Presentation of the project Enterprise creation for for the production of

industrial wood pellets at the Crimean republican enterprise «Crimean grain elevator»

Main goals of the project:

Development of the production of alternative, environmentally-friendly mode of consumption

(granular solid fuel) from renewable sources, exactly from plant biomass

Strengthening agriculture and energy potential of Crimea

Improving the socio-economic and investment and innovation activity in the Autonomous Republic of Crimea, as well as directly in Simferopolsky region

Increasing revenues to the budgets of all levels and state funds

Solving social and economic issues in rural areas through the creation of new jobs with year-round

employment

The potential of Crimea’s resource base

The main raw material for the production of alternative fuels are crop waste. 20% of the collected straw can be directed to the production of alternative fuels.In Crimea the average annual potential of the resource in the straw of cereal crops is 458,4 thousand tons (based on 2008-2012)., with low productivity of grain crops amount of straw that can do for biofuels, will be 272,5 thousand tones.

РАЗДОЛЬНОЕ

ЕС

БА

СЕВАС ЛТА

АК

ФЕОДОСИЯ

ВЕТСКИЙ

ЕГОРСКИЙ

К

АЛУШТА

130 000 т 125 000 т

60 000 т115 000 т

Name of the district where economically feasible to place the plants for biofuel production The total capacity of lines, t/h

Annual productivity,tonnes/year

The required amount of raw material, tonnes year

Simferopolsky region 10 67,2 80,6Razdolnensky region 10 67,2 80,6Nizjnegorsky region 10 67,2 80,6Leninsky region 5 33,6 40,3Total 35 235,2 282,2

Information about the production of alternative fuels in Crimea

According to the Ministry of agricultural policy and food of the Autonomous Republic of Crimea in the Crimea 7 companies produce solid biofuels, with a total capacity of lines - 21 thousand tons/year.

The project concept

Create a new line of production at the Crimean republican enterprise «Crimean grain elevator» urban village Gvardeiskoe, Simferopolsky region

The project includes the construction of a plant for the production of solid biofuel capacity of 65,000 tons/year of finished products

Kind of finished product - fuel pellets from waste grains (wheat, barley, oats, rice).

General volume of investments – 1609,5 thousand USD. The period of investment development - 2 years.

Features of the project

The project is the first industrial production of alternative solid biofuels with capacity of over 65,000 tons per

year in Crimea

The project can be used as a typical to create a new production of alternative

fuels to other areas in Crimea

The project can be used in the development of the national program to modernize the boiler at social and communal areas in the rural areas of

Crimea in order to replace use of natural gas and search of budget

financing of these activities

Predictive markets of production distribution, tons

Index 1st year 2nd year 3rd year 4th year 5th year

External market (EU countries)

0 14790 42840 44200 45560

Internal market, including

556 16610 21560 21800 22040

objects of public sector

556 14000 14000 14000 14000

other domestic consumers

0 2610 7560 7800 8040

Own use 4 24 24 24 24

Total 560 31424 64424 66024 67624

Consumption of industrial wood pellets in Europe The consumption of industrial pellets in Europe by analytical calculations of various experts will be in 2020 from 20 to 50 million tons per year.

Local European producers are willing to offer only 81 % of the total consumption of biofuels.

At the end of 2011, only the Netherlands, Belgium and Great Britain have consumed more than 4.5 million tons per year of industrial pellets, part of which close to half for co-firing.

Almost all European energy corporations invest in the construction of their own productions pellet, mainly in North and South America , not to depend on third-party suppliers of granules

Location of "Crimean grain elevator"

Ukraine, the Autonomous Republic of Crimea, Simferopolsky region, urban village Gvardeiskoe

Planned location of production and support facilities

1

•manufacturing premises for pelletizing straw

2

•warehouse for finished products

3

•shed for storage of straw

4

•office building

5

•checkpoint

6

•fire department post

7

•control truck scales

8

•garages

9

•workshops

10

•transformer substation

11 12

•sheds for storage of straw

Summary investment costs,thousand USD

Index 1st year 2nd year Total

1. Capital stock 6795,6 4856,0 11651,6

1.1. Buildings, structures and transmission facilities 4531,5 2700,1 7231,6

1.2. Operating machinery and equipment 865,2 843,0 1708,3

1.3. Transport vehicles 1057,9 1128,7 2186,6

1.4 Other capital stock 106,8 38,3 145,2

1,5 Project documentation and unforeseen costs 234,1 146,0 380,0

2. Working capital 790,2 445,4 1235,6

2.1. Funds for working capital financing 790,2 445,4 1235,6

3. Total demand for investment 7585,8 5301,4 12887,3

Schedule of development

Preparatory year

• development of land documents, registration rights for land ownership

• preparatory stage - market research, scientific evidence, conclusion of preliminary contracts passing expertise

• negotiations with suppliers of equipment, machinery, straw

1st year

• attraction of financial resources

• tender process for the final selection of suppliers of equipment and transport equipment, search of executors of works

• building and construction holding utilities and other objects

• manufacture, delivery, installation and commissioning of the first production line of pellet with capacity of 5 tons/hour

