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Turchrome Mining: Leading Chrome Producer in Turkey

Turchrome Mining in Turkey offers investment opportunities in Chrome mining with an experienced management team focusing on expanding production and creating job opportunities. The company aims to become a significant low-cost producer of Chrome Ore in Turkey by leveraging its expertise and operational improvements. With a growing global demand for Chrome and the country's competitive position, Turchrome Mining is set to grow as a major player in the industry.

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Turchrome Mining: Leading Chrome Producer in Turkey

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  1. Chrome Mining in Turkey

  2. Executive summary • Turkey has significant mineral wealth which has yet to be explored • Improved foreign investment is leading to the development of Turkey’s resources • This is increasing money inflow into Turkey, creating significant jobs and helping GDP growth • Nithia Capital, through International Chrome Mining, has made investments in producing Chrome assets • We will invest in mine and production expansion and the employment of hundreds of extra Turkish workers • Increasing global demand for Chrome and Turkey’s cost competitive position will see Turkey increasingly become a large global Chrome producer

  3. International Chrome Holdings (ICH) • Nithia has extensive Chrome experience having managed 2 of the worlds 3 largest chrome mines • Nithia Capital through ICH acquired a number of Chrome Ore producing assets in Turkey • New company is called Turchrome Mining Trabzon Port Gemlik Port Kangal License Kilicmehmet License Basalan License Gokarik License Mine shipping port Antalya Port Mersin Port • New highly experienced on the ground management team put in place to run the operations and expansion programme • Identified operational improvements will add to production increases and profitability • It is our intention to become a significant low cost producer of Chrome Ore in Turkey STRICTLY PRIVATE AND CONFIDENTIAL

  4. % Share (2010) Uses Metallurgical demand Chemical demand Refractory demand Foundry sands demand Chromite demand Stainless steel demand Alloy steel demand Other Net scrap availability Stainless steel - the main driver for chromite demand • Stainless steel is used in construction, consumer goods and other sectors 95% 91% High growth (>3%) • Used for ball-bearings, tools and other high-strength applications 7% Decline (<0%) Stagnant (0-3%) • Use of chromite in non-ferrous alloys and special cast iron applications (e.g., grinding media) 2% • Leather tanning • Pigments and textiles • Metal finishing 1.8% • Refractory linings for furnaces and kilns in steel, non-ferrous metals, cement, glass and ceramics 0.7% • Sand casting of metals 2.5%

  5. 8 % Regional growth (CAGR) Rebound in Chinese and Indian demand has driven stainless steel growth in recent years Apparent demand1 for stainless steel Million metric tonnes per annum 2004-08 2008-10 Global crisis 5.7 10 Global 30 3.5 7.0 Developing2 25 20 5.9 -1.8 Developed3 15 9.8 35.8 India 10 6.8 21.2 China 5 0 2004 2005 2006 2007 2008 2009 2010 1 Including stocking/destocking effects 2 CIS, MENA, Africa, Latin America 3 EU countries; NAFTA; Japan, Korea

  6. 3 % Regional growth (CAGR) 2010-20 2010-20 Going forward, China and India will continue to drive stainless steel demand and production Global stainless steel demand Finished steel; Million metric tonnes Global stainless steel production3 Crude steel eq.; Million metric tonnes India Developing1 China Developed2 +4.3% 48.3 2.9 +4.3% 2.0 43.9 3.0 39.4 +5.5% 6.9 -0.4 1.7 35.8 17.1 +5.5% 31.7 5.6 0.6 28.8 1.3 12.2 16.1 24.2 5.1 10.0 7.1 11.2 22.1 1.3 16.1 8.4 6.1 3.3 4.9 11.0 4.1 18.1 11.5 3.0 13.8 2.7 22.1 18.8 6.5 16.8 15.1 1.2 11.3 10.0 6.1 3.2 2005 2010 2015 2020 2005 2010 2015 2020 1 CIS, MENA, Africa, Latin America 2 EU countries; NAFTA; Japan, Korea 3 Yield loss of 9% (based on historical estimates) between crude steel equivalent and finished steel demand

  7. Growth (CAGR) Percent 2010-20 2005-10 Overall chromite demand will continue to be driven by China in future 42% standard grade apparent chromite demand; Million metric tonnes 37 +3.5% 2 Developing1 31 1 +7.1% 13 Developed2 26 0.8 3.9 1 13 -0.8 -0.2 19 6 India 13 1 4 13.9 8.1 14 3 17 China 13 9 1 2 30.9 6.2 2005 2010 2015 2020 1 CIS, MENA, Africa, Latin America 2 EU countries; NAFTA; Japan, Korea

