key to success - EuroChem

key to success - EuroChem

Social Responsibility Atlas 2008 key to success key to success Corporate Social Report Key to success Corporate social report Ke y to Succes s...

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Social Responsibility Atlas 2008

key to success

key to success

Corporate Social Report

Key to success Corporate social report

Ke y

to Succes

s

EuroChem I Social Report I 2008 The Mineral and Chemical Company EuroChem presents its fourth social report for 2008. The Company has been practicing regular reporting for eight years now. The 2008 Report discusses the principles of sustainable development which have rigorously been adopted by EuroChem at its operational locations. This Report’s format is a social policy atlas covering a wide range of successfully accomplished social tasks. The document is important and interesting for all stakeholders as well as for a broader audience.

CONTENT

EuroChem Social Responsibility Atlas

Social report summary ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 4 About the Company ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 6 Production divisions ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 8 Product range ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 10 Financial performance ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 12 Distribution, logistics and transportation ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 14 Corporate governance ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 16 International operations ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 18 Investment project map ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 20 Human resources ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 22 Social policy review ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 24 Example of a complex social programme ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 26 Kovdor ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 28 Nevinnomyssk ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 30 Belorechensk ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 32 Tuapse ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 34 Novomoskovsk ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 36 Kingisepp ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 38 Kedainiai ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 40 Kotelnikovo ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 42 Karatau ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 44 Environmental projects ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 46 Labour and industrial safety ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 48 Achievements and tasks for 2009 ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 50 Independent assurance ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 52 Exhibit: GRI Table ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ ∙ 55

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2008 I Social Report I EuroChem

social spending in 2008

444.8 million RUR

Summary of

EuroChem Social Report 2008 self-declaration of application level

“EuroChem consistently adheres to the principles of social responsibility and sustainable development and the Company’s fourth successive social report proves it. The effectiveness of the Company’s social policy has been clearly recognized by related Russian and global ratings,” – Andrey Melnichenko, MCC EuroChem, Chairman of the Board

The EuroChem Social Report 2008 is based on GRI G3, Global Compact, AA1000APS 2008 requirements. The Report is validated by Bureau Veritas Certification Rus. The Report has been discussed with stakeholders.

EuroChem social achievements:

disclosure level

„„ranking second in the Russian CSR Accountability Rating 2008; „„Top-10 corporate charity ranking by Vedomosti Newspaper and PricewaterhouseCoopers.

“Our company is maintaining its level of social investments which totaled 444.8 million RUR in 2008. Notwithstanding the current global economic difficulties, we are going to stick with our freewill social commitments,” – Dmitry Strezhnev, MCC EuroChem General Director

EuroChem I Social Report I 2008

Accomplishment of 20 sustainable development tasks in 2008 The sustainable development tasks were established in EuroChem CSR 2007, page 80.

Sustainable development tasks for 2008

tasks have been completed or are currently in process

Completion level

Develop management in the area of corporate social responsibility and reporting Systematic approach to CSR actions

underway

Integrate the principles and indicators of corporate social reporting into EuroChem's system of corporate governance

completed

Renew corporate social responsibility working group activities

underway

Initiation of opinion sharing between EuroChem divisions regarding CSR

completed

Prepare the next corporate social report incorporating additional CSR initiatives

underway

Develop a children’s sports development program at the Company’s operational locations

completed

Increase awareness of stakeholders and broader public regarding EuroChem's progress in CSR

completed

Human Resources Management Reform the salary and bonus system

completed

Implement social investment projects focused on the construction and repair of public facilities for employees

completed

Organise and conduct annual workmanship competitions

underway

Further develop non-monetary incentive programmes

completed

Interface with local communities at operational locations Interface with local communities at operational locations

underway

Assist local community initiatives to improve quality of life through social projects which have been tested in Nevinnomyssk

underway

Gradual transition from annual agreements with local municipal authorities to strategic CSR cooperation

underway

Industrial Safety and Occupational Safety Risk Management Ensure the total injury rate at EuroChem divisions is below the annual average over the past five years

completed

Conduct audits at EuroChem divisions with respect to industrial, labour and environmental safety completed Adopt a series of measures to reduce significant hazards and risks at all production divisions

completed

Develop and implement a corporate standard on “Special Clothing and Personal Protection Equipment (PPE)”

completed

Develop and implement procedures for investigating incidents in the Company's divisions

completed

Implement a safe contractor’s operations management system

completed

5

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2008 I Social Report I EuroChem

EuroChem Mission

“To be the leading European manufacturer of agrochemical products and a wide range of services, providing guaranteed quality, continuously improving technologies and a thriving environment.” (Code of Ethics, approved by the Board of Directors)

About

EuroChem Historical facts 1933 – Start of production at the Stalinogorsky Chemical Plant (now NAK Azot, a EuroChem subsidiary) 1960–1970 – Commissioning of the largest production facilities which are now divisions of EuroChem 2001 – Establishment of MCC EuroChem

Name: Open Joint Stock Company “Mineral and Chemical Company “EuroChem”. Established: 2001. Major shareholders:

2002–2004 – Consolidation of production assets, rehabilitation of production potential

„„MCC Holding Limited - 67,932,000 shares (99.9 percent of authorized capital);

2004–2005 – Formation of a distribution network, logistics business, investments in new business processes and corporate management systems

„„LLC Phosphorite Industrial Group - 68,000 shares (0.1 percent of authorized capital);

2006 – Development and implementation of a long-term development strategy, startup of the potassium fertilizers project 2007 – Expansion of Russian and international transportation and distributor networks and agro-consulting centres, improvement of company structures 2008 – Start of shaft construction at the Gremyachinskoe deposit, startup of a project in Perm Territory

„„A company that represents business interests of Mr. Melnichenko, owns a 95 percent stock in the parent company MCC Holding Limited (Cyprus); „„The beneficiary of 5 percent stock in the parent company MCC Holding Limited (Cyprus) is Dmitry Stepanovich Strezhnev, EuroChem MCC General Director.

Sales volume: over $4.5 billion. Output: 24 MMT. Personnel headcount: 21,585 employees.

Ratings: „„International credit rating (Standard & Poor’s and Fitch Ratings): BB / stable; „„Corporate governance rating (Standard & Poor’s): 6+.

Scale of operations: EuroChem is Russia’s largest producer of mineral fertilizers and ranks among the top three in Europe and the top ten worldwide. It is the only Russian chemical company which incorporates mining and processing facilities, logistics companies and a distribution network.

Company structure: Five production companies in Russia and one in Lithuania, a distribution network of 33 sales centres in Russia and Ukraine, two marine terminals in Russia and one in Estonia.

Global context: The Company exports its products to 68 countries in Western and Eastern Europe, North and Latin America, Africa, Asia and Oceania.

EuroChem I Social Report I 2008

sales volume

4.5 usd

billion

production output

24

MMT

employee headcount

21,585

7

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2008 I Social Report I EuroChem

Production divisions

OJSC Kovdorsky GOK

A KGOK branch in Perm Territory PG Phosphorite LLС

Lifosa AB

EuroChem Moscow Office OJSC Azot

EuroChem-VolgaKaliy LLC

EuroChem-BMU LLC

see web-site

for more information

OJSC Nevinnomyssky Azot OJSC Sary-Tas

EuroChem I Social Report I 2008 OJSC Kovdorsky GOK Russia’s second largest producer of apatite concentrate, a large producer of iron ore and the only producer of baddeleyite concentrate in the world.

Industrial Group Phosphorite LLC One of the leading producers of phosphate fertilizers and feed phosphates in northwest Russia. The company ranks third among phosphate fertilizers producers and first among feed phosphates producers in Russia in terms of volume.

AB Lifosa The largest producer of phosphate mineral fertilizers in Europe. The company’s key product is diammonium phosphate (DAP), and other products include aluminum fluoride, monocalcium phosphate, phosphoric acid and commercial sulfuric acid.

OJSC Azot A multi-product chemical manufacturer, one of the country’s core chemical companies. It operates a highly automated state-of-the-art facility.

EuroChem - Belorechenskie Minudobreniya LLC A large producer of phosphate and compound fertilizers such as sulphoammophos 20:20, ammophos 12:52, NPK 16:16:16, fertilizer mixtures, extracted phosphoric and sulfuric acids.

OJSC Nevinnomyssky Azot One of Russia’s largest producers of nitric fertilizers, methyl acetate and polyvinyl alcohol. The company is the only Russian manufacturer of synthetic acetic acid.

EuroChem-VolgaKaliy LLC The company is developing the Gremyachinskoe potassium ore deposit which has estimated reserves of 1.2 billion tons of potassium salts, and is designing and building a mining and processing plant to produce potassium chloride.

A Kovdorsky GOK branch in Perm Territory Established to develop the promising Verkhmekamskoe potassium deposit that, along with the Gremyachinskoe deposit, is expected to put EuroChem in the leading position in domestic and global markets.

OJSC Sary-Tas Construction is planned for a mining and processing facility in Karatau, Kazakhstan, to refurbish a mineral fertilizer plant shut down 15 years ago.

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2008 I Social Report I EuroChem

nitrogen produced from natural gas

Product range

one of the key sources of plant nutrition raw material for proteins, enzymes, nucleic acids, chlorophyll and vitamins

Nitrogen fertilizers Liquid ammonia (NH3) – feedstock for nitrogen, phosphate

and complex fertilizers. It is also used for direct application.

phosphorus produced from apatite or phosphate rock plays a key role in metabolic processes required for photosynthesis in plants

potassium produced in the form of potassium salts facilitates synthesis and transportation of carbohydrates in plants increases strength against adverse environmental conditions improves crop quality due to intensified carbohydrates accumulation

see web-site

for more information

Urea (CO(NH2)2) – the most concentrated solid nitrogen

fertilizer, contains amide nitrogen (46 percent N). It is used for all types of crops in all types of soil as the primary fertilizer, pre-sowing fertilizer and top dressing. It can be used for rice cultivation, foliar dressing for vegetable and fruit crops, and for late corn dressing in order to increase the content of proteic substances in grain.

Ammonium nitrate (NH4NO3) – a highly efficient nitrogen

fertilizer (34.4 percent N), contains nitrogen in two forms: nitrate (direct nutrition for plants) and ammonia (prolonged action). It is used for all types of soils and crops as the presowing fertilizer and top dressing.

Calcium ammonium nitrate (NH4NO3. CaCO3. MgCO3) – a

nitrogen fertilizer (27 percent N). It is a mixture of ammonium nitrate and ground limestone or dolomite. The fertilizer is explosion and fire resistant and prevents soil from becoming acidic. It is used for all types of soils and agricultural crops as the main fertilizer, pre-sowing fertilizer and top dressing. The product is especially good for sour and alkaline soils as well as magnesium-deficient soils.

UAN solution – a liquefied nitrogen fertilizer (32 percent N) identical to ammonium nitrate or urea for its qualities in improving crop yield. It is used as the pre-sowing fertilizer and top dressing, and is applied using sprayers and in irrigation water.

Phosphate fertilizers MAP (monoammonium phosphate) (NH4H2PO4) – a highly

concentrated granular nitrogen-phosphate fertilizer containing nitrogen in ammonium form (12 percent N and 52 percent P2O5). MAP is a highly effective all-purpose fertilizer used for all types of soils and crops as the main and pre-sowing fertilizer.

EuroChem I Social Report I 2008

DAP (diammonium phosphate) (NH4)2HPO4) - a highly

concentrated granular nitrogen-phosphate fertilizer (18 percent N and 46 percent P2O5). DAP is a highly effective fertilizer used for all types of crops and soils as the main and pre-sowing fertilizer. The product is more efficiently used in spring and autumn by replowing the soil or as a top dressing during the vegetation period.

NP (monoammonium phosphate sulphate) ((NH4)2HPO4 +

(NH4)2SO4) – an all-purpose granular nitrogen-phosphate fertilizer containing at least 8 percent of sulphates (in terms of sulphur). The product is produced in two grades, NP 14:34 and NP 20:20. It is used for all types of soils and crops as the main fertilizer, pre-sowing fertilizer and for top dressing. It is especially good for crops that need sulphur: rape, winter cereals in early growth phases, potatoes.

Single superphosphate (Ca(H2PO4)2) –a granular

phosphate fertilizer that contains 6 percent N and 26 percent P2O5. It is used for all types of soils and crops as the main fertilizer, pre-sowing fertilizer and for top dressing. It also contains up to 10 percent of sulphates (in terms of sulphur) which is especially important for bean, grain and oil plants in low-sulphur soils.

NPK (ammonium nitrate phosphate) fertilizers

Other products Feed phosphates: defluorinated feed phosphate (DFP) (Ca4Na(PO4)3) - a highly effective environmentally-friendly fodder additive; monocalcium phosphate (MCP) (Ca(H2PO4)2) is used as a feed supplement for poultry and domestic animals, especially herbivorous animals. Feed phosphates are produced using high quality phosphate rock from the Kovdorsky GOK which does not contain heavy metals.

Mineral raw materials: apatite concentrate used in production of phosphate and complex fertilizers, phosphoric acid and feed phosphates; iron ore concentrate used as a raw material for cast iron manufacture; baddeleyite powder (ZrO2) used to produce fireproof and abrasive materials; aluminium fluoride (AlF3) used in aluminium production, glass making, optics manufacture and the tanning industry.

Acids: extracted phosphoric acid, sulphuric acid, four types of nitric acids (concentrated, weak, reactive and ultraclean).

NPK (NH4H2PO4 + NH4NO3 + KCl) (16:16:16, 8:24:24, 17:0,

1:28, 21:0, 1:21) – an all-purpose complex fertilizer widely used to balance nutrients for plants in all types of soils as the main fertilizer, pre-sowing fertilizer and for top dressing. The product features a solid smooth grain. High nutrient content exceeding 40 percent allows significant reductions in transportation costs, storage and application as compared to single fertilizers.

NPK (12:15:15) – a highly efficient complex chlorine-free fertilizer containing all elements necessary for plant growth such as nitrogen, phosphorus, potassium, and sulphates (at least 14 percent in terms of sulphur). It is used for all types of soils and crops and is recommended for chlorine-sensitive crops such as potatoes, fruit and berries, vegetables, vines, and tobacco. The fertilizer is mostly effective in fruit and vegetable gardening and flower growing.

Organic synthesis products: methanol, synthetic acetic acid, polyvinyl alcohol, acetic aldehyde, commercial butyl acetate, rectified vinyl acetate, methyl acetate, paint solvents, etc.

Industrial gases: gaseous and liquefied argon, gaseous and liquefied nitrogen, solid (dry ice), gaseous and liquefied carbon dioxide, gaseous and liquefied oxygen.

Deicing agents: Antigor and Acedor. Other commercial products: nutritional crystallized urea, nutritional acetic acid, commercial acetone, flotation agent.

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2008 I Social Report I EuroChem

Financial Performance

EuroChem maintains stable financial standing. Production and financial indicators EuroChem’s operations are based on the concept of sustainable growth. The Company’s goal over the next five years is to rank among the top-five global producers in terms of sales volume and cost effectiveness for three major fertilizer categories – nitrogen, phosphate and potash. In 2008, our production level was exceptionally high: „„Ammonia – 2.573 MMT „„Urea – 1.509 MMT „„Ammonium nitrate – 2.169 MMT „„UAN – 0.934 MMT „„MAP – 0.718 MMT „„DAP – 0.790 MMT „„NP and NPK – 0.580 MMT „„Apatite – 2.564 MMT „„Iron ore concentrate – 5.423 MMT „„Baddeleyite concentrate – 0.007 MMT „„Methanol – 0.458 MMT „„Acetic acid – 0.140 MMT In 2008, total production costs grew by 36 percent to 44.5 billion RUR, though sales grew at an ever greater rate. This resulted in a gross margin of 60 percent compared with 56 percent in 2007.

Financial stability In 2008, the global economy suffered severe dislocations which shook overall market confidence and impacted world prices and demand for various nutrients. However, by effectively managing its production resources, EuroChem capably maintained stable operating performance. EuroChem has maintained its stable financial position. 2008 was a record-setting year for the Company in terms of revenue and profit, due primarily to favourable fertilizer prices. As of year-end 2008, net debt totaled 25.3 billion RUR and Net Debt to EBITDA dropped below 0.6. Our cash flow and strong financial position support out credit ratings from S&P and Fitch (both BB/stable). In 2008, the EBIT margin grew from 26 percent to 36 percent as revenue growth exceeded growth in production and other

costs. The EBITDA margin also increased from 30 percent in 2007, to 39 percent in 2008. Our financial income slumped in 2008, as depreciation of the Russian Rouble against the US dollar offset net gains from the revaluation of financial assets and liabilities (loans, bank deposits and borrowings) denominated in foreign currencies. Instead, a loss of 3.8 billion RUR was recorded because financial liabilities denominated in foreign currency significantly exceeded the Company’s financial assets denominated in foreign currencies following the placement of a syndicated loan of $1.5 billion (44.1 billion RUR at the yearend exchange rate) in September 2008. A significant portion of borrowed funds, 10.1 billion RUR, was used to acquire stock in K+S AG, the revaluation of which is directly reflected in the Company’s equity capital without distinguishing between the foreign currency and exchange rate components (per IFRS requirements for “available for sale investments”). The currency translation loss of 3.8 billion RUR represented most of the Company’s 4.2 billion RUR net financing expenses in 2008. Managing working capital is one of the Company’s financial priorities. In 2008, net working capital increased significantly to 17.9 billion RUR from 9.6 billion RUR. This was primarily due to an accumulation of inventory during the fourth quarter of 2008, as the Company opted to carry sales over to future periods due to slumping prices. There was also an increase in advance payments and other receivables (from 6.4 billion to 10.6 billion RUR) attributable to increased capital investments in 2008. For more details see Annual Report 2008, pages 45-53.

