Investment project of Kostroma region ferrosilicon plant construction

Investment project of Kostroma region ferrosilicon plant construction and highquality ferrosilicon production June 2012

1. Characteristics of ferrosilicon production sector Ferrosilicon is an alloy of iron with silicon. Silicon increases the hardness of steel, tear resistance, the limits of fluidity and elasticity, increases the resistance to oxidation, reduces energy losses. Ferrosilicon, produced at the enterprise using high-quality quartz sand charcoal, has minimum of impurities such as sulfur, phosphorus that is necessary in the high-quality steel production. 40 % Ferrosilicon production in 2009 -2011 33 29 30 20 24 18 21 20 19 17 15 11 10 10 20 19 17 14 27 26 12 9 8 6 0 -1 -4 -10 -20 -30 -10 -9 -7 -12 -16 -20 -26 January February March April May 2009 June 2010 July August September October November. December 2011 Ferrosilicon is produced at the following Russian plants: – “Serovsky plant of ferroalloys” OJSC; – “Tchelyabinsky electrometallurgical plant” OJSC; – “Kuznetskie ferroalloys” OJSC; – “Bratsky plant of ferroalloys” LLC; – “Novolipetsky metallurgical plant” OJSC.

2. Location of the Nagatinskoe deposit of molding sands Яковлево Nagatinskoe deposit of molding sands is situated 12 km to the West from Galich (Kostroma region). Useful layer capacity is from 1, 1 to 29, 7 m. Overburden is represented by morainic loam and clay glacial sands with the capacity from 4, 0 to 16, 0 m. License for the right of bowels use belongs to “Nagatinskie industrial sands” LLC. Галичское озеро Нагатино Вяхирево Екимово Струково Починок Васильевское Челсма Горки Вострилово Сальково Абабково Апушкино

3. Plant’s plan. Production capacity of the main product – ferrosilicon FS 75 – 20 000 tons per year. Plant’s main workshops Preparatory workshop Acceptance and preparation of charge materials Technical structure of the main equipment Bunker and metering devices complex Equipment for grinding of charcoal Briquette-making workshop Preparation of mixture and briquetting Briquetting materials mixer Briquetting equipment Metallurgical workshop Receipt of liquid ferrosilicon Thermal electric furnaces RKZ-6, 3 Filling machines Filling workshop Filling of ferrosilicon Equipment for grinding and sorting of ferrosilicon Packaging equipment Granulation Crushing and packaging Conveyor system Hoisting-and-transport equipment Energy workshop Electricity production Gas-power station equipment

4. Stages of project realization Period № Stage 2012 I 1 Project development. Technical regulation development. Project and construction working plan development 2 Working project development including construction documentation for nonstandard equipment development 3 Industrial site reconstruction and building. Equipment manufacturing. RMC. Personnel formation. Starting-up and adjustment works 4 Plant functioning in permanent mode of operation II III 2013 IV I II III 2014 IV I II IV

5. Investment volume, million RUR 2012 2013 Buildings and constructions 150 350 Equipment and RMC 800 1 420 Project 190 110 Total 1 140 1 880 üTotal project value – 4 020 million RUR üNPV – 128, 7 million RUR üIRR – 9, 2% üPayback period – 5, 9 years 1 st half of 2014 1 000

6. Personnel plan The number of new working places – 200 Position Amount Сaverage salary (thousand roubles per month) Payments Management Administration 5 15 Guarding 10 15 Specialists 20 25 Monthly, during the whole project period Management 10 50 Monthly, during the whole project period Production workers 130 25 Monthly, during the whole project period Workers, employees, engineers, not engaged in production 20 25 Monthly, during the whole project period 35 Monthly, during the whole project period Marketing specialists 5 * Amount of constantly working personnel and salary is defined below. It is expected a growth of wages coordinated with the rate of inflation. Serious attention will be paid to the labour protection and fire safety.

7. Major financial and economic indicators. Factors of investment project realization success Value, million RUR Indicator 2014 2015 2016 2017 2018 2019 800 1 600 1 600 Sold products costs 280, 45 560, 9 560, 9 Gross profit 519, 5 1 039 1 039 Profit tax 103, 95 207, 8 207, 8 Net profit 415, 6 831, 2 831, 2 Cumulative net profit 415, 6 1 246, 8 2 078 2 909, 2 3 740, 4 4 571, 6 Total revenue Factors of investment project realization success: üThere is no ferrosilicon plant in European Russia (with the exception of ferrosilicon production workshop for own needs with capacity of 40 000 tons at Novolipetsky metallurgical plant); üThe presence of large ferrosilicon consumers: Tcherepovetsky metallurgical plant, metallurgical plant «Electrostal’» , «Tulachermet» , Starooskolsky plant, Izhorskie plants, Volgogradsky metallurgical plant; üOwn raw materials (quartz sand), restorer, charcoal, own power energy provides low prime cost; üHigh quality of ferrosilicon defined by presence in its structure of charcoal with low content of harmful impurities (sulfur and phosphorus).