МЕСТО ДЛЯ ОБЛОЖКИсмз.рф/raport/2018/itog2017/6985.pdf · 2018. 7. 9. ·...
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ADOPTED BY:
Annual General Assembly of Shareholders
Of JSC Solikamsk Magnesium Works
Date of General Assembly of Shareholders:
«29» June 2018
Protocol № 1
of «02» July 2018
Provisionally Approved by:
The Board of Directors
Of JSC Solikamsk Magnesium Works
Protocol №4
of «25» May 2018
JOINT-STOCK COMPANY
SOLIKAMSK MAGNESIUM WORKS
ANNUAL REPORT
2017
General Director ________________ Dmitriy L. Melnikov
(signature)
Solikamsk
2018
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TABLE OF CONTENT Page
LETTER TO SHAREHOLDERS 3 MISSION OF JSC SOLIKAMSK MAGNESIUM WORKS 4 GENERAL COMPANY’S INFORMATION 4 History in Brief 4 Solikamsk Magnesium Works in Brief 5 Registration Data 6 Auditor of the Company 6 Register-keeper of the Company 6 Authorized Capital of the Company 6 Shareholders of the Company 7 Market Capitalization of the Company 7 Subsidiaries (Dependent Entities) of the Company 7 SMW’s Membership in Organizations & Associations 7
PRIORITY ACTIVITIES OF THE COMPANY 8 REPORT OF THE BOARD CONCERNING PROGRESS IN THE COMPANY’S PRIORITY ACTIVITIES 8 General Overview 8 Performance by Operations 9 Magnesium Operations 10 Rare Metals Operations 12 Niobium Compounds 13 Tantalum Compounds 14 Compounds of Rare Earths 15 Titanium Sponge & Compounds 15 Chemical Operations 16
Usage of Energy Resources 16 Technical Development 16 Integrated Management System 17 Operational & Industrial Safety 18 List of the Company’s Licenses & Permissions 19 Social Activity 19 POSITION IN THE INDUSTRY 20 Position in the Magnesium Industry 20 Position in the Rare Earths Industry 22 Position in the Titanium Industry 24 Position in the Niobium Industry 25 Position in the Tantalum Industry 27 Position in the Chemical Industry 28
PROSPECTS OF THE COMPANY 28 RISK FACTORS CONNECTED WITH THE COMPANY’S ACTIVITY 29 CORPORATE GOVERNANCE 30 Duties and Activity of the General Assembly of Shareholders in the Reporting Period 30 Duties and Activity of the Board in the Reporting Period 31 Dividend Statements 31 List of the Company’s Deals Those Could Be Referred to as The Large Deals In Accordance with Federal Law Joint-Stock Companies
32
List of the Company’s Deals Those Could Be Referred to as the Interested Party Transactions In Accordance with Federal Law Joint-Stock Companies
32
The Board of Directors of the Company 32 Information on the Person Who Holds the Position of Exclusive Executive Body of the Company 34 The Main Provisions of the Company's Policy on Remuneration The Main Provisions of the Company's Policy on Remuneration and Reimbursement of Expenses, as well as the Criteria for Determining the Amount of Remuneration and Compensations Paid to the Members of the Board of Directors of the Company
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34 The Main Provisions of the Company’s Policy on Remuneration and Reimbursement of Expenses, as well as the Criteria for Determining the Amount of Remuneration and Compensations Paid to the Executive Body of the Company
34 Information (report) on Compliance with Principles and Recommendations of the Code of Corporate Governance Recommended by the Bank of Russia
35
Information Concerning Approval of this Annual Report 35
KEY PERFORMANCE INDICATORS OF THE COMPANY 36 REPORT OF AUDITOR 37 Annexes- available only in Russian electronic version under link: http://смз.рф/index/godovye_otchety/0-11 Annex № 1 List of the Company’s Licenses Annexе № 2 Compliance with Code of Corporate Governance Recommended by CBRF Electronic Version of this Report is located on the Company’s site under link http://смз.рф/index/en_information/0-104
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LETTER TO SHAREHOLDERS
Dmitriy L. Melnikov
General Director of JSC Solikamsk Magnesium Works
Last year -2017 – was not favorable for Solikamsk Magnesium Works. Recovery of the world economy and demand for the Company’s products improved only by the end of the year, and throughout the reporting year, demand and prices remained at a low levels.
Negative impact of market factors in combination with strengthened Russian ruble, cost increases caused by high inflation in Russian industry and high banking interest rates, affected the Company’s profitability in 2017.
Despite increased output of the main products and sales revenues in US dollar terms, sales revenues of SMW in terms of Russian ruble dropped by 7.35% year-to-year, from 6'521.9 million rubles in 2016 to 6’042.303 million rubles in 2017, sales loss totaled 368.3 million rubles, net loss accounted for 299.2 million rubles.
Despite unfavorable financial performance of the Company in the reporting year, certain developments to produce new value-added products like lithium tantalate, new magnesium alloys and master alloys with rare earths, granular products were performed by the Company, and SMW is going to continue further efforts in this direction in 2018.
The market outlook is cautiously optimistic for 2018. Rising demand and prices are observed for the main products of the Company and it is projected this upward demand trend will have long-term prospects due to its close connection with the Fourth Industrial Revolution, digital economy and green transport and energy, while the intention of the Central Bank of Russia to reduce the key interest rate, which is expected to lead lower interest rates on banking loans, would also have a positive support on the Company's performance.
Apparently, 2018 will be the complicated year for the Company, however, management of SMW will make efforts to overcome any challenges, that may arise, and to strengthen the technical and financial performance of the Company in the coming year and beyond.
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MISSION OF JSC SOLIKAMSK MAGNESIUM WORKS
Mission
Activities of our Company are concentrated on the manufacturing of quality magnesium, chemical and rare metals products designed for use in High-Tech industries.
Our long-term and reciprocal relationships with customers, suppliers, employees, shareholders and the community are established with use of efficient, environment-friendly and modern engineering approaches.
Vision
We confidently remain on leading market positions, meeting improved and modified customers’ requirements by the way of development environment-friendly and efficient processes.
High-skilled, self-motivated and devoted employees are considered as the basic source of the Company’s success in the market.
Efficient and reciprocal relationships with our partners give us a competitive edge.
GENERAL COMPANY INFORMATION History in Brief
● 14 March 1936: first ingot of primary magnesium metal was produced by the Company. This historical date is fairly considered as the Date of Birth of Solikamsk Magnesium Works (SMW)
● 1939: SMW had started production of alloy magnesium for aircraft industry
● 1946: the Experimental Plant was founded, - the first experimental plant inside an operating facility in the Non-ferrous Industry of the Soviet Union. All of the main basic technologies recently utilized by CIS magnesium and titanium companies and Israeli DSM were developed here
● 1962-1966: A proprietary technology to produce Mg-Zr master alloy and MZr1N3 magnesium super alloy was implemented to source the Soviet Space Program and Aircraft Industry
● 1971: Rare Metals Operations were brought on stream with use of chlorine generated in Magnesium Operations as the main reagent to process loparite and other raw materials in these operations
● 1977: a line to separate niobium pentachloride out of tantalum pentachloride with production of technical grade niobium pentoxide was put into operation
● 1983: a line to produce optoelectronic grades of tantalum and niobium compounds was brought on stream
● 1985: SMW was awarded with the Order of Great Patriotic War 1941-1945 recognizing importance of SMW’s supply for Soviet Army and Navy to win the War
● 1992: state-owned enterprise Solikamsk Magnesium Works was transformed into joint-stock company Solikamsk Magnesium Works (hereinafter referred to as “SMW”, “Solikamsk”, or “the Company”)
● 1996: in joint venture partnership with Almamet GmbH, Germany, a plant to produce magnesium granules, powders and mixes for desulfurization of iron and steel – Solikamsk Desulfurizers Works OOO (SZD) - was brought on stream. This event pushed mass introduction of desulfurization process in the Russian Steel Industry
● 2000: a line to produce rare earths carbonates was brought into operation; the first ISO 9001 certification
● 2009: the first 1’000’000th ton of magnesium metal was smelted by SMW; the first stage of titanium sponge project was brought on stream with capacity 2’500 tons per year out of total projected capacity of 5’000 tons per year
● 2010: the first ISO 14001 certification
● 2014: facility to process by-products of Magnesium Operations was brought on stream
● 2016 - 2017: facilities to produce granular potash and fluxes were brought into operations; production of new products was developed: new grades of magnesium creep resistant alloys for elevated temperature applications; master alloys with rare earths; lithium niobate and tantalate; calcium – strontium carbonate
Solikamsk is a modern, continuously developing company which gradually increases the range of products with enhanced features and keeps leading positions in Magnesium and Rare Metals Industries of Russia accounting for, virtually, 100% output of tantalum, niobium and rare earths chemicals, more than 60% of commodity pure & alloy magnesium metal and 4-5% of titanium sponge production in the country, with Integrated Management System conforming to appropriate international standards and requirements.
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Solikamsk Magnesium Works In Brief
Annual capacities to manufacture main products Magnesium Operations
- Pure & alloy Mg – up to 18’200 mt, including 16’200 mt output for sales; - Potash, fluxes, etc. – up to 79’320 mt; - Calcium hypochlorite solution – up to 60’000 mt
Rare Metals Operations
Capacity for loparite processing is up to 13’000 mt that enables to produce: - Niobium compounds – up to 855 mt Nb2O5 contained - Tantalum compounds – up to 60 mt Та2О5 contained - Rare earths compounds – up to 3’600 mt Total Rare Earths Oxide (TREO) contained - Titanium sponge & titanium compounds – up to 2’600 mt Ti contained
Chemical Operations - Chlorine, liquid – up to 3’000 mt - Lime – up to 20’000 mt - Calcium chloride solution (32% CaCL2) – up to 72’000 mt
SMW’s suppliers of the main raw materials
Solikamsk, Perm Region
SOLIKAMSK PRODUCTION FLOW CHART
Raw material supply Production
Revda, Murmansk
Region
Finished Products
Magnesium Operations
•Pure & alloy Mg metal •Potash (40% К2O) •Carnallite •Fluxes, etc •Ca hypochlorite solution
Chemical Operations
•32% CaCL2 solution •Lime •Lime slurry •Liquid chlorine
Ch
lori
na
tio
n
Production of rare earths compounds Rare Earths Chlorides
TiCl4
•Titanium sponge
loparite
•Nb pentachlorides & oxides •Та pentachlorides & oxides •Ti tetrachloride •Nb пентахлориды и оксиды •Та пентахлориды и оксиды •Ti тетрахлорид •Rare earths carbonates •Ca-Sr carbonate
Rutile
Lime stone
Chlorine, Lime slurry milk
Mg
MgCl2
Chlorine (gas)
carnallite
Lime slurry
loparite
Rare Metals Operations
Production of Nb, Ta, Ti compounds
Production of titanium sponge
Ti, Nb, Ta chlorides
Carnallite
ООО Галополимер-Пашия
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Registration Data Complete Name of the Company In Russian: Открытое акционерное общество «Соликамский магниевый завод» In English: Open joint stock company «Solikamsk Magnesium Works» Short Name of the Company: In Russian: ОАО «СМЗ» In English: JSC «SMW» Company Location: 9 Pravda Str., 618541, Solikamsk, Permskiy Krai. RUSSIA Tel: +7(34253) 51171 Fax: +7(34253) 52375 E-mail: [email protected] htpp:// www.smw.ru, www.смз.рф Date of State Registration and Register Number: Order of Solikamsk City Administration № 919.1 of 10 November 1992 Key State registration number of juridical person (OGRN): 1025901972580 Date of registration: 10 September 2002 Taxpayer Identification Number (INN): 5919470019 Name of Registering Agency: Inter-regional Inspection № 11 for Perm Region and Komi-Permiatskiy National District, the Russian Federation Ministry of Taxes Registered Activities (codes OKVED): - Production of other inorganic chemicals OKVED 20.13 - Production of other non-ferrous metals OKVED 24.45
- Casting of metals OKVED 24.5
- Generation, transfer & distribution of steam and hot water; air conditioning OKVED 35.30
- Exploration of gravel and sand pits, mining of clay and kaolin OKVED 08.12
- Building & construction of residential and non-residential buildings OKVED 41.20
- Activity of sports entities OKVED 93.11 - Activity of medical entities OKVED 86.10
- General medical practice OKVED 86.21
- Professional education not included in other groups OKVED 85.42.9
- Activity of canteens and buffets belonging to enterprises OKVED 56.29.2
- Retail in non-stationary retail objects and market places OKVED 47.8 - Wholesale trade of other food including fish, crustaceans & mollusks OKVED 46.38 - Wholesale trade of homogenized food products, children's and dietary food OKVED 46.38.21 - Retail of alcohol-free soft drinks in special shops OKVED 47.25.2 - Other retail activity out of shops, shopping trays & market places OKVED 47.9
The main activity in 2017: Production of other inorganic chemicals OKVED 20.13
Sources of information about the Company: Company’s newspaper “Magnievik”, city’s newspaper «Solikamskiy rabochiy», Company’s web-site http://www.smw.ru, www.смз.рф and web-page of Center of Corporate Information Disclosure ООО «Interfax - CRCI» http://www.e-disclosure.ru/portal/company.aspx?id=6100
Representative offices and affiliated branches: not available
Auditor of the Company
Name: Closed type joint-stock company Firm Legion-Audit (ZAO Auditing Firm Legion-Audit) Location: ul. Kostycheva 42a, 614031, Perm. RUSSIA INN: 5903029169 OGRN: 1025900766870 E-mail address: [email protected] Auditor is a member of Self-Regulatory Organization of Auditors Chamber of Auditors of Russia (Association), OGRN 1027739244015, ORNZ 11603087954 from 20 December 2016.
Register-keeper of the Company
Name: Joint-Stock Company Registrator Intraco Location: ul. Lenina 64, Suite 209, 614990, Perm. RUSSIA Tel: +7(342) 233-01-63/233-01-64, fax: +7 (342) 236-08-44, http://www.intraco.ru License number: 10-000-1-00272 of 24 December 2002 Issuing Agency: The Russian Federal Securities Commission Validity: unlimited Registrator Intraco is a member of Professional Association of Register-keepers, Transfer Agents and Depositaries (PARTAD). Performs function of Register-keeper of the Company since 23 December 1996
Authorized Capital of the Company
Authorized Capital of the Company is 99’568 (ninety nine thousand five hundred sixty eight) rubles which is divided into 398’272 (three hundred ninety eight thousand two hundred seventy two) personal ordinary (voting) shares with a nominal value of 0.25 rubles per share
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State registration number of shares’ issue: 1-01-00283-А Date of State registration of shares’ issue: 05 June 2007
Shareholders of the Company Number of persons registered in the list of shareholders on the last date of the reporting year is 687, including 1 nominal shareholder. List of shareholders owing at least 5% of authorized capital or not less than 5% of ordinary (voting) shares of the Company on 31 December 2017: 1. Timur Vladimirovich Starostin – 25.0020% 2. Igor Leonidovich Pestrikov – 24.9997 % 3. Petr Ivanovich Kondrashev – 24.0002 % 4. Sergei Yurievich Kirpichev – 15.4533% Other shareholders – 10.5451 %
Information concerning any agreement of any shareholder(s) and/or person(s) who keep(s) a control on any shareholder(s) act together with participation of the other shareholder(s), which may have significant impact on the Company’s activities, under which parties of such agreement(s) assume its obligations act together in connection with business activities including managing of the Company, is not available.
