Samruk kazyna national welfare fund investment opportunities
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Samruk-Kazyna National Welfare Fund Investment opportunities July 2010 Samruk-Kazyna Overview National Welfare Fund consolidates key state assets in more than 400 subsidiary companies Key player of the industrial and innovation development program

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Samruk-KazynaNational Welfare FundInvestment opportunities

July 2010


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Samruk-Kazyna

  • Overview

  • National Welfare Fund consolidates key state assets in more than 400 subsidiary companies

  • Key player ofthe industrial and innovation development program

  • Effective tool in implementation of the Anti-crisis program:

  • primary role in stabilization of financial sector by means of direct participation in 4 largest commercial banks of the country

  • primary role in stabilization of the real estate market

  • direct support of the small and medium size businesses

  • manages mortgage refinance program

  • Main objectives

  • Achieving sustainable growth of state economy

  • Promoting modernization and diversification of state economy

  • Increasing the effectiveness of the holding and all of its affiliates

  • Promoting and implementing large-scale investment projects

2


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Samruk-Kazyna

  • Main assets


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Oil & Gas

  • Overview

  • Oil and gas sector – 30% of Kazakhstan’ s GDP

  • Proved oil reserves - 6.5 bn tons

  • Gas reserves – 7 trillion cubic meters (3.9% of world reserves)

  • The production of oil in Kazakhstan has increased by 52% (2002-2009) while the production of gas has increased by 37% in the same period

  • Samruk-Kazyna participation in the sector

    • KazMunayGas - vertically integrated national oil and gas company

  • Development perspectives

  • Production growth due to field developments (Kashagan, Khvalynskoye, Block N etc.)

  • Transport infrastructure development – launch of Trans-Caspian Transportation System, “Kazakhstan-China” pipeline’s extension, construction of “Beineu-Shymkent” gas pipeline, Aktau port’s development

  • Development of local refinery capacities up to 17 mln tons / processing upgrading

  • Development of petrochemical branch

  • Investment opportunities*

  • Atyrau Oil Refinery - Oil deep processing Complex construction ($1.1 bn)

  • Pavlodar Oil Refinery ($1 bn)

  • Construction of petrochemical plant in Atyrau ($6.3 bn)

  • *More information about investment projects – in annex


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    Power

    • Current trends

    • Considerable gap in electricity supply between energy excessive northern regions of Kazakhstan and energy-dependent southern regions of the country

    • Local production capacities are depreciated by almost 70%

    • Competitive advantage

    • Access to low-cost fuel due to large local reserves of coal, oil and gas

    • Opportunity to develop renewable energy resources

    • Development perspectives

    • Construction of 6 new thermal power plants (coal or nuclear) until 2030

    • Construction of new hydropower plants

    • Samruk-Kazyna participation in the sector

    • Samruk-Energy- operates major power plants in Kazakhstan

    • KEGOC- operates the national power grid, owns and operates all main and interregional transmission lines and master substations across the country

    • Investment opportunities

  • Balkhash thermal power station ($2.4 bn)

    • Electricity consumption in Kazakhstan (forecast), bn kWth

    2009

    2024

    138

    125

    98

    Pessimistic

    78,4

    Basic

    +25%

    +60%

    +76%

    Optimistic


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    Transportation& Telecommunications

    • Overview

    • Strategic geographical location

    • High dependence of the economy on transport infrastructure

  • Samruk-Kazyna participation in the sector

    • Kazakhstan Temir Zholy - national company, monopoly railway operator

    • Air Astana - leading domestic airline

    • Kazakhtelecom - major player on the telecommunication market

    • Investment opportunities

    • Production of passenger rail carriers ($60 mln)

    • Construction of the railway Zhetygen – Korgas (border with China) ($1.1 bn)

    • Construction of the railway Uzen – border with Turkmenistan ($433 mln)

  • Freight turnover in Kazakhstan, bn tkm

    Passenger turnover in Kazakhstan bn pkm


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    Metals& Mining

    • Overview

      • Large reserves of Uranium, Lead, Zinc, Gold, Coal

      • 2008: production of ferrous metals - $4.5 bn

      • production of precious and non-ferrous metals – $ 4.4 bn

      • Share of metals and mining sector in total industrial production of Kazakhstan – 20%

      • Objective – production of high value added products

      • Samruk-Kazyna participation in the sector

      • Tauken-Samruk -national mining company

      • Kazatomprom - national nuclear company, implements the industry development program of Kazakhstan aimed at creation of a vertically integrated complex of nuclear fuel cycle

    • Investment opportunities

      • Upgrade of cast iron plant ($457 mln)

      • Steel rails production ($309 mln)

      • Polycrystalline production ($388 mln)


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    Chemicals

    • Resources

      • Kazakhstan is 11th in the world in mineral production

      • Second largest proved supplies of sulfuric acid in the world

      • Kazakhstan possesses 1/3 of proved phosphorite reserves in CIS and over 5% of world reserves

