PRECHEZA a.s. is an important European manufacturer of high quality titanium dioxide and other inorganic pigments. It is a safe, modern and well-managed company which takes the environment into consideration in all of its activities.

State of the Environment Report for 2017

Clever choice for nature

PRECHEZA a.s. with its registered address in Přerov is proud of over a hundred years tradition in inorganic chemical products manufacturing. It is the largest inorganic pigment manufacturer in the Czech Republic and one of the three titanium dioxide manufacturers in CEFTA countries; the company exports technological know-how. It is also a founding member of the Association of Chemical Industry of the Czech Republic, a member of the Association of Paint Manufacturers of the Czech Republic and an active member of the Czech Chamber of Commerce and a member of the Titanium Dioxide Manufacturer Association (TDMA) in the European Union.

The company management and its individual elements, espe-cially safety management and occupational health and safety, quality and environmental protection and energy management systems are created in accordance with the internationally recog-nized ISO 9001, ISO 14001 and OHSAS 18001 and ISO 50001 standards. The company has also implemented food safety management under FSSC 22000 international standard for food grade titanium dioxide production as well as serious incident prevention system based on approval of a safety program under the statute on prevention of serious accidents caused by se-lected hazardous chemical mixtures and substances. Individual products are then certified for compliance with the according legislative and technical norms. Expert supervision is exercised by external authorized persons. Since 1994, PRECHEZA has been engaged in the worldwide activity entitled RESPONSIBLE CARE – responsible care and business in chemistry.

PRECHEZA manufacturing program is oriented mainly at manu-facturing inorganic pigments and chemicals produced as inter-mediate products in main production. PRETIOX® titanium diox-ide is PRECHEZA‘s most important product – its sales account for approx. 80% of the company‘s total turnover. PRECHEZA also manufactures iron oxide pigments (12% of the company‘s turnover), sulphuric acid (2%) and other chemical substances. PRECHEZA exports more than 85 percent of its production. Half of the company’s sales are realized in Western Europe, the rest goes to North and Central America, Asia and Eastern Europe.

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STATE OF THE ENVIRONMENT REPORT

A SYSTEMIC APPROACH TO THE ENVIRONMENT AND OCCUPATIONAL SAFETY

RESPONSIBLE CARE PRECHEZA a.s. conforms with the eight basic principles of the RESPONSIBLE CARE - responsible business in the chemical industry – a voluntary program

1. Openness2. Protection of health and safety, 3. Comprehensive environmental protection 4. Mitigation of consequences of environment related failures5. Preparedness for an emergency6. Environmental management7. Education and training8. Information openness

Integrated Management Systems PolicyAll activities of PRECHEZA a.s., inorganic pigment and other chemical substances manufacturer are performed with the view of systemic care for

occupational health and safety of employees and other individuals on the company’s premises,

major accident prevention for activities involving certain chemical substances regarding people, the environment and property on the company’s premises and in its neighbourhood,

mitigation of negative impact of the company on the environment,

ensuring the set, agreed or assumed quality of products, services and processes is an integral part of all activities of PRECHEZA a.s. as a manufacturer of inorganic chemical substances.

decreasing energy consumption related to manufacturing and non-manufacturing activities of the company and its facilities and purchasing energy efficient products and services.

Pursuant to this approach, PRECHEZA a.s. assumes the following obligations:1. To comply with the relevant legal norms and other requirements applicable to the company or obligations assumed by the company regarding occupational health and safety, major accident prevention and care and quality of the environment and using and consuming energy and energy efficiency.2. To improve the company’s results consistently in occupational health and safety, major accident prevention, environmental impact, production, services and processes quality, energy efficiency, and to provide all neces-sary information and resources for achieving set targets.3. To identify possible risks, to evaluate them and to exercise efforts to prevent injuries, serious accidents, health damage, pollution and other negative impacts on the environment, as well as poor quality of products, services, processes or low energy efficiency.

