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THE PROJECT AIMS

THE PROJECT AIMS. The investment project Complex Development of South Yakutia aims at creating a new large industrial district in Russia's Far East on the basis of hydroenergy mineral resources available in the region - natural gas, apatites, coal, iron and uranium ores and others.

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THE PROJECT AIMS

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  1. THE PROJECT AIMS The investment project Complex Development of South Yakutia aims at creating a new large industrial district in Russia's Far East on the basis of hydroenergy mineral resources available in the region - natural gas, apatites, coal, iron and uranium ores and others.

  2. ECONOMIC CONDITIONS AND POTENTIAL Niche specialization in gold and coal mining Underdeveloped processing industries Low investment growth rates Outflow of population Underdeveloped infrastructure – above all, in energy and transport Largest infrastructural hub in Russia’s Far East (oil and gas pipelines, railroads and motorways, electric grids) Creating an industrial cluster for high-level processing of mineral resources: – hydropower industry, – uranium production, – gas chemical industry, – iron-ore production, – mineral fertilizers, – coking concentrate. Southern Yakutia is a region with narrowly specialized economy but rich mineral resources and high industrial potential whose realization is stalled by the dearth of transport and energy infrastructure. CURRENT STATE THE POTENTIAL OF CREATING A NEW DIVERSIFIED INDUSTRIAL DISTRICT

  3. THE CONSTRUCTION FACILITIES The construction of the following facilities is planned within the framework of this project: • Kankunskaya HEPP; • Elkonsky Mining and Metallurgical Complex; • Taezhny and Tarynnakhsky Mining and Processing Integrated Works integrated into the South Yakutia Mining and Smelting Association; • Inaglinsky Coal Complex; • Seligdarsky Mining and Chemical Complex; • Yakut Gas Processing and Chemical Combine; • Aldansky Factory of Motor Fuels; • Transport infrastructure; • Power supply infrastructure.

  4. PARTNERSHIP SCHEME KANKUNSKAYA HEPP; ELKONSKY MMC; SOUTH YAKUTIA MINING AND SMELTING ASSOCIATION; IINAGLINSKY COAL COMPLEX; SELIGDARSKY MCC; YAKUT GPCC; ALDANSKY FMF. The Investment Fund of Russia

  5. PROJECT PARTICIPANTS MINISTRY OF ENERGY (RUSSIA) PROJECT INVESTORS: EXECUTIVES IN CHARGE: MINISTRY OF REGIONAL DEVELOPMENT The Investment Fund of Russia STATE COORDINATOR: FEDERAL HIGHWAY AGENCY FEDERAL AGENCY OF RAIL TRANSPORT The Government of Sakha (Yakutia) ROSATOM INITIATOR OF APPLYING TO INVESTMENT FUND OF RUSSIA, PROJECT COORDINATOR :

  6. ON SOUTH YAKUTIA DEVELOPMENT CORPORATION • The Corporation was established in April 2007 for submitting a request to the RF Investment Fund and further promotion of the Project. • Organizes interaction between all participants of the Project; • Coordinates the efforts of state and business during the Project implementation; • Ensures the formation of favorable public opinion about the Project; • Organizes the alignment of works on the Project.

  7. SHAREHOLDERS • The Government of Sakha (Yakutia) • RusHydro Joint Stock Company • ARMZ Uranium holding Co. • ALROSA Investment group • Kolmar LTD

  8. LOCATION

  9. FIRST STAGE: DESIGN DEVELOPMENT OF DESIGN DOCUMENTS FOR INDUSTRIAL AND INFRASTRUCTURAL FACILITIES,PASSING ESSENTIAL EXPERT EXAMINATIONS SECOND STAGE: CONSTRUCTION CREATING INFRASTRUCTURAL FACILITIES AT THE EXPENSE OF THE INVESTMENT FUND OF THE RUSSIAN FEDERATION, CREATING MANUFACTURING FACILITIES ON PRIVATE EQUITY FUNDS

  10. PROJECT COST The Investment Fund of Russia PUBLIC INVESTMENTS114,49 billion rubles Kankunskaya HEPP(design documentsand dam); Elkonsky MMC(design documents); Highways; Railroads; Power supply infrastructure. PRIVATE EQUITY307,98 billion rubles Kankunskaya HEPP; Elkonsky Mining and Metallurgical Complex; Seligdarsky Mining and Chemical Complex; Taezhny Mining and Processing; Tarynnakhsky Mining and Processing; Inaglinsky Coal Complex; Yakut Gas Processing and Chemical Combine;; Aldansky Factory of Motor Fuels. 422,5 billion rubles Every ruble invested by the state in Project’s infrastructure attracts three rubles of private equity to the economy.

