JSC "NIKOMAG" STRATEGIC DEVELOPMENT PLAN

Transcription

1 GROUP OF COMPANIES NIKOCHEM

2 ABOUT THE COMPANY JSC "NIKOMAG" was founded in 2006 in order to make a separate direction of the integrated bischofite processing program being realized within Group of Companies NIKOCHEM development strategy. In 2006, the company started up a magnesium chloride flakes and prills production complex with capacity 30 thousand tons/year. As of today, JSC "NIKOMAG" is the largest magnesium chloride prills producer on the territory of the Russian Federation. 2ABOUT THE COMPANY The company is developing the deicing segment very actively - now bischofite (magnesium chloride) and the solid DIA GreenRide are in the range of produced goods. The formulations of the produced reagents are constantly improved thanks to research activities carried out. The icemelter GreenRide is actually a state-of-the-art MULTICOMPONENT material for winter slipperiness control, having higher melting ability and lower corrosivity compared with analogs. At the moment, a big investment project is being realized together with JSC RUSNANO. The main products of the project will be nanostructured magnesium hydroxide with modified surface used as an effective environmentally safe flame retardant and smoke suppressant and high-purity magnesium oxide. As of today, Russian demand for these products is met by import supplies from Europe, USA and Israel. The project also foresees solid magnesium chloride grades production capacity increase up to 60 thousand tons/year.

3 GENERAL CHARACTERISTICS OF THE PROJECT PRODUCTS OF THE PROJECT: nanostructured magnesium hydroxide, high-purity magnesium oxide, bischofite (magnesium chloride). 3ABOUT THE PROJECT DESIGNED CAPACITY: for magnesium hydroxide - 25 thousand tons/year; for magnesium oxide - 30 thousand tons/year; for magnesium chloride 30 thousand tons/year (addittionally to the existing plant). RAW MATERIAL SUPPLY: For nanostructured magnesium hydroxide and high-purity synthetic magnesium oxide production bischofite brine containing high-purity magnesium chloride will be used. Explored bischofite reserves и received licenses for mining it guarantee raw material supply for the project during the next 150 years. CURRENT STATE: in realization stage, production startup is in the 1st quarter of 2015

4 ADVANTAGES OF THE PROJECT ᅵ RAW MATERIALS. Near magnesium chloride (bischofite) deposit and own-produced caustic soda. For nanostructured magnesium hydroxide production bischofite brine coming through a pipeline from Svetloyarskoye Deposit and containing high-purity magnesium chloride will be used, which ensures minimum brine purification expenses. ABOUT THE PROJECT ᅵ ᅵ ᅵ INFRASTRUCTURE. The industrial site of Group of Companies NIKOCHEM in Volgograd has a highly developed infrastructure with reserve capacities regarding heat and electric energy, treatment facilities, maintenance services etc. which will be used in the project with the according efficiency increase. LOGISTICS. Easy access to transport junctions for exports and physical proximity of major industrial centers of the Russian Federation. Minimum expenses for transporting main raw materials - bischofite solution and caustic soda (by pipeline). FURTHER DEVELOPMENT POTENTIAL. Further diversification of the complex is possible with introducing the stage of isolating bromine from bischofite solution fed for magnesium hydroxide production and further synthesis of bromine compounds with high added value, for e.g. sodium bromide. 4

