eurochem fy 2016 · eurochem fy 2016 ifrs results conference call 9 february 2017 ... acquisition...
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EuroChem FY 2016 IFRS Results Conference Call 9 February 2017
Start time: 10:00 NY / 15:00 London / 16:00 Zug / 18:00 Moscow TO ATTEND, please register at: https://cossprereg.btci.com/prereg/key.process?key=P9GM3UQD6 or use the dial-in information on the first page of this presentation
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This presentation has been prepared by EuroChem Group AG (“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 forward-looking 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
2
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Passcode: 696 633 86#
EuroChem Group Overview
Growth through potash
• Build leading low-cost potash business
• Target self-sufficiency (nat. gas, phosphate rock, potash)
• Further cost efficiency through vertical integration in logistics
• Enhances cost position and reduces risk / volatility of earnings
Cost leadership through vertical integration
• Minimize commodity, maximize specialty agrochemicals: emphasis on de-commoditization of product portfolio by growing specialty fertilizer grades, including biostimulants, water-soluble and micro nutrients
• Expand industrial portfolio (melamine, LDAN, AdBlue)
Value-added product range
Proximity to Customers
• Proximity to customers in key home markets via distribution allows EuroChem to sell at a premium and exploit seasonality patterns
• Brings valuable market knowledge from direct end-user contact
Strategy
Phosphate Potash
3 Nitrogen fertilizer plants
c.8.9MMT of nitrogen fertilizer capacity
3 Phosphates fertilizer plants
c.5.1MMT of phosphates fertilizer
capacity
2 potash projects underway in Russia with a combined targeted capacity of over
8.3 MMT MOP
Phosphoric acid
Nitrogen
Apatite (Kovdor) and Milling phosphate
(Kaz)
Iron ore
Ammonia (NH3)
1MMT pa project
Port facilities: 8.8MMT (Russia) & 3.5MMT (EU) c.6,400 rail cars
Sales to more than 6,000 customers worldwide (>100 countries) supported by own distribution
Acquisitions of Bentrei (Q4-15) and
Tocantins (Q3-16)
Ongoing and potential investment projects By-products
277 bcm in reserves
Natural gas
Condensate
Potash ore proved and probable reserves in excess of
10 BMT
• Ust Luga • Sillamea
3
• Usolskiy Potash • EuroChem VolgaKaliy
EuroChem Group Overview
20
15
2
01
6
Agrinos AS and EuroChem Group AG Enter Into Distribution & Sales, Research & Development, and Equity Investment Agreements.
Completed tender on 2017 LPNs ($426m) and placed $500m Eurobonds issue
EuroChem Group AG Signs $800m Pre-Export Finance Club Facility
US Distribution Acquisition of Bentrei Fertilizer Company, a 1 MMT US-based fertilizer distributor.
Brazil Distribution Acquisition of Fertilizantes Tocantins with blending facilities and established network of 2,000 customers in the North, Northeast and Mid-West of Brazil.
Bentrei charters approximately 150 river barges and over 2,000 rail cars a year to transport product from point of production direct to customer facilities and to its system of privately managed river warehouses – ensuring just in time seasonal delivery for customers.
Strategically located in Brazil’s emerging fertile farming regions in the North, Northeast and Mid-West. Blending facilities, market expertise and established network of 2,000 customers. Double digit sales growth for 7 consecutive years.
Distribution Centre in Russia Opening of a new distribution center in the Belgorod region , including educational center
Distribution Centre in Hungary New centre to mainly distribute EuroChem products and specialty fertilizers from Fertilia Ltd., a leading Hungarian producer and distributor.
The rail spur connecting Usolskiy site and the Russian Railways network s completed. Usolskiy welcomes its first train and locomotive diesel-powered) in June.
First train at Usolskiy Potash
Group sells its stake in Murmansk Commercial Seaport for a total consideration of RUB 8.74 bn ($143m).