EuroChem I Social Report I 2008

Nitrogen

Russian market standing

Compared to 2007, revenue and EBITDA from our nitrogen business increased by 50 percent and 84 percent, respectively. This was made possible due to between 40 and 95 percent average annual price increases for key product categories. The abrupt decline in demand and the resulting price correction in the final quarter caused a sharp contraction in sales volumes (down by 24 percent from the third quarter in terms of weight). This led to an overall 9 percent decline in sales volumes from 2007 to 2008. In the first quarter of 2009, sales volumes recovered strongly, increasing 9 percent over the first quarter of 2008.

The Company’s major market is in Russia. In 2008, 1.2 MMT of nutrients were sold in Russia.

Phosphate In 2008, phosphate segment revenue and EBITDA grew by 92 percent and 232 percent, respectively, driven by prices which more than doubled compared to 2007. As with nitrogen, the strong demand during the first eight months of the year (particularly from Indian and Chinese buyers) significantly declined toward the fourth quarter in anticipation of the ensuing price corrections. Because of these deferred purchases, sales volumes plummeted 75 percent in the 4th quarter, resulting in an overall decline for the year of 9 percent. In the 1st quarter of 2009, sales rebounded strongly, but still wound up 30 percent below those in the 1st quarter of 2008.

Organics In 2008, organics revenues declined by 2 percent against a backdrop of lower sales volumes (down by18 percent for methanol and by 9 percent for acetic acid). Margins were further depressed by rising transportation costs, with the EBITDA margin falling from 36 percent to 29 percent, whereas gross margin did not change. Higher iron ore prices in early 2008 held steady through the first nine months of the year, increasing revenues in this segment despite a 14 percent drop in sales volume compared with 2007. However, the positive impact on EBITDA from higher average prices in 2008 was more than offset by increasing transportation costs, which almost doubled. As the result, the EBITDA margin in mining by-products declined from 38 to 25 percent.

The Company’s distribution network in Russia consists of 29 distribution centres. In Russia, we focus on the Southern and Central Federal Districts which account for about three quarters of all fertilizer consumption in the country. The market is expected to grow annually by 10 percent over the next five years. We also expect that we will be selling more protective plant and seed products compared with the current level of 5 to 6 percent. Following the disintegration of the USSR, the application of fertilizers in Russian agriculture decreased sharply by 90 percent, which led to plummeting crop yields. This is why our distribution philosophy is centred around selling yield, not just fertilizers. EuroChem’s objective in Russia is to contribute to the recovery of efficient and productive agriculture which seems nearly impossible without substantial improvement in the rational application of fertilizers.

13

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2008 I Social Report I EuroChem

Distribution, logistics and transportation EuroChem is focused on developing its own agricultural distribution network. Investments in the agricultural network to date total 1.0 billion RUR.

Agricentres Company offices Marine terminals

EuroChem I Social Report I 2008

see web-site

for more information

Distribution EuroChem’s agricultural network has become an essential and reliable partner for agricultural producers by timely supplying a full range of nutrient products and providing integrated agrochemical solutions aimed at achieving planned crop yields. An integrated agrochemical support programme is currently underway: 11 agricultural centres take soil samples, make maps and provide advice to farmers on fertilizer application. In 2008, EuroChem’s distribution network was expanded to incorporate 33 agrochemical centres, 12 of which are either company-owned or affiliated. New distribution centres have opened in the Lipetsk and Orel Regions where the Company did not previously operate. Compared with 2007, nutrient sales through the Company’s own distributors doubled. As part of a systematic approach to distribution management, EuroChem commenced supplies of sugar beet and grain crop seeds in 2008. The Company also supplied products and services under the “Autumn Sowing 2008” programme which included a complete agrochemical process covering a seasonal cycle of winter crops growing over an area of 5,000 hectares.

Logistics The objective of our logistics divisions is to optimize logistics costs along the entire value chain. EuroChem’s strategic logistics development directives are: „„reduction of raw material and finished product transportation costs; „„further improvement in uninterrupted and timely supplies of finished products to users.

Railroad transport In railroad transportation, we are pursuing a change from a leased fleet to our own equipment. Our corporate fleet numbers: „„over 7,000 dedicated rail cars;

Starting from 2008, EuroChem is an official dealer for Pioneer, a large seed producer. The Company maintains partnerships with global leaders in the chemical protection of plants - Syngenta, BASF, DuPont and Bayer. EuroChem is now one of Bayer’s top-ten dealers in Russia, and has received its platinum dealer card. The Company also ranks among BASF’s top-ten and Syngenta’s topfive Russian dealers.

„„45 locomotives. A well-developed transportation system is an essential condition of transportation independence and goods security.

Sea transport EuroChem needs a well-developed sea transportation and port terminal system to enable deliveries to remote world regions, including South America and Asia. Currently, EuroChem operates a fleet of five to 10 vessels which is sufficient to support the Company’s sea transportation needs. As to marine terminal infrastructure, EuroChem owns three port facilities (Murmansk, Sillamae and Tuapse).

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2008 I Social Report I EuroChem

Corporate governance

EuroChem’s system of corporate governance helps ensure effective management and underpins its approach to behaving responsibly toward stakeholders. The Company’s governance bodies are the General Shareholders Meeting, the Board of Directors, the Management Board and General Director.

Board of Directors Our governance is guided by the Board of Directors whose role is to provide strategic leadership and oversight. The Board has a unitary structure bringing together non-executive and executive directors. During 2008, the Board had seven members. The chairman and five of the directors are non-executives, and of these, four directors comply with the criteria set for independent directors (as stated in the Board of Directors Regulations).

Board of Director Committees­: „„Audit Committee. In 2008, the committee focused on financial reporting, detailing a more structured organisational approach to risk management and internal control. It regularly meets with the External Auditors to discuss their audit and control recommendations. „„Corporate Governance and Personnel Committee. In 2008, the committee oversaw the development of the human resources strategy, the preparation of new incentive plans and the start of work on improving the senior management succession pool. „„Strategy Committee. In 2008, the committee reviewed the Company’s long-term investment programmes, prioritized proposed projects, assessed the ongoing implementation of strategic initiatives and evaluated new challenges and opportunities that emerged as the market changed. The committee also dealt with issues of environmental protection and health and safety. The committees meet before each Board meeting. Because meetings are planned in advance, director attendance in 2008 was very high at 96.6 percent. The committee members’ duties include a preliminary review of the issues to be covered in the Board of Directors meeting. Advance preparation of meeting materials enables a comprehensive analysis and effective exchange of opinions so that the directors can make high-quality decisions. Most of the meeting time is spent on reviewing opportunities, risks and performance drivers.

Reporting period events „„­General Shareholders Meeting – 5 meetings „„Board of Directors – 6 meetings in person and 15 meetings remotely „„Audit Committee – 8 meetings in person and 5 teleconference meetings „„Corporate Governance and Personnel Committee - 8 meetings in person „„Strategy Committee - 6 meetings in person and 2 teleconference meetings The Board of Directors focuses its efforts on major strategic initiatives and pays great attention to the way the Company responds to market changes. The Board also closely monitors cash flows, financing and investment programmes. The Board members have a good understanding of existing and future opportunities. The Board of Directors is set to ensure that the Company’s management makes decisions that would allow EuroChem to optimise performance levels , fully use available strategic advantages, and swiftly and deliberately exploit opportunities that arise. Production and commercial decisions are made with consideration for their social and environmental impacts on the Company, and are aimed at strengthening the Company’s business reputation and competitive edge. The Board of Director’s responsibilities include ensuring that company management is accountable for decisions made and the Company’s performance. The management’s performance reporting regularly appears on the Board’s agenda.

EuroChem I Social Report I 2008

Corporate governance rating

6+

Standard&Poor`s

Board of Directors at end of 2008

Management and reporting

A­ ndrey Melnichenko, Chairman of the Board of Directors ­Charles Adriaenssen, Corporate Governance and

EuroChem continues to implement the project entitled “Integrated Corporate Management System in Accordance with the Requirements of International Standards ISO 9001, ISO 14001, and OHSAS 18001”. The integrated management system is already in place at Lifosa AB and PG Phosphorit LLC. In 2009, the system will be implemented at the corporate level.

Personnel Committee

George Cardona, Strategy Committee (Chairman) Keith Jackson, Audit Committee and Strategy Committee Vladimir Stolin, Corporate Governance and Personnel Committee (Chairman)

Dmitry Strezhnev, CEO of EuroChem since 2003 Richard Sheath, Audit Committee (Chairman); Corporate Governance and Personnel Committee

In 2008, we started implementing El Compas, an integrated automated corporate governance and financial reporting system which will allow significant improvements in reporting quality and timeliness as performance information is now available within two weeks of the end of a reporting period. The non-executive directors have online access to this system at all times.

Nikolay Pilipenko, elected to Board in February 2009 For more details on the Board of Directors see Annual Report 2008, pages 60-64.

Risk management The Company is managing three main types of risks: operational, financial and strategic. Reputational risks are regarded as a separate risk category derived from the three main categories. Risk management at EuroChem covers the whole organization from top management at the main office to the plant level where managers are the key link in the risk management chain. We are currently in the process of establishing a more structured framework of risk management activities, and are setting up a group within the finance department to coordinate this effort. This group will be in charge of developing overall risk management methods, as well as classifying, reporting and communicating risk levels. For more details on risk management see Annual Report 2008, pages 54-56, and Social Report 2007, pages 53-75.

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2008 I Social Report I EuroChem

International operations EuroChem is a Russian manufacturing company selling in global markets. The Company is the largest producer of mineral fertilizers in Russia and ranks among the top-three companies in Europe and top-ten in the world.

5

th

in the world

for potassium

The Company exports over 80 percent of its products which makes global markets a critical factor in EuroChem’s sustainable operations.

salts

phosphate

fertilizers

Global markets standing: „„eleventh in the world in key products capacity; „„1.9 percent of the world’s mineral fertilizers production; „„2.1 percent of all mineral fertilizer sales in Europe; „„11.0 percent of all mineral fertilizer sales in the CIS.

Goals: „„increase the worldwide share of mineral fertilizer production from 1.9 percent in 2008, to 2.9 percent in 2013; „„take the lead in fertilizers production in Europe and the CIS.

6

th

in the world

in production

capacity nitrogen

fertilizers

7

th

in the world

in production

capacity

EuroChem I Social Report I 2008

In 2008 the Company exported its products to 68 countries, serving markets in Russia, the CIS, Western and Eastern Europe, North and Latin America, Africa, Asia and Oceania

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2008 I Social Report I EuroChem

Investment projects map

The Company’s long-term sustainable development is driven by the implementation of a number of investment projects

11 5

4

8

1

2

3

7

6

10 9

EuroChem I Social Report I 2008

1. Development of Gremyachinskoe potash field (Phase I), Volgograd Region, Russia, 2005 to 2014

7. Melamine production at OJSC Nevinnomyssky Azot, Nevinnomyssk, Russia, 2007 to 2010

Objectives: ensuring the Company’s raw materials supply and

Objectives: construction of Russia’s only state-of-the-art melamine facility, reduced imports, available product for end users Social impacts: environmental safety improvement by substituting toxic tar for safe melamine, 40 new jobs

production capacity, product range diversification Social impacts: establishment of a small town with welldeveloped infrastructure using the town of Kotelnikovo as the base point, 2,000 new jobs

2. Tuapse bulker terminal, Tuapse, Russia, 2007 to 2009 Objectives: optimization of regional transport infrastructure,

reduction of transportation costs, optimization of logistics chains Social impacts: 50 new jobs

8. Production of granulated urea at OJSC Azot, Novomoskovsk, Russia, 2007 to 2010 Objectives: start-up of Russia’s first granulated urea facility, products with highly useful qualities

Social impacts: environmental safety and labour condition improvements

3. Upgrade of sulphuric acid production at EuroChem-BMU LLC, Belorechensk, Russia, 2008 to 2010 Objectives: production growth Social impacts: environmental safety and labour condition

improvements

9. Development of phosphate rock deposits and construction of production facility in Karatau, Kazakhstan, 2009 to 2016 Objectives: entry into Kazakhstan’s phosphate sector and fertilizer market, production of mineral fertilizers, diversification of production, enhanced EuroChem corporate strength Social impacts: rehabilitation of Karatau infrastructure including water supply, motor roads, power and heat supply, 4,000 new jobs

4. Production of explosion-proof calcium ammonium nitrate at OJSC Azot, Novomoskovsk, Russia, 2007 to 2009

10. Upgrade of weak nitric acid production units at OJSC Nevinnomyssky Azot, Nevinnomyssk, Russia, 2008 to 2011

Objectives: competitive products, improvement of production

Objectives: replacement of outdated facilities, support fertilizer

standards

Social impacts: labour condition improvements

5. Sulphuric acid production at PG Phosphorite LLC, Kingisepp, Russia, 2008 to 2010 Objectives: production efficiency improvement Social impacts: increased availability of fertilizers for Russian

agriculture

6. Construction of NPK production facilities at EuroChem-BMU LLC, Belorechensk, Russia, 2009 to 2011 Objectives: new NPK high-level processing capacity for domestic and global markets Social impacts: environmental safety improvement

availability, stem decline in ammonium nitrate production Social impacts: environmental safety improvement

11. Development of Palashersky and Balakhontsevsky blocks of Verkhnekamskoe potash deposit, Perm Territory, Russia, 2008 to 2012 Objectives: development of new potash deposit, ensuring raw materials supply and production capacity, product range diversification Social impacts: improvement of infrastructure and quality of life in town of Usolie, 2,300 new jobs

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2008 I Social Report I EuroChem

Human resources THE KEY PRINCIPLE FOR EUROCHEM’S HUMAN RESOURCE POLICY IS BOOSTING COMPANY PRODUCTIVITY THROUGH ATTRACTION, DEVELOPMENT, AND MOTIVATION OF COMPETENT PERSONNEL. In February 2008, EuroChem’s Board of Directors adopted a Human Resources Management Strategy through 2012. The Strategy provides a detailed action plan in the following areas: „„support of business objectives and enhancement of employees’ performance;

Indicator \ Year

2006

2007

2008

Personnel costs, million RUR

6 588,1

7 288,2

9 628,7

Personnel costs changes, percent

15,3

10,6

29,0

„„improvement of staff qualities; „„recruitment, retention, dismissal of employees;

Incentives and compensation

„„organisational development, labour management;

EuroChem’s employee incentive system is a major tool for enhancing business efficiency and is a key element in the social policy.

„„incentives; „„personnel training, career management; „„in-house employer’s image. Practical efforts by human resources management have reduced active employee turnover in the Company’s production divisions from 7.3 percent in 2007, to 5.7 percent in 2008. Increasing efficiency and labour productivity have enabled a reduction in the Company’s average payroll by 9.3 percent in 2008. Indicator \ Year Average headcount, people

2006

2007

2008

26 410

23 805

21 585

EuroChem has fulfilled its commitments to assist released employees in finding other jobs. In 2008, labour productivity increased by 8.7 percent in terms of commercial product output per employee (6.5 percent in terms of gross output) and revenues per employee grew by 67.5 percent. Indicator \ Year

2006

2007

2008

Revenue per employee, million RUR

2,02

3,10

5,20

Gross output per employee, thou. tons

0,97

1,01

1,07

We continually increase our investments in human resources to remain a competitive, attractive and socially responsible employer.

The incentives system addresses both tangible and intangible rewards. We recognize our best employees on corporate holidays such as EuroChem Day and Chemist’s Day. In 2008, 347 top employees received EuroChem corporate awards. In 2008, a new compensation system was introduced in all of EuroChem’s Russian divisions. The new grading-based system aims at developing an employee’s multi-functional capabilities, mastering related job skills, and harmonizing personal and shared values. The system ensures fair and sufficient compensation commensurate with an employee’s effort, skills, knowledge and expertise. The system also motivates each employee to strive for better performance by achieving individual, team and corporate goals. This all serves as a guarantee of social strength within the EuroChem corporate environment. At its operational sites, EuroChem pursues hiring local staff. EuroChem’s regional strategy strives to ensure a competitive compensation package (10% above average across the main regional industries).

see web-site

for more information

EuroChem I Social Report I 2008

Indicator \ Year Average salary, RUR/ month

2006

2007

2008

16 025

20 305

25 220

31,3

26,7

24,2

Average salary changes, percent

The average monthly salary at EuroChem was 47 percent higher than the average salary throughout Russia in 2008. EuroChem’s corporate social guarantees are in fact the benefits stipulated in collective bargaining agreements. The average cost of an employee’s benefits package is 1/12 of the annual salary. EuroChem develops its budgets to account for annual indexation of social costs per employee by a factor at least equal to the inflation rate in the current year.

Training and development The personnel training system encompasses all employee categories, from workers and technical specialists to top managers. Personnel reserve development programmes have been continued. In 2008, 342 employees participated in the “Target Management” programme, up 16 percent from 2007. EuroChem maintains partnerships with lead Moscow and regional specialist universities and colleges. In 2008, target student groups were formed at MGGU (Moscow State Mining University) and MGUIE (Moscow State University of Engineering Ecology). The groups consisted of school graduates specializing in the Company’s areas of operation. The Company took part in more than 10 university recruitment fairs during the reporting year. All of the Company’s divisions place high emphasis on the involvement of young specialists. Over 100 employees participated in the young specialists training programme as instructors.

150

employees

trained under Manager Competence Development Programme (jointly with High School of Corporate Management)

27

employees

received МВА training (at the Academy of National Economy under the Government of the Russian Federation, and Kingston University, UK )

200

young specialists

hired

1300

university students

trained at EuroChem

23

24

2008 I Social Report I EuroChem

Social

policy review Internal social policy The Company’s internal social policy aims at improving labour and recreation conditions. In 2008 we spent 56 million RUR to arrange for our employees recreation at both our own recreation centres and external facilities. The Company also funded medication services and nutritional food on top of regulatory requirements. All employees underwent regular medical examinations. In 2008 we renovated amenity rooms in manufacturing shops, cafeterias, rehabilitated health care, recreational and educational facilities. Sports and healthy lifestyle remain among the most critical social aspects pursued by the Company. About 26 percent of employees went in for sports and participated in corporate sporting events in 2008. The Company is actively involved in industry professional and national holidays such as Chemist’s Day, Metallurgist’s Day, City Anniversary Days, Victory Day etc.

Community social policy EuroChem’s long-term community policy priorities are sports, healthcare, sciences and education which all cost the Company over 444.8 million RUR in 2008. The year 2008 social costs went down as compared with 2007 by 5.7 percent only. We had to cut some unplanned social expenditures in the final quarter of 2008 due to the global economic recession. The majority of EuroChem’s enterprises are local economic mainstays that support regional social stability through their continuous operations, taxes and decent salaries. This turned out as a critical factor at the time of economic depression when employees and their families largely depend on normal operation of the mainstay enterprises. With this in view, the Company is committed to: „„provide funding for construction and rehabilitation of municipal infrastructure facilities such as sporting, social, cultural etc.; „„assist in building motor roads and solving public transportation problems; „„allocate funds for the disabled, retired and low-income citizens; „„allocate funds for educational and health care institutions, orphanages and boarding schools to support their every-day operations.

Supporting sporting and healthy lifestyle activities is EuroChem’s social priority. The Company has for many years sponsored the SKA St-Petersburg ice-hockey club and some sports contests in various regions. In 2008 this was made a separate programme of children and youth ice-hockey and sports infrastructure development at locations of the Company’s operations. In 2008 we completed a number of large infrastructure projects at location of our operations which projects materially improved the life of local people. We overhauled kindergartens and hospitals in the town of Belorechensk, Krasnodar Territory (pages 32-33), purchased a 20 million RUR computer tomograph for the Kingisepp District Hospital (pages 38-39), invested in educational infrastructure and the renovation of the Azot Cultural and Business Centre complete with professional audio equipment in Novomoskovsk, Tula Region (pages 36-37). We also commenced residential housing construction and opened a health & fitness centre in Kotelnikovo, Volgograd Region, built a mountain skiing facility and a cinema theatre in Kovdor, Murmansk Region (pages 28-29). In 2008, pursuant to the “EuroChem Classes” programme, we set up 15 dedicated classes in a number of Russian regions, namely, four in Kovdor (Murmansk Region); three each in Novomoskovsk (Tula Region), Belorechensk (Krasnodar Territory), and Nevinnomyssk (Stavropol Territory); two in Kingisepp (Leningrad Region). So far over 21 million RUR has been allocated for the programme. EuroChem also invests in tools, chemicals, visual aids etc. intended to further develop the EuroChem classes.

EuroChem I Social Report I 2008

employees

7,000 and their families improved health in health and recreation centres

56 RUR million

allocated for employees recreation

Technologies, projects and programmes Notwithstanding the economic crisis, we are trying to fulfil our social commitments, adhere to the corporate social responsibility principles, and develop our dedicated social investment projects. In 2008 we continued the implementation of a complex innovative social programme in Nevinnomyssk, Stavropol Territory. Within the framework of the “Environment and Population Health” programme and jointly with the “Sustainable Development” Foundation, we conducted social projects competitions with the Company’s grants as awards. See page 27 below for the list of projects. Also see our Social Report 2007 (pages 43-45) and the web-site of the “Sustainable Development” Foundation. Within the framework of the “Healthy Family – Healthy Nation” programme and jointly with the “Healthy Russia” Foundation, we also conducted health festivals and contests, implemented programmes for teachers and medical doctors, arranged healthy lifestyle events and roundtable discussions in local educational institutions in Nevinnomyssk. All of these events were attended by over 2,000 people and 100 local organisations. For more details see pages 28-45. In 2008 we presented a programme of children and youth icehockey and sports infrastructure development at the Company’s operational locations for 2009 through 2012. The programme stipulates establishing the basis for training and methodology support of children and youth ice-hockey and ice sports at locations of the Company’s operations. The programme implementation is supported by the Ministry of Sports, Tourism and Youth Policy of the Russian Federation.

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2008 I Social Report I EuroChem

Example of a complex

social programme EuroChem helps the people of Nevinnomyssk realise projects that improve the quality of life in their home town

2 19 24 22 23

7 4

17

11

15

10

16

1 3

9 8

5 18 6

14

13

20

21

12

EuroChem I Social Report I 2008 “Environment and Population Health” Programme in Nevinnomyssk Implemented Projects 1. “Children’s Dreams”, gymnasium No. 10 : a sports and entertainment ground.

13. “The territory of health”, Harbor social rehabilitation centre: construction of a new sports ground, installation of additional sports equipment.

2. “A way to healthy life for students and teachers

14. “Don’t reject me”, a complex social services centre:

of the vocational school and inhabitants of Golovnoe Neighborhood”, vocational school No. 11: rehabilitation of a sports ground, construction of a run track, jumping pit, playing ground, outdoor fitness equipment.

equipping the aftercare and computer rooms.

3. “Winter garden – an advisory centre for landscaping of municipal educational facilities”, a young naturalist station: exposition of environment-vitalizing green plants, assistance in landscaping of educational facilities.

15. “Your health is in your hands”, “Zhuravlik” regional

4. “Resources saving – a critical prerequisite to an effective healthcare model”, municipal hospital: replacement of electric cooking ovens with gas ovens.

16. “Dazzling smile”, a dental clinic: equipment for a new children’s dental facility.

5. “The key to health”, the municipal children’s hospital: installation of water therapy facilities, purchase of fitness equipment, aftercare treatment of children from the local orphanage; trees planting at the orphanage.

17. “New sports for Nevinnomyssk teenagers”, the

6. “Mediasphere”, the local radio station Vis-a-vis:

18. “Healthy infants”, the municipal children’s hospital: revamp of the swimming pool for infants, purchase of medical supplies as part of the programme of preventive healthcare of infants.

establishment of a school of eco-journalism.

children’s health centre: equipment for aromatherapy, oxygen cocktail, inhalation therapy, psychological help rooms, health improvement services for over 250 elementary school pupils.

Palace of Sports: construction of a skate park.

7. “Energosphere”, the municipal ambulance station: installation of power saving systems in the building.

19. “Healthy maternity – happy maternity”, municipal outpatient clinic No.1: refitting the room for physical exercises for pregnant women.

8. “Ecosphere”, school No.1: equipping an environmental

20. “Assiduous manager”, the municipal children’s

classroom.

hospital: revamp of kitchen facilities.

9. “Comfort, smile and home feeling”, kindergarten No. 45: revamp of kitchen and laundry facilities.

21. “An island of joy”, Municipal Government Body No. 4: a new playground, redevelopment of the municipal children’s hospital site.

10. “Become a never-sick”, kindergarten No. 22: upgrade

22. “Be happy from your childhood”, kindergarten No.

of physical therapy and sports rooms.

19: sports facilities and site redevelopment.

11. “Future stars of Russian football”, vocational school

23. “The youth for sports”, Chemical College: refitting

No. 6: refurbishment of changing rooms at the Vesta football club, organisation of the Preschool Football League.

the sports room.

12. “Mercy and compassion”, Blue Cross animal hospital: establishment of a stray pets rescue service.

24. “Family recreation”, the housing and public utilities department: construction of a mini-park on the waste land between the kindergarten and the chemical college.

27

28

2008 I Social Report I EuroChem

see web-site

for more

Murmansk

information

Murmansk Region

Kovdor

Murmansk Region

O T

JSC Kovdorsky GOK is a unique division of EuroChem.

he facility is located in northern Russia, Murmansk Region, close to the Russian-Finnish border. It produces iron ore, apatite and baddeleyite concentrate, being the second largest producer of apatite concentrate in Russia and the only producer of baddeleyite concentrate in the world. The products comply with international standard requirements.

T K

he history of the plant stems back to late 50-s and early 60-s.

ovdorsky GOK went through a decline in production in the 90-s. In 2001 Kovdorsky GOK joined EuroChem Mineral and Chemical Company whose rehab and investment projects allowed the enterprise to rise and become a successful producer. In 2007 Kovdorsky GOK celebrated its 45th anniversary, while the mining town of Kovdor turned 55 in 2008.

M

ajor investment projects in 2008: expansion of the rock overburden transportation conveyor; renewal of mining transport vehicles; upgrade of receipt and storage technology for fuels and lubricants; upgrade of baddeleyite gravity separation facilities and apatite filtration facilities.

O

ur important large-scale social projects implemented in the Kovdor district in 2008 totalled 52 million RUR.

EuroChem I Social Report I 2008

EuroChem’s major social investments in Kovdor in 2008 „„­A European-class mountain skiing facility Vars, one of the best in the Murmansk Region. The facility includes a T-bar lift and platter lift, a ratrac snow machine, a ski-pass system and state-of-the-art sporting equipment. The facility has a capacity of 465 people per hour, a 610 m long slope run (130 m vertical drop) and artificial lighting. It is a great place for family recreation. „„Diagnostic and treatment equipment for the Murmansk regional children’s hospital and the Kovdor central district hospital. „„Social protection programmes for low-income population of the Murmansk Region and Kovdor district. „„A 130-seat movie theatre in the Pyramid family recreation centre, complete with state-of-the-art film projectors. The movie theater ranks third in the region for its equipment. „„Rebuilding of the Kovdor polytechnical college’s hostel which can now accommodate non-resident students. „„Social benefit payments for employees recreation in the Kovdorsky preventive healthcare centre and in healthcare centres outside of the Murmansk Region and for children’s recreation, non-recurrent cash aid at retirement, nonrecurrent cash aid to hired young specialists, to employees celebrating their anniversaries, to employees at child birth. In 2008, 1,099 people enjoyed a stay in the Kovdorsky preventive healthcare centre. „„106 university and college students had their practical training at Kovdorsky GOK in 2008. „„Kovdor has more EuroChem classes than any other location of the Company’s operations. In 2006 and 2007 we equipped a chemistry classroom in school No. 11, a natural science classroom and an international linguistic centre in school No. 2, a EuroChem-class for preparation engineers training at the Kovdor polytechnic college. In 2008 we established a dedicated natural sciences classroom at the municipal resource centre based in school No.8. „„Conducted phase 1 of staff training under the aegis of a Russian-Norwegian programme “Quality, health and environment” for employees and union activists. The programme includes resources and energy saving approaches.

О

ОО «Ковдорский горно-обогатительный комбинат» - уникальное предприятие «ЕвроХима». Комбинат расположен на севере России в Мурманской области вблизи с границей с Финляндией. Предприятие производит железорудный концентрат, апатитовый концентрат и бадделеитовый концентрат. Комбинат - второй по величине производитель апатитового концентрата в России и единственный в мире производитель бадделеитового концентрата. Продукция комбината соответствует требованиям мировых стандартов.

И

стория Ковдорского ГОКа которая начиналась в конце 50-х начале 60-х годов. ГОК пережил спад производства в 90е годы, но в дальнейшем начался устойчивый рост объёмов выпуска. Вхождение в ЕвроХим в 2001 г., реконструкция и инвестиционные проекты позволили ГОКу вновь стать успешным предприятием. В 2008 г. город горняков отметил 55-летие.

О

сновные инвестиционные проекты на Ковдорском ГОКе в 2008 г.: расширение конвейерной линии участка ЦПТ скальной вскрыши, обновление горно-транспортной техники, модернизация технологии приемки и хранения горюче-смазочных материалов, модернизации отделения фильтрации апатитового производства обогатительного комплекса

В

рамках социальных программ в 2008 г. реализованы масштабные и значимые для Ковдорского района проекты на сумму 52 млн. руб.

О

сновные инвестиционные проекты на Ковдорском ГОКе в 2008 г.: расширение конвейерной линии участка ЦПТ скальной вскрыши, обновление горно-транспортной техники, модернизация технологии приемки и хранения горюче-смазочных материалов, модернизации отделения фильтрации апатитового производства обогатительного комплекса.

Основные направления социальных инвестиций

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S t a v r o p o l Te r r i t o r y

Stavropol

O

Nevinnomyssk Stavropol Territory

JSC Nevinnomyssky Azot is the largest producer of nitric fertilizers in Russia and the only Russian producer of synthetic acetic acid, methyl acetate and polyvinyl alcohol. It is the economic mainstay of the town of Nevinnomyssk and a prominent tax payer.

A

s the enterprise merged with EuroChem, the Company launched a strategic production development programme. Investments in capital assets have totalled 5.02 billion RUR since 2000.

T

he Company’s social priorities in the region are scientific research and education, support of healthy lifestyle and sports, assistance in solving pressing municipal problems. A complex social programme is being implemented in a joint effort with the “Sustainable Development” and “Healthy Russia” Foundations, with total spending of 30 million RUR.

EuroChem’s major lines of social involvement in Nevinnomyssk in 2008:­ „„implementation of a complex innovative social programme including the “Environment and Population Health in Nevinnomyssk” and “Healthy Family – Healthy Nation” programmes (more than 30 municipal development projects involving over 100 local organisations); „„funding upgrades of the town’s educational institutions within the framework of the Company’s priority of education support; „„purchasing state-of-the-art medical equipment for the municipal healthcare department; „„taking part in the town’s infrastructure development; „„holiday-related events such as the Chemist’s Day on which the best school chemistry teachers and student contest winners are awarded, and participation in City Anniversary Days (Social Projects Fair and other events).

EuroChem I Social Report I 2008

E

uroChem’s social programmes implemented jointly with the “Sustainable Development” and “Healthy Russia” Foundations, were at their peak in 2008.

M

ost of the projects performed during the first two grant competitions under the “Environment and Population Health in Nevinnomyssk” programme were completed and the third competition’s projects were launched. We financed 24 projects initiated by local people in the areas of resources saving, equipment upgrades, children’s sports, ecological journalism etc. (see pages 26-27). In early October 2008, a roundtable discussion was held during the Social Project Fair to discuss effectiveness of implemented social projects. The programme’s fundamentals and organisational details of grant competitions for the people of Nevinnomyssk are reflected in Social Report 2007, “Social Investments and Charity” section on pages 43 to 45.

T

he “Healthy Family – Healthy Nation” programme included infants health improvement, reproductive health of the young people, educating teenagers on healthy lifestyles, health festivals, contests, events for teachers and medical workers. We arranged a town campaign devoted to healthy lifestyles which included events under the aegis of the International Day Against Smoking, healthy lifestyle discussions in local schools concluded in the final discussion club meeting. For more details see the Company’s web-site.

A

s part of the health care support programme we purchased equipment for the territorial clinical cardiology centre, territorial clinical oncologic centre, Medical centre for outpatient dialysis, Stavropol territorial clinical centre for specialist medical aid, Kislovodsk maternity hospital and municipal children’s hospital, etc. All in all, EuroChem’s spending on medical treatment improvements in Stavropol Territory amounted to 25 million RUR.

A

second EuroChem-class consisting of two chemistry classrooms (theory and practical exercises) was opened in town in vocational school No.6.

N

evinnomyssky Azot continues to implement one of EuroChem’s most challenging investment projects. In 2011 we expect to commission a 50 KMT p.a. melamine production facility. This facility is going to be the first of its kind in Russia and its production capacity will be enough to supply all of the country’s demand. As of today, the project has been through all approval stages, including public hearings, and received appreciation from various public associations including the Council of Elders of Nevinnomyssk.

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see web-site

for more information

K r a s n o d a r Te r r i t o r y

Krasnodar

Belorechensk Krasnodar Territory

E

uroChem - Belorechenskie Minudobreniya LLC is a large producer of phosphate and compound fertilizers, ammonium phosphate sulfate, MAP, NPK, fertilizer mixtures, extracted phosphoric and sulfuric acids.

T

he enterprise and the town around were first established in early 1970-s and then reborn in 2002 when it merged with EuroChem. The Company’s investment project stabilized the existing capacity at its design level and facilitated performance improvement. Over 1.2 billion RUR was spent on production upgrade.

A

tmospheric emissions today are 15 percent to 20 percent below maximum acceptable concentrations.

A

zero-discharge water supply system is currently being designed and built. The plant’s own 1,000 m2/day waste water treatment facilities have been put in operation. The problem of production waste storage (phosphogypsum) has been basically resolved.

E

uroChem-BMU LLC provides support to the town of Belorechensk in its social and economic development. The main social projects relate to the support of education, health care and children’s sports.

EuroChem I Social Report I 2008

EuroChem’s key social projects in Belorechensk in 2008: „„­Revamp of kindergarten No.11 – the building face renovated and windows replaced; overhaul of rooms in kindergartens in towns of Shkolnoe and Zarechnoe; „„Overhaul of the accident emergency ward in the central district hospital; replacement of window frames in the Ryazanskoe medical district hospital. „„In 2008, 44 university and college students had their practical training at EuroChem-BMU; „„EuroChem-BMU continued its programme of EuroChemclasses in Belorechensk (school No.5) and towns of Ryazanskoe (school No. 18) and Pshekhskoe (school No. 26) and purchased additional state-of-the-art interactive equipment. „„Overhaul of the sporting games room in the Olympic reserve youth sports school (complete replacement of flooring). „„Provided aid to the Kuban cycling team of the Krasnodar Cycling Federation.

I

n 2008 EuroChem-BMU received the “Best Corporate Charity Provider” award from the Council for assistance in development of civil society and human rights institutions under the jurisdiction of the Head of Administration of Krasnodar Territory.

E

uroChem-BMU won the “Best Environmental Project 2008” award for the project of land reclamation using mineral soil (phosphogypsum). The project was implemented to reclaim abandoned pits used for liquefied wastes storage, with a total area of 25 hectares. The reclaimed land was used to lay out a park and forest area and then returned to former owners. The biological phase of land reclamation included planting of transplant oak and chestnut trees and is monitored by the Kuban State Agricultural University. This work will become a joint contribution of scientists and manufacturers to the local programme of maintenance and restoration of agricultural soil fertility.

Врезка экологический проект - Рекультивация карты № 2 шламонакопителя цеха кормовых обесфторенных фосфатов (КОФ) с использованием в качестве минерального грунта отхода производственной деятельности предприятия нейтрализованного фосфогипса. На площади 25 га карты № 2 цеха КОФ разбита лесопарковая зона. В октябре 2008 г. предприятие приступило к проведению биологического этапа рекультивации в ходе которого высажены саженцы дуба красного, липы крупнолистной и клена явор.

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K r a s n o d a r Te r r i t o r y

Krasnodar

Tuapse

Krasnodar Territory

I

n 2008 we began construction of the Tuapse Bulker Terminal for dry granulated fertilizers. The project is set to reduce transportation costs and become an independent stevedore player in the Black Sea basin.

P

lanned terminal’s cargo turnover is 2.3 MMT per annum, storage capacity for shipping lots up to 105 KMT. The terminal’s major process equipment is supplied by Thyssenkrupp Foerdertechnik (Germany). In terms of equipment the facility is the most advanced in Russia and in line with the best in the world terminals.

E

uroChem’s priority is environmental safety of the new facility. Each cargo handling area will be equipped with dust cleaning systems, the railroad car unloading station will use a pneumatic system for cleaning mounted wheels, the entrance and exit gates will be equipped with non-rigid shutters.

T

he facility is set to be commissioned in late 2009.

EuroChem I Social Report I 2008

see web-site

for more information

Fulfillment of EuroChem’s social commitments in Tuapse in 2008 „„The Company is building two ninestorey houses for the residents of three houses that have appeared to be located within the sanitaryprotection zone of the terminal. The Tuapse terminal will comply with all current environmental and technical regulations. „„In summer of 2008 the Tuapse terminal paid for recreation of 60 gifted children from low-income families in the Khimik vacation hotel. „„Construction of an access railroad to the terminal is almost completed. This is going to be the first access road to detour the town on the way to the marine facilities. This solution will partly unclog the existing road to the Tuapse cargo port, thus improving both natural and social environments in Tuapse.

O

nce the Tuapse bulker terminal is put in operation, its key social priorities will be transportation infrastructure, children help programmes, children out-of-school education, environmental projects.

E

uroChem provides open and trustworthy information in respect of the Tuapse bulker terminal construction and its impacts on the local social and economic development.

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2008 I Social Report I EuroChem

see web-site

for more information

Tula

Tu l a Re g i o n

Novomoskovsk Tula Region

N

ovomoskovsky Azot is one of the largest chemical manufacturers in Europe and Russia. Out of seven EuroChem-affiliated enterprises, Azot is responsible for 22 percent of the holding company’s products. Within EuroChem organisation, Azot ranks first in the production of ammonia, ammonium nitrate, urea and methanol. The enterprise takes active part in funding municipal social programmes, provides charity services to children educational, municipal health care and sports institutions.

EuroChem’s key social projects in Novomoskovsk in 2008 „„­Completion of resettlement of residents from one-kilometer sanitary-protection zone at the total cost of 21 million RUR. „„Organisation of competition of sports classes ‘Vityaz” (school No. 9). „„Refit of the sports room in school No.17. „„Refit of the sports room in the special boarding school, category V, and renovation of special school, category VIII. „„Establishment of EuroChem classes in schools No. 12, 18, 25. „„Continued cooperation with the Novomoskovsk Department of Russian Mendeleev Chemical and Technical University. While in 2007 the Company helped refit the existing laboratory of physical and chemical research, in 2008 it financed a state-of-the-art laboratory for the first and second year students. The Novomoskovsk polytechnic College and vocational school No. 10 also received financial aid.

EuroChem I Social Report I 2008

„„A concert piano for children’s musical school No.1. „„Renovation of the Azot cultural and business centre, installation of MartinAudo equipment. „„Refit of outpatient clinic No. 3 and Barsky medical centre. „„Redevelopment of the sports ground in the Novomoskovsk orphanage.

I

n 2008, 31 million RUR was invested in social and economic projects in the Tula Region in general and the Novomoskovsk District in particular. 3,727 employees of OJSC Azot received training in 2008: 1,853 engineering staff and 1,874 production personnel. Training was conducted both at in-house and external training centres.

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see web-site

for more information

S.-Peterburg Leningrad Region

Kingisepp Leningrad Region

P

hosphorit Industrial Group is one of the leading producers of phosphate fertilizers and feed phosphates in the north-west of Russia as well as sulfuric and phosphoric acids for its own needs. PG Phosphorit LLC ranks third in Russia for phosphate fertilizers and ranks first for feed phosphates. In late December 2008 the division celebrated its 45th anniversary.

I

n 2008 EuroChem invested 680 million RUR in Phosphorit upgrade and quality improvement. Upgrade included application of resource saving technologies and refit of capital assets.

F

rom its day one, Phosphorit has been and still is the local economic mainstay

I T

n 2008, 28 million RUR was spent as social aid to local organisations.

he division’s collective bargaining agreement is the basis for its social policy. The agreement was recognized as the best collective bargaining agreement in the Leningrad Region in 2008. All social benefits and guarantees that are stipulated in the agreement are provided in full.

EuroChem I Social Report I 2008

EuroChem’s key social projects in Kingisepp in 2008 „„­Purchase of a 20 million RUR Toshiba MS computer tomograph for the Prokhorov central district hospital. The new medical service is now available for the company employees as well as for the people of Kingisepp and visitors from neighboring districts. In the past, this kind of medical examination was only available in St-Petersburg after a long waiting period. „„Equipment of EuroChem-classes in school No.3 and an electric repair shop in the regional polytechnic vocational school No. 18. „„Aid to the Kingisepp football team. „„Allocation of 45 million RUR for construction of a residential house for young specialists. „„Training of young specialists at the PG Phosphorit Training Centre. „„A 5,000 RUR non-recurrent cash aid to each War veteran on Victory Day.

B

y President’s Decree, three PG Phosphorit employees were awarded the Order of Service to the Fatherland, II degree, two employees were bestowed the title of the Honoured Chemist of the Russian Federation. On the Chemist’s Day, 59 employees were distinguished by various awards.

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see web-site

for more

Lithuania

information

Vilnius

Kedainiai Lithuania

L T

ifosa AB operates in Kedainiai, the geographical centre of Lithuania.

he region is known for its strategic motor roads such as the Via Baltic international motor road.

L

ifosa’s key product is diammonium phosphate fertilizer (DAP). The company also produces aluminum fluoride, monocalcium phosphate, phosphoric acid and commercial sulfuric acid. Lifosa merged with EuroChem in 2002. In 2003 the company implemented quality assurance and environmental management systems (ISO 9001, ISO 14001, OHSAS 18001). Lifosa is the winner of many national environment protection and products quality competitions.

I T

n 2008 Lifosa celebrated its 45th anniversary.

he Company’s high level of social responsibility is the factor that drives fulfilment of the following commitments: „„­before the society – manufacture of high quality products, observance of law and environment protection; „„before the Company personnel – investments in human resources; „„before the government and local authorities – social and economic cooperation; „„before the local communities – target assistance as an element of the Company’s social policy.

EuroChem I Social Report I 2008

1,1 USD

million

social expenditures

A

s the largest industrial enterprise of Kedainiai district, Lifosa AB has always helped its home town. It is owing to the company that the town is the way it is these days, a nice-looking and comfortable place to live. The Company provides assistance in implementing health care and youth sports projects

EuroChem’s social investments in Kedainiai in 2008 „„­Support to scientific research and education - $130,000. „„Support to health care and sports - $500,000. „„Regional programmes - $370,000. „„Miscellaneous district needs - $100,000.

EuroChem’s key social projects in Kedainiai in 2008 „„­Refit of qualitative chemical analysis laboratory of the Kaunas technological University, the chemical technologies department. Overhaul of rooms (ca. 100 m2), purchase of new equipment and furniture. The investment allowed the university to improve training effectiveness. „„Repair of chemistry and biology classrooms, purchase of new appliances and training aids in four secondary schools of Kedainiai district (Iosvainiu, M.Daukshos, Shetos, Rito) plus in Mikaloyuus Katkus gymnasium. „„A festivity for Kedainiai farmers. In January 2008 the Company presented 55 tons of fertilizers (diammonium phosphate) and passes to the Hannover agricultural exhibition. Thanks to the Company, 55 Kedainiai farmers were able to participate in the exhibition. „„Construction of sporting facilities in a new Kedainiai residential neighbourhood: a fenced-off ground with artificial flooring, a play ground with seesaws and other play facilities.

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2008 I Social Report I EuroChem

Volgograd Region

investments billion RUR

10

in an engineering and social infrastructure

Volgograd

new jobs

2 000 will be created

Kotelnikovo Volgograd Region

E

uroChem’s operations are the driving factor of development of the town of Kotelnikovo. EuroChem-VolgaKaliy LLC is building a mining and processing plant to produce potash fertilizers. The plant will be the first green-field mining and processing facility in the CIS and Europe over the past 25 years and one of the largest private investment projects in the modern Russian history.

T

he magnitude of changes is especially visible in Kotelnikovo, a small district centre with less than 20,000 people. A complete set of both economic and social facilities (residential housing, social infrastructure) will be built almost from scratch.

I

n 2009 to 2013 we will build the required infrastructure to support the town and make it an attractive place for new-coming workforce. The development concept for the town is supposed to provide a comfortable compact residential area with a quality working and living environment.

The Company will provide funding for: „„construction of single family homes and hostels for specialists; „„preschool and school educational infrastructure; „„modern quality health care infrastructure; „„entertainment and sports facilities; „„redevelopment of public utility systems, and other projects.

EuroChem I Social Report I 2008

total

investments

85,5 RUR

billion

Education: two preschool facilities, 100 children each, and a school for 600 pupils.

Health care: a therapy building for 100 beds and an outpatient clinic for 500 patients per shift.

Culture: a shopping and entertainment mall, a sports centre and a municipal park area.

A

health and fitness centre has been built recently. The centre comprises a multipurpose 42x18 m2 sports room, a four-lane swimming pool, a sauna, a fitness machines room, a medical aid room, a massage room.

I

n December 2008 EuroChem responded to the request from the Volgograd regional administration and presented a water-supply truck to the people of Elton, Pallasovsky District, to support water supply.

I

n whole, EuroChem-VolgaKaliy’s charity funding in the Kotelnikovo District in 2008 amounted to 20 million RUR.

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2008 I Social Report I EuroChem

Astana Republic of Kazakhstan

Karatau Republic of Kazakhstan

Revival of abandoned town, organisation of production

E

uroChem’s new complex project in the Republic of Kazakhstan:

„„­Development of Karatau phosphate fields. „„Construction of a mining and processing plant to produce high-quality phosphate concentrate. „„Construction of a large mineral fertilizer manufacturing facility (nitric, phosphate complex nutrients), with a capacity of 2 MMT p.a.

K

azakhstan’s domestic market will be a priority market for the new manufacturer. This project may help boost the country’s fertilizers consumption.

see web-site

for more information

EuroChem I Social Report I 2008

new jobs

4 000

will be created

Project milestones in 2008 „„In 2008 the Company acquired the government’s stock in Sary-Tas manufacturing facility in Karatau which will be used as the site for a new fertilizer plant. „„Complete redeemed outstanding payables for the past 15 years, including salary debts, taxes, pension deductions etc. „„Salaries are paid to the employees of the shutdown facility, staffing is underway. „„Preparation for ore mines engineering and construction of a new plant is underway.

Social and economic effects Once implemented, the project will help: „„resolve the problem of fertilizers shortage in the Republic of Kazakhstan; „„increase yield of all agricultural crops, improve quality of products; „„create up to 4,000 new jobs; „„ensure significant tax proceeds; „„solve a number of social and economic problems currently pressing in the Zhambyl Region and in the towns of Karatau and Zhanatas.

T

he project implementation would strengthen the relations between the countries under the aegis of economic integration of Russia, Kazakhstan and Belarus. Potash from EuroChem’s field in Volgograd Region will allow the Company to produce all known fertilizers. At the same time, phosphate rock supplies from Kazakhstan to processing facilities in the south of Russia and to Gomel chemical plant in Belarus will increase Kazakhstan’s export revenues.

K T

azakhstan President N. Nazarbaev signed a Protocol that regulates major issues of subsoil use rights.

he Government of the Republic of Kazakhstan and EuroChem have signed a memorandum of cooperation. This project is expected to grow into the largest Russian-Kazakhstan joint projects.

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2008 I Social Report I EuroChem

Environmental

projects

IN 2008 ENVIRONMENTAL IMPACTS WERE EFFECTIVELY MITIGATED. ENVIRONMENT PROTECTION COSTS IN 2008 AMOUNTED TO 967 MILLION RUR. The Company’s environmental policy relies on the corporate Management System Policy endorsed by Order No. 08-182/01-2 dated October 20, 2008.

Environment protection provisions at EuroChem

Environment protection results in 2008 „„Total annual emissions by EuroChem’s divisions made 28.4 KMT which is 2.1 percent lower than that in 2007. „„109 million m3 of waste water was discharged in 2008 which is 9.9 percent lower than in 2007. „„Fresh water consumption reduced by 17.5 percent to reach 88.2 m3. „„Electric power consumption reduced by 7.6 percent to reach 3,261 million kWt/h. „„Heat power consumption was at 6,373,698 Gcal which is 9.7 percent lower than in 2007. 47,564 thousand tons of wastes were generated in the reporting year. The 3.7 percent growth in wastes generation by the mining sector was caused by greater output at Kovdorsky GOK. Total mining sector wastes of hazard class V amounted to 98 percent. At EuroChem we perform ongoing environmental monitoring in order to: „„prevent environmental hazards; „„maintain environmental safety of production processes through identification of dangerous deviations from standard impact values; „„ensure production safety through identification of equipment operation departures from standard performance.

PG Phosphorit LLC Action: Improvement of heat recovery and reduction of sulfur dioxide emissions in sulfuric acid production. Implementation period: January 2007 through December 2008 Investment: 732 million RUR Environmental effects: Annual reduction of sulfur dioxide emissions by 600 tons, carbon dioxide by 83,762 tons, carbon oxide by 175.8 tons, nitrogen oxide by 165.7 tons; reduction of fuel equivalent by 60.1 thousand tons due to complete heat recovery from power-generating steam in sulfuric acid production.

EuroChem-BMU LLC Action: Reclamation of pit No. 2 used for storage of sludge from the defluorinated feed phosphates shop, using neutralized phosphogypsum wastes as mineral soil. Innovation description: Modification of phosphogypsum storage and neutralization technology. Chemical and ecotoxicological studies have indicated that phosphogypsum generated by production processes at EuroChem-BMU has properties of hazard class V substances and may be used as a friendly substrate for soil formation. Implementation period: 2007 through 2009 Investment: 26 million RUR Environmental effects: Reclamation of pit No.2 used for storage of sludge from the defluorinated feed phosphates shop, pit area 25 hectares, laying out a park and forest in the area of the pit. In October 2008 the company commenced the biological phase of reclamation which included planting of transplant red oak trees, large-leaved lindens and sycamore maple trees.

On December 1, 2008, the Minister of Natural Resources of the Russian Federation awarded EuroChem the “Best Environmental Project of the Year” prize. EuroChem was also awarded a prize and diploma, nomination “Environmental Effectiveness of Economic Activities. Environmental Management” for the “Enhancement of Environmental Effectiveness of Management Systems in Mineral Fertilizers Production”

EuroChem I Social Report I 2008

OJSC Nevinnomyssky Azot

OJSC Azot

Action: Upgrade of the water treatment process.

Action: Upgrade of urea production in Karbamid-3 shop.

Innovation description: To supply required quality water for ammonia production, a reverse osmosis water treatment unit is installed at the demineralization station. This will take a replacement of three trains consisting of H+ cation exchange filters, decarbonizers and OH- anion exchange filters in ammonia production shops with a 500 m3/hour reverse osmosis unit. Implementation period: 2008 through 2009

Innovation description: Upgrade of the synthesis and distillation process (Urea Casale license) and replacement of the existing prilling column with a new Stamicarbon granulation unit. The upgrade will help increase Karbamid-3 shop productivity, improve economic and environmental performance, increase the engineering level of production and produce better quality products.

Investment: 86.7 million RUR

Implementation period: 2006 through 2009

Environmental effects: River water consumption will be reduced by 17.52 million m3/year; waste water discharge will be reduced by 16 million m3/year; sulphates discharge in water bodies will be reduced by 1,500 tons, solid residues discharge will be reduced by 3,000 tons and nitrates discharge will be reduced by 400 tons.

Investment: 2, 413.2 million RUR, inclusive of VAT and 522.9 million RUR for environment protection.

Kovdorsky GOK jointly with the Mining Institute of the Kolsky Scientific Centre of the Russian Academy of Science Action: Study and laying of a testing ground on the bund wall of the tailing dam’s second field, in order to ensure safe operation of water works at Kovdorsky GOK and reduce anthropogenic impacts on the environment. Innovation description: Dust suppression of tails and enhancement of water works strength. A testing ground has been laid (3 hectares), a process has been developed to make a polymeric coat for a biological and geological barrier. Slopes have been graded, starter fertilizers have been applied, grass mixtures have been selected to form a sod layer, grass has been sown and protective water polymeric emulsions have been applied. A coat has been made to fix the beach portion of the tailing dam and other working surfaces. Ongoing monitoring of the established biological and geological barrier is performed. Input data have been compiled for a further elaboration of process procedures. Implementation period: June 2007 through December 2009 Investment: 4.7 million RUR Environmental effects: The project will help strengthen the bund wall slopes, stop wind and water erosion of the tailing dam, improve sanitary and hygienic situation in the town of Kovdor and Kovdor district, reduce anthropogenic impacts on the environment (reduction of dust emissions by 190 tons per year).

Environmental effects: The project will help reduce ammonia emissions by 411.9 tons per year (36 percent reduction) and urea dust by 227.5 tons per year (63 percent reduction). Once Karbamid-3 shop is upgraded, a significant reduction of ammonia concentration (down to 0.68 MAC) in the residential area in the northern part of Novomoskovsk is expected. This all will reduce anthropogenic impacts on the atmospheric air at the Novomoskovsk industrial hub and at the Shatskoe water reserve.

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2008 I Social Report I EuroChem

Labour

and industrial safety

EFFECTIVE GOVERNANCE ALLOWED US TO REDUCE HAZARDOUS AND HARMFUL IMPACTS ON MAN AND ENVIRONMENT. Our labour and industrial safety policy is based on the Management System Policy endorsed by Order No. 08182/01-2 dated October 20, 2008.

Industrial and labour safety achievements „„no work time fatalities;

Governance Structure

„„number of industrial accidents resulting in absence from work reduced by 18 percent;

The holding company’s governance structure:

„„injury frequency factor (Ff) reduced by five percent;

„„Overall guidance – General Director, Technical Director

„„total injury factor (I) 15 percent lower than an average over the past five years;

„„Management of governance procedures – HSE Department of the technical direction „„Managed companies’ governance structure: „„Overall guidance – Executive Directors, Technical Directors „„Management of governance procedures – labour and industrial safety departments reporting to Technical Directors of companies (as part of HSE Departments) „„Emergency rescue – gas rescue contractors „„Analytic monitoring of compliance with regulations – centralized technical monitoring departments

Labour and industrial safety tasks for 2008 Development of management decisions and action plans aimed at eliminating work time fatalities, reducing accidents, reducing environmental emissions in the situation of increased fertilizers output and cuts in workforce responsible for hazardous operations. To complete the tasks, the following was accomplished: „„identification of significant hazards and harmful conditions, risk assessment in all production divisions, elaboration of risk mitigation plans for 2009; „„top and line managers’ individual plans included target indicators for labour and environment safety; „„adoption of local regulatory documents to control labour and industrial safety issues in the Company’s divisions, including work place qualification and accident investigation instructions; „„testing of protective clothing and PPE in order to develop and adopt in 2009 an industry specification for recommended protective clothing and PPE for EuroChem employees. These and other measures have helped reduce harmful and hazardous impacts on man and environment.

„„specific number of accidents per 1 MMT of products reduced to 1.4; „„no emergency failures; „„key production monitoring indicators improved by 11 percent; „„number of violations pinpointed by Rostekhnadzor was reduced. Rostekhnadzor revealed 1,464 departures from industrial safety rules, of which 1,108 were rectified.

EuroChem I Social Report I 2008

see web-site

for more information

On 2008, seven quality management and HSE audits were performed at EuroChem. Third-party audits were conducted in 14 production divisions. In total, 115 items as per ISO 9001, ISO14001 and OHSAS 18001 were checked for compliance; 36 noncompliances were found, and 136 corrective and preventive actions were elaborated for completion in 2008 and 2009.

Risk management: health and life risks



Risk / Factors

Risk description

Risk owner

1.

Fatal accidents

Risk caused by low-qualified personnel performing hazardous works

Technical Director, managed company

2.

Accidents

Risk caused by mining works specifics and large number of mechanical equipment

Technical Director, managed company

3.

Road traffic accidents

Risk caused by potential hazards from large trucks used in mining

Technical Director, managed company

4.

Accidents arising out of as well as during maintenance and repairs

Risk caused by work safety violations during maintenance and repairs and departures from maintenance and repair procedures

Technical Director, managed company

5.

Employee life hazards. Material damage

Loss of containment of large components of process equipment , pipelines

Technical Director, managed company

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Achievements and tasks for 2009 2008 achievements in the area of corporate social responsibility All of the tasks identified in the previous social report (page 5) have been completed or are in the process of completion. We have retained the consistency of principles, goals and methods of implementation of the Company’s corporate social policy. The amount of social expenditures has changed insignificantly. We have completed a complex innovative programme in Nevinnomyssk, infrastructure projects in other regions of the Company’s operations. We have developed programme tools that enable realization of our policy toward children and youth sports. We have expanded our communications with stakeholders. During the reporting year we had three discussions with stakeholders in respect of EuroChem’s environmental and social policy in the Tula Region, effectiveness of social projects in Nevinnomyssk, social programmes in Kotelnikovo. Summarized results of the discussions have been included in this report.

EuroChem’s social achievements: „„ranking second in the Russian CSR Accountability Rating 2008; „„a place on top 10 list of corporate charity ranking by the Vedomosti Newspaper and PricewaterhouseCoopers.

Public recognition and awards in 2008 „„­EuroChem was awarded “Best Environmental Project of the Year” prize, nomination “Environmental Effectiveness of Economic Activities. Environmental Management” for the “Enhancement of Environmental Effectiveness of Management Systems in Mineral Fertilizers Production” project. „„EuroChem was awarded “Best Environmental Project of the Year” prize, nomination “Environment Protection Technologies”. „„Sulfoammophos 20:20 produced by EuroChem-BMU LLC won the regional and national phases of the “Russia’s 100 Best Commodities - 2008” competition. „„Commercial liquefied ammonia and ammonium nitrate produced by OJSC Nevinnomyssky Azot are among the prize-winners of the “Russia’s 100 Best Commodities - 2008” competition and liquefied nitric fertilizers (UAN) received a diploma as a participant. The division also received the badge of honour “For Excellence in Quality”. „„Defluorinated phosphate produced by PG Phosphorit LLC won the “Russia’s 100 Best Commodities - 2008” competition. „„PG Phosphorit LLC products received the “European Quality” award of the European Business Assembly. „„AB Lifosa received the “Medal of Exporter” from the Lithuanian Confederation of Industrialists. „„PG Phosphorit LLC was among prizewinners of the “Russia’s 1000 Best Companies and Organisations 2008”. „„PG Phosphorit LLC received a certificate of achievement and a diploma of the International Specialized Exhibition “Agricultural chemistry, agricultural biotechnologies”. „„By President’s Decree, three PG Phosphorit employees were awarded the Order of Service to the Fatherland, II degree, two employees were bestowed the title of the Honoured Chemist of the Russian Federation. „„EuroChem-BMU LLC received the “Best Corporate Charity Provider” award from the Council for assistance in development of civil society and human rights institutions under the jurisdiction of the Head of Administration of Krasnodar Territory. „„PG Phosphorit LLC was among winners of the Russian Public Prize “The Nation’s Glory”. „„PG Phosphorit LLC won the competition “Highly Socially Responsible Company” organised by the Leningrad Region Government, nominated for “Implementation of Company’s Social Programmes”

EuroChem I Social Report I 2008

Sustainable development tasks for 2009

Development of social responsibility and reporting management system development of social responsibility and reporting management system, development and introduction of internal engineering standards and principles, social policy in EuroChem’s divisions discussion of the Company’s social reporting system with representatives of European organisations involved in environment protection and CSR improvement of internal communications system, publishing more materials on CSR in corporate press increase of the total social investments’ share of target financing of social projects in regions of the Company’s operations Major social responsibility and charity events realization of priority plans within the framework of children sports programme assistance to municipal authorities in outlining the concept of social infrastructure development in Kotelnikovo, Volgograd Region elaboration of social development projects in the areas of the Company’s operations in Kazakhstan and the Perm Territory assistance in promoting healthy lifestyles in the areas of the Company’s operations Development of integrated management system elaboration of corporate Guidelines on integrated management system certification audits of the management system in the Company and the three managed companies. Audit results shall attest that the integrated management system complies with ISO 9001, ISO 14001 and OHSAS 18001 Industrial and labour safety management elaboration of a Specification for protective clothing and personal protection equipment. Development of rates of free issue of PPE to EuroChem employees and incorporation thereof in typical PPE issue standards for chemical manufacturers maintenance of the positive momentum in quantitative HSE performance indicators achieved in 2008 maintenance of the general injury rate at EuroChem companies at a level below the average value over the past five years

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2008 I Social Report I EuroChem

Independent Assurance of the Social Report FOR THE ATTENTION OF: EUROCHEM Bureau Veritas Certification Rus has been providing auditing services for EuroChem in terms of assurance of corporate social reports for the last three years. This audit assurance applies to the social report “Key to Success. EuroChem Social Responsibility Atlas for 2008” (hereinafter referred to as the Report). The Report was prepared by EuroChem who bears responsibility for the collection and presentation of all information contained in the Report. Bureau Veritas Certification Rus is responsible for the results of assurance of the Report only before EuroChem and will not take any responsibility before any third party for any decisions made or postponed on the basis of this assurance.

Scope and criteria of validation 1. Check if the Company has complied with the principles of inclusivity, materiality, responsiveness of AA1000 AccountAbility Principles Standard 2008. 2. Assess reliability of sustainable development indicators. 3. Apply the assurance level “reasonable” as stipulated in ISAE3000 International Standard on Assurance Engagement. 4. Check that the Report is compliant with level B+ (company selfevaluation) in accordance with the Global Reporting Initiative Sustainability Reporting Guidelines GRI-G3 2006. During the verification of the Report, we considered the information published on the corporate web-site at www.eurochem.ru, in the Social Report 2008, in corporate press publications: “EuroChem” newspaper and NPK journal, as well as the information collected during our visit to a selected location of the Company’s operations (Novomoskovsk).

protection zone, the municipal administration). • Analysis of a selection of information from mass media and published statements of third parties regarding EuroChem’s adherence to its mission and values in the area of sustainable development, as reference points for examining the validity of the statements in the Report. • Verification of GRI standard reporting elements included in the Report. • Verification of performance of feedback mechanisms in respect of reporting.

Assurance limitations • The assurance was limited to the current 2008 reporting cycle. • The assurance did not take into account statements that expressed opinions, beliefs or intentions of EuroChem to take any actions in the future. • The assurance was limited to visiting the Company’s head office and facilities in one region of the Company’s operations (Novomoskovsk). • Discussions with stakeholders included representatives of the Company management, its employees and representatives of the local community.

Assurance level and basis of our opinion

• Interviews with top managers of EuroChem in order to form a consistent view of significant economic, social and environmental aspects of the Company’s operations, its intentions, commitments, priorities and goals in respect of sustainable development, means and degree of achieving these goals.

The selective verification of the information in the Report carried out at the “reasonable” level of assurance provides a lower level of assurance guarantee than the verification of all data (“high” level). In our work, we relied upon the supporting information presented by the EuroChem management and the Company’s divisions, information from public sources and on analytical assurance methods. The assurance work may not be regarded as sufficient to reveal any inaccuracies in respect of the numeric information contained in the corporate report.

• Interviews with managers responsible for interfacing with stakeholders and a study of a selection of documents confirming such interfacing in 2008.

The information collected provides a sufficient basis for our conclusions at the “reasonable” assurance level regarding each of the AA1000 AccountAbility Principles Standard 2008.

Methodology

• Attendance of public hearings of the Social Report 2007. • Verification of achieving the goals set in the Social Report 2007. • Verification of documents and data that describe performance of EuroChem’s systems of management of social, economic and environmental aspects. • Verification of the methods used at EuroChem for the collection, processing, documenting, transfer, analysis, selection and consolidation of data to be included in the Report. • Verification of validity of presented statements, assertions and data through visiting EuroChem’s social, production and innovative facilities (Novomoskovsk, OJSC Azot, the training centre, the cultural and business centre, the local branch of the Russian Mendeleev Chemical Technologies Institute, schools No. 9 and No. 18, the site allocated for the Palace of Ice Sports, residential housing for resettlement of people from the sanitary-

Our opinion • As a whole, the Report adequately reflects EuroChem’s performance indicators in terms of corporate social reporting. • The report is made up in a clear and understandable form, it is accurate, objective and informative. • EuroChem has in its possession efficient management systems that allow the Company to identify significant economic, social and environmental aspects of the Company’s operations, plan, manage and improve related processes, define expectations of the stakeholders in respect of these aspects and respond thereto. • The social reporting control systems exercised by the Company management are fully supported by the company’s mission, policies and resources as well as by its adherence to the “Social Charter of the Russian Business”.

EuroChem I Social Report I 2008 Report compliance with three AA1000 APS principles Principle 1. Inclusivity • EuroChem interacts with a broad range of stakeholder of whom most significant are owners, investors, employees and their families, trade union, products and services consumers, government and municipal authorities, vendors and business partners, mass media, public associations, local residents in areas of operations, independent environmental organisations. Interface processes used in preparation of the report conform with the Report scope and limits. • The submitted information and collected unbiased and indirect data indicate that expectations and needs of stakeholders in respect of the Company’s operations are taken into account on all stages of the corporate reporting process. Opinions of stakeholders as well as interests of future generations and the requirement to preserve nature are subject to discussions. Three discussions with stakeholders in respect of EuroChem’s environmental and social policy were held in the reporting year: a roundtable on businesses’ responsibility over social and economic development under the aegis of the 3rd Tula Economic Forum (October, Tula), a roundtable on effectiveness of social projects implemented in Nevinnomyssk, Stavropol Territory (October, Nevinnomyssk), a roundtable on social programmes implemented in Kotelnikovo, Volgograd Region, and Nevinnomyssk, Stavropol Territory (November, Moscow). • The key way of informing and interacting with stakeholders are press releases, public hearings, mass media publications, circulation of information messages (letters, information brochures and booklets), the corporate web-site, consultations, negotiations, opinion polls, working groups and permanent commissions etc. • Implementation of social programmes within the framework of the Company’s social policy aimed at improving the quality of life of employees, their families and local residents provides advantages for sustainable business development in the regions of the Company’s operations. Implementation of such infrastructure projects helps develop health care systems, improve school education, reduce morbidity and occupational injuries, enhance the social climate in the regions of the Company’s operations. Principle 2. Materiality • The Report is a balanced and substantiated account of material economic, social and environmental aspects of operations that determine EuroChem’s sustainable development indicators. • The Company has defined the materiality of issues to be addressed in the Report based on a comprehensive application of the inclusivity principle as well as the principle of openness in making significant corporate decisions. According to the Provisions for information disclosure at EuroChem, all material information, including material facts such as transactions involving the Company’s assets, quarterly and annual issuer’s reports, is published on the official web-site in due time. • According to the Vedomosti Newspaper and PricewaterhouseCoopers, EuroChem is on top 10 list of corporate charity ranking. • In 2008 the Company implemented El Compas, a unified automated corporate governance and financial reporting system. In order to ensure timely disclosure of information, the Company maintains registers of facts which must be disclosed, and registers of voluntarily disclosed information. • The information and management system Oracle has been

realized at the Company to enable access and transparency of data which are used for assessment of the Company’s performance. • The Report contains information on risk and opportunities management, including information in respect of supply chains. The Company manages the major risks such as operating, financial, strategic and reputational, the latter being a derivative of the former three risk categories. • The Company has target priorities and a mid-term social action plan that is revised annually. • The Report addresses the majority of GRI performance indicators (97 percent) applicable to the Company. • Subject to the analysis of the Report data and related interviews, no material aspect of sustainable development identified by the Company has been omitted or unreasonable excluded from the reporting process. • The fact that the Report does not carry details on some of GRI performance indicators is explained by that at this time these issues are immaterial for stakeholders or that their contribution is negligible as compared with the Company’s core operations. • The information presented in this Report, Annual Report and on the web-site is material for stakeholders as it can influence their future decisions and behaviour toward the Company. • The Report contains sufficient information on the Company’s compliance with Russian law, regulatory acts and chemical industry standards, international standards and internal code of responsible business conduct. Principle 3. Responsiveness • We do not know of any areas which could have been disclosed in the Report, but were not, for which the company would have been unable to respond to the justified requests of stakeholders. • Response to regional needs is provided through establishing target programmes (priorities being sports, health care, science and education), territorial and regulatory approaches to finance appropriation for a variety of social projects. As a counterpart to social and economic agreements with regional authorities, EuroChem participates in funding important sporting and cultural municipal facilities, assists in redevelopment of towns and settlements, realizes sporting, educational and cultural programmes, significantly contributes to the development of social infrastructure which is critical for the quality of life of the Company’s employees and their families as well as all population in the regions of the Company’s operations. The total count of corporate investment projects in 2008 amounted to 11 projects. • The public's right to a beneficial environment is ensured through the scheduled environment protection measures within the framework of the Management System Policy and the “Enhancement of Environmental Effectiveness of Management Systems in Mineral Fertilizers Production” project that received a prize for the nomination “Environmental Effectiveness of Economic Activities. Environmental Management”. Implementation of a wide range of measures helped reduce major impacts on the environment defined in environmental regulations. Projects are being carried out aimed at reducing greenhouse gases. • The interests of shareholders are taken into account through implementing EuroChem's corporate governance principles, including holding annual shareholder meetings. • Consumers’ requirements are met through scheduled supplies of guaranteed quality products. The Company’s well-

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2008 I Social Report I EuroChem developed product quality assurance system, advanced services and customers informing play a more and more important role in establishing EuroChem’s competitive edge. The said features are inherent to the integrated quality, environment, labour safety, occupational health and safety management system. Bureau Veritas Certification Rus is currently certifying the management system for compliance with international standards ISO 9001:2000, ISO14001:2007 and OHSAS 18001:2007.

Compliance of the Report with GRI recommendations The Report has been completed using the recommendations of the GRI G3 Guidelines for Reporting in the Area of Sustainable Development and contains information on GRI reporting elements and performance indicators which meet the B+ application level.

Recommendations for developing corporate management of social reporting • Work out a sustainable development strategy that would enable application of unified indicators important both for the Company and the stakeholders. Submit reports according to the extent of implementation. • Continue formalization of the process of consultations with various stakeholder groups so as to elaborate and introduce a structured approach toward obtaining of information which is material for stakeholders. • Specify criteria for assessment of effectiveness of the Company’s social programmes and projects. • In the next cycle reports, provide more opinions of stakeholders in respect of the current cycle report. • Conduct an internal audit of the social reporting process. • Provide a more balanced presentation of both positive and negative trends in fulfilment of planned tasks of sustainable development for the current year (Royal DSM experience). • Perform in-house audit of the social reporting process. • Share experience in sustainable development and social responsibility with originators of the Industry exhibit to the GRI Guidelines for the chemical sector.

Statement of Bureau Veritas Certification Rus independence, impartiality and competence Bureau Veritas Certification Rus is an independent professional international company which specializes in providing services for the accredited certification of various management systems ( quality management, occupational health and safety, environment protection and social responsibility). Bureau Veritas Certification Rus hereby officially declares that this Conclusion is an independent evaluation by a third party auditor. Bureau Veritas Certification Rus does not have any commercial interest in the operations of EuroChem except for the provided assurance services. CJSC Bureau Veritas Certification Rus July 6, 2009

Vera Skitina Technical Director PhD Chemistry

EuroChem I Social Report I 2008 This Report offers the first-ever presentation of GRI G3 disclosure information in tabular format for user convenience.

Exhibit

GRI G3 Table of Standard Disclosures

55

56

1.2. Description of key impacts, risks and opportunities

See pages 10-12 Bldg 6, 53 Dubininskaya St, Moscow, 115054 EuroChem exports its products to over 60 countries MCC Holdings Limited is the controlling shareholder. See Chapter “About the Company”

2.4. Location of organization’s headquarters

2.5. Number of countries where the organization operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report

2.6. Nature of ownership, legal form

„„Baddeleyite

„„Apatite

„„Iron ore

„„Acetic acid

„„Methanol

„„MAP

„„Complex fertilizers (NPK, ammophoska universal)

„„Feed phosphates

„„Superphosphate

„„Diammonium phosphate (DAP)

„„Urea-ammonium nitrate (UAN)

„„Urea

„„Ammonium nitrate

„„Ammonia

2.3. Operational structure of the organization, including main divisions, operating companies, subsidiaries, and joint ventures

2.2. Primary brands, products, and/or services

2.1. Name of the organization

EuroChem exports its products to 68 countries. The company’s core business is conducted in the Russian Federation

See Chapter “About the Company”. See Annual Report 2008, pages 103-104

See Chapter “Production”. Also see detailed products description on EuroChem web-site

Open Joint-Stock Company, EuroChem Mineral and Chemical Company

Chemical production is potentially hazardous to the environment and people. See sections “Corporate Governance”, “Key Financial Indicators”, “Environmental Projects”, “Labour and Industrial Safety”. See also “Risk Management” in Annual Report 2008.

Chemical production is potentially hazardous to the environment and people. See Chapter 3 CSR 2007

2. Organisational Profile

See page 4

PERFORMANCE INDICATORS 2008

See page 6 (hereinafter this column refers to pages in CSR 2007; the next column refers to pages in CSR 2008)

PERFORMANCE INDICATORS 2007

1.1. Statement from the most senior decision-maker of the organization (e.g., CEO, chair, or equivalent senior position) about the relevance of sustainability to the organization and its strategy

1. Strategy and Analysis

G3 STANDARD DISCLOSURES

57

See page 33

2.10. Awards received during the reporting period

Bldg 6, 53 Dubininskaya St, Moscow, 115054, OJSC EuroChem Mineral and Chemical Company, PR and Communications Department

3.4. Contact point for questions regarding the report or its contents

3.6. Boundaries of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, vendors). See GRI Boundary Protocol for further guidance

„„identifying stakeholders the organization expects to use the report

„„prioritizing topics within the report; andidentification of engaged stakeholders regarded as potential report users;

3.5. Process for defining report content, including: „„determining materiality;

Boundaries of the report: manufacturing divisions, subsidiaries

See pages 4, 5, 34 Report content is designed to fully and clearly describe the Company’s priorities which influence its long-term sustainable growth

Annual

3.3. Reporting cycle (annual, two-year, etc.)

REPORT SCOPE AND BOUNDARIES

2006

3.2. Date of most recent previous report (if any)

The report boundaries have not changed. The Company’s social policy toward EuroChem-VolgaKaliy LLC (Kotelnikovsky District, Volgograd Region) and Lifosa AB (Kedainyaisky District, Lithuania) is more detailed herein as compared with CSR 2007

Report content is made up subject to: 1) dialogue and engagement; 2) the need to present a regional dimension to the Company's social policy within the framework of an atlas report; 3) the need to discuss matters that have become pressing due to the global economic recession. See CSR 2007, pages 34-39, for a list of engaged stakeholders

2007

2007

2008

See Chapter “Achievements and tasks for 2009”

EuroChem, in a joint effort with MCC Holdings Limited, acquired 16 percent of the stock in K+S AG. We also acquired a license to develop two blocks of the Verkhnekamskoe deposit in the Perm Region

See pages 12-13, 22-23. Average head count – 21,585 employees Sales revenues RUR 112.2 billion Over 100 products, see paragraph 2.2

See Chapters “About the Company”, “Financial performance”, “International operations”

3.1. Reporting period (e.g., fiscal/calendar year) for information provided

3. Report Profile

EuroChem is actively developing its new division, EuroChemVolgaKaliy LLC In August 2007, we acquired 100 percent stock in Murmansk Alumina Terminal LLC

2.9. Significant changes during the reporting period regarding size, structure, or ownership including: „„the location of, or changes in operations, including facility openings, closings, and expansions; and locations or the nature of change in operations, including opening, closing and expansion of businesses; „„changes in the share capital structure and other capital formation, maintenance, and alteration operations (for private sector organizations)

„„quantity of products or services provided

See pages 10, 19-22 „„nnet sales (for private sector organizations) or net revenues Average headcount – 23,805 employees Gross output – 24 MMT (for public sector organizations); Total production of mineral fertilizers – 6.1 MMT „„total capitalization broken down in terms of debt and equity Sales revenues – RUR 73.8 billion (for private sector organizations); and

2.8. Scale of the reporting organization, including: „„number of employees;

2.7. Markets served (including geographic breakdown, sectors See pages 10-11, 22-24, 78-79 served, and types of customers/beneficiaries)

58

This report does not contain any re-statements of information presented in earlier reports This report does not contain any Significant changes from previous reporting periods in the scope, boundary, or measurement methods as compared with CSR 2006

3.10. Explanation of the effect of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g., mergers/acquisitions, change of base years/periods, nature of business, measurement methods)

3.11. Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report

4.2. Indicate whether the Chairperson of the highest governance body is also an executive officer (and, if so, their function within the organisation’s management and the reasons for this arrangement)

4.1. Governance structure of the organisation, including committees under the supreme governance body responsible for specific tasks, such as setting strategy or organisational oversight

4. Governance, Commitments, and Engagement

3.13. Policy and current practice with regard to seeking external assurance for the report. If not included in the assurance report accompanying the sustainability report, explain the scope and basis of any external assurance provided. Also explain the relationship between the reporting organisation and the assurance provider(s)

ASSURANCE

3.12. Table identifying the location of the Standard Disclosures in the report See pages 55-79

EuroChem’s governance bodies are the General Meeting of Shareholders, Board of Directors, Management Board and General Director. The General Meeting of Shareholders is the highest governance body of the Company. Committees of the Board of Directors: Strategy Committee, Governance and Personnel Committee, Audit Committee

Andrey Melnichenko is the Chairman of the Board of Directors. Dmitry Strezhnev is the General Director and a Board Member since July 2007

EuroChem’s governance bodies are the General Meeting of Shareholders, Board of Directors, Management Board and General Director. The General Meeting of Shareholders is the supreme governance body of the Company

Bureau Veritas Certification Rus has verified our CSR. See pages 52-54

See pages 82-85

Guidelines for reporting process: G3 Sustainability Reporting Guidelines; GRI Application Levels; Engagement. Edition 2: Practical Guide on Stakeholders Engagement; Glossary of special terms, words and phrases applied in translation of the Sustainability Reporting Guidelines GRI 2002 and in preparation of translation of the Draft Guidelines 2006 (G3); Global Treaty; GRI G3 Indicator Protocols and AA1000 set of documents

3.9. Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations applied to the compilation of the Indicators and other information in the report

GRI CONTENT INDEX

Data are comparable with previous reports

3.8. Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations and other entities that can significantly affect comparability with previous reports and/or between other organisations

This report does not contain any Significant changes from previous reporting periods in the scope, boundary, or measurement methods as compared with CSR 2007

CSR content is limited to the Company’s economic activities and that of its subsidiaries

3.7. State any specific limitations on the scope or boundary of the report

59

See page 14

See pages 13-14

See page 14

See page 30

4.5. Linkage between compensation for members of the highest governance body, senior managers, and executives (including departure arrangements), and the organisation’s performance (including social and environmental performance)

4.6. Processes in place for the highest governance body to ensure that conflicts of interest are avoided

4.7. Process for determining the qualifications and expertise of members of the highest governance body for guiding the organisation’s economic, environmental, and social strategies (for sustainable development)

4.8. Internally developed statements of mission or values, codes of conduct, and principles relevant to economic, environmental, and social performance, and the status of their implementation

See page 6 for the statement of EuroChem’s mission. See the Company’s web-site for the Code of Corporate Conduct and the Code of Ethics. See CSR 2007, page 30, for corporate social responsibility principles

See pages 16-17, as well as Annual Report 2008, pages 60-64

See pages 16-17

Criteria for determining Board member remuneration and payment procedures for both remuneration and compensation of expenses are set out in the Board Member Remuneration Regulations (latest revision approved by the General Meeting of Shareholders in December 2007). Remuneration is fixed and adjusted to account for membership and chairmanship in Board Committees and performing the duties of the Chairman of the Board of Directors. The members of the Management Board do not receive additional remuneration for their membership on the Management Board. Their remuneration packages are defined exclusively by their performance of top management functions. The remuneration paid to the Company’s senior executive managers includes annual bonuses for achieving annual targets (as part of individual plans adopted under the “Target Management” programme), with the account of environmental, labour safety and social indicators. See the Company’s web-site for management remuneration information for 2008

4.4. Mechanisms for shareholders and employees to provide See pages 12-13 recommendations or direction to the highest governance body

Since 2005, at least 50 percent of Directors are independent directors The key mechanism is the function of the Corporate Secretary who, on the one hand, relays shareholder proposals with respect to operational improvement, and supports feedback, and, on the other hand, facilitates reviews of major issues within the committees of the Board of Directors

4.3. For organisations that have a unitary board structure, state the number of members of the highest governance body that are independent and/or non-executive members

During 2008 there were seven Directors on the Board. The Chairman and five Directors are non-executive members, of whom four Directors comply with the criteria set for independent directors (as stated in the Board of Directors Regulations)

60

When considering potential environmental risks imposed by its operations, EuroChem takes the precautionary principle into account by thoroughly assessing the situation in order to avoid serious or irreversible environmental damage. The precautionary approach is pursued in accordance with industrial and environmental safety codes and standards applied by EuroChem to assess, prevent, and control environmental risks GRI G3, Global Compact, AA1000

4.11. Explanation of whether and how the precautionary approach or principle is addressed by the organisation

4.12. Externally developed economic, environmental, and social charters, principles, or other initiatives to which the organisation subscribes or endorses

GRI G3, Global Compact, AA1000APS (2008)

See pages 34-39 for the list and description of engaged stakeholders See page 34

4.15. Basis for identifying and selecting stakeholders with whom to engage

Influence on the Company’s business processes, regional business climates, and social processes important to the Company

The list of engaged stakeholders has not changed. See Chapter “Stakeholders” in CSR 2007

The Russian Association of Fertilizer Producers (RAPU). Mr. A. Melnichenko, EuroChem Board Chairman, is a member of the Bureau of the Board of Directors of the Russian Union of Industrialists and Entrepreneurs (RSPP)

4.14. List of stakeholder groups engaged by the Organisation

STAKEHOLDER ENGAGEMENT

„„ views membership as strategic

„„provides substantive funding beyond routine membership fees; or

„„participates in projects or committees;

4.13. Membership in associations (such as industry associations) and/or national/international advocacy organisations in which the organisation: „„has positions in governance bodies;

See pages 4, 5,12-14

4.10. Processes for evaluating the performance of highest governance body, particularly with respect to economic, environmental, and social aspects See pages 16-17, as well as Annual Report 2008, pages 60-64

See page 13

The Board of Directors is completely focused on strategic governance issues and performs regular independent assessments of the corporate governance level based on Standard & Poor`s practices. See pages 16-17, as well as Annual Report 2008, pages 60-64

4.9. Procedures of the highest governance body for overseeing the organisation’s identification and management of economic, environmental, and social performance, including relevant risks and compliance with internationally recognized standards, codes of conduct, and principles

61

See pages. 4-5, 40-42

4.17. Key issues and concerns that have been raised through stakeholder engagement, and how the organisation has responded to those key issues and concerns, including through its reporting

In the long term, the composition and volume of mineral fertilizer demand may be influenced by global warming and climate change in various parts of the world At this time, EuroChem does not operate its own pension fund. However, the Company takes care of retired employees and veteran employees in accordance with corporate social responsibility principles The Company did not receive any financial assistance from the government and did not resort to any tax preferences An average monthly wage at EuroChem as a whole in 2007 was 16 percent higher than the average wage rate in all Russian industrial sectors, and 55 percent higher than the overall average wage rate in Russia

EC2 Financial implications and other risks and opportunities for the organisation’s activities due to climate change

EC3 Coverage of the organisation’s defined benefit plan obligations

EC4 Significant financial assistance received from the government

EC5 Range of ratios of standard entry-level wage compared to local minimum wage at significant locations of operation

The average monthly wage at EuroChem in 2008 (RUR 25,220) was 47 percent higher than the average wage rate in Russia (RUR 17,112)

See pages 21-22, 59

See pages 12-13, 22-25, as well as Annual Report 2008

Summarized proposals and opinions expressed during discussions with stakeholders have been incorporated in CSR 2008 and reflected in the summary of future tasks for sustainable development in 2009

In February, 2008, a roundtable discussion was held in Moscow involving industry trade union representatives from various regions. See CSR 2007, pages 40-41

„„a roundtable discussion titled “A New Phase of Corporate Social Responsibility: Transition to Target Programmes” and discussions of implementing social programmes in Kotelnikovo, Volgograd Region, and in Nevinnomyssk, Stavropol Region (November 7, 2008, Moscow).

„„a roundtable discussion on the effectiveness of social projects held at the Social Projects Fair in Nevinnomyssk, Stavropol Region (October 3, 2008, Nevinnomyssk);

EC1 Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments

5. Management Approach and Performance Indicators

See pages 39-40

4.16. Approaches to stakeholder engagement, including frequency of engagement by type and by stakeholder group

he approaches have not been changed – see “Interaction with Stakeholders” in SCR 2007. Three dialogues were held during the reporting period: „„a roundtable discussion titled “Corporate Responsibility for Social and Economic Development and Environment Protection in Regions. EuroChem’s Experience” discussed at the 3rd Tula Economic Forum (October 10, 2008, Tula);

62

80,0 85,71 84,62 41,67

Murmansk Region Stavropol Territory Tula Region

28,57

71,42

85,71

80,0

56,25

2008

See pages 43-46

See pages 6-7, 15, 17, 22, 30, 38, 45

EC9 Understanding and describing significant indirect economic impacts, including the extent of impacts

Not only do local communities receive direct financial aid for socially vulnerable groups, but they also receive funds for infrastructure development, material supplies for educational and medical institutions, sports facilities, etc

See pages 24-25

* Data presented in combined columns hereinafter are for 2008. See EuroChem’s Social Reports for 2001 through 2005, 2006, 2007

56,25

Leningrad Region

2007

Proportion of senior management, hired locally, %

Krasnodar Territory

EuroChem

*At operational locations, the Company traditionally hires personnel from local communities. Applicants are to meet requirements subject to the job description, job-specific qualifications and safety regulations. Hiring procedures are included in the Company’s Employment Policies and Procedures

EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in kind, or pro bono engagement

EC7 Procedures for local hiring and the proportion of senior management hired from the local community at significant operational locations

EC6 Policy, practices, and proportion of spending on locallybased suppliers at significant operational locations

The process of partnering with vendors and suppliers includes procurement planning and arrangements, receipt, storage and distribution of raw materials required for production. The process is controlled through EuroChem’s approved standards, as well as ISO standards. To mitigate procurement and contracting risks, bids are arranged, including electronic tendering. Supplied equipment must be duly certified for safety compliance and licensed for use. Contractors are required to abide by EuroChem’s labour and industrial safety regulations

63

EN2 Percentage of materials used that are recycled input materials

EN1 Materials used by weight or volume

volume

0 912,697

per unit weight weight of phosphogypsum

% thou. tons thou. tons

0

weight

EuroChem BMU LLC

thou. tons

Grand total

weight

weight

weight

weight

weight

weight

Unit of measure

mln. m3

Natural gas

Indicator

thou. tons thou. tons

Tails

thou. tons

Lime Ore

thou. tons thou. tons

Wet process phosphoric thou. tons acid Ammonia

weight

thou. tons

Sulphuric acid

Sodium hydroxide

weight

thou. tons

Sulphur

weight weight

thou. tons thou. tons

Apatite concentrate

Indicator description

Potassium chloride

Unit of measure

Indicator

1,204

0

0

PG Phosphorite LLC

947,999

5,5

0

0

19,186

0,52

71,845

0

101,963

162,55

10,065

578,322

EuroChem BMU LLC

0,576

2,686

0,217

OJSC Nev. Azot

1 287,194

0

0

0

1,88

35,473

65,869

0

111,06

196,379

0

876,533

PG Phosphorite LLC

0

6,882

0,71

OJSC Azot

1 237,598

1 629,686

0

0

0,323

5,017

0

35,525

15,054

0

128,13

2,402

OJSC Nev. Azot

969,255

21 221,3

0

15 771,000

5 450,300

0

0

0

0

0

0

0

0

25,683

0

5 450,3

25 663,345

3 114,004

15 771

5 450,3

21,389

48,124

137,714

35,525

235,751

358,929

138,195

1 457,886

Total

914,477

5 459,868

21,275

Total

OJSC Kovdorsky GOK

OJSC Kovdorsky GOK

1 478,818

0

0

0

7,114

0

0

7,674

0

0

0,629

OJSC Azot

64

thou. GJ

Total

total

burning

46 571,816 167,658

0

In 2007 no regular records were maintained

EN7 Initiatives to reduce indirect energy consumption and reductions achieved

351 721

PG Phosphorite LLC

See page 66

1 070,1

GJ

total

EuroChem BMU LLC

thou. GJ

Total

purchased

purchased

Indicator description

Unit of measure

thou. kWh Gcal

Electric power Heat

Unit of measure

Indicator

181 365,519

337 468,4

1 029 467,6

155 945

OJSC Azot

9 242,872

1 322 692

See pages 46-47

See pages 46-47

OJSC Nev. Azot

652,916

0

4 549,165

0

139,328

0

2,027

0,314

947,429

OJSC Azot

2 424,458

0

673 460,7

38 989

17 692,041

1 578 054

3 079 530,035

Total

22 855,397

134,718

253,739

0

41,959

1,472

2 677,056

Total

885 193,5

Total

OJSC Kovdorsky GOK

7 000,814

134,7177

0

0

35,957

0,636

0

OJSC Kovdorsky GOK

OJSC Kovdorsky GOK

5 204,137

255 362

1 148 664,4

OJSC Azot

3 558,953

0

15,458

0

1,206

0,199

833,34

OJSC Nev. Azot

OJSC Nev. Azot

4 954,014

0

68,611

0

2,069

0,223

520,272

PG Phosphorite LLC

PG Phosphorite LLC

2 792,451

0

30,342

0

0,7

0,1

376,015

EuroChem BMU LLC

EuroChem BMU LLC

burning (without process gas which is used for chemical reactions in production)

burning

motor diesel fuel

motor fuel

Owing to chemical reactions

In 2007 no regular records were maintained

thou. tons

Fuel oil

thou. tons thou. tons

Diesel Coal

mln. m3

thou. tons

Gasoline

Gas

thou. Gcal

Heat generated by chemical reactions

Indicator description

EN6 Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives

EN5 Energy saved due to conservation and efficiency improvements

EN4 Indirect energy consumption by primary source

EN3 Direct energy consumption by primary energy source

Unit of measure

Indicator

65

319

volume

3

thou. m thou. m3 thou. m3 thou. m3

Ground water Third-party' waste water Purchased Water Grand total

7 026

0

0

At this time, the Company is not aware of any IUCN Red List species or national conservation list species with habitats in areas affected by operations

The Company abided by effective Russian law and assumed environmental responsibilities

PG Phosphorite LLC, 127 ha

EN15 Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations, by level of extinction risk

93

1 169 926

Total

No actions to impacts on biodiversity were taken

90,2

102 808

OJSC Kovdorsky GOK

EN14 Strategies, current actions, and future plans for managing impacts on biodiversity

89,9

308 580

OJSC Azot

88 161,82

33 644,52

0

EuroChem did not take any dedicated actions to protect and restore over the reporting period

95

559 442

OJSC Nev. Azot

11 146,4

3 989,1

0

1 500

0

53 017,3

Total

EN13 Habitats protected or restored

93,6

86 023

PG Phosphorite LLC

34 731

11

0

0

0

7 157,3

OJSC Kovdorsky GOK

No significant impacts of activities, products and services on biodiversity in protected areas and areas of high biodiversity outside protected areas have been observed

94,1

113 073

EuroChem BMU LLC

29 382,42

29 382,42

0

1094

0

33 626

OJSC Azot

EN12 Description of significant impacts of activities, products and services on biodiversity in protected areas and areas of high biodiversity outside protected areas

per unit

volume

Indicator description

5 876

262

0

0

0

0

OJSC Nev. Azot

EuroChem divisions do not own, lease, manage land in or adjacent to protected areas and areas of high biodiversity outside protected areas

%

thou. m3

Reused water Percentage of reused water out of total water consumption

Unit of measure

Indicator

The Company’s water intake primarily impacts surface water

volume

volume

volume

87

0

5 527

PG Phosphorite LLC

EN11 Location and size of land owned, leased, managed in or adjacent to protected areas and areas of high biodiversity outside protected areas

EN10 Percentage and total volume of water recycled and reused

EN9 Water sources significantly affected by withdrawal of water

EN8 Total water withdrawal by source

0

6 707

volume

thou. m3

Storm water

volume

thou. m3

EuroChem BMU LLC

Surface water

Indicator description

Unit of measure

Indicator

66

EN19 Emissions of ozone-depleting substances by weight

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved

EN17 Other relevant indirect greenhouse gas emissions by weight

EN16 Total direct and indirect greenhouse gas emissions by weight

weight

thou. tons

CO2

Indicator description weight

tons

tons

Action

Unit of measure

Unit of measure

thou. tons

C02 equivalent

Indicator

tons

thou. tons

CO2 tons

weight

Unit of measure

Indicator

N20

Indicator description

thou. tons

CO2 equivalent

CH4

weight

tons

N2O

0,148

0,008

none

Implementation of Uhde EnviNOx process (at each unit) will enable reductions in nitrogen oxide and ammonia in tail gas emissions. In 2015, the system will be able to meter tail gas flow and nitrogen oxide concentration

0,034

0,041

OJSC Azot

OJSC Azot

160,340

0,289

14,473

159,946

OJSC Azot

174,416

0,357

15,74

173,975

OJSC Azot

OJSC Nev. Azot

284,773

0,514

25,705

284,074

OJSC Nev. Azot

22,751

0,066

2,058

22,687

OJSC Nev. Azot

OJSC Nev. Azot

Construction of 12 MW power generator

PG Phosphorite LLC

20,116

0,036

1,816

20,067

PG Phosphorite LLC

89,328

0,202

8,01

89,097

PG Phosphorite LLC

PG Phosphorite LLC

none

Emission reductions enabled by action

EuroChem BMU LLC

EuroChem BMU LLC

5,166

0,009

0,466

5,153

EuroChem BMU LLC

38,85

0,084

3,501

38,751

EuroChem BMU LLC

Indicator description

weight

weight

weight

weight

tons

CH4

weight

Indicator description

Unit of measure

Indicator

0

OJSC Kovdorsky GOK

none

OJSC Kovdorsky GOK

137,97

1,061

3,536

137,567

OJSC Kovdorsky GOK

522,530

4,019

18,032

520,906

OJSC Kovdorsky GOK

0,231

Total

*

Total

608,365

1,91

45,996

606,807

Total

847,875

4,729

47,342

845,415

Total

67

EN20 NO, SO, and other significant air emissions by type and weight

weight

tons tons tons tons

Ammonia Solids Hydrocarbons (excl. VOC) Volatile organic compounds (VOC)

tons tons

NOx Sulphuric acid

weight

tons

СО

weight

weight

weight

weight

weight

weight

weight

tons tons

Total

Indicator description

SO2

Unit of measure

Indicator

17,47

0,153

126,491

322,409

20,774

231,437

98,77

901,796

1 759,575

EuroChem BMU LLC

213,232

3,023

284,971

139,188

100,024

479,834

81,601

2 668,471

4 138,66

PG Phosphorite LLC

174,076

279,556

1 869,94

1 065,856

1,104

642,807

893,049

1,026

4 952,77

OJSC Nev. Azot

81,276

118,499

1 066,675

1 750,839

0,03

1 694,888

4 068,135

1,356

9 280,511

OJSC Azot

7,202

109,118

1 695,993

0

0

1 391,154

808,251

4 290,386

8 302,556

OJSC Kovdorsky GOK

493,256

510,349

5 044,07

3 278,292

121,932

4 440,12

5 949,806

7 863,035

28 434,072

Total

68

EN21 Total water discharge by quality and destination

weight weight

* tons

Total discharged pollutants (incl. users). Including:

weight weight

tons tons tons tons

Suspended particles Ammonia nitrogen Nitrates Sulphates Chlorides

weight weight

name

hou. m3

hou. m3

tons tons

Water body Total annual water discharge by water body Incl. total annual untreated water discharge by water body Total weight of pollutants discharged by water body BODfull

weight weight

tons tons tons

Ammonia nitrogen Nitrates Sulphates

weight

weight

tons tons

Hydrocarbons Suspended particles

weight

weight

volume

volume

Water body

tons tons

Fluorine Common phosphorus

184

184

7,137

2,504

24,37

0,16

7,7

1 054,93

2 225,9

687,325

91,705

19,513

36,397

0,31

25,705

5 823,977

0

4 898

Luga River

Pshekha River

2 225,9

10,738

3,253

258,332

694,126

91,722

19,633

38,188

0,314

26,148

*

5 861,36

4 942

PG Phosphorite LLC

2,22

0,86

55

7,137

weight

2,504

24,37

0,16

7,7

*

1 054,93

weight weight

weight

weight

tons tons

BODfull Hydrocarbons

*

weight

tons

2 225,9

Total annual water discharge (incl. users)

volume

hou. m3

Indicator

EuroChem BMU LLC

Indicator description

Unit of measure

Indicator

6981,44

623,484

7,564

375,381

2,774

192,104

27 146,71

528,5

22 403,211

Barsuchki River

56,302

6,009

1 985,405

8 925,347

1 083,161

10,566

619,545

4,288

355,44

*

39 079,497

40 677,631

OJSC Nev. Azot

3910,187

2447,526

129,142

115,361

1,783

68,936

26 418,638

0

9544,8

511,01

23,29

209,4

2,77

178,9

35 820,94

5 294,3

41 872,5

Kovdora River, Mozhel River, Lake Kovdor

Shat River, Shatskoye water storage 28 928

18,4

0

379,42

9 544,8

511,01

23,29

209,4

2,77

178,9

*

35 820,94

41 872,5

OJSC Kovdorsky GOK

14,404

0

3 741,343

5 302,649

3 507,323

132,77

231,466

3,444

104,384

*

37 597,819

37 579

OJSC Azot

21307,752

3680,862

182,013

760,909

7,797

473,345

96 265,195

8 048,7

100 327,611

*

102,064

10,122

6 419,5

24 650,922

5 200,353

188,763

1 122,969

10,976

672,572

*

119 414,546

127 297,031

Total

69

EN22 Total weight of waste by type and disposal method

tons tons tons tons tons tons tons tons tons

Hazard class 3 Hazard class 4 Hazard class 5 (total) Hazard class 5 (mining sector) Total decontaminated waste Hazard class 1 Hazard class 2 Hazard class 3

tons

Total disposed waste tons

tons

Hazard class 5 (mining sector)

Hazard class 1

tons

Hazard class 5 (total)

Hazard class 2

tons tons

tons

Hazard class 2 Hazard class 3

tons

Hazard class 1

Hazard class 4

tons

Total generated waste

weight

volume

weight

weight

weight

weight

weight

weight

weight

weight

weight

weight

weight

weight

weight

weight

weight

weight

weight

weight

weight

weight

Indicator description

thou. m3

Total volume of waste water delivered to third-parties for treatment Unit of measure

tons

Common phosphorus

Indicator

tons tons

Chlorides Fluorine

55

2,335

30,98

0,287

64,052

0

913 892,6

124,451

30,396

0,25

0

914 047

0

851 655,247

338,794

33,231

45,967

0,125

852 073,364

EuroChem BMU LLC

0

2,22

0,86

256,033

0

0

1,962

1,975

0

1 550,503

27,794

64,504

0,111

0

1 642,912

0

1 152,683

5 781,717

271,917

0,111

1,21

7 207,638

PG Phosphorite LLC

0

10,676

3,235

1 133,493

388,072

5598,743

2,945

5 989,76

0

12 089,638

50,76

868,12

1 096,04

0

13 360,198

0

5 091,444

9 945,008

1 907,215

5 730,783

3,732

22 678,182

OJSC Nev. Azot

0

27,177

3,308

2 589,092

0

0

102,465

102,465

0

7 153,57

685,48

3 529,346

0

0

11 368,396

0

8 384,654

15 117,945

3 892,001

0

102,465

27 497,065

OJSC Azot

0

4,716

0

379,42

5,2

0,69

0

5,89

21 557 201

21 557 271,9

0

509,6

0

0

21 557 781,5

46 645 792,9

46 651 619,491

2 301,51

619,304

0,69

0,931

46 654 544,926

OJSC Kovdorsky GOK

1 627,800

18,40

0

4 413,038

395,607

5630,413

107,659

6 164,142

21 557 201

22 491 958,211

888,485

5 001,966

1 096,401

0

22 498 200,006

46 645 792,9

47 517 903,519

33 484,974

6 723,668

5 777,551

108,463

47 564 001,175

Total

1 627,8

63,189

7,403

70

EN25 Identity, size, protected status and biodiversity of value water bodies and related habitats significantly affected by the reporting organisation’s discharges of water and runoff

EN24 Weight of transported, imported, exported or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally

EN23 Total number and volume of significant spills

tons

Hazard class 5 (mining sector) weight

weight

pollutant weight pollutant weight

description tons description tons

weight

pollutant

quantity

Indicator description

0

35,02

214,343

0

0

0

249,363

tons

description

0 0

0,013

0

*

0

*

0

*

0

EuroChem BMU LLC

0

134,42

5743,865

230,996

0

0

6109,281

0

0

0

*

0

*

0

*

0

PG Phosphorite LLC

0

3387,616

8905,089

755,889

8,28

0

13056,874

0

0

0

*

0

*

0

*

0

OJSC Nev. Azot

0

1552,753

15916,32

157,03

0

0

0

0.05

ammonia

0

none

0.05

ammonia

1

0

*

0

*

0

*

0

OJSC Kovdorsky GOK

25088591,9

25088609,261

1604,339

10,394

0

0

25090223,994

0

OJSC Azot

17626,103

0

0,013

0,05

*

0

*

0,05

*

1

Total

25088591,9

25093719,07

32383,956

1154,309

8,28

0

25127265,615

0

The Company does not significantly affect water bodies that have a protected status and biodiversity. The Company does affect Lake Kovdor which is a habitat for one protected species

EuroChem does not transport, import, export or treat waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII

Atmospheric pollutant

Water pollutant

Total amount of atmospheric and water pollutants, incl.:

ea.

tons

weight

Number of emergencies and accidents resulting in environment pollution

tons

Hazard class 4 Hazard class 5 (total)

weight

weight

weight

weight

Unit of measure

tons

Hazard class 3

weight weight

Indicator

tons tons

Hazard class 1

tons

Total buried waste Hazard class 2

tons tons

Hazard class 4 Hazard class 5

71

EN28 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations

EN27 Percentage of products sold and their packaging materials that are reclaimed by category

EN26 Initiatives to mitigate environmental impacts of products and services and extent of impact mitigation

number

number

ea. ea. ea. ea. ea.

ea.

Number of non-monetary sanctions, total Number of other administrative sanctions Number of criminal sanctions Number of lost law suits Number of identified noncompliances (improvement notice items) for reporting year Number of rectified noncompliances (according to improvement notice items) for reporting year

amount

number

number

number

number

amount

thou. RUR thou. RUR

Fines Other monetary sanctions

amount

thou. RUR

Monetary sanctions, total

Indicator description

Unit of measure

Indicator

1

2

0

0

0

0

0

0

0

EuroChem BMU LLC

0

0

0

0

0

0

0

0

0

PG Phosphorite LLC

Due to the specific nature of the Company’s product, no data is collected

Extent of impact mitigation

2

2

0

0

0

0

0

10

10

7

0

0

0

0

0

92,2

50

142,2

none

none

3

3

0

0

0

0

80,548

20

100,548

OJSC Kovdorsky GOK

mpact mitigation will be noticeable upon revamp completion

Revamp of production shops underway. Complex fertilizers, Carbamide-3

OJSC Azot

OJSC Azot

Reduction of waste water discharge by 1 mln. m3 in 2008

Stabilizing treatment of cooling water

OJSC Nev. Azot

OJSC Nev. Azot

Reduction of sulphur dioxide emissions by 600 tons

significant initiative

Reduction of drop entrainment subject to subject to by 38 percent, type of impact type of impact or by 3.5 thousand m3/ year

description

Worn equipment retrofit (catalytic reactor) for production of sulphuric acid

Installation of drift eliminators at cooling tower with water recovery cooling system (heat power station)

Brief description of environmental initiative

PG Phosphorite LLC

Indicator description EuroChem BMU LLC

Unit of measure

Indicator

OJSC Kovdorsky GOK

13

7

0

0

0

0

172,748

80

252,748

Total

*

*

Total

72

EN30 Total environmental protection expenditures and investments by type

EN29 Significant environmental impacts of transporting products and other goods and materials used for the organisation’s operations, and transporting members of the workforce

thou. RUR * thou. RUR

thou. RUR

thou. RUR thou. RUR

thou. RUR

Total environmental protection expenditures and investments by type including: Environmental protection current expenditures Expenditures to refurbish fixed assets for environmental protection Environmental impact charges Water protection charges Investments in capital assets for environmental protection and management 11 898,5

86,3

492

14 592

70 515

*

99 083,8

165 206

35,434

1 459,42

7 019

170 376

*

344 095,854

100 858,016

30 228,984

8 193,7

50 271,5

477 655,3

*

527 926,8

3 611 463

OJSC Azot

39 541

332 191,627

9 408,551

75 056

100 040

*

636 213

OJSC Azot

1 230 231,662

OJSC Nev. Azot

OJSC Nev. Azot

574 056

PG Phosphorite LLC

PG Phosphorite LLC

167 842,79

EuroChem BMU LLC

EuroChem BMU LLC

quantity

Unit of measure

thou. km

Railroad transportation

Indicator description

Indicator

Unit of measure

Indicator

25 070,2

9 790,07

20 856,121

45 446,9

174 870,532

*

230 586,923

OJSC Kovdorsky GOK

12 179 380,6

OJSC Kovdorsky GOK

342 573,716

372 332,415

40 409,796

192 385,4

993 456,832

*

1 837 906,377

Total

17 762 974,05

Total

73

LA1 Total workforce by employment type, employment contract, and region

20 755

Head count, total

239 20 737 18

- fixed term employment contract - full time - part time 1 418 1 398 20 1 418 0 4 874 4 763 111 4 865 9 2 138 2 124 14 2 136 2 4 192 4 150 42 4 190 2 6 279 6 237

Krasnodar Territory - indefinite term employment contract - fixed term employment contract - full time - part time Stavropol Territory - indefinite term employment contract - fixed term employment contract - full time - part time Leningrad Region - indefinite term employment contract - fixed term employment contract - full time - part time Murmansk Region - indefinite term employment contract - fixed term employment contract - full time - part time Tula Region - indefinite term employment contract

incl. by regions:

20 516

- indefinite term employment contract

including:

01.01.2009

Indicator

74

999 999 0 999 0

Lithuania - indefinite term employment contract - fixed term employment contract - full time - part time

LA6 Percentage of total workforce represented in formal joint management–worker health and safety committees that help monitor and advise on occupational health and safety programmes 2.3 percent

2.3 percent

LA5 Minimum notice period(s) regarding operational changes, According to the information exchange procedure, the minimum notice period regarding operational changes is two months including whether it is specified in collective agreements

91 percent

94 percent

0

- part time

LA4 Percentage of employees covered by collective bargaining agreements

267

- full time

EuroChem’s corporate benefits guarantees are in fact stipulated in collective bargaining agreements. Average employee benefits package costs 1/12 of annual salary

3

- ixed term employment contract

Average employee benefits package costs 1/12 of annual salary. In order to maintain a highly competitive edge and benefits commitments, EuroChem budgeting accounts for annual indexing of benefits costs per employee by at least the annual inflation rate

264

- indefinite term employment contract

LA3 Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations

267

Moscow, EuroChem MCC

Average head count: 21,585 employees. Effective employee turnover in the Company’s divisions: 5.7 percent

5

- part time

Average head count: 23,805 employees. Effective employee turnover in the Company’s divisions: 7.3 percent (10.2 percent in 2006)

6 274

- full time

LA2 Total number and rate of employee turnover by age group, gender and region

42

- fixed term employment contract

75

LA8 Education, training, counselling, prevention, and risk-control programmes in place to assist workforce, their families, or community members regarding serious diseases

LA7 Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region

*

ea./thou. people work days * work days

days ea. ea.

Accident frequency rate Number of days of short-term disability due to injuries Absenteeism factor Total number of work days lost to shortterm disability for any reasons Accident severity factor Number of fatalities Number of newly identified occupational diseases 0

0

0

59,14

18 982

0,041

414

3,8

7

PG Phosphorite LLC

1

0

80

29 579

0,028

320

0,94

4

OJSC Nev. Azot

0

0

91,7

42 929

0,035

550

1,22

6

OJSC Azot

3

0

32

38 211

0,039

480

3,8

15

OJSC Kovdorsky GOK

4

0

55,1

138 162

1 764

2

32

Total

EuroChem BMU LLC

589

Indicator Number of employees trained and certified for industrial safety compliance during reporting period, people

632

PG Phosphorite LLC

383

OJSC Nev. Azot

1 501

OJSC Azot

1 108

OJSC Kovdorsky GOK

4 213

Total

Education and training programmes by occupation for the Company’s employees; technical inspection training programmes by type of supervision (boiler inspection, gas, chemical facilities inspection etc.)

*

0

0

disability work days per accident *

8 461

0,032

0

0

0

EuroChem BMU LLC

*

*

*

*

ea.

Number of recorded accidents involving short-term disability

Indicator description

Unit of measure

Indicator

76

No regular records are maintained

See page 50

No regular records are maintained

LA13 Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity

LA14 Ratio of base salaries between men and women by employee category

HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening

HR2 Percentage of significant suppliers and contractors that No regular records are maintained have undergone screening on human rights, and actions taken

See page 50

The Company is implementing the following corporate programmes: (a) МВА programme (at the Academy of National Economy under the Government of the Russian Federation and Kingston University, UK), (b) a four-module programme for developing basic managerial competence (at the Academy of National Economy under the Government of the Russian Federation, High School of Corporate Management). Out of 280 young specialists, 70 percent participated in development programmes, of which 26 percent were promoted

LA11 Programmes for skills management and lifelong learning that support continued employability and assist employees in managing career changes

LA12 Percentage of employees receiving regular performance and career development reviews

See page 50

LA10 Average hours of training per year per employee by employee category

Average salary in 2008 amounted to RUR 25,220. The ratio of base salaries between men and women by employee category is 1.4 (1.3 for management positions, 1.4 for specialists, 1.3 for workers and clerks)

In 2008, 342 managers at different levels participated in the “Target Management” programme (16 percent more than in 2007)

Average hours of training per year per employee - 63.5 hours: 86.8 hours per worker, and 40.5 hours per manager and specialist

See pages 40-42

LA9 Health and safety topics covered in formal agreements with trade unions

EuroChem-BMU LLC: PPE – 2.8 mln. RUR; nutritional care, milk – 7.2 mln. RUR; labour safety measures - 3.8 mln. RUR; insurance – 1.7 mln. RUR. PG Phosphotite LLC: according to the Collective Bargaining Agreement labour safety spending amounted to 18,340.98 thou. RUR, PPE - 7,564.0 thou. RUR; nutritional care – 13,871.539 thou. RUR, milk – 1,273.39 thou. RUR. OJSC Nevinnomyssky Azot : Collective Bargaining Agreement sections: 6. Labour Safety; 7.Social Benefits; 8. Employment Rights and Guarantees. Labour Safety: 1. Juice, nutritional care, milk -19,701.3 thou. RUR; 2. PPE (protective clothing) – 14,197.9 thou. RUR; 3. Labour safety agreement – 7,423.7 thou. RUR; 4. Labour conditions improvement plan – 21,244.7 thou. RUR. Total - 62,567.6 thou. RUR. OJSC Azot : Agreement – 22,970 thou. RUR; PPE – 12,370 thou. RUR; nutritional care – 7,451 thou. RUR, milk – 8,451 thou. RUR

77

No incidents of discrimination were recorded For information on collective bargaining agreements see CSR 2007, pages 38-42

No child labour is used at EuroChem

No forced or compulsory labour is used at EuroChem

All security personnel are briefed on the organisation’s policies and procedures concerning human rights At EuroChem, the rights of indigenous people are not violated See pages 43-44

Security and in-house audit personnel regularly monitor all of the Company’s divisions for risks related to corruption All EuroChem employees adhere to existing Russian laws and the Company’s Code of Corporate Conduct. No dedicated training in the organisation’s anti-corruption policies and procedures was conducted No incidents of corruption involving the Company’s employees were revealed during the reporting period EuroChem is striving to build its relationships with government bodies and municipal authorities based on law and other regulatory acts, without resorting to any unlawful means of influence. As part of its cooperation with government bodies, EuroChem prepares documents concerning key issues in the development of the chemical sector such as development strategy, international cooperation, organisational and economic management mechanisms, and review and discussion thereof by a variety of companies, institutions and corporations. As required, the Company provides all necessary information to regulatory bodies The Company does not offer any financial or in-kind contributions to political parties, politicians or related institutions EuroChem has never been subject to any legal actions for anticompetitive behaviour, anti-trust or monopoly practices

HR4 Total number of incidents of discrimination, and actions taken

HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights

HR6 Operations identified as having significant risk for incidents of child labour, and measures taken to contribute to the elimination of child labour

HR7 Operations identified as having significant risk for incidents of forced or compulsory labour, and measures to contribute to the elimination of forced or compulsory labour

HR8 Percentage of security personnel trained in the organisation’s policies or procedures concerning human rights that are relevant to operations

HR9 Total number of incidents of violating rights of indigenous people, and actions taken

S01 Nature, scope, and effectiveness of any programmes and practices that assess and manage the impacts of operations on communities, including entering, operating and exiting

S02 Percentage and total number of business units analyzed for risks related to corruption

S03 Percentage of employees trained in the organisation’s anti-corruption policies and procedures

S04 Actions taken in response to incidents of corruption

S05 Public policy positions and participation in public policy development and lobbying

SO6 Total value of financial and in-kind contributions to political parties, politicians and related institutions by country

SO7 Total number of legal actions for anticompetitive behaviour, anti-trust and monopoly practices and their outcomes

See pages 24-45

No dedicated training was conducted

HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained

78

During the reporting period, no incidents were recorded of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services The Company keeps fertilizer wholesalers and retailers informed of both the quality and potential environmental impacts of its products. All of the Company’s products are duly labelled. Products are supplied with required passports and certificates, including the hygienic certificate and the safety sheet The Company is not aware of any incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling At EuroChem, annual surveys are conducted to measure customer satisfaction In terms of press relations and marketing communications, EuroChem adheres to applicable laws and professional ethics codes, being also a member of the Russian Association for Public Relations (RASO) No incidents were recorded of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship No complaints were filed during the reporting period regarding breaches of customer privacy or losses of customer data

PR2 Total number of incidents of non-compliance with regulations and voluntary codes concerning health and safety impacts of products and services during their life cycle, by type of outcome

PR3 Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements

PR4 Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labelling, by type of outcome

PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction

PR6 Programmes for adherence to laws, standards and voluntary codes related to marketing communications including advertising, promotion, and sponsorship

PR7 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications including advertising, promotion, and sponsorship by type of outcomes

PR8 Total number of substantiated complaints regarding breaches of customer privacy and losses of customer data

No fines were imposed on the Company during the reporting period for noncompliance with laws and regulations concerning the provision and use of products and services

On the Company’s web-site www.EuroChem.ru, “Agrochemical Review” discusses eurochem’s products used in agriculture, with emphasis on the life cycle stages of plants in terms of effective and safe usage of fertilizers

PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures

PR9 Monetary value of significant fines for noncompliance with laws and regulations concerning the provision and use of products and services

No fines or non-monetary sanctions for non-compliance with laws and regulations were imposed on the Company during the reporting period

SO8 Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations

79

80

EuroChem I Social Report I 2008

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2008 I Social Report I EuroChem

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