Market Capitalization of the Company According to data provided by Public Joint-Stock Company Moscow Exchange MICEX-RTS (PAO Moscow Exchange), market capitalization of SMW on the last date of the reporting year (31 December 2017) accounted for 1’465’640 ‘960 rubles. Ordinary shares of JSC SMW (trade index – MGNZ, international identification code (number) - RU0009100911) are included in the 3rd Level of Securities List permitted for trade in PAO Moscow Exchange. Location of exchange: 13 Bolshoi Kislovskiy pereulok, 125009, Moscow. RUSSIA. http://moex.com/ Information concerning market price of SMW’s shares and market capitalization of SMW on the basis of trading in the stock market of PAO Moscow Exchange, at the end of reporting period, is readily available under link: http://moex.com/a4258
Subsidiaries (Dependent Entities) of the Company
1. Limited Liability Company Solikamsk Desulfurizers Works (OOO SZD)
Location: 9 Pravda Street, 618541, Solikamsk, Permskiy Krai. RUSSIA. Web: www.szd.ru INN: 5919492823 OGRN: 1025901973459
The main activity: production of other non-ferrous metals (ОКVED 24.45) SMW’s share in Authorized Capital of the subsidiary,%: 50
2. Open Joint-Stock Company "The Russian Titanium & Magnesium Research, Development & Designing Institute” (OAO RITM)
Location: 101 Lenina Avenue, 618421, Berezniki, Permskiy Krai. RUSSIA Web: www.oao-ritm.ru INN: 5911030023 OGRN: 1025901707237 The main activity: research and development works in area of natural and technical science (ОКVED 72.19) SMW’s share in the authorized capital of subsidiary, %: 68 SMW’s share in total voting shares of subsidiary, %: 68
3. Limited Liability Company "Mart" (OOO Mart)
Location: 9 Pravda Street, 618541, Solikamsk, Permskiy Krai. RUSSIA INN: 5919491570 OGRN: 1025901972656 The main activity: production of lime products (ОКVED 23.52.1) SMW’s share in subsidiary’s Authorized Capital%: 67.54%
4. ZAO Ecomag – inactive
SMW’s share in the authorized capital of subsidiary, %: 50 SMW’s share in total voting shares of subsidiary, %: 50
Subsidiaries do not have quasi-securities (shares of SMW) at their disposal.
SMW’s Membership in Organizations and Associations:
1. Tantalum – Niobium International Study Center (TIC) - from 1992 2. Perm Chamber of Commerce - from 1992 3. Verkhne-Kamskaya Chamber Of Commerce - from 1995 4. Association of Analytical Centers Analitika - from 1995 5. Non-commercial alliance Association of Chlorine Industry (Association RusChlor) - from 2006 6 ZAO Inter-state Association Titan - from 2008 7. Association of Energy Facilities of Western Urals - from 1997
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8. Self-regulatory Organization Non-commercial Partnership Union of Architectural & Designing Organizations of Permskiy Krai - SRO NP SAPO - from 2009 9. Self-regulatory Organization Union of Builders ZapadUralStroy Alliance of Builders– from 01 August 2017 10. Non-commercial Partnership Council of Managing Directors of Enterprises in Solikamsk City and Solikamsk District - from 2002
PRIORITY ACTIVITIES OF THE COMPANY
The Charter of the Company constitutes that priority activities of SMW are to supply markets with magnesium, chemical and rare metals products, satisfy demand for commodities and services, and earn a profit. The Company’s strategy is the gradual development of products with enhanced features in order to assure sustainable sales of the Company’s products in changing market conditions
REPORT OF THE BOARD CONCERNING PROGRESS IN THE COMPANY’S PRIORITY ACTIVITIES
GENERAL OVERVIEW Recovery of the global economy from crisis was observed by financial institutions by the end of 2017. According to IMF and World Bank, in 2017, growth of the world economy accounted for +3.6% and +3.0% respectively (http://tass.ru/ekonomika/4893092; http://www.vsemirnyjbank.org/ru/news/press-release/2018/01/09/global-economy-to-edge-up-to-3-1-percent-in-2018-but-future-potential-growth-a-concern). This is a rise of +0.2-+0.4%% compared to initial outlooks for 2017. 2018 – 2020 forecasts have also been improved by the both abovementioned institutions. However, markets of SMW products were under pressure during the reporting year. Strengthening of Russian ruble caused by carry trade policy applied by the Bank of Russia, in terms of dropped prices on the Company’s products and elevated prices on purchased materials and energy, affected key performance indicators of the Company in the reporting year.
SMW. Key Performance Indicators (KPI) in ₽ mln and US$ mln, exchange rate ₽/US$
Sales revenues of the Company totaled ₽ 6’042.303 million in the reporting year. This is a drop of -7.35% (- ₽
479.617 million) compared to ₽ 6'521.920 million in 2016. The same parameter in US$ accounted for US$ 103.677 million. This is a rise of + 6.0% (+US$ 5.855 million) compared to US$ 97.822 million in 2016.
Sales loss accounted for - ₽ 368.321 million (-US$ 6.319 million), net loss totaled - ₽ 299.218 million (-US$ 5.134 million) compared to sales loss of - ₽ 29.073 million (-US$ 0.434 million) and net loss of - ₽ 237.581 million (-US$ 3.544 million) in 2016.
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Sales revenue in the Russian market increased by +0.9% (+ ₽32.767 million), from ₽3'562.662 million in 2016 to ₽3'595.429 million in 2017, while, in US$ terms, the same results accounted for US$ 53.553 million and US$61.696 million respectively representing a rise of +15.2%(+US$ 8.143 million). Share of Russian sales in total sales revenues of the Company increased from 54.7% to 59.5%.
Export sales revenues accounted for ₽ 2'446.875 million in 2017. This is a drop of -17.3% (- ₽ 512.383 million) compared to ₽ 2'959.258 million in 2016. Export sales in US$ decreased by -5.2% (by -US$ 2.288 million), from US$44.269 million in 2016 to US$ 41.981 million in 2017. Share of export sales fell from 45.3% до 40.5% Y-o-Y.
SMW. Sales revenues by market areas, ₽ million, US$ Million, and in % (on the graphs)
₽ million 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Russia 1'589.463 1’226.148 1’747.359 2‘674.856 3’172.561 2’867.001 2'593.914 3'820.781 3'562.662 3'595.429
Other EurAsEC 178.775 251.208 330.613 1 388.396 238.671 335.514 425.794 294.969 426.828 112.761
TOTAL EurAsEC 1'768.238 1'477.356 2'077.972 4'063.252 3'411.232 3'202.515 3'019.708 4'115.750 3'989.490 3'708.190
Americas 279.309 118.523 395.136 78.812 198.792 336.134 749.857 939.917 1'142.557 889.918
Asia 95.542 107.885 170.166 290.559 238.849 346.091 717.292 610.819 446.553 354.666
Europe , others 974.316 823.056 704.560 2'077.465 1'672.027 570.830 677.881 729.009 943.320 1'089.529
TOTAL ROW 1'349.167 1'049.464 1'269.862 2'446.836 2'109.668 1’253.055 2'145.030 2'279.745 2'532.430 2'334.114
TOTAL WORLD 3'117.405 2'526.820 3'347.834 6'510.088 5'520.900 4’455.570 5'164.738 6'395.495 6'521.920 6'042.303
US$ million 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Russia 63.901 38.598 57.523 90.998 102.096 89.857 68.514 62.647 53.553 61.696
Other EurAsEC 7.187 7.908 10.884 47.233 7.681 10.516 10.896 4.836 6.322 1.943
TOTAL EurAsEC 71.088 46.506 68.407 138.230 109.777 100.372 79.410 67.484 59.875 63.639
Americas 11.229 3.731 13.008 2.681 6.397 10.535 19.075 15.411 17.193 15.271
Asia 3.841 3.396 5.602 9.885 7.686 10.847 17.922 10.015 6.665 6.059
Europe , others 39.170 25.909 23.194 70.675 53.808 17.891 17.388 11.953 14.089 18.708
TOTAL ROW 54.240 33.036 41.804 83.240 67.891 39.273 54.385 37.380 37.947 40.037
TOTAL WORLD 125.328 79.543 110.211 221.471 177.668 139.645 133.795 104.864 97.822 103.677
PERFORMANCE BY OPERATIONS SMW. Sales revenues by Operations, ₽ million, US$ million и в % (graphs)
₽ million 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Magnesium (Mg) operations 1'938.084 1’519.937 1’850.875 1'925.943 2’050.233 2’081.928 2’117.357 2’744.153 2'963.940 2'947.811
Rare Metals operations 956.945 793.769 1'226.470 4'159.545 2’963.816 1'830.148 2'538.288 3’220.397 3'281.675 2'718.505
Chemical operations & services 222.376 213.114 270.489 424.600 506.851 543.494 509.092 430.945 276.304 375.988
TOTAL, ₽ million 3'117.405 2’526.820 3’347.834 6'510.088 5'520.900 4'455.570 5’164.737 6'395.495 6'521.920 6'042.303
US$ million 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Magnesium (Mg) operations 77.916 47.847 60.931 65.520 65.979 65.251 55.826 45.197 44.617 50.501
Rare Metals operations 38.472 24.987 40.376 141.506 95.379 57.360 64.590 52.567 49.035 46.717
Chemical operations & services 8.940 6.709 8.905 14.445 16.311 17.034 13.379 7.100 4.170 6.459
TOTAL, US$ million 125.328 79.543 110.211 221.471 177.668 139.645 133.795 104.864 97.822 103.677
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TOTAL ROW 43.3% 41.5% 37.9% 37.6% 38.2% 28.1% 40.6% 35.6% 38.8% 38.6%
TOTAL EurAsEC 56.7% 58.5% 62.1% 62.4% 61.8% 71.9% 59.4% 64.4% 61.2% 61.4%
Europe and others 31.3% 32.6% 21.0% 31.9% 30.3% 12.8% 13.0% 11.4% 14.4% 18.0%
Asia 3.1% 4.3% 5.1% 4.5% 4.3% 7.8% 13.4% 9.6% 6.8% 5.8%
Americas 9.0% 4.7% 11.8% 1.2% 3.6% 7.5% 14.3% 14.7% 17.6% 14.7%
Other EurAsEC 5.7% 9.9% 9.9% 21.3% 4.3% 7.5% 8.1% 4.6% 6.5% 1.9%
RU 51.0% 48.5% 52.2% 41.1% 57.5% 64.3% 51.2% 59.7% 54.7% 59.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
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Share of Magnesium operations in total sales revenues of SMW rose from 45.4% in 2016 to 48.8% in 2017. Sales revenues of these operations accounted for ₽ 2'947.811 million in 2017. This a drop of -0.5% (- ₽ 16.129 million)
compared to ₽ 2'963.940 million in 2016, due to deflated prices and strengthened ruble, and despite growth of output. Sales revenues in US$ terms increased from US$ 44.617 million in 2016 to US$ 50.501 million in 2017. This is a rise of +13.2% (+US$ 5.884 million).
Share of Rare Metals operations in total sales revenues of SMW decreased from 50.3% in 2016 to 45.2% in 2017. Sales revenues of these operations dropped by -17.2% (- ₽ 563.170 million), from ₽ 3'281.675 million in 2016 to ₽2'718.505 million in 2017 due to strengthened ruble and deflated prices. In US$ terms revenues decreased from US$ 49.035 million in 2016 to US $46.717 million in 2017. This is a drop of - 4.7% (-US$ 2.318 million).
Share of Chemical operations & Services in total sales revenues increased from 4.2% in 2016 to 6.2% in 2017. Sales revenues accounted for ₽375.988 million in 2017. This is a rise of + 36.1% (+ ₽ 99.684 million) compared to ₽276.304 million in 2016 due to increased shipments of chemicals. In US$ terms revenues accounted for US$ 6.459 million. This is a jump of + 54.9% (+US$ 2.289 million) compared to US$ 4.170 million in 2016.
MAGNESIUM OPERATIONS
The production of the magnesium metal from carnallite is the basic process in Magnesium operations of SMW, and it is the starting point of the processes utilized by the Company.
Chlorine generated in the production of magnesium metal is the main reagent used to process loparite and other raw materials utilized by the Rare Metals operations. While, part of magnesium capacity is employed in the titanium-magnesium cycle of the titanium sponge production where magnesium metal is used as the reducing agent to extract titanium from titanium tetrachloride with generation of titanium sponge and magnesium dichloride. Magnesium dichloride is then recycled back to magnesium metal and chlorine in the Magnesium operations, and magnesium is then reverted back to the process of titanium sponge production, while chlorine is used to process raw materials on chlorination stage of the Rare Metals operations.
Pure & alloy magnesium are the main products of Magnesium operations. Other products of these operations include processed carnallite mainly used to produce salts for balneotherapy, potash (>40% К2О) mainly used as the fertilizer or in solutions for oil drilling, fluxes (potash, carnallite, other salts, sulphur) mainly used in the non-ferrous industry, and calcium hypochlorite solution used for disinfection of premises and paper bleach
SMW. Shipments of products of Magnesium operations by market areas, ₽ mln and US$ mln, % (graphs)
₽ million 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Russia 950.869 725.289 1'069.342 1'513.027 1'593.712 1'770.394 1'564.447 2'087.137 2'479.221 2'089.778
Other EurAsEC 64.278 141.752 59.629 74.358 59.099 55.883 86.782 54.528 46.421 53.255
TOTAL EurAsEC 1'015.147 867.041 1'128.971 1'587.385 1’652.811 1'826.277 1'651.229 2'141.666 2'525.642 2'143.033
Americas 213.598 90.097 347.386 41.177 16.947 15.720 234.785 221.453 118.473 497.559
Asia 90.752 88.535 113.769 197.789 199.387 113.724 120.073 185.825 187.771 171.323
Europe, others 618.587 474.264 260.749 99.592 181.088 126.207 111.270 195.220 132.054 135.896
TOTAL ROW 922.937 652.896 721.904 338.558 397.422 255.651 466.128 602.498 438.298 804.778
TOTAL WORLD 1'938.084 1'519.937 1'850.875 1'925.943 2'050.233 2'081.928 2'117.357 2'744.163 2'963.940 2'947.811
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Chemical operations & services 7.1% 8.4% 8.1% 6.5% 9.2% 12.2% 9.9% 6.7% 4.2% 6.2%
Rare Metals operations 30.7% 31.4% 36.6% 63.9% 53.7% 41.1% 49.1% 50.4% 50.3% 45.0%
Mg operations 62.2% 60.2% 55.3% 29.6% 37.1% 46.7% 41.0% 42.9% 45.4% 48.8%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
85.0%
90.0%
95.0%
100.0%
11
US$ million 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Russia 38.227 22.832 35.203 51.473 51.287 55.487 41.648 34.425 37.247 35.808
Other EurAsEC 2.584 4.462 1.963 2.530 1.902 1.751 2.326 0.929 0.701 0.924
TOTAL EurAsEC 40.812 27.294 37.166 54.002 53.189 57.239 43.974 35.354 37.948 36.732
Americas 8.587 2.836 11.436 1.401 0.545 0.493 5.948 3.532 1.827 8.527
Asia 3.648 2.787 3.745 6.729 6.416 3.564 3.051 2.976 2.791 2.922
Europe, others 24.869 14.930 8.584 3.388 5.828 3.956 2.921 3.336 2.051 2.319
TOTAL ROW 37.104 20.553 23.765 11.518 12.789 8.013 11.92 9.844 6.669 13.769
TOTAL WORLD 77.916 47.847 60.931 65.520 65.979 65.251 55.894 45.197 44.617 50.501
.
