eurochem-annual-report-2011

Potash
912 MMT
of proven and
probable reserves
(JORC)
With the commissioning of our first potash mine and production facilities,
EuroChem will become the fourth major global fertilizer producer operating
in all three primary nutrient segments.
Gremyachinskoe deposit (Volgograd)
• License acquired in 2005 at state auction
• Purchase price of RUB 3.0bn
• Reserves and resources: 1.9bn tonnes*
• Depth of 1,000-1,200 metres
• High nutrient content: KCI average content 37% (in the range of
23.4-40.9%); NaCI content 57-61%; MgCl content 0.10-0.15%;
CaS04 content 4-5%
• Phase I: capacity of 2.3 MMT p.a.
• Phase II: capacity doubled to 4.6 MMT p.a.
• RUB 27.0bn in total cumulative investments as of 31 December 2011
Verkhnekamskoe deposit (Perm)
• License acquired in 2008 at state auction
• Purchase price of RUB 4.1bn
• Reserves: 1.5bn tonnes*
• Depth of c. 500 metres
• KCl average content 30%
• Phase I: capacity of 2.0 MMT p.a.
• Phase II: capacity increased by 1.4 MMT p.a. to total of 3.4 MMT p.a.
• RUB 8.6bn in total cumulative investments as of 31 December 2011
* A+B+C1+C2+P1 according to Russian reserves classification.
Because of rounding, some figures may not exactly add up to the totals.
Sales &
trading
i
Further information on our segments
is in our management report
See pages 36-51
Distribution
25%
nitrogen market share and
20% phosphates market
share in Russia in 2011
Group capex dedicated
44% to potash in 2011
EBITDA contribution 11%
to Group in 2011
2%
11th
global fertilizer producer
by nutrient capacity
today, and aiming to be
among the top five
by 2015.
BB/stable
credit rating from
Fitch and S&P
USD 3.6bn
planned capex into potash
in 2012-2016
Revenue contribution
to Group in 2011
Our distribution business consists of a sales network in Russia and Ukraine that
sells fertilizers, seeds and crop protection products, as well as offering various
consulting services to local agricultural producers.
The development of our distribution network is an important part of EuroChem’s
sustainable growth strategy. Not only does having our own distribution
capability help us enhance value all the way to the end consumer, it also gives
us a strong foothold in our home market, and provides important revenue
in the same currency as the majority of our operating costs.
With the collapse of the Soviet Union, fertilizer application fell throughout the
CIS. Fertilizer consumption in Russia is estimated to have declined drastically
in the 1990s, to less than a tenth of earlier rates. Only recently have we seen
application trends reverse, as better educated and better equipped farmers
have both the incentive and means to increase yields.
However, fertilizer consumption is still very low in Russia. In fact, according
to the most recent data from the Food and Agriculture Organization, Russia
consumes 16 kilograms of fertilizer per hectare of arable land, compared to
154 in India, 160 in the European Union, and 468 in China. But the landscape
is changing fast and Russia is displaying the highest growth trends globally.
In the past five years alone, fertilizer consumption increased 30%, while
EuroChem’s distribution business saw a tenfold increase in revenues from
RUB 1.4bn to RUB 14.0bn in 2011.
Annual fertilizer consumption in Russia
KMT
12,000
10,000
8,000
6,000
4,000
2,000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Nitrogen Phosphates Potash
Our international network currently includes the Swiss-based trader EuroChem Trading GmbH, which is responsible for global sales outside
the CIS and North America; a Florida-based trading company, EuroChem Trading USA Corp., responsible for North American sales; and
EuroChem Comercio de Produtos Quimicos Ltda, which is based in São Paulo and supports our sales efforts in this rapidly expanding market.
Annual Report and Accounts 2011 EuroChem 05
Overview