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AMTPJ Project Overview

February 2013
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Contents

Projects Overview
Strategic Partner Overview
Key Competitive Advantages
AMTPJ Market
Project Financials
The Opportunity
Photos from Site

Projects Overview

Projects Overview

ArcelorMittal , the worlds largest steel


manufacturers, joint forces with a Saudi Partner
(Tanmiah) to develop a state-of-art Industrial
Facility (AMTPJ) to produce a 600,000 Ton/year
steel mill producing steel tubes and pipes at Jubail
Industrial City , Saudi Arabia. Project total
investment is in the range of 1 Billion $ US .

Two-thirds of the mills capacity will be used to manufacture oil-country tubular goods (OCTG), for
which Saudi Aramco will be the main customer. OCTGs comprise pipe and tube products used in
the petroleum industry, such as drill pipes, pipe casings and oil pipes. The remaining capacity will
be used to manufacture line pipes in sizes ranging from 4-14 inches. The mill will be fed with billets
and slabs produced by ArcelorMittal steel plants located around the world.

Projects Overview
Project Description :

Location:
Plot Area:

Facilities
Input:
Output:
Grades:
Diameter Range
Wall Thickness
Heat Treatment Capacity
OCTG Finishing Capacity

Industrial Area of Jubail 2 , KSA


48 ha (38 ha are used in the current project, with
possible 10 ha for future extensions)
Port (at 20 km)
Round Billets (~690 kt/y)
Seamless Tubes (614 kt/y in 2016).
OCTG and Line Pipe
4 (114.3mm) to 16 (406.4mm)
5.26mm to35.7mm
350,000t/year
370,000t/year

Applications:

OCTG Casing for gas & oil, used as the outer protection in a well. (4/20)
OCTG Tubing for gas & oil, used as the inner in the well. (2/4)
Line Pipe, used for transmission of oil & gas in petrochemical plants (2/15)

Metallurgy Groups:

OCTG:

Group 1 J55, K55, N80 (Normalizing)


Group 2 L80, C90, T95 (Quenched & Tempered)
Group 3 P110 (Quenched & Tempered)
Group 4 Q125 (Quenched & Tempered)

Pipes:
following the norms : B, X42, X 46, X52, X60, X65, X70

Projects Overview
Location

Projects Overview
Site Overview

Projects Overview
Process Flow

Projects Overview
Selection of Best Technology

and this is just a beginning .

We choose the best technology from the World Leaders .


AMTPJ shall be World Class plant with state of art technology, designed to meet stringent quality
parameters of customers like Saudi Aramco.

Projects Overview
Projects Schedule
Milestone

SCHEDULE Target

Hot Mill

28-Mar-13

Pre-finishing & Finishing Line

28-Apr-13

First Pipe on Cooling Bed

04-Sep-13

First Commercial Pipe

04-Dec-13

Projects Status
Activity

Progress as of 01
Dec 12

Comments

Engineering (CISDI)

99.95%

Main Steel Structure

99.9%

Civil works

97.5%

Roads, false ceiling,slab on grade ,Doors &windows painting work in


progress .

Mechanical & Electrical


Equipment Erection

76.5%

Contractor agreement implemented


Detailed schedule finalized
Hydraulic piping and Electrical & Control erection on the critical path.

Excluding Coupling Shop and Security Gate


Last side sheeting and staircases work in progress

As of today, the Hot Mill Construction, the Pre-Finishing and the Finishing Schedules have been
finalized.

Strategic Partner Overview

Strategic Partner Overview


ArcelorMittal Group

AMTPJ Overview

ArcelorMittal is the largest steel producer in the


world. The group is head quartered in Luxembourg,
and operates in more than 60 countries in Europe,
Asia Africa, North and South America.

ArcelorMittal is listed on the stock exchanges of


New York, Amsterdam, Paris, Brussels, Luxembourg
and on the Spanish stock exchanges of Barcelona,
Bilbao, Madrid and Valencia.

ArcelorMittals revenues in 2010 amounted to US$


78 billion. It was one of the top 50 companies
globally.

