29.03.2006 – 11:17

RHI Magnesita

euro adhoc: RHI AG
Joint Ventures/Cooperation/Collaboration
RHI signs magnesia raw materials joint venture in China

  Disclosure announcement transmitted by euro adhoc.
  The issuer is responsible for the content of this announcement.

29.03.2006

RHI Refractories operates two plants producing refractories in the
Liaoning province in China. Currently, their total annual capacity is
being extended is being extended, and the third plant will be
commissioned at mid-year. The main raw material for refractories
production is magnesite, and 20% of the world’s deposits of this
mineral are located in the Liaoning province. Before being used as a
refractory raw material, the mineral is processed into magnesia of
different qualities in a multi-level treatment and firing process.
RHI currently covers 50% of its basic raw material requirements from
its own mining and raw materials plants in Austria, Italy and Turkey.
RHI’s Chinese plants today cover their needs for high-grade magnesia
exclusively from Chinese suppliers.   To secure the supply of raw
materials for the Chinese RHI plants in Bayuquan and Dalian in the
long term, RHI will establish a joint venture for the production of
top-quality magnesia together with its Chinese partner Liaoning
Jinding Magnesite Group Co. Ltd. (JDMG). Construction is scheduled to
begin in mid 2006 once all approvals have been obtained. Production
will be launched in mid 2007 with the first production line, and in
2008 from the second line. 500 people will be employed when both
lines are in operation.  RHI will hold an 80% share in the newly
established company, its partner JDMG will hold 20%. JDMG owns two
high-grade magnesite mines in the Liaoning Province and will ensure
the long-term local supply of raw materials to the joint venture. In
addition, JDMG, like RHI; operates two magnesia plants itself; both
partners provide their know-how and financing for the new company
relative to their shares.  The investment in the two production lines
which will cover the raw material demand of the Chineese RHI plants
by more than 50% amounts to EUR 35 million; the total financing
requirements for RHI come to nearly EUR 40 million. Sustainable
investments in the strategic supply of top-quality magnesia for the
Chinese plants and other RHI facilities in Europe and North America
reduce RHI’s dependence on suppliers on the world market
significantly.  In addition to ensuring the continuously high quality
of raw materials, which is indispensable for the production of
cutting-edge refractory products by RHI Refractories, the joint
venture also achieves an important economic optimization. RHI
Refractories can optimally employ its technological leadership in
producing refractory raw materials at a logistically optimal location
in the immediate vicinity of raw material sources and its own plants.
This will lead to an improvement in RHI’s earnings quality based on a
deeper backward integration.

end of announcement                               euro adhoc 29.03.2006 10:40:43

Further inquiry note:

RHI AG
Investor Relations
Dkfm. Markus Richter
Tel: +43-1-50213-6123
Email: markus.richter@rhi-ag.com

Branche: Refractories
ISIN: AT0000676903
WKN: 874182
Index: ATX Prime
Börsen: Wiener Börse AG / official dealing