Ash and Slag Materials Market of Russia: Problems and Solutions

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c o n s o r t i u m

integratedash & slag materialutilization system

Ash & slag materials (ASM) in Russia

Annual production of ASM:

≈30 000 000tons

172 of them produce>100 000 tons of ASMannually

Coal power plants andthermal power stations

350

c o n s o r t i u m

Tomsk

MoscowOrel

Saint Petersburg

Samara

Yekaterinburg

Nizhnevartovsk

Noyabrsk

Krasnodar

Tomsk

MoscowOrel

Saint Petersburg

Samara

Yekaterinburg

Nizhnevartovsk

Noyabrsk

Krasnodar

Tomsk

MoscowOrel

Saint Petersburg

Samara

Yekaterinburg

Nizhnevartovsk

Noyabrsk

Krasnodar

Major sales volumes of ASM in 2013:

Utilization volumeof produced ASM

(30 mln. tons)

≈ 0,63 mln. tonsper year

≈ 3,27 mln. tonsper year

ASM sales in Russia

Geography of deliveries:

Irkutskzoloprodukt

≈ 4,0TGK-11

Ekozoloprodukt

Refinskaya Power Plant

ProfCement-Vector

Siberian GK

Others

Dry ash Sent to ash dumpsHydrated ash

0 0,5 mln. tons 1 mln. tons

mln. tons

1,02

0,67

0,36

0,17

0,15

0,12

Uncontrolled ≈ 1,00

0,06 0,06

0,10 0,26

0,08 0,94

0,15

0,17

≈ 0,35

0,07 0,60

2% 11%≈ 26 mln. tons

per year

87%

c o n s o r t i u m

Every ash dumpis a localecologicalcatastrophe

Every ash dump is a local ecological catastrophe

Coal power plants andthermal power stations

172

110 power plantalmost exhausted theirash dump capacities

Reftinskaya power plant

ASM production:

Cost of thesystem:

≈ 6 mln. tons per year

until 2040

10,2 billion rubles

The old water-based ash removal systemallows the plant to run only until 2016

Energetics industry problems

A new system of dry ash removal is being made which will allowthe plant to operate

c o n s o r t i u mCauses of weak ASM marketing

Power industry officials mustturn waste into goods

Stableproductparameters

Stabilepresenceon the market

1

2

Required conditions for theexistence of goods:

c o n s o r t i u m

Характеристики некоторых зол уноса Европейской части РФ

Химический состав и физико-механические характеристики зол уноса Новочеркасской, Каширской, Рязанской, Черепецкой, Подмосковной ТЭЦ-22.

Specific surface area, cm2/g

Novocherkasskaya Kashirskaya TPS-22 Ryazanskaya

SiO2 35,0-56,0 46,0-55,0 35,0-56,0 46,0-55,0 53,0-62,0 46,0-55,0Аl2О3 12,0-28,0 22,0-39,0 12,0-28,0 22,0-39,0 22,0-25,0 22,0-39,0Fe2О3 9,0-18,0 5,0-17,0 9,0-18,0 5,0-17,0 7,0-14,0 5,0-17,0СаО 1,0-5,0 2,0-5,0 1,0-5,0 2,0-5,0 3,0-5,0 2,0-5,0MgO 0,2-3,0 0,2-2,4 0,2-3,0 0,2-2,4 0,2-2,5 0,2-2,4K2O 2,5-5,0 0,2-1,0 2,5-5,0 0,2-1,0 0,1-0,2 0,2-1,0

Na2O 0,6-2,0 0,1-0,7 0,6-2,0 0,1-0,7 0,1-0,3 0,1-0,7SО3 0,2-3,0 0,2-1,6 0,2-3,0 0,2-1,6 0,3-0,8 0,2-1,6СаО 1,5 1 1,5 1 1 1

Underburn 8,0-22,0 0,2-1,3 8,0-22,0 0,2-1,3 ок. 15 0,2-1,3

Cyclone ash - 2300-2400 - 2300-2400 880-2040 880-2040

Electrofilter ash 3000-5000 1500-5200 3000-5000 1500-5200 1530-4000 1530-4000

Characteristicsof fly ash

Type 2BR & type T Type 2BR

Name of fly ash

Cherepetskaya

Chemicalcomposition(oxides), %

Type of coal

Type A Type T Type A Type T

c o n s o r t i u m

Of 172 power plants in Russia 110 have almost exaustedthe capacity of ash dumps.