RESPONSIBLE CARE guiding principles regarding the environment are outlined in more detail in the approved Management System Integrated Policy of the company and the RC program. Following it‘s 8th defense in 2016, PRECHEZA a.s. is entitled to use the RESPONSIBLE CARE – Responsible Business in the Chemical Industry logo until 2020.

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4. To ensure comprehensive compliance, education and employee motivation for correct and safe process management and realizing own responsibility for influencing occupational health and safety, major accident prevention, the environment, quality and energy management.5. To communicate openly with the relevant partners in the areas of occupational health and safety, serious accident prevention, quality, environmental care and all levels of the organization including energy efficiency, and to disclose necessary information for defining mutual obligations, reporting and receiving feedback to improve performance.

Obligations under the integrated management systems policy are reflected in the internal regulations system which defines rights, duties and procedures related to occupational health and safety, serious accident preven-tion, quality, environmental care and energy efficiency for individual positions within the company and for its organizational units.Obligations of integrated management systems policy are the starting point for our management in setting specific time-framed regularly checked targets and target values for occupational health and safety, major accident prevention, environmental impact, quality and energy management.Integrated Management Systems Policy with regard to occupational health and safety, major accident pre-vention, quality, energy management and the environment is binding for all PRECHEZA a.s. employees and is available to the public. It is disclosed to all individuals working for the company or authorized by the com-pany. The company’s management is responsible for its implementation, understanding and maintaining at all organizational levels.

Management Systems Certificate

An inspection carried out by the external auditing company BUREAU VERITAS CZECH REPUBLIC, spol. s.r.o., in May 2017 confirmed conformity of the integrated environmental management, quality management sys-tem, security and occupational health and safety management systems with the requirements of ISO 14001, ISO 9001 and OHSAS 18001 international standards. This confirmed validity of the relevant certificates.

The integrated management system was extended to include energy management system under ISO 50001 international standard. Certification audit confirmed conformity with the above standard.

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Compliance with legal norms and other regulations

In 2017, Precheza met its reporting obligations via the integrated system of reporting obligations (ISPOP).

Compulsory measurements in 2017 proved compliance with the binding emission limits at all sources regarding both air and water. Waste management was set up in ac-cordance with valid permits.

The company runs a system which allows efficient identification of legal and other requirements, control of their implementation and timely solutions of identi-fied issues.

DEVELOPMENT, INVESTMENTS AND OTHER ENVIRONMENT-RELATED COSTSUnder the technical development investment plan for 2017, the company made several investments with a positive environmental impact. The largest was recon-struction of the homogenization and retention reservoir within the water management system; its main advan-tage lies in prevention of soil and water pollution relat-ed to manufacturing technology. In 2017, Precheza a.s. spent a total amount of CZK 16.8 mil. on purchasing environmental-related equipment. Since early 1990s, approx. CZK 1.5 bil. have been invest-ed in the environment.

Operational costs of all facilities related to the environ-ment have reached another approx. CZK 350 mil. on av-erage per year.

AIR PROTECTIONPrecheza a.s. operates the following stationary pollution sources:1 – Inorganic pigment manufacturing2 – Sulphuric acid manufacturing (S1)Operation of these sources generates emissions of SOx (expressed as SO2), particulate matter, NOx (expressed as NO2) and CO, for which relevant binding emission limits are set for individual emission ducts and measuring points.

The total atmospheric emissions (in tons per year) in 2017 and before are shown in the following chart:

Year SO2 TZL NO2 CO

2013 317 16.2 60.9 6.5

2014 471 14.4 64.9 9.1

2015 183 10.0 72.0 8.0

2016 362 8.2 82.7 8.9

2017 283 7.9 69.8 3.8

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Atmospheric emissions were compliant with the limits set in the integrated permit and with the requirements for the so-called best available technology (BAT) outlined in European reference documents (BREF).

In the integrated permit, Precheza a.s. has stricter limits than the general national and specific Czech limits or the limits that can be found in the relevant EC directives regarding some items. Emission level values are generally at the lower end of the interval for the European best available techniques, which means maximum performance in the EU pigment manufacturing industry.

