EDITOR: | December 5th, 2012

Russian Eurochem Aims to become the largest Potash and Phosphate Player

| December 05, 2012 | No Comments

Russian agrochemical giant Eurochem aims to become one of the largest players in the European market of potash and phosphate fertilizers in the coming years, which is expected to take place through the development of its recently acquired EU assets.

In recent years, share of the company on the domestic market of potash and phosphate fertilizers has reached 30%, forcing Eurochem to think over the foreign expansion.

As part of this plans, this summer Eurochem completed the acquisition of Eurochem K + S, Germany’s largest producer of potash and nitrogen fertilizers, as well as Belgium plant for the production of mineral fertilizers, owned by German BASF.

According to Andrey Melnichenko, owner of Eurochem, the company has no plans for a significant increase of its share in the domestic market, but rather plans to concentrate on further expansion in the European market.

Andrei Melnichenko comments:

“After the completion of the acquisition of European enterprises we are starting to build our own distribution network in Europe. In the medium term we plan to integrate our European production and distribution activities with those of foreign companies, which have different geographical structure of their production capacities. In the period of 2012-2020 years Eurochem plans to invest about $1.5 billion annually in its EU organic growth.”

At the same time, according to Dmitry Sterznev, CEO of Eurochem, in the European market, the company plans to mainly focus on the development in France and Germany.

According to Sterznev, Eurochem acquired BASF’s Belgian plant, which is located just between the two countries.

This is a chance for us to become a company that lives up to its name – Eurochem,  but not Asichem, – Sterznev said.

In the meantime, many EU officials are not so happy with the arrival of Eurochem, partly due to high ecological risks, associated with its production.

In Russia, the company’s activities have often been the subject of mass protests of local population, which ultimately led to the fact that last summer a number of production facilities of the company were stopped by personal order of Russia’s Prime-Minister Dmitry Medvedev.

According to Russian analysts, the same level of emissions in the EU will result in a multi-million dollar fines to Eurochem and license revocation.

In addition, in order to avoid monopolistic activities of Eurochem in the European market the European Commission has already imposed a anti-dumping duty of $ EUR 32.82 per tonne on the imports of ammonium nitrate by the company.

Representatives of EuroChem reluctantly comment on the situation, noting that the rumors about the possible introduction of duties on their products ammonium walked a long time, so these news were unpleasant, but not unexpected.

So far, the company is not ready to disclose the volume of its losses, associated with the introduction of a duty. As Zinaida Sedzenevskaya, head of department of strategic projects of Eurochem said the company’s exports are properly differentiated and therefore ammonium nitrate will be simply redirected to other markets, such as Brazil.

Domestic projects

At the same time, in addition to European projects, Eurochem is considering further expansion of its potash and phosphate busines in the domestic market.

In case of Russian potash projects, during the period from 2013 to 2017 total volume of investments is planned at $6.6 billion, of which $2.1 billion will be invested in the development of Gremyatchinskoe potash field and $1.3 billion – in the Verkhnekamskaya potash project.

“EuroChem” is currently developing two large potash deposits in Russia as part of of the implementation of Gremyachinskoye and Verkhnekamskoye potash projects.

In the case of phosphates business EuroChem plans to make investments in the construction of production of compound fertilizers at the capacities of its EuroChem-BMU plant, which are set at the level of $134 million and the increase of capacities of its Kovdor Mining and Processing complex with the volume of investments $267 million.

At the same time another $55 million will be invested on the development of the Phosphorite company in the St.Petersburg region and $100 million – in the phosphorus project in Kazakhstan.



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