Fertilize and rule policy
Despite general decrease of Russian cargo transshipment via the ports of the Baltic states and Finland, turnover of domestically produced mineral fertilizers grew in 2019 driven by their handling in Sillamae and Kotka. The situation can be reversed through liberalization of Russian laws and phasing out of agricultural imports.
According to RF Transport Ministry’s statistics, the scope of Russia’s foreign trade cargo handled at the ports of the Baltic states and Finland totaled 40.7 million tonnes in 2019, which is 11% less as compared with the year of 2018. It should be noted that this downward trend has been seen for many years in a row which reflects the state policy on redirection of domestic cargoes to national terminals.
Yet, this matter has its specifics.
Transshipment of mineral fertilizers via foreign ports does not decrease. On he contrary. It shoes a consistent growth: in 2019, ports of the Baltic states and Finland handled 9.84 million tonnes of Russian mineral fertilizers, up 3.5%, year-on-year. This growth should be attributed to the Estonian port of Sillamae and the Finnish port of HaminaKotka.
As for Kotka, its terminal for mineral fertilizers has been in active operation since 2012 with Russia’s Azot, Urachem and Fosagro among its clients. The terminal has been consistently building up its throughput and handled 1.3 million tonnes in 2019. According to earlier statements, in 2017 Fosagro acquired storage facilities in Kotka for its mineral fertilizers.
Transshipment of Russian mineral fertilizers via Sillamae totaled 3.79 million tonnes in 2019, 27% more as compared with 2018. Other ports of the Baltic states saw a decrease in transshipment of mineral fertilizers from Russia.
Sillamae hosts a terminal for mineral fertilizers owned by Russia’s Eurochem as well as Baltic Chemical Terminal (ВСТ). According to Eurochem, in December 2019 it opened a new ammonia storage and transshipment facility in Sillamae “providing additional logistics flexibility and cost advantages”. The annual ammonia transshipment capacity is estimated at 1 million tonnes. The cargo seems to be delivered from newly launched ammonia plant in Kingisepp (Leningrad Region).
With a plant in Kingisepp, it would be logical enough to transship the product via the port of Ust-Luga located nearby. Indeed, back in 2015, Eurochem announced its plans to build a dedicated terminal there for transshipment of potassium fertilizers from its Usolskiy plant. Its maximum design capacity for 2020 is estimated at 2.3 million tonnes.
“We plan building 5 to 7 million tonnes (terminal capacity – Ed.) right on the shore in Ust-Luga. We have a plot of land and money”, said Dmitry Boldyrev, Operational Logistics Manager at EuroChem Group AG, said in October 2019 at the “PRO//Motion.1520” International Transport and Logistics Forum. In his opinion, the project implementation is hindered by excessive requirements of the Water Code, according to which chemical facilities should be located 500 meters from the shoreline while the worldwide practice is to build such facilities on the shore.
The Government of the Russian Federation seems to hear the voice of the business and a draft law to lift the ban on placement of agrochemical storage facilities within seaports was submitted to the State Duma on 20 December 2019. According to the bill, the design documentation on such projects should be obtain the state environmental approval.
In January 2020, the draft law was backed by the Council of the Federation Committee for Agrarian and Food Policy and Environmental Management.
In this context, it should be noted that an ambitious project on construction of a terminal specializing in transshipment of mineral fertilizers with annual capacity of up to 7 million tonnes was also announced under the project of Primorsk Universal Port Complex (the port of Primorsk).
On the other hand, the policy of sanctions has triggered the agricultural growth in Russia. According to Higher School of Economics consumption of fertilizers in Russia grew by 14.1% to 5.46 million tonnes in the first half of 2019. The highest growth was shown by urea ammonium nitrate (+36%), phosphoric concentrate (+32%) compound fertilizer (+22%).
Alexander Goloviznin, Director of Logistics and Analytics at Morstroytechnology, told IAA PortNews that “the growth in domestic consumption of mineral fertilizers is slower than building up of production facilities. Besides, it is below the target set by the Ministry of Agriculture. Meanwhile, large-scale use of mineral fertilizers, probably excessive in some regions of the world, can become the next target of ‘the green’.
Thus, if Russian laws in the part of storage facilities for mineral fertilizers are liberalized, internal demand for fertilizers grows and a campaign towards limitation of their use begins worldwide, the ports of the Baltic states and Finland can be easily miss Russian fertilizers. Moreover, nobody's canceled containerization which is being actively developed by Saint-Petersburg based terminal Bronka.