5 NANOSTRUCTURED MAGNESIUM HYDROXIDE MAGNESIUM HYDROXIDE NANOSTRUCTURED MAGNESIUM HYDROXIDE IS USED: as a highly effective non-toxic inorganic flame retardant, filler and smoke suppressant additive for producing practically all kinds of plastics and pigmented (co)polymer compounds based on PVC, PA, PS, PP, PE, PET etc.; in paper and cardboard production; as a mild neutralizing agent for water treatment; as a raw material in the pharmaceutical branch. MAIN QUALITY FACTORS: Index Denomination Norm Value Grade A Grade B Grade M7 Grade M10 Appearance White White White White powder paste powder powder Mass fraction of magnesium hydroxide, %, minimum Mass fraction of volatile substances at 105 С, %, maximum Iron fraction of total mass calculated on ferric oxide (Fe2O3), %, maximum Calcium chloride fraction of total mass calculated on calcium hydroxide (CaO), %, maximum Chlorides fraction of total mass, %, maximum Silicon dioxide (SiO2) fraction of total mass, %, maximum Sulfates fraction of total mass, %, maximum Aluminum fraction of total mass calculated on aluminum oxide (Al2O3), %, maximum Mass fraction of loss on ignition at temperature 1000 С, % Bulk density, g/cm3, minimum Weight of oil adsorbed by magnesium hydroxide, g, maximum Specific surface, m2/g Particle-size distribution: diameter of 10 % of particles (d10), maximum diameter of 50 % of particles (d50), maximum diameter of 90 % of particles (d90), maximum

6 CONFIRMED PRODUCIBILITY AND EFFECTIVENESS High producibility of both magnesium hydroxide itself and polymer compounds based on it associated with passing one the geometrical dimensions (flake height) to the category of nanosizes conditions a fundamental change in nanostructured magnesium hydroxide properties and its easier and completer distribution in the mass of polymer matrix. MAGNESIUM HYDROXIDE APPLICATION ADVANTAGES: COMPARED TO THE NATURAL ANALOG - BRUCITE regular crystalline structure, chemical purity, particle-size distribution constancy ensure stability of the indices of the produced compounds and their processing conditions; extruder motor load decrease to 30%: increasing the thermostability polymer compounds, possibility of producing white compounds and finished products; increasing the rate of processing the compounds to 40% and their plasticity. COMPARED TO ALUMINUM TRIHYDRATE decreasing the thermal degradation of plastics due to higher heat absorption in the process of decomposition (to 328 kcal/g), a higher temperature range of thermal degradation ( C in case of magnesium hydroxide compared to 220 C in case of aluminum hydroxide), much higher qualitative characteristics: whiteness, abrasivity and controlled dispersion. COMPARED TO THE SUBMICRON ANALOG better processability (electric energy saving while processing); higher electrical resistance (it is more efficient in insulating materials production); higher fire resistance of compounds and finished products, their higher level of safety for people and lower environmental impact at combustion. Polymer compounds produced using nanostructured magnesium hydroxide with modified surface have been tested together with Russian leading manufacturers and specialized institutes, such as Federal State Unitary Enterprise Fire Safety Research Institute. The full set of certification tests has bee carried out. Feedback received from the end users allows us to state with certainty the doubtless technical and technological advantages of nanostructured magnesium hydroxide compared to the analogs availabe in the market. As a result, as early as the design stage, NIKOCHEM concluded a number of off-take contracts for delivering nanostructured magnesium hydroxide. 6

7 CONFIRMED PRODUCIBILITY AND EFFECTIVENESS COMPARING THE PROPERTIES OF THE MAIN FLAME RETARDANTS Index Denominations Magnesium hydroxide Aluminum Trihydrate Bromine-Containing Decomposition temperature, 0С up to 400 MAGNESIUM HYDROXIDE Smoke density decrease at combustion 3-9 times 2-5 times smoke density increases Electric conductivity (10% in Н2О), S/cm not rated Heat absorption at decomposition none Whiteness (Elrepho 357 nm) >96 >94 not rated Smoke toxicity at decomposition does not form toxic or pungent gases bromine-containing toxic gases Consumption rate, % up to 40 up to 50 up to 10 Finished product recycling technology level, % The given consumption rate values of various flame retardant types characterize to a greater extent maximum values for the most popular compounds and will vary in rather wide range for particular formulations, depending on the required fire resistance and other characteristics. 7

