27 de noviembre de 2014 / 16:28 / en 3 años

Russian fertilizer maker Phosagro eyes expansion with $1.4 bln investment

* Phosagro seeks 25 pct sales growth by 2020 -CEO

* Investment targets ammonia plant, mine expansion

By Ron Bousso

LONDON, Nov 27 (Reuters) - Russian fertilizer producer Phosagro plans to invest around $1.4 billion in a new plant and mine expansion by 2017 to increase sales by 25 percent over the next five years.

The phosphates and compound fertilizer maker aims to produce and sell more than 8 million tonnes of product by 2020 as it expands business in Asia, Latin America and Europe, chief executive officer Andrey Gutyev said.

Phosagro is the world’s third-largest producer of phosphate rock, an essential agricultural nutrient. It also sells compound fertilizer, a blend of processed phosphates, nitrogen, potash and often sulphur, known as NPK or NPKS.

The company aims at completing by 2017 an ammonia plant in Cherepovets, east of Moscow, with a capacity of around 760,000 tonnes per year, which will account for a large part of increased production.

Around $1.07 billion has been earmarked for new capacity construction by 2017, according to a presentation during Phosagro’s investor day in London this week.

An additional $407 million will go towards expanding its phosphates mine in Murmansk in northern Russia, including the completion of a new shaft next year.

Production at Murmansk is nevertheless set to decrease by 2020 to 7.1 million tonnes from 7.5 million tonnes in 2014 due to lower output from its ageing open pit mines, Guryev said.

Phosagro opened a sales office in Singapore in 2013 and plans to expand in other key export markets, he said.

“Next year we will open an office in Brazil, which is a core market for us. The second new office will be in Europe.”

Sales in Brazil are expected to increase next year after the government recently scrapped an import duty on phosphate-based fertilizer, Guryev said.

SHIELD

Phosagro’s heavy reliance on export sales, which make around 70 percent of its current sales, has kept it relatively shielded from the rouble’s sharp depreciation by around 30 percent this year following Western sanction on Moscow over the Ukraine crisis, Guryev told Reuters.

“We are still managing a very comfortable level of our debt by the revenues we receive in U.S. dollars from our sales, so it has a hedging effect,” he said.

Phosagro’s net debt at the end of September reached 52.7 billion roubles ($1.1 billion), up from 43.8 billion roubles in December 2013, according to the company presentation.

Phosagro’s debt-to-equity ratio over the past 12 months was however 103.6 percent, compared with 89.2 percent for Russian peer Akron and 80.9 percent for Uralkali, according to Reuters data.

Reporting by Ron Bousso; editing by Keiron Henderson

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