  8. 0 CAGR (2010-20) Percent • Other metallurgical demand (alloy steels and cast iron) is biggest driver – however, it grows slower than stainless steel • Refractory and foundry demand show slower growth due to increased substitution with magnesium and alumina • Chemical use has fallen from historical levels but expected to remain in China and CIS Chromite demand from non stainless steel is expected to grow slower than stainless steel Chromite demand by type; Million metric tonnes +2.4% p.a. 4.8 +5.3% p.a. 4.3 3.7 3.1 3.2 2.9 2.8 2.3 Other metallurgical 1.7 1.0 Refractory and foundry 1.3 Chemical 2005 2010 2015 2020

  9. 0 Current chromite situation in Turkey • Key strengths for Turkish industry are: • High quality of ore • Greatercost competitiveness compared to South-Africa • Main opportunities for Turkish industry are: • Chinese demand for chromite ore likely to be strong with lower availability of ore by main players • Main threats include: • Higher availability of chromite from Kazakhstan or Zimbabwe • Flooding of market with UG2 ore could depress global prices or Turkish premiums (similar to Q3 2011) Chromite production in Turkey Million tons +19% p.a. 2.1 2.0 1.7 1.7 1.1 2006 2007 2008 2009 2010

  10. 1 Infrastructure Regulatory environment Labour market Turkey exhibits strong fundamentals that allow an expansion of chromite production while maintaining competitive advantages • Overall Turkish infrastructure is not expected to be a constraint on chromite expansion • Turkey has excellent road and port infrastructure in place • New regulations promulgated to enable ease of entry for professional mining companies • Turkey has no shortage of labour coupled with specialised skills in mining disciplines

  11. Demand In 2011, all Turkish capacity are either first or second quartile mines 2011 CIF China cost for 42% standard grade ore; USD per metric tonne (2011 real) CIF China costs USD/tonne UG2 South Africa 300 Oman Turkey 250 Other C901 cost: 210 USD 200 150 100 C901 50 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 Capacity Million metric tonnes

  12. Low sea freight rates in Turkey supported due to availability of excess container capacity on the Turkey – China route • Overall processing cost increase in SA driven by power tariffs In 2010, lower transport costs key reason for competitiveness in Turkish costs Comparison of Turkish and South African CIF China cost base for comparable mines1 2010 cost comparison USD per metric tonne (real 2011) 2020 cost comparison USD per metric tonne (real 2011) 241 Other 2 Sea freight 194 Other 2 172 158 4 Sea freight 3 Inland transport 66 Inland transport 55 Royalties 10 41 34 Processing costs 5 Royalties 4 6 Processing costs Mining costs Mining costs 1 Underground mines with ~1 million metric tonne

  13. 0 2010 2009 2011 2008 Mining companies continue to consider Turkey an investment friendly destination Policy Potential Index by country Score out of 100 Notice • PPI is a composite index that measures the effects of government policies on the investment attractively in mining industry • The score is calculated as a normalized average of score based on set of questions asked to mining companies on administration efficiency, labour issues, infrastructure, regulations • Historically, Turkey generally scored better than other main chromite producing countries 71 W. Australia 61 63 67 69 Ontario 69 75 66 43 Brazil 45 47 46 35 Turkey 36 40 53 30 Kazakhstan 26 33 39 South-Africa 35 40 26 23 23 Russia 36 38 44 22 Zimbabwe 19 15 India 12 16 27 11

  14. Russia South-Africa India Turkey Turkey’s new regulation favours professional mining investors … 2 • Obtaining mining rights in Russia is generally a long complicated by several internal factors • From Jun-Nov 2007, success rate of mining rights application was 5 out of 453 • Broad Based Black Economic Empowerment (BBBEE) legislation and by the legal uncertainties complicates mining rights process in South Africa • More than 90% of the mining right licenses take more than a year and even up to 5 years • The process is complicated by the amount of administrative issues and bureaucracy involved • New Turkish legislation was passed to enable professional mining; it links the licence acquisition with actual mining activity within a certain time frame. License traders with no real investment plans should, therefore, be eliminated from the market • The process to obtain operation license and permit is fairly structured and can take from 3 to 12 months depending on the geographical and specific localisation but is generally considered reliable for genuine mining companies

  15. Conclusion • Our experience in Turkey has been very positive to date • Turkey’s infrastructure, labour and friendly regulatory jurisdiction is a strong draw for international mining companies • Chrome production in Turkey set to expand significantly over the coming years • Turchrome Mining is set to become a large producer of low cost Chrome Ore • Foreign investment will lead to substantial fund inflow, capital expenditure and importantly – jobs STRICTLY PRIVATE AND CONFIDENTIAL

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