Annual Environmental & Social Report 1. Company Details Company Name: Grupa Azoty S.A. Company Address: Ul. Kwiatkowskiego 8

Annual Environmental & Social Report

1. Company Details Company Name: Grupa Azoty S.A. Company Address: ul. Kwiatkowskiego 8, 33-101 Tarnów, Poland Country: Poland Town/Location: Tarnów Company authorized representative: Wojciech Wardacki I certify that the data contained in this report completely and accurately represents operations during this reporting period.

Signature: Wojciech Wardacki Title: President of the Management Board Date: April 26th 2017

[stamp reading: “PRESIDENT OF THE MANAGEMENT BOARD Wojciech Wardacki” and signature] Contact Details: Telephone: 14 637-32-03 Mobile: E-mail: [email protected]

Please provide key data on the Company performance, as well as production levels at each plant. For each of the 7 large plants please provide:

Item CUMULATIVE

[PLN '000] 2015* 2016 restated Revenue 1,768,984 1,552,332 Profit/(loss) on sales 32,437 -7,521 EBIT 4,355 -29,179 EBITDA 95,469 64,858 Net profit/(loss) 209,055 224,775

* In the reporting period, the presentation of financial statements was changed to improve the presentation of information on the effect of certain transaction types on the Company's assets and financial position. The comparative data has been appropriately restated.

Key performance indicators in terms of energy use, emissions, natural resource use, and carbon emission

See Sections 4 and 5.

Number of staff employed and any change in employment over past 3 years

As at Dec 31 As at Dec 31 As at Dec 31 2016 2014 2015 Number of direct employees: 2,088 2,077 2,088 Number of contracted - - - workers:

Provide information on permits and status of compliance of each subsidiary with IPPC/IED Grupa Azoty S.A. currently operates pursuant to the following decisions:  Decision of the Marshal of the Province of Kraków dated June 20th 2012, Ref. No. SR-II- 1.7222.1.1.2012, granting an integrated (IPPC) permit to Zakłady Azotowe w Tarnowie-Mościcach for the Hydrogen Unit, valid for an indefinite term (permit amended by Decision of December 3rd 2014, Ref. No. SR-II-1.7222.2.13.2014);  Decision of the Governor of the Province of Kraków dated February 16th 2007, Ref. No. ŚR.XIV.JI.6663-6-05, granting an integrated (IPPC) permit to Zakłady Azotowe w Tarnowie- Mościcach for the Park Infrastruktura Complex, valid for an indefinite term (permit amended by Decision of July 29th 2011, Ref. No. SR-II-1.7222.1.3.2011, Decision of September 11th 2012, Ref. No. SR-II-1.7222.1.7.2012, Decision of December 3rd 2014, Ref. No. SR-II-1.7222.2.17.2014 and Decision of December 31st 2015, Ref. No. SR-II-1.7222.2.1.2015);  Decision of the Governor of the Province of Kraków dated April 17th 2007, Ref. No. ŚR.XI.JI.6663- 3-06, granting an integrated (IPPC) permit to Zakłady Azotowe w Tarnowie - Mościcach for the POM Manufacturing and Compounding Complex, valid for an indefinite term (permit amended by Decision of July 29th 2011, Ref. No. SR-II-1.7222.1.1.2011 and Decision of December 3rd 2014, Ref. No. SR-II-1.7222.2.14.2014);  Decision of the Governor of the Province of Kraków dated July 29th 2011, Ref. No. SW.II.1.AJ.7673-10/09, granting an integrated (IPPC) permit to Zakłady Azotowe w Tarnowie - Mościcach for the Technical Grade Nitric Acid Unit, Calcium Ammonium Nitrate and Ammonium Nitrate Unit, Nitrogen Fertilizer Granulation Unit, and Dolomite Milling Unit, valid for an indefinite term (permit amended by Decision of December 3rd 2014, Ref. No. SR-II-1.7222.2.15.2014 and Decision of August 16th 2016 Ref. No. SR-II.7222.2.8.2016);  Decision of the Governor of the Province of Kraków dated March 22nd 2007, Ref. No. ŚR.XI.JI.6663- 4-06, granting an integrated (IPPC) permit to Zakłady Azotowe w Tarnowie - Mościcach for the PTFE and Fluorine Compounds Unit, valid until December 31st 2016;  Decision of the Governor of the Province of Kraków dated July 17th 2007, Ref. No. ŚR.XIV.JI.6663- 2-06, granting an integrated permit to Zakłady Azotowe w Tarnowie - Mościcach for the Caprolactam and Polyamide Manufacturing Units, valid until December 31st 2016, amended entirely by Decision of the Marshal of the Province of Kraków dated December 1st 2010, Ref. No. SW.II.1.AJ.7673-11/08 (part I, part II, and part III) (permit amended by Decision of July 29th 2011, Ref. No. SR-II-1.7222.1.2.2011, Decision of February 16th 2012, Ref. No. SR-II-1.7222.1.2.2012, Decision of June 20th 2012, Ref. No. SR-II-1.7222.1.5.2012), Decision of October 21st 2013, Ref. No. SR-II-1.7222.1.3.2013. - [WKS], and Decision of December 3rd 2014, Ref. No. SR-II- 1.7222.2.16.2014 - [WKS], valid for an indefinite term);  Decision of the Marshal of the Province of Kraków dated March 16th 2009, Ref. No. SW.II.1.JI.7673- 6/08, amending the integrated (IPPC) permit granted to Zakłady Azotowe w Tarnowie - Mościcach for the Caprolactam and Polyamide Manufacturing Units (with respect to the Natural Polyamide Unit), valid until December 31st 2016;  Decision of the Governor of the Province of Kraków dated December 29th 2014, Ref. No. SR-II- 1.7221.2.2014, granting permit for the release of gases and dusts into the air to Grupa Azoty S.A., valid until December 28th 2024;  Notification of Grupa Azoty S.A.'s EC II CHP Plant Water Treatment Unit and Modified Plastics Facility of November 24th 2014 to the Marshal of the Province of Kraków, Ref. No. TB/JK/1034/2014;  Decision of the Marshal of the Province of Kraków dated September 13th 2012, Ref. No. SR-II- 1.7225.1.2012, granting permission to participate in the European Union Emissions Trading Scheme to the CHP Plant located on the premises of Zakłady Azotowe w Tarnowie – Mościcach, valid until September 12th 2022, amended by Decision of December 20th 2012 (with an appendix thereto), Ref. No. SR-II-1.7225.4.2012, Decision of August 20th 2013 (with an appendix thereto), Ref. No. SR-II-1.7225.1.2013, Decision of December 23rd 2013, Ref. No. SR-II-1.7225.5.2013, and Decision of December 31st 2014, Ref. No. SR-II-1.7225.3.2014, together with a Monitoring Plan, and Decision of July 16th 2015, Ref. No. SR-II-1.7225.1.2.2015, together with a Monitoring Plan, all issued by the Marshal of the Province of Kraków;  Decision of the Marshal of the Province of Kraków dated June 30th 2011, Ref. No. SR-II- 1.7225.1.2.2011, granting permission to participate in the European Union Emissions Trading Scheme with respect to greenhouse gas emissions from the units manufacturing nitric acid, ammonia and organic chemicals in bulk by way of cracking, reforming, oxidation or similar processes, with a daily production capacity exceeding 100 Mg, valid until June 29th 2021, amended by Decision of December 20th 2012 (with an appendix thereto), Ref. No. SR-II- 1.7225.5.2012, Decision of December 20th 2013, Ref. No. SR-II-1.7225.2.2013, and Decision of December 30th 2014, Ref. No. SR-II-1.7225.4.2014, together with a Monitoring Plan, all issued by the Marshal of the Province of Kraków;  Decision of the Mayor of Tarnów of January 13th 2003, Ref. No. WGK.B-III.6210/16/02/03, granting permit for collective water supply and collective wastewater discharge, with an indefinite term;  Decision of the Governor of the Province of Kraków dated December 30th 2014, Ref. No. SR-IV- 1.7322.1.28.2014.MG, granting permit for special use of water – abstraction of underground water from an intake point located in Tarnów-Mościce, valid until December 31st 2034;  Decision of the Governor of the Province of Kraków dated December 29th 2005, Ref. No. ŚR.XIV.MGą.6811-31-05, granting permit for special use of water – abstraction of surface water from the Dunajec river, valid until December 31st 2025;  Decision of the Marshal of the Province of Kraków dated May 27th 2015, Ref. No. SR-IV- 1.7322.1.6.2015.MG, granting permit for discharge of wastewater containing substances particularly harmful to the water environment into the sewerage system of Zakład Oczyszczania Ścieków T.W. Sp. z o.o., valid until June 8th 2019;  Decision of the Marshal of the Province of Kraków dated November 21st 2013, Ref. No. SR-IV- 1.7322.1.26.2013.MG, granting permit for discharge of wastewater to surface waters, valid until December 31st 2017;  Decision of the Marshal of the Province of Kraków dated July 1st 2015, Ref. No. SR-IV- 1.7222.1.2015, granting an integrated (IPPC) permit to Grupa Azoty S.A. for the Central Wastewater Treatment Plant, with an indefinite term;  Decision Ref. No. SR-IV.1.7328.1.2013.MG, establishing a protected zone for water intake points;  Decision of the Marshal of the Province of Kraków dated January 20th 2016, Ref. No. SR-III- 1.7244.4.9.2015.AG, permitting Grupa Azoty S.A. to collect and process waste, valid until January 19th 2026;  Resolution of the Provincial Assembly of the Province of Kraków of October 25th 2010, No. LI/833/10, establishing Industrial Zone at ZAT S.A. (Official Journal of the Province of Kraków, No. 580/2010, item 4475)

Reporting Period: 2016

2. General Is the project materially compliant Yes [X] If No, please provide details of any material non- with all relevant EBRD Performance No [ ] compliances: Requirements (taking account of agreed action plans, exemptions or derogations)? Is the project materially compliant Yes [X] If No, please provide details of any material with all applicable environmental and No [ ] non-compliances: social laws and regulations? Have there been any accidents or Yes [X] If yes, please describe, including details of incidents that have caused damage to No [ ] actions to repair and prevent reoccurrence: the environment, brought about injuries or fatalities, affected project Conclusions are described in the documentation labour or local communities, affected of accidents and incidents, in compliance with cultural property, or created the applicable law. liabilities for the company? Have there been any changes to Yes [X] If yes, please describe: environment, social, labour or health No [ ] and safety laws or regulations that Obligation to obtain an integrated have materially affected the company? permit for Fertilizer Warehouse The Environmental Protection Law − accidents (alignment with the SEVESO III Directive) How many inspections did you receive Number: 3 Please provide details of these visits, including from the environmental authorities number and nature of any violations found: during the reporting period?  Compliance with environmental regulations (April 18th 2016) - The inspection report was not signed by the Company, four decisions were issued following the inspection, with the implementation deadline of July 29th 2016. By the decision of the Provincial Administrative Court, item 1 of the follow-up orders was repealed. The remaining 3 decision items were implemented.  Compliance with environmental regulations (July 4th 2016) - Post-inspection decisions implemented  Inspection on request, in accordance with Art. 76.4 of the Environmental Protection Act (October 24th – October 31st 2016) - No violations found How many inspections did you receive Number: Please provide details of these visits, including from the health and safety authorities County number and nature of any violations found: during the reporting period? Sanitary Inspector – County Sanitary Inspector (PPIS): 21 1. 1) Inspection of OHS conditions; 2) National Inspection of compliance with Labour regulations applicable to hazardous Inspectorate substances and mixtures and of the – 1 sanitary and technical condition of the National Fire Service facilities (January 27th 2016) − No decision – 2 was issued. 2. 1) OHS conditions, 2) compliance with regulations applicable to hazardous substances and mixtures used, 3) assessment of the sanitary and technical condition of the facilities (January 29th 2016) − No decision was issued. 3. 1) Inspection of OHS conditions; 2) Inspection of compliance with regulations applicable to hazardous substances and mixtures of the sanitary and technical condition of the facilities (March 14th 2016) − No decision was issued. 4. 1) Inspection of OHS conditions; 2) Inspection of compliance with regulations applicable to hazardous substances and mixtures and the sanitary and technical condition of the facilities (March 22nd 2016) − No decision was issued. 5. 1) Assessment of sanitary and technical condition of the facilities (March 29th 2016) - No decision was issued. 6. 1) OHS conditions, 2) compliance with regulations applicable to hazardous substances and mixtures used, 3) assessment of the sanitary and technical condition of the facilities (April 8th 2016) − No decision was issued. 7. 1) OHS conditions, 2) compliance with regulations applicable to hazardous substances and mixtures used, 3) assessment of the sanitary and technical condition of the facilities (April 20th 2016) − No decision was issued. 8. Inspection of the sanitary and technical condition of the Water Treatment Station at ul. Chemiczna (May 19th 2015) - No decision was issued 9. 1) OHS conditions, 2) compliance with regulations applicable to hazardous substances and mixtures used, 3) assessment of the sanitary and technical condition of the facilities (June 1st − June 7th 2016) − No decision was issued. 10. Verification of implementation of the County Labour Inspectorate’s decision dated January 11th 2016 (June 7th 2016) - No decision was issued 11. 1) OHS conditions, 2) compliance with regulations applicable to hazardous substances and mixtures used, 3) assessment of the sanitary and technical condition of the facilities (July 6th − July 15th 2016) − No decision was issued. 12. 1) OHS conditions, 2) compliance with regulations applicable to hazardous substances and mixtures used, 3) assessment of the sanitary and technical condition of the facilities (July 26th - July 29th 2016) − No decision was issued. 13. 1) OHS conditions, 2) compliance with regulations applicable to hazardous substances and mixtures used, 3) assessment of the sanitary and technical condition of the facilities (September 7th 2016) − No decision was issued. 14. 1) OHS conditions, 2) compliance with regulations applicable to hazardous substances and mixtures used, 3) assessment of the sanitary and technical condition of the facilities (September 19th - September 30th 2016) − No decision was issued. 15. Operating permit for the Iron-Chromium Catalyst Plant - (October 10th 2016 - No decision was issued. 16. Verification of implementation of the Tarnów County Labour Inspectorate’s decision of August 9th 2016 - section 2 (October 28th 2016) - No decision was issued. 17. Inspection of OHS conditions, compliance with regulations applicable to hazardous substances and mixtures, and the sanitary and technical condition of the facilities (November 10th 2016) − No decision was issued. 18. Inspection of OHS conditions, compliance with regulations applicable to hazardous substances and mixtures, and the sanitary and technical condition of the facilities (November 16th 2016) − No decision was issued. 19. Inspection of OHS conditions, compliance with regulations applicable to hazardous substances and mixtures, and the sanitary and technical condition of the facilities (November 18th 2016) − No decision was issued. 20. Inspection of OHS conditions, compliance with regulations applicable to hazardous substances and mixtures, and assessment of the sanitary and technical condition of the facilities (November 23rd – December 14th 2016) − No decision was issued. 21. Inspection of OHS conditions, compliance with regulations applicable to hazardous substances and mixtures, and the sanitary and technical condition of the facilities (December 20th 2016) − No decision was issued.

National Labour Inspectorate (PIP) 1. Inspection concerning selected issues relating to Oleum Storage (facilities A-78 and A-78A in the Plastics Business Segment (April 18th - June 18th 2016). The inspection was carried out jointly with the representatives of the National Fire Service and the Provincial Inspectorate for Environmental Protection. An inspection report was prepared. One statement and one ruling were issued following the inspection: - Statement Ref. No. 07170-5317-K022- Nk01/16 containing one decision to be implemented: 1/ provide corrosion protection at the Sulphuric Acid and Hydroxylamine Sulfate Production Plant for: - the structure supporting the trestle on line XIII, power supply lines, and sulfuric acid/oleum service valves, - part of the structure (i.e. up to about 5.0 metres from level 0.0) of the service platform support post – completed, National Labour Inspectorate notified on October 13th 2016 - about 25.0 metres of the sulfuric acid pipeline situated on the trestle west of the A-78A storage facility - completed, National Labour Inspectorate notified on October 13th 2016 The deadline for full implementation of the task was extended until October 31st 2017 by the National Labour Inspectorate’s decision of November 14th 2016.

Ruling Ref. No. 07170-5317-K050-Ws01/16 containing four items for implementation. The decisions concerned the following matters: 1. Update/review of the operating manuals for the oleum and sulfuric acid storage facilities. Implemented. National Labour Inspectorate notified on January 3rd 2017. 2. Consideration of the possibility of automatic shutdown of pumps P-25, P-26, P-28, P-29 in the oleum storage facility (facilities A-78, A-78A) by the distributed control system (DCS). Following an analysis, the completion deadline for the task was set at the end of the first half of 2017. The National Labour Inspectorate was notified about implementation on October 7th 2016.

3. Limitation of permitted speed to 20 km/h on appropriate road sections, situated by the storage facilities. Decision implemented. The National Labour Inspectorate was notified about implementation on June 22nd 2016.

4. Consideration of the possibility of providing at the oleum storage facilities (A- 78, A-78A), in the first place, a tank pressure metering system with alarm, and block triggering values to prevent the pressure being exceeded, and then considering the same with respect to temperature. The task referred to in the ruling is expected to be implemented as part of the planned investment project to modernise the A-78 and A-78A oleum storage facilities. In the first place, the technical and economic concept is planned to be prepared in the first half of 2017. The investment project to modernise the storage facilities is planned for 2017-2010. The National Labour Inspectorate was notified about implementation on October 7th 2016.

National Fire Service (PSP) 1. Inspection of compliance with fire regulations, evaluation of compliance with safety requirements for a plant exposed to a high risk of industrial accident (April 18th - April 29th 2016) – No decision was issued. 2. Preliminary identification of the violations that contributed to the fire and of the circumstances of fire spread (July 4th - July 8th 2016) - No post- inspection decisions were issued. How many inspections did you receive Number: 1 Please provide details of these visits, including from the labour authorities during the number and nature of any violations found: reporting period? One statement and one ruling were issued following the inspection: - Statement Ref. No. 07170-5317-K022-Nk01/16 containing one decision to be implemented: 1/ provide corrosion protection at the Sulphuric Acid and Hydroxylamine Sulfate Production Plant for: - the structure supporting the trestle on line XIII, power supply lines, and sulfuric acid/oleum service valves, - part of the structure (i.e. up to about 5.0 metres from level 0.0) supporting the service platform support post – completed, National Labour Inspectorate notified on October 13th 2016 - about 25.0 metres of the sulfuric acid pipeline situated on the trestle west of the A- 78A storage facility - completed, National Labour Inspectorate notified on October 13th 2016. The deadline for full implementation of the task was extended until October 31st 2017 by the National Labour Inspectorate’s decision of November 14th 2016

4. Consideration of the possibility of providing at the oleum storage facilities (A-78, A-78A), in the first place, a tank pressure metering system with alarm, and block triggering values to prevent the pressure being exceeded, and then considering the same with respect to temperature. The task referred to in the ruling is expected to be implemented as part of the planned investment project to modernise the A-78 and A- 78A oleum storage facilities. In the first place, Have these visits resulted in any Yes [X] If Yes, please describe, including status of penalties, fines and/or corrective No [ ] implementing corrective actions to address any action plans? violations found:

The Company received no fines as a result of the inspections. Corrective measures related to the above decisions, rulings, orders and statements were undertaken. Has the Company engaged any Yes [X] If Yes, please state for which types of work and contractors for project-related work No [ ] how the company monitored contractors’ in the reporting period? compliance with the EBRD Performance Requirements and the Environmental and Social Action Plan:

The Company hires contractors to perform repair and maintenance work. A special procedure governs the performance of such work, including obtaining of permits. Compliance of contracted work with safety rules and regulations is monitored by employees responsible for internal supervision, OHS services, as well as internal and external ISO auditors. Were any of the violations stated Yes [X] If Yes, please provide details, including how the above the responsibility of No [ ] Company is ensuring that corrective actions are contractors? implemented by the contractor?

A few violations of safety rules and procedures were identified, mainly consisting of failure to use personal protection equipment (hard hats, gas masks). Each time such violation was identified, work was suspended until the violation was corrected, and in a few cases notices were submitted to the contractors' management. Have any operations been reduced, Yes [X] If Yes, please describe: temporarily suspended or closed down No [ ] due to environmental, health, safety See above (industrial accidents and or labour reasons? incidents) Please describe any environment or social programmes, initiatives or sub-projects undertaken during the reporting period to improve the company's environmental or social performance and/or management systems:

The key environmental projects in 2016 included the construction of a flue gas desulfurization unit, flue gas denitrification unit, and installation of a new turbine generator at the CHP Plant. The projects were undertaken to ensure compliance of the Company's industrial combustion sources with the requirements laid down in the Minister of Environment's Regulation on Emission Standards for Installations of April 22nd 2011 and the Industrial Emissions Directive. The projects involve upgrading of the existing EC-2 CHP infrastructure and bringing it into compliance with the new emission requirements. As a result, the amount of pollutants released into the environment by the Company's combustion sources will be reduced, improving air quality. All flue gas desulfurisation and deNOx construction projects at Grupa Azoty S.A. have received partial funding from the Norwegian Financial Mechanism 2009–2014. Completion of the projects is planned for 2016−2017.

The project to upgrade power generating installations (for the flue gas denitrification, desulfurization and particulate matter removal systems) with a view to bringing them in compliance with the post- 2016 requirements, is included in by the Environmental and Social Action Plan. The budget of the flue gas desulfurisation and dust removal project is PLN 45,400 thousand. Work completed as part of the project included preparation of detailed plans and specifications, construction of FGD buildings, delivery and assembly of apparatus and equipment. Currently, finishing construction works as well as instrumentation and control and electrical works are underway. Final completion of the project is planned for 2017. Expenditure incurred so far is PLN 30,635 thousand, of which PLN 22,353 thousand was spent in 2016. The budget of the flue gas deNox project is PLN 44,600 thousand. Work completed as part of the project included preparation of detailed plans and specifications, delivery and assembly of apparatus and equipment, work related to primary and secondary measures, as well as instrumentation and control and electrical works. Final completion of the project is planned for 2017. Expenditure incurred so far is PLN 38,510 thousand, of which PLN 24,967 thousand was spent in 2016.

3. Status of the Environmental and Social Action Plan Please provide information on the status of each item in the Environmental and Social Action Plan (ESAP) agreed with EBRD. If the ESAP was updated during the reporting period, please attach a copy of the new plan.

See attachment for information on the implementation of ESAP.

4. Environmental Monitoring Data for each of the key subsidiaries

The information required in this section can be extracted from a CSR report, or a full CSR report can be attached.

Please provide the name and contact Leszek Polak, details for your environmental manager: Phone: +48 14 637-21-04 Parameter2 Value3 Unit Compliance Status4 Comments5 Wastewater Total wastewater 3,370 TCM Compliant generated Biochemical 3,549 kg Compliant Oxygen Demand (BOD) Chemical Oxygen 64,157 kg Compliant Demand (COD) Suspended solids 0 kg Compliant Phosphorus 1,050 kg Compliant Nitrates 41,092 kg Compliant Heavy metals 141 kg Compliant [Other] Air Per each Mg/2016r emissions major point source CHP Plant: NE/EPK/1 406 NE/EPK/2 933 Sulfuric Acid SO2 Production Unit Compliant NK/KPH/175 54 Hydroxylamine sulfate NK/KPH/185 42 CHP Plant: NE/EPK/1 199 NE/EPK/2 350 Hydroxylamine sulfate NK/KPH/185 303 Dual pressure

NOX wp NO2 nitric acid Compliant NA/PN-1/20 200 Ammonium nitrite NK/KPH/163 675 NK/KPH/164 612 NK/KPH/165 647 NK/KPH/169 1,928 CHP Plant: NE/EPK/1 17 NE/EPK/2 46 Fertilizers NA/PN-3/47 10 Particulates NA/PN-3/48 9 Compliant NA/PN-3/51 7 NA/PN-3/105 35 NA/PN-3/106 34 NA/PN-3/107 4 NA/PN-3/29-46 44 CHP Plant 500,267 Production 496,631 CO2 units in ETS Including Compliant

N2O – 108,316 Production 31,070 units outside ETS Other Parameters Noise 45 – night dB Non-compliant According to 55 – day measurements around the plant, the permitted level was exceeded in one place at night time. Excessive noise emissions come from the area of the 5th methane decomposition plant. Detailed acoustic tests were performed. The Company took steps to reduce noise emissions. [Other] Total solid waste 56,101,38 including: 10 01 15 Bottom ash and 27,064,41 Compliant Recovery slag 10 01 02 Fly ash 24,647,89 Compliant Recovery 19 09 06 Solutions and 46.42 Compliant Disposal sludges from regeneration of ion exchangers 06 06 99 Wastes not 118.96 Compliant Disposal otherwise specified 17 04 05 Iron and steel 732.55 Compliant Recovery 17 06 04 Insulation 239.48 Compliant Disposal materials 13 02 08 * Other engine, 44.74 Compliant Recovery gear and lubricating oils 16 08 02 * Spent catalysts 33.454 Compliant Recovery containing dangerous transition metals or dangerous transition metal compounds 19 08 14 Sludge from 981.44 Compliant Recovery non-biological treatment of wastewater 19 08 12 Sludge from 891.66 Compliant Recovery biological treatment of wastewater 07 02 13 Waste plastic Compliant Recovery 257.5

17 02 01 Wood 18.06 Compliant Recovery 15 01 03 Wooden 134.16 Compliant Recovery packaging 17 01 01 Concrete waste 162.32 Compliant Recovery 15 01 02 Plastic 59.729 Compliant Recovery packaging Please provide details of the types and amounts of solid wastes generated by the project. Indicate where wastes are classified as hazardous. Indicate the final re-use, recycle or disposal method for each waste type.

5. Resource Usage and Product Output Measurement Parameter Value Comments6 Unit Fuels used Liquid fuels 1,535.315 Mg Consumption at the Power Business Unit (mazut + MEK) Gas fuels 964,142 m3 Consumption at the Power Business Unit (gas from the Plastics Business Unit) Crude oil Natural gas 201,794,907 m3

Hard coal 238,299 Mg Lignite Electricity 468,181.9 MWh Heat purchased Feedstocks and raw materials consumed Ammonia 125,122.9 Mg Dolomite 71,288.8 Mg Total fertilizers 1,019,246.6 Mg Benzene 4,751.61 Mg Phenol 83,630.00 Mg Technical-grade Mg methanol 12,740.69 Molten sulfur 112,146.61 Mg Product output Caprolactam 99,140.00 Mg Polyamide 53,443.00 Mg Ammonia 180,673.8 Mg Technical-grade Mg 303,013.0 nitric acid Total fertilizers 1,019,246.6 Mg

6. Human Resources Management Please provide the name and contact details for your Krzysztof Pabian Human Resources manager: +48 14 637 3131 Recruited in this Terminated in this Total reporting period reporting period Number of direct 2,088 101 92 employees: Number of contracted - - - workers: Were there any collective Yes [ ] If Yes, please describe the redundancy plan, including redundancies during the reporting No [X] reasons for redundancies, number of workers period? involved, how they were selected, consultation undertaken, and measures to mitigate the effects of redundancy: Are any redundancies to the Yes [ ] If Yes, please describe the redundancy plan, including workforce planned for the next No [X] reasons for redundancies, number of workers year? involved, and selection and consultation process: Were there any changes in trade Yes [ ] If Yes, please provide details, and summarise union representation at Company No [X] engagement with trade unions during reporting facilities during the reporting period: period? Were there any other worker Yes [ ] If yes, please provide details and summarise representatives (e.g. in the No [X] engagement with them during reporting period: absence of a trade union)? Were there any changes in the Yes [ ] If yes, please provide details: status of Collective Agreements? No [X] Have employees raised any Yes [ ] If yes, please state how many, split by gender, grievances with the project during No [X] summarise the issues raised in grievances by male the reporting period? and female staff and explain how the Company has addressed them: Have employees raised any Yes [ ] If yes, please state how many, split by gender, complaints about harassment or No [X] summarise the issues raised by male and female bullying during the reporting staff and explain how the Company has addressed period? them: Have there been any strikes or Yes [ ] If yes, please summarise nature of, and reasons for, other collective disputes related No [X] disputes and explain how they were resolved: to labour and working conditions at the Company in the reporting period? Have there been any court cases Yes [X] If yes, please summarise the issues contested related to labour issues during the No [ ] and outcome: reporting period? In 2016, court proceedings were pending for damages and compensation in connection with an accident at work. The proceedings are still pending. The amount of claim is PLN 315,392.00. Following a third party notice issued in response to the statement of claim, PZU SA joined the case, entirely agreeing with the position of Grupa Azoty S.A. Have there been any changes to Yes [X] If yes, please give details, including of any new the following policies or terms and No [ ] initiatives: conditions during the reporting period in any of the following In 2016, an Additional Protocol to the Collective areas: Agreement was registered. Under the Protocol, the  Trade union recognition allowance for work in a continuous system was  Collective Agreements increased and the definition of gross profit was  Non-discrimination and equal changed for the purposes of the Annual Bonus Payment opportunities for all Rules.  Equal pay for equal work  Gender equality In 2016, the base pay and incentive bonus were  Bullying and harassment, increased. including sexual harassment  Employment of young workers under 18  Wages and salaries (for regular and overtime hours)  Overtime  Working hours  Flexible working / work-life balance  Grievance mechanism for workers  Health & safety?

7. Occupational Health and Safety Data Please provide the name and Leszek Polak contact details for your Health 14 637 3667 and Safety manager: Direct Contracted Direct Contracted employees workers employees workers Number of man- 3,521,300 - Number of 0 - hours worked this Fatalities7: reporting period: Budget spent on PLN 3,017 Number of 0 - OHS in this period thousand disabling injuries: (total amount and currency): OHS training 378 training - Number of lost 12 - provided in this courses – 5,527 time incidents period in person- person-days (including days: vehicular): Number of lost 636 - Number of cases 0 - workdays resulting of occupational from incidents: disease: Number of sick 24,781 - days: Accident causes (falling, heavy loads, struck by object, contact with energy source etc.):

Accidents during transport: 9 Steam burn/pressure equipment operation: 2 accidents Minor mechanical injuries at workstation: 1 Please provide details of any fatalities or major accidents that have not previously been reported to EBRD, including total compensation paid due to occupational injury or illness (amount and currency): - Please summarise any emergency prevention and response training that has been provided for company personnel during the reporting period:

Grupa Azoty S.A. employees receive emergency prevention and response training as a part of periodic OHS training. The Company Fire Brigade also runs emergency prevention and response training as part of initial and periodic training programmes and drills under the Internal Rescue Operation Plan in place at Grupa Azoty S.A. for the Divisional Chemical Rescue Team. Please summarise any emergency response exercises or drills that have been carried out during the reporting period:

The plant has in place an Internal Rescue Operation Plan (as required by the Environmental Protection Law). In accordance with the adopted schedule, there were 16 emergency response exercises (including one emergency drill) in major accident risk facilities in 2016.

8. Stakeholder Engagement Please provide the name and contact details for Lucyna Bielatowicz your external relations or community Head of Corporate Communication Department engagement manager: e-mail: [email protected] 14/637 25 55 Please provide information on the implementation of the stakeholder engagement plan agreed with EBRD and summarise interaction with stakeholders during the reporting period, including:  meetings or other initiatives to engage with members of the public or public organisations during the reporting period  information provided to members of the public and other stakeholders during the reporting period relating to environmental, social or safety,  coverage in the media  interaction with any environmental or other community groups Please describe any changes to the Stakeholder Engagement Plan agreed with EBRD:

Grupa Azoty maintains ongoing contact with the local community, keeping it informed on current developments in its operations. Grupa Azoty communicates with its stakeholders in various ways, including:

 Organisation of press conferences and/or publication of press releases: Grupa Azoty S.A. uses the media to keep the local community informed on all important matters concerning the Company's operations. In 2016, the Company published 15 press releases;  Through additional publications in the form of sponsored press articles, the Company also announced important matters/projects in the area of power generation, investment projects related to catalysts, fertilizers and plastics; the Company's representatives do not hesitate to respond to interview invitations and do not leave journalists' questions unanswered;  Internet and Intranet website at grupaazoty.com, updated and developed on a daily basis. The website provides all material information on Grupa Azoty, its product portfolio, management systems etc.  Grupa Azoty's integrated annual report prepared in accordance with the GRI G4 guidelines (audited) – the report was prepared in accordance with the international standard and the accuracy of information was confirmed by two independent verifications of its content and financial data as well as of compliance with the GRI indicators. The Report presents Grupa Azoty's annual achievements in all important aspects, such as market presence, product mix, initiatives for sustainable development, structural changes, management, standards and broadly defined environmental protection matters (with figures). The report is available on the Company's website at grupaazoty.com;  Publication of the company newsletter ‘Tarnowskie Azoty’, including information on and interviews concerning Grupa Azoty; information on and interviews concerning Grupa Azoty’s environment and connected with social policy, culture, sports, employees, etc. The bulletin is addressed to both Grupa Azoty's and the Grupa Azoty Group's employees and external institutions. 'Tarnowskie Azoty' is an informative, educational and entertaining monthly publication, covering current affairs at the Parent and subsidiaries. The bulletin is mainly distributed within the Group, but also sent out to its partner institutions, Members of Parliament from the Tarnów region, and representatives of the town and county authorities. In 2016, 8 issues of the bulletin were published;  Internal radio broadcasting system, airing programmes three times a day (6.45−7.30 am, 10.00−10.15 am and 14.45−15.10 pm) on each business day (Monday to Friday). The broadcasts cover the most important information on Grupa Azoty and its environment. In 2016, the system aired the Company's programmes and announcements, trade unions' announcements, employees' announcements, as well as interesting news from Tarnów and the region.

Information provided to the representatives of the local community and other stakeholders in the reporting period included information on environmental protection, pro-social policy, support to the local community (education, culture, sports), support of local development, and safety-related matters.

Grupa Azoty is a co-organiser and/or partner of conferences on environmental protection and safety. The conferences and events that Grupa Azoty co-organised in 2016 included the “Environmental Development Trends in the Chemical Industry”, “Chemical Industry 2016”, “Safety in Industrial Facilities”, “European Economic Congress 2016”, “Polish Chemical Industry”, “Nationwide PETROBUSINESS Congress”, “Tarnów Investment Forum”, “Krynica Economic Forum”, “Petroleum/Chemicals”, and “Polish Chemical Forum”. In addition, Grupa Azoty is a partner of the “Safety in Chemical Industry” (Bezpieczna Chemia) programme, run by the Polish Chamber of Chemical Industry. The conferences provided a platform for meeting experts on safety in the chemical sector, experience sharing and developing solutions that can be used at the Grupa Azoty plants.

Membership in associations Grupa Azoty is a member of several dozen economic, chemical industry and scientific associations and institutions. In 2016, these included:  Polska Izba Przemysłu Chemicznego (Polish Chamber of Chemical Industry − PIPC),  Plastics Europe,  Fertilizers Europe,  The World Economic Forum of Davos  Chatham House,  IFA (International Fertilizer Industry Association),  CEEP (Central European Energy Partners),  CEFIC (European Chemical Industry Council),  Stowarzyszenie Emitentów Giełdowych (Polish Association of Listed Companies)  Pracodawcy Rzeczypospolitej Polskiej (Employers of Poland)  Polska Izba Gospodarcza Ekorozwój (Polish Commercial Chamber of Environmental Development),  Polska Grupa Bezpieczeństwa Chemicznego (Polish Chemical Safety Group),  Centrum Zaawansowanych Technologii przy Instytucie Chemii Przemysłowej (Advanced Technology Centre at the Industrial Chemistry Institute),  Polska Platforma Technologiczna Zrównoważonej Chemii (Polish Technological Platform for Sustainable Chemistry),  Polska Platforma Technologiczna − Bezpieczeństwo Pracy w Przemyśle (Polish Technological Platform – Safety at Industrial Workplaces),  Stowarzyszenie Inżynierów i Techników Przemysłu Chemicznego (Polish Association of Chemical Engineers),  System pomocy w transporcie materiałów niebezpiecznych SPOT (SPOT System of Assistance in Transport of Hazardous Materials),  Forum Liderów Bezpiecznej Pracy (Forum of Safe Work Leaders),  Narodowa Fundacja Ochrony Środowiska (National Foundation for Environmental Protection),  Polskie Forum ISO 9000 (Polish ISO 9000 Forum),  ISO 14000 Forum.

Grupa Azoty supports and runs numerous local projects designed to engage stakeholders in joint initiatives. Key such projects in 2016 included:

3rd New Year's Charity Concert In January 2016, the 3rd New Year's Charity Concert was organised. The objective was to support children under the care of the ICH LEPSZE JUTRO Association of Tarnów. Proceeds from the 2016 concert exceeded PLN 100,000 and were allocated in full to the construction of ‘The Little Prince’ pre-school, which is to be attended by autistic children under the care of the Association.

Plastics – Grupa Azoty S.A.’s materials of the future May June 2016 saw the third edition of the promotional and educational project devoted to the plastics manufactured by the Company. During the event, in front of Grupa Azoty S.A.'s headquarters, the residents of Tarnów and its vicinity could learn what plastics are, how they are manufactured and what makes them useful. Plastics manufactured by Grupa Azoty, including their applications and position versus other plastics, were presented. Apart from educational stands, there were also stands of the event’s scientific partners, including the Faculty of Mechanical Engineering and Aeronautics and the Faculty of Chemistry of the Rzeszów University of Technology. For selected school groups, tours of the Company's premises were organised to show the students selected production processes.

Employees' Day – Open Day and Saturday with Grupa Azoty In 2016, the Company employees with their families, as well as the residents of Tarnów were invited to participate in the Open Day event (organised as part of the Employees' Day). The guests had an opportunity to participate in educational sessions on road safety and first aid, as well as to familiarise themselves with chemical-rescue and fire-fighting equipment. The programme also included a film screening, music workshop, group sports and recreational activities connected with the sports supported by Grupa Azoty (e.g. archery and sports climbing). How many complaints or grievances did the project receive from members of the public or civil society organisations during the reporting period? Please split by stakeholder group. Summarise any issues raised in the complaints or grievances and explain how they were resolved:

In the period under analysis, no complaints were raised by the local community.

