28 April 2006

New Investment Projects

On April 28th, the Extraordinary General Shareholders Meeting of ZAKŁADY AZOTOWE PUŁAWY S.A. approved the Company’s three new investment projects worth in total PLN 71m.

These projects concern an increase of the urea-ammonium nitrate solution (UAM) production and storage capacity, environmental protection (adaptation of the Company’s CHP plant’s electrostatic precipitators to new standards which will be applicable as of January 1st 2008), and efficiency enhancement of the ammonia production unit at the Ammonium Nitrate Production Centre (automation upgrade based on the DCS computer system).

These are new projects carried out by the Company as part of its development programme. Earlier, corporate approvals were obtained for investment projects valued at PLN 145m. Currently, the most advanced project is the construction of the Melamine Recovery Unit. The Unit will enable ZAP to recover approximately four thousand tonnes of melamine more. The construction of the unit, worth PLN 56m, will be completed still this financial year.

As part of these projects, the Company is carrying out tasks related to the upgrade of the caprolactam production technology (increasing the capacity for processing caprolactam into its flake form, for which the market demand is greater). The equipment will be installed in September 2006. The upgrade of the Sulphuric Acid and Fuming Sulphuric Acid Plant is underway. The first stage of the upgrade will also be completed in September 2006.
Modernisation work is currently in progress at the synthesis units of the Ammonia Production Centre. The modernisation is aimed at improving the technological parameters and producing greater volumes of cheaper and higher quality ammonia. A licence and modernisation technology for two synthesis units have been purchased.

Preparatory work is underway on projects related to the upgrade of the Company’s CHP plant, including the construction of a flue gas desulphurisation unit with a view to reducing the SO2 emission. The unit will be one of the most advanced solutions of this type in Poland. The desulphurisation process will be waste-free: ammonium sulphate, a by-product of the unit, will be subsequently sold. ZAP is also considering the submission of an application for project support, financed with structural funds, to the National Fund for Environmental Protection and Water Management in Warsaw.

ZA Puławy operates on three key product markets:

• Fertilisers for the agricultural sector (urea, ammonium nitrate, urea-ammonium nitrate solution, ammonium sulphate) – leading Polish and global producer
• Melamine (used in the production of synthetic resin which is applied in the furniture, paint and varnish market, as well as textile and paper sectors) – third largest producer in the world, the only producer in Poland
• Caprolactam (used for the production of textile and industrial fibres, carpeting and engineering resins used in automotive, electronic and food industries) – one of the two producers in Poland.
  ZA Puławy is the largest company in the fertilisers and chemical sector in Poland and an important producer in the world. Approximately half of its revenue is derived from the exports.

For more information please contact:

Marek Sieprawski
ZA Puławy SA
tel. (+ 48 81) 887 62 01
msieprawski@azoty.pulawy.pl