PEG India PEG Resources S.A. PEG South East Asia · PEG India PEG Resources S.A. PEG South East Asia CEMENT - ENVIRONMENT - INFRASTRUCTURE June 2008 - 3rd Edition The Company Newsletter

PEG IndiaPEG Resources S.A.PEG South East Asia

CEMENT - ENVIRONMENT - INFRASTRUCTURE

June 2008 - 3rd EditionThe Company Newsletterwww.pegeng.ch

NCB New Delhi 2007Hama Fires Up Akmenes

Airbus & Boeing Maintainance Docks

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PEG S.A. 4 rue du Lièvre, CP 1411 CH - 1211 Geneva 26 SwitzerlandTel: +41 (0)22 544 31 00 • Fax: +41 (0)22 544 31 05 • www.pegeng.ch • [email protected]

Contents

Best wishes from GenevaPEG S.A. welcomes you to its third company newsletter. First of all we would like to reiterate our best wishes to you and your family for 2008. After the great success of the first two issues of our newsletter, we are pleased to bring you the third installment. Present conditions are favourable in the cement world as the market celebrates phenomenal world growth. We also bring you the second installment in our Jordanian Greenfield Projects Sequel. Yours Sincerely, Marc Lambert - Deputy General Director

Company news 2

New projects & new employees 3

Greenfield Projects - Part II 4

NCB New Delhi 2007 5

PEG India & PEG S.E.A. 6

Akmenes’ multi-package contract 7

The prospects for 2008 and beyond 8

Current projects 10

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PEG invites you to come and visit our premises in the multi cultural city of Geneva, Switzer-land. If you happen to be in the country for either business matters or pleasure we invite you to come and pay a visit to our staff in our well situated offices adjacent to the beautiful river ‘Arve’ and a stone’s throw from Geneva’s renowned lake. Here, at PEG, we realize the value and importance of long and solid relationships and are always happy to develop them further, as well as to establish new ones. It would be our pleasure to show you around the company and introduce you to our 60+ strong team. Remember, “the doors are al-ways open at PEG”. We hope to hear from you soon. Call us today on +41(0)22 544 3100, or fax us on +41(0)22 544 3105, if you are intending to visit Geneva, or already visiting Switzerland.

Company News

During the last couple of years PEG has been maximizing its chances towards the securing of young, motivated and ambitious graduate engineers. Each year PEG has been taking on high university achievers who are in the pe-nultimate year of their studies to embark on a one year work experience and to get an insight into the cement industry. Students are selected from the business as well as the engineering spectrum’s of top universities around the world. This year from the world renowned Aston Uni-versity, in Birmingham, UK, Michael Duncan and Harpal Singh were selected and from the Grenoble’s specialist Engineering University in France Sofiane Ennseiri was chosen. PEG is de-lighted with the success of this scheme, which has enabled the young students to learn in a pro-fessional environment, this being done through the development of their own ideas and contri-bution to the good running of the company.

To register your interest in the scheme please contact [email protected]

Hama Lights its Flame

Come and visit usPEG SA’s Undergraduate Scheme

PEG is pleased to announce that the new Hama cement plant project in Syria is now in operation.

Once everyone had accepted their different functions, roles and responsibilities the start up was progressive and resulted in the achievement of a greater nominal production capacity than originally guaranteed by the contractor and supplier. The amount achieved was 3700tpd compared to the 3300tpd

The successful start up of the project was due to the dedication and expertise of the different project teams involved, past and present. PEG is pleased to thank all those who have shown commitment to the project throughout its execution and commissioning.

RecruitmentAs a growing company PEG is on the constant look out for experienced and motivated experts to join the team. We currently seek the following profiles:

Civil Engineers• with a minimum 5 years of cement experience.Mechanical • Engineers with a minimum 5 years cement or heavy industrial engineering experience.Electrical Engineers with cement or heavy industrial engineering experience.Site Resident Engineers• with at least 10 years of cement or heavy industrial engineering experience.Process Engineers• with at least 5 years cement or mining engineering experience.Civil & Mechanical Draftsmen• with at least 5 years of cement design experience.Geologists• with at least 10 years of cement industry experience.Commisioning Engineers• from all fields with a minimum of 10 years experience

English language & willingness to travel are essential.Fluency in other languages is an advantage but not necessary.