Environmental charges are very low and still make 5-16 rubles per ton. However, later this year 2014 Ministry of En-vironment plans to triple the fee. The idea of a quarterly payment is being discussed.

On September 12, 2013 the Russian government made a decision according to which in the year 2014 the tariffs of natural monopolies will not grow.

Incentives for power industry officials

12

3

c o n s o r t i u m

Incentives for power industry officials:fines in Europe and Russia

Fine amount,€ per ton

Supplement to the client for ASM disposal

ItalyFinland Russia

Utilization leveltends to 100%

Utilization levelnot more than 13%

100

50

0

0,3

0,3

60

20

90

20

Penalty for storage in the dumps

Germany

120

15

c o n s o r t i u mRussian ASM market potential

Cement market

Recultivation market

Road construction market

Market of soil deoxidation

mln. tons≈17

mln. tons≈5

mln. tons≈10

mln. tons≈3

1

2

3

4

Totals to about tons of ASM per year35 000 000Сurrent consumption: not more than 4 million tons of ASM per year

Cement consumption:68,5 mln. tons

Produced: Productioncapabilities:

65,2 mln. tons 85 mln. tons

Imported:5,1 mln. tons

Exported:1,8 mln. tons

Russian cement market in 2013

Average percentage of fly ash inputin concrete systems in Europe

25%of cement

volume

The potential market in Russia only in the fields where cement is usedcan consume about 17.1 million tons of ASM per year

c o n s o r t i u m

c o n s o r t i u mNeeds of the Russian marketPresident and Government program:

100 mln. m2 of housing per year

≈ 20 mln tons of cement

6 billion € 3 billion €

At least 100 million tons of cement per year is needed1 m2 of housing = 1 ton of cement

Defecit:

Investments in cement: Investments in ASM:

minimum 300 € per ton maximum 130-150 € per ton

20 000 000 tons 20 000 000 tons

c o n s o r t i u m

Active mineral additivesfor cement

Raw materialsfor the production oflarge artificial fillers

for concertes

Activemineral additives for concretes and mortars

Lightconcrete

Heavyconcrete

MortarsFoam & gasconcrete

Active mineral additivesfor the production of

dry mortars

Manufacture of ceramic products

Fly ash use capabilitiesin the construction industry

The main effects of ASM usage in concrete systems:

Reduction ofwater requirementof the concrete system

Structure compaction due to:• spherical particle shape• small particle size (< 40 μm)• chemical structure

1 2

In these conditions was born the idea of creating an international consortium, which would bring together professionals from the energy, cement and construction industries.

The solution

Strategic financial partner

c o n s o r t i u m

Integrated ash & slag materialutilization system Fenix offers:

Investigation of physical, mechanical and chemical properties of all types of the power plants ashes and slags, identification of factors affecting their stability. Definition of usage di-rections for these materials in industry, con-struction and agriculture. Formation of the market within 500-1500 km from the station. Development of technical conditions and ob-taining certificates of conformity on ash and slag materials, produced by the power plant.

Development of technical concepts of dry ash re-moval system oriented at 100% selling of ASM to the consumers and not its storage in the dumps, using the most modern technologies and equipment. Feasibility study of construction of a dry ash removal system for newly construct-ed or reconstructed power plant.

Making the project of dry ash removal system with binding and adaptation of the Dry Ash Re-moval System 100™ technological scheme to the power plant, based on the existing condi-tions and customer requirements.

Research Pre-project work

Engineering design

1: 2:

3:Assistance & organization of loan financing from Russia’s largest bak — Sberbank — for the construction of the Dry Ash Removal System 100™.

Funding4:

Construction of the Dry Ash Removal System 100™ by most modern and quick ways on a working power plant.

Construction5:Organization of ash and slag marketing to the consumers.

