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Integrated development of the Kaytash-ugat site within Kaytash field with establishment of an industrial cluster for manufacture of special alloys

Investment proposal
  

Project Name

Integrated development of the Kaytash-ugat site within Kaytash field with establishment of an industrial cluster for manufacture of special alloys.

Project objective

Development of tungsten ore underground mining at the Kaytash-Ugat site of the “Kaytash” field to provide tungsten raw materials with the production of concentrates during the first stage, and creation of a cluster to manufacture special steels during the second stage.

Sphere/industry

Mining and processing of minerals.

Project Schedule

Up to 01.01.2020 Geological and survey works.

01.01.20-01.06.20 Development of a feasibility study of the project, obtaining a license for the right to use the site

01.06.20-01.01.22 Recovery of the mines, including underground utilities, construction of facilities and technological infrastructure, supply of mining machinery, 

01.01.22-01.06.22 Commissioning and start-up of the process plant to output products 

01.01.22-01.06.23 Construction of a production plant to manufacture special  steels (second stage)

Project implementation location

Gallyaaral district of Jizzakh region, 38 km away from Gallyaaral and 75 km away from the regional center Jizzakh city, connected by an asphalt road. At a distance of 19 km there is an inoperative rail hardstanding area.  Now the nearest railroad output terminal is Gallyaaral station.

Project Stakeholders Information

Initiator

National Agency for Project Management under the President of the Republic of Uzbekistan.

Associate contractors

1.   1. Ministry of Economy and Industry

2.   2. State Committee for Geology and Mineral Resources.

Lender:

Not available

Total project cost

USD 20.0 Million

 

Estimated sources of financing

Proprietary funds and credits

The financing structure is to be determined by the investor. 

Investments volume

USD 20.0 Million

Capital expenditures
(mln.  US dollars)

Not available (subject to be defined as per Feasibility study)

Projected payback period

4.4 years (taking into account granting tax exemptions during the project payback period) 

Money flow

Specified in Attachment 1

Characteristics of the products to be produced

During the 1st stage

1.   WO3 concentrate

2.   Copper concentrate

3.   incidental useful components in the form of a concentrate

During the 2d stage 

4.   paratungstate/tungsten metal, ferrotungsten and special steels based on them (hard steel, heat-resistant/wear-resistant, high-speed grades, raw materials for arc welding tungsten electrodes).

Project capacity

 

In case of extraction of 50 tons/hour or 300 tons/year with the output of:

·        WO3 concentrate 700 t/year

·        copper concentrate 900 t/year

·        associated components (to be determined after in-process tests) will be sent for processing at Marzhanbulak GPP

·        Special steel 20 000 t/year

Contribution of the project initiator

It is suggested the initiator consider the possibility of assisting in the following: 

1.  Obtaining all required permits from the state authorities.

2.  Providing existing buildings and structures at zero cost. 

3.  Ensuring technical conditions to provide the industrial site with electricity, fuel and water. 

4.  Arranging construction of necessary external utilities.

5.  Granting tax exemptions and preferences as well as exempting from customs duties and fees. 

6.  Arranging the processing of minor materials by involving organizations of the Republic of Uzbekistan.

7.  Providing all the necessary original data. 

Granting permission for construction and installation works with the concurrent design.

 

Information about the project contractor
 

Full company name

National Agency for Project Management under the President of the Republic of Uzbekistan.

Address, contacts

Legal address:

Republic of Uzbekistan, Tashkent, Nukus street, 22.

Tel: +998 71 231 79 27

E-mail: info@napm.uz

www.napm.uz

Contacts of the contractor

Tohtaev Jasur Talatovich  

chief specialist

Tel: +998 71 231 79 28 (#1917)

E-mail: j.tohtaev@napm.uz

General Information
  

Number of jobs to be created

New jobs being created -113, of which:

– Administration – 13;

– Workers – 100.

Environmental impact of the project

Environmental requirements are established by the project of environmental impact of the State Nature Protection Committee of the Republic of Uzbekistan.

Information about the site for the construction of the enterprise

The project intends the involvement of Canadian, Russian and Chinese partners for the implementation of designing, shafts recovery and the resumption of underground mining and beneficiation operations.

Existing infrastructure

The area of the field has its own production infrastructure, a processing plant, water and electricity. The development area will require the construction of energy infrastructure at the expense of the contractor; the area is located at a distance of 12 km from its own substation.

Required infrastructure

It is necessary to disconnect the local population from the power grid and substation of the enterprise by installing a new substation with the capacity of 2500 kVA for the needs of the population.

Upcoming construction and installation works

It is necessary to carry out works on reconstruction of engineering networks and communications, and also construction of buildings and structures on the basis of the developed design documentation.

