eurochem-annual-report-2011

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Business review Sustainability At EuroChem we constantly strive to maintain and develop the sustainability and growth of our business and products while expanding our production capacity and supporting the drive for added efficiency within the agriculture sector, to help provide the world with the food it needs. We remain committed to investing in our employees, communities, and the environment to secure tomorrow’s prosperity. Justus von Liebig, who is regarded as the father of the fertilizer industry, formulated the “Law of the Minimum”. Illustrated as a barrel with staves of unequal length, von Liebig’s law states that your maximum yield will be determined by your most limiting nutrient. We want to become a leading global top five fertilizer producer, but getting there is really just one part of our story. The following pages showcase our achievements in some of the other key areas designed to keep us at the top. 58 EuroChem Annual Report and Accounts 2011 PHOSPHAT AA E FINANCIAL STA T BILITY CUSTOMERSS POTA T SH EMPLLLOOOYEES COOOMMMMUNITIES RAW AA MAT A ERIAL SECURITY SHHHAREHOLDERS GOVERNANCE CORPORAT A E NITROGEN ENVIRONMENTA T L IRON ORE LOGISTICS i EuroChem’s commitment to building and securing stakeholder value is driven by similar beliefs. We firmly believe that environmental, social, operational, and financial performance are all interlinked and must be developed in concert to secure and sustain our growth. Take a closer look at our vertically integrated business model and its impact See pages 8-9
Environment We’ve come a long way since acquiring EuroChem’s first assets. Because of the nature of our business, from the very beginning we highlighted environmental safeguards as a prerequisite to increasing both efficiency and production volumes. A clear trend has since emerged. While efficiency improvements and investments in new production lines have steadily increased capacity and ramped up output over the years, over the same time frame targeted environmental investments have steadily reduced our operational footprint. In 2011, our annual environmental expenditure exceeded RUB 1bn for the first time. Totalling an aggregate RUB 1.1bn, environmental protection expenditures increased by 16% compared to 2010. RUBm 2004 2005 2006 2007 2008 2009 2010 2011 Environmental protection expenditures 348.9 544.4 671.9 894 803.8 762.2 917.9 1,067.7 As in past years, our environmental investments in 2011 were primarily directed at further reducing volumes of emissions and effluent discharge. The upgrade of outdated equipment and the launch of new production lines also helped to bring down our energy consumption. And, at the same time as conserving valuable resources, these investments also contribute to the competitiveness of our production. Kg/tonne 2004 2005 2006 2007 2008 2009 2010 2011 Atmospheric emissions 1.34 1.26 1.26 1.24 1.24 1.20 1.20 1.13 m 3 /tonne 2004 2005 2006 2007 2008 2009 2010 2011 Effluent discharge 5.75 5.45 5.25 4.60 4.04 3.48 3.35 3.38 m 3 /tonne 2004 2005 2006 2007 2008 2009 2010 2011 Non-recycled water consumption 4.77 4.41 4.94 4.40 3.59 3.30 3.39 3.43 kWh/tonne 2004 2005 2006 2007 2008 2009 2010 2011 Energy consumption 154.97 147.94 155.50 148.72 140.41 133.47 134.40 137.88 We are proud of these results and to further diminish our environmental footprint we are introducing a series of health, safety and environment (HSE) components within our management’s key performance indicator structure. Production As indicated above, while preventive maintenance and repairs, capital expenditure on new equipment, and investment in new technologies are primarily carried out to increase production efficiency, these activities offer the added benefit of ultimately reducing our operational footprint. Maintenance (RUBm) 2008 2009 2010 2011 Maintenance and repair expenses 5,767,132 4,377,957 5,436,338 6,855,773 Sustaining capital expenditure, including capitalised maintenance and repair costs 7,431,883 4,828,166 4,344,110 