Environmental performance

Safety

The Group’s business requires compliance with the most exacting safety standards, which minimise the risk of industrial incidents. Relevant solutions applied across the Group ensure appropriate conditions for the manufacture, storage, transport and distribution of substances to meet the natural environment protection requirements. The Group companies operate in the chemical industry and are classified as facilities with a high risk of a serious industrial incident. Being aware of the possible consequences of their operations, the Group companies strive to mitigate their negative environmental impact.

Advanced technological solutions enable the Group companies to actively engage in pro-environmental efforts, which are often a source of economic benefits as well. Ensuring the responsibility and safety of production processes is a fundamental principle of the Group. The companies have devised and implemented appropriate incident prevention programmes, and safety matters are subject to regular reporting.

Moreover, rescue plans and safety management systems are in place for the Group facilities. Given the nature of its business, the Group is subject to the requirements of the Environmental Protection Law, the Water Law, the Waste Act, and other regulations on environmental protection, OHS and fire safety. The legislation imposes certain obligations on Group companies with respect to production activities, investment projects, site restoration and creating appropriate conditions for the manufacture, storage, transport and distribution of products.

The Group companies were distinguished with the Gold Card of Safe Work Leader, which is awarded to businesses that operate effective OHS management systems and have effective OHS prevention programmes in place.

The Group has implemented the STOPTM Safety Monitoring Programme, designed to raise the degree of involvement in OHS matters among managers and employees of all ranks, develop hazard identification skills, improve communication with respect to OHS matters, raise awareness of the importance of occupational safety by building new attitudes.

In 2016, joint inspections were carried out at the Group by three national supervision and inspection bodies: National Fire Service, Provincial Inspectorate for Environmental Protection, and National Labour Inspectorate. The inspections revealed no omissions or irregularities.

Emissions

The Group has implemented a range of environmental protection solutions contributing to lower air emissions.

The air pollution control equipment reduces the amount of flue gases and particulate matter discharged into the atmosphere:

• Particulate matter emissions can be reduced thanks to the use of wet scrubbers, cyclones, multicyclones and electrostatic precipitators;
• the reduction in pollutant emissions in gases was achieved through scrubbers and thermal reducers.

The parent also measures emission volumes and pollutant concentration levels at major emitters. Measurements are taken on a continuous basis (at the CHP plant and the dual-pressure nitric acid unit) or on a periodic basis at selected process emitters. Emission volumes and pollutant concentrations are measured in keeping with the applicable legal and administrative requirements. As the in-house CHP plant and chemical plants have participated in the emissions trading scheme since 2005 and 2013, respectively, the Company reviews its annual reports and obtains rights on an annual basis.

In an effort to preserve clean air, the parent constantly monitors air quality at five sites across Tarnów. The locations of the measurement sites were selected to span the wide area that may be affected by particulate matter and gas emissions from the plant.

Grupa Azoty POLICE takes special care to ensure compliance with the terms of its integrated permit and applicable legal regulations on emissions into the air from production nodes. At present, two units are monitored by the company on a continuous basis:

• The EC II CHP plant − for SOx, NOx, and dust emissions,
• The titanium dioxide production unit (decomposition and calcination node) − for SOx, sulfuric acid mists, and dust emissions.

The company monitors the volumes of emissions of gaseous pollutants and particulate matter in accordance with
the requirements defined in the integrated permit. To reduce pollutant emissions from the highly polluting units, overhaul and upgrading work is performed on gas treatment units, which requires substantial expenditure, including on replacement of filter cloths, repairs of absorbers and scrubbers, upgrades of dust filters. The company meets legal requirements pertaining to integrated air protection, and complies with the requirement to provide external supervisory authorities with relevant reports in a timely manner. Ambient concentrations are monitored on a 24/7 basis from four stations, whose location allows the company to assess the impact of pollutants generated during everyday operation of the plant.

