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									            Kazakhstan has a significant advantage in terms of
            electricity tariffs in comparison with China and Ural
            region
                90


                80

                70                                                                    China : $35-
                                                                                      81/mwh
Price ($MW h)




                60
                                                      Ural region :
                50                                    $35-46/Mwh

                40                                                                                      Средний
                                                                                                          Average world
                                                                                                        мировой тариф
                         Gulf : $13-                                                                     electricity tariffs
                30                                                                                      на эл. энергию в
                         16/mwh                                         Тариф на                        In 2008: $38/mwh
                                                                                                        2008 $38/мвтч
                                                 Iran :                 элеткро- tariffs
                                                                         Electricity
                20
                                                 $24/MW/h             inэнергию в
                                                                         Pavlodar: $30/mwh
                10
                                                                        Павлодаре
                           Siberia :
                                                                        : $30/мвтч
                           $19-20/mwh
                 0
                     0            5000   10000        15000           20000       25000         30000    35000         40000

                                                    Total production ( thous. tons)
Diversification in processing would satisfy increasing
demand in CIS driven by transport and energy sectors
Demand in CIS countries and Europe, thous.
tons
Low supply of copper in global scale brings high level of prices that might
increase further in case no further investments are made in exploration



                                                  Price, $/TONS     9000

                                                                    8000

                                                                    7000




                                                                           $/tons
                                                                    6000

                                                                    5000

                                                                    4000
 M tons




                                                                    3000

                                                                    2000

                                    >10 г.                          1000

                                                                    0
                Costs of ferroalloys production in Kazakhstan are
                comparatively low, which is a key argument towards
                further investments
Цена поставки, US цент /lb с содержанием Cr,




                                                production
                                               in RK
2008
 The home market volume is insignificant - about 17 billion dollars, its future
 growth will be caused by development of the basic consumers: oil and gas,                                                                     5
 building and power sectors

    Domestic demand for machine-building                                           Investments into main sectors of economy
    production, 2008.                                                              of the Republic of Kazakhstan
                                                                                   In billion dollars for 2009-2014 .
                                      Domestic
                                      production                                               Oil and gas                              24,3
                                   10%                                                             Building                      12,7

                                                                                            Electric-power                 8,8

                                                                                   Railway transportation            4,7

                                                                                                Metallurgy         3,1

                                                                                   Metal mining industry           2,7
                      Import
                                                                                                 Agriculture       2,6

                                                                                             Food industry        2,5

            S               17 billion dollars                                            Communication           2,2




Source: Agency of RK on statistics, Committee on trade, expertise surveys, investment programs of ministries and large companies,
Analytics of Strategy Partners


                  Republic of Kazakhstan Ministry of Industry and Trade
Machine building provides only 3% of industrial production in Kazakhstan and does
                                                                                                                            6
not play a significant role in the economy

 Share of machine building in the total industrial              The share of machine building in manufacturing
 production ,                                                   %, 2005-2008 г.
              15,9%
                                                                 46%
                                                                            42%
                                                   5,5 times
                                                                                      33%

                                            2,9%                                               21%        18%
                                                                                                                    8,8%
                   1990                     2008

                                                                Germany     Japan     USA     Russia     Australia Kazakhstan

                                                               Share of employed in machine building in the total
                Share of machine building                      industrial production ,
                                        43.0%                  %

                                                                    12.1%           13.0%        12.7%           12.9%



                   2.0%

                 In export            In import                      2004           2005         2006             2007

Source: Agency of Statistic of Kazakhstan


                   Republic of Kazakhstan Ministry of Industry and Trade
 Majority of machine building products are imported, domestic production 6 times
                                                                                                                                                 7
 lower than import.