The Group manufactures and sells:

Flat sheets
Stainless steel and alloys
Long sheets

Wire products
Pipes and tubes

o Seamless pipes and tubes


o Welded pipes and tubes

AMTPJ is an LLC company registered in Saudi Arabia,


investing in a Seamless Steel Pipes manufacturing plant in
Saudi Arabia to manufacture and sell high value added
seamless OCTG products and Line Pipes.
The project has been designed to meet the OCTG and Line
Pipes demand in Saudi Arabia, GCC and selected countries in
Africa.
The seamless mill will have a capacity of 600 Kilo-tons per
year; Two thirds of its capacity will be used for OCTG, and
the remainder for Line Pipes, in sizes ranging from 4 to 16
inches.
The Project is being constructed in the Eastern region of
Saudi, in Jubail 2 Industrial City (25 KM from the port). The
cost of the project has been estimated at SAR 3.37 billion
and the mill is expected to commence commercial
operations in Dec 2013.
The plant can produce 225 different types of products
thereby providing the company with immense Product and
Operational flexibility.
Competitive advantage is also reinforced by proximity to
customers and by local partnerships.
The main raw materials for the production are two types of
special round billet, carbon steel and an alloy steel. AMTPJ
has signed a long term raw material supply agreement with
ArcelorMittal Ostrava.

The w orlds leading steel and m ining c om pany


A rcelo rMi ttal is th e wo rld's n umbe r o ne ste el and min ing compa ny, with over
2 60,00 0 e mplo ye es in mo re th an 60 coun tries. Ar ce lorMittal is the le ade r in a ll
ma jor glo bal ste el markets, inclu ding a utomotive, con stru ction , ho useho ld
a ppli ances and pa cka ging , with lead ing R&D and techn olog y, as we ll as
sizea ble captive suppl ies of raw materi als and ou tstand ing distribu ti on
n etwo rks.
A n indu stria l p resen ce i n 2 0 co untrie s expo se s the compa ny to all ma jor
ma rkets, fro m e mergin g to ma tu re.
A rcelo rMi ttal valu es scale , vertical integr ation and p rod uct diver si ty.
A ppr oxi mately 38% of our steel is prod uced in the Ame ricas, 46 % in Eu rope
a nd 16 % in other coun tr ies such a s Ka za khsta n, So uth Africa and Ukrai ne.
Und er pinn ing all o ur o perati ons is a phil osophy to p rodu ce safe, sustai nab le steel
1

H e alth an d Sa fe ty: o u r n o.1 p rio rity

L o st tim e in ju r y fr e q u e n c y ra t e (L T IFR ) i m p r o ve d to 1 .1 i n th e f i rs t q u a rte r 2 0 1 2


Ou r Jo u r n e y to Z e ro p r o g ra m m e a i m s a t a c h ie v i n g z e ro fa ta liti e s , a c cid e n ts a n d o cc u p a ti o n a l i ll n e s s e s

2 0 1 2 H e a lth a n d S a fe ty D a y a r o u n d th e th e m e S to p , th i n k a n d a c t s a fe l y

C o u ra g e o u s le a d e rs h i p s e t o f va l u e s : e v e ry o n e h a s t h e a u th o r it y, r e sp o n s ib i l ity a n d a cc o u n ta b il i ty to
co u r a g e o u s l y sp e a k u p w h e n s o m e o n e i s th o u g h t to b e a t ri sk

A n n u al h ea l th a n d s a fety fre q u en c y ra te* (mi n i n g a n d s te el )


3 .2
2 .8

Q u ar ter l y h ea l th a n d sa fet y fre q u en c y ra te * (mi n in g a n d


s tee l
1 .6

2 .4
1 .2

2 .0
1 .6

3. 1
0 .8

2. 5

1 .2

1. 9

0 .8

1 .6

1. 5

1. 4

1 .5
1 .2

1 .8
1. 4
1 .0

0 .4
0 .0

0 .4
0 .0

20 0 7

20 0 8

2 00 9

2 01 0

2 0 11

20 1 3

4Q 10

1Q 1 1

2Q 11

3Q 11

4Q 1 1

Arcel orM ittal s Health a nd S afety p er form an ce i mp rov ed again i n 20 11


* IIS I- sta nda rd: Fr = Los t T ime Injur ies per 1.0 00 .00 0 w or ked h our s; b a sed on ow n pe rso nne l an d c ontr act ors

A rcelorMittal 2011 key figures


201 0*

201 1

S ales (US$ bil lion )