SMW. Shipments of products of Magnesium operations, mt
SMW. Shipments of pure & alloy magnesium by market areas, mt and in %% (graphs
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Russia 6'460 5'861 9'307 11'809 12'868 13'315 11'207 10'729 13'243 11'749
Other EurAsEC 596 240 154 549 399 330 609 243 294 356
TOTAL EurAsEC 7'056 6'101 9'461 12'358 13'267 13'645 11'816 10'972 13'538 12'104
Americas 2'570 901 3'544 375 142 138 1'695 1'051 623 3'158
Asia 1 003 215 80 0 0 20 0 0 0 0
Europe, others 5'952 4'903 2'376 784 389 167 233 437 185 330
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Alloy Mg 1 756 775 957 512 544 752 829 634 671 602
Pure Mg 14 825 11 345 14 504 13 005 13 254 13 218 12 915 11 826 13 675 14 990
TOTAL pure & alloy Mg 16 581 12 120 15 461 13 517 13 798 13 970 13 744 12 460 14 346 15 593
Potash (40% K2O) 0 0 37 346 30 906 45 436 32 697 36 404 51 253 56 846 32 590
Fluxes 77 448 40 514 47 730 52 930 24 361 55 650 39 695 8 621 14 411 15 557
Carnallite 55 216 58 832 44 819 138 256 156 158 146 2 6
Ca hypochlorite solution 2 723 2 410 2 371 2 705 2 427 1 816 1 368 1 521 1 110 1 223
05 00010 00015 00020 00025 00030 00035 00040 00045 00050 00055 00060 00065 00070 00075 00080 00085 00090 00095 000100 000105 000110 000115 000120 000125 000
01 0002 0003 0004 0005 0006 0007 0008 0009 000
10 00011 00012 00013 00014 00015 00016 00017 00018 00019 00020 00021 000
Oth
er
pro
du
cts,
mt
Pu
re &
All
oy
Mg
, m
t
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
ROW, % 47.6% 43.0% 39.0% 17.6% 19.4% 12.3% 22.0% 22.0% 14.8% 27.3%
Total EurAsEC, % 52.4% 57.0% 61.0% 82.4% 80.6% 87.7% 78.0% 78.0% 85.2% 72.7%
Europe, others, % 31.9% 31.2% 14.1% 5.2% 8.8% 6.1% 5.3% 7.1% 4.5% 4.6%
Asia, % 4.7% 5.8% 6.1% 10.3% 9.7% 5.5% 5.7% 6.8% 6.3% 5.8%
Americas, % 11.0% 5.9% 18.8% 2.1% 0.8% 0.8% 11.1% 8.1% 4.0% 16.9%
Other EurAsEC, % 3.3% 9.3% 3.2% 3.9% 2.9% 2.7% 4.1% 2.0% 1.6% 1.8%
RU, % 49.1% 47.7% 57.8% 78.6% 77.7% 85.0% 73.9% 76.1% 83.6% 70.9%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
12
TOTAL ROW 9'525 6'019 6'000 1'159 531 325 1 928 1'488 809 3'488
WORLD TOTAL 16'581 12'120 15'461 13'517 13'798 13'970 13'744 12'460 14'346 15'593
SMW shipped 15'593 mt of pure & alloy magnesium to its customers in 2017. This is a rise of +8.7% (+1’247 mt) compared to 14’346 mt in 2016. Shipments to Russia accounted for 11'749 mt in 2017. This is a drop of -11.3% (-1’494 mt) compared to 13’243 mt in 2016. Shipments to other EurAsEC countries totaled 356 mt in 2017. This is a rise of +21.1% (+56 mt) compared to 294 mt in 2016. Outside EurAsEC were shipped 3’488 mt of pure & alloy magnesium in 2017. This is a rise of +2’697 mt or by a factor of 4.31 times compared to 809 mt shipped in 2016.
RARE METALS OPERATIONS
Loparite is the main raw material processed in Rare Metals operations of the Company. This material is a complex titanate –niobate - tantalate of rare earths, alkali and alkali-earths elements, and typically contains 35-38% TiO2, 28-30% TREO, 7.5-8% Nb2O5 and 0.5-0.8% Ta2O5.
SMW. Processing of raw materials in Rare Metals operations, mt
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TOTAL ROW 57.4% 49.7% 38.8% 8.6% 3.8% 2.3% 14.0% 11.9% 5.6% 22.4%
TOTAL EurAsEC 42.6% 50.3% 61.2% 91.4% 96.2% 97.7% 86.0% 88.1% 94.4% 77.6%
Europe, other 35.9% 40.5% 15.4% 5.8% 2.8% 1.2% 1.7% 3.5% 1.3% 2.1%
Asia 6.0% 1.8% 0.5% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0%
Americas 15.5% 7.4% 22.9% 2.8% 1.0% 1.0% 12.3% 8.4% 4.3% 20.3%
Other EurAsEC 3.6% 2.0% 1.0% 4.1% 2.9% 2.4% 4.4% 2.0% 2.1% 2.3%
Russia 39.0% 48.4% 60.2% 87.4% 93.3% 95.3% 81.5% 86.1% 92.3% 75.3%
TOTAL 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
85.0%
90.0%
95.0%
100.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Loparite 8 564 6 510 5 339 6 147 6 713 7 363 7 699 8 509 8 756 8 928
Rutile 732 14 347 1 099 1 171 1 236 215 0 0 146
Columbite 10 0 31 0 0 0 0 0 0 0
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
5 500
6 000
6 500
7 000
7 500
8 000
8 500
9 000
13
As the result of raw materials processing, the following products are produced by Solikamsk: carbonates and oxides of rare earths; tantalum – niobium chemical concentrate, pentachlorides and pentoxides of niobium and tantalum; niobates and tantalates; titanium sponge and tetrachloride; calcium – strontium carbonate.
Solikamsk processed 8’928 mt of loparite in 2017. This is a rise of +172 mt or +1.9% compared to 8’756 mt in 2016. Rutile processing accounted for 146 mt in the reporting year. Improvements in technology enabled to yield Ca and Sr in the form of Ca-Sr carbonate in the reporting year. SMW. Shipments of Rare Metals operations by aggregate product category, mt of the main substance contained
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rare Earths compounds, mt TREO 2'470.0 1'898.0 1'495.5 1'443.6 2'131.3 1'443.1 2'133.8 2'312.3 3'063.1 2'500.3
Titanium products, mt Ti 1'788.3 647.7 1'605.8 1'694.9 1'874.7 1'452.2 1'981.8 2'013.9 2'228.4 2'022.5
Niobium compounds, mt Nb2O5 584.9 511.0 397.1 430.8 450.2 510.7 580.7 628.2 628.3 647.7
Tantalum compounds, mt Ta2O5 39.3 34.8 31.0 27.0 31.4 32.2 39.9 31.6 48.8 44.5
Ca-Sr carbonate, mt 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 23.3
SMW. Sales revenues of Rare Metals Operations by market areas, %% (graphs), ₽ mln, US$ mln ₽ million 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Russia 406.884 266.324 374.353 704.189 1'071.931 553.113 520.375 1'302.709 807.136 1'129.663
Other EurAsEC 114.497 109.457 270.984 1'314.038 179.571 279.631 339.012 240.441 380.406 59.506
Total EurAsEC 521.381 375.780 645.336 2'018.227 1'251.502 832.744 859.387 1'543.150 1'187.543 1'189.169
Americas 65.711 28.425 47.750 37.635 179.179 320.414 515.072 533.789 1'024.084 392.359
Asia 10.988 35.983 56.397 92.769 36.897 237.269 597.219 718.464 258.783 183.344
Europe, others 358.865 353.581 476.986 2'010.914 1'496.238 439.721 566.611 424.9937 811.266 953.633
Total ROW 435.564 417.989 581.134 2'141.318 1'712.314 997.404 1'678.902 1'677.247 2'094.132 1'529.336
TOTAL 956.945 793.769 1'226.470 4'159.545 2'963.816 1'830.148 2'538.289 3'220.397 3'281.675 2'718.505
US$ million 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Russia 16.358 8.384 12.324 23.956 34.496 17.336 13.554 21.233 12.137 19.429
Other EurAsEC 4.603 3.446 8.921 44.703 5.779 8.764 8.570 4.132 5.621 1.019
Total EurAsEC 20.961 11.829 21.245 68.659 40.275 26.100 22.124 25.365 17.757 20.449
Americas 2.642 0.895 1.572 1.280 5.766 10.042 13.128 11.570 15.366 6.743
Asia 0.442 1.133 1.857 3.156 1.187 7.436 14.871 7.113 3.874 3.137
Europe, others 14.427 11.130 15.702 68.410 48.151 13.782 14.467 8.519 12.038 16.388
Total ROW 17.511 13.158 19.131 72.847 55.104 31.260 42.466 27.203 31.278 26.268
TOTAL 38.472 24.987 40.376 141.506 95.379 57.360 64.590 52.567 49.035 46.717
Niobium Compounds
Shipments of niobium compounds totaled 647.7 mt Nb2O5 in 2017. This is a rise of +3.1% (+19.4 mt) compared to 628.3 mt Nb2O5 contained in 2016 mainly driven by increased demand of high purity products. Shipments to EurAsEC market rocketed by a factor of 3.07 times year-on-year, from 117.7 mt in 2016 to 361.9 mt in 2017. Shipments to Russia experienced 3.03 fold hike, from 117.6 mt in 2016 up to 356.0 mt in 2017, shipments to other EurAsEc countries increased from 0.1 mt in 2016 to 5.9 mt in 2017, while shipments outside EurAsEC dropped by a factor of 1.79 times (-224.7 mt), from 510.6 mt in 2016 down to 285.9 mt in 2017. Shipments of metallurgical grade pentoxide accounted for 618.9 mt, high purity grade products for optoelectronic and cemented carbide applications totaled 28.8 mt.
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TOTAL ROW, % 45.5% 52.7% 47.4% 51.5% 57.8% 54.5% 66.1% 52.1% 63.8% 56.3%
TOTAL EurAsEC, % 54.5% 47.3% 52.6% 48.5% 42.2% 45.5% 33.9% 47.9% 36.2% 43.7%
Europe, others, % 37.5% 44.5% 38.9% 48.3% 50.5% 24.0% 22.3% 13.2% 24.7% 35.1%
Asia, % 1.1% 4.5% 4.6% 2.2% 1.2% 13.0% 23.5% 22.3% 7.9% 6.7%
Americas, % 6.9% 3.6% 3.9% 0.9% 6.0% 17.5% 20.3% 16.6% 31.2% 14.4%
Other EurAsEC, % 12.0% 13.8% 22.1% 31.6% 6.1% 15.3% 13.4% 7.5% 11.6% 2.2%
Russia, % 42.5% 33.6% 30.5% 16.9% 36.2% 30.2% 20.5% 40.5% 24.6% 41.6%
0.0%5.0%
10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%50.0%55.0%60.0%65.0%70.0%75.0%80.0%85.0%90.0%95.0%
100.0%
14
SMW. Shipments of niobium compounds by market areas, mt Nb2O5 contained and in %% (graphs)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Russia 153.7 269.4 260.4 318.8 325.9 175.3 153.6 242.2 117.6 356.0
Other EurAsEC 0.2 0.1 0.2 0.1 0.2 0.1 0.1 0.0 0.1 5.9
Total EurAsEC 153.9 269.5 260.6 318.9 326.1 175.4 153.7 242.2 117.7 361.9
Americas 206.1 41.8 56.3 21.1 90.0 247.6 403.6 367.1 501.3 253.0
Asia 10.1 28.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Europe, others 214.9 170.9 80.2 90.8 34.1 87.7 23.4 18.9 9.3 32.9
Total ROW 431.0 241.5 136.5 111.9 124.2 335.3 427.0 386.0 510.6 285.9
TOTAL 584.9 511.0 397.1 430.8 450.2 510.7 580.7 628.2 628.3 647.7
SMW. Shipments of niobium compounds by product grades, mt Nb2O5
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Technical grade, mt Nb2O5 554.8 480.9 362.8 406.0 437.2 481.9 557.2 608.4 617.6 618.9
High purity grade, mt Nb2O5 30.1 30.1 34.3 24.6 13.0 28.7 23.5 19.7 10.7 28.8
TOTAL, mt Nb2O5 584.9 511.0 397.1 430.6 450.2 510.6 580.7 628.1 628.3 647.7
Tantalum Compounds
Russian demand for tantalum compounds is relatively small due to lack of commercial scale tantalum metal production inside Russia and this demand is covered by SMW and remainder is exported.
SMW. Shipments of tantalum compounds by market areas, mt Ta2O5 and in %% (graphs)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Russia 1.3 2.0 2.1 2.0 3.0 1.6 2.4 3.4 3.4 4.6
Other EurAsEC 22.4 26.2 19.6 0.0 3.1 25.0 34.2 16.2 33.1 4.4
Total EurAsEC 23.7 28.2 21.7 2.0 6.1 26.6 36.6 19.6 36.4 8.9
Americas 0.0 0.0 0.0 0.0 0.0 0.0 0.9 0.0 0.0 3.5
Asia 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Europe, others 15.6 6.6 0.0 25.0 25.3 5.6 2.4 12.0 12.4 32.1
Total ROW 15.6 6.6 9.3 25.0 25.3 5.6 3.3 12.0 12.4 35.6
TOTAL 39.3 34.8 31.0 27.0 31.4 32.2 39.9 31.6 48.8 44.5
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TOTAL ROW, %% 73.7% 47.3% 34.4% 26.0% 27.6% 65.7% 73.5% 61.4% 81.3% 44.1%
TOTAL EurAsEC, %% 26.3% 52.7% 65.6% 74.0% 72.4% 34.3% 26.5% 38.6% 18.7% 55.9%
Europe, others, % 36.7% 33.4% 20.2% 21.1% 7.6% 17.2% 4.0% 3.0% 1.5% 5.1%
Asia, % 1.7% 5.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Americas, % 35.2% 8.2% 14.2% 4.9% 20.0% 48.5% 69.5% 58.4% 79.8% 39.1%
Other EurAsEC,% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.9%
Russia, % 26.3% 52.7% 65.6% 74.0% 72.4% 34.3% 26.5% 38.5% 18.7% 55.0%
TOTAL, %% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100% 100% 100% 100%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TOTAL ROW,% 39.7% 18.9% 30.1% 92.6% 80.6% 17.4% 8.3% 38.0% 25.3% 80.0%
TOTAL EurAsEC, % 60.3% 81.1% 69.9% 7.4% 19.4% 82.7% 91.7% 62.0% 74.7% 20.0%
Europe, others, % 39.7% 19.0% 30.3% 92.6% 80.6% 17.4% 6.0% 38.0% 25.3% 72.1%
Asia, %% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Americas,% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.3% 0.0% 0.0% 7.8%
Other EurAsEC, % 56.9% 75.4% 63.1% 0.0% 9.9% 77.7% 85.7% 51.3% 67.7% 9.8%
Russia,% 3.3% 5.7% 6.8% 7.4% 9.6% 5.0% 6.0% 10.7% 6.9% 10.2%
TOTAL, % 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
15
In 2017, shipments of tantalum compounds totaled 44.5 mt Та2О5 contained. This a drop of -8.8% (-4.3 mt) compared to 48.8 mt in 2016. Out this total, technical grade products for production of metal and cemented carbide accounted for 41.3 mt and high purity grade products for optoelectronic applications amounted to 3.2 mt, new product -lithium tantalate – was first shipped in the reporting year.
