BMO Farm to Market May 2016
EuroChem Group AG Ver3cally integrated business with a growing global presence !
3 Nitrogen plants (2 in Russia, 1 in Belgium) - 3.0 MMT(1) of ammonia and 8.9 MMT of total N fer3lizer product capacity.
!
3 Phosphate plants (2 in Russia and 1 in Lithuania) - 2.5 MMT of MAP/DAP – and JV in China. 5.1 MMT of total P fer3lizer & feed product capacity
!
Total annual fer8lizer/feed capacity of 14.0 MMT, including c.2 MMT of specialty products
!
Ver8cal integra8on: own raw materials, port terminals, rail stock, construc3on/ repair works, Europe/CIS distribu3on capacity
!
Natural gas operator (Russia) - 1.1bn m3 of annual capacity (c.25% of EuroChem’s annual consump3on)
!
Iron ore as a co-product of apa3te mining: up to 5.6 MMT of iron ore (Fe content 63.5%)
!
Logis8cs assets include transshipment capacity of c.8.8 MMT in Russia and c. 3.5 MMT in the EU, ~ 6,400 own rail stock/depot
!
Sales : global plaform anchored on EuroChem Agro and CIS presence
!
Projects o
o
Potash projects
1 Severneft-Urengoy 2
Kovdorskiy GOK
3
EuroChem Fertilizers
Logis8cs
26 EuroChem-VolgaKaliy
11 Ust-Luga
27 EuroChem Usolskiy
12 Tuapse 13 Murmansk 14 Sillamae
2
1
13
14 11 6 18 23 15
Apa8te (Russia) - P2O5-rich (37%-38%) and low-MER(2) content (0.057) apa3te ore (2.5 MMT per year) covers c.75% of own produc3on needs for all phosphate plants and Antwerp, addi3onal volumes from Kazakhstan project
!
!
Raw materials
22
16
25
27
7 8
4 5 26 12 9
26
3
20 24 10
19
21
17
Potash (K) : 2 greenfield projects in Russia with targeted capacity of over 8.3 MMT of KCl per year. First ore 2017/18. Ammonia – 1MMT facility in close proximity to Phosphorit (Russia/Bal3c Sea), startup 2018
Total employees: >23,400 EBITDA ($b) 1.35
Revenues ($b) 1.51
1.58
5.56
5.09
4.54
Produc8on
Sales & distribu8on
4 Novomoskovskiy Azot
15 Switzerland
19 Mexico
23 France
5 Nevinnomysskiy Azot
16 USA
20 Turkey
24 China
6 EuroChem Antwerpen
17 Brazil
21 Singapore
25 Italy
7 Lifosa
18 Germany
22 Spain
26 Greece
8 Phosphorit 9 BMU
2013
2014
2015
(1)MMT : million metric tonnes; (2)MER : minor element ra7o.
2013
2014
2015
10 EuroChem Migao
2
EuroChem Group AG The most ambi3ous growth story in the fer3lizer sector •
!
Less than 20 months away from star3ng 2 potash mines in Russia (>10% of global capacity ager ramp up)
!
Ager adding Potash and comple3ng EuroChem Northwest ammonia project, should become the 3rd largest global fer3lizer company in the world
!
Sizeable mining franchise: assets in Russia and Kazakhstan ! Phos rock reserves: >3.7 bn tonnes (17-38% P2O5) ! Phosphate rock produc3on: 2.5 MMTpa ! Iron ore produc3on: 5.6 MMTpa
2018: start of 1 MMTpa ammonia plant
2017: start of potash produc8on, ramping-up to over 8 MMTpa Today
Currently: a top 10 global fer3lizer company in the world by primary nutrient capacity
3
EuroChem Group AG Strategy N
Cost leadership through ver8cal integra8on
P
• Target self-sufficiency (ammonia, phosphate rock, potash) • Further cost efficiency through ver3cal integra3on in logis3cs
>500bcm in reserves
Natural gas
• Enhances cost posi3on and reduces risk / vola3lity of earnings
Growth through potash
Kazakhstan Apa3te project & Kovdor (Phos Rock) expansion
Condensate
1MMTpa project
Ammonia (NH3)
K Potash reserves and resources in excess of 10bn tonnes
Iron ore
Phosphoric acid
• Build leading low-cost potash business
Value-added product range • Minimize commodity, maximize specialty agrochemicals: emphasis on de-commodi3za3on of product porfolio by growing specialty fer3lizer grades and industrial products
3 Nitrogen fer8lizer plants c.8.9 MMT of nitrogen fer3lizer capacity
3 Phosphates fer8lizer plants c.5.1 MMT of phosphates fer3lizer capacity