78. 0

94. 0

E bitda (US$ b illi on)

8.5

10. 1

O per ating inc om e (U S$ bill ion )

3.6

4.9

N et inc om e (US$ bil lion )

2.9

2.3

S hipm ents (m il lio n t on nes)

85. 0

85. 8

S teel pr oduc tion (mi lli on tonne s)

90. 6

91. 9

O wn i r on ore produc tion (m il lion ton nes)**

48. 9

54. 1

O wn c oal pr oduc tion (m i lli on t onne s)* *

7.0

8.3

Allo catio n o f e mp loyee s in 2 011, acco rdin g t o


geo grap hic locat ion (fu l l-ti me eq u iva l en t)

O ve r 26 0 ,00 0 e mp lo yee s in mo re
th an 60 cou n tr ie s

Lead er in the m etals and mining sector with 63 blast furn aces and 49 electr ic arc fur naces
* S ucce ssfu l spin off of stain less s teel busin ess ( A pe ram ) f ollow in g sh ar eho der s ap pr ova l on Jan uar y 25 , 2 011 . A ccor din gly st ainle ss ste el r esult s ha ve b ee n sh ow n as
d is cont inue d o per at ions and all p erio ds r ep ort ed (re sults and op er ation al K P Is) ha ve b een r ecast .
* * O w n ir on or e an d c oal p ro duc tion exclu ding str ateg ic lon g- ter m co ntr acts.

143

Diversified leader in steel and mining


T op steelm akers 2 011* ( mi l lio n to n n es o f cr ud e ste el)

4 th largest iron or e p r od uce r


(2 01 1, mil l io n to n n es )

374

192
149

21
Evraz

36

Metinvest

46

Anglo

48

F ortescue

ArcelorMittal

BHP

Rio

Vale

54

Diver sified steel busin ess (by pro duct and g eog raphy) wi th expan ding m inin g op er ati ons
* S ou rce : S B B 201 2
* * Inclu des no n-c onso lidat ed affiliat es

15
5

G eographical reach
M ar ke t po sit ion by r eg ion

Le a de r i n
N o rth A me ric a

N o 1 in
Eu ro p e

L ea d er
i n th e CI S

Emerging markets continue t o of fer the


best organic growt h pot ential for
ArcelorMittal
S up erior de ma nd grow th po te ntial

L e ad e r i n
L a ti n A me ri c a*

W e hav e th e p latfo rm a nd exp erience :


L e ad er in
Af rica

Ar c e lo r Mit ta l
O th e r s

A lready the s teel m ar ke t lea der


i n Latin A m eri c a, C IS a nd A fri c a

A rc el orM i ttal foc us area s fo r


gro wth ar e B raz il

W e als o hav e JV p roj ec ts i n the


M i ddl e E ast and Chi na

Ind ustr ial and commercial n etwork focus on m ar ket sustainabili ty and gr owth oppo rtunity
* L atin Am er ica in clud es M exico .

16
6

ArcelorMittal main markets


Au to moti ve

W orldwi de no.1 sup pli er for au tom oti ve steels with a l eadi ng m ar k et sh are of around 18%.
W orldwi de i ndus tri al pre senc e v i a about 4 0 co ating lines i n E uro p e, Nor th A m er ic a, S outh
A m eri c a and A fr ic a.

Co nstr uction

Globall y, th e la rges t s ing le m ark et for st eel: a 715 m ill i on ton ne stee l c ons um pti on m a rk et c om pri s ed of
div er sifi ed pr oduc ts

E m ergi ng m a rk ets repr es ent m or e than 50% of the squ are m e ters c o ns truc ted ea ch y ear gl obal ly .
A rc elo rM i ttal is a w orl d l eader wi th ov er 2 6 m i ll io n tonnes of pr oduc ts deli v ered to the bui l din g and
cons tr uc tion sec tor in 2011

Packagin g

New p ack aging c onc epts c ons tantl y de si gned to ach iev e di ffer enti atio n by stee l s ol utio n
(bottl e c an, eas y open e nd...).
Com plem ent ary indus tri al networ k in E ur ope w ith p roduc ti on plants and s erv i c e cen tres near
cus tom e rs ' c an m ak i ng fac ili ties.

