Sustainable Development Report | Chapter 1 Strategy and Vision of Sustainable Development 27

SUSTAINABLE DEVELOPMENT REPORT 2019 IN A SINGLE 2019 RHYTHM 1979 - CONTENTS OF THE REPORT CHAPTER 2 CHAPTER 4 CHAPTER 5 PRODUCTION, SAFETY AND SALES HUMAN CAPITAL ASSETS ECOLOGY, ENVIRONMENTAL OF PRODUCTS AND FORMATION PROTECTION AND PERSONNEL SAFETY OF A PROFESSIONAL TEAM 2.1. Types of products and production volumes ..................... 39 Address of the General Director of the 2.2. Ensuring supply of raw materials and equipment .................. 41 Company ........................................................ 6 2.3. Production efficiency ........................................................... 41 About the Report ............................................ 8 2.4. Program of modernization and revamping of 4.1. The Company staff and formation 5.1. Environmental policy of the Company .. 69 Key indicators and achievements in 2019 .... 10 production facilities ..................................................................... 42 of a professional team ................................... 57 5.2. Environmental impact ............................. 70 Company development history .................... 14 2.5. Construction of Urea Plant No. 3 ..................................... 43 4.2. Training and professional development .... 59 5.3. Energy efficiency ..................................... 71 Awards of the Company ............................... 20 2.6. Restructuring of the repair service ...................................... 45 4.3. Remuneration system ............................. 61 5.4. Ecological activities ................................. 72 40 years of the Company`s achievements .... 22 2.7. Sales markets and transportation of products ................... 47 4.4. Social support of employees, incentives 62 5.5. Industrial safety, health and labour 2.8. Laboratory research and development ............................... 48 protection ........................................................ 73 CHAPTER 1 CHAPTER 3 CHAPTER 6 STRATEGY AND VISION OF ECONOMIC DEVELOPMENT OF THE REGION SUSTAINABLE DEVELOPMENT SUSTAINABILITY OF PRESENCE. CHARITY 1.1. Company overview ................................ 25 3.1. Economic growth indicators ........................... 51 6.1. Company policy on development 1.2. Company governance structure ........... 26 3.2. Company`s assets ........................................... 53 of the region ................................................... 79 1.3. Company`s strategic priorities ....................... 27 6.2. Environmental initiatives ......................... 81 1.4. Risk management in the field of 6.3. Social projects, charity ............................. 82 sustainable development .............................. 29 1.5. Stakeholder engagement ....................... 34 1.6. Innovation development of the Company ............................................. 36 ADDRESS OF THE GENERAL DIRECTOR OF THE COMPANY 7 ADDRESS OF THE GENERAL DIRECTOR OF THE COMPANY 2019 is an anniversary year to develop the production site. To process control system, which Care for the environment is for Togliattiazot. The Company increase operating efficiency, it is allows minimizing the influence one of the main tasks for TOAZ. In celebrated its 40th anniversary with planned to bring the repair service of the human factor, increasing 2019, more than 254 million rubles significant successes in all areas in line with the best practices in the the reliability, safety of equipment was allocated for environmental of activity. Thus, a record level frequency and duration of shutdown operation and maintaining an protection, thereby air and water of 3 million tons of annual output repairs, increase labor efficiency optimal process mode. basins protection programs, as well of ammonia in the entire history and reduce gas consumption. An important moment for as programs aimed at reduction of the was achieved. In addition, TOAZ Changes in the structure of sales the further growth of production harmful effects of industrial waste, increased its urea output by almost in the foreign and domestic indicators of TOAZ was the signing are successfully implemented. The 19% up to 784.6 thousand tons. This markets, as well as improving the of a three-year gas supply contract company systematically implements indicator is the best for the Company commercial conditions for the with Gazprom Mezhregiongaz programs to reduce impact on the over the past twelve years. Successful main products with key customers, Samara LLC at the end of 2019. Thus, environment. sales activities allowed the company should contribute to increasing the enterprise guarantees for itself The new year sets new tasks for in the reporting year to become commercial efficiency. As part of the long-term supplies of the key raw the management and employees of the largest supplier of urea to the development of the production site, material and will be able to increase Togliattiazot. In difficult conditions, agricultural market of the Russian it is planned to build Urea Plant No. accuracy of prognosis of expenses we should maintain leadership Federation. During the reporting 4, an Ammonium Nitrate and Urea which constitute a significant part in positions in the Russian and global period, TOAZ demonstrated Ammonium Nitrate Plant, as well as the production cost. markets, developing production, excellent results in energy efficiency. to complete the construction of a It is worth noting individually ensuring a decent standard of living TOAZ became the best in terms of fertilizer transshipment terminal in that highly qualified employees not only for employees and their labor efficiency in the region. Taman. are the basis for the successful families, but also for all residents Abovementioned and many The construction of Urea Plant implementation of all planned of the city and the region, moving other achievements became possible No. 3 is currently in progress. In projects. The TOAZ team is an forward in terms of strengthening due to the systematic modernization November 2019, the foundation example of solidarity and hard the economy of Samara region and of the factory`s capacities and the of one of the key elements of work. The company takes care of its the entire country. I am sure that involvement of each TOAZ employee the facility, a Prilling Tower, was employees, providing them with all taking into account the accumulated in an effective work process. completed. At the end of the year, kinds of support. Thus, the program experience and the constantly At the end of 2019, a new large-scale equipment manufactured for provision of corporate housing, growing production and labor enterprise development strategy by the Swiss company CASALE launched in 2018, is in full swing, indicators, it is within our scope until 2025 was adopted. For the S.A. was delivered at the site, its under which the company allocates of abilities. At the same time, we first time, it formalized the mission installation will begin in the summer apartments for families of employees understand that any progress is of the Company: “We care about of 2020. The implementation of the as per a planned program. possible only with strict compliance land fertility and productivity for project for construction of Urea Plant TOAZ is one of the major with the rules of industrial safety, the benefit of the whole world”, No. 3 will increase the existing urea employers of the city; it takes an improvement of the labor protection as well as stated ambitious goals: production capacity of the enterprise active part in projects of social system and social policy. I am leadership in the production of by 70%. Commissioning of the Plant significance and contributes to grateful to each employee for his/ nitrogen mineral fertilizers in Russia is scheduled for 2021. development of the general cultural her invaluable contribution to and becoming one of the five largest In 2019, TOAZ completed the and educational environment of the overall success and I urge to producers in the world. According overhaul of Ammonia Plant No. Togliatti. The company continues continue, without reducing efforts, to the new development strategy 3. This project has become one to implement awareness-raising, the course of TOAZ development! of Togliattiazot, the enterprise is of the largest in the history of the educational, cultural, charitable, faced with an ambitious task to enterprise in terms of scope of sports and environmental projects. significantly increase production work and investment. The Plant Among those projects which indicators (including production of received modernized turbine, attracted wide public interest are ammonia by approximately 40% up compressor, rotating equipment and such as the city lectures “Chemistry to 4.15 million tons per year, of urea a new control system. Technical of the Word”, a unique educational by more than 2.5 times up to 2.53 re-equipping made it possible to program for the elderly “Chemistry million tons per year) and increase stabilize the operation of the plant of Experience”, a charity program EBITDA by 3.3 times. Investment and reduce the consumption of “Chemistry of Good”, a scholarship Best regards, in production development will natural gas per ton of product by program for young talents “Impulse”. Dmitry Mezheedov amount to 112 billion rubles. almost 10%. In addition, quality of Togliattiazot is in constant search of General Director of CJSC To ensure such growth, it is control of the technological process new vectors for the social and cultural Corporation Togliattiazot, planned to increase

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