Brief summary presentation of theStrategic VCP demand in the GCC for the next 5 years and beyond.

1. Vitrified Clay Market
GCC
STRATEGIC PLAN
2013-2017
SS VCP STRATEGIC PLAN 2013-2017

2. WHY CLAY PIPES?
• Vitrified clay pipes (VCP) have been used for
over 6000 years
• Clay pipes are chemically resistant.
• They have high crushing strengths
• VCP is lay and forget piping system
SS VCP STRATEGIC PLAN 2013-2017

3. MARKET DATA
• In 2011 some 195,000t was sold in the GCC worth
SR280 million
• Average price per tonne SR1435
• Actual demand was considerably greater than ability
to supply. National Water Company (NWC) and
Directorates say their need for clay pipes in the
Kingdom was for 262,000t worth SR350 million
• By 2017 the demand will have expanded to 410,000t.
SS VCP STRATEGIC PLAN 2013-2017

4. SOME MARKET FACTORS
• Saudi Government prioritizes completion of sewage
networks
• Ministry of Water & Electricity announces the need
for an investment of SR 350billion in sewage
networks over the next 20 years
• Population of GCC due to double in 25 years-
– Increased demand for housing/schools/hospitals and
therefore infrastructure and sewage networks.
• FIFA WORLD CUP 2022 in Qatar
SS VCP STRATEGIC PLAN 2013-2017

5. DEMAND DATA
NWC VCP REQUIREMENT FOR RIYADH TONNES 2012-2017 (2017
ESTIMATED)
DIAMETER 2012 2013 2014 2015 2016 2017
DN200SS 7018 7720 8492 9341 10275 11303
DN200ES 10191 11210 12331 13564 14920 16412
DN250SS 396 436 480 527 580 638
DN250ES 582 641 705 775 853 938
DN300SS 252 277 304 335 368 405
DN300ES 381 419 461 508 558 614
DN350ES 656 721 794 873 960 1056
DN400ES 1167 1284 1413 1554 1709 1880
DN450ES 806 886 975 1072 1180 1297
DN500ES 2134 2347 2582 2840 3125 3437
DN600ES 2260 2486 2735 3008 3309 3640
TOTAL 25843 28428 31270 34397 37837 41621
% CHANGE 10 10 10 10 10
AVERAGE TONNES /km 58.3 58.3 58.3 58.3 58.3 58.3
SS VCP STRATEGIC PLAN 2013-2017

6. DEMAND DATA
NWC VCP REQUIRMENT FOR JEDDAH TONNES 2012-2017 (2017
ESTIMATED)
DIAMETER 2012 2013 2014 2015 2016 2017
DN200SS 1186 1825 8213 11388 8943 9837
DN200ES 1723 2650 11925 16536 12985 14284
DN250SS 0 0 0 0 0 0
DN250ES 0 0 0 0 0 0
DN300SS 0 0 0 0 0 0
DN300ES 4230 6110 37130 50760 36660 40326
DN350ES 0 0 0 0 0 0
DN400ES 2850 4200 21750 30000 22500 24750
DN450ES 0 0 0 0 0 0
DN500ES 1824 2508 15504 20748 15960 17556
DN600ES 1525 2440 12810 16775 12200 13420
TOTAL 13338 19733 107332 146207 109248 120172
% CHANGE 48 444 36 -25 10
AVERAGE TONNES /km 93.9 93.1 97.6 96.8 95.8 95.8
SS VCP STRATEGIC PLAN 2013-2017