 Export structure,                                                                            Import structure,
 2008 y.                                                                                      2008 y.
                                      Shipbuilding                                                   shipbuilding Energy
                          AgriculturalEnergy                                                   Element base
               Engineering tool                                                                                           Car manufacturing
                                  3%                                                   Component base           2%
           instrumentation                            Component base                                       4%
                                                                                        Construction                   17%
           Oil and gas
                              5% 4% 2%                                                                    4% 2%
                                     1%
                                                                                          Railway
                                                                                                     5%
    Home appliances                                                                                                             11% Engineering tool
                                                                                  Instrumentation   6%
         Mining and      5%
        metallurgical
                           6%                        14%
                                                           Electric engineering        Aeronautics
         Element base                                                                                                                Home appliances

                                             9%                                            Agricultural     7%
                        Railway                                                                                     7%        Oil and gas
                                               construction                                Electrical engineer
                    car manufacturing                                                                            Mining and metallurgical




      S                  673 bln US dollars                                                          15 306 bln. US dollars
 Domestic
 production              2 430 bln. US dollars                                            6 times


Source: Custom statistics


                    Republic of Kazakhstan Ministry of Industry and Trade
 Machine building industry of Kazakhstan characterized by small number of
                                                                                                                         8
 segments and types of product

                                                                                     Mining
Auto industry:                                                                       • Machinery for mining (430
• Cars (3284 units)                                                                    units)
• Trucks (1073 units)                                 Production Structure,          • Equipment for the oil sector
• Special Vehicles (27 units)                         2008 y.                          (12 mil. US dollars)
• Fire engines (141 units)                                                           • Parts for drilling machines
• Trailers (99 units)                                                                • (73 mil. US dollars)
• Tractors (118 units)                                               Machine tools
• Bearings (33,9 units)                                Transport
                                                                     and equipment
Railway:
•Equipment for railway tracks (40 tons)                                              Metallurgical
                                                                                     • Rolling mill (11 units)
                                                        35%                          • Presses (72 units)
Power Machinery                                                           41%
• Transformers
• Equipment electrical networks (429 units.)                                         Machine tool
• Wires and Cables (477 thousand km)                                                 • Machines (80 units)
• Batteries (809 161 units)                                                          • Parts of machines (2 mil. US
                                                                                       dollars)

                                                              24%
 Home appliances                                         Electric equipment
 • TVs and tape recorders (322 thousand units)
                                                                                     Building-elevating
 • Computers (93 thousand units)
                                                                                     • Cranes elevating (80 units)
 • Washing machines (83 units)
                                                        S = 2 bln. US dollars
                                                                                     The agricultural
   Instrument, radio
                                                                                     • Agricultural machinery parts (6
 • Medical equipment (18 mln US dollars)
                                                                                       mln. Dollars)
 • Devices measure the flow of fluids (1 508 units)
 • Electricity meters (371 units)

Source: Statistic Agency


                   Republic of Kazakhstan Ministry of Industry and Trade
The most attractive markets for export of machine building products are Russia,
                                                                                                                                              9
Belarus, CIS countries and China

                                                                                Import of machine building products, 2008, bil. US dollars
    Belarus                                                                     The growth rate of imports of machinery, 2005-2008
               36%
                                                     Russia   48%
                                                     134



     Ukraine   38%



                                                                                   521           China
     Georgia   33%
                                                                                               15%
    1,9

                                                                     India
     Armenia    33%                                                             23%                                  5 802           World
    1,0                                                                                                                           10%3


    Iran                                                                                                                 3 CAGR   2006-2008
                                     Pakistan          Central Asia Countries

               6%1                              9%                     5-8%2
                                                                                                                         Markets 1 priority
                                                                                                                         Market 2 priority
 Sources: UN Comtrade, Strategy Partners

                Republic of Kazakhstan Ministry of Industry and Trade
 Priority segments are machine-building for mining, iron and steel industry, oil and
 gas, railway and agricultural machine-building, and also electric equipment                                                                         10
 manufacture
Attractiveness
                         Automotive-building
                                                                                                Comments:
0,90
                                                                     1st priority            ● The most priority for development in territory
                      Machine tool building                                                    Kazakhstan are segments: machine-building for
                                                      Oil and gas                              oil and gas sector, machine-building for
0,45
                                                                                               mountain-ore and steel industry; railway and
                                                                      Electric-                agricultural machine-building and electric
                                                                      equipment                equipment manufacturing
0,40                      Household appliances
                                                                                             ● These segments differ in considerable potential
       Equipment building                                  Agriculture                         of internal demand, export possibilities (mainly in
0,35                                                                                           the CIS), presence of existing industrial base,
                                   Building                                   Ore mining       moderate risks and a competition
          Element base                                                        and metallyrgy ● The least priority segments for development are:
0,30                                                                 Railway
                                                                                               instrument making and thin machine-building,
                                                                                               element base, power machine-industry,
0,25                                                                                           shipbuilding and aircraft engineering
                                                   Component base
                      Energy                                                                 ● The given segments differ by low chances of
                                                                                               realization (thus the part from them has rather
0,20                                                                   2nd priority            high appeal) as demand high competence and
                                                                                               qualified personnel resources, differ by high risks
0,15
                                                                                               and competition level
                            Aircraft engineering