Sales6:

c o n s o r t i u m

Dry Ash Removal System 100™focused at 100% utilization of ASM

Екатеринбург

Екатеринбург

™

Coal preparation system:• averaging of parameters and providing a certain level of coal grinding.

Stabilization of coal burning modes:• providing the level of underburn not higher than 5%;• power unit certification for production of quality ash and slag materials.

Separate selection of fly ash from different fields of electrostatic filters (and cyclones) and slag from power units.

Monitoring system of ash and slag production in the power plants own laboratories capable of analyzing up to 4,5 thousand samples per year from one power unit and providing the necessary consumer properties of ash.

Multi-comparetment concrete silo (or multiple silos) for ash from different fields of electrostatic filters with the possibility of their controlled mixing and a volume of one-time storage not less than 10-day-production of ASM.

Slag grinding system and its separate storage.

Shipping system with cement trucks, railway hopper wagons and big bag packers.

Backup ash removal system with 30% moistening of ash waste (water-to-ash ratio 3:10) and storage into small ash dumps.

Principles of theDry Ash Removal System 100™

1

2

3

4

5

678

c o n s o r t i u m

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№ п

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Наименование, обозначение Позиция

Кол-

во Производитель-ность

Основное оборудование1 Электрофильтр 2

2 Рукавный фильтр 1

3 Рукавный фильтр 12

4 Дробилка валковая 1 5 т/час

5 Мельница вертикальная 1 5 т/час

6 Система аэрожелобов выгрузки из секции 1 1

7 Система аэрожелобов выгрузки из секции 2 1

8 Система аэрожелобов выгрузки из секции 3 1

9 Система аэрожелобов выгрузки из секции 4 1

10 Система аэрожелобов выгрузки из секции 5 1

11 Элеватор 1

12 Пневмокамерный насос 9

13 Делитель потока 5

14 Система увлажнения 1

15 Ленточный конвейер 4

16 Виброгрохот 3

17 Скребковый транспортер 1

18 Виброжелоб 1

19 Система отгрузки в ж.д. транспорт 1 до 250 т/час

20 Система отгрузки в автотранспорт 1 до 150 т/час

21 Весы для ж.д транспорта 1

22 Весы для автотранспорта 2

23 Компрессор 3

24 Воздуходувки для системы аэрации компл.

25 Пробоотборник 9

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Перечень оборудования

АвтодорогаАвтодорога

Зола Зола ЗолаЗолаШлак

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MOTOR-ALLGMDWALZENSCHÜSSELMÜHLE - HAUPTANTRIEBROLLER MILL - MAIN DRIVEMOLINO VERTICAL - MOTOR

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Технологическая схема

c o n s o r t i u m

Principle technological scheme of theDry Ash Removal System 100™

Dry Ash Removal System 100™ project implementation stagesby the participants of the Consortium Fenix

Stages and worksExecutors t.(months) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30+

Stage I: Research 15 m.

Feasibility study,technical requirements for project realization

Design specificationsdevelopment 4 m.

5 m.

Sampling, researchesof the applicability

of ash and slag12 m.

Processing of theresearch results 3 m.

Stage II:Stage II: Engineering 16 m.

Elaboration of designdocumentation 6 m.

Design documentationagreement 3 m.

Design documentationstate examination 2 m.

Elaboration ofworking documentation 9 m.

Stage III: Design specification

and contract preparationТехн. консультант

Техн. консультант

2 m.

Construction, productionand equipment delivery,

commissioning

Stage IV:15 m.

Stage V: Marketing

Credit funding

c o n s o r t i u m

c o n s o r t i u m

The main components of the system: electrostatic filters and IBAU multicompartment silos

© IB

AU

Ham

bur

g

IBAU Two-Way ValveElectrostatic Filter

IBAURotary Air Lock

IBAU FluidslideIBAU Screw Pump

IBAU MulticompartmentSilo

IBAU Flow Control Gate

IBAU Loading

Main components of theDry Ash Removal System 100™

c o n s o r t i u m

List of necessary laboratory teststhat should be conducted by the power plant during output control of ash

№ Test name Testing methodology

1Chemical composition(oxide composition, harmful impurities including Cl-, SO3, Р2О5)

