structure 30 mln- equity, 51 mln
  debt
• Implementation period 2009 - 2011
• Key advantages
• Growing local demand
• Growing local production on the Kazakhstans
  pharmaceutical market from 10 to 25
• Creating innovative, science intensive and export
  oriented production (turnaround)
• Manpower construction 1000, maintenance - 300
• Investment Opportunities
• Equity
• Debt financing
• Technologies

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National medicine and medical equipment
distribution company

• Background
• Creation of integrated medicine and medical
  equipment distribution system
• Total project cost 80 mln
• Expected launch 20092010
• Key project advantages
• Growing market
• Development of local pharmaceutical industry
• Transparency in government pharmaceutics
  procurement, effective system of transport and
  logistics
• Investment Opportunities
• Debt financing for a logistics system
  construction
• Medications supply to Kazakhstan

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Contacts Republic of Kazakhstan Astana ,
Orynbor street 10, Kazyna Tower info_at_skinvest.k
z www.samruk-kazyna.kz