Phosphate - EuroChem

Credit Suisse 17th Annual Global
Ag Productivity Conference
March 2012 | London
Summary Overview
Nitrogen Segment
Phosphate Segment
Potash Segment
Summary
Top 10 by nutrient capacity globally
PRIMARY PRODUCT CAPACITY, MMT* OF NUTRIENTS
EuroChem today:

3 Nitrogen plants (2 in Russia, 1 being acquired in Europe*) - 2.7
MT of ammonia and c.10 MT of fertilizer product capacity

Natural gas operator (Russia) - 1.1bn m3 of annual capacity (c.25% of
EuroChem’s annual consumption)

3 Phosphate plants (2 in Russia and 1 in Lithuania) - 2.0 MMT of
MAP/DAP

Vertical integration: own raw materials, port terminals, rail stock,
construction/repair works, distribution in CIS

Apatite and iron ore mine (Russia) - P2O5-rich (37%-38%) apatite ore
(2.7 MT per year) covers c.85% of own production needs at the 3
phosphate plants. Apatite co-product : up to 5.7 MT of iron ore (Fe
content 64%)

0
Construction of own Potash (K) capacity is well underway (targeted
capacity of c.8 MT of KCl per year)

Strong operational track record; all EuroChem production facilities are
OHSAS-8001, ISO 14001 and ISO 9001 certified
4
6
8
10
12
14
PotashCorp
Mosaic
By 2021
EuroChem
Yara
Post completion
of both potash
projects
CF Industries
Uralkali
Logistics (Russia) - 3 port facilities (Murmansk Bulk Terminal, Sillamae
liquid terminal and Tuapse transhipment terminal), 2 Panamax vessels, and
own rail facilities (c. 7,000 rail stock and 45 locomotives)

2
Belaruskali
ICL
Agrium
OCP
EuroChem
Now

Total employees of >20,000

FY 2011 revenues USD 4.5bn; EBITDA USD 1.7bn

Privately owned by Andrey Melnichenko (92%) and CEO Dmitry Strezhnev
(8%)
K+S AG
PhosAgro
UralChem
Ammonia (N)
Phos Acid (P2O5)
Potash (K2O)
* Acquisition of BASF fertilizer assets expected to close in March 2012
Overview
Nitrogen
Phosphate
Potash
*MMT = million metric tonnes
3
Vertically Integrated Producer
Novomoskovskiy Azot
All capacity volumes are expressed in thousands of tonnes, except where otherwise specified
2012
Capacity by product
Ammonia
1,670
Urea
1,480
2012
Ammonium Nitrate
1,290
Iron ore
5,700
UAN
427
Apatite (37-38% P2O5)
2,700
Murmansk CAN
420
Kovdorskiy GOK
Capacity by product
Baddeleyite
Severneft-Urengoy
Capacity by product
10
Kovdor
Natural gas
Gas condensate
Urengoy
Phosphorit
2012
MAP, DAP
775
Feed phosphates
220
Oil
Moscow
EuroChem-Antwerpen
Kedaynyay
2012
AN / CAN
1,250
NPK
1,025
Novomoskovsk
Volgograd
Nevinnomyssk
Belorechensk
Expected transaction close: end of March 2012
Phase I (2014-15*)
2,300
Phase II (2016-17*)
2012
DAP
990
Feed phosphates
160
4,600
492
EuroChem-Kazakhstan (75%)
MAP, NP
590
Planned Capacity
Nevinnomysskiy Azot
EuroChem-BMU
2012
420
Taraz
Capacity by product
2012
Ammonia
1,160
Urea
Capacity by product
3,400
Proven and probable reserves
Tuapse
Capacity by product
2,000
Phase II (2019-20*)
MT KCl (JORC)
MT KCl (JORC)
Lifosa
Phase I (2016*)
Proven and probable reserves
VolgaKaliy
Planned Capacity
Antwerp
32 MT
Planned Capacity
Perm
Kingisepp
Capacity by product
50bn m3
EuroChem-Usolskiy
Ust-Luga
Tallinn
220 KT
Proven and probable reserves
Natural gas
Capacity by product
1,1bn m3
Phase I, phosphate rock 30%
P2O5 (2014-15)
1,500
Phase II, NPK/AN plant with
ammonia (2016-17)
2,600
890
Ammonium Nitrate
1,420
UAN
1,022
NPK
460
Melamine
50
Reserves, MT of P2O5
515
Nitrogen
Phosphate
Potash
Mining operations
* Estimated ramp-up to full capacity: 2 years.
Overview
Nitrogen
Phosphate
Potash
Transhipment terminals
4
EuroChem Strategy
Main strategic objective – become a top 5 company globally by earnings and nutrient capacity
•
N and P: secure highest competitive position on target markets (FSU and Europe) in terms of cost delivered to customer through
integration into raw materials.
•
K: build a globally competitive business with up to 8 MT p.a. capacity by 2021.
Nitrogen

