EMU-DET Russia Project RussVzryv Ltd. April 2012

EMU-DET
Russia Project
April 2012
RussVzryv Ltd.
Euro Market
Consumption
Consumption
of explosives
in Europe
RUSSIA:
1,200,000 t
LATVIA:
500 t
ESTONIA:
LITHUANIA :
1,200 t
POLAND:
35,000 t
BELORUS:
14,000 t
UKRAINE:
190,000 t
CZECH REP.:
SLOVAKIA:
TOTAL:
PAGE # 2
12,000 t
12,000 t
4,000 t
1,468,700 t
RussVzryv Ltd.
Russian Federal Market (2011):
Consumption
Explosives, MIL tonnes
1.4
1.244
1.181
1.2
1.125
1.068
1.024
0.965
1.0
0.862
0.795
0.8
0.702
0.705
0.635
0.634
0.6
1.173
0.549
0.533
0.548
0.564
0.4
0.2
0.0
PAGE # 3
RussVzryv Ltd.
Russian Federal Market (2011):
Consumption
PAGE # 4
EXPLOSIVES:
1,24 MIL tonnes
DETS EA:
18 MIL kits
DETS NA:
31 MIL kits
RussVzryv Ltd.
Russian Federal Market (2011):
Consumption, Manufacturers & Market Shares
EXPLOSIVES:
Group “Nitro-Sibir”
MS = 27% (0,33 MIL t)
Group “Azot-Vzryv”
MS = 9% (0,11 MIL t)
1,24 MIL tonnes
FSE "Zavod imeni Ya. M. Sverdlova“
MS = 9% (0,11 MIL t)
overall consumption
JSC “Znamya”
MS = 16% (0,20 MIL t)
FSE “Permsky porohovoy zavod“
MS = 7% (0,09 MIL t)
JSC "Promsintez”
MS = 8% (0,10 MIL t)
FSE “Biyskiy oleumniy zavod“
MS = 6% (0,08 MIL t)
LLC “ORICA“
MS = 4% (0,05 MIL t)
JSC "Kalinovskiy Khimicheskiy Zavod”
MS = 10% (0,12 MIL t)
Other
MS = 4% (0,05 MIL t)
JSC NMZ “ISKRA”
MS = 78% (38 MIL kits)
Group “Azot-Vzryv” (JSC "Muromets“)
MS = 13% (6,5 MIL kits)
CJSC "VSI”
MS = 5% (2,5 MIL kits)
FSE “Chapayevskiy mehanicheskiy zavod“
MS = 1% (0,5 MIL kits)
LLC “Dino Nobel Russia”
MS = 3% (1,5 MIL kits)
Other
MS = 0% (0,0 MIL kits)
INITIATION SYSTEMS: 49 MIL kits
overall consumption
PAGE # 5
RussVzryv Ltd.
Russian Federal Market (2011):
Market Trends & Expectations of Consumers
Market Trends:
1. Continued growth in markets of explosives and initiation systems;
2. Accelerating the conversion to the use of low-dangerous emulsion explosives and non-electric
initiation systems;
3. With relative price stability are increasing direct costs of explosives manufacturers;
4. Market shares are redistributed for benefit of the most modern and largest manufacturers of
explosives and initiation systems.
A competitive advantage in the Russian market
will have manufacturers that will provide for the emulsion explosives:
 Highest range of explosive properties variation - for different rocks & for different conditions;
Technologies and equipment for use in open pits and in underground mines;
 Flexible delivery schedule, the possibility of a one-time delivery of large volumes (over 100 tons at a time);
 Long period of storage for the matrix and the cartridges;
 Low temperature applications (below – 30 ºC);
 Applicability in hi-watered blast holes (including the possibility of injection in hole under the column of water);
 Failsafe initiation of small diameter of the explosive charge;
Safe use in coal deposits;
 Low cost "pumped into the blast holes - ready to explode”.
PAGE # 6
RussVzryv Ltd.
RussVzryv GOALS in Russia

STEP 1:
Penetration in the Russian market of materials for explosion
 The Local Market:

30 000 tons of Explosive p.a.

STEP 2:
Leading position in the regional market of explosive
 The Regional Market:

60 000 tons of Explosive p.a.,

3 MIL kits of Initiation Systems p.a.,

Complete blasting service.