Water and wastewater management

The Group uses water for industrial purposes, as a cooling agent, for drinking, to produce process waters, and for fire-fighting applications. The parent draws water from two sources − a surface intake on the right bank of the Dunajec river and an underground intake from Quaternary water-bearing formations (first aquifer). The allowed amounts of water drawn are specified in the relevant water-law permits.

The parent’s industrial facilities generate the following types of industrial wastewater: process wastewater, sanitary sewage, spent cooling water, and stormwater. Industrial wastewater is routed for treatment via an underground industrial sewer system and trestle-supported sewer lines. Depending on origin, industrial wastewater is transported to either the Central Wastewater Treatment Plant or the Biological Wastewater Treatment Plant. Industrial wastewater and sanitary sewage undergo mechanical and chemical treatment at the Central Wastewater Treatment Plant. The Biological Wastewater Treatment Plant receives industrial wastewater containing biodegradable substances. This type of wastewater is then additionally streamed to the Wastewater Treatment Facility operated by the Tarnów Water and Sewage Utility (Zakład Oczyszczalni Ścieków Tarnowskich Wodociągów Sp. z o.o.). Stormwater and spent cooling water from Grupa Azoty S.A. are drained separately, through an EF+A0 collector, collected in a retention pond, and then discharged through a Sutro weir into the Dunajec river.

The parent is well prepared for any wastewater system failure. In order to prevent wastewater escape, the system can be entirely shut off by closing the storm water outflow valve and pumping all wastewater to the Central Treatment Plant. It is also possible to direct the entire volume of wastewater generated by Grupa Azoty S.A. to the Wastewater Treatment Facility operated by the Tarnów Water and Sewage Utility.

Relevant parameters of the industrial wastewater are monitored on an ongoing basis at individual system nodes with remote analysers. Also, wastewater samples are laboratory-tested for pollutants at a predetermined frequency. The discharged wastewater meets the parameters defined in the integrated permit.

Grupa Azoty POLICE operates a sustainable water and wastewater management programme. The company takes care to ensure that the emission parameters are compliant with the terms of its integrated permit by supervising the wastewater treatment process.

For its power-generation or industrial process purposes, the company draws water from two surface water intakes:

• Western arm of the Oder river, through a river-bank water intake located on 48+900 km of the Szczecin−Świnoujście seaway,
• The Gunica river (the water intake from the Gunica river was constructed along with a surface water storage and pressure-equalising tank, which is to secure sufficient amount of water without exploiting water resources of the river; additionally, water is periodically abstracted from the Oder river, depending on its salinity).

The water is used for industrial purposes, as a cooling agent, and for fire-fighting applications. Industrial wastewater from production processes is received by the Company Wastewater Treatment Plant. Spent cooling water and stormwater from the plant are discharged directly into the surface waters of the Oder river. Spent cooling water undergoes regular automatic pH monitoring.

Industrial wastewater, leachate from the phosphogypsum landfill site, leachate from the iron sulfate (II) landfill site, sanitary sewage, and municipal wastewater from the town of Police are treated at the company’s collective mechanical and chemical wastewater treatment plant.

The treated wastewater is monitored in accordance with the terms of the integrated permit. At present, the volume of discharged wastewater is monitored on an ongoing basis, while the quality of wastewater discharged into water is regularly examined by an accredited laboratory. Tests are performed in line with reference methods set forth in the Regulation of the Minister of the Environment on conditions to be met when discharging wastewater into water or soil, and on substances particularly harmful to the water environment, dated November 18th 2014. The company meets all the requirements defined in the integrated permit for the quantities of abstracted water, volumes of discharged wastewater, pollution parameters of treated wastewater, as well as the amounts of stormwater and spent cooling water.

