Upstream

04

Upstream operations are a key element in PhosAgro’s production cycle. Our facilities include four operating apatite-nepheline ore mines and two beneficiation plants, where the extracted ore is processed and phosphate rock and nepheline concentrate are produced.

Our Assets

PhosAgro is the world’s largest producer of high-grade phosphate rock (P₂O₅>35.7%). Our upstream business comprises OJSC Apatit, the number one global producer of high-grade phosphate rock on a standalone basis and Russia’s only nepheline concentrate producer.

Apatit comprises four apatite-nepheline ore mines (Kirovsky, Rasvumchor, Central and Vostochny), with a combined ore extraction capacity of 27 million tonnes a year, and two beneficiation plants (ANBP-2 and ANBP-3). Each of Apatit’s mines holds licences for exploration and extraction of apatite-nepheline ores at the following deposits: Kirovsky mine — the Kukisvumchorr and Yuksporr deposits; Rasvumchor mine — the Apatitovy Cirque and Plato Rasvumchorr deposits; Central mine — the Plateau Rasvumchorr deposit; and Vostochny mine — the Koashva and Njorkpahk deposits.

PhosAgro is fully self-sufficient in phosphate rock, satisfying its downstream requirements for apatite concentrate needed in the production of phosphate-based fertilisers.

Mining and benefication, our assets

Resources and Resources

Due to its igneous origin, PhosAgro’s ore contains P₂O₅, Al₂O₃, TiO₂ and rare earth elements with low content levels of hazardous metals such as cadmium, arsenic, mercury and lead, and the lowest radioactivity level compared to other major global phosphate rock producersFertecon. In addition, phosphate rock produced from igneous origin apatite-nepheline ore requires less sulphuric acid to produce one unit of phosphoric acid, which is used to produce phosphate-based fertilisers. In 2011, the international consulting firm IMC conducted an independent review of the apatite-nepheline ore reserves and resources at our mines. Based upon its review, IMC believes that the resource estimates are consistent with prudent engineering practices.

Our existing resource base will allow us to maintain production of high grade phosphate rock for over 75 years, based on current extraction volumes. Rich in different minerals, our ore contains approximately 280 million tonnes of aluminium oxide, the largest resource in Russia, as well as over 41%The Institute of Economic Problems, Kola Science Center, Russian Academy of Sciences named after G.P. Luzin of Russian total rare earth resources, plus other useful elements such as titanium dioxide.

Reserves as at 1 January 2012

Deposit Reserves, ‘000 t
(Categories A+B+C1)
Average P₂O₅
content, %
Kukisvumchorr 419,567 14.64%
Yukspor 543,613 14.25%
Apatitovy Cirque 118,985 14.83%
Plateau Rasvumchorr 289,925 13.57%
Koashva 629,319 16.79%
Njorkpahk 58,955 14.92%
Total 2,060,364 15.06%

Source: PhosAgro

Resources Categories Classification

Category A:

the deposit is known in detail; the boundaries of the deposit have been delineated by trenching, drilling, or underground workings. The quality and properties of the ore are known in sufficient detail to ensure the reliability of the projected exploitation.

Category B:

the deposit has been explored but is only known in reasonable detail; the boundaries of the deposit have been delineated by trenching, drilling, or underground workings. The quality and properties of the ore are known in sufficient detail to ensure the basic reliability of the projected exploitation.

Category C1:

the deposit has been estimated by a sparse grid of trenches, drillholes or underground workings. The quality and properties of the deposit are known tentatively by analogy with known deposits of the same type and the general conditions for exploitation are known tentatively. This category includes resources peripheral to the boundaries of the A and B category and also reserves allocated in complex deposits in which the ore distribution cannot be reliably determined even by a very dense grid.

Source: PhosAgro data

Our existing resource base will allow us to maintain production of high grade phosphate rock for over 75 years, based on current extraction volumes. Rich in different minerals, our ore contains approximately 280 million tonnes of aluminium oxide, the largest resource in Russia, as well as over 41% of Russian total rare earth resources, plus other useful elements such as titanium dioxide.

Products

Apatit produces "standard" grade phosphate rock (P₂O₅ content of 39%) and "superior" grade phosphate rock (P₂O₅ content of 40%). "Superior" grade phosphate rock is principally sold to premium European producers of food and technical phosphate products. These companies require phosphate rock with a high nutrient content and low level of hazardous elements. Apatit also produces nepheline concentrate, which is primarily used in the complex production of alumina, cement, soda ash, potassium carbonate and gallium.

Performance in 2011

In 2011, PhosAgro produced 26.6 million tonnes of apatite-nepheline ore and 7.7 million tonnes of phosphate rock. The Company’s nepheline concentrate production totalled 1 million tonnes. PhosAgro utilised internally 59 % of its phosphate rock for the production of phosphate-based fertilisers. 32 % was sold to domestic external customers and 9% to European external customersIncluding Belarus. External sales of phosphate rock constituted 14% of PhosAgro’s total external revenue in 2011.

Export phosphate rock revenue per tonne increased by 75% year-on-year to RUB 8,475 from RUB 4,849, while domestic revenue per tonne was down 1% from RUB 3,575 to RUB 3,536.

Production Volumes, ‘000 t

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Sales Volumes, ‘000 t

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Phosphate rock export sales breakdown, %

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