2016-1-20

NORINCO GROUP

CHINA NORTH INDUSTRY GROUP COOPERATION

NORINCO

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NORINCO’S PETROCHEMICAL BUSINESS

HUAJIN GROUP

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2016-1-20

NORINCO PETRO CHEM BUSINESS – HUAJIN GROUP

DIVERSIFICATION

CAPACITY ADDITION

MARKET SHARE

HUAJIN GROUP ( modifications)

• Huajin Group, with an employee strength of over 12000, is Headquartered in Panjin City, Liaoning

• Owns 4 manufacturing bases1. Liaoning Panjin2. Liaoning Hulu Island3. Xinjiang Kufeng, Inner Mongolia Xilin'gele4. Panjin North Asphalt Corp.

HUAJIN GROUP OPERATIONAL CENTERS

UPSTREAM EXTRACTION

CRUDE OIL TRADE

PROCESSING AND PETRO

CHEM

HUAJIN GROUP

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DIVERSIFICATION

CAPACITY ADDITION

MARKET SHARE

MAIN BUSINESS SEGMENTS

Petro-chemical

Logistics

Fertilizer

Asphalt

Huajin has the capacity of oil refining for 6 million tons/year, production for ethylene production is 0.49 million tons/year, PE 0.31 million tons/year, PP 0.3 million tons/year, ABS 0.2 million tons/year, ST 0.23 million tons/year, BD 0.12 million tons/year, arene 0.25 million tons/year.

Huajin owns 3 major fertilizer corporations which are Liaohe Fertilizaer, Jintian Chemical, Aksu Huajin Fertilizer, the annual producition of urea is up to 1.8 million tons; the inner mongolia Huajin Fertilizer which uses coal as raw material is under construction, the annual production of urea is up to 0.8 million tons.

Huajin crude oil distillation capacity is 2.30 million tons/year, owns heavy traffic paving asphalt plants that produce 1 million tons/year, naphthenic base hydrogenation plants that produces 0.2 million tons/year, paraffin hydrogenation plants that produce 0.4 million tons/year, the annual asphalt output is 1 million tons, base oil for lubricant output is 0.6 million tons.

Huajin has public auxiliary companies concerning thermoelectricity, logistic transportation, engineering maintenance, plastic products, engineering design etc and logistic auxiliary units regarding hotels, real estate, executive service corporation etc.

HUAJIN GROUP OPERATIONAL CENTERS

Liaohe Plant

Aksu Huajin Plant

Jintian plant

• 0.32 million t/year synthetic ammonia

• 0.48 million t/year urea

• 0.47 billion m3 Natural gas from Liaohe oil fields

• 0.45 million t/year synthetic ammonia

• 0.8 million t/year urea

• 0.3 million t/year synthetic ammonia

• 0.52 million t/year urea

• 0.47 billion m3 Natural gas from Liaohe oil fields

• 0.47 billion m3 Natural gas from Liaohe oil fields

FERTILIZER SEGMENT

PLANT THROUGH-PUT RAW MATERIAL

Asphalt

SBS additives

Base oil production

• 1 million t/year Heavy paving Asphalt

• Brazilian Cycloropropy Crude

• 0.2 million t/year naphthenic base distillation

• 0.4 million t/year hydrogenation tail oil isomeric dewaxing units API Ⅱ/Ⅲ lubricant and base oils

• In process quality line oil

• 0.47 billion m3 Natural gas from Liaohe oil fields

HEAVY OIL SEGMENTS

PLANT THROUGH-PUT RAW MATERIAL CLIENTS

• Domestic• Global

• Domestic• Global

• Domestic• Global

Power• Power Generation – 150 MW• 0.48 million t/year urea

• Internally Generated Steam

AUXILLIARY PRODUCTION

PLANT THROUGH-PUT RAW MATERIAL CLIENTS

• Internal• Domestic

CLIENTS

• Domestic• Global

• Domestic • Global

• Domestic• Global

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Liaoning Panjin Equipment Area

