Development of Grain Export and Transit through the Far Eastern Ports Growth Capacity

1. Development of Grain Export and Transit through the Far Eastern Ports Growth Capacity Tokyo, March 2014

2. Strategic Role of the Russian Far East Export Capacity of Siberia – Grain Demand of Countries in the Asia-Pacific Region • The grain market of Siberia and the Far East is characterized by high growth capacity. The actual achievable grain surplus in the Siberian Federal District (2008) is more than 6 million tons, the average surplus is about 3 million tons per year. • Growth in the export capacity of the Siberian Federal District till 2020 is about 8-10 million tons per year, including growth through reactivation of fallow lands (up to 3.5 million ha). • Since 2000, the growth in demand for imported grain on the part of the countries of the Asia-Pacific Region has exceeded 40%. The current volume of grain import by countries of the Asia-Pacific Region exceeds 80 million tons per year (more than 30% of the world trade) where wheat accounts for about 40 million tons per year. The forecast growth in the grain import for the next few years is 4-5% a year. • South Korea, China, Taiwan, and Japan, which are located in immediate proximity to the Far Eastern ports of Russia, account for about 50% of grain import of the Asia-Pacific Region (more than 40 million tons per year). Transit of agricultural cargoes in favor of bordering countries • The use of Primorye ports for interregional transit of own agricultural cargoes, as well as for export and import provides economic benefits for the bordering countries • According to the estimates, the transit capacity will amount approximately to 4–6 million tons by 2020 and approximately to 8–10 million tons by 2030. However, there are infrastructure limits on supply of Russian grain to the countries of the Asia-Pacific Region and arrangement of agricultural cargo transit in favor of bordering countries

3. Geographic Location of the Far Eastern Grain Terminal Region of prospective construction The Far Eastern Grain Terminal Export lines of Siberian grain Trinity Bay Zarubino Port • The Far Eastern Grain Terminal construction project is to be implemented near Zarubino port, Trinity Bay, the Khasansky District of the Primorye Territory as part of Bolshoy Zarubino Port project. • Bolshoy Zarubino Port project is defined as a promising point of Primorye economic growth. • Location: 60 km from the border with China and North Korea (Kraskino border crossing), 80 km south-west of Vladivostok. • A deep-water port with natural protection. • It is well protected against dominant waves and exposed to southern waves. • One of the best anchoring grounds of Posyet bay. • Year-round navigation – no ice-class vessels are required in winter. Following the analysis of promising sites in the Far East performed by Dutch company Royal Haskoning DHV, Trinity Bay in the Khasansky District of the Primorye Territory has been recognized as the first choice for arrangement of the grain terminal.

4. Main Parameters of the Far Eastern Grain Terminal • Grain Terminal with up to 10 million tons/year volume of transhipment, including two stages: • Stage 1: development of Russian grain export: • Phase 1 – 2016: up to 3 million tons/year • Phase 2 – 2018: increase up to 5 million tons/year • Stage 2: arrangement of agricultural cargoes transit from the bordering countries – up to 5 million tons/year (from 2019 to 2020) Trinity Bay, Zarubino port – the Khasansky District of the Primorye Territory Eastern Grain Corridor Volume of investments Grain surplus in the region The Far Eastern Grain Terminal >+5,000 from +1,000 to +1,500 from +500 to +1,000 from +200 to +500 The Main Effects: • Extension of crop areas and increase of grain production in Siberia and the Far East • Development of infrastructure capacities of the Eastern Grain Corridor (silos and transport) • Social and economic development of the regions in Siberia and the Far East