Ust-Luga to be fertilized with containers

PhosAgro and Ultramar are set to create a terminal in Ust-Luga for transshipment of mineral fertilizers in containers. The volume of investments into a terminal with annual capacity of 1.5 mln t is estimated at $15 mln. As PhosAgro told IAA PortNews, the company sees a huge potential of the port in the Leningrad region in terms of taking over of cargo from foreign ports.

The port gets smarter

PhosAgro and Ultramar (Russia’s largest transporter of mineral fertilizers in containers) have established Smart Bulk Terminal LLC, their own operator on transshipment of mineral fertilizers via the port of Ust-Luga (Leningrad region). PhosAgro owns 70% of the company.

As PhosAgro told IAA PortNews, the new company will build and then operate a new terminal in Ust-Luga port for reloading of mineral fertilizers from railcars into specialized containers. According to Company Ust-Luga OJSC (customer-developer of the port), the terminal will be located within the multi-purpose transshipment complex Yug-2.

Design capacity of the new ‘smart’ terminal is about 1.5 mln t of mineral fertilizers per year. Investments are estimated at $15 mln. PhosAgro and Ultramar will finance the project with their own resources on a pro rata basis. Ultramar will be in charge of operational management of Smart Bulk Terminal.    
   
The technology of construction and transshipment applied for Smart Bulk Terminal has been developed on the basis of the existing experience with the application of technology widely used in Australia. 

PhosAgro expects port Ust-Luga to become the most competitive multi-functional commercial seaport which will take over major cargo flows running via foreign ports today. “Taking into consideration current load of the ports and growing volumes of transportation, it is important to make sure that there is enough terminal capacity in the future,” the company says. 

Establishment of its own operator is in line with the company’s policy on control and management of costs throughout the entire chain of production and sale. It is aimed at the reduction of costs related to transshipment of mineral fertilizers, PhosAgro explained. 

Another project in Ust-Luga is being implemented at the European sulphur terminal. Under long-term contract PhosAgro is building new terminal facilities with the first phase of 100,000 t in capacity to be launched in summer 2015. Via this terminal, PhosAgro plans to transship and sell at least 1 mln t of fertilizers per year with a possibility to load containers onto Panamax ships and store products free of charge. This will provide for more flexible sales through accumulation of different brands of fertilizers and overall loading of vessels. “We will be able to promptly supply almost any customer anywhere in the world,” the company says.

As Aleksandr Ignatyuk, Director of Information and Analytical Department of Investment Group Energocapital, commented on the plans of PhosAgro, the industry of mineral fertilizers is one of stable points today amid considerable decline of general economic activities including that in the sphere of logistics. “We are quite optimistic about the project of PhosAgro. The more so as the company announces its plans to handle up to 1.5 mln t of fertilizers per year, which is 25% of its annual sales of all types of fertilizers. Moreover, this step looks logical following the reform of distribution and transition to own traders in 2013-2014,” the analyst said. According to Aleksandr Ignatyuk, the idea of building the company’s own transshipment complex seems to be reasonable and viable as PhosAgro exports up to 70% of its products and the demand for phosphate fertilisers has been increasing in Africa and Latin America over the recent years.

Besides, we think it is necessary to take into account a geopolitical strain affecting the attitude of European Union to Russian companies. In this context, redirection of cargoes to Russian ports will let mitigate the political risks associated with cargo transshipment via foreign ports of the Baltic Sea.

It should be noted, that the idea of handling fertilizers in Ust-Luga is not new. EuroChem is going to build a 5 mln t bulk cargo terminal here to support future exports of potash fertilizers from EuroChem-Usolskiy Potash. As IAA PortNews learnt from a source in the port, EuroChem had been building a water front under this project but the works have been frozen due to the market situation. No respond on the project status have been obtained by IAA PortNews from EuroChem by the time of this article publication.

About PhosAgro

The Company is Europe’s largest producer of phosphate-based fertilisers, the world’s largest producer of high-grade phosphate rock and the world’s second largest producer (excluding China) of MAP and DAP (according to Fertecon), Russia’s only producer of feed monocalcium phosphate (MCP), and also the sole producer of nepheline concentrate in Russia.  PhosAgro’s primary assets include Apatit, PhosAgro-Cherepovets (established as a result of the merger of Ammophos and Cherepovetsky Azot), Agro-Cherepovets, Balakovo branch of OJSC Apatit, Metachem, PhosAgro-Trans, PhosAgro-Region and NIUIF.  

Vitaly Chernov