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Phosagro to Gain as Russian Phosphate Prices Double, Troika Says

30 May 2012


OAO Phosagro, Russian billionaire Andrey Guriev’s fertilizer maker, is set to benefit from the liberalization of domestic phosphate-rock prices from next year, Troika Dialog said.

The Federal Anti-Monopoly agency will allow producers to link domestic charges to export prices asked by Phosagro’s Apatit unit or Morocco’s Office Cherifien des Phosphates, the agency said on its website.

The liberalization “should result in domestic phosphate rock prices almost doubling from the current $120 a ton to roughly $250 to $280 a ton, which would obviously be positive for Phosagro,” Mikhail Stiskin, a Troika analyst in Moscow, said in a note today. This may add as much as $200 million annually to Phosagro’s earnings before interest, taxes, depreciation and amortization, according to Troika Dialog.

Russian domestic rates could be also linked to phosphate- rock prices implied by the export price of complex NPK fertilizers, which contain the material, the agency said.

OAO Acron, another Russian fertilizer maker, should be unaffected by the price increase, provided it starts its own phosphate project this year and reaches full capacity in early  2013 as scheduled, Stiskin wrote.

The new rules, which take effect Jan. 1, may make UralChem, which buys Phosagro’s phosphate rock as an ingredient in its complex fertilizer, “even more desperate to find any tool to strengthen its position,” Troika said.