PhosAgro CEO Mikhail Rybnikov on the Company’s 2023 Results

Dear colleagues,

As we traditionally sum up the year in late December, we can say that 2023 was a productive one for the Company.

Although we are still consolidating the final figures from all of our production sites, we can already say with confidence that we will set a new all-time record in terms of agrochemical production. I would like to thank our entire workforce of thousands for their concerted efforts and efficient work as well as their profound sense of responsibility for our country’s food security.

Key result: we bolstered our leading position when it comes to total mineral fertilizer supplies to Russian farmers. Tentatively, supplies increased by 11% in 2023.

We introduced both new products and new services to the domestic market, such as soil testing for agrochemicals. In addition, we began providing farmers with crop protection agents and domestic seeds for crop breeding from our partners.

Our preliminary data also shows that exports increased to 8.7 million tonnes, with exports of nitrogen-based mineral fertilizers growing by 6.5%; and feed phosphates, by 8.7%. Our main sales markets remain in the global South: Latin America, Asia and Africa. In addition, we redirected about 1 million tonnes of exports previously sent India and other Asian countries to Latin America during the year. This was driven by recovery in demand from Brazil and a more favourable pricing and logistics environment in Latin America as a whole. We continued to ramp up exports to Africa, exceeding 550 thousand tonnes in 2023. We also enjoyed a sharp increase, 18%, in exports to CIS countries. Friendly states accounted for nearly 75% of all exports in 2023, up from 70% in 2022.

As a result of self-imposed local sanctions, exports to countries in Northern and Eastern Europe as well as the Baltic states effectively stopped. At the same time, shipments to Southern and Western Europe as well as the Balkans increased. Total exports to Europe remained in the range of 2 million tonnes – the same as in 2022 (but a third less than in previous years, when exports to Europe reached 2.8–3 million tonnes).

We invested a record amount this year in development and modernisation (including major overhauls). Next year we plan to raise this bar by another 13%, to RUB 73 billion.

In accordance with our comprehensive Development Strategy to 2025, these funds will be used both to develop our unique ore and raw material base and to expand and upgrade the capacities of our facilities, which produce 57 grades of mineral fertilizers that are very popular among Russian farmers and in 100 countries around the world, on every inhabited continent.

o   As for our mining and processing complex, we are close to completing the construction of a new +10 m level at the Kirovsky mine. Some 2 thousand specialists from more than 50 contractors were involved in developing the new level. Their work was carried out underground, using highly advanced technologies and unique engineering solutions, including ballastless tracks and high-capacity rolling stock. Thanks to crushing and conveyor systems made using materials and technologies to increase service life as well as state-of-the-art equipment, the continuous conveyor system for each of the new level’s two deposits – Kukisvumchorr and Yuksporr – will be able to meet productivity targets. This is ultramodern facility will enable us to replace volumes mined at levels that are being shuttered and also to increase ore production at the Kirovsky mine over a three-year period. Total capital investments in the project will amount to more than RUB 36 billion.

o   We have already started building a new mine to develop the Rasvumchorr Plateau deposit, which will have two start-up facilities. We plan to start mining operations at the first start-up facility, at the 430 m level and with a capacity of 4 million tonnes, in 2Q 2025. Operations at the second start-up facility, at the 310 m level and with a capacity of 6 million tonnes, are expected to start in 2031. Total capital investments in the project will be about RUB 38 billion.

o   Late next year, we plan to start underground mining operations in the Gakman section of the Kirovsky mine’s Yuksporr deposit.

o   When it comes to processing facilities, we plan to complete the implementation of projects in Cherepovets and Volkhov in 2024 to increase the processing of phosphate rock by a total of nearly 400 thousand tonnes.

o   The third stage in the development of the production complex in Balakovo is fully under way with the establishment of a flexible arrangement for the production of MAP/DAP/NPS/NPK fertilizers and an increase in gross production volumes. Financing for the site’s development programme was nearly doubled to RUB 27 billion. The project is expected to reach target capacity in 1Q 2024, increasing the production of feed phosphates by 14% to 443 thousand tonnes per year. We also expect our upgraded SK-20 process system to reach design capacity in the first quarter, expanding the site’s sulphuric acid output by 13% to 3 million tonnes per year.

We continue to work hard in terms of import substitution – focusing on a number of areas at once. At our mining and processing plant, for example, we began field testing of new load-haul-dump loaders (LHDs) with a payload capacity of 14 tonnes, produced by Shadrinskiy Avtoagregatniy Zavod. The new LHDs will replace the Caterpillar 1700G LHDs currently in operation. The main difference between the Russian-made LHDs and the Caterpillars is that imported assemblies and components are being replaced to the maximum extent possible with high-quality Russian analogues without impacting the quality of the equipment as a whole. This has enabled us not only to reduce our dependence on foreign equipment manufacturers; we are also ensuring the long-term sustainability of the site’s operations by improving the quality and availability of maintenance service for mining equipment and other machinery. 

We consider the development and introduction of Russian-made biotechnologies to be extremely promising. We are working on seven innovative products as part of the Innagro project in partnership with Innopraktika. Three of them have already successfully completed all the required testing, and production has begun. AgroGard, a leading Russian agricultural holding, and our other partners are already using the innovative biofungicide Metabacterin, the probiotic Enzymesporin and the biopreservative Fermasil. The reviews have been nothing but positive. We have also been conducting joint production experiments at 11 farms, using the biofungicide Metabacterin and the silicon-based adaptogen ApaSil. This system has enabled an 11%–19% increase in cereal yields, and an increase of 23% in yields of pulse crops. We are close to registering Altasol, an innovative soil remediator, and we are developing three more products in parallel.

In 2023, we continued to allocate a record amount of funds to support social and charitable projects, exceeding RUB 12.5 billion for the second year in a row (nearly 2.5 times as much as in 2021).

One of the highlights of this past year was the 20th anniversary of the DROZD (Educated and Healthy Children of Russia) project. As part of the project, PhosAgro supports 77 divisions in 26 different sports, in every region where the Company operates, and creative studios and supplementary education classes have also been launched. More than 7.2 thousand children take part in them on a regular basis free of charge. In addition, around 50 thousand young athletes participate in regular sporting events and festivals. In just 20 years, more than 150 thousand pupils have been educated at DROZD schools.

Dear friends,

Please accept our heartfelt best wishes on the occasion of the upcoming New Year and Christmas holidays!

We appreciate these wonderful winter holidays for their special atmosphere, and for the belief in kindness and justice that we all share. They serve as a starting point for new beginnings.

I offer you my sincere gratitude for your professionalism and for everything you have done to highlight the operations of our Company and of the chemical industry as a whole.

I wish you an endless supply of creative energy and holiday spirit!

PhosAgro CEO                                                                                        Mikhail Rybnikov