To apply please send your CV and covering letter to [email protected] quoting your name and skill in the subject line.

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PEG has signed 6 new projects in the past 4 months: Gerard Richter•

Technical Management Director

Luc Courtieu• Electro Mechanical Engineer

Boussadia Zidoune• Mechanical Draftsmen

Theodore P. Amoy• Civil Engineer

Jan Vinken• Process Engineer

Jean-Pierre Widmer• Civil Engineer

Sofiane Ennseiri• Industrial Engineering Stagier

Enas El-Shikh• Marketing IT Development

Consultant

Debasis Bera • Project Manager Process Engineer

New Projects & New Employees

PEG’s New Employees

6 New Projects

LUFTHANSA TECHNIK BULGARIA

Turnkey construction of 2 maintenance service docks for the Airbus and Boeing series in Sofia.

LUFTHANSA TECHNIK MALTA

Turnkey construction of 2 maintenance service docks for the Airbus and Boeing series in Malta.

RUSSIAN GROUP

Study for the establishment of a 12’000 tpd cement plant.

CIMENT VICAT FRANCE

Feasibility Studies regarding the loading, transportation and storage of raw materials from the quarry to the plant.

KCC KUWAIT

Preliminary study and evaluation for a 5500tpd clinker Line at the KCC Cement Plant.

RUSSIAN GROUP

Geological site investigation for a greenfield 6’000 TPD plant.

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Greenfield Projects (Part II)

Maintaining the confidentiality and anonymity of the suppliers’ bids is indeed very important. PEG’s total independence is the guarantee that it will be so.

In the previous installment of our popular sequel we detailed the basics of the Modern Cement and Mining Company, part of the JOMO group conglomerate in Jordan. We covered some of the main objectives of the project, including the 3500tpd target output and that the project’s execution will be on a turn-key basis. We then reviewed the first 2 phases of the project: the feasibility studies and the detailed design of the plant. After these preliminary steps we moved onto the 3rd phase of the project: the tendering. The importance of sending the tender documents out as early as possible was highlighted by the increasing world demand for cement, which contributes seriously to the suppliers’overbooking and as a consequence, to increased prices and time delays. When PEG sends out a call for tenders it is imperative that it utilizes all its capabilities to generate as great an interest as possible from the

largest number of suppliers. By doing so for MCM PEG placed them in the best possible position with the ability to develop an optimal project, both technically and financially. In the last newsletter, PEG stopped at the stage when the suppliers were developing their bids and getting ready to send their proposals in time for a construction start up during the first quarter of 2008.

Phase III – Tendering

After receiving the suppliers’ initial offers, PEG analyzed as well as evaluated and compared both the commercial and technical parts of the offers. For the technical part, PEG examined the civil, mechanical, electrical automation and process aspects of each offer, as well as the proposed time schedule. On the other hand, for the commercial part, the suppliers’ level of experience, references and project organization was evaluated. Furthermore, the prices, along with the payment terms and any inclusions such as spare parts, were also analyzed and compared. The analysis, evaluation and comparison of the offers must be executed in relation

to the client’s specified requirements. At this point, PEG’s impartiality, naturally enhanced by its independence, becomes of critical importance.The next step was for the client, the suppliers and PEG to meet for an initial technical discussion, which was based on PEG’s analysis, evaluation and comparison of the suppliers offers. During these meetings PEG stood by his client in order to negotiate the best possible terms and conditions. PEG is always at all times the client’s technical and commercial expert, protecting his best interests and thereby creating an indispensable, efficient and amicable relationship. At the end of the meeting, the suppliers had taken on board the client’s needs which in its turn enabled them to revise their offers in order to meet MCM’s requirements as closely as possible.

To conclude, the suppliers, after amending their offers, submitted them in February 2008, enabling PEG’s final evaluation to take place in order to recommend the best 2 suppliers’offers.

To be continued…

Ideal project management directly linked to a full Greenfield project

A view of the site Picture of the multi-package tender docunments

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NCB New Delhi 2007

In November 2007 PEG attended the 10th NCB International Seminar on Cement and Building Materials in India. The event was a great success and attracted over 600 delegates. The NCB committee ran the event in a well organized manner which helped them develop their mission to “Research and develop innovative technologies, their transfer and implementation in partnerships with the cement and construction industries”.