STEP 3:
Expansion to other Russian regions
 The Federal Market:
 250 000 tons of Explosive p.a.,

7 MIL kits of Initiation Systems p.a.

Complete service cycle: drilling + blasting,

Geological prospecting works.
PAGE # 7
RussVzryv Ltd.
STEP 1: Penetration in the Russian market
Project Location
The RussVzryv (Step 1) location shall be the Chelyabinsk city,
Urals Federal District of the Russian Federation.
The Ural Federal District (UFD) consolidates 6 subjects of the Russian Federation: 4 regions (Sverdlovsk,
Chelyabinsk, Kurgan, Tyumen) & 2 autonomous areas (Khanty-Mansi - Ugra, Yamal-Nenets).
UFD occupies 11 % of Russian territory (1,8 million sq. km.),
8,5 % of the Russian population (12,3 million people) live in UFD.
UFD is in the border of:
- from the west - the Volga Federal District with
the eastern part thereof being an extension of the
Urals mountain ridge.
- from the south - the North-Western part of the
Republic of Kazakhstan. The exploitability of the
region is based upon the similar (as the one of the
Russian Urals) geology.
- from the east - the Siberia Federal District with
waste territories of a various geology pattern and
the wealth of the resource base.
PAGE # 8
RussVzryv Ltd.
STEP 1: Penetration in the Russian market
Project Location
Thanks to the most complicated geology, UFD - one of the richest Russian
source of raw materials.
UFD is the area of living development of resources (carbohydrates and metals)
forming the basis of the Russian export capacity.
For some Urals' deposit occurrences, certificated stocks of basic resources
make, in total, the amount equal to that of 50-150 years of extraction (providing
the same extraction rate).
The estimation of explored reserves UFD exceeds EUR 7 trillion.
66,7% of the Russian oil reserves (6% share of world) & 77,8% of gas
reserves (26% share of world) are concentrated in UFD.
UFD has the enormous explored reserves:
 iron ores,
 power station coals,
 chromic and manganese ores,
 titaniferous magnetite and copper ores,
 tungsten- molybdenum ores,
 phosphorites, bauxites,
 piezooptic quartz,
 noble and rare metals,
 peat, asbestos, zeolites, bentonitic clay,
 nonmetallic building materials, precious & semiprecious stones…
PAGE # 9
RussVzryv Ltd.
STEP 1: Penetration in the Russian market
Regional & Local Markets
In 2011 the UFD regional consumption:

