ARMENIAN RAILWAY CONCESSION

ARMENIAN SHIPPER/FORWARDER COMMUNITY

Arsen Ghazaryan President

Union of Manufacturers and Businessmen

2

C O N T E N T S

• INTRODUCTION

• ARMENIAN RAILWAY FREIGHT MARKET

• RAILWAY AND ROAD TRAFFIC

• MARKET PARTICIPANTS

3

INTRODUCTION

4

GENERAL INFORMATION

Fast factsPopulation: 3.2 millionCapital: YerevanArea: 29.743 sq km (11.484 sq miles)State language: ArmenianReligion: ChristianityMain exports: Processed diamonds, machinery,

metal products, foodstuff

Sovereign Country Ratings Moody’s Ba2Fitch BB- (ceiling BB)

5

ECONOMY

• GDP in 2006 about $6.4 billion

• Leader in economic growth among non-oil-exporting countries

• Real GDP was 13.4% in 2006, the 5th consecutive year of double-digit growth

• GDP comprised of – Services 39%

– Construction 25%

– Agriculture 18%

– Manufacturing 11%

– Energy 4%

– Mining 3%

GDP growth

Armenia

Bulgaria

Georgia

Ukraine

0

2

4

6

8

10

12

14

16

2000 2001 2002 2003 2004 2005 2006

6

GEOPOLITICAL ENVIRONMENT

• Intensive Geopolitical situation around Armenia and Caucasus • Increasing ties with Russia and maintaining good relations with US

and EU

• Armenia has good relations and developing economic cooperation with Southern and Northern neighbors - Iran and Georgia

• No diplomatic relations with Turkey in the West, but substantial volume of trade (the imports from Turkey has increased by 42% to 95 million USD in 2006 while exports is moderate: about 2 million).

• No diplomatic and trade relations with Azerbaijan in the East, because of conflict around historical Armenian disputable lands.

7

ARMENIAN RAILWAY FREIGHT MARKET

8

ARMENIAN RAILWAY TRAFFIC

Main active directions

• Yerevan to Poti (Georgia) for export (cement, metals, industrial raw materials, construction materials) and import (wheat, sugar, oil, chemicals, other goods) traffic

• Sodk to Ararat (gold ore) and Shorja to Hrazdan (raw materials for cement) for domestic traffic and

Yerevan

Massis

Gyumri

SpitakVanadzor

Pemzashen

Sanahin

Airum

Yerask

Karmir Blur

Akshalins

AraratArmavir

Hrazdan

DilijanIjevan

Vardenis

Aga

rak

Aghband

Megri

ArmeniaTurkey

Iran

Georgia

Azerbaijan

RoadRailwayBlockage

AzerbaijanArmenia

Turkey

Ukraine

Black Sea

Novorossiysk

Pot’si

Bat’umi

Grozny

Kars

Tehran

T’Bilisi

Baku

Aktau

Yerevan

Caspian Sea

Kazakhstan

Uzbekistan

IranIraqSyria

Russia

Georgia

YerevanNagornoKarabakh

NagornoKarabak

hStepanakert

Stepanakert

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ARMENIAN RAILWAY TRAFFIC

Main active locations and commodities

Export Import Domestic

Alaverdi Cooper Cooper Ore

Gyumri Construction Materials Wheat, Sugar, Oil, Other goods

Construction Materials

Dalarik Construction Materials Wheat

Masis Chemicals, Oil, Animal Feed

Yerevan Metal scrap, beverages, other goods

Wheat, Sugar, Oil, Other goods

Cement

Ararat Cement Cement, Mettalic Ore

Charentsavan Mineral water Soil

Hrazdan Cement Cement

Shorja Raw materials for cement

Zod Gold ore

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AR FREIGHT COMPOSITION

AR Total Cargo Traffic

0

500

1,000

1,500

2,000

2,500

3,000

2000 2001 2002 2003 2004 2005 2006

Th

ou

s T

on

s

0

100

200

300

400

500

600

700

Mill

ion

GT

K

Oil Products Wheat & Flour SugarOther Industrial Raw Materials Non-Metalic OresConstruction Material Cement Scrap MetalsChemicals & Fertilizer GTK-Cargo Traffic