9. Community Development Please summarise any social or community development / investment initiatives undertaken by the company during the reporting period, and any associated expenditure:

In 2016, Grupa Azoty S.A. spent approximately PLN 2,983,193 on CSR activities (for the benefit of the local community). As part of these activities, the Company undertakes educational, cultural and sports initiatives for the local community and the region, and thus builds and consolidates the image of Grupa Azoty as a valued and recognised partner. Thanks to such efforts, the Company also builds stronger and lasting relations with its immediate social environment. Development of the region In 2016, Grupa Azoty S.A. participated in numerous initiatives for regional and community development, supporting such institutions as:  PTTK (Polish Tourist Association) Branch at Grupa Azoty S.A. in Tarnów-Mościce  Naczelna Organizacja Techniczna Federacja Stowarzyszeń Naukowych-Technicznych (Polish Federation of Science and Engineering Associations NOT), Tarnów Council  Stowarzyszenie Inżynierów i Techników Przemysłu Chemicznego (Polish Association of Chemical Engineers)  Towarzystwo Przyjaciół Mościc (Society of the Friends of Mościce)

Development of education Grupa Azoty S.A. has a long-standing commitment to promoting the development of local communities through various educational activities, campaigns and programmes designed to support children and young people in pursuing their interests, improving their skills and acquiring new knowledge about environmental protection. In 2016, Grupa Azoty S.A. collaborated with a number of schools from the Tarnów region, including:  The Technical School Complex of Tarnów  General Education School Complex No. 1 of Tarnów  Sports School Complex of Tarnów. Grupa Azoty S.A. intends to continue the cooperation on a long-term basis. To this end, the Company has signed an agreement with the Ignacy Mościcki Technical School Complex, which provides for the Company employing up to ten of its students each year, organisation of internships, support in preparing classes, assistance in organising educational field trips, and support in applying for EU funds. Grupa Azoty S.A. also actively collaborates with scientific institutions and academic centres. For decades, the Company has not only supported technological research and development, but also participated in the organisation of educational projects enabling students to meet industry representatives. The institutions with which Grupa Azoty currently cooperates include:  Kraków University of Technology,  Rzeszów University of Technology,  Kraków University of Economics  Jagiellonian University of Kraków  Catholic University of Lublin,  Małopolska School of Economics in Tarnów,  Maria Curie-Skłodowska University of Lublin,  AGH University of Science and Technology of Kraków,  University of Agriculture in Kraków, and  Silesian University of Technology in Gliwice.

Development of sports In building the strength of its brand, Grupa Azoty supports best Polish athletes. In an effort to help satisfy the needs of the local community, it supports not only professional but also amateur athletes and sports organisations, which in 2016 included:  University Sports Association Sports Club at the National Higher Vocational School of Tarnów (field and track section)  Miejsko-Ludowy Klub Sportowy (sports club) Dąbrovia (archery)  Football school at Ludowy Klub Sportowy Jutrzenka (sports club). Driven by the belief that universal access to sports, which promotes respect for people and the spirit of fair play, not only is a foundation of correct education of children and youth, but also eliminates the threats posed by contemporary social ills, Grupa Azoty undertakes initiatives supporting stakeholders conducting activities in this area. In 2016, Grupa Azoty S.A. continued the multi-year programme Grupa Azoty START – its original, new, comprehensive sports and social project designed to discover young talents. The programme supports young people dreaming of excellent performance in various sports. For many of them, this may mark the beginning of their ascent to the top. The following initiatives have been undertaken as part of the Grupa Azoty START Programme:  Climbing Development Programme,  Basketball Development Programme,  Speedway Development Programme,  Handball Development Programme, and  Cross-Country Skiing Development Programme. The Grupa Azoty Group also supports numerous other nation-wide and local sporting events.

Development of culture Believing that culture is an invaluable social phenomenon and an integral system within the process of education which stimulates imagination, sensitivity and creativity of subsequent generations and plays a significant role in shaping both individual and national identity, in 2106 Grupa Azoty undertook the following initiatives:  organisation of cultural events and workshops promoting respect for the national and cultural identity,  support of cultural projects and programmes promoting both the region and the national culture,  support of entities and institutions engaged in the development of regional culture and contributing to the development of national culture. To this end, in 2016 Grupa Azoty supported a number of entities, including:  Krzysztof Penderecki European Centre for Music of Lusławice  Tarnów Culture Centre (Tarnów Film Prize)  Mościce Arts Centre  ArtContest Artistic Association of Tarnów (Grupa Azoty International Jazz Contest)  Puellae Orantes Girls Cathedral Choir  BWA City Art Gallery of Tarnów  Leliwa Traditional Jazz Association of Tarnów  Klasa Dance Association (National Ballroom Dance Tournament)  Zachęta Fine Arts Association of Tarnów  Paderewski Centre of Kąśna Dolna  ‘I KROPKA’ Culture and Arts Foundation  Ludwik Solski Theatre of Tarnów – TALIA Comedy Festival

Protection of life and health In January 2016, Grupa Azoty S.A. organised the New Year's Charity Concert, the Company's initiative financed with its own funds. All proceeds are donated to charities. Proceeds from the concert exceeded PLN 100,000 and were allocated in full towards the construction of ‘The Little Prince’ pre-school, which is to be attended by autistic children under the care of the ICH LEPSZE JUTRO Association. The Company is aware of the need to undertake initiatives for human health and life, help the suffering, sick and terminally ill, as well as those deprived of opportunities to grow and function in society on their own. For this reason, in 2016 Grupa Azoty S.A. focused on organisations which care for the development of others and provided financial aid to:  Centre for Children with Special Educational Needs of Zbylitowska Góra  ‘Ich Lepsze Jutro’ Association  KANA Catholic Youth Education Centre  SIEMACHA Association  Polish Welfare Committee, Tarnów Regional Board. By supporting the Tarnów Volunteer Water Emergency Service, Grupa Azoty S.A. helped to improve the safety of the local community.

Additionally, the Company spent PLN 420,992.95 on donations in 2016. Annual Environmental & Social Report

1. Company Details Company Name: Grupa Azoty Zakłady Azotowe Puławy S.A. Company Address: Aleja Tysiąclecia Państwa Polskiego 13 Country: Poland Town/Location: Puławy Company authorized representative: Andrzej Skwarek I certify that the data contained in this report completely and accurately represents operations during this reporting period. Signature:

[name stamp reading “Andrzej Skwarek” and illegible signature]

Title: Vice President of the Management Board Date of the report: March 10th 2017 Contact Details: Phone: 81 565 22 60 E-mail: [email protected]

Please provide key data on the Company performance, as well as production levels at each plant. For each of the 7 large plants please provide:

Item 2015 2016 [PLN '000] performance performance Revenue 3,451,751 2,860,140 Profit/(loss) on sales 501,601 334,342 EBIT 516,435 328,261 EBITDA 661,833 496,231 Net profit/(loss) 486,214 273,342

Key performance indicators in terms of energy use, emissions, natural resource use, and carbon emission Number of staff employed and any change in employment over past 3 years

As at As at As at Dec 31 Dec 31 Dec 31 2016 2014 2015 Number of direct employees: 3,307 3,209 3,416 Number of contracted 137 147 99 workers:

Provide information on permits and status of compliance of each subsidiary with IPPC/IED

Environmental decisions held by Grupa Azoty Zakłady Azotowe Puławy S.A.

A. Integrated permit

 Decision of the Provincial Office of Lublin No. PZ 7/2004, Ref. No. ŚiR.V.6618/31-5/04, granting Zakłady Azotowe Puławy S.A. of Puławy an integrated permit to operate chemical industry installations to manufacture, using chemical processes, basic products or semi- finished products Amending decisions:  Decision No. PZ 12/2007 of December 12th 2007, Ref. No. ŚiR.V.6618/14-12/2006/2007, issued by the Governor of the Province of Lublin  Decision No. PZ 8/2008 of November 25th 2008, Ref. No. RŚ.IŁ.0722/12/08, issued by the Marshall of the Province of Lublin  Decision No. PZ 21/2010 of July 27th 2010, Ref. No. RŚ.V.MJ.7624/52/08, issued by the Marshall of the Province of Lublin  Decision No. PZ 16/2011 of August 9th 2011, Ref. No. RŚ.V.IŁ.7624/52/08, issued by the Marshall of the Province of Lublin  Decision No. PZ22/2012 of November 28th 2012, Ref. No. RŚ.V.IŁ.7624/52/08, issued by the Marshall of the Province of Lublin  Decision No. PZ23/2014 of October 23rd 2014, Ref. No. RŚ-V.7222.46.2014.ILU, issued by the Marshall of the Province of Lublin  Decision No. PZ45/2014 of November 28th 2014, Ref. No. RŚ-V.7222.46.2014.ILU, issued by the Marshall of the Province of Lublin  Decision No. PZ7/2015 of April 8th 2015, Ref. No. RŚ-V.7222.46.2014.ILU, issued by the Marshall of the Province of Lublin  Decision No. PZ15/2015 of June 24th 2015, Ref. No. RŚ-V.7222.46.2014.ILU, issued by the Marshall of the Province of Lublin  Decision No. PZ6/2016 of February 26th 2016, Ref. No. RŚ-V.7222.46.2014.MCHW, issued by the Marshall of the Province of Lublin

Validity period – indefinite

B. Decision permitting participation in the EU emissions trading system for the CHP plant:

 Decision of August 9th 2016, Ref. No. RŚ-V.7225.8.2016.ARA, issued by the Marshall of the Province of Lublin

C. Decision granting permit for greenhouse gas emissions for process units

 Decision of August 9th 2016, Ref. No. RŚ-V.7225.7.2016.ARA, issued by the Marshall of the Province of Lublin

D. Sector permits

 Decision granting a permit for transport of waste of October 27th 2014, Ref. No. ŚR.6233.10.2014.AKA, issued by the Puławy County Governor; valid until October 27th 2024  Decision approving the landfill site operating instructions of December 17th 2014, Ref. No. RŚ-V.7241.34.2014.LG, issued by the Marshall of the Province of Lublin

E. Safety report Safety report approved by the Commander in Chief of the National Fire Service in the Province of Lublin by way of Decision No. WZ-5517/47-2/03 of November 12th 2003. Amending decisions:  Decision Ref. No. WZ-5517/23-3/10 of November 3rd 2010,  Amendments to the 2013 Safety Report were approved by Decision Ref. No. WZ.5586.4.2013 of May 16th 2013.

Reporting Period: 2016

2. General Is the project materially compliant Yes [X] If No, please provide details of any material with all relevant EBRD Performance No [ ] non-compliances: Requirements (taking account of agreed action plans, exemptions or derogations)? Is the project materially compliant Yes [X] If No, please provide details of any material with all applicable environmental and No [ ] non-compliances: social laws and regulations? Have there been any accidents or Yes [ ] If yes, please describe, including details of incidents that have caused damage to No [X] actions to repair and prevent reoccurrence: the environment, brought about injuries or fatalities, affected project labour or local communities, affected cultural property, or created liabilities for the company? Have there been any changes to Yes [ ] If yes, please describe: environment, social, labour or health No [X] and safety laws or regulations that have materially affected the company? How many inspections did you receive Number: 2 Please provide details of these visits, including from the environmental authorities number and nature of any violations found: during the reporting period? 1. Inspection carried out by the Marshal's Office of Lublin in June 2016 with respect to charging fees for the economic use of the environment (waste management). No violations were found

2. Inspection concerning the implementation of tasks related to the prevention of major industrial accidents, carried out in October 2016 jointly by the Provincial Inspector for Environmental Protection, the National Fire Service, and the National Labour Inspectorate. No violations were found.

How many inspections did you receive Number: 23 Please provide details of these visits, including from the health and safety authorities inspections number and nature of any violations found: during the reporting period? during calendar Two decisions were issued, containing six year 2016. recommendations concerning inappropriate condition of sanitary facilities (paint peeling off the ceiling, dust and smoke covered walls etc.) – decision ordering bringing the facilities into a condition compliant with applicable laws. The recommendations are being implemented in accordance with the agreed deadlines.

How many inspections did you receive Number: 2 Please provide details of these visits, including from the labour authorities during the number and nature of any violations found: reporting period? One order containing two recommendations was issued. The recommendations concerned removal of cavities in the floor and improving internal transport safety. Two statements were also issued, containing seven recommendations: five recommendations to improve safety during manual transport and two recommendations to improve safety during plant start-ups. The recommendations were complied with. Have these visits resulted in any Yes [ ] If yes, please describe, including status of penalties, fines and/or corrective No [X] implementing corrective actions to address any action plans? violations found: Has the Company engaged any Yes [ ] If yes, please state for which types of work, contractors for project-related work No [X] and how the company has monitored the in the reporting period? compliance of contractors with EBRD Performance Requirements and the Environmental and Social Action Plan:

Yes [X] If Yes, please provide details, including how No [ ] the Company is ensuring that corrective actions are implemented by the contractor? During inspections, recommendations are given Were any of the violations stated and written down in inspection reports or above the responsibility of verbal recommendations are given. Compliance contractors? with recommendations is verified during subsequent inspections. In case of serious violations, work is discontinued until the violations are removed. Have any operations been reduced, Yes [ ] If yes, please describe: temporarily suspended or closed down No [X] due to environmental, health, safety or labour reasons? Please describe any environment or social programmes, initiatives or sub-projects undertaken during the reporting period to improve the company's environmental or social performance and/or management systems: See Section 9. Please indicate the level of associated expenditure (capital expenditure and operating expenditure), and whether this relates to the requirements of the Environmental and Social Action Plan, or to any other initiative: See Section 9.

3. Status of the Environmental and Social Action Plan Please provide information on the status of each item in the Environmental and Social Action Plan (ESAP) agreed with EBRD. If the ESAP has been updated during the reporting period, please attach a copy of the new plan. See the Appendix.

4. Environmental Monitoring Data for each of the key subsidiaries The information required in this section can be extracted from a CSR report, or a full CSR report can be attached.

Please provide the name and contact Marek Kuba, Chief Environmental Protection Specialist details for your environmental Email: [email protected] manager: Telephone: 603 712 356 Parameter2 Value3 Unit Compliance Status4 Comments5 Wastewater Total wastewater 85,507 TCM generated Biochemical Oxygen 3.6 mg/dm3 Compliant with Integrated Permit Demand (BOD) Chemical Oxygen 25.8 mg/dm3 Compliant with Integrated Permit Demand (COD) Suspended solids 27.8 mg/dm3 Compliant with Integrated Permit Phosphorus 0.05 mg/dm3 Compliant with Integrated Permit Nitrates 8.6 mg/dm3 Compliant with Integrated Permit Heavy metals Zinc 0.0475 mg/dm3 Compliant with Integrated Permit Nickel 0.0031 mg/dm3 Compliant with Integrated Permit Lead 0.0007 mg/dm3 Compliant with Integrated Permit Chromium 0.0010 mg/dm3 Compliant with Integrated Permit Copper 0.019 mg/dm3 Compliant with Integrated Permit Arsenic 0.0025 mg/dm3 Compliant with Integrated Permit [Other] Per each major Air emissions Mg/year point source

SO2 994 Mg/year Compliant with Integrated Permit

Nitrogen oxides (NOX) 2,653 Mg/year Compliant with Integrated Permit Ammonium nitrate 391 Mg/year Compliant with Integrated Permit dust Urea dust 27 Mg/year Compliant with Integrated Permit Ammonium sulfate 224 Mg/year Compliant with Integrated Permit dust Melamine dust 13 Mg/year Compliant with Integrated Permit Dust from fuel 79 Mg/year Compliant with Integrated Permit combustion

CO2 1,910,088 Mg/year Compliant with Integrated Permit Other Parameters Noise [Other] Solid waste Please provide details of the types and amounts of solid wastes generated by the project. Indicate where wastes are classified as hazardous. Indicate the final re-use, recycle or disposal method for each waste type. 2016

Permitted in Integrated Permit Waste type Generated [Mg] [Mg] Compliant with Integrated Hazardous waste 342,862 Permit Compliant with Integrated Non-hazardous waste 109,823.06 Permit Compliant with Integrated Total 110,165.92 Permit 2016

Self-management of waste − total 14,585.25

including: Recovery 43.66 Storage 14,541.59

Transferred to external companies holding permits for waste 95,454.01 collection/recovery/disposal,

including: from year under analysis 95,441.40 Waste stored at year end compared with waste generated during the year under 139.27 analysis including: Hazardous 83.67 Non-hazardous 55.60

5. Resource Usage and Product Output Measurement Parameter Value Comments6 Unit Fuels used Crude oil - Natural gas 953,888 TCM Jointly as feedstock and fuel Hard coal 717,165 Mg Lignite - Grid electricity 948,537 MWh Total electricity purchased for own needs and for resale Heat purchased - Feedstocks and raw materials consumed Benzene 62,962 Mg Sulfur Mg 39,647 Product output Ammonium nitrate 1,072,740 Mg Caprolactam 65,286 Mg Urea 1,102,128 Mg Melamine 89,388 Mg

6. Human Resources Management Please provide the name and contact details for your Renata Kubiś, Head of HR Administration Human Resources manager: Department Telephone: 81-565-37-55 E-mail: [email protected] Recruited in this Terminated in this Total reporting period reporting period Number of direct 3,416 205 84 employees: Number of contracted 99 workers: Were there any collective Yes [ ] If yes, please describe the redundancy plan, including redundancies during the reporting No [X] reasons for redundancies, number of workers period? involved, how they were selected, consultation undertaken, and measures to mitigate the effects of redundancy: Are any redundancies to the Yes [ ] If yes, please describe the redundancy plan, including workforce planned for the next No [X] reasons for redundancies, number of workers year? involved, and selection and consultation process: Were there any changes in trade Yes [ ] If yes, please provide details, and summarise union representation at Company No [X] engagement with trade unions during reporting facilities during the reporting period: period? Were there any other worker Yes [ ] If Yes, please provide details and summarise representatives (e.g. in the No [ x] engagement with them during reporting period: absence of a trade union)? Were there any changes in the Yes [ ] If yes, please provide details: status of Collective Agreements? No [X]

7. Occupational Health and Safety Data Please provide the name and Tomasz Ogrodnik, Chief OHS Specialist contact details for your Health E-mail: [email protected] and Safety manager: Telephone: 81-565-20-53 Direct Contracted Direct Contracted employees workers employees workers Number of man- 5,064.42 261.09 thousand Number of 0 0 hours worked this thousand hours hours fatalities7: reporting period: Budget spent on PLN 10,573,262 Number of 0 0 OHS in this period disabling injuries: (total amount and currency): OHS training Worker training: In 2016, training Number of lost 24 3 provided in this 2,048 was given to 986 time incidents period in person- participants/ 189 employees of (including days: training sessions external vehicular): in 2016 companies Management performing work staff training: at ZAP / 95 415 participants/ training sessions 12 training sessions in 2016 Administration and office staff training: 125 participants/ 7 training sessions Number of lost 1,372 70 Number of cases 0 0 workdays of occupational resulting from disease: incidents: Number of sick 44,441 1,547 days: Accident causes (falling, heavy loads, struck by object, contact with energy source etc.): Injuries in transport, contact with chemical substances and sources of heat, mechanical injuries, loss of balance

Please provide details of any fatalities or major accidents that have not previously been reported to EBRD, including total compensation paid due to occupational injury or illness (amount and currency): No such occurrences

Please summarise any emergency prevention and response training that has been provided for company personnel during the reporting period:

In 2016:  306 persons participated in training for chemical rescue teams;  47 persons completed training for chemical rescue candidates;  51 employees of Grupa Azoty Puławy participated in training for users of self-contained breathing apparatus;  2 persons continued education at the Central School of the National Fire Service;  Emergency procedures are also discussed during OHS training.

Moreover, as part of OHS training 2,588 employees received training on the use of gas masks, first aid, evacuation procedure in case of an alarm signalling a chemical threat, and the rules of safe movement. Please summarise any emergency response exercises or drills that have been carried out during the reporting period:

In 2016, the following drills were performed: - 16 tactical and emergency drills of the Company Fire Brigade at the facilities of Grupa Azoty Puławy, - 9 drills testing the organisation and conditions of building evacuation, - 12 drills at Grupa Azoty Puławy's premises together with the fire brigades of the County Headquarters of the National Fire Service in Puławy, - 70 chemical rescue drills with the participation of divisional chemical rescue teams and firefighters from the Company Fire Brigade, - 1 company-wide drill to test the provisions of the Internal Rescue Operation Plan, - two times a year, on the last Mondays of March and September, loud tests of sirens are performed on the premises of Grupy Azoty Puławy.

Moreover, emergency response exercises and drills are carried out pursuant to Order No. 27 of the Governor of the Province of Lublin – Head of the Provincial Civil Defence, dated March 26th 2014, amending the Order on Preparation and Ensuring the Operability of the Provincial Detection and Alarm System and the Provincial Early Warning System in the Province of Lublin. In order to check the technical condition of the alarm equipment, alarm sirens are tested: 1) four times a year: in March, June and December on the fourth Thursday of the month, and on September 1st, when a loud test of the alarm signal is performed at 12 noon (as part of the Provincial Detection and Alarm System drill), 2) in other months, at 12 noon on each Thursday of the month, a silent test of the sirens is performed (as part of the Provincial Early Warning System drill). In 2016, loud tests of the sirens were made on March 24th, June 23rd, September 1st, and December 15th. In addition, in 2016 sirens were also operated in the loud mode to commemorate the outbreak of the Warsaw Uprising. 8. Stakeholder Engagement Please provide the name and contact details for Michał Mulawa, Head of Corporate your external relations or community Communication Department (Press Officer) engagement manager: E-mail: [email protected] Mobile: 603 133 153 Monika Płońska, CSR Senior Specialist E-mail: [email protected] Mobile: 724 340 115

Please provide information on the implementation of the stakeholder engagement plan agreed with EBRD and summarise interaction with stakeholders during the reporting period, including:

 meetings or other initiatives to engage with members of the public or public organisations during the reporting period  information provided to members of the public and other stakeholders during the reporting period relating to environmental, social or safety,  coverage in the media  interaction with any environmental or other community groups

Please describe any changes to the Stakeholder Engagement Plan agreed with EBRD:

 Meetings or other initiatives to engage with members of the public or public organisations during the reporting period:  Organisational meetings in connection with the 'Tree for a Bottle' campaign with local partners (Puławy County Governor Office and Zakład Usług Komunalnych (Municipal Services Company)), visits at schools as part of the campaign, media coverage of school visits and a finale on the Company's premises, with the participation of representatives of all organisers, as well as the winning students and school;  Meetings with the Secretarial Office of the Responsible Care Programme devoted to the further development of the Programme as part of the operations of the Polish Chamber of Chemical Industry and at its member companies;  Cooperation with the Puławy Science and Technology Park during educational events for children and youth on the occasion of Innovation Days, Children's Day and the Science Festival;  Participation in the 12th Puławy County Job and Education Fair; information and consultancy point and stand;  Meetings of members of the PUŁAWY Competence Centre consortium;  Execution of annexes to sponsorship agreements with Puławy's leading sports clubs;  Publication and distribution of the 'PULS' information magazine presenting all key areas of operation of the Company and the Grupa Azoty Group (copies for internal distribution contain an insert on employee matters);  Content and financial patronage of environmental, agricultural and CSR inserts released by the local press ('Dziennik Wschodni' and 'Kurier Lubelski');  Support of the Puławy hospice in organising the ‘Fields of Hope’ campaign and collecting plastic caps for charitable purposes;  Continued patronage of the Technical School Complex in Puławy, as part of which Grupa Azoty PUŁAWY agrees to hire ten or more of each year’s school leavers;  Continued cooperation with the Puławy Branch of the Maria Curie Skłodowska University of Lublin.

 Information on environmental protection, social policy and safety matters provided to the local community and other stakeholders during the reporting period:  2015 Integrated Annual Report;  Press releases concerning the Employee Volunteering Programme competition, employees' projects providing for peregrine falcons settling in the nest, blood donation campaign participated by sportspersons of the Azoty-Puławy club and the Science- Business-Agriculture conference;  'PULS' magazine;  the Company blog;  a YouTube channel.

 Coverage in the media:  environmental and CSR inserts in the local press;  Information on the 'Tree for a Bottle' campaign and its results, and on the Employee Volunteering Programme competition;  Information on the Company's financial position;  Interviews with the Company's representative on various aspects of the Company's operations;  Reports from the Science-Business-Agriculture conference organised by the PUŁAWY Competence Centre;  Information on the Company's new investment projects;  Information on projects supported by the National Centre for Research and Development;

 Interaction with any environmental or other community groups:  the ‘Falcon’ Society for Wild Animals – relocating the peregrine falcon nesting box from the Company's old CHP Plant flue gas stack to the new one.

How many complaints or grievances did the project receive from members of the public or civil society organisations during the reporting period? Please split by stakeholder group. Summarise any issues raised in the complaints or grievances and explain how they were resolved:

No complaints were made with respect to the projects.

9. Community Development Please summarise any social or community development / investment initiatives undertaken by the company during the reporting period and any associated expenditure:

'Tree for a Bottle' campaign in 2016 In 2016, for the twelfth time, Grupa Azoty PUŁAWY participated in the nationwide 'Tree for a Bottle' campaign organised on the initiative of chemical companies. This campaign, held under the auspices of the Minister of the Environment and the President of the National Fund for Environmental Protection and Water Management, aims to combine environmental education, social activity, as well as care for the environment and for the participants' home towns. The campaign is addressed to elementary school and preschool children, who play in groups trying to collect as many empty plastic bottles as possible. The bottles collected by children are recycled, and trees planted on the premises of the participating educational institutions are permanent reminders of the participation. The best participating groups receive financial and non- financial prizes. The partners of the campaign are Zakład Usług Komunalnych (Municipal Services Company) of Puławy (responsible for accepting and recycling the collected PET bottles) and the Puławy County Council (supervising the participating educational institutions). In the 2016 edition, 2,105 pupils from 26 educational institutions from all over the county (17 elementary schools and nine preschools) were involved in the campaign. The participants collected a record number of 1,078 thousand plastic bottles. The Company’s spending on coordinating the project amounted to PLN 59,210 in 2016.

'Safety is Our Common Goal' As part of the Sponsorship and Social Support Policy, the 'Safety is Our Common Goal' project was continued. Undertaken in 2012 together with the County Police Headquarters and County Fire Service Headquarters of Puławy, the project is an educational initiative addressed to young people from the County of Puławy. Thanks to the Company's support, an interesting educational offering was prepared, including brochures on fire safety and road traffic rules. The initiative involves meetings at educational institutions across the county (elementary schools, junior high schools and pre-schools). Each participant receives an educational brochure and small gifts (including reflective bands). Cost of the project in 2016: PLN 68,811.

The Employee Volunteering Programme competition In 2016, Grupa Azoty PUŁAWY launched the new ‘Employee Volunteering Programme’, in the form of a contest. This CSR initiative not only encouraged Grupa Azoty PUŁAWY's employees to volunteer, but also brought numerous benefits to the local community, in the form of ten projects implemented by 73 volunteers during more than 2,000 hours of community service. The volunteers of Grupa Azoty Puławy have acted on their own initiative, in their free time, and for no extra pay. In the 2016 ‘Employee Volunteering Programme’, ten projects were awarded and the Company contributed PLN 5 thousand to the implementation of each of these projects. 1. Purchase and assembly of the furniture and equipment for a room used in therapy for children suffering from autism and other developmental disorders. Beneficiary: The ‘Krok po Kroku’ Foundation of Puławy. 2. Playground for children. Beneficiary: Preschool No. 18 of Puławy. 3. The 'Sports Children's Day' at the Sister Klara Staszczak OSB Special Education Centre. Beneficiary: The Sister Klara Staszczak OSB Special Education Centre. 4. Garden for the patients of the Puławy Hospice. Beneficiary: The 'Puławskie Towarzystwo Przyjaciół Chorych Hospicjum' association. 5. Silent room for doing homework. Beneficiary: Elementary School No. 4 of Puławy. 6. Recreation and educational hall for children living in Parchatka. Beneficiary: ‘Sokoły’ Sports Club of Parchatka 7. Creative playground for the youngest pupils. Beneficiary: Elementary School No. 4 of Puławy. 8. Roof replacement on the building of the Volunteer Fire Department of Rogów. Beneficiary: The Volunteer Fire Department of Rogów. 9. A gym for junior high and high school students. Beneficiary: Komisja Edukacji Narodowej School Complex No. 1 of Puławy. 10. Revitalization and restoration of the population of the river trout in the Chodelka river. Beneficiary: The PZW Polish Angling Association, Lublin Branch. Cost of the project in 2016: PLN 41,202. Annual Environmental & Social Report

1. Company Details Company Name: Grupa Azoty Zakłady Azotowe Kędzierzyn S.A. Company Address: ul. Mostowa 30 A, 47-220 Kędzierzyn-Koźle, Poland, PO Box 163 Country: Poland Town/Location: Kędzierzyn-Koźle Company authorized representative: Mateusz Gramza

I certify that the data contained in this report completely and accurately represents operations during this reporting period. Signature:

[stamp reading “Mateusz Gramza President of the Management Board and CEO” and illegible signature]

Title: President of the Management Board Date: March 6th 2017 Contact Details: Telephone: +48 77 481 26 59 Mobile: 609774444 Email: [email protected]

Please provide key data on the Company performance, as well as production levels at each plant. For each of the 7 large plants please provide:

Item CUMULATIVE 2015 2016 [PLN '000] performance Revenue *) 1,810,517 1,696,395 Profit/(loss) on sales 157,941 128,722 EBIT 146,166 115,910 EBITDA 223,294 203,083 Net profit/(loss) 124,423 98,931

*) Change of the revenue figure for 2015. The correction is required due to change of accounting policies in 2016 and the resultant need to ensure the comparability of the 2015 data.

Key performance indicators in terms of energy use, emissions, natural resource use, and carbon emission;

See Section 4 and Section 5.

Number of staff employed and any change in employment over past 3 years

As at Dec 31 As at Dec 31 As at Dec 31 2016 2014 2015 Number of direct employees: 1,569 1,567 1,568 Number of contracted - - - workers: Other information in Section 6.

Provide information on permits and status of compliance of each subsidiary with IPPC/IED Grupa Azoty ZAK S.A. operates in full compliance with applicable legal requirements. In 2016, Grupa Azoty ZAK S.A. continued the efforts to ensure that its operations are conducted in compliance with applicable environmental laws and regulations. The company obtained, inter alia:  one amendment of the integrated permit for the Oxoplast Business Unit installations,  one amendment of the integrated permit for the Fertilizers Production Unit installations,  one amendment of the integrated permit for the industrial wastewater treatment plant,  a new permit for greenhouse gas emissions for fuel combustion installations,  a new waste collection and processing decision.

Below are presented the decisions currently held by Grupa Azoty ZAK S.A.

Integrated permits: I. Oxoplast Business Unit's installations 1. Environmental decision ŚR.III-MJ-6610-1-34/06 of December 29th 2006 − integrated permit for the Oxoplast Business Unit's installations, as amended: Environmental ruling ŚR-III-MW-6610-1/16/07 of May 14th 2007 Environmental decision ŚR.III-MW-6610-1/19/07 of May 28th 2007 Environmental decision DOŚ.III.TŁ.7636-31/09 of December 10th 2009 Environmental decision DOŚ.7222.62.2011.MJ of January 21st 2013 Environmental decision DOŚ.7222.48.2013.MK of February 21st 2014 Environmental decision DOŚ.7222.9.2014.MJ Z of August 22nd 2014 Environmental decision DOŚ.7222.86.2014.MJ of March 16th 2015 Environmental decision DOŚ.7222.66.2015.HM of July 12th 2016 II. Fertilizer Business Unit's installation 1. Environmental decision ŚR.III-MJ-6610-1-28/06 of December 29th 2006 − integrated permit for the Fertilizers Production Unit's installations, as amended Environmental ruling ŚR.III-MW-6610-1/16/07 of May 14th 2007 Environmental ruling DOŚ.III-MJP-7636-21/08 of June 10th 2008 Environmental decision DOŚ.III.MWo-7636-47/08 of March 26th 2009 Environmental ruling DOŚ.III-MJP-7636-24/09 of June 17th 2009 Environmental decision DOŚ.III-MJ-7636-50/09 of December 22nd 2009 Environmental decision DOŚ.III-MJ-7636-51/09 of October 13th 2010 Environmental decision DOŚ.MWi.7636-45/10 of December 23rd 2010 Environmental decision DOŚ.7222.48.2011.MJ of October 15th 2012 Environmental decision DOŚ.7222.36.2014.MJ of October 27th 2014 Environmental decision DOŚ.7222.106.2014.HM of March 30th 2015 Environmental decision DOŚ.7222.61.2015.MSu of May 4th 2016

III. Power Business Unit's and Infrastructure Unit's installation 1. Environmental decision ŚR.III-MJ-6610-1-29/05 of June 30th 2006 − integrated permit for the Power Business Unit's and Infrastructure Unit's installation, as amended: Environmental decision DOŚ.III.MWo.7636-46/08 of December 31st 2008 Environmental decision DOŚ.Aku.7636-39/10 of June 11th 2010 Environmental decision DOŚ.7222.36.2013.MJ of January 31st 2014 Environmental decision DOŚ.7222.39.2014.JZ of November 27th 2014 Environmental decision DOŚ.7222.84.2014.BG of March 17th 2015 Environmental decision DOŚ.7222.65.2015.MJ of December 29th 2015 2. Environmental decision DOŚ.7222.12.2015.AK of June 30th 2015 – integrated permit for wastewater treatment plant, as amended: Environmental decision DOŚ.7222.42.2016.NG of October 24th 2016 IV. Water-law permit 1. Environmental decision ŚR.III-MJP-6811-179/05 of March 14th 2006 − water-law permit for water abstraction, as amended: Environmental decision ŚR.II-MJP-6811-13/07 of May 21st 2007 2. Environmental decision ŚR-III-MK-6811/19/02 of May 16th 2002 – decision establishing a direct protection zone for wells drawing water from Tertiary and Quaternary formations. V. Waste collection and processing 1. Environmental decision DOŚ-IV.7244.4.12.2015.DP of April 19th 2016 − waste collection and processing permit VI. Ash and slag landfill site 1. Environmental decision DOŚ.III.7241.2.9.2013.MK of February 26th 2014 – decision approving the operation instruction for an ash and slag landfill site VII. Landfill site for hazardous waste – sludge landfill site from the Central Mechanical and Biological Wastewater Treatment Plant 1. Environmental decision DOŚ.IV.AKu-7638-4-1/08 of February 12th 2008 – permit for closing the sludge landfill site at the Central Mechanical and Biological Wastewater Treatment Plant, as amended: Environmental decision DOŚ.IV.AKu.7638-4-8/09 of August 5th 2009 Environmental decision DOŚ.7241.1.3.2012.IR of January 21st 2013 VIII. Greenhouse gas emission 1. Environmental permit DOŚ.III.7225.10.2011.BG of June 30th 2011 − permit for emission of greenhouse gases from the TKIV and TKV nitric acid, ammonia, synthesis gas, aldehyde and alcohol production units, as amended: Environmental decision DOŚ.III.7225.2.2013.BG of February 26th 2013 Environmental decision DOŚ.III.7225.2.2014.BG of May 21st 2014 Environmental decision DOŚ.III.7225.3.2015.BG of April 28th 2015 2. Environmental decision DOŚ-III.7225.20.2016.BG of November 25th 2016 − permit for greenhouse gas emissions from fuel combustion installations with a rated thermal input of 395 MWt 3. Environmental decision DOŚ.III.7225.14.2016.HM of September 12th 2016, concerning approval of the ‘Report on monitoring methodology improvements’ IX. Remediation 1. Decision WOOŚ.511.1.4.2015.KM.4 of August 26th 2015 − determination of a plan for remediation of historical contamination of soil on the area around the decommissioned ammonia gasometer at the TK I unit.

Reporting Period: 2016

2. General Is the project materially compliant Yes [X] If No, please provide details of any material with all relevant EBRD Performance No [ ] non-compliances: Requirements (taking account of agreed action plans, exemptions or derogations)? Is the project materially compliant Yes [X] If No, please provide details of any with all applicable environmental and No [ ] material non-compliances: social laws and regulations? Have there been any accidents or Yes [ ] If yes, please describe, including details of incidents that have caused damage to No [X] actions to repair and prevent reoccurrence: the environment, brought about injuries or fatalities, affected project labour or local communities, affected cultural property, or created liabilities for the company? Have there been any changes to Yes [ ] If yes, please describe: environment, social, labour or health No [X] and safety laws or regulations that have materially affected the company? How many inspections did you receive Number: 9 Please provide details of these visits, from the environmental authorities including number and nature of any violations during the reporting period? found:

In 2016, the Provincial Inspectorate for Environmental Protection of Opole conduced the following environmental inspections: a) one comprehensive inspection carried out between May 18th and June 17th 2016, covering all environmental protection matters, b) seven inspections relating to the completion of investment projects inspection carried out between June 13th and June 17th 2016, concerning: - execution and commissioning of the investment project ‘Construction of a membrane-based purge gas separation unit’ at the Ammonia Division in the Fertilizers Production Unit, inspection carried out between July 20th and July 22nd 2016, concerning: - completion of construction and commissioning of the project ‘Construction of a UAN production unit and a logistics base for UAN liquid fertilizers with added modifiers’ at the Fertilizers Production Unit, inspection carried out on July 22nd 2016, concerning: - completion of construction and commissioning of the project ‘Construction of an ammonia condensation system’ at the Fertilizers Production Unit, inspection carried out on July 25th 2016, concerning: - completion of construction and commissioning of the project ‘Preparation of the A109/1 tank for use as an anticaking agent storage tank, and preparation of the A109/2 tank for use as a tank for ammonium nitrate melt from a new neutralisation unit’ at the CAN Division in the Fertilizers Production Unit, inspection carried out between July 26th and July 27th 2016, concerning: - completion of construction and commissioning of the project ‘Expansion of the urea storage and loading facilities’ at the Fertilizers Production Unit, inspection carried out between September 15th and September 30th 2016, concerning: - completion of construction and commissioning of two investment projects:  Construction of loading/unloading stations for loading and handling of liquid waste stream from production of aldehyde and alcohol’ at the Oxoplast Business Unit,  Construction of an instrument air drying station at the Synthesis Gas Division of the Oxoplast Business Unit,

inspection carried out between July 26th and July 27th 2016, concerning: - completion and commissioning of two investment projects:  Construction of a facility for transporting and dispensing of terephthalic acid from the existing silo tank to the Oxoplast ® OT unit at the Ester Division of the Oxoplast Business Unit,  Construction of a circulation water system for the launch of continuous production of Oxoplast ® OT at the Ester Division of the Oxoplast Business Unit,

c) one inspection concerning prevention of major industrial accidents inspection carried out between May 18th and June 17th 2016, concerning: – verification of completion of tasks at the Oxoplast Business Unit's propylene unloading and storage facility, and verification of implementation of measures to prevent major industrial accidents (the inspection was carried out as a joint effort of the Provincial Inspectorate for Environmental Protection, the National Labour Inspectorate, and the National Fire Service).

