OREANDA-NEWS. PhosAgro (Moscow Exchange, LSE: PHOR), a leading global vertically integrated phosphate-based fertilizer producer, announces that it has signed a contract with an international consortium led by Mitsubishi Heavy Industries Ltd for construction of a new, energy efficient ammonia production plant at PhosAgro-Cherepovets in the Vologda region. The new line is expected to have an ammonia production capacity of 2,200 tonnes/day (760 ths tonnes/year).

The document was signed during the St. Petersburg International Economic Forum, with the Russian Federation Minister for Industry and Trade Denis Manturov, the Governor of the Vologda region Oleg Kuvshinnikov, and PhosAgro Deputy Chairman of the Board and Vice President of the Russian Union of Chemists Andrey Guryev in attendance.

The consortium will also include the Japanese company Sojitz and the Russian-registered company Renaissance Heavy Industries, which will be responsible for construction work. The licensor of the ammonia production technology is Haldor Topsoe (Denmark), a leading global engineering company in this sector.

Construction of the third ammonia production line at PhosAgro-Cherepovets is a key part of PhosAgro's long-term modernisation and growth strategy. Project development was led by the National Mineral Resources University (St. Petersburg) and is aimed at a ground-up modernisation of the Company's production technologies using the best available technologies.

The commissioning of the new ammonia plant at PhosAgro-Cherepovets is planned for the first half of 2017. The new facility will be the highest-capacity of any ammonia lines currently functioning or under construction in Russia. With the launch of the new ammonia plant, PhosAgro's total ammonia production capacity will increase by nearly 70%.

Total investments in the new ammonia facility and related infrastructure, which PhosAgro plans to finance from its own cash flows and with third-party funding, are expected to be USD 785 million.

The new ammonia production facility will rank among the best in the world in terms of characteristics like raw materials and energy consumption, labour productivity, up-time between repairs, as well as environmental impact. Natural gas consumption per unit if production is expected to be 20% lower than the current average for ammonia production facilities in Russia.

In order to supply the new ammonia line with hydrocarbon raw materials, Gazprom has agreed to supply an additional 800 million cubic metres of gas per year to PhosAgro following the launch of the new facility. The Russian Ministry of Economic Development has also confirmed the use of natural gas in the new ammonia production line.

PhosAgro CEO Maxim Volkov said: “The construction and commissioning of the new ammonia plant at our PhosAgro-Cherepovets site will mark a new phase in PhosAgro's development, strengthen its market-leading position, create new jobs and improve production efficiency. The project is designed to achieve one of PhosAgro's key strategic goals of increasing internal processing of its own phosphate rock to produce higher volumes of phosphate-based fertilizers.”