SMW. Shipments by product category, mt Ta2O5 contained Категория 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Technical grade chemicals, mt Ta2O5 34.0 29.7 25.0 23.6 23.2 26.6 36.5 30.7 47.4 41.3
High purity compounds, mt Ta2O5 5.3 5.2 6.0 3.4 8.2 5.6 3.4 0.9 1.4 3.2
TOTAL, mt Ta2O5 39.3 34.8 31.0 27.0 31.4 32.2 39.9 31.6 48.8 44.5
Compounds of Rare Earths
Original rare earths carbonate manufactured by Solikamsk has a limited range of applications, and the main use of this product is a semi-product to produce separated and individual rare earths by further extraction. Rare earths extraction facilities are not available in Russia, that is that the vast majority of this product is exported. 2’500.3 mt TREO contained were shipped by SMW to its customers in 2017. This is a drop of -18.4% (-562.8 mt) compared to 3’063.1 mt in 2016. Shipments to EurAsEC accounted for 6.9 mt representing 6.65 fold (-39.0 mt) decine compared to 45.9 mt in 2016, all of that in Russia. Outside EurAsEC were shipped 2’493.5 mt TREO. This is a decrease of – 17.4%(-523.7 mt) compared to 3’017.2 mt in 2016.
SMW. Shipments of rare earths compounds by market areas, in %% (graphs) and mt TREO
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Russia 12.8 8.2 30.0 22.0 83.7 48.7 109.8 228.6 45.9 6.9
Other EurAsEC 502.0 150.8 448.4 656.4 213.0 0.0 0.0 0.0 0.0 0.0
TOTAL EurAsEC 514.8 159.0 478.4 678.4 296.7 48.7 109.8 228.6 45.9 6.9
Americas 0.0 0.0 12.0 0.0 0.0 0.0 0.0 0.0 9.0 0.0
Asia 0.0 0.0 102.2 55.1 0.0 784.2 852.9 888.8 422.9 713.2
Europe, others 1'955.2 1'739.0 872.9 710.3 1'834.6 610.1 1’171.1 1’194.9 2'585.3 1'780.2
Total ROW 1'955.2 1'739.0 987.1 765.4 1'834.6 1'394.4 2'024.0 2’083.7 3'017.2 2'493.5
TOTAL 2'470.0 1'898.0 1'465.5 1'443.8 2'131.3 1'443.1 2'133.8 2'312.3 3'063.1 2'500.3
Titanium Sponge and Compounds
SMW. Shipments of titanium products by market areas, in % (graphs) and mt Ti
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TOTAL ROW, % 0.0% 62.5% 60.0% 47.8% 43.7% 33.2% 50.8% 19.6% 44.0% 35.3%
TOTAL EurAsEC, % 100.0% 37.5% 40.0% 52.2% 56.3% 66.8% 49.2% 80.4% 56.0% 64.7%
Europe, others, % 0.0% 45.5% 51.8% 44.9% 32.1% 29.1% 24.5% 19.5% 31.9% 35.3%
Asia, % 0.0% 14.8% 8.1% 2.8% 5.5% 4.1% 26.3% 0.0% 12.1% 0.0%
Americas, % 0.0% 2.2% 0.0% 0.0% 6.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Other EurAsEC,% 0.0% 0.1% 0.0% 0.0% 0.0% 0.2% 0.0% 0.2% 0.0% 0.2%
Russia,% 100.0% 37.4% 40.0% 52.2% 56.3% 66.6% 49.2% 80.2% 56.0% 64.5%
TOTAL,% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%
100.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TOTAL ROW,% 79.2% 91.6% 67.4% 53.0% 86.1% 96.6% 94.9% 90.1% 98.5% 99.7%
TOTAL EurAsEC, % 20.8% 8.4% 32.6% 47.0% 13.9% 3.4% 5.1% 9.9% 1.5% 0.3%
Europe, others, % 79.2% 91.6% 59.6% 49.2% 86.1% 42.3% 54.9% 51.7% 84.4% 71.2%
Asia,% 0.0% 0.0% 7.0% 3.8% 0.0% 54.3% 40.0% 38.4% 13.8% 28.5%
Americas,% 0.0% 0.0% 0.8% 0.0% 0.0% 0.0% 0.0% 0.0% 0.3% 0.0%
Other EurAsEC, % 20.3% 7.9% 30.6% 45.5% 10.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Russia,% 0.5% 0.4% 2.0% 1.5% 3.9% 3.4% 5.1% 9.9% 1.5% 0.3%
TOTAL, % 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%
100.0%
16
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
РФ, т Ti 1'778.3 242.3 643.0 885.5 1 055.9 967.2 974.3 1’615.1 1'247.5 1'304.0
РБ+РК+КР+РА 0.0 0.4 0.0 0.0 0.2 3.0 0.0 5.0 0.0 5.0
Итого ЕАЭС 1’778.3 242.7 643.0 885.5 1'056.1 970.2 974.3 1'620.1 1'247.5 1'309.0
Америка 0.0 14.4 0.0 0.0 112.0 0.0 0.0 0.0 0.0 0.0
Азия 0.0 96.0 130.6 48.0 104.0 60.0 522.0 0.3 270.0 0.0
Европа и прочие 0.0 294.6 832.2 761.4 602.6 422.0 485.5 393.5 710.9 713.5
Остальной мир 0.0 405.0 962.8 809.4 818.6 482.0 1'007.5 393.8 980.9 713.5
ВСЕГО, т Ti 1‘778.3 647.7 1'605.8 1'694.9 1’874.7 1'452.2 1'981.8 2'013.9 2’228.4 2'022.5
SMW. Shipments of titanium products by product category, mt Ti Виды 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TiCL4, т Ti 1'788.3 12.8 10.3 19.7 18.4 41.5 41.8 32.9 54.3 50.8
TiO2, т Ti 0.0 170.8 108.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Ti губчатый, т 0.0 464.2 1'487.1 1'675.1 1'856.3 1'410.7 1'940.0 1'981.0 2'174.2 1'971.8
ИТОГО, т Ti 1'788.3 647.8 1'605.8 1'694.8 1'874.7 1'452.2 1'981.8 2'013.9 2'228.4 2'022.5
In 2017, SMW shipped to its customers 2'022.5 mt Ti contained in all the forms of titanium products. This is a drop of – 9.2% (- 205.9 mt Ti) compared to 2’228.4 mt Ti in 2016. Out of this total, 1'971.8 mt were shipped in the form of titanium sponge (Ti sponge) and 50.8 mt Ti (201.1 mt physical tonnage) in the form of titanium tetrachloride (TiCL4). Shipments to EurAsEC market accounted for 1'309.0 mt Ti. This is a rise of +4.9% (+61.5 mt Ti) compared to 1247.5 mt Ti in 2016. Out of this total, 1’304.0 mt Ti were shipped to Russia representing a rise of +4.5% (+56.5 mt Ti) year-to-year, and 5.0 mt Ti-sponge to other EurAsEC countries. Shipments outside EurAsEC (ROW) totaled 713.5 mt of Ti sponge. This is a drop of -27.3% (-267.4 mt) compared to 980.9 mt in 2016.
CHEMICAL OPERATIONS The range of commodities manufactured in the Chemical Operations include calcium chloride solution (32% CaCl2), liquid chlorine (Cl2), lime (CaO) and lime slurry milk (Ca(OH)2 ● xH2O). Historical shipments of these products are provided in the table below.
SMW. Shipments of products of Chemical Operations, mt
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Calcium chloride solution 32% CaCL2 50'453 38’914 44'489 53'645 58'881 53'099 53’885 46'368 15'464 49'040
Liquid chlorine 1'328 1'514 1'571 1'566 1'561 1'519 1'384 971 1’212 1'281
Lime 11'641 6'561 9’620 19'440 14’975 16'557 13'223 14'368 10'881 9'040
Lime slurry milk, m3 1'218 658 709 693 605 568 923 1’058 933 948
USAGE OF ENERGY RESOURCES
Electricity is the main energy resource utilized by the Company, and it is major cost factor in Magnesium Operations. Natural gas is directly used in the generation of heat, production of lime and cell feed preparation. Heavy oil (mazut) is used as the reserve fuel in heat generation and cell feed preparation. Gasoline (benzin) and diesel fuel are the energy sources for internal-combustion engines in automotive transport employed by SMW. Coke is used as the reducing agent in the processes of Magnesium and Rare Metals operations. In 2017, energy expenses increased by +15.7% Y-o-Y due to rising output.
Consumption of energy resources in 2017
Unit of measure Quantity ₽ million
Electricity МWh 466 312.72 1’334.930
Natural gas ‘000 m3 63 504.59 263.917
Gasolene mt 110.49 4.527
Diesel mt 372.95 14.126
Heavy oil mt 454.47 4.652
Coke mt 2 222.23 28.104
Total 1’650.256
TECHNICAL DEVELOPMENT In 2017, Solikamsk invested ₽128.529 млн (US$2.202 млн) in renewing equipment, developing technology, and improving operational and works’ safety. This is a drop by a factor of 1.69 times (factor of 1.48 in US$ terms) compared to ₽217.853 mln (US$3.250 mln) in 2016. R&D expenses accounted for ₽13.559 million in 2016 vs. ₽22.140 million in 2016. The following works and R&D were performed: in the Magnesium operations:
- test of electrolytic cell with low interelectrode distance and shortened height of anodes was finished. Lifetime lasted 43 months with technical parameters similar to cells taken for comparison - a technical parameters for the design of an advanced energy-saving cell with hollow box cathodes and a low interelectrode distance were developed - tests of electrolytic cells with 850 mm length of cathode and cell with graphite mono-anode were continued
17
- capacity of facility to produce small lots of magnesium alloys and master alloys was doubled, technology to produce magnesium alloy under protective atmosphere was implemented, test to produce Mg-Zr master alloy with use of ZrCL4 was performed - technology to produce Mg – Y master alloy and ML-19 magnesium alloy was developed - grinding facility for potash was rebuilt and granulation facility was brought on stream - trial lot of carnallite flux flakes was produced - design of mixer for synthetic carnallite production was performed and preparation works for project started
in the Rare Metals operations:
- technologies to produce new products – lithium tantalate and Ca-Sr carbonate – were developed and trial lots of the both products were shipped
in Chemical and auxiliary operations:
- modernization of Chlorine Storage Facility was completed
- works to improve quality of chlorine were continued, additional devices to control dust were installed
in Operational and Industrial Safety:
- sensors for chlorine, hydrogen chloride, carbon dioxide and methane detection at the Plants 1, 4, 7 have been installed according to the schedule for automation of air control in the working area
- construction of channel from polygon of solid industrial wastes to settling pond for rainy and drainage water as well as reclamation of field B in polygon of solid industrial wastes were continued
INTEGRATED MANAGEMENT SYSTEM
SMW developed and implemented Integrated Management System (IMS) conforming to ISO 9001 and ISO 14001 requirements, that, in 2011, was amended with requirements of Due Diligence on trade with tantalum materials enforced by UN Security Council Resolution № S/2010/596. Successful maintenance and improvement of this System is an incontestable priority for the Company. Administering of IMS is performed in accordance with Quality Policy, Environmental Policy and Conflict Free Raw Materials Purchasing Policy of Solikamsk Magnesium Works OAO those are readily available under link http://www.смз.рф/index/en_information/0-104 . Inspection audit of IMS on conformance to ISO 9001: 2008 and ISO 14001: 2004 was performed by Certification Association “Russian Register” in the reporting year. The same Association performed estimated audit IMS compatibility with requirements of 2015 version of ISO standards and, following results of this audit, IMS is on the way of improvement to meet these new requirements, aiming successful certification in 2018. Analytical Laboratory of SMW was audited on compliance with ISO/MEC 17025:2005 and GOST ISO/MEC 17025:2009 requirements and obtained appropriate certificates. Tantalum Supply Chain was remotely audited by EICC under Conflict-Free Smelter Program. SMW was granted with Conflict Free Smelter status until 2018. Titanium sponge facility and alloy magnesium production were audited and certified by the customers. Since 2007, SMW surveys customers’ satisfaction and loyalty with respect to main products manufactured by the Company to improve IMS and products.
Customers’ loyalty
4.6
4.3
5.0
4.0
4.5
5.0
5.0
5.0
4.8
5.0
5.0
5.0
4.0
4.2
3.7
3.4
5.0
5.0
4.0
4.8
3.0
5.0
4.8
3.3
4.0
3.0
5.0
3.3
3.8
3.4
4.5
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0
Ti-sponge
Rare Earths carbonate
Ti tetrachloride
Nb pentachloride
Nb pentoxide grades 1-3
Ta pentachloride
Ta pentoxide grades А, В, ТС
Ta pentoxide grades 1, 2
Liquid chlorine
Lime slurry milk
Lime
Calcium chloride 32% solution
Potash
Potash flux
Carnallite flux
Pure & Alloy Mg
2017 2016
18
Customers’ satisfaction
Customers’ satisfaction is studied using a 9-point ranking scale while customers’ loyalty is assessed with use a 5-point scale where 9 and 5 are the best values, respectively. The average ranking of customers’ satisfaction was 8.6 out of 9 (lowest was 6.3), and customers’ loyalty was 4.1 out of 5 (lowest was 3) in 2017. These results mean that the Solikamsk products meet customers’ expectations. Besides official certification, SMW performed unaudited self-assessment on compliance with Supplier Code of International Die – Casting Association (IDCA) and EICC Code of Conduct. Result of this self-assessment is provided on the web-site of SMW under links in Russian: www.смз.рф/index/integrirovannaja_sistema_menedzhmenta/0-90 in English: www.смз.рф/en/manag_system/new2014/Compliance_with_Code_of_Conduct_for_the_Industry.pdf
OPERATIONAL AND INDUSTRIAL SAFETY
Care of life, health and safety of SMW’s employees, residents and guests of Solikamsk city is unavoidable priority of the Company. An integrated systematic approach in the field of operational and industrial safety is performed in accordance with the Company’s Regulations The Managing System in Operational & Industrial Safety.