No post-inspection rulings were issued following the inspections and no breaches of environmental protection regulations were revealed.

How many inspections did you receive Number: Please provide details of these visits, from the health and safety authorities 1 including number and nature of any violations during the reporting period? found:

Between May 18th 2016 and June 17th 2016, three national supervision and inspection bodies: the National Fire Service, the Provincial Inspectorate for Environmental Protection, and the National Labour Inspectorate carried out a joint inspection at Grupa Azoty ZAK S.A. concerning ‘Elimination of Hazards at Nitrogen Plants’. The inspection by the National Labour Inspectorate revealed no violations or irregularities. No administrative decisions were issued. How many inspections did you receive Number: Please provide details of these visits, from the labour authorities during the see above including number and nature of any violations reporting period? found:

Have these visits resulted in any Yes [ ] If yes, please describe, including status of penalties, fines and/or corrective No [X] implementing corrective actions to address action plans? any violations found:

Has the Company engaged any Yes [X] If yes, please state for which types of work, contractors for project-related work No [ ] and how the company has monitored the in the reporting period? compliance of contractors with EBRD Performance Requirements and the Environmental and Social Action Plan:

The Company engaged external contractors for the following types of work: - development of design documentation, - demolition work, - remediation of a landfill site (sludge landfill site at the Central Mechanical and Biological Sewage Treatment Plant) and land (the area around the decommissioned ammonia gasometer at a decommissioned unit), - construction and repair work, - collection of waste generated by the plant (including complete oil and lubrication service of plant and equipment). The work of sub-contractors was monitored through: - regular supervision of work, - regular OHS inspections, - subcontractor/contractor audits, - waste transfer notes, - work acceptance reports. Yes [ ] If Yes, please provide details, including how Were any of the violations stated No [X] the Company is ensuring that corrective above the responsibility of actions are implemented by the contractor? contractors? Have any operations been reduced, Yes [ ] If yes, please describe: temporarily suspended or closed down No [X] due to environmental, health, safety or labour reasons? Please describe any environment or social programmes, initiatives or sub-projects undertaken during the reporting period to improve the company's environmental or social performance and/or management systems:

Work on improvement of the environmental protection management system, compliant with the ISO 14001:2004 standard, was continued. The work involved, inter alia, updating system documentation (including the list of significant aspects), implementation of detailed objectives, and performance of internal audits, including audits carried out at service providers. In March 2016, auditors from BUREAU VERITAS Polska Sp. z o.o., an external entity, performed a re-certification audit of compliance with the requirements of the ISO 9001:2008, PN-N-18001:2004, OHSAS 18001:2007 and ISO 14001:2004 standards. The audit confirmed compliance. The certificates are valid until February 13th 2017.

In 2016, the Company engaged in activities designed to achieve detailed environmental protection objectives as well as in tasks connected with its participation in the Responsible Care ® Programme, the most important of which were: 1. Continuation of the construction of the new CHP plant 2. Overhaul of electrostatic precipitator no. 5 3. Upgrade of the Urea Unit 4. Completion of reclamation of the sludge landfill site at the Central Mechanical and Biological Sewage Treatment Plant 5. Completion of remediation work on the area around the decommissioned ammonia gasometer at the decommissioned TK I nitric acid production unit 6. Modernisation of the Central Mechanical and Biological Wastewater Treatment Plant 7. Improvement of employee safety at a number of installations 8. Implementation of nine health promotion programmes for employees 9. Participation in the 'Catch the Hare' nature photography contest (for employees)

The expenditure on the planned activities was as follows: - expenditure on the environmental protection improvement plan in 2016 – ca. PLN 134.44m, - expenditure on the activities declared for 2016 as part of the Responsible Care® Programme – ca. PLN 11.36m.

3. Status of the Environmental and Social Action Plan Please provide information on the status of each item in the Environmental and Social Action Plan (ESAP) agreed with EBRD. If the ESAP has been updated during the reporting period, please attach a copy of the new plan.

See the attached table.

4. Environmental Monitoring Data for each of the key subsidiaries The information required in this section can be extracted from a CSR report, or a full CSR report can be attached.

Please provide the name and contact details Joanna Maj, Head of Environmental Protection for your environmental manager: Office Telephone: +48 77 4812103 [email protected]

Parameter2 Value3 Unit Compliance Status4 Comments5 Wastewater 5,379.8 TCM Total wastewater 5,379.8 TCM Compliant Amount for aggregate generated wastewater stream Biochemical 33.7 Mg Compliant Same as above Oxygen Demand (BOD) Chemical Oxygen 351.7 Mg Compliant Same as above Demand (COD) Suspended solids 73.4 Mg Compliant Same as above Phosphorus 1.7 Mg Compliant Same as above Nitrate nitrogen 47.5 Mg Compliant Same as above Heavy metals 1.393 Mg Compliant Same as above [Other] Ammoniacal 56 Mg Compliant Same as above nitrogen Total nitrogen 117.8 Mg Compliant Same as above Air emissions

SO2 1,835.9 Mg Emissions mainly from the CHP Plant Nitrogen oxides 1,080.7 Mg Aggregate emissions from

(NOX) the CHP plant and chemical units Particulates 211.2 Mg Same as above

CO2 949,658.4 Mg Same as above Other Parameters Noise The periodic noise measurements carried out in 2016 with respect to the Company's units as part of ongoing investment projects revealed no exceedance of the permitted night and day time levels at the border of the areas subject to noise level limits. [Other] Total solid waste 96,562.05 Mg Compliant Volume of waste generated including but not in the reporting period limited to: 07 01 04* 145.82 Mg Compliant Aldehyde and alcohol post- rhodium catalyst production waste reactivation residue 07 01 08* 4,925.88 Mg Compliant Aldehyde and alcohol post- post-reaction and production waste post-distillation residue

07 01 10* 174.80 Mg Compliant Ester post-production waste filter cakes 07 01 11* 23.36 Mg Compliant Waste from treatment of sludges from aldehyde and alcohol post- on-site effluent production wastewater treatment 10 01 80 83,275.68 Mg Compliant Waste from the Company's ash and slag mixes CHP Plant 15 01 02 30.89 Mg Compliant Amount for aggregate waste plastic packaging stream

15 01 03 59.29 Mg Compliant Amount for aggregate waste wooden packaging stream 15 02 02* 5.29 Mg Compliant Amount for aggregate waste absorbents, wiping stream cloths 15 02 03 4.02 Mg Compliant Amount for aggregate waste absorbents, filter stream materials 16 02 14 56.00 Mg Compliant Amount for aggregate waste discarded stream equipment 16 07 09* 11.48 Mg Compliant Waste from fertilizer waste from tank production line cleaning 16 08 01 5.73 Mg Compliant Nitric acid post-production catalysts waste containing precious metals 16 08 02* 78.24 Mg Compliant Ammonia, aldehyde and spent catalysts alcohol post-production waste 17 01 03 17.64 Mg Compliant Amount for aggregate waste ceramics stream 17 02 01 27.72 Mg Compliant Amount for aggregate waste wood stream 17 02 03 17.16 Mg Compliant Amount for aggregate waste plastics stream 17 04 02 25.20 Mg Compliant Amount for aggregate waste Aluminium stream 17 04 05 4,366.03 Mg Compliant Amount for aggregate waste iron and steel stream 19 08 01 3.22 Mg Compliant Waste from treatment of screenings aggregate wastewater stream 19 08 02 98.84 Mg Compliant Waste from treatment of waste from aggregate wastewater desanding stream 19 08 11* - sludges 1,622.84 Mg Compliant Waste from treatment of from biological aggregate wastewater treatment of stream industrial wastewater 19 08 13* - sludges 1,179.30 Mg Compliant Waste from treatment of from other aggregate wastewater treatment of stream industrial wastewater 19 09 01 – solid 155.52 Mg Compliant Waste from water waste from treatment primary filtration and screenings Please provide details of the types and amounts of solid wastes generated by the project. Indicate where wastes are classified as hazardous. Indicate the final re-use, recycle or disposal method for each waste type.

During project execution, the following types and quantities of waste were generated by contractors: - structural materials containing asbestos (waste code 17 06 05*) − 71.46 Mg – delivered to a waste management company for disposal - mixed rubble (waste code 17 01 07) – 35.22 Mg – delivered to a waste management company for disposal - concrete (waste code 17 01 01) – 17.2 Mg – delivered to a waste management company for disposal - bricks (waste code 17 01 02) – 218.2 Mg – delivered to a waste management company for disposal - mixed wastes (waste code 17 09 04) – 14.72 Mg – delivered to a waste management company for disposal

5. Resource Usage and Product Output Measurement Parameter Value Comments6 Unit Fuels used Crude oil - Natural gas 4,395,417.984 MWh For ammonia production Hard coal 201,508.847 Mg Coal parameters: calorific value – 21,337 kJ/kg, sulfur content – 0.49%, ash content – 24.31%. Lignite - Grid electricity 353,785.467 MWh Volume of electricity purchased for Grupa Azoty ZAK S.A. Heat purchased 23,243.000 GJ Feedstocks and raw materials consumed Propylene 124,426.723 Mg For alcohol and aldehyde production Ammonia 12,870.400 Mg For nitric acid production Phthalic anhydride 2,402.064 Mg For plasticizer production Terephthalic acid 16,266.379 Mg For Oxoviflex plasticizer production Oxygen 259,041.000 TCM Figure covers all plant operations Nitrogen 280,667.000 TCM Figure covers all plant operations Dolomite 100,487.390 Mg Dolomite meal production unit Product output Anhydrous ammonia 424,350.000 Mg Gaseous carbon dioxide 225,127.000 Mg Technical-grade nitric 504,504.000 Mg acid Ammonium nitrate 588,778.000 Mg solution Miksal 2,740.000 Mg Anhydrite meal 6,742.120 Mg Dolomite meal 96,688.040 Mg ZAKsan® 312,240.000 Mg Total Salmags 340,670.000 Mg including: Salmag® 300,810.000 Mg Salmag z borem® 9,490.000 Mg (Salmag with boron) Salmag z siarką® 30,370.000 Mg (Salmag with sulfur) UAN 28% 8,067.941 Mg UAN 30% 26,184.609 Mg UAN 32% 36,251.275 Mg Total urea 177,826.148 Mg including:

Urea-based lyes 60,161.148 Mg Technical-grade urea 117,665.000 Mg

Granulated urea 46% 117,665.000 Mg ® PULNOX 33% 787.500 Mg ® PULNOX 40% 21,986.080 Mg ® PULNOX 45% 3,181.220 Mg NOXy® (also known as 80,718.000 Mg AdBlue®) LIKAM® 12,650.528 Mg Hydrogen (from the 950,763.000 TCM Synthesis Gas Division) Hydrogen from the 40,609.000 TCM purification unit Isobutyl aldehyde 4,781.524 Mg n-butyl aldehyde 4,460.104 Mg Total OXO alcohols 169,394.000 Mg including: 2-Etyloheksanol 127,444.000 Mg Isobutanol 12,950.000 Mg n-butanol 29,000.000 Mg Octanol F 3,425.689 Mg Total OXOPLASTS 43,919.305 Mg including: OXOPLAST® O 5,284.000 Mg OxoviflexTM 37,821.000 Mg Oxoplast® Medica 814.305 Mg Plasticizer mix 119.260 Mg OXO synthesis gas 128,441.000 TCM Compressed hydrogen 28,498.200 TCM Instrument air 84,520.000 TCM Heat 3,976,600.000 GJ Electricity 79,076.250 MWh

6. Human Resources Management Please provide the name and contact details for your Monika Ptaszyńska, Head of HR Policy Office Human Resources manager: Telephone: +48 77 481 31 52 E-mail: [email protected] Recruited in this Terminated in this Total reporting period reporting period Number of direct employees: 1,568 89 88 Number of contracted - - - workers: Were there any collective Yes [ ] If Yes, please describe the redundancy plan, including redundancies during the reporting No [X] reasons for redundancies, number of workers period? involved, how they were selected, consultation undertaken, and measures to mitigate the effects of redundancy: Are any redundancies to the Yes [ ] If Yes, please describe the redundancy plan, including workforce planned for the next No [X] reasons for redundancies, number of workers year? involved, and selection and consultation process: Were there any changes in trade Yes [ ] If Yes, please provide details, and summarise union representation at Company No [X] engagement with trade unions during reporting facilities during the reporting period: period?

Have employees raised any Yes [ ] If yes, please state how many, split by gender, grievances with the project during No [X] summarise the issues raised in grievances by male the reporting period? and female staff and explain how the Company has addressed them: Have employees raised any Yes [ ] If yes, please state how many, split by gender, complaints about harassment or No [X] summarise the issues raised by male and female staff bullying during the reporting and explain how the Company has addressed them: period? Have there been any strikes or Yes [ ] If yes, please summarise nature of, and reasons for, other collective disputes related No [X] disputes and explain how they were resolved: to labour and working conditions at the Company in the reporting period? Have there been any court cases Yes [X] If yes, please summarise the issues contested and related to labour issues during the No [ ] outcome: reporting period?  one case – violation of the principle of equal treatment in employment − action dismissed  three cases pending – for reinstatement to employment  two cases pending – for quashing penalty for breach of order Have there been any changes to Yes [X] If yes, please give details, including of any new the following policies or terms and No [ ] initiatives: conditions during the reporting period in any of the following In 2016, two additional protocols to the Collective areas: Agreement were signed.  Trade union recognition The protocols concerned:  Collective Agreements  change of the basic contribution to the Company  Non-discrimination and equal Social Benefits Fund, opportunities for all  change of the fixed pay and the allowances for  Equal pay for equal work shift workers and workers substituting for a  Gender equality foreman. The rules of remunerating employees  Bullying and harassment, released from the duty to provide work for the including sexual harassment duration of their service on the Management  Employment of young workers Board of the Company trade union and of the under 18 employee serving as the Company Social Labour Inspector were changed.  Wages and salaries (for regular and overtime hours)  Overtime  Working hours  Flexible working / work-life balance  Grievance mechanism for workers  Health & safety?

7. Occupational Health and Safety Data Please provide the name and Marcin Trochimowicz, Head of Occupational Health & Safety contact details for your Health Division and Safety manager: Telephone: +48 77 481 22 53 Mobile: +48 695380826 [email protected] Direct Contracted Direct Contracted employees workers employees workers Number of man- 2,642,537 0 Number of 0 0 hours worked this fatalities 7: reporting period: Budget spent on PLN 1,903.7 0 Number of 0 0 OHS in this period thousand disabling injuries: (total amount and currency): OHS training 1,303 0 Number of lost 11 0 provided in this time incidents period in person- (including days: vehicular): Number of lost 525 Number of cases 0 0 workdays resulting of occupational from incidents: disease: Number of sick 25,088 days: Accident causes (falling, heavy loads, struck by object, contact with energy source etc.):

Fall in a passageway (9), contact with a corrosive substance (1), contact with a sharp edge (1).

None

Please summarise any emergency prevention and response training that has been provided for company personnel during the reporting period:

The employees of Grupa Azoty ZAK S.A. receive emergency prevention and response training during periodic OHS training in compliance with Procedure P-03/C. The Chemical Rescue Division conducts training programmes of this type during the training given to the Divisional Chemical Rescue Team (100 people) operating at Grupa Azoty ZAK S.A. Please summarise any emergency response exercises or drills that have been carried out during the reporting period:

In 2016, the Chemical Rescue Division organised and conducted 12 emergency response exercises at Grupa Azoty ZAK S.A., on the premises of the Divisions/Units carrying the highest risk of major industrial accident. The exercises were attended by employees from individual Divisions, the Rescue Team, Divisional Chemical Rescue Team, GWARANT (a personal and property security services provider), Falck Medycyna (healthcare provider) and Company Shift Dispatchers. In 2016, exercises were conducted at the Ammonia, Ester, and Aldehyde Divisions. Additionally, at 12 noon on the first Tuesday of each month the Company Shift Dispatcher announces a second degree drill alarm. On a daily basis, the Company Shift Dispatcher also runs operating tests of the emergency channel (the principal communication means during rescue operations at Grupa Azoty ZAK S.A.).

8. Stakeholder Engagement Please provide the name and contact details for Maciej Wronecki your external relations or community Head of Communications Office, engagement manager: Grupa Azoty ZAK S.A. Press Officer Telephone: +48 77 481 26 35 Mobile: 695 380 892 Please provide information on the implementation of the stakeholder engagement plan agreed with EBRD and summarise interaction with stakeholders during the reporting period, including:  meetings or other initiatives to engage with members of the public or public organisations during the reporting period  information provided to members of the public and other stakeholders during the reporting period relating to environmental, social or safety,  coverage in the media  interaction with any environmental or other community groups Please describe any changes to the Stakeholder Engagement Plan agreed with EBRD:

The Company takes care to ensure clarity and consistency in communicating with its market environment, and the local community and media. The Company announces all material events and activities through the media by maintaining contacts with journalists and publishing information and accounts of events and activities in the media. The Company has in place a consistent visual identity system and advertising design ensuring recognition in advertising and promotional campaigns, as well as in contact with the media and the Company's environment.

In its dialogue with stakeholder groups, the Company uses various communications tools:

- dialogue with Employees: Company bulletin, intranet, email, company memos and letters, directives, staff meetings, staff meetings with the Management Board and team bonding events; - Employees and persons from outside the Company: social media (FB, Google+, Twitter, Youtube); - Social dialogue forum: regular meetings of the Company Management Board and HR Manager with trade unions and social labour inspectors; - Retired employees: semi-annual meetings of the Senior Citizens Club with the Company Management Board; - the media: regular press meetings to discuss the Company's current operations, additional press briefings and events, press releases, information in the 'Media' section on the Company website and regular contact with the Company press officer; - Local community: local media (press articles and releases, radio programmes etc.), GRI annual report, FB; - Customers and suppliers: regular meetings with customers, leaflets, advertising brochures, POS materials, workshops, seminars, conferences, Customer Service Office, regular contacts of sales managers and directors with customers, and fertilizer and Oxoplast product websites.

OTHER: - participation of Company representatives in City Council meetings; - participation of Grupa Azoty ZAK S.A. analysts in the work of a team for the implementation of objectives and tasks set out in the strategy for improving the air quality in Kędzierzyn-Koźle, and in the work of the Committee for solving environmental issues – benzene in the air.

None

9. Community Development Please summarise any social or community development / investment initiatives undertaken by the company during the reporting period, and any associated expenditure:

In 2016, Grupa Azoty ZAK S.A. was involved in CSR advertising activities in the following areas:  amateur sports,  cultural initiatives,  education and schooling,  scientific and research programmes and initiatives to promote regional development,  environmental initiatives,  initiatives to promote the protection of human life and health and support for the disabled,  social projects. In 2016, Grupa Azoty ZAK S.A. spent PLN 603,803.22 on CSR activities (local community).

In 2016, Grupa Azoty ZAK S.A. also gave donations for initiatives related to:  health protection and promotion  assistance in difficult personal circumstances  support of the World Youth Day  welfare support in difficult personal circumstances  renovation of the Cathedral  treatment and rehabilitation  treatment and rehabilitation  treatment and rehabilitation  repair of a district road (ul. Mostowa)  rescue and civil protection  support for the disabled  support for people at retirement age  religious worship activities  culture, arts, protection of cultural property...

Total donations: PLN 434,500.00

[stamp in the left bottom corner of the page: “TECHNICAL SAFETY DEPARTMENT Management Board Proxy Director Witold Rusak” and an illegible signature] Annual Environmental & Social Report

1. Company Details Company Name: Grupa Azoty Zakłady Chemiczne Police S.A. Company Address: 72-010 Police, ul. Kuźnicka 1 Country: Poland, Province of Szczecin Town/Location: Police Company authorized representative: Wojciech Wardacki I certify that the data contained in this report completely and accurately represents operations during this reporting period. Signature: Wojciech Wardacki Title: President of the Management Board Date: April 26th 2017

[stamp reading: “PRESIDENT OF THE MANAGEMENT BOARD Wojciech Wardacki” and signature] Contact details: Telephone: 91-317-40-30 Mobile: E-mail: [email protected]

Please provide key data on the Company performance, as well as production levels at each plant. For each of the 7 large plants please provide: Key performance indicators in terms of energy use, emissions, natural resource use, and carbon emission

Item Cumulative 2015* 2016 [PLN '000] restated performance

* Revenue 2,719,273 2,385,094 Profit/(loss) on sales 466,856 385,492 EBIT 192,420 112,997 EBITDA 275,044 201,167 Net profit/(loss) 129,597 63,983

* In the reporting period, an error made in the previous period was corrected and the presentation of financial statements was changed to improve the presentation of information on the effect of certain transaction types on the Company's assets and financial position. The comparative data have been appropriately restated.

Number of staff employed and any change in employment over past 3 years

As at Dec 31 As at Dec 31 As at Dec 31 2016 2014 2015 Number of direct employees: 2,380 2,343 2,416 Number of contracted workers: 0 0 0

Provide information on permits and status of compliance of each subsidiary with IPPC/IED

Grupa Azoty Zakłady Chemiczne Police S.A. monitors changes in environmental protection regulations on an ongoing basis and takes measures to ensure compliance. The Company takes part in public consultations announced by competent public administration authorities, voicing its comments on draft legislation. In accordance with the integrated permit, the Company fulfils the obligation to assess the risk of soil, land and groundwater contamination with substances used in technological processes. The assessment takes into account technical and organisational actions, as well as measures taken to prevent soil, land and groundwater contamination.

Commission Implementing Decision (EU) 2016/902 establishing best available techniques (BAT) conclusions, under Directive 2010/75/EU of the European Parliament and of the Council, for common waste water and waste gas treatment/management systems in the chemical sector (EU OJ L 24 of 2016, No. 152, p. 23) was issued on May 30th 2016. The Company analysed its units for their compliance with the requirements of the conclusions. Relevant information was submitted to the Marshal Office of the Province of Szczecin. In November 2016, the Marshal Office completed an examination of Grupa Azoty POLICE's integrated permit in terms of its compliance with the requirements of new conclusions and called on the Company to apply for an amendment to the integrated permit by December 2nd 2017. The Company is required to implement the BAT conclusions by June 8th 2020.

INTEGRATED PERMIT

In terms of environmental protection, the Company operates based on an integrated permit for the operation of process units, granted by the Marshal of the Province of Szczecin on January 9th 2014. In 2016, under Decision WOŚ.II.7222.6.7.2016.MG of the Marshal of the Province of Szczecin, dated September 21st 2016, the Company obtained the sixth amendment to its integrated permit. The amendments resulted from the need to:  Meet the requirements stipulated in the Regulation of the Minister of the Environment dated August 27th 2014 on the types of installations which may cause considerable pollution of individual components of the environment or of the environment as a whole (Journal of Laws, item 1169) with regard to classification of installations of the same type located on the premises of one plant. At present, Grupa Azoty POLICE's fuel combustion units that requiring an integrated permit are the EC I CHP Plant and EC II CHP Plant.  Bring the contents of the integrated permit into compliance with the emission requirements stipulated in the Minister of the Environment's Regulation of July 21st 2015 on the requirements material to the delivery of the Transitional National Plan (Journal of Laws, item 1138),  Bring the contents of the integrated permit into compliance with the emission requirements stipulated in the Minister of the Environment's Regulation of November 4th 2014 on emission standards for certain installations, fuel combustion sources, and waste incineration and co- incineration equipment (Journal of Laws, item 1546, as amended) and the definition of new channelled and fugitive emissions indicators.

OTHER ADMINISTRATIVE DECISIONS

- In 2016, under Decision WOPN-OG.6401.248.2015.AK of the Regional Director for Environmental Protection in Szczecin, dated January 14th 2016, the Company obtained a permit to destroy European beaver dams built on the drainage ditch by settlers W-104, 105 and 106 on plots Nos. 3301/4 and 3301/6, as well as to destroy beaver dens located in the embankment of the operating desludger.

The permit is valid until January 1st 2019.

- As regards greenhouse gas emissions, in 2016 the Company obtained new emission allowance decisions issued by the Marshal Office of the Province of Szczecin under the Act on Trading System for Greenhouse Gas Emission Allowances, dated June 12th 2015. (Journal of Laws, item 1223, as amended) for all of Grupa Azoty POLICE S.A.'s units covered by the EU ETS:  Decision WOŚ.II.7225.3.6.2016.AM of the Marshal of the Province of Szczecin, dated October 5th 2016 – EC I CHP plant;  Decision WOŚ.II.7225.4.6.2016.AM of the Marshal of the Province of Szczecin, dated October 5th 2016 – EC II CHP plant;  Decision WOŚ.II.7225.5.6.2016.AM of the Marshal of the Province of Szczecin, dated October 5th 2016 – Ammonia;  Decision WOŚ.II.7225.6.6.2016.AM of the Marshal of the Province of Szczecin, dated October 5th 2016 – Titanium White;  Decision WOŚ.II.7225.7.6.2016.AM of the Marshal of the Province of Szczecin, dated October 5th 2016 – Fertilizers.

Reporting Period: 2016

The Company actively participated in the drafting of the bill, raising an objection against the introduction of charges for abstraction of internal sea water. The Company's position was taken into consideration. Art. 267.1 of the Water Law bill (delivered to the Company on October 13th 2016) stipulates that no charges will be payable for abstraction of internal sea waters. However, the new Water Law has not been promulgated to date. The Company also took part in public consultations of the draft Regulation of the Minister of the Environment of February 25th 2016 on the method of classifying the condition of uniform parts of surface waters and on environmental quality standards for priority substances (Appendix 9). The enactment of this regulation is important because of the temporary derogation (until 2027) for the achievement of environmental objectives. The Grupa Azoty Group's comments on the draft were submitted to the Ministry of State Treasury. How many inspections did you receive Number: 4 Please provide details of these visits, including from the environmental authorities number and nature of any violations found: during the reporting period? In the period June 6th − July 18th 2016, the Szczecin Provincial Inspectorate for Environmental Protection, together with the National Labour Inspectorate and the National Fire Service, carried out a scheduled comprehensive inspection at the Company. The inspection was designed to verify the Company's compliance with regulations and administrative decisions regarding environmental protection, including those relating to the prevention of major industrial accidents. The inspection findings were as follows: - Breach of the terms of use of the environment consisting in temporary exceedance of permitted limits of dust emissions from pigment spray dryers (for three emitters), i.e. breach of the terms stipulated in the integrated permit. - Breach of Art. 6.1 of the Environmental Protection Law of April 27th 2001 (Journal of Laws of 2016, item 672, as amended).

No post-inspection recommendations were issued. In 2016, the Provincial Inspectorate for Environmental Protection of Szczecin also performed three inspections of the Company's wastewater treatment plant to verify compliance with environmental protection regulations and administrative decisions. The inspections were carried out in the following periods: March 24th–May 16th 2016 September 26th– November 2nd 2016 November 14th–December 20th 2016 The inspections revealed no violations and no follow-up recommendations were issued. How many inspections did you Number: 9 Please provide details of these visits, including receive from the health and safety number and nature of any violations found: National authorities during the reporting Labour period? National Labour Inspectorate: Inspectorate 8 rulings with 38 instructions – 5 5 statements with 17 conclusions National National Sanitary Inspectorate: Sanitary 2 administrative decisions with 12 instructions Inspectorate – 4 National Fire Service: 5 administrative decisions with 11 orders to National Fire perform specific tasks Service – 1

How many inspections did you Number: 5 Please provide details of these visits, including receive from the labour authorities number and nature of any violations found: during the reporting period? 1. Ruling No. 140096-5317-K007-Nz01/16 of March 3rd 2016 (16030311939747140096) – 1 instruction was carried out.

2. Ruling No. 140096-5317-K007-Nz01/16 of March 3rd 2016 (160303135052871140096) − 1 instruction was carried out.

3. Ruling No. 140096-5317-K007-Nk02/16 of March 21st 2016 − 5 instructions were carried out.

4. Ruling No. 140161-5317-K015-Nk01/16 of April 29th 2016 − 1 instruction was carried out. 5. Ruling No. 140161-5317-K015-Nk01/16 of April 29th 2016 − 1 instruction was carried out.

6. Ruling No. 140003-5301-K015-Nk01/16 – 26 instructions, of which 23 were carried out. The remaining three, scheduled for completion in 2017, are being carried out.

7. Ruling No. 140096-5303-K033-Nk01/16 – 2 instructions - carried out. 8. Ruling No. 140096-5303-Nm01/16 – 1 instruction - carried out.

The remedial measures laid down in CEO's Orders No. 07/2016 and 46/2016 and in the Head of the Logistics Operating Centre's Order No. 02/2016 were taken.

Have these visits resulted in any Yes [ ] If yes, please describe, including status of penalties, fines and/or corrective No [X] implementing corrective actions to address any action plans? violations found: Has the Company engaged any Yes [X] If yes, please state for which types of work, and contractors for project-related work No [ ] how the company has monitored the compliance in the reporting period? of contractors with EBRD Performance Requirements and the Environmental and Social Action Plan: Contractors were engaged, inter alia, to:  Take samples and measure concentrations of soluble forms of heavy metals: zinc, lead, nickel, chromium and antimony in the water from the piezometers of the monitoring network of the Iron Sulfate Landfill Site. The contractor holds accreditation No. AB 283 from the Polish Centre for Accreditation (Polskie Centrum Akredytacji);  Take geodetic measurements of the landfill sites. The contractor holds the professional licences and certifications required to carry out the work;  Modernise the floodbank around the phosphogypsum landfill site. The contractor held the professional licences and certifications required to carry out the work.

Yes [ ] If yes, please provide details, including how the Were any of the violations stated No [X] Company is ensuring that corrective actions are above the responsibility of implemented by the Contractor? contractors? Have any operations been reduced, Yes [ ] If yes, please describe: temporarily suspended or closed No [X] down due to environmental, health, safety or labour reasons? Please describe any environment or social programmes, initiatives or sub-projects undertaken during the reporting period to improve the company's environmental or social performance and/or management systems: 1. Grupa Azoty Zakłady Chemiczne Police S.A. has implemented an ISO Integrated Management System. 2. In 2016, the Company pursued its voluntary projects under the 'Responsible Care' programme, leading to a gradual reduction of the Company’s environmental footprint and improvement of employee safety. Various green initiatives implemented under the Programme have become a permanent fixture in the Company’s environmental strategy. The following tasks were completed in 2016 as part of the Responsible Care Programme: Environmental protection initiatives:

 Repair of safety gutters under leachate piping from the iron (II) sulphate landfill site. The repair ensured protection of people and vehicles in the area of the Kuźnicka street (under the sulphate evacuation trestle) from being poured with leachate containing diluted sulfuric acid as well as protection of rainwater in the “bystrotok” storm sewer against contamination with the leachate.  Replacement of catalyst parts in catalytic reactors 3, 4, 5 and 7 of the sulfuric acid production

units. The replacement helped to reduce the volume of SO2 air emissions.  Purchase and assembly of the second 63-7 roller mill facility at the titanium white production unit. The task was completed and helped to reduce dust emissions, electricity consumption by the calcine milling process, and noise emissions.

Initiatives to improve process and occupational safety:  Modernisation of the dust extraction system for production equipment and screens at the PN-3 fertilizer production plant. The project improved OHS and staff working conditions and reduced dust emissions at the workplace and the cost of cleaning. Moreover, in 2016, the following investment projects were under way:  Modernisation of the floodbank around the phosphogypsum landfill site,  Purchase and installation of the settling centrifuge,  Replacement of the EF2 electrostatic precipitator control system,  Continuous monitoring of SO2 and dust emissions at the titanium white production plant,  Modernisation of the post-calcination gas distribution system at the titanium white production plant,  Repairs of access roads and repainting of horizontal signs on internal roads,  Repairs of service platforms for unloading sulfuric acid from rail tank cars,  Lowering of the run of the ammonia water unloading pipeline with to facilitate access to and evacuation of the facility,  Sound insulation of the crystallisation control room,  Refurbishment of staff rooms, sanitary rooms, control rooms and staircases within a dedicated repair fund (PLN 2.3m). 3. Under the Responsible Care Programme, the Company also monitors and updates its occupational and environmental safety indicators. 4. The effectiveness of the Company’s safety efforts and measures is confirmed, inter alia, by:  The Golden Card of Safe Work Leader (Złota Karta Lidera Bezpiecznej Pracy)  The Responsible Care Framework Management System Certificate.

5. In 2016, the Company implemented programmes aimed at improving safety at work:  ‘OHS Sheets Database’ – an electronic information exchange platform at the Grupa Azoty Group,  Regular briefings for rank-and-file employees based on the ‘5 Minutes for Safety’ material prepared by the OHS and Prevention Office,  Continuation of the ‘Protect Your Eyes’ campaign,  The ‘Stop Accidents’ behaviour monitoring programme,  Participation in the ‘Safety in the Chemical sector’ campaign.

6. The 2016 expenditure on environmental protection projects was PLN 55,143 thousand.

3. Status of the Environmental and Social Action Plan Please provide information on the status of each item in the Environmental and Social Action Plan (ESAP) agreed with EBRD. If the ESAP has been updated during the reporting period, please attach a copy of the new plan.

A copy of the Environmental and Social Action Plan is attached as Appendix 1 to this Report.

4. Environmental Monitoring Data for each of the key subsidiaries The information required in this section can be extracted from a CSR report, or a full CSR report can be attached.

Please provide the name and contact details Magdalena Rabe for your environmental manager: [email protected] Parameter2 Value3 Unit Compliance Status4 Comments5 Wastewater Treated industrial 35,244,307 m3 compliant with the integrated wastewater permit Treated municipal 1,382,129 m3 compliant with the integrated wastewater permit Total wastewater 36,626,436 m3 compliant with the integrated generated permit Spent cooling water 123,814,806 m3 compliant with the integrated and rainwater permit Biochemical 255,380.09 kg/year Compliant Oxygen Demand (BOD) Chemical Oxygen 698,531.29 kg/year compliant with the integrated permit Demand (COD) Total load: Suspended solids 861,127.54 kg/year compliant with the integrated - industrial permit Phosphorus 7,269.96 kg/year compliant with the integrated wastewater permit - municipal Ammoniacal 129,155.49 kg/year compliant with the integrated wastewater nitrogen permit - spent cooling Heavy metals 224.39 kg/year Compliant water and rainwater [Other] (Phenols) 19.04 kg/year Compliant Air Per each major Mg emissions point source

SO2 ammonia production 3.87 compliant with the integrated permit titanium white 44.28 compliant with the integrated production permit

mineral fertilizers 1.44 compliant with the integrated production permit

sulfuric acid 1,242.83 compliant with the integrated production permit

fuel combustion 1,827.78 compliant with the integrated (capacity above permit 50 MW)

Nitrogen oxides ammonia production 123.76 compliant with the integrated

(NOX) permit titanium white 8.98 compliant with the integrated production permit mineral fertilizers 15.28 compliant with the integrated production permit sulfuric acid 85.03 compliant with the integrated production permit fuel combustion 879.36 compliant with the integrated (capacity above 50 permit MW) particulates titanium white 29.72 compliant with the integrated production permit

phosphoric acid 52.22 compliant with the integrated production permit mineral fertilizers 219.21 compliant with the integrated production permit

urea production 57.25 compliant with the integrated permit fuel combustion 89.84 compliant with the integrated (capacity above 50 permit MW)

Ammonia production CO2 629,931.615 unit Urea production unit 12,703.705 Titanium white 28,803.194 production unit Mineral fertilizers 42,891.280 production unit Sulfuric acid production unit 1,548.943

Dried iron sulfate 1,983.847 production unit EC I CHP plant 15,279.607 EC II CHP plant 625,581.772 Other Parameters Noise According to 2015 measurements, noise emissions are within permitted levels and comply with the Integrated Permit.

[Other] Solid waste All waste generated at Grupa Azoty Police as well as waste accepted and transferred to third parties was managed in accordance with the Integrated Permit; no exceedance was recorded in 2016. Please provide details of the types and amounts of solid wastes generated by the project. Indicate where wastes are classified as hazardous. Indicate the final re-use, recycle or disposal method for each waste type.