7. DEMAND DATA
NWC VCP REQUIREMENTS FOR MAKKAH TONNES 2012-2017 (2017
ESTIMATED)
DIAMETER 2012 2013 2014 2015 2016 2017
DN200SS 0 0 4380 3609 913 821
DN200ES 0 0 6360 5240 1325 1193
DN250SS 0 0 0 0 0 0
DN250ES 0 0 0 0 0 0
DN300SS 0 0 0 0 0 0
DN300ES 11062 8519 33582 20597 4451 4006
DN350ES 0 0 0 0 0 0
DN400ES 2411 776 2925 2396 488 439
DN450ES 0 0 0 0 0 0
DN500ES 1507 632 2998 2930 274 246
DN600ES 1571 1297 1998 1208 305 275
TOTAL 16551 11225 52242 35980 7755 6979
% CHANGE -32 365 -31 -78 -10
AVERAGE TONNES /km 113.7 109.2 82.1 80.0 75.4 75.4
SS VCP STRATEGIC PLAN 2013-2017

8. DEMAND DATA
NWC VCP REQUIREMENTS FOR TAIF TONNES 2012-2017 (2016/2017
ESTIMATED)
DIAMETER 2012 2013 2014 2015 2016 2017
DN200SS 2975 591 712 1500 1649 1814
DN200ES 4320 858 1034 2177 2395 2635
DN250SS 0 0 0 0 0 0
DN250ES 0 0 0 0 0 0
DN300SS 0 0 0 0 0 0
DN300ES 3190 1656 373 1319 1451 1596
DN350ES 0 0 0 0 0 0
DN400ES 2263 725 297 980 1077 1185
DN450ES 0 0 0 0 0 0
DN500ES 2381 548 291 1377 1515 1666
DN600ES 1865 366 223 743 817 899
TOTAL 16995 4745 2929 8096 8905 9796
% CHANGE -72 -38 176 10 10
AVERAGE TONNES /km 74.3 81.2 62.4 72.8 72.8 72.8
SS VCP STRATEGIC PLAN 2013-2017

9. DEMAND DATA
DIRECTORATES PIPLINES TONNES NEEDS FOR VCP 2012-2017
2012 2013 2014 2015 2016 2017
RIYADH 16902 16902 16902 16902 16902 16902
MAKKAH 20564 20564 20564 20564 20564 20564
MADINAH 8451 8451 8451 8451 8451 8451
QASSIM 15024 15024 15024 15024 15024 15024
ASIR 18780 18780 18780 18780 18780 18780
NAJRAN 4695 4695 4695 4695 4695 4695
BAHA 32865 32865 32865 32865 32865 32865
JAZAN 8169 8169 8169 8169 8169 8169
EASTERN PROVENCE 17841 17841 17841 17841 17841 17841
HAIL 32865 32865 32865 32865 32865 32865
NORTHERN BORDER 5540 5540 5540 5540 5540 5540
TABUK 4695 4695 4695 4695 4695 4695
JOUF 3380 3380 3380 3380 3380 3380
TOTAL DIRECTORATES 189772 189772 189772 189772 189772 189772
SS VCP STRATEGIC PLAN 2013-2017

10. MARKET SIZE 2012-2017
DEMAND TONNES 2012-2017
2012 2013 2014 2015 2016 2017
TOTAL DIRECTORATES 189,772 189,772 189,772 189,772 189,772 189,772
TOTAL NWC 72,727 64,131 193,774 224,680 163,744 178,568
REST OF GCC 31,000 33,000 35,000 37,000 39,000 41,000
TOTAL TONNES 293,499 286,902 418,546 451,452 392,516 409,340
Source: Directorates/NWC and Market intelligence- ISBC Report
Note: KSA tonnage based on size range DN200-600mm diameter pipes
SS VCP STRATEGIC PLAN 2013-2017

11. COMPETITION
SVCP
Strengths
• The largest installed capacity at 185ktpa
• The oldest and are well established
• Can be considered a truly one stop shop
• Have defended clay pipes really well
• Can call on German partners to supply extra volume.
Weaknesses
• Still not achieved all capacity of new facility
• Monopoly supply situation and therefore influences market
approach
SS VCP STRATEGIC PLAN 2013-2017

