Chairman’s statement

With its unique business model and competitive strengths, EuroChem is well positioned to deliver strong value for all its stakeholders in the years to come.

EuroChem is unique. It not only stands out as a privately-held company among its globally listed peers, but also by its level of strategic investments. Over the years, our balanced and prudent approach to financial management has allowed us to implement our growth strategy, reflecting our long-term commitment to helping feed the world’s growing population.

BUSINESS MODEL

Since our founding in 2001, we have developed the company in response to the increasing global demand for food, feed, fibre and fuel. To help us meet these challenges we have built a unique production and distribution network spanning both developed and emerging markets. One of our key strengths lies in our vertically integrated business model which encompasses the whole value chain, from raw material extraction, to production and logistics functions. This provides us with a stable and resilient low-cost operating base which allows us to generate robust cash flows to fulfil our strategic vision.

POTASH

Developing Potash operations is a key part of our growth strategy to become one of the world’s top-five fertilizer companies. We made remarkable progress in 2013 and enter 2014 simultaneously working on five potash shafts. At Usolskiy an important milestone was passed as we completed the sinking of our first shaft, while at VolgaKaliy we overcame earlier setbacks and resumed sinking at all Phase 1 shafts and prepared the Phase 2 skip shaft for sinking. At both sites, such significant progress would not have been possible were it not for the commitment and depth of experience of our potash and mining teams and the support of more than 22,000 dedicated employees. Building a potash mine is a long-term, capital intensive project. While many are re-evaluating their potash aspirations, we have established an excellent position with the world’s two most advanced greenfield potash projects.

GROUP INTEGRATION

As underscored by our 2013 results, the integration of EuroChem Antwerpen and EuroChem Agro has been a visible success. While we have further broadened our product mix and strengthened our position in key markets, the additional market knowledge and cross cultural talent which we have gained from these acquisitions are invaluable assets.

GOVERNANCE

As Chairman of the Board I am responsible for ensuring that our investments are strategically sound and capable of providing adequate financial returns. As such the Board and I have set out to instate corporate governance practices which secure EuroChem’s growth and success while maintaining and promoting transparency, accountability, and responsibility to deliver value in the long term across its stakeholder base.

We aim to attract and retain high calibre individuals to the Board whose complementary skills and experience will secure the continuing growth of the Company. During the year, there were a number of changes at Board level. After six years on the Board, Keith Jackson stepped down in June. His contribution was integral to defining EuroChem’s strategic development and steering its course throughout these challenging times. In December we welcomed Garth Moore and Alexander Landia to the Board. Alexander was special advisor to the Board during 2013 and has already contributed to our strategic path, while Garth’s considerable experience in potash further anchors our ambitious growth plans.

A SUSTAINABLE APPROACH

Our aim is to build and grow a business that is sustainable in the long term; consequently our approach to sustainability is fully aligned with the strategic interests of our business. Economic sustainability and social and environmental responsibilities comprise our ‘triple bottom line’ – and play a central role in the way we run our business.

Our longstanding commitment to the environment remains as strong as ever. Despite our increased production levels, we continue to reduce our impact on the environment, aligning our policies with global standards. EuroChem’s business is now of a size and scale that enables us to make a tangible positive difference in the regions where we operate. While the fundamental driver of our business is the continued global need for food, our long term success will be built on our ability to create best in class products and deliver them to our customers in the most efficient and effective way.

As a growing global business we depend on a constant intake of highly skilled employees, and we work hard to attract the right levels of local talent, while enhancing the mobility of our employees through cross-divisional moves. 2013 also saw us expand the scale and scope of our training and development programmes, and we continued to promote closer cooperation
with universities.

OUTLOOK

Our principal objective is to achieve a place among the top five global fertilizer manufacturers in terms of output and profits, as well as upholding the highest possible value for our stakeholders. To achieve these goals, EuroChem must develop at a pace faster than that of the market, ensure a high, stable level of profitability, and expand its geographical presence. Looking back at how far we have come gives me great confidence in tomorrow. We have already built one of the world’s leading agrochemical companies and our investment initiatives of the next few years will have a profound and lasting impact on our financial profile and resonate across our stakeholder base. I now look at EuroChem and see a truly global company, well positioned for future growth and ready to capture further opportunities.

Andrey Melnichenko

Chairman