INVESTMENT COMPANY POLICY: Operating activities

Operating activities of JSC “NC” KTZ» are divided into three components: freight, passengers or other activities.

• Trucking. By volume of freight rail firmly holding first place in the Republic: it accounts for more than 71% of turnover – against 28,4% of pipeline transportation, automotive and 0,5% 0,1% sea and air transport. The main volume of cargo Transportation Company has the products of extractive industries of national economy, about 30 companies which provide over 80% of all freight. Volumes of cargo loading “NC” KTZ “declined from 129.9 million tons in 1998 to 124.0 million tons in 1999, but then rose to 156.3 million tons in 2000. After improving the economic situation in Kazakhstan and neighboring countries has increased considerably the demand for transportation. Overall growth of freight increased by 26% in 2009 compared with 2008.

In 2009, the volume transported by rail exports accounted for 40.3% of the total traffic. Railway transportation continues to be the only practical kind of transportation of coal, ores and metals. About 80% of transported “NC” KTZ “goods accounted for coal and ferrous and nonferrous metals, crude oil and petroleum products. Financial services

In the coal industry’s major shippers are businesses and Ekibastuz Karaganda coal basins, which are concentrated 80% of coal production in Kazakhstan. The main consumers of the Karaganda coking coal are JSC “Ispat-Karmet, metallurgical plants in Russia, and Karaganda Bishkek CHP. About 67% of the coal mined in the Ekibastuz coalfield, is consumed within the country, the rest is exported to Russia. Incipient economic recovery in Russia and Kazakhstan taking into account the existence of significant residual coal reserves in the Kazakh oil fields gives reason to expect that the volume of coal shipments in the coming decades will grow.

In the oil industry’s main clients of JSC “NC” KTZ “are Tengizchevroil and AO SHNOS. Petroleum and petroleum products constitute the second category of goods on the proportion in the total loading in 2007 and 2008 and the third category in 2009, reaching respectively 11.0%, 12.3% and 11.6% of the total volume of transported cargo. Volumes of transportation of oil and petroleum products have steadily increased from 14.5 million tons in 2007 to 15.3 million tons in 2008 and 18.5 million tons in 2009. The main volumes of oil from Tengizchevroil, is exported, with most of them are transported by rail. So from 11.0 million tons of oil extracted in 2009, 7.3 million tons (66, 3%) were transported by rail. In 2008, the expected reduction in traffic volumes of Tengiz oil be 3, 5-4, 0 million tons, which will be almost entirely offset oil supply JSC “CNPC-Aktobemunaigaz, etc. It is planned that freight traffic in the inside of the national and export traffic in 2008 be around 17-17,5 million tons. It is assumed that the increase in demand from China and domestic consumption would reimburse most of the loss of oil transportation due to the commissioning of a new Caspian pipeline.

In the mining industry “NC” KTZ “serves traffic flows between producers of ore (AO SSGPO, Don and Lisakovsk GOK) and consumers (JSC” Ispat-Karmet, Magnitogorsk, Kuzbass, Novolipetsk Steel). In non-ferrous metals major shippers are JSC “Kazakhmys Corporation”, “Kazzinc, JSC Aluminium of Kazakhstan” and the enterprise of JSC TNK Kazchrome. In 2009 it was transported 12.9 million tons of ore by rail.

• Passenger traffic. Rail transport provides more than 50% of passenger traffic, compared with 36% of road transport and 12%air.

The total passenger traffic on the rail network in Kazakhstan in 2009 increased by 17,2%. This was due to an increase in the number of routes, offering commuter transportation. Passenger turnover in 2009 amounted to 10.2 billion passenger-kilometers against the 8.7 billion passenger-kilometers in 2008. The total number of passengers carried by rail has fallen from 21.6 million people in 2007 to 18.9 million people in 2008, accounting for 12, 3%. But, with economic growth in the region and rising real incomes in late 2008 and 2009, passenger traffic increased. The total number of passengers carried in 2009 amounted to 21.3 million, an increase of 12.7% compared with 2008.

• Utility and economic activity. Most of the utility-support activities carried out for companies that are part of “NC” KTZ “. This article proceeds in the future will increase due to the fact that the company expects the first phase of restructuring the rail industry to allow the implementation of commercial activities in areas such industries as road repair, repair of cars, cargo security and other services with the aim of introducing competition in the railway industry