At present, conditions are very favorable within the global cement industry, this statement being particularly true for India and its booming economy. The Indian economy experienced a GDP growth of 9.0% during 2005-06, then 9.4% during 2006-07. Furthermore, the Indian construction market has been boosted by the government, which is now allowing 100% foreign direct investment in the real estate sector. These factors contribute to the economic forecasts

which predict the Indian cement production to double from 150million tons in 2008 to 300million tons by 2012.

It is with the above in mind that PEG decided to attend the conference to introduce itself, evaluate the market potential and acquire new clients within the Indian cement industry. PEG made a number of fruitful contacts and its Technical Director, Dr Hans Wilhelm Meyer, gave a lecture: “Professional Plant Optimization, Modernization and Energy Conservation” The presentation was prepared by PEG’s usual duo, Dr Hans Wilhelm Meyer and Mr. Marc Lambert and was executed in such a way that resulted in the NCB committee of judges awarding PEG SA the trophy for the best paper within its category. Once again PEG held its usual prize draw, 2 PEG custom made skeleton watches were put up as prizes. And the lucky winners can be identified at the bottom of the page.

Following the extraordinary success of the conference and PEG’s visits to its potential clients, PEG is proud to announce that during the month of March a new affiliated company was born and we celebrated the grand opening in New Delhi of “PEG INDIA”. The company will serve the Indian market and signals the beginning of a new era for PEG and the Indian cement industry. “PEG INDIA” is now offering its services to the equipment manufacturers and general contractors to deliver any detail design within the civil, mechanical and electrical sectors. PEG is also in the process of opening an engineering recruitment company in New Delhi.

Please contact us for more information about these companies.

The NCB Seminar New Delhi, India

Mr Puneet Arora•Mr Susai Michael Sekar •

PEG NCB Prize Draw Winners

PEG’s representatives at the conference

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PEG India & PEG S-E Asia

two new ventures. Moreover, the two companies will of course, perform and operate to PEG’s high standards. PEG S.E.A started its operations at the beginning of January 2008 and obtained its first contract 7 days later. In March, a team of specialists from PEG S.A., including; Deputy General Director, Marc Lambert and Technical and Operations Director, Dr Hans Wilhelm Meyer, traveled to New Delhi to celebrate the grand opening of PEG India. PEG India will be led by Mr Sharad Nema and PEG South East Asia by Mr Frank Winecke. Both of these Gentlemen have proven their capabilities countless times and are the perfect candidates to run these companies. We wish them both a great success in their new ventures!

Frank Gerd Wienecke

Frank began in 1991 with the engineering and trading house C. Illies & Co. in Hamburg, Germany. This led him to appointments in Taipei, Taiwan, as department manager and, as country manager, to Vietnam and the Philippines. Last a Vice President and the COO of Maschinen & Technik, Inc.

PEG branches out into India and South East Asia...opening the door to a whole new world of opportunity and advantage

As the world cement market continues to boom, PEG is pleased to announce the opening of two new offices: PEG India and PEG South East Asia (S.E.A). The wealth of talents and resources in these regions has driven PEG to be one of the first cement consulting engineers choosing to capitalize on this pool of knowledge. With the demand for building materials continuously increasing in the East, PEG has seen fit to open these two new international branches in New Delhi and Manila. PEG decided on these two locations due to their significant strategic advantages in serving, not only the cement market, but also the heavy industry as a whole. Due to PEG’s excellent relationship with some of the leading Indian and Philippine business groups, it has been possible to get extensive support in the establishment of PEG in India and South East Asia. Opening an engineering office in a new country can be extremely challenging due to the differences in values, cultures and practices. Fortunately, PEG already has an extensive experience with both Indian and Philippine engineers through a multicultural workforce in Geneva which will not only be guiding and advising but also assisting with the set-up and future growth of these

(MATEC) in Manila. He joined PEG in early 2008 as the general director of PEG South East Asia, Inc.

Sharad Nema

His bases for success are now 18 years in India, where he has built a profound network of personal contacts and first hand knowledge of the region and its economical policies. He began his career in Cement industry as a Maintenance engineer and subsequently shifted to project execution. Thereafter he was picked by Holtec where as Consulting Manager he executed design engineering, project management and co-ordination functions for many Cement projects in India and abroad. On deputation from Holtec he also offered his services to M/s Holcim in Switzerland and M/s Kobe Steel in Japan. He held the position of Lead engineer at FFE Minerals India Private Limited. This led him to the position of General Manager at M/s KHD Humboldt Wedag India where he was associated in execution of international projects. He has joined PEG India in Mar-2008 as Technical Director.

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Akmenes

Akmenes Cementas will modify their existing wet process plant and install a new dry process 4’500 tpd clinker pro-duction line in Lithuania. The first three of the Contracts have been signed with three equipment suppliers: KHD, Bede-schi and CTP, this was on the 19.03.2008.

PEG S.A., as the Consultant, has pre-pared these contracts and will be the Consultant of Akmenes Cementas throughout the execution of the project. The five contracts still to come for the Technical Project, Detail Design, Elec-trical Equipment Supply, Civil Works and Erection are in preparation and will be signed within the year. The first

clinker production is scheduled for 2010.This project is particularly interesting since it is being executed on a multi package basis. A multi package project is a project where the equipment used to build the cement plant is provided by a number of different main suppliers and also involves a number of other equipment suppliers as well as various civil works and erec-tion contractors, versus a turnkey project which only has one General contractor.

Supplying on a Multi Package basis gives the client the possibility to choose the best possible equipment, civil and erec-tion works as well as all other services, at the best prices and shortest delays. This

AKMENESA multi-package contract

means the client can have a completely custom built plant using the technology and personnel best suited for its require-ment and saving a substantial amount on the total investment cost. This entails that the consultant will have a more important role in the design, integration as well as engineering design meaning that his fees will be slightly higher. However, the ad-ditional consulting costs are substantial-ly lower than what a general contractor would usually charge. There again, PEG is your engineering consultant and part-ner in order to deliver the best and most optimized solution that can be obtained.

Signature of the Akmenes contract

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and 1.8% per year, reached 4.6%, exclud-ing China, in 2006 and should continue to rise, through 2010 at a rate of 8% and more, according to some world experts.This will result in the following:

• Less clinker and cement willbe available on the free market,•More plants will have to be built, in-creased in capacity or refurbished, in order to meet the actual demand. Such projects will take 2 to 4 years to complete which implies an unknown increase in the price of cement and clinker for years to come.• The traditional equipment manu-facturers, under greater demand and pressure, will instigate longer de-livery delays whilst charging high-er prices to the cement industry.

With the above in mind, PEG’s exper-tise might provide an opportunity to support the arrival of new equipment suppliers from developing countries.

To that effect, PEG will:

• Serve, at its best, their new and exist-ing clients, with their usual services,• Organize a network of independ-ent cement producers around the world, of those who do not belong to the larger international groups, in order to propose our expertise.• Rehabilitate and increase their ex-isting production facilities, whilst

PEG S.A. has developed PEG RESOURCES S.A., to become a haven of all the new services we are offering to our clients.

Globalization has brought democracy to the markets and has improved the avail-ability of resources to a larger number of people, thereby creating more wealth for all. This results in the poor being less poor and having enough to eat, their at-tention turned to the securing of a shelter and stability thereby consuming cement to build the family home. This trend, which we consider extremely positive for the future of mankind, is changing drastically our cement industry, in as much as the world consumption of ce-ment, which was increasing between 1.3

reducing their energy consump-tion and running costs as a whole.• Modify certain equipments/proc-esses in order to produce a larger tonnage of cement using additives such as ashes, slag, pozzolana etc…•Sellorbuyfromitsclientssuchadditives,.• Sell or buy from its clients such ce-ments, thereby playing a banker’s role versus a trader’s role, for their clients.• Investigate the different places aroundthe world having such cement additives as well as the ability to grind clinker.

At this stage we must remind our clients that the world, for the years gone by, has gener-ally been using non composite cements be-cause the commodity was widely available. Today, by adding 20% and more additives to the cement, it is possible to increase ac-cordingly the available quantities and there-by reduce the price per tonne of cement.

Furthermore, PEG will help all new equip-ment manufacturers to expand onto the international market by setting up joint ventures with them to make the complete package more attractive to the clients, in order to match the offers of the more es-tablished suppliers. There is already a case in China where PEG is working for a Ka-zakh client as well as a client from Benin in the search for the best equipment and contractor. At PEG, we have realized that the best known manufacturers and con-tractors are not always in the best posi-

PEG Resources S.A.

