On 18 December Uralkali provided its Q3 2014 key figures and a market update. In its presentation the company stated that depending on the outcome of ongoing geotechnical assessments at its flooded Solikamsk-2 facility, in the worst case it may need to accept a $1bn hit from the accident. Uralkali’s CEO Dmitry Osipov said that inflows at the mine are approximately 700-800m3 /hour which Uralkali was able to maintain by pumping brines to the surface, however, the capacity to do was limited therefore if inflows were to increase then most likely would be lost.
The granulation facility at Solikamsk-2 is unaffected therefore the company plans to truck ore from neighbouring Solikamsk-3 which will enable the facility to continue producing granulated MOP. The facility has a capacity of 1.2 million t/y and the logistical cost of transporting ore from mine 3 to the facility at mine 2 is estimated to be around RUB 250 million (approximately $4.5 million).
The loss of Solikamsk-2 would likely have a huge impact on Uralkali’s 2015 production, as shown in the company’s production and capacity forecasts for next year which assumes a worst case scenario (no mining at Solikamsk-2). In 2014 Uralkali’s capacity was 13 million t and it produced approximately 12 million t. Under its forecast for 2015, Uralkali has a capacity of 11 million t with a production of 10.2 million t – that’s factoring in increased production from the debottlenecking programme at Berezniki 1 and 2.
Uralkali lifted its estimate for world MOP shipments in 2014 to a record 59-60 million t from its previous forecast of 56-58 million t, citing strong performances by Brazil, the US and Southeast Asia. In its 2015 forecast Uralkali expects volumes to retreat slightly to 57-59 million t – which would still be the second highest year on record for potash demand.
In Q3 Uralkali sold 3.1 million t, a 19% increase in the Q3 2013 figure. During the quarter the average export price was $233/t fca which was down on Q3 2013 price of $272 fca. In the January-September 2014 period Uralkali sold 9.2 million t MOP which constitutes a 28% increase on the comparative period from last year. The company listed its average selling price for MOP at $224/t fca, a 25% decrease on the fca selling price for January-September 2013 which was $299 /t.
Uralkali also highlighted the ongoing pressure from Russia’s ongoing financial turmoil, however, stated that it would still satisfy domestic MOP requirements as a priority. “The key question, what will happen to inflation,” Uralkali’s CFO said, continuing that the company had budgeted for a 5% inflation rate in 2015. Whilst this corroborated by the official forecast, many economists regard it as being too low.
Acron has posted a 3% year-on-year increase in earnings before interest, taxes, depreciation and amortisation (EBITDA) for the first nine months of 2014, the company said on Friday 5 December. EBITDA amounted to 12.81 billion Rouble ($362 million), up from 12.38 billion Rouble in the January-September period in 2013, despite pressure on earnings at subsidiary JSC Dorogobuzh.
“While Acron Group’s growth in financial performance slowed in Q3 due to the planned long-term overhaul at JSC Dorogobuzh, the group’s efficiency actually improved,” senior vice president Alexander Popov said. EBITDA at Dorogobuzh was down 29% y-o-y to 2.78 billion. Popov said capacity expansion projects would further support earnings, with the peak of an investment phase of the Ammonia-4 project to be passed at the end of 2014. Previously released production figures, excluding in-house consumption, for the January-September 2014 period showed ammonia output was down 2% y-o-y to 1.4 million t.
This was in contrast to nitrogen fertilizers, which were up 5.9% to 2.36 million t, mostly owing to a 21.1% increase in UAN to 720,500 t. Ammonium nitrate output was flat year-on-year in the first nine months at 1.14 million t, while urea production increased by almost 1% to 504,300 t. NPK production came in at 1.95 million t, up 2.8% while apatite concentrate output amounted to 630,500 t.
Uralchem has reported a net loss of 19.17 billion Roubles ($35.8 million) for its first nine months of 2014, as increased AN production failed to outweigh negative currency effects. The poor net result was due to the sharp rise in the dollar against the Rouble since July 2014. Adjusted earnings before interest, taxes, amortisation and depreciation (EBITDA) for the January-September 2014 period was up 6% year-on-year to 18.28 billion Roubles ($34 million). Uralchem sold 495,000 t ammonia in the first nine months of the year, down 2% from the 504,000 t sold over the same period last year.
PhosAgro has said that it plans to increase the volume of fertilizer that is exports through the port of Ust-Luga in 2015 to about two million t/y, accounting for about 48% of its exports. PhosAgro plans to build its own terminal in Ust-Luga. It is currently using ECT and Smart Bulk. At the end of this year it will be shipping 16% of exports through Ust-Luga. Tonnes will be taken away from Muuga and Kotka.