Information on waste generated in 2016 Solid waste generated by Grupa Azoty POLICE Weight of waste Item Waste code Waste type generated [Mg] Solid salts and solutions other than those mentioned 1. 06 03 14 in 06 03 11 and 06 03 13 21.100

Sludges from onsite effluent treatment other than 2. 06 05 03 321,700.000 those mentioned in 06 05 02 Phosphogypsum mixed with slags, bottom ash and 3. 06 09 81 boiler dust (excluding boiler dust mentioned in 10 01 2,029,031.714 04) 4. 06 11 83 Waste iron sulfate 95,508.711 5. 07 02 99 Wastes not otherwise specified 47.480 Bottom ash, slag and boiler dust (excluding boiler 6. 10 01 01 94.700 dust mentioned in 10 01 04) 7. 15 01 01 Paper and cardboard packaging 13.404 8. 15 01 02 Plastic packaging 220.640 9. 15 01 03 Wooden packaging 333.440 Packaging containing residues of or contaminated by 10. 15 01 10* hazardous substances (i.e. Toxicity Class I: very toxic 3.900 and Class II: toxic crop protection chemicals) Absorbents, filter materials, wiping cloths and protective clothing other than those mentioned in 15 11. 15 02 03 99.760 02 02

Discarded equipment other than that mentioned in 16 12. 16 02 14 02 09 to 16 02 13 4.872

Components removed from discarded equipment 13. 16 02 16 24.267 other than those mentioned in 16 02 15 14. ex16 02 16 Discarded printer toners from office equipment 0.143 15. 16 06 01* Lead batteries 2.560 16. 16 06 04 Alkaline batteries (except 16 06 03) 0.050 Mixture of concrete, bricks, tiles and ceramics other 17. 17 01 07 17.120 than those mentioned in 17 01 06 18. 17 02 01 Wood 294.200 19. 17 04 01 Copper, bronze, brass 6.502 20. 17 04 02 Aluminium 16.313 21. 17 04 03 Lead 6.864 22. 17 04 05 Iron and steel 1,806.356 23. 17 04 11 Cables other than those mentioned in 17 04 10 7.510 Soil and stones other than those mentioned 24. 17 05 04 2.060 in 17 05 03 25. 19 09 02 Sludges from water clarification 160.500 (Generated) solid waste subject to recovery at Grupa Azoty POLICE Weight Item Waste code Waste type Process [Mg] Solid salts and solutions other than those mentioned 1. 06 03 14 21.350 R5 in 06 03 11 and 06 03 13 Sludges from onsite effluent treatment other than 2. 06 05 03 321,700.00 R5 those mentioned in 06 05 02 3. 06 11 83 Waste iron sulfate 1,393.040 R5 Bottom ash, slag and boiler dust (excluding boiler 4. 10 01 01 94.700 R5 dust mentioned in 10 01 04) Soil and stones other than those mentioned 5. 17 05 04 40.080 R5 in 17 05 03 6. 19 09 02 Sludges from water clarification 160.500 R5 (Generated) solid waste subject to disposal at Grupa Azoty POLICE Weight Item Waste code Waste type Process [Mg] Phosphogypsum mixed with slags, bottom ash and 1. 06 09 81 boiler dust (excluding boiler dust mentioned in 2,029,031.714 D5 10 01 04) 2. 06 11 83 Waste iron sulfate -6,998.813 D5 Mixture of concrete, bricks, tiles and ceramics other 3. 17 01 07 17.120 D5 than those mentioned in 17 01 06 Solid waste transferred to third-party operators for recovery (R) or disposal (D) Weight Item Waste code Waste type Process [Mg] 1. 06 11 83 Waste iron sulfate 78,465.290 R 2. 07 02 99 Wastes not otherwise specified 45.460 R 3. 15 01 01 Paper and cardboard packaging 13.404 R 4. 15 01 02 Plastic packaging 169.320 R 5. 15 01 02 Plastic packaging 51.320 D 6. 15 01 03 Wooden packaging 331.480 R Packaging containing residues of or contaminated by 7. 15 01 10* hazardous substances (i.e. Toxicity Class I: very toxic 3.900 R and Class II: toxic crop protection chemicals) Absorbents, filter materials, wiping cloths and 8. 15 02 03 protective clothing other than those mentioned in 15 99.760 D 02 02 Discarded equipment other than that mentioned in 16 9. 16 02 14 4.872 R 02 09 to 16 02 13 Components removed from discarded equipment 10. 16 02 16 24.880 R other than those mentioned in 16 02 15 11. ex16 02 16 Discarded printer toners from office equipment 0.210 R 12. 16 06 01* Lead batteries 2.560 R 13. 17 02 01 Wood 294.200 R 14. 17 04 01 Copper, bronze, brass 6.342 R 15. 17 04 02 Aluminium 16.943 R 16. 17 04 03 Lead 6.864 R 17. 17 04 05 Iron and steel 1,781.198 R 18. 17 04 11 Cables other than those mentioned in 17 04 10 6.210 R Solid waste collected from third-party operators for recovery or disposal at Grupa Azoty POLICE Weight Item Waste code Waste type Process [Mg] 1. 12 01 01 Ferrous metal filings and turnings 1,490.852 R4 2. 12 01 99 Wastes not otherwise specified 2,143.234 R4 3. 17 01 03 Tiles and ceramics 0.780 D5 Mixture of concrete, bricks, tiles and ceramics other 4. 17 01 07 57.500 D5 than those mentioned in 17 01 06 5. 17 02 02 Glass 1.980 D5 * − hazardous waste

5. Resource Usage and Product Output Measureme Parameter Value Comments nt Unit Fuels used Crude oil Not applicable Natural gas 5,404,664 MWh Hard coal 284,151 Mg Lignite Not applicable Grid electricity 277,088 MWh Heat purchased 476,313 GJ Feedstocks and raw materials consumed Phosphate rock 958,212 Mg Sulfur 229,803 Mg Sulfuric acid from 284,315 Mg external sources Ilmenite 66,334 Mg Slag 18,760 Mg Potassium chloride 373,363 Mg Potassium sulfate 7,928 Mg Ammonium sulfate from external 63,272 Mg sources Magnesite 36,469 Mg Product output NPK fertilizers 900,264 Mg 199,503 NP fertilizers Mg 42,632 NS fertilizers Mg 700,200 Sulfuric acid Mg 370,760 Phosphoric acid Mg 476,650 Ammonia Mg 346,150 Urea Mg 115,606 NoxyTM(AdBlue) Mg 37,171 Titanium white Mg

6. Human Resources Management Please provide the name and contact details for your Roman Cygan Human Resources manager: [email protected]

Recruited in this Terminated in this Total reporting period reporting period Number of direct employees: 2,416 212 139 Number of contracted 0 0 0 workers: Were there any collective Yes [ ] If Yes, please describe the redundancy plan, including redundancies during the reporting No [X] reasons for redundancies, number of workers period? involved, how they were selected, consultation undertaken, and measures to mitigate the effects of redundancy: Are any redundancies to the Yes [ ] If Yes, please describe the redundancy plan, including workforce planned for the next No [X] reasons for redundancies, number of workers year? involved, and selection and consultation process: Were there any changes in trade Yes [ ] If Yes, please provide details, and summarise union representation at Company No [X] engagement with trade unions during reporting facilities during the reporting period: period? Were there any other worker Yes [ ] If yes, please provide details and summarise representatives (e.g. in the No [X] engagement with them during reporting period: absence of a trade union)? Were there any changes in the Yes [ ] If yes, please provide details: status of Collective Agreements? No [X] Have employees raised any Yes [ ] If yes, please state how many, split by gender, grievances with the project during No [X] summarise the issues raised in grievances by male the reporting period? and female staff and explain how the Company has addressed them: Have employees raised any Yes [ ] If yes, please state how many, split by gender, complaints about harassment or No [X] summarise the issues raised by male and female bullying during the reporting staff and explain how the Company has addressed period? them: Have there been any strikes or Yes [ ] If yes, please summarise nature of, and reasons for, other collective disputes related No [X] disputes and explain how they were resolved: to labour and working conditions at the Company in the reporting period? Have there been any court cases Yes [X] If YES, please summarise the issues contested related to labour issues during the No [ ] and outcome: reporting period? Most of the court cases relating to labour issues ended in settlement between the parties. Have there been any changes to Yes [X] If yes, please give details, including of any new the following policies or terms and No [ ] initiatives: conditions during the reporting period in any of the following During the reporting period, an agreement on system- areas: wide pay rises was concluded with the trade unions.  Trade union recognition  Collective Agreements  Non-discrimination and equal opportunities for all  Equal pay for equal work  Gender equality  Bullying and harassment, including sexual harassment  Employment of young workers under 18  Wages and salaries (for regular and overtime hours)  Overtime  Working hours  Flexible working / work-life balance  Grievance mechanism for workers  Health & safety?

7. Occupational Health and Safety Data Please provide the name and Marta Szczucka-Kulig contact details for your Health [email protected] and Safety manager: Direct Contracted Direct Contracted employees workers employees workers Number of man- Number of hours worked this fatalities7: reporting period: 3,651,537.08 0 0 0 Budget spent on Number of OHS in this period disabling injuries: (total amount and 3,327,336.00 0 1 0 currency): OHS training Number of lost provided in this time incidents period in person- 1,900.00 0 (including 23 0 days: vehicular): Number of lost Number of cases workdays resulting of occupational from incidents: 1553 0 disease: 0 0 Number of sick days: 38,236 0 Accident causes (falling, heavy loads, struck by object, contact with energy source etc.): Accidents while moving (tripping, slipping, etc.): 9 Striking against an object/getting struck by an object: 4 Motor accidents: 3 Other accidents: 3 Chemical burn: 2 Thermal burn: 1 Amputation of two fingers: 1

One accident: amputation of two fingers of the left hand following an injury. An employee moved his hand near the screw feeder inspection hatch. Please summarise any emergency prevention and response training that has been provided for company personnel during the reporting period:

The Company holds scheduled OHS training sessions in line with the approved programme:  General induction training – new employees.  Position-specific training.  Periodic and supplementary training. The training covers current risks related to chemicals used, emergency procedures and crisis response procedures.  OHS training for subcontractors. The OHS training for subcontractors covers plant-wide risks and local risks at the worksite.

Please summarise any emergency response exercises or drills that have been carried out during the reporting period:

In the period under review, there were 23 on-site training sessions, including 14 chemical rescue drills, 5 technical (landslide) rescue drills, and 5 fire-fighting training drills, 2 evacuation drills for S-6 and 512 facilities, classified in the risk to humans category. Periodic training sessions included 22 equipment training sessions for chemical rescue teams and 3 equipment training sessions for technical rescue teams. Additionally, the Company Fire Brigade took part in the ‘Risk of a terrorist attack at the port’ training organised by the Water Transport Division, in the chemical rescue training organised by the Police National Fire Service at Kemipol, and in 2 training sessions held at the Ammonia Synthesis Plant – the “Passing Loop” jointly with the Police National Fire Service, the aim of which was to check to correctness of the assumptions of the External Rescue Operation Plan (training sessions organised by Provincial National Fire Service Headquarters).

8. Stakeholder Engagement Please provide the name and contact details for Ewa Prüffer your external relations or community [email protected] engagement manager: Please provide information on the implementation of the stakeholder engagement plan agreed with EBRD and summarise interaction with stakeholders during the reporting period, including:  meetings or other initiatives to engage with members of the public or public organisations during the reporting period  information provided to members of the public and other stakeholders during the reporting period relating to environmental, social or safety,  coverage in the media  interaction with any environmental or other community groups Please describe any changes to the Stakeholder Engagement Plan agreed with EBRD: In 2016, Grupa Azoty Zakłady Chemiczne Police S.A. together with the other companies of the Grupa Azoty Group published another Integrated Report. Apart from financial information, the Report also contained a CSR and environmental overview. The Integrated Report presents the details of all key developments at the Grupa Azoty Group in 2015, including all material ways in which the Group affects its environment. In 2016, Grupa Azoty Zakłady Chemiczne Police S.A. participated in the 'Responsible Care' programme. The Company’s employees once again took part in the ‘Catch a Hare’ photo competition. The 2016 edition was organised for the tenth time, with children participating in three age categories, and with four topics for them to choose from. Since its inception, Grupa Azoty Zakłady Chemiczne Police S.A. has been engaged in the life of the local community, which is an important stakeholder group and also many of the Company’s employees are members of the local community. With them in mind, the Company cooperates with the local media. Each month, the TV Police channel broadcasts two editions of ‘News from Grupa Azoty Zakłady Chemiczne Police S.A.’ Local magazines, which also have their online versions (in 2016 these were ‘Wieści Polickie,’ ‘Tygodnik Policki’, and ‘Magazyn Policki’), publish information on major events in the business of both the Company and the whole Grupa Azoty Group. Twice a month, the ‘Kurier Szczeciński’ daily publishes a column devoted to Grupa Azoty Police. Materials from the paper edition of the newspaper are also published at its website. Information on the Company is regularly presented in ‘Teletygodnik Policki’, an Internet-based TV channel, and the ‘Dziennik Policki’ and ‘Wirtualne Police’ news websites (also as part of their joint project ‘Internetowa Telewizja Regionalna HB‘). As part of external communication, the Public Relations Office prepares press releases, which are sent to local, regional and national media as the need arises. For important events and investment projects, press conferences are held. Other sources of information on the Company’s day-to-day operations are the Company’s website and Facebook.com, which provides the possibility of direct communication with the local community. The Company communicates internally with employees using the intranet, the ‘Magazyn POLICE S.A.’ corporate newsletter, and radio broadcasting system programmes.

The Company received no complaints concerning the project in the reported period. 9. Community Development Please summarise any social or community development / investment initiatives undertaken by the company during the reporting period, and any associated expenditure:

Each year, Grupa Azoty Zakłady Chemiczne Police S.A. engages in the life of the local community and in regional development. As the Company attaches great importance to the promotion of sports and physical culture, it has been supporting local clubs for both junior and senior players for many years. 2016 saw another edition of the International Police Day, combined with the celebrations of the Chemists’ Day. It is the largest local event addressed to the residents of Police. Given the cooperation with Germany, the event gains a cross-border dimension. The initiatives supported by Grupa Azoty POLICE included also cultural, educational and charity campaigns. Support was provided to schools and students.

The expenditure on community development projects in 2016 totalled PLN 2,027,239 (long-term agreements with sports clubs, schools and cultural institutions as well as agreements for advertising during local events and donations). Annual Environmental & Social Report

1. Company Details Company Name: Zakłady Azotowe Chorzów S.A. Company Address: ul. Narutowicza 15 Country: Poland Town/Location: 41-503 Chorzów Company authorized representative: 1) Stanisław Biskup

I certify that the data contained in this report completely and accurately represents operations during this reporting period.

[stamp reading: “Vice President of the Management Board Stanisław Biskup” and illegible signature]

Signature: …………………………………………..

Title: Vice President of the Management Board Date: March 3rd 2017

Contact Details: Telephone: 32 736 20 00 Mobile: E-mail: [email protected]

Please provide key data on the Company performance, as well as production levels at each plant. For each of the 7 large plants please provide:

Zakłady Azotowe Chorzów S.A. Item CUMULATIVE 2016 [PLN '000] 2015 performance

Revenue 51,176 59,627 Profit/(loss) on sales -3,870 -837 EBIT -34,964 -20,215 EBITDA -29,809 -16,070 Net profit/(loss) -33,411 -21,257

Key performance indicators in terms of energy use, emissions, natural resource use, and carbon emission

Number of staff employed and any change in employment over past 3 years As at As at As at Dec 31 2014 Dec 31 2015 Dec 31 2016 Number of direct employees: 191 211 210 Number of contracted - - - workers: Provide information on permits and status of compliance of each subsidiary with IPPC/IED

 Decision of the Marshal of the Province of Katowice of May 13th 2015, Ref. No. 850/OS/2015, amending the decision of the Governor of the Province of Katowice of December 27th 2007, Ref. No. ŚR-III-6618/147/21/07, granting an integrated permit for the potassium nitrate production unit

Decisions from previous years:

 Decision No. ŚR-II-6618/PZ/147/8/06 by the Governor of the Province of Katowice, issued on May 7th 2007 (as amended), granting an integrated permit for the potassium nitrate production unit  Decision No. 1848/OS/2013 by the Marshal of the Province of Katowice, issued on August 22nd 2013, granting an integrated permit to Zakłady Azotowe Chorzów S.A. of Chorzów for the installation processing technical-grade animal fats and vegetable oils into distilled fatty acids and stearine, located within the premises of Zakłady Azotowe Chorzów S.A. at ul. Narutowicza 15 in Chorzów.  Decision of the Marshal of the Province of Katowice of November 26th 2014, Ref. No. 2587/OS/2014, amending the Decision of the Governor of the Province of Katowice of December 27th 2007, Ref. No. ŚR-III-6618/147/21/0, granting an integrated permit for the potassium nitrate production unit – validity of the permit changed to an indefinite term.  Decision of the Marshal of the Province of Katowice of December 2nd 2014, Ref. No. 2769/OS/2014, amending the Decision of the Marshal of the Province of Katowice of August 22nd 2013, Ref No. 1848/OS/2013, for the facility for processing of industrial-grade animal fats into distilled fatty acids − validity of the permit changed to an indefinite term.

Reporting Period: 2016

CORRECTIVE ACTIONS CONCERNING FIRE SAFETY: update of the fire safety instruction with respect to evacuation plans.

CORRECTIVE OHS ACTIONS: measurement of harmful agent levels, installation of new safety showers, enclosing safety showers. Has the Company engaged any Yes [ ] If Yes, please state for which types of work, and contractors for project-related work No [X] how the Company has monitored the compliance in the reporting period? of contractors with EBRD Performance Requirements and the Environmental and Social Action Plan:

Yes [ ] If Yes, please provide details, including how the Were any of the violations stated No [X] Company is ensuring that corrective actions are above the responsibility of implemented by the contractor? contractors? Have any operations been reduced, Yes [ ] If Yes, please describe: temporarily suspended or closed down No [X] due to environmental, health, safety or labour reasons? Please describe any environment or social programmes, initiatives or sub-projects undertaken during the reporting period to improve the company's environmental or social performance and/or management systems:

No such programmes or projects were operated.

No expenditure was made. 3. Status of the Environmental and Social Action Plan Please provide information on the status of each item in the Environmental and Social Action Plan (ESAP) agreed with EBRD. If the ESAP has been updated during the reporting period, please attach a copy of the new plan.

4. Environmental Monitoring Data for each of the key subsidiaries The information required in this section can be extracted from a CSR report, or a full CSR report can be attached.

Please provide the name and contact details for your Zakłady Azotowe Chorzów S.A. environmental manager: Bogusław Zieliński Environmental Protection Specialist Mobile: 605 347 505 E-mail: [email protected] Parameter2 Value3 Unit Compliance Comments5 Status4 Wastewater Total wastewater 334 m3/d 535m3/d generated Biochemical

Oxygen Demand 8.2 mgO2/l 25 (BOD) Chemical Oxygen 39.3 mgO /l 125 Demand (COD) 2 Suspended solids 10.2 mg/l 35 Phosphorus 2.5 mg/l 2 Nitrates 2.1 mg/l 30 Heavy metals [Other] 8.2 6.5-9.5 pH Mg/Nm3 Per each major point source given in Not applicable Air emissions Boilers 3 mg/m u 3 K2 K3 K4 K5 mg/m u K2 = 850

1,219.4 3 K3 = 850 SO2 714.02 780.71 1,214.51 mg/m u 2 K4 = 1500

K5 = 1500 calculated as O2

Nitrogen oxides 3 content in flue gas 297.26 337.65 301.14 344.96 mg/m u 400 (NOx) (K2 and K3 – 3%, K4 K2 = 50 and K5 – 6%) K3 = 50 6.16 7.71 72.09 74.90 3 Particulates mg/m u K4 = 100 K5 = 100

3 CO2 analysis is not CO 27.94 36.97 273.32 287.08 mg/m u carried out. Other parameters Noise does not 34.5 – 42.8 Noise LAeg [dBA] 45-55 exceed permitted 36.5 – 43.6 levels

Solid waste Please provide details of the types and amounts of solid wastes generated by the project. Indicate where wastes are classified as hazardous. Indicate the final re-use, recycle or disposal method for each waste type.

Item Waste code Waste type Weight of waste generated [Mg] 1 06 10 02* Wastes containing hazardous substances 201.69 2 06 10 99 Wastes not otherwise specified 183.40 Sludges from onsite effluent treatment other than those mentioned in 07 3 07 06 12 163.90 06 11 4 07 06 80 Bleaching earth from oil refining 106.20 5 07 06 99 Wastes not otherwise specified 455.30 Bottom ash, slag and boiler dust (excluding boiler dust mentioned in 10 6 10 01 01 1.052.00 01 04) 7 10 01 04* oil fly ash and boiler dust 0.064 8 12 01 13 Welding wastes 0.0 9 13 02 05* Mineral-based non-chlorinated engine, gear and lubricating oils 0.0 10 13 08 02* Other emulsions 0.0 11 15 01 01 Paper and cardboard packaging 0.1 12 15 01 02 Plastic packaging 14.8 Packaging containing residues of or contaminated by dangerous 13 15 01 10 0.056 substances Absorbents, filter materials (including oil filters not otherwise specified), 14 15 02 02* wiping cloths, protective clothing contaminated by dangerous 0.140 substances (e.g. PCB) Absorbents, filter materials, wiping cloths and protective clothing other 15 15 02 03 0.6 than those mentioned in 15 02 02 Discarded equipment containing hazardous components (1) other than 16 16 02 13* 0.075 those mentioned in 16 02 09 to 16 02 12 17 16 02 14 Discarded equipment other than that mentioned in 16 02 09 to 16 02 13 0.1 18 16 02 16 Components removed from discarded equipment 0.1 Laboratory chemicals (e.g. chemical reagents) consisting of or 19 16 05 06* containing hazardous substances, including mixtures of laboratory 0.662 chemicals 20 16 06 01* Lead batteries 0.575 Spent catalysts containing transition metals or transition metal 21 16 08 03 3.5 compounds other than those mentioned in 16 08 02 Glass, plastic and wood containing or contaminated with dangerous 22 17 02 04* 4.770 substances (e.g. wooden sleepers) 23 17 04 05 Iron and steel 37.0 The company engages third parties to dispose of waste. 5. Resource Usage and Product Output Measurement Parameter Value Comments6 Unit Fuels used 621.38 Mg Heavy fuel oil, gasoline, Diesel oil, LPG Crude oil Natural gas 570.083 TCM Hard coal 6,292.98 Mg Lignite Grid electricity 5,409.843 MW Heat purchased 0 Feedstocks and raw materials consumed Nitric acid 4,779.2 Mg Potassium carbonate 5,293.5 Mg Animal fat 6,583.1 Mg Product output Potassium nitrate 6,189.1 Mg Calcium nitrate 1,817 Mg Stearin 4,975.0 Mg

6. Human Resources Management Please provide the name and contact details for your Ilona Mostowska Human Resources manager: Mobile: 533 324 379 E-mail: [email protected] Recruited in this Terminated in this Total reporting period reporting period Number of direct 210 31 31 employees: Number of contracted - - - workers: If yes, please describe the redundancy plan, Were there any collective Yes [ ] including reasons for redundancies, number of redundancies during the reporting No [X] workers involved, how they were selected, period? consultation undertaken, and measures to mitigate the effects of redundancy: If yes, please describe the redundancy plan, Are any redundancies to the Yes [ ] including reasons for redundancies, number of workforce planned for the next No [X] workers involved, and selection and consultation year? process: If Yes, please provide details, and summarise Were there any changes in trade engagement with trade unions during reporting union representation at Company Yes [X] period: facilities during the reporting No [ ] As a result of elections to the trade union period? representation, a new Board was appointed. Were there any other worker Yes [ ] If yes, please provide details and summarise representatives (e.g. in the absence No [X] engagement with them during reporting period: of a trade union)? Were there any changes in the Yes [ ] If yes, please provide details: status of Collective Agreements? No [X] If yes, please state how many, split by gender, Have employees raised any Yes [ ] summarise the issues raised in grievances by male grievances with the project during No [X] and female staff and explain how the Company the reporting period? has addressed them: If yes, please state how many, split by gender, summarise the issues raised by male and female Have employees raised any Yes [X] staff and explain how the Company has addressed complaints about harassment or No [ ] them: bullying during the reporting period? one complaint by a man – mobbing. The Company opened an anti-mobbing procedure. Have there been any strikes or other collective disputes related to labour Yes [ ] If yes, please summarise nature of, and reasons and working conditions at the No [X] for, disputes and explain how they were resolved: Company in the reporting period? Have there been any court cases Yes [ ] If yes, please summarise the issues contested related to labour issues during the No [X] and outcome: reporting period?

Have there been any changes to the following policies or terms and conditions during the reporting period in any of the following areas:  Trade union recognition  Collective Agreements  Non-discrimination and equal opportunities for all  Equal pay for equal work  Gender equality If yes, please give details, including of any new  Bullying and harassment, Yes [ ] initiatives: including sexual harassment No [X]  Employment of young workers under 18  Wages and salaries (for regular and overtime hours)  Overtime  Working hours  Flexible working / work-life balance  Grievance mechanism for workers  Health & safety?

7. Occupational Health and Safety Data Please provide the name and Paweł Polak, Chief OHS Specialist, Fire Safety Specialist contact details for your Health Telephone: +48 533 330 256 and Safety manager: E-mail: [email protected] Direct Contracted Direct Contracted employees workers employees workers 350,088 hours Number of man- worked by all staff / Number of hours worked this on average 143.80 0 0 0 fatalities 7: reporting period: hours per person per month Budget spent on OHS in this period Number of PLN 81,325.00 0 0 0 (total amount and disabling injuries: currency): OHS training Number of lost provided in this 100 persons/ time incidents 0 3 0 period in person- 20 days (including days: vehicular): Number of lost Number of cases workdays resulting 100 0 of occupational 0 0 from incidents: disease: Number of sick xxxxxxx 0 days: Accident causes (falling, heavy loads, struck by object, contact with energy source etc.):

 careless behaviour of adult persons  poor work organisation  faulty work equipment

Please summarise any emergency prevention and response training that has been provided for company personnel during the reporting period:

In 2016, the Company did not conduct any emergency prevention and response training for its employees.

Please summarise any emergency response exercises or drills that have been carried out during the reporting period: 8. Stakeholder Engagement Please provide the name and contact details for Joanna Leśniak your external relations or community Telephone: 32/73 62 000 engagement manager: Mobile: 533 927 438 E-mail: [email protected] Please provide information on the implementation of the stakeholder engagement plan agreed with EBRD and summarise interaction with stakeholders during the reporting period, including:  meetings or other initiatives to engage with members of the public or public organisations during the reporting period  information provided to members of the public and other stakeholders during the reporting period relating to environmental, social or safety,  coverage in the media  interaction with any environmental or other community groups Please describe any changes to the Stakeholder Engagement Plan agreed with EBRD:

Zakłady Azotowe Chorzów S.A. have no Stakeholder Engagement Plan.

None.

9. Community Development Please summarise any social or community development / investment initiatives undertaken by the company during the reporting period, and any associated expenditure:

In 2016, Zakłady Azotowe Chorzów S.A. supported a local sports organisation by donating PLN 2,500.00 for the development of physical culture and education of youth.

[translators’ note: three illegible signatures in the bottom left corner of each page of the document] Annual Environmental & Social Report

1. Company Details Company name: GZNF FOSFORY Sp. z o.o. Company address: ul. Kujawska 2, 80-550 Gdańsk Country: Poland Town/Location: Gdańsk Company authorised representative: Waldemar Kolanowski I certify that the data contained in this report completely and accurately represents operations during this reporting period. Signature:

Position: Chief Process Engineer Date: March 3rd 2017 [stamp reading: “Chief Process Engineer Waldemar Kolanowski” and illegible signature] Contact Details: Telephone: 58 3438398 Mobile: 669 600 372 E-mail: [email protected]

Please provide key data on the Company performance, as well as production levels at each plant. For each of the 7 large plants please provide:

Item CUMULATIVE 2016 [PLN '000] 2015 performance Revenue 293,204 254,083 Profit/(loss) on sales 9,017 7,880 EBIT 14,142 8,265 EBITDA 24,790 18,943 Net profit/(loss) 11,850 6,318

Key performance indicators in terms of energy use, emissions, natural resource use, and carbon emission

Number of staff employed and any change in employment over past 3 years

As at As at As at Dec 31 2014 Dec 31 2015 Dec 31 2016 Number of direct employees: 267 273 294 Number of contracted 0 0 0 workers: Provide information on permits and status of compliance of each subsidiary with IPPC/IED

Reporting Period: 2016

An inspection was carried out by the National How many inspections did you Number: 1 Labour Inspectorate. receive from the labour authorities No violations were found. during the reporting period? Have these visits resulted in any Yes [ ] If yes, please describe, including status of penalties, fines and/or corrective No [X] implementing corrective actions to address any action plans? violations found: Has the Company engaged any Yes [ ] If yes, please state for which types of work, and contractors for project-related work No [X] how the company has monitored the compliance in the reporting period? of contractors with EBRD Performance Requirements and the Environmental and Social Action Plan: Yes [ ] If Yes, please provide details, including how the Were any of the violations stated No [X] Company is ensuring that corrective actions are above the responsibility of implemented by the contractor? contractors? Have any operations been reduced, Yes [ ] If yes, please describe: temporarily suspended or closed No [X] down due to environmental, health, safety or labour reasons? Please describe any environment or social programmes, initiatives or sub-projects undertaken during the reporting period to improve the company's environmental or social performance and/or management systems:

There were no such programmes, initiatives or sub-projects.

Please indicate the level of associated expenditure (capital expenditure and operating expenditure), and whether this relates to the requirements of the Environmental and Social Action Plan, or to any other initiative: 3. Status of the Environmental and Social Action Plan Please provide information on the status of each item in the Environmental and Social Action Plan (ESAP) agreed with EBRD. If the ESAP has been updated during the reporting period, please attach a copy of the new plan.

Not applicable. 4. Environmental Monitoring Data for each of the key subsidiaries The information required in this section can be extracted from a CSR report, or a full CSR report can be attached. GZNF FOSFORY Sp. z o.o. has no CSR policy in place. Please provide the name and contact Environmental Protection and Chemical Safety details for your environmental manager: Specialist Lidia Wilczewska-Treder Telephone: 58 343 383 12 Mobile: 669 600 394 [email protected] Compliance Status4 Permitted value in line with integrated permit DROŚ-SO.7222.45.2013/2014.BA issued by the Marshal of the Parameter2 Value3 Unit Province of Gdańsk Comments5 on August 1st 2014, amended by Decision DROŚ- SO.7222.60.2014.EŻ issued by the Marshal of the Province of Gdańsk on December 4th 2014 Wastewater Total Most of the 26,532,000 m3 per year wastewater 10,345,487 m3/year wastewater is No exceedance of permitted generated cooling water. values was found. Biochemical Oxygen Demand (BOD) ---- mg/l - No measurements of BOD and COD Chemical were made in Oxygen 2016 Demand (COD) ---- mg/l -

Suspended 35 mg/l solids average 19.5 No exceedance of permitted mg/l None maximum 33.2 levels for single measurements or average annual values was found. Phosphorus GZNF FOSFORY Sp. z o.o. does - - not monitor phosphate levels in None industrial wastewater. Nitrates GZNF FOSFORY Sp. z o.o. does - - not monitor nitrate levels in None industrial wastewater. Heavy metals GZNF FOSFORY Sp. z o.o. does - - not monitor heavy metal levels in None industrial wastewater. Petroleum 15 mg/l hydrocarbons average 0.03 No exceedance of permitted mg/l None maximum 0.04 levels for single measurements or average annual values was found. pH average 7.7 minimum 7.5 - . None maximum 8.2 Temperature 35 °C No exceedance of permitted maximum 33.9 °C None levels for single measurements or average annual values was found. Air emissions

Type of Major point Mg/year substance source

SO 157.40 Mg/year 2 Manufacture of 32.96 No exceedance of permitted None fertilizers levels was found. 156.50 Mg/year Manufacture of 33.03 No exceedance of permitted None sulfuric acid levels was found.

Boiler house 0.12 No permitted levels were set. None

Nitrogen oxides 88.98 Mg/year Manufacture of (NO ) 33.60 No exceedance of permitted None X fertilizers levels was found. 3.40 Mg/year Manufacture of 2.26 No exceedance of permitted None sulfuric acid levels was found. Boiler house 0.32 No permitted levels were set. None Particulates 35.13 Mg/year Manufacture of 19.41 No exceedance of permitted None fertilizers levels was found. Boiler house 0.17 No permitted levels were set. None

CO2 Boiler house 114.19 No permitted levels were set. None

Fluorine 6.16 Mg/year None Manufacture of 0.48 No exceedance of permitted fertilizers levels was found. CO 8.94 Mg/year None Manufacture of 4.04 No exceedance of permitted fertilizers levels was found. Boiler house 0.03 No permitted values were set. None Sulfuric acid Manufacture of 12.18 Mg/year sulfuric acid 5.27 No exceedance of permitted None levels was found.

Other Parameters

Noise Process 41-51 [dB] downtime Daytime Production Permitted noise levels for 52-60 [dB] run residential areas. Noise emissions from the premises of GZNF had no None Night Process impact on the neighbouring time 40-50 [dB] downtime residential areas. Production 51-60 [dB] run

Solid waste Waste type Quantity of Waste code generated waste [Mg] None

Waste sulfur 06 01 99 4.360

None Rubber waste from 07 02 80 3.920 unit overhaul . d n u

o None f

Wastes not otherwise specified s a w

(waste sand from vapour 12 01 99 1.000 s blasting) l e v e l

d None e

Mineral-based non-chlorinated t t engine, gear and lubricating 13 02 05* 3.700 i m r

oils e p

f o

e c n a

Plastic packaging 15 01 02 24.907 d None e e c x e

o None N Wiping cloths, filters, oil- 15 02 02* 0.840 soaked protective clothing

None Absorbents, filter materials, 15 02 03 0.750 wiping cloths (filter cloths)

Discarded equipment None containing hazardous components other than those 16 02 13* 0.125 mentioned in 16 02 09 to 16 02 12 (fluorescent lamps and computer monitors) Discarded equipment other than those mentioned in 16 02 09 to 16 02 13 (computers, 16 02 14 0.322 None copy machines, fax machines and other discarded electric devices) None Components removed from discarded equipment other 16 02 16 0.003 than those mentioned in 16 02 15 (electronic waste) Aqueous liquid wastes other Leachate from than those mentioned in 16 10 landfill site, 01 − leachate from the 22,153.31 recovered (R5) 16 10 02 phosphogypsum landfill site in at the fertilizer Wiślinka, recovered at a GZNF production unit production unit Linings and refractories from None non-metallurgical processes 16 11 06 1.000 other than those mentioned in 16 11 05 None Aluminium 17 04 02 0.820

None Steel from discarded 17 04 05 500.489 equipment 5. Resource Usage and Product Output Measurement Parameter Value Comments6 Unit Fuels used: - fuel oil RG3 7,091 Mg

152,294 L - light fuel oil Crude oil Natural gas Not applicable Hard coal Lignite Grid electricity (from 17,927,220 KWh external provider) Heat purchased Not applicable Feedstocks and raw materials consumed:

phosphate rock from Morocco 63,004 Mg 68−69

phosphate rock from Algeria 29,660 Mg

phosphate rock from Senegal 1,925 Mg ammonium sulphate 7,647 Mg

ammonium sulfate FGD 21,721 Mg

zinc sulfate 73

anhydrous sodium sulfate 13 Mg granulated potassium chloride 22,448 Mg

fine potassium chloride 27,653 Mg phosphoric acid from external 13,308 Mg sources 100% P205 sulfuric acid from external sources 0 Mg borax 310 Mg crystalline magnesite R 30 4,565 Mg crystalline magnesite R 40 1,180 Mg molten sulfur 28,537 Mg soda lye 877 Mg ascorbic acid 2 Mg Product output:

SULFURIC ACID 84,177 Mg

SODIUM BISULFITE 1,770 Mg

ENRUCHED SUPERPHOSPHATE 61,600 Mg AMOFOSKA 4-16-18 21,495 Mg

AMOFOSKA 5-10-25+B 28,253 Mg

AMOFOSKA 4-12-12+4 45,678 Mg AMOFOSKA Corn 4-10-22 12,047 Mg

AMOFOSKA 4-10-28 + 2Mg 4,350 Mg

AMOFOSKA 4-12-20 17,997 Mg

Granulated potassium 3,418 Mg chloride AMOFOSKA 5-10-22 2,038 Mg AMOFOSKA 3,5-10-24 5,585 Mg

AMOFOSKA 5-10-22 4,551 Mg 6. Human Resources Management Please provide the name and contact details for your Violetta Wuczyńska Human Resources manager: Head of HR and Organisation Department Telephone: 58 34 38 250 Mobile: 669-600-426 Email: [email protected] Recruited in this Terminated in this Total reporting period reporting period Number of direct employees: 294 51 30 Number of contracted 0 0 0 workers: Were there any collective Yes [ ] If Yes, please describe the redundancy plan, including redundancies during the reporting No [X] reasons for redundancies, number of workers period? involved, how they were selected, consultation undertaken, and measures to mitigate the effects of redundancy: Are any redundancies to the Yes [ ] If Yes, please describe the redundancy plan, including workforce planned for the next No [X] reasons for redundancies, number of workers year? involved, and selection and consultation process: Were there any changes in trade Yes [ ] If Yes, please provide details, and summarise union representation at Company No [X] engagement with trade unions during reporting facilities during the reporting period: period? Were there any other worker Yes [X] If Yes, please provide details and summarise representatives (e.g. in the No [ ] engagement with them during reporting period: absence of a trade union)? There is an Employee Council at the Company, established pursuant to the Act on Provision of Information to and Consultations with Employees of April 7th 2006. Were there any changes in the Yes [ ] If yes, please provide details: status of Collective Agreements? No [X]

7. Occupational Health and Safety Data Please provide the name and Mirosław Charytoniuk contact details for your Health OHS Officer and Safety manager: Telephone: 669 600 416 E-mail: [email protected] Direct Contracted Direct Contracted employees workers employees workers Number of man- Number of hours worked this 477,338 - fatalities 7: 0 0 reporting period: Budget spent on Number of OHS in this period PLN 338.9 disabling injuries: - 0 0 (total amount and thousand currency): OHS training Number of lost provided in this time incidents 182 - 3 0 period in person- (including days: vehicular): Number of lost Number of cases workdays resulting 166 - of occupational 0 0 from incidents: disease: Number of sick 26,107 - days: Accident causes (falling, heavy loads, struck by object, contact with energy source etc.): Accidents in 2016 1. Insufficient concentration during laboratory work. 2. Fadroma loader tyre burst at the maintenance/repair workshop. 3. Struck by a falling roll. Please provide details of any fatalities or major accidents that have not previously been reported to EBRD, including total compensation paid due to occupational injury or illness (amount and currency): 2016 – Accident at work classified as serious, resulting in temporary inability to work (125 days in 2016). An employee was injured as a result of a loader tyre burst at the maintenance/repair workshop. Compensation was not paid. Please summarise any emergency prevention and response training that has been provided for company personnel during the reporting period: No training was conducted in 2016. Please summarise any emergency response exercises or drills that have been carried out during the reporting period: Evacuation drills with the participation of the Fire Service and the medical rescue team were organised and carried out in 2016.

