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PhosAgro's uniqueness

Leadership

Absolute global leader in the production of phosphate ore and phosphate-based fertilisers.


Phosphate-based products account for approximately 90% of PhosAgro’s consolidated revenues, which makes PhosAgro a pure play integrated phosphate producer. PhosAgro is the leader in this segment, is one of the top producers of phosphate rock and the world’s second largest producer of MAP/DAP*. The company’s competitive advantage comes from its low-cost business model. (Source: Fertecon, 2011) 

According to the International Association of Fertiliser Producers in the area of phosphate ore production, high-grade products (P₂O₅ content >35.7%) represent approximately 9.2% of global production. PhosAgro accounts for approximately 43% of global production of phosphate rock in this category, which makes the Company as the No. 1 producer in this segment.

*Net of Chinese producers (Fertecon, CRU) 

Resources

PhosAgro has a unique resource base 

PhosAgro has significant reserves of high-grade apatite-nepheline ore with very low levels of radioactivity and low heavy metal content.

Reserves of apatite-nepheline ore at mined deposits have been measured at approximately 2.1 billion tonnes (in accordance with JORC as at 1 June 2013), which will enable the Company to continue production of phosphate rock for over 75 years (based on current production levels). The Company’s existing resource base also includes the largest aluminium oxide reserves (Al2O3) in Russia and over 41% of Russia’s rare-earth resources (according to data from the G.P. Luzin Institute of Economic Problems. Kola Science Centre, Russian Academy of Sciences, 2010) and other useful elements such as titanium dioxide. 

 

Volume
 (million tonnes)

P2O5 content (%)

Al2O3 content (%)

Rare earth element oxides
 (kg/tonne of ore)

Reserves:

 771.4

 14.0

 14.0

 

— proven

 614.7

 14.2

 14.0

 

— probable

 156.8

 13.4

 14.1

 

Resources:

 2073.9

 15.1

 13.6

3.6

— estimated

 1278.5

 15.2

 13.9

 

— identified

 795.4

14.8

 13.0

 

Source: JORC, IMC, as at 1 June 2011 

Integration

PhosAgro’s vertically integrated business model provides it with significant competitive advantages 


PhosAgro is a vertically integrated company from the extraction of apatite-nepheline ore, its processing, the production of phosphoric and sulphuric acid, ammonia, to the processing of phosphate rock and production of complex mineral fertilisers and feed phosphates, and on to logistics, sales and distribution. 

Such an approach enables the Company to manage costs effectively throughout the value chain and leverage all the benefits of synergies, investing in different areas of its business.

Thanks to its unique resource base and production capacities, in 2014 PhosAgro was fully self-sufficient in phosphate rock, phosphoric and sulphuric acids, and also 82% self-sufficient in ammonia.

PhosAgro is self-sufficient in the following (data for 2014):
  • Phosphate rock –100%
  • Ammonia - 82%
  • Phosphoric acid - 100%
  • Sulphuric acid - 100%
  • Electricity –more than 40%

Because it has its own apatite-nepheline ore and its own ammonia production facilities, PhosAgro is not directly affected by price fluctuations for these raw materials, which in turn enables the Company to maintain costs at a low level compared to other producers, with a positive impact on margins.  
The Company owns the transportation-forwarding company PhosAgro-Trans, which operates a fleet of 6,000 owned and leased rail cars. 

Cost effectiveness

PhosAgro benefits from a sustainable low-cost business model 


Owing to the low cost of resources and vertically integrated business model, the Company is able to keep costs low compared to other producers.

PhosAgro benefits from the low cost of raw materials and production costs compared to a number of its competitors due to access to relatively low-cost feedstock, in particular phosphate rock, natural gas and sulphur, and cost-efficient transportation and logistics services. Two main types of feedstock account for approximately 70% of DAP production cash costs: phosphate rock and ammonia, the production of which is controlled by the Company.

Own generating capacities


Since 2003 PhosAgro enterprises have been implementing generating capacity development and energy-saving programmes aimed at increasing the Company’s energy independence and reducing the need for external electricity suppliers. At present PhosAgro-Cherepovets and Balakovo branch of Apatit have their own power plants, using primarily steam heat recovered from the production of sulphuric acid for electricity generation primarily. As a result the Company is as a whole more than 40% self-sufficient in electricity. 

Flexibility

Flexibility of production facilities and sales and distribution policy 


Unlike many other producers, PhosAgro has the technological ability to switch between the production of different types of compound fertilisers based on market demand, and to produce MAP, DAP, NPK or NPS on the same production line.

The flexibility of production capacities, together with a flexible marketing strategy, enables the Company to ensure high utilisation of production capacities, and to optimise the range of products and consumption of raw materials. 

This flexible business model enables the Company to focus product sales on the markets that offer the best netback. PhosAgro’s sales markets are diversified - the Company is present in Russia, countries in Asia, North America, Latin America and Europe.

Potential

PhosAgro can benefit from the significant growth potential of the Russian fertiliser market 

Use of fertilisers, Kg nutrients/ha
EU149
Brazil182
USA131
Russia40
Source: Rosstat, FAO

According to ChemExpert, PhosAgro is a leading Russian producer of MAP and NPK and the most popular phosphate-based fertilisers in Russia, and is well positioned to benefit from the significant growth potential of the Russian fertiliser market.

Use of mineral fertilisers per hectare of arable land in Russia is lower than the global average and the fertiliser consumption levels seen in Soviet times have still not been reached.

Consumption of phosphate-based fertilisers was high under the Soviet system, peaking in 1988. Consumption of mineral fertilisers contracted immediately after the political changes at the end of the 1980s. As certain producers of phosphate fertilisers managed to access export markets, production contracted less than consumption, which has still not returned to the levels reached before the 1990 slump. At the same time, in view of government policies in this area, PhosAgro expects that this recovery will be attained in the next few years. 

Innovations

Implementation of innovations


PhosAgro cooperates closely with the Scientific Research Institute for Fertilisers and Insectofungicide (NIUIF) – a research & development institute specialising in research in the area of phosphate rock processing technologies, the production of phosphate rock and phosphoric acids and nitrogen mineral fertilisers. NIUIF specialists participate in the drafting of PhosAgro’s modernisation programme, and also research the possible implementation of environmentally sound and resource-saving technologies.