Committed to growth

Strategy
Maintaining strategic
discipline
01
Cost leadership through
vertical integration
Strategic priorities
• Target self-sufficiency (ammonia, phosphate
rock, potash)
• Enhance cash cost position and reduce risk/
volatility of earnings
Associated risks
• Shrinking natural gas cost differential between
Russia and Europe/US
• Vertical integration results in higher operating
leverage which may be detrimental to cost position
in a period of prolonged market deterioration
• New capacity, especially ammonia, in other
low-cost regions
Performance/KPIs
Our competitiveness depends on the cost of
delivering products to key markets and their
quality. Our cost and quality advantages are driven
by the ownership and control we have over the
manufacturing and distributing of our products –
the very essence of our vertically integrated business
model. (See charts below and pages 24, 28).
02
Growth through potash
Strategic priorities
• Build leading low-cost potash production
by the end of 2017
• Maximize internal processing of potash
for NPK, NK, SOP production
Associated risks
• Technical risks relating to the construction
of potash mines
• Commercial risks
Performance/KPIs
We have secured access to over ten billion tonnes
of proven and probable potash reserves. With
initial production set to commence from late 2017,
our two key sites will have over 8.3 MMT KCI
(5.0 MMT K 2 O) of capacity once fully ramped up,
which is equivalent to approximately 10% of current
global supply. We derive our completion rate from
capital expenditures incurred at each project.
The completion rates provided below represent
the percentage of planned first phase total
capital expenditure.
Global urea export cost curve
(Jan 2016)
NAK Azot
NEV Azot
VolgaKaliy
(%)
42
48
49
Usolskiy
(%)
27
38
19
DAP global export cost curve
(Jan 2016)
Phosphorit
Lifosa
2013
2014
2015
2013
2014
2015
Note: Based on budget for all items, including associated
social infrastructure
Targets for 2016
• Increase intra-group shipments of phosphate
rock from Kazakhstan operations
• Improve existing production efficiency
in natural gas
• Progress with construction of new
ammonia capacity
Targets for 2016
• Reach upper potash salt layer and begin
horizontal development in hard rock layer
(VolgaKaliy, skip shaft 2)
• Finalize potash market entry strategy
and positioning
• Configure potash product storage at ports
(Tuapse, Ust-Luga, Murmansk)
• Test runs on the entire 46 km rail logistics system,
including main line, depot, and stations (Usolskiy)
• Begin underground development, place
mining machines underground (Usolskiy)
• Resume sinking of VolgaKaliy cage shaft
14 EuroChem Annual Report and Accounts 2015