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External Development in Asia

Creation of a JV - Creation of a business entity for manufacturing PMB and marketing standard bitumen, PMB and associated product Team OAK 15/01/2010. External Development in Asia. Summary. Presentation of the project Market study How to realize our project? Why JV? How to set up the JV?

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External Development in Asia

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  1. Creation of a JV - Creation of a business entity for manufacturing PMB and marketing standard bitumen, PMB and associated product Team OAK 15/01/2010 ExternalDevelopmentinAsia

  2. Summary • Presentation of the project • Market study • How to realize our project? Why JV? How to set up the JV? • Business Plan • Conclusion

  3. A contractual agreement joining together two or more partiesfor the purpose of executing a particular business undertaking. All parties agree to share in the profitsand losses of the enterprise. Source : www.investorwords.com

  4. I.Presentation of the project

  5. The interest of JV • The company’s interest : • Development , growth ( new market ) • Questions • With which product? : PBM polymer modified bitumen • Own proprietary technology using special polymers • Relatively recent technology • Where to go?

  6. Direction of thedevelopment - Bitumen • Naturalstateorproducedinrefineriesfromspecialqualitiy of crudeoil • 90% usedforroadconstruction, 10 % industrialproposes (source: Total) • 8 to 10% of the European & US roads are made of PMB • PMB : PolymersModified Bitumen • Considered to provide prolonged life • The role of a PMB varies in each different applicationalsodifferentstypesworkindifferentways ( importanttowell design the mix) • Twobasictypes of polymerareusedinmodifying bitumen forroadapplication • Elastomer : flexible „rubber” backbone and largeside-chaininitsstructure / SBS : Styrenebutadienestyrene/ • Plastomer : eg EVA ethylnevinylacetate

  7. Why PMB? Without modification With polymer modification

  8. Destination • Why to choose China? • Why not : eg. Japan, India, etc? • Reason : infrastructure, experiencing the biggest growth in new roads • Japan : already existing technology • India : 10% of the bitumen production quantity of France (4,7Million tonne) • China : Only standard bitumen used so far • exisitng needed market, bitumen technolgie known ( possibility of the entrance of our new technology PMB )

  9. 2. Market Study

  10. Chinese development • China • 200 million drivers (+19 million new drivers in 2009) • From 2009 China is the world biggest automotive market (13,4M and 20M expected in 2014) • 15 billion people drive on average 530 km per year • Lorries ship 12 billion tons utilities over 600 km on average per year • Expressways • Inner big city roads • During 2008 in Beijing: 1302 new drivers & 2000 cars sold per day • 90% of the roads are overloaded in Beijing • 4 Millions cars in Beijing in 2009 • Extreme climatic conditions roads • North & East • Airport runways

  11. Expressway • From 1988 government decided to spend $240 billions in its national expressway network • Final network: 175,000 km • A market of 110,000 km • 20,000 km more expected for 2020 • Reliable estimation last years • Speed limit: 120 km/h Expressways ‘000 km evolution Source : Ministry of Transport 2009 Expressway network in 2008

  12. Expressway technical background 650 tons of PMB per km of expressway General pavement layers distribution of a road • French A31 • 50 000 v/d • “Bitume info n°17” • Pavement composition • BBM: 4cm • BBME: 7 cm • EME base: 7cm • EME foundation: 7cm • 5% PMB • Estimations • 2x3ways • Width of one way 3.5m • Layers density : 2.4 • Results • 12,862 tons/km of rocks & bitumen • 643 tons/km of PMB

  13. Highway Highway Millions km evolution Source : Ministry of Communication 2009 • In 2009, $27.6 billion was spent • On building and renovating 391,000 km of rural roads, • The network now serves almost 89 percent of all towns • In, 2020 according to vice minister of Communications: FengZhenglin • Passenger and freight transport via highways at that time are expected to be 149 percent and 40 percent more respectively than in 2006 • estimated 36.5 billion passenger trips and 20 billion tons of goods moving along the country's highways annually • Often more than what they were planning (13 years advance on the planning) • 60% of these roads would be located in North and East of China • 138,000 km of paved roads more in 2020 in the North and East of China Highway network in 2008

  14. Highway technical background 100 tons of PMB per km of highway General pavement layers distribution of a road • Pavement composition • BBME: 4 cm • EME base: 8cm • 5% PMB • Estimations • 2x1ways • Width of one way 3.5m • Layers density : 2.4 • Results • 2016 tons/km of rocks & bitumen • 100 tons/km of PMB

  15. Big cities 27,825 tons of PMB in the next 10 years • Overloaded & crowded roads • 10 years maximum life cycle • 80% - 2x1 way • 20% - 2x2 way • Same composition as extreme highways • 1000 km length by million people • 1 way • 346 272 tons of rocks & bitumen • 17 313 tons/km of PMB • 2 ways • 210 237 tons of rocks & bitumen • 10 511 tons/km of PMB

  16. Airports • The challenge is not only to increase the number of airports but to improve existing infrastructure as well. (Source : Air Transport World, February 2006) • From 1990 $30 billion spent • upgrading 90 landing fields • building 47 new airports. • 133 airports are served by airlines. • 39 account for 93.5% of total traffic while • 85 handle fewer than 500,000 passengers a year • Expectations until 2020 • 50 new airports • 100 landing fields upgrades

  17. Airports technical background Amsterdam Schipol Airport runways Source : Bitume Info n°17 6000 tons of PMB per airport • Averages • Length: 2500m • Width:50m • 2 runways by airports • Layers density : 2.4 • 5% PMB • Results by airport • 120,000 tons of rocks & bitumen • 6,000 tons of PMB

  18. Roads funding Source : Ministry of Transport announce (2009) • Tax reforms: • Fuel reform aborted: road projects lose their usual financing platform • Road maintenance, waterway maintenance and road transport surcharges fees have been canceled. • Toll collection on secondary roads phased out • Bank would be reluctant to issue loans • Construction funds should then come from • Vehicle purchase tax (48% in 2008, 32% in 2005) • Fees and taxes collected by local governments • State bonds • Domestic investment and foreign investment • Private companies & expressways: • Raise money through bond and stock offerings • Recover money through tolls (0.5 Yuan per km) • Chinese provinces • Responsible for road building • Extremely limited powers to tax and even fewer powers to borrow

  19. Chinese PMB market (In 2006 3.39 Mt of all sort of bitumen have been sold in France)

  20. SensivityAnalysis

  21. RisksAnalysis

  22. Competitors on the market hát igen, szal ez a nagy helyzet..ha ő az igazi, akkor bátorítana

  23. III.How?

  24. In this case it is advisable to go in China without a chinese partner because No previous experience Entry into the chinese markets, trying to tap on to the exisiting markets for the existing company The contacts and the suppliers and distributer networks Indepth exisiting geogrophic knowledge with the existing company Use of exisiting production and storage facilities of the existing company Lack of experience in dealing with chinese approval authorities and bureaucracy. The progress plan So solution: look out for an exisiting Chinese company

  25. Different Partner options • A National petroleum company • Independent Refining company already involved in the Bitumen activities • Road costructions communication department • Local muncipality • Road Contractors

  26. Selectionof Partners

  27. Choice • An exisisting petroluem company like sinopec or CNPC • A decision to go with 51 % share • The important contribution from would be the Technology and production methods and advanced machines • Capital also would be given

  28. IV. Business Plan

  29. M.O.U • Act with our partner the decision of creating a Joint Venture • Accord of secret between the two firm

  30. Thankyouforyourattention!Anyquestion

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