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PhosAgro is Russia's largest producer of phosphate-based fertilisers and one of the leading producers in the world. The company owns its own deposit of apatite-nepheline ore on the Kola Peninsula — the raw material from which phosphate fertilisers are made. The shares trade on the Moscow Exchange under the ticker PHOR.
The key to understanding the company is its self-sufficiency in raw materials. Phosphate fertilisers are made from apatite concentrate, and producers that buy it on the market depend on someone else's price. PhosAgro has its own ore, and ore with a low level of impurities at that: the fertilisers come out cleaner, and the cost of producing a tonne is among the lowest in the industry.
Demand for fertilisers is steadier than for most industrial goods: a field has to be fertilised every season, whatever the phase of the economic cycle. The price, however, is volatile — it depends on global benchmark prices, on what competitors pay for gas and on the previous year's crop yields.
Revenue comes mostly from exports and is earned in foreign currency, while costs are in roubles. Hence the sensitivity to the exchange rate: a weaker rouble improves the result even when global prices do not change.
The core product line: complex fertilisers containing phosphorus, nitrogen and potassium.
Ammonia and its derivatives, where the key input is natural gas.
The company's own deposit of apatite-nepheline ore on the Kola Peninsula.
Products for livestock farming and industry.
Strengths and weaknesses describe the business itself. Opportunities and threats describe what may happen around it.
The company mines apatite-nepheline ore, makes phosphate and complex fertilisers from it, as well as nitrogen products, and supplies them to farmers in Russia and in dozens of countries around the world.
Because apatite concentrate is the main cost item in phosphate fertilisers. A company with its own ore does not depend on the market price of the raw material and stays profitable at a point where competitors that buy their raw material are already operating at a loss.
Because the soil needs nutrients every season: a missed application results in a lower harvest. A farmer can put off buying machinery, but not fertilisers — so volumes hold up even in a weak economy, although the price still fluctuates.