8 DEMAND IN THE MARKET MAGNESIUM HYDROXIDE High-purity magnesium hydroxide is mainly used an effective environment-friendly flame retardant filler in the manufacturing of polymer compounds and finished products. At the present time, a fundamental change in flame retardant market structure is observed. The main trend is step-by-step halogen flame retardant abandonment in favor of halogen-free ones. This process is tooke place in conformity with EU Regulation on halogen flame retardant use restriction coming into effect in First of all, it relates to the low ecological and toxic safety level of halogen flame retardants, which, in its turn, determines high and constantly growing demand for halogen-free flame retardants in general and magnesium hydroxide in particular. After passing the Federal Law of the Russian Federation of July 22, 2008 Nr. 123-ФЗ "Technical regulations for fire safety requirements" requirements to fire safety of polymer compounds are toughening significantly in Russia. As the result, polymer compounds produced using imported submicron magnesium hydroxide available in the market do not meet the requirements of the Law in respect of many indices. In case of adding same flame retardant amounts, polymer compound containing nanostructured magnesium hydroxide has a number of advantages compared to analogs including submicron magnesium hydroxide available in the market: better processability (electric energy saving while processing); higher electrical resistance (it is more efficient in insulating materials production); lower combustibility and higher level of ecological safety at combustion. 8

9 DEMAND IN THE MARKET ᅵ The target segment of the world market is the market of EU countries and the reasons for this are logistical considerations and its price attractiveness (compared with other regions of active demand). ᅵ The present magnesium hydroxide market volume in European Union countries is assessed to be at the level of 30 tons/year with further growth potential. MAGNESIUM HYDROXIDE ᅵ According to the pessimistic forecast, 5% growth of magnesium hydroxide market is expected in the medium term; the optimistic forecast is 9-10%. The main growth segments are power supply cables with projected growth approximately 5-8%, as well as cables and wires for automobile use with growth within 4-11%. ᅵ Russian magnesium hydroxide market potential is approximately 9 thousand tons. The main regions of demand concentration in the domestic market are: Samara, Sterlitamak, Dzerzhinsk, Vladimir, Volgograd, Moscow. The main direction is the European part of the Russian Federation, because the most consumers are situated in this part. ᅵ The markets of CIS countries also have some demand potential: ᅵ Ukraine - up to t; ᅵ Belarus - up to 150 t; ᅵ Kazakhstan - up to 500 t. 9

10 SYNTHETIC MAGNESIUM OXIDE SYNTHETIC MAGNESIUM OXIDE IS USED: MAGNESIUM OXIDE MAIN QUALITY INDEXES: in transformer steel production to form the insulating layer; as a vulcanizing agent in rubber production; as a filler in the production of rubber, plastics, mastic compounds, adhesive materials; in medicine and perfumery; in chemical agent production; in crude oil and petroleum product removal; in producing various magnesium compounds; in gas purification; in leatherware production (leather dressing); as a component of drilling muds. Index grade A (chemicals) Norm value grade Б transformer steel grade B (general mechanical rubber goods, plastics) Mass fraction of magnesium oxide (MgO), %, min Mass fraction of calcium oxide (CaO), %, max 0,35 0,30 0,30 Mass fraction of silicon dioxide SiO 2, %, max 0,05-0,05 Mass fraction of iron oxide Fe 2 O 3, %, max 0,05-0,05 Mass fraction of aluminum oxide Al 2 O 3, %, max - - 0,05 Mass fraction of chloride ion Сl -, %, max 0,10 0,03 0,10 Mass fraction of sulfate ions SО 2-4, %, max 0,20 0,20 0,15 Mass fraction of sodium ion (Na + ) and potassium ion (К + ), %, max 0,1-0,1 Loss of ignition, %, max 0,8-2,0 2,0-4,0 4,0-10,0 Specific surface area (BET), m 2 /g, within Citric acid reactivity, seconds, within Particle size: passes 325 mesh (wet screening), %, min 99,0 99,5 99,9 10

11 DEMAND IN THE MARKET MAGNESIUM OXIDE The world demand for the magnesium oxide of high-purity is focused on the following main applications: food and pharmaceutical industry; production of lubricating oil additives; general mechanical rubber goods production; chemical compounds production; transformer steel production. According to the data in the report by «SRI Consulting» the consumption growth up to 2.5% per year is projected in the main markets of magnesium oxide (CCM) the USA and EU during The main prospects of synthetic magnesium oxide demand growth are conditioned by consumption increase in the segments of general mechanical rubber goods and transformer steels at the level of as much as 4% by 2016: -in general mechanical rubber goods production due to predictable structural change from simple general mechanical rubber goods to more sophisticated ones - vulcanized with some elements (metal, plastic etc.), mechanical engineering development: -in transformer steel production due to the trend of modernization and building new production facilities with cluster arrangement manner and to general electric power consumption growth and the corresponding transformer infrastructure revamping. 11