First Ural-20 mining machine starts at Usolskiy
With mining equipment at mine development level, the Group’s first Ural-20R mining machine was deployed in the fourth quarter. In December, the connection between the cage and skip shafts was completed. As of early February 2017, over one kilometer of underground development had been completed
In September, the Russia sales team opened the EuroChem Belgorod AgroCentre in the Belgorod region, one of the top-three largest agricultural regions in Russia. A strong distribution foothold is a key part of the Group’s strategy given estimates that over 60% of our EuroChem local sales go directly to growers - from farmers (1,000 ha estates), medium size farming enterprises (1,000 to 20,000 ha), and to agricultural holdings (>20,000 ha).
Selected key events of the last 12 months
4
Fertilizer Sector
Market pricing dynamics – at marginal cost levels, but stable
Averages are derived from weekly prices
Nitrogen (US$/tonne)
Phosphates (US$/tonne)
Iron ore (US$/tonne)
Average market prices for key products (US$/tonne)
Key themes: • India / Brazil subsidy
and currency • MEA capacity • Producer discipline
Key themes: • Chinese costs /
exports / capacity rationalization
• New capacity • Indian subsidies • Acreage plans
Key themes: • China steel demand • Global supply
dynamics • CNY devaluation
2016 Backdrop
5
Q4-16 Q4-15 Y-o-Y,
chng % 2016 2015
Y-o-Y, chng %
Ammonia
(FOB Yuzhny) $190 $359 -47% $236 $387 -39%
Prilled urea
(FOB Yuzhny) $206 $250 -18% $198 $272 -27%
AN
(FOB Black Sea) $179 $206 -13% $165 $222 -25%
MAP
(FOB Baltic) $320 $423 -24% $338 $459 -26%
MOP
(FOB Baltic, spot) $221 $278 -21% $232 $288 -19%
Iron ore
(63.5% Fe, CFR China) $72 $48 +52% $60 $57 +4%
$0
$100
$200
$300
$400
$500
$600
$700
Prilled urea (FOB Yuzhniy) Ammonia (FOB Yuzhniy)
AN (FOB Black Sea) UAN (FOB Black Sea)
$0
$100
$200
$300
$400
$500
$600
MAP (FOB Baltic) DAP (FOB Baltic) NPK 16:16:16 (FOB Baltic)
$0
$40
$80
$120
$160
Iron ore (CFR China)
• Fertilizer prices followed energy prices lower
• Soft commodity prices sliding in most regions of the world
• Further weakening of emerging market currencies - fertilizer imports less
affordable in such large import-oriented markets as India, Brazil, Mexico, Thailand
• Hit by low prices and rising costs, Chinese fertilizer producers fail to sustain low-
cost advantage despite flat export tax rates for 2016
o Urea exports down 36% y-o-y to 8.86 MMT,
o DAP exports 15% lower y-o-y to 6.8 MMT
o Structural changes in Chinese cash costs (higher domestic tariffs/prices for
electricity, rail/truck transportation, coal) and environmental issues
• High stock levels limit imports in India, Europe and other regions;
• Trade restrictions on fertilizers:
o AN and CAN bans in Turkey imposed from June (CAN lifted in JAN-17)
o 2016 P&K subsidy decreased in India
o Duties on Chinese AS imports into the USA (until end 2016)
Fertilizer Sector
Market pricing dynamics – cost pressure curbing supply
Coal prices
Higher leverage at Chinese fertilizer producer level
$/tonne
6
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
DEBT/EBITDA
Energy and ammonia prices (rebased to 100)
Sources: Integer, CRU, Bloomberg, BofA Merrill Lynch Global Research *2016 estimated; China fert industry public companies include Kingenta, Sierte, Wintrue, Luxi, Chengxing, Liuguo chemical, Hechi chemical, Salt Lake, Jianfeng, Lutianhua, Yuntianhua, Xinyanfeng, Batian, Hubei Yihua, Lanhua Kechuang, China BlueChem, Sichuan Meifeng Chemical.
5.3 4.4
3.4
7.0
3.6
6.9
8.3
13.6 13.7
8.9
2.0
0.8
2.1
4.0 4.0 3.9 3.8
4.9
8.0
6.8
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Urea DAP
Lower utilization and higher domestic demand pushing exports lower
0
50
100
150
200
250
Jan
-11
Ap
r-1
1
Jul-
11
Oct
-11
Jan
-12
Ap
r-1
2
Jul-
12
Oct
-12
Jan
-13
Ap
r-1
3
Jul-
13
Oct
-13
Jan
-14
Ap
r-1
4
Jul-
14
Oct
-14
Jan
-15
Ap
r-1
5
Jul-
15
Oct
-15
Jan
-16
Ap
r-1
6
Jul-
16
Oct
-16
Anth. Mid-lump Jincheng FOT Anth. Slack Jincheng FOT Bituminous QHD FOB
0
20
40
60
80
100
120
140
160
180
200
Jan
-14
Mar
-14
May
-14
Jul-
14
Sep
-14
No
v-1
4
Jan
-15
Mar
-15
May
-15
Jul-
15
Sep
-15
No
v-1
5
Jan
-16
Mar
-16
May
-16
Jul-
16
Sep
-16
No
v-1
6
Ammonia (FOB Yuzhniy) Brent, spotNatural Gas (Henry Hub) Natural Gas (TTF, NEW)
EuroChem Group Overview
7
• Diversified presence in non-domestic markets
• #1 in Russia/CIS with c.60% of Russian domestic sales directly to farmers
• #2 in Europe, anchored by Europe EuroChem Antwerpen / Agro
• Growing presence in the Americas supported by acquisition of Bentrei (USA) and Tocantins (Brazil)
Group sales volumes (KMT)
From 2018, added focus on Brazilian market with world’s lowest cost potash
• Entering transformational stage with potash
353 319
2015 2016
Africa
3,569
4,443
2015 2016
Asia
1,015
1,389
2015 2016
CIS
1,042
1,663
2015 2016
Latin America
1,608
2,396
2015 2016
North America
5,655 5,638
2015 2016
Russia 4,732
5,089
2015 2016
Europe
17,974
20,938
2015 2016
Group
33%
18% 15% 14%
11% 8%
1%
• Mining products split between Russia and Asia
Group sales geography (2016)
Global market presence
+8% -%
+37%
+24%
+49%
+60% -9%
+16%
EuroChem Group Overview
Sales by product (2016)
8
Share of premium products in sales (2016)
• EuroChem manufactures high-quality nitrogen, phosphate and complex fertilizers. Its line of specialty products are engineered to keep their nutrient properties longer, guaranteeing an optimal supply of nutrients to plants, even during critical phases of growth
From basic to high-end fertilizer products
• EuroChem’s vertically integrated business model yields more than fertilizers. Throughout the production chain, the ability to process and produce mining and industrial products as well as feed products adds further depth and value to EuroChem’s product portfolio
Beyond fertilizers - a wide range of industrial products
Straight Nitrogen
Phosphate-based
Premium products(1) Industrial products
Mining Feed Nitrogen+ Sulphur
Nitrophoska Nitrophos
Nitrophoska S ENTEC UTEC
Base organic chemistry
HSE products Explosives Wood
industry
• Urea (2.6)(2)
• AN (3.7)
• CAN (1.3)
• UAN (1.5)
• MAP (1.2)
• DAP (1.4)
• NP (0.1)
• ASN
• ASN boron
• AS
Complex NPK (MOP), incl.: 15+15+15 (+0+2) 20+10+10 (+0+3) Nitrophos® 20+20 (+0+2)
Complex NPK (SOP), incl.: Special 12+12+17 (+2+8) Perfect 15+5+20 (+2+8)
Treated with inhibitors including: 24+8+7 (+0+2) 26 Inhibitor treated urea: 46
• Acetic acid • Vinyl acetate • Butyl acetate • Methyl
acetate • Acetaldehyde • Butanol • Nitric acid
• Caustic soda • Calcium
chloride • Hydrochloric
acid • Sodium
hypochlorite • Argon • Carbon
dioxide • Ammonia
water • AdBlue®
• High Density Ammonium Nitrate
• Low Density Ammonium Nitrate
• Melamine • Methanol • UREA Grade A
• Iron ore • Apatite • Baddeleyite • Potash (from
2017)
• Monocalcium phosphate (MCP)
• Defluorinated feed phosphate (DFP)
Source: Company’s data; (1) Products with specific features, having the potential to generate a price premium over alternative products with similar product characteristics and within similar areas of application; (2) Prilled + granular;
Premium 18%
Commodity / Standard
81%
(X.X) – Production capacity (MT pa)
• Development new product lines, such as
DMPSA inhibitors
• AdBlue certification in Russia received in
Russia
• Developing the Crenel (Crop Enhancing
Elicitor) brand for biostimulant products
17% 17%
10% 9% 8% 6% 5%
4% 2%
1%
7% 7%
3% 5%
Diversified product offering with broad variety of value-added products
Fertilizers
EuroChem Group Overview
Geography of sales (% of total)
Revenues (US$bn), Gross margin (%) EBITDA (US$m), EBITDA margin (%)
Key ratios (LTM)
12M-15 3M-16 6M-16 9M-16 12M-16
Net debt1 / EBITDA 1.97x 2.06x 2.39x 2.78x 2.88x
Funds from operations / Gross debt1 32% 30% 26% 20% 19%
EBITDA / interest coverage 9.03x 8.59x 7.95x 6.39x 5.20x
Return on capital employed 29% 26% 24% 19% 17%
(1) Defined as per bank covenants. 9
Key 2016 figures
48%
32% 30% 41% 41%
28% 30% 32% 38% 33%
19%
20% 19%
20% 16%
18% 20% 21% 20%
18%
9%
14% 16%
10% 10%
18% 16% 11% 12%
14%
10%
11% 13% 13% 20%
18% 11% 10%
12% 15%
6% 15%
6% 6% 4% 11%
13% 15% 8% 11%
6% 5% 13%
7% 7% 5% 10% 10% 8% 8% 1% 2% 2% 2% 2% 1% 1% 2% 2% 1%
Europe Russia Asia Pacific North America Latin America CIS Africa
$461 $318
$438 $360 $384
$202 $230 $283
$1,577
$1,099
37%
28%
39% 34%
31%
20% 22%
27%
35%
25%
EBITDA ($m) EBITDA margin (%)
$1,235 $1,135 $1,120 $1,050 $1,255
$1,013 $1,054 $1,053
$4,540 $4,375
47%
43% 42% 41% 41%
34% 35% 36%
44%
37%
Revenues ($m) Gross margin (%)
EuroChem Group Overview
$1,577
$1,099
+338
+114
+44
+6
-843
-48
-88
EBITDA12M-15
Salesvolumes and
mix(EuroChem)
Prices (incl.FX)
Variableproduction
costs
Fixed costs(excl. effectsof FX rates)
Effects ofFX rates onfixed costs
FX gain/lossfrom
operations
Other items,net
EBITDA12M-16
Substantially weaker product pricing environment overshadowed growth in sales volumes across key products
EBITDA development
Product 2016 2015 Y-o-Y,
chng %
Ammonia
(FOB Yuzhny) $236 $387 -39%
Prilled urea
(FOB Yuzhny) $198 $272 -27%
AN
(FOB Black Sea) $165 $222 -25%
MAP
(FOB Baltic) $338 $459 -26%
Iron ore
(CFR China) $60 $57 +4%
10
• EBITDA 30% lower year-on-year
• Fertilizer sales volumes +13% y-o-y (+20% incl 3rd party products)
• BenTrei and Fertilizantes Tocantins contributed $17m to 2016 Group EBITDA
Selected sales volumes (KMT)
2016 2015 Y-o-Y,
chng % 2016 2015
Y-o-Y, chng %
N&P fertilizer products
13,605 11,377 20% 10,526 9,332 13%
Urea 3,153 2,160 46% 1,911 1,724 11%
UAN 1,522 1,076 41% 1,371 1,037 32%
DAP 1,120 801 40% 1,068 792 35%
ANF 441 338 30% 441 338 30%
MAP 1,054 910 16% 976 885 10%
Complex fertilizers
2,095 1,832 14% 1,934 1,711 13%
AN 1,938 1,895 2% 1,848 1,817 2%
Ammonia 101 84 20% 23 21 12%
AS 1,224 1,272 -4% 0 0
CAN 957 1,010 -5% 955 1,008 -5%
Feed phosphates 300 327 -8% 300 327 -8%
Mining products 6,029 5,553 9% 6,029 5,553 9%
Iron ore 5,995 5,545 8% 5,995 5,545 8%
other 34 8 314% 34 8 314%
Industrial products 1,045 972 8% 1,045 972 8%
EuroChem products only
$ Million
Sales volumes
Prices
EuroChem Group Overview
+$496m in undrawn
committed lines
$332
$1,402
$451 $510
$762
$427
Cash and equiv. 2017 2018 2019 2020 2021
Unsecured syndicated facility
PxF
Eurobonds
Rouble bonds
Bilateral loans
Debt(1) maturity profile as of 31 December 2016, $m
Debt(1) mix as of 31 December 2016
Net debt(1)/ LTM EBITDA dynamics (x)
33.0%
60%
77%
90%
66%
25%
40%
23%
9%
34%
22%
1%
20% Bond/bilateral
loans/PxF/syndicated facility
Long-term/short-term
Unsecured/secured
$/RUB/BRL
Float/Fixed
(1)Defined as per bank covenants (does not include project finance facilities)
• Committed to maintain cash balance at the level of $200-300m in addition to credit lines
• To maintain a debt structure with a balanced maturity profile Certain significant investment projects are financed through non-recourse project financing facilities
• Usolskiy Project finance of $750mm • ECA (SACE) backed project financing of EUR 557m for EuroChem-
Northwest (Baltic Ammonia)
2016 developments • Signed $800m pre-export finance club facility maturing in 2021 with
LIBOR-based interest rate • Completed tender on 2017 LPNs ($426m) and placed $500m
Eurobonds issue • Agreement with AIM Capital SE for perpetual debt financing with a
limit of up to $1.5bn ($250m drawn as at 31/12/2016)
US$ 2019 2020 2021 Total
Usolskiy Project Finance 150 200 400 750
Northwest (Baltic ammonia) 35 62 489 586
Gross debt: $ 3,530m
Highlights / recent developments
11
1.57x 1.56x 1.59x
1.97x 2.06x
2.39x
2.78x 2.88x
Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16
History of prudent financial policy backed by shareholder commitment
As of 31 Jan-2017:c.$499m undrawn committed lines + $422m total cash
EuroChem Group Overview
92 144 144 180 110 156 186 233 282
372
278
312
74
35 61
157 95
91
177 185 140
348
519
$141
$211
$311 $304
$217
$337
$390 $380
$968
$1,323
Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 2015 2016
Mining PF Usolskiy PF Northwest Fertilisers Oil&Gas Logistics Sales Other
• Despite large-scale projects the Group maintains the flexible CAPEX outlay
• 29% of 2016 CAPEX from non-recourse project financing • $312m: EuroChem Usolskiy (potash) • $74m: EuroChem Northwest (ammonia)
• Annual Group sustaining CAPEX requirements: c.$150m
• RUB/$ dynamics enhancing economics of investment projects in Russia (capital and operating costs)
Strategic projects largely funded
Group CAPEX (US$m)
12
Pro
ject
fin
ance
$
38
6m
$517m
$74m
CAPEX spent todate
Remaining CAPEX Total estimatedCAPEX
$425m
c.$552m c.$977m
Amount funded of total investment: c. 60%
$160m
$590m
CAPEX spent to date CAPEX outstanding2017 - 2026
Totalestimated CAPEX²
$1,417m
c. $2,800m
Amount funded of total investment: c. 27%
c. $1,383m
EuroChem-Northwest ammonia project
Usolskiy potash project
Project Finance (US$m)
Excluding temporarily unallocated CAPEX 2- including all development phases and all social infrastructure
PF Usolskiy
PF Northwest
EuroChem Group Overview
0
100
200
300
400
500
600
2 3 5 7 8
10
11
13
15
16D
AP
co
st o
n D
DP
/FC
A b
asis
, $/t
on
ne
MMT
0
50
100
150
200
250
300
4 8
11
15
19
23
27
30
34
38
42
Ure
a co
st o
n D
DP
bas
is, $
/to
nn
e
MMT Gas Conversion costTransportation FCA-FOB FreightImport duty Export duty
NAK Azot
NEV Azot
Lifosa DAP costs (FOB Baltic), US$/tonne, with iron ore credit
Competitive advantages rooted in low-cost raw materials, specialty products and global reach
13
$315
$0
$100
$200
$300
$400
$500
$600
Jan
-15
Feb
-15
Mar
-15
Ap
r-15
May
-15
Jun
-15
Jul-
15
Au
g-15
Sep
-15
Oct
-15
No
v-15
Dec
-15
Jan
-16
Feb
-16
Mar
-16
Ap
r-16
May
-16
Jun
-16
Jul-
16
Au
g-16
Sep
-16
Oct
-16
No
v-16
Dec
-16
PhosRock Apatite Ammonia
Sulphur Conversion cost Transportation FCA-FOB
Most assets are in the 1st quartile of respective cost curves benefiting from advantageous location and upstream integration
• EuroChem’s nitrogen plants have one of the lowest gas costs globally
• Company’s own annual gas capacity of c. 20% of annual consumption
• Internal phosphate rock production covers c.65% of annual consumption
• By-products (gas condensate, baddeleyite and iron ore) further improve cost competitiveness of the business
Additional cost efficiency through vertical integration in logistics and distribution
• Own port facilities with annual capacity of 8.8MMT (Russia) and 3.5MMT (EU)
• Fleet of 6,400 railcars and 43 locomotives
• Distribution network in over 25 countries covering CIS, US, Latin America, Europe and Asia
• Increased intake of Kovdor rock • Higher iron ore prices
Nevinnomysskiy urea cost (FOB Black Sea), US$/tonne
Low-cost nitrogen and phosphate operations in the 1st quartile of the global cost curve on DDP basis
Phosphate rock Ammonia Sulphur Conversion
Transport to port
DAP cost based on mix phosrock price
Phosphorit
Lifosa
Freight Import duties
100Rmb export duty
DAP global cost curve in 2016 Urea global cost curve in 2016
$215
$0
$50
$100
$150
$200
$250
$300
$350
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5
May
-15
Jun
-15
Jul-
15
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
Dec
-15
Jan
-16
Feb
-16
Mar
-16
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
Dec
-16
Gas price Conversion cost Transportation FCA-FOB FOB Price BS
Projects
Kovdor
Kingisepp
Kedaynyay
Moscow
Novomoskovsk
Perm
Volgograd
Murmansk
Tuapse
Sillamae
Belorechensk
Ust-Luga1
Planned Capacity
Phase I (greenfield) 2,300
Phase II (brownfield) 1,400
Total 3,700
Nevinnomyssk VolgaKaliy Project
Usolskiy Potash Project
Antwerp
Taraz
Planned Capacity
Phase I (greenfield) 2,300
Phase II (brownfield) 2,300
Total 4,600
M
P
P
P
N
N
N
K
K
1) Under construction
K
K
Favorable positioning
P
N
K
M
Nitrogen
Phosphates
Potash
Mining / minerals
EuroChem port terminals
14
Projects
Timeline of main items
DEPTH IN METERS
Project status
VolgaKaliy (Gremyachinskoe deposit, Volgograd region, Russia)
2.3 2.3
2.3 2.3
4.6
Phase 1 Phase 2
Capacity (KCL, MMT)
Cage shaft
Skip1
Skip 2
KCl storage
Beneficiation
Crushing
Offices
Not to scale, for illustrative purposes only
In addition to an average KCl content of 39.5% and modern mining operations, a distance of approximately 500km to our Tuapse port facilities will provide us with unmatched cost advantages
15
SURFACE UNDERGROUND
Completed
• Dirt work • Main electrical substation • Water treating system • Gathering pond for storm water • Skip shaft (SS) headframes • SS1 hoist bldg. + hoist • Mine rescue & fire brigade bldg. • Main guard bldg. to ops. • Potable water wells • Tailings & Pond Area (1st Level) • Gas pipeline
Start of mine development (Q3-16)
Q4-16 • Crushing bldg. • Thickeners
1H-17
• Cage shaft hoist bldg. • Raw ore storage building • Main fan building. • Finished product storage building • Galleries • Mill Administration Building
• Extension of cage shaft freeze wall • Lowering of mining machines
2H-17 • Loadout • Main Mill – Screening & Floatation
• Restart of cage shaft sinking
Projects
VolgaKaliy visuals - surface
16
Projects
VolgaKaliy visuals – undergound
17
Projects
Usolskiy Potash (Verkhnekamskoe deposit, Perm region, Russia)
Cage shaft sinking completed in October 2013
Ore/KCl storage
Beneficiation Crushing
Offices
Loading
Skip shaft sinking completed in August 2014
Not to scale, for illustrative purposes only
Project status
Timeline of main items
Skip 1
Cage shaft
2.3 2.3
1.4 2.3
3.7
Phase 1 Phase 2
Capacity (KCL, MMT)
Located in the Perm region near Russia’s traditional potash production sites, the Verkhnekamskoe potash deposit is one of the largest in the world. Within this deposit, Usolskiy Potash has secured rights to over 2.3 billion tonnes of reserves with an average KCI content of 30.8% and an active mine life of 35+ years.
18
SURFACE UNDERGROUND
Completed
• ISBL (site) dirt work • Gathering pond • Potable water wells • Process water pipeline • Equipment storage bldg. • Main railroad & Rail Station • High voltage power line (excl. Tie-in) • Rail station & spurs
• Shaft sinking (Shafts 1,2) • Backwall grouting of shaft liners (water
proofing)
Q4-16
• Main substation • Pump station #1 • Main fan station & heating bldg. • Load center #1 • Gas pipeline tie-in • Main 220kV tie-in • Permanent Cage Shaft Headframe
• Initiate freeze system on shaft #3 • Ventilation • Lowering of mining machines • Connection between shafts
1H-17
• Permanent skip shaft headframe • Boiler house • Water treatment system • Pump Station #2 • Reagents Building • 1 Raw Ore & Product Storage Building • Crushing Building & Various Galleries
• Mine development • Sinking of shaft #3 (Skip-2)
2H-17
• Commissioning of Train 1, Beneficiation • First Tailings Management Area • First Ore Delivered • First Production
Projects
Usolskiy visuals – underground
19
Projects
Usolskiy visuals – surface
20
Fertilizer Sector
21
Outlook drivers
Demand continues to grow, but needs to work its way through newly commissioned supply
Q1-17 expected to be relatively strong
Chinese producers/exports and new supply outside China should cap pricing appreciation to c.10-15%
Environmental /HSE issues and concerns in China
Thank you – and now time for our Q&A session….
Please visit www.eurochemgroup.com for further details or contact our Investor Relations. [email protected]