INSPECTION REPORT                                        Report No:       0 Date:              3 Nov.
2013        Page     1   of 11
                                                                               1
                              CUSTOMER DATA                                                                  MI DATA
  Client            Metals international Limited                                  MI Project No.                 29020-1
                                                                                  Project Name                   Yallourn Project
  Supplier Job
  No:
                                                                                  Requisition No:                N/A
                    A, F1/7, Liaoshen international Building, 1068
  Location:                                                                       Date of Order:                 N/A
                    Wuzhong Rd, Shanghai 201103, P.R.China.
                    Hoffman Fang                                                  MI Contract Coordinator:       Cathy Brooks
                                   With Customer Supplier        With Sub-
  Inspection Performed:                                                           Date(s) of Visit(s):
                                Supplier
  P.O. No:                      Change No:                Requisition No:         Oct, 16 2013/Oct 29,2013/Nov 2,2013
  13YFS92-A Rev.1                                         N/A                     Date of Previous Visit:       N/A
  INSPECTION DISPOSITION:              Accept          Nonconformance(s) Identified          Placed on Hold            Other (Explain)
  RECOMMENDED ACTION:
  n/a
  INSPECTION              DAYS                                     TRAVEL                                      DISTANCE:
  TIME :                  HOURS      24                            HOURS :           4                            MI  KM
  Technical Specialist:     Cui Shengfei                                        MI Project Coordinator   Hongyin Yu
Notice: Moody International accepts no liability for the design, Integrity or overall conformity of items, materials or components inspected.
Date: Oct. 16,2013-External FBE
 1.0       ATTENDEES
               NAME                                 COMPANY REPRESENTED                                                TITLE
  Hoffman Fang                     Metals International Limited                                      Vice General Manager
  Cui Shengfei                     Intertek Moody                                                    Inspector
 2.0       MATERIAL INSPECTED
                                                                     ORDERED          PRESENTED              ACCEPTED       ACCEPTED TO
   ITEM NO.         PRODUCT / MATERIAL / ITEM NAME
                                                                     QUANTITY          THIS VISIT            THIS VISIT        DATE
                 APL 5L X52M PSL 2 Bevelled End
                 323.9x6.4mm, L=11.8m, Total 3009m
        1        Internal:400µm, liquid Epoxy
                                                                       3009m           3155.360m
                 External:400µm, FBE
 3.0       DOCUMENTS USED
                                                                                                                               APPROVAL
           DOCUMENT NO.               REVISION                                      TITLE
                                                                                                                                STATUS
                                                                                                                          MI-1220-01 07Jul2008
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       Job No:    29020-1                        Report No:     01    Date of Report: 4 Nov. 2013
                                                           SUMMARY REPORT
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             API 5L-2012             45 Edition                       Specification for Line Pipe                        Yes
             13YFS92-A               30/05/2013                            Purchase order                                Yes
 HL-ITP-13YFS92-A-FBE                       0                          Inspection and test plan                          Yes
  HL-ITP-13YFS92-A-IL                       0                          Inspection and test plan                          Yes
4.0     SCOPE OF INSPECTION
   ITP
                              ITP ACTIVITY DESCRIPTION                          ITEMS             RESULTS               CLAUSE
LINE NO.
               Reviewed documents                                                              Acceptable                6.2.1
               Dimensional inspection                                                          Acceptable                6.2.1
      3.0      Coating online inspection for external surface                                  Acceptable                6.3.1
5.0     EQUIPMENT AND INSTRUMENTATION USED (TO BE SUPPLIED BY SUPPLIER)
                   EQUIPMENT / INSTRUMENT DESCRIPTION                               CALIBRATION CERT. NO.         EXPIRY DATE
Vernier calipers (0~500mm)                                                        FFL-005                       2014-8-8
Wall thickness gauge                                                              FF-D-023                      2014-8-7
tape-measure (0~15m)                                                              HL-16                         2014-8-8
Angle ruler for bevel                                                             FF-L-008                      2014-8-7
Electronic thermometer                                                            FF-T-021                      2014-8-7
Roughness meter                                                                   FF-O-011                      2014-8-7
Psychrometer                                                                      FF-T-020                      2014-8-7
Conductivity meter                                                                FF-O-007                      2014-8-7
Chloride content analyzer                                                         FF-O-005                      2014-8-7
Holiday spark detector                                                            FF-E-016                      2014-8-7
D.F.T gauge for coating                                                           FF-D-026                      2014-8-7
6.0     INSPECTION DETAILS
       6.1     Reviewed documents
       6.1.1 During this visit, MI inspector reviewed raw material test certificates and found it acceptable.
       6.2     Inspection activity
        6.2.1     Visual, dimensional, marking verify before coating
           a.     More pipes had been placed in the coating production line preparation workshop before MI inspector
                  arrived.