The dynamics of air emissions of key substances in the recent years are shown in the following charts:

Absolute volumes of key emissions (particulate matter, SO2) decreases year-on-year (particulate matter by 1.2 %, SO2 by 22%) – for particulate matter, this is the lowest reading in the company’s modern history, for SO2 it is one of the lowest; both con-sidering that pigment production (ti-tanium dioxide and ferrous pigments) grew by 3.3% and sulphuric acid pro-duction grew by 5.3%. Significant de-crease in SO2 emissions in 2015 visi-ble on the chart was due to long-term shutdown of sulphuric acid manufac-turing facility.

Since 2013, Precheza has been listed in the European Emissions Trading System for greenhouse gases (EU ETS). In 2017, 96,285 tons of CO2e were produced (compared to 90,238 tons CO2e in 2016 and 87,156 tons in 2015). This gradual increase is also linked to the increase in titanium dioxide production and a higher consump-tion of limestone at the neutralization station and vapour and natural gas in the heat processes of pigment pro-duction.

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WATER PROTECTIONPrecheza makes saving natural resources, minimizing pollution and recycling water in technology its long-term priorities. Waste water is purified, and its quali-ty and quantity are in conformity with the integrated permit in all their indicators. White gypsum PREGIPS is obtained by neutralization of certain technological waters and the rest are used for producing red gypsum PRESTAB.

Regarding groundwater protection, the company carries out long-term regular monitoring of quality of ground-water on its premises and in the surrounding areas. Monitoring and evaluation is performed in a specialized hydrogeological form.

Precheza a.s. complies with emission limits of pollution released out of the neutralization station for concen-tration of soluble inorganic salts (SIS), sulphate ions, non-soluble substances (NS), total iron (Fetotal) and for the chemical oxygen demand (CODCr).

The total water emissions (in tons per year) in 2017 and before are shown in the following chart:

Water emissions were compliant with the limits set in the integrated permit and with the requirements for the so-called best available technology (BAT) outlined in European reference documents (BREF).

YearSIS Sulphates NS Fetotal CODCr

(t/year) (kg/t/TB) (t/year) (t/year) (t/year)

2013 8,129 112 11 0.6 76

2014 8,909 105 14 0.5 64

2015 8,630 107 15 0.8 66

2016 9,530 108 14 0.6 50

2017 9,534 102 10 0.5 46

Emission limit 15,000 400 80 18 250

Sulphates (kg/t TiO2)Sulphate emission in waste water is typical for titanium dioxide production. The dynamics of this parameter in the recent years is shown in the following chart:

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WASTEWaste management was carried out in accordance with the applicable valid legislation in 2017.

Total production of waste: 4,817 tons - ‘O’ category waste (other): 1,506 tons - ‘N’ category waste (hazardous): 3,311 tons

The total volume of carried production waste was higher than the year before (2,510 tons in 2016) and so was N-category waste (1,656 tons in 2016), especially due to extensive investment and reconstruction activities.

Hazardous waste was deposited in disposal sites and in an incineration plant. 3,311 tons were submitted to an authorized company for disposal, out of which 2,994 tons came from ferrous sulphate depository.

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ENERGY CONSUMPTIONEnergy consumption in 2017 and before is shown in the following chart:

The long-term trend of energy consumption in production – expressed in GJ of energy consumed per ton of manufactured pigment – has been decreasing.

OCCUPATIONAL SAFETYAs a part of its obligations under the integrated management system, Precheza a.s. has implemented measures to improve its performance regarding occupational health and safety. The company is using an array of tools ranging from raising awareness by providing repeated trainings to its employees and increasing their contribu-tion, and up to introducing intensive supervision performed by the company’s management.

The indicator of occupational safety the company uses is the number of industrial injures per 100 employees. An industrial injury is defined as health damage causing inability to work for the period of over 3 calendar days. The values for 2017 and previous years are the following:

The above injuries mainly occurred due to lack of attention and risk underestimation. Statistically, the highest number of injuries were linked to falls and result of industrial toxic substances, also moving heavy loads. In all cases of injury, relevant remedial steps have been taken.The conformity between hygiene requirements and the working conditions in the company is ensured by regular monitoring of working conditions, es-pecially, by measuring levels of industrial hazards in the working environment (especially, dust and noise) in an authorized lab. The measurements the company has carried out indicated conformity with the actual categorization of work.

