Public Joint Stock PhosAgro : Deputy Prime Minister of Russia Yury Borisov Takes Part in Launch of Facilities for Final Stage of Large-Scale Investment Programme at PhosAgro’s Cherepovets Production Site

Cherepovets - During his visit to Cherepovets, Deputy Prime Minister of Russia Yury Borisov participated in the ceremonial commissioning of a new sulphuric acid production unit with a capacity of 3,300 tonnes per day (SK-3300) and the reconstructed Kryolite rail station.

Vologda Region Governor Oleg Kuvshinnikov, Deputy Minister of Industry and Trade of Russia Mikhail Ivanov, PhosAgro CEO and Head of the Russian Fertilizer Producers Association (RFPA) Andrey Guryev participated in the event.

Launching these facilities aimed at increasing mineral fertilizer production capacity and their supply to end consumers marks the final stage of PhosAgro's large-scale development programme at its Cherepovets production site. The Company previously commissioned a high-tech ammonia production line with a capacity of 760,000 tonnes per year and granular urea production with an annual capacity of 500,000 tonnes as part of the investment programme, which totalled over RUB 120 billion (PhosAgro's total investments over just the last seven years amounted to RUB 240 bln). As a result, since 2012, the Company's fertilizer output doubled to a record 7.4 mln tonnes in 2020, tax payments grew and more than 650 highly qualified jobs were created.

SK-3300 has become the highest-capacity production unit of its kind in the country. It was developed by some of the country's leading scientific institutes employing best available techniques. They helped significantly increase the unit's energy efficiency and reduce emissions. The water vapor produced during the sulphuric acid manufacturing process is utilised to generate power at the plant's CHP. This decreases natural gas usage and reduces the carbon footprint of the Company's products. This production line will boost sulphuric acid output, enabling PhosAgro to produce a higher volume eco-efficient fertilizers.

The reconstruction of the Kryolite station will enable PhosAgro to boost rail freight volumes for the Cherepovets site's railway infrastructure by more than a third up to 16.5 mln tonnes per year. The Cherepovets complex has a unique logistical advantage, with access to two major railways, the Oktyabrskaya and Severnaya. Trains carrying apatite concentrate will arrive at the Kryolite station, where they will be loaded with mineral fertilizers and sent to Russian ports. This brings the logistical capabilities of the Cherepovets complex to a whole new level.

As noted by Yuri Borisov, the country's top scientific, design and contracting organisations were involved in the construction of SK-3300:

"Today we witnessed the launch of a state-of-the-art technology complex. It is an example of the application of the best available techniques. One of the most efficient and safe. The new facility will make it possible to increase volumes and expand the range of fertilisers produced here. This will benefit the entire Russian agricultural industry along the whole chain 'from mine to plate'. Our country's food security will be strengthened. The Russian mineral fertilizer industry will be able to strengthen its competitive position in the global market. With products that are free from concentrations of cadmium and other heavy metals that are hazardous for human health and soils, and with a high nutrient content. This is a milestone event for the industry and a landmark in our industry."

Vologda Region Governor Oleg Kuvshinnikov underscored that the new unit is an example of advanced technologies and an environmentally friendly approach to production. He noted that the commissioning of new capacities entails an increase in cargo turnover, so "it is very important that today the Kryolite-Nelazskoye railway junction has also been put into operation."

"PhosAgro is a reliable strategic partner and the largest employer and taxpayer in the Vologda region. In recent years, production volumes have more than doubled. Fertilizers are in demand on the domestic and foreign markets. It is also important that the Company invests in social projects, setting an example for socially responsible business," Oleg Kuvshinnikov summed up.

PhosAgro CEO Andrey Guryev thanked everyone who participated in the construction for their hard work, teamwork, and professionalism: designers, construction workers, installers, equipment suppliers and factory workers.

"Commissioning these new facilities is a wonderful gift for the company's 20th anniversary. I would like to emphasise that this is our shared victory. The federal government has done an excellent job of ensuring that the domestic economy continues to grow despite the pandemic and sanctions, providing favourable conditions for the implementation of investment projects and modernising the manufacturing industry. The rapid transformation of PhosAgro's Cherepovets complex is a shining example. At the same time, we felt support from the regional government for the construction. I am confident that together we will implement many more large-scale projects in the Vologda region, as our investment programme does not stop here. Today, the company is confidently looking ahead and is considering the construction of a new ammonia and urea production complex here in Cherepovets," said Andrey Guryev.

Following the launch ceremony, Yuri Borisov hosted a meeting in Cherepovets to discuss the future of the mineral fertilizer sector. Heads of the RFPA and key industry enterprises attended the event.

"Over the past seven years, Russia's mineral fertilizer industry has invested over RUB 1.3 trillion into development and increased its production output by 40%, becoming the second-largest in the world. This rapid expansion is necessary to meet the growing needs of Russian farmers, who have virtually doubled their fertilizer consumption over the last five years and will double their purchases again by 2025," Yuri Borisov said during the meeting.

The Deputy Prime Minister added that in view of the President's goal of doubling non-resource non-energy exports by 2024, it is critical for the domestic mineral fertilizer industry to maintain its global market share. Today, Russia is one of the world's major suppliers of mineral fertilizers, with the products of Russian companies in demand in more than 130 countries and rising. The industry priority remains meeting demand from Russian farmers, which must be met 100%.

In this context, the industry's enterprises have prepared plans for investment programmes totalling RUB 2 trillion for the next seven years.

PhosAgro CEO and Head of the RFPA Andrey Guryev noted in his report to the Deputy Prime Minister that the ongoing investment boom in the industry was made possible by the government's investment incentive programmes, such as the mechanism of special investment contracts, the corporate competitiveness enhancement programme, and the investment protection and promotion agreement.

"All new projects are developed utilising the best available techniques, based on modern innovations of Russian and foreign design institutes, which meet strict environmental legislation standards while lowering unit costs of raw materials and energy resources. As a result, by 2026 the production capacity of enterprises in the sector will practically double compared to 2013," Andrey Guryev said.