Distribution and Logistics

BMF is located in close proximity to Russia’s main agricultural producing regions, which gives us logistics flexibility and logistics cost advantage for domestic sales.

With the addition of the Metachem production site, we have new capacity in close proximity to the St. Petersburg port and to our Apatit mine, creatingn additional logistics flexibility and significant potential for future development.

While we do not report distribution and logistics operations as separate segments, they are a key part of PhosAgro’s business in our fastgrowing home market of Russia, helping us control costs and manage risks. Our distribution and logistics networks are managed and operated by PhosAgro-Region and PhosAgro-Trans.

During 2012 we operated eight distribution centres. These centres are located in close proximity to the major agricultural regions of Russia that account for approximately 70% of domestic demand for MAP and NPK. Four of PhosAgro-Region’s distribution centres provide additional services, such as blending, to tailor products for specific crops and types of soil, as well as delivery of PhosAgro products to customers.

We also own and operate 17 storage facilities in Russia with a total capacity of more than 270,000 tonnes of fertilizers. These facilities help us to maintain stable production levels through seasonal demand cycles, while ensuring that we can meet demand during high season.

We also operate more than 7,000 railcars (owned, leased and under operating lease), which are used for the transportation of raw materials and products, including phosphate rock and nepheline concentrate. Of these more than 7,000 railcars, 649 are cisterns used for transporting ammonia, acids and liquid fertilizers.

We reduce our transportation costs by minimising empty runs of our railcar fleet. PhosAgro’s phosphate rock production facilities are located near the Murmansk port, through which we export a large portion of our fertilizers. As a result, we are able to reduce transportation costs by using the same railcars to transport phosphate rock from our phosphate rock production facilities to our fertilizer production facilities and to transport fertilizers from PhosAgro fertiliser production facilities to the Murmansk port. We monitor the movements and locations of our railcars on a daily basis.