Year 2014 2015 2016 2017

Electric energy (GJ) 256,032 228,616 269,260 281,030

Steam consumption (GJ) 798,992 647,402 806,234 812,675

Gas consumption (GJ) 719,660 814,412 855,287 857,765

Total energy consumption (GJ) 1,774,684 1,690,430 1,930,780 1,935,981

Water consumption - from the river (m3) 2,449,490 2,268,550 2,673,500 2,617,100 - drinking water (m3) 46,591 49,614 46,425 49,565

Year Number of workplace injuries

Incidence/ per 100 employees

Degree of seriousness (av. % of inability to work)

2013 11 1.77 0.21

2014 7 1.12 0.28

2015 11 1.75 0.14

2016 5 0.80 0.28

2017 10 1.60 0.19

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ACTIVITIES FOR COMMUNITY AND SOCIETY PRECHEZA a.s. builds its relationship with com-munity on informational openness, one of the guiding principles of Responsible Care.

PRECHEZA a.s. discloses reliable and timely infor-mation about its impact on the environment and the implementation of the comprehensive envi-ronmental protection program. It informs people in the media about its manufacturing program and the results of implementation of its environ-mental management program. It always places an emphasis on timely consultations about its in-vestment projects with relevant public authorities. The company has been awarded the prestigious Regional Employer of the Year several times.

Sponsoring and promotional activities of Preche-za are focused on selected groups (especially children and youth) to promote and explain the role of chemical industry in our daily lives and in building a developed economy. PRECHEZA a.s. is trying to convince young people to study chemistry and contributes to improving the quality of life in the region. It also supports selected cultural and sports events.

The company tries to stay in touch with its former employees and organizes events together with them regularly. It also provides to them its employee magazine Noviny PRECHEZA. For its 626 employees and the public, the company organizes various sports events; the most popular one is the day-long bicycle ride called PRECHEZA Cyklotour or ‘Getting Some Fresh Air’ for tourists, as well as football (ZOK Cup), volleyball and tennis tournaments between departments. PRECHEZA is also one of the organizers of the very popular long-distance PRECHEZA AGROFERT Run with its over 1000 competitors from amongst the company’s employees and the public.PRECHEZA a.s. takes good care of its buildings and vegetation on the premises and around them with the goal of improving work environment for its employees, visitors and citizens of Přerov. The company’s goal is to play an important role in the life of the local community being one of the largest companies in the region, and to show that it is a safe and a modern company with good gov-ernance and a future potential.

Selected activities of PRECHEZA a.s. PRECHEZA:• Financial and in-kind support of kindergartens in Přerov and its surroundings• long-term cooperation with Secondary Technical School Hranice, Pardubice University, Univer-

sity of Chemistry and Technology Prague and Palacky University in Olomouc• the regional round of the knowledge contest for students of chemistry and the small round

of the contest for high school students• support of Czechoslovak Jazz Festival • cooperation within the Association of Chemical Industry of the Czech Republic, TDMA • General Partner of Extraliga women volleyball team PVK PRECHEZA • support of car races organized by Autoklub PRETIOX • cooperation with Ice Stock and Skittles club SK PRECHEZA Přerov

• implementation of specific measures of the local program for improving air quality in Přerov9

Joint stock company identification

Company name: PRECHEZA a.s.

Registered address: nábř. Dr. Edvarda Beneše 1170 / 24 Přerov I - Město

750 02 Přerov

Czech Republic

Business ID: 26872307

Tax ID number: CZ 26872307

Industrial Classification 241200of Economic Activities (OKEČ) Code:

Phone: +420 581 252 111

Fax: +420 581 217 048

Email: precheza@precheza.cz The company is entered in the Commercial Register kept by the Regional Court in Ostrava, Section B, Insert 2953

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