September 25, 2007Russian Coal Conference 2007 – Istanbul, Turkey CAN CHINESE COAL BE COMPETITIVE AGAINST RUSSIAN COAL IN TURKEY? Robert Yuksel YILDIRIM.

September 25, 2007Russian Coal Conference 2007 – Istanbul, Turkey

CAN CHINESE COAL BE COMPETITIVE CAN CHINESE COAL BE COMPETITIVE AGAINST RUSSIAN COAL IN TURKEY?AGAINST RUSSIAN COAL IN TURKEY?

Robert Yuksel YILDIRIM

President & CEO

YILDIRIM GROUP OF COMPANIES

McCloskey

Russian Coal Conference 2007


DisclaimerThis document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of YILDIRIM Holding Inc. or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the YILDIRIM Holding Inc. or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the document.

This document contains “forward-looking statements”, which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words “targets”, “believes”, “expects”, “aims”, “intends”, “will”, “may”, “anticipates”, “would”, “could” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond YILDIRIM Holding Inc.‘s control that could cause the actual results, performance or achievements of YILDIRIM Holding Inc. to be materially different from future results, performance or achievements expressed or implied by such forward-looking, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Turkish economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions.

Such forward-looking statements are based on numerous assumptions regarding YILDIRIM Holding Inc.‘s present and future business strategies and the environment in which YILDIRIM Holding Inc. will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and YILDIRIM Holding Inc. expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in YILDIRIM Holding Inc.’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

Neither YILDIRIM Holding Inc. , nor any of its agents, employees or advisors intend or have any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document.

The information contained in this document is provided as at the date of this document and is subject to change without notice.


1. Structure of Turkish Coal Market

2. Advantages / Disadvantages of Russian Coal (RC)

3. Advantages / Disadvantages of Chinese Coal (CC)

4. Outlook of RC & CC in Turkey

5. Forecast for Turkish Coal Market

6. Conclusion

Content


1.1. Types of Imported Coals in Turkey

Steam Coal

Coking Coal

PCI Coal

Sized Coal

Anthracite




1.2. Sectoral Distribution of Coal in Turkey

Steel Industries

Power Plants

Cement Industries

House Heating

Others (Soda, Sugar, Textile, Paper, etc.)



1.3. Consumption of Imported Coal in Turkey

(in ’000 mt)

Sectors 2004 2005 2006 2007 (Est.)

2008 (Est.)

Steel Ind. 4,750 4,750 4,850 5,050 5,500 Power Plants 3,750 4,000 4,100 4,200 4,200 Cement Ind. 1,000 1,000 1,300 1,500 1,700 House Heat. 8,500 9,000 9,500 10,000 9,500

Others 100 100 150 200 250 TOTAL 18,100 18,850 19,900 20,950 21,150



1.4. Consumption of Imported Coal in Turkey

(in ’000 mt)

Coal Types 2004 2005 2006 2007 (Est.)

2008 (Est.)

Steam Coal 4,750 5,000 5,400 5,800 6,050 Coking Coal 4,000 4,000 3,900 3,950 4,300

PCI Coal 400 400 500 550 600 Sized Coal 8,500 9,000 9,500 10,000 9,500 Anthracite 450 450 600 650 700

TOTAL 18,100 18,850 19,900 20,950 21,150


1.5. Coal Exporters to Turkey

Coking Coal : Australia, USA, Canada, Poland,

Russia, Ukraine

Steam Coal : Russia, South Africa, Colombia

PCI Coal : Russia, Australia, Colombia, China

Sized Coal : Russia, China, South Africa

Anthracite : Russia, Ukraine, Vietnam



1.6. Quality Comparison Table for Thermal Sized Coal

Coal Specs Russian Chinese

Total Moisture (a.r.) 10 % max. 13% max.

Ash (d.b.) 3 - 14 % 7 - 13 %

Sulphur (d.b.) 0.5 % max. 0.5 % max.

Volatile Matters (d.b.)

11 - 29 % 27 - 32 %

CV N.A.R. (Kcal/kg)

6000 - 7400 5800 - 6900

Size 25 - 300 mm 25 - 300 mm



2. Advantages / Disadvantages of RC

2.1. Advantages

RUSSIA is always a WINNER in Turkey!... Because of:

