Introduction

Steppe Cement Ltd is the Malaysian-incorporated holding company of the two operating companies, Karcement J.S.C., and Central Asia Cement J.S.C., that form the cement manufacturing complex at Karaganda in central Kazakhstan.

Steppe Cement Ltd was incorporated as a special purpose holding company in the Malaysian Federal Territory of Labuan on 17 September 2004 and its wholly owned subsidiary, Steppe Cement (M) Sdn. Bhd. was incorporated in Malaysia as an intermediate holding company. The shareholders of Central Asia Cement Holding BV then transferred their shares in Central Asia Cement Holding BV to Steppe Cement (M) Sdn. Bhd. on 28 July 2005.

On 8 June 2005, Steppe Cement Holdings BV (SCH BV) was incorporated in the Netherlands, as a special purpose holding company to manage and operate the dry cement lines. The shares in Steppe Cement Holdings BV are 100% owned by Steppe Cement (M) Sdn. Bhd. On 16 July 2009, SCH BV merged with Central Asia Cement Holding B.V. and the later ceased to operate.

On 13 July 2005, Mechanical and Electrical Consulting Services Ltd was incorporated in the Malaysian Federal Territory of Labuan primarily to facilitate the refurbishment projects and sourcing of expatriate staff engaged in the Cement Business.

Steppe Cement was listed on the AIM in London in September 2005 and raised US$21 million by the issue of 14 million new shares in March 2006 in order to finance its the refurbishment of two large dry-process kilns.

Central Asia Cement JSC operates the cement wet lines located at Aktau Village, which is approximately 40 kilometres north of the city of Karaganda and 180 kilometres to the south of Kazakhstan's capital city, Astana.

The region has a strong industrial base with a well-developed public infrastructure that facilitates the operations of major mining and industrial activities including coal and ferrous metal production.

The cement plant was established in 1953 by the former Soviet State owned Production (Industrial) Society Karagandacement with four wet cement kilns. The Cement Plant was expanded in 1975 and in 1984 with the construction of two dry cement kilns. The cement plant operates from a plant located near to the city of Karaganda in the central northern region of Kazakhstan.

Central Asia Cement JSC operates four wet kiln cement lines with a current operational annual clinker production capacity of around 600,000 tonnes per annum. The clinker can be milled with other products to produce up to 800,000 tonnes of cement per annum. The wet lines have been mothballed in Oct 2014.

Steppe Cement also has 2 dry lines since 1998s, one of which, line 6, commenced production in early 2009.

Karcement JSC was founded in the Republic of Kazakhstan and registered on 15 November 2005 with the Ministry of Justice of Temirtau, Karaganda region. The sole shareholder of the Company is Steppe Cement Holding BV.

Karcement JSC is involved in the production and sale of cement using the cement dry production line.

Its subsidiary, Karcement J.S.C., completed the Line 6 refurbishment project in October 2008. Karcement J.S.C. received all the necessary licenses for commencement of commercial operations in the first quarter 2009.

In May 2009, Steppe Cement successfully raised USD10 million before expenses by way of an Offer for Subscription ("Offer") of 40 million new ordinary shares at 25 pence per share conditionally underwritten. The Offer shares were admitted to AIM for dealing on 11 May 2009.

In July 2009, the merger between Steppe Cement Holdings B.V. and Central Asia Cement Holding B.V. was completed. The purpose of the merger is to rationalise the Dutch investment holding entities to achieve future cost savings as the Kazakhstan operations are consolidated under the Dutch investment holding company, Steppe Cement Holdings B.V.

In Nov 2010, Steppe Cement raised GBP10 million via the issuance of 25 million new ordinary at 40p per share shares in the Offer for Subscription. A major portion of the proceeds raised were used to partially redeem the bonds due in Aug 2011 and the remaining for working capital purposes. The admission of the new shares commenced on 1 Nov 2010.

In Dec 2012, Steppe Cement raised GBP10 million via the issuance of 40 million new ordinary at 25p per share shares primarily to finance the refurbishment of Line 5. The new shares commenced dealing on 10 December 2012.

The new line was completed in June 2014 and increased Steppe Cement's annual production capacity by an additional 1.2 million tonnes.

From 2014 to 2016, production steadily increased to 1.7 million tonnes. Current capacity in 2017 in the dry lines is 1.8 million tonnes and it will be increased to 2 million tonnes by 2020.

In 2014, Steppe Cement purchased a fleet of 330 new cement hoppers for transportation.

In 2015, Steppe Cement upgraded the cement mills in stages to increase monthly milling capacity to 250,000 tonnes and commissioned electronic weigh bridges for all wagons and trucks loading points.

In 2016, Steppe Cement installed a new line to pack big bags of 1 tonne each inclusive of logistical support.

In November 2017, Steppe Cement repaid its remaining bonds of KZT1.5 billion listed on the Kazakhstan Stock Exchange.

In 2018, Steppe Cement plans to install a new cement packing line for 25 and 50 kg bags with a capacity of 1,000 bags per hour inclusive of logistical support facilities for two wagons direct loading simultaneously and one truck loading. The new facility has the ability the palletize the cement bags once the demand develops in the country.