                                                                                                                MI-1220-01 07Jul2008
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                       INSPECTION REPORT                                                                             1
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Job No:   29020-1                   Report No:     01     Date of Report: 4 Nov. 2013
                                              SUMMARY REPORT
    b.    MI inspector performed the visual inspection for welding seam and surface at random, no defects were
          found.
    c.    MI inspector randomly checked the dimension of length, OD, Wall thickness, ovality and bevel angle,
          found the results were acceptable as per PO and API 5L. The inspect pipe tracing No is 1167480,
          1165780, 1167140, 1167360.
    d.    MI inspector verified the marking on the pipe surface, and label on the pipes, found the information were
          acceptable.
 6.2.2 Blasting inspection for external
     a. Verified the compressed air, free of oil and moisture contamination, and checked the air pressure.
     b. Witnessed the abrasive conductivity, the actual data is 32.7-14.7=18µS/cm, as required is max 60µS/cm
        as per ITP requirements, so the result was acceptable.
     c. The surface cleanliness can meet the requirement of ISO Sa 2.5
     d. Witnessed the surface profile inspection for 5 pipes, the actual data is 69µm, 76µm, 83µm, 72µm, 56µm
        and 61µm, as requires is 50~100µm as per ITP requirement.
     e. Witnessed the chloride content test after blasting for 2 pipes, the actual data is 0.5µg/cm2, as required is
        ≤25 mg/m2 as per ITP requirement.
     f. No oil and/or grease contamination were found on the surface after blasting.
     g. All rust and/ or girt was removed on the surface prior to coating.
 6.2.3 Coating inspection for external
    a. Checked the air humidity, environment temperature and dew point when coat the FEB, the results were
       acceptable as per manufacturer’s product data sheet and ITP
          Date: 2013-10-16                                                     Results
          Dry temperature       19℃           Humidity             52%
          Wet temperature       13.5℃         Material surface     26℃              Acc
          Dew point             8.5℃          temperature
    b. Checked the expiration date and lot No for the coating material, and recorded it, the results were
       acceptable.
    c. Witnessed the pipe temperature prior to coat FBE, the results in accordance with manufacturer’s
       recommendations (not exceed 260℃).
 6.2.4    Visual inspection for the coating for external
    a.    MI inspector performed the visual inspection for the external coating, found the results were satisfactory.
 6.2.5 Dry film thickness inspection for external
    a. MI inspector witnessed the D.F.T inspection for the finish coating, each set consists of three readings then
       taken the above averaged value as a spot measurement, the records please see below photos, and the
       results were acceptable (PO required is 400µm).
 6.2.6    Holiday spark test
    a.    MI inspector witnessed the holiday spark test at random for the finished coating at voltage of 5.3KV, no
          defects were found as per mill process requirement (min 5.0KV).
 6.2.7    Adhesion inspection
                                                                                                     MI-1220-01 07Jul2008
                                                                                                            Ref SOP 1220
                       INSPECTION REPORT                                                                            1
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Job No:   29020-1                   Report No:     01    Date of Report: 4 Nov. 2013
                                              SUMMARY REPORT
      a. Witnessed the adhesion inspection on the pipe’s end surface for one point, found the method and
      results were acceptable accordance with the requirement AS 3862 Appendix J of rating ≤2.