    • Current trends

      • Growing demand for fertilizers in Russia and China

      • Annual chemicals production grew 2,6 times in 2004-2008 years period

      • Local companies produce phosphorus, sodium bichromate, phosphoric fertilizers, nitric fertilizers, chromic compounds, plastics, tires, general mechanical rubber goods

      • There is a potential of products diversification (organic and nonorganic chemical products, special chemicals)

      • Samruk-Kazyna participation in the sector

  • United Chemical Company - consolidates state assets in chemical sector

    • Investment opportunities

      • Mineral fertilizers – Kok-Dzhon ($1.9 bn)

      • Construction of phosphorite fertilizers plant ($600 mln)

      • Sulphuric Acid production ($65 mln)


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    Pharmaceuticals

    • Current trends

    • Market size – around $900 mln

    • Growing local consumption – 20% average annual growth

    • Local production is growing, but covers only 10% of domestic market

    • 90% of consumed pharmaceuticals are imported

    • Samruk-Kazyna participation in the sector

    • SK Pharmacy - national medicine and medical equipment distribution company

    • Key advantages

    • Growth of domestic production

    • Transparency in government purchases

    • Demand for improved quality of products

    • Investment opportunities

      • Construction of pharmaceuticals plant in Astana and expansion of production in Shymkent ($81 mln)

      • National medicine and medical equipment distribution company ($80 mln)

    9


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    Annex

    Investmentprojects

    10



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    Atyrau Oil Refinery

    Oil deep processing Complex construction

    • Background

      • Total project cost: $1.1 bn

      • Capital structure: equity - $1 mln, debt - $1,099 mln

      • Implementation period: 2011-2014

    • Key project advantages

      • High value added production:

        • Increase in processing depth up to 82%

        • Production of high-octane refined products

        • High ecological standards: Euro - V

        • Domestic market’s share increase for high-octane oil products

        • Manpower: construction – 2507, maintenance - 391

    • Investment Opportunities

      • Debt financing

    12


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    Pavlodar Oil Refinery

    • Background

      • Reconstruction and modernisation of Pavlodar Oil Refinery to increase annual production capacity to:

        • motor fuel – 2 million tons

        • jet fuel – 132 thousand tons

        • diesel fuel – 2 million tons

        • fuel oil – 252 thousand tons

      • Total project cost: $1 bn

      • Implementation period: 2011-2013

    • Key project advantages

      • High value added production

        • Production of high-octane refined products

      • High ecological standards: Euro - III, IV

      • Domestic market’s share increase for high-octane oil products

      • Manpower: construction – 3100

    • Investment Opportunities

      • Debt financing

    13


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    Petrochemical plant in Atyrau

    • Background

      • Construction of a petrochemical plant with annual production capacity:

        • 1 stage: polypropylene 800 thsd tons

        • 2 stage: polyethylene 450 thsd tons

      • Total project cost: $6.3 bn

      • Capital structure: 27% equity, 73% debt

      • Implementation period: 2009-2012

    • Key project advantages

      • High value added production

      • High profitability margins (over 50% EBITDA, over 20% net income margin)

      • Manpower: construction – 12000, maintenance – 800

    • Investment Opportunities

      • Debt financing

      • Equity

    14


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    Balkhash thermal power station

    • Background

      • Construction of one 1320 MWt module is under consideration

      • Possible further extension up to 4000 MWt

      • Total project cost: $2.4bn

      • Capital structure: equity 30%, debt 70%

      • Implementation period: 2010 – 2014

    • Key project advantages

      • Meet the demand for electricity in Almaty region

      • Low production costs

        • Investment opportunities

      • Debt financing


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    Rail Passenger Carriers

    • Background

      • Production of rail passenger carriers

      • Total project cost: $60 mln

      • Quantity: 150 units per year

      • Implementation period: 2010-2012

    • Key project advantages

      • Creation of carrier assembling line to meet the growing demand in passenger carriers on the domestic market

    • Investment Opportunities

      • Debt financing

    16


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    Construction of the railway Zhetygen - Korgas

    • Background

      • Construction of a railroad connecting Almaty region with the Chinese border in Korgas

      • Total length – 293 km

      • Passenger and freight transportation

      • Total project cost: $1.1 bn

      • Capital structure: 45,8% equity, 54,2% debt

      • Implementation period: 2009-2012

    • Key project advantages

      • Strategic infrastructure concession project

      • Risks shared with public authorities

    • Investment Opportunities

      • Debt financing (45%)

    17


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    Construction of the railway Uzen – border with Turkmenistan

    • Background

      • Construction of the new railway road near Caspian sea (Uzen-Gyzylgaya-Bereket-Etrek-Gorgan) with further link with Russian railroad network

      • Total length – 670 km, Kazakhstan’ s part – 138,5 km

      • Passenger and freight transportation

      • Total project cost: $433 mln

      • Capital structure: 47,2% equity, 52,8% debt

      • Implementation period: 2009-2012

    • Key project advantages

      • Strategic infrastructure concession project

      • Risks shared with public authorities

    • Investment Opportunities

      • Debt financing (31%)

    18


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    Cast iron plant Turkmenistan

