Acron obtains approval for construction of US$420M ammonia unit in Russia

July 13, 2013 (press release) – Acron has obtained an approval for Ammonia-4 design and permit for construction of a new 700,000 tpa ammonia unit from Glavgosexpertiza (Directorate-General for State Environmental Review). Thus, one of the milestones in implementing this investment project has been completed; design documentation, time schedule and term of construction of a new ammonia unit have been approved. Total planned investments are USD 420 million.

Currently, the Company’s specialists are focused on several tasks, which include selecting equipment supplier and executing contracts, developing engineering documentation for all objects, preparing the site for construction and assembling operations. Under the project, Acron cooperates with the world’s and Russia’s major equipment producers-Dresser-Rend, Heurtey Petrochem, Hitachi, Cristof Group, GEA, Sulzer, Shin Nippon Machinery, Uralchimmash, Tambov plant Komsomolets, Tuymazychimmash and others. Start of production is planned for 2015.

Acron’s acting CEO Alexandr Popov said:

Ammonia-4 is the major investment project implemented on our production site over several last decades. I believe that our professional team with extended expertise in management, upgrade and construction, and our production potential are the key factors for successful implementation of this project. Due to these factors we are able to build a new ammonia unit in a fairly short period of time with relatively small capital expenditures for such a large-scale project compared to similar Russian and international projects.

Construction of Acron’s new ammonia unit will significantly improve the prospects for the Group’s development. First of all, 65 per cent increase in ammonia capacity will not only allow to enhance the fertiliser output at existing production capacity, but also to ensure the required base for further expanding of production capacity and product portfolio. Gaining the additional profit from the sale of commercial ammonia, cost effective product of choice, is no less important factor. Capacity of own AS BCT sea port terminal will provide the required volume of ammonia transshipment for export sales.

The key advantage of a new unit is lower natural gas consumption rate. At present, two Acron’s operating ammonia units are the most cost effective in Russia in terms of average gas consumption rate (1,070 cubic metres per tonne). Average gas consumption rate at Ammonia-4 will be 927 cubic meters per tonne, which will allow reducing the expenses on natural gas and, accordingly, the production cost. It is clear that construction of a new cost effective ammonia unit is a key factor to maintain Acron Group’s competitive power and improve the profitability of its business.

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