8. Stakeholder Engagement Please provide the name and contact details for GZNF FOSFORY Sp. z o.o. does not employ an your external relations or community external relations or community engagement engagement manager: manager. Tasks of the external relations or community engagement manager are performed by relevant units (OHS and Environmental Protection). Please provide information on the implementation of the stakeholder engagement plan agreed with EBRD and summarise interaction with stakeholders during the reporting period, including:  meetings or other initiatives to engage with members of the public or public organisations during the reporting period  information provided to members of the public and other stakeholders during the reporting period relating to environmental, social or safety,  coverage in the media  interaction with any environmental or other community groups Please describe any changes to the Stakeholder Engagement Plan agreed with EBRD: GZNF FOSFORY Sp. z o.o. has no CSR policy in place but, given its production activities GZNF FOSFORY Sp. z o.o. acts in line CSR objectives in its operations. How many complaints or grievances did the project receive from members of the public or civil society organisations during the reporting period? Please split by stakeholder group. Summarise any issues raised in the complaints or grievances and explain how they were resolved: No complaints were received. 9. Community Development Please summarise any social or community development / investment initiatives undertaken by the company during the reporting period, and any associated expenditure: In December 2016, the results of radioactivity surveys carried out at the phosphogypsum landfill site in Wiślinka were made available to the local community through the agency of the Gdańsk Municipal Office. The surveys were performed by the Central Laboratory for Radiological Protection, the Main Mining Institute and the Institute for Energy Technology, Health and Safety Department (Norway) as part of the PORANO project, financed under the Polish-Norwegian Research Programme. The surveys showed a negligible radiological impact of the landfill site on humans and that the landfill can be viewed as an area with unlimited access from the radiological point of view. Annual Environmental & Social Report

1. Company Details Company Name: Grupa Azoty Jednostka Ratownictwa Chemicznego Sp. z o.o. Company Address: ul. Kwiatkowskiego 8, 33-101 Tarnów Country: Poland Town/Location: Tarnów Company authorized representative: I certify that the data contained in this report completely and accurately represents operations during this reporting period. Signature:

Title: President of the Management Board Date: March 10th 2017

[stamp reading: “Vice President of the Management Board Jacek Łabno” and an illegible signature] [stamp reading: “President of the Management Board Leszek Gniadek” and an illegible signature]

Contact Details: Telephone: 14 637 27 30 Mobile: E-mail: [email protected]

Please provide key data on the Company performance, as well as production levels at each plant. For each of the 7 large plants please provide:

Grupa Azoty Jednostka Ratownictwa Chemicznego Sp. z o.o. Item

2015 2016 [PLN '000] performance performance

Revenue 41,467 37,274 Profit/(loss) on sales 1,769 1,743 EBIT 960 2,185 EBITDA 4,110 4,891 Net profit/(loss) 917 1,910

Key performance indicators in terms of energy use, emissions, natural resource use, and carbon emission Number of staff employed and any change in employment over past 3 years

As at Dec 31 As at Dec 31 As at Dec 31 2016 2014 2015 Number of direct employees: 225 225 241 Number of contracted 0 0 0 workers:

Provide information on permits and status of compliance of each subsidiary with IPPC/IED

- Decision of the Governor of the Province of Opole of December 13th 2006, Ref. No. ŚR.III.AS-6610-1- 30/06, as amended, granting an integrated permit to operate installations manufacturing, with the use of chemical processes, organic chemistry products and semi-finished products, i.e. WAXES, MELAMINE RESIN, and VARIOUS ORGANIC PRODUCTS,

- Decision of the Governor of the Province of Kraków dated April 27th 2007, Ref. No. ŚR.XI.AJ.6663-11- 06, as amended, granting an integrated (IPPC) permit for the Czajki I and II landfill site,

- Decision of the Governor of the Province Kraków dated April 25th 2007 (Ref. No. ŚR.XI.AJ.6663-6-06), as amended, granting an integrated (IPPC) permit for the Za Rzeką Biała landfill site,

- Decision of the Governor of the Province of Kraków dated May 24th 2007, Ref. No. ŚR.XI.AJ.6663-10- 06, as amended, granting an integrated (IPPC) permit for the AN II landfill site.

Reporting Period: 2016

Act on Provision of Information on the Environment and its Protection, Public Participation in Environmental Protection and Environmental Impact Assessments of October 3rd 2008 (consolidated text in Journal of Laws of 2016, item 353 of March 16th 2016)

Regulation of Minister of the Environment of November 14th 2016 on detailed information to be included in the report and the manner of its uploading into the National Database for Emissions of Greenhouse Gases and Other Substances ( Journal of Laws of 2016, item 1877)

Regulation of Minister of the Environment of July 7th 2016 on the form of the collective report (Journal of Laws of 2016, No. 1115)

Regulation of Minister of the Environment of April 21st 2006 on the list of waste types that natural persons or non-business organisations may recycle for their own needs, and the permitted methods of such recycling (Journal of Laws of 2016, item 93)

Regulation of Minister of the Environment of September 2016 on detailed conditions for considering hazardous waste as non-hazardous waste (Journal of Laws 2016, No. 1601)

Regulation of Minister of the Environment of February 10th 2016 on the form of the report for 2015 and 2016 (Journal of Laws of 2016, item 182) How many inspections did you receive Number: 8 Please provide details of these visits, including from the environmental authorities number and nature of any violations found: during the reporting period? Following an inspection carried out on December 28th 2016 by the Marshal Office of the Province of Opole – Memo on periodic analysis of the integrated permit , the need to change the terms of the integrated permit for the Waxes, Melamine Resin, and Various Organic Products unit located in Kędzierzyn-Koźle was demonstrated.

How many inspections did you receive Number: 3 Please provide details of these visits, including from the health and safety authorities number and nature of any violations found: during the reporting period? The County Sanitary Inspectorate carried out two inspections to evaluate the OHS conditions, including exposure to asbestos, and compliance with regulations applicable to hazardous substances and mixtures, including category 2 and 3 narcotic precursors. Assessment of the sanitary and technical conditions of the facilities. No post-inspection decisions were issued. The National Fire Service carried out one inspection concerning the use of hazardous substances and implementation of previous decisions. The inspection covered the Chemical Wastewater Treatment Plant facilities and the ‘Za Rzeką Biała’ landfill site. Following the inspection, a decision was issued to ensure the required amount of water for fire-fighting purposes for the ‘Za Rzeką Biała’ landfill site. How many inspections did you receive Number: 2 Please provide details of these visits, including from the labour authorities during the number and nature of any violations found: reporting period? The National Labour Inspectorate carried out two inspections without issuing any decisions. The goal of the inspection of April 21st 2016 was to check the implementation of the decision issued by the Labour Inspector following a previous inspection and confirmed correct implementation of previous orders. The purpose of the second inspection by the National Labour Inspectorate, carried out on September 21st 2016, was to evaluate compliance with OHS regulations during removal of asbestos-containing products from buildings and structures. The inspection was performed in connection with the work to dismantle the filling of the C90B cooling tower owned by Grupa Azoty S.A. Following the inspection, no orders were issued. Have these visits resulted in any Yes [X] If yes, please describe, including status of penalties, fines and/or corrective No [ ] implementing corrective actions to address any action plans? violations found:

Following an inspection performed on December 28th 2016, the Marshal Office of the Province of Opole called upon Grupa Azoty Jednostka Ratownictwa Chemicznego Sp. z o.o. to apply for an amendment of the integrated permit for the unit manufacturing, with the use of chemical processes, organic chemistry products or semi- finished products (i.e. the WAXES, MELAMINE RESIN, AND VARIOUS ORGANIC PRODUCTS unit) – letter of January 26th 2017, Ref. No. DOŚ- III.7222.4.51.2016.BG

Grupa Azoty Jednostka Ratownictwa Chemicznego Sp. z o.o. is required to file the application within six months of the receipt of the letter. Implementation in progress. Has the Company engaged any Yes [ ] If Yes, please state for which types of work, and contractors for project-related work No [X] how the Company has monitored the compliance in the reporting period? of contractors with EBRD Performance Requirements and the Environmental and Social Action Plan:

Yes [ ] If Yes, please provide details, including how the Were any of the violations stated No [X] Company is ensuring that corrective actions are above the responsibility of implemented by the contractor? contractors? Have any operations been reduced, Yes [ ] If yes, please describe: temporarily suspended or closed down No [ ] due to environmental, health, safety or labour reasons? Please describe any environmental or social programmes, initiatives or sub-projects undertaken during the reporting period to improve the company's environmental or social performance and/or management systems:

- Please indicate the level of associated expenditure (capital expenditure and operating expenditure), and whether this relates to the requirements of the Environmental and Social Action Plan, or to any other initiative: -

3. Status of the Environmental and Social Action Plan Please provide information on the status of each item in the Environmental and Social Action Plan (ESAP) agreed with EBRD. If the ESAP has been updated during the reporting period, please attach a copy of the new plan. -

4. Environmental Monitoring Data for each of the key subsidiaries The information required in this section can be extracted from a CSR report, or a full CSR report can be attached. Please provide the name and contact Dagmara Dalida details for your environmental E-mail: [email protected] manager: Telephone: 698 930 317; 14 637 27 30, ext. 26 Parameter2 Value3 Unit Compliance Status4 Comments5 Wastewater Decision of the Marshal of the Decision granting the Province of Kraków of December water-law permit for 18th 2013, special use of water – Ref. No. SR- discharge of IV.7322.1.32.2013.MG wastewater from the ‘Za Rzeką Biała’ landfill site (Syfon II) to the Biała river and discharge of stormwater from the ‘Za Rzeką Biała’ landfill site to Rów Chyszowski.

Total wastewater 41,173 m3 generated Biochemical 82.346 kg Oxygen Demand (BOD) Chemical Oxygen 1,461.641 kg Demand (COD) Suspended solids 362.322 kg Phosphorus - - Nitrates 156.457 kg Heavy metals 0.452 kg [Other] Air Per each Mg/Nm3 Notification concerning Paint emissions major Shop – gas cylinder certification point chamber, made by letter Ref. source No. RZ/3528/ZS/267 of October 30th 2014

Notification concerning Chemical Wastewater

Treatment Plant, SO2 storage facility, tanker unloading and

SO2 cylinder and container loading installation made by letter Ref. No. RZ/4096/ZS/160/2012 of September 12th 2012

- Decision of the Governor of the Province of Opole of December 13th 2006 (Ref. No. ŚR.III.AS- 6610-1-30/06, as amended) − integrated permit for installations manufacturing, with the use of chemical processes, organic chemistry products or semi-finished products, i.e. WAXES, MELAMINE RESIN, and VARIOUS ORGANIC PRODUCTS.

SO2 81.67 kg Nitrogen oxides - -

(NOX) Particulates - -

CO2 - - Other Parameters - Xylene 19.50 kg Methoxypropanol 3.60 kg Methyl isobutyl 1.20 kg ketone Butanol 3.80 kg Benzene 0.010 kg Butan-1-ol 0.050 kg Aliphatic 4.25 kg hydrocarbons Paraffin 0.073 kg Carbon monoxide 727.628 kg Noise - - [Other] - - Solid waste Please provide details of the types and amounts of solid wastes generated by the project. Indicate where wastes are classified as hazardous. Indicate the final re-use, recycle or disposal method for each waste type.

Type and amount of solid waste generated Weight of waste generated [Mg] Ite Waste code Waste type Handling m Weight of waste Animal-tissue waste classified as material of specific and high risk, Transferred to a 1 02 02 81 including waste from 1.400 third party manufacture of meat and bone fodders other than mentioned in 02 02 80 Transferred to a 2 06 13 03 Carbon black 74.880 third party Transferred to a 3 07 02 13 Waste plastic 0.400 third party Wastes not otherwise Transferred to a 4 07 02 99 0.150 specified third party Bottom ash, slag and boiler dust from co- Transferred to a 5 10 01 15 27,064.600 incineration other than those third party mentioned in 10 01 14 Transferred Paper and 15 01 01 9.770 to a third 6 cardboard packaging party Transferred to a 7 15 01 02 Plastic packaging 125.704 third party Transferred to a 8 15 01 03 Wooden packaging 4.880 third party Transferred to a 9 15 01 04 Metallic packaging 9.634 third party Transferred to a 10 15 01 07 Glass packaging 140.370 third party Discarded equipment containing hazardous Transferred to a 11 16 02 13* components other than those 0.033 third party mentioned in 16 02 09 to 16 02 12 Discarded equipment other Transferred to a 12 16 02 14 than that mentioned in 0.187 third party 16 02 09 to 16 02 12 Components removed from discarded equipment other Transferred to a 13 16 02 16 0.125 than those mentioned in third party 16 02 15 Laboratory chemicals (e.g. chemical reagents) consisting of or containing hazardous substances, including 14 16 05 06* 0.0205 D9 mixtures of laboratory chemicals

15 16 07 08* Wastes containing oil 46.560 R3 Wastes not otherwise 16 16 07 99 10.940 D9 specified 17 16 08 01 Spent catalysts containing 5.229 Transferred to a gold, silver, rhenium, third party rhodium, palladium, iridium or platinum (except 16 08 07) Spent catalysts containing hazardous transition metals Transferred to a 18 16 08 02* 11.02 or hazardous transition metal third party compounds Transferred to a 19 17 04 05 Iron and steel 8.211 third party Construction materials 20 17 06 05* 549.880 D5 containing asbestos Other waste containing viable micro-organisms or their toxins, as well as other entities capable of Transferred to a 21 18 02 02* transferring their genetic 2.362 third party material, which are known to cause or are reasonably believed to cause disease in man or other living organisms Sludges from non-biological treatment of industrial 22 19 08 14 565.720 D5 wastewater other than those mentioned in 19 08 13 Other wastes (including mixtures of materials) from mechanical treatment of 23 19 12 12 wastes other than those 358.200 D5 mentioned in 19 12 11

5. Resource Usage and Product Output Measurement Parameter Value Comments6 Unit Fuels used Crude oil - - Natural gas 71 m3 Hard coal 3 Mg Lignite - - Grid electricity 2,075,064 kWh Heat purchased 6,295.50 GJ Feedstocks and raw materials consumed Paraffin 32.1 Mg Polyethylene 0.913 Mg Potassium 0.065 Mg permanganate Product output Wax 20.025 Mg Wosken 10.475 Mg

6. Human Resources Management Please provide the name and contact details for your Katarzyna Kokoszka Human Resources manager: Specialist [email protected] Recruited in this Terminated in this Total reporting period reporting period Number of direct employees: 241 30 14

Number of contracted 0 workers: Were there any collective Yes [ ] If Yes, please describe the redundancy plan, including redundancies during the reporting No [X] reasons for redundancies, number of workers period? involved, how they were selected, consultation undertaken, and measures to mitigate the effects of redundancy: Are any redundancies to the Yes [ ] If Yes, please describe the redundancy plan, including workforce planned for the next No [X] reasons for redundancies, number of workers year? involved, and selection and consultation process: Were there any changes in trade Yes [ ] If Yes, please provide details, and summarise union representation at Company No [X] engagement with trade unions during reporting facilities during the reporting period: period? Were there any other worker Yes [ ] If yes, please provide details and summarise representatives (e.g. in the No [X] engagement with them during reporting period: absence of a trade union)? Were there any changes in the Yes [ ] If yes, please provide details: status of Collective Agreements? No [X] Have employees raised any Yes [ ] If yes, please state how many, split by gender, grievances with the project during No [X] summarise the issues raised in grievances by male the reporting period? and female staff and explain how the Company has addressed them: Have employees raised any Yes [ ] If yes, please state how many, split by gender, complaints about harassment or No [X] summarise the issues raised by male and female bullying during the reporting staff and explain how the Company has addressed period? them: Have there been any strikes or Yes [ ] If yes, please summarise nature of, and reasons for, other collective disputes related No [X] disputes and explain how they were resolved: to labour and working conditions at the Company in the reporting period? Have there been any court cases Yes [X] An employee raised a claim concerning related to labour issues during the No [ ] groundless termination of an employment reporting period? contract and demanded that his employment certificate be rectified. The parties made a settlement. Have there been any changes to Yes [ ] If Yes, please give details, including of any new the following policies or terms and No [X] initiatives: conditions during the reporting period in any of the following areas:  Trade union recognition  Collective Agreements  Non-discrimination and equal opportunities for all  Equal pay for equal work  Gender equality  Bullying and harassment, including sexual harassment  Employment of young workers under 18  Wages and salaries (for regular and overtime hours)  Overtime  Working hours  Flexible working / work-life balance  Grievance mechanism for workers  Health & safety?

7. Occupational Health and Safety Data Please provide the name and Jarosław Mirek contact details for your Health E-mail: [email protected] and Safety manager: Telephone: 728 463 197, 14 637 27 30, ext. 43 Direct Contracted Direct Contracted employees workers employees workers Number of man- 382,888 0 Number of 0 0 hours worked this fatalities7: reporting period: Budget spent on PLN 434,647 0 Number of 0 0 OHS in this period disabling injuries: (total amount and currency): OHS training 112 0 Number of lost 2 0 provided in this time incidents period in person- (including days: vehicular): Number of lost 235 0 Number of cases 0 0 workdays resulting of occupational from incidents: disease: Number of sick 0 0 days: Accident causes (falling, heavy loads, struck by object, contact with energy source etc.): There were accidents involving lower limb injuries suffered by employees while moving around the Company premises. The cause of the accidents was putting a foot wrong due to not paying enough attention during routine activities.

Please summarise any emergency prevention and response training that has been provided for company personnel during the reporting period: The training was carried out by staff managers as part of monthly scheduled job retraining sessions.

Please summarise any emergency response exercises or drills that have been carried out during the reporting period: The simulation of an accident on May 11th 2016 related to sulfuric acid pipeline leakage, causing risk of skin irritation, respiratory irritation, eye injury, and environmental contamination. Measures taken: Use of personal protective equipment – protective glasses, acid-proof clothing; a protected zone was established; the pipeline was emptied and washed. Measures were also taken in accordance with the sulfuric acid safety data sheet. The measures were assessed as effective.

8. Stakeholder Engagement Please provide the name and contact details for your external relations or community engagement manager: Please provide information on the implementation of the stakeholder engagement plan agreed with EBRD and summarise interaction with stakeholders during the reporting period, including:  meetings or other initiatives to engage with members of the public or public organisations during the reporting period  information provided to members of the public and other stakeholders during the reporting period relating to environmental, social or safety,  coverage in the media  interaction with any environmental or other community groups Please describe any changes to the Stakeholder Engagement Plan agreed with EBRD:

9. Community Development Please summarise any social or community development / investment initiatives undertaken by the company during the reporting period, and any associated expenditure:

1. Company Details Company Name: Grupa Azoty Kopalnie i Zakłady Chemiczne Siarki Siarkopol S.A. Company Address: Grzybów 28-200 Staszów Country: Poland Town/Location: Staszów, Kielce Province Company authorized representative: Zbigniew Snopkiewicz I certify that the data contained in this report completely and accurately represents operations during this reporting period. Signature: Zbigniew Snopkiewicz Title: Member of the Management Board Date: March 13th 2017

[stamp reading: “MEMBER OF THE MANAGEMENT BOARD Zbigniew Snopkiewicz” and an illegible signature] Contact Details: Telephone: 15 864 92 08 Mobile: 723 440 006 E-mail: [email protected]

Please provide key data on the Company performance, as well as production levels at each plant. For each of the 7 large plants please provide: Item CUMULATIVE 2015* 2016 [PLN '000] restated

Revenue 302,621 256,869 Profit/(loss) on sales 34,458 5,444 EBIT 21,860 10,119 EBITDA 42,848 31,241 Net profit/(loss) 20,128 11,555

Key performance indicators (KPI) in terms of energy use, emissions, natural resource use, and carbon emission

Number of staff employed and any change in employment over past 3 years

As at As at As at Dec 31 2014 Dec 31 2015 Dec 31 2016 Number of direct employees: 757 739 748 Number of contracted workers: - -

Provide information on permits and status of compliance of each subsidiary with IPPC/IED Obtained permits Compliance with the IPPC/IED Directive

Decision of the Marshal of the Province of Kielce A IPPC installation - conducting and planning of May 28th 2012, Ref. No. OWŚVII.7222.1.2012, production in a manner ensuring a high level of granting an integrated permit for the installation protection of the environment as a whole producing sulfur insoluble in carbon disulfide with an through taking an integrated approach to the annual capacity of 5,000 Mg, together with auxiliary whole process, not causing any significant facilities, located in Dobrów, commune of Tuczępy. changes to the environment, preventing With amendments: emission of pollutants and generation of waste, Decision of the Marshal of the Province of Kielce and adaptation of operations to the BAT Ref. No. OWŚVII.7222.23.2013 of November 8th 2013 requirements Decision of the Marshal of the Province of Kielce Ref. No. OWŚ-VII.7222.44.2014 of December 2nd 2014 Decision of the Governor of the Kielce Province, An IPPC installation - the permit defines the Ref. No. ŚR.III.6618-10/06, dated April 26th 2007, ways to prevent and contain environmental granting an integrated permit for the installation impact by using appropriate methods for producing carbon disulfide, sulfur insoluble in carbon protection of water environment, nature disulfide, and sodium sulfide, located in the protection, protection against noise, reducing Chemical Production Plant in Dobrów, commune of the onerousness of waste management, Tuczępy. methods for choosing technologies that are safe With amendments: to the environment, and ensuring that the Decision of the Marshal of the Province of Kielce individual installations operate in compliance Ref. No. OWŚ VII.7222.16.2012, dated July 17th 2012 with BAT requirements Decision of the Marshal of the Province of Kielce, Ref. No. OWŚ VII.7222.22.2013, dated November 8th 2013 Decision of the Marshal of the Province of Kielce, Ref. No. OWŚ- VII.7222.43.2014, dated December 2nd 2014 Decision of the Marshal of the Province of Kielce, An IPPC installation Ref. No. OWŚ- 7225.1.18.2015, dated October 15th 2015, declaring the expiry of the final decision of the Marshal of the Province of Kielce, Ref. No. OWŚ.VII.7225.1.16.2011, dated December 13th 2012, as amended by decision Ref. No. OWŚVII.7225.1.4.2014, dated May 26th 2014, granting permit for emission of greenhouse gases from fuel combustion installations other than hazardous or municipal waste incineration installations with a nominal thermal power of over 20 MW, located in the Chemical Production Plant in Dobrów Reporting Period: 2016

2. General Is the project materially compliant Yes [ ] If No, please provide details of any material non- with all relevant EBRD Performance No [ ] compliances: Requirements (taking account of agreed action plans, exemptions or Not applicable derogations)? Is the project materially compliant Yes [ ] If No, please provide details of any material with all applicable environmental and No [ ] non-compliances: social laws and regulations? Not applicable Have there been any accidents or Yes [ ] If yes, please describe, including details of incidents that have caused damage to No [X] actions to repair and prevent reoccurrence: the environment, brought about injuries or fatalities, affected project labour or local communities, affected cultural property, or created liabilities for the company? Have there been any changes to Yes [ ] If yes, please describe: environment, social, labour or health No [X] and safety laws or regulations that have materially affected the company? How many inspections did you receive Number: Please provide details of these visits, including from the environmental authorities 1 number and nature of any violations found: during the reporting period? Emergency inspection concerning compliance with administrative regulations and decisions on environmental protection at an upper-tier establishment – Provincial Inspectorate for Environmental Protection (WIOŚ) in Kielce. The inspection did not reveal any non- compliance.

How many inspections did you receive Number: Please provide details of these visits, including from the health and safety authorities 13 number and nature of any violations found: during the reporting period? 1. In 2016 inspectors of the National Sanitary Inspectorate carried out 5 inspections – no violations were found

2. Inspectors of the Regional Mining Authority performed 7 inspections – no violations were found

3. Inspectors of the State Mining Authority performed 1 inspection in 2016 – no violations were found How many inspections did you receive Number: Please provide details of these visits, including from the labour authorities during the 1 number and nature of any violations found: reporting period? 1. Inspectors of the National Labour Inspectorate carried out one inspection in 2016, following which a statement was issued containing three conclusions. All the conclusions were implemented.

Not applicable

Have any operations been reduced, Yes [ ] If yes, please describe: temporarily suspended or closed down No [X] due to environmental, health, safety or labour reasons? Please describe any environment or social programmes, initiatives or sub-projects undertaken during the reporting period to improve the company's environmental or social performance and/or management systems:

Environmental initiative or subproject:

Since 2015, Grupa Azoty Siarkopol has had in place an Integrated Management System compliant with the ISO 9001, ISO 14001 and OHSAS 18001 standards, as well as a Quality Management System compliant with the ISO/TS 16949:2009 standard with respect to production of insoluble sulfur and milled sulfur.

 In 2016, the Company's insoluble sulfur Polsinex received the European Medal, which is awarded by the European Economic and Social Committee and the Business Centre Club to products and services whose quality is not inferior to that of European products and services.

 In 2016, Grupa Azoty Siarkopol won the Świętokrzyska Nagroda Jakości quality award.

 The most important tasks defined in the internal environmental management programme included the commencement in 2016 of construction of the package plants for treatment of sanitary wastewater at the Chemical Production Plant in Dobrów, and completion of reclamation work in areas 2, 3, and 4 of the Mining Field in the Osiek Sulfur Mine.

CSR initiative:

 In 2016, under an agreement for the years 2015 and 2016, Grupa Azoty Siarkopol undertook to cover the costs of purchase of new equipment for the chemical laboratory at comprehensive secondary school Liceum Ogólnokształcące im Kardynała Stefana Wyszyńskiego in Staszów, and to provide methodological support to teachers pursuing a project. The project is in progress.

In 2017, Grupa Azoty Siarkopol plans to implement the ISO 50001:2011 Energy management systems standard.

There is no expenditure associated with the requirements of the Environmental and Social Action Plan; the expenditure is related to the company's own initiative.

3. Status of the Environmental and Social Action Plan Please provide information on the status of each item in the Environmental and Social Action Plan (ESAP) agreed with EBRD. If the ESAP has been updated during the reporting period, please attach a copy of the new plan.

Not applicable 4. Environmental Monitoring Data for each of the key subsidiaries The information required in this section can be extracted from a CSR report, or a full CSR report can be attached.

Please provide the name and Head of the Environmental Protection Department contact details for your Elżbieta Molas, telephone: 15 86 49 192 environmental manager: [email protected]

Parameter2 Value3 Unit Compliance Status4 Comments5 Wastewater Chemical Production Plant Total wastewater 1,310,22 m3/year compliant generated Biochemical 1,460 kg/year compliant Oxygen Demand (BOD) Chemical Oxygen 8,473 kg/year compliant Demand (COD) Suspended solids 2,683 kg/year compliant Phosphorus N/A tests for this parameter are not required Nitrates N/A tests for this parameter are not required Heavy metals tests for this parameter are not required [Other]

Air Per each Mg/year emissions major point source Chemical Production Plant

SO2 34.18 compliant Nitrogen oxides 14.2 compliant

(NOX) Particulates 0.097 compliant

CO2 8,007.6 compliant

Other Parameters CS2 0.322 compliant Mining Facility particulates 0.461 compliant

Other H2S 0.047 compliant Parameters

Noise Daytime dB Acceptable levels in accordance with Noise emission Equivalent level of 38.7±1.6 the permit: measurements sound A over time T 44.1±1.7 daytime: 55 dB taken in 2015 Night nighttime: 45 dB at the Chemical time Production 36.4±1.1 Plant, planned 42.8±1.2 in 2017 [Other] Solid waste

Hazardous solid Quantity generated consistent with the waste integrated permits for the Chemical (major types) Production Plant of Dobrów and the sector permit for the Osiek Sulfur Mine 06 13 02* Spent activated Recovery 0.600 Mg carbon (except method: R3 06 07 02) 130205* Mineral-based non- Recovery chlorinated 2.800 Mg method: R9 engine, gear and lubricating oils 13 08 99* Wastes not 0.0 Mg otherwise specified 16 02 13* Discarded equipment containing hazardous Recovery 0.108 Mg components5) other method: R12 than those mentioned in 16 02 09 to 16 02 12 0.192 16 05 06* Laboratory Disposal 0.104 Mg chemicals (e.g. method: D9 chemical reagents) 150202* Absorbents, filter materials (including oil filters) not otherwise Recovery specified, wiping 0.200 Mg method: R1 cloths, protective clothing contaminated by dangerous substances (e.g. PCB) 16 06 01* Lead batteries 0.0 Mg

Non-hazardous solid waste 06 06 03 Wastes containing 0.0 Mg sulphides 06 06 99 Wastes not 0.0 Mg otherwise specified 15 01 02 Recovery 4.277 Mg Plastic packaging method: R1 150103 Recovery 18.180 Mg Wooden packaging method: R1 170402 Recovery 1.503 Mg Aluminium method: R4 17 04 05 Recovery 333.396 Mg Iron and steel method: R4 17 06 04 Insulation materials other Recovery 1.160 Mg than those method: R5 mentioned in 17 06 01 and 17 06 03

Please provide details of the types and amounts of solid wastes generated by the project. Indicate where wastes are classified as hazardous. Indicate the final re-use, recycle or disposal method for each waste type.

Important note: Applicable to waste quantities generated in connection with the Plant's operation – not applicable to the project

5. Resource Usage and Product Output (2016) Measureme Parameter Value Comments6 nt Unit Fuels used Crude oil Natural gas 49,966.148 MWh 4421783 Nm3 Hard coal Lignite Grid electricity 31,012.794 MWh Joint purchases (Dobrów + Grzybów + Osiek area) Heat purchased 2,13,5205 GJ Heat in hot water from the Połaniec Feedstocks and raw Power Plant materials consumed Name 1 Name 2 Product output Product 1 Product 2

6. Human Resources Management Please provide the name and contact details for your Human Resources manager: Wiesław Jerzy Anioł Recruited in this Terminated in this Telephone: 15 864 92 60 Total reporting period reporting period [email protected] Number of direct employees: 748 78 69 Number of contracted - - - workers: Were there any collective Yes [ ] If Yes, please describe the redundancy plan, including redundancies during the No [X] reasons for redundancies, number of workers reporting period? involved, how they were selected, consultation undertaken, and measures to mitigate the effects of redundancy: Are any redundancies to the Yes [ ] If Yes, please describe the redundancy plan, including workforce planned for the No [X] reasons for redundancies, number of workers next year? involved, and selection and consultation process: Were there any changes in Yes [ ] If Yes, please provide details, and summarise trade union representation at No [X] engagement with trade unions during reporting Company facilities during the period: reporting period?

Were there any other worker Yes [ ] If Yes, please provide details and summarise representatives (e.g. in the No [X] engagement with them during reporting period: absence of a trade union)? Were there any changes in the Yes [ ] If yes, please provide details: status of Collective No [X] Agreements? Have employees raised any Yes [ ] If yes, please state how many, split by gender, grievances with the project No [X] summarise the issues raised in grievances by male during the reporting period? and female staff and explain how the Company has addressed them: Have employees raised any Yes [ ] If yes, please state how many, split by gender, complaints about harassment or No [X] summarise the issues raised by male and female bullying during the reporting staff and explain how the Company has addressed period? them: Have there been any strikes or Yes [ ] If yes, please summarise nature of, and reasons for, other collective disputes No [X] disputes and explain how they were resolved: related to labour and working conditions at the Company in the reporting period? Have there been any court Yes [X] If yes, please summarise the issues contested cases related to labour issues No [ ] and outcome: during the reporting period? Claim brought by Mr Sławomir Bielecki, demanding payment and increase of the disability pension. Case is pending. Have there been any changes to Yes [ ] If yes, please give details, including of any new the following policies or terms No [X] initiatives: and conditions during the reporting period in any of the following areas:  Trade union recognition  Collective Agreements  Non-discrimination and equal opportunities for all  Equal pay for equal work  Gender equality  Bullying and harassment, including sexual harassment  Employment of young workers under 18  Wages and salaries (for regular and overtime hours)  Overtime  Working hours  Flexible working / work- life balance  Grievance mechanism for workers  Health & safety?

7. Occupational Health and Safety Data Please provide the name and Michał Markiewicz - Head of the OHS Centre contact details for your Health Telephone: 15 864 94 20; Mobile: 784 025 659 and Safety manager: [email protected]

Direct Contracted Direct Contracted employees workers employees workers Number of man- 1,257.0 Number of 0 hours worked this thousand fatalities7: reporting period: Budget spent on PLN Number of 0 OHS in this period 1,114,724.42 disabling injuries: (total amount and currency): OHS training 50 training Number of lost 6 provided in this sessions time incidents period in person- for 465 (including days: employees vehicular): Number of lost 503 Number of cases 0 workdays resulting of occupational from incidents: disease: Number of sick days: Accident causes (falling, heavy loads, struck by object, contact with energy source etc.): 1. A stream of hot reservoir water running under pressure of the column of water present in the expander tank, the employee not protected against the hot reservoir water stream and hydrogen sulfide during work.

2. Uneven surface at the place there the injured person was pulling a line towards a hook on a rail car.

3. Temporary malfunction of the sulfur level measurement system due to the measuring probe becoming sealed up, slippery surface as a result of a liquid sulfur spillage.

4. Wrong choice of means to obtain access to a temporary place of working at height, the ladder not being sufficiently secured against moving. 5. Tapping a transport pipeline in a place not intended for this activity, the injured person's right leg slipping from the transport pipeline. 6. Not using auxiliary equipment when manually moving a locomotive radiator, manually moving a locomotive radiator over concrete slabs which were slippery in some places due to below zero temperatures.

Please summarise any emergency prevention and response training that has been provided for company personnel during the reporting period:

Each year training on defence economics tasks is conducted by entrepreneurs working under the supervision of the Ministry of State Treasury. Training is also given to the Continuous Duty Team members: 8 hours per year.

Please summarise any emergency response exercises or drills that have been carried out during the reporting period: Mining rescuers designated by the employer perform monthly drills intended to prepare them to react in crisis situations (fire, explosion, spills of hot energy carriers). Provincial rescue operation drills of the National Fire Service were held at the Chemical Production Plant in connection with the fact that the plant is classified as an upper-tier establishment (such drills are held every five years). Drills for chemical rescue teams were performed at the Chemical Production Plant. Moreover, each year National Fire Service staff perform checks and reconnaissance activities at each of the Company's Plants.

8. Stakeholder Engagement Please provide the name and contact details for Not applicable your external relations or community engagement manager: Please provide information on the implementation of the stakeholder engagement plan agreed with EBRD and summarise interaction with stakeholders during the reporting period, including:  meetings or other initiatives to engage with members of the public or public organisations during the reporting period  information provided to members of the public and other stakeholders during the reporting period relating to environmental, social or safety,  coverage in the media  interaction with any environmental or other community groups Please describe any changes to the Stakeholder Engagement Plan agreed with EBRD:

Grupa Azoty Siarkopol has no Stakeholder Engagement Plan.

None.

9. Community Development Please summarise any social or community development / investment initiatives undertaken by the company during the reporting period, and any associated expenditure:

 In September 2016, Grupa Azoty Siarkopol donated PLN 150,000 to finance the purchase of medical equipment (an Aloka Prosound F75 ultrasound scanner) for the ultrasound laboratory of the Diagnostic Imaging Department of Samodzielny Publiczny Zespół Zakładów Opieki Zdrowotnej (Hospital) in Staszów.  In 2016, under an agreement for the years 2015 and 2016, Grupa Azoty Siarkopol undertook to cover the costs of purchase of new equipment for the chemical laboratory at comprehensive secondary school Liceum Ogólnokształcące im Kardynała Stefana Wyszyńskiego in Staszów, and to provide methodological support to teachers pursuing a project. So far, about PLN 20,000, VAT exclusive, has been allocated to the project.  In August 2016, Grupa Azoty Siarkopol donated PLN 20,000 to finance the purchase of endoscopy equipment for urology diagnostics for Samodzielny Publiczny Zespół Zakładów Opieki Zdrowotnej (Hospital) in Staszów. ENVIRONMENTAL AND SOCIAL ACTION PLAN

Table 0.1 Wisła Project, Grupa Azoty Poland – Environmental, Social, Health and Safety (ESHS) matters, Updated (Alchemist Project) Action Plan:

GRUPA AZOTY S.A.