The l ead er in automo tive steels


17
7

The Group Management Board (GM B)

Lakshmi N. Mit tal

C ha irm an a nd C EO , resp o nsi bl e for sh are d se rvi ces


(i ncl . p urc ha sin g, le ga l, IT, sh ip pi ng a nd en erg y),
h uma n re so urce s, in te rn atio na l a ffai rs, in te rn al
a ssu ran ce, he al th an d sa fety an d mi ni ng

Adit ya M ittal

C F O , re spo n sibl e fo r F l at Ca rb on E uro pe , i nve stor


re la ti on s an d co mmu ni ca ti on s

Mich el W urth

R esp on si ble fo r Lo ng Ca rbo n W o rld wi de

Go nzalo Urquijo

R esp on si ble fo r AAC IS (exc lu di ng Chi na an d Ind ia ),


D istri bu ti on Sol utio n s, T u bu la r Prod uc ts a nd corp or ate
re spo n sib ili ty

Sudhir Mah esh wari R es po nsi bl e for co rpo ra te fi na nc e, M&A, Ind ia a n d


Ch in a , ri sk man ag e men t

Davinder Ch ugh

R esp on si ble fo r sh are d se rvic es (re po rtin g to C EO )

Pet er Kukielski

R esp on si ble fo r Mi ni ng

Lou is Schorsch

R esp on si ble fo r F la t C ar bon Ame ric as, gro up strate gy,


C T O , re sea rch an d de ve lo pme nt, com merc ia l
co ord in ati on a nd mar keti ng , a nd g lo ba l au tomo tive

App ointed by the Board of Directors, the GMB is responsible for strategic d irection
8

Key facts & four operating groups

ArcelorMittal Tubular Products


Headquartered
in Luxembourg

Energy

Aktau - Kazakhstan: spiral to 56


Annaba - Algeria: seamless to 14
Ostrava - Czech Republic: seamless to 10 Galati - Romania: DSAW to 52
Ostrava - Czech Republic: spiral to 32
Roman - Romania: seamless to 20
Vereeniging - South Africa: seamless to 6

Jubail - Saudi Arabia: seamless to 16 (under construction)

25 industrial units
in 12 countries

Mechanical
& Automotive
North America

Brampton - Canada: welded to 3


Hamilton - Canada: welded to 6
London - Canada: tubular components
Marion - USA: welded to 6

Chevillon - France: welded to 5


Hautmont - France: welded to 5
Iasi - Romania: welded to 8
Karvina - Czech Republic: welded to 6
Krakow - Poland: welded to 6

Monterrey - Mexico: welded to 6


Shelby - USA: welded to 12.5 &
seamless to 7.75
Woodstock - Canada: welded to 7

Designed capacity
of 3 million tons

2011 revenues:
USD 2.3 billion

9,000+ global
employees

Mechanical
Automotive
Europe

&

La Victoria - Venezuela: welded


(energy, mechanical, standard to 12)

Unicon

Business structured to optimize market segments & regions


Confidential Information

19

ArcelorMittal Tubular Products Key Figures


Sales by Operating Group - 2012 Forecast

Sales (US$ billion)


2.5

22%

Energy

2.0

29%
Mech. & Auto - North
America

1.5
1.0

Mech. & Auto - Europe

14%

0.5

Unicon

2010

2011

35%

2012F

Sales (US$ billion)

No. of Employees (000s)

Shipments (million tonnes)


2.0

10.0

1.6

8.0

1.2

6.0

0.8

4.0

0.4

2.0

2010

2011
Shipments (million tonnes)

2012F

2010

2011

2012F

No. of Employees (000s)

ArcelorMittal Tubular Products is the most diversified global tube producer


20
in terms of types of productsConfidential
and geographies

20

ArcelorMittal brings certain strengths to the


project which will be key to its success
Global leadership and reputation for excellence in Steel & steel products
World leadership in steel research

11 research centers globally with 1,300 full time researchers and


an annual R&D spend of over $300 million
the state of the art research facility in Belgium is specialized in
supporting energy products and will support development of
premium grades and connection technology for AM tubular
businesses including AMTPJ
Global marketing and sales presence:

present in every geographical region important to steel and energy


products including Venezuela and Saudi Arabia (with AMTPJ)
Existing relationships with most of AMTPJs prospective customers
Will ease the market entry and commercial ramp-up
Management team with experience in managing a global tubular products
business with an with annual sales of over $2 billion
What we need

