Letter from the CEO

Highlights of 2012

PhosAgro has many meaningful achievements to report for 2012. On the operating side, we set new records in 2012, producing 5.4 million tonnes of mineral fertilizers and achieving sales volumes of 5.3 million tonnes, increases of 8.6% and 7.8% y-o-y, respectively. This was the primary driver of our 5% revenue growth for the year, which also set a new record at RUB 105.3 billion. Our 2012 EBITDA was RUB 34.7 billion and profit for the period increased to RUB 24.5 billion. Our financial positionremained strong, with a net debt/EBITDA ratio of 0.77x. One of the key factors supporting these resultswas our decision in early 2012 to take advantage of PhosAgro’s production flexibility and to focus oncomplex NPK/NPS fertilizers instead of MAP/DAP. Being able to respond quickly to changing marketdemand is critical to maintaining stable results: we increased our annual sales volumes, revenue andprofit in a year when the average DAP price was down 14% compared to 2011.

Looking at our strategic priorities, we can report significant progress on many fronts. Perhaps the two most important events of 2012 were the consolidation of our ownership in Apatit (over 95% as of the date of this report), and the launch of our new 500 kt per annum urea line. We furtherincreased our self-sufficiency, launching a 32 MW power generation facility in Cherepovets. We also moved forward on consolidating our stake in PhosAgro-Cherepovets, something we will continue to focus on in 2013. There are several projects currently underway to maximise the value we extract from our unique apatite-nepheline ore: first, we are increasing fluoric salts production as part ofour long-term contract with RUSAL, and second we increased our stake in Metachem, bringing us into the technical phosphates market and opening the prospect of further capacity growth through modernisation and upgrades to the site’s production lines.It has been a busy year, but a very successful year.

Market Environment

DAP/MAP producers faced a challenging market environment in 2012, driven by weak demand from India due to changes in fertilizer subsidy policies and a weak rupee. At the same time, China continued to restrict phosphate-based fertilizer exports, while demand outside of India remained strong, and fertilizer stocks globally (excl. India) remained at very low levels.

The Russian fertilizer market continued growing faster than the global average. Domestic phosphate consumption accounted for over 33% of our total sales in 2012.

Soft commodities, to which the performance of the fertilizer market is closely tied, remained at or near historic highs throughout 2012. The fundamental need for farmers to producemore on each acre or hectare of land they use remains unchanged. With the global population continuing to grow, I believe this trend will only strengthen.

Outlook

I am very optimistic about the outlook for PhosAgro. We have a proven track record of adopting prudent strategic initiatives and delivering on them year after year, and 2012 was no exception. We also have a very clear set of value-accretive strategic goals set out before us that I am confident we will achieve.

We carefully manage our balance sheet and cost of financing for all current initiatives, including both the consolidation of subsidiaries and our growth projects. One recent highlight that underscores our ability to manage our debt portfolio by raising low-cost, long-term financing is the successful placing of our debut USD 500 mln 5-year Eurobond with a coupon rate of 4.204%. The issue was met withstrong interest from fixed-income investors and was assigned a Baa3 rating from Moody’s and BB+ from Fitch Ratings, both in line with the Company’s corporate credit ratings from these agencies. Proceeds from the issue will be used for further consolidation of our stakes in key production subsidiaries, as well as to refinance short-term borrowings. Additionally, in February 2013, Standard & Poor’s assigned PhosAgroa BB+ long-term corporate credit rating with a positive outlook.

In April 2013 a group of PhosAgro’s shareholders also completed a secondary public offering (SPO) of shares and GDRs representing 9% of PhosAgro’s share capital, and increasing our free float to nearly20%. This was followed by an additional share issue by PhosAgro in which the selling shareholders re-invested 45% of the proceeds from the SPO, thus further strengthening our financial position as we head into another year of important planned strategic investments. The SPO is also important because increasing the liquidity of our shares andGDRs has been identified as a priority by our shareholders and Board of Directors. The approximately two-fold increase in PhosAgro’s free float has addressed this issue, and should support the inclusion of PhosAgro shares in the MSCI Russia index.

In the short term, a key focus will be the full consolidation of Apatit and PhosAgro-Cherepovets, both of which will help to create operational and cost synergies, and will simplify our corporate governance structures once we achieve 100% control. This will also significantly increase the profit available for distribution to PhosAgro shareholders. Increasing our stake in Metachem in December 2012, we were ableto us to consolidate the company’s capacities and enter the technical phosphates market from 2013.

In the longer term, we are at various stages of implementing or launching several major projects that will enable us to increase our production capacity and should have a sustainable positive impact on shareholder value. The first of these is the construction of a new760 kt per annum ammonia plant, which will make PhosAgro fully self-sufficient in ammonia — and thus enable us to further ramp up production of downstream fertilizers. To that end, we are working on plans to construct a new fully flexible NPK/MAP/DAP/NPS line at Balakovo Mineral Fertilizers. And finally, we see opportunities inareas like capacity increases at Metachem. While developing these growth-oriented projects, we will maintain a disciplined approach to our balance sheet, aiming to limit capital expenditure to under 50%of EBITDA. We also plan to continue our dividend policy of distributing from 20% to 40% of profits to our shareholders.

All of these strategic initiatives are aimed at building sustainable value for our shareholders. I believe they are all achievable given our experienced management team, strong financial position and supportive global demand environment. This is what gives me cause for optimism, and I hope that our shareholders, employees and other stakeholderslook to the years ahead with the same enthusiasm that I do.