 6.2.8    Cut-back inspection
    a.    The worker removed the coating on the pipe end with a mechanical polishing, and MI inspector checked
          the cut-back length, found the results were acceptable as per PO requirements (100mm)
6.3    Photos
                 Before blasting                                          Check material
            Check dimension marking                             Check bevel ends of the bare pipe
                                                                                                    MI-1220-01 07Jul2008
                                                                                                           Ref SOP 1220
                        INSPECTION REPORT                                                                         1
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Job No:   29020-1                    Report No:     01    Date of Report: 4 Nov. 2013
                                               SUMMARY REPORT
                     Calibration                                        Check wall thickness
                    Check ovality                                           check length
          Check OD (circumference/Л )                              Check OD (circumference/Л )
                                                                                                  MI-1220-01 07Jul2008
                                                                                                         Ref SOP 1220
                      INSPECTION REPORT                                                                         1
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Job No:   29020-1                   Report No:     01    Date of Report: 4 Nov. 2013
                                              SUMMARY REPORT
              Check air pressure                                         Check humidity
                    Abrasive                                            Check conductivity
           Check surface temperature                                   Check surface profile
                                                                                                MI-1220-01 07Jul2008
                                                                                                       Ref SOP 1220
                     INSPECTION REPORT                                                                            1
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Job No:   29020-1                   Report No:     01    Date of Report: 4 Nov. 2013
                                              SUMMARY REPORT
    Check chloride content (hold 2 minutes)                           Check chloride content
               Check cleanliness                                        Check cleanliness
                Check Preheat                                             End protection
                                                                                                  MI-1220-01 07Jul2008
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                       INSPECTION REPORT                                                                          1
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Job No:   29020-1                    Report No:     01    Date of Report: 4 Nov. 2013
                                               SUMMARY REPORT
             Check coating material                                    Check coating material
               Holiday spark test                                             voltage
             Alarm (if found holiday)                                      Adhesion test
                                                                                                  MI-1220-01 07Jul2008
                                                                                                         Ref SOP 1220
                             INSPECTION REPORT                                                                            1
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     Job No:   29020-1                    Report No:     01    Date of Report: 4 Nov. 2013
                                                    SUMMARY REPORT
                         Adhesion test                                          Check cut-back
                         Check D.F.T                                             Check D.F.T
Date: Oct.29,2013-Finished Products
     6.4   Inspection activity
               6.4.1 Visual, dimensional, marking verify before coating
               6.4.2 MI inspector performed the visual inspection for the external coating at random, found the surface
                      of 5 repaired area were not smooth, and then the worker removed them and repair it.
               6.4.3 MI inspector performed the visual inspection for the internal coating at random, the pits were
                      found on the end of each pipe, which were caused by the wet film thickness test, MI inspector
                      could not measure the thickness of this parts whether meet the requirement, and the surface was
                      not flat, then the factory replied that they were repairing them, and the repair work would be finish
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                      on 30 , Oct. 2013.
       6.5   Witness dry film thickness for internal coating
          h. MI inspector witnessed the dry film thickness for the internal coating at random, the PO’s required is min
             400µm, and the records please see below table.
                                                                                                          MI-1220-01 07Jul2008
                                                                                                                 Ref SOP 1220
                         INSPECTION REPORT                                                                      1
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Job No:     29020-1                  Report No:     01    Date of Report: 4 Nov. 2013
                                               SUMMARY REPORT
       Pipe No        Results (µm)                          Pipe No       Results (µm)
       1166070        558, 570, 683, 725, 655, 672          1166790       728, 584, 519, 600, 560, 652
       1167600        468, 513, 626, 616, 549, 631          1166480       538, 543, 471, 496, 416, 502,
       1166440        980, 904, 815, 914, 728, 798          1167250       662, 778, 681, 689, 522, 521, 738
       1167100        715, 797, 735, 697, 729, 540, 824     1167530       913, 701, 868, 869, 1030, 611, 849
       1166390        848, 740, 991, 887, 813, 755, 730     1165270       736, 642, 848, 1080, 688, 897, 927
       1166990        493, 660, 631, 810, 794, 722, 643     1166160       718, 614, 657, 655, 669, 563, 598
       1165330        823, 772, 779, 621, 674, 641, 749     1167610       617, 700, 685, 635, 600, 581, 671
       1167740        956, 882, 1030, 892, 920 938, 908
      6.5.1      Holiday spark test
      b. MI inspector randomly selected two pipes to check the holiday spark test, the voltage was set to
          2.0KV, no defects were found as per mill process requirement (min 2.0KV).
