Grupa Azoty Group’s capex projects in 2020
In 2020, the Grupa Azoty Group’s capital expenditure exceeded PLN 2.75bn and was financed with internally generated funds and a set of corporate credit facilities, loans, lease contracts and government grants.
In 2020, the Grupa Azoty Group’s capital expenditure exceeded PLN 2.75bn and was financed with internally generated funds and a set of corporate credit facilities, loans, lease contracts and government grants. Growth capex, of more than PLN 1.74bn, represents the largest portion of our capital expenditure.
Structure of the Grupa Azoty Group’s capital expenditure in 2020
| Growth capex | PLN 1,744,675 thousand |
| Maintenance capex | PLN 323,542 thousand |
| Mandatory capex | PLN 449,395 thousand |
| Purchase of finished goods | PLN 54,520 thousand |
| Other (components, major overhaul work, other) | PLN 182,592 thousand |
Our key project is Polimery Police. Its purpose is to build propylene and polypropylene units with auxiliary systems and associated infrastructure, as well as a port terminal with feedstock storage facilities. The general contractor for the project is Hyundai. The start of commercial operation is scheduled for 2023.
The Polimery Police project in 2020:
- a project financing agreement between Grupa Azoty, Grupa LOTOS, Hyundai and KIND was signed;
- a credit facility agreement with a bank syndicate and financial institutions was signed;
- all required building permits (22 permits) were secured;
- the foundations for propane and ethylene tanks were laid;
- hydrogen, process steam and natural gas connections were installed;
- installation of roof structures on propane and ethylene tanks, pipelines, pumping stations and control rooms continued;
- construction of a furnace for the PDH unit started;
- contracts for the dredging of the port terminal were concluded.
Ranking among the largest chemical industry projects in Poland and Europe, Polimery Police will help diversify our Group’s business and strengthen Poland’s independence in terms of energy and raw material supplies. The project is in line with the closed-loop climate neutral economy strategy, which defines the process of decarbonisation of plastics throughout their life cycle through the use of four key solutions:
- transition to a circular plastics economy;
- improving energy efficiency in production processes;
- decarbonisation of production;
- partial transition to renewables.
Polypropylene to be produced by Polimery Police is a chemical compound that can be used in the chemical, pharmaceutical, textile, food, packaging, electronics and automotive industries. Advanced production technologies reduce consumption of raw materials and energy, ensure high reliability of the units, and mitigate environmental impacts by lowering emissions of sulphur oxides or carbon dioxide.
The project is also of great importance to the local community. The Police plant is the largest employer in the region. The construction and launch of Polimery Police will increase the county’s revenue, stimulate the development of entrepreneurship and encourage local residents to stay in the county. The project may also support local field research, development of higher and vocational education, and the financing of construction of new infrastructure.
best practice
Once the polypropylene plant comes on stream, traffic volumes on the road leading to Grupa Azoty Police will increase significantly. For this reason, our Group cooperated closely in designing the Szczecin western bypass. In 2021, we made available our land which is necessary for the construction of a tunnel that will be a part of the bypass. Thanks to the Group’s efforts, its initial route was changed as it was conflicting with the plant’s infrastructure. Ultimately, the investor accepted a route that was welcomed by the company, involving the construction of a tunnel which will be some 1.5 km longer than the one originally planned. The rerouting will make it possible for the bypass to be constructed safely and almost without any interference with the Company’s infrastructure.