Our Saudi partners to support the project with infrastructure (gas,


utilities etc) and long term relationship with Saudi Aramco

21

R&D Gent centre in Belgium


A laboratory dedicated to the development of industry products from metallurgy
over surface to application behavior

R&D Gent centre in Belgium


Unique facilities in processing, characterization and testing of metal alloys
Unique facilities in processing and
characterization of metal alloys

Completely integrated
metallurgical processing center

Fully equipped chemical


characterisation laboratory
Extensive electron microscope
facilities
Complete coating laboratory
including novel curing techniques
and corrosion laboratory
All major welding and cutting
techniques available ((hybrid)
laser, SAW, MIG/MAG/TIG)
Forming and rapid prototyping
capabilities
Complete facilities for
electromagnetic characterisation
Large experience in Finite Element
Modeling

Wide range of casting


possibilities
5 rolling stand of which 2
continuous
Multi-purpose dynamic
annealing line with transverse
flux inductor
Complete mechanical testing
facilities
Advanced characterisation
equipment like dilatometry,
torsion and easy access to high
speed-compression
Complete sampling preparation
facilities including waterjet
cutting
Unique reactive continuous
annealing simulator
Fully equipped hydrogen lab

R&D Gent centre in Belgium


Regrouping of existing equipment and
competences of ArcelorMittal R&D Gent / OCAS,
the Belgium Welding Institute and Laboratory
Soete of Gent University on the Metal Research
Campus in Gent
Among others:
Complete HIC/SSC testing facilities
5-wire SAW pilot
Large scale testing (wide plate testing,
fatigue testing on threaded pipes, buckling
tests, etc.)

ArcelorMittal global R&D capabilities


ArcelorMittal R&D
Around 1,300 full time researchers
Annual R&D expenditure of $300 million
(2011)
Number one R&D in the industry

strongly supporting specialties


R&D spending focused on 7 areas:
Automotive, Packaging, Construction,
Energy, General Industry, Long products
and Special Plates

Working on all development axes


Research into products & steel
solutions

R&D Key challenges in accordance


with the Group strategy

Process research

Product: Differentiated product offer


Geography: Support the transfer of technology
between plants
Value chain: Transverse projects optimising the
product value along the complete value chain

Technical assistance to the plants


Worldwide network of 11 research
centers, further supported by a network of
scientific and academic partners
worldwide

from mining to finished products

Research & development enables to realize our ambitions


in technological innovation and sustainability

ArcelorMittal global R&D capabilities


Main potential areas for cooperation and development
Steel
chemistry &
production
simulation

New product
development

Training &
technical
support

Definition and optimization of steel chemistry for all the target products (OCTG, Line pipe,
HPI, others)
Simulation of heating/quenching and tempering cycles on different grades to fine tune the
heat treatment process at Jubail mill

Sour service grades (T95, C110 and proprietary grades) especially used in the MENA
region
Proprietary OCTG premium connection technology

Support to Jubail laboratory (exchange of information on sour service testing and potential
training to Jubail lab staff)
Specific on-demand technical support

ArcelorMittal global R&D capabilities


Relevance of sour service OCTG grades for Jubail
Growing segment in the OCTG market
Sour service demand will continue to grow as drilling is increasingly moving to more difficult
environments
Higher margin with limited competition
Sour service OCTG is produced by a limited number of high-end suppliers
Margins are so far considerably higher than for normal heat treated OCTG
Essential for premium connections
Sour service OCTG is always requested with premium connections
Around 15% of global premium OCTG demand is with sour service grades
Middle East is the largest regional market for sour service:
Total regional demand of ~150 Kt High presence of sour oil and sour gas in the producing
basins of Saudi Arabia, Kuwait, Qatar and Iran, in deep drilling with high pressure and high
temperature

Sour Service OCTG is a critical application for the success of Jubail as it is a highly profitable product
ArcelorMittal has an R&D program for T95 and other proprietary sour service grades to support the
development of value added products for Jubail

AMTPJ Market

AMTPJ Market
Global growth of Pipes & Tubes is in line with the overall steel market but it offers
specific opportunities to AM
Breakdown of consumption of Pipes & Tubes*
Auto mo tive &
trucks
6%