No. Action Environmental risks, Legislative Requirement Scheduled Target and Comment liabilities/benefits requirements/ /Resources completion - evaluation criteria Best practice action to be for implementation completed by progress end of year 0. General − Management, Environmental, and OHS issues - management at the corporate level of Grupa Azoty 0.1 Develop and implement a new EHS performance monitoring, Best practice, Internal Ongoing; Please Conduct operations in The resulting new management structure, maintain minimum EHS risk at the Bank's resources provide update line with Polish and structure will be including EHS issues, as part of corporate level Performance in the annual EU requirements and presented in an the merger of the Grupa Azoty Requirements report follow the Bank's PRs appropriate and Puławy Groups (“PRs” or (particularly 1, 2, 3 internal executive “Performance and 10) order of the group Requirements”) management (1, 2, 3 and 10) Information:

The Grupa Azoty Group is an international corporation integrating European chemical sector companies, with its own research, development, logistics and technical facilities. The Parent of the Group, responsible for its strategy and corporate governance, is Grupa Azoty S.A. In 2013, in connection with the inclusion into the Grupa Azoty Group of Puławy and Siarkopol assets /2014/, a new management model was prepared and implemented at the Group. Corporate governance at the Grupa Azoty Group is guaranteed by the exercise of the powers of the corporate governing bodies of Grupa Azoty S.A.: the General Meeting, the Supervisory Board, and the Management Board. In line with the Grupa Azoty Group Strategy for 2013–2020, the management model's key objective is for the Group to grow value by operating as a single corporate organism. In line with the model's assumptions, functions offering the strongest synergies are centralised and main business processes are managed at the Group level, with the identities of Grupa Azoty Group companies preserved. In July 2013, the Management Board of Grupa Azoty S.A. approved the assumptions for a new model of the Group’s management, built on a process- based division of powers and responsibilities between members of the Grupa Azoty Management Board.

The aim of the new management model is to ensure delivery of the Grupa Azoty Group's Strategy, achievement of synergies, as well as efficient and effective execution of decisions of the Grupa Azoty Management Board, while preserving the identities of the subsidiaries. The pillars of the new management framework are process leaders (individual members of the Grupa Azoty Management Board responsible for their

1 respective processes), defined decision paths, decision-making transparency, and an incentive system, which ensure direct delivery and communication of the developed strategy and strategic objectives. Members of the Grupa Azoty Management Board are process leaders with uniform decision-making powers to prepare organisational and HR decisions (appointments and target setting), which are then approved by the Grupa Azoty Management Board or the management boards of subsidiaries. President of the Management Board exercises overall supervision of the Group at the corporate level. In its management of the Group and supervision of the business segments and support functions, the Grupa Azoty Management Board is supported by the Grupa Azoty Council, standing advisory and consultative committees, process and project steering committees, as well as Corporate Departments and Offices, and tiered decision-making positions at the Corporate Centre. In accordance with the management model implemented at the Grupa Azoty Group, the main corporate business processes are managed at the Group level, while the organisational units of the Corporate Centre, including Corporate Departments and Offices of the Parent /Grupa Azoty S.A./ are assigned the dual role of managing business areas and processes within the Parent as well as performing the relevant corporate functions, including through management of the main corporate business processes. The model adopted for the Grupa Azoty Group's structure and governance, known as cross-management, envisages an interdependent management system based on a vertical and horizontal (process-based) organisational structure configuration, consisting of 21 main corporate business processes of the Group.

The functioning of the management model of the Grupa Azoty Management Board and of the subsidiaries’ management boards is further reinforced by the following principles adopted at the Group:  the Grupa Azoty Group management model provides for preserving the subsidiaries' identities, locations and legal autonomy;  the Grupa Azoty Group management model provides for centralising functions offering the strongest synergies, economies of scale, and specialisation;  the Grupa Azoty Group management model is a 'joint operation model' relying on the following basic principles:  the Grupa Azoty Group operates as a single entity based on its four key companies;  members of the Grupa Azoty Management Board – the leaders of main corporate business processes – ensure joint operation to achieve strategic and financial objectives of the Grupa Azoty Group by driving the effects of business processes at the Group;  at the Grupa Azoty Group, opinions of the management boards of Group subsidiaries are taken into account when making decisions with a material effect on the subsidiaries' financial performance; if no agreement can be reached between a process leader and the subsidiaries’ management boards, the decision is made by the Grupa Azoty Management Board;  all activities and decisions at the Group are transparent to all parties involved.

In connection with the Group management model being deployed, in the pursuit of the Organisational and Cultural Integration at the Grupa Azoty Group project, the following were implemented at the Group: Level 1 Main Corporate Business Processes Management Guidelines (defined solely at the level of the Grupa Azoty Corporate Centre), which include in particular: 1. Strategic management and strategic planning 2. Strategic project management 3. M&A management 4. Business environment management 5. Corporate governance and corporate supervision 6. Compliance and audit 7. Communication 8. Production integration and coordination management 9. IT management

2 10. Risk management

as well as Level 2 Main Corporate Business Processes Management Guidelines (defined at the level of both Grupa Azoty and its subsidiaries), which include in particular:

1. Controlling, planning and budgeting 2. Preparation and execution of investments in fixed assets 3. R&D and product portfolio management 4. Marketing and sales management 5. Customer service quality management 6. Repair and maintenance 7. Environmental and technical safety 8. Logistics and supply chain management 9. Strategic feedstock procurement management 10. Financial management 11. HR management. The Grupa Azoty Process Book was also implemented, setting out general rules applicable to the Main Corporate Business Processes Management Guidelines. The Guidelines were consulted with relevant process administrators and approved by process leaders.

Below is presented a short description of the actions and initiatives related to the implemented management model, which were taken as part of the consolidation process with respect to a number of organisational, formal and legal aspects.

Formal and legal aspects:  Preparation and implementation of Internal Audit Standards for Grupa Azoty and Grupa Azoty S.A. Internal Audit Rules;  Preparation and implementation of the Financial (Currency and Interest Rate) Risk Management Policy for the Grupa Azoty Group;  Preparation and implementation of naming standards for companies of the Grupa Azoty Group;  Preparation and implementation of the Strategy of Technical Maintenance and Asset Life Cycle Management at Grupa Azoty;  Preparation and implementation of a joint model for managing CO2 emission allowances at the Grupa Azoty Group;  Preparation and implementation of the Framework Procedure for Disposal of Perpetual Usufruct Rights, Ownership Rights to Real Property, or Interests in Such Rights, at the Grupa Azoty Group Companies;  Preparation and implementation of the Financing and Liquidity Management Policy for Grupa Azoty;  Preparation and implementation of a procedure to be followed in the event of an inspection by the Polish Office of Competition and Consumer Protection (UOKiK) or the European Commission at Grupa Azoty;  Preparation and implementation of a procedure to be followed before the execution of contracts for the provision of services or delivery of raw materials or consumables at Grupa Azoty S.A. and for joint procedures at the Grupa Azoty Group;  Preparation and implementation of a document drafting policy for related-party transactions at the Grupa Azoty Group;  Preparation and implementation of purchase of CO2 emission allowances at the Grupa Azoty Group;  Preparation and implementation of rules for coal procurement management at the Grupa Azoty Group Companies;  Preparation and implementation of guidelines on submitting investment plans and preparing investment projects at the Grupa Azoty Group Companies;  Preparation and implementation of the Integrated Investment Project Management System Instruction at the Azoty Tarnów Group; 3  Preparation and implementation of methodology assumptions for project efficiency analysis at Grupa Azoty;  Preparation and implementation of guidelines for the allocation of umbrella facility sublimits between Grupa Azoty Group companies;  Preparation and implementation of the Compliance Management Policy at the Grupa Azoty Group;  Preparation and implementation of the credit risk management instruction at the Grupa Azoty Group;  Preparation and implementation of rules for keeping an inside information access list;  Changes in the Information Policy at Grupa Azoty.

Organisational aspects:  Establishment of the standing Finance Committee at Grupa Azoty;  Establishment of the Procurement Committee at Grupa Azoty;  Establishment of the EU ETS Management Committee and the EU ETS Executive Team for the purposes of the CO2 emission allowances joint management model;  Increase in the number of members of the Risk Management Process Steering Committee and expansion of the concept for implementing the enterprise risk management process at other Companies (Grupa Azoty Kopalnie i Zakłady Chemiczne Siarki Siarkopol S.A., Gdańskie Zakłady Nawozów Fosforowych Fosfory Sp. z o.o., Zakłady Azotowe Chorzów S.A.);  Establishment of the Expert Committee and Task Team for development of a joint HR strategy for the Grupa Azoty Group;  Establishment of the Steering Committee and Team for implementation of EU capital market regulations at Grupa Azoty;  Establishment of the Working Group for implementation of an IT tool to support tender and procurement processes at Grupa Azoty Group companies;  Establishment of the Team for review of organisational structures at Grupa Azoty S.A. and subsidiaries of Grupa Azoty S.A.;  Establishment of the Team for drafting changes to corporate documents of Grupa Azoty S.A. and subsidiaries of Grupa Azoty S.A.;  Establishment of the Corporate Energy Team at the Grupa Azoty Group;  Establishment of the Personal Data Protection Team at the Grupa Azoty Group. 0.2 As part of new EHS Following completion of the EBRD PR 1 and Internal Completed Regular management structure – merger, the Company will best practice resources certification of maintain and further develop maintain EHS management EHS management existing EHS management systems and develop such systems systems (such as ISO 14001, systems throughout the OHSAS 18001, etc.); by 2015 Company, both at the Group and Objective: obtain develop and implement energy subsidiary levels. ISO 51001 management systems for the certification in Group in line with ISO 51001. The Company will also address 2015 energy efficiency at the Group The target is to achieve a 10% and subsidiary levels, and energy intensity reduction by implement an energy 2016 compared with 2012, with management system to reduce a long-term objective of a 15% energy intensity through BAT reduction. (Best Available Technology) implementation and to reduce carbon emissions. Information: 4 The key Grupa Azoty Group Companies have implemented and maintain management systems based on international standards. In addition to quality, environmental, and OHS management systems, some of them have in place a food safety management system or laboratory management systems. The companies covered by this report have implemented and maintain management systems and hold certificates issued by certification bodies, confirming compliance with the requirements of the standards listed below, in particular the specified EHS standards: Grupa Azoty S.A.  ISO 9001:2008 (valid until June 30th 2018)  ISO 14001:2004 (valid until June 14th 2017)  ISO PN-N 18001:2004 (valid until January 31st 2017, extended until January 31st 2020)  BS OHSAS 18001:2007 (valid until January 31st 2017, extended until January 31st 2020)  ISO 22000:2005 (valid until October 31st 2017)  ISO 50001:2011 (valid until February 2020)  Product Stewardship certificate (valid until May 24th 2017)  PN-EN ISO/IEC 17025:2005 standard (general requirements for the competence of testing and calibration laboratories) (valid until March 15th 2019)

Grupa Azoty ZAK S.A.  ISO 9001:2008 (valid until February 13th 2017, extended until September 14th 2018)  ISO 14001:2004 (valid until February 13th 2017, extended until September 14th 2018)  ISO PN-N 18001:2004 (valid until February 13th 2017, extended until September 14th 2018)  BS OHSAS 18001:2007 (valid until February 13th 2017, extended until February 13th 2020)  Product Stewardship certificate (valid until May 24th 2017)

Grupa Azoty Z.Ch. POLICE S.A.  ISO 9001:2008 (valid until October 19th 2018)  ISO 14001:2004 (valid until October 19th 2018)  ISO PN-N 18001:2004 (valid until November 6th 2017)  BS OHSAS 18001:2007 (valid until January 17th 2018)  ISO 22000:2005 (valid until November 23rd 2019)  ISO 50001:2011 (valid until January 12th 2017)  Product Stewardship certificate (valid until May 24th 2017)

Grupa Azoty Z.A. PUŁAWY S.A.  ISO 9001:2008 (valid until September 15th 2018)  ISO 14001:2004 (valid until September 15th 2018)  ISO PN-N 18001:2004 (valid until September 15th 2018)  ISO 22000:2005, ISO/TS 22002-1:2009, FSSC 22000 (valid until June 26th 2017)  Product Stewardship certificate (valid until May 24th 2017)  other e.g. ACCREDITATION CERTIFICATE FOR Industrial Hygiene Laboratory, Conformity Certificate - EC Fertilizer (PULAN, UAN, AN, PULREA), Q-mark product certification (UAN, AN, PULREA),

5 Zakłady Azotowe Chorzów S.A.  ISO 9001:2008 (valid until December 1st 2017) HACCP Food Safety Management System (valid until July 5th 2019)

GZNF Fosfory S.A.  ISO 9001:2008 (valid until September 30th 2017)

Grupa Azoty JRCh Sp. z o.o.  ISO 9001:2008 (valid until September 14th 2018)  ISO 14001:2004 (valid until September 14th 2018)  ISO PN-N 18001:2004 (valid until January 25th 2018)  other e.g. PN-EN ISO/IEC 17025:2005 (General requirements for the competence of testing and calibration laboratories)

Grupa Azoty Kopalnie i Zakłady Chemiczne Siarki Siarkopol S.A.  ISO 9001:2008 (valid until September 14th 2018)  ISO/TS 16949:2009 (valid until September 14th 2018)  ISO 14001:2004 + Cor1:2009 (valid until September 14th 2018)  BS OHSAS 18001:2007 (valid until December 22nd 2018)

In 2016, external audits were carried out at Grupa Azoty Group Companies by the relevant certification bodies. In the reporting period, re- certification audits were carried out in the specified areas.

In 2016, the Management Systems Integration Team established at the Grupa Azoty Group continued its efforts to work out a common approach to regulating selected issues. The Team includes representatives of Grupa Azoty S.A., Grupa Azoty ZAK S.A., Grupa Azoty Z.Ch. Police S.A., Grupa Azoty ZA Puławy S.A., Grupa Azoty Polskie Konsorcjum Chemiczne Sp. z o.o., Grupa Azoty ATT Polymers GmbH, Grupa Azoty Koltar Sp. z o.o. and Grupa Azoty KiZCHS Siarkopol S.A. Moreover, the Grupa Azoty Group Companies implemented an energy management system compliant with the ISO 50001 standard. Grupa Azoty S.A. submitted its energy management system for certification.

6 0.3 As part of EHS management, the EHS performance monitoring, Best practice, Internal Ongoing; planned Annual financial The result/new system Company will develop its own maintain minimum EHS risk at Bank's PRs resources to be completed report with clear presented in an procedure for assessing EHS corporate level by the end of estimation of appropriate internal provisions and contingent 2015 potential executive order of the liabilities to enable: The system will then be audited extraordinary Group management a) their initial assessment, and and reviewed by an independent threat to the b) annual verification of their financial auditor. If necessary, environment In pursuit of this amounts in accordance with the procedure will be updated objective, the IFRS. to enable an appropriate Management Board will assessment of environmental rely on IFRS and EU The initial assessment will be liabilities and contingent Guidelines made in 2013 in the liabilities. consolidated statement of profit or loss and in updated financial Technical, financial and legal statements accounting for the departments of the Company provisions and contingent will be involved. Appropriate liabilities. legal advice will also need to be obtained. The system will be verified by an independent qualified The Consultant believes that auditor as part of a financial the current provision for soil audit. and groundwater clean-up is insufficient and should be increased (in particular for costs of mercury clean-up in Tarnów, as well as demolition work). An initial assessment by Environ is that a provision of EUR 10m should be recognised in the full- year financial statements for costs related to the Wisła landfill site as well as for additional contingent liabilities related to mercury clean-up in Tarnów. However, this needs to be verified.

7 Information: At least once a year, a review of provisions recognised in the financial statements is performed on the basis of information from technical staff. In 2016, an update of the feasibility study of the ‘Withdrawal from Service of the Chlorine Products Division’ was prepared, with special attention paid to the mercury electrolysis plant at GA S.A. The paper presents the method for implementation of the project and updated cost estimates of decommissioning of the Chlorine Products Division. As at the end of 2016: 1. Discounted amount of the provision for demolition of mercury electrolysis facilities is PLN 8,161 thousand, 2. Discounted amount of the provision for site restoration is PLN 16,946 thousand. 3. Discounted amount of the provision for asbestos disposal is PLN 1,220 thousand. In 2016, the Company incurred expenses related to site restoration of PLN 203 thousand, while costs of demolition and waste landfilling amounted to PLN 557 thousand. The provisions were presented in the financial statements for 2016, in Note 25 – Provisions under ‘Provision for environment protection, including site restoration’ and ‘Provision for demolition of mercury electrolysis plant’, and have been verified by the Auditor − KPMG Audyt Sp. z o.o. in the course of the ongoing accounting audit.

8 0.4 The Company will maintain The technical basis for IFRS, EBRD, EU External Recognition of Summary in annual adequate provisions and recognition of a provision or directive consultant/ provisions and report Information in contingent liabilities in the contingent liability will be requirements auditor regular annual report full-year financial statements subject to a full technical remeasurement for reasonably anticipated review by an appropriate of provisions and costs. The provisions and independent technical adviser contingent contingent liabilities will be in 2015. The scope of work will liabilities audited and updated as part of be agreed with the Financial a financial audit every three Auditor. years to ensure that adequate provisions are maintained and As part of the financial audit, that environmental, health an independent auditor will and safety liabilities are approve the relevant correctly assessed, quantified provision. and reflected in the financial statements. The purpose of the provisions is to: The provisions need to be  ensure that all regulatory independently reviewed by requirements, including technical advisers every three periodic orders or years. Such review, including a demands by environmental technical opinion on the authorities, are complied provisions and contingent with; liabilities, will take place every  ensure availability of a three years, or in the event of provision for liabilities a material change to related to the landfill site accounting assumptions, or as closure and post-closure required by accounting costs; and advisers.  ensure that all other legal requirements or requirements necessary to manage potential environmental liabilities are complied with. Information: The Company maintains an appropriate level of provisions, which is reviewed every year by the Financial Auditor. A review of the provisions for 2016 was performed by the Auditor − KPMG Audyt Sp. z o.o. in the course of the ongoing accounting audit.

9 0.5 In the event of a site closure or For all such sites, the Company: IFRS Internal 2013 onwards Annual report for the Please provide a sale, the Company will  will maintain a financial resources/ shareholders summary in the undertake an environmental mechanism to implement a accounting/ 2016 annual assessment to identify its remediation plan in case of consultant report. environmental or social contamination, as well as a liabilities prior to the plan for closure or post- closure/sale. This will include, closure of a site, including a if needed, retrenchment plans landfill site, or restructuring to ensure compliance with the or retrenchment, to the EBRD Performance Requirement extent that, in the event of 2, as well as development and its sale, the liability and implementation of remediation costs are not borne by the plans based on a site-specific buyer, in a manner which risk assessment to limit the risk will ensure that any related to the environment and humans liabilities do not revert to from contamination that is or the Company, its may be present at, or that may shareholders or its parent, originate from, the site or result and from the Company’s activities.  will agree on the financial mechanism with the parent prior to the closure or sale. Information: The Company does not plan to close or sell a site in the near future. When individual installations are decommissioned or disposed of, an environmental assessment is carried out. The financial statements for 2016 are being audited by the Auditor, KPMG Audyt sp. z o.o., in the course of the ongoing accounting audit.

10 0.6 Develop a new Corporate Social impact monitoring, Best practice, Internal Ongoing Information in the To be updated Social Responsibility (CSR) maintain minimum CSR in Bank's PRs (PR 1, resources annual report every year programme for the entire accordance with the GRI 2, 4 and 10) Grupa Azoty Group (Global Reporting Initiative) guidelines. Information: On November 9th 2016, the third integrated report of the Grupa Azoty Group was released during the presentation of financial results for the third quarter of 2016. It was for the third time that the Group's four strategic companies presented a common integrated report, prepared in accordance with the latest GRI G4 guidelines. It was the annual report for 2015. In order to define the scope of integrated reporting, an Expert Committee for CSR was appointed in 2015, composed of Grupa Azoty employees. Data collection and processing activities were performed by employees representing all the four companies. The working groups were additionally supported by external experts (CSRinfo, Deloitte, KPMG and ArtGroup). In preparing the report, importance was attached to identifying the existing challenges and expectations that stakeholders and other entities may have towards the Grupa Azoty Group, as well as all events in 2015 which had a material effect on the Group. Out of several dozen entities comprising the Grupa Azoty Group, the report covers its four key companies: Grupa Azoty S.A. of Tarnów (Parent), Grupa Azoty Zakłady Azotowe Puławy S.A., Grupa Azoty Zakłady Azotowe Kędzierzyn S.A., and Grupa Azoty Zakłady Chemiczne Police S.A. These are the largest Group companies in terms of revenues and headcounts. Also given the scale and nature of their businesses, they have the greatest impact on the social and natural environment. As the prepared and published report contains information of particular relevance to the Group and its environment, analyses were carried out to identify aspects of medium and high relevance. These related to occupational health and safety, environment protection, materials used, prevention of discrimination and corruption, local communities, water and wastewater management, waste management, transport, as well as customer health and safety. The report also contains information on management standards, employee development, supporting employee education, marketing communication, and public engagement. An important step in preparing the report was identifying the Grupa Azoty Group's stakeholders, i.e. persons and entities which the Group affects and which may affect the Group. Key stakeholders include the Group's trading partners (customers and suppliers), shareholders, local communities, employees, research and academic institutions, public authorities, trade unions, local governments, banks, and financial institutions. The report in electronic form (in the Polish and English version) is available from www.grupaazoty.com in the Sustainable Development/Reports section.

11 0.7 Provide the Bank with a report Update of the road map for Legislative Internal BAT assessment Information in the As part of the on the status of implementation maintaining compliance with requirements resources in 2015 annual report on annual report of IED (Industrial Emissions the Industrial Emissions and best practice progress status. for 2016, the Directive) and EU ETS Directive by all Grupa Azoty Company will requirements by Grupa Azoty as Group production plants. In 2015, provide the provide updated part of annual reports Bank with an information on submitted to EBRD. A schedule for an independent executive summary of steps taken to audit of IED BAT compliance the BAT assessment ensure The report also includes will be developed in 2015, and ESAP continuous information on the status of taking into account compliance implementation. compliance with projects in progress and post 2016. BAT, and will projects planned to ensure identify the compliance after 2016. Provide information in the specific BAT annual report on any material requirements to An independent audit is to be instances of non-compliance, be implemented undertaken in 2015. accidents/incidents, or within four years investment needs as agreed of adoption of with regulators. the new Best Available Techniques Reference Document (“BREF”) Information: Projects implemented in 2016 to ensure compliance of the Company's industrial combustion sources with the requirements laid down in the Minister of Environment's Regulation on Emission Standards for Installations of April 22nd 2011 and the Industrial Emissions Directive, included construction of the flue gas desulfurisation and dust collection units and construction of the flue gas deNOx unit. Work completed as part of the flue gas desulfurisation and dust collection project included construction of buildings, as well as delivery and assembly of apparatus and equipment. Investment expenditure incurred on the flue gas desulfurisation and dust collection project is PLN 30,635 thousand. Work completed as part of the flue gas NOx reduction project included work related to primary and secondary measures, delivery and assembly of apparatus and equipment, as well as C&I and electrical work. Investment expenditure incurred on the flue gas deNOx project is PLN 38,510 thousand. The completion of both projects is planned for 2017. 0.8 Ensure that Grupa Azoty has Ensure ongoing compliance with Legal Internal Ongoing Provide update on valid IPPC/IED permits and is in IPPC and IED. requirements resources status in the annual compliance with Polish and EU report submitted to requirements. the Bank. Information: Currently, Grupa Azoty S.A. operates pursuant to the following decisions:  Decision of the Marshal of the Kraków Province dated June 20th 2012, Ref. No. SR-II-1.7222.1.1.2012, granting an integrated (IPPC) permit to Zakłady Azotowe w Tarnowie-Mościcach for the Hydrogen Unit, valid for an indefinite term (permit amended by Decision of December 3rd 2014, Ref. No. SR-II- 1.7222.2.13.2014);

12  Decision of the Governor of the Kraków Province dated February 16th 2007, Ref. No. ŚR.XIV.JI.6663-6-05, granting an integrated (IPPC) permit to Zakłady Azotowe w Tarnowie-Mościcach for the Park Infrastruktura Complex, valid for an indefinite term (permit amended by Decision of July 29th 2011, Ref. No. SR-II-1.7222.1.3.2011, Decision of September 11th 2012, Ref. No. SR-II-1.7222.1.7.2012, Decision of December 3rd 2014, Ref. No. SR-II- 1.7222.2.17.2014 and Decision of December 31st 2015, Ref. No. SR-II-1.7222.2.1.2015);  Decision of the Governor of the Kraków Province dated April 17th 2007, Ref. No. ŚR.XI.JI.6663-3-06, granting an integrated (IPPC) permit to Zakłady Azotowe w Tarnowie - Mościcach for the POM Manufacturing and Compounding Complex, valid for an indefinite term (permit amended by Decision of July 29th 2011, Ref. No. SR-II-1.7222.1.1.2011 and Decision of December 3rd 2014, Ref. No. SR-II-1.7222.2.14.2014);  Decision of the Governor of the Kraków Province dated July 29th 2011, Ref. No. SW.II.1.AJ.7673-10/09, granting an integrated (IPPC) permit to Zakłady Azotowe w Tarnowie - Mościcach for the Technical Grade Nitric Acid Unit, Calcium Ammonium Nitrate and Ammonium Nitrate Unit, Nitrogen Fertilizer Granulation Unit, and Dolomite Milling Unit, valid for an indefinite term (permit amended by Decision of December 3rd 2014, Ref. No. SR-II- 1.7222.2.15.2014 and Decision of August 16th 2016 Ref. No. SR-II.7222.2.8.2016 );  Decision of the Governor of the Kraków Province dated March 22nd 2007, Ref. No. ŚR.XI.JI.6663-4-06, granting an integrated (IPPC) permit to Zakłady Azotowe w Tarnowie - Mościcach for the PTFE and Fluorine Compounds Unit, valid until December 31st 2016;  Decision of the Governor of the Kraków Province dated July 17th 2007, Ref. No. ŚR.XIV.JI.6663-2-06, granting an integrated permit to Zakłady Azotowe w Tarnowie - Mościcach for the Caprolactam and Polyamide Manufacturing Units, valid until December 31st 2016, amended entirely by Decision of the Marshal of the Kraków Province dated December 1st 2010, Ref. No. SW.II.1.AJ.7673-11/08 (part I, part II, and part III) (permit amended by Decision of July 29th 2011, Ref. No. SR-II-1.7222.1.2.2011, Decision of February 16th 2012, Ref. No. SR-II-1.7222.1.2.2012, Decision of June 20th 2012, Ref. No. SR-II-1.7222.1.5.2012), Decision of October 21st 2013, Ref. No. SR-II-1.7222.1.3.2013. - [WKS], and Decision of December 3rd 2014, Ref. No. SR-II- 1.7222.2.16.2014 - [WKS], valid for an indefinite term);  Decision of the Marshal of the Kraków Province dated March 16th 2009, Ref. No. SW.II.1.JI.7673-6/08, amending the integrated (IPPC) permit granted to Zakłady Azotowe w Tarnowie - Mościcach for the Caprolactam and Polyamide Manufacturing Units (with respect to the Natural Polyamide Unit), valid until December 31st 2016;  Decision of the Governor of the Kraków Province dated December 29th 2014, Ref. No. SR-II-1.7221.2.2014, granting permit for release of gases and dusts into the air to Grupa Azoty S.A., valid until December 28th 2024;  Notification of Grupa Azoty S.A.'s EC II CHP Plant Water Treatment Unit and Modified Plastics Facility of November 24th 2014 to the Marshal of the Kraków Province, Ref. No. TB/JK/1034/2014;  Decision of the Marshal of the Kraków Province dated September 13th 2012, Ref. No. SR-II-1.7225.1.2012 , granting permission to participate in the European Union Emissions Trading Scheme to the CHP Plant located on the premises of Zakłady Azotowe w Tarnowie – Mościcach, valid until September 12th 2022, amended by Decision of December 20th 2012 (with an appendix thereto), Ref. No. SR-II-1.7225.4.2012, Decision of August 20th 2013 (with an appendix thereto), Ref. No. SR-II-1.7225.1.2013, Decision of December 23rd 2013, Ref. No. SR-II-1.7225.5.2013, and Decision of December 31st 2014, Ref. No. SR-II-1.7225.3.2014, together with a Monitoring Plan, and Decision of July 16th 2015, Ref. No. SR-II-1.7225.1.2.2015, together with a Monitoring Plan, all issued by the Marshal of the Kraków Province;  Decision of the Marshal of the Kraków Province dated June 30th 2011, Ref. No. SR-II-1.7225.1.2.2011, granting permission to participate in the European Union Emissions Trading Scheme with respect to greenhouse gas emissions from the units manufacturing nitric acid, ammonia and organic chemicals in bulk by way of cracking, reforming, oxidation or similar processes, with a daily production capacity in excess of 100 Mg, valid until June 29th 2021, amended by Decision of December 20th 2012 (with an appendix thereto), Ref. No. SR-II-1.7225.5.2012, Decision of December 20th 2013, Ref. No. SR-II-1.7225.2.2013, and Decision of December 30th 2014, Ref. No. SR-II-1.7225.4.2014, together with a Monitoring Plan, all issued by the Marshal of the Kraków Province;  Decision of the Mayor of Tarnów of January 13th 2003, Ref. No. WGK.B-III.6210/16/02/03, granting permit for collective water supply and collective wastewater discharge, with an indefinite term;  Decision of the Governor of the Kraków Province dated December 30th 2014, Ref. No. SR-IV-1.7322.1.28.2014.MG, granting permit for special use of

13 water – abstraction of groundwater from an intake point located in Tarnów-Mościce, valid until December 31st 2034;  Decision of the Governor of the Kraków Province dated December 29th 2005, Ref. No. ŚR.XIV.MGą.6811-31-05, granting permit for special use of water – abstraction of surface water from the Dunajec river, valid until December 31st 2025;  Decision of the Marshal of the Kraków Province dated May 27th 2015, Ref. No. SR-IV-1.7322.1.6.2015.MG, granting permit for discharge of wastewater containing substances particularly harmful to the water environment into the sewerage system of Zakład Oczyszczania Ścieków T.W. Sp. z o.o., valid until June 8th 2019;  Decision of the Marshal of the Kraków Province dated November 21st 2013, Ref. No. SR-IV-1.7322.1.26.2013.MG, granting permit for discharge of wastewater to surface waters, valid until December 31st 2017;  Decision of the Marshal of the Kraków Province dated July 1st 2015, Ref. No. SR-IV-1.7222.1.2015, granting an integrated (IPPC) permit to Grupa Azoty S.A. for the Central Wastewater Treatment Plant, with an indefinite term;  Decision Ref. No. SR-IV.1.7328.1.2013.MG, establishing a protected zone for water intake points;  Decision of the Marshal of the Kraków Province dated January 20th 2016 Ref. No. SR-III-1.7244.4.9.2015.AG permitting Grupa Azoty S.A. to collect and process waste, valid until January 19th 2026;  Resolution of the Provincial Assembly of the Kraków Province of October 25th 2010, No. LI/833/10, establishing Industrial Zone at ZAT S.A. (Official Journal of the Kraków Province, No. 580/2010, item 4475).

14 0.9 Develop and implement a The corporate (and site- Best practice, 2013−2016; SEP to be NTS is to be a corporate (Grupa Azoty) specific) SEP will outline the EBRD PRs thereafter to be amended/update separate document in Stakeholder Engagement Plan Company's public reviewed every d every three accordance with the (SEP) in line with EBRD PR 10. communication policy and two years as part years or earlier, Environmental Impact commitments, including the of EHS audits as needed. Assessment directive For any new investment project grievance mechanism, (“EIA directive”), and where an Environmental Impact indication of contact persons Please provide a include information Assessment (EIA) is required by and project information copy of the NTS on the project, Polish authorities, publish on availability. (link to web site) impacts and risk the Internet a Non-Technical in the annual mitigation actions, Summary (NTS) of SEP for all report and as a presented in a projects covered by Annex 1 as summary of SEP concise and defined in the EIA directive. associated with meaningful way. Ensure that the EIA process is the EIA process. carried out in accordance with EU and Polish requirements. Information: In 2016, Grupa Azoty S.A. prepared applications for an integrated (IPPC) permit for the CHP Plant, Granulation Unit - New Storage Facility. Prior to the issuance of relevant decisions, these applications were displayed for public inspection at the Marshal Office of the Kraków Province, and information on the pending administrative proceedings was published on Grupa Azoty S.A. notice boards. The same procedure was followed in the case of applications for integrated (IPPC) permits for other units. Information on safety at Grupa Azoty S.A. was published on the Company's website ( http://tarnow.grupaazoty.com/files/980cdee1/bezpieczenstwo_w_grupie_azoty_sa_informator.pdf) and was also distributed among interested business entities, schools, and institutions. 0.1 Regular ESHS audits (every Review status of operations Best practice As part of Report for the Report for the 0 three years) to review the BAT Management Bank as part of progress in ESAP assessment Board and EBRD 2016 report implementation and status of in 2015 compliance with EU environmental standards. The first report will be part of BAT assessment.

15 Information: In line with the Strategy, the company focuses on continual adaptation of product quality and product range to customer requirements, product improvement with the use of innovative technologies, and reduction of product costs through modernisation of key production lines. To ensure lasting and effective customer relations and become the first-choice supplier, the company makes every effort to offer top quality products. The pursuit of strategic objectives is based on management systems consistent with the highest international standards. Also, pursuant to environmental protection laws, the company holds valid integrated (IPPC) permits to operate all its production units, which define the company's obligations under applicable laws. BAT assessments for individual units were made in the applications for amendments to the integrated (IPPC) permits for the existing IPPC installations and will be made in the applications for integrated (IPPC) permits for new installations. The analysis confirmed compliance of Grupa Azoty S.A.'s existing installations with BAT. For information on EHS audits, see Section 1.1. 0.1 Develop contaminated land Compliance with the Legislative As soon as Soil or Regular 1 management plan - this should regulations and remediation requirement possible groundwater monitoring include identification and programmes. surveys or results for each cataloguing of contaminated monitoring contaminated sites, control measures and results site. remediation plan. Identification should cover areas around production plants. Information: Grupa Azoty S.A. carried out surveys to find out if there are any contaminated areas within its premises. The surveys enabled the Company to make an catalogue of contaminated sites. Local soil contamination with mercury was found at the decommissioned Mercury Electrolysis Unit – spreading of the contamination is monitored by means of piezometers located within the contaminated area. No contamination of groundwater was detected. In 2015, a Baseline Report was prepared covering the Company's premises, which is submitted to the Marshal Office together with applications for integrated permits. 1. Site Specific Environmental, Health and Safety Management System

16 No. Action Environmental risks, Legislative Requirement Scheduled Target and Comment liabilities/benefits requirements/B /Resources completion - evaluation criteria est practice action to be for implementation completed by progress end of year 1.1 Introduce newly developed In order to maintain Compliance Management In the course of EHS management Cover each plant Environmental, Health and comprehensive management with EBRD and time or 2013-2014 system has a clear with the existing Safety Management Systems at systems at the company, it is PR 1. consultant structure defining EHS management all Grupa Azoty production necessary to implement the Compliance fees responsibilities and systems plants. newly developed EHS systems with standards formalised operating at all production plants. of the leading procedures. Maintaining effective and companies (ZA comprehensive environmental Tarnów and ZA and social management Puławy). systems is the best way to ensure a dynamic and continuous improvement of EHS performance at the company. It allows the organisation to identify, avoid, minimise and mitigate potential EHS risks and impacts. The EHS management system must cover activities undertaken by contractors and other third parties (plant engineering and maintenance staff) as well as other plant staff. The system should include an EHS training programme for all employees and contractors. Information: On a site-specific basis, i.e. Grupa Azoty S.A.

17 Grupa Azoty S.A. pursues a Corporate Management Policy which guarantees that the Company's strategic goals are achieved in reliance on an integrated management system, consistent with international standards. Grupa Azoty S.A. holds the following management system certificates related to the indicated areas:  environmental management system certificate confirming the system's conformity with the ISO 14001:2004 standard (valid until June 14th 2017);  quality management system certificate confirming the system's conformity with the ISO 9001:2008 standard (valid until June 30th 2018);  occupational health and safety management system certificate confirming the system's conformity with the PN-N 18001:2004 standard (valid until January 31st 2017, extended until January 31st 2020);  occupational health and safety management system certificate confirming the system's conformity with the OHSAS 18001:2007 standard (valid until January 31st 2017, extended until January 31st 2020);  food safety management system certificate confirming the system's conformity with the ISO 22000:2005 standard (valid until October 31st 2017);  energy management system certificate confirming the system's conformity with the ISO 50001:2011 standard (valid until February 2020);  Product Stewardship certificate (valid until May 24th 2017);  accreditation certificate for the research laboratory confirming conformity with the PN-EN ISO/IEC 17025:2005 standard (general requirements for the competence of testing and calibration laboratories) (valid until March 15th 2019).

In 2016, re-certification audits were carried out at Grupa Azoty S.A. for its quality management system. They were completed with positive results and the certificate were renewed.

The implemented systems are continually improved. The company adopts improvement programmes for a given year, covering, among other things, various issues that determine improvement in the EHS area. The manner of proceeding in this respect is described in a management systems procedure, which has been put in place. The Company has also implemented a procedure for identification of environmental aspects and selection of material aspects. Another procedure in place at the Company is the Environmental Monitoring and Measurements. The following procedures apply with respect to OHS management: the Occupational Risk Management, and the Monitoring of Occupational Health and Safety. These tools describe the rules of identifying, assessing and managing environmental and OHS issues with a view to minimising related risks. The procedures and other internal regulations adopted by the Company take into account the activities of employees, contractors and other third parties, as well as their training.