• During 2000-2006 AR freight traffic grew at rate of about 11%, approximately the same rate as Armenian GDP

11

RAILWAY AND ROAD TRAFFIC

12

RAILWAY VERSUS ROAD FREIGHT

  Export Import Domes-tic

TOTAL

Railway 513 1,274 932 2,720

Road 248 596 4,886 5,730

Air 4 5  - 9

Pipeline  - 1,200  - 1,200

TOTAL  765 3,075  5,818 9,659

Railway vs. Road (tonnes)

2006 Freight Traffic by Transport (thousand tonnes)

2,720

5,730

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Railw ay Road

'000 tonnes

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RAILWAY VERSUS ROAD FREIGHT

• Road carriers carry twice as much freight as railway

• Railway carries 7 times longer traffic

• Railway is convenient for bulk and long distance shipments

• Railway is cheaper

Railway vs. Road (tonne kilometers)

668

91

0

100

200

300

400

500

600

700

800

Railway Road

Million tonne km

Comparative AdvantagesRailway vs. Road

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MARKET PARTICIPANTS

15

ARMENIAN RAILWAY REVENUE BY CUSTOMERS

• 80% of revenue came from 18 customers• About 60 relatively large customers

Cumulative Revenue by Shipper

0%

20%

40%

60%

80%

100%

120%

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70

No of Shippers, largest to smallest

% o

f fr

eig

ht

reve

nu

e

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FORWARDER COMMUNITY

• There are more than 50 registered forwarders

• 16 of them use railway services

• 12 most active are members of Armenian Association of Freight Forwarders (AAFF - www.aaff-association.narod.ru)

• AAFF is a member of International Federation of Freight Forwarders Associations (FIATA – www.fiata.org) since 2000

• International forwarders such as MAERSK, Mediterranean Shipping company and CMN France are present in the market through local forwarders

17

MAJOR FORWARDERS

Export traffic goes mainly through several forwarders

Company CEO Webpage Contact

Apaven Co Ltd

Gagik Aghajanyan

www.apaven.am Tel

Fax

E-mail

+374 10 350160

+374 10 351240

apaven@apaven.am

Trance Alliance Trans. Co

Sargis Martirosyan

www.trans-alliance.am Tel

Fax

E-mail

+374 10 529598

+374 10 543801

Trance-alliance @Trans-Alliance.am

Unitrans Co Ltd

Mosik Arzumanian

www.unitrans.am Tel

Fax

E-mail

+374 10 539425

+374 10 539427

unitrans@unitrans.am

Armtrex Co Ltd

Sergo Sumbatyan

Tel

Fax

E-mail

+374 10 552698

+374 10 550799

sss@armencell.am

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MAJOR INDUSTRIES AND EXPORTERS

Major export and domestic shipments comprise of construction materials and mining and metals

Industry Company Contact

Cement production

Mika Cement

Ararat Cement

www.hrazdan.am/cement

www.araratcement.am

Mining and Metals

Zangezur Copper Molybdenum Co

Armenian Copper Program

Agarak Copper Molybdenum Co

Armenian Gold Recovery Co

Dino Gold Mining Co

Akhtala Mining Co

www.zcmc.am

www.cooper.am

Tel. +374 10 522336

Tel. +374 10 538572

Tel. +374 285 62040

Tel. +374 10 545538

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MAJOR IMPORTERS

Large importers work directly with the railway

Industry Company Contact

Fuel and Oil Mika Armenia Trading

Exim Petrol Group (CPS)

Flesh

Ran Oil

Max Group

Tel. +374 10 538781

Tel. +374 10 526746

Tel. +374 10 582884

Tel. +374 10 451798

Tel. +374 10 548171

Wheat and Sugar

Salex Group

Manana Grain

Viktoria Trade

Yerevan Mill

Tel. +374 10 749955

Tel. +374 10 472426

Tel. +374 10 468899

Tel. +374 10 528539

20

T H A N K Y O U