| Project name | Project budget | Expenditure incurred | Expenditure incurred in 2020 | Project purpose | Scheduled completion date |
|---|---|---|---|---|---|
| Grupa Azoty POLICE | |||||
| Making production of demineralised water independent of variable salinity of the Oder River and increasing the ability to produce special waters in the units | 108,000 | 60,172 | 59,122 | Upgrade and expansion of the water treatment and demineralisation station as a means of protection against periodic salinity increases in the Oder river for Grupa Azoty Police companies | 2023 |
| Grupa Azoty PUŁAWY | |||||
| Construction of coal-fired power generation unit | 1,200,000 | 412,077 | 401,382 | Adaptation of energy generation units to environmental requirements, while increasing the share of the autoproducer CHP plant in electricity consumption by production units and ensuring continuity of energy supplies | 2022 |
| Upgrade of existing nitric acid production units and construction of new nitric acid production and neutralisation units and units for production of new fertilizers based on nitric acid | 695,000 | 352,471 | 111,479 | Increase in the efficiency of nitric acid production and the economics of production of nitric acid-based fertilizers | 2028 |
| Facility for production of granulated fertilizers based on ammonium nitrate | 430,000 | 388,365 | 24,918 | Improvement of the quality of fertilizers by applying modern mechanical granulation | 2021 |
| Upgrade of steam generator OP-215 No. 2 to reduce NOx emissions | 145,000 | 60,296 | 29,824 | Bringing the steam generator into compliance with new NOx emission standards and restore it to proper working condition | 2022 |
| Replacement of the turbine generator set | 85,000 | 28,591 | 28,382 | Increase in the efficiency of electricity and heat cogeneration by replacing a pass-out and condensing turbine with a new unit | 2021 |
| Grupa Azoty KĘDZIERZYN | |||||
| Upgrade of the synthesis gas compression unit supplying the Ammonia Plant | 140,000 | 66,607 | 7,284 | Rebuilding the synthesis gas compression capacities for the Ammonia Plant through the installation of new compressors | 2022 |
| Peak-load/reserve boilers | 123,000 | 9,300 | 9,201 | The peak-load/reserve boiler house functioning as a peak-load source will interoperate with steam generators; in the event of downtime of coal-fired boilers, it will serve as a stand-alone reserve steam generator | 2023 |
| Purchase and installation of an oxygen compressor | 72,800 | 34,294 | 26,819 | Replacement of old steam turbine driven oxygen compressors with one electric compressor | 2021 |
Environmental projects
Our investments and expenditure translate into tangible benefits. Grupa Azoty Group’s selected non-financial information (compared with 2019):
- 10% reduction of requirement for energy generation fuels;
- 20% reduction of emissions of the greenhouse gas nitrous oxide;
- over 17% reduction of PM 2.5 emissions;
- 5% reduction of waste volumes;
- over 130 projects supported under the CSR strategy.
Selected environmental projects in 2020:
Grupa Azoty S.A.:
- A project was launched to construct a dry slag collection unit at the Grupa Azoty S.A. Power Centre. After it is completed, the hydraulic conveyor system will be decommissioned and the consumption of electricity and water will be reduced. Furthermore, the project will allow the Company to discontinue slag storage and to recover dry slag for use in road construction.
Construction of a turbogenerator set using steam from the Sulfuric Acid Department. As a result, waste heat is utilised to generate electricity.
- Adapting the flue gas desulfurisation unit to the new and more stringent EU requirements – BAT conclusions.
- Construction of a plant for biological treatment of wastewater from Grupa Azoty S.A. production units. Based on the completed tests, assumptions for the upgrade of the biological wastewater treatment plant will be developed.
Grupa Azoty Kędzierzyn:
- In 2020, Grupa Azoty Kędzierzyn worked on implementing the adopted ‘steam policy’, which will result, among other things, in reducing the steam requirement in technological processes of ammonia and hydrogen production and, as a consequence, lower emissions of pollutants from combustion processes at the company’s CHP plant.
Grupa Azoty Puławy:
Upgrade of steam generator and reduction of NOx emissions.
Adaptation the flue gas desulfurisation unit to comply with BAT conclusions.
Expansion of the decarbonisation plant.
Utilisation of waste gas emissions from the ammonium nitrate solution production hub at the Ammonium Nitrate and UAN Department.
Construction of a coal-fired power generation unit.
Work was continued to select a contractor to design and build a central biological industrial wastewater treatment plant. Laboratory and pilot tests were launched on discharged wastewater streams to select an appropriate treatment technology. Once completed, the project will enable Grupa Azoty Puławy to meet the requirements defined in the BAT conclusions for common wastewater treatment systems.
Grupa Azoty Zakłady Fosforowe Gdańsk:
- Recovery of phosphates from leachate from the phosphogypsum landfill in Wiślinka. Phosphorous recovery accelerates the reclamation of the landfill site, improves the condition of the natural environment and fits into the sustainable development strategy by reducing the use of water and phosphate resources.
- Recovery of sewage sludge incineration ash classified as waste. The waste contains phosphorus, which the European Environment Agency has recognised as a priority raw material. The Agency indicated recycling and recovery of phosphorus from sludge as key ways to balance its consumption. Furthermore, the use of ash as a low-cadmium feedstock helps reduce cadmium content in phosphate fertilizers, which is beneficial for the environment and reduces cadmium accumulation in soil.