Revamp/upgrade existing assets

Build new ammonia capacity

Optimize product mix

Secure competitive gas supply
Logistics
Revamp/upgrade existing assets

Optimize product mix

Secure competitive supply of P2O5
covering 100% of needs
Continuously optimize transshipment, freight and rail costs

Maximize return on capital tied in
logistics assets
Distribution
Phosphate/mining


Potash

Focus on distribution channels in
target markets (FSU and Europe)

Full-scale distribution networks in
Russia and Ukraine
Governance/sustainability

Start own production in 2014/2015

Expand new supply capacity to 8 MT
by 2021 through brownfield

Adhere to best practice in corporate
governance, social responsibility and
environmental accountability.
Conservative financial policy supports strategic objectives while ensuring the sustainability of investments
5
Overview
Nitrogen
Phosphate
Potash
6
Performance overview
External sales by segment (2011)
Key Figures 2011
(in brackets – change in percentage
points relative to 2010)
Phosphates
46% (-2)
FY 2011
Y-o-Y,%
Revenue
RUBm
131,298
34%
EBITDA
RUBm
49,656
66%
Net profit
RUBm
32,031
60%
Gross margin
%
52%
+3 p.p.
EBITDA margin
%
38%
+7 p.p.
Nitrogen*
KT
5,647
0%
Phosphate (excl. iron ore and
baddeleyite)
KT
2,387
-1%
Only iron ore and baddeleyite
KT
5,480
-11%
Sales volumes:
Distribution
11% (+2)
Other
3% (+1)
Nitrogen
40% (-1)
External sales by region (2011)
(in brackets – change in percentage
points relative to 2010)
CIS
12% (-1)
Europe
14% (-5)
* Includes organic synthesis products.
North
America
8% (-) Australasia
1% (-)
Africa
3% (+1)
Latin
America
15% (-)
Russia
24% (-)
Asia
23% (+4)
6
Capital Expenditure
25
Main Projects

23.81
2.17
20.47
20
18.69
3.31
2.85

10.56
15
RUB bn
6.97
6.40
10
2.65
4.94
6.40
6.78
6.00
0.14
5
6.79
5.25
4.68
0
2009
2010
Nitrogen
2011
Phosphate
3.85
2.65
0.65
1.51
1.84
0.89
7.17
0.48

3.21
3.20
1.80
1.71
1.05
0.64
1.37
0.99
1.68
Q1 11
Q2 11
Q3 11
Q4 11
Potash

Nitrogen:
•
Construction of melamine production (online in 1H 12) along
with the revamp of urea shop at Nevinnomyssk
•
New granulated urea facility with 1.15 KT per day capacity at
Novomoskovsk (Urea 4 shop)
•
Deployment of environmental monitoring stations and
wastewater treatment programs at both N facilities
•
Technical rehabilitation of plants to increase efficiency
Phosphate:
•
Rebuild sulphuric acid production with capacity increase by
720 KTp.a.
•
Reconstruction of phosphate acid production with capacity
increase by 300 KTp.a. / potential construction of 6 MW
turbine
•
Upgrade of Kovdor wastewater treatment facility
•
Technical rehabilitation and modernization of existing
facilities, including dismantling of BMU sulfuric acid shop and
upgrade of Phosphorit wet-process phosphoric acid facility
Potash:
•
Active shaft sinking at Gremyachinskoe (phases I & II) and
Verkhnekamskoe (phase I)
•
Start of beneficiation plant construction at Gremyachinskoe;
trunk rail line and station completed in 1H 11
Other:
•
Tuapse: operations commenced in July 2011
•
Purchase of 2 Panamax vessel
Other
7
EuroChem Overview
Nitrogen Segment
Phosphate Segment
Potash Segment
8
Vertically Integrated Nitrogen Production
All capacity volumes are expressed in thousands of tonnes, except where otherwise specified
Novomoskovskiy Azot (NAK)
Capacity by product
2012
Ammonia
1,670
Urea
1,480
Ammonium Nitrate
1,290
UAN
427
CAN
420
Murmansk
Kovdor
Urengoy
Ust-Luga
Tallinn
EuroChem-Antwerpen*
Perm
Kingisepp
Capacity by product
2012
AN / CAN
1,250
NPK
1,025
Moscow
Severneft-Urengoy
Capacity by product
Kedaynyay
Novomoskovsk
Natural gas
Gas condensate
1,1bn m3
220 KT
Proven and probable reserves
*Expected transaction close: end of March 2012
Volgograd
Antwerp
Nevinnomyssk
Natural gas
Oil
50bn m3
32 MT
Belorechensk
Tuapse
Taraz
Nevinnomysskiy Azot (NEV)
Capacity by product
2012
Ammonia
1,160
Urea
890
Ammonium Nitrate
1,420
UAN
1,022
NPK
460
Melamine
50
Nitrogen
Phosphate
Potash
Mining operations
Transhipment terminals
9
Overview
Nitrogen
Phosphate
Potash
Nitrogen: details of performance
Sales by region* (2011)
Key current / recent investment projects






Europe
14% (-8)
Granulated urea (1,100 KT p.a.): launched 2009/2010 at
Novomoskovsk
CAN (420 KT p.a.): launched 2009 at Novomoskovsk
Melamine (50 KT p.a.) + revamp of urea shop at Nevinnomyssk:
to launch in Q2 2012
First nitrogen fertilizer producer to back integrate into gas with
the acquisition of Severneft-Urengoy
Construction of new granulated urea facility (Urea 4 shop)
LDAN production (300 KTp.a. by 2016)
(in brackets – change in percentage
points relative to 2010)
Latin America
22% (+7)
Asia
15% (+5)
North America
11% (-1)
Africa
3% (-1)
Russia and CIS
33% (-3)
EBITDA margin
Australasia
2% (+1)
Sales by product* (2011)
(in brackets – change in percentage
points relative to 2010)
45%
41%
37%
39%
Acetic Acid Methanol
3% (-1)
5% (-1)
Other
7% (-2)
CAN
3% (+3)
42%
35%
29%
24%
Urea
38% (+7)
Ammonia
5% (-4)
NPK
7% (-2)
2009
2010
2011
Q4 10
Q1 11
Q2 11
Q3 11
UAN
10% (+1)
Q4 11
*Revenue and sales volumes include sales to other segments
Nitrogen segment includes nitrogen fertilizers and organic
synthesis products.
Overview
Nitrogen
Phosphate
Potash
Ammonium
Nitrate
22% (-1)
10
Nitrogen in Pictures
Granulated urea conveyor
Novomoskovskiy Azot0
Nevinnomysskiy Azot
Novomoskovskiy Azot
Melamine construction
11
Overview
Nitrogen
Phosphate
Potash
EuroChem Overview
Nitrogen Segment
Phosphate Segment
Potash Segment
12
Vertically Integrated Phosphate Production
All capacity volumes are expressed in thousands of tonnes, except where otherwise specified
Kovdorskiy GOK
Capacity by product
2012
Iron ore
5,700
Apatite (37-38% P2O5)
2,700
Baddeleyite
Murmansk
Kovdor
10
Urengoy
Phosphorit
Capacity by product
2012
MAP, DAP
775
Feed phosphates
220
Ust-Luga
Tallinn
EuroChem-Kazakhstan (75%)
Perm
Kingisepp
Planned Capacity
Moscow
Kedaynyay
Lifosa
Capacity by product
2012
DAP
990
Feed phosphates
160
Novomoskovsk
Volgograd
Nevinnomyssk
Belorechensk
Antwerp
Phase I, phosphate rock 30%
P2O5 (2014-15)
1,500
Phase II, NPK/AN plant with
ammonia (2016-17)
2,600
Reserves, MT P2O5
515
Tuapse
Taraz
EuroChem-BMU
Capacity by product
2012
MAP, NP
590
Nitrogen
Phosphate
Potash
Mining operations
Transhipment terminals
13
Overview
Nitrogen
Phosphate
Potash
Phosphate: details of performance
Sales by region* (2011)
Key current / recent investment projects

Increase of sulphuric acid capacity at Phosphorit from 720 to 1,000
KT p.a.; at EBMU from 520 to 720 KT p.a.

Building NPK production at EBMU by 2014-16: 800 KT p.a. (to
correspond to K production coming online in Volgograd)

Feed phosphates at Lifosa: 160 KT p.a. – completed

Kazakhstan: two-phase project, starting with phosphate rock supply
(up to 1,500 KT per year 30% P2O5) and ending with construction of
2.6 MT p.a. NPK / AN / LDAN production aimed at Central Asia and
North-Western China
35%
40%
37%
40%
Europe
18% (-)
Latin America
6% (-7)
North America
6% (+1)
Russia and
CIS
35% (+1)
Sales by product* (2011)
EBITDA margin
38%
Asia
32% (+3)
(in brackets – change in percentage
points relative to 2010)
Africa
3% (+2)
(in brackets – change in percentage
points relative to 2010)
MAP, DAP
51% (-2)
40%
34%
Apatite
2% (-)
Feed
phosphates
6% (-)
14%
2009
2010
2011
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Phosphate segment includes iron ore and baddeleyite, co-products of apatite production at the
Kovdorskiy GOK mine.
Overview
Nitrogen
Phosphate
*Revenue and sales volumes include sales to other segments
Baddeleyite
2% (+1)
NP
2% (-)
NPK
0% (-1)
Others
2% (-1)
Iron ore
35% (+3)
14
Potash
Phosphates in Pictures
15
Overview
Nitrogen
Phosphate
Potash
EuroChem Overview
Nitrogen Segment
Phosphate Segment
Potash Segment
16
Future Potash Global Cost Leader
All capacity volumes are expressed in thousands of tonnes, except where otherwise specified
Murmansk
Nitrogen
Phosphate
Kovdor
Potash
Mining operations
Urengoy
Transhipment terminals
EuroChem-Usolskiy
Planned Capacity
Ust-Luga
Tallinn
Perm
Kingisepp
Moscow
Kedaynyay
Phase I (2016*)
2,000*
Phase II (2019-20*)
3,400*
Proven and probable reserves
MT KCl (JORC)
420
Novomoskovsk
Volgograd
Antwerp
Nevinnomyssk
Belorechensk
Tuapse
Taraz
Volga-Kaliy
Planned Capacity
Phase I (2014-15*)
2,300*
Phase II (2016-17*)
4,600*
Proven and probable reserves
MT KCl (JORC)
492
17
* Estimated ramp-up to full capacity: 2 years.
Overview
Nitrogen
Phosphate
Potash
Potash Segment - 912 Million tonnes of proven and probable reserves
Volgograd Region (Gremyachinskoe deposit)

JORC proven and probable reserves: 492 MT (39%-40% KCl
content); JORC useful life of mine: 58 years
4.6 MT

Phase I: capacity of 2.3 MT p.a., involves the construction of
social infrastructure, cage shaft, skip shaft #1 and processing
facility.

Phase II: capacity doubled to 4.6 MT p.a., involves the construction of
skip shaft #2 and expansion of processing facility.

Current status: -490m at skip shaft #1, -100m at cage shaft (currently
prepared for freezing), -40m at skip shaft #2.
2.3 MT
Perm Region (Verkhnekamskoe deposit)



JORC proven and probable reserves: 420 MT (30% KCl
content); useful life of mine: 37 years
3,000
2,500
Phase I: capacity of 2.0 MT p.a., involves the construction of
social infrastructure, cage shaft, skip shaft #1 and processing
facility.
Phase II: additional capacity of 1.4 MT p.a., involves the construction of
skip shaft #2 and expansion of processing facility.
Current status: skip shaft #1 -90m; cage shaft sinking starting in March
2012.
US$ m

Verkhnekamskoe cumulative capex
Phases I+II (2010-completion)
1.4 MT
2,000
1,500
1,000
2.0 MT
500
0
2011
201220122013
2014
2015
201620162017
2018
2019
202020202021
prior2010
2010
2011
2013
2014
2015
2017
2018
2019
2021
to
2010
Phase II cumulative capex
Overview
Nitrogen
Phosphate
Potash
Phase I cumulative capex
18
Potash in Pictures : Gremyachinskoe deposit (Volgograd)
19
Overview
Nitrogen
Phosphate
Potash
Potash in Pictures : Verkhnekamskoe deposit (Perm)
20
Overview
Nitrogen
Phosphate
Potash
Thank you
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