Operational & Works’ Safety
SMW’s System of Operational & Works Safety is maintained in accordance with the Company’s Regulations The Operational & Works’ Safety, requirements of Section VIII The Operational & Works’ Safety. Term & Conditions in Collective Labor Agreement between the Company & Trade Union as well as in accordance with statutory requirements in the Russian Federation. SMW’s expenses to maintain abovementioned System accounted for ₽ 54.8 million including ₽44.9 million for personal protection and ₽9.9 million for safety techniques. These expenses do not include compensation paid to personnel in accordance with legislation.
Industrial & Environmental Safety
SMW’s System of Industrial & Environmental Safety is maintained in accordance with the Company’s Policy in Industrial Safety, Environmental Policy, Regulations The Production Control on Compliance with Industrial Safety Requirements as well as in accordance with statutory requirements in the Russian Federation and international environmental standards. Measures prescribed by Schedule for 2017 to maintain industrial & environmental safety have been completely performed by SMW In 2017, supervisory State agencies (RosTechNadzor, RosPotrebNadzor, RosTrud, EMERCOM) performed 14 surveys of the Company. Certain non-conformities were found during audits, and elimination of these non-conformities is performed under schedule developed with these authorities. SMW’s expenses to maintain this System accounted for ₽20.4 mln. These expenses do not include environmental costs specified for production processes. SMW completed its obligations concerning water protection under Schedule for 2013 – 2017 in accordance with conditions of water use. ). Total expenses to protect water objects exceeded ₽4.953 mln in 2017. The following measures were performed under this Schedule: modernization of local treatment facilities, cleaning and repair of storm sewage facilities, maintenance of settling pond and waste water channel including surrounding roads, monitoring of conditions of water object (monitoring of morphometric features and other
8.9
9.0
8.9
9.0
8.8
9.0
9.0
8.8
8.4
9.0
9.0
8.6
9.0
8.8
8.1
'8.9
'8.2
'8.9
'6.3
'7.9
'9.0
'9.0
'8.8
'9.0
'9.0
'9.0
'8.6
'8.7
'9.0
'7.8
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0
Ti-sponge
Rare Earths carbonate
Ti tetrachloride
Nb pentachoride
Nb pentoxide grades 1-3
Ta pentachloride
Nb pentoxide grades А, …
Ta pentoxide grades 1, 2
Liquid Chlorine
Lime slurry milk
Lime
Calcium chloride 32%…
Potash
Carnallite flux
Pure & Alloy Mg
2017 2016
19
parameters of on-ground water objects); rebuilding of recycling water system and building of artesian water pipeline. Release of waste water to settling pond, including waste water released by OOO Vodokanal, accounted for 7’634’130 m3.That contained of 36 thousand tons of contaminants. SMW met its norms for contaminants. SMW obtained new licenses for water use and permissions on contaminants releases in 2017, schedule of gradual decrease of waste disposal in Kama basin was developed with Perm Ministry of Natural Resources for 2017-2023. Modernization project of Chorine Storage Facility and local ventilation in ammonia hydrolysis were completed. Continuous monitoring of condition of air, water objects and soil is regularly performed. That enables quickly react on deviations from threshold limit values (TLV) if happens. Expenses to protect air accounted for ₽4.566 million. Total pollution of air amounted 751.88 mt in the reporting year, all premises have appropriate permissions. The main target of handing residues is their further processing into saleable products. The number of residues generated inside SMW was 13’104.3 mt that is– 286.5 mt less than that in 2016. 4’229mt of residues were disposed at own polygon of solid industrial wastes, the all of 6’298.5 mt residues generated in Magnesium operations were processed into saleable products as well as certain other residues (aluminium and ferrous metals scrap) were also handled in accordance with appropriate norms. SMW permanently monitors contamination of air, water objects and soil. This measuring helps to act effectively if pollution exceeds environmental norms. SMW expenses for monitoring of environment accounted for ₽
893’000 in 2017. In 2017, Rospotrebnadzor of Perm Region performed scheduled audit and non-conformances were not found. SMW is a transparent company, participates in the Days of Environment Protection arranged by Solikamsk City Administration each year, and awarded with Diploma of city Administration. Environmental activities of the Company are regularly disclosed to the public in the Company’s newsletter “Magnievik” and radio reports.
LIST OF THE COMPANY’S LICENSES AND PERMISSIONS Certain activities of SMW are subject to licensing. List of the Company’s licenses and permissions is provided in Annex №1 to Russian version of this Annual Report (available only in Russian under link http://смз.рф /index/en_information/0-104 ).
SOCIAL ACTIVITY Social activity of the Company is concentrated on improvement of the welfare and intellectual activity of personnel; support of the Company’s veterans and pensioners; and support of culture, sports and education. These aspects of social activity of SMW are included into Collective Labor Agreement between the Company and employees of the Company, as well as in the Agreements between the Company and the Administration of Solikamsk city.
Improvement of Welfare and Intellectual Activity of Personnel
In 2017, 1’165 employees were trained and educated by SMW that accounted for 41.9% of the total number of
employees. SMW. Number of employees and salaries
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Non-industrial employees 117 112 117 119 119 110 105 100 100 100
Industrial employees 2 918 2 984 3 082 3 119 3 170 2 999 2 710 2 667 2 707 2 681
Total number of employees 3 035 3 096 3 199 3 238 3 289 3 109 2 815 2 767 2 807 2 781
Monthly average salary, RUR/mo 14 688 14 396 16 233 20 851 22 841 23 002 24 201 29 318 30 682 28 458
01 0002 0003 0004 0005 0006 0007 0008 0009 00010 00011 00012 00013 00014 00015 00016 00017 00018 00019 00020 00021 00022 00023 00024 00025 00026 00027 00028 00029 00030 00031 00032 00033 000
0100200300400500600700800900
1 0001 1001 2001 3001 4001 5001 6001 7001 8001 9002 0002 1002 2002 3002 4002 5002 6002 7002 8002 9003 0003 1003 2003 300
Mo
nth
ly a
ver
age
sala
ry,
RU
R/
mo
Nu
mb
er o
f em
plo
yee
s, p
erso
ns
20
645 employees were educated under programs of improvement of qualification, 100 employees were trained under special programs, 147 employees were awarded with higher skill rank, 239 specialists and managers were trained and certified on compliance with the rules of RosTechNadzor, and 35 employees were trained under program of Gas Rescuer Team. 3 students study at universities at the Company’s expense, and 58 students have a scholarship grants under contracts with the Company. 50 employees study in universities and 98 employees study in colleges out of working hours, 174 students of universities and colleges were trained by the Company at its facilities. The Company has granted ₽ 0.343 mln of loans to its employees to study in universities themselves or to fund their children’s studies in 2017.
Social programs
Social expenses of the Company decreased from ₽59.884 in 2016 to ₽33.336 million in 2017. SMW has spent ₽16.716 million to support social infrastructure and ₽2.935 mln to support retirees, veterans and other social programs. Payment of social bonuses to the Company’s employees and certain other personnel related expenses accounted for ₽13.684 million.
POSITION IN THE INDUSTRY Disclaimer: This part of Annual Report includes certain estimates performed by SMW itself, and/or outside third parties. These studies are based on the facts collected from statistical reports, estimates, outlooks and other similar sources of information which, by SMW opinion, are based on reasonable assumptions. Nevertheless, SMW, in neither event, is and will be liable, if actual results differ of those expressed in this Section below, as well as SMW, in neither event, is and will be liable for potential losses and/or injury those may happen of use of this information.
Position in the Magnesium Industry
Definitions: Primary magnesium is a magnesium metal produced by the way of decomposition of natural raw materials and does not include secondary magnesium that is produced by the way of remelting of magnesium scrap and residues. Primary magnesium also does not include magnesium produced by titanium sponge manufacturers from recycled magnesium dichloride generated inside titanium-magnesium cycle of titanium sponge production that is then reverted back to this process after in-site electrolysis of this magnesium dichloride.
End-uses
Magnesium is a silvery-white metal, 1.5 times lighter than aluminium. Magnesium exhibits the best strength-to-weight ratio and it is the lightest among structural metals, and contributes other important physical and chemical properties. That is that magnesium is widely used in the automotive, aerospace, and electronic industries as well as serves as an alloying additive in the production of aluminium alloys. It is also used in the production of vitamins, food additives and various chemical compounds; in iron and steel desulphurization and modification; as the reducing agent in the production of certain non-ferrous metals; for cathodic protection of steel structures from corrosion; as the metal for alternative energy sources; and other applications. Substitutes for magnesium may be in: - aluminium alloying –no substitutes, but aluminium alloys with magnesium may be substituted by polymers, glass, paper and steel in packaging; by magnesium alloys, titanium, polymers, composites, zinc, iron and steel in design of land-based transport and in structural uses; by magnesium alloys, titanium, steel, polymers and composites in aerospace and electronics; by steel, composites, wood and polymers in building and construction; - structural uses – aluminium and zinc alloys, polymers, composites, iron, steel and titanium; - iron and steel desulfurization – calcium carbide, lime, cerium, calcium; - titanium sponge production - sodium and calcium. Titanium may also be produced by an electrolytic process and by a process of thermal decomposition of titanium iodide.
Primary Magnesium Market Overview In accordance with CNIA, USGS and SMW own estimates world primary magnesium output accounted for 1’163 kilotons in 2017. This is a rise of +116 kilotons or +11.1%compared to 1’047 kilotons in 2016. Based on this estimate, SMW’s share in global primary magnesium output accounted for 1.3% and ~65-70% of that in Russia and EurAsEC countries. Growth of output is observed in China, where production rose by +112 kilotons (from 910 kilotons to 1’022 kilotons) and Turkey from 6 kilotons in 2016 to 11-12 kilotons related with ESAN efforts to reach installed capacity 15 kilotons a year. Drop of output in the US is estimated 10-13 kilotons due to closure of adjacent ATI titanium sponge plant that was a customer of this metal. Market was weak due to overproduction during the whole reporting year. Chinese Government started to apply environmental restrictions that led to plant closures and drop of output in certain periods of the year and prices ran at the ‘wavelike’ scenario due to that.
21
In November 2017, Communist Party of China adopted “The Blue Sky” program that involves strengthening of environmental requirements to operations, closure of companies operating at loss as well overcapacities in coal and metallurgical industries. Implementation of this program, probably, will rise costs and prices on Chinese commodities during coming several years.
CNIA, USGS, SMW. Estimated world primary magnesium output*, ‘000 tpa
* Does not include production of magnesium within Ti-Mg cycle of titanium sponge operations at the Ti-Mg plants
Sources: USGS, China Non-ferrous Metals Monthly, Financial Tribune (Iran), SMW’s estimates http://minerals.usgs.gov/minerals/pubs/commodity/magnesium/mcs-2018-mgmet.pdf, https://financialtribune.com/articles/economy-business-and-markets/80885/iran-s-untapped-potential-for-magnesium-production
Asianmetal, USGS. Average magnesium metal (min.99.9%) prices, US$/mt
Magnesium Market Outlook
CAGR of magnesium consumption is forecast at +5.8% during 2016 – 2026 (https://www.smartcitiesdive.com/press-release/20180223-global-magnesium-metal-industry-analysis-and-opportunity-assessment-to-2026/ ). Key market drivers are growth of use of aluminium mill product with
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
UKTMK, Kazakhstan 1 0 1 1 1 1 1 1 1 1
Royal Metal Ingot Co,Iran 0 0 0 0 0 0 0 0 2 3
ESAN, Turkey 0 0 0 0 0 0 0 0 6 11
AVISMA, Russia 10 8 7 6 6 6 6 7 6 7
SMW, Russia 17 12 15 14 14 14 14 12 14 16
Rima Industrial, Brazil 15 16 16 16 16 16 16 15 15 16
Dead Sea Magnesium, Israel 30 29 25 28 27 28 26 19 23 24
US Magnesium, USA 50 40 52 60 58 63 63 63 70 63
>50 plants, China 631 501 654 661 698 770 874 852 910 1 022
TOTAL 754 606 770 786 820 898 1 000 969 1 047 1 163
SMW share,% 2.3% 2.0% 1.9% 1.8% 1.7% 1.6% 1.4% 1.2% 1.3% 1.4%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
2.4%
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
SM
W s
har
e,%
Ou
tpu
t '0
00 m
t
2010 2011 2012 2013 2014 2015 2016 2017 Q1-17 Q2-17 Q3-17 Q4-17
Mg, FOB PRC 2 815 3 083 3 147 2 708 2 502 2 149 2 213 2 263 2 204 2 186 2 253 2 408
Mg, iwh Europe 2 938 3 207 3 180 2 847 2 655 2 204 2 141 2 242 2 261 2 238 2 144 2 326
Mg, dp USA 5 362 5 030 4 464 4 210 4 439 4 050 3 609 3 202 3 290 3 213 3 153 3 153
0200400600800
1 0001 2001 4001 6001 8002 0002 2002 4002 6002 8003 0003 2003 4003 6003 8004 0004 2004 4004 6004 8005 0005 2005 4005 6005 8006 0006 2006 4006 6006 8007 0007 200
22
magnesium as an ingredient of aluminium alloys and alloy magnesium parts in design of land-based and air-based means of transport.
Outlook of primary magnesium consumption until 2026, ‘000 mt a year
Supply – Demand Balance is not observed in this report and it is not an issue of concerns. Installed capacities to produce primary magnesium in the world exceeded 1’870 Ktpa at the end of 2017.
Position in the Rare Earths Industry
Note: All data in this sub-section is provided in total rare earths oxide (TREO) content independently on actual form of use, e.g. mixed rare earths or individual element, chemical compound or metal, unless otherwise stated
End-uses
The term Rare Earths Elements (REEs), in industrial and commercial practices, is applied to 15 elements with numbers of 57-60, 62-71 (Lantanides) and 39 (Yttrium) in Periodic Table. Pm (61) is also a rare earth, but it is synthetic element. Despite all 15 REEs have single valence and similar properties, and typically occur in the earth’s crust collectively, however, in individual form, each REE enhances its own properties and in mixed form the properties of one element depress properties of the other element. This is the reason that these elements are normally separated for further use.