Co nverting &
pro cessing
4%

World apparent demand for Pipes & Tubes (mt)*


140

Electrical
equipment
2%

M achinery &
industrial
equipment
11%

CA G R of 3-4%

120
100
80

Oil & Gas


Industry
40%

60
40
20

Steel Service
Center &
distributo rs
14%

0
2005

Co nstructio n
23%

Pipes and Tubes consumption per capita (kg/year)*


29
18
2
Africa

22

22

CIS

China

Latin
America

Middle East

Developed
World*

2006

2007

2008E

2009E

2010E

2015E

Key specific opportunities in Pipes & Tubes

OCTG: The growth of the Oil Country Tubular Goods market and
specifically the high end market is expected to grow at strong rate
as oil reserves need to be replaced and drilling complexity
increases.

High end mechanical tubes: Strong growth expected in technical


products, such Drawn Over Mandrel tubes, benefiting from global
market growth in construction and agricultural machinery

New solutions in Automotive: Automotive market growth


expected to be limited except for high technological solution to
reduce weight

Africa, Latin America, Middle East and CIS regions: Strong growth
expected in those regions supported by high oil prices

AMTPJ Market
Seamless OCTG & Line pipe applications drive the demand in these regions
Middle East

Africa

USA

2011, 100% = 1.9 Million metric tons

2011, 100% = 0.8 Million metric tons

2011, 100% = 4.0 Million metric tons

12%

14%
25%

88%

Seamless OCTG and line pipe


are the major categories
Other seamless categories
include boilers for power
generation and gas processing
and standard seamless pipes
for general infrastructure

86%

Seamless OCTG and line pipe


are the major categories
Other seamless categories
include boilers for power
generation and gas processing
and standard seamless pipes
for general infrastructure
Some quantities for mechanical
pipes as well

75%

U.S. seamless market is driven


by OCTG mainly, followed by
line pipe
Mechanical is a major category
represented mainly by
automotive, heavy equipment
and other applications
Standard pipes for construction
and pressure pipes for power
plants complete the market

AMTP Jubail will be focused on serving the Oil & Gas industries along the upstream,
midstream and downstream activities

AMTPJ Market
AMTP Jubail natural markets
North Africa

Middle East

Egypt
Algeria
Libya
Tunisia
Sudan

Domestic market
Saudi Arabia
Iraq
Bahrain
Qatar
Yemen
Others Middle East
UAE
Kuwait
Oman
Syria

Syria

Tunisia

Iraq
Kuwait
Algeria

Libya

Qatar

Egypt

UAE

Saudi

Oman

Mauritania
Yemen
Senegal

Sudan
Nigeria

Sierra Leone

Ghana
Cte d'Ivoire

Equatorial Guinea
Gabon

Uganda

Kenya

Congo

West Africa
Mauritania
Senegal
Sierra Leone
Liberia
Cte d'Ivoire
Ghana

Somalia

Cameroon

Liberia

East Africa

Tanzania

Nigeria
Cameroon
Eq. Guinea
Gabon
Congo
Angola

Angola

Mozambique
Zimbabwe
Madagascar

South Africa

Somalia
Kenya
Uganda
Tanzania
Mozambique
Zimbabwe
Madagascar

AMTPJ Market
Geographic location & product range of AM Energy mills
Energy mills locations

Rolling capacity by mill


kT/yr

OD Range size
Inches
1 3 4.5 6 7 10 12 14 16 18 20

Ostrava

275

Roman

4 5 3 20

3 00

Vereeniging
Annaba

10 0

50

Jubail*

60 0

Galati

50

Aktau

60

Seamless

Spiral

LSAW

Energy units are concentrated in Europe, Africa & Middle East


We are mainly focused in the seamless energy markets

* Joint venture.

32

56

AMTPJ Market
Leverage on ArcelorMittals existing business relations in the Region
Saudi
Aramco

KOC

ADCO

South Africa mill approved for LP & OCTG, Ostrava approved for OCTG
Local Jubail team in regular touch with Aramco- A special Aramco Day is planned soon
Premium connection team in regular contact with Drilling department

Have a strong relationship with KOC and major pipe line contractors since last 15years and are
regular supplier
Already given a brief to KOC regarding our upcoming mill in KSA

Have been a regular supplier for almost 6 years to ADCO and its related group companies .
Introductory Presentation has been made to ADCO of our new facility.

