1 Bechtel Confidential

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National Development & Innovation Committee

Sainshand Industrial Complex Program

Introduction of Master Plan

Bechtel Limited

03 August, 2012

2 Bechtel Confidential

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SIC Planning & Development Process

Government Plan of Action

[2008-12] Resolution

#118

Value Delivery

Value Creation

Engineer

Procure

Implementation

Construct

Land Use

Facilities

Concept Plan

(FEED)

Layout

Market Input

Data

Master Plan Study

Scope of Process Plants

Economic Analysis

Scope of Utilities &

Infra Community & Sustain

Operations

Government Decree

#216

Feasibility Studies

Stakeholders

Sustainable Dev

Concession Tenders

3 Bechtel Confidential

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Bechtel Confidential

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Consistency With Global

Strategic Objectives

l Contributions to lowest cost

production

– Synergies

– Efficiency

l Enhancement to market

reputation

l Enhanced use of resources

– Labor

– Environmental allowances

– Available raw inputs

l Sustainability and

diversification

Assessment

Criteria:

Global

Factors

Assessment

Criteria:

Global

Factors

Technical/Engineering

Factors

l Size / utility

requirements

l Environmental issues

Compelling Merits

l Economic contribution

l Technological advancement

l Comparative advantage

l In-country skills advancement

Cost Realization l Budgetary objectives

l Capital market constraints

Timing Realization

l Impacts on cost, operations, and economic risk

Contribution to Risk and

Risk Diversification l Impact of volatile market

demand / competitive supply l Effects on other in-country

sectors and infrastructure

SIC Master Plan Study Considerations

4 Bechtel Confidential

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Bechtel Confidential

Use of this report is subject to certain restrictions set forth in the Important Notice of the Contract between NDIC and Bechtel.

ACT 1

Data Collection

ACT 2

Define Plant Requirements

ACT 3

Define Utility Requirements

ACT 4

Quantify Plant & Utility Requirements

ACT 6 & 7

Develop Layout from Alternatives

ACT 10 & 12

Deliverables, Cost Estimate &

Final Report

F201010010

ACT 8

Define Community Facilities

ACT 11

Economic Analysis & Debt Financing

ACT 5

Transportation Infrastructure Plan

ACT 9

Sustainable Development

SIC Master Plan Study Activities

5 Bechtel Confidential

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Bechtel Confidential

Use of this report is subject to certain restrictions set forth in the Important Notice of the Contract between NDIC and Bechtel.

ACT 1

Data Collection

ACT 2

Define Plant Requirements

ACT 3

Define Utility Requirements

ACT 4

Quantify Plant & Utility Requirements

ACT 6 & 7

Develop Layout from Alternatives

ACT 10 & 12

Deliverables, Cost Estimate &

Final Report

F201010010

ACT 8

Define Community Facilities

ACT 11

Economic Analysis & Debt Financing

ACT 5

Transportation Infrastructure Plan

ACT 9

Sustainable Development

SIC Master Plan Study Evolution

•Coking Coal Plant •Copper Smelter •Cement Plant • Iron Pellets Plant •HBI / DRI Plant •Power Plant •Coal Gasification •Oil Refinery •Utilities

Kick-off

•Added Study Scope of −Direct Coal to Liquid −Alternate Sites

Evaluation

Interim

Report

Review

•Alternate Technologies •Optimization

Economic

Analysis

Review

•Coking Coal Plant •Copper Smelter •Cement Plant • Iron Pellets Plant •Utilities

GoM

Approval

6 Bechtel Confidential

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Bechtel Confidential

Use of this report is subject to certain restrictions set forth in the Important Notice of the Contract between NDIC and Bechtel.

SIC Master Plan Study Major Findings & GoM Decisions

Alternate plant locations study confirms SIC concept

Oil refinery regional locations preferred

Iron plant preferred location at Darkhan

7 Bechtel Confidential

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Bechtel Confidential

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GoM support or ownership of park infrastructure is required for better economics

Optimize power solution: SIC power generated from coking coal plant and powered from grid for additional needs

SIC Master Plan Study Major Findings & GoM Decisions (Cont’d)

8 Bechtel Confidential

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Bechtel Confidential

Use of this report is subject to certain restrictions set forth in the Important Notice of the Contract between NDIC and Bechtel.

