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18.07.2012

Coeval with new industrialization

«SAT & Company» JSC occupies a definite place among the leading representatives of the domestic Mining and Metallurgy Industry. Whereas the majority of them were established during the Soviet era, «SAT & Company» JSC started it’s formation as metallurgical holding only in 2008. Following the government policy on development of processing industries, this company is de facto the coeval with new industrialization of Kazakhstan. 

History of «SAT & Company» JSC dates back to 2000 At the very beginning the company was mainly focused on petroleum products trade and construction, thus creating good financial basis for investing in larger, more capital-intensive industrial projects. Later machine-building holding company for production of petroleum and gas equipment was established within the structure of the Society and a project on construction of a Petrochemical Industry in Atyrau Oblast was worked out. By 2006, «SAT & Company» JSC united about 50 enterprises and carried out more than 30 projects in various sectors of the economy. Shares and bonds of the company are listed on KASE. 

The qualitative transformation of «SAT & Company» JSC strategy took place in 2008, when a strategic decision to focus the group development on metallurgy and mining industry was made. By that time the state has made a "clear signal" that Kazakhstan needs to develop new competitive industries focused on the processing of raw materials and production of products with high-added value. 

The management of «SAT & Company» JSC determined a new goal – the company’s entry into 30 Top Metallurgical Holdings of the CIS as per market capitalization value. Over a relatively short period «SAT & Company» JSC has acquired number of companies producing ferromanganese, chromium, nickel and other minerals which are now processed at the plants of the company, thus providing a complete production cycle. 

Altogether nowadays «SAT & Company» JSC has 4 metallurgical plants in Kazakhstan and China, as well as 10 deposits in our country and Turkey. To-date the production capacity of the holding company totals to 100 thousand tons of ferroalloys per annum. Manganese ore reserves totals to 106.980 million tons under C1 + C2 Category, nickel ore – more than 100 million tons under P1 Category, expected chromite reserves - about 10 million tons, coal - 124.3 million tons, zinc - 151 million tons. Total assets value is estimated to more than $ 551 million. Development of ferroalloy direction of the holding company is carried out by its structural subdivision - "Central Asian Investment Consulting Company” (CAICC) LLP with Taraz Metallurgical Plant (TMP) being key production asset . History of this company establishment is very significant in terms of cooperation between the state and business within the scope of the State Program for Forced Industrial-Innovative Development. Predecessor of TMP was "Khimprom" LLP founded in 1969 which produced phosphorous fertilizers. After establishment of more advanced "Novodzhambulsky phosphorus plant" in the region, "Khimprom" started to give ground losing its competitive edge. As a result, the company's management had the idea to substitute the production of phosphorus by metallurgical one. However, for some reason the idea has not been fully implemented.

The situation ultimately changed in November 2006, when "CAICC" LLP acquired 100% shares of "lying sidelong" enterprise. The new owners decided to introduce the production of ferrosilicon manganese (FeSiMn), which is widely used in steel and casting industry, as well as for the production of manganese alloys. Within 2007-2008 furnaces 5 and 6 were revived and put into operation and in 2009 construction of two new ferroalloy furnaces RKO-25 with a capacity of 25 megawatt has begun. 

The project of TMP modernization with the cost about 11.5 billion tenge was included in the list of breakthrough projects and the State Program "30 Corporate Leaders" with participation of "Development Bank of Kazakhstan" (DBK) through project financing. Since the process of plant expansion had been taking place during economic crisis, the government support came just at the right moment. By June 2011 reconstruction of ferroalloy plants has been fully completed and new furnaces have been put into operation. The result of such modernization was transformation of the plant to a powerful export-oriented production.

Today, consumers of TMP products are large and medium metallurgical companies in Russia, Ukraine, Belarus and the Baltic States, as well as the metallurgical and engineering plants of Kazakhstan. In the near future TMP is planning to enter new promising markets in Europe and Asia. Pursuant to this purpose CAICC intends to develop strategic partnership with leading trade companies and large-scale end users.

Experts estimate that by 2020 world demand for manganese alloys will grow upto 20.2 million tons and planned production capacity will amount to only 14.5 million tons. Considering these prospects the management company has set a challenge for "CAICC" LLP the to further increase the capacity of TMP up to 300 thousand tons of marketable products per annum with expansion of the products range by adding ferrochrome, ferromanganese and ferrosilicon. In case of successful implementation of this project, financing of which will be provided by DBK, one of the largest CIS enterprises for manganese ferroalloys manufacture will be created, providing that annual production volume and export at current prices may estimate to 65-70 billion tenge. 