The main uses of rare earths by element:
Cerium (Се) - catalyst in emission combustion systems, polishing powders, modifier for nodular iron production, decolorizer and ultraviolet absorption addition for glass, flints, creep resistant aluminium and magnesium alloys for elevated temperature applications. Lanthanum (La) - oil cracking catalysts, camera and laser optics, fiber optics, modifier for nodular iron production, additive for HSLA grade steels, NiMH batteries and hydrogen storage systems, sensors, architectural and electronic ceramics, capacitors, resistors and thermistors, creep resistant magnesium alloys for elevated temperature applications. Neodymium (Nd) – high strength permanent magnets, ceramic capacitors and other components of electronics, glazes and colored glass, lasers, petroleum cracking and polymerization catalysts, magnesium super alloys, energy saving lamps, lasers, creep resistant magnesium alloys for elevated temperature applications. Praseodymium (Pr) – electronic and traditional ceramics, glass and enamels, high strength permanent magnets, yellow ceramic pigments, tiles, ceramic capacitors, with neodymium in combination for goggles to shield glass makers against sodium glare, cryogenic refrigerant, creep resistant magnesium alloys for elevated temperature applications (magnesium super alloys). Samarium (Sm) – permanent magnets, microwave filters, lasers, nuclear applications, constituent of computer memory chips. Europium (Eu) - phosphors, LCD/LED, energy-saving lights, neutron absorption. Gadolinium (Gd) - phosphors, permanent magnets, refrigerators, medical devices, magnesium super alloys, microwave ovens, superconductors, creep resistant magnesium alloys for elevated temperature applications. Yttrium (Y) - phosphors, ceramics, color glass, aluminium and magnesium alloys for elevated temperature applications. Terbium (Tb) – permanent magnets, phosphors, optical computer memories, hard disc components, magnetostrictive alloys. Dysprosium (Dy) – permanent magnets, phosphors, ceramics, nuclear applications. Holmium (Но) – permanent magnets, ceramics, lasers, nuclear applications. Erbium (Er) – ceramics, glass color, infra-red absorption glass, fiber optics, lasers, medicine and nuclear applications. Ytterbium (Yb) – metallurgical and chemical research. Lutetium (Lu) – single crystal scintillators, deoxidizer in stainless steel production, rechargeable batteries, medical uses, phosphors, superconductors. Thulium (Tm) – magnetic resonance imaging, phosphors
23
Rare Earths Market Overview
According to different sources (BAIINFO, company’s report), estimated world REEs output totaled 183 Kt TREO in 2017 without much change of 182 Kt in 2016. In accordance with this estimate, Solikamsk’s share in the global market of primary rare earths is estimated 1.1% and more than 90% of that in Russia and EurAsEC. According to BAIINFO, REEs output in China accounted for 159 kilotons TREO in 2017. This is a drop of -2% (-3 Kt TREO) compared to 162 kilotons TREO in 2016. Output outside China is estimated at 24 kilotons TREO in 2017. This is a rise of +20% (+4 kilotons TREO) compared to 20 Kt TREO in 2016 due to increased production at Lynas LAMP facility in Malaysia. Output of other non-Chinese producers has not been much changed year to year, ~ 2 Kt TREO at IREL-TREC, India, ~ 2.5 Kt TREO at Solikamsk, ~ 1 Kt TREO at CBMM, Brazil, and 1-2 Kt TREO of others including Acron in Russia.
Estimated world rare earths output, ‘000 mt TREO contained
Asianmetal, SMW. Composite price* of rare earths oxides in SMW’s rare earths carbonates, FOB China, US$/kg TREO
Rare Earths Market Outlook
IMCOA, SMW. Consumption of rare earths by areas - outlook until 2026, ‘000 mt TREO
Area/Year 2010 2015 2016 2020f 2026f
China 80 102 111 149 165
Rest of the world (ROW) 47 46 48 61 95
TOTAL: 127 146 159 210 260
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Others 0 0 0 0 2 1 1 1 1 1
CBMM 0 0 0 0 0 0 0 1 1 1
IREL-TREC 0 0 0 0 0 2 2 2 2 2
Lynas 0 0 0 0 0 1 6 12 14 17
Molycorp 2 3 3 4 3 4 4 4 0 0
FSP Russia 0 0 0 0 0 0 0 0 0 0
Solikamsk 3 2 2 1 2 1 2 2 2 3
China 147 139 152 125 115 105 150 192 162 159
ИТОГО/TOTAL 151 144 157 130 122 114 165 214 182 183
Solikamsk share, % 1.7% 1.3% 1.3% 0.8% 1.6% 0.9% 1.2% 0.9% 1.4% 1.4%
0.0%0.1%0.2%0.3%0.4%0.5%0.6%0.7%0.8%0.9%1.0%1.1%1.2%1.3%1.4%1.5%1.6%1.7%1.8%
0102030405060708090
100110120130140150160170180190200210220
So
lik
am
sk s
ha
re,%
Ra
re e
art
hs
ou
tpu
t, '0
00
mt
TR
EO
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
TREO in SMW carbonate* 10.32 7.33 27.34 128.12 44.78 22.46 20.11 12.43 9.39 11.94
* Price of oxide х content
0.005.00
10.0015.0020.0025.0030.0035.0040.0045.0050.0055.0060.0065.0070.0075.0080.0085.0090.0095.00
100.00105.00110.00115.00120.00125.00130.00
24
IMCOA, SMW. Consumption of rare earths by end-use - outlook until 2026, ‘000 mt TREO
End-use/Year 2010 2015 2016 2020f 2026f
Magnets 33 45 50 73 100
Metal Alloys 24 26 28 38 40
Catalysts 20 28 29 34 43
Polishing 16 20 21 25 30
Glass (including optics) 11 8 9 12 15
Phosphors (including pigments) 8 6 6 5 5
Ceramics 5 7 8 9 10
Others 10 8 8 14 17
TOTAL: 127 148 159 210 260
Supply – Demand Balance is not observed in this report and it is not an issue of concerns. Installed capacities to produce rare earths in the world exceeded 365 kiloton per year at the end of 2017.
Position in the Titanium Industry
End-uses
Titanium is the lightest among refractory metals, and it exhibits certain enhanced properties such as high plasticity, strength, and corrosion resistance including resistance to corrosion in high temperature environments. End-uses of titanium metal are the production of parts and mill products for the aerospace (40-50%) and chemical and energy (30-40%) industries, production of military equipment, shipbuilding, medical appliances (implants and others), sports applications (golf clubs and other uses), and certain other applications which, depending on demand, may account for between 5 and 20% of the total market for the metal.
Titanium Market Overview
ITA. World Ti sponge output, ‘000 t
Asianmetal. Ti-sponge price in China and FeTi prices in Europe, US$/kg
2009 2010 2011 2012 2013 2014 2015 2016 2017
USA 8 8 14 18 13 19 20 21 12
ZTMK, Ukraine 7 7 9 9 8 7 8 5 8
UKTMK, Kazakhstan 17 15 21 23 11 9 9 9 14
SMW, Russia 1 1 2 2 2 2 2 2 2
AVISMA, Russia 26 26 37 43 44 40 38 36 40
Japan (JTA) 25 32 53 63 42 31 42 56 50
China (CNIA) 41 58 65 81 81 68 62 67 72
TOTAL 123 147 201 239 201 175 181 196 198
SMW share, % 0.8% 0.7% 1.0% 0.8% 1.0% 1.1% 1.1% 1.1% 1.0%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
0102030405060708090
100110120130140150160170180190200210220230240
SM
W s
ha
re,%O
utp
ut,
'0
00
mt
2012 2013 2014 2015 2016 2017
FeTi, min.70% Ti, $/кг Ti 7.28 6.15 5.84 4.74 3.29 4.19
Ti-sponge, EXW China 11.87 8.98 7.59 7.77 7.05 8.89
0.000.501.001.502.002.503.003.504.004.505.005.506.006.507.007.508.008.509.009.50
10.0010.5011.0011.5012.0012.5013.0013.5014.00
25
According to different sources, world Ti sponge output accounted for 198 Kt in 2017. This is a rise of + 1% (+2 kilotons) compared to 196 kilotons in 2016. Based on this estimate, SMW’s share in the global output accounted for 1.0%, 4.8% in Russia and 3.6% in EurAsEC countries. Titanium Market Outlook
Ti sponge demand outlook until 2026, ‘000 mt
In accordance with ITA Conferences Proceedings and other titanium sources, growth of titanium demand is projected at CAGR +3.6% during 2017 – 2026
https://custom.cvent.com/C2795141339A407CA590D38C49421294/files/511b70ac8fcb45a095b5652f6685e5f8.pdf
Supply-Demand Balance is not an issue of concerns and it is not observed in this Report. Total installed capacities exceeded 340 kilotons per annum at the end of 2017.
Position in the Niobium Industry
Note: All data in this sub-section is recalculated to niobium pentoxide (Nb2O5) content independently on actual form at which pure niobium is produced or consumed unless otherwise stated.
End-uses Entire niobium (Nb) market is generally divided into two main markets: 1. HSLA Grade FeNb that accounts for approximately 85-90% of total world niobium market. HSLA Grade FeNb or Standard Grade FeNb is used to produce high strength low alloy (HSLA) steels. Supply of Solikamsk to this market is a very few that is that this market is not observed in this Report. 2. Pure niobium market that accounts for remaining 10-15% of entire niobium market. Pure niobium market could also be sub-divided to two aggregate markets categories as follows: (1) in the form of chemicals: -production of lithium niobate which is the base of surface acoustic wave filters used to produce high resolution audio and video devices, fiber optics, lasers; - lenses for digital and still cameras, eye-glasses, coating of computer screens; - niobium oxide capacitors; - niobium carbide for hard alloy cutting tools; - niobic acid for bio-fuel and auto catalysts, other uses (2) in the form of metal: - vacuum grade NiNb and FeNb used to produce super alloys for jet engines and gas fueled turbines; - superconductor alloys for magnetic resonance imaging devices, magnetoencephalography, magnetic levitation transport systems, sub-atomic and other physical science like Large Hadron Collider; - mill and wrought pure & alloy niobium products for chemical processing equipment, sputtering targets, corrosion protection systems for large structures, sodium vapor lamps The following materials can be substituted for pure niobium: ceramics, molybdenum, tantalum, tungsten and titanium in high temperature applications; tantalum, lanthanum, hafnium, polymers, aluminium, poly-silicon and electronic ceramics in optics and electronics; tantalum, tungsten, titanium and silicon in cemented carbides; and molybdenum in catalysts.
Pure Niobium Market Overview According to TIC, pure niobium shipments accounted for 7’701 mt Nb2O5 in 2017. This is a rise of + 3.4% (+251 mt Nb2O5) compared to 7’450 mt Nb2O5 in 2016. Based on this data, Solikamsk share is estimated at 8.4% in global pure niobium market supply and 100% of niobium oxide output in Russia Companies producing pure niobium and niobium concentrates prefer to keep their production data and capacities confidential.
2014 2015 2016 2020 2026
194 197 191 200 271
020406080
100120140160180200220240260280
26
The main suppliers to the metallic pure niobium market are CBMM (Brazil), Solikamsk, AMG (Brazil) and Chinese processors. The other suppliers to this market are Hermann C. Starck (Germany), Molycorp Silmet (Estonia), АО Ulba Metallurgical Plant (Kazakhstan), Mitsui Mining & Smelting (Japan). The main suppliers to the market of high purity grade products are Hermann C. Starck (Germany), Chinese processors, СВММ (Brazil), Mitsui Mining & Smelting (Japan). The other suppliers are GAM (Australia) and Solikamsk.
TIC, SMW. Pure niobium shipments and share of SMW, mt Nb2O5 contained and in %
Asianmetal. Prices for niobium oxide FOB China and niobium concentrate CIF China, USD/kg
Pure Niobium Market Outlook
Pure Niobium Market Outlook until 2028 г, mt Nb2O5
2006-2010 2011-2015 2016 2017 2023 2028
mt Nb2O5 7 624 9 297 7 450 7 701 9 025 12 100
0500
1 0001 5002 0002 5003 0003 5004 0004 5005 0005 5006 0006 5007 0007 5008 0008 5009 0009 500
10 00010 50011 00011 50012 00012 500
2009 2010 2011 2012 2013e 2014 2015 2016 2017
World total, mt Nb2O5 5 523 8 494 9 618 9 730 8 668 9 241 9 228 7 450 7 701
including SMW, mt Nb2O5 511 397 431 450 511 580 628 628 648
SMW share,% 9.3% 4.7% 4.5% 4.6% 5.9% 6.3% 6.8% 8.4% 8.4%
0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%5.5%6.0%6.5%7.0%7.5%8.0%8.5%9.0%9.5%10.0%
0500
1 0001 5002 0002 5003 0003 5004 0004 5005 0005 5006 0006 5007 0007 5008 0008 5009 0009 500
10 000
SM
W s
har
e, %
Nio
biu
m s
hip
men
ts, m
t N
b2O
5 co
nta
ined
2009 2010 2011 2012 2013 2014 2015 2016 2017
Nb2O5 min. 99.95% 50.5 62.8 71.5 69.4 64.6 55.9 40.3 38.7 41.6
Nb2O5 min. 99.5% 32.4 41.3 55.2 62.6 52.3 45.3 30.2 26.8 32.2
Columbite,kg ∑ Nb2O5+Ta2O5 19.4 32.0 44.3 47.0 36.5 27.4 22.0 20.9 25.9
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
55.0
60.0
65.0
70.0
75.0
27
Pure niobium market is projected to rise with CAGR of +4.19% until 2028 https://custom.cvent.com/C2795141339A407CA590D38C49421294/files/1a9673334220404db4b273bf75d6f387.pdf, based on forecast air-based turbines.
Supply-Demand Balance is not observed in this Report and it is not an issue of concerns. Installed capacity is enough to cover demand until 2028.
Position in the Tantalum Industry Note: All data in this sub-section is recalculated to tantalum pentoxide (Ta2O5) content independently on actual form in which tantalum is produced or consumed unless otherwise stated.
End-uses Tantalum market could be sub-divided by the two main sections: (1) Market of tantalum compounds used to produce: lithium tantalate that is the base of surface acoustic wave filters used in high precision audio and video devices, fiber optics, lasers; optics for digital and still cameras, spectacles, X-ray films, ink jet printers; tantalum carbide for hard alloy cutting tools; (2) Market of tantalum metal used to produce: capacitor grade powder for electronic and electric industries; jet turbines and rocket nozzles; alloys for hard drives with shape memory; sputtering targets; high temperature parts of furnaces; corrosion resistant parts of chemical processing equipment, corrosion protection systems for large structures; implants and prosthesis; - DVD/BD-ROM, signal masts, battery charges, power rectifiers, engine management modules and auto components like ABS and airbag activation, other electronic components operating at wide range of temperature.
The following materials can be substituted for tantalum: niobium, aluminum and ceramics in capacitors; glass, polymers, niobium, platinum, alloys of refractory metals and full alloy steels, titanium and zirconium in corrosion-resistant equipment; hafnium, iridium, molybdenum, niobium, rhenium, tungsten, vanadium and molybdenum in high-temperature applications and superalloys; niobium, hafnium, lanthanum and polymers in optics; and niobium, titanium, silicon and tungsten in hard alloys.