12 FLAKED MAGNESIUM CHLORIDE MAGNESIUM CHLORIDE IS USED: MAGNESIUM CHLORIDE as an independent deicing agent and as part of modern multicomponent icemelters; for handling of dust-forming and freezable cargoes in mining and metal industry; in oil and gas industry as a component of magnesia cement mortars; in building industry: in production of magnesia concretes, glass-magnesium sheet, foam magnesium carbonate etc. in chemical industry: preparation of magnesium-containing compounds, production of synthetic rubbers and thiokol; in textile industry; in production of fire-proof and abrasive materials. MAIN QUALITY INDEXES: INDEX NAME VALUE Mass fraction of magnesium ions (Mg 2+ ), %, not less than 11,8 Mass fraction of magnesium ions (Mg 2+ ), % calculated as MgCl 2 * 6H 2 O, %, not less than 97 Mass fraction of calcium chloride calculated as calcium oxide (CaО),%, not more than 0,1 Mass fraction of sulfates calculated as sulfate ion, %, not more than 0,1 Mass fraction of alkali metals ions (Na + + K + ), %, not more than 0,8 Mass fraction of water-insoluble residue, %, not more than 0,2 12

13 DEMAND IN THE MARKET 13MAGNESIUM CHLORIDE The Russian magnesium market volume has been growing during last five years. In 2007 the market was assessed at 5500 tons, in tons, at year-end 2012 it reached tons which is equivalent to the annual average growth of consumption by more than 60%. In 2014 the market has grown by 23% to a greater extent due to the consumption expansion of the following segments: ᅵ handling of freezable cargo (up to 9000 t); ᅵ oil and gas industry (up to 7600 t). The most prospective applications of bischofite (magnesium chloride) are anti-icing industry, oil and gas industry and application as an antifreeze compound for bulk cargo in metal industry and mining industry and the total prospective volume of tons per year. In the short term the projected consumption growth of magnesium chloride is not less than 20% per year considering the existing potential of the magnesium chloride application and the lack of the plans concerning the commissioning of new capacities by Russian manufacturers (except for CJSC NIKOMAG ) and if there are some free volumes it will be at the level of the really reached ones over a period of not less than 40% per year.

14 INVESTMENTS IN COMPANY DEVELOPMENT Million USD INVESTMENTS IN COMPANY DEVELOPMENT TOTAL TOTAL INVESTMENTS: NIKOMAG 1. Own funds Contribution of RUSNANO to equity NIKOMAG Loan by RUSNANO Bank loan by Sberbank 40.9 For recalculating the future payments the exchange rate of RUB 40/$ is accepted 14

15 FUTURE PROSPECTS OF THE COMPANY PROJECT PARAMETERS: PB DPB 6.9 years 8.4 years NPV 22.9 mio $. IRR 18,25 % NIKOMAG When the project is implemented, CJSC NIKOMAG will be in the top three of the largest manufacturers of magnesium oxide and magnesium hydroxide high-purity grades along with such companies as ICL (Israel) and KOYOWA (Japan) which are market leaders in these goods. INDICATORS, USD MILLIONS 2014 WHEN REACHING THE DESIGN CAPACITY REVENUE 12,72 127,5 NET INCOME 1,98 32,4 EBITDA 4,13 50,6 AVERAGE STAFF NUMBER, PERS

16 CONTACT INFORMATION LLC NIKOCHEM CONTACTS Volgograd, 40 Let VLKSM Street, 57 tel.: +7 (8442) fax: +7 (8442) http: CJSC NIKOMAG Volgograd, 40 Let VLKSM Street, 57 tel.: +7 (8442) fax: +7 (8442) http: