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Acron Managing Board Met on November 8 to Discuss Corporate Strategic Development Programme

The Acron Managing Board discussed in detail the Company’s strategic development programme, which includes raw material projects and construction of new production facilities at existing industrial sites.

Talitsky Mine Potash Project

The Managing Board focused on the potash project implemented by Verkhnekamsk Potash Company (VPC), which in 2008 obtained a subsoil licence for the Talitsky area of the Verkhnekamsk potassium and magnesium salt deposit in Perm Krai. All operations at the deposit comply with the terms of the licence agreement. The preconstruction stage is nearing an end: exploration of the Talitsky area has been completed and initial data and regulations for a feasibility study on permanent mineral quality requirements, which are expected to add 100 million tonnes to ore reserves, are being prepared. The next stage will be the engineering design for the mine.

The head of the Berezniki city administration has approved a land allocation act and location for the mine. Galurgia Research Institute has prepared the main design solutions for the Talitsky Mine. The data received at the pre-project stage indicate a high degree of economic effectiveness and investment potential for the Talitsky project. In accordance with the terms of the subsoil license, the mine must be put on stream in 2016 to reach design capacity in 2018. The budgeted cost of the mine, with a capacity of 8 million tpa of ore and 2 million tpa of end product, will reach US$ 1.5 billion.

Financing for construction of the Talitsky mine will start in 2011. The plan for 2011 includes shafting (the project and tender for drilling and associated work are complete) and construction of roads and power supply lines. Major financing will start in 2012, by which point the first stage of the Oleniy Ruchey mine in the Murmansk region will have ended, and the Company will focus its efforts on implementing the potash project. By spreading out the deadlines and expenditures for the two raw material projects, Acron will be able to ensure maximum financial sustainability for the entire construction period.

Oleniy Ruchey Phosphate Project

In 2010, North-Western Phosphorous Company continued construction of its Oleniy Ruchey mine. Mining and processing are both underway, along with building infrastructure, including roads, power supply lines, bypass channel and auxiliary facilities. Sixteen contractors are operating at the industrial site. The Company has been building up its heavy auto park, which currently consists of seven 90-tonne dump trucks, a bulldozer and an excavator, and soon will be supplemented by a second 11-cube excavator, another bulldozer and four dump trucks. This heavy equipment is making it possible to construct the three mine faces simultaneously while performing pre-portal excavation drilling in the area of the underground mine. Three hydraulic engineering structures were completed and comply with environmental requirements for mine construction.

Investment in the project from the start of development to present has reached US$ 170 million, of which US$ 60 million was spent on equipment. This year’s investments total US$ 100 million, with peak investments of US$ 150 million planned for 2011. Work is currently ahead of the license agreement timeline, and the mine’s first stage is scheduled for commission in the first half of 2012.

Capacity Expansion

A strategic programme to expand urea and ammonia capacity at Acron in Veliky Novgorod is underway, with construction of a new 330 ktpa urea facility started in 2008. At present, most construction is complete and manufacturing equipment is being installed. By year-end, investments in the new urea unit will have reached US$ 35 million. Commissioning is planned for December 2011, by which time total investments will reach US$ 100 million.

In 2010, Acron made preparations to expand its ammonia capacity. The Company intends to launch a new 500-700 ktpa ammonia unit by 2015 to fully cover Acron’s increasing nitrogen needs. Project investments will total US$ 200-250 million.

In addition, in 2011 Acron (Veliky Novgorod) and Dorogobuzh will embark on construction of two 50-megawatt power generating units to be put on stream in 2013 at a total cost of US$ 120 million.