REALISED PROJECT PRODUCTION OF NANOSTRUCTURED MAGNESIUM HYDROXIDE AND SYNTHETIC MAGNESIUM OXIDE , Volgograd, str. 40 let VLKSM, 57, tel.: +7 (8442) , fax: +7 (8442) ,

2 GROUP OF COMPANIES PRODUCTION OF NANOSTRUCTURED MAGNESIUM HYDROXIDE AND SYNTHETIC MAGNESIUM OXIDE PURPOSE Establishment of unique nanostructured magnesium hydroxide plant with a capacity of tpy and of synthetic magnesium oxide plant with a capacity of tpy. RAW MATERIAL SOURCES The main raw material for production is brine of “bischofite” and own-produced caustic soda. Own “bischofite” field is located in SvetlyYar, that contains high-purity magnesium chloride, is located in close vicinity to the production site. Explored “bischofite” reserves and obtained licenses for its mining should ensure providing with raw materials under the project for the next 100 years , Volgograd, str. 40 let VLKSM, 57, tel.: +7 (8442) , fax: +7 (8442) ,

3 GROUP OF COMPANIES PRODUCTION OF NANOSTRUCTURED MAGNESIUM HYDROXIDE AND SYNTHETIC MAGNESIUM OXIDE ADVANTAGES OF LOCATIONA REA Production site in Volgograd has well-developed infrastructure: water catchment area and water treatment system, refrigerating station providing production with cold of different parameters, modern biological treatment plants, maintenance service, motor-road and rail transport department. CHP-3 (owned by LLC "LUKOIL Volgograd-Energo") is rented by us for a long term and provides production site of Group with electric energy and low\high pressure steam. The second independent source of electricity provision are networks of JSC “Volgogradenergosbyt” , Volgograd, str. 40 let VLKSM, 57, tel.: +7 (8442) , fax: +7 (8442) ,

4 GROUP OF COMPANIES PRODUCTION OF NANOSTRUCTURED MAGNESIUM HYDROXIDE AND SYNTHETIC MAGNESIUM OXIDE PRODUCT CHARACTERISTIC Nanostructured magnesium hydroxide is used:  as a highly efficient non-toxic inorganic flame retardant, filler and smoke suppressing additive for the manufacture of almost all types of plastics and filled (co)polymer compositions on the basis of PVC, PA, PS, PP, PE, PET, etc.,  in paper and cardboard production;  as soft neutralizing agent for water treatment;  as raw materials in pharmaceutical industry. Synthetic magnesium oxide is used in production of mechanical rubber goods; in production of transformer steel; in production of chemical compounds; in food and pharmaceutical industry; in production of additives for lubricating oils , Volgograd, str. 40 let VLKSM, 57, tel.: +7 (8442) , fax: +7 (8442) ,

5 GROUP OF COMPANIES PRODUCTION OF NANOSTRUCTURED MAGNESIUM HYDROXIDE AND SYNTHETIC MAGNESIUM OXIDE MARKET SITUATION: MAGNESIUM HYDROXIDE Market tendency: gradual recede from halogenated flame retardants to halogen-free flame retardants; expansion of magnesium-containing products consumption. Drivers: - EU Directive - RoHS (Restriction of the use of certain hazardous substances in electrical and electronic equipment);RoHS - Federal Law No. 123-FZ of July 22, 2008 “Technical Regulation of fire safety” toughens significantly requirements for fire safety of polymer compounds , Volgograd, str. 40 let VLKSM, 57, tel.: +7 (8442) , fax: +7 (8442) ,

6 GROUP OF COMPANIES PRODUCTION OF NANOSTRUCTURED MAGNESIUM HYDROXIDE AND SYNTHETIC MAGNESIUM OXIDE MARKET DEMAND: MAGNESIUM HYDROXIDE Polymer compound comprising nanostructured magnesium hydroxide by the same loading of flame retardant has a number of advantages in comparison with analogues comprising available on the market submicron magnesium hydroxide, such as: 1) better processability (energy savings during processing); 2) higher electrical resistance (more effective by production of insulating materials); 3) lower flammability and higher environmental safety by combustion. The price segment of the world nanostructured hydroxide and high-purity magnesium oxide market is market of the EU that is primarily caused by logistical considerations and its price attraction (in comparison with other regions of active demand). Mid-term magnesium hydroxide market growth: 9-10% per year , Volgograd, str. 40 let VLKSM, 57, tel.: +7 (8442) , fax: +7 (8442) ,

7 GROUP OF COMPANIES PRODUCTION OF NANOSTRUCTURED MAGNESIUM HYDROXIDE AND SYNTHETIC MAGNESIUM OXIDE MARKET SITUATION: MAGNESIUM OXIDE Global demand for high-purity magnesium oxide is concentrated on the following main areas of application:  food and pharmaceutical industry;  production of additives to lubricating oils;  production of mechanical rubber goods;  hydrotalcite production;  production of transformer steel. According to SRI Consulting report is expected consumption growth at 2.5% per year till 2017 in the major markets of magnesium oxide (CCM), USA and EU , Volgograd, str. 40 let VLKSM, 57, tel.: +7 (8442) , fax: +7 (8442) ,

8 GROUP OF COMPANIES PRODUCTION OF NANOSTRUCTURED MAGNESIUM HYDROXIDE AND SYNTHETIC MAGNESIUM OXIDE MARKET DEMAND: MAGNESIUM OXIDE The main prospects of increasing demand for synthetic magnesium oxide are caused by expansion of consumption in the segments of production of mechanical rubber goods and transformer steel of at least 4% till 2017: - in the production of mechanical rubber goods due to the predicted structural shift in production from simple products to more complex - vulcanized with any of the elements (metal, plastic, etc.,), development of mechanical engineering; -in the production of transformer steel in connection with the trend of modernization and construction of new production facilities with the clustered location, as well as general increase of electricity consumption and the corresponding modernization of the transformer infrastructure , Volgograd, str. 40 let VLKSM, 57, tel.: +7 (8442) , fax: +7 (8442) ,

9 GROUP OF COMPANIES PRODUCTION OF NANOSTRUCTURED MAGNESIUM HYDROXIDE AND SYNTHETIC MAGNESIUM OXIDE POSSIBILITIES An important factor in the implementation of project is minimization of negative situation on the caustic soda market caused by entry into the market of new caustic soda producers (“RusVinyl”, Nizhny Novgorod region – tpy) due to using of own caustic soda (about tpy) as raw materials for creating products with higher added value , Volgograd, str. 40 let VLKSM, 57, tel.: +7 (8442) , fax: +7 (8442) ,

Since 2013 implementation of quality management system has started within the framework of general concept for improving quality of production and focusing on customer in the company. In 2014 company has confirmed the efficiency of internal management control and was certified successfully for compliance to ISO 9001: 2008 in the bodies of one of the largest international certification centers SJS. Nanostructured magnesium hydroxide is registered under REACH (registration № ). CONTACT PERSON: Andrey Tereschenko New Industries Development Department tel.: +7 (8442) NIKOCHEM GROUP OF COMPANIES Moscow, Aptekarsky Lane., 4, Bldg. 2. office fax: +7 (495) tel.: +7 (495) http: Group of Companies PRODUCTION OF NANOSTRUCTURED MAGNESIUM HYDROXIDE AND SYNTHETIC MAGNESIUM OXIDE