Long term Ammofos investment pays dividends during downturn

Russia’s phosphorus based fertilizer producers have been exposed to a sharp global downturn. But the Ammofos plant in Cherepovets is showing that it still turn a profit.

Ammofos is a part of Phosagro – Europe’s largest phosphorus fertilizer producer. It produced 2.3 million tons in 2008, with profits up on the back of a five fold increase in its major nutrient product over the preceding two years.

The increased output came in the wake of a $500 million plant modernization. But Ammofos Director, Vladimir Pomatilov, says the global economic downturn has seen demand slump – and prices along with it

“Demand for fertilizers has fallen, and prices have dropped by up to 50% for exported fertilizers. We had to change our operation – we are exporting 70% of our production. We have concluded a long term contract with India, and have started producing new kinds of fertilizers that the market requires. Domestic demand has stayed unchanged, mainly due to government support for the agricultural sector."

But, while most producers are selling at a loss Ammofos is still posting profits –even if they are modest. Local officials, including Governor, Vyacheslav Pozgalyov, praise it as a successful business model

“The company's owners have invested in production and modernized production lines before the crisis. Ammofos is working at 100% capacity because of the production improvements.”

The modernization has also extended as far as the introduction of renewable energy, with latest stream turbine technology providing 100% electricity self-sufficiency.

An 8 year long investment programme has resulted in rising production despite a year of crisis, allowing the company to keep its entire workforce gainfully employed. Ammofos is based in Cherepovets  – also home to steelmaker Severstal. Where job losses in the steel sector are threatening many small and medium sized contractors in the region, the resilience of Ammofos has been a blessing.