18 1.2 Provide annual reports on EHS Aspects to be included in the Best Internal Annually, Expand existing Provide annual performance to EBRD and annual report: practice/compli resources published in the shareholder reports on other shareholders.  general information on ance with EBRD first quarter of a reporting system. Environmental, the project status within PRs year Social, Health and A general (brief) summary of the Group; Safety (ESHS) environmental and social  information on the First report in performance to the issues to be provided on the overall environmental 2014. EBRD and other website. performance and shareholders. compliance; For every new project that  summary of KPIs covering A general (brief) requires an EIA under Polish energy intensity and summary of law and is subject to Annex 1 carbon emissions for each environmental and to the EIA directive, a Non- subdivision; social issues to be Technical Summary (NTS) to  summary of any areas of provided on the be provided on the Internet. material non-compliance website. with environmental regulations, or material breach of the relevant permit levels;  information on any material fines or other material charges or pending court cases related to ESHS matters;  general information on ESAP implementation;  summary of any material legislative changes related to environmental or social aspects.

19 Information: The EHS report was prepared in 2016. EHS information is included in the report for EBRD and in the account of ESAP implementation. Grupa Azoty also prepared an integrated report for 2015. The report was drawn up in accordance with the G4 Global Reporting Initiative guidelines and was subject to external audits. The GRI report is also available on the Company's website. Non-Technical Summaries concerning new implemented projects requiring an EIA are posted on the Grupa Azoty website. 1.3 Set up a procedure to process Early identification of problems Best practice Operational Ongoing Management reports Set up a complaints and grievances to and public grievances to ensure and compliance costs of on application of the procedure to enable meaningful public timely implementation of with EBRD and information grievance procedure process consultation and information solutions. PR 10 office. complaints and process, in particular with requirements. grievances to regard to historical enable environmental impact (e.g. the meaningful public Wiślinka landfill site in Gdańsk). consultation and The potential environmental information and social risks are treated as a process significant issue requiring much attention. Information: Grupa Azoty S.A. has developed and implemented a procedure for handling complaints and grievances in the form of Internal Order No. 49/2010.

2. Actions required to maintain compliance with EHS requirements of national law and EU environmental standards - GRUPA AZOTY S.A. No. Action Environmental risks, Legislative Requirement Scheduled Target and Comment liabilities/benefits requirements/B /Resources completion - evaluation criteria est practice action to be for implementation completed by progress end of year

20 2.1 Monitoring of environmental Record consumption of raw Legislative Internal Ongoing/ad-hoc Statement of Achieve impacts of all operated materials, fuels and energy, air obligation, best resources and periodic compliance in the environmental production facilities. emissions, water consumption, practice/internal reports annual report impact level in and amounts of generated resources line with the Reference to BAT requirements. waste. Regularly evaluate design, operational efficiency to environmental minimise resource consumption guarantees and and waste generation. standards, identify potential improvements. Submit report to the Bank. Information: The Company records consumption of raw materials, fuels and energy, air emissions, water consumption, and amounts of generated waste. Data describing the scale of environmental impacts is entered in the Plant's Environmental Pollution Data Bank. This IT system is used to prepare Reports for the Marshal Office of Kraków and ad-hoc reports for the Company's internal needs and for external institutions. Furthermore, reports are prepared for the National Database on Emissions of Greenhouse Gases and Other Substances, and the National Pollution Release and Transfer Register. As part of reviews of the integrated (IPPC) permits held by Grupa Azoty S.A., the Company’s compliance with BAT requirements is assessed. In 2016, an assessment was performed to check the conformity of the Company's environmental impacts with the integrated (IPPC) permits held. 2.2 Complete planned investment The Sulfuric Acid Unit is Best practice Internal Ongoing/ad-hoc Provide update on projects, such as the Sulfuric undergoing Legal resources and periodic BAT compliance as Acid Unit modernisation, to modernisation and the requirements reports part of 2015 BAT maintain compliance with BAT. project will help /BAT assessment maintain BAT compliance Information: Modernisation of the Sulfuric Acid Unit was completed in December 2013. The purpose of the project was to achieve improved environmental performance and increased steam output, while ensuring BAT compliance. Capital expenditure on the project totalled PLN 64,646 thousand.

21 2.3 Complete the planned Reduce environmental impact Legislative Investment By 2016/2017 Obtain a relevant modernisation of energy in line with IED requirements requirements, needs permit generation installations to (Annex V of IED). The best ensure compliance post 2016. investment project will include management Update information The action will require a deNOx unit, an FGD unit, and practices, on the project in the application of relevant a more efficient dust Bank's PRs annual report, derogations agreed upon with collector, in connection with selected technology Polish and EU authorities. BAT requirements. and target emission levels. Target emission levels: As part of the energy audit and 3 200 mg/m for SO2 BAT assessment, other carbon Publish NTS of the 200 mg/m3 for NOx reduction measures will be project and provide 20 mg/m3 for PM. considered. copy/web link to the Bank as part of the The Company to provide annual report. information on the derogations and their relevance to the annual report. Information: The projects were undertaken to ensure compliance of the industrial combustion sources with the requirements laid down in the Minister of Environment's Regulation on Emission Standards for Installations of April 22nd 2011 and the Industrial Emissions Directive. The projects involve upgrading of the existing EC-2 CHP infrastructure and bringing it into compliance with the new emission requirements. As a result, the amount of pollutants released into the environment by the combustion sources will be reduced, improving air quality. The flue gas desulfurisation and deNOx units to be constructed at Grupa Azoty S.A. will be co-financed with funds of the Norwegian Financial Mechanism 2009–2014. The budget of the flue gas desulfurisation and dust collection project is PLN 45,400 thousand. Work completed as part of the project included construction of FGD buildings, as well as delivery and assembly of apparatus and equipment. The budget of the flue gas deNOx project is PLN 44,600 thousand. Work completed as part of the project included preparation of detailed plans and specifications, work related to primary and secondary measures, delivery and assembly of apparatus and equipment, as well as C&I and electrical work.

The completion of both projects is planned for 2017. 2.4 Prepare a plan (including Reduce environmental impact Legislative Investment 2015 - 2020 as Obtain integrated Information on . budget) and - if necessary - and ensure compliance with requirements, needs, required by (IPPC) permit and the progress upgrade the wastewater IED requirements. best internal and competent achieve compliance status should be treatment plant to ensure management external authorities provided in long-term compliance with practices, annual reports Polish and EU environmental Bank's PRs starting from standards 2015

22 Information: Grupa Azoty prepared an upgrade plan for its wastewater treatment plant. Possible time of implementation of the project has been defined as 2019- 2020. By 2018, the plan is expected to be updated, for instance by further optimising the scope of work and reflecting any changes in the wastewater composition and volume. 2.5 Prepare a plan (including Reduce environmental impact Legislative Internal 2015 - 2018 Report on soil and budget) and conduct soil and in line with IED requirements. requirements, resources and groundwater groundwater surveys. This will enable an assessment best external condition of baseline conditions and management support identification of potential practices, Bank's impact receptors. PRs Information: In 2015, a Baseline Report was prepared covering the Company's premises, which was submitted in 2016 to the Marshal of the Kraków Province.

PRESIDENT OF THE MANAGEMENT BOARD dr Wojciech Wardacki [signature]

23 ENVIRONMENTAL AND SOCIAL ACTION PLAN

Table 0.1 Wisła Project, Grupa Azoty Poland – Environmental, Social, Health and Safety (ESHS) matters, Updated (Alchemist Project) Action Plan:

GRUPA AZOTY ZAKŁADY AZOTOWE PUŁAWY S.A.

3. Actions required to maintain compliance with EHS requirements of national law and EU environmental standards - GRUPA AZOTY ZAKŁADY AZOTOWE PUŁAWY S.A. No. Action Environmental risks, liabilities/benefits Legislative Requirement Scheduled Target and Comments requirements /Resources completion - evaluation /Best practice action to be criteria for completed by implementation end of year progress 3.1 Complete the planned upgrade Reduce negative environmental impact Legislative Investment 2015 Obtain a relevant of energy generation in line with IED. requirements, needs permit for the installations to ensure best new facility. compliance with Annex V [to As part of BAT assessment and management IED] by 2016, taking into assessment of compliance with energy practices, Update account the derogations management systems, assess further Bank's PRs information on agreed upon with competent carbon reduction options. the project in the authorities (please provide annual report, information on any such selected derogations in the annual technology and report) target emission levels. Target emission levels: 3 200 mg/ni for SO2 Publish NTS of 200 mg/m3for NOx the project and 20 mg/m3 for PM. provide copy/web link to the Bank ZA Puławy has recently as part of the completed the first stage of annual report. the upgrade, achieving the following target emission 3 levels: 200 mg/ni for SO2 and 20 mg/m3 for PM.

24 Information: Desulfurisation of flue gas from the Company's CHP plant using the ammonia-based wet method enables the Company to achieve target flue gas 3 3 parameters, i.e. 200 mg SO2 /Nm and below 20 mg PM/Nm . In December 2015, the second stage of construction of NOx reduction units at boiler 4 and boiler 5 of the CHP plant was completed. The optimisation

work performed using the selective non-catalytic reduction (SNCR) method allowed the Company to reduce NOx emissions from the K4 and K5 boilers to 200 mg/m3 . In accordance with Section IV.2 of the Regulation of the Minister of Environment dated November 4th 2014 (Dz.U.2014 item 1546), three boilers are covered by treaty derogations. 3 Therefore, until December 31st 2017, the maximum permitted NOx emission level for the Company's CHP plant is 435 mg/Nm . At present, the NOx emissions are about 300 mg/Nm3. In the fourth quarter of 2016, a decision was made to build a catalytic flue gas deNOx unit on boiler 2. The ‘Upgrade of OP-215 boiler No. 2 to reduce NOx emissions’ project has already been approved by the Company governing bodies. The upgrade work is to be launched at the end of 2017. 3.2 Complete the planned Reduce negative environmental impact Legislative Investment 2015 - 2019 Obtain a relevant Please provide modernisation of in line with IED; currently, the required requirements, needs as required by permit for the information on WWTP/construction of new quality parameters (with respect to best competent new facility progress status WWTP nitrogen compounds) are achieved only management authorities in the annual through wastewater dilution practices, report Bank's PRs Information: In 2015, efforts were continued to reduce the amount of COD and nitrogen compounds discharged to the Wisła river. In the third quarter, pilot tests were run on wastewater discharged by the Ammonium Nitrate and Nitric Acid Divisions, and in the fourth quarter - on wastewater generated by the water preparation station. Final reports from these tests will be presented to the Company in the first quarter of 2016. – A pilot survey of sludge wastewater treatment using the Actiflo process was carried out at the water preparation station. The tests have shown that application of this technology can deliver very good results in wastewater treatment. Treated wastewater may either be discharged to the receiving body of water or returned for reuse. In September 2016, a team was established to develop comprehensive solutions related to water and wastewater management as well as sludge management at GA ZAP S.A. The team will focus on developing and presenting to the Company's Management Board recommendations of comprehensive solutions related to wastewater management at the Company. An agreement was signed with an external company for development of a technical concept and cost estimate for the management and discharge of all wastewater streams generated at the Company, ensuring that their quality and manner of discharge meet the required standards for wastewater discharged to receiving waters in line with BAT requirements for the chemical sector and other legal regulations. Completion of the team's work and delivery of the wastewater management concept is expected in May 2017.

25 3.3 Prepare a plan (including Reduce negative environmental impact Legislative Internal 2015 Report on soil Soil and budget) and conduct soil and in line with IED requirements. This will requirements, resources and and groundwater groundwater groundwater assessment enable an assessment of baseline best external condition assessment conditions and identification of management support required under

potential impact receptors (both practices, IED. Draft humans and the natural environment). Bank's PRs report completed in 2014 and delivered to the authorities; final approval by the authorities is expected in 2015 Information: In connection with the Company's project to construct a new unit for the production of solid fertilizers based on urea and ammonium sulfate (PULGRAN), in December 2014 an application for a relevant amendment to the Company’s integrated (IPPC) permit was filed with the Marshal Office, together with the baseline report on the state of soil, ground and groundwater contamination, as required by law. On April 8th 2015, an amended integrated (IPPC) permit was received – Decision No. PZ 7/2015 Ref. No. RŚ-V.7222.46.2014.ILU.

3.4 Review data on nitrate This will facilitate proper assessment of Best practice Internal 2015 Submit report Reduction of pollution of the forested areas potential issues associated with historical resources nitrate in the vicinity of the plant. off-site nitrate contamination. concentration Summarise this in a report in groundwater assessing historical, current has been and future impacts and recorded determining whether the existing monitoring system is appropriate. Information: Appendix - Report on historical impact of the Company's emissions, remedial measures and current monitoring was submitted in February 2016.

Appendix to Section 3.4 of ESAP

Report on historical impact of the Company's emissions, remedial measures and current monitoring.

The construction of Zakłady Azotowe Puławy of Puławy began in the early 1960s, while ammonia and urea production was launched in mid 1966. Initial

26 plans assumed that the new facility would only manufacture ammonia-based urea and the environmental impact assessment was substantially conducted on that assumption. The assessment was positive and, admittedly, was consistent with the requirements of the then applicable environmental protection laws. However, already during the construction phase, the production profile of the future facility was modified, as the so-called Puławy II project, including an ammonium nitrate plant, was approved. Zakłady Azotowe Puławy was built based on state-of-the-art technological solutions and equipment, aiming for waste-free, safe and environmentally- beneficial processes, as it was assumed that minor emissions of fertilizer dust to the environment would benefit field, meadow and tree yields. The first disturbing symptoms of forest damage coincided with the commissioning of the Urea Plant. Once the Ammonium Nitrate Plant was placed in service, the intensity of tree degradation started to increase at an alarming rate. Whole forest sections showed clear signs of dieback, starting from the site fencing towards the north-east (along the prevailing wind rose). The strongest negative environmental impact was recorded in 1969–1971, during the commissioning of Puławy II and the second stage of Puławy I. During that time, roughly 600 ha of pine forest was destroyed and 2,000 ha was damaged. The specific and seemingly closed production profile presented an opportunity to solve the environmental issues of Puławy. But the construction of yet another plant, the Caprolactam Unit with a large Sulfuric Acid and Oleum Facility, and the related expansion of the on-site CHP Plant to include new boilers, created new sources of pollutant emissions. Towards the end of the 1970s, environmental activists became increasingly vocal, actively and effectively presenting social sentiments and views on Poland’s environmental protection issues. Zakłady Azotowe Puławy was the first company in the Polish chemical sector to start analysing its impact on the environment. Compiled at the beginning of the 1980s by experts and environmentalists, the ‘Report of the state of the natural environment within the impact area of Zakłady Azotowe Puławy of Puławy’ assessed the state of the natural environment in the main spheres – air, water, soil, flora and health of people living in the area of Puławy. Zakłady Azotowe Puławy was not equipped to conduct monitoring and tests of the natural environment. As plant life degradation, particularly of high greenery, became apparent, the Institute of Soil Science and Plant Cultivation of Puławy, the Forest Research Institute of Warsaw and Biuro Projektów Ochrony Atmosfery Proat of Szczecin were engaged to investigate the causes of that phenomenon. The Institute of Soil Science and Plant Cultivation measured the ambient concentration of pollutants in selected fixed locations and commenced phytometric tests which consisted in placing various types of model soils in a dozen or so locations with varying concentration of industrial pollutants. Additionally, lysimeter tests were conducted, involving automatic irrigation and microfield experiments in the area exhibiting the highest level of contamination with nitrogen compounds. Over the course of studies lasting several years, it was established that excessive nitrogen compound emissions was the cause of increasing acidity of sandy soils with a low sorption capacity. Furthermore, it was demonstrated that nitrophilous plants could be used to restore vegetation within the dead forest area. The growth patterns and yields of a number of crop plants, including vegetables, herbs and flowers, were studied, as was the nutritional and hygienic value of plants cultivated in the area of strong pollutant impact. Next, the Institute of Soil Science and Plant Cultivation started cultivating canopy crops within the deforested area adjacent to the site fence. The experimental fields were appropriately deacidified and fertilized, and were regularly sprinkled. These small fields yielded good crops of cereals, grasses, vegetables and root crops. The results of the tests informed the ‘Programme of restoration and agricultural development of the unwooded area’, which was submitted to the Ministries of Agriculture, Forestry and Wood Industry, Chemical Industry, Local Economy and Environmental Protection. The relevant ministers and the Lublin Province Governor accepted it as an interministerial action plan for the restoration and development of land within the negative impact area of Zakłady Azotowe Puławy. The Minister of Agriculture established the Experimentation and Implementation Institute for Restoration of Devastated Land in Puławy. The purpose of creating a ‘biological, green filter’ of nitrophilous crops around Zakłady Azotowe Puławy was to bring down the content of nitrogen compounds in the environment. In 1968, the Forestry Research Institute commenced experimental work in the surrounding area of Zakłady Azotowe Puławy. In 1968–1983, it conducted an array of tests in the forest areas near Zakłady Azotowe Puławy to identify: - the impact of pollutant emissions on individual species of plants, forest damage zones and changes in forest vegetation community; - the impact of air pollution on the soil environment, accumulation of nitrogen in tree needles, bark and wood; - the relative resistance of various species of trees and shrubs to emitted pollutants; - coniferous and deciduous tree and shrub pests occurring in weakened communities; - the intensity and directions of soil zoocenosis changes, as well as possible measures to restore the forest. 27 The work was carried out on experimental plots in various areas of degradation within 2 km from Zakłady Azotowe Puławy's fence. Roughly 40 species of trees and shrubs were analysed. The tests conducted by the Forestry Research Institute over the span of more than 10 years confirmed that the destruction of floral and soil communities was caused by the emissions of airborne nitrogen compounds. The volume of pollutants emitted by Zakłady Azotowe Puławy was determined by measuring their emissions. These tests were conducted by Biuro Projektów PROAT of Szczecin and the Fertilizer Research Institute of Puławy. Pollutant emission measurements in fixed locations were performed until the mid 1970s by the Institute of Soil Science and Plant Cultivation of Puławy. By determining the concentration of such pollutants as sulfur dioxide, nitrogen oxides, ammonia, hydrocarbons, carbon oxide and particulate matter, it was possible to establish the level of air contamination within the Zakłady Azotowe Puławy protected zone and its surroundings. The observations and tests performed by these institutions demonstrated the need to diminish the impact of Zakłady Azotowe Puławy on the environment. A schedule of necessary objectives related to environmental protection was established. Prepared in 1985 and then expanded to include further objectives, the schedule became a comprehensive Programme of objectives related to environmental protection at Zakłady Azotowe Puławy S.A. for 1985–2000. For the first time it was recognised as a priority, and was consistently and systematically implemented with a great economic effort, particularly in terms of investment projects. The Programme was designed to radically reduce pollutant emissions. In 1985–1998, some PLN 350m was allocated to its implementation. Since 1985, Grupa Azoty Zakłady Azotowe Puławy S.A. has operated based on solid and reliable foundations of sustainable development such as:  Economic effectiveness – oriented towards benefiting the community, taking into account social and environmental costs;  Care for the natural environment – assuming, apart from protection of natural resources, consistent mitigation of the environmental impact and involvement in promoting transparency and environmental education through such initiatives as the Responsible Care;  Social balance – achieved through active efforts towards improving the quality of life of the local community, engagement in its cultural and educational life. Through such policy, the Company seeks to reconcile the need to deliver financial performance with deep care for the social and natural environment. One vital element of this approach is the international Responsible Care Programme, implemented since December 1995. It is an expression of the Company's deep voluntary commitment to effectively pursuing the principles of environmental ethics, improving the working conditions and plant safety, and maintaining ongoing dialogue with its external stakeholders. The implementation of Responsible Care plays an important role in raising the environmental awareness of shared responsibility for the natural environment. On a daily basis, Responsible Care entails conducting the business based on solid and reliable foundations of sustainable development such as: protection of natural resources, consistent mitigation of environmental impact, economic effectiveness, improving the quality of life of local communities and increasing efforts to promote environmental education. Towards this end, the Company maintains dialogue with its employees, the local community and business partners to learn as much as possible about each other's needs. The Company is managed in accordance with the Integrated Management System comprising:  the Quality Management System;  the Environmental Management System;  the Occupational Health and Safety Management System;  the Integrated Quality, Environment and Safety Management System. ENVIRONMENTAL EFFECTS Grupa Azoty Zakłady Azotowe Puławy S.A. is strongly focused on environmental protection. Given the implementation of pro-environmental projects, ongoing monitoring of the natural environment and genuine care for the diverse fauna and flora in the region, the Company has come to be perceived as a business that harmoniously co-exists with the environment. AIR POLLUTION CONTROL Examples of investment projects related to air pollution control completed in 1985–2014:

28  Decommissioning of the old and building of a new urea unit. Environmental effect: reduction of ammonia emissions by 90% and reduction of the amount of coal burned in the on-site CHP pplant by 120,000 tonnes/year (with resulting reduction of fly ash, nitrogen oxides and sulfur dioxide emissions).  Construction of a unit improving the absorption of nitrogen oxides on line 4 of the nitric acid production facility, thus reducing their emissions by approximately 50%. Construction of a catalytic NOx reduction unit on three nitric acid lines, achieving a 93.7% reduction in nitrogen oxides.  Construction of a new unit for the recovery of sulfur compounds present in outlet gases from the Sulfuric Acid Unit. Reduction of sulfur dioxide and trioxide emissions, and sulfuric acid mist by over 98%.  Upgrade of boilers at the on-site CHP plant to use low-temperature swirling coal combustion technology. This reduced the emissions of nitrogen oxides by about 60%.  Introduction of ongoing monitoring of emissions of gaseous pollutants and particulate matter from the on-site CHP plant.  Construction of a unit to use waste heat in the Benfield section at the Ammonia Plant for municipal heating, enabling a reduction of the amount of coal burned at the CHP plant by some 30,000 tonnes/year, and thus reduce emissions of fly ash, nitrogen oxides and sulfur dioxide.  Construction of a unit for transmission of waste gases from the Cyclohexanone Unit for combustion at the on-site CHP plant (carbon oxide and hydrocarbons).  Construction of a unit for catalytic reduction of nitrate oxides from the Hydroxylamine Unit.  Upgrade of electrostatic precipitators of four boilers at the on-site CHP plant. Measurements of the electrostatic precipitators efficiency for the individual boilers demonstrated an average dust collection rate of 99.93%. The average dust content in flue gases is 19.0 mg/Nm3 with a guaranteed content of 50 mg/Nm3.  Implementation of a project to reduce nitrous oxide emissions on four lines of the Nitric Acid Unit, achieving a reduction of approximately 85%.  Alteration of steam generator no. 2 to bring it into compliance with applicable emission standards.  Commissioning of a selective catalytic reduction (SCR) unit on line 4. The project reduced the emissions of nitric oxides from line 4 by some 86 Mg/year.  Implementation of a project involving desulfurisation of flue gases from the CHP plant using the ammonia method. The commercial product of this unit is a crystalline fertilizer – ammonium sulfate in the amount of roughly 30,000 tonnes/year. As a result of the project, the concentration of SO2 was reduced from 3,000 mg/m3 to ca. 200 mg/m3.  Implementation of a project consisting in NOx removal from flue gases from the CHP plant at boilers no. 4 and 5 using the selective non-catalytic reduction (SNCR) method. The project helped reduce NOx emissions from 350 mg/Nm3 to levels below 200 mg/Nm3. By 2014 (compared with 1985), Grupa Azoty Zakłady Azotowe Puławy S.A. reduced emissions of:  dust from fuel combustion by ca. 98%,  nitrate dust by ca. 85%,  urea dust by ca. 75%,  ammonia by ca. 83%,  nitric oxides by ca. 69%,  sulfur dioxide by ca. 64%.

29 Emisja zanieczyszczeń z Grupy Azoty Zakładów Azotowych „Puławy” S.A. w latach 1985- Pollutant emissions from Grupa Azoty Zakłady Azotowe Puławy S.A. in 1985–2014 [%] 2014 [%] Pyl ze spalania paliw Dust from fuel combustion Amoniak Ammonia Pył saletry Nitrate dust Tlenki azotu Nitrogen oxides Pył mocznika Urea dust Dwutlenek siarki Sulfur dioxide

WATER PROTECTION Examples of completed investment projects related to water protection:  Construction of a water intake point drawing water for industrial purposes from the Kurówka river, thus reducing the withdrawal of groundwater by approximately 50% by substituting it with surface water.  Implementation of an improvement project consisting in partial recirculation of spent cooling water for reuse, thus reducing withdrawal from the Wisła river by approx. 20-30%.  Implementation of an improvement project at the Urea Plant consisting in recirculation of wastewater from the urea crystallisation and granulation systems to the production process. The project reduced the volume of urea discharged into the sewage system by approx. 70%.  Construction of a wastewater hydrolysis unit to recover and recirculate ammonia to production processes.  Construction of a unit to reduce the amount of nitrogen compounds discharged into the sewage system from the Ammonium Nitrate Unit.  Construction of three local treatment plants for sanitary wastewater from the Urea Unit.  Renovation of the blackwater sewage system.  Commissioning of Melamine Recovery Unit to treat process condensates from Melamine Plants II and III.  Partial renovation of the industrial sewage system to eliminate potential leakage to the environment.  Reduction of surface water withdrawal from the Kurkówka river by: - using condensate from the Melamine Plant to produce out-gassed condensate in the power distribution unit; - modernising the ion exchange unit through full replacement of the ion exchange compound to improve efficiency.

30  Upgrade of the unit for CO2 absorption in potassium carbonate solutions, achieving an improvement in its energy efficiency, potential to increase output, reduction of the amount of condensate discharged into the sewage system and elimination of hazards in the operation of 150 K2 absorber.  Separation and utilisation of ammonia from water/oil contaminations on the nitrate unit, thus reducing the amount of ammonia discharged into the sewage system.  Commissioning of a modern water demineralisation unit, enabling reduction in withdrawal of raw water (well water and water from the Kurówka river) for the station’s own needs by approximately 90%, thus reducing the amount of wastewater discharged into the environment.  Modernisation of the Biological Blackwater Treatment Plant by changing the wastewater aeration method in biological ditches of the Blackwater Treatment Plant, achieving an improvement in its operation by introducing ongoing supervision of the concentration of oxygen in activated sludge and decreasing the consumption of electricity by installing current frequency converters to control Kessener brush drive units.  Completion of upgrade of the P1, P2, P3 pump system of filters and solution piping on line 3 of the Ammonium Nitrate Unit, achieving a reduction in the volume of discharged wastewater, improvement in the continuity of operation as well as in working conditions.  Implementation of a project to install an ammonium ion analyser at the outlet of the rainwater drainage system to the discharge channel. This enabled the introduction of continuous monitoring of the concentration of ammoniacal nitrogen in the stream of spent cooling water and rainwater at the outlet to the discharge channel.  Modernisation of the recirculation system for waters assumed pure at the CHP plant contributing to reduced consumption of surface waters by the Company. By 2014 (compared with 1985), Grupa Azoty Zakłady Azotowe Puławy S.A. achieved the following reductions in the volume of wastewater discharged: • ammoniacal nitrogen by 29%, • organic nitrogen by 93%, • BOD by 83%, • COD by 74%, chlorides by 25%, • sulfates by 76%, water withdrawal: • groundwater withdrawal by ca. 68%, • surface water withdrawal by ca. 32%.

Ładunki ściekowe odprowadzane przez Grupę Azoty Zakłady Azotowe „Puławy” S.A. w Wastewater discharged by Grupa Azoty Zakłady Azotowe Puławy S.A. in 1985–2014 [%]

31 latach 1985-2014 [%] Azot organiczny Organic nitrogen ChZT COD Azot amonowy Ammoniacal nitrogen Azot azotanowy Nitrate nitrogen

RESTORATION OF LAND DAMAGED BY THE COMPANY'S OPERATION Notable efforts in this respect: . Agroforestry restoration efforts on land owned by Zakłady Azotowe Puławy S.A. Thinning, snag removal and introduction of undergrowth in forests. Areas deforested by 2011 were gradually afforested (ca. 3 ha annually). The rooting rate of new plantings is approximately 90%. . On December 14th 1999, Zakłady Azotowe Puławy S.A. acquired the Experimentation and Implementation Institute for Restoration of Devastated Land situated within its premises from the Institute of Soil Science and Plant Cultivation of Puławy for the purpose of its afforestation. . Tests were run to assess the state of the environment of forest soils and changes which occurred in that environment due to decreased emissions of pollutants by the Company. Observations of pine, oak and birch trees were conducted on the established experimental plots, contributing to the restoration of forest functions of areas adjacent to the Company premises. A green belt was created by planting seedlings of Robinia pseudoacacia, Acacia and pine, which offer additional protection against pollutants and soil erosion. . Regular greenery maintenance work on Company premises (lawns, shrubs and ornamental trees). Pro-environmental projects carried out in 1985–2014 led to a significant improvement in the quality of groundwater and soils. Quality of groundwater Water from groundwater intake points at the Company is used in systems that require high-quality water and for human needs, i.e. feeding the water demineralisation station and drinking water treatment plant. Groundwater is withdrawn from 21 wells with depths ranging from 30 m to 60 m (including 2 wells for drinking water and one that can be used for industrial purposes and drinking water). The wells are grouped in the following intake structures: • "old" intake complex: located along the road running in parallel to the eastern fence of the site. The intake currently comprises nine wells (designated according to the in- house classification as no. 1D, 2C, 3C, 5C, 6D, 7D, 8B, 9C and 10 C). • "emergency" intake complex: currently comprises five wells located in parallel to the old intake complex, approx. 300 m to the east, designated according to the in-house classification as no. IIA, IIIA, IVB, VA, and VIB. • "new" intake complex: comprises six wells located by the south-east boundary of the Company premises, designated as no. VIIC, VIII, XB, XIB, XIIIB and XVIB. Formal and legal requirements to conduct monitoring of waters apply primarily to the assessment of their quality in relation to their planned further use, for instance for drinking, fish farming or as bathing sites. In this case, only requirements related to monitoring waters used for drinking purposes could be taken into account. However, these do not apply to the withdrawal of water, but to a separate issue – the quality of treated water (in the drinking water system and respective water withdrawal points) and are provided for in the Act on the Collective Supply of Water and Collective Discharge of Wastewater of June 7th 2001 (consolidated text: Dz. U. of 2006, No. 123, item 858, as amended) and its secondary legislation. The scope of analyses of withdrawn waters performed by Grupa Azoty Puławy allows it to assess the specific conditions for the use of groundwater defined in the hydrogeological documentation and to assess the water consumption volumes proposed in the relevant application and their fitness for the purposes indicated in the permit. All tasks related to the manufacturing of the Company's products are carried out inside production halls or units residing on tight plates. To intercept any effluents they generate (originating from spillage of raw materials, washing of floors, equipment, etc.), these facilities were sewered and connected to

32 the plant sewage system. Vehicles travel on sewered hard-surfaced traffic routes with a run-off system connected to Grupa Azoty Zakłady Azotowe Puławy S.A.'s wastewater management system. The nature of operations carried out at the respective facilities was taken into account in the construction of the sewage systems (selection of materials). Due to the fact that some of the sewage systems have been in use for a long period of time, their condition is regularly inspected. If their condition is unsatisfactory, selected sections of the system undergo maintenance work. Work conducted on the sewage system in recent years:

• 2004: overhaul of industrial sewage system DN 500 mm road 4 – 207 m; • 2004: overhaul of rainwater drainage system DN 600 mm road B – 27 m; • 2004: overhaul of sanitary sewage system DN 200 mm road B – 277 m; • 2005: overhaul of sanitary sewage system DN 200 mm roads E and 2 – 423 m; • 2005: overhaul of sanitary sewage system DN 200 mm from gate no. 1 to cafeteria building – 116 m; • 2006: overhaul of industrial sewage system DN 300 mm road G – 104 m; • 2007: overhaul of rainwater drainage system DN 1,100 mm road 3 – 151 m; • 2008: overhaul of industrial sewage system DN 300 mm road 3 – 310 m; • 2009: overhaul of industrial sewage system DN 500 and 300 mm road D – 117 m; • 2012: overhaul of rainwater drainage system DN 900 mm road B – 87 m. These overhauls significantly minimised the site’s potential impact on groundwater quality and, accordingly, on the environmental objectives applicable to groundwater, in terms of both quality and volume. From 2004, regular maintenance work was conducted on the yards, plates and internal sewage network at the Urea and Melamine Plant. It involved modernisation and tightening of the industrial sewage and rainwater drainage systems. The work covered some 100 m of the sewage system and approx. 2,000 m2 of repaired yards and plates. As an open channel is used to discharge the combined stream of industrial wastewater, in 2014 the tightness of its bottom was assessed. The tests conducted as part of the analysis showed: • that wastewater running through the discharge channel cannot infiltrate to the aquifer due to heavy colmatage of the channel trough, • a considerable degree of colmatage of the channel's walls and bottom with sediments contained in the wastewater, • no impact of wastewater running through the channel on groundwater quality (based on water chemism tests). Quality of soil and ground The soils surrounding the Company grounds are rusty podzols and podzols with poor buffering properties with the granulometric composition of loose sands in the mineral layer, with the occurrence of sandy soils in the surface layer. Excessive amounts of ammoniacal nitrogen and nitrate nitrogen contaminated the soils in areas adjacent to the Company. Since 1973, environmental monitoring has been conducted on the air contaminants migration line to assess the Company’s impact on soils surrounding the site.

The monitoring involves analyses of: pHH2O; pHKcl, soluble forms of N-NH4, N-NO3, P-PO4, Ca, Mg, K, S-SO4, Na and current humidity. The soil monitoring points are located at a distance of 0.2 km and 1.4 km north-east from the Company grounds. The progressive reduction of emissions since 1990 has contributed to the emergence of pioneering trees and plants (birches, pines, heather) in the ecosystem. Soil testing (up to a depth of 400 cm) for the content of elements absorbable by plants attested to a clear reduction in the content of mineral forms of nitrogen across all levels of the soil profile. The most evident reduction relates to the content of ammoniacal nitrogen in the surface layers of soils at a site 0.2 km away from the Company premises. The site showed an over twenty-fold decrease in the NNH4 content compared with peak values from 1982 and an eighteen-fold reduction compared with the average from 1973–1982. The content of nitrate nitrogen has also been reduced significantly (ca. five times). Tests have shown that the state of soils in areas adjacent to the Company is improving. Monitoring of pollutant emissions into the air and groundwater Monitoring of air emissions 33 The scope and method of monitoring applicable to air pollution control are determined as follows: - monitoring of air emissions from the coal combustion units at the CHP plant of Zakłady Azotowe Puławy S.A. must be conducted in accordance with the scope set out in the Regulation of the Minister of Environment dated November 4th 2008 on the requirements with respect to measurement of emission volumes (Dz. U. No. 206, item 1291) based on continuous measurements of the emission volumes of: total dust, carbon oxide, sulfur dioxide, nitrogen oxides in nitrogen dioxide equivalent, oxygen in flue gases and carbon dioxide, in the emission-source of the CHP plant. - monitoring of air emissions from emission-sources of production plants is based on periodic measurements of the emissions of: total dust, sulfur dioxide, nitrogen oxides in nitrogen dioxide equivalent performed twice a year (one measurement in winter season, i.e. October–March, and one in summer season, i.e. April–September). - monitoring of ambient concentrations is conducted at eight sites located around the Company premises based on measurements of ammonia, sulfur oxides and nitrogen oxides. The emission measurement methodology is consistent with reference methods. Monitoring of withdrawn groundwater

• measurement of the volumes of withdrawn groundwater – performed once a day. • measurement of the amount of water used in the respective units Water consumption volume is measured using a system of flow meters installed at particular water recipients. The results are transmitted to the plant supervisory control and data acquisition system (SCADA). • measurements of the efficiency and ordinates of the dynamic water table in operational groundwater intake wells and the static water table in decommissioned representative wells enable the unequivocal determination of the reach of the cone of depression: – performed once a quarter. • measurement of the quality of groundwater withdrawn (in operational wells) for drinking purposes with respect to: – pH, iron, ammoniacal nitrogen, nitrate nitrogen and nitrite nitrogen, total hardness, – performed once a month. • measurement of the quality of groundwater withdrawn (in operational wells) for industrial purposes with respect to: – pH, alkalinity, sulfates, iron, ammoniacal nitrogen, nitrate nitrogen, chlorides, total hardness, – once a quarter. The monitoring is conducted in accordance with the scope defined in the applicable integrated (IPPC) permit. A comprehensive inspection conducted in 2015 by the Provincial Environmental Protection Inspection Authority with regard to compliance with environmental protection requirements by operators of facilities requiring an integrated (IPPC) permit, compliance with the provisions concerning chemical substances and their mixtures, and prevention of major industrial accidents did not identify any irregularities. No post-inspection recommendations were issued.

VICE PRESIDENT OF THE MANAGEMENT BOARD Andrzej Skwarek [signature]

34 ENVIRONMENTAL AND SOCIAL ACTION PLAN

Table 0.1 Wisła Project, Grupa Azoty Poland – Environmental, Social, Health and Safety (ESHS) matters, Updated (Alchemist Project) Action Plan:

GRUPA AZOTY ZAKŁADY AZOTOWE KĘDZIERZYN S.A. Appendix to Section 3 of the Report

4. Actions required to maintain compliance with EHS requirements of national law and EU environmental standards - Zakłady Azotowe Kędzierzyn No. Action Environmental risks, liabilities/benefits Legislative Requirement Scheduled Target and Comments requirements/B /Resources completion - evaluation criteria est practice action to be for implementation completed by end progress of year 4.1 Complete the planned Reduce negative environmental impact in Legislative Investment 2015/16 Obtain a relevant construction of energy generation line with IED. requirements, needs permit for the new installations to ensure compliance best facility with IED post 2016, taking into The Company is planning to install new coal- management account the derogations agreed fired boilers to replace old units. Any new practices, Bank's Update information upon with competent authorities. units must comply with IED. PRs on the project in the annual report, Target emission levels: selected technology 3 200 mg/m for SO2 and target emission 200 mg/m3 for NOx levels. 20 mg/m3 for PM Publish NTS of the project and provide copy/web link to the Bank as part of the annual report.