Their best quality and specifications of coal

Geographical location

Lowest freight rates

Faster deliveries

Affordable amount of deliveries



2.2. Disadvantages

Dependance on Ukrainian R/W & Ports

Old infrastructure of railway network

Lack of R/W wagons for export

Bad weather conditions and ice declarations in ports during winter

Impossible to make fixed price contract more than 3 months



2.2. Disadvantages

The highest FOB prices

Requirement of 100% prepayment

Long term coal contracts not available

Coal mines located very far away from ports

Unable to load more than 30,000 dwt vessels to Turkey for sized coal


3. Advantages / Disadvantages of CC

3.1. Advantages

Cheaper FOB prices than RC’s

Very effective and efficient ports for coal export

Ability to load Handymax & Panamax vessels for Turkish Market

Ability of screening coal at loadports for Turkish sized coal buyers



3.1. Advantages

Having long term coal contracts available

Accepting L/C payments

Coal mines are located near to loadports & lower transportation costs

Effective R/W system



3.2. Disadvantages

NDRC (National Development and Reform

Committee) has changed their coal policy for the 11th 5-year plan (2006-2010)

Export license & Export quota system

Despite contractual obligations some Chinese suppliers may not perform contract during high season



3.2. Disadvantages

Quality assurance system still need further development

The sized coal quality is lower than RC

Geographical location

Higher freight rates to Turkey


2008 & BEYOND?



Russia has been and always will be the

“Dominant Power” in the Turkish Coal Market.

When Prices become “much higher” for

Russian Coal

Turkish Importers search alternative suppliers

from China, South Africa & elsewhere




4.1. Let’s understand China better

2004 2005 2006

2007 (Est.)

2008 (Est.)

GDP Growth Speed 9.5% 9.8% 10.7% 11.2% 10.6%

Source: National Bureau of Statistics (NBS) of PR China Est.: The Goldman Sachs (Asia)’s forecast published in July 2007

China’s GDP is growing fast based on

tremendous industrialazition triggering the

demand of raw materials




Statistics for all commodities in China are not

only unreliable but also enigmatic

No one outside of China will know the real

truth about Chinese economy and industry

for a long time


You must understand China’s coal policy to analyze the factors why the price of Chinese coal, especially sized coal would keep increasing in the future.




China made three important steps to secure its future domestic coal demand:

1. Beijing scrapped an 8% tax rebate for sized & thermal coal exports in November 2006. This recently implemented legislation allowed China to become a NET coal importing country in 2007.




2. China has not increased its coal export license quantity for last 6 years and it is expected that Beijing will continue to reduce the export quotas step by step in the next few years to tempt the import of coal.

3. China removed import tax of 1% related with coal products on June 1, 2007 to encourage to boost its future coal import.




Beijing may impose an export tax on coal products to curb the export. Beijing made similar moves in 2007 for Coke and various Ferroalloys products. China adjusted the export tax for coke products twice (first 5%, then 15%) during 2007. The aim of this decision was to secure the supplies necessary for the rapidly growing demand of the local steel industry.




2005 2006

2007 (Est.)

2008 (Est.)

Export 70,710 63,300 53,000 44,000 Import 20,620 38,250 68,000 89,000 Difference 50,090 25,050 -15,000 -45,000

Source: General Administration of Customs of PR China

China became a “NET” coal importer in 2007



China’s Export & Import of Coal Business (in ’000 mt)


Jan Feb Mar Apr May Jun Jul Total Export 3,290 4,420 3,710 4,460 3,430 3,820 5,730 28,860 Import 4,080 4,550 5,670 4,920 3,740 4,100 3,900 30,960 Difference - 790 -130 -1,960 -460 -310 -280 +1,830 -2,100

Source: General Administration of Customs of PR China



China’s Export & Import of Coal Business in 2007 (in ’000 mt)



4.2. Let’s understand Russia better

Russia’s GDP is growing fast based on export of

natural resources

2004 2005 2006

2007 (Est.)

2008 (Est.)

GDP Growth Speed 7.2% 6.4% 6.9% 7.0% 8.0%

Source: Russian Ministry of Economic Development and Trade Est.: The Goldman Sachs’s forecast published in July 2007




Russia is ALWAYS and will REMAIN a

major coal exporting country

2004 2005 2006

2007 (Est.)

2008 (Est.)

Coal Export 55,000 64,000 72,000 77,000 82,000

(in ’000 mt)




Russian coal resources are majorly controlled

by six private groups

It is very difficult to make foreign investment in

Russian coal resources

Russia’s coal exports help its economy to stay in

stable growth

Russia has no plans to reduce coal production


4.3. Similarities of RC & CC Industries

On one side, Chinese Central Government

shuts down all small / unhealthy / unsafe

coal mines; on the other side, local Chinese

Governments silently allow these closed

coal mines to continue their coal production.



On one side, small Russian coal producers

are trying to produce & export coal; on the

other side, “Russian Coal Barons” are trying

to blockade these small exporters by stopping

them by preventing to access to R/W network

and ports.