June 9th 2016 saw the publication of Commission Implementing Decision (EU) 2016/902, issued on May 30th 2016, establishing best available techniques (BAT) conclusions for the common waste water and waste gas treatment/management systems in the chemical sector (CWW). Accordingly, Grupa Azoty PUŁAWY, as an operator of a wastewater treatment plant, is required to comply with the BAT Conclusions by June 8th 2020. A project structure was established at Grupa Azoty PUŁAWY for a programme designed to develop comprehensive solutions related to water and wastewater management as well as sludge management. As part of the tasks performed by the wastewater management team, a contract was signed with an external company for the development of a technical concept and cost estimate for the management and discharge of all wastewater streams generated at Grupa Azoty PUŁAWY so that their quality and manner of their discharge meet the parameters of wastewater discharged to receiving waters, in line with BAT for the chemical sector and other legal regulations. The team responsible for sludge management analysed the current status and possible options for managing the sludge generated by the company. Inspection carried out by the Marshal Office of Lublin with respect to waste management and payment of charges for landfilling of waste revealed no irregularities.

Solid waste management

The main types of waste generated by the parent are ash and slag. Wet ash was reused, and fly ash was delivered to customers for use in the construction industry. Approximately 50% of the hazardous waste were spent oils and lubricants, which were collected by MIS-Polska and subsequently transferred to a refinery where the waste is used to manufacture new oil. The remaining part of the waste was hazardous packaging materials and spent catalysts containing hazardous substances.

The parent recycles its plastic waste in the Compounding PA6 and Compounding POM units. In 2016, the units recovered 74.8 tonnes of plastics.

The parent also operates a selective waste collection programme (for waste paper, plastics, wood, glass, used batteries, and used electric and electronic equipment). With environmental concerns in mind, in contracts with external providers of waste collection services and services involving generation of waste Grupa Azoty S.A. incorporates a clause requiring the providers to reuse or dispose of the waste collected from the Company in accordance with environmental protection laws and the waste act. Grupa Azoty S.A. also works with Branżowa Organizacja Odzysku S.A. and the Polish Chamber of Commerce to meet the appropriate targets applicable to recovery and recycling of packaging waste, including composite and hazardous materials packaging waste.

The main type of waste by-product generated by Grupa Azoty POLICE is phosphogypsum, which is disposed of by being deposited in the company’s phosphogypsum landfill site. Waste was managed in compliance with the terms of the Company’s integrated permit.

Additionally, in order to meet the appropriate targets applicable to recovery and recycling of packaging waste, including composite and/or hazardous materials packaging waste, Grupa Azoty POLICE partners with TOM Organizacja Odzysku S.A. and Polska Izba Odzysku i Recyklingu Opakowań (Polish Chamber of Recovery and Recycling of Packaging Waste).

In 2016, Grupa Azoty PUŁAWY transferred 80,221 tonnes of slag and ash from wet removal of furnace waste for recovery. An inspection carried out in June 2016 by the Marshal Office of Lublin with respect to waste management and payment of charges for landfilling of waste revealed no irregularities.

Noise emissions

As production processes tend to generate noise, the Group companies select equipment with appropriate acoustic parameters for every new unit already at the design stage. In accordance with the integrated permits, noise generation must not exceed the permitted levels. This applies to both the noise at the workplace and the noise emitted outside. The Group monitors its noise emissions, and measures them in accordance with the requirements set out in the integrated permits.

The selection of equipment featuring proper noise emission parameters or methods of reducing noise applies to workplace noise as well as noise emitted to the environment. In accordance with the integrated permits, noise generation must not exceed the permitted levels.

The main sources of noise affecting the acoustic climate include sources related to the operation of process units (compressors, turbocompressors, reactor and distiller agitators, granulator drive motors), sources related to ancillary process units (such as transmission pipelines, pump systems, fans, cooling facilities, screw and belt conveyors), sources related to the operation of machinery and equipment during the start-up and shut down of process units.

Typical means of reducing noise nuisance are applied, including:

• installing soundproof enclosures,
• placing equipment in buildings and casings,
• exhaust silencers.

In 2016, noise measurements were taken in the proximity of Grupa Azoty S.A. facilities, in line with the requirements of integrated permits.