SIC Site Plan and Facilities

Coke 2 MTPA

Coke: 2 million

tonnes per year

Coke for export

(initially) steel

industry

Coking coal feed

from Tavan Tolgoi

Capital estimate:

1.8 billion US$

EPC duration: 36

months

9 Bechtel Confidential

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Bechtel Confidential

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SIC Site Plan and Facilities

Copper 500 kTPA Copper: 500 thousand tonnes per year

Copper for export (initially) commodity

market

1.5 MTPA domestic copper concentrate

(Oyu Tolgoi, Erdenet)

Capital estimate: 1.7 billion US$

EPC duration: 42 months

10 Bechtel Confidential

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Bechtel Confidential

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SIC Site Plan and Facilities

Iron Ore Pellets: 4.5

million tonnes

per year

Pellets for export to

steel industry

Domestic iron ore

feed

Capital estimate:

1.8 billion US$

EPC duration: 36

months

Iron Pellets 4.5 MTPA

11 Bechtel Confidential

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Bechtel Confidential

Use of this report is subject to certain restrictions set forth in the Important Notice of the Contract between NDIC and Bechtel.

SIC Site Plan and Facilities

Cement 1 MTPA

Cement: 1 million

tonnes per year

Type I/II cement for

domestic and

export market

Raw materials from

Sainshand area

Capital estimate:

315 million US$

EPC duration: 34

months

12 Bechtel Confidential

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SIC Shared Infrastructure & Facilities

Rail

Security

Telecoms

Material Handling

Air Separation Unit

Community Heating

Water & Wastewater

Site Development

SHARED INFRASTRUCTURE

& FACILITIES

Power Distribution

13 Bechtel Confidential

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SIC Shared Infrastructure & Facilities

14 Bechtel Confidential

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Bechtel Confidential

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SIC Community Facilities

15 Bechtel Confidential

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Bechtel Confidential

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SIC Community Facilities

2,300 SIC Employees 18,000 New

Residents – 7300 Housing Units

7 Clinics, 1 Hospital

7 Schools, 5 Nurseries/Kindergardens

2 Libraries, 5 Community/

Recreation Centers

3 Government Offices, 3 Police & 1 Fire Station, 4 Post Offices

Retail, including 1 Mall

16 Bechtel Confidential

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Bechtel Confidential

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Capital Cost Estimate – Millions US$

Coke 2.265

Copper 2,350

Pellets 379

Cement 315

Common Facilities

2.745

Community 640

External Roads & Rail 597

Private 5,596

Public / PPP 3,698

Total 9,294

17 Bechtel Confidential

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Sources of Debt and Equity Financing

18 Bechtel Confidential

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Wholly-Government Owned (State Ownership)

• Applicability: Infrastructure Outside SIC, Common Infrastructure Inside SIC

• Financing sources: Sovereign debt from multi-lateral and bi-lateral lenders

Alternative Commercial Structures

19 Bechtel Confidential

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Wholly-Privately Owned (concession)

• Applicability: Industrial plants inside SIC

• Financing sources: Commercial bank debt, export credits, multi-lateral debt and equity, sponsor equity, sovereign wealth funds

Alternative Commercial Structures

20 Bechtel Confidential

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Joint Venture (between State and private sector)

• Applicability: Industrial plants inside SIC, certain common infrastructure inside SIC

• Financing sources: Mix of public and private sources depending on structure

Alternative Commercial Structures

21 Bechtel Confidential

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Bechtel Confidential

Use of this report is subject to certain restrictions set forth in the Important Notice of the Contract between NDIC and Bechtel.

GoM Incentives and Tax Exemption Options

Scenario Cement

Plant Coke Plant

Iron Ore

Pelletizing

Plant

Copper

Smelter

(500 kTPA)

Grid Power and GoM Funded

Infrastructure √ √ √ √

Exempt from VAT and Import Duties

on EPC Cost √ √ √ √

Income Tax Holiday √ √

Water Cost Subsidy (Raw Water

Rate) √ √

Tavan Tolgoi Thermal Coal Sold to

SIC at Mine Cost + Transportation √

Copper product to domestic finished

products plant (transportation

savings) √

22 Bechtel Confidential

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Bechtel Confidential

Use of this report is subject to certain restrictions set forth in the Important Notice of the Contract between NDIC and Bechtel.