Tantalum Market Overview TIC, SMW. Tantalum processors’ shipments and share of SMW, mt Та2О5 contained
Asianmetal. Average prices on tantalum pentoxides FOB China and tantalite CIF China, US$/kg
2009 2010 2011 2012 2013 2014 2015 2016 2017
Total world, mtTa2O5 2 417 2 790 3 067 2 489 2 237 2 444 2 629 2 673 2 744
including SMW 35 31 27 31 32 40 32 49 45
SMW share, % 1.4% 1.1% 0.9% 1.3% 1.4% 1.6% 1.2% 1.8% 1.6%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
0250500750
1 0001 2501 5001 7502 0002 2502 5002 7503 0003 2503 5003 750
2009 2010 2011 2012 2013 2014 2015 2016 2017
Та2O5 99.5% 118 218 377 333 335 253 224 183 215
Ta2O5 99.95% 154 249 444 417 382 328 297 259 266
Tantalite, $/kg Ta2O5 86 142 272 249 246 193 156 125 152
0255075
100125150175200225250275300325350375400425450
28
TIC data is not provided since Q1 2017. According to different sources, tantalum processors shipments are estimated at 2’744 mt Та2О5. This is a rise of +2.7% (+71 mt Та2О5) compared to 2’673 mt Та2О5 in 2016. According to data expressed above, share of Solikamsk in global tantalum processors shipments accounted for 1.6% and 100% of tantalum oxide output in Russia. Companies producing tantalum prefer to keep their production data and capacities confidential. Suppliers to metal market are Hermann C. Starck (Germany), GAM (Australia-USA), Chinese processors, Mitsui Mining & Smelting (Japan), AMG (Brazil), Molycorp Silmet (Estonia), SMW. Suppliers of high purity chemicals used to supply optoelectronic market are Hermann C. Starck (Germany), GAM (Australia-USA), Chinese processors, Mitsui Mining & Smelting (Japan) and SMW.
Tantalum Market Outlook
Tantalum consumption is projected to rise at CAGR of +3.3% during 2017 – 2026 ( https://roskill.com/market-report/tantalum/ )
Tantalum market outlook, mt Та2О5
Supply-Demand Balance is not observed in this Report and it is not an issue of concerns. Installed capacity is enough to cover demand until 2026.
Position in the Chemical Industry
Position in the market of products of Chemical operations is not observed in this Report due to small share of these operations in the Company’s sales revenues.
PROSPECTS OF THE COMPANY
Further development of the Company is scheduled as follows:
Development and implementation of new technologies: - designing of carnallite warehouse - adjustment of actual output to projected output at granular potash equipment - development of designing documentation for new electrolytic cell БЭН-98 ПКА - test of electrolytic cells with mono-anodes, analysis of technical & economic parameters of pilot electrolytic cell at the end of production campaign - development of design for installation of gantry crane at potash facility, purchase and construction - designing and building of equipment to pour liquid chlorine into railway tanks
Modernization of equipment: - designing works for installation of chlorine filter in compressor facility of Plant 4 - designing of improved main equipment and parts for titanium sponge production - installation of equipment under project Mixer for synthetic carnallite production - installation of equipment for aerodynamic removal of sublimate from chlorine pipeline between Plant 1 and Plant 4 – modernization of continuous refining furnace Decrease of anthropogenic impact on the environment - building of channel for rainy and drainage water from polygon for disposal of solid waste to settling pond - building of unit №17 in radioactive waste disposal facility - reclamation of field Б in polygon for disposal of solid waste Protection of priority R&Ds – patenting
Certification – certification audit under requirements of ISO 9001:2015 and ISO 14001:2015, inspection audit of Analytical Laboratory under requirements of ISO/MEC 17025, certification audit of Due Diligence of Tantalum Supply Chain.
2006-2010 2011-2015 2016 2017 2026
mt Ta2O5 3 027 2 573 2 673 2 744 3 700
0250500750
1 0001 2501 5001 7502 0002 2502 5002 7503 0003 2503 500
29
RISK FACTORS CONNECTED WITH THE COMPANY’S ACTIVITY
In the terms of impact of various external and internal risk factors on financial and business activities, the Company seeks to apply various ways to reduce or avoid major risks. These ways include: method of diversified sales and supply (expanding the range of products, strategic planning, creating a reserve system, targeted marketing); retention of qualified personnel; training of required personnel; monitoring of regulatory and legal business environment; complex of protective measures to monitor accident-free operating of production and communication facilities; works’ safety on the basis of the the Company’s Regulations The Production Control on Compliance with Industrial Safety Requirements developed in accordance with Federal Law No. 116-FZ of 21 July 1997 Industrial Safety of Hazardous Production Facilities, the Company’s Policy in Industrial Safety (readily available on the Company's website), the Company’s general safety instructions for employees ИОТ-03-1-2015, other internal documents and instructions.
Technical and Operational Risks, Production and Environmental Control, Insurance
Technical and operational risks
Technical and operational risks are caused by the level of development of production. The Company's policy in managing such risks consists of improving processes and stricter control in production, conducting preventive measures, forecasting, applying various types of insurance of property interests and civil liability of the Company in the event of emergencies
Production and Environmental Control In order to prevent accidents in production and injury to personnel due to availability in the structure of the Company facilities operating with hazardous and explosive substances, as well as facilities where processed minerals (loparite concentrate) containing increased level of natural radionuclides, the Company implemented set of preventive (prophylactic) measures in the following areas: - systematic training of employees and representatives of contractors to form and conduct safe behavior, examination of their knowledge before providing an admission to perform their jobs; - supervision in the form of telic, regular, spontaneous and detailed inspections with involvement of employees of Department Safety and Production Control, leading managers and public inspectors to control proper technical conditions of hazardous operations, safe operations of equipment and lifting machines, implementation and performance of measures prescribed by The Schedule of Measures to Guarantee Industrial Safety and The Agreement Concerning Improvement of Conditions in Workspaces and Supplementary Utilities at the plants and shops of the Company, compliance with works’ safety requirements on sites, use of certified workwear and protective devices, compliance with requirements to take individual respirator for each person entering industrial area of the Company; - radiation control is maintained by the personnel of Radiation Safety Team with use of technics in the accredited SMW’s Laboratory of Radiation Control (LRC). It is performed under Program of Radiation Control in Loparite Concentrate Processing approved by RosPotrebNadzor. LRC performs control of radiation on surfaces (surfaces of production equipment, skin, workwear, devices for individual protection, transport), in the sanitary-protective zone, in the soil, in the stream of off-gases and in the air of industrial areas and workspaces; - permanent monitoring of air condition of workspaces, and physical factors affecting employees under requirements of Program of Production Control for Compliance with Sanitary Rules and Performance of Sanitary – Antiepidemic Measures using capacities of SMW’s Sanitary – Production Laboratory; - performing of maintenance and capital repair of tools; timely revision, repair and replacement of equipment and means of transport; - implementation of environmental measures and special Programs for protection of water basin, atmosphere, aimed gradual reduction of negative effect to water and air from solid wastes disposal under principles of Environmental Policy and requirements of federal, local and international environmental regulations and standards; - development of production environmental control aiming compliance with limits of pollution, limits for use of natural resources and requirements to quality conditions of environment in areas affected by the Company’s activities; - conducting of trainings for alarm cases, training sessions and exercises aiming coherent interaction of plant’s personnel and specialized outside emergency services; - avoidance of pollution is the preventive approach when making decision for design/engineering, reconstruction, organization of new production facilities; - timely renewal, prolongation obtaining of new licenses and permissions for certain types of construction works that may affect safety of objects under construction; - providing free therapeutic and preventive nutrition, dietary food recommended by regulations and medical norms to employees working under harmful and dangerous conditions; - conducting the annual preventive medical examinations of employees engaged in heavy and/or harmful/dangerous works, fluorographic examination of all employees (according to approved schedule)
30
- conducting of the annual preventive medical examinations of women by physicians of Perinatal Center, Solikamsk city; - providing affordable health care procedures in the Company’s medical center and/or sanatorium Insurance 1. In order to protect its property interests, SMW insures goods those are transported by auto, marine, railway or air transport with the JSC "Insurance Company of Gas Industry" (JSC "SOGAS"), Perm Division, under the General Insurance Police for Transportation of Goods. 2. In accordance with Article 15 of the Federal Law № 116 – FZ of 21 July 1997 Industrial Safety of Dangerous Production Facilities, Federal Law № 225 of 27 July 2010 Mandatory Insurance of Civil Liability by Owners of Dangerous Facilities for Injury Caused by Accident in Dangerous Objects SMW each year concludes insurance contract for mandatory insurance of dangerous facilities. Insurance contract was concluded with JSC Insurance Joint-Stock Company ENERGOGARANT 3. In accordance with legislation of Russian Federation and licensing requirements of RosTechNadzor for entities operating with objects using atomic energy (Article 56 of the Federal Law № 170 - FZ of 21 November 1995 Use of Atomic Energy), the Company signed the Contract for Insurance of Civil Liability of Entity Exploiting Atomic Energy with JSC Alfa-Insurance covering compensation of loss and harm for third party caused by radiation or other harmful exposure valid until August 2017. In August 2017, SMW signed similar contract with JSC Insurance Joint-Stock Company ENERGOGARANT 4. Employees of the Company’s Gas Rescue Team are insured under terms and conditions of voluntary insurance against accidents during performance of their duties which provides insurance of property interests connected with life, health and workability of these employees. Insurance contract was concluded with JSC Insurance Joint-Stock Company ENERGOGARANT. 5. The Company insures its civil liability for harm to life, health and injury to property of persons affected by road accidents under insurance policy of mandatory civil liability of transport vehicles (OSAGO) with JSC Alfa Insurance, under Rules of OSAGO. 6. In order to support access for additional medical services by SMW’s employees, the Company concluded the Contract for Voluntary Medical Insurance ДМС № 1/2017 of 30.06.2017 with JSC Insurance Company Ingosstrakh where employees may select its own class of insurance policy. Basic insurance policy is free for employees and completely paid by the Company.
Risks Associated with Lawsuits
The Company's is not involved in lawsuits which may result imposition of sanctions those may significantly affect financial and operational activity of the Company.
Risks Associated with Inability to Prolong Existing Licenses of the Company
Risks of revocation, suspension or refusal to prolong the licenses for the main activities of the Company is virtually nonexistent. SMW builds its forecasts on the base of compliance of its actual results with requirements to prolong appropriate licenses. SMW conscientiously meets its environmental obligations and adjusts its activities towards requirements prescribed by Russian legislation as well as requirements prescribed by international standards, agreements, conventions and protocols. Efforts to improve efficiency of the Company’s production activities include, inter alia, efforts to reduce pollution and discharge of hazardous substances, building of waste disposal facilities. The Company strives to comply with requirements governing the licensing of its activities, provides resources and arrange appropriate measures for that.
Risks Associated with Potential Liability of the Company under Obligations of Third Parties
The Company has neither obligations against debts of either third party.
Risks Associated with the Potential Loss of Large Customers
Risks associated with the potential loss of customers accounting for at least 10% in total sales revenues of the Company are moderate, and competition in the market is the only factor which may result this failure. In the event of such a case, SMW has opportunity to sell its products to other customers without significant loss of profitability.
CORPORATE GOVERNANCE
Duties and Activity of the General Assembly of Shareholders in the Reporting Period
In accordance with Article 10.1. of SMW’s Charter, the General Assembly of Shareholders (GAS) is a top governing body of the Company.
Under decision of the Board, GAS was held on 23 June 2017. GAS adopted: Annual Report and financial statements for 2016; decision concerning non-distribution of income (due to lack of income) and non-payment of dividends for 2016; elected the Board and Internal Audit Commission; approved External Auditor for 2017; approved interested party transactions that were concluded during ordinary course of business.
31
Duties and Activity of the Board in the Reporting Period
Rights and obligations of the Board members are defined in the SMW Statute of the Board of Directors that was adopted by GAS on 28 June 2016. This Statute is readily available on the Company’s web. In accordance with this Statute, the Board develops and regulates implementation of the Company's development strategy, controls the activities of the Company's executive body and performs general management of the Company except certain issues assigned to the competence of the GAS and certain controlling functions assigned to the competence of Internal Audit Commission by the Charter of the Company and by legislation. The Chairman of the Board initiated 10 Meetings of the Board during the reporting year, which were convened and held under rules of the Board Statute. 7 Meetings were proxy, while 3 Meetings were held in person. From 6 to 9 members of the Board took part in the meetings. It means that all Meetings were constituents in accordance with article 24 of Section 7 of the SMW’s Statute of the Board (quorum is at least a half of elected members of the Board). In accordance with Article 65 of Federal Law Joint-Stock Companies № 208-FZ of 26 December 1995, and Article 11 of SMW’s Charter and provisions of the SMW’s Statute of the Board, the following issues, assigned to the Board competence, were discussed and voted:
- discussion of candidates to the Board and Internal Audit Commission proposed by the shareholders owing at least 2% shares of the Company and selection of nominees to the list for vote by GAS; proposal of external Auditor of the Company; proposal of new edition of SMW’s Statute of the Board of Directors; - approval of the Company’s representatives to the managing and controlling bodies of subsidiaries/depending entities where SMW is a shareholder/co-owner or partner; - exit of the Board member; - approval of the SMW’s Budget for 2017 - performance of plan for improvement of profitability of SMW for 2017 – sale of Sport Facility - convening the Annual GAS and setting its Agenda - recommendations to the GAS concerning sharing the income for 2016 year, amount and rules for dividends payment, approval of Joint-Stock Company Legion-Audit as the Auditor of the Company for 2017 year - issues related to the preparation for the Annual GAS: - procedural issues regarding the procedure for holding GAS: the procedure for notifying shareholders; the list of information (materials) submitted to persons entitled to participate in the annual GAS; approval of text of notice to shareholders concerning GAS; approval of information concerning candidates to the Board, Internal Audit Commission, external Auditor; approval of the form and text of voting ballots; approval of draft GAS decisions; approval of the values and list of interested-party transactions that may be performed by the Company in the ordinary course of business (in accordance with paragraph 6 of Article 83 of the Federal Law Joint Stock Companies) and decision concerning inclusion of proposed interested-party transactions for approval by GAS; - approval of Report concerning interested-party transactions - provisional approval of Annual Report and financial statements for 2016 - appointment of General Director of the Company; - joining of SMW to Self-Regulatory Organization Alliance of Operators in Building & Construction ZapadUralStroy - election of Chairman, Deputy Chairman and Secretary of the Company; - discussion and approval of fees for the Company’s Auditor; - termination of activity of the Board Committees for Personnel Policy & Corporate Ethics, and Development of Strategy; - approval of candidates on positions of directors (deputy and assistants of the General Director), Chief Accountant and other positions defined by the Board; - approval of Organization Structure of SMW - approval of contract for sale of the part of SMW warehouse to SZD; - discussion of priority activities and the Company’s efficiency;
In the coming years, the Board will continue improvement of its corporate governance in accordance with recommendations of Russian Code of Corporate Governance and the Board Committees, improvement of corporate profitability, sustainability, reliability and competitiveness of the Company in the main markets.
Dividend Statements
Neither decision to pay either dividends for the results of 2016 year as well as for the results of the first quarter, the half a year, the nine months of the year, as well as for whole 2017 year were adopted by the Company.
32
List of the Company’s Large Deals
Neither deal or (trans)action, that fall under criteria ‘large’ in accordance with the Federal Law Joint Stock Companies and/or fall under procedure of approval large deals in accordance with the Charter of the Company, were signed by the Company in 2017.
