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F 0 I. KONA Nir:. Directorate of R&D MODA. Dear Sirs,

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F 0 I

KONA Nir:.

0

Directorate of R&D MODA

Your reference

Maj Gen Nasser Al-Shaye Director of R&D MODA Riyadh, Saudi Arabia

This offer is valid until:

30th of July 2007

Dear Sirs,

Re: SA ProposalWith reference to Outline of the Requirements and content of the Study for Production of NC-propellant and Explosives in SA by POT: Dnr 07-11149:3, FOT hereby wishes to make the following offer: FOI will offer a study: Study for Production of NC-propellant and Explosives in SA. The study will start when the proposal is signed, received by FOI and the secure link between SA and FOI is established. At the earliest the start date will be the 31" of July.

1. Scope of work

FOI shall perform services in accordance with following: FOI is to perform a study that should describe the requirements, and alternative solutions to these requirements, needed to establish

manufacturing capability of propellants, primary and secondary explosives. The study should provide different options, where applicable, and recommendations.

(Merl

f11311 This study would then be the basis for the next phase of the implementation of the plants. The plants

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gl should be capable of processing the chain from raw materials to end product by formulation of the

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energetic substance manufactured. Safety, testing, training and geographical requirements should be

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viga considered in this study.

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3

The study should follow the following general requirements FOI, Swedish Defence Research Agency

Defence & Security, Systems and Technology

Postal address Visiting address Telephone Fax Web page

GrindsjOn +48 8 55 50 30 00 +46 8 55 50 41 43 www.foi.se SF.•147 26 Tumba

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2E (3E)

o The plants should be versatile and able to produce a variety of products

o It should be possible to tailor the products to several systems -> versatile processing o An production and processing must be safe

o The availability of material in the production chain should be in the control of Saudi Arabia.

o Analytical and test equipment should be useable in several applications, as much as possible.

o If possible no licensing should be involved in any of the technologies used. o The technologies should be robust, mature and as simple as possible.

o The plants should handle limited intermittent production cycles and production sizes should be as flexible as possible.

o Communications between FOI and MODA regarding this project should be carried only through a secured channel that is to be established.

o During the study phase, Saudi Arabia should not be mentioned as the end customer. o FOI is the prime contractor and is allowed to use industrial subcontractors which will be

defined and accepted by MODA during the study.

o In Sweden, work and related information in this study should be classified as confidential

The scope of the study is based on Annex 1 and detailed in Annex 2. With precedence for Annex 2 in the areas: Acid and waste management (rough estimate), compounds produced (TNT and RDX not included), NC-manufacturing (not included) and availability of raw materials in Saudi Arabia (SA to check availability).

The project will deliver a budget estimate and a preliminary report at the end of October 2007 and a full report which will be the basis for the next phase in the implementation of the plants at the end of January 2008.

2. Time of delivery

POT shall make deliveries according to following schedule!

Delivery Item Date

Project updates: Intermittent communication with project 31/7-2007

IR

manager in Saudi Arabia and scheduled project meetings: tentative dates: 10-1 4th during 6 months

of September in SA, 22-26th of October in SE and 7-10th of January in SE

• Budget Estimate Intermediate budget estimate with 24/10-2007 preliminary report

Final Report: Full report 31/1-2008

3. Fixed price

The price is fixed at SEK 6 500 000 (VAT excl.),

The project will be invoiced bimonthly for six months with one third of the fixed price. Payment shall be made within thirty (30) days from date of invoice.

4. Terms and conditions

FM's General Conditions for research and development works, Appendix 3, shall apply for the assignment. We are grateful for your interest in working with FOI, and we are looking forward to

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hearing from you soon. If you have any questions regarding this offer, please contact our reference given above.

30 (30)

Sincerely yours,

Dr Jan-Erik Rendahl

Acting Deputy General Director

FOI, Swedish Defence Research Agency

Appendices:

• Appendix 1 Outline of the Requirements and content of the Study for Production of NC-propellant and Explosives in SA by FOI: Dnr 07-11149:3 (already delivered)

Appendix 2 Outline of the initial project planning with cost estimation

Appendix 3

FOI's General Conditions for research and development works

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Annex 2: Outline of the initial project planning with cost

estimation

This is a definition and clarification of what is mentioned in the document: Outline of the Requirements and content of the Study for Production of NC-propellant and Explosives in SA by F01: Dnr 07-H149:3. Annex 1 defines the overall scope of the study. This

document gives an extended depth to some of the topics covered in Annex 1. Annex 2 supersedes Annex 1 when in conflict, namely the areas: acid and waste management, compounds produced (TNT and RDX not included), NC-manufacturing (not included) and availability of raw materials in Saudi Arabia.

Infrastructure

• Suggest layout and general specifications of the facilities.

• What demands should be placed on geography, what are the special demands for the required area where plants are to be situated.

Buildings

• Outlined below are the different kinds of building which might be necessary for the full scope of the project.

