PhosAgro and Chemoproject Nitrogen sign agreement

For Immediate Release 14 August 2014 PhosAgro and Chemoproject Nitrogen sign agreement for design engineering andprocurement of equipment for the construction of a new granulated urea unit in the Vologda region Vologda-PhosAgro (Moscow Exchange, LSE: PHOR), a leading global verticallyintegrated phosphate-based fertilizer producer, and Chemoproject Nitrogen a.s.,a leading global engineering company, have signed a contract for the designengineering and procurement of equipment for the construction of a 500 thstonne/year granulated urea production unit at PhosAgro-Cherepovets in theVologda region. The agreement was signed by PhosAgro CEO Andrey Guryev and Chairman of theBoard of Directors and CEO of Chemoproject Nitrogen a.s. Tomas Plachy, in thepresence of the Vologda region's interim governor Oleg Kuvshinnikov. Urea and granulation technology will be licensed from Stamicarbon from theNetherlands, the licensing and IP Center of Maire Tecnimont, which was thelicensor on the construction of the second urea production unit atPhosAgro-Cherepovets, realised and commissioned by Chemoprojekt a.s. in 2012.This will be the first time that Stamicarbon's Urea2000plusTM technology willbe used in combination with fluized bed granulation for producing granulatedurea in Russia. The construction of the third urea production unit at PhosAgro-Cherepovets ispart of a comprehensive investment project to commission a new energy-efficient760 ths tonnes/year ammonia plant in 2017 for the production and processingmineral fertilizers. The project is an integral part of PhosAgro's long-termmodernisation strategy, which was developed under the leadership of the GornyNational Mineral and Natural Resource University (St. Petersburg) and aims tocompletely upgrade production capacities using the most advanced technologyavailable. Commissioning the new urea unit will increase PhosAgro Group's overall ureaproduction capacity by 50%, and could make PhosAgro-Cherepovets the largestsingle producer of urea in Russia. Total investments in the construction of the new urea unit and productioninfrastructure, which the company plans to finance through borrowing, areestimated at RUB 7.8 billion. The project will utilise the most advancedtechnology and modern equipment available, enabling it to deliver topperformance in the areas of energy efficiency, resource conservation,operational efficiency, as well as ecological and industrial safety. Construction and installation work will be carried out by local contractors aswell as contractors from other Russian regions. In total, more than 1,000workers of various specialisations will be engaged in the project, and the ureaproduction will create approximately 90 new highly-skilled jobs. Employees onthe production side will receive training onsite at the existing urea plantusing Urea2000plusTM technology. In addition to increased urea production, for which there is significant marketdemand, the project is also expected to increase tax payments into the regionalbudget, while providing a boost to the development of key infrastructure in theregion, while also supporting residential property development for employees atPhosAgro's Cherepovets facilities. The project will also bring significant environmental benefits. Launching newurea production facilities will help to decrease carbon dioxide emissions.Carbon dioxide will be used as a raw material in the production process, whichis very important for the industrial city of Cherepovets. In order to train all staff properly and to equip them to work at the high-techfacility, as well as at other divisions of PhosAgro-Cherepovets, PhosAgro andthe local Vologda Government have jointly lead on the opening of a dedicatedtechnical college in Cherepovets, while at the Cherepovets State University anew department has been created focused on the technology of non-organicsubstances and fertilizers PhosAgro CEO Andrey Guryev said: "Realising this complex and high-priorityproject to build a modern ammonia production facility to produce and furtherprocess into mineral fertilizers, including the new urea plant, will help us tostrengthen further our position in the global fertilizer market and to expandour product range. The new urea plant will help to create new highly-skilledjobs, while also increasing our operating and financial efficiency. The projectwill increase our fertilizer production capacity by 25% by 2017." Vologda Governor Oleg Kuvshinnikov added: "Not only is PhosAgro one of theworld's largest fertilizer producers, continually seeking to develop itsproduction capacity, but it is also a very socially responsible company, thelargest taxpayer in the Vologda region and a great supporter of strategicallyimportant initiatives for the region. It is particularly important for us thatthe chemical production complex in Cherepovets was selected as the optimumplatform for this ambitious project. This project will also support thedevelopment of related industries, create new jobs and increase taxcontributions to the local budget, which in turn will allow for new importantprogrammes to be introduced in the fields of sport, medicine and healthcare. Weare ready to provide all necessary support for this project." Tomas Plachy, Chemoprojeсt Nitrogen a.s. CEO, remarked: "We are delighted tocontinue our cooperation with PhosAgro, a company that is always looking toapply best international practice and knowhow in design engineering, and to usethe latest technology in the fertilizer production process. Our key competitiveadvantages include our long-standing cooperation via EPC contracts withStamicarbon, our substantial experience in successfully completing similarprojects, as well as our strong local Russian market knowledge, which we viewas a strategically important market." For further information please contact: OJSC PhosAgroIrina Evstigneeva, Head of Corporate Finance and Investor Relationsir@phosagro.ru+7 495 231 3115 Timur Belov, Press Officer+7 495 232 9689 EMSam VanDerlipvanderlip@em-comms.com+44 7554 993 032+7 499 918 3134 Notes to Editors PhosAgro is one of the leading global vertically integrated phosphate-basedfertilizer producers. The Company focuses on the production of phosphate-basedfertilizers, feed phosphate and high-grade phosphate rock (P2O5 content of notless than 39%), as well as ammonia and nitrogen-based fertilizers. The Company is the largest phosphate-based fertilizer producer in Europe, thelargest producer of high-grade phosphate rock worldwide and the second largestMAP/DAP producer in the world (excluding China), according to Fertecon.PhosAgro is also one of the leading producers of feed phosphates (MCP) inEurope, and the only producer in Russia. PhosAgro has 2.1 billion tonnes of resources (according to JORC) of highquality apatite-nepheline ore. The Company's mines and phosphate rockproduction facilities are located in the mountainous areas of the KolaPeninsula in the Murmansk region of northwest Russia, whereas its fertilizerand feed phosphate production assets are located near the city of Cherepovetsin the Vologda region and near the city of Balakovo in the Saratov region ofsouthwest part of European Russia. PhosAgro's 2013 IFRS revenue was over USD 3.3 bln and EBITDA was USD 752 mln.The Сompany's net debt/EBITDA ratio was 1.8 at 31 December 2013. For further information on PhosAgro please visit: www.PhosAgro.com Chemoprojeсt Nitrogen a.s. is a Czech company providing services in design,engineering, ensuring the supply of equipment and materials, construction andinstallation work, field supervision, contract supervision and commissioningworks, the creation of industrial production associated with investments in thenitrogen industry, the production of nitric acid and ammonium nitrateproduction and granulation of urea, compound fertilizer production, ammonia andaniline. In July 2014 the well-known engineering company Carsale Group, which hasimplemented numerous reconstruction projects on existing ammonia plants in theRussian Federation, became a major shareholder in Chemoproject Nitrogen. Stamicarbon B.V. Stamicarbon, the licensing and IP Center of Maire Tecnimont, is the globalmarket leader in licensing of urea technology and services with more than 50%market share in synthesis and 32% market share in urea granulation technology.Stamicarbon has more than 65 years' experience in licensing its urea technologyand services, delivering optimum environmental performance, safety, reliabilityand productivity at the lowest investment level. Over 260 urea plants are usingits technology. In addition, it has completed over 90 revamp projects inStamicarbon and non-Stamicarbon plants. Since 1947, Stamicarbon has been theworld's leading authority and innovator in the field of urea in closeco-operation with research institutes, suppliers and customers. Stamicarbon hasoffices in Sittard (The Netherlands), Beijing (China) and Moscow (Russia). Forfurther information: www.stamicarbon.com. The urea plant will utilize Stamicarbon's state-of-the-art Urea 2000Plus® PoolReactor technology. The granulation plant is based on Stamicarbon's latestfluid bed granulation technology. Both plants will have a capacity of 1500 mtpdeach. Granulated urea has a high density and a low dissolution rate, which increasesefficiency when applied to soil, increasing its ease of use and facilitatinghigh yields. Granulated urea can be used in animal husbandry as a feedadditive, as well as in the production of resins that are widely used asadhesives in the production of wood-fiber boards and furniture. In thepetroleum industry it is used for purification of oils and motor fuels fromparaffin-release soft paraffin feedstock to produce a protein-vitaminpreparations, fatty alcohols and acids, detergents. Urea is also used fortreatment of nitrogen oxides from the flue gas of thermal power plants,boilers, incinerators, emissions of trucks for compliance with the emissionstandards of Euro 5 and 6. In medicine, pure urea is used as an antitumor agentfor the prevention and reduction of cerebral edema, as well as for theproduction of sleeping medicines, such as veronal, luminal, and bromural. Ureais registered as a food additive E927b and is used for the manufacturing ofchewing gum