 6.2.9      Cut-back inspection
      b.    MI inspector checked the cut-back length of internal coating, the results were acceptable as per
            mill/PO requirement.
6.6    Photos
           Not acceptable for visual inspection                    Remove the defect coating
                                                                                                MI-1220-01 07Jul2008
                                                                                                       Ref SOP 1220
                        INSPECTION REPORT                                                                         1
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Job No:   29020-1                       Report No:   01   Date of Report: 4 Nov. 2013
                                                 SUMMARY REPORT
                        Re-coat                                             After repair
                    Pits were found                              After repaired (need grind smooth)
                    Visual inspection                                        Calibration
                                                                                                  MI-1220-01 07Jul2008
                                                                                                         Ref SOP 1220
                       INSPECTION REPORT                                                                        1
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Job No:   29020-1                   Report No:     01    Date of Report: 4 Nov. 2013
                                              SUMMARY REPORT
                     Check D.F.T                                           Check D.F.T
                     Check D.F.T                                           Check D.F.T
                    Check cut-back                                       Check cut-back
                                                                                                MI-1220-01 07Jul2008
                                                                                                       Ref SOP 1220
                        INSPECTION REPORT                                                                       1
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Job No:   29020-1                    Report No:     01    Date of Report: 4 Nov. 2013
                                               SUMMARY REPORT
                    Holiday spark test                                   Holiday spark test
 Internal coating were found on the external surface                     Clean the surface
                    (Atomization)
                    Clean the surface                                    Clean the surface
                                                                                                MI-1220-01 07Jul2008
                                                                                                       Ref SOP 1220
                            INSPECTION REPORT                                                                       1
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       Job No:   29020-1                Report No:     01    Date of Report: 4 Nov. 2013
                                                  SUMMARY REPORT
Date: 2 Nov.,2013-Container Loading
1.0     INSPECTION DETAILS
       1.1       Fabrication Status
             When MI inspector arrived at the coating mill, 267 pieces of OD323.9mm x WT6.4mm external and
             internal coated pipes were stacked orderly at the storage. Every three pipes are fastened together
             into one bundle with packaging belt. And every pipe is evenly tied up with six safety ropes and
             capped at both ends.
       1.2       Loading Inspection
             Total 267 joints OD323.9mmxWT6.4mm pipes (overall length 3155.36m) were loaded into 7
             containers as scheduled. The coating applicator utilized frame crane with nylon belts to lift the
             pipes, every lift carrying 2 bundles of 6 pipes. Before loading the pipes, 9 poly woods were laid at
             internal bottom and both sides of the container against any sliding, scratching and other damage
             probability. The top of container was covered with tarpaulins and supported with 20 beams.
             Below is the detailed storage info of 7 containers, for more details see the pictures attached.
                                 Container No.                        Quantity (jts)
                                TRIU 050674 8                             39
                                CBHU 541236 3                             39
                                CXSU 100901 7                             39
                                CXSU 101073 8                             39
                                TEXU 152743 8                             39
                                CXSU 100992 7                             39
                                TRIU 056286 5                             33
 2.0    Photographs
                                                                                                   MI-1220-01 07Jul2008
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                    INSPECTION REPORT                                                                     1
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Job No:   29020-1               Report No:     01    Date of Report: 4 Nov. 2013
                                          SUMMARY REPORT
    Pipes stacked at the storage yard                     Safety ropes and nylon belts on pipes
  Containers equipped with poly wood                                 Poly wood utilized
                                                                                          MI-1220-01 07Jul2008
                                                                                                 Ref SOP 1220
                           INSPECTION REPORT                                                                     1
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      Job No:   29020-1               Report No:     01     Date of Report: 4 Nov. 2013
                                                  SUMMARY REPORT
            Loading pipes to the container                 Workers passing the steel beams for top-supporting
      Workers tying up the waterproof tarpaulin                    The outcome after everything done
3.0    NON-CONFORMANCES
         N/A
4.0    EXPECTED FEEDBACK AND CONFIRMATION OBTAINING FROM CLIENT
         N/A
                                                                                                 MI-1220-01 07Jul2008
                                                                                                        Ref SOP 1220