Polska Chemia Congress in Puławy

| Polish Market |

The chemical sector should build demand for its products, foster the growth of domestic manufacturing companies, at the same time develop the national economy. These were the main conclusions presented by experts at Polska Chemia 2014 Congress. Grupa Azoty was the strategic partner of the event.

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Destination: petrochemicals

| Prospects & Investment |

In early December Paweł Jarczewski and Paweł Olechnowicz, on behalf of Grupa Azoty S.A. and Grupa Lotos S.A. respectively, signed an agreement concerning the establishment of a new company. The task for the business entity is to prepare the construction of a new petrochemical complex at the Polish seaside.

The aim of the new enterprise

The manufacturing installations erected in this project will serve for production of propylene, xylene, benzene, as well as polyethylene based on crude petroleum, and LPG produced by Lotos. Grupa Azoty S.A. would be one of the main purchasers of those products. The project may help reduce the foreign trade deficit of the Polish chemical sector. Additionally, new jobs would be created, while merging the potential of two giant corporations could bring many synergistic effects.

Current progress

Grupa Azoty S.A. and Lotos S.A. have already prepared the preliminary feasibility study. Next, the proper study is to be prepared. An analysis of the profitability of the investment may last the whole 2014. Both companies are also seeking other investors ready to join in the project. One of such potential partners is Polish Investments for Development (PIR), a government agency with which we have signed a draft cooperation agreement.

A huge project for the economy

The value of this new joint investment by Grupa Azoty S.A. and Lotos S.A. is estimated to be 12 billion PLN, with the contribution of PIR at 750 million PLN. Should the decision to launch the investment be taken, the new installations will be built in Gdańsk in 2016-2018, so that in 2019 they could be started up. 5,000-7,000 people are to find jobs at the construction site, while the staff of the finished installations will reach c. 2,000.

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Keeping up the pace!

| Production & Resources |

On Wednesday, November 20th we held a morning press conference, at which the current investment plans of the company were presented to media representatives. The Vice Chairman of the Board of “PUŁAWY” Zenon Pokojski and the Director of Fertilizer Research Institute Janusz Igras participated in the meeting.

Launching the production of ammonium thiosulfate

During the conference the Vice Chairman of the Board of “PUŁAWY” outlined the preliminary project to erect an ammonium thiosulfate production line. The substance is used in the manufacturing of nitrogen-based fertilizers. The Director of Fertilizer Research Institute Janusz Igras stressed the importance of this project for agricultural manufacturers. Estimated cost of the venture, including the construction of silos, exceeds 120 million PLN. The investment shall be located on the land belonging to Grupa Lotos, and adjacent to the premises of Gdańskie Zakłady Nawozów Fosforowych “Fosfory”, a member of Grupa Azoty “PUŁAWY”.

Cooperation with Grupa Lotos

The Vice Chairman of “PUŁAWY” Zenon Pokojski remarked that acid gases are one of the byproducts produced in Grupa Lotos installations. Upon the completion of the joint project, “PUŁAWY” will use those gases for ammonium thiosulfate production. The current plans suggest that production could be launched in 2016. The output capacity of “PUŁAWY” is estimated at 20,000 tonnes initially, and 100,000 tonnes eventually.

Destination Senegal

The Vice Chairman Zenon Pokojski also told the journalists about the plan of Grupa Azoty “PUŁAWY” to develop its activity in Senegal. He made an announcement that our Company is preparing to submit an offer to the Senegalese Ministry of Agriculture for a water management audit, soil analysis, as well as educational and scientific activities. We would like Grupa Azoty “PUŁAWY” to provide know-how, technology and fertilizers on the Senegalese market.

In the summer of 2013 another member of Grupa Azoty, Grupa Azoty “POLICE”, signed an agreement to buy 55% of African Investment Group shares, at the cost of 28.85 million USD. “POLICE” thus gained access to natural resources deposits in Senegal. Grupa Azoty “PUŁAWY” is following a slightly different path, paving the way for the sale of fertilizers in Africa and possible future launches of production installations on that continent.

We are intending to organize meetings of Grupa Azoty “PUŁAWY” representatives with the press regularly, so that we may share information about the ongoing scientific research, investment projects and present data concerning Company activity.

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Neighbors invest together

| Prospects & Investment |

Gdańskie Zakłady Nawozów Fosforowych “Fosfory”, a member of Grupa Azoty “PUŁAWY”, is located on Gdańsk shoreline. It so happens that the facility neighbors with a plant belonging to Grupa Lotos. Management of both companies is planning to take advantage of such favorable circumstance – having two leading chemical companies in one location – and is preparing for a joint investment project.

Three new lines

The plan is to erect a complex for the manufacturing of aromas, polyethylene and for steam cracking. It is worth to mention here that demand for polyethylene reached 800,000 tonnes annually in Poland. The main client is going to be the works belonging to consolidated Grupa Azoty.

A worthwhile investment

Such a project is likely to succeed not only thanks to the potential of both companies, but also due to the availability of natural energy resources: crude oil and natural gas. Also, the project involves search and excavation of hydrocarbons. Such resource would secure stability of functioning for the installation, making it independent of external suppliers. Looking at the current market situation and the conditions in which the new initiative is to launch experts forecast great success of the joint venture by Grupa Lotos and Grupa Azoty.

At present the two companies are preparing feasibility studies of new installations. Promising results of this research will make it possible to pick the most advantageous option and to launch investment works.

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