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LSR Group launches a new cement plant

29 November 2010

On November 27th, 2010, LSR Group (LSE: LSRG; MICEX, RTS: LSRG) performed technological launch of a new cement plant in Slantsy, Leningrad region, which has been built using the world’s leading expertise in cement plant construction. The production capacity of the plant is 1.86 million tons of cement per year. The total amount of investment into the project is EURO 445 million. The new cement plant is considered to be a high-priority investment project for the economy of Russia.

The inauguration ceremony was attended by:
Valery Serdyukov, Governor of the Leningrad region, Andrey Molchanov, Senator of the Leningrad region in the Council of Federation of the Federal Assembly of the Russian Federation, Mr. Xie Xiao Yong, Consul General of China, Igor Levit, Chairman of the Board of Directors of LSR Group, Aleksandr Vakhmistrov, President, Chairman of the Executive Committee of LSR Group, Mikhail Romanov, Managing Director of New Business Development of LSR Group, Mr. Xu Ning, President of Hefei Cement Research & Design Institute (HCRDI), and also scientists, mass media and the plant’s employees.

The construction process which has been underway for 2 and a half years, is completed, the equipment has been assembled and installed. For the very first time, the variety of metal structures and complex technological mechanisms, including the key production unit of the cement plant – a rotatory kiln, has started to operate jointly with each other. Since this moment, the plant is facing a new stage – the stage of production and certification of the project.

The new plant is a unique “green-field” project: the complex construction, including engineering and transport infrastructure, was conducted from the ground up. The plant area is 40 ha (excluding quarries, an access road and a railway).

The location of the plant in the town of Slantsy, 175 km away from St. Petersburg, has been chosen on purpose. As a rule, cement plants depend on raw material base: its closeness usually affects profitability of the plant.

LSR Group has all the necessary rights and licenses for the two mineral deposits - the Duboyom quarry with a proven reserves of 95 million tons of limestone and the Bolshiye polya quarry with a proven reserves of around 41 million tons of cement clay.

As an additional raw material in cement production, the new plant will use rock mass which represents the waste from the oil shale production by OJSC Leningradslanets and OJSC Slanets, which also affect environmental situation in the town. The rock mass of 100 million tons occupies more than 400 ha of Slantsy, and will be utilized as a component in the cement production (up to 50% of a raw mixture).

The plant will operate the most efficient “dry” process technology, enabling it to produce high-quality cement of grades 400 and 500, the most demanded after by builders. The production technology, which uses the waste limestone from oil shale production as an additional raw material, was developed by FLSmidth & Co. A/S of Denmark, a world’s leading cement equipment manufacturer. FL Smidth & Co. A/S designed and supplied all the equipment for the new plant. In addition, its specialists organised trainings for engineering and technical employees, and also the management of the plant. The general contractor for the full range of design and construction works was OOO Cement Northwest, a 100% subsidiary of Hefei Cement Research and Design Institute, China.

The new production facility will become one of the most energy efficient plants in the world, due to the following factors:
- use of alternative fuel – the plant can operate thorough waste materials combustion (used tires, oil, plastic packaging, etc.);
- 40% of the energy required for the operation of the production lines is provided through waste materials combustion;
- automatic monitoring of emission points into the atmosphere through the analyzer of emissions, and also implementation of the emission limits in accordance with the European environmental standards.

At the moment, the plant employs 200 people; as soon as the plant reaches its full production capacity, the number of employees is expected to double.

According to independent experts, Resheniye Consultancy Company, the current capacity of the cement market in the North West Federal Region in 2010 will amount to 4.1 million tons of cement per year, whereof 2.9 million tons is a market capacity of the Leningrad region.

Valery Serdyukov, Governor of the Leningrad region, comments:
“Today we all witnessed the completion of the huge construction project – efficient and environmentally-friendly world class cement plant. This is an advanced high-tech facility based on innovative technologies. The new plant is a significant contribution into the region’s economy: not only will it produce high quality cement for the builders and improve ecological situation in Slantsy, but also provide 400 new jobs for the residents of the Leningrad region. This is very important that LSR Group managed to complete the construction on time, despite challenging economy of the last year”.

Alexander Vakhmistrov, President, Chairman of the Executive Committee of LSR Group, comments:
“Cement plant technological launch of LSR Group is an important event for the cement sector of the North West region which today has obsolete production facilities.
For our company, the new plant will enable us to complete our integrated chain of building materials operations and it will fully cover our internal demand for cement. LSR Group is one of the largest cement consumers in Russia (around 1 million tons of cement per year). For this reason, our company and other consumers are waiting for certification of the cement, produced at the Russia’s most advanced plant”.

Photo images of the cement plant launch ceremony are available at:
http://www.lsrgroup.ru/en/2010-11-27

Notes to Editors:
OJSC LSR Group is a real estate development and building materials company founded in 1993 and operating in a number of complementary market segments. Its core business areas are production of building materials, real estate development and panel construction.
LSR Group's main operations are located in St. Petersburg, Moscow, Yekaterinburg and Ukraine.
In 2009, the sales revenues of LSR Group were RUB 51,024 million (IFRS).
LSR Group is a public company, with its GDRs traded on the London Stock Exchange and its ordinary shares traded on MICEX and RTS.
 
For more details please contact:
LSR Group Press Service
Tel.: +7 812 314 10 44
Fax: +7 812 458 83 72

E-mail: press@lsrgroup.ru
www.lsrgroup.ru

«LSR Group» discloses information on the page on the Internet of LLC Interfax-TsRKI — the news agency accredited by the Central Bank of the Russian Federation to disclosure of information.
Information is available here.



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