Bechtel’s Successful Experience

Client: Royal Commission for Jubail and Yanbu

Location: East Coast of Saudi Arabia

Value: $23 billion

Project Summary:

Jubail Industrial City is the largest civil engineering project in the world today — a city built from the sand up, including 6,000 hectares of new industrial area, 33 km of new roads, expansion of the King Fahd Industrial Port, construction of seawater cooling distribution network, and 30 km of infrastructure for products and fuel/ gas

The city now serves 40 primary and secondary industries including oil refining, petrochemicals and steel as well as hosting a community for 140,000 residents

The original master plan had envisaged a 22-year program, but in 2005, the Royal Commission for Jubail recognized a need to accelerate the program in order to meet the rising demand for petrochemical facilities in the region. Bechtel responded by developing an accelerated ten year program. This plan was agreed and the deal subsequently signed in May 2006

Jubail Industrial City

Schedule: 1975 – 2016

Bechtel Scope : Master Planning, Engineering, Procurement,

of Work & Construction Management

23 Bechtel Confidential

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Bechtel Confidential

Use of this report is subject to certain restrictions set forth in the Important Notice of the Contract between NDIC and Bechtel.

Bechtel’s Successful Experience

1975 Master Plan approved / Royal Commission established

1977 Formation of SABIC

1978 Jubail Training Center opens

1980 Construction of primary industries begins

1981 King Fahd Industrial Port opened

1983 First three primary industries commissioned

1983 Human Resources Development Institute opens

1984 Five more primary industries commissioned

1986 First secondary industry (SUCCO) startup

1988 15 primary industries in operation

1995 Privatization program of infrastructure underway

2010 Planned completion -- 35-year program

Jubail Industrial City

24 Bechtel Confidential

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Bechtel Confidential

Use of this report is subject to certain restrictions set forth in the Important Notice of the Contract between NDIC and Bechtel.

Bechtel’s Successful Experience

Achievements in Developing and Financing Projects

TIA MARIA COPPER PROCESSING COMPLEX

Project Description: Bechtel client considering a Greenfield

mining and oxide copper processing complex in Peru,

including full economic analysis and capital and operating

cost estimates.

BEn Development and Financing Services:

Developed project-specific economic model that performed

after-tax cash flow analysis

Performed economic analysis to evaluate varying plant

capacities and mine plans/sequences

Assisted client in scenario identification with optimized

economics for mine sequence and capacity

25 Bechtel Confidential

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Bechtel Confidential

Use of this report is subject to certain restrictions set forth in the Important Notice of the Contract between NDIC and Bechtel.

Bechtel’s Successful Experience

Achievements in Developing and Financing Projects

CSPC NANHAI PETROCHEMICALS

Project Description: Bechtel was awarded the Project

Management contract for China’s $4.3 billion petrochemical

facility with up to 2.3 mmtpa of products and $1.7 billion in

sales per year.

BEn Development and Financing Services:

Developed a financeable commercial structure and

contracting strategy to lower project cost

Developed a multi-sourced export credit agency financing

strategy, integrating U.S. Ex-Im Bank, JBIC/NEXI,

Hermes, and Gerling NCM

Coordinated equipment suppliers, ECAs, and agent backs

to facilitate documentation and disbursement

26 Bechtel Confidential

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Bechtel Confidential

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Schedule

27 Bechtel Confidential

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Bechtel Confidential

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SIC Sustainable Development Strategy

Integrate environmental protection throughout SIP design, construction and operations Demonstrate international best practice in social

and environmental planning

Build and maintain strong government, community and other stakeholder relations

Capture both short-term economic benefits through Mongolian participation in SIP and develop workers and businesses for future in-country and international opportunities

VISION

Leverage a new economic sector to diversify the Mongolian economy while protecting the environment and improving human capacity and creating sustainable jobs.

28 Bechtel Confidential

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Bechtel Confidential

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Sainshand Industrial Complex – Benefits

Build new industrial center to promote advancement opportunities for Mongolians

Optimize Mongolia’s industrial competitiveness

Base for follow-on industries, additional economic growth

Attracts foreign investment

29 Bechtel Confidential

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Bechtel Confidential

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THANK YOU