139 000 tons / year of Explosive,

& 9,8 MIL kits / year of Initiation Systems,
In the Chelyabinsk region where first RussVzryv plant will be
builted, explosive consumption during the same period has
exceeded 64 thousand tons.
The radius of 350 kilometres from RussVzryv plant in Chelyabinsk
covers more than 50 large and mid-size mining objects.
New mining projects of the Chelyabinsk region, such as
Miheevskoe and Tominskoe deposits of copper ores (owner of
a licenses & developer deposits - JSC "Russian Copper
Company") will require an additional 25,000 tons of explosives
in 2013 and 25 000 tonnes in 2015.
PAGE # 10
RussVzryv Ltd.
UFD Regional Market:
Consumption
Explosives, MIL tonnes
0.2
0.139
0.1
0.124
0.1
0.102
0.1
0.1
0.1
0.0
0.0
0.0
2005
PAGE # 11
2008
2011
RussVzryv Ltd.
UFD Regional Market:
Consumption
Initiation Systems, MIL kits
12.0
9.846
10.0
8.331
8.0
7.268
6.0
4.0
2.0
0.0
2005
PAGE # 12
2008
2011
RussVzryv Ltd.
UFD Regional Market (2011):
Consumption
EXPLOSIVES:
DETS EA:
DETS NA:
PAGE # 13
0,139 MIL tonnes
0,9 MIL kits
8,9 MIL kits
RussVzryv Ltd.
UFD Regional Market (2011):
Consumption, Manufacturers & Market Shares
EXPLOSIVES:
MS = 13% (0,018 MIL t)
(LLC “Uralskiy Sibirit”, UFD - Chelyabinsk region)
Emulsion
JSC "Zavod “Plastmass“
MS = 5% (0,007 MIL t)
0,139 MIL tonnes
(UFD - Chelyabinsk region)
Mixed / Emulsion
overall consumption
Group “Azot-Vzryv”
MS = 32% (0,044 MIL t)
(LLC “AVT-Ural”, UFD - Sverdlovsk area)
(LLC “AVT-UralService”, UFD - Sverdlovsk region)
Emulsion / Mixed
JSC "Kalinovskiy Khimicheskiy Zavod”
MS = 21% (0,029 MIL t)
(UFD - Sverdlovsk region)
Mixed / Emulsion
JSC “UralAsbest”
MS = 17% (0,024 MIL t)
(UFD - Sverdlovsk region)
Emulsion
JSC "Promsintez”
MS = 9% (0,013 MIL t)
(Volga FD – Samara region)
Mixed / Emulsion
FSE "Zavod imeni Ya. M. Sverdlova“
MS = 3% (0,004 MIL t)
(Volga FD – Nizhniy Novgorod region)
Mixed
JSC NMZ “ISKRA”
MS = 65% (6,4 MIL kits)
(Siberia FD – Novosibirsk region)
EA, NA “SINV”
Group “Azot-Vzryv” (JSC "Muromets“)
MS = 28% (2,7 MIL kits)
(Central FD – Vladimir region)
EA, NA "Edilin“ / "Korshun”
CJSC "VSI”
MS = 7% (0,7 MIL kits)
(Volga FD – Samara region)
NA "Primadet"
INITIATION SYSTEMS: 9,8 MIL kits
overall consumption
PAGE # 14
Group “Nitro-Sibir”
RussVzryv Ltd.
UFD Regional Market (2011):
Prices
EXPLOSIVES:
Whilst the fact of cartel agreement had not been confirmed, sometimes, a
majority of Explosive Substances (ES) manufacturers symmetrically set
their prices at the same level (± 5%).
Current (03/2012) prices (EXW)* of major mixed ES manufacturers are:
- for regular NON-water-resisting ES
€ 500 ÷ 850 / ton,
- for water-resisting ES
€ 800 ÷ 1,200 / ton,
- for regular packaged ES
€ 900 ÷ 1,000 / ton.
(*) it should be noted that the utilization of final ES means hazardous freight transportation
and intermediate warehousing, as well as commonly manual or deficiently mechanized
loading. It results in constituent additional consumer's costs estimated as € 450 ÷ 750 per 1
ES ton.
Current (03/2012) prices (EXW)* of Russian Initiation Systems (IS) are:
- for NA systems "SINV" / "Edilin" / "Korshun”
€ 0.85 ÷ 1.76 per a unit,
- for EA systems
€ 0.35 ÷ 1.00 per a unit,
INITIATION SYSTEMS:
Current (03/2012) prices (EXW)* of Initiation Systems (IS), assembled
in Russia from imported parts, are:
- for NA systems "Primadet" / "Nonel" / others € not available*
(*) – set up for every Consumer individually, higher than prices of the Russian
manufacturers and depend on the current ruble rate. A prominent part of price is played by
20% customs fee for component parts used for Initiation Systems assembly.
PAGE # 15
RussVzryv Ltd.
STEP 1: Penetration in the Russian market
Products
Products:
Emulsion Explosives
Type
Bulk
Cartriges
Annual
production
Volume:
18 000 tons
12 000 tons
Subtypes of products:
 for open pits,
 for underground mines,
 for coal-mining industry,
 high–power for hard rocks,
 for low (to -30C°) and ultralow (to -46C°) temperatures.
PAGE # 16
RussVzryv Ltd.
STEP 1: Penetration in the Russian market
Raw Materials
Source
Raw Material
Ammonium Nitrate
Sodium Nitrate
Филиал «Азот» ОАО «ОХК «УРАЛХИМ» (г. Березники, Пермский край)
Calcium Nitrate
ОАО «Минудобрения» (г. Россошь, Воронежская обл.)
ОАО «Буйский химический завод» (г. Буй, Костромская обл.)
pH-regulators
ООО "ЦИТРОБЕЛ" (г. Белгород)
Филиал «Азот» ОАО «ОХК «УРАЛХИМ» (г. Березники, Пермский край)
PAGE # 17
RussVzryv Ltd.
STEP 1: Penetration in the Russian market
Raw Materials
Source
Raw Material
Oils, wax/paraffin
ООО "ЛУКОЙЛ-Нижегороднефтеоргсинтез« (г. Нижний Новгород)
ООО «ЛУКОЙЛ-Пермнефтеоргсинтез» (г. Пермь)
ОАО “Славнефть-ЯНОС” (г. Ярославль)
Emulsifiers
Croda Chemicals International (Moscow) Ltd (г. Москва)
Lubrizol Ltd (UK, Hazelwood P. O. Box 88, Belper, Derby)
Sensitizers (Microspheres, Sodium nitrite)
Филиал «Азот» ОАО «ОХК «УРАЛХИМ» (г. Березники, Пермский край)
ОАО «Газпром нефтехим Салават» (г. Салават, Республика Башкортостан)
ООО «Уралсфера" (Калужская область)
ООО «Научный центр «Эпитаксия» (г. Новосибирск)
Aluminium powder
ООО «Волгоградская алюминиевая компания порошковая металлургия» (г. Волжский, Волгоградская область)
РУСАЛ: «Порошковая металлургия – Шелехов»,
«Порошковая металлургия – Краснотурьинск»,
«Порошковая металлургия – Волгоград»
PH-regulators
ООО "ЦИТРОБЕЛ" (г. Белгород)
Филиал «Азот» ОАО «ОХК «УРАЛХИМ» (г. Березники, Пермский край)
Packaging material
ООО "Фабрика ЮжУралКартон» (г. Коркино, Челябинская область)
PAGE # 18
RussVzryv Ltd.