In line with the requirements of the integrated permit, the most recent measurements of noise levels in the vicinity of Grupa Azoty POLICE’s plant at day- and night-time were carried out in 2015. The noise emissions were found to be within permitted levels.

Sustainable development policy

Grupa Azoty has implemented a strategic approach to sustainable development, based on its long-term Sustainable Development Strategy. The Strategy was developed on the basis of the Company’s existing good practices as well as research and analyses conducted both internally within the Company and among its stakeholders. It is founded on the business strategy. This approach allows the Group to enhance its economic value and to build value for the stakeholders.

The strategy reflects an integrated approach to:

• economic efficiency,
• responsibility towards staff and the natural environment,
• relationship with the environment.

The Sustainable Development Strategy rests on three pillars:

• sustainable production (mitigation of environmental impacts, creation of sustainable products, and increasing environmental awareness),
• dialogue and relationship building (active dialogue with all stakeholder groups, implementing a code of ethics),
• workplace (improving employee satisfaction and workplace safety).

Joint Implementation Project

The Joint Implementation Project, launched in the second half of 2008, was successfully completed at the end of 2012. The project was run by the parent in partnership with Japan’s Mitsubishi Corporation following the signing of the Kyoto Protocol, with a view to reducing GHG emissions, including nitrous oxide produced by the KDC nitric acid unit.

Over the project’s duration (2008–2012), a total of 2,670,356 ERUs were generated, producing a profit in excess of PLN 100m.

Due to its importance, the project was monitored and supervised by management staff and unit operators on an ongoing basis during the entire period. The generated ERUs were subject to repeated reviews by an external company, and the units were placed for trading only after a final report was approved, confirming the correct application of the required standards and methodologies.

The company has been reducing emissions of nitrous oxide as a GHG since 2013, to the levels achieved during the Joint Implementation Project, in an effort to satisfy the BAT (Best Available Technique) criteria.

Respect Index

The purpose of the RESPECT project is to bring to light the companies that excel in communication
with the market through current and periodic reports and through websites. Inclusion in the RESPECT Index depends on, among other things, socially responsible conduct vis à vis the environment, the community and the employees.

The selection of companies to be included in the Index is a three-stage process. The criteria evaluated in the selection process include financial condition, strategy, management processes, environmental factors, human resources policy and employee relations, as well as market impact and customer relations. Thus, Grupa Azoty S.A. has become a member of an elite group of stable, reliable and trustworthy organisations. Grupa Azoty S.A.’s inclusion in the RESPECT Index provides investors with an additional assurance that Grupa Azoty S.A. is a stable and safe enterprise, managed to the highest standards of sustainable development. In 2016, the parent participated in yet another evaluation of corporate social responsibility in public companies and was awarded a diploma as a Respect Index constituent.

The Company has been a constituent of the RESPECT Index since November 19th 2009, which stands as a testament to Grupa Azoty S.A.’s care for sustainable development and responsible management.

SPOT

With the safety of people, their property and natural environment in mind, the Group’s plants offer assistance in the event of incidents involving transport of hazardous materials. In 2000, the Group along with a group of other chemical manufacturers and the Polish Chamber of Chemical Industry established the Assistance System for Transport of Hazardous Materials (SPOT).

The system aids in recovery from incidents involving transport of hazardous materials. It helps to improve the safety of transport in Poland, and in case of any incidents it facilitates effective removal of their consequences by joint effort and measures of the national rescue, fire services and SPOT members. SPOT’s help in actively preventing potential threats and damage to property as well as in providing assistance to rescue services allows hazardous materials to be transported in as safe and reliable a manner as possible. In 2016, SPOT drills were conducted at Grupa Azoty.

In 2016, Grupa Azoty PUŁAWY was actively involved in the SPOT System of Assistance in Transport of Hazardous Materials. On February 15th−19th 2016, together with Grupa Azoty POLICE the company participated in the pumping of ammonia from derailed rail tankers in Szczecin. The operation was carried out using a unique technology for pumping ammonia under field conditions, developed and tested by Grupa Azoty PUŁAWY.