• purchase of motor vehicles of the first stage

2nd year

•putting into operation the first production line of pellet capacity of 5 tons/hour•gradual increase in the capacity utilization of the first line from 20% to 98%•manufacture, delivery, installation and launch – setup of the second production line of pellet with capacity of 5 tons/hour

•purchase of vehicles on •the second stage

3rd year

• putting into operation the second production line of pellet with capacity of 5 tons/hour

• gradual increase in the capacity utilization of the second line from 20% to 98%

• utilization of production capacity up to 98%

Scheme of production

Procurement of raw materials (cereal straw)

Raw materials warehouse

Chopper roll and baled straw

Storage hopper-doser

Storage hopper-doser

Millet grains

Wat

er,

stea

m

Harvesting of straw in CrimeaPROCESS

Keeping straw is an operation co-grain harvesting. Additional operations should include baling, loading and transportation from the field to the processing site.

Harvesting of straw is a seasonal event. From the point of view of production the straw should be stored and then gradually processed. Storage capacity must let to keep annual amount of raw materials.

Provision of raw materials and delivery of straw will be produced by own capacity. To do this it’s planned to make a purchase of agricultural machinery and equipment, loaders and road transport .

PRICE FORMATION

Indexunit of

measure

Scenarios of development the value of straw in the field rollsbasic version 1st version 2nd version 3rd version 4th version

Straw price in the field rolls

UAH/ton VAT excluded 5,00 12,50 18,75 25,00 37,50

Annual average production cost of harvesting straw

UAH/ton VAT excluded

18,63 27,75 35,25 42,88 58,00

Average annual total cost of pellets

UAH/ton VAT excluded 70,25 82,50 92,63 102,88 123,13

Average weighted annual average retail price (market price)

UAH/ton VAT excluded 117,63 117,63 117,63 117,63 117,63

Business profitability % 0,04 0,03 0,02 0,01 -0,01

Expected net income for the 5 years of project implementation

thousand UAH 8 566,63 6 322,25 4 436,13 2 536,00 -1 358,38

Forecast period for simple project payback years 0,75 1,13 1,88 4,25-Forecast period of discounted payback period (7% discount rate) years 0,88 1,38 2,13- -

Production indicatorsVOLUMES OF STRAW, TONS VOLUMES OF PRODUCTION OF PELLETS, TONS

1 год 2 год 3 год 4 год 5 год

560.0

31836.0

64204.0 66528.0 67200.0

1 год 2 год 3 год 4 год 5 год

21840

61152

87360 87360 87360

Financial indicatorsSALES VOLUME, THOUSAND USD

NET INCOME, THOUSAND USD

1 год 2 год 3 год 4 год 5 год

56

3493

76958285

8914

1 year

2 year 3 year

1 год 2 год 3 год 4 год 5 год

-327,5

587

24742767

3074

1 year

4 year 5 year

5 year4 year3 year2 year

Efficiency indicators of the Project:

INVESTMENT

Index Meaning Comparative base

Discount rate7,0%

effective rate of the NBU

Net present value of income, thousand USD

6 628 >0

IRR15,7% >d

Discounted payback period, years

7 positive value

BUDGET

Index Meaning Comparative base

Discount rate7,0%

effective rate of the NBU

Net present value of income, thousand USD 2 822 >0

IRR10,7% >d

Discounted payback period, years 9 positive value

Forecast of economic and social effects

Index unit of measure 1st year 2nd year 3rd year 4th year 5th year Total

Net income thousand USD 56 3493 7695 8285 8914 28443

Net profit thousand USD -328 587 2474 2767 3074 8574

Business profitability % - 18,00 34,00 35,00 36,00 32,00

Jobs creating units 28,00 72,00 29,00 0,00 0,00 129,00

Average monthly wage in the enterprise USD 452 336 340 357 375 372

Dividends thousand USD 0 422 2466 3272 3614 9774

The payment of taxes, fees and mandatory payments

thousand USD 92 535 1496 1634 1798 5555

General conclusions1. This project was designed and planned to be implemented in accordance with Ukraine and the

Autonomous Republic of Crimea laws and regulations.

2.This project is in line with Ukraine and the Autonomous Republic of Crimea priorities of development, ensure energy security, development of alternative fuels and implementation of planned government programs.

3. The project is aimed to create an enterprice for the production of alternative fuels and the gradual development of industrial-scale production of granulated fuel from straw of cereal crops to replace natural gas use at social and communal areas in the rural areas of republic, and needs of the Crimean population and other consumers including the European countries.

4. The project will create 129 jobs in rural areas

5. The total project cost is $ 12 887 thousand USD, including working capital financing in the early stages of the project.

Details about the project initiator

The Crimean Republican Enterprise «Crimean grain elevator»The Autonomous Republic of Crimea,

urban village Gvardeiskoe, St. Karl Marx, 101Director - Malyarob Evgeniy (+38 099-212-93-76)

Support of the project Ministry of Agrarian Policy and Food of the Autonomous Republic of Crimea Simferopol, str. Kyivskaya, 81 (0652) 27-67-10 E-mail:plan_apk@mail.ru

Thank you for your attention!