Moscow – PhosAgro (Moscow Exchange, LSE: PHOR), one of the world’s leading vertically integrated phosphate-based fertilizer producers, announces that it has begun construction of a new, energy efficient ammonia production plant with a capacity of 760 ths tonnes/year at PhosAgro-Cherepovets in the Vologda region.
Vologda region Governor Oleg Kuvshinnikov, Russian Federation State Duma Deputy Vyacheslav Pozgalev, Chairman of the Vologda Region Legislative Assembly Georgiy Shevtsov, Cherepovets Mayor Yuri Kuzin, the Archbishop of Vologda and Velikoustyuzhskiy Maximilian, Russian Union of Chemists Vice President and Deputy Chairman of the PhosAgro Board of Directors Andrey Guryev, PhosAgro-Cherepovets CEO Alexei Grigoryev and representatives of the construction contractors attended the ceremony to mark the start of construction.
The contract with an international consortium led by Mitsubishi Heavy Industries Ltd was signed during the St. Petersburg International Economic Forum in June 2013. The consortium also includes Sojitz and Renaissance Construction. The licensor of the ammonia production technology is Haldor Topsoe (Denmark), a leading global engineering company in this sector.
The new ammonia line will have a production capacity of 2,200 tonnes/day (760 ths tonnes/year). It will be the first ammonia line of such capacity in contemporary Russia. Total investments into the production facility and related infrastructure are expected to exceed RUB 25 billion. The commissioning of the new ammonia plant is planned for 2017.
Construction of the third ammonia production line at PhosAgro-Cherepovets is a key part of PhosAgro’s long-term modernisation and growth strategy. Project development was led by the National Mineral Resources University (St. Petersburg) and is aimed at the ground-up modernisation of the Company’s production technologies using the best available technologies.
PhosAgro Cherepovets CEO Alexei Grigoryev said: “PhosAgro’s investment programme has helped our Cherepovets production site to develop over recent years into a leader by mineral fertilizer production capacity and volumes in both Russia and Europe. The launch of the new production line will both enable PhosAgro-Cherepovets to become self-sufficient in ammonia and lay the foundation for further expansion of its fertilizer production capacities.”
The new ammonia production facility will rank among the best in the world in terms of raw materials and energy consumption, as well as labour productivity. Natural gas consumption per unit produced is expected to be 20% lower than the current average for ammonia production facilities in Russia (945 m3/tonne). Operating costs are expected to be 20% lower than those of the other ammonia lines currently operating at PhosAgro-Cherepovets. The new facility will also meet the most stringent environmental and safety standards.
With the launch of the new ammonia plant, PhosAgro’s ammonia production capacity will increase by nearly 70%, enabling the Company to reach full self-sufficiency in this raw material and creating a foundation for further development of PhosAgro’s Cherepovets chemical complex. A portion of the ammonia produced will be sold to the market.
Deputy Chairman of the PhosAgro Board of Directors Andrey Guryev said: “We successfully completed the first stage of this project, which involved analysing the economic parameters and choosing a contractor, when we signed the agreement with the international consortium. Today we start the second stage, which is the actual construction of the ammonia production facility. The economic situation today is challenging, but the key is for us to continue to grow without slowing down. The new production facility, new technologies enabling high-quality products and new jobs are what give us hope in the future, and what enable us to not just survive the crisis, but to come out of it with new strength, and to fill the Vologda region and Russian Federation budget coffers.”
Vologda Region Governor Oleg Kuvshinnikov expressed his belief that the new ammonia production line should be a priority project for the Northwest Federal District, saying: “PhosAgro is the largest taxpayer in the region and the largest investor in the Northwest Federal District. Including this new ammonia line, the company has invested over RUB 60 billion into the development of its Cherepovets site. This includes important social investments like the construction of corporate housing, support for children’s sport, educational projects and help in building an orthodox church. All of these projects are important for the Company and its employees, as well as for Cherepovets as a whole.”
PhosAgro CEO Andrey A. Guryev said: “This high-priority project is expected to enable PhosAgro to strengthen its position as one of the world’s leading vertically integrated producers of phosphate-based fertilizers and to increase shareholder value. In addition, there will be new highly productive jobs created by the completed ammonia line, and payments into local and federal budgets will increase.”