Management standards

The Group operates an Enterprise Management Policy. The policy defines the general plans and directions for the Group. The Enterprise Management Policy sets out the mission, vision and strategic objectives of the Group companies implemented based on management systems compliant with the highest international standards.

To accomplish this mission, the following strategic objectives have been set:

• to increase the scale of operations in core areas through organic growth, alliances and M&As, both in Poland and abroad,
• to advance integration within the Group to maximise operating synergies,
• to reduce the Group’s sensitivity to energy costs through the use of technological and energy-efficient solutions,
• to reduce the Group’s sensitivity to changing economic cycles and prices of natural gas and petrochemical commodities by extending product chains,
• to reduce production costs through upgrades of key production lines,
• to build stable and effective customer relations, increasing the brand awareness of leading products of the Group, and optimising product logistics and distribution,
• to improve the efficiency of key processes and of knowledge gathering and management,
• to continuously adapt product quality to customer requirements,
• to diversify horizontal, leveraging synergies with the existing product portfolio,
• to continuously improve products and services using innovative technologies.

The Group companies pursue strategic objectives based on management systems conforming to the highest international standards. Operating priorities, such as high quality, care for technical safety and environmental protection, energy efficiency, health safety of food, reducing environmental losses, giving priority to customers, are all efficiently monitored and ensure effective management.

In its operations, the Group complies with all applicable laws and regulations and strives to constantly improve the results of its operations and minimise the associated risks.

Management systems

The Azoty Group is implementing a Management Policy that ensures that its strategic objectives are based on an integrated management system that complies with international standards.
Business priorities: high quality, care for technical safety and the environment are effectively monitored and managed effectively. The Integrated Management System is built on the principles of priority treatment, minimizing environmental and risk hazards and continuous improvement.
The Parent Entity is obliged to:

• Quality Management System compliant with ISO 9001: 2008,
• Environmental Management System compliant with ISO 14001: 2004,
• Occupational Health and Safety Management System compliant with PN-N-18001: 2004 and BS OHSAS 18001: 2007 standards,
• Food Safety Management System compliant with ISO 22000: 2005,
• Management System PN-EN ISO / IEC 17025: 2005 (competence of testing and calibration laboratories);
• Quality Management System for automotive industry implemented in accordance with ISO / TS 16949: 2009,
• Management Standard compliant with the requirements of the Product Stewardship Program (Fertilizers Europe),
• Corporate risk management system based on ISO 31000 "Risk management principles and guidelines" and COSO "Corporate risk management - integrated framework",
• Energy Management System compliant with ISO 50001: 2011.

During the period covered by the report, the Azoty Group companies maintained and perfected implemented management systems. The validity of certificates confirming compliance of existing systems with the relevant requirements has been maintained. The improvement activities resulting from external and internal audits carried out on certified management systems and applications adopted during the Management Review were also performed. The activities for integration of management systems in the Azoty Group were conducted on a regular basis with the participation of the Team appointed for this purpose. He keeps track of changes in standards and initiates adaptation activities for the preparation of management systems certification in accordance with the requirements of ISO 9001: 2015 and ISO 14001: 2015.
During the period covered by the report in the companies of the Azoty Group, the measures taken to implement the energy management system in accordance with ISO 50001 were continued.

CO₂ emission allowances

In 2016, the average spot price of EUAs on the EU ETS market was EUR 5.28 (the highest price: EUR 8.08; the lowest price: EUR 3.91), which means a decrease of approximately 30% relative to 2015, driven chiefly by lower prices of energy commodities, including crude oil, electricity and natural gas (as EUA prices correlate with those prices).

In February 2016, distribution of free emission allowances to the participants of the EU ETS commenced. The Group companies hold a sufficient number of allowances to meet the obligations related to the settlement of CO2 emissions and redemption of allowances for 2016.

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