  11. KANKUNSKAYA HEPP Lies on Timpton River Dam’s maximum effective height – 230 m Planned capacity – 1,200 MW Long-term average power generation – 4.87 billion KW/year Construction time – about 8 years (2012–2019) Project investor: ОАО RusHydro (ОАО South Yakutia Hydropower Complex)

  12. ELKONSKY MINING AND METALLURGICAL COMPLEX The Elkon, Elkon Plateau, Kurung, Neprokhodimoe, Druzhnoe, Severnoe deposits and the Interesnaya Zone are located in the Aldan district of the Republic of Sakha (Yakutia). Mining of coracite (uranium ore), its processing and dressing, production of up to 5,000 tons of natural uranium oxide concentrate per year Project investor: Uranium Holding «ARMZ»

  13. SOUTH YAKUTIA MINING AND SMELTING ASSOCIATION Construction of two mining and concentrating mills based on iron ore deposits – Taezhny and Tarrynnakhsky TAEZHNY MCM Overall output – 9 million of crude ore per year Planned capacity – 4.1 million tons of concentrate per year with the iron content of 67.7% TARYNNAKHSKY MCM With the volume of extraction at 23 million tons of ore per year the planned capacity is about 7.3 million tons of concentrate with the iron content of 68.5% to be further refined into 6.8 million tons of iron nuggets. Project investor: Investment Group «ALROSA»

  14. SELIGDARSKY MINING AND CHEMICAL COMPLEX The Selgdarsky Mining and Chemical Complex includes: a mining and concentrating mill – an opencast and a concentrating mill for the production of apatite concentrate; a chemical plant putting out compound phosphor-magnesium fertilizers with manufacturing capacity in excess of 567,000 tons per year. Project investor: Investment Group «ALROSA»

  15. INAGLINSKY COAL COMPLEX Construction of the Inaglinskaya mine with planned capacity of up to 2.5 million tons of run-of-mine coal per year and the coal-preparation plant Inaglinskaya to refine run-of-mine coal into coking concentrate; By 2011, the output of cocking concentrate will exceed 1.9 million tons. Project investor: Kolmar

  16. YAKUT GAS PROCESSING AND CHEMICAL COMBINE Gas will be transported from Chayandinsky oil and gas condensate field over the gas main Yakutia – Khabarovsk – Vladivostok to be built by OAO Gazprom within the framework of its Eastern Gas Program. The output of the Yakut natural gas conversion plant may reach 20 billion cu. m/year. Produce: methane, liquefied helium, polypropylene, polyethylene, butane, C5+ faction (stable gasoline). Project investor: Gazprom

  17. ALDANSKY FACTORY OF MOTOR FUELS Feedstock – treated natural gas from the Chayandinsky field Annual conversion – up to 1.32 billion cu. m of gas and production of more than 560,000 tons of motor fuels (diesel and gasoline) Diesel fuel will account for 64% of the total output and gasoline – for 36%. Project investor: Gazprom

  18. TRANSPORT INFRASTRUCTURE Design and construction of motorways with total extension nearing 150 km: Tommot – the Elkonsky Mining and Metallurgical Integrated Works (≈44 km); Maly Nimnyr – power site of the Kankunskaya HPP (≈106 km) Construction of railways with total extension nearing 270 km: Tommot – Elkonsky MMIW (≈53 km); Kosarevsky – Seligdarsky MCC (≈13 km); Taezhnaya – Taezhny MCM (≈4 km); Chulbas – Inaglinsky Coal Complex (≈11 km); Ikabyekan – Tarynnakhsky MCM (≈189 km). Agencies in charge: Federal Roads Agency, Federal Railway Transport Agency FEDERAL HIGHWAY AGENCY FEDERAL AGENCY OF RAIL TRANSPORT