We have existing relationship with Major EPCs in


Middle East , who have been expanding to Africa as
well:

Global Project Package Specialists has been


developed keeping in view the new facility. Viz.
DSTC Dubai

NPCC Abu Dhabi

Gerab UAE / KSA

Petrofac Sharjah

Van Leeuwen Holland / UAE

Technip France / Dubai

Trouvay Cauvin Dubai / UK

Dodsal Dubai

Groupe Genoyer - France

JGC Japan / Algeria

NOV Wilson USA / UAE

Hyundai Korea / Abu Dhabi

Cunado Group Spain

VM Gulf Abu Dhabi

Kurvers- Germany/UK/ UAE

CUEL Thailand
ENI / SAIPEM Italy
Fluor Corporation- USA

Network of Agents in
Kuwait, Abu Dhabi,
Qatar, Oman, Egypt,
Tunisia, Libya

AMTPJ Market
International capabilities beyond MENA

USA

Office in Houston, Texas - established since 2005


6 people covering seamless line pipe and OCTG and large diameter pipes
Existing relationships with all major distributors in U.S.
Have been supplier to major drilling operators
ArcelorMittal brand very well established in US Market with sales >100Kt/year

South
America

ArcelorMittal owns Unicon, the largest welded pipe maker in Venezuela


Main pipe supplier to PdVSA, the National Oil Company of Venezuela
Established industrial and commercial capabilities
Developing Oil Field Services business
ArcelorMittal International has sales network in entire South America

Have a strong historical presence in India with supplies and strong relations with:

India

ONGC - OCTG
Oil India - OCTG
BHEL - Line & Alloy Carbon Steel Pipes
Reliance - Line Pipes & OCTG

L&T - Line , Alloy & Structural Pipes


EIL - Line Pipes
GSPC - OCTG
Thermax - Alloy Pipes

New relationships has been developed with Subsea pipe laying companies in India and abroad:

L&T
Essar
SWIBER
Leighton Welspun

VM Gulf
Hyundai
PunjLlyod

AMTPJ Market
Sales & Marketing
ArcelorMittal Tubular Products Al Jubail (AMTPJ) signed a Sales & Marketing Agreement with ArcelorMittal, who through its distribution
network, has to market and sell each Product which is in excess of the AMTPJ Market requirements, in priority to the Middle East and North
Africa and any remaining surplus in other regions, all in the best interests of the Company and with a view to reach the full capacity of the
Companys plant;

Key Comparative Advantages

Key Competitive Advantages

One of only 2 seamless pipe production units (and the only one with a PQF Mill) in the whole of Middle
East North Africa (MENA) region which consumes an annual volume of approx 3M MT.

MENA region is the fastest growing market for seamless pipes


in the world

Very attractive market for premium grades / qualities

Saudi Aramco is the largest consumer of seamless pipe in the


MENA region (approx 400 k MT p.a.) and is actively promoting
local production

Local Producer status expected to further ease entry into


Aramco including supply of premium segments

Proximity to markets like Iraq and Iran will be hugely attractive


once the political situation normalizes (already happening with
respect to Iraq)

Mill with state of the art technology, able to produce to the


highest quality specifications

Cost of the project is very competitive when compared to competition (Tenaris Veracruz brownfield
expansion project ($850M), V & M Sumitomo Brazil greenfield project including 1M Mt of round
billet production for approx $3 BLN)

Key Competitive Advantages

Low operating costs due to technology and prices of utilities & infrastructure

Electricity $0.04 / KWH

Natural Gas $0.75 / MBTU

Land lease cost of approx 4.5 SAR per sq. m p.a.

Low logistics cost for land and sea for the target markets due to plant location

Projects financing at SAIBOR + 450 bps (approx overall) at a debt-equity ratio of 75:25

Cost Advantages due to::


Shipping & Storage costs of seamless pipes into the region are expensive as specialized handling is required;
Outbound shipping cost from the region is low thereby providing AMTPJ with a cost advantage over international
manufacturers; and
Cheaper labor in Saudi Arabia vs Europe provides further cost advantage to AMTPJ.