                                Shipbuilding
0,10


                                                                          Marketability

                 Diameter – production in RК in 2014

Source: analysis of Strategy Partners


                    Republic of Kazakhstan Ministry of Industry and Trade
 The forecast of demand and manufacture of agricultural machine-                                                                     11
 building
                                                                                                                    agricultural
 The demand forecast in RК on sector
 production,                                                             Comments:
 mln. US dollars, 2008 prices                          CAGR, 2008-2014   ● Internal demand – in agriculture of RК occupied more than
                                                                           150 thousand people, thus it possesses low productivity first
                                1113.3                      4,6%           of all at the expense of low level of mechanization of work
               846.6
                                                                           and moral and physical deterioration of existing technology
                                                                           parks
               2008             2014
                                                                         ● According to specifications 89% of combine harvesters,
                                                                           93% of cargo motor vehicles, 83% of harvesters, 84% of
 Production forecast in RK                                                 tractors are subject to write-off
 Production,                                                             ● Thus at development of agriculture and at providing with
 mln, US dollars 2008 prices                                               state support at purchase of a fixed capital by agriculture
                                           246.6       CAGR, 2008-2014     (for example, preferential schemes of leasing), demand for
                                            24.6                           agricultural cars and the equipment will considerably
                                                            5,9%
   +13,1%                                                                  increase
                        151.3
     118                 17.3
                                                           10,8%         ● The competition (a share in the market) –a share of own
     13.3                                   222                            manufacture in internal demand can increase from 12% to
               +4,2%                                        4,2%           20% ( fin the Russian Federation the similar indicator makes
                        133.7
      105                                                                  an order of 30%)
                                                           13,4%
                                                                         ● Export – there are a set of large players in the world, who
                                                                           trades with agricultural machinery from the developed
     2008               2014               2014
                        base            optimistical
                                                                           countries, and in the CIS market – Belarus МТЗ, that in a
      Export                                                               combination of the state control of import of production of
      Market consumption                                                   agricultural machine-building by neighbor countries, is a
                                                                           considerable barrier to escalating of RK export
  Share of satisfaction of internal demand by its own
  manufacture
                                                                                            – base scenario
    12%                 12%                20%
                                                                                            – optimistic scenario

Source: analysis of Strategy Partners


                       Republic of Kazakhstan Ministry of Industry and Trade
 The forecast of demand and manufacture of construction technologies                                                         12
 and equipments
                                                                                                              Construction
 The demand forecast in RК on sector
 production,
 mln. US dollars, prices of 2008 year CAGR, 2008-2014                   Comments:
               660             793
                                                           3,1%         ● Internal demand – increase the volume of
                                                                          construction and expansion of road network of
               2008            2014
                                                                          Kazakhstan will stimulate demand for
 Production forecast in RK
                                                                          construction equipment
 Production,
                                                                        ● Competition (market share) – in Kazakhstan
 Mln. US dollars in 2008 prices                                           there is no final production of building
                                            90        CAGR, 2008-2014     equipment . For example, 100% of tower
                                                           4,2%           cranes are imported.
   +12,1%                                    34.7
               +0,5%   46.6
                                                          10,9%         ● Export – in Kazakhstan there is no final
     45.3
                                                                          production of building equipment.
                       23.3                                -2,5%
      18.7                                 55.3
     26.6              23.3                               12,9%

     2008              2014                2014
                       base              optimistic
      Export
     Internal production
  Share of satisfaction of internal demand by its own
  manufacture
                                                                                      – base scenario
     4%                3%                   7%
                                                                                      – optimistic scenario

Sources: analysis of Strategy Partners


                      Republic of Kazakhstan Ministry of Industry and Trade

								
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