- Upgrade of the soda lye handling terminal. The terminal was equipped with environmental protection devices such as drip trays at railcar unloading bays, a reinforced concrete tank at the pump station, and a leachate collection unit. The terminal was also equipped with railcar loading and unloading facilities with emergency disconnect systems protecting against uncontrolled leakage. The upgrade reduced the risk of chemicals handling operations affecting the natural environment.
BEST PRACTICE
We share our best practices and experience during industry meetings, conferences and panels
- In March 2020, the Grupa Azoty Group was the honorary host of the 15th Scientific and Technical Conference – ‘Environmental Protection. Electricity. Heat. Industry’, organised by BMP. Our representatives took part in a panel opening the conference and in workshops on waste. Our experts also presented an emissions reduction concept and the role of circular economy as a tool for implementing environmentally-oriented ideas.
- In June 2020, we participated in an online debate prepared by the Polish Chamber of Chemical Industry, entitled ‘Green Transition as a Medicine for Economic Recovery? Challenges and Prospects for Poland’s Chemical Industry’.
- In October 2020, we attended the debate entitled ‘EU Emission Reduction Targets – How Is Poland’s Chemical Industry to Meet Them?’ organised by the Polish Chamber of Chemical Industry.
Monetary value of fines for non-compliance with environmental laws and/or regulations [PLN]
| 2019 | 2020 | |
|---|---|---|
| Grupa Azoty POLICE | 46,215 | 0 |
| Grupa Azoty PUŁAWY | 3,276,186 | 5,573,283 |
| Total | 3,322,401 | 5,573,283 |
In March 2020 and March 2021, the Lublin Provincial Inspectorate for Environmental Protection imposed a fine on Grupa Azoty Puławy for the release of pollutants (sulfur dioxide, nitrogen oxides and particulate matter) from the Company’s CHP plant in 2019 and 2020, in volumes exceeding the set limits.
As Grupa Azoty Puławy initiated projects which, once completed, will ensure that the emission limits are observed, thus removing the grounds for imposing the fines, the company has applied to the Inspectorate for a postponement of the penalties. The penalty payment date was moved to the end of 2022. Upon completion of the necessary work, Grupa Azoty Puławy will apply for a reduction of the postponed penalties by the expenditure made to complete the projects.
Sustainable production
Sustainable production is a pillar of sustainable development of the Grupa Azoty Group. Ensuring the responsibility and safety of operations is a fundamental principle of the Group.
Polyamide-6
An example of sustainable products manufactured by the Group is polyamide 6 and its compounds. Polyamide 6 is an engineering plastic used in many sectors of the economy, which substantially improves or reduces human impact on the environment. In the food industry, it is used in the manufacturing of cling film that significantly extends the shelf-life of food, preventing its waste. In the automotive industry, parts made of polyamide 6 markedly reduce the weight of cars, translating into lower fuel consumption and indirectly protecting the environment. Polyamide 6 is also used in the textile industry as it extends the useful life of clothes and carpets.
The Grupa Azoty Group manufactures polyamide 6 according to state-of-the-art technologies developed by leading Western providers, such as Zimmer and Uhde Inventa-Fischer. In recent years, the production technologies have been modernised and their environmental impact has been materially reduced. The consumption of raw materials and energy has also been lowered.
NOX
To bring down environmental pollution, the European Union has set requirements for exhaust gas emissions from heavy and light goods vehicles powered by diesel engines. One of the methods adopted by car makers to ensure compliance with the EU requirements is SCR (selective catalytic reduction), which chemically reduces NOx emissions by using an additive (urea) in the exhaust system in engines, i.e. AdBlue® (NOXy® manufactured by the Grupa Azoty Group) with an appropriate content of urea. Using the liquid with appropriate content of urea is crucial to maintaining the efficiency and ensuring proper operation of the system. In 2020, the Grupa Azoty Group carried out research with a view to developing the NOXy product line and supplementing its NOXy offering with additives which will enable:
- higher NOx emissions reduction compared with the traditional AdBlue;
- higher particle number reduction compared with the traditional AdBlue;
- reduction of carbon dioxide emissions;
- reduction of fuel consumption;
- extension of the useful life of SCR catalyst.