    • Background

      • Construction of metallurgy plant SBS Steel for production of cast iron in Aktobe region

      • 500 thsd tons of granulated iron annually

      • Total project cost: $457mln

      • Implementation period: 2010 – 2012

      • Key advantages

      • Strengthening export potential of Kazakhstan

      • Production of high quality iron based on the unique patented KOBE Steel technology

      • Manpower: construction – 1800-2300, maintenance - 500

      • Investment Opportunities

      • Debt financing

    19


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    Steel Rails Production Turkmenistan

    • Background

      • Production of steel rails and rolled steel at KSP Steel metallurgy plant

      • 200thsd tons annually

      • Total project cost: $309 mln

      • Capital structure: 20% equity, 80% debt

      • Implementation period: 2010-2013

      • Key advantages

      • Meet the growing local demand

      • Manpower: construction – 1000, maintenance - 106

      • Investment Opportunities

      • Debt financing $247 mln

    20


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    Production of Turkmenistanpolycrystalline silicon

    • Background

      • Creation of silicon cluster on manufacture of mono/poly crystal ingots and silicon plates:

        • 2500 tons of polycrystalline silicon

      • Total project cost: $388 mln

      • Capital structure: 30% equity, 70% debt

      • Implementation period: 2010 – 2013

    • Key project advantages

      • Well-positioned to supply European and Asian markets

        • Competitive advantage via long-term access to low-cost raw materials

      • High value added production

        • High profitability margins (sales of $594 mln a year)

        • Competitive advantage due to low transportation costs

      • Advanced stage of project planning

        • Feasibility studies and technical specifications completed by leading consultants

        • Development Bank of Kazakhstan commenced $150 mln loan guarantee for plant construction

    • Investment Opportunities

      • Debt financing $50 mln

      • Equity

    21


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    Mineral Fertilizers Production Turkmenistan

    • Background

      • Construction of mineral fertilizers producing plant combined with Kok-Djon (Aral-Tobe and Kisik-Tobe sites) and Gimmelfarbskoe deposits

      • Production of mineral fertilizers -1 mln tones

      • Products:potassium phosphate, NPK fertilizers, yellow phosphorus,phosphoric acid, reactive compounds

      • Total project cost: $1.9bn

      • Expected launch: 2018

    • Key project advantages

      • Availability of natural resources

      • Low production costs

      • Meeting 100% local demand on mineral fertilizers of high quality and exporting

      • Manpower: 5000

    • Investment opportunities

      • Equity

      • Debt financing

    22


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    Phosphorite Turkmenistan Fertilizers Production

    • Background

      • Construction of phosphorite tails and low-grade ore processing plant

      • Production capacity of 1mln tons of phosphorite fertilizers annually

      • Total project cost: $600 mln

      • Expected launch: 2010

    • Key project advantages

      • Availability of unique technology to produce phosphorite fertilizers from low-grade ore

      • Large reserves (over 500 mln tons) of low-grade ore

      • Proximity and access to markets in China

      • Strong competitive advantage – the lowest production cost

      • Ability to produce highly-enriched fertilizers and develop production of NPK fertilizers jointly with KazAzot

    • Investment Opportunities

      • Debt financing

      • Equity

      • Equipment & Technologies

    23


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    Sulphuric acid production Turkmenistan

    • Background

      • Reconstruction of sulphuric acid plant on the base of SGHK Ltd aiming to provide Kazatomprom’s uranium producing entities with sulphuric acid

      • 180 thsd tons annually

      • Total project cost: $69 mln

      • Capital structure: 31% equity, 69% debt

      • Implementation period: 2010 - 2012

    • Key advantages

      • Low cost of raw materials

      • Manpower: construction – 300, maintenance – 141

    • Investment Opportunities

      • Debt financing

    24


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    Pharmaceuticals plant Turkmenistan

    • Background

      • Construction of a pharmaceuticals plant in Astana and expansion of current production of ChimPharm (Shymkent)

      • Total project cost: $81 mln

      • Capital structure: $30 mln- equity, $51 mln – debt

      • Implementation period: 2009 - 2011

    • Key advantages

      • Growing local demand

      • Growing local production on the Kazakhstan’s pharmaceutical market from 10% to 25%

      • Creating innovative, science intensive and export oriented production (turnaround)

      • Manpower: construction – 1000, maintenance - 300

    • Investment Opportunities

      • Equity

      • Debt financing

      • Technologies

    25


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    National medicine and medical equipment distribution company Turkmenistan

    • Background

      • Creation of integrated medicine and medical equipment distribution system

      • Total project cost: $ 80 mln

      • Expected launch: 2009–2010

    • Key project advantages

      • Growing market

      • Development of local pharmaceutical industry

      • Transparency in government pharmaceutics procurement, effective system of transport and logistics

    • Investment Opportunities

      • Debt financing for a logistics system construction

      • Medications supply to Kazakhstan

    26


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    Contacts: Turkmenistan

    Republic of Kazakhstan

    Astana , Orynbor street 10,«Kazyna Tower»

    [email protected]

    www.samruk-kazyna.kz