12. COMPETITION
CPC
Strengths
• Installed capacity of 60 000t
• Modern plant
• Now in 3rd full year of operation
• Have already been approved by SASO and Ministry Of Water &
Electricity
Weaknesses
• Not yet fully operational- Delays and extra loans affecting costs &
margins.
• Only approved for sizes DN200 and DN300 grade A and B
• No know how technical partners
• In the throws of re-organizing its– likely to cause further delays as
new team takes time to gel.
SS VCP STRATEGIC PLAN 2013-2017

13. Competition
Sweillem-Egypt
Strengths
• Have over 25 years manufacturing experience
• Capacity of 50ktpa- output 40ktp
• Excellent product quality ( have coveted MPA approval).
• Excellent hands on technical expertise in the family from all
generations.
Weaknesses
• Limited GCC market penetration- Sell mainly in Western area.
• Poor image in some KSA regions
SS VCP STRATEGIC PLAN 2013-2017

14. AICCP
Strengths
• Installed capacity of 60,000t
• Plan to manufacture in last quarter of 2013
• Will have know how from Sweillem
• 2014 output will be 15,000t
• Can start trading straight away with Sweillem pipes or semi
finished products
• Own mine for clay
Weaknesses
• Delays in completing the project
• No Natural Gas supply may cause cost disparity.
SS VCP STRATEGIC PLAN 2013-2017

15. Bench Marking-Competition Extruder
Information
Extruder Installed Capacities Extruder Output Efficiency
No: Pipe Extruders Installed Capacity'000's t/a Actual Output 000's t/a Output / Extruder 000's t/a
Capacity /Extruder '000's t/a % Efficiency
140
185
80
76
50
60 60 40 40
50 50
26 20 20
20 20
15 13 10 10 8
10 10 7 6 5 5
4 3 2 4 5 2
000
SS VCP STRATEGIC PLAN 2013-2017

16. Table showing supply versus demand
Estimated Outputs/Sales
YEAR 2013 2014 2015 2016 2017
SVCP 190,000 190,000 195,000 195,000 195,000
CPC 25,200 45,000 60,000 60,000 60,000
AICCP 5,000 15,000 45,000 60,000 60,000
SWEILLEM 5,000 0 0 0 0
TOTAL Supply 225,200 250,000 300,000 315,000 315,000
SHORTFALL/SURPLUS -61,702 -168,546 -151,452 -77,516 -94,340
Source: NWC, Directorates and market estimates ISBC report.
Note: KSA demand is based on sizes DN200-600mm
SS VCP STRATEGIC PLAN 2013-2017

17. DEMAND V SUPPLY GAP
GAP ANALYSIS OF MARKET DEMAND V SUPPLY OF VCP 2013-2017
500000
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
1 2 3 4 5
YEAR TOTAL TONNES SUPPLIED SHORTFALL
SS VCP STRATEGIC PLAN 2013-2017

18. BEYOND 2017
The next graph shows that there is a strong demand for VCP up
to 2026.
3 scenarios are given
1. NWC 10% Growth figures,
2. Growth in line with economic estimates at 6.6%
3. No Growth
SS VCP STRATEGIC PLAN 2013-2017

19. Graph of Demand beyond 2017
Conservative growth at 6.6% v NWC 10% rate as forecast for Riyadh 2010-2026
and no growth
2000
Thousands
1800
1600
1400
1200
1000
800
600
400
200
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
year Tonnes at 6.6% growth tonnes at approx 10% growth incl GCC tonnes if no Growth incl GCC
Source NWC
SS VCP STRATEGIC PLAN 2013-2017

20. DEMAND V SUPPLY GAP
GAP ANALYSIS OF MARKET DEMAND V SUPPLY OF VCP 2013-2017
500000
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
1 2 3 4 5
YEAR TOTAL TONNES SUPPLIED SHORTFALL
SS VCP STRATEGIC PLAN 2013-2017

21. Conclusions
• There will be a shortfall in supply by 60,000t in
2013
• In 2014 the shortfall will be 168,000t.
• NWC and contractors welcome competition
It is, therefore, my considered opinion that the
market can easily support a 3rd manufacturer.
SS VCP STRATEGIC PLAN 2013-2017