As the research results show that the objectives for the new product have been achieved, Grupa Azoty is working to start its mass production and sales. We plan to offer the product to our customers in 2022.
NovaTec
In cooperation with COMPO EXPERT, we added the NovaTec nitrogen stabilizer and granulated nitrogen fertilizer to our product range. They temporarily block the activity of Nitrosomonas bacteria by interrupting the nitrification process for up to three months. The slowing down of nitrogen release triggers a number of positive effects for both plants and the natural environment:
- significant reduction of nitrogen leaching;
- ensuring stable supply of nitrogen to crop plants;
- high efficiency even in light soils;
- reducing the number of runs on the field;
- improving the crop’s yield and quality.
Tohumus
To meet the needs of the constantly evolving agricultural sector, Grupa Azoty has expanded its product mix to include an organic and mineral plant growth stimulator derived from a biological, natural raw material. It is manufactured using alkaloid extraction from lignite. Application of humic acids in plant production makes it possible to produce more food of better quality. The results of numerous tests showed that the preparation is highly effective in improving plant productivity (higher yields and higher growth of the above ground weight of plants and of the root system and improved natural resistance). The preparation also enhances soil fertility by:
- increasing water capacity, especially in light soils, which reduces the risk of drought;
- building a soil crumb structure, creating favourable air-water relations;
- increasing the availability of nutrients for plants;
- reducing the leaching of elements and ensuring their retention in the root zone (greater chance of absorption by crop plants);
- maintaining an appropriate content of organic matter;
- improving solar energy absorption efficiency and thus offering better thermal properties (which affects the pace of nutrient release from soil);
- supporting proliferation of useful microorganisms;
- accelerating the decomposition of post harvest (organic) residue – the released nutrients become available for plants more quickly.
Circular economy
We want to achieve the highest standards of circular economy. We are aware of the need to reduce the consumption of raw materials, recover materials and recycle waste, and to develop biodegradable plastics. The Grupa Azoty Group is able to meet the increasingly stringent EU regulations, which point to the need to transform the economy towards the circular model to the widest extent possible.
We want our new products to contribute to economic growth while protecting natural resources and preserving the balance of agroecosystems globally. We focus on rational and efficient use of fertilizer nutrients, which means that we can ensure optimum yields of desired quality while reducing pollution and protecting the production potential of the environment.
An example of a product consistent with the idea of circular economy is Fosfarm fertilizers. They are enriched with calcium, magnesium, sulfur and micro-elements, such as copper and zinc. The phosphorus content, as well as the calcium, magnesium and micronutrients, all come from regenerative sources only, including sewage sludge incineration ash.
Manufacture
The formula of Fosfarm fertilizers has been designed to minimise the use of the product and maximise its effectiveness. They are enriched with calcium, magnesium, sulfur and micronutrients, that is copper and zinc, which significantly contribute to improving soil quality. Fosfarm fertilizers contain ammoniacal nitrogen, magnesium and sulfur as components facilitating absorption of phosphorus by plants, i.e. stimulating what is called synergism between elements. The phosphorus contained in the fertilizers is soluble in ammonium citrate and water (one-fourth of the phosphorus is water soluble). Phosphorus compounds soluble in those two substances show comparable effectiveness regardless of when they are applied, provided they are placed at the correct depth in the soil.
Consumption
The efficiency of the product also depends on how it is used. We therefore provide our customers with leaflets containing information about how and when to use Fosfarm fertilizers in the best possible way. The leaflets contain advice on the optimum doses of the product, and show the periods that are critical to plant growth (when the product should be used). Those materials also have an added educational value, explaining the source of fertilizer application at a given time of the plant’s life cycle, as well as the expected effect of fertilizer application.
Recycling
Being aware that natural resources are not unlimited, we are attaching more and more importance to using them in a sustainable and responsible manner. A by-product of one process may become the basis for another. With this in mind, we have developed Fosfarm fertilizers. The phosphorus content, as well as the calcium, magnesium and micronutrients, come from regenerative sources only, including sewage sludge incineration ash.
Design
Each component of the product, including its packaging, should be reusable and therefore the packaging of the Fosfarm line has been designed to be recyclable. To facilitate segregation, it has been marked with appropriate signs.