35 Information: The new CHP plant construction project is ongoing. A number of milestones have been scheduled for the project, including: 2014–2016: execution of milestone 1, i.e. construction of a coal-fired boiler house with a capacity of 140 Mg/h, installation of a 25 MWe pass-out and condensing turbine, and construction of a control centre building, 2017−2021: execution of milestone 2 of the CHP project, as per the 2013 Feasibility Study, involving the construction of a second coal-fired boiler with a capacity of 140 Mg/h and a gas and oil-fired boiler house with a capacity of 2 x 70 mg/h. The following elements were completed in 2016:

 construction of external walls of the buildings,  delivery of a step-up transformer,  installation of a stack,  preparation of working plans and specifications,  delivery of a cooling system: cooling tower and cooling water pumping station,  delivery of flue gas desulfurisation and NOx reduction units,  completion of boiler installation – pressure testing of the entire boiler,  completion of installation of flue gas NOx reduction and desulfurisation units,  completion of Facility assembly and launch of start-up work,  synchronisation of the turbine generator set with the power grid.

4.2 Complete restoration of the old Reduce negative environmental impact Legal Internal Ongoing waste landfill site and continue requirements/b resources monitoring of waste landfilling est management and external conditions. practice support

Information: In accordance with the schedule, in 2016 restoration work was completed on the sewage sludge landfill site at the Central Mechanical and Biological Wastewater Treatment Plant (scheduled for 2014−2016). All landfill sites within Grupa Azoty ZAK S.A. premises, including inactive and restored sites, are monitored to ensure compliance with permits held.

4.3 Prepare a plan and potential Reduce negative environmental impact Best Internal Action plan and Prepare a plan and budget for removal of management resources potential budget to potential budget for redundant/not operated practice and external be decided in 2013 removal of installations/buildings and support and updated in redundant/not structures 2016 operated installations/buildings and structures

36 Information: Grupa Azoty Zakłady Azotowe Kędzierzyn S.A. has a RESTRUCTURING PROGRAMME in place, approved by the Management Board’s resolution in April 2010. It includes demolition of redundant buildings and structures in 2010-2018. The required funds are allocated in each year's budget. Expenditure incurred in 2016 on demolition of disused facilities comprises: - expenditure on demolition - PLN 2,052,111.21, - pre-demolition expenditure (site clearance, disconnection of utilities, etc.): PLN 54,394.60. Total expenditure: PLN 2,106,505.81

PLANT SAFETY DEPARTMENT President of the Management Board Director CEO Witold Rusak Mateusz Gramza [signature] [signature]

37 ENVIRONMENTAL AND SOCIAL ACTION PLAN

Table 0.1 Wisła Project, Grupa Azoty Poland – Environmental, Social, Health and Safety (ESHS) matters, Updated (Alchemist Project) Action Plan:

GRUPA AZOTY ZAKŁADY CHEMICZNE POLICE S.A.

5. Actions required to maintain compliance with EHS requirements of national law and EU environmental standards − GRUPA AZOTY ZAKŁADY CHEMICZNE POLICE S.A.

No. Action Environmental risks, liabilities/benefits Legislative Requireme Scheduled Target and Comment requirements nt/Resourc completion - evaluation /Best practice es action to be criteria for completed by implementation end of year progress 5.1 Complete the planned Reduce negative environmental impact Legislative Investment 2018 Obtain a relevant Provide update modernisation of energy in line with IED. requirement needs permit for the in the 2017 generation installations to s, best new facilities annual report. ensure compliance with Asses further methods of reducing managemen Annex V to IED. energy intensity and carbon emissions t practices, Update from energy installations as part of the Bank's PRs information on Target emission levels: project and future BAT assessment. the project in the 3 200 mg/m for SO2 annual report, 200 mg/m3 for NOx selected 20 mg/m3 for PM technology and target emission levels.

Publish NTS of the project and provide copy/web link to the Bank as part of the annual report.

38 Information: As part of the project, OP-230 boilers no. 1 and 2 were revamped. A deNOx system was installed on both boilers and put in operation, with NOx emissions now below 200 mg/m3 over the entire load range. Installation of a flue gas desulfurisation and dust collection system is currently under way. Technical documentation has been prepared, equipment and fittings have been delivered; an absorber has been fabricated; work is currently under way to construct a building accommodating a dewatering station, and a control room and patch panel building; a switchgear building has been constructed; work is under way to install flue gas ducts; installation of glass-reinforced plastic tanks and an emergency discharge steel tank has been completed; work commenced on the construction of remaining steel tanks and; work on electrical systems, I&C and the distributed control system (DCS) has started. Due to considerable delays in the project, ZRE Katowice S.A. was appointed new Project Manager, who set the project completion deadline for Q4 2018. A total of approximately PLN 189m was spent on the project from its launch until the end of January 2017.

5.2 Monitor environmental Reduce negative environmental impact Legislative Own Ongoing Summary of the impacts of landfill sites and of landfill sites. Develop long-term requirements, resources action plan in the continue planned technical action to further monitor and reduce best and annual report development. impact of the landfill site as part of BAT management investments assessment in 2015. practices, Bank's PRs Information: The environmental impact of the landfill sites (Section 5.2) was monitored in accordance with the decision of the Marshal of the Szczecin Province, approving the iron sulfate landfill site operating instruction (Ref. No. WOŚ.II.7241.62.2.2013.BK, dated January 9th 2014), and the decision of the Marshal of the Szczecin Province, approving the phosphogypsum landfill site operating instruction (No. WOŚ.II.7241.5.2.2015.AM, dated December 15th 2015).

5.3 Complete modernisation of Reduce negative environmental impact of Legislative Internal Completed on Summary in the heating oil storage depot - the HFO (heavy fuel oil) storage areas. requirements, funds August 29th 2014 annual report execution stage HFO storage must be modernised. best management practices, Bank's PRs Information: The following work was completed: installation of oil-tight bunds for F3 and F4 storage tanks (light fuel oil), installation of oil-tight bunds for F5 and F6 storage tanks (heavy fuel oil), construction of stormwater drainage system, installation of I&C system for measuring oil levels in the tanks, as well as testing of tank truck earthing continuity during oil unloading. The project was completed. Expenditure incurred: PLN 1,355,850.

39 5.4 Prepare a plan (including Reduce negative environmental impact in Legislative Internal 2015 Report on soil and budget) and conduct soil and line with IED. requirements, resources groundwater groundwater assessment. best and condition management external practices, support Bank's PRs Information:

The Company regularly assesses the risk of soil, ground and groundwater contamination with hazardous substances from the Company's units and installations (in compliance with the integrated permit granted by decision of the Marshal of the Szczecin Province No. WOŚ.II.7222.13.9.2013.MG, as amended, dated January 9th 2014). The assessment takes into account actions, procedures and measures taken to prevent contaminants from entering the ground. The ‘Assessment of the risk of soil, ground and groundwater contamination’ is performed in line with Scheme No. SP-O-P06-01, using dedicated software. The related monitoring covers procedures aimed at removing the consequences of incidents and preventive measures taken to minimise the risk of occurrence of similar incidents in the future.

PRESIDENT OF THE MANAGEMENT BOARD dr Wojciech Wardacki [signature]

40 ENVIRONMENTAL AND SOCIAL ACTION PLAN

Table 0.1 Wisła Project, Grupa Azoty Poland – Environmental, Social, Health and Safety (ESHS) matters, Updated (Alchemist Project) Action Plan:

ZAKŁADY AZOTOWE CHORZÓW S.A.

6. Actions required to maintain compliance with EHS requirements of national law and EU environmental standards – ZAKŁADY AZOTOWE CHORZÓW S.A. No. Action Environmental risks, liabilities/benefits Legislative Requirement Scheduled Target and Comments requirements/B /Resources completion - evaluation criteria est practice action to be for implementation completed by end progress of year 6.1 Prepare a plan (including Reduce negative environmental impact in Legislative Internal 2015−2016 Summary of An analysis was budget) and conduct soil and line with IED requirements, resources completed actions carried out of surface water assessment. best and external in the 2016 annual potential soil, management support report. ground or practices, groundwater Bank's PRs contamination with hazardous substances from the facility for processing industrial-grade animal fats and vegetable oils into distilled fatty acids and stearin Information: No action was undertaken in 2016. No expenditure was made in 2016. 6.2 Prepare a modernisation plan for Reduce negative environmental impact in Legislative Investment 2015−2016 Update in the WWTP, prepare design and line with IED; currently, the required quality requirements, needs annual report. implement the plan to ensure parameters are achieved partly through best Obtain IED permit compliance with IED. wastewater dilution management and ensure practices, compliance post Bank's PRs 2016

41 Information: The modernised wastewater treatment plant was placed in service on June 30th 2014. Total capital expenditure was PLN 2,536,210.

Vice President of the Management Board Stanisław Biskup [signature]

42 ENVIRONMENTAL AND SOCIAL ACTION PLAN

Table 0.1 Wisła Project, Grupa Azoty Poland – Environmental, Social, Health and Safety (ESHS) matters, Updated (Alchemist Project) Action Plan:

GNZF FOSFORY Sp. z o.o. 7. Actions required to maintain compliance with EHS requirements of national law and EU environmental standards − GZNF Fosfory No. Action Environmental risks, liabilities/benefits Legislative Requireme Scheduled Target and Comment requirements nt/Resourc completion - evaluation /Best practice es action to be criteria for completed by implementation end of year progress 7.1 Complete environmental risk Reduce negative environmental impact in Legislative Internal End of 2013 - Risk assessment assessment for groundwater line with IED and the Bank's PRs. requirements, resources prepare the and action plan. from historical landfill site. best and action plan and The landfill site is situated in a sensitive management external preliminary Summary of both Based on risk assessment and location, which could result in practices, support budget. in the annual surveys, develop a plan for contamination of deeper water reservoirs Bank's PRs EU report. long-term monitoring and used by the Town. Environmental Contingent actions to reduce the risk of Liability liabilities/provisi contaminating groundwater and A comprehensive risk assessment must be Directive (ELD) ons in annual water reservoirs. performed, and investment projects must financial reduce impacts. General site restoration is statements by Budget for the actions needs to needed and a landfill site management 2013. be developed. system must be put in place. Risk assessment by 2016.

43 Note 1. The phosphogypsum landfill site in Wiślinka has been closed since December 31st 2009. The landfill site was closed pursuant to the Marshal of the s to Gdańsk Province's decision, and the process was carried out in accordance with closure plans providing for mechanised land restoration and in 7.1 accordance with a bioremediation plan. The closure was supervised by authorised technical experts and employees of the environmental protection department of the Marshal Office of the Gdańsk Province. The closed landfill site is supervised by environmental protection authorities and monitored on a continuous basis in accordance with applicable laws. 2. IED requirements do not apply to the phosphogypsum site in Wiślinka, which was closed pursuant to the Marshal of the Gdańsk Province's decision. It has a closed site status, no new waste is received, and the site is subject to monitoring. 3. In April 2014, an environmental review of the closed phosphogypsum landfill site in Wiślinka was submitted to the Marshal Office and the Provincial Inspectorate for Environmental Protection (WIOŚ) of Gdańsk. According to the review, the impact of the landfill site on the environment is not significant. 4. Since August 2014, pursuant to the decision of August 1st 2014 (Ref. No. DROŚ-SO.722.45.2013/2014.BA) granting an integrated (IPPC) permit to the Company, leachate from the retention reservoir has been transferred to GZNF for recovery. 40,521 Mg of leachate had undergone recovery by

the end of 2016, and thus approximately 278 Mg of phosphorus in P 2O5 equivalent had been removed from the landfill site. Under the permit, up to 24,000 m3 of leachate may be transferred annually. The transfer and recovery of phosphate-containing leachate will accelerate the process of restoring the site to its original condition.

The company has set up a provision for restoration and securing of the closed phosphogypsum site in Wiślinka. As at December 31st 2016, the provision was PLN 3,320,578.44. The maintenance, restoration and monitoring of the landfill site are financed solely with the Company's own funds.

7.2 Set up a procedure to process Identification of problems and public Best practice Operational 2016 Management reports complaints and grievances to complaints in order to implement solutions and compliance costs of on application of the enable meaningful public designed to improve public perception of the with EBRD and information grievance procedure consultation and information Wiślinka landfill site PR10 office. Summary of systems process with regard to historical requirements. in the annual report and current EHS impact of the for the Bank Wiślinka landfill site in Gdańsk. Notes The Company has a procedure in place for managing grievances and complaints in accordance with the ISO 9001 standard under the management system used by the to 7.2 Company. Grievances, complaints or other comments can be submitted using a contact form available from the Company's website. Any important events are reported by the Company on its website. Over the past few years, the Company has received no grievances or complaints with respect to its production facilities in Gdańsk or the closed phosphogypsum landfill site in Wiślinka. A series of articles on removal and recovery of phosphates-containing leachate and the role of the process in accelerating landfill restoration were also published to change public opinion on the Wiślinka landfill. One such article was 'Innovative technology to enable Grupa Azoty to make fertilizers from waste', posted in the Chemicals section of the business news website www.wnp.pl.

7.3 Prepare a plan (including Reduce negative environmental impact Legislative Internal 2016 Report on soil and budget) and conduct soil and in line with IED requirements, resources groundwater surface water assessment best and condition within the plot. management external practices, support Bank's PRs

44 Note 1. The Company has set up a provision for restoration and securing of the closed phosphogypsum site in Wiślinka. As at December 31st 2016, the s to provision was PLN 3,320,578.44. The maintenance, restoration and monitoring of the landfill site are financed solely with the Company's own 7.3 funds. 2. Surface water quality assessment The Company carries out surface water quality testing in accordance with the Monitoring Plan for the closed phosphogypsum landfill site in Wiślinka, as approved by the Marshal of the Gdańsk Province. Such tests are also carried out by the Provincial Inspector for Environmental Protection. 3. Soil and vegetation evaluation in the phosphogypsum landfill site's surrounding area Soil and vegetation quality testing was carried out within the protection zone of the phosphogypsum landfill site in Wiślinka and on agricultural land beyond that zone. The evaluation was carried out by independent specialist bodies:  Agricultural Academy of Wrocław and Wrocław University of Science and Technology,  National Agrochemical Station in Gdańsk. According to the evaluation, the landfill site poses no threats to the natural and agricultural environment of Wiślinka. 4. In 2014, the Company began removing leachate from the retention reservoir of the closed phosphogypsum landfill site in Wiślinka. As a result, the impact of the landfill site on the natural environment has been reduced, and the restoration process has been accelerated.

A report on the soil and groundwater condition for the plant located at ul. Kujawska 2 in Gdańsk will be prepared as part of a baseline report which is being prepared in connection with the need to amend the integrated permit. Examination of the soil and groundwater condition and preparation of a relevant report are scheduled for Q2 2017.

Chief Process Engineer Waldemar Kolanowski [signature]

45 ENVIRONMENTAL AND SOCIAL ACTION PLAN

Table 0.1 Wisła Project, Grupa Azoty Poland – Environmental, Social, Health and Safety (ESHS) matters, Updated (Alchemist Project) Action Plan:

GRUPA AZOTY JRCH SP. Z O.O.

8. Actions required to maintain compliance with EHS requirements of national law and EU environmental standards − JRCh Jednostka Ratownictwa Chemicznego (Tarnów/Kędzierzyn) No. Action Environmental risks, liabilities/benefits Legislative Requirement Scheduled Target and Comments requirements/B /Resources completion - evaluation criteria est practice action to be for implementation completed by end progress of year 8.1 Monitoring of environmental Record consumption of raw materials, fuels Legislative Internal Ongoing/ad-hoc Summary in the impacts of the operating and energy, air emissions, water obligation, best resources and periodic annual report for production unit (Chemzak in consumption, and amounts of generated practice/internal reports the Bank Kędzierzyn) waste resources Reference to BAT requirements. Regularly evaluate operational efficiency to minimise resource consumption and waste generation Information:

Consumption of raw materials, fuels and energy, air emissions, water consumption, and amount of generated waste are recorded. The process units are regularly evaluated for efficiency to minimise raw material consumption and waste generation. Operation of the process units does not violate environmental standards beyond the owner's premises. The environmental impact of the process units is monitored in accordance with the integrated (IPPC) permits.

Requirements: - Decision of the Governor of the Province of Opole dated December 13th 2006 (Ref. No. ŚR.III.AS-6610-1-30/06, as amended) − integrated permit for installations manufacturing, with the use of chemical processes, organic chemistry products or semi-finished products, i.e. WAXES, MELAMINE RESIN, and VARIOUS ORGANIC PRODUCTS. - Decision of the Marshal of the Province of Opole dated December 20th 2012 (Ref. No. DOŚ.7222.64.2012.HM) on change of the manager of the Company operating the above units from Chemzak Sp. z o.o. to GA JRCh Sp. z o.o.

46 8.2 Monitor environmental impact of Reduce negative environmental impact Legislative Own Ongoing Summary in the non-hazardous waste landfill sites requirements, resources annual report for and prepare a programme of their best and the Bank management investments closure and restoration (Czajki, Za practices, Bank's Rzeką Biała) PRs Information: Reduce negative environmental impact: - on air quality:  maintaining transport roads clean,  proper organisation of extraction work,  sprinkling transport roads with water during periods of high temperatures to suppress dust. - on noise pollution:  limiting transport vehicle traffic and machine operation at the landfill site to a necessary minimum,  using only equipment in good working order,  carrying out extraction activities during daytime only.

- on groundwater:  maintaining sludge supernatant pumping house in continuous working order,  maintaining drains, culverts, perimeter trenches, and drainage systems in good condition.

The environmental impact monitoring of the Czajki and Za Rzeką Biała landfill sites is carried out in accordance with the integrated (IPPC) permits.

Requirements: - Decision of the Governor of the Kraków Province dated April 27th 2007, Ref. No. ŚR.XI.AJ.6663-11-06, as amended, granting an integrated (IPPC) permit for the Czajki I and II landfill site. The decision is valid for an indefinite term.

- Decision of the Governor of the Province Kraków dated April 25th 2007 (Ref. No. ŚR.XI.AJ.6663-6-06), as amended, granting an integrated (IPPC) permit for the Za Rzeką Biała landfill site. The decision is valid for an indefinite term.

8.3 Monitor environmental impact of Reduce negative environmental impact Legislative Internal Final closing Summary in the the old hazardous waste landfill requirements, resources and annual report for the site Design document/(technical and financial) best and implementatio Bank and prepare a programme for its concept for planned restoration with a future management investments n of the restoration (AN II landfill site) monitoring programme practices, Bank's restoration PRs programme:

47 Information: The environmental impact monitoring of the AN II landfill site is carried out in accordance with the integrated (IPPC) permit. The technical equipment of the landfill site ensures its proper functioning. The solutions in place enable secure waste landfilling, in full compliance with legally required emission and environmental standards.

Requirement: - Decision of the Governor of the Kraków Province dated May 24th 2007, Ref. No. ŚR.XI.AJ.6663-10-06, as amended, granting an integrated (IPPC) permit for the AN II landfill site. The decision is valid for an indefinite term.

Vice President of the Management Board Jacek Łabno [signature]

President of the Management Board Leszek Gniadek [signature]

48 ENVIRONMENTAL AND SOCIAL ACTION PLAN

Table 0.1 Wisła Project, Grupa Azoty Poland – Environmental, Social, Health and Safety (ESHS) matters, Updated (Alchemist Project) Action Plan:

GRUPA AZOTY KOPALNIE I ZAKŁADY CHEMICZNE SIARKI SIARKOPOL S.A.

6. Actions required to maintain compliance with EHS requirements of national law and EU environmental standards – GRUPA AZOTY KOPALNIE I ZAKŁADY CHEMICZNE SIARKI SIARKOPOL S.A. No. Action Environmental risks, liabilities/benefits Legislative Requireme Scheduled Target and Comments requirements nt/Resourc completion - evaluation /Best practice es action to be criteria for completed by end implementation of year progress 9.1 Prepare the plan (including Reduce negative environmental impact Legislative Internal 2016/2017 Summary of budget) and monitor the in line with IED requirements and completed condition of soil and surface , best external actions in the water with the area covered management 2017 annual by facilites for which the practices, report. Integrated Pollution Bank's PRs Prevention and Control (IPPC) permit is required.

49 Information

In 2016, the Chemical Production Plant in Dobrów continued to implement integrated environmental protection measures, taking into account applicable legal requirements, environmental protection standards and safety.

Legal requirements: The Chemical Production Plant's facilities operate on the basis of the following integrated (IPPC) permits and notification:

1. Decision of the Governor of the Kielce Province, Ref. No. ŚR.III.6618-10/06, of April 26th 2007, granting an integrated (IPPC) permit for facilities producing carbon disulfide, sulfur insoluble in carbon disulfide, and sodium sulfide, located at the Chemical Production Plant in Dobrów, commune of Tuczępy. 2. Decision of the Marshal of the Kielce Province, Ref. No. OWŚVII.7222.16.2012, of July 17th 2012, amending the Decision of the Governor of the Kielce Province of April 26th 2007, Ref. No. ŚR.III.6618-10/16, granting an integrated (IPPC) permit for facilities producing carbon disulfide, sulfur insoluble in carbon disulfide, and sodium sulfide, located at Kopalnie i Zakłady Chemiczne Siarki SIARKOPOL S.A. in Dobrów. 3. Decision of the Marshal of the Kielce Province, Ref. No. OWŚ.VII.7222.22.2013 of November 8th 2013, amending the Decision of the Governor of the Kielce Province of April 26th 2007, Ref. No. ŚR.III.6618-10/06, amended by Decision of the Marshal of the Kielce Province of July 17th 2012, Ref. No. OWŚ.VII.7222.16.12, granting an integrated (IPPC) permit for facilities producing carbon disulfide, sulfur insoluble in carbon disulfide, and sodium sulfide, located at the Chemical Production Plant in Dobrów, commune of Tuczępy. 4. Decision of the Marshal of the Kielce Province, Ref. No. OWŚ-VII.7222.43.2014, of December 2nd 2014, amending the decision of the Governor of the Kielce Province of April 26th 2007, Ref. No. ŚR.III.6618-10/06, as amended by decisions of the Marshal of the Kielce Province of July 17th 2012, Ref. No. OWŚVII.7222.16.2012, and of November 8th 2013, Ref. No. OWŚ.VII.7222.22.2013, granting an integrated (IPPC) permit to Kopalnie i Zakłady Chemiczne Siarki Siarkopol Spółka Akcyjna with its registered office in Grzybów for facilities producing carbon disulfide, sulfur insoluble in carbon disulfide, and sodium sulfide, located at the Chemical Production Plant in Dobrów, commune of Tuczępy. 5. Decision of the Marshal of the Kielce Province dated May 28th 2012, Ref. No. OWS-VII.7222.1.2012, granting an integrated (IPPC) permit for facilities producing sulfur insoluble in carbon disulfide with a capacity of 5 thousand tonnes per year, together with auxiliary facilities, located in Dobrów, commune of Tuczępy. 6. Decision of the Marshal of the Kielce Province dated November 8th 2013, Ref. No. OWS-VII.7222.23.2013, amending the integrated (IPPC) permit for facilities producing sulfur insoluble in carbon disulfide with a capacity of 5 thousand tonnes per year, together with auxiliary facilities, located in Dobrów, municipality of Tuczępy. 7. Decision of the Marshal of the Kielce Province of December 2nd 2014, Ref. No. OWS-VII.7222.44.2014, amending the integrated (IPPC) permit for facilities producing sulfur insoluble in carbon disulfide with a capacity of 5 thousand tonnes per year, together with auxiliary facilities, located in Dobrów, commune of Tuczępy. 8. Notification of a sulfur mill with a capacity of up to 2 Mg/h, whose operation does not require a permit, but must be notified. Card number 000080/2017.

Following a reduction of thermal power below the threshold qualifying the carbon disulfide installation for participation in the EU ETS system (20 MW), based on an analysis of data and adoption of assumptions formulated after the audit, a request was filed with the Marshal Office in Kielce to terminate decision Ref. No. OWŚ.VII.7225.1.16.2011, as amended by decision Ref. No. OWŚ.VII.7225.I.4.2014, relating to emissions of greenhouse gases from a carbon disulfide facility. The nominal thermal power, qualifying the installation for participation in the EU ETS system, was 28.97 MW. The reduced nominal thermal power is 11.2 MW. Despite discontinuation of production, the facilities for carbon disulfide purification, storage and dispatch were maintained in continuous operation. The operator of the installation notified the National Centre for Emissions Balancing and Management (KOBiZE) and the authority issuing the permit for greenhouse gas emissions (the Marshal Office of the Kielce Province) of those changes. Written notification within the statutory time limit of 21 days from the date of a reduction of thermal power (below 20 MW). In 2015, the permit for greenhouse gas emissions was terminated by Decision of the Marshal of the Kielce Province of October 15th 2015, Ref. No. OWS.VII.7225.1.18.2015, terminating the decision of December 13th 2011, Ref. No. OWS.VII.7221.1.16.2011, amended by decision of May 26th 2014, Ref. No. OWS.VII.7225.1.4.2014, permitting the emission of greenhouse gases. In 2016, after Grupa Azoty Siarkopol transferred the accumulated EUAs to another account, the National Centre for Emissions Balancing and Management (KOBiZE) closed the installation's account.

50 Baseline report: In 2014, installations covered by integrated (IPPC) permits obtained ex-officio amendments to the permits (item 4,7). In 2016, due to the planned modernisation of the insoluble sulfur unit and the need to obtain a decision amending the integrated permit, it was necessary to prepare a risk assessment and, if needed, a baseline report. Analysis of the risk of soil and water contamination on the site of the IPPC installation of the Chemical Production Plant demonstrated that the applied safeguards practically prevented the release of any substances posing the risk of soil, ground and groundwater contamination. Accordingly, it was concluded that no baseline report would be required for the IPPC installation of the Chemical Production Pant.

Soil, ground and groundwater protection at the Chemical Protection Plant is achieved by: - tight sealing of processes. Processes at the Chemical Protection Plant are conducted in sealed devices made of materials suitable for the type of media used, - use of systems in which tanks may be drained by pumps (in case of emergency), with their content directed to the network or another tank, - ensuring good technical condition of underground infrastructure to prevent leakage from interceptors, - application of impermeable materials (equipment and devices are placed on a concrete surface, with any leakage drained to the industrial wastewater system), - use of devices to measure and monitor the level of liquids in tanks, connected to a lock-out system, - identification of wastewater and its analysis in terms of quality and volume, - minimum amount of water used in the process (stripping and returning water back to protective cushions), - cooling with water from the closed-loop cooling water system, - maintaining good condition of surface water intake points and other equipment used to supply water to the plant for process and other purposes, - rational waste management system, - appropriate procedures for all operations associated with the handling and transport of liquids, - regular inspections of the technical condition of plant and equipment. Environmental parameters are monitored in accordance with the requirements set out in integrated (IPPC) permits: - monitoring of pollutant emission levels. Measurement of concentrations and emissions of sulfur dioxide (SO2) and carbon disulfide (CS2) from the plant's emission source, conducted twice a year by accredited laboratories - monitoring of the amount and quality of surface water drawn from the Czarna Staszowska river - surface water quality tests performed in the section starting in Oględów, in ducts located above and below the channel outlet, in terms of parameters specified in the applicable decision; frequency: once every two months - industrial wastewater quality tests performed at the interceptor outlet to the open channel, in terms of pollution parameters specified in the applicable decision; frequency: once every two months - regular measurements of noise generated by the plant during day- and night-time, so as to determine and analyse the impact of noise on the environment in the immediately surrounding area protected from noise - monitoring and recording of waste, in accordance with law. Safety: The Chemical Production Plant has a Safety Report, approved by the Chief Officer of the State Fire Service in the Kielce Province by Decision of October 26th 2015, Ref. No. WZ-5586.1.16.2015. Under the Decision, the plant's operator is ready to roll out a programme to prevent and manage industrial accidents, in accordance with the Internal Rescue Operation Plan.

51 9.2 Monitor environmental Reduce negative environmental impacts Legislative Internal Ongoing/ad-hoc Summary in the impacts of mining operations, in accordance with IED, and implement requirements and and periodic annual report for restoration of mining sites, measures expected by the local , best external reports the Bank and reclamation of post- community. management mining land for use, in practices, accordance with applicable Bank's PRs legal decisions and public needs.

52 Information: In 2016, the Osiek Sulfur Mine continued to implement integrated environmental protection measures, taking into account applicable legal requirements, environmental protection standards, safety, and the local community’s needs. The monitoring of environmental impacts of the Osiek Sulfur Mine covers: surface protection, restoration of post-mining sites, waste management, water and wastewater management, protection of surface water and groundwater, and air pollution control. Measures taken to eliminate negative environmental impacts of mining activities on the ground's surface include: safety pillars and designation of mining protection areas, eruption prevention measures, and measurements of ground subsidence.

Restoration of post-mining sites Given the terrain in the Osiek deposit area, which includes a low and high terrace, and the earlier ground subsidence, restoration models other than agriculture, afforestation and tree planting need to be determined. This applies in particular to the Vistula valley forming the lower terrace. The 'Legal and environmental study for the restoration of the Osiek mining sites', prepared at our request by Stanisław Staszic's Scientific Association of Kraków (Stowarzyszenie Naukowe im. Stanisława Staszica w Krakowie), proposes an afforestation/tree planting/water restoration model for the lower terrace, with an option of creating natural water reservoirs in areas with a considerable degree of subsidence. This will be possible after full discontinuation of mining work in the high terrace. The mine currently holds the following decisions determining the possible land restoration models: - Decision No. G.II-6012/3/96 of July 5th 1996, determining the afforestation model for restoration of 16.30 hectares of land in the area of former A-1 and A-2 control rooms. - Decision No. G.III-6019/8/2003 of August 26th 2003, determining the afforestation model for restoration of 28.9668 hectares of land situated in Mikołajów and in Osiek - cadastral district No. 2 (formerly Osieczko), and the agricultural model for reclamation of 1.2210 hectares of land. - Decision No. OŚ.II-6019/4/2010 of April 6th 2010, determining the afforestation model for restoration of 20.50 hectares of land situated in Mikołajów and 10.3996 hectares in Osiek - cadastral district No. 2, and the tree planting model for restoration of land located in Mikołajów (89.04 hectares), in Osiek - cadastral district No. 2 (formerly Osieczko - 35.6894 hectares), and in the town of Osiek (1.46 hectares). - Decision No. OŚ.6122.8.2011.III.D of August 5th 2011, determining the tree planting model for restoration of 10.7138 hectares of land situated in Mikołajów. - Decision No. OŚ.6122.6.2011.III.D of August 5th 2011, determining the agricultural model for reclamation of 7.91 hectares of land situated in Trzcianka. - Administrative ruling of the Staszów County Governor No. OŚ.6122.8.2011.III.D of March 21st 2012 concerning correction of a calculation error in decision No. OŚ.6122.8.2011.III.D of August 5th 2011. - Decision of the Staszów County Governor No. OŚ.6122.7.2013.III.D of August 26th 2013, determining the tree planting model for restoration of plot No. 961 with an area of 0.0576 hectares, situated in cadastral district No. 2 in Osiek. - Decisions of the Staszów County Council No. OŚ.6122.4.2014.III.D of March 12th 2014, determining the tree planting model for restoration of plot No. 1087 with an area of 0.4798 hectares, situated in cadastral district No. 2 in Osiek. Under the above decisions, a part of plot No. 1438 with an area of 8.0580 hectares situated in cadastral district No. 2 in Osiek (the area of former A-1 and A-2 control rooms) was restored; decision No. OŚ.6122.8.2013.III.D of September 6th 2013 regarding completion of the restoration process was obtained from the Staszów County Governor; agricultural reclamation of 7.1318 hectares of land situated in Trzcianka was performed; and decision No. OŚ.6122.13.2013.III.D of January 9th 2014 regarding completion of the restoration process was obtained.

53 Under decision No. OŚ.II.6019/4/2010 determining the restoration model, and decision No. OŚ.6237.1.2011.IIIB approving the closure of the waste drilling mud landfill site located in Mikołajów, restoration of the site was performed based on the relevant technical documentation. By decision No. OŚ.6122.14.2014.III.D of November 7th 2014, the Staszów County Governor determined that restoration of the waste drilling mud landfill site had been completed. The landfill site is currently in the after- care phase and is subject to monitoring in accordance with the Landfill Regulation of the Minister of Environment (Dz.U.2013.523) in terms of the ground subsidence area as well as the level and quality of groundwater. In 2013, restoration by afforestation was launched for the following areas, based on technical documentation prepared by Przedsiębiorstwo Usługowo-Produkcyjne SIGMA BP Sp. z o.o. of Tarnobrzeg:  Region No. 2 with an area of 2.9015 hectares, located within the area of the former A-5 control room,  Region No. 3 with an area of 5.6040 hectares located east of the A-7R control room, between the pre-main route No. 3 and pre-main pipeline No. R-IV, and restoration by tree planting for Region No. 4 with an area of 22.93 hectares within the area of the former A-12 and A-13 control rooms. Under the relevant agreement, the work is to be completed at the end of 2016. In 2016, under decisions No. G.III-6019/8/2003 and OŚ.II.6019/4/2010 on land restoration models, restoration was performed on the land located in Osiek (cadastral district No. 2) and Mikołajów, with a total area of 8.5055 hectares, including:  Region No. 2 with an area of 2.9015 hectares, restoration by afforestation,

 Region No. 3 with an area of 5.6040 hectares, restoration by afforestation of 5.3473 hectares and restoration by tree planting of 0.2567 hectare;

and decision No. OŚ.6122.15.2016.III.D of December 16th 2016 was obtained from the Staszów County Governor determining that the restoration process had been completed. Restoration of Region No. 4 with an area of 22.93 hectares, commenced in 2013, is under way. The planned completion date is May 31st 2017. Rational waste management Management of waste, including mining waste from the Osiek Sulfur Mine, is in line with the applicable laws and administrative decisions issued by the Marshal of the Kielce Province: - Waste generation permit covering waste generated by the Sulfur Mine, dated December 31st 2014, Ref. No. OWŚ-VII.7221.2.44.2014, and August 13th 2015, Ref. No. OWŚ-VII.7221.2.23.2015 - Mining waste management programme, decision of January 18th 2012, Ref. No. OWŚVI.7240.3.6.2011 - Permit of April 10th 2012, Ref. No. OWŚVI.7241.2.1.2012, to operate a mining waste disposal facility. In compliance with the requirements of the Act on Mining Waste, Grupa Azoty Siarkopol reviewed the mining waste management programme. The adopted waste management, handling and storage methods have no negative environmental impacts. The prescribed period for the storage of waste before its disposal is complied with. Waste is recorded in accordance with the Regulation of the Minister of Environment of December 12th 2014 on the form of waste records (Dz.U.2014.1973). Surface water protection Protection of surface water in the area of the Osiek Sulfur Mine is based on:  introduction of a closed-loop system for formation waters,  eruption-free extraction of sulfur,  introduction of a closed-loop system for sanitary and industrial wastewater,  moving of watercourses and ditches outside the mining sites and changing their functions,  regular testing of water quality in ditches and watercourses within the area of the mine. Following the introduction of a closed-loop system for formation waters, the mine does not discharge any wastewater to the environment. The quality parameters of surface waters are monitored once a month. The monitoring covers the following surface waters: the Wisła river and Ocieckie Lake, the watercourse from Pliskowola, the watercourse from Mikołajów, and the watercourse from Mucharzew and the Strzegomka river. Protection of groundwater Groundwater is protected based on a system of observations conducted in accordance with the 'Instruction for hydrogeological observations regarding the method, scope and frequency of observations, measurements and tests as well as their recording', approved by the Mine Operation Manager. Annual results of the observations and their interpretation, together with attached maps, form the basis for a report on the impacts of mining activities on the rock mass and mining sites, drawn up by March 31st of the following year. If any impacts of mining activities on the quality of groundwater are identified, appropriate measures are taken to eliminate them. Such measures may include changes in the direction of extraction or use of protective barriers.

54 Air pollution control Air pollution control in the area of the Osiek Sulfur Mine is based on: - tight sealing of the decompression system and chemisorption installation for on-site sulfur tanks, - ongoing drainage of the area to prevent formation of pools which would emit hydrogen sulfide, - regular monitoring of H2S emissions.

Measurements of H2S emissions in the area of the Osiek Sulfur Mine are performed at four points in Osiek, Osieczek, Pliskowola and Trzcianka. Since 2013, measurements of hydrogen sulfide emissions have been averaged for one-hour periods, in line with the regulations currently in effect. In the Decision of March 8th 2013, Ref. No. OWS VII.7221.1.12013, the Marshal of the Kielce Province repealed the earlier decision of the Governor of the Tarnobrzeg Province of March 12th 1993, Ref. No. OŚ-IIB-7644/7/93, as amended on March 10th 1997 (Ref. No. OŚ-II-7644/4/97/JM), as well the decision of the Governor of the Kielce Province of October 23rd 2003, Ref. No. ŚR.II.6610/1-3/03, imposing on Kopalnie i Zakłady Chemiczne Siarki Siarkopol S.A. of Grzybów an obligation to monitor air pollutions within the site's impact area.

Environmental standards and needs of local communities Having regard to Art. 144 of the Environmental Protection Law and the provisions of Par.165 and 166 of the Regulation of the Minister of Economy of April 25th 2014 on specific requirements for the operation of mining facilities producing minerals through wells (Dz.U.2014.812), the Osiek Sulfur Mine continues to monitor its hydrogen sulfide emissions in Osiek, Osieczko, Pliskowola and Trzcianka, regardless of the decision issued by the Marshal of the Kielce Province repealing the obligation to conduct air pollution monitoring in the area of the Osiek Sulfur Mine. The air monitoring has been conducted since 1994 and has provided extensive comparative data, which was used in settling disputes with local authorities and communities. If mining operations are commenced in a section of the Osieckie Lake, an additional hydrogen sulfide measurement point will be set up in the village of Lipnik.

Member of the Management Board Zbigniew Snopkiewicz [signature]