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ENRC to develop and operate the Zhetigen-Khorgos railway line between Kazakhstan and China

Eurasian Natural Resources Corp (ENRC), the holding company of a leading diversified natural resources group based in Kazakhstan, announces that ENRC Logistics, the group’s transportation division, has won the Kazakhstan State tender for the ‘China Gateway Project’. This will involve the construction of approximately 300 km of railway in southeast Kazakhstan, which ENRC will subsequently operate.

The China Gateway Project is one of the key elements in the Government of Kazakhstan’s program to develop the nation’s transport infrastructure. A single-track railroad will be constructed between Zhetigen in the Republic of Kazakhstan and Khorgos on the Kazakhstan-Chinese border. Four intermediate stations, ten intersections, and a loading complex will also be built as part of the project. According to recent projections from the Japan International Cooperation Agency (JICA), the volume of cargo transported between Kazakhstan and China is expected to increase from around 19 Mt/y in 2008 to some 46 Mt in 2020.

The $900 million capital expenditure project will be the largest ever private investment in Kazakhstan’s transport infrastructure. Construction will begin later this year, and it is envisaged that the railway will commence operations in 2012. ENRC’s concession to operate the railway will run until 2036. The realisation of the project will enable ENRC to improve the delivery of its products to customers in China, diversify the activities of ENRC Logistics and enhance profitability by offering services to third parties.

Dr. Johannes Sittard, CEO of ENRC, said: “We are proud to be involved in this great project. The new railway will facilitate the increase in cargo carried between Kazakhstan and China by up to 30 Mt/y. It will provide ENRC’s operations with an additional secure transportation route and with an increased capacity for products to be sold into the growing Chinese market.”

ENRC is the holding company of a leading diversified natural resources group with integrated mining, processing, energy, logistical, and marketing operations, based in Kazakhstan. ENRC is the world’s largest producer of ferrochrome, based on chrome content, the world’s sixth largest iron ore exporter by volume and world’s fifth largest supplier of traded alumina by volume (CRU and Heinz H. Pariser, 2006 data). The group’s revenue was $4,106 million for the year ended 31 December 2007 (2006: $3,256 million) and EBITDA before exceptional items was $1,906 million (2006: $1,256 million); EBITDA for the year ended 31 December 2007 was $1,724 million (2006: $1,250 million). http://www.enrc.com/.

ENRC Logistics is Kazakhstan’s leading international freight forwarder and one of the country’s major railroad operators with transportation volumes of some 60 Mt/y. ENRC Logistics also provides wagon repair services and railway construction and repair services and operates a railway transfer and reloading terminal on the Kazakhstan-China border.

ENRC has also announced the establishment of the ENRC Komek Corporate Foundation (ENRC Komek). This ia a non-commercial, charitable organisation that  will finance cultural, educational and other social activities in Kazakhstan. Its long-term focus is on the implementation of programs aimed at supporting its own workforce, such as improvements to housing conditions, professional staff training and education, as well as programs aimed at improving the welfare of the general public, such as development of scientific, technical and artistic creativity, protection of public health, supporting children’s homes, schools and higher education institutions, as well as environmental protection.

The Foundation consists of the General Assembly of Founding Members (which includes all ENRC companies), The Board of Trustees, an Executive Body headed by the Foundation’s Director, and an Audit Committee. Maran Omarov has been appointed as the Foundation’s Director by a unanimous decision of the General Assembly of Founding Members.s The Board of Trustees, comprising five members, is headed by Mrs. Sigrid Helga Sittard.

As the first program of the Foundation, ENRC has signed Memorandums of Cooperation with Aktobe, Kostanai, Karaganda and Pavlodar regions of Kazakhstan and has allocated a total of $25.3 million for the year 2008 to finance several social projects in these regions which include provision of housing, healthcare, sports and recreational facilities. In Karaganda region most of the funds will be allocated to the provision of housing. In Aktobe region, they will be spent on charitable causes, which will include donations to Alginsk Orphanage, support to less fortunate families, and the construction of churches and mosques in Chromtau and Aktobe. In Kostanai region the contribution will support several sports initiatives, including the development of ice hockey facilities, as well as the construction of housing for 36 families of young specialists. Pavlodar region will receive funds for the development of sports facilities, provision of housing for 120 families in Ekibastuz and Aksu, and for a kindergarten for 320 kids.

Commenting on the establishment of the Foundation, Felix Vulis, COO of ENRC, said: “We see Corporate Social Responsibility as one of our highest priorities.  ENRC strives to act as a good corporate citizen and support its employees and the communities in which it operates.  Đ•NRC Komek is set to become an effective mechanism for the integrated and efficient implementation of ENRC’s socially responsible programmes.  It will allow us to expand the scope of the group’s leadership role in the area of corporate social responsibility in Kazakhstan and fully contribute to tackling social, cultural, spiritual, and environmental issues in interests of our employees, our communities and Kazakh society as a whole”.