St Petersburg – PhosAgro CEO and President of the Russian Association of Mineral Fertilizers Producers (RAPU) Andrey Guryev took part in televised debates organised by the Russian Direct Investment Fund (RDIF) and Rossiya 24, titled Investment Breakthrough: Infrastructure and Technology of the Future.
During the televised debates, participants noted that Russia has established an infrastructure that unites investments from leading sovereign funds from around the world and leading Russian companies. This makes it possible to combine best global expertise and practices with unique opportunities and progressive developments by Russian companies.
One of the main issues discussed by the participants was the effect of investments in creating competitive advantages for companies in the Russian market and abroad.
Over the past five years, PhosAgro has invested RUB 160 billion into its development using best available technologies. As a result, production volumes during this period increased by 40%, to a record 8.3 million tonnes, while labour productivity per employee increased by 2.5 times, which helped the Company win in a Vedomosti rating.
For the last three years, PhosAgro has achieved annual growth in fertilizer output of 10%, with a similar trend for phosphate rock production. This year the Company plans to maintain the same pace of growth.
Last year, the PhosAgro completed a large-scale investment into the construction of new, high-tech production facilites. PhosAgro’s new ammonia plant is currently the highest-capacity in Russia (760 thousand tonnes per year), as is the granulated urea line with a capacity of 500 thousand tonnes per year. Investments in the project exceeded RUB 65 billion. These will enable PhosAgro to continue to produce phosphate-based fertilizers that are naturally low in potentially-harmful impurities, helping to support national and global food security. The new production facilities will also create significant potential for increasing production capacity and improving the Company’s self-sufficiency in key inputs.
In the next two years, PhosAgro plans to invest at least RUB 50 billion, which will enable it to open three new production facilities (sulfuric acid, nitric acid and ammonium sulfate) at the production complex in Cherepovets by 2020, and to expand the capacity of the third apatite-nepheline beneficiation plant. PhosAgro is also considering options for the development of the production complex in Volkhov.
PhosAgro CEO Andrey Guryev said: "At present, we are working on a long-term strategy for the development of PhosAgro until 2025, which will be aimed at further improving efficiency, strengthening the Company’s positions in domestic and foreign markets, increasing shareholder value and profitability.
“The Company, whose shares have traded on the London Stock Exchange and Moscow Exchange since 2011, last year conducted its second SPO in recent years. Shareholders successfully placed 4.5% of the shares of PhosAgro. RDIF together with five sovereign funds from China, Kuwait, Qatar, Bahrain and the UAE participated in the SPO, as well as international investment funds from the UK, continental Europe and the United States.
“The Company benefited significantly from the SPO with RDIF, increasing its free float to more than 25%, helping the liquidity of PhosAgro shares traded on the Moscow Exchange to grow 5-fold. The company’s weighting in the MSCI Russia index also grew, while the geography and structure of its investors became more diversified, and the share price broke records.
“RDIF has built an effective mechanism for attracting financing from foreign sovereign funds to the Russian equity market, and this contributed to high demand for PhosAgro shares. The order book for PhosAgro shares was fully subscribed within an hour, becoming oversubscribed thereafter. The volume of the transaction exceeded RUB 15 billion.
“We also expanded the Board of Directors of PhosAgro to ten people from eight, and an absolute majority of those are independent directors. In addition, through our cooperation with RDIF, we have gained invaluable insight into communication with and decision making by sovereign funds.
"I believe that RDIF provides a certain assurance of quality. Trust in Russia, inspired by this fund, is extremely unique."
Responding to a question from the moderator about the possibility of an investment breakthrough, Andrey Guryev noted that "an investment breakthrough is not only possible and inevitable, but we have already entered this investment cycle, investing about USD 500 million annually into production development."