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Omnia’s new nitric acid complex on time and below budget



Omnia is delighted to announce the successful completion of its world class Nitric Acid Complex in Sasolburg, which started operating towards the end of March 2012. This Complex is the first of its kind to be built in South Africa for many decades. The Complex represents a milestone investment in the development of South Africa to produce nitric acid and will alleviate the pressure Omnia experienced as a result of an increasing shortage of this critical raw material.

The Nitric Acid Complex is a much needed investment in the future of South Africa’s mining and agriculture sector. Despite Omnia’s existing plant being operated at full capacity, the growth in Omnia’s markets has led to an increasing shortage of nitric acid which has in particular, restricted its use in its fertilizer business. In 2010 Omnia announced that R1 billion was raised for the Complex, with a capital budget of R1.4 billion (excluding capitalised interest). Today, Omnia is pleased to announce that the expected cost for the Complex will be below budget.

Rod Humphris, Omnia Group Managing Director, said: “The capital cost at less than $200m compares favourably with international benchmarks for similar plants of $500m. We are extremely pleased that the start-up was achieved in a record construction period of 21 months - a very tight time schedule for a capital project of this nature. The construction was managed by our own internal team.”

The completion of the Nitric Acid Complex is a great development for the Group and will enhance South Africa’s capacity to produce nitric acid and ammonium nitrate using world class technology. The Complex will have a positive impact on the Group’s performance going forward and updated guidance in this regard will be provided when the Group’s results for the year ended 31 March 2012 are released on 26 June 2012. Ramp up to full capacity will take place in line with growth in the explosives and fertilizer markets.

The Complex comprises a nitric acid plant, an ammonium nitrate plant, a porous ammonium nitrate plant (PGAN), a fleet of 145 specialised ammonia rail tankers and other ancillary facilities. The nitric acid plant will produce 1 000 tons per day which is 40% more than the current plant. German engineering design company ThyssenKrupp Uhde, one of the world’s leading companies in the design and construction of chemical, refining and industrial plants, supplied the technology, licences and engineering design.

The Complex is Omnia’s biggest investment to date and demonstrates the Group’s commitment to South Africa’s mining and agricultural sectors. Not only does it create a new growth path for the Group but it is also, together with the existing plant, a major step in ensuring security and continuity of supply for the Group’s explosives and fertilizer businesses.

Humphris noted: “These plants provide growth opportunities for our Omnia Fertilizer and BME operations, allowing us to take advantage of the increasing demand for fertilisers and explosives as a result of the significant growth in the agriculture and mining sectors in South and Southern Africa.”

Omnia uses international leading technology, EnviNOx® of ThyssenKrupp Uhde, which is more than 98% efficient, to eliminate greenhouse gases at its new and old nitric acid plants in Sasolburg. The new nitric acid plant is expected to generate up to 350,000 carbon credits annually at full load, in terms of the United Nations Framework Convention on Climate Change (UNFCCC) which recently approved a new mechanism for the abatement of greenhouse gas emissions arising from new nitric acid plants. In the first year of operation, the new nitric acid plant is expected to achieve 60% of this total. One of the features of the new complex is that it will generate approximately 50% of the total electricity demand for the entire Sasolburg site from excess steam resulting from the exothermic nature of the reactions in the plant. This benefits the business in buffering the high inflationary electricity price increases and substantially reduces the Group's carbon footprint even further.

Omnia recently became the first company in sub-Saharan Africa to be issued in excess of a million Certified Emission Reductions (CERs) by the Executive Board of the Clean Development Mechanism Protocol. Omnia has to date been issued with a total of 1 076 015 CERs, 42% of the total quantity issued in Southern Africa.

Humphris concluded: “We chose this technology as we believe that the alternatives are not nearly as efficient and are therefore not in line with Omnia's commitment to reducing its environmental impact and effect on climate change. The new Nitric Acid Complex establishes a new growth platform for the Group which will be of immense benefit to our customers in the growth of their businesses”.

ENDS

Note to editors:

Background on the investment

In May 2010, the Omnia board approved a R1,4bn investment in a second nitric acid complex aimed at alleviating the growing shortage of raw materials, particularly in the mining division. The investment by Omnia was driven by growing demand in its explosives and fertilizer markets as a result of international demand and development trends in mining and agriculture which are set to continue.

Omnia’s need for Nitric Acid, and history of raw material supply

Nitric acid (HNO3) is a core raw material for both fertilizer and explosives manufacturing. Omnia’s nitric acid plant in Sasolburg was commissioned in 1983 with the main purpose of supplying the fertilizer market during the early years. The growth in the explosives market has now eroded the industry’s spare capacity, and is expected to do so for the foreseeable future. There are also technical challenges inherent in importing nitrates which make this an increasingly unattractive raw material supply solution. BME, Omnia’s explosives business, has since developed a strong market presence, demanding an ever-increasing portion of the nitric acid plant capacity. The development of calcium nitrate (used both as a fertilizer and in explosives manufacturing) has also added to the nitric acid demand within the Group.

The new plant logistics include investment in rail infrastructure, via state of the art rail tankers, to comply with best practice safety transportation standards.

About Omnia

Omnia is a diversified, specialist chemical services provider with business interests balanced across chemical, mining and agricultural markets. The Group’s business model, which leverages its intellectual capital and technology, differentiates it from commodity chemical companies.

The Group’s three businesses (chemical, mining and agriculture) continue to provide high value, customised solutions built on a continually expanding knowledge base. Omnia’s unique business model places it at the forefront of the chemical services industry and involves matching customer needs to product innovation and application expertise to add extraordinary value to its customers businesses.

Issued by Brunswick: 011 502 7400

Taryn Wulfsohn 083 273 1301

For more information contact:

Rod Humphris, Omnia Group Managing Director 011 709 8850