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EUROCHEM 15/02/2007

EUROCHEM ENTERPRISE IN NEVINNOMYSSK MADE USE OF OVER RUR 1 BN OF INVESTMENT IN 2006

Nevinnomyssky Azot – a subsidiary of EuroChem – fulfilled its production plan for 2006 at 105.3%. The enterprise market grade output reached RUR 11.7 bn, up RUR 594 m from the planned figures, but down RUR 1171.7 m against actual 2005 figures. This reduction was primarily related to the large-scale maintenance, upgrade and retrofitting in 2006, and consequent output reduction due to scheduled shutdowns.

The enterprise produced 835,000 tonnes of mineral fertilizers (100% nutrient content), down 8.7% from the level of 2005. The output of ammonia in 2006 was 1.07 m tonnes, down 73,700 tonnes from the level of 2005. The reduction was due to the largest in the factory's history upgrade of ammonia shop No.1-B, which resulted in the shop production capacity increase to 1,700 tonnes of ammonia per day with substantial reduction in natural gas consumption. It was the best performance among sectorial peers of the former Soviet Union.

After relieving ammonia production shops' load (ammonia is a raw material for nitrogen fertilizers), the output of urea was reduced compared to the previous year by 65,800 tonnes to 815,000 tonnes; ammonium nitrate output was down 134,500 tonnes to 1,048,000 tonnes. At the same time, the annual plan for ammonium nitrate production was overfulfilled by 40,900 tonnes (4.1%). The general decrease in urea output resulted in UAN output reduction by 86,300 tonnes to 748,000 tonnes.

The output of organics also declined in 2006, due to the scheduled maintenance – methanol output was 124,000 tonnes (95% of the level of 2005), and acetic acid – 161,000 tonnes (96%). At the same time the production of butyl acetate and methyl acetate was up as a result of improved market environment.

The use of capital investment made up a record of RUR 1.089 bn, up 2.5 times compared to 2005. In addition to the above mentioned large-scale upgrade of ammonia shop 1-B, the upgrade of unit No.2 at urea production shop No.2 was carried out to increase its production capacity by 70 tonnes per day; main actions taken to upgrade the scheme of ammonium nitrate and NPK packing to big bags, as well as other activities. In addition, Nevinnomyssky Azot successfully launched Oracle E-Business Suite resource management system. This solution is currently being launched at other holding enterprises.