URALCHEM focuses on phosphor

The Company acquired 71.72% shares of Voskresensk Mineral Fertilizers.

URALCHEM purchased 71.72% shares of Voskresensk Mineral Fertilizers and added a phosphate fertilizer enterprise to its nitrogen plants. The deal amounted to $358.6 million.

URALCHEM includes Kirovo-Chepetsk Chemical Works and Azot, Berezniki. In 2007, The Company’s sales volume amounted to 3.5 million tonnes. Dmitriy Mazepin is the owner of the Company.

Yesterday URALCHEM announced the acquisition of 71.72% voting shares of VMF. The deal amounted to $358.6 million. Previously, the block of shares was owned by Agroprodmir, which had purchased it from Phosagro in 2006. The rest 28% shares are considered to be owned by Phosagro. The shares were sold because of a conflict between the shareholders. A source close to Agroprodmir said to RBK Daily that there was misunderstanding between Agroprodmir and Phosagro. “Loan money was used to purchase the plant. Possible operational risks imposed by irregular raw material supplies from Phosagro are the reason why Agroprodmir decided to sell the plant, - he says, - In future, URALCHEM can supply VMF with its own raw materials.” Agroprodmir intends to use the deal funds for loan repayment. Phosagro refused to comment on the issue.  

URALCHEM is satisfied with the acquisition. VMF will bring the Company to the phosphate fertilizer market which is new for it. Dmitriy Osipov, Chief Executive Officer of URALCHEM believes that another advantage in acquiring control of VMF is its capacities for production of sulphuric acid, which will be used to manufacture ammonium sulphate-nitrate (ASN), which is a new product for URALCHEM. Mr. Osipov also noted the favourable market conditions which have arisen for basic phosphate fertilizers. As of 1 June, 2008 prices for DAP and MAP reached levels of US$ 1160-1200 per tonne (FOB Baltics).

Analysts say this is a good bargain for URALCHEM. According to the deal conditions, VMF was priced at $512 million. Andrey Fedorov, an analyst at Alfa-bank believes that URALCHEM received a discount. The risks that arose from the dispute between the previous shareholders were taken into account. All analysts are sure, that the new enterprise will well fit into URALCHEM’s structure. Marina Alekseenkova at Renessans Capital said: “URALCHEM made a logical move. Considering the Company’s development strategy, VMF will become an important element of URALCHEM’s production chain”.

Published in abridged form