Aluminum Association

KRASNOYARSK TECHNOLOGICAL VALLEYS:

NEW OPPORTUNITIES FOR BUSINESS DEVELOPMENT IN RUSSIA

2

KRASNOYARSK REGION

> 460 companies with participation of foreign capital (2016)

KRASNOYARSK ALUMINIUM SMELTER : INDUSTRIAL LEADER OF KRASNOYARSK

Capacity > 1 mln. tonnes

• liquid aluminium • alloys (slabs, billets, ingots) • high purity aluminum

One of the largest regions in Russia

Industrial capital of Siberia

Extensive logistical network

2.87 mln people

2,367 thous. sq. km

1 579.1 bln roubles GRP in 2015

394.4 bln roubles investments in 2015

Krasnoyarsk Technological Valley

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OBJECTIVES

ALUMINIUM TECHNOLOGICAL VALLEYS DEVELOPMENT PROJECT

MARKET DEVELOPMENT AND STIMULATING DEMAND FOR ALUMINIUM-CONTAINING PRODUCTS

IMPORT SUBSTITUTION

CREATION OF FAVOURABLE INVESTMENT CLIMATE FOR NEW PRODUCTION FACILITIES

REDUCING RISKS FOR INVESTORS

DEVELOPMENT OF EXPORT

EXPANSION OF ALUMINIUM APPLICATION IN NEW SECTORS AND DESIGN OF NEW PRODUCTS

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Delivery of liquid aluminium and alloys

Land and property to lease (brownfield and greenfield)

Existing infrastructure

Competitive costs of utilities

Option for government funding and other financing

PROJECT CONCEPT

Tax and customs privileges

New opportunities for development

Access to the growing Russian and Eurasian Economic Union markets

Supply of aluminum produced with renewable energy

Opportunities for industrial and scientific cooperation with US RUSAL

PROJECT SITE

6 Available land plots for new projects

close to KRAMZ industrial facilities

The first stage of the project is to be implemented using the readily available engineering, production and transport infrastructure

PROJECT SITE WITH READY-TO-GO INFRASTRUCTURE

1st stage 2nd stage

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INVESTMENT PROJECTS: OPPORTUNITIES FOR INVESTORS

Development of rolling mill production plant

Investments in the new aluminium wheels plant

Production of wide range profiles for transport and construction

Production of aluminium rondoles and tubes

Production of high purity aluminium oxide

Production of cookware

Manufacture of aluminum cables

Production of aluminum window frames and sandwich panel

Production of aluminium frames for snowmobiles and bicycles

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6,7

5,8

5,7

1,6

1,2

0,9

0,6

0,6

-0,3

-0,6

-1,0

-2,7

Литье, поковки, радиаторы

Диски

Плоский прокат

Металлоконструкции

Экструзия

вторичные сплавы

Трубы и трубки

Резервуары

Емкости, баллоны, тубы

первичный алюминий

Фольга

Кухонные приборы и радиаторы

MARKET GROWTH BY SECTOR, 2017 /2016, 2016/2015 (KMT)

3,8

1,2

1,2

0,6

0,4

0,2

0,1

-0,3

-3,6

Плоский прокат

Фольга

Трубы и трубки

Диски

Экструзия

Литье, поковки, радиаторы

Металлоконструкции

порошки и чешуйки

Емкости, баллоны, тубы

DYNAMICS OF IMPORT OF ALUMINIUM GOODS TO RUSSIA, 1H2017 (KMT, YOY)

TRENDS IN THE KEY SECTORS FOR CONSUMPTION IN RUSSIA (%, YOY)

DYNAMICS OF EXPORT OF ALUMINIUM GOODS FROM RUSSIA, 1H2017 (KMT, YOY)

108

-4

2

43

41

34

-8

4

-61

36

-100 -50 0 50 100 150

Перв.Al - Русал

Перв.Al - Другие

Втор.Al

Импорт п/ф

Экспорт п/ф

2016/2015 2017/2016

Exports of semis

Imports of semis

Secondary aluminium

Primary aluminium (others)

Primary aluminum (RUSAL)

1%

10%

1%

4%

9%

2%

-5%

8%

-5%

0,1%

-7%

1%

-10% -5% 0% 5% 10% 15%

2016 2017f

Casting, forgings, heaters

Light-alloy wheels

Flat rolled products

Metal structures

Extrusion

Secondary aluminium

Pipes

Tanks

Tubes

Primary aluminium

Foil

Kitchenware, radiators

Flat rolled products

Foil

Pipes

Light-alloy wheels and parts

Extrusion

Casting, forgings, heaters

Metal structures

Powders and flakes

Tubes

Industrial PMI Index

Automotive

Machinery

Construction

Cable production

Sales Turnover

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2016-2017 TRENDS: IMPORT RECOVERY AND GROWING EXPORT OF SEMI-FINISHED PRODUCTS

