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 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 the refurbishment of two large dry-process kilns. When completed in 2008, this will enable the group to triple its present production capacity.

The Cement Market in Kazakhstan
Overall demand in the country was up 34% over the first five months of 2005. The cement market in Kazakhstan is presently in acute shortage with imports representing 33% of the market (an increasing of 78% from the same period last year). Steppe Cement’s capacity expansion will substitute most of the imported cement. This reflects the continuing strong economic growth that the economy has been enjoying for the last five years. As the Government recently announced substantial tax cuts and plans for increased infrastructure spending, it seems unlikely that this rate of economic growth will slow in the near term. The demand is not expected to attend the peak of 9 million tons achieved in 1989 until 2010.

Against this background of surging demand for cement, Steppe Cement has entered into a series of contracts with leading cement plant suppliers, such as F.L.Schmidt, to enable it to refurbish and improve two very large dry-process kilns that have been moth-balled since 1994. These will quadruple the capacity of the present operations from four wet-process kilns (approx. 800,000 tons per annum) and will substantially reduce operating costs per ton. To finance this expansion, the group entered into a long term loan agreement with the European Bank for Reconstruction and Development and raised new equity by a placement of shares to new investors in which the EBRD also participated.