4.3. Similarities of RC & CC Industries


The fast growing steel & cement industries

Expected boom in coal-fired power plants

Constant growth of Turkish Economy for 22 quarters in-a-row and expected to continue

4.4. Why CFR Coal Prices will continue to

increase in Turkey?



Boom in construction of new houses

Turkey doesn’t have good enough coal reserves

left to satisfy the growing of coal consumption

China’s domestic coal demand will trigger the

prices in the World and Turkey


4.4. Why CFR Coal Prices will continue to

increase in Turkey?


5.1. Steel Industry 5.1.1 Turkey’s Steel production (in ’000 mt)

2004 2005 2006 2007 (Est.)

2008 (Est.)

Steel Prod. 18,900 21,000 23,300 25,300 30,000

Source: Worldsteel.org

5.1.2 Forecast for Consumption of: Coking coal: PCI coal : Anthracite :



5.2. Cement Industry 5.2.1 Turkey’s Cement production (in ’000 mt)

5.2.2 Forecast for Consumption of: Steam coal:

2004 2005 2006 2007 (Est.)

2008 (Est.)

Cement Prod. 38,800 42,800 47,000 50,800 54,900

Source: Turkish Cement Produders’ Association




Turkey’s demand in electricity is growing

tremendously

The Turkish Electricity Market Regulatory Authority (EPDK) authorized licenses in total of 2190 MW to several private groups to produce electricity by imported coal-fired power plants by end of 2009

5.3. Coal Fired Power Plant Industry



In addition to this power generating capacity, by end of 2008 we expect that various private coal-fired power plant projects (approx. 5000 MW total) will apply for a licenses at EPDK by using the imported steam coal




YILDIRIM Group has signed a JV for

establishing one coal-fired power plant with

capacity of 300 MW to be built within next 3

years and has plans to establish two more

coal-fired power plants with a total capacity of

2000 MW to be built within next 8 years.

Imported steam coal will be used at all these plants.




Hence, the consumption of imported

steam coal will increase continously due

to upcoming coal-fired power plants.



5.4. Forecast of Imported Sized Coal

FORECAST RUSSIA(in ’000 mt)

CHINA(in ’000 mt)

2007 7,000 2,000

2008 7,500 2,000



5.4.1. Forecast of CFR Turkey Price for

Imported Sized Coal

Coal Types Jan 2008 (USD/mt)

Jan 2009 (USD/mt)

Russian Washed Sized Coal 180 - 200 210 - 230 Chinese Datong Sized Coal 150 - 160 170 - 190




5.4.2. Forecast of Sellers’/Buyers’

Perspectives for CFR Prices

FORECASTRUSSIA CHINA

2007 2008 2007 2008

EXPORTERS

IMPORTERS


6. CONCLUSION

Steam coal will enjoy a strong and growing market in Turkey.

Huge investments in coal-fired power plants and fast growing domestic cement sector will trigger additional demand for Russian steam coal in the forthcoming years.

The imported steam coal sector will grow every year minimum 20%; however, expansion of sized coal business will slow down.


6. CONCLUSION

Turkish Coal Market is always bullish and the Bulls will rule this coal market.

The removal of the export rebates, the cancellation of the import tax, the expected export tax and the future decrease of export quota will complicate the life of Turkish importers of Chinese coal.

The Russians will benefit from these policies despite the sluggish future demand for sized coal products in Turkey.


6. CONCLUSION

Beijing’s new coal policy will strengthen the position of the Russian sized coal vendors.

China became a NET importer of coal from 2007.

The Chinese are looking for global acquisition possibilities of coal enterprises and mines in Australia, Botswana, Mozambique, Indonesia, Vietnam, South Africa and Russia to secure their future coal needs.

China will push the global coal prices up.


6. CONCLUSION

Profit levels will rise sharply in future for all type of Russian coal suppliers.

Big Russian coal groups like KRUTrade, Mechel and MIRTrade will enjoy remarkable profits obtained from the Turkish coal business.


6. CONCLUSION

The CFR coal prices will ascend faster than the real FOB costs.

We observe the effects of the Chinese influence at the global commodity prices since 2002. In particular, global coal products (incl. Russian and Chinese origin) will become more expensive (approx. 20% per annum) in the forthcoming years.

Thank you!

Russian Coal Conference 2007 – Istanbul, Turkey September 25, 2007

September 25, 2007Russian Coal Conference 2007 – Istanbul, Turkey CAN CHINESE COAL BE COMPETITIVE AGAINST RUSSIAN COAL IN TURKEY? Robert Yuksel YILDIRIM.

Documents

forwardlooking statements

achievements of yildirim

securities of yildirim

statements of historical

chinese coal

future results

future business strategies

impact of general business