8,221,820 Total 13,199,015 9,206,123 9,780,448 15,077,593 i Find our more on our nitrogen and phosphate capacity utilization See pages 39 and 43 Environmental protection expenditures RUBm 1200 1000 800 600 400 200 0 2004 2005 2006 2007 2008 2009 2010 2011 Trend since 2004 Atmospheric emissions Kg/tonne 1.40 1.35 1.30 1.25 1.20 1.15 1.10 1.05 1.00 -16% 2004 2005 2006 2007 2008 2009 2010 2011 Trend since 2004 Effluent discharge m 3 /tonne 6 5 4 3 2 1 0 -41% 2004 2005 2006 2007 2008 2009 2010 2011 Trend since 2004 Non-recycle water consumption m 3 /tonne 5 4 3 2 1 0 -28% 2004 2005 2006 2007 2008 2009 2010 2011 Trend since 2004 Energy consumption kWh/tonne 160 155 150 145 140 135 130 125 120 -11% 2004 2005 2006 2007 2008 2009 2010 2011 Trend since 2004 Annual Report and Accounts 2011 EuroChem 59 Business review
Page 1 and 2:
Enabling our future Annual Report a
Page 3 and 4:
...by supplying world markets Our s
Page 5 and 6:
2011 Operational highlights > Succe
Page 7 and 8:
Potash 912 MMT of proven and probab
Page 9 and 10: 16 Estonia Lithuania 7 14 15 Belaru
Page 11 and 12: Raw materials Up to 80% self-suffic
Page 13 and 14: Ten years of performance Ten years
Page 15 and 16: A record RUB 131bn in revenues 66%
Page 17 and 18: 4. Global economy Emerging economie
Page 19 and 20: Ranking by nutrient capacity MMT p.
Page 21 and 22: Despite the significant breakthroug
Page 23 and 24: Business review Our strategy Our st
Page 25 and 26: Enabling our future... ...by supply
Page 27 and 28: 7billion World population in 2011 9
Page 29 and 30: Severneft-Urengoy Novy Urengoy, Yam
Page 31 and 32: Environmental footprint -16% decrea
Page 33 and 34: Our commitment We have committed US
Page 35 and 36: Vertical integration > 2.8 MMT p.a.
Page 37 and 38: Employee participation Our employee
Page 39 and 40: The following table highlights our
Page 41 and 42: Nitrogen segment RUBbn, or as indic
Page 43 and 44: Over the next five years (2012-2016
Page 45 and 46: Phosphate segment RUBbn or as indic
Page 47 and 48: EuroChem’s main planned investmen
Page 49 and 50: i Along with nitrogen and phosphate
Page 51 and 52: Distribution RUBbn, or as indicated
Page 53 and 54: i At Tuapse, one of our priorities
Page 55 and 56: Cost of sales and gross margin As i
Page 57 and 58: 2011 2010 2009 RUBm % of total % ch
Page 59: Balance sheet Working capital Worki
Page 63 and 64: Occupational health and safety We s
Page 65 and 66: Strategic risks We classify as stra
Page 67 and 68: Area Ref. code Nature Description S
Page 69 and 70: Richard Sheath Audit Committee Chai
Page 71 and 72: Nikolay Pilipenko Audit Committee Q
Page 73 and 74: Where did we focus in 2011? The Boa
Page 75 and 76: The Strategy Committee The Strategy
Page 77 and 78: 1 Andrey Melnichenko (39) Chairman
Page 79 and 80: Financial information Consolidated
Page 81 and 82: Financial information Consolidated
Page 83 and 84: Financial information Notes to the
Page 85 and 86: 2 Basis of presentation and signifi
Page 87 and 88: 2 Basis of presentation and signifi
Page 89 and 90: 3 Critical accounting estimates, an
Page 91 and 92: 4 Adoption of new or revised standa
Page 93 and 94: 6 Segment information continued The
Page 95 and 96: 8 Intangible assets Note Acquired s
Page 97 and 98: 10 Mineral rights continued As of 3
Page 99 and 100: 13 Cash and cash equivalents and fi
Page 101 and 102: 15 Bank borrowings continued Intere
Page 103 and 104: 17 Derivative financial assets and
Page 105 and 106: 22 Distribution costs Distribution
Page 107 and 108: 26 Income tax continued The movemen
Page 109 and 110: 29 Business combinations Acquisitio
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31 Contingencies, commitments and o
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32 Financial and capital risk manag
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Page 117 and 118:
Page 119 and 120:
Financial information Main producti
Page 121 and 122:
Q4 2010 Q3 2010 Q2 2010 Q1 2010 201
Page 123 and 124:
Forward-looking statements This ann
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