Raw materials base for TMP is provided by three companies that are included into extracting unit of CAICC. The first is "Arman-100" LLP engaged in exploration and production of manganese ore at Western Kamys deposit in Karaganda Province. "Saryarka Mining” LLP also operates and carries out exploration and production of ferromanganese ore at Tuyebay Syurtysuyskaya area in mentioned province. Third company - «KARUAN» LLP carries out exploration, trial production and test survey for manganese ore at Aytkokshe deposit (Mangystau). 

However, implementation of the plans on production increase will require faster growth of mineral and raw materials base. Once new expansion project will be completed the output of manganese concentrate at existing mining enterprises will cover only about a third of TMP needs. Taking into consideration the company's activity and its social significance there is a belief that the state will not remain on the sidelines. Thus, the corresponding work is carried out with related state agencies and departments in order to revval the company's position with regard to need to get subsurface use rights for new deposits. Developing new deposits, establishing infrastructure and job places, the company will be able to contribute to the development of mineral and raw materials industry of Kazakhstan. Large scale plans of holding company also include reconstruction and expansion of "Temirtau ElectroMetallurgical and Metal Plant" (TEMP)JSC that was acquired at the end of last year. TEMP incorporates the enterprises of chemical, metallurgical and mining industries, namely: YuzhnoToparskiy Mining Group carrying out limestone mining on Topar 1-8 deposit, "Marganets" Mining Group carrying out mining and processing of manganese ore and ferromanganese ore at “Bogach” and “Esymzhal” deposits, Chemical and Metallurgical Plant producing calcium carbide and ferroalloys. Thus, within the limits of TEMP a complete production cycle is now established: raw material - production - finished product. During the factory modernization project it is planned to increase annual production of ferroalloys from 20 thousand tons to 60 thousand tons adding new workplaces totaling to 200 manpower volume.

It is worth to note that along with development of Kazakh ferroalloy capacity, «SAT & Company» JSC is implementing a strategy of geographical diversification of the production. For example, in 2009 ferroalloy segment of the holding company was added by Chinese assets –Jinsheng SAT (Tianjin) Commercial & Trading Co., owing modern plants in Taonan, Baicheng and Ulanhot. «SAT & Company» JSC has 51% in each of those three plants and 51% in trade company responsible for products sales. 

Should be mentioned that investment activity of «SAT & Company» JSC is primarily focused innovative technologies application. In particular, nowadays holding company assesses new methods of smelting lateritic nickel ores of Gornostayevskoye deposit located in Beskaragaisky regions of Eastern-Kazakhstan province. In 2011 this technology was awarded a Diploma at the "Republican Contest of Innovative Projects" under the category "Innovative (Scientific Technical) Development" as the best technology for nickel ore smelting with drying and calcination of incoming wet ore by gases delivered by the furnace. Successful implementation of this project will establish create first ferronickel production in Kazakhstan, where "KAZNIKEL" LLP (having a contract for mentioned deposit development) will be the base for production development. This company was acquired in 2009 by the subsidiary "Ferronickel Plant Ertis" LLP.One of the most successful transactions in 2011 was the acquisition of majority interest in Shalkiyazinc N.V., which is listed at London Stock Exchange. The company founded in 2001 was engaged in mining and processing of lead-zinc ore at largest deposit in Kazakhstan named Shalkiya. The final products of the company were lead and zinc concentrates and with the prices drop in 2008 production development at Shalkiyawas temporary suspended. In order to reduce production costs and increase added value of the products «SAT & Company» JSC is intended to build a new concentration plant for ore refinery with the capacity up to 4 million tons per annum. 

Considering that «SAT & Company» JSC owns open-pit coal mine and chromite ore deposits in Turkey in addition to above mentioned projects, then we may state that within four years from the beginning of restructuring, the company has turned into a well-diversified metallurgical holding. At the same time a clear focus on deep integrated raw materials processing and increase of production output and energy saving production make SAT & Company one of the leaders of new industrialization of mining and metallurgy industry in Kazakhstan.

In conclusion it should be added that promotion of social stability and prosperity was determined by «SAT & Company» JSC as part of the mission. That is why the company is actively involved in social life of the country arranging charity events in education and sports, as well as contributing to spiritual and religious development. As a recognition of it «SAT & Company» JSC was awarded a special diploma for participation in the national contest "Paryz" under the category "Best Social Project in 2011". This award is certainly the acknowledgement of merits of the company aimed to achieve not only business success, but spiritual harmony which may gained by good deeds for the sake of the society.

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