Puławy, 4 June 2008

Agreement on the Fertiliser Mega Project entitled
International Research Cooperation under the Auspices of ZA Puławy

On June 3rd, Zakłady Azotowe Puławy S.A. signed a letter of intent concerning the execution of an international research project consisting in the use of nitrogen fertilisers on experimental fields in Poland, Germany and the Czech Republic. The Company’s partners in the project and signatories of the letter are research institutes from Poland, the Czech Republic and Germany (the Fertilizers Research Institute of Puławy, the Institute of Soil Science and Plant Cultivation – National Research Institute of Puławy, the Prague Institute of the Czech Republic, and the Mecklenburg Vorpommern Institute of Germany), the Szczecin Univeristy of Agriculture and the following business partners: Unibaltic Agro, AGRO CS, and F. Rellmann GmbH. The Mega Project is to be executed from 2008 to 2012 and is to result in the preparation of an assessment of the production, economic and environmental effects of plant fertilisation with solid and liquid nitrogen fertilizers, and as a consequence – production launch and distribution of new generation fertilizers.

The project is executed in ZA Puławy’s home market, comprising its natural and closest sales markets. Its objectives include increasing the knowledge of the market, development of new fertilizer brands, expansion of the product portfolio and generation of profits on the sale of the new fertilizers.

Experimental research under the project has already started in Poland. This cross-sectional research work is carried out in four regions, namely in the Pomerania, in the Wrocław Province, the Poznań Province and the Lublin Province. In autumn work will also start in one region in Germany and one region in the Czech Republic. The project is cross-sectional in the sense that it covers the following groups of plants: wheat, rape and corn.

The research is to provide exact data to answer the question which fertilisers are more effective in traditional fertilisation – simple nitrogen fertilisers (such as ammonium nitrate or nitro-chalk) or new generation fertilisers containing nitrogen and sulphur. The research will also verify whether the use of liquid nitrogen fertilisers, such as UAN, containing sulphur and magnesium, is economically more beneficial for farmers and more desirable given the global warming, difficulties in the ammonium nitrate trade, lifting of anti-dumping customs duties on fertilisers from Russia and Ukraine, and increased production costs of granulated fertilisers.

Research of such type has never before been carried out in Poland on such a scale, – says Paweł Jarczewski, President of the Management Board of ZA Puławy. The results will be presented in publications and at conferences to a large group of interested parties, including – besides scientists – our customers, i.e. the farmers.

The new granulated and liquid fertiliser products will enrich ZA Puławy’s product mix but will also be the Company’s response to new trends on the fertiliser market.

In the next few years we expect the market to remain strong for fertiliser producers, however the lifting of the anti-dumping customs duties will open up the market to competitors from the countries east of Poland. The steps taken by our Company with a view to offering fertilizers of new generation will mitigate the risk related to competition with simple fertilisers offered by producers from the former CIS countries. – adds Paweł Jarczewski.
The new generation fertilisers will be cheaper to produce than the currently produced granulated fertilisers (urea, ammonium nitrate) or crystalline fertilisers (ammonium sulphate). They will be a response to the farmers’ interest in fertilisers which contain sulphur and magnesium, have larger and more durable granules, and can even be transported in bulk.