2 potash projects underway in Russia with a combined targeted capacity of over 8.3 MMT MOP
• Expand industrial porfolio (melamine, LDAN, Adblue) Ust Luga op7on
Port facili3es: 8.8 MMT (Russia) 3.5 MMT (EU) c.6,400 rail cars
Proximity to Customers • Proximity to customers in key home markets via distribu3on allows EuroChem to sell at a premium and exploit seasonality paierns • Brings valuable market knowledge from direct end-user contact
Sales to more than 6,000 customers worldwide (>100 countries) supported by own distribu3on in over 15 countries covering US, LatAm, Europe and Asia Ongoing /poten3al investment projects
Q4-2015 acquisi7on of Bentrei – 1MMTpa fer;lizer distribu;on in the US
By/co- products
4
$0
Gas price Conversion cost Transporta3on FCA-FOB
Mar-2016
Feb-2016
Jan-2016
Dec-2015
Nov-2015
Oct-2015
Sep-2015
Aug-2015
Jul-2015
$150
Jun-2015
May-2015
Apr-2015
Mar-2015
Feb-2015
Jan-2015
Dec-2014
Nov-2014
Oct-2014
Sep-2014
Aug-2014
Jul-2014
Jun-2014
May-2014
Apr-2014
Mar-2014
Feb-2014
Jan-2014
Nitrogen Sustainable profitability Nevinnomysskiy urea cost (FOB Black Sea), US$/tonne
$400
$350
$300
$250 $201
$200
Devalua3on of RUB vs.US$
$100
$50
FOB Price BS
5
Phosphates
Low cost integrated dap/map produc3on with iron ore contribu3on Lifosa DAP costs (FOB Bal8c), US$/tonne, with iron ore credit
$600
$500
$400
$357
$300
$200
PhosRock
Apa3te
Ammonia
Sulphur
Conversion cost
Transporta3on FCA-FOB
Mar-16
Feb-16
Jan-16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
$0
Jan-14
$100
DAP FOB Price Bal3c sea
6
EuroChem Group AG Global market presence Group sales (KMT) North America
• #1 in Russia/CIS
1,686 1,430 1,568 1,418
864
Europe
Russia 5,405
4,958 4,898 4,460 3,392
4,513
5,449 4,824 4,052
1,253
• #2 in Europe, anchored by Europe EuroChem Antwerpen / Agro (acquired 2012)
2011 2012 2013 2014 2015
2011 2012 2013 2014 2015
2011 2012 2013 2014 2015
1,801 1,024 1,207 924 1,027
2011 2012 2013 2014 2015
• Growing presence in North America supported with acquisi3on of Bentrei (2015)
• Diversified presence in other markets
• Entering transforma3onal stage with potash
CIS (ex RUS)
La8n America
Asia Pacific
Africa 459
1,567 1,723 1,418 1,382 1,041
290 289
2011 2012 2013 2014 2015
2011 2012 2013 2014 2015
386 354
5,028
3,449 3,726
3,749 3,570
2011 2012 2013 2014 2015
From 2018, added focus on Brazilian market with world’s lowest cost potash
7
Q1 2016 PERFORMANCE
EuroChem Antwerpen
Q1 2016 Markets and Group Performance Key figures Revenues (US$bn), Gross margin (%)
EBITDA (US$bn), EBITDA margin (%) 1.00 0.90
47%
37% 37% 36%
40%
38%
40% 40%
43% 42%
Q1-16 revenue split by currency(2)
34%
1.43
1.24
1.35 1.41 1.34
€: 29% 1.26 1.19 1.15 1.24 1.14 1.12 1.05
₽: 16% other 6%
0.70
26%
31%
29%
28%
31% 28%
24%
0.60 0.50
39%
37%
34%
0.80
41% 41%
$: 49% 1.53
37%
21% 0.41
21%
0.40 0.26
0.30
0.42
0.41
0.40
0.32
0.28
0.46
0.36
0.44 0.38
0.36
0.32
0.20 0.10 0.00
Revenues ($b)
Gross margin (%)
EBITDA ($b)
Geography of sales (% of total)
Key ra8os 3M-15
Net debt1 / EBITDA
1.57x
6M-15 1.56x
9M-15 1.59x
12M-15 1.97x
3M-16 2.06x
7% 5% 12% 14%
Funds from opera3ons / Gross debt1 EBITDA / interest coverage Return on capital employed
38% 8.34x 29%
36% 8.01x 27%
35% 9.17x 31%
32% 9.03x 44%
30% 8.59x
21%
39%
9% 15% 9% 20%
10% 12% 8%
7% 6% 10% 21%
22% 19%
16%
20%
27%
26%
35%
8% 6% 10% 12% 20%
42%
3% 12% 14% 18%
15%
6% 6% 8%
6% 6% 10%
7%
13%
9%
11%
13%
19%
14%
16%
8%
13%
18%
21%
32%
33%
21%
44%
5% 15%
13% 6%
20%
19%
32%
30%
48%
7% 6%
7% 4%
13%
20%
10%
10%
20%
16%
41%
41%
25%
Europe (1) Defined as per bank covenants.
EBITDA margin (%)
Russia
Asia Pacific
North America
La3n America
CIS
(2)In terms of economic substance, the Group views its sales as predominantly denominated in US dollars even where nominally this may not be the case.