ГОСТ* 8269.1-97

2 СаОfree content ГОСТ 23227-78

3 Underburn content ГОСТ 11022-95

4 Specific surface area & fineness (sieve 008 residue) ГОСТ 310.2-76

5 Bulk density of ash in natural state ГОСТ 8735-88

* ГОСТ (Государственный Стандарт) — Russian state standard

Initial data for the financial model

c o n s o r t i u m

Pricing policy

of Dry Ash Removal System 100™ usageon Khabarovsk Thermal power plant-4

1

Savings factorswhen using dry ash removal2

Ash typeOutput of ash Year I II III IV V

Field I 300 400 400 500 500

Field II 400 500 500 600 600

Field III 500 600 600 700 700

Field IV 700 800 800 900 900

Price, rub./ton

Slag 100 100 200 200 200

53%

22%9%

4%11%

Operating expensesfor ash removalare reduced

Environmental charges for ash dumping increase forecast:

3 times increasein the coming year

30% increaseevery next year

2–2,5 times

These price levels will provide quick entry to the ASM market with attainment of 100% utilization in the course of the 5th year.

SakhalinskayaGRES-2

х

40

95

190

55

0%

Mayskaya GRES

55

879

105

9

2024

51%

Komsomolskayathermal plant 2

Amurskayathermal plant

Komsomolsk-na-Amure

23

44

7364

140

51

2055

89%

2022

90%

Schem e L EGENDPrimorskaya GRES

2029 y.

89%

1250thousands

of tonsper year

107

1010

127Concrete and mortar market

(radius: 1000–1500 kmfrom site)

Road constructionmarket

(R = 150–200 km)

ASM production

— total

Estimated timeof ash dump filling

with current level ofconsumption

Recultivation market(R = 100–200 km)

Percentage of ash dump filling

thous.tons/year

ASM market potential analysisof RAO ES Vostoka enterprises

Blagoveshenskthermal plant

224

51

80

202

71

2033

43%

Artemovskayathermal plant

PartizanskayaGRES

Vladivostok

101227

226

448

554

129

2015

90%

2015

97%

Thermal plant 1 Thermal plant 2Khabarovsk

24

105

174220

303

133

2017

93%

2017

41%

NeryungrinskayaGRES

334

4383

2020

2034

63%

≈1000 km

(conservative estimate)

(ash + slag)Road construction

• Mounds and earth bed construction

• Soil strengthening• Road base strengthening• As an additive in pavement

manufacturing

thousand tonsper year588

Far East markets of ash and slag

Concretes & mortars(ash)

radius: 1000–1500 km from power plant radius: 100–200 km from power plant radius: 150–200 km from power plant

1 2 3

• Active mineral additives for cements and mortars

• Raw material for the production of large artificial concrete fillers

• Active mineral additives for concretes and mixes

thousand tonsper year476

(ash + slag)Soil recultivation

• Restoration of soil fertility• Filling of depleted quarries

and mines• Landscaping

thousand tonsper year638

mln. tonsper year1,7

c o n s o r t i u m

(conservative estimate)

Marketpotential:

Payback periodsince launching the system 5½ years

mln. rubles1950Investment in constructionof Dry Ash Removal System 100™:

Target technical and economic indicatorsof Dry Ash Removal System 100™ operation on Khabarovsk Thermal plant 4 c o n s o r t i u m

Dry Ash Removal System 100™ operation:

Year I III V VII X

ASM sales volume 225 360 450 450 450 thousand tonsper year

Additional income from ASM sales 75,5 156,8 236 236 236 mln. rublesper year

Reduction of operating costs for the maintenance and expansion of ash dumps 67,5 108 135 135 135 mln. rubles

per yearReduction of environmental charges

for ash & slag waste removal 24,2 65,5 138,4 233,9 513,8 mln. rublesper year

Simulation periodsince launching the system

NPV during simulation period IRR 15,6 %

10 years

151,1

Expenses:Incomes:

14 %Discount rate

millionrubles

Thank youfor your attention

www.ksfenix.com8 (812) 363-01-43

c o n s o r t i u m