Phosphates

In 2009 the world consumed 34.6 MMT of P2O5 in phosphate fertilizers; this is set to rise to 42.7 MMT by 2014.*

In 2009 we produced 0.9 MMT of P2O5 in phosphate fertilizers and this is set to rise to 1.2 MMT by 2014.

The key to growth: our currently planned investment in phosphates and apatite mining 2010-2014 is over US$ 600m

*Sources: IFA, BSC, Fertecon, EuroChem estimates.

Key facts

  • Crops need phosphate to stimulate root development and protect against drought
  • Phosphorus plays a vital role in energy transfer, photosynthesis, nutrient transport, sugar metabolism, plant genetics, cell division and as a structural component of plants
  • Crops with adequate phosphorus 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
MAP+DAP capacity global ranking MMT p.a.
Mosaic 10.2
OCP 2.6
Phosagro 2.5
EuroChem 2.2
CF Industries 2.0
PotashCorp 1.9
GCT 1.1
Agrium 1.1

Sources: IFA, BSC, company data.

Capacity in MMT p.a.
  Kovdorskiy
GOK		 Lifosa Phosphorit Eurochem - BMU Nevinno-
mysskiy
Azot		 Total
Apatite 2.70 0 0 0 0 2.70
MAP, DAP, NP 0 0.98 0.74 0.51 0 2.23
NPK 0 0 0 0.06 0.44 0.50
Feed phosphates 0 0.08 0.22 0 0 0.30
Total 2.70 1.06 0.96 0.57 0.44  
The soybean plant has been used in Chinese agriculture for over 5,000 years. Today the top three producers of soybeans are the United States, Brazil and Argentina.
Lifosa sulphuric acid plant HRS unit
Ammonia storage at EuroChem-BMU phosphate plant

Strategy

  • 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

Achievements in 2009

  • Invested in new turbine generators to re-capture steam produced in sulphuric acid production process to improve energy efficiency of Phosphorit plant
  • Launched DAP production at Phosphorit plant
  • Planned phosphate fertilizer line at EuroChem-BMU plant will have capability to process phosphate rock from mine at Kara Tau deposit in Kazakhstan

SWOT analysis

Strengths
  • Own supply of apatite accessible through open-pit mining, with high P2O5 content
  • Plants are located close to sea ports 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
Weaknesses
  • 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
  • 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
Threats
  • 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

Revenue contribution 2009

40% (2008: 44%)

Revenue contribution 2009

EBITDA contribution 2009

27% (2008: 45%)

EBITDA contribution 2009

4th largest global producer of phosphate fertilizer by MAP/DAP capacity