In this report

Economic
sustainability

During the last ten years we have proven our economic sustainability. In 2010, the favorable price dynamics observed in all key market segments, coupled with our production flexibility, ensured record sales for EuroChem: RUB 97.8 billion, a 33% increase over the previous year. At the same time, EBITDA grew by an impressive 80% and amounted to RUB 29.7 billion.

Sustainability of the investment program

In 2010 each facility continued to work on investment projects directed at achieving the Company’s goals. In all the projects we undertake, full consideration is given to their environmental and social effects.

Case Study 1:
Development of the Gremyachinskoe potash deposit

Project parameters

• One of the largest projects in the sector, and the first greenfield potash development undertaken in Europe in the last 30 years
• Total investment: RUB 85.5 billion
• Investment in 2005-2010: RUB 15 billion
• Projected annual tax payments: RUB 10 billion
• Employment opportunities: 3,000 full-time jobs and up to 30,000 jobs in services and related areas
• Strategic impact: de-monopolization/deregulation of the potash market in Russia

Key sustainable development and social responsibility initiatives of the Gremyachinskoe project

1. The Gremyachinskoe project crystallizes the company’s strategy to enter the potash business and to ensure its long-term competitiveness in terms of reserves.

2. A key social innovation is the hiring, within the project, of over 3,000 new employees, a considerable number of whom are mining industry personnel. The logistics (given the scarcity of labor resources in Russia) of the recruitment and social integration of so many employees will be a big challenge for the HR department. Our partners in this drive to ensure sufficient labor resources are the Ministry of the Regions of Russia, the regional governments – which are the sources of our specialized labor resources (for example, traditional mining towns) – and recruitment agencies.

3. EuroChem will seek to build relationships with the local community in accordance with the latest international standards, including environmental monitoring. In 2009, Environmental Resources Management (ERM) carried out an independent environmental and social review of the construction of the potash beneficiation plant at the Gremyachinskoe deposit and a preliminary plan of activities in the environmental and social sphere. During 2010, background social surveys and socio-environmental and health impact assessments were carried out; systems of social and environmental management were introduced into the EuroChem-VolgaKaliy management system, including in its environmental and social risks management program. Public hearings took place around the project to discuss the environmental and social impacts of the project. A stakeholders’ interaction plan has been developed and put into action. In 2011, we are commencing implementation of the plan to mitigate environmental and social risks and impacts associated with the project.

4. Modern housing representing a total area of 250,000m² is being constructed for 10,000 people: the future employees of the mining and processing plant and their families. EuroChem has invested RUB 1 billion in this housing construction. By 2013, no less than 90,000m² of housing will have been already built. The commissioning of our own construction facility will allow the use of Russian ‘warm wall’ technology, which ensures high quality, while keeping construction costs low at RUB 20,000 per m². Two types of buildings will be built – individual houses with individual yards (cottages) and low-rise apartment blocks. In 2010, the first two of the planned nine low-rise apartment blocks were completed in the Vostochny district. Both are hostels: an apart-hostel for 60 families, which was occupied at the beginning of 2010, and a hostel for 200 people, with the first tenants moving in at the end of 2010. Each floor has a spacious recreation room and a well-equipped kitchen, and a launderette fitted with modern washing machines. Each room is fully furnished and equipped with an air conditioning unit and a refrigerator. Each apartment block, designed with 36 flats, will have four living floors and an attic floor.

   Nine houses are in the first phase of construction in the new district, located within the town boundary. Currently, the utilities networks are being designed for the Vostochny district. This work incorporates the needs of the neighboring Dubovaya Roscha (Oak Grove) district, where the construction of the new town will be continued. Plans also include a supermarket, hotel and fitness center.

5. Social infrastructure and support services are also under construction. The program for Volgograd region to develop the Kotelnikovo industrial zone has been finalized, and includes the construction of the following social facilities: a school, two kindergartens, a hospital, a primary health care center and a recreation center. In addition, housing and utilities infrastructure, roads and a railway station will be constructed.

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