All steps – only forward

Despite the world financial crisis, Azot, OJSC is developing and gaining momentum. This URALCHEM subsidiary has everything: unique investment projects, well-balanced sales and innovative developments that are always in demand.

Being a leader, even under crisis

The operating results of Azot, OJSC for 2008 has become rather positive. According to Azotecon, Azot ranks No. 4 among 23 mineral fertilizer enterprises. Compared to 2007, in 2008 Azot increased ammonium nitrate production, including porous and stabilized ammonium nitrate, by 5.7% to take the top position among 13 enterprises. Compared to 2007, this chemical giant in Berezniki increased urea production by 13.2% to become the 8^th largest urea producer.

Keeping up

In 2009, 1^st quarter results may be considered as success. All large-tonnage plants exceeded the planned capacity. Within 3 months, the production of major fertilizers increased by 25% compared to the same period in 2008. And, as compared to the “critical” 4^th quarter of 2008, the increase reached 28.7 %. The enterprise produced 103.6% of the planned amount of mineral fertilizers in 100% nitrogen equivalent; in total, within 3 months the enterprise produced 176,962 tonnes of mineral fertilizers, with 6076 tonnes of output in excess of the plan.

Seasonal demand in the domestic market is one of the reasons for such growth. In addition, today Uralchem is developing a sales network in Russian regions and negotiating sales of mineral fertilizers at reduced prices. Therefore, the demand for the company’s products is growing. As far back as in February this year, URALCHEM Trading House and regional ministry of agriculture concluded an agreement. Under the agreement, before the spring field works began, agricultural enterprises of the region purchased 20.5 thousand tonnes of mineral fertilizers, 92.3% of the total amount required, at fixed (reduced) prices. This is a 7.7 tonnes increase compared to 2008. Now, under the conditions of the agreement, URALCHEM Trading House will supply farms in the region with the required amount of mineral fertilizers at prices to be fixed for every following month.

New projects to respond to crisis

In the beginning of 2009, URALCHEM shifted to production of the fertilizers that were in demand under the conditions of crisis, including complex mineral fertilizers.

Today, Azot, OJSC has launched the production of a new product – 80% ammonium nitrate solution. Now, together with traditional granulated ammonium nitrate, the enterprise also produces ammonium nitrate solution with different consumer characteristics. Ammonium nitrate solution is used by mining enterprises. This investment project allowed the company to expand the line of products used for emulsion explosives production. Planned production is set at 30 thousand tonnes per year. Dino Nobes, a Swedish company has become the first consumer of 80% ammonium nitrate solution and has already purchased over 100 tonnes of the product from Azot. 

In addition, URALCHEM plans to launch dry urea-ammonium nitrate (UAN) production at Azot. The major sales market here is France. It is the first time that a new investment project is to be implemented in two countries at a time. Dry UAN production unit will be built in Berezniki, Russia, and a unit to convert dry urea-ammonium nitrate into liquid condition will be constructed in Dieppe, France. 

URALCHEM and the French party both see the benefits of this project. French consumers obviously lack their own liquid UAN production. Thus, owing to URALCHEM project in Dieppe, the French will be able to give up import. And extra working places won’t be a bad thing now that the crisis still exists.

The new product is an advantage for URALCHEM too. First, granulated grade implies a competitive advantage in Russian and the world market. Second, UAN production does not require extra natural resources, as it is based on further processing of ammonium nitrate and urea. This is why this product has higher added value. Third, as compared to liquid UAN, dry UAN makes it possible to reduce transportation costs. Finally, the city itself has favourable geographic location: there’s access to many transport routes in the Atlantic Ocean through the English Channel, which means that URALCHEM will also have access to new markets in other countries in Europe.

- Aleksandr Pavlov, Deputy Strategic Development Director of the branch of URALCHEM MC, LLC said: “In January, we sent first dry UAN samples to France. One of the laboratories identified the product and received good results. Our French colleagues were glad to see that the new product is absolutely safe for transportation, storage and use.

This year URALCHEM will start building a dry UAN unit with designed capacity of 500 thousand tonnes at Azot. Due to the implementation of the new project, we have every reason to say that the enterprise will become an object of ever-growing attention of consumers and competitors. Not all companies are ready for serious investments now that the crisis still exists.