The company confirms that it is looking at a possible construction of a new plant in Murmansk Oblast. The condition, however, is that it gets access to plenty of cheap energy. In a recent meeting between company owner Andrey Guriev and regional Governor Marina Kovtun, the former granted his support to the latter’s bid for a new gas pipeline to the region. Such a new pipeline, along with a projected new nuclear power plant, would significantly boost the region’s access to competitive energy and attract industrial investments.
Phosagro’s interest in a new plant in the Kola Peninsula comes at a time when the company is experiencing a growing demand on its raw materials and subsequent price hike. In July, the market price on diammonium phosphate increased to $500/ton, a 25 percent growth since January. The stock market value of the company has subsequently increased by almost a third, to $4,9 billion, newspaper Vedomosti reports.
At the same time, Phosagro is conducting major cost cuts and reorganizing company structures. According to Murman.ru, the company is reducing its staff in Murmansk Oblast with as much as 3500 jobs. The company itself maintains that the lion’s share of the staff cuts consists of early pensions and tranfer of employees to other company units.
Earlier this year, the subsidiary Balakovsky Mineral Fertilizers was merged with the Apatit, and additional mergers of subsidiaries could follow, company director Andrey Guriev confirms.
The Apatit is the main subsidiary unit of Phosagro. A mining and processing enterprice based centrally in the Kola Peninsula, Apatit alone accounts for a lion’s share of Russian fertilizers production. Andrey Guriev in 2013 secured 100 percent of the company shares and now has full control the unit.
Apatit operates four mines in the Kola Peninsula with a total annual production capacity of about 27 million tons of ore. The biggest mine, the Kirovsky, alone has a capacity of 11 million ton per year, the company informs. As previously reported, a key stake in Apatit was in the late 1990s controlled by Menatep, the bank associated with now exiled Mikhail Khodorkovsky and his Yukos.
Phosagro is eager to keep its leading position in the lucrative Murmansk phosphorous sector. Over the last year, the company has been increasingly challenged by competitor Acron and its subsidiary Northwest Russian Phosphorous Company, which has strengthened its regional positions with the Oleny Ruchey project.
The apatite industry remains hightly profitable and Murmansk Oblast is the key region in Russia for apatite ore. And ore resources in the Kola Peninsula still remain abundant.
As illustrated by figures from Patchwork Barents, production of the mineral ore has increased from 4.2 million tons in year 2000 to 10,7 million in year in 2013.
Check out apatite production (1000 tons) in the Kola Peninsula in the period 2000-2013 underneath: