BMO-2014_1_on_1

EuroChem | BMO Farm to Market
New York, May 2014
This presentation has been prepared by OJSC Mineral and Chemical Company EuroChem (“EuroChem” or the “Company”) for informational purposes, and may include
forward-looking statements or projections. These forward-looking statements or projections include matters that are not historical facts or statements and reflect the
Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, performance,
prospects, growth, strategies, and the industry in which the Company operates. By their nature, forward-looking statements and projections involve risks and uncertainties
as they relate and depend on events and circumstances that may or may not occur in the future. The Company therefore cautions you that forward-looking statements and
projections are not guarantees of future performance and that the actual results of operations, financial condition and liquidity of the Company and the development of the
industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements or projections contained in this
presentation. Factors that could cause the actual results to differ materially from those contained in forward-looking statements or projections in this presentation may
include, among other things, general economic conditions in the markets in which the Company operates, the competitive environment in, and risks associated with
operating in, such markets, market change in the fertilizer and related industries, as well as many other risks affecting the Company and its operations. In addition, even if
the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forwardlooking statements or projections contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The
Company does not undertake any obligation to review or confirm expectations or estimates or to update any forward-looking statements or projections to reflect events
that occur or circumstances that arise after the date of this presentation.
This document does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or
subscribe for, any securities of the Company in any jurisdiction, nor shall it or any part of it nor the fact of its presentation, communication or distribution form the basis of,
or be relied on in connection with, any contract or investment decision. No reliance may be placed for any purpose whatsoever on the information contained in this
document or on assumptions made as to its completeness. No representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their
respective advisers, officers, employees or agents, as to the accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of
this presentation or its contents.
Due to rounding, some totals may not correspond with the sum of the separate figures
EUROCHEM GROUP OVERVIEW
EuroChem Antwerpen
EuroChem Group Overview
EuroChem today

3 Nitrogen plants (2 in Russia, 1 in Belgium) - 2.7 MMT(1) of
ammonia and c.10 MMT of fertilizer product capacity

3 Phosphate plants (2 in Russia and 1 in Lithuania) - 2.4 MMT of
MAP/DAP

Vertical integration: own raw materials, port terminals, rail stock,
construction/repair works, CIS distribution capacity

Natural gas operator (Russia) - 1.1bn m3 of annual capacity
(c.25% of EuroChem’s annual consumption)

Apatite (Russia) - P2O5-rich (37%-38%) and low MER(2) content
(0.057) apatite ore (2.7 MMT per year) covers c.75% of own
production needs for all phosphate plants and Antwerp.

Iron ore as a co-product of apatite mining : up to 5.7 MMT of iron
ore (Fe content 63.5%)

Logistics assets include 3 port facilities, Panamax /Handymax
vessels, and own rail facilities (c. 6,000 rail stock; 45 locomotives)

Construction of own Potash (K) capacity well underway (targeted
capacity of c.8 MMT of KCl per year)

Strong operational track record; all EuroChem production facilities are
OHSAS-8001, ISO 14001 and ISO 9001 certified

Total employees of >20,000

2013 revenues USD 5.6bn; EBITDA USD 1.3bn
(1)MMT
(2)MER
: million metric tonnes
: minor element ratio
Vertically integrated production
N
Nitrogen
K
Potash
P
Phosphates
M
Mining / minerals
EuroChem port terminals
4
EuroChem Group Overview
Strategy : targeting a top 5 global position by size and profitability
Growth through
Potash
 Build leading low-cost potash business
Cost leadership
through vertical
integration
 Target self-sufficiency (nat. gas, phosphate rock, potash)
Value product
range
 Minimize commodity, maximize specialty agrochemicals
Proximity to
customers
 Further cost efficiency through vertical integration in logistics
 Expand industrial portfolio (melamine, LDAN)
 Increase volumes sold through own distribution network in all target
markets
5
EuroChem Group Overview
Key figures
Key Figures
Revenue
RUBm
excluding acquisitions
(1)
Gross margin
%
excluding acquisitions
EBITDA
RUBm
excluding acquisitions
EBITDA margin
%
excluding acquisitions
Net profit
RUBm
Sales volumes
Nitrogen
KMT
excluding acquisitions
Phosphate (excl. iron ore and
baddeleyite)
Iron ore and baddeleyite
KMT
KMT
2013
2012
Y-o-Y, %
176,937
166,478
6%
134,932
137,709
-2%
36%
41%
- 5p.p.
42%
48%
42,961
Sales by segment (2013)
1
2013 Share
Change to
2012 (PP)
1 Nitrogen
49%
1
- 6p.p.
2 Phosphates
31%
-3
49,168
-13%
3 Distribution
10%
--
39,223
46,045
-15%
4 Other
10%
2
24%
30%
- 6p.p.
29%
33%
- 4p.p.
12,256
32,569
-62%
2013
2012
Y-o-Y, %
8,217
7,380
+11%
6,024
5,950
+1%
2,405
2,455
-2%
5,858
5,295
+11%
4
3
2
Sales by region (2013)
6
5
4
2
3
(1)Excluding
the effects of the EuroChem-Antwerpen and EuroChem-Agro acquisitions;
2013 Share
Change to
2012 (PP)
1 Europe
32%
+5
2 Russia
19%
-2
3 Asia
18%
+2
4 North America
10%
-1
5 Latin America
9%
-5
6 CIS
8%
-
7 Africa
3%
+1
8 Australasia
1%
-
7 8 1
6
EuroChem Group Overview
Capital expenditure
Nitrogen
Nitrogen
Phosph
Phosphates
Potash
Potash
Other
Other
USDm
301.7
298.5
253.1
18.4
241.8
197.0
206.1
9.6
212.4
28.9
15.1
36.6
43.7
88.6
71.0
189.4
7.2
126.5
90.9
11.2
156.3
33.7
99.6
228.7
35.4
104.1
75.7
98.5
75.9
90.8
28.7
76.9
37.0
56.4
Q2-13
41.9
57.0
110.6
43.9
60.3
49.0
50.1
63.2
Q1-12
Q2-12
Q3-12
Q4-12
Q1-13
2012 : 917m
Q3-13
2013 : 1,022m
93.6
Q4-13
64.4
Q1-14
E 2014 : 1,000m
Maintenance CAPEX : ca. USD 150-200m per year
7
EuroChem Group Overview
Key projects underway
Project
Mine pushback
Phosphate rock
Nevinnomysskiy
Novomoskovskiy
Kovdorskiy GOK
EuroChem
Fertilizers (Kz)
Production
increase (p.a.)
+ 117 KMT
ammonia
+ 300 KMT
LDAN
+ 948 KMT (apatite)
+ 136 KMT (iron ore)
Total CAPEX
2014 CAPEX
US$ 0.1bn
US$ 0.06bn
US$ 0.2bn
US$ 0.05bn
60%+
+US$ 20m
Facility
Ammonia
LDAN / nitric acid
VolgaKaliy(3)
Usolskiy(3)
+ 600 KMT
phos rock
+ 4,600 KMT
KCl
+ 3,700 KMT
KCl
US$ 0.1bn
US$ 0.07bn
US$ 0.1bn
US$ 0.04bn
US$ 5.0bn
US$ 0.3bn
US$ 2.9bn
US$ 0.3bn
60%+
30%+
40%+
20%+
+US$ 50m
+US$ 35m
+US$ 20m
+US$ 1.3bn(4)
+US$ 1.0bn(4)
Drilling & blasting
operations launched
October ‘13
Reach self-sufficiency
in potash with unique
resource base.
Increase resource
base / reduce mining
Reduce raw material Broaden product mix; Increase resource base raw material deficit
gap in ammonia and increase efficiency and / reduce mining raw
increase gas to
phase out outdated
material deficit
Establish foothold in
ammonia ratio & unit production units
Central Asia
efficiency
Gremyachinskoe
deposit averaging
39.5% KCl, <500km to
port; enter seaborne
potash market
Launch potash
production in Russia’s
potash heartland at
the Verkhnekamskoe
deposit.
IRR,% (remaining)
incremental
EBITDA (p.a.) (1)
Comments
Completion(2)
(1)
(2)
(3)
Potash
Potash
Technical
reconstruction of
ammonia unit with
capacity increase to
1,980 KMT per day
45%
Upgrade of weak nitric
acid unit and launch of
production of lowdensity ammonium
nitrate (LDAN)
62%
Opening of a new ore
body adjacent to the
main pit to increase
apatite production
33%
Assuming full capacity utilization of project(s) (4) Assuming US$ 350 FOB potash price
As of 31 March 2014 , for total project, including all development phases
Including both project phases
28%
33%
20%+
Further expand mix
with proprietary
specialty K products
(SOP, NK, NPK...)
19%
8
EuroChem Group Overview
Conservative financial policy
Key debt metrics, RUBm
Comments
RUB
Original currency
Unsecured syndicated facility
45,814
USD 1,300m
2017 Eurobonds
26,636
USD 750m
Bilateral loans (RUB)
19,960
Bilateral loans (FX)
9,267
Rouble bonds
9,976
Shareholder loan
1,784
ECA-backed facilities
4,204
As at 31 March 2014

31 March 2014 - Net debt / LTM EBITDA(2) : 2.27x

Targeted across-the-cycle range of 1.5x-2.0x

Comfortable debt structure and maturity profile, remote
refinancing risk

BB/stable ratings from Fitch and S&P
USD 259.7m
USD 50m
USD 94.9m
EUR 32.3m
Gross debt
117,642
Less: cash and cash equivalents(1) and
fixed-term deposits
16,057
Net debt
1.2 1.3
Debt maturity profile, US$m
Unsecured syndicated facility
Rouble bonds
Shareholder loan
101,585
2.3 2.2 2.0
1.8 1.6
1.1
0.7 0.8 0.7
2.0 2.2 2.1 2.3
1.4 1.2 1.2 1.2 1.5 1.7
97
68
60 52 52
48 42 42 42 43
38 42
Eurobonds
ECA
Bilateral loans
Comfortable liquidity position
118
105 111 113 110
94 99
91
82
1,170
936
630
450
341
total debt (RUBbn)
(1)
(2)
net debt /EBITDA
Including current portion of restricted cash
Including pro-rata Murmansk Commercial Seaport net income
Q1-14
Q4-13
Q3-13
Q2-13
Q1-13
Q4-12
Q3-12
Q2-12
Q1-12
Q4-11
Q3-11
Q2-11
Q1-11
Q4-10
Q3-10
Q2-10
Q1-10
Q4-09
Q3-09
Q2-09
Q1-09
320
44
Cash and
equiv.
2014
2015
2016
2017
2018
2019-2024
9
NITROGEN SEGMENT
Severneft Urengoy
Nitrogen Segment
Vertically integrated producer
Murmansk
M
N
N
Novomoskovskiy Azot
Capacity by product
Ammonia
Urea
Ammonium Nitrate
UAN
CAN
Kovdor
Urengoy
1,670
1,480
1,290
427
420
Sillamae
Ust-Luga
P
Kingisepp
Moscow
K
Severneft Urengoy
Capacity by product
Natural gas
Gas condensate
Proven and probable reserves
Natural gas
Oil
P
N
Novomoskovsk
Kedaynyay
EuroChem Antwerpen
Capacity by product
NPK (c. 30 grades)
AN / CAN
N
1,250
1,025
N
Antwerp
Volgograd
Nevinnomyssk
Belorechensk N
P
N
Perm
K
1,1bn m3
220 KMT
50bn m3
32 MMT
M
Tuapse
Taraz
Nevinnomysskiy Azot
Capacity by product
Ammonium Nitrate
Ammonia
UAN
Urea
NPK
Melamine
N
1,420
1,160
1,022
890
460
50
All capacity volumes are expressed in thousands of tonnes, except where otherwise specified
11
Nitrogen Segment
Entrenching competitiveness
Severneft-Urengoy (SNU) / Novomoskovskiy
Cost benefits

FY 2013 gas cost at Novomoskovskiy: $3.87 /mmBtu*
(Q1-14: $3.79/mmBtu)