Requirements — How the building should be built

• Bunker

o Thickness of the walls o Amount of armour o Quality of concrete (7) Pressure release system

o Simple sketches over the buildings

• Location

o Bunker location with respect to other buildings

o Maps and Photos to show were the buildings should be located

• Requirement for inside the building

o Electricity

o Back-up electricity o Pure water

o Electrical cooling water/glycol o Compressed air system

o Vacuum system o Ventilation system o Computer network o Hydraulic system o Automatisation o Reactors o Drain o Pumps o Steam

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o Safety systems o Capacities

• Type of buildings

o Explosives Factory

• Multipurpose plant

• 100-150 Litre Nitration reactor o HMX

o PETN o TNT o RDX

• 600 Litre Work-up reactor • Separation units

• Injector nitration reactor o Nitro glycerine o TEGDN

o DEGDN -

o Explosives Powder Factory

• Crystallization reactor 400 litre

Evaporation and recycling unit for solvents

Vacuum oven room - Drying of propellants and explosives

Lead azide production

• PBX production

o

Acid Recycling Building (Less detail, rough estimate)

Reactor for recycling of mixed acids

o

el

Reactor for recycling of acids from HMX process

Explosives Storage Building

• Propellant storage

• Secondary explosives storage • Primary explosives storage

o Explosives Workshop

• Kneaders for formulation of explosives and propellants • Twin screw extruder

• Coating of explosives • Pressing equipment

• lsostatic pressing • Pistong pressing o Propellant Testing Building

• Strand burn test

Tensile testing Hardness measurement

I/

Thrust measurement rocket engine • RSV testing

o Laboratory • Analyses

Small scale synthesis and formulation

o

Waste water treatment facility (Less detail, rough estimate)

• Precipitate the acids

o Incinerator (Less detail, rough estimate)

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o Storage facility for starting material

Explosives Processing

Outlined below are the different kinds of explosives processing which is needed for the production of the desired explosives and charges.

Nitrocellulose procurement

• Study how nitrocellulose with the right quality could be bought from several producers.

Nitroglycerine

• Nitration

o Mixed acids

• Injector nitration reactor 0.1-0.3 litre • Separation centrifuge

• Washing in several steps

• DEGDN instead of Nitroglycerine • TEGDN instead of Nitroglycerine

PETN

• Nitration in nitric acid

• Recrystallization from acetone • Made in multipurpose plant

HMX

• Hexamine • Nitration

• Acetic acid anhydride 6-8:1 Hexamine • Nitric acid 2:3 Hexamine

Produce a mixture of 3:1 HMX / RDX • Washing

• Separate RDX from HMX

• Acetic anhydride recycling (in detail)

Multipurpose plant with three reactors

• Pre-reactor 0,1-1,01 • First reactor 100-150 litre • Second reactor 600 litre reactor

Crystallisation

• Two or three crystal sizes • Re-crystallization to purify

Mixing plant

• Mixing of NC, and Nitroglycerine

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All reactors will be built to enable a safe and efficient production

Shape charge production

• Formulation recipes

• Formulation production method • Moulds for the Shape Charge

• Shape charge tested according to UN test battery • Performance measurement

• Pressing techniques • Curing techniques

Rocket Engine production

• Formulation recipes

• Formulation production method • Moulding techniques

• Extruder methods • Curing methods

• Moulds for the rocket engine production

• Rocket engine tested according to UN test battery • Performance measurement

• Inhibition and insulation of rocket engines, different types of materials

Production quality

• Analysis methods for the starting materials o According to STANAG

Analyse methods for the explosives produced o According to STANAG

• Production records

• Formulation quality check • Finished products quality check

• Check the products with the UN-test battery

Study of availability of copper cones and possible production Study the availability and supply of electrical igniters

Knowledge Transfer

Outlined below is what kind of training and what kind of personel that is need to run the facility.

• What kind of personal to recruit

• How many people are needed to run the complex • Process Safety education

• Explosives education for all personal performed in Saudi Arabia • Education for Operation personal

• Specialist education (OM for personal held in both Sweden and Saudi Arabia o Testing

o Analyse methods o Instrument operation

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Instrument and Equipment

Outlined below is what kind of equipment and instruments which are needed to run the facility.

• Suppliers of instrument • Suppliers of machines • Design of Automation • Design of equipment

Suppliers of starting material

Suppliers of starting material within Saudi Arabia

FOI

will supply MODA with a list of necessary raw materials, availability of these in

SA will be checked by MOD A. FO1 will find suppliers for starting materials not available in SA.

Outlined below is what is needed to know about the availability of raw materials in Saudi Arabia.

• Supplier reliability • Material quality

• Supplier cost estimation • Material unavailable in SA

o Find a supplier in SA who has the right equipment to produce it • Material needed for production

o Water C.? Acids o Organic powders o Solvents o Electricity o Etc..

• Material needed for the Project o Concrete

o Pumps o Etc..

• Suppliers of starting material outside Saudi Arabia • Supplier reliability

• Supplier cost estimation • Material quality

Goals of the study

• Estimate the cost for the proicct

• Estimate the time needed to fulfil the project • Supply a detailed description of the project

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• The report will be the foundation for a work shop to draw up the lines of the next phase of the project.

References

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