Phosphate segment – Downstream

We switched our flexible production lines to NPK/NPS from MAP/DAP in 2012, thus increasing NPK/NPS volumes while decreasing MAP/DAP.
DAP/MAP vs. NPK/NPS sales kt

The downstream operations in our phosphate segment take place at PhosAgro-Cherepovets assets (formerly part of Ammophos) and Balakovo Mineral Fertilizers (BMF). These facilities produce phosphate- based fertilizers, and BMF also produces feed phosphate MCP.

In response to changes in demand, and thanks to our ability to quickly switch between production of MAP/DAP and NPK/NPS fertilizers,we produced and sold record levels of NPK and NPS in 2012. Both production and sales of NPK fertilizers reached 1.6 million tonnes in 2012 (up 37.1% and 39.2%, respectively). This contributed toplanned declines in production and sales of DAP/MAP by 19.3% and 20.0%, respectively, as we focused on producing the products withthe highest netback for PhosAgro.

Another notable change in 2012 was NPS output, which increased to 346 thousand tonnes, up 321% over 2011. In addition to the primary nutrients nitrogen and phosphorous, NPS contains the secondary essential element sulphur. Demand for sulphur-containing fertilizers has increased due to depletion of sulphur levels in the soilglobally, especially in Southeast Asia and Latin America, and we were able to quickly respond with new products and grades, which drove the increase in NPS production and sales in 2012.

Production and sales volumes of feed phosphate (MCP) increased by 5.8% and by 8.1%, respectively, y-o-y in line with demand.

Thanks to our production flexibility, we were also able to maintain100% capacity utilisation throughout 2012. While production ofMAP and DAP declined in 2012 compared to 2011, this was due tosignificantly higher production of NPK and NPS fertilizers on the same flexible production lines.

Sulphur has become increasingly important as a crop nutrient in recent years, sometimes being referred to as “the fourth major nutrient”:

  • Sulphur is important for the formation of amino acids, proteins, and oils. It is also necessary for chlorophyll formation, as well as helping develop and activate certain enzymes and vitamins.
  • Sulphur improves the efficiency of use of other nutrients like nitrogen and phosphorous.
  • Higher demand for S-containing fertilizers is a result of increasing crop yields, as higher crop yields and more intense land use lead to greater depletion of this nutrient.
  • Other factors driving demand include successful efforts by fertilizer producers to decrease S impurities in sulphur-free products, a decline in the use of S-containing pesticides, and lower S emissions from industrial sources.

Source: IPNI, Summer 2010, No. 7; The Sulphur Institute

Production Volumes, kt

2012 2011 Change y-o-y
Phosphate-based fertilizers and MCP
DAP/MAP 2,047.3 2,537.4 (19.3%)
NPK 1,644.2 1,199.2 37.1%
NPS 346.4 82.3 320.9%
APP 60.5 58.1 4.1%
MCP 241.6 228.4 5.8%

Sales Volumes, kt

2012 2011 Change y-o-y
Phosphate-based fertilizers and MCP
DAP/MAP 2,027.1 2,533.2 (20.0%)
NPK 1,619.0 1,162.8 39.2%
NPS 299.1 82.7 261.7%
APP 52.0 55.7 (6.6%)
MCP 245.7 227.3 8.1%