Could rise to over $4.5 /mmBtu by 2016
Benefits from SNU acquisition - assuming production of 1.1bn m3
(per mmBtu)
of gas and 220 KMT of gas condensate :
Agreement with Gazprom on gas
transmission from SNU to
Novomoskovskiy Azot (NAK) since
2012.
Sales volumes
Cost of gas at the well:
$1.18
+ mineral resource extraction taxes:
+ transportation cost to Novomoskovskiy:
- revenue from gas condensate:
$0.54**
$1.98
($2.22)
Delivered cost to Novomoskovskiy Azot:
$1.46
Comments
39
36
26
28
36
35
 Tariff freeze on natural gas prices announced for 2014
31
30
27
 Supply availability likely to limit price increases going forward
156
166
158
174
188
201
219
222
223
 Advantageous market outlook for condensate and liquids
 Gas transmission system accessibility to remain
Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14
Natural gas (mcm)
Gas condensate (kmt)
* Average of RUB 3,966 per 1000m3 at Novomoskovskiy Azot for 2013 (2013 average RUB/USD exchange rate: 31.85)
** Mineral resources extraction tax (MET) of RUB 426/1,000m3
12
Nitrogen Segment
Sustainable profitability
Urea FOB Yuzhny costs
500
Maintenance on ammonia
and urea units
450
400
350
362
Ukraine (gas @ 485$)
353
346
319
322
305
298
314
331
345
316
300
Ukraine (gas @ 268$)
Yara
250
China [FOB , low tax 40Rmb (6$)]
295
200
150
100
50
0
Apr-13 May-13 Jun-13
Gas price
FOB (Yuznhy)
Yara
Jul-13
Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 others
Conversion cost
Ukraine
Transportation FCA-FOB
China
13
PHOSPHATES SEGMENT
Kovdorskiy GOK
Phosphates Segment
Targeting self-sufficiency
Kovdorskiy GOK
Capacity by product
Iron ore
Apatite (37-38% P2O5)
Baddeleyite
Murmansk
M
Phosphorit
P
Kovdor
M
2012
5,700
2,700
10
N
Urengoy
Capacity by product
2012
MAP, DAP
775
Feed phosphates
220
Sillamae
P
Lifosa
Ust-Luga
EuroChem-Kazakhstan
K
P
Kingisepp
Planned Capacity
Phosphate rock 30% P2O5
(2015)
Perm
Moscow
P
Capacity by product
2012
DAP
990
Feed phosphates
160
N
Antwerp
P
EuroChem-BMU
Capacity by product
2012
MAP, NP
590
N
Novomoskovsk
Kedaynyay
Reserves, MMT of P2O5
M
600
515
Volgograd
Nevinnomyssk
Belorechensk N
P
K
Tuapse
M
Taraz
M
Raw material mining
P
Phosphate fertilizers
All capacity volumes are expressed in thousands of tonnes, except where otherwise specified
15
Phosphates Segment
Kazakhstan phosphate rock mining project
Bring EuroChem to full self-sufficiency in phosphate
rock through open-pit mining operations in Kazakhstan
•
Achieve production of +600 KMTpa of rock
(28.5 - 29% P2O5) per year 2015 and through
2018 - no beneficiation required until then.
•
Total CAPEX US$ 150m
Production (KMT)
Araltobe
prior
to
2014
2014
2015
2016
2017
2018
2019
2020
-
168
614
614
614
840
984
984
rock @ c.29% P2O5
-
168
614
614
614
614
395
395
rock @ c.17% P2O5
-
-
-
-
-
226
589
589
-
-
-
-
500
500
500
-
-
-
-
500
500
500
-
168
614
614
614
1,340
1,484
1,484
77
37
3
2
14
14
1
-
Kesiktobe
-
rock @ c.17% P2O5
PRODUCTION TOTAL
CAPEX (US$m)
-
10 KM
16
Phosphates Segment
Low cost integrated DAP/MAP production with iron ore contribution
Lifosa DAP costs (FOB Baltic)
600
513
494
500
479
473
455
488
Feb-14
Mar-14
432
418
400
491
384
373
380
Oct-13
Nov-13
Dec-13
300
200
100
0
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Jan-14
PhosRock Morocco
Apatite (if Iron Ore CFR China = 120$)
Sulphur
Sulphuric acid
Ammonia (NAK porduction cost)
Conversion cost
Transportation FCA-FOB
FOB Price Baltic sea
17
POTASH PROJECTS
Potash Projects
Favorable positioning
Murmansk Port
Usolskiy Potash
Transhipment capacity 1.5 MMT
K
Planned Capacity
Murmansk
M
Kovdor
Phase I (greenfield)
2,300
Phase II (brownfield)
1,400
Total
3,700
Ust Luga Terminal(1)
Proven and probable reserves
Transhipment capacity 5.0 MMT
MMT KCl (JORC)
420
~1,600km
Sillamae
Sillamae Terminal
Ust-Luga
K
P
Kingisepp
Transhipment capacity 1.0 MMT
Perm
Moscow
P
N
Novomoskovsk
Kedaynyay
Antwerp
N
Volgograd
Nevinnomyssk
Belorechensk
VolgaKaliy
N
Planned Capacity
P
Tuapse
Phase I (greenfield)
2,300
Phase II (brownfield)
2,300
Total
4,600
Taraz
Tuapse Terminal
Transhipment capacity 2.3 MMT
a) Under
K
K
~500km
Proven and probable reserves
MMT KCl (JORC)
492
construction
19
Potash Projects
Potash greenfield projects
EXPLORATION
FEASIBILITY
CONSTRUCTION
Zhongchuan
Kaiyuan
(Laos)
South
Boulder
Sentient
Group
Pacific
Potash
Potash
West
Brazil
Potash
Prospect
Global
Source: CRU
Passport
Potash
Encanto
Potash
Elemental
Minerals
Allana
Potash
Sirius
Minerals
Acron
K+S
BHP Billiton
EuroChem
Asia Pacific
Potash
Vale
Turkmenhimiya
Yuntianhua
(Laos)
IC Potash
Ethiopotash
Sino-Agri
(Laos)
MagMineral
Verde
Potash
Rio Tinto
Yancoal
Slavkali
Sinohydro
(Laos)
Western
Potash
Karnalyte
20
Potash Projects
Key Characteristics
VolgaKaliy
Usolskiy Potash
2
License area
96.9 km
Depth
1,000–1,250 meters
License area
Depth
License acquired
2005, via auction
License acquired
Purchase price
USD 106m
(RUB 3.1bn)
Reserves and resources
Purchase price
132.9 km2
~500 meters
2008, via auction
USD 172m
(RUB 4.1bn)
Reserves and resources
Russian classification (per Minutes of GKZ
as № 2339 of 26.11.2010)
MMT
Russian classification (per GKZ as No 2339 of
26.11.2010)
MMT
Reserves (B+C1+C2)
1,613
Reserves (B+C1+C2)
1,580
Off-balance reserves (С1+С2)
0,074
MMT
JORC (per Sept 2009 independent appraisal’s report)
MMT
492
Proven and Probable reserves
1,337
Measured and Indicated resources
1,075
KCl average content
39.8%
Nutrient content of Sylvinite ore
KCl average content
30.8%
NaCl average content
MgCl average content
54%
0.20%
NaCl average content
62.0%
CaSO4 average content
6-7%
MgCl2 average content
Insoluble residue
14%
JORC (per SEP-09 independent appraisal’s
report)
Proven and Probable reserves
Measured and Indicated resources
Nutrient content of Sylvinite ore
CaSO4+ Insolubles content
420
6.9%
0.30%
21
Potash Projects
VolgaKaliy (Gremyachinskoe deposit, Volgograd region)
Status – 05/2014
Work in progress
Skip shaft 2
Surface
Expected completion
Skip shaft 1
Cage shaft
Dirt work
Completed
Gathering pond for storm water
Completed
Ore/KCl storage
Beneficiation
Mine administrative building
3Q-15
Workshops
1Q-15
Permanent canteen
Complete
Ore product storage buildings
2Q-16
Crushing
Shaft freezing
Completed
Sinking
2015-16
Industrial
Shops and infrastructure
-82m
Offices
Shafts
2.3
2.3
MMTpa
MMTpa
-253m
Significantly complete
Key stages
•
2.3 MMT p.a. (KCl), construction of infrastructure, cage shaft (C), skip
shaft #1 (S1) and processing facility.
•
Additional capacity of 2.3 MMT p.a. (KCl), construction of skip shaft (S2)
and expansion of processing facility.
-676m
 JORC proven
and probable
reserves: 492
MMT (39.5%
KCl content)
 useful life of
mine: +40
years
22
Potash Projects
The Verkhnekamskoe deposit
VERKHNEKAMSKOE (“UPPER
KAMA”) IS ONE OF THE LARGEST
POTASH DEPOSITS IN THE
WORLD
•136 km x 40 km (longest /
widest)
• total area - 3.5 thousand km2
• Potash reserves - 52 bn tonnes
• Magnesium salts - 73 bn tonnes
As % of Russian reserves:
•70% of potassium salt
•20% of magnesium
•56% of rock salt
Uralkali/Silvinit
Acron, VPC (Talitsky)
K
EuroChem Usolskiy Potash
Planned Capacity
Phase I (greenfield)
2,300
Phase II (brownfield)
1,400
Total
3,700
Proven and probable reserves
MMT KCl (JORC)
420
23
Potash Projects
Usolskiy Potash (Verkhnekamskoe deposit, Perm region)
Work in progress
Status – 05/2014
Surface
Expected completion
Dirt work
2Q-14
Gathering pond for storm water
3Q-14
Mine administrative building
4Q-14
Workshops
1Q-15
Permanent canteen
1Q-15
Ore product storage buildings
4Q-15
 JORC proven
and probable
reserves: 420
MMT (30.8%
KCl content)
Skip shaft 1
Cage shaft
Ore/KCl storage
Crushing
Shafts
Loading
Beneficiation
 useful life of
mine: +35
years
Offices
Shaft sinking
Completed
Back grouting
1Q-15
Mine
Assembly of combines
2Q-15
Ventilation
3Q-16
2.3
MMTpa
Key stages
•
•
2.3 MMT p.a. (KCl), construction of infrastructure, cage shaft (C), skip
shaft #1 (S1) and processing facility.
-530m
-473m
Completed in
October 2013
Additional capacity of 1.4 MMT p.a. (KCl), construction of skip shaft (S2)
and expansion of processing facility.
24
VISUALS
Usolskiy Potash
Potash Projects - Visuals
VolgaKaliy – Mill
26
Potash Projects - Visuals
VolgaKaliy – Product Storage
27
Potash Projects - Visuals
VolgaKaliy – Mine Rescue
28
Potash Projects - Visuals
VolgaKaliy – Insulation Block Plant
29
Potash Projects - Visuals
VolgaKaliy – Main Substation
30
Potash Projects - Visuals
VolgaKaliy – Social Infrastructure
31
Potash Projects - Visuals
VolgaKaliy – Employee Housing
32
Potash Projects - Visuals
Usolskiy – Excavation of Loading and Haulage Sections
33
Potash Projects - Visuals
Usolskiy – Ground Leveling
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ADDITIONAL MATERIAL
Novomoskovskiy Azot
Additional material
What are fertilizers?
AN ESSENTIAL RESOURCE
TO HELP MEET
GLOBAL FOOD DEMAND
Fertilizer production entails gathering raw materials from nature,
purifying them to increase their concentration, converting
them into plant-available forms and often combining them into
products containing more than one nutrient.
Plants need sun, water and nutrients to grow.
The three principal nutrients are nitrogen (N),
phosphate (P) and potassium (K). If one is
lacking, plant growth is limited and crop yields
are reduced.
Fertilizers are essential to deliver the nutrients
crops require in the right amounts at the right
time. The addition of fertilizers to crops can
result in the doubling or even tripling of yields.
Each individual nutrient, whether required in
large or small amounts, plays a specific role
in plant growth and food production. One
nutrient cannot be substituted for another.
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Additional material
Strong underlying industry dynamics
Key growth drivers of the fertilizer industry
Global population and available arable land
 Steadily increasing world population
 Decreasing per capita arable land available for cultivation
 Changing diets towards protein rich food in developing
countries
 High energy prices and increasing importance of renewable
raw materials driving demand for biofuels
Stable industry with attractive outlook
 Historically stable demand profile except for certain severe
economic downturns
 Decrease in early 1990s due to the fall of FSU and, albeit
shortly, in 2008 following the credit crisis
 Global fertilizers consumption to grow steadily going
forward in line with historical rates at ~1.7% pa (2011A 2016E CAGR)
 Potash consumption to grow the fastest at ~2.8%,
followed by phosphates at ~2.1% and nitrogen at ~1.3%
 Positive effect on the value of domestic fertilizers market
following Russia’s WTO accession
Global fertilizer consumption1
Million tonnes
200
150
100
50
0
N
Source: IFA, FAO of UN, Company’s reports
1 Represents nutrient consumption for fertilizer use on a calendar year basis in million tons of nutrients. Projections based on IFA material.
P2O5
K2O
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Additional material
Market backdrop
Nitrogen (US$/tonne)
US$/t
2012
2013
Chg.
Ammonia
$545
$479
-12%
$700
Urea
$408
$341
-16%
$600
AN
$303
$288
-5%
Phosphates (US$/tonne)
$700
$500
$400
$400
$300
$300
$200
$200
$100
Key themes:, Ukraine, Chinese costs & exports; Shale gas & N supply growth
$0
2012
2013
Chg.
DAP
$551
$457
-17%
NPK
16:16:16
$446
$377
-16%
$600
$500
$100
US$/t
Key themes: Indian currency & subsidies; EMEA capacity
$0
Prilled urea (FOB Yuzhniy)
Ammonia (FOB Yuzhniy)
Potash (US$/tonne)
$600
AN (FOB Black Sea)
DAP (FOB Baltic)
NPK 16:16:16 (FOB Baltic)
US$/t
2012
2013
Chg.
Iron ore (US$/tonne)
US$/t
2012
2013
Chg.
MOP
contract
$424
$352
-17%
$200
Iron ore
$133
$136
+3%
MOP spot
$466
$379
-19%
$500
$160
$400
$120
$300
$80
$200
$100
Key themes: Marketing discipline; Indian currency & subsidies; Capacity expansion
$40
Key themes: China steel demand; Global capacity
$0
$0
MOP (FOB Baltic, contract)
MOP (FOB Baltic, spot)
iron ore (CFR China)
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Additional material
Q1 2014 key figures
Key Figures
Revenue
RUBm
Gross margin
%
EBITDA
RUBm
EBITDA margin
%
Sales volumes
Q1 2014
Q1 2013
Y-o-Y, %
2013
2012
Y-o-Y, %
49,416
46,651
6%
176,937
166,478
6%
40%
37%
+ 3p.p.
36%
41%
- 5p.p.
14,168
12,352
15%
42,961
49,168
-13%
29%
26%
+ 3p.p.
24%
30%
- 6p.p.
Q1 2014
Q1 2013
Y-o-Y, %
2013
2012
Y-o-Y, %
Nitrogen
KMT
2,110
2,051
3%
8,217
7,380
11%
Phosphate (excl. iron ore and
baddeleyite)
KMT
626
705
-11%
2,405
2,455
-2%
Iron ore and baddeleyite
KMT
1,326
1,215
9%
5,858
5,295
11%
Q1 sales by segment* (RUB bn)
Q1 sales by region
+6%
16.6
other
phosphates
23.0
4
11.5
nitrogen
14.6
7 1
5
5
distribution
14.5
66
49.4
46.7
13.8
4
2
3
3 2
Q1-2013
Q1-14 Share
Change to Q113 (PP)
1 Europe
42%
+3
2 Russia
20%
-
3 Asia
11%
-2
4 North America
10%
-1
5 CIS
6%
+1
6 Latin America
8%
+1
7 Africa
2%
-
7 8 1
Q1-2014
*From 1 January 2014 the results of our EuroChem Agro distribution network were reallocated from Nitrogen and Other to the Distribution segment.
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Additional material
Integrated value chain
External raw material purchases
Mining (Kovdorskiy GOK)
Sulphur
Iron ore
Apatite
Baddeleyite
Natural gas
Natural Gas (Severneft Urengoy)
Natural gas
Gas condensate
Phosphate rock
Potash
Iron ore
Baddeleyite
Apatite
Steelmaking
Electronics /
aerospace
Phosphate fertilizer
raw material
Condensate
Ammonia
Sulfuric
Acid
Fuel &
petrochemical
industries
Ammonia
Phosphates Fertilizer Facilities
Nitrogen Fertilizer Facilities
Nitric Acid
Fuel & petrochemical
industries
Phosphoric
Acid
Melamine
Wholly owned: +6,000 rail cars / transhipment & port capacity + vessels
MAP, DAP
complex mineral
fertilisers
consisting primarily
of phosphorus
upstream
NP
Feed
Multi-nutrient
blended fertilizer
feeding additive in
the cattle, poultry
and swine
industries
midstream
KMT : thousand metric tonnes
NPK
Urea
Multi-nutrient,
complex fertilisers
most widely used
dry nitrogen
fertiliser
downstream
Organic synthesis
(methanol / acetic
acid)
Ammonium
Nitrate (AN)
CAN
UAN
typically applied in
solid form, it is
water soluble and
can be used in
various fertiliser
solutions
produced by mixing
calcium and/or
magnesium
carbonate into an
AN solution before
solidifying
Solution fertilizer,
can be applied via
fertigation systems,
for increased
effectiveness
Plastics
use/ markets
40
Thank you, please visit www.eurochem.ru for
further details.
[email protected]

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