Opportunity for further expansion investment in billet production for the pipe mill can further enhance
the margins at an attractive ROI for incremental investment

Other Advantages

AMTPJ has signed a long term raw material supply agreement with ArcelorMittal Ostrava.

AMTPJ has a management agreement with ArcelorMittal Tubular Products Luxemburg.

AMTPJ signed a Sales & Marketing Agreement with ArcelorMittal who will, through its distribution
network, have to market and sell all products not sold in AMTPJs priority markets of MENA, in the
international market. The agreement is structured with a view to reach full capacity of the AMTPJs
plant.

Key Competitive Advantages


Saudi Aramco discard any doubt about the continuation of their long term projects, although they
mention there could be delays on their beginning

The construction boom in the ME might cool off, putting Saudi


Aramco in a more advantageous position to negotiate
Equipment and qualified personnel are also likely to be easier to
obtain as other projects in the region are canceled or delayed, both
in the industry, construction and infrastructure sectors

Their projects are long term base and somehow benefited by the current economical situation
Saudi Aramco mentioned that short term volatility is nothing new in the Oil & Gas industry

Projects Financials

Projects Financials
Projects Cost
Total Project Cost is US $997.2M (including Financing Charges).
COMPARED TO RECENT COMPARABLE SEAMLESS MILL PROJECTS,

AMTPJ Project STILL COMPATATIVE >>>>>>

997.2

Projects Financials
Projects Cost
Total Project Cost is US $997.2M (including Financing Charges).
COMPARED TO RECENT COMPARABLE SEAMLESS MILL PROJECTS,

AMTPJ Project STILL COMPATATIVE >>>>>>

Projects Financials
Means of Finance
DESCRIPTION

MUSD

MSAR

907.2
90.0
997.2

3,402.0
337.5
3,739.5

[ 30 % ]

114.4
110.0
74.8
299.2

429.2
412.3
280.5
1,122.0

[ 70% ]

160.0
377.6
160.4
698.0

600.0
1,416.0
601.5
2,617.5

[ 100% ]

997.2

3,739.5

1. PROJECT COST
- Project Cost
- Financing Cost
TOTAL PROJECT COST
2. MEANS OF FINANCING
- Arcelor Mittal
- AlTanmiah
-New Investor
TOTAL EQUITY
- SIDF
- Bank Loan
- New Loan
TOTAL LOANS
TOTAL EQUITY + LOANS

(38.25%)
(36.75%)
(25.00%)

Projects Financials
Projects Key Performance (Full Production)
Gross Margin (%)
EBITDA Margin (%)
EBT (%)
Return on Capital - ROC (%)
Return on Investment - ROI (%)
Return on Equity - ROE (%)
Asset Turnover (%)
Return on Assets (%)

Projects IRR

35.97%
23.24%
14.65%
43.69%
14.16%
39.48%
87.10%
12.76%

12.53%

REVENUE (US$X 1000)

891,973

EBIDTA (US$X 1000)

207,302

EBT (US$ X 1000)

130,696

total Investment
Equity

Projects Financials

The Opportunity

The Opportunity
An opportunity to acquire a direct equity
stake in AMTPJ (25%), the biggest
Seamless Steel Pipes manufacturer in the
Middle East, developing a 600 Kilotons/year Seamless Steel Pipes (OCTG &
Line Pipes) manufacturing in Saudi Arabia.

AMTPJ
38.25%

36.75%
25%

New Investor
More than 84% of overall project
milestones have been achieved and
completed including receipt of gas supply
from the Saudi government, and
commercial production expected to
commence in Dec 2013.
Given its partnership with ArcelorMittal,
the project has many advantages. AMTPJ
also has multiple cost advantages which
provide it with pricing advantage
compared to international producers.
The Middle Eastern market for Seamless
pipes is currently being supplied almost
completely by imports. This provides a
regional manufacturer like AMTPJ with an
immense business opportunity.

Project Cost: $ 997.2M

Raising Capital to $299.2M (30% of total


Project Cost) is in progress.

Total Partners Equity (100%)= $299.2M


AM Share

(38.25%)

$114.6M

Tanmiah Share (36.75%)

$109.8M

New Investor

: $ 74.8M

(25%)

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Thank you

Feb 2013

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