The prospects for 2008 and beyond...

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tion to meet the demand during this boom period. All in all, it is essential to get involved with all those who can re-spond to the shortage of equipment lurk-ing ahead, including manufacturers in India, Brazil as well as others to come.

This significant new demand for ce-ment is partly being met by the large international cement producers, by the independent local producers and also by “Newcomers”. The “Newcomers” are attracted by the astonishing return on investment which permits to amortize a plant in 3 to 4 years after construction. The “Newcomers” tend moreover, to have a complete need for the whole variety of services we normally offer, which range from the raw materials’ research right through to the actual management of the plant, with an acute incentive for short delays and a number of new services.

PEG Resources has therefore developed a complete new range of services such as fi-nancial services, which include insurance advice, a service which is too often for-gotten. The financial services start with the presentation of complementary fund-ing options which might be requested by any investor, whether in equity capital or loans. Let us take, for example, the Inter-national Finance Corporation (IFC) and the World Bank. In most cases these in-stitutions, The IFC – World Bank Group insists on a Capital-Loan ratio of 40% and

60%. IFC may participate in the equity, as long as it is sure about when and how it will recover its investment. It is important to understand that the IFC covers private entrepreneurs whereas the World Bank acts with Governments. D.E.G – KFW, a German government agency, acts more or less in the same way, but essentially with private entities whilst preferably associat-ing local and foreign shareholders so as to be certain to monitor a perennial activity through the transfer of technologies and managerial expertise. D.E.G – KFW and PEG are currently working on a large ce-ment project in Africa. The distinct ad-vantage of such a type of financing is the acceptance, by both of the above banks, of the political risk involved, which is generally not accepted with commercial banks. At PEG, we are sure that a number of projects in developing countries will be successfully executed in this man-ner. Each of which will obtain made to measure financing. PEG’s ability in this field is backed up by the expertise of our three Swiss banks: UBS, Credit Suisse and Banque Cantonale de Genève (BCG).

Services, including the operation of a plant, will consist of the following:

•Negotiationswithbanksandsuppliers,to bring about the lowest financial costs. •Aspartofitsmanagementcontract,PEGwill financially manage the day to day cash flow of each plant in order to continuously increase, the client’s return on investment, • Finally, PEG will propose to its cli-ents a sophisticated and secure way of financially managing their divi-dends and at large, their wealth,

To conclude this chapter, let us go back to the client’s Insurance policies which are to be contracted at the various stages of the construction as well as throughout the operating life of the plant. This is too often not taken seriously enough, where-as it should be worked up expertly from the start of the project. PEG will be there to fill these gaps. Legal services, as well as

Finance and Insurances, are also deter-minant factors to strengthen any project right up from the word go, until the end of its life. Not only with regards to the suppliers’ contracts, but also including the insurance companies in the day to day running of the plant with its person-nel, machinery and cash flow. Concluding with the resolution of all disputes arising out of, or in connection to, any contracts, under the Rules of Arbitration conducted by the International Chamber of Com-merce. In accordance with the said rules the ADR (Amicable Dispute Resolution) scheme can be chosen, resulting in limi-tation of the time, expense and hassle. “There again, let PEG be your partner”.

PEG’s understanding is that, in order for the client to reduce his risks as low as possible, it is essential to regroup all services required to successfully ex-ecute any project with one “state of the art expert”. This is achieved with PEG’s panel of new services harboured and monitored by PEG RESOURCES S.A.Last but not least, PEG RESOURCES goes one step further to offer a solu-tion that can possibly integrate them all, called the “Coordination of Trades”. This implies that a client can ask PEG to take care of any and all research in any field of activity. PEG RESOURCES, through its experienced and highly skilled team of experts, will assure the client to find the best engineering, equipment sup-pliers as well as the best construction and erection contractors to monitor and supervise its project, being clearly un-derstood that, at all times, and until the commissioning of the said project, PEG will act as the “Coordinator of all trades”.

“For your dream to become reality let the next step be yours”

PEG Resources S.A.

Local housing development in Gambia

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Current Projects (26)

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Current Projects (26)

PEG India PEG Resources S.A. PEG South East Asia · PEG India PEG Resources S.A. PEG South East Asia CEMENT - ENVIRONMENT - INFRASTRUCTURE June 2008 - 3rd Edition The Company Newsletter

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