Oil Refining Plant6 Million tons per annum

ETH Plant 0.49 Million tons per annum

PROJECT OVERVIEWFine Chemical and Raw Material

Complex

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PROJECT OVERVIEW

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• The fine chemical and Raw material complex covers 6 km2

• Overall investment of US$ 1.4 billion in the following units1. Raw Material Complex (oil refining)

15 million tons /year oil refining integrated unit 1.4 million tons /year arene integrated unit which includes 19 units:Atmospheric and vacuum distillation unit, wax oil hydrogenation unit, residual oil

hydrogenation unit, catalystic cracking unit, diesel hydrogenation unit, delayed coking unit, CCR/arene integrated unit, gasoline hydrogenation unit, hydrogen production unit, MTBE production unit, sulfur reclaimer, light hydrocarbon reclaimer et al

2. Chemical industrial plant

Petro-chemical and petro-chemical intensive processing units 1 million tons /year ETH integrated units that includes 13 units:ETH integrated units, ETO/EG production unit, cracking gasoline hydrogenation unit,

ABS resin, Propylene oxide/styrene production unit, acrylic acid and acrylate production unit etc.

NDRC*- National Development and Reform Commission Statutory approvals* - Liaoning Development and Reform Commission

PROJECT APPROVAL MILESTONES

Layout of Fine Chemical Park – Construction Site

PROJECT FINANCE

Capital fund via raising equity -20%

Domestic and overseasLoan debentures

Shareholder equityAvailable Capital fund -20%

Others

Domestic and overseasCompany bonds

The government specialfunds or subsidies

Project Funding（100%）

60% FUNDING VIA BONDS AND DEBENTURES

40% FUNDING VIA SHARE HOLDER CAPITAL

PROJECT FINANCE

Capital fund via raising equity -20%

Domestic and overseasLoan debentures

Shareholder equityAvailable Capital fund -20%

Others

Domestic and overseasCompany bonds

The government specialfunds or subsidies

Project Funding（US$ 11.4 Billion）

US$ 6.8 Billion FUNDING VIA BONDS AND DEBENTURES

US$ 4.5 Billion FUNDING VIA SHARE HOLDER CAPITAL

PROJECT PROJECTIONS

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 OPERATING LINE ITEMS ASSESSMENTS1 Income from Sales ( YOY) US$ 16.9 Billion

Estimated average value for

production period

2 Cost of goods sold ( YOY) US$ 13.2 Billion

3 Value added tax ( YOY) US$ 0.8 Billion

4Business tax and surcharge ( YOY)

US$ 1.2 Billion

5 Total profit ( YOY) US$ 1.8 Billion

6 Income tax ( YOY) US$ 0.4 Billion

7 After tax profit ( YOY) US$ 1.3 Billion

Joint Venture and Cooperation

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PROJECT SYNERGIES

EXPERIENCE CURVE ADVANTAGE

Huajin group has been a major producer of industrial chemicals since 1970 well versed in technology, production methodology and product logistics

ECONOMIES OF SCALEThe impressive scale of production has

enabled Huajin group to be a cost leader in the industry

ECONOMIES OF SCOPEProduction diversity of related Refined

product portfolio

VALUE CHAIN

EFFICIENCY

TECHNOLOGY

SYNERGIES

BUSINESS ECOSYST

EM

PRODUCT SYNERGIE

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TECHNOLOGY SYNERGIESWhere applicable, Huajin group has developed strategic

partnerships with global and local technology providers for state of the art process technology

VALUE CHAIN EFFICIENCYThe new production facility is located in the heart of

the business ecosystem with adequate access to raw material, power and a well developed logistics network

INVESTMENT INTENSITYHuajin group has been consistently

investing in throughput and energy consumption optimization

MARKET SHAREWith impressive investments in

capacity addition and technology upgradation, having secured upstream raw material supply, Huajin group has not only sustained but is strategically positioned to capture the growing domestic market share in china for fine chemicals

PROJECT STRENGTHS