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LARGEST CATEGORIES OF IMPORTED ALUMINIUM PRODUCTS

SHEETS AND STRANDS FOR CONSTRUCTION ~ 20 thousand tons per year

ALUMINIUM FOIL ~ 25 thousand tons per year

STRUCTURAL SECTIONS AND CONSTRUCTIONS ~ 15 thousand tons per year

LIGHT ALLOW WHEELS ~ 40 thousand tons per year

CONSTITUTES OF FLAT ROLLED PRODUCTS, FOIL, CASTING, RADIATORS AND CAR WHEELS

ALUMINIUM COOKWARE ~ 10 thousand tons per year

HEATING RADIATORS ~ 50 thousand tons per year

>70% Import

138 thousand tons

VOLUME OF SEMI-FINISHED PRODUCTS IMPORTED TO RUSSIA

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KRASNOYARSK ALUMINIUM SMELTER – INDUSTRIAL LEADER OF KRASNOYARSK

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1,024 Kt of output in 2016

4,200 employees at the smelter

5,500 employees of contractors

No 1 UC RUSAL site in terms of output

2% of aluminium produced worldwide

The unique Green Soderberg process

25 potrooms

3 casthouses

Production of high-tech and innovative alloys

40% доля

высокотехнологичной продукции и

сплавов в общем объеме производства

KRAZ PRODUCTS

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Aerospace Electronics Transport Construction

KEY SECTORS:

40% of the total output are hi-tech products and alloys

PRODUCT SALES

EUROPE

Сitroen, BMW, Novelis, Constellium, Aleris, Montupet, Noble Group, Saint Jean Industries , Elval, Metalimex

ASIA

Toyota. Novelis Korea, Mitsui Co Ltd., Kosei Aluminum Co, Intelorg, Bluescope

AMERICA

Laurand Associates, Toyota Tsusho America , Beck Aluminum

• primary aluminium • alloys (slabs, billets, ingots) • high purity aluminium

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115 000 tonnes per year

> 2 000 employees

• slabs, billets, ingots, • wire rod, pipes, rods

and profiles, forging and pressing products

KRASNOYARSK METALLURGICAL PLANT

Plant has experience in supplying products for export for 30 years in more than 30 countries

PRODUCTS:

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AN EFFICIENTLY OPERATING SUPPLY CHAIN

ASIA

EUROPE

AMERICA

AFRICA

KrAZ

St. Petersburg

Novorossiysk

Vanino

Nakhodka

Moscow

Vladivostok Temryuk

5 000 km / 2 weeks from Krasnoyarsk to the major seaports

Well-developed road and rail network, as well as water transport infrastructure, have allowed the company to successfully serve both domestic and export markets over the last 30 years

SPECIAL TREATMENT OPTIONS FOR REGIONAL DEVELOPMENT

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KRASNOYARSK TECHNOLOGICAL VALLEY

SPECIAL ECONOMIC ZONE

Federal Law on Special Economic Zones in the Russian Federation (SEZ) or

Compliance with WTO standards, international laws and practices

SEZ: SPECIAL TAX BENEFITS FOR INVESTORS

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TAXES AND RATES RUSSIA SPECIAL ECONOMIC ZONES

Profit tax paid to federal budget 3% 2%

Profit tax paid to regional budget 17% Max. 13.5%

Property tax 2.2 0 (the first 10 years)

Land tax 1.5 0% (the first 5 years)

Rates of insurance premiums for mandatory pension

insurance 22 %

in 2017 – 8%,

in 2018 – 13%,

in 2019 – 20%

Rates of insurance premiums for mandatory social

insurance 2.9%

in 2017 – 2%,

in 2018 - 2.9%

in 2019 – 2.9%

Rates of insurance premiums for mandatory medical

insurance 5.1 %

in 2017 – 4%

in 2018 - 5.1%

in 2019 - 5.1%

SEZ: SPECIAL CUSTOMS REGULATIONS

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0% Import duties on equipment, components and materials imported into SEZ

0% VAT on equipment, components and materials imported into SEZ

0% Export duties on finished products exported outside the Customs Union (Russia, Belarus, Kazakhstan, Armenia, Kyrgyzstan)

FREE CUSTOMS ZONE

• Promotion of development of industrial territories

• Support and concessional financing for new industrial projects

• Legal support for development of the aluminium industry (aluminium for automotive industry, infrastructure, energy industry, construction, etc.)

• Stimulating demand for products of Russian origin

• Support for localising new production industries in Russia

• Special Investment Contracts and guarantees for investors

MINISTRY OF INDUSTRY AND TRADE

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STRATEGY FOR DEVELOPMENT OF METALLURGICAL INDUSTRY ELABORATED UNTIL 2030

GOVERNMENT SUPPORT FOR ALUMINIUM INDUSTRY DEVELOPMENT

> 40 production

facilities and sites

2

UC RUSAL: GLOBAL LEADER IN ALUMINIUM PRODUCTION

6.2% of global

aluminium production

61,000 employees around

the world

UC RUSAL has initiated the creation of technological valleys in Krasnoyarsk, Volgograd and Khakassia in order to promote innovation in industry

700 major clients

Supplying aluminium to all key markets: Europe, North America and Asia, Russia and other CIS countries

Main products:

primary aluminium

alloys aluminium foil and powder

44% share of value added

products in 2016

3.7 mln tonnes produced by

RUSAL in 2016

RUSSIAN ALUMINIUM ASSOCIATION

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The mission of the Association is to create optimum conditions for the development of the Aluminium Industry in Russia

http://www.aluminas.ru

MAIN FOCUS AREAS

Innovative industrial development in Russia, creating conditions for new facilities, technologies and products

Market development and expansion of demand

Development and improvement of regulatory framework

Standardisation and improvement of product quality

Educational programmes

70 Members

Technical Committee 099 Working group for standardization of aluminum-containing products

2015 Establishment of the Aluminium Association in Russia

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CONTACTS

For questions concerning the project please contact: 1) Igor Marchev – the Head of the project (Igor.Marchev@rusal.com) 2) Vlada Usova – the Manager of the project (Vlada.Usova@rusal.com)