  19. ARRANGEMENT OF TRANSPORT INFRASTRUCTURE Tarynnakhsky MPIW Taezhny MPIW Kankunskaya HEPP

  20. ELECTRIC GRID INFRASTRUCTURE MINISTRY OF ENERGY (RUSSIA) • About 1,200 km of high voltage lines Scheme of power distribution at Kankunskaya HEPP: • HV lines at 500 KW: Kankunskaya HEPP – Neryungri (≈246 km), • Neryungri substation; • HV lines at 500 KW: Kankunskaya HEPP – Aldan (≈220 km), Aldan substation. • Industrial power supply for: • Taezhny MPIW (HV lines at 220 KW ≈6.6 km plus a substation); • Seligdarsky MCC (HV lines at 220 KW ≈7.5 km plus a substation); • Inaglinsky CC (HV lines at 110 KW ≈7.5 km plus a substation); • Elkonsky MMIW (HV lines at 220 KW ≈76 km plus a substation); • Tarynnakhsky MPIW (HV lines at 220 KW ≈203 km plus a substation and second-circuit catenaries at BAM Trans-Siberian Railroad ≈434 km). The design and construction of infrastructural facilities will be financed from the RF Investment Fund. Coordinator: Russian Ministry of Energy The Investment Fund of Russia

  21. PATTERN ELECTRONETWORK INFRASTRUCTURE for Tarynnakhsky MPIW for Taezhny MPIW Kankunskaya HEPP - Kankunskaya HEPP -

  22. PROJECT PARAMETERS AND EFFECTS (scenario set for 2007) • Profitability of Investment for the Budget (PIB) – 8.96; • Profitability of Investment for GDP (PIGDP) – 4.1; • Internal Rate of Return (IRR) for the government – 17.4%; • Sales revenues (2019) – 273 billion rubles; • Net annual gain (2019) – 48.8 billion rubles; • Assignments to the federal budget (2019) – 32.9 billion rubles; • Assignments to the regional budget (2019) – 15.1 billion rubles; • Gross regional product to increase 2.5 times by 2020

  23. PROJECT EFFECTS • Accelerating the pace of socio-economic development in eastern parts of Russia; • Reinforcement of Russia’s geopolitical positions in Southeast Asia due to more intense export flows of Russia-made products and diversification of Russian export, among other factors; • High-level processing of extracted minerals at new modern-day manufacturing facilities; • Development of the construction industry in the region, including road-building and manufacture of construction materials; • Attraction of more than 30,000 workers to Yakutia – one of the most thinly populated subjects in the Russian Federation.

  24. MAIN EVENTS / 2007-2008 June 2007 June 9, 2007 November 16, 2007 January 17, 2008 September 20, 2008 October 10, 2008 South Yakutia Development Corporation applies to the RF Investment Fund for public support. The Investment Commission approves of the application(protocol #7 from June 9, 2007) The request is approved by the Government Commission (protocol #7 from Nov. 16, 2007) Decree #21 of the Russian Government is issued on financing of the Project’s first phase from the RF Investment Fund – namely the development of design documents Second approval of the Project by the Investment Commission(protocol #12 from Sept. 20, 2008). Endorsement of the concept and approval of the Project Passport by the Government Commission (protocol #11 from Oct. 10, 2008).

  25. MAIN EVENTS / 2009-2010 March 10, 2009 June 5, 2009 June - October, 2009 September - December, 2009 From January 2010 Decree #302 of the Russian Government on authorization of the Project and financing of design works from the RF Investment Fund. An investment agreement on realization of the Project’s first phase is signed. Allocations from the RF Investment Fund are obtained for designing in 2009 of the Elkonsky MMIW, Kankunskaya HEPP, railways, motorways and electric grid infrastructure amounting to the total of 5,372.4 million rubles. Holding tenders for the selection of design corporations, forming the projects design and financing schedule for 2010-2011. The design of infrastructural facilities for the Elkonsky MMIW and Kankunskaya HEPP at the expense of the RF Investment Fund; designing of the South South Yakutia Mining and Smelting Association and construction of the Inaglinsky Coal Complex at the expense of investors.

  26. THANK YOU!

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