EuroChem

Phosphates Segment

EuroChem is the 7th largest global producer of phosphate fertilizers by MAP/DAP capacity

Key Facts about phosphate fertilizers:

  • Crops need phosphates to stimulate root development and protect against drought
  • Phosphorous plays a vital role in energy transfer, photosynthesis, nutrient transport, sugar metabolism, plant genetics, cell division and as a structural component of the plant
  • Crops with adequate phosphorous show steady, vigorous growth and earlier maturity.  Earlier maturing crops are less susceptible to summer drought, disease infection, frost and harvest damage
  • Phosphate deposits are relatively rare, with large deposits concentrated in North Africa, China, the CIS and North America
  • Phosphate ore, produced by mining apatite and phosphate rock, is the key ingredient for phosphate fertilizers.  Other important ingredients include ammonia and sulphur
  • Production lead time for new phosphate mines and processing plants is three to four years

Our phosphate and mining production facilities:

Our phosphate products:

Phosphate segment capacities:

Key capacities, MMT p.a. Kovdorskiy GOK Lifosa Phosphorit EuroChem-BMU Total
Apatite 2.70       2.70
MAP, DAP, NP   0.99 0.78 0.59 2.36
NPK     0.06   0.06
Feed phosphates   0.16 0.22   0.38

Phosphate segment financial highlights:

RUB bn 2010 2009 2008 2007
Revenue 48.50 31.12 52.02 29.65
EBITDA 16.79 4.43 20.15 8.44
EBITDA Margin 35% 14% 39% 28%
Sales Volumes (MMT)
Apatite 0.21 0.22 0.27 0.03
Iron Ore 6.12 5.58 4.69 5.44
MAP 0.96 0.72 0.63 0.87
DAP 0.89 0.95 0.76 0.84
NP, NPK 0.11 0.07 0.13 0.10
(figures include sales to other segments)

Our strategy for the phosphate segment:

  • Increase supply of raw materials (phosphate rock, apatite)
  • Grow capacity to increase the benefits of economies of scale
  • Improve cost efficiency through energy saving technologies

SWOT Analysis:

Strengths Weaknesses
  • Own supply of apatite accessible through open-pit mining, with high P2O5 content
  • Plants are located close to seaports and close to their target markets (Europe and Russia/CIS)
  • Lifosa is an EU-based plant hence no import tariffs in Europe
  • Absence of ecologically harmful substances in apatite (cadmium), which is particularly important for exports to Europe
  • Transportation costs for Kovdor apatite are relatively high for Lifosa and EuroChem-BMU
  • Relatively high maintenance costs and restrictions on maximum efficiency improvements due to age of equipment
Opportunities Threats
  • Securing access to phosphate ore in Kazakhstan would remove limitation on growing fertilizer production capacity
  • Further efficiency improvements are still possible, mostly at EuroChem-BMU and Phosphorit
  • Large-scale project: construction of phosphate and compound fertilizer plant in Kazakhstan
  • New capacity coming online (e.g. Ma’adden project in Saudi Arabia, Bayovar project in Brazil) could unfavourably alter the supply-demand balance in the sector and/or compress the normally higher margins enjoyed by integrated producers like EuroChem
10th largest fertilizer producer globally by nutrient capacity
2.3 mmt p.a. capacity of potash fertilizers is expected to be reached in 2015, with first potash production launched towards 2014
№1 fertilizer poducer in Russia
5.3 bn US$ is the current estimate of the total investment in EuroChem’s two potash projects over 2011-2021.