B Break-bulk Cargo Terminal

1. Project Site

The Western Area of Yantai Port is situated in the west of the city proper, as well as besides the northeast sea of Dajijia Village in Yantai Economic & Technological Development Zone (YETDZ), with a distance of 35 km on the sea and a distance of 30 km on land to Zhifu Bay. The proposed Break-bulk Cargo Terminal is located in the northwest of the western port area.

2. Project Scope

Two berths of 200,000 DWT and 70,000 DWT respectively will be built up, with an alongside depth of –20.5 m and –16.5 m. The wharf length totals 700 m and a storage yard covers an area of 550,000 square meters. The designed traffic capacity is 15 million tons. The construction period is 18 months.

3. Project Progress

The project has been approved by the State Council as a part of the Port Construction Planning (2004-2010) for Yangtze River Delta, Zhujiang Delta and Bohai Sea Area. Now the preparation of the Feasibility Report has been completed. And the Project has been approved by National Development and Reform Commission.

4. Traffic Analysis

(i) Iron Ore Along with the fast economic growth in China, the iron & steel industry is witnessing a rapid development and calling for an increasing import volume of iron ore. This momentum is anticipated to be continuing, and the import volume will be 300 million tons in 2006. Iron ore is one of the most important cargo handled in Yantai Port, accounting for the largest part among the others and increasing fast in the past years. In the hinterland of the port, there are quite a few large steel works, which are utilizing Yantai as a port for iron ore import business. By 2009, the Huanghua-Yantai Railway will be completed and put into operation, which will enable Yantai Port to deliver the imported iron ore even further to the steel works in the northwest of China. Hence it can be anticipated that the traffic of iron ore in Yantai Port will continue to grow at a stable ratio. According to the forecast, the iron ore traffic in Yantai Port will be 20 million tons in 2010 and 30 million tons in 2020.

(ii) Coal At present, the traffic of exported coal in Yantai Port is usually from the mines in the hinterland, for example, the mines in Yanzhou, Xinwen, Longkou and Shanxi. Moreover, during the 11th Five-Year Plan of Yantai City, two power supply plants in Yantai and Longkou are to be expanded and a certain part of the coal for power generation shall be transported through Yantai Port. In the surrounding area of Yantai, the cement industry has been booming up, with a big quantity of coal consumption. With the further development of cement industry, the coal exported through Yantai Port is expected to be of continuous growth. According to the forecast, the coal traffic will be up to 3 million tons in 2010, 5 million tons in 2015. and 10 million tons in 2020.

5. Distribution and Transportation Conditions

Railway: The inner-port railway, connecting with the national railway network through Lancun-Yantai railway, possesses an outstanding transport capacity. Meanwhile two additional railway lines (i.e. Dezhou-Longkou-Yantai and Huanghua-Longkou-Yantai) are under construction and will be fully completed for operation in 2008. Road: According to the planning, several port access roads will be integrated with the provincial road network by direct connection with Tongjiang-Sanya Expressway, Weihai-Wuhai Expressway and No. 206 National Road.

6. Investment and Economic Analysis

The total investment of the project is estimated to be RMB 1.7 Billion yuan. The Economic Internal Return Ration of the project is evaluated as 17.23%, and the FIRR (after tax) turns out to be 8.41%. Therefore the project is profitable and the investment recovery period is anticipated to be 11.8 years (including the construction period).

7. Cooperation Partners

For the purpose of this project, we are willing to cooperate with the famous iron & steel works, power suppliers, logistic service providers, shipping companies, terminal operators and investment companies all over the world.

8. Cooperation Mode

A limited company shall be established by relevant parties for the construction and operation of the terminals.