Fertilizer plant

Russian Federation

Plant for the production of urea to 2000 tons / day,processing of ammonia 1200 t / day,in the village. Dolgoe, Orel region of the Central Federal District of the Russian Federation

About company

Using of urea

Industry

• Raw materials for carbamide resins, melamine, hyrazine, pharmaceuticals;

• In the oil industry for dewaxing oils and motor fuels..

Agriculture

• Universal fertilizer;

• The use for foliar feeding of plants;

• Protein substitute in ruminant feeds.

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The company Orelmetakhim in the Oryol region of the Russian Federation is implementing an investment project for the construction of a modern industrial complex for the processing of natural gas into granular urea.The company was organized in 2016 in coordination with the administration of the Oryol region. The Orelmetakhim company and the administration of the Oryol region signed a cooperation agreement of 04.10.2017.Project Country: RussiaProject location at the site rural village Dolgoe in Orel, Dolzhansky District, Oryol Region

About company

At this juncture were obtained the following main authorizing documents

• Technical specifications were obtained for the designed connection of a gas pipeline and gas distribution point in the Dolzhansky district of the Oryol region in the amount of 455,520,000 m3 / year (52,000 m3 / hour).

• A lease agreement for a land plot of 646385 sq. M.

• Obtained permission to use water bodies of the Don River basin in the amount of the established limits in the amount of 9 million cubic meters of industrial water per year (water-resource region 05.01.01.002. Sosna River).

• An application was submitted for the connection of electricity from 2 transformers with a power of 63 MW / hour from Cheremisino substation in category No. 1 of the Federal Grid Company (free capacity).

•For the construction period, the technical specifications for interconnection from the interregionaldistribution grid company Orelenergo for the construction site in the amount of 2 MW / hour are received.• There is an agreement between the Russian railway and the Administration of the Oryol Region on thepossibility of constructing non-public access railways from Dolgoye station to the loading complex of thedesigned plant.

•Currently, internal technical networks are being designed. 3

Project Benefits• Economic efficiency - investments are based on economic efficiency, as in the Russian

Federation the lowest prices for gas and electricity in Europe; The plant will be equipped with the latest technologies for the production of ammonia and carbamide, which require 30% less natural gas compared to the old equipment.

• State support - active support of the administration of the Oryol region and the Oryol region development corporation, low cost of renting a plot of land for the construction of a plant, a simplified way to allocate additional land plots.

• Location and infrastructure - to ensure the delivery of construction materials to the village ofDolgoe Orlovskaya oblast, the plant will be located near the developed pipeline system fornatural gas, railway

• Mitigation of construction risks - at the moment the Company selects a ready-made general contractor with a good reputation who is able to complete construction within the established economic parameters..

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The site for Orelmetakhim of 64.6 hectares is located, near the village of Dolgoe, in the Oryol region, Central Federal District of the Russian Federation

Construction site

Nearby passes:

Construction site is a long-term lease on25 yearswith the possibility of subsequent redemption

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Main export gas pipeline.The actual capacity of 28 billion m3 per year, the diameter of the pipeline 1420mm

Location site

Project location - Central Federal District of the Russian Federation

Sea routes:

800 km

Novorossiysk - Istanbul, Turkey

8,000 km

Novorossiysk - Mumbai, India

12,000 km

Novorossiysk - Rio de Janeiro, Brazil

13,000 km

Novorossiysk - Houston, USA6

The advantages of the construction sitePreviously, an airfield was located here, which significantly reduces the cost of preparing the construction site and vertical planning:

The site is located 1.3 km from with the export main gas pipeline system with a diameter of 1420 mm;

Two independent power inputs

The location allows to supply urea in the chernozemic soil belt of the Russian Federation;

The railway to the sea port of Novorossiysk is 0.6 km from the site, the road is 0.4 km.

Availability of qualified labor resources in the village. Dolgoe, and the ability to attract qualified professionals from other regions

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Infrastructure benefits of the site

Project location -Central Federal District of the Russian Federation

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The plot is in a long-term lease for a period of 25 years with the option of subsequent redemption

Key assumptions *

681.6 million Euro136,4 million Euro

136,4 million Euro

138 months90 months

40-48 months

532 Workplaces

966,37 million Euro

*According to the feasibility study of investments"Research and Design Institute of Ureaand products of organic synthesis "(OJSC "NIIK")

Manufacturing:

700 000 tons per yearor2 000 tons per daygranulated urea

Sales market:

20%Russia

80% exportBrazil, India

Need for financing of permanent assets, total:- including at the expense of equity

Аnnual net profit after the project payback

Internal rate of return (IRR) nominal annual

Net present value of the project (NPV) for the period under review

The payback period of capital investments (since the beginning of the project)

- payback period (PBP)- discount payback period (DPP)

Project implementation period (investment phase)

58%

18%

6%

9%

9%

GAS

Electricity

Water

Auxiliary materials(chemical reagents,inhibitors, etc.)

Staff Wages

The cost of production of urea

The structure of the cost of raw materials in the production of 1 t. Urea

The price of urea in the world market in November 2018

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Total:

71,44 $VAT included,

cost of gas 78$ per 1 000 m3

Project Implementation Schedule 2019-2022

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Market overview

The import to Brazil for 2016 increased to 4 million

tons: by1.15 million tons or 39%.

8,9 million tons –exports of urea from China in 2016, which is 35% below the record of 2015 in 13.8 milliontones.

7,16 million tons of urea was produced in Russia in 2016, 80% is exports.

265 $/т. FOB (+12% per month)–сost of urea in 2017,February(The Baltic/Black sea).

311$/т. FOB – is average price of urea in 2014 (The Baltic/Black sea).

230 $/т FOB – the prime cost of urea production from the most effectiveChinese manufacturers in2016.

Cost:For 2015, urea cost was fell by 30%, and in 2016 was continuing to fall in

value by 27% (the average price for 2016 –$ 198 / t). This was caused by theintroduction of new capacities that outstripped demand, as well as a recordharvest of agricultural products. Low prices have led to the crowding out of themarket of less efficient and high-cost players such as China and Ukraine – theexports from these countries decreased by 35% and 30% respectively. It hasallowed the market to come to equilibrium in the new price conditions. Thecurrent dynamics of the price increase for urea is estimated at 10% permonth and should fully recover for 2017- 2018.

Demand:According to preliminary IFA data, the demand for urea is estimated at 192

million tons by 2020, that is, it will grow by 2.5% or 4.24 million tonsannually. The most attractive countries for export are South America and India.These forecasts are based on several factors: the growth of the world’spopulation, the limited areas under crop, the depletion of agricultural land.

Today, Russian manufacturers are highly competitive in the world of the market due to low production costs. At the same time, there are a number of factors that adversely affect the competitiveness of Russian enterprises: high level of equipment wear (60-70%), high energy intensity of production (primarily ammonia units) and high raw materialconsumption.

Contact Information:

Fertilizer plantChief Project Manager :

Yuri I. Elfimov

Tel: +7 903 696-29-87E-mail: elfimov@astralnalog.ru

During the preparation of the presentation were used materials NIIK

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