Competitive advantages of the NEKK OJSC production

1. High-quality copper (II) sulphate is produced using:
high-quality processed raw copper and high-purity sulphuric acid;
deep metallurgical processing of raw materials;
deep refinement and filtration of technological solutions.

2. A wide variety of products that meet the customers’ requirements:

fractionating into granules of the specified size;
addition of anti-cacking agents and other additives;
packaging into containers of weight from 100 grams to 1.5 tons.

3. Permit documentation that proves the production quality:
GOST Certificate 19347-99;
Certificates of HACCP (№ HACCP RU.001.P.D1549.0098), FAMI-QS (№ CCMRU.001.004), FEMAS (№ 43854) and EU Feed Hygiene;

preliminary registration of the production in compliance with the regulations of the EEC— REACH No. 05-2114479932-35-0000.

4. Elaborated delivery schemes for any country with shipment by motor, rail and marine transport, contracts with the large forward companies and owners of vehicles.

5. Commodity producer’s responsibility insurance.

6. The company is represented on the European market and has its own office in London, Great Britain.

7. Membership in international organizations and consortiums.

8. Publicity of the company:

reorganization into an open joint stock company;
publication of accountability documents in compliance with the regulations of the legislation system for financial markets of Russian Federation;
preliminary preparation for the company’s stock floatation at the MICEX (registration of prospectus for issue at the Federal Financial Markets Service of Russian Federation, making of contract with an independent registrar etc.)

 

A complex of arrangements have been realized as part of the creation of the Production Quality Control System:

1. The Technical Control Service has been created.

2. The Chemical and Spectral Laboratories have been created for testing:
— chemical composition of raw materials (copper scrap, sulfuric acid)
— quality of water
— chemical composition of purified copper
— chemical composition of produced copper (II) sulphate (all controlled elements including dioxins).

3. In 2008 the emission spectrometer with inductively coupled plasma iCAP 6500 was bought to measure elemental composition of different materials with maximum sensitivity and minimal detection limits in the range of 166–867 nanometers.

4. The Incoming Control System has been introduced to thoroughly exclude the use of low-quality raw materials.

5. Inter-laboratory comparison tests are run to check the quality of measuring copper (II) sulphate at the Chelyabinsk Agricultural Radiology Chemicalization Centre and the Ecological Research Centre of the Republic of Bashkortostan.

6. The Quality and Production Safety Management System has been developed in accordance with the HACCP standards and the standard GOST R ISO 22000 for the producers of copper (II) sulphate that are aimed to provide human and animal safety. The HACCP certificate No. HACCP RU.001.P.D.1549.0098 No. 0142 has been received.

7. The system of copper (II) sulphate production has been developed in accordance with the European Codex for fodder additives, the certificate FAMI-QS № CCMRU.001.004 has been received.

8. The quality and safety standards of copper (II) sulphate satisfy the requirements of the GOST 19347-99.

All rail, marine and motor transport used for delivery of the production meets the requirements for the hazardous cargo shipment.

Transportation and delivery are run with all necessary permit documents:

• ADR-Training Certificate for motor transport;
• safety data sheet registered with RPB Code (Code of Safety Data Registration List) No. 12601934.21.17181
• safety cards for motor transportation
• multimodal danger cargo declarations that regulate copper (II) sulphate transportation in multipurpose marine cargo containers
• Russian Railways OJSC approvals for transportation of hazardous commodities under special terms
• origin of good certificates (form A)

 

The products are packaged in special containers certified in accordance with the U.N.O. regulations for storing and transportation of hazardous commodities.
The complex of covering documents includes the passport security and emergency cards in the languages of those countries where the cargo is transported to.

Stages of the chemical production development

Since August 2006 technical-grade copper (II) sulphate has been produced and sold on a regular basis following a period of a 6-month test production. Copper (II) sulphate complies with the codes of practice for technical-grade products defined by the state Russian standard GOST 19347-99.
During the period from August 2006 till December 2007, NEKK OJSC produced total amount of copper (II) sulphate of 1750 tons.

In July 2007, NEKK produced 20 tons of the first experimental batch of fodder and food-grade copper (II) sulphate in accordance with the CMP/HACCP standards.

In October 2007, a smelting workshop started producing copper granules. By introducing a new procedure to utilize hollow copper granules in December 2007, NEKK increased the output of copper (II) sulphate up to 15 tons per day and improved the quality to the first class of mark A according to the GOST 19347-99.

 

The Industrial Group NEKK’s authorities have approved the development plan for 2008-2009 that outlines main provisions:
1. Reconstruction of the metallurgical workshop to increase its productivity up to 15 tons of granular copper per day.
2. Upgrading the workshop to increase copper (II) sulphate output up to 45 tons per day.
3. Production of fodder and food-grade copper (II) sulphate with grain-size composition of any weight and type of packages and adding an anti-caking agent including other additions.
4. Organization of a container-filling site for copper (II) sulphate.

In 2008 NEKK had produced 4200 tons of copper (II) sulphate, including 1750 tons of fodder and food-grade copper (II) sulphate.

In 2009 NEKK is planning to produce 10800 tons of copper (II) sulphate.

In 2010 NEKK is planning to produce 16200 tons of copper (II) sulphate.

From February 2009 the ratio of production volumes of fodder and food copper (II) sulphate and copper (II) sulphate technical will depend on the customer demands only.

Diagram
Production volumes of copper (II) sulphate in 2006–2008. Prognosis for 2009-2010, tons

	technical	fodder
August 2006 —December 2007	1730	20
2008	2450	1750
2009	on demand	10800
2010	on demand	16200

FINANCIAL AND ECONOMIC INDICATORS OF CHEMICAL PRODUCTION

Industrial Group NEKK has increased production and sales volume, whilst simultaneously inflating its chemical subdivision, each year since it was established.

In 2008 the annual sales volume of Industrial Group NEKK increased by 237 per cent in comparison with 2008 and made a total of 658.9 million rubles ($22419190*).

In 2008 the annual sales volume in chemical subdivision increased by 314.3 per cent in comparison with 2007 and made a total of 185.1 million rubles ($6298060*).

In 2007–2008, investments in chemical production increased 137,5 times in comparison with 2000 and made a total of 165 million rubles ($5614154*).

Диаграмма The Annual Sales Volume, USD

 

* According to the USD exchange rate of the Central Bank of the Russian Federation as for 01.01.2009 (1 USD = 29.39 rubles)

** Prognosis for 2009 according to the LME exchange rate $ 6000/ton of copper

*** Prognosis for 2010 according to the LME exchange rate $ 6500/ton of copper

In 2008 the company has been turned into a joint-stock company to increase its capitalized value and the company’s stock market floatation is planned to be realized in the beginning of 2009.