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Strategy

The investment projects of MidUral Group persue two primary objectives: To improve competitiveness and to ensure environmental safety of the manufacturing processes. Commonly, these objectives are implemented simultaneously within one project.

Over the last years, MidUral group has implemented a number of projects. In 2009 the Russian Chrome Chemicals 1915 factory has seen commissioning of an additional drum kiln dryer and diversion of the sodium monochromate production to recycling of tailing sludges. The project allowed to increase the production of sodium monochromate and, as a result, of chromium salts by 25% - up to 60 thousands tons per year. Implementation of the kiln provided an opportunity to tackle certain environmental issues: through introduction of a technology of dry stacking of tailings. The project is valued at 130 million Rubles.

In 2012 at the same plant, the chromium oxide production capacity was increased to 14 thousand tons, fully satisfying the operating supplies of the Kluchevskiy Ferroalloys Plant for production of Chrome metal. The same year witnessed the start of production of acetic aldehyde and restart of production of chromium anhydride in the amount of 4 thousand tons. Over 90 million Rubles were spent on these projects.

One of the most significant projects of MidUral Group was the construction and commissioning of Kluchevskiy Concentrating Plant. The slags accumulated as the result of operation of the Kluchevskiy Ferroalloys Plant are of a great economic value: Secondary raw materials are converted into marketable metallurgical products, used in the production of bauxite cements, abrasives and other products. Commissioning of the first stage of Kluchevskiy Concentration Plant with the capacity of 50 thousand tons took place in the beginning of 2012 and the company is already achieving profits through its operation. The project is valued at 265 million Rubles.

In completing its objectives, MidUral Group cooperates with various investment and government institutions. The RusEff program, realised in cooperation with the European Bank for Reconstruction and Development (EBRD) may serve as an example of success of such cooperation. In the course of this program, a number of activities were conducted at key manufacturing companies of the Group to improve the energy efficiency of the manufacturing processes. The budget of the program amounted to 3,2 million US Dollars.

An example of Private-State partnership to tackle environmental protection issues is to be portrayed in the project of processing wastes accumulated by Chromepic Industrial Group. In cooperation with the Ural State University the project foresees development and implementation of a technology for manufacturing of marketable products from industrial wastes. In the beginning of 2013 this project won the award of The Ministry of Education of the Russian Federation to receive a subsidy in the amount of 190 million Rubles. The overall budget for the project is 380 million Rubles until the end of 2015.

The Group puts more and more significance into Merging and Acquisition transactions – capital investments into other companies.

Insofar from 2011 through 2013 the Group has acquired equity stakes in three companies. The Group has completely acquired Dirox SA - an Urugay company producing highly demanded products - stock breeding vitamins. This market displays billion dollar revenues in South and North America where the agricultural markets are traditionally strong. Dirox SA uses the products of Russian Chrome Chemicals 1915 as its raw materials and its products are certified in most countries around the world.

A share in F.W. Winter Inc & Co (Philadelphia, USA) was acquired. A factory with a 40-year history carries a reputation of a reliable supplier in the North-American market. Upon receiving materials from Kluchevskiy Ferro-alloys plant, it further refines them and supplies products to the manufacturers of special steels and alloys supplied to the World's largest aircraft manufacturers. The Company operates out of the United States of America and carries all the necessary local certificates, allowing the group to expand its products to the markets of North America.

The same period witnessed the closure of the transaction for the purchase of a minority share in Somikivu S.A.R.L. in the Democratic Republic of Congo. The Company holds the license for exploitation of a niobium deposit and operates a concentrating plant. The Group is assessing the opportunity to renew the exploitation together with a German Company – GFE, who is the the majority owner of Somikivu S.A.R.L.

An important step for the development of the company will be the construction of a special steel manufacturing plant on the territory of the Kluchevskiy Ferroalloys Plant. The construction of the plant is perceived to be in cooperation with a German company, ALD – the leader in development of technologies for special steel production. A Letter of Intent was signed on the 9th of April between the MidUral Group Managing company, ALD, and its Holding company – AMG, in the course of the visit of the Russian Federation delegation to Hannover.