Design and estimate documentation

The design and estimate documentation shall be developed on the basis of existing norms and rules of the Republic of Uzbekistan taking into account Decree of the President of the Republic of Uzbekistan No. УП-5577 dated 14.11.2018.

 

Market analysis, productions definition (works, services),marketing researches
  

Estimated sales markets and their shares:

Domestic market

WO3 – 65 % of the production volume

Copper concentrate – 15% of the production volume

Product cost (US  dollars)

The price of the products obtained is the same for both the export and the domestic market; it is assumed that the entire volume of produced concentrates will be sold. In this case the estimated cost is:

–     WO3 equ. 26 000 $ (by useful component)

–     Copper concentrate equ. 3 500$ (by useful component)

Estimated cost of raw materials


(USD / ton)

–     Ore extraction equ. 10 $

 

Provision with raw materials

For category C1 – 2,780 mt of ore, for category C2 -300 kt, with an average grade being 0.3% of WO3 and 0.49%  of Copper

WO3 – C1 – 9 579 т, С2 – 925 т

Copper– С1 – 13 647 т, С2 – 1786 т

Main competitors

Tungsten cluster IFG CAPITAL

Key competitive advantages

The planned enterprise will be the only one in the territory of Uzbekistan with an annual output of up to 20.0 thousand tons of special alloys per year with a full cycle from ore to product

Sales structure by target consumer groups

Finished products will be sold through the Uzbek Commodity Exchange and for export under import contracts.

Pricing strategy

Prices are taken based on average prices in the domestic and foreign markets.

 

Production technology and parameters of main equipment
  

Depends on the investor’s preferences

Type of equipment

 

Country of origin

 

Performance

 

Cost

 

Energy consumption

 

Installed capacity

 

Overall size of equipment

 

Weight of main equipment

 

Node of main equipment (lines)

 

Number of working hours per year

 

Duty cycle

 

Periodicity of the planned –warning repair (design and preparation works)

 

Number of people involved in the production process and their functions

 

Cash flow, including tax benefits (in thousands of USD)
  

No:

Description

 

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Total:

1.

Sales proceeds

 

5 384.8

8 981.5

13 429.7

14 371.2

17 022.8

17 059.9

17 059.9

93 309.7

2.

Total cost, including:

 

7 130.8

9 673.5

12 760.9

13 380.5

15,203.4

15,186.5

14,460.3

87,796.0

2.1

Depreciation

 

2,150.0

2,150.0

2,150.0

2,150.0

2,150.0

2,150.0

1,450.0

14,350.0

 

Financial result before tax

 

-1,746.0

-692.1

668.7

990.6

1,819.4

1,873.3

2,599.6

5,513.7

 

Income tax (profit)

     

80.2

118.9

218.3

224.8

312.0

954.2

 

Net profit (loss)

 

-1,746.0

-692.1

588.5

871.8

1,601.1

1,648.5

2,287.7

4,559.4

 

Depreciation

 

2,150.0

2,150.0

2,150.0

2,150.0

2,150.0

2,150.0

1,450.0

14,350.0

 

Net profit (loss) taking into account depreciation

 

404.0

1,457.9

2,738.5

3,021.8

3,751.1

3,798.5

3,737.7

18,909.4

3.

Capital investment

15,000.0

             

15,000.0

4.

Cash flow

-15,000.0

404.0

1,457.9

2,738.5

3,021.8

3,751.1

3,798.5

3,737.7

3,909.4

5.

Tax benefits, including:

 

1,847.1

2,932.6

4,370.5

4,662.8

     

13,813.0

5.1

Income tax

     

80.2

118.9

     

199.1

5.2

VAT

 

931.2

1,634.2

2,508.7

2,694.0

     

7,768.2

5.3

Tax on subsoil use

 

635.5

1,060.9

1,587.2

1,698.5

     

4,982.1

5.4

Property tax

 

278.5

235.5

192.5

149.5

     

856.0

5.5

Land tax

 

1.9.

1.9.

1.9.

1.9.

     

7.5

6.

Cash flow taking into account tax benefits

-15,000.0

2,251.1

4,390.5

7,109.0

7,684.6

3,751.1

3,798.5

3,737.7

17,722.4

7.

Cumulative cash flow taking into account tax benefits

-15,000.0

-12,748.9

-8,358.5

-1,249.5

6,435.1

10,186.2

13,984.7

17,722.4

 

 

NPV (net present value)

-15,000.0

-12,243.9

-8,451.3

-2/602/7/

3,418.4

6,217.5

8,917.1

11,446.9

 

 

Payback period of the project (taking into account the investment period and tax benefits)

1.0

1.0

1.0

1.0

0.4

     

4.4

 

IRR (Internal rate of return)

 

-85%

-38%

-4%

13%

18%

21%

24%

 

STEP-BY-STEP, DESCRIPTION OF PRODUCTION TECHNOLOGY

(Show schematically)