List of the Company’s Deals That May be Referred to as the Interested-Party Transactions in Accordance with Federal Law Joint-Stock Companies
Information concerning interested-party deals or (trans)actions concluded by the Company during the reporting year is readily available on the Company’s web under link http://www.смз.рф/index/godovye_otchety/0-11 (available in Russian only) Identification of document: report is placed in the section of SMW web «Акционерам», sub-section « Годовые отчеты », name of document: Отчет о совершенных ОАО «Соликамский магниевый завод» в 2017 году сделках, в которых имелась заинтересованность. Placed on the web on 07 June 2017. Direct link is http://смз.рф/raport/2018/itog2017/otchet_o_sdelkakh_s_zainteresovannostju_2017.pdf
The Board of Directors of the Company
The Board of Directors of the Company consists of 9 members.
In accordance with decision of General Assembly of Shareholders of 23 June 2017, the following persons were elected to the Board:
Dr. Pavel G. Detkov Independent Member of the Board Chairman of the Board from 22.12.2015 Year of birth: 1960 Graduated from M.V. Lomonosov’s Moscow Institute of Fine Chemical Technology, specialty Chemical Technology of Rare & Trace Elements, in 1984, and Russian Academy of External Trade, specialty International Economic Relations (World Economy), in 1995. Doctor Degree in Technical Science from 1987 Director of Polyfer Handels GmbH (Wien, Austria) from 2008 Member of the SMW’s Board from May of 2014 and was a member of the earlier Boards % in the Authorized Capital of SMW: 0.1599 % in Voting Shares of SMW: 0.1599
Sergei B. Shalaev Deputy Chairman of the Board Year of birth: 1956 Graduated from Perm Polytechnic Institute, specialty Technology & Complex Mechanization of Underground Mining of Mineral Deposits, in 1978 Positions in governing bodies of other companies: member of the Board of OOO Lovozerskiy Mining & Concentration Combine, member of the Board of SZD First elected to the SMW’s Board from 2005 % in the Authorized Capital of SMW: 0.001 % in Voting Shares of SMW: 0.001
Tatiana R. Aflatonova Independent Member of the Board Year of birth: 1964 Graduated from Order of Red Banner of Labor Perm State University, specialty economist in Accounting & Analysis of Operational Activity, in 1985 Information concerning recent job is not available. First elected to the Board at the Extraordinary General Assembly of Shareholders on 25 March 2016 % in the Authorized Capital of SMW: 0% (nil) % in Voting Shares of SMW: 0% (nil)
Alexei E. Butenko Year of birth: 1969 Graduated from Perm Polytechnic Institute, specialty engineer-electrician in Electric Transmissions & Automation of Industrial Machines and Technological Complexes, in 1992; graduated from Perm State Technic University, specialty Economics & Management of the Company, in 1997. General Director of OOO Mineral Group First elected to the Board at the Extraordinary General Assembly of Shareholders on 25 March 2016 % in the Authorized Capital of SMW: 0% (nil) % in Voting Shares of SMW: 0% (nil)
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Alexander N. Lemiagov Independent Member of the Board Year of birth: 1964 Graduated from Soviet Juridical Institute, specialty Jurisprudence, lawyer. Deputy General Director of ООО Juridical Firm Aisenman & Partners % in the Authorized Capital of SMW: 0% (nil) % in Voting Shares of SMW: 0% (nil)
Dr. Dmitriy L. Melnikov Year of birth: 1961 Graduated from M.V. Lomonosov’s Moscow Institute of Fine Chemical Technology, specialty Chemical Technology of Rare & Trace Elements, in 1984. Doctor Degree in Technical Science from 1987. General Director of SMW First elected to the Board in 2009 % in the Authorized Capital of SMW: 0.0005 % in Voting Shares of SMW: 0.0005
Artem M. Nechaev Secretary of the Board Year of birth: 1976 Graduated from Perm State University, specialty Jurisprudence, in 1998 and Perm State University, specialty Management, in 2012. SMW’s Director for Legal Affairs First elected to the Board in 2015 % in the Authorized Capital of SMW: 0 (nil) % in Voting Shares of SMW: 0 (nil)
Yuriy A. Savin
Independent Member of the Board
Year of birth: 1968 Graduated from Moscow Aircraft Institute, specialty engineering of radio, in 1991. Graduated from Institute of Skills Improvement & Training of Leading Managers, division of G.V. Plekhanov Russian Economic Academy, specialty banking & finance, 1996. General Director of OOO ESSENT, President of Business Support Fund % in the Authorized Capital of SMW: 0 (nil) % in Voting Shares of SMW: 0 (nil)
Timur V. Starostin Year of birth: 1975 Graduated from Perm State University, specialty Jurisprudence, in 1999 Advisor of General Director of OOO Mineral Group, Deputy Director OOO Capital Invest Centre First elected to the Board at the Extraordinary General Assembly of Shareholders on 25 March 2016 % in the Authorized Capital of SMW: 25.0020 % in Voting Shares of SMW: 25.0020
Before election of new Board on GAS of 28 June 2017 and during 2017, the Board consisted of the following members:
Pavel G. Detkov
Sergei B. Shalaev
Tatiana R. Aflatonova
Alexei E. Butenko
Dmitriy L. Melnikov
Artem M. Nechaev
Timur V. Starostin
Denis A. Uzoykin Independent Member of the Board Year of birth: 1976 Graduated from N.P. Ogarev Mordovia State University, specialty Jurisprudence, in 1998. President of Moscow Collegium of Advocates “Uzoykin, Piskov & Colleagues” (non-profitable organization) from June 2011 First elected to the Board at the Extraordinary General Assembly of Shareholders on 25 March 2016
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% in the Authorized Capital of SMW: 0 (nil) % in Voting Shares of SMW: 0 (nil)
Neither deals with the Company’s shares were concluded by the Board members in 2016.
Information on the Person Who Holds the Position of Exclusive Executive Body of the Company
Pursuant to article 69 of Federal Law № 208-FZ of 26 December 1995 Joint Stock Companies and the SMW’s Charter, the Company is managed by General Director of the Company. General Director of the Company is Dmitriy Leonodovich Melnikov since 04 June 2015, 1961 year of birth, former Chief Engineer of the Company.
Neither deals with the Company’s shares were concluded by General Director in 2017.
The Main Provisions of the Company's Policy on Remuneration
Salary policy of the Company is based on the following principles: - compliance with the requirements of the Labor Code of the Russian Federation; - the salary of each employee and labor collective of the Company depends on employee’s labor contribution and quality of works performed as well as from production & financial performance of division and the Company in whole. SMW uses time - bonus and piecework - bonus systems of remuneration. Under time-based system, salary is calculated for the actual time worked depending on tariff per hour or monthly salary, while under piecework system salary is counted depending on tariff per quantitative and qualification parameters of works performed. Bonuses are accrued in accordance with the Company’s Regulation on Bonuses for Employees. Tariffs for workers are assigned in accordance with scope in Unified Tariff Qualification Schedule under 8th rank unified Russian tariff system in accordance with labor conditions and complexity of job. Monthly salaries for executives, managers, engineers and clerical employees are assigned in accordance with Schedule of Monthly Salaries for each group of employees depending on qualification, work experience, level of responsibility for decisions, as well as skill of employee. Terms and criteria for accrual of basic bonuses for each division of the Company as well as extra bonuses depending on performance of the Company in whole are defined in the Company’s Regulation on Bonuses for Employees.
The Main Provisions of the Company's Policy on Compensation and Reimbursement of Expenses, as well as the Criteria for Determining the Amount of Remuneration and Compensations Paid to the Members of the
Board of Directors of the Company
Pursuant to Article 4 of Section 4 of the SMW’s Board Statute adopted by Annual GAS of 28.06.2016, the Board members have a right to a monthly remuneration for performance of their duties in the amount equal to monthly average salaries of industrial employees of the Company and/or compensation of expenses connected with performance of their functions as the Board members. The total remuneration of the Board accounted for ₽20’214.19 thousand rubles in 2017. This remuneration includes salaries of the Board members who are the Company’s employees including bonuses, remunerations paid individually to the Board members for performance of their duties in the governing body during the reporting year. Compensation of expenses related to the performance of the functions of the Board member were not paid by the Company during 2017 year.
The Main Provisions of the Company’s Policy on Remuneration and Reimbursement of Expenses, as well as the Criteria for Determining the Amount of Remuneration and Compensations Paid to the Members of the
Executive Bodies of the Company
Collegial Executive Body is not stipulated in the Company’s Charter The criteria for determining and amount of remuneration Exclusive Executive Body - General Director (GD) - are defined in the article 12.2 of the Charter of the Company, in the article 1.3. Statute of the General Director and in the Labor Contract between Dmitriy L. Melnikov, the General Director of the Company, and the Company. Terms and conditions of this Contract were adopted by the Board on the Board Meeting that was held on 03 June 2015 (Protocol №6 of 03 June 2015), and, after re-election for new period, on the Board Meeting of 31 May 2017 (Protocol №4 of 31 May 2017) Under this Contract, the remuneration (salary) of GD is determined as a fixed monthly salary. This salary is subject to indexing in proportion to indexing of fixed monthly salary of officers, managers, engineers and clerical employees in accordance with Collective Labor Agreement.
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For each period, under decision of the Board, additional remuneration (timely or annual bonuses) may be paid to GD, depending on results of the Company’s performance during the reporting period, in proportion to the period of employment in the position of GD within reporting period. The remuneration of General Director is subject to the Company’s regulations on confidentiality and it is not disclosed. During the period of employment on the position of the General Director, GD is provided with guarantees and compensations included in the Collective Labor Agreement and in GD’s Labor Contract. Reimbursements and compensations related to business trips are performed in accordance with article 168 of Labor Code of RF. The procedure and rates of compensations for business trips are described in the Company’s Regulation Procedure for Documenting of Business Trips, Compensations for Business Trips, Issuance of Accountable Funds to Employees
Information (report) on Compliance with Principles and Recommendations of the Code of Corporate Governance Recommended by the Bank of Russia
The rules of corporate conduct at the Company are introduced in the form of informal rules that are mandatory for compliance. The Company and its governing bodies tend to comply principles and recommendations laid down in the Code of Corporate Governance, approved by the Board of Directors of the Bank of Russia on March 21, 2014 those are recommended for use in public joint-stock companies, to the such extent as the current organizational & ownership structure of the Company, financial and economic situation, and other factors allow. In accordance with requirements of Federal Law Joint-Stock Companies, Federal Law Market of Securities and regulations of the Bank of Russia, SMW provides shareholders and investors with all appropriate ability to participate in managing of the Company and obtaining the information concerning the Company’s activities that is disclosed by the Company on its own web-site http://www.smw.ru (http://www.смз.рф) and on the web-page of Center of Corporate Information Disclosure (CCID) of OOO Interfax - CRCI http://www.e-disclosure.ru/portal/company.aspx?id=6100. This information includes: general company information; banking account and price for copying of documents which the Company should provide under request of owners of the Company’s securities and other interested persons in accordance with the Russian legislation, Charter and internal documents of the Company; quarterly and annual financial statements and reports; list of affiliated persons; information about essential events in the Company. This information is also provided on the web of OOO Interfax - CCID. Duties of the Secretary of the Board are performed by the specially appointed person whose job duties include duties recommended by the CB RF Code of Corporate Governance and by internal documents of the Company on implementation of the basic principles of corporate governance. The Company's Department of Corporate Relations ensures compliance by managing bodies of the Company and the Company’s executives with the procedural requirements guaranteeing the legitimate rights and interests of the shareholders, timely disclosure of information making this information readily available to the public. For the convenience of shareholders, who are physical persons, and for implementation of rights of owners of the Company’s securities, the Company provides services to receive from shareholders documents, required for records in register, and arranges transfer of these papers to the Company’s Register-keeper (in Perm). Compliance of the Company with the Code of Corporate Governance under requirements of Annex 1 to Recommendations for Completion of Report on Compliance with Principles and Recommendations in the Code of Corporate Governance (Annex to Letter of Bank of Russia № ИН-06-52/8 of 17.02.2016) is provided in Annex №2 to Russian version of this Annual Report (available only in Russian under link http://смз.рф/raport/2018/itog2017/godovoj_otchet_smz_2017_final_dlja_sajta.pdf).
Information Concerning Approval of this Annual Report
Pursuant to sub-article 25 of Article 11.3. of the SMW’s Charter, Annual Report is subject to provisional approval by the Board. Authenticity of information contained in Annual Report, under requirements of Article 16.2 of the SMW’s Charter, should be confirmed by Internal Audit Commission that is the Company’s supervisory body on financial and general activity of the Company. In accordance with sub-article 11 of Article 10.2. of the SMW’s Charter, Annual Report should be adopted by the General Assembly of Shareholders. Text of Annual Report, adopted by the General Assembly of Shareholders, should be readily accessible to the public on the Company’s web for, at least, three years.
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KEY PERFORMANCE INDICATORS OF THE COMPANY
Aggregated balance sheet on 31 December 2017 (in thousand rubles)
ASSETS LIABILITIES
1 Fixed assets 2’469’573 3 Equity 2’583'394
2.1 Inventories and expenses 901'939 4 Long-term loans and other long-term borrowings
1'138’630
2.2 Cash, accounts receivable and other assets, including
1'292’159 5 Accounts payable and other liabilities 941’647
Cash and equivalent 113'140
Accounts receivable and other assets
1'179'019
TOTAL ASSETS 4'663'671 TOTAL LIABILITIES 4'663'671
Income Statement for 2017 year (in thousand rubles)
Name Код
строки 2017 2016
Sales revenues 2110 6'042'303 6'521’920
Cost of goods sold 2120 (5'703'736) (5’774'738)
Gross margin (loss) 2100 338'567 747'182
Selling expenses 2210 (391'942) (403'843)
General & Administrative expenses 2220 (314'906) (372'412)
Sales income (loss) 2200 (368'281) (29'073)
Earnings from participation in other entities (dividends) 2310 120'490 100’095
Interest receivable 2320 420 2 498
Interests payable 2330 (31'265) (30’922)
Other revenues 2340 124'752 186'116
Other expenses 2350 (223’415) (510’035)
Income (loss) before taxation 2300 (377'317) (281'321)
Сurrent income tax 2410 - (2’652)
Including fixed tax liabilities (assets) 2421 (2’705) 42’184
Change of deferred tax liabilities 2430 (528) 8’316
Change of deferred tax assets 2450 76'810 (23)
Other 2460 1’817 38’099
Net income (loss) in the reporting period 2400 (299’218) (237'581)
FOR REFERENCE:
Result of re-assessments of net assets which is not included into net income (loss) of the reporting period
2510 - 185'271
Results from other operations which are not included into net income (loss) of the reporting period
2520 - -
Total financial result for the reporting period 2500 (299'218) (52'310)
Earnings (losses) per share 2900 (0.75) (0.13)
Diluted earnings (losses) per share 2910 - -
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THE COMPANY’s AUDITOR REPORT
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