Africa
9
Q1 2016 Markets and Group Performance Capital expenditure Large-scale projects contemplated over the next 6-7 years:
Group CAPEX (US$m)
Potash (>8 MMT KCl) K 2013: $1,002m 326
270
388
2015 : $969m
2014: $1,108m 18
340
282
439
46
271
212
446
40
Nitrogen plants (>2 MMT NH3) N 355 321 248 231
Integrated phosphates/specialty (Kazakhstan - DCP/SOP/NPK) P
5
126
37
225 8 104
88
298
Q1-13
Q2-13
255
70
107
212
99
140
72
7 66
78
65
76
71
Q3-13
Q4-13
Q1-14
Q2-14
128
Q3-14 Phosphates
116
215
63
38
Q4-14
57
28
39
Q1-15
Q2-15
Potash
126
Q3-15
17 96
54
66
42 94
21
154 96
77
307
110
113
Nitrogen
Excludes temporarily unallocated capex
11
147
177
113 56
311
25
34
57
63
24
15
78
87
Q4-15
Q1-16
Other
10
KEY PROJECTS
Nitrogen
Targe3ng self-sufficiency : EuroChem Northwest ammonia plant Loca8on August 2015: Start of construc3on of EuroChem Northwest, a 1 MMT pa ammonia plant located in Kingisepp, Russia. Expected comple8on : Q4 2018 Financed via non-recourse EUR 557 million 13.5-year project finance facility benefi8ng from insurance cover provided by the Italian Export Credit Agency SACE for the project’s poli8cal and commercial risks.
Excellent strategic loca3on within the territory of EuroChem’s Phosphorit phosphate facility in close proximity to the Bal3c Sea (45km to Sillamae and 50km to Ust Luga)
Key features:
Global ammonia efficiency curve
" Developed industrial infrastructure
New ammonia plant to be among most compe33ve in the world
" Proximity to port, excellent logis3cs " In-house experience in large-scale projects and with +1MMTpa ammonia facili3es " Top-notch EPC contractor (Tecnimont)
NAK-3 NEV-1B
NEV-1A
NAK-4
S3rol G-1
NAK-2
" Excellent project economics " Strong sponsor support " Only surface construc3on, limited risks " Well-known technology
Yara Sluiskil E
" Project benefits from strong community and Government support Source: Integer
12
Phosphates Kazakhstan: closing the phosrock gap, future Central Asian plaform EuroChem has acquired licenses to develop three sec8ons of the KokDjon phosphate deposit and has an op8on to acquire licenses for the Geres deposit.
13
Potash Projects Favorable posi3oning Usolskiy Potash Project
K
Planned Capacity Phase I (greenfield)
Murmansk M
Kovdor
Sillamae
Ust-Luga P Kingisepp
P Kedaynyay Antwerp N
1,400
Total
3,700
Perm
N Novomoskovsk Volgograd
Belorechensk Tuapse
Phase II (brownfield)
K
Moscow
Nevinnomyssk
1) Under construc7on
2,300
N P
K
VolgaKaliy Project
K
Planned Capacity Phase I (greenfield)
2,300
Phase II (brownfield)
2,300
Total
4,600
14
Potash Projects VolgaKaliy (Gremyachinskoe deposit, Volgograd region, Russia) In addi3on to an average KCl content of 39.5% and modern mining opera3ons, a distance of approximately 500km to our Tuapse port facili3es will provide us with unmatched cost advantages Main work in progress
Project status
EXPECTED COMPLETION
SURFACE
Completed
Dirt work Permanent canteen Gathering pond for storm water
2Q-16
SHAFTS
MINE
KCl storage
Shag freezing
Beneficia8on Crushing
Administra3ve building Ore storage Workshops
3Q-16
Offices
Skip 2
Skip 2 sinking
4Q-16
Skip1 Cage shal
Ven3la3on
Capacity (KCL, MMT) 4.6 2.3
2.3
2.3
2.3
Phase 1
Phase 2
DEPTH IN METERS
End Q1-2016
Not to scale, for illustra7ve purposes only
15
Potash Projects VolgaKaliy visuals
16
Potash Projects Usolskiy Potash (Verkhnekamskoe deposit, Perm region, Russia) Located in the Perm region near Russia’s tradi3onal potash produc3on sites, the Verkhnekamskoe potash deposit is one of the largest in the world. Within this deposit, Usolskiy Potash has secured rights to over 2.3 billion tonnes of reserves with an average KCI content of 30.8% and an ac3ve mine life of 35+ years.
Project status
Loading
Ore/KCl storage
Crushing
Beneficia8on
Main work in progress EXPECTED COMPLETION
SURFACE
2Q-16
3Q-16
Offices
MINE
Skip 1 Dirt work
completed
SHAFTS Shag sinking Back grou3ng
Skip shag sinking completed in August 2014
Cage shal
Gathering pond storm water
Ore storage Admin building Workshops
Cage shag sinking completed in October 2013
Capacity (KCL, MMT) 3.7
Ven3la3on
2.3
1.4
2.3
2.3
Phase 1
Phase 2
Not to scale, for illustra7ve purposes only
17
Potash Projects Usolskiy Potash visuals
18
Thank you
Please visit www.eurochemgroup